Greetings, ladies and gentlemen, and welcome to Energy Transfer's First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. It is now my pleasure to introduce your host, Mr. Tom Long. Please go ahead, sir.

Thank you, operator. Good morning, everyone, and welcome to Energy Transfer's first quarter 2018 earnings call, and thank you for joining us today. I'm also joined by Kelcy Warren, Mackie McCrea, Matt Ramsey, John McReynolds, and other members of the senior management team, who are here to help answer your questions after the prepared remarks. I'll begin today with an overview of our most recent announcements, followed by a discussion of our latest developments on Rover, Mariner East 2, Permian Express 3, Bakken, and other growth projects. Then I will turn our focus to a discussion of Energy Transfer Partners first quarter results, followed by a CapEx discussion, liquidity and funding update, and lastly a distribution discussion. As a reminder, we will be making forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. These are based on our beliefs, as well as certain assumptions and information currently available to us. I will also refer to adjusted EBITDA and distributable cash flow, or DCF, both of which are non-GAAP financial measures. You will find a reconciliation of our non-GAAP measures on our website. Before turning to recent developments and a growth project update, I just want to start by saying that we are pleased by Energy Transfer's very strong first quarter. ETP's adjusted EBITDA increased by 30% and DCF attributable to the partners of ETP, as adjusted, also increased nearly 30% over the first quarter of last year, pro forma for the merger between ETP and SXL. I will provide more details later on in the call, but this increase is due to significantly higher results from the Crude Oil Transportation and Services segment, as well as strong growth in the Midstream, NGL and Refined Products, and Interstate segments. I'm also pleased to say that…

Thank you. Ladies and gentlemen, we will now be conducting a question and answer session. Our first question comes from the line of Shneur Gershuni with UBS. Please proceed with your question.

Hi, good morning, everyone. I was wondering if we can start off with a rating agency question. Clearly, they've been the gating issue on the simplification process. I was just wondering if there's been any conversations about once the projects are fully up and running with Rover and Mariner East 2, will you be able to get trailing credit for the EBITDA that's in service, so that you can simplify earlier?

Yes. Listen, Shneur, that is probably one of the – a very commonly asked question. And absolutely, we continue to have discussions with the rating agencies. And that's not one of those that's necessarily an exact science as to how that will work. I will tell you that when you have the ramp up we have in EBITDA, in other words, the EBITDA catching up with all the funding we've been doing on these projects, clearly it is one that we will always talk to the agencies about, meaning taking the current quarter and annualizing it. Because remember the nature of these projects. They are good fee based type projects. There are good contracts on them, et cetera. So all those are very positive. And that's the reason why you can take a current quarter and annualize it. But absolutely, answering your question very directly, we do continue to have conversations with the agencies. And we will continue to look at how we can accelerate the process. So...

Okay. Fair enough. Just switching to CapEx expectations. So it seems like you're kind of leaving it flat for 2018. But at the same time, you're talking about a greenfield project. Once you FID this big crude project, would there be any spend in 2018? And is there any sense of the size of spend that we could be talking about?

No. There will be – if there's any, it's going to be a very immaterial amount. So that's the reason you see us keep the spend number, the funding number at $4.5 billion. So very little in 2018.

In terms of the total spend, once you FID it?

Yeah. This is Mackie, and we'll talk about this probably a little later with other questions. But we're real excited about that project. It has kind of taken a turn for the good in that it doesn't – will not provide only Nederland, but will provide access to the ship channel market. So we're still finalizing the exact nature of it. Of course the customers – and there's a tremendous amount of interest in kind of the new project, and once we have finalized that and are contracting with the customers, we'll be able to finalize the CapEx.

Okay. And one final question. I was wondering if – I'm not sure if you're able to. But is it possible to discuss your interest in NuStar? And how you see the strategic operational fit into the Energy Transfer family?

Yeah. This is Kelcy. As you know we sent a letter, offering to acquire NSH. And as you know, the company responded, saying that they were not interested in that. And then we followed up to provide some more clarity in a letter. We think the assets fit us extremely well. And we think more money could be made from those assets. Not a reflection on anybody's management team, but rather just the complement of the assets with ours across the family. We have made it very clear to management of NuStar that we would not do anything hostile. But we did want to strongly express our interest, and we have done so. So they don't agree with us that this is a better alternative for them, which I respect their right to that opinion. And that's where we are.

Great. Thank you very much, guys. Really appreciate all the color.

Thank you.

Thank you. Our next question comes from the line of Jeremy Tonet with JPMorgan. Please proceed with your question.

Hi, good morning. I was hoping just to start off on the Midstream side. The results came in just a little bit below what we were looking in quarter over quarter there. So I was wondering if you could provide a bit more color, as far as producer activity behind your systems and kind of the really big growth you see in the Permian versus some of the legacy areas that don't see quite as much activity? And kind of how you see that balancing out over the balance of the year here?

Okay. This is Mackie again. Yeah. If you look at Midstream quarter over quarter, we're up a PCF (31:42) and our EBITDA is up $58 million, so not a bad quarter to quarter. Our volumes are down a little bit from the fourth quarter, mainly because we had pretty significant weather that affected our – that affects our G&P business more than anything else. And we've had also in South Texas some slowdown with a few of our larger producers. But by and large, our volumes are growing, they're growing significantly out of the Permian. We're just trying to stay ahead of it, and it's difficult to stay ahead of the volume growth. And so we're really pretty pleased with how the quarter went, considering some weather impacts and looking at the results.

Got you. Thanks for that. And then if you think about Permian production growth here and the wider differentials both on the gas side and the oil side, I was wondering if you could provide some kind of goal posts or any rules of thumb as far as the differentials spread, a certain amount, what that can translate into your business? Or just any more color as far as what – how these benefits could shape up for you guys over the balance of the year?

Okay. This is Mackie again. Yes, it's interesting. Because for the last four, five, six years and even as much as a year ago, we've had capacity, both on the gas and the crude side across the state. And it hadn't been a lot of fun. The spreads have been nil to very little, and we've kind of weathered the storm. And so we couldn't be more pleased with where we sit today. We have not only available capacity that we've been selling and aligning with the customers that need it, but we also are aggressively expanding, not only Oasis by over 100,000 [MMBtus] a day, but the announcement on Old Ocean and NTP by another close to 100,000 [MMBtus], our share. So we're doing everything we can to not only maximize our margins and revenues on our existing capacity, but also increasing our capacity where it makes sense.

That's helpful. Thanks. And then maybe just the last one as far as the structure and anything new you could say there or refresh us for your thoughts as far as how you see eventual family simplification down the future? And I guess most importantly, do you see a C-Corp as something that could really be additive to the family and open up kind of the shareholder base there?

Yeah, this is Kelcy. I'll start with the second part of that question. We are evaluating a C-Corp structure within our partnership. We are very, very carefully evaluating that. We do not want to do something that is irreversible and something that we would regret. So that is something we are studying. As far as the simplification that you refer to, it would most certainly be a structure whereby ETE acquires ETP. There's – we've looked at every scenario possible to us. And we don't see any mathematical scenario that makes any sense other than that one.

That's very helpful. Thanks for taking my question.

Thank you.

Thank you. Our next question comes from the line of Brian Zarahn with Mizuho Securities. Please proceed with your question.

Good morning.

Good morning.

Just following up on the Midland to Nederland project. When do you anticipate having an update on the size and scope of the project? And do you anticipate it to be part of your Permian JV?

This is Mackie again. Certainly on a daily basis, we're looking at expanding our Permian Express system. We're – the fourth quarter this year, we're bringing on another portion. As everybody knows, it's demand based. And as part of that, we also have a fairly sizable volume that we'll go out for an open season on here in the next month or so. That will start in October, November. In addition to that, we evaluate constantly expanding Permian Express 3, even as of today we have – kind of have some updates that it may make sense to move quicker on that, to provide capacity quicker than any new project, even our 30-inch. And we're looking at that. It wouldn't be a material amount of capital to create some capacity. So we are continuing to work with Exxon, our partners, to expand that partnership. But at the same time, we're certainly focused on getting this 30-inch. There's a lot of projects out there. But, golly, look on paper and look at what our 30-inch is offering. We'll be very pleased to announce a strategic partner we hope in the near – very near future. And we do anticipate there possibly could be some other equity partners. But if you look at the project, it's just – golly, you get to anywhere in the Houston ship channel, south of Houston, all the refineries markets, Nederland, like Tom already said, it's just unprecedented market access and flexibility. And we're really excited about the new project.

I appreciate the color. So verify, you expect as of now the project destinations to be the Houston ship channel, as well as your Nederland Terminal?

Yes, sir.

Okay. And then on timeframe, would this be more of a 2020 project?

Yes.

Okay. And then moving on to Mariner East 1, looks like the impact was about $6 million of EBITDA in March. Is that sort of a reasonable assumption for April? And how do you anticipate volumes ramping back up in the second quarter?

Yes in answer to your question. In other words, you can see kind of the monthly impact there. So I think you could probably see that about the same from that standpoint.

I may add, we are ramping up Mariner 1 now. And we are going to be testing kind of the upper limits on it as time goes on. So we think the volumes will actually increase in the future, higher than where they were when it went down.

And then on Mariner East 2, any – can you elaborate a bit on when in the third quarter you expect the project to enter service? And has the delay impacted costs?

Well, I think – this is Matt. I think the delay certainly impacts cost, I mean as it always does. But I don't think it's materially impacted the cost.

And then in the third quarter, early or mid-late is your expectation?

Yes, sir.

Okay...

Mid to late or early...

Oh, I'm sorry, I thought you said mid to late, yes.

Mid to late, okay.

Yeah.

And then the last one for me on the distribution, certainly pausing distribution growth at ETP makes a great deal of sense as you've done. For ETE, curious if you expect the pause to continue for the rest of the year? Or is it just more of a quarter by quarter decision?

That we always want to say that's a quarter-by-quarter decision. I can't highlight enough the fact of preserving cash and deleveraging, how important that is. But that is one of the factors that goes into the discussion every quarter as we look at it. But so let's – we're not trying to give any type of guidance here today or anything else. But it is – let's leave it as a quarter-by-quarter decision. So...

Thank you.

Thank you. Our next question comes from the line of Michael Blum with Wells Fargo Securities. Please proceed with your question.

Thank you. I'm wondering if you can just clarify one thing. So as it relates to this Permian pipe project that you're developing, which seems like a large project, and then you've got Permian Express 3 Phase 2 potential. Are those – is there any connection between them? Meaning can you still move forward with Phase 2 on Permian Express 3, regardless of this larger project? And I guess given where the spreads are, is there a reason that that isn't moving forward?

This is Mackie again, Michael. Yes, they absolutely both can go forward. And probably the way we'd separate them out is the expanding Permian Express 3 to the next phase is much quicker. It's probably half as long as the large pipeline will take. So kind of just speed the market is important. There is a massive just difficulty of getting barrels out of West Texas. Most of the big producers now are looking at rail and truck over the next year to two years until another big project comes online. So Permian Express 3 expansion has become much more important quicker. So we do see those both as moving forward. But we'll continue to evaluate the timing, cost, and the size of the next Permian Express 3 expansion. But we do anticipate it will happen.

Okay. And then do you have an estimate of the cost of this ethane export project that you announced this quarter? And is that already reflected in the $4.5 billion CapEx number?

Hey, this is Tom. I'll answer definitely the second part of that. But yes, it is included in the $4.5 billion funding for this year. So...

Okay. And then I guess last question for me, as it relates to simplification, when it happens, can you just comment on kind of where SUN fits into all that? Does that also get rolled up? Or how do you see that? Thanks.

Hey, Michael. This is Kelcy. No, it does not. SUN, we're very pleased with what we're seeing at SUN as far as what the growth that they will be directing that MLP into. And as you know, SUN is younger in the IDR life. And they will get the support from ETE or the merged ETE and ETP, they will continue to get that support. But at – for the reasonable future, we don't see that being rolled up, no.

All right. Thanks, Kelcy.

Thank you.

Thank you. Our next question comes from the line of Darren Horowitz with Raymond James. Please proceed with your question. Darren C. Horowitz - Raymond James & Associates, Inc.: Hey, guys. Good morning. Mackie, if I go back to the Permian, as you guys look at leveraging your scale and putting more barrels into Colorado City and then to hit Corsicana, with or without NuStar, does it ever make any sense for you guys to start thinking about moving those barrels from Colorado City staging and moving them south into Corpus [Christi] or possibly Corsicana South? So that way you're offering producers a slightly different downstream optionality? Maybe hitting the water at a different point? And just having more of a path of least resistance type scale footprint?

Yeah, great question, Darren. Absolutely we're looking at that. As we've always said, we don't go out and say, okay, this is what we're going to do. We ask our customers, where do you want to go? And certainly there is desire, some of the projects have already been announced that are going. And a lot of projects that may or may not go, there is a desire to get to Corpus in the Gulf Coast. And we are not only looking at new legs that direction, but also possibly utilizing existing pipelines and repurposing them for those – for that business. Our focus right now though is the 30-inch to Nederland and Houston. We think it has the most viability, the most flexibility, and the best kind of netbacks for the producers with the market access. But we will continue to look at – listen to our customers and very likely look at doing something to the Gulf Coast to the Corpus area. Darren C. Horowitz - Raymond James & Associates, Inc.: Okay. And then if I could switch over to Red Bluff Express. With that connecting Orla into Waha, I think Red Bluff brings, what, like 1.4 Bcf into the header. I know that you guys can add more compression. So how do you think about, as we've talked, the gas converging on Waha? Maybe scaling Red Bluff up further? And possibly different outlets for that gas versus moving it just west?

Yeah. Another project Luke Fletcher and his – great job on expanding it. Originally it was smaller. We've expanded as we said to – now we're to 1.4 Bcf. That kind of ramps up through time, so there's plenty of capacity for others that we're chasing. Tremendous volume growth. And we don't really have an answer right now to what happens downstream. With the other project that's coming online in a year and a half, that's going to help alleviate it. But I guess what we love about the project is not only are we making the accretive rates on new capital to Waha, but also we provide the most flexibility at Waha. We can go back into TW to the west United States, we can go to Katy, we can go to of course Mexico, we can go to multiple pipelines, intra and interstate at Waha. So who knows where that gas will ultimately go and how jammed up it will be over the next year or two? But we'll certainly play a big role both getting it to Waha and getting it out of Waha. Darren C. Horowitz - Raymond James & Associates, Inc.: Okay. And then last question for me. Kelcy, just back on simplification for a minute. Was it ever in the thought process of consideration, when you're thinking about evaluating a C-Corp structure in the family of companies, that you would look at ETP's depreciated asset basis. And from a taxable perspective obviously any sort of step up with ETP would create a significant amount of tax depreciation that could be amortized for many years? Or is it simply more of a partnership equity to equity swap with ETE? And there is no taxable liability coming from that simplification?

Both. You are correct. We have looked at – we've just every way we know to look at a C-Corp type solution for us. And we've not just said that we will not be doing that. It's just at this time, that does not appear to be the superior solution for us. So we have looked at that, to answer your first part of the question. And of course in the next part of your question, taxes influence our decisions here. They're a very big component for our unitholders to deal with. So that is a reason that we've ended up where we've ended up. I say ended up, that's not fair. Today, if we had to make a decision today, we believe a simple purchase by ETE of ETP would be the structure. That could change by the time the rating agencies give us the green light to go forward. Darren C. Horowitz - Raymond James & Associates, Inc.: Okay. Thanks, Kelcy.

Thank you.

Thank you. Our next question comes from the line of Colton Bean with Tudor Pickering Holt. Please proceed with your question. Colton Bean - Tudor, Pickering, Holt & Co. Securities, Inc.: Morning, guys. So you noted some hedges on the crude oil segment as partially offsetting some of the marketing gains there. Can you just provide a little bit of disclosure on the nature of those hedges and maybe the term as well?

Yeah. Listen, this is Tom. I'll start off here, and then we can be expansive. But clearly we have hedged a portion of kind of the basis that we've all seen. Those are really at various prices on both the gas and the crude oil side. You'll probably see some mark-to-market, because those were done kind of earlier in the quarter. But we still have significant upside that we've not locked in on some of this during Q2. So we're going to continue to look at that as we move forward, as far as what level really makes sense there as far as hedging. Colton Bean - Tudor, Pickering, Holt & Co. Securities, Inc.: Okay. So you mentioned Q2 you've got some capacity available. So that implied that the hedges are really short term in nature and don't necessarily extend through 2018 and 2019?

This is Mackie. No, we have hedges that extend. It's very difficult to hedge crude as compared to other commodities. But no, we do have volumes hedged for the next year, year and a half. But it's more heavily hedged this year and the first quarter of 2019, and then less hedged out. But we have – we're trying to be prudent. We're trying to lock in where it makes sense. But we're also looking at the market and where we think the market may go and where basis may go. And we're basing our decisions on future hedging with those analysis. Colton Bean - Tudor, Pickering, Holt & Co. Securities, Inc.: Got it. And I guess just a related question there. So Trans-Pecos and Comanche Trail arguably have the most spare capacity headed out of the basin. What are you guys seeing in flows currently? And is there any likelihood of that actually stepping up before year end here?

Those volumes have been low compared to where the capacities are. There are volumes flowing to Mexico. It varies. It could be 100,000 [MMBtus], 100,000 plus a day. Some days it may be that much or more backhaul back into it. But we do see slow volume growth. We see more of an opportunity of backhaul growth to the header system. And of course ultimately a lot of that getting into our intrastate, interstate markets. But that's a demand based business. So any incremental volumes, backhauls of course is incremental revenue. But we're guaranteed the revenues on all the forward haul, regardless of what flows or not. Colton Bean - Tudor, Pickering, Holt & Co. Securities, Inc.: Yeah. And I guess to switch gears over to Old Ocean. The 24-inch diameter would seem to imply a significantly larger capacity than the 160,000 [MMBtus]. So is that constrained primarily by North Texas? And then I guess you mentioned projects like Wildcat. I mean is there any potential for some of that Mid-con [Mid-continent] gas to find its way down to the Gulf on Old Ocean?

The pipeline, yeah, it's 24-inch. And it's limited by the MAOP [maximum allowable operating pressure]. So there's operating conditions that we have to operate under, based on the diameter and the type of steel and all that. So we're somewhat limited there regardless of the size. As far as the origin of the volumes, any volumes that can reach the fourth basin, our Maypearl or Cleveland (49:43) points or other points of the fourth basin will be able to access Old Ocean. And then of course ultimately through Old Ocean to Katy and the ship channel through us. Colton Bean - Tudor, Pickering, Holt & Co. Securities, Inc.: Great. And I guess just a final one. So Rover you highlighted an EBITDA contribution of about $50 million on the partial in-service. Given the existing operating expense and G&A, and then you've started up Market Zone North here, which my understanding is that has the highest tariff on the system, should we see an expanding market – or sorry, expanding margin over the balance of the project?

Absolutely. Our volumes will continue to grow as we get the phases approved, where as we've said we hope all phases are approved here this month and we're fully online June 1. In addition to that, we've been following limited volume south down into our trunk line system. Once Rover is fully up and running we'll be flowing, instead of a couple hundred thousand a day, up to 750,000 a day in that demand base new margin for our partnership. So absolutely, as Rover comes to completion, our revenues will appreciate significantly. Colton Bean - Tudor, Pickering, Holt & Co. Securities, Inc.: Okay. And so in terms of G&A, probably a more muted increase there versus what you're seeing on the revenue front?

Yeah, that's correct. This is Tom. Colton Bean - Tudor, Pickering, Holt & Co. Securities, Inc.: Yeah. Perfect. All right. Appreciate the time.

Thank you.

Our next question comes from the line of Dennis Coleman with Bank of America Merrill Lynch. Please proceed with your question.

Great. Thanks for taking my question. I want to maybe take another swing at Orbit and just make sure we have all the details we can get. I guess it's – I haven't – don't have an official JV yet, is that – do I still have that right? Has there been any progress on that? And should we think about this as a 50/50 joint venture? Or I guess any additional details you can add there.

Yeah. This is Mackie again. Another project we're really excited about. As the country and especially Texas continues to grow ethane at astronomical levels, there's got to be markets outside of just the U.S. And so we're really excited about the project. We're also excited to team up with such a large company as Satellite, who already has a lot of business lines around cracking. And we're very pleased to be teamed up with them. The partnership, the way it works is that we will have a JV on the chiller and the tank and the pipeline. That's the approximately 53% that we will own. And then outside of that, we also have fee-based business related to Mont Belvieu, storage and to terminaling in our dock. So the partnership just owns the pipe, chiller, and tanks. And then we have other fee-based parts of that business that are downstream and upstream of that system.

Okay. That's helpful. And then the Chinese government approvals, can you just explain a little bit about what they need to approve? Or I guess that's on the Satellite side?

Yes. It's interesting, because when we went to China and actually signed the deal, we were told that they thought they'd get expedited approval. And then our President kind of lofted in some tariffs. So that's kind of changed things a little bit. We still think it's going to be approved. Think it's going to take a little bit longer, as everything kind of gets worked out around tariffs. But we believe in the next 60 days they'll receive approval. And our understanding is, there's going to be three or four that will receive it. And they're certainly in the top three or four.

Right. Great. I guess maybe if I can switch gears a little bit to the simplification. And just dig a little bit in terms of, Kelcy, maybe what you mentioned about not viewing the C-Corp as the winning strategy right now. I wonder, just one angle on that, with all the FERC action lately, there's been a real seeming comeback to C-Corp trend in the industry. So how does that – how do you factor that in? And how do you still end up sort of with a more simple ETE, ETP strategy?

Yeah, well, fundamentally, I just don't – it's hard. You start with a problem. And you identify the knowns and you solve for the unknowns. And one of the knowns here is, you pay taxes twice. So you're disadvantaged in a C-Corp structure. What is the advantage? Well, there's many advantages of being in a C-Corp, including a broader market that you could offer your equity to. That's the part that we are really studying hard. If it appears that when you weigh in those factors, when you weigh in the tax drain that you'd ultimately have, not just the first couple years, as many partnerships state. I mean a lot goes on past two years. You got to think about it long term. When we weigh all those in, it's right now, I don't like the answers we're getting. But again this is something that Tom Long, Brad Whitehurst, Tom Mason, many others have – they – this is something that every day in our office we are modeling and looking at every alternative, as you might expect. We have banks that are doing that for us as well, unsolicited by the way. And so we're not absolutely punting on a C-Corp structure. We're just saying at this time if we had to pull the trigger today, it would be a more simple type structure of E buying P [ETE buying ETP].

Okay. Thanks, thanks for that additional color. Then just one last one for me. Volumes on Tiger out of the Haynesville, really got a nice pop. Can that continue to grow there? Do you expect a continued volume strength there?

Yeah, absolutely. Some of our biggest shippers have called recently and asked, how much capacity is available and at what rates it will be? So as you know, forward haul, we sold that out for term, a lot of that. But we are looking at volume growth, significant volume growth in the Haynesville both with a desire to go east on Tiger and a desire to come west back into Texas.

Okay. Thanks for the answers.

Thank you. Our next question comes from the line of Jean Ann Salisbury with AllianceBernstein. Please proceed with your question.

Hi, good morning. How much Lone Star NGL capacity will be removed from doing the diesel project that you mentioned on the call?

How much Lone Star capacity would be removed – I'm sorry. Could you ask that again? I'm sorry.

You said that you were doing a conversion, maybe I misunderstood, but to do the diesel project on Lone Star. Does that mean that some Lone Star NGL capacity is going away?

Yeah, I'm sorry, I didn't hear diesel. No, the 12-inch pipeline that we're very excited for finding a purpose with in the open season is going exceptionally well. That's a project that we – when we built the 24-inch across Texas, the 24- and 30-inch, we idled the 12-inch pipe. We've continued to look for uses for that pipe, because it's in great shape, and we can use it for any number of commodities. We decided to put it into diesel service. So that's an idle pipe. It's creating no revenue that we hope a year from now is creating significant revenue.

Great. That's helpful. Thank you. I believe on the last call you mentioned something that Energy Transfer was marketing some of the Lake Charles cargos. Did I hear that right? And does that mean that Shell has paused on marketing them at the moment?

On the LNG fronts...

Yes.

Yeah. This is Tom Mason. We're continuing to work with Shell, and we're not marketing yet. I mean in terms of we're in the marketing process, if that's what you're asking. But yes, we're very excited about the project. We have an MOU as you know with Kogas and Shell. We're continuing to work with them. As I think you know, the market dynamics are shifting.

Yeah.

The studies have shown that the supply and demand lines will cross in the – beginning in 2023 and 2024, there'll – should be a shortage in long term LNG supply, as compared to projected demand over the next 10 to 15 years. So if you think about the construction time of four years or so to build a project like this, we're really in the right position now over the next 12 months to seriously market the project. And we had a team that was over in Korea and China two weeks ago. And we had a very positive response to a project that they liked that we've got two really good partners. Kogas is the second largest importer of LNG in the world, and Shell is the largest worldwide marketer of LNG. So we think our project is going to be very cost competitive. And it's just primed to really commence the move forward of the marketing in earnest. So we're very excited about it.

Really helpful. And then one last quick one. Is there any customer walkaway or renegotiation point in 2018 for Mariner East 2, if it's not in service by any certain date?

Yeah. We typically don't get into the kind of heart for competitive reasons of what our contracts say.

Okay. Cool. Well, thank you very much for the time.

You bet.

Thank you. Our next question comes from the line of Eric Genco with Citi. Please proceed with your question.

Hi, good morning. I just want to come back to the NuStar issue for a quick minute. I think you said in your comments that you weren't interested in sort of taking on a hostile sort of situation. But I thought I read somewhere in their filings that you had expressed an interest in doing the deal without support of their major shareholder. So I guess my couple questions would be, also I guess a few months ago, we had asked and talked about your appetite for deals, unless the perfect opportunity fell in your lap. So I was just trying to better understand that. And is there something I'm missing in terms of, would a hostile deal still be on the table somewhere? And what kind of comments can you give us on that front?

No. No. A hostile deal would not be on the table. What we did in our letter, our subsequent letter, that was a follow-up to a letter we received from NuStar, stating that we had asked for support of a major shareholder and – in our letter. And so we sent a letter back clarifying that that would not be required. That this was open for all the unitholders to decide, if in fact they chose this alternative. But I want to just emphasize we – and we've made this clear to NuStar management as well. Again, we will not be pursuing any kind of hostile action on NuStar.

Okay. And then I guess one other one. And maybe this is just kind of taking a step back overall. But we've talked in the past about sort of the persistent discount that some of the – that ETP in particular has kind of received in the market. And we had done a report a while back that was – that on corporate governance and seeing a pretty strong correlation to a handful of metrics. And the top three or four things that kind of generally push for better performance of the units were, no IDRs, a total shareholder return metric tied in incentive compensation, return on capital targets rather than EBITDA growth, and the ability to vote the board. I think your comments on the potential collapse and how that might look, obviously that's a huge thing and thank you for those. But I was just curious, is there any sort of interest or thought about addressing some of these issues? Or maybe adjusting corporate governance going forward, if the discount persists?

Yeah. On the compensation you referred to, yes, we have our Head of HR that is reviewing that now. Return on capital, all these things are being examined. We're studying what other people are doing. And I think it's safe to say that we will be modifying our compensation to our management. On the government issue, absolutely not. Under no circumstances ever – this will not be a wishy-washy answer – you will not see our governance change.

Thank you so much. I appreciate the clarification.

Thank you.

Thank you. Our next question comes from the line of Keith Stanley with Wolfe Research. Please proceed with your question.

Hi, good morning. And sorry to beat a dead horse on simplification. But do you – under the structure you're seeing as more likely with ETE buying ETP, do you see it as more difficult to get the rating agencies to upgrade ETE to investment grade if it's structured that way? Or is that different than if went the other way, and you just had to maintain investment grade ratings at ETP?

And listen, this is Tom. It's probably a little bit early to give you a definitive answer on that. But I'll go ahead and give you the – at least give you my opinion here on this. Our opinion as we look at it here is that it's not. In other words, from a rating agency standpoint, going this path we feel like is probably the most favorable from a rating standpoint. Obviously, keep an investment grade rating, I know being repetitive on that, but that's obviously very, very important to us. So...

Okay. And then one quick one on the crude marketing. So crude marketing was up, I think it was $85 million year over year, and spreads were only a few dollars better if you look and compare the periods. Can we apply that type of ratio over the balance of the year in terms of looking at what the difference was in spreads and the magnitude of the uplift you saw in Q1? Or was there anything unusual in the quarter that led to results being that good?

This is Mackie. We typically, as you all know, don't give guidance. But let's just say that we're – we couldn't be more excited about where spreads have gone, where WTI and Midland have gone. And the widening of that basis, just almost historical widening of that basis, will certainly help improve our margins in the coming quarters.

Thank you.

Thank you. Our next question comes from the line of Ethan Bellamy with Baird. Please proceed with your question. Ethan Heyward Bellamy - Robert W. Baird & Co., Inc.: Hey, guys. How long do you expect the Permian differentials to remain wide? And relatedly, Kelcy, you said in the past that the industry always overbuilds. Is that likely to happen in the Permian in a few years, based on all the projects that are in development?

If we can find a person that can answer that question, we'll have a new probably CEO of our partnership. Yeah, I tell you, it's – who would've thought a year ago when there was a spread from Midland to Nederland of $0.25 that that would be some days as much as $12 to $14. And it's only going to exacerbate itself with the tremendous volume growth of crude in the Permian, Delaware the coming 12 months. So we don't know where it's going to go. As you can imagine, Greg Mills and his team and Jim Malott and Luke [Fletcher] and their teams are constantly analyzing with our financial people and doing all kind of studies on where do we think basis are going. Clearly, the market believes there's going to be a shortage of gas and crude space over the next two years. You see it in the basis. There are some that believe it could extend out five, six, seven years. By the time you get two years down the road, the volume has already grown to such a degree that it continues to be a problem. So as long as commodity prices stay up, we're excited about where the basis is now, where it will be for at least the next couple years. And who knows? But we certainly look at that daily and constantly and make decisions based on where we feel the basis will go.

And let me add, Mackie, just – he just answered a previous question about corporate governance. Ethan Heyward Bellamy - Robert W. Baird & Co., Inc.: Thanks. With a potential go-private transaction in the works at Boardwalk, do you have any interest there?

We have actually looked at that several times. We will continue to look at a go-private move. It never makes the cut. It doesn't – we just can't seem to make the math work. But those are some of the things that we're constantly analyzing. Ethan Heyward Bellamy - Robert W. Baird & Co., Inc.: Okay. And then lastly, should we expect a monetization of a portion of ME2 when it gets done?

Of ME2, I would say more likely than not – well, I'd say we continue to look at any opportunity that will – that's the best decision for our partnership for that asset and for our unitholders.

And Mackie let me add. We – it is safe to say that any monetization of ME2 would be a strategic partner. It would be somebody that would be bringing barrels to make that project more – a project more successful. So it would not be a financial partner at all, but rather strategic. Ethan Heyward Bellamy - Robert W. Baird & Co., Inc.: Thank you very much.

Thank you.

Thank you. Our next question comes – excuse me, our next question comes from the line of Chris Sighinolfi with Jefferies. Please proceed with your question.

Hey, guys. It's Corey filling in for Chris. Just one quick follow-up on the capacity for your crude acquisition remark. And maybe just if I can ask more directly, how much capacity do you have that is not hedged that you expect to benefit from, given the wide dips?

Yeah. This is Mackie again. We just typically do not answer those kind of questions. It varies from month to month and quarter to quarter kind of across the board. So we don't really disclose that. But Tom's already alluded that we made prudent decisions on hedging out some of the volume this year and into 2019. And we'll continue to evaluate that and do what we think makes the most sense for our partnership.

Got you. Okay. And then maybe just a follow-up on the Permian. Given that we expect production to keep rising from current levels, we're already tight capacity. What do we expect to happen in that basin to the extent that there's not at actually evacuation capacity right now? I believe that's what the market is telling us. What's the expectation for wells? Do you expect them to be shut in? Do you expect those trucks to evacuate?

Our understanding is a lot of the larger producers are out trying to acquire more trucks, trying to lock up more rail. So there certainly is a growing concern over at least the next year or two of crude outlets from that area as well as the gas outlets. So who knows? I think there's some in our group, on our gas side that believes there will be a time potentially in the next 6 to 12 months where there will be a no bid at Waha. In other words, nobody is buying gas, for say a weekend or something, just because there is no outlets. With gases shut in, of course oil will be impacted as well, because a lot of the gas is flowing just to produce the oil. So certainly there's some tough times probably coming if volumes continue to grow as they are now, as they're projected to grow. But we in the industry are doing everything we can to alleviate that as quick as we can.

Got you. Okay. And then maybe just one quick one on PE3. I know it's still in the process of ramping up. Can you quantify how much it ran in 1Q?

Of PE3?

Yes.

Well, we're – it was a couple hundred thousand a day. We're ramping that up. The largest customer on that ramps up again in November this year and in November of next year. In addition to that, we have approximately 50,000 barrels that will be going out for an open season in the very near future.

Okay. And then one last one for me. On ME2, any update to the contracts on the pipeline with respect to both NGL and refined products?

This is Mackie again. The update is, we just need to get it in. It's one of those things, build it and they will come. And once we're in and flowing, it is absolutely the most viable, the most profitable, the most efficient way to get propane and butane out of Eastern Ohio, West Virginia, and Western Pennsylvania. So we're very excited about what will come in addition to what we already have signed. But we need to get it flowing, and we're pushing hard to get there.

Understood. Thanks so much for the question – or for the answers to the questions, guys.

Thank you. Ladies and gentlemen, at this time, I would like to turn the floor back to Tom Long for closing comments.

All right. Well, listen, thanks again. Fantastic quarter across all of our segments. So clearly you can see the excitement in what we're seeing. Kudos to the entire team here on getting these projects, continue to ramp up, coming on. And we're very excited about the future, as you look out over the remainder of this year and where we're headed. So thank all of you once again for joining the call today. And we look forward to talking more with you.

Thank you. Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.