Ladies and gentlemen, thank you standing by. Welcome to the PAA and PAGP Second Quarter Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ryan Smith, Director of Investor Relations. Please go ahead.

Thanks, Kelsie [ph]. Good morning, and welcome to Plains All American Pipeline’s second quarter 2015 results conference call. The slide presentation for today’s call is available under the Investor Relations section of our website at www.plainsallamerican.com. During today’s call, we will provide forward-looking comments on PAA’s outlook for the future. Important factors which could cause actual results to differ material are included in our latest filings with the SEC. Today’s presentation will also include references to non-GAAP financial measures, such as adjusted EBITDA. A reconciliation of these non-GAAP financial measures to the most comparable GAAP financial measures can be found under the financial information tab of the Investor Relations section of our website. Today’s presentation will also include selected financial information of Plains GP Holdings, or PAGP. We do not intend to cover PAGP’s GAAP results separately from PAA’s. Instead, we have included the schedule in the Appendix to the slide presentation for today’s call that reconciles PAGP’s distributions received from PAA’s General Partner with the distributions paid to PAGP’s shareholders and a condensed consolidated balance sheet. Today’s call will be chaired by Greg Armstrong, Chairman and CEO. Also participating in the call are Harry Pefanis, President and COO; and Al Swanson, Executive Vice President and CFO. In addition to these gentlemen and myself we’ll have several other members of our senior management team present and available for the question-and-answer session. With that, I’ll turn the call over to Greg.

Thanks, Ryan. Good morning, and welcome to today’s call. The last three months have been fairly eventful. Since PAA’s last quarterly earnings call on May 6, PAA experienced two unrelated incidents that led to crude oil releases, held its Annual Investor Day and also announced several organizational changes. Additionally, oil prices have fluctuated and midstream equity valuations experience significant downward pressure. I will address the organizational changes, our thoughts on the impact of oil prices and equity market valuations, as well as our current thoughts on distribution guidance in my closing remarks. Before we dial in to the typical discussion of quarterly results, I want to first discuss the financial impacts of the two operating incidents. Regarding, the first of two incidents, on May 19 we experienced a crude oil release on Line 901 in Santa Barbara County. That resulted in a net $65 million contingency loss in PAA’s reported but unadjusted second quarter results. This loss is comprised of $257 million charge for actual and estimated total cost all set by an estimated $192 million insurance recovery. Our estimate of contingency loss includes actual and projected emergency response and cleanup cost, natural resource damage, certain third party claims settlements, as well as estimates for fines, penalties and certain legal fees. Actual cost incurred for these items through June 30, 2015 totaled approximately $100 million and the balance represents our current estimate of amounts to be incurred in the future. Obviously, this is just an estimate and while it is based on what we believe to be a reasonable set of assumptions our cost could vary from these estimates. I want to also like to note that our estimate of the contingency loss does not include lost revenues due to the continued shutdown of Line 901 and Line 903. We…

Thanks, Greg. During my portion of the call, I’ll review our second quarter operating results, compared to the mid-point of our [indiscernible] discuss the operational assumptions used to generally our third quarter guidance and provide an update to our 2015 capital program. As shown on Slide 5, adjusted segment profit for the Transportation segment was $256 million or approximately $8 million below the midpoint of our guidance. Tariff volumes of 4.5 million barrels per day were approximately 141,000 barrels per day below our guidance. We have lower volumes in our Permian Basin gathering pipeline primarily due to a slight delay in service state of new pipelines and connections. We have lower volumes on our major pipelines as an unplanned downtime with the connecting carrier and lower volume on our California pipeline assets due to both the Line 901 incident and refinery issues in Los Angeles area. Firstly, offsetting the impact and lower the forecasted volumes with lower operating cost. A portion of lower operating cost was volume related. However, the majority was time-related, and we expect to incur these costs later in the year. Adjusted segment profit per barrel was $0.62 which was in line with the mid-point of guidance. Adjusted segment profit for the Facility segment was $146 million, which was approximately $15 million above the mid-point of our guidance. Volumes of 126 million barrels of oil equivalent were slightly above the mid-point of our guidance. Adjusted segment profit per barrel was $0.39 or $0.04 per barrel above the mid-point of our guidance, and it was primarily due to higher than anticipated throughput and related fees at several of our terminals and lower operating cost. A portion of these lower operating costs was timing related and we expect to incur those costs later in the year. Adjusted segment profit…

Thanks, Harry. During my portion of the call, I will review our financing activities, capitalization and liquidity, as well as our guidance for the third quarter and full year of 2015. We do not have any financing activity in the quarter, from an equity perspective this was primarily attributed to the $1.1 billion of equity we’ve raised in the first quarter, which funded the majority of the equity component of our 2015 capital program. As a result, we do not issue any additional unit through our continuous offering program in the second quarter. Illustrated on Slide 9, PAA ended the second quarter with strong capitalization and liquidity and credit metrics that are consistent with our target. At June 30, 2015 PAA had a long-term debt to capitalization ratio of 51%, our long-term debt to adjusted EBITDA ratio of 4.0 times and $3.1 billion of committed liquidity. Slide 10 summarizes the information regarding our short-term debt hedged inventory in line with our quarter-end. Moving on to PAA’s guidance, which is summarized on Slide 11, we are forecasting midpoint adjusted EBITDA of $480 million and $2.275 billion for the third quarter and full year of 2015 respectively. Our guidance continues to assume that 2015 oil prices will average approximately $50 per barrel resulting in suppressed drilling activity throughout the year, and that 2015 exit rate for production will be below 2014 production exit rates. Our updated adjusted EBITDA guidance for the second half of 2015 contains a decrease of approximately $75 million from the guidance we provided in May, which is a net decrease of $50 million for the full year guidance after taking into consideration, our over performance in the second quarter. The main driver that the decrease are loss revenue associated with pipeline shutdown in California, as a result of the Line 901 incident, reduced volumes in cash flow in our rail activity due to the expectation that tighter margins we experienced in the second quarter, will continue to impact rail volumes for the remainder of the year. Higher operating expenses due to the shift in timing in some of our integrity spending, plus the cost related to the incident in Illinois, lower volumes on a couple of our pipelines, partially offset by the expectation that margins in our Supply & Logistics segment result will be better than previously forecasted. As a reminder, and as illustrated on Slide 12, our adjusted EBITDA profile is a U-shaped, reflecting the seasonality of our NGL business. Although this negatively impacts our distribution coverage ratio in the second and third quarter, this is expected and is consistent with the adjusted EBITDA profile contained in the 2015 guidance that we furnished in February. The direction of the illustration from our February call is depicted in the upper right section of the slide. For more detailed information on our 2015 guidance, please refer to the Form 8-K furnished yesterday. With that, I’ll turn the call back over to Greg.

Thanks, Al. As several matters to address in my closing remarks, including recent organizational editions and promotions, observations on crude oil market and equity market valuations and our current thoughts on distribution guidance. However, before I go any further, I want to take this opportunity to thank all the PAA’s employees for their continued focus on safety and execution of these past several months. Despite, incident related challenges and volatile market conditions, the entire team has worked well together to expand the PAA’s organic growth projects and execute PAA’s plans. I want to especially acknowledge and thank the employees and their families that have been directly and indirectly involved in responding to the two unfortunate operating incidents in California and Illinois. Both Harry and I were able to see firsthand the significant level of skill, commitment and professionalism that they demonstrated during some very challenging times and the unbelievably long days and nights that they worked under intense and stressful conditions for extended periods. Also, I want to recognize the rest of the team that has worked diligently behind the scenes to take on additional burdens and keep our asset base business on track. While the incidence of sales are regrettable, response from all of our employees has been truly impressive. With respect to PAA’s organization in mid-July we made several announcements, the first was Willie Chiang will be joining our executive management team as EVP and Chief Operating Officer for PAA’s U.S. Operating & Commercial Activities and will be reporting directly to Harry. Harry and I have worked closely with Willie in a number of capacities for several years and we are very pleased to have him join our team and look forward to really play an increasingly important role in the leadership of the organization over the next…

[Operator Instructions] Let’s see, our first question is from Steve Sherowski from Goldman. Please go ahead. Your line is open.

Hi, good morning. Just on a revised PAA distribution guidance, do you use similar revision for PAGP for 2015?

Steve, because of the fact that we issued units earlier in the year, on PAA, if you extrapolate that 6% out to PAGP, they’ll still come in about 21%, which is what we targeted for 2016 – sorry 2015.

Okay all right, great. And on your earlier comments when you talked about overbuilt and infrastructure impacting margins, is this primarily – I guess what segment is this primarily in, is this across the board and what basins are you seeing the more acute overbuilds?

It reflects two things, one, what we’re actually seeing, and what we’re anticipating to see because clearly, we’ve got some visibility in the projects that aren’t in service yet, but I would say in general it’s across the Board. There’s certain areas today because projects have been completed that are more intense, but when you combine those with the shipper pay commitments, for example, in the Permian today, Midland is training at $1 premium whereabouts to Cushing, you would normally expect that to be at the other way around. We think part of that is a combination of the excess capacity combined with the shipper pay commitments. But you have those also it currying in Eagle Ford and in the Rockies, as well. And some in the Eagle Ford we also have, in addition to sort of shipper pay, we have new facilities coming on that have commitments, as well.

Understood, thanks and just a final quick question. So your adjusted EBITDA guidance for, I know this is preliminary for 2016 and 2017, I guess what did you confidence in that step up in growth between 2016 and money 2017? Are there any projects in particular you would point to or is this just based on the assumption of our recovery in crude oil prices?

I would say the majority of it is based upon the projects that we see coming into service, many of which – as Steve have or backed by our commitments. And so, what we did is in our outlook, we reverted back to the baseline guidance for supply and logistics, which call it roughly $500 million to $550 million. And then the balance of that as we have been seeing and continue expect to see is growth in the facilities and transportation on a fee base. And in many cases we tried to take into account the competitive issues that we just talked about. We do have an expected market recovery in mid-to-late 16 that’s going to have volumes dip and then start to recover. But again in many cases, we’ve got commitments on those projects. So we feel pretty good about the 10% growth in 2016 and roughly 30% in 2017 over the 2015 levels.

Got you. Okay that is it for me, appreciate it, thanks.

Thank you.

Next question from Brian Zarahn from Barclays. Please go ahead. Your line is open.

Good morning.

Good morning, Brian.

I appreciate the preliminary guidance I know it’s earlier than you normally do it so just appreciate it in the context of the environment we are in. Just given the ramp a little bit more in 2017, can you maybe elaborate on your thoughts on distribution coverage during this time period and how you balance that with providing some level of growth. So how do you balance those two variables?

Yes, so again we certainly like the target back in the base level environment which is what we are including in those forecasts about 1.05% coverage is the minimum, and effectively, as we look out through 2016, which again will be – we are expecting to be challenging and so we are waffling quite candidly on whether there is going to be any distribution growth or whether it’s going to be modest. But we feel fairly robust, when you’re on the numbers on the 30% growth over current levels about returning back to something that is very respectable and attractive, the mid single-digits of growth in that area we’ve only did that with [indiscernible] being able to achieve the 105 coverage and growing.

Then on projects, given my price environment is turned back negative, probably we’ll see some more bankruptcies and smaller producers and how do you think about the counterparty risk on your base business and your projects obviously the bigger ones you’ve identified some of the demand pull counterparties but I guess from a higher level how do you think about counterparty risk in the next 12 to 18 months?

But to kind of responding to your question and then also one that’s kind of and implied in there is when we looked at the shipper pay commitments, we started to look at credit as an issue and who are counterparty is. We’ve also looked at what we think our competitors are issues are because to some extent, if some of the barrels that are being purchased away from the logical moves on our asset are going to one that’s not logical, but it makes sense because of shipper pay. We try to look through that to figure out whether those entities actually can honor their commitments and survive. We feel pretty good about the shipper pay commitments on our assets and counterparties that we have, whether they be demand pull, or production push. We’re not without some exposure to companies that are investor grade but most of ours really have quality investment grade commitments behind it. And so we feel the pretty good about that, and we tried to dial some, what I call friction into the mix. That says things don’t go perfect, and that we have that we have some challenges. I think what that also implies, I’m trying to kind of cover it in my very last comment, is we think that some of these areas where there has been excess logistics build that maybe based on commitments from other parties that don’t have higher credit quality that those could be acquisition opportunities for us and that we consolidate those nicely into our system and achieve operating efficiency. So that’s not built into our numbers, but we think that’s probably a little bit of an effective hedge against perhaps unknowns that aren’t built into our guidance.

Last one for me, and following-up on your comment. Even very patient on M&A, partially due to the very competitive environment that we have seen. Do you think we are finally in a place where you could see more opportunities like you just mentioned that would potentially provide some upside to your outlook.

I’m going to give you a qualified yes, the qualification is as long as the capital markets don’t continue to fund, irrational optimism, then, I think, the answer is yes, because, I think, when we run our analysis, we think there are companies and haven’t funded commitments that they don’t have on their balance sheet, but they are counted on the EBITDA and we think at some point in time those two have to be synced up. So that’s the capital markets will not continue to provide very cheap and fluid capital then, I think, there’s going to be some opportunities in there. And we – in many of those cases I bet Brian we bid on 20 to 30 acquisitions where we felt very good about wanting to own the assets and having synergies and in many cases we were out bid by 30%, 40% even 50%. Those assets are still good and they would still fit with us. But it’s a question whether those companies can extract the values that are implicit need to be in a 50% higher valuation that what we would place on them. Again, if they could raise money very cheaply, then they can – they push that issue out for a couple of years. So the answer is that’s come to a halt where I think we’re in great position to take advantage of our strong balance sheet and operating synergies that are fundamental to our business and give us a competitive advantage, wouldn’t you say, Harry?

Yes, I would. I mean, just still saying a little bit of – how valuations, but like Greg said as – as we advance in this market, we would expect to see opportunities. That makes sense for us.

Thanks for the color, guys.

Thank you.

Next question from Faisel Khan with Citigroup. Please go head. Your line is open.

Thanks. Good morning, it’s Faisel from Citi. Just going back to the sort of the shadow guidance for 2016, as you call it. The coverage ratio you talked about 1.05%, so is it fair to say that that’s the ratio you want to defend whatever the environment is for next year is that how we should look at it?

I would say that’s a very important consideration as we look through it. Faisel, if you go back again to what we try to do and quite candidly it did improved a bit the smartest thing we could have done, we know the coverage in 2015 would be sub one-to-one, and we targeted the 7% growth. But as we look through the 2017, we felt like we could maintain that growth through 2016 and 2017 based upon the environment assessment. And what we thought would be reduced capital availability across the sector which would stop some of the competitive issues that we are now facing.

Sure.

That turned out not to be the case. People funded throughout the dip from $100 oil to $45 oil, and then is it rally back towards $60, they even raised more capital. And so when we look at that, it makes growth in 2016 starting at the levels of 6% or 7%, very challenging to even maintain even a one-to-one. So that’s where we were at – it depends on what when we get to the end of the year and we look at what the environment looks like, whether we would choose to go the route of perhaps sub 105 and marginal distribution growth, or whether we simply pun it to 2017 where we have clear visibility to significant coverage and the ability to return back to something that’s in the mid single-digits. And a part of that issue is kind of capsulated I think in our appendix we put a slide in there that shows what we think is the biggest overhang right now on causing uncertainty about volume growth is inventory levels. And today’s results basically take that where we updated that slide today, we’re right on track, where we think we would have been. So, we’re expecting to end the year somewhere between 23 million barrels and 70 million barrels, excuse me, 80 million barrels above normal, that’s got to be worked off, we think that could make the first six months of 2016 difficult. And if that is, we’re probably looking to 2017 for the resumption of growth instead of 2016.

Okay. And then as I look at your sort of guidance going to the third quarter, that you guys put out on your 8-K, your lease gathering guidance sort of goes down about 2% from this quarter into the third quarter, what’s driving sort of that those lower volumes as you move into 3Q is it these inventory issues you’re talking about or is it one producer activity that’s driving that in your model.

There’s some seasonality that built, I think we look at Al’s chart and comments and but I think part of it is we’re also expecting to see volumes begin the rollover. And there is a lot of conflicting data. We all try to use and Im sure you do as well the EIA is a source of data but when you try to square up their weekly data with their monthly data, it doesn’t always pan out. We’re certainly starting in some areas to see volumes come in short of expectations of the producers. Part of that was going to be as they ship to pad drilling that causes lumps growth.

Okay.

But at the same time we think in certain areas we’re seeing TQM activity start to catch up to where – I would certainly say it is certainly flattening and probably starting to roll over.

Okay, I think, just to elaborate on that a little bit. I think it’s actually – it’s pretty flat between the second and third quarters what we’re seeing there is higher first quarter impacting the first six months.

Okay, it sounds, that you guys did $965 million in the second quarter and in your guidance for the third quarter was it $945 million. So that’s what I was just trying to iron out, but…

If we get it that close we’re real happy.

Okay.

That’s what the model spit out when we collect the information from the guys.

Got you.

And then its Greg mentioned we are allowing for some of the competitive pressures that he mentioned will effect the least side as well behind some of those T&Ds.

Okay, and then just going back to your comments on the financing, obviously you didn’t need the equity financing in the second quarter. It looks like your guidance also assumes some unit issuances going on at the end of year. I’m just trying to understand that is do you still need to issue equity going into the end of the year or are you all trued up for now?

Certainly we are always trying to stay well-funded and in a position where an opportunity comes up we don’t have to worry about that we need capital. I think we put very modest amount of funding in their using basically APM. If we’re in a weak market we don’t have to try to force our way into it. We think that’s probably in contrast to some of our competitors, who probably in a situation where they’re going to need to meet obligations. The funding that we did in the first part of the year that was again one of opportunity we looked at and say gosh, we need this equity, just go and get it now, I think its bearing out. So we will monitor that and the markets are favorable relative to the cost of capital and the projects that we are funding. We are certainly not going to restrain ourselves and go zero.

Sure.

But we are not going to try and force our way into the market either.

Okay. And on the Canadian propane prices, NGL prices, obviously, it’s been fairly weak in the last quarter. How did that impact you guys? And how does that impact you guys going forward?

It’s basically a margin business, so as long as the volumes are there we’re not really that sensitive to the outlay price of propane. So weaker propane prices actually great, better storage economics.

Okay. It makes sense. And then in the quarter, your cost in the transportation side were up substantially over the last year. I know you brought some new assets in the service, I’m trying to understand, how much were the California, Illinois incidences in that $209 million sort of cost that you have in transportation for the quarter.

Well, the California, we factored that out, and the Illinois didn’t happen until the third quarter. So should be much chatter in there. Certainly, we had some lower volumes in California, which if you looking on the per unit basis, it will be a little bit influenced by that.

Yes. Yes, I think you probably are looking at may be the reported number which the $65 million in it.

Yes. Okay. Got you. Okay, it makes sense. Thank you, appreciate the time.

Thank you, Faisel.

Next question from Jeremy Tonet from JPMorgan. Please go ahead.

Good morning.

Good morning, Jeremy.

Just want to clarify a little bit more on the overcapacity that you guys saw in certain places. It seems like you know some refineries have talking about Delaware discounts to Midland and so – Midland prices, so I was wondering if you could talk a bit more that gathering our mainline overcapacity when it comes to the Permian in particular.

Well, on the Permian, the Delaware basin infrastructure shouldn’t build out yet, so you’re still seeing some discounts because of logistical constraints. We see a lot of that being lifted starting in the third quarter. We’ve got a number of pipeline projects that go into service and really debottleneck a lot of the Midland basin. There might be a little bit of a quality discount – some of the higher – provide volumes, but we haven’t seen much of that in our business. But I think and that’s, if you looked at some of our comments we see margins little tighter, because in areas, where you had pipeline constraints and Delaware is probably the biggest area where we see that being relieved for second half of the year.

And we’ve got several projects that, I think, are becoming mainstream during the third quarter.

Yes.

Yes.

Yes. So we are expecting that to lighten up quite a bit.

Okay, and thanks for that. And you did touch on the big here, but I’m just wondering, if you might talk a bit more, as far as mid-2016 recovery that you guys are currently looking for. What do you think are the key risk to that being earlier or later that being the inflection point?

Well, part of its going to depend how quickly we can roll this inventory off, it has been building we’ve got quite a bit of turnarounds. If you look at our chart, we are expecting a build to start happening in October, November – lot of turnarounds coming. The most quick solution to lower the inventory build is to stop importing more barrels. So part of the journey is how aggressive the mid eastern companies are – countries are in trying to price these barrels into our market. So far they have been pretty aggressive, I think, due [ph] to-date, even though we’ve had high inventory levels and low prices, total imports into the U.S. have been only down about 120,000 and 130,000 barrels a day came today. That’s pretty amazing, when you think about it, especially considering that Canada had some about 200,000 barrels a day, reduced imports in the second quarter over the first quarter, because of the Canadian fires. So I’d say whatever activities of foreign countries with respect to trying to push barrels into our market will be having impact on that. The other one is just how U.S. producers collectively act over the next six months to nine months, maybe 12 months. I refer to it if we stayed on the 21 day diet, we would have been fine. For about – looks like 10 days to 15 days into that, people started picking up rigs and saying, let us go back after the game. And that turns that into 45 days or 60 days [indiscernible]. So I think that could extend it. Candidly, we had picked June 30 as kind of our inflection, June 30, 2016 is our point where we though. At that point, we pick an over and under-arm prices for WTA probably in the neighborhood of $70.00. Partly because we thought the inventory situation would clean up by then or if it didn’t we would see visibility for it to clean up, which means you had continued production rollover in the U.S. and you’ve had some concession from the Middle Eastern companies that they have caused enough pain to quit forcing barrels into complicate that. I mean there are so many variables in it Jeremy. If Iran comes on and they don’t make room for them, it could get hopefully a little bit longer. Again, that would probably hurt our near-term outlook but probably improve the overall long-term because of the rationalization would have to happen in competitors that we have that have marginal outlooks in that type of environment. So it’s – we think six times kind of the year transition, we think we picked right at the mid-to-late part of the recovery, but could it be little bit later certainly could depending on what – it’s going on overseas.

Great, thanks. And then with that backdrop, as far as CapEx spend is concerned, are you guys looking to kind of rein in at this point or the projects you have to have significant commercial support that it still makes sense to go forward?

Yes, all the projects that we have that are, obviously, in the hopper this year and carry over into next year, are pretty solid projects and that’s really what provides the uplift in 2017. In many, many cases they are backed by commitments from credit quality and creditworthy companies . And so don’t see much change in that. Certainly with respect to new projects. You are going to take a real long look at making sure that you’ve got real strong counterparties if they are willing to make a commitment at all, or you’ve got real high conviction, as we have for example in the Delaware where we have gone in and built some pipeline projects that we could connect our existing ones to gave us a competitive advantage because we said that’s going to be the last place in the country that rigs are going to be laid down. And so we are going to be the guys there to pick the volumes up. Near-term, Jeremy, that causes some pressure on the returns, but we’re building assets that have 70 year life and that’s the business that we’re in. So we are willing to take probably skinnier returns near-term with the longer, because of lower volumes but knowing that we think the volumes it’s not a question if the win – we’re in a position to be able to do that because of our balance sheet. And five years from now when we look back, we will have a better company because we went ahead and pushed a project that didn’t have maybe all of the commitments that you’d like to have but because it’s part of our system, we could do economically we think that the challenge is going to be with the One Trick Pony company that are trying to build the project out there that they really don’t have the scale to be able to take advantage of it. So we feel pretty good about our projects if your question is are we going to go out and try to build a lot more projects without commitments the answer is no. Are there areas where we would do that, they are very limited , and there are some.

Got you, thanks for that. And then one last one, as far as M&A is concerned , with the bid ask spread, I’m just wondering – access to capital being tighter with cost of equity being higher for the space, do see that kind of widening out the spread they or any thoughts on that?

Well, yes, I mean, what we hope is that expectations for sales come down, or the forced sales will cause more rational prices. Clearly, we’re not the only ones after looking to buy and in position to. But if the capital markets aren’t open to the competitors that don’t have an existing base, and their cost of capital at the margin mean is higher than ours, I think, we’re we’re just really well-positioned. So we certainly expect to be more active in acquisitions over next 24 months, and we have been in the last 24 months.

Great. Thanks for that. That’s it from me.

Thank you.

Next question is from Gabe Moreen from BofA Merrill Lynch. Please go ahead. Your line is open.

Hey, good morning, everyone. Most of my questions have been asked. I suppose wondering have you thought about other mystery means kind of discussed cost cuts and belt tightening, is that something that’s being contemplated here or that maybe in your guidance?

I mean, we always try to stay prudent, Gabe, on that. I mean, we are more focused in on building out over the long-term. So we wouldn’t want to cut costs and for go opportunities that cause an interim benefit but a long-term detriment. And so that’s not our focus, we’re not in a situation where we have to tighten our belt just to stay alive and we’re not trying to defend a distribution growth level that we could achieve on the short-time with cost cuts that don’t make sense long-term, but achieve that for short-term goal. Again, we’ll be looking at things clearly when you have skinnier results, you have skinnier bonuses, if any bonuses, that type of thing will be looking at, but we’re not looking to start cutting heads just so that we can say we can make a distribution target in the near-term and then realize that we sacrificed our long-term business plan.

Understood. And then I guess in terms of the balance sheet, clearly you are pushing a little in terms of about 4X of EBITDA. You had some hard-fought battles that you wanted to see the industries getting upgraded. But just wondering in terms of whether you’d be willing to sacrifice or a not or to [ph] within investment grade to take that leverage up this equity markets kind of continue to be so choppy?

Wouldn’t want to go there right now, I think, one of the things you should look at is yes we are on the upper end of our range but we are there because this is a very weak market. The reason you have a range is so that you can basically say I want to operate within this through the cycle. The fact that we are at 4.0 and what maybe one of the worst parts of the cycle when we looked around at our peers , many of them are well above four and in some cases above five, and I think, they are going to be the ones that are under more pressure than we are. If your question is will we go ahead and lever up just because the equity marks weren’t available. That’s hard to – how good is the opportunity, but not just to philosophically to say we’ll do it just because equity costs are higher. We’re going to look at it from a total cost of capital and a total return on the projects. I think the market has a way of self-discipline when capital markets aren’t available to everybody. That hasn’t been the case recently, and so I think we’re kind of looking forward to where math matters.

And Gabe, I would add I mean the growth that is embedded in the 2016 and 2017. A lot of that capital has been funded already. So you see a natural deleveraging based on that growth i.e. the 30% Greg mentioned on the call 2017 over 2015.

Got it. All right, thanks guys.

Thank you.

Next question from Sunil Sibal from Global. Please go ahead. Your line is open.

Hi, good morning guys and thanks for detailed color. Many of my questions have been asked. But just one quick one. When you think about the M&A situation and also a situation like the costs associated with the crude still. I was wondering you know any particular support that the general partner PAGP can provide in situations like this to kind of mitigate the impact on the LP guys?

That’s not been part of the discussion. At all today I mean clearly the GP IDR modifications have been really in connection with opportunities that either could not achieve in the near-term accretion that without was necessary to support the capital raise or that was necessary for a long-term strategic move that had a tight cost of capital – a tight spread relative to our cost of capital. We will certainly look at those opportunities, but the typical operating cycle is not part of that what we would incorporate into that discussion.

All right. That’s helpful. That’s all I had. Thanks.

Thank you.

There are no further questions at this time.

All right. I want to thank everybody for dialing into the call. We look forward to updating you on our results for the third quarter in November. And again, thanks for dialing in.