Genesis GEL Q4 2025 Earnings Call Transcript

Date

Thursday, Feb. 12, 2026 at 10 a.m. ET

Call participants

• Chief Executive Officer — Grant E. Sims
• Chief Financial Officer — Kristen Jesulaitis
• Chief Legal Officer — Ryan Sims
• President and Chief Commercial Officer — Ryan Sims
• Chief Accounting Officer — Louis Niccol
• Director of Investor Relations — Dwayne R. Morley

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Takeaways

• Adjusted EBITDA guidance -- Management expects sequential growth in adjusted EBITDA of plus or minus 15% to 20% over normalized 2025 adjusted EBITDA of $500 million to $510 million, with the higher end attainable depending on timing of offshore developments.
• Liquidity position -- Genesis Energy (NYSE:GEL) exited the year with effectively zero outstanding under its $800 million senior secured revolving credit facility, after accounting for cash on hand.
• Distribution increase -- The Board raised the quarterly common unit distribution to $0.18 per unit, representing a 9.1% increase year over year.
• Preferred units repurchase -- Management opportunistically purchased an additional $25 million of corporate preferred units in a privately negotiated transaction last week.
• Offshore segment performance -- Offshore pipeline transportation segment margin increased approximately 19% sequentially, and system volumes rose about 16% versus the third quarter, with segment margin up roughly 57% and volumes up about 28% from the first quarter.
• Offshore system activity -- Steady base volumes, higher-than-commitment contributions from Shenandoah, and continued ramp-up from Salamanca supported quarterly performance; Salamanca's first three wells are ramping, and a fourth is scheduled for completion next quarter.
• Marine transportation segment -- Segment returned to normalized operating performance, with market conditions stabilizing and refinery runs of heavy crudes increasing; higher maintenance is expected in 2026 due to a planned dry docking schedule affecting four of nine offshore vessels.
• Maintenance capital expenditure -- Guidance calls for a $15 million to $20 million increase in 2026 maintenance capital expenditures, mainly attributable to higher marine vessel dry docking activity.
• Leverage ratio -- The company’s bank-calculated leverage ratio at year-end was 5.1; management targets a long-term ratio near 4 and notes improving trajectory from both debt reduction and increasing EBITDA.
• Legacy wells and development visibility -- Eight additional development or tieback wells are planned at legacy production facilities over the next 12 to 15 months, expected to boost long-term throughput.

Summary

Genesis Energy (NYSE:GEL) is positioned to benefit from deepwater Gulf of Mexico growth, with management projecting significant sequential increases in adjusted EBITDA for 2026. The company outlined a disciplined capital allocation strategy, including active debt reduction, an opportunistic preferred unit repurchase, and a year-over-year cash distribution increase. The offshore pipeline segment saw volume and margin improvements, driven by higher production at both Shenandoah and Salamanca, with multiple planned wells offering further upside potential. Marine transportation conditions normalized, but heavier than usual 2026 maintenance requirements are expected to temporarily impact vessel availability. Management anticipates additional tiebacks and development wells at legacy assets, indicating sustained throughput growth beyond the current year.

• CEO Sims highlighted the recent BOEM Big Beautiful Gulf One lease auction, which allocated 1,000,000 acres, 65% in the Central Gulf, underpinning the company’s conviction in long-term regional activity.
• Planned producer turnarounds in 2026 could generate more pronounced financial swings than in the prior year, though these are characterized as typical and primarily timing-related.
• Harbor Energy’s acquisition of LLOG, a key customer whose volumes comprise 70% transported on Genesis Energy’s pipelines, may double production by 2028, potentially benefiting throughput and margins.
• Marine segment day rates may rise in 2026 and 2027 due to near full inland barge utilization, and increased heavy crude volumes from the Gulf, Venezuela, and other regions.
• Refinery services may see output growth if heavy sour crudes continue to return, supporting expectations to sell all produced sodium hydrosulfide.

Industry glossary

• CHOPS Pipeline: A 64% owned and operated offshore crude oil pipeline system of Genesis Energy, located in the Gulf of Mexico.
• Poseidon Pipeline: Another 64% owned and operated major crude oil pipeline system serving the Gulf of Mexico developed fields for Genesis Energy.
• Shenandoah FPU: Shenandoah floating production unit; a deepwater production platform contributing major volumes to Genesis Energy's offshore segments.
• Salamanca production facility: An offshore development whose ramping volumes have contributed to Genesis Energy's throughput growth.
• NaHS (sodium hydrosulfide): A chemical used in mining and industrial applications, produced by Genesis Energy as part of its refinery services business.
• BBG-1 (Big Beautiful Gulf One): Bureau of Ocean Energy Management offshore lease sale, significant for new acreage and potential future throughput affecting Genesis Energy.
• Dry docking: Scheduled maintenance where marine vessels are taken out of service for inspection, repair, or regulatory compliance, impacting operational availability.

Full Conference Call Transcript

Dwayne R. Morley: Genesis Energy, L.P. has three business segments. The offshore pipeline transportation segment is engaged in providing the critical infrastructure to move oil produced from the long life of world class reservoirs in the deepwater Gulf of Mexico to onshore refining centers. The marine transportation segment is engaged in the maritime transportation of primarily refined petroleum products. The onshore transportation and services segment is engaged in the transportation, handling, blending, storage, and supply of energy products, including crude oil and refined products, primarily around refining centers, as well as the processing of sour gas streams to remove sulfur at refining operations. Genesis Energy, L.P.’s operations are primarily located in the Gulf Coast states and the Gulf of Mexico.

During this conference call, management may be making forward-looking statements within the meanings of the Securities Act of 1933 and the Securities Exchange Act of 1934. The law provides safe harbor protection to encourage companies to provide forward-looking information. Genesis Energy, L.P. intends to avail itself of those safe harbor provisions and directs you to its most recently filed and future filings with the Securities and Exchange Commission. We also encourage you to visit our website at genesisenergy.com, where a copy of the press release we issued this morning is located. The press release also presents a reconciliation of non-GAAP financial measures to the most comparable GAAP financial measures. At this time, I would like to introduce Grant E.

Sims, CEO of Genesis Energy, L.P., who will be joined by Kristen Jesulaitis, Chief Financial Officer, and Chief Legal Officer Ryan Sims, President and Chief Commercial Officer, and Louis Niccol, Chief Accounting Officer. I will now turn the call over to Grant.

Grant E. Sims: Thanks, Dwayne, and good morning to everyone. Thanks for listening to the call. As noted in our earnings release this morning, our fourth quarter results came in slightly ahead of our internal expectations, as our offshore pipeline transportation segment saw strong growth driven by steady base volumes, a full quarter of volumes from Shenandoah well above its minimum volume commitment, along with continued ramping volumes from Salamanca. Our marine transportation segment returned to a more normalized level of operating performance as our refinery customers increased runs of heavy crude oil which drove higher volumes in their intermediate black oil available for transport.

In addition, the transitory market conditions and supply pressures that impacted our Bluewater fleet last quarter now appear to be behind us.

Grant E. Sims: All of which should provide for a constructive outlook for our marine segments as we look ahead. The strategic actions we took in 2025 combined with the strong operating performance from our underlying businesses, new offshore volumes enabled us to exit the year with effectively zero outstanding under our $800,000,000 senior secured revolving credit facility at the end of the year after giving effect to cash on hand. With ample liquidity, and an increasingly clear line of sight ahead of us, the Board made the decision to increase our quarterly common unit distribution to $0.18 per unit, representing a 9.1% increase year over year.

Furthermore, just last week, we opportunistically purchased an additional $25,000,000 of our corporate preferred units in a privately negotiated transaction. Taken together, these actions demonstrate our disciplined approach to capital allocation. As we look ahead to 2026, assuming our other businesses perform as expected, the Genesis Energy, L.P. story at this point is largely a deepwater Gulf of Mexico growth story.

Grant E. Sims: Based on our ongoing discussions with our offshore producer customers, and the conversations we have with them during their year-end budgeting cycle, we have been provided with lots of information including expected production volumes for 2026 and beyond, along with current and future expected drilling schedules. We were also notified of certain planned and routine turnarounds they have scheduled for 2026, a couple of which will take place at production facilities where we handle the hydrocarbon molecules more than once and that is going to be more financially impactful. While we benefited from no significant turnarounds in 2025, these are absolutely normal and customary and in some cases unfortunately, they can last upwards for 30 to 45 days each.

These are their plans. And as I believe everyone can appreciate, we ultimately do not control our customers' operations, nor the precise timing of them drilling, completing, and bringing new high impact wells online. We fully understand the plans and schedules of offshore change. Deepwater drillship schedules change, weather throughout the year changes. Planned turnarounds can be delayed, or extended for a variety of reasons outside our control.

What is important though is that despite all of this, and a heavier than normal marine dry docking schedule, which we will go into more detail in 2026, we still reasonably expect to deliver sequential growth in adjusted EBITDA of plus or minus 15% to 20% over our normalized 2025 adjusted EBITDA of $500,000,000 to $510,000,000. We obviously hope to exceed the top end of that range in 2026. And quite frankly, we could easily make a case for such an outcome.

To the extent our actual results differ in any significant way, we would simply view that as more of a timing issue with ultimate cash flows just sliding to the right rather than any fundamental degradation in the long-term cash flows expected from the fields contracted to access our offshore infrastructure. Even if certain offshore activity slips to the right, 2027 should be meaningfully stronger than 2026. Based upon our producer customers' current development plans that we have seen, and as a result, the opportunities available to us in 2026 become even more compelling in 2027 and beyond. With that, I will go into a little more detail on each of our business segments.

As noted in our earnings release, our offshore pipeline transportation segment delivered another quarter of strong sequential growth, with both segment margin and total volumes increasing across our CHOPS and Poseidon pipelines, rising approximately 19% and 16% respectively versus the third quarter, marking the third consecutive quarter of sequential improvement. In fact, from the first quarter of 2025, segment margin increased by roughly 57% with total volumes across both systems growing approximately 28%. These results were driven by steady volumes from our legacy fields, strong contributions from Shenandoah, and the continued ramp up in volumes from Salamanca.

During the quarter, volumes from the Shenandoah FPU remained steady as the facility continued to operate at or near its 100,000 barrel per day target rate from four Phase One wells. At Salamanca, volumes continued to ramp from its first three wells, and we remain encouraged by both reservoir performance and the remaining development plans. An additional well at Salamanca is scheduled for completion in the second quarter with the potential for a fifth well as early as the fourth quarter. Together, these wells are expected to result in total production of 50,000 to 60,000 barrels per day from the Salamanca production facility.

Looking ahead, we expect the Monument development, a two-well subsea tieback to Shenandoah, to be completed and flowing through our facilities by late this year, certainly early 2027. Following Monument, a fifth well at Shenandoah is scheduled to be drilled, which could increase total throughput across Shenandoah FPU to as much as 120 KBD with potential upside of an additional 10,000 to 20,000 barrels per day in early 2027. In addition to the five development wells between Salamanca and Shenandoah, we are aware of at least eight additional development or subsea tieback wells at legacy production facilities served exclusively by our pipeline infrastructure that are planned to be drilled over the next 12 to 15 months.

Taken together, this activity underscores that producers in the Gulf of Mexico continue to prioritize long-cycle, high-return deepwater developments. We remain actively engaged in commercial discussions around future tieback and development opportunities that could access our offshore systems as projects are sanctioned. Given the competitive economics and long planning cycles associated with these developments, we do not expect near-term commodity price volatility to materially impact offshore development activity in the Gulf. As we look beyond 2026, we would be remiss not to highlight the results of BOEM's most recent lease sale Big Beautiful Gulf One, or BBG-1, which was held on 12/10/2025.

The outcome of this sale further reinforces our view, and that of the broader upstream industry, that there remains strong long-term interest in the Central Gulf of Mexico. BBG-1 generated over $300,000,000 in high bids for 181 tracks covering approximately 1,000,000 acres in federal waters, with roughly 65% of the acreage located in the Central Gulf of Mexico. When combined with Lease Sales 259 and 261, which took place in March 2023 respectively, more than 4,400,000 acres have been leased in federal Gulf waters over the past three years, approximately 2,400,000 acres or 53% of the total of which are located in the Central Gulf where our offshore pipeline infrastructure is located and has existing capacity.

The breadth of current development activity, the scale of recent lease sales, and the long-cycle nature of deepwater investment all underscore our conviction that the Gulf of Mexico remains a world-class basin with decades and decades of existing inventory. We believe Genesis Energy, L.P. is uniquely positioned as the only truly independent third-party provider of crude oil pipeline logistics in the region, offering producers flow assurance and downstream market optionality along the Gulf Coast. Our differentiated asset footprint, deep customer relationships, and decades of existing and future inventory ahead position us for continued growth and decades and decades of opportunity in this world-class basin.

Grant E. Sims: Our marine transportation segment returned to a more normalized level of operating performance during the quarter. Market conditions across both our brown water and blue water fleets stabilized as refinery runs of heavy crudes increased and broader equipment utilization improved. Demand for our inland or brown water fleet recovered as Gulf Coast refiners responded to the widening of light-to-heavy differentials and increased runs of heavy crude oil, which allowed the supply of intermediate black oil needing to be transported to return to more normalized levels.

Looking ahead, we remain optimistic that our marine transportation segment could benefit over time from additional volumes produced in the Gulf of Mexico and incremental crude imports into the Gulf Coast, including volumes from Canada, the resumption of exports from Kirkuk, Iraq, and the potential for additional volumes from Venezuela should they all materialize. At a minimum, all of these additional heavy or medium sour volumes showing up on the Gulf Coast should cause heavy-to-sour differentials to continue to widen, providing refiners the incentive to process increasing volumes of heavier crudes.

To the extent these additional heavy volumes come to fruition, this should result in additional intermediate refined products volumes that need to be kept heated and moved from one refinery location to another, which should drive demand for our inland heater barges, providing a constructive backdrop for increasing rates as we move through the year and into next year. Recent commentary from Gulf Coast refiners would reaffirm they are in fact starting to see additional heavy sour discounts as additional volumes arrive on the Gulf Coast. To quote from Valero's recent earnings call, looking at differentials not only with Venezuela, but we have had several beneficial factors that have occurred to kind of help move this market weak.

After last year with discounts fairly tight, most of these market moves are making differentials increasingly favorable for refiners, with high complexity refiners such as ours pushing to maximize heavy crude processing in the system going forward with better differentials. Meanwhile, conditions in our Bluewater fleet have normalized as incremental capacity that migrated from the West Coast to the Gulf Coast and Mid-Atlantic trade lanes has largely been absorbed by the market. As we noted in our earnings release, 2026 is expected to be a higher maintenance year for our Bluewater fleet with four of our nine offshore vessels scheduled to undergo regulatory dry dockings in the first half of the year.

These planned shipyard periods will temporarily reduce vessel availability and may mute the near-term benefit of any improvement in day rates. Importantly, however, we expect these vessels to reenter the market against a more constructive backdrop and be well positioned to recontract at day rates that are consistent with or modestly above their current levels when they exit the shipyard. In addition, the American Phoenix remains under contract through early 2027. Based upon prevailing market rates for comparable assets, we would expect the American Phoenix to recontract at a higher day rate than our current charter when that contract expires. Overall, we remain confident in the long-term fundamentals of the marine transportation sector.

With effectively zero net new supply of our classes of Jones Act vessels, and the high cost and long lead times required to construct new equipment, the market remains structurally tight. As demand continues to improve across both our brown and blue water fleets, we expect our marine transportation segment to deliver stable to modestly growing contributions in the years ahead.

Grant E. Sims: Our onshore transportation and services segment performed in line with our expectations during the quarter. Throughput volumes continued to increase across both our Texas and Raceland terminals and pipelines as new offshore volumes ramped and moved onshore through our system. Our legacy refinery services business also delivered results largely consistent with our expectations. As we have mentioned in the past, our refinery services business has faced certain structural headwinds over the past several years. Specifically, we have been supply constrained in part because refineries moved to run more light sweet crudes as a result of the shale revolution over the last 10 to 15 years.

As shale production is peaking, and/or the gas-to-oil ratios are increasing from the shale plays, and as the heavy sours we mentioned above are returning to the Gulf Coast, we believe we should have the opportunity to make more NaHS, sodium hydrosulfide, at several of our existing facilities in future periods. We, generally speaking, can sell every ton we make, and we look forward to restoring some of our supply flexibilities. As our financial performance continues to strengthen over the coming years, and we generate increasing amounts of free cash flow, we will continue to reduce debt in absolute terms, redeem our high-cost corporate preferred securities, and thoughtfully evaluate future increases in our quarterly distribution to common unitholders over time.

Importantly, we will pursue these objectives while maintaining the flexibility to evaluate future organic and inorganic opportunities as they may arise. Finally, I would like to say that the management team and the Board of Directors remain steadfast in our commitment to building long-term value for all of our stakeholders, regardless of where you are in the capital structure. We believe the decisions we are making reflect this commitment and our confidence in Genesis Energy, L.P. moving forward. I would once again like to recognize our entire workforce for their individual efforts and, importantly, unwavering commitment to safe and responsible operation. I am extremely proud to be associated with each and every one of you.

I will now turn the call over to the operator for questions.

Operator: Thank you. We will now be conducting a question and answer session. Our first question today is coming from Michael Jacob Blum from Wells Fargo. Your line is now live.

Michael Jacob Blum: Thanks. Good morning.

Grant E. Sims: Good morning, Michael. So I wanted to start with the guidance for 2026. If I simplistically just annualize Q4 2025 EBITDA and compare that to the midpoint of the 2026 guidance, there is a delta there of, call it, $35,000,000 to $40,000,000. So I am wondering if you can just give us a rough ballpark for how much of an EBITDA deduct you are assuming for typical hurricane disruptions, and then the higher-than-typical marine maintenance? Because if I just remove those, you know, and do not even assume volume growth, which the offshore, which I am sure you will have. Just wanted to get a sense of like where the low end of guidance could come. Thanks. Yes.

No, I mean, it is a good question. And as we basically try to explain, we think that we are being conservative, especially based upon some of the things that we have been told by our producing customers. But again, yes, we are assuming 10 days’ worth of anticipated downtime for, in essence, treating the third quarter as an 82-day quarter instead of a 92-day quarter for our offshore business. We probably net expect $5,000,000 to $10,000,000 on the segment margin line, if you will, from the heavy dry docking schedule on the marine side.

So I think that as I said in the commentary that I just gave that we fully expect and we can make a case that we can comfortably exceed it, but we are the only reason that we are not pulling out a larger number, the primary reason is basically just taking into account that things can happen beyond our control, and try to emphasize to make sure that everybody understands that it is really just a timing of recognition of the future cash flows out of the Gulf of Mexico and has nothing to do with structural issues or subsurface issues. So hopefully it will turn out to be a conservative range that we throw out.

Michael Jacob Blum: Great. Appreciate that. And then on capital allocation, really have like a two-part question. First, can you just remind us where you would like to take the leverage ratio and what timeframe you think you will get there? And then as it relates to distribution growth, how do we think about the cadence of increases going forward? Is this something you will be evaluating once a year every fourth quarter? And will the growth in EBITDA, is that a good proxy for how we should think about growth in distribution?

Grant E. Sims: Well, I mean, again, on a bank-calculated basis, I think at 12/31 it was 5.12. So as we continue to use our increasing amounts of free cash flow to pay down debt in absolute terms at the same time that we are seeing increases in our calculated LTM EBITDA, I think that in essence debt ratios are going to improve because we are paying down the numerator while at the same time the denominator is increasing. So our long-term target has always been in the neighborhood of four and, again, we have a pretty clear line of sight on it.

Michael Jacob Blum: And assuming that

Grant E. Sims: everything holds up and the producers do, you know, the quicker they do things the quicker that we will hit those targets. But it is pretty obvious that we can get there. So depending upon, you know, that performance dictates the time schedule under which we get there. Relative to distribution growth, it is something that the Board discusses every quarter. There is no hard and fast program that in essence we can talk about at this point. But I do think that it is clear that the Board is committed, as is the management team, to kind of an all-of-the-above approach.

As you, as we said, we were also successful in negotiating a redemption of another tranche, on a negotiated basis, of the outstanding corporate preferred. So, we will evaluate it on a quarterly basis and let the market know how things are going at that point in time. So

Operator: Thank you. Next question today is coming from Wade Anthony Suki from Capital One. Your line is now live.

Wade Anthony Suki: Thank you, operator, and good morning, everyone. Appreciate you all taking my questions. Just wanted to, it is a question I have probably asked of you guys before, but, you know, repetition is always a good teacher. But wondering if you might be able to sort of revisit how you think about potential opportunities to pick up, let us say, the remaining interests in some of these offshore systems that you have, you know, how that might fit with your longer-term priorities and, of course, appreciate any insight you might have there or, you know, how the counterparties might be looking at it.

But, yeah, to the extent you can sort of clarify or revisit that for us, that would be great. Thank you. Well, you know, again, we are not going to comment in one form or another, as you would expect, on the potential for M&A activity or other things. I mean, obviously, you can understand from our enthusiasm that we very much like our existing position. To the extent that, from an ownership position, it would be possible to increase that exposure, that is something that we would be very comfortable with.

But as I want to point out, and you mentioned repetition is a good thing, that repetition, we have substantial existing capacity on our two major pipelines, 64% owned and operated Poseidon Pipeline and 64% owned and operated CHOPS Pipeline. And so we are in a very comfortable position and arguably an enviable position that depending upon developments in the right place that we could have substantial increases and see substantial increases in segment margin and basically flowing to the bottom line in terms of incremental EBITDA without spending any capital. So it is a good runway of continued opportunities in the Central Gulf that we think that we have positioned ourselves for. No question. I appreciate that color.

Just to switch gears a little bit. I think I know the answer here, but obviously some M&A among a customer or maybe two customers. Just wondering if you could sort of speak to impact expectations. I would expect some maybe acceleration potential, but any kind of longer-term impact you might see from that would be great. Thanks again. Can you repeat it? I am sorry. I did not quite fully understand the question. I apologize. No. I was asking about some of the consolidation we have seen among your customers in the Gulf. Oh. And I think there is soon to be one more possibly. So just wondering what the implication would be for you all longer-term.

I imagine positive acceleration and whatnot, but love to hear your thoughts on that. Yeah. No. It is a very good question and I think that, you know, a transaction just closed yesterday, was basically Harbor Energy out of the UK closed on the acquisition of LLOG. LLOG is obviously an extremely important customer of ours. To the best of my knowledge, we actually move 70% of LLOG’s operated production through our pipelines, with most of those coming through our Sygna lateral and then downstream transportation, which is downstream transportation on our 64% owned Poseidon line.

It is in the public domain, as Harbor said, that it is their intent to double that production from the asset base that they are acquiring in the LLOG acquisition, to double that between now and 2028. So that is a positive read-through on things. So if anything, we view that as an extreme positive of a significantly large public company acquiring a private company and with the full intent of doubling its production over the next two years, a very good outcome for us especially given our existing relationship with LLOG. Perfect. Thanks so much. Appreciate it. Thank you.

Operator: Thank you. Next question today is coming from Elvira Scotto from RBC Capital Markets. Your line is now live. Hey, good morning, everyone. I just wanted to go back to the guidance. And can you maybe provide a little more detail around what specifically are you embedding in off Shenandoah? Then you also mentioned kind of the development of eight additional tieback wells planned at legacy facilities? Like is any of that in your 15% to 20% guidance? I will stop there, then I have some follow ups.

Grant E. Sims: Yeah.

Grant E. Sims: Yeah. I mean, basically, Elvira, again, yes, based upon what we have been able to ascertain in terms of talking to our producer customers that we are extremely comfortable that we will meet or achieve the 15% to 20% off of the baseline that we talked about. So, and again, we are trying to set expectations to under promise and over deliver on a prospective basis, and to make sure that, to reemphasize, that to the extent that there is any failure to achieve overperformance it really is just a timing issue and not an underlying ultimate value consideration.

So that is the approach that we are taking as opposed to formal guidance, it is more of an informal guidance that we could easily construct a case, as I said in the prepared remarks, based upon what we know to significantly exceed that range that we just, we threw out there.

Elvira Scotto: Okay, great. And then just going back to the dry docking, I think you said the expectation there is $5,000,000 to $10,000,000 kind of impact to margin. Is there an impact to maintenance CapEx on that?

Grant E. Sims: Yes. I think we made reference to it in the earnings release itself. But because of that, yes, we would expect this to be a heavier maintenance capital year than we experienced in 2025.

Elvira Scotto: Is there any quantification of the impact that you can provide?

Grant E. Sims: I think, generally speaking, that if you looked at a $15,000,000 to $20,000,000 increase that would be within the ballpark.

Elvira Scotto: Okay, great. And then just one last question for me. So you mentioned how the refineries are increasing runs of heavier crude and importing more Venezuelan crude. What do you think, how much incremental inland barge utilization could this drive this year?

Grant E. Sims: Well, utilization has remained fairly high, which is the necessary condition before rates start going up. So as we anticipate, whether or not we gave a specific example of Valero, but P66 and others have also mentioned it, that as we see more and more of heavies run, whether or not it is Venezuela or incremental Gulf of Mexico medium sours or other imports, Canadian and other things, that total black oil pool or the total supply of intermediate refined products, which we were specifically designed to meet, will go up.

And so in an already, in essence, close to 100% if not practically 100% utilization world, we anticipate being able to move prices up, day rates up, as we progress through this year and on into next.

Elvira Scotto: Great.

Elvira Scotto: Thank you very much.

Operator: Thank you. We have reached the end of our question and answer session. I would like to turn the floor over to Grant for any further closing comments.

Grant E. Sims: Well, as always, appreciate everybody listening in, and we look forward to delivering more good news as we progress through 2026. So thank you very much.

Operator: Thank you. That does conclude today’s teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

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