Paul Cheng: Okay, we do. Thank you.
Operator: Your next question comes from the line of Douglas Leggate of Bank of America. Your line is open.
Douglas Leggate: Thanks. Good morning, everyone. Thanks for taking my questions. Tim, there’s a lot of — I’m going to follow Neal’s methods example here, and I’ve one macro and one company specific, but my company specific is heavy oil runs or advantage crude runs, I guess is a way to put it. There’s a lot of things changing, obviously in Canada, TMX supposedly linefill, we’ll see what happens to spreads consequence. But how are you thinking about the appropriate crude slate going forward for your business in light of what is potentially a very significant change in Canadian spreads in the first time in 20 years?
Steve Ledbetter: Hey, Doug. This is Steve. I’ll take that one. Yeah. We’re watching the TMX situation very closely. As you know, we expect the announcement for full linefill coming online sometime late Q1 more likely Q2. As we think about that, we clearly will run the most advantaged crude. Our heavy crude value chain has provided a significant advantage for us. We think that the dips will continue to remain wide through Q1 and then compress somewhat in Q2. And when you think about our Puget Sound refinery, we think that proximity to the dock is going to allow us to take advantage of the optimal crude slate, more barrels over the water. I’ll remind you that we have the ability to take and run heavy and sour and we have ample dock capacity, so we will look to optimize that as well.
And then the flexibility of our kits. We’re connected to many hubs and we have the flexibility of the kit to take multiple grades to optimize our value chain. But by default, we believe that the heavy oil value chain is a key element of our portfolio moving forward and we’ll continue to drive that to optimize the value chain.
Tim Go: Yeah, Doug. I would say, crude flexibility and optionality continues to be an advantage for us, not just at the Puget Sound refinery, but also at our El Dorado refinery with access to — direct access to Cushing. We’ve got the ability to arb whatever the best crude slate is for that refinery. From a bigger picture perspective, I just want to remind folks that the Alberta crude production continues to increase. And I think even November, December they set annual crude production records or monthly crude production records during that time frame, every month, every quarter that TMX delays is a month or quarter closer to when the Canadian crude production will once again outpace the TMX takeaway capacity. So we believe that period is going to be fairly short, maybe two years, something in that time frame to when takeaway capacity will again be constrained and we’ll be back into this advantaged crude situation on the heavy crude.
So we think this is just a short-term position until the crude — Canadian crude production increases again.
Douglas Leggate: Great stuff. We’re all watching to try and figure out what happens. So I appreciate you guys helping us navigate that. My housekeeping question, if you don’t mind, is probably to Atanas. The change in cash in the quarter, obviously the buy in of HEP. But I’m just wondering if you can walk us through any other issues, because it looks like tax was light, interest was light and you still had a big draw in cash. Any help you can give us there, and I’ll leave it at that. Thank you.
Atanas Atanasov: Yeah. So when we look at kind of the drawing cash, it’s kind of the big — the big ticket items is the HEP buy and obviously, almost $270 million on that. We paid incrementally on the revolver as well. Obviously, the stock buybacks that we did for the quarter and the dividend. On the tax side, we — from a cash perspective, we benefited from the depreciation — the bonus depreciation that we got from closing on the HEP transaction that was substantial. And in terms of the rest of it, when you look at working capital was essentially flat once you took into account the payment of the HEP bonds, which is about $308 million.
Tim Go: Yeah. And Doug, don’t forget we had some bonds mature under the quarter and $308 million that we paid down in bonds.
Atanas Atanasov: And those are our bonds, DINO bonds, not HEP bonds. I want to correct myself.
Douglas Leggate: Yeah. I think the bonus depreciation that help on the tax, I think closes the gap for us. So that’s really helpful, guys. Thanks very much indeed. Thank you.
Operator: Your next question comes from the line of Manav Gupta from UBS. Your line is open.
Manav Gupta: Hi. I wanted to ask about the outlook for the Lubes business as we go into 2024. And a quick clarification also there, sometimes you report adjusted EBITDA, sometimes for some segments you don’t. It looks like the reported EBITDA was $57 million for the lubes, but there was a $30 million FIFO inventory charge, so the actual number was closer to $87 million, if you could clarify that?
Tim Go: Yeah. Let me ask Matt. Matt, as you know, is our leader for our Lubes business. Let me have him comment first.
Matt Joyce: Thanks, Manav. It’s Matt here. Just speaking to the FIFO impact on the quarter. Base oils and feed costs shifted lower throughout the quarter, and as a result, we had consumed older and more expensive inventory, which drove our FIFO number up to that $30 million range. We finished — excluding FIFO, you’re absolutely right. It was actually a really robust quarter. But including FIFO, we saw it at that $58 million range. It’s $57.7 million, I think was the final number. But when we look at what’s driving it, the back half of the quarter, really, we saw a slowdown in offtake and demand across the portfolio. And that was really driven by many of the customers destocking in anticipation of falling prices and not replenishing their inventories.