Crestwood Equity Partners (CEQP) 21 Feb 232022 Q4 Earnings call transcript

Good morning, and welcome to today's conference call to discuss Crestwood Equity Partners' Fourth Quarter 2022 Financial and Operating Results and 2023 Outlook.

Before we begin the call, listeners are reminded that the company may make certain forward-looking statements as defined in the Securities and Exchange Act of 1934 that are based on assumptions and information currently available at the time of today's call.

Please refer to the company's latest filings with the SEC for a list of risk factors that may cause actual results to differ.

Additionally, certain non-GAAP financial measures, such as EBITDA, adjusted EBITDA, distributable cash flow, and free cash flow will be discussed. Reconciliations to the most comparable GAAP measures are included in the news release issued this morning.

John prepared Phillips; Founder, Executive President, and Financial with Executive and Vice today Chief Robert Officer, Robert Officer, us remarks Chairman, are Chief President Joining Black. Halpin; and

is management [Operator Additional members session Crestwood's reminder, Instructions] are this As analysts current in will At call available the remarks. all for a with prepared team being following time, of question-and-answer be a recorded. senior the participants listen-only today's mode.

you Thank introduce your It host is now pleasure Phillips. my to Bob sir.

begin. may You

segment Thank off operator to strategic Thanks recap you, over turn then to good and everyone. it going the deeper our years to finally over made into for morning I’m today. I'll the dive in to joining of past Johnny our transition financial of with XXXX us that and guidance. we've our start our And couple results outlooks. and us XXXX to then Robert a discuss to operational results

portfolio extremely It are Crestwood to dedicated which as which to regional our So, consolidation Powder position Williston, which establish and was to realignment follows started in long-term let we X producer XXXX better have our me River This all weighted designed Basins. Crestwood of decades core inventory, another strategy, with XXXX. start undrilled Delaware, which was a a competitive we important forward for with processor push our the in plays, up gatherer strategy, as in resource economics and Top year system.

it this while made spot in businesses. basins, streamlines this while sheet transition. we portfolio in growth and a and our balance we've weighted, we divesting gas assets kept good done think low the our And And

it what transitioning accomplished concentrated widely in that and in a us as to the forward. we that potential profiles portfolio more a away to much basins of served think been price spot put and in well gathering more years the few think a diversified We're we've visible proud production commodity position at and together we've is midstream going of that. growth look realistic the during future. years the I Very Crestwood effectively, long-term stable formative we good offer So, and the first we it from processing

make a as a that in Reserve’s announced We partner general acquired recap the Board. transactionally structure the Northeast remind bigger I'll Williston. Just publicly governance interest. to And deal we elected year, to you Stagecoach and [ph] in converted XXXX, late we partner our Oasis [this] sold the First in storage We facility. gas our limited Midstream

Whiting. Midstream in merger a In distribution production XXXX, organized through X%, increased closed we CEQP of merger of we significant units from Chord, annual we buyback Williston the which the in created was Oasis stock by Oasis the doubling size our our Basin,

and assets, We the our also by sold expanded first Marcellus and acquiring our gathering Midstream buying and were which legacy position Delaware on and processing reserves, PDP decline, Barnett JV interest, significantly CP assets. Sendero out we

Continental's us program each acreage in all So, in Express for commercial opportunities, with of long-term Williston much River new improves the made our Delaware the and to years, capacity, in the significantly built scale legacy in larger Cutting and we of of Basins, operating capital basins. these to gave our both acquired due in XXXX assets more assets synergies, processing efficient the integrated the connect Continental successfully which savings, more dramatically and and big year cost our PRB Powder pipeline we which XXXX. Basin, all the across outlook

of our extreme expectations, expectations, and caused industry-wide by delays, our I which that producer the which and due say, short we while and And I'm results, three repositioning to events market's were challenges. I for in chain assets assimilation largely disappointed oilfield the supply came in growth these beyond. new our of and development all can services portfolio very basins in and outlook with and further actual the have am XXXX winter strategically positive XXXX the of pleased

think that better, more is a stronger, much resilient Crestwood and I company.

industry, gathering top the and of our processing total upside franchises looking significant MLP and One in an ESG, in distributions potential and leader a growing the return. for who are unitholders with stable midstream for

deal as on this focus sale upsized that of that have significantly facility just morning, was with continuing enhanced deal. a Palacios So, successful successful our million we Crestwood recently sheet Senior to very revolver with we joint note – liquidity out we're in termed successful and significantly partner and total with begin oversubscribed Note for our Gas our balance million in $XXX proceeds. Tres XXXX, our and a $XXX going and And venture Brookfield our forward the announced January Storage

debt I Palacios highly The so sale hardworking last for allows fourth to much down the divestiture Tres and our valuation compelling over to have to thank represents at non-core and personally our sheet. and strengthen decade. proceeds take contributed want a further the our Crestwood, employees moment that $XXX balance pay million a in success cash utilize field to Crestwood our

safety embody and operating company. longest performance principles in they Crestwood's the I'm fully string of zero, proud that net They triple the say to have zero entire

in few we maximizing out and we is basins what reducing of asset and the repositioning cash debt Palacios, Palacios job very the of three our years. Tres of next the They for I really think culminates portfolio now a the did on very over Tres streamlined folks. over great proud us. operate. laser we're free The flow last years So, plan strategic And that think, couple divestiture through portfolio we're a of focused the competitive

the the on get the we think in is portfolio I manage is activity our going into their financially details, but in And do certainly both development last forecasted some and operationally deliver to and Robert industry going producer better saw better are to that supply much that equipped challenges Johnny to much XXXX. chain forward. year of shape

is to expand located well systems That backbone and over in from XXXX. new efficiently of to year. XX% of add and capital growth continue We and an X% in carefully guidance. we're connects infrastructure mid-point new than last And and to spend approximately more make going Delaware increase in primarily expect well to connections, increase budgeted year-over-year the Williston cash in we at our and our have basins the strategically flow plants XXX

unitholders the Really proud we the of space. So, is at has of one deliver of this and rate, let what and very that is to opportunities me work gotten rate good our year in that more $XXX distribution the far At the enables Xx. is Crestwood annually. this we're million to close returning well think current And distribution a per that by highlighting covered in $X.XX common X. Crestwood our than spot. unit last team really year, year best done investment midstream so approximately

our to guidance. the details and over provide on our And with XXXX turn to that, Johnny operations Robert? Robert I'll additional XXXX and call

Thank you, Bob's morning would outlook strength echo thoughts and over good the our and Bob, portfolio the to reposition the like coming around everyone. of I to years.

to newly year in our pivot M&A Additionally, our across we to execution are integrating active and focus XXXX of assets systems. maximize throughput fully following an excited acquired our on

across full-year we due discussed operational to wells initial weather, XX during quarter, the connected was the in to our which extreme XX the Rough update. below XX Starting the winter fourth total Basin, expectations Arrow in which Rider the bringing we Williston January and wells, systems our

While how we to weather, responds cannot Crestwood these we the control can control events.

to with pleased operations during producers tremendous a extremely the on am online Rider flowing, the working job Rough both with I as quarter and possible. back as and systems get as our teams Arrow they quickly did production

we XXXX, more Energy approximately than about across Energy connects an in to look expect acreage led well the Williston in drilling program by XXXX. driving XX% our dedicated we As and active Chord or Devon XXX

our be the growth to capital acreage and year-over-year. We X% Arrow gathering City on Energy’s Williston Basin capital, in we XX% build-out for system. running rigs Chord smaller incremental Painted system average throughout of the of complete driving invested the the anticipate X as and respect Woods year, budget an of roughly of multiproduct With continue half growth to X Williston expansion to volume will rigs XXXX approximately to

Now Crestwood's full-year connects for turning to Basin, quarter Delaware well a the systems. XXX across connected the XX during wells gathering we of

set diverse programs in their across a resulting XXX to XX% drilling XXXX, in well volume completion should approximately continue operators XX% to and and connects our year-over-year. active growth public expect We private drive our of assets. That

optimize day of expansion, XXXX connects, New Approximately be Mexico. invested per and commercial incremental assets, our opportunities Our and fully capturing processing in-service primarily million in Basin, XXX low position feet XX% gathering the are will capital teams system actively in pressure well high and cubic Mexico on and Delaware across our budget of to additions processing which Crestwood will New pressure Texas our compression capacity.

River XX system, in delineate largest well targeting on acreage Jackalope finally Resources, its Continental between multiple to new position Now, connects continues XX expect the we in formations. customer Powder to large Crestwood's the the basin Basin,

to at capacity Horse on continue area the other large Bucking and excess new processing Jackalope operators with We volumes to the the bring on in capitalize work our facility. system

going with Storage earnings XX% the Tres will the of forward. up now of this divestiture the the make In segment segment and the announced morning, for NGL Logistics business Palacios Logistics

NGL present and normalized forward the current We assets. storage and expect opportunities have to the incremental our end S&L earnings around levels XXXX XXXX the XXXX of in contango return to at our rolled for segment margin NGL off as hedges curves the the

I'll turn call cover the our XXXX results financial now, guidance. And to Johnny to over and

Thank you, Robert.

EBITDA generated XX% past year-over-year flow of year. respectively, fourth and XXXX, Crestwood our over the million, adjusted XX% activity $XXX million, the and of M&A For increases by of quarter $XXX driven of cash distributable

For year-over-year respectively. XX% and generated the assets flow distributable million, increases full-year EBITDA of of $XXX XX% cash and XXXX, of of our million adjusted $XXX

$X.XXX of distribution quarterly as of in announced on the XXXX, resulting X.Xx. of XX Crestwood For unitholders coverage February quarter record X ratio to of a approximately a February fourth payable

fourth segment and gathering of the Gathering XXXX the Looking North million, Oasis increase quarter results, higher $XXX natural an at water gathering, operations gas of XX% by EBITDA the assets. quarter from volumes XXXX, processing in fourth gas Midstream and totaled segment, driven the the over natural of Processing expanded

Gathering and Barnett and quarter an volume EBITDA In of assets. growth acquisitions, Processing from XX% Segment CPJV by segment, a combination million, by segment Sendero with the divestitures year-over-year. fourth of XXXX of was legacy the the coupled Marcellus totaled offset and the Midstream, increase assets, the $XX growth Crestwood South driven

our and the storage our Logistics Storage price volatility and around the capitalizing for driven year-over-year, segment, business fourth on totaled logistics $XX increase EBITDA quarter, In an by assets. NGL million

During approximately of the million million invested $XXX to fourth $XX bringing the million, to of the full-year total range in below XXXX million $XX growth we million. $XXX capital guidance quarter, capital, the growth low-end $XXX

pushed from and excellent continues match capital an executing our throughout great the an well development both team projects team job XXXX. in efficiently to do several to updated job our being our XXXX to inflationary targets timing management project With optimizing a Our cost safely of plans did XXXX, connects environment. management producer project below spend

sheet, to outstanding, Crestwood consolidated a Turning credit billion ended the leverage facilities, balance including the of Xx. with fourth debt in the on X.X billion ratio total X. approximately quarter resulting revolving of X.X

earlier, credit and $X.X a facility JV Pro borrowings the Xx. outstanding million of senior senior will proceeds notes for Tres and and we January. debt ratio X.XXX% the mentioned have of Crestwood the sale of to $XXX pay and notes use credit revolving long-term repay leverage billion Palacios, Permian the facility. issuance forma unsecured Crestwood the successfully revolving As And terminate down issued in corporate consolidated of

outlook. the million and to We Now, $XXX flow $XXX XXXX million. turning in the to be to $XXX million EBITDA in cash the million $XXX to focus of of distributable adjusted to estimate range range our be

plans a commercial our the for development acquisitions our year from from environment a underpinned the price realization by customers, and constructive in guidance is cost and financial continued XXXX. producer most Our of oil synergies recent

highlighted on focused portfolio. across Bob costs capacity, remarks, our available processing the and throughput and plan his is gathering the As capital requirements in while maximizing reducing financial on

EBITDA bridge growth and was bit we a for a Additionally, year, and detail moving of little to wanted M&A the expected to help in our because divestitures, XXXX. lot more provide due there year-over-year parts last

$XX adjust you completed adjusted the approximately acquisitions XXXX for and approximately both in and EBITDA divestitures that from XXXX assets If Crestwood not million the for assets that in earnings and assets our divested have generated of incorporates from EBITDA backs the XXXX, reported $XX of additions our of last Palacios. XXXX did $XXX EBITDA the divestiture announced million approximately in periods would from recorded for Tres XXXX million, are including results acquired XXXX the we year, contribution which off XXXX own of recently

are volume we and forecasting M&A XXXX, system In commodity X% the adjusted guidance approximately range, gathering to is year-over-year by of driven lower at partially which by growth on XXXX growth offset mid-point primarily compared the our number, EBITDA prices. our

a sizable Although with G&P had previously new to of wells we QX exit ended quarterly QX be XXX the we we XXXX volume to our driven growth XXXX XXXX, EBITDA rate of expected, than lower throughout from by year. systems are forecasting connected across approximately

we million the at with common after to paired $XXX distribution the A the capital of XX% turning to and side, of basins. XXXX. million investing expectations generate and When $XX Next, midpoint the than XXXX. the in the free of and between capital step concentrated in flat XX% Williston of approximately growth more with year-over-year $XXX anticipate down cash year, Delaware flow guidance in adjusted we our EBITDA keeping range approximately million distribution for expect

this cash think our about with debt allocate this focused sheet X.Xx. to to ratio and free the flow squarely we for to excess returns leverage on than over paydowns, capital we the incremental long-term. year, which We for unitholders sheet financial our a debt leverage in the and outstanding plan priorities target remain of will balance less all create company our divestiture and As reducing flexibility year allocation balance strength to long-term drive deliver our proceeds

open that, for line to With we the are up operator, ready questions.

Our Instructions] with first Spiro comes Dounis your question. from Citi. Please [Operator proceed question with

guys. operator. Thanks Good morning,

First question, maybe could. to one we sensitivity, commodity touch on just if

side the tailwinds segment, as just profile versus house, it variable of overall now like on talked G&P but curious looks about You about XX% thinking revenue NGL you're XX% is the last potential the year. the

gas of curious but bit a Just curious the that about have mitigation through think sensitivity I little a we natural how exposure? you the forward? into commodity you out been as hedged lot have more think So, largely there. And guys about guys go assumption, going year, your [indiscernible] to XXX

Thanks, Spiro. question. Appreciate Yes. the

in POP this contracts So, down that's the that the of commodity presentation XXXX investor year as our in say I our year-over-year, the to averages you and this posted would prices mentioned and in are flow as XXXX. in the to commodity prices primarily cash XX% you roughly was correlated lower XXXX, flagged is via in Delaware. because morning, Williston compared

equity than for volumes Also [ph] volumes for crude would as [ph] north gas on a the roughly range annual per out, XXXX assumes in prices gas we've approximately roughly XX% equity our [$X $XX an [$XX] pointed on average of standpoint at our midpoint of that and that a barrel a at guidance per per of I and you MMBtu] say annual little average oil approximately price $X.XX lower hedge price hedged bit barrel. oil. from

revenue about has dollar sensitivity plan $XX in a million basis. impact got annual MMBtu annual prices in we've at. lock on to impact in revenue million over every the move plan strip every gas So, prices above period. some a on million the From $XX and hedges where an is standpoint, roughly barrel has move on XX-month place per a oil per prices $XX $XX in a crude Similarly, to about

some So, part kind guidance for in color hopefully that range that some to around, the the upsides and of the plan, gives EBITDA you reason we downsides range. set the out of

Perfect.

Okay. helpful. No, actually really that's

deleveraging and I where gets stronger sounds distribution in XXXX. mentioned growth. I rate to on path XXXX be you one goals. that of question Second think recommencing accomplishing like about exited This should lot certainly you recent And you thinking XQ the your sale just than a exit it think also

or X.X not would think rate walk XXXX, target, as the be point] that of but [ph], maybe certainly full-year a we So, kind that to item run basis, recommence you're of seem distribution just growth under gating on us or [by need that of at? approaching through you're factors like leverage and is the see before looking some the leverage going X.X by about it the end you to maybe

great Yes, question.

should clear As leverage. mentioned, down. all the, put cash in kind is allocation flow be Xs year. free to out our pay think in on year our by we end of focus XXXX of you this the We debt range this mid-to-high We

I don't think ramp necessarily we flow here point, the X.Xx your quite to at but are first the XXXX in cash that quarter think be to we'll significant expecting fourth So, zip quarter a code, from of XXXX. of

our exit XXXX. set So, we number, to don't than business, rates much up seasonality higher quarter just here exit we in of want necessarily for rates XXXX, run which expect our be should rate a XXXX given really at fourth do solid the us end the our but to

in other the XX% profile capital think expect from XX% our thing that think be think year-over-year year. about I flow to is, decline and free do enhanced to so much next XXXX to will So, more we cash

drive in to leverage, Next that X.Xx kind lower to XXXX or year of starting back level.

gating once This unitholder ways incremental I maintaining at return the visibility start on think into next that's look the to we committed item have And incremental flat year. to point distribution few year the the this over year, level, next really and get to we're to years. to X.Xx value unitholders returns your our via to that distribution.

the Helpful Thanks time it. Got guys. for color.

comes Neal Securities. with question question. Instructions] with proceed your Our [Operator Dingmann Please Truist next from

Good morning all.

or paid opportunistic just the unit one, of laid debt you know plans depending to wondering, with this debt the out would paid-out with out? you again such stay Just but price no on arise the I thought quick if you priorities most consider I'm buybacks, year, does what situation

continue but to to stock Yes, for is getting there's leverage buy price we focus want on levels absolutely paydown. at We're I like and to would a down where get it at to and the focused to watch debt debt would we the back. back pay which today, price Clearly, X number still those say long-term. not the

And would you. know Great. of market view there? looking it secondly, right also not not just out I Thank who in you but at active the would consider just but you guys your consider plans, then now? with – M&A I always you now right some the things, know

active stay priority for We a but in the Yes. it's M&A say not market, for us. I'd year, this

we're are, deleveraging looking and right finance those raises accretive comes in but a we way was that opportunity can on internally a think along we're focused, options neutral or of leverage I kind it the for.

a not priority active, say I'd so, but overall. And

Makes sense. Thank you.

questions at turn further no are closing to now There time. over Phillips for comments. Bob floor like back would the this I

operator thanks all of this of want the to my in commercializing in intro and Williston operating are teams with when higher largely for commercial portfolio to in the thanks we is, largely the these and Well, I be done you Delaware just that All comments look U.S. the We're gas soon that and very you of assets in together, of Powder the prices, and highest teams at we're the we of the expanding do from oil us active joining the put business entire drilling highlight realignment across but morning. the benefit weighted company's portfolio. proud to levels very and rate one of strategic proud that some rig our areas opportunities by the the and the prices.

year. this that's So, in we think upside

repositioning, Let me with with just the we're we're the assimilation pleased and very assets. integration pleased the of say that very

This in going these basins. to very unique now. what Wellhead is Industry for from positive to time supply a Our that we our be drive assets is in Burner-Tip. this more continue To to operating think strong year is for we're execution. theme needs right outlook

capacity in critical a basins. each lot a a got of of of for are that We those We've part standpoint. room from growth three

weighted cash and position next going return declining significantly debt a be drive several greater of with no virtually I to getting we'll to And investors. the those Johnny core the the should we've [ph] which pay free of assets. flow, said Our down, then at like in where and capital think capital a look for years, is be out to some gas over areas into that's realignment had basins] [oil in what we ourselves built growth weighted basins the of left strategic

team in to going accomplish the and excited really very So, pleased about what with we're XXXX.

standpoint there for a thank confusing to much operator, it's and and the to put a and us. for call you from I very little the year the out] blueprint what XXXX. we So [shook very Thank know this figure a like hanging [ph] you budget out managing how last our morning with budgeting but I of all in looks this, for ins investors. outs the good think boys together been for

So, see by if please and Houston, you're us. in stop

really very We’re much. we you about Thank from go happy where excited to to talk anybody here.

This teleconference. concludes today's

at You may time. you your Thank disconnect this your participation. lines for