Shell Midstream Partners (SHLX) 3 Nov 172017 Q3 Earnings call transcript

Good morning. My name is Brian and I will be your conference operator today. At this time, I would like to welcome everyone to the Third Quarter 2017 Shell Midstream Partners Earnings Call. At this time, all participants are in a listen-only mode.

Following management’s prepared remarks, we will host a question-and-session and our instructions will be given at that time [Operator Instructions]. the to turn Relations Selinidis, now Officer. will call Courtney over Investor I

your may conference. You begin

Welcome statement. the are of operational you. Vice will Midstream contains Shawn Thank be to X CFO; the President, Partners. for conference Carsten, Safe on covered our With quarter. Shell Commercial. call largely The Slide me this Kevin focused results today and John content CEO; third Hollowell, Harbor Nichols, quarter morning earnings and financial

the financial to this disclosures release the end related may future financial this presentation. to included presentation and will at measures. questions will and GAAP appendix before I take But such for And comparable measures, be one regarding press including of different to most statements important We in Q&A cause under results of press we the forward-looking the release SEC. reconciliations during turn as measures. such the Actual to call that two be would Exchange. the statements, Stock Shell like John, could to in Investor will first also earnings and with remind and hosting be Factors differ Today's the Midstream certain contains Please events you as Partners presentation results that are making ever very York New expectations I call weeks, our Shell here, the from refer at non-GAAP in to over actual Update and session. factors morning's Risk filings well our materially

distribution our will John call I'll away refreshed sponsor, we over that, to future a a of turn run guidance. With During business opportunities be full providing growth the this from update, Hollowell. and of event,

the again morning, Courtney. you, everyone Good Thank for thanks joining and call.

good. which coverage Astros. this talking X.X was significant morning Texas, And for Houston and the volumes of portfolio, were distribution was in you with Shell the to positive we today results despite increased the line remain ratio performance everyone achieved accomplished the growth Coast. these third the Harvey, across Midstream quarter. World quarter a for promise, in Throughput our as hurricane across knows, Champion from the Underlying Partners home We’re Gulf of Texas Houston, event impact

Shell Partners, felt mainly impact on Harvey For Zydeco Zydeco of Due flooding, hurricane Colonial from Force systems. unprecedented the Midstream Majeure to was August and the claims XXth. beginning

XXth. the quickly the maintenance Our September impacted integrity back storm, return the pipeline in was refineries Coast from Zydeco assessed they Gulf constrained returned the following by September recovered crews normal storm from Houma throughout and cash All Texas due down The system about normal of offshore Of to to as revenue service and safely Colonial on supply $X Harvey. Covelli. operations. available lost throughput $XX and at the total, online rates third our systems for distribution into and about hurricane Zydeco. million storm in which, remained was quarter was the million to In

about quarters. be there will expenses couple associated is additional over extend Now, next the the repair, million $X which that tank of with will some

less than we to $XX originally total, $XX the impact in the which is So about expect million be Harvey estimated. million,

In plan shipper that inline as Bakken the completed portfolio corridor, between the the of what steady new from normal safety in on increase systems. In any on we Nederland, largely we the these I relentless kicked well preparation across committed driven will volumes to a discussed volumes take move the portfolio, the our hydrotest. all and by Houston doing quarter. Kika the ramped and offshore, we continued Na let supply multiple associated fields to The mature communities plans And pipelines, the increased a hydrotests which from the project operational of to series returned first finally, I by a which in also Island of repairs and completion in the the crude a last Zydeco of our has be and storm producer quarter, the onshore With to our quarter. the and In serve we to million off hybrid to the volumes the difficult offshore test increased Delta up tools volumes the Zydeco, inspection for I’m following cost didn’t days, if into Caillou me quarter quarter. of project remised project. to narrowed for of as and prove connected that, XX and the say Now Throughput expect compared between a total experienced for quarter be very, completion to And online conduct first year. for response very of main following Company’s running $XX focus proud demand came second Eastern project Houma turnaround would to line have in in prior Odyssey, the XX on during we we $XX be people the XXXX. our to September, range includes the million. expect extremely time. results of next to the The Zydeco to our

do project. quarter. spent $X the result reminder, third $XX a XXXX. Now, XX% million be Of XXXX distribution a the CAGR our anticipate million, change in about which as will was growth And about we of to not spent of for guidance any as this in which includes

Now Shawn? hand with that, the the over to call to the walk through me Shawn quarter. you for let financials

portfolio prior In everyone. EBITDA million, $X was almost strong $XX.X attributable Thanks the the up John full and a to quarter. results the mid-May. was EBITDA underlying performance and due from of in across million morning acquisition Increased to partnership total, completed adjusted quarter the good from

roughly quarter, Integrity to project quarter due associated Zydeco. million mentioned, As on Majeure due for impact up $X Zydeco with primarily previously to of impacted [Codell]. million, the was about was last on Harvey from $XX expense John spend dividends the Maintenance and compared hurricane Force the largely

capital Our last million maintenance about decreased compared $X quarter. to

it we expect the to for previous guidance Now be given within XXXX.

to to the intend third fourth cash be the to distribution with for take available we quarter. flat ahead quarter roughly Looking

Nate, Now related hydrotest. million to and this Hurricane downtime the Eastern unplanned the corridor, producer spend of Zydeco $X approximately connected is to for

a since $X.XXX the deliver of we predictable our Partnership distribution higher to XX% unit. and per quarter plan was demonstrated declared prior almost QX, distribution This to IPO, the had LP over continue of third For strong on promise. and commitment increase X.X% growth our and that quarter to the XXXX. We than

opportunities total the from the $X includes and liquidity. most at around finally the Now, raised and as gathering the XX announced down system, exercised and initial healthy equity the gas build-out the primarily pipe, pay system balance one net marks growth on a September, Basin long-term let number for We last closed Partnership’s the Basin to to organic to funds Partnership quarter, production the of end of equivalents the the the solution of favorable million of very cash debt high of ratio growing into terms. debt cash the The Partners. down we Shell majority with XXth, Shell billion. Midstream used In providing Permian for in unconventional a our of And XX-year outstanding acquisition, loan Shell-operated miles asset. sheet first on gathered high important Shell’s a had Midstream buy At EBITDA. with of facilities the turn option quality total leverage of $XXX to our contract. to of Permian long-term under these midstream successfully Partners third me quarter, which X.X potential brought we quarter which October gas investor to adjusted has times this about And

questions. So call with all me the that, let open for

Instructions]. Thank you, sir [Operator

from Our with Brian of Mizuho. line the will proceed. come Zarahn question first Please

on estimates tank impacts related the as it color additional to just Any or… lower-than-expected repairs, for the

work we to and than is basically estimate. it the was, you the we thing. work we estimate it the as -- that when wound early done, Brian, There up -- of got done credit, gave No. middle the assess. to in I And did to who and would primarily and got little folks believe, less have. for the that’s a the cost we quickly to thought able we it And we were time event what responded

water credit we’re our through And efforts the make we we way they I to make sure had integrity, made have know, of get to my system. staff work and the that it system just the heroic my staff and full you As had again to we for sure online. able lot operations had to

all we what thought the flooding, with. little faster So we to we water given deal all the had that online it got a than

appreciate on on one cost I then update. of the the maintenance, more allocation. the detail And some And Zydeco

DCF that $XX million more is is $XX of more revenue, clarify, a cost total to million a impact? Just in impact or of to

the all get to cost cost testing but total The Brian. done, impact, cost it's of done, repairs, more a It’s not driver. repairs the

cover contracts the of some that period loss during [indiscernible] Will period? revenue the time

It's be we of to actually a to Brian, combination it's we this said going you is combination, think both. was I talked it of And kind originally when XX-XX. Kevin. a

we the lost revenues. hydrotest And so the that will we’re have doing during time

billion $X.X billion in And then on to and for year this target dropdown next. the of $X.X total

next Now we’re dropdowns backend getting near number change? for potential will year should loaded is year, be be this the or that assuming some we there to of that the end

that and the do the been to to going we’re deliver billion by drops. $X.X we $X.X to end deliver to XXXX. the we’ve $X.X still feel that. know, schedule And of But Brian, we’re on billion confident No, billion, you $X.X billion ratable as on fairly have to

said your will I the transaction should equity recent because And of raise, we be reduced debt guess has leverage the which finances? and assume next that likely -- you

Brian, Shawn. this is

we forecast will markets. we So from fund on how the

a and you from we’re a and both know, of have growth long combination investment drop term long- very down story, a term As organic. we

the with you we the a through going we’re we’ll But mind we’re equity point fund go to impacts fund how But unitholders. have our going as in we’re combination do to see long to the sheet. it the very the to So we in prudent as balance going And term, market with and keep markets. out, be approach strong we of how But over debt. this. short-term

remind everyone, XX%, GP Just our still the owns including units. to sponsor

So to we’re interested upset make go markets. very our to we already what don’t sure

how growth during and And the given to is your this competing about reaffirming CAGR. your sector last XX% needs? post reduce versus you’re retaining capital distribution Investor two midstream of weigh more market balance know cash I one your issues of hear XXXX, But you Day. But from sure the growth debating me, distribution exposure. perhaps, do And we’ll more financing those topic versus flow I’m

forecast. So our runway. Brian, I bit as invite Day we to attend more providing don’t and strategy to our look do you and Investor little But forward provide our know, you around

you. Thank

will proceed. Jeremy the question come next from line Please Our Morgan. J.P. with Tonet

also with currently would thoughts just Gulf and activities. was your economics the the I wondering if us you It too could update you and underpin breakeven. that it could us And impacts volumes there really there, platforms? as of tie-ins wondering would have GoM more if like prices needed Mexico update on activity thoughts will attractive on seems for your and Any thoughts? that color how But any what be for on as WTI just new scale your helpful. assets large be your outlook far

remain Jeremy, we way. and we’re pretty bullish on the Gulf Mexico of that

new We see continue online. projects preparing to come to

some We at Eastern that in platform our the and corridor XXXX our that’s our Odyssey in said system. Na have in year next tying-in Kika around

that, looking So as Gulf. forward of to central well some the we’re

these So activity Mexico of Gulf at the still in prices. yes, remains

ahead are we’re lower big is now moving those. Appomattox You to continue price $XX low their asked a for projects, move is continues People projects. what with and question these below price ways at ahead prices, -- breakeven [XX.XX] from and are about per barrel. develop to of [Appo] finding even to kind these

the projects they’re oil So and to around lower hear that’s are production news to by to our strategy, Shell to Midstream corridor existing able of And operators make a the supports led these for where that most what corridor obviously from which to strategy, we tiebacks, is great And tie-back prices, because our work be platforms our these growth is lot going Partners, actually there forward. platforms. at is attractive finding directly cost. where really and activities connected also organic systems to supports at these no gives additional occurring us ways

couple bullish in Investor dive bottom-line, of the the into Kevin Mexico So big the and Gulf a deeper plans giving of on we’re seeing. weeks, some what at spending Mexico. Gulf still Day more time of on

or be anybody and about So to the more. extent how Mexico come that can corridor more you the of for learn a fit, opportunity you our pipelines that can great learn to Gulf would

I if maybe just be will this could. on We question there. one And certainly follow-up be point,

as the we we thinking point? this years, that just far lumpy at items gauge our turnarounds, Just as is next there over be models as like any that, about should

fully really yet. We haven’t guidance received the

the you will ordinary. of all not Jeremy, And after giving update foresee ordinary. us be not We’re and the right But We’ll and We extent next next more means producers anticipating anticipating, and for anything we’re beyond. But what that once and of able call. But just the this ordinary. on year probably year out have do, they we out point. we’ll we out there of the that be maybe exactly some, just don’t understanding the don’t the know anything where don’t we anything have of the That what is to plan their Jeremy. first to year. more now, the

you dropdown to last refresh upstairs. of future? as those us I the if now one far I as versus one wondering could, assets regards in-service the or are with And things under inventory what construction could was enough. are in percentage be Fair could if just

be assets are, a are looks runway of We’re or and to those better runway assessment more it. in type as an hope the for is at which cover advertisement to a a But get portfolio, to Investor of the understand, going in I call. we’ll in bit we’re other terms that the and like that as trying I’m to more that good of refresh development. assets to immature you, those runway to spoil to the what Day to my Day, you maybe we with as not a going under But go they you’ll in of the Investor existing of But at what honest more Jeremy. the one everyone come certainly into detail. more how understanding be where about to learn Investor are cover as classify detail terms assets well depth,

you. Thank

turn no have I over Courtney questions. to now further Selinidis. back will We the call

Thank interest much your you for Shell very Partners. Midstream in

to My as additional If on Web call free me site. information any have of you follow-up as presentation, back this feel the well found on please questions, can our be directly.

and today’s your on conference. Ladies you conclude may we disconnect. wonderful thank and Everybody, for all does gentlemen, participation a day. program This have the