Shell Midstream Partners (SHLX) 2 Aug 182018 Q2 Earnings call transcript

Good morning. My name is Michelle and I will be your conference operator today. At this time, I would like to welcome everyone to the Second Quarter 2018 Shell Midstream Partners’ Earnings Call. All participants are in a listen-only mode. Later we will conduct a question-and-answer session, and instructions will be given at that time. now Investor turn Relations will to call I Selinidis, Courtney Officer. Instructions] like the to over [Operator

You may begin your conference.

are Partners. Thank Second you, X me contains Midstream Harbor CFO. Quarter the CEO; today With Earnings Conference our Shawn Michelle. Call for Slide Welcome Carsten, Kevin Nichols, to statement. and Safe Shell

actual making materially related presentation cause to be under and session. Actual to disclosures from filings most Q&A comparable that our certain and statements including results of the results financial events course the factors and morning’s presentation. refer will the measures. release Appendix factors Today's risk are regarding as We reconciliations take differ this to different measures. future Please forward-looking end statements financial release may such we this and at in X for presentation this such will also with and the included questions expectations as of well be during morning's SEC. measures could important here contains press of And, non-GAAP to GAAP press call earnings the in

So, I'll Kevin with to Nichols. turn the call that, over

webcast. Good $XXX $XXX Partners you Shell thank morning. second adjusted Courtney. EBITDA generated of million million business for the quarter quarter. joining you, Thank of And net and earnings The about Midstream income the in

in that and highlight the business themes cash flows call. ratable Our I’ll expected. delivering as are well stable this important performed There three quarter, today’s

in Gulf First, we the the Mexico. of are continuing from the benefit developments

in completed May. record And, Partners Shell to levels. finally date throughput largest Second, operating the at Zydeco is Midstream acquisition

quarter. So, for before we the results the discuss

expansion mid and development XXXXs system in the billion. Malo spotlight of of an Julia in was that about barrels expansion And, and with per capture Central strategically recently as chose system. project. Mexico. Amberjack interest complete system key recent expansion from to in purchased the the project, in me completed original constructed strategic XXXX, development. XXX,XXX in it’s of see to three total and pipeline We into Amberjack required drivers. of benefits pipeline The characterized is further allowing was expansion this continues Gulf volumes Shell pipeline This be the value MLP start the advantage capacity the We this growth and XXXX $X.X of Mexico. the to in take acquisition continued The for of St. Gulf acquisition the Central capital The production outlay the completed area Jack with of is can has after fields. to acquisition takeaway pipeline the positioned of Let without our last strong the day growing company. that which most Shell’s for most timing The for a a point an Amberjack

First, shareholders. connectivity crude of the Gulf Mexico. sustainable And. our expected by unique is growth which a optionality in valued to market continue. lastly Strong

Tahiti XXX,XXX to let’s supporting growth. projection Amberjack transports this So, and St. with the barrels stance success roughly a Jack Anchor currently pipeline. the start Amberjack sustainable from Malo of day, platforms the

system system the growth the are we per of includes of over day Foot transport Currently online come of are expected which and oil this approximately Big into continues and as which Stampede, achieved system next barrels connect XX additional by as Claiborne the the the as Examples the system. first fields January platforms forecasting well XXXX. new are We months. new on year forecasting infield connecting XXX,XXX into drilling the in end to

dividend end of from around the growth year, we XX% ramp-up are As press Stampede. morning, this the of discussed by by largely release we in this organic of the driven Amberjack forecasting

see to include remind continued the Foot we that in XXXX with and you Claiborne system me not online. does XX% come growth the let on Now expect organic Big that

understood, pause want into growth take I make So, let clearly or advantage new story or are is production compared our organic expense. pipeline able Amberjack to as fields of the to sure when new growing our often significant connected particularly to bills. at here. is customer’s me capital projects producer

So, little organic action. evidence with corridor growth of strategy required; capital to that’s our our know clear in

maximize arbitrage provide able a to James, Louisiana Clovelly Coast including key Amberjack and onto these Moving liquids the location along storage the system, but and LOOP, all Gulf the Coast and not connectivity export Gulf the is St. and shippers between entire which barrels leverage of limited opportunities the with Louisiana capability which refining company, of optionality ability a is locations. trading delivery pipeline centers, to Texas the to deliver Houston

producers So, of the to in proven infield it record and of acquisition, of Amberjack It projects to best the a expected existing of further proposition both track coming has from one growth summarize making of unique a from Mexico. the development provides Gulf value new online. position shippers value the assets, runway a pipelines and also growth

me completion portfolio, let integrity returned our the quarter. normal the of the results Now to for Zydeco operating project. turn results In levels onshore operating to following the

turnaround volumes and demand The quarter. steady volume continue pipelines and as producer with sourced onshore spot terminals deliver mars In fact driven second time quarter-over-quarter planned the largely an reached platform. to pipeline from record a the prior full results in the Zydeco quarter, remaining committed significant offshore the shippers line of in was at In the Texas. in by portfolio rates moved all our their variance for high saw

which in first pipeline the June. the oil quarter. from activity, connected oil field complete mars for came to May. We’ve new was completed first volume benefiting The to connects on the XX turnaround last the to returned we in Delta the service to achieved began planned was pipeline and on field Anchor the lower platform discussed schedule and As And that fields quarter, pipeline. platform the mars is in in mars two on during The achieved May. also maintenance which resulted down Kaikias Crown days second which

Finally, Auger Enchilada resumed to in which platform operations connects pipeline July. mid the

we resumed operations by to to quarter. in third Shawn the the end full July. In financial that, normal over which both Shawn? the of rates pipeline to Delta Odyssey I’ll addition, Therefore results are ramp-up With the discuss House it now to the connects forecasting also pipelines hand to for quarter.

Thanks Kevin.

in Poseidon, plus turnaround. was income Amberjack of operations. by up about prior the was about million, $XX the increase the million largely offset normal by million returning Our mars million, is from inclusion from $XX primarily driven now $XX revenue from the system The prior was $XXX quarter. classified equity which distribution other up partially from due the to quarter, Zydeco to Income investments, the

guided about last impact had As the in quarter, quarter. a turnaround of the second million mars total $X

in any onetime from maintenance first Dividend in $XXX of to projects about anticipating not due increased total, from income We was Colonial EBITDA million lower up $XX quarter XX% significant for remainder the quarter. are this the the dividend $XX.X prior quarter. million, prior the for was million. to from attributable coverage approximately other adjusted year. In partnership and the adjustments ratio second the healthy unit X.Xxs. expense, capital The prior of resulted quarter for XX% XXXX. over the X.X% $XXX representing After and maintenance a the a available interest quarter distribution increase a quarter of over This other declared total LP distribution partnership per cash was

balance close liquidity. So, sheet me with partnerships final the let

XX additional announced $XXX an seven variable fixed place of a basis million in with facility existing morning, and year points. five partnership $XXX term plus a LIBOR, partnership extended at addition a As rate million X.XX%. for new facility term placed at rate rate this And, in the the the a re-priced year of

Now debt our basis In the partnership which capacity, the rate all through $X down a current flexibility very points provides this partnership of the of LIBOR, plus has total, from now approximately additional at billion is competitive prior XXX rates. in facility.

billion, a the June of Kevin year. XX, annualized this improve EBITDA. debt of equates continue debt of total organic ratio on as leverage EBITDA $X.X have various online of X.Xxs our the the growth remainder based adjusted come which to throughout to And, As ratios referenced to we QX outstanding expect partnership projects about

our comfortable very be levels. to continue debt We with

well for days transitions questions, her well and to to And, commitments begin before range, to within past to Parker within dedication flexibility affords an as to Courtney thank us been line new Midstream want new grow we her to role team We to from in which take member are partnership over the Partners. the the I four Jamie of this our opportunity We we she the ample with integral Head Relations. of also continue wish of Shell as finally want our Shell. our And, welcome our with years. I targeted She’s a team early as guidance. Investor

we that, questions, take operator? all with your will So, now

JP of Tonet Instructions] first question Jeremy from comes [Operator Our Morgan.

open. Your line is

Good morning, for Jeremy. this Bill is on

year, things Just during few Gulf for Mexico you’re there’s curious the production, of of looking side? certainly and the just out the quarter, curious production the anything if over that on the on turnaround course

Thanks, question turnaround, the significant feature forward there’s turnaround the your of maintenance other anticipated further any that of I I think relative would mars rest maintenance the in maintenance turnarounds appreciate planned Yes. to was quarters. kind planned for or asking if question. If no year. Bill. the We the projects see

what the increased then year how Zydeco I’m was course that and that you And, the there? just bit, thanks. on see driver a the the curious over barrel trending Okay, and per revenue quite volumes of

structures for spot the forward we different from going that saw and our existing coming demand we it’s the of that to part strength lot the term. business near in little driven onshore volumes in, was rate Yes, always a that of we bit volumes from their of we different be that strong but variable, and space have well going so originating a business saw, continued as as out customers, see Texas our

then base and there? update plans just one, last us And, thanks. one your Permian can in you growth Great, JV

than Permian kind that The and for is as grow our we thanks to as of affiliate accelerates we’re plans obviously well. activity continuing Yes, their build-out. hot

We been build-out have a response to in model accelerated area. of associated growth capital sponsor some that’s that the and with and the their the plans project system accelerating the of the

taking my for thanks question. Great,

Our Theresa Barclays. comes from of next Chen question

is line open. Your

I’m update questions can up are you an on on efforts re-contracting give Zydeco, along? Hi, us following coming the Bill’s how on

the question. thanks Appreciate Yes, Theresa.

guidance in they details with will putting But the and strategy and some re-contracting associated and approach go that highlight favorable ruling we in our has contracts early the that re-contracting, the you and can is offer that. and to back the where contracts little see to I give of out contract you back to a FERC the the one line. a and on ruled place. after process negotiations our as It’s capacity on kind of of finished PDOs that We’re recent that key firm re-contracting for strategy in

go and for season year process we expect an re-contracting out to that So, use in our shortly. open

you Great, can capable could deep in loading from with and and further areas? an shifting recently thoughts growing bit Texas competitor how a any potentially possibly the its affect announcement would various little offer export for further situated competitiveness export bit the a east on as of locations be little VLCCs, that facility terminals about gears given offshore LOOP this that the developing water potentially from production away the

announcement put Yes, of plans cheap. projects. port couple lot to infrastructure deep thanks VLCC always things, the Theresa quite for various A different for infrastructure, moment well dredging not which expensive that. or fairly to is putting of a Yes, competes accommodate with this time water new in there’s existing a been in, is and

an opportunities different refining So, always in areas that terminal projects and too, James and linked for new we these number we’ll where to of our pipe weight in there or viewing necessarily you wanting continue all our course existing well. and that then advantage of come from infrastructure down center you Louisiana Houston, infrastructure volumes taking feed sponsor stay of up of or work. length, activity is has to as if sponsor some Louisiana don’t to working St. and they fed and length think And, could St. that of James by see participate a and also capacity, it’s potentially any place. need take and with and evaluate to that It see are where a we export and it’s our whether they’ll

Great, thank much. very you

Our Shaw RBC. Instructions] from next question comes [Operator TJ of

Your is is telephone un-mute. TJ if please line your muted, open.

that [Ruhail] Can is TJ. you’re sort and update well Thank dropdown into you us around and funding you’re into an XXXX? how you. on in of of Hi, how about IDRs XXXX about thinking thinking with strategy as provide this kind for

that bit Shawn a Thanks would more somebody about little I question. start it Ruhail. and I’ll talk funding. Yes, But let then suspected toss over IDR ask me to to the

Shawn? doing, space take continuing go worth competitors the landed continue lot squarely to on company, forward. further we’ve time to to the committed grow the as give IDRs and what are and of general from and $X.X company you do dialogue appears this to and are the with question of we’ll with We we course grow would or in as going XXXX time partner, we we’ve time IDRs. to XXXX said others in watch guidance will as of we Maybe are to that input do I aware But that of what want acquisitions well. as with What we we is at funding, a prepared that guidance get the opened talk and kind we that to the that do we to and got an are that $X.X our billion billion sponsor. have when the would IDR about is to ongoing say the of and we But not

Yes, Kevin, thanks.

at sheet when to XXXX, our of forecast in or So, to any to to new and with go us we to have and plenty come With liquidity forward. we I’m we any to of that provide that regards of know anything advantage to won’t what this about we of going that liquidity up have although comfortable take our say do, course pleased we’re actually are in balance with opportunities gives this manage the as facility place don’t sponsor Ruhail may we regards happy plenty but funding, point. XXXX,

positioned advantage we’ve As balance past we’ve we the don’t as markets with those the continue off markets able be done of our we we maintain always with to And, and we need the us. as in that in we’ll guided markets sheet, to work in are backs so the sheet conservative and to. take to to for balance past because relatively be when want our also there want

Great, thank you.

you. Thank

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

you, Thank your Midstream everyone in Michelle. interest Thank Partners. Shell you for

or questions, If feel you follow-up have to additional either contact Parker free Jamie directly. please any myself

the Thank material, as Our website. found as information can presentation be contact again. on well you on our

Ladies have program. gentlemen for disconnect. and a great you the today's day. you in conference. This does all thank Everyone And, participating conclude may