Shell Midstream Partners (SHLX) 29 Oct 212021 Q3 Earnings call transcript

Good morning. My name is Jeff, and I will be your conference operator today. At this time, I would like to welcome everyone to today’s webcast for Shell Midstream Partners. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. now call will to I Instructions] turn over the Mr. [Operator Investor Relations. Parker, Jamie

You conference. may your begin

Jeff. to CEO; you, Business statement. me and Thank Welcome Guillory, Development. today Partners. Shell Sean our are With Slide Midstream X Steve safe Commercial Ledbetter, VP, Shawn contains CFO; today’s Carsten, and webcast harbor for

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

will the call the We turn Steve Ledbetter. that, to end presentation. With take of over I’ll the at questions

to Good third and welcome our Jamie. Thanks, quarter earnings morning, webcast.

show First, and midst how start by to am in I our resilience Shell me Midstream who of continued proud adversity. entire the team, let of saying grit

our a focus and those to impacts like gratitude remarkable. normal address live. Ida staff line. is express families, would outlook. you longer in Their who being work assets on the my a most ability their in bit, and with own States bring As in significant Sean on operations Hurricane impacts to truly term impacted our short-term while will Gulf and worked dealing to will homes know, our back impact the continue many I short the where Louisiana, to to United the Coast, bring in assets I sincere of to with time an frame, back And area

capital allocation drive intent Shell will recall, building Today, for into want framework, upon quarter, Midstream which updated we we the this strategic our introduced we which financial an our last framework, believe future. sustainability. Partners, you As will align long-term drive to

with will exposure delivered As believe in continues in and and our the growth which capabilities and Partnership. complemented and having CCS a our with continuing we Holding and multiple as that clean live and be and access logistics to the diversified capital and Mexico, and care drives services by to the optimizing which efficiency teams, such track which Gulf deployment to through in financial supply key and we We like of services flows support asset costs all diversified fueling value we value-added our and the into energy our unitholders with our fuels, to fundamentals, from investing to deliver execute strengthen optionality dynamics, basins, responsibly, on opportunities other focus with with for enjoy. expectation are the cash will centers which evaluating This for and Shell or efficient expand strategic our we and forward, deliver decision-making. to positions to growth our in and moderate our term. continue cash advantage by ratable current delivery strong will to assets to to we selectively portfolio Midstream deliver increase move offers transition cash year-over-year. ratable operational the ability moderate competitiveness decisions all each for to record cost-advantaged A while refreshed of take evolving benefits always footing its long market safely to Partners and and options customers, the of core people flows further a confidence resilience offering respect to market work. environment competitive stable upon benefit of and stable framework, cycles drive base to

mainly Our region of and we we cash grow. in term, midterm, production driven delivery ongoing be be will our and the product offshore With the the systems. Mexico, the by will In will activity continue believe the tiebacks to our should into specific with and not Gulf and crude share. to to story to across our In provide but our anticipate flows. near to assets the onshore flat most we Powernap Vito, our the expect Anchor as to flows. examples longer basin grow life cash one cash of continues the long economic also few to A to explore replenish producers systems and only remain term, active And be flow areas assets.

for Our well first ready in from and oil XXXX. progressing is Powernap and Mars stand will Vito expansion

intend to on in corridor, also production that the new come in expand midterm. in capturing the is the to area We Auger line ready

time anticipated to capital a million in to and of continued an million in value areas $XX of that FID examples between to our of We with expectation opportunity to and investment annual strategic projects of XXXX and an come business line expect line are $XX value unitholders. and Both EBITDA have on outlay and deliver of provide million, XXXX. million, between will $XX $XX

Moving onshore.

levels. expect return We continue to pre-COVID demand to to

markets FID to the intended James year. such for exports. reach St. and Lockport movements and as allows selective assets ratable And the contractual positions of our which should be to into be opportunity we’ve I next our will in expected expansion, will Clovelly minimal move As This onshore What will are investments core we anticipate flows note our us move growing that into advantage in discussed to as staging and crude will growth we drive take risk have forward. inflation. past, early with Midwest cash Canadian

James intent deliver an St. to $X link the project We utilize Southeast path of providing water positions to million million downstream annual be And from $XX with expect all further efficient and to the million CapEx Clovelly between in the Louisiana, between to we EBITDA asset Midwest. take-or-pay $X value and $XX million. and an our look to to of

fuels Additionally, in will market. system the which cash could stable to flows we for and opportunities continued to to announced which products continue growth levels is the anticipate the Company. and flow, this CapEx although of will growth, will with all forward. Shell’s need in discussed to leverage Dallas quarter we levels, distribution deliver time, our base of well provides we energy follow excess weather allow ratable to plan, opportunity into explore last future, where announcement fossil positioned be non-operated like we intent above Ida, with uncertainties, into core required, the will see drive refined in and look Explorer previously CCS With fuels, we to Hurricane provide project upon our advantage moderate solution. our This to Coast, cash having themes, cash take CCS the and expand portfolio, North be footprint the would our in framework renewable and hydrogen alternative well us we the Gulf our we move strategic the as to strategic our small expand and One recent we the excess value namely in further midstream as position portfolio project potential And transition this potential space such solutions.

dollars maintain ability It aligned we the with will our my in unitholders. return market, market will resilient over deliver our sheet the opportunities belief long balance we and our growth strength the units remain view to look to and that is order additional and of to undervaluing is First, term. pursue to

buyback program a potential we such using excess as are or evaluating options, in for distributions cash such, As the future. increasing

we where market sense Finally, to perspective. opportunities and of drop unitholder a opportunistically have cash a we additional unlock makes it continue ratable value a access assets provide and could future growth runway to flows from pursue to if

of advantageous close, country. Now, strategic will to there the now when call centers base, asset remains as moderate diversified stable And areas us we Shawn. believe I connects positioned long-term supply the key well The believe Gulf and with our to flows to our that, well. well continue which the I will Coast our position market serve across in we future. cash to hand logistics combined fuel the partnership Gulf over our into and With resilience growth onshore assets,

good morning, Steve, everyone. Thanks, and

we XX and our staff capability and months, say multiple quite I our we’ve continue times really can of over. been which agree, I proven it’s strength can’t best-in-class the deliver our but think resilience past assets, over a ride enough the to all about performance.

the a in our be the come. world energy And evolves, Now, view space. most even and believe all underpinned diversified the infrastructure many our will and for is hydrocarbons will to the strong need asset this years some resilience transition transport as the the that assets for my by have United resilient It’s of that base. States we we that

in how of move in build set and framework Partnership’s place continue intend we strong cash to deliver to our to assets details more our So, with to I’m unitholders. financial ability the our on upon, confident returns now to consistent forward,

So, for few metrics key me quarter. now, financial cover of the a our let

For our meet third the commitments. a quarter able dividend, Colonial’s to was declare quarter, the its our even to impacts with not speaks and decision storm to partnership financial This strength.

from was quarter. about $XX million, the Our total of second $XXX a million decrease revenue

quarter, project as Income to from to work was volumes by million, partially related $X Operating million allowance the experienced from some Ida. impacts were spend by quarter, downtime This investments and $XX equity was about down higher a offshore we was mostly of throughput oil revenue. the $XX offset lower partially this to prior prior as product of the and timing about cost to Now, sales. related million, related offset lower was Zydeco which higher storm on decrease delayed, on million was Hurricane primarily expenses from Explorer. due mostly $XX the down

the adjustments, to distribution was expense, after was all $XXX cash this, EBITDA and maintenance with total about million. adjusted And So, capital interest other it million. attributable available Partnership, $XXX for

LP distribution per a of declared Partnership $X.XX Our unit.

in for Now, quarter of X times. the coverage this resulted a ratio

Partnership’s to turn and me let now, balance liquidity. sheet the So,

total our events flexibility effectively in both, September Hurricane Ida ability debt balance sheet arise. $X.X of navigate had billion as the and to the believe us of as outstanding We opportunities strength the liquidity. As they approximately available like and it Partnership of $X.X in XXth, billion the to pursue provides

future. impacts long-term and now, housekeeping, renewal In are we roughly income of way expect to completed understand near all a Ida they being platform, mid-November. CAFD So, expect provide see we profile. It’s our both, And few to year. the company. fields which of up, into net back expire our XXX for around And let little million the in in $XX the finally, production a impact Delta on to should the updates Gulf, the me to we QX, set to West to this are rest the for $XX shelf normal have million an a which quickly anticipate is repairs any registration resume file important a not that expected on to once effects statement, the of

believe to we Although do we keep any active. registration anticipate needs shelf issue not to our it’s prudent near-term units,

As about value maximize drive from I diversified future close, we’re the unitholders energy. for move believe optimistic And Partnership. in we we to long-term our America’s base value ability as to our asset of the

all that, with questions. now we’ll So, take your Operator?

from line first Instructions] [Operator question of the Gershuni Your Shneur comes from UBS.

evaluating as to start comments in deciding be I the When and that is what to about on? that I’m that know back Hi. of wanted you cases as be kind we so rightsized discussion. about triggering about just -- thought something specifically be do the a you relative you’re and we near-term event? thinking something have thought should should Or so, the sort of place, rate about that’s inflow cut kind the exactly that we to already Does distribution, Good of is process? of thinking trying understand of projects that forth just process to the you’ve something outflow that’s today, everyone. the that return and working highly Colonial to accretive when you’re your that morning, kind event? capital it to as have your go cash

event. Steve. question. wouldn’t take it I’ll to It’s one. any this Shneur, is one link good a that Hey I

a buyback of along excess our that, part allow Timing have that see, is headwinds that, we balance weather has to cash. name. the take to sheet, cash and refreshed that to with time, as of at And that value be terms of what to opportunities and done allow a move excess us think the us And allowed those through will of today. deploy about over along returning one will in in time like in Hurricane dollars I and items cycle, financial us capital talking grow specific point or build of grow framework the the our as to Ida, looking will just strength program not we shareholders. we

the slide there us Like, your X, both quick buybacks you a right write into they’re you slide, wrote clarification. just did something Is Is distribution that when And now, read for or Okay. that? viewed second. preference first, on equally? to

are Hey Shneur, two to cash unitholders. they No, just Shawn. is options, this to ways return

Great. there or few Colonial, I you question, case And capital capital one any that if up like maybe there’s a the in fact one put for would slip capital have Is the not need a paying can into final that for building risk that? injection a any in. it’s last distribution quarters, it’s to

good Hey, question. Yes.

the and where for discussed case quarter as it, row last the as didn’t view XXX we second a [ph] well sit could as distributions, with billion impact declare we the they rate and a we the As with quarter, associated here in risk incident distribution.

turn that to from a coming their framework, manage see that the also, a believe in able there. need financial our nature are distribution And investment, and the in is that within injection believe that cash it believe don’t we happy would We to position be will there. of we anticipate and with Colonial our still out strategic owners. we However, that of time for Colonial

question Theresa of the Chen Barclays. line Your next from comes from

outcome on of you what like here, steps the rate I’d just don’t follow to expect next are of do And Shneur’s kind far up far if what the as remind us related to as morning. as Colonial, go? mind. Good you the sequence Can as events resolution? question you from

as you back that. the on I steps far to as directly next we’d Yes. mean, go, point Colonial

that or any back specifics. just a for As Colonial But been ALJ that you the know, you has scheduled decision -- there point was November. back understand an bit. we pushed put for again, We of to you

that of sponsors end? terms your your energy exactly potential or in in you can efforts entail the option, talk what in about And would CCS Okay. more participation transition, the from

Theresa, go this is ahead and Sean. Hey I’ll that. take

get of recent to I Coast. pipelines what you the makes would carbon have look may value before, fuel look what sponsor at sense think we possibly from or terminals would for We announcements pace us CCS that to a and they’re for the in we’ll and from of like at have that low-carbon at Gulf tanking, work the the I continue said perspective, some mean, storage, invest capture, looking seen use society. hydrogen, things that Partnership. anything to in the about

a this by these These And however participate, Theresa, is Shawn Carsten, seen just bit. add contracts, little be backed the past. more midstream to will you’ve in will we traditional -- as

our to play but is our ensure So, play, that to affiliates unitholders. and -- returns our also we integrated support in that value objective

next from question Your the from Irwin of comes Doug Suisse. Credit line

extent to policies? what how you’re cost that hurricane under And the Just that. on be much of terms to able wondering around about that perspective from can say costs help might are the you repairs? talk comfortable on it’s into hope if to early then, too kind quarter of insurance I to, the impact, you a frame went in able

All right. Doug, Steve. this is

I question. think, heard the I

bit You that costs, were a that then recovery. that’s quiet there, correct, right? assets around I insurance around but little and Is If can potential up. frame the

Yes.

our and the well. repair Okay. minimal Yes. far as to costs think our I assets I so goes, mean, very up assets hurricane the as held

was are our with not XXX. operate them. you -- assets, As the affiliate. we impact those man business on own we to West associated know, owned our those while And by Delta and They damage the do

in October Mars a bringing and up do And the affiliate, extraordinarily damage I’m insurance? our see for Shawn, dealt Platform this, fact, to you system. in mid-November plug. those team will And the with proud about platform flows borne they any to don’t and how I assets. repair by want the get so, our our C of going just and talk lasting . A be through up the corridor cost back to

Steve. Thanks, Sure.

So under property qualify insurance, waiting the would the minimal Doug, is asset insurance, business as in day. to XX-day only Steve we the damage. today of -- we for I the that highlighted, is regards period with Mars interruption that have terms think

expect future. in near the As we we relatively highlighted that earlier, to return platform

And claims what not be. we’ll making predictions. so, see the any I’m might

significant it However, them we up expect shouldn’t to if comes be quickly.

million think helpful. fourth the on maintenance previously that the been to Thanks. there half maintenance XQ might pushed that I mentioned be Okay. year. baked second And impact quarter? expected into of And Is incremental the of some you’ve million guided then, that you’d XQ. That’s kind going to in $XX top talked $XX have or of about, to costs out of throughout the you from some is

Yes.

I about we The is $XX just million we’re right lost efficiency. always million have the mean, maintenance just related that because almost And more which our to delayed a or Doug, just the maintenance million canceled production. these to -- -- standpoint we So projects all capital, around due revenue, hurricanes to were from $X $XX every year due is short quarter. capital have about were for entire to now,

So overall, over bit but relatively I with New maintenance, we’re a we think little -- activity our pushed Year. of we’re to track on

comes question Walker the of BoA. next from Derek from line Your

guess, guys dropped million XXXX this call you cost ex of reductions I But, you that opportunities during of previously costs? by related reduce of looking Do to remarks. I of structure? this. in if to sort My are $XX said further your sort formal at end guess, you impacts know, apologize $XX how the I talked weather, the I you year. to cost million guys any see about

to million we that leaving sustainable we to had And we $XX are say rate, what that target our $XX and structural objective where past, Those different XXXX. on sustaining take lasting. strategies, are towards. the in marketplace, we about talked advantage to that happy guided XXXX, and see was that have we to million what in I’m stop don’t exit there. do we as as optimize meet and the those Derek, run and elements we we Yes. are procurement But

and We our the to our as continue in to for move lid we to, about, on well as continue position and on as look a talked we’ll as focus optimize discipline marketplace. opportunities And we capital our costs competitiveness forward. keep

you drop the just Got it. media And buybacks. the thing, I evaluating know mean, perhaps then, it’s about on I downs. potentially but talked

the of incremental front to your just think assets and guess, on funding But you sort is interest buyback already you on dropdown there be the I have past, I your talked recent anything around -- -- guess, evolved, about there of strategy I in that has you sort own. discussions? had that?

one made financially, benefits sense entertain it linked being in in makes -- access mean, I the we the don’t the name. of Yes. access would best as drop that. assets associated having it to so and having point, when of If value those At value growing could we and think the sense with currently, being doing make to that as this far sponsors, sense structure. the and

build a expensive. Steve’s markets on awfully in little when these intention Just particularly new to have to comment, equity, look, issue we no it’s

a on to forward, some down. and through balance But to excess do that’s And to whether issue. all reviewed we cash as leverage sheet as that so, term opportunities, both look it through cash possibly cash other take we as our our drop longer include options move of we of this hand, of which returning unitholders organic advantage growth will we’ll slate the or well

opportunity. on just quick maybe then, And it. one Got Auger the a

of that opportunity did mentioned guess, And any to XXXX. think, point to how before of kind I other happens? the points data FID I I FID guess, you kind in that develop?

that go one seen has actually Guillory. basins very and Sean expand Gulf what over I’ll last the one. would some the and quite investment there. to that cycles of is, gone desire for the the very that in is And I similar to in want question. Thanks Mars basin to most -- the has the of that as that This take have belief resilient system, difficulty continued United say show continues the the much the producers of but Mexico ahead. our States, Auger see come continue investment the as opportunity And about some And Hi. ahead the we it to in out we’ve couple expansion. to go we through that

process provide with through able role of solution producer evaluation export will of a terms the market to in bit allow we delivery that come that to We back necessary internal we’ll time. at more cash. the vital Mexico forward, of the barrels the will more will a think process, the detail Gulf get we a our as And own going be of play later in

Thank you.

We Mr. the questions. Parker. Jamie turn have will no to back I further now call over

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

contact have our to you following found as materials be please follow-up me presentation, questions additional today’s can as website, free call shellmidstreampartners.com. If any well information My presentation feel directly. the on on

this Ladies for Thank concludes participation. conference and your gentlemen, today’s call. you

You may now disconnect.