Noble Midstream Partners (NBLX) 8 May 202020 Q1 Earnings call transcript

Good morning, and welcome to the Noble Midstream First Quarter 2020 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Park Carrere, Manager-Investor Relations. ahead. go Please

Robin good Midstream and me And to Smolik welcome to Tom COO; Thank CFO. Christensen, first morning, quarter Noble CEO; Brent is Partners our With President XXXX the and review and you, results everyone. Fielder, earnings today call.

our we a will Following question-and-answer prepared remarks, hold session.

Operations. the and we Corporate participate also Stavinoha, Chris Here Barry Development; Reuwer, Director of John in Director to Projects; have question-and-answer session Capital Guice, of of Vice President

results as supplemental This as announced the morning, our quarter XXXX be in The nblmidstream.com. and we year XX-Q full release Investors website, available guidance. today, the slides well XXXX filing our first updated on later same Upon will section location. press of are

certain news Please to of cause latest a those statements. As to a reminder, factors for today's releases filings the for differ may forward-looking materially discussion well and financial our with refer non-GAAP will as latest list reconciliations that statements contain as non-GAAP SEC our in results the measures. actual from forward-looking

time turn the to Brent. will this I call over At

COVID-XX, remained first In home morning, and office-based to to families to that and of have I'd health well like safety I everyone from Midstream Noble your our early workforce. to an decision Park. Good to and the Thanks, hope on to everyone. you response made work say are call safe. transition protect the

of customer and to we keep very to made and from possible. employees and personnel field service uninterrupted safe maintain our I'm efficient continue operating thank Our like themselves and to delivered our proud that operations. to precautions report virus that response all I'd took very safe our and sites the that contractors the of work hard to

our has gas been of ability our oil will So execution projects by execute and far in gather on share moment. impacted the our more capital QX Robin a and produce virus. not and water to

our prioritize business operating additional efficiency We liquidity. our reduced Midstream contractor capital from at project by chain lowering balance our to gains and We protect supply expenditures operator quarter in cost organic through and the Noble lower we reacted million quickly reduction capital costs activity. sheet XX% and During deferrals. our and $XXX negotiations, a delivered over

cost saving made our reduced And sheet. balance to including prudent for the cash cash flow methods, but G&A and reduce net new program. management management approximately through enacting lowering in million difficult multiple and We the our compensation annualized $XXX cash a Board the lastly decision nearly protect management furlough XX% distribution to further --

QX from This timing. what delivery produced to on volumes new metrics outperformed control. all record all gathering all EBITDA. Oil, to led well continue accelerated our guidance execute and quarterly on and well well and of We we benefited can water gas connect

beyond completion early fairly activity we Going limited a forward, expect QX.

I to Before our turn Robin, within the points I differentiators inflection over Noble highlight want business. to Midstream's important key call and

new connections First, have has capital in to couple to infrastructure cost per efficiently our We capital well. and the last out each our necessary continue over backbone in build add years. of the gathering in business, infrastructure Partnership the spent now basin place to reduce the

first Second, we've nearly over of addition quarter. in Investments these with complete years the and long-haul intermediate projects last diversified our in several business pipelines. the was the

will As gathering EBITDA and to we investment cash peers. high-quality, move free past from we contracted differentiate expect us in growth that the see phase, flow

sight XXXX of business. to our from flowing Crossing now by to online pipelines Delaware EBITDA we and With approximately has minimum Y-grade volume estimated service growing Noble and the line XX% are and the Crude EPIC to commitments, transmission backed throughput very soon. EPIC Midstream full The transition anticipate of

inflection self-funding without additional entity, a transition the equity into points need Beginning for will in Midstream investment. QX, these Noble

free discipline, capital prioritize to continue debt we'll reduction. forward flow and going So cash generation

to over call the turn operations now update Robin, guidance. I'll on to that, and With

Thanks Brent.

quarter, excellent to from and reductions, strong benefiting Partnership execution. our higher During run and flow EBITDA systems, throughput times This Midstream's gathering the the record cash across expectations, cost first efficiencies core and contributed project that distributable volumes outdelivered coupled generated. business, Noble with operating

delivered The to completions water XXX connections during nearly basins across gathering added well systems, our fresh the team XX and quarter. both into

tankage on XX,XXX of the Basin addition, In was gathering an incremental quarter April. completed the XX,XXX Black the barrels during crude in Diamond in late with first barrels storage and expanded DJ system, added oil

due full we metrics production capital updated the of and outlook, duration around guidance we scenario customer on for uncertainty provided investments based months, Turning volume suspended other yet have to and over next year the several to outlook the analysis. financial XXXX an curtailments gathering the key

We assumed of our and curtailment range activity, guided delivery the bound August, reduced transmission into gathering of of moderate ranges. and million. a high-end $XXX gathering These customer to in water significant fresh transportation due And the adjustments curtailments segments and in our to ranges. lower of of $XXX curtailment through million $XXX flow cash net million. $XXX distributable translate forecast of And annual million to adjusted EBITDA across

cost year. the XX%, first per-well few in the more connections months connection per-well reduced, Despite Partnership than of this

year. now of a and of reduced $XX we anticipate to project a our result $XX efficiency deferrals, have XX-plus an from March budget, organic gains million our As update. million capital percent additional this capital these And range

from this beginning enhance our have our efficiently further remainder ability than resiliency of reductions align year, XX% by to highlights guidance, to second cash and for the free the original continuing In in customer and total, our resources quarter these flow February lowered reallocate we and activity. more capital expectations generation, with

When are for for connected we new of the two the year. of development. the well completion recommences and across activity, approximately dedications in early DJ Noble to the ahead, in the road Looking we our quickly due to rigs quarter, remainder minimal Basin connect anticipate acreage synergies cost XX positioned wells second wells

activity the expected the with a projects, to well dozen second an XXXX. half quarter, early on in we Basin, anticipate pause a late resume Permian In new connections before additional in

for minimal are are operating of result and the remainder a As capital for spend reduce XXXX reductions, facilities our of evaluating of optimization these organic activity currently expense. we planning to

in million year. Meanwhile, we expense have for already total savings million identified the $XX to $XX

will We potential before future improved further on cautious and with timing development sight plans prices. incremental base are be we likely commodity customer, work line opportunities. continue of and which capital, on be have by activity our committing And until existing we'll supported to to

I update balance will now to call and investments turn to Tom, on the the over you sheet. equity

Robin. Thanks

owned pipelines, on Midstream. to subsidiary, for update an Black $XXX our Noble stake our a million million First the acquired Diamond Saddlehorn net partially in $XX Xst, ownership XX% or February effective pipeline

of or $X.X Midstream. for Diamond million generated first the Saddlehorn two to Noble ownership net million During months of earnings $X.X Black

EPIC We as from to also volume transitioned first during improvement quarter permanent service. saw the line Crude the crude

environment, in market-based its advantaged Crude to activity near-term continue near-term Despite its believe tariffs headwinds pipeline EPIC exposure rate that as existing EPIC build Crude lower new the to reduced renegotiations. has And operating recent costs we is this pipelines. than

customers it summer. Its premium adds storage X.X in Christi an Corpus pricing, over online to dock of space, now, crude expected million with with crude markets. provides access barrels additional And later this million in international X.X

budget quarter full the of second until partners is during of half fractionator to this is transitioning investing depth service began as the the In service the Delaware have and to Basin JV the the delayed second up when and the expect the of NGL to Y-Grade service back transporting entered on time this we have Crossing second the greenfield market uncertain completion from on during from crude quarter. year to start better on to Southern and downturn. Wink. Delaware backdrop, target currently interim visibility

Permian this of in low-cost -- allows include to in in the the asset Benefits is the terminals that into tied connectivity future multiple access Gulf. it and our and mainline EPIC us Crude Basin customer its drilling current allows hub a customers and

fresh to and portfolio solid see the cash to water Cliffs to uncertain investments Advantage enhancements, to coupled profile investments. navigate us pipeline will addition our with recent In these MVC pipeline quality provide XXXX. and Partnership's help from These an performance stability and flow continue White we our

Midstream This a first $XX reflecting is first of distributable of with record impact transaction. quarter to simplification the and of $XXX full had recent Noble cash quarter Now drop million flow. adjusted our million EBITDA financials. the quarter

$XXX on the investments requirements the expenditures pipeline These meet we funding investments. quarter, $XX and investments. equity spent and on the made interest other Saddlehorn our acquire During million of to million were organic capital

our recent million in For goodwill for million It's year, to Partnership full the of $XXX million. caused price worth investment capital $XXX goodwill forecast current net gathering DJ fair Saddlehorn or value to impairment in Noble used was a Black recording and now mentioning analysis the in that The us related price the $XX $XXX the goodwill we Midstream. dislocation include has system. between for third-party be has impairment Diamond gathering expect acquisition not million does assessing our resulted equity investment near-term XXXX our This business and pipeline. of valuable our to lower to

is Partnership sponsor path The midstream in long-term company. highlights no-activity of this creating even low be and on our self-funding environment, in sustainable which valuable support the to a to

that priority Returning an remain will important unitholders times expect distribution we capital our to coverage four Additionally, XXXX. above in for remains Partnership. the

as to assess our business the continue the quarter. monitor market of conditions appropriateness will distribution and we both each We our

and We ended million four the over quarter leverage $XXX times with liquidity. in

disparate XXXX. below due actively curtailment even of threshold. working We we our five times covenant are back we come remain in the safely maturities that and extend that in debt the half Additionally, in will to scenarios, XXXX believe debt

we through company, the a be competitive lower essential will to understand commodity As keep cycles. Partnership that leverage

during we leverage target laser-focused of our are debt our slowdown. With the of three reducing on absolute times amount the

the on assets move needed year. to well the flows progress forward generate throughout begin we as I immediately look deleveraging positioned and you updating Our to excess this are cash to our process

for now questions. call With turn the that, I over will

[Operator ahead. Instructions] Please JPMorgan. is go Jeremy Our from question Tonet first of

and seems near-term DCP out call there? morning maybe as midstream to even that as in good through Jeremy. guys. May seems is and pretty I was DJ the constructive. you're through that the Noble's talk your I Basin play April This with how well for wanted on guidance solid It given about yesterday peers curtailments outlook. seeing like start already wondering June, from just assumes the James Hey, DJ outlook here earlier But

the for question Thanks Sure. James.

connection. drilling prepared As early through into to continue rig and I well activity April continuing seeing mentioned DJ, and even in in we're May my the we see remarks

So we do activity. have

But sponsor across month and on with leverage we yet mentioned as meters some associated since customer into distributable second forward see not to week early cash into guidance seeing forward our And of we're to respect earlier, look curtailment the that. anticipating a our June, scenario in in are quarter, really month. analysis or with this a as that of we've the EBITDA our and to put some look and flow we then May our but that -- the side our on it

not and place. certainly constructive systems activity for are year So we're when got gathering already largely a lot in potentially even prepared our but resumes before, there section as we've in as of later the well because development sister

So Econodes. just incremental will in connections it cases be on just turning well some but

mentioned, you don't it. guidance case? last Got And think have in still Is any That's the your that quarter I the helpful. then distributions. in you EPIC

Yes. It is.

cover’s That great. the me. for Okay, I appreciate questions.

James. Thanks,

The is Energy. Hammond from Simmons of Pearce go next Please question ahead.

first the in would my is Good back say a the and bring is the the And what ratio this My normalized questions. down. you past morning, and when COVID all environment would price thanks be in path we to for get distribution distribution coverage? implosion, taking coverage what target oil of question

Yes.

-- is Pearce is this this Brent. think I

think should on priority reduction. in we'll about debt the be I you terms think sheet near-term-focused and balance it that of

close out we As three as But we the increasing times as and the thinking again target, later. to start can we'll to I move we phase focused stay of start get investment think comfortably heavy more there. about distributions moved we forward

times. Thank follow-onm X.X the as NBLX? guidance X.X for ratio again just a be ratio a your few you. picking think should the for the the Okay. normalized comments ultimate you year up appreciate provided target And in you ago on this leverage then environment, what moments And leverage my that to do

lower. We're three or times shooting for

both to color. your Yes. And questions some add additional of this is Pearce Robin. I'll

you of much JV and starting are we've As to backbone those investments place much -- our in know got on gathering turn of right pipelines our have now.

behind us. is So of spend that much

So have to capital we're as we set into next minimal investments well year. up move

on connects. matter So just of a well turning incremental it's then

really with quarter. So through especially our we're cost we've generate up system free program able we the we all to this as like flow to reductions as been stated nicely far outlook roll quite to set expect the continue starting cash

Okay. Robin. Thank you very much,

Pearce. Thanks,

Brent to our [Operator Instructions] questions over would There time. Smolik session. conference this to like back I are This closing for no turn at concludes the question-and-answer remarks.

industry, supply -- I today safe. at see We're to are some time remain in all announced and the obviously everybody look some thank unprecedented reductions When we capital of they producers just the increase and increasing hope for maybe some times in when very do year you. increasing be developments. positive I the I families early recovery your ready cuts sets the throughput. you all want that to shut-ins Thank and globally your think to the COVID-XX, starting well we'll OPEC+ next but producer this in for with and activity so beginnings And later them. from up

concluded. for presentation. you The today's Thank conference attending now has

disconnect. now may You