Midstream (EQTNP) 2 May 232023 Q1 Earnings call transcript

Hello and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Equitrans Midstream First Quarter 2023 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to Nate Tetlow. ahead. go Please

The welcome XXXXXXX. for and call first XXXX The this quarter be is the Good or XXX-XXX-XXXX Midstream to Corporation. call XXX-XXX-XXXX. evening. beginning days Equitrans for ID this number A earnings for available replay is morning conference XX the phone replay will of

XX, actual in Please regarding results today's news December measures. release Today's call Please call from measures, the related to and statements year to such forward-looking presentation release XXXX XX-K to future GAAP forward-looking the financial risk by may refer the this to factors statements. ETRN's investor morning's updated news including measure. may reconciliation to Today's differ contain events Form comparable materially refer for and and cause Form most expectations. that factors as non-GAAP disclosures contain and the financial ended important certain XX-Q, our these could for

Diana Chairman Vice Senior Vice the and On the President After call and Pietrandrea, Macken, President Financial Justin call Systems, CEO; Senior Officer; open Oliver, prepared Officer; Brenner, will Treasurer. and Officer; today and Karam, Chief we Vice Chief Vice President, Janice are and Operating Kirk Accounting President Chief and Charletta, and Brian Engineering; Planning Tom the Gas President remarks, questions. to

will Tom. I to that over With it turn

everyone. morning Good Nate. Thanks,

quarter adjusted first ahead on net Kirk deferred of in financial details results a reported million. XXXX $XXX EBITDA of of few the million, we million of provide Today will expectations $XX $XXX revenue including income minutes. results and

may permits. know now construction remaining months of of four months Pipeline. is approximately that XXX and XXX and five with reviews, than to What from more More we project's months than of scrutiny, Valley are know, the initial FERC. months you have analysis, As re-issuances we complete repeated Mountain not filing you to

are We third Biological on our now Opinion.

than allowing causing communities action affordability reliability the construction. complete and MVP customers. our endless The impact is negative challenges to on and employees, and adverse is more of and environmental permit The security court our and impact simply on real, loop is seemingly energy regional impact negative so

with off empathize many the want property. their certainly the right-of-way landowners us simply who We along

best get the finish this and and again landowners' permanently environment restore property said, the time right-of-way. Federal its is are impacts. view supported to I to to evaluate agencies the way has protect State and best positioned off As the that And our project, been by project and

path notwithstanding setbacks And continued permitting are the under we the and so, law. to available risks, pursue continuing

path a of outstanding a that for Bureau cross the permits Forest from and Land The about minute. required to Service are the Management. talk National Let's right-of-way Jefferson authorization Forest

receive to authorization about two this expect in We weeks.

need we U.S. permits water Corps a Engineers. permit, the Forest the from of Virginia, from Water West and crossing individual Quality the Beyond Certification Army

degree of vacated the ruling. ruling with Virginia in and as Fourth the Certification did a West as confidence the This the been The previously foreshadowed and issued adequately oral West not in high come close the have Water a raised DEP last October Circuit Quality argument we've Virginia the X. addressed. contact will on ruling, issues Since be that April surprise can

will We summer. late And will are opportunity XXXX. complete once early necessary to narrow, by give path construction FERC to permits And the approvals we see all grant full resume expect us in obtaining the all authorizations lastly, to construction. while issued, this a

no All is of and this intervention. contingent of court course additional

the Last Biological seeking a opponents Opinion. stay did of a week, file motion project

required. Fish the Service that produced the confident addresses that Opinion a are concerns and and exceeds Wildlife Biological the court We previous standards

weeks. request a rule few to court in the expect stay We the on

for should each concerns receive required every Fish confident permits court that projects permit and agencies Federal standards required as and and And follow said are involved all the to that address every authorization. Wildlife, required we're process we've prevail. State that previous addition In like producing and exceed before, the MVP the

energy Secretary Valley highlighting MVP The many the in of of commissioners national week particular reliability energy natural and to and supporting Granholm Energy, and electric regional Last the infrastructure, Pipeline. infrastructure, Jennifer system the letter enhancing sent highlights a Mountain including security. the benefits importance of the the and letter of gas FERC

We differences Biden be the truly MVP of We between case critical support are permitting supporting need bipartisan reform administration's MVP. reform grateful reconciled. can for a to parties political the necessary at high the study, to a should and advancing, and level real-time legislation. the the support believe is permitting pass has outward keep

to both continue urge reform We permitting comprehensive to act sides together to legislation. on come

update, now to the operations and over discuss then Diana? Diana it financial And I Kirk will will results. the for turn

Tom. morning Thanks, Good everyone.

In we gathered Bcf quarter, the day. about X.X first per

Given continued takeaway A basin volumes flat. constraints, be we to expect to roughly

gathering primarily sustaining CapEx, year. guidance year of approximately volumes XXXX is $XXX midpoint, we what keep remaining projects, consider is related million CapEx to CapEx estimated is various flat of to Our additional that compression. the for full gathering $XXX million $XX and million this growth The at includes capital

the Over CapEx next pad as annual to the increases. drilling few trend lower return years, sustaining to we expect

the not should Lastly, in contract were that acreage under that the first to volumes be exchange any terminated subject contract. we cash gathering It quarter, noted termination dedication. we one-time of of payment a $X a million was the received for in gathering

into open set day agreement On an through million that first an payment shipper. the the we a expire for April per early and Transmission capacity an XXXX execution XXXX. cash day termination newly received contract a from XX to available new of XX one-time segment, exchange quarter. We of The average X through for XXXX, entered of this million $XX million commenced commitment an capacity on for per season million with from buyout average and XXXX. fully completed the approximately We successfully day then of the also XXX of in capacity in in a was benefited per

capacity. several remaining We for discussions are with in active potential available the shippers

Connector Project, XXX of day mid-year having approvals after. the anticipate deliverability necessary by soon on mid-continent and Expansion Valley Ohio. for access targeted interconnects all is Valley our in Coast Gulf pipeline, Ohio in-service capacity expect half per markets through we the will in On The of which and to commence million to Connector XXXX. incremental Clarington, add provides construction expansion The first Ohio the about

the drove strong for solid quarter. the On segment, delivered Water the volumes financial results

strategy enhanced between continue shift producing system mixed-use producers seeing This towards to water are that the pads our produced and storage water includes and new for in produced jobs. direct We connectivity to supported using more shift is hub-and-spoke facility by access frac water pad.

and in storage water this barrels. expected our month is to total second placed will Our bring service storage early facility be capacity XXX,XXX to

We of are enhance the exploring system. connectivity water several and opportunities scale mix with producers to our

quarter, forecast to first our end the XXXX. we previous As a of result for of be water EBITDA guidance high million our now at of strong $XX

the around addition, our for implementation climate Next the with management development system focus enhanced goals, big mitigation efforts year continuing our this TCFD are reporting the framework. of and XXXX in on ESG, items of an environmental

last, occurred quarter. Rager storage regards the fourth with to that And Mountain well in leak the

are and the closely with continue to investigation DEP PHMSA. and We root cause the Pennsylvania coordinate with progressing independent

activities. approximately $XX of million expense, $X.X And $XX to expect the incur we million million $X of CapEx. approximately to the related approximately to first incurred operating and $X full for quarter, In million post-incident of today, we based year, know million we on what expense to

of of a and wells Additionally, comprehensive we field review are storage integrity. continuing all our storage

At to will it's be is continue conclusions. information still to and more the analysis review, expected to is present, diligently We which work summer. this root the expect provide to throughout cause any premature draw once complete,

say today So we will we again beyond what on this be update. brief very limited

I'll turn over the now to call Kirk.

good and everyone. morning Diana Thanks,

Today, of earnings $X.XX. million, diluted we shareholders of adjusted Net common common was million, $XX share million. deferred net quarter ETRN reported to revenue income income was first million ETRN EBITDA $XXX $XX and was and per attributable $XXX

activities operating net $XX flow also cash free million and cash We million. of reported of $XXX provided by

income common to shareholders Net was by items. impacted two attributable ETRN

NYMEX certain post within the operating related gas to entitling expense. MVPs First This and received the by which Henry And million $X.X Mountain contractual prices exceeding expenses storage an second, XXXX. conditioned natural instruments, Hub of specific in-service by on on Rager from the loss thresholds previously unrealized reported $X.X mentioned incident. other through to payments is relates cash provision EQT, ETRN million derivative

contract million, transmission water increase attributable share was diluted these to After of by the one-time by year first adjusted gathering $XX common the first of and for contract items, approximately per the and the quarter compared by Operating million, for higher lower $XX quarter buyout gathered income ETRN shareholders to revenues was net adjusting buyout the $X.XX. million. offset driven partially earnings $XX volumes. same was last adjusted higher was services quarter of million, The was revenue $X primarily impact one-time

storage was quarter from first first were of than and quarter O&M, by driven the expenses. primarily and higher for The 'XX. expenses Operating XXXX SG&A Rager higher increased incident, million increase $XX Mountain the of depreciation the

The also $XX first assets. XXXX tax driven valuation by reversal quarter of an by income deferred impacted million tax favorably on primarily benefit, allowances certain was of

May updated a share that shareholders quarter, X. the provided the MVP, on completion on Tom we of guidance, common pay first common close May will path the assumes for now XX-XX-XXXX. Today, business per by For ETRN dividend MVP narrow given cash quarterly the of which XX of $X.XX at described record

$XXX updated income million full-year to million, And will of net accordingly EBITDA XXXX. obligations billion, of million $XXX $XXX to X, to million $XXX $X.XX $XXX and $XXX contractual negative to The negative capital adjusted revenue commence million. deferred cash million. cash $XXX contributions January of guidance of negative to CapEx free million free million billion, to negative retained $XXX $XXX Total $XX of $X.XXX and million flow million, of flow includes,

In in each commenced expenditures flow flow forward and $XXX lower higher that capital and we approximately addition, retained would is million, million. cash capital in free XXXX. cash that be cash provided contributions by would guidance and construction approximately event of by $XXX MVP the scenario, and flow not be In

to the hand back I'll Tom. now call

Thanks, Kirk.

base billion focus volume anchored we cubic feet and overshadowed. appropriately our Today, business business assets MVP, minimum X per gathering a over on gets have value day sometimes existing of by we As the commitment. of

across Tier Northern traverses and Pennsylvania Southwestern system gathering West Our Virginia. X acreage

steady to header wellhead of with and capital system sustaining The systems, producers. investments will return anticipate in growth positioned opportunities drive drilling annual lower compression, a and significant CapEx integrations many to our gathering gathering combined of stream are and the scale new years. capture from our we over We coming pad

Our one already nearly pipelines long-haul others. new on unmatched saw in this day commitment for with high The and local negotiating offers quarter our to customers Bcf pipeline available into significant for several are optionality available markets. X.X we capacity. We've demand newly tap interest system secured for and was season per flexibility capacity open when reach and takeaway transmission display

a of good capacity, and Beyond as add expand supported extend flow opportunities to a projects system. Rover we're and in OVCX the it our transmission is will to example, REX developing average XX into business leveraging pipelines, contract very growth latent life focused stable a project capacity cash weighted and is the many profile. years The incremental addition by the on

reservation transmission firm fact, than In were XXXX, fees. more XX% from revenues in generated of

the is And where reuse The create lastly, executed significant producers it water. become in need primarily service, will by but investment the and was the environmental water A attractive nearby all team mixed-use that advantages business Not fresh-water trucking. a premier reducing this access does growth, to. the recognized a I market and that has headed produced want system delivery maximizes Water and believe, a for of developing, team was the opportunities also what freshwater took strategy system only utilization the that will basin. need and

assured executing we goal across time, the strong and are get our be that to at as line, same in we ever. is on are control within everything closing, that the business base In MVP focused doing the as

to that, With we're your happy questions. take

Our Please Instructions] comes with line first Schultz the Capital. ahead. of RBC question TJ [Operator from go

information. the all Appreciate thanks. Great,

Just MVP. first on

high issues West a to start what's guess court, DEP all function clear? summer, the the you additional the Is that maybe this at I court on that no And turn by of you question hurdle I just the by quickly was raised they can addressing construction which Virginia your it contingent is, where the around? too critical for this comment unlikely a next So sit. level, from all is seems how think then intervention, just

this start So very highlighted summer? [technical supportive legislative that standpoint something needed is a You to letter Granholm difficulty] work mean does being the from

the TJ, thanks question. for

and Service clear, of couple in road Federal in construction. to valid commence the think required of permits of and of BLM. the I the it's pretty of and we reissued Forest of couple the expect for required and a forget over months, permits would it. we be weeks Each next when re-issuance map But name is those beginning us expect order dashboard. the on all to permits I be those of

that understand skepticism position. I a your don't that Circuit. I the share know Fourth dire I on

to and are put analysis, for the more permits, back third permits. to Going what agencies, far most my them and State is, round both comments, went the withstand back of of Each the more standards behind this work Federal the more to man-hours, litigation. time, exceed

when thing, And that I the side. that the right follow rules, believer be the do you the your should law a am you on law and and

that So we these required have while and durable of the done permits it's us should skepticism our everything be under that law, withstand we position out there, understand and litigation.

mean with I the on reasonable through was -- next get last got if what the that that's through. they've month, that Okay, like little the they more can you are get those contact get in can you maybe addressing sounds to it it understood. couple specifically issues. close a DEP, Is of granular months? kind within of But vacated that on permit

those speak timing. year, it's have them been complete terms sometime as just timing optimistic within cited in reasonable been will We're curing schedule the vacatur the fall terms things. we've the the summer. for the permit. end that Well, get the the this in But in I by DEP of to and project that the can't contact of mobilized later our issues to the that the of close identified of around understanding pretty with of issues all And court

sense. makes that Okay,

if Just start me, construction eliminate you do path the summer? Or on is that, the MVP to there just given Thanks. on lastly conspiration the on forward clear? payout MVP, uncertainty until you from dividend, the was this more view don't how sustaining

not delays balance we're focused to around these this of the speculate Yes sheet. and going put the on that dividend. of Kirk. the actions we're time acutely on is TJ, this stress aware Obviously kind at have But any

TJ. Thanks,

Okay. Yes, thank you.

[Operator the Instructions] UBS. from Brian ahead. of go comes Reynolds with Our line next question Please

guidance pieces upside. Maybe Hi, and update, the some between everyone. morning flow good just to going cash obviously on free the revenue, touch to EBITDA, deferred moving

Just pieces, without any maybe given can the you the gas there on through curious business, kind us just you and and moving assumptions, and just the talk perhaps base know, change of we with the nat point? transmission year-end if what's in gathering the was Fourth that the this are at pretty differences MVP point -- potential at guidance happened should 'XX is given given what just tight between Circuit, MVP and this headline

Yes, Brian, this is Tom.

the And put benefit back level from throughout So in a quarter buyout. also contract just then there, right, year. second what same the had first simple had the don't that expect transmission be Water we transmission. and necessarily it we linear business, or quarter gathering pretty the in seasonality QX QX in going the to to of for buyout out the we benefits strong contract the

and in be it won't business linear. in improvement the growth expect the do but We business,

you to the now for because the calculation. -- affects factor some always is MVP year, later modeling purposes, parts, the revenue there then in in, that are So and have moving deferred

two the changes a weren't deferred as MVP, seasonality to So then date nuances in the there QX or and Water business. any gathering It's revenue our transmission those guidance some our it of just gathering one-time of contract. and step and relates in quarter the in-service performance those, transmission our business of the and the for sliding the around buyouts

that up given flow maybe pushed CapEx on for deference as then was revenue free that to then scenario? CapEx, assume 'XX could 'XX. follow-up, into fair in could 'XX increase seems cash it MVP quick a just like into slightly move And if Thanks. deferred And

assumptions. Yes, those are fair

a Okay, thanks. methane follow-up -- with XQ, incremental costs on looking And $X then Rager some the OpEx in as leak, million ahead.

Thanks. Rager I curious, resolved being should think know to potential root kind But related future some methane of still cause. the how into liabilities leak? incidents Just we there's about the

So to million that million $X of about as we range as year we this We year. for think we're there $XX for have there well. is $XX to worked $X into And capital this million total now. million of know at as far expense guidance what

potential just related estimate is fines? from the potential is for And accounting costs to And around that or -- that to an is cleanup that there related EPA?

potential year. account fines We did for last

million incident So there we the was that last reserve now about as an for year. fines, for what as, expense number. $X And our in know right far are

Thank the morning. Okay, all color. great. rest enjoy the you. And Appreciate your of

you. Thank

further questions any this time. I Tom will back no turn there to And for remarks. are the at call closing Karam over

Bye. a for week. joining hope you. all you us good today. And has everybody Thank Thank

and you joining. that meeting. Thank for will Ladies gentlemen, conclude today's all

You disconnect. may now