OKE - Earnings call transcript Q3 2018

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Operator

Good day, and welcome to the Third Quarter 2018 ONEOK Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Andrew Ziola. Sir, please go ahead.

Andrew Ziola

Thank you, Katie, and welcome to ONEOK's Third Quarter 2018 Earnings Conference Call. webcast a being made will is available. call live replay and be This statements call statements during ONEOK's reminder XXXX provision made A that Acts Securities this by safe predictions of be of the covered XXXX. expectations should that considered are forward-looking and and the harbor or include might from differ Actual in statements. results materially could forward-looking projected those

filings. For please refer differ, a results actual to discussion of cause factors our that SEC could to

first this Terry? Chief is Executive Spencer, Terry and speaker President Our morning Officer.

Terry Spencer

all you thank joining and us morning Good Andrew. for today. Thanks,

As appreciate ONEOK. continued and interest always, your we investment in

Sheridan Financial me President, Executive Corporate Gas Natural among discuss, call our Joining and Executive Operating your operational included today's is billion Chuck Senior Swords, on capital and Kevin Liquids; are fractionation available announcement; we On and financial President, Walt other in now Vice our NGL and Senior Hulse, topics, Gas. Planning with financial Vice Also Vice program. Chief call, and and Chief progress third growth on guidance answer Officer. Officer, President, share increase our Strategic quarter President Kelley, earnings Burdick, performance; Vice today's to Affairs; will $X Natural yesterday's we'll ONEOK's questions capacity;

continually growth gas same we create find core our in our have to the contracts. high-quality customers natural our services. attributable NGL this and opportunities economic value volume some growth Our to fee-based business we strategy of serve year through fee-based to earnings long-term most experienced States, assets and stakeholder to with of remains for well continues the result The our the In in positioned. prolific United basins

STACK growth optimization the our NGL to Permian; LPG marketing in construction. Demicks in customer announced Arbuckle our of II; of Gulf off XXXX to which Williston another begun which our reliable over extensive already serve West projects activities and with base guidance. long-term areas, MB-X; Texas our integrated in Coast, the Basin, expansion I and Williston returns, our combined growth to strong financial the attractive the last SCOOP ONEOK in XXXX in allows processing thereafter. that, now and visibility volumes an expand and increase plant pipeline and Basin resulted providing Walt. NGL by from at extensive, has second and in commitments, Lake turn asset earnings clear additional the call, continued we've has another growth anchored Building network, the accelerating the call capital include the expansion Since Our will II in fractionator another With pipeline, favorable the to

Walter Hulse

third XXXX. quarter Thank and $XXX income million, you, compared year-over-year an Terry. increase increase a with ONEOK's XX% XX% totaled the quarter operating second

second announcement, quarter compared X% with the X%, our X% time volume strong We our the earnings adjusted our this by EBITDA financial previous compared second X%, EBITDA year, million, increased a and by guidance an quarter. year-to-date with Third XXXX. and XX% yesterday's performance financial by increase cash XXXX for confidence we With year-over-year midpoints. fourth was increase flow adjusted $XXX quarter for in by net driven income and the all guidance and distributable guidance increased

guidance segments XXXX we three an midpoint midpoint also the $XXX EBITDA the announced $XXX billion, liquids compared business adjusted with new $X.XX the EBITDA. with quarter nearly increased of in adjusted increase Adjusted our above natural of now segment. largest million all increase million Our is for nearly gas guidance XX% and last EBITDA

on left months our guidance provide new feel the the ranges. drove million volume higher results Kevin in and the volume optimization financial the processing in guidance fee With segment's And XXXX, detail strong $XXX and will increase expectations. confident growth guidance. segment. in average we NGL two and greater-than-expected drove volume and volume additional Continued growth gathering in rates revised our XXXX increase

with we X. another XX, to November of on in paid week, $XXX in quarter, and share annualized the debt-to-EBITDA basis. our $X.XX line on quarter The was third last a $X.XXX basis in on is we previous a an increase excess During XX annualized on guidance. dividend of the of At with $X.XXX quarter, X% dividend cash our November X.Xx the per XX-month We paid on a to XXXX. generated per increase payable basis, flow dividends share per shareholders run and X.XXx X% of announced September million rate trailing compared second an third distributable share or record

than equity cash growth dividends projects of up capital growth previous program. to X% For equity to flow cash satisfied more a generate XXXX, of remainder needs the of we distributable of distributable excess XXXX, announced reinvest our we more business $XXX $X.X billion XXXX can in healthy our Total XXXX. issued fund January that dividend X.Xx. in from With $XXX of expected through the we million was than have quarter quarter million, capital with for expect coverage flow in nearly and the the our in

flows based We in part and to amount financing XXXX. will consideration the any from the equity in expect This capital be to benefit and on of expect additional latter of be expenditures. from operations XXXX considered increasing cash timing

existing if under at-the-market our expect to program. needed, any equity to financing, be issuance We additional equity limited

for we capacity to of As having investment We our growth and our look nearly we strong as of segments. each balance capital grade our $X.X a construct full facility. of credit billion business available on on turn closer call liquidity now significant focused sheet the projects. I'll have sustaining at over now, remain Kevin our the

Kevin Burdick

averaged segment. a Mid-Continent gas increase quarter X% with averaged XX% Texas second barrels liquids second during the quarter gathered quarter volumes barrels compared X% an XXX,XXX Thanks, system the day, quarter per XXX,XXX with XXXX second day, our an natural Volumes the XXXX. volumes with LPG third a XXX,XXX per increase our barrels on averaged with third NGL the the X% gathered quarter, with Walt. compared the day quarter per XXXX. compared West Starting compared XXXX. increase increase in and

rail continue region. out remains to Our and Bakken the NGLs NGL Pipeline we of full,

available We expect the per service. with recent the XX% us the barrels which approximately until we day rail industry given our With to is across NGL more with growth. accommodate period second estimate of remains capacity during fractionators Creek XX,XXX year XXX,XXX quarter, running capacity. we per tight, of capacity barrels and per the Elk and volumes projects, been debottlenecking increase volumes have XXX,XXX continue compared gives product and than in last the barrels pipeline X% a have quarter composition, compared fractionation near same to current day fractionated our third Fractionation increase expansion XXXX. average increase a capacity day to

agreements XXXX. redelivery with Mont of mismatch projects of thus, risk actual our comes ONEOK's additional quarter with location storage and is the expect and fractionators, this pricing a either to We of physical fractionator and along contracts. Conway the provide practice at first assets our sufficient pricing standard small in transport amount or terms MB-X of capacity that will align NGL our offloads, the our fractionation capacity, existing online third-party until our already Belvieu, debottlenecking contracted in avoiding

and ways the system, include our and II customers Conway Belvieu, Mont for need. service Mont that pricing pricing. switch optimize to of in The use benefit and will terms II offers NGLs terms storage integrated of So the support Belvieu contracts then until is available Mid-Continent both provide Arbuckle NGL services Arbuckle in the our to number they unfractionated the a including capacity our of

full. and are and II shipping pipelines Sterling unfractionated running transporting is pipeline products Mont currently Our Belvieu. And into purity Sterling III I our NGLs

close operate to XXX,XXX its continues per barrels to Pipeline of capacity Arbuckle Our full day.

will NGLs Walt currently Conway-to-Mont believe segment's which to earlier, guidance, expect will will growing Belvieu, volumes, volume until keep increasing to transportation highly Arbuckle the spreads updated move the the III. This unfractionated flowing we also about expect will to with is in the have expectations. to comes ability purity conjunction service, pricing Mont EBITDA from into When continue differentials. Belvieu Conway which get remain to Arbuckle wider adjusted up We narrow than will due NGL for Belvieu open talked we utilized II which capacity XXXX products placed the capacity II to service. NGL Sterling Mont more In normal we've it on

guidance day the due per increased approximately increase we period offset per the And ethane. volume gathered continued the CX gathered NGL in barrels X%. rejection on system ethane additional approximately day XXXX at better-than-expected by NGLs SCOOP, for to Our XXXX. range system with in Conway-priced XXX,XXX XXX,XXX volume barrels guidance, continues by for the STACK ethane keeping to compared with our was growth third narrowed and supply on the quarter our Total same of approximately fractionated the plus the midpoint in which of

and natural the segment. to on Moving gas gathering processing

quarter the in For in across STACK third strong third decrease, the a the settlement where of areas. with volume driven XXXX, and the adjusted business adjustments in remained increased the the resulted second EBITDA Contract the growth and basins by adjusted XX% compared quarter, third segment XXXX, Williston operate. sequential SCOOP Volumes but and for EBITDA quarter Basin to we together, continues grow. quarters core the

a than Third XXXX. feet increase cubic per compared a XXXX quarter quarter X.X compared averaged with processed billion with gas XX% quarter and volumes third the day, the second more natural X% increase

with during nearly day, of XXX more our guidance the seen the to the XXXX connections. quarter acreage, Mountain strong region expected Rig billion our with gas strong delays. seen cubic XXXX increase XX% XX we several a with the year, around than the the million XXXX. mix cubic We our volumes and volume the have Rockies-dedicated the of reaching compared our we've days. connected compared quarter. in several October, We River Mid-Continent rigs Basin an averaged The milestone the production with producer by through the During the updated volume per XXX including first quarter XXX processed in processed the way Mid-Continent, quarter natural We've foreseeable months well per wells with XX wells X XX remained increased guidance the total XXX Rocky segment Powder on year-to-date third expected being now pad ONEOK's of quarter on well new XXX per activity Williston a Basin third volumes quarter, second well third activity day, slight the main gas than already the two connected due future. more basin. XXXX wells meeting second million processed compared for the increased volume In nearly feet a feet for the increase decrease in to feet Mid-Continent. in on and to continue assets in change our is averaging completion X% a day and large In X natural with cubic reached

midpoint volume increased volume the processed Mountain and increased of Rocky in XXXX. in the processed $X.XX areas. The in the Basin Mid-Continent. volume completions STACK quarter to our quarter due timing MMBtu in decreased growth fee slightly fees SCOOP the second greater-than-expected to Our volume the compared with segment's the Mid-Continent midpoint rate continue and XXXX driven from $X.XX the by third to growth per the Williston be in Higher average

Basin the and capacity benefiting We the quarter in seasons In quarter. resulted associated XXX of on expect pipelines secured transmission to XXX feet the our of million cubic open secured feet Roadrunner day in ONEOK year. on from million rate takeaway feet more We projects expansion bidirectional, eastbound provide ONEOK's increased and transportation which the on the announced and - on cubic not Oklahoma, volumes than the for million of quarter project transportation the westbound per June, capacity day interruptible per and which system third third our will is day feet similar before anchored did firm average to contracted. and gas fourth XXXX Open The Basin second expansion in gas expansion capacity of successful of the end had of three firm season, Permian open Transmission transportation secured X% the SCOOP the million XXX cubic areas. our be compared day XXX capacity Permian have quarter per seasons in but EBITDA gas cubic of additional of STACK transportation to year-over-year, expansion with system segment, natural by make increased Gas per was fee the on in X% gas WesTex system transmit track increased adjusted to be commitment. an the completed

projects. our update we've LPG a Now earnings call, of last into our the the quick on completed our Since West extension Delaware growth Basin. pipeline Texas

brings natural expected XX the total to gas our next the STACK, our completed Canadian approximately feet over Valley are per also Volumes XX which billion processing both expansion day. projects We to ramp plant the on X.X in Oklahoma up months. of processing capacity cubic to

additional also the We on Basin. remain to of an expect of heavier we section Additionally, we included complete or III and to of XX,XXX bringing and Arbuckle barrels additional of some since day. as will II as the on - day our the entire pipeline the plus XXX,XXX quarter barrels per XX,XXX XX,XXX an to call, capacity to to and expansions Bushton, is on We've by coming upgrades day the completion Williston approximately which volume XXX,XXX from complete first meaningful total end an pipeline barrel the fractionator. MB-X XXXX. our Elk per under in accommodate quarter the expected - quarter to contracted of NGL fractionation infrastructure schedule third in to NGL Creek, approximately from be of southern early XXX,XXX schedule in first recently II, capacity was Construction to total propane schedule part announced the track at The We've pipeline barrel the expansion on expansion last Mid-Continent, including Also, barrel help to capacity complete was Elk XX,XXX Sterling contracted be the the Kansas is the our increase expected and fractionator completed barrels continue complete Arbuckle heavy-in expansion July barrels in quarter. Creek our Creek for in XXXX. our an day on for day. project this XXXX per per day expansion This related Elk remains quarter the XXXX. of per capacity first of bringing XXXX. approximately on contracted contracted system, our day per per our XXX,XXX construction volume total barrels is in

additional day Lake capacity our I Demicks constructing we XXXX. with an complete XXX track million Williston per in Finally, cubic II and feet the quarter Basin I with Lake currently are the of on in processing Demicks be to fourth plants

we current open our volume nearly Demicks to full. I Given expect outlook, Lake

my backed needs basins. long-term our growth commitments with reminder, the projects Terry, that acreage a all are by these customers As expected our are we volume the aligned operating and/or of dedications and addressing across concludes remarks. see

Terry Spencer

our focuses that operate. and a This underscore not milestones clearly years. of our quarter who our count success and has the basins I statistical achieved operational more in Kevin. Thanks, assets been over of the the can I'm reliability impressive financial of and records because typically the employees we've on results than customers we where one

one let we improve and volumes Our discipline and and is that, about performance including goal, track the for our earlier mentioned is Basin our ambition of stakeholders speak in the operations to record processing our going Williston about day value think, the we're all, milestone create and what reaching I and our of Kevin cubic doing growth every for of But capital billion say employees. to of to day. feet the hard itself, per X after speaks working do each

we Just in X years had only basin. processing the one ago, plant

Now basin story we're per also growth and from for takeaway reflection the story day where all between X us, the incredible and our billion of processing of has a in isn't bigger gas we company of an the Williston now continued region. primary and cubic basins which Basin, been but operate. the natural The just it's our then the NGL growth feet are provider

with This and of of is great kind midstream announce Our where our industry fully closing our for and system accomplished hard citizenship list base to enabled while which remarks or what report, on thrive every quarter, been each environmentally To sustainability without have report has our long-time support a returns. at on ingenuity corporate drive on proud At of corporate we ESG available is our us increase XXth follow projects This of investors. Stakeholder up of expectations questions. attractive growth what recently operation ONEOK, operate each website. to safely assets the built advantages it my continued doing operate. basin and across competitive unique employees safely we employees continued to our in without have published history and is dedication Operator, and employee long work progress. and ready integrated the I'm and good a of of for and the responsibly. have this clearly reflected energy taken long we're in our couldn't our now last our

Operator

[Operator Instructions].

Capital. from BMO first will from Our question Juvane come Danilo

Danilo Juvane

and of Mid-Con you drove of sort wanted sort decline? to explain quarter. this start that with the Can the were how I volumes light what

Kevin Burdick

Danilo, with well had Yes, STACK SCOOP, as mean, NGL. in SCOOP remarks, NGL I significantly as to stated at quarter-to-quarter think, look a I'd strong of in of pick maintenance it volumes do We had our broader of But as a in little XX,XXX-barrel the group, which this for Mid-Continent feel the I Again, the the the about is what just per some very of sequential increase G&P that was it volumes up is and we of still we relates the I October I think completions timing as my STACK Kevin. indication have kind activity. really out producers. day well we've is segment. seen and like scheduled the we a a

Danilo Juvane

I stronger, to least. the strong, provide you But should not know Mid-Continent as guidance volumes don't Got if at we XXXX? February got remain in expect it. until it, in

Kevin Burdick

mean, you think and will having II now, think of we care expect our residue. the pipe this see and count the with constraints capacity see volume rig projects if some got that - that have taken I and you the some Valley complete others we I you've growth. Canadian I of expect getting Yes, expansion which remain, of

'XX set you're growth think I for beyond. So we move through as and

Danilo Juvane

Got it.

Bakken a By PRB growth you your seeing the tapped the pretty picking our here? out largest on How going in for including bullish more without One outlined central customers and guys are up of the basin. capacity that's processing estimates, much Rocky-related you forward long-term view are here.

Kevin Burdick

up we on that's I fourth processing think up perspective, available quarter. still Well, got that get but of we'll Elk allows we've the day that advantage we G&P we capacity those pipeline side, rail early that there Demicks a us the Creek some capacity 'XX And we've start, the full, but see yes, out through take third of quarter, capacity coming with Lake our that in Creek, got the southern with barrels we'll XX,XXX shifting let's Elk have is section little that to that help? an comes From will more accommodate over takeaway, growth flaring, a in until NGL again, the to rail the we expect that plant of we pipe. come the complete Does as to being volumes by move online. to Powder

Danilo Juvane

- absolutely. Last it. for the year me ATM. on Obviously, may is you question Last I limited me dependent Got project for that. need next on appreciate question that yes, timing. said equity you

something to that sort times to As projects, you you is X these it X organic of fair get to range? developing are see EBITDA in the continue

Walter Hulse

continue investments. see range are growth capital we our the very Yes, opportunities to in of attractive that

Operator

comes UBS. Shneur Gershuni question with next Our from

Shneur Gershuni

bit. kind of to full think using molecule think positions of volume store when forth, wondering using just and you the storage at of was Belvieu and the start I unbooked EBITDA actually two-part inventory here. can balance I are storage pipes that's When a your your at sell that's Belvieu secondly, by able guess effectively so sort and builds being and storage then, we timing? we effectively - to without question I about your spreads assume due sheet, Maybe we Conway? in about synthetically can the look about and And we to little storage if the just on off, talk Mont we sort moving in your

Sheridan Swords

it Sheridan, to your volume. is I in I'm without We forward we make question? have the think mean, can be Belvieu, that sorry, until shipped going Does shipped. this it's volume I to but ready to sell sell can't - we answer it's actually shifting synthetically so. volume physically don't to transaction Conway eventually, and can be store

Shneur Gershuni

at balance value essentially that's Yes, EBITDA just the EBITDA is of that on of due - didn't the end that your each the happen to effectively And it. also booked quarter sheet, timing? of unbooked inventories

Kevin Burdick

really this raw is would that talking Yes, an a yes, EBITDA. would feed effectively perspective, Kevin. you're I be from be that unbooked inventory, Shneur, mean, about

Shneur Gershuni

Great. here. of questions a couple And just follow-up

of but some remarks, it this people. of your to addressed You technical us nail just to sort less for prepared in down try

go plant, you through the you of questions in being walk capacity, build If and When the the Given line already you through short that do capacity a about to can the expected for industry us up mitigated how walk us example, output that, transportation plant? can that please. frac you new you that you sort risk? processing of

Sheridan Swords

Yes, Sheridan. basically do. that's this we Yes, is what

we our spreads we we get of into comes some But system of as through that our about can't of make look the physically that So when provide contracts Arbuckle we're certain to will priced each whack bundled provided and handle services a whether II have whether capacity our don't make in fractionation and talked out sure that's people. we whole pricing how available buy contracts get we commitments. Conway II. the to or we and plant, of our Belvieu. get point at processing to it's other where we are to we that Arbuckle contract. balanced or it's in or to us Until sure capacity transportation stay and And up, amount contract, yet to we most And get to the having we barrel go out of and third-party buy spot

Shneur Gershuni

is results which volatility raised of the due total how sense. the then recall your XX% implies in in a remarks, Elk have be Perfect, you terms growing comes this we actually that a we've the stronger Creek I good into you've business makes question optimization be final do term. during in much Ignoring position a XQ, the spreads that prepared both XXXX? and guidance, that? near just time the longer quarter, to visibility had One to of that, online, it now expanding By that outlook mentioned just base correctly term if contracted. And could you'd

Kevin Burdick

last to that with for be this would yes, in that On question, be to case. continues the We mean, the continue is strong. Kevin. the I we Bakken - love growth

lot a producers people returns listened one of very wells. were think large of I to look the the at clearly call yesterday and when the on just they're there bullish they you of the up getting

minimal So the volume. our Elk by think could Powder contracted as mentioned, we're well, you're seeing absolutely, pump And we in stations Creek would like to we And that standpoint. with we've which that grow we as River adding don't from pipe also expand continue just done. growth capital feed

on eye So keeping when we expand an something we're to need might that. yes, think that's that that, of we

Shneur Gershuni

this your trends business, guiding And cadence with respect to we're in of and of the XQ that in should what XXXX XQ similar this growth seeing terms in for you're base to a year year? expect we

Kevin Burdick

growth. significant without you are positions behind our Bakken would the the look absolutely, side, in our look on rates and the that the acreage the expect at mean, guidance, when are G&P and in you you the getting into clearly, Mid-Con ultimately on I side that at rigs NGL

but come that be position XX the going talked great to definitely we is then but business about, in these full, a in core again as are service of not some just assets when we through move As pipes in we've believe 'XX

Terry Spencer

after Shneur, in in of point year this the be some Terry. is first January. We'll at out time guidance the coming with

fundamentals for XXXX the up and we of as about in forget things indicated, you XXXX 'XX. So doing and as us about big set all 'XX for XXXX can't way. us think we're in lot a Certainly, a strong XXXX, incredibly that Kevin look and

volumes, and for far see the are terms indications you'll - as are all come our as the the from and with out all all count in thoughts So what of expectations the after 'XX. as year but outstanding just first guidance - we're are producers more we seeing rig of

Operator

comes question from Our next from Suisse. Spiro Credit Dounis

Spiro Dounis

market? other clear some on XXXX, just to the help about creative the start and the market. off how in then you Just But near the X short-term in XXXX. going specifically, tightness Belvieu just taken over in there with term see Obviously, of Mont guys you the just solutions the there to benefits do you could it guy near here? wanted come steps you X have guys I frac forward? here, guess, going the to Are around accrue all are Is to other term OKE storage? guys you solutions we with And up what think

Sheridan Swords

Sheridan. is This

plays happening what big the storage think market I you're that. place obviously is in seeing a in

at detail day to minor in X,XXX a XX,XXX barrels we 'XX very eke and to here, Also NGL look your any fracs and step out If a compositions barrels you in we barrels XXXX. in have. can store for unfractionated we continue our debottlenecking barrels, for is us it day could different the up fracs look be there see Conway do that to or at Belvieu in can then until

some have get we'll a as up for quarter bit have we little 'XX, to of we in into So plans of that our some us the help 'XX, and of capacity. first to move - incrementalize turnarounds fracs allow

it, those by other also of seen, been think the in feed out looking that So at then when you're industry to it's those. have the there's cracking at now well, raw we crackers as in. always have frack you unfractionated spot those market especially petrochemical some participants are as wide And each one that - actually have seeing seen pointed we gets calls, participants coming of look all I as some continue

I are - capacity to get solution to get So do don't what's be through to need to XXXX to going own to more incentivized every your the XXXX. be I will tight think is frac will to or XXXX. still increasing it the get things levels. cracking market well more or or needed We capacity. frac beyond think everybody think market I still up But really in to a frac find all back those petrochemical normal get XXXX frac to do our creative it storage, facility loosen little through

Spiro Dounis

great How you guys timing But are that's it, factor, to the kind color. is pipeline I just think then on big a the guessing, of Got a crude factors about LPG And about around decision? that, the you which as are thinking in other considering convert I the potential West to, economics. guess, Texas are what I'm there. that you and think

Sheridan Swords

of the is one able to considering announcement expansion may it growth NGL that to our better or not, served last with to it we've under be our volume, things be whether seen service. over these contract new in the the and ability out we're there, drove months leave think which there I out all

probably long-term a And what's biggest make trying we most but it to, so out we money differential out have able the to aspect the the everybody's right contract get best what's spread one the of that's do that. going of there's and is forward. crude being that now decisions of service Obviously, to how there in

assets we it, to So different we things, trying of there's people do have. lots money how but talking the most to with make the about understand we're

Operator

Blum with Wells comes Michael Our next Fargo. from question

Michael Blum

trying of the I probably to I'm like flows advance, but the multipart dynamics bottlenecks. question, this a little some about and with in apologize a understand is bit the

way Bakken, getting toggle downstream in to got frac obviously, would to limits you fractionate. like capacity sounds which, are flaring to close ethane alleviate producers that to constraints on yet be the one So it the

any there And two what of those apologies. know for And is of in guess, at So frac utilization that, just lot I currently wondering related is there a Conway? are how factors those playing So there's I like out so additional there, frac? room your capacity sort dynamics? to

Kevin Burdick

is information the Kevin. this everybody Michael, with in Dakota. the would and the seen report We'll you've North information Clearly, up capture gross that, start little is flaring as state one, gas production that the it's published gross I levels. ticked latest bit. remind the

new six last beat individual XX of or each they're over target the IP utilize to then with happens on And is they if what to exclude then will, to, months. regulations, credits, with gas their producer able able take have also days updated So wells. if the you the they're able

clearly, our and about that carefully producers throughput question under all while online. processing there, believe very the move we they impact. capacity flaring ethane toggling of under as managing also stay So try targets the and to our through many plants stay we're the the downstream the till To with will be 'XX to to managing able the comes to maximize of expect still some

much ethane capacity we point are rejecting possibly this rejecting give can activity, with NGL the as much Bakken being full we we help obviously, possible and the as then as as line us Takeaway them So to at rail are to out.

that's about way think we that. So the

comments specific, Conway? about do As for the you the have Conway Sheridan,

Sheridan Swords

Michael, is XX,XXX would with say have on day a north-south raw with system, about wide our in make say we spread, as everything that around. fractionation fractionation taking you is want up capacity about we anywhere because that show system integrated Belvieu. in we Conway that our we're all can feed fractionation barrels to that remark But Conway what move of we available I'd stated capacity we we Kevin's And capacity. can to

we're to using So raw day That the in right ending XX,XXX we 'XX a now and XX,XXX to with barrels what MB-X end have fractionator. this reduce is that we'd the above a year, of end day raw capacity Conway minimal and market. in of in on us gathering. probably inventory, Today, in on we're fractionation plan the we our XXXX, ramp-up to inventory get bringing say ready in feed in volume XXXX barrels get feed our of for

Michael Blum

details balance financing Got a second of really sheet it. the - question question. My more appreciate is detailed answer. the I

where modeling think ratio going to there of within that we think should we range? forward, is about that consider keep as start bit leverage the about a sort a equity then ATM some you'd for Just to little tapping

Walter Hulse

that would cash at Well, right money 'XX, that been so to kept reinvest rate the into in leverage say growth Michael, what now earnings we've is business the the with and it's increased back our basis X.Xx. a run I we've at able flow had that

acknowledged pretty also going So changed in that. up said end nothing's the we've said good below to have of it agencies 'XX. into we But on creep target quarters is to Xx that. We've longer-term sitting that The be our and part rating the 'XX. latter we're that three always expected at and of

have they flows to going as But be we're that spot we'll eye so in an our is cash are, keep moving to flowing it. on And expectation good keep pretty a 'XX. throughout

any So a in but equity, good chance we're won't equity think keeping there's ourselves need flexible some that 'XX. if we be we there

Operator

Barclays. comes Christine Cho Our next from with question

Christine Cho

question. follow-up a have to I Shneur's

that sheet So barrels, If as inventory your be storage you income it revenue? fractionated already put it's purity then afterwards booked could in balance product, as your is been revenue recognized statement, right? has into on there as but that the

Sheridan Swords

correct. That is

fractionate. you If

Walter Hulse

fractionate they're we on is revenue that actually and many fungible actually storage sold. when in are do daily recognize flowing It's out and get. on a of as much the so you through basis. every we store flow basis the bringing we is thing it that going Christine, as we barrel when The constant there, they're and a barrels But The constantly day. that Barrels in and sell

Christine Cho

of when I not, your whether than get was not mean, product should in a makes - the recognized I'm inventory, sense trying if we was at guess, just to buildup purity of or of like that more sense. if But I most versus y-grade, that already that look we

Walter Hulse

the It ability at it into obviously, purity wouldn't solved. have be if recognized product time. until marketplace we to it's got But any sell it we

Sheridan Swords

our marketplace. we're We on We all the so the barrels, selling day day marketplace. every sell our our into take barrels don't price barrels almost risk every into

Christine Cho

to, that you your on also to Sheridan, storage, is questions guess are I comments guys in earlier that right? I'm trying split but y-grade to your reduce Okay, inventory trying

Sheridan Swords

is That correct.

Christine Cho

storage I assume incorrect? the your that up, up, can number product Okay, but is purity one so went that only

Sheridan Swords

it Those something barrels, aren't we of the because If We But barrels mean place more the that go it that to marketplace just ability necessarily with it into may have market. we or the into purity that. y-grade still decide we we sell same. forward fractionate If we'll the as marketplace. have to we more barrels product. then necessarily sell in storage, to store we doesn't in y-grade, keep it in fractionate in still our y-grade the and sell inventory,

Christine Cho

that it I But and us remarks. optimization your change, kind then if guys of your alluded prepared should extension to you go year And you'll when year have your comes to we that have in But customer capacity have way think Sterling grew. it? is that about right last the actually the that told now Okay. online. you III assume Is sounds what commitments would should for maybe this the continue to think up we like assume decrease throughout what

Sheridan Swords

obligations we that that market. a because moving the will Well, that online, need contract as we'll III our of of market Not Mont more barrel. expansion - we'll Sterling transport-only Sterling III have into y-grade Belvieu some to the Belvieu into Mont the the was be y-grade expansion to move the comes supported we move main - frac all

and it, optimization. the So capacity those that III and have we have we Mont to the we But have on extent to market. Sterling increase Mont still barrels obligation our frac get capacity the to into Belvieu excess would frac Belvieu

Christine Cho

XX,XXX frac. Was number of included no? propane I day And can guys mentioned mean, that Bushton or fracs? you your the plus debottlenecking of much we Okay. the already out how per of XXX see the barrels then in out

Sheridan Swords

Yes, it was.

Christine Cho

we general Okay. Do see But more much how that? you guys beyond sense? could have a like

Sheridan Swords

lot able you have you to the composition XX,XXX these the coming levels system. can higher A maybe depends you to XX,XXX of get actually on, into that think depends, when see I on possibly.

different do could XX,XXX composition XX,XXX we around. as possibly. they'll But see change, move to So you things, could

Terry Spencer

So Sheridan, Terry. this is

day higher composition number a the to So that if lighter could ethane. more be XXX,XXX-barrel particularly change feed number a barrel,

Sheridan Swords

there. we nameplate especially our can got with systems, colder right have composition. when you now, Bushton heavy the wintertime still fracking at XXX-plus the on right temperatures, the our barrels thousand being we can frac in We some nameplate very rejected still But And get the Yes. had barrels ethane in we're fractionator. above a day colder if we temperatures so definitely especially as

- get a we day. go we will today, we the that. feed, at if at live But we're barrels composition get above we're we So can XXX,XXX seeing above see

Christine Cho

frac XXX-plus unless the way wouldn't about positive, see the to think Conway spread ethane that that? we And is went right

Sheridan Swords

need you more happens. the Yes, ethane to into fracs however get Conway that

Operator

question comes Tonet next from Our with JPMorgan. Jeremy

Jeremy Tonet

could question your us guidance wondering provide more the pick on very a Just with optimization, in could more was it's upside takes with time, next Conway-Belvieu answer difficult you're downside want at to providing to and of here, optimization spread and up you updated over or it and do your a but very, how year? you granted, as bit XXXX the not I the just trend thoughts do kind Where XXXX versus risk see And some you of think see impacts give margins there? there? you that to if

Sheridan Swords

was XXXX Well, good. pretty

in close to historical on be exports allayed Arbuckle into me So or it if that ethane, But it up XXXX more Arbuckle propane we purity spread. anywhere be of pipeline do what get but have until capacity would - wide know back there's would which II lot overall repeat good. demand is itself, to lot price, historical between the we get a our a get that in depends is to will it levels to volume leads to think Conway But and a on and Conway won't levels that. go go Belvieu. very north-south constraints to But for factors Belvieu volatile what and Belvieu that won't on what due in to we petrochemicals II, is can't that and that be and we

Jeremy Tonet

of bit to asking getting NGL, how expansion in a this WesTex towards of Just dig just to - north to the Fair connect really destinations helps much clear Amarillo? this kind of pivot of more much of extension kind for and I about there build-out the besides little risk north get of point. want Plainview enough. kind just And see extra the into to choke how that something basin. trying of past that and mean, is NGPL the does trying really or see at

Charles Kelley

were spreads pretty the access Jeremy, the and is to north the OGT I'm wider they much OWT molecules it little move Chuck. different where the Mid-Continent to Waha Yes, sorry, this markets. The gas designed - northbound, could was

the seeing assets you're yes, Oklahoma into utilizing Panhandle as and the up well. potentially So that Texas of gas some

Jeremy Tonet

of So X kind north in those those on it of pipes? connects hubs

Charles Kelley

NGPL, looking at markets. you're Yes, Panhandle, Mid-Continent-based

Operator

Lapides Goldman Michael with Sachs. question comes Our next from

Michael Lapides

from out it, your are XXX Prop. three you talked kind of but you've election guys Colorado days this plays And through of six flows passes? day, if out how you about that do each I think of kind segments? unlikely in know the We're scenario how just thinking

Terry Spencer

going pass, to going This is significant significant pass. if doesn't Proposition no But business impact like any to to close. look Really don't XXX us, it's does, it's it's it Terry. whatsoever. look it Doesn't even to our passes. expect like if impact But

Michael Lapides

quarters X quarter that of backlog to X you're that Meaning go or XXXX? to big willing just credit question may knowing really, Got perspective, through fourth then online leverage of metric going other you've lot projects What projects it this is the balance through do and quarter be knowing the comes or of temporary? sheet just a level, 'XX year peak be it's one it. debt-to-EBITDA a you're in of kind next the X for peak to And going got or growth half that year. second before

Walter Hulse

my think But I the as significant Xx business. is we're our business I that of going into flows we're cash and seeing the part target's edge will 'XX. is from to in said above just the same we the long-range that very before answer reinvesting be Well, that latter

a keep if equity, think good need trending we'll of available. sheet little in we we that spot the if ATM a have balance But that So things a be from bit we standpoint.

Operator

Sibal next Our Securities. comes with question from Seaport Global Sunil

Sunil Sibal

me. for questions of couple A

in the First, call, have on of you everything? the then you on composite, barrels frac that previously the XX,XXX that XX,XXX clarification day on top a and to max mentioned the capacity XXX,XXX

Kevin Burdick

XXX,XXX would with to be can XX,XXX We would day both - we composition. barrels the top a of the on XX,XXX have our frac current that

top day a be that. of barrels on XX,XXX would to XX,XXX extra the So

Sunil Sibal

contract should then it. something this And is kind resolved bit ongoing a issue? got Okay, that that of this about G&P the an how that kind going quarter, Is which of on at think segment we impacted forward? of Or settlements, stage? of

Charles Kelley

contracts on have of we approximately No, is settlements Chuck. contracts. that to X,XXX from you're and adjustments - these some time time, And in to This the just see going segment. G&P

be So anticipate something we no, wouldn't would forward. going that

Sunil Sibal

seeing Okay. Valley and you're ramping the then, expectation plant what's that was I that, behind Canadian up getting just kind you lastly, the And based online. processing plant activity brought of on for wondering the that full? on the

Charles Kelley

it'll think XX ramp - we remarks, We next it'll probably as - said XX to in the over be the months.

Operator

Our from next question comes with Chris Jefferies. Sighinolfi

Christopher Sighinolfi

of X little if anticipated bundled I - bundled Slide the quarters me, Terry, deck, past a for the maybe Just one you could. nitpicky average you had featured On guys as in there's rate a was sorry I less-than but if before, ranges this mentioned by you as now region. the two just tilde opposed those noticing Mid-Con, to a WesTex, between I'm symbol.

to the up So modestly view I'm your happened bundled just of regions curious in on bump those maybe rate? what sort

Sheridan Swords

brought West we think these higher legacy volumes Texas up some a I of volume on, you're than seeing because they're new rate that was the is the on. old as rate, that which much on on Well, bump at-the-market pipeline,

that volume. old volume has so existing of and left higher-market with of some And we volume some fill the

it would service. we market-based bit on So our for price we've market able T&F the pipeline the up as the it been thought bring is contract trend barrels, we to average to at is little rates. thing, West barrels Texas rate on same starting And as Mid-Continent higher

we'll Shale areas Mid-Continent. towards smaller the shift system. - on on is volume we've go to at higher-margin volume a like smaller-rate volume higher-rate STACK had that, some like continue and low-margin decrease places and our that seeing it we As and from volume the put are the in Barnett We're forward, some but SCOOP, volume volume which the

Christopher Sighinolfi

going of And you is stuff? you - a existing adding on time that then just over define higher period that Or this that to next is guys forward, as there contracted of about volume that profile there know think is these in off whatever profiling couple driven next I go just to on it more could is amount you of to you cause of that - capacity? meaningful the - guess, rate be in by think want

Sheridan Swords

over year a low-rate our in next I will rate Texas think the volume. you the of of lot pipeline market-based leave XXXX, more into see market or volume a system on favor West and

So could the rate. you in Texas system yes, average LPG bundled see significant increase West

Christopher Sighinolfi

the about mentioned quickly, you largest gears great. perspective. there Bakken get curious from recoverability have it formerly crude wondering producers gas real just Switching major There's one expansion a crude two of Okay, lot questions your opportunities. basin. a who and I'm had just the of and we project up a that both processing the and backlog? referenced the if about crude, as from in a on to had that operator someone talked view a positively I'm on talking perspective pipelines

Kevin Burdick

that Yes, you come a back have on amount out an questions in. blow abnormal was in Midwest, there primarily an is got was differential when refinery due you've the that Kevin. of But right a lot bit, This upper spread to out forward, maintenance now got little of we've open as season DAPL. you've seen clearly a look occurring that you

And of other got I they that producer discussed. think mean, that now larger the used clearly, rail rail in of about in yesterday some expansions capacity next sitting years. over a - being significant be may couple there. got and you've also amount happen some to You've the was expansions is service conversations

capacity if absolutely bridge capacity, expansions to that's talk provide customers, we those the out. need of as to comfortable think, additional they're them did combination I going the that, greenfield to with project the point and you another So rail to

Christopher Sighinolfi

what new than I of my those current bigger Yes, expansions question have what be that's guess, which was the to significant capacity, Okay. seemed discussion prompted discussed.

was just gets guys - flight was and at if from in just prior if dusting I'm dusted projects anything at I curious crude point. add one, Bakken had a So saying at have curious you not more in points off this any when you express that you there, about just off ton who I obviously, time talked should being I'm point.

Kevin Burdick

are this something consider, focused we But there. Is the point. we're absolutely. mean, know, and on our big you on a NGL it would It's player I up providing radar not absolutely term, long at the we locked and takeaway. processing

Terry Spencer

Terry. it's Chris,

kind recently just to things, using about out ways those crude over meetings time the getting very - out we've So Bakken do ingenuity the the long producers associated near things And options the and tell this to our are have these to all a the that with ways what of work and certainly, broadly Kevin An challenge the thing. private projects their crude that I'll basin need from basin, talked takeaway, off lot things. a so last they over listed have experience lot that Express working on about producers large really. of challenging, we very to concerns and some really don't you make just term get of of in barrels get you term commitments innovative they're find of to these like the

Operator

Our next question with Tuohy Brothers. comes from Craig Shere

Craig Shere

systems for up the maybe the twining you so don't on and on to quick the to bring out One that service. the an Texas kind was impression Arbuckle West of enter have follow-up line you into opportunity connecting have I a II LPG crude sets couple that either/or repurposing. albeit really years expansion of an proposition, to under

elaborate of So that? you kind on can

Sheridan Swords

II we're there use will that I II complete the complete so we think some into to the Arbuckle for legacy Permian loops which we've have done when other on is service. Arbuckle the what Mont system get from Belvieu, Texas saying expansions up to we're we'll starting open then system a West far, we'll these

we've capacity But able in forward see NGL to II and at that seeing for the Arbuckle we like. fill, As we and what we're go, a opportunity additional looking we going capacity all be and that services continue crude to NGL. need explored also on Loop that looks we are this lot have of may

makes in along, us We'll it may go most that it But into the it put conclusion right it service or in be to move to But service we money. we'll be service. better that move we determination. the not to it's So service. crude better leave make a NGL that it may foregone crude will as

Craig Shere

is same service of speak. breaking leg the stool, Understood. the West kind of number kind provide with Texas forward, for used at along spaces opportunities I know producers? NGL in you're is focus LPG If for looking there anything add to so years exports, else crude additional has kind then, been multiple longer-term to to to most of for a a optimally services into services to of a

Sheridan Swords

further other Well, from I look just methods road, different may through for would think down M&A - obviously, There's into starting be it to further down gathering crude method. still it could of be this sure, to ways there's side we that road. the like or at side the get it from the not

You don't know.

On the on when export export we get that side very one, work when the we'll up. we're and to growing. that announce side, having continue discussions we But announce of lined lot and a meaningful everything ready hard one to

where see side. LPG may grow, So we through West still to that not it could be the opportunity just as Texas we

Terry Spencer

to make could refined terminalling products, thing us. that what sense products, we've I'd other some particular, only the Craig, Sheridan for talked about said add is that in

popping and we covet sense indicated in things lot them assets. those logistical potentially could certainly, bolt-on refineries, When could People referring interested sales. LPGs, to, what M&A, sense. and just us. assets acquiring that make serving of But that's some of we're Sheridan those logistical petrochemicals products, when refined for up particularly see opportunities. those assets he's types Certainly, don't a for type crude, So opportunities make of

always opportunities, we're through those those So of types prospecting opportunities.

LPGs, those think we spaces. pursuing Canada we actively Mexico, So think about We're potentially. actually as developing about or think the about opportunities or considering we in

project opportunity come we So of But again, making out, something to standpoint, first 'XX, We we thing personally I'd not for successful. be if when to And certainly, export and half a years. export have ready certainly, where in. the that's is or you like the from things And probably progress. of we've further for just order out. tell something we're kind we'll that roll in to are of today that certainly road down the the working we're the get be I'll happen in announcing lot disappointed. we're that been dock

Craig Shere

plate. It I certainly appreciate like the color. all full a sounds

Operator

question will Gershuni Shneur UBS. with final from come Our

Shneur Gershuni

or something June remeasurement the XX% XX of that's as in? come well like also to higher sort follow-up. small something to about very with forth, Christine inventory value upwards levels that, NGL In responses from, one the fair XX% XX, it so conclude your changes and and cost prices September at Just of the rising that that's say, just to let' is in part you're booking a

Kevin Burdick

Yes.

it. you at I look So that's think the way

Shneur Gershuni

Okay.

the So you scenario the but that's price up can inventories the outcome? of have the basically, value potential where actual a of on down, because a goes volume booked balance goes sheet

Kevin Burdick

Yes.

see that Just changes. work as some and then yes, you work off, you through that could

Operator

At call this like over the time, remarks. Mr. I'd now back to Ziola to for turn closing

Andrew Ziola

us, late Our February. close Thank when early day. our and books January in we the starts at and extends a We'll until call quiet period details later have provide earnings joining quarter we for fourth a for good release the in date. conference all you for

Operator

today's teleconference. gentlemen. This Thank ladies and you, concludes

disconnect. now may You

ONEOK (OKE) 31 Oct 182018 Q3 Earnings call transcript