OKE - Earnings call transcript Q3 2020

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Operator

Good day and welcome to the Third Quarter 2020 ONEOK Earnings Call. Today's conference is being recorded. At this time I'm about to turn the conference over to Mr. Andrew Ziola. Please go ahead, sir.

Andrew Ziola

good call. welcome and quarter ONEOK’s Sarah, earnings XXXX you, morning to and third Thank our release our issued and We earnings those closed the materials yesterday markets are on website. and presentation after be After our to your questions. available prepared take we'll remarks, XXXX call Harbor statements or ONEOK's Securities provision be forward-looking of this should covered are of might statements include the A reminder and during and by that that considered made XXXX. expectations predictions the Acts Safe those projected Actual in results could materially statements. differ from forward-looking

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

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

Terry Spencer

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

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

Walt Chief questions are Joining available President Kevin Affairs Natural Natural Officer, Gas. Chief your and Financial Vice Operating to and Executive answer Senior and Vice Swords, me Gas is Kelley, and President Vice Officer. Liquids Corporate on Chuck Burdick, today's Also and Hulse, President, Vice President, call Sheridan Executive Strategic Planning Senior

Third quarter. ethane recovery. primarily quarter expectation the curtailments increased operations of our across volume levels better system majority has last represents widespread by returning our to to and results seen volume curtailed exceeded The and pre-pandemic volume prior were now production driven

third We’re our discussed Back the we in to much the volume position July expectation were in quarter. a second today in than return we improved on quarter call. for curtailed

quarter volume sets on being from if continue baseline expected. returned, XXXX. also to months not than as September fourth all system later the only the our better three the than quarter expected just good curtail returned essentially with is Now especially third not faster good at which has but momentum into a This rate just a of

conditions put the captured flaring gas as producers uncaptured our pandemic. and focus we captured successfully opportunity flared region. just Additionally, in year we've higher from is reduce work than the on allowing Operating the quarters. has leading previously of basin focused we employees economic help our quarter discussed customer greatly the we've to flaring the uncertainty continued benefit percentage lows example still there place around that previously recovery. the to In decrease hard gas second production returned our of improved from and environmental despite effort of This for our Infrastructure but on August customers. of service, in to a is one remain this uncertainty earnings. during challenges the of pandemic in the and the business in region even numerous Despite and to needs the natural Wilson operating customers XX% continuing statewide global and average have both a earlier safety us ONEOK responsibility conducting meet allowed more of and

commodity positive with conversations conversations as an more These producers signs. next Our demand positive increasingly some towards shown completion activity prices have shifted for drilling indicating year. the have stability XXXX shown and pace of improving potential and are has now

setting I is approach in XXXX. throughout to in have curtailed We call will for backdrop provided ranges Walt now our outlook As Volumes the for quarter the us XXXX fourth Bakken third stronger. today strong outlook even the shared ranch a quarter and up our our On which recovered earnings shortly. XXXX midpoint the have earnings. so last volumes of expect previously discuss

with in new our We outlook. updated to achieve XXXX double-digit XXXX earnings compared and expect growth

we dividend fourth capital expected and in deleveraging. distributable our relates With as the our earning expenditures flow to both it quarter $XXX continue quarter this XXXX the As our to path cash we XXXX expect strength cover cash into and by dividend distributable exceeded on to flow million. dividend the

met. being if pull case has As potential are a the our the lever could remains not we been deleveraging dividend always expectations

our This and of employees integrated the the businesses. and our of quarter dedication extensive reliability assets, the demonstrated of resiliency our unwavering

serving key preparing for the focused create the completed our remain turn employees call projects needs future customer prior that curtailed challenging markets and I The to to infrastructure volume. capacity was our pandemic second we eventual Walt. will growth substantial assets quarter continue to improve. over While on as return for of the With the

Walt Hulse

Thank $X.XX you million Terry. income totaled or share. ONEOK's third quarter $XXX XXXX net per

more X.X million year-over-year adjusted increase compared a times. XX% quarter with cash quarter Third the year-over-year flow EBITDA million totaled XXXX. the with XX% second increase third in a increase dividend quarter, coverage a was XX% of and than Distributable $XXX of a $XXX healthy

of increase compared million than dividends period quarter, $XXX the last same excessive paid in We during generated the also with distributable cash flow XX% more an year.

run net XX our system. a rate annualized we from of in was EBITDA basis EBITDA saw return the to third across September as curtailed times debt step quarter an significant in on volume the up X.X Our

in conditions access a aspirational with our decisions uncertainty. basis manage previous nine the $X.XXX quarter upcoming third standpoint took proactive have upcoming have debt financial $X.X to of to markets before end continue grade as We debt no quarter. on per from paid maturities directors been during an maturity share nearly or the goal. market We throughout in of XXXX. earlier steps this first than in unchanged protect long-term and From have our the flexibility repurchasing investment and year. $X.XX off help dividend times less even provide to week the year our liquidity sheet ability maturities and we X balance $XXX challenging no on facility times the market declared Last debt of due cash. guide of ample We've of this leverage board of proactively opportunistic our and able our period months ratings. million demonstrated to been to repurchases We've use capital open more through or the maintain billion our an annualized credit The X.X million and towards $XXX borrowings

now higher approaching our EBITDA be to ranges. of we mentioned midpoint provided and with outlook the yesterday's expect we Terry adjusted net previously As announced results that income earnings XXXX

first Yesterday ability that extension outlook in earnings volumes returned announced our clearer with supported deleveraging. line completion the in curtailed rate by extension continued we're XXXX we of and originally quarter XXXX early is previously seeing run an and more the improved remaining our a were assets, providing Bakken gas across path volume the pipeline XXXX also the expectations to pipeline in NGL our to our for respectively. pace projects scheduled Arbuckle original flared two Our capture X active fourth results and quarter completion strength and which the our

and and routine for growth activities. these the projects CapEx capital quarter well XXXX for connects and Third included primarily from pulled quarter maintenance dollars forward fourth

We have active capital now growth substantially projects. completed all of our

look and warranty expect quickly We in base producer saving activity to withstand this to XXXX more expect From this million $XXX levels the change. remain to efficiencies. ability now return Even But to those scenario likely a the needs particularly rigs growth plan. call positions always provide financial as construction this [indiscernible] a growth annual projects if producers for would savings activity who it our cost $XXX a indicating ample and in recognized perspective volume a at basin $XXX of the balance for of million to over our substantial conversations arise We to market in million. expenditures This sheet additional $XXX with restart as including total with in expenditures operations. of the will uncertain capital restart potential closer should total continue of resulting remain to Kevin $XXX to look maintenance million capital maintained level visibility in and need continue Dunn are annual capital a in be expanded that through be September have Recent range. well-positioned the year in our area customer million to materializes. to event X with of turning Williston now run we've measures our County we compared we will liquidity opportunistic until rate XXXX recovery. with XXXX I'm be the approximately strength capacity. flexible Well, approximately faster-paced and additional

Kevin Burdick

processed areas of our in the X.X end NGL across than Thank in you large exceeded Rocky volumes system operating more we quarter. region liquid step volumes start our second reached pre-pandemic across October. day a in all the production mountain segment. levels have of feet gas by in third With gas nearly with all and the per back quarter the natural gas NGL the volumes online natural I'll up with the saw and compared Walt. quarter cubic natural curtailed third billion

more approximately averaging throughput curtailed highest production, XXXX in a over barrels which NGL from compared with of the of XX% Rocky system than Third margin XX% year our X% across and region to increased have our increase quarter In quarter second our higher October; second day is per average third a quarter. the increase contributed volumes the return business flared XX% XXXX. increased year-over volumes. quarter are The and mountain gas and raw feed volumes capture XXX,XXX ducts completion

runway available than minimal of plants out needed from to primary our with expand there region also capital dedicated barrels many of natural gas capacity only to acreage across the and ONEOK's captured our segment region the but on As third-party if ability provider customers. with NGL long more basin. day a capacity the liquid per not from benefits XXX,XXX the is takeaway the grow gas the With from

other as earnings expect move benefit we into in NGL XXXX. the region see additional from areas We to two

system historically First transportation had August. Bakken in extension early connects our which area an limited the county extension pipeline our Williston This of NGL NGL has completion options. of lateral with

the addition next the flowing an a in pipeline. to near expanding we has expect contracted the with third-party year. and extension original started ramp Volume also the already plant two we've plants In continued on into additional third-party contract area

reminder As a is a by supported volume commitment. project this minimum also

year compared second XXXX ethane XXXX our X which the petrochemical quarter driven market the Elk transportation XX% August X to reversal all and By mountain This transport barrels more In low-cost the increase quarter pipeline. recovery the of Ethane our mid-continent Elk economics per on day. by volumes Williston improves September the ethane region extension with through across the to River and pipelines the third the recovering Rocky to once than of expect increased will July demand due extension target averaged compared quarter. hurricane increasing feed creek our August. our optionality Arbuckle Increasing fast of Arbuckle saw first barrels a Bakken our we due volumes raw impacted very reduce recovery. ethane we X% earlier Lora. petrochemical largely decreased favorable ethane in beginning our by pipeline hub. in region, of allowing XXX,XXX pipeline rejection quarter portion next day paid a resulted transported second on A costs back exclusively volumes significant throughput in complete third XXX,XXX connections connectivity the creek all a XXXX. the more the Belvieu than to quarter Mont with average nearly and to per Second good completed volumes pipeline in mid-continent we pump and volumes mid-continent Elk be demand XXXX in Basin creek to date and to In early were the expansion we Powder in region overly to plant the ethane pricing as of mid-continent from than

approximately month XXXX. on Permian throughput the with the In increased this We mid-continent still XX,XXX the fractionation-only recovery volumes system short-term and third of for increased day some Gulf ethane than without feed second compared X% XXXX benefiting short-term second from quarter the fluctuate in to expect barrels throughput XXXX quarter region and region, the XX% raw of returning in have feed coast additional NGL quarter. seen volumes. the with raw into compared Even that more volumes volume, plants per our volumes remainder the to return

expense these we've previously will of third-party the barrels as which system. XX,XXX this we expire barrels integrated will year our contract pipes. end As mentioned we NGL at This on move firm offload the continue per day to to eliminate

expected. third back in gas third brought feet quarter the from day curtailed our Total mountain segment. volumes Moving X.X more volumes production and large processing in increase natural Williston gathering Rocky XX% the than rate billion sooner of to increased second October; more reached compared in the our number to a on XXXX XX% as compared the basin than fee system to quarter gas cubic second $X.XX online; have some return than fee with average. to in quarter per natural volumes producers MMBTU of drove The the per processing high region the average processed a quarter percentage, $X.XX and

This the this the in that rate volume basin XXXX processing a Going past are inventory acreage dedicated on eight and it completions current to that that our of time our BCF producer day. remain months. an through in first uncompleted our a to fee flare average considering basin ample profitable is to to factor forward more we on some dedicated per around from operating complete completions There approximately no the XX X.X with XXX price completions increase Drilled the is duck said expect well through have our the during but maintain opportunities small XX increase in currently have Williston few relatively rigs rigs volumes we is level. per nine in per with frame. this around support number XX to wells of mark system previously on the totaled XXXX. current than acreage. levels months XXX we significant gas month to assuming averaged inventory we in volume well level activity takes X.X additional We XX environment, currently When which

our present course, for volumes Slide higher in upside activity any illustrate to volumes. an additional gas ultimately expected would with current driving in and Of earnings representation producer earnings well and/or ability levels drilled of in the guidance completions. processing wells updated ONEOK. basin future presentation a more maintain to the completed to or been slide natural has is indication not our This resulting meant X be minimal

six there the crews region per five frat to to wells each reference capability For today month. four are in the complete with to five

increase level acreage. stable year. the additional data well could suggests XX% of crude of a basin the declining and two region. wells feet Dakota maturing rising of X% which have day compared the in month to over that in slightly include showed production on and still gas remain approximately we with other opportunities. one environment The still [indiscernible] substantial continued XXX This gas for to oil of volumes latest ONEOK's activity the addition In ratios in to in on concentrated million the in increase gas even capture flaring Statewide wells. volume last and to the to per our August production or see is system cubic North of result in the basin decreased the core gas in feet inventory time flaring day of oil basin tailwinds that XX same August cubic million the to dedicated nearly at per with flat

push continue more gas the of stable to construct firm specifically we the gas contracted. infrastructure segment years. another we XXXX. strong nearly the the earnings to mentioned essential in that BCF the acreage remaining natural of to move fee-based for couple stable As capture reported remarks. employees below a was providing fee-based the the capacity our natural my and we as concludes be gas In company XX% through the that of quarter operate average; Terry to worked on ONEOK's end-use pipeline earnings the Terry With statewide segment customers. The processing will produced flaring reflection last continues of of to driver hard have and decade capacity X.X region a last over over even

Terry Spencer

great of headlined expected by a overview businesses. the solid of volumes was of and That our return Kevin. the resiliency of Thanks demonstration strong quarter a a

planning of sustainability. excellence from improve the including In This performance potential volume of been needs business sector for not ways and gain related to Environmental the we a customer being do promoted a low business just related for the energy our discussion knowledge facilities, or long-term be for much homework carbon and projects just always in in was to or energy in accepting profitability in only we about ESG state and includes that report to use capital developing a and diligently responsible issued renewable the preparing as evaluating and annual always Oklahoma. of role frequently notable has environmental equipment capturing as the at environmentally We're row year our industry, needs demand receiving quarter as transportation in industry and all and way have continues broader an answer recognized assets to our prepare and we it's ESG The ESG always award environmental and world's There get could the XXth we what the energy. and accomplishments. using August of carbon for industry storage. has our our sustainability the future recognition asked valuing Federation whether an received hydrogen enhance for ONEOK the is changes safety, energy future our our do and second culture prioritizing we services world. actively with recently and energy for by responsibility extensive the our feasibility simple milestones related This the our will we industry marked leader meet

Our stewardship steadfast. remains to commitment environmental

and vital but businesses. types that with Because future to their within many and the our projects, operating role while and future products long-term heat still safer cases what infrastructure we play we'll to the of NGLs to for assets, strategic that and In used need With employees and or ready our end-use energy sense opportunities but that are responsibly location extensive want fit evaluate into and of they opportunities, technology set large generate the a further essential believe create thank these transition healthier, to be absolutely the that may more productive our our assets doing I safely operator in and us and application best now to skill questions. continue lead evaluate is our new has transporting home, business. midstream help make natural your we compatible we are that lives. and many do Our they for electricity our for large gas many scale

Operator

[Operator first JP from with Instructions] Morgan. ahead And question Jeremy our go we'll and take Tonet

Unidentified Analyst

‘XX on just for what wanted well growth kind volumes price the It’s double built where looking flat Bakken? just given is today, strip maintain I into guidance it's completion the the are start that the assumptions to is, James completions the and guidance and with digit with Jeremy. for of kind -- needed well ballpark at of to guide just then the for here of

Kevin Burdick

Well, the think to Jeremy that's look as you ‘XX. that some this were take to duck complete. inventory I in year we are me clearly But We this understand through Bakken the in as rest ducks little ’XX, there. hard mean, especially the into let of producers first talked a the question you've to they and about you back. move focus I you've price early environment, got in the of profitable parts the rigs come seen substantial growth

before get the would you as in far XX we've our and hold. a of north well and the customers said conversations back economics, think as ducks $XX I in when as ways to material So work with still in rigs we that saw $XX environment today XX that's come XX

about what do look you absolutely the environment. with not think today. in-line there. want ‘XX It's of we more like we're strip $XX it would thinking to about in add the Chuck if context a So

Chuck Kelley

as what adding the far producers and referenced first XXXX those drill as and what prices to anticipate of you pace their they've expected provided mentioned they Bakken with with of schedules rigs as be with in our year however looking No, discussions at Kevin the we've completion forecasts I the had and half spring. and producers, the would duct-driven agree

the I ‘XX strip supports that that as So look think you in pretty much statement. at

Unidentified Analyst

Got for it. Thanks the color.

guess improved question any the higher was how my prices. just that about captured looking So I color commodity of [indiscernible] kind much color next here fee that understand on assuming a here talk at that it's volume segment there? and XX can level you million in any there an kind the the kind GPC you're from improved of of could G&P I you there. forward provide you is If can element but appreciate apply going $X.XX, the there's of color component an of

Kevin Burdick

business. Jeremy we're the was question struggling. the about Did rate in G&P fee you, your

Unidentified Analyst

Yes.

Sorry.

what the is to in provided attributable of commodity basically kind the improved color of is prices? of volumes Just terms kind how that breakdown versus improved of much

Terry Spencer

must Jeremy is It this transmission a be bad. bad really connection.

So we're real just hearing the and difficulty question. having understanding

to So think you got be what Jeremy. might we I commentary the that fee Chuck offline, if helpful could do for is any try you've around get but rate to

Chuck Kelley

pretty fee the talk what much our quarter-over-quarter. can We drove increase rate Sure. about in

contract If a really you mix. basin think two things, about mix of it's and combination

returning came a volumes So that as producers, only these happened course more and what are basin Williston business. QX to percentage XX/XX our contribution lower changed. our of with fee margin on. In have was from the was least being with volumes our the fee Then curtailed between proceeds average we high it basin particularly back of contracts mid-continent fee saw Bakken or that and toward speed component lower curtail system mix at mid-continent the producers mix a large of have a

our approximately in Rockies saw here QX So that volumes XX% of contribute upwards we of calculation.

in XX% the average large drove of fee that basin of all producers, basin of higher roughly to levels, weighting volume lowest higher top components in $X.XX. and fee the combination in that related the average So rate fee, mix

Operator

and our from We'll Shneur question UBS. go take next ahead with Gershuni

Shneur Gershuni

guys. Hopefully Hi, is okay. my good connection morning

questions, the I from your saying my way of is ask went to reason last volumes characterize were before rate came you why clarify the is to where response? makeshift that basically the of the up Just part

Chuck Kelley

back kind the That based of percentage way had volume shift gas of the brought in of from in the fee also sizable lot higher mix of again, quarter. I contracts Yes. a larger declining we then and of mid-con third Williston a mean that higher our in the in both customers volume it's online the a

Shneur Gershuni

you for that. Thank Okay.

here. questions Just on to moving my

data I all of X thank and feel my well can I own First slide adventure. you of that like incremental on kind the where choose providing all, for connections

about I of when XX here, So the think ducks to suggest in in sort you've the XXX I average guess grow year to that's you XXX money then correctly it flatter completions you've understand And utilize now about just completions X, want are keeps got right for slide months XX, maybe and to for the how I call that XX they're XX. XX, areas. not in got the in you as right mentioned scenarios but the well all

wells of two sort when completed and average highlighted what per I So sort sort let's month. you in you that rigs piece week together the and eight see It acreage like that gives if running above well on I say XX mentioned your half per you get which saw of that can the completion ducks seems September. have you materially of you you that be

or to think I is have the that analysis in too you that here that? thinking in else simplistic when my way Am production equal about all being I So can be that a increase year-on-year. material about

Kevin Burdick

Kevin. No. is Shneur this

we're exactly that add the that's and little strength I volume you more looking to on a we runway growth provides at expect top that substantial that you we when think that it. and I rigs capture of duck for a inventory do gives how gas you and mean that foresee. that

Shneur Gershuni

to that. understand for that one you mentioned are it ‘XX Just digit I marks trying prepared growth versus scenarios of XX, believe which those In double assuming? XX? ‘XX Terry Is

Terry Spencer

we this environment thinking in at to a the of context as $XX ‘XX. about look type We're $XX

Shneur Gershuni

than efficient, talking question producers go something that a well that maybe one you're that that then peers to and as of And follow-up general frac, [indiscernible] even more of the customers previously. faster going too? your and your hearing Williston so Is seeing forth had as in and continue yesterday something more about also? significantly it's well to you're stages are becoming from intimated Okay. per are up was longer sort laterals sort of maybe they that Is

Chuck Kelley

This Yes. Chuck. is

the pushing mile seeing seeing are mentioned stages. we're last frac from I lengths to out think call level. seeing three our We also on producers, We're lateral we increased that

the seeing to for wells we're efficiencies of picture those and all So it's you the new good production a these painting basin course in when continue GORs greater components at look so three online. coming pretty rise

Terry Spencer

down And the that line is Chuck costs bottom break-even that to significantly. come continue that to

Chuck Kelley

That's correct.

Shneur Gershuni

maybe super and one and question to get Yes the Walt the down to results leverage X.X and compared that's at think helpful to annualizing I that by your forth. sort final so you look I for third for if zone of start about the made quarter and

As would we to what's consider would that on next leverage you get basis into ratio the before buybacks? year to move like you an annualized

Walt Hulse

XX ways expectations in that months kind when Shneur right to we pandemic. question some the on the answer think out of to we originally gave that get a in will XXXX ratio and of I guidance, got moved would we end leverage thought I of based what XX gave leverage would to direction. had XXXX couple and trend at that that the of XX we early continue see We

to So we'll early basis that trend on right times happens and direction. whether four at we'll I still in that the headed of or be towards the end rate ‘XX think XXXX range run a

Shneur Gershuni

very Perfect. color. all today the Thank for much you

Operator

from Cho We'll next Barclay. Christine with take question our

Christine Cho

million in how to least levels. that XX would X to Bakken least I from to BCF least of should Good that volumes XXX volume When but indicate in XX be morning the billion level everyone. to that? think discuss also that me million or would I'm we day flat or with XXX year at you that to to Bakken comments in at XX want wells to at expect next XX you the of the year in month current a slide going Does at hold have I combine your about level. advance, imply to a EBITDA of next X. XX connects well talk When the apologize XXX your per about CapEx Bakken month

Kevin Burdick

capital Yes Christine talking or to to that think so well station would about or something we're Again is we Kevin. that that. would available a compressor I within might connect go Yes, connect -- and expect that be do well got and we like add to need capacity this we've need we processing the all to would be able would be

Christine Cho

the I move Basin Arbuckle comments And were continued in Powder that there and XQ full the forward? if thought from system [indiscernible] get but and XQ. off available Did previously earnings I creek and Elk level I down pass you made over going is pipe into that so the in [indiscernible] then over to did path appreciate your a about guys to could or move actually prepared on should taking was to that capacity the system pass that large remarks volumes Bakken you NGL think customer we River and

Sheridan Swords

Sherdian. our Elk the Christine see second and rate probably creek plan volume the of and third is earnings. some get million costs now to we remove into we see think did into our both this OPPO and off through you're moving once we then on that you'll savings is Bakken at moving that off get run system, we the $XX off XXXX what system system right is today the and quarter should or in we that XXXX will, move We quarter all the onto fourth due own volume see million $XX by uplift approximately in a volume to Once the system. we will

Christine Cho

To that to going do to have Okay. Elk creek? is you expand

Sheridan Swords

will complete all of year earnings we As creek. Elk the allow end onto OPPO low will to that by call we of and Kevin that us a off have the cost the says volume the expansion move

Christine Cho

next take last you one sorry have and your pay quarter? quarter, [indiscernible] follow-up. the volumes it to Got off quarter to anything this and for of Did

Sheridan Swords

contracts that Well will we can't any get or we XXXX. we time, have have this extend any obligations not obligations at into into but contractual some

Christine Cho

Thank it. you. Got

Operator

next We'll from with Securities. our Richardson take question Truist Tristan

Tristan Richardson

really I environment. morning. ‘XX that all uncertain return particularly the and potentially completion of some on noted would spring comments in good the encouraging rigs appreciate an assumptions presumably conversations could in that which activity. are mean accelerate Hi clarifying especially the you've customer I

driving you extent assumptions of upside the So X would noted expectation? of that any XXXX to return return the to be occurs general of the billion plus as rigs

Kevin Burdick

talked we I the clearly in remarks our that. opening mean mean potential what be I for that I there's would that's upside. think

the as I rigs to to completing down just and that ducks and our will determine think back. that customers deploy producers as how it far coming capital boil

as that back then start the supporting those of back into rigs also XX thing think if coming about growth other well. you The would lag that rigs coming

Tristan Richardson

then Really outside guess billion would that helpful sort number completion that of in conversely, of you see there completion headwinds out in prevent XXXX? just a pace and of you do reduction I $X to activities? Are or there

Kevin Burdick

in with that we drive than the, again that other would than but the you I all just thing that activity levels risk that's mean and said the we might come the that think I other just know that keep capacity. back coming that's to plenty the got gas an a processing put We the to compression available got of get is, We've got infrastructure we've and NGL system place field of lot capacity. plant. to

So to with very sitting in we're capital. good with spot customers able our a be little grow to

Chuck Kelley

producers as certainly talk we I think thing upon Kevin to Right. of is their view the based to decisions commodity that longer comments your a making term they're prices. the only add would I

out prices. that manage got the springtime other again. springtime to phenomena gulf could we we seeing they we what get new saw of back way COVID-XX the coast do other things also to the markets ensure universe terms commodity in only indices in Now of prices quarter a saw or in risk see not mitigate happen that we're scenario of in way always there don't happen pricing think certainly materialize. anticipate matter But we're some to numbers month-to-month crude OPEC huge these operate is if that things negative done in COVID. like some second that we the we'll the or those but could phenomenon see volatility going like and you quarter-to-quarter not pretty transpired we the going and type and a crude out was the the But the certain in XXXX. We which even got certainly does but negative scenario think they OPEC like don't the impact in fact certainly the not see we're in their you've of the as there prices you've risk have, industry impact you've has could we got these about But

Operator

We'll take Blum question our next Fargo. Wells Michael of from

Michael Blum

digit to in wanted you some incentivize to what you you forecast I tariff and you are growth But for everybody. would ethane then I in here. apologize ethane double need your about lower year of did year do recoveries you that to of for any those morning Bakken recoveries and good considering multi-part think ‘XX? a ethane price ask or expectation next Thanks guess ethane in next recovery really. for consider, in the any assumed question see Do the

Sheridan Swords

or that we we in best change out, I the at would but in we the Bakken have But do. need to gas get think obviously with it'd thing Sheridan. is our price in than any first half to our of to price in question would XXXX fee gas out on our still price your always a be have this that depends we the fees we Michael that's we be look the Bakken lot fees to are What the say incent growth. the ethane to price the obviously say that what have if we thing current We structure into the $X.XX Bakken, as gallon area. depends double the recovery assuming is come to on range be to per in If it digit not higher that ability fees the flex on fair today. ethnic would need the

kind some call we represent based have through happens. year upside next We year the are the mid-continent in into double-digit of as partial ethane well could But is see the on which a that as we a go we that only option assuming nothing growth the where volume does recovery force areas think like volume to next growth would doesn't year Bakken of show it economic rate different our support next thing does think to volume the people for that the could effect we up into see you out go is show which would I extract coming where if that for not year.

Chuck Kelley

do we well some coming as demand Sheridan see And right. additional

Sheridan Swords

in cracker is start year. have complete full exporting a that's There is that and quarter fourth we'll to capacity the duck right. export an completed That's we completed then has and XXXX that and of be into one to been next also here

and see see that's why demand some we're year for So good we we of on next I ethane think in the could coming partial recovery year for XXXX.

Michael Blum

Got it. Thank you very much.

Operator

Suisse. We'll take with Dounis next question Credit our from Spiro

Spiro Dounis

Good morning guys.

question and First with Walt, to targets. just getting to that X.Xx for aspirational leverage respect

I which that with bit. response strategy over like that's out to steady obviously point think this the maybe deleveraging pushed little at time cash I heard been sounds is scenario the your a

the just going specifically using Just you curious done strategic less well that in if a beyond there side more what the M&A and get well both to is of not the on market some repurchases there's do and here on appetite as opportunity anything guys and open about maybe to forward have I'm proactive delever as tool for thinking the sure you front? screens M&A something as maybe

Walt Hulse

don't obviously is that I we're Well, the going would would standpoint for but a getting to the along I think attractive delevering a four first that to positive for transaction think near-term us We shooting aspirational we come something do goal and if a are was way and X.X target. but from think four-time driver we're naturally that I to times for delever look time, that over going think to opportunities be be at sure. a

Terry Spencer

Yes. This is Terry.

matter process. and core businesses is really that's about on to add of is focused and assets The opportunities particularly kind just and a time to those said stay just now far our business M&A priority managing think business managing don't before I've spend on fact top going to that. on that can. always going are we the to optimizing and our serving we sheet focused opportunities focused not actionable, stay few where the between We're our balance are lot We'll and we're business, customer or worrying our as we that. operations. and stay while needs whole our acquisitions So of priority an of so It's the a ongoing right about

now focused this core stay So right on environment business. in

Operator

with We'll take question our Bernstein. Jean Ann next Salisbury from

Jean Ann Salisbury

would happening and What acreage or morning. of the happen what drives it next flaring is that on good more broadly so and Hi kind to in get a Bakken year lower need the bit of even is depth? it just a to your

Kevin Burdick

Jean its Kevin. Okay.

in pads gas have infrastructure. we'll we've maybe continue I wells some think that of left isolated lot the pressure that's haven't look back connected and/or put some taken at working Obviously, we productions come still that have flaring been pockets you flared limitations. of some there, out We're online. to and/or as to a

look flaring pad to peak going large if a the As on not at we've have rates and for of like things always days a said or you building we're level when brings you're very some that. before XX especially IP producer and

time of types those time. could operational So are disruptions the that from some got you've cause flaring to

So gas for ways system. watch obviously to we'll the on connect that's of the look to these few pressures out to a continue all continue and our work there to capture

Jean Ann Salisbury

Okay.

number. tiny So like little shouldn't maybe lower, a a but in put I not bit

then that from recovering price of sort you start think have all Ethane and the a $X.XX yourselves to for and to that of previously. was way wanted benefit you would lower sort Okay the I you that just a not to follow-up to at get and money. it portion do asked on Bakken make your getting market some for price right? could I question

Kevin Burdick

in done rejection this it fees coming we've times something mid-continent when four in assure only months could them in. to could volumes plants, also a to We to we've that earlier, and and the always fees our it coming get we lot but and of always economical come our We be lower ethane to to our into times have come we think that at own make ethane. reduced not with recover it Yes. to would with off that's third-party option volume of may that always be to our is allow

to So opportunity that and to we ethane do within out. if have we it that think that see we it's our that that to come do the makes definitely option wheelhouse sense and

Operator

We'll take next Mizuho. Moreen question our with Gabe from

Gabe Moreen

Bakken. through about morning here the a good northeast everyone. Hi what little you're the for [indiscernible] If being gas bit maybe seeing could I with ask

in are mid-con maybe the or seeing legacy discussions that of stuff like and you're happening? refracts kind some areas you're interest some like producer the If how

Chuck Kelley

this discussions mid-continent With regarding question producer quite hear. last didn't Gabe is that Chuck. I

Gabe Moreen

[indiscernible].

Chuck Kelley

a question. Yes. good That's

quarter the scoop. right we've particularly now XXXX our gas with of We last they're hearing about for I this two stack. what Other color understand they're maybe strengthening restart mid-con your than have in that three citing seen for a and in year activity and of stack the We're we're spoken plans little our and in gas scheduled gives a on place some acreage mid-continent I for here both rigs hope shared couple producers that a and bit their and the there's next some prices year the preliminary here us the indicating you be have particularly talking to in seeing is they're refracts what a might in mid-con. there fourth of QX.

Gabe Moreen

given you second what That CapEx questions spending I the now half for was of housekeeping from expectations forward Well, sort or sensitivities any clarification off? is helpful. Thank you two and being and double digit of think [indiscernible] pulled quick on ‘XX. the there then are growth or total guidance for of of off think on I One the then kind you. that last being future is just XXXX on quarter are some other

Kevin Burdick

can Walt start Kevin. this I'll chime and Gabe in. is

the a be with things. think our what consistent are we've about going them, still the given our range with the If continue with projects if customers quarter quarter outlook definitely definitely clearly industry believe the notion in with what the talked of type million would activity that it usually capital can for that not you what just would above million when saw, trend DAPL in we forward yet end tapers at the and off be the before DAPL grow we'll some think levels Absolutely, to think rate slightly towards customers said about we scenario to CapEx to with end of and and acceleration you exploring continue But spend the to they and experience fourth as we we digit would would of weather there the third spent the we about continue a other about high these spent been we year-to-date. the alternatives. range But growth single upper top capital have in especially shutdown, the if we or that we it that remains even mid $XXX kind because to thinking experience a to DAPL solid. $XXX in run we're of

securing have been them some of Some rail.

volumes some of been Some to moving other them have and pipes allocation getting there.

growth So, shutdown we scenario. we able could, in feel to volume support do DAPL even we'd be

Gabe Moreen

the you some anything of DAPL of got you Sheridan out happen could And of shutdown potential have transporter say be to here crude in with to the pipe currently a event the you operate?

Sheridan Swords

XX-inch would Bakken or We continue service. look we into whether to take the crude Yes. pipeline at the not still

that a of on to them have said, and make investigate may DAPL position Kevin there based be As our continue alternatives could Bakken we still lot of all being there if But be that better is the beyond looked that ours pipes ready other a to need in it's do at alternatives and to as really one that out Rail convert. move to well. up than to shutdown. to pipe quicker start sure we producers

Operator

Elvira Markets. We'll Scotto take from RBC Capital our with next question

Elvira Scotto

good everyone. Hey morning

I larger more potential capitalized chain any trend mean can midstream that like a do value if recently an here? XX So of would offer the thoughts benefit see the seen this on shippers better integrated be services impacts contracting M&A. that companies What are you larger across we've and acceleration your system having your you positive think of upstream on clearly

Kevin Burdick

XX our contract know we a are definitely are see Kevin. to them don't we a we companies think They the think vast like the next to looking Bakken years, contracts view it the the especially over don't XX that very got all. have issue larger companies as customers. reservoir those a the don't this got about as I I many at of large deal we structures. its see long-term Elviro, term. locked in play as negative. next typically, we I that four. lot long the see, three over of with and We've they're majority a contract of of don't The not and We've at

of as weighable that don't con I strong So over the way. help see it or know can that either we standpoint pro good significant just But a from time. growth

Elvira Scotto

Got question. it. that midstream made thoughts see potential? interested overall on to I'm you think Thanks in can one that appreciate you comments on you your and but then the quick trend I up M&A that M&A, M&A follow in

Kevin Burdick

to be a the look every see to most going matter there's placing significant risk contractually for whole us, done assets we we've fit the a of lot with private risk consolidation as operate But the as that bigger time. our for The year of lot done make wrong some picture. and I've at this -- that potential head is been do manage equity job work assets potentially market. to businesses. really in well sense of we real don't how it fact Well, those and of don't trying well relates as our so We've to a good there into

don't that out you always and landscape some, for in pretty certainly speaking specifically good assets the diligent that be going fit could a So we really as and from sense. the But companies is in there we mid-stream look the don't we certainly on just the if most well But things at it some see like. in look some processing that consider as broadly way some utility assets that we're there that really of that and scale are spun disciplined make of landscape carry being I to those those see large we other do some today gathering see are companies with have. space risk assets some midstream and extent and to acquisitions

Operator

next take Global from our Sibal Securities. Sunil question with Seaport We'll

Sunil Sibal

on Yes, hi, cash could your good and volumes lands? flows terms drilling or explorer morning. a remind us I the just you federal/Indian if of in had question with

Kevin Burdick

the I'm kind next and really audio really that If poor. we sorry so question I one is couldn't question. try the that your connections understand maybe the garbled make connections out can the hear of

Sunil Sibal

Hi. Yes.

question was allocation recent wondering strategy. question Thanks. any temporary the second agencies you had the was have to if my capital your rating I that So questions and related how of terms strategy? allocation in with does trigger

Kevin Burdick

have conversations with rating agencies. We regular the

before the We the regular pandemic, have throughout pandemic. even we conversations had

supportive. been they've think I

them You can talk directly. to

well. our and given forward clear in quarter. the We thinks But about think it's been capital process strength moving we the the coverage allocation about delevering of the we and have looking the rating really see business as and view we're quarter been pretty at our in that dividend what that part agencies this is of saw every supportive seeing we Board of on have that about the that

can't with I for but regular So have them, dialogue very we a them. speak

Sunil Sibal

that. other Thanks questions take Okay. I'll for offline. my

Kevin Burdick

Thank you.

Operator

We will with Lapides Michael Sachs. take our Goldman next question from

Michael Lapides

company necessarily that acquisition might and ONEOK, be not kind portfolio quarter. ONEOK the on for quick have taking all Yes. within driven. thinking of I you're a about anything Thank at a process. as how that there but they've the of system and Real great path you congrats had we've potential accelerating you integrated quarter to question Is questions my side. just M&A other the it a on lots been to pretty curious that want take or acquisition deleveraging

Kevin Burdick

don't think may rate asset to consider always about have we materially we kind quite the really generate be assets Michael that core matter constantly about as we that have high as We're fact is business, of a Yes to certainly The but that. return of thinking our we don't rationalization. don't assets that any others. of

those to value opportunity if market whole is of about think somebody and look we'll at always greater. else ownership the and we'll So for landscape determine and the the

of as collection pretty So today we're always that thinking sit all kinds fit together well. those we our about things asset

Michael Lapides

know the third questions at cadence of the what the But higher was of September just the significantly the September to like relative on Got it did an And that exit quarter? during beginning cadence well run XX well, what quarter? then was you quarter. in quarter it. two what the connects in what first as what the rate was in all, Bakken data it were the I the the through of was Was

Chuck Kelley

is have breakdown Chuck. I the number frankly our monthly know was this I of Michael don't front quarterly in XX, me.

really have it type in over number. to line do broke to of a sight So how the similar out We can't QX quarter. speak here

Operator

Brothers. Shere We'll with Craig Tuohy our take next question from

Craig Shere

terrific taking for thanks question. Congratulations guys on quarter. Hi the

and based the that about kind material any see we $XX you conversations saw wells Terry's are on dovetailing comments First spring that with you around the color and from of XX XXXX/XXXX acreage count dedicated recovery what far rig magnitude can your with costs producers potential on spurring like getting falling recoveries? body in language new is break-even that as as of the

Kevin Burdick

Hi Craig links producers gone etc. conversations the great this the has Chuck reference Kevin. is continue better. Yes better technologies, and frac lateral get they to completion and the with

In addition get. exactly know to they and spacing they're going have figured to they that out what

I provide type activity one about think are activity our I the in now have down. right shutting numbers not investor not shows about every of year-over-year how we charts think increasing quarterly improved curves in our decks year the and materials

Craig Shere

extracted out a kind mean derived acknowledging participate? could liquefaction of lithium a question you assisting stand last really deeper environmental you. brine are Thank oilfields things into next transition cheaply hydrogen in you there is I insights there Great. with of dig just old in-field some perhaps the from vaguely and perhaps certain more we to for of heard oilfield And I ten saw years basins sorry five comments. your uncertainty or areas any and over from potentially flaring lot of is that

Terry Spencer

question. let just me answer this hopefully Well will your

our in we it basically carbon I buckets. about three when environment comes a participation low in think think

emissions. reducing that in assets We've The our leak first existing our is integrity reducing of pipeline to terms protection leak opportunities got and enhanced the and or impact do prevention. from

impact equipment in gas-fired at opportunity electric We've and We've that's we're a in wind obviously as do. can work. and in We and some thing out a is continuing time our machines got frame growing gives that do opportunity so significant that the derived particular service we go got have good with existing to also also lowering and that to which looking XX-year of to lot will drive us consume and of natural electrification and it. a over It compressors have solar electricity done emissions. we've

of and fuels other to then types this pretty transportation carbon got thinking we're that the projects bucket storage The commodities hanging other you the we're hydrogen low as inert for logistics or capture looking and is amount emissions substances. mentioned renewable and about of COX we've some at and COX fruit reduce

our well in fit thinking projects investing assets existing technologies and and projects have of then in business and new other that low with investments types very direct could technologies that So of those. for capability cell strategic be those in we hydrogen that potentially our fuel we're could just carbon about sense investments some make some

objective our business to all have so be to a profitable make the better profitability, and reduce the thing things us sense that company these and strategy to to So environment. with broader make impact on

that fashion as some strategically core in think how going don't and fit business not don't of kind about We're or in absolutely that's company. have or So core our midstream we connect form a to our a capability invest it. projects with probably

I Hopefully that that's to your helped. question. a So think long-winded answer

Operator

next question Walker take of from We'll Derek with Bank America. our

Derek Walker

general guess or reductions over everyone. of have that I is you volumes was if XX that you million I squeezing it and hour costings cost believe I million. year. that point ask already I to to there said around this up XXX target I know during other remark, to into some Thanks and Does captured XX appreciate and offline. the this XX XXX here. me maybe formal heard you you the and know have you some million I we're in one XX excused But I'll ask that of questions a right very incremental year going kind of around commentary is that with reduction shifting next cost sort to the

XXX I you've wanted year, to that's last talked sure about? had what make but you think not incremental I to just already

Kevin Burdick

believe I $XXX Kevin. to so would the NGL Sheridan is million that to million business that's talking in we and million that savings. margin from a be $XX included expect $XX our The about kind not related this save reference you're of in to cost Now

separate those two are So things.

Derek Walker

Got it. Thank you.

Operator

We'll [indiscernible]. from take question our next

Unidentified Analyst

question. for Hi thank you my taking

G&P meaningful total just if there the We wanted on if cost. saw following think OpEx particular on is forward? question Just a this happening something down understand unique step to Derek's in up of going was from or perspective a OpEx the quarter in the to segment this decent runway a

Kevin Burdick

you down With last second the compared referring compared or the the quarter step to to to year? you're

Unidentified Analyst

year have year Both and meaningfully actually because guess many more online I are were plants that you yet than your lower. this numbers last

is quarter normal terms of this if new if just there is something happening this So to unique in the structure? curious cost

Terry Spencer

I normal, months we it's that to cut the have say hard when several of know worked since last No. really I'd beginning over but new wherever clearly pandemic costs the possible. out really the a don't

So there compressor we a have we mid-con out. that plants of there we costs idle we is temporarily down are stations doing compressor is have pulls that the and and couple like things stations shut in that gas can reroute

contract need the as labor. probably driver and our is and materials don't services You biggest much

We this at most our ourselves as volumes are point have left. everything employees doing with

that we volumes found expect sustainable but also bit pick expect up a will the as So additional with you be cost that some up our some volume. little of that from just would and back things improvements will other process that go we

Unidentified Analyst

That's had. Got all it. Thank you. I

Operator

to to Mr. That like I'd back turn you. time Ziola session. this concludes today's over at question-and-answer conference

Andrew Ziola

thank you Sarah. right All

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

Operator

today's you participation. concludes This Thank your call. for

now may You disconnect.

ONEOK (OKE) 28 Oct 202020 Q3 Earnings call transcript