CEQP - Earnings call transcript Q1 2020 | Crestwood Equity Partners LP

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Operator

Good morning and welcome to today's conference call as Crestwood Equity Partners provides First Quarter 2020 Financial and Operating Results and update on current market condition and revised 2020 outlook.

Before we begin the call listeners are reminded that the company may make certain forward-looking statements as defined in the Securities and Exchange Act of 1934 that are based on assumptions and information currently available at the time of today’s call. Please refer to the company’s latest filings with the SEC for a list of risk factors that may cause actual results to differ.

Additionally, certain non-GAAP financial measures such as EBITDA, adjusted EBITDA and distributable cash flow will be discussed. Reconciliations to the most comparable GAAP measures are included in the news release issued this morning.

prepared Phillips; Chairman, and and Officer, Halpin. with Executive and Chief today Robert Bob Officer, Executive us remarks President are Chief Financial Joining Vice President

for senior following analysts prepared remarks. will Additional Crestwood’s the management of session with the be members available the question-and-answer current team

Today’s being Instructions] recorded. call is [Operator

call At the Bob over time, this turn Phillips. to I’ll

Bob Phillips

You operator and Thank good morning to everybody.

the a technical had delay glitch. We there. slight Sorry for

of healthy. difficult certainly around United everybody to We and Crestwood and about has know call we in Let and States this me say you been we thinking challenging time I of the families. and on just world to behalf a all for are and we are of all the welcome your that before wanted safe your that start hope the are everybody you families

to Now -- update. the the to

the and practices you economy U.S. way has a of force significant all impact to assembled here demand a on through task issues we Those have the life on at shutdown implement know our work COVID-XX us. with done more As great to regulations compliance and from with orders to organization. COVID-XX Crestwood due government and for work to hydrocarbons. manage health had even certainly the on Early the economy's job the for strict shelter-in-place across home to our program safety our ensure a folks of

know the XX% rather quarter to seeing industry XX% It's we're with you as a first production and quick energy oil The the XX% in causing historical oil on the in dramatic impact is in in impact destruction gas its industry. reduction of and pandemic weighted the to and compared a U.S. demand our basins. as and unprecedented of scope cuts scale had on volumes count to-date rig horizontal now

did close team second in able We months and several with the I'm we potentially quarter. related get the market. being of challenges done Notwithstanding activities for pandemic that expect previous strong first the a of guidance through to consistent into and the continue the It and was industry this to in very quarter all the third. our last deliver the very proud despite

guidance We revised group to on the very quarter but will revised give does about think we given put X% early come XXXX only GNP you about to the our the in Our more detail our his at and to original pandemic this peer all the going going very part. and Robert guidance of guidance gets the is when in be XXXX that guidance results compare February. is uncertainties the it's back to details conservative it revised above XXXX XXXX he below and our favorably first results XX% the market before midpoint in out which

equal $XX turn me capital this run response we weather let on the the by to impact million XXXX position by and Now pandemic, remaining O&M took our rate company cash an to decreased $XX expenses to this, in and we’ve reduced Crestwood our business million G&A savings to our swift $XX million spend that's action the year.

bills projects pay and major late the include here in processing a spent Culberson in capital bills the down we side, to first arrow just Basin brand-new a county; including gathering Basin number our that system well system million of water The XXXX Bakken. Bucking completed The It capital our $XXX $XXX expansions plant, II that produced finished coming in of just produced and Delaware and a gathering to be water the to coming which in system, half. into the River $XXX got of upgrades Powder with budget. projects. in half On Horse XXXX million on earnings. will we've really million we revised of We've saltwater wound growth the on year-to-date a will results XXXX. project our additive XXXX range time we of completed pleased be about of Devonian all We've the capital few in deep in a first disposal disposal

spend projects our think less Now give are at for that time it's those point a largely XXXX a in capital just than is million capital program from and this we sense you in to standpoint. service capital complete $XX XXXX

temporarily as the and On volumes we've downsized expect about and the in as through quarters. XX% in we third variable already cost costs announced side the time we during summer organization lower we've operating additional second shut cost see by savings the

hydrocarbons all having have if I'm absolutely picks a in here leaner period Crestwood that absolutely it response longer of done prices we the unequivocally to we organization efficient pandemic navigate confident demand After than depressed a more for this this we stronger to up. at and once to reemerge think lasts expect

the lot you what in quarter? a detail as be transparent to be. we're So expect period as intended expect today and the extreme to quarter is of to second possibly in challenging. can investors our be clearly going you A to second of should and we uncertainty conservative we We're the give

Crestwood's is I management the one think that's our of team of hallmarks transparency.

assets producers volumes on can it's with have been all our rates if of maintain actively incentive appropriate. where we Our teams our commercial across working

We been successful. totally haven't

rates. incentive some had have We

We the some out. commercial volume producers doing some help to key good are of in guys because work have our our kept going that areas

their and standby job they're necessary. lower Our when idling in service They're great expenses operations. employees operating variable on are doing focusing equipment and safe furloughing teams the a facilities and field, moving to

a in in the credit on last team to collected lot weeks. protections getting They're exercising our receivable of the terms faster. operate. of Crestwood's good some to been from producer we eight They're improve game has contract our really their top back six finance Our of from standpoint customers. from areas getting receivables, reimbursements capital producers and paid shape We're on really a in that

our team So I'm our has managed credit exposures. and really pleased with treasury finance

talk entire than less downgrade about XXXX. their our Powder in on recent XX% transparent total venture joint includes Chesapeake just in of Again joint Chesapeake up our to represents in let's as Stagecoach based be our the the as portfolio River That to CC. cash across Jackalope well Northeast ConEd. both flow as possible as Now venture the with

We have put protection for place with full Chesapeake receivables in their letters of outstanding. credit current

that dedication wells to contract number it towards very covenants with As of wide a bankruptcy. we've us is would land, language, in favorable XXX has for mentioned to and get rejected very be that contract system a that relatively connected with new a times is running a over the large good contract that difficult

that been revised our been by big contributor forecasts. producers invaluable of XXXX has oil the Bakken, team to past Colt marketing We think Arrow flow has barrels X.X the months. In million crude and at be product helping using and two in it's our our going a storage to

we've the what the across short to been that's term. impact negative So doing mitigate of our business the organization the in pandemic on

me predictable These decline. G&P our flow in from but assets Let the portfolio XX% our of assets a as in G&P PDP think the XX% color our you regions. Marcellus is of by and our our pandemic of mitigating segment we gas dry on about cash approximately driven Fayetteville and are Barnett, comes legacy the uniquely stable flow some cash on that give long term.

will if flat older continues really level wells with requirement potential same improve. shut-ins as decline. their of the as assets, not even the to likely are any all and of offer incur They the gas forward These they strip upside a weighted natural

contracts Palacios joint from Gulf with market-based the gas of the our need due that's for XX% and firm our Brookfield with long These are regulated and assets gas term Coast excess under Stagecoach Storage with market. natural Tres in stable of serving ventures big our are serving earnings and Infrastructure by anchored cash Texas both they are Tres benefiting segment Palacios markets Transportation Northeast our supplies this respectively; storage storage To these and markets. and services it's Stagecoach infrastructure the to ConEd flow assets from FERC LNG critical speed and

XXXX We're NGL last for years on the to NGL April which MSL we Now today of period XX% cash this valuable market storage this our season, terminal flow. on is pleased during that that All-American closed been to It's on $XXX assets which the business from we've X injection of million heightened an traditional acquisition a coveted been of the volatility. working Plains our business, time. that and and for storage is long incredibly beginning we've a announce deal a contributes

million acquired existing our to platform. asset LPG X storage is highly and this and terminals barrels of We seven complementary MSL NGL

barrels million eastern United makes half also the a us with terminals. States supply deal We multi-year of in XX NGL one LPG and marketers Plains the of the approximately deal with storage in of XX the largest got

$XX for at XX these we us our over them generate because we million meaningful value purchased assets expect Importantly add to the XXXX months to million to cash and flow premium results. next great a $XX

over I unprecedented call these thank So team adjusting events. hand before to and Crestwood employees our Robert adapting for quickly to and the I the leadership to want to

to As pandemic had our part the capital policy dislocations preserve future that liquidity. steps and think as to to we're align balance best support structure. be Reserve, payout the we to protect been view sheet partner review actively with conservative capitalize needed distribution a forward. going First our to can path on of our the navigate environment working great our them across long general from business value We've way our we forward we're what that of develop Clearly term support through with going going additional and take our ratio will

value continuing downturn and cycle. way lost continues mid-March did and XXXX finally tirelessly we of some our the to pandemic. point we're we've sustainability during to like Finally, that through in going and ‘XX due team out the June plan adapt to to commitment the ‘XX want work in to I that report to equity our this we're our the to rebuild and manage ESG last file since

of highly more invested we how know we the are are investors XX% in CEQP. our inside outstanding Our ownerships invested than

have alignment partners We with going strong our a forward. of interest

over give I'll the to to Robert our first more around quarter outlook. update that with you details and quick results revised And on a you turn give it XXXX

Robert Halpin

you Thank Bob.

During and our cash up flow distributable million, year-over-year adjusted EBITDA up the first $XX of $XXX XX% year-over-year. XX% generated quarter of million, assets

volatility market despite March. their maintained By completion extreme and outperformed through that Our expectations large results producer end began our guidance first original customers the our March. meaningfully programs early in the of quarter

May solid result X. announced payable the our quarter on Friday, times $X.XXX As results of ratio May an strong we approximately is or record unit four unit for combined as our flat of of times holders a annualized of a the distribution quarter-over-quarter with all unit per XX on leverage ratio per X.X of $X.XX which financial coverage basis and to at

our to XXXX moving previously longer guidance out in today's we market. that the as we've is Now financial put in revised February outlook, no disclosed relevant

the prices increase change over the market to volatility midpoint from uncertainty, facing $XXX in X% adjusted conditions, represents prior Given decrease have guidance at extreme adjusted of and commodity industry million our and full-year we approximately which currently a million our from adjusted is EBITDA in EBITDA a $XXX range. million, the XXXX the $XXX guidance the XX%

$XXX At between to would between be times these well times and ranges, distributable leverage be ratio our of million maximum X.X cash our X.XX flow below leverage $XXX and covenant is X.XX to expected times. million

view a are transparent potential of slightly variables that range capture could try the potential would our in we and outcomes to guidance that and performance note using of the provide investors XXXX. our all I a drive wider

July bottom to adjusted guidance through weighted view EBITDA oil are our returned a that of the XX% then guidance shut $XXX million conservative production the assets and end in is our on of X. August of At range end of assumed

in growth you of our assume $XXX are of $XXX needs $XX million able of all capital of assumptions and million of interest this meet to can million As XXXX. maintenance conservatism flow is a see those both scenario and Crestwood free we if cash maxed at capital capital significant through $XXX expense, still financial approximately added for million drive

beginning still we weighted our assets in upper to near our of range million and production oil start end but back in to for of the shut system term return that July. of June of a XX% expect At seeing forecast portions the guidance $XXX the

planning Shell until of we system wells cycle Delaware notably that our Basin a on completions system and have are later of rigs the to Nautilus most Additionally, run active our through to this number Arrow continue producers XCO and in defer WPX this but year. on our the

us fourth XXXX. Based quarter range. DUC scenario customers of to ongoing on with significant would the our the Crestwood our cash will conversations complete free some we in of generates larger begin flow which these higher in expect drive guidance during XXXX their inventory to Again this substantial end

highlight at it to Marketing the I flow important to gas and for in XXXX from our $XX to cash and is legacy of also assets $XX and include unchanged which segments assets our think million Logistics are million well segment outlook substantial XXXX in remains has in Supply million S&T storage natural increased Contango to current $XX in to the positioned in volatility the light million acquired value capture currently newly capacity with market. very NGL the $XX

Now $X.XX sheet million to with of looking and acquisition, X.X at billion. borrowings long-term and the credit outstanding including borrowing on outstanding revolving balance as XX, facility $XXX of $XXX billion was outstanding credit capacity approximately million a revolving the fixed-rate facility. of billion the up approximately of Crestwood senior balance March full the for of debt Forma $X.X Pro NGL had notes

the the four XXXX. times until of we quarter first no leverage was have debt Our end at maturities and

As cash his and will Crestwood of present objectives. as capital as those in continued our themselves optimizing highlighted of our remarks distribution the be our in prepared be certainly becomes structure evaluation on third policies additional positive free quarter to flow core and an continue liquidity current executing to component position on priority our will opportunities Bob build continuing

available lineup best Q&A information would we we doing reiterate all the Now for that transparently of us. to the communicate before we that the like can opening to I are to have

cash lower-than-expected the and in second absorb revised it position and our through stage. to of recovery demonstrates Crestwood's impact the third to quarters flow As make the guidance XXXX

and positive have a capital still allocate which the in portfolio, sheet, cash will balance near We free no significant to XXXX strong business diversified structure. capital and flexibility of flow returns us our to debt gives our maturities a we best term goal reach optimize financial

cycle sheet our process will operator enhancing to improve markets were the long up through remain term We the rebuilding of line our balance liquidity overall on At and position for forward. manage maintaining questions. investors partnership and our we time ensure the this going successfully open singularly to focused our this we for ready value begin as

Operator

you. Thank

of Instructions] question-and-answer [Operator Our We conducting comes Gershuni Shneur UBS. your be will Please a with question now session. with question. line first proceed for

Shneur Gershuni

Hi, you doing good guys. Hopefully current morning all well the in environment.

around To into recent guidance provided your start was begin originally a few off is February that with you that? complains to clarification Just maybe questions back that in were baked guidance an to the and guidance. your acquisition already today's apples-to-apples comparison

Bob Phillips

for thanks the Shneur, question.

Let Moore a strategically me that and ask of answer you answer question question. from important then it the around Robert us. guidance to first you guidance is transaction to perspective to give and to color Robert timing want that Will the how some

Robert Halpin

Yes.

guidance April and in original estimated is been a that timing Assets The $XX in on first of transaction not that the the for to in included $XX that you February acquired closed range part is executed incorporated the upon. ultimately question the guidance of importance as on the to the we your – The were want acquisition not flow provided of had Plains strategic million. and approximately current comment it? guidance cash into is the Bill, around amount million the the Xst of

Will Moore

office business, us adding their we've office as our head able number coveted fortunately opportunity Bob. de-emphasizing transaction that business this for the side. and portfolio assets high or touch about We count very great but front Thanks for was existing we our closed portfolio position business of in were was Plains to and it X high the these are touch on strategic because any signed talked of already the back where without it April we've in a years the into Yes. February incorporate but a

only base So outperform well very that our it not XXXX good in asset we're with original set months to going the to beyond. our existing own underwriting nine expectations in but

Shneur Gershuni

just correctly, just able the maybe the in around I is talked of own that? back there. quantify difference to to is follow-up can guidance. your of from wondering about of kind us if I'm just so way with you what high our on Cool. a of and high a you midpoint assumes are decision shut-ins just Are shut-ins I then for of that timing? as sort between moment of value in, decline a around the make little and the the then us sort a color on give level high there the clarification guidance to or end but can you you're it's of bit assumptions, the understand we you to respect appreciate basically a think midpoint a expectation the a color of PDP Robert, of that

Bob Phillips

conversations expect our range crude assets, and our our through to production basins Sure. month XX% guidance on our oil our of the the shut-in systems July. have and and on around observations assets May perspective end month extending across beginning with weighted Based market the in weighted oil customers our the and of we of our broadly of

here I that the our that assumption that guidance generally midpoint is trending of we is we're little ahead over think the a and of the of bit increasing balance in prices range. summertime included continue have what as but to over optimism May into now stabilize

DUCs a impact largely that XXXX impact meaningful latter in in on the but those minimal on our to Arrow do we we from will mentioned as in inventory expect a the those DUC handful basin our a building half having have the on XXXX. we As rigs well outlook year fourth active of continue more rigs this completions on much quarter customers and resuming Delaware of as begin that fairly

Shneur Gershuni

final questions I me. color the appreciate of set from there. One

still secondly potentially talked in with and cash there about type obstacle forth. looking open reserve buying remarks you well that issue are below decisions back par and in distribution? to in any at to to expect debt so flow were you're making given be, XXXX be then first would be trading and prepared covenant an the market your reducing you is free accretive you guys You mentioning the A) that positive

Speaker

Shneur. Yes,

The first have balance market, deleveraging. believe around build priority question is priority accomplished we open this year. is to terms to transactions our throughout we've first management building year priorities market pursue clearly is to in as flow in as that continue accelerated priorities desire and those the purchase second we enhancement of flexibility cash liquidity, sheet our We the open

component loan second does investment around holding the require have an distribution going amount cash believe partnership On company preserver that it. do at first some its forward. not the making their be a to does around to We any allocates it term on that decisions will impediment ultimately level. covenants up of It any how service the

Shneur Gershuni

very Stay much you Thank safe and Perfect. guys. sane. stay

Bob Phillips

Shneur. Thanks

Operator

with proceed Our next of Morgan. Jeremy Tonet JP question from the Please question. your comes with line

Unidentified Analyst

guys. good on Hey, morning James This Jeremy. is for

Just from or million breakdown there Plains, you there? could sticking can? of if fee of about $XX talk maybe I guess based months, next that in the component you into the million drivers that Is I with in assumptions any can the guess if performers or seasonality pricing deal guided $XX the and you to build XX and spread the

Bob Phillips

all understands the day. responsible day-to-day business He's and turn NGL we're dynamics John it the our for why and market volatility he's the He then in socially Yes the Bob. strategy, the this the transition for to not runs closing, different of the storage James this Kansas these important places let assets. he's Powell NGL integration the He Since and over guy only manager an City the every who's in to distancing of and the first market is and business. but me question of answer part that call, is in office.

March roll So April an beginning that basis. and calendar during starting traditional it XX-month around in April. hedge retail we not deliver propane the We It's the closed that season of wholesale beginning NGL facilities. NGL a first of butane business. to winter the started forward. necessary largely the usually and on product the we It's store behalf markets. We the X withdrawing on business year hedge we injection extent We on it and months November, you deal propane to We April and then and product; will. commented start buying the storage our is and butane it to that if in a our customers December

to benefit winter period like the seasonality that is real economic that sell is period. some the of is during injection products high a it There low buy business lot to the demand but of in and

So talk it are you seasonality, definition me that why to favorable the us this market of dynamics for specifically you about over and John with can year. turn let to

John Powell

Yes. Bob. you Thank Sure.

and really complementary the we way extension current to is just think non-competing that assets these that we with so completely an have overlap existing the assets about we have I markets platform platform really are the standpoint. in from of it's the think an business

a ones we've So this very good the out we've been in are and base decades in These year. throughout assets and assets an these really it's as with to assets. for of size increase platform years been the market, player not of if the active around been that similar here have

them So we very know well.

addition question market of of on Contango positions. terms different the a So of in took level volatilities fields. building lot to in in the there here for the in your think particularly with markets basically on I have one there's that a seeing bases of the do conservative spreads But it production terms is, in to really of the downstream approach two on relative inventory you you're components or we what

the we question to second more it's as areas of downstream we look it's the These are, that's for what are having participate downstream you whether standpoint. fee We the this or market at really important item and out heating a commodity for market. consumers on essential these in really So really supporting just platform diverse assets your is as diversify view there. cooking an from based. allows a think kind flow When that based different really of your that cash to

some when the at these But as fee-based parties. lease to third about we of facilities have we these each at you talk out do that of of we some assets stores one look

well we So on balance storage we terminal the I then take storage of fee fixed all fixed well third-party that the almost as of side fee our is prior going as assets do fees between Plains are to fixed as legacy as have in similar it would contracts say very positions terminals across positions a to which good internal acquisition. the and the

Bob Phillips

James, Bob, Pro-forma add let one fixed there. little fee increase this is portfolio Plains me piece slight with corporate the overall color. in it's acquisition XX% of to from just fee only slightly to our adjusted fixed pop a XX%

is in are, it the So us future portfolio. supply are and remind transportation to a there. we our gave advantage expected but just connectivity big year What much years fee Mont net out contango Belvieu and this market everybody wanted us across and fixed the wider and does hubs a the to of only not company take this we asset entire predominantly let

was much deal product and our that announced quickly get earnings and and us happy the stronger really So that bigger, with These it the that deal. good to the already John NGL release marketplace close into part forward. Plains and first team a better, assets. facilities his storage pleased across putting are done, to low-priced a their and we're They in entire of we're makes rolling business. exiting so player had are that quarter opportunity integrated that already

of revised on our about XXXX the impact guidance. excited So that

had another you Okay question.

Unidentified Analyst

to right? really The quick that a is I going other of increase going in segment, parts of It's color. the the XXXX there other or is had guide, to not and pieces just MS&L up helpful. solely appreciate impact deal there. the that big this follow-up It's the only I just because deal EBITDA business? the impact Yes.

Bob Phillips

just will, only teams crude [indiscernible] MSL standpoint position, TMP these elsewhere a segment. Intel our are on our the Obviously arm assets assets to directly John impact Rob in marketing gain standpoint utilize results and It around our and portfolio MS&L our guidance from but from specifically a platform. embedded our NGL we

change guidance is the is guidance our by majority acquisition. The the updated in not, prior largely our versus that if of vast driven Plains

current made that our business the portfolio. have But base we're modifications vast across some and We the the conditions assets. Plains seeing market slight to from majority to is acquired reflect value

Unidentified Analyst

stop will I appreciate I color. the there. Great.

Operator

question your May comes Kyle question. with One. proceed next of line Capital Our from Please with

Kyle May

any having you've their Good all this that year color you're the production and for thoughts details with the XXXX? about preliminary provide Can the the outlooks morning. additional and customers conversations about provided plans for for year. you Appreciate updated outlook about

Bob Phillips

strategies keep can question and runs and Thanks front conversations completions producer good benefit He has for G&P Kyle. you. We with Diaco volumes of to center and us. our to Aviki the been business. morning both optimization to drilling and flowing

volume For it's times us fee.

price. For our producers it’s volume time commodity

line. to we to them they can flow So as bottom our as and financially well want producers our much keep healthy sound as as to add

leveraging done relationships our to Diaco great we've and of customer have and people. think job service really a the customer great team I provided that his

insider really when their good do really they want mind change change like plan. and we a they're plan their to an we're these time a or feel guys. they of to telling us They're with what us So lot giving lead

So then Diaco the and then to maybe let with turn finally the to Delaware. go start it Bakken and over Powder me the

Diaco Aviki

the Thank you, have the conversations been the negative over Bob. more very with customers our into recently had and outlook expect more Kyle change and actually half and that's can outlooks the pricing we've last of WTI positive listing. month with been a as constructive constructive you

build into continuing XX and this the sense that, DUCs fourth for a also Powder there's the give and just stocks A a have we XX year we to over feel you should are lot the roll you close quarter good then our a of and of in DUCs expect as to Powder towards at and producers accumulation to have the Bakken the there. in DUCs Permian, least in

about producer a more to going that the quarter forecasts. our each complete but every we you day continue in target good the has and DUCs as goes different has see fourth they're that them where to by and and look evolve So at feel do price more coming to we

in product have on since Yes. helps Bakken have really From water, are very crude we our on systems side, the area and Bakken well. especially and is interesting unique a shedding water our is us variable where in we're of where we that costs system the water, that disposable pipeline of three perspective the gas a

do we've there's competitors G&P rates frankly and some us don't It's of and give is water what to some low rates of can't seen able our they that quite on variable trucking product system come other system. the So cost because not to in them for been the customers trucking. our component good we've to have a relief a

on So do we've provide it's constructive above day that some for variable that we TI incentive win-win by that to each can rates in -- help that able more customers costs our pricing ourselves the well get every and revenues really and environment goes improve our and water our both been is and with what a

Kyle May

helpful. That's Okay.

Bob Phillips

GR sensitive barrels to Yes of as of foot high water as water we and of appreciate or as in of as a low of to crude. from our a different barrel quite go of barrel five barrel perspective, G&P course camp half crude you can from parts Bakken six to

leverage help. the where platform of that's really So does our

Kyle May

support. the distribution balance the talking business allocation mentioned the for thinking then year? you had the cut I balance my you with How capital And about in the can seen of focus Crestwood Okay. aligning peers and one other of morning we've it. the this helpful. number Got to strengthening for distribution your a of to this That's sheet are follow-up, question about distributions what on

Bob Phillips

second today late our enhancing Yes, disclosed Kyle support sheet prioritizing we're to balance that we strategies time. opportunities where themselves policies priorities Based first focused on our as business to in on and that what on and announced strength. our and our around as our the we coverage enhancing in I it we're distribution so we're XXXX to still specific ahead We distribution forward looking business capital exactly align were beginning at can had that quarter don't announced sheet first be quarter in expect in structure focused structure at distribution we've to have later $X.XXX on track our continue continue evaluate to strategies point I we foremost to and are objectives our first this and X elected back then and reinvesting on in year. our as continues results invest plan. the in our XXXX April day around single X.X think building as and and as quarter present and and this our evolve that's our balance and conclusions liquidity, where will ‘XX when think every at times significant working for maintain lie singularly and revised outlook leverage our and a at times beyond we right capital focused of We're we've

Kyle May

Alright. Great. info. for the Thanks

Operator

proceed Elvira line with from question Scotto comes next Our of with RBC. the question. Please your

Elvira Scotto

morning information good everyone. Hey for the you've Thanks that here. provided

you've any -- more cost that that it like you that on cost sounds that just like started, of the or that cost and looks reduction can significant you included cost guess upside guidance. there's and incremental in out quantify of Can really cost I that side, it already is reduction think talked your about you and I amount do. variable a taken downside that potential you've

Bob Phillips

for Thanks question the Elvira.

what three-year cut me new of I to going just a we because We the reflect first of had lot as built the couple a across done new XXXX strategic said a entire our of is the by over of at on Crestwood the think know, had maturity model, the up that technical period, significant four to say that. lot re-engineering from projects three service beginning, carried last or going some place we we be model in standpoint cost and group a the as company functions half here those you complete to build-out months. XXXX. over Let We into had in in those to forward. a organization program the executed services as folks We've capital had year we XXXX major we yet

extent So three-year program to of going anyway, organization as occur we reengineering that big saw the was the some to capital likely decline.

focused that be has while variable build-out lot capacity what a areas that facilities, think we're a in to operate of now new to I we've the our cost. we is before going [Joe] done on got going and it's be we lowering pandemic operating

meant with commentary. that's the what So I

managed our expert that our has is cost chief he's in cuts. and organization Dougherty, our accounting and reductions the cost on So the knows structure cost cost and the Steven organization officer guy the in about more our

just new some going need like don't want feel we in that forward. the that frankly the things we you Doug, took model So mention of we to out

Steven Dougherty

Absolutely. Yes.

we've to So in reduction did we will reduction that cost that half due able around the force press release, $XX reduce like was rate in from run the we on for basis. XX% to the announced we believe of already employee group. costs a been that achieve million organization Over that the

So million directly operating around a to related we've standpoint. cost from to cost been million that that $XX is reduce of to able variable $XX

there our if well what reduction to lower believe additional be up are a parallel operations we variable do directly out cost from wind we that that come So anticipate that primarily so and that standpoint in of related will well. can take that we that results than will our as as a having we costs the to are cost believe organization operating we

Elvira Scotto

to wanted I go to helpful. acquired back very the That's assets. Great.

use normalized we You over talked on I because should should lower be rate a the when flow opportunity? that, you assets that from provided Is it segment next lot that should or cash right how of it's the XX guidance about it acquisition experiencing guess think now at a of forward expect you year the to time where about the MS&L a today is month. different we cash basis? that a full it's So a be or higher these flow look incremental good you're that run not because

Robert Halpin

Yes. that is Elvira. This one. I'll Robert. take

we in and two and I are third Plains guidance -- quarters included those acquired of in that have owned the the that mind acquisition three nine we think assets months only the portfolio our keep from them for second quarter. a that standpoint trough quarter

be the million into $XX I the we million think will than heading today. platform guided generating So to $XX XXXX, that do higher

one years of positions these and of of in John Powell to based In forward as we've that the terms flow business. these alluded assets cash elements of trajectory in our kind like had going we assets many contractual for existing the

the So very we know assets well.

Belvieu, those that connectivity but We and assets built elements to and locations them hub around have was it liked notably was providing the created addition and as with to positions we of the the a as from to one Bob really side access tremendous comes to in capacity to deal roughly the Mont most supply pipeline well. barrels, alluded storage complementary hold the greater in million the X it acquisition

we So stable guided market that assets is for next baseline well, basis. favorable environment not is from XX for today flow do far a cash that, on the all set the to these what off certainly we've believe month

the So stability that we profile will flow for to beyond. like think hold XXXX and the continue cash and in it

Elvira Scotto

more but and just question a little Thank think maybe touched you. I and this for That's very on bit helpful color. then last you me little a the

the color also for customers well? you of if to else can update short some appropriate. Chesapeake a reflects potential that, talked I'm maybe other counterparty release with financial the on about wider with if the that fees also and about referenced I So an press result you and then you possible arrangements know talked guidance in anything where mentioned you but risk you there's producer service then incentive the you term counterparties provide customers us rates assuming water as as reduced fees range encounter around your certain provide difficulties there maybe can but

Robert Halpin

Sure.

questions there a So of couple Elvira.

to unpredictability range one in centered production. curtailment little the and one guidance wider as is that the bit fact think of being alluded a I really you around fact being

a that is biggest think variation. that the drives I wider variable

commented alluded, for XX% we we the we balance our assumption weighted July. had three months oil of an through in May as basin shut-ins As

feel that captured overly but is we the uncertainty the as could to believe I ensure impact think we that there of an definitely to we be. the what extent wanted that given conservative full assumption had upside

impactful with we discussed can highlighted exactly are customers other XXXX ways our might incentive around The to system the that that on is incentive get our at aligned commentary otherwise is all we if our what work to curtailed. producers, that that fees Diaco guidance less production incentivize impactful that's stay and fees with to that finding

it's on be in term keep on all to month-to-month They're designed been that just nature fees water to We've short curtailed. it and might otherwise some the if agreements in in able basis really products instances accomplish Bakken. a usually the flowing type

customers positions Those we their that will to deploy. net with and addition optimize our to work been our In some that to can are pricing. we've help strategies storage of arrangements back able to around continue other

in have counterparties that on in prepared remarks, Bob last And other are as counterparty that producer the the counterparties. our point comment release we we your most challenges put area of of press to alluded and in increased a our couple to facing

guys think well-positioned those from we that are individual extremely contractual who standpoint with are I know We a counterparties. those and

up-to-date a are receivable standpoint. We from

place best them provide can times. and the those to closely they are very the to in degree collaboratively have credit assurances for help these possible We with navigate maximum as service most and we working possible in instances customers through

beyond any G&P to impact it exposure expect not to meaningful do our and as any XXXX customers. cash We counterparty in flow relates of

Elvira Scotto

much. you Great. Thank very

Operator

comes Ned next with Our question. Wells Baramov with from question Please line Fargo. of proceed your

Ned Baramov

Thanks questions. morning. question and development to acreage are the Crestwood? dedicated taking any is first on any My the that's in discussions their your or good potential specifically plans on incentive the basins rates legacy change customer for with the the for more there gas in Hi, of Marcellus from

Bob Phillips

associated our way. comment question. We gas down a gas did in assets on legacy meaningful a that come some likely good with upside of the Ned, to around potential is

example is is production gas on a likelihood of started our the going there dry economics rich in Marcellus in an Certainly to the higher asset that where of have development customer up got we've dry there. that to much expect shift good Southwest do versus asset gas future and capacity production It's the a that. of significant area. gone gas we available

through pushing of production acreage active We around that finish that don't had discussions over the to help over the return had region. of weeks could we we have from from the customer in activities our standpoint that portion an last potentially customer the of line on have accelerate but specifics and exact we in any incentive ways couple on timeline discussions have

Ned Baramov

of to Crestwood storage? helpful opportunity on the and for you increase in That's of storage thinking book guess, you if own and taking for rates? right. then maybe the can thoughts crude versus All switching contango spreads advantage I how hub, provide your [Colt] just the about the are playing

Bob Phillips

facility, pre-lease give hub a coast to which X.X storage is Ned, around answered of East customers the on you think barrel bit that, just question little to only not connected coast Colt free to was West with for your located but the DAPL, a color you own refinery but our Tesoro, some our the I more pipeline a we are balance Colt got was which of us has that hub connected connected we’re and there to Highland. connectivity we're centrally trucking to use We've the facility. to million

due gotten the has buyer barrels there thing the same for now go-to shut-ins. We have up a market become that to tied

otherwise. We are or pipeline to balance you go to your nominations need a a find got a barrel either barrel to if

we ensure some them fee the color customers. gathering barrels gathering, the collect do price our water to financial team storage and and and importantly crude market to optimizing Arrow to that is higher, want but can clear processing or marketing we so add storage a take not services the clearing the you providing Colt capacity using Colt our system only Arrow simply All that? producers rates way earlier and mentioned our for Arrow is which oil to our a low on higher to capacity get to are physical to more of away production. gathering Diaco that fee the or use by the both those gas They

Diaco Aviki

talked between Bob. leveraging what marketing some incentive marketing of traditionally about will rates these it's you, and really do Thank contained effort then crude the one marketing a things but and team the as a the market. and It's we've crude the Yes. about crude do, the been Arrow the team that's and of team storage where marketing collaborative crude you group the is on done on assets average think month current

effect. decision customer's good but their the and They'll in we're price So match customers fixed them with pricing storage going helps also to really get, customers It's about the take some that's moving not price. which storage just uncertainty our drive risk feel together. with buy barrel all that rates via real up and customers this use matrix where the book away asset, about to to a leveraging a asset the incentive up of nice and really of volume happen the match their through they help really from make to

Robert Halpin

that that and the storage not changed contango It's either Basin was good capacity May flowing from but and our Arrow contango Ned, us. board as our is from that April in So that or on using that volumes trade month-to-month play gathering to the to in so continues product the keep but huge to we month storage additive that to important quarter second we way and markets make important three of That's on the we will crude a for for that to our it customers part in out system, going to that of, lot way used and contango available money benefit there. was to that's which captured not that's the was continue our use could fees large Bakken additional week be a which and capacity. as did use week month volumes

not got the that due market the when now to customers ways. and our supply find tight the ability for works the from storage if the market to know So pipeline and ability we that the have capacity benefitted day day that really basis connectivity has barrels gotten customers tight It barrels that's you're to I to a in takeaway shut-ins. but on now both market in confusing for

Ned Baramov

thorough. Thanks Very for this.

Bob Phillips

Thanks, Ned.

Operator

to We turn the like comments. session. question-and-answer the for I would Phillips, floor back to end you over closing have of the Mr. reached now

Bob Phillips

companies We coming know and earnings thanks other in with morning. to for out hanging with Thanks us. are this operator there there everybody

our for projects shutting forward. customers re-engineering getting hard delaying down organization around close this, one, ready COVID-XX the both pandemic operations with of capital preserve or strategy Let thoughts terms the and precious Number me very getting three our going this this, ready internally in for just capital. to cutting our we quickly hit

from take that that accretive step an was we was year. decision price or away for well thought offense needed. did It Closing the leverage positive we an at liquidity transaction to this we buy coveted that Plains the years immediately made It important we've throughout potentially very as as good even us. that for on asset deleveraging both was neutral going a not a

liquidity was our a to good levels Robert's business minimum really and we buy with XXXX going thought this and run at comfortable additive that be so The and great a to that to time numbers. XXXX it's

guys them how a at optimize guys flow have cash digging cost is that understand over to looking The they're and of their exceptional operations, more operations two done financially but great are. challenged really the more time we not taking in customers Woodmac job. they Number and which our and benefit an get drilling deep just revenue market job can we and the re-forecasting can a their forecast our with and than done XXXX budget have out cost, producer completion so more

changed invest about think team they're companies the business pandemic finance to going the will We the be liability and Robert allocation. forward in. midstream focused this the going capital has way management on Now that and and know investors

can stronger place we come We're consolidation on we we're bigger, other going this going to being take are get side out downturn of We and event. more get that that going will of advantage liquidity. the this in a this we change going have so side up dry take inevitable company as the powder more better, as the well. market wind to to other of We're when to

everybody we're joining. operator going close. to to So for that Thanks with

right done. think time I we're and on Josh we're

Operator

Ladies and teleconference. gentlemen this does conclude today's

You you wonderful at may participation day. this have for your a and Thank time. lines your disconnect

Crestwood Equity Partners (CEQP) 5 May 202020 Q1 Earnings call transcript