- Earnings call transcript Q3 2022

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Operator

Good morning, and welcome to today's conference call to discuss Crestwood Equity Partners' Third Quarter 2022 Financial and Operating Results.

Before we begin the call, listeners are reminded that the company may take 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, distributable cash flow and free cash flow will be discussed. Reconciliations to the most comparable GAAP measures are included in the news release issued this morning.

Officer, prepared Chief President, and Financial President Chief with Vice Halpin, Executive today and and President Officer, Operating us remarks Robert are Executive Vice Joining Aviki. Diaco John Black;

and Robert the would the Instructions]. of to At recorded. call with will for question-and-answer management Additional like Today's the answers, analysts call over members the following senior for current [Operator I to remarks. be turn this team Halpin. available time, questions prepared Crestwood's being session is

Robert Halpin

operator. quarter you, and well you operating Thank the morning, Good thank we as for for everyone, as today remainder discuss joining of as results financial us our outlook our XXXX. third and

on. get Now couple do housekeeping started, a touch have we before items we of to I wanted

he unable us the a in Bob and at some call I he you conferences Phillips a is of holidays. quarter fourth morning, join with not on internationally disappointed the he the Bob around over service. the the his morning on various of events traveling with planned this trip unfortunately, connecting to but First, or previously of to investor many know this unreliable Internet is upcoming forward course looks is and as location is sends other to be regards,

responsibility, here. recognize Second, XXXX are since we Crestwood our who was roles I in Financial committee join have Johnny and congratulate has to various to would with increasing been recently of Officer. like executive Black, and really promoted Johnny him to financial excited Chief

and more turn off results cover Diaco it cover to opening started. a and get an then then detail. few in Johnny over to kick financial I'll to with to call finally, our let's So operational update, the over remarks

the another and efficiently in our strategy America, and fully the available we continue be now aggressively active that and very the in JV, and unitholder growth prolific about as acquisitions X to First the execute develop in venture with our plants. and make months, was quarter core robust to Delaware as quarter contributor a we company to continue Sendero the both our short transactions drill play with of much inventory plant align long-term North accomplishments operations significant This interconnected number active teams drilling a Midstream significantly these footprint as closed and to substantial The at our and and increased continues CP the remain acquired Delaware initiatives that of third strategic Reserve. our programs. joint assets. previously completed our our In producers newly strategy assets enables few Early more better Crestwood September, producer announced a position opportunities strong to customers quarter, management positions. accelerate integrated our on to Sendero assets. of maximize we capacity Collectively, are the Crestwood around Basin of their basin project well for XX-XX The utilization with and wells our Delaware exceeding excited Sendero public in Basin and existing our diverse set Orla Basin value. that private flow. have our the to and Willow maintain overall The cash processing already significantly most our Lake busy just expectations as operational In larger gathering very capacity Carlsbad and compression

in Midstream our portfolio the and our further we divestiture in $XXX our to assets asset streamlines regions. million which gathering cash, high-growth core for of compression First, announced Marcellus operating Antero

XX significant many million divestiture Energy, offering in long-term of unitholders. by the proceeds portion role a Second, redeployed public alongside our from a we Marcellus immediately secondary of unit those playing Chord

from units repurchased outstanding. Crestwood transaction, Crestwood units than ownership common approximately $XXX total Energy in of Chord Crestwood As a that less reduced And of X% was part retired to for and Chord's million. million X.X

if us play Chord amounts a completed XXXX, transaction in this the another common million Crestwood Reserve long-term take very excited in transaction. over the not repurchase, adds unitholders. very transaction are sizable transaction XX repurchased $XXX thank to with secondary our We minute partnered of would role units last sizable of be also dedicated back our which investors months, I that to First up capital March a in you in when we which return through approximately large a to the to to with having did remiss combine CEQP this unit I

participation reach XX Chord, with last months us You support remains and your with all very showed so us to solution a has for to going been great the or over who a and enabled customer us important forward. tremendous a win-win partner

the of Now acreage. M&A our remainder before of and shifting some our the provide XX strong, the our of evolved rigs quarter EBITDA wake factors for have an we set outlook and processing business be gathering wanted to active and on remains call substantially of high-level few comprised over Johnny, drilling to The producer grown assets. gears, extremely I has adjusted Diaco portfolio's in XXXX. and our our transactions, that impacted running I XX% across has the fundamentals dedicated hand around and to and a series In results commentary

including Continental's Powder amount meaningful assets, Energy, assets around and multiple our a of of Whiting Chord our Arrow seen acquisition on Basin. producer the have RimRock in M&A merger with Oasis' create activity Devon's River we acquisitions Additionally, to

All our the long-term transactions enhance our behind assets these further base acreage. dedicated quality and of around customer the our inventory core of and value highlight

to gathering connects delays were quarter, negatively timing volumes and Basin the on processing well by system. our impacted Williston During

to customers system catch increase Arrow in and to the the wells. we on which recently acquired up have assets work seen supply from disruptions, quarter market near-term constraints, to key completions, to those delays second weather integrate count chain oilfield our and have As labor well in XX approximately services DUC challenges the led

quarter and fully XXXX the of $XXX timing we result, year are revising these a As activity but levels to full some visibility $XXX to range EBITDA our shifts. reflect guidance have XXXX solid adjusted million to fourth million to

base operations customers our that, continue to basins, and of provide to generate operations expect on American cash to these our in with our call through long-term meaningful and the over With are continue we short-term challenges, now And turn the increasingly confident to focused squarely free our leading the asset Crestwood creating work that value unitholders. the details North portfolio. Diaco our quarter. strength enables additional our for we us growing flow As on for I'll to

Diaco Aviki

our how we are Robert's portfolio I'd heading and morning, and high-graded asset you, into good to Thank Robert, on everyone. echo positioned also XXXX. like settlement

As upsided for have XXXX activity guidance season and our off the budget kicks to active customers, year. expect an receiving for

and financial excellent some the are to oilfield now better in of are equipped constraints experienced service navigate producers Our this health year.

and Our has additional in commercial strategic basins operations are year scale value. capturing the core competitive built our management execution and in project teams past

in get Let's the started Williston Basin.

As discussed, this well winter year and delays. was by weather connect impacted

Some Today, to wells in wells the a second the come third shifted come X originally are few expected fourth running in into XXXX. on have online and our rigs we've currently quarters got quarter now fourth to online expected acreage. quarter and

XX wells to to in quarter. connected expect have We the XX fourth

environment. acreage the and commodity of fourth am continue the coming Our synergy Cash Basin growth some producers best economics in pleased the our highlight quarter is of offers to the that XXXX into from and assets this Williston high capture level flow I exceptional really support through gathering in to price activity, optimization efficiencies. incremental and teams merger and improved in processing this

exceed to of track on our XXXX synergy XXXX. well are operational cost target We previously in million identified $XX

STACK Basin, Powder Operators connected acres. our are of pipeline, acreage, X That to Crestwood's Continental multiple on currently the to across formations Moving over delineate third quarter, dedicated system. year-over-year volume drove as excluding Express there running to X XX%. during continue producers formations XXX,XXX targeting the southwest River our new the are growth wells rigs Jackalope a

this development ongoing continue expect the level and producers activity Basin, volumes both on to footprint. We strong Jackalope public XXXX. the operate private result to in throughout our increasing across Delaware plans In system of

across placing attract volumes incremental better to opportunities and premium on optionality to the quarter. During Mexico flow activity commercial CP is are capture optimize acquisitions, teams and processing well a systems expected in Sendero to our to provide our able continue them a our were X in as are excess process capacity we're to XX and our currently basin Since in XX that connects is producers running in the and the incremental our quarter, activity big expanded in rigs producers fourth system. Current to JV result total New the a assurance. advantage for and Texas both volumes completing an third connected of XX wells

of facility We a Texas. cavern. expansion and on I'll with Palacios's supported existing X Bcf update quick by be Finally, long-term existing X.X FERC counterparties expected facility to production to South expansion X fourth filed brine a application fully converting Tres storage with into is in by well investment-grade conclude contracts demand to in through facility Crestwood continues months approval after Coast needing our I'll and over turn storage X strong from gas the an in a a This Gulf for approximately recently With increased incremental the February Uri customers the financial the that, Storm quarterly see wheeling application. in cover Winter LNG to Johnny interest results. service to to since in and services. XXXX it

John Black

Diaco. Thank you,

flow cash XX%, EBITDA $XXX over Crestwood generated of past year-over-year and quarter, XX% months. XX driven increases third and the distributable million, our million respectively, of the For by of M&A activity adjusted $XXX

of of $X.XXX approximately quarter, third payable of the distribution as coverage resulting record X.Xx. X, For quarterly XX Crestwood a announced November in on ratio to a unitholders November

by gas results. gas quarter third Midstream Looking gathering, acquisitions, segment EBITDA July third and higher which expanded In segment and segment, assets, of quarter for EBITDA year-over-year losses. In driven the quarter X. Oasis than assets. EBITDA more decrease at assets, quarter, growth to Gathering of the $XXX realized volume CP water of hedge a the from million of the segment, XXXX, year-over-year. and North with Crestwood a gathering million, on an Processing totaled combination double volumes and natural of third Sendero XX% Logistics due legacy Storage third from driven natural Gathering totaled the the JV totaled the coupled processing XXXX $XX South by operations the the sale $XX growth over million, the closed Segment and increase Barnett by XXXX segment, the In Processing primarily offset was the

to line our original storage for upcoming year NGL perform and logistics to business with positioned the heating Our the season. and continues in for is perform well expectations winter

job the has and of quarter third expenses XXXX, the side, the year. and On environment a quarter the Permian throughout million done $XX due over G&A expenses primarily XXXX. despite the Basin cost O&M for managing totaled great increased Crestwood inflationary acquisition and Williston this to

$X our this $XX growth reduction environment, capital in in million, on XXXX, and the reduction the range, at million projecting to year expansions the midpoint system the $XX range of capital, in multiproduct $XX been $XX million for have as flow capital inflationary approximately well cash crude capital invested free system Williston from gathering the producers to able million at this full these a reducing guidance exceptional the million spend Panther and for and third-party to job gas we $XX and our are our later to for quarter, growth throughout primarily the Basin executing targets on energy Percussion system maintenance year deferral build-out representing optimize third on of our capital therefore, are, gathering million, mentioned we $XXX of Williston the million updated projects range. to after in the contracted of our of the the to range and and the to Based year we the During cost approximately below Chord in in continued year of are as $XXX a Basin, in million reduced previously and an the reducing build-out XXXX water distributions year Basin, compression midpoint Petroleum related Basin. recently a other to as earlier of connects Delaware guidance figures, oil into Based basis. the positive $X million we Delaware this gathering well and

sheet. $X.X facilities. credit outstanding notes of balance ended third $X.X revolving with billion X and billion in our quarter debt outstanding, the $X.XX to Turning the including billion senior Crestwood on long-term

and in billion third quarter. a cash has As of mentioned, the consolidated $X.X Crestwood for Marcellus the revolver outstanding of debt on the used Crestwood the to X.Xx forma closed on the sale assets at the debt. pay of of long-term the million all of down Pro proceeds now were sale XX, $XXX leverage end October of and for assets, sale ratio

priorities allocation focused and through our less leverage As target growth about balance long-term EBITDA we think to and sheet than ratio on going committed of the allocation combination remain to flow our are we squarely our reducing free paydown. forward, to cash X.Xx of a debt capital

preliminary the outlook reduction open flexibility for goals XXXX, is for business, look and generation commercial As sheet. operator, on into integration and assets. our continued opportunities the flow company accelerate from With to to our up next we capture maximizing the in the ready balance to we positioned are the we the we acquisitions well leverage on free cash financial start that, Based optimization focused and through questions. reduction and cost our of our of are believe create the line year

Operator

Instructions]. [Operator

Jeremy Tonet JPMorgan. first of question with the comes line Our from

Stephen McGee

starting McGee Steve the EBITDA. down through just walk for is out guess I going This Jeremy. in on

walk could great. Just how just timing? timing? led sale? possible in of asset that? much the us of than because for us you would quarter walking expectations was that it to of it through through your was much be better to what of And kind come If Is fourth the How then it

John Black

problem the new from down the range at really range, is This coming million the There's guidance all. in $XXX to guidance of No the drivers Johnny speaking. million. Yes. X of midpoint $XXX change

will were expectations. year November quarter after impact from earnings to kind the an $X well half second in XX. remainder That million the EBITDA compared The first the be is second estimated the million on of then for driven of removed part a million deferral of in to our This this the our by factor, into roughly October, from $X divestiture and October obviously to the XXXX. Williston the shifting Marcellus December. earnings really of obviously, closed XXXX completions contribute in to $XX original quarters and And of assets fourth drives the third for of additional

with that end of drives second push question the us the of of coupled downwards. million with the and the towards kind what really the revision higher answer we XX could the So miss, to Obviously, mentioned, cash Williston significant that I up projecting amount connections catch us fourth incremental Diaco both the in incremental in the and as part removal say, XX XX low would flow $XX volumetrically across the to a of Delaware. Marcellus the approximate here Delaware, your are in of to range. quarter and to XX wells wells Williston

So guidance the this our just end a impact given the have of the amount connections to here EBITDA timing this wells new the really low substantial kind rates quarter, quarter big high of the and production of exact initial those be will driver range. the of and the on for

Stephen McGee

further Got also shaking are constraints, on acreage. just of And gets how opening Bakken delayed XXXX out far see constraints, DUCs, it. how you and it any of because as And risk the this the that see delays now? do you then kind as up or then with go XXXX, the the is on many there Bacreage the into maybe OFS these

Diaco Aviki

is Diaco Aviki. Yes. This

Let me we one on second are The answer the Arrow. the quoted additional DUCs U.S. across DUCs that across first. our There's footprint only

what than this only the Arrow in those expectations on year were point much for [indiscernible]. So we in that at number in lower time are our quoted

expect impacts those We that customers think into to activity. appropriate to kind continue of done of issues. Going taking the actions -- have We our XXXX. the OFS the don't into manage

activity be good pretty today should a shape have and XXXX to of the reflection we robust So that. is up

Operator

Instructions]. [Operator

line comes Dingmann of Truist. question Neal with from the next Our

Neal Dingmann

Bakken. first Sorry about My is just on guys. the that,

could. bit talking on, XX a you you Were maybe little XX a X Bakken to not mentioned rigs you're think, some I 'XX, expectations and into you talk weather that all little about the beyond if color just just about maybe anticipated gave, currently bit, wells. Or on You seeing? but

Robert Halpin

second weather quarter result of of producers we The this and on year. But in back of XQ lot to in April referencing the a we've anticipated this XXXX. kind is and really what those timing that experienced a out Neal, of the of is and in was kicked Yes, come obviously we XQ Robert. of our completions that May storm anticipated those the as were quarter, and second

of kind then frame adding also bounce to they from As from and assets our the shifts has decent well. that navigated we've to those back then timing integration challenges we've of tried a some side, the caused of of M&A the had amount And key activity that's those operational as timing some time really the slippage. in And some OFS bit, what that operators. around little on obviously, of a seen

is that come through sight to quarter that to the XX handful month So already seen for the got line of first on the XX coming good this well online. year. We've quarter. fourth pretty of connects a of pads We've here of

Williston plans about this, to we pretty through the made acquisition. well think feel I that some go have the in they ready further Antero and up running. to and as to up that producer to think Arrow wells the outlook the assets operational Rough navigated our from completion assets commentary, given do we I well be are good and challenges Basin feedback outlook of crews our navigate feel, 'XX have on in a based and of as XXXX then on confidence able in they've the those Rider Diaco's degree good both and So appropriate that to Midstream are we And

Neal Dingmann

anticipate look you just then rest think are feel around that? I and Or a Do details. I'm the you're just XX% bit thinking mean, the more? NGLs revised little And you had could quick just about like shifting potentially bit a slightly Great into that water. type. you 'XX, 'XX? are think on I when one. that I gas you a oilier in do now, get and how you wondering XX% commodity right

Robert Halpin

think don't come really mix to from I I stays going basins. the well the relatively are because -- the completions consistent same

core up have in the and the sorry, our operating areas X Bakken Delaware. We and the the Bakken, -- Powder Powder Williston the

we at be of acceleration activity, I year. we look think to as obviously, pretty Delaware next the robust expect

it metric side stays But So to bit the see there. consistent. mix think overall, volume shift gas could gas a pretty you I given our little service

Operator

comes question from of next Our Fargo. the Wells Baramov Ned with line

Ned Baramov

S&L inventory now the segment in complete. seems It build is the

the You from assets. sale be the moderating requirements Marcellus of think also from the proceeds I CapEx got And should here.

So decision can on you your on the to maybe exercise the accordion credit elaborate facility? revolving

John Black

Yes, larger sure. accordion No increase business was you of said, an The problem, Delaware extra just like reason scale gives in given the felt major just just, now we size pro That to again. the -- level really of revolver peers. the the of was Johnny exercised it it the is million speaking Marcellus for our divestiture the prudent of of the Ned. size based on This that liquidity. was us forma acquisitions $XXX our

in credit was liquidity and agreement addition, given this were volatility near wanted additional set and to broader point, ahead of terms. at in under the now that our existing an with the kind that able to secure term, done of we banks, that just of get the option and access the markets, the uncertainty the inability given market the In just in to bond the go

Ned Baramov

but little fourth makes the And early, CapEx. XXXX? the bit you talk activity of about I in a given it's from if some can into XXXX, question shift a That quarter then know CapEx in sense. on

John Black

Yes. No problem.

to generally of lead right backbones about systems built the will quarter. in well. our are Basin excited year be multiproduct in around extremely areas. are before, core footprint building level expansions of Chord That, down and capital our out of on areas for overall, for the about in they of of the primarily activity well-connect out the XXXX year. the to meet system, kind talked we've developing focused this G&P the at G&P our we fourth X into But next next as will Western with needs Williston our plans. point, Energy and exception We've the now that Obviously, As for expecting step capital gathering capacity development customers

So definitely year. stepping down next

million But next free A will down kind about, in As year business capital stepping program is we little XXXX. the deferred into of stepping the year. the for $XX XXXX, guidance flow bit model. our be about cash this overall, driving will of down that positive talked be

Ned Baramov

Palacios, would Then meaningful to like maybe up operating what capacity upon the how improved but in months? the then also just one And increases the next much any maybe given more then of the expansion? for renewal recontracting? is CapEx, CapEx on this environment, time, just on guess, is demand associated rate XX last expect Tres related with currently there of of to expansion budget type And the I this, you realize a

Robert Halpin

Good Ned, question, I'll and Yes. those. take

first So cavern number, . around the the the roughly expansion. million $XX CapEx It's a X CapEx question with associated fairly manageable

with So attractive Obviously, underpinned on LNG counterparties, that would have And else. there going in players to investment-grade with markets who in with Crestwood. everything a $XX getting contracts XX-year net be that high take-or-pay down very marketplace. and in logical long-term the million project, everything

opportunity attractive to amount So it. set attached and very capital a that about very risk and a profile of very excited manageable

about And rates season indications excess available of excess -- very I the open early around next actually Bcf looking an for speaks positive your now good. we're are capacity to capacity, look in think that, X.X question which terms For of on year. third

Operator

Instructions]. [Operator

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

Elvira Scotto

saying you're that I provide indications contracting good. that have I Tres oversubscribed. guess there's potential excess is for question for And that Palacios on what further capacity was there? kind Curious on if I think early said even look this -- and expansions you expansion. just then a season open you that, know of return some question capacity expansion? your is my follow-up the you Can outlook

Robert Halpin

piece last first. answer the I'll

events all we've Texas, else. the look gas you I seen in years, that's Tres the around South think, of winter markets yes, there going in at some and the the opportunity some volatility is out of out as of power given on into grade the everything and just expansion unpredictability for further

as is And business open excess their questions your future very, so to clearly seasons and speak facility. opportunities that well current the expansion at looking everything around as I very want for positive to capacity.

filing One was we considerations. and X is season, X expansion process as the place with separate there's made. working the renewals that open FERC subscribed year. PAs next fully expansion the speak. That heading around process cavern So to from I and and That contract mentioned the apart we FERC Bcf X.X we're in through is available capacity due into

very, Tres. So of rate both direction we of across looks environment solid, optimism those a have legs of the increasing capacity around of confidence the very and lot and

that term, last XX-year we contract around grow say and to optimize profile the high project, of and unlevered it's extremely would return ability I Your as on return attractive an we rate expand question I there. think simply expect from

Operator

Halpin call There over remarks. to the Mr. to for I'd are the no further closing like hand queue. questions back in

Robert Halpin

again, you operator. joining the everybody thanks for morning. Yes. appreciate And time. this Thanks, taking I to us

other I in in he disappointed avoid. you was sure you the of be we said but of with back some conferences the the be know in here that plans into Bob run touch over couldn't as I'm many As of travel some course not had quarter and to gathering. he my holiday will at onset, I

speak, as everybody holidays have look and a obviously, catching upcoming. forward up, So we to happy

Operator

you Thank your Ladies for participation. and gentlemen, conclude teleconference. does today's this

time, your this disconnect at wonderful may day. and a lines have You

Crestwood Equity Partners (CEQP) 2 Nov 222022 Q3 Earnings call transcript