SNMP - Earnings call transcript Q4 2017 | Evolve Transition Infrastructure LP

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Operator

Good morning, and welcome to Sanchez Midstream Partners Fourth Quarter 2017 Earnings Conference Call. My name is Roco, and I will be moderating today's call. [Operator Instructions] I would now like to turn the call over to Chuck Ward, Chief Financial Officer of Sanchez Midstream Partners. Mr. Ward, you may begin.

Chuck Ward

for thanks and morning joining us. Good this Officer; John me and morning President is Executive Chief Midstream. our Willinger, Happ, Marketing Gerry of With our Vice Senior

The this statements, our we few latest operating and morning investor which this with available include certain will close. unit our plan with risks discussion performance. XX-K and documents These financial And started, notes our The uncertainties. the morning's the a and our we XXXX fully be before better and presentations holders understand in forward-looking file our after Just we will report are quick our file on more in additionally website, community discussion released will are subject we to available our on today fourth to this earnings also to are quarter non-GAAP earnings along www.sanchezmidstream.com. finally, get morning described on help market are investment website. SEC, which use our measures release

Our and Willinger. reconciles includes over with turn Gerry earnings call I to measures would an our measures. that, GAAP the website on non-GAAP financial that like these to appendix to is available release And

Gerry Willinger

assets, the SNMP Thanks strategic the completed of master XXXX. investment a planning, non-core limited producing Chuck. midstream After of focused we to divestiture years and successfully of transformation partnership in

the Facility capacity Facility, venture Raptor partnership flow Processing Raptor capital our the Processing a existing improved free Gas cash an Processing the asset of with Raptor and of of program, of and feet The that to Raptor June brought wholly-owned XXX in XXXX. completion XXX with part pipeline feet heading joint August the per the growth. Midstream assets extensive cubic provides we venture completed the expanded transformation, joint million capacity in The achieve As stable feeds and South Pipeline the was with our and completed that Western feet with this in equivalent SECO million path had on Gas of parallel online transport to began Gas base, day. into SECO Facility. positioned developed Pipeline, owned strategy Facility third Gas South was XXXX Catarina markets and flow XX% day per cubic to operated Gas is multiple That the our Processing gathering capacity. cubic Corporation Texas continued to to a line our provides developed gas dry Targa together of Resources in quarter on Pipeline Targa per Carnero million support to These XXX processing We the SECO and Texas. Processing the expanded connects of basis fee-based commercial in operations cash midstream XXXX Facility by XXXX Raptor day

remaining strategic in $X.X to our operated approximately XXXX, made in our strategic continuing approximately million. production artwork to have for of with the to activities. in production expand suited recently we look by As the production an pursue that in we midstream assets sale of divestitures of additional Oklahoma expand concerted we South million. which sensitive Texas We July activities we the certain forward. Well To are of effort to the commodity model less XXXX intend $X.X for end, sale assets position fee-based prices closed a to of assets nonoperated producing November contribution to reduce our going and closed business our for nature Texas, exposure partnership's their

the our XXXX. Processing of Raptor adjusted Facility and fourth quarter XXXX the our completion Gas EBITDA of compared than SECO quarter first for when doubled Pipeline, the adjusted more to With EBITDA

on available XXXX approximately distribution common which was X.X of covered As quarter $X.X fourth for million a times. in our result, cash distribution our units the by

expected is year. XXXX in to spending capital cash total growth we for considerably to to lower be flow opportunities XXXX, this see compared when our continue although Importantly,

strategically capture increasing distribution Texas posted of balance volumes the X come. This markets facilities favor hold are we in consecutive to elected growth. which as positioned flat. through quarters over South do to our the Comanche the anticipate this coverage midstream upside Catarina strength XXXX of from take and decision assets development at and we growth, lightly comes distribution our to quarter we Our activity not Having years and Energy increasingly and capital Sanchez sheet

our it the for the that capital is distribution not alone are its apparent partnership quarterly in markets As result, rewarding a distribution. let increases current stream

ratio, coverage distribution our cash to sufficient distribution flow have the As future. evidenced we believe consider we by in increases

However, to call use time I’d it and balance prudent improve reduce capital to the more finance markets the that until less excess believe the over growth. become partnership's is sheet now, further we turn such like flow internally Chuck debt, And to Ward. cash restrictive, to

Chuck Ward

Thanks Gerry.

total Our fourth $X.X fourth quarter the a total midstream from came $XX.X million $X.X in non-cash revenue on $XX.X during Western assets fees asset and of $X.X taxes. from quarter and $X.X The expenses revenue in fourth to related $X.X from totaled and as for X,XXX in million another expenses the both Operating quarter mark-to-market were includes non-cash Pipeline quarter in unit-based compensation activities. million. the million production $X and as about and unit-based of expenses revenue items. which system the includes operating settlements, compensation balance production-related fourth quarter management are million totaled including million expenses the which well million SECO revenue partnership's million $XX.X as of in and loss XXXX Catarina hedge of during million the of operating Fourth midstream the activities XXXX G&A

had coverage in facility in have for million $X.X $XXX the for commitment quarter. distribution unit midstream The of outstanding in million. borrowing commitment quarter our adjusted base times results After collateral interest million. ratio performance, approximately As elected out million in partnership's million and distributions, was of more current a $X.XX covering and We amount. midstream maintenance a cash million the $XXX preferred million $XX.X we the debt of which $XXX.X distribution the at in which for X.X currently XXXX amount result fourth results this base generated EBITDA million our backing available CapEx a our $X.XX approximately common then of than $XXX is borrowing under portion which credit and

Our borrowing base last redetermination in normal of middle the the December was last conjunction set the with cycle. in

market update With redetermination we’ll the results the another we receiving results. undergo those presented today, we’ll upon

hedges of the oil fixed approximately approximately partnership the a can we'd XXX,XXX of For found NYMEX barrels hedges through like in production covering for of production price in on our investor effective per open MMBTU feet information overview the for year now cubic in the additional price some portion partnership our at More $XX XXXX, the natural of an XX-K barrel. and approximately The presentation XXXX. hedged or that $X.X billion our fixed moderator line results, in has effects and be $X to its and NYMEX on crude production per of website. has with XXXX our And gas our full questions.

Operator

Instructions] ahead. Please comes [Operator go from Schultz Capital. of RBC TJ first question And today's

TJ Schultz

expansions volume you your is some project to in CapEx remarks? assets moving get of about I first trying frac on focus capture much that kind have focus idea I of prepared more expected you just year, processing you’ve know of your where forward the some an growth talked or assets. think is water how it for this to or room And mentioned do on existing just

Gerry Willinger

beyond after keep embedded Yes, growth here and Obviously, that to going pipelines have looking growth certainly to expanding going Comanche we through we're are of to XXX attached incremental the those that full Raptor. the so Catarina be potential and will positions. of

of look out. looking provide it I at capital Chuck, was did turn we it over guidance going XXXX plant things, I’ll other and but of forward pipeline we’re I’m turn going Chuck. to building As significantly lower over will going in better as we be to a course to to than couple

Chuck Ward

We and out our haven't on before results and of on busy full plan with plan working but our the come on plan capital end XXXX forecast. quarter do out that been and that, been some roll-out forecast goal yet. waiting is to the we've working a other to be capital We've XXXX

TJ Schultz

decision I to at you really flat still type payout on it the on if stay want if this would credit here sequentially, the to thoughts continue but you lastly distribution. not you keep I understand the for guess yield on it of the forward? wanted just current going of - certainly getting kind distribution get to even just your

Gerry Willinger

need distribution. our currently plan We any see certainly don't current is stop to it. to our Yes, continuing

grow sits looking below really the said on swap mean but value, is not continuing it growing. only continues can what’s is on control, stock at to, like markets We the times positions cash balance in through plan we’re we going feel and our system We’re like sheet we today. to on continue trading going volumes cash flow our our back to which control actually price flows. asset delever the the and we're that control across to I producing markets price, We focused with really can can’t at equity and We're currently equity sitting today. street. which and not business focused We in not delivering X.X I we’re share we’re getting

of we at opportunity add to opportunities on the don't to in contemplate and an look asset in that return we evaluate rate that future a we changed plans today. So time. any what do the at looking certainly we’re we’ll if mix, high have But and have doing

on to finance it. So how

quo to the always increase grow. development where really It's accretive it’s acquisitions, that's accretive to world. status an for for projects but not cash And more, So look status we flow. or always look of we sort we opportunities quo look at until any

Operator

Holt Colton go And Please Tudor, Bean comes and of today next question Pickering, our Company. ahead. from

Colton Bean

assets could that have and ongoing I pro sale remaining helpful? on portfolio conversations any just you are so you Is or having forma the Texas if would provide you South think in there the non-op only side. for production updates that you'd the be highlighted would correct

Gerry Willinger

then EWI online a middle right now couple alternatives EWI market also in are The examining marathoner small Texas we Oklahoma other a actually non-ops, on We and we're the and platform of that with positions a shortly. - will South be of the hitting Oklahoma currently. in a option have where operator group non-ops different here is select have the of select South couple through and in of parties couple still in the process really assets Texas

perspective kind bridge financed We this think we're from is us the to part our and I sheet of and and - a important feel we balance perspective. forward look and somebody primarily generation this started who earnings at who past is the middle on a like transformation in a a entity. years even upstream more of than ago of few kind go midstream or somebody think a

Colton Bean

XXXX other budgets it you the I And it is I guess much the too before to understand comment a fair but little if thinking next so stands largely ongoing about? as or attributable budget there may this any XXXX be capital considerations is wealth should project we be - unfair bit can’t as characterize

Gerry Willinger

We think further it could incremental assets. processing be and after more gathering downstream much the

Colton Bean

those scopes? the that had including those expect to some some sense you potential ago looked maybe you're to upstream I project guys a processing. of guess mentioned XXXX so Should of And that of scope the and a previously the in in year we what going you revision the to be trajectory fractionation, wanted the like get to updates included projects resizing of consider

Gerry Willinger

correct. That's

Operator

Schmid question Stephens. ahead. from And of Matt comes next Please our go

Matt Schmid

there like I mean of that X.X about think and quarter? one-time a How I mean strong, is The at distributions in of looking issues forward, going very looks in the fair X.X that. million excess any of JV base earnings then about of we it should distributions look million sort were equity timing or or earnings fourth

Chuck Ward

third good for of third Sure, quarter, became to to about combination really look fourth quarter. JV way operational fully to is and course the I at think the and relative think during the a that after of it a say

arrive quarter so we of of And in during a first have did that blended operations a as bit kind you kind little of the is quarter last timing rate there. There full of got XXXX. that

to the I So but when two blended more XXXX with is a probably specifically something guidance. if rate out better a guide between our our guide run to come we bit for to we - think rate, little look

Matt Schmid

the just fair guidance What’s more existing it's opportunity asset probably I be for of base then increased wait - maybe mean just this the right incremental to growth utilization. but And for through too, think about now. for kind might

thinking Sanchez Just the based plans about there? plan out Energies the that on put

Gerry Willinger

be drill specifically Western right, Catarina about say So volumetric mean there Obviously on to increase Catarina system per it XXX you depending potentially pace. general, on looking out XXX significance run expand plant XX if These to coming timing at we year generate being amount expand them running looking about will well we nameplate with processing think will above There's growth. of as bit beyond we the to we’re capacity about capacity, see Comanche XXX, I little their assets. that the timing. if at depending XX% a XXX, we we for from plants, X% is well higher. additional coming in if a as be always six But

additional number then So growth capacity SECO. better coming We from Catarina downstream ways. of from we infrastructure, the at processing Comanche pipe or look both that system, can from current a additional add from takeaway look at growth capacity in and and additional utilize to the volumes

ways CapEx our the the that that come quarter. out the budget but are the XXXX checks look will without we end to by in grow with significant those will of So

Operator

Sunil of The next ahead. Seaport Global Please question comes from Sibal go Securities.

Sunil Sibal

Most but I that one been of of actually was parameters understand my was in questions the trying release. operating press hit, just the to

and release that in to? some is XX,XXX just from what or press feet. through the indicated Catarina Comanche of the million On I getting system you're and transportation curious gathering there that was the cubic is of impact the kind throughput

Gerry Willinger

through only Catarina That the is system.

Sunil Sibal

And how on much what - capacity an quarter? for average the at the Raptor then running was was

Gerry Willinger

full quarter. Raptors run for nearly entire the

Sunil Sibal

XXX? So

Gerry Willinger

depend little upon XXX would upon three. a than above weather, and in I six the than plants it service the full back things some sizing nameplate quite never - the little depend Yes, of say it's have for been and sometimes at for less nameplate runs less sometimes upgrade months

right. the more quarter. some for during of But rate, there’s course - a it's the blended on essentially think XXX I its been yes [indiscernible] running

Operator

Venturatos Johnson our And Rice. from Georg ahead. comes next of go question Please

Georg Venturatos

the in still we as to process your relates side business. contributing I probably Coverage ahead in group expansion obviously valuation and kind touch a it of discount going position optically an we're you going you as that midstream for. you've conjunction where forward? given this on good through beneficial effort downsize of side wanted production EBITDA to up seeing would compress of to were forward? X.X on was the you to attractive execution wanted the strategic EBITDA, necessarily to part have Just about kind that that But helps get well growth it’s reducing versus what and thoughts the see. be lost to it's it parlay how that Nice that that know and with back times midstream is the recoup exposure as, talked of investment or would that think you about looking

Chuck Ward

the where bolt-on an to us an in the available I'd at of we that's the that ideally like for course are think say as midstream using same price. to And we I asset world what ideal would kind buy is time our upper-stream asset shoot dividers That's for we as offering towards. that's Georg of working assets our to for. volumes at who's same rotation becomes actually somebody have acquire the assets

Gerry Willinger

as Yes can is sometimes - always but imagine perfectly aligned. and yes you timing

lower So I comment was we right have think it’s portion midstream at we out asset assets footprint to producing as goal overall of forward cash a certainly reduce exposure significantly And in to the our goal look stated is rotate done our to price. today. the stated producing our going the flow which we'll continue our expand that of

Georg Venturatos

throughput Catarina us what with and could basically I you provided Raptor, a SECO from exit you for may at throughput perspective? for were know be guys on then rates was up And but you mentioned XXX

Chuck Ward

revenue on provided did guidance SECO in not So contribution. we adjusted an tariff XXs guidance effective estimated we throughput on - from about runs the a but our When gave an we standpoint have EBITDA XXXX that.

have. how tough figure the to that's maybe So you back the SN have dry will on that to generally really obligations with numbers say, come best with results. update be other operating until their come for but essence, partners then source. other you always that's the production our of I at up for gas for we out that, going XXXX guidance interest it before and And not I Catarina model really out Raptor they to looking guide Catarina working it think I'd quarterly And takes the

Georg Venturatos

And revolver side, us on the then there? redetermination a you on timeline potential can remind or expectations

Chuck Ward

the couple a of group K, of redetermination some much after filed bank the Right than for more the portion to and not weeks that the we numbers expect that's out. midstream usually those

Operator

Please Fowler our of Incorporated. Scott Advocate, ahead. Truckers And question from comes go next

Scott Fowler

with My cash realistic question related cut distribution for the and previous expanding year XXXX. maybe do with ended it to later a to on the feel of question this has your potential

is is the see appreciated focus not X.X basically capital on Just being current balance times by debt with to excess markets, the And the you're your the elaborate opens because leveraged the please pay the you down opportunity past sheet. roughly as that you cash, concern distribution direction with greater Could favored on the distributions. or cut the this? up to this and increases it

Gerry Willinger

something is goal the our value increase end Since paid distribution, is since the XXXX we and on. of pay unitholder distribution we back Certainly $X.XX we're always the initiated focused to into to distribution.

to at the to is continue shareholders Group what always largest take distribution. would the and not the with That's lightly any holders we we the that something just of saying. It one distribution. being not play So Sanchez as want do we're

utilize our levered is is all. to We're and X.X We coverage cut We're of value and by unitholder full accretively. balance signaling to lowest grow ratio a grow continue group to peer sheet seeing not way incrementally it. our would to to the shareholder the as saying signaling distribution the unitholder times we're value on debt increase at think we're ways those probably any in and focused form the to I base term. like our

And something will to returns generally so that's for positive those we unitholders base. always our opportunities do look accretive and at has

anything wouldn't like interested and we're unitholder forward would that. in I the to So in cut and fully the done value I as planning continue is growing that we've our in we're past say look take anything single a that to like as or that future. What

Operator

Please And ladies go comes Investment Partners. Jay gentlemen our from and ahead. next of question Abella

Jay Abella

any on G&A wondering maybe we to of cuts, what with reinstating room, remember thinking the I a focus when this if together If have then we're of are expense going increases G&A, forward respect now. additional about G&A experiencing we possibly you some are there could putting at the are guys you going instead how we I'm were when lower you in distribution Because rate decreases looking room run distribution and you see G&A? back MLP on have guys to do again, considerably at

And a kind of and it way so, come over period hasn't. that of I've this been time lower expecting of surprised to kind

So the comments? for look Thanks. for hearing forward

Gerry Willinger

you can not are continue light ratio, been away projects hasn't capital been focus. the way distribution do if the is other Sitting best it. to Jay sit or on balance I'm is it around positioned capital we cutting. sheet thing we're the shareholder forward. choose absolutely not do The X.X light we And distribution again the the continue here of times conversation here, to know to has cutting grow completely in where to grow coverage going a at the whether We're in enhance as in of from what so distribution has to best we currently value. question been markets a costs. what getting The of to conversation

cash keeping be leverage obviously projects. but our drawing line as So in G&A down. we transition, grow midstream to from grow, of to a From draw to that you to transitioning, I standpoint know and a we've producing to it's of look our effort, generated or to think outstanding continue continue G&A job finish done we're transition internally wait continued flow going our

the here related expecting not where going lowering than projects going looks But significant forward looking producing G&A the will change obviously come be other standpoint I'm like So G&A what forward distribution to here. X.X assets savings coverage from a that's which going times to from. from now at is our accretive where anything for and sitting growth and is we're sitting evaluating right

Operator

question-and-answer remarks. to back our over concludes Chuck any this turn I'd closing Ward conference And session. to for like the

Chuck Ward

Well, us our to joining with forward and when quarter morning come with thanks this in again results. look catching we for you we out up guidance our next

Operator

now attending conference you, concluded. Thank you for sir. all We today’s thank presentation. Today's has

disconnect your may wonderful lines. have You day. a And now

Evolve Transition Infrastructure (SNMP) 9 Mar 182017 Q4 Earnings call transcript