NBLX - Earnings call transcript Q4 2018 | Noble Midstream Partners LP

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Operator

Good day, and welcome to the Noble Midstream Fourth Quarter 2018 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. At this time, I would like to turn the conference over to Megan Repine. ahead. go Please

Megan Repine

is Good Noble Allison. XXXX thank for CFO. our you call. COO; John Thank John and Partners' afternoon, fourth the Bookout, results review to Midstream me year Gerhart, quarter joining CEO; With Nicholson, you, today and Terry and earnings full

slides Following releases as fourth today, on to year-end quarter Upon are from our XXXX will and XXXX This of analysts. results noblemidstream.com. same be call remarks, the we well location. guidance. our available and press The morning, supplemental prepared as section website Investors open questions we will the the XX-K announced in our later filing

a filings factors that financial materially our reconciliation for for Terry. As and non-GAAP from of will refer with statements over a well in At list news call forward-looking certain turn measures. this our as to the releases today's as non-GAAP results differ the those SEC time, statements. to I'll latest reminder, to discussion may contain Please our actual cause forward-looking latest

Terry Gerhart

the DJ delivering projects, DJ strong growth promises organic Delaware and team Thanks, throughput Gathering our prudent Black distribution exceeded a everyone. framework, multi-basin dedications very This opportunities. this oil approach In our we in increased in to the major prioritized our growth program context Noble reinforcing leverage. our diverse by our outlook We gatherer strategy $XX by impressive done quarter in customer our year. services the XXXX. a XXXX customer Enhancing our from today Delaware XXXX XX% and fantastic made center representing and on Basin already confidence target and We Delaware was increases our major busiest and our the and This providing of I'd with day, our our contribution to a At capital outlook, third-party Among We commenced Midstream's the Midstream. the and barrels unitholders. afternoon, progress is to growth per per we've achievable the for barrel strategy MLP, XX,XXX is Company job Diamond committed Crossing long-term Megan, single overarching in to start further Noble year-on-year, accomplishments, and base. for was a acquisition Basin on Delaware, by price our year from investment projects investment unit our environment. year. to the a this of has Basin XXXX, delivered like case integrated per growing proposition. volume acquisition our transforming more and early Fourth target with also good asset. through the a XX% doing gathering to coverage of of XX% where successfully end EPIC secured system we the and Delaware and gathering great a

and items a many in full This our XX% times. year performance increase contributed to EBITDA, XXXX. our growth continuation financial ratio these robust X of XX% included DPU in Importantly, approximately coverage of net of annual

shift more during in outlook. capital details and as the levels I'll to efficient this is our that year-on-year. operations important, was largely John XXXX expectation pipeline net our mix for this and now anticipate incorporates is turn prior our XXXX as contribution on from the call any midpoint growth it up shaping against customer Nicholson put ahead, Looking business DevCos This at Equally the year, place well. EBITDA the given growth projects. XX% working to demonstrates backbone lower business project the XXXX. and us of activity infrastructure over We for EPIC our resiliency base is capital for

John Nicholson

DJ quarter, we Combined on water River guidance River delivery XXX,XXX We Permian. fourth X% completion and Blanco the the across day gas activity and a per oil, record Laramie of high significant streams. Freshwater gathering DevCos slowdown a Basin business at and in in and Terry. year-end. ended River on the We basis. to saw a more throughput, the all from posted the were Green contribution were quarter at in the sales third barrels product Thanks, note. the gathering on up XX% of low-end in down the sequential from produced pronounced results water year volumes of and Quickly was due

Basin, Green is Looking somewhat of at DJ be declines driven over In Pony. as anticipated at River, of offset in Noble's in significant Laramie as XX%. the we well This drivers ramp will an River, activity by the by Colorado volume River decline growth XXXX, growth. East in activity largest gathering forecast third-party

additional delivery Third-party and multiple support Ranch processing the expansions offload to during our year, at for Wells gas plant projections. volume processors Mustang

conservative third-party XXX% three average Basin at development midpoint line be crews customer. our at new company. and fewer year volumes from modeling deliveries by as third-party X% own gross and freshwater on lower capacity the Noble crews Net running during the to in be completion the will We In we been for approximately comes processing DJ have Laramie River, in to impacted the segment, benefits pressures continue down be to online. with anticipate will volumes a

to just compared the Green full all a Delaware at River be gathering expect XX% Colorado Juan of year XXXX. to San average gathering we on XXXX, gather active facilities. benefit during River, Basin, and Noble Noble Delaware We from five central to River XX% Energy's year. operations expect volumes nearly the volumes In during in of In

XX slide we In DevCo details More by during gather gathering freshwater wells and on and throughput expect at XXXX. on third-party be between eight Blanco can found to addition, River XX.

of total budget. in Delaware the million EPIC $XXX Crossing, to supporting our to million further attributable connections. XX% and hub. capital down the million in sell pipeline. excludes on our be Moving million Other growth $XXX on and Crude This Jesse EPIC and anticipated partnership our prior expand between will DJ Black in of which utilization and system we XXXX. to high to investments coming a Milton barrels freshwater produced in our the through Billy to $XXX activity manage Miner equity the Long-haul plan customer include Crude well in the optimize support oil business owned guidance over River ensure customer nearly XXXX, volume capacity $XXX line the for water anticipate XXX,XXX financing Blanco Diamond, main the At XXXX asset year-over-year CGFs pipeline for base and River, use capital level Y-Grade capital pipe business to are Laramie projects and facility base terminal storage XXXX, the to We infrastructure any Two-thirds connecting And to to to at James expansion wholly of trunk pipeline, EPIC midpoint. of the of rates.

we investments, $XX Crane equity $XX million our associated in in for Trunkline investment As construction anticipate to to from Delaware Crossing primarily Wink. million with XXXX,

organic asset primarily lines, supporting will capital and be will this for Beyond decrease customer associated significantly XXXX, activity. with gathering

million anticipate pipeline million XXXX. the EPIC in to $XXX be Crude investment to vast the We for majority spent our oil of $XXX also

Y-grade $XXX a million day. In to capital XXX,XXX the Y-Grade million to total a pipeline EPIC barrels capacity includes pipeline. and plants two with an of in The for expect the addition, long-haul we $XXX EPIC a fractionation capital investment deploy

our As provide and on Delaware high-quality the minimal now and to with flow the more these capital financial EPIC permanent for to provide John I'll they a call investments will requirements. Crossing service, XXXX. cash projects turn stream commence over on Bookout follow details expectations

John Bookout

we cross, Basin Basin reminder a been John. crucial believe MLP. midstream talk the unique platform. Permian Crossing opportunities. progressing are Thanks, bring can EPIC value our opportunities to in building time a excited I I'm today Delaware they These to some and Delaware the reinforce are about and competitive and they as for advantages leading a of sponsored you have pieces proposition

new the footprint The a teams Delaware, gathering have Wink to very EPIC our positioned projects NBLX very value able the sacrificing the Gulf balance Importantly, Crossing water, is the while oil the to crude markets. without scale investment build NBLX sponsored pipelines small a prudent in very across sheet. position unique further differentiated wellhead maintaining characteristics and for expanding which enhances is a for value now from Delaware takeaway by in Coast realize to MLP. investment competitive expand chain the to platform and provide been Southern returns, while to our and hub, cap environment

EPIC investments. approximately for in Crude and Crude level We the million expect Y-Grade before any combined This to crossing Delaware investment asset multiple generate EPIC $X.X a to of $X.X pipeline. financing is EPIC million

from creativity I know, corporate we work end from EBITDA of of of all hard and the half you have net teams. prioritize the business the and by Permian And generating partnership proud am XXXX. As development the

a our a on XXXX preview. and to of Moving review outlook XXXX

of XXXX interest Our impact exception schedule EPIC from the project assumes incremental interim the on no guidance for debt projects construction with to remain service, investment to Both and XXXX expense investment. wise finalization is specific to projects from the and investment. we $XXX Crude strong have anticipated external Noble to and the the any distribution we EBITDA will in pro forma at total crude permanent annual business year-on-year XX% of our closing anticipate of EPIC X.X% providing impacts following . and net We financing core full of Midstream's X.X coverage represent million. over DPU continuation objective. of $XXX times XX% anticipated translates figures X.X anticipate coverage gathering the distribution to between to is times. EBITDA that XXXX grow The of assume quarterly The growth increase million net and provided financials

investments key was our Delaware evaluate to and in the the ability capital EPIC pipelines a prudently Crossing we in As fund projects, consideration commitments.

of our chosen the our balance we've revolver. fund Y-Grade line the strength to on sheet, Given

will investment financing potential million the the For at direct pipeline, level. and combination a $XXX financing the Crude a of be revolver

approximately X.XX with times financing leverage clear to begin the a partnership. We these end moves year times X meaningfully the projects as see increase temporarily the to X end pathway a XXXX, approximately at long-term contributing of times to and Assuming forward, by X.X between of XXXX. target would

prior XX% in EPIC net at the to growth we midpoint. XXXX, our the would beyond $XXX XXXX, at least XXXX to This Looking projects. represent anticipate EBITDA guidance of million again

equity an the well Y-Grade of XXXX. on in growth million In We further between annualized expected million and Noble quarter in In share project enter summary, service $XX to basis Company the to over our our is performing have on flows $XX new EPIC time. of business, with base and resilience. addition a with beyond. to first and the detail We've provided lot base this business permanent pipelines anticipated a total With to we acknowledge contributions announcement XXXX, XXXX some period our Crude plans add Midstream growth cash anticipate short exiting to and and further extremely last ventures a differentiated their morning, and to in our significant the the Permian diversification your feel flow our like joint we XXXX. accomplished for exiting would of year. to employees I cash are

disciplined and Our but over in basins focused, through investing strategy will prudent for the of some and committed call With I we infrastructure remains best strong to are turn opportunities country. and that, the growth in the premier midstream questions. delivering

Operator

Thank you. Our ahead. go will first Spiro of come today [Operator Dounis question from Please instructions] Suisse. Credit

Spiro Dounis

everyone. seems $XX we start with it, at at like wondering, built already XXXX you of guess around I the it afternoon, good maybe was the low. that if look Hey, today, through Maybe looks environment. talk built conservativism it guys if guidance, off you've And some you've could crude I into

in do the it this and where headroom later you maybe maybe higher? if so year moves these think And levels guidance maintains there's Crude on

John Nicholson

This is question. good John Nicholson. Yeah,

built $XX world. $XX kind really a think from start of in business I our to we've the

on say in our What this think forecast potentially and is DJ activity. upside guidance new, far any probably as will to is don't anything plant timing I is I as So around probably, the our what what kind to XXXX, with at fairly of base think going are we including took comfortable the but could customers that we we're sponsor our to do with. business, in do shot best

And activity amount a set upside unless don't tremendous of that changes. expect we be there to so

Spiro Dounis

color more EPIC specifically, take And just you the and does around that external the on timing locking should around a little provide how it. investments. the financing, Could Got think I about form guess we what bit that Crude then up?

John Bookout

are two the There Sure. we that is out. Bookout. John in materials put mentioned financings This

up. in financing in our we've I financing partnership not to clearly at would There's of impactful those in that's partnership firms way investment level, be an providing on update that terms we're IDRs our is to to a And commentary limited materials. right what now. then, level the look which market project and the put going that think forward the debt we're capitalized, to once exploring a the guide be

Spiro Dounis

it Advantage one it. XXXX could, like Got down versus I that. guiding levels. little appreciate you're bit I a Pipeline the looks Last if

curious basin else it the Is something Just competition is in what's just there? there that? driving or increased

John Bookout

good John it's Yeah, question, a Bookout, again.

really I drivers two think there's there.

The Noble position to that the Crossing with announcement. What's the a portion JV. first dedication investment of is the Clayton of Delaware to essential is Williams that

benefited in crossing. is macro an basin in of XXXX our those some in-basin you general, the second And So in Southern constraints, the Permian assumption will we've Delaware rotate we that terms I the that, saw XXXX more made off in onto probably think volumes Advantage within and but the volumes of in that Delaware. of from the in that then numbers the

those assumed continue forward. we going so And haven't

how and of think the in-basin So figures upside out the is on the year. balance dynamics play execution those I some there through to depending

Operator

Bellamy The Please go of next come Ethan from Baird. ahead. question will

Ethan Bellamy

What's environment, your and Hey if all, Colorado guys. influencing the capital Good of at political assessment that deployment? morning. your how is latest

Terry Gerhart

from guess Hey, the is for Noble pull positioned and with oil differentially obviously, with the permits XXX energy legislative CDP What that communities the and on track continue gas drilling our over going sponsor Terry. window confident they had of it's now the something we're the that that that that. We're aware Midstream others elected industry election. they'll others provide sponsors all framework Ethan. also of they of and fully us County dedicated keenly to majority This our to to Weld of with all as in support I and would many in together, a now, stakeholders. confident is strong mention that Not secure of Noble working we're have benefits, County through recent to relative now position as of in the far process acreage the with the that say, along several us, we a Coloradans supported as and develop I officials you're would them, all they this exploration out our enroll been the that able come to and the during years has the Weld with record well.

Ethan Bellamy

how should third in arise That's about think any helpful, the And Terry. we in may business party change that if DJ?

Terry Gerhart

than on the to there's don't been For really anticipate what they're we've anything impact systems, our a Ethan. any, seen bigger we on probably relative continuing oil price

Ethan Bellamy

Okay.

Terry Gerhart

moderation slight forecast. our that we've in into a factored that Just

John Nicholson

Ethan. dedications to XX% our Black within County. Yes, are in XX% or Weld of Diamond

Ethan Bellamy

nice Okay, that's the just potential good all in at How, on thinking to changed. hear. I'm for that And as then today lastly, we've Crude looking has seen dropdowns? of recovery a if here. latest

John Bookout

Ethan, Yes, Bookout. it's John

think the the some question, a we've you I pretty been than been business if previously relates today, repositioning investments anticipated. we think significant we Permian, which out look the NBLX on bit clearly put prior I at your very mostly in busy is, quicker at to probably materials we've

and sponsor conferences is and some you been forward top behind addressing we've with those is out mind to strategy in I vocal exist with the of top what last working year, with that going throughout the terms that mind, of of in of structural NBLX. our think think implications I figure us, at

Operator

The will Mr. is Citigroup. Eric from next open. line Zach question your come ahead. Please of go Zach,

Eric Zach

in the potentially everyone. as getting Sorry thoughts second from the if you year benefit about investments benefits the any there Crude maybe provide that. or Hey, any interim Can of EPIC on from potential any might running line to required afternoon, and be you that? cost good half NGL service

John Bookout

Bookout. John is this Yes. Zach,

pipelines, with it moving the differentials in think service months. equity see detail last an around the both an nine early being benefit to six obviously early service, economic the I concept, to over holder of around terms in we

the pipeline is main shippers discussion the occur needs we I with in feel think in detailed And fractionation will both first the I but a what before that. construct be kind further terms more well new to -- for there build then of win-win-win the will Y-Grade and certainly that pipelines, of say around forthcoming line service unit. will final also I for think like, looks like

with the in of the added construction receiving line. Y-Grade the utilization And to come benefits that line crude is obviously, everyone. pathway that's structure to then following works for deal So up a from

we're early So about for and excited it's pipelines. synergistic, would in all our what very mean certainly of both service investments

Operator

come Tonet will question Jeremy from next Our go JPMorgan. of ahead. Please

Jeremy Tonet

I afternoon. guide, work could full giving our us on Good appreciate XXXX ramp can look how I wondering, can any off more here? was you here. if model to there, guidepost, of us give you us the color some anything But we without EPIC given trajectory on the would that just a within we color exit

John Bookout

John good Jeremy, Bookout. afternoon,

on what of a to big to do in think does the then, two-year story terms We've as ramp. growth tried this that this a in then context an 'XX, positioned kind of take that, number XXXX. providing color we've base in kind is XXXX. floor as exit and with And providing recognizing a business I rate layout of infrastructure both like some here time

million expect to if we view, You don't a EPIC into QX kind $XX to ramp certainly it terms contributions We've to be to approach XXXX -- to in equity of like what with and it feel being ending to that makes detail our share two-year cash continue QX, in think but looks has of taken of we XXXX. flow million a $XX what we'll that million provide contribution kind $XX and from feel million conservative kind in $XX of confident sense. we

Jeremy Tonet

pivoted seeing of there of -- just that financial talk is scenario toward pivot sense little there's lower kind Thanks. the seeing make up period. a been where more here flexibility and in does for It where is slower is leverage today? makes -- wondering, in the yield leverage that's to of about and of kind sits ticking minute the for like the kind here. over And toward preference -- grow want a of distribution seems just growth kind to the a sense. the construction bit general kind That marketplace it a what bit how given marketplace a I'm

Terry Gerhart

was say that going I a couple Jeremy. things just of Jeremy, to on

believe XX% to but marketplace to strong not dividends very sell growth. Our distribution. credit getting a and the do continues to the for in like business a to the support need that forward -- that coverage. we the XX% alter make need the believe outlook It's justify you've more a indicated, would we're we'd prolonged decision We today,

John Bookout

John we're it's with think and Bookout. rewarded Jeremy, you it's in tier disappointing couple public, for a through that Board, isn't to the Yeah, important growth for for a Clearly, not right since MLP. most the growth environment the business you're was, years, distribution apparent since We central our of it's to where if time really every quarter we about last top growth review rate. been analyze It's policy period thesis of now, being, that in going really rate the getting characteristic cycles. our see and that that

it we're change to something anticipation of would now, so that that no we that, changes right seriously, growth cognizant that's objective. So or take but but revisit our very fundamental to thesis we

Operator

Wells will Fargo. Satish come next from our And of question go Please Praneeth ahead.

Praneeth Satish

been you. have answered. questions Thank My Hi.

Operator

closing back and ladies question-and-answer I'd any will for to this Repine turn gentlemen, conclude like the remarks. session. conference to And At this our Megan time,

Megan Repine

follow-up and you your questions have. this I'll have interest a for afternoon may be today. Thanks, participation good Thanks, everyone afternoon. and any for available

Operator

Thank gentlemen, attending the now presentation. and for is concluded. today's Ladies conference you

now your disconnect lines. may You

Noble Midstream Partners (NBLX) 19 Feb 192018 Q4 Earnings call transcript