NBLX - Earnings call transcript Q4 2019 | Noble Midstream Partners LP

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. Welcome to Noble Midstream Fourth Quarter 2019 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions. event recorded. this that note is being Please

I to Relations. Park like to Please conference over turn the Carrere, ahead. would now go Manager of Investor

Park Carrere

Thank to and fourth morning, XXXX you, Midstream quarter Noble Partners welcome call. earnings Kate. Good the everyone,

review Tom me and Brent Smolik, and CFO. results CEO; With our is Fielder, Robin to President today Christensen, COO;

session. our remarks, prepared we Following will hold a question-and-answer

President question-and-answer Here we also Vice in Reuwer, the session, of participate Development. to John Corporate have

first the as and quarter and nblmidstream.com. XXXX of our results XXXX in be today, morning, The full our XX-K later This announced guidance. available well year the we fourth supplemental as slides Investors website, quarter press location. release same will filing are Upon on section

certain news Please to of cause latest a those statements. As to a reminder, factors for today’s releases filings the for differ may forward-looking materially discussion well and financial our with refer non-GAAP will as latest list reconciliations that statements contain as non-GAAP SEC our in results the measures. actual from forward-looking

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

Brent Smolik

you morning, and good everyone. Park, Thank

impact why our been on comments and short positive our we're into already organization excited few board. understand to you Before to that and her of welcome previous have only team. I this to for you on prepared morning, suspect many I'd business. here is midstream I a know her having a her She from Robin has I get suspect weeks Fielder she roles on like but the

Robin. welcome So,

successful progress our of to business am strong quarter additions execution, the morning to pleased report close year performance on with and cost operational the quarter new this reductions, from begin investments. I of of Partnership equity fourth out a I'll another results.

reminder, value DevCo remaining in back Partner’s a wholly-owned of the interest, synergies in businesses. outcome midstream the the with assets acquisition total. deal of billion our support to of a the upstream and Distribution November, solutions into the General Drop Noble's Rights markets. was of of midstream I'm and announced all highlighted the we substantially And midstream we for transaction and successful Noble as midstream deliver the execution the the review, aligned equity concluded which strategic and Energy As several leading this on business the put of strengthened pleased We by $X.X path full service Partnership core and the Incentive decade. the positive next Simplification midstream

two Noble the transaction, to a growth long-term DJ With supports Partnership gained Noble customer third-party core areas, to of enables all and and essentially of the in organic runway production volumes. close Energy's Noble exposure throughput which those Midstream Delaware and expand the

capital XXXX. that that number the similar reduce delivered was XX% we well two the we efficiency well are able to project to and we last to believe of Basins, and cost Delaware DJ gains Overall, years about by over both expense connections. during the decreased the capital the year in the capital per sustainable. execution twice Due addition on connection efficiency a transaction, the savings Partnership and In top-tier gains, in year-over-year guidance

Black increased previous customers new Partnership addition Diamond added midstream the Verdad fourth during During XX%. which the its gathering including the also about acreage quarter the the our in operational dedicated In segment, by added Resources year, customers. and third-party two DJ, the leveraged year, new successes of to

Tom few will and efforts. additional ownership to and all diversification in flows. In details our on will more business processing pipelines a higher some minutes, quality, equity provide our some provide stable cash business, development our generate Additionally, gathering

financial to and operational Turning results.

original both oil and gas, row in barrels & XXX,XXX in produced connections produced and the volumes gross grew a oil half and record delivered of picked of at for the water of QX. the We XXXX, water oil as capital gathered we quarters up We while we Delaware had below QX. and a low below $XX of guidance. the day DJ Permian gas Delaware our barrels throughput the day barrels throughput a day Basin, the end million record back in four in the First of for Basins was executing while the full XXX,XXX guidance, for equivalent the capital program third-party guidance year, DJ the of per and high-end year, in of XXX,XXX

by East DJ about were Ranch. modestly XXX,XXX to the during in early did we Diamond to day. in equivalent gross overall was Noble oil connections not Basin third Wells gathering ‘XX, Black gas any from connections assets, up volumes Noble barrels Mustang, primarily & In Mustang of wholly-owned Pony volumes per activities and our fourth Upstream to trim new of and area driven the quarter expect The in wells oil XXXX. XX% but see completing backup quarter, increased IDP

record had more XX% which gross oil volumes, to was going another we & by than compared gas gathering the Produced XX%, third grew primarily Noble quarter. driven by set the Basin, for activity. record In a quarter sequentially, water Delaware also Energy

literally wells quarter. Additionally, third-party new in the from third-party two benefited the and QX connected from last the that on day the X came customer third a line wells then of Partnership first in

momentum this expect we into to also. continue XXXX ahead, Looking

this I we're want in cost leave capital with and brings We're and off expanding XXXX comments. inflection point cash flow few Robin existing on successes, and and improved outlook, our XXXX efficiency be a execution on focused hand it remain XXXX, to to our pipelines. benefits infrastructure And and leveraging our additional an on multiyear to about resting to I you not important opportunity strengthens year in our both because our savings talk returns and our business Before enhance then, will to G&P capital focused for plan. and our core We unitholders.

the the announced to investments in and investments largely including recently contributions equity investment. first equity the of year, XXXX, growing then expect complete our half We be expect Saddlehorn from throughout

we remain our plans. ensure And service hyper-focused on execute finally, we’ll then, on that to customer

call the Robin. turn now over to I'll

Robin Fielder

morning, momentum highlighted. continuing operational that and Noble Brent, look Thanks, be just to good part happy strong and forward the the Brent team of I'm everyone. Midstream to

As he high oil, gathering both and up Combined a mentioned, results business was on DJ and with annual streams. and basis the note we sales across the throughput in an produced record significant gathering and from XX% year gas all water Basins. on Permian product contributions with ended

costs significant on already And success Partnership focused cost start. and enjoyed off XXXX. drive XXXX, we're to throughout we remain a The reducing to structure in its efforts down further great will

allowed or expectations outlook. the the us in and of our With organic These this reduction significantly pipeline release with deferral comes reduced continued efficiencies all infrastructure. XX% wells the installation $XX by utilization budget, costs year-on-year. capital midpoint while improvement project our of decrease in design from our approximately strategy, reduced XXXX a capital from organic to our existing the capital November connecting contracting equipment million morning number and This along same we of has

at place. As Noble the unit Energy length XXXX, than to connect a us to connect sessions, roughly focuses per both on infrastructure activity reduce new minimal expense. adjacent Partnership quarters be be on in of in in the wells cost, enables road of already and we leverage as This returns, in well improve less operating basins laterals the backbone in to three and the mile XX% development expects Permian DJ Basin

oil well facility larger comprised gas the well gathering year-over-year. We to allocate to more contribute year and of volume Basin growth. organic of program In DJ and absolute in gathering will as Delaware total, connections both expected throughout basins are is to grow XX% capital both Basin while the to largely continue expansions. XXXX capital to volumes plan the percentage Our investments DJ as a than

In we well activity the as and dedicated at across in as now its Noble in Mustang anticipate XX XX area wells to on two has acres. in average increased DJ Energy XX to XX Wells XXXX, completion well expects Ranch. Basin, connections to our the new crews three development

activity Third-party the the gathering in joint onto and led the volumes Black forecasted system. be Verdad DJ crude and Diamond higher venture of the by addition Basin XXXX, slightly to are in volumes

this tier make top a presence evaluate Our basin we opportunities to strong like us continue example. commanding partner execution will new recent backyard choice, of the in and and

volumes In transitions from year an Basin Noble XX% customer. Ranch a anticipate average the for Also completion positive increase our on crews the during barrels growth two in impact to increase with third-party delivery a fresh water Wells a DJ and segment, which day to annually year. see commitment, XXXX, we at volume this to will we minimum XX,XXX

three to on in operate we In to line two in crews average XX the wells XX Permian and completion to XXXX. turn Noble expect energy Basin,

this Our third-party to crew third-party continued anticipate XX one to we at business on average XX and and connects expand, year. has well least

from operations volumes Our benefit XXXX Basin gathering all central gathering full of facilities. will a five from year Delaware

volumes connected and three us supersystem, Our production which enables are efficiently swing peak manage new from northern via CGFs wells. to

I activity our to will transparency with to end efforts. the want address Finally, further last further cadence focus anticipate trend We weighted before allocate leverage year I a to pass stewardship to with -- our capital that around continue reduce volume performance of growth. to returns, enhance in investments activity second front Noble operator optimize environmental similar costs, and opportunity reduce to half generate XXXX. Midstream on to the basically Tom,

now over turn will it Tom. to I

Tom Christensen

and Energy's driven with remaining basins. Delaware $XX Adjusted of EBITDA interest acquisition sequentially, DJ Starting XX% by Robin. quarter fourth was Thanks, up the financials. Noble in DevCo million, the

reflect million. a full QX of with the ownership quarter. service interim results EPIC’s loss results impacted of Our larger-than-expected half for the DevCos these Partnership’s crude $XX

of expected. service to Excluding as our quarter this business full first impact, begin EPIC positioned XXXX. performed late the in is

softness service, fourth experience the significantly to interim over some QX We expect still be will improved results during from quarter. but

accordion acquisitions revolver the on billion. the feature borrowing our liquidity. up to $X.XX digested, we focused $XXX million healthy We capacity recently With the maintaining exercised bring in are to recent

We liquidity. million with ended year the $XXX in

extend As maturities. longer on we prudent to move liquidity maintaining while leverage, XXXX, financing enhance focus and term will we near-term into pursuing

development was for the business Partnership strong year on the front. XXXX a

mainline Our Delaware footprint further JV exposure Basin acres. already by of the Salt X customers volumes. the Delaware transporting Midstream spanning position third-party to investment Crossing has asset Creek Partnership asset, completion new nearing This NBLX This XXX,XXX the the the provides and gathering to our dedicated Southern in Wink begun a with and expanding is Hub. enhances between

Crude on exercising in made pipeline EPIC cash diversifying We flow XX% profile EPIC the and by XX% also option the pipeline. the the Y-Grade steps in option towards significant XXXX our

announced to allowed $XXX exercise our utilize recently while pipeline operational commitments an to our remaining from also for Saddlehorn or in million $XX Diamond the Saddlehorn of by acquired volume minimum XXXX. subsidiary. backed leverage-neutral Black for valuation attractive is pipeline facility, Black the Diamond us option credit net This our NBLX. Saddlehorn million through producers. revolving XX% We investment-grade

our of As flows, high-return investments further cash quality these to of not we continue midstream Partnership types allow enhance to grow the only participate our down value business, but also chain. will the the

can NBLX competitive in to us as differentiate now DJ offer as Cushing. These peers. from our the transportation to Permian highly wellhead capabilities water many services our from of provide customers well

how team success. continued We for positioned the are recent proud are for accomplishments the of Partnership is and excited their about

XXXX onto on million, operator and anticipated net activity. to to Now, midpoint between guidance below line prior due XXXX guidance. EBITDA slightly million sight be the $XXX better the $XXX is of

undergo a XXXX. nearing Once to Y-Grade continue portfolio has Crude pipeline fill to full transitioning The taking to producers assets. is and by service. during back additional will line developing largely more the line measured the NGL their is We service, been has before and Crude line approach in begun. customers pigging This to added offset slowdown EPIC cleaning completion see the

a this expect take to month transition We to accomplish. about

With distributions are to of EBITDA currently XXXX not from XX% Saddlehorn XX% XXXX our come We recent any DCF acquisition, from anticipate to approximately the our EPIC of our in our addition forecasting we investments. guidance.

also capital updated our guidance. have investment XXXX We

EPIC to from $XXX Delaware out our million, frac and in Second, $XX XXXX; of the build successes recent anticipating for We the an second be propane resulted guidance. project was driven of of Y-Grade increased of Sweeny, increase to million cost previous scheduled due funded Crossing EPIC XXXX XXXX investment to are the million of the are $XXX a by project; Crude three to on Y-Grade both FID third, This of which interim in have an factors: investment results now to planned and equity commercial and million service. the of the delayed during EPIC approximately early increase First, midpoint $XXX was

this anticipate Our during transaction, distribution and between coverage We X.X forma distribution our was X.X quarter. coverage for XXXX coverage fourth distribution for times to the was Pro be X.X times. our times. X.X

the the XX% long-term from remain to we discipline. for committed growth was XX% recently growth align rate also market business our capital current to and to We with coverage better felt capital rate reduced -- unitholders. appropriate exercise continued to conditions distribution XX% underlying return of to distribution that We and the

form including of capital We distribution will buybacks. the continue unit of return, this and to reevaluate the growth combination

expect net we X.X debt to trailing X.X XXXX, to average XX-month For to times EBITDA.

anticipate ahead first EBITDA million. $XXX we quarter, net the Looking of to million $XX to

expect less in the in we volumes during expect We step lower from quarter fresh the quarter, water first the quarter. first activity delivery a the Conversely, running customers hit have fourth up gathering in ground resulting volumes to see as in the New Year. customer

assumed we see momentum. levels activity around customer EBITDA cautious and We've to expect intensity. in throughput Moving our gathering through XXXX, and been assumptions completion

to the well joint In and our are perform ready Permian contribute to getting summary, our to significantly Partnership. base ventures business very continues

of are excited at any the Even we still, cost. opportunity front don't has development aspire and in business about Our experienced set to successes recent grow us. several team

will returns. discipline and capital level achieving project focused on high We remain

for will uniquely country. relationships. It competitive basins outsized positioning on to we exciting to You can our will to two be and be see returns the best due We grow assets only an the selective in look the positioned where existing customer year in us of primarily are our leveraging achieve investments, NBLX.

are and capital midstream and investment not reduce to improve grow distributions, equity and organic that. of companies leverage We both say lot on can a path and EBITDA,

the With for I questions. that, turn will over call

begin Phil Scotiabank. Instructions] [Operator will now go question comes the from We ahead. session. The from first Stuart Please question-and-answer

Phil Stuart

Robin, everyone. on role. congrats your new morning, Good

Robin Fielder

you. Thank

Phil Stuart

how curious XX%. or growth. kind probably how and program? like potentially you seem yielding you're prepared in now the you thinking repurchase as that kind target you, that all different is But, are the unit are in more touched question doesn't stock for options, projecting target for XXXX, I'm currently you bit the leverage be ratio thinking mentioned kind obviously this about remarks, just given think all the paid to growth are you of about of just it the with your the I on Brent, hit remarks. little close term you in curious distribution to in prepared distribution getting maybe leverage detail additional It all future a could you of longer if below repaying discuss it or debt whether all growth

Brent Smolik

investments through on a we're and phase a as There's loaded we program of lot the EBITDA, high and first being all. in At capital our there, Yes. then growing front level, investment going delever, Phil. through roll the these equity year, to naturally

in we'll And a to be so, think to debt. compelled -- don't I down position we'll be we'll have have pay

time. at we're we second rate we -- your the and question, that call, I think business rate Tom the plan I distribution simplification supported pretty the we've did when as rolled mentioned that we on then, to of do. is, got So, we the the still job the set growth out because thought part we on mean, close it

we want now, the to rate. the a if think from market growth look it, and though. the will to the with so, we still then But, market if we're time we at over rate. staying that it doesn’t hear We're growth And path. different business Right support sticking supports

Phil Stuart

conversion? to Okay, given great. appreciate conversion a any the I And more have potential color full-on structure to quickly, I corporate thought or UP-C there. C-corp all an you guess, then,

Brent Smolik

By option road. time haven't still that the the of the that at as we we said that We closed doing Yes. the out open down possibility. drop left transaction, an

the it. to I for obvious an sure that to to and not It's full need advantage we think, make of there's me it merits unitholders. continue understand we analyze completely

right made with structure. to we've we'll keep looking But, stick call time. current And the over the it at near-term in the I so, think

Phil Stuart

appreciate All right, I for it time. Brent. That's me. the

Brent Smolik

Okay.

Operator

is question next Our Hammond from Go Energy. ahead. Pearce from Simmons

Pearce Hammond

aboard, thanks Good morning you welcome for my taking and there. to Robin, questions. And good have

Robin Fielder

Thanks.

Pearce Hammond

more provide My and color this a prepared first for could QX? and the question, you that bit if happened release, EPIC QX touched press in is you on to but what in resolved and on the remarks in

John Reuwer

us is a to the basically currently no obligation have to there's traditional call under service. is, had it's John a there that to service, commercial were One kind previously under any And interim to shippers guided caused bring we what interim EPIC two This difference of here. in items project. of were Sure. Reuwer around There what barrels -- we arrangement.

that shippers when However, service required in commercial barrels to are bring of the we switch the agreements level, at fully-commissioned and effect, bring. March, to that the sit all EPIC into to come they're the required

So, there to item we reporting of over typically then, kind other a And monthly EPIC financials. would didn't lag. that interim we through on was service the volatility see the that flowed anticipate some our in be, volumes

those us here in kind of two QX. so, caught items And up to

Pearce Hammond

a record Delaware some the a Thank Okay. That connections accounting And specific can follow-up, you XXXX? cost as in and provide in then, well Basin ton makes color of as drivers sense. to DJ the you. the for per

Brent Smolik

Yes. give There's big I'll And we We contractors a shifted those how we're basins. projects will high our more close you XXXX existing things we in manage couple to fundamentally carry let saw that then, at in benefits Robin both infrastructure some real then manage we level, in there a of color. over. really and and how

to distances. Robin? significantly reduce mean, to want you the I do going add we're So, anything

Robin Fielder

as good our able some that through and of processes think, just that's and year. of our and Brent optimizations. out, reduced those for the I scrubbing capital them field the outlook cost were roll is, what news organic this and sustainability savings, pointed see to and the it's we we've made a as, in changes procedures design the where complete of out even And we

Pearce Hammond

and me, some why NBLX? on on ownership that exercised you Great. as background just you option and strategic accurse last the the rationale strategic pipeline then, to provide the And benefit, Saddlehorn if then Brent, could one for

Brent Smolik

Yes.

I to them to with with lower to to the able significantly mean, transportation think, down the least at historical versus start significantly customers, reduced I Cushing. benefit rates, offer get -- versus to we're rates

some so, provide option. be to our get be in the And figuring to think Noble. I expand, customers, because we're that's then main the themselves able equity able that's one to a motivation ways we’ve own out to collaboratively is And of service them, and with them able that to good and our really to, is pipeline. working we'll Noble frankly the the option took of space

Robin Fielder

This is the our like out, commitment sustain minimum this of to long-haul the of pointed think add, help nature opportunities Tom what as add volume Robin. on flows we I the really I'll just and portfolio these cash our business. and

Operator

[Operator Instructions] Our next ahead. JP from Go Jeremy from Tonet question is Morgan.

Unidentified Analyst

believe This for it just then, EPIC want in XXXX James morning. talk up? of see I XQ for Good after especially the went to CapEx trajectory Hey. is that guys Jeremy. touch for increased, on and kind the ‘XX terms I XQ just you could pipe. kind the more and of to that if of ‘XX, And here you why

John Reuwer

This Two items John. James. there, answer is I'll both,

kind commission. really fully EPIC the side, before, of project, our mentioned post I've of the haven't view EPIC changed On long-run we

changes, was it's the seen much exactly in pretty volume to we've due the the primarily on was So, underwrote where interim we agreements service volatility commercial when we given pipeline. that that it to there be no The project. QX expected

cash So, profile we've expect a fully them. we trend kind type change for seen of into and flow commission fully we'll that get roughly will and

on came lag tariffs. then was them couple would some relative that side, that grain kind that hit year build secondly, things deal a to you CapEx brought scope example, increased. as if of was terminal the costs of recall due of items. into acquiring had in on of project, to of pipeline that had scope But, an last those month some -- were and a that out buckets some kind On to this a from that And There interstate were the there scope. two reported the higher done us they seen And they one quarter.

Unidentified Analyst

But, XXXX, then, EBITDA to done you And I here. of is how terms there Thanks. in in any Great. much CapEx much color how flat you work keep don’t just share? would have needed

Tom Christensen

Sure.

maintenance capital our use to report our guidance, so that's an flat. actually that in we we keep figure when So, estimate volumes

ventures, of say keep don't like we only at do bottom then, think a capital -- the we G&P those do via via capital the only full distributions that will project, for implied do flat. required I our assets. to EBITDA that is and And of we we maintenance So, we those an from will joint volumes that the cash report actually our calculation typically what implied be amount, DCF investments.

that keep business parts typically how calculate number capital, report the So, guidance we flat. our for maintenance is of to we be we what there's two think G&P kind would to required but

Operator

Heikkinen Our next Amoss is from Go David from question Energy ahead. Advisors.

Michael Cusimano

me. for morning. Good on for This Michael is Thanks David. taking

Brent Smolik

Michael. morning, Good

Michael Cusimano

more the detail fresh Can XXXX? in you outlook water give around volume

Robin Fielder

Yes. Hey, is Robin. this

to alluded but going some is it XX% year-on-year, we're of we're expecting I As growth see to the annual on that there, order volatile. pretty

Michael Cusimano

Okay. the just intact on say is previously you still range Would you or you all can't it? that provided speak

Brent Smolik

Yes. still intact. largely It's

be a You'll -- we see it expect to front-weighted. that little we

We guidance to be just of the still ahead cash stream. initial that due what that historically. have is just predictability business flow to to our it's of lack similar But, quarter impression been of one shifted

Michael Cusimano

right. you. Thank All

Brent Smolik

Michael. Thanks,

Operator

turn Park remarks. Carrere would over our like conference any concludes now to I This closing session. for the to back question-and-answer

Park Carrere

for answer questions. day today. reach Please be I'll joining out. you all to Noble quarter you the all. Thank call around fourth Thank Midstream any all

Brent Smolik

Thank you, everyone.

Robin Fielder

Thank you.

John Reuwer

Thanks.

Operator

concluded. now you attending is conference The for Thank today’s presentation.

You disconnect. may now

Noble Midstream Partners (NBLX) 12 Feb 202019 Q4 Earnings call transcript