ALTM - Earnings call transcript Q3 2019

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Altus Midstream Third Quarter 2019 Earnings Conference Call. [Operator Instructions] After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Patrick Cassidy, Director of Investor Relations. Thank you.

sir. begin, may You

Patrick Cassidy

you XXXX us conference financial Thank Company's call. Altus third quarter and for afternoon. on joining Midstream Good operational results

Midstream's summarize our We overview performance and Bretches; call the financial Ben CEO Altus and will will Clay and CFO, with Rodgers, outlook. President, begin by an

which length Midstream refer for be prepared during Q&A. altusmidstream.com/investors. can Our in the will investor to of Investor remainder call at approximately be the remarks also the Remarks Midstream Altus the presentation, minutes may our website on XX with call found allotted Relations

On yesterday noted. measures. can most measures today's conference the on call, directly these we differences the may website financial posted discuss GAAP be certain Investor Relations found A non-GAAP of non-GAAP financial comparable and in reconciliation financial the previously measures between presentation the investor

I'd remind to estimates expectations. assumptions based will that and our discussion and today's reasonable like Finally, views current on contain forward-looking everyone

number we on differ cause of investor presentation actual our However, A could located the to is today. disclaimer discuss results factors with a what website. from materially full

will I to Clay. call over that turn the With

Clay Bretches

good financial afternoon. discuss capital and an since this for planning we're at on we including how provide looking call operational last our Midstream's briefly XXXX. key you Thank accomplishments will review our Company's the guidance our update performance, call, today, and and Altus On progress, our year and

cryogenic achieved processing quarter, third and Altus number our a meeting plant expectations. online of We our second the During milestones. budget significant brought schedule

began Express Waha Belvieu. end Shin this and moving commercial to completed Permian that gas September, Shin At which earlier Coast. from Oak, delivering natural option full June, year, barrels Mont the We Gulf Basin pipeline. of to from the to began interconnection for Oak Coast service, the natural Gulf Y-grade the exercised liquids began gas hub our the operations in

optimism a can lower from that. a price upstream even Looking reasons lower come ahead, with commodity that investment we for see environment and

capital our lower our be fund complete Permian to pipelines ample with investments early start-up in reinforces have business The to contributions joint Financially, ability significant we dividend the by earnings of year. cash of the generate our confidence a in will projects, through long-haul next Pipeline our The Highway XXXX. venture past and liquidity distributable capital with end planned and of increasing the pipeline the primarily nearly as pay investments, combined XXXX. combination in from flow

Moving the quarter. on to

beginning future We foundation are on of set a executing out the year, growth. the for plan building at this

budget processing the of new the quarter, Apache and for up volumes quarter was the cryogenic plants. are first compared Much expected processing noted be Construction to plants QX of were gas two commissioning call brought in and through their third in today Our cryo two continue ramping are with to that on that the up hookups functional. plant the the fourth rich complete, late is available now on awaiting our fully were third the expect and and on cryo earlier in volumes second curtailed we XX% we're the time completed year. utility online end Gathering previously facilities quarter. and with

recovery or Cryo we technology rejection of response process in in choose conditions. adjust we with market mode, other in superior can focus operators and our to an capabilities. SRX numerous benefits on transportation that levels We liquids gas it is capacity the continues and and our had meaningful Delaware have possible, processing in any distinct of fill order to number recoveries The provide Basin operators real-time ethane offers and believe Diamond to Complex at whether Altus. who move soon conversations as Altus excess as third-party a upstream running volumes we volumes nearly and in natural possess in to companies advantages processing to with recovery interested midstream

We optionality additional to have customers. our on gas multiple providing also lines NGL and interconnects

Coast which two ownership Express which counterparties. binding Morgan, Permian that subscribed business Gulf operated September in of now gas of pipeline Morgan creditworthy and a joint are long-haul Altus Highway, now commercial venture pipeline equity has Kinder interest fully in Coast premier I'll Express Kinder in with are in-service Pipeline our start-up pipelines. agreements natural late both by long-term by announced all to projects Gulf shift in We full XXXX. four the own long-haul

of Dulce. also at on realize the Agua in XX% connecting Permian X.X X cubic contribution from is XXXX capacity in an and in Kinder full per operating ahead construction back. Permian to the three a full the the early day came some and GCX Morgan securing quarter. interest Coast. beginning start interest a Basin start Gulf from Bcf The the fourth pipeline feet a GCX. gas as the now XX% billion in and project Permian a natural Altus day gas schedule owns transporting should months right-of-way delays PHP, pushed budget per equity to pipeline holds slightly of Altus Highway date announced have for Basin with Altus EBITDA and

to NGL EPIC including was in on barrel crude in per lateral this Permanent of interest reach capacity expected its quarter pumping effective stations the a Oak quarter to XX, line months line, three new in the third service It oil the Waha, entire quarter. the NGL crude of in July interim converted is day full come equity Shin the XXXX. The August. the first online. service The began for as is expected XX% Altus pipeline XXXX. line holds service XXX,XXX pipeline

performance the is monitor January that the through to XXXX. where option continue exercisable equity Pipeline an end of we NGL have of Creek Salt the regional We

perspective, an Altus performed we execute capital and well closing, discipline continue from plan. execution the quarter, our In on in third and to will

particularly site performance to the two first incident. And completed recordable significant a construction our X.X pipeline date, man-hours cryo we phase of where on during pursuing actively a third-party gathering are of opportunities. contribution beginning plants full JV spectrum came the we am are our million the without processing to more expected as stream I and and than with projects Company. Our pleased to on make safety

From price is recognize our we in believe inherent the the our disconnect a assets. relative stock and between standpoint, value valuation we

are to looking we'll full realize this a We actions, an and of strategic you and time. at tactical, at update range appropriate

I year. will now this to in Rodgers to turn cover financial the Ben detail for forward the the path quarter call performance over and for our last

Ben Rodgers

Thank you, Clay.

that reported non-controlling cancellation impairments $X As a $X.X issued comprises million million. net and the loss, third an number compression items including the yesterday, affect associated comparability press a interest the related quarter, project included unrealized of this noted Altus of In a preferred million in results. $X reporting third-quarter derivative of can GAAP the of loss This for embedded equity. for with to release

quarter and increase than million adjusted EBITDA second other from Altus the $XX million. a those million. on EBITDA of items, of of million is approximately more of $X fourfold Excluding revenues on generated revenues This adjusted $XX $XX

Gathering averaged the period was were feet Cryo the Apache's increased with day and line compared gas. Volumes feet production processing at fill million day the at XXX volumes period. of per rich cubic Diamond Express from XXX volumes start for coinciding Complex. second online and facility third with deferred Alpine in Coast million brought High field per back Approximately, our preceding quarter cubic Gulf of XX% the as

pipeline for JV JV of quarter ownership $XXX projects, the comprises Shin option in all was Capital four This projects. our million. in $XXX during gas infrastructure in included the pipeline midstream long-haul Oak calls which liquids the July our and investments natural capital pipeline million exercise for

Capital investments for gathering and billion third processing the our gathering quarter for $X.X capital totaled billion, $X million infrastructure for at pipeline the and in JV came Year-to-date processing. for projects million. and $XX $XXX

been by the focus one-third year, organization headcount, since which actively operations. align has with on more We reduced to of the continue including to centralized the managing costs, beginning

go outlook. on million. the our the don't enhanced markets by revolver Liquidity credit our any asset or meet our of the enhances Moving end exit year, By capital Altus revolver by to liquidity this objectives. further cells. $XXX be equity to may $XXX we defined executes million, as growth the financial additional expect to and agreement. as to commitments bringing This evaluates initial current debt period to see to We our of need

an to million million $XX assets in potential We sale. for have $XX estimated identified

million have we pending sales or quarter closed on have $XX asset with in the about This market. remaining the assets

guidance. on to Moving

on effectively implemented lease plan. $X interim of This crude service pipeline expense Operational and the EPIC's offsetting our are volumes reiterating been interests forecast cost line. are in G&P for cubic million the performing per we $XX million million efforts million cutting and XXX EBITDA feet XXXX, range XXX $XX to have day. gathered our adjusted to service currently million and is to For of ahead Y-grade the lower volumes with our revising associated year equity

outlook, billion range close to year Our for are process planning unchanged. regards for program Directors XXXX capital this as our Board growth $X.XXX is $X.XXX billion Apache XXXX full-year maintaining disclosed and dialog in XXXX fourth we With approved through it with final reviewed works guidance quarter be will a with year. investments of results. Altus February of next its and capital The by our and our to

EPIC. of are XXXX. a to that a majority next At in to $XXX of million compared been our XXXX a into updated midpoint, G&P still this XXXX XX% range revised assumed downward is our modest the $XXX we Adjusted $XXX Capital. guidance in from with plans commodity previous from guide the is $XXX considerably for G&P of has $XXX and our year, this XXXX, capital $XXX deferral XXXX the price from is based million coming growth the on reduced represents next $XXX year, million. guide, to a decrease EBITDA on EBITDA into PHP volumes with to vast million assumption midpoint, $XXX an midpoint expected for and progress, in adjusted to At persist reflecting environment million, The million. million While scenario, a guidance million. contributions XX% today our adjusted lower of have previous EBITDA revised revisions lower In reduction decrease now this

needs three fourth met the through at guidance assumes that million facility. of Our Diamond Cryo plants $XXX Cryo Complex, from to $XXX processing of deferred savings which revised existing Apache's construction provides the a the be a million can

significant result to As our capital Highway next growth Pipeline. Permian the G&P reduction, predominantly year is attributable capital the of a

requirements in capital XXXX. substantially We lower anticipate

essentially $XX have will completed is level investments XXXX midpoint projects of our capital to G&P a at and will pipeline capital a guided JV the now be to growth in million. similar XXXX. We our

Altus at continues level. a high to execute

investment and While the believe the commodity the Altus Permian we environment resulting the on Basin, face for with Company core and impact challenges price the remain the industry merits activity current in intact.

guidance metric, In the cash $XX in DCF by of $XXX and of million, to include in JV ability our capability. our XXXX. $XXX posted is cash underpinned million we XXXX which strength for new to distributable Our our presentation increases generate is yesterday guidance midpoint to investor pipelines. to XXXX The flow, a website this million highlight our in

a should XXXX in As well result, to Altus positioned pay we've previously. noted a be dividend as

over now to will operator turn I Q&A. the for the call

Operator

the question James U.S. Your go Instructions] first Capital [Operator comes you. Thank from from Please Advisors. line ahead. of Carreker

James Carreker

you. Thank

kind I flat of G&P. are and Just with back G&P, of have you of envelope roughly pipes the attributions kind guidance, EBITDA XXXX at for your in that kind your of looking guess of revised expectations showed my math XXXX. between EBITDA JV

on that -- based what from of type a to I rig reading right? count is that, guess it follow-up am And Apache? is G&P the I as outlook So

Clay Bretches

Bretches. Thanks is at. James. will we address count question. not rig I let that the something you're Yes, that say looking disclose. Clay That's your on EBITDA But the typically me for question. And This this

out one extremely being there, being a at putting this taking look, conservative EBITDA focusing number customer and that with Apache. and are on that our we're bare We minimum primarily we're we're

listen dialing not but with earlier, pursuing in third we not believe comments party third also you is. the business we're there third-party And only in with we're -- So area. actively other which our if producers upside, area companies to midstream

conservative. the terms the EBITDA that, of the numbers see of at are G&P you in side very the business but on looking we're that So

fluff see well. don't comment you won't to you you see whatsoever. as want may And -- any So Ben,

Ben Rodgers

Clay. right, That's

James Carreker

earnings then in new track slides, the that can is the And quarterly the keep on I in guidance? kind coming updated with metric of a that with basis, guess something so DCF of we'll out seeing release start we

Ben Rodgers

just cash it can't show we that to it's that But generation Yes. because in the item, inability reconcile not have power really roll capture to from accelerate financials non-GAAP Board our we'll certain so, and show so We future position to our a if that and we dividend reconcile the wanted XXXX. start others have that previous of into and and choose hope to we recognize that in put XXXX to we When in quarters there in asset metric, it. we'd base But our ability, diverse and forecast pay even quarterly be future to will that obviously, to forward out that's in items. provide to We address our that's soon. quarters. something the a

James Carreker

Thanks. those a up Is there the third-party discussions? meaningful it then Is that's some relative potential on to of of put be to it conversations maybe meaningful. color if can of kind of it there or Apache? something of Any going you number And had. with I guess -- production either around adds together up in to of that bunch singles the following what What's terms is available? out you've upside contracts kind

Clay Bretches

Right.

So can right with begin with when additional to just James, we reminder, business, start a because. talked about as Apache we midstream

have As well the basin first we within as we're areas water at of High terms with you for other gas, oil in of for a oil, offer recall, with Apache of Apache. business. additional looking other right in water Alpine opportunities, starting and But

some producers are hope that be have in impactful right customer front that degree third-party we're have Alpine which Apache that and those see something the have it we it's in future. make believe comment some success and third-party of We in is are opportunities, there to we on we just comparison we seeing of with of And and that or pursuing do principal opportunities and will now. right midstream order that what our able terms on believe to out a there to potential, good substantial. we'll be actively to Outside to to High now meaningful

you that the a terms to And it's have is anchor think customers, unprecedented in and much in of support acreage really overlooked. dedicated When be that of it about to from producer not kind basin.

a So to us put for start ground is really order utilize to it and and value it us assets the great on for some from. great some capture in

will good but So we ahead, believe come to believe more there calls and that it be and out we do potential there, again, in impactful is meaningful.

James Carreker

If I in color. fit one the Appreciate can more.

price. pipe I You could disconnect bit prepared some did about talk options your out remarks that of of the and there that guys the that unlock there bit wondering little in a was of interest mention contemplating is JV you that? you're between stock the would your value And maybe if little a a

Clay Bretches

this that Thanks, at At say we're James, just both stated point great strategic. and any not and I detail. a as and time, comments, to in all this, our that's options, want it's we into we would in question. something tactical looking go

to but our is calls our announce So, sure again, maximum for ahead, hope be say, something that the more investors. job in and to we're future, able providing in come we it to make to value to suffice

at looking in get that options share to to order price we're us all available up. so And that are

James Carreker

That's have. all I Appreciate it. Okay.

Operator

are call to any at remarks. management time. There Instructions] the closing for back this further questions over turn [Operator I no

Clay Bretches

participation That great for great very Okay. concludes Thanks today. much week. Have in the day and a remarks. our a call your

Operator

you you and for Gentlemen Ladies Midstream earnings participating. concludes Thank quarter this Thank call. Third Altus

You disconnect. may now

Kinetik (KNTK) 2 Nov 192019 Q3 Earnings call transcript