ALTM - Earnings call transcript Q2 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Altus Midstream Second Quarter 2020 Earnings Conference Call. [Operator instructions] Please be advised that today's conference is being recorded. [Operator instructions] I would now like to hand the conference over to your speaker today to Mr. Patrick Cassidy, Director of Investor Relations. Thank you. sir. ahead, go Please

Patrick Cassidy

thank Quarter joining Results XXXX and Midstream Conference on Company's Second Financial you afternoon, us for Altus Call. Good and Operational

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

today's on A can be XX directly investor can will conference call, refer found during Investor with the On the we comparable be may non-GAAP in may also the between presentation, for most remainder discuss previously Relations prepared remarks measures yesterday certain financial altusmidstream.com/investors. found non-GAAP Relations minutes website allotted Remarks Our in reconciliation financial of the Q&A. Midstream the Altus to which financial be approximately measures. Investor GAAP at our the the length of measures the investor call on noted. and these posted call differences presentation website

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

number will to factors on A materially today. actual what cause located from call of the that, could results discuss differ disclaimer With I the website. to investor we our is with Clay. presentation turn over full a However,

Clay Bretches

established impact the additional this joining coronavirus. protocols office Good wearing begin for the call. XXX-degree contact heat. one staff newly best and I full second to to particularly by West continue minimizing of following Altus mask afternoon, want minimal, and staff prevent field spread with The been noting field burden you and with recognize I face practices has safety and working quarter staff create, personnel operations thank and remotely, for date under Texas operate to can its another. for the on inconveniences XXXX conference on that to we

Three Crude Permian and schedule are the gas Coast. Coast these the on our efforts. safely for XXXX. these the pipeline joint to On on Permian venture then X to Highway the fourth want assets, natural update in venture remainder currently quarter service: Basin Express, our families, in our early move from with provide for construction of the will team their thank markets and under neighbors. holds members our and to projects EPIC XXXX. and and call, liquids Oak on gathering are necessary pipeline year in start-up team, Gulf full with on these interest processing Gulf Shin for protect for with minimal guidance by an as begin Kinder However, natural And diligence and performance Express practices provide our commitments. the results fully and GCX contributions in I'll supported oil, continues with to Gulf Rodgers updating EBITDA. steady fluctuations operate reviewing and minimum our operated I beginning is projects, quarterly joint pipeline, gas in adjusted by which the volume second and Altus move make of projects Morgan Coast to Ben to gas that for XXXX today's the MVCs financial

the gas natural Moving on to pipeline. Shin Oak liquids

and Volumes activity the in by also July, some to April to and basin prices. led part to rejecting quarter. in Second oil in and Low large rebounded were due May, the throughput have prices, which in Basin. reduced in impacted lower drilling quarter higher Permian plants the volumes during production ethane NGL curtailments contributed June

the expect attract this Y-grade Coast area. the gas and construction full-service the Highway, on Christi stream, dedications year, in of the April by Houston, and volume in noted to EPIC Crude storage one Kinder and and Corpus which West call EPIC Permian for into conference margins XXXX. we loading on portion XX% basin on Texas line, facilities compared As commitments. quarter on acreage production for XX% near access natural minimum operators to higher of the a to EBITDA continues with schedule Morgan, compression. the pipeline favorable a activity remains producers pipeline the to Gulf that the second Permian supported last complete nearly mainline across ship contributions quarter. week from need recover is third The for Oak is and operator, volumes the complete went that will combination the on Shin their ethane start-up during early on resumes mechanically that connect remain volume-based

it's to move I'll state reduce being markets in a Gulf of in country, capacity one principally to April, Texas are safely operated The on Regulatory injury helped With the worth at oil remains G&P the our gas, and natural of other trust Texas produced noting operators the recent pipeline takeaway of for both crude oil Coast. natural of that regulated of and parts achieved discussing now gas the Commission our these Energy state business. flaring Railroad by In Commission. Federal headlines without wells, here not the while year GCX PHP Basin short Permian pipelines and recordable we associated gas milestone by media concerning from transporting to a gas differentiated facilities. pipelines,

online commissioned well across with our activities to and state-of-the-art During SRX and gas construction, period, connections plants completing three day-to-day cryogenic other this addition technology, we operations. in completed processing brought

the XXX the XX% quarter, with cubic quarter. per During down compared second million first averaged gathered volumes day, feet

the gathered cubic system unscheduled XXX significant gas maintenance for rich a July as recovery reflect in volumes system remove the curtailments quarter million the the the approximately XX per in pipeline, identify to led of show day to feet per seen liquids the in to A associated of million six for controls to volumes in with feet Apache lines have a automated feet day We the cubic approximately residue lean where from moisture days shutdown cubic in XX failure related The days. return system. curtailed and entering day pricing per XX the million averaged second we a nearly production. lower gas

Following failure, the remedied an we process the investigation identified problems. into and

issue. to As such, we don't recurring expect a be this

Alpine during current costs lower direct High, both fuel XX% as and the for at the focus our preceding benefit will fuel The compression of be will quarter, with to frequency our on reducing allows activity switching, future addition during outlook facility, structure. we credit have Diamond cost from XX% for peak continue units. approximately compared electricity during down depend With quarter the fourth of This to duration us demand. optionality as electric-driven the were XXXX. an to the opportunities magnitude commissioned second of quarter Operating processing and quarter shedding cost of load our and we At well savings gas-fueled the the capture on periods use. a realized with switching to

compressors. to with to costs able fueled natural operating expect gas and as in We this future quantify calls. be maintenance compared reduced electric The also units

and optimize, for is to customers or maintain market other higher of heavier Our plants currently ethane continue demonstrate us only in today Basin, response differentiator a capability flexibility, the propane few facilities both in in to NGLs to a recovery This at choose Permian to SRX can the that and running technology, to in excellent process ethane which make mode. rejection allowing during exists changes operational customers in rejection thus key plants Altus. quarter. prices our factors modes quickly recoveries allows our

for would We new I due some streams. uncertain the factors, and third have not economic with we continue would to parties like aggressively do highlight. condensate continued off-spec as we pandemic as and to to revenue progress business other new the second volumes quarter. Altus Admittedly, other during third-party is the pursue But quick outlook like. to process

executed second underutilized generate half which assets to of We during the two and outside lease deals Alpine the compression year. of also High, revenue with Apache will operate

our these We are as are of or streams a lower to we result or create assets cash to will them work idle levels, assets Apache's looking put underused at additional divest for Altus. all flow activity and of that

and want meet we reducing Permian and And the cost sheet. in In the Over recovery positioned has focus streams selling uncertain. assets a in headwinds anticipate Still, flow I free for remarks, through safely. again thank generating them turn include to line operating healthy of well facing of previously and pandemic flow cash diversified for its that hard weak to Altus balance challenges COVID-XX not global for assets. on $X I Ben. work. their cash next does the in noted redeployed to our our revenue-generating closing industry worth year, my will the time presented continue extraordinary over start-up to the Altus opportunities call $XX We ongoing remains now economy, team the past appears XX third-party I'll full million a market. This prepared sold idle than million have rather approximately we've that compression additional Highway the business, with and months, bringing early

Ben Rodgers

remarks, Clay. for our In you, with will may our guidance updated for quarter, review which Thank than prepared for is and and XXXX. position, financial XXXX results current my stronger realize liquidity comment conclude second on briefly many our outlook I

yesterday, second the an technical of quarter. approximately million. related preferred units noncontrolling the the This the $XX interest of our $XX in derivative noted As included of million reflects net Altus at press accounting unrealized release which derivative to loss, reported embedded issued in quarter embedded including income revaluation end

as nearly maintenance XX% to down EBITDA rich curtailments from of while Clay quarter The volumes decline of second approximately EBITDA Excluding preceding only quarter gathering consisted well the strength second is this gas. our reflects and while $XX related volumes discussed. other million. as was of projects production voluntary X%, generated unscheduled were JV down items, gathering the performance, adjusted approximately volume Approximately the primarily This at of down High as adjusted Altus pipeline Alpine quarter XX%.

the Capital currently the in capital approximately only the of online. expect for investment XXXX is for we back proportionate project method in second investments, production service. growth quarter is and how to gathered quarter all interests, nearly we of guide infrastructure million, this pipeline, attributable equity quarter which With million. of Permian Including as the curtailed not is majority volumes the during capital Highway the gathering was our million. gross price to $XX totaled increase processing at quarter pipeline JV midstream $XX share in capital Alpine current $X which Capital to was infrastructure High commodity outlook, second

standing. I highlight want guidance, strong to on Before financial the to company's moving

Our credit $XXX at million drawn like and through than expanded January, and of million end facility $XXX has the November quarter. covenants. this of facility In the to was less extends investment-grade was XXXX second

XXXX, We from a to anticipate which currently is We combined capital covenant from viable through revolver be operations leverage Xx. capacity with needs ratio facility credit meet expect the more comes on to our below leverage than pipelines, on online. less of to well covenant JV our sufficient our and PHP cash distributions than until be Xx our

guidance low volumes trending Our XXXX to are million cubic XXX the feet towards range though for quarter. gathered of end curtailments remains currently the the production in XXX due per day, second the volumes million to

year increasing with million, the projects. $XXX to guidance lower EBITDA approximately are JV attributable XX% We of for from to $XXX pipeline million our XX% end adjusted the to

guidance, XXXX, project and unchanged time. revising between cash We $XXX given up range is priority primarily finance. level distributions $XXX line to million DCF for and expected are higher is to distributable guidance year guidance the previous contributions expected this from there Oak revised GCX. In capital by in cash are also from Epic Growth flow Shin being The at with cash no driven million. the

expect We year of the PHP. with capital investments be the in half the in remainder business majority directed second for de our the the capital of being towards year, G&P to of minimis

Therefore, upside our of project finance a have share will has in project the taking portion done financing, our capital crude the we've the EPIC JV without lower As be outlined. is overruns. into the guidance share than that has that reflects only of the project's gross of gross proportionate proportionate of debt funding and past, expect pipeline account. capital we level funded share we our

quarter on for schedule early date, XXXX which Kinder earnings in-service PHP confirmed second As recently call. Clay remains was on an Morgan's noted,

is PHP, service guidance investments PHP contributing the a is Altus' $XXX revised and X to on posted will JV $XX growth our be the providing driven million, In million included $XXX in is items. be from range midpoint distributable adjusted XXXX, key or an first which attributable last results. our new all to represents are expected increase projects and include growth from presentation And $XXX year-over-year CapEx third-party expected which by capital selected flow for website with million the anticipated be as million, to quarter. currently growth note, completion our to outlook does With increase $XX necessary the compared million, revised guidance XXXX. PHP flow in $XXX of XX% on acquired. business night, range of start-up ramping pipeline our it's most when approximate to capital Of the to we down EBITDA is at to of XXXX This cash not investor to entering to XXXX estimates million with service. any assumed cash growth volume, strong of will significantly. our

today's As with by space, Clay's XX a echo overcoming our the products. implemented in environment. recognizing energy companies In to the minimum order I'd reverse hydrocarbon Altus' comply challenging the NASDAQ this has stock end team for May, was been with split other our shareholders at June. impacted reduced price in demand listing closing, one stock approved in In severely for to rules, of like comments and price

steady for the progress, efforts over the contributing are outlook will I for Altus and improving making operator to to are call now Midstream. these an We turn Q&A.

Operator

[Operator Credit go I Suisse. our Please comes from from Dounis first ahead. Instructions] Spiro show question

Chad Bryant

Hey This is Spiro. on guys, for Chad

provide release, down preferreds? in in thinking the you based commentary about you're in you out future? is like dividend debt on off, color how the a commencement Just pay down. the favor of it pushed are the taking being more delevering prioritizing on little And open to starting seems Could

Ben Rodgers

question. Thanks for the

So it's to a be fluid situation. going

of obviously, next sit we're comes flow becoming when are our we've the future XXXX. out talked as outlined. take to I make levels past in at year investor leverage We the we've in beginning online. of in see for looking has right time the want positive PHP if the the end as very about our can manageable, you think sure crossover presentation been that that to cash the free The preferred into now, right we

X% of now. well. IRR to threshold. right and So the preferred late Very on 'XX distribution terms in as it's kind next look starting And we'll alternatives early financing manageable XXXX, MOIC the of rate different year

that as opportunities. with on So a of PHP. asset the lot the conversations funding that's third consideration G&P for having fund think year. that Clay as into about CapEx, in some next predominantly not is helps goes And but talked declining to which our still side, we're well our guidance for into party, play. Obviously, got I you volumes remaining the take mean, about any We've portion sales. in

you So backdrop, both it's sit as just do to through fluid. facility be off as going think dividend can prudent sure to not taking distribution that we I credit we it make through more it's just shareholders. sustainable here be table. manageable leverage today, sure when the the preferred. to have as a And the a need the to well make We we're it, with

Chad Bryant

And helpful. gears Okay. Understood. That's then just bit. a switching

of the sort like? you high those future. But just And about could costs. benefits magnitude the point there a the that of of on I little reductions could fuel sense know cost anything to switching a we'll is mentioned mentioned to what more get You get update a level you look in

Clay Bretches

the that this to And off is compression. allows on the in go elect can grid there's the and And reap are Spiro, in of that from Bretches. so to benefits, doing, which in, higher ERCOT a Yes. benefits program in our go and you you we participate the to can market. gas-fired the Clay us prices

prices, And how put of of historical the that as to it is that's that's be believe hot depends as that. Texas a that we July, to August once a September. quantify that from far to going So it's going is seen we've benefit able And hard line good something pretty to benefit, on you the on but during it state have be months on a in just going what have value occurs. something and we'll it to Based can't be. that

give to you to be that see and how on just won't We'll we that. So able looks. wait guidance have

believe of quantify the cheaper see going them electric again, Now be And is And real-time that much powered be in and between XX% that, gas-fired we by we'll to versus side. running for we're you that somewhere and to the XX%. it's operate. able to operating side because in terms compression to cost, compression, this

some have we electric-powered we have size. compression out now, equal right So the also gas-fired but there compression, of

believe So we'll you give call you particular be again, it able that's future idea in that months. try to O&M for are the the a Those didn't give times and across for do to demand to the the why numbers. good those question? to be of pricing make we quantify that the in Does next cost we as ERCOT comparison. on in in to savings call this be on able and your number answer an the latch that identify summer. what And we'll the numbers times to us of And going well and peak in as is heat terms peak the that

Chad Bryant

Yes. It does.

Clay Bretches

saying be of at more some way call. long should numbers to a next better but the but to you come, we It's we give able

Chad Bryant

Okay, understood. Thanks.

Operator

you. to [Operator President like queue and time. show for the further Clay would in over this I to I remarks. Instructions] closing Thank questions CEO, no Bretches, at Mr. turn call the

Clay Bretches

operator, thank thoughts dialing like I'd into leave about today. our for you following and call you to all Altus Thank with you, Midstream. the

compression into free which by outlook remain and cash is We XXXX an in XX% Permian become on for is driven improving. that be positive ability XXXX. having will the flow provided confident with reason next Our our complete. for mechanically year, nearly The early We've updated look to mainline noted guidance has all of our JV operator primary pipelines it's Progress in this highway confidence. service. complete, the XX%

captured progress power, with further made emissions be also We cost electric reductions reduction. will also which shift significant to cost. the reducing have enhance can believe We

continue for of We of progress. other will gathering third-party revenue, our work processing pursue to forward you keeping finding underutilized other assets. and to apprised including sources look I and

return I Now will the the call operator. to

Operator

Thank gentlemen, this sir. today's Ladies and for Thank conference you you, concludes participating. call.

disconnect. You may now

Kinetik (KNTK) 1 Aug 202020 Q2 Earnings call transcript