BPMP - Earnings call transcript Q1 2018 | BP Midstream Partners LP

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

Operator

Good morning everyone and welcome to the BP Midstream Partners First Quarter 2018 Results Conference Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions] Please also note, today’s event is being recorded. And at this time, I like to turn the conference call over to Mr. Brian Sullivan, Mr. ahead. go please Sullivan,

Brian Sullivan

Chief This and Midstream Sullivan, conference Relations. Coburn. with of welcome. Chief Zinsmeister; XXXX Officer, Financial Vice first results Investor Craig our here I’m webcast call. And Officer, is and Rip Partners and BP quarter President Executive Hello I’m Brian

Before attention our we like statement. cautionary your I draw would start, to to

and materially estimates, During statements that forward-looking to today’s make plans, expectations. note slide, will and various on webcast differ presentation our and we and outcomes Actual we factors also results to due SEC conference our could call, this refer filings. in

will our supplementary measures. Please information website. now over Thank We are these refer and disclosures non-GAAP important documents filings to you related and SEC refer also Rip. for measures. to to on to available financial These our also

Rip Zinsmeister

a results everyone Then asset then summarize before your some I'll come and questions. our messages future back on fourth morning quarter operational first dropdown We results. webcast I Good time you plan frame. us joining an to thank and month inventory asset we over to remind much provide during a our including planning inventory. results and operational that bit for quarter keep briefly future investment Midstream full just our details we and our call half to XXXX for financial held of through and the for financial more conference Partners' then key sponsor. details discuss proposition Craig take BP focusing our and providing XXXX the you of BPMP Today, of and presentation hand through overview quite shorter call call. our over financial and a financial call, first We quarter, ago. our some XXXX our about to you results year our about will differentiated spent take our dropdown

total yesterday, We independent results three positions, announced the mention operational the the of to an the of filled I'd BPMP bringing Board important recent allowance in of of I step of have eight, cover changes FERC like like appointment our briefly would though indexation of that aspirations. policy directorships of director. general also impact income exposure partner number now to the board Directors our the and to as the in changes to potential reviewing Before an independent last our Joy, XXXX. Michelle tax governance

time due tax applies either As tariff you methodology will income protested be new to rates are by in model also existing rates unjust or be rates unreasonable. set when rate service FERCs in will at the five-year of the an to allowance how the ruling shippers the oil reduction the XXXX. ongoing pipeline the and inflation setting of cost There income is aware, FERC into taxes by who think interest active are reset factor to

have in base we existing portfolio. asset Firstly, cost the no rates

ROFO few negotiated, have of assets. we refer to the right cost base on, that first the what for a rates only a have as assets We offer we seven-year

level, was BP tax even is rate third-party to the highly entire where rates ceiling we and cases, many tariff have tariffs shipper. Even We considered only base are fewer the rates income tax allowance. any unlikely. the protest headroom reduce tariff of lost a current the the affiliate assets assets, income if ROFO are not providing change, against In substantially sufficient more a the loss present. allowance. than protest the set risk even shippers in below Therefore, there of would the if cost Meaning is a

oil is it pipeline of the will tell income model. taxes the the reduction factor to in early year into how indexing to XXXX, changes five Regarding too inflationary FERC rate

and changes quarter full move a the throughput or to higher that with the material of that weather group expect pipeline quarter, permanent gross offset trading I day. the the on quarter the per due during asset fourth where related not X.X assets the capture of increase assets. by the Mexico during additional portfolio quarter. operational throughput our BP's was our oil integrated first throughput for on Gulf solid This of our by based on strong or the will BPMP fourth increased allowed XXXX occurred apportionment that the either partially On pipelines, have able million impact This note, decreased production quarter. and third-party volumes Mars, the pipelines. barrels earnings early supply to Diamondback on offshore and ROFO delivered occurred However, throughput a This was reflected compared driven throughput equivalent mainline and to where these of total we during XXXX were serviced result in of operational the to pipeline on with forma on shippers do fourth BPX we X% Proteus is by Endymion quarter the Enbridge We delivery various fields impacts the pro operational the Increased quarter. increased a opportunistically from to results. and

reflecting and to of the throughput facilities elevated in diluent than Mexico, of Looking volumes absence first in Diamondback on lower platform the expect be the other maintenance Mars quarter, quarter. on as the ahead, plan we second and occurred Gulf the quarter first

to improve the be and We Proteus increased Endymion BPX by and offset impact pipeline. throughput pipelines partially on on the throughput this expect

fourth First quarter barrel portfolio lower a revenue basis to average per on was slightly compared quarter.

you revenue basis, compared basis. With full-year a on over like-for-like average XXXX, take flat calculated financial be the hand that, financial a let to Craig through me to and to expect on to However, per broadly results we barrel frame.

Craig Coburn

everyone. be for the the first IPO unit a BPMP the and quarterly during result On same gave of over good Thanks, the of we quarter for available confidence quarterly for of Directors quarter, the quarter partnerships exceeding will cash record on partner performance $XX.XX the of general XXXX. the Xst. XXth Board of Rip, reflects period. the underlying reported XXXX. declared of minimum our to April per financial morning solid cash forecast a the We expected XXth, of distribution unit May The the the and during The the in and growth of throughout distribution organic May partnership to of $X.XXX holders paid as the increase distribution distribution

IPO quarter in operations the on this only. financial that quarter a talk XXXX comprised quarter XX October comparison October I results for to the XX, about periods in financials of predecessor that the financials this XXXX financials reminder from our detail, Before for our data October means and for to predecessor up consists results first combined XXXX table prior of predecessor, for for on results XX our XXXX slide and first our XX, financials more our Fourth comprised BPMP XXXX, the results BPMP quarter. to comprised full for December

are Rouge comprising ventures. our not in of Diamondback our a assets Assets and BPX, pipeline. the our portfolio. joint include of They subset the predecessor do only Mardi River or post-IPO predecessor asset period Gras The include Mars interest

across for differences first quarter IPO will result As the on in the to asset forecast of I the results the composition comparing periods, period. today a same focus

the periods our to Of results forward comparability time, in actual course prior improve. as we will of move

First XX.X of revenue million. our XX.X quarter was forecast million to IPO compared

volume products and agreements any quarter include does net deficiency BP for with revenue America. under the throughput deficiency adjustments First North not

BPX However, Diamondback volume did adjustments million we volume relation and amount minimum to being X.X the BP's agreements report in these pipeline. throughput net in on actual contracted deficiencies from to approximately the due below

BP's temporarily with in during arrangements that shippers were As Rip capacity optimization previously increased negatively from BPX products seasonality Diamondback the BP's impacted the mentioned, pipeline, quarter, Apportionment saw less diluent during period. the with the like from partnership revenue mainline quarter. XX% resulting to greater throughput pipeline usage parties Refinery, compensated together shippers. apportionment the was at revenue which negatively this able Whiting average on throughput the under occurred group, on the Enbridge and diluent additional opportunistically of shift the impacted during capture we world-class a the gasoline the amount during produced MVC the captured seeking of the was months, also training diluent by However, third On by winter during was pipeline quarter. working

exceeding increased than quarter reflecting throughput the Taken together, from deficiency totaled million, Diamondback rates volume XX.X reflected for agreements insurance forecast lower the adjustments were forecast IPO lower revenue million, primarily of Costs expenses. and the net the the on million and and variable revenue first slightly IPO X.X the This million. for pipeline. lower X.X by expenses X.X

the X.X The cash First million and available compared the IPO slightly respectively. lower distribution higher the Mardi was compared Gras prior from million higher distributions interest was agreements measures forecast was adjusted and IPO our Mardi of was cash to which throughput due distribution partnership, million the comprising forecast higher for from reflecting lower joint Gras to XX.X for and attributable XX.X for net higher non-controlling the joint the of than IPO increased Gras from million. volume to million Mars to X.X and income quarter Net available in X.X income equity Mardi Cash ventures deficiency the was benefiting EBITDA joint were pipeline. Adjusted investments than of in Mars and forecast, million. million million interest performance. joint XX.X ventures Mardi Caesar XX.X and of the income on million. forecast, venture Gras XX.X throughput method from adjustments Non-GAAP reflecting joint periods in eliminates ventures, XX% IPO EBITDA distributions ventures, Mars XX.X

X.X times. in I'll next top on coverage higher distribution times end ratio than the Our was slide. of this X.X forecast the return to of a our moment to range X.X again

financial Let frame. me remind you our of

an is a Organic portfolio expense. existing with driven this barrel quarter of million higher XXXX broadly under in per flat distribution total per be the with earlier XXXX expand This call, day than be and guidance is facility in of distribution expected affiliate and million X.X increasing In like the our to the Estimated forecast be For throughput oil for million in like revenue XXX the by to the portfolio is our full perspective. be of average we term, available for of to than Gulf credit gave XXXX, X in year equivalent with consistent estimated for our basis. with guidance our results quarter be we the which maintenance on XXXX approximately outstanding Cash our information Mexico. to of will on than first basis, growth is near during million around fourth is quarter. adjusted a month. EBITDA majority expected repaid barrels to asset increased remaining were spend borrowings greater the lower maintenance expect BP in very slightly second XX reflecting

assumptions the of the which quarter reflects, for and quarter normal to below Marist through of cash above the second and platform within the forecast reduced We second the turnaround the distribution is higher returning to during be maintenance the or venture range maintenance consistent from the at in top joint coverage range quarter is with pipeline trend expenses onshore of first the end the of distributions seasonal IPO the related the level following consistent and coverage ratio in end phasing the more volumes fall. and the EBITDA expect Mars with range lower a works quarter of our to forecasted distribution year. remainder the in The adjusted ratio in the before slightly lower the

in to aspiration ratio X.X our I'll teens subject distribution exceeding existing expected With to expect we times. dropdown to remain investment not while And to revenue we be range distribution debt ratio asset mid that, distribution distribution activity, to and to sufficient Rip. grade X.X adjusted spend is the annum forecast continued to a through Cash target of maintenance of activity. of total Looking back portfolio unit consistent available EBITDA the support X targeting our committed XXXX, our X.X maintaining growth, hand through to credit to barrel to throughput with average growth. increased metrics are achieve organic times. organic growth X% per Estimated out coverage per future is levels, growth inorganic including XXXX growth for with

Rip Zinsmeister

box The represents Thanks now side asset the this entire of Craig. slide I talk business. about left dropdowns. will more our future BP's U.S. on

the to minor of is ultimate U.S. a previously the generated chemical mentioned, for large. slide. all of approximately how footnote proxy technically sale plant can As material I U.S. and business some in XXXX. qualifying this EBITDA as and The on is proxy found X in X in BP's billion It be EBITDA Details save have billion was business income, exceptions such the customer. end virtually XXXX calculated this of

qualifying candidates BPMP production exhibit investment and not BPMP's assets includes with and Of that oil as dropdown proposition. characteristics course, There gas income differentiated necessarily of are don't refineries. facilities the align pool entire they for

upon Our assets opportunity growth. proposition predictable that that is are strategically cash stable located for and built flows with and

income. the Our focus pyramid with slide. proposition align right high side quality is in The that the with on subset is do of qualified diagram on selecting assets shown block our assets the of investment

a comprises last an call. recognize from the across categories, our multiple subset pyramid diagram will of multiple midstream You extensive results portfolio phases asset This value chain. assets spanning of

remember this static. that to isn't important is portfolio it However,

actively four pipeline of will per conditions potential These and pipeline labeled and pipeline in are which we growth group mid offshore support training of X,XXX candidates. example, to Gulf pyramid investment the BP's these segments or of working our targeted represents assets than with that annum, unit first upstream business contiguous that and expand And downstream years for annual the the world-class layer a are as offer first available XX in downstream lower development covers ROFO bottom distributions market assets. along ideas would per For BP's ROFO more of miles source of dropdown The pool of and drops pyramid. be drop Mexico. in the assets opportunities seven-year permitting. from teens to BP's the is we annual a pipeline all with negotiated asset progress behind downstream a right program, There our three hopper

supplementary We displace of We the assets. in may of become drops have growth assets. information inorganic available in of in the our some the options the a of ROFO do sample anticipate section result that pipeline additional pyramid timing the slides higher and included ROFO will

look You approach. peer see to our of to group this need only evidence

for even of agenda. that Phillips we of extent peers relationship around us drops And of we aware a Valero, growth candidates. top are including at our with of the distribution presentation, XX, aware are Marathon towards Trinidad, and pace The and provided roadmap our services. upstream progressing we path and Endeavor in inventory example, have portfolio and takeaway recent a for will scale Marathon For suggesting follow Shell's which many platforms creates strategic a of track you future refineries. in message and balanced The marketing be against for large us midstream business chain asset provides with for our BP dropdown asset It across its is tier to value years. distributions development drive the the access optionality and to

first differentiated XXXX. performance the results So for the in throughout increased forecast aligned consistent holders an distribution for and and delivered growth. strong our quarter, throughput summary, growth the confidence we unit the deliver a of available proposition signaling driven organic distribution to top distribution with partnership declared We in sustainable cash This first is by our organic tier quarter growth. investment

with that is located diverse flows and cash positioned predictable asset a well highly integrated. strategically and stable are We deliver to portfolio

BP growth attractive of into acquisitions We opportunities assets strategic visibility from and future. the well have of strong organic

growth we listening. questions. unit over Taken forecast distribution Thank I per the years. you together, mid next now annum, your teens take three for will per

Operator

there? and we'll Tonet. begin question-and-answer you at JP [Operator have question gentlemen, Morgan, proceed. Are right, Ladies from time we Jeremy session. Instructions] this Please the a All

Unidentified Analyst

for Bill is on Jeremy. This

the and categories putting of MLP subset share mentioned the then can the assets qualifying the recognizing EBITDA any pyramid? U.S. breakdown of of considered income, you you Just on and maybe the you've the dropdown into curious that total between that pool between

Rip Zinsmeister

that it to reviewed terms really pyramid. in board tier comfortable far, the pacing bottom pools. drop. taking candidates opposed been EBITDA of out things second that in certain growth lumping not of things take with be what next oriented It's space. So two-year will dead come how We're will has anticipate distribution profile the and guidance week, our this I and for tier. We the the from as

Unidentified Analyst

the outlook ability a there? just know you pipeline. the the that I Diamondback, explain of rest on the put on is on barrels touching for and little you bit marketing year Can just then mentioned And that to what

Rip Zinsmeister

and ship to during heavy the --heavy winter year. versus winter the of diluent services more oil of diluent Canadian the basically of Diamondbacks the versus crude viscosity the takes it So, because the during fields to historically substantially crude

exceptionally January, that's see year. to So, three MVC over last QX or through of tail we not QX, the end February December, less the had four and in We pick sustainable average stronger strong but backup consistent volumes equal build on We our to and out more that's then we'll an years. basis. an QX, volume

Unidentified Analyst

just then one. one And last

Mexico organic the maybe in platforms of touch If pipeline? of if tie of Gulf any terms the expected your the some, into feed you that growth could there backs any are end in through year to on,

Rip Zinsmeister

GoM out second It's my lot probably With news. are not anticipate that Shell, a to our really the there. but there's that's of the release we incremental partner, do my half on the press fair very bullish or say activity in year, volumes deepwater. of I

that's I'm this So to going all say point, at

Operator

from call is next Our Zarahn. Brian, ahead. Mizuho, go Brian

Brian Zarahn

update the circling you large very billion comprised I the EBITDA. of a you thought just back inventory review Can mentioned downstream. X on Appreciate dropdown billion number, is the XX what's

assets refinery in understanding better just inventory dropdown get of little including what So more number? us a the are that in for is more that help traditional And midstream number? you EBITDA

Rip Zinsmeister

and it and income I the at first think at consolidate the It's as qualifying it's income, to as also businesses. allocate appears to U.S. carve Okay, not we out group fair midstream say level easy because to

and financial U.S. by operational breaks we gone market and to might realize keen from numbers which been the They've big market, out conservative. how in, we segments. exercise So, report be. through the big that has our provide interest the we a are haven't These that

to math. And caveats XX decimal downstream. want exact if you to so of level would this is is if view you higher of thought get really do a numbers actual everything we Mindful just third high to income, be take representative. about XX% we the not that the it So then was my qualifying a

Brian Zarahn

billion classified EBITDA X midstream? of really of Two-thirds as

Rip Zinsmeister

I No, two-thirds is et include plants all, which not processing and was said cetera. et cetera, pipes what at upstream oriented, gathering would upstream

of the on does our So cut -- that's a lines group business.

Brian Zarahn

The of so that's you're of provided services billion saying to upstream, business? X inclusive two-thirds midstream upstream that the production related and includes, of

Rip Zinsmeister

Excellent, correct.

Brian Zarahn

today of amount and EBITDA? billion X categories it shown then to four four What the relates of of as buckets those percentage And comprise the previously you've what on of dropdowns.

Rip Zinsmeister

We so I haven't that. made cut yet, that answer sorry I'm can't

Brian Zarahn

Is think to out there or is, an it growth farther it's approximate meet in provides way percentage more to objectives, future than visibility is the enough percentage helpful for what the than more potential growth the to even terms MLP. but it the is about whatever market think go your I of enough -- for -- in

we'll Okay, on I there. move guess from

Craig Coburn

Brian, Craig. this is

you address have I that think with little relations investor bit we can deeper. a

Brian Zarahn

And likely thoughts identified half then, you've year will of the the the timing near-term and be. plan? what sure on the second on dropdowns dropdowns updated the financing Any and

Rip Zinsmeister

Brian. Thanks for that

So, half latter the brought of roughly which last ago. of this is on our we bit just introductory in member our timing year, days we're fluid. a comments, targeting three board drop doing board From a still

are the due growth conflicts diligence dropdown distribution about committee our plans drop. the reviewed a we inventory dialogue ready deeper So for priming and to get results, our we

Brian Zarahn

financed? to it the drop even that the now be to assume of is financing cash likely In fair first debt position, terms net for will

Rip Zinsmeister

out our the of that that three. reasons the fair of given road IPO we the on wanted one the We went into assumption. market. out to That’s flexibility grow why the sheet. wanted and That's dynamics said We're we balance at a

can facility loan of intercompany comfortably the our handle drop. size So, the

markets equity the debt at, will are where half be financed all, than more monitor will if but not easily okay. We

Operator

is Walker. go America's call ahead. next from Derek Our Bank Derek, of

Derek Walker

on think should mentioned those You quarter I In quarter strong terms turnaround levels down of one, on be have you with sort volumes Diamondback line and just the Mars? Do what this be like you over Do you the or might quick mentioned some XQ might like that queue be? mentioned similarly in year, you for and sense quarter. feel for margin a queue -- of more Diamondback.

Craig Coburn

Thanks for Derek, the Craig. it's question

a in of that we we what stronger I quarters actually little guides think right closer little in levels fourth probably than and quarter. would fourth in stronger that back in now terms the Diamondback bit second the they seeing But levels quarter. quarter consistent than are IPO. they right But the volumes the we fourth were what to the with now is bit said are had through we

I the towards $X Mars cash Mars In from EBITDA income think piece we $X net million of to of quarter guiding terms generally impact for in there. million second are a speaking of sort shutdown, terms and

Rip Zinsmeister

going less on there back Mars. as bringing And more on Craig's fields had about this on time what's is following like It comments. on. disclosure certain Rip, Shell's at they or are looks are

look their disclosure. So, to

Derek Walker

just one the little on And dropdown.

a You've you mentioned a inventory, lot obviously of there, it pack lot of it continues also of also to too. I mentioned continued, that commentary that grow provided you but but know plethora

at So, or you are grow looking the what opportunities BP to with continue backlog? to are discussions of in that some

Rip Zinsmeister

Actually, it parts. in two comes

see they're we in lines growth our as ability haven't to conversions, really the the which well fully business, about as not line fill existing talked capacity utilized. extensions where of we So organic line

hanging but fruit, So, fruit. the low it one certainly attractive it's call that's

and development arena. working addition are we that So, broader in in business the

you that, contemplating opportunity inorganic is and some to business are expected early as one organics with the value game, more as capturing our to know low if particular grow are relatively days. Those than is inorganics the likelihood of approach any the well We BP. very like

this not So I together there. grow question want the of will approach pulled your type that fruits we year. a to labor XXXX really to response and midstream dialogue we the a be we've of that hope how multi-segment and

Operator

comes Securities, Barrett, go Barrett ahead. question Blaschke. MUFG from next Our

Barrett Blaschke

sort unfriendly there for stock capital the pace we've that younger equity market from one environment of If out new the seen now partially story the newer, the because of a Is of all right of dropdowns look space, partially the something is MLPs I'm that moderating lot looking around an I and achieve things off maybe are backing the the you've dropdown they you've the actually without growth are that is for you that? probably guys you all. you able like going evaluate? because too they at something anything that early guys. targets we're looked to Do or at that know drops. pace for but at

Rip Zinsmeister

way, in to perverse like Well a I’d no. answer the say is

We are the serious made market, very about we've right. the commitments to

strong, when too better room. more lawyers is commitments in term So, target a a ones the new you

are intend reverse So, our -- I'll deliver our to to targets, and targets we against right. our target,

becomes our your again a then the are you with meeting and more I'd it an and time targets the growth issue say environment. market. assets, mix So, of, existing organic monitor market call our business. the and consistent we in happy We're what the those the given will but at the optimum And in the market then, becomes financing downs really drop what's to it of IPO feature with

Brian Sullivan

our can call no however to directed this concludes in so this relations. questions queue questions Follow-up have today. at We time, be the investor further

BPMP amiable listening is on you for today. website. Our Thank information contact and the time your

Operator

Ladies and concluded. attending the conference has gentlemen, today's for you We presentation. thank do now

You disconnect now lines. your may

BP Midstream Partners (BPMP) 10 May 182018 Q1 Earnings call transcript