BPMP - Earnings call transcript Q2 2018 | BP Midstream Partners LP

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Operator

Good morning everyone, and welcome to the BP Midstream Partners Second Quarter 2018 Results Conference Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note, today's event is being recorded. At this time, I'd like to turn the conference call over to Mr. of President Vice Sullivan, Investor Relations. Brian Mr. may you begin. Sullivan,

Brian Sullivan

Officer, quarter Welcome of I'm presentation. Coburn. Midstream Chief Investor Officer, Chief second to Partners XXXX Executive our Brian with And here results Zinsmeister; Craig I'm and Financial BP Relations. today Rip Sullivan, Vice President

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

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

refer We our for to will these also also non-GAAP refer related our disclosures filings financial measures. information measures. supplementary on Please documents are site. available to and These to SEC Web important

to over Now, Rip.

Rip Zinsmeister

and your our take distribution come through and messages then by we asset for distribution, result distribution back and the another growth. key our We Thanks, I Brian, quarterly the our will joining portfolio commitment our of and financial gave quarter unitholders With tier and top us. the differentiated deliver earnings period. for and distribution for before summarizing for both operational Directors half second the first quarterly same summarize good regarding per consistent increased financial growth strong declared $X.XX distribution of delivering quarter investment financial will growth the of our increase results. second operational I the over cash with performance forecast we take to $XX.XX you distribution, today increase results frame. over exceeding unit the you Board will the minimum delivered on continued IPO General morning the cumulatively This cent distribution. Thank a Craig of an an for questions. Partner in demonstrates cash quarter, available proposition to start of dropdowns everyone.

with our solid still was slightly for last lower gross throughput though the previous total the consistent was quarter throughput this exceeding day, IPO slightly guidance. barrels lower period. around a than was equivalent first result, oil million forecast per Even quarter, second same X.X than Our of the quarter,

results remember may to in to of captured the Diamondback expecting facilities last that maintenance in During affect we Gras lower you Gulf the Mars on gross quarter, be second throughout pipeline the Mexico volumes quarter's diluent guided Mardi the and to and systems, on pipeline. on throughput lower call,

[ph] During quarter the the Gras lower did we second quarter, to maintenance. Mardi planned result on see systems as the first and compared volumes a the Mars of pipeline

throughput the with throughput the the the pipeline, partially on diluent this ongoing at we mainline, slightly than crude River on Diamondback increased pipeline, notwithstanding apportionment by Whiting pipeline of and the what continued Enbridge record the Refinery lower Rouge However, BPX was the production on increased Whiting during and offset levels volumes at on first process quarter, with elevated in demand, saw the consumer strong increased Refinery albeit quarter.

relative consistent the contributed second to volumes IPO on with during pipeline the systems the River diluent forecast. of that Gulf together throughput of Rouge planned maintenance and Mexico to portfolio the the broadly Mardi the The anticipated continued elevated in on forecast quarter, the was of Diamondback Our the throughput forecast. with increased the Mars Gras IPO outperformance pipeline and

late completion be quarter, the second the to via and in increased start-up Looking of that Mars will diluent occurred deliveries Kaykus than Gulf offset pipeline throughout lower from Diamondback [ph] more Refinery, mitigating place of have on quarter, in of commitment in respect with increased for September of quarter which and maintenance Mexico on to pipelines, onshore our volumes system as by weeks. volume Whiting A throughput be commence in higher return Whiting. the maintenance to maintenance This Amberjack. at arrangements Rouge of cash throughput throughput scheduled ahead, facilities the with and the second partially impact the the of approximately available plant reminder expect the on the we BP River the that at volumes on we planned last minimum plant for lower impact third seven distribution to and levels, reflecting during is

per the revenue consistent quarter, broadly a flat we to portfolio the compared full-year broadly on average basis, barrel On on to Second XXXX, a like-for-like average was quarter asset basis. barrel existing portfolio our a expect first guidance. per basis with flat revenue continue be to calculated for with

Now, to over Craig.

Craig Coburn

everyone. morning Good Rip. Thanks,

After to Compared in net with Rouge and of are BPX throughput all plant distribution of third venture higher diluent higher phasing income the levels. in include the the forecast return lower EBITDA forecast, was favorably the distribution million, Whiting and during related largely Higher quarter. by Diamondback the second within and X.X is distribution Net the of to both in related offset as BPX deficiency not the Adjusted adjusted to the with results allowance period. activity volumes broadly we times. fixed driven The million higher quarter. revenue under revenue Refinery quarter impacts attributable our our does forecast to in $XX.X loss be first EBITDA quarter same IPO revenue throughput was revenue $X.X maintenance quarter. was plant and increased more increased result factoring reflected with million, cash quarter, fixed the and EBITDA financial with realized dividends late throughput. to the lower is prices for partnership Diamondback by In times, consistent normal any were exceeded distribution, to quarter, second ratio results for for coverage IPO income, from the forecast. which $XX.X to the exceeding from was X.X impacting deficiency available increased range to allowance quarter our third IPO cash expected by the exceeding the on agreement. as maintenance and consistent loss for commences X.XX the revenue interests for adjusted and the our the expected be $XX.X million, River strong, approximately in forecast IPO quarter Our the available The gave joint

to ratio to distribution the times. Our is range within of converge X.X be expected X.X

to financial frame, the Turning this call. slide from our you will results recognize previous table our on

Our through XXXX guidance guidance as is is our largely changed, XXXX.

quarters first hand I back full-year to However, from for for for our XXX having outperformed to two guidance raising million cash up Rip. XXXX, are distribution we our to will With available XXXX XXX guidance that, million, the million. XXX of

Rip Zinsmeister

Thanks, Craig.

growth. opportunities and strategic organic consistent we BP, unit assets proposition growth distribution acquisitions the Combining attractive top investment of forecast differentiated per mid-teens Our is next growth deliver to years. per unitholders over three annum tier from distribution

growth the targets to to have on we committed and these are are unitholders, focused made we consistent delivery We distribution targets. against

expected Organic per pipelines Let capital portfolio unit. can growth this. throughput achieved current on by surplus which is will capacity, to me explain X% achieve our will from average annum with per existing increasing expenditure. distribution we asset without to X% how be This growth be achieved

portfolio. current opportunities Canadian provides our Forecast visible increased growth for of crude BP's Whiting pipeline at onshore Refinery processing

remain capacity fields Forecast Mexico available potential production in Mardi ventures. to provides region. development activity opportunities We surplus Gulf offshore a on growth this pre-invested Gras growth and to bullish Mexico of the Mars of Gulf form and joint expiration from see on of lot the the from pipelines that and leverage

Confirming strategic are is that with Mexico. inventory significant business chain assets and such a including seven-year BP. included In relationship candidates underpinned half distribution previously drop and opportunities midstream assets optimization to in plan organic development of drop supportive drive our addition, growth execute These is we the strategically First targeting flows, to upstream strong extensions all do Offer the of optionality evaluating the as as to tier using add are drop predictable to integrated of many top value year, XX by distribution recycle midstream and product range provides and growth our offshore of we line with are a and a and scale for batching and portfolios communicated. BP's cash to years. Right located stable Inorganic this BPMP. provide to are this during or the The sponsor incentive asset BP's BP's a pipelines of have of second may candidates contiguous Gulf with highly downstream access of us we lower year in downstream having These capital down growth. alignment BP ROFO.

We continue to work the drop.

half inventory of asset anticipate characteristics IPO. expect assets will consistent be a our at that an asset proposition. of two and as the investment drop differentiated We dropdown pyramid align our in shown supplementary bottom least our initial size with be the include our We could with the or information tiers that from it

change depending asset to market finalized subject on as is conditions. course, Of progress and this mixes and the

financing our evaluate regarding anticipate will conditions. the We revolver opportunistic remain of on depending the use of market equity drop. and We facility. also flexible We'll using

conflicts place comprises reviewing drop. and The is directors. evaluating committee Our is independent materials committee the actively the anticipated in advance drop three in of down and

takeaway downs. by regarding drop the close again me asset Let reiterating you for messages future

many scale asset predictable drop tier that giving many a with of located with value with top to us access for us chain and for strategically large relationship distributions flows, strategic drive Our to provides inventory assets across of and years. opportunity BP exhibit down and comprises This future inventory its candidates. the are portfolio growth cash midstream the stable growth, choices

is focus on income. selecting assets Our qualified quality high with

questions. will flexible me you Thank it for listening optimum We regarding the mix remain over and market given environment. you now achieve turn the for financing financing let to to

Operator

[Operator JPMorgan. Ladies today our Jeremy roster. and Tonet question. session. momentarily from gentlemen, go with ahead Please, Instructions] first to at the pause this the from begin question-and-answer your comes We'll we'll time, assemble question And

Unidentified Analyst

on Jeremy. Bill, is for this morning, Good

you BP do BHP's have purchasing expect a Just given become there? curious, could Permian in how the acreage BPMP involved

Rip Zinsmeister

did Good morning. Bill, get right? Is that I that

Unidentified Analyst

Hey, yes.

Rip Zinsmeister

your Having the get has been Okay. far approval, the $X present say period yet to of yourself of combination over first, not said interim BHP BP there's in a ahead about on of that, waiting just billion kind to signaled important assets. that in to so infrastructure we're $X skis, Well, talking approved. the hasn't billion and too let's antitrust market

I to unencumbered position, occur. them BP needs because organically near-term. it's attractive dedications. It's as very relatively we lot out think that a a to acreage have grow bias with a of build There's

our it to it building into terms self freedom and BPMP. in partnering, ample have we of dropping So eventually or choices operate

As also that drop greater you drop multi-year BPMP, have it like assets. our we R&M our using plan extends a down inventory, down know, optionality. creates we it, because comfortable I'm

don't So more I near-term see in the for be will long-dated. us. And that BHP featuring

Unidentified Analyst

And declined asset that for share through thanks. looks volumes more Mexico, then Gulf switching year-on-year. little rest the Great, the like Caesar a Could XXXX? expectation and you color to of the there of

Craig Coburn

how Bill, it's here, are Craig Hey, you?

Unidentified Analyst

Good, are thanks, you? how

Craig Coburn

play into came XQ, that there. we Mad had the Dog tar

expect do some Caesar things we XQ more that that Caesar, longer in around. on-stream are the of there. terms turn XQ, of recover in is So after Dog But asset that term, the would a and and mature Mad

see will we but some Dog X, eventually, with later in decrease on in coming So time, that volumes back up Mad it years. will be over

Unidentified Analyst

one think strong one, then not last be over to that seemed rest that Diamondback year? said guys XQ Okay, just then room to the the continue And for pretty was there of would and and you outperform XQ XQ quarter thanks. strong. way Is for I I and this sustainable

Craig Coburn

deeply call Heavy, [indiscernible] out, a traditional that, creates heard higher Bill, basically what creates on some So went drove when on which I a it that Canadian then whispers call haven't diluent. higher goes crude interrogated

had we or kind that's people forecasting effect producing in that. a But There We're to conservatism and/or some as think may I of of trend. So through the much returning of turnaround. kind going be knock-on approach. not safer other

Unidentified Analyst

questions. my taking for thanks Great,

Craig Coburn

It's to for again. that that. Bill, build the Craig I'd we around in just Hey, SX. signaled on XX say XQ

in be that range. we'll be we'll to close think I that --

on to planned going XQ. So it's back it's in SX to be to still it in return going the -- where we

quarter. So but just seeing there, first we're the and still as strength as strong not second

Unidentified Analyst

Okay, thank you.

Operator

your ahead next question comes Our with from Please go America. Bank question. Derek of from Walker

Derek Walker

morning. good Hi,

Rip Zinsmeister

Good morning.

Derek Walker

business opportunities development the organic side. just Rip, you some on mentioned

you us give And that is was patching of some bit perhaps of opportunity X% just set. going X% supportive Can of a that that little growth annum extensions more Some do little per to that opportunities. a bit a sort sense of of that or and more? see line you

Rip Zinsmeister

is absent the X% So kind X% CapEx organic any to in spend. growth embedded the of portfolio firstly,

-- Mad their going to [indiscernible], with producer Kaykus you Gulf what's in simply Dog Atlantis we pretty has that's the and this click So X, off Norphlet activities can had play. happen X, have much Shell year,

of really we that So us. activity and see and from sets existing not development growth all our organic rate customers coming

terms X.X and high-end between X.X. of X.X and in then the inorganics ratio keeping our Okay? for And of mindful BPMP, managing we're coverage

you will consequence of a build cash. that As

some we singles, to looking so speak. So are for

extension want it line have competitive that's early where at, engineering phase, We talk like because not one would but project, to we a it's market. is

would because the in market. market. the that interested others XX% So Diamondback, Diamondback, the pipe back really given be And we've seasonality equally just of service to full look continued servicing potentially then diluent at is

are We first may assets affects drop. that mix, the certainly have in things the in some it ROFO our other that actually feature but

So we'll subsequent in talk about that calls.

Derek Walker

Okay, great, thanks…

Craig Coburn

it's Derek, Craig.

Derek Walker

Craig. Hey,

Craig Coburn

Whiting Craig the X% offshore very driven of pertaining running here. of And organic use Rip is just The well. by wanted to -- the to I pieces. increased as about well the growth Heavy to emphasize course, X% Whiting. onshore, talked and is

was it think their BP out and announcement. running second in I came quarter about how well talked

see the to as Whiting consumption. its at that growth assets increases on So out track we onshore coming organic of well heavy are

Derek Walker

color I appreciate it me. guys. additional there, it, from Craig. That's the Got Thanks,

Operator

question [Operator Blaschke next with question. Instructions] MUFG Securities. go comes from Our Barrett from ahead your Please

Barrett Blaschke

Hey, one. guys, quick just a

As it probably we to if us at getting how whether get any as onshore, breakdown, into and that of closer like? you would will kind we it's of of back-half first can kind offshore, of mix color the drop, give the are year the all what so, look mix both, and

Rip Zinsmeister

committee my a front answer things just have okay? question, the MLPs smile face should couple well, them. on I is, we work, put of their in and how We've the I have read a let have of Blaschke, this handled because other short do conflicts

And passed due diligence so, have they the all stream.

drop And next a We of are accounting that final sense at margin. like the about market also the pricing. trap notionally in talking time on may as makes to in or the which consequence, I articulate are a just running change don't fact the change we two. kind mix at actually bit something feel month a And requirements, the in it this may point in of

Barrett Blaschke

That's fair. Thank you.

Rip Zinsmeister

Apologies.

Operator

this gentlemen, Rip to I over in conference at and back Zinsmeister any Ladies additional for questions, no to the like turn showing remarks. time, would closing call

Rip Zinsmeister

you given our unitholders. just in our hope sense the sustainably Well, like thank here. this distributions result, are to much. offer I why confidence That's I commitment you to meeting quarter's growing very we to

the of by the and As we we the to drop, our growth of model, on strength as continue first of support forward work demonstrating our look sponsor, deal strength their our to evidenced and further us. BHP

for the future. to you So, I call. forward joining thank dialog further again you look in Thank the everyone.

Operator

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

your disconnect now may You lines.

BP Midstream Partners (BPMP) 9 Aug 182018 Q2 Earnings call transcript