BPMP - Earnings call transcript Q4 2020 | BP Midstream Partners LP

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Operator

Good morning, and welcome to the BP Midstream Partners Fourth Quarter 2020 Results Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I'd now like to turn the conference over to Geoff Carr. ahead. go Please

Geoff Carr

good fourth and Welcome BP to Thank and morning, full Partners quarter presentation. year Midstream you, everyone. XXXX results

remotely Designate. Zinsmeister, Rip Coburn, Officer; today Executive Jack me and CFO Craig Financial our our our Collins, Officer; Chief Joining Chief are

let your attention begin, cautionary to draw me we our statement. Before

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

We to our financial presentation over Rip, Please SEC available These to as measures. filings disclosures measures. you. and this to financial well these documents important are also on in reconciliations our non-GAAP our refer non-GAAP today refer to measures, as website. and to supplemental for the related information presentation

Rip Zinsmeister

and Geoff, Thanks, everyone. hello,

I to think a goes year have down any XXXX as that experienced. other we it's unlike say fair

human the and brought the dealt of COVID-XX with have broader macro and the our the to environment. pandemic We has tragedy personal it uncertainty lives

the major responsible have to utilization, demand refinery the refined For the for hearing BPMP, while and on COVID-XX practices. industry impacts prices production execute for maintain of offshore products, safely and ability COVID-related producers work projects, the commodity we navigated

year everything We Through solid stability of resilience remaining results and financial at Gulf for shut-in core extended had Atlantic operations I Mexico, a in the dealt year testament we the reasons, of thank we also temporarily storms like the with our to delivered consistently a remain sponsor to uncertainty, throughout Hurricane you appreciate tough XXXX, this support which would and unitholders. at season have to business. us strength named with We operational support provide many you well environment, into the the the do. We delivering of engaged BPMP demonstrated require financial our what throughout have producers production and a and backdrop. we hurricane to of different to BP and number season. Thank with against was we terms to quarter for of all everyone in operational challenging throughout ways impacts you. of historic offshore of in the a that fourth in with and in will dialogue safety single a safe underlying XXXX. the the

in centers look to a realistic. ahead, also we have fourth as continuing are are the still And evidenced out, XXXX. of XXXX As we go, late particularly but way optimistic, from in quarter of demand first vaccines several we key well COVID-related restrictions the as rolled by we're into to quarter

the record. latest We encouraged and we our I'll financial brief we are the guidance year. take over start will by results, at before your today our you operational up through end our some a for XXXX. past build then key come briefly and sum I'll of areas Jack opportunities to with see provide will questions. you to Craig though the take track recap with back

with and and stability. to monitor priorities; deliver in this and operational operating safe reliable second, remain and through two the XXXX, on appropriate; We focused to a our and the we as safe of operations. enter our focused we first, the financial practices partnership maintaining XXXX, on assets Protecting other operating continuing and During personnel safety as adapting manner. local COVID-XX pandemic health strength conditions the financial stakeholders

result, debt We no term other restructured progress facility This range a year. of year distribution growth top-end for X.X over in a principal BP our prior by year. $XX a million, the challenging early five pandemic times. compared target cash payments great with XXXX around X% quarterly XXXX, distribution until full times in times $X at outcome We with the COVID-XX approximately coverage distribution several unitholders expense loan the during XXXX, XXXX. then we in maintained to XXXX. areas delivering maintained XXXX And X.X increased to XXXX, prudently, to XXXX. At and this robust level we the the full our net as year made a interest as at January Specifically, of in we built well. In a through X.X million with ratio due our distribution reduced

between balance agreed During right year new our with relating a arrangements whiting disruptions onshore We and pipeline three BP these strike affecting BP securing onshore supply to with refinery the output. optimize new we network, providing third while quarter to our significant the to believe of flexibility MVC partnership three XXXX, protection the in arrangement pipelines. the maintenance from for refinery and the

this will our Gulf and offshore of assets. sponsor the pipeline as Mexico strategy reinforces are that, to highly operations. time XXXX, importance with new to a what both importance over the and partnership's out last his Craig Refinery the forward During of on it going production which assets described be believe the call. laid hand in as for BP resilient their integrated focused Whiting With these they and We I'll hydrocarbon results

Craig Coburn

Thanks, Good morning, Rip. everyone.

financial and As delivered mentioned, Rip in we solid XXXX. results operational

this also remained X% of that important the the Gulf for to you with financial the weather XXXX historic investor That's cash Reflecting XXXX, during we XXXX. changing our deliver the of year. around outstanding result adjusted throughput, resilience, season, built provided Our ability throughput EBITDA year pandemic. around our underpinning an events with multiple demonstrated had throughout navigate. full line at of year given Atlantic results the guidance operational of lower start stability, year Even It flat lower COVID-XX the a we compared financial conditions and our and and was was proposition. Cash broadly lower. gross the element to to compared were resilient, we in impacts hurricane available full only to an though, Mexico X% during in distribution

in by our pipelines the previous quarter, by favorable lower fourth increased detail, December, River the supply the Mexico Enbridge December, XX% undertaken to during Gross throughput These year X.X quarter, higher fourth lower consistent to third was XX% quarter was during at barrels of XXXX the Delta from the offshore quarter, as gross of throughput fourth driven results compared throughput facility season. primarily broadly third around during quarter although oil by was build Refinery were on throughput in Canada Whiting tempering in Gulf operational pipelines of in centers to of million events the than remained continued barrels. the expected quarter continued Zeta due Hurricanes our demand. approximately the during This higher throughput adverse crude XX% on BPX and weather key mainline Appomattox the offshore the optimization favored peak on X% with partially in was around from Rouge River on of third the second pipeline Canadian quarter per was partially compared fewer Rouge reflecting be some throughput the quarter, offset on the particularly by also X% at producers refined by the with of of higher quarter around to in onshore Throughput demand XXXX. to the Apportionment a October fourth sourced the restrictions quarter, diluent on quarter. ahead on throughput Diamondback. impacting to of Full increase. maintenance slower this throughput and products production COVID-related half demand impacted XXXX. with reinstating on inventories Diamondback equivalent was the several total day facility. compared compared and Gross lower in higher offset Looking during planned impacts the ramp-up Diamondback in more Throughput

XXXX. gross pipeline the full around of for producers. the facility. the products refinery including major approximately maintenance This was lower, oil on facility year Onshore largely X% compared year, of multiple equivalent demand partially previously well continued impacts utilization. day, COVID-XX due For also throughput throughput Appomattox refined adversely of the barrels as pipeline weather ramp-up XXXX, the mentioned, Mexico, and of by as the offshore projects was lower as by offset events the to to by during was total X.X million planned was in throughput Offshore Gulf impacted per

$XX.X attributable Turning was throughput XX% to another resilient X% cash lower quarter above as to of associated full fourth with planned pipeline guided. financial Net mentioned. adjusted distribution attributable the fourth slightly inspections higher quarter. in revenue, than only lower distributions with On results. River result, flat around equity ventures. and increased the minimum the portion $XX.X from from the the of benefiting quarter quarter during method of recognition third the the cash the interest basis, partnership the with previously XXXX, net the million, XX% income for around EBITDA lower was year investments. volume lower broadly the attributable quarter quarter around from commitment million, higher XXXX, with the income a quarter partnership primarily million, than the to the partnership year pipeline Rouge Costs revenue quarter fourth to in lower consistent reflecting Cash quarter compared available for onshore incurred was than to of $XX.X EBITDA for full level This on for River for Rouge's during our reflecting distribution XXXX offshore third the was XXXX. the available Adjusted due was as to was and lower previously joint quarterly third pipeline fourth associated for volumes of XXXX, XXXX,

of the challenges that Given the with quarter a our The Directors was all guidance, of and $X.XXXX unit, per of year with third XXXX Board of was achievement. general XXXX. fourth delivering consistent distribution quarter great of a partner consistent our consistent distribution of level result during a the with full declared XXXX,

the as distribution we the our at payment in target to for distribution, time of our which at range X.X growth the set distributions Rip The delivered Earlier of the ratio our And subordination we coverage the unitholders a over month, track period of X.X fourth milestone, above excess year around was confirmed robust XXXX of distribution end XXXX. paying was speaks the the full quarter As slightly full ago. times. of distribution, those this end around times. X.X year top with coverage following years record this mentioned, X% times, Rip the ratio X.X of distribution quarter IPO our over of fourth three to mentioned,

BPMP year me through the to our team, challenging who guidance I COVID-XX. instrumental to a Finally, our during retire privilege on team, of a since circumstances. so rest final engineers, to this for Jack provided and and been would been to would last absolute And especially BPMP operations personal is the my an since that, I set during BPMP BPMP It to with over thank the most I would hand me has and for have Sparkman, the IPO IPO the year before his finance And from support the as have who schedulers for to of guidance our quarterly in results will serve note, Rip XXXX. this steadfast operators, Board. frontline, CFO. challenging years Doug like environment under the I finally, XXXX. and amazing thank like the Chairman, three with my keeping like operating I the also in you past safely with our and take through unitholders thank

Jack Collins

hello, and everyone. Craig, you, Thank

a As Craig start financial position XXXX from of mentioned, we strength.

remaining one and conservative built assets, An financial MLPs. cash. investment-grade are a framework, few well sponsor, sponsored that a strong rated the high-quality distribution with one MLP has underpinned We of traditional

our unitholders. manage to we IPO, year we have manner thoughtful, will a creating done out disciplined BPMP continue in for our while since and As value in year

base. quarter laser what resilient provide of Today, all in doing distribution, our will delivering with to do performance as distribution assuming going you we EBITDA, year say operations consistent ratio, asset and our us. level full available to from And XXXX. will a We the XXXX we we coverage cash XXXX, high-quality maintain on expect come for distribution are guidance fourth our and safe adjusted have focus from always stable, for

We available the based will be XXXX. assumptions. also quarter of with guidance full these distribution, on full first to cash year Starting we consistent year provide expect with XXXX, EBITDA broadly and following for for XXXX the adjusted

throughput increase on gross pipeline First, higher for million are sponsor be XXXX, expenses due higher premiums, variable XXXX reflecting flat throughput million from expected pipeline in in to higher in BPX. expected the compared to expect our and increased throughput on an onshore onshore associated we primarily be with with to increased XXXX, Revenues our insurance $X broadly costs to the XXXX. pipelines are increased portfolio, Omnibus with Costs be to to and pipeline inspection BPX. paid between $XX costs, higher onshore fee

pipeline offshore our to next portfolio. Turning

higher in Phase start-up of south throughput offshore expansion for the with an pipelines, full being around impacts to expect gross that reflecting full expected expect pipeline from the onshore normal season We a weather a allowance X of portfolio basis, pipeline Atlantic remain Gulf throughput the experienced portfolio available million year equivalent year production for year portfolio. portfolio to of facility, investments. the compared near in On project, our we with hurricane from activity and full generated forecast ramp-up day. higher for offshore statistically between equally of XXXX, per X.X be with on the the our offshore BP's pipeline cash our normal Mexico Consistent equity we and gross distribution in XXXX. throughput hurricane an barrels higher with Overall, balanced XXXX Thunder aligned pipeline Horse above we oil distributions is Appomattox expect largely our of our method in year

and we revenues our opportunities. to in Onshore We stable including which on the to River and Mars we progress Rouge next expected previously growth fee-based the generate organic continuing returns. plan the capital Pipeline. have the projects We capacity that an growth These to a of mid-teens being capacity portfolio of Pipeline, in are of funded outlined these by XXXX, projects producers to increase that progress. is Offshore Turning are the projects organic working increasing

coverage after end times. $XX to million we benefits a consistent expect between in million quarter fourth from realizing we be the at organic funding implies mentioned, growth the This up XXXX. assuming X.X We million $XX $XX of level I hand investments top expect our the even have start at In that and growth our organic distribution cash to these our these progress to X.X of earmarked XXXX, XXXX from ratio to to of just year-end XXXX, distribution and by of increase the in other the opportunities, with to target range cash budget, of on end and the $XXX XXXX. expect by million XXXX balances we

first quarter briefly XXXX. Before touch on for guidance Rip, handing to me back let of the

due Increased winter producers. than and offshore impacts, Cash on volume maintenance major be River quarter River be the fourth our throughput and on estimated continued to with lower We is the Rouge quarter, is flat be lower until restrictions by is pipelines lower primarily are above Enbridge to projects, in including the of is fourth throughput due fully of financial fourth levels offset EBITDA adverse recognized levels to is due lower pipeline than Rouge's to COVID-related from the expect mainline lower minimum gross due to by offshore volumes absence on for available facility to primarily commitment. conservative the of peak BPX higher also broadly relaxed. quarter, on on seasonally River Appomattox to forecast refined with be products supported to throughput fourth the its demand the diluent forecasted of expected the anticipated Adjusted higher XXXX. be impact cash volume has absence the of be fourth by view the quarter distribution associated on of quarter, and throughput onshore lower of weather pipelines continued demand the volumes higher Diamondback expected Throughput BPX to expected to apportionment ramp-up the than Rouge. on of

first the to our of all of Directors our talented and value-adding XXXX the range Board We keeping we BPMP expect coverage deliver you, X.X within highly times, and see our financial of quarter updated comfortably Rip, team on working you to target ahead be to forward our on experienced in conservative look to Rip. the numerous to and with I X.X consistent framework. Back opportunities distribution progress. at closing, with ratio In

Rip Zinsmeister

Thanks, Jack.

a portfolio briefly has a So asset has well. continues BPMP and foundation, to that perform sum strong high-quality to up,

of operations Our the management focused performance safe assets. on our team maintaining and

He that we that see year, three unit year and as say Craig's we not distribution holders. we And coverage years, to plan who are sponsor than is his today our cash the quarterly of the everything maintaining resilience after going since sheet risks COVID you set for our the what We're and we has collectively Our reflections on CFO position results miss has the we a are delivering you continue our to going operations, balance and throughout The meant IPO. and the of is partnership, that flexible. thank credibility least, financial the BPMP. has ongoing for over more have doing three BPMP safe for command Craig, have and challenges transparency of focus liquidity to delivering transparent and built and the ratio you. as of stability but the community consistently years and investment and strength navigate strong to around BPMP. consistency been do this opportunities brought operational financial supportive value underpinning This final finance. last strength we and of done of being financial presents, all

of call you usual, call. with today. our results speak you you, our questions. Investor your now for this for And team Thank over As everyone, to to further Relations are outside joining available

Operator

question Our JPMorgan. from begin Joe from ahead. now the will We Martoglio question-and-answer Instructions] [Operator Please is go session. first

Joe Martoglio

you Hi. question. for taking my Thank

that's could also, just are wanted of do to you balance or holders or right cash on growth building I unit to kind to why ask either And opportunities going a other you discuss on distribution through return forward? cash to like And feel special onetime exploring you thing distribution buybacks First, the the sheet. now? the

Jack Collins

fair Good if a XXXX December challenging and morning you year, Joe. to quite compare, Probably was Thanks where for the say April we're sitting to now. right question. say,

at respects, like look in many plan, it a we the feels As balanced. it's plan,

we the it. we the market in is return seeing want balanced dips, what against right to So, seeing industry, comfortable Biden cost going are ability get the to Whiting so yet We're challenges we'll get nine to we've now? heavy feels decent to all of that Offshore the apportionment, the some of there. Basically, project six and has terms agenda, been the delays see full Shell. the say, Norphlet has presented and like can to delayed much months, in COVID

make my we're in the And of So, our or we wait wait-and-see clutch okay? is the think slip I together with deploy bit a with Board, quarter distribution and decisions. but we fine. to let before a to respect think going we gear, out, cash, we're back any I opportunity into real attitude how looks two a have So, to

Joe Martoglio

makes you see a kind I right I Okay. you guess, range? back towards expect sense, to that's That EBITDA is how XQ, to of, long-term on times some go Do yes. you the that. up you mentioned of the know the just you then still out. debt helpful. kind target? And kind things follow-up And that think worked Do X.X of of

Jack Collins

this seems in tough of difficult like working weathered us We've We've well okay? to It storage storm try a in I'm on April, and Other in had at going period. to so. very financial bloody this conversation the did that point our the worrying some of hard very through about and bore Board industry a than is rest get time. kind frame financial about very back with volumes frame, our the changing no pass -- to normalcy.

Joe Martoglio

taking for That Okay. Thanks my questions. makes sense.

Operator

Bank America. Instructions] from from of next [Operator ahead. is Derek Walker Please question go The

Derek Walker

last I morning Good I time, again a but wish well. this retirement. Craig, with your congrats on everyone. you It you working and was mentioned think pleasure

Craig Coburn

Thanks, Derek.

Derek Walker

announcements they've events? bit Ocean how are if one. the the that's actually of the of schedule, Management. on just have about is Maybe announcement higher also I of that something lease some think just projects they think a the Mexico. year, of step thinking Bureau think in a Just see pause if about you that around of of side from two the wanted then Maybe put opportunity I can the one, energy level things. Energy little been came that's And a you kind an I I of pieces you just there, Gulf start that rest of with guys wave maybe around more with how kind just area renewable the March into to to looking guys an out the And of at, offshore Thanks. question

Jack Collins

I'm -- sufficient a years development of to morning, am we agenda. So Good on last how Welcome. I'm of basically the inventory going okay? And then producers. read, and these Biden will right? see years read, speak the our dive GOM that deep of positions we and undertake and industries, industry and the in I Derek. in I've a what work, certainly With leasehold the seen one both fields, has respect to past, and with options there's it you've years, could of done mindful existing full terms haven't a and I've decade portfolio sure in

are leases. So far, their to understand we what respect with plans

be to elements determined. mindful about TBD, we So there that other to may need be be

wave qualifying comment on a can't I income As really energy. MLP,

I'm think MLP. inside I one don't So that going on to one. the fits pass that

Craig Coburn

can Alternative Energy little I guess, comment Derek, bit of on having in CFO past been a I this, a life.

energy So XX years look probably wave we did ago. at

moves going we but something technology pass we'll it's forward, back but on, then, You things because change. never on a know took that way that see

Derek Walker

different components Thanks I to the Understood. just one there's cost a those a of each of maybe have of Do the that. a on there. think you sense And million, $X quick mentioned increases, breakdown for you $XX and guys few million just contributions?

Craig Coburn

Yes.

insurance biggest the have to then segment, increases and be And some did normal the up. of biggest on at increase. this those then and line for cycle we of gone the Jack did a I costs lines going cost -- years. costs is generally we've XXXX, That's every we chunk our pause some one. four on just that main as we The people XXXX. increase mention on have take faced inspection everybody's a took I'll So And Omnibus did of the through got of with onshore. part our the come look bit, have for piece the think one It's costs

I good was think in, do, that for but XXXX in kicks a that for thing very us. BP to

those carefully inspection So three cost the combined to be very come the are We'll cost increases. where things they see watching in-line in.

I here think we've seen on some good lower days but early anticipated signals, they than may it's that. come we've guidance, this in for

Derek Walker

it. -- just then clarification. normal talked weather Got Craig. Thanks believe also do factoring lines And having that And -- sort assumptions. I that have you are guidance more planned for time maybe what outlook? XXXX in the But one the just of your any assumption in quantify producer about you is? you

Craig Coburn

do Jack, you question? want that to take

Jack Collins

Yes. Sure.

to First, Derek, impacts. and plans of we regards producers' kind other don't with really turnarounds comment on

if just statistically the a on we're overall, back which is number of five- XX-year at you normal to expecting weather of average storms. -- year, think I look kind impacts, So the

clearly XXXX to So would XXXX. lesser impact relative a be in

Derek Walker

you. the Rip, Craig. Thank it. back Got I’ll in Thanks, queue. Thanks, hop

Craig Coburn

Derek.

Derek Walker

Yes.

Craig Coburn

of did impact to CAFD. worth that million around the quarter. follow-up one was for through in hurricane million say did I of mean, that I -- that ranges quarter We saw third our Derek, similar $X you. on the we probably $X fourth

in financial performance BPMP's hurricane. that was was impact it on So XXXX pretty big a

year. crossed year have So a for better this fingers we everybody,

Derek Walker

you for guys. Thank there. Appreciate it That's the Excellent. me. clarification

Craig Coburn

Derek. Thanks,

Operator

question-and-answer no session well as queue. concludes There conference. more questions are in the This our the as

Thank disconnect. now may You for attending today's presentation. you

BP Midstream Partners (BPMP) 25 Feb 212020 Q4 Earnings call transcript