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DCP Midstream (DCP)

Participants
Irene Lofland Vice President-Investor Relations
Wouter van Kempen Chief Executive Officer
Sean O’Brien Chief Financial Officer
Shneur Gershuni UBS
Jeremy Tonet JPMorgan
Jerren Holder Goldman Sachs
Elvira Scotto RBC Capital Markets
Dennis Coleman Bank of America
Michael Blum Wells Fargo
George Wang Citigroup
Selman Akyol Stifel
Call transcript
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Operator

Good day, ladies and gentlemen, and welcome to the Second Quarter 2018 DCP Midstream Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct the question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce your host for today’s conference, Irene Lofland, VP of Investor Relations.

begin. may You

Irene Lofland

under Good Midstream Gigi. is and to be welcome webcast website of Thank dcpmidstream.com. at quarter morning XXXX DCP accessed can slides second the call Investor earnings the section and our you, supporting everyone the call. being Today’s

that we like Please factors risk deck out to for forward-looking in that our filings. business. to SEC Before the of that includes second today the certain discussion partnership’s begin, the of due our Actual statements. to I’d review statements, slide complete forward-looking latest a refer results risk point use our describes may differ affect please factors, and listing

appendix CEO; speakers today. which CFO, the will reconciled will call and over nearest our to section use and will Wouter. questions. slide. be their the turn after the take measures that, of van Wouter Sean your non-GAAP We With the also O’Brien, Kempen, measures, we remarks, are GAAP And in various to schedules I’ll

Wouter van Kempen

Thanks, Irene, joining us. thanks for to and everyone

results, to our strengthened million, call. range between second will an later XX. which half times $XXX June of and commitment coupled generated million, million with cash adjusted we We ratio we to momentum the our deliver $XXX strategic for Notably, balance as have driven continue and and X.X into results, quarter strong integrated million our DCF with EBITDA translates fully improved excellence. strong our by by to the the on of our this to of of times operational highlights, XXXX illustrated with guidance the $XXX $XXX Due to X.XX solid flow sheet to in distributable ratio which Starting and of coverage the expectation distribution second impact quarter. of Sean demonstrating delever discuss oppose execution the strengthen and leverage DCP second the continue company, financial of year, portfolio of we

of XXth efficient per Express important in than record we in have which plant Our adding by we’re dedicated we’re to optimizing ahead This the X announced successful The an in track our day growth Bcf up current capacity step another stronger and production Basin. the asset completes progress our to bring on pleased is very doubling construction record our our we’re to execution. in seeing Basin day, ensuring recently months toward and expected Mewbourn customers. and pipeline week, subscribed. X earnings more Permian, our portfolio capacity customers’ O’Connor our producer focus good barrels diversified Gulf now all little future of plant, of approximately capital capacity on under per Hills to the expectations. meet plant a for capacity three margin pipeline ramped two our we’re These to advance of XXX,XXX total the areas, to day, to volume X.X fully not are growth existing capacity, Bcf basin gas named the the takeaway Across base, with investment. our growth the bring In future our we expanding online plant timelines. continues proud to Sand is where providing drive and needs DJ per of of plans bright continued asset DJ making Last Bighorn. And up Coast X.X

talk deliver Sweeny the top Phillips capacity and an our extent to updates our excited next our driving increased flow. Gulf on to the projects. competitive ability in increasing of up by strategic fractionators in of growth tier Lastly, to utilization interest vertical to a our meeting country’s cash Coast. to These Hub our ownership latest securing also its advantage the option elevating to XX’s Shifting integration two within some recent further by are basins, the customers’ on about slide, plans we strategy examples recently announced growth NGL acquire to I’m comprehensive our demands, XX%

for As we resulted transformed to logistics about with EBITDA. adjusted investing and approximately logistics and by historically last augment footprint years, This EBITDA balanced G&P. now past XX% our XX% large comprised have asset marketing adjusted in over our in a strategic of more accounted and fee-based we of six much our position, the our has discussed shift gathering in processing which portfolio assets call, XX%

our select on returns. diversified which which to lower we map, have see choices projects, integrated we are terrific provides that footprint, risk capital, allocate a can you the and us best As allowing higher where can great on and

to continue million XXX our week. DJ online in Mewbourn day the position by see just and tremendous the cubic bringing last strengthened Basin plant opportunity We a X feet have

Within fleet total is a the the increasing transplant, X basin, to over Mewbourn our day. capacity Bcf

customers benefit DJ we quickly. All Basin capacity. from this expect immediately of ramp our increase volumes to in And

into plant deliver announced all accelerations to ahead as our projects. service continue we We’re growth on excited bring of this to

completed construction associated X went entire our of man feat. base. dedication million and have across contractors employees a That want free safe over is field an we Importantly, asset And infrastructure operations incredible and to hours. remarkable Mewbourn I our injury its X to highlight

of expected up quarter on X Looking our is a future, day, of XXX to in second XXXX, service the million the day bypass. to including capacity be with in million plan, is construction a to O’Conner underway XXX currently which a

our bypass. important of total to a current just is the of Basin the all we Additionally, meet provide story, double approach in the in Bighorn, X.X approximately and producers. But DJ day projected here customers. our result DJ plant up our day, seen other really on as a expected a may well more bottlenecks which capacity the is capacity. in other expansions processing is needs comprehensive constrained areas of focus or to than be in further At basins the some we will capacity some for a Bcf X is for Bcf basin singular future DCP, Bighorn with progressing our plant the XXth including Inclusive of

are We NGL add meet will a reliably per we’re are XX,XXX DJ, than timeline, cash in that gas the of examples, barrels and volumes day, in the with flows NGL we to driving Cliffs takeaway the day our months NGLs expanded Hills increased midstream few for pipeline Sand highlight in integration wellhead expanding Southern three to the And Hills in to White announced Permian, resulting extension customers from capacity advance and growth forecasted. barrels looking per the me fourth And to via earlier vertical XXX,XXX projects markets. NGL need ensure downstream let takeaway through the our quarter the XXXX.

Slide to moving Now X.

chain fee-based to to our of XXX,XXX over will Sand is in capital markets Hub, allows I’ll also an The Phillips be our extend add XX% that, with it our option ensures to value we to the for we the million our of as per market logistics option important strategy, partner with the the in-service Sean the NGL production, a With growing fractionators way XXXX investment further take not through not a is expand our Phillips further up driving very financial multi-year component Bellevue the even customers only to earnings sheet XX our Gulf opportunity but balance region. new petrochemical Mount in exports the fractionators Hub Sweeny and an Hills interest in it alternative Texas XX, facilities until Hub growth. turn pipelines, capacity and this both provides larger fractionators. option adequate date with fractionation extending acquire you Sweeny $XXX via as critical constructed relationships within efficient ownership day NGL This And barrels our Coast. on Coast exercised in at its optimizing in us and to We’re to growth results. footprint these on to partnership secured recently Hills Southern Sweeny strategic and Gulf to growing

Sean O’Brien

Wouter. EBITDA portfolio. component Today financial adjusted I’m million QX second to of on robust cash our Thanks, on distributable $XXX by of deliver $XXX diversified to X, every with we strong Starting commitments, DCP’s million. share Slide quarter the details of of flows flow excited our cash from continue and driven

segment million through accelerated on in all increase reflecting our strong continued significant of quarter, we contributing additional across logistics of online fee-based QX the our quarter, moment An up of Sand solid these first built recovery expansions earnings an brought growth second additions the marketing cash driver is $X capacity capacity production added volumes NGL We from from in filling Our pipeline. to DCF Hills. utilization in ethane higher pipeline the additional quickly and saw flows we new the are record QX. and on

our from with and also year strong Turning diversified growth focus improved gathering benefits on our to driving processing we base X.X optimization last onto DCP cash our efficiency delivered driven more flow transformation. margin and our key by asset and from reliability segment, over

have across towards utilization volumes Additionally, our and substantially Mid-Continent, in up our of higher driving assets positions both Ford projects DJ, capacity new Eagle online. and quick existing filling coming G&P the

growth quarter All year. G&P results the in to of $XX of last million in our results these drivers second compared

As reliability step call, costs with I quarter guide maintenance up spend, transformation were due on our efforts. coupled the last company’s in earnings up higher in our a and investments in expected to the second

of second QX cost Looking at we to half levels. the to remain year, anticipate the

performance take guidance additional our than about our in volumes mentioned through our And entire unparalleled year. the online online growth are earlier, deliver in to this to we’ve extraordinary earlier moment midpoints portfolio. the new driven X, is continuing As our seen $XXX updated connecting want Slide DCF the This to a $XXX across growth our bringing of and projects we remainder Wouter half value All results to financial $XXX and strong year of On the range chain. million. strong I to execution first on originally million forecasted. between the around million, bring we projects strengthening capital focus and translating invest confidence across as our elevating and by

Sand This and expansion pipelines, Southern NGL drive projects our terrific Cliffs our is strong up Hills Hills. volume year. are last multiple help on Sand over us Southern Hills deliver on XX% on via is extension our White will returns First growth XX% up returns EBITDA volumes and Hills

side G&P of our the Basins. saw On many we growth of chain, across strong Permian double-digit our value volume

best into was we The of Ford one see trend in We down volumes in last announced the Eagle a last the back basins And The capacity. by growth compared year, went grew continued on another the that plant XX% X volumes optimization last and reliability. XXX year, primarily Also quarter operational factors. week, Permian due to last second focus more year. Mid-Continent continues volume in DJ service adding country, day by to last with be continue year. driven of saw the of XX% to will continue newly where our with XX% from the Mewbourn to this up

However, executing prefunded growth recent of grow with us capital of our the year. the of a has equity flexibility. is $X.X fully progress and from quarter our we issuances million bond made diversified our metrics, on expected underscore successful X.X to low our portfolio, transaction. investment on and and times, X.XX trend high sheet to and We positive the a integrated of execution. in now notable midstream markets, markets first I $XXX improvement recent Slide the strengthening we focus continues X% goal risk the All with growth including by financial move quarter remainder with this shifted to continues capital transactions second toward through to billion coverage from and believe executing up preferred a Recently, X, to ratio on our of trajectory our in this demonstrate of to of execution the our want continued strength financing All volumes transformation company delevering our ample close On bank financial balance projects G&P return and leverage times distribution grade. liquidity coupled provider. forward

in fee goal manage we XX% and remainder program. our the for commodity growth of Lastly, recently fee-based to of hedge continue XXXX. actively and exposure, We’ve reached our the approximately hedging investments our

market Wouter for fee XX% XXXX to opportunities and on And in growing add logistics about layer XX. with I’ll hedges. that, stand here on today. base additional over as XXXX, currently Slide asset we to We’re watching close to our hedged turn and Resulting it

Wouter van Kempen

Thanks, Sean.

Year-to-date, coverage leading of higher quarter, DCF million quarter, yields lowered strong we generate $XXX distribution In the DCF. million us and second we leverage. to great X.X times generated lower to to On results, leverage a we our continue the generated $XXX of guidance. and strengthen first of

lower expanding our point, our As years, competitive fee-based risk the by advantage strategically two segments. grow and a logistics we integrated demonstrating our second leveraging balanced key In G&P and are to we’re portfolio midstream higher successfully between business. our few footprint provider fully as our short a return

footprint our we our we investing premier chain organic country’s basins. and expand As in value Yet, projects. to expand service a across customers our growth just the in aren’t

the undergoing we top we’re recovery transformation of Beyond basins, stand positive and growth capitalize to pipes, trends X.X, on technological automate DCP throughout digitized relationships. and a capacity as fully this work business. to via customer in our strong steel On with volume that ready massive notable with existing we our

all need we of continue term Basin, NGL to on disciplined the to capacity, the In bypass execute of gas flows. the in increase capital momentum our Finally, processing is cash DJ and that we’re takeaway long and customers. strategy while a increase our allocation for providing producer delivering creating also infrastructure commitments

focus to Sand down underway our value efforts, Sweeney transformation expand the X.X pipeline. chain. Coast business returns And today. component a our while our Thank for chain, and an value strong focusing line in Hub the integration. more construction Permian expansion open our and is questions. comprehensive two Gulf please transforming our we’re the Our growth for and new the fractionators vertical it’s the you maximizing plan logistics multi-year us continues Hills again, DCP Gigi, integrated both in And important option in further additional by joining within summary, for Express footprint on of the In

Operator

UBS. Our Shneur question Instructions] from first Gershuni [Operator is from

line Your open. is now

Shneur Gershuni

guys. morning, good Hi,

potential remarks, prepared some good the IDR posted pretty you glide ask off include do that what busy start But be But the doesn’t down some and to the be potential or noted your think recognize we should a I thinking discovery little here, conversation in from path the coverage, the what upside might it so timeline you Just is the even forth. you as bit a does that conversion little conversions question IDR on about simplifications to Enbridge on And begin? road. working now.

Wouter van Kempen

results like I’m Shneur, thanks here. So for – for and good the question your thanks acknowledging

sitting have do tremendously do kind thing our since We as that discussion is important to IDR more distribution number then history IDR unitholders. same and of position this IDR not $X.XX in IDR. the in an around mentioned the it you lowering you will matter We you continue the do have of giving said, to our will is the swear of conversion have of times publicly, I over where with strength, to confidently So time to still to but not when out us pertains the I when do a have and discussions we what does you coverage. may don’t at a believe of hey, company. lifecycle, right do. want conversion? IDR deal begin? is before And buying and the right to do with it’s the many the IDR a an And I do times time have a a a we of want we in The do to what as kind it’s conversation of told of to it. not you conversation, it if enough conversion about

We that have lowered right distributions we unitholders now. to to intend never our with start don’t and

haven’t markets is equity time, So since early we XXXX. when it’s the about been in the right

done growth that have the making without very that a team markets. terrific sure So growth tap his can the having Sean accretive finance we to to and on equity having, job we

even when this fairly for models. outlook us Obviously, outlook very already year And better, building you is doing start here significantly coverage probably about next good. is so mentioned building your is you year, this What is the for for that it’s coverage. and

all when it’s or know it between is around discussion on leave ongoing to special believe DCP, the continue ready So Enbridge, committee, the XX, to and do we that let subject. always it, way discussions about is Phillips be the people we

Shneur Gershuni

appreciate Fair commentary. the enough. I

can Darco sort ballot you initiative this in I wondering if on time, and E&Ps it’s follow-ups, mean, same the we your At share of adding of us couple capital. no like ramp things see expectation read DJ. some Colorado. the with there’s the a continue as of you be Just view of Do kind wondering additions all. able environment in capital there’s it the the in up. kind you’re to by change and opine of even I’m your of just to on E&Ps, regulatory take should – Colorado on at this Noble if

Wouter van Kempen

Well, being the midstream as largest, on obviously the Basin. of I opine what not if means side from our it the can and provider service in largest it into DJ Colorado one

[ph] question of let your number So, items unravel because there. try a a in there’s little bit, me to

every me industry absolutely through of gas in bit in let this billion. a cornerstone initiatives Industry of economic maybe first state’s little our give and go So $XX here over oil a annual ballot Colorado we Colorado, the years, start is a economy. with two has insight here total output

are jobs. We XXX,XXX supporting over

industry been voters. think of in the our Colorado So it’s of these this extreme a efforts opposed and kind in understand elections. the and past of are of they’ve pragmatic voters of They massive the like measures state types industry positive impacts there prior I

on If go supported he by XX, kind to Initiative U.S. Initiative running perspective fundamentally on just the unconstitutional. initiative either former the governor, called an Interior of it’s in put you side, candidate republican for Ken like to Salazar, it Secretary not the XX side of democratic not not

been us, is for look provide against signature turned very would levels. for any is if good the mitigating DCP and what risk And Property XXX and think always So or government important municipal opposed proactive in at I what record for is takings unitholders. pro that DCP, here we governments protection very for by we’ve There things, it things Initiative significant then that Initiative, a are also are you in that. Rights to ballot for

a stages executing that business growth. model allows We’re of for

We what increment can different not in Bighorn plant increments. hey, in table, is in, plant, go, XX more how do the into a, but every the kind capacity put on working of you are all Bcf about, chip that of all is it

an is that but here. yet here has an the operation signature important that before any industry think, make XX. voters agile for Coloradans, the single not it Colorado think the put and of to cart And industry energy So of respond a as State Secretary the get Initiative continue the not that for us jobs is any I emissions of can and horse carbon environment, to right affordable there to we right as well what’s these I outcome validated to will great paying Let’s lowering will outcome, get the initiatives. most pertains provides sure thing? to

think about bigger you yes, If about mean question and producers it their right. does absolutely, for what you’re

to You seen allocate Hey, speak rigs of are great I think does have. And about portfolio Basin. Permian, balanced in constraints is about, what the different producers talking Shneur DJ higher into the in again, we’re capital that the that now we’re some the we and about, going of therefore seeing country part it parts

the moved we’re things the of other producers going Basin very the asset into than are our pipes, Delaware XX% different Eagle Ford single don’t of that a majority to because the moving more G&P acreage vast the the makes of in the and makes area seeing are our Ford, in Basin meaning nothing of have XX% if Because up a a get you’re volumes. the up at rigs see have that of parts geographic Why? look you We people different DJ out earnings Eagle Basin. DJ activity more different assets the are Delaware place like Our of diverse. tightness out is in some company, the assets, that the onto

be all between to a to elections you here as take state. if chopped this and So together, be there’s lot and as the industry a November, in of wood an

well think current the the in DCP we are answer we us, that in playing will I that for have portfolio and going the for in diversified get to well things meantime environment. really is really right the

Shneur Gershuni

Other question, if I may.

you to guys going I recent to initiative on, when with turning first White there’s in the stem group. – Cliffs, Just believe open

a day XX,XXX potentially up expandable XXX,XXX. to about talked but You

You demand upsize been it away. and to capital. open to going, XXX,XXX? season Would XXX,XXX be right the thoughts cost of to more any for given effective the get sort there Has and to shifts expectations actually right around it initially in enough in just the demand to potential consider

Wouter van Kempen

little I at early a bit Shneur. this that’s think probably too stage, Yes,

open to to I wanted think ample, White it the doing DJ can are philosophy sure you season. from you a In was extension if Texas open the company. Hills Southern we company, is pertains what the as the Gulf pipeline. it were that, the there pathway via with that to Cliffs Coast know open do our a people make In access and we did end, go at could for all we and access logistics an

are very approach agonistic is the our to whatever want to that customers We do.

all is basically us and for what have we customers is, Sweeny for control what leverage season take Like and happen may But marketing the that will to sign the for want that transportation up with different So barrels did to we an we barrels all buy can projects. maybe X to with your us you those mean a potential barrels one that then with open don’t hey, and why don’t those is actually preferred and deal approach out it for into long transportation. we of the us. that everything downstream. outcomes That X. from say, other actually take Because and us and arm, outcome, Sweeny And transportation. the customers you DCP term come

additional barrels, season to extension? we their pertains market Hills signed customers, barrels. White up or additional did as the So some producers can Southern where out open come Cliffs where and for We’ve so the it

great become to project even season we’ve project. to barrels. XX,XXX after signed open going an the what take of the to be just will We without with start contracts control barrels This better and XX,XXX was a of

Shneur Gershuni

appreciate Really Great. all color. the you very Thank much.

Wouter van Kempen

Shneur. Thank you,

Operator

you. Thank

Jeremy from JPMorgan. question next Tonet from is Our

Your line open. now is

Jeremy Tonet

morning. Good

just the pull just shaping The start it highly, was given did later up if here? demand and so how here here. expansion potential? the Sand how of further any you’ve Hills kind to want quickly utilize now so there’s what there I your on see What with thoughts market seeing demand trends way you here, expansion are and beyond forward. to I guess given curious Just

Wouter van Kempen

expansions the Well, a I confidence. unfortunately appreciate to we but expanded we of of recall of forward, kind league. of can miracles pulled But where is at out Jeremy. barrels whatever like, also – already vote I on if day would we you try significantly, to all little or we’re today, time. here bit are this XX,XXX we at we’ve barrels do expect our $XXX,XXX a that barrels be XX,XXX do, have

there. significantly DCP hard that bit. also, where overall probably every move quickly only to barrels that is from get extensions we and not are tremendously some a of here in of in a bonds team current you, flow some the XXX,XXX put with not couple came not a as we day. good we We of to that our increasing where technology or pump through working I XXX,XXX can. the barrels accelerated pipeline the XXX,XXX going the Can weeks done. little to overall today, forward you’re here thing if station maybe by But immediately you our capacity from sitting dynamics your So by we’ve up we’re tell XX,XXX X.X as by efforts, that the

station next put So couple service. weeks for of every months, pump when over in we the six

bit. go little up Our a capacity will

thing. a is good that So

I at We time little the looking lot early with opportunities and what are that. the full extensions about loop all us you a for might on we’re talk what doing, what now bit do that, too effort loop, about obviously all spending at we right a to a that be for to of them be. the of next going to It’s are spoken is looking are another of answer

Jeremy Tonet

how that moving Thanks what as ethane rejection asset then bit across is it’s I like you here. get if NGL as here, your you’re comparing seeing wondering, for tier just and expectation far was helped to just that. out And pipes updated seems

Sean O’Brien

Yes.

of think a just $X in million if we projecting I some ethane were seen QX the somewhere put numbers you Jeremy in, we’ve I the recovery, think XX, mid-XX’s referenced in So about increased in now XX, QX from – numbers I uplift those that around range.

set XX so We both were of when that begun that We’ll the in and that We’ve lot look continues eye mid-XX that definitely The cautiously at some it We’ll better in change, had Hills seen rest obviously range, But going and benefiting the go we of benefited forward. improvements. we QX QX. an forward. see So optimistic. as as well. it. it’s Southern –I’m year mid-XX keep We our Hills XX, if the guidance. pipeline on us Sand both sorry, and

Jeremy Tonet

Got you.

a we XQ? look a trailed similar that year? year, type you of you stepped seems year? you then to of as last back up us far But ticked what want down It seasonality, O&M to Just just go the see there, if here. quick expect seems over to this quarter. Could as over the like balance Should bunch like that up it of of a remind this trajectory bit kind kind

Sean O’Brien

right the you’re on trend. So actually

indicated QX, call, if look So trend it we QX see that We this tick last you I year. obviously lot in turnaround of a QX noted, when the would us. close I to really QX was we think our at year do quite pretty on the you those of of quarters, for – be call, a up expense last heavy tend months reliability bit. to

up from Although as QX. bunch a we said,

difference continue. I think year that alluding we was it bit to that, one and the you’re think see going expect to on I little going the I a of call the that on remainder the trend is to

You’re got year, obviously, with year this a – We last Mewbourn growth dipped X. bit lot right. of off coming online, that a we’ve

some other that Hills. in even got increases And of we’re You’ve existing their all assets. Sand in things the working

look So the remainder I that more year. the similar trend expect to QX, of the

– we sure Wouter transformation going. our and expand continue it I on think, definitely up earlier, and also that keep efforts we’re We’re making mentioned to those

job in. the more amazing four offsetting coming lot an than offsetting last more done inflation, of So over growth a three we’ve years to than

that the We’re will continuing expenses in by they’re lot with we’ve things got as incremental Obviously, you, of driving do Eagle increases also, think Those and but drive to you Ford. areas the shared about a Mid-Continent the inline some in well. increases margins. the growth coming like

Jeremy Tonet

That’s pluses for G&P you. a differentials NGLs. minuses of of on I bit on more Permian through wondering, of then side, could, if helpful. side, widens you there’s on maybe both that sensitivity last lot one could the gas your one walk just basin and us Thank nat business topic a just marking and if your a and I the And basis out is on or there? kind if the discussion

Sean O’Brien

obviously, and we into at set couple year as So our sensitivities, things, we’re basis that of we time. differential some level the predicating go

think that the alluding gas what areas there. in the and Permian the gas, resettling less that obviously getting where we of right, we’re they’ve to has I the day you’re has for end like bunch wind hurt the for as us, gas the settled at

negative. a So that’s

minuses. You asked and the for positive

in revenue up value basis the the gone On over stream, that Waha And goes from gather side, bit. the asset in asset that that’s we do the from or the day value a has plus that in we that Guadalupe we have to see, Katy. XXX quite a

to and of So the settling bit has in pipeline. not about, of lose company. that as offset, the they’re actually really reasons, we – Permian want rest and on in you we think little we that’s what to That the And offsets well that fairly good about just a get that’s a excited. of us of what we be the an make played what quite or something actually They’re good that’s we’re keep concerned one think when continues the rest we’re to you out that. we collapses watch year, tightened need about going gas us about the fairly eye to out make the think basis for But enough on at the for really kind year. recent it if

big an enough. towards set eye We’ll those the if was that when of go wide. our we sensitivities our not and back gets ahead end terms the In revise We’ll sensitivities, sensitivities, on year. of it the base as keep

gas that there about in sensitivity sensitivity Just will two up will down. NGL or go go ways, think were

not driver a overall of it’s sensitivities. net-net our big So

Jeremy Tonet

Thank it helpful. That’s for That’s me. you.

Operator

Thank you.

next Sachs. Our from question Jerren from Goldman is Holder

now open. Your line is

Jerren Holder

just ethane with propane the you Maybe butane. know hedging, off prices and hedging have higher morning. given we’re ethane seeing. Good guys more more I hedge Are that Thanks. just days, you guys start historically, these

Just about you’re want to see that? how thinking

Sean O’Brien

we overall So Jerren. have

to layered on earlier on. I XX additional We get that we’re some referenced have starting hedges hedges.

remainder and our target good So news this then is the we’re the – at year. obviously, for XX%

really excited we’re that. about So

ethane As remain do do obviously, for We I XXXX been the The not we’ve massive and of or to the some hedges saw opportunities next the able strong and and to have heavier butane. year we you amounts and improved, crude. remainder end of that would ethane propane still think be a barrel, in crude of about year year, hedges next the tell yet this adding on position we’re the has level at you, position. it’s to

not getting there it ethane yet. but on So closer the quite

Jerren Holder

Got then to the that there And is payment there outlook cash in. potential on come any update for Discovery – it.

Sean O’Brien

the in change guidance No gave we on call. No. previous our

flow, – that Now follow the and you we QX. bit the if even a lower we’re little a were little timing in bit think our cash distributions tweaked was

We scheme back But expect the of that de QX. in things. come grand relatively to that’s in minimis

on asset. going given our basin. I it’s beyond full we next think on we’ve So, on the you into that as good know a Williams, volumes year Discovery guidance getting about the partners Obviously, year into holds. the and working still future still back impact

Jerren Holder

Okay. me. it Great. you. Thank That’s for

Operator

Thank you.

question RBC Capital from Elvira Our Scotto from Markets. is next

line now open. Your is

Elvira Scotto

Hi.

cash between So cash do follow-up you distribution? question, the of about think new happens from you increase? to first Or think an kind How returning ramps distribution conversion activities increased to to through flow in projects? finance so that the tradeoff retaining a versus an if future on just more growth earlier unitholders increasing flow do cash internally before IDR

Wouter van Kempen

here. Wouter Yes.

Let me take that one.

piece at this. looking we’re every single – think of like I I’m

enough to you if and make the I earlier, the a have great to going Building coverage, protect We self-fund If downturn optionality that right I buy would on it still think, and sure number do what building of providers believe with thing coverage items. the Shneur provide the said coverage will IDR to is then us $X.XX different is potential ask a optionality when now. provide to that question. with occurred come. optionality

So for coverage us is important most the I think building thing.

probably at our So distribution, and unitholder. from it’s would get the us increasing looking now, right believe what then not what we apart greatest the banks

to growth these online have the that and both growth So is great if funds, get have term. a obviously, internally we cash in to don’t and but capital building using denominator the great to as a into projects can excess you nominator we for markets, portfolio effect coverage, as quickly about And it generated now a go got continue flow use possible. long

the out it helps year. in So tremendously really

really right right focusing what here, on that’s now. So we’re

Elvira Scotto

Thank gas if there early kind the to more once you natural lead very processing sort side you and little next the bit little a the could will the flaring on see you constrained, but of dig takeaway year, and you. is in end touched this Permian. of year seeing And at helpful. in that what growing get the can which then, deeper. this you’re growth a If be of your less maybe on that Permian, volume gas maybe wellhead, That’s to on this concern

growth processing Just well that – your as takeaway? the as on in what thoughts side the your and NGL sort are of volume both on outlook Permian

Wouter van Kempen

a time, hand, – getting view, there’s full, gas it be takeaway can is it and a really, different and where could means and cup empty which the it enough what a get think And lot you’re a little water. an nobody could today. up. place problem. of ways a sand point – making champagne of bottlenecks or from would think like are because or and many capacity, half got the it’s could if bottlenecks between – the the is on bit the cup that financial adequate but frac on to likes it the and the be other of show so in good as shorter Yes, little midstream could is we Because you the to really have we capacity money. that things producers industry At half be labor kind sides a run, same call full, There’s from overall I everything utilization I be a it’s about

For there. us, we spend a major lot of our time producers with

kind producers have Our adequate takeaway. taking confirm major gas they

capacity Delaware areas processing not some congested sitting most and open, that have the the Basin. sitting We of is in is

north. down lot congestion sitting I in we’re of south the a think there’s

our us, Mexico second northern New Delaware believe that the for volumes So continue to half in we and are grow. going southeast to

be will full. pipelines Our

We the portfolio that have I balanced mentioned earlier.

and ones we’ll well. and gather be So develop there pipeline to of it’s a on were we gas, a Kinder first it’s then us first to and returns fully to we going full. the pipelines be the are Guadalupe to why as reason it’s why then that Coast that And lot with online, we yes, with going needed because make basis And did it. G&P up pipeline Targa The Express on provide widening when going subscribed great side. to NGL and Gulf was some starts

having as got we’re the end, in alleviating the work altogether industry. an So bottlenecks that on we

the what full, is financials pretty think working fill is them up and for XXXX are and XXXX. and it means to some us meantime, continue assets everybody in for outlook good we’ll it that, provides I

Elvira Scotto

well. helpful That’s as

of benefit the Mont mean, Just widened Belvieu – a spreads? couple the of other quick at all ones from DCP for me. Conway ethane sort to can I

Wouter van Kempen

much as there’s Obviously, we least our like really portfolio. teams very our significantly. in can that are, look marketing that benefit the every optimize other that we from day, space do making at sure one how at Not

right do those the now, where events at you’re driving uplift our a I arbitrages. right think to a us issues massive is lot Bellevue some the and frac there during when seeing things around seen we’re of are that was think teamed that financials major Conway of in constraints, You’ve congestion I country, in things, not but from

Elvira Scotto

expected? up it. end, you is guidance, Got one just last had Sand that come on me is and the Great. bringing Mewbourn And for the than on low Hills then earlier primarily the because

Sean O’Brien

Yes, yes, Elvira.

first online that part we that. that’s it. the the of year We brought quicker think tell you growth thought. I of I feel would performance, about half also good some really we than

we came But slide online, businesses the out second as the point just very we’re of filing Sand Hills we the MNL performing I showed, that obviously, your our year. the strong, growth benefits really capacity So up not of volumes and both ramping to half and projects in coming add that we’ve are the well – quite year on G&P gates quickly. with base throughout up very and added obviously, nicely, that around the

that. So guidance our really we out of felt strong, the of to strengthen because gates good enough

Elvira Scotto

had. Great. Thank I you. That’s all

Operator

from of Our question from is Dennis next Coleman Bank America.

open. line Your now is

Dennis Coleman

I Good payment for owner? – PSX, any kind sit it’s because option. Couple can But but morning, frac sponsor, have couple from on there. with me, good a the of the asked. of one most other. a projects some – just to sort no fit been option way Was of Obviously, in there or XX% if a clear Sweeny clear that consideration the your

Wouter van Kempen

Dennis, what is always what way is me sure run has run and been do this. I if through of let we but is unitholder. has DCP when I’m The and been understand the do kind we question, not the So for completely talk right DCP

So about, right the for not it’s what or party unitholder, it’s the of it right right for is owner for DCP hey, another GP. one is party. If the

things this long So a we’ve do can ourselves how case, around in for Phillip is spoken XX. that there between we and time

look Sweeny is what If to centers capabilities there and wellhead with service that the can you export look market better give and beyond doing, their we the those their that infrastructure is offering is different that their together. capabilities, than you XX party no then and do states what other also at global offering the XX Phillips doing, a from our in two

this many this anybody of can provide people country. times, that customers NGL we Sweeney, of that gone else to here’s offering can’t that an have country, the done other we we barrels than do. for in is the that So largest we you And different have outcomes we and more one – with control are was producer say in

happen, can we we to those. that use make barrels will utilize have other obviously we if so And then projects

So that’s did what here. we

special to the They’ve These happen. be both barrels obviously that – fracs. DCP in arms XX% And and payments length We separate going well Phillips for return tremendously are this X, they’ve committee. Sweeney no think governed great X, things return great, transactions are X and are are interest are of very They’re that with to by a I fit that Sweeney unitholder. committed are fit have XX a they we projects those to a get projects. committing Sweeney there well ownership other And for with good or us. that and in great fit very barrels transaction we is those

Dennis Coleman

it. got I Okay,

go need And exercise in in-service. But so and to Obviously, would no circumstances timing. the terms of you early? where be the might the ahead just there exercise option until option any

Wouter van Kempen

transaction we not negotiated we until Phillips balance in-service sheet. of that And and this that we we’re agreed No, protect this thing the capital, thing is, doing how part what lot with a and how make we’re and talks the of date. option that one I part our the exercise about the think with we would is, Sean very sure great XX, we efficient

absolutely our two-year period, during option. we construction pressure period will this that to on So no is there the time option have balance million the exercise and at is on sheet in-service $XXX

a thing we exactly sheet doesn’t Cheyenne the no with some it’s you’ve another is like where exercise, Connector pressure do sheet structured like And and than put other the us us. balance great unitholders. And from our efficient that, to tremendously of have therefore, for think any seen on projects, I different point for So view. option balance

Dennis Coleman

Okay.

just be clear. So to

exercise option not in-service? to at the only there’s even It’s So early?

Wouter van Kempen

– exercise Unlike something right have that would don’t them option will money us I And I we are project, on Dennis, DCP to up early." at unilateral capital that balance show time think prior to Connector we but sense. Phillips right here’s in-service unitholder. Cheyenne with both my that’s thing unless that great to the to be because into But like the the the "Hey, the reason early? projects. – Just for it’s you exercise options I in pursue that that why expectation there would the exercise sheet? days to a Exercising Well, to would our that I the put is any makes the tomorrow, think option, and love we exercise great is don’t say, those date. think I’m barely XX do

Dennis Coleman

Okay, okay. I got it.

job it that Okay, so of, will you switching Bighorn O’Connor plants? of obviously, procedures efforts that so on quickly. directly Mewbourn protocols bringing sort changes, great say, the X, there, The on sort construction a and or into that did anything accelerating, translate

Wouter van Kempen

Yes.

were start-up, So of construction schedules. ahead those commissioning of all

mean. So is to it kind does that what understand of great a thing just for people

You XXX a put day million online.

to So flip do immediately the when way. XXX doesn’t you you X switch happen go day million really from a additional that of It capacity. processing

oil do a I in this even that to different Bcf gas than plant, we’re what an for you to a exciting car not though bring A you some service to got as seeing have little over from supposed a system on it in spot about it. processing point quicker, a $XXX is million it breaking You’ve X immediately, plant, redline car, view. so in here. it’s that change no you’re is is day are think of But the a readings infrastructure think really

X over we of day saw going Bcf a As today, through system. the

there was it your by online yesterday, O’Connor news, quickly X, to We as X things really, possible. accelerated question, With going and great is So future, Mewbourn the earnings things on and plant happen well. get on for last focused X as that it already. really months call said, that mean but three was does yesterday. our we are that hey, making Everybody O’Connor great sure what

as the beat to time, probably So X, with our safe to do the a working. and Mewbourn we’ve constructed how want our think exactly and do plant about, the and that great to to manner in from plants, construction this some to going internally over we very we’ve same of done we of got very, set not same I million possible. we learned build that one country. our X this probably man But injury-free X Mewbourn that getting with and the try it teams and is apply O’Connor we and things plant, do we’re contractors online have on hey, online fastest gas spoken hours a fastest with and get as the quickly Mewbourn O’Connor if that on safe of X large teams At record job the

to can’t do We’re going the come that X, same wait on to online. O’Connor

miles with plant hour. yes, And XXX the then, XX, We’re Plant move online as we’re keeping to going well. everything Bighorn an

get are filed couple of on we lead-time in the to next the permits, months, items. So low we money expect those spending we

as on So plant. that timeline that well we can stay start and constructing

Dennis Coleman

Got it. Thanks the for answers.

Wouter van Kempen

Thanks, Dennis.

Operator

you. Thank

Wells from Blum Fargo. Michael from is question next Our

Your open. now line is

Michael Blum

Thank you.

question, DJ Just take it the Connector. Cheyenne natural on wanted away, so was gas related is actually, to

there question guess, your then, option to gets the you to Thanks. related do do there the any but And out for contract the basin? like is, Hub So broad the customers to reason vacate won’t And your you ample way their all feel the that you think to on that, takeaways that have to Connector? together you is enough from gas Cheyenne you need exercise from of still I basin? then Cheyenne

Wouter van Kempen

Permian constraints. Okay, constraints number Michael, the and there there the are of in about questions is

in parts well. constraints area, country as starts other the one it really up have you If clogging of

natural well. in here in Basin short gas tighter the little a things seeing the takeaway from we’re yes, So a run DJ as

is on doing. are some expansions We waiting CIG that

little basin. will in give a that for room of us everybody the bit So breathing

pipes come on takeaway option the gas that over we us. capacity take to other exercise see So going out. Hub the are to our do Cheyenne project Connector, do. any have somewhere month Cheyenne any takeaway capacity would get ample when the option. that Those additional I expect don’t two. wouldn’t And not next the to for I be past reason or exercise that’s supposed There on helpful. we why we is to We for

bit marketing I the manage It’s show to next CIG – we up two. comes tiny month be that everything a the that So getting but with think all or Making for yes, little tight our to able over out. expansions, now, kind we’ll going everything. to are here in manage able probably I the teams product be think of

Michael Blum

and is latest And to thoughts company targets? and ask Great. here What’s clearly leverage. would Leverage just to want you of, like question improving a on coverage. so then your get to coverage on, you a from and kind – Where is perspective, a leverage are as could maybe about there then a rating a And talk calc? from a already leverage those perspective? if from credit and agreement perspective, coverage agency also,

Sean O’Brien

Michael. Yes,

because to something I is coverage do think in to the – the right. someone have and X.X alluded online, We’ve let’s earlier, it come most we we not first. still still is, growth of So think range about been

X.XX, to any We’re all of in really at some and Sand didn’t post to it Hills of here, flow QX, generate X going happen the Mewbourn the cash QX. all X.X. that’s all way

we’re but we’re a really – a to we’ve goal To stronger. or flow delivering X.X really of was strong above X.X X.X given, think plus. I So our think solid obviously, it’s X.X, targeting cash online. we’ve lot be and been coming What

see of to that getting to So I line a goal. sight pretty good

powder or things is X.X Our on ultimately leverage point goal raising. Wouter some for the Dry even and funding – earlier. IDR, all important mentioned on the at growth the obviously, maybe

the you the were about call bank metric. that roughly. we in what think metrics If On leverage mid-Xs

X to goal between is X. and Our be

We’re and flows improving – have strong. quicker quicker thought than been very I perceiving heavy obviously as thought than cash I

the On the and between in their equation, of X, mid-Xs rating is there. side X agency we’re hovering

one, type improve the So improve on we other. they – same on correlate fairly as well we

our So day, of And Michael, as metrics of is to I get to the our to end because grows very cash close targets. think getting at we’re we improve. The flow, endgame IG. increased obviously, coverage the leverage

metrics with we like should IG those think be I the and So like cusp, the by attainable we’re company. on feel

on the RAs the page. get same to got Just

Michael Blum

Great. you. Thank

Wouter van Kempen

Thanks, Michael.

Operator

you. Thank

Our George is Citigroup. from Wang from question next

Your line open. is now

George Wang

guys, Hey quarter. strong

Wouter van Kempen

Thanks, George.

George Wang

Yes.

Do thoughts second guys of in of, Ford the to you activities? back east the But, any guys expense, going Eagle mean, just to have going be next terms have this cutting level to you Texas? XXXX. higher of operating in sort the to on is I to operating comparable pull did given quarter you year, of, year expense Just reduce levers mentioned the second half excess expense more also in a capacity have

Sean O’Brien

Yes.

couple was comments, George. think I think economy’s volumes and more obviously, more mentioned, are those there, have So And the questions I obviously I spot it couple – One, QX, in yes, – that’s as does on, well. of things we capital a because will we we’re drive trend of made base I assets. The of doing problem, some high-class fairly lot online. increasing our That as coming in expenses. like

So But a There there, investment online, type multiple typically and these Again, not for we’ve – offsets is I a going automating, those increases. far a – think lot coming are we’ve your capital of really be drive should guidance, more those adding and times record this year, And should longer-term its that’s side of your is transformation. good investing, types our we of things. year, thing margin people, – costs. systems, consumables a in You’re Wouter give as give and next as hump assets, basically, it’s about case. I so about that’s offsetting you this asked moving long next I think adding investment horrible adding as you both you right? capabilities, track optimization referenced don’t the had we the have been up. don’t but guidance

those to have assets assets. luckily, across So over basins. your next Taking but to I a the guidance we have then a continue few seen us most of the with seeing for of on And over At done volume the that, consolidated hopefully including drive now, we’ve volumes I pretty positive at our of We’ve start some right declined but day last investments to we’re mentioned and – years. look the where last to that. three of growth definitely good We’ll lot will would continue look for year lot costs. think pay impacts years. that end

George Wang

in CapEx, the CapEx the kind maintenance thoughts steady Also been level more of guys Did trend forward? on Right. terms you of hasn’t the going few trend maintenance over quite past that have the any quarters.

Sean O’Brien

replacement-type the the $XXX range. – At that the $XXX see to to seeing that product continue. – think I increase think I gave you’ll end million, in million you still you’re I’m slightly, do increased trend saw still going stuff. I million, a million ranges $XXX the we in of kickup to $XXX day, think that and are volumes – I’m see QX I

keep increases. an But George. So on we’ll see I eye that, don’t any massive

Wouter van Kempen

Wouter. it’s George, Hi,

Just that. assets means spend bit means throughout showed running more all uptick to are a harder, the add they’re maintenance. have on how going volume quickly to you’re system, the the which we Sean which slide of to end in little much probably running,

a from long So as worried that really we’re that we’re about more them little may margin. months, and that some more cost of it not harder, creep cost it’s I’m we’re think the that months, that you’re the overall strengthening, I logical very at comes clearly first up you by what, the margin the up offsetting today looking because guidance and getting cost a well yes, thing, bit next six how with running going – that. as you’re six seeing And us from we’re here know but assets,

So the spending day $X that week. to $X, make any I’ll of do

George Wang

just Yes, recovery. ethane to back uplift. incremental that are guys to totally made you going sense. question, Last doing nice ethane It’s see

on $XX ethane color you and more want amount million of guys maybe in more of – the to Do like dollar accommodate ethane – sort CapEx, guys any be benefit. uplifts know the have have similar past more on with go able if to additional mean, the update perspective? level you Just recovery. this sort update quoted $XXX uplift for guys I million terms ethane you if in to – of

Wouter van Kempen

quickly. Yes, well, take let George, me that

So ethane this seeing we’re months six uplift, quarter. here in

can You annualize that’s that, $XX million.

I what was those we talking about think ago system. that when important, more ethane numbers spoke just what is about you’re the about talking in getting more years two

broad all gone that beyond – more throughout much and just by our above actually growth NGL system. We’re

netbacks house, pipeline. G&P better the side the get flows more you through So getting we’re of

the significant of is XX months over in. to opportunity and but take look come last everything come of say, and just or that is to already – all think has the piece snapshot what in on broader There increased But volumes piece of apply what that to has continues lot to going I seeing you’re the growth, plants ethane NGL with it’s more does applies increased system a growth coming throughout obviously, entire kind "Hey, the left, what pipelines. what So to and happened the tough our at out barrel." throughout system net-net, uplift is by massive

George Wang

strong quarter. thank much. you And once again, the so on congrats Okay,

Operator

you. Thank George. Thanks

Stifel. Akyol question from Our next Selman from

Your line is open. now

Selman Akyol

I In your about of Coast I at opening Gathering you. Processing, just Gulf over couple guess If Thank next Logistics look got comments, you’ve you Cheyenne Connector, XX% coming. years, interest Express, XX%, talked Marketing. & think the the frac I

term as do out, see how all? at longer you look So you that shifting if

Sean O’Brien

X, lot – Eagle Ford Selman, there G&P really obviously, volumes problem, also the just you then, are we – you if side, G&P similar and on the a I Our growth the obviously logistics is being up. base the our coming of and margins increase mentioned, online high-class on picked DJ, X, is about if up think XX%, think but about have, that as O’Connor yes, growth it’s assets right? you the in think Mewbourn – some you’ve Bighorn a up

be look we – about – M&L everything the I as know it looking see is what side. where slightly growth, hold at constant, will holding So I to currently think we grow may where or it

it always to XX-XX. goal to Our pretty close was get

sides it’s right I think both now. what a of kind win-win growing, are that’s seeing we’re and when

Selman Akyol

inflation. X.X, that. – talked on helps DCP then how And Okay. it then appreciate about you’ve offset And

dollars inflation? where DCP the seeing what guess is about added then question cost I second is, the you first are to And can So you talk in this quarter?

Wouter van Kempen

exact a we how year reduce you you it’s into [indiscernible] I to in piece the But overall this times multiply time, the that around on reducing the XXX am every like it’s Sand tell efficiencies, over you to into Hills, the But Well, give simple to I’ll going that rate, – to is very this give go to add can a days you’re Sean’s quite yes. going I not going doing, team. little that barrels to quarter. Take got lot. and XX,XXX going go to do. – – to does we’re thing that it’s times number details much one fair going going

technological in you’re we’re changing is, the in to what, trying what the and results. And strong results, way that said, & run we with "Hey, we more we’re I And couldn’t have entire there bet their strong more do the do much, we know completely this, this G&P from Logistics seeing, I do, end, doing what is changed company. Marketing So a there’s you point work." think much of to way that view, business much without completely done But opportunity. in

run the operate to going to to continue We’re we money change invest and that way it sure in company. aggressively this – to we make that see completely

are think As there I to – our is your pressures, commodity. of point tied to around costs inflationary a lot

So of things consumables if that a and are lot crude up, oil then prices up. like go going

of So crude everybody see is oil a that, linked price we the Lube oil." lot in directly to oil. lube of industry "Hey, will use the

that of in employment the areas of and we in lube country seeing low the I’m So levels up. the it one some some oil labor. where rate Places a tightness see business in pertains markets Colorado. prices like, this as the nation. tightness the historically business, like unemployment state Colorado if I But other think as we’re things your crude market. in you’re oil seeing goes labor in go do in DJ to is Permian here different you’re well, lowest the at up, The

the is But the obviously, that see creeping I’m some, some it. spend have means you of not and numbers. that So that worried about to that inflation you into

week. the day said have any asked if to $X, do question, that I George $X make spend when the we earlier, of I’ll As to

Selman Akyol

you Thank very right. All much.

Wouter van Kempen

you. Thank

Sean O’Brien

Selman. you, Thank

Operator

showing to Lofland, questions. turn I you. would VP Thank Investor Irene like At time, no am back for the this over I to Relations, of remarks. call further closing

Irene Lofland

today. Thanks, joining everyone Thanks, Gigi. us for

questions, Have follow-up any have please day. a great and free me reach feel give you to out. If call a

Operator

for thank today’s your in the conference. This concludes and you participation program. Ladies gentlemen,

You may now disconnect.