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DCP Midstream (DCP)

Participants
Sarah Sandberg Senior Director-Investor Relations
Wouter van Kempen Chief Executive Officer
Sean O’Brien Chief Financial Officer
Jeremy Tonet J.P. Morgan
Spiro Dounis Credit Suisse
Shneur Gershuni UBS
Gabe Moreen Mizuho
Chris Sighinolfi Jefferies
David Amoss Heikkinen
Elvira Scotto RBC Capital Markets
James Carreker U.S. Capital Advisors
Call transcript
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Operator

Ladies and gentlemen, thank you for standing-by and welcome to the Q3 2019 DCP Midstream Earnings Conference Call. At this time all participants are in a listen-only mode, after the speakers presentation there will a question-and-answer session. [Operator Instructions]

I would now like to hand the conference over to your speaker today Sarah Sandberg, Senior Director of Investor Relations. Thank you, please go ahead Ma’am.

Sarah Sandberg

Chris. Thanks welcome Midstream and earnings quarter the call. to morning third DCP XXXX Good

being encourage are and the call webcast Today's is I website dcpmidstream.com. view supporting our phone the those slides on which available at to on listening

forward-looking in point our our Before that today the business. statements. results differ Please our Actual use risk certain slide out due we review statements. like to forward-looking the factors discussion describes I'd may begin, of deck to that includes that second affect

complete a risk please for the And listing SEC factors, refer of latest partnership's filings. to the

We reconciled the will scheduled slides. GAAP also in use the and various non-GAAP measures, which measure of to are the section appendix nearest

take CFO Wouter be their today. our your van speakers will after questions. CEO; Kempen, Sean O’Brien, will And we and remarks,

turn Wouter. With the to call over that, I'll

Wouter van Kempen

morning, Thank lot have we We you, today. joining to appreciate a call the us discuss. Good everyone. Sarah. for And of news great you

to through financial to call of continue share our the we're we on elimination the saw IDRs. capital targets progress So consistent predominantly projects execution of and excited today's fee-based how our value towards unitholder enhance our

were transaction But common very the general before details on we our IDR DCP units. including for to the happy into partners that a IDRs elimination permanently on interest we eliminates closing million X. economic Yesterday, let's of start announce Slide exchange XX quarter, jump with very, our in

non-economic price the weighted And common a XX current now X. valued XX% of of is $XX.XX November and nine partner average volume transaction at of in This equal of general of ownership distributions. multiple day which the based approximately total times billion represents outstanding the units. maintain close Phillips a-XX interest as $X.XX deal owns GP, The DCP’s on Enbridge markets on

the Let's we IDR elimination, to Slide key In discussed we potential X. the continued move reiterate themes. when two past to

on all strength. be commitments. both First, we have fair a we delivered of position to absolutely And transact from stakeholders a secondly would of and deal will those

ensures parity this that a our elimination continued to economic cost Phillips success unit for complete IDRs future long-term grow. common to Let me lowers our The This drive on and few and home capital points DCP between continued ability positioning, XX. highlight our of Enbridge slide transaction first theme. of holders,

This due throughout of IDR transactions believe this X.XX coverage lowest growing compared and we our our to or multiples all effect to agreement very with represents unitholders. of solidify And maintaining and only to leverage. impact with the distribution elimination It financial impact strong one minimal fair a on of that deal the history similar has our is track to we record metrics one on diminimous financial our Company position. our to a

our to is of the strategic. commitment I deal highlight and a of the to position strength timing why transacting also want from very

year-to-date with brings financial strategy. equity Our common sight ample coverage, for which distribution to need allocation commitment flows, liquidity, to remains solid and of in flexibility cash a no increase capital continued great our me to line

XX% of Today, logistics from in increase representing just EBITDA segments, substantial our of marketing XX% a comes from XXXX. EBITDA and our

our XXXX based expand are portfolio, to profile. Looking margin to we XXXX growth continuing and our fee

chain against From potential and our pipelines these and takeaway Fracs, NGL projects DJ processing Basin balance Sweeny our expand and mitigate further and and portfolio gathering the to value integrate continuing gas overbuild. while to

on IDRs strategic a eliminate adding the this for time our basis. based, $XXX approximately an adjusted Coupled growth of financials these to of XX% projects EBITDA was us with from and our solid annualized of million strength. position right incremental are fee

service result summary, Company. of this the and LP provider fully is future as transaction enhances our premier, In great believe proposition a for unitholders this further a DCPs the midstream for value and we integrated

pleased once excited with again I wanted did. strongly before to by we outcome. turn to that get very, this I’ll I right very quarter, and believe this that tremendously and are the And emphasize We we

Slide QX X. of totaled advantage our value our portfolio quarter year. and Year-to-date, highlights IDRs million, million of our to strong is $XXX looking the to distribution the The our Now fully our back coverage comes elimination X.XX diversified demonstrating integrated competitive on DCF $XXX for of adjusted bringing chain. our from another EBITDA and the times

capital lower both segments, mitigating overbuild on against strategy sought a the disciplined addition, on growth efficiency our to In we prices, outcomes successfully risk. focus commodity from which execute offset increasing with continue and

in lockstep DJ plant averaging million takeaway gas Basin day and The in X NGL foot throughput. needs residue currently cubic is and and O'Connor in expanding remain service XXX per with of the We capacity. gas is our actively natural customers’ G&P about

a job has in exceed great the takeaway on to allowing DJ volume marketing team expectations the initial executing solutions at our interim incremental done Our plant. us

day DJ for in option cubic Following ownership in residue is be to potential The pipeline an on increased customers the the half of alleviate Basin, and pipeline. the we first our FERC constraints surface exercise we'll unlocking the approval per full all of XXX million Cheyenne Connector gas within September, expected in XXXX production. the feet XX% fully of

day the Express pipeline from the was expectation of Basin. needed Gulf Coast placed of out Permian, in having two and September, approximately slightly the Delaware gas Bcf service In in per takeaway

and and company continues forward commitments team increase on value. our to deliver financial operational, structural drive unitholder to our Our

Sean to it to Now discuss turn our I'll financial results. over

Sean O’Brien

coverage Thanks a highlights excited our by for from QX, times. driven Wouter walk of resulting delivering results another DCF of and both quarter strong execution X $XXX DCP, X.XX to Slide solid I'm good in of segments. our morning. in terrific distribution through million

Our by These team our Sand from extremely and NGL narrowed investment, basis impacted Guadalupe between increased from continues by our new well, GCX’s perform Waha and and gas dampened Katy. Logistics cash earnings spreads earnings by segment driven margins strong partially marketing and generation results on to were lower volumes sustained and Marketing Hills.

one-time Discovery Ford JV DJ, the of volumes settlement record Eagle G&P in In margins solid quarter over out a our our segment, improved increasing volumes the had a on and driving last Permian quarter. we continued with and

We due prices. adverse to impacts to continue lower see commodity

time. driving flows solid despite be non-recurring over base headwinds price charge, with million period saw and business same have In versus more a separation as results $XX of QX, result QX, expect of QX project XX% full the cost efficiencies these new However, earnings, a our XXXX up voluntary the been than of forward. QX from cash to and year drive costs we lower which to program, in offset

last our transformation. saw accelerate we call, overall slight sequential our $X increase online million As as a guided and on new assets costs in of we bring

XXXX, a Southern full strong partially by quarter Basin incremental sustained the to processing anticipate remainder flows from results GCX, we earnings QX, Looking O'Connor of headwinds extension. by at from DJ increasing DJ Hills commodity and driven the cash X in offset volumes

now We're the around two $XXX exceed this million. for our adjustment. drivers somewhere growth There's of to XXXX high end range our capital settle and guiding key of million modestly $XXX

First, the agreement does our reduce XXXX significantly and offload program. overall capital efficient growth capital

However, versus XXXX project project top it this to pushed original and into therefore capital the us the capital more end moved expectations range. our Bighorn of

Cheyenne program one-third push $XXX project increase range. Secondly, approximate from to our the XXXX up economic decision ownership in million Connector the the to XX%, the to fee-based

quarter the our solid On last want financial the position move year. to I highlight Slide of as into we X,

our dispositions is year-to-date a coupled to million portion allows year-to-date of Our X.XX self-fund growth. this times, with $XXX us around of coverage non-core proceeds from

have billion in bank liquidity financial with We available $X.X flexibility our ample facility. and

risk is the hedges, of side with management margin hedged. equation, On of QX addition some XX% fee-based our the or the recent XXXX now

margin coming our the is now Looking cash grow to fee portion to fee-based XXXX, of flows with all online, of to XX%. our new expected

with position Additionally, NGL and hedged open hedges. crude already we've XX% our commodity recent XXXX of gas

Together, time more this and going XX%, into XXXX. had hedge XXXX positioning hedge us this takes fee than and percentage margin we at our fee to with

and are portfolio, the position beyond. in and and to well thrive growing future grow financials into strong the fee-based Our company the the maintain distribution IDRs, eliminate XXXX

within full And We're early flows. of vein, guidance in will the operating on provide cash you long expected anticipating as industry's in companies slow on while that Slide trends give on outlooks wanted to focus XX. growth we some I and color super-cycle February, to XXXX

low sustained environment. a for price planning we're commodity Additionally, relatively

DCP our built lean to is Our XXXX left are the predominantly Slide fee-based allocation XXXX capital optimization approach of and from has through million all in of $XXX disciplined up X.X efficiencies drive in led X.X which this manufacturing set perform environment on highlighted Complimenting which approach strategy through XXXX cash and XX. disciplined flows us margin operational cost new well DCP projects, is side transformation, uplift and our our to digital capital DCP increased approach.

successfully are driving executed the growth. and our costs, continue while efforts well dynamic increased correlated navigate offsetting expenses These base very inflation overall company We've strategy asset to to and helping environment. grow industry a business, our margins on around

back over it turn And Wouter. with I'll that, to

Wouter van Kempen

Thank you, Sean.

we Let that dedicated improve it of also a flexibility, that me have year-to-date we achieved our a to only of from enable but results strong position not on IDRs up as approach, strength. ensure wrap result our us eliminating financial XX, were Slide to strategic

ability With and DCP IDRs value for the investors and for drive way, excited our for the on to out about company, future the our increased of team. our we're everyone

that chain. Our results executing in and outlook a balanced now We margins the in years we customers, XXXX year-over-year align anticipation to needs further cutting-edge projects slowing up meet portfolio our real-time DCP ago DCP with our value began of optimized by have strategic X.X our growth coupled of technology, growth. being and built industry integrate well by and strategies increase are underpinned of

our by million strategy I and commodity our DCP flow of to grown financial $XX a by line and $XX as stakeholder into have despite with or have continue performance move year-to-date capital And will XXXX, and elimination price bright our alignment for we We know to unitholders. value X% very cash future combine we and headwinds. drive our of million upcoming projects sight IDR

forward And us Q&A. to questions. please taking I'm off looking Chris, kick on your

Operator

comes And line question with Instructions] [Operator you. our first of J.P. Tonet Thank Jeremy Morgan. the from

now is Your line open.

Jeremy Tonet

morning. Good Hi.

the far wanted a IDRs as what in this elimination to point, start rear expand with maybe as your off more could the you at here view the not with bit if what and strategy IDRs guys in sense? now that are change a the strategy is other in or undertake or been there new could simplified you now, structure the opportunities any has that Just

Wouter van Kempen

Well, This is structure change Wouter. change you this in think Jeremy, change in a don't structure. strategy. in it’s giving is a I

We do. we we integrate and and a our to service we been provider. And want I integrated what want strategy predominantly sure to are very midstream about think clear grow make to business has business. fully our grow want that our

that. do to continue We

spoken continue own the the We want to be last that fact I've to spoken We've don't that to all you the growth disciplined times times and plants. around many of processing in. you many very about gas we’re putting

last own pipeline. to the want don't You

high you float all so have utilization and want got to use you And means else's someone very that capacity.

a smart That's that. do thing to You do. should probably

that. So we do continue to

And so efficient, Be call, to kind from more be take think same of that point I what system within manufacturing no DCP. continue technology what to more safer. strategy different. reliable, a do is is the build to to At time, to cost out our I of view, use be be operator, we cost low a, lean

that. We to do will continue of all

And that. so IDR doesn't eliminating change really the

eliminating uncertainty important. is I people. think away do for that what takes And the it is does IDR I think

it of pie. an it has of an that that thing to, distributions the in kind and opportunity raising distributions other the time The about over part a you think gives way the equal raising does, everybody

distribution And than owner GP owner everybody that more equally getting versus the significantly participates and a IDR unitholder. LP race in

think this at that overall. good So And the look that's we've I worked a strategy strategy. on how would is I

to continues in leverage check. Our stay

coverage We do years expected to environment. four us a to four ago. were expect to are environment above and well relatively three where commodity be we low that three, that of many be probably two, or build ago in commodity a two, you And we continuing years is

So up are for right good, us feel now. tremendously things I lining

Jeremy Tonet

Hills a like quick Southern here. other It [indiscernible] seems Got it. there's some or been online maybe just has competitors And on coming narrow narrow. there question

going other any as wondering forward? the thoughts you could Just outlook there far provide as

Sean O’Brien

bit, of some there. in can little saw weakened. bit I Sand talk ethane specifically, – did also drivers we Sean. prices about But some a I’ll so include volumes I just can it’s Hills The the and Hills strengthened prices get rejection. gas little out see Southern on the you a Jeremy, increase

modeling though. So about modeling where QX. we doubling ultimately. they're that, more it and of economic between and modeling are that when rejection all a the you when we're QX money make producers That's Obviously, saw

Southern as on know volumes way, But that the many I reduce was did were that some driver. Hills. people well. about thinking Sand By the Hills

but The and other saw the have intact. in of we we have other volumes, we Southern so margin see volumes equation we remains third-party thing to the that is side pipelines, particular, volumes those T&Ds Hills did on on

come offline. have some did volumes You

We also bridge and off. that – we coming that up we online. Southern That intended Hills gap White some intended until volumes on was was shorter Cliffs when had to rolled our term was knew

a volumes excited Cliffs White about are through margins our new Hills feel strong about got which you You've Hills year-to-date way, connection can that to the Southern out of very and DJ that about we're up lot margins, of or in I pretty that. come going Sand comfortable, XX%. year-over-year tell very by the our and we’re we

continue assets. we those So to those around grow margins

Jeremy Tonet

me. my question. for for taking all That's Thanks

Sean O’Brien

Thanks.

Operator

And from the our Suisse. next you. Thank Dounis Credit line comes Spiro with question of

open. Your line now is

Spiro Dounis

good Hey, morning everyone.

a of I Wouter, some forward. out over going disrespect around your of see the distribution just some that your few strong flow desire off distributable to to sponsors. complimentary this cash to the Just forward. years. other specifically let’s but Had you your to of the to I you say, But comments, last in turn things, start growth thing with from X% company kind about ability think mention X% going comments growth pretty pointed yesterday some mentioned guess, one was of range

what plan your and on is target view achieving you curious it? how that growth Just maybe on

Wouter van Kempen

Yes.

Spiro, So, that good And thing shareholders. going if job raising shareholders start treated cash to to and be equally the can shareholders is deal to distribution. the now, – our this the we about we all return yesterday, when did are all obviously

things XXXX, given guidance haven't been There but distribution specifically the put around, around has we is are we comfortable tremendously on any and $X.XX. us hey, the risk. out for at maybe people So

distribution time at risk. absolutely now, think that The I take come. is the you'd long thing to from a transaction. one Not not tomorrow, not away not this for

about like happening and, X. look think at obviously November and this November what X thinks our We alike. look like, is on we just look XXXX look don't what we When transaction, or at XXXX

distribution we of distribution. our how maintain is maintain and have So we are do around the we only not to us, grow very the then distribution It the for continue to and comfortable lowering distribution. that about record never

those think anybody coming I the GCX anybody be EBITDA spoke don't of as so risky. online We fact or is looking have million full. we kind over growth great probably that $XXX year about of of to that not here are think growth projects next is additional I the hey, at projects going projects. don't says,

Your going going is DJ plants full. are are Sweeny be The full. to be not Fracs going Connector Cheyenne not to be to full. not

I in better we tremendously think going in projects hopefully that take of the with, a is to be I reliability, are utilization So we cost technology growing get unitholder safety, equally. really manner place into take start you where can yourself treated distribution when a that company. in and way controls reasonable good we online this good coming and where Better together, that that have some think have all a

Sean O’Brien

said. I'm to things going add Sean. Wouter is to this what two Spiro, only

like – about a analysis this, If give there's around analysis. XXXX where to transaction – health where is obviously of lot go, We're next going but long-term. a the there's a the to lot year, early over of of the company going the you guidance think company the

ought this good to sign. So be a

their comments lot the company like where this and go. of you some involved, – mentioned we you a of transaction parties is look and that around moving a owners When going had forward at to this the confidence

them, the looking outlook. the We at this they two, I'll through did rating three down very thing the transaction, of And also and obviously, treasurer agencies years all don't four remember about positive lot. it road. talk are other three, and we a with The mention take myself

this to just sets up that – beyond ought really some year saw the that just comfort and next looked So people give at beyond the this going forward. well transaction today, company say,

Spiro Dounis

encouraging fee-based hedges. color. No, some to really see saw the question looks helpful getting you book, was maybe Yes. around the up the And like that's hedging that. just Appreciate next year. second step hedge then amount But on

it wondering pave is to way for XX% to at us Just of And what this XXXX? hedge still is walk point? your through about get to Does if the just there. targets kind strategy the you hedge fixed

Wouter van Kempen

Yes.

yes, XX% is we earlier. out We the least. crude throw there, was that of that that gas, should excited hedges long ago. that into answer CX+ to XX%. bit excited company grow I'm I next volatility no to I'm XX the did of XX were not Remember winter at the get So that, the movements get year propane, doubt. a very were the got We – XX%, year. We on. there some year going months XX to was the last we're able and little with before

XX% already we're hedged. So

that already into wasn't XXXX. hopefully, the the of XX% more at on last And fee in hedged, we and time is year, than you going fee growth have When XXXX going XXXX, that for absolutely lost had. we are going XX% into At hedge in people, this target into book a our we us.

I a think we as way, the to multiyear we approach, we curve hedge the thing But about. think by And far try out can. the take as and other

those bit you is NGL. you that's can to looking know, But gas our hedges strategy. a that we're can on are long-term at crude very than on our to ratios on you As go opportunities little further differ, coverage and to constantly out looking going complimentary layer for team

declines that with had even it some we saw of online QX, those pretty year-over-year. about, where and fee-based more had move in that the That's money we're we're QX down to strong I fee, new NGL Commodity cash that is Wouter at XX% becoming key they're $X that's year almost the speaks really already. capital I bit company, in We less $XX less versus commodities speaks impressive. driving little a down and So it prices And QX. hey, we're pretty flows. making to to And can we environments coming in low think that just – even gas. crude, mentioned said, driver. But significantly. almost a last as $X.XX to still excited earlier, had really reports and think go. We're of people as where some year-over-year about that a this company commodity the XX% speaks should

Spiro Dounis

color. helpful Thank gentlemen. very That's Yes. you,

Wouter van Kempen

you. Thank

Operator

question our Gershuni Thank comes the you. next And UBS. of line with Shneur from

open. Your line is now

Shneur Gershuni

off would partner, – prevent them wanted a about the with environment, on selling morning talk let's simplification to this everyone. start I improve on now. potentially first – with Wanted that shareholders your your right post does your growth Phillips at projects? potential tax Good point basis And or Is their relationship then just to largest ability from all any some at to does change it units? negative in say guess,

Sean O’Brien

talked I'll just Wouter can the which which sent Enbridge tax. basis, the basis. I negative to had the about to speaks makes biggest flow And low I talk over no this company has cash opportunities, can that on back – main has very in tell you think years, I impact Shneur. tax this tax the handle a its Spectra about let or The way owner. the the value is simplest it future transaction,

company still eating So change in around terms that nothing's a are one the were those really other, up basis changed gains, a going the if hindrances sale forward, company, there. And selling low obviously or of no of tax there front. on before the on

issue just a makes LP, So of an GP interest problem. because and shifted – a any IDR it gain the to still time you

owners, was think speak about and don't let opportunities. that I'll tax selling math And for around talk additional basis but change change. the there to doesn't the before Wouter local want I I the doesn't all

Wouter van Kempen

to view has it pretty you've gets of than is think someone I this our part the Shneur, that this take someone more that again, with only thing changed of XX% as it's strategic increase from that gets comes with everybody That The only transaction nothing the has when else. point When simple. projects, this an Yes. either. transaction. pie. we – got equal distribution, that Not thing changed to is changed

with business more of dovetails We with kind more have a transactions of together. the XX our multiple done way our owners, opportunities or some better one of little because bit Phillips

And we’ll to look continue that. at

a that think you about a things the So that. to think participate for project. that as commit in project us great barrels Fractionators, I like Sweeny to great than to It's is

overall that doesn't really So change.

we'll we think look I the sense. when really continued projects good, and makes at when to been be there smart doing do have And relationships it can very together it good.

Shneur Gershuni

right, perfect. All

Just talk look But of XXXX, guidance but and I as in you you you sort at when we and about the forth. realize on, X, XX% some think haven’t trends I Slide given moving so gave fee-based XXXX. about

XXXX. I And going then at well EBITDA also as talk You too. of you to new of mentioned in XX% $XXX about be look Slide XX% is million the XX, fee-based

I of well a when you're generation below So to saying year that sort billion from are $X effectively think fee-based million going you about guided year? this for for earnings next $XXX over little your XXXX, bit

Sean O’Brien

I'm going parts. moving give again, guidance. not There's other Once to

I I pure we Shneur. to streams terms to understand company we type of But the people is out of went giving that DCF and think for has people in margin annuity think want grow. to XXXX, we that bit revenue guidance little what number want a understand a ahead obviously this continues streams and

That we and core have go still flows. the right. shown of way written commodity I massively talked We've we're Obviously next commodity my in flow but not it about off very big cash good a producing numbers. with strong very year still XXX% this company delivers this exposure. cash we're And away coming that still fully year, doesn't in fee, some That remarks.

slow were rebound. talking on color, plan we cash There going commodity. slowing It's Wouter foundation or that be planning a do I great been a trying going managing The not on good thing, that increase into have for XXXX. think say, to of we show down, a Again not continue. obviously hey, to next slide that's I year. give the into to in on going in exponentially – slide we're going still about other it we that of is are super-cycle we time. big what to couple great but key We're a feel will think to slide, And just a is industry, ways long that flows some has think the that within you

I have we commodity mean the continue more is stronger, to flow to of company's that fee-based, And back We're can key annuity-based, more count proven it. upside. this cash year. and on say, you this more if have comes quite you frankly,

Shneur Gershuni

one question for really job we done you've And this on X.X is the optimizing strategy years? capital last good of was to it be a final over that which may. a fair of focus year. on the on your two as the you XXXX, to to about stands, DCP meaningfully I bear this say sort And Okay. lower kind expect is that think if year fruits needs than CapEx it CapEx focus When and it that

Sean O’Brien

is the think absolutely short yes. Yes, I answer

more anticipate and in we We think to guidance anticipate do delivering XXXX out I we've down million always in cash projects. as years. we've of fee-based again, think even These I'm tied maybe cash phenomenal they're capital what flow projects. $XXX That talked are And of – to lot, these projects. I are some mostly curve even mean, do XX% had a here, very you capital the giving not well. levels but so future come

which transformation long this what know two point, the been you the have. about focus years. massive we've think can for I the focus time, the people – I which the you think getting has X.X as the the if I point or been three transformation as made, company And we can. out strongest I out Because about they base is getting think is for why differentiates assets more much be of But digitization a and and new what that's to assets now going of – on that's talking

got obviously, said Sweeny. you things next some just is Wouter everything about we've color. small talk then We I still some online, coming more a you have Cheyenne heard accurate, year. capital think and Connector you But little giving coming And other on

Shneur Gershuni

see hope Thank you in All color right, B. and the perfect. to you Appreciate Riley. very much.

Wouter van Kempen

Thank you.

Sean O’Brien

Thanks Shneur.

Operator

Thank of Mizuho. [Operator comes And our with line Moreen Instructions] Gabe question you. from the next

open. line Your is now

Gabe Moreen

was Hi, you've if personnel year G&A us we side maybe all to assets, good of and I – X.X. the O&M out about bringing about given wondering some on help where measures on calibrate morning. if ought we the the taken may can thinking we cost stay maybe DCP next can And XXXX can stay saving XXXX on you versus and these shake from this directionally year? on O&M new G&A how think

Sean O’Brien

I start on some of that, Gabe. can

efforts, growth this We got you've new from not good assets inflation, and are coming pretty we not a a seeing efficiencies is digitization, way, you've think you've trending coming last costs – that, been got going from large I've only and small the some We've married, got chunk progress. are they of got fee, tried clear. offsetting that than right, we're online. X.X automation, additional to that's we're reducing I've I these be lower costs be By pretty to year believe were lines. year. We're along those

going a to think XXXX think I about we into fair to continue. expect way is that that it

and So I digitization that referenced than will around, in comments the build, give do get more around to XXXX we efficiencies. drive in anticipate February and my in those program That's separation things XXXX. again, we'll benefits more voluntary you continuing as did in that guidance I

into that XXXX. think trend continues I

And O'Connor we're goal cost with costs bring here think to absorbing money still very to year of to and the on of that have those. every you we year our full people cost February. about to a a efficiencies that there's continue while new that drive More X, our color company, to in the environment those bring year. pay But assets trajectory is But our strong down. goal So is if coming the in next trends right employment more absorbing of is down course online, married, while key.

Gabe Moreen

still with GCX to, equity then on capacity we about hold coming has having Permian, your anything Guadalupe you Thanks is always And just terms online? in about that also something changed true of out terms GCX and maybe turn changed Sean. if that your the that it volumes open is may in position, is thought or of come GCX. with coming And it's relationship, online it here, I of whether should you've can think

Sean O’Brien

think to strong the phenomenal it's Coast, words, a coming stuff volume still way Gulf so earning. earning online. anything's GCX, think GCX don't GCX is – a very In off perspective changed the I And from moving about with other of Guad.

As a year, very, be benefit that Guadalupe. our company – got to we we very as significant. open manage approach you position GCX on on it's get of that We’ve continue forward from as think the extreme. taken Guadalupe year to full very spreads a going prior to there next

this hedged some We've we hedges to done roughly attractive QX Guadalupe. capture think we locked just contracts, year. that's going into XX%. give XX% something is assets I'll longer – volatility and we that are and yes, long-term annuities year think We've those That and year rates attractive you long-term spreads going taken via smart. that's to at blew on and contracts some pretty what When rates. – very were next able about term We benefited important from that into and percentages. some about lock-in next had into

much on rates higher past. are there that maybe what have than you the the are but earned we spot, that the So rates in saw not would long-term blowout

a of is at about So very and opportunity a giving the and as level of well, full levelizes with. obviously then terms performing and remainder course year us volumes QX the think earn that. of of on you comfortable And we're there very lot to kind return in Guad GCX quite next

lot a Guad last from bit on just I color could One point, a that say perspective, people the thought GCX came a diminish online. of spreads quite when would

a saw I probably That what that near XXXX the some that there bit tightening, was wider. in into thought we was delayed nowhere spreads Although, kept project. another Permian little referenced people the

online At would. or spreads think when and some depending even on XX% we'll that would still XXXX. thought on wait point, pipeline we have that position, about I open XX% seeing stronger you, have to mentioned open. comes new to the than you we more So in we But We're period, spread narrows the see.

Gabe Moreen

quarter me. you was then the settlement? two And from quantify maybe what One Discovery benefit the housekeeping That the and Sean. from were is in for can the just ones one-time helpful. impairments if Thanks

Sean O’Brien

Yes.

we'll $X.X the settlement easy one-time So Discovery. about one, the do million on on

model not so So good to some about the from to money million back Discovery. I is people want it get huge would knew but $X.X

at do every it –companies impairments, the We always look On at look in year. we QX. goodwill

some cash took we to a that then some ongoing up bit had do the long in we every of lower and on every No we quarter. that, QX. So non-cash look those volumes, non-core had also time. – Permian. a, non-cash tied very called Marysville. seeing portions in obviously the we’re we tied to books again, goodwill, there and took were And we areas that Western at the of a asset assets where And Midcontinent the little the quarter growth non-cash a downs, north areas been of impairments just impact, whatsoever, our for goodwill look hit Permian, and that's But remaining the flow assets goodwill not some the write on at but we

Gabe Moreen

Thanks Sean.

Operator

Sighinolfi next of from Jefferies. you. Thank our question the comes And line Chris with

Your line is now open.

Chris Sighinolfi

the on could came you if time was morning today. how just touch Thanks just for guys. wondering maybe together. Hey, elimination I IDR the good

indicate the might started to end it period IDR the release final late of terms You've of coalesced that's approaching also movement discussed on you're waiver fairly and the and in it the recently your seemed in XXXX. have for timing years, call based

performance in So, or you what broke it X.X% led a absorb sponsors business could sort Was of this wondering that conclude IDR the that and you guess was something of the to the the multi-year increase the else the long-term? recent termination I'm I window of was it outlays? finally cash it

Wouter van Kempen

Okay. let's take a Chris. couple of those

X, we the IDR you that coverage. XXXX below an really publicly waiver coverage. above was do put there the we would announced transaction where when if on well, IDR entity January with And, the period every have traded since anything very then, this. are So, been waiver X.X be quarter doesn't to into we everything we have Remember,

sitting you which protection. kind insurance, a floor think wasn't So to is call a looked never and the and It that you're a on was great in is insurance we how what thing company shows that we waiver deck we significantly coverage actually enough executed with at as here X.XX at than today commodity XXXX. had lower a have and X, I January

I people. obviously with form. is related completely ourselves, We of the Hey when this you didn't the are not do people this. any to a find was you when is right this high? things is had guys to with do those commodity discussions in why shape some when Phillips, do didn't should or with QX commodity Enbridge, lot you in And, interesting, way, And why that or vouch one amongst high, have of time said, So

would I tremendously this things end, they random commodity commodity at there today's goal think XXXX with commodities narrow of I way if the that’s of QX would are during and barrier done And prices. deal high still have a because walk we looking of have in to really, a

is the looking way commodity at this. So of wrong

online, the O’Connor is right it online, into is that $XXX do performing? us quickly? X DJ it it coming filling coming prepared that's looking how I Front that is Express, is if at take Sweeny is my to take that approve that in basin, get together then on online? are ongoing Texas FERC Hills all always Coast and And and we cued moving actually the it's that business at EBITDA. the and The Do how that the on remarks, filling Range time we online. percentage? we projects, massive Southern looking The Express coming is way up you it? underlying it coming Gulf this up. project, extension the The is ownership of million Fractionators, forward was mentioned of plant, for of the what is So, different is GCX

we of come at how came and all so are hits, basis and that That once every Hey things of projects and how kind a day-to-day that they've how on have that kind online. those go looking the were say, forward online, second of come have is online, executed they've what we are great very comfort what comfortable we they doing

end this really team between the Phillips together that's So between committee their I'm take IDRs does of sense? that of owners the tremendously the here is this the together, in say, the we the you XX, outcome. and board management pleased at of how Chris, with is looking kind looking Enbridge that And have this at been and a make of special all with together advisors Hey,

this one like, deal. of a very It's reasonable I'm IDR is think multiples I deal. of transaction, a lowest fair any the it's

People economic Xx complete the tremendously low alignment It's has and a and LP protected. very GP, is been always all have to $X.XX You important a can the the of distribution bank the the between it us. for multiple, is multiple. that take

If the XX deals take together, The you XX% average they at premium last together you deals last, set average premium is the take XXx. XX was XX, XX, the XX%. plus

on coverage it impact, have. X% what You is coverage look impact we at the

the and again, for billion per equity, impact. think It the is that removes million I our there's it $XX great strong roughly no was an that from on this dilution take minimal you is plus up uncertainty. our DCF shows, have and you If which of it year, of over DCF midpoint X.X%, LP, for ownership is gets unit. XXX when the this leverage There's guidance divide extra premium, once helpful in

for no business. it we Chris, and and win-win thing execute talking about I or think, deals of the thinks what So and know And the is you to on can have how has, IDR super talking focus I'm we we're is team how safest everyone on is, the about how that focus us Instead about here. the cost at continue online, midstream best surprise great a alike increase let's surprises, on putting we're technology excited reliability, utilizing smart And our and the to the executing, company in be projects savings, DCP business, about. industry. how what business

Chris Sighinolfi

others. I that. any seen IDR out eliminations this Wouter Okay. Obviously much deal of as terms in of And us I don’t of relative we've appreciate favorable have the other a to well more what lot than think space.

future, why any think some the going I that's it's question premium you metric hedge view day. a offered point offered you've for somebody based Sean, that another at that types have you XX% metric, for is year, these in But did think deals. I to I you've a explain have of a to is in probably me the warranted view to next mentioned that report. but and for had fee now, awhile don't

have I'm or a year of in that so just business do XQ on the XXXX you where And curious, to-date was sense metric?

Sean O’Brien

hedged mean, XX% we XX% you hedge Yes, portion into so so that guidance really running the update. the fee I gave don't would think at and we've been coming then year at we I this put year. we've us

about to basis So, at. as looking you to going be target XXXX, that XX% really on an that equivalent were I we close we're think

We points is would the a in month during through ago. Chris even on hedges whatever just put making, coming some that of The and into hedges over been turmoil year. that I've we put on always some Saudi, QX

coming I more year guarantee get roughly now have year. on opportunities right feel XX to for throughout the at good. the So, XXXX being into very I versus you will XX very, hedges

you in a fee-based it the our G&P some and earnings We'll, and earnings think why we business more solidify We'll forma the our by we more your when very, are base some and will make that's of guidance Very, of continue ago next that would foundation half to weeks. XX big a of budgets folks getting through the way, I about continues when will, I less. I projects very or or because small that fee. the give increase solidify so moving think or deal it had we volatility with but of add, are either couple even approved the have that to expecting been our decade it over half pro position, to boards hedging

our cash starting see pretty continuity flow. obviously good You're out to some of

Chris Sighinolfi

footnote differential And it there would to are. that margin and have Can an was I that just one a actually just you what I butane of a do hedge and outsized with And there is the way? or propane – I'm your parts curious, it does there, XX, mostly at on ask extent you question has then look have – that us there's in edges NGL composition, prices give allocation us no One two propane is with point you did because number there for price can XX. it captured that talked, spread follow-up Guadalupe opportunity at or that Sean? fee? you if differential the in that you give get some second, skewed Slide on not just the total butane

Sean O’Brien

the propane on obviously and our ethane are low. in only, relatively reject has been butane discussions all it's Nope,

we've levels seen be. that products those So the to get they not to would need

that solidify two to ratios, that coverage range. goes a in As we right? can at XXXX. hedge over give multiple you're hedge we we XXXX, target program able we dollars and you're is hedging, it at at or yet about higher that think a ratios no, a to better So think that we're the way Chris. hedge tiered levels if But to company, it's hedge able in trying were in years. and have looking one, right we're terms coverage the pricing And to I of The

we're putting on, those to us to get help hedges intended those coverage are those As ratios.

into and because So, XXXX the levels are to still that those going more more we're the even we're our reason growing business going obtain fee ratios. based coverage and is, hedges, more. And if on pricing able down is

So, you're relying pricing. less and less the on

Chris Sighinolfi

Right.

Okay. then sorry, And Guadalupe side, on the

Sean O’Brien

side a pipeline. It's a fee. On we hedging it through And to just But XX% and spread is lock-in Katy. or that I it's, XX%, Guadalupe those locked actually Waha continue portion the to in. Guadalupe have and consistent. fee-based pretty of of is is about continue margins basis It between portfolio we as contracts because our either well. lock-in fee been long-term a mentioned

Chris Sighinolfi

it. this the for guys. Thanks Great. time much Appreciate morning very

Wouter van Kempen

thanks Chris. right, All

Operator

you. Thank

with the comes question from next of David Our line Amoss Heikkinen.

Your line open. is now

David Amoss

simple, or came there Offload. else with I Cheyenne, in that's million side $XX increased this Latham Latham interest expected on about for million, on Or in and the faster Is wanted the is you're just there? something when you going looks XQ? guys. out to on year. more like dig going Hey, or ask Thinking that the pretty second a than that additional is $XX wanted spending number faster to you that just CapEx the primarily

Wouter van Kempen

majority as going the dollars be solidified are we've to spent year. of this The

So not been great up. it not still Latham is project. There's a overruns. gone that It's timing has anything

would The going over project. mitigated. originally year, program the capital early to or Latham gave high-end solidified more the the we the now expenditures we've, is Bighorn guidance our the have last so As Bighorn majority month capital those some range we of when the in were Bighorn, our are be of in much a assumed efficient Obviously but capital XXXX.

it's timing. So just

You're Cheyenne spending more project, obviously you the just understood said is in that. XXXX the you upsizing then on that And spend it XXXX in on you'll significantly less

David Amoss

Thanks. the do the color like IDR really deal. Appreciate and Great.

Wouter van Kempen

David. Thank you

Operator

next from of comes our with And Markets. Scotto you. Capital the Thank RBC question line Elvira

open. now is line Your

Elvira Scotto

Hey, everyone. good morning

based, that So of you contracted MVC fee how remind just pay take commitments? fee much that under, us of the on is or either based, can or

Sean O’Brien

into plant right obviously about and talked exact Those some margin. of lot our get new going And do, to recently plans they production, plant be we Elvira, be commitments we going have up percentages. Elvira know, some is feel it but comfortable are of under under MVCs control. around The obviously have we think rest I volume to the but not we're we remember But very the for of that That's I can a dedications. it's growth. the you the that can't with or the majority are pipelines how T&Ds. filling we've is be the DJ I pipelines are MVCs You in the that minimum the pipelines. volumes and MVCs minimum volume, essentially to there on T&Ds put some going the

Elvira Scotto

QX. is look XXXX, first Got it. XXXX, Frac in you're Connector comes Slide your saying in And kind And of half then, I it's fee-based XX%. Cheyenne in, the Sweeny as for of XX, looking at at

you to flat based, look could as I XX%. environment, closer assuming out to price XXXX, I'm So a getting say mean, I XX% commodity if see fee that

Sean O’Brien

Yes.

Elvira Scotto

are for distribution about challenging flows. you're see of and kind kind in within And, metrics seeing talked Okay, commodity you And still trigger growth, to distribution I that growth, lower of outlook How you've know do distribution you of about, about, meaningfully not think great. think growth then what cash guiding about how to distribution what think a are about XXXX, that need our and producers you're can but we And – the you the when you environment. growth? living talking you think when talked about terms about do you CapEx.

Is it about just thought you is ratio, certain how how can distribution business look coverage what of, ratio? Is some a at, given to much on a coverage certain give fee-based think it, growth. your us this trigger sort

Wouter van Kempen

one. Elvira, let me this take

happy tremendously that's we're talking I'm all of about. what First

how I'm really we're every of what so you point in when dynamic are agree of alike? view, running, us. grow looking are day, is where happy commodity $X.XX of where thinks is, obviously a from very you view, protect the for about, and and me that and going it's And are helpful assets firm We're that And and to model. where we single with a your a we bit talk coverage if from leverage point to distribution cycle you are us, it a

and how and for that I with, look we overbuilding, when look to we flow how at to things to coming get are the XXXX of But online, entity. look together we’re how that self-funded potential all pretty we're feel that. And managing cash growing at assets free we and not those our we that's do up, you completely capacity. will how optimistic about, take all and distribution pretty, set when us And start we when beyond the XXXX, we've combine of at models, how

give this can this everybody benefit. about a can’t now is got you can where of perfect, Hey, the this dynamic, a way buckled gets really because type think you it is about thing about equal same which good understand. in start thinking you treated it the in But I has the I plug you roll-out because model and the So know is it everybody and

Elvira Scotto

figure But, the repurchase unit equation I evaluate, how or makes distribution mean, I trading, look is you sense. the do at that into share at your repurchase a so Now, you all? where can stock distribution, on you your coverage. down actually When your bring want growth, would to DCF be Share share maintain clearly right? repurchase, count able that you a cover help you it. – set to mean,

you So about repurchase how growing the versus distribution? think do share

Sean O’Brien

with this trajectory I a think program think I Frac, for are but a looked of coming of we've I run. equations of you need capital short we, that's in it's that, as of the year. little a with really the downward at all year. just us next where the a to we on obviously year capital sense. we're online some on get online having in our lot But the some Elvira ways don't maybe and off, and kind but in going it's you comes something that sitting then Wouter coming covering yes, then I we're totally need out models, you run relatively mentioned, to this think projects it some project large some solid we're that to and think that do. makes makes free, immediate your And in cash It's you're Sweeny obviously to, of term

Wouter van Kempen

about yield. of the I say, to that, I is tell secure being today $X.XX on, XX% know things think always the and got a what, I we talk you one other

don't think $X.XX the I So, perfectly valued today. is

that company I comfortable a things you feeling a before thinking get of is are set where being you've pure about increasing think So, place very the from But valued to how up. with start we to got power it. financial are very,

Elvira Scotto

if to distribution $X.XX just what's what to just great. incentive saying get raise Okay, that you, secure if that, yield already XX% is a make back going to your to on have on Wouldn't but But mean, rewarded the more maintained. not it for you're you're if shares? sense distribution you're I a up follow and distribution? you buy the

Wouter van Kempen

that this to I why moment more grow why the make bring the will that's, or sure to increase I you I sitting have. doing this continue see Connector coverage, think then what's and distribution? Cheyenne for play things we utilize after what say, the would think how like, Sweeny continue hey, are that, coverage XXXX to good projects is that the at and at you're I in moment, instance, that Fractionators to not excess with to online we're same important that’s and saying new Well, and up. We

and you there. think I So, I sync in are

Elvira Scotto

Gotcha.

Okay, great. Thanks.

Wouter van Kempen

you. Thank

Sean O’Brien

Thanks, Elvira.

Operator

Carreker our And the Capital comes line question Advisors. the James you. from with of Thank U.S. last

is line open. Your now

James Carreker

we and thanks been you the others again question. for deal. Hey Congratulations know for several on pestering on have IDR years guys, the on I that.

So for in apologize advance still non-economic the that and you’ve next investors I say there my quasi GP general that would private an think somewhat an some I you still overhang eliminated but controls is of that but, overhang, partner. question,

autonomous whether mechanism? other PSX my have guess any a is I you your there respective or spin by fully to thanks. anything that's your organization, Is talked have interest question so is or some desire guys And that on done part that discussions or there Enbridge about, in through become a thought any about, with parents any

Wouter van Kempen

here. James, Hey Wouter

things be and same I same there's way everybody treated exactly economically off, be the is different things no gimmick other way and think, anybody going treated there's no or Everybody that's will can First economically to happen. way. to the exactly treated, so

enjoy other then talk moment we'll those those sure option for too I that think is should a early I'm we about things. But way I about I – enjoy think day the just and seek moment for I of the talking the or and you talking that's stuff thing, two. all we important day questions. think week a probably we'll with should most next those answering And independent so. about, start think that's or

Sean O’Brien

the one add your point the I'm And I my and transaction, look, obviously to think the agencies size conversations earlier, right, with of is talked viewed and having James, around it owners earlier about Moody's, I thing thing this have those pretty massive that strategic to value S&P of clear that. one investors in I about favorably reiterated parodied add we value, economically been going see they want Wouter just to see they and but rating has interfaces with companies some two

differentiator pretty strategic see on for that DCP we as So as benefit, a with and got cases can stuff very two some you've that do large companies they actually that a some sitting the in top.

I throw So just I'd in there. thought that

James Carreker

the Thanks. No, That's color. I all I I understand. had. appreciate

Sean O’Brien

Thanks.

Wouter van Kempen

you. Thank

Operator

turn I call like session. further remarks. now to the to back Sandberg for Sarah concludes Thank today's you. And question-and-answer would this any

Sarah Sandberg

Great. Thanks for today. joining us

If give hesitate you day. don't have a call. any follow up questions, please good me Have to a

Operator

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

disconnect. now may You