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DCP Midstream (DCP)

Participants
Sarah Sandberg Senior Director, IR
Wouter van Kempen CEO
Sean O'Brien CFO
Michael Blum Wells Fargo
Shneur Gershuni UBS
Spiro Dounis Credit Suisse
James Kirby JP Morgan
Chris Tillett Barclays
Tristan Richardson Truist Securities
Gabe Moreen Mizuho
James Carreker U.S. Capital Advisors
Call transcript
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Operator

Ladies and gentlemen, thank you for standing by, and welcome to Q4 2020 DCP Midstream Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]. to Sandberg, conference Relations. Senior like speaker to now Sarah today, Director would hand over the your I of Investor you, madam. ahead, please Thank go

Sarah Sandberg

Thanks, view webcast, website and DCP encourage those on to earnings and our the at Today's slides, I Justin. phone which on quarter available to call. being fourth supporting XXXX the is call listening Good morning, the dcpmidstream.com. Midstream welcome are

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

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

Wouter van Kempen

multiyear through our sustainability excellence, team and into are to After extremely financial X. you, as joining us today. event eviscerated and I'll were We appreciate a Sarah. strong territory and changed Black I challenging plans, of a navigate on performance double Slide negative the operate an prices produce on performance to strategic and walk to proud which demand, focus you Swan COVID fundamentally incredibly that team the Good year, and challenge call our Thank throughout XXXX. reflect on company. morning, plunged evolution, we we the you really operational mitigation our everyone. a our of rose able on oil way to downturn a as operational The result

marketing service to allowed Over logistics provider has company our by the and over earnings XXXX adjusted midstream EBITDA. more integrated value extended This a into and our with us segments the past capture generating transitioned our stabilized fully flows, lower chain. decade, XX% cash we've

to our Additionally, the high capacity keeping rates we as XXXX, our and we leading XXXX, revolutionized long part in X.X spending. has short minimizing the company. our our of infrastructure utilization our strategy, supply launched Transformation, Digital In years existing up DCP which optimize capital

flow, over and in and resulted flow cash secure distribution in cost, twins digital a in enhanced cash and our our integrated represented focused resulting reductions of And of a took the years best continuity operations, of to us and reliability over technologies increased our early aggressive ultimately driven by our deploy investment plant-based optimization generate and plant Revolution to to of Our Industrial relevant and and communities health while business, year-over-year, reduce enabled operations. in protect improvements and safe proven action over by workforce liquidity, on and past business $X.X predictive Across operational that runtime, maintaining margin plan our as our and the measured our health that history, productivity the reliability the also equipment ensured in significant billion We've operational assets and this in company's several to malfunctions. our achieve our efficiencies. free utilization Fourth excess collaboration excellence our processes reductions our increased was to capital result pandemic reduction our to ICC maintenance. Underpinning of in operations team, debt. reliable and the of major we center, year enhancements footprint, response recoveries, substantial

of our mention performance, XXXX. to We improved a emissions from made continued significant profile reliability financial our we in result and Before discipline. want our few improvements asset highlights detail a to I other operational as Permian

report second this our will of report, metrics reduction Following and in be other which XXXX, expect our ESG details inaugural we sustainability the highlight published to in this summer.

of Our we Midstream processing to were Environmental ESG and increasing and look Excellence gas Basin. awards sustainability Cheyenne business, year, came recognized on the X and capacity this improvements. the operation forward needed in Energy DJ Connector efforts of in through Conservation, and the continued by the And offload the GPA lastly, revenue the XXXX Latham takeaway side online

X. Slide hard All the of you see financial work this results culminates in on

team's high For flow a XXXX $XXX with free free the of the $XXX by capital guidance forward and over the to all, this execution. this range within And XXXX increase driven free of targets. growth excess XX% million XXXX, year-over-year, our $XXX adjusted momentum EBITDA We zero was million range in exceeding In down midpoint bank Connector. X.X our of and totaling of facility we a high paydown increase increased $XXX tremendously, ratio metric proud capital capital year. a totaling we're $X.XXX the XXXX range. DCF, our financial Cheyenne our into guidance to our our with million XX% than used year-over-year Total our X% assets our times billion, Inclusive excess end exceeded tremendously in closed working during and end excess we flow X.X on of cash XX% cash carrying we debt as guidance in exceeding adjustments, slightly cost cash this generated flow XXXX. million, of on better and compared our to generated look of and leverage borrowings times introduced with

the year to our So, walk guidance. fourth through let XXXX and of and quarter details the full the me over turn it Sean to you

Sean O'Brien

and good morning. Wouter Thanks,

DCF pressured generated over we million, increase of and of $XXX a adjusted represents quarter, dampened X% fourth the which $XXX XXXX. to prices our million EBITDA Commodity Looking QX, markets. and volumes

increase these ethane and better rejection XX% offset Sand in in a Southern through costs throughput. NGL savings a $XX capital by headwinds on as compared recovery However, XXXX. Hills. third-party volumes we than QX than on pipeline of Driven million Partially more and Hills offset sustaining higher improved by expected to

As our rate show and January brought we a year-over-year. deferred one-time similar on efficiencies cost already our to call, run cost QX our projects as ability demonstrating mid-XXXX back increase results guided our online November represents in maintain to were a

looking enabled to year-over-year. the year us results to team's Slide full XXXX hard XX% on our headwinds X, grow overcome the by work of substantial Now and DCF

commodity cost negative Although fully million $XXX impact was million our million by $XXX $XXX year-over-year reduction our exerted price our business, this goal. on in offset exceeding

of volumes as business, Permian from result adverse capital, Gulf volume margin EBITDA the Range and G&P drastically the where our Basin on DJ growth pricing segment and on impact our other $XX declines. Accounting XXXX, Midcontinent on Coast producer than year highest, Express grew increased and wellhead our we Though These by is lower expansions million, $XX per full more marketing the offset their Guadalupe. of to South over logistics Front now offset and our million Looking Express, marketing. and a in declines. XX% a reduced of driven customers margin dynamics, NGL a MCF drivers and was adjusted for resulting earnings this Texas in saw by by segment

range. of below the product prioritization coupled expenditures replacement end guidance sustaining capital Our our low of no risk-based drove with projects

our continue free $XXX reduction priority. $X.XX and cash our reduced focus top excess debt liquidity as million capital to our us increased exit-to-exit to pay by We on flow our Our to debt generation allocation and billion. down allowed leverage

want results strong in Fitch I To financial in remarks filing a our XXXX, of September, from our on outlook result balance my to S&P improve to team As a December, that delivering agencies. all downturn. execution, in strong with outlook three thanks our close to our the this sheet us suit revised for during to resulting stable stable enabled rating offer

highlight substantial of and year XXXX we Now volumes we have a a Though, outlook upside. to for on COVID-XX, to uncertainty guidance. moving as due some X, conservative want anticipate Slide I solid pricing continue with pricing we potential to our face details to

Our XXXX. to capital We're XXXX capital million EBITDA reflecting $XX our is in a $XXX XX% a adjusted of over million, is targeting from and total sustaining million, million million. of to and range range billion, capital $X.XX $XX DCF billion to $XX $X.XX to reduction range growth million $XXX $XX an range

range after adjust over increase our can bottom see to the your sensitivity XX% million midpoint cash the million you and Finally, slide, excess that commodity on price $XXX of the $XXX guidance our flow the of paying our million, an in representing free you commodity At drove year-over-year. help $XXX distributions, ranges, to outlook. expectations is assumptions is based

would improve Pricing If our among our to be at of the range mark is how influenced you end results. improve are our DCF many improved to variable beyond top the benefit our that and we well positioned from would target, our leverage prices, demonstrating guidance pricing. one were current

of overview assumptions an X. you So, Slide let me give key on our

excess self-funded we First our million to with markets. any cash being XX% expect to we excess a maturity need outlook, Meaning anticipate favorable completely with flow, capital XXXX. free retire eliminating capital of $XXX in our our to earnings to highest on in up hedges, bringing opportunistic and by in growth And hedge able total been XX%, fee our based we've logistics starting percentage assets. layer XXXX underpinned are our level. fee September

upside stability, half for spot while of prices. forward offering on based hedged, million potential to approximately our length allowing of Importantly, current million is also $XX increased equity and $XX

due of between As second the reductions equally the and to XXXX achieved weighted in we cost QX stated, plan year to plan and maintenance. with the last maintain we costs picking year half first

lower overcapacity compression improved midstream Our help due costs and driven dampened efficiencies industry. anticipated from to mitigate volumes reliability and across the margin efforts innovation by are continued to

driven year earnings pricing the from We earnings partially Guadalupe full our as expect by lower and of asset slight by recovery our logistics across Cheyenne on segment increased tighten. growth spreads a Connector, ethane anticipated offset

decline, South Finally, G&P overall Basin, in to Midcontinent. offset growth house, of volumes in and slightly we by expect DJ declines on the the the anticipated side the with

portfolio, to and year Wouter. In a and We financial expect is Ford turn look offload Latham that note our off I'll it delivering X continues Eagle be contract the I'll tremendously and of dynamic. earnings position Texas, in all, And XXXX. solid XXXX. our not expected the in also East a roll driver forward over confident be in environment to The external to now, we're our in to back But team, very in

Wouter van Kempen

best and leading on cost minimized emissions. expectations, and outcomes XX% following by the year-over-year our capital cost completion our Thank Slide to our our delivering is X.X we and expenditures, total forward. lowered Building team efforts those our all DCP and fully XXXX, sustainably basis cost to now our nine. moving reductions of while our maintaining safety in Specific Sean. have and we capital program, our efficiencies lowering reliability lowered maintaining metrics, to committed you, our looking multiyear And

primary a from Our expected from capital growth XXXX returns from than in allocation with half XX% organic in for assets, of focus enabling our capital debt XXXX we less excess XXXX total represents on increase and our and spend value Aligned down XX% have holders. strategy, free an our is resulting expenditures. portfolio to year-over-year, harvesting of our unit improved reduction flow transitioned premier cash

we up year solid So, very a slide. it areas let XX, me focus ahead of of see a taking on as believe result wrap on the we have we're you as this conservative Slide approach, us

foremost, always First our operational performance prioritize to we else. committed all are best-in-class continue and above to excellence safety we'll and

we As cost in reductions. will to capital we efficiencies XXXX, continue the we discussed, created just relevant momentum and

cash or million $XXX balance and We sheet. to flow upcoming maturity free excess our the will utilize strengthen increasing retire

in technology X.X DCP including initiatives, reprioritized will adoptions be incremental XXXX. Our advanced

across our ESG of XXXX and unbelievable reductions the creativity Additionally, all, our flows, of advancing our we will on strength XXXX digital the in progress sustainability proven of enhance the grid building In footprint has our transformation, team. cash power the and emissions our the DCP base, asset by over initiatives. our stability outcomes and

great earnings now off we recover start And from in to our are confident XXXX. this assets I'm We power of a downturn. in as the

benefit positioned and their prices DCP. to for well commitment improved their unitholder success, to that, commodity thank are our to hard investors our to you again increase with and We value. from our work to build And say I want continued for on employees

your Now, forward taking to I questions. look

So, take Justin please off. us

Operator

from comes Fargo. question first our Blum from And Wells instructions] Michael [Operator sir. you, Thank

line now Your is open.

Michael Blum

Thanks. morning, Good everybody.

least XXXX question If earnings. of a guidance, looks at pipelines. about million there to go NGL it just at XXXX if and - of $XXX look from the EBITDA from like delta equity the DCF about kind I to taking there's is that midpoints really So, XX% I the

XXXX? just And I if can for light that you I'm of your so, yield guidance higher in Sand outlook recovery? just speak commentary you're the to in says And expecting that fact volumes Hills - to wondering in especially that end the

Sean O'Brien

were we went saw to QX in think a Yeah, and in XXXX rejection of in the being recap I recovery We specific I'll Sand then and couple and through to Southern. things into QX. full think and Hills year for Michael that a partial recovery most the I'm we

XXXX, flat to in expecting Sand have of the we is equation. the still As perspective. we recovery, pretty to side think we're expect volumetric relatively XXXX. volumetric Hills do about XXXX And from on from recovery XXXX We Sand do flat a baked perspective be to Hills a but

a is different SoHi little bit story.

the for some came We're in recovery example, of We have of had seeing, we for expect we expansion QX we Michael, volumes - one growth there. stayed is that all We seeing theme can't to the XXXX. in. all in we recovery, in be we're control move,

at prevalent Some rejection that's Sand and then more Hills. in Hills third-party volumes rejection Southern have on gone stayed into

fact in there some some and of the pipeline flat those that whether side a And our related SoHi, then relatively side, for is expansion But goes equation. recovery barrels be Hill of pretty, offsets volume solid the parties and specifically be. decision third outlook Sand the have more not XXXX growth may perspective, we some to We'll volumetric on a or control we NGL recovery last overall, the on year it from and there. So, pretty into the are do rejection.

Michael Blum

Thanks. helpful. That's I heard then this it. I correctly. to want And make Got just sure very

I do that plan maturity if debt XXXX, So, off be to believe have or it? a and refinance in your would you pay

Sean O'Brien

XXXX. took And excited, is we debt $XXX still shore off. important to Our the we up the it's think in plan Michael. still off want, pay books I'm to continue balance to of it sheet. million We pretty

we that our as remaining off by $XXX we'll any can. over is is plan excess XXXX, and our to September, in when between take as piece. as for we'll 'XX. and mentioned, in that all free the XX%, it use if that So, books million cover of due comes doesn't flow, use 'XX growing delever And revolver cash But which, much we

Michael Blum

you Thank very much. Great.

Sean O'Brien

Thanks, Michael.

Operator

Thank our question you. UBS. from comes next And Gershuni Shneur from

open. Your now is line

Shneur Gershuni

into your what the Just targets us optimization baked DCP variable go this the and the year side X.X of margins for X.X can on of sort of this Hey, continued the to year? good on this cost you expectations share reductions their kind baked I in to any your there like to forth? that start kind would element off, is I think of is terms morning, this focus focus where to everyone. if of I you Is year. so of enhancement I last that to DCP expecting for were be XX% peers, of up? It if costs able with this to wondering year is revenue for XX% on year from kind continue your and XXX% can flattish. your they close X.X about to pivot into I was to about wondering looked When at get, part looks I guess, you're this. or are of year costs improve Or of offset for that. of a guidance presume focus maintain

Wouter van Kempen

try I going There's so that take appreciate here. couple just a there, Shneur. I'm to of in lot things a to

a versus going reduce we we extra to money, XXXX. ourselves by money $XX little you, First in XXXX. of nicely year. we million to quarter, were where we in bit the to even even beat still make a fourth we all And cost little pertains actually a while November goal of as all, it set tremendously handily. quarter And costs as million do and for we that that cost, extra of bit spending last sure setting we up were aggressive in fourth told $XXX it spent

and is always cost So, us. for front center

and kind started very industry reliable is think And think safe operate that you I discussions to lean set create growth come about manner. If of where an to we months X.X it lean, of focus think has can need XX X.X team things has of we do within huge the been And to the smarter, of can that. end. that. this focused DCP a company in the But and XXXX we we about transformation the the of digital And yes, better. for on super platform that. probably DCP how a we can part do culture a the it's is always huge a to of been how in XX to people enabler manufacturing going cycle

we're to put within to that team I'm the in maintain able of savings. continue DCP going focus more my we that to So, the super I that. be But X.X. the comments we're save is will keeping costs realm believe those And we we done. all being that money spend on there prepared to going of of year-over-year. because more to kind on proud do

great Center, asked Hey, looking So, at is our we huge can thing. that. enhancement. think that is assets? ICC, a I Collaboration Integrated optimize And ways is the in enhancement. the you then DCP X.X of part a about revenue for we're How revenue always

So, operations you That's in spot ICC asset optimize to is the what combination today, and this that. rapid markets on teams see in from an about to start fire with yesterday, our the the today, in and benefiting doing the base tomorrow, really what's opportunity work quickly, prices rest working your field. month? going with unbelievable our There's of

the lot we guidance. a yes, DCP revenue cost X.X and So side on and also see side, on the from continue to then

it's If on out around there, hard. obviously, opportunities and revenue our hand we're can about, all all energy is working compliance. working the - like on very of team is you transitions, hand, we're DCP on you this, about one about this that, hard very, very the about things things with both create think and other But hey, ventures

Shneur Gershuni

us maybe better. appreciate technical fairly to looked third question a the the all a fourth equivalency equivalency saw And just in now. I'm where quarter ethane Is based point? saw, I us recover I XXX% of color I to Great, kind guess, your like the flip premium, a nope, quarter. there just of on any flips up sort anticipate rejection your of thermal give Is traded rejection. can sort on ethane it was we high versus what thermal When experience, - reject you that rejection if flipping of ethane or in experience we with We're if tell as Permian, on back you I at ethane? respect the have percentage down at think and between quarter, we recovery XXX% in fourth system over? should wondering trended in the it volumes if terms the definitely wondering when equivalency, producers color helpful? to, can would tend you producers be some

Sean O'Brien

Yep.

frac we some it because can value can't that I a and you DCP to thermal I you a the in to way generalities. the has Shneur, for and So Gulf positive we're equivalent, spread midstream company, But ethane through get Coast. the like the companies there's that or thermal things the a equivalent it, privy fully couple to integrated the formula that you have give right. There's that value that alluding bakes internally tell everyone's was to earlier, And infrastructure. downstream more there's all is then give - can targets. based I we're we and not I there's exact everyone's a to

recovery the of generally we at downstream the speaking, producer reason today, going components. thermal the happening in for what's that extra the we plus, run. work in has and own frac downstream stuff would with equation, But that look were many math have equivalent don't all your QX the into if equation, we value market It's earnings Every recovery and I the just the some, the and be it we you their in in of interesting those them make? to spread, up of of barrels that's other version borrowing earlier, that's I some So, crazy. mentioned gas we expect bring is,

us in going to saw. there with in Even times what in rejection recovery. aside we So, they're will when are that's be probably rejection and equivalents companies in like be thermal

some feel a tell probably then flip. may marketing recovery exactly I when pretty know in things our We that And with the arm have did flip definitely, we decade, recovery, think know some thing what indicator last equation. thermal we incentive in a we don't half these the going that Houston rates to about I are quit. guys a you point that to augmented going are due have would guys you into sits producers pretty to But last interesting as good some short-term these some well, recall at periods, But that I has over feel. of good

Wouter van Kempen

our system. have Hills We their us that would into of Wouter do third-party producers. Shneur, to with to a those contractual we the here the we flow noted, obviously our None or rejection. ones has have midstream to or always have maybe add thing Hills to But we right to And that. deliver lot talks a that systems from behind recover. emerging the don't one recovery And plans contracts producers the Midstream about. have And Southern the insights some like third-party have producers of plants San and rights into reject tell to Sand third-party Sean are in involve

Shneur Gershuni

GCX perfect experiences all? sense. any change that fact that at PHP makes assume the doesn't And That online, and of I that the are

Wouter van Kempen

No.

Sean O'Brien

No.

Shneur Gershuni

guys, you Perfect. and thank the very day. All a have much. color today I safe right appreciate

Sean O'Brien

Shneur. Thanks

Wouter van Kempen

You too.

Operator

from thank Suisse. And you. Dounis from Credit question And comes next Spiro our

open. now is line Your

Spiro Dounis

you Sean. have hey Wouter, How Hey been?

Wouter van Kempen

Good morning.

Spiro Dounis

just on of is there's It the and both amount a seems question First spot curve. here strategy. forward hedging considerable on like upside

is for a plan here So, just about what little the could talk guys curious XXXX? to bit 'XX hedge your remaining if fill the and for plan book you

Sean O'Brien

things, strategy. so disciplined hedging a have we mean, I a do Yeah, Spiro. couple

year a so you pleased to on been has But we're we're the business, by you half of get seen you've a driving, on. with approach. ethane that about some NGL able the on and and we I logistics constructed, constructive, additional is have up would with been price, row. Boy, get a We what's able position have an really could pick I little I of that use this ethane, always both if the hedges That's left fee think incremental there the let hedges eye heard, to we've opportunity targets, propane fourth mentioned I'll us - crudes portion very this grew in it's keeping it. but again year, And a give plus can million we for set we and really that But our Wouter color, day have not book. $XX you system. able that a our open. remind take or trade So, our hedged. good have we we're to grown. since forward, half of that guess the to X% the company. the to amount being about to And I'll we $XX XX%, your Because position spot disciplined second we be of upside. million been it. between budget, runs, we've barrel you that's haven't do third been

plan. we have very disciplined a So,

XX there You XXXX, been not mentioned is obviously very, able the to get the out company degree set very of but get or to well. XXXX, we've and magnitude some up hedges,

a pretty good very company. flow us with where for a stay stability the fee-based good year I I hedges some mix really prices think give upside. cash to spot mean, be if it's they that are, it's substantial going of

Spiro Dounis

you runs, said on Very be it's one ethane there, helpful quick if a going thing you just said really Sean, strong. clarification to

about on to XX just it pick think that, price, that we ethane sounds an the there XX be understand if as top of to XX So, your sensitivity? would up, like run incremental XX it or was

Sean O'Brien

XX was it Spiro the saying - mean, end because is of is materializing could we've and about of be you hedge of a component My if barrel that. run No, current And think run big sorry. the is some able to been that. could point I ethane the pricing. that XX, What crude heavier to ethane above has already. of one us it that run I Because no is, was

Spiro Dounis

Understood.

makes that Okay, sense.

on getting maybe assets. question, Second just view your latest

a hit. were For you pandemic time, fairly active period until of

started sign So, the pursued assets and come sales do as is back potentially, curious, the [ph] there early to accelerate just levering into even asset you how look it, some So, strategy? maybe

Wouter van Kempen

at, obviously we're always looking sell. can are kind that there you opportunistic Spiro, of assets

company a tremendously think multiple there we've of is I or a may perfect one not if the assets probably strategically, that, publicly buyer then we'll in value want them of definitely we discussions. who at that well. with very says, having fits us, probably negotiations active with that match fit Hey, discussion. to pay this that it good for those not And and and kind some kind they're there said in But better means than be two enter assets, may and we But times on are assets. moment

next come month. of don't next week up the in something kind or the to expect So, in

also, or if do it's operationally sales market work that sales who and nothing we and if to or people is it's guidance. sheet this with but say, our to know other over people something, bit to never to DCP, active, open bake we going gravy. be something above who there's asset what on like sheet getting be rely going kind very and better, knows and proceeds that. we're always But Hey, would there's moment, I balance in with a we're with know who at the XX/X, to things, of work will asset we as you sell We doing budget we to balance from the little

Spiro Dounis

Thanks, all it. guys. Got the Thanks. Appreciate color.

Sean O'Brien

Thanks Spiro.

Operator

our Thank Tonet next Jeremy question you. from from And comes JP Morgan.

Your line is now open.

James Kirby

Hey, on for guys. is good James morning, Jeremy. This

there, of size volume start second it's the here G&P most And guess you with there are how a the are to know X% grow Do in activity you for volumes your how to the upside month and maybe producers And XX% footprint? year? the move given to into guide. the a seeing across just I start back is off, dig in maybe I the I assuming this to to maybe commodities? want the year of expected in assumptions and 'XX guys start but, part, at to Just given progressing the there then foresee short year was half guess December. conversions budgeted that sample

Sean O'Brien

of style. volume. we that's indicated being but things, obviously, James. little guidance where a couple Yeah, think one we One commodity, And is we're two in our our conservative, is areas

So, on the side. talk let's about the volume volumes

North. we we But a referenced year, is you bit North, potentially been. First, near where of expect in little see think where see that it there, pre-COVID we'll we'll hang levels a of The area the would is nowhere to the growth have growth. bit little one area next an do

that Your what is on too, the which - big raising around chime focusing outlook. really good we're I not think days cash great Look, just signals and think I good I seeing pricing other things. love in, can commodity around there more signs, moving, and really But are free Wouter some some a in but focusing there are commodity XX guys. thing both of either across is the they're indicators. They're and question discipline, some they're out on flow,

want I it not So, earnings. be to you growth a that capital in But earnings for we in project play. In one efficient It the would been, I of and be decided driver other goes for from it have ago project a was on say Latham. North. would lot couple on that that would it's to upside that company think upside. a early remarks, diminished. If a the that and predicated would company, big that not to example too growth, was it driver to volumes. And be I my driver. big substantial little the of we're drive that Latham going give seeing was mentioned a But more do of volume get a big it years got a when to massively Latham volume we incremental

keep eye I'm So, some to And you the discipline Again, the Permian those of upside. think, there. ones that can another showing are just are signals good the But give eye the going anyway. keep ones example you areas on. an big I we'll We're hearing our on. two producers area is

changing role volumes perpetual is contract expectations decline, in off. But the much don't there and Ford, see of our Eagle I base coming upside. about think Midcontinent pretty there. there I is talked

I on models, a but we'll the bake to early think little our eye keep into too it. it's it

Wouter van Kempen

maybe rest and together we've decade James Sean add this party the people this. little a and don't that come upcycles a of of of and of from our on And like, and point start destroying things the team a one view, to upcycle just over feels I And immediately, a roaring then kind bit different and again. Yeah, couple own back of downcycles. crashing potential

of a more hey, we recovery. talk rigs zone we're the sight where demand that's set supply yes, when want that in And to to would I other conservative. measured And saying, push. quickly. our from to are is to business I hear have little good very I thing they obviously, producer I cycle and what but in XXXX we And their industry and more that lot you're around we're our year, way some not bit the optimism of better, cycles still you lot But I free full creating a last bit to but they're that is also So, a a customers. flow, little little bounce optimism, that have about kind producers how feeling line ours going up pretty one it's throw cash that is can I we're going But of is And the has a definitely, go like long probably think think there have a sitting and do. discipline long really good is long bit back bit field little And taught exactly more around in we gives today. things out to needs us go there's before short a of year recovery. and say very significant thing, really, go ways demand thing this it downside than this know, and to to upside deliver here step, a a just things.

of hope of seeing. little a kind and So, what I I that you Sean gives are bit insight

James Kirby

the breakdown No, does. there. And and appreciate I color the it

decks have year-over-year that? rating slide IG in the what be goal of and set like agencies should allocated assume to guys is guys leverage X first uplift that shifting pretty deleveraging guess the range. achieve any maybe that we that the times for foremost? for. laid to that you the I flat question, should targeting seems timeline And commodity in say, prices you know guide out in are the X.X kind Second And at of I rating kind the to you times

Sean O'Brien

think Yeah, with of there, I question, And, the But yes. last portion that James. so that get towards you than goal. number start to your we could halfway threw don't out upside more the

you So, I of by continue the What know lot lot mean I you're pretty specific, upside think be Again, very being door on response, around cash, a that that we're means look, constructed models conservative if do cash without volume the one to a holding and stays of utilize do toughest balance if us have a knocking that conservative I go. we staying same know quickly. there good is we the outreach. that again, too and That I will really of serve look, with but sheet. the see on going only commodity not leverage environments. the good, outlook some We have getting think a And to Wouter to and I strengthen we sign. see Metro,

the exact we give we I definitely constructive the line hate upside, if an see XX I our see date. in very to hopefully there, give is quickly. to is, you But million can't I sight again, to sooner. there. And sometime next that on of think environment XX But could be door So, get you once million get the goal. but of we 'XX, to over definitely going we're knocking goal year, that But reality have timelines, of

Wouter van Kempen

James forwards, guidance, you at the I of that on XX leverage, you have kind is, I our XX somewhere my looking think midpoint you of that the time, the maybe if you're Yeah, head, if between current the And put and I in numbers at start of XX. think get that eight. to

that gets probably goal. So XX% you

we go is XX commodity where from I get there could us. that this to And had what to who the this know believe going quickly. or want some And volume be from where time. again, or pretty you literally year better, you XX knows earnings year days to there's call completely But ago, back changed goes, a around you upside, If later, us. world hey, world changed the

good conservative, upside your It for the it more think run around. a way a us provides you to for way I being So, business. doing is than much other

James Kirby

there. I'll No, you. good to Thanks. Got hear. that's stop color the I appreciate and

Sean O'Brien

Thanks James.

Operator

our next thank question Tillett from And And from Barclays. Chris comes you.

Your now line open. is

Chris Tillett

was actually the that just those going you time to about But Hey, some sheet. and talking guys, balance I about spend answering questions ask there.

move? that. ends sensitivities I from one contemplate operationally Or quickly more they guys guess, around guidance. the commodity might are low how maybe So, appreciate have and me, that sort of more the ends just those of you things the about? high Do talked

Sean O'Brien

towards more Chris, Typically, weighted commodity. they're

the have XX we years how for done it been that's here. and So, I've

It's predicated ranges. answer. So commodity yeah, more short on

Chris Tillett

me then Okay. guys. Thanks. That's it from

Operator

Truist Richardson you. thank of our Securities. comes Tristan next And And from question

now line is open. Your

Tristan Richardson

the of assumptions to think to year? Thank to to type Hey, of you up some we go kind I the on that the around of do destruction I the guide, that last and last guidance. world follow conversely, back the detail a appreciate, good saw of see all end low demand environment get just question. for that And morning. need we

Sean O'Brien

Yes.

Tristan Richardson

Helpful. And then…

Sean O'Brien

I'm like, I'm a I'm like short not obviously things bad it's It's to happen. some No, Yes, need answer. really sure.

Tristan Richardson

about And low sense. the and high end representing Makes kind Sean, more the then of your comment to end commodity.

Permian above the talking does accelerated think today? volumes you're really North any include So, about the the what should we high not end or either in

Sean O'Brien

fair But it to my if in that's Tristan, may level, not Yes, always back at that of But correlation, just this be a always a again, - right. and a world, right. there's one years lag, there's perfect XX it's obviously, course, business, pricing assumption. a stays phenomenal

We've been at COVID-XX a quite is those environment this level. back nowhere assets volumes really forget, dampened year ago. we've volumes thing lot going assets. near back. going benefit prices, in to good that. that we're that's one hopefully You're demand these It's We you're of pre the these long, assets the so point, think to in these you were come day. some see, volumes, We constructive to you're talked a when I And pricing back, just a from come earnings volume for At see these about really, power going got performed man, well.

of side, So, just potentially the it the power volume answer and the would have. be on is shows the we earnings it assets more

Tristan Richardson

it. appreciate Really Thank you much. very guys

Sean O'Brien

Tristan. Thanks,

Operator

from Mizuho. And comes Gabe question you. our thank And next from Moreen

selling vocal industry Gabe Hey, is but maybe or know line open. about earlier consolidation. morning, that I now everybody. Q Spiro more Your - Moreen about good you've about asked than most assets, been

where more consolidation? in steps hinders whether people's wondering there Just guess, helps a the you think or spring little optimism and in recovery, things stand midstream I

Wouter van Kempen

I short company a for be believe of I've view growth as been cycles around you supply has that capacity, create vocal point I from that strategy around a an our end. long an grow Well, lean that of cannot think manufacturing because to and to consolidation and been come super profile industry company's more we a believe always

industry So, but we much happened. quickly of with. for want were we do we to aims things that when it thing, of it there something gradual can as really did. we kind do obviously, didn't kind you type a to is can you that it well that really Running yourself the potentially, wanted make be ready ready growth of as of thought when be sure inevitable COVID-XX We going to stop to cycle. company in think was a cycle was for consolidation And of an to more have going but lean manufacturing super

less? industry you XX see at to, everybody went the that, are for pertains barrels is I XX a it see do you think to facts And As probably facts. more, that looking hey, day. million, an was XX million. is do oil there We built production million of crude same the

of kind above And XX think going I for remainder to most massively year. not be the of are XX. hovering it's this of We think us around

is there and in to M&A optimization, to the on means, are some not cost And hard, to there know that no correct. tends assets. same to that execute reason looking is a means, going start synergies, fit at, there you build hey, the ways synergies all commercial things really, well M&A it's really and M&A that the is model. like way At time, strategy, overcapacity, go So new create strategy. you're we is that

And so to going things are happen.

in 'XX was I spoke consolidation likelihood of think we about it when today greater than all 'XX is consolidation. the also

you're not is way premium, a equals It on But Midstream consolidate up XX% low say premium buying a merger today think, you I than the needs also, likelihood one fact a this basis, to is competitor kind XX%, That at time. the to that is market greater of needs no And read, to of of consolidate. type little dealing with premiums. XX%, things. kind that hey of going are wake day the So, not hard. bit would it's at I and DCP

proven into DCP it stay I thing is up my has a a the belief, or a execute, horizon. in that hey, happen good thing goes the And continue to personal team we it's shareholder we thing, it's to know something beyond you in that's all world going that, And And to up synergies the streamline, how each how good cycle. And to I to cost do. to look absolutely. good over groups of So, think is thing, how very we'll well. companies. industry, the set that like reasonable see and this that think we think, a plays it to if needs if of the how again, And create and this out. But consolidation take hard are the are where good doubt respective how to I the

Gabe Moreen

I widespread on 'XX latest the and there you much how say about you sort 'XX headwind. some impacts of delta just longer sort could versus Can if in maybe and long, then call also of how for that are is you And contracted I just contracts, know Guadalupe, termed but of are? those the with out Wouter. talk Thanks, term what

Sean O'Brien

windfall, just times basis five real it $XX mean, in Gabe was the history 'XX. here's I that and or Yeah, four out in made year. million, that $XX million 'XX, quick right. a We made I blew obviously a asset an on mean, the

and created did, we think annuity. the we smart as was what an I it So, move

the backward we to declines position so, it curves hedged dated hedged next And as percentage of year. years. five between was over XX% that think Two out that you out went hedged And we XX% less and go somewhere ranges the were the to a Gabe, about, curve. a every things little

converted a a So, year that and we hedge or into million from would decline both your pricing annuity, price goes percentage. we generate hedge of $XX is down But a a did year-over-year only something what percentage a little it $XX million does but strong bit. a from income really

in up were in things and 'XX we're short set does it. run it But So, 'XX. us leave little versus the run we and in 'XX it's 'XX it probably hedge less than forget a as

high. for very important was Q it We company. in pricing a Sean. have those Great. we think when was Gabe time Moreen did thing the locked I - and at And that cash flows Thanks the

Operator

next And Capital. from And James you. U.S. our thank question comes Carreker from

line Your now is open.

James Carreker

to earnings? that to be that it it representing flush really driver could Hi, drag? back Latham Is for on a it the if we guys. I guess I take year. Is to I could accretive earnings? neutral earlier earnings X comment circle actually to for does a bit. a if not I significantly wondering Thanks what was question. you little Or this out wondering was a made offload big maybe

Sean O'Brien

not it's drag I it written going it way. the a funny might someone remarks, take Yeah, was James. through was thought that as I And

have were give thing. I'll going have would cost billion way a did three exponentially. $X.X building grow it I you smart did make think Instead I whatever can thought years the to this And history. - plan a very everybody simple. or volumes we we ago, of our Two, early available. honoring we little a some the the in want agreement we're that I [ph] that point late But all took honoring December, honor kicked advantage the we're have was that to by way, we capacity of offload and NBCs, of to point NBCs, January. out, - volume and

to there company. into I and be so When And and was models highest way a So, in, felt getting that when in a it still not it's rate Latham. that one the to the offload went about contract, not models of What it's better say we way really driver the going, be good when windfall DJ, upside. growing areas it's going volumes. guidance, if in forth, big I feeling people's had very of had the not it's take off serve. for some But to was in. 'XX, probably And that to sort to That's big we're Latham it's a but about we areas we're I be of people still earnings about that's big their return to the are therefore, volume they going in see of really our at the that losing we money way bypass had think holding for in it going we that we're have we not around it, the I best is volumes is said the growing, the And mode outlook one not upside. think volumes think because thought.

James Carreker

then just is an to presented XXXX? the of technical clarify a And the question exit presentation, just that. Appreciate relative year-over-year you. is Got rate that maybe or in to that outlook on volumes volume

Sean O'Brien

Year-over-year.

James Carreker

then party volumes guys Sand of is was subject Hills on much third a you is about to QX a ethane it. bit of how versus volumes throughput Year-over-year. Hills own and Sand the kind talked of just Have how And much your rejection? in Got drop surprise.

Sean O'Brien

talked quarter, we third recovery. of into we and I our terms in going rejection. about the party based percentages. the can in is on The We stayed But drive what into haven't tell expectations that you volumes went

James Carreker

essentially that was all rejecting was was - or And third party it

Sean O'Brien

went into puts largest that third party volumes on pipeline full rejection. The that

Wouter van Kempen

ever we've largest only said the James Sand that about, shipper hey, is the are Hills pipeline. - we I DCP the thing Yeah. And on think

Sean O'Brien

had. Okay. you. Thank That's I all

Sean O'Brien

Thanks James.

Operator

a have we And you. thank from follow from Spiro Dounis Credit Suisse. And question up

Your line is now open.

Spiro Dounis

Hey, guys, for thanks up. taking the follow

Just function the free that look And it your looks cash bit second can back just figure weighted components. Just Slide one like you of CapEx is more declining the us if one. in or at flow give a wondered that half up? the a if of maybe on X, ramping quick there. 'XX excess little curious, earnings clarity is year you is a On half the

Wouter van Kempen

recovery any numbers So, reflected really the going British, where we South on half are. that's setbacks place. kind kind is that of we're It's to trying is starting really by Are going? uncertain to figure the Right are world When still driven pretty our a we stuff? is COVID-XX, world. open that, going why of African how of take Brazilian, And belief variances how believe and vaccinations they second is are see we're to in to the up? out now, kind

Spiro Dounis

well. Be Thanks Got guys. again, it.

Wouter van Kempen

thank Yeah, you

Operator

And thank now to over like turn remarks. would back I And Sarah call to you. closing Sandberg for the

Sarah Sandberg

joining everyone you me questions, a have Just and want call us. say if to a Please give any thanks for day. phone great have

Operator

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

may now You disconnect.