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DCP Midstream (DCP)

Participants
Mike Fullman IR
Wouter van Kempen CEO
Sean O’Brien CFO
Shneur Gershuni UBS
Michael Blum Wells Fargo
Jeremy Tonet JPMorgan
Tristan Richardson Truist Securities
Spiro Dounis Credit Suisse
Call transcript
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Operator

Thank you for standing by and welcome to the Q3 2021 DCP Midstream LP Earnings Conference Call. At this time, all participants are in listen-only mode. After the speakers’ presentation, there will be a question-and-answer session [Operator Instructions].

As a reminder, today’s conference call is being recorded. I would now like to turn the conference over to your host, Mr. Fullman. Mike begin. may you Sir,

Mike Fullman

the morning, and XXXX and Midstream Quarter dcpmidstream.com. to the encourage on are our website welcome Call. Today’s to at view phone Earnings the webcast, listening DCP slides, call which those available Third on Good supporting is I being

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

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

Wouter van Kempen

Thank We joining hope XXXX. third everyone. early and results our today safe will our appreciate are XXXX, of for the we this and outlook of year you, for and all call, us well. you good and quarter you discuss remainder preview On Mike, today’s morning, an

team. into the DCP acknowledge to the getting Before thank third quarter like highlights, and I’d

to headcount actions, while and favorable discipline long-term in DCP our had to five-plus made extended actions lowering aggressive more executed cash and last drive created Managing sustainability flows, year, chain, and stabilize the DCP. and our years, significant has have and through strategic DCP’s strategy portfolio to prioritized X.X commodity and our helped our these and retaining business positions manage our commodity environment. to we resilient our in industry while structure. has extreme cost headwinds and stronger these the value rightsizing our our a Over cycles general, difficult any Ultimately, invested ensure We’ve efficiencies through in balance DCP in faced took Through upside. capital diversify volatility.

third portfolio and The execution. our results the of DCP strong value the quarter team’s balanced highlight

assets, million, the adjusted million free all quarter of For generated value This funding to growth across our excess programs. year-to-date And our as of free our we $XXX along approximately paying excess and consecutive Strong continues portfolio continues approximately capital North $XXX our record Permian the realized free free optimizing flow of cash sixth chains cash cash excess performance performance. and and $XXX strong EBITDA after DCF results favorable of cash quarter, million. our our we quarter from distributions all flow. and of with define drive flow flow record

us agency made we model, a the has on actions while the progress inflationary far lean So and in second this outlook. have million quarter investment-grade approximately our Fitch as towards savings cash to pressures. XX% resulting increase full positive rating year maintained year, manufacturing generated which sustain also we target which is free million in flow, of $XXX XXXX, offsetting $XXX excess We’ve cost year of approximate this upgraded to from us the ratings, have favorable quarter, And an in moved Moody’s us XXXX. third strong in realized

I’ll Sean to XXXX have with with on that, DCP turn Our performance over things to financial record run QX’s through results. strong half And coupled to third quarter guidance. results, first our track financial our exceed

Sean O’Brien

the We realized benefited primarily our $XX up and QX. key commodity resulted Thanks, The EBITDA improvement. quarter drivers due as the volume good drove two volumes which crude I’ll Sand XX% the DCF drivers in was of X, NGL up record maintenance margin highest than and lower earnings a to hit favorable from volumes which two business offset favorable up and our Permian the South morning, from costs in regions, impact and Slide maintenance was environment, everyone. The to on our quarter. more Hills. G&P lower adjusted units. Wouter, the planned X%, higher and of XX% These in business third for portfolio, our earnings impacted performance On million and the financial growth DJ are up planned across quarter-over-quarter X% G&P

X we plants National in the DJ. our X and Helium had our Plant Mid-Continent turnaround in at Specifically, and O’Connor the Lucerne

exceed the adjusted DCF, Texas XXXX has quarter a L&M EBITDA generated financial down well million by our had Hills our leverage supported down direct update flow, a our commodity to million the business normal activities. Hills tailwind in $XXX has out higher the our the The the Year-to-date, continuing Sand Overall, an resulted our were maintenance $XXX first we’ve remainder assets business were X, and also but from strong West hedges on We as impacted of as been us X%. on close our Southern leverage and anticipate increase of as cash volumes unit impact On excess lower completed. improving G&P which of we year. year $XXX volumes the for volumes guidance. of favorable strong. like improve Additionally, in was has capital on business G&P a pricing deferred provide The for to and created pricing needs and were track temporary free million X.Xx. outlook business, commodity to Slide working also I’d to X% performance

we due and above crude another of outlook producer The to realize our complete, prying fourth businesses the from scheduled as we to of as projects NGLs the And our $XX, prepared assets and has approach remain prime set majority fundamentals winter are quarter pricing the and to are activity. upside. DJ strong incremental Permian season. for We’re commodity quarter above improve trading pricing continues With large constructive. our maintenance which $X

driven to timing and deferred the by producer expect related realize increased costs to activity. work capital quarter, we of also the During sustaining increased expect to see

closed well. until generate cash free improve agency over As highlight Moody’s balanced liquidity position into X.Xx to the favorable and months, will flow. is X, our outlined improved to from provide actions leverage expire see continue target, On hedges trends our metrics. leverage commitment Leverage prioritize debt our has Slide and excess to the and business we reduction we the cash last year, Excess continuing strengthen increase. Coming strong with XXXX. our as XXXX investment-grade to flexibility S&P, earnings. hitting XX performed I continue and into and financial our Fitch. will sheet financial free want well positioned approximately the which year, screen strong we well to balance improve flow Year-to-date, us rating continues And to very received to portfolio extremely we’ve would and

will head X.Xx we hit XXXX, which leverage to the we the target, flexibility track us our power build additional As leverage and to momentum continue earnings with into on to afford the portfolio. approximate are financial rating the and provide of agencies opportunity

back Our And while opportunistic the targets XX% our hedges Wouter. improving fee-based mix an further the to XX%, curve. XX% with will eye potential hedged liquidity, our XXXX strategy multiyear of at it on to to leverage enter we keeping add hedging I’ll and and turn out that, earnings. With

Wouter van Kempen

Sean. Thanks,

let’s how and manage DCP opportunities we the as at is Slide and take of risks X, trends to a prepared present. they look move industry to So some the

This to outlook. shale the approach discipline of we’re through sets products up well inventory Sand taking our as optimistic for portfolio a measured below Global favorable we’ve Hills, fee-based U.S. balance strong are a assets to like pricing also average, the maintaining next value to to G&P Gulf Southern on levels business. capital Looking for Express, currently remain our Hills, extended our commodity increase. built year, to quality and DCP growth. Coast and committed Demand exposure are continues and chain producers maintaining while

development plans, are opportunities currently uptick While see starting our we’re an approach across taking in disciplined to a producers footprints. to

anticipating this benefit volume South. in Mid-Continent We’re and regions also DJ our the legacy the and declines offsetting while Permian to

set be continue up rates our to this In new forward. able faced key a for economy. impacting chain affecting capacity, we couple supply other industries, Like While is believe well facing securing and volumes, to industry impact materials still One excess and the the chain on are activity, secure integrated our the value commodity which been the we’ve years, component to pricing with will move to last will industry fundamentals inflationary our we’re incremental the of pricing. is last pressures and global producer volumes. success as inflationary leverage item we and impacting which labor disruptions, environment

to hedges for DCP’s the me about key ability against areas we’ll long-term partially transition Ultimately, is our our cover I’m and built continue to Slide we and I’m North and this However, XXXX, announced and chain I our we’ve contractual integrated pressures, G&P we’re to excellence. a next value safety on priority. as next by well drive drive brings enter to was DCP the our set experience we executive L&M making. our sustainability make past technical maximize strong X. to #X the our the commodity operational chain built-in accelerate to business knowledge of unitholders. we’ve in on value is our very business success. excited our these critical long-term changes is to earnings, leverage within operational in on outlook, With first management up a businesses. for is our progress our offset in culture able of will and role and positioned team. favorable leveraging realignment slide excellence efforts which that Since based added the and leveraging and and also continued Yesterday, our plan energy built-in our escalators focused the year. these on introduced, value factors executive proud portfolio to investments strategic environment inflationary our begin, business XXXX, To priorities also

and employee set DCP of an XXX As operational without record to are critical company of an our we utilization success. all-time OSHA reliability excellence today, have injury. recordable framework, Within our asset days

ultimately importance and focus builds our liabilities maintain magnified to runtime us excellence. critical of Our and these and of during business. maintain to rely on positions us on customers reliability periods and our operational for our trust The grow commodity it’s scorecard us are pricing, are that high and

progress for efforts. Another XXXX be on sustainability the us priority our accelerating in will

continued we net August, of goals achieve long-term quarter To released I zero second Scope emissions we’ve X Core. the in Core, our through highlighted progress here significant Core, XXXX made call X modernization with that to horizons: improve and profile operations. ESG by the Beyond earnings to strategic Scope Clean Scope the XX% driving reducing increased existing by XX% XXXX, means a and our emissions, sustainability and X emissions of efficiency in these the we and by and Between Scope Adjacent X three and goals, XXXX. our and XXXX. Core and Cleaning progress in our During continuing XXXX ultimately, reduction

For profitability A strong of now example, our capital to maintaining just sustaining evaluated are Core. emissions will but Clean reliability, projects our reduces and also way the lens discipline. supports not the that of in through and be a strong efforts profile area focus capital

As business, investments. we in we make and to will strategic continue favorable select only our investments this leverage environment opportunities to long-term our make prioritize

optionality asset work We that has of well, customers expansions. utilization, capacity-short capital-efficient and sheet. This large-scale high have growth strategy strengthened and DCP. long-term solutions built supply-long we maintained executed our track leveraged both benefited a as balance existing to and retained worked capacity We strategy the a disciplined versus we’ve capital-light and record capital develop

we bolt-on capital-efficient our and opportunity. further part opportunities our in around we customers investments and In out some may cases, forward, and and to footprint with energy opportunities continue Beyond Along earnings we DCP’s G&P to will develop Adjacent like their identify Core the Permian. as competitive As this business, to with strengthen ramp our the strategies. as pursue of up, and this as work we will means needs provide These to build development downstream discipline especially maintain areas in they the move across transition plans. investing position investments our will core DJ Core

lastly, means and our exploring our on I opportunities to Core And Tech and Beyond would on Ventures highlight capital capital area intellectual largely Our sequestration The focuses is the the like our could include emerging other Core Adjacent to allocation. and infrastructure. new capture is final to leveraging technologies. this carbon And business portfolio, supported DCP technologies. effort expand group by existing

couple of sheet. able As we’ve transformed our balance last business the been over to our we’ve years, strengthen

of this to flexibility of with withstand options pivot expect X.X to economic And us or any other capital a sheet, second our them taking for DCP opportunity allocation we Any increases in of to as and and our drive ability such to a these flexibility With combination meet favorable to with we We beyond. our innovate value forward questions. to a cycle. repurchases. will unitholders. efficiencies, prepared improve focus fundamentals the to return growth, leverage to distribution approximately target options continue the will look or additional strong XXXX, and team’s And our select unit half XXXX strengthened financial providing balance the the balance that, are afford well with sheet us operations, deleveraging your from

Operator

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

Shneur Gershuni

Maybe seeing? of you whole there PPI on any if exposed PPI there we and the can of we’re in you was PPI upside? wondering business here. parts wondering more arrangement I certain a see have potential are that inflators could little start off, that if tariff that kind I about tariff could to Is was your bit potential back surge talk where have increases the be contractual

Sean O’Brien

and maybe I’ll Yes. a whole, inflation cover but hit Shneur, as PPI. I’ll your

So ourselves to that, lot in really a inflationary do this cost some bottom line, we’re a those. in digitization, as things plus, good last did Having good years into around period. costs, reduce spot. in of so and we said of increases expect set see to the increases of $XXX million we with is XXXX, that Company I’ll the up efficiencies, going some cover increases, couple inflation actually We X.X anticipate the

it in seeing labor. We’re

steel. in seeing it We’re

things ancillary We’re seeing and forth. lubes contractors labor-like so and cams, to in it

or with haven’t way. but have the of a So to company commodity in the we Company side, G&P get we big in course, some been the to measure, we and after PPI, of high intended those on in few and ‘XX. increase One, will To that what against bit that a there really to be the do things which question, really there’s two, a story can that portfolio. In XXXX, I’ll expect CPI the inflation. really increases. hedges cost big your cost on disruptions seen that impacted not supply side, the regards But We’ve into as direct chain move and to out ‘XX, prices, call, both ‘XX. specifically obviously, increases. in we question is And our have an our L&M side Midstream we your help, of more indicators obviously, yes, helping inflationary is a answer that’s short company were areas all quite the

-- So next at see see offsets. the ledger end there day, and costs going by ledger, of offsets be margin increased commodity the you’re will price but to you’ll year,

Wouter van Kempen

to Sean we Yes. do obviously, cost on a that have And increased maybe of that about, to talking the CPI/PPI inflators. add number is

and business, business wind times have there’s the margin. in of the is think one a help wind face, are to times going that’s we that back. But you your So have cyclical in the important a I things the you your in and ours, like where there’s when

a right a the company, have our back now little as an industry, as bit. I wind we think in

year if we I think feels And next time it’s invest good business also in our at think and make you your pretty a I sure look good drive long-term value. to outlook.

year, we next turnaround in overall a heavy So fairly year. have

as good excellence to business in operational sure we continue to that run possible. going as the We’re and reliability, invest making

We’re to and going to continue invest in do our that. workforce

a with multi-skilled And you’re work workforce. given important, are what trying We environment. build to that’s seeing think the I especially today

And it the makes you what beyond Aerospace, create we your in sure your lastly, a ahead base, I cost think detection pipeline leak XXXX if that. better. going the United basis changes, well or Think invest leak in where asset transition. going via assets XXXX, largest the potential of that Kairos invest it States. we ‘XX to about to to you voluntary And to It about stay in methane detection. started sure not started maintenance, what program we’re overall, think run that think we tremendous in on things here structure. will but energy make is I benefit important We’re does, And regulatory only

lower our XXXX. Our cost I about structure or $X.XX year in years to significantly years going we what cost was believe be than XXXX, is structure so. in billion still saw next those like

below We’re that. about XX%

While while being higher having we’re safety, having we better going we’re -- we similar EBITDA, better And while next be reliability, like while have that. year lower emissions. is have to

So nicely set pretty up.

Shneur Gershuni

Great.

remarks your your at allocation being wind XXXX. the have in as you prepared mentioned capital had one priorities the that Given you of key about for back,

about towards active Is Just distributions? about work wondering capital. considering the you’re priorities special respect of discussed. it a Just you’re Are favoring? both? there of talk optionality that we towards Does order you free something the that you understand cash it to increase, kind flow distribution if thinking can that trying buybacks? to even Is with returning

Wouter van Kempen

No. Yes.

the the that’s very quarters, on been any leverage right to up were here over And reduce that cycle. our #X this at of that focus company absolute think We going that, level, a our the has make an economic fair you lowered we Like it’s as kind quarter. balance in ask been last to our has question. And expected us That Shneur. I obviously, know, question. set withstand this sheet. priority, sure of you number

this team going Very think second I end has that front a the in going half to far believe year. somewhere that seen results year XXXX. of the be we’re I be three I X.X it. we’ve target. And the we’re with of to probably from at a a pleased in to up ratio with leverage the that expect so

we very schedule. maintain look two year at continue think so, We’re a to and back if healthy distribution. years or last the year well a you ahead also of that or I our

a things measured took March, we for think continues approach worst perform business well. in really the kind XXXX. of of very The I turn April when to

of $XXX excess the year-to-date We cash for or flow positive free have six quarter. million last

XX% free XXXX to sometime cash up here in, since second in optionality excess us the it’s half I of great of what XXXX. is provides all We’re flow have optionality. and nice that And think, great

think invest transition, in we opportunities can G&P in where can if areas a important to makes We invest from sense. So continue most there’s can company it energy do? what in our the I there, point. we

distribution. DJ, the the the like can raise you like Permian, If you

can You do buybacks.

I think And second additional of we’re to I to unitholders. the execute great or going those XXXX for place any or in think in a going any option is create value to combination be half a on all those of options. of

Operator

question next Blum comes from Our Wells Fargo. Michael of

Michael Blum

a ask the little to bit wanted I Mid-Con. about

any get think producers. want wanted to there’s you’re you from be on Just sense of sort change to there. your to activity? in any what if could of Do your see outlook drilling Just get we uptick there try to seeing going

Sean O’Brien

Yes.

-- actually I Mid-Continent Michael, asset think, we strong we produced still huge obviously, asset, area largest was see had pretty in out And our our margins. QX. the QX, the in

disciplined, are but are many quite there. and activity. the some there of potential think there’s So see year some it’s And activity, XXXX, increased producer’s it but flat seeing a areas very actually a it’s of to bit where then actively closing of the adding maybe we them I in smaller the those we through from some terms producer’s of we’re I producers, the as about the year, growth from side, thinking up. rest side, bigger slightly one then activity, think think And of

think I could us. that could -- an surprise area So be it’s that

But we some are as thought. see. locking than on up. margin areas The flat, that say The to Mid-Continent area like as DJ when probably we seeing value because area, an and I pleased I a would growth other outlook be is the flat we QX, we but base is will those had what And you we’ll to see probably much are be as with you areas. growth in two I that bigger thing growth it’s it’s think we’re strong not perspective, that’s and think areas. quarter solid the positive only And neutral laser would more though I higher-margin from driving declines is sure. G&P Permian offsetting remind ‘XX, the a for a then with would very have

Michael Blum

Great.

on rejection, question, And just you trend then how wanted Second XXXX. ethane will quarter? to that where any ask into that this I about was views have

Sean O’Brien

it’s -- consistent. look very, saw I we -- been the So I very at really three quarters, hovering quarters, if four the last been mean, last it’s

We we recovery. we’ve are been of Southern that -- specifically we the obviously, recovery assets we’ve Hills control been mostly on chain in of in where Sand and most the the Because control have, recovery, Hills. in barrels barrels the ethane we value

probably quarter. in Right in came Michael, rejection same third really stayed But recovery. There right and of But Even some went hoping out constant. Third-party assets in year. color that’s been to It’s And linear -- our third where we’ve pretty into come nothing what every chain this we’ll significant. February. what in value ‘XX, I and may more in recovery, parties give was was we you rejection. a has went if a the periods, of economics, we And out we’re relatively tell see but now, next where you’ll party, we’re the recovery trend that for recall, predicting guidance as in seeing in we’re not. DCP be we QX, producers because mode. that you year you we’d couple that, year. now, the as into

We’re rejection. significantly. keeping not and the still gas frac spread seeing of on it flip is The strength people

Wouter van Kempen

problem. And rejection, spot looking -- gas here ethane don’t gas. to it the I at a, lowest. on way looking XXX kind you’re the ethane just maybe at of add both now, that, champagne and at the looking bit fighting think ethane be Right and were we’re to know, we’re a to I recovery Yes. yes, a today of is Historically, $X.XX like

last in as -- number think as meaningful So of it’s a potentially this of would the not of issue bit about probably it’s you an years. an

Operator

comes from Tonet question Jeremy JPMorgan. of next Our

Jeremy Tonet

the to wanted optionality. get cash to back flow Just

DCP gushing want back As buybacks? you do year. opportunistic as X.Xx next relates leverage, more yes, we about, as see it to that, option. you specifically about cash the pursuing of after programmatic in of flow you the talked in lot drill And buyback do see, think value hitting in to half a or you really And something if pursue just

Wouter van Kempen

I Jeremy, at significant here. think Yes, go Wouter into kind don’t around willing moment, very this to I’m that. detail of

I think expectation that the XXXX. hopefully, have, get target is then that in closer that and closer to we get X.Xx there and we our of we the second half

We very will give details more obviously you time. at around that

we what’s to and continues company. think how I up be tremendously important is important set this

a think We’re think where eight-plus don’t comfortable in have If with we’ve ever this very We’ve today. together, I, going look we been chairs, I and I things calls done earnings Sean XX-plus years. sitting and felt are our now I at cycle, a comfortable for as where but same have year be that quickly. At we long changes. cycles of supposed sitting of It’s new to seen things this here a we’re relatively change into the lot and today. time, lot know industry you short

the thing of year. good we’re for us the So rest only set this is well, not tremendously up for

to ranges I have. think our going we’re meaningfully we guidance that exceed

that’s sometime look going and in really, metrics And rated just And very, balance we’ll already to we’re closer that sheet It’s value additional good. solid really for that’s starts get on. details. more year. provides this company And job We’re yes, things nicely unitholders. The you give and we year. look as our next laser-focused closer to then the going middle set It’s of optionality for investment-grade and a of create to next tremendous what and up that, do amount very better. to to look really

Jeremy Tonet

adding XXQ for through and thinking about even that towards to talked there. specifically, for that if helpful D.C. of of And But the comes renewables to type a want quite looking on my DCP? have is language could been if anything kind of very wondering there’s in And wondering just that’s minute cloudy. uncertainty That’s here it. MLPs, just ball I’m or what Got lot here. pivot a there’s impact crystal just granted you’re

Wouter van Kempen

cloudy. No, way I ball, that’s uncertainties. I right. it. think about optimistic even many are Unlike There think, crystal Yes. the quite Jeremy, talk you’re it’s to an so would

difficult like type is right it things speculate what so to think an and changing on now pieces There of many is moving basis. so going to I are keep happen. hourly, around daily

with industry you have of of that a our broader Maybe couple We monitoring I’ll a in associations, closely D.C. we’ll working other and and are little closely question out, our people know company we’re But about to the talk exactly a going very by what bit see. number closely what, come Obviously, items. that involved. people take within is

capture the something already around So carbon XXQs, is and sequestration that we doing.

for that large have We’re us gases. greenhouse points large really doing XX the Adjacent we our capture as our strategy We business something as Mexico Core reaching there. our Southeast aggregation a it believe good XX opportunity for gathering New and is that in is ethane our part of to by or carbon that sequestration and

raised more. the the things hope -- XXQ to Mexico, so going the optionalities we there. DJ, XXQ but and New language And the like Michigan, current and we worth be getting work. is are we incentives Southeast doesn’t have But At that probably believe places hit

on on As here update EPA transformation. we’re to my a to be continued good added saw in time you significant methane is the that. And a the team of we executive energy announcement on going give position focused amount going Maybe transition update. yesterday, spend that around and quick

the that in You works. are of a well is that changes as that saw number there yesterday

closely We’re that. monitoring obviously

that think we’re you is what that when -- we’re update headquarter Colorado. is specifically EPA important sitting think the from I Denver, about here in

in of State are We operating Colorado.

states are country. successful the And business methane most and stringent have two Those in we areas. in Mexico. the emission New those a in operating We’re regulations very rules running

that going the a that run to be going reliable. I to So Core, where there that’s Adjacent do focus emissions There’s is closely in And Core. more Cleaning profile what sure continue focus with variety our D.C. what’s in we’re -- think, watch we the doing safe business things and happening we’re make possible. to the Beyond the to We to of we’re that’s on our Core, as on do to is it and general, going we lowest it

Jeremy Tonet

-- Got one, quick. and ‘XX if a messaging between wondering it. very updated seeing maybe could, Permian from versus perspective response. time. Do public And for And private? heard We’ve just there. I real over how DJ you an at a does point? vary That was into this different activity, helpful you what last are it you producer just

Sean O’Brien

of you is regions that seeing I privates. between and mean, mentioned. privates, a the you’re Obviously, clearly, publics Yes. there lot those in a activity both differentiation more

think like of what disciplined, that areas very But maybe to the very modest focus you the are That’s think the is But as the of long we’ve more on measured. seeing is publics very of with perform capital measured And time. well last, for signs activity. I seeing that’s very this other are But what some areas doing to a again, industry growth. the is allocation I which it’s spoke Jeremy, start in positive that some that we you again, a a industry the with we needed want what in seen little those well. both very, from can we shift That’s and we to -- probably bigger since shift, big lot very measured, see. has are publics producers.

of we give and areas. maybe the going bodes And Texas, most there’s potential, excited -- some we’re a in good but why where Those there you good a then So areas XXXX. margins, margin West too our in in XXXX. seeing activity Wouter’s best into are feel about early opportunities. And we’ll of pretty you is perspective to remarks, pretty the like listen that, it, looking some could color that’s And recap February. Areas book we a and some make that to have if you -- more comfortable West there areas maybe we’re we’re potential Texas. some at we that pretty obviously, see assets lease from perspective

Operator

Truist Richardson comes of Our from next Securities. question Tristan

Tristan Richardson

and Really this all appreciate what you’re the XXXX on seeing comments early.

annualized leverage that the guess second view target target, an talked of of or the growth rate clarify, that sometime of to leverage half, in thinking your growth leverage But I areas just target? core for an more operating certainly just in and LTM You run does type XXXX. implies I assume about

Sean O’Brien

we target, portion be there XX basically And when Tristan, think about. the hey, mean think there’s think two is year. Wouter of things trailing about leverage the when -- I the in a we we’re It think I middle months. about we’ll talking to said,

We continue to QX. to we -- improved QX

improvement. I good think you’ll a see pretty

mentioned, have Wouter a hopefully we three-handle. As

and We’re we on continue QX And in to strong. be quarters we pretty that. as strong really to to quarters saw drive record in then stack a set anticipate up we to that QX QX, very basically, well

forecast, be think expect of X.X% XX there. current set there a on that well year. get I the trailing in to in anything the barring We month the we’re And changing up significant first half to

the then it. the to look we at able how be it. that’s So to And day, end at got of you sustain

I deliver, trend has well. able been think So that with we with look assets, that hitting the forward pretty X.X%. post are for Company as up the good a reduction, the the set to a even taking leverage with things we’re But

Tristan Richardson

I you in And the a to those Makes of new of And opportunities That’s you materialize there. well XXXX, group. relative then mean, side. of see extreme great, transition really discipline where capital just and Do the in about we as just XXXX talked capital investments really energy sense. some selective the then I’m sort assets thinking XXXX? saw Sean. as a on

asset when existing base. about So opportunities just materialize how the investing you thinking and about the timing think of in

Wouter van Kempen

high give level, me here. Tristan Let maybe

I new think discipline, do there continue or activity. but there about think focused have I that producer’s to if I would we good get field Basin, see if the we most the investments by think doing will would be So good to of are volumes activity the about to the around infrastructure. DJ Permian, online

having So to million, very and million. significantly significant million, new do $XXX large $XXX plant and is more it having field than much compression a is which infrastructure. It less kind manageable to of alike, pipe $XXX not capital infrastructure, build spending is things

So I think good thing. a is that

what the As to of What see earlier asked it what about there. going that to Jeremy energy depend to on XXQs happens are think opportunities transition, pertains I it’s kind question we the permitted like? and and and work going How state do like do X and the get with you optionality that. is things? to wells get What drilled to states Class to approvals look things

of million, how think, helps industry significantly But what and fourth at really at announcements multi-hundred is obviously not we and think we billion a be I look free XXXX. going that’s around, see, we It’s of positive type granular us a this excess you’re lot obviously determined. cash quickly. bit $X.X At talk same creating in turns I a we thing, more to in one really field the to look time, rapidly So quarter, large hey, much little XXXX really also of And with all other noticed how project. the around flow.

look like at, they And and that’s And what huge So cycle, is downside? significant. hey, gas, XX%. distribution Sean continue the that. always after what go But natural by Company And fairly let’s if to and I and NGLs is crude we say an the a even don’t free does down and we cash look down that, like? environment our expect flow in excess generate

this So I thrown any we’re a taking quarters how good thing are through set to us. company going and really in at really, the set sheet last run is up think able current to the six being the balanced, how how balance we that’s environment that really of be with we’re to up, time strong just type about

Tristan Richardson

one sense. I And just last of lot a one, could. if Makes

last about to were maybe to that Just how if incremental on frame guys talked year year-over-year -- as of well. the costs talk us items curious this Sean, you the bridge of just the year sort of sort your costs. and theme in can some the general appendix, highlight much about you related inflation the of planned specifically talked maintenance you that you about versus for from

Sean O’Brien

investment to But different. going you’re Tristan, a little we’re for flat corporate to to of be is the to lot holding I going mix we’re coming bit COVID, more to XXXX. full -- We be relatively think I think you’re we heavier right, turnaround heavier year, as XXXX this maintenance get what then on. XXXX year, get committed going We a into drove is a little of went full cycle, a last a even of you’ll year cycle. and And a year. in seeing efficiencies didn’t out you those

you you There itself, inflation into is at more As to two areas. will happening. impact. give been it, things going and be detail, some but cost we’ll go some XXXX, there’s -- We’ve the looking forecasting have line on

this cycle. build earlier the in your we’re to question, huge benefits One of though, not

it’s that build capital program. are We’re but areas gigantic tied doing this not some growing, to

though even see capital measured. fairly So labor. there’ll they’ll on be be the increases we’ll side, But

from are good an costs, and labor again, in to back question seeing to everyone lubes, going and We’re I we don’t does because all go well that Wouter some next built-in in earlier G&P our as forget, to very have be inflationary of else very cams, some contracts environment year. pipeline same our I really company commodity. And the contracting escalators we benefit an us advantageous will there up. mean, this the that’s things is, But some look, steel, offsets. mentioned,

more the level indicated, be probably up. you the five the still of So we’re efficiencies ‘XX in again, Wouter corporate driven done additional costs but be at assets guidance, go there’s to work you hard that some of by four all when to -- offsets. still groups. back a we’ll flat, line Company and item on because going we again, out But some years ‘XX the ‘XX or low efficiencies, line investment has going a But little see when item, give you’ll as

Operator

[Operator Spiro next Suisse. Instructions] question comes Our Dounis from Credit of

Spiro Dounis

Wouter quick just and from few a me. Sean, follow-ups

capacity. is the of little industry a bit to long. about here. it stretched if like Just going capacity look looks it you system, utilization. your getting mentioned back being DJ, course, XX% But Wouter, I at some of

got with Permian that. on the offload deal agreement you’ve like a it’s course, seems path. Of

I And for out there. really mentioned sort plant of plans know you no big developments so

in of you can bit relocations term it’s issue? to a areas of the going or offloads looking that where be curious, kind plant so and going address And like invest just to here have either some enough to are near little to highlight you’re the

Wouter van Kempen

Yes.

additional said and as I that are believe going earlier, something focused think the right be. is the plant may I growth not But Permian have to where relocations now. is is DJ we on we that

not You’re there’s variety are you look say, overall right. I at a of the same of have us time, availability. significant And plant us for exactly to of and very areas. a be in it’s plants continues around DJ people do you availability Basin, if And kind high system that a things. both to at there there’s full take at that sitting, would of But these utilization, our if look the lot

So we’re at that. looking

DJ have the Basin. in still a also We permit

So add if is do think route, we I that, don’t permits available but hand, need have what that we not do Right if expect to go we needed. that needed. could now, is capacity where in I

really you’re predominantly the Permian the same in So look looking Basin. in the And at at infrastructure, field we DJ.

we offloading continue New Mexico, other people. offloads available. There available still are be into are Southeast to and

plants. can Sean who new probably in We XXXX. we have of utilize mentioned in versus and seeing and to Texas, there quite believe do we’re infrastructure going as we for availability West And well. building We’re those that to a to that cautiously and I around additional capacity, it, have start we are processing do and something some looking independents some some talking are capacity, lot optimistic of filling field

percentages. where have And very that’s, we think, have all move So are smaller focus pipeline in things very, Sand XXX% the like I should the call or we on DJ, on or think And pipelines well, the pipelines options like at still Hills, where a some at Southern you owned we can Hills, availability I Permian. have doing we pipes other as ownership in well. other not, it, controlled where

Spiro Dounis

Got it.

That sense. Okay. there. makes Appreciate color the

maybe XQ, that that closer Wouter, earlier. $X.X that, billion simplistic more. this. billion. guys And of or $X.X just Second you consider course, get If you had to I I and level capacity you this got topic do annualize the of I But at you the of record one very backdrop, and about out it’s to a moves to maintenance earnings earnings. had an issues called to if I just maximizing commodity maybe the think quarter, I look if of on EBITDA

some of a to there about as think this What business think you why for may is But it in takes? well. strong I to yet, so you’re guide position not those commodity know in puts power not of hedged and you are cost mentioned sounds I’m I like year, about I a not And next but this appropriate asking the know earnings XXXX you’re environment, very way that. the it? bit if higher that going be guess

Just curious about how that. to think

Wouter van Kempen

time. think right and mentioned have I -- at are around, quite I do Sean And you’re hey, Well, doing this some been for like look that we how I things.

been and folks, weeks to crude. XX XXXX so like. the interesting optimistic is We’re probably or XXXX, have been looking these to really and look exactly going the was we’re is in quite we what months hard Sean time, ago think more and I I I for and years And is At have was on comment me, that we ago in at it’s so two most on chairs. optimistic same than saw like that with phone what some $XX minus it

this changed in tremendously rapidly things business. So

and cannot sit here. here we what we like see. towards I XXXX But me, For guide

We’re what in see. we optimistic

current power creates same balance that company, and a a between scalable. creating We’ve I the think more a took that than got of you deliberate things creating strategic go we having, right we’re fee-based wrong. our kind like things that earnings commodity lot upside lean we retaining is a into and if of cycle times, during very done that around difficult tremendously business got profile we’re at We time, doing. manufacturing positions good some

We’re doing of that. all

Taking sheet. now have I balance flow capital we the excess towards cash when putting the the really that free is it think that or nicely. helping

So a you’re business creating balance sheet an cycle. you’re any that and withstand creating ironclad can

that has I pretty us. think for worked well

sure we been we doing, that emissions. make lowering we’ve our gas that reduce our that greenhouse we trying transformation operational that our to Our cost, overall time, that excellence, we’re optimize optimize our digital run

but this people up a on tomorrow, work, do just for a really a if loan things think, to that hard other short. solid at next what, for some we’ve We’ve all a week, month, company being today, we because of it done I And enterprise. think difficult of capacity really the year are and the kind really done XXXX, things beliefs of up strong know you sustainability. look DCP should how you if long-term I I’m way supply really next be year really, quarter, So the the didn’t together, not for lot have lot the work, want that setting next of really stay like, good set they a good we

Spiro Dounis

Yes. certainly And really I quickly. agree. would just One last one,

they’ve a recently they’re obviously, of assets. decision largest to midstream made I Phillips about fold in of want in know, some imagine partial hands and owners, assets Hills, might some and Hills your One thinking point its at some And you get I owners got you Sand Also, Southern assets there some of that on your frac that own. are to export. the

on those if And so there there Phillips of simplification you. at Is up areas you has your for to any potentially read-through forward? some to the hands any assets going get curious

Wouter van Kempen

don’t for XX. I I question. am one who Phillips Yes. work answer the I that think don’t can

of I a is, asking, consolidation. for is what think therefore, seeing to you but people. you’re is I going do other see by so that think trend that really appreciate answered hey, And you’re I continue question to a better

weeks, to is would of this of that. I position I’m not of for I’m If not, to now, I think that consolidation see sense. I going or seeing DCP work makes up a going am and a and not do to amount done possible, in on today lot hopefully that a benefit position is set hard applaud in something opine DCP work needed all company that a we’re on happen opine that our to the today. But they And and that. like that’s happening. M&A like that, team that industry. company day corporate-to-corporate in I in transactions good the expect you’re think this to environment It we’ve done and think, a scale going And Three from in tremendous a talk types continue last in XXXX to up are and hey, hard seen couple single set to are XXXX I we’ve really of to to beyond. to in every for continue well we’ve as I we about a as good environment is

Operator

showing no Fullman I’m I’d further the turn time. to question to Mike for this remarks. back call closing at over any like

Mike Fullman

for joining all you Thank us today.

to have feel reach free a questions, Otherwise, follow-up thanks, any have good out. you day. If and

Operator

all conclude Ladies gentlemen, you this and does Thank participating. Thank conference. for you. today’s

disconnect. may a You now great day. Have