Crestwood Equity Partners LP

Good morning and welcome to today's conference call to discuss Crestwood Equities Partners third quarter 2022 financial and operating results. Before we begin the call, listeners are reminded that the company may take certain forward-looking statements as defined in the Securities and Exchange Act of 1934 that are based on assumptions and information currently available at the time of today's call. Please refer to the company's latest filings with the SEC for a list of risk factors that may cause actual results to differ. Additionally, certain non-GAAP financial measures, such as EBITDA, adjusted EBITDA, distributable cash flow, and free cash flow will be discussed. Reconciliations to the most comparable GAAP measures are included in the news release issued this morning. Joining us today with prepared remarks are President Robert Halpin, Executive Vice President and Chief Financial Officer, John Black, and Executive Vice President and Chief Operating Officer, Diaco Avicki. Additional members of the senior management team will be available for questions and answers for the question and answer session with Crestwood's current analysts following the prepared remarks. Today's call is being recorded. If anyone should require operator assistance during a conference, please press star zero on your telephone keypad. At this time, I would like to turn the call over to Robert Halpin.

Thank you, operator. Good morning, everyone. And thank you for joining us today as we discuss our third quarter financial and operating results, as well as our outlook for the remainder of 2022. Now, before we get started, we do have a couple of housekeeping items I wanted to touch on. First, Bob Phillips is unable to join us this morning as he is traveling internationally on a previously planned trip. and unfortunately is in a location with unreliable internet service. I know Bob is disappointed to not be on the call this morning, but he sends his regards and he looks forward to connecting with many of you over the course of the fourth quarter at some of the various investor conferences or other events around the upcoming holidays. Second, I would like to recognize and congratulate Johnny Black, who was recently promoted to Chief Financial Officer. Johnny has been with Crestwood since 2014 in various financial roles of increasing responsibility, and we are really excited to have him join our executive committee here. So let's get started. I'll kick off the call with a few opening remarks and then turn it over to Diaco to cover an operational update, and then finally over to Johnny to cover our financial results in more detail. The third quarter was another busy quarter for Crestwood. with a number of significant accomplishments that position the company to better execute our long-term strategy around our core assets. Early in the quarter, we closed on the previously announced acquisitions of Sendero Midstream and CPJV, our 50-50 joint venture with First Reserve. Collectively, these transactions significantly increased our operational footprint in the Delaware Basin and make the Delaware Basin a much larger contributor to our overall cash flow. The Sendero assets are already significantly exceeding our expectations as our diverse set of public and private producers continue to drill strong wells and maintain very active drilling programs. In just a few short months, our operations and project management teams have fully integrated and interconnected the Sendero and Willow Lake assets. This now enables Crestwood to efficiently accelerate utilization of existing gathering and compression capacity as well as available processing capacity at both our Orla plant and the newly acquired Carlsbad plants. The Delaware basin continues to be the most robust and prolific and active play in North America. And we remain very excited about our growth opportunities in that basin as our producer customers continue to aggressively develop their substantial inventory positions. In September, We completed two more strategic initiatives that align with our strategy to maximize unit holder value. First, we announced the divestiture of our Marcellus gathering compression assets to Antero Midstream for $205 million in cash, which further streamlines our asset portfolio in our high growth core operating regions. Second, we immediately redeployed a portion of those Marcellus divestiture proceeds by playing a significant role in the 16 million unit secondary offering from Cord Energy alongside many of our long-term public unit holders. As a part of that transaction, Crestwood repurchased and retired 4.6 million Crestwood common units from Cord Energy for approximately $124 million. And Cord's ownership in Crestwood was reduced to less than 5% of total units outstanding. We are very excited to play a sizable role in this transaction through another large unit repurchase, which when you combine this transaction with the first reserve transaction we completed back in March of 2021, adds up to Crestwood having repurchased approximately $380 million in common units over the last 18 months, which amounts to a very sizable return of capital to our unit holders. I would be remiss if I did not also take a minute to thank our long-term dedicated CEQP investors that partnered with us in the CORD secondary transaction. You all showed tremendous support with your participation and enabled us to reach a win-win solution with CORD, who has been a great partner to us over the last 14 months or so and remains a very important customer for us going forward. Now, shifting gears, and before I hand the call over to Diaco and Johnny, I wanted to provide some high-level commentary on a few factors that impacted our results in the corridor and outlook for the remainder of 2022. In the wake of our series of M&A transactions, our portfolio's adjusted EBITDA has grown substantially and has evolved to be comprised of 90% gathering and processing assets. The fundamentals around our business remain strong, and we have an extremely active producer set running 16 drilling rigs across our dedicated acreage. Additionally, we have seen a meaningful amount of producer M&A activity around our assets, including oasis's merger with whiting to create cord energy devon's acquisition of rimrock on our aero assets and continental's multiple acquisitions in the powder river basin all of these transactions further enhance our customer base around our core assets and highlight the quality and long-term value of the inventory behind our dedicated acreage during the quarter Williston Basin gathering and processing volumes were negatively impacted by timing delays to well connects on our system. As our key customers integrate those recently acquired assets and work to catch up from second quarter weather disruptions, near-term challenges in the oil field services labor market, and supply chain constraints, we have seen delays in well completions, which have led to the duck count on the aero system to increase to approximately 20 wells. As a result, We have solid visibility to the fourth quarter and 2023 activity levels, but are revising our full year 2022 adjusted EBITDA guidance range to $780 million to $800 million to fully reflect some of these timing shifts. As Crestwood and our customers continue to work through these short-term challenges, we are increasingly confident in the strength of our portfolio, and with our operations now squarely focused on the leading North American basins, We expect our asset base to generate meaningful and growing free cash flow that enables us to continue creating long-term value for our unit holders. With that, I'll turn the call over to Diaco to provide additional details on our operations for the quarter.

Thank you, Robert, and good morning, everyone. I'd also like to echo Robert's sentiment on our high-graded asset portfolio and how we are positioned heading into 2023. As the budget season kicks off for our customers, receiving updated guidance for 2023 activity and expect to have an active year. Our producers are in excellent financial health and are now better equipped to navigate some of the oilfield service constraints experienced this year. Our strategic execution the past year has built competitive scale, and our core basins and commercial operations and project management teams are capturing additional value. Let's get started in the Williston Basin. As discussed, this year was impacted by winter weather and WellConnect delays. Some wells originally expected to come online in the second and third quarters have shifted into the fourth quarter, and a few fourth quarter wells are now expected to come online in 2023. Today, we've got four rigs currently running on our acreage. We expect to have 40 to 45 wells connected in the fourth quarter. Our gathering and processing assets support some of the best acreage in the Williston Basin that offers producers exceptional economics in this commodity price environment. Cash flow growth in the fourth quarter and into 2023 is coming from this high level of activity. And I am really pleased to highlight our teams continue to capture incremental merger synergy through the optimization and improved efficiencies. We are well on track to exceed our previously identified 2023 operational synergy cost target of $25 million in 2022. Moving southwest to the Powder River Basin, excluding the Continental Express pipeline, During the third quarter, there are six new wells connected to our jackalope system. That drove year-over-year volume growth of 11%. Operators are currently running three rigs on Crestwood's acreage, targeting multiple formations as our producers continue to delineate stack formations across over 400,000 dedicated acres. We expect this ongoing level activity to result in increasing volumes on the jackalope system throughout 2023. In the Delaware basin, both public and private producers continue to operate strong development plans across our footprint. During the third quarter, 43 wells were connected across our systems and producers are currently running a total of nine rigs that are expected to result in incremental 40 to 45 well connects in the fourth quarter. Since completing the Sendero and CPJV acquisitions, our commercial teams continue to capture incremental opportunities to attract volumes to our expanded system. Current activity in the basin is placing a premium on excess processing capacity, and our optionality process volumes both in New Mexico and in Texas is a big advantage for our producers, as we're better able to optimize activity and provide them flow assurance. Finally, I'll conclude with a quick update on Trace Palacios gas storage facility in South Texas. We recently filed a FERC application for a 6.5 BCF expansion to the facility, by converting an existing brine production well into a fourth cavern. This expansion is fully supported by two long-term contracts with existing investment-grade counterparties and expected to be in service in approximately six to nine months after the approval of the application. Crestwood continues to see strong interest in the facility since winter storm Uri in February 2021 and through increased Gulf Coast LNG demand from customers needing incremental storage and wheeling services. With that, I'll turn it over to Johnny to cover our quarterly financial results.