CorEnergy Infrastructure Trust, Inc.

Good day, and welcome to the Core Energy First Quarter 2023 Earnings Conference Call. At this time, all participants are on a listen-only mode. After management's prepared remarks, there will be a question-and-answer session. I would now like to turn the call over to Matt Kreps. Please go ahead.

Thank you, Kelly. And thank you, everyone, for joining today's Core Energy Infrastructure Trust Conference Call. With me today are Dave Schulte, CEO and Chairman, Robert Walgen, President and CFO, and Chris Huffman, Chief Accounting Officer. Robert and Chris will provide updates on our business operations and results, and all three will be available for Q&A. Earlier this morning, we published a press release announcing the first quarter results for 2023. We expect to file our Form 10-Q later today. I'd like to remind everyone that the statements made during the course of this presentation that are not purely historical may be forward-looking statements and subject to the safe harbor of protection available under the applicable securities laws. Important factors that could cause actual results to differ materially from those in the forward-looking statements are discussed in our filings with the SEC. These documents are available on the investor relations section of our website. We do not update our forward-looking statements. During this call, we will also make reference to certain non-GAAP metrics, which are reconciled in our filings as part of our results reporting. We encourage all of you to review our complete disclosures, risk factors, GAAP financial numbers, and those non-GAAP metrics with related reconciliations. And with that, I would like to now turn the call over to Robert Waldron. Please go ahead.

Good morning, everyone. It's been an eventful couple of months since our last earnings call, and I am pleased to report that we are implementing favorable long-term solutions to the near-term challenges we have discussed. Our team has been diligently working on a number of initiatives, including streamlining our executive team, reducing our corporate cost structure, initiating an asset divestiture program, and working to deleverage our balance sheet. The benefits of these actions will become more visible as we move further into 2023. Starting with a few overview comments of our recently completed first quarter, we continued the steady performance of our predictable MoGas and Omega natural gas operations that serve the St. Louis and surrounding areas. However, due to the process underway, These entities are now reflected as assets held for sale on our balance sheet. We expect to update our progress on that divestiture when appropriate. Turning to our Crimson assets, as anticipated, volumes decreased to lower levels compared to Q3 and Q4 2022 due to the restart of a third-party pipeline system that had been down since July 2022. Volumes appear to have stabilized at the reduced level previously anticipated. We believe this lower volume level will continue indefinitely. Furthermore, we are seeing some expense pressures in the areas of labor, asset maintenance, and electricity costs, which seem to be consistent with the rest of the industry. As a response to those changes in volumes and costs, Crimson filed for a 36% rate increase on its San Pablo pipeline and a 107% rate increase on its KLM pipeline. both based on the regulated cost of service. Both filings were protested by shippers and will proceed through the CPUC process with a resolution expected in 2025. We are always open to negotiating with our shippers to find a resolution acceptable to all parties and may lead to an earlier resolution. While the California energy market has been more challenging and volatile than we have ever experienced or planned, Our Crimson pipelines remain a critical link in the state's energy infrastructure, operating under fixed tariffs for volumes transported with long-term investment-grade customers. Once the tariffs are properly aligned to current volumes and costs, we believe these assets will profitably fulfill critical energy needs in California for decades to come, both in the existing energy economy and in the emerging new energy economy. We hold a strong belief that our Crimson assets have a significant and critical role to play in the energy transition in California, especially the new hydrogen and carbon capture and sequestration markets. Our crimson system and rights-of-way provide a critical linkage between large carbon emission sources and prospective storage reservoirs, an asset we believe would be difficult or even impossible to replicate today. We are working with multiple parties to determine the best path forward in this new market opportunity. The commercial case for CO2 capture remains better in California than in any other state. The California Air Resources Board has set aggressive climate goals of a 40% reduction in carbon emissions by 2030 and carbon neutrality by 2045 and identified CCS as a central pillar to their targets. Federal legislation has increased the carbon capture credit from $50 a ton to $85 a ton and to $185 a ton for direct air capture. In many cases, it's also possible to take advantage of the LCFS credit. Finally, we published an updated ESG progress report with the filing of our 10-K for 2022. Some of the highlights include scope one and scope two emissions have been reduced by 56% from the 2021 baseline. We have initiated a plan to reduce methane emissions by an estimated 65% by 2025. And we have implemented board oversight of wide-ranging cybersecurity and ESG programs for our critical business systems. With that, I'll turn it over to Chris to address the financials and other notable items.