DCP Midstream, LP Common Units

Thank you. Good morning and welcome to the DCP Midstream first quarter 2022 earnings call. Today's call is being webcast and I encourage those listening on the phone to view the supporting slides which are available on our website at dcpmidstream.com. Before we begin, I'd like to point out that our discussion today includes forward-looking statements. Actual results may differ due to certain risk factors that affect our business. Please review the second slide in the deck that describes our use of forward-looking statements and for a complete listing of risk factors, please refer to the partnership's latest SEC filings. We will also use various non-GAAP financial measures, which are reconciled to the most comparable GAAP financial measures and scheduled in the appendix section of the slides. Wouter van Kempen, CEO, and Sean O'Brien, CFO, will be our speakers today. And after their remarks, we will take questions. With that, I'll turn the call over to Wouter.

Thank you, Mike. Good morning, everyone. We appreciate you joining us. On today's call, we'll look at our QBON financial performance. highlighting the earnings power of the diversified DCP business model and reviewing the significant progress we've made towards strengthening our balance sheet. Before getting into our quarterly results, I'd like to briefly touch on the macro environment impacting the energy industry today. On our fourth quarter call, I highlighted the constructive environment projected to benefit DCP, which included producers' commitment to capital discipline and a strengthening demand for our products and services, as the world reopened from COVID-19 restrictions. These factors supported our 2022 outlook for moderate growth, favorable commodity pricing, and strong cash generation. Since that goal, world events brought a stark reminder of the role the U.S. oil and gas industry plays in meeting global energy demand and providing energy security. This increased focus supports the long-term outlook for U.S. production, which will benefit our customers and DCP alike. As we turn to our Q1 results, I'm proud to announce that for adjusted EBITDA, DCF, and excess free cash flow, we reported record quarterly results. For the quarter, we realized adjusted EBITDA of $436 million and DCF of $337 million, and our excess free cash flow, which we define as free cash flow after paying our distributions and funding our growth capital program, was approximately a quarter billion dollars. This performance has enabled us to continue our de-levering effort and achieve investment-grade balance sheet metrics. Closing the quarter at 3.3 times, well ahead of our internal timeline, sets up well for a second half distribution race. This fast start exceeds where we expected to be at this point and builds great momentum as we continue through the year. And for that reason, coupled with continued favorable fundamentals and pricing outlook, I'm pleased to announce that we expect to significantly exceed our 2022 full-year guidance for adjusted EBITDA, DCF, and excess free cash flow. And with that, I'll turn it over to Sean to give us further insight into our financial results.

Thanks, Valter, and good morning, everyone. On slide four, I'll walk you through the key drivers that led to our record first quarter performance with DCF up 54% and adjusted EBITDA up 32% versus last quarter. On our fourth quarter call, I outlined a series of trends we expected as we enter 2022, and I'm pleased to report that the business capitalized during the quarter to deliver very strong results that exceeded our initial expectations. In line with our comments from the last quarter call, the favorable commodity environment proved to be a strong tailwind, as our G&P business benefited greatly from commodity pricing and a strengthened hedge book, which resulted in a $45 million improvement quarter over quarter. Additionally, our logistics business performed extremely well as we optimized our gas storage business, taking full advantage of the strong natural gas markets we saw in early January. And as expected, our cash distributions from our joint ventures were up significantly in Q1, as Q4 distributions were dampened by the timing of ad valorem taxes. Lastly, we saw a normalization of our costs in capital expenditures, placing us in line with our 2022 outlook and moving from our traditionally higher-weighted Q4 spend. These strong results more than offset the impact that winter weather had on our GNP volumes and asset performance across a couple of our key regions. Despite the slow start on volumes, we are starting to see favorable signs in our GNP businesses, as exit rates strengthened in the MidCon and South regions and the DJ and Permian recovered from Q1 weather. Our business is performing well, And I'm pleased with how we're set up for the rest of the year, as the commodity outlook remains very strong. If the current forward curve holds up, we could potentially see $200 million plus of upside to our original full-year midpoint guidance, putting us well above the high end of our adjusted EBITDA range. As we move to slide five, I'd like to provide a summary of our Q1 financial position, starting with earnings mix. we are currently sitting at 83% fee and hedge for 2022, providing consistent, stable cash flow and also leaving a significant upside as our portfolio takes advantage of the strong current fundamentals. And while we're comfortable with our current 2022 hedge book levels, we are capitalizing on the current market and adding hedges in 2023 and 2024 at very attractive pricing levels. From an excess-free cash flow perspective, we saw greater than 100% increase quarter-over-quarter, which allowed us to continue prioritizing debt reduction. While the commodity environment significantly benefited margins, we experienced higher working capital needs associated with our hedge book. However, we expect that to improve over the remainder of the year. All in, we reduced our absolute debt by roughly $100 million in Q1 and closed the quarter with leverage at 3.3 times, which has our balance sheet in line with investment-grade metrics as we continue to build momentum with the rating agencies. In closing, this record quarter is a testament to the strength of the DCP business model. Over the years, we've taken very deliberate actions to prioritize debt reduction, leverage our DCP 2.0 digital transformation to reset our cost structure, diversify our earnings mix by extending our value chain and increasing fee-based earnings, all while exercising capital discipline. These deliberate strategic actions allow DCP to successfully navigate the historic volatility we've seen over the last couple of years while continuing to drive earnings growth regardless of the commodity price environment. We have a proven track record of execution and our assets continue to prove their earnings power. Now I'll pass it back to Wouter to discuss our outlook.