CorEnergy Infrastructure Trust Inc (NYSE:CORR.PA) Q3 2018 Earnings Conference Call Transcript

Nov 01, 2018 • 02:00 pm ET


CorEnergy Infrastructure Trust Inc (NYSE:CORR.PA) Q3 2018 Earnings Conference Call Transcript


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Greetings, and welcome to CorEnergy's Third Quarter 2018 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the presentation. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to Lesley Schorgl. Thank you. Please go ahead.

Lesley Schorgl

Thank you for joining CorEnergy Infrastructure Trust's third quarter 2018 earnings call. I'm joined today by Dave Schulte, CEO and President; and Rick Green, Executive Chairman. As a reminder, the presentation materials for this call as well as information included in our press release issued Wednesday and an audio replay of this conference call will be available on CorEnergy's website.

(Forward-Looking Cautionary Statements)

Reconciliations between GAAP and non-GAAP results, which we discuss on this call, can be found in our related earnings release and 10-Q filing.

President and CEO, David Schulte, will now speak to you about CorEnergy's third quarter and recent events.

David Schulte

Thank you, Lesley. We appreciate everyone for joining us today. Last week, CorEnergy declared a $0.75 quarterly dividend, beginning its fourth year of consecutive dividends at this level and demonstrating the resilience of our business model even during times of market volatility. Regarding our portfolio, as previously announced, the tenant of our largest asset, the Grand Isle Gathering System, which served approximately 40% of the total reserves held by Energy Gulf Coast, has been acquired by Cox Oil. Cox Oil is a privately held operator in the Gulf of Mexico, and it paid approximately $320 million for the stock of EGC. The GIGS lease agreement has been assumed by the new owner of EGC as part of that transaction.

Also, we received participating rents from Ultra Petroleum last quarter for the use of our Pinedale liquids gathering system for volume increases over our baseline. Ultra recently announced its capital plans and goal of keeping volumes flat during 2018 and 2019. Ultra also increased its liquidity during the quarter with an asset sale and announced debt exchange lengthening out their maturities.

Moving to slide four, we'd like to remind investors of the consistency of our operational performance both quarter-over-quarter, as depicted on the slide, as well as year-over-year. The main source of variance over last year has been the sale and valuation of legacy equity investments from our time as a business development company prior to converting to a REIT. The steadiness has allowed us to continue paying a stable dividend, currently at $0.75 a quarter, and maintain a level of dividend coverage that we feel comfortable with given our need to reinvest in new assets in order to offset the depleting terminal value associated with some of our larger assets.

Turn to Slide five, you'll notice that our capital structure remains conservative and flexible with our total debt-to-total capitalization ratio at the low end of our target range. And our preferred to total equity ratio at 29%, which is below, again, our 33% target range. Our credit facility is borrowing base driven and we