DCP Midstream Partners LP (NYSE:DPM) Q4 2018 Earnings Conference Call Transcript

Feb 12, 2019 • 11:00 am ET


DCP Midstream Partners LP (NYSE:DPM) Q4 2018 Earnings Conference Call Transcript


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Good day, ladies and gentlemen, and welcome to the Q4 2018 DCP Midstream Earnings Conference Call. Currently at this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) Also as a reminder, this conference call is being recorded.

At this time, I would like to turn the call over to your host, Irene Lofland, Vice President of Investor Relations. Please go ahead.

Irene Lofland

Thank you Daum. Good morning, and welcome to the DCP Midstream Fourth Quarter 2018 Earnings Call. Today's call is being webcast and the supporting slides can be accessed under the Investors section of 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 the risk factors, please refer to the partnership's latest SEC filings.

We will also use various non-GAAP measures, which are reconciled to the nearest GAAP measures and schedules 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 your questions.

With that, I'll turn the call over to Wouter.

Wouter van Kempen

Thank you, Irene, and thanks to everyone for joining us. In 2018, we continued to demonstrate strong execution of our commitments, while advancing our DCP 2020 strategy, which is evident in our full-year results. We delivered DCF above the high end of our 2018 guidance range, driven by improvements and expansions in our base business and outcomes of DCP 2.0 transformation efforts. However, due to weaker Q4 and a number of non-recurring items, we missed beating the high end of our EBITDA range, and Sean is going to speak to that shortly.

Our balance sheet remained strong throughout the year and we exited 2018 with a distribution coverage of 1.11 times and a leverage ratio of 3.8 times, both within our target ranges and exceeding our full-year guidance. We continue to build on our track record of successfully executing our long-term capital allocation strategy, focused on extending our value chain by a disciplined growth, and increasing volumes and cash flows. And behind our operations, our DCP 2.0 transformation effort have elevated our competitive advantage by driving greater reliability, improved safety and increased volumes, resulting in financial benefits substantially higher than our 2018 commitment.

In Slide 5, we will highlight some key drivers underpinning our 2018 results. Notably, we saw record volumes in Southern Hills and in the DJ Basin. On the Logistics side, as a result of our DCP 2.0 innovative optimization efforts, we added 35,000 barrels per day of capacity to Sand Hills, which required very little capital to produce significant cash flows and improved customer service. Combined this optimization with the latest expansion to 485,000 barrels per day that was