DCP Midstream, LP (NYSE:DCP) Q2 2019 Earnings Conference Call Transcript
Aug 07, 2019 • 11:00 am ET
Good day, ladies and gentlemen, and welcome to the Q2 2019 DCP Midstream Earnings Conference Call. [Operator Instructions].
I would now like to introduce your host for today's conference, Sarah Sandberg, Senior Director of Investor Relations. You may begin.
Thank you, Gigi. Good morning everyone, and welcome to the DCP Midstream Second Quarter 2019 Earnings Call. Today's call is being webcast and the supporting slides can be accessed on 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 the 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, Sarah and good morning everyone. We appreciate you joining us. On today's call, we will discuss our second quarter results, announce and highlight our growth projects, and provide an outlook into the second half of 2019.
Our team continues the excellent momentum of Q1, resulting in a strong first half of the year and solid progress towards our financial targets. In Q2, we achieved adjusted EBITDA of $278 million, and DCF of $173 million representing a respective 12% and 18% year-to-date growth compared to 2018.
Our distribution coverage is 1.12 times for the quarter, and 1.28 times year-to-date. We have ample liquidity, and financial flexibility and our bank leverage ratio was 3.7 times as of June 30, demonstrating the strength of our balance sheet. Our earnings are underpinned by effective execution of our capital allocation strategy, and our operational optimization efforts, resulting in strong volumes, including double-digit year-over-year volume growth in the DJ Basin, and on Southern Hills, and Sand Hills.
We're excited to highlight several capital growth projects. First, last week we were happy to announce that we executed a very capital efficient and accretive long term offload agreement in the DJ Basin with Western Midstream Partners, which will provide up to 225 million cubic feet per day of incremental processing capacity for our producer customers. Second, we are increasing our NGL takeaway capacity on Southern Hills with a 40,000 barrel per day expansion, bringing our total capacity up to 230,000 barrels per day.
And third, as of last night, our O'Connor 2 plant is now in service, increasing our total processing and bypass capacity to over 1.3 Bcf per day in the DJ Basin. At the same time, we maintain our focus on effectively managing risk in both the short and long term. We significantly reduced our commodity sensitivity through a multi-year approach to