DCP Midstream Partners LP (NYSE:DPM) Q3 2019 Earnings Conference Call - Final Transcript
Nov 07, 2019 • 10:00 am ET
Ladies and gentlemen, thank you for standing-by. Welcome to the Q3 2019 DCP Midstream Earnings Conference Call. [Operator Instructions]
I would now like to hand the conference over to your speaker today, Sarah Sandberg, Senior Director of Investor Relations. Thank you, please go ahead Ma'am.
Thanks Chris. Good morning and welcome to the DCP Midstream third quarter 2019 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 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 measure 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 your questions.
With that, I'll turn the call over to Wouter.
Wouter van Kempen
Thank you, Sarah. Good morning, everyone. We appreciate you joining us for the call today. And we have a lot of great news to discuss. So on today's call, we're excited to share how we continue to enhance unitholder value through consistent progress towards our financial targets, solid execution of our predominantly fee-based capital projects and the elimination of our IDRs.
But before we jump into details on the quarter, let's start with our IDR elimination on Slide 4. Yesterday, we were very, very happy to announce the closing of a transaction that permanently eliminates our general partners economic interest including IDRs in exchange for 65 million DCP common units. This transaction is valued at approximately $1.53 billion based on a 20 day volume weighted average price of $23.62 as of the markets close on November 5th. The deal represents a 9 times multiple of current total general partner distributions. And Enbridge and Phillips 66 maintain equal ownership in the non-economic interest of the GP, which now owns 57% of DCP's outstanding common units.
Let's move to Slide 5. In the past, when we discussed the potential IDR elimination, we continued to reiterate two key themes. First, a deal would be fair to all stakeholders and secondly, we would transact from a position of strength. And we have absolutely delivered on both of those commitments.
Let me highlight a few points on this slide to drive home that first theme. This transaction ensures complete economic parity between our common unitholders, Enbridge and Phillips 66. The elimination of our IDRs lowers our future cost of capital, positioning DCP for continued long-term success and continued ability to grow. This agreement represents one of the lowest multiples compared to similar IDR elimination transactions and one that we believe is very fair to all