Crestwood Equity Partners LP (NYSE:CEQP) Q4 2019 Earnings Conference Call - Final Transcript

Feb 18, 2020 • 09:00 am ET


Crestwood Equity Partners LP (NYSE:CEQP) Q4 2019 Earnings Conference Call - Final Transcript


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Robert T. Halpin

outstanding, including $1.8 billion of fixed rate senior notes and $557 million of outstanding borrowings on our revolving credit facility, resulting in a leverage ratio of 4.1 times as of December 31, 2019.

Now as we look forward into 2020, we are guiding to an adjusted EBITDA range of $590 million to $620 million, an increase of 15% year-over-year at the midpoint, and distributable cash flow of $350 million to $380 million, an increase of approximately 20% year-over-year at the midpoint. This growth is driven by our G&P segment as recently completed capital projects, new commercial contracts and producer drilling plans drive volume growth across our core basins.

In 2020, we expect to connect approximately 300 wells across our core growth basins, up slightly when compared to 2019. We expect solid, stable contributions from our storage and transportation assets and continued outperformance at the COLT Hub as NGL and crude takeaway optionality becomes more valuable in the Bakken. In the MS&L segment, our NGL and crude marketing teams will continue to focus on optimizing Crestwood's network of storage and transportation assets to place volumes to premium markets for producers.

We will continue to focus on preserving our balance sheet and expect full year distribution coverage of 1.9 times to 2.1 times in 2020, and a leverage ratio of between 3.5 times to 4.0 times in 2020. Now that our largest capital projects are complete, we are guiding to a growth capital range of $150 million to $200 million in 2020, representing a 58% decrease from 2019.

Our capital forecast is comprised of the remaining expenditures for the build out of the Bucking Horse II plant, continued expansion and upgrade of the produced water gathering systems in the Bakken, the continued build out of natural gas gathering and produced water systems in the Delaware Basin, and approximately $25 million of payments on invoices related to 2019 capital projects that we will pay out here in the early part of 2020. Crestwood intends to finance its current 2020 growth capital entirely through retained operating cash flow.

2019 marked another very successful year for Crestwood and we are very well positioned to achieve all of our financial, operational and strategic objectives in 2020. We will continue to make prudent investment decisions, only taking on new projects or transactions that meet each of our strict investment hurdles, transactions that fit our core strategy, that deliver returns clearly above our long-term cost of capital, that are immediately accretive and enhancing to our balance sheet for the long term. We believe we are positioned as one of only a few midstream companies generating real free cash flow in 2020, and with that comes tremendous flexibility to continue executing our business plan through all market cycles and allows us to selectively pursue the best uses of capital to enhance value for our unitholders going forward.

I think, with that, operator, we'll turn the call over for questions.