Hess Midstream Partners LP (NYSE:HESM) Q2 2020 Earnings Conference Call - Final Transcript

Jul 29, 2020 • 12:00 pm ET


Hess Midstream Partners LP (NYSE:HESM) Q2 2020 Earnings Conference Call - Final Transcript


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Q & A

Thank you. [Operator Instructions] And our first question comes from the line of Jeremy Tonet with JP Morgan.

Vinay Chitteti

Hi. Good afternoon, guys. This is Vinay on for Jeremy. Just wanted to quickly touch upon your EBITDA guidance for 2020 and '21. With almost approximately $370 million EBITDA already in the books, the 2H guidance seems to be very conservative. I understand you guys have assumed zero third-party volume assumption for the balance of the year, but we have also seen approximately 11% gas in 2Q when there were a lot of curtailments as well. Could you talk about like -- there seems to be a lot of upside risk for the EBITDA guidance here. Can you just talk about what are the moving pieces? Why you have assumed zero third-party volume assumption even after seeing a lot of recovery in market production since 2Q?

John A. Gatling

Yeah. Maybe I'll start off with just addressing the third parties, and then I'll hand it over to Jonathan to address the financial aspects of it. So yes, we had a very strong first quarter, and it even continued into our second quarter from a third party's perspective. We averaged about 11% in the second quarter. Looking at our guidance right now, the low end of our guidance has third parties approximately zero. And the midpoint of our guidance has about 5% in there, and the upper end has about 10%.

From our perspective, it really depends on what the producers are doing. And we're, again, trying to take up a very conservative look at this. And that's kind of what you're seeing with our guidance as it relates to that. But just a reminder, I mean, the third-party producers, they're already hooked up to our system. When they bring that volume on, it will be available to us, and we'll have the capacity -- the system capacity to handle it. So really, we just wanted to kind of leave that open for the producers as they bring additional volumes in.

So with that, I'll hand it over to Jonathan to address the financial side of that.

Jonathan C. Stein

Sure. Thanks, John. So let me just start -- let me go through the drivers of the change in our guidance, and then I can talk about how changes in that would work. So in terms of -- if you look at the top end of our guidance range, we increased that by $10 million. The drivers of that were a strong second quarter. So that was $3 million above the upper end of our guidance. We defer the TGP turnaround that reduced our opex by $12 million. We did add back some projects into Q3 with the deferral of the turnaround. That gave us the opportunity now to do projects that we seasonally would typically do in Q3. So we added that back. That's part of the Q3, as I talked about -- together with the revenue decline, I talked about $5 million to $10 million decrease from Q2