Rattler Midstream LP (NASDAQ:RTLR) Q2 2020 Earnings Conference Call - Final Transcript

Aug 06, 2020 • 10:00 am ET


Rattler Midstream LP (NASDAQ:RTLR) Q2 2020 Earnings Conference Call - Final Transcript


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Ladies and gentlemen, thank you for standing by, and welcome to the Rattler Midstream Q2 2020 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Mr. Adam Lawlis, VP of Investor Relations. Thank you. Please go ahead, sir.

Adam Lawlis

Thank you, Teresa. Good morning, and welcome to Rattler Midstream's second quarter 2020 conference call. During our call today, we'll reference an updated investor presentation, which can be found on Rattler's website. Representing Rattler today are Travis Stice, CEO; and Kaes Van't Hof, President.

During this conference call, the participants may make certain forward-looking statements relating to the Company's financial condition, results of operations, plans, objectives, future performance and businesses. We caution you that actual results could differ materially from those that are indicated in these forward-looking statements due to a variety of factors. Information concerning these factors can be found in the Company's filings with the SEC.

In addition, we will make reference to certain non-GAAP measures. The reconciliations with the appropriate GAAP measures can be found in our earnings release issued yesterday afternoon.

I'll now turn the call over to Travis Stice.

Travis Stice

Thank you, Adam. Welcome, everyone, and thank you for listening to Rattler Midstream's second quarter earnings call. The second quarter of 2020 presented historic volatility in global energy demand and commodity prices. Rattler, despite all of its operations being located in the premier low-cost shale basin and operated by the low-cost operator in Diamondback, was not immune from this volatility.

Diamondback made the prudent decision to suspend completion activity and curtail production in the quarter, directly impacting Rattler's second quarter volumes. Diamondback has now returned all of these curtailed volumes back to production and is currently running three completion crews, both of which will help Rattler's cash flow grow significantly in the back half of the year, from the second quarter lows. And a maintenance scenario for Diamondback in 2021, Rattler will have fewer operated capital requirements and relatively flat volumes in the second half of 2020, producing free cash flow at the operated level. We are also reiterating our previously announced EBITDA guidance for the year, which at the midpoint implies growth of 6% year-over-year, even in the current commodity price environment.

Turning to our equity method investments, both the Gray Oak and EPIC crude pipelines began full commercial service in April, generating cash flow at the project level and contributing meaningfully to Rattler's EBITDA since starting up. We have also been impressed by the resilience of our OMOG oil gathering JV with volumes growing on this system in the second quarter. This highlights the quality of the acreage underpinning the system, which was the primary rationale for our investment last year. Three of our five equity investments are now operational with Wink to Webster pipeline expected to come online in 2021, and our Amarillo-Rattler gathering and processing expansion delayed until commodity prices recover and volumes return to growth