Kinetik Holdings Inc (KNTK) 2021 Q3 法說會逐字稿

Good day, and thank you for standing by, and welcome to the Altus Midstream Third Quarter 2021 Earnings Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions)

美好的一天，感謝您的耐心等待，歡迎參加 Altus Midstream 2021 年第三季財報電話會議。 （操作員指示）請注意，今天的會議正在錄製中。 （操作員說明）

I would now like to hand the conference over to your speaker today, Patrick Cassidy, Director of Investor Relations with Altus Midstream. Please go ahead.

我現在想將會議交給今天的發言人，Altus Midstream 投資者關係總監 Patrick Cassidy。請繼續。

Good afternoon, and thank you for joining us on Altus Midstream Company's Third Quarter Financial and Operational Results Conference Call. We will begin the call with an overview by Altus Midstream's CEO and President, Clay Bretches; and Ben Rodgers, CFO, will summarize our financial performance and outlook.

下午好，感謝您參加 Altus Midstream 公司第三季財務和營運業績電話會議。我們將首先由 Altus Midstream 執行長兼總裁 Clay Bretches 進行概述；財務長 Ben Rodgers 將總結我們的財務表現和前景。

Our prepared remarks will be approximately 12 minutes in length, with the remainder of the call allotted for Q&A. Remarks during the call may also refer to the Altus Midstream investor presentation, which can be found on our Investor Relations website at altusmidstream.com/investors.

我們準備的發言長度約為 12 分鐘，其餘時間則用於問答。電話會議期間的發言還可參考 Altus Midstream 投資者演示文稿，該演示文稿可在我們的投資者關係網站 altusmidstream.com/investors 上找到。

On today's conference call, we may discuss certain non-GAAP financial measures. A reconciliation of the differences between these non-GAAP financial measures and the most directly comparable GAAP financial measures can be found in the investor presentation posted yesterday on the Investor Relations website previously noted.

在今天的電話會議上，我們可能會討論某些非公認會計準則財務指標。這些非公認會計原則財務指標與最直接可比較的公認會計原則財務指標之間的差異的調節可以在前面提到的投資者關係網站昨天發布的投資者演示文稿中找到。

Finally, I'd like to remind everyone that today's discussions will contain forward-looking estimates and assumptions based on our current views and reasonable expectations. However, a number of factors could cause actual results to differ materially from what we discuss today. A full disclaimer is located with the investor presentation on our website.

最後，我想提醒大家，今天的討論將包含基於我們當前觀點和合理預期的前瞻性估計和假設。然而，許多因素可能導致實際結果與我們今天討論的結果大不相同。我們網站上的投資者簡報包含完整的免責聲明。

With that, I will turn the call over to Clay.

這樣，我就把電話轉給克萊。

Good afternoon, and thank you for joining us today for Altus Midstream's Third Quarter 2021 Conference Call. On the call today, I will begin with a brief review of our operating performance and provide background on the new gas processing agreement between Altus and Apache. Then I will discuss the business combination with EagleClaw that we announced 2 weeks ago highlighting what it offers investors, customers and other stakeholders. Ben will provide more information on the transaction and a review of our financial results. Following that, we will move on to questions and answers from the sell-side community.

下午好，感謝您今天參加 Altus Midstream 的 2021 年第三季電話會議。在今天的電話會議上，我將首先簡要回顧我們的營運業績，並提供 Altus 和 Apache 之間新天然氣處理協議的背景資訊。然後我將討論我們兩週前宣布的與 EagleClaw 的業務合併，重點介紹它為投資者、客戶和其他利害關係人提供的服務。本將提供有關交易的更多資訊以及對我們財務業績的審查。接下來，我們將繼續回答賣方社群的問題和答案。

Given the disclosure made last month, the strong performance Altus achieved during the third quarter could easily be overlooked, but it deserves recognition. As noted in the news release issued yesterday, we continue to make steady progress on the key performance metrics that we've guided to for the year.

鑑於上個月披露的信息，Altus 在第三季度取得的強勁業績很容易被忽視，但它值得認可。正如昨天發布的新聞稿中所指出的，我們繼續在今年指導的關鍵績效指標上取得穩步進展。

Both our joint venture pipeline and gathering and processing businesses have contributed to strong results in the third quarter. G&P volumes, growth CapEx and adjusted EBITDA are all in line with our annual guidance. The joint venture pipelines continue to contribute to our results with the minimum volume commitments on the natural gas pipelines providing stable, predictable cash flow. Our liquids pipelines are well positioned for volume growth as activity returns to the basin.

我們的合資管道以及採集和加工業務都為第三季度的強勁業績做出了貢獻。 G&P 銷售、成長資本支出和調整後 EBITDA 均符合我們的年度指引。合資管道繼續為我們的業績做出貢獻，天然氣管道的最低產量承諾提供了穩定、可預測的現金流。隨著盆地活動的恢復，我們的液體管道處於有利的位置，可以實現流量成長。

Moving now to our gathering and processing business. Gas processing volumes were up slightly, about 1% compared with the preceding period. This reflects the full 3 months contribution from the DUCs recently brought online at Alpine High in 2021, offsetting the natural decline from legacy production. No new wells were added during the quarter, and we had no material disruptions or other events that impacted our operations. Our operations team has done an excellent job focusing on cost structure, identifying and capturing efficiencies across the system and maintaining the strict discipline necessary to operate safely and responsibly.

現在轉向我們的收集和加工業務。天然氣處理量小幅成長，較上期成長約1%。這反映了 2021 年 Alpine High 最近上線的 DUC 的整整 3 個月的貢獻，抵消了傳統產量的自然下降。本季沒有增加新井，也沒有發生影響我們營運的重大中斷或其他事件。我們的營運團隊在專注於成本結構、識別和捕獲整個系統的效率以及維持安全和負責任營運所需的嚴格紀律方面做得非常出色。

During the third quarter, for the first time in 2 years, operating expenses were higher than the preceding period. The main factors contributing to the increases were all non-routine in nature, including maintenance work associated with out-of-service equipment, weather-related road and right-of-way repairs and inventory cleanup. A further increase in cost during the quarter was related to servicing a new compressor lease with Apache. These increased lease costs are more than offset by the related lease income. Importantly, despite these higher costs during the quarter, we remain on track for a 15% year-over-year reduction in operating cost.

第三季營運費用兩年來首次高於上一季。造成成長的主要因素都是非常規性質的，包括與停用設備相關的維護工作、與天氣相關的道路和通行權維修以及庫存清理。本季成本的進一步增加與阿帕契租用的新壓縮機的維修服務有關。這些增加的租賃成本被相關租賃收入所抵銷。重要的是，儘管本季成本較高，但我們仍有望實現營運成本年減 15%。

Last month, we signed a new gas processing agreement with Apache and announced our combination with EagleClaw Midstream. The updated processing agreement contains modified gas processing fees for new volumes that are more consistent with the current market. The circumstances that existed when the original agreement was signed have changed dramatically, and the outdated terms impacted our ability to attract new business from both Apache, our existing customer; and third-party producers and midstream companies. With these new terms for gas processing, Apache is further incentivized to initiate new development activity at Alpine High. And with the removal of contractual constraints that limited the infrastructure capacity to serve other operators, third parties can now be assured that they have access to capacity on our facilities under current market terms.

上個月，我們與 Apache 簽署了新的天然氣處理協議，並宣布與 EagleClaw Midstream 合併。更新後的加工協議包含修改後的新產量天然氣加工費，與目前市場更加一致。原始協議簽署時的情況已經發生了巨大變化，過時的條款影響了我們從現有客戶 Apache 那裡吸引新業務的能力；以及第三方生產商和中游公司。有了這些天然氣處理的新條款，阿帕契將進一步激勵在 Alpine High 啟動新的開發活動。隨著限制基礎設施能力服務其他運營商的合約限制的消除，第三方現在可以放心，他們可以根據當前的市場條款使用我們設施的能力。

Since we formed Altus Midstream in 2018, our goal was to create a pure-play midstream company in the Permian and grow the business to support all of Apache's gas gathering, processing and transportation assets at Alpine High. As the business evolved, we continue to seek new opportunities to grow and compete for third-party opportunities. We have created a very successful business literally from the ground up building a team of midstream specialists operating state-of-the-art gas processing facilities and investing in 4 of the newest Permian to Gulf Coast pipelines. Through the quarter, the Altus team has worked over 2.5 years without a reportable incident.

自 2018 年成立 Altus Midstream 以來，我們的目標是在二疊紀創建一家純粹的中游公司，並發展業務以支持阿帕奇在 Alpine High 的所有天然氣收集、加工和運輸資產。隨著業務的發展，我們不斷尋求新的發展機會並爭取第三方機會。我們從頭開始創建了一個非常成功的企業，建立了一支由中游專家組成的團隊，運營最先進的天然氣處理設施，並投資了 4 條最新的二疊紀到墨西哥灣沿岸的管道。在整個季度中，Altus 團隊已經工作了 2.5 年多，沒有發生任何可報告的事件。

As we pursue new business, we didn't limit ourselves to just E&P companies. We engaged with other midstream service providers in the effort to fully utilize our facilities. In the past year, we have found that the vast majority of acreage proximal to our Alpine High gathering system was dedicated to other gas processors. These leases were under long-term contracts that locked up otherwise suitable and economic midstream opportunities. This dynamic occurred frequently during the height of Permania and the shale drilling frenzy. Understanding this competitive landscape, we recognize the necessity of working with a midstream company, one that had commitments and infrastructure, including a vast network of pipelines in the Delaware Basin.

當我們追求新業務時，我們不僅限於勘探與生產公司。我們與其他中游服務提供者合作，努力充分利用我們的設施。在過去的一年裡，我們發現靠近我們的 Alpine High 收集系統的絕大多數面積都專門用於其他氣體處理器。這些租賃是長期合同，鎖定了其他合適且經濟的中游機會。這種動態在二疊紀鼎盛時期和頁岩鑽探狂潮期間經常發生。在了解這種競爭格局後，我們認識到與一家擁有承諾和基礎設施（包括特拉華盆地龐大管道網路）的中游公司合作的必要性。

We evaluated a wide range of strategic alternatives for creating long-term value. This effort prioritized a number of factors, including the protection of the $6 annualized dividend implemented this year, addressing debt and preferred equity financings and prudently and efficiently growing a sustainable, profitable business. The transaction with EagleClaw meets those criteria. The opportunity to combine our assets is a great next step for Altus.

我們評估了一系列創造長期價值的策略選擇。這項工作優先考慮了許多因素，包括保護今年實施的 6 美元年化股息、解決債務和優先股融資問題，以及審慎有效地發展可持續、盈利的業務。與 EagleClaw 的交易符合這些標準。對 Altus 來說，合併我們資產的機會是一個很棒的下一步。

I have watched the growth of EagleClaw for several years and am impressed with what their management and operations teams have accomplished. They have built a competitive and diverse midstream business in West Texas. Their asset footprint and client base are extensive and strategically located in the core of the Delaware Basin.

我多年來一直關注 EagleClaw 的成長，他們的管理和營運團隊所取得的成就給我留下了深刻的印象。他們在德克薩斯州西部建立了具有競爭力和多元化的中游業務。他們的資產足跡和客戶群廣泛且策略性地位於特拉華盆地的核心。

I always thought Eagle Claw system would be a great complement to the Altus Midstream footprint. EagleClaw has done an impressive job of maintaining and growing contracts. They currently serve over 30 customers with 14 drilling rigs on their area of dedication today. Much of the A&D and M&A activity that has recently transacted in the Delaware Basin has been on the nearly 800,000 acres dedicated to EagleClaw. This transaction outlines a clear path for growth and use of Altus' excess processing capacity. The combined company is expected to have a lower risk profile than either company on a stand-alone basis.

我一直認為 Eagle Claw 系統將是 Altus Midstream 足跡的一個很好的補充。 EagleClaw 在維持和發展合約方面做得非常出色。目前，他們在其專注領域擁有 14 台鑽孔機，為 30 多家客戶提供服務。最近在特拉華盆地進行的大部分研發和併購活動都集中在 EagleClaw 專用的近 80 萬英畝土地上。此交易為 Altus 過剩處理能力的成長和利用指明了一條清晰的道路。預計合併後的公司的風險狀況將低於任何一家公司單獨的風險狀況。

A new management team led by Jamie Welch as President and CEO will take on executive management responsibilities at Altus following the close of the transaction. Jamie and his team are aligned with the core objectives of Altus, including turning capital to shareholders and operating in an environmentally responsible manner.

交易完成後，由 Jamie Welch 擔任總裁兼執行長的新管理團隊將承擔 Altus 的執行管理職責。 Jamie 和他的團隊與 Altus 的核心目標保持一致，包括將資本轉向股東以及以對環境負責的方式運作。

Our combination provides a scale and operational capabilities necessary for long-term success. The combination of Altus and EagleClaw will create the largest pure-play midstream company in the Permian Basin. It will become the largest gas processor in the Delaware Basin and third largest in the Permian. We expect the transaction to close during the first quarter next year, following customary reviews and regulatory approval.

我們的合併提供了長期成功所需的規模和營運能力。 Altus 和 EagleClaw 的合併將創建二疊紀盆地最大的純中游公司。它將成為特拉華盆地最大的天然氣處理廠和二疊紀第三大天然氣處理廠。我們預計該交易將在慣例審查和監管部門批准後於明年第一季完成。

This transaction is really about the efficient utilization of assets in the Delaware Basin. The new company is better positioned for the rebound in activity across the basin with long-term growth opportunities. Commodity prices are improving and production activity is accelerating in the Texas Delaware Basin, making this an opportune time to take advantage of market conditions by expanding our processing and transportation capabilities for oil, gas and NGLs. The combination truly creates a leading, pure-play Permian integrated midstream company with a capital return focus.

這筆交易實際上是關於特拉華盆地資產的有效利用。新公司能夠更好地應對整個盆地經濟活動的反彈，並提供長期成長機會。德州特拉華盆地的大宗商品價格正在上漲，生產活動正在加速，這使得現在正是利用市場條件、擴大我們的石油、天然氣和液化天然氣加工和運輸能力的好時機。此次合併真正創建了一家領先的、專注於二疊紀盆地綜合性中游公司，以資本回報為重點。

Ben, over to you.

本，交給你了。

Thank you, Clay. In my prepared remarks, I will highlight additional aspects of Altus Midstream's business combination with EagleClaw as well as our financial performance for the third quarter and outlook for the year.

謝謝你，克萊。在我準備好的演講中，我將重點介紹 Altus Midstream 與 EagleClaw 業務合併的其他方面，以及我們第三季的財務表現和今年的前景。

The combination that we announced 2 weeks ago will establish a robust cash flow generating business focused on providing midstream services to producers in the Permian Basin. It creates the largest gas processor in the Delaware Basin with pro forma adjusted EBITDA for 2022 projected between $800 million and $850 million.

我們兩週前宣布的合併將建立一個強大的現金流生成業務，專注於為二疊紀盆地的生產商提供中游服務。它創建了特拉華盆地最大的天然氣處理廠，預計 2022 年調整後 EBITDA 預計在 8 億至 8.5 億美元之間。

The combined company expects to achieve at least $50 million of annual EBITDA synergies with a total integration spend of less than $100 million spread out over the next 3 years. Capital synergies from combining the systems are estimated at more than $175 million in the 5 years post closing.

合併後的公司預計未來 3 年將實現至少 5,000 萬美元的年度 EBITDA 協同效應，整合總支出將低於 1 億美元。預計交易完成後 5 年內，系統合併帶來的資本綜效將超過 1.75 億美元。

One of the key highlights of the transaction is the ability of the combined company to generate significant free cash flow, not only due to low forecasted capital needs, but also the ability to convert EBITDA into free cash flow.

此次交易的主要亮點之一是合併後的公司能夠產生大量的自由現金流，這不僅是由於預計的資本需求較低，而且還能夠將 EBITDA 轉換為自由現金流。

Capital spending for the pro forma enterprise is minimal, which gives us increased confidence in the ability to return capital to investors over the long term. The pro forma cash dividend coverage ratio for the combined company is estimated to be 1.75x for 2022, higher than what a stand-alone Altus would have been able to achieve next year. The company has not only committed to maintaining the existing dividend through 2023, it is targeting 5% dividend growth starting in 2024.

預計企業的資本支出很少，這使我們對長期向投資者返還資本的能力充滿信心。預計 2022 年合併後公司的現金股利覆蓋率將達到 1.75 倍，高於單獨的 Altus 明年所能達到的水平。該公司不僅承諾在 2023 年之前維持現有股息，還計劃從 2024 年開始將股息成長 5%。

We are clearly excited about the prospects for the combined company. The new business will operate in 2 segments: midstream logistics, which includes gathering and processing businesses, water handling services and crude oil gathering and storage, will represent approximately 65% of EBITDA; pipeline transportation represents the remaining 35%. This segment comprises 4 joint venture long-haul pipelines that export natural gas, NGLs and crude oil from the Permian Basin to the Gulf Coast. These include a 53% majority interest in the Permian Highway Pipeline, a 16% interest in Gulf Coast Express, a 33% interest in Shin Oak and a 15% interest in the EPIC Crude pipeline.

我們顯然對合併後公司的前景感到興奮。新業務將分為兩個部分：中游物流，包括收集和加工業務、水處理服務以及原油收集和儲存，將佔 EBITDA 的約 65%；管道運輸佔剩餘的35%。該部門包括 4 條合資長途管道，將天然氣、液化天然氣和原油從二疊紀盆地出口到墨西哥灣沿岸。其中包括二疊紀公路管道 53% 的多數股權、Gulf Coast Express 16% 的權益、Shin Oak 33% 的權益以及 EPIC 原油管道 15% 的權益。

Our plan is to integrate the Altus and EagleClaw assets into a gathering and processing supersystem. This provides competitive advantages with greater scale, reliability and flexibility for customers. We think there is little execution risk with this transaction. All material consents have been secured in connection with our joint venture pipeline interest and bank credit facility lenders. Our preferred equity holders have executed waivers and amendments in support of the transaction. And Apache, our 79% owner, has agreed to vote in favor of the transaction. We expect to issue more detailed 2022 guidance for the pro forma enterprise closer to the closing date.

我們的計劃是將 Altus 和 EagleClaw 資產整合到一個收集和處理超級系統中。這為客戶提供了更大的規模、可靠性和靈活性的競爭優勢。我們認為本次交易的執行風險很小。所有與我們的合資企業管道利息和銀行信貸便利貸款人有關的重要同意均已獲得。我們的優先股持有人已執行豁免和修訂以支持交易。我們持有 79% 股份的所有者 Apache 已同意投票支持該交易。我們預計在接近截止日期時為備考企業發布更詳細的 2022 年指引。

Now I'll move on to our third quarter results. We generated free cash flow for the third consecutive quarter. Altus paid its third cash dividend in September. And this week, the Board of Directors declared another quarterly dividend of $1.50 per share, which will be distributed at the end of December.

現在我將介紹我們的第三季業績。我們連續第三個季度產生自由現金流。 Altus 於 9 月支付了第三次現金股利。本週，董事會宣布再次發放每股 1.50 美元的季度股息，將於 12 月底派發。

As noted in the press release issued yesterday, Altus reported net income, including noncontrolling interest, of $50 million for the third quarter. This includes approximately $4 million related to an unrealized embedded derivative gain for the quarter, which reflects a technical accounting revaluation of the embedded derivative in our preferred units for the period.

正如昨天發布的新聞稿所述，Altus 報告第三季淨利潤（包括非控股權益）為 5,000 萬美元。這包括與本季未實現的嵌入衍生性商品收益相關的約 400 萬美元，這反映了我們對本季度優先單位中嵌入衍生性商品的技術會計重估。

Adjusted EBITDA was $70 million, and growth capital expenditures were approximately $3 million. Gathered volumes increased slightly from the preceding period, averaging 452 million cubic feet per day, of which approximately 75% was rich gas. Our results benefited from numerous factors, including strong operational uptime during the quarter as there were no material weather events, continued cost discipline and lower growth CapEx.

調整後的 EBITDA 為 7,000 萬美元，成長資本支出約 300 萬美元。收集量較上一期略有增加，平均每天 4.52 億立方英尺，其中約 75% 為富氣。我們的業績受益於眾多因素，包括本季因沒有重大天氣事件而保持良好的營運正常運作時間、持續的成本控制和較低的資本支出成長。

I'll move on now to our outlook for 2021. We have not changed our guidance ranges for 2021, though, I would note, we are trending better than the midpoint for all items. And to clarify, for growth CapEx, we are looking to spend less than the midpoint. Overall, we had a very good quarter, and the expectations for the year remain constructive as we are outperforming across the board.

我現在將繼續展望 2021 年。我們沒有改變 2021 年的指導範圍，但我要指出的是，我們的趨勢比所有專案的中點都要好。需要澄清的是，對於成長資本支出，我們希望支出低於中點。總體而言，我們度過了一個非常好的季度，並且對今年的預期仍然具有建設性，因為我們全面表現出色。

Operator, that concludes our prepared remarks. We can now move on to Q&A.

接線員，我們準備好的發言到此結束。我們現在可以繼續進行問答。

(Operator Instructions) And I'm not showing any questions at this time. I'll turn the call back over to Patrick Cassidy for any closing remarks.

（操作員說明）我目前沒有提出任何問題。我會將電話轉回給帕特里克·卡西迪，讓他發表結束語。

Thank you for joining us on the call today. You're welcome to reach out to Investor Relations if you have any questions following this call. Victor, thank you, and back to you.

感謝您今天加入我們的電話會議。如果您在電話會議後有任何疑問，歡迎聯絡投資者關係部。維克多，謝謝你，回到你。

My pleasure. This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.

我的榮幸。今天的電話會議到此結束。感謝您的參與。您現在可以斷開連線。大家，祝你有美好的一天。