Rattler Midstream LP (RTLR) 2022 Q1 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Rattler Midstream Q1 2022 Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions)

美好的一天，感謝您的支持。歡迎參加 Rattler Midstream 2022 年第一季電話會議。 （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, Adam Lawlis, Vice President of Investor Relations.

現在我想將會議交給今天的演講者、投資者關係副總裁 Adam Lawlis。

Thank you, Andrea. Good morning, and welcome to Rattler Midstream's First Quarter 2022 Conference Call. During our conference call today, we will 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.

謝謝你，安德里亞。早上好，歡迎參加 Rattler Midstream 2022 年第一季電話會議。在今天的電話會議中，我們將參考更新的投資者演示文稿，該演示文稿可以在 Rattler 的網站上找到。今天代表 Rattler 的是執行長 Travis Stice；和總裁 Kaes Van't Hof。

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.

在本次電話會議期間，與會者可能會就本公司的財務狀況、營運績效、計畫、目標、未來績效和業務做出某些前瞻性陳述。我們提醒您，由於多種因素，實際結果可能與這些前瞻性聲明中所示的結果有重大差異。有關這些因素的資訊可以在該公司向 SEC 提交的文件中找到。

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

此外，我們可能會參考某些非公認會計原則措施。與適當的公認會計準則措施的對帳可以在我們昨天下午發布的收益報告中找到。

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

我現在將把電話轉給 Travis Stice。

Thank you, Adam. Welcome, everyone, and thank you for listening to Rattler Midstream's First Quarter 2022 Earnings Call.

謝謝你，亞當。歡迎大家，感謝您收聽 Rattler Midstream 的 2022 年第一季財報電話會議。

The first quarter of 2022 was another exceptional operational quarter for Rattler. And together with the effect of a full quarter of post the recent transactions showcases the Rattler business going forward. This is reflected in the operating results with a sequential increase in adjusted EBITDA of 8% quarter-over-quarter.

2022 年第一季對 Rattler 來說是另一個出色的營運季度。加上最近交易的整個季度的影響，展示了 Rattler 業務的未來發展。這反映在經營績效中，調整後 EBITDA 較上季成長 8%。

Despite limiting volume growth in the near term, the flat production guidance of Rattler-sponsored Diamondback Energy allows Rattler to efficiently manage its business and minimize unnecessary operating and capital outlays. With inflationary pressures on both the capital and operating expenses resulting from a tight labor market and materials derived from hydrocarbon and steel-based commodities, the operating team at Rattler performed admirably in controlling costs. Our focus for the rest of the year is holding the line on costs wherever possible and continuing to provide the highest level of service as responsibly and economically as possible.

儘管短期內銷售成長受到限制，但 Rattler 贊助的 Diamondback Energy 的平穩生產指導使 Rattler 能夠有效管理其業務，並最大限度地減少不必要的營運和資本支出。由於勞動力市場緊張以及來自碳氫化合物和鋼鐵商品的材料導致資本和營運費用面臨通膨壓力，Rattler 的營運團隊在控製成本方面表現出色。在今年剩下的時間裡，我們的重點是盡可能控製成本，並繼續盡可能負責任、經濟地提供最高水準的服務。

The outlook for the equity method joint ventures is also extremely positive. The entirety of the joint venture portfolio consisting of long-haul and intra-basin oil and gas transportation systems is now in full service, and the overwhelming majority of the expected capital contributions have been made. Additionally, in keeping with the expected growth of the overall Permian Basin volume in years to come, these projects are expected to continue to grow volumes and, accordingly, cash flow for years to come.

權益法合資企業的前景也極為樂觀。目前，由長途和流域內油氣運輸系統組成的整個合資公司組合已全面投入使用，絕大多數預期出資已完成。此外，為了與未來幾年二疊紀盆地整體產量的預期成長保持一致，這些項目預計將在未來幾年繼續成長產量，並相應地增加現金流。

In combination with the operated CapEx, which is expected to decline dramatically once Rattler completes the construction of its centralized gathering system, the return of capital from these joint ventures will bolster Rattler's free cash flow as the gap between equity method distributions and the growing equity method of EBITDA convergence. With Rattler's peer-leading leverage position limiting the need for principal reduction, we expect to return this growing free cash flow to unitholders in the form of either the distribution and the common unit repurchase program as the market conditions warrant.

結合營運資本支出（一旦 Rattler 完成其集中收集系統的建設，預計資本支出將大幅下降），這些合資企業的資本回報將增強 Rattler 的自由現金流，因為權益法分配與權益法之間的差距不斷擴大EBITDA 收斂。由於 Rattler 領先同業的槓桿地位限制了本金減少的需要，我們預計在市場條件允許的情況下，以分配和普通單位回購計劃的形式將不斷增長的自由現金流返還給單位持有人。

With these comments now complete, operator, please open the line for questions.

這些評論現已完成，接線員，請打開線路提問。

(Operator Instructions) Our first question comes from Spiro Dounis from Crédit Suisse.

（操作員說明）我們的第一個問題來自瑞士信貸銀行的 Spiro Dounis。

This is Chad on for Spiro. Starting off, it sounds like you're entering a more stable period following the active M&A over the past few months. Do you view any incremental M&A is unlikely in this environment? Or are there still some smaller opportunities around your footprint that you're seeing?

這是斯皮羅的查德。首先，在過去幾個月的活躍併購之後，您似乎正在進入一個更穩定的時期。您認為在這種環境下增量併購不太可能發生嗎？或者您所看到的圍繞您的足跡是否還存在一些較小的機會？

Yes. Chad, good question. I certainly think large-scale M&A or new equity method JVs are off the table today given what we've done in the last 9 months or so. There are little deals here and there that could make our systems a lot more efficient. It's not really anything that's going to move the needle much on the corporate level, but certainly, can help at the asset level, and that's kind of where we're focused. So building out our system but also making sure we have great connectivity, particularly in the Martin County area as we build that out.

是的。查德，好問題。我當然認為，鑑於我們在過去 9 個月左右所做的事情，大規模併購或新的股權法合資企業今天不再是討論的對象。到處都有一些小交易可以讓我們的系統更有效率。這實際上並不會在公司層面上產生太大的推動作用，但肯定可以在資產層面上有所幫助，而這正是我們關注的重點。因此，在建立我們的系統的同時，也確保我們擁有良好的連接性，特別是在我們建造系統時在馬丁縣地區。

Okay. Understood. That's helpful. And then I guess just with a few expansion projects being announced for Permian gas takeaway, I just want to get your latest thoughts on how conversations are developing on participation in a greenfield Permian gas pipeline from a [Rattler] perspective.

好的。明白了。這很有幫助。然後我想隨著二疊紀天然氣外運的一些擴建項目的宣布，我只想了解您從 [Rattler] 的角度了解參與新建二疊紀天然氣管道的對話如何發展的最新想法。

Yes, that's a good question, too. I think just like you've seen over the course of Rattler's public history, we are focused on JVs and participating somewhere where Diamondback has a significant amount of volume or acreage dedicated to that particular JV or system. And right now, on the greenfield side, Diamondback doesn't have control of enough gas molecules to contribute to a greenfield pipe. We're certainly pushing -- putting my Diamondback hat on, we're certainly pushing the GMPs to commit to our new long-haul pipe, but it won't be through the Diamondback name or the Rattler investment alongside it. But we think it's going to happen, it's just we won't be a major participant in it.

是的，這也是一個好問題。我認為就像您在 Rattler 的公共歷史中所看到的那樣，我們專注於合資企業並參與 Diamondback 擁有大量專用於該特定合資企業或系統的交易量或面積的地方。目前，在新建管道方面，響尾蛇無法控制足夠的氣體分子來為新管道做出貢獻。我們當然會推動 - 戴上我的 Diamondback 帽子，我們當然會推動 GMP 致力於我們新的長途管道，但這不會透過 Diamondback 名稱或 Rattler 投資來實現。但我們認為這將會發生，只是我們不會成為其中的主要參與者。

(Operator Instructions) Next up, we have Michael Lapides from Goldman Sachs.

（操作員說明） 接下來請來的是高盛的麥可‧拉皮德斯 (Michael Lapides)。

Real quick. When you think about just the organic growth CapEx on your systems, can you talk about just cadence? Like when you're thinking about this year relative to maybe what the next 2 years bring, how dramatically different should we be thinking about the cadence of organic CapEx to build out the system? And if one part is up, one part is down or if they're moving in lockstep, like I'm just trying to think about it given a little bit of the focus on having more recycled water capability. Just trying to think trajectory.

真快。當您只考慮系統上的有機成長資本支出時，您能談談節奏嗎？就像當你考慮今年相對於未來兩年的情況時，我們應該考慮建立系統的有機資本支出的節奏有多大的不同？如果一部分上升，一部分下降，或者它們步調一致，就像我只是想考慮它，因為稍微關注擁有更多的循環水能力。只是想思考軌跡。

Yes. Good question, Michael. This year is certainly a heavy year for operating CapEx, $80 million to $100 million. I think we still feel good about that range despite inflationary pressures. I would say that, that's going to encompass the majority of our necessary build-out across our Martin County system, and then things will kind of move back down into a blocking-and-tackling maintenance/new battery connection type of capital. So if you look back at kind of where we were last year before we started building these new systems in Martin County, it's kind of a $8 million to $12 million a quarter of CapEx. I would think that we're probably moving back towards that in 2023 and beyond.

是的。好問題，麥可。今年對於營運資本支出來說無疑是沉重的一年，達到 8,000 萬至 1 億美元。我認為，儘管存在通膨壓力，我們仍然對該範圍感到滿意。我想說的是，這將涵蓋我們整個馬丁縣系統的大部分必要建設，然後事情將回到阻塞和處理維護/新電池連接類型的資本。因此，如果你回顧去年我們開始在馬丁縣建造這些新系統之前的情況，你會發現每季的資本支出約為 800 萬至 1200 萬美元。我認為我們可能會在 2023 年及以後回到這一目標。

Got it. And then when you think about capital allocation at the Rattler level, how do you -- how does the team think about like what's the most accretive way to return the capital? Like what are the metrics you guys are using when you're sitting around talking and saying, "Hey, you know what? We ought to bring forward maybe a greater pace of distribution hikes," versus, "Hey, at a certain metric or certain valuation level, the right thing to do is buy in the units."?

知道了。然後，當您考慮 Rattler 等級的資本配置時，您 - 團隊如何考慮返還資本的最增值方式是什麼？就像你們坐在一起聊天時使用的指標是什麼，“嘿，你知道嗎？我們應該加快分配增長的步伐”，而不是“嘿，在某個指標或在一定的估值水平下，正確的做法是買入單位。」？

Yes, good question. It's certainly become a harder debate as the stock has improved in price, the flip between distribution and buybacks. We're very aggressive on the buyback back half of the year last year. It's still out there. We didn't get as much done in Q1 as maybe we'd like due to trading days and the blackout periods, but it's still out there in times of weakness. I think generally, we think the distribution is the primary return vehicle for Rattler as well as other midstream companies, but we're not afraid to lean in the buyback if we see weakness.

是的，好問題。隨著股票價格的上漲、分配和回購之間的轉換，這肯定會成為一場更加激烈的爭論。去年我們半年的回購非常正面。它仍然在那裡。由於交易日和停電期，我們在第一季的業績沒有達到預期，但在疲軟時期仍然存在。我認為總的來說，我們認為分配是 Rattler 以及其他中游公司的主要回報工具，但如果我們看到疲軟，我們並不害怕回購。

And does the concept of doing onetime upsizing of the distribution, meaning specials, does that fit into the Rattler portfolio?

一次性擴大分銷規模（即特價商品）的概念是否適合 Rattler 的產品組合？

No. I just think this year, we spent some money in Q1 on the BANGL pipeline, and we've got a lot of CapEx relative to the forward outlook, which is coming down. So I think distribution increase is certainly something the Board is going to discuss as we get more confidence in the free cash flow. I think we're in a good place on debt today. So probably, we don't need to pay down too much more debt, and we're certainly not going to sit on the cash. So I think there's discussions to be had in future quarters on raising the distribution quarterly or more consistently.

不。我只是認為今年，我們在第一季在 BANGL 管道上花了一些錢，相對於前景，我們有很多資本支出，而前景正在下降。因此，我認為隨著我們對自由現金流更有信心，董事會肯定會討論增加分配的問題。我認為我們今天的債務狀況良好。因此，我們可能不需要償還太多債務，而且我們當然不會坐擁現金。因此，我認為未來幾季將就按季度或更一致地提高分配率進行討論。

I'm showing no further questions at this time. I'd now like to turn the conference back to Travis Stice, CEO.

我目前沒有提出任何進一步的問題。我現在想把會議轉回執行長特拉維斯·斯蒂斯（Travis Stice）。

Thanks again to everyone participating in today's call. If you've got any questions, please reach out to us using the contact information provided.

再次感謝參加今天電話會議的所有人。如果您有任何疑問，請使用提供的聯絡資訊與我們聯絡。

This concludes today's conference call. Thank you for participating. You may now disconnect.

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。