Crestwood Equity Partners LP
Q2 2018 Earnings Call Transcript

Published: 31 Jul 2018

[Operator:]

Good morning and welcome to today’s conference call to discuss Crestwood Equity Partners’ Second Quarter 2018 Financial and Operating Results. Before we begin the call, listeners are reminded that the company may make certain forward-looking statements as defined in the Securities and Exchange Act of 1934, that are based on assumptions and information currently available at the time of today’s call. Please refer to the company’s latest filings with the SEC for a list of risk factors that may cause actual results to differ. Additionally, certain non-GAAP financial measures such as EBITDA, adjusted EBITDA and distributable cash flow will be discussed. Reconciliations to the most comparable GAAP measures are included in the news release issued this morning. Joining us today with prepared remarks are Chairman, President and Chief Executive Officer, Bob Phillips; and Executive Vice President and Chief Financial Officer, Robert Halpin; and Executive Vice President and Chief Operating Officer, Heath Deneke. Additional members of the senior management team will be available for the question and answer session with Crestwood’s current analysts following the prepared remarks. Today’s call is being recorded. [Operator Instructions] At this time, I will turn the call over to Bob Phillips.

[Bob Phillips:]

Thank you, Operator, and good morning. Thanks to all of you for joining us. We’ve had a lot of positive things happening at Crestwood past several weeks. Last week we made two important announcements on expansions in the Delaware Basin and the Powder River Basin. And today, we’re very pleased to announce strong financial results for the second quarter. And first, I want to congratulate Crestwood team for delivering another great quarter to our investors. In the second quarter, Crestwood continued to fire on all cylinders commercially, operationally and financially with adjusted EBITDA of about $103 million, that’s up 6% from last year. Importantly, as we promise, we delivered strong leverage ratio of 4.0x and a distribution coverage ratio of 1.3x. Also in the announcement, we talk about the sale of our West Coast NGL assets. We sold those assets at a price of approximately $58 million for the assets and the inventory. This divestiture is consistent with our ongoing strategy to rationalize and redeploy assets from low growth to higher growth opportunities. The Westcoast NGL business, which we've had for a lot of years, has been shrinking for quite some time, requires high annual maintenance capital. It has needed significant growth capital just to remain commercially relevant given the consolidation at the regional California gas production and NGL markets. And it has -- it faces ongoing challenges like our primary customers in the California refining market. This was another good portfolio of divesture for Crestwood. I’m going to let Robert give you the details on the second quarter and the announced projects, but I would like to give you some additional color on where we think Crestwood is strategically. First, to our gathering and processing business. The three growth areas, the Bakken, the Delaware Permian and the Powder River Basin, all those areas are benefiting from strong fundamentals with both near-term and long-term commodity prices, which exceed the breakeven economics for producers in those basins. Our producers group continues to be diverse, financially strong and continue to show great year-over-year performance and improvements in drilling and completions. And our producers are motivated to accelerate production if the infrastructure is available to market that production with good netbacks and reasonable flow assurance. Against that backdrop, we continue to improve and expand our service model for these customers as we fully integrate assets and operations and expand services downstream to provide even more flow certainly, more marketing optionality and even greater netbacks to drive producer development of this dedicated acreage. We think we got very visible top line growth out of all three basins for years to come. In our storage and transportation segment, Stagecoach and Tres Palacios are still located in markets where we expect to see solid long-term growth in demand for both gas storage as well as market connectivity over time. Stagecoach in the Northeast, as demand for natural gas increases from the power market, Tres Palacios on the Gulf Coast, as the Mexican gas market continues to grow in LNG exports, are now growing substantially year-over-year. Similarly, our Colt oil assets in the Bakken are seeing rising North Dakota oil production, higher long-term oil prices, a WTI/Brent spread, which makes Bakken crude even more economic to refiners on the East Coast and West Coast. We expect these fundamental trends to continue as well. In our marketing, supply and logistics segment, our NGL team has finished a bottom-to-top review of the business in the past 9 to 12 months, clearly, resulting in better first half 2018 performance due to lower operating cost of streamline organization, new NGL supplies and improved delivery systems, truck, rail and terminal. As an example, our transportation team recently won the 2018 CCJ Innovator of the Year Award for electronic implement -- system implementations in our U.S. trucking fleet. Same as gathering in processing and storage and transportation, the fundamentals here are very supportive of this business with higher absolute NGL prices driving supply growth, strong export demand, balancing the market, a significant Mont Belvieu to Conway spread and growing NGL sales in downstream capacity book from our expanding processing plant business in the Bakken, the Delaware Permian and potentially the Powder River Basin. So we’re pleased with what our NGL team is doing as well. In summary, given the strong fundamentals supporting all of our business segments, the visibility to growth projects in the Bakken, the Delaware Permian and the Powder River, over the next 18 months, our ability to finance the current capital program without dilutive equity issuance, improvements that we continue to make any organization in the field and on the balance sheet, we remain highly confident in our 2018 guidance and our forecasted earnings growth over the next several years. Crestwood has clearly become a leader in the industry in the past few years, as we have executed on our strategic plan. And I want to thank our investors that stayed with us during the downturn and those that have recently invested in Crestwood Equity Partners. We’re very excited about the future. And we know that you are as well. With that, I’ll turn it over to Robert for a review of our second quarter financial results.

[Robert Halpin:]

Thank you, Bob. I am very pleased to report the strong financial results for the second quarter. Our second quarter adjusted EBITDA totaled to $103 million, which was up 6% year-over-year compared to $97 million in the second quarter of 2017, and up 1% sequentially from the first quarter of 2018. Our strong results were driven by outperformance in our gathering and processing, and marketing supply and logistics segments. Distributable cash flow available to common unit holders for the second quarter was $54 million, and net-net of our quarterly cash distribution to our Class A preferred unit holders. For the second quarter 2018, we declared a distribution of $0.60 to our common unit holders, resulting in distribution coverage for the quarter of approximately 1.3x. In our gathering and processing segment, segment EBITDA totaled $79 million in the second quarter of 2018, a 16% increase compared to $68 million in the second quarter of 2017. Segment EBITDA increased during the quarter as a result of continued volume growth across our Bakken, our Powder River and our Delaware Basin systems. In the second half of 2018, we expect the gathering and processing segment to be a large contributor to our cash flow growth, as we begin to see the benefit of our capital investments go into service in the Bakken. In our storage and transportation segment, segment EBITDA totaled $14 million in the second quarter of 2018 compared to $17 million in the second quarter of 2017. Segment EBITDA decreased primarily as a result of expected lower year-over-year EBITDA contributions of the Colt hub. In the second half of 2018, we expect the storage and transportation segment to benefit from the Stagecoach cash distribution step-up, increased Northeast transportation demand from new power generation projects and increased rail loading utilization at the Colt hub due to favorable WTIs and Brent spreads. In our marketing supply and logistics segment, segment EBITDA totaled $12 million in the second quarter of 2018 compared to $15 million in the second quarter of 2017. Second quarter 2018 EBITDA reflects the divestiture of U.S. Salt, which contributed approximately $6.7 million of segment EBITDA. Adjusted for the sale of U.S. Salt, segment EBITDA for the marketing, supply and logistics segment increased 46% year-over-year as a result of an expanded U.S. NGL supply base and market dislocations caused by increased NGL supplies from various high-growth regions as well as regional pipeline outages. Now moving to expenses. Combined O&M and G&A expenses for the second quarter were down 13% or $6.5 million compared to the second quarter of 2017. The decrease in combined expenses was driven by Crestwood's efforts to streamline our marketing, supply and logistics segment operations as well as lower insurance expenses due to continued improvement in operational safety across our operating platform. Now, looking to the balance sheet. As of June 30, Crestwood had approximately $1.6 billion of debt outstanding, including $1.2 billion of fixed-rate senior notes and $385 million in outstanding borrowings under our $1.5 billion revolving credit facility. This resulted in a leverage ratio at 4x. During 2018, we are actively investing in growth capital to expand our gathering and processing systems in the Bakken to Delaware and the Powder River basins. In the second quarter, we invested approximately $47 million in consolidated growth capital and have invested $105 million in accumulative growth capital through the first half of 2018. For full-year 2018, Crestwood is increasing its previously stated growth capital guidance of $250 million to $300 million up to $300 million to $350 million to reflect our 50% interest in the recently approved Powder River basin and Delaware basin expansions. Based on our current outlook for the remainder of 2018, Crestwood does not expect to issue any equity to execute on this expanded capital plan. Crestwood remains firmly committed to the self-funding model through utilizing excess retained DCF, proceeds from the divestiture of the West Coast NGL assets, significant availability into our revolving credit facility and capital commitments from our existing joint venture partners to continue funding our current 2018 and 2019 capital needs. We expect to complete the year within our previously guided total leverage ratio range of 4x to 4.5x. In addition, as a result of our very strong financial results for the first half of 2018, we are tightening our full year 2019 adjusted EBITDA guidance range upward from the previous range of $390 million to $420 million to now be in the range of $400 million to $420 million, equating to a $5 million increase in the midpoint. This provision is also adjusted to exclude the EBITDA from our West Coast NGL assets as a result of the divestitures we officially announced today. And with that, I'll now turn the call over to Heath to provide an update on our capital projects and business outlook.

[Heath Deneke:]

Thanks Robert. So we've had another really strong quarter across our portfolio of assets of Crestwood. And we will continue to experience strong biometric growth in our core G&P growth basins due to continued advancement and producer activity levels, efficiency, improvement in our overall well results, and crude oil pricing exceeds $60 per barrel for the full duration of the quarter. Our Marcellus and Barnett system volumes continue to outperform decline curve expectations and our operations teams are doing a great job, driving cost efficiencies in those regions. Our MS&L segment posted strong results by taking advantage of favorable supply pricing associated with growing NGL production and widening of the Mont Belvieu to Conway NGL basis differential as well as increased output from our downstream refinery and fractionation customers. Our Northeast storage and transportation assets also benefited from growing demand from the power sector as well as increased localized gas price volatility, which we believe further highlights the extreme tight gas takeaway situation in the region. We look forward to the additional pickup in activity on the Stagecoach system as the 1.7 Bcf/d lending some price projects comes on line later in the third quarter of this year. Finally, last week we had two really exciting major project announcements in the Delaware and the Powder River Basins. I’ll provide a little bit more color on these projects as well as an update on the debottlenecking and processing expansion projects currently ongoing in the Bakken. So starting with the Delaware Basin. During the second quarter, Crestwood’s gathering assets averaged natural gas volumes of 157 MMcf/day, a 184% increase over the second quarter of 2017, and 21% sequentially of our first quarter of 2018. We expect volumes to continue to grow throughout the remainder of the year as there are currently nine rigs now operating across our Delaware footprint. Last week, we are very pleased to provide strategic update, announcing the in-service date of the first processing plant at Orla, the full integration of the Willow Lake and Nautilus gathering systems and a comprehensive NGL takeaways solution that will move NGL extracted from the Orla plant two competitive Gulf Coast markets. That announcement marked a very important step in our Delaware Basin franchise to now have a fully integrated and fully operational system that spans over 100 miles across the heart of the Delaware Basin. I want to congratulate our project management team for doing an outstanding job running the Orla plant in-service in July as planned. The project was delivering budget and importantly maintaining an outstanding safety track record that we built in building projects in the Basin. As a reminder, the Orla plant is a 200 million a day cryo, that is centrally located to provide gas processing services for both the Willow Lake System and Eddy County, New Mexico, as well as the Nautilus gathering system that spans Reeves, Loving and Ward Counties in Texas. The Orla facility has been designed to accommodate at least two additional 250 million per day trains of processing capacity to meet our producers growing needs as associated gas volumes continue to grow at a rapid pace in and around our system footprint. As you would expect, competition for midstream services in the Delaware Basin is very fierce. We knew from day one that we had to develop a large scale of G&P platform to compete over the long haul and we now reporting to have that with the Orla plant facility and the full integration of the Willow Lake and Nautilus systems. Similarly, we also understood the need to have a very cost effective long-term NGL takeaway solution to compete, particularly to compete with some of the larger companies in the Basins that have integrated gas gathering, processing and liquid platforms. So as we have announced last week, we are very excited to complete the EPIC NGL Pipeline and Chevron Phillips Chemical or CP Chem by sale transactions. These two transactions create a very competitive outlook for our NGLs while ensuring that we have adequate takeaway capacity and optionality for Orla -- for our first Oral trained as well as our planned Orla plant expansions. The acquired undivided joint ownership interest in the Orla-to-Benedum segment of EPIC 16 inch NGL pipeline provides Crestwood with control of over 80,000 barrels per day of takeaway out of the Basin and will interconnect to multiple pipelines in the Benedum, Texas area. The EPIC capacity was purchased through our Permian joint venture with First Reserve and was funded via our revolver at that joint venture level. Simultaneously the EPIC transaction, we also entered into a long-term purchase and sell agreement with CP Chem to purchase Y-grade originating from our Orla plant and deliver via our new Orla-to-Benedum NGL pipeline. These NGLs will be delivered to a new inner connect with CP Chem's EZ Pipeline at Benedum Station. So through the CP Chem agreement, Crestwood expects to be a key feedstock supplier to Chevron Phillips' Sweeny Complex while maintaining the optionality to move the NGL products to premium markets located along the Gulf Coast region. So in summary, our fully integrated Delaware Basin, gathering, processing and liquids platform is now in service. We believe that we're now very well-positioned to compete for growth and look forward to working closely with First Reserve to continue to expand our platform for new and existing customers in this basin. Similar to our approach on the G&P side, we’ve also announced previous plans to develop an integrated large scale produce water handling, reuse and disposal system with infrastructure located alongside of our gas gathering and processing footprint. While we don’t have a specific announcement to make at this time, we continue to be very excited about the water business in Delaware Permian, we really like our strategy and we're very pleased with the progress that our commercial teams have made the case. So let’s shove north to the Powder River Basin. In the Powder River, we continue to see resurgence producer activity would now over 20 rigs now operating in the basin targeting multi formations including the Turner, Frontier, Sussex and Niobrara stack formations. On the Jackalope system Chesapeake ran four rigs during the majority of the second quarter and has recently added a fifth rig. So during the second quarter of 2018, gathering volumes on the Jackalope systems increased 55% over the second quarter. And our recent daily gathering volumes have exceeded 125 million per day as Chesapeake energy is shifted from appraisal mode into full development model targeting the Turner formation. In a recent press release, Chesapeake stated that its total net production reached record highs of approximately 32,000 net Boe per day in July, which is comprised of 42% of oil, 41% of natural gas and 17% of natural gas liquids. And that its net production of the Powder River is now expected to more than double in 2019 compared to 2018. Separately, in a press release issued last week, Crestwood and Williams jointly announced that we are proceeding with plans to expand the Bucking Horse processing facility by 220 million a day by the fourth quarter of 2019. This is in response to currently forecasted volume growth from Chesapeake as well as surrounding third-party offset operators. Crestwood expects to invest approximately $200 million in these projects over the next several years for our portion of the expansion. Based on the increasing productivity at the Turner and Niobrara formations in the basins and the current level of rig activity within the joint ventures dedicated of acreage, volumes are expected to approach the full capacity of expanded Jackalope system during the '20-'21 time frame. With this volume growth, we expect to generate more than the 5x to 7x range and we’re in early planning stages to add a third train of processing associated gathering expansions to further capture growth in the region in the coming years. In addition, we’re actively pursuing development of new crude gathering systems in Converse County to support growing producer needs in the basin and in areas surrounding our G&P foot print. Shifting now to the Bakken. During the second quarter, we saw natural gas and produced water volumes increased 37% and 21%, respectively. On the Arrow system, as a result of newly completed infrastructure projects that are beginning to alleviate bottlenecks and capture volumes that were previously been flared, curtailed or tucked off the Arrow system. We’re on track to complete most of our remaining debottlenecking projects by the end of the third quarter of 2018. And when those are done we expect continued acceleration in our producer completions and corresponding volume growth throughout the second half of ’18 and into ’19 as the products are placed in service. We continue to see our Arrow producers make terrific gains and well productivity results while continue to gain efficiency on the cost side as well. So as an example, during the second quarter, WPX Energy, is one of the largest producers on the Arrow system, announced in company record 24 IP rate of approximately 5,200 barrels of oil equivalent per day with an 81% oil cut. This record occurred on 804 well pads. Also our producers' drilling and completion costs are now averaging about 6.3 million per year which further highlights that our system supports some of the most economic acreage in North America. So shifting to the processing side, the Bear Den processing plant operated at high utilization during the second quarter, which provided Arrow producers flow assurance as well as competitive netback pricing through collaboration with our NGL marketing team who are handling the liquids out of the Bear Den 1 facility. We’ve also done construction of the second phase of the expansion, which will provide an additional 120 million a day of capacity, which in aggregate will bring our total processing capacity of 150 million a day to 250 million a day by the third quarter of 2019. So once complete, Crestwood will be in position to process 100% of the gas gathered on the Arrow system. Also during the second quarter, we also reached turns and signed an agreement with One Oak on their Elk Creek NGL project to become an anchorage shipper on their system for our Bear Den plant NGLs, when the project comes online, which is expected to be in the second half of 2019. We expect that this additional NGL outlet will provide Arrow and its customers the best NGL netbacks -- or the best netbacks move NGL out of the Bakken, which will ultimately the liquids will show up in Mont Belvieu markets. So in total, our gathering and processing expansions at the Arrow system, Crestwood is committed to invest approximately $550 million beginning in the 2017 period through 2019 to expand our crude gathering capacity to 120,000 barrels per day; our natural gas gathering and processing capacity to a 150 million per day, and produced water gathering capability to 75,000 barrels per day. When the full expansion program is complete these projects are expected to generate extremely attractive total project returns with an expected well below 4x overall build multiples. As these projects remain on track to drive very meaningful and accretive cash flow growth for Crestwood in 2018, 2019 and beyond, with Arrow's total cash flow contribution going at an expected 15% plus cumulative annual growth rate from 2017 to 2022. In addition, based on feedback from our existing Arrow customers and some potential new customers in the area, our commercial and project teams continue to identify additional system expansion opportunities that could further increase Arrow system capacity as well as increase in the expected cumulative annual growth rate over the next five years for the asset. So with that, before opening line for questions, I’d like to say how pleased we are with how Crestwood is positioned for the remainder of the year and then going into 2019. We think the base business is performing well on all fronts. We’ve a high quality backlog of organic projects in three of our high growth basins. And we believe these projects provide our investors with visibility to multiyear accretive cash flow growth. Importantly, we do not need to access the exceeding capital markets to execute on this growth strategy. So with that, operator, I believe we’re ready to open the line for questions.

[Operator:]

At this time we’ll be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Tristan Richardson from SunTrust. Please proceed with your question.

[Tristan Richardson:]

Just on your recently announced Permian Y-grade capacity acquisition, you noted that there is capacity there to accommodate a second and potentially a third train. Until such time that you approve those projects, could you talk about the commercializing the capacity you have on that line?

[Heath Deneke:]

Yes, absolutely. So this is Heath Deneke. So look when we entered into this transaction and underwrote the capital expenditure, is really gone off the back of the train one economics. So really relates to our expected returns overall one transaction, they really only get better as we increase the capacity and the utilization of the line. So our near-term plans are to kind of inject exclusively we kind fill up train one and then kind of keep it available for our system as we grow into trains two and trains three.

[Tristan Richardson:]

Got it. That’s helpful. And then just, now that you've talked about Bucking Horse and the expansion there. Could you just talk a little bit about the crude opportunity you've seen in the PRB where the pinch points are sort of what triggered events could relate it to crude solution there?

[Heath Deneke:]

Yes, well, let me start just at the basin level. I mean, obviously, we’re seeing a ramp-up in activity. If producers want to shift into full development mode, currently, the majority of the crude in the basin is getting trough to market. It cost sometimes $2 to $3 per barrel. When we look at gathering systems out there we think we can cut that cost in half or in some situations, perhaps better. So we definitely feel both to handle the quantity of all that’s going to be produced here in the coming years as well as getting the cost efficiency there. We think that producers are starting to shift to really want to get as much crude oil as possible. For us, in particular, we put actual investments in the basin both Jackalope investment as well as the -- a crude oil rail that take that crude hub, crude terminal if you will near Douglas. And the combination of these two foot prints, we think gives us a competitive advantage to develop crude gathering solutions and ultimately get the barrels to the markets that they want to access. So, I think, that’s why we’re focused on it, again it's a very competitive market as appreciate. But we did think that we have --with our gas gathering foot print as well as our Douglas terminal, we got to -- have been lend up try to secure some of these systems, particularly those in and our foot print.

[Operator:]

Our next question comes from the line of Dennis Coleman from Bank of America. Please proceed with your question.

[Dennis Coleman:]

Just as little bit on Tristan's question there, on the expansion opportunities at Orla, you've talked about the two plants, obviously, EPIC purchase. How can we think about timing there and decision process, what are the key tech points for you to make a decision on expansion?

[Heath Deneke:]

Yes, I think our timing, I mean, we've got -- we think we got what we need with the train one kind of going into 2019. I think the next train, where we've already placed an order for the kit and we are having permitting efforts are ongoing. So I think we could have that train and services are we at end of 2019. But this point, I think, it's going to be highly dependent upon the ramp-up in our producer activity. Again, we believe for the one, we’ll largely the volumes that we -- the contracts that we secure in the Willow Lake system and we shifted close to 80 million a day of production that was being processed up to your to this plant location. With those existing customers we have good chance of filling up that capacity certainly by the midpoint of next year, which means if we’re going to -- as our other customers continue to remain in the process. And we think that it put us somewhere in the 2019, maybe early 2020; put the next planning service day. But the FID have not been made on that yet, that will made in connection with better line of sight on borrowings that will need to process in the coming years.

[Dennis Coleman:]

So but that -- if it takes -- it sounds like you’re doing some of other things where it takes 18 months to build another trained FID sometime this year for sure?

[Heath Deneke:]

Well, I think if we -- if we’re going to make in 2019, we need to be FID being here pretty soon roughly. We think we’ve 12 to 14 months from go time to completion time. As I said we’ve completed some of the Permian project activities to have -- to prepare the site next to our Orla train one. We’ve already ordered the kit, so it’s ready to go, the permits are ready to go. So really, at this point in time, we think probably inside, like I said, 12 to 14 months, we need to hit the go button. So I think there’s a good chance that we could potentially FID depending on some of the success we’ve in some of the ongoing RPs that we know off. But we’ll -- the timing will really be dependent upon when the market need is there for us.

[Dennis Coleman:]

And then on the water opportunity in the Delaware basin, when might you be more specific on that? And can you talk anything about what the capital opportunity might be?

[Heath Deneke:]

Yes, look, I mean, I think any of us that has really studied the Delaware Permian, understand just the share amount of produced water that’s going to be gathered across the basin. We think it’s one of the primary potential debottle -- or bottlenecks, if you will, in the area to achieve the type of ramp-up that lot are calling for in the Basin. So we think it’s an area and a segment of the business that really needs a large scale solution, more than midstream like approach to where you’re not just looking at putting SWD in the middle of producer acreage position and laying quality pipe to. It needs to have a high pressure larger scale solution to get costs down, but also to handle the magnitude of the water that we think is going to be coming out of ground through production and then mean to get rejected. So I think the size, it’s a little bit early, I mean, we think it could be very large in terms of the quantity of water that we need to handle. I think we are -- we’ve looked at opportunity of ranging from 50,000 barrels a day up to 0.5 million barrels per day. So I think until we get a little bit further along to where we have secured the base deal with the customer, I think, we’ll announce the kind of the general size, but it could be a very meaningful growth opportunity set for our CPJV in the basin.

[Dennis Coleman:]

A couple of more, hopefully, a quick ones for me. Anything you can share on the terms of the CP Chem purchase and sale agreement in terms of tender or specific volumes?

[Heath Deneke:]

I mean, I think we’ve disclosed what we could do in the press release and through the call scripts. I mean I think what I would tell you is we were in a very extensive RFP process for 6 months and negotiated and discussed options for virtually every provider in the basin. And let’s just say we feel really good where we came out on this overall CP Chem transaction. Number one, we secured 80,000 barrels of day of capacity, is not subject to allocation with any other pipeline system. Lot of the -- some of the issues that you’re seeing in recent run-ups and transportation fractionation services is due to those constraints in the bottlenecks and people are getting somewhat curtail depending where you are on the systems. So number one is that we now feel like we got access to liquidity and we will be able to move our NGLs not just for this train but for subsequent train. And again, this is going to be a privately-held pipeline. And so we can preserve that capacity for our processing shippers, which we intent to do. As it relates to the price again, I think, we’re competing and we believe we have some of the best pricing in basin and we will certainly put that to our advantages we continue to go on compete for new customers. Regarding quantity, the only other thing I could add on the CP Chem side is that it is a substantial portion of that 80,000 barrels of day, but we do have options and continue to look for additional downstream markets and opportunities to deliver Y-Grade to other markets, so it's not exclusive, it's not 100% of our volumes, but it is a significant portion. The other thing I would comment on is well is that we do have the flexibility within that CP Chem agreement to exercise opportunities, to get our liquid back in county, we do think that our growing amount of producers are wanting to direct some of their barrels downstream until we maintain that flexibility as well with the combined transactions on the EPIC Pipe as well as the CP Chem deal. So again we think it's very flexible to really hit the mark in terms of long-term guarantee flow assurance for our sales and producers, and we think if someone would certainly wants the most attractive rate that we saw in the market place.

[Dennis Coleman:]

Thanks for all that color. And then my last one is just sort of what do you expect for cadence and CapEx for the second half you got about 200 to 250. Is that kind of the ratable over the quarters that I wish to think about it?

[Heath Deneke:]

Yes, Dennis, I think it is fairly ratable. I think with the timing -- the additive CapEx in the second of the year largely being driven by the Powder River Basin expansion which we now plus we continuation of our Bakken plus the Delavar capital we mentioned. I think you will see a fairly evenly spread between the third and fourth quarter.

[Operator:]

Our next question comes from the line of JR Weston from Raymond James. Please proceed with your question.

[JR Weston:]

Congrats on the quarter and the recent commercial successes. A lot of options on the table now both from a grow perspective and a financing perspective. And really, I guess, we’ve seen kind of three asset sales recently with the U.S. Salt and today’s announcement and then going back to the Willow Lake contribution to the JV. Just kind of curious how much consideration there is for potential additional asset sales in 2019? And then kind of along with that, can you remind us on the first reserves CPJV CapEx credit and how much is remaining there? And kind of any color on First Reserve's interest in incremental investment with customers?

[Robert Halpin:]

Sure, JR, this is Robert. I will hit your questions in order to there. So I think first, speaking to the strategy we deployed of kind of internally generated proceeds whether it's direct at CP act or strategic divestitures from time to time. And I think, we've been pretty clear on the core growth opportunities we see around our portfolio largely being in the Bakken and the Delaware Basin and the Powder River Basin and then longer-dated in the Northeast Marcellus. And I think that's still the core strategy around growth of the company and where we will be allocating capital. As we've been able to in the past, we found opportunistic times to divest of non-core assets at attractive prices and redeploy those proceeds into our more core growth and higher growth areas. And I think the West Coast divestiture would be now today is another perfect example of that. We don't have an active divestiture program ongoing. We just take advantage of those opportunities when they arise. But certainly what we are committed to is a continuation of the self funding model and utilizing excess DCF and other sources of capital to continue executing on our growth plans in those high core growth areas. And so I think, with that, as new opportunities arise, we'll certainly capitalize upon them, but no active program or eminent desire to divest of any others at this point. And then to your second one on the Delaware Basin structure with First Reserve, we do have the revolver feature down there, a revolver at the asset level. And we had the $151 million commitment from them through the in-service data, the Orla plant, now that we've brought Orla in service. We have completed that utilization of their capital. So any future FID on any subsequent capital investment will be split to 50-50, but we do have a self contained capital structure financing plan down that joint venture through equity capital from both purchasers and ourselves as well as the revolver at that level.

[JR Weston:]

Great. I appreciate that. Kind of switching gears a little bit. Just kind of curious what your updated sense is for investor preferences kind of between balance sheet strength and coverage relative to distribution growth or maybe even unit repurchases? And just kind how that might be influencing your capital allocation plans for the rest of this year and into 2019 if at all?

[Robert Halpin:]

I think it’s a great question JR. And I think our strategy closed to last 18 months as well as going forward into 2018, 2019 and 2020, is really an evaluation of where we can allocate capital towards the greatest long-term return. And year-to-date, and for the foreseeable future, we still believe that we've got a backlog of call it 5x to 7x all in build multiples around our portfolio. And those opportunities keep expanding our growth assets at those types of returns is the best near-term utilization of our capital. That's said, we've also been very clear about our long-term objectives of balance sheet at 4.0x or better coverage at 1.3x or better and we've been there for now many quarters in a row and we continue to expect to be there, and, in fact, better than that as we execute heading into 2019. And so I think, there's a right balance, an appropriate balance of investing in new growth return of capital unit holders. And I think we planned to start further evaluating that in the coming quarters. And we'll be more clearer in the remainder of this year and our exact strategy around the mix between those components.

[Bob Phillips:]

Hey JR, this is Bob. Let me just add a little color to that. We've done pretty well year-to-date compared to our peer group. If you just look at absolute price and total return, we've been rewarded for our current strategy, which is primarily financial strength. And the execution of that strategy from quarter to quarter to quarter, I can't see anything causing us to deviate from that primary strategy of financial strength while this industry is still kind of recovering from the downturn that we've all experienced. As time goes on and as more investors come back into the MLP space, and if they are rewarding higher growth than they are more financial strength, and we'll evaluate that at that point in time, that our entire business plan is based on keeping the balance sheet strong and executing in the three regions where we have a lot of producers and customer activity. I think we’re actually doing that quite well in the markets rewarded us so far for that. So I don’t see us deviating a lot from our current strategy even as we roll-up the end of '18 and hit our revised guidance and move into 2019, I think you’re going to see more of the same. It may not be a particularly sexy story, but it's one that the market likes right now.

[Operator:]

Our next question comes from the line of Shneur Gershuni from UBS. Please proceed with your question.

[Shneur Gershuni:]

I just wanted to follow-up on the last question. And Bob, I definitely appreciated your perspective there. But I was wondering if you can sort of -- if we sort of step back and think about that you’re one of the earliest adopters of going over to the self-funding strategy right? And as you pointed out, we definitely seen that in your stock price over the last several months or so, but I understand your perspective that that’s what investors are rewarding right now. But when you started, not a lot have actually gone down that path, and now a lot of the companies have gone on that path. And so sort of the differentiation is as you move to the next phase and are we ready to see that and will we see the growth? And I understand that you're waiting for investors to tell you that the reward growth over a repaired balance sheet, but you kind of have to test the waters a little bit. And so just kind of wondering how you are going to be thinking about on a go forward basis? Is it -- does the balance sheet have to be 375 or 350 before you absolutely realize that you have to step-up and raise the distribution of buyback units? Or there’s some triggers out there that we cross that line, I don't call it red line, but we cross that point and we’ll definitely see a clear shift or we kind of already there at this stage right now and you're just kind of watching it?

[Bob Phillips:]

No. We’re doing more than just watching it Shneur. And you know that you and I’ve had this conversation several times. What do you do with excess cash flow? We planted our flag during the second quarter when we announced to our investors and future investors that our 3-year plan shows us grow in DCF by 15% per year compounded annual growth. We think that’s going to be top of the peer group type growth. And we think investors are going to be rewarding that DCF growth not what we say in advance that we’re going to do with that excess cash flow when we get it. So let’s stay focused on the assets and investments that we’re making, and the 15% compound annual growth that we’re predicting out of this portfolio over the next three years. And as we achieve that DCF growth, I think, our management team is very focused on doing the right thing with excess cash flow whether it is paying down more debt and getting at an even lower leverage ratio going forward, which, of course, reserves flexibility for us to do other transactions that may ultimately add significantly to our portfolio or even be transformational. You can’t do that without balance sheet strength and flexibility, or in the event we feel very comfortable with our balance sheet position and the availability of additional capital from the capital markets, which doesn't exist today, then we might actually start moving towards a more aggressive thought about returning some of that excess cash flow through our investors, through increased distributions, but I think we’re ways away from that. Let’s stay focused on that 15% per year growth rate that we're predicting out of the current portfolio and the investments that we’re making.

[Shneur Gershuni:]

Okay. Fair enough. And one follow-up question if I may. Just you've talked about a lot of the growth opportunities; these are about 15% CAGR growth rate on DCF. Are you able to bifurcate debt into what is organic that can happen with minimal capital versus -- or just incremental capital where you're just going with your producer versus kind of step-out type capital? Is there a way to sort of give you up to 15% growth rate into those kinds of buckets?

[Robert Halpin:]

Yes, Shneur, this is Robert. I think what we've outlined for the next early to 2020 timeframe, it based upon currently underwritten projects organically being built around our existing portfolio. Most notably, the ongoing expansion in the Bakken shale that you mentioned in your remarks and extremely attractive returns we expect to generate on those project as we rail that capacity and service and the producers continue developing in line with our current development plans. And so there is no part of that 15% growth outlook that unidentified or we made addition to projects, but we are not actively underway in executing on today. So that would be -- there is no bifurcation, that would be the contribution to that growth rate. It's really just an execution of our announced organic plan around the Bakken to Powder River and the Delver Basin through 2020.

[Operator:]

Our next question comes from the line of Jeremy Tonet from JP Morgan. Please proceed with your question.

[Jeremy Tonet:]

Just wanted in terms of the guidance here, and clearly lifting the bottom end positive. But the midpoint of what you have 410 here, it seems like you're already kind of annualizing with the first half to hit that. And yet you have growth in the Bakken, PRV Permian, all continuing to materialize over the back half of the year. Are there kind of offsets to back half of the year we should be thinking about? Or is this just a conservative take on the guide? Could you extend a bit there?

[Bob Phillips:]

Yes, Jeremy, I don’t think there is any offset to it. I think as we talked about from a get go, tremendous amount of our long-term outlook in growth into Bakken centered around our debottlenecking projects and execution of that. If everything goes exactly the plan up there, I think, we feel that that we will perform really well relative to our updated guidance for the year. But we are moving in closure to winter season, these are capital projects hearts of operating environment, there is always some element of timing to that as we execute. Again as Heath highlighted, our operations and project management teams have done an exceptional job of bringing projects and service on time on budget. And I think we expect that to continue. And if that happens, I think, we will be very pleased with where we end up with both '18 and heading into 2019.

[Jeremy Tonet:]

And then just diving back into kind of your new project announced here a little bit more. If we could get some of the more thoughts on the economics there or even just with Jackalope; are there any kind of guarantees from Chesapeake here or anymore color that you can share on these projects?

[Bob Phillips:]

Yes. I mean, I guess the Bakken as we said is well baked. It builds multiple substantial of 4x. So I think those are -- well, clearly there is a little bit of volume growth in and lot of those economics are driven by existing production levels that currently have been either flared or troughed. So I think we feel very confident in our end math. I think when you go again to the Power, I mean, as Chesapeake just kind of stated, after their Utica Shale's of $2 billion transaction that they did, they continue to emphasize the Powder River being really the growth engine for the company. And in fact that broadcasted that they expected to double their production here in 2018 going into 2019. So I think we feel really confident about the production. And the other thing to point out to, as we said, this is kind of the next expansion is to 200 million a day processing in addition associated gathering. If all that need to happen for that plant to get full by the 2020, 2021 timeframe is for Chesapeake continue to run five rigs, which is what they have stated they're committed to do. So I think there's a lot of upside beyond that, certainly, a consideration for us. When we underwrote that investment, there are a lot of offset operators and [Anshuts] being one and Balidor being another world that there are several operators in the area that likewise are starting to shift into development mode. And kind of given the other system that we have in ground underplays; we think we're going to be very successful competing for additional third-party opportunities. So our base economics were supported by simply just maintaining existing rig activity, but we think we got a whole lot of upside with third parties. And that could enhance the production in the early years, but we -- as we said, it probably could lead us to more expansions than what we've announced here. So we spent a lot of time working really closely with Chesapeake CMT team, the marketing teams. We've got a lot of independent work ourselves on the tight curves and the inventory levels. And let's just say we're very excited about the investment here and we think there's a lot more potential to come.

[Jeremy Tonet:]

And I think you touched on COLT, but just want to go back there. And you've given -- you talked about just been wider there. How should we think about upside at COLT just kind of recovering versus where it's been with these dynamics at play?

[Bob Phillips:]

So I think definitely the diffs have helped exceed the utilization that we projected for the terminal. I think our team has shifted to the model that were self-performing and really driving a lot more crude through the terminal both the crude rail and as well as some of the pipeline connections that we have to DAPL and others at the facility. So, look, I don’t think that we see this necessarily returning to the days when the terminal was all prepared to go, but we did see with DAPL getting closer to being fold with the winding of the WIT and Brent spread, we think that’s kind of here to say that we ought to continue to see COLT maybe even outperformed with our expectations were here, six months of data. So again, I think, in the plan we're going to kind of continue to have a conservative outlook -- performance of that asset. But I think we're excited about the potential and some of the optionality that we have with that terminal now being in place and very well connected to a lot of growth in COLT production.

[Bob Phillips:]

Jeremy, this is Bob. Let me add some color to that. I want to brag on our crude and our transportation teams; they collaborated over the last six months to really optimize this asset. You might recall that years ago we bought a couple of trucking businesses up in North Dakota literally right on the heels -- right before the price collapse, shut down a lot of second tier, third tier drilling. So that business set relatively dormant for a couple of years. Robin the crude team and Steven the transportation team have got together and a lot of the barrels that were tracking at COLT are not traditional barrels, they are non-traditional barrels that come from good old fashioned lease buying and marketing to new buyers approved that want to take these barrels to the refiners on the East Coast and the West Coast. I don’t think any others were not even up to think lever go back to the old days of long-term contracts with big rail loading and storage fees associated with those type facilities that given where COLT is located, how well-connected it is, how aggressive our crude team has been in optimizing the capacity there with leased barrels to new customers. We’re really excited about just moving only order of 60,000 barrels a day presently, which is a long way from where we saw the bottom a year ago. And we think it's going up from there and we think it's going directly attributable to the increase in overall crude supplies in North Dakota, which is being clearly indicated month-over-month and quarter-over-quarter. So I think we’re well positioned to attract additional barrels. It’s not a particularly high-margin business, but we’re optimizing an asset that we own that’s available, that's strategically located and that keeps us in business with a lot of players out there for potentially either gathering, processing our NGL marketing as well. So the entire North Dakota team has more from just a basic gathering at the wellhead business and an old-style crude storage and rail loading to now fully-integrated crude activity value chain. And we’re pretty pleased with the combination of all of the commercial activities we have going on in North Dakota right now.

[Operator:]

Our next question comes from the line of Selman Akyol from Stifel. Please proceed with your question.

[Selman Akyol:]

Almost everything has been hit. I just have two quick questions. First of all, when you talk about the crude opportunity up in the PRB, all the opportunities you’re seeing in conjunction with Williams up there or would you be doing outside of Williams?

[Bob Phillips:]

I think it could be with Williams. I think there’s various opportunities some of which that we have reserved under our PRBIC with Twin Eagle and others that we think are opened to -- potentially to be synergistic with the Jackalope system. So I think we kind of have the optionality here to do it. I think we do want to work with our existing partners in the basin and we think that we’ll try that orbit. What’s really going to drive that is the synergies of which partner or combination of partners that we think we can be most cost-effective and most profitable within expansion.

[Selman Akyol:]

And then other one, in the Delaware, you talked about funding on your JV revolver. Can you just remind us how large is that revolver and what’s current balances are?

[Bob Phillips:]

$200 million at the overall facility side, and we’ve got about $40 million drawn today.

[Operator:]

Our next question comes from the line of Jerren Holder from Goldman Sachs. Please proceed with your question.

[Jerren Holder:]

Maybe going back to the Bakken, obviously, great volumes there on the water and gas side, but crude gathering volumes were down. What was kind of the driver of that?

[Unidentified Company Representative:]

Yes, I’ll take that one. So really as we talked about we have had a lot of constraints on the system. We’ve had -- until we got our Bear Den 1 fully operational and until we completed some of the near -term bottlenecking projects replace the service in the second quarter, we’re fairly well constrained. And as a result, a lot of our producers have kind of deferred some of the completions that otherwise would have been done in the first half of the year to the second half of the year. So I think this performance is actually pretty much in line with our expectations for the year. We thought as we kind of debottleneck the gas and water system we would see increase in pent up production that was either being flared or trucked away. So I think that's more so represented in the volume increases you’re seeing there. As well as on the crude side, as we kind of get fully debottleneck there and we get into the second half of the year with completion, we do think that we will continue to grow the crude production. But that kind of just put it in this board again it's just the bottleneck in our infrastructure.

[Jerren Holder:]

Okay. And then maybe switching across, I know, you guys mentioned why that Mont Belvieu Conway differentials has positive factor there? Is that something you guys think will continue for the rest of the year? How are you looking at that?

[Unidentified Company Representative:]

Sure. This is John. We think that over the next couple of quarters that constrains going to be there right now. There is a lot of additional production coming into the market. And as that product tries to get down to the Mont Belvieu mark that we’re really waiting on additional capacity to come online. And so over the next couple quarters, we would anticipate that to kind of spread to continue not nearly where it is today, but particularly as we get into the higher demand season for both propane as well as butane. So you will see that spread come in. But over this -- definitely over the next 9 to 12 months we would anticipate Conway being a little bit more than what has traditionally been underdevelopment complex.

[Unidentified Company Representative:]

Just to add a little color to that too, just we really have that Crestwood benefited by the spread. One our G&P assets are large with price top of the Belvieu base trending significantly higher than Convey. And lot of the supply agreements that JP and his team have on the NGL MSL segments are Convey-based but sales being oriented towards the Belvieu price. So I think it really has helped our NGL performance with the spread as well as that our G&P customers are still getting growth netbacks for the premium the Belvieu is trading relative to Convey. So I think it's really been hit dynamic course.

[Jerren Holder:]

So just to be clear this is like trucking right that you’re using to get the propane done?

[Unidentified Company Representative:]

Yes, it’s a combination of all of our midstream assets, trucking, rail, rail terminals, access to pipelines, so it’s the comp and storage as well. So it’s the combination of the fully integrated midstream size that we have on the NGL.

[Jerren Holder:]

And then lastly, maybe switching to storage and transportation, you look like some of the contracted capacity is kind moving around. I think storage is down a little bit, transportation up a little bit. Can you remind us some of the trends going on there? And kind what's the outlook for some of the growth opportunities that we've been sort of looking to for this asset?

[Unidentified Company Representative:]

In the storage and transportation business, I’m assuming you’re talking about the Stagecoach facilities?

[Jerren Holder:]

Yes.

[Unidentified Company Representative:]

I'll latest now and I will let Mark Mitchell kind of comment as well. But we’re fully subscribed at Stagecoach we come through. When you look I think operate -- and see us just operating within the expectations for the year. We’re very optimistic. We got Atlantic Sunrise coming online and Mark can talk a little bit about how we think that’s going to impact our business favorably. And we continue to believe that this asset is going to be well positioned to growth in during the long-term. As saw in the second quarter, we've had a couple of maintenance outages on pipeline that we feed into created a huge dislocation in cash to foreign spread, and we’re able to benefit from that. But more importantly what we think that shows the market is that is extremely tight, supply and demand balance up there, and any minor disruption whether its bringing in a new 1.7 Bcf day pipeline in or if its bringing on new production or what have you, it really don’t have an impact from the market given how our footprint is established with having storage, transportation access, we think it's just a matter of time before either the producers and with the market end users, I just add that we need to further expand the debottlenecks, some of the infrastructure in Northeast DA. So again, I think, a lot of our growth targets have kind of pushed back, largely resulted from delays and in-service state the projects would have in, but we continue to believe that there's ample and a robust growth opportunities as we get to the back half of our plan. But with our turnover, Mark is going to give a little bit more color near-term around Sunrise and other little attractions that you see around our Stagecoach position.

[Unidentified Company Representative:]

Yes, I mean, as we've stated in line the Sunrise is at 1.7 Bcf pipeline is going to move gas out of Northeast Pennsylvania where the part of assets set to market in the Mid-Atlantic and Southeast. And our MARC I pipeline facilities are directly connected to the Atlantic Sunrise facilities. So we do expect to see here increased throughput on our system due to that new delivery alternative for our customers. Additionally we've seen a number of new power -- gas fired power generation projects come online this summer and in and around our assets, specifically the Panda Hummel Station is directly connected to our MARC I facilities as well. And that's been running at a high load factors since June. So I mean we do see increased volume across the system, we see continued customer interest in contracts and remain fully contracted across the system and volumes are improving. We expect that trend to continue.

[Operator:]

Our next question comes from the line of Ned Baramov from Wells Fargo. Please proceed with your question.

[Ned Baramov:]

Good morning. Most of my questions have been asked and answered. But I had two real quick ones maybe on the reduction of OpEx and SG&A, which has been a recurring theme in your results. Do you see any additional opportunities to further cut expenses? Or would you say you're largely done with asset optimization and streamlining positive at this point?

[Unidentified Company Representative:]

I think, Ned, I think we're always looking for ways to optimize our business, streamline our business and gain efficiencies and cost saving as available. I think we have had a tremendous effort and tremendous execution from the team over the last couple of years. I think that has continued and we would hopefully can continue to perform very well on that front. I would say at this point, I don't see any imminent opportunities to drive meaningful incremental savings from here. I think we've got a pretty good business as we've guided. I think definitely throughout this call we're kind of clicking on all cylinders now. I think we got the right sized organization to execute on the opportunities in front of us and continue to operate our business as best manner possible. And so that's where I'd say we are on that front.

[Unidentified Company Representative:]

I’ll provide a little bit of commentary to that as well. I think we're really focused on and particularly in our high growth Basins, the Bakken and Powder and the Permian, we do have kind of that critical mass of operators and operating expenses, but what we're really driving is as those volumes increase, we don’t think that our OpEx is going to proportionally increase. So we're definitely going to be focused on driving higher margins, particularly in higher growth Basins. And our lower growth Basins, those that are more mature and potentially declining, again, a lot of relentless focus from our operating team to try to keep our margins as high as possible as volumes kind of decline in that 5% to 9% range. So and I think they've done a remarkable job and we’ll continue to look for ways to make sure we're being as efficient as possible there. But I definitely think there's room for continued margin improvement as our overall system volumes growth.

[Ned Baramov:]

Got It. And then the second one on CapEx, I think, in your slides from May, there was EBITDA – CapEx guidance for 2019 of 200 million to 300 million. Does that reflect the potential second train -- the second Orla train?

[Unidentified Company Representative:]

That number does not include a potential FID on a second train Orla. What it does include is all of the capital for our Powder River Basin expansion that’s been up last week as well as our ongoing fully underwritten projects in the Bakken and Delaware at this point.

[Ned Baramov:]

And then last one maybe could you provide an update on the fee-based EBITDA in your portfolio as a percent of the total pro forma, the sale of West Coast NGL business?

[Unidentified Company Representative:]

I think you know the scale, Ned, it really doesn’t move that number a lot. We’ve always been in around 80%, 85% closer to 85% across the overall portfolio. And I think it’s -- all that number stays unchanged.

[Operator:]

Our last question is a follow-up question from Jeremy Tonet from JP Morgan. Please proceed with your question.

[Jeremy Tonet:]

Just a quick question because I ask here. You said you dedicated Bear Den 2 to the Elk Creek. Have you and willing to discuss NGL dedications for Jackalope plant?

[Unidentified Company Representative:]

Yes. We have. In fact as part of our negotiation and while we thought that that deal that we signed was one of so strategic was that we want to have as Crestwood’s NGL marketing team built in the flexibility to also utilize that capacity for our Powder River Basin growing opportunity. So we’ll say, Chesapeake they do have a dedication of baring liquids to separate contract for one all, but all the third-party opportunities that we have will have access, very cost-effective access to move NGLs, so very strategic for both our Bakken and our Powder River assets. I’d also point out just like we talked about in the Permian all of those rails are headed to Belvieu. I don’t know John and his team are looking for other ways that we can kind of take securities that we have the option to receive back in Belvieu and fine some ways to make margin to move those further downstream to the grow and peck in markets.

[Operator:]

Ladies and gentlemen we’ve reached the end of the question-and-answer session. And I would like to turn the call back to Bob Phillips for closing remarks.

[Bob Phillips:]

Thanks, operator, thanks again to all of you for joining us this morning. As you can tell the team is very excited about where we’re and how well we’re positioned in the -- particularly the three basins for growth at Crestwood. Let me just comment on the second half of the year; I think several of the questioners touched on that. We see significant growth in the Bakken as on-system volumes increase directly attributable to these debottlenecking projects, their pumps, their compressors, their line loops, their station enhancements, more salt water disposal wells, a lot more line looping on the water system, a big compressor station to move more gas to the Bear Den processing complex. Then, of course, the big jump up there is third quarter next year when Bear Den 2 is completed. We just continue third-party processing and start processing all of our on-system gas, so clear visibility. In the Delaware Permian, good rig activity both on the Nautilus system by Shell as well as our producers up on the Willow Lake system. All of that now funneling directly into the high recovers, low operating costs, Orla plant with great downstream NGL and natural gas connections that we’re going to be imminently more competitive for new volumes. But we've got a pretty active set of producers in that region that are continuing to increase volumes. And we should see that through the second half of this year and on to next year. PRB continues to be of a real exciting story for us. Chesapeake helps us a lot because they continually brag on their focus on the PRB and their well results there and their commitment to it as their prominent growth engine. We’re excited to see them continue to improve their balance sheet and get financially stronger. And we think that does boards well for Crestwood and Williams joint venture, and the opportunities there to particularly merge the crude gathering business with the gas gathering business. We know we’re in unique, competitive position that benefit from the synergies of those two systems. And we intend to translate that to Chesapeake to lower operating costs, better netbacks for them, which we think will result in accelerated development. We're excited about their year-over-year forecast of doubling production from '18 to 19. So those are the three primary areas that we're focused on but we touched on around the edges. The positive things happening by our group team in North Dakota as crude oil supplies grow in that area. And I think we’re well positioned. We got an exciting winter time ahead of us as our storage customers fill up early and we see clear line of sight increase in utilization of our strategically located assets both in the Northeast at Stagecoach and on the Gulf Coast with traces as the L&G and Mexican gas markets continue to grow and begin to grow exponentially as well, so pretty excited about all that. Finally, our NGL team done a job in the first half of the year that will position we think better than normal cost of product going into storage, which should translate into more profitable activities for us almost notwithstanding the winter, but we do expect another strong winter in our business plan or business model depends on that. So I think we’re well positioned across all the areas. Robert and the finance team have done a really good job of positioning us here midyear and halfway through our capital program, but still with a 4.0 leverage ratio. And we continue to drive DCF growth as well as deliver strong coverage ratio. So again I think we hit on all cylinders. Congratulations to the team. Appreciate the investors that have stuck with us and those who are starting to take a hard look at our equity story right now. I think we’re in really good shape. So with that operator, we will close the call. Look forward to talking to you all after the end of the third quarter. Thank you.

[Operator:]

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.