Crestwood Equity Partners LP
Q3 2018 Earnings Call Transcript

Published: 30 Oct 2018

[Operator:]

Good morning and welcome to today’s conference call to discuss Crestwood Equity Partners’ Third 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:]

Good morning, operator, and good morning to all of you and thanks for joining the call today. It’s certainly an opportunity to announce yet another strong quarter of financial and operating results. And we are pleased to discuss this with you this morning and give you a lot of color and background on the great progress that we’re making within our organization and relative to the numerous growth projects that we have underway in all of the basins that we operate. So, we are excited about the chance to present all that to you. Looking at the third quarter and for the first nine months of 2018, we’ve certainly exceeded our internal expectations for both adjusted EBITDA, as well as distributable cash flow and I think would largely beat consensus estimates along the way. So, we’re very pleased with that. That does position us to have a really strong finish to 2018 and we’re clearly on track to achieve our financial guidance targets, which at the mid-point you might remember would imply year-over-year adjusted EBTIDA growth of about 10% from 2017, and recall that we adjusted our guidance up mid-year as we gain more confidence in the volumes across our systems and the services that we’re providing to customers. So that certainly positions us very well for the ability to deliver adjusted EBITDA and DCF growth of about 15% per year over the next few years starting in 2019, and we’re very excited about being in a good position to do that. So, clearly the confidence level at Crestwood is high. And I think our expectations for annual growth in 2019 are driven by a few factors or themes that I want to highlight for you today. First, and most important to me, I’m very proud of Crestwood’s employees and our ability to execute our business plan across the entire organization. Our performance year-to-date continues to be a result of Crestwood’s execution on capital projects, our commitment to customer service, and the emerging culture of financial discipline in cost management is certainly is evident here at Crestwood, but I think beginning to take hold across the entire mid-stream industry. This is highlighted by our O&M and G&A expenses, which you continue to decline quarter-over-quarter, in-light of growing volumes and higher activity levels across the company. This indicates efficiency. Additionally, our project execution teams are doing a great job of staying on schedule, delivering projects on budget, and with great safety performance during these critically important construction projects and this indicates a commitment to customer service. The entire Crestwood organization is committed to expanding our peer group leading operational safety performance, regulatory, compliance initiatives, and dedication to environmental stewardship and community engagement, and this is being highlighted by our recent plan to implement what we think is the first comprehensive MLP midstream, ESG sustainability program here at Crestwood. I think Crestwood is making a peer growth leading progress on this initiative with plans to publish our first sustainability report in 2019, and this indicates a commitment to great operating principles. We certainly feel like we’ve got the right people and the right culture and the organization to continue to deliver solid results for our investors. Second thing, or factor driving growth is, looking at across all of our operating segments, the business fundamentals are very strong in this part of the recovery cycle. We expect this to continue to drive volume growth and opportunities for Crestwood to capture incremental margin and offer even more service opportunities across the value chain. In our G&P segment, our producers continue to ramp up drilling activity, based on strong [indiscernible] economics in almost all the basins that we operate in with high-crew, high-NGLs, and high gas prices. And they continue to improve drilling and completion results in almost every area that we operate. And that isn't lost on us that the ability to grow volumes is not necessarily rig count or well connections, but in every area, we operate, new wells are coming in bigger and better and stronger than they ever have before. Preliminary 2019 forecast indicated this trend will continue and Heath is going to give you a lot of color and explain in detail what our expectations are to finish out the year and move into 2019. Certainly, we’re at a point in the recovery cycle where we’re working hard to stay ahead of our producers. We think that’s a good spot to be in, given the very large acreage dedications that Crestwood has and the large undrilled inventories that producers committed to our systems have in the core areas of the Marcellus, the Bakken, the Delaware Basins, and the Powder River Basin. As you know, we recently completed the Orla processing plant in the Delaware Permian and we’re currently making great progress on two large-scale processing expansion projects in the Bakken and in the Powder, and this is all designed to support current and forecasted volume growth. These are not built [ph] and they will perm type projects. These are projects where the gas is available today, the rigs are on the system and the drilling forecasts are very strong and robust going forward. While building the processing plans, we’re also expanding our gathering systems in all three areas, based on producer’s development plans, and the need simply for more capacity and more market connectivity. The Bakken and the PRB plan expansion projects are expected to be in service mid-year next year and get the full benefit in the second half of 2019 giving us a big boost to our 2019 forecast. In the storage and transportation segment, our COLT Hub facility up in North Dakota is having a very strong year with Bakken oil volumes up significantly and the addition of NGL volumes being railed out at North Dakota not only from our Bear Den facility, but from third-party producers as well to fractionation markets across the United States. Given current market conditions, we expect that asset to exceed its annual forecast by 20% to 30% in 2018 and 2019 [ph]. Kudos to the COLT team, they weathered the storm and now they are playing a vitally important role in marketing excess Bakken crew today and going forward. At our Stagecoach facility in the dry gas Marcellus, remember that’s our joint venture with Con Edison, the new Atlantic Sunrise pipeline has helped to reduce basin volatility, rigs are now coming back to Northeast PA, the economics are good, and we’re seeing – continue to see increased gas demand from local power gen facilities. So, a little bit of a revitalization there, some excitement in Northeast PA, and producers are finally getting a good netback pricing again. In our marketing, storage and logistics business, we expect a strong fourth quarter and another strong first quarter of 2019. We’re well-positioned for the winter time. We were able to source well priced Marcellus Utica and midcontinent propane and butane production to build a good seasonal inventory position. And along the way, we have taken an advantage of NGL pipeline disruptions to provide some incremental margin opportunities. So, kudos to the MSL team for having another good quarter and positioning Crestwood well for the winter time. And finally, let me just say that internally we continue to make great strides building a first-class midstream organization and I'm very pleased with the integration that’s occurred over the last year between our G&P and our MS&L segments. As you know, we spent much of the past year restructuring our MSL Group to lower operating cost and get them more focused on a standalone basis, and with greater alignment with our G&P sector, given the big increase in Crestwood's gas processing volumes and investments. This is a really important part of our business going forward. Now, the recent sale of our West Coast assets allowed for that team to sharpen their focus even more, along our U.S. NGL business and it allowed the finance guys to redeploy capital from a lower growth business to a higher growth business in our G&P assets. And while our G&P segment will be the primary growth driver for Crestwood over the next 3 years to 5 years, the MSL guys are certainly going to serve [indiscernible] in our value chain business model to not only ensure that our producers have flow assurance and that we provide them with optimal access to premium NGL markets, but also to attract new third-party business around these assets that we’re building in these high growth basins. The MSL team as you know is already a major player in the Marcel Utica NGL market. And now as our processing business grows in the Delaware and the Bakken and in the PRB, and Y-grade pipeline takeaway capacity tightens as volumes increase our integrated NGL processing to market service model becomes a real competitive advantage for Crestwood, as our producers have begun to rely on our terminal, our truck, and our rail assets to support their NGL volumes when pipeline capacity becomes an issue. So, we’re excited to be able to extend the service offering all along the value chain in those basins. We certainly have been doing that in the Delaware for the last couple of years and it’s just now starting to kick in in the Bakken where we’re trucking excess Y-grade to COLT and about to kick-off in the Powder River Basin as we expand Bucking Horse and bring our truck and terminal solution into that value chain service offering. So, kudos to those guys for being part of the solution. In addition, as you know fractionation capacity has become quite an important issue for the industry, particularly from the Delaware Permian and we have been developing strategies across our basins to reduce and mitigate our exposure to improve our producers flow assurance and netbacks. In the Delaware, during the last quarter, you’ll recall that we announced the acquisition of pipeline capacity and the epic NGL pipeline from our Orla Plant tailgate to Benedum, which allows us to access numerous downstream Gulf Coast Bellevue priced markets. At the same time, we announced a companion purchase and sales growth agreement with Chevron Phillips Chemical, which ensures that Crestwood and our producers will receive very attractive TNF pricing for our Delaware production as it accesses growing markets in the Gulf Coast. That’s going to be a big deal for us in the second half of 2019 and beyond. Similarly, our teams decided in the Bakken and the Powder River Basin to become an anchorage shipper on One Oaks Elk Creek pipeline and that will ensure that our Arrow Bear Den plant and our Jackalope Bucking Horse plant producers get adequate connectivity, strong economic TNF rates and good solid netbacks when we market their NGLs. So, I think we’re driving along the areas that most midstream companies are looking for right now. The good news is, our footprint is expanding in the areas that we operate. We continue to have financial discipline with our balance sheet. We’re making good investment decisions and our teams are carrying them out with great execution and skill as we commit to efficiency and strong operating principles. So, before I hand the call over to Robert to give us the financial details, I just want to reiterate how pleased we are at Crestwood with the execution during the first nine months of the year. This was part of the recovery cycle and we were very aggressive in setting guidance and our teams really have delivered so far in the first nine months of the year, and we expect to continue to do that based on the momentum that we have in 4Q and going forward. Crestwood’s story continues to be promises made, promises kept, capital and financial discipline, striving and building the organization to be a best-in-class midstream operator, and staying extremely focused on executing our organic growth projects with great safety performance. So, I’m really pleased with where the company is right now. And with that, turning over to Robert, our CFO, for a review of the third quarter financial results.

[Robert Halpin:]

Thank you, Bob. I’m very pleased to report yet another quarter of solid financial results. Our third quarter results keep Crestwood right on track to finish the year with momentum and achieve our increased financial guidance targets in 2018. In the third quarter, adjusted EBITDA totaled $101.4 million, up 5% year-over-year, compared to $96 million in the third quarter of 2017. Increases in adjusted EBITDA continue to be driven by strong performance across all of our operating segments. While our G&P segment has been the primary growth driver over the last 18 months or so, we’re now also seeing strong trends developing across our storage and transportation, and our marketing supply and logistics segments that are leading to improving results as well. Distributable cash flow available to common unit holders for the third quarter was $52 million, that net of our quarterly cash distribution to our Class A preferred unit holders. For the third quarter 2018, we declared a distribution of $0.60 to our common unit holders, resulting in distribution coverage for the quarter of approximately 1.2 times. In our gathering and processing segment, segment EBITDA totaled $78 million in the third quarter 2018, a 12% increase compared to $70 million in the third quarter of 2017. Segment EBITDA increased during the quarter as a result of strong market fundamentals driving producer development activity on the Bakken to Delaware Basin and the Powder River Basin systems, as well as the benefit of new gathering and processing capital projects, which we placed into service over the past 12 months. Fundamentals across Crestwood's key growth basins are expected to remain strong for the remainder of 2018, and for full-year 2019. In our storage and transportation segment, segment EBITDA totaled $15 million in the third quarter 2018, an increase of 12%, compared to $13 million in the third quarter of 2017. Segment EBITDA increased primarily as a result of higher volumes at Stagecoach, Tres Palacios, and the COLT Hub. For the remainder of 2018, we expect the S&T segment to benefit from the Stagecoach cash distribution step-up, increased Northeast transportation demand from new power gen projects, and increasing rail loading utilization at the COLT Hub due to favorable WTI to Brent spreads. In our marketing supply and logistics segment, segment EBITDA totaled $7 million in the third quarter 2018, compared to $14 million in the third quarter 2017. Third quarter 2017 EBITDA, included the results of operations of our US Salt and West Coast facilities, which were divested in December 2017, and October 2018, respectively. After adjusting for these divestitures, segment EBITDA increased 26% year-over-year as a result of increased NGL supplies from various high-growth regions and regional project pipeline project delay. Now moving to expenses, combined O&M and G&A expenses for the third quarter were down 14% or $7.1 million when compared to the third quarter of 2017. The decrease in combined expenses was driven by Crestwood's efforts to streamline our MS&L segment operations. Now looking at the balance sheet. As of September 30, Crestwood had approximately 1.7 billion of debt outstanding, including 1.2 billion of fixed-rate senior notes, and 498 million in outstanding borrowings under our revolving credit facility. This resulted in leverage ratio of 4.2 times as of September 30. Recently, we amended our revolving credit facility. The amended revolving credit facility extends the maturity date by three years to October 2023, reduces the facility's pricing grid by 25 basis points, reduces the revolving credit facility size from 1.5 billion to 1.25 billion, and maintains all of the credit financial covenants. Crestwood expects the new facility to resolve the annual interest expense savings of approximately $3 million. Based on our current outlook for the remainder of 2018, Crestwood will use excess retained DCF, proceeds from the divestiture of the West Coast NGL assets, significant availability under our new revolving credit facility, and capital commitments from our existing joint venture partners to continue funding all of our 2018 capital needs. We expect to complete the year within our previously guided total leverage ratio range of 4.0 times to 4.5 times. During 2018, strong volumes and increasing producer forecast continues to support our active organic capital investment program and keep us right on track to achieve our adjusted EBITDA guidance range of $400 million to $420 million. In the third quarter, we invested approximately $95 million in consolidated growth capital and have invested approximately $207 million in cumulative growth capital through the first nine months of 2018. For full-year 2018, Crestwood still expects to invest between $300 million to $350 million to continue to executing on our expansion projects. Crestwood's capital investment is targeting organic growth projects that are supported by current producer development activity or Crestwood has established franchise gathering and processing assets. As a result, Crestwood expects average project build multiples in the 5x to 6x range, which help drive adjusted EBITDA and DCF per unit growth of approximately 15% in full-year 2019, and we expect to give much more detail in our fourth quarter 2018 call when we roll-out our full 2019 guidance. And with that, I will now turn the call over to Heath to provide an update on our capital projects and business outlook.

[Heath Deneke:]

Alright. Thanks Robert. So, once again, we posted really strong operating results during the third quarter, and we continue to make excellent process both on executing our current backlog of growth capital projects, and advancing new business development opportunities in our high growth basins. As a result, the key takeaway we want to leave you with today is that all three of our operating segments are thriving in current market conditions, and the business fundamentals across our operating footprint are even stronger as we look forward into 2019 and beyond. So, to begin, in our gathering and processing segment, we continue to see increased drilling activity across our key all-weighted growth basins as improved commodity prices drive strong producer economics. And last year, crude oil are up approximately 30%, gas was up approximately 10%, and NGLs are up 70% higher than prices at the beginning of the third quarter of 2017. As a result, we have seen increasing rig activity and currently have some seven rigs on our Arrow system in the Bakken, we have six rigs up in the Jackalope system in the Powder River Basin, and five rigs active on our gathering systems in the Delaware Basin. The current rig activity is expected to drive volume growth for the remainder of the year, but we’re really beginning to see the benefit in 2019 as we place our ongoing expansion projects into service to provide incremental takeaway capacity for our producers. In the Bakken, we’ve made tremendous progress on the system debottlenecking projects and are nearing completion of our 2018 capital program. As we look into 2019, we will continue to be focused on the construction of the Bear Den plant expansion that will provide Crestwood up to 150 million a day of processing capacity. The Bear Den Phase-2 plant expansion remains on track to be completed in the third quarter of 2019, and once in-service Crestwood will begin processing 100% of the gas volumes on the arrow system. From there, we will also benefit from improving NGL netbacks as we begin delivering Y-grade volumes into the proposed Elk Creek pipeline later that year. In the meantime, Crestwood's MS&L segment will continue to market NGL's from the Bear Den plant to local and regional markets via the COLT Hub. Crestwood expects approximately 20 to 25 new well connects in the Arrow system during the fourth quarter of 2018, and based on current producer forecast we expect over 100 new well connections to be completed into 2019. Turning to the Powder River Basin, earlier this morning, Chesapeake announced its plans to place additional 15 [ph] Turner wells on production during the fourth quarter of 2018 and is currently projecting an additional 65 to 70 Turner wells to be placed on production in 2019. As a result, we expect Jackalope system volumes to reach approximately 150 million a day by year-end 2018, and increase by 100% year-over-year and into 2019. Earlier this year, Williams and Crestwood, through the Jackalope joint venture announced a final investment decision on a major expansion of the Jackalope gas gathering system and Bucking Horse processing complex in Converse County, Wyoming. Construction activities are now underway on the Bucking Horse plant 2 and the associated gathering system expansions. In the aggregate, when we complete, the Jackalope total gas gathering and processing capacity is expected to reach 345 million a day by the end of 2019. Additionally, the previously announced Bucking Horse 1 plan expansion will increase current system capacity from 120 million a day to 145 million a day during the fourth quarter of 2018. In conjunction with these capital expansions, Crestwood and Williams will extend its gathering and processing acreage dedication agreement with Chesapeake by 10 years, through 2037, under its existing terms. In addition, Jackalope continues to advance plans to further expand its gas gathering processing system to capture additional growth and Chesapeake and surrounding third-party producer volumes. We also believe that we’re in a favorable position to compete for complementary crude gathering services across our footprint as oil production continues to rise across the Powder River Basin. Shifting over to the Delaware Basin, during the third quarter, we successfully placed our Orla 200 million a day plant into service, and fully integrated our Willow Lake and Nautilus high-pressure gathering systems, which will also connect to the Orla facility. In addition, we announced a very timely solution for how we plan to deliver Orla’s NGL volumes to market over the long-term. As Permian NGL takeaway constraints and limited fractionation capacity along the Gulf coast continues to drive high transportation and fractionation rates for producers and other mainstream service providers we were able to secure a long-term take-away solution to provide flow assurance for multiple trains of processing capacity at very attractive TNF pricing beginning in 2019 and beyond. This was accomplished with our acquisition of an ownership interest in EPIC's Orla and Benedum pipeline and our Y-grade purchase and sale agreement with Chevron Phillips at Benedum that would send NGLs to the Gulf Coast markets via the easy pipeline. Crestwood's Basin wide gathering and processing footprint and attractive long-term NGL takeaway solution provides Crestwood with a strong advantage to compete for additional G&P opportunities across the entire Delaware Basin. Our business development team continues to advance discussions for new gathering and processing acreage dedications that we believe could result in a final investment decision on second train at Orla in the coming months. We also continue to advance commercial discussions with multiple producers to provide produced water gathering and disposal services alongside our extensive gas gathering footprint. So, across the Bakken, the Powder River and the Delaware Basin systems our commercial teams are actively evaluating opportunities to offer our current customers incremental services, as well as opportunities to further expand our franchise position to support other new customers. Given our extensive footprint and our ability to provide incremental value chain services via collaboration with our MS&L assets, Crestwood expects to be successful in generating incremental organic growth opportunities across our G&P segment. Shifting over to our storage and transportation segment, we also saw improved fundamentals to that drove a 12% increase in segment EBITDA. During the third quarter, we saw a 20% increase in natural gas volumes leading to our system. This was a really a primary result of two drivers. One, the combination of new power generation demand and growing production along the Stagecoach system to [indiscernible] at Atlantic Sunrise pipeline have increased our overall system utilization in the Northeast. And second, we experienced increased storage utilization at our Tres Palacios facility as a result of the growing LNG export activity along the Gulf Coast region. Additionally, the big driver of our S&T segment outperformance from a cash flow perspective was a COLT Hub. During the quarter, daily rail crude oil loading volumes at COLT increased 119% on the third quarter 2017, which was driven by wider WTI to Brent spreads and favorable economics for Bakken crude with refinery customers both in the East and West Coast markets. Crestwood expects these favorable market conditions to continue at the COLT Hub through 2019 as a result of a combination of strong production growth across the Bakken; tightening the pipeline capacity, and COLT Hub’s access to multiple supply sources that position the facility to capture market share. In the Marketing, Supply and Logistics segments during the quarter, we continue to see favorable margin opportunities created by an increased NGL supplies from various high-growth regions and coupled with regional pipeline project delays. Additionally, in mid-October, we closed the sale of the West Coast assets. This divestiture resulted in proceeds of $70 million to Crestwood, which we will reinvest in our capital investments in the G&P segment. As we look into the fourth quarter of 2018, we believe the MS&L segment is poised to have yet another strong quarter, due to seasonal market conditions. So, before we open the line for questions, I wanted to conclude by saying, our commitments operational excellence through top tier safety performance and first-in-class customer service remains at the top of our priorities. I’m very proud of our commercial, our operations and engineering teams, and the job that they do to provide excellent service to our customers across the country. Our operating capabilities and track records pay financially, and positions us to continue to grow in a highly competitive market. Crestwood's results have exceeded our internal expectations through the first nine months of 2018, and we’re in a great position to finish out the year strong. Looking forward into 2019 and beyond, strong and improving fundamentals across our three operating segments combined with our accretive high-quality organic capital program will generate top tier multi-year cash flow growth, and will deliver increased value to our unit holders. So, with that, operator, we’re ready to open the lineup for questions.

[Operator:]

Thank you. [Operator Instructions] Our first question comes from the line of Tristan Richardson from SunTrust. Please proceed with your question.

[Tristan Richardson:]

Him good morning gentlemen. Just a quick question on funding. It seems at least for now excess DCF and proceeds from the recent divestiture will be used to fund capital plans, should we think about that as – or at least could you give us an update on potential progress on growth projects outside of one's already under construction, whether that would be accrued in the PRB or other Permian projects?

[Bob Phillips:]

Tristan. Thanks for the question. It highlights one of our main themes for this year, which was financial discipline and that is a combination of us selecting the right projects that drives long-term growth and value, but also are largely accretive in the near-term. As you know, we’ve then balancing leverage ratio and coverage ratio for the last couple of years, and I really think that is what has differentiated Crestwood from our peer group, and while we have actually led the peer group and absolute price and total return for the last year, certainly year-to-date. So, I’m really proud that the finance team and the commercial team working together to first and foremost select the right assets to invest in. As you know, most of our organic projects right now are on or near our current footprint. We’re not building any spec positions, we're not buying any assets that don't fit largely with the existing assets that we have. And as I mentioned in the introduction, most of our projects are largely going to fill up very soon after we put them in service. On the gas processing plants, a lot of the gas is being flared today in the areas that we operate. So, we’re working aggressively to build out infrastructure, debottlenecking projects, expand capacities, add compressors, new oil pumps, new water pumps, drilling new salt water disposal wells across all these different areas. So, they really are incremental add-on and fairly accretive projects. So, again, it starts with financial discipline. Now, how Robert and the team decide to finance all that is driven by the tools that we have in hand. And as you know, we spent several years building good strong strategic partnerships in these areas, and those guys not only bring capital, but they bring the ability to close deals and to think forward out a year or two and so we are in a really good spot with that. Now to the specifics, Robert, I’ll turn it over to you and let you talk. I think, he's asking what’s going to happen in 2019, so I’ll leave that up to you.

[Robert Halpin:]

Thanks, Bob. Tristan, I think we’ve kind of given soft guidance for 2019 at kind of a $200 million to $300 million expectation around growth capital based on preliminary reviews of the plan and where we are in our budgeting cycle, still feel pretty good about that, and obviously we’ll give much more wholesome disclosures and guidance in our fourth quarter call in February, but I think a continuation of this strategy of using a meaningful component of excess DCF credit availability, and our revolver, while still maintaining four times or better, and as Bob mentioned, the capital availability we have from our joint venture partners in several of these core growth areas where we’re executing on these projects position us very well to continue our funding model into 2019.

[Tristan Richardson:]

Helpful. Thanks guys. And then just one follow-up. Heath, just kind of curious as we’ve seen the big rebound in utilization of the COLT Hub, I mean, I think we thought about it as the opportunity has really been in NGL supply, but as crude differentials have widened it seems like crude is an opportunity as well, could you talk about the split there between the two streams and how you see that playing out in 2019?

[Heath Deneke:]

Yes, sure. I think you are right. I think we are looking at increasing crude volumes, as well as NGL volumes until the Elk Creek lateral comes online. We’ve recently manned up to run 24-hour operations out of COLT to be able to handle all of the currently anticipate barrels of oil that are increasing WTI to Brent spreads, as well as the NGL activity at Bear Den. Our MS&L segments also pretty uniquely positioned not only the service NGLs on our footprint, but also would offer that up to third parties that are struggling to get barrels, the clear barrels. We’ve got the truck assets. We've got the rail assets. We've got the people and the capability to really offer a downstream solution for this market.

[Tristan Richardson:]

Great. Thank you, guys, very much.

[Bob Phillips:]

Thanks Tristan.

[Operator:]

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

[Unidentified Analyst:]

Good morning, guys. This is Rahul on for Jeremy. Just have a couple of questions here. Looking at the strong 4Q completion activity in Bakken and also looking at the favorable trends, how should we think about the upside risk for the implied 4Q materializing here? Are there any other offsetting factors or any other decline rates to be noted here, which are higher than expected?

[Heath Deneke:]

Yes. I’ll take that one. So, as we said, we’re expecting to have 20 to 25 well completions in the fourth quarter of 2018, and lot of those completions were deferred kind of going into the year and recognizing that we had a pretty massive debottlenecking program that had to get completed. So, as we are placing those projects and service, we are seeing an immediate pickup in all commodities really across our gathering foot print. So, we do expect volumes to continue to grow in the fourth quarter. And again, as we look into 2019, if you inventory all of the current producers and their ability in development plans for 2019 we’re going to exceed 100 well connects based on those plans in 2019. So, again, we think that not only are we going to continue to see increased drilling activity and production volumes throughout 2019 and 2020. As a reminder, we’re also going to increase our self-performance if you will of processing, as well as soft water disposal on a capacity across the footprint. So, we’re increasing volumes, but also our market share of what we’re self-performing versus outsourcing will be increasing in 2019 as well.

[Unidentified Analyst:]

Got you. And then just building up on your comments on the Delaware Basin earlier, in-light of the recent projects completed and the solutions announced, are there any plans to participate on the further downstream expansions or are potentially participating in like frac exposure and then just building – and just a second part of the question here, are there any updates on the water gathering build out, anything on your latest discussions with the potential customers or third parties at this point?

[Bob Phillips:]

So, on the Delaware, just kind of starting with your question, I believe it was around our participation in downstream infrastructure. I mean, I think what we're doing now is, we're building out tremendous scale, and certainly as evidenced by our epic transaction, we do want to push those barrels downstream, and we believe as we kind of grow our G&P segment and kind of continue to utilize the epic capacity that we’ve inherited there will be opportunities for us to kind of further push that value chain into the Gulf Coast markets and kind of benefit or have our MSL segment kind of get involved in, in not only helping secure great markets for the NGLs, but also participating in some of the purity products in and around that facility. We’re also kind of working on opportunities to get involved in some of the [indiscernible] if you will of purity, the storage if you [indiscernible] up along the Gulf Coast and we think our Tres Palacios facility provides the opportunity with that. And finally, we have a great relationship and partnership with CP Chem and we expect that to yield long-term benefits beyond just the initial Y-grade purchases sale agreement that we had in place with them. So, our absolute broad plans do envision us to continue to get further downstream in the Delaware. As it relates to the water, so, a couple of things. We have filed our first permit for a Devonian disposal well in Culberson County, and we are continuing, we’ve acquired land there, and we are in advanced discussions with a handful of producers that we would be providing large scale water gathering and disposal services. So, we're not ready yet to announce the same thing, but what I will tell you is that, our thesis around developing complementary services across our extensive gas gathering foot print is bending out. We think, we got the right strategy, and we’re well-positioned with our current customer base, as well as future customers to really provide what we think is going to be one of the more critical services over the course of the next few years that will enable the Delaware Basin to grow. We’re big believers in water. We know it’s going to be the biggest constraint when you look beyond 2019, and so we’ve got some very largescale plans to be a solution provider in the basin there.

[Unidentified Analyst:]

That’s helpful color, guys. Thank you. That's it from me.

[Bob Phillips:]

Thanks Rahul.

[Operator:]

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

[Shneur Gershuni:]

Hi, good morning guys.

[Bob Phillips:]

Good morning, Shneur.

[Shneur Gershuni:]

Just wondering if we can start off on the Powder River Basin, sort of recycle back to this. You’ve seen some tremendous volume growth there and you’re effectively guiding to a tremendous amount of volume growth you have talked about, well connections in the last question and so forth. I was wondering when I think about the CapEx that is being put in place right now, obviously, you are adding new capacity and so forth, but sort of a given that volume trend, how fast does that get filled up and should we be thinking every other year, you're going to be adding capacity, I was just wondering if you can sort of talk about the trend and how that would translate into a cadence on CapEx as we think two years, three years out, and so forth?

[Bob Phillips:]

Sure. This is Bob. Let me start off and then I’ll let Heath and Robert jump in with some additional color. We just finished the field tour up there last week, and I was really impressed with where that field development plan is in its cycle. It’s been a slow start going on five years now. We’ve bought the initial interest back in 2013. It was largely focused on a deep [indiscernible] play, prices fell apart in 2016, drilling slowed down, delineation stopped, but producers continued to aggregate acreage. And there are some of the best producers in the industry that have aggregated significant acreage positions. Number one Chesapeake, almost 400,000 acres; Anadarko, EOG, Devon, Anschutz, you name it, there is some really, really strong producers that have assimilated acreage positions they’ve all been through the initial delineation phase and we know through our discussions with all of them that they are gearing up for a pretty largescale multi-year development plan. What is lacking in the basin is the basic infrastructure necessary to get the crude and the gas and the gas liquids out. We are excited about our competitive position. We were one of the early movers through our 50-50 joint venture first with Access and then with Williams, and Chesapeake while maybe taking a slow start to it has been the leader in the region in terms of accelerating their Turner development plans, their wells are getting bigger and bigger and bigger, I’ve spent a lot of time with Frank driving around in the field and just anecdotally he talked about the great potential for the wells and the acreage and the play, as long as the Jackal [ph] of joint venture can stay ahead of them, and build out the infrastructure necessary. We have a great partnership with Chesapeake. They are a great customer to work with. They are very excited and passionate about the Powder being the number one player in their entire portfolio, and we’re pleased to have a very traditional mid-stream opportunity to build out infrastructure when it’s absolutely needed by the producers. So, my comment earlier about we’re barely staying ahead of the producers. This is the play I was talking about. We’re barely staying ahead of the producers and that’s a good place to be in the cycle. So, if that means plat 2 next year, and plant 3 in 2020 that’s probably what we think it means, right now. Heath, I’ll turn it over to you for the details.

[Heath Deneke:]

Yes, I mean just a couple of comments. I mean, when you think about the churn or that’s certainly what most of the operators are talking about. Each of the ones in and out around our footprint, including Chesapeake have about a decade worth of inventory. Chesapeake has announced they currently have five rigs running and they are evaluating bringing this sixth rig into 2019, and I would tell you there is plenty of inventory and five or six rigs year-over-year you're going to continue to grow production. What we think about where we are with the Bucking Horse 2 expansion, we really feel like just with Chesapeake volumes, certainly in the 2021 time period that that plant will be full. Earlier this year, we connected two third-party producers to our system that’s in and around that footprint as well. So, not even including those third parties with just Chesapeake growth we do think that a third plant will be warranted in the near future. When you think about the other offset operators in the area, we certainly will have the opportunity to continue to expand and add capital to the basin, but it has got to come with financial discipline. And that’s going to be one of the things that we evaluate opportunities, you know, we've got a great position and it gives us a really a competitive advantage relative to new entrants in the basin. And as long as those margins continue to drive very accretive projects that we can finance, then we’ll certainly have plenty of opportunities in the basin there.

[Robert Halpin:]

I would just add one final point. This is Robert. I think as people alluded to and as Bob alluded to in the sequencing of capital needs, obviously we’re getting increasingly optimistic and bullish around the development page from all the customers and induce the incremental expansions above and beyond Bucking Horse 2. I think importantly, as we saw this trend developing really in the latter parts of 2017, now into 2018, with our partnership with Williams and our actual financial partners that we have built in there, we feel we’ve got a very good runway and good alignment with those partners to execute on all this over the next 3 years to 5 years.

[Shneur Gershuni:]

Okay. Can you talk a little bit about margins or returns on capital in the Powder River Basin as you sort of compared to the rest of your footprint i.e. the Permian? Are the returns better due to lower competition, just kind of wondering how the landscape plays out?

[Heath Deneke:]

I probably won’t get too specific here. But what I will tell you, one of the benefits of being an early mover, you know we locked in and we believe to be good rates with our current producer customers, and those are good contracts as we mentioned in our – my commentary, we were able to extend that to effectively a 20 -year term and at the existing terms there is. So, we believe that our existing business produces fairly high margins, and given that we have a large system in place and therefore our cost to expand that system or much less than if it was a pure Greenfield build, we expect to have really decent profit margins and certainly would have to have decent project margins to continue to expand a third-party. So, across the footprint, obviously we have extremely high margins in the Bakken with the legacy contracts we have got good margins in Powder River and good margins in the Permian.

[Bob Phillips:]

Shneur just strategically, the important next step for us in the powder is to extend our gas gathering and processing franchise, number one to bring in third parties to our existing system, which adds incremental capital by incremental volumes, and really drives the return on the initial investment. Then separately, but very importantly to add additional services whether it be crude gathering, where we’re putting two pipes in one ditch and we’re creating efficiencies for our producers, so that over time, we can expand and modify and to a certain extent manipulate the gathering systems to accommodate where they are drilling because remember one – very, very early stage of the development of this. There’s going to be Turner, as he said for the next 10 years. Now, it’s also a huge prospect out there, and if you go back to the producers’ investor decks, it is a stack pay scenario just like the Delaware. There’s multiple mentions at multiple targets that have different products that are being developed. So, our long-term plan is to provide multiple services in the same ditch to all these customers, including, but not limited to marketing their NGLs to make sure the NGLs flow when they get higher netbacks. So, we're really taking the Bakken Delaware approach to the Powder River Basin to enhance that original investment that we made.

[Shneur Gershuni:]

Okay. And as a follow-up, you’ve made great progress over the last two years bringing your leverage down and coverage up, Robert you indicated you want to use your retained DCF to continue to fund growth. When the time is right for a responsible return of capital to unit holders, what is your preferred route are you thinking about distribution increase, or do you prefer the flexibility of unit buybacks, I was just sort of wondering about when you get there, what’s the avenue you are going to take and how far away you are from getting there given all the growth that you have in front of you?

[Robert Halpin:]

Yes, I think without getting too much into our plans for 2019 Shneur, I think, as we’ve talked about for a number of quarters in a row, I mean, our commitment long-term is to a floor of 1.2 times on the coverage side and sustainable leverage at [indiscernible] or better, and I think that with the capital projects we have the notion right now, the very clear line of sight we have to the expansion in growth in 2019, I think, the valuation of incremental returns of capital is absolutely a part of the discussion in 2019. I mean, I think that will continue to work with our board in the coming weeks and quarter to finalize those plans, but I think the parameters that we’ve set out are clearly in-line with now and I think we’re actively evaluating it as we go.

[Shneur Gershuni:]

In your preferred route, when do you think about distribution versus buybacks?

[Robert Halpin:]

I think it’s really a prioritization of allocation of capital and I think as we think about where we’re positioned and where we expect to go, obviously, organic capital at 5 times to 6 times take it priority and I think we would probably lean towards some appropriate and modest amount of distribution.

[Shneur Gershuni:]

Got it. Perfect. Thank you, guys. Appreciate all the color today.

[Bob Phillips:]

Thank you, Shneur.

[Operator:]

Our next question comes from the line of Kyle May from Capital One Securities. Please proceed with your question.

[Kyle May:]

Hi, good morning guys.

[Bob Phillips:]

Good morning Kyle.

[Kyle May:]

In-light of the Chesapeake acquisition this morning, just curious if you’ve had any discussions or had any thoughts about how the acquisition of WildHorse could change their plans in the Power River Basin over the long-term?

[Heath Deneke:]

Yes, I mean, look as Bob mentioned, we were with them last week and certainly as reiterated in our announcement today, I think that WildHorse really is not going to impact their Powder River Development plans. They’ve got five rigs, they’ve announced the increase in well-connect activity in 2019 potential plans to add another rig in 2019. So, we really don’t see it having really any adverse impact on the Powder, but as you kind of look at the transaction overall, I mean, we think it is actually just an improvement to Chesapeake’s overall balance sheet. So, we think it’s about enhancing transactions to make them a little stronger, it’s going to give them more exposure to all and we certainly don’t think it’s going to slow down their Powder River investments in any meaningful way.

[Kyle May:]

Okay, got it. That’s helpful. And then, maybe looking at the Permian, we could see processing volumes ticked up in the third quarter, can you talk about how much contribution we had from Orla 1 and then kind of your outlook for how that plant is going to ramp up?

[Robert Halpin:]

I mean, I think, well we definitely expect Orla 1 to ramp up when you get into 2019. I think we’re processing close to 80 million a day or so through the complex. So, when we – as we near, basically with our existing customer base and activity that’s expected to increase, we think Orla 1 is going to fill up over 2019 and into 2020. So, we’re starting to evaluate, we’ve already purchased an option on a plant that we think could come online as early as the end of 2019. So, we're kind of actively watching it. We have seen a little bit of slowdown, not necessarily from our producer customer, but in terms of the new customer opportunities just given the current constraints on the fractionation and oil pipeline takeaway side. So, things have shifted a little bit, but we continue to think that we're going to be well on our way with Orla 2 here in a few months.

[Kyle May:]

Okay, got it. Maybe just one more on Orla 2, are there any hurdles or benchmarks or anything you really need to see to reach an FID on that plant?

[Robert Halpin:]

No, nothing specific. I think, we do – we anticipate underwriting that with incremental customers or new G&P acreage dedications, so as soon as we get those customers signed up that’s when we will move forward with the final investment’s decision.

[Bob Phillips:]

I think, we’ll know a lot more Kyle after we finish out our 2019 plan, which allows us to confirm drilling forecast with all of our producers. We’re well along the way having started the budgeting process several months ago, about to present that plan to our board next week at our quarterly board meeting, and then we will really work hard over the next 45 days to 60 days to confirm and finalize drilling plans by our major producers, get the capital right, but most importantly as Heath pointed out, we have a high degree of confidence, we're going to build a second plant at Orla. We bought an option on the plant. We’ve done the front-end engineering. We’ve done a lot of the permitting work, and as you know from Orla 1, we built that facility to expand it. With the utilities, with the takeaway capacity, the guys continue to improve commercial takeaway on both the gas, as well as the gas liquids side, and the team is very active in the region offering for lack of a better term, third-party off-load opportunities to other gatherers out there that might not have all the processing that they need for their current producer development plan. So, it’s an active area. I would say, we feel very comfortable when we get to January, February and announce 2019 plan. A key component of that is, what are we going to do at Orla for 2019 and 2020?

[Kyle May:]

Okay. That’s very helpful guys. Appreciate it. Thanks.

[Operator:]

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

[Dennis Coleman:]

Yes. Good morning, and thanks for taking my question. Just to press a little bit more on the CapEx issues if I can. Starting, maybe even just with what’s fourth quarter spend? You’ve spent just over 200 million, you are something between 300 and 350, should we think about the lower end on that based on the third quarter spend or is there, what moves it to the higher end, I guess is it the 2025 well connects in the Bakken, what is that range?

[Robert Halpin:]

I think, really the primary driver of the fourth quarter capital spend is the Bucking Horse 2 expansion and just sequencing of CapEx around that. Obviously, with about 207 [ph] spent year-to-date, 300 to 350 of guidance that we reiterate this morning, you can back into kind of what we are expecting there in the fourth quarter. I think, we are still expecting and aggressively moving forward on that plant to get it in service by the end of next year, but you could see some timing gaps in that between 4Q and 1Q, but as of now, we still feel pretty good about where we are heading.

[Dennis Coleman:]

Okay. And then, again, I guess, we’ve talked a lot about all the good projects you have Orla 2, the water possibilities, Bucking Horse 3, 100 well connects, you know, and then we have this guidance of 200 million to 300 million next year seems certainly that you could lead towards the higher end of that, I know you want to put this conversation off, but any guidance within that range or could you come in higher than that? How are you thinking about that?

[Robert Halpin:]

I think $200 million to $300 million is based on our current expectation of projects we’ve underwritten and outlined a site execution around, I think if we make incremental FID on some of these opportunities throughout the remainder of 2018 and into 2019, I think that would be the upside and additive to that. And I think that as we have talked about a lot of that opportunities said as predominantly in the Powder and in the Delaware, you know where we have the built-in financial structures and capabilities to execute.

[Dennis Coleman:]

Okay. Thanks for the answers.

[Operator:]

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

[Ned Baramov:]

Good morning. I have a quick question on the storage and transportation segment, so the sequential increase in EBITDA was less than $1 million, while contributions from the Con Edison JV increased and you also talked about COLT having a stronger than expected quarter, so could you maybe help me understand the modest sequential increase in EBITDA in that segment?

[Robert Halpin:]

Yes, I think – if I follow your question, a couple of dynamics went into the modest increase. One was, when you look sequentially quarter-over-quarter from COLT, we do still have some legacy contracts and deficiency payments that would have kind of crossed the second quarter a little bit, what you see now is the utilization of the facilities step-up meaningfully quarter-over-quarter and spreads have widened, and our teams have done a great job of commercializing on that. So, I think that’s probably the largest driver, obviously the Stagecoach was also pretty stable quarter-over-quarter in terms of a throughout-put and activity around that facility and asset.

[Heath Deneke:]

And I think the point we’re trying to get at is, we are seeing improving fundamentals and so activity has picked up. First, volumes picked up. Now, we're starting to see margins pick up, particularly at COLT. So, I think as we kind of look forward into 2019 based on that or effectively being fuller close to be full at this point in time, and increased demand for the Bakken barrel on the East and West Coast. We think that we're going to continue to see margin expansion as we look into 2019.

[Ned Baramov:]

Got it. And then, I guess given the widened differentials, are there opportunities to sign three month or six-month contracts or are the volume increases you're seeing mostly driven by spot shipments?

[Robert Halpin:]

Yes, it is a good point. I mean, I think we recently have secured a contract that’s going to be about a year in Turner and that’s certainly up from the – much more of the spot business that we’ve kind of self-performed on. So, we are starting to see both the [indiscernible] agreements, as well as the margins that we can make enhance advance as we look forward.

[Ned Baramov:]

Okay. That’s great, and then a question on the Northeast with the expected start-up of [indiscernible] two later in the year, how are you thinking about the impact to CEQP's NGL marketing business?

[Robert Halpin:]

John Powell, who head us our MS&L segment will kind of fill that one.

[John Powell:]

Thank you for the question. I think, what we’ve seen really is, a lot of those barrels are currently being exported on rail to other hubs. So, I think initially what you’ll see is, you know, you won’t see those barrels for example flowing in [indiscernible], you have seen them going to the dark. So, from what we’ve seen, the indication is that they will have an interim solution with a smaller diameter pipe to get there, and we will expect a little bit compression in terms of, kind of the traditional summer, winter opportunities out there, but I think with the increased drilling capacity, as well as fractionation capacity coming on in the fourth quarter that become additional liquids opportunities for us to maintain our business out there, well into 2019 and beyond.

[Bob Phillips:]

John, why don't you give them a little bit of color about how well we are positioned with our seasonal inventory build, and how our customers actually use our inventory position in the Northeast to meet their operational needs?

[John Powell:]

Yes. I think that's one of the things that we’ve particularly done well here in 2018, also making sure that we work with our producers on a day-in and day-out basis with the un-surety in terms of [indiscernible] exactly was going to come online. So, we have worked hand-in-hand with our producers to make sure that we give them all the operationality around all of our trucking, rail, pipeline, as well as storage capabilities to keep the balances rolling, and so those relationships are key to our business going forward as well, and so that is really, we are in a unique position right there to continue to develop further relationships with customers there.

[Ned Baramov:]

That’s helpful. And lastly, a housekeeping item, what was the approximate EBITDA generated by COLT in the quarter?

[Bob Phillips:]

Approximately $5 million.

[Ned Baramov:]

Thanks. That’s all I had.

[Bob Phillips:]

Hi, Ned, just a second of COLT. I want to highlight COLT because the COLT team and Bakken crude services team did such a great job. So, we’ve got Rob de Cardenas here, he runs our crude business, and Rob, you and spent a lot of time along with Health talking about the changing market dynamics of Bakken, we got higher overall crude production across the state, we got pipeline filling up to a certain extent, spreads have been wide due to the Brent WTI, but more than anything, what you told us is, you are just seeing a much higher level of activity then you have over the last year or two. Why don’t you give the investors and analysts some color on that, and why that is important to us at COLT because we were a premier rail loading facility based upon five-year contracts that were entered into back in 2011 and 2012, and when those expired and the cycle turned down, basically we got to a point where we almost shut the facility and now we have got this revitalization, got all this activity, we have gone from 12 hour service to 24 hour service. We’ve added in NGLs, it is really exciting time for us at COLT.

[Rob de Cardenas:]

Yes. [We exchanged words last year, thanks Bob]. This time last year, we saw rail lines were moving far east about lower, just 20,000, 25,000 a day on rail at coal. DAPL just came on line, it wasn’t full yet, so it was plain takeaway at a Bakken basis, we say the Bakken basin a year-ago trading average about minus $2 and production is about $1.1 million barrels a day. Right now, we are seeing production about 1.3, DAPL is 4, all the pipelines coming out of basin are pretty much getting 4. [indiscernible] minus $20. So, the margins have really stepped-out. Producers are calling us, they are looking for, you know they are worried about takeaway. So, now we are starting to see producers even interested in doing deals, turn deals like COLT and our long-term rail customers are looking to sphere long-term supply, obviously at lower margins than we had a couple of years ago, about three years ago, but still higher than we were last year. So, we are seeing much improvement.

[Ned Baramov:]

Great thanks.

[Bob Phillips:]

Thanks Ned.

[Operator:]

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

[Selman Akyol:]

Thank you. Just a couple of quick ones. Just going back to COLT Hub real quickly, can you guys talk about your expectations for capacity utilization on a go forward basis?

[Robert Halpin:]

As we talked about, I mean it is certainly increasing and it will continue to increase. We do expect that DAPL will eventually add an additional southern capacity. So, I kind of want to temper [ph] our remarks here to tell you that it’s a great option in a portfolio. We’re doing well in 2018 because we are going to do well in 2019 and most importantly both on the crude and NGL side it insurers that well [indiscernible] gathering business stays for and can grow. So, I think that, more so than a specific asset contribution I think the, the full suite of service that we can provide having that position really enhances our Bakken position overall.

[Bob Phillips:]

And let me just add that it adds absolute flow assurance on our NGLs coming out of Bear Den and that is a similar situation with respect to potential lead type pipeline capacity for Y-grade, and so as we are self-performing there and building the team, and the equipment and the systems and synergies to be able to evacuate excess NGLs we are not only doing it for ourselves, but we are starting to do it for third parties as well. So, it is pretty exciting time at COLT for both crude and NGL takeaway.

[Selman Akyol:]

Understood. And then just pivoting over to Tres Palacios real quick, I guess you talked about increased utilization due to the LNG opportunity, you’ve been seeing that coming for a while, I guess if you could just maybe expand on that and maybe talk a little, are we seeing any uplift in pricing, and then I think you also mentioned in your comments, maybe moving some of that capacity to NGLs if I heard you correctly?

[Heath Deneke:]

Yes. I will start this off and then Mark [ph] if you want to add some more details to it. I mean, we certainly knew that Tres would have a stay in this on. I mean with although the activity on the LNG front and the growing demand for global LNG is certainly driving improvement fundamentals we are starting to see margins increase. We’ve maintained a view point that we were not going to transact it and what we believe to be historical low pricing. We have kept our options open and now we are starting to see benefits on the gas side as those conditions kind of come to fruition. We also think with a lot of the new pipeline capacity that’s targeted, kind of hit the [indiscernible] channel area in down south is also going to be enhancing to our long-term service offering at Tres. And then on the liquid side, this will not be taking existing gas [indiscernible] out of service, we have rights to some additional [indiscernible] that are on the market that we have access to and anything that we do on the NGL or the purity side would be incremental to what we are doing on the gas side. But really would like Mark to give maybe just a little bit more color on the existing activity in and around Tres in what we think could happen over the next few years?

[Bob Phillips:]

Yes, thank you Heath. I think what we are seeing right now on the asset is strong demand in the region. We have seen high prices in the ship channel area. I think it is impact due to the LNG growth that we have referenced. The Corpus Christi [indiscernible] going through commissioning that will be online as early as Q4 this year. We have seen demand from the Western Louisiana project they have has been passed as well. Strong power gen in the area and then as well as the growth that we have seen in Mexico, which is largely a power gen driven market. So, it was a call on our service to provide flexibility and balancing to all those areas. On the liquids front, Heath did reference we have options on liquid ready for service, just with what we are seeing in the Permian with NGLs coming out of the basin, some of the pet chem activity from Corpus Christi all the way through [indiscernible] into Western Louisiana. We think there is some good opportunities for development and growth in that sector of the business as well.

[Heath Deneke:]

And just to kind of conclude on this. I think as we – as Bob alluded, as I alluded to in my comments, Robert in his, when we talked about our operating segment really kind of performing well across our segments, you know asset wide [indiscernible] COLT while our key drivers are going to be on the G&P segment side at Arrow and at Powder and the Permian, you know we continue to see that the value embedded in our asset footprint, assets like COLT and Tres that have kind of lagged performance wise over the past couple of years. So, it is really exciting, none of that growth is really built into our forward-looking plan when we look out over the five-year horizon, but as these fundamentals play out, we are continuing to see that not only our margins and EBITDA contribution starting to pick-up they could really result in some meaningful growth as not accounted for currently in our outlook. So, just exciting, and don’t want to over emphasis it, but just wanted to highlight the things that are kind of looking up from on those two assets as well.

[Selman Akyol:]

Thanks for all the additional color.

[Bob Phillips:]

Thanks, Selman.

[Operator:]

Ladies and gentlemen, we have 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, and thanks again to all of you for great questions, and everybody handing in to get additional color on the exciting things we have going on in various basins. Just want to close with kind of two thoughts. We are all about strong execution and capital discipline, right now. We think that’s what investors are looking for. We’ve been reported so far this year by delivering on what we’ve said, we’re gaining increasing confidence in our full-year 2018 and 2019 forecast. We look forward to being back in front of our investors with maybe a little more color in December, and then a complete guidance outlook in late January, early February, but things are going very well at Crestwood right now. And as always, we appreciate all of our investors hanging in there with us through the tough times to get the benefit of the good times and that is kind of where we feel like we are right now. So, execution and discipline will continue to be our themes as we close this year and go into next year. Thanks again operator, and thanks for everybody to join us on the call.

[Operator:]

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