DCP Midstream, LP
Q2 2017 Earnings Call Transcript

Published: 7 Aug 2017

[Operator:]

Good day, ladies and gentlemen, and welcome to the DCP Midstream's 2Q 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we'll have a question-and-answer session, and instructions will be given at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce you host for today's conference Irene Lofland, Vice President of Investor Relations. Please go ahead.

[Irene Lofland:]

Thank you, Nova. Good afternoon and welcome to the DCP Midstream Second Quarter 2017 Earnings Call. Today's call is being webcast and the supporting slides can be accessed under our Investors section of our website at dcpmidstream.com. Before we begin, I'd like to point at that our discussion today includes forward-looking statements. Actual results may differ due to certain risk factors that affect our business. Please review the second slide in the deck that describes our use of forward-looking statements, and for a complete listing of the risk factors, please refer to the partnership's latest SEC filings, and the 10-Q that was filed yesterday. We will also use various non-GAAP measures which are reconciled to the nearest GAAP measures that schedule in the appendix section of the slide. Wouter van Kempen, CEO and Sean O'Brien, CFO, will be our speakers today and after their remarks, we will take your question. With that, I will turn the call over to Wouter.

[Wouter van Kempen:]

Thank you, Irene, and thanks, everyone for joining us on our call today. I'll start with some highlights and then show the overview to quarter results and our 2017 outlook. After that I'll insights into our volume outlook and spend some time on our strategy and growth projects in two of our premier regions, the Permian and the DJ. As we announced this morning, we are moving forward with significant projects in those two areas, allowing us to capture growth in these basins with less capital, lower risk and higher returns. Going back to the quarter, coming into 2017, we knew it would be a transition year for the industry and we were anticipating choppy waters and so far, this year have seen significant volatility in the energy sector. We have a strong track record of managing through this environment and continue to position DCP for long-term sustainability and value creation. We are reaffirming our full year adjusted EBITDA and Dcf guidance and tightening to between the low and middle end to reflect a first half of the year results and the current commodity outlook for the remainder of the year. In the second quarter, the partnership generated DCF $190 million and adjusted EBITDA of $260 million, both lower than the first quarter as we expect it, reflecting weaker commodity prices and higher plan maintenance and cost, offset by better performance from our NGL pipelines. Our distribution coverage was 0.89x for the quarter and 1.04x year-to-date inclusive of IDR giveback. And as a reminder, we added a layer of downside protection as part of our simplification transaction in the form of three years of IDR givebacks of up to $100 million annually to protect our $3.12 per unit distribution. This IDR giveback essentially had used our distribution coverage to approximately 1x annually, against a dampened commodity in industry environment. Sean will provide more details on our outlook and he will review the mechanics of this IDR giveback. As we look through the second half of the year, we are seeing multiple positive side posts from producers in our key areas. An early look at July results shows record volumes in the DJ Basin, volume growth in the Eagle Ford and on our NGL pipelines and continue to improve within the Permian, setting the pace for an improved second half of 2017. Longer term, we continue to be well-positioned to manage through this environment to achieve our financial strategy. The team has executed well through this downturn and has built a solid foundation. As we pivot to the future, we have a very strong sleight [ph] of growth projects that will drive higher cash flows. With that said, we will remain disciplined and we'll allocate capital to the best-returned projects with strategic partners in our key regions that will further enhance our portfolio. Let me give you some examples of that. In the Permian, we're executing on our 2017 and 2018 Sand Hills expansions, adding 60% plus of NGL capacity to bring Sand Hills up to 450,000 barrels per day. Both of those expansions are supported by existing long term contracts with plant and acreage dedications going out to 2036 and are backed by growing volume forecasts. So we are very comfortable that Sand Hills will continue to fill up as new capacities plays in service. Also in the Permian, progress continues on the Gulf Coast Express pipeline projects with bids while in excess of the 1.8 Bcf per day of capacity offered during the open season. Together at Kinder Morgan, we continue to work with perspective shippers through definitive agreements and commercial discussions. Another area that is very strategic for us is the DJ Basin. I'm excited to share that a Mewbourn 3 plant is under construction and we have approved our 11th plant O'Connor 2. Together these two plans will have [ph] day, up 45% plus from our current capacity to about 1.2 Bcf a day. The DJ Basin continues to be a phenomenal story and I'll add more color later in the call. And lastly, with our focus on optimizing our asset portfolio, we significantly reduced our capital markets needs by redeploying the proceeds from high multiple non-core asset divestitures to lower risk, high-return projects in places like the Permian and the DJ strengthening our integrated asset portfolio in these strategic areas. Now, I'll hand it over to Sean to review the quarter results.

[Sean O'Brien:]

Thanks, Wouter and good afternoon. Today I'll cover our results and then give details around our distribution coverage, second-half outlook and tightened guidance, and finally I'll give an update on our hedging financing on liquidity. To begin, I'll take you through our second quarter versus first quarter Dcf. The second quarter 2017 Dcf was $119 million, compared to $161 million in the first quarter. As I mentioned on our last earnings call, we expected Q2 to be lower than Q1 primarily due to dampened commodity environment and higher cost and maintenance capital associated with planned maintenance from reliability spend, which tends to be higher in Q2 and Q3. These decreases were partially offset by higher distributions from our NGL pipelines driven by growth from Sand Hills as well as higher G&P margins from our DJ Basin system. Prices dampen throughout the second quarter, accounting for a $20 million reduction from the first quarter results. Both cost and maintenance capital were higher in the second quarter from our first quarter run rate. I'll start with some of the cost drivers. Approximately $10 million of this increase was driven by planned maintenance and reliability activity in the quarter. An additional $5 million of the increase is tied to targeted investments in technology and automation efforts as part of our DCP 2020 strategy to drive increased reliability productivity and efficiencies and the remainder is primarily timing between quarters. Looking at the rest of the year, we expect second half cost to trend lower than our Q2 run rate. Now moving to maintenance capital, we saw $14 million increase over Q1 tied to planned maintenance and higher rig activity, driving expected volume growth over the remainder of the year in the Eagle Ford, DJ, Permian and SCOOP. More details from Wouter around these positive trends in a moment. To continue to drive new context, I want to highlight that the company has had very strong execution around our cost efficiencies throughout the downturn. That drove approximately $200 million of base cost reductions over the past two years. That equates to about 20% improvement in our base cost. To bottom line, Q2 was in-line with our expectations and we're confident that 2017 will be within our guidance range. Moving on to Slide 5; as Wouter touched on in his opening remarks, we knew that '17 was going to be a transitional year. We expected a volatile commodity environment. So when we simplified our structure with our owners, we had the force right to layer in downside protection in the form of an IDR giveback, essentially adding a hedge against lower commodity prices and volume pressures until the industry materially recovers. This is unique to DCP and demonstrates the strong support we have from Enbridge and Phillips 66. The IDR giveback provides up to $100 million annually from 2017 to 2019, effectively acting as a three-year hedge against lower commodity prices. This slide shows how we calculate the IDR giveback and distribution coverage ratio. If needed, the distribution defaults to a $20 million reduction each quarter to be trued up annually, to target the distribution coverage of approximately 1x. During the first and second quarters, the incentive distribution paid to our general partner was reduced by $20 million each quarter resulting in a second quarter distribution coverage ratio of 0.89x and 1.04x year-to-date. Looking forward, our goal is to grow our Dcf to achieve our targeted 1.2x or better distribution coverage. To achieve this goal, we're executing on predominantly fee-based lower risk higher return growth projects underway in the DJ and Permian Basins. We are also investing in automation and technology to drive greater efficiencies and productivity in long term sustainability. Building on our already $200 million based cost reduction and driving stronger margins from our assets just like we did through our contract realignment efforts and we will continue to redeploy proceeds from high multiple non-core asset divestitures into lower multiple growth projects in our core regions. Turning to Slide 6, we are reaffirming our 2017 Dcf and adjusted EBITDA guidance and we're tightening the ranges to reflect the commodity outlook. We still expect our distribution coverage ratio for the year to be approximately 1.0x with the IDR. In the second half of the year we anticipate our Dcf and adjusted EBITDA to be higher than the first half of the year despite a lower commodity outlook, reflecting a stronger volume outlook and unit margins in our G&P business, continued growth from Sand Hills and lower costs. We also expect the negative impact of approximately $10 million to earnings and distributions from our discovery equity investment due to a lower producer production forecast, associated with wells tied into the [indiscernible] Canyon gathering system. We've included the August forward strip price for the second half of the year on Slide 6 and using the commodity sensitivities we provided, that puts our Dcf and adjusted EBITDA in between the well and mid-point of the range. Looking at our capital outlook, we are forecasting maintenance capital to be at the low end and growth capital to be at the high end of our guidance ranges, driven by current year execution of our Sand Hills and DJ Basin expansion projects. Moving to Slide 7, you'll find [ph] update on our hedging, financing and liquidity. Despite the damp in commodity environment, natural gas liquids, prices have strengthened and are now at 50% of crude. As one of the largest NGL producers in the U.S., we are sensitive to changes in NGL prices. So we are encouraged that NGL to strengthen and we took this opportunity to layer on additional hedges specifically propane in butane during the quarter and July. Now taking our fee-based and hedge margin up to 78% for the remainder of the year, up 5% from Q1. We have ample liquidity and financing flexibility in our bank leverage ratio improve to 4.5x as of June 30th. At the end of the second quarter, we had approximately $1.4 billion available on our credit facility and with the proceeds received from our recent Douglas divestiture; we had $251 million of cash on hand. So we have options available to manage and fund our disciplined and expanding growth program. Through our disciplined capital approach and strategic non-core divestitures, we haven't had to issue any equity since early 2015 and I'm very confident in our ability to fund our 2017 growth capital without any equity needs. We will remain disciplined on our financial priorities, focus first on strengthening our balance sheet and reducing leverage to our target range of 3x to 4x building distribution coverage of 1.2x or better, and then once we reached these goals, we will turn our focus to raising our distribution. With that, I'll hand it back over to Wouter.

[Wouter van Kempen:]

Thank you, Sean. On Slide 8, we show our volume outlook. First, in our G&P segment, rig comes and up 111% year-over-year and our second half outlook anticipates growth in multiple areas. In the northern Delaware, increased drilling is translating to volume growth around footprint. In Eagle Ford, I'm optimistic to be [indiscernible] in March, volumes have increased significantly. To put that in perspective, in July, volumes were over $600 million cubic feet per day, up more than 15% from March levels. In the DJ Basin, we put the $40 million a day O'Connor bypassing service in June and in July, this DJ have multiple daily volume records and we averaged $845 million a day for the month of July of total processed and bypass gas. And lastly in the SCOOP, our key producers have provided a strong growth outlook for the rest of the year and we expect additional volumes to start coming in during the third quarter. Now moving to our logistics in marketing segment; the big story here is Sand Hills with capacity and volumes steadily ramping up since inception. Sand Hills is pacing service in late 2012 and since that time we've increased its initial 200,000 barrel per day capacity by 40% to 280,000 barrels per day primarily by adding bump stations with very little capital outlay and at very low multiples. We've always matched the base of supply growth with capacity expansions and we're currently in the process of expanding Sand Hills capacity again, now from 280,000 to 450,000 barrels per day. We know there are many Permian NGL takeaway projects announced are on the drawing board. What differentiates Sand Hills from those announcements is that we have existing pipe in the grub with loan contract, long term contracts in place and our expansions are being executed as we speak. Now moving to the next couple of slides; I want to spend some time grounding you on our Permian and DJ Basin strategies -- two areas where we have a tremendous opportunity to continue to grow around our expansive footprint and while we are providing offerings across the energy value chain. On Slide 9, I want to share a strategy on capturing Permian Basin growth. The industry outlook for the Permian and Delaware Basins is very strong and we've seen producers, midstream companies and private equity firms focusing their resources on continued development of these areas. With the significant growth projections in the Permian and Delaware Basins, market growth from pipeline exports to Mexico, as well as LNG exports, we believe there will be considerable capacity to match for both natural gas and NGL takeaway. DCP's leading footprint and existing Sand Hills NGL pipeline in the Permian puts us in an excellent position to capture that growth. We've been asked why DCP isn't participating as actively as some others in building new processing plans as part of the recent Permian G&P built up. So let me address that strategy. You haven't seen a G&P growth in the Permian and Delaware because we believe that we should not build for the big, but instead, balance the right amount of capacity at the right profitability. We love the Permian, but we've seen a similar playbook in the past in many, many areas around the country including not too long ago, the Eagle Ford where the industry is now sitting on a lump of access processing capacity. With that said, our G&P position in the Permian is very strong and it's very important to us. It is foundational providing connectivity to our downstream logistics business. We have millions of dedicated acres and strong drilling by producers and we will continue to partner with our producer customers and evaluate processing capacity needs around the footprint, but we will remain disciplined and not built on [indiscernible]. We will look at the right opportunities and are in very active discussions with multiple large and established players where we can provide a fully integrated midstream solution. What we are very aggressively investing capital in the Permian is the Sand Hills NGL pipeline, which has consistently delivered strong-fee based returns while ramping to keep pace with producer demands. Sand Hills is backed by volume commitments, plant and acreage dedications from our G&P business, as well as from our existing third party facilities which currently account for approximately 70% of volumes. This contracts are very long term in nature, extending out to 2036 with no significant renewals until 2023 and I'll talk more about the Sand Hills expansions on the next slide. Another project I'm excited about is our participation in the Gulf Coast Express metro gas pipeline. DCP's leading G&P footprint in the Permian provided us with a natural opportunity to partner with Kindred Morgan to develop needed residue gas takeaway infrastructure for existing and prospective producers. The [indiscernible] open season close in April with bips exceeding the capacity offered so we're now walking with shippers to obtain firm commitments. Gulf Coast express is expected to be in service [ph] in the second half of 2019 and we look forward to sharing more in the coming months. To sum it all up, our strategy in the Permian built on our solid G&P footprint and full value chain solutions and let me hit this point home. We believe there's a risk when G&P overbuilt in the Permian. So at this -- deliberately chosen to allocate our capital in this area to our integrated logistics business which allows us to capture growth across the whole Basin with less capital at lower risks and higher return. On the next slide, I'll spend the moment discussing our Sand Hills expansions. Our 2017 Sand Hills expansion is nearing its expected fourth quarter and service date and we'll bring capacity to 365,000 barrels per day. This was a $70 million investment at approximately 2x multiple, adding 85,000 barrels per day through incremental pump stations. In May, we announced a larger scale, 2018 expansion of Sand Hills which will bring capacity up to 450,000 barrels per day for an estimated $300 million, not the DCP's interest at a lower cost than we initially shared with you. We've secured the pump [ph] stations, we're working right away and we will break ground in September with an expected end [ph] service date in the third quarter of 2018. So on the next couple of months, we will have increased Sand Hills capacity by 30% to 365,000 barrels per day and by the third quarter of 2018, we will be up another 20% plus to 450,000 barrels per day. And I would like to emphasize, we are not expanding Sand Hills in speculation - we have iron-clad contracts in place, securing dedicated volumes from plants that are built around the construction, which will bring NGL volumes well into the next decade and if doesn't taken to account any growth from ethane recovery, which would be significant upside over and above what we already have. Now let's turn to Slide 11 where I'll focus on the strategy on the DJ Basin. The DJ Basin is just as exciting as the Permian and SCOOP Stack areas, but very few people talk about it is because we're only one of two midstream providers and the acreage is dedicated to us on our life on lease agreements. This region provides some of these strongest returns and lowest break evens in the country. We have an integrated system in the DJ with approximately 850 million a day of processing in bypass capacity, which includes up to $40 million a day of incremental capacity from our O'Connor bypass that was placed in service in June. And already in July, the DJs have multiple daily volume records averaging 845 million a day of total processed and bypassed gas. With continued growing demands in the DJ Basin, we are on track to increase our total capacity by over 45% to about 1.2 Bcf a day over the next two years. This is driven by a 200 million a day Mewbourn 3 plant and associated gathering, which is under construction and will be in service in the fourth quarter of 2018. And I'm really excited to announce that we've also approved an 11th plant, the 200 million a day on O'Connor 2 plant and associated gathering which is expected to be placed into service in the middle of 2019. These new plants are supported by very strong producer partnership in commitments and underscored a strength of a footprint and are focused on capital discipline. They provide strong returns with 5x to 7x multiples, we have life-of-lease, we have full-value chain economics and we have minimum volume commitments and minimum margins. So with that, let me summarize what makes me excited about the opportunities ahead of us. We feel good regarding the second half of the year. During the month of July, we have already seen record volumes in the DJ. Volume growth in the Eagle Ford and on our NGL pipelines, continued improvement in the Permian, lower costs associated with operational efficiency improvements and NGLs strengthening to 50% of the crude, all setting the pace for an improved second half of the year. We are reaffirming our 2017 Dcf and adjusted EBITDA guidance radius, tightening to between the low and midland to reflect the current commodity outlook. We delivered 1.04x coverage year-to-date and we expect distribution coverage of 1x in 2017, which is protected by IDR givebacks. We have ample liquidity and financial flexibility to fund our growth, reducing our needs to access capital markets and we do not anticipate any equity needs in 2017. Our Permian and DJ Basin strategies are focused on tremendous lower risk high return predominantly fee-based growth opportunities which extend our value chain and further integrate our G&P and logistics businesses. With that, I'd like to thank you for your interest in DCP and now, Nova, we're ready to take questions.

[Operator:]

Thank you. [Operator Instructions] Our first question comes from the line of Jeremy Tonet of JPMorgan. Your line is open.

[Jeremy Tonet:]

Good afternoon. Just wanted to start off from the DJ; seems like there is a lot of discussion there as far as growth is concerned. I'm wondering if there's any opportunity for you guys to bring forward any of your projects, service this growing need there.

[Wouter van Kempen:]

Yes, Jeremy, let me take that one. There is definitely some very significant growth opportunities. Obviously, that's underscored by our announcements of now putting the O'Connor II plant online as well and we have approved that plan together with Mewbourn 3, 45% increase in our total processing capacity that we're going to expect over there. For us it's about what can we do quicker? How can we make sure that we let our producers run as much as possible through our system? We brought the O'Connor bypass online. That's an additional 40 million a day that's getting online in June and then we are doing anything and everything in our power combined with the company that is building the Mewbourn 3 plant, ourselves, our producers to see is there a way that we can potentially go a little bit faster and bring that Mewbourn plant up from the fourth quarter of 2018 a couple of weeks early, a couple of months early. We're trying whatever we can do there. Hopefully we're going to be successful, but it's a little bit too early to tell. But I think you're absolutely right. If you look at the DJ Basin, it's an unbelievable area. The good thing for us, we do have life-of-lease agreements with our producers, so we have very close line of sight, we work very closely with our producers to make sure that we always match our capacity and their volumes that come online and we have a history of filling up our volumes tremendously fast and quickly there. Once Mewbourn 3 comes online, and I can't wait for that to come online as quickly as possible, I'm very confident we'll fill it up quickly and we'll do the same on the O'Connor 2 plant.

[Jeremy Tonet:]

Great, thanks for that. And just staying in the DJ here; there was few producers that talked about there was some issues with line pressure they had during the quarter. Didn't know if you guys have the impression of finding their shoes [ph] and if so, that was a result?

[Wouter van Kempen:]

You have to gauge and the producers know this. We have lengthy-lengthy discussions with our producers during 2015 and say, our time line and the time line for the producers, they're not in sync. Obviously, it takes more time for us to build a new plant versus the producers to bring rigs online and we have discussions with them in 2015 and say, if we continue to believe that aspect is downside, that DJ keeps growing the way it's growing, we really need to kind of start working and put a new plant online. At that time, the producers, given the environment and that was obviously a very difficult environment, we're uncomfortable committing to it. What that means now is that the producers are coming online, the systems are full and then line pressures start building a little bit. We're working together with the producers to make sure that the pressures aren't going to be too high, at the same time, the system is pretty full. Producers know that and that's why we're all working on trying to get new capacity online quickly as possible.

[Jeremy Tonet:]

Great. Thanks for that. And then just on the Permian quick here, I wanted to see what Gulf Coast Express. Seems like you guys have a lot of volumes that could direct towards that system and then I'm just wondering if you kind of are looking to align your ownership in the project with the amount of volumes so you could point there, is there any guidance you could give us like it should be a quarter, or a half, or any thoughts on what's the right amount of ownership for this type [indiscernible]?

[Wouter van Kempen:]

You know, what we've always said, Jeremy, is that we would be a meaningful owner in Gulf Coast Express. Obviously, we will commit volumes to the project and that will translate into a meaningful equity acquisition for us. At the same time, we're working with Kindred Morgan. I'm trying to see who are the right people to come into the pipe, what are the various commitments that people are bringing to that pipe. If that means there are other companies and other players that would like to bring significant volumes, if it has to come with some type of an equity position, we are all open to that. But for us, it's going to be a meaningful ownership interest.

[Jeremy Tonet:]

That makes sense. GUR recoveries have been big topic this starting season in the Permian. I'm just wondering, given some of the plants are a bit older that you guys have in the Permian, is there an opportunity to kind of upgrade some of those plants to capture some of the richer gas out that seems like it's going to be growing there? What do you think about that within your Permian strategy as potential to upgrade plants to capture more of this volume?

[Wouter van Kempen:]

We always look at what can we do to upgrade our fleet in mark. I think historically we as a company have always been very much [indiscernible] rich focused company. So from that point of view, I think we are well-positioned. We'll try to capture as much as we can from a growth point of view and from a processing point of view with the fleet that we have, modernizing it where needed, building new plants where needed, where it makes sense. But it obviously bodes well I think for us what is happening from the integrated footprint that we have, not only to gather in the processing fees, but also from our NGL business and from our future business with Gulf Coast Express.

[Jeremy Tonet:]

Than you. And then just the last one real quick; G&A, is this a good run rate this quarter?

[Sean O'Brien:]

Yes. The G&A was a little bit high. I gave some details around some of the cost drivers, Jeremy. One of the drivers was this investment in technology that we talk about. That usually all hits in the G&A section and it was accelerated in Q2. I do anticipate that to continue through the year. Maybe not at the exact levels, but I think G&A, similar to the cost trend for the whole company, we expect it to trend down the second half of the year. That will also include the G&A side.

[Jeremy Tonet:]

That's it for me. Thank you.

[Wouter van Kempen:]

Thanks, Jeremy.

[Operator:]

Our next question comes from the line of Shneur Gershuni of UBS. Your line is open.

[Shneur Gershuni:]

Hi, good morning or good afternoon, guys. Just wanted to actually follow-up on a couple of Jeremy's question. At first in the DJ, with Mewbourn 3 coming online, that would solve all the line pressure issues that the producers have been talking about? Is that a hope or that's pretty much in the bag once it comes online?

[Wouter van Kempen:]

No. I think that's very much in the bag from that point of view and I just want to talk about what we're already been doing. There has been a tremendous amount of work. Prior to our producers, being willing to commit to us bringing additional capacity online, like we did a lot of other things like the O'Connor bypass, like Grand Parkway. So there are numerous things that are going on in the field to make sure we could handle the volumes that the producers are bringing us. But yes, once Mewbourn 3 comes online, obviously that gives you an extra 200 million a day, that will suck the system to much better pressures. We expect to fill it out really, really quickly and that's why we today announced that we are moving forward with plant 11 and put another $200 million on top of that in the middle of 2019. So these two plans are going to follow each other very quickly here, obviously it talks about how great of resource it is, how willing the producers are to commit themselves to these projects and how we look at the DJ Basin.

[Shneur Gershuni:]

Okay. And the second follow-up was; Sean, I think you had mentioned G&As up this quarter because of some -- an accelerated technology investments. But the way you answered the question before I was kind of confused, first you said it's going to be elevated throughout the end of the year but then you said that it -- the whole direction is pointed downwards; are you saying that it's going to be elevated relatively to 1Q lower than 2Q? I'm just trying to understand…

[Sean O'Brien:]

Yes, this is. So first off, the cost as a whole will be lower in the second half of the year than the first half of the year, Q2 being the peak. And that goes across most of our categories Shneur and inclusive of G&A. So, it will be -- I think you are right, it will be lower than the levels we saw in Q2, the whole second half of the year we expect costs to come down. What I mentioned around technology in particular is we have accelerated our spend on that, I do expect that to continue on as we've made commitments to that program for quite a while.

[Shneur Gershuni:]

Okay, cool. And just a couple of other questions; realizations on the NGL side seems a bit low and I do understand pricing was low during the quarter. But as I sort of decompose it, I kind of wonder if there was a bit of a mix shift -- was the lighter end of the barrel more representative this quarter than it was typically -- was there more ethane recovery? Just trying to understand the weakness there and trying to understand if it's something about the individual purity products?

[Sean O'Brien:]

I don't think the product has shifted significantly, we did move a little bit more, I think we've given indications in the past we're running around 60 a day of rejection, we saw that improve a little bit in Q2 closer to the 50 range; so that's the biggest move we've seen in a while but I don't think we saw a significant shift in the composite of our barrel at the end of the day.

[Wouter van Kempen:]

But it's probably not unrealistic to assume that some of that -- those ethane recoveries that we did that's going to reflective of the broader portfolio.

[Shneur Gershuni:]

Okay. And then you mentioned how you've been stepping up hedging activities. Was a lot of it done in the second quarter? Was a lot of it done in the last week when prices were really up? I was wondering if you can sort of -- kind of direct this as to when you were sort of active in the market, just given the prices have moved a lot in the last week or this week?

[Sean O'Brien:]

Yes, I think most of it was done I'd say in the last couple of weeks, last three weeks or so which would include the second quarter. I did indicate that carried over into July as well, you know, it was really tied to strengthening in propane and the butane side of the equation and I will point out we were able to -- because of that strengthening, Q1 of 2018 -- not huge numbers but we were able to get out there and start to add-on to our '18 position as well, same two commodities out there in Q1 of 2018. So very recent development, I hope it stays with this. I hope it continues and we can continue to layer on '18 and we still have the ability to layer on a little more '17 as well.

[Shneur Gershuni:]

Is there an interest in holding back a little bit, just given how low propane inventories are? I mean we have an abnormal winters and inventories are as low as they are but that sort of guide you would all or you sort of step in and say, I'd want to put a step back as long as it [indiscernible]?

[Sean O'Brien:]

The bottom line is we have -- we never hedged a 100% of our position, I think we've been clear on that in the past. As you think about our equity length, we have targets that hedged anywhere from 50% to 70%, really what we're trying to do Shneur is target that 80%, you saw we got a little closer for the second half of the year. When I say 80% that would be the mix of fee and hedges, we use hedges to get us there. So we still have upside, I think which you're alluding to is, you have upside at propane runs, absolutely, we still have some upside but -- and that will point out we're always hedging at levels that are above the 10 coverage ratio, so we feel good about that. So is there a point where we would stop; maybe, but we're still couple of percent lighter that 80% and we hedged the commodities that give us the opportunity to go out and do it at the right price.

[Shneur Gershuni:]

Okay. And final question, any color from your sponsors given there is some change in ownership, are you getting a look at them after that might be in a different portfolio now? I'm just wondering if you can sort of talk about that relationship right now?

[Wouter van Kempen:]

Yes, I would say that to you the relationship with Enbridge has been really good so far. Obviously they have some significant things, they are working on with their large transaction and that is from the center for them, more than I think but what we're doing with DCP and what the opportunities are there, I can't call [indiscernible] on specifics or any details but you know, if there are things that make a lot of sense while we can create a win-win between Enbridge, between DCP, between all the unit holders and all the owners, we obviously will take a look at it.

[Shneur Gershuni:]

Great. Thank you very much, appreciate the color guys.

[Wouter van Kempen:]

Thanks.

[Operator:]

Our next question comes from the line of Gabe Moreen from Bank of America Merrill Lynch.

[Gabriel Moreen:]

Good afternoon. I just wanted to ask the maintenance CapEx range and guidance towards the lower end. Can you just talk about a little bit more the drivers there? I know in the past you had mentioned producers connecting well but is this their own well systems; whether this is something with just lower activity or something else going on; I'm just wondering how much lower this can go in terms of the maintenance CapEx number?

[Sean O'Brien:]

Gabriel, this is Sean. I mean Q1 was really light, as you know, as we came in -- and part of the maintenance uptick in Q2, we saw Q2 getting back to prime more closer to run rate levels, part of that also was we had a lot of our reliability work which also drove the cost that I talked about scheduled for Q2 and Q3 of this year. So we were at pretty low levels early in the year around things like well connects [ph] volumes were still actually coming off in some of the key areas, overall Wouter gave you a lot of color as to how that has shifted and the outlook has definitely gotten better. So I think those guiding to the lower end of the range was a lot of the activity that happened already through the year, we're almost through most of our maintenance and reliability work, still more to happen in Q3; as we're modeling Q3, there is still a little bit higher levels there that we would expect. And then we'll keep an eye on the well connects [ph]; as I mentioned in Q2 we saw some really good signs tied to rig counts, tied to increase volumes that are happening as we move to Q3 but we still went into the range as you've checked out the remainder of the year, I think we spend about $45 million in the first half of the year so I'm guiding you to around $100 million which would tell you you're more at a run rate that we saw in Q2.

[Gabriel Moreen:]

Thanks, Sean. And then turning to assets sales as potential sources for I guess just recycling capital, Douglas sale obviously was beneficial to you guys, anything else out there and you've done other asset sales; anything else out there in the portfolio that could you look to clean up as a source of capital recycling?

[Wouter van Kempen:]

Gab, this is Wouter. There is not a much of list that we're having, there is no processes that are currently ongoing but you know, there is always opportunities to do something if it makes sense. If there is a willing buyer and a willing seller and we can get to the right place but I would not take in consideration anything that is significant at this stage of the game, so right now nothing in process but you can always decide to me from now or so that there may be some things that are better with someone else.

[Gabriel Moreen:]

Thanks, Wouter. And then last question I guess is a little bit bigger picture for me in terms of not necessarily competing further upstream in the gathering and processing side of things in the Permian, is there any concern that when some of the new build NGL pipelines come online where some of those participants building those pipelines are involved further upstream that you could see some volumes shift away from Sand Hills over the long-term. Can you just maybe address how you might be protecting yourself from that?

[Wouter van Kempen:]

Let me react and give some thoughts about two things that you're saying. First of all, you mentioned -- you said you were not competing or decided not to compete on the GMP side, that's not the case. I mean we are in very active discussions looking at a number of opportunities around work and we built additional GMP, do that in combination with all the downstream offerings that we have. What I said is that we believe there is a risk for an over belt and we've seen it in many, many different places where a lot of people are got to skating to the buck and throwing a lot of capacity down and we can get to a place where for instance, in the Eagle Ford we're sitting still as the industry is sitting on a couple of bcf of full capacity. For us it's about where do we align ourselves; do we align ourselves with flyby night, click in at our time for companies or do you align yourself with the large integrated companies that are also looking for an integrated solution from us, that's where we're spending our time and that's where we will built a new processing plants if we have the opportunities. What that also means is that those people are looking for NGL pipeline solutions, so if we built new processing capacity, most likely you will see it come together with people looking for demands on our Sand Hill system. As it pertains to other people that maybe more aggressively building -- again, I mentioned our contract portfolio; our contract portfolio is going till 23/6 [ph], unlike that is under any stretch of the imagination, a tremendously long time period. We do not have any volumes coming up for renewal until 2023. All the contracts that we have are iron-clad contracts that give us volumes deep into the next decade and then stretching to 23/6 [ph]. So we are very comfortable with where we're sitting here today, how we're doing the first expansion here in 2017, the second expansion in 2018. And then I haven't spoken about this today but I've spoken about it before; we have another expansion that we could do maybe in 2019 or beyond. What we're doing is, we're doing these faced expansions; what it does, it's just in time, it makes sure that we're not overbuilding, that we get the right returns and if in some way shape or form the Permian doesn't exactly pan out the way we had expected it, we're not sitting middle out of empty capacity.

[Gabriel Moreen:]

Thanks Wouter, that's helpful.

[Wouter van Kempen:]

Thanks, Gabe.

[Operator:]

Our next question comes from the line of Jerren Holder of Goldman Sachs.

[Jerren Holder:]

Thanks, good afternoon. Just going back to maybe to equity earnings in general, as we look at the first quarter of '17 and compare it to the second quarter of '17, there is a $25 million increase in EBITDA related to distributions from unconsolidated affiliates. Can you just remind us what drove that big increase? I know there is some growth from Sand Hills but it's still a pretty big number.

[Sean O'Brien:]

Yes, Jerren. And we did give some indications early on even as core that we see improvements. As you may recall, those distributions were dampened in Q1 related to Sand Hills activity in Q4, so you're right on spot. Sand Hills was the largest driver that we saw there, big driver in the increase and we expect that to continue as we see growth that Wouter talked about this year and to next year. Front Range was also up, you may recall in the first quarter we mentioned some timing around Front Range and some tax payments they made, so Front Range was definitely higher; so that's a good trend as well. And I did mention some issues around discovery and so forth but not a lot of that hit in Q1, that's more of a forward-looking -- I'm sorry, in Q2, that's a forward-looking component. So that business -- those businesses, pipeline businesses performing well; Sand Hill is the biggest driver, Front Range helping out quite a bit as well.

[Jerren Holder:]

Thanks. And still going forward as we sort of look at NGL, sort of equity earnings assets; so excluding discovery, the second quarter number should be a good number to sort of base case as we sort of grow volumes in Sand Hills and some of the other assets; that's a good sort of normalized number to work off of?

[Sean O'Brien:]

Absolutely. And again if Q1, if we didn't have those downtime on Sand Hills and Q4 and then there was that little blip with proper range, those are the key drivers between Q1 and Q2. So very good run rate to kind of model going forward.

[Jerren Holder:]

Okay. And then going back to gathering and processing volumes; and so if we think about the third quarter and compare it to the second quarter based on what you saw in July, should we expect the aggregate sort of average to be higher than the second quarter levels?

[Sean O'Brien:]

Yes. I think some of the numbers that Wouter covered are not insignificant and we're happy to see it. The Eagle Ford increase that we're seeing in July and it's kind of -- it's along the lines of what we were hoping for, we hope to see Eagle Ford by the time we got to the end of this year trending up, we saw that movement actually start to occur very strongly in July and we expect that to continue. He also referenced records in the DJ, right, and we referenced that or kind of bypassed project that we brought online that is just pushing the DJ well beyond where we have seen in Q2 as well. So those two things are clearly showing up as we get some near results around July. And then as you think about the rest of the year, although not seeing it yet, the SCOOP/STACK, that area we are anticipating, I think we have a slide that would indicate that we would expect to see that maybe later in Q3, early Q4, some really good sign post on that area as well, volumetrically. So the G&P business on the volume front as you think about first half of the year versus second half of the year, the outlook overall, it is much improved.

[Jerren Holder:]

Thanks. And just the last one, was there any producer settlements including in the second quarter EBITDA?

[Sean O'Brien:]

No. We called out the one that was in Q1, there was nothing in Q2.

[Jerren Holder:]

And in general, going forward should we expect any more of that, at least as far as this year is concerned, bits in what you see?

[Sean O'Brien:]

No, I would not expect them. I mean they popped up, it's the nature of the business Jerren but we don't have anything in our forecast.

[Wouter van Kempen:]

Jerren, I don't expect anything material.

[Jerren Holder:]

Okay. All right, that's it for me. Thank you.

[Operator:]

Our next question comes from the line of Faisel Khan of Citigroup. Your line is open.

[Faisel Khan:]

Thanks, good afternoon. Can you cover a little bit on the cost of some of the plans here? So you've got the corner plant I think which we're talking about is bringing in an estimated cost of $350 million to $400 million and then you're talking about another plant I think, new one, it will be about $395 million. Can you just give me an idea of what is the plant and what is the related infrastructure because some of the costs we're seeing for other plants that the G&P guys are building are closer to $150 million to $200 million for this sort of size plant.

[Wouter van Kempen:]

Yes, and those numbers that you have mentioned they are -- Faisel, are probably numbers that those are kind of in-sync as it pertains to just plant cost. So when we talk about plant cost, we always say it is both the processing side of the house and the gathering side of the house where we have fairly significant in-field gathering that we're building which obviously is reflective in the margins that we make in the DJ basin. So it is a little bit of an apples-and-oranges to pure high pressure central delivery point, that would obviously be significantly lower cost because that tends to be plant only.

[Faisel Khan:]

Okay. And then but some of these plants are basically -- there are additions or additional train, so I would have thought that you've already have a lot of the central gathering facilities in place, the pipe underground; so what would I be missing here because I mean the numbers are -- they would basically be implying that the cost of the plant is $150 million to $200 million, the rest of the cost is $200 million for some of these plants which is for the gathering systems which is more than what I would think. So I'm just making sure I understand what's going on here.

[Wouter van Kempen:]

Yes. So one of the things you should think through there is for instance, we have to build big turbine stations, compressor stations, out in the field to make sure that we can get the gas from the well to the plants; so those are kind of examples of things that we continue to build.

[Faisel Khan:]

Okay, got it. And then just -- on the sequential movement and I guess the logistics marketing and logistics business that quarter, there is sort of improvement there. Is that -- was that related to something seasonal or was there something else going on in the business that caused that improvement sort of sequentially quarter-over-quarter?

[Sean O'Brien:]

No, I know that the improvement predominantly is going to be driven by the things like I mentioned, Sand Hills, Front Range; as I mentioned, Discovery wasn't impacted by or key to the Canyon [ph] by some of the negative impacts that we did give you an outlook for the rest of the year. So definitely those things are driving it, Q1 was a little bit weaker as you think about our gas storage business, I think we talked about that on our Q1 call, that got a little stronger in Q2. And then you've got propane; because of the mild winter we didn't have a phenomenal, typically propane would be stronger in Q1 but it just wasn't as strong as historically because of the mild weather. So sequentially big improvement in that business, a lot of it driven by things that will continue and a little bit of strengthening in the gas storage business.

[Faisel Khan:]

Okay, got you. And then just on distribution growth, I know you guys have talked about this in the past and maybe you guys can be setting up the business to maybe talk about distribution growth next year. I mean how you're feeling about that right now between the quarter coming on the way it did?

[Wouter van Kempen:]

You know, you can't look at this as a quarter-over-quarter Faisel. Unlike I think what you got to look at in the longer term is how do we kind of guide towards -- what processing this company need to look like and what we've spoken about is we want to get leveraged between three to four times, we're sitting at 4.5 times, steadily taking our leverage down; our goal first and foremost is get leverage since 3 to 4 times. Secondly, we were going to get from a coverage point of view, we want to get to -- call it 1.2x; after we have those two accomplished then we will start thinking about what can we do from a distribution point of view, can we start increasing the distributions. And you know, part of this has to do with a lot of different things. Obviously, getting the right cost structure in the company and I think we're doing a good job on that, we're going to continue to deliver significantly over and above on the $200 million that we've taken out already. So -- but you've seen in Q2 as a run rate is probably the highest quarter in this year; as Sean mentioned, you will see a better run rate in Q3 and Q4. We'll continue to invest in things like technology, get better efficiencies, get better reliability, as a company we're putting some fairly significant growth in place that we feel very good about, it's significantly derisked, a lot of fee based in places that we like. All of those need to happen then in combination with where is the commodity going to sit and what does that look like and on Slide 6 of -- that we gave you in second half 2017 outlook, you clearly see where is the commodity sitting in the first half of the year, where is it sitting today as it pertains to strip; and then our guidance ranges. And you know what, NGL looks pretty good and that's a good place to be as a still largest NGL producer in this country. At the same time, both crude and natural gas are significantly lower than even with we've realized and the industry realized for the first half, you probably do need to see some commodity health as we've indicated when we rolled out our transaction and gave our guidance to make sure that we then get to the third piece which is increasing the distributions.

[Faisel Khan:]

Okay, that is clear. And then one last question, I just want to make sure I understand the sequential sort of increase in cost and then there is sort of -- the eventual decline in the cost structure of the company. So when you guys talk about higher costs associated with asset reliability, can you guys give me example of what that means, like what did you have to spend on to make the asset more reliable?

[Sean O'Brien:]

Some of that is plain turnaround, some of that were fizzle [ph] is -- the normal maintenance that we do, obviously that drives reliability of our assets but we were very, very centralized in Q2, that will continue by the way into Q3, some of that work but I think Q2 was the high peak. Some of that is also -- as you're doing work around the asset you're preparing for, which is a good thing that we are seeing growth come online, so you're doing some things to your assets and out in the field to prepare for incremental volumes. So that's what we saw in Q2, so a lot of that we expected, some of that was accelerated real quick, I know it wasn't part of your question but I mentioned, we've -- disinvestment in technology, we have that in our expectations this year but we've accelerated some of that as well and that hit in Q2. As you think about going forward some of that will continue into Q3, I think it's slightly lower levels; so hopefully you will see Q3 again as we've given guidance as second half lower than the first half. I will give you little more granularity, you expect Q3 to be low -- to be lower than Q2, and then Q4 even to be lower than Q3, so that's kind of how we're thinking about the rest of the year on our costs.

[Faisel Khan:]

Okay, makes sense. Thanks for the time guys.

[Sean O'Brien:]

Thanks, Faisel.

[Operator:]

Our next question comes from the line of Selman Akyol of Stifel Nicolaus. Your line is open.

[Selman Akyol:]

Thank you. I guess thinking about just sort of the north system in the DJ up there; it looks like your overall utilization was down from the first quarter, even though you saw fairly good strength within the DJ. So can you talk a little bit about I guess what's going on with the legacy systems up there?

[Wouter van Kempen:]

Yes, I think probably what you're looking there is -- you know, we have assets in Michigan that fall under our north business, so there are some things in there. Also maybe sales are predominantly treating that we're doing, sort of treating volumes fairly low margins but if you look at the DJ and by itself, I can guarantee you that those are significantly up from where we were in the first quarter.

[Selman Akyol:]

Got you. And then I'll just try this, so I think you referenced for the month of July you had 845; can you just say what the second quarter average was for the DJ?

[Wouter van Kempen:]

I don't have that here sitting in front of me but I'm sure that we can get back to you if we disclose that in detail.

[Selman Akyol:]

Okay. And then also just in terms of thinking about 2018, you've certainly talked about CapEx out there; can you just talk about your plans for funding it?

[Sean O'Brien:]

Selman, as we sit here today we're fairly well capitalized cash-on-hand of about $0.25 billion in the full; the full facility available. As we're thinking about next year, one thing I'll point out; these projects, they are spend at pro rata so the nice thing is it doesn't all hit one norm and some of it carries into '19. The majority of the capital we're showing you guys would be spend in '18. We would normally utilize our normal 50-50 cap structure, the dead markets are quite well right now, there are various options on the equity side of the equation and we'll definitely continue to look at those options as we go forward. I think the good news is don't need to do anything this year. And I think that one thing to keep in mind is that these projects, we give the multiple to these projects and they are very attractive, so my belief is when we do have to go out and raise some capital to fund some of these projects, that will be received fairly well.

[Selman Akyol:]

All right, thank you very much.

[Operator:]

Thank you. And our next question comes from the line of Chris Sighinolfi of Jefferies. Your line is open.

[Christopher Sighinolfi:]

Good morning guys, or good afternoon, I'm sorry. Thanks a lot for the color this afternoon, I just have a couple of clarification questions. I guess Sean to pick up on that last one was with regard to financing, with the majority coming later this fall, just wondering you do have some -- obviously, some equity and you have some -- you also have some hybrid instruments on the balance sheet; I'm just wondering if that hybrid market is of interest to you? You mentioned sort of equity like instruments in that response, I'm just wondering where sort of the pecking order is at this point?

[Sean O'Brien:]

Yes, here is how I look at it Chris. When I talk about the maturity on the bond, obviously we talk about flexibility, those market seem to be pretty strong right now. So the question, I think it's fair to think that we would go out and reap [ph] that, so -- and retake that out in the markets. Then what you're left with obviously is funding some of the new growth as we get out of '17 because we have enough cash-on-hand to handle the capital. As you think about the products that we might use, I think you're referring -- obviously, there is some preferred projects out there for the high yield customers that have some -- definitely some beneficial leverage, especially with the rating agencies, cause this -- and we're definitely looking at those. You got to look at the demand for the traditional equity markets, we've been massive equity raisers over the last five to six years, we're very experienced but some of those markets have gotten a little tight, fund flows may not have been as strong as you'd like; so we are looking at other projects and few directly, things like preferred and stuff like that. I won't tell you that's exactly what we would use but there seems to be -- as we sit here today, some beneficial treatment if we were to utilize some of those projects but again, we don't equity in the short-term so we'll have to reassess that next year when we may need some stuff. Last thing I would point out is, we've -- over the years we've been utilizers of our ATM program as well which is a nice efficient way to raise equity.

[Christopher Sighinolfi:]

Okay, that's really helpful. Some of that -- some of those markets we don't look as closely, so it's helpful to get your perspective. I guess switching gears a little bit, there were some discussion of the equity earnings and you had mentioned in the release, some of the recognitions on discovery and some of the anticipations there as we move through the back half there; I was just curious Sean, with regard to the distributions that you anticipate receiving from your JV affiliates, it's been pretty low in the first half via relative to what you had put forth as a full year expectation. I'm just wondering what at this point are you thinking for the full year given; A) what's happening here today than your commentary about Discovery?

[Sean O'Brien:]

So Discovery would be an impact to obviously distributions and earnings. So I think you're picking up on that right, Chris. At the end of the day, I was trying to guide guidance more holistically, we gave -- obviously, we tightened the range on EBITDA -- our adjusted EBITDA and Dcf tied to the commodity and then I definitely gave you some more clarity on the maintenance side of the equation and the growth capital. On distributions, I think your thought process is right, I've given you a negative and we've been running a little bit lower; I mean you had obviously the impact on Sand Hills in Q1 which affects distributions in excess. And then that won't come back this year, even though the run rate has come back, that's a permanent hit. So I think you're thinking about it right, I don't -- you know, I haven't given direct guidance around modeling that exact input but I think you're thinking about it right in terms of lower levels tied to Discovery but -- and lower levels tied to what happened in Q1. So I think your point is, would you be on the lower end or lower, I think that would prior accurate.

[Christopher Sighinolfi:]

Okay. And then I have two other questions related to the hedged disclosures on Slide 15, both as implications of what's stated here and then just practice in general. If I look Sean at the third quarter, fourth quarter, first quarter; NGLs hedged and the percentages that you gave there and sort of back end of what's an implied equity number, it looks like from where you were in February to where you are back half of '17 and then into '18, that's a declining number in terms of equity NGL expectations. I was just wondering is that due to contract restructuring, am I seeing that right, A), and then B) is that due to ongoing contract restructuring or is there something else going on there?

[Sean O'Brien:]

Yes, some of that is contract restructuring. We've talked about the contract realignment efforts, we didn't talk that much on this call Chris, but there is definitely some of that going on as you get into the back half for the year. And then you've got the components at the end of the day, we're hedging; I mentioned the opportunities that we were able to get in and hedge or the butane and the propane side of the equation, so we're hedging those quite heavily but you still have -- on that same position you still have the heavier end of the barrel which we haven't been hedging as much. So it gets to our waiting in those particular composites and then what we can hedge and the entire to some movement in our contracts which is favorable around the rest of the year as we continue to move to fee.

[Christopher Sighinolfi:]

Okay. And with regards to -- I mean the profile for hedges, we've talked about this when you guys did the restructuring transaction in January, we're just towards the depth of the NGL market and the degradation of it. I think you had some gas hedges at that point in time for the first quarter, we've seen those, we've got some NGL hedges. I'm just wondering, is there something about when you look at second quarter or further out in the curve, the prices aren't what you want? And then second to that, and maybe this is the answer; you were mentioning earlier that the hedges you're putting in place are done at or above the one-time coverage but in response to Faisel's question about distribution growth, you were talking about a target of 1.2. So is the goal unlike long-dated future hedges to have them priced such that your 1.2 times covered or are you comfortable locking in hedges at 1.0 when you're aspiration is 1.2? Just help us understand that.

[Sean O'Brien:]

Lot of questions in there but let me take it this way. We're obviously trying to target to the 1.2 coverage ratio, that would include hedging as a tool, there is also increasing our fee based margins at strong returns, there is all the things that we talked about today around continuing to drive efficiencies in our costs and those types of things. So to get to the 1.2 it's a very broad strategy tied to all the things that affect our cash flow. As you think about now, just utilizing the hedging that is one element that we've utilized and we will continue to utilize, we have tearing, without giving you as the full story on how we approach it; we have tearing. And -- so there are levels that we would say we might be willing to extend that at 1.1 cover, some levels we've made at 1.2 and so forth to get us in an aggregate to a point where we're comfortable, obviously in the cash flows that we're going to drive in the future. The more volatility we can take off the table by hedging at those levels, the better. And then there is this duration of time, right; we think our fee based percentages of our cash flow are going to overtime, they have grown significantly over the last two years and we're -- and based on the growth outlook that we've given you, that will continue to grow. So that can change the strategy on how much we want to hedge at various tiers but we are hedging in many cases at 1.2, at 1.1, maybe at 1.05 in the aggregate. And again, as I mentioned earlier or to another question, we never really hedged at the 100% level, we're trying to target that 80% fee or hedge. As a great tool, I think the last question is you asked is, are you not always seeing the prices that you want; that is true. Obviously we saw some movement in gas in Q1, so you can see that we were able to get some stuff done in Q1 of next year on gas that was there for a little bit, it popped out and right now the opportunities we're seeing for the remainder of this year are back to propane, butane this year and as I mentioned, we were even able to get out and do some propane and butane in Q1. So yes, sometimes we're not seeing the right prices, we're seeing either back gradation or not enough contango [ph] shape to get out there and hit our tiers. So hopefully, I think I tried to answer all your questions.

[Christopher Sighinolfi:]

It's very helpful and your responses to the other questions. Thanks a lot guys, I appreciate it.

[Sean O'Brien:]

Thanks, Chris.

[Operator:]

Ladies and gentlemen, this does conclude the question-and-answer session. I would now like to turn the call back to Wouter van Kempen for closing remarks.

[Wouter van Kempen:]

Thank you all for joining us today. As always, if you have any follow-up questions, please get Irene or Andrea [ph] and we look forward to seeing you soon. Have a good day.

[Operator:]

Ladies and gentlemen, thank you for participating in today's conference call. This does conclude the call. You may now disconnect. Everyone have a wonderful day.