Noble Midstream Partners LP
Q3 2017 Earnings Call Transcript

Published: 1 Nov 2017

[Operator:]

Good day, and welcome to the Noble Midstream Third Quarter 2017 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Chris Hickman. Please go ahead.

[Chris Hickman:]

Thank you Steve, and good afternoon everyone. Thanks for joining the Noble Midstream Partners third quarter earnings call. With me today to review our results is Terry Gerhart, CEO; John Nicholson, COO; and John Bookout, CFO. Following our prepared remarks, we'll open the call to questions from analysts. Our third quarter earnings release and supplemental slides which include updated fourth quarter guidance are on the investors section of our website and nblmidstream.com. Upon filing later today, our 10-Q will be available on the same location. As a reminder, today's discussion will contain forward-looking statements and certain non-GAAP financial measures. At this time, I'll turn the call over to Terry.

[Terry Gerhart:]

Thanks, Chris. Last month marked one year from our IPO and I'm very proud how we have consistently improved Noble Midstream's outlook over the last 12 months. Achievements in the third quarter include successfully bringing online our first central gathering facility in the Delaware Basin, and our third-party gathering system in the DJ Basin. These are two projects that are instrumental to our near and long term growth. Additionally, this month we had a gas compression to our service offering across all of Noble Energy's Delaware Basin acreage. This service is complementary to our Blanco River gas gathering system and adds to our existing oil, gas and produced water gathering services. Also in the third quarter we again established new records with key financial results allotted by 36% increase in net EBITDA compared to the second quarter, a 4.7% distribution per unit increase, distribution coverage of 2.4 times, and an annualized leverage of 1.1 times. I believe the successful execution of our two recent growth projects combined with our strong financial position is foremost to all of our accomplishments over the last 12 months. Looking ahead we expect 2018 capital will focus on additional CGFs and infrastructure in the Delaware, and shift from the initial infrastructure build-out in the Laramie River development company in 2017, two the initial infrastructure build out in the Green River development company for Noble Energy's Mustang development in 2018. We will also continue to invest in more connections in Noble Energy's Colorado River and our third-party customer in the DJ Basin. I expect to continue our 20% annual distribution per unit growth objective in target one dropdown per year including 2018. We're committed to maintaining our financial strength building on our successes thus far in 2017 with two acquisitions funding our first to Greenfield growth projects, and distribution increases faster and greater than initially expected. Our strong financial performance combined with our ability to sustain 20% annual distribution per unit growth through time, positions Noble Midstream Partners well now and into the future. And with that, I'll turn the call over to John Nicholson for an operations update.

[John Nicholson:]

Thanks Terry. It was an exciting quarter for NBLX with the startup of our growth projects in the DJ and Delaware basins. In the Delaware we are excited by the initial results of our first central gathering facility which were especially impressive given third quarter volumes we generated from a partial quarter with only 10 wells connected. With a strong results from these wells, we kicked off a debottlenecking project at the Billy Miner CGF immediately following startup of the facility. These facilities were built to be expanded and with a few piping modifications, we increased oil capacity by 50% up to 15,000 barrels of oil per day while doubling produced water capacity to 30,000 barrels of water per day. This expansion was done during the short shutdown and required less than $100,000 of capital. In addition to increased capacity, we had over 98% uptime reliability at the facility in the first month of operations. Blanco River oil and gas volumes for the third quarter averaged approximately 4800 barrels of oil equivalent per day, while produced water volumes averaged over 7500 barrels of produced water per day. Fourth quarter volumes should grow at Billy Miner as a result of the debottlenecking projects in a full quarter production from all 10 wells. Our project execution combined with better than expected throughput certainly makes Billy Miner a successful project. One of the supplemental benefits is the amount of knowledge and learnings we've gained will be applied to our upcoming facilities further enhancing those projects as well. As a reminder, Billy Miner represents one-sixth of our planned 90,000 barrels of daily oil capacity by mid next year. We remain on schedule to bring the Jesse James CGF online in December or capacities will match the upgraded capacities of Billy Miner. Moving over to the advantage pipeline, daily throughput averaged 36,000 barrels during the quarter exceeding our expectations. We are forecasting 50,000 to 60,000 barrels of oil a day in the fourth quarter, an increase of more than 40% versus the third quarter. This is driven by a full quarter of Billy Miner and the connection of Jesse James along with third-party barrels. Adding to our excitement in the Delaware, yesterday we announced we will be providing high pressure compression services across Noble Energy's Delaware acreage beginning in 2018 through our Trinity River development company. We will invest $50 million to $60 million for approximately 250 million cubic feet per day of high pressure compression capacity. Compressors will be staged into service to closely match Noble Energy's volume ramp. This is a complementary segment to our existing facility and infrastructure designs and would have otherwise been a third-party operating expense for Noble Energy. We stay quite busy in the Delaware and are excited to have taken our first step towards what we expect to be a significant growth in the basin. Moving up to the DJ Basin, we began gathering volumes on our oil and produced water gathering system for our third-party customer in the DJ Basins in August. The system currently includes over 60 miles of pipe and has four well pads connected. The 12 inch 35 mile transmission line is complete and connected to Grand Mesa in Lucerne, and White Cliffs in Platteville. Third quarter oil volumes averaged 5000 barrels of oil per day and 15,000 barrels of oil per day in September alone. Activity on this acreage remains consistent since August at two rigs and one frac crew. In the fourth quarter, we anticipate connecting one additional well pad which should contribute to continued gathering growth in the fourth quarter. To date, we have invested approximately $89 million of capital in the Laramie River development company and estimate approximately 100 million to be invested for the full year which is more than 10% below our initial budget. Gathering throughput and activity to-date is well ahead of our initial expectations which certainly enhance our project returns and make it easy to understand why we're so excited about this project heading into 2018. The continued growth from the Colorado River DevCo should certainly not go overlooked. Over the last 12 months oil and gas gathering volumes are over 30% above our IPO forecast. In the third quarter, oil and gas gathering volumes grew 14% from the second quarter with only $5 million of capital invested showing the continued success of our sponsors drill program and completion techniques. Also in the DJ we've started construction in Noble Energy's Mustang development area where two rigs are currently running. We expect our oil, gas and produced water gathering system to be online late in the first quarter of 2018. The expansion of our fresh water delivery system is expected to be completed by the end of this year. Third quarter fresh water volumes declined 5% as we saw DJ Basin completion activity reduced by two crews beginning in August, one for Noble Energy and one from our third-party customer. We do not expect any changes to current activity levels in the DJ Basin which is why fourth quarter fresh water volumes are down from the third quarter. However, fresh water per well across the basin remains strong and well ahead of our plan. Our 2017 capital guidance midpoint has increased $10 million for gross and net. This primarily is a result of spending in Colorado River DevCo where we are beginning to expand the gas gathering capacity of our system in anticipation of continued growth in 2018 and beyond. Early in 2018 we’ll be connecting our gathering system to an additional third-party delivery point which is anticipated to increase our wells ranch gas capacity by 14% to 200 million per day. Our teams has had the third quarter circled our calendars for several months and I'm pleased with the accomplishments in the quarter and I certainly look forward to continuing to execute on the milestones ahead of us. We certainly have a deep inventory of projects and are well positioned for a very exciting 2018. With that, I'll turn it over to John.

[John Bookout:]

Thanks John. Due to contributions from our inaugural dropdown transaction in June and new quarterly records and gathering volumes, we are pleased to report another strong quarter with new records for key financial metrics. A 29% increase in oil and gas gathered volumes to 95,000 barrels of oil equivalent per day during the third quarter drove quarterly gross revenue of $63 million with 62% or $39 million coming from our gathering segments with the balance from our fresh water delivery segment. Total operating expenses were $20 million which include $14 million in direct operating expenses resulting in operating income of $43 million for the third quarter, a 14% increase sequentially. We expect margins on our new systems for SRC and in the Permian to improve as volumes ramp to the balance of the year and into 2018. Net income for the quarter totaled $44 million with $42 million attributable to the partnership which represents $1.15 per limited partner unit for the quarter. Gross to net EBITDA upset records. We reported gross EBITDA of $48 million, a 15% increase over the second quarter. Our EBITDA net to the partnership totaled $46 million which increased 36% versus the second quarter. This was due to our dropdown transaction system for opening Colorado River and contributions from the startup of our SRC and Permian systems. Removing the impact of the dropdown transaction, third quarter EBITDA attributable to the partnership increased approximately 13% versus the second quarter highlighting the organic growth of our assets. Our gathering segment continues to perform well and would have covered the entire distribution by 1.5 times assuming no freshwater contributions at all. Additionally for the third quarter 68% of our EBITDA came from our gathering segments up from 58% during the second quarter and we expect this trend to continue into next year as our Permian gathering business continues to grow and scale. The partnership recorded $41 million of distributable cash flow which represents $1.14 for LP units or $4.56 per LP unit on an annualized basis resulting in coverage of 2.4 times on an increased distribution of 4.7% above the second quarter. The distribution now sits 24% above the minimum quarterly distribution after just four full quarters as a public partnership. For the quarter approximately 60% of our distributable cash flow is able to go towards funding capital projects and debt repayment with less than 40% to satisfy our quarterly distribution. We believe we are uniquely positioned to cash flow fund higher portions of our organic program than others in the gathering and processing space. We ended the quarter with liquidity of $161 million consisting of $11 million in cash, and $150 million remaining on our $350 million revolving credit facility. Looking to the fourth quarter, the partnership expect continued growth in volumes and expects between 15% and 26% growth in oil and gas gathered volumes to between 110,000 and 120,000 barrels of oil per day more than a 20% increase from the third quarter. Produced water volumes are expected to grow 60% versus the third quarter due to continued growth in Colorado River and anticipated growth as well as - a full quarter of contributions from our SRC and Permian systems. We expect gross EBITDA $48 million to $55 million with the midpoint reflecting a 7% increase from the third quarter. EBITDA net to the partnership is expected to be between $45 million and $52 million, a 5% sequentially to third quarter. Our full-year outlook has been updated to reflect our strong third quarter and increased fourth quarter expectations. We expect oil and gas gathering volumes of 86,000 to 88,000 barrels of oil equivalent per day a 40% increase versus our throughput in 2016. We now expect full-year 2017 EBITDA to be between $175 million and $182 million or $151 million to $158 million attributable to the partnership. Distributable cash flows is expected to be between $131 million and $140 million for the year with coverage to be between 2.1 and 2.2 times. As John mentioned we remain busy on the development front as highlighted by the addition of our compression service segment in the Delaware. This segment is highly complementary to our existing gas gathering system and captures additional share of the infield gathering value chain. The segment will begin contributing to our results in the second quarter of 2018 and should show similar 5 to 5.5 times organic build multiple through time similar to our existing gathering businesses. This is also in line with our goal of adding to our core midstream services at attractive 15 or better rates of return. The compression segment also fits our strategic and operational objectives adding additional operating leverage to Noble Energy's Delaware program which also results in cost savings for our sponsors. Our corporate and business development team during 2017 has consistently improved the growth outlook and long-term run rate of our business through two acquisitions and now the addition of this compression segment. We feel that our opportunity set both related to Noble Energy but also to third parties is robust. We take a measured approach to additional opportunities to expand our portfolio and we believe we will continue to be successful through time and enhancing our growth outlook and making NBLX a more dynamic midstream service provider. With that Steve, we'll open the call for questions.

[Operator:]

[Operator Instructions] And our first question comes from David Amoss with Heikkinen Energy. Please go ahead.

[David Amoss:]

Just a question on the compression business, just thinking about how to model the growth potential there. If we just align with your CGF capacity coming online is that good enough to get us through 2018. And then any comments you can make about kind of longer-term need for additional CGFs and potentially compression in the future?

[John Bookout:]

In terms of the compression segment on the capital side, you'll see the initial funding of that segment occurred at the end of the first quarter and at the beginning of the second quarter. We would expect both in 2018 but through time the kind of volumes for that segment to mimic what you have modeled for the gas gathering segment.

[David Amoss:]

And then any comment on target return for that segment longer-term?

[Terry Gerhart:]

Yes David I think in the prepared remarks we mentioned that this is the returns we really targeted were similar to how we think about kind of cost to service methodology on our gathering segments and I feel pretty confident in a 15% rate of return on this segment more better through time.

[David Amoss:]

And one last one just a quick modeling question here it seems like the fee structure for the frac water business differs across the different DevCos. Can you comment on potentially you know how different DevCos are doing the per barrel fee for water?

[John Bookout:]

I think when you’ll look at the three different fresh water segments one is for SRC Energy and two IDP areas for Noble Energy. I think the base service fee is consistent between the two Noble Energy areas. The difference being that in East Pony you have just a fresh water system and no produced water system, but due to qualification we manage the trucking of water barrels from the well site which is passed through to Noble Energy. So that likely explains the difference between the Noble Energy structure.

[Operator:]

Our next question comes from Georg Venturatos with Johnson Rice. Please go ahead.

[Georg Venturatos:]

Wanted to just touch on the Delaware side obviously you got to have some heavy lifting on the project fronts and nice to see successful completion with the first gathering facility. But just looking out to the first half of 2018 with Jesse James coming in December. Anyway you can maybe provide a little more detail on the timing of this kind of first half 2018 expectations in terms of when those would be coming online?

[Terry Gerhart:]

Sure, I’ll have John do but with the next three beyond that are going to be - by the first half John you can get in details of when you.

[John Bookout:]

Yes, so from a timing perspective Georg you’re looking at probably the first one in 2018 sometime in March and then thereafter that every 30 days or so is kind of our plan internally.

[Georg Venturatos:]

And then on the gas compression side and John had mentioned we're kind of looking at that 5, 5.5 times build multiple and in working into that. Could you guys provide kind of a timeframe to work into that multiple from startup of where we’re going to be in the second quarter of 18?

[John Bookout:]

I think we'll put in a fair amount of compression that coincides with how John mentioned will bring on our facility in March, April and May and then grow into those. We expect to kind of compress to that build multiple likely in the kind of 2020/2021 timeframe, we'll be pleased with the results going into 2019.

[Georg Venturatos:]

And last one from me and more general but yes just in terms of drop preference and you guys obviously have reiterated the plan for at least one year in your slide deck certainly outlines a lot of opportunities which is good to have but the DJ and Delaware, but how much do you think about that target that you all have thrown out there in terms of 50% EBITDA from the Delaware by 2020 you know what do you think about near-term potential drops or does that - is it purely on multiple basis and that’s kind of secondary?

[John Bookout:]

I think obviously we think about everything we do in context of our overarching strategic goals, Permian contribution balance in terms of EBITDA is obviously very important one. I don't think there are predetermined transactions and we look back to the IPO and what was the first dropdown in that point in time in terms of our planning process and the dropdown that was consummated in June was different than that. So we are little bit hesitant to speculate but obviously there's two parties involved it’s either negotiation, discussion between Noble Midstream and Noble Energy and one of the variables that goes into that entire discussion is to have your Permian long-term goals. But we've a pretty robust quarterly review processes as it pertains to all the assets at the wholesale level.

[Operator:]

Our next question comes from Jeremy Tonet with JPMorgan. Please go ahead.

[Jeremy Tonet:]

Just want to start off thinking about the crude oil transmission business in Delaware seems like you guys have been quite successful gathering volumes to advantage pipeline there. And was wondering you know the partnership's appetite or maybe the family appetite to kind of participate in further downstream takeaway expansion out of the basin given that NBL is going to have such a large equity position there volumes to be moved and being able to lever that into something on the infrastructure side wondering if you might be able to provide any thoughts on that topic?

[Terry Gerhart:]

Well I’ll go ahead and start. This is something we’re not going to get to any specific details on but more certainly aware of that and that's something that we are investigating. I guess I’ll turn it over to John Bookout as he is leading the business developments side to add little more clarity.

[John Bookout:]

I think you highlighted exactly why there is a high degree of interest in understanding that opportunity. We’ve been monitoring and having all the right discussions with digital projects so kind of the often talked about longhaul lines that come out of the Permian. I think at least from the NBLX perspective we have the benefit of being able to be very measured to make sure that it makes sense for the sponsor to make sure that all of the characteristics of a potential longhaul pipeline project are - position the asset to be successful through time through flexibility. So we are fortunate that we don't need this to be part of the portfolio but we clearly recognize that it’s an opportunity for both entities.

[Jeremy Tonet:]

Thanks for sharing your thoughts there. Just want to turn to the water business and you guys continue to exceed expectations there and you kind of talk about a step down into the next quarter because of activity levels but I am just trying to understand better it seems like you guys keep coming well ahead of what you guide to there, is there an element of conservatism with this step down or could just provide some more thoughts on that?

[John Bookout:]

We often talked about our thought process around forecasting this business in terms of the kind of cash flow quality versus the gathering segment. I don't expect the way that we manage the business and forecast the business to change from that perspective because we think it's the right way to do it. In terms of conservatism in the past versus what was were saying about the fourth quarter clearly we still are conservative but there are changes in activity that are in our numbers well as in prior quarters it was just the way we choose to forecast the business we’ve seen some reduction in completion activity from Noble but also from SRC Energy beginning I think towards the end of the third quarter.

[Jeremy Tonet:]

Just one last one if I could. We definitely would echo your sentiment as far as having almost 2.5 times coverage truly puts the partnership in the unique position here. And just wondering as you think about what you can do with this strong financial position. You talked about greater ability to internally fund all kind of CapEx here you would have the potential to lift up the dividend faster than your target rate if you so chose as he did recently but even it seems like you have the opportunity if you want to fold in the structure as part of remove the IDRs which has become something that topical in base these days. Just wondering how you guys think about using this very strong position you have is kind of 4G to opportunity that are most others in this space?

[Terry Gerhart:]

I’ll go and start this just from the level of comfort we are pulling from this Jeremy we certainly locked the strong balance sheet right now we’re looking at funding the capital program also and looking at other opportunities that are out there. We had a lot of internal discussion of how we use it and what’s the proper coverage level but John Bookout can probably give you some more details around that.

[John Bookout:]

I think tell you that echoes my opinion as well I think in terms of throwing the distribution faster that's not anything that we really focused on right now and we talked in the past about how 20% business the right long-term growth rate for us and that we really believe it’s very durable through cycle and we continue to expand the business and extend that runway of 20% growth I think what will do with it the short answer is we like our financial position but will always be opportunistic. We’ll continue to be opportunistic I think your earlier question longhaul was a good example what you could do with a portion of that coverage and leverage that would make sense long-term I think advantage is another example of something that we would look to do in the future should opportunities arise I think from M&A perspective we’ll always be focused on assets that we can do more with than anyone else and take advantages is certainly an example of that.

[Operator:]

Our next question comes from next question comes from Bernie Colson with Seaport. Please go ahead.

[Bernie Colson:]

Just some more I guess philosophical questions about the dropdowns with Blanco River stream at about 40% ownership how do you think about what company capture the kind of build economics of the projects there and how does that influence the potential timing off of an additional drop-down of that particular asset just want to know your general thoughts about how you think about that spread between field economics versus the Buyer economist.

[John Bookout:]

Because I think it’s a good question obviously asset maturity was an important part of thinking about our inaugural dropdown transaction right now I think NBLX is exposed to kind of 50% to organic billable force and longer river would get the other 50% roughly through acquisition from our sponsor in the future. I think it’s a of variable in the consideration terms of asset maturity but we look at this every quarter to make sense to make sure that were on top of how the holdco assets are performing and we look at how they fold into our overall growth objectives as well as the balance sheet I think it's really a kind of fluid conversation that we have with Noble Energy every quarter to understand the timing of each assets.

[Bernie Colson:]

And then I think you said on the call how much is drawn on the $350 million facility at this point?

[John Bookout:]

200.

[Bernie Colson:]

So 200 is drawn okay, so yes you find yourself in a situation where you got as you pointed out really great coverage and low leverage and talk a lot about being able to fund a lot of that organic spending internally. But when it comes to dropping these assets down in 2018 wondering your thoughts on how you finance something like that given the difficulty we’re seeing in equity markets and just overall difficult capital markets?

[John Bookout:]

Good question, I think as we mentioned earlier on the call there's no predetermined transaction in terms of financing mix as it start early comment on that without timing and without specific transaction. I would just highlight the two that we've done this year, the advantage pipeline acquisition we put on the revolver, the dropdown risk was larger and the advantage we took a look at kind of aggregate financing in this couple year. I will say we're 1.1 times leverage we still good about funding things with our credit facility and would also highlight that inspite being $200 million drawn on it, it does have an expansion feature, an accordion features that you could take the facility up to 700 million. So we feel very good about financing capacity going to the next year.

[Operator:]

Our next question comes from Ethan Bellamy with Baird. Please go ahead.

[Ethan Bellamy:]

You guys mentioned a third-party connection in August, you said SRC Energy or did you pick up somebody new?

[John Bookout:]

No that's SRC Ethan and that’s the - just to be clear we connected our system on the oil side in the Grand Mesa and White Cliffs in the DJ and then produce water system in the NGL and we make connections in August and September to four well pads and we expect an additional well pad in the fourth quarter on that system and then we’ll obviously have many more in 2018 and beyond given the acreage dedications to that system.

[Ethan Bellamy:]

And then can you refresh us on the parent's historical typical timing for the 2018 capital plans and when we are to hear about 2018 CapEx expectations?

[John Bookout:]

I would expect you'll hear 2018 sometime in early 2018 likely in early February I would think if that’s the timing of our call.

[Ethan Bellamy:]

And then lastly on the Noble call this morning, it sounds like you guys have the parent has a quality problem ahead in 2020 whereby it comes online where they will get to choose between buying back stock or paying a dividend or accelerating onshore U.S. activity. Have you thought about, I know you thought about it but can you give us any sort of insight into how that excess cash flow pie might be carved up and if indeed we had to sort of thinking that there's a material chance that we see rig count acceleration in 2020 I know it's long way down but sort of think longer term just want to capture in our model now?

[John Bookout:]

Ethan I don't think we're going to speculate on that or defer that question to sponsor.

[Operator:]

Our next question comes from Barrett Blaschke with MUFG. Please go ahead.

[Barrett Blaschke:]

Just a quick question, I know IDRs have become a topical trends or topical point of discussion within the MLP world, but given that you guys are still less than $0.5 million in this quarter going to the GP, cash flows in total. Do you feel like this is something you really need to address at this point, do you get a lot of questions on it or are people pushing it that hard?

[Terry Gerhart:]

This is something that has been discussed probably since IPO I can remember getting some of the questions on that. We are early into it as you acknowledge, I’ll probably to get into the finer points of it probably pass it on to Bookout to provide some more insight on it but it’s not something that I believe we’re planning on doing right now.

[John Bookout:]

We get that question a fair amount probably more than we think is warranted given where we are in terms of the maturity life but we recognize the kind of long-term kind of clock that is on the structure that we have and when it becomes a problem if you let it become a problem. And for many years away from that we expected when we get there have all the conversations and be able in a prudent way for both entities.

[Operator:]

Our next question comes from Chris Tillett with Barclays. Please go ahead.

[Chris Tillett:]

I was just wondering if you guys could give us an update on your thought process around the production coming off of the Clayton Williams acreage and what might make sense there from an inter basin transfer perspective and then maybe also when we might know more definitively?

[John Bookout:]

The two of the facilities that are coming online in early 2018, the first and the third actually will be primarily serving Clayton Williams acreage and kind of the rigs that will be - that are running down there. Those facilities are likely to be tied in to advantage at least for an interim solution to move them out of basin. As we highlight in the earnings material that is dedicated to us for transmission but does not have a permanent home and so we will use that as we look at other opportunities as a value lever for us. So you could see us do any number of things there I mean could potentially build another line when needed you could build another line to different location. You could use it again as value and in another opportunity so more on that in the future.

[Operator:]

Our next question is a follow-up from David Amoss with Heikkinen Energy. Please go ahead.

[David Amoss:]

Just wanted to get your take on what you're seeing in terms of potential issues with third-party gas processing in the DJ and how that potentially could be impacting activity levels in the beginning of next year?

[John Bookout:]

As we mentioned in the call in the Colorado River system, the Wells Ranch portion of that, the portion that is on a third-party system. We have a pretty robust plan in place to expand that over the next 12 to 18 months. We'll expand it by 25 million to 200 million a day here in the first quarter and then we will expand it further to almost 275 million a day over the course of time over the next two years. It's important to look at how that system works and that we gathered to compression that is proprietary to the NBLX and NBL family and then it goes into a third-party system. So we’re very confident and comfortable that our volumes will move, we’ll employ a similar set up in Mustang when that gathering system comes online we’ll have a central point that we deliver into that has some proprietary compression for the family and really ensures that we can move our volumes moving forward. In addition to that, you know about the two DCP plants that are being built. The first is scheduled online for the back half of next year and the second in 2019 and that’s a pretty big increase in DCP’s capacity in the basin almost 50% not to mention Anadarko and Western. Their family are building additional plants as well and some of the volumes in Mustang will move to them.

[Operator:]

And this concludes our question-and-answer session. I'd like to turn the conference back over to Chris Hickman for any closing remarks.

[Chris Hickman:]

Yes, everyone, I'll be available this afternoon for any follow-up questions that you have. We really appreciate your interest and participation and looking forward catching up with you guys next quarter. Thank you.

[Operator:]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.