Q2 2020 CorEnergy Infrastructure Trust Inc Earnings Call

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Hello, and welcome to core energy second quarter results call.

At this moment.

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If you have any question you may see have any.

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Please remember this call is being recorded.

I would now like to turn the call over to Mike Grubbs, especially with <unk>. Please go ahead Sir.

Thank you. Thank you everyone for joining core energy infrastructure Trust second quarter 2020 results call I'm joined today by Dave <unk>, Chairman President and CEO.

Second quarter tenants you should also be available later today and you actually see filings cite any investor section core I did you talk right.

The press listen. Thank you include additional non-GAAP metrics and a reconciliation to our GAAP results. We encourage all of you to review our complete disclosure and those metrics.

Additionally, due to ongoing work, so well liquidity and resolve to register she is working.

Well not typical question and answer session at the end of this call.

We recognize that many of you may have questions. We're presently I point that once our ability to make further discussions at this time.

Finally, I would like to remind everyone statements made during the course of this presentation. There are not purely historical maybe forward looking statements are subject to say, although protection and dirty applicable securities laws.

Important factors that could cause actual results could differ materially from does in the forward looking statements are discussed in our filings with the FCC. These documents are available on the Investor Relations section of our website, we did not update our forward looking statements.

I'd like now I'll turn the call over to Dave <unk>. Please go ahead.

Hey, good afternoon, everyone and thank you for joining us on the call today I'll mention in advance that today's call will again be brief and we're only provide management's remarks.

We've been doing our best to keep all of your apprised of our results through regular press releases and FCC filing updates.

Putting the difficult resolution to our pine deal Lgf system and ongoing efforts on gigs.

Most importantly, we're now shifting our focus to rebuilding our dividend generating asset base and making progress on acquisition efforts.

The first half of 2020.

It was the most challenging period, our company's history the impact of the global health crisis on the energy markets resulted in severely diminished revenue and asset values for tenants.

Our leases have provided revenue protection in difficult times in the past they cannot ensure payment during the unprecedented times weve faced beginning in March of this year.

As you know we sold the pando liquids gathering system in Wyoming to U.P.L. at the end of June after they rejected our lease some bankruptcy and rejecting the lease their stated intention was to start construction from there well pads to another system bypassing our system entirely.

Construction would have severely diminished the value of our plan to liquids gathering system and would've been disallowed under our lease creating an indemnification claim for us under normal times, even in distressed times.

However, while we believe we had a valid damages claim for these actions under our lease the U.P.L. bankruptcy estate was so severely diminished the no value recovery was going to exceed their second lien position, including the value of our unsecured claim for damages.

Unlike the 2016 bankruptcy, where you P.L. had an estate value of more than 6 billion and could pay all claims just four years later the estate was valued at only a billion.

In consultation with the lender partnered with us on the LG S. system quite deep familiarity with U.P. also stayed from that prior bankruptcy. We believed the sale was in the best available course of action.

The proceeds were approximately equal to you appeals cost of the proposed construction project.

And they were turned over to the lender in exchange for fully discharging the associated subsidiaries secured debt of approximately 32 million.

We are extremely disappointed in the pineal outcome is an example of the worst aspects of a bankruptcy process amplified by market and economic conditions in short the low gas price environment. It pandemic created a perfect storm that swaps that asset and the protections we would have normally been able to deploy to protect our interest.

We've also been challenged by the refusal to pay rent from our tenant at the Grand out gathering system, However, with oil prices recovering into the Fortys. The tenant recently resumed transporting oil on the system.

And while they have not paid rent since April the leases clear there went to do whether or not oil is flowing I cannot provide further details today around our gigs conversations, but we're working to resolve these issues directly into move forward.

In contrast, remote gas Omega assets have performed well despite all the challenges in 2020.

Illustrating the resiliency of other types of assets that we have in our portfolio.

Oh, gastro make our natural gas transportation and delivery systems with long term capacity contracts and therefore less sensitivity to commodity price fluctuations in fact, well guess entered into an agreement with a subsidiary of aspire to construct an interconnect with their pipeline expected to be completed in the fourth quarter.

As well as entered an additional 10 year firm transportation services agreement with Amarin energy starting in about the same time.

The final asset we're managing is our liquidity.

Our balance sheet is strong with more than $110 million in cash at quarter end, we're mindful of our bondholders and preferred stockholders priorities will be prudent in our use of this resource for the benefit of all of our stakeholders.

With this cash in our bank lines of more than 55 million plus potential asset level financing. We believe core can execute a new acquisition in excess of 200 million just with our resources I'll hand it.

Enough to make significant headway in rebuilding our dividend paying capabilities for our common stockholders and we believe their support for even larger transactions should we find the right opportunity.

I can share with you today that we're actively pursuing new opportunities with conservative risk profiles, including diligence activities and our goal is to complete a transaction before year end.

Now these opportunities may include assets, where we can leverage our private letter ruling to both own and operate infrastructure assets. We intend to emerged from these challenging times with greater insight better position to capitalize on our pioneering business model.

Our progress to date on these efforts gave management the confidence to recommend to our board the payment of both our preferred dividends and a common dividend for the second quarter.

We will continue to review the dividend each quarter as our portfolio progress is ahead.

In closing I'd like to thank the core team for its hard work through this difficult time and thank our stockholders on bondholders, who have continued to support our work during these challenges and who have expressed confidence in our business model ended our ability to rebuild our business.

I hope all of your staying safe and he is unusual times and thank you for joining us today.

Thank you for Giants. When this conference today you may now disconnect. Your lines. Thank you and have a good day.