Q3 2020 Hess Midstream Operations LP Earnings Call

My name is covered and I'll be your operator today at this time all participants are in listen only mode. Later, we will conduct a question and answer session.

But anytime you require operator assistance. Please press star followed by zero and we'll be happy to assist you.

As a reminder, this conference is being recorded for replay purposes, I would now like to turn the conference over to Jeff Gordon Vice President Investor Relations. Please proceed.

Thank you Kevin Good afternoon, everyone and thank you for participating in our third quarter earnings Conference call. Our earnings release was issued this morning and appears on our website Www Dot has midstream dot com.

Today's conference call contains projections and other forward looking statements within the meaning of the federal Securities laws. These statements are subject to known and unknown risks and uncertainties that may cause actual results to differ from those expressed or implied in such statements. These risks include those set forth in the risk factors.

Section of hasn't Midstreams filings with the FCC.

Also on today's conference call, we may discuss certain non-GAAP financial measures a reconciliation of the differences between these non-GAAP financial measures and the most directly comparable GAAP financial measures can be found in the earnings release we.

With me today are John Gatling, President and Chief operating Officer, and Jonathan Stein, Chief Financial Officer in compliance with social distancing protocols. As a result of covert 19th we are conducting the call remotely. So please bear with us in case their audio issues, we will be posting transcripts of each to be.

Group's prepared remarks on www Dot Hess midstream dot com following their presentation I'll now turn the call over to John Gossling.

Thanks, Jennifer Good afternoon, everyone welcome to House Midstreams third quarter 2020 conference call today, I'll review, our operating performance and highlights as we continued to execute our strategy and discuss Hess Corporation's latest results and outlook for the Barking Johnny.

Jonathan will then review our financial results.

Third quarter results reflect continued strong balking performance by Hess Corporation, and increase gas capture by Hess midstream, which drove throughputs above expectations, yes.

This along with our continued disciplined approach to managing costs enabled us to exceed our guidance for the third quarter has allowed us to again raise our full year 2020 guidance.

We now expect our 2020 full year adjusted EBITDA to be in the range of $725 million to $735 million, which represents a 33% growth year over year at the midpoint.

We're also reiterating adjusted EBITDA guidance for 2021, where we anticipate an approximate 20% increase from our expected 2020 outperformance.

In addition, our targeted annual distribution per share growth of 5% through 2022 remains unchanged validating the strength stability and visibility of our financial outlook.

Focusing in more closely on our third quarter results gas processing volumes averaged 296 million cubic feet per day and crude terminalling volumes were 141000 barrels of oil per day, both approximately flat compared to the second quarter third.

Third party's contributed approximately 7% of our gas and 9% of our oil volumes in the third quarter also flat with the second quarter and slightly ahead of expectations at the midpoint of our adjusted EBITDA guidance range water.

Water gathering volumes averaged 78000 barrels of water per day in the third quarter, an 18% increase compared to the second quarter as we continue to capture incremental trucked water into our expanding gathering system.

Now turning to house upstream highlights earlier today has reported strong third quarter production results with Bakken production, averaging 198000 barrels of oil equivalent per day, an increase of 21% from the year ago quarter and above guidance of approximately 185000 barrels oil equivalent per day.

During the quarter has continued to leverage Hess midstream pipeline and rail terminal system, which provides significant export keep capacity and optionality, north and south of the Missouri River to key markets throughout the United States.

For full year 2020, pest forecast Bakken production to average approximately 190000 barrels oil equivalent per day, an increase from previous guidance of 185000 barrels oil equivalent per day.

Turning to Hess midstream guidance as a result of continued strong performance, we have increased our full year throughput guidance for gas gathering and processing through.

Through the first nine months of the year the installation of an additional 40 million cubic foot per day of gas compression capacity has significantly improved our gas capture capability, which helped mitigate the anticipated throughput impact from Hess as rig reduction.

Furthermore, we expect to add an approximate 30 million cubic foot per day of additional compression capacity in the fourth quarter with the restart of two newly refurbished legacy compressor stations and innovative solutions that create a near immediate capacity at a low incremental cost.

This highly localized approach is an important component of our strategy to capture more Hess and third party volumes that enables customers to continue to meet or exceed north dakota's wellhead gas capture targets, which are increasing to 91% effective November onest 2020.

As a result, we now expect to gas gathering volumes to average 315 to 320 million cubic foot per day gas processing volumes to average 300 to 305 million cubic foot per day for the full year 2020, both increasing 8% at the midpoint compared to previous guidance.

Our complete financial and operational guidance is available in our earnings release that was distributed earlier this morning.

For the fourth quarter, we expect gas throughputs, which generate approximately 75% of our revenues to be roughly flat compared to the third quarter.

Fourth quarter oil and water volumes are expected to decline compared to the third quarter in line with Hess as guidance.

Good point of our financial guidance also assumes third party activity remains consistent with the third quarter.

Turning to house Midstreams capital program, our 2020 guidance remains unchanged.

Full year 2020 expansion capital is expected to be $250 million, comprising approximately a $140 million in gas processing $25 million in gas compression and $85 million in gathering and well pad interconnects.

We continue to make excellent progress on the expansion of the Tioga gas plant and as previously announced expect construction construction to be complete by the end of 2020.

Incremental gas processing capacity is planned to be available in 2021 upon completion of the turnaround during which time the expanded plant, including the risk residue and natural gas liquids takeaway pipelines will be tied in.

Maintenance capital guidance remains unchanged at $10 million.

In summary, we continued to demonstrate strong operational and financial performance in a challenging macro environment, where.

We are again, increasing volume guidance, enabling us to raise our full year 2020, adjusted EBITDA guidance to be in the range of $725 million to $735 million.

In addition, we're reaffirming our 2021 guidance, where we expect another year of double digit adjusted EBITDA growth.

Growing distribution per share and with the tie in of the 150 million cubic foot per day expansion of the Tioga gas plant, which creates significant new opportunities for gas capture growth in the basin for years to come.

Finally, we want to again emphasize our continued commitment to operating safely and reliably during this unprecedented.

The safety of our workforce and the communities, where we operate remains our top priority.

I will now turn the call over to Jonathan to review our financial results.

Thanks, John and good afternoon, everyone.

As John described we have continued our track record of delivering strong results within a challenging macro environment again, emphasizing how both our contract structure and financial strength differentiate our business model.

Our third quarter results again beat our quarterly guidance and as a result of our continued strong volume performance and our expectation that we will maintain our higher third quarter EBITDA level in the fourth quarter. We are again, raising our full year 2020 financial guidance.

We are increasing our full year 2020, net income guidance to be in the range of $465 million to $475 million. Adjusted EBITDA is expected to be in the range of $725 million to $735 million.

Presenting at the mid 0.8, 33% growth compared to full year 2019 result.

An increase of 4% compared to the midpoint of our previous guidance.

We expect to maintain approximately 75% EBITDA margin, but 2020 consistent with our historical margin.

Maintenance capital and cash interest are projected to total approximately $100 million for the full year 2020, and distributable cash flow is expected to be in the range of $625 million to $635 million, resulting in an expected distribution coverage of approximately 1.3 times.

Expect to end the year with leverage at or below our conservative three times adjusted EBITDA leverage target.

Our contract structure and financial strength enable us to provide visibility and stability to our board trajectory. We are reiterating our 2021 adjusted EBITDA guidance, which is growing 20% of our updated 2020 adjusted EBITDA guidance, primarily pump our expected annual we determination at the end of this year.

As well as the contractual inflation escalator and increasing 2021 M.B.C.

They both 2021 and 2022, we also expect approximately $750 million of free cash flow defined as adjusted EBITDA less capex that includes approximately 95% of our revenue is protected by NBC efficient, perhaps midstream to threeq to be free cash flow positive after.

Funding interest expense and growing distribution, while maintaining distribution coverage of approximately 1.4 times without the need for any incremental debt or equity.

Turning to our results I will compare results from the third quarter to the second quarter.

Third quarter, net income was $116 million compared to $108 million for the second quarter.

Adjusted EBITDA for the third quarter was $182 billion compared to $173 million for the second quarter. It.

The change in adjusted EBITDA relative to the second quarter was primarily attributable to the following told.

Total revenue increased $12 million, including an increase in gathering revenue of approximately $8 billion driven by higher has production gas capture and increasing NBC.

An increase in processing revenues of approximately $3 million driven by higher has production and gas capture.

An increase in Terminalling revenues of approximately $1 million driven by increasing nbcs.

Total operating expenses, including DNA, but excluding depreciation and amortization a pass through costs were higher decrease in adjusted EBITDA by approximately $4 million, including seasonally higher maintenance and operating cost of approximately $4 billion higher overhead of approximately $2 million higher.

Insurance and property tax of approximately $1 million offset by lower costs associated with the TGP turnaround of approximately $3 million.

Alan fourth proportional share of running and depreciation that Oh processing fees increased adjusted EBITDA I talked about like $1 million.

Resulting in third quarter, adjusted EBITDA of $182 billion exceeding the top end of our guidance range by approximately 10% primarily due to higher than expected volumes.

Third quarter maintenance capital expenditures were approximately $4 million and that interest excluding amortization of deferred finance costs was $22 million.

The result was that distributable cash flow was approximately $156 million for the third quarter covering our distribution by approximately 1.2 times on.

On October 26, we announced our third quarter distribution that increased 5% on an annualized basis.

Expansion capital expenditures in the third quarter was $63 million.

At quarter end debt was approximately $1.9 billion.

Is that the leverage of approximately 2.7 times adjusted EBITDA on a trailing 12 month basis and below our conservative three times adjusted EBITDA targets.

Turning to expectation for the fourth quarter as implied in our updated full year 2020 guidance, we anticipate fourth quarter net income and adjusted EBITDA to be relatively consistent at the mid point with a higher than expected third quarter results that we reported today.

In the fourth quarter, but seasonally low operating costs, we expect distribution coverage to be approximately 1.2 times with revenues that are approximately 95% protected by NBC.

In summary, even in this period of macro uncertainty the strength of our business model is clear and we maintain differentiated visibility to our financial metrics, including adjusted EBITDA growth of approximately 33% and 2020 and approximately 20% 2021 with revenue.

That are 95% protected by NBC.

Expected free cash flow of $750 million in 2021 and 2022.

Distribution per share targeted increased 5% annually and fully funded from free cash flow in 2021 and 2022 at.

And conservative leverage expected to be approximately two times adjusted EBITDA, It's quite 21 on a full year basis.

With our strategic asset be visible financial metrics, you de contract structure, you have a differentiated value proposition across the midstream sector. This concludes by remarks, we'll be happy to answer any questions I will now turn the call over to the operator.

Ladies and gentlemen, if you have a question. Please press star followed by one on your phone. If your question has been answered you would like to withdraw your question. Please press the pound key questions will be taken in order to receive please press star one to begin.

Our first question comes from Phil Stuart with Scotia Bank.

Good morning, everyone. Appreciate the time today I guess my question sorry, I guess my question is on.

M&A.

Obviously, you guys have talked about it in the past I'm just curious with all the volatility that we've seen and 2020 has anything changed in terms of your views as to where you'd be interested in M&A I guess, what I'm getting at is are you you know may be more likely to want to.

Do an acquisition of of the Gulf of Mexico assets from half as opposed to you know potential bolt on in the Bakken I'm just given that you know you'll have very strong counterparty strength with a deal with Hess I'm in a similar contract structure, you know relative to so maybe what's out there.

Or with some third party Bakken assets.

Yeah. So think thanks for the question I think you I mean, you hit it right on I mean, obviously the most important thing that we've got obviously is our relationship with Hess No no Bakken remains our focus.

And we're continuing to look to strengthen our strategic footprint, but fortunately for us with the contract structure. We have in place were able to be highly selective on that so it's it really comes back to focusing on the right assets that integrate well into our system.

System and have immediate returns that can deliver immediate returns and benefits to two house and third parties. So I mean, I think as we look at.

Acquisition opportunities in the Bakken, that's really our focus it is it is focused on those kind of highly strategic well integrated assets.

That strengthen our position and continue to support the Hessam third parties and as you mentioned, we are absolutely interested in in the process of evaluating the Gulf of Mexico assets I mean.

You know it is having a contract structure similar to what we have in the Bakken with with Gulf of Mexico assets is extremely attractive it extends that relationship obviously between the midstream and house.

And we see that obviously is a is a is a huge enabler and and and.

Oh highly valuable from from our perspective. So those those are focused area I mean, we're continuing to look in the Bakken.

But again being selective and then continuing to evaluate the Gulf of Mexico assets and are excited about the opportunity there and the ability to to expand our relationship and and and a into a new basin with a bit of diversification as well. Those are those are all very attractive things to us.

Okay. Great. Appreciate the color there and then next questions are on the TGP expansion I guess my understanding is that the majority of the capital has already been spent.

But I guess just curious you know on the timing of the turnaround in 2021 to finish that project up.

Yes, and you're exactly right. So the plan would be is we're going to wrap up construction at the end of this year, we're well advanced on the actual construction activity in fact, we're in the process of essentially wrapping up construction.

Everything will be prepared and ready for the turnaround activity in 2021, we're not really specifically discussing exactly the timing for the turnaround.

It really will depend on kind of what the environment is what caused it maintain the situation is again as I mentioned in my opening remarks, you know really it's more focused on the safety of our personnel and the communities, where we operate and that's our top priority we do anticipate.

And expect to do the turnaround in 2021 and as soon as the turnaround has.

He has been scheduled the plan would be is that we would be fully capable to tie in the expansion and be ready to to increase the total capacity if the guest.

Okay, great. That's it from me thanks, Okay. Thank you.

Our next question comes from shouldn't recur Shami with Qbs.

Hi, good afternoon, everyone I'm just.

Just got a couple of quick questions here, just to kind of start off and when it should be looked at some of your peers in the Balkan sort of talking about flat volume for 2021 has seems to be maintaining a rig on its footprint and what I sort of think about the Pos structure should we.

Kind of expect has to keep production roughly flat you know as you sort of enter this getting set up I guess for the second term of your Cmos contract and and given that it would be a blended average drop your 21 to 23 type of timeframe just kind of wondering how we should sort of think about that in sort of toggling as to how we think about the the set up for the next contract.

Sure I mean, let me maybe I'll start off with the kind of the operational side and then you know Jonathan can hit some of the financial aspects of it but as you heard. This this morning has talked about kind.

Kind of a two rigs to hold production flat at a 180000 barrels oil equivalent per day.

From our perspective as it has has kind of runs at at at the current rates and then moves into the future years, we definitely see the diesel production plateau sustaining that as it continues into into 2023, and then into the into the second term, but I'll I'll kind of handed over to Jonathan just.

To address the needs of the the financial components of that.

Yes. Thanks, I think as you know as as you know hotspots that that's certainly they're looking to you know it added Greg as you get closer back to 50 so.

You know, saying at one rig that's done a long term basis is not necessarily the plan that we would see but even in that scenario I think the contract structure really a indoor than we really have strong visibility to continued free cash flow I mean, even at one rig on a long term basis, we would still continue to be free cash flow positive after distribution.

At our expected 2022 level, mainly for the foreseeable future and how that works is basically is as you described it's a combination of the cost of service over the next number of years, leading to the long term a second trial and really way that worked as we look at 20% growth at the end of this year in terms of EBITDA that will take us to.

To a new level in terms of EBITDA and then as John described a you know house will be able to hold production flat at one makes certainly we would expect that they would reach that level by 2023 and during that period, our annual lease that would adjust the tariff that we'd be able to maintain our EBITDA approximately at 2021 level then as we got the 2024, we would convert to.

Fixed price contract deal with NBC, let's stick for price a steadily increasing from 2024 through 2033 with inflation escalator on a flat production into our revenue. Therefore would just be steadily increasing over that long term period, and then of course in a little bit Carl we'd be at sustaining capital, which is what we expect to be anyways next year.

That's a $100 million to $150 million in just the question is stable because we have no incremental debt and 2022 levels of distribution or you know growing 5%. That's approximately $550 million. So you put all that together that's a that we can be approximately a $100 million free cash flow after distribution.

Well on a long term basis, even in past where to stay at one rig on a long term basis and that is really I think a very unique business model that allows us to just continue to deliver that ongoing free cash flow after distribution, even in the well call. It kind of stress scenario and I think it also highlights that even in that case, we still have a free cash flow generation and will allow.

Average, which gives us financial flexibility and capacity so that we have the opportunity to do the things like John said, whether it'd be a Gulf of Mexico, whether it be bolt on opportunities in the Bakken, but it also gives us the opportunity to things like buyback from our sponsors which could be accretive to all shareholders. So we really do have a model that is very unique in terms of <unk>.

Contract structure and also in particular in terms our visibility to continued to deliver free cash flow I'd be free cash flow positive after distributions on a long term basis.

I appreciate all the color and then there was a lot of details there if I can sort of paraphrase a little bit and sort of add my own assumption here. So basically with Hess in flattish to production type environment has seven could kind of be a billion dollar base run rate business starting in lets say 2022 that kind of the right way to think about it.

Yeah, and I think the I would say is look we're going to increase EBITDA. This year, 20% you know into 2021, and then with production thing flat yeah, the increasing rates because as you go into the second time will be fixed an increasing steadily and then everything else whether it be interests or capital all stays the same and that all of that is more than enough to fund our.

Your vision on a long term basis.

Free cash flow positive afterwards.

Okay, maybe just one last question just given the discussion around free cash so you're you're kind of in a free cash flow basis and at the same time, there isn't a large float on your stock and everyone's talking about buybacks and so forth I was just wondering if you can sort of toggle between some of the ideas that you're you're kicking around as to how to deploy your line.

Bridges is fairly low you don't want to reduce your liquidity with buybacks, but is there a way to sort of pro rata buyback, let's say yours in GRP or houses and G.I.P. stake as kind of the way too.

You know sort of return capital to shareholders and so forth, but just wondering if you can sort of walk through the option set that you're thinking about both inside and outside of the box.

Yeah, I mean, I think that's actually right. We do have the ability in our structure to be able to buy back.

She has directly just on hot than VIP or as you mentioned our float is it you.

You know and too small so we wouldn't be doing buybacks from the public but we were able to just buy back she has one passenger IP.

I would obviously be accreted to everybody and that would be also a good use of the financial flexibility. We have we do have opportunities, though as John said again Gulf of Mexico, you know potential bolt ons in a very disciplined way that we're going to get used to be very disciplined to add you know together. The good news for US is we don't have to do just one of the things we could do you know.

Gulf of Mexico transaction, and we can also do buyback from our sponsors so were not given the financial flexibility in a position where and we really have the ability to do many of these thing of course, we're going to do them all in a very disciplined way as we've always done in the past.

Maybe one last one actually that just popped into my head here.

In all the responses so far you've brought up off of Mexico assets acquisition, and so forth. What due diligence has has done in terms of if there is that biden victory as to what it does to the Gulf of Mexico with the whole you know ban on drilling on federal lands and so forth I was wondering if you had some comments you'd like to share.

Yeah.

Yeah, the only thing I'd say there I mean, there's obviously you know uncertainty in the in the upcoming election, but you know we do not anticipate there being any any significant impact as a result of either.

Either continued administration or change in administration.

All right perfect well. Thank you very much everyone. Appreciate the time today.

Thank you very much.

Our next question comes from Spiro Dounis with credit Suisse.

Hi, good morning, guys.

First one for Jonathan just coming back to the M&A in thinking not even that are really more around growth and thinking how you're going to fund that.

In various ways, whether it be Gulf of Mexico. Other organic expansions is there a blueprint that you guys are thinking about when it comes to the debt equity mix on a go forward basis, I know you've been focusing on sort of naturally de leveraging over the next year or so but as we think about the debt equity mix on future spending what does that look like and then how are you thinking about sourcing the equity component.

Right. So I mean, I think for US. The good news is we really can do all the things that we've talked about you don't really through our free cash flow after distributions together with that if you look at what we we've said for next year expect leverage to be approximately two times EBITDA well below our three Todd.

Target that's on a full year basis and that would continue because there's no incremental debt. So absent any other the things that we've talked about we have all that flexibility available to us. So that's the whole turn of EBITDA, even relative to our conservative.

You know three times EBITDA target and of course, you know in that situation. Like for example, if we were able to do the Gulf of Mexico that of course would come with its own EBITDA as well so that would give us additional flexibility and then on top of that as we've talked about starting next year will be free cash flow positive. After distribution. So that also creates even additional balance sheet strength in order to belt.

To fund that so we fully anticipate that all the things we're talking about <unk>, we'd be able to do just on balance sheet strength and have no plans for any equity needs in order to meet these.

You know target that we've talked about our two build to fund any the opportunities that we've talked about.

Great. Okay, and then I appreciate that Jonathan second question.

On M&A again, but maybe a little bit differently, obviously, we're seeing a lot of combination in the upstream space and so things and I think your sponsor would be coming involved in M&A at some point, how do you guys think about the potential impact to Hess midstream that does anything ever actually really changed for you and that's an area.

Yeah, No I mean, I think the from a contract you know obviously, we see that is very unlikely, but there would be no change in terms of the contract for the dedication. The governance would also stay in place or you know with the house seats being taken by the course, and we're quite hot but they would have a minority position relative to VIP and the independent directors. So forth. These sources the VIP.

And the fact that sick and then have them of course has its own capital.

Capital structure, I know, it's 100% of own assets. So there'll be no change in terms of our ability to operate independently or with the same underlying contract and the same dedication.

Great. Thanks for the color guys do well.

Yeah. Thanks.

Our next question comes from furniture tricky with JP Morgan.

Hi, good.

Good afternoon, Thanks for taking my questions.

I wondered about when they ask on FCF, but I guess I cannot say that felt like a dog.

Just starting up with the gas capture and got.

Got crossing Williams for third quarter, I guess, you if it's still a boat nvcs right now and and looking at what you guys have talked about adding additional compression capacity about 30 Mmcf per day, two and a full Q.

That that looks a very somewhat upside could be extended data then nvcs next year, that's what I mean of course, they have east some decline base with respect to head, but just trying to understand what is driving that I. Just started volumes is there any shift and what he is doing from.

Some board got Seattle was audience is just increased gas capture rates if it got up to what upside do is to have them. What do you have children to you.

Sure and maybe what I'll do is all all address the general gas capture question and kind of more of the the the operational aspects of it and then I can hand over to Jonathan talked little bit about the NBC levels.

Overall, weve seen a significant improvement in overall gas capture in the basin I think as we've continued to build out our own infrastructure in support of house and our third party customers we've seen.

You know gas continuing to to increase now it's it's it's a positive for us because the oil is very stable and it's it's it's either meeting or exceeding expectations.

We are starting to feel a little bit more gas come and as a result of that we're putting the infrastructure in place to support that and that's been that's been our strategy for the last several years. I mean this is a continued execution plan that we've that we've had in place for.

Three plus years and it will continue into 2000 2021, as well and really it just it follows the the development plan from the upstream we continue to add infrastructure like we've done in the first three quarters of this year, we added 40 million cubic feet of a million cubic foot of compression capacity and then in the fourth quarter, we saw an opportunity there.

Actually go leverage some idle.

Idle equipment. Some some legacy facilities that we had not planned on bringing back online we refurbish those facilities.

And that was really kind of something that came up in the middle of the year as we were looking at the development plan looking at opportunities to improve hesse's gas capture but also improve the throughput through our system.

We went in and spend a bit of time with our operational and projects teams to reevaluate those facilities and refurbish them and get them get them back on line and we expect them to be online in in the fourth quarter, which again adds a another 30 million cubic foot a day of total total compression capacity. So overall.

We see that it's continued optimization of our infrastructure I mean, I think that's that's one thing that we've been we've done a very good job on is is not overbuilding infrastructure, we've been very disciplined in our execution plans and our investment opportunities and you know, we're really leveraging our infrastructure to its maximum.

And I think that just shows through the oh through the ability to actually bring back on facilities legacy facilities.

And immediately capture volumes, so we do see that as upside as far as throughput and I think that's what supported.

Kind of muting some of the impact of the of the rig reduction by by Hess and it it continues to create opportunities for us.

As far as you know the Mbcs, all kind of handle that with that over to Jonathan to talk a little bit about the nbcs and especially how that plays in the 2021.

Oh, Thanks, So yeah, I mean, I think through the rest of this year you can see based on our Q4 implied volumes in general was going to be most of our systems are going to be just about mbcs or below so that means from a physical side. So those will be primarily the driver the mbcs of our volume.

Going through into Q4 and that is really one of the drivers that supports our ability to maintain our EBITDA expected at the same level as our Q3 EBITDA to you know.

A combination of that together with some seasonally lower opex, but certainly the nbcs.

Providing that floor. So that we have Ah that's sort of a revenue foreign or on our on a revenue and as we look to next year Oh, we do have increasing NBC with the higher volumes of course that we have this year.

Compared to where we were even just three months ago. So the growth rate it is little bit less because our higher volume. This.

This year, our physical volumes going into next year, and then B C. But we do still see a a bit of growth oil and got the generally flat a little bit maybe growth on the gas side outside of the turnaround period, but then water. For example is increasing approximately 25% relative to 2020 levels relative to NBC and so we see some growth there as well, but certainly we will be.

You know running expecting at NBC levels, we've had really 21 and 2022, because those mbcs with that under the prior development plan and so that will really create kind of a level that we would expect a kind of revenue to be at or going into 21, and then continuing into 2022.

Got it thanks, and then just wanted to follow up on the Twentytwenty one guidance here. So you guys Didnt mentioned about 20% a good I mean infusion neo guidance has been very conservative on the third party business without fulfillment and pull into bought a site and I'll just wanted to understand what pace.

Included in your dog 20000 to one guidance the 20% growth what kind of took back to anything to did I do see any upside there [noise].

Yeah, So maybe I'll just I'll hit the third parties you know for a second here. So you know we're kind of keeping the third parties flat what we've seen over the last several quarters and the 2021, we're trying to be.

Somewhat conservative there, but I would say that as we think about the third parties.

As Jonathan mentioned, they're going to be largely below or NBC levels and as such we don't anticipate there to be any any revenue impacts to that now I would say on the on the upside is you know we've got a volume behind pipe currently were in the process of expanding the gas plant you know timing of that is a bit uncertain. It's it's it's planned to be in 22.

Anyone you know so we do see some opportunity there and again, we're very fortunate to have a highly strategic footprint asset base that I think is a natural.

System that will that will attract volumes to it. So we do see we do see opportunity there, but but you know where to where we're trying to be realistic in the forecast and kind of what we see today is kind of what we're projecting on it but again I think as Jonathan mentioned, you know, we're going to be largely at NBC levels.

And we are not expecting.

Much uncertainty on the on the revenue side.

I don't know Jonathan said anything else you want to add to that.

No I think that no doubt that's right itself on the third party John gave that overview and so there was that we didn't have the 20% growth is really the big majority of that growth is going to come from the rate reset which will occur at the end of this year as part of our annual domination process or that you know of the 20% almost like 15% of that growth is really the 15 out of the.

20 is really from that rate reset and that's because you know has to have a lower development plan. This year than it had last year last year with six rigs going on the four rigs maintain 10000 Boe per day now obviously, we're starting at one Meg so that well developed plan will I know what to maintain our target return on capital will increase rate.

On the other 5% is really just the combination of our inflation definitely there, which is part of that calculation as well as nvcs, but as we've talked about with the higher volume that we have now this year going into Mbcs they'll be you know, we'll be really wanting to the MVC level, so not a bunch of driver.

Really the big driver will just be the rate reset and of course as John described we have all the capacity. So you know I guess, there could be potential upside above that but our expectation is that we would want you know the 20% growth and then running at NBC levels, mostly driven by the rate reset.

Got it thanks, guys that's it for me.

Okay. Thank you.

Thank you very much. This concludes todays conference call. Thank you for your participation you may now disconnect have a great day.