Q3 2021 NGL Energy Partners LP Earnings Call
[music].
Ladies and gentlemen, thank you for standing by and welcome to the Q3 F. One.
'twenty 'twenty, one NGL, earning partners conference call at this time all participant lines are in a listen only mode. Later, we conduct the question and answer session and instructions will follow at that time, if anyone should require assistance. During the conference. Please press Star then zero on your Touchtone telephone.
As a reminder, this conference call is being recorded.
I'd now like to hand, the call over to your speaker today, Mr. Trey Karlovic our CFO. Please go ahead.
Great. Thank you and good evening good evening everybody.
As a reminder of this conference call includes forward looking statements and information words, such as anticipate project expect plan goal forecast intend could believe may and similar expressions of the statements are intended to identify forward looking statements.
While the NGL energy partners believes that its expectations are based on reasonable assumptions. There can be no assurance that such expectations will prove to be correct. The number of factors could cause actual results to differ materially from the projections anticipated results or other expectations included as forward looking statements.
These factors include prices and market demand for natural gas natural gas liquids refined products and crude oil.
The level of production of crude oil natural gas liquids and natural gas the.
Fact of weather conditions on demand for oil natural gas and natural gas liquids and the ability to successfully identify and consummate growth opportunities and strategic acquisitions of costs that are accretive to financial results.
To successfully integrate and operate assets and businesses that are built or acquired.
Other factors that could impact. These forward looking statements are described in risk factors in the partnership's annual report on form 10-K quarterly reports on form 10-Q, and other public filings and press releases.
NGL energy partners undertakes no obligation to publicly update or revise any forward looking statements as a result of new information future events or otherwise.
This conference call also includes certain non-GAAP measures, namely EBITDA, adjusted EBITDA and distributable cash flow, which management believes are useful in evaluating our financial results.
Please see the partnership's earnings releases Investor presentations, and annual and quarterly reports on form 10-K, and form 10-Q on our website at Www Dot NGL energy partners Dot com under the Investor Relations tab for more information on our use of non-GAAP measures as well as reconciliations of differences between any non-GAAP measures.
Just on this conference call to the most directly comparable GAAP financial measure.
With that I will turn the call over to our CEO, Mr. Mike Crumble right great. Thanks strength.
Welcome I'd like to begin with the Ngls business our outlook.
First on our water segment higher crude prices mean more DUC completions in the ultimately drilling in the DJ Delaware and Eagle Ford, which will translate into higher volumes.
The duck count on acreage dedicated to NGL in the Delaware is in excess of 500 wells currently.
Of the D. J has at least eight rigs running and three completion rigs that we know of.
With respect to BLM land, we know about as much as you do our customers have multi year inventory of drilling permits.
We do not expect the surge of rigs entering the basin are the.
The upstream companies will spend within their cash flows which could actually be better for midstream is there will be consistency to drilling activity not the peaks and valleys, we've seen in the past.
From a right of way perspective, we anticipated the current environment and we have secured all of the BLM right away, we need to service our customers as well as future dedications, we are working on them.
Importantly, we continue to reduce our cost per barrel through.
Through installation of station power limiting diesel generators.
The incremental barrels coming to us on pipe.
And staff reductions through automation and consolidation.
With respect to our crude oil logistics and as you know we settled the.
The extraction.
Bankruptcy retaining their crude oil production with a new term supply agreement.
We negotiated what we call the price adder, if crude exceeds $50 a barrel we get to share in that increase that will come into play beginning March 1st obviously, we're very fortunate because crudes in excess of $58 at the moment.
With higher crude oil prices, we anticipate increasing volumes. It was important for us to retain these volumes on our pipeline and secured dedication over the term of the contract to ensure that all future production flows on great Grand Mesa as well.
Regarding our liquids.
Both propane and butane blending of performed at or above our expectations for this year. We're.
We are expecting this segment to show improved earnings next year as demand for liquids and refined products.
<unk> is expected to improve post pandemic.
We are currently the beneficiary of of mineral many polar vortex now that will benefit our wholesale propane division for the current quarter.
Regarding our adjusted EBITDA guidance for fiscal 2021, EBITDA guidance remains at $500 million that is the net.
Net of the impact of the extract the settlement.
Which caused us an estimated $45 million of this year.
For fiscal 'twenty, two EBITDA is expected to be in the range of $5 70 to 600 don't change the increase over 2021 is predominantly the water segment with additional contributions from liquids and lower legal fees.
Regarding our capital expenditures, reducing maintenance Capex has been of focus as we upgraded our facilities in the prior fiscal year. Our budget for fiscal 2021 was approximately $50 million, we've incurred just over $22 million for the nine months ending 12 31.
We've been very selective and spend the growth capital is the majority of our infrastructure has already been built.
We spent $43 million through the first nine months on approximately a $50 million budget.
Combined we have incurred $65 million in maintenance and growth Capex on a $100 million budget and expect to come in under budget for the year.
In fiscal 'twenty, two maintenance cap will be about 35 million growth cap around 75, which is 110 than we previously guided to a combined range of $100 million to $125 million.
Thereafter growth Capex.
<unk> is expected to be around 50 million of handling and maintenance between 40 and 50.
Trey will speak to our recent refinancing and the elimination of the revolving credit facility that would of mature this October.
We explored a number of private and public options and ultimately access the bond market.
At an attractive interest rate.
In summary, this past provides for an extension of our maturities from 2021 to 2026.
We now have covenant flexibility by eliminating leverage and interest coverage maintenance covenants and.
And greatly improved liquidity.
All of the options, we pursued would've required a suspension of both common unit distribution and preferred share dividends.
Under the option. We chose these payments can be reinstated once our leverage falls to four five times or seven five times or less.
We cannot project when this will be achieved but our goal is to delever as quickly as possible through debt reduction and EBITDA enhancement.
So with that back to you Trey great. Thanks, Mike.
I'm going to start with the refinancing obviously this was the very significant transaction for the partnership.
First off I'd like to thank our NGL team for all of their efforts in Poland. This transaction together. It was the significant like I said it was a significant accomplishment.
Yeah.
As we discussed on our last earnings call. The extension of our credit facility has been our top priority due to the significant amount of those outstanding on the facility about $1 7 billion plus $140 million of letters of credit and the near term maturity of the debt, which when current of October and mature later in 2021.
We were working closely with our relationship banks to effectuate of short term of extension into 2023. However, we were not able to meet certain terms and requirements of some of the lenders.
We evaluated several alternatives to complete the extension, including asset sales minority interest investments in our assets private capital transactions among others.
Ultimately, we made the determination that of refinancing of the entire credit facility would be the best outcome for all stakeholders as it provided a complete solution to near term maturities and will allow the business operations to recover and grow following COVID-19 no pack and our recent mesquite and <unk> acquisitions as well as the.
The settlement with extraction.
This refinancing pushed $2 billion of maturities that were coming due between now and June 2023 out of the February of 2026.
It also provided over $200 million of needed incremental liquidity today, as we are managing higher commodity prices and a ramp up in demand and activity associated with the Covid recovery.
This refinancing of obviously came with of course, our interest cost will be higher over the next few years and as Mike noted our distributions will be temporarily suspended until our leverage is reduced but.
But we believe this was the best outcome for all stakeholders, considering some of the alternatives, we were faced with and the impact of near term maturity and tight liquidity, what's happening on our operations.
This new structure provides the partnership with significant flexibility, especially once our leverage reduced to under 475 times as long as liquidity remains over certain levels of no significant debt maturities are due within 90 days.
The elimination of financial covenants will also enable the management team to focus on executing our business plans over the near term to grow our cash flows and earnings of our established asset base.
We currently have minimal capital expenditure needs for requirements over the next few years, which also fits well within this new financial structure.
All capital expenditures will either be funded with cash flows from operations.
Possibly on the ABL and any significant capex of acquisition opportunities that arise will be specifically self financed.
Ultimately this refi provided the partnership with a full solution to its financing needs and we appreciate the bank group the supported US through this transaction as well as the investors that participated in the notes offering.
Our goal is to Delever, our balance sheet and provide the business with flexibility to maximize returns to the benefit of all stakeholders.
We will be highly focused on reducing debt and continuing to extend maturities over the coming quarters.
Yeah.
Moving to our results for the quarter I would like to point out of few of the items that impacted the quarter specifically.
As we noted on the last call. The Poker Lake connection came online on October one of significant milestone for our water solutions business and water volumes of the northern Delaware Basin continued to grow.
Extraction diverted significant volumes from Grand Mesa, and our crude oil segment of both parties work towards the ultimate settlement of new contractual arrangement that might cover.
And we completed additional note repurchases of various discounts during the quarter as well.
Overall, our adjusted EBITDA for the quarter was $125 million and has totaled $354 million year to date.
But the impact of these items our total leverage at 12 31 2020 ended up just over six times.
Some additional color on the crude oil segment the crude oil segment reported approximately $26 million of adjusted EBITDA, This quarter and $122 million year to date.
Grand Mesa volumes averaged only 69000 barrels per day this quarter with the largest decrease due to the extraction barrels being diverted.
We have estimated the fiscal 2021 impact from the extraction of bankruptcy to be $45 million, which includes the lower volumes revised rates. The the write up of minimum volume deficiencies and legal costs for defending our contracts.
We received $35 million for our remaining unsecured claims of January this amount will not be recognized in fiscal 2021 adjusted EBITDA.
As a result of the bankruptcy and the global settlement with the extraction, we wrote off our intangible assets associated with legacy transportation agreements.
<unk> also required us to evaluate the goodwill associated with the crude logistics segment for an impairment.
We wrote off $384 million of goodwill and intangible assets during this quarter as a noncash charge to earnings.
Third quarter adjusted EBITDA for this segment also includes the write off of approximately $6 million related to previously invoiced the minimum volume deficiencies to extraction.
We are expecting improved earnings from this segment on a go forward basis as we transition to the new supply agreement with the extraction and see increased activity from other producers in the DJ Basin.
We also expect to benefit from the higher crude oil prices and the current market.
Moving to water the water solutions adjusted EBITDA was $66 million for the quarter and has totaled $184 million year to date.
Total produced water volumes averaged one 4 million barrels per day during the quarter with an increase in the northern Delaware basin, driven by the new Poker Lake deliveries.
Delaware Basin volumes now represent 86% of total portfolio of volumes and over 97% of the Delaware Basin volumes are on our pipeline system.
Eagle Ford the DJ Basin volumes remained challenged by the lower crude oil prices rig counts and completions, coupled with production declines during the quarter.
We are starting to see increased activities in these basins in the current commodity price environment, but continue to expect the slower recovery of volumes in those areas of operations.
We received an average disposal fee of 61 per barrel for the quarter of slight decrease driven by the new Poker Lake volume.
Skim oil volumes average 2000 barrels per day during the quarter and we recovered about 14 basis points from our disposal water again poker lake volumes of impacted our recoveries as they contain minimal skim oil.
Operating expenses was another highlight with reductions realized in the prior quarter carried into the third quarter and we averaged <unk> 27 per barrel for the quarter.
We expect this cost per barrel to continue to decline as we add incremental pipeline barrels and capture the efficiencies of the scale on our system as well as some of the items Mike mentioned earlier.
Finally go into liquids and refined products adjusted EBITDA for this segment totaled $42 million this quarter and $75 million year to date.
Product margins remain in line with our expectations during the quarter and volumes continued to be impacted by weaker demand through COVID-19.
We have seen some increased product pricing in the recent months.
And several cold snaps should benefit our wholesale propane business demand the.
The segment remains in line with our expectations for the year and we expect it to perform better as demand picks up for motor fuels and blending stocks and a recovery of macroeconomic environment.
Our corporate costs remain in line with expectations as well and included the one time legal costs associated with our defense of the extraction bankruptcy of approximately $5 million year to date.
Our growth Capex totaled approximately 5 million for the quarter and 44 million year to date as previously mentioned, we have minimal growth capital expenditure requirements going forward and we believe we can service our producer customers utilizing our existing pipeline system and internet connected disposal of assets.
We continue to manage our maintenance capex as well, which was about $6 million during the quarter and has totaled $22 million year to date.
Our combined capital expenditures is totaled $66 million as Mike mentioned and is still expected to come in below the $100 billion guidance for the full year.
Mike also covered our initial guidance for fiscal 'twenty two out of 100 to 122 hundreds of $125 million for growth acquisitions and maintenance expenditures.
Non of these expenditures would be dependent on successfully securing additional acreage dedications in the Delaware.
Finally, we've covered some of the highlights of the expectations related to each of our segments going into next year, we initiated adjusted EBITDA guidance for next year between 570 of the $600 million. This guidance includes assumptions around increased produced water volumes crude volumes transported on Grand Mesa by extraction and other DJ basin producers.
<unk> prices remaining at reasonable levels are higher and the recovery in demand for refined products and natural gas liquids.
Summary, this was the very significant three to four month period for the partnership.
We resolved several of nodes, including extraction of near term debt maturities and positions. The partnership for future success. This has been an unprecedented time for all of US and we appreciate your continued support that concludes our prepared remarks, we will now open the lineup for questions and thank you as.
As a reminder to ask the question you'll need to press star one on your telephone to withdraw your question. Please press the pound key please standby, while we compile the Q&A roster and once again that is star one if you would like to ask the question.
And our first question comes from T. J Schultz from RBC capital markets. Your line is now open.
Hey, guys good afternoon.
Just first unclear with with the debt deal.
Dan are you no longer pursuing H.
J P of the water business.
That's correct we are not.
Okay understood and then on the water business as we think about.
Other potential dedications out there are there dedications.
Dedications similar in size to <unk>.
The Lake out there that you expect in the coming year and and his guidance next year dependent on capturing any of those.
Of dedications or is it more.
Of the DUC conversions driving some of that growth.
Yes, there are two in particular working on that are of that size. None of those are in our numbers.
So it's more of a we anticipate more of the ducks getting.
The complete that's quite of bit of water.
Hopefully, we just kind of maintain a.
Certain rig count in <unk>.
As I said before get rid of the the peaks and valleys.
Okay.
Understood and then maybe for Trey on the on the distributions I understand.
The 4.75 times leverage target, but.
Where do you want to manage.
The business longer term from a debt perspective should we assume you keep driving leverage lower before restarting the.
The common unit distributions and then is there a different.
Timeline kind of thinking along those lines to pay the preferred pay on the preferred versus restarting on the comments. Thanks.
Sure. So so the $4 75 is the threshold T. J. So we have to be below 475% in order to make restricted payments what sort of include common and preferred distributions. The preferred distributions will accumulate so we will have.
We will have to make preferred distributions before we can make common distributions of.
Honestly, we want to continue to push leverage lower our target is not 475, we'd like to get below four times. That's been a long term goal continues to be the goal.
But there will be numerous factors that go into that decision.
Ultimately we have to look at the performance of the business the liquidity buffer.
<unk>.
Maturities look like.
What the market looks like at that point in time, so there will be new.
<unk> factors that weigh into that decision.
Yeah.
But we will have to make the preferred distribution of our address the preferreds prior to making a common distribution.
Okay understood. Thanks.
Yes.
And thank you.
And our next question comes from Patrick Fitzgerald from Baird. Your line is now open.
Okay.
Hey, congrats on getting the new deal done.
Bank.
I wanted to ask about.
The crude oil logistics segment.
Obviously, there's a lot of moving pieces.
In the $45 million reduction.
But assuming.
The oil is that current level or stays at current levels.
Based on the new deal with the extraction, what what would you expect the.
The impact of B.
Vs. What you had the once you have now kind of on a full year basis.
Sorry go ahead.
Yes, so the $45 million impact as we mentioned about $5 billion of assets related to the legal costs. The remainder is driven by volume and the rate under the new structure as Mike discussed we have what we call of price adder.
In todays environment, we would have a benefit from that price adder.
The key to what the earnings profile would look like would be volume.
So.
The extraction has.
They have emerged from bankruptcy they are looking to to start to increase the production they have.
Activities going on within the basin.
Higher price environment, obviously should support their activities.
But that will be the driver for the grant Grand Mesa asset, which is the biggest piece of crude will be what ultimate volumes are moved on the pipeline.
Under the new contract as we mentioned there is not a minimum volume commitments. So we are aligned with extraction and with their production profile. So that they can increase production as well as the other producers in the basin of extraction just happens to be the largest.
But as well as other producers in the basin that they can increase production out of the basin.
That will be to our benefit on Grand Mesa.
And the guidance we put out.
About three or four weeks ago.
I will tell you did not factor in 57 or $58 crude prices.
So that's the benefit to this point in time, the key will be what does that mean from a production.
Profile perspective.
Yes.
Okay, and how how how much of a benefit would that be.
Okay.
Some range, what kind of a range of benefit would that be.
Yes, I mean that the.
What I think you're getting at is what is our rate on Grand Mesa of what I think will what we can say is that.
The rate not where it was historically, which was about $4 40.
But it's also not.
At where some people speculated of $2 of loss.
The rate adder.
As prices continue to increase or stay at these levels, we get back closer to what our existing <unk>.
Previous rate was.
But again, the key is going to be volume.
Okay great.
Now under the new deal you can still buy back.
The.
Both of their 20 threes in your and your later dated senior notes up to $200 million.
Where does that fall in the priority.
Spectrum.
Yes, it's a bit of a balancing act, but obviously, we want to Delever, we also need to address near term maturities.
We will be generating pretty significant excess cash flow over the over the coming quarters.
I would expect us to look at all options between the 23 25 from 'twenty sixes.
There are.
I think there is.
Good reasons to address the 'twenty threes first because of the near term maturity. But then you also capture more of a discount on the 25 and $26.
So it will be a bit of a.
The balancing acts so to speak.
But I think all options are on the table, Mike I don't know if you want it yes, I think I would just add we're definitely focused on the 20 threes.
Yes.
Okay.
Great.
And then just just you've kind of talked about it a little bit, but you know five.
500.
585 midpoint.
You know you said water is going to be a big component of that.
If you could.
Any additional color on.
By segment, how you would expect that the.
So it would be helpful.
Yes.
We would expect crude to be.
Fairly consistent with this year's earnings.
As our expectation of our next year right now.
Again higher commodity price could be of benefit there.
The liquids as we mentioned we are expecting liquids to perform better than it did the this current year.
Last year wasn't the novel each of the upside there were several onetime items that impacted last year.
To the to the good so we're not expecting to get back to that level necessarily in liquids, but we are expecting improvement.
And then water again water if you look at the current run rate.
Of $66 million.
That's a benefit on the on.
What we're seeing for this year to date.
We have we will have a full year of poker Lake, which won't be only have six months in the current year as well as the growth that were expecting primarily in the Delaware basin.
We are.
Looking at some improvement in the DJ and the Eagle Ford assets.
But not significant it will be driven by the Delaware and what we have going there.
Alright, Thanks, a lot.
And thank you.
Our next question comes from Avi Ginger from PPR. Your line is now open.
Yes. Thank you for taking my question I was wondering if you could help me understand the change in gross margins in the crude oil logistics between the second and third quarter.
Pinpoint deterioration or those onetime items.
Permanent change in the profitability of that business.
So that the gross margin and crude will be driven by.
What the shape of the market looks like so if the earlier in this year, we were in a contango market.
That will drive our could impact the margins that we generate in that segment.
We our hope would be holding barrels in that business versus.
The backward dated market, where we're trying to liquidate the barrels.
Look over time, the margins the crude oil margins.
Do have some variability to them depending on what the again, what the shape of the curve looks like.
Okay.
But primarily crude is driven by historically has been driven by the transportation fees.
Okay I think another question on the on the preferred accruals.
Assuming that the.
That there is no preferred payments in the few quarters coming forward, how much of what the total accruals across all three classes per quarter or per year.
No.
It's between eight at the current range is between 85% of $90 million per year.
Okay.
Thank you.
Yep.
Thank you.
And one moment for questions. Please.
Yes.
Yeah.
And our next question comes from Philip Duffner from release your line is now open.
Hi, Thanks for taking my question.
I was wondering on the <unk>.
Grand Mesa pipeline right the volume fell pretty dramatically.
All of the quarter could you.
Do you have some more color on what were the.
The different components that caused the breakdown and also to what level good day rebounds, or do you expect them to rebound this quarter and going forward.
Yes.
So that completely relates to extraction and there they are restructuring so they entered bankruptcy in June.
The volumes came down significantly and our.
The fiscal third quarter October through December with our.
New contract in place we are expecting those to go back.
At the beginning this quarter.
It will take some time for them to recover back to weather the prior production levels, where they are active in the basin, but it will take some period of time.
Brian you mentioned earlier that the diverted some barrels did you mean, but at the they actually put it on different pipelines and goes well come back to you immediately or is there also a delay to that impact.
Correct those barrels are coming back this quarter.
Got it.
And.
Can you give us some more color in terms of the.
The gross profit per barrel in the what the segment I mean, how much.
Scope is there for that to decline from the <unk> 61 per barrel.
Yeah.
So the disposal rate per barrel.
As we increased barrels in the Delaware basin on pipe could come down a little bit. However, the operating expenses per barrel in that basin are also lower so our margin is about the same as compared to some of our ancillary basis as well so while the disposal rate per barrel could come down.
Over time, as we add more pipe barrels and that based on the opex per barrel should come down.
At relatively the same level.
Yeah.
Products and those of our quarter over quarter Youre looking at EBITDA, increasing from around like 125 to 145 based on the guidance.
Can you give some color on the quarter over quarter period, while theyre going to be the main drivers here.
Sure so the incremental volumes coming back on Grand Mesa for crude.
We had some onetime charges during the quarter of about $11 million.
To the extraction settlement between legal and.
<unk>.
And the write off of a minimum volume deficiencies.
We also are expecting water volumes to continue to grow through the quarter and then remember our liquids business has some seasonal components, where our propane business generates most of its profit.
Call. It November December through March.
Great. Thank you that's helpful.
Yep.
And thank you and our next question comes from Jason Stewart from Stewart Holdings. Your line is now open.
Yes. Thank you good afternoon guys.
Two questions.
First.
I might have missed it but.
Can you give us some insight was there any debt repurchased during this quarter.
At a discount or otherwise.
There was a little bit of debt repurchased during this quarter in total during the year, we repurchased about $125 million of face value of notes and spent about $75 million so of net $50 million debt reduction.
Repurchases.
Second question can you give a little color or insight.
Had it from your customers regarding the the expected ramp up for volumes on Poker Lake.
Yes, so the poker Lake volumes came on line exactly how we expected it we have seen.
An increase coming into this calendar year and expecting those volumes to continue to increase through this year. We have no reason to believe that those volumes will not be in line with the.
The producer expectations.
Okay. Thank you very much guys.
Yes.
Thank you.
And our next question comes from Fernando answer from ABC. All incorporated your line is now open.
Hey, Good afternoon, guys first question is.
God forbid the low.
Or to flow back into the Twenty's Thirty's, how secure is the.
The global agreement with the extraction.
Baby again easily too.
We choose themselves from the contract or a day Bert.
Barrels to another pipeline.
No.
The barrels would be dedicated the question would be how what what does their drilling activity look like at that at those levels.
But any barrels produced on the dedication of would come to our system.
Okay and then the the.
The leveraging.
From from what from.
From what I've seen it's going to be very slow, possibly in the next I don't know five say, then possibly 10 years to deleverage.
The business to the appropriate level of.
Before paying.
Operating in common.
Ballpark figure this is the.
Clinical question, what would be the EBITDA, if all three segments, where it full.
Full capacity sales.
The premium was at 3 million barrels of Grand Mesa was at the 150000 barrels what would be the EBITA.
All three segments were finding all of seven years ballpark figure.
It could be more money than we can count.
I don't know what's in.
It would be a happy day, but I think to your first observation.
If we were to if your EBITDA of $600 million and your.
Your debt some billion if youre, reducing your debt by $300 million Thats the half a turn of year.
So.
Just on that math it would take three years.
To get down to four five times if the.
There was no increase in EBITDA, which.
Over the we expect better results each year from our water business.
So.
Yes, I appreciate the 10 years I went line rates.
Okay and one final question is the retail Investor day.
You know tens of thousands of shares of into you and I think that's it.
For the retail community what would be the incentive for us to stay invested.
Now that the dividend has gone to the bondholders.
And.
Possibly for the next three to five years, what would you think would be our incentive to stay invested.
For long term.
Thank you.
I don't know that I can say much about buying and selling our equity.
Because we're in a blackout period.
So.
All I can say is watch what I do.
Okay. Thank you very much Mike I appreciate it.
And thank you and our next question comes from Sam cash deal from J P. Morgan.
Your line is now open.
Hi, Thanks for taking the question.
I know you guys can't comment on customer specific volumes, but when you say the ex AGA.
The <unk> volumes during the quarter, where they are shipping and the volumes on Grand Mesa I'm, just trying to bridge and the you know what.
Current transport volumes look like in <unk> and <unk>.
Run rate going forward.
Yes.
There is limited of what we can disclose regarding shippers on Grand Mesa.
Pat.
As we stated they had they didn't deliver volume they did deferred of significant amount of volumes they are bringing volume back.
So unfortunately, I can't give specifics around it.
But they did deliver some volume strength during the quarter.
Yeah.
Okay. Thanks.
Thanks.
Thank you.
And our next question comes from Alan Freegan from Lone Star capital.
Your line is now open.
Hi, guys. Thank you for taking the question.
When you created your guidance for next year's EBITDA did you have any revenue adds from the new ex GE contract baked into guidance.
Yeah.
For those guidance measures.
Yes, the next year's guidance.
Yes, we built next year's guidance based off of the the new contract and the settlement with the extraction.
And did that contract did your estimates assume.
Well I guess I would ask what is your estimates assume for the price of oil vs.
The revenue ads.
Yes, when we put we put this guidance together.
As we were working with our bank group and it was less than less than $50 a barrel.
Yes, we were below.
Where the price adder is today.
And if you were to read the cash guidance, assuming current oil prices stay steady throughout the year.
How would that change your guidance.
Well it wouldnt be low to me.
Yes.
I understand the assuming assuming your volume estimate stay the same.
And assuming oil is where it is versus.
The below 50 that it was.
Yeah.
Hard to answer.
There's obviously a lot of things that go into putting together our guidance just the crude price alone would have a benefit as Mike said, it would be lower quantifying that right now it would be difficult.
Okay.
On unrelated topic, given what new Mexico excited about using freshwater for drilling and fracking.
Is there any opportunity for you to take some of the produced water debt U.
Currently dispose of these wells and recycling and sell it back as Frac water.
Yes.
That's a.
It is taking something that was the cost to us to dispose and turning it into a new revenue stream and that the producers.
For the most part we think of develop develop the chemistry to be able to use the produced water.
And so we think that's that's the real growth area going forward, we're already selling produced water.
And I don't know if.
We set that out separately in our financials.
Yes, not yet so we may it may be something we do so you can see how much it is.
And do you have ongoing conversations with current.
Customers are current drillers in the new Mexico area to explore that opportunity.
Yes.
Great. Thank you very much.
Thank you.
And I would now like to turn the call back to trade Carlo Rich for closing remarks.
Great again, thank you everybody for joining us this was day and important quarter for the company.
We've addressed as we've mentioned quite a few of the unknowns and uncertainties gotten back on our front foot and looking forward to ex successful fiscal 'twenty to 2022.
Everybody stays safe and healthy.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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Yes.
[music].
Yes.
[music].
Yes.
Yeah.
Yes.
Thanks.
[music].
Okay.
Kind of.
Okay.
[music].
Yes.
Okay.