Q1 2021 EnLink Midstream LLC Earnings Call
Good day and welcome to the Enlink Midstream first quarter 2021 earnings conference call all participants will be in listen only mode.
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I'd like to turn the conference over to Brian Brungardt Director of Investor Relations. Please go ahead.
Thank you and good morning, everyone welcome to Enlink <unk> first quarter of 2021 earnings call participating on the call today are Barry Davis.
Chairman and Chief Executive Officer, Ben Lamb, Executive Vice President and Chief operating Officer, and Pablo Mercado Executive Vice President and Chief Financial Officer.
We issued our earnings release and presentation after the markets closed yesterday.
Those materials are on our website.
A replay of today's call will also be made available on our website at www Dot Enlink Dot com.
Today's discussion will include forward looking statements, including expectations and predictions within the meaning of the federal Securities laws.
The forward looking statements speak only as of the date of this call.
Undertakes no obligation to update or revise.
Actual results may differ materially from our projections and a discussion of factors that could cause actual results to differ can be found in our press release presentation and our SEC filings.
This call also includes discussion pertaining to certain non-GAAP financial measures.
Definitions of these measures as well as reconciliations of comparable GAAP measures are available in our press release and the appendix of our presentation.
We encourage you to review the cautionary statements and other disclosures made in our press release, and our SEC filings, including those under the heading risk factors.
We will start today's call with a set of brief prepared remarks by Barry Ben and Pablo and then leave the remainder of the call open for questions and answers with that I would now like to turn the call over to Barry Davis.
Thank you, Brian and good morning, everyone. Thank you for joining us today to discuss our first quarter 2021 results.
After a 2020 there was a challenging gear yeah, one in which our performance exceeded expectations. The first quarter of 2021 was a continuation of that strong performance.
I am incredibly proud of the relentless effort our employees made during winter storm here not only to ensure the integrity and performance of our assets.
But also to ensure people's homes could be heated empowered.
And that impact to the communities, we serve would be short term in nature.
I am, particularly thankful that they did that while remaining safe.
For the first quarter Enlink delivered another strong resilient quarter, we achieved adjusted EBITDA of $249 million and free cash flow after distributions of $94 million.
Both of which exceeded our expectations.
When you drill down into our segment performance, we achieved another quarter with all four asset segments generating significant cash flow.
This is a tremendous outcome given the unprecedented temporary volatility winter storm Yuri presented and speaks to the operational excellence focus we have had over the last few years.
Overall, you already had a minimal net impact to our first quarter results. Despite the unprecedented temporary impact to volumes across all our segments.
Importantly, all of our systems are back online and volumes have returned to normal.
With the strong first quarter results, we remain positioned to meet our full year 2021, adjusted EBITDA and free cash flow guidance.
Our focus for 2021 continues to be one of execution with four key areas that our team is working on today.
First is operational excellence and innovation.
We have been laser focused on this we have centralized some compressor station and plant monitoring to enhance the cost and scalability of operations and we have fully embraced an efficiency mindset, which is led to operating our business better each and every day.
Second is financial discipline and flexibility.
With our focus on operational excellence, we continue to reduce operating and G&A expenses in the first quarter.
And we continue to forecast another year of very strong free cash flow after distributions with the ability to continue to pay down debt.
Our third focus area is strategic growth.
We have previously discussed our disciplined approach to opportunistic accretive bolt on acquisitions.
Yesterday, we announced an acquisition consistent with our strategy with the Amarillo Rattler system in the Midland Basin.
The Amarillo Rattler acquisition builds on our long standing relationship with Diamondback Energy and offers another example of using operational synergies to achieve attractive economics.
In terms of business development, we continue to see our Louisiana footprint offering growth opportunities.
In addition to new projects like the venture Global project, we completed last year, our extensive asset footprint and longstanding customer relationships position us well to collaborate with others in the energy transition over the long term.
And our fourth and final focus area is sustainability and safety.
Providing safe reliable operations is the foundation of sustainability at Enlink and a cornerstone of our operational excellence.
You'll see the clear evidence of this through our third annual sustainability report issued last night and available on our website.
Yesterday, we advanced our goal of being part of the energy transition and being an active participant in it.
As we build our path towards our long term emission goals, we have established emission reduction milestones, which include striving for a 30% reduction in methane emissions intensity by 2024.
And pursuing a path to reach a 30% reduction in our total carbon dioxide equivalent emissions intensity in our operations by 2030.
These milestones will build a path to our long term goal to reach a net zero emissions by 2050.
Lastly to Romania, United with our industry in addressing the environmental impact. We also joined the environmental partnership.
With that I'll turn it over to Ben to talk about operations.
Thanks, Barry and good morning, everyone.
Before we get into the segments I want to thank our team for their efforts to manage the business during winter storm Yuri.
The storm was an unprecedented event that temporarily disrupted volumes across all of our asset segments and created a number of operational challenges.
Negatively impacting the quarter, we purchased gas at extremely high market prices to cover firm sales as volumes received from producers on our systems fell.
We experienced other marketing related losses, including losses on derivatives that in normal times are used to ensure price stability and predictability.
In spite of the challenges presented from the severe decline in customer volumes Enlink resilient assets helped to create offsetting operational savings.
We were able to make limited incremental commodity sales to support local markets and less operationally affected regions.
Additionally, as a result of forced outages on our systems due to the unavailability of volumes from producers and from power outages. We received approximately $40 million in credits for unused electricity that had been purchased on a firm basis.
Our focus on operating efficiently and safely helps set the foundation for us to respond swiftly to the challenges the extreme temperatures presented.
Our team is prepared for the storm by pre positioning heavy equipment to ensure that we could access our assets, reducing the levels on our storage tanks. So that we could operate without truck access for a period of time and having detailed plans for how to keep our employees safe as they responded to this unprecedented event.
These actions and others helped contain the operational impact to a window of about 10 days.
We are incredibly proud of the work our employees did during this unprecedented events are.
Our team worked tirelessly to ensure that all of our assets operated to the greatest extent possible because we know that our products are essential to the lives of those in our communities.
Additionally, I want to add on to Barry's earlier comments on the Amarillo Rattler acquisition, we are extremely excited and deepen our long standing relationship with Diamondback energy one of the most successful Permian focused producers.
At a cost of $60 million the acquisition represents attractive economics of about six times on 2022 expected EBITDA.
Thanks in part to significant operational savings and it requires minimal capex for system integration.
Now moving to the segment results. The Permian continues to see robust activity and generated $42 $8 million in segment profit.
Additionally, the first quarter of 2021, Mark the third consecutive quarter of positive segment cash flow with $29 $5 million being generated.
Average natural gas gathering volumes were 1% lower compared to the fourth quarter of 2020, but increased by approximately 11% over the first quarter of 2020.
Average natural gas processing volumes for the first quarter were 3% lower compared to the fourth quarter of 2020 net increased by approximately 2% over the first quarter of 2020.
The sequential decline in gas volumes on our system was due to the temporary severe volume disruptions we saw from here for.
For example, we saw volume reduced as much as approximately 90% on our Midland gas system before returning to normal operations.
When we look at March 2021 volumes gathering and processing volumes increased over 12% and about 7% respectively over December 2020.
Project War-horse, our Midland Basin plant relocation.
<unk> to make good progress and it remains on schedule to be in service in the second half of 2021.
Given the current commodity environment and level of producer activity, we anticipate that war horse will be highly utilized shortly after startup.
Turning now to Louisiana segment profit for the quarter was very strong coming in at $82 $2 million.
This represents an increase of almost 2% when compared to the seasonally strong fourth quarter of 2020, and a 9% increase from the first quarter of 2020.
Louisiana saw very strong cash flow generation of $79 $4 million during the quarter.
And we continue to forecast strong cash flow for the remainder of 2021.
The segment benefited from strong NGL prices. The recent inception of the venture Global Transportation agreement and the acquisition of Jefferson Island storage in hub.
The recent acquisition of the Jefferson Island assets also helped to balance our system and ensure that our firm, Louisiana customers, including utility power and industrial users continued to receive service during winter storm here.
And despite the addition of the acquired assets our focus on operational excellence benefited the segment as operating expenses declined over 8% year over year.
Moving up to Oklahoma, we delivered $55 $5 million of segment profit for the first quarter of 2021, which was approximately $43 million lower than the fourth quarter of 2020.
The first quarter of 2021 marks the first quarter following the exploration of a minimum volume commitment.
This N V C accounts for approximately 40% of the decline relative to the fourth quarter of 2020.
Despite the M D C. Rolling off Oklahoma continues to be a very strong source of cash flow, which was approximately $54 million in the first quarter of 2021.
Natural gas gathering and processing volumes decreased by about 10% sequentially.
Similar to what we saw on the Permian average volumes for the first quarter of 2021 were significantly impacted by the volume disruptions associated with Yuri.
Which saw temporary reductions of over 90% in Oklahoma.
The JV project between Devon, and Dow began development under its two rig program we continue.
To expect to begin receiving volumes in the second half of 2021.
Additionally, we expect to see slightly higher levels of activity from private operators given the current commodity price deck. We think both of these factors may help provide momentum into 2022.
Wrapping up in North, Texas segment profit for the quarter was $76 9 million, which increased by approximately 25% compared to the fourth quarter of 2020.
Additionally, we saw very strong stable cash flow generation with approximately $75 million in the first quarter of 2021.
Our team in North, Texas is doing an incredible job managing the asset base and was able to reduce operating expenses by 6% compared to the first quarter of 2020.
Gathering volumes for the first quarter of 2021 declined 3% when compared to the fourth quarter of 2020 due in part to the impact from here.
While volumes were negatively impacted by the storm, we were able to support the local market during the storm with some limited incremental gas sales at higher than normal prices.
North Texas is a mature basin that we have been encouraged by some recent activity.
On a private operator drilled four very successful new wells on our system in the first quarter and BK V has been reactivating old wells and re stimulating active wells.
This kind of activity can help to reduce the overall decline rate of the basin.
With that I'll pass it over to Pablo to discuss our financial update.
Yeah.
Thank you Ben and good morning, everyone.
I'll start with our first quarter highlights.
As Barry mentioned Enlink delivered a strong first quarter, achieving $249 million of adjusted EBITDA.
The team overcame significant volume disruptions and operational challenges created by the Winter Storm. In addition to the Oklahoma MVC roll off.
Enlink also achieved $94 million of free cash flow after distributions for the first quarter of 2021 with all four of our asset segments delivering strong contributions.
As Ben highlighted winter storm Uri temporarily impacted all four of our segments. However.
However in aggregate the storm did not have a material impact on our first quarter results.
Yeah.
On a segment level basis, Oklahoma was the hardest hit since it did not have significant offsets the count on the volume impact to our systems.
We estimate that Oklahoma was adversely impacted by approximately $15 million.
North, Texas on the other hand.
A net positive impact of a similar magnitude.
The effects of winter storm Yuri on our industry are far ranging and resulting industry wide litigation and billing disputes will take time to resolve.
In addition to our team's performance through the February storm, we're incredibly proud of the work they have done to focus on operational execution and gain efficiencies since 2019.
Operating and G&A expenses in the first quarter of 2020, one were down 13% year over year, excluding the $40 million electricity credits, resulting from Yuriy and project more force opex of $7 $6 million.
We continue to see the significant cost reductions that we achieved in 2020 as a.
100% sustainable in 'twenty, 'twenty, one and a large portion of them about 85% to 90% sustainable even in a modest growth environment.
On the capital expenditure front the team continues to keep a sharp eye on capital light high return projects as exemplified by project work Force.
For the quarter capital expenditures net to Enlink, where only $28 million, which is down from $91 million in the first quarter of <unk> 'twenty.
We do however, anticipate capex to pick up starting in the second quarter. As we proceed with the project War horse and other well connect activity.
In total we continue to expect capital expenditures to be between 140 and $180 million in 2021.
On the balance sheet side, one of our top priorities is to maintain our strong liquidity and financial position and we continue to make progress on debt reduction.
Yeah.
During the quarter, we reduced our bank debt balance by $100 million and increased our cash position.
We continue to be well positioned to repay our remaining $350 million term loan balance this year, given our strong free cash flow generation and our $1 $75 billion on drawn revolver.
Also in the first quarter, we expanded our AR securitization facility by 50 million to $300 million, while simultaneously lowering the cost by almost 40 basis points to LIBOR, plus 125 basis points.
At the end of the quarter, we had only $150 million drawn on that facility, giving us additional liquidity.
Our debt to adjusted EBITDA ratio under our credit agreement was four two times at quarter end.
Reducing leverage below four times continues to be our objective and we will likely set a lower objective over time.
Now as we look ahead with a strong first quarter under our belt, we feel very good about our guidance range of $940 million to $1 billion of adjusted EBITDA.
And $275 million to $325 million of free cash flow after distributions.
Yeah.
We continue to see solid operator activity, which should drive higher volumes in the second half of the year.
And while we have seen some volatility in commodity prices.
Current forward curves for Ngls and W. T I remain above the assumptions used in our guidance for.
For reference as discussed last quarter, our guidance was based on average prices of 55 cents, a gallon for Ngls and $3 per M M Btu for natural gas.
And $50 a barrel for W. P I.
Yeah.
That said Theres still a lot of year yet to play out. So we will look forward to providing a further update with respect to our guidance on our second quarter call.
Turning to capital allocation.
We remain committed to a disciplined and balanced allocation of our free cash flow.
While deleveraging the balance sheet remains our top objective, we have the national flexibility to pursue other high return opportunities and return of capital to unit holders.
We continue to evaluate small tuck in acquisition opportunities around our existing footprint.
But like the Amarillo Rattler acquisition, those investments will have to Cui our high bar with respect to returns and not impede our deleveraging objective.
We did not repurchase any of our equity or debt securities in the first quarter, but continue to have that flexibility as we generate cash and balance our capital allocation objectives.
With that I'll turn it back to Barry.
Thank you Pablo to sum it up I am very proud of all the hard work and dedication of the team has shown to put us in this position and showcase the resiliency of our asset footprint during this past quarter.
We are well on our way to meet our 2021 guidance and continue to lay the foundation for this to be our trough year in terms of EBITDA.
Additionally, we are laying the path to be active participants in the energy transition with that you may now open the call for questions.
We will now begin the question and answer session.
To ask a question you May Press Star then one on your Touchtone phone.
If youre using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
The first question will be from Shneur <unk> of UBS. Please go ahead.
Hi, good morning, everyone.
Maybe to start off I was wondering if we can talk about the Oklahoma segment for drove that here.
You know when I sort of think about this segment. Several years ago, you were coming off a very active period and you know when the rig count decline you were you're fighting high decline rates just because of the newer wells you had the MVC roll off.
At the end of last year, and so I guess trying on my question is are we at the point, where the decline rates on more manageable.
Can you talk about where it goes from me from here have rigs returned to the footprint.
If so how many.
Can we assume with the flattening of decline rates that not as many rigs are needed to keep Oklahoma flat, especially when I sort of take into account the 14% reduction in opex year on year and any color would be would be super helpful. In helping us think about the Oklahoma segment on a go forward basis.
Hey, Eric Good morning, it's Ben.
Yeah, a lot a lot a little sub questions there, but let's let's just kind of lay the.
Laying the foundation, obviously the storm.
Makes it difficult to see in our reported first quarter results.
Sort of the underlying volume trend.
Oh I will share with you that if you were to look at March versus December.
It's about the fairest comparison, you have a pretty noisy quarter.
The gathered volumes were down about 2% I think the process volumes were down about about 5%.
So that gives you some sense of what's going on.
On the footprint with relatively little activity today in terms of rig activity right.
Right at the moment, we have three running two of those are the Devon Dow JV rigs that we expect to be honest footprint all year long and we expect to see first volumes from that activity.
In the second half kind of late late summer early fall and.
And the third rig in the private operator, and Thats been pretty consistent we've seen one or two rigs from our private operators.
Alongside the two from the Devon Dow JV.
What I would tell you is the private guys in the current price deck.
Especially with some more robust NGL pricing that really comes into play in the combo play that Oklahoma is.
I expect we will see a moderately higher level of activity from the private guys in the second half and I think that combined with the Devon Dow JV sets up to carriers with pretty good momentum into 2022.
Perfect. Thank you for that and maybe it's a follow up question I knew I asked this on almost every call, but I was wondering if we can talk about the operational excellence program.
On the last call if I remember correctly you talked about.
You know how much you achieved last year and.
When you first embarked on it and that you were working on 'twenty potential different concepts now.
Trying to understand.
Kind of what your expectations are around it.
Is it something where we see you know another round of big improvements in 'twenty one.
Or is it something that we have to wait for Cal 'twenty, two and they're more a little bit longer term in nature.
Just any color around your expectations around that in terms of both from an opex reduction perspective, but also from a revenue optimization perspective.
Yeah Shneur, what you are right, we did a tremendous amount of good work in 2020 and that really showed up.
Not just in Opex, but also in G&A, we call it operational excellence, but theres, certainly a strong G&A component to it as well.
Pablo in his prepared remarks talked about some of the Opex comparisons.
And we talk about some of those two and in the earnings release.
When we look forward, we do have a very robust pipeline of operational excellence.
Opportunities.
I would say that in 2020, we got a lot of the low hanging fruit 2021, we're doing some of the harder where some work around technology implementation that we think will pay dividends in future periods. So are we going to see another 20% year over year reduction no I don't expect to see that but I think what you will see.
We will continue to grind cost out quarter after quarter on a volume adjusted basis. So as the business grows the cost base naturally wants to growth and our operational excellence effort will help to keep that cost base in check or even pushing downward.
Perfect I have more questions, but I'll pause for now thank you.
Yeah.
Thank you.
The next question will be from Michael Cusumano of Heikkinen energy.
Hey, good morning.
Good morning.
No.
Correct me, if I'm wrong, but I believe the Amarillo rattler.
JV had a processing plant plan that they had table through 2020 is that right.
Yes, that's correct Michael and so is it you kind of go ahead.
No go ahead ask questions.
So I guess my question was.
What are they starting to run into.
Capacity restraints to where that plant was going to be revisited from.
From a capex standpoint.
Yeah, Here's what I would say they they had planned to build a small processing plant on that footprint and I think that.
As all of us in the energy sector. Thanks through the right way to do our business.
Investing in small processing facility on a relatively small gathering system.
Maybe it doesn't have a ton of visibility to long term.
Becoming a big system is probably not the right thing to do and I think the diamondback team recognize that and recognize that in the hands of Enlink.
We could operate that that system at much lower cost and integrate those volumes into our broader system. Today includes five processing plants and one under construction and so there is both an efficiency benefit and also a reliability benefit from not having all of your eggs in one basket.
It's big.
Okay. So there is enough capacity on your system to where no new greenfield plants needed right now.
Volumes could yes, that's right I mean, we have the war horse plant under construction Thats, our plant relocation project from Oklahoma to the Midland Basin.
So our near term expectation is that we'll operate the amarillo assets until the time that more horse becomes available I would also say, though that one of the best things about our team is when we give them some assets to work with they find new and creative ways to use them and that may end up being the case here, we'll see.
Gotcha.
Good job to your team at I think most will agree that capital efficient agreements like this are a big positive for our industry.
T O.
Appreciate that.
The secret is you can appreciate is having some operational synergy and also having some downstream integration and that's what made it possible for diamondback in Amarillo to exit at a price that they felt good about and for us to integrate a price that we feel good about.
Sure got it thank you.
The next comes from T J Schultz of RBC capital markets.
Hey, Good morning, let me just starting on North, Texas say, some new join was successful so outside of <unk>.
The storm impact on first quarter or just what are your expectations for <unk>.
That drilling activity in some of the re stimulations you talked about the impact.
Kind of the volume declines that we've been seeing.
Yeah. Thanks P J.
Great quarter in North, Texas fighting through the storm.
Operations team all across Enlink did a great job certainly they did it in north Texas.
When you think about the volume we did have four new wells drilled in the first quarter. They were great wells some of the best Wells, we've seen in the Barnett profitably ever they were lean gas wells and have been great great performers.
I don't necessarily expect that that translates into consistent rig activity at this point.
I do think that it probably gets the attention of some private operators can I think that combined with some price deck strength that is sustained over time.
Would bring some activity back to the back to the footprint.
In the meantime, though <unk> has been a wonderful customer for us to have as Devin successor.
On the biggest acreage footprint.
In North Texas.
They have been extremely active reactivating on.
A number of wells that have not been active on that added maybe three or 4 million cubic feet a day.
Also experimenting with some re <unk> and re stimulation techniques that have been successful and so those two things together over time on to help stem the decline on North, Texas, I think it's probably a little bit too soon to start quoting specific numbers, but.
Absent that activity, we expect to see sort of a high single digit number and so to the extent that we see some activity like this pool will help to stem that.
Okay understood and just my follow up would be.
Around the storm impact a lot of moving parts in the quarter. My question is just really around the comment on some of the billing disputes coming out of the storm.
What's the potential impact to you all from any potential or outstanding litigation around that thanks.
Yeah, Hey, T J, it's Pablo.
So as you know and you've heard.
From others.
The storm created quite a mess in our industry.
Everyone Force matured, everyone else and so it's going to take some time for those things to get resolved.
From our perspective.
We feel good about our position on all of that and what we reflected in the first quarter are those things that we were able to bring to a resolution pretty efficiently.
Thank you T J.
The next question will be from James Kirby of J P. Morgan.
Hey, good morning, guys.
Good morning.
Maybe just want to start here with the newly.
Newly announced emission reduction goals.
As mentioned on the opportunities on slide in and it seems I guess, the most immediate would be the or I guess, the most capital intensive that is near term would be the compression compressor engines and three of them for electricity I was wondering if you could allocate where talked through kind of.
What the capital burden would be for that or any kind of early budgeting stages that you talked you've gone through in terms of how much capital that would take.
Yes, Hey, James This is Barry. Thank you for the question, let me, let me again say that.
The work that the team has done on this has been terrific work, we've had a large group across the company from all different departments, who have.
Just really done extensive work to get a handle on our emissions and how we can continue to get.
Get better there.
So we're proud of the targets that we've set.
We feel confident that we'll be able to hit those intermediate targets that we've established and we have a pathway specific pathways to each one of those that being said.
We're not ready at this point to put a number on the capital.
I'll tell you that it is going to be relatively modest amount of capital because we're doing the things that are closest in the things that can be done very efficiently I think.
You hit on the point that is is correct, which is when we start getting into switching out any of the compressor engines to move from.
From gas fired to electric.
Electric fired.
We're certainly going to see that but I'm going to ask you for some patients for us to establish better capital numbers and communicate that to you in the future.
Got it appreciate that and then maybe just a follow up the guidance you mentioned more color coming in in the <unk>.
Earnings, but maybe just where we stand now looking at the commodity price curve.
Since you know above.
Above where you guys are budgeting.
Budgeting for and maybe just with current activity levels has messaging changed in terms of what is needed to kind of get into the high end of guidance were slow and or is that really just activity driven.
And I guess as we start through April and the first few days of May how are we seeing activity relative to kind of a budgeting acquisitions here.
Yeah, James It's Pablo.
Great question.
Happy to provide color.
Activity has been good and we are optimistic about that continuing particularly with the price backdrop very similar to what we said in the call last quarter.
Current price environment, if it hangs in there is sufficient to put us towards the high end of the range.
So we're optimistic we're off to a good start with a very strong quarter and we continue to gain momentum both on the <unk>.
Volume side in the Permian that we expect the ramp in the second half as well as on the cost control side that touched on.
Great. Thanks for taking my questions.
Thank you James.
The next question comes from Gabriel Moreen of Mizuho.
Hi, This is Chris Jeffrey on for Gabe.
Just had one left him about the Permian crude volume, we noticed that they were down due to the timing of producer completion activity I was just hoping for more color on that and whether the volumes are now kind of running at former levels.
Yeah, Hey, Chris it's been if you just kind of look at the evolution of volume. So if you go back to quarter to the third quarter of 'twenty. It was 99000, a day did in the fourth quarter. It popped up 20% to 120000, a day and then in the first quarter of 'twenty. One we were at 108000 a day. So a couple of things going on there in the fourth.
Order, we had some pretty robust completion activity and we saw some flush production. So you got the benefit of that and that's what drove a 20% increase quarter over quarter now go on from $1 20 to one.
You didn't have as much flush production in <unk>, but you did have 10 days of storm impact that that held us back a bit.
And so maybe that kind of helps you with the with the trend.
The crude volumes from my perspective.
In line with our expectations by its nature.
Just because it's a smaller business for us it can be a little bit lumpier than our gas volumes are just depending on when wells get completed and turned to sales.
Yeah.
Great. Thank you very helpful.
The next question will be from Chris Tillett of Barclays.
Hey, guys good morning.
Just wanted to circle back on the JV here for a second.
I guess first you mentioned that in that six ex multiple there was some operational savings built into that so I was just wondering if you might be able to quantify it how much of those savings are built in.
Yeah, I don't want to get into the nuts and bolts to deep aircrafts, but let me give you a little bit of a.
I think from Diamondback and Amarillo perspective.
The business today was was not generating much.
Much cash flow.
From our perspective, we have not only the operational synergies. We also have some downstream integration with our NGL business that provide some value to us that others might not be in a position to capture.
And so between those two things.
From our perspective, it looks like about a six times on on next year's EBITDA I'll add we're not banking on an enormous amount of volume growth to achieve that the volume flowing today is on the order of 13 million cubic feet a day, our number for next year, something like 17 million cubic feet a day its not not hero.
On consumption and Diamondback actually has two rigs working on.
Acreage dedicated to Amarillo as of today, So we feel good about it and like I said earlier.
M&A works well win win from our perspective, we feel good about the price fix next to us from Diamond backs perspective, it looks like our sterling cash flow or selling not very much cash flow and offer $60 million to $75 million.
Okay.
I mean, I guess is there much capital required to integrate your existing assets with the system.
There is not if you look at the math, you'll see that that the gathering system lives right on top of us.
And so it's a pretty efficient.
Integration plan.
We're talking.
$1 million to $2 million when everything is said and done.
Okay. That's helpful. Thanks, and then I guess last on that.
You guys have mentioned that the gathering agreement was amended are you able to provide any color on what in the agreement was amended.
Yeah.
So the bigger picture here is we have a dedication.
Significant dedication from Diamondback in this university lands area.
I think it's for actually for a day for contracts that we've done with diamondback over the years.
On that lies right alongside the Amarillo dedicated acreage and so what we did was we put in place an agreement for the Amarillo acreage that is similar to our other agreements and we also extended the terms of our existing agreements so that now.
Most of that areas dedicated to this and we'll be able to serve it more efficiently.
Under under one consolidated acreage position.
Got it okay.
That was it from me then thanks guys.
Again, if you have any questions. Please press star then one.
Yeah.
Yes.
Seeing no further questions I'll turn it back to Barry Davis for any closing remarks.
Thank you Carrie for facilitating our call. This morning, and thank you everyone for being on the call today and for your support as always we appreciate your continued interest and investment in Enlink. We look forward to updating you with our second quarter results in August in the meantime, we wish you all well and stay healthy have a great day. Thank you for joining.
Thank you Sir the conference has now concluded. Thank you all for attending today's presentation. You may now disconnect your lines have a great day.
Yeah.
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