Q1 2023 Crestwood Equity Partners LP Earnings Call

Speaker 1: I I.

Speaker 2: in the Securities and Exchange Act of 1934 that are based on assumptions and information currently available at the time of today's call. Please refer to the company's latest filings with the SEC for a list of risk factors that may cause actual results to differ. Additionally, certain non-GAAP financial measures could likely lead to show up with GAAP in Happiness rotation.

Speaker 2: such as Ibra and adjusted Ibra, distributed, viewable, cash flow, and free cash flow will be discussed. Reconciliation to the most comparable GAAP financial measures are included in the news release issue this morning. Joining us on today's.

Speaker 2: Call with prepared remarks are founder chairman and chief executive officer Bob Phillips President Robert Halpin and executive vice president and chief financial officer Johnny black additionally Additional members of the management team are available for the question-and-answer session with Crestwood's current analyst following the prepared remarks

Speaker 3: turn the call over to Bob Della. Thank you, operator, and good morning, everyone. Thank you for joining us today to discuss our first quarter, 2023 results and little discussion on how we're positioned for the rest of the year. I'll begin by a few opening remarks and then turn it over to Robert for an operational review of the quarter.

Speaker 3: And then finally, a Johnny to review the first quarter financial results in more detail.

Speaker 3: As I start, as a reminder, we went into a lot of detail last quarter about our strategic M&A, but let me just give you a reminder that we have repositioned the Crestwood portfolio in the last couple of years through strategic M&A, specifically to bulk up our G&P assets in the areas that we operate.

Speaker 3: and extend our long-term producer-dedicated inventory in those core oil-weighted resource plays, which are the Williston, Delaware, and Powder River Basins.

Speaker 3: Our producer-customer portfolio continues to improve year-over-year through upstream consolidation.

Speaker 3: We believe all fundamentals will remain strong throughout the decade and natural gas prices while lower today due to oversupply. We'll start to improve beginning in the second half of this year and on into 2024. We expect that to occur due to a pullback in gas directed rig activity.

Speaker 3: is strategically located on or near some of the best undeveloped acreage in these oil-weighted basins.

Speaker 3: with the lowest break even cost and the highest potential for production growth. And we think this is indicated by the 70 new wells that we connected to Crestwood assets in the first quarter. So let me give you a high level update on our core areas first in the williston.

Speaker 3: We're seeing the Arrow system slowly catch up to last year's volumes, as we expect to connect more than double the new wells in 2023 than we connected last year.

Speaker 3: Our key producers, Devon, Exxon, Interplus, are maintaining active new drilling or duct completion programs.

Speaker 3: And they have a number of workover rigs coming back in the field, bringing weather-related shut-in production back online. A lot of activity around Arrow on the Rough Rider system.

Speaker 3: CoORD is spot on on their 2023 development schedule, and we just placed the very important City of Williston Three Product Gathering project in service last week, and this is critical infrastructure to support CoORD's 2023 and 2024 drilling program in the western acreage dedicated to us.

Speaker 3: And let me finally say that our Williston operations team continues to do a great job in reducing operating costs, continuing to find integration synergies, and mitigating winter weather disruptions that we've experienced in the fourth quarter and the first quarter of this year.

Speaker 3: Now on to the Delaware. Now that our Senderos, CPJV, will alike and oral assets are fully integrated, we continue to see solid performance in producer drilling activity, new well-connects, IP rates, system volumes, and third party processing opportunities.

Speaker 3: With excess gathering, compression, and processing capacity on the legacy system that we built for Chesapeake pre-bankruptcy, Crestwood is very well positioned to compete for not only the growth of continental volumes, but significant new producer supplies that are being developed in the PRB in and around our gathering systems. Now quickly to the finance side, despite all the changes in our portfolio, Crestwood continues to maintain strong distribution coverage and conservative financial metrics compared to our peer group. To keep our balance sheet in check, we divested legacy low growth and low growth growth.

Speaker 3: and non-core GNP assets in the Barnett Marcellus.

Speaker 3: Plus, we sold JV interest in our gas storage assets at Stagecoach and Trace Poloshos.

Speaker 3: We got better than expected prices for those assets and are able to reduce our debt back to four times leverage on a pro forma basis. We continue to believe that was a really good trade for Crestwood as we scaled up our GNP portfolio with visible long-term growth in top-tier oil weighted basins. And we expect that to drive continued declines in leverage in 2020.

Speaker 3: Our operations plan this year is now to focus on execution, optimization, and value creation, while our capital allocation strategy for 23 remains focused on utilizing free cash flow after distributions to pay down debt and enhance Crestwood's financial flexibility.

Speaker 3: So, a couple of final notes before I hand the call over to Robert. I want to reiterate that Crestwood is off to a great start in 23. Got volumetric growth on key systems. Our quarterly performance was very much in line with market expectations and we continue to enhance our financial flexibility, closing the trace transaction and getting our leverage ratio back to 4.0.

Speaker 3: pro forma. After a busy 22, we're excited to focus on this year's priorities to execute on our 23 guidance, grow EBITDA and free cash flow by optimizing our asset base and creating long term value for our unit holders through the leveraging of the balance sheet and paying out

Speaker 3: our well-covered distribution of $276 million a year to common unit holders.

Speaker 3: We think the combination of all these strengths across the Crestwood organization will continue to represent a compelling total return opportunity for Crestwood investors. And we're really pleased with how we're well positioned for the next several years to grow in all these areas.

Speaker 3: And with that overview, happy to turn the call over to Robert and Johnny to cover the quarter's operational and financial results.

Speaker 3: Robert, thank you Bob and good morning everyone.

Speaker 3: As Bob mentioned, I am very pleased with Crestwood's great start to the year and believe that the outlook for the remainder of the 2023 timeframe looks very strong across all of our assets.

Speaker 3: Starting in the Williston Basin, we connected 29 wells across the Arrow and Rough Rider systems during the first quarter, which was in line with our expectations as producers turned in line wells on schedule and on time.

Speaker 3: This was a fantastic accomplishment for our operations teams up in North Dakota, as well as for our producer customers, as this past winter proved to be exceptionally challenging as record snowfall and cold temperatures hit North Dakota and surrounding states.

Speaker 3: While we did experience some lingering volumetric impacts associated with the weather in the first quarter of this year, we are seeing positive trends across the assets as warmer weather has arrived.

Speaker 3: Also important, it appears as though our customers have successfully mitigated some of the supply chain and labor challenges that we faced in North Dakota over the past year, as DNC schedules year-to-date have been right in line and planned wells for Q1 and the early part of Q2 have turned in line on or even ahead of schedule.

Speaker 3: To that end, we continue to anticipate strong producer activity across the rest of the year and remain on track to connect between 115 to 125 new wells by year end. The majority of these new well connections are coming from key Bakken operators Devon Energy and Cord Energy. Our growth capital spend in the basin.

Speaker 3: approximately half of our 2023 budget is progressing as planned and is focused on the Western expansion of the Rough Rider system as well as incremental expansions on the aerosystem. We are excited to bring our Rough Rider expansion into service as we are optimistic about the growth potential of the dedicated acreage and the third party opportunity set in the Western Wilson Basin.

Speaker 3: In the Delaware Basin, we connected 35 wells across our New Mexico and Texas gathering assets during the quarter, which drove natural gas gathering volumes of 495 million cubic feet per day, or over a 100% year-over-year growth.

Speaker 3: This is in part due to our acquisition of Sendero Midstream, but also is a result of substantial volume growth on our legacy Willow Lake system by both public and private operators, with gathering and processing volumes growing by 60% and 50% year-over-year, respectively.

Speaker 3: For the balance of the year, the development activity for our assets remains strong, and we continue to expect 120 to 130 new wealth connections through the end of 2023. And finally, our capital spend in the Delaware, approximately 40% of our 2023 budget remains on track.

Speaker 3: and is focused primarily on WellConnect, system expansions, and compression additions in New Mexico to accommodate continued development from our dedicated customers.

Speaker 3: Now moving to the Powder River Basin, we connected 6 wells during the first quarter, and Crestwood remains on track to connect between 10 to 20 new wells throughout 2023.

Speaker 3: Additionally, we are actively pursuing commercial opportunities with large operators in the basin to bring new volumes onto the Jackalope system and capitalize on our unutilized processing capacity at the bucking horse facility.

Speaker 3: And finally, in the storage and logistics segment, our NGL logistics business, which constitutes about 90 percent of segment earnings following the trace divestiture, had a successful quarter optimizing our NGL storage and transportation assets in response to increased demand from winter weather in the Midwest and East Coast.

Speaker 3: the 10 million barrels of NGL storage and 13 terminals, the NGL logistics business is well positioned this year to capitalize on continued commodity price volatility and deliver a solid year of results.

Speaker 3: And now I'll turn the call over to Johnny to cover our financial results. Thank you, Robert. For the first quarter of 2023, Crestwood generated adjusted EBITDA of $193 million.

Speaker 4: A year over year increase of 11% driven by our expanded operations in the Williston and Delaware basins.

Speaker 4: Additionally, Crestwood delivered approximately 104 million dollars of distributable cash flow.

Speaker 4: For the first quarter of 2023, Crestwood announced a 65.5 cent distribution, payable on May 15 to unit holders of record as of May 8, resulting in a quarterly coverage ratio of approximately 1.5 times. Looking at the segment results in the gathering and processing more segments, the gathering

Speaker 4: First quarter, 2023 EBIDA totaled $133 million, roughly flat to the first quarter of 2022. Due to incremental cash flow from a full quarter contribution of the OASIS mystery mass sets, offset by lower gas gathering and processing volumes and reduced commodity prices impacting areas per cent of proceeds.

Speaker 4: revenue contracts. In the gathering and processing style segment, first quarter of 2023, segment EBITDA, soldered $41 million.

Speaker 4: an increase of 50% year-to-year. Segment growth was driven by a combination of the Senderro midstream and CPJV acquisitions coupled with volume growth from the legacy Permian assets.

Speaker 4: offset by the divestitures of the Barnett and Marcellus GMP assets. In the storage and logistics segment, EBITDA totaled $33 million for the first quarter, a year-over-year increase of 55%, driven by increased product demand from winter weather in the first quarter. Next, from a capital investment standpoint,

Speaker 4: During the first quarter, we invested a total of $37 million in growth capital projects.

Speaker 4: which was primarily related to the continued build-out of the three-product gathering system for cord energy and other third parties on the western side of the Roughrider system.

Speaker 4: In addition, we also invested capital into Delaware for WellConnect and to expand our compression capacity to support the substantial volume growth over the next 12 months from our dedicated producers in New Mexico. On a full year basis, Crestwood continues to expect 2023 growth capital investments.

Speaker 4: to be between $135 million and $155 million. Turning to the balance sheet, Crestwood ended the first quarter with $3.3 billion of total debt outstanding.

Speaker 4: including $474 million drawn on our $1.75 billion of revolving credit facility, resulting in the consolidated leverage ratio of 4.2 times.

Speaker 4: As Bob mentioned, pro forma for the Sailotrace Palacios, which closed a few weeks ago in early April , Crestwood now has a leverage ratio of 4.0 times an available borrowing capacity of approximately $1.2 billion as of the end of the first quarter.

Speaker 4: Lastly, from a strategy standpoint, if you have any questions, feel free to contact me

Speaker 4: Crestwood's number one financial focus going forward is maximizing free cash flow generation from our assets and minimizing costs and capital needs across the portfolio.

Speaker 4: We are forecasting free cash flow to ramp in the second half of this year, and we remain committed to allocating all free cash flow after distributions to debt pay down in 2023, as we are squarely focused on the balance sheet and reducing our debt outstanding. We believe this strategy will create financial flexibility for the company to deliver incremental returns to our unit holders over the long term.

Speaker 2: With that operator, we're ready to open the lineup for questions. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

Speaker 2: Kristen Richardson with Scotiabank, please proceed with your question.

Speaker 5: Hey, good morning guys. I'm just curious about maybe the mix of WellConnect this year in the BAC and the 115 to 120. And maybe at a high level just share kind of where you're seeing most of the activity with East versus West, you know, Rough Rider versus Arrow, etc.

Speaker 4: Yeah, no Tristan, this is Johnny. It's a great question. You know, it's a pretty even split. I would say. Of the midpoint, you know, call it 120. It's roughly 60 from Arrow and 60 from Roughrider on the Arrow system, really across both of the systems, I'd say.

Speaker 4: roughly 75% of those well connects are three product well connects at both arrow and rough rider and then roughly 25% are kind of water only well connects.

Speaker 4: on both of those systems. And again, as Robert said, on the Arrow system, the activity is underpinned by Devon, and then NICE contributions from XPO, as well as EnerPlus. And then on the Roughrider system, that's underpinned by Cord Energy, and then we also have some nice third-party producers.

Speaker 5: connecting wells up there as well. Appreciate it, Johnny. And then Bob, you talked about the potential to see your existing capacity in the Delaware Bowl over the next 12, 18 months. Could you talk a little bit about, you know, lead times you're seeing for early procurement for additional processing infrastructure?

Speaker 5: You know, maybe where geographically future plant might go in the Delaware or even, you know, just to the extent you're thinking about offloads as we see new 3rd party capacity in the Delaware coming online in 2324.

Speaker 3: Yeah, Tristan, let me maybe answer a question that you didn't ask and then turn it over to Diaco, who runs that business for us. He's got much better handle on who's building new plants, what their time schedule is, and how we're going to fill the void there and make a good deal of what we think of incremental profit by utilizing the available capacity.

Speaker 3: You remember when we announced the Sendero deal last year.

Speaker 3: One of the big attractions to us of that deal was a whole lot of excess processing capacity. We felt like our orla plant was largely full or was going to be full fairly soon, and we properly evaluated that. That was a good buy and a good strategy for us, and the drilling has been better.

Speaker 3: than we thought in the area that we operate. There have been a couple of maybe short-term delays or pushbacks just due to gas price, maybe a little rejiggering about target completions in a lot of these multi-zone wells out there. I'll let the OCCO talk about that.

Speaker 3: But on balance, we have been, as one of the very few guys that has excess capacity in the area, with all this new gas production coming online.

Speaker 3: We have been targeted by not only producers who ask us before they drill, can we get in your plant.

Speaker 3: But many of our competitors who we have good relationships with and interconnects with are coming to us and asking for onload or offload opportunities as the case may be. So we have not only an active WellConnect program going on the acreage that's dedicated to us and we're more than serving all of our current contract producers.

Speaker 3: needs for processing capacity. But we are also actively pursuing on-load opportunities with these other operators out there, and we think that'll last a year, year and a half, and as our producers continue to execute on their drilling plans in 23 and 24.

Speaker 3: we'll largely be filling up that capacity with long-term dedicated production, and that's more profitable for us than onload is. So Diaco, maybe give us a sense for who's building plants out there, what the timing is, and how we see the overall lay of the land from a processing standpoint. Yeah, so without going into the details of the...

Speaker 6: of the counterparties. What we are doing, Bob's right on the strategy, we're working with others for onloads and those onloads could be future offloads for us to mitigate capital and push capital out. So that's the structure that we're contemplating with others helping each other out. The production activity as Bob highlighted is spot on. We'll fill the void and enter.

Speaker 6: processing capacity there, we'll probably trigger that first and then explore a new plant addition down the road when we can underwrite it properly. And that will most likely be in New Mexico.

Speaker 3: Yeah, the good thing, Tristan, is it gives us a chance to not only fill up the available capacity but push capital out as well. That's really important to us right now as we're trying to be very disciplined in all three basins about capital utilization.

Great. Bob, Diaco, thank you, guys.

Thank you. Our next question comes from the line of Spiro Dumas with Citi. Please proceed to the left if you have a question.

Hi, this is Chad on prespiro. I believe you mentioned EBITDA DCF and coverage metrics met or exceeded your expectations in the first quarter and the guidance range for the four year appears to factor in a fairly wide range of scenarios. Just curious when could you be in a better position to refine the EBITDA guidance range and what variables go into that?

Hey, good morning. This is Johnny speaking. So, you know, it's a good question. I'd say to the extent we would revise or tighten our range. I would say that probably would be done in the August call after our 2nd quarter earnings. Where we've got 2 quarters of actuals and more visibility. Into the 2nd, half of the year.

As we think about the outlook for the remainder of this year, by far the biggest factor for us will be the timing and the performance of the well connects to be brought online between Q2 and Q4. As we stated in our press release in our initial comments, we connected 70 wells in the first quarter, which exceeded our expectations. And then from Q2 to Q4 this year, we're expecting to connect another 190.

from a timing standpoint as Robert mentioned in his remarks our producers generally connected well ahead of our internal estimates through the first quarter and based on feedback and activity from our producers we're expecting that trend to hold for the remainder of 2023 especially since we're now past the extreme winter weather in the Bakken for the most part.

I'd say the other factor impacting our performance this year will just be around commodity prices. As we have said, we have roughly 15% of our company cash low exposed commodity prices via our pop contracts in the Willis and Delaware. So realize gas and crude prices will have an impact on the financial performance either to the high end or the low end of the range. So.

You know, with that, I think, you know, those are the key factors for this year. Okay, thanks. That's helpful. And then just second question, a small one. Looking through the slide deck, I noticed phrasing on the quarterly, the dollar ramp start in the slides changed to significant cash flow generation from I believe in

fourth quarter call, because $35 million, even though growth from Q1 to Q4, anything to read in there or just $35 million growth, still a good way to think about the EBITDA ramp through the year. Just thinking about exit rates and looking in the 2024. That was a great question and good attention to detail there on the presentation. I'd say it's really just because...

It comes down a little bit, but I'd say that Q4 number is still the same.

Okay, thanks. Makes sense. Thanks for the time today.

Thank you. Our next question comes from the line of Ned Barramov with Wells Fargo. Please share this with your question.

Thanks. Good morning. Just wanted to go back to the Williston. So, well connects were in line in the first quarter, yet gas gathering and processing volumes declined 7 or 8% year over year. And you mentioned the impact of weather. You also reaffirmed well connect targets for the year in the Williston.

Could you maybe review your expectations for volume growth in the Williston exiting 2023 for crude and gas? Yeah, I'll take a shot at that, Ned, you know.

You know the first quarter volumes were still impacted as Robert said through the from the extreme winter weather We saw through the fourth quarter, and we continue to see a bit of that through the first quarter Wells you know continue to be shut in in the fourth in the first quarter You know producers have been you know unable to get

workover rigs out to the wells due to the weather. So we're beginning to see volumes lift right now through the second quarter as weather has improved in the Bakken and our producers are able to get workover rigs out to their pads. Importantly, the weather in the first quarter, as you mentioned, did not impact their completion timing and their turn-in-line timing of the wells.

I'd say cadence of growth between Q1 to Q4, it differs by product again, because there's 3 product wells and there's water only wells. I'd say generally we're expecting about 10 to 15% growth from Q1 levels to Q4 levels this year. So again,

pretty strong exit rates for 2023, setting up a pretty good 2024. Deaco, give some color on our producers activity in the field right now, what they're doing, and we're just now coming out of the wintertime really. In the roads aren't even clear. We still got a lot of mud, and so we're...

supply chains improving, but give us some color around our producer activity. Ned, I'd point you to two things and it's a good question you have. I mean you think about this level of D&C activity. There's a lot of shut-in for offset track. That goes on with that level of activity. And then on top of that, I think we've got somewhere around 25 workover rigs working on aero right now.

Thanks for that very thorough. And then my second question is on leverage and your thoughts on longer term targets. Specifically, are you looking to get to your stated long-term target of three and a half times at some point next year and then maybe stay there or would you consider?

further deleveraging below the three and a half? Yeah, a great question there. This is Johnny again. You know, we've stated, you know, our long-term leverage target has moved, I'd say, from three and a half times to under three and a half times. You know, as we mentioned, we are very focused on the balance sheet this year and allocating all excess pre-cash flow to debt pay down.

We want to get our leverage target closer to that 3 and a half times. Before we start thinking about incremental returns across the board. As we get into 2023 2024. I'd say allocation of capital will really be a function of the outlook of the business at that point in time. And opportunities to reduce our cost of capital.

and continue to drive value for investors. I'd say over time, we see the free cash flow generation of the business ramping significantly in 24 and onwards, which should provide a lot of opportunity with that excess cash flow to either drive into the balance key for incremental returns to our unit orders.

Thank you. Thank you. Our next question comes from the line of Neil Bingman with Cruise Securities. Please proceed with your question.

I'm Lorde gentlemen, my first question is on your SNL segment specifically. Could you discuss expectations for the future earnings given what you're seeing down today's forward curve and I know you had decreased the head's position so I'm just wondering how you're thinking about that today. Yeah, this is Robert. I mean, I think our outlook this year.

with pretty steep backwardation. I think now, as we look out into the future, and we eliminate some of the hedge losses we experienced last year, we should be back in line with normal operating.

Okay, good to hear. And then my second is just maybe on the Powder River assets. Certainly not the size of your Willister or Delaware, but I'm just wondering if you could give some color on kind of what you're seeing in your day activity there in the play and you know its impact on the jackalope system, on your jackalope system.

Yeah, hey, no, I want one thing I'd highlight with our jackalop well-connect results that those actually under represent what we don't report is the well-connects that are behind continental gathering system to the north of the Heritage Chesapeake asset.

So they're quite active over there. They're running two rigs right now. The well results they're seeing are fantastic. And really, as producers ramp up in that area, which they have been doing, the supply chain costs start to become more and more attractive in the well results. They're going to three mile laterals and even testing four.

are going to drive what's needed to break that base and force here soon. So we're very, very pleased with what having Continental as a partner there. They're no longer a public, they're a private, which is fantastic for us, and we're really excited about what's in store for that base.

I appreciate the other. Thank you all. Thank you. As a reminder, ladies and gentlemen, if you would like to ask a question, please press star 1 on your telephone keypad.

Our next question comes from the line of Bill via Escada with RBC Capital Markets. Please proceed with your question.

Hey, good morning, everyone. Just a couple of questions for me. Can you just remind us of what your commodity price sensitivity is, specifically around the POP contract?

Yeah, hey, O'Reilly, this is Johnny. You know, we've got roughly 15% of our company cash low correlated to commodity prices.

as we show in the investor presentation, all that's in the Williston and the Delaware, roughly 75% of that in the Williston and 25% in the Delaware. From a sensitivity standpoint, I'd say every dollar per MMBT you move in gas prices.

Has about a 10M dollar annual impact on the plan. So about a 1M dollars a month for a dollar per MMBTU move and gas. Similarly, on the crude side, every 10 dollar per barrel move in oil prices. Has about a 12 or 13M dollar annual impact on the plan. For about a 1M dollar a month.

bit about, I know you give a lot of producer commentary, but are you hearing any differences between your public versus private producers or maybe some of your larger versus, you know, smidt.

I know you gave a lot of producer commentary, but are you hearing any differences between your public versus private producers or maybe some of your larger versus smaller mid-cap type producers?

Thank you, Ovar. This is Diaco. Appreciate the question. First, I want to point back to what Bob highlighted in his opening remarks. Our strategic M&A has created a portfolio of assets with significant undeveloped inventory in the core of oil-weighted resource plays. And oil fundamentals remain strong and will remain strong. We do see a lot of discussion on private versus public operators. Are two largest privates our continental and mubern?

Again, going back, we're in the core of the core of the oil weighted basins and our privates are not typical privates.

Great. Thank you very much. And Elvira, this is Bob. I might add that in almost all of our basins, we've seen larger companies buying the small privates almost in the way of an internal consolidation or a field consolidation. I'll give you a couple of examples. Of course, continental bought-out chest-peak.

out of bankruptcy and so that was great. That was probably one of the most important things that happened to us over a couple of years ago. But in on the arrow system, I mean we've had Devon fire out, Rimrock we've had Interplus fire out, Bruin.

We had cord before they merged with whiting. Buy out diamondback. So we're consolidating acreage into hands of extremely strong basin players. They're financially strong. They know how to drill and complete wells. Typically they drill and complete better wells than the small privates did.

in the Delaware and we're going through that process now. We've got some really impressive small privates that are drilling great wells and eventually they're going to attract the attention of the bigger players in the play. And that's a good thing for us because we're a long-term player, as Diaco said. By our calculation, and I think we put that information out from time to time, we have several thousand.

long-term drilling locations dedicated to these three systems and the ability to grow and reach out and capture additional inventory. So the financial strength, the long-term quality of our producers is really important to us.

and we look at our portfolio overall right now, it has improved dramatically over the last couple of years.

We've got great producers under contract. We have great relationships with them. We provide good customer service. We talk to them in multiple basins. And so we're in a really good spot with respect to our producer customers. Not sure that helps you with a broad brush across the industry or not, but we do see a lot of people in the industry that are interested in the product.

the private starting to pull back a little bit on gas price, whereas the public's probably weren't pushing it too hard to begin with. But we don't see any big change in the areas we operate on on drilling and development programs over the next 18 to 24 months. In fact, we think we've got great visibility, probably the best visibility that we've ever had.

with our customers in terms of collaborating to make sure that capacities there, the well-connects are there, processing capacities there so that we're not flaring gas in these basins because that's critically important to everybody right now, no flare across the industry.

collaborating to make sure that capacities there, the well-connector there, processing capacities there so that we're not flaring gas in these patients because that's critically important to everybody right now, no flare across the industry. Hope that helps.

That does. Thank you very much. Thank you. Thank you.

Thanks, operator. Just a point in time with the trace transaction, which we closed in early April , we're largely completed with our strategic repositioning. I think we've done a great job to restructure this company portfolio. We're at top three gatherer and processor in the Williston Delware in the PRB.

long-term inventory positions dedicated under long-term contracts, good terms, good margins, good access to additional supplies as technology improves and we go from two-mile to three-mile laterals. Diaco didn't really talk about that. That's going to have a big impact on productability in the areas that we operate almost all of our.

operators are either doing it or thinking about it or coring up acreage and swapping acreage to get ready for three my laterals, we're going to see improved IP rates from some of these wells. We think that the new GNP position in these basins gives us a competitive advantage. It's still a very competitive business out there.

and there's still a cat fight for undeticated acreage. And we're in a good spot in all three basins to continue to drive growth of our systems. We're gonna do it with very disciplined capital spending. And Robert highlighted that and Johnny did too.

Capital discipline this year and next is incredibly important to us. Our capital spend should be going down year over year, and that should generate increased free cash flow and reduce debt. And that is our simple business plan and it's pretty darn simple.

We've got great visibility, as I said, to the 23, and we think 24 drilling and development programs with our customers. A lot of our capital spent today will make new acreage available to be drilled next year, particularly the...

some of the new projects in the Williston Basin, the city of Williston and the painted woods. So a great visibility there. Now it's about execution, quarter to quarter.

And I think the team is excited to be really focused on the drill bit and the wellhead and the connects and maximizing available capacity at minimal capital expense. I want to thank all of our investors for supporting us through that restructuring period.

I know that wasn't easy and it probably didn't look like we knew what we were doing, but when you look back on it, it's almost like a triple bank shot to have been able to have bought good assets, integrated them, cored up our position in three oil-weighted basins, and then selling the rest of our assets, which didn't have any growth potential.

to keep our balance sheet back in line. And now we're on track to do what we do best, which is gathering process gas and market natural gas liquids. And I think the team's in good position. And the first quarter was a good start to the year. So thanks to everybody for joining us. Thanks to all the analysts for the questions. I know you guys have a lot of work to do today for the number of companies coming out. We're really pleased with our first quarter performance.

Thank everybody for their time this morning. Thank you, operator. This concludes today's teleconference. You may disconnect your lines now. Thank you for your participation and have a wonderful day.

So I.