Key bits from the conference call
we recently held an open season on the Grand Mesa Pipeline. On January 5, we closed the open season on the Grand Mesa Pipeline and had a new 5-year MVC with the same counterparty, whose prior contract expired on December 31.
Does this mean that the result of the Open Season is the current customer extended his contract for five years? If so, seems like a strange process to me. Why not just negotiate with the customer, and announce the extension?
Outside of entering into a new 5-year MVC agreement, this counterparty will also be the shipper on the pipeline, freeing up $18 million to $20 million of working capital. This is a permanent release of working capital.
This sounds like from now on the customer owns the oil inventory when it enters the pipeline? Perhaps previously NGL owned it until delivery, so it was NGL's inventory "in the pipe"?
Looking forward, we are focused on following: payment of the remaining preferred distribution of arrearages as soon as possible, then reinstatement of the Class B, C and D distribution as soon as possible.
Rather than limiting growth capital as we have up until now, we will look for investments to expand our footprint, strengthen our competitive position that will also increase the quality, consistency and amount of our adjusted EBITDA.
One example of this is the recently announced expansion of Lea County Express Pipeline system. The growth CapEx and adjusted EBITDA for this project will be included in our fiscal 2025 guidance.
Finally, we expect to grow adjusted EBITDA each year for the foreseeable future led by our Delaware Water Solutions business. With respect to our adjusted EBITDA, we are affirming the previous guidance of $500 million plus for water and $645 million for the partnership. Our guidance for adjusted EBITDA and growth CapEx in fiscal year '25 will obviously be higher than the current fiscal year, so we will announce that at our year-end earnings call. |