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Crestwood Equity Partners Fourth Quarter, Full Year 2021 Results

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   |    Tuesday,February 22,2022

Crestwood Equity Partners LP reported its financial and operating results for the three months ended December 31, 2021.

Fourth Quarter and Full-Year 2021 Highlights:

  • Fourth quarter 2021 net income of $78.6 million, compared to net income of $27.8 million in fourth quarter 2020; full-year 2021 net loss of $37.4 million, compared to a net loss of $15.3 million in 2020
  • Fourth quarter 2021 Adjusted EBITDA of $149.1 million, compared to $165.1 million in the fourth quarter 2020; full-year 2021 Adjusted EBITDA of $600.1 million, compared to $580.3 million in 2020, an increase of 3% year-over-year
  • Fourth quarter 2021 distributable cash flow ("DCF") to common unitholders of $91.1 million for Crestwood stand-alone, resulting in a coverage ratio of 2.3x; full-year 2021 DCF of $371.1 million for Crestwood stand-alone, resulting in a coverage ratio of 2.4x
  • Fourth quarter 2021 free cash flow after distributions of $32.8 million for Crestwood stand-alone; full-year 2021 free cash flow after distributions of $154.0 million for Crestwood stand-alone
  • Ended 2021 with approximately $2.1 billion of total debt, including $282.0 million drawn on its revolving credit facility, resulting in a 3.5x leverage ratio

Recent Developments and 2022 Capital Summary

  • On February 1, 2022, Crestwood closed the previously announced merger with Oasis Midstream Partners LP ("Oasis Midstream") adding highly complementary Williston and Delaware Basin assets that enhance the company's competitive positioning in its core growth basins. Over the next 12 to 18 months, Crestwood expects to capture approximately $45 million in annual commercial, operational, and G&A synergies through the successful integration of the combined platforms.
  • On February 14, 2022, Crestwood paid the fourth quarter 2021 cash distribution of $0.625 per common unit to unitholders of record as of February 7, 2022, including the 33.8 million common units issued as a result of the Oasis Midstream merger. Including Oasis Midstream's DCF for the fourth quarter 2021, the coverage ratio was 2.1x for the fourth quarter.
  • Crestwood expects 2022 capital expenditures to include $160 million to $180 million of growth capital to support accelerated producer development plans and new customer contracts including (i) the construction of multi-product gathering systems for Oasis Petroleum in the Williston Basin, (ii) the Continental Express natural gas transportation line for Continental Resources (NYSE:CLR) ("Continental") in the Powder River Basin, (iii) a natural gas gathering and compression system for Novo Oil & Gas ("Novo") in Eddy County, New Mexico, and (iv) the expansion of crude oil and water gathering systems for Percussion Petroleum ("Percussion") in Winkler, Ward, and Loving counties, Texas.

Robert G. Phillips, Founder, Chairman, and Chief Executive Officer of Crestwood's general partner, said: "Following a year of strategic achievements in 2021, I am pleased to announce Crestwood delivered record Adjusted EBITDA of $600.1 million, above the high end of our guidance range, distributable cash flow of $371.1 million and free cash flow after distributions of $154.0 million, resulting in year-end leverage of 3.5x and full-year coverage of more than 2.0x. I am especially proud of our management team and employees, who delivered record financial and operating performance and grew our leading Sustainability program, while we completed the buyout of First Reserve, transitioned to a publicly elected Board of Directors, reduced leverage with the sale of the Stagecoach assets, and acquired Oasis Midstream, which increases our scale in the Williston and Delaware basins."

Mr. Phillips continued, "As we move into 2022, Crestwood's gathering and processing portfolio is benefiting from strong commodity prices, healthy producer customer balance sheets and recent upstream acquisitions and mergers which have greatly improved the overall quality of our customer portfolio. These trends, which underpin our 2022 forecast, have resulted in many of our key producers accelerating activity around our assets to drill their highest economic inventory in today's favorable commodity price environment. Combined with the successful integration of Oasis Midstream, Crestwood expects to generate Adjusted EBITDA of $780 million to $840 million, invest $160 million to $180 million of growth capital in high returning expansion projects, and deliver free cash flow after distributions of $75 million to $135 million. Importantly, we will continue to focus on our balance sheet with a long-term leverage target of less than 3.5x, which provides us with the financial flexibility to organically grow our business as new expansion opportunities arise, participate in strategic M&A in the areas we operate, or return capital to our unitholders through our authorized unit buyback program."

Fourth Quarter 2021 Segment Results and Outlook

Note: As of December 31, 2021, Crestwood has re-segmented its business for reporting purposes. The Gathering and Processing North segment includes the Williston Basin and the Powder River Basin assets. The Gathering and Processing South segment includes the Delaware Basin, Barnett and Southwest Marcellus assets. The Storage and Logistics segment includes the NGL Logistics business, the COLT Hub, the Tres Palacios JV, as well as the Stagecoach Gas Services assets that were divested in July 2021.

Gathering and Processing North (G&P North) segment EBITDA totaled $116.5 million in the fourth quarter 2021, compared to $108.6 million in the fourth quarter 2020, an increase of 7% year-over-year. During the fourth quarter 2021, segment EBITDA increased primarily as a result of the Williston Basin assets benefiting from higher commodity prices on the percent of proceeds contracts. In the fourth quarter 2021, five wells were connected in the Williston Basin and six wells were connected in the Powder River Basin. Crestwood forecasts that the favorable commodity price environment will drive an increase in development activity across the Williston Basin and Powder River Basin in 2022. Crestwood expects approximately 75% of its 2022 capital budget to be invested in the G&P North segment.

Gathering & Processing South (G&P South) segment EBITDA totaled $29.5 million in the fourth quarter 2021, compared to $19.5 million in the fourth quarter 2020, an increase of 51% year-over-year. The fourth quarter of 2021 excludes a $20.7 million loss on long-lived assets related to the anticipated decommissioning of the Victoria compressor station in the Southwest Marcellus. During the fourth quarter 2021, segment EBITDA increased as a result of higher volumes across the Delaware Basin as producers, primarily on the Willow Lake system, accelerated drilling activity in the third and fourth quarters, as well as increased percent of index (POI) revenues in the Barnett. Crestwood forecasts an increase in well connect activity in 2022 as producers accelerate development activity in response to favorable commodity prices. Crestwood expects approximately 20% of its 2022 capital budget to be invested in the G&P South segment.

Storage & Logistics (S&L) segment EBITDA totaled $13.9 million in the fourth quarter 2021, compared to $42.2 million in the fourth quarter 2020. All periods exclude the non-cash change in fair value of commodity inventory-related derivative contracts. Additionally, fourth quarter of 2020 includes $16 million in Adjusted EBITDA attributable to the Stagecoach joint venture that was divested in July 2021. During the fourth quarter 2021, the NGL Logistics business continued to be impacted by backwardated markets and unseasonably warm weather which drove fewer heating degree days and lower NGL demand. Based on recent weather events in 2022, Crestwood expects the return of seasonal weather opportunities and an increase in heating degree days to result in more normalized earnings in the first quarter 2022. Crestwood expects approximately 5% of its 2022 capital budget to be invested in the S&L segment in 2022, primarily related to the expansion of storage facilities in the NGL Logistics business.

Combined O&M and G&A expenses, net of non-cash unit-based compensation, in the fourth quarter 2021 were $48.9 million compared to $45.7 million in the fourth quarter 2020. O&M expenses were relatively flat year-over-year, while G&A expenses increased due to transaction costs related to the Oasis Midstream acquisition recognized during the fourth quarter 2021.

4Q 2021 Business Update and FY 2022 Outlook

Williston Basin

During the fourth quarter 2021, the Williston Basin averaged crude oil gathering volumes of 80 MBbls/d, natural gas gathering volumes of 141 MMcf/d, natural gas processing volumes of 132 MMcf/d, and produced water gathering volumes of 91 MBbls/d. The Williston Basin continues to benefit from increased gas-to-oil ratios (GORs) from legacy production, incremental gas capture from flare minimization, strong commodity prices, and improved completion techniques. Five three-product wells were connected during the fourth quarter, resulting in a total of 47 wells connected in 2021.

In 2022, Crestwood expects to connect 110 - 120 total wells across the Williston Basin systems. Crestwood's capital investments in the Williston Basin will include the build-out of three product infrastructure for Oasis Petroleum's City of Williston and South Nesson acreage positions and the continued expansion and optimization of the Arrow water system to support producer development plans on the Fort Berthold Indian Reservation ("FBIR"). In the current commodity price environment, Crestwood expects Oasis Petroleum to run a two-rig development program and Arrow producers to run an average of one to two rigs on the FBIR, as well as complete DUC inventories.

Oasis Integration Update

Following the close of the Oasis Midstream acquisition, Crestwood's integration team has been actively working to streamline operations to capture the identified synergies across the combined footprints. Crestwood estimates it will capture approximately $25 million in run-rate O&M and G&A synergies, primarily through the reduction of duplicative corporate functions. Additionally, Crestwood's commercial teams have successfully entered into new third-party customer agreements in the Williston Basin and Crestwood now expects to exceed its previously identified commercial synergies target of $20 million in the next 12 to 18 months. Crestwood expects incremental volumes from new third-party gathering and processing agreements commensurate with Crestwood's gathering system expansion throughout 2022 and into the first half of 2023.

Powder River Basin

During the fourth quarter 2021, the Powder River Basin averaged gathering volumes of 103 MMcf/d and processing volumes of 99 MMcf/d, increases of 25% and 18% year-over-year, respectively. During the fourth quarter 2021, six wells were connected to the Jackalope system by a large independent operator, resulting in a total of 21 well connects in 2021.

In 2022, Crestwood expects 10 - 15 new wells in the Powder River Basin. As previously announced, Crestwood is constructing the Continental Express high pressure natural gas transportation line that expands the Jackalope system to the north to support the new contract and acreage dedication from Continental. On January 25, 2022, Continental entered into an agreement to acquire Chesapeake Energy's acreage position in the Powder River Basin, including approximately 350 producing wells. Once the transaction closes, Continental will become the new anchor customer on the Jackalope system, and Crestwood will proactively work with Continental to support future development plans on the Jackalope system. Following the recent transactions, Crestwood is now one of the largest service providers in the Powder River Basin with approximately 400,000 acres dedicated under midstream service contracts.

Delaware Basin

During the fourth quarter 2021, the Delaware Basin averaged natural gas gathering volumes of 251 MMcf/d, an increase of 45% year-over-year, and processing volumes of 112 MMcf/d, an increase of 99% year-over-year. Notably, gathering volumes on the Willow Lake system in New Mexico increased 96% year-over-year with 30 wells connected during 2021 as producers accelerated activity in response to strong commodity prices. As a result, volumes at the Orla processing plant nearly doubled year-over-year and exited the year at 120 MMcf/d. Based on current producer forecasts, Crestwood expects volumes at the Orla plant to grow significantly during 2022. Across the Willow Lake and Nautilus systems, 95 wells were connected during 2021, exceeding the original guidance range of 65 - 75 well connects.

In 2022, Crestwood expects to connect in approximately 100 - 110 wells driven by a mix of public and private producers on the Willow Lake system, ConocoPhillips on the Nautilus system and Percussion on the newly acquired Oasis Midstream system. Crestwood is continuing to invest capital in the Delaware Basin to build out required infrastructure for Novo's and Percussion's development plans, including incremental pipeline and compression assets, and oil and produced water gathering systems, respectively. Crestwood forecasts this activity to drive a significant increase in volumes and expects the Delaware Basin assets to generate in excess of $50 million in 2022 cash flow net to Crestwood.

2022 Financial Guidance

Crestwood's 2022 guidance reflects the general business updates and outlook noted above, the most recent feedback from customers, and Crestwood's current outlook on commodity prices. The guidance range is generally estimated to reflect Crestwood's business performance in an oil price environment of $75 to $85 per barrel taking into consideration the impact commodity price movements may have on Crestwood's customers' development plans, as well as the limited direct commodity price exposure Crestwood has under its percent of proceeds and marketing contracts. The ranges include only eleven months' contribution from the Oasis Midstream assets; Crestwood estimates Oasis Midstream generated approximately $15 million to $20 million in Adjusted EBITDA in January 2022. These projections are subject to risks and uncertainties as described in the "Forward-Looking Statements" section at the end of this release.

  • Net income of $200 million to $260 million
  • Adjusted EBITDA of $780 million to $840 million
  • Contribution by operating segment is set forth below:

$US millions


Adj. EBITDA Range

Operating Segment





Gathering & Processing North





Gathering & Processing South





Storage & Logistics





Less: Corporate G&A





FY 2022 Totals





  • Distributable cash flow available to common unitholders of $500 million to $560 million
  • Free cash flow after distributions of $75 million to $135 million
  • Full-year 2022 coverage ratio of 2.0x to 2.2x
  • Full-year 2022 leverage ratio between 3.25x and 3.75x
  • Growth project capital spending and joint venture contributions in the range of $160 million to $180 million
  • Maintenance capital spending in the range of $30 million to $35 million

Capital Allocation Priorities

Crestwood is committed to generating value for unitholders through utilizing free cash flow to maintain a strong, conservative balance sheet, to re-invest in high return, accretive capital projects, and to return capital to unitholders via distributions and common or preferred unit repurchases. Based on the current business environment, Crestwood's capital allocation priorities for 2022 are outlined below.

  • Balance sheet strength and flexibility: Crestwood will continue to prioritize debt reduction to build balance sheet strength and flexibility with a long-term target leverage ratio of 3.0x - 3.5x. Due to seasonality and working capital requirements in the NGL business, the company's leverage ratio is typically slightly higher in the second and third quarters and lower in the first and fourth quarters.
  • Returns focused capital projects: Crestwood will invest between $160 million and $180 million in high return, accretive capital projects supported by strong contracts with high-quality customers.
  • Common Distributions: In connection with the close of the Oasis Midstream merger, Crestwood intends to recommend to the Board of Directors an increase to the common unit distribution to approximately $2.62/unit annually, representing an approximate 5% increase year-over-year attributable to the first quarter 2022.
  • Unit Repurchases: Crestwood has a $175 million buyback program authorized that it can utilize to opportunistically support the repurchase of common units or preferred units, including the common units owned by Oasis Petroleum following the Oasis Midstream merger.

Capitalization and Liquidity Update

Crestwood invested approximately $26.0 million in consolidated growth capital projects and joint venture contributions during the fourth quarter 2021 and approximately $50.7 million during full-year 2021 (excluding litigation-related capital pertaining to the Bear Den II processing plant). During the fourth quarter 2021, Crestwood increased its growth capital investments to begin the system expansions for Continental in the Powder River Basin and Novo in the Delaware Basin. As of December 31, 2021, Crestwood had approximately $2.1 billion of debt outstanding, comprised of $1.8 billion of fixed-rate senior notes and $282.0 million outstanding under its revolving credit facility, resulting in a leverage ratio of 3.5x.

In connection with the Oasis Midstream acquisition, Crestwood entered into the Third Amended and Restated Credit Agreement which provides for a five-year $1.5 billion revolving credit facility that matures in December 2026. As part of the merger, Crestwood assumed Oasis Midstream's $450 million of 8% senior notes outstanding and approximately $218 million outstanding on the company's credit facility as of the closing date. Pro forma for the acquisition, Crestwood had approximately $2.9 billion of long-term debt outstanding including $2.25 billion of senior notes and $660 million outstanding on its $1.5 billion revolving credit facility, resulting in more than $800 million of available capacity.

Crestwood currently has 71.3 million preferred units outstanding (par value of $9.13 per unit) that pay a fixed-rate annual cash distribution of 9.25%, payable quarterly. The preferred units are listed on the New York Stock Exchange and trade under the ticker symbol CEQP-P.

Sustainability Program Update

In the fourth quarter 2021, Crestwood completed its second materiality assessment providing the framework for the company's 2022-2024 sustainability strategy and its first carbon management plan. Over the next three years, Crestwood's sustainability strategy will focus on supply chain management, transparency and disclosures, biodiversity, carbon management, diversity, equity & inclusion, and indigenous relations. With carbon management as a leading component of Crestwood's strategy, the recently published carbon management plan outlines meaningful, near-term emissions reduction activities that the company intends to implement as it continues to expand its G&P asset portfolio.

Recently, key ESG rating and ranking organizations have recognized Crestwood's commitment to its sustainability initiatives with MSCI upgrading Crestwood to a BBB and Sustainalytics ranking Crestwood in the sixth percentile in the Refiners and Pipelines industry group. Additionally, Crestwood was recently recognized by Hart Energy as an Energy ESG Top Performer in the midstream sector and was one of three midstream companies included in the 2022 Bloomberg Gender-Equality Index (GEI) for the second consecutive year.

Crestwood remains on track to publish its fourth annual sustainability report in June 2022 in accordance with the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB) Midstream Framework, the Task Force on Climate-Related Financial Disclosures (TCFD) and the EIC/GPA ESG Reporting Framework. For more information on Crestwood's approach to sustainability, please visit

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