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Edited Transcript of SEMG earnings conference call or presentation 7-Aug-17 3:00pm GMT

Thomson Reuters StreetEvents

Q2 2017 SemGroup Corp Earnings Call

TULSA Aug 13, 2017 (Thomson StreetEvents) -- Edited Transcript of SemGroup Corp earnings conference call or presentation Monday, August 7, 2017 at 3:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Alisa M. Perkins

SemGroup Corporation - Treasurer

* Carlin G. Conner

SemGroup Corporation - CEO, President and Director

* Robert N. Fitzgerald

SemGroup Corporation - CFO and SVP

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Conference Call Participants

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* Craig Kenneth Shere

Tuohy Brothers Investment Research, Inc. - Director of Research

* Ryan Michael Levine

Citigroup Inc, Research Division - Equity Analyst

* Shneur Gershuni

UBS Investment Bank, Research Division - Executive Director in the Energy Group and Analyst

* Tristan James Richardson

SunTrust Robinson Humphrey, Inc., Research Division - VP

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Presentation

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Operator [1]

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Good morning, ladies and gentleman, and welcome to the SemGroup Corporation Second Quarter 2017 Earnings Conference Call. As a reminder, this call is being recorded. (Operator Instructions)

I would now like to turn the call over to SemGroup's head of Investor Relations, Alisa Perkins. Please go ahead.

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Alisa M. Perkins, SemGroup Corporation - Treasurer [2]

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Thank you, Brian. Good morning, everyone. We are glad that you can join us today for our second quarter conference call. I hope that you have had a chance to review our press release and earnings presentation, which can be found on our website.

I'd like to remind everyone that today's presentation may contain projections, forward-looking statements and certain non-GAAP financial measures. We encourage you to read our full disclosures in our latest press release, slide presentation and SEC filings for a discussion of those items. These materials contain reconciliations to GAAP financial measures.

Hosting the call today is Carlin Conner, our CEO; Bob Fitzgerald, our CFO; and Dave Minielly, Vice President of Crude. With that, let me turn the call over to Carlin.

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Carlin G. Conner, SemGroup Corporation - CEO, President and Director [3]

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Thank you, Alisa, and thanks, everyone, for joining us today for our second quarter update. This summer has been eventful, so we have a lot to cover this morning.

Our second quarter results were up slightly from the first quarter and tracked expectations. Bob will go into more detail on our performance results shortly. Before that, I would like to take a step back and look at how we are executing on our strategy.

Slide 4 of our presentation outlines accomplishments and progress made since our conference call last quarter. To fully appreciate the scope and intention of these highlights, we need to go back in time almost 3 years. That's when we recognize the critical need to balance our portfolio in the face of a lower for longer crude price environment. At that time, we designed and embarked on a very clear strategy to stabilize our cash flows, become less dependent on producer balance sheets and commodity prices. Our initial focus was to find a way to access the downstream, we're finally facing market on the Gulf Coast.

Second, we're committed to grow our midstream operations in areas where we could leverage our existing footprint while improving contract quality.

Thirdly, we're committed to pursue M&A opportunities that would further advance our strategy.

Fast forward to where we are today. During the past month, we successfully completed the construction of the Maurepas Pipeline project. We also closed the acquisition of Houston Fuel Oil Terminal Company, also known as HFOTCO, one of the largest oil terminals in the U.S. This acquisition establishes SemGroup's position on the Houston Ship Channel.

Slide 5 goes into more detail around last month's HFOTCO acquisition. With respect to the financing, we are focused on funding the second payment as quickly as possible in a way that minimize long-term costs to SemGroup. As mentioned on our HFOTCO call, we have a number of options we are considering. These include noncore asset sales, joint ventures and structured equity. Funding a portion of the second payment with a large common equity offering is always an option. However, it is an option that is not preferred nor expected, given today's market environment. While we do have these remaining financing decisions to work through, I can't emphasize enough how excited we are to add this asset to our portfolio.

HFOTCO is a versatile, growing and independent deepwater terminal. It provides a foundation of secure cash flows that are not dependent on elevated commodity prices, strategically positions us as a clinical service provider to the U.S. Gulf Coast energy market and provides dynamic growth options that are driven by exciting new supply chains. And when you consider the recent completion of Maurepas, combined with the HFOTCO acquisition, we now have a secure foundation of cash flows that are agnostic to commodity prices and do not require extensive CapEx to maintain. These 2 transformational projects will deliver portfolio balance and a new source of capital for both reinvestment and dividend growth.

The integration of HFOTCO is going well. We are extremely pleased with the early commercial momentum. In addition, we are pleased to advise that the full team has been retained. This year's contract renewals are largely complete and the extensive growth projects are on schedule and on budget. In addition, multiple opportunities are being pursued to further grow our presence around HFOTCO. We firmly believe that this unique and versatile asset serving a market and region that is evolving creates extensive optionality, which will drive value appreciation.

Turning to Slide 6 for a more in-depth update on our key projects. As I stated, construction on all 3 pipelines in the Maurepas project is now complete. The 24-inch crude line is operational and cash flowing. The 2 intermediate pipelines are completed and expected to begin contributing EBITDA in September. I want to highlight how proud we are that our experienced engineering and operations team successfully overcame a number of challenges, including permitting delays and a 45-day work closure this summer due to weather-related issues.

In Oklahoma, we continue to make progress on our 2 new STACK pipelines and expect to complete construction by early first quarter. Both projects are back-stopped by long-term contracts with investment-grade counterparties. In addition, SemGas recently contracted with an additional customer to transport gas on the Canton pipeline to the Rose Valley gas processing complex. This additional agreement is backed by a long-term acreage dedication from a producer. Both pipelines will leverage existing asset capacity, driving capital return efficiencies. We fully expect to continue to announce additional customer commitments that will further enhance our returns.

In Canada, growing demand for our lake salt recovery capacity and capability is driving significant opportunities with well-capitalized producers. Our SemCAMS team continues to make progress towards further commercialization of our previously announced Wapiti plant. This plant will add to our Duvernay and Montney footprint. In addition, we are reviewing other pipelines and processing expansions in this highly active region and we are now looking at extending our Wapiti footprint north. If there's ample interest, we envisage constructing a new plant in the 2019, 2020 timeframe. Ongoing projects at HFOTCO are on schedule and on budget. If you recall, the team in Houston is building a fifth deepwater dock and additional 1.45 million barrels of crude tankage, which is backed by long-term take-or-pay contract with an investment-grade counterpull.

Now I'd like to turn the call over to Bob who will discuss our financial results in more detail.

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Robert N. Fitzgerald, SemGroup Corporation - CFO and SVP [4]

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Thanks, Carlin. Starting with Slide 7. SemGroup reported net income of $9.6 million compared with a net loss of $10.3 million in the first quarter. The first quarter was negatively impacted by a nearly $20 million charge related to the refinancing of bonds. As announced earlier this morning, the SemGroup Board of Directors declared a quarterly cash dividend to common shareholders of $0.45 per share, resulting in an annualized dividend of $1.80.

SemGroup posted second quarter consolidated adjusted EBITDA of $65.4 million, up nearly 8% from $60.7 million the prior quarter. Earnings for all 3 of our crude segments were essentially flat in the second quarter compared to the first quarter. In our crude transportation segment, White Cliffs' volumes were down slightly quarter-over-quarter, while remaining at the high end of our expectations. We continue to expect White Cliffs volumes to average 100,000 to 110,000 barrels per day for the year.

Glass Mountain Pipeline contracted volumes were up sequentially due primarily to the step up in shippers' minimum volume commitment of April.

Crude supply and logistics adjusted EBITDA was flat quarter-over-quarter, as we continue to experience compressed margins in key marketing regions and were negatively impacted by inventory cost timings. The plant logistics volume were down sequentially as the first quarter volumes were elevated due to scheduling constraints at a third-party terminal.

Turning to SemGas. Adjusted EBITDA was up slightly from the previous quarter, largely due to a one-time contractual true-up of $2.5 million, partially offset by lower volumes. Currently, 2 rigs are operating in the acreage dedicated to our plant, which is slightly below our initial expectation. We have lowered our forecasted volumes approximately 7% or 20 million cubic feet per day to 260 million to 280 million cubic feet per day. We expect to see contributions from the Canton Pipeline project starting in the first quarter of 2018.

SemCAMS' adjusted EBITDA was up about $3.4 million sequentially as the current quarter benefited from a $4 million annual true-up of minimum volume commitment. For the remainder of the year, we are anticipating that customers will be shifting at or above their take-or-pay level. During the second quarter, we had a planned turnaround at our K3 plant, which lasted approximately 4 weeks and was completed on-time and on budget.

Overall, the turnaround negatively impacted the quarter by approximately $1 million as we were able to move some volumes to our KA Plant and we captured higher cost recoveries. With the continued development around our assets, we have increased our anticipated volumes by nearly 6% to a range of 400 million to 420 million cubic feet per day.

SemLogistics posted adjusted EBITDA of approximately $3 million, down $800,000 compared to the prior quarter due largely to seasonal decrease of throughput volumes. SemMaterials Mexico EBITDA was relatively flat quarter over quarter, reflecting the continued constraint in the federal government's road construction budget.

Moving to Slide 8. Our leverage and liquidity position. SemGroup ended the quarter with a net compliance leverage ratio of 3.7x compared to our target of 4.5x and our maximum covenant of 5.5x. Our total liquidity as of June 30th was approximately $850 million. As previously noted, SemGroup closed the acquisition of HFOTCO on July 17. SemGroup funded the initial $1.5 billion consideration by assuming $761 million of HFOTCO net indebtedness paying $301 million in cash using the SemGroup revolving credit facility and issuing 12.4 million shares of SemGroup common stock. Although not reflected in SemGroup's second quarter results, HFOTCO reported net compliance leverage as of June 30 of 6.8x compared to a covenant of 7.5x.

I'd like to point out a few items with regards to the HFOTCO debt structure, which is detailed on Slide 16 the presentation. For the past several years, HFOTCO has operated with a higher leverage ratio, but maintained relatively strong BB credit ratings from both agencies. This is a recognition of the strong, stable and secure cash flows generated by HFOTCO's asset position and long-tenured customers. The rating also reflects the fact that HFOTCO's debt structure includes $225 million of advantaged tax-exempt low-cost Hurricane Ike bond that mature in 2015. We expect to keep the HFOTCO debt as a key component of our capital structure.

On a pro forma basis, our June 30 net leverage is 3.8x calculated on our covenant basis, which includes adjustments for the $301 million revolver draw as well as $70 million pro forma last 12 months distribution from HFOTCO at December. Our pro forma consolidated leverage ratio is 5.2x. As Carlin noted earlier, we are evaluating options to fund the remaining consideration related to the HFOTCO acquisition that will not add incremental debt to the company. In addition, we are evaluating other options that will further de-lever the company on a consolidated basis, including noncore asset sales, joint ventures and structured equity. Post acquisition, our consolidated liquidity is nearly $630 million as of June 30th. We expect to term out a portion of our revolver debt later this year.

Turning to Slide 9. SemGroup is narrowing its initial 2017 adjusted EBITDA guidance to a range of $270 million to $290 million, due primarily to the continued softness in the crude supply logistics market and the timing of Maurepas cash flows. With the expected addition of $60 million of adjusted EBITDA in connection with the HFOTCO acquisition, SemGroup is updating its 2017 adjusted EBITDA guidance to a range of between $330 million and $350 million. We expect to provide 2018 adjusted EBITDA guidance with our year-end results.

Management reaffirms that dividends will be reviewed annually in December of each year, targeting a 10% dividend CAGR through 2020. In December 2017, management expects to recommend to the Board of Directors a dividend increase of 10% on an annualized basis.

Now on Slide 10, for our updated capital expenditures guidance. For the year, we expect to deploy approximately $575 million of capital expenditures, which now includes approximately $75 million in growth projects for HFOTCO, which are on-time and on budget. On a consolidated basis, we expect to spend $60 million in maintenance projects.

I'll now turn the call back over to Carlin for some final comments.

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Carlin G. Conner, SemGroup Corporation - CEO, President and Director [5]

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Thanks, Bob. This summer marks incredible achievements toward our long-term goals. These achievements have laid the foundation for stable and growing cash flows going forward. Our portfolio is now generating significantly more secure cash flows that are insulated from crude oil price volatility, while providing exciting new growth paths. Projects on the Gulf Coast, in the STACK and Central Alberta provide a path to double-digit dividend growth while growing coverage and de-levering. After a lot of hard work and persistence, our strategy is beginning to bear fruit. However, we are fully aware that to deliver shareholder value, we need to execute on these growth projects under construction, address the second HFOTCO payment in a timely manner and at the lowest cost, strengthen the balance sheet and pursue additional organic growth off of our expanded and diversified platform.

With that, I'd like to thank you for your time this morning. And now I turn the call over for questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question comes from Shneur Gershuni with UBS.

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Shneur Gershuni, UBS Investment Bank, Research Division - Executive Director in the Energy Group and Analyst [2]

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Just wanted to start to talk about kind of the financing plans on a go-forward basis, and I do appreciate some of the color that you provided today. When you talk about, in your slide decks, structured equity and so forth, I was wondering if you can sort of give us examples of what you're thinking about. Do they have to be full equity credit from an agency perspective, or is it something that just must comply with your credit facilities? Just wondering if you can sort of give a little bit more color on that, if possible?

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Robert N. Fitzgerald, SemGroup Corporation - CFO and SVP [3]

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This is Bob. I'll go ahead and take that. We've been evaluating different preferred equity structures, which we believe could help fund the early payoff of the outstanding amount. We have not settled on any specific structure at this point, but based on initial discussions, we're pretty confident that there's a healthy appetite in this market for our offering. It doesn't have to receive full credit from both rating agencies. Obviously, some of that preferred doesn't get credit. But we're looking at all -- through all those options today.

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Shneur Gershuni, UBS Investment Bank, Research Division - Executive Director in the Energy Group and Analyst [4]

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Okay. And just to continue on that. When you talk about potential JVs and partnerships and so forth, are you talking about newer/existing assets like, let's say, Maurepas? Or are you thinking about JV-ing on projects that are currently in construction?

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Carlin G. Conner, SemGroup Corporation - CEO, President and Director [5]

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This is Carlin. We're looking at all of the above. We do have a pretty healthy backlog of capital, and so as we look forward in some of the basins where we're building, we're open to ideas of sharing that capital and bringing in partners. We also are available to discuss other interesting concepts around joint ventures and, of course, noncore asset sales. I think it's important to point out, we've hired Evercore to help us in evaluating all of our options. And I think if you listen to the call script, we're really focused on these 3 options of noncore asset sales, joint ventures and structured equity.

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Shneur Gershuni, UBS Investment Bank, Research Division - Executive Director in the Energy Group and Analyst [6]

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Okay. And just shifting to your results and so forth. One, I was wondering if you can sort of expand on the Maurepas delay. And then secondly, with the Canton Pipeline that you announced last quarter, you had talked about the potential to get far and above the committed amount or the committed volumes that were there and the system would be expendable. Have you made any progress on further offtake agreements that could lead to filling up the full capacity of your Miss Lime system?

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Carlin G. Conner, SemGroup Corporation - CEO, President and Director [7]

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First, let me handle the Maurepas question. The delay from our last guidance on the project was really driven by weather constraints during this past summer. We had a very interesting occurrence of the Bonnet Carré Spillway which is an important floodgate for the Mississippi River. It was opened for only the 12th time in its 85-year history. That forced us to leave the work area for almost 45 -- it cost a 45-day delay. So that pushed us back quite a bit. But we're happy to report that field work is done. And we are now cash flowing on the crude system, and we will be cash flowing on the 6 12-inch in early September. As far as Canton, I think your question was around the Canton gas system?

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Shneur Gershuni, UBS Investment Bank, Research Division - Executive Director in the Energy Group and Analyst [8]

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Yes.

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Carlin G. Conner, SemGroup Corporation - CEO, President and Director [9]

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As we talked about before, the initial set up for that system, 250 million a day of capacity which we could expand quite a bit with further compression. The good news is our base load customer, our first customer, investment grade long-term counterparty, has indicated that they will be -- their profile, their gas profile is much more robust in the early stages, so we're going to actually see more gas coming than we thought. And then as we mentioned in the script, we have added a second customer, a producer with an acreage dedication that is going to bring on some volumes. So we are definitely in the middle of commercializing that whole pipe and we have some exciting opportunities in front of us.

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Shneur Gershuni, UBS Investment Bank, Research Division - Executive Director in the Energy Group and Analyst [10]

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And so would you expect to bring the compression on sooner than originally thought?

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Carlin G. Conner, SemGroup Corporation - CEO, President and Director [11]

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Yes. I think we're definitely accelerating the compression.

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Operator [12]

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Next question comes from Tristan Richardson with SunTrust.

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Tristan James Richardson, SunTrust Robinson Humphrey, Inc., Research Division - VP [13]

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Just curious on the HFOTCO. You guys narrowed the outlook for the EBITDA contribution of HFOTCO just by a small amount. And I noticed you guys said that outlook for '18 and '19 is on track. Just curious if that narrowing from 60 to 65 down to 60, is that really just a function of the timing of the close? And then just secondly, you talked about contract renewals largely being complete at HFOTCO. Just kind of curious, just generally speaking how the contracting process works at HFOTCO.

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Carlin G. Conner, SemGroup Corporation - CEO, President and Director [14]

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Let me answer the contracting. As we talked about when we had the call when we announced the acquisition, HFOTCO has the resid business and the crude business. Crude business is largely underwritten by long-term contracts. With the resid business, you have long-tenured customers that have been there for an average of 50-plus years, but you do have these contract renewals that kind of clip on every year. So there is a pretty healthy maintenance of contracts that are ongoing. And so as we sit here in mid '17 and we're 1 month into operating HFOTCO, we're very pleased with the contract renewals that have already occurred in '17. So we're very much on track. As far as the $60 million versus what we said earlier, I think we said $60 million to $65 million, it had everything to do with the timing of the close.

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Tristan James Richardson, SunTrust Robinson Humphrey, Inc., Research Division - VP [15]

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Bob, I think you alluded to this somewhat on your comments around the Canadian gas business. But just curious, the upward revision, the outlook there, I means, is that purely a function of the KA Plant capturing more than you expected while K3 was down? Or is it -- or could you maybe just comment on sort of either producer outlooks changing -- or just a little more commentary there would be helpful.

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Robert N. Fitzgerald, SemGroup Corporation - CFO and SVP [16]

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Sure, Tristan. It really didn't have anything to do with the KA taking on some of the K3 volumes during the down time of K3. It was all about the aggressive drilling that's going on up in the Montney, Duvernay. Really, it's really happening in both areas. We're seeing a lot of volumes coming down our Wapiti pipeline system into K3. And we're also seeing good development around the Duvernay area, which is feeding into KA. So one thing I'd like to clarify, we had kind of a true-up, as we mentioned in the prepared comments, in the second quarter for CAMS. That really pertain mostly to the second half of '16 volumes that weren't delivered during that timeframe, and then the annual true-up hit in the second quarter. Currently, those producers are off hitting their take or pay and actually going above that. And we expect that to continue and that growth to continue, which is why we raised our volume guidance for the rest of the year.

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Operator [17]

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Next question comes from Craig Shere with Tuohy Brothers.

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Craig Kenneth Shere, Tuohy Brothers Investment Research, Inc. - Director of Research [18]

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A couple of questions already answered here. Any comments about the potential size of the revolver term out and the expectation of remaining the -- keeping the revolver size static going forward?

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Robert N. Fitzgerald, SemGroup Corporation - CFO and SVP [19]

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I think with regard to the revolver size, Craig, I would say that, today, we think that the $1 billion revolver at SemGroup is fine. We do have some options around that with an accordion feature related to it. As far as the size of potentially terming out some of that revolver, sitting here today, we're looking somewhere in the range of $300 million to $400 million, but that will depend upon the markets and what they look like at the time we pull the trigger on.

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Craig Kenneth Shere, Tuohy Brothers Investment Research, Inc. - Director of Research [20]

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And you talked about the MVCs already. So how soon do you need to announce another plant further north in the Wapiti area to hit that 2019, 2020 potential timeframe?

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Carlin G. Conner, SemGroup Corporation - CEO, President and Director [21]

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Craig, this is Carlin. It's a great question. Because as you recall, we made an announcement on our current Wapiti plant early this year, and it's not going to be ready until first half of '19. So you can kind of use that as a measure. Projects do take like a lot of time up there, especially the permitting. The permitting is ongoing. And we will hopefully have FID sometime in the near feature, but market and permit conditions will obviously dictate that.

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Craig Kenneth Shere, Tuohy Brothers Investment Research, Inc. - Director of Research [22]

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So it's interesting. I mean, it sounds like an extremely positive call, and you're talking about full steam ahead on accretive growth projects. At the same time, there doesn't seem to be a lot of concern about getting your arms around the back-end payment on the latest acquisition and overall balance sheet leverage. Is it fair to say that you don't feel capital-constrained relative to these accretive growth projects?

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Carlin G. Conner, SemGroup Corporation - CEO, President and Director [23]

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Well, Craig, clearly, we recognize the importance and we have prioritized the second payment. And that's why we talk about trying to get that out of the way sooner than later. The bottom line is I guess the confidence that you may be hearing is that we have a plan. And we've said that, and we feel like with the options that we have and the feedback from the market already from the potential counterparties, it's fairly positive. And we just -- it is full steam ahead. We clearly will be paying attention to the balance sheet going forward. And any big projects that have a longer-term delivery of cash flows will have to be managed within our balance sheet targets. And if that means we have to joint venture some of those projects or find partners, we will do that. But we believe it's important to take advantage of the assets and the footprint that we have. In Canada, we've been sitting on that for a while. We're finally at a point where it looks like that asset will be paying dividends for us. We definitely want to be very careful how we play it going forward. We don't want to appear to our customers that we're not ready to spend CapEx to follow them and we definitely want to tap into that growth. So understood the question. But the full steam ahead is really because we have a plan for the second payment and we feel very confident about it.

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Craig Kenneth Shere, Tuohy Brothers Investment Research, Inc. - Director of Research [24]

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That's great. Last question pertaining to the second payment. Do I understand that you can prepay any portion of the $600 million and you get a discount of basically 5% rate of return on your money on anything prepaid? And could we have a solution in the second half '17 for a good portion of those rather than having to wait a long time.

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Carlin G. Conner, SemGroup Corporation - CEO, President and Director [25]

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Bob has been assigned that project, so I'm going to kick it to Bob.

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Robert N. Fitzgerald, SemGroup Corporation - CFO and SVP [26]

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Thanks, Craig. Yes, I think that you have it right. We get 5% per annum discount off the $600 million payment if we pay it before the end of 2018. So we're focused on that. If we get it done sooner than later, we absolutely want to capture that, and that was part of our positioning in our prepared comments. So we're not going to sit around. We're not going to wait until next year to do something. We're going to start taking actions as soon as we can. So we'd love to get it done as soon as possible to get a bigger discount.

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Carlin G. Conner, SemGroup Corporation - CEO, President and Director [27]

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And Craig, just to follow up. We see those 3 options that we mentioned as most likely options at this point. We do not envision that any one of those options will solve it. We believe a combination out of those options will be the answer going forward.

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Operator [28]

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The next question comes from Ryan Levine with Citi.

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Ryan Michael Levine, Citigroup Inc, Research Division - Equity Analyst [29]

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Two questions on the second HFOTCO payment. So just to follow-up on that last question. If a portion of it were to be paid, i.e. half of it, would you receive the 5% discount on the half of the payment that was made? Or do you only receive the discount if the entire liability or obligation is made?

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Robert N. Fitzgerald, SemGroup Corporation - CFO and SVP [30]

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No. It's not required to pay the entire amount to get the 5% discount. So we'll get that discount on any partial payments as well. But obviously, as we indicated, our focus is to pay the full thing up early.

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Ryan Michael Levine, Citigroup Inc, Research Division - Equity Analyst [31]

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Okay. And then how does the HFOTCO debt covenants treat the second payment liability to win the -- in connection with the acquisition? Is it -- would you get any relief in reducing that obligation?

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Robert N. Fitzgerald, SemGroup Corporation - CFO and SVP [32]

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No. It has nothing to do with HFOTCO bank credit facilities and covenants, so it's completely separate from that. And the HFOTCO debt, obviously, is nonrecourse debt.

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Ryan Michael Levine, Citigroup Inc, Research Division - Equity Analyst [33]

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Okay. And then last question. What portion of the full quarterly EBITDA contribution do you expect in the third quarter from Maurepas?

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Carlin G. Conner, SemGroup Corporation - CEO, President and Director [34]

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So we're running -- well, we're not giving out that level of guidance right now, Ryan. But if you think about what full quarter Maurepas looks like. And we talked about $60 million a year run. So that's a -- a quarter is 1/4 of that. And then you can fight kind of back into what it would look like.

Thank you all very much for joining us today. We appreciate your continued interest and support. Have a good week.

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Operator [35]

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The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.