Greetings, and welcome to the Genesis Energy LP Fourth Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. It is now my pleasure to introduce your host, Dwayne Morley. Thank you, Mr. Morley, you may begin.

Good morning. Welcome to the 2022 Fourth Quarter Conference Call for Genesis Energy. Genesis has 4 business segments. The Offshore Pipeline Transportation segment is engaged in providing the critical infrastructure to move oil produced from the long-lived world-class reservoirs from the deepwater Gulf of Mexico to onshore refining centers. Sodium Minerals and Sulfur Services segment includes trona and trona-based exploring, mining, processing, producing, marketing and selling activities as well as the processing of sour gas streams to remove sulfur at refining operations. The Onshore Facilities and Transportation segment is engaged in the transportation, handling, blending, storage and supply of energy products, including crude oil and refined products. The Marine Transportation segment is engaged in the maritime transportation of primarily refined petroleum products. Genesis' operations are primarily located in Wyoming, the Gulf Coast states and the Gulf of Mexico. During this conference call, management may be making forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. The law provides safe harbor protection to encourage companies to provide forward-looking information. Genesis intends to avail itself of those safe harbor provisions and directs you to its most recently filed and future filings with the Securities and Exchange Commission. We also encourage you to visit our website at genesisenergy.com, where a copy of the press release we issued today is located. The press release also presents a reconciliation of non-GAAP financial measures to the most comparable GAAP financial measures. At this time, I would like to introduce Grant Sims, CEO of Genesis Energy, L.P. Mr. Sims will be joined by Bob Deere, Chief Financial Officer; and Ryan Sims, Senior Vice President, Finance and Corporate Development.

Good morning to everyone, and thanks for listening in. Our market leading businesses continue to perform in line with or actually ahead of our internal expectations in the fourth quarter, especially since we experienced unplanned downtime from several of our offshore customer locations, which negatively affected the quarter by some $10 million. For the full year, we generated adjusted EBITDA of $717 million, which was up approximately 25% over our initial 2022 guidance range or up approximately 18% over our initial range, even if you exclude the $41 million of non-recurring income we recognized in 2022. Importantly, we once again saw a reduction in our quarter end leverage ratio as calculated by our senior secured lenders to 4.14x, which is down in less than 15 months from our third quarter 2021 leverage ratio of 5.51x and fast approaching our targeted long-term leverage ratio of 4x. As we look ahead to 2023, the fundamentals and macro conditions across our business -- our largest business segments continue to be as positive as we have ever seen them. We believe this backdrop provides the foundation for us to continue to improve our balance sheet, generate increasing amounts of free cash flow from operations and deliver value for everyone in our capital structure in the coming years. We expect to see steady activity levels in the Gulf of Mexico, including new infill development wells and subsea tiebacks to existing deepwater production facilities for which we are the exclusive midstream provider, and we will benefit from a full year's worth of volumes from both keys, key and sprints, both of which came on last year and continue to exceed pre-drill expectations. We also expect to finally see new volumes from Argos, which we are told is currently scheduled to start up in the middle of…

[Operator Instructions]. And our first question is from TJ Schultz with RBC.

First question just on considering free cash flow in 2024. You have some capital to finish up SYNC and the CHOPS expansion. But is it fair to think that CapEx requirements should be a fair bit lower next year? Or do some of these additional potential offshore projects require any meaningful capital we should consider?

No. I think the lion's share of the -- what's remaining is going to be spent in '23, there will be some tail in capital spent in 2024, but we would expect a significant reduction in growth CapEx in 2024. And as the spend ends in, call it, second, third quarter of '24, then -- and we started receiving the revenues associated with the growth projects, and that's when we significantly turn free cash flow positive.

Okay. And then with the expanded investment baskets and the revolver, how are you thinking about that flexibility? You talked about simplifying the capital structure, just what's the plan with the preferreds? Or where in the capital structure do you consider purchasing securities as debt leverage moves sub-4x?

Yes. Again, I think that's going to be something that kind of unfolds over time as we look across the capital structure and expensive pieces of capital and other things, but it's a good -- it's a high-class problem to have the flexibility to do that. We very much appreciate the banks of giving us that additional flexibility. And as we move through time, it's -- and get to what we perceive to be the great situation to be in, in 2024 after we get these high return, all over which are less than 5x multiples on a billed basis. We start harvesting that cash. We will look at simplifying the capital structure and taking out expensive pieces of capital and made all the time managing the debt as calculated by our banks to at or below 4x.

Okay. Makes sense. If I can just shift gears real quick, 1 or 2 on operations. You talked about the potential volume uplift from the Samurai well that can be turned to production in 2Q? Just any estimate on volume uplift there. And then for our modeling, how ratable should I consider the ramp on Argos to get to that nameplate capacity?

Again, we're dealing with the situation. The King's Quay is already operating at above almost 15% above design capacity. So in reality, there probably will not be a net uplift from the Samurai number 5, but rather all of the 7 wells that are there will be somewhat constrained, but still performing well above pre-drill expectations. And the main reason that they're able to exceed the design capacity is because the strength of the reservoirs are such that they're not seeing -- they're seeing limited amounts of produced water at this point. And so what's coming out is strict hydrocarbon flows, which is a very good thing and just indicates the longevity and the long-term quality of the reservoirs that they are developing here. Relative to Argos, as we said, there's 14 wells pre-drilled and we could expect at least in historical perspective, they're pre-drilled and completed that mechanically, you could reasonably expect that it would take 2 to 3 weeks in round terms to fully tie in and mechanically get a well going. So once they're confident in their ability to start ramping up production, we kind of believe that it should be a fairly rapid ramp in these wells, again, are anticipated to, on average, be, call it, 10,000 barrels a day wells given that they got 14 pre-drilled or even greater. And importantly, the other thing from a scale point of view about the Gulf of Mexico is that the recoveries, EURs from most of these wells are anticipated to be in the 20 million to 25 million, even 30 million barrel plus per wellbore to give you an idea of the scale. So each one of these wells is the equivalent of, call it, at least 30, if not 40 onshore shale wells.

Okay. All makes sense. Just lastly, on soda ash, you have prices locked in higher year-over-year for 2023. Can you just remind me what's locked in beyond this year? And then what would be open to setting contracts at the end of this year, including the Granger expansion, understanding clearly the view you have for the market to remain tight?

Yes. All good questions. We continue to have a series of laddered contracts that go out over time and a number of them have been reset into this world or this price deck and are subject to caps and collars on a prospective basis. Others, some residuals are kind of locked in at 2020 pricing or 2021 pricing, in which case we need to get to the end of the 3 to 4 years of their primary term in order to reprice them up. So that's why everything doesn't go immediately up given the nature of our contracts, but we feel very comfortable of where we are as we intimated, it sure feels like at this point, and I agree, we're only 45 days into the new year. But it feels very comfortable that prices could actually hold steady or even continue to increase as we go throughout 2023. And that is -- if that indeed turns out to be the case, then we will -- over the coming quarters, we will be adjusting our annual guidance if that turns out to be the case.

[Operator Instructions]. As there are no further questions at this time, I would like to turn the floor back over to Grant Sims for closing remarks.

Again, we thank everybody for participating, whether or not you're here live, you're going to hear it on the tape-delay but we're very excited about the company and the prospects that we have in '23 and beyond, and we look forward to sharing that with you in future calls. So thanks, everyone.

Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.