Greetings, and welcome to the Genesis Energy L.P. Second Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Dwayne Morley, Vice President of IR. Please...

Good morning, and welcome to the 2025 Second Quarter Conference Call for Genesis Energy. Genesis Energy has 3 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 America to onshore refining centers. The Marine Transportation segment is engaged in the maritime transportation of primarily refined petroleum products. The Onshore Transportation and Services segment is engaged in the transportation, handling, blending, storage and supply of energy products, including crude oil and refined products, primarily around refining centers as well as the processing of sour gas streams to remove sulfur at refining operations. Genesis' operations are primarily located in the Gulf Coast states and the Gulf of America. 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 this morning 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 Kristen Jesulaitis, Chief Financial Officer and Chief Legal Officer; Ryan Sims, President and Chief Commercial Officer; and Louie Nicol, Chief Accounting Officer.

Good morning to everyone, and thanks for listening to the call. As we mentioned in our earnings release this morning, the second quarter was generally in line with our expectations. What is much more important from our perspective is looking ahead. And along those lines, I'm extremely excited to report the successful commissioning and start-up of the Shenandoah production facility and its 120,000 barrels per day of nameplate capacity, which just last week delivered first oil to our new sink pipeline lateral and then onto shore through our newly expanded CHOPS pipeline. This is a tremendous milestone for our entire Genesis team. I want to publicly thank them for all the hard work and dedication over the last 3-plus years during the design and construction phase as well as the countless hours day and night put in by our operations folks offshore to bring these exciting new projects into full service. Despite initial production from Shenandoah being delayed, first by around 6 months because of an industrial mishap during construction in Korea and then 6 weeks or so due to some commissioning challenges, primarily driven by abnormal loop currents in the Gulf, the operator successfully cleaned up the first of its 4 predrilled and completed wells last week. On Tuesday of this week, the operator began the cleanup of the second well, with such cleanup operations likely to continue through this weekend. The operator will then move to the third well and then on to the fourth well. Based upon initial results, it appears more likely than not that the initial wells will meet and/or exceed original predrill expectations. In fact, the operator and at least one of Shenandoah's nonoperating working interest owners have publicly affirmed that the initial phase should achieve 100,000 barrels a day of oil production from…

[Operator Instructions] Our first question is from Michael Blum with Wells Fargo.

I wanted to ask about the timing on Salamanca. I realize it's out of your control directly, but just wanted to get your confidence level in the latest time line. Are there any other kind of variables that could shift that? Or do you feel pretty good about the latest projection there?

I think we -- based upon our most recent conversations, we feel very good about the projected time line at initial production certainly by the end of the third quarter. This is the kind of starting to get into the peak season for named storms that can cause interruptions. But at least the long term or at least the 7- to 10- to 14-day forecast at this point is that there's no significant disruptive weather on the horizon. So we feel very good about it. I think the operator feels very good about it. And so we're looking forward to seeing that start.

Great. And then appreciate all your comments on capital return and the different avenues and constituents there. Just wondering, given the delays in the -- ramp of these offshore projects, should we think about all this capital return really starting in 2026? Or do you think possibly some of this could start in 2025?

Well, I think that as we said in our prepared remarks, our focus for the rest of this year as we hit our free cash flow numbers is to pay our revolving balance to 0 by the end of the year. We think that, that is an achievable outcome. And then -- but I would say that by the time we get to the fourth quarter in the context of distribution for the fourth quarter that we would expect to have 3 to 4-plus months worth of operating history under our belt, so to speak, for the 2 major fields that are coming on, and we may have at that point, we may have a discussion and the flexibility to do something in '25 as opposed to '26.

Our next question is from Wade Suki with Capital.

Not sure if I got cut off or not, but I'll give it a try anyway just in case -- I think I might have asked this on the last call, but just looking at new commercial opportunities, anything out there on the horizon right now you can sort of discuss or opine on?

No. We have nothing on the horizon other than to use -- it's almost football season. So blocking and tackling for purposes of seeing the ramp and fully placed into service the significant offshore expansion projects at this point. So no, there's nothing identified that we're working on in terms of additional capital expenditures. We are getting into the free cash flow world and having the high-class problem of being able to allocate that across everybody in the capital structure.

I appreciate that. Love the analogy there. Just, I guess, in terms of the portfolio kind of as it sits today, are you all pretty happy with where it is? Any inorganic opportunities or maybe even a divestiture candidate out there that might be material or meaningful?

I think that we are -- we think that as you could tell from our prepared remarks that the underlying macro fundamentals for all of our businesses are as good as they've been in many, many, many years. And so we're very comfortable with where we are, and we look forward to continuing to deliver increasing financial results in a positive macro backdrop for our businesses. So the short answer is, we like where we're at, and we intend on harvesting cash from where we have and look forward to, at some point in the future, having the financial flexibility to be opportunistic, but I don't see us stepping outside of our current lines of businesses whatsoever, just focusing on our preeminent positions that we've worked very hard to build.

Understood. I hear that loud and clear. Just one more, if I could squeeze it in. Is Monument sort of the next chunky development coming online after Salamanca?

Yes, it's a combination of, as we said, Phase 1 of Shenandoah represented by the first 4 wells is anticipated to achieve about 100,000 barrels a day of oil flows. With the debottlenecking, both whether or not it's Phase 2 or Monument, we would expect that we would see additional volumes come up with -- through the expanded Shenandoah FPU in the back half of '26, if not into early '27. But that should -- again, that cost us no money whatsoever. And so we look forward to their continued success in bringing the wells on and as they tie in the incremental facilities or incremental reserves to the Shenandoah FPU is a great thing for us.

Our next question is from Elvira Scotto with RBC Capital Markets.

Can you talk a little bit or elaborate a little bit on some of these trends that you noted in the Marine Transportation segment and just the impact to your ability to raise day rates? What are your expectations here kind of going forward? I think you mentioned it's going to be a little sloppy, but what are we thinking here like quarters into next year? Just any incremental detail there?

Yes. I mean I think that the second quarter was a little sloppier than the third quarter, at least for the brown our inland barges. I mean we still achieved the inland barge utilization rate for the quarter in excess of 98% and that's adjusted for scheduled dry dockings and other issues, which wouldn't allow us to otherwise use the equipment. So that's a pretty high utilization rate, but we anticipate that to be even higher in the third quarter. So really, the sloppiness we saw in the inland side, we think is behind us. What we're dealing with on the blue water side and the larger barges, ATBs and wireline units, as you're aware, we have 9 of those. We have seen some equipment that had previously been in the West Coast trade that due to some emission restrictions -- new emission restrictions in the Republic of California, primarily, they are leaving the West Coast trade and coming to the Gulf Coast. So we've seen a little bit of -- but our utilization continues to be 97%, which means we have a substantial amount of under longer-term contract and not so much in the spot business. But we -- as I said in the prepared remarks, we think that, that will ultimately find a home and everything will kind of settle down. And given those utilization rates that are in the high 90%, approaching 100%, that's the necessary condition for being able to ultimately raise rates. So some short-term speed bumps along the way that have no significant impact on the long-term fundamentals in the Jones Act tonnage world from our perspective.

Great. And then the -- can you just remind us of the time line to reach that leverage ratio of 4x? And how do you plan to balance shareholder returns with your focus on kind of reducing leverage and improving the balance sheet?

I think, again, we'll probably get into a further discussion of '26 later in the year and certainly the first part of '26. And again, driven primarily just as our range for the '25 is driven by the performance of these 2 significant incremental economic opportunities for us represented by Shen and Salamanca that we'll have more clarity as we go through the year and enter '26, so we can give you a more concise answer on that. But again, I think that the total distribution to common unitholders is order of magnitude, what $78 million or something in that regard. So 10% increases in distribution is less than $8 million. And so that's not a significant heroic cost of beginning a return to unitholders, but that's something that we will consider as we move through the year. And given Michael's comments or question earlier, how I responded to that, it's something that I think that we can potentially consider beginning as early as the fourth quarter or as we progress through '26.

Great. And then just my last one. Given the timing of Salamanca and Shenandoah and some of the remediation work, you are now guiding to the low end of your previous adjusted EBITDA guidance. Do you think given the line of sight that you have now and visibility, are you pretty confident that you can, at the very least, hit that low end?

You never say never -- at this red hot moment, we have 2 wells out of what are 7/8 predrilled or pre-completed wells on. So again, as I said, based upon early analysis, it certainly -- it appears to be meeting or exceeding our predrill expectations. So time will tell, but we're in the very early stages, but we're very excited, as you can tell from where we are at this point.

[Operator Instructions] This does conclude our question-and-answer session. If you'd like -- I would now like to pass the floor back over to management for any closing comments.

Well, thanks, everyone, for listening to the call, and we look forward to discussing better things as we continue through 2025 and into 2026. Thanks very much.

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