Good day ladies and gentlemen and welcome to the Fourth Quarter 2018, Hess Midstream Partners Conference Call. My name is Brian and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to Jennifer Gordon, Director of Investor Relations. Please proceed.

Thank you, Brian. Good afternoon, everyone, and thank you for participating in our fourth quarter earnings conference call. Our earnings release was issued this morning and appears on our website, www.hessmidstream.com. Today's conference call contains projections and other forward-looking statements within the meaning of the federal securities laws. These statements are subject to known and unknown risks and uncertainties that may cause actual results to differ from those expressed or implied in such statements. These risks include those set forth in the Risk Factor section of Hess Midstream's filings with the SEC. Also on today's conference call, we may discuss certain non-GAAP financial measures. A reconciliation of the differences between these non-GAAP financial measures and the most directly comparable GAAP financial measures can be found in the earnings release. With me today are John Gatling, Chief Operating Officer; and Jonathan Stein, Chief Financial Officer. I'll now turn the call over to John Gatling.

Thanks, Jennifer. Good afternoon, everyone and welcome to Hess Midstream’s fourth quarter 2018 conference call. Today, I'll review our operating performance and recent highlights as we continue to execute our strategy, and provide additional details regarding our 2019 plans. I will also discuss Hess Corporation's latest results and long-term outlook for the Bakken where they plan to grow production to approximately 200,000 barrels of oil equivalent per day by 2021, which represents a 20% compound growth rate. Jonathan Stein will then review our financial results. First I'd like to reflect on the progress we've made over the past 12 months. We continue to invest in our strategically positioned and integrated oil and gas systems, further expanding our strategic footprint and enhancing our execution track record. In 2018, we met all Hess Midstream execution milestones through our $325 million expansion capital program, adding new crude oil and gas gathering pipelines and compression capacity to support Hess and third-party volume growth. In addition, the operator Targa Resources continued to advance the construction of our 200 million cubic foot per day JV gas plant, Little Missouri 4. Also in 2018, we’re pleased to have delivered another year of very strong operating performance. We continued the safe and efficient operation of our Hawkeye Oil and Gas facilities, and the Johnson's Corner Header System all of which were bottom line in 2017. These projects enabled us to deliver more than double-digit percentage throughput growth in 2018, compared to the prior year. Our gas processing volumes grew by 17% to our full year of 2018 average of 233 million cubic foot per day, while our crude terminaling volumes grew by 46% to a full year average of 101,000 barrels of oil per day. Now turning to our fourth quarter results. Gas processing volumes were 238 million…

Thanks, John, and good afternoon, everyone. As John described, we are pleased with the progress we made in 2018 on executing our strategy. Our track record of delivery is visible in the projects and organic throughput that we have delivered and in our financial results. For the fourth quarter of 2018, we again delivered our targeted distribution per unit growth of 15% on an annualized basis, announcing our sixth consecutive quarterly increase in distributions since our IPO. Our full-year 2018, consolidated adjusted EBITDA of $497 million represented 24% growth over full year 2017 results. We delivered on our long-term 15% distribution growth target with an annual average DCF coverage ratio of approximately 1.2 times, above our long-term target of at least 1.1 times. Significantly, we accomplished this while primarily self funding both our $325 million consolidated expansion capital program and our growing distribution, ending the year with no debt. In addition, based on our 2019 guidance, we can achieve our growth targets without the need for the equity market or dropdown until beyond 2021. Turning to fourth quarter results. I will compare results from the fourth quarter of 2018 to the third quarter of 2018. For the fourth quarter 2018 consolidated net income was $92 million compared to $97 million for the third quarter. Consolidated adjusted EBITDA for the fourth quarter was $124 million compared to $128 for the third quarter. The change in consolidated adjusted EBITDA relative to the third quarter was primarily attributable to the following: Total revenues increased EBITDA by approximately $1 million, including revenues for our terminaling segment increased by approximately $2 million, primarily from higher crude terminaling volumes from Hess and third parties. Revenues for our gathering and processing segment decreased by approximately $1 million, primarily due to maintenance at TGP in the fourth quarter.…

[Operator Instructions] And our first question will come from Barrett Blaschke with MUFG Securities. Your line is now open.

Hey, guys. Just one quick one for me. While I realize that there's no projection for dropdowns prior to post-2021 and the capital markets remain closed, is there any incentive that as your coverage sort of creeps up with LM4 coming on that maybe you could bring down a little at a time, just to move assets into -- or the asset interest into the more tax efficient vehicle?

No. I think, as we've talked about, we have significant and highly-visible organic growth, as I mentioned more than 15% across all of our systems. So, as you said and as you heard me say on the call, therefore, we have no need for dropdowns to meet our financial targets. As we have higher coverage, we'll do as we have done before, which is to continue to self fund our distribution and capital program. In 2018, we actually self funded both of those and ended the year with zero leverage. And looking forward, we can continue to do that with very low leverage that's at a half a turn of EBITDA or less. So, we think that that using that higher coverage in that way really goes towards helping to continue the sustainability of our model.

Thank you. And our next question will come from the line of Jeremy Tonet with JP Morgan. Your line is now open.

Good afternoon, guys. This is Rahul on for Jeremy. Just couple of quick questions here. First, can you share your thoughts on how you see HESM leveraging Hess’ volumes into equity options on potential crude oil takeaway solutions, given the recent announcements out there?

Sure. I mean, Hess has -- as you heard on the prior call, I mean, Hess is looking at export. Currently about 70% of the oil that's being delivered to the Gulf, we've got 50,000 barrels a day on DAPL currently, we've got the rail option. There's a number of expansion opportunities that are currently being considered, primary one is DAPL at the moment. And we are, both I think Hess and Hess Midstream looking at those opportunities, I think Hess more from a takeaway perspective to support their upstream development plan and then Midstream would be looking at it obviously to connect to our system. But then, as we've talked about before, we're always looking for those strategic investment opportunities. And if it makes sense and ties in with our system and extends our opportunity to support our customers, it's absolutely something we would consider. So, yes, we are continuing to evaluate all opportunities within the basin and export options out of the basin as well.

Got you. That's helpful. And then on the gas side, given the continued high level of flaring there, I'm just curious if HESM is in a position to capture opportunities from the dry gas out of the tailgate of Tioga and move it to the long haul pipe, similar to what like some of your peers have announced earlier this week. Can HESM participate in this project going forward or any thoughts there?

Yes. I mean, just to be clear, we currently have sufficient capacity from both NGL and a residue tailgate gas plant requirement. So, we've got sufficient takeaway capability. But, like I mentioned on the crude oil side, as gas volumes continue to increase in the basin, I mean, Hess has announced significant production ramp-up to 200,000 barrels of oil equivalent per day by 2021, it's a 20% per year compound growth rate that they've got from a production perspective, that obviously is oil and gas. And so, we're expecting to see gas to grow, both from Hess and third parties, which is part of the reason why we invested in LM4, part of the reason why we've announced that we're planning to expand the Tioga Gas Plant to at least 50 million a day and potentially more, depending on the demand in the basin. And so, part of that obviously would include export and making sure that we have export that fits along with our processing capability. So, while there are some recent announcements, I mean similar to the DAPL comment, I think we are always looking at those strategic opportunities to see if there is an investment opportunity there, and we're definitely talking to the same providers that have announced kind of expansions as part of just securing that export.

Thank you. Our next question will from the line…

Sorry. I just want to make sure -- my mic went out there and it slashed. Was I able to respond to the question?

Yes, I heard you.

Okay, very good. Thank you.

Our next question will come from the line of Mirek Zak with Citigroup. Your line is now open.

Just one quick one for me. Around M&A, what are you guys seeing around assets coming to market in the region, and are there any you think that may potentially fit well into your asset portfolio?

There has been a few announcements as far as looking to bring cash into other portfolios. So, I do think that there is a little bit of activity going on there and there is some options there, and there are definitely assets within the basin that we're interested in that are natural strategic bolt-ons to our existing infrastructure. As I kind of talked about on the takeaway, I think we would continue to look at those opportunistically. We are very fortunate that we have a kind of built-in growth into our existing contract structure and our volume forecast from an organic perspective. So, these are all additional layers of EBITDA growth for us. But, at the end of the day, we're always looking to expand in the basin, looking to expand our strategic footprint. And there are number of providers that would be a nice fit into our infrastructure. So, we are continuing to look at those and evaluate them and progress as you would expect to see.

Okay. And is this on both the crude and gathering sides or assets outside of that? And am I right to assume that you would probably look to have contracts on these systems similar to what you have with Hess at this point?

Yes. I mean, I think we provide oil and gas services currently. And as we've announced, there was a sell into the JV for the water business. So, that's obviously a piece of business we're looking at as well. And so, it would clearly be oil and gas services. And yes, I mean, I think we've made this fairly clear that we really like our contract structure that we've got established in future investments, our baseline would be to start with that structure, and get it set up the right way. But, there are definitely characteristics of the existing structure that we would look to replicate any future investments that we've got.

Thank you very much. This concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.