Ladies and gentlemen, thank you for standing by and welcome to the Altus Midstream Third Quarter 2019 Earnings Conference Call. [Operator Instructions] After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Patrick Cassidy, Director of Investor Relations. Thank you. You may begin, sir.

Good afternoon. Thank you for joining us on Altus Midstream Company's third quarter 2019 financial and operational results conference call. We will begin the call with an overview by Altus Midstream's CEO and President, Clay Bretches; and Ben Rodgers, CFO, will summarize our financial performance and outlook. Our prepared remarks will be approximately 15 minutes in length with the remainder of the call allotted for Q&A. Remarks during the call may also refer to the Altus Midstream Midstream investor presentation, which can be found on our Investor Relations website at altusmidstream.com/investors. 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 investor presentation posted yesterday on the Investor Relations website previously noted. Finally, I'd like to remind everyone that today's discussion will contain forward-looking estimates and assumptions based on our current views and reasonable expectations. However, a number of factors could cause actual results to differ materially from what we discuss today. A full disclaimer is located with the investor presentation on our website. With that I will turn the call over to Clay.

Thank you and good afternoon. On our call today, we will review Altus Midstream's key accomplishments since our last call, provide an update on the Company's operational and financial performance, and briefly discuss our capital planning progress, including our guidance for this year and how we're looking at 2020. During the third quarter, Altus achieved a number of significant milestones. We brought our second cryogenic processing plant online meeting our schedule and budget expectations. We exercised our option for the Shin Oak natural gas liquids pipeline. Shin Oak, which began operations earlier this year, completed the interconnection to Waha in June, and began moving Y-grade barrels from that hub to Mont Belvieu. At the end of September, Gulf Coast Express began full commercial service, delivering natural gas from the Permian Basin to the Gulf Coast. Looking ahead, we see reasons for optimism even with a lower commodity price environment and a lower upstream investment that can come from that. Financially, we have ample liquidity to fund our business through and past the start-up of the Permian Highway Pipeline in early 2021. The significant capital investments with our long-haul pipelines will be nearly complete by the end of next year. The combination of lower capital investments, combined with increasing earnings contributions primarily from our joint venture pipeline projects, reinforces our confidence in the ability to generate distributable cash flow and pay a dividend as planned in 2021. Moving on to the quarter. We are executing on the plan set out at the beginning of this year, building a foundation for future growth. Our first two cryo plants were completed on time and on budget and are now fully functional. Construction on our third cryo plant is complete, and we're commissioning the facilities awaiting utility hookups that we expect to be available…

Thank you, Clay. As noted in the press release issued yesterday, Altus reported a third-quarter net loss, including non-controlling interest of $8.2 million. This comprises a number of GAAP reporting items that can affect comparability of results. In the third quarter, this included $9 million for impairments associated with the cancellation of a compression project and $4 million for an unrealized embedded derivative loss related to the preferred equity. Excluding those and other items, Altus generated adjusted EBITDA of approximately $18 million on revenues of $34 million. This is more than a fourfold increase from the second quarter adjusted EBITDA of $4 million on revenues of $24 million. Gathering and processing volumes for the period averaged 467 million cubic feet per day compared with 363 million cubic feet per day in the preceding period. Approximately, 73% of third quarter volumes were rich gas. Volumes increased as deferred production from Apache's Alpine High field was brought back online coinciding with line fill at Gulf Coast Express and the start of our second facility at the Diamond Cryo Complex. Capital investments in midstream infrastructure during the quarter was $610 million. This included $570 million for our JV pipeline projects, which comprises the exercise of the Shin Oak natural gas liquids pipeline option in July and capital calls for our ownership in all four long-haul JV pipeline projects. Capital for gathering and processing infrastructure for the third quarter came in at $40 million. Year-to-date our capital investments totaled $1.3 billion, $1 billion for the JV pipeline projects and $276 million for gathering and processing. We continue to focus on costs, including actively managing headcount, which has been reduced by one-third since the beginning of the year, to align the organization with more centralized operations. Moving on to our financial outlook. We don't see…

Thank you. [Operator Instructions] Your first question comes from the line of James Carreker from U.S. Capital Advisors. Please go ahead.

Thank you. Just kind of looking at your revised guidance, you kind of have attributions of EBITDA between JV pipes and G&P. I guess my back of the envelope math kind of showed that your expectations for G&P, EBITDA in 2021 are roughly flat with 2019. So is it -- am I reading that right? And I guess as a follow-up to that, what type of rig count is the G&P outlook based on from Apache?

Yes, James. This is Clay Bretches. Thanks for your question. And let me address the rig count question. That's not something that we typically disclose. But I will say this on the EBITDA that you're looking at. We are being extremely conservative with that EBITDA number that we're putting out there, and we're taking this at a bare minimum look, and we're focusing primarily on our one customer being Apache. So we're not dialing in third-party upside, which we believe there is. And if you listen to our comments earlier, we're actively pursuing third party business not only with area producers but also with other third -- midstream companies in the area. So we're looking at that, but the numbers that you see in terms of the EBITDA on the G&P side of the business are very conservative. So you don't see -- you won't see any fluff whatsoever. And Ben, you may want to comment as well.

That's right, Clay.

And then I guess with the new metric of DCF coming out in the slides, is that something we'll start seeing in the earnings release on a quarterly basis, so we can kind of keep track with that updated guidance?

Yes. When we roll forward in previous quarters and start to capture that metric, obviously, it's non-GAAP item, so we'd have to reconcile it. We can't reconcile the future because of our inability to forecast certain items. But that's something that we hope to provide soon. We wanted to put it out there to really just show the cash generation power from our diverse asset base and show that we will be in a position to pay a dividend in 2021 and have the ability, if our Board and others choose so, to even accelerate that into 2020. But we recognize that that's not in our quarterly financials and we'll address that in future quarters.

Thanks. And I guess following up then on some of the third-party conversations you've had. What's the potential upside there either in terms of number of contracts or what kind of production is out there that's available? Is it going to be meaningful relative to Apache? Is it kind of -- if you can put together a bunch of singles maybe it adds up to something meaningful. Any color around that with those discussions?

Right. So just as a reminder, James, when we talked about additional midstream business, we can start right with Apache to begin with because. As you recall, we have a right of first offer for oil and for water within Alpine High starting with Apache. But we're looking at other opportunities, gas, oil, water with Apache in other areas of the basin as well in terms of additional business. Outside of that in terms of third-party producers or third-party midstream opportunities, we believe that there are some meaningful opportunities out there and are actively pursuing those right now. And we're seeing some good potential, and it's something that we hope to be able to comment on in the future. We do believe it will be impactful and we'll just have to see to what degree of success we have on that front in order to make a comparison to our principal customer that we have with Apache right now and Alpine High which is substantial. And it's not to be overlooked. When you think about it in terms of anchor customers, to have that much dedicated acreage from a producer and that kind of support is really unprecedented in the basin. So it really is a great start for us and it put some great assets on the ground in order for us to utilize and to capture some value from. So more to come in calls ahead, but again, we do believe that there is good potential out there, and we believe it will be impactful and meaningful.

Appreciate the color. If I can fit in one more. You guys did mention in your prepared remarks that there is a disconnect between the value of your JV pipe interest and the stock price. And I was wondering if you could talk a little bit about some of the options out there that you're contemplating that would maybe unlock a little bit of that?

Thanks, James, and that's a great question. At this point in time, it's not something that we want to go into detail. I would just say this, we're looking at any and all options, as we stated in our comments, both tactical and strategic. So, again, more to come in calls ahead, and we hope to be able to announce something in the future, but suffice it to say, our job is to make sure that we're providing maximum value for our investors. And so we're looking at all options that are available to us in order to get that share price up.

Okay. Appreciate it. That's all I have.

[Operator Instructions] There are no further questions at this time. I turn the call back over to management for any closing remarks.

Okay. That concludes our remarks. Thanks very much for your participation in the call today. Have a great day and a great week.

Thank you Ladies and Gentlemen this concludes Altus Midstream Third quarter earnings call. Thank you for participating. You may now disconnect.