Greetings and welcome to the NGL Energy Partners 2Q 2024 earnings call. At this time, all participants are in a listen-only mode and a question and answer session will follow the formal presentation. [Operator Instructions] Note this conference is being recorded. I will now turn the conference over to your host, Brad Cooper, CFO of NGL Energy Partners. Brad, you may begin.

Thank you. Good afternoon and thank you to everyone for joining us on the call today. Our comments today will focus on the strong second quarter results, the outlook for the balance of this year and the steps we're taking to ensure we can address our debt maturities in the near future. After the market closed today, we issued an earnings release, published our investor presentation and filed our 10-Q. Comments today will include plans, forecasts and estimates that are forward-looking statements under the U.S. Securities Law. These comments are subject to assumptions, risks and uncertainties that could cause actual results to differ from the forward-looking statements. Please take note of the cautionary language and risk factors provided in our SEC filings and earnings materials. With that, let's jump into our second quarter's results. Adjusted EBITDA for the second quarter was $176.2 million compared to $142.2 million for the second quarter of fiscal 2023. The quarter was driven largely by water solutions continued strong performance. Water generated adjusted EBITDA of $140.4 million and processed $2.44 million barrels per day for the quarter. Through the first two quarters of the year, water solutions has generated $263 million of adjusted EBITDA, and we are on pace for over 1 billion barrels of water disposal for the year. With this strong start to the fiscal year, we are raising the full-year guidance for water solutions from $485 million to $500 million plus. We have seen quite a bit of commodity price volatility this year and to mitigate against swings in oil prices, we have entered into crude oil costless collars, through the end of the fiscal year to hedge our skim oil. Moving to liquids logistics, butane and propane are seasonal with the majority of their adjusted EBITDA coming in the back half…

Thanks, Brad. As you've heard, our strategy has not changed. Achieve and beat our EBITDA guidance, utilize free cash flow and non-core asset sale proceeds to reduce debt and thereby lower leverage. All good things come from less leverage. With respect to our EBITDA guidance, water year-to-date EBITDA $263 million we only need to generate $237 million in second half to achieve the $500 million. So we raised water guidance to 500 plus. This is being conservative, not an indication that we expect a decline. Water volumes have started out lower, slower in October, so 3rd quarter water EBITDA should be between first and second quarter actuals and an anticipate increase in the fourth quarter. For all of NGL, as Brad said, we're leaving full guidance at $645 million as we're anticipating more asset sales prior to 3/31/24, which will reduce EBITDA for the remaining months in the fiscal year that we do not own the asset. Free cash flow should not be impacted as reduced EBITDA would be offset by lower interest. Looking at our long-term indebtedness, we have been well served in a rising interest rate market with our secured and unsecured debt paying a fixed rate of 6.8% to 7.5% depending upon the tranche. As Brad mentioned, our only floating rate debt is on the ABL approximately 10%. So it is prudent to repay that first and then attack the 2025s. Regarding the dividend arrearages, we do not expect to pay them nor reinstate the dividend in this fiscal year. With that, let's open the line for questions.

[Operator Instructions] And there are no questions in queue at this time.

All right. Well, we'll see you next quarter. Thank you very much.

Do apologize actually speakers, I did have a couple of participants just joined the queue. We have...

If they're late, they can only ask - they can only half their question. They're late, only half a question.

Thank you so much. I appreciate. Our first question is coming from Jason Mendell from RBC Capital Markets. Jason, your line is live. Please go ahead.

Hi, thanks for taking the question. My full question is going to be if you can break out a sense for the improvement in water EBITDA over the next couple of quarters between volume and margin, but since I only have half the question, can you talk about margins?

You are being very gracious, so we'll answer the whole thing. Doug, if you're on, do you mind taking the question? You may have to repeat it.

Yes, Jason. Can you repeat the question?

Yes. Can you give us a little bit of detail on what you see for the progress of margins in the water business over the coming quarters? Thank you.

So if you're trying to do the math, on the second quarter while our average volume stayed closely flat to the prior quarter, our margins were very strong compared to the first quarter. So that's where we gleaned a large portion of our gain in second quarter. Part of that has to do with the OpEx coming down, we're continuing to trend down on OpEx, and we're really seeing the increased fees based on demand happening especially in the Delaware. So that's all a reflection of that is the expansion of the margin per barrel. So as Mike mentioned, we expect that margin to continue while we may have a slower Q3 just based on timing of completions activity. We expect the margin to remain close to the same. And then in Q4, as we expect a lot more completions to come along, we expect to have a very strong Q4 and have at least the same amount of margin per barrel, we would expect that in Q4 as we had into Q2.

Thank you very much. Appreciate it.

Thank you. And there are no further questions in queue at this time. And at this time, I would now like to close the call and thank everybody for their participation. Today's call has ended. Thank you once again for your participation and have a wonderful day.

Thank you.