GENESIS ENERGY LP Q1 FY2025 earnings call

• Successfully exited the soda ash business and used proceeds to simplify balance sheet and reduce cash costs. - Offshore projects: Shenandoah FPU moored, SYNC Pipeline to commission end of month, Salamanca FPU nearing arrival. - Producers working on repairs for affected wells, with exit rates improving and expected volume normalization by end of second or third quarter. - Finalizing agreements for downstream oil transportation, expecting 6 infill/tieback wells by end of year with zero capital requirement. - Deepwater projects resilient in low price environments, cited examples from Chevron and Talos. - DOI's new permitting procedures to accelerate energy resource development. - Consolidated Onshore Facilities and Transportation with Refinery Services into OTS segment, with steady volumes expected to increase.

The company has three segments. The Offshore Pipeline Transportation segment had projects like Shenandoah and Salamanca FPUs nearing completion, with Shenandoah expected to have first oil in June and Salamanca soon after arrival. The Marine Transportation segment performed in line with expectations, on pace for record earnings in 2025, with favorable market conditions for Jones Act tonnage. The Onshore Transportation and Services segment (OTS) is refinery-centric, with steady volumes expected to increase as offshore projects commence production.

• Anticipate segment margin from offshore to contribute significantly to annual EBITDA. - OTS and Marine segments expected to be consistent with first quarter, possibly ticking up. - Distribution consideration based on visibility from offshore projects and well repairs, likely flat for second quarter with potential movements in third quarter and beyond.

• Producer mechanical issues affecting offshore production volumes. - Uncertainty in timing of repair completion and volume normalization. - Commodity price fluctuations could impact producer activity, but deepwater projects are resilient.

Q: Thoughts on capital allocation and distribution, including if distribution might be flat this year?

A: Ryan Sims said they'll likely maintain flat distribution for second quarter, with visibility around offshore projects and well repairs to consider movements in third quarter and beyond.

Q: Quantify opportunity for additional infield and subsea tiebacks?

A: Grant Sims said 10 of 22 deep water rigs in Gulf of Mexico are on fields dedicated to them, with 7 active rigs drilling infilled/subsea tieback wells, expecting 7,000-10,000 bbl/day wells contributing to throughput.

Q: Bracket segment margin for Offshore segment this year and next?

A: Grant Sims said OTS and Marine segments expected to be consistent with first quarter, with offshore segment margin contributing significantly to annual EBITDA.

Q: Tie-back opportunities as growth enhancements and embedded in guidance?

A: Kristen Jesulaitis said ones with higher visibility accounted for in guidance, but potential upside from additional ones, offsetting declines from mature fields.

Q: New projects on horizon?

A: Kristen Jesulaitis said focused on harvesting from ramp of past investments, but prebuilt capacity on SYNC laterals and CHOPS system allows incremental segment margin without spending money.

Q: Confidence in resolution of producer issues by end of second quarter/early 3Q?

A: Grant Sims cited Murphy call example of wells being worked on, producers incented to get repairs done quickly, confident in their progress.

Q: Crude oil price point affecting producer activity?

A: Grant Sims said deepwater projects are resilient with low marginal lifting costs, no significant supply response seen in low price environments.

Q: Target leverage ratio and distribution coverage?

A: Ryan Sims said long-term target leverage ratio around 4 times, anticipating rapid approach with incremental segment margin from producers hitting numbers.

Q: Day rates needed for new Marine segment construction?

A: Kristen Jesulaitis said day rates need to go up 30-40% from current levels and be sustained for 5+ years for new construction to be incentivized.