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An Arrow Guiding the Williston

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The Daley Note: July 21, 2023

East Daley expects Crestwood Equity Partners (CEQP) to post higher earnings in 2Q23, lifted by higher volumes from the Williston Basin and a new producer tie-in agreement.

CEQP’s performance is closely tied to Bakken shale development, and we estimate overall gas volumes in the Williston increased by ~3% Y-o-Y in 2Q23 and by 5% compared to 1Q23.

CEQP reported 1Q23 EBITDA of $193MM and, based on the updated Financial Blueprint, East Daley expects the company to report EBITDA of $201MM in 2Q23. In our forecast, around $145MM comes from the North G&P segment composed of the Bakken (Arrow and Wild Basin) and Powder River assets.

Winter storms in 4Q22 and mid-1Q23 caused lower-than-expected volumes and well connect activity across CEQP’s G&P assets, but the systems have fully recovered. East Daley can observe this recovery through real-time pipeline samples and in plant-reported inlet data. Pipeline samples cover most dry gas production in the Bakken, allowing us to adjust our models before companies report earnings.

CEQP volumes should also get a lift from the start of a tie-in agreement with Chord Energy (CHRD). CEQP previously guided that it expects to bring online the initial wells of CHRD’s Rough Rider project in 2Q23. The dedication agreement represents a growth opportunity for Crestwood on the western edge of the Williston. East Daley expects the company’s Williston volumes to increase from an average of 290 MMcf/d in 2023 to 318 MMcf/d in 2024. – Maria Paz Urdaneta Tickers: CEQP, CHRD



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