Hello, and welcome to the Genesis Energy Fourth Quarter 2021 Earnings Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Dwayne Morley, Vice President, Investor Relations. Please go ahead, Dwayne.

Thank you. Good morning. Welcome to the 2021 fourth quarter conference call for Genesis Energy. Genesis has four business segments. The Offshore Pipeline Transportation segment is engaged in providing the critical infrastructure to move oil produced about the long-lived, world-class reservoirs in the deepwater Gulf of Mexico to onshore refining centers. The Sodium Minerals and Sulfur Services segment includes trona and trona-based exploring, mining, processing, producing, marketing and selling activities as well as the processing of sour gas streams to remove sulfur at refining operations. The Onshore Facilities and Transportation segment is engaged in the transportation, handling, blending, storage and supply of energy products, including crude oil and refined products. The Marine Transportation segment is engaged in the maritime transportation of primarily refined petroleum products. Genesis' operations are primarily located in Wyoming, the Gulf Coast states and the Gulf of Mexico. During this conference call, management may be making forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. The law provides safe harbor provisions to encourage companies to provide forward-looking information. Genesis intends to avail itself of those Safe Harbor provisions and directs you to its most recently filed and future filings with the Securities and Exchange Commission. We also encourage you to visit our website at genesisenergy.com, where a copy of the press release we issued today is located. The press release also presents a reconciliation of non-GAAP financial measures to the most comparable GAAP financial measures. At this time, I would like to introduce Grant Sims, CEO of Genesis Energy LP. Mr. Sims will be joined by Bob Deere, Chief Financial Officer; and Ryan Sims, Senior Vice President, Finance and Corporate Development.

Thanks, Dwayne, and good morning. As we stated in our earnings release this morning, 2021 was expected to be a year of transition as our businesses recovered from the impacts of the COVID-19 pandemic and the unprecedented hurricane season of 2020. We did, in fact, see our businesses begin to recover and our financial performance for the fourth quarter and all of 2021 was in line with our expectations. As we look forward to 2022, we're very excited about the continuing recovery in the future trajectory of our businesses. Our two largest businesses meaningfully improved as we move through 2021 and that momentum is expected to accelerate as we move through 2022. Because of the increasingly tight conditions in the world soda ash market, we expect our weighted average price this year to be at or above what we realized in 2019 or before any of the effects of the pandemic. This recovery in pricing is at least one year ahead of schedule, based upon our previous expectations and taking into account the caps and collars we have in place for a significant percentage of our sales contracts. We're also excited because we expect that 2022 will be a year of dramatically increasing volumes out of the deepwater Gulf of Mexico as King's Quay and Argos began ramping production. Together, these two projects represent some $12 billion to $15 billion of capital invested over the last several years in the deepwater Gulf of Mexico, one of the lowest, if not the lowest carbon footprint crude oil basins in the world. As we look forward and not backwards, we're rolling out initial guidance for 2022 of total segment margin expected in the $620 million to $640 million range and adjusted EBITDA within the $565 million to $585 million range. Both of…

[Operator Instructions] Our first question today is coming from Michael Blum from Wells Fargo. Your line is now live.

Thanks. Good morning everyone. Wondering if you have a 2022 growth and maintenance capital number and any kind of large projects or large buckets you could highlight there?

Generally speaking, I think that our expectation for maintenance capital in 2022 is in the $50 million, $60 million range, which is consistent with our historical run rate.

Okay. Any...

Excuse me, Michael, with the line here being associated with our soda ash operations as it usually is.

Okay. Any estimate on growth capital?

As I said earlier, in it there's a couple of hundred million. The lion's share again is the remaining capital associated with the Granger expansion, which is a very, very attractive opportunity for us.

Okay. Great. And then I apologize if I missed this, but do you have an expectation or forecast for soda ash volumes in 2022?

Well, we're basically – we're sold out, which is – includes all of the 3.5 billion to 3.6 million tons that we make at the Westvaco facility. Not all of that is obviously sold as bulk soda ash sales, but also included is the soda ash that we use for AR specialty products as well as the soda ash that we use to make synthetic caustic soda, which in turn; we use a lion's share of that in our refinery services business. But we will be sold out just as we were actually sold out in 2021. That's the way the market works, low-cost suppliers, the low-cost producers, such as natural producers, and certainly us are baseloaded into the world market.

Okay. Great. And then my last question, just on Argos and King's Quay. Just want to confirm what I heard in your comments that you – it sounds like you think you'll hit kind of run rate volumes by 2023. Is that right?

Correct. We would anticipate a fairly dramatic rapid ramp, and it's in the public domain because it's reported on BOEM websites and other places, but there are 14 wells that are predrilled and completed at Argos. And I think the number is either eight or nine that are drilled and completed at King's Quay. So it's a matter of picking them up, if you will, which is more or less a two-week to four-week process per well as opposed to drilling and which could be four to six months. So we would anticipate a fairly rapid rate ramp of the production once they're commissioned to start hooking up the wells.

Okay. Great. Thank you so much.

Thanks Michael.

Our next question today is coming from Kyle May from Capital One Securities. Your line is now live.

Hi. Good morning everyone. Grant, maybe following along with the discussion on the Gulf of Mexico. In the past, I believe you all have talked about maybe some longer-dated potential developments, maybe in the 2024, 2025 time frame. Can you give us any updates on these projects? And then also maybe any other thoughts about Gulf of Mexico production over the next few years?

We're still in active discussions and not at a position yet to divulge some of the things that we talked about in the 2024, 2025 time frame. We continue to see very active levels of activity in and around our assets with folks actually, I think Transocean just announced a kind of extension of some of their drilling activities and in fact returning some of their vessels into the deepwater Gulf of Mexico for further activity. So we see that those lumpy, if you will, new fields to come on in 2024, obviously in 2025, we believe we'll have ramping volumes that we've talked about out of Argos and King's Quay ramping in the latter part of 2022 and into 2023. And then, what we don't normally kind of highlight but there's a tremendous amount of what I would call infill drilling or subsea tiebacks in and around a lot of our existing production hubs to which we're the exclusive provider of downstream transportation. So we believe that that level of development activity, either additional infill drilling and/or subsea satellite tiebacks to the existing hubs that that more or less addresses any of the decline or makes up for any of the natural decline, one would expect out of the reservoirs. And so, that these new incremental facilities are basically their net increase in terms of total throughput. So very good things happening in the Gulf.

Got it. That's helpful. I appreciate that. And another question, maybe following on the previous CapEx comments. I know you all have talked about the – I believe you described it as cost effective use of capital from Granger. Can you give us any more details around the – I guess, the split of spending between 2022 and 2023?

I don't have that at my fingertips at this point. We will probably – we'll file the K later and probably have a little bit more detail. But basically the large portion of the remaining capital to be spent on the Granger expansion is going to hit in 2022. And so, we can get that for you at a later date, but I don't have it right in front of me at this point.

Okay. Understood. Appreciate the time this morning.

Okay. Thank you.

[Operator instructions] Our next question is coming from Karl Blunden from Goldman Sachs. Your line is now live.

Hi. Good morning. Thanks for the time. Just good to see the pricing upside that you guided to on the soda ash business. I was just curious if you could provide a bit more color on two things: one, when you think about the contract resets, have – at this point in time in your guidance, does that reflect most of your contracts having reset higher? Or is there a good proportion that still need a reset to current supply demand dynamics? And maybe an extension of that is, if current conditions hold into 2023, do you get material upside from caps and collars rolling off? Or are those going to continue to impede the upside going forward?

That's a good question. Basically, all of our contracts, the vast majority of our contracts have been determined for 2022. So we do have a portion of our international sales contracts, which are through ANSAC, which are determined on a quarterly basis. But basically, all the domestic contracts and Latin America contracts and a portion of the Asian contracts are known and fixed for 2022. So the volatility, if you will, which we would – again, given the current market conditions, the only exposure, if you will to soda ash prices, which we believe should be up rather than down is in the Asian markets or that portion of it to be redetermined on a quarterly basis as we go through 2022. As I made reference in the prepared remarks, as we enter into 2023, a, we'll have a certain portion, I don't have that right off the top of my head, both domestic term contracts, as well as some of the ANSAC longer-dated contracts, will be available to reset, if you will at upper markets and then even taking into account the caps and collars that we have on the remaining domestic contracts and ANSAC contracts, which extend beyond 2023. If we would anticipate getting again under current market conditions, we would anticipate pricing at the high end, if not being limited by the caps that we have on those agreements, that we could easily see our weighted average price in 2023 go up in excess of $10 a ton, taking into account the overall dynamics of resets, as well as the restrictions associated with having caps and collars in a significant portion of our contract portfolio.

Helpful framing. With regard to the guidance that you gave and now specifically on offshore, there have been as you alluded to in your remarks, some years where there's been more impact from weather disruptions or hurricane activity. What do you bake in there for 2022? Just trying to figure out if – what kind of allowance we can put in our model?

Yes. Historic – yeah, good question. Historically, as we've prepared our own internal budgets, we have baked in, in the third quarter that the third quarter is basically an 84-day quarter, instead of 92 – excuse me, 85-day instead of 92. So we've taken a full seven days' worth of aggregate anticipated shut-ins. And that's how historically we have done it. We've been in – even 2020 and 2021 have been kind of unprecedented in terms of – or way to the right tale of a normal distribution of hurricane activity and its effect on the offshore. So in the guidance that we gave, we acted as if – or we put together a budget and a plan that anticipated that the third quarter was actually an 82-day quarter instead of a 92-day quarter. So we've baked into that annual guidance a full 10 days in the aggregate of, in essence a zero revenue out of the Gulf of Mexico as opposed to our historical norm of only baking in seven days. So we've tried to be a little bit more cautious on the approach based upon the last two years' activity levels. But as I said, historically, seven seem to be the right number.

Thanks very much. Appreciate that.

Okay.

Thank you. We've reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments.

Okay. Well, we appreciate everybody's time as usual, and we look forward to visiting with you either as a group or individually over the next 90 days. So thanks, everyone, for participating.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.