Greetings and welcome to CorEnergy's Conference Call to Discuss the Second Quarter 2021 Results. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note this conference is being recorded. I would now like to turn the call over to Matt Kreps, Investor Relations for CorEnergy. Please go ahead.

Thank you, everyone, for joining today's CorEnergy Infrastructure Trust conference call. With me today are Dave Schulte, CEO; John Grier, COO; and Robert Waldron, CFO. This morning, we published a press release announcing the second quarter results and outlook for 2021. We'll file our Form 10-Q this afternoon. We will not present slides on a live call this quarter, but do have archived slide decks available online for reference at the Investor Relations section of our website. We plan to update our investor slides for conferences beginning next week. You can also access a webcast replay on the site typically posted within a couple of hours when the live call's end. I would like to remind everyone that statements made during the course of this presentation that are not purely historical may be forward-looking statements and are subject to the Safe Harbor protection available under the applicable securities laws. Important factors that could cause actual results to differ materially from those in the forward-looking statements are discussed in our filings with the SEC. These documents are available on the Investor Relations section of our website. We do not update our forward-looking statements. During this call, we will make reference to certain forward-looking non-GAAP metrics, which we reconciled in the subsequent filings as part of our results reporting. We encourage all of you to review our complete disclosures risk factors, GAAP numbers and those non-GAAP metrics with the related reconciliations. And with that, I would now like to turn the call over to Dave Schulte. Please go ahead.

Good afternoon, everyone. We continued to solidify the foundation of our capital structure post transaction, including the internalization of our REIT manager to create a more efficient cost structure, and we believe these steps will facilitate opportunities to further scale our revenue and dividend-generating asset base. I want to thank our stockholders for their support of our efforts at this year's annual meeting, which just finished at the end of June. We've emerged from the Crimson transaction with a complement of critical oil and natural gas pipeline infrastructure, which serve a more diverse and stronger customer base. With new platform demonstrating our business model as an operator of the infrastructure, the addressable market to continue to acquire assets is very large, with hundreds of billions of dollars of transportation and storage infrastructure currently serving the energy market. Creating a stable base from which to grow has been our goal, and we have successfully laid the foundation for our future by establishing: first, solid coverage of our debt and preferred stock dividend obligations; second, a baseline of dividend coverage for our common stockholders, which is enhanced by the subordination of the Class B common dividend for three years; third, a plan to grow that dividend through a variety of commercial activities and strategic actions; and finally, opportunities now emerging to gain scale through additional acquisitions of complementary as well as diversifying assets that fit our model. I'm pleased to report that we are seeing early signs of progress, even if not yet fully reflected in our reported results for the second quarter. Our MoGas and Omega assets are performing steadily, as you have seen for many years, and delivering increased volumes under expanded customer contracts and new projects completed over the past year. We are working to support the efforts of our customers, Spire and St. Louis, which is a critical provider of natural gas to customers in that area, particularly with winter approaching. In California, refinery utilization has nearly returned to pre-COVID levels for crude oil production has lagged. As the price of oil continues to climb, producers are back to profit or production for California wells. And with the return in refinery demand, we expect the second quarter may be our revenue trough. Producers are indicating a desire to return to pre-COVID production levels by Q4, although permitting has been challenging and there's always a risk of adverse impacts on demand due to renewed COVID impacts. The locally produced California crude is the ideal feedstock for California refineries, producing the state's carb required gasoline and diesel products. In short, California refineries represent a captive market for in-state production, and Crimson operates as one of the most efficient and environmentally responsible petrochemical systems in the U.S. Turning to our platform opportunities, I want to share with you that we are reviewing potential opportunities to expand with two goals in mind. First, with lowest execution risk with expansion within our existing pipeline footprint, we already executed incremental volume capacity on our MoGas Pipeline, which proved critical to our customers this past winter. We also are considering potential corporate level acquisitions that can add scale and diversification through expansion into new markets where our business model offers a competitive advantage. We remain diligent and cautious, which as the right opportunity arises, we're ready to create new value opportunities for our stockholders. And with that, I'll turn it over to Robert to address the financials.

Thanks, Dave. The second quarter of 2021 is the first CorEnergy report to include a full quarter of Crimson in results. For the three months ended June 30, 2021, we had revenue of $32.3 million, adjusted EBITDA of $10 million, adjusted net income of $3 million and after providing for maintenance capital and debt amortization, cash available for distribution or CAD of negative $1 million. Comparisons to second quarter in 2020 have limited utility since the vast majority of the difference is the inclusion of Crimson in the 2021 results. When making comparisons to first quarter of 2021, I will remind you that Crimson's results are only included after February 1, 2021. Q2 2021 represents the new baseline for future comparisons. We finished the quarter with liquidity of approximately $40 million, including cash of $18 million and $22 million of undrawn revolver. As a result of the proxy vote and subsequent corporate actions, the current equity capital structure consists of only Series A preferred, common stock, Class B common stock and non-controlling interest exchangeable into those securities subject to CPUC approval. The prospective forward-looking capitalization table located on Page 63 of our second quarter 10-Q to be filed later today reflects the priorities of the fully exchanged capitalization and provide additional detail. The most material impact of these changes was to move the distributions on $60 million of preferred equity to become subordinated to the common dividend. The Company's Board declared dividends on all preferred obligations during the second quarter and a $0.05 per share dividend on our common stock. No dividend was declared on the Class B common stock as a result of not meeting the required 1.25 coverage ratio for the Class B shares. Regarding Class B stock, Crimson and CorEnergy management teams roll their equity into CORR equity with much of that being subordinated Class B common stock and equivalent LLC interest. The internalization coupled with the Crimson transaction, resulted in management owning just under 50% of the combined common and Class B with over 90% of the common equity owned by management being the subordinated Class B common stock and equivalents. This quarter highlights the reason that structure was utilized to provide a shocker as we navigate the next several quarters. This structure not only protects and prioritizes the dividend for our common equity holders, as it did in Q2, but also indicates our management team's confidence in our ability to execute on this strategy. As a potential added benefit to our investors, we expect to characterize our dividend as a return of capital on -- due to our losses from 2020 rather than as ordinary dividends for tax purposes for the foreseeable future, which may provide favorable tax circumstances for many of you. As Dave mentioned, we believe second quarter will be a trough for us with the back half of the year showing improvement. One action we have already taken and announced is that we have raised tariffs on substantially all of our California-regulated pipelines 10%. These increases were all in place by August 1st and represent the vast majority of our revenue in Crimson. Our ability to raise tariffs when appropriate demonstrates the long-term stability of our regulated assets. We are, therefore, referring our outlook for the back half of 2021. At this time, we would like to take questions from our covering analysts or institutional stockholders before closing the call. If you have additional questions or follow-up needs not addressed on today's call, please reach out to our Investor Relations team, and they will make necessary arrangements. Thank you.

At this time, we will be conducting a question-and-answer session. Our first question comes from Selman Akyol with Stifel. You may proceed with your question.

First up, can you just break out transportation revenue from distribution revenue?

The transportation and distribution revenue really are one category for us.

Okay. And on the pipeline lots for allowance less, I guess, the pipeline, subsequent sales and revenue, it seems like it accelerated pretty sharply this quarter compared to the last quarter. Is there any comment around that?

The PLA of subsequent sales, there's two components of our PLA revenue. One is the revenue we earned every quarter -- every month as we transport customer's crude. But then the revenue of subsequent sales is really when we sell that revenue. And so, you really need to look at the two, the revenue line and the offsetting expense, and the net of that really represents gains or losses on inventory from the time we hold it. So that will depend on -- those lines will always move around a little bit depending on the sale timing of the actual crude oil that we earn from our PLA.

Okay, okay. So yes, and I had net those two against it. And then also in terms of just G&A, further improvement to come since the buy-in of the management company. Should we expect net line to go down?

I think the biggest trend that we've -- the biggest area that I'd comment on is, the first half of the year was very heavy on professional services, as you might imagine, with integrating the acquisition, additional activity around with auditors and consultants around purchase price allocation and things like that. So I think some of that activity will -- is trending down and will continue third and fourth quarter. But I don't think there's -- I don't think we've really identified any other major savings as far as other G&A buckets.

Our next question comes from Michael Zuk with Oppenheimer. You may proceed with your question.

Dave, can you give us an update on the Fort Leonard Wood project? And how it is developing for MoGas?

Sure, Mike. Thanks for the question. We have had some successful projects at Fort Leonard Wood, including the installation of supplemental propane backup system, which was kicked in last winter and was used to generate incremental revenue. The service contract that was -- that we won with our partner, now two years ago, I think, has yet to be awarded on specific projects. We identified a bunch of projects and priorities of projects. And the U.S. Department of Defense has so far not acted on the list, but we would still be the incumbent if they did act toward those. And it's just tough to predict the timing of when they would prioritize that activity level. We have great relationships on base. We've been supportive of the -- there's a hospital construction project. They just completed that required some incremental work on our behalf. And so Mike, we don't have anything else to add on that other than we're in the pull position if and when the DoD decides to start work.

Fair enough. Are there any other activities for a potential incremental flow of gas on the MoGas or Spire system?

Well, beyond the project that we just completed in December of last year, we are having conversations with Spire about their position in the marketplace and how we can continue to be helpful to them. There's public information about the Spire pipeline being reviewed again for its necessity, and we filed supportive documentation around that. It's all public information out there, but other than continuing to be in a position to try to augment Spire's need to serve their market. There's no incremental flow from incremental customers, which I think may be really what you're referring to is there other development work that's going on along our pipeline that might draw additional gas down and none that we've been aware of.

Our next question comes from Selman Akyol with Stifel.

Dave, and I just wanted to follow up on the ST. Louis pipeline. So in the event that, that were to get shut down, how would that impact you?

Well, we don't think it would impact us dramatically, Selman. It would impact the city of St. Louis dramatically as they had a cold snap that they had in February. And so, we think it's -- therefore, we think it's unlikely you could shut down, but there's always vulnerability when you're back in front of the regulator for review. Our supply pipeline for Spire would go back to maximum capacity, but they would -- they've engineered around already their own storage and other assets, which they've said in their public information. So it would be challenging for Laclede to handle the cold snap without access to the volumes on that pipeline. So, we don't believe it would have an adverse impact on us. And because -- and we're integrated into their system in a couple of different places, so we would continue to be supportive, I think in terms of how that might functionally work depending on any changes to Spire's ability to create secondary or other plans for alternative access, which they don't have right now because of the Spire pipeline. I think our team thinks it would not be feasible to implement alternatives between now and there.

Okay. Fair enough. And then I guess, Robert, can you just say how many barrels of oil you transported this quarter?

Sure. That is one -- on a daily basis -- let me get to that table. On a daily basis, about 188,000 per day.

Okay. And that's for both sort of the North system and the South system, right, I mean just looking at them as one?

One, and this will come out later in our 10-Q, as we've given in the past, we give all the quarterly volumes. Yes, 188,000.

We have reached the end of the question-and-answer session, and I will now turn the call back over to Dave Schulte for any closing remarks.

So please contact our Investor Relations team if you'd like to meet with us at one of our coming investor conference events or arrange on direct one-on-one call. Thank you for joining us today.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.