Good morning, and welcome to Sanchez Midstream Partners First Quarter 2018 Earnings Conference. My name is Denise and I will be moderating today's call. [Operator Instructions] I would now like to turn the call over to Chuck Ward, Chief Financial Officer of Sanchez Midstream Partners. Mr. Ward, you may begin.

Good morning and thanks for joining us. With me this morning is Gerry Willinger, our Chief Executive Officer; Pat Sanchez, our President and Chief Operating Officer. Just a few quick notes before we get started, we released our fourth quarter 2018 earnings report this morning and we plan to file our 10-Q after market closes today. Our first quarter 2018 earnings release, which includes our forecast for the full year 2018, is available on our website www.sanchezmidstream.com. Please note that we have not yet updated our investor presentation to reflect our 2018 guidance. We expect to do so before attending the MLPA Conference later this month. Also note that our discussion this morning will include forward-looking statements, which are subject to certain risks and uncertainties. These are described more fully in our documents on file with the SEC, which are also available on our website. And finally, we will use non-GAAP financial measures during this morning's discussion to help our unit holders and the investment community better understand our operating performance. The earnings release available on our website includes a reconciliation of these non-GAAP financial measures to GAAP measures. And with that, I would like to now turn the call over to Gerry Willinger.

Thanks Chuck. I'll keep it relatively brief. The partnership had another solid quarter to start 2018. As you know our business normally sees the most seasonal variability in its financial results in the first quarter as the timing of the joint schedules tend to impact production volumes more during the first three months than at other times of the year. Now withstanding with the completion of the Raptor Gas Processing Facility and the Seco Pipeline now behind us, our first quarter 2018 adjusted EBITDA increased by more than 75% when compared to adjusted EBITDA for the first quarter of 2017. As a result our cash available for distribution in the first quarter 2018 was approximately $7.1 million, which resulted in a distribution coverage ratio of greater than one times for the quarter. Notably, the partnership had distributed over $4.72 per unit since restarting the distribution in November 2015 and for the two full quarters of operations since both the Raptor Gas Processing Facility and the Seco Pipeline online, our distribution coverage ratio averaged 1.25 times. In addition to first quarter earnings, we announced our forecast for the full year 2018 with this morning's release. We currently project Western Catarina Midstream volumes will range from 170 million to 180 million cubic feet per day of natural gas and from 13.1 thousand to 13.9 thousand barrels of oil per day. With combined Catarina and Comanche volumes the non-operated Carnero Gathering Line and Raptor Gas Processing Facility, each 50% owned and operated by Targa, estimated to be 255 million cubic feet per day. The Seco Pipeline, which like Western Catarina Midstream asset is wholly owned by the partnership, is expected to flow from 80 million to 90 million cubic feet per day of dry gas from its interconnection at the Raptor Gas Processing Facility to markets in south Texas. On the production side of the partnership's business, we currently project total volume for 2018 of approximately 475,000 to 535,000 barrels of oil equivalent. As we opportunistically expand our midstream activities in south Texas, we continue to work through the strategic divestiture of producing assets to reduce the partnerships exposure to production activities, which by their nature are sensitive to commodity prices and are less suited for our business model going forward. As we reported in our 8-K filing with the SEC late last month, we recently completed the sale of the small package of producing assets, which added about $4 million to our liquidity. For balance of the year and headed into 2019, we look to do the following. Convert the currently flowing Comanche volumes, to firm commitments with supporting acreage dedications, implement our strategy to capture the margin on processing those wet gas volumes as they grow to exceed raptor capacity, continue down the midstream value chain to further unlock the potential value of significant dry gas and oil volumes which Catarina and Comanche deliver, maintain solid distribution coverage metrics and maintain our prudent debt metrics so as to maximize potential M&A arbitrage opportunities across the midstream space. Charles Ward will pick up the discussion from here with an overview of first quarter 2018 financial results.

Thanks Gerry. Our revenue for the first quarter 2018 totaled $18.5 million. Of this amount, 14 million came from midstream activities and approximately 6.4 million came from production activities. We had $200,000 loss on hedge settlements and the balance of our revenue was $1.7 million loss on mark-to-market activities which is of course a noncash item. Our operating expenses during the first quarter 2018 totaled $18.5 million, which includes 2.8 million in operating expenses related to our midstream assets and $2.3 million in production related operating expenses and taxes. Cash G&A expenses for the quarter totaled $2.9 million and adding 3.7 million in non-cash unit based compensation and asset management fees, you arrive at the reported G&A for the quarter which totaled $6.6 million. Our adjusted EBITDA for the first quarter of 2018 was approximately 18.6 million, including 6.1 million in cash distributions from our joint venture with Targa. After backing out 2.3 million for cash interest expense, $400,000 for maintenance CapEx and 8.75 million for preferred distributions, we generated 7.1 million in cash available for distributions, which as Gerry mentioned earlier resulted in distribution coverage ratio for the quarter greater than one time. It's worth noting that we forecast for 2019 maintenance CapEx to be $1.6 million or $400,000 per quarter, down about a third compared to 2017. We currently have 184 million in debt outstanding in our credit facility and have a borrowing base of a little less than $250 million with 200 million in lender commitments. As we noted last quarter the midstream portion of our borrowing base, which is currently set at around 211 million, more than covers the lender commitments on our credit facility. With another strong midstream adjusted EBITDA contribution, we anticipate this over collateralization will continue to be the case when we complete our next borrowing base redetermination, which is expected to conclude later this quarter. And for 2018 we've hedged approximately 0.5 million cubic feet of our natural gas production, and effective fixed price of about $3 per MMBtu and hedged approximately 260,000 barrels of crude oil production and effective fixed price of slightly below $60 per barrel. The partnership has additional hedges covering a portion of its production in 2019 and 2020, which are written more firmly on the partners' hedges portion in the 10-Q. With that overview of our results, we now like for the moderator to open the line for some questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Your first question will come from Sunil Sibal of Seaport Global. Please go ahead.

Hi, good morning guys.

Good Morning.

Good morning, Sunil.

Yeah, a couple of questions for me, but I think you guys kind of touched about some goals for growing the midstream business in '18, so couple of clarifications on that. I think you mentioned acreage dedication on Comanche, would that be part of the JV with Targa or would that be just kind of - as an entity on its own? And then if you kind of take it from there and kind of elaborate a little bit about what all are the other opportunities in terms of growing your midstream footprint for the remainder of the year?

Sure on the Comanche, we - though we look to do those in collaboration with Targa, I think until those deals are consummated it's best for us to hold up on the results until we're finished.

Though we do have goals for this year to - as volumes grow from Catarina and Comanche, so look for ways to continue to capture those volumes as they get above the Raptor Gas Processing nameplate rates. So as you can tell on our forecasts, we're forecasting 255 million cubic feet a day through the plant. The plan is 260 a day, so that's essentially full capacity through the plant. We're expecting volumes coming from the Catarina and Comanche assets to eventually exceed those volumes and part of our goal is to continue to try to capture all those volumes and continue to flow it down through our systems as they approach market.

Got it and just a kind of complete discussion on that aspect, so your maintenance capital guidance is 1.6 and you're kind of still holding off on giving any guidance on growth CapEx at this stage, to that fair?

That's correct.

Okay, that's helpful and then just couple of kind of clarifications for me on the guidance that you provided, first of all on the non-operated assets, right. You laid out the operating margin kind of in the guidance, how should we kind of think about that of trading earnings versus distributions, is there anything between operating earnings versus distributions that we should be aware of. I realize that there are timing issues with the way we get the distribution, but I just wanted to clarify on the operating earnings part, is that a good proxy for distributions?

Yeah, those are meant to be proxies for the distributions as it was for the timing on the distributions as we receive them from Targa on a quarterly basis are prior to distributions made out of our entity, so actually that works out to never be a hindrance.

Okay, got it and then just one last one from me on the water volumes, right. I think last year you had some arrangement with Sanchez based on which you were moving some volumes for them, water volumes for them far a defined period of time. Has that kind of agreement been extended for all of '18 or how should we think about that?

We are currently processing those water volumes through our system. We will continue to evaluate the needs to bring water through the system as 2018 goes through. It's really based upon the drawing schedule coming out of sand and we monitor that in real time and so if water is flowing through the system, we certainly expect to have those margins coming through the broader system as well and that pretreatment environment.

Got it and then just last one for me, in terms of cadence of volume growth, so clearly it seems like from the guidance you laid out there is a fair bit of volume growth. Is there any kind of lumpiness we should expect in that growth for the remaining three quarters or is it fairly ratable?

Well, certainly if you see - let's see last year as well, we do have we drawing schedules and how they're projected out. We do typically have lumpiness in the first quarter and could roll over a little bit the second quarter, but it's typically isolated in the first quarter coming out at the end of the year and typically ramps through the year. So as we think of volumes it's really back half weighted more than front half weighted and I think that's always a good way to look at our business as we approach year 2019 as well.

Got it, guys. Thanks a lot for all the color.

The next question will be from Georg Venturatos of Johnson Rice. Please go ahead.

Hey, good morning guys.

Good morning, George.

Good morning, George.

Just, I apologize if I missed any details here, but obviously some nice further progress you announced in [indiscernible] production sale. Just wanted to get an update kind of on what we had remaining on that production side. Feels like largely EWI's maybe the Palmetto assets and some of the demits of other stuff, but just wanted to get a sense of, if there were any other kind of small opportunities out there and what the bigger pieces are left remaining.

Sure, you're right. The Palmetto still makes up the largest portion of what we have remaining on the upstream the EWI asset. Additionally we have one of the other EWI assets that we have bought as part of the - we actually go back and I guess all of '16, right. And that remains the bricks ranch was another part of those acquisitions back then that we've recently closed on and then just this last week we had the remainder of some of our small holdings in Oklahoma sold off on one of the online auction portals. So we're down to some non-off in Louisiana, a little bit more there in South Texas and then the big Palmetto and then –that's kind of it. I think we keep on doing it, but it's a lot easier to do some of the big deals than some of the small deals, but we just keep on chunking through those assets and kind of reinforcing the liquidity position and the debt to adjusted EBITDA metrics record.

Got it, it's good to see. And then strategically I guess, just wanted to make sure, we were still on the same page in terms of obviously as you look at divestment opportunities there is obviously an EBITDA portion associated with that and so as you look to be able to maintain that distribution level that we're at today, I mean how do you - do you still think about that as perfect world coinciding with hopefully a midstream either growth opportunity or acquisition that would fill in there?

That's exactly right, I think if you think about say a transaction that would give us an investment opportunity to keep following the molecules that come out of Comanche and Catarina and to the degree you had perfect timing then you would look to supplement that with further reduction of the production part of the assets. So that's one of the keys to being able to do that and the actual world as opposed to that theoretical perfect world is having the debt capacity and having the low debt metrics.

Got it and then last one for me, I thought volume guidance is largely consistent what you guys had talked about and Catarina seems like it's got that trajectory upward in the second half after the seasonality we typically see in 1Q. Care to throw out just kind of a bogie at least where you anticipate kind of distribution coverage being north of it in the second half as we continue and improve there.

I think if you work through the guidance that kind of yield a result, but I think for us we're going to balance kind of staying within our cash flows. I think we'll balance trying to make sure that we follow the molecules and are in a good position to actively take advantage of investment opportunities. So you're here today, I don't see it in need to tap capital markets, so it seems like if we just keep on going through the balance of the year it's hard for coverage not to increase.

Got it, no, it definitely looks like it will improve through the year, but thanks for this answer Chuck.

[Operator Instructions] And at this time we will conclude the question-and-answer session. I would like to hand the conference back over to chuck ward for any closing remarks

Well, thanks again for joining us this morning and we look forward to speaking with you very soon. We're meeting with some of you at the MLPA Investor Conference in Orlando.

Thank you, sir. Ladies and gentlemen the conference has now concluded. Thank you for attending today's presentation .You may now disconnect your lines. And once again the conference has concluded. You may disconnect your lines.