Genesis Energy, L.P. Q3 FY2025 earnings call

• Offshore Pipeline Transportation: Shenandoah和Salamanca浮式生产装置成功启动并 ramp产量，预计未来对该 segment财务表现有重大贡献，现有管道系统吞吐量超70万桶/天，预计未来持续增长。
• Marine Transportation: 7 - 8月受短期市场条件影响，但棕色和蓝色水船队长期基本面稳固，8艘蓝色水船合同至年末，预计Q4恢复。
• Onshore Transportation and Services: 德州和Raceland终端及管道量增加，专注于资本配置以减少债务、回报资本给单位持有人。

Genesis Energy has 3 business segments. The Offshore Pipeline Transportation segment saw sequential improvement in volumes and segment margin,受益于Shenandoah和Salamanca浮式生产装置的启动等因素。Marine Transportation segment因7 - 8月短期市场条件面临挑战，但预计Q4恢复。Onshore Transportation and Services segment表现符合预期，Texas和Raceland终端及管道量在增加。具体而言，Offshore Pipeline Transportation segment财务结果目前仅反映Shenandoah的最低产量承诺，Salamanca暂无贡献；Marine Transportation segment受短期市场影响但长期基本面稳固；Onshore Transportation and Services segment量增趋势持续。

• Expect to generate increasing amounts of free cash flow and see significant improvement in leverage ratio throughout 2026.
• Marine Transportation segment expected to recover in Q4 and deliver stable to modestly growing contributions in future years.
• Offshore Pipeline Transportation segment to see significant contribution from Shenandoah and Salamanca, with offshore business as self-regenerating annuity if producers replace reserves.

Q: I know the big project spend has been completed. But can you give us a sense for where future growth capital might be directed or recognizing it's pretty modest at this point? And maybe sort of the dovetail on that. I may have asked you the same question last quarter, but do you see any material project potential on the horizon to something a little chunkier?

A: Wade, I mean, as a normal course of business, I think we view growth capital to be in the $10 million, $15 million range, which, generally speaking, is -- might be tanks or pumps at one or more of our offshore facilities and/or onshore facilities to support the operations of our -- allow us to increase the throughputs on our existing footprint. So we don't have anything on the horizon that we're looking at, evaluating. But that doesn't mean that ultimately, things may opportunistically pop up. But we are really focused, Wade, on being in a position to generate increasing amounts of free cash flow and simplifying the balance sheet capital structure and returning capital to our unitholders. So that's what our focus is at this point.

Q: Understood. And I was hoping to revisit, I think you made some comments in your prepared remarks about 11 more wells per year needed. If I heard you correctly, is that sort of to offset declines, anticipated declines from Shenandoah and Salamanca? Just any clarification you could give would be great.

A: I think that it really is -- we view this -- the offshore business is a self-regenerating annuity, and it will regenerate itself every year if we "If the producers replace the reserves regardless of where they come from, that they move through our pipeline in any 1 year." So that's kind of how we think about it, Wade, is that -- so if we move 275 million barrels in '26, which we would anticipate that we would, if the producers across the footprint of existing production facilities, which are dedicated and tied into us, exclusively tied into our infrastructure, if they drill just 11 additional development wells, they're adding a year. They're replacing that throughput and annuitizing our ability without us spending any money, annuitizing the ability for us to repeat year after year after year the financial performance that we expect.

Q: Understood. And I was hoping to revisit, I think you made some comments in your prepared remarks about 11 more wells per year needed. If I heard you correctly, is that sort of to offset declines, anticipated declines from Shenandoah and Salamanca? Just any clarification you could give would be great.

A: I think that it really is -- we view this -- the offshore business is a self-regenerating annuity, and it will regenerate itself every year if we "If the producers replace the reserves regardless of where they come from, that they move through our pipeline in any 1 year." So that's kind of how we think about it, Wade, is that -- so if we move 275 million barrels in '26, which we would anticipate that we would, if the producers across the footprint of existing production facilities, which are dedicated and tied into us, exclusively tied into our infrastructure, if they drill just 11 additional development wells, they're adding a year. They're replacing that throughput and annuitizing our ability without us spending any money, annuitizing the ability for us to repeat year after year after year the financial performance that we expect.

Q: Fantastic. If I could squeeze one more in, guys, I appreciate you all bearing with me here. But recognizing how underutilized the assets are, what do you think offshore -- and you might have touched on this in previous calls, what do you think offshore segment margin could look like with full utilization, I guess? Is that something you're kind of prepared to touch on?

A: Well, I mean, let's -- we'll kind of give you a little bit of the financial and leverage is a bad word in this context, but the operating results that are levered to the existing capacity. So we have kind of publicly stated if the producers for Salamanca and Shenandoah kind of come close to hitting their forecast, then we would expect an incremental plus or minus $160 million a year of recognized segment margin. And we have, in essence, used half of the capacity that we have installed and paid for. So if we filled it up with similarly situated fields, including coming through a lateral and then going downstream on Poseidon or you can appreciate the "upside" we have without spending any money at this point forward.