2017 MLPA Investor Conference

Transcription

1 2017 MLPA Investor Conference May 31 June 2, 2017

2 2 Forward Looking Statements and Non-GAAP Measures This presentation contains certain forward-looking statements within the meaning of the federal securities law. Words such as anticipates, believes, expects, intends, will, should, may, estimate and similar expressions may be used to identify forward-looking statements. Forward-looking statements are not statements of historical fact and reflect Noble Midstream Partners LP s ( the Partnership or Noble Midstream ) current views about future events. No assurances can be given that the forward-looking statements contained in this presentation will occur as projected, and actual results may differ materially from those projected. Forward-looking statements are based on current expectations, estimates and assumptions that involve a number of risks and uncertainties that could cause actual results to differ materially from those projected. These risks include, without limitation, the ability of Noble Energy, Inc. ( NBL ) to meet its drilling and development plans, changes in general economic conditions, competitive conditions in the Partnership s industry, actions taken by third-party operators, gatherers, processors and transporters, the demand for crude oil and natural gas gathering and processing services, the Partnership s ability to successfully implement its business plan, the Partnership s ability to complete internal growth projects on time and on budget, the price and availability of debt and equity financing, the availability and price of crude oil and natural gas to the consumer compared to the price of alternative and competing fuels, and other risks inherent in the Partnership s business, including those described under Risk Factors and Forward-Looking Statements in the Partnership's Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and in the other reports the Partnership files with the Securities and Exchange Commission. These reports are also available from the Partnership s office or website, Forward-looking statements are based on the estimates and opinions of management at the time the statements are made. Noble Midstream does not assume any obligation to update forward-looking statements should circumstances or management's estimates or opinions change. This presentation also contains certain measures of financial performance that are not calculated in accordance with generally accepted accounting principles in the United States ( GAAP ) that management believes are good tools for internal use and the investment community in evaluating Noble Midstream s overall financial performance. Please see the attached schedules for reconciliations of the non-gaap financial measures used in this presentation to the most directly comparable GAAP financial measures. In this presentation, we refer to certain results as attributable to the Partnership. Unless otherwise noted herein, all results included in this release reflect the results of our predecessor for accounting purposes, for periods prior to the closing of our initial public offering ( IPO ) on September 20, 2016, as well as the results of our Partnership, for the period subsequent to the closing of the IPO. We refer to certain results as attributable to the Partnership, which excludes the non-controlling interests in the development companies ( DevCos ) retained NBL. We believe the results attributable to the Partnership provide the best representation of the ongoing operations from which our unitholders will benefit.

3 3 Noble Midstream Partners LP Overview Partnership Overview Premier E&P Sponsorship Noble Midstream Partners LP ( NBLX ) is a midstream MLP formed by sponsor, Noble Energy, Inc. ( NBL ), to support the development of its leading liquids shale plays 100% (NYSE: NBL) NBLX provides a diverse set of midstream services Crude oil gathering, treating and transmission Noble Midstream GP LLC ~55% LP Interest / IDRs Natural gas gathering Produced water gathering and freshwater delivery NBLX s development company ( DevCo ) structure provides multiple avenues for organic and drop down growth 0-95% Non-Controlling Interests Non-economic GP Interest (NYSE: NBLX) 100% ~45% LP Interest Public Unitholders NBLX holds significant dedications in two leading U.S. oil shale basins Noble Midstream Services, LLC Acreage Dedications 5-100% Controlling Interests DevCos DJ Basin 300,000 net acres Delaware Basin 111,000 net acres

4 4 Consistently Enhancing Top-Tier Growth Outlook DPU Growth Objective (Sep. 2016) 20% Enhancements Since IPO: Fresh Water Delivery Per Well Demand Nearly Triples Accelerating activity + Increased Type Curves NBL USO Update Nov. 16 Accelerating Activity + Increased Type Curves in both DJ and Delaware Advantage Pipeline JV Acquisition Delaware Basin Crude Transmission Added to Portfolio Delaware Basin Gas Gathering Dedication NBL s legacy 47,000 Delaware Basin acres Clayton Williams Gathering Dedication Apr. 17 Oil, gas and produced water gathering on 64,000 Delaware Basin acres Record Oil and Gas System Throughput Enhanced Completions Driving Record May Throughput Sep. 16 Feb. 17 Apr. 17 May DPU Growth Objective (May 2017) 20% Extends 20% Growth Horizon Durability to Distribution Through Commodity Cycles Improves Already Strong Coverage and Leverage Outlook Provides Financial Flexibility for Complementary Growth Opportunities

5 5 Increasing 2Q 2017 Volume Guidance Enhanced Completion Performance Driving Record Throughput 3 consecutive months with record throughput (March, April, May 2017) Significant Growth Through Existing Infrastructure 2Q oil and gas gathering volumes expected to grow ~15% vs. 1Q before new growth projects begin Fresh Water Outperformance Continues Fresh water demand from existing customers exceeding expectations 2Q 2017 Gross Volume Guidance Oil and Gas Gathered (MBoe/d) Produced Water Gathered (MBw/d) Fresh Water Delivered (MBw/d) Prior Current Prior Current Prior Current

6 Gathering Increasing Share of NBL DJ Horizontal Volumes NBLX Gathered Volumes and NBL DJ Basin Gross Horizontal Production (1) Gross Volumes (MBoe/d) 125 NBLX Gathered Volumes as % of NBL Gross Hz. Production 4Q 13 4Q 14 4Q 15 4Q 16 1Q 17 2Q 17 (E) 20% 30% 49% 53% 55% ~ 60% NBLX Gathered Volumes NBL Gross Horizontal Volumes 1. NBL gross volumes assume 78% NBL net royalty interest 6

7 Midstream Services Portfolio DJ Basin Delaware Basin Blanco River 25% Interest Trinity River 100% Interest NBL Acreage 3 rd Party Acreage NBL ROFR Acreage Existing NBLX Pipelines Planned NBLX Pipelines Central Gathering Facility Oil Treating Facility Integrated Development Plan Areas ( IDPs ) Dedicated Service DevCo Colorado River 80% NBLX Ownership IDP Producer Dedicated Acres (~) Crude Oil Gathering Gas Gathering Prod. Water Gathering Fresh Water Delivery Wells Ranch NBL 78k East Pony NBL 44k Crude Oil Transmission Trinity River 100% Blanco River 25% Delaware Basin Laramie River 100% Greeley Crescent Legacy NBL 47k * Acq. CWEI 64k SYRG 33k NBL 32k Green River 25% Mustang NBL 75k San Juan River 25% East Pony NBL 44k Gunnison River 5% Bronco NBL 36k Post IPO additions * Dedicated to Advantage Pipeline JV 7

8 8 Significant Activity and Scale Added in Delaware Basin Clayton Williams Acreage Dedication NBL dedicated acquired acreage in Reeves County, Texas (64k net) for crude oil and produced water gathering and substantially all of the acquired acreage dedicated for gas gathering NBL s acreage position ranks second largest in southern Delaware Basin Anticipated NBL Rigs on NBLX Delaware Basin Dedicated Acreage NBL s Delaware Basin rig count expected to increase to 6 operated rigs by YE 2017 Planning for two additional central gathering facilities to support Clayton Williams acreage activity; expected facility start up in 1H 2018 YE2017 (E) 2018 (E) 2019 (E) 2020 (E) Noble Energy s Base Plan (Jan. 2017) Source: Clayton Williams Acquisition Announcement Presentation (Jan. 2017) Legacy Gas Gathering Dedication Added gas gathering dedication on substantially all of NBL s legacy 47k net acres to complement existing oil and produced water gathering dedication System continuity across NBL s southern Delaware Basin acreage Southern Delaware Basin Net Acreage (000s) 25 0 OXY NBL FANG CXO CDEV JAG PDCE PE CPE Source: review of public disclosures

9 2017 Growth Projects Update Delaware Basin Gathering Infrastructure Commissioning activities on 1 st Central Gathering Facility expected to begin in June 2 nd CGF on schedule for 4Q start up Net Capital (attributable to the Partnership) Trinity River 11% Colorado River 10% Advantage JV Crude Oil System Advantage operations control handed over to NBLX on April 3 rd at close Advantage tie-in construction underway; connection online with CGF startup Commercial and scheduling team in place DJ Basin Greeley Crescent Infrastructure Fresh water services for SRC Energy commenced operation in April 2017 Construction ~75% complete on 60 MBbl/d Empire Pipeline and 30 MBw/d of produced water infrastructure Blanco River 22% Green River 10% $185 - $205 MM Laramie River 47% Delaware Basin 1 st CGF Delaware Basin - Hwy 285 Station DJ Basin - Empire Pipeline 9

10 10 Advantage Pipeline Strategically Located Southern Delaware Oil Takeaway Pipeline with Premier Joint Venture Partner Joint Venture Structure System Map 100% Trinity River DevCo LLC 100% Plains Pipeline, L.P. 50% 50% Advantage Pipeline Holdings LLC 100% Advantage Pipeline, LLC Advantage Pipeline to Crane

11 11 DJ Basin Growth Projects Laramie River DevCo (NBLX Interest 100%) Phased Infrastructure build out for SRC Energy ~ 35 mile transmission line with optionality to Grand Mesa and White Cliffs 60 MBbl/d spec oil capacity w/ expandability 30 MBw/d produced water capacity 120 barrels per minute fresh water delivery capacity Oil and produced water systems operational 3Q Fresh water deliveries began in April Green River DevCo (NBLX Interest 25%) Planning underway for Mustang IDP Infrastructure Initial construction to include backbone infrastructure for: Oil Gathering Gas Gathering Produced Water Gathering Fresh Water Delivery Empire Pipeline Laramie River DevCo

12 Fresh Water Adding to Strong Coverage High Intensity Completions Contributing to Robust Coverage 1Q 2017 NBLX Net EBITDA and Distribution Coverage (1,2) 1.8x Distribution Coverage 1 of 1Q Distribution $40.0 Gathering segments continue strong performance and cover full distribution by 1.13x 1.84x Distribution coverage 1 of 1.5x including normalized fresh water use 1Q fresh water delivery averaged 217 MBw per equivalent well $30.0 $ x $ x $22.3 $26.4 x Implied Distribution Coverage of 1Q Distribution 1Q 2017 Average Fresh Water per Equivalent Well (MBw) Wells Ranch 270 East Pony fee 230 $10.0 Actual Freshwater Delivery EBITDA Normalized Freshwater Delivery EBITDA (3) East Pony federal 110 $0.0 Gathering EBITDA Figures are Non-GAAP; see reconciliation to GAAP measures in Appendix 2. G&A allocated to gathering and freshwater delivery based on proportionate share of EBITDA; coverage figures reflect full net maintenance capital totals 3. Assumes 1H 2016 average water volumes / equivalent well 12

13 2020 Outlook Substantial organic growth with large existing drop-down inventory Organic No Drop Downs CAGR Net EBITDA > 20% Distributable Cash Flow > 20% 20% DPU Organic Growth while Building Coverage Distribution per Unit 20% Coverage (in all years) (1) > 1.3x Leverage (in all years) < 2.5x Drop Down Inventory >2017(E) Net EBITDA (1) Potential drop-down inventory estimated to exceed 2017(E) Net EBITDA (1) : ROFO on DevCo retained interest ROFR on wholly retained Noble Energy midstream assets (2) 1. Non-GAAP measures 2. Excluding Marcellus shale 13

14 14 Investment Thesis Strong Sponsor Commitment Large-Cap, investment grade E&P sponsor Strategic midstream vehicle for NBL Incentivized to support NBLX through significant post-ipo ownership (including the General Partner and Incentive Distribution Rights) Strategically Positioned Assets Significant dedications in the DJ and Delaware Basins Aligned with NBL capital allocation priorities Diverse midstream services portfolio Visible, Long-Term Growth Opportunities Long-term 20% distribution per unit growth Significant drop down inventory Contractual ROFR on NBL retained midstream assets and future services Long-Term, Fixed-Fee Contracts 15-year, fixed fee contracts Annual rate escalators Financial Flexibility and Strong Capital Structure Conservative distribution coverage and leverage ratio Available liquidity provides financial flexibility

15 15 Appendix

16 16 EBITDA Reconciliation Non-GAAP Financial Measures This presentation includes EBITDA, Distributable Cash Flow, and Distribution Coverage, all of which are non-gaap measures that management believes are good tools for internal use and the investment community in evaluating our overall financial performance. The following presents a reconciliation of each of these non-gaap financial measures to their nearest comparable GAAP measure. We define EBITDA as net income before income taxes, net interest expense, depreciation and amortization. EBITDA is used as a supplemental financial measure by management and by external users of our financial statements, such as investors, industry analysts, lenders and ratings agencies, to assess: our operating performance as compared to those of other companies in the midstream energy industry, without regard to financing methods, historical cost basis or capital structure; the ability of our assets to generate sufficient cash flow to make distributions to our partners; our ability to incur and service debt and fund capital expenditures; and the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities. We define Distributable Cash Flow as EBITDA less estimated maintenance capital expenditures and cash interest expense. Distributable Cash Flow is used by management to evaluate our overall performance. Our partnership agreement requires us to distribute all available cash on a quarterly basis, and Distributable Cash Flow is one of the factors used by the board of directors of our general partner to help determine the amount of available cash that is available to our unitholders for a given period. We calculate our Distribution Coverage ratio as Distributable Cash Flow for a given quarter divided by the aggregate amount of distributions declared in respect of such quarter. The Distribution Coverage ratio is used by management to illustrate our ability to make our distributions each quarter. We believe that the presentation of EBITDA and Distributable Cash Flow provide information useful to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to EBITDA and Distributable Cash Flow are net income and net cash provided by operating activities. EBITDA and Distributable Cash Flow should not be considered alternatives to net income, net cash provided by (used in) operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. EBITDA and Distributable Cash Flow exclude some, but not all, items that affect net income or net cash, and these measures may vary from those of other companies. As a result, EBITDA and Distributable Cash Flow as presented in the following pages may not be comparable to similarly titled measures of other companies. EBITDA and Distributable Cash Flow should not be considered as alternatives to GAAP measures, such as net income, operating income, cash flow from operating activities, or any other GAAP measure of financial performance Q ' Q '171Q (E)' Q (E) '17 (E) 2017 (E) Net Income Net Income $ 86 $ $ $31 - $ $33 35 $135 $31 - $147 - $33 $135 - $147 Add: Depreciation and Add: Amortization Depreciation and Amortization Add: Interest Expense, Add: Net Interest of Amount Expense, Capitalized Net of Amount Capitalized Add: Income Tax Provision Add: Income Tax Provision EBITDA EBITDA $ 126 $ $ $33 - $ $36 37 $146 $33 - $162 - $36 $146 - $162 Less: EBITDA Attributable Less: EBITDA to Noncontrolling Attributable Interests to Noncontrolling Interests EBITDA Attributable EBITDA to NBLX Attributable to NBLX $ 26 $25 - $ $28 26 $110 $25 - $122 - $28 $110 - $122 Less: Maintenance Capital Less: Maintenance Expenditures Capital & Cash Expenditures Interest & Cash Interest Distributable Cash Distributable Flow of NBLXCash Flow of NBLX $ 24 $22 - $ $25 24 $96 $22 - $107 - $25 $96 - $107 Distribution Coverage Distribution Coverage 1.8x 1.6x - 1.8x 1.8x 1.7x 1.6x - 1.9x - 1.8x 1.7x - 1.9x

17 17 NBLX Structure

18 Contact Information Chris Hickman VP, Investor Relations Noble Energy Way Houston, TX