June 2016 MLP ENERGY CONFERENCE ORLANDO VTTI ENERGY PARTNERS LP INVESTOR PRESENTATION

Transcription

1 June 2016 MLP ENERGY CONFERENCE ORLANDO VTTI ENERGY PARTNERS LP INVESTOR PRESENTATION 1

2 DISCLAIMER Forward Looking Statements This presentation contains forward-looking statements as defined in the Private Securities Litigation Reform Act of You are cautioned not to rely on these forwardlooking statements, which speak only as the date of this presentation. All statements, other than statements of historical facts, that address activities, events or developments that the Partnership expects, projects, believes or anticipates will or may occur in the future, including, without limitation, future operating or financial results and future revenues and expenses, future, pending or recent acquisitions, general market conditions and industry trends, the financial condition and liquidity, cash available for distribution and future capital expenditures are forward-looking statements. These statements often include the words could, believe, anticipate, intend, estimate, expect, project and similar expressions and are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These statements are based on current expectations of future events, are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond the Partnership s control and are difficult to predict. If underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results could vary materially from our expectations and projections. In addition to other factors described herein that could cause VTTI s actual results to differ materially from those implied in these forward-looking statements, negative capital market conditions, including a persistence or increase of the current yield on common units, which is higher than historical yields, could adversely affect VTTI s ability to meet its distribution growth guidance. Risks and uncertainties include, but are not limited to, such matters as: future operating or financial results and future revenues and expenses; our future financial condition and liquidity; significant interruptions in the operations of our customers; future supply of, and demand for, refined petroleum products and crude oil; our ability to renew or extend terminaling services agreements; the credit risk of our customers; our ability to retain our key customers; including Vitol; operational hazards and unforeseen interruptions, including interruptions from terrorist attacks, hurricanes, floods or severe storms; volatility in energy prices; competition from other terminals; changes in trade patterns and the global flow of oil; future or pending acquisitions of terminals or other assets; business strategy, areas of possible expansion and expected capital spending or operating expenses; the ability of our customers to obtain access to shipping, barge facilities, third party pipelines or other transportation facilities; maintenance or remediation capital expenditures on our terminals; environmental and regulatory conditions, including changes in such laws relating to climate change or greenhouse gases; health and safety regulatory conditions, including changes in such laws; costs and liabilities in responding to contamination at our facilities; our ability to obtain financing; restrictions in our credit facilities and debt agreements, including expected compliance and effect of restrictive covenants in such facilities and debt agreements; fluctuations in currencies and interest rates; the adoption of derivatives legislation by Congress; our ability to retain key officers and personnel; the expected cost of, and our ability to comply with, governmental regulations and self-regulatory organization standards, as well as standard regulations imposed by our customers applicable to our business; risks associated with our international operations; compliance with the U.S. Foreign Corrupt Practices Act or the U.K. Bribery Act; risks associated with our potential business activities involving countries, entities, and individuals subject to restrictions imposed by U.S. or other governments; and tax liabilities associated with indirect taxes on the products we service. A further list and description of these risks, uncertainties and other factors can be found in our Annual Report filed on Form 20-F which was filed with the United States Securities and Exchange Commission on April 29, 2016 and is available via the SEC s website at VTTI undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after this presentation. Non-GAAP Financial Measures Adjusted EBITDA and distributable cash flow are non-gaap financial measures provided in this presentation. Adjusted EBITDA and distributable cash flow reconciliations to the nearest GAAP financial measure are included in the Appendix to this presentation. Adjusted EBITDA and distributable cash flow are not defined by GAAP and should not be considered in isolation or as an alternative to net income attributable to VTTI or other financial measures prepared in accordance with GAAP.

3 VTTI INVESTMENT HIGHLIGHTS VTTI is a unique global terminal MLP, well differentiated from its peers Cash flow stability Long-term, take or pay contracts with no direct commodity price exposure Reflected in cash flow performance since IPO Attractive growth characteristics Dropdown inventory approximately 3x existing MLP capacity Active in highly fragmented international terminal market Positive long-term trends Driven by supply-demand imbalances and product demand growth Not dependent on upstream investment in US (or elsewhere) Premium portfolio High quality, strategically located assets with leading customer service Resilient financial performance in different market pricing structures 1099 filer VTTI unitholders receive an annual 1099 No K-1s 3

4 HISTORY OF VTTI B.V. VTTI B.V. has grown rapidly to become one of the largest global independent storage companies Created to own, operate, develop and acquire refined petroleum product and crude oil terminals, and related energy infrastructure Demonstrated track record of rapid growth through expansions and acquisitions ~40% CAGR 34.3 MMBbls 16.8 MMBbls 54.0 MMBbls Fee-based, growth-oriented company with large global portfolio in strategic locations Today comprises 12 terminals in 5 continents with ~1,000 employees 2.9 MMBbls 2006 Organic Acquisitions 2015 (greenfield & brownfield expansions) 3 Terminals 3 Continents 12 Terminals 5 Continents 4

5 ROFO Assets VTTI Operating Assets VTTI B.V. ASSET GROWTH 6 ACQUISITIONS ETT Rotterdam, The Netherlands FTL 2 Fujairah, UAE Seaport Canaveral Florida, USA ETT 3 Rotterdam, The Netherlands 6 GREENFIELD 9 BROWNFIELD ETA Amsterdam, The Netherlands FTL Fujairah, UAE ETA 2 Amsterdam, The Netherlands ETT 2 Rotterdam, The Netherlands ATPC Antwerp, Belgium ATB Johore, Malaysia ATPC 2 Antwerp, Belgium BNK Kaliningrad, Russia VNT Ventspils, Latvia Vitco 2 Zarate, Argentina Navgas Lagos, Nigeria VTTI Kenya Mombasa, Kenya Vitco 3 Zarate, Argentina VTTV Vasiliko, Cyprus ATB 2 Johore, Malaysia Vitco Zarate, Argentina FTL 3 Fujairah, UAE 5

6 VTTI GROUP ASSET SUMMARY Region / Location Ownership Interest Gross Capacity Capacity in MLP at 42.6% Remaining ROFO Capacity VTTI Terminal Locations (2) MLP Opco Europe / Amsterdam 100% Europe / Rotterdam 90% Europe / Antwerp 100% Middle East / Fujairah 90% Asia / Malaysia 100% North America / Florida 100% OpCo Capacity VTTI BV Topco Europe / Latvia 49% Europe / Russia 100% Europe / Cyprus 100% South America / Argentina 100% Africa / Kenya 100% Africa / Nigeria 50% Asia / Malaysia terminal expansion 100% Middle East / Fujairah expansion (COD 2016) 90% Cape Town (COD 2017) 100% <1.0 MMBbls ~8.5 MMBbls TopCo Capacity (1) Total VTTI Capacity (1) Includes Fujairah expansion and Cape Town projects under construction (2) Circles denote relative terminal size 6

7 VTTI EP TERMINALS Portfolio currently comprises six terminals located in four major global energy market hubs Well interconnected to sea, road, pipelines and railroads ~400 tanks, comprising 35.5 million barrels of capacity Newly constructed/retrofitted and fully automated infrastructure with extremely efficient operations Highly flexible, industry leading customer service and responsiveness Significant opportunities for expansion Europe Middle East Asia North America Locations Amsterdam Rotterdam Antwerp Fujairah Johore (Malaysia) Florida Gross Capacity (MMBbls) No. of Tanks Products Refined products Refined products Refined products Crude oil Refined products Crude oil Refined products Refined products Maximum draft (feet) Connectivity Ship Barge Road Railroad Ship Barge Road Railroad Pipeline Ship Barge Road Railroad Pipeline Ship Barge Road Pipeline Ship Barge Road Ship Barge Road Pipeline 7

8 SPONSORED BY THE WORLD S LARGEST INDEPENDENT ENERGY TRADER Vitol is the largest mover of physical oil in the world, for which VTTI provides critical infrastructure. Founded in Rotterdam, with primary operations in Houston, Geneva, London and Singapore 49 consecutive years of profitability with private investment grade credit rating since 1994 Employee owned, with over 350 employee shareholders 2015 Revenues and Net Income of US$168Bn and US$1,600mm, respectively Vancouver, Canada El Segundo, USA 30+ OFFICES WORLDWIDE Calgary, Canada Houston, USA Tulsa, USA Bogota, Colombia Lima, Peru Hamilton, Bermuda Cape Canaveral, USA Kaliningrad, Russia Amsterdam, Netherlands Rotterdam, Netherlands Belgium London, UK Geneva, Switzerland Rio de Janeiro, Brazil Buenos Aires, Argentina Riga, Latvia Ventspils, Latvia Kiev, Ukraine Mazeikiai, Lithuania Moscow, Russia Almaty, Kazakhstan Beijing, China Casablanca, Cyprus Morocco Tripoli, Libya Bahrain Dubai, UAE Taipei City, Taiwan Fujairah, Mumbai, India UAE Accra, Ghana Singapore Lagos, Nigeria Karachi, Pakistan Abuja, Nigeria Nairobi, Kenya Jakarta, Indonesia Luanda, Angola Cape Town, South Africa VITOL VOLUMES 6+ MMBbls OF CRUDE OIL AND REFINED PRODUCTS MARKETED BY VITOL DAILY 3 MMBbls OF CRUDE DAILY 3 MMBbls OF REFINED PRODUCT DAILY 200 SHIPS ON THE SEA AT ANY TIME

9 VTTI IS CRITICAL TO THE GLOBAL ENERGY VALUE CHAIN Vitol s Crude Oil & Oil Products Volumes (MMbpd) Source: Public Filings 9

10 LONG-TERM TRENDS SUPPORTIVE OF INTERNATIONAL TERMINAL DEMAND ~55% ~125% ~37% Source: BP Statistical Review Source: BP Statistical Review Source: IEA 55% increase in oil demand in last 30yrs......whilst regional flows have increased at much faster rate Strong growth in demand forecast, with continued positive benefit to VTTI 10

11 Middle East Mbpd United States Gulf Coast Malaysia / Australia Mbpd Mbpd Northwest Europe Mbpd REGIONAL IMBALANCES AND GROWING OVERALL DEMAND International oil trade flows have and continue to grow steadily, driving need for midstream infrastructure Ongoing refinery closures in OECD countries and new worldscale refineries in non-oecd countries Differential quality specifications between and within regions New centres of demographic and GDP growth Product Balances (406) (947) Diesel/Gasoil Gasoline 1,960 1, Diesel/Gasoil Balances Product Balances (324) Diesel/Gasoil Gasoline VTTI Terminals Gasoline Diesel Fuel Oil Diesel/Gasoil Balances Source: Wood Mackenzie 11

12 Brent Spot Price Brent 12m Contango STRONG PERFORMANCE THROUGH COMMODITY PRICE CYCLES Contango Contango Backwardation (1) Data shown is for VTTI B.V. as a whole, 2010 and 2011 utilization impacted by acquisition and upgrade of new terminal. Cumulative rate increase is shown relative to 2007 Source: Bloomberg for price data 12

13 STABLE FEE-BASED REVENUES Storage Fees Fixed monthly fee paid for storage or throughput "Take-or-pay" basis independent of actual usage, i.e. zero volume risk and no direct commodity price risk Ancillary Services Ancillary fees are paid for services including blending, heating, and transferring products between tanks or to rail or truck No direct commodity price risk Excess Throughput Excess throughput fees are paid if total number of "tank turns" for the year exceed the contractually agreed threshold No direct commodity price risk 13

14 FINANCIAL PERFORMANCE SINCE IPO Average: c.$50m per quarter Top quartile distribution growth Average c.1.15x vs Target 1.10x 14

15 VTTI GROUP TERMINAL CAPACITY (MMBbls) Q Dropdown Q VTTI Operating VTTI BV Total 1. Numbers shown are on gross ownership basis 2. Includes greenfield Cape Town project 15

16 GROWTH OPPORTUNITIES Multiple sources of significant growth Drop downs ROFO on all current and future VTTI B.V. assets Assets outside of MLP: 20.4 MMBbls gross storage capacity (57.4% proportional) in VTTI Operating 18.5 MMBbls gross storage capacity at VTTI B.V. (including assets under construction) Organic growth Continuously evaluating organic development opportunities 5.0 MMBbls of organic projects completed 2015 (Cyprus, 3.4 MMbls, Malaysia Phase II, 1.6 MMbls) Progressing number of other projects including Fujairah (2.7 MMBbls) and Cape Town (0.8 MMBbls storage) Acquisitions Highly fragmented international terminaling market provides opportunity for additional consolidation ~3 Bn of capacity globally vs ~1 Bn US Top 10 independents own 16% outside US vs 53% in US NON U.S. STORAGE CAPACITY ~40MMbls of gross terminal storage capacity available for dropdowns ~10MMbls of terminal storage capacity recently completed, under construction or planned Balance of capacity 84% 3.3 BNBbls Top 10 independents 16% Source: PortStorage Group-OPIS/STALSBY TankTerminals.com Database 16

17 Q CORPORATE AND OPERATING REVIEW Annual Report on Form 20-F 2015 filed Corporate Update Shelf Registration Statement on Form F-3 filed, registering $500m of common units RCF was reduced from 359m to 300m in January 2016 Top quartile distribution growth rate maintained Portfolio utilization levels approximately 100% excluding maintenance Operating Highlights Strong ancillary revenue performance in Q Throughput increased versus Q prior year Maintenance capex spending levels below run rate levels due to timing of spend 17

18 Q FINANCIAL AND DEVELOPMENT REVIEW Malaysia Phase 2 assets performing well since commissioning in 2015 (1) Growth Projects Fujairah expansion undergoing commissioning in Q adding further 2.7MMbls to drop down inventory - on time and on budget Cape Town project construction well underway Continuing to assess opportunities within and outside existing business Adjusted EBITDA for Q of $49.9m positively impacted by non-rental revenue outperformance Financial Highlights Increased distribution by 3.1% over prior quarter in line with mid-teen annual distribution growth target from $ to $ per unit Net debt implies a net debt to annualized Adjusted EBITDA ratio of 2.6x (2) Extension of hedging program to Malaysian terminal (1) Malaysian Phase 2 assets are economically for the benefit of VTTI B.V. (2) Excludes affiliate debt and restricted cash 18

19 Q SUMMARY FINANCIALS Reconciliation of Adjusted EBITDA to Distributable Cash Flow (in US$ millions) Q Q Adjusted EBITDA Cash interest expense (7.7) (4.9) Cash income tax expense Maintenance capital expenditures (3.8) (4.7) Cash flow attributable to non-controlling interest (24.1) (24.3) Distributable cash flow Total distribution Coverage ratio 1.12x 1.10x Adjusted EBITDA of $49.9m benefited from ancillary revenue outperformance Maintenance capex below run rate quarterly level due to timing of spend Interest increase reflects combined cost of new debt instruments and historic interest rate swaps Coverage ratio of 1.12x above stated target of 1.10x 19

20 BALANCE SHEET AND HEDGING UPDATE VTTI Energy Partners LP VIP (in US$ millions) Cash Actual March 31, 2015 Cash and cash equivalents (1) 39.3 $270mm RCF ~$180mm undrawn VTTI B.V. Debt (2) VTTI Operating Revolving Credit Facility US Private Placement Net debt $75m Loan VTTI MLP PARTNERS B.V. Net debt / annualized Adjusted EBITDA 2.6x Hedging Update PUBLIC 300mm RCF (3) ~$235mm undrawn USPP $245mm/ 180mm VTTI MLP B.V. (VTTI OPERATING) USD/EUR hedging program previously expired mid-2019 Extended at c.50% coverage to end of 2020 USD/MYR cost hedging program effective for Q2 Match profile and tenor of Euro hedge (1) Excluding restricted cash (2) Excluding affiliate debt and debt issuance costs (3) Facility reduced during Q1 from 359m to 300m Hedging program expansion addresses remaining material non-usd FX exposures 20

21 OUTLOOK Market Dynamics Regional product imbalances and product demand growth continue to drive fundamental requirement for storage Contango market in certain products boosting demand, although financial impact for VTTI limited due to largely contracted portfolio Strong ancillary revenue performance in Q1 reflects changes in specific customer mix and behavior Opportunity to grow existing footprint and enter new markets through development projects at the VTTI B.V. level Growth Actively monitoring several ongoing processes and have ROFO on all current and future VTTI B.V. terminaling assets Liquidity available to finance further growth Next dropdown expected in Q2/Q Dropdowns Financing alternatives under consideration Q1 distribution growth in line with stated target 21

22 VTTI ENERGY PARTNERS LP THANK YOU 22

23 VTTI ENERGY PARTNERS LP APPENDIX 23

24 FINANCIAL DETAIL Q Income Statement (unaudited) (in US$ millions) Three Months Ended March 31, 2016 Revenues 76.6 Operating expenses (incl. D&A) 44.8 Other operating income Total operating income 31.8 Total other expense, net (7.7) Income before income tax expense 24.1 Income tax expense (7.3) Net income 16.8 Interest expense, including affiliates 7.8 Other items (1) (0.2) Depreciation and amortization 18.2 Income tax expense 7.3 Adjusted EBITDA 49.9 (1) Other items comprise primarily the impact of FX and related derivatives, other non-cash items on our financial results and the removal of the net contribution of the ATB Phase 2 assets of our Malaysian terminal which is attributable to VTTI B.V. 24

25 FINANCIAL DETAIL Q Balance Sheet (unaudited) (in US$ millions) March 31, 2016 Cash and cash equivalents (1) 39.3 Property, plant & equipment 1,244.4 Other assets Total assets Long-term Debt (2) Other liabilities Total equity Total liabilities and equity 1,546.9 Net debt Net debt / Annualized adjusted EBITDA ratio 2.6x (1) Cash and cash equivalents excludes restricted cash (2) Debt excludes affiliate debt and includes debt issue costs 25

26 VTTI BV TOPCO ASSET OVERVIEW Region Europe South America Africa Location Ventspils, Latvia Kaliningrad, Russia (2) Vasiliko, Cyprus Buenos Aires, Argentina Mombasa, Kenya Lagos, Nigeria VTTI Ownership Interest 49% (3) 100% 100% 100% 100% 50% (4) Gross Capacity (1) (MMBbls) 2015 Capacity Utilization % NM (5) 73% 100% NM (5) NM (5) # of Tanks Products Refined products Crude oil Refined products Refined products Refined products Refined products Refined products Maximum Draft (ft) Connectivity Ship / Road / Railroad / Pipeline Ship / Barge / Road / Railroad Ship / Barge / Road Ship / Barge / Road Ship / Barge / Pipeline Ship / Barge / Road Note: Does not include Johore and Fujairah expansions and Cape Town project under construction. (1) Capacity statistics for (2) VTTI in process of monetizing terminal in Russia. (3) Remaining 51% owned by JSC Ventspils Nafta. (4) Remaining 50% owned by Nidogas. (5) Primarily throughput based contracts.

27 MISC-VITOL INVESTMENT PARTNERSHIP ("VIP") TRANSACTION Vitol Contract Extensions (1) Terminal Country Omnibus Guarantee Revised Expiration Capacity Amsterdam Netherlands Jun 19 Dec Rotterdam Netherlands Jun 19 Sep Fujairah UAE Jun 19 Jun Antwerp Belgium Jun 17 Dec Seaport US Jun 17 Mar VIP, an investment vehicle sponsored by Vitol, has acquired the MISC 50% stake in VTTI B.V. Completed on 9 November 2015 Two new VIP Board representatives replacing MISC representatives Vitol contract extensions have replaced the VTTI B.V. rate guarantee provided in the Omnibus Agreement (1) Johore Malaysia terminal was not included in the Omnibus Guarantee; contract expiration is September