Presentation Title. Crestwood Equity Partners LP. Presentation Subtitle. Darrel Hagerman- VP-Commercial & Business Development

Transcription

1 Presentation Title Presentation Subtitle 30/07/2015 Crestwood Midstream Partners LP Darrel Hagerman- VP-Commercial & Business Development Permian Midstream Congress July 29 th and 30 th, 2015 Crestwood Midstream Partners LP Crestwood Equity Partners LP

2 Forward Looking Statements The statements in this communication regarding future events, occurrences, circumstances, activities, performance, outcomes and results are forward-looking statements. Although these statements reflect the current views, assumptions and expectations of Crestwood s management, the matters addressed herein are subject to numerous risks and uncertainties which could cause actual activities, performance, outcomes and results to differ materially from those indicated. Such forward-looking statements include, but are not limited to, statements about the benefits that may result from the merger and statements about the future financial and operating results, objectives, expectations and intentions and other statements that are not historical facts. Factors that could result in such differences or otherwise materially affect Crestwood s financial condition, results of operations and cash flows include, without limitation, the possibility that expected cost reductions will not be realized, or will not be realized within the expected timeframe; fluctuations in crude oil, natural gas and NGL prices (including, without limitation, lower commodity prices for sustained periods of time); the extent and success of drilling efforts, as well as the extent and quality of natural gas and crude oil volumes produced within proximity of Crestwood assets; failure or delays by customers in achieving expected production in their oil and gas projects; competitive conditions in the industry and their impact on our ability to connect supplies to Crestwood gathering, processing and transportation assets or systems; actions or inactions taken or non-performance by third parties, including suppliers, contractors, operators, processors, transporters and customers; the ability of Crestwood to consummate acquisitions, successfully integrate the acquired businesses, realize any cost savings and other synergies from any acquisition; changes in the availability and cost of capital; operating hazards, natural disasters, weather-related delays, casualty losses and other matters beyond Crestwood s control; timely receipt of necessary government approvals and permits, the ability of Crestwood to control the costs of construction, including costs of materials, labor and right-of-way and other factors that may impact Crestwood s ability to complete projects within budget and on schedule; the effects of existing and future laws and governmental regulations, including environmental and climate change requirements; the effects of existing and future litigation; and risks related to the substantial indebtedness, of either company, as well as other factors disclosed in Crestwood s filings with the U.S. Securities and Exchange Commission. You should read filings made by Crestwood with the U.S. Securities and Exchange Commission, including Annual Reports on Form 10-K and the most recent Quarterly Reports and Current Reports for a more extensive list of factors that could affect results. Readers are cautioned not to place undue reliance on forward-looking statements, which reflect management s view only as of the date made. Crestwood does not assume any obligation to update these forward-looking statements. 2 2

3 Today s Topics of Discussion Company Overview A little bit about Crestwood Basin Overview on Current and Future Capacity (The Permian Play) Current Y-Grade production out of the Permian Where are we going by 2020? Everyone is hedging their bets. Can t talk about Y-Grade without talking about Plant Expansions and Oil forecast Who are the Players in the Midstream and what are they up to? Existing Capacity and New Y-Grade expansion projects All roads lead to Mt. Belvieu Existing Players expansions in the works and announced NGL Production Impact Factors Discuss pricing of NGL components and their relationship to Crude/Condensate Discuss the heart of the issue All commodity prices are low Frac-Spread- Process by necessity Summary Why are producers drilling in this environment? Discuss what the future may hold 3

4 Crestwood s Mission Connections - Create Flow Assurance Linking supply and demand across midstream value chain Increased visibility for producers to end users End-to-end solutions for best path to demand centers Scale to complete major infrastructure growth projects Crestwood connects fundamental energy supply with energy demand across North America through a best-in-class midstream network. Our diversified asset base and integrated services provide flow assurance across the value chain for producers and consumers of natural gas, natural gas liquids and crude oil. Building on our history of strong customer services, operational safety as the top priority and long term value creation for our investors, Crestwood is committed to achieving sustainable growth through expansions and acquisitions which increase our connections to America s midstream energy infrastructure. Operations - Maximize Value to Customers Critical midstream infrastructure in premier shale plays and market centers Comprehensive services, leveraging relationships to link supply with demand Through expertise in gathering, processing, transportation, storage and logistics Improving customer options through control of product from wellhead to burner tip Execution - Deliver on Disciplined Strategy Best-in-class operations and customer service Completing infrastructure projects on time, on budget Optimize the asset portfolio through organic project and acquisition growth Experienced management and dedicated employees focused on creating investor value Integrity - Embody Core Principles Focus on operational safety as our top priority Responsible care for environmental compliance and sustainability Commitment to communities where we operate and our employees live Valuing relationships with our, customers, employees, vendors and the public 4

5 Crestwood Midstream Value Chain Business Model Dry Gas Gathering Pipelines CO 2 Treating Intrastate & Interstate Pipelines Gas Storage Intrastate & Interstate Pipelines Ethane Rich Gas Gathering Pipelines Gas Processing Mixed NGL Pipeline & Trucks NGL Fractionation Propane Iso-Butane Butane Nat Gasoline NGL Storage & NGL Pipelines Crude Gathering, Trucks, Rail & Pipelines Crude Storage & Terminals Crude Oil Refining Refined Products Storage Barges & Refined Products Pipelines Serving Blue-Chip Customers Across the Value Chain to Link Fundamental Supply & Demand Denotes current services offerings and/or operational capacity 5 5

6 Diversified US Midstream Portfolio Existing platform in every premier shale play in North America creates significant opportunity for optimization, organic expansion, and strategic M&A Key Statistics: 1.4 Bcf/d transportation 2.6+ Bcf/d gathering 1,350 miles of pipeline 79 Bcf storage 481 MMcf/d processing 180 MBPD crude oil rail terminalling 125 MBPD crude oil gathering 294 MBPD nationwide NGL logistics business; 543 trucking units and 1840 Rail Cars 6 6

7 80,000 Square Mile Playground Larger than Oklahoma 7

8 Spraberry/Wolfcamp A view in 2014 Spraberry/Wolfcamp is the world s second largest oil field and the largest US oil field. Other stacked formations in the Midland Basin add additional resource to recoverable estimates. Ghawar, Saudi Arabia 1 Spraberry/Wolfcamp Spraberry/Wolfcamp, USA Eagle Ford Shale Burgan, Kuwait Prudhoe Bay, AK Safaniyah, Saudi Arabia Bakken Shale Samotlorskoye, Russia Delaware Basin Shaybah, Saudi Arabia East Texas Basin Romashkinskoye, Russia Midway-Sunset, CA ADCO, UAE Wilmington, CA Zuluf, Saudi Arabia 2 nd Largest Oil Field Worldwide Kuparuk River, AK Largest Oil Field in the US Cantarell, Mexico Thunder Horse, GoM Total Recoverable Resource (BBoe) Total Recoverable Resource (BBoe) Source: Pioneer Natural Resources, Investor Presentations. (1) Ghawar scaled down for illustrative purposes. Its total recoverable resource is ~157 BBoe. 8 60

9 Here we are in 2015 Permian is still King Source- Pioneer Investor Presentation 9

10 Yes Flaring is still going on in the Permian Basin 10

11 Where the Experts say we are now The Experts EIA, Platts, Harts, Bentek, TP, RBN (My favorite), DLH Crude coming out of the Basin 1.7 MMBD-2.1 MMBD, depending on who your Expert of choice is (Lag) Why does Crude Matter? Where there is new Crude, there is rich gas associated with it that needs processing Y-Grade coming out of the Basin MBD, depending on your Expert of choice (Lag) Natural Gas BCF/d also depending on your Expert of choice (Lag) Approximately 1.5 BCFD is legacy gas that is on dry lines not going to plants Processing Capacity 4.5 BCF/d and growing rapidly and the 4.5 BCF per day did not take into account Western/Nuevo and some producer owned facilities in the basin Average GPM is 4.8 across the Permian Y-Grade take away Adequate for now most experts agree Some infrastructure needs but they are small Source: Zillow 11

12 Expert Predictions through 2020-NGL s The Experts are Hedging their Bets EIA, Platts, Harts, Bentek, TP, RBN (My favorite), DLH Crude/Y-Grade/Natural Gas coming out of the Basin Predictions are based on similar cases Crude price is the driver for now Case 1 Growth Scenario* Crude average $56/bbl through 2015 and make their way to $80/bbl by 2017 and make it to $95/bbl by 2020 Case 2 Cutback Scenario* Crude averages $56/bbl for 2015 and make their way to $70/bbl by 2020 Case 3 Curtailment Scenario* Crude stays below $50 on average in 2015 and only reaches $65/bbl by 2020 No one knows which one is right Just forecasts for each case All use roughly the same metrics First lets look at what we thought this time last year.. Basically, in a nut shell, 100 dollar crude for 70 years *RBN Case Source: Zillow 12

13 What we thought our world would look like in 2014 By 2020: Gas was expected to reach over 8 Bcf/d NGLs were expected to approach 1 MMBls/d Source: RBN Energy 13

14 Fast forward to July 2015 Source: RBN Energy 14

15 Fast Forward to July 2015: NGL Forecast Source: Bentek 15

16 Fast Forward to July 2015: Gas Forecast Source: Bentek 16

17 Production Outlooks from the Permian by Quality Source: EIA 17

18 Processing Expansions in progress and announced The Major Players Current Capacity BCFD Future Capacity BCFD Enterprise Energy Transfer DCP Targa Enlink *MarkWest *Western *Agave *PE other 0.1 Processing Capacity BCF/d and growing rapidly and the 4.5 BCF per day producer owned facilities in the basin. Average GPM is assumed to be 4.8 across the Permian (will increase over time) Y-Grade take away Adequate for now with some small future infrastructure needs 18

19 Y-Grade takeaway in service and announced The Major Players Current Capacity Mbpd Future Capacity Mbpd *Enterprise Energy Transfer DCP Oneok 75 N/A Total true Permian 912 N/A *Not all Enterprise/Oneok capacity is dedicated to the Permian. Texas Express, although some of its capacity has Permian Y-Grade on it also has a large Eagle Ford component. Oneok purchased Chevron s interest in the West Texas LPG line in late 2014 which serves the Permian and the Barnett. Oneok has indicated that it may expand the West Texas line, however such has not been formally announced. True Permian Take Away Y-Grade pipes New or changing- DCP Sandhills and Energy Transfer announced Lone Star Express Existing Y-Grade takeaway from legacy Enterprise MAPS, Seminole, Chaparral and Quanah Y-Grade take away summary by experts Adequate for now. Some infrastructure needs but small. 19

20 NGL value per Mmbtu correlation to Crude Price 20

21 Summary Y-Grade and Processing Infrastructure Appear to be in-line with current environment Fractionation, which will be discussed later, appears to be in-line with today s market conditions as well The Y-Grade take away players and Midstream providers each have an incentive to adapt quickly to changing market conditions Price uncertainty Some producers will drill to hold acreage even if economics are not acceptable Regardless, if commodity prices remain depressed, drilling will slow and oil, gas and Y-Grade outputs will fall Frac-Spread In most areas, depending on a producers contract with its Midstream provider, someone is losing money as the frac-spread has disappeared Propane The US is now the world s largest exporter of Propane. Propane is now under water in most areas as an NGL Despite being the world s largest Propane exporter, US supply is at record levels with no demand growth The remainder of 2105 should be very interesting Investor Slides for the projects we discussed are attached Source: Zillow 21

22 Questions and Answers 22

23 Y-Grade DCP 23

24 Y-Grade Enterprise 24

25 Lone Star Investor Presentation LS Express Willow Lake - Phase 2 Cryogenic Gas Plant 25

26 Enterprise Y-Grade Investor Slide 26

27 Enlink Investor Presentation Slide 27

28 Enterprise Midstream Expansions 28

29 ETC Investor Slide 29

30 Targa Investor Presentation Slide 30

31 Enlink Investor Presentation Slide 31