Investor Presentation

Transcription

1 BreitBurn Energy Partners L.P. (NASDAQ: BBEP) Investor Presentation Halbert S. Washburn Co-founder and Chief Executive Officer San Francisco, CA January 2012

2 Forward Looking Statements Cautionary Statement Regarding Forward-Looking Information This presentation contains forward-looking statements relating to BreitBurn's operations that are based on management's current expectations, estimates and projections about its operations. Words and phrases such as expect, estimated, guidance, approximately, assume, , opportunities, may, believe, forecasted, target, references to future years, and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control and are difficult to predict. These include risks relating to the Partnership s financial performance and results, availability of sufficient cash flow to execute our business plan, our level of indebtedness, our ability to raise capital, prices and demand for natural gas and oil, our ability to replace reserves and efficiently develop our current reserves and the factors set forth under the heading "Risk Factors" incorporated by reference from our Annual Report on Form 10-K, our Quarterly Reports on Form 10- Q, and our Current Reports on Form 8-K. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. Unless legally required, BreitBurn undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Unpredictable or unknown factors not discussed herein also could have material adverse effects on forward-looking statements. BreitBurn Energy Partners L.P. 1

3 Overview of BreitBurn Energy Partners L.P. Publicly-traded upstream MLP with long-lived assets and extensive hedge portfolio Focused on acquisition, exploitation and development of oil and gas properties Leverage technical expertise and state-of-the-art technologies to identify and implement successful exploitation techniques to optimize reserve recovery Assets consist primarily of long-lived oil and gas fields (17+ years reserve life index) Northern Division: Antrim Shale (MI); New Albany Shale (IN/KY); Wind River, Big Horn, Powder River, Evanston and Green River Basins (WY) Southern Division: Los Angeles Basin (CA), Sunniland Trend (FL) Key Statistics (1) Market Valuation (3) ~160 MMboe (960 Bcfe) estimated proved reserves 29% oil / 71% natural gas 83% proved developed Production (2) : 40% oil / 60% natural gas Equity market cap $1.1 billion Total debt $810 million Enterprise value $1.9 billion Debt / enterprise value 42% (1) Reserves data based on BBEP YE 2010 Reserve Report at SEC pricing plus estimated proved reserves of recently completed Wyoming acquisitions. (2) Current production mix based on midpoint of 2011 guidance and recently completed Wyoming acquisitions. (3) Market data based on January 3, 2011 unit price of $ Enterprise value assumes $0.5 million in minority interest and $4.8 million of cash as of September 30, 2011, and $810 million of debt as of October 31, BreitBurn Energy Partners L.P. 2

4 Key Operating Attributes Asset Base Mature predictable and low-risk Shallow decline long life with low maintenance capital requirements Balanced between oil and gas Substantial low risk development opportunities Upside potential in certain areas Commitment to consistent, high level of hedging Personnel Excellent industry experience Strong track record and longevity with BreitBurn Significant history with BreitBurn assets Long-Term Business Strategy Acquire long-lived assets with low-risk exploitation and development opportunities Use our technical expertise and state-of-the-art technologies to identify and implement successful exploitation techniques to optimize reserve recovery Reduce cash flow volatility through commodity price and interest rate derivatives Maximize asset value and cash flow stability through our operating and technical expertise BreitBurn Energy Partners L.P. 3

5 Nationwide Footprint Significant Operations Diversified Among Six States Headquarters Gaylord Office Houston Office Cody Office Avg. Daily Prod. 7,692 Boepd Est. Proved Reserves 53.6 MMBoe % Proved Developed 66% R/P ~19 years 2010 Avg. Daily Prod. 10,683 Boepd Est. Proved Reserves 80.3 MMBoe % Proved Developed 89% R/P ~21 years WY MI IN CA KY 2010 Avg. Daily Prod. 587 Boepd Est. Proved Reserves 2.4 MMBoe % Proved Developed 100% R/P ~11 years 2010 Avg. Daily Prod. 3,190 Boepd Est. Proved Reserves 14.6 MMBoe % Proved Developed 96% R/P ~13 years TX FL 2010 Avg. Daily Prod. 1,702 Boepd Est. Proved Reserves 9.3 MMBoe % Proved Developed 100% R/P ~15 years Note: Reserve data based on YE 2010 Reserve Report at SEC pricing. Wyoming amounts include recently completed Greasewood and Evanston and Green River Basins acquisitions. BreitBurn Energy Partners L.P. 4

6 Growth of Our Asset Base Since our IPO in October of 2006, BreitBurn has: Expanded its operations from 2 to 6 states Diversified its commodity base by acquiring natural gas assets in addition to oil properties Increased proved reserves per unit by ~94% (1) Increased production per unit by ~98% (2) Production by State in 2006 Production by State Wyoming 45% California 55% Kentucky/ Indiana 3% Florida 7% California 13% Michigan 45% Wyoming 32% (1) Compares YE 2006 proved reserves of 30.7 MMBoe divided by 22.0 million units to current estimated proved reserves of 160 MMBoe divided by ~59.0 million units as of September 30, (2) Compares 2006 production of 4,494 Boepd divided by 22.0 million units to 2010 production of 18,354 Boepd, plus estimated production from recent Greasewood and Cabot acquisitions, divided by ~59 million units as of September 30, BreitBurn Energy Partners L.P. 5

7 Focus on Core Strategies Maintaining and Growing Production 2010 production increased 3% over 2009; 2011 expected production is approximately 7.0 MMBoe 2011 capital spending is expected to be approximately $80 million, with approximately 70% spent principally on oil projects in California, Florida and Wyoming Significant Financial Flexibility Demonstrated efficient access to debt and equity markets Semi-annual borrowing base redetermination in October increased borrowing base from $735 million to $850 million Distributions Q distribution increased to $1.74 per unit (annualized) Increased distributions for six consecutive quarters Growth Through Acquisitions Actively pursuing acquisition opportunities that are consistent with or enhance our current asset base, promote commodity diversity and have production upside or exploitation potential Closed $57 million acquisition of oil properties in Greasewood Field, WY on July 28 Closed $283 million acquisition of gas and oil properties in Evanston and Green River Basins, WY on October 6 BreitBurn Energy Partners L.P. 6

8 Recent Wyoming Acquisitions Evanston and Green River Basins Closed October 6 ~95% gas 230 Bcfe proved, 136 Bcfe PDP 30 MMcfe / day on average for 2012 ~620 producing wells in 16 fields Over 90 PUDs, 600 potential drilling locations Proved reserve life ~ 21 years PDP reserve life ~ 14 years Lifting cost ~$0.83 per Mcfe BTU : 1,000-1,300 Mmbtu per Mcfe Evanston & Green River Basins Wyoming Area of Operations Greasewood Field Greasewood Field Closed July 28 Producing ~550 Boe / day 14 producing wells Reserve life ~16 years Current Field Operations Recent Acquisitions BreitBurn Energy Partners L.P. 7

9 % of Assumed Production Hedged % of Assumed Production Hedged Commodity Price Protection Portfolio: Assumes production equals the midpoint of 2011 production guidance (6.7 million boe) plus contributions from Wyoming acquisitions and assumes oil comprises approximately 40% of total production $80.84/bbl $7.27/mmbtu $101.00/bbl $7.12/mmbtu Average Oil and Gas Hedge Prices $92.05/bbl $5.96/mmbtu $92.17/bbl $5.43/mmbtu $96.45/bbl $5.55/mmbtu 100% 93% 80% 60% 40% 73% 59% 79% 70% 68% 73% 63% 65% 46% 63% 38% 42% 36% 36% 20% 0% 4Q 2011 FY 2012 FY 2013 FY 2014 FY 2015 Total Crude Oil Natural Gas Note: Includes all current hedges other than 2013 and 2014 call options entered into in October Niobrara County, Wyoming acquisition closed July 28, Evanston and Green River Basin acquisition closed October 6, BreitBurn Energy Partners L.P. 8

10 NYMEX Crude Oil Mitigating Commodity Price Volatility Our hedge portfolio has significantly mitigated crude oil and natural gas price fluctuations as evident by our quarterly Adjusted EBITDA $ $58.2 $62.3 $61.6 $50.9 $46.8 $50.8 $48.4 $49.0 $51.1 $56.7 $60.0 $59.1 $56.0 $51.6 $52.9 $ NYMEX Natural Gas Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q Quarterly Adjusted EBITDA (in millions) NYMEX Crude Oil NYMEX Natural Gas BreitBurn Energy Partners L.P. 9

11 Cumulative Distribution Cumulative Distributions Since IPO in 2006 Six Quarters of Consecutive Distribution Increases $8.00 $ $4.19 $4.19 $4.19 $4.19 $4.19 $4.56 $4.95 $5.34 $5.75 $6.17 $6.59 $ $3.67 $ $ $0.40 $0.81 $1.23 $1.68 $ Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q BreitBurn Energy Partners L.P. 10

12 Distribution Yield Attractive Distribution Yield BBEP has an attractive distribution yield versus its peer group 10.0% 9.0% 8.0% 9.0% 8.2% 8.0% 7.7% 7.6% 7.2% 7.0% 6.0% Alerian MLP ETF (AMLP) yield 6.2% 5.0% 4.6% 4.0% 3.0% 2.0% 10 Year Treasury yield 2.0% 1.0% 0.0% BBEP VNR QRE PSE LGCY LINE EVEP Upstream MLP Peers Based on unit prices as of January 3, 2012 and most recently announced quarterly distribution. BreitBurn Energy Partners L.P. 11

13 Target Acquisition Criteria BreitBurn is actively pursuing acquisition opportunities that meet the following criteria: Long-lived and mature properties with large amounts of original oil and gas in place Consistent with our current asset base Commodity diversity Pursuing both oil and gas opportunities, though we believe gas is currently undervalued Production upside / exploitation potential Expand inventory of low risk development opportunities Enhances current operations Significant bolt-on opportunities in all of our core areas BreitBurn Energy Partners L.P. 12

14 Investment Highlights High-quality asset base with predictable, long-lived production Experienced management, operating and technical teams Critical mass in large mature basins with geographic, geologic and commodity diversity Substantial hedging through 2015 at attractive weighted average prices of $94.63 for oil and $6.24 for gas (1) Distributions have grown approximately 16% since Q from an annualized rate of $1.50 to an annualized rate of $1.74 for Q Attractive distribution yield versus MLP peer group Distributions supported by strong 2011 coverage ratio of ~1.2x and strong 2012 hedge portfolio further improves DCF coverage outlook Recent sales by Quicksilver Resources and The Baupost Group have eliminated unit overhang BBEP recently added to Alerian MLP Index (1) As of January 3, BreitBurn Energy Partners L.P. 13

15 BreitBurn Energy Partners L.P. (NASDAQ: BBEP) Investor Presentation Halbert S. Washburn Co-founder and Chief Executive Officer San Francisco, CA January 2012