Investor Presentation August 2015

Transcription

1 Investor Presentation August 2015

2 Disclaimer Forward-Looking Statements This presentation includes forward-looking statements. Forward-looking statements give our current expectations, contain projections of results of operations or of financial condition, or forecasts of future events. Words such as may, assume, forecast, position, predict, strategy, expect, intend, plan, estimate, anticipate, believe, project, budget, potential, or continue, and similar expressions are used to identify forward-looking statements. They can be affected by assumptions used or by known or unknown risks or uncertainties. Consequently, no forward-looking statements can be guaranteed. You are cautioned not to place undue reliance on any forward-looking statements. We caution you that these forward-looking statements are subject to all of the risks and uncertainties incident to our business, most of which are difficult to predict and many of which are beyond our control. We disclose important factors that could cause our actual results to differ materially from our expectations in the Risk Factors set forth in the prospectus dated June 3, 2015 relating to our initial public offering and filed with the Securities and Exchange Commission on June 4, These risks include, but are not limited to, delays in completing the construction of our initial assets; the inability of our primary customer to meet its drilling and development plan; our ability to successfully implement our business strategy; fluctuations in commodity prices, including realized natural gas, NGLs and oil prices; actions taken by third-party producers, operators, processors and transporters; general economic conditions; credit markets; regulatory changes; the uncertainty inherent in projecting future rates of production, cash flow and access to capital; and others. Should one or more of the risks or uncertainties associated with our midstream business occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements herein, to reflect events or circumstances after the date of this presentation. Non-GAAP Financial Measure In this presentation, we present Adjusted EBITDA and distributable cash flow, which are non-gaap financial measures. Adjusted EBITDA and distributable cash flow are used as supplemental financial measures by our management and external users of our financial statements, such as investors, commercial banks, research analysts and others, to assess: our operating performance as compared to other publicly traded partnerships in our industry, without regard to historical cost basis or financing methods; the ability of our assets to generate sufficient cash flow to support our decision to make distributions to our unitholders; our ability to incur and service debt and fund capital expenditures; the financial performance of our assets without regard to the impact of the timing or accounting treatment of deficiency payments and the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities. We believe that the presentation of Adjusted EBITDA and distributable cash flow provide information useful to investors in assessing our financial condition and results of operations. We define Adjusted EBITDA as net income, plus interest expense, income taxes, depreciation and amortization, changes in deferred revenue, non-cash equity-based compensation expense, non-cash general and administrative costs, non-cash loss (income) related to derivative instruments and gain (loss) and impairments on long-term assets. We define distributable cash flow as Adjusted EBITDA, less cash interest expense, net of interest income, cash tax expense and maintenance capital expenditures. We have included a reconciliation of Adjusted EBITDA to net income, the most directly comparable U.S. GAAP financial measure, at the end of this presentation. Adjusted EBITDA and distributable cash flow should not be considered as alternatives to U.S. GAAP net income or net cash provided by operating activities. Adjusted EBITDA and distributable cash flow exclude some, but not all, items that affect net income and these measures may vary among other companies. As a result, Adjusted EBITDA and distributable cash flow as presented herein may not be comparable to similarly titled measures of other companies. 2

3 Recent Highlights Completed a successful $225MM IPO on June 9, 2015 Successful start-up of the Lincoln Parish Plant and associated pipeline infrastructure in May 2015 Mt. Olive Plant and associated pipeline construction is 95% complete Expecting mid-september commissioning Declared an initial quarterly distribution of $ per unit for the 22-day post-ipo period Pro-rated based on the MQD of $ / unit ($1.10 / unit annualized) Appointed two independent directors to the Board of Directors of the General Partner Ambassador Robert Jordan Richard Walker 3

4 PTXP Investment Highlights Targeting strong distribution growth Growth Opportunities Visible and growing backlog of organic projects to serve growing production ROFO on PennTex Development s 98.5% equity interest in PennTex Permian Financial Strength and Flexibility $275MM revolving credit facility Strong Agreements and Contracts Alignment with Growing Anchor Producer Strong Sponsorship Seasoned and Successful Management Team 15-year exclusivity agreement with Memorial Resource Development Corp. ( MRD ) in north Louisiana 100% fee based contracts with minimum volume commitments ( MVCs ) and pipeline reservation fees contributing more than 75% of forecast revenue for the twelve month period ending June 30, 2016 Strategic alignment with MRD Growing producer in prolific basin with strong basin economics Natural Gas Partners ( NGP ) is a leading energyfocused private equity firm with over $16.5 billion in energy capital under management and over 50 upstream portfolio companies Significant experience building, operating and integrating midstream businesses Successful history of acquiring, growing and financing midstream operations 4

5 PTXP Asset Overview Phase I Assets (In-Service May 2015) Phase II Assets (Commissioning mid-september 2015) Lincoln Parish Plant: 200 MMcf/d cryogenic processing plant PennTex Gathering Pipeline: 35 mile rich natural gas gathering system PennTex Residue Gas Pipeline: 1 mile residue natural gas header Mt. Olive Plant: 200 MMcf/d cryogenic processing plant PennTex Residue Gas Extension: 14 mile residue natural gas pipeline that provides market access for residue natural gas from the Mt. Olive Plant to the same delivery point as the PennTex Residue Gas Pipeline PennTex NGL Pipeline: 40 mile NGL pipeline North Louisiana Area of Exclusivity with MRD Lincoln Parish Plant PennTex Gathering Pipeline PennTex Residue Gas Pipeline PennTex NGL Pipeline Mt. Olive Plant 5

6 PTXP Contract Strength (MMBtu/d) 575, ,000 On July 1, 2016, MRD s gathering and processing minimum volume commitments increase from 345,000 MMBtu/d to 460,000 MMBtu/d ($MM) $120 $100 MRD s gathering and processing minimum volume commitments increase from 115,000 MMBtu/d to 345,000 MMBtu/d upon the completion of the Mt. Olive processing plant $78 $78 $80 345,000 $62 $62 $62 $60 230,000 $40 115,000 $24 $20 0 Q Q Q Q Q Q (1) Total Firm Revenue Total Gathering and Processing MVC Gathering Demand Charge Volume $- 1) Full quarter annualized 6

7 PTXP Financial Overview Capitalization ($MM, as of June 30, 2015) Common units (MM) 20.0 Subordinated units (MM) 20.0 Total units outstanding 40.0 Unit price as of 6/30/15 $19.39 Market capitalization $775.6 Debt 83.5 Cash 13.9 Enterprise value $845.2 Operating Results 22-Day Period Post IPO ($MM, except per unit data) Ending June 30, 2015 Adjusted EBITDA (1) $1.1 Distributable cash flow $1.0 DCF / unit $ Distribution declared (2) $2.7 Distribution / unit $ LP Ownership (3) 26.4% 39.4% 34.2% Ownership IDR Ownership 7.5% 92.5% Public PennTex Midstream Partners, LLC MRD WHR LA (4) Liquidity as of June 30, 2015 ($MM) Revolving credit facility (total size) $275.0 Revolving credit facility (amount available) (5) Less: amount drawn 83.5 Less: letters of credit outstanding 1.9 Availability under revolving credit facility $64.6 Plus: cash on hand 13.9 Liquidity $78.5 1) See reconciliation on page 10 2) Distribution declared includes $1.7MM of borrowings to fund distributions 3) Ownership percentages include impact from partial exercise of underwriters overallotment option 4) Represents units issued to/ownership by MRD WHR LA Midstream LLC at IPO (giving effect to partial exercise of underwriters overallotment option), which was subsequently distributed to members 5) Based on 40% debt / total capital covenant for Q Beginning Q3 2015, credit covenants based on debt / EBITDA and interest coverage 7

8 Growth Opportunities NGP Opportunities through current and future portfolio company relationships Third Parties Non-related party opportunities through broad industry relationships Existing Growth Platform Future Growth Platforms Deep industry relationships Significant midstream development expertise Strong capital markets and M&A experience PennTex Permian (1) Plant I Pipelines Additional Midstream Infrastructure PennTex Midstream Partners, LP Lincoln Parish Plant Mt. Olive Plant PennTex Gathering Pipeline PennTex Residue Gas Pipeline PennTex NGL Pipeline Growth projects in area of exclusivity 1) Subject to a ROFO on PennTex Development s 98.5% interest in PennTex Permian in the event PennTex Development elects to sell such equity interest 8

9 Appendix 9

10 Adjusted EBITDA Reconciliation Three Months Ended ($ in thousands) June 30, 2015 Net income (loss) ($4,170) Add: expense, net 88 Depreciation and amortization 740 Changes in deferred revenue (1) 528 Equity-based compensation expense 231 Non-cash contribution for general and administrative costs 408 Asset impairment 2,483 Adjusted EBITDA $308 Reconciliation of Adjusted EBITDA for the three months ended June 30, 2015 to Adjusted EBITDA and distributable cash flow subsequent to the IPO (June 9, 2015 through June 30, 2015): Adjusted EBITDA for the three months ended June 30, 2015 $308 Less: Predecessor Adjusted EBITDA prior to the IPO (747) Adjusted EBITDA subsequent to the IPO (June 9, 2015 through June 30, 2015) $1,055 Less: Cash interest expense 35 Cash tax expense 0 Maintenance capital expenditures 3 Distributable Cash Flow subsequent to the IPO (June 9, 2015 through June 30, 2015) $1,017 Note: Adjusted EBITDA and distributable cash flow are supplemental non-gaap financial measures that are used by management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. We define Adjusted EBITDA as net income, plus interest expense, income taxes, depreciation and amortization, changes in deferred revenue, non-cash equitybased compensation expense, non-cash general and administrative costs, non-cash loss (income) related to derivative instruments and gain (loss) and impairments on long-term assets. We define distributable cash flow as Adjusted EBITDA, less cash interest expense, net of interest income, cash tax expense and maintenance capital expenditures. Adjusted EBITDA and distributable cash flow are not measures of net income as determined by United States generally accepted accounting principles, or GAAP 1) Deficiency payment obligation from MRD on undelivered MVCs are recorded as deferred revenue 10

11 PennTex Organizational Structure (1) PennTex Midstream Partners, LLC ( Development ) MRD WHR LA (2) 92.5% Membership 7.5% Membership 100% Membership 98.5% Membership 26.4% LP (2) PennTex Midstream GP, LLC Non-economic General Partner Public Unitholders 34.2% LP 39.4% LP PennTex Midstream Management Company, LLC PennTex Permian, LLC ROFO Asset PennTex Midstream Partners, LP ( PTXP ) 100% Membership $275MM Credit Facility Services and Secondment Agreement Operating Subsidiaries 1) Ownership percentages include impact from partial exercise of underwriters overallotment option 2) Represents units issued to/ownership by MRD WHR LA Midstream LLC at IPO (giving effect to partial exercise of underwriters overallotment option), which was subsequently distributed to members 11