Investor Presentation

Transcription

1 Investor Presentation September 2017

2 2 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 50.1% 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% 49.9% 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

3 3 Midstream Services Portfolio DJ Basin Delaware Basin Laramie 100% Interest Blanco 40% Interest San Juan 25% Interest Colorado 100% Interest Trinity 100% Interest Gunnison 5% Interest Green 25% 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 ) DevCo Colorado 100% NBLX Ownership IDP Producer Dedicated Acres (~) Crude Oil Gathering Wells Ranch NBL East Pony 44k Gas Gathering Dedicated Service Prod. Water Gathering Fresh Water Delivery 78k Crude Oil Transmission Blanco 40% Delaware Basin NBL 111k Trinity 100% Delaware Basin * Laramie 100% Greeley Crescent SRCI 33k NBL 32k Green 25% Mustang NBL 75k San Juan 25% East Pony NBL 44k Gunnison 5% Bronco NBL 36k * 64k acres acquired by NBL from CWEI is dedicated to NBLX; NBL s legacy Delaware Basin acres (~47k) dedicated to the Advantage Pipeline JV

4 Recent Highlights Growth Projects and Well Performance Driving 3Q Guidance Increases Following Record 2Q Results Setting Records in 2Q 2017 Record Results in Volumes and Financial Metrics Ahead of Key Gathering Growth Projects Commencing in 3Q 2Q Annualized Leverage: 1.4x Closed Advantage JV and Inaugural Dropdown 8.5% DPU Growth Above 1Q DPU 2.3x DCF Coverage Pro Forma for Full Second Quarter Dropdown Interest Actuals 3Q Guidance % Change to Mid- Gross Volumes 1Q 2Q Record Prior Current Point Oil Gathered (MBbl/d) Gas Gathered (MMcf/d) Oil and Gas Gathered (MBoe/d) Produced Water Gathered (MBw/d) Fresh Water Delivered (MBw/d) Financials ($MM) % % % % % 3Q 2017 Guidance Raised Strong Well Performance and Fresh Water per Well Demand Continuing in 3Q Successful Startup of 1 st Delaware Basin CGF and DJ Basin Third-Party Gathering System Gross Attributable to the Partnership Net Income $35 $39 $33 $36 $42 $43 23% EBITDA 1 $37 $42 $35 $41 $45 $49 24% EBITDA 1 $26 $34 $32 $39 $43 $47 27% Distributable Cash Flow 1 $24 $30 $27 $33 $37 $40 32% DCF Coverage 1,2 1.8x 1.9x 1.6x 1.9x 2.2x 2.4x 32% 1. Non-GAAP measures; see reconciliation to GAAP measures in Appendix 2. Estimates include forecasted DPU growth of 4.7% quarterly, or 20% annual 4 4

5 5 Building for Sustainable, Long-Term Growth 2017 Growth Projects: 2Q 3Q 4Q SRC fresh water system online 1 st Delaware Basin CGF online & connected to Advantage DJ Basin third-party gathering system online 2 nd Delaware Basin CGF Gross Oil & Gas Gathered (MBoe/d) 63 1Q Q % 3Q (E) Midpoint Net EBITDA and DCF Coverage 1 Current Outlook CAGR Pro Forma Drop Down x 1.9x 2.3x $45 2.5x 2.x Net EBITDA 1 > 20% Distributable Cash Flow 1 > 20% Distribution per Unit 2 20% $26 $34 +33% 1.5x 1.x 20.5x DCF Coverage 1,2 (in all years) > 1.3x Leverage (in all years) < 2.5x 10 1Q Q Q (E) Midpoint.x 1. Non-GAAP measures; see reconciliation to GAAP measures in Appendix 2. Estimates include forecasted DPU growth of 4.7% quarterly, or 20% annual Net EBITDA ($MM) DCF Coverage

6 6 Consistently Enhancing Top-Tier Growth Outlook DPU Growth Objective at IPO (September 2016) 20% Enhancements Since IPO: Fresh Water Delivery Per Well Demand Nearly Triples Enhanced completions driving increased fresh water demand NBL USO Update Higher activity + increased type curves in both DJ and Delaware Advantage Pipeline JV Acquisition Delaware Basin crude transmission added to portfolio Sep. 16 Nov. 16 Feb. 17 Extends 20% Growth Horizon Durability to Distribution Through Commodity Cycles Delaware Basin Gas Gathering Dedication NBL s legacy 47,000 Delaware Basin acres Clayton Williams Gathering Dedication Oil, gas and produced water gathering on 64,000 Delaware Basin acres Inaugural Dropdown Transaction Accretive transaction providing additional exposure to Permian Basin Record Oil and Gas System Throughput NBL s DJ horizontal wedge production driving record gathering throughput Apr. 17 Apr. 17 Jun. 17 2Q 17 Improves Already Strong Coverage and Leverage Outlook Provides Financial Flexibility for Complementary Growth Opportunities DPU Growth Objective (September 2017) 20%

7 7 Recent Acquisitions Two Acquisitions Closed in 2Q Totaling $337mm 2017 M&A and net capital spending estimated to total approximately $530mm; funded with ~30% equity (June 2017 PIPE) Balance sheet remains strong with 2Q annualized leverage at 1.4x 2018 EBITDA Multiple Expected to be 6.8x 7.8x From Acquired Assets Significant Steps Toward 2020 Goal of ~50% of Partnership EBITDA From the Permian Basin Southern Delaware Basin Crude Oil Pipeline 50/50 JV with PAA $133mm ($66.5 mm net) 70 miles 150 MBbl/d Capacity Closed April 3, 2017 Dropdown and Private Placement (PIPE) Review Acquired 20% of Colorado DevCo and 15% of Blanco DevCo from NBL $270mm purchase price; funded by $143mm PIPE, approximately $25mm in units to NBL and $102mm borrowing under credit facility Priced $143mm PIPE on June 20, 2017 at 80% Premium to IPO Price Execution Despite Challenging Market Backdrop First MLP PIPE since Jan and first PIPE to fund a dropdown since Nov MLP Investor Participation (6 Existing Investors, 2 New Investors) Transaction Merited in Upside and Defensive Commodity Price Curves Inaugural Dropdown Additional DevCo Interests Acquired for $270mm DJ & Delaware Basin Closed June 27, 2017

8 8 Conservative Financial Management of Freshwater Segment NBL Fresh Water per Equivalent Well 2Q 2017 NBLX Net EBITDA and Distribution Coverage (1,2) x ~200% Higher than 1Q15 2Q16 Average x 1.9x 200 1Q 15 2Q 16 Average = x 1.5x $ x $27 50 $20 0 1Q '15 2Q '15 3Q '15 4Q '15 1Q '16 2Q '16 3Q '16 4Q '16 1Q '17 2Q '17 x x 2Q Pro Forma for Full Quarter Including Drop Down Implied Distribution Coverage of 2Q Distribution 2Q 2017 Average Fresh Water per Equivalent Well (MBw) Wells Ranch 268 Actual Freshwater Delivery EBITDA Normalized Freshwater Delivery EBITDA (3) Gathering EBITDA East Pony federal 126 Gathering EBITDA Normalized FW Actual FW Non-GAAP measures; 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

9 Capital Budget 2017 Capital Projects Well Aligned with Producers Growth Objectives Trinity 6% Gross Capital Colorado 6% 2017(E) Capital (1) Net Capital (attributable to the Partnership) Trinity 10% Colorado 10% Rigs on NBLX Dedicated Acreage 9.0 Delaware Basin Blanco 48% $365 - $405 MM Laramie 28% Blanco 29% $215 - $235 MM Laramie 46% DJ 3rd Party Green 12% Green 5% 1 0 NBL DJ NBL DJ NBL DJ Q 2017 DJ Basin Delaware Basin DevCo % Ownership Colorado 100% Laramie 100% Green 25% Blanco 40% Trinity 100% Expected 2017 Capital Investment ~ 24 miles of gathering lines Wells Ranch produced water expansion Infrastructure build out for DJ Basin 3 rd party, including oil pipeline connecting to White Cliffs and Grand Mesa Mustang backbone infrastructure build out for oil, gas, PW & FW services Delaware Basin central gathering facilities and infrastructure build out Advantage pipeline integration capital and CGF tie-in 1. Excludes Acquisition Capital

10 Delaware Basin: Noble Energy Blanco DevCo Infrastructure Build Out Continuing to Support NBL s 5 Rigs in the Southern Delaware Basin 1st Delaware CGF Online (Billy Miner I) and Capacity Successfully Expanded With Debottlenecking Project 95 MBbl/d of Crude Capacity Planned to be Operational by 1H 2018 Full Infrastructure Buildout Includes ~450 Miles of Gathering Pipelines (Oil, Gas and Produced Water) Near-Term Delaware Basin CGF Projects #1 Oil (MBbl/d) Daily Capacity Gas (MMcf/d) PW (MBw/d) Est. Online Billy Miner I Online Billy Miner II H 2018 #2 Jesse James Dec. 17 #3 Coronado * H 2018 #4 Collier * H 2018 * expandable to 30 MBbl/d and 60 MMcf/d with minimal equipment additions Evaluating In-Basin Crude Transmission Solution for CWEI Acreage 1 Delaware Basin - Billy Miner I CGF 1. 64k acres acquired by NBL from CWEI is dedicated to NBLX; NBL s legacy Delaware Basin acres (~47k) dedicated to the Advantage Pipeline JV 10

11 11 Delaware Basin: Advantage Pipeline JV Advantage Crude Oil System 70 mile, 16 inch crude oil pipeline connecting the Southern Delaware Basin to Crane, TX System Map 150,000 Bbl/d throughput capacity Commenced operations in September 2013 Access to Midland, TX via Plains crude network Access to Longhorn Pipeline 2Q Average Throughput 35 MBbl/d ~ 35% above acquisition case July 2017 throughput 40 MBbl/d Evaluating Advantage System Capabilities for Blending & Batching Expected Advantage Growth Drivers Approximately 47k Noble Energy Acres Dedicated to Advantage Billy Miner I CGF Connected to Advantage in Late August NBL Legacy Acreage Pump Stations Volume Commitment from Plains Marketing, L.P. Plains to connect its Wolfbone Ranch facility

12 12 DJ Basin: Noble Energy Well Connects Supporting NBL s Development Driving 2Q 2017 Oil and Gas Gathering Growth of 18% Wells Ranch (Colorado DevCo) CGF Capacity: 50 MBbl/d of Oil, 165 MMcf/d of Natural Gas, 30 MBw/d of Produced Water ~125 Miles of Pipelines (Oil, Gas, PW, and FW) in Place Fresh Water Delivery Service East Pony (Colorado DevCo) ~25 miles of crude oil gathering pipelines servicing Colorado DevCo - Wells Ranch CGF Fresh Water Delivery Services through San Juan DevCo Mustang (Green DevCo) Expanding Fresh Water System; Expected to be Operational November 2017 Long-Lead Gathering System Equipment Ordered Construction Expected to Begin in September 2017 Full Infrastructure Build Out Includes ~250 Miles of Pipelines (Oil, Gas, PW and FW) Startup Expected Late 1Q 2018 Green DevCo - Mustang Infrastructure Plans

13 13 DJ Basin: Third-Party Greeley Crescent (Laramie DevCo) First Phase of Backbone Infrastructure Build Out For Third-Party Complete and Online 35 mile, 60 MBbl/d spec oil transmission line with optionality to Grand Mesa and White Cliffs 30 MBw/d produced water capacity Fresh Water Services Commenced Operation in April; Early Results Above Expectations Laramie DevCo - Empire Pipeline Laramie Devco - Infrastructure Plans

14 14 Significant Drop Down Inventory NBLX Strategy to Execute One Drop Down per Year Retained Interest Current Status of Asset Acreage Blanco (Delaware Basin) 60% Operational 111,000 Green (DJ Basin Mustang IDP) 75% In Progress 75,000 Gunnison (DJ Basin Bronco IDP) 95% N/A 36,000 San Juan (East Pony Fresh Water) 75% Operational 44,000 Wholly Retained Assets Legacy CWEI Infrastructure Assets Operational N/A East Pony Gas Gathering East Pony Gas Processing Operational 44,000 Eagle Ford Gathering Operational 31,000 Other ROFR Services Delaware Basin Produced Water Disposal Delaware Basin Fresh Water Delivery N/A 111,000 Crude Oil Gathering, Natural Gas Gathering and Water Services ROFR on all future acquired onshore acreage in U.S. (outside of Marcellus Shale)

15 15 Strong Balance Sheet Provides Runway for Opportunities 2H 17 Expected Milestones Potential 2H 17 Opportunities Delaware Basin Volume Ramp and Results Advantage Connection and PAA Match CWEI Oil Transmission Dedication Third-Party Efforts Long-Haul Opportunities DJ Basin Third-Party Gathering System Online and Results Third-Party Efforts Storage / Terminal Opportunities

16 16 Strategy Safety Continuous focus on safety culture Customer Service Customer service mentality for NBL and 3 rd parties Increase 3 rd Party Business Execute on back-yard opportunities Disciplined Financial Principals Preserve prudent long-term leverage and coverage Distribution Growth 20% distribution per unit growth rate through Execute Drop Downs Effectively manage and optimize drop-down inventory Increase Permian Exposure 50% Permian EBITDA contribution by 2020

17 17 Appendix

18 18 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 2Q 3Q (E) Prior 3Q (E) Current Net Income $ 35 $ 39 $33 - $36 $42 - $43 Add: Depreciation and Amortization Add: Interest Expense, Net of Amount Capitalized Add: Income Tax Provision Add: Unit-Based Compensation EBITDA $ 37 $ 42 $35 - $41 $45 - $49 Less: EBITDA Attributable to Noncontrolling Interests EBITDA Attributable to NBLX $ 26 $ 34 $32 - $39 $43 - $47 Less: Maintenance Capital Expenditures & Cash Interest Distributable Cash Flow of NBLX $ 24 $ 30 $27 - $33 $37 - $40 DCF Coverage 1.8x 1.9x 1.6x - 1.9x 2.2x - 2.4x

19 19 NBLX Structure Noble Energy NYSE: NBL June 2017 dropdown assets 100% ROFR Assets: East Pony Gas Gathering East Pony Gas Processing Eagle Ford Shale Midstream Additional DJ Acreage Additional Delaware Basin Services 50.1% Limited Partner Interest Noble Midstream Partners LP NYSE: NBLX 100% Noble Midstream GP LLC Non-Economic General Partner Interest Public Unitholders (LP) 49.9% Limited Partner Interest Noble Midstream Services, LLC 3.33% Non-Operating Membership Interest White Cliffs Pipeline L.L.C. Controlling Interest 100% 100% 40% 25% 25% 5% 100% Colorado Laramie Blanco Green San Juan Gunnison Trinity Non-Controlling Interest 60% 75% 75% 95% 50% Advantage JV

20 Contact Information Chris Hickman VP, Investor Relations Noble Energy Way Houston, TX 77070