Investor Presentation. March 2-4, 2015 Strong. Innovative. Growing.

Transcription

1 Investor Presentation March 2-4, 2015 Strong. Innovative. Growing. 1

2 Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the federal securities laws. Although these statements reflect the current views, assumptions and expectations of our management, the matters addressed herein involve certain risks and uncertainties that could cause actual activities, performance, outcomes and results to differ materially than those indicated. Such forward-looking statements include, but are not limited to, statements about future financial and operating results, guidance, projected or forecasted financial results, objectives, project timing, expectations and intentions and other statements that are not historical facts. Factors that could result in such differences or otherwise materially affect our financial condition, results of operations and cash flows include, without limitation, (a) the dependence on Devon for a substantial portion of the natural gas that we gather, process and transport, (b) our lack of asset diversification, (c) our vulnerability to having a significant portion of our operations concentrated in the Barnett Shale, (d) the amount of hydrocarbons transported in our gathering and transmission lines and the level of our processing and fractionation operations, (e) fluctuations in oil, natural gas and NGL prices, (f) construction risks in our major development projects, (g) our ability to consummate future acquisitions, successfully integrate any acquired businesses, realize any cost savings and other synergies from any acquisition, (h) changes in the availability and cost of capital, (i) competitive conditions in our industry and their impact on our ability to connect hydrocarbon supplies to our assets, (j) operating hazards, natural disasters, weather-related delays, casualty losses and other matters beyond our control, (k) a failure in our computing systems or a cyber-attack on our systems, and (l) the effects of existing and future laws and governmental regulations, including environmental and climate change requirements and other uncertainties. These and other applicable uncertainties, factors and risks are described more fully in EnLink Midstream Partners, LP s and EnLink Midstream, LLC s filings with the Securities and Exchange Commission, including EnLink Midstream Partners, LP s and EnLink Midstream, LLC s Annual Reports on Form 10-K, Quarterly Reports on Form 10- Q and Current Reports on Form 8-K. Neither EnLink Midstream Partners, LP nor EnLink Midstream, LLC assumes any obligation to update these forward-looking statements. The assumptions and estimates underlying the forecasted financial information included in the guidance information in this press release are inherently uncertain and, though considered reasonable by the EnLink Midstream management team as of the date of its preparation, are subject to a wide variety of significant business, economic, and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the forecasted financial information. Accordingly, there can be no assurance that the forecasted results are indicative of EnLink Midstream s future performance or that actual results will not differ materially from those presented in the forecasted financial information. Inclusion of the forecasted financial information in this press release should not be regarded as a representation by any person that the results contained in the forecasted financial information will be achieved. 2

3 Non-GAAP Financial Information This presentation contains non-generally accepted accounting principle financial measures that we refer to as adjusted EBITDA, distributable cash flow, gross operating margin, growth capital expenditures, adjusted EBITDA of EnLink Midstream Holdings (EMH) and maintenance capital expenditures. We define adjusted EBITDA as net income from continuing operations plus interest expense, provision for income taxes, depreciation and amortization expense, impairment expense, stock-based compensation, gain on noncash derivatives, transaction costs, distribution of equity investment and non-controlling interest and income on equity investment. We define distributable cash flow as net cash provided by operating activities plus adjusted EBITDA, net to EnLink Midstream Partners, LP less interest expense, litigation settlement adjustment, interest rate swap, cash taxes and other, maintenance capital expenditures and Predecessor adjusted EBITDA. Gross operating margin is defined as revenue minus the cost of purchased gas, NGL, condensate and crude oil. Growth capital expenditures are defined as all construction-related direct labor and material costs, as well as indirect construction costs including general engineering costs and the costs of funds used in construction. Adjusted EBITDA of EMH is defined as earnings plus depreciation, provisions for income taxes and distribution of equity investment less income on equity investment. The amounts included in the calculation of these measures are computed in accordance with generally accepted accounting principles (GAAP) with the exception of maintenance capital expenditures. Maintenance capital expenditures are capital expenditures made to replace partially or fully depreciated assets in order to maintain the existing operating capacity of the assets and to extend their useful lives. The Partnership and General Partner believe these measures are useful to investors because they may provide users of this financial information with meaningful comparisons between current results and prior-reported results and a meaningful measure of the Partnership s and the General Partner's cash flow after it has satisfied the capital and related requirements of its operations. 3

4 Our Strategy: Stability Plus Growth A Stable Investment in the MLP Space Top tier midstream energy service for our customers Stability of cash flows ~95% fee-based contracts ~50% of gross operating margin from long-term Devon contracts Leverage Devon Energy sponsorship for growth Expect significant growth from dropdowns Serve Devon E&P portfolio in its growth areas Strong organic growth South Louisiana, West Texas and Ohio River Valley (ORV) expansion projects Top tier balance sheet Investment grade credit rating at ENLK since inception Strong liquidity with a new $1.5 billion credit facility Note: Adjusted EBITDA and gross operating margin are non-gaap financial measures and are explained on page 3. 4

5 The Vehicle for Sustainable Growth: Strategically Located and Complementary Assets Gathering and Transportation ~8,800 miles of gathering and transmission lines 11 Bcf of natural gas storage capacity Gas Processing 13 plants with 3.4 Bcf/d of total net inlet capacity NGL Transportation, Fractionation and Storage ~600 miles of liquids transport line 7 fractionation facilities with 280,000 Bbl/d of total capacity 3.2 MMBbl of underground NGL storage Crude, Condensate and Brine Handling 200 miles of crude oil pipeline Barge and rail terminals 500,000 Bbl of above ground storage 100 vehicle trucking fleet 8 brine disposal wells 6 condensate stabilization & gas compression stations in service 5

6 The Vehicle for Sustainable Growth: MLP Structure with a Premier Sponsor Devon Energy Corp. NYSE: DVN (BBB+ / Baa1) Public Unitholders ~44% LP ~70% ~30% EnLink Midstream, LLC General Partner NYSE: ENLC ~1% GP ~18% LP EnLink Midstream Partners, LP Master Limited Partnership NYSE: ENLK (BBB / Baa3) GP + 75% LP EnLink Midstream Holdings (formerly Devon Midstream Holdings) ~37% LP ~25% LP ENLC owns 100% of IDRs Current Position Dist./Q Split Level < $ % / 98% < $ % / 85% < $ % / 75% > $ % / 50% Note: The ownership percentages shown above are as of the date of this presentation. 6

7 The Vehicle for Sustainable Growth: Well Positioned with a Strong Balance Sheet Strong B/S & Credit Profile Investment grade balance sheet at ENLK (BBB, Baa3) Debt / EBITDA of ~3.3x Strong liquidity with new $1.5 billion credit facility Diverse, Fee-Based Cash Flow ~ 95% fee-based margin Balanced cash flow (Devon ~50%) Projects focused on NGL/crude and rich gas processing Louisiana Substantial Scale & Scope Total consolidated enterprise value of ~$14 billion Projected 2015 Combined Adjusted EBITDA: ~$740 MM Geographically diverse assets with multi-commodity exposure Sustainable Growth Stable base cash flow supported by long-term contracts Organic growth opportunities through Devon s upstream portfolio Expect significant growth from drop downs Note: Adjusted EBITDA is a non-gaap financial measure and is explained in greater detail on page 3. 7

8 2015 Guidance: Stability Plus Growth EnLink Midstream Consolidated 2015 Guidance Adjusted EBITDA $740 MM % of Gross Operating Margin from fee-based contracts ~ 95% EnLink Midstream Partners, LP (ENLK) Adjusted EBITDA Distributable Cash Flow 2015 Guidance ~ $710 MM ~ $570 MM ENLK annual distributions per unit ~ $1.58 ENLK annual distribution growth rate from 2014 to 2015 ~ 7.5% Announced acquisitions (not including drop downs) Growth capital expenditures Maintenance capital expenditures EnLink Midstream, LLC (ENLC) ~ $700 MM ~ $500 MM ~ $50 MM 2015 Guidance Cash Taxes ~ $20 MM ENLC annual distributions per unit ~ $1.025 ENLC distribution growth from 2014 to 2015 ~18.5% Note: Adjusted EBITDA, gross operating margin, distributable cash flow, growth capital expenditures and maintenance capital expenditures are non-gaap financial measures and are explained on page 3. 8

9 The Four Avenues for Growth 9

10 The Four Avenues for Growth Progress in Last Nine Months Avenue 1: Drop Downs Ohio River Valley: E2 drop down complete EnLink Midstream Holdings (EMH): 25% drop down complete Capital Commitment ~$1.1 Billion Avenue 2: West Texas: Ajax Plant & Martin County Expansion ~$200 MM+ Growing With announced Devon Avenue 3: Ohio River Valley: condensate pipeline & stabilization / ~$300 MM+ gas compression stations announced Organic Growth Projects Louisiana: Marathon JV & NGL pipeline announced Avenue 4: Louisiana: Gulf Coast natural gas assets acquired Mergers & West Texas: LPC crude logistics business acquired ~$935 MM Acquisitions West Texas: Coronado acquisition announced In the last nine months, EnLink announced $2.5 Billion of acquisitions and growth projects. EnLink also completed Organic construction Growth on ~$1 billion of growth projects, Projects including the Cajun-Sibon and the Bearkat expansions

11 Avenue 1: Drop Downs Devon Sponsorship Creates Drop Down Opportunities Devon Sponsorship Provides Potential for ~$375 MM of Adjusted EBITDA from Drop Downs % EMH E2 25% EMH ** Drop Down Cost: ~$193 MM Estimated Adjusted EBITDA: ~$20-25 MM Drop Down Cost for 25% Interest: $925 MM Estimated 2015 Adjusted EBITDA: ~$100 MM ** Victoria Express Pipeline * Estimated Capital Cost: ~$70 MM Estimated Adjusted EBITDA: ~$12 MM Access Pipeline * Other Potential Devon Drop Downs * Estimated Capital Cost: ~$1.0 B Estimated Adjusted EBITDA: ~$150 MM * Cautionary Note: The information regarding these potential drop downs is for illustrative purposes only. No agreements or understandings exist regarding the terms of these potential drop downs, and Devon is not obligated to sell or contribute any of these assets to EnLink. The completion of any future drop down will be subject to a number of conditions. The capital cost information on this slide is based on management s current estimates and current market information and is subject to change. ** Based on 2015 Guidance and accounts for 25% of the total estimated adjusted EBITDA of EMH. Note: Adjusted EBITDA is a non-gaap financial measure and is explained on page 3. 11

12 Avenue 1: Drop Downs E2 Drop Down in Ohio River Valley New Assets Three facilities operating, two under construction When completed, five facilities will have total capacity of ~580 MMcf/d and ~19,000 Bbl/d E2 Stations Strategic Benefits Key customer: Antero Resources 100% fee-based contracts with minimum volume commitments Drop down from ENLC to ENLK completed in October 2014 Approximately $193 MM acquisition cost Estimated annual adjusted EBITDA contribution: ~$20-25 MM * * * * Assets are in development as of the date of this presentation. Note: Adjusted EBITDA is a non-gaap financial measure and is explained on page 3. 12

13 Avenue 1: Future Drop Downs Devon s Access & Victoria Express Pipelines Access Pipeline Victoria Express Pipeline Three ~180 mile pipelines from Sturgeon terminal to Devon s thermal acreage ~30 miles of dual pipeline from Sturgeon Terminal to Edmonton Capacity net to Devon: - Blended bitumen: 170,000 Bbl/d Devon ownership: 50% - ~$1B invested to date ~56 mile crude oil pipeline from Eagle Ford core to Port Victoria terminal ~300,000 Bbl of storage available Capacity: - 50,000 Bbl/d start-up capacity (expandable) Devon ownership: 100% - ~$70 MM invested to date 13

14 Avenue 2: Growing With Devon Martin County Expansion in West Texas Ajax: ~120 MMcf/d cryogenic processing plant Acreage dedication from Devon in Martin County Anchored by long-term, fee-based contract Expect to begin operations in 2016 Note: EnLink Midstream will own the Coronado assets upon the closing of the acquisition, but does not own them today. 14

15 Avenue 2: Growing With Devon Significant Production Growth in Cana-Woodford EnLink Assets in the Cana-Woodford Pipeline: 410 miles, 530 MMcf/d capacity Processing: one plant with 350 MMcf/d capacity Devon Assets in the Cana-Woodford Devon Rigs in Cana End of 2014: 5 rigs Avg. in 2015: 8 rigs (including non-operated) Acreage: ~280,000 net acres Workover activity yielded excellent results Acid treatments performed on 200+ wells Avg. rates per well increased 1-2+ MMCFE/d Payback period <3 months Emerging opportunity in STACK oil window 35,000 net acres Significant undrilled well inventory Expected wells drilled in 2015: 95 total Expected wells in STACK oil window: 20 15

16 Avenue 3: Organic Growth Projects Gulf Coast Market for Products & Services is Strategic to Growth Plans Bcf/d New Gas Pipelines to Gulf Coast Source RBN Energy, January 2015 Source: EIA/RBN Energy 16

17 Avenue 3: Organic Growth Projects Cajun-Sibon Expansion Complete 258 miles of NGL pipeline from Mont Belvieu area to NGL fractionation assets in south Louisiana (195 miles new, 63 miles re-purposed) 140 MBbl/d south Louisiana fractionation expansion Phase I completed Q4 2013; Phase II completed in Q Expected run-rate adjusted EBITDA of ~$115 MM Note: Adjusted EBITDA is a non-gaap financial measure and is explained in greater detail on page 3. 17

18 Avenue 3: Organic Growth Projects JV with Marathon to Build NGL Pipeline in South LA New Assets in Development 30-mile, 10 NGL pipeline from EnLink s Riverside fractionator to Marathon Petroleum s Garyville refinery Expected to be operational in first half of 2017 Strategic Benefits 50/50 JV with Marathon Petroleum Corp. Marathon to support the project with 50% of capital cost and long-term, fee-based contracts for butane and natural gasoline transportation, supply and optional storage EnLink to construct and operate the pipeline First bolt-on project to Cajun-Sibon expansion * Assets are in development as of the date of this presentation. * 18

19 Avenue 3: Organic Growth Projects Ohio River Valley Condensate Pipeline, Stabilization & Compression System Expansion New Assets In Development 45-mile, 8 condensate pipeline with an expected capacity of ~50,000 Bbl/d 6 new condensate stabilization and natural gas compression stations with combined capacities of ~41,500 Bbl/d and ~560 MMcf/d, respectively Once complete, EnLink s assets in the Utica/Marcellus will include: 250 miles of pipeline 11 natural gas compression and condensate stabilization facilities with total capacity of ~1.2 Bcf/d and ~60,000 Bbl/d, respectively Over 110 trucks Eight brine disposal wells ~630,000 Bbl of above ground storage Strategic Benefits Leverages and expands EnLink s footprint of midstream assets in the Utica/Marcellus Supported by long-term, fee-based contracts * * * Deploying over $250 MM in capital; increases EnLink s investment in the ORV to over ~$700 MM * Assets are in development as of the date of this presentation. 19

20 Avenue 4: Mergers & Acquisitions Gulf Coast Natural Gas Assets Closed on ~$235 million acquisition from Chevron on November 1 st Creates opportunities to optimize Louisiana assets and convert redundant natural gas pipelines to other services ~1,400 miles of natural gas pipelines in three systems spanning from Port Arthur, TX to the Mississippi River corridor ~11 Bcf of natural gas storage capacity in three south Louisiana caverns Ownership and management of title tracking services offered at Henry Hub Expected near-term acquisition multiple: ~10x adjusted EBITDA Note: Adjusted EBITDA is a non-gaap financial measure and is explained in greater detail on page 3. 20

21 Avenue 4: Mergers & Acquisitions Coronado Midstream in Midland Basin Announced ~$600 million agreement to acquire Coronado Midstream Holdings LLC on Feb. 2, 2015 Coronado s assets include: ~175 MMcf/d of gas processing capacity ~270 miles of gas gathering pipelines with ~35,000 horsepower of compression Under construction: ~100 MMcf/d of processing capacity and gathering system expansions Underpinned by long-term contracts and production dedication from over 190,000 acres Key producers include Reliance Energy, Inc., Diamondback Energy, Inc. and RSP Permian, Inc. Expected long-term acquisition multiple: 7-8x adjusted EBITDA with $400-$600 of additional capital expenditures Note: EnLink Midstream will own the Coronado assets upon the closing of the acquisition, but does not own them today. 21

22 Avenue 4: Mergers & Acquisitions LPC Crude Oil Logistics Business Closed on acquisition of LPC Crude Oil Marketing, LLC ( LPC ) on January 31, 2015 for ~$100 MM LPC s assets include: 13 pipeline and refinery injection stations, ~67 miles of crude gathering systems 43 tractor trailers Extensive crude oil first purchasing operation Acquisition Multiple: ~8x run rate adjusted EBITDA Note: Adjusted EBITDA is a non-gaap financial measure and is explained in greater detail on page 3. 22

23 EnLink Midstream Today & Tomorrow EnLink Midstream Today EnLink Midstream Potential Future in 2017 Drop Downs Growing with Devon Organic Growth M&A CANADIAN OIL SANDS Access Pipeline Drop down Complete West Texas Growth: Bearkat, Ajax, Coronado & LPC acquisitions Cana Growth Midstream Holdings Drop Down Complete Victoria Express Drop Down Complete ORV Condensate Pipeline and Stabilizers Complete E2 Drop Down Complete South Louisiana Growth: Cajun- Sibon, Marathon JV, Gulf Coast Acquisition 23

24 Our Strategy: Stability Plus Growth A Stable Investment in the MLP Space Top tier midstream energy service for our customers Stability of cash flows ~95% fee-based contracts ~50% of gross operating margin from long-term Devon contracts Leverage Devon Energy sponsorship for growth Expect significant growth from dropdowns Serve Devon E&P portfolio in its growth areas Strong organic growth South Louisiana, West Texas and Ohio River Valley (ORV) expansion projects Top tier balance sheet Investment grade credit rating at ENLK since inception Strong liquidity with a new $1.5 billion credit facility Note: Adjusted EBITDA and gross operating margin are non-gaap financial measures and are explained on page 3. 24