White Cliffs Pipeline David Minielly VP Operations 1
Forward-looking Information Certain matters contained in this presentation include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, included in this presentation regarding the prospects of our industry, our anticipated financial performance, NGL Energy Partners LP (NYSE: NGL) anticipated financial performance, management s plans and objectives for future operations, business prospects, the outcome of regulatory proceedings, market conditions and other matters, may constitute forward-looking statements. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that these expectations will prove to be correct. These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. Factors that might cause actual results to differ include, but are not limited to, our ability to comply with the covenants contained in and maintain certain financial ratios required by our credit facilities; NGL s operations which we do not control; the ability of our subsidiary, Rose Rock Midstream L.P. (NYSE: RRMS), to make minimum quarterly distributions; the possibility that our hedging activities may result in losses or may have a negative impact on our financial results; any sustained reduction in demand for the petroleum products we gather, transport, process and store; our ability to obtain new sources of supply of petroleum products; our failure to comply with new or existing environmental laws or regulations or cross border laws or regulations; the possibility that the construction or acquisition of new assets may not result in the corresponding anticipated revenue increases; any future impairment to goodwill resulting from the loss of customers or business; changes in currency exchange rates; and the risks and uncertainties of doing business outside of the U.S., including political and economic instability and changes in local governmental laws, regulations and policies, as well as other risk factors discussed from time to time in each of our documents and reports filed with the SEC. Readers are cautioned not to place undue reliance on any forward-looking statements contained in this presentation, which reflect management s opinions only as of the date hereof. Except as required by law, we undertake no obligation to revise or publicly release the results of any revision to any forward-looking statements. 2
DJ Basin, Niobrara Shale, and the Wattenberg Field 3
White Cliffs Pipeline White Cliffs is a 527 mile, 12-inch common carrier pipeline Originates in Platteville, CO, northeast of Denver and terminates at Rose Rock Midstream s storage facility in Cushing, OK Capacity of 70,000 barrels per day 20,000 barrels per day take or pay Platteville, CO 5,000 barrels per day minimum leased volume Healy, KS Owns 100,000 barrels of crude oil storage at the Platteville Station Anadarko/White Cliffs Pipeline leases 200,000 barrels of storage from Rose Rock Midstream at Platteville Station Leases 250,000 barrels from Rose Rock Midstream at Cushing terminal Four pumping stations Platteville, CO Sharon Springs, KS Cunningham, KS Deer Creek, OK 4
White Cliffs Pipeline Map 5
Structure of the Business White Cliffs Pipeline, L.L.C. currently has the following members: SemGroup 51% ownership Operated by Rose Rock Midstream Plains All American 34% ownership Anadarko 10% ownership Noble 5% ownership 6
Rose Rock Midstream Platteville Truck Unloading Facility Owned by Rose Rock Midstream Origin point of the White Cliffs Pipeline System Multi-bay unloading facility 10 bays Eight dedicated bays Four 5,000 barrel tanks State of the art offloading facility Producer owned and operated oil polishing facility 7
Rose Rock Midstream Platteville Truck Unloading Facility 8
Rose Rock Midstream Platteville Truck Unloading Facility 9
Platteville Truck Unloading Facility - Expansion 6 additional bays under construction ~ completion 4Q 2012 2 additional 5,000 barrel tanks 10
Rose Rock Midstream Cushing Terminal White Cliffs Pipeline Rose Rock Midstream Access to all Cushing storage terminals 11
Cushing is a Liquidity Hub Designated point of delivery for NYMEX crude oil futures contracts Cushing Commentary North American Oil Flow Continues to serve as the primary crude oil hub in the U.S. Growing volumes (Canada, unconventional plays) have led to strong storage levels Activity levels remain strong Significant takeaway capacity under development Cushing storage demand will continue to be strong; WTI discount expected to narrow Blending hub to handle various qualities of crude Cushing Is Here to Stay Alberta Basin Powder River Basin Platteville Alberta Oil Sands Permian Basin Bakken Shale Williston Basin Niobrara Denver Basin Eagle Ford Shale Cushing Houston Existing Major Crude Pipelines TransCanada Keystone Pipeline (Completed) TransCanada Keystone Pipeline (Proposed) Magellan Pipeline (Proposed) White Cliffs Pipeline Seaway Crude Pipeline Reversal Glass Mountain Pipeline ONEOK Pipeline (Proposed) Pony Express/Banner Pipeline (Converted or Proposed) Port Arthur Legend 12
Anadarko Gathering System Newly constructed gathering system completed in June by Anadarko Terminates at the White Cliffs Pipeline in Platteville, CO only outlet Currently transporting incremental production to White Cliffs Pipeline 13
White Cliffs Pipeline Volumes (Thousand Barrels per Day) 70 60 50 40 30 20 10 0 60.7 53.7 44.5 41.5 34.4 24.5 24.5 26.3 27.7 27.8 8.9 11.2 11.3 12.0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 2010 2011 2012 Healy White Cliffs Pipeline 14
DJ Basin Take Away Capacity White Cliffs Pipeline Suncor refinery Rail Long haul barrels by truck 15
White Cliffs Pipeline Expansion Currently holding an open season Closes October 22, 2012 Additional capacity of 80,000 barrels per day anticipated Estimated to be in service by the first half of 2014 16
Wattenberg Oil Trunkline 37 mile, 12-inch pipeline in DJ Basin 200,000 barrels of system storage Currently under construction ~ 4Q 2013 completion Transports Noble Energy production within the DJ Basin to White Cliffs Pipeline Long term agreement 17
Well-positioned to Benefit from Supply / Demand Fundamentals The Wattenberg Field currently produces an estimated 100,000 barrels per day, with Anadarko and Noble together accounting for approximately 65% to 70% of total production Condensate, a high gravity crude oil, is a byproduct of Wattenberg gas extraction that must be moved from the lease site to ensure continued gas production White Cliffs Pipeline provides flow assurance for Wattenberg gas production and access to alternative crude oil markets Existing outlets for Wattenberg oil production are limited to local refiner, trucking or railing to alternative markets Other Wattenberg producers include Petro-Canada, EnCana and Petroleum Development Corporation (PDC) With this field and the development, where many shale plays have struggled with infrastructure and have struggled with accessing competitive markets for the products, we re very well positioned to increase this production. - Robert Lawler, Anadarko Wattenberg continues to grow and produces strong returns due to low operating costs and strong liquid volumes. - Noble Energy website Just a few years into an oil rush precipitated by advanced horizontal drilling techniques in the Niobrara shale formation, companies with strong national and global footprints are naming northern Colorado's oil play as key in their 2012 production plans. - By Sharon Dunn, The Greeley Tribune 08/13/2012 18