August 2018 2018 EnerCom Oil and Gas Conference
Tailwater Introduction Middle-market private equity focused exclusively on the energy industry History of creating solutions oriented, value-added partnerships Well-established track record, having executed more than 100 transactions representing $18.8 billion in value over the last 20 years Invest growth equity across the midstream and upstream sectors Currently manage over $2.7 billion across five distinct funds of capital Growth Mindset, Partnership Oriented 2
Current Market Perspective Long-haul logistical constraints occurring throughout the U.S., particularly in the Permian Basin Tight frac capacity on Gulf Coast due to influx of NGL supply Master limited partnerships focusing on core-of-the core operations given capital markets constraints Latest generation well and completion design being applied successfully in new basins Continued call on U.S. crude supply for the foreseeable future Public markets requiring E&P operators to drill within cash flow, constraining upstream development plans 3
Case Study: EPIC Pipeline Overview Background & Overview In 2015, TexStar Logistics and Tailwater forecasted long-haul Permian Basin constraints and began developing crude and NGL takeaway pipeline projects to debottleneck the region The Eagle Ford Permian into Corpus Crude Pipeline ( EPIC Crude Pipeline ) will transport crude from both West Texas and the Eagle Ford into Corpus Christi, Texas The Eagle Ford Permian into Corpus NGL Pipeline ( EPIC NGL Pipeline ) will transport and fractionate natural gas liquids from West Texas into Corpus Christi, Texas In 2017, Tailwater and TexStar sold their interests in the EPIC projects and associated rights-of-way to Ares Management EPIC Crude System Map EPIC NGL System Map 4
Tailwater s Investment Strategy Well-established basins such as the Permian have become highly competitive As a result, Tailwater has focused on other basins with the following characteristics: Encouraging well results, where the play has not yet fully matured Old infrastructure designed for legacy development Competitive drill-bit economics given differentials Representative Investments Powder River & Big Horn Basins DJ Basin Arkoma Haynesville Acreage available for midstream dedications 5
Tailwater Platform: Representative Investments Gas gathering & processing East Texas, North Louisiana CEO: Fritz Brinkman Solids waste disposal Permian and Eagle Ford CEO: George Wommack Crude oil transportation South Texas CEO: David Ash Spent lubes processing Baytown, TX CEO: Jim Lelio Integrated Eagle Ford and Mississippi / Alabama CEO: David Biegler Water gathering and disposal Bakken, Permian CEO: Patrick Walker Gas gathering & processing Permian CEO: Jim Bryant Gas gathering & processing DJ Basin CEO: Charlie Beecherl Oil / gas gathering & gas processing Mid-Continent CEO: Brandon Webster Gas gathering, compression & treating Appalachia CEO: Robert Stiles and downstreamadjacent infrastructure CEO: Wes Martin Crude oil transportation Powder River / Big Horn Basin CEO: J. Patrick Barley Non-core midstream assets U.S. Lower 48 CEO: Roger Fox 6
Tailwater Non-Op Platform: Pivotal Petroleum Partners Tailwater s non-op platform owns interests in over 500 wells in leading basins across the U.S., providing valuable intelligence on well performance and development trends 7
Tailwater / Value Proposition Tailwater creates a win-win scenario for producers by providing upstream capital coupled with midstream expertise BP & XTO, the operators of 290,000 gross acres in East Texas/Louisiana, are targeting dry gas in the Haynesville and Bossier Black Stone Minerals (BSM) owns a portion of the working interest under the acreage operated by BP & XTO Canyon Creek Energy, the operator of 38,000 net acres in the Arkoma Woodford, is targeting wet gas in the Woodford and Mayes formations Verdad Oil & Gas, the operator of acreage in the DJ Basin, is targeting wet gas in the Wattenberg field Operator seeking to farmout a portion of acreage to accelerate upstream acreage development Operator seeking midstream solution for gas gathering and treating on a portion of the acreage to accommodate the anticipated production growth Operator seeking DrillCo capital to accelerate upstream acreage development Operator seeking midstream solution for gas gathering and processing solutions to support future drilling activity Operator seeking capital to help fund development plan Operator seeking midstream solution for gas gathering, processing and compression to support future drilling activity Tailwater was able to leverage its two strategic capital platforms to provide a holistic solution for both the upstream and midstream challenges Flexible and creative nonop capital solution to offset drilling costs Gathering and treating solution provided by bestin-class midstream operator with extensive in-basin knowledge and operational expertise DrillCo solution provided to accelerate upstream development Gathering and processing solution provided by bestin-class midstream operator with existing assets in the basin Formed joint venture to deploy sufficient capital and fund near-term, high visibility drilling plans Gathering, processing and compression solution provided by best-in-class midstream operator with extensive operational expertise 8
Contact Details Jason Downie Managing Partner Edward Herring Managing Partner David Cecere Partner Billy DeArman Principal wdearman@tailwatercapital.com Joel Fry Principal jfry@tailwatercapital.com Stephen Lipscomb Principal slipscomb@tailwatercapital.com 2021 McKinney Ave Suite 1250 Dallas, TX 75201 Tailwater Capital EnerCom Oil and Gas Conference August 2018 9
Questions