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Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P.

Sunoco Logistics Partners L.P. · Dec 8, 2015 · 85 slides

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Slides

  1. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 1
    Sunoco Logistics Partners L.P. NYSE Wells Fargo Securities SXL Energy Symposium December 8, 2015
  2. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 2
    Agenda Sunoco Logistics Overview p. 4 Crude Market Summary p. 17 Permian Basin p. 39 Crude Projects / Nederland Terminal p. 43 NGL Market Outlook p. 47 NGL Projects p. 58 Marcellus / Utica Shale p. 62 Mariner East Marcus…
  3. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 3
    Sunoco Logistics Overview
  4. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 4
    Sunoco Logistics Assets Note: Bakken and Bayou Bridge Pipelines are expected to start up in 2016. 5
  5. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 5
    Sunoco Logistics and Energy Transfer Assets Note: Bakken and Bayou Bridge Pipelines are expected to start up in 2016. 6
  6. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 6
    Energy Transfer Family of Companies LP Interest, GP Interest, IDRs ENERGY TRANSFER EQUITY, L.P. GP Interest, IDRs (NYSE: ETE) LP Interest, Class H Units(1) GP Interest, IDRs LP Interest, GP ENERGY TRANSFER ENERGY TRANSFER SUNOCO…
  7. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 7
    Highlights Excellent Third Quarter Performance: 289MM Adjusted EBITDA 2nd highest quarter ever Permian Express 2 project operational throughout quarter 3Q Crude Oil Acq. & Mktg. results include 7MM of prior period expenses Record…
  8. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 8
    Highlights Distributions: 14th consecutive quarterly increase of 5% 42nd consecutive increase overall 3Q increase: 1.75/unit to 1.83/unit (annualized) 20% increase over 3Q14 distribution of 1.53/unit (annualized) Commencement of…
  9. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 9
    Adjusted EBITDA: Ratable and Market Related 1,200 1,073 Maximize asset base by 1,000 971 taking advantage of 871 Adjusted EBITDA (MM) 810 market opportunities 800 600 573 Distributions based on ratable cash 400…
  10. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 10
    EBITDA by Segment (MM) 2011 2012 2013 2014 LTM* Crude Oil Pipeline 207 275 349 377 402 Crude Oil Acq. & Mktg. 148 239 233 163 103 Terminal Facilities 149 225 233 346 390 Products Pipeline 69 71 56 85 178 Total EBITDA 573 810 871 971…
  11. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 11
    14 Consecutive Quarters of 5% Distribution Growth Guidance 5% quarter over quarter increases in 2015 12
  12. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 12
    Organic Expansion Capital 13
  13. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 13
    Acquisitions *SXL does not comment on future acquisitions *Includes the acquisition of an additional interest West Texas Gulf Pipeline 14
  14. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 14
    16 Successful Major Projects Major Organic and Joint Venture Projects: 3 West Texas Crude expansion projects (crude oil) Permian Express 1 (crude oil) Permian Express 2 (crude oil) Eaglebine Express (crude oil) Granite Wash…
  15. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 15
    Actively Developing Publically Disclosed Major Organic and Joint Venture Projects: Bayou Bridge St. James 30% Ownership (crude oil) Launched open season in 3Q15 Mariner East 2 Expansion (natural gas liquids) Launched open season in…
  16. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 16
    Crude Market Summary
  17. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 17
    Dated Brent Daily Price 2008 Present 18
  18. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 18
    Total Commercial Stocks In The 3 Major OECD Markets Source: PIRA 19
  19. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 19
    World Oil Supply and Demand (2014 Versus 2013) Source: PIRA 20
  20. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 20
    World Oil Supply and Demand (2015 Versus 2014) Source: PIRA 21
  21. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 21
    World Oil Supply and Demand (2016 Versus 2015) Source: PIRA 22
  22. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 22
    Oil Demand
  23. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 23
    Annual GDP Growth by Key Area, % Source: PIRA 24
  24. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 24
    World Oil Demand Growth (2010-2016) Source: PIRA 25
  25. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 25
    Long-Term Oil Demand Growth Developed & Emerging Areas Source: PIRA 26
  26. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 26
    China Oil Demand Trends MM BPD China Oil Demand M BPD Year on Year Change 12.0 800 11.5 600 11.0 400 10.5 10.0 200 2013 2014 2015 2016 2013 2014 2015 2016 Source: PIRA 27
  27. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 27
    Oil Supply
  28. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 28
    Cost to Develop New Supplies are Down from 2014 but Many Projects Remain Unprofitable At Prices Below 50/Bbl Source: PIRA 29
  29. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 29
    Top 20 Crude Producers October 2015 (MMB/D) Source: PIRA Note: Yellow signifies OPEC member, Blue signifies not OPEC member 30
  30. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 30
    Non-OPEC Supply Growth (2012-2016) U.S. drives supply growth to a decline in 2016 Source: PIRA 31
  31. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 31
    World Non-OPEC Liquids Supply Growth (Change Year-Over-Year) Source: PIRA 32
  32. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 32
    Latest EIA Weekly U.S. Crude Oil Production Data Source: Energy Information Administration 33
  33. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 33
    U.S. Production Permian, Bakken, & Eagle Ford Source: Energy Information Administration 34
  34. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 34
    North American Midcontinent Crude Production Growth (MBPD) Source: PIRA 35
  35. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 35
    OPEC Crude Production (MMB/D) Source: PIRA 36
  36. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 36
    OPEC Spare Capacity at Historic Lows Source: PIRA 37
  37. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 37
    Overall Crude Market Summary Low Prices are causing a supply response The US Shale decline will be modest Other non OPEC could have larger, longer lasting impacts OPEC market share needs to grow Highest OPEC utilization in history…
  38. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 38
    Permian Basin
  39. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 39
    North American Midcontinent Crude Production Growth (MBPD) Source: PIRA 40
  40. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 40
    Permian Production By Year (MBPD) Actual Projected Production There has been a pause in growth in 2015 and a slight decline is expected in 2016 SXL poised for growth as production rises with our PE 3 project Source: PIRA 41
  41. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 41
    Permian Operators Are Less Leveraged And More Liquid Source: PIRA 42
  42. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 42
    Crude Projects / Nederland Terminal
  43. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 43
    Crude Projects: 9 Successful Open Seasons 3 West Texas Crude Expansions Granite Wash Extension Permian Crude to multiple markets Granite Wash Crude to multiple markets 2012 - 2014 4Q 2014 Permian Express 1 Permian Crude to…
  44. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 44
    Crude Projects: 11 Successful Major Projects Bakken Pipeline Joint Venture 4Q 2016* Bayou Bridge Joint Venture 1Q 2016** Committed Fee-based Income *Expected Start-up **1Q 2016 Expected Start-up for Nederland to Lake…
  45. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 45
    Nederland Terminal 25 MMB Crude and NGL terminal Pipeline connected to most major crude pipelines and Mt Belvieu NGL Export Capability Crude Export Capability Connected to SPR 46
  46. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 46
    NGL Market Outlook
  47. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 47
    NGLs: U.S. as Big as Next 4 Largest Countries Combined Source: PIRA 48
  48. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 48
    Global NGL Field Production Source: PIRA 49
  49. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 49
    U.S. LPG Imports and Exports (2000 2014) Source: PIRA 50
  50. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 50
    Profile of U.S. LPG* Exports in Jan. Aug. 2015 Source: PIRA 51
  51. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 51
    Petroleum Prices Low crude price and high shipping cost in 2015 Source: PIRA 52
  52. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 52
    Fractionation Margins (2016 2020) Crude price increase Naphtha price moves with crude Ship cost declines dramatically 50% growth in VLGCs Panama Canal expansion Slower export growth Margin improvement is expected 53
  53. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 53
    International Propane Prices Discounts to Naphtha /Ton /Ton Cold winter Low crude price Lower shipping costs to Asia will change the market dynamic Source: PIRA 54
  54. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 54
    US Ethane Penetrating the European Market First movers (Mariner East) Ineos crackers in Rafnes, Norway and Grangemouth, Scotland Borealis cracker in Stenungsund, Sweden Recent Development Announced on Monday 11/9/15 Shell / Exxon…
  55. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 55
    Global Steam Cracker Feeds Source: PIRA There is currently 5 MMBPD of Naphtha feeding steam crackers 56
  56. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 56
    Ethylene Cracking Capacity (January 2016) MM Tons % of Market U.S./Canada 33.5 20.5% Europe 25.2 15.4% Latin America 7.2 4.4% Africa/Middle East 32.3 19.8% China 22.5 13.8% SE Asia 24.3 14.9% Other Asia 13.6 8.3% FSU 4.7…
  57. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 57
    NGL Projects
  58. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 58
    Mariner Franchise: 4 Successful Open Seasons Mariner East 1 Ethane / Propane from Houston to Marcus Hook 4Q 2014* Mariner West Ethane from Houston to Sarnia 4Q 2013 Mariner South Mariner East 2 Propane / Butane from Mont…
  59. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 59
    Mariner South Natural Gas Liquids Mariner South Propane / Butane from Mont Belvieu to Nederland End of 2014 SXL Terminal Lone Star Fractionators Committed Fee-based Income 60
  60. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 60
    Mariner South at Nederland Terminal 61
  61. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 61
    Marcellus / Utica Shale
  62. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 62
    Marcellus / Utica NGL Forecast Source: Bentek 63
  63. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 63
    Mariner East Marcus Hook Industrial Complex Mariner East + Marcus Hook providing both intrastate and interstate service to PA, regional, and international markets 64
  64. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 64
    Mariner East Capacity 70 MB/D for ME 1 Initial Capacity 275 MB/D for ME 2 Connecting to 4 Fractionator Upside Capacity 800 MB/D for Mariner East Origin Locations in the Basin World-Class NGL Facility at Marcus Hook Industrial…
  65. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 65
    Marcus Hook Industrial Complex Mariner Infrastructure 66
  66. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 66
    Marcus Hook Terminal Build-Out 67
  67. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 67
    Mariner East Service Update ME 1 started up propane End of 2014 (30 MBPD, 7 months early) ME 1 ethane expected by end of 2015 ME 2 scheduled for the end of 2016 ME 2X is in open season soliciting interest Marcus Hook is the…
  68. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 68
    Marcus Hook Industrial Complex 800 acre facility; former Sunoco Refinery Crude, products, and NGL storage 4 docks with deep water draft to handle VLGCs Pipeline connectivity: inbound and outbound Local refinery connectivity…
  69. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 69
    Marcus Hook is Advantaged over the Gulf Coast Northeast Winter Demand There is a seasonal increase in demand in the NE market Provides optionality Logistically Advantaged for Exports 1,500 miles closer to Europe, significantly cost…
  70. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 70
    Ship Channel Information 2014 Port of Port of Houston Philadelphia Channel project width 400 feet 800 feet General Port Traffic (ships & tugs) 163,866 4,440 Vessel delays (hours) 685 hours 0 Fog Delays (hours) 385 hours 0 Channel…
  71. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 71
    Marcus Hook Storage Fit for Purpose The NGL markets are LONG The propane and butane markets are no longer seasonal The US major markets (gasoline, diesel, jet fuel) do not have 6 months storage For example, current gasoline days…
  72. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 72
    PDH at Marcus Hook In Development
  73. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 73
    Global Propylene Supply and Demand - Global Propylene market is expected to grow by 33MM Metric Tons by 2020 - Lighter feed to crackers - PDH is a preferred choice 74
  74. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 74
    Propylene Supply and Demand 75
  75. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 75
    Why PDH in Marcus Hook Perfect location for local demand Better logistics Perfect location for propylene export to Northwest Europe Advantaged shipping and logistics costs Delivered cash cost competitive with international…
  76. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 76
    Marcus Hook Industrial Complex PROPOSED PDH Mariner Infrastructure 77
  77. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 77
    Summary
  78. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 78
    Key SXL Takeaways Recent History Strategic Focus on Crude and Natural Gas Liquids First Mover First West Texas crude projects on line since the shale boom First Marcellus propane project offering local, regional & international…
  79. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 79
    Project Execution in Progress 80
  80. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 80
    Key SXL Goals / Takeaways Going Forward Commitment to Growth New phase of growth in processing at Marcus Hook Opportunities within the Energy Transfer family M&A - Actively looking for right, strategic opportunities Commitment to…
  81. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 81
    Appendix
  82. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 82
    SXL Non-GAAP Financial Measures Twelve Months Ended December 31, (MM) 2011 2012 2013 2014 LTM Net Income 322 531 474 300 246 Interest expense, net 89 79 77 67 113 Depreciation and amortization expense 86 139 265 296 354 Impairment…
  83. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 83
    Historical Financial Results (MM) 2011 2012 2013 2014 LTM Crude Oil Pipelines 207 275 349 377 402 Crude Oil Acquisition & Marketing 148 239 233 163 103 Terminal Facilities 149 225 233 346 390 Products Pipelines 69 71 56 85 178…
  84. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 84
    SXL Key Financial and Operating Statistics 2011 2012 2013 2014 2015 Total Total 1st 2nd 3rd 4th Total 1st 2nd 3rd 4th Total 1st 2nd 3rd Total Financial highlights (in millions) Sales and other operating revenue Crude Oil Pipelines…
  85. Wells Fargo Securities SXL Energy Symposium – Sunoco Logistics Partners L.P. – slide 85
    SXL Key Financial and Operating Statistics 2011 2012 2013 2014 2015 Total Total 1st 2nd 3rd 4th Total 1st 2nd 3rd 4th Total 1st 2nd 3rd Total Reconciliation of Segment Operating Income to Net Income Attributable to Sunoco Logistics…

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