Presenter Bios Senior Leadership Team With Over 100 Years of Combined Energy Experience Founder of Summit Midstream and a member of the Board of Directors of Summit Midstream Partners, LP and Summit Midstream Steve Newby - Partners,…
Table of Contents I. Executive Summary II. 2016 Drop Down Review III. Macro Perspectives A. Utica / Marcellus B. Williston Basin C. Piceance / DJ / Barnett IV. Engineering, Construction & Operations V. Health, Safety,…
I. Executive Summary Steve Newby, President & CEO
SMLP Overview Summit Midstream Partners, L.P. (NYSE: SMLP) is a growth-oriented limited partnership Org Structure focused on developing, owning and operating midstream assets strategically located in core producing unconventional (2)…
Diverse Portfolio of Basins, Customers and Commodities Handled Utica Williston Piceance / DJ Barnett Marcellus 2Q16 Segment Adj. 17 MM (21%) 19 MM (24%) 26 MM (32%) 14 MM (17%) 5 MM (6%) EBITDA(1) 2Q 2016 Nat Gas: 24 MMcf/d…
Evolution of SMLPs Business Profile 2016 Drop Down continues to further diversify SMLP geographically while enhancing its core focus on fee-based revenue Revenue Composition 2012 at IPO 2016E 2019E Variable Variable Variable 3%…
ECP Defines a Supportive Sponsor Reviewing ECPs Track Record of Support Four drop down transactions since SMLP IPO in 2012 Four Drop Downs Assets dropped at EBITDA multiples ranging from 6.5x 9.3x at Attractive GP assumed…
II. 2016 Drop Down Review
Market Perception vs. Reality Market Perception of SMLP in 2H 15 What We Said December 2015 Summit Investments ownership of approximately 30 million SMLP units 1. ORPHAN RISK and 100% of the IDRs provides ECP with a powerful economic…
Transformational Drop Down Positions SMLP for Future Growth Highly Attractive Compelling valuation with consideration for Drop Down Assets based on a 6.5x multiple of average LTM EBITDA actually generated during 2018 and 2019 Valuation…
Impact of the 2016 Drop Down Transaction SMLP has outpaced the Alerian MLP Index by 55% since announcing the 2016 Drop Down Pre-Announce Total Return Post-Announce Total Return (1/1/2016 2/25/2016) (2/26/2016 8/5/2016) 110% 110%…
Attractive Valuation Based on Actual Future Performance Illustrative Deferred Payment Sensitivity Significant Structural Benefits ( in millions) '18 - '19 Avg. EBITDA 125 150 175 200 225 Total Net Investment Fixed at 6.5x EBITDA…
Structure Protects SMLP From Asset Performance & Development Risk The amount of the Deferred Payment is adjusted by the cumulative amount of capital expenditures and EBITDA generated by the assets over the deferral period (through…
Structure Provides Deferred Payment Financing Flexibility Deferred Payment Plan of Finance Structure Offers Option Value 2016 Drop Down acquired with SMLPs revolver, avoiding dislocated The following is an illustrative analysis that…
III. Macro Perspectives Steve Newby, President & CEO Brad Graves, EVP & CCO
Natural Gas Demand Growth is Happening U.S. Natural Gas Demand + Net Exports set to grow from 65.9 Bcf/d in 2015 to 82.5 Bcf/d in 2020 Demand growth is real and not reliant upon winter weather: Gas-fired Power Demand: 26.2 Bcf/d in…
Crude Oil Market Outlook Production declines occurring; however, cautious on near-term prices as inventories remain a headwind After an 85%+ rally from its February 2016 lows, WTI prices have retreated 16% since the end of May 2016 58…
Drilling Productivity Gains Productivity Gains Bakken Drilling Efficiencies Rig count down Producers have partially offset lower commodity prices with 90% from peak drilling efficiency gains and cost savings from other New-well…
Strategic Perspectives by Area Themes by Basin UTICA / MARCELLUS WILLISTON Early innings of Utica development Cost reductions and other efficiency gains have offset lower commodity prices World-class reservoir that is poised to…
III A. Utica / Marcellus Poised to Deliver Bulk of Marginal Supply
Utica & Marcellus Growth Utica & Marcellus production growth has more than outpaced the declines experienced across the rest of the U.S. U.S. Natural Gas Production Since 2010, total U.S. natural gas production has grown by…
Basin Economics Justify Activity Levels Gulfport Drilling Economics at a 3 plus strip, we believe we can easily ramp to a six-rig program. Based on our current estimates, we anticipate this level of activity would result in a…
Utica Continuously Raising the Bar Improving Productivity Utica Growth Engine Summit entered the Utica Shale in 4Q 2013 with the Significant volume growth over the last two years announcement that it would acquire an option to acquire…
SMLP Has Participated Disproportionately in the Ramp of the Utica Utica Production Growth SMLPs build-out of its wholly-owned Summit Utica gathering system and the commissioning of the OGC dry gas system have enabled it to grow its…
Utica Growth How Do We Get There Large Inventory of Drilling Locations Asset Footprint Based on existing leaseholds, SMLP estimates that its customers have 1,200 to 1,500 future drilling locations in its Utica AMIs Acre Spacing…
Basin Positioning & Outlook SMLPs Northeast assets have exposure to the liquids-rich Marcellus in West Virginia and the dry gas, wet gas, and condensate windows of the Utica in Ohio Area Positioning, Strategy & Outlook Geographic…
III B. Williston Basin Weathering the Storm
Williston Basin Growth SMLP still tracking to its Polar & Divide drop down multiple guidance despite 25%+ decline in crude oil strip since transaction was announced in May 2015 SMLP Doing What We Say How We Did It SMLP Announces 255…
Significant Efficiency Gains Overview Avg. Drilling & Completion Costs(1) At its peak, there was a significant amount of profit margin and 9.0 8.0 redundancy in the North Dakota oil and gas value chain compared to other shale plays…
Translates Into Enhanced Producer Returns Whiting Drilling Economics (1) Our Williston Basin enhanced completion technique continues to perform well, and our wells are tracking at 900,000 barrels of oil equivalent per well type curve…
Significant Development Opportunities Exist Williston assets have a stable base of cash flow and offer upside potential: Completing the backlog of drilled but uncompleted wells already on the system In-fill drilling locations require…
Basin Positioning SMLP has an expansive footprint in the northern core of the Williston Basin Area Positioning, Strategy & Outlook Geographic Footprint Area Positioning Expansive footprint Liquids System 1,100+ miles of crude oil,…
III C. Piceance / DJ / Barnett Dont Judge a Book by its Cover
Resiliency of SMLPs Piceance Footprint Highly contracted business model enables SMLP to avoid negative impact of declining volumes Since 2013, volume throughput on SMLPs Piceance Volumes(1) Piceance system has declined at a 5.4% 2,250…
Piceance Basin A Changing Landscape Recent acreage trades and fresh capital have stimulated production activity in SMLPs Piceance Basin Ursa Announces Acquisition of Noble Sells its Piceance Terra Energy Agrees to Acquire Antero…
Piceance Basin Potential Implications for Summit Transaction Details Selected Asset Details Acreage Acquired(1) Close Date: April 8, 2016 200,000 net acres(1) Detail on Transaction Value: 910MM 10,000 gross drilling locations(1)…
Niobrara Permitting Activity Showing Signs of Strength(1) Since January 1, 2016, there have been several new horizontal drilling permits granted within close proximity to Summits existing Niobrara footprint 75% of permits have been…
Basin Positioning Piceance / DJ Positioned in the core of the Piceance/DJ Basins with exposure to the liquids-rich Mesaverde formation as well as the emerging Mancos & Niobrara formations Area Positioning, Strategy & Outlook…
DFW Midstream Outperforming Basin Trends SMLPs location in the core of the Barnett has enabled it to maintain relatively flat volumes despite strong headwinds elsewhere in the basin Since 2013, volume throughput on SMLPs Barnett…
Basin Positioning Barnett Natural gas gathering in the core of the core of the Barnett Area Positioning, Strategy & Outlook Geographic Footprint Area Positioning & Strategy System fully built-out with minimal maintenance capex…
IV. Engineering, Construction & Operations Leonard Mallett, EVP & COO
EC&O Structure EC&O Team Composition West Operations Technical Services Control Center Engineering East Operations Operators Technicians Controllers Engineers Operators Plant & Pipeline Measurement System Controllers Project Management…
2016 EC&O Highlights No significant injuries, vehicle accidents or spills Safety Recently passed PHMSA audit in North Dakota 2Q 2016 Controllable Opex per Mcfe was the lowest it has been at SMLP in the past two years Cost…
Asset Teams Purpose and Structure I&E Engineering Mechanical Operations Manager Maintenance Measurement Commercial Maximizing use of technical talent across Summit Creates accountability within each asset…
Ability to do Heavy Development Summit Investments / SMLP have invested 1 billion of organic capex since 2013 Williston Utica 530 million of organic capex 175 million of organic capex since 2013 since 2013 Approximately 45 miles of…
Utica Shale - Sand Hills Dehy Station Construction 54
Utica Shale - Sand Hills Dehy Station Construction 55
System Integrity Keeping the System Healthy Maintain first class operations staff Mechanical maintenance program yielding 99% on compressor and pump availability Operate all our own compression Comprehensive Pigging Program…
SOCC - Best Management Practices Summit Operations Control Center Field Operators by Location 43 Field Summit Operations Control Center (SOCC) Ops SOCC is manned 24 hours a day, seven days a 9 week, 365 days a year Field 10 Ops…
Key EC&O Takeaways Safety and Environmental compliance is Summits top priority Major projects are Strong EC&O Team Year to date weve executed on time is in place, ready done an excellent and on budget, and focused on job of…
V. Health, Safety, Environmental & Regulatory Affairs Brock Degeyter, EVP, General Counsel & Chief Compliance Officer
HSERFully Developed Team of Qualified Professionals Summits dedication to health, safety, environmental and regulatory compliance is industry-leading within the midstream sector Currently employ 25 professionals with full-time focus on…
Safety Culture: 9 Core Safety Principles Each of Summits employees and contractors is responsible for adhering to our 9 Core Safety Principles 61
Safety Culture: Enterprise-Wide Commitment Employee Safety: Safety Meetings are held (at least) monthly in each regional office and are led by our local safety representatives A member of the HSER management team attends the field…
VI. Financial Overview Matt Harrison, EVP & CFO
Growing and Diversifying SMLPs Business Key Observations Exposure to Multiple Basins(1) SMLP has continued to grow and diversify its business across multiple facets 300 286 263 7% 250 9% 223 17% Segm ent Adjusted EBITDA…
Conservative Financial Strategy Strong balance sheet and liquidity enables SMLP to execute its growth strategy Actual Targeting long-term leverage ratio of 3.5x 4.0x (s in millions) Jun-16 529 million of borrowing availability at…
Consistent Ratings Despite Improved Scale and Diversification Proven Track Record of Growth, Diversification and (1) Scalability Adjusted EBITDA Liquidity Market capitalization 1,502 1,308 1,066 518 788 536 433 375 280 208…
Financing the Deferred Payment The 2016 Drop Down structure allows SMLP to pick its spots to finance the Deferred Payment Ability to opportunistically access the debt and equity capital markets with proceeds used to prepare the…
2016 Financial Guidance SMLP will take a measured approach with regard to DPU growth in 2016. In the near-term, SMLP intends to focus on building distribution coverage and strengthening its balance sheet Guidance Range FY 2016 (…
VII. Investment Considerations Why Own SMLP Marc Stratton, Senior Vice President & Treasurer
SMLP Units Poised to Benefit From a Continued Market Rebound Broader MLP market, as defined by the AMZ, continues to trade at significantly elevated spreads relative to long-term treasury yields SMLP continues to trade at significantly…
Attractive Price Relative to Selected G&P MLPs Historical SMLP and G&P(1) Distr. Yields Distribution Yield and Growth (2) 22.0% 20.0% Above Median Below Median Distribution Yield / Spread to Selected SMLP Yield 18.0% 17.0% 18%…
SMLP Key Takeaways Visible cash flow growth a function of SMLPs contract portfolio, diversified operations and capital position 2016 Drop Down provides SMLP with scale and further diversification by basin, commodity, Visible Organic…
NYSE: SMLP www.summitmidstream.com 74
VIII. Appendix: Non-GAAP Reconciliations
2Q 2016 MVC Shortfall Payments Three Months Ended June 30, 2016 MVC Gathering Adjustments to MVC Net Impact to (s in 000s) Billings Revenue Shortfall Payments Adjusted EBITDA Net change in deferred revenue related to MVC shortfall…
Non-GAAP Reconciliations Three Months Ended June 30, Year Ended December 31, (s in 000s) 2016 2015 2015 2014 2013 Net Income (Loss) (50,555) (2,396) (222,228) (47,368) 47,008 Add: Interest expense 16,035 15,599 59,092 48,586…
Reconciliation of EBITDA to Adjusted Distributable Cash Flow Three Months Ended June 30, Variance (s in 000s) 2016 2015 % Adjusted Distributable Cash Flow: EBITDA (6,068) 39,171 (45,239) (115% ) Add: (1) Proportional adjusted EBITDA…
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