USA Compression Partners, LP 2018 J.P. Morgan Energy Conference June 19 20, 2018
Q1 2018 Recap Strong Start to 2018; Closing of CDM Acquisition Q1 2018 fleet HP of 1.85 million and average revenue generating HP of almost 1.7 million Average active HP up 60,000 over Q4 Operational Average horsepower utilization of…
CDM Acquisition On April 2nd, USA Compression completed the previouslyannounced 1.7bn acquisition of CDM Resource Management Resulted in Energy Transfer Equity acquiring the GP interest and 48% LP interest in USAC Simplified…
Compelling Strategic Rationale Financially and operationally accretive Attractive combination of two Complementary focus on large HP infrastructure applications domestic compression Minimal customer and geographic overlap…
Geographic Presence Minimal Geographic Overlap Northeast Region 22% MidCon Region (OK) 17% Southeast Region (ArkLa, Rockies, NE Texas) 15% Permian Region 28% Gulf Coast Region (LA, TX Coast, TX South) 18%…
Key Transaction Points 1.7 bn total consideration for CDM Resource Management funded through: USAC equity taken back by Energy Transfer family: 435mm Preferred Equity: 500mm 9.75% coupon (Lead investor: EIG Global) Senior Notes:…
Pro Forma Organizational Chart Energy Transfer Equity, L.P. USA Compression Public Holdings, LLC USA Compression GP, Unitholders Energy Transfer LLC 7.9% Partners, L.P. 44.3% (our general partner) 12.9% LP LP LP…
Macro Overview & Demand Drivers
Domestic Natural Gas Supply & Demand Growth Natural Gas Supply & Demand Continues to Grow as does the need for midstream infrastructure to move it through the pipeline system EIA projects significant increase in natural gas demand…
Macro Thesis: The Shift to Shale Shale Gas Expected to be the Primary Source in Future Shale Ramp: Production from shale has now pulled Shale gas is typically produced at lower wellhead even with all other sources pressures (050…
Key Industry Drivers for Compression Services Compression is Critical Midstream Infrastructure for Producing & Transporting Hydrocarbons 85% of USACs business (by HP) is installed in natural gasbased infrastructure applications Overall…
Customer Activity E&P Activity Rig count continues strength as E&Ps increase capex Producers showing more discipline; attractive returns driving spending Marcellus Operators gaining efficiencies in a world of 60/Bbl oil and…
USAC Overview
Key Strategic Priorities Nearterm focus on integrating all aspects of CDM into USAC Successful CDM Alignment of strategy / policies / procedures is critical; build a single culture Integration Extract synergies as integration takes…
Business Model Allows for Prudent Capital Spending.. Large HP focus ideally suited for growth and stability Advent of shale production has changed the industry: demand for larger, more flexible assets Assets provide growth when…
..Leading to Cash Flow and Asset Stability Through Cycles Utilization Trough (May 16) to Horsepower Utilization current: 9% HH Nat Gas /MMBTU 100.0% 14 90.0% Horsepower 12 utilization average: 80.0% 93% for over a…
Fleet Overview Horsepower Mix Fits Like a Glove Pro Forma, Large Horsepower Focus Remains Paramount USAC Standalone USAC Pro Forma Fleet Horsepower % Total Pro forma, USAC Fleet Horsepower % Total Less than 400 HP 333,004 18.0% will…
Combined Customer Overview Top 20 Customers: Diverse Counterparties & LongTerm Relationships % of Length of Total % of Length of Total Customer Rev(1) relationship HP Customer Rev(1) relationship HP(2) Independent Public E&P 10% 17…
Large Horsepower Gas Applications Drives Stability Compression Unit Size Matters USAC Focus: Gas Compression Industry: Key Characteristics by Size Small Medium Large Ex. Large XX Large Commentary Compression More 400 1,000 1,500…
Balancing Distribution Stability and Leverage Annualized Distributions per LP Unit DCF (and Cash) coverage (1) for Q1 2018 was 1.03x Riverstone did not participate in DRIP USAC Historical Leverage(2) Managed…
USAC Standalone Operational and Financial Performance Avg. Revenue Generating HP (000s) Revenue (MM) mm HP 271 300 2007 2017 280 1,800 1,663 266 2007 2017 1,506 15% CAGR 1,600 250 15% CAGR 1,409 1,378 222 1,400 1,201 1,200 200…
USAC Investment Highlights USACs Business Prospects Driven By Positive Macro Drivers in the Midstream Industry Continued focus on infrastructureoriented compression applications; compression is critical to Critical transporting…
Appendix
Compression Throughout the Value Chain Midstream Compression Offers Cash Flow & Customer Stability Lower (Sm. Volumes) Pressure Regime Higher (Lg. Volumes) Crude Oil Wells RateBase Applications Gas Lift Midstream Applications…
NonGAAP Reconciliations Three Months Years Ended ( in 000's) Ended March 31, December 31, 2018 2017 2017 2016 2015 Net income (loss) (15,370) 1,552 11,440 12,935 (154,273) Interest expense, net 9,219 5,674 25,129 21,087 17,605…
NonGAAP Reconciliations, contd. Years Ended December 31, ( in 000's) 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Net income (loss) 11,440 12,935 (154,273) 24,946 11,071 4,503 69 10,479 21,228 20,911 7,122 Interest expense,…
NonGAAP Reconciliations, contd. Three Months Ended ( in 000's) March 31, December 31, March 31, 2018 2017 2017 Net income (loss) (15,370) 4,546 1,552 Plus: Noncash interest expense 704 545 547 Plus: Noncash income tax expense 20 90…
NonGAAP Reconciliations, contd. ( in 000's) Guidance Net loss (50.0) million to (30.0) million Plus: Interest expense, net 84.5 million Plus: Depreciation and amortization 235.0 million Plus: Income tax expense 0.5 million…
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