Analyst Day Water Solutions Overview December 17, 2018
Agenda Water Solutions Operations & Overview NGL Operations & Strategy Integrated Platform: Services by Region Contracting Strategy & Operational Efficiencies Pinedale Anticline DJ Basin Eagle Ford Basin Midland Basin Delaware…
Water Solutions Operations & Overview 4
What is Salt Water Disposal 1) During the process of drilling or fracking for oil and gas, fresh water is injected (along with other additives) into the hydrocarbon reservoir to increase pressure allowing the oil and gas to be pumped to…
The Disposal Process Water Tanks Sand Tanks Gun Barrel Tanks Skim Oil Tanks Oil is picked up and sold Water is piped to well and injected via Horizontal pumps 0 6
Barriers to Entry Land Owners & Royalties Long-term Contracts Local Relationships Regulatory Size & Scale Location & Geology 7
Efficiencies of 3rd Party Water Infrastructure Provider Producer Owned Water Disposal Vs. 3RD Party Water Disposal Exploration and Production expertise Salt Water Disposal expertise Higher cost per BBL Lower cost per BBL Smaller…
New Disposal Facility Development Land Purchase and Well Development Surface Development Operational Permitting 1. Determine Location for 1. Move in rig and drill to 1. Order all tanks required 1. Obtain station power from new…
Oil Sub-Play Break evens Breakeven Oil Price (1) Basin Map 0.00 20.00 40.00 60.00 80.00 100.00 W. Howard County - Wolfcamp A 1 31.26 STACK Meramec - Over-Pressured Oil 2 31.61 S. Delaware Basin - Reeves Wolfcamp A 3 31.99 Core…
Macro Trends in Our Basins Commentary 2016+ Initial Rates by Basin (2) Boe/d Max Mo.boepd Max Mo.boe20pd Well recoveries in the Delaware are dominating 1,600 the US unconventional arena despite a lower 1,400 1,248 1,164 percentage…
NGLs Assets Assets are are in the Strongest located Basins Basins in the Strongest Several basins receiving major capital deployment, some achieve more wells or lateral footage relative to others, but US L48 unconventional arena is…
NGL Operations & Strategy 13
Full Service Water Platform NGL is the largest wastewater midstream company in the United States NGLs integrated footprint spans 5 basins and multiple wastewater services Over 500 employees dedicated to Water Solutions Water…
Services by Region Water Disposal(1) Land Assets Water Supply Solids Solutions Water Pipelines 1 well plus multiple Acquired 2,479 acres 65 KBPD water 95% of water piped Anticline / wells in development north of the Anticline…
NGLs Contracting Strategy Targeting largest producers and best credit in core Key Customers operating areas Contract Type Initial Term MVCs and acreage dedications are primary contract 1) Producer A MVC 5 Years structures with…
Piped Water Trends 9/30/16 9/30/17 9/30/18 28 16 18 20 Piped Water by Region 29 (KBPD) 138 7 17 Total Piped Water (Excludes Bakken) 59 KBPD 213 KBPD 404 KBPD Piped % of Total Water 12% 32% 41% (Excludes…
Operating Efficiencies NGL has decreased its Total Opex/BBL Six Months Ending September 30 by 13% since FY17 Operating Leverage ( in Millions) 2016 2017 2018 CAGR As volumes increased at a 44% KBPD Water 498 676 1,040 44% CAGR,…
Estimated Produced Water Volumes by Basin KBPD - Oil 2018 2019 2020 2021 2022 DJ 262 290 357 384 380 Eagle Ford 1,325 1,408 1,615 1,817 1,924 Permian 3,338 3,573 3,965 4,286 4,599 Total KBPD - Oil 4,925 5,271 5,937 6,487 6,904…
Incremental Capacity Utilization & EBITDA 100 KBPD increase in utilization adds an estimated 15MM in incremental EBITDA Assumes variable costs remain consistent with 1H-FY19 results and no incremental fixed costs are incurred…
NGLs Seismicity Management Program NGL Management is closely monitoring seismic activity and has been working with regulators in all areas of operations (TX, NM, and CO) as well as in Oklahoma to better understand and minimize the…
Seismicity in Delaware Basin 320 earthquakes over 2.0 magnitude in the focus area since January 2017 The vast majority of the activity has centered near the town of Pecos, TX No seismic activity noted in southern New Mexico since…
Pinedale Anticline (WY) 23
Anticline Analytics Strategy Volume Trends (KBPD) 1) Increased horizontal fracking will greatly extend the life of the field 2) Acquired royalty free land and developing additional disposal wells and pipeline assets 3) Continue to…
DJ Basin (CO) 25
DJ Basin Operating Activity Daily Production and WOR DJ Basin Active Rigs 900 1.0 WY NE 800 0.9 700 0.8 UT CO 0.7 WOR, Bbl/Bbl 600 Mboe20/d 0.6 500 0.5 400 0.4 300 0.3 200 0.2 100 0.1 0 0.0 2012 Q1 2012 Q2…
DJ Basin Assets Completed In Development HIGHPOINT 27
DJ Basin Analytics Strategy Volume Trends (KBPD) 1) Continue to develop new pipelines including a bi- directional trunk line (produced water to the SWD and treated water back to the central facility) 2) Increase pipeline volumes as a…
Eagle Ford Region (TX) 29
Eagle Ford Basin Operating Activity Daily Production and WOR Eagle Ford Basin Active Rigs 2,500 2.5 OK AR NM 2,000 2.0 TX WOR, Bbl/Bbl Mboe20/d 1,500 1.5 1,000 1.0 500 0.5 0 0.0 2012 Q1 2012 Q2 2012 Q3 2012 Q4…
Eagle Ford Basin Assets 31
Eagle Ford Basin Analytics Strategy Volume Trends (KBPD) 1) Develop new pipelines and increase pipeline % of total volumes 2) Continue to increase commitments (added substantial minimum volume commitments in 2018) 3) Growth via…
Midland Basin (TX) 33
Midland Basin Operating Activity Overview (1) Current Rig Activity New well production per rig Basin production Boe 20 / day Mboe 20 / day Central Basin Platform 900 4500 Delaware Basin 800 4000 Midland Basin 700 3500 600 3000 500 2500…
25% of AllLocated Strategically US Rigin Activity Occurs the Prolific in the Basin Delaware Delaware Delaware rig activity continues to set records with 263 rigs running all focused on longer laterals to drive capital efficiencies,…
Delaware Performance by county Daily Water Rate vs. Time Daily Oil Rate vs. Time Mbbl/d County Name Daily Water (1) Mbbl/d County Name Daily Oil (1) 3,500 3,500 Reeves 934.4 Reeves 320.9 3,000 Eddy 632.7 3,000 Lea 221.5 Loving 581.0…
Delaware Basin Geologic Overview Delaware Basin Water-Oil-Ratio by Bench 1-2 mile Bone Spring Bone Spring (Full) Wolfcamp XY Wolfcamp A Analogous to Spraberry Shale in Midland with great well results WOR WOR WOR 1 mile 2nd BS…
Delaware DELAWAREBasin BASIN Type Curves Delaware Basin Water Type Curve Delaware Basin Water-to-Oil Ratio 2,000 800 4.8x 1,800 700 4.5x 1,600 4.3x Cumulative Production (MBbl) 600 Avg. Water-Oil Ratio Daily Production…
New Mexico Sub-Region Assets NGL North Ranch NGL South Ranch 42
Ranch Acquisition Strategy NGLs strategy is to provide an integrated NGLs McCloy and Beckham Ranch Acquisitions(1) service offering to our E&P customer base spanning disposal, land use, freshwater, solids and pipeline…
Rigs & Active Permits Near NGL Ranches NGL Striker 6 NGL Striker 2 NGL Striker 5 44
Freshwater Strategy NGLs strategy is to provide an integrated NGLs Freshwater Assets(1) service offering to our E&P customer base spanning disposal, land use, freshwater, solids and pipeline transportation NGL has capabilities to…
Hydrology Map of Pecos Valley Aquifer NGLs Beckham Ranch has some of the best hydrology in Lea County, NM given its proximity to the thick areas of the Pecos Valley Aquifer NGLs freshwater assets in Reeves county are well…
Pecos Sub-Region Assets Asset Overview Asset Map NGL owns and operates 9 saltwater disposal facilities in Reeves and Ward counties near Pecos, Texas Pyote Located in a high demand area with a substantial and Central Reeves 4 Central…
Delaware Basin Analytics Strategy Volume Trends (KBPD) 1) Acquired ROW and building Western Express trunk line system for transporting water across disposal network 2) Increase pipeline volumes (current piped water is 60% of total in…
Investment Thesis & Valuation Observations 51
Water Midstream Value Chain Wastewater Service Traditional Disposal Integrated Water Platforms Companies Companies Provides short-term equipment rental Provides disposal services on-demand Provides disposal services in the G&P…
NGL Operational Significant Assumptions Growth Opportunities Continued effort to execute long-term contracts with the largest producers in area of operations Volume Growth Delaware Basin produced water growth will continue to expand…
Select Precedent Water Transactions Water Midstream Transactions Date Headline EBITDA EBITDA Multiple Announced Buyer Seller Value (mm) LTM FY1 LTM FY1 Location Description Water gathering assets and saltwater disposal services in…
Key Investment Highlights Assets are strategically positioned across operating basin footprint Most of the rig activity centers around NGLs SWDs Located along main development areas to facilitate pipeline buildout Strategically…
Loading...
