USA Compression Partners, LP J.P. Morgan High Yield and Leveraged Finance Conference February 26, 2019
Agenda I. Introduction II. Q4 Review & Market Perspectives III. Macro Overview and Demand Drivers IV. USAC Overview V. Q&A VI. Appendix 3 2019 USA COMPRESSION PARTNERS, LP CONFIDENTIAL
I. Introduction 4 2019 USA COMPRESSION PARTNERS, LP CONFIDENTIAL
Organizational Chart Energy Transfer L.P. 100% Energy Transfer Operating, L.P. Public 100% 39.5% LP Preferred Common Interest Unitholders Unitholders USA Compression GP, LLC 52.2% LP Preferred Interest (our general…
Key Credit Highlights 20 year history focused on large HP applications using standardized, flexible equipment Focused Compression services is substantially all we do; excellence in customer service and highly Business Model trained…
II. Q4 Review & Market Perspectives
Q4 2018 Review & Recent Activity Strong Finish to 2018; Opportunistic Capital Raise in Q119 EoY fleet HP of 3.6 million and average revenue generating HP of 3.3 million HP Average active HP up 62,000 over Q3 Operational Update…
2019 Capex Guidance Selective Capex Program in 2019 Focused on HighReturn Opportunities USAC expects to deploy 140150mm for expansion capital expenditures in 2019 Additional 25mm projected for maintenance capital expenditures in…
Large HP Compression is NOT an Oil Field Service Large HP Strategy Has Proven Itself More Stable Over Cycles Large HP Small HP Nature of Application Gathering Systems, Central Delivery Wellhead service Points, Processing Facilities…
USAC View of Current Marketplace Expect Present Cycle to be Shorter than Previous Cycles Global crude inventories remain tight; demand potentially stronger than reported; Supply / waiver impact past; IMO 2020 impact Demand OPEC…
Infrastructure Development Will Require Compression Marcellus / Utica Gas Pipeline Supply & Demand: Constraints Removed 50 Bcf/d 45 Southeastern Trail Project Buckeye Xpress 40 Northeast Supply Enhancement Atlantic Coast…
Compression Sector in 2019 vs 2014 Cyclical Pullbacks are Not New, but Sector is Better Positioned in 2019 Current 2019 Previous 2014 Customer Balance Stronger; living within cash More constrained Sheets flow E&P Efficiencies Strong: 4+…
Macro Drivers Still Attractive The Big Four Natural Gas Demand Drivers Not Slowing Down LNG Exports PetChem/Industrial Demand 50mtpa (30 Bcf/d) of projects in US currently Readily available natgas feedstock driving petchem under…
2019 Priorities & Opportunities Conservative Approach Coming into Year; Positioned to Benefit from Market Strength Capex Balance Sheet Commercial Currently have 132,000 of Deleveraging the balance New deliveries committed to large HP…
III. 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 Benefitting from Efficiencies; Compression Demand Follows Growth in drilling activity has moderated Producers continue to be active in attractive areas, but takeaway bottlenecks have had an impact…
IV. USAC Overview
USAC Overview Large Horsepower Strategy at Core of USAC Business Business Overview USAC Market Statistics Geographically diversified provider of ( in billions) compression services Common Equity 1.5 billion Focused primarily on…
Geographic Presence CDM Acquisition Expanded Geographic Footprint Northeast MidCon Region 23% Region (OK) 17% Permian Southeast Region 29% Region (ArkLa, Rockies, NE Texas) 15% Gulf Coast Region (LA, TX Coast,…
Business Model Allows for Prudent Capital Spending.. Large HP focus ideally suited for growth and stability Shale production has changed the industry: demand for larger, more flexible assets Assets provide growth when marketplace…
..Leading to Cash Flow and Asset Stability Through Cycles PostCDM PreCDM Acquisition NonPredecessor (1) Acquisition (2) Horsepower Utilization HH Nat Gas Utilization, which was impacted /MMBTU by lower CDM fleet utilization,…
USAC 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 Independent Public E&P 8% 17 Years…
Large Horsepower Gas Applications Drive Stability Compression Unit Size Matters USAC Focus: Gas Compression Industry: Key Characteristics by Size Small Large X Large XX Large XXX Large Commentary Medium Compression More 400…
Balancing Distribution Stability and Leverage Annualized Distributions per Common Unit Stability in Distribution through the cycle 2.50 PostCDM PreCDM Acquisition NonPredecessor (1)(2) Acquisition (2)(4) 2.10 2.10 2.10 2.10 2.10…
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 December 31, December 31, 2018 2017 2018 2017 Net income (loss) 10,185 (232,216) (10,551) (264,734) Interest expense, net 27,252 78,377 Depreciation and…
NonGAAP Reconciliations, contd. Three Months Ended Years Ended ( in 000's) December 31, December 31, 2018 2017 2018 2017 Net income (loss) 10,185 (232,216) (10,551) (264,734) Noncash interest expense 1,525 5,080 Plus: Noncash…
NonGAAP Reconciliations, contd. PostCDM (1) (2) Acquisition PreCDM Acquisition NonPredecessor Years Ended December 31, ( in 000's) 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Net income (loss) (10,551) 11,440 12,935…
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