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Scotia Howard Weil Energy Conference – Archrock Inc.

Archrock Inc. · Mar 25, 2019 · 39 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 1
    ARCHROCK, INC. SCOTIA HOWARD WEIL ENERGY CONFERENCE MARCH 25, 2019 ARCHROCK, INC. (NYSE:AROC)
  2. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 2
    Archrock Company Overview Growth and returns oriented energy infrastructure company Natural gas compression company based in Houston, Texas NYSE: AROC Largest outsourced compression provider in U.S.(1) Market Cap: 1.4 billion(2)…
  3. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 3
    The Leader in U.S. Natural Gas Compression Leading contract compression position supplemented by AMS capabilities Total Compression Market Outsourced Owned 30% of market 70% of market Contract Operations(1) Aftermarket Services…
  4. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 4
    Our Rich Company Legacy Successful 60+ year company history with proven success over time South Coast Gas 1950s 1990 2006 2007 2014 2015 Current South Coast Gas Hanover Compressor Exterran formed by merger Archrock is the…
  5. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 5
    We are an Energy Infrastructure Company A unique combination of attractive attributes Energy Infrastructure Oilfield Services Attributes Service provider to energy Provide services to oil Provide services to oil & industry & gas…
  6. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 6
    Archrock Investment Highlights AROC represents an attractive energy infrastructure investment Gathering focus; a leading provider of large HP, 71% of fleet(1) Midstream / Compression is a mustrun service for gas transportation…
  7. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 7
    OPERATIONS ARCHROCK, INC. (NYSE:AROC)
  8. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 8
    Compression 101 What Do we Do Compression increases pressure within a pipeline to transport natural gas A MustRun Service Equipment that moves natural gas through infrastructure systems to consuming Benefits to customer of…
  9. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 9
    Archrocks Focus on Midstream Our midstream focus results in greater stability UPSTREAM MIDSTREAM DOWNSTREAM Large Pipeline/ Drilling Completions Gathering Processing Refining Marketing Storage Archrocks Compression Focus We…
  10. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 10
    A Market Leader in Large Horsepower Leveraging the growing industry trend towards larger HP units 29% Small HP 71% Large HP Fleet Allocation(1) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Drivers of Large HP Demand Lower initial…
  11. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 11
    Diversified Platform Across Key Shale Basins Stability and growth opportunity across U.S. production basins Material presence and scale in all major U.S. shale Marcellus / Utica production basins Niobrara Largest U.S. provider…
  12. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 12
    Contract Operations Customer Base Strong relationships with toptier energy companies Revenue 38% Major Customers % of total revenue from Diversification top 10 customers(1) Longterm 15 years Relationships Avg. relationship…
  13. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 13
    Aftermarket Services Capabilities Growing opportunities to service customerowned compressors Ability to serve the entire U.S. compression market Margin contribution from customers with their own compression solutions Leverages…
  14. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 14
    FUNDAMENTALS ARCHROCK, INC. (NYSE:AROC)
  15. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 15
    Abundant U.S. Natural Gas Supply The shale revolution has transformed natural gas supply The Shale Revolution Total gas 52.6 50.9 55.2 65.8 80.7 94.8 Shale gas 2.2 2.8 7.5 28.3 50.4 65.0 The U.S. has experienced 50.4 48.2 47.7 37.6…
  16. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 16
    Structural Shift in Demand Sources The shale revolution has structurally shifted & revolutionized natural gas demand Abundant U.S. Natural Gas Supply Stable Pricing LongTerm Projects Significant Exports Significant growth in U.S.…
  17. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 17
    Key Natural Gas Demand Drivers Robust demand drivers led by natural gas export opportunities Bcf/d 100.0 U.S. Natural Gas Demand Growth(1) 1.9 94.6 95.0 2.2 LNG Exports 4.1 2.2 90.0 5.8 85.0 78.4 80.0 75.0 70.0…
  18. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 18
    FINANCIALS ARCHROCK, INC. (NYSE:AROC)
  19. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 19
    Prudent Stewards of Capital Capital policy based on balancing three objectives 1 2018 simplification accelerates path to…
  20. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 20
    Solid Profitability Through Cycle A resilient business model tied to production, not commodity prices Adjusted EBITDA margin (%)(1) Oil 26% 28% 35% 35% 38% 41% 35% 39% Gas /bbl /MMBtu 120 6 Track record of generating attractive…
  21. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 21
    Financial & Operational Momentum Improving profitability trend and fleet utilization benefiting the company Revenue (MM) Gross Margin % Contract Operations Aftermarket Services Contract Operations AMS Total 227 232 233 209 212 60%…
  22. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 22
    Recent Financial Highlights (4Q 2018) Solid financial and operational performance in 4Q 2018 In 000s, unless noted(1) 4Q 2018 3Q 2018 4Q 2017 Revenue 233,159 232,372 209,934 Adjusted EBITDA 97,557 89,466 74,277 Cash available for…
  23. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 23
    Solid Balance Sheet Position Achieving balance sheet targets while selffunding growth Debt Maturity Schedule(1) (MM) Balance Sheet & Funding Overview A 6% senior notes due October 2022 No nearterm debt maturities 560 Revolving…
  24. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 24
    Executing on Balance Sheet Goals On target to…
  25. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 25
    Financial Guidance Robust market backdrop supports attractive 2019 forecast 2018 2019 Guidance Longterm Targets Net Income: 29 73 103 1015% Adjusted EBITDA: (1) 370 400 Annual dividend growth 352 through 2020 Selling,…
  26. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 26
    Key Takeaways We are the leader in U.S. natural gas compression Midstream / Resilience Visible, Long Solid Financial Proactive Large HP Focus Through Cycles Term Growth Position Leadership 27 ARCHROCK, INC. (NYSE:AROC)
  27. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 27
    APPENDIX ARCHROCK, INC. (NYSE:AROC)
  28. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 28
    2019 Guidance FullYear 2019 Guidance in thousands Low High Net income (1) 73,000 103,000 Adjusted EBITDA (2) (3) 370,000 400,000 Cash available for dividend (3) (4) 174,000 194,000 Segment Contract operations revenue 730,000…
  29. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 29
    Simplification Overview & Rationale Merger transaction positions Archrock for the future On April 26, 2018, AROC completed a merger in which it acquired all outstanding common units of Archrock Partners (APLP) it did not already own…
  30. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 30
    Management Overview Highly qualified and experienced management team D. Bradley Childers, President and Chief Executive Officer Brad Childers is President, Chief Executive Officer and a director of Archrock, Inc. Previously, he…
  31. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 31
    Archrock Addendum I-A Archrock, Inc. Gross margin, a nonGAAP measure, is defined as total revenue less cost of sales (excluding depreciation and amortization). Gross margin percentage is defined as gross margin divided by revenue.…
  32. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 32
    Archrock Addendum I-B ( in thousands) Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 Revenue Contract Operations 149,984 151,114 153,524 156,299 161,197 165,450 169,509 176,380 Aftermarket Services 39,901 46,868 44,329 52,636 50,843 61,420…
  33. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 33
    Archrock Addendum I-C Reconciliation of Net Income (Loss) to Gross Margin (in thousands) Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 Net income (loss) (14,013) (4,036) (12,683) 49,142 2,069 4,149 9,974 12,968 Selling, general and…
  34. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 34
    Archrock Addendum I-D Reconciliation of Net Income (Loss) to Adjusted EBITDA ( in thousands) Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 Net income (loss) (14,013) (4,036) (12,683) 49,142 2,069 4,149 9,974 12,968 Loss from discontinued…
  35. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 35
    Archrock Addendum I-E Reconciliation of Net Income (Loss) to Adjusted EBITDA ( in thousands) 2011 2012 2013 2014 2015 2016 2017 2018 Net income (loss) (355,308) (37,696) 126,606 88,661 (125,697) (65,243) 18,410 29,160 (Income) loss…
  36. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 36
    Archrock Addendum I-F Reconciliation of Net Income to Adjusted EBITDA and Cash Available for Dividend ( in thousands) Q118 Q218 Q318 Q418 2018 Net income 2,069 4,149 9,974 12,968 29,160 Depreciation and amortization 44,455 43,331…
  37. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 37
    Archrock Addendum I-F (cont.) Reconciliation of Cash Flows from Operations to Cash Available for Dividend ( in thousands) Q118 Q218 Q318 Q418 2018 Cash flows from operating activities 62,455 42,760 65,490 55,242 225,947 Inventory…
  38. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 38
    Archrock Addendum I-G Annual Guidance Range ( in thousands) 2019 Low High Net income (1) 73,000 103,000 Depreciation and amortization 180,000 180,000 Interest expense 103,000 103,000 Stockbased compensation expense 9,000 9,000…
  39. Scotia Howard Weil Energy Conference – Archrock Inc. – slide 39
    CONTACT US Investor Relations Paul Burkhart (Treasurer & VP of Investor Relations) (281) 8368688 investor.relationsarchrock.com www.archrock.com/aroc Corporate Headquarters 9807 Katy Freeway Suite 100 Houston, TX 77024…

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