USA Compression Partners, LP B. Riley FBR Institutional Investor Conference May 23, 2019
Q1 2019 Update & Market Commentary
Q1 2019 Recap Solid Start to 2019; Continued Attractive Marketplace; Successful Integration Q1 2019 fleet HP of 3.6 million / average revenue generating HP of 3.3 million Operational Average horsepower utilization of 94.2% (vs.…
Marketplace Commentary Solid Underlying Fundamentals Leading to Attractive Outlook Crude oil price up meaningfully from 2018 lows Supply / OPEC supply cut working as planned; global inventories remain tight Demand Crude economics in…
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…
Permian / Delaware Basin Dynamics Gas Production Continues; Compression Demand Strong Natural gas noise aside, production volumes out of Permian / Delaware continuing to increase Gas production volumes up 30% year-over-year, per…
2019 Priorities Capex Program Remains Conservative; Commercial Initiatives Continuing Capex Commercial Balance Sheet Currently have 103,000 of New deliveries committed Current leverage levels large HP on order for to large, existing…
2019 Capex Program Scaled Back Capex Program for 2019 Moderated capex spend in 2019 & allocating capital to the highest-return projects Primarily 3600-series large horsepower units (2,500 HP & above) These units are in greatest…
Macro Overview & Demand Drivers
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 Well-head service Points, Processing Facilities…
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 by…
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 (0-50…
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 gas-based 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…
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 LP Equity Value (1) 1.7 billion Focused primarily…
Geographic Presence CDM Acquisition Expanded Geographic Footprint Northeast Mid-Con Region 23% Region (OK) 17% Permian Southeast Region 29% Region (ArkLa, Rockies, NE Texas) 15% Gulf Coast Region (LA, TX Coast,…
Organizational Chart Energy Transfer Combined, the Energy Family Transfer family owns 48% of USAC Public Unitholders USA Compression GP, LLC (our general partner) 52.3% 39.4% LP LP Non-econ Preferred GP; Unitholders 8.3%…
Key Strategic Priorities Consistent Further strengthen the USAC Southwest Airlines standardized business model Business Continue focus on large HP class units Model Implement best practices across the combined business Prudent…
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 Post-CDM Pre-CDM Acquisition Non-Predecessor (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 & Long-Term 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 400 1,000…
Balancing Distribution Stability and Leverage Annualized Distributions per Common Unit Stability in Distribution through the cycle Post-CDM 2.50 Pre-CDM Acquisition Non-Predecessor (1)(2) Acquisition (2)(4) 2.10 2.10 2.10 2.10…
USAC Investment Highlights USACs Business Prospects Driven By Positive Macro Drivers in the Midstream Industry Continued focus on infrastructure-oriented 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 Rate-Base Applications Gas Lift Midstream Applications…
Non-GAAP Reconciliations Three Months Ended March 31, 2019 2018 Net income (loss) 6,587 (23,370) Interest expense, net 28,857 Depreciation and amortization 58,924 44,672 Income tax expense (benefit) 104 (435) EBITDA 94,472…
Non-GAAP Reconciliations, contd. 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 (154,273) 24,946 11,071 4,503 69 10,479 21,228 20,911 7,122…
Non-GAAP Reconciliations, contd. Three Months Ended March 31, 2019 2018 Net income (loss) 6,587 (23,370) Non-cash interest expense 1,680 Non-cash income tax expense (benefit) 14 (435) Depreciation and amortization 58,924 44,672…
Non-GAAP Reconciliations, contd. ( in 000's) Guidance Net income 20.0 million to 60.0 million Plus: Interest expense, net 127.5 million Plus: Depreciation and amortization 222.0 million Plus: Income tax expense 0.5 million EBITDA…
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