Introduction Marc Stratton, Vice President, Treasurer & Head of Investor Relations
Presenter Bios Experienced Senior Leadership Team to execute Buy, Build, Partner growth strategy Steve Newby, President and Chief Executive Officer Founder, President & CEO of Summit Midstream and a member of the Board of Directors of…
Table of Contents I. Introduction II. Executive Summary & Strategic Overview III. Industry Overview IV. SMLP Commercial Overview V. Summit Investments Commercial Overview a. Bakken Asset Overview b. DJ Niobrara Asset Overview c.…
Executive Summary & Strategic Overview Steve Newby, President & Chief Executive Officer
SMLP Key Investment Considerations Visible cash flow growth a function of SMLPs contract portfolio, diversified operations, inventory of GP assets and capital position 90%+ of revenue is fee-based Industry Leading Contracted growth…
Summit History: Buy, Build, Partner SMLP & Summit Investments have invested 3.7 billion since 2009 2009 2010 2011 2012 2013 2014E Founded by Energy Acquired remaining Investment by GE Summit Investments Summit Investments Summit…
Summit Enterprise Then & Now Since September 2012, Summit has diversified its geographic footprint, commodity exposure, service offering and customer portfolio SMLP at IPO (September 2012)(1) Current Summit Operating Footprint…
SMLP Then & Now SMLP has not wavered from the core business strategies communicated in its IPO IPO Strategy SMLP 1Q 2014 Focus on fee-based revenues 90%+ fee-based 4.0 Tcf of remaining MVCs (up from 2.5 Tcf at IPO) Mitigate…
Summit Enterprise Basin Exposure The Summit enterprise has exposure to four of the most active shale plays in the U.S. IRR by Shale Play Top 10 Basins By Rig Count Basin 2011 2012 2013 Permian 404 386 407 Eagle Ford 205 222 200…
Summit Investments Adds to its Growing Inventory of Assets Summit Investments now estimates its inventory of midstream assets to be 2.0 billion New Bakken Project Announcements Pro Forma Bakken Footprint(1) On June 10th, Summit…
Summit Enterprise Growth Projects 2014E Summit enterprise is executing on more than 1 billion of midstream investment in 2014 2014E Growth Asset Capex (MM) Scope Primarily related to the Zinnia Loop, which will increase system…
Summit Investments Development Strategy STRATEGY CAPITAL GROWTH Operating cash flow Use Summit Investments SMLP distributions as development vehicle to Sponsor equity mitigate development & Bank facilities Top Tier Distribution…
Summit Investments Development Strategy Works for LP Unitholders Summit Investments interests are aligned with SMLPs other unitholders Summit Investments currently owns over 34 million SMLP units (common & subordinated) and the…
Drop Down Structure Drives Top Tier Growth SMLPs relationship with Summit Investments provides it with long-term, visible growth ( in millions) Expected Total System Total Investment Operating Area Status Mileage(1) System…
SMLP Continues to Be Undervalued Relative to Many of Its Drop Down Peers Summit Investments inventory of assets represents 60% of SMLPs current enterprise value(1) Peer Valuation Analysis(1) Performed linear regression on SMLPs drop…
Industry Overview Steve Newby, President & Chief Executive Officer
Natural Gas Supply & Midstream Investment 58% projected growth in natural gas production drives over 300 billion of investment through 2035 Estimated U.S. Natural Gas Production Estimated Midstream Spend(1) Total Spend Average…
Appalachian Basin Activity Map(1) 25 rigs currently working in the Ohio Gathering catchment area 12 rigs currently working in the Harrison & Doddridge counties Source: Drilling Info. (1) As of June 2, 2014. 21
Marcellus & Utica Growth Northeast natural gas production estimated to grow over 81% from 2013 to 2020 Northeast Natural Gas Production By 2020, Northeast production estimated to increase to 26.3 bcf/d from 14.5 bcf/d at the end…
Crude Oil Production & Midstream Investment 54% projected growth in crude oil production drives over 270 billion of investment through 2035 Estimated U.S. Crude Oil Production Estimated Midstream Spend(1) Total Spend Average…
Williston Basin Activity Map(1) 77 rigs, or 41% of the total rigs currently working in North Dakota are in Summit areas (Divide, Williams, Mountrail & Burke counties) Source: Drilling Info. (1) As of June 2, 2014. 24
Development Opportunities Fuel SMLPs Long-Term Growth Summits footprint in the high-growth Bakken, Utica and Marcellus shale plays will create substantial growth opportunities for years to come Growth Capex: Guidance vs. Upside…
Commercial Overview Organization Structure Chief Commercial Officer Brad Graves Director, Business VP, West Division VP, East Division Services Manager, VP, Liquids VP, Natural Financial Contract Corp Group Gas Group…
How Summit Analyzes New Business Opportunities Quant-Intensive Approach Reservoir Quantitative Inclusion of Internal Analysis Analysis EC&O Vetting All new business Business Services Commercial group New business opportunities…
How Summit Analyzes Development Opportunities Dispersion of Risk / Return: Greenfield Development 2011 to 2014 Summits recent M&A activity has provided it with anchor systems in high growth shale plays such as the Bakken, Utica, and…
DFW Midstream Natural gas gathering in the core of the core of the Barnett Basin Outlook & History Barnett Activity Map(1) Summits first operating asset, built from 2009 to 2012 Located in the core of the core of the Barnett…
DFW Midstream Bulldog Compressor Station DFW Pad Site 31
Grand River Positioned in the core of the Piceance Basin with exposure to the liquids-rich Mesaverde formation as well as the emerging Mancos & Niobrara shale formations Basin Outlook & History Piceance Activity Map(1) Legacy Grand…
Grand River DeBeque Processing Plant Orchard Compressor Station 33
Bison Midstream Associated natural gas gathering (1,425+ Btu gas) from over 676,480 net acres serving producers in the Bakken Shale Play in North Dakota Basin Outlook & History Bakken Activity Map(1) Acquired by Summit Investments in…
Bison Midstream Mirage Compressor Station West Compressor Station 35
Mountaineer Midstream High-pressure natural gas gathering and compression assets located in the rich gas window of the Marcellus Shale Play Basin Outlook & History Marcellus Activity Map(1) Acquired from MarkWest (MWE) in 2Q 2013…
Mountaineer Midstream Construction of Zinnia Loop Zinnia Compressor Station 37
Summit Investments Bakken Assets Then & Now Summit Investments Bakken Assets February 2013 Summit Investments Bakken Assets Current(1) Upon the acquisition of Bear Tracker Energy in February 2013, Polar and Today, the Polar and Divide…
Summit Investments Bakken Assets Asset Summary Asset Footprint(1) Polar Oil & Water Gathering: Acquired as part of the acquisition of Bear Tracker Energy, LLC in February 2013 Commissioned in May 2013 and underpinned by a long-term,…
Summit Investments Bakken Assets Polar System LACT Unit 42
DJ Niobrara Asset Overview
Meadowlark Midstream Niobrara Gathering & Processing Asset Summary Asset Footprint(1) Summit Investments acquired the Niobrara Gathering & Processing system (Niobrara) as part of its acquisition of Bear Tracker Energy, LLC in February…
Ohio Gathering JV Overview June 2, 2014 General Partner of SMLP Acquires 40% Interest in Ohio Gathering Joint Venture with MarkWest Utica EMG in Utica Shale Ohio Gathering Summary Summit Investments owns a 40% interest in natural…
Ohio Gathering Asset Overview Transaction provides ownership in premier gathering system in the Utica Shale Asset Summary Map of Ohio Gathering & Delivery Points Ohio Gathering is developing a premier gathering system in the southern…
Strategically Located in the Southern Core of the Utica Shale The Utica Shale is the highest return shale play in the United States(1) Hess: 1 well GPOR: Boy Scout 25 MMcfe/d IP 1-33H 7 MMcf/d IP 1,008 Bbl/d NGLs IP 1,560 Bbl/d…
Significant Growth Opportunities In and Around Ohio Gathering Area Summit estimates 6 billion of potential growth opportunities in and around the Ohio Gathering focus area(1) Current Ohio Gathering Customer 179,000 net acres in Utica…
Engineering, Construction & Operations Rene Casadaban, Senior Vice President & Chief Operating Officer
EC&O Overview Summit employs a dedicated team to construct and operate its family of assets Organization Structure Chief Operating Officer Rene Casadaban Western BU: Eastern BU: Health, Safety Engineering & Engineering &…
Fully Integrated EC&O Team Project Process Flow Corporate & Construction / Business Engineering Project Operations Development Management Establish Commercial & Finalize Capex, Opex, & AFE Steward Project Schedule & Finalize Change…
Execution to Date Summit has constructed over 500 miles of pipe since inception Mileage Total Mileage at Constructed System Asset Acquisition by Summit Mileage(1) Commentary World-class development project that includes 40% of its…
Engineering & Construction Overview Urban Gathering DFW Midstream Contractors are selected based on safety, quality, cost and schedule Over 350 MSAs in place, which enables Summit to save money via its centralized procurement…
Engineering & Construction Construction of Zinnia Loop Mountaineer Midstream 56
Operations Overview Boots on the Ground Ops Team by Locale Approximately 160 employees, or over half of Summits total employee base, is organized under the Operations 27 FTE function Responsible for operating and maintaining 2,580…
Health, Safety and Environmental Operating and constructing in a safe and efficient manner is Summits number one objective Summits Health, Safety and Environmental (HSE) group is FLIR Technology Identifies Pipeline Leaks focused on…
Safety ROW Monitoring Aerial monitoring allows Summit to survey and monitor its operating footprint 59
SMLP Board Composition SMLPs independent directors control its audit committee and conflicts committee Independent Conflicts Compensation Name Audit Committee Director Committee Committee Thomas K. Lane P Christopher M.…
Conflicts of Interest How They Arise As with most MLPs from time to time, conflicts of interest may arise between Summit Investments and SMLP There also may be conflicts for the officers and directors of SMLP who are also officers or…
Conflicts of Interest Roles of the Conflicts Committee Delaware courts have repeatedly recognized that conflicts committee approval is an effective means of resolving conflicts of interest between a general partner and the limited…
Financial Overview Matt Harrison, Senior Vice President & Chief Financial Officer
SMLP Numerous Sources of Capital Distribution Revolving Credit Coverage Facility General Partner Senior Notes Support Financing Sources Private Equity Public Equity (Energy Capital Partners & GE) 65
Third Party Research: Gathering & Processing Peer Analysis Relative Positioning Financial Profile(1) Criteria (2014E) Peer ( in MMs) Average Adj. EBITDA 201 404 1,096 468 482 532 211 832 618 580 Distributable Cash Flow 146 253 796…
SMLP Conservative Financial Strategy Strong balance sheet and liquidity enables SMLP to execute its growth strategy Targeting long-term leverage ratio of 3.0x 4.0x Actual (s in 000s) Mar-14 3.9x leverage at March 31, 2014 Cash and…
SMLP Liquidity & Maturity Schedule Historical Liquidity MM 4Q12: 2Q13: Issuance 4Q13: Increased 140MM of of 300MM facility from 500 1Q14: IPO Senior Notes. 600MM to 700MM 200MM proceeds Upsized facility primary 2Q12: used to repay…
SMLP 2014 Financial Guidance Guidance Range Actual Actual FY 2014(3) Year Ended Year Ended ( in millions) 2012 2013 Low High Adjusted EBITDA 103.3 145.5 190.0 210.0 LP Distribution Growth(1,2) n/a 20.0% 15.0% 20.0% Growth…
Summit Investments Financial Overview Well-Capitalized General Partner Size & Scale 650 million of bank debt 2.0 billion of operating assets Equity capital support from Energy Capital Partners and GE 1.5 billion of LP units Energy…
SMLP Key Takeaways Visible cash flow growth a function of SMLPs contract portfolio, diversified operations, inventory of GP assets and capital position 90%+ of revenue is fee-based Industry Leading Contracted growth under long-term…
Appendix: SMLP Non-GAAP Reconciliations
SMLP Non-GAAP Reconciliations Three Months Ended March 31 Year Ended December 31, (s in 000s) 2014 2013 2013 2012 2011 2010 (1) Net Income 6,373 13,864 43,636 41,726 37,951 8,172 Add: Interest expense 7,144 1,879 19,173 12,766…
SMLP SMLP Financial Performance Quarter Ended March 31, Variance (s in 000s) 2014 2013 % Distributable Cash Flow: EBITDA(1) 33,543 30,115 3,428 11.4% Add: Unit-based compensation 1,063 462 601 130.1% (2) Adjustments related to MVC…
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