Genesis Energy, L.p. · NYSE:GEL
Genesis Energy, L.p — J.P. Morgan Global High Yield & Leveraged Finance Conference 2023
45 slides from Genesis Energy, L.p's conference presentation, March 2023
Slide 1: J.P. Morgan Global High Yield & Leveraged Finance Conference
J.P. Morgan Global High Yield & Leveraged Finance Conference March 2023
Slide 2: Disclosures & Company Information
Disclosures & Company Information Genesis Energy, L.P. NYSE: GEL Investor Relations Contact Common Unit Market Value ~$1.5 billion(a) InvestorRelations@genlp.com (713) 860-2500 Convertible Preferred Equity ~$0.9 billion(a) Corporate Headquarters Enterprise Value ~$5.4 billion(a) 811 Louisiana, Suite
Slide 3: Genesis Energy Investment Overview
Genesis Energy Investment Overview • Genesis Energy, L.P. operates a diversified collection of high-quality infrastructure assets and world-class businesses with significant upside and operating leverage – Offshore Pipeline Transportation: Over 2,400 miles of pipelines and basin critical infrastruct
Slide 4: Improving Performance and Financial Flexibility
Improving Performance and Financial Flexibility Continued Leverage Reduction with Free Cash Flow on the Horizon • Improving the balance sheet and achieving long-term target leverage ratio of 4.0x has been a top priority – Currently expect to exit 2023 at or below 4.0x • Strong underlying business pe
Slide 5: Financial Guidance and Segment Outlook
Financial Guidance and Segment Outlook Offshore Pipeline Sodium Minerals & Onshore Facilities Marine Genesis Energy, L.P. Transportation Sulfur Services & Transportation Transportation • Murphy’s King’s Quay • Market for soda ash • Segment continues to • Seeing tremendous • Continue to remain develo
Slide 6: Key Investment Considerations
Key Investment Considerations Market Leading Businesses with High Barriers to Entry 1 • Genesis is a market leader in four critical businesses – (1) Deepwater Gulf of Mexico ("GOM") pipeline transportation, (2) Producer & marketer of U.S. natural soda ash, (3) Producer and marketer of sodium hydrosu
Slide 7: Market Leading Businesses / High Barriers to Entry
Market Leading Businesses / High Barriers to Entry Genesis Total LTM Offshore Pipeline Transportation Segment Margin $770 MM(a) • Practically irreplaceable integrated asset footprint focused on transporting crude oil produced from the deepwater Central Gulf of Mexico to multiple onshore markets 40%
Slide 8: Actively Participating in Green Activities
Actively Participating in Green Activities Helping Facilitate the Energy Transition & Lower Emission Activities Sodium Minerals & Sulfur Services • Our soda ash business should increasingly participate in multiple renewable energy themes moving forward – Demand for soda ash driven by the production
Slide 9: Recent Developments
Recent Developments
Slide 10: Extended and Upsized Credit Facility
Extended and Upsized Credit Facility Provides Ample Liquidity & Financial Flexibility to Execute • On February 17, 2023 we successfully syndicated and closed on an extension and upsizing of our revolving credit facility – $850 million in commitments from both existing and new lenders – Initial matur
Slide 11: ORRI – Transaction Overview
ORRI – Transaction Overview Attractive Structure Provides Genesis with Long-Term Cost Efficient Capital • On May 17, 2022, Genesis sold a 10% overriding royalty Illustrative Transaction Structure interest (“ORRI”) in substantially all of Genesis’ trona mineral leases to a special purpose vehicle (“S
Slide 12: Re-Financing Alkali Asset-Level Preferred Units
Re-Financing Alkali Asset-Level Preferred Units Eliminating Any Perceived Overhang While Preserving Upside • Genesis used the proceeds from the ORRI Secured Notes used to redeem 100% of the Alkali asset-level preferred units originally issued to fund the Granger expansion – Returns 100% of Alkali as
Slide 13: King’s Quay Overview
King’s Quay Overview New FPS Provides Additional On-Ramp for Future Gulf of Mexico Volumes • Murphy’s King’s Quay Floating Production System (“FPS”) King’s Quay FPS Ties in Multiple Fields(a) achieved first oil in April 2022(a) with 97% facility uptime – The King’s Quay FPS will support volumes from
Slide 14: Gulf of Mexico Footprint Expansion
Gulf of Mexico Footprint Expansion Building Upon and Expanding Basin Critical Infrastructure in the Gulf of Mexico • On May 4th, 2022 Genesis announced it would spend ~$550 million to expand its existing CHOPS system and construct a new 100% owned approximately 105 mile, 20” diameter pipeline (the “
Slide 15: The SYNC Pipeline
The SYNC Pipeline Further Extending Genesis’ Pipeline Network in the Central Gulf of Mexico • The SYNC Pipeline will connect the Walker Ridge area of the SYNC Pipeline Connects Walker Ridge to CHOPS Gulf of Mexico directly to the CHOPS system and its Garden Banks 72 platform – 100% of oil production
Slide 16: Salamanca & Independence Hub
Salamanca & Independence Hub Re-Purposing Existing Facility to Reduce Environmental Impact • On May 4th, 2022 Genesis announced the sale of the idled Independence Hub Platform Independence Hub platform to LLOG to serve as the floating production system for the Salamanca development – Gross proceeds
Slide 17: Business Segment Detail
Business Segment Detail
Slide 18: Offshore Pipeline Transportation Overview
Offshore Pipeline Transportation Overview World Class Footprint in Leading North American Basin Long-Term Value Creation Historical CHOPS & Poseidon Volumes • Beginning in 2010 with the acquisition of 50% interest in +51% CHOPS, management has acquired an irreplaceable industry leading portfolio of
Slide 19: Offshore Pipeline Transportation Asset Summary
Offshore Pipeline Transportation Asset Summary Leading Gulf of Mexico Midstream Service Provider • ~2,400 miles of pipelines and associated platforms primarily Deepwater to Shore Crude Oil Pipeline Solutions located in the Central Gulf of Mexico CHOPS Poseidon Eugene Island Odyssey • Leading indepen
Slide 20: Gulf of Mexico Crude Oil Production
Gulf of Mexico Crude Oil Production Continued Growth in the Deepwater Gulf of Mexico Crude Oil Production(a) • Deepwater Gulf of Mexico crude oil production increased by ~78% from 2013 – 2022E • Production increase has been primarily driven by producers’ ability to leverage existing infrastructure,
Slide 21: Central Gulf of Mexico Overview
Central Gulf of Mexico Overview Robust Inventory of Future Growth Ram Powell Petronius Stonefly Delta House Nearly Headless Nick Selected Recent Developments / FIDs Field Producer First Oil Lobster Spruance Mad Dog 2 (Argos) BP Mid-2023 Katmai Bullwinkle • Caicos Shenandoah Beacon Late 2024 Droshky
Slide 22: Gulf of Mexico - Active Federal Leases
Gulf of Mexico - Active Federal Leases Proximity to Existing Leases Creates Stability and Opportunity • Inflation Reduction Act of 2022 allows Department of Interior to grant leases, easements and rights-of-way pursuant to the Outer Continental Shelf Lands Act in land areas previous withdrawn from l
Slide 23: Gulf of Mexico – Lower Carbon Intensity
Gulf of Mexico – Lower Carbon Intensity Regulatory Oversight Helps Drive Lower Carbon Footprint Gulf of Mexico Plays Leading Role(a) Significant Regulatory Oversight(b) • Barrels produced from the Gulf of Mexico are the least • The leasing and operations activities in the GOM are subject emissions i
Slide 24: Central Gulf of Mexico Midstream Dynamics
Central Gulf of Mexico Midstream Dynamics Uniquely Positioned to Capture Additional Volumes in the Central Gulf of Mexico • Integrated system provides producers with basin leading midstream solution “highway to shore” for deepwater producers – Uniquely positioned to service the continued growth in c
Slide 25: Case Study: Poseidon Oil Pipeline
Case Study: Poseidon Oil Pipeline Irreplaceable Crude Oil Pipeline in the Central Gulf of Mexico • Poseidon Oil Pipeline is a basin critical pipeline that transports Steady Volumes Through Commodity Cycles central Gulf of Mexico production to key markets in Louisiana +22% – Integrated onshore with G
Slide 26: Case Study: CHOPS Minority Interest Sale
Case Study: CHOPS Minority Interest Sale Critical Gulf of Mexico Infrastructure with Multiple Delivery Points in Texas • Cameron Highway Oil Pipeline System is a high barrier to entry Increasing Volumes Through Commodity Cycles pipeline transporting central Gulf of Mexico production to multiple key
Slide 27: Sodium Minerals Overview
Sodium Minerals Overview Largest North American Producer of Low Cost Natural Soda Ash • Market leading position with highly consistent cash flow profile Genesis has Largest Trona Lease Holding in U.S. and significant barriers to entry • ~4.2 million tons per year of natural soda ash production capac
Slide 28: Soda Ash Market Summary
Soda Ash Market Summary Supply / Demand Balance Expected to Remain Tight over Long-Term • U.S. demand is relatively stable Historical U.S. Natural Soda Ash Pricing(a) • Domestic natural soda ash production competitively positioned vs. global high cost synthetic production to supply export growth in
Slide 29: Soda Ash Demand Drivers
Soda Ash Demand Drivers Growing Global Demand (Ex. China) Driven by Emerging Middle Class & Green Initiatives • Soda ash demand is driven by a diversified set of global end 2022 Global End-Markets (%)(a)(b) markets • Over 75% of global demand from glass, chemicals and soaps / detergents – Flat glass
Slide 30: Natural Soda Ash Cost Advantage
Natural Soda Ash Cost Advantage Low Cost Position Drives Stable Cash Flow Generation • Genesis is a low cost producer of natural soda ash – Synthetic production is roughly twice as expensive to produce when compared to U.S. natural soda ash production – Synthetic soda ash consumes substantially more
Slide 31: Natural vs. Synthetic Soda Ash
Natural vs. Synthetic Soda Ash Natural Soda Ash Combines Lower Energy Usage with a Lower Carbon Footprint • Approximately 70% of the world’s soda ash is produced synthetically through the Solvay process or the Hou process(a) – The Solvay process (or ammonia-soda process) uses sodium chloride brine,
Slide 32: Granger Facility Expansion
Granger Facility Expansion Project Overview December 2021 • Genesis is investing approximately $350-$375 million to expand its Granger soda ash facilities by approximately 750k tons per year – Anticipated in service in 2H 2023 – Designed as a near-replica of existing ELDM facility (operating since 1
Slide 33: Sulfur Services Overview
Sulfur Services Overview Market Leader of NaHS Production and Leading Provider of Sulfur Removal Services • Produce sodium hydrosulfide (“NaHS”) through proprietary Sales by Industry(a) process reacting high hydrogen sulfide (“H2S”) gas with Caustic Soda (“NaOH”) • Sour “Gas Processing” units inside
Slide 34: Facilitating Lower Refinery Emissions
Facilitating Lower Refinery Emissions NaHS Technology Helping Reduce Host Refinery and End Customer Emissions • Proprietary technology used to facilitate the eco-friendly NaHS Production Process removal of sulfur entrained in crude oil and its finished refined High H2S products Gas Stream Chlor-Alka
Slide 35: Onshore Facilities & Transportation Overview
Onshore Facilities & Transportation Overview Integrated Asset Footprint with Exposure to Significant Refinery Demand Baton Rouge Complex Texas City Terminal Raceland Terminal Other Legacy Onshore Assets • Integral part of ExxonMobil’s Baton • Connection to Genesis owned • Connection to Genesis owned
Slide 36: Marine Transportation Overview
Marine Transportation Overview Improving Fundamentals & High Degree of Operating Leverage • Inland barges are all asphalt capable, heated barges primarily Genesis Marine Equipment utilized in black oil service American Inland Offshore • Business operates with largely fixed costs and a high degree of
Slide 37: Appendix & Reconciliations
Appendix & Reconciliations
Slide 38: Corporate Information
Corporate Information Debt and Preferred Equity Profile & Corporate Structure Balance Sheet Overview Corporate Structure(a) • Committed to long-term leverage ratio of 4.00x(b) Series A Class A Class B Convertible • 4Q 2022 leverage ratio of 4.14x(b) Common Units Common Units Preferred Units (122,539
Slide 39: Environmental, Social & Governance (“ESG”)
Environmental, Social & Governance (“ESG”) Supporting Business Priorities & Our Investors Through ESG • Genesis is committed to operating its business in a responsible and sustainable manner – Understanding, monitoring, engaging and improving ESG metrics is central to our long-term strategy and valu
Slide 40: Unitholder Alignment / Long-Term Value Creation
Unitholder Alignment / Long-Term Value Creation Unitholder Alignment Long-Term Value Creation • NO incentive distribution rights (“IDRs”) with non-economic • Management has a track record of acquiring and developing General Partner (no sponsor) world class infrastructure assets at attractive valuati
Slide 41: Balance Sheet & Credit Profile
Balance Sheet & Credit Profile Leverage Ratio & Common Unit Distribution Coverage Ratio (a) We define Adjusted Debt as the amounts outstanding under our senior secured credit facility and senior unsecured notes (including any unamortized premiums, discounts, or issuance costs) less the amount outsta
Slide 42: Reconciliation
Reconciliation Segment Margin (a) The 2022 Quarter includes income associated with the repurchase and extinguishment of certain of our senior unsecured notes on the open market. (b) The 2021 Quarter includes PIK distributions and accretion on the redemption feature. The associated Alkali Holdings pr
Slide 43: Reconciliation
Reconciliation Available Cash Before Reserves 42
Slide 44: Reconciliation
Reconciliation Adjusted Debt & Adjusted Consolidated EBITDA (a) We define Adjusted Debt as the amounts outstanding under our senior secured credit facility and senior unsecured notes (including any unamortized premiums, discounts, or issuance costs) less the amount outstanding under our inventory fi
Slide 45: Reconciliation
Reconciliation Select Items (a) Includes the difference in timing of cash receipts from customers during the period and the revenue we recognize in accordance with GAAP on our related contracts. For purposes of our Non-GAAP measures, we add those amounts in the period of payment and deduct them in t
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