Usa Compression Partners, Lp · NYSE:USAC
Usa Compression Partners, Lp — 2022 J.P. Morgan Global High Yield & Leveraged Finance Conference
33 slides from Usa Compression Partners, Lp's conference presentation, Feb 28, 2022
Slide 1: 2022 J.P. Morgan Global High Yield & Leveraged Finance Conference
USA Compression Partners, LP 2022 J.P. Morgan Global High Yield & Leveraged Finance Conference February 28 - March 1, 2022
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements relating to the operations of USA Compression Partners, LP (the “Partnership”) that are based on management’s current expectations, estimates and projections about its operations. You can identify many of these forward-looking statemen
Slide 3: Important Note Regarding Non-Predecessor Information
Important Note Regarding Non-Predecessor Information On April 2, 2018, the Partnership consummated the acquisition of CDM Resource Management LLC and CDM Environmental & Technical Services LLC, which together represent the CDM Compression Business (the “USA Compression Predecessor”), from Energy Tra
Slide 4: USAC Overview
USAC Overview [USA } 3 COMPRESSION
Slide 5: USAC Overview
USAC Overview Large Horsepower Strategy Critical for Domestic Natural Gas Infrastructure Business Snapshot USAC Market Statistics ■ USAC provides compression services across a ■ Public since 1/2013 (NYSE: USAC) geographically–diversified operating area ■ Current Unit Price: $17.11 ■ 23-year history
Slide 6: Q4 2021 Recap
Q4 2021 Recap Solid Conclusion to 2021; Tailwinds Coming? ■ Q4 2021 fleet HP of 3.7 million / average revenue generating HP of 3.0 million ■ Q4 2021 average horsepower utilization of 83% Operational Update ■ Customer sentiment improving; commodity price strength helping ■ Q4 Growth Capex: $14.3mm ■
Slide 7: USAC Operates Critical Assets with Positive Fundamentals
USAC Operates Critical Assets with Positive Fundamentals Natural Gas Has Proven Itself as a Long-Term Fuel; Compression is Critical! ■ Bullish on demand for natural gas, both in US and globally Supportive Macro: Gas Isn’t ■ LNG exports, petchem feedstock and power gen driving continued gas usage Goi
Slide 8: Why Focus on Midstream Compression?
Why Focus on Midstream Compression? Operational / Cash Flow Stability with Strong Counterparties Wellhead (Gas & Oil) Midstream Downstream Uses Gas Lift Regional Gathering Interstate Pipelines Gas Reinjection Central Delivery Point Trunkline Gathering Processing Plants Gas Storage Customer Base Broa
Slide 9: USAC Customer Overview
USAC Customer Overview Top 20 Customers: Diverse Counterparties & Long-Term Relationships % of Length of % of Length of Customer Rev(1) relationship Total HP Customer Rev(1) relationship Total HP Independent Public E&P 9% > 10 Years 298K Private Midstream 2% < 5 Years 25K Major O&G 5% > 10 Years 149
Slide 10: Business Model Allows for Prudent Capital Spending
Business Model Allows for Prudent Capital Spending….. Historical Balance Between Capital Spending and Cash Flow Stability ■ Large HP focus ideally suited for growth and stability ■ Assets provide growth based on marketplace demands ■ Ability to rein in spending and operate for stable cash flow when
Slide 11: Leading to Cash Flow and Asset Stability Through Cycles
…..Leading to Cash Flow and Asset Stability Through Cycles Post-CDM Pre-CDM Acquisition Non-Predecessor (1) Acquisition (2) Horsepower HH Nat Gas Utilization $ /MMBTU 100.0% $14 90.0% $12 80.0% Horsepower utilization average: 70.0% >92% for over a $10 decade $420 $414 $398 60.0% Stability through $8
Slide 12: Leverage Reduction / Stability Over Time & Throughout Cycles
Leverage Reduction / Stability Over Time & Throughout Cycles USAC’s Asset Base Supports Leverage Stability ■ As a public partnership, USAC has decreased leverage since being privately held ■ Continued prudent management of leverage to suit business stability USAC Historical Leverage(1) 8.0x 6.0x 5.0
Slide 13: Diversification – The "Right" Operating Regions
Diversification – The “Right” Operating Regions Dry Gas Areas Have Seen Increased Activity Lately Rockies = Northeast = ~5% ~25% Mid- Continent = ~13% Permian/ Louisiana / Delaware Basin = East TX = ~35% ~6% Gulf Coast = ~16% Note: Regional % breakdowns represent active fleet horsepower at December
Slide 14: Key Credit Highlights
Key Credit Highlights ■ 23-year history focused on large HP applications using standardized, flexible equipment Focused ■ Compression services is substantially all we do; geographic diversity enhances business stability Business Model ■ Fully-integrated CDM acquisition further strengthened asset bas
Slide 15: Natural Gas: Not Going Away!
Natural Gas: Not Going Away! USA COMPRESSION
Slide 16: Resilient US Natural Gas Demand in 2021
Resilient US Natural Gas Demand in 2021 2021 Nat Gas Demand Flat From 2020 ■ Natural gas continues to play an important role in the US & global economy ■ Critical fuel for the economy: power generation, industrial feedstock and residential/commercial demand = 90%+ of usage ■ 2021 was essentially fla
Slide 17: Longer Term Natural Gas Demand Growing
Longer Term Natural Gas Demand Growing Driven by Industrial Use and LNG Exports ■ Consumption growth between 2020 and 2050 concentrated in exports and industrial use: – Net exports (primarily LNG) add 4.7 Tcf/year by 2050 • January 2021 saw record LNG volumes for 3rd consecutive month – Industrial u
Slide 18: Natural Gas Remains Critical to US Electricity Production
Natural Gas Remains Critical to US Electricity Production Renewables Becoming More Important, But Nat Gas Remains Vital for Electricity ■ More electricity in the US continues to be produced from natural gas than any other fuel ■ Natural gas share projected to decline slightly, but remains critical f
Slide 19: Natural Gas Production
Natural Gas Production E&P Activity Uptick in 2021 & 2022 Expected to Bolster Compression Demand ■ Increased E&P activity (new drilling and DUCs) helped sustain gas volumes during 2021 – Q4 2021 gas production was up >6% over year-ago period – Forward years reflect increases in exports and industria
Slide 20: Appendix
Appendix Tk—— COMPRESSION
Slide 21: Organizational Chart
Organizational Chart Combined, the Energy Energy Transfer Transfer family owns ~47% Family of USAC (unchanged since 2018 CDM Acquisition) Public Unitholders USA Compression GP, LLC (our general partner) 52.7% 39.1% LP LP Non-econ Preferred GP; Unitholders 8.2% LP Preferred Units USA Compression Part
Slide 22: Large Horsepower Gas Applications Drive Stability
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 – 1,000 – 1,500 – 2,300 – Unit 0 – 400 HP horsepower HP Range 1,000 HP 1,5
Slide 23: Balancing Distribution Stability and Leverage
Balancing Distribution Stability and Leverage Annualized Distributions per Common Unit Stability in Distribution through the cycle $2.50 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.00 $1.50 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021
Slide 24: Operational and Financial Performance
Operational and Financial Performance Avg. Revenue Generating HP (000s) Revenue ($MM) Post-CDM Post-CDM Pre-CDM Acquisition Non-Predecessor (1) Pre-CDM Acquisition Non-Predecessor (1) Acquisition (1)(2) Acquisition (1)(2) $800 4,000 $698 $668 3,279 $633 3,140 2,951 $584 3,000 2,760 $600 2,000 $400 1
Slide 25: Macro Thesis: The "Shift to Shale"
Macro Thesis: The “Shift to Shale” Shale Gas Expected to Continue to be the Primary Source of US Natural Gas ■ Shale Dominance: Production from shale shadows ■ Shale gas is typically produced at lower wellhead all other sources pressures (0-50 PSIG) in contrast to conventional gas – 2020 est. ~29 Tc
Slide 26: Compression Throughout the Value Chain
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 • Interstate Pipeline • Gas Reinjection • Regional Gathering • Trunklin
Slide 27: Non-GAAP Reconciliations
Non-GAAP Reconciliations 27 © 2022 USA COMPRESSION PARTNERS, LP | CONFIDENTIAL
Slide 28: Non-GAAP Reconciliations, cont'd
Non-GAAP Reconciliations, cont’d 28 © 2022 USA COMPRESSION PARTNERS, LP | CONFIDENTIAL
Slide 29: Non-GAAP Reconciliations, cont'd.
Non-GAAP Reconciliations, cont’d. Notes: (1) Following the Transactions, the USA Compression Predecessor has been determined to be the historical predecessor of the Partnership for financial reporting purposes. The information presented above under the heading “Pre-CDM Acquisition Non-Predecessor” r
Slide 30: Non-GAAP Reconciliations, cont'd.
Non-GAAP Reconciliations, cont’d. Notes: Following the Transactions, the USA Compression Predecessor has been determined to be the historical predecessor of the Partnership for financial reporting purposes. The information presented above under the heading “Pre-CDM Acquisition Non-Predecessor” repre
Slide 31: Non-GAAP Reconciliations, cont'd.
Non-GAAP Reconciliations, cont’d. 31 © 2022 USA COMPRESSION PARTNERS, LP | CONFIDENTIAL
Slide 32: Non-GAAP Reconciliations, cont'd. – 2022 Guidance
Non-GAAP Reconciliations, cont’d. 2022 Guidance 32 © 2022 USA COMPRESSION PARTNERS, LP | CONFIDENTIAL
Slide 33: Basis of Presentation; Explanation of Non-GAAP Financial Measures
Basis of Presentation; Explanation of Non-GAAP Financial Measures This presentation includes the non-GAAP financial measures of Adjusted gross margin, Adjusted EBITDA, Distributable Cash Flow and Distributable Cash Flow Coverage Ratio. Adjusted gross margin, a measure not defined under U.S. generall
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