Usa Compression Partners, Lp · NYSE:USAC
Usa Compression Partners, Lp — 2022 Energy Infrastructure Council Investor Conference
30 slides from Usa Compression Partners, Lp's conference presentation, May 16, 2022
Slide 1: USA Compression Partners, LP 2022 Energy Infrastructure Council Investor Conference
USA Compression Partners, LP 2022 Energy Infrastructure Council Investor Conference May 16-17, 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: $17.19 ■ 23-year history
Slide 6: Q1 2022 Recap
Q1 2022 Recap Activity Has Picked Up at Start of the Year ■ Q1 2022 fleet HP of 3.7 million / average revenue generating HP of 3.0 million ■ Q1 2022 average horsepower utilization of ~85% (up 2% Q-o-Q) Operational Update ■ Q1 Growth Capex: ~$20mm (new units & reconfigurations) ■ Increased customer b
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 280K Independent Public E&P 2% > 10 Years 64K Major O&G 6% > 10 Yea
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 Utilization fell more quickly than in HH Nat Gas Utilization past cycles, but Q1 ‘22 seeing positive $ /MMBTU demand signals 100.0% $14 90.0% $12 80.0% Horsepower ut
Slide 12: Diversification – The "Right" Operating Regions
Diversification – The “Right” Operating Regions Dry Gas Areas Have Seen Increased Activity Lately Rockies = Northeast = ~5% ~27% Mid- Continent = ~11% Permian/ Louisiana / Delaware Basin = East TX = ~36% ~5% Gulf Coast = ~15% Note: Regional % breakdowns represent active fleet horsepower at March 31,
Slide 13: Natural Gas: Not Going Away!
Natural Gas: Not Going Away! USA COMPRESSION
Slide 14: Resilient US Natural Gas Demand in 2021
Resilient US Natural Gas Demand in 2021 2022 Nat Gas Demand Up Meaningfully from 2021 & Previous Estimates ■ Natural gas now seemingly playing a greater role in the US & global economy ■ Critical fuel for economy: power generation, industrial feedstock and residential/commercial demand = 90%+ of usa
Slide 15: 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 ~3 Tcf/year by 2050 • Record LNG volumes continue to leave domestic ports – Industrial uses add ~3
Slide 16: 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 is produced from natural gas than any other fuel ■ While renewable energy projected to gain share, natural gas will remain critical for
Slide 17: Natural Gas Production
Natural Gas Production E&P Activity Picking Back Up, Driven by Resilient Demand; Supported by Commodity Prices ■ After E&P activity curtailment in 2020/2021, attractive demand signals have led producers to increase activity, leading to increased natural gas production – Forward years primarily refle
Slide 18: Appendix
Appendix Tk—— COMPRESSION
Slide 19: Organizational Chart
Organizational Chart Energy Transfer Combined, the Energy Family Transfer family owns ~47% of USAC Public Unitholders USA Compression GP, LLC (our general partner) ~53% ~39% LP LP Non-econ GP; Preferred ~8% LP Unitholders Preferred Units USA Compression Partners, LP Note: Percentages reflect USAC un
Slide 20: 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 21: Balancing Distribution Stability and Leverage
Balancing Distribution Stability and Leverage Annualized Distributions per Common Unit $2.50 Stability in Distribution through the cycle $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 $1.50 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021
Slide 22: Operational and Financial Performance
Operational and Financial Performance Avg. Revenue Generating HP (000s) Revenue ($MM) Post-CDM Post-CDM Pre-CDM Acquisition Non-Predecessor (1) Pre-CDM Acquisition Non-Predecessor (1) Acquisition (1)(2) Acquisition (1)(2) 4,000 3,279 $800 3,140 $698 2,951 2,978 $668 $633 3,000 2,760 $584 $600 2,000
Slide 23: Macro Thesis: The "Shift to Shale"
Macro Thesis: The “Shift to Shale” Shale Gas Expected to Continue to be the Primary Source of US Natural Gas ■ Shale Dominance: Production from shale shadows ■ Shale gas is typically produced at lower wellhead all other sources pressures (0-50 PSIG) in contrast to conventional gas – 2021 est. ~30 Tc
Slide 24: Compression Throughout the Value Chain
Compression Throughout the Value Chain Midstream Compression Offers Cash Flow & Customer Stability Lower (Sm. Volumes) Pressure Regime Higher (Lg. Volumes) Crude Oil Wells Rate-Base Applications • Gas Lift Midstream Applications • Interstate Pipeline • Gas Reinjection • Regional Gathering • Trunklin
Slide 25: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Ended March 31, December 31, ($ in 000's) 2022 2021 Total revenues $ 163,412 $ 159,943 Cost of operations, exclusive of depreciation and amortization (53,732) (50,998) Depreciation and amortization (59,064) (59,247) Gross margin $ 50,616 $ 49,698 Depreciation an
Slide 26: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Ended March 31, December 31, ($ in 000's) 2022 2021 Net income (loss) $ 3,254 $ 3,105 Interest expense, net 31,838 32,966 Depreciation and amortization 59,064 59,247 Income tax expense 26 284 EBITDA $ 94,182 $ 95,602 Unit-based compensation expense 3,710 3,599 T
Slide 27: Non-GAAP Reconciliations, cont'd.
Non-GAAP Reconciliations, cont’d. Years Ended December 31, ($ in 000's) 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Net income (loss) $ 3,254 $ (594,732) $ 39,132 $ (10,551) $ 11,440 $ 12,935 $ (154,273) $ 24,946 $ 11,071 $ 4,503 $ 69 $ 10,479 $ 21,228 $ 20,911 $ 7,122
Slide 28: Non-GAAP Reconciliations, cont'd.
Non-GAAP Reconciliations, cont’d. Three Months Ended March 31, December 31, ($ in 000's) 2022 2021 Net income (loss) $ 3,254 $ 3,105 Non-cash interest expense 1,822 2,899 Depreciation and amortization 59,064 59,247 Non-cash income tax expense (benefit) (204) 59 Unit-based compensation expense 3,710
Slide 29: Non-GAAP Reconciliations, cont'd. 2022 Guidance
Non-GAAP Reconciliations, cont’d. 2022 Guidance Guidance Net income $33.0 to $53.0 million Plus: Interest expense, net 129.0 million Plus: Depreciation and amortization 229.0 million Plus: Income tax expense 1.0 million EBITDA $392.0 million to $412.0 million Plus: Unit-based compensation expense 14
Slide 30: 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. EBITDA, a measure not defined under U.S. generally accepted acco
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