Usa Compression Partners, Lp · NYSE:USAC
Usa Compression Partners, Lp — Credit Suisse Energy Summit 2020
33 slides from Usa Compression Partners, Lp's conference presentation, Mar 2, 2020
Slide 1: USA Compression Partners, LP – Credit Suisse Energy Summit
USA Compression Partners, LP Credit Suisse Energy Summit March 2‐3, 2020
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 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: $13.85 ■ 20+ year history
Slide 6: USAC Offers a Stable Infrastructure Opportunity
USAC Offers a Stable Infrastructure Opportunity Natural Gas Has Proven Itself as a Long‐Term Fuel; Compression is Critical! ■ Bullish on natural gas production & demand, both in US and globally Supportive Macro: Gas Isn’t ■ LNG exports, petchem feedstock and power gen driving continued gas usage Goi
Slide 7: 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 8: Customer Overview
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 8% > 10 years 297K Independent Public E&P 2% > 10 Years 62K Large Private E&P 4% > 10
Slide 9: 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 10: 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 HH Nat Gas Utilization has remained at $ /MMBTU higher, fully‐utilized levels 100.0% $14 90.0% $12 Horsepower 80.0% utilization average: ~93% for over a
Slide 11: Diversification – The "Right" Operating Regions
Diversification – The “Right” Operating Regions Rockies = Northeast = ~5% ~23% Mid‐ Continent = ~15% Permian/ Louisiana / Delaware Basin = East TX = ~34% ~8% Gulf Coast = ~16% Note: Regional % breakdowns represent active fleet horsepower at December 31, 2019; excludes non‐compression equipment. 10 ©
Slide 12: Rewarding our Unitholders
Rewarding our Unitholders Timely Investment Thesis: Stable Distributions and Attractive TUR ■ Since USAC’s IPO in January 2013, over $880 million has been distributed to common unitholders ■ Stable distribution history has resulted in substantial TUR performance over the past 5+ years Total Unithold
Slide 13: Natural Gas: Not Going Away!
Natural Gas: Not Going Away! COMPRESSION
Slide 14: Moderating Rig Count but Production Increases Expected
Moderating Rig Count….but Production Increases Expected Slowing Rig Count / Production in Face of Strong Demand Should Bode Well for Nat Gas ■ Overall domestic rig counts are down (~60% off recent highs) (1) – Gas‐directed rigs are down >90% off 2008 highs, aided by economics of gassy oil plays (i.e
Slide 15: Global Natural Gas Demand
Global Natural Gas Demand Natural Gas Is Not Going Away ■ World energy usage expected to grow with growing GDP – Total energy usage expected to grow by ~50% by 2050 (1) – Renewables growing quickly, but gas will still be critical ■ Natural gas and petroleum still expected to meet much of energy need
Slide 16: Domestic Natural Gas Demand
Domestic Natural Gas Demand Rising Baseload Natural Gas Demand ■ Natural gas domestic consumption is up 10.5 Bcf/day (~14%) since 2014 to 83.3 Bcf/d in 2018 (1) – Majority of increase (~6.4 Bcf/d) took place in 2018 ■ 1H 2019 increased over 1H 2018 by 2.2 Bcf/d to 84.2 Bcf/d (1) ■ Largest driver has
Slide 17: LNG Baseload Demand
LNG Baseload Demand LNG Growing Annually: Large Increases Are Coming ■ LNG export capacity has increased substantially in last twelve months – to >7 Bcf/d (2) – Sustained demand for feedgas is creating “baseload”‐type demand dynamics – Positive for compression as baseload gas demand is steady and re
Slide 18: Domestic Natural Gas Demand Growth
Domestic Natural Gas Demand Growth ■ Natural Demand Continues to Grow…with Large Increases from… Projected Natural Gas Demand (Bcf/d)(1) Exports to Mexico: 140 ~23% growth ‐ Growing power needs to be met by US over 30 years! 118 shale gas 120 113 109 ‐ ~6 Bcf/d to Mexico by 2020 100 96 88 LNG Export
Slide 19: Q4 Review and 2020 Outlook
Q4 Review and 2020 Outlook COMPRESSION
Slide 20: Q4 2019 Recap
Q4 2019 Recap Infrastructure Business Strategy Has Resulted in Continued Stable Performance ■ Q4 2019 fleet HP of 3.7 million / average revenue generating HP of 3.3 million ■ Q4 2019 average horsepower utilization of 93.9% Operational Update ■ Upward pricing movement & continued demand for large HP
Slide 21: 2020 Outlook & Focus
2020 Outlook & Focus Capex Program Scaled Back vs 2019 ■ Customers finalizing 2020 budgets; anticipate spending reductions – positive for compression outsourcing ■ USAC high‐grading customers – longer term contracts with strong counterparties ■ Highest‐return customer projects will get completed, re
Slide 22: Appendix
Appendix cy—— COMPRESSION
Slide 23: Organizational Chart
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% LP Preferred Units USA Compression Partners, LP Note: Percentages reflect USAC
Slide 24: 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 25: Balancing Distribution Stability and Leverage
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 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.00 $1.50 Q1 2017
Slide 26: Operational and Financial Performance
Operational and Financial Performance Avg. Revenue Generating HP (000s) Revenue ($MM) Post‐CDM Post‐CDM 4,000 Pre‐CDM Acquisition Non‐Predecessor (1) Acquisition (1)(2) Pre‐CDM Acquisition Non‐Predecessor (1) Acquisition (1)(2) $800 3,279 $698 3,000 2,760 $584 $600 2,000 $400 1,409 1,378 1,506 1,201
Slide 27: Macro Thesis: The "Shift to Shale"
Macro Thesis: The “Shift to Shale” Shale Gas Expected to be the Primary Source in Future ■ Shale Ramp: Production from shale has now pulled ■ Shale gas is typically produced at lower wellhead even with all other sources pressures (0‐50 PSIG) in contrast to conventional gas – 2019 est. ~ 26 Tcfe of s
Slide 28: Compression Throughout the Value Chain
Compression Throughout the Value Chain Midstream Compression Offers Cash Flow & Customer Stability Lower (Sm. Volumes) Pressure Regime Higher (Lg. Volumes) Crude Oil Wells Rate‐Base Applications • Gas Lift Midstream Applications • Interstate Pipeline • Gas Reinjection • Regional Gathering • Trunklin
Slide 29: Non-GAAP Reconciliations
Non‐GAAP Reconciliations Three Months Ended Year Ended December 31, December 31, ($ in 000's) 2019 2019 Net income $ 9,281 $ 39,132 Interest expense, net 32,984 127,146 Depreciation and amortization 58,227 231,447 Income tax expense 1,563 2,186 EBITDA $ 102,055 $ 399,911 Interest income on capital l
Slide 30: Non-GAAP Reconciliations, cont'd.
Non‐GAAP Reconciliations, cont’d. Years Ended December 31, ($ in 000's) 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Net income (loss) $ 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 Interest expense, net 127,146
Slide 31: Non-GAAP Reconciliations, cont'd.
Non‐GAAP Reconciliations, cont’d. Three Months Ended Year Ended December 31, December 31, ($ in 000's) 2019 2019 Net income $ 9,281 $ 39,132 Non‐cash interest expense 1,987 7,607 Depreciation and amortization 58,227 231,447 Non‐cash income tax expense 1,024 1,376 Unit‐based compensation expense 2,88
Slide 32: Non-GAAP Reconciliations, cont'd. – 2020 Guidance
Non‐GAAP Reconciliations, cont’d. 2020 Guidance Guidance Net income $40.0 million to $60.0 million Plus: Interest expense, net 131.5 million Plus: Depreciation and amortization 231.0 million Plus: Income tax expense 0.5 million EBITDA $403.0 million to $423.0 million Plus: Interest income on capital
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 gross operating margin, Adjusted EBITDA, Distributable Cash Flow and Distributable Cash Flow Coverage Ratio. EBITDA, a measure not defined under U.S. generally accepted acc
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