Usa Compression Partners, Lp · NYSE:USAC
Usa Compression Partners, Lp — UBS MLP One-on-One Conference 2017
32 slides from Usa Compression Partners, Lp's conference presentation, Jan 10, 2017
Slide 1: USA Compression Partners, LP
USA Compression Partners, LP UBS MLP One‐on‐One Conference January 10, 2017
Slide 2: Disclaimers
Disclaimers This presentation contains forward‐looking statements relating to the Partnership’s operations that are based on management’s current expectations, estimates and projections about its operations. You can identify many of these forward‐looking statements by words such as “believe”, “expec
Slide 3: Q3 2016 Review & Q4 Equity Offering
Q3 2016 Review & Q4 Equity Offering Strong Q3 2016 Results; Updated 2016 Guidance; Equity Offering Strengthens Balance Sheet ■ Q3 2016 fleet HP of 1.7 million and average revenue generating HP of 1.4 million ■ Average horsepower utilization of 87.3% for Q3 2016 – up from 86.1% in sequential quarters
Slide 4: Addressing the Market Backdrop: USAC's Strategy
Addressing the Market Backdrop: USAC’s Strategy USA Compression has pulled multiple levers to help navigate this difficult environment Market Backdrop and USA Compression’s Strategy the Effect on the Compression Industry Significantly Reduce Focus on Utilization Expense Control Capital Spending • Lo
Slide 5: Outlook For Compression and Macro Drivers
Outlook For Compression and Macro Drivers
Slide 6: Compression Basics and the Need for Compression
Compression Basics and the Need for Compression Critical Infrastructure for US Natural Gas ■ Compression is a mechanical process where natural gas from a lower pressure is “smashed What is down” (compressed) to a smaller volume which results in a higher pressure Compression? ■ In a nutshell, compres
Slide 7: Strategic Focus on Infrastructure Applications
Strategic Focus on Infrastructure Applications ■ Compression is a critical service across a range of applications in the production, processing and transportation of oil and natural gas: ompression is a must run service and is required in a – Enhances oil and natural gas production – Pressurizes nat
Slide 8: Long-Life Deployment Cycle – Early to Mid-Innings
Long‐Life Deployment Cycle – “Early to Mid‐Innings” Horsepower Available for Redeployment Horsepower Variable Horsepower Baseload Horsepower 1 3 5 7 9 11 13 15 17 19 21 23 25 Time (years) USAC meets changing contract compression requirements during all phases of the life of a developing natural gas
Slide 9: Production Stabilizes in ~3 Years then has a Long Life
Production Stabilizes in ~ 3 Years then has a LONG life . . . Representative Marcellus Shale Type Curve Steep Hyperbolic Initial decline: 70‐90% first year…. Shallow exponential decline (15% declining to 1% next 20+ years) creates long‐lived, stable ‘tail’ production Source: EQT Corporation. © 2016
Slide 10: USAC Business Drivers
USAC Business Drivers Compression is Critical Infrastructure for Producing & Transporting Hydrocarbons ▪ ~85% of USAC’s business (by HP) installed in natural gas‐based applications Overall Gas Demand ▪ Projected increasing demand / steady production of natural gas & Production ▪ LNG exports, Mexico
Slide 11: Macro Thesis: The Shift to Shale
Macro Thesis: The “Shift to Shale” Shale Gas Piece of the Growing Pie Continues to Increase Tcfe 45 42 Tcfe ■ Overall natural gas production expected to increase from ~74 Bcf/d in 2015 to ~115 Bcf/d through 2040, an 40 increase of 55% ■ Volume projections continue to be revised upwards 35 – In 2013,
Slide 12: Growing Shale Compression Requirements
Growing Shale Compression Requirements Shale Production Drives Increasing Compression Requirements (1) (HP) ■ Shale gas is typically produced at lower wellhead 350,000 pressures (0‐50 PSIG) in contrast to conventional gas wells (100‐300 PSIG) ■ Pipeline specifications remain constant – 300,000 Compr
Slide 13: Natural Gas Demand Poised to Surge
Natural Gas Demand Poised to Surge “Big Four” Demand Sources Driving Majority of Expected 38 Bcf/d of New Natural Gas Demand Thru 2040 ■ EIA expects 40 – 45 gigawatts (GW) of coal‐plant retirements in 2016 alone, with 55 GW of Coal Plant expected retirements beyond 2016 Retirements ■ >6 Bcf/d of dem
Slide 14: Natural Gas Demand Poised to Surge, Cont'd.
Natural Gas Demand Poised to Surge, Cont’d. Industrial Sector, LNG and Pipeline Exports to Mexico Drive Demand Growth Projected Natural Gas Demand LNG Export Capacity Thru 2020 Bcf/d Bcf/d 12.0 140.0 116.4 Almost 13 Bcf/d of LNG 120.0 105.2 9.0 projects approved by FERC – 100.0 86.8 78.2 1 in‐servic
Slide 15: USAC: Story of Stability and Growth
USAC: Story of Stability and Growth
Slide 16: USAC History
USAC History 18‐year History of Growth and Differentiated Business Model 1998: USAC 1998 – Dec 2010: Jan 2013: Aug 2013: May 2014: Sept 2015: Dec 2016: founded by 2010: Riverstone $198mm $182mm S&R $169mm $74mm $81mm CEO Eric Long Large HP completes IPO; used Acquisition, equity equity equity with p
Slide 17: Geographical Presence
Geographical Presence Diversified Presence in Key Geographical Regions Key Customer Profile • Oil and Gas Majors • Independent E&Ps • Large Midstreams & Processors • Regional Gathering Systems Marcellus / Utica Shale Anadarko and Hugoton Basins Fayetteville & Woodford Shales Permian and Delaware Bar
Slide 18: Business Model Underpinned by Stability
Business Model Underpinned by Stability Stability Through Multiple Commodity Price Cycles ■ Commodity price levels do Horsepower HH Nat Gas not directly affect USAC’s Utilization $ / MMBTU business prospects 100% $14.00 ■ Rather, natural gas 90% compression is impacted by $12.00 the level of natural
Slide 19: Large Horsepower Gas Applications Drives Stability
Large Horsepower Gas Applications Drives Stability Gas Compression Industry Varies By Size of Compression Unit Gas Compression Industry: Key Characteristics by Size Small Medium Large Extra Large Commentary Compression Unit 400 – 1,000 1,000 – More horsepower 0 – 400 HP 1,500+ HP HP Range HP 1,500 H
Slide 20: Nature of USA Compression's Contracts
Nature of USA Compression’s Contracts Compression Services Contract Profile ■ USA Compression’s service contract rates are billed monthly (typically 30 days in advance) and Contract are 100% fixed fee (i.e. contract stipulates a specific $ / month) Service Rate ► Structured similar to take‐or‐pay co
Slide 21: Strong, Large-Cap Customer Base Able to Weather the Storm
Strong, Large‐Cap Customer Base Able to Weather the Storm Diverse Customer Base Includes O&G Majors, Independent E&Ps, Large Midstream Operators and Regional Gatherers Length of Rank Top Customers Relationship Top 10 customers 1 Pipeline Subsidiary of Utility 3 years represent over 42% of 2 Large Pu
Slide 22: Fundamentals Result in Cash Flow Stability
Fundamentals Result in Cash Flow Stability “Infrastructure‐Nature” of USAC Assets Provide Cash Flow Stability ■ Long asset life complements gathering systems and processing facilities served Long‐lived Asset ■ Compression units typically last for 40+ years, when properly maintained Base ■ 60% of the
Slide 23: Financial Overview and Investment Highlights
Financial Overview and Investment Highlights
Slide 24: USAC Distributions and Leverage Since IPO
USAC Distributions and Leverage Since IPO Prudent Balance Between Distribution Growth, Coverage and Leverage Annualized Distributions per LP Unit USAC Historical Leverage(2) 8.0x $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.20 $2.06 7.5x $2.04 $2.02 $2.00 $2.10 $1.96 7.0x $1.92 $2.00 1 $1.84 $1.90 6.0x 4
Slide 25: Operational and Financial Performance
Operational and Financial Performance Avg. Revenue Generating HP (000s) Revenue ($MM) HP $mm 1,600 300 $271 2006 – 2015 1,409 1,405 1,382 1,400 19% CAGR 250 2006 – 2015 1,201 $222 1,200 21% CAGR $202 $191 902 200 1,000 750 $153 800 150 $119 517 571 $99 600 489 $92 371 456 100 $70 $91 $95 400 289 $50
Slide 26: USAC Investment Highlights
USAC Investment Highlights USAC’s Business Prospects Driven By Positive Macro Drivers in the Midstream Industry ■ Continued focus on infrastructure‐oriented compression applications; compression is critical to Critical transporting hydrocarbons to end markets Midstream ■ Shale gas continues to rewar
Slide 27: Appendix
Appendix COMPRESSION
Slide 28: USA Compression Ownership Structure
USA Compression Ownership Structure USAC is a Pure‐play Compression MLP Backed by Experienced Energy Investors Riverstone Holdings & Management 100.0% Membership Interest Public Unitholders 36.8mm USA Compression Holdings, LLC Common Units 23.9mm Common Units 59.8% LP Interest 38.9% LP Interest 1.3%
Slide 29: Non-GAAP Reconciliations
Non‐GAAP Reconciliations Three Months Nine Months Ended September 30, Ended September 30, ($ in 000's) 2016 2015 2016 2015 Net income (loss) $ (2,146) $ 9,805 $ 9,666 $ 5,357 Interest expense, net 5,275 4,665 15,476 13,074 Depreciation and amortization 23,195 21,360 68,701 63,598 Income taxes 74 1,0
Slide 30: Non-GAAP Reconciliations, Cont'd.
Non‐GAAP Reconciliations, Cont’d. Year Ended December 31, ($ in 000's) 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Net income (loss) $ (154,273) $ 24,946 $ 11,071 $ 4,503 $ 69 $ 10,479 $ 21,228 $ 20,911 $ 7,122 $ 9,829 Interest expense, net 17,605 12,529 12,488 15,905 12,970 12,279 10,043 14,0
Slide 31: Non-GAAP Reconciliations, Cont'd.
Non‐GAAP Reconciliations, Cont’d. Three m onths ended Septem ber 30, June 30, Septem ber 30, ($ in 000's) 2016 2016 2015 Net income (loss) $ (2,146) $ 3,274 $ 9,805 Plus: Non-cash interest expense 546 548 416 Plus: Non-cash income tax expense 74 32 1,076 Plus: Depreciation and amortization 23,195 23
Slide 32: 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 EBITDA ,LTM Adjusted EBITDA, Adjusted EBITDA Margin Percentage, Distributable Cash Flow, Distributable Cash Flow Coverage Ratio and Cash Coverage Ratio, as well as
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