Usa Compression Partners, Lp · NYSE:USAC
Usa Compression Partners, Lp — 2015 NAPTP MLP Investor Conference
33 slides from Usa Compression Partners, Lp's conference presentation, May 21, 2015
Slide 1: USA Compression Partners, LP 2015 NAPTP MLP Investor Conference
USA Compression Partners, LP 2015 NAPTP MLP Investor Conference May 20 – 22
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: Who is USA Compression?
Who is USA Compression? Pure-play Compression MLP Backed by Experienced Energy Investors Ownership Structure (1) Market Data Unit Price (as of 05/15/15) $22.67 Riverstone Units O/S (mm) (1) 46.8 Holdings & LP Equity Value $1,060.4 Management Public GP Equity Value (2) 17.6 Unitholders Debt (as of 3/
Slide 4: Recent Developments: Q1 2015 Review
Recent Developments: Q1 2015 Review USAC Continues to Excel Operationally; Achieves Record Revenue, EBITDA and DCF in Q1 2015 ■ Q1 2015 fleet HP of 1.6 million and average revenue-generating HP of 1.4 million– a 29% and 27% increase over Q1 2014 levels ■ Average horsepower utilization of 92% for Q1
Slide 5: Outlook For Compression
Outlook For Compression <=—— COMPRESSION
Slide 6: USAC Business Drivers
USAC Business Drivers Compression is Critical Infrastructure for Producing & Transporting Hydrocarbons ▪ Approximately 85% of USAC’s business (by HP) installed in natural gas-based applications Overall Gas Demand ▪ Expect to see continued steady demand / production of natural gas & Production ▪ LNG
Slide 7: Macro Thesis: The "Shift to Shale"
Macro Thesis: The “Shift to Shale” Shale Gas Piece of the Growing Pie Continues to Increase Tcfe 40 35 Tcfe ■ Overall natural gas production expected to increase from ~66 Bcf/d in 2012 to ~97 Bcf/d through 2040, an 35 increase of 47% ■ Importantly, shale gas volumes are projected to grow 30 ~2x the
Slide 8: Dry Gas is Starting to Play a Bigger Role
Dry Gas is Starting to Play a Bigger Role Decline in Liquids/Associated Gas Production Presents Opportunity ■ Dry gas volumes remained relatively constant from 2011 through 2014 ■ For the past few years, associated gas (accompanying the strong crude oil / NGL market) has accounted for the majority o
Slide 9: Changing Natural Gas Market
Changing Natural Gas Market Marcellus / Utica to Transform Market in Near Term Rockies Marcellus / 13.0 Utica 16.4 Anadarko 7.5 Fayetteville Permian 2.9 Barnett 6.3 5.3 Haynesville Eagle 4.3 2015 7.1 Ford (Bcf/d) GOM 4.5 Note: Green/red circles indicate whether projected natural gas production expan
Slide 10: Changing Natural Gas Market, Continued
Changing Natural Gas Market, Continued Northeast Continues Growth; West / South Texas Adding Rockies Marcellus / 11.6 Utica 24.2 Anadarko 6.5 Fayetteville 3.2 Permian Barnett 5.0 Haynesville 7.2 4.2 Eagle 2020 9.0 Ford GOM (Bcf/d) 4.9 Note: Green/red circles indicate whether projected natural gas pr
Slide 11: Continued Northeast Infrastructure Build-Out
Continued Northeast Infrastructure Build-Out Pipeline Takeaway Projects Out of SW PA, WV, OH 30 25 Producers with firm capacity will continue to 20 develop until the NE “debottlenecks” in mid-’17 15 Bcf/d 10 5 0 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020 Trough Local Dem
Slide 12: LNG and Pipeline Exports Drive Growing U.S. Gas Demand
LNG and Pipeline Exports Drive Growing U.S. Gas Demand Approved LNG Projects and Incremental Natural Gas Export Capacity Total ~27 Bcf/d; Supports the Need for Midstream Compression LNG Opportunity ■ ~23 Bcf/d of LNG export projects filed/approved by FERC; 5 approved for total capacity of over 9 Bcf
Slide 13: The Need for Compression
The Need for Compression Critical Infrastructure for US Natural Gas ■ Compression is required to transport natural gas throughout the pipeline system ■ Once installed, becomes part of midstream infrastructure, remaining in field for significant Critical Part of lengths of time Natural Gas Transporta
Slide 14: Growing Shale Compression Requirements
Growing Shale Compression Requirements Shale Production Drives Increasing Compression Requirements (1) (HP) ■ Shale gas is typically produced at lower wellhead pressures (0-50 PSIG) in contrast to conventional 350,000 gas wells (100-300 PSIG) ■ Pipeline specifications remain constant – 300,000 Compr
Slide 15: Strategic Focus on Infrastructure Applications
Strategic Focus on Infrastructure Applications Midstream and Crude-Oriented Gas Lift Compression Offer Cash Flow Stability Crude Oil Wells Midstream Applications Rate-Base Applications • Regional Gathering • Interstate Pipeline • Gas Lift • Gas Processing Plant • Trunkline gathering • Gas Reinjectio
Slide 16: Stable, Long-Lived "Tail" Oil Production Supports Gas-Lift Operations
Stable, Long-Lived “Tail” Oil Production Supports Gas-Lift Operations Illustrative Shale Oil Well Production Profile ■ 1,000 Bpd initial production can decline to ~100 Bpd by year 3 ■ Gas-lift compression utilized during this long “tail” of production Lift energy often required for – Provides lift e
Slide 17: USAC: Story of Stability and Growth
USAC: Story of Stability and Growth
Slide 18: USAC History
USAC History 17-year History of Growth and Differentiated Business Model May 2014: USAC 1998: USAC 1998 – 2010: USAC Dec 2010: Jan 2013: Aug 2013: USAC completes $169mm founded by CEO grows through organic Riverstone USAC completes primary and Eric Long with development – completes $198mm $182mm S&R
Slide 19: Business Model Underpinned by Stability
Business Model Underpinned by Stability Stability Through Multiple Commodity Price Cycles Fleet HH Nat Gas ■ Commodity price levels do Utilization $ / MMBTU not directly affect USAC’s 100% $14.00 business prospects ■ Rather, natural gas 90% $12.00 compression is impacted by 80% $127 the level of nat
Slide 20: Business Fundamentals Result in Cash Flow Stability
Business 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 ■ 6
Slide 21: Geographical Presence
Geographical Presence 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 Barnett Basins
Slide 22: Well-Capitalized Customer Base with Strong Credit Ratings
Well-Capitalized Customer Base with Strong Credit Ratings Diverse Customer Base Includes O&G Majors, Independent E&Ps, Large Midstream Operators and Regional Gatherers Length of Credit Rank Top Customers Relationship Rating (1) 1 Large Public Independent E&P 9 years Baa3 / BBB- 2 Large Public Indepe
Slide 23: 2015 Capital Program
2015 Capital Program Continued Build-Out of the High-Growth Shale Plays Drives Robust Capital Program Horsepower 400,000 348,000 Approximately 91K HP 350,000 Almost 2.5x 2013 added to fleet in Q1; Fleet Additions remainder of 2015 order is 71,000 300,000 weighted to Q2 and Q3 250,000 241,000 27,000
Slide 24: Financial Overview and Investment Highlights
Financial Overview and Investment Highlights
Slide 25: USAC Distributions and Leverage Since IPO
USAC Distributions and Leverage Since IPO Partnership Has Delivered Strong Distribution Growth, While Taking Steps to Methodically De-Lever the Balance Sheet Annualized Distributions per LP Unit USAC Historical Pro Forma Leverage(2) $2.10 $2.04 $2.06 8.0x $2.00 $2.02 7.5x $2.00 $1.96 $1.92 7.0x $1.9
Slide 26: Operational and Financial Performance
Operational and Financial Performance Avg. Revenue Generating HP (000s) Revenue ($MM) HP 27% growth 1,386 $mm 1,400 250 $222 2006 – 2014 1,201 2006 – 2014 1,200 19% CAGR 1,095 200 20% CAGR 1,000 902 $153 750 150 30% 800 $119 571 $99 growth 517 $91 $95 $92 600 489 100 456 $70 $65 371 400 $50 $50 289
Slide 27: USAC Investment Highlights
USAC Investment Highlights USAC’s Business Prospects Driven By Positive Macro Drivers in the Midstream Industry ■ Continued focus on infrastructure-oriented compression applications; compression is critical to Critical transporting hydrocarbons to end markets Midstream ■ Shale gas continues to rewar
Slide 28: Compression
i —— COMPRESSION
Slide 29: Appendix
Appendix Ss
Slide 30: 2015 Guidance
2015 Guidance Guidance ($ in millions) Net income $13.1 to $24.1 Plus: Interest expense $17.6 to $18.6 Plus: Depreciation and amortization $92.0 Plus: Income taxes $0.2 EBITDA $123.9 to $133.9 Plus: Interest income on capital lease $1.6 Plus: Unit-based compensation expense (1) $4.5 Adjusted EBITDA
Slide 31: Non-GAAP Reconciliations
Non-GAAP Reconciliations ($ in thousands) Three Months Ended March 31, Years Ended December 31, 2015 2014 2014 2013 2012 2011 Net income $ 11,456 $ 3,915 $ 24,946 $ 11,071 $ 4,503 $ 69 Interest expense 3,994 3,549 12,529 12,488 15,905 12,970 Depreciation and amortization 20,731 16,220 71,156 52,917
Slide 32: Non-GAAP Reconciliations (cont'd)
Non-GAAP Reconciliations (cont’d) Three Months Ended March 31, Decem ber 31, March 31, 2015 2014 2014 Net income $ 11,456 $ 8,501 $ 3,915 Plus: Non-cash interest expense 455 307 582 Plus: Depreciation and amortization 20,731 19,631 16,220 Plus: Unit-based compensation(1) 1,026 77 1,096 Plus: Impairm
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 EBITDA ,distributable cash flow and cash coverage, as well as fleet utilization. EBITDA, a measure not defined under U.S. generally accepted counting principles (“
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