Kinetik Holdings Inc. · NYSE:KNTK
Kinetik — Altus Midstream Company — Q3 2020 Earnings Presentation
25 slides from Kinetik's earnings presentation, November 2020
Slide 1: Investor Presentation
ALT U S M ID ST R EAM C O M PANY Investor Presentation November 2020 Nasdaq: ALTM
Slide 2: Disclaimer
Disclaimer FORWARD LOOKING STATEMENTS The information in this presentation and the oral statements made in connection therewith include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities E
Slide 3: Altus Midstream Overview
Altus Midstream Overview Commentary Simplified Structure ► Altus Midstream is a pure-play, Permian to Gulf Coast Public Investors Apache Corporation midstream C-corp C-corp governance ~21%(1) ~79%(1) No IDRs ► Interests in premier JV pipelines provide diversity of Altus Midstream Company (Nasdaq
Slide 4: Potential 2021 Dividend Program
Potential 2021 Dividend Program ►In December, Management plans to recommend to the Board of Directors the initiation of a dividend in 2021 Intend to propose a $1.50/share quarterly dividend payout, commencing in March 2021 Implies ~1.8x coverage ratio at the midpoint of 2021 DCF guidance(1) 2021
Slide 5: Dividend Rationale
Dividend Rationale ►Following a thorough strategic review, we believe the best option to maximize shareholder value is to return capital to investors through a dividend program Surety of cash flows to support a dividend with the expected start-up of PHP in early 2021 High conviction in projectio
Slide 6: Benchmarking Analysis
Benchmarking Analysis ►ALTM currently trades at a discount to its peers despite having strong visibility into future free cash flow Non-operated exposure to top-tier projects managed by two integrated, investment grade midstream companies (KMI and EPD) ►Upside potential in G&P business from increm
Slide 7: JV Pipelines and G&P Overview
JV Pipelines and G&P Overview 7
Slide 8: Joint Venture Pipelines Overview
Joint Venture Pipelines Overview Pipeline Map Commentary ► Altus owns equity interests in four joint venture pipelines ► All four pipelines provide takeaway capacity from the Permian Basin to the U.S. Gulf Coast ► All pipelines in-service with the exception of Katy Permian Highway (expected in early
Slide 9: JV Pipeline Recent Developments
JV Pipeline Recent Developments Gulf Coast ► Capacity of 2.0 Bcf/d is fully subscribed under long-term, binding agreements Express Pipeline ► GCX continues strong performance, with cash distributions in-line with expectations ► Capacity of 2.1 Bcf/d is fully subscribed under long-term, binding agree
Slide 10: Gulf Coast Express (GCX) Overview
Gulf Coast Express (GCX) Overview Pipeline Map Commentary ► Altus owns 16% of GCX, remaining ownership is 34% Kinder Morgan (Operator), 25% DCP and 25% Targa ► Project Statistics: Capacity: 2.0 Bcf/d In-service since Sept 2019, Altus continues to receive distributions Capacity is fully subscri
Slide 11: Permian Highway Pipeline (PHP) Overview
Permian Highway Pipeline (PHP) Overview Pipeline Map Commentary ► Altus owns ~27% of PHP, remaining ownership is ~27% Kinder Morgan (Operator), ~27% EagleClaw and 20% from an undisclosed anchor shipper ► Designed to transport approximately 2.1 Bcf/d of natural gas Pipeline capacity is fully subscr
Slide 12: Shin Oak Pipeline Overview
Shin Oak Pipeline Overview Pipeline Map Commentary ► Breviloba LLC owns the Shin Oak NGL Pipeline (Shin Oak) and is owned 67% by Enterprise Products Operating LLC and 33% by Altus ► Project overview: ~658 miles of 24-inch pipeline connecting Orla and Waha to Mont Belvieu NGL fractionation and stor
Slide 13: EPIC Crude Overview
EPIC Crude Overview Pipeline Map Commentary ► Altus owns 15% of EPIC Crude, remaining ownership is 45% Ares Capital(1), 30% Noble Midstream Partners and 10% Rattler Midstream ► The project consists of ~700 miles of pipeline connecting the Permian and Eagle Ford Basins to Corpus Christi ► Current cap
Slide 14: Gathering & Processing Overview
Gathering & Processing Overview Asset Map Asset Highlights ► Rich Gas Processing: 600 MMcf/d of capacity from three cryo trains online and in-service Cryos performing well, consistently able to run above nameplate capacity with 99%+ ethane recovery ► Lean Gas Treating / Compression: 400 MMcf/d o
Slide 15: State of the Art Cryogenic Processing – SRX Technology
State of the Art Cryogenic Processing – SRX Technology ► The cryogenic facilities utilize SRX technology to capitalize on better recoveries in ethane rejection mode ► Drives improved netbacks on third-party volumes ► Standardized units allow for efficient operations at centralized cryo complex Desig
Slide 16: Financial Overview
Financial Overview 16
Slide 17: Financial Overview
Financial Overview ►Altus has ample liquidity to execute on its 2020 and 2021 capital plans through a combination of reinvesting operating cash flow and revolver capacity Revolver capacity is $800 million, maturing in November 2023 No anticipated need to access any capital markets to finance gro
Slide 18: Updates to 2020 Guidance
Updates to 2020 Guidance ►Gathered volume outlook remains 480 – 520 MMcf/d (~70% rich gas) ► Trending towards the middle of the range given strong return of volumes following production curtailments in 1H20 ►2020 Adjusted EBITDA(1) range revised upwards to $170 – 190 million ► 55-65% attributable to
Slide 19: Updates to 2021 Guidance
Updates to 2021 Guidance ►Gathered volumes revised upwards to 360 – 400 MMcf/d (~70% rich gas) ► 2021 gathered volume outlook reflects no third-party or additional wells turned online at Alpine High ►2021 Adjusted EBITDA range revised upwards to $230 – 270 million ► ~80% attributable to JV pipeline
Slide 20: 2020 – 2021 Guidance Overview
2020 – 2021 Guidance Overview ADJUSTED EBITDA DISTRIBUTABLE CASH FLOW GROWTH CAPITAL INVESTMENTS(1) ($ in millions) ($ in millions) ($ in millions) $300 $200 $400 $190 $270 $360 $175 $350 $250 ~40% increase ~45% increase $330 $150 $160 $300 $230 $200 $190 $125 $125 $250 ~90% decrease $170 $115 $150
Slide 21: Appendix
Appendix 21
Slide 22: Joint Venture Pipelines Detail
Joint Venture Pipelines Detail Gulf Coast Express Permian Highway Shin Oak EPIC Crude Product Natural Gas Natural Gas NGL Crude Operator Kinder Morgan Kinder Morgan Enterprise Products EPIC Project Cost $1.75 billion ~$2 billion $1.5 billion $2.4-$2.5 billion Altus Ownership % 16% ~27% 33% 15% Origi
Slide 23: Non-GAAP Reconciliation – Adjusted EBITDA & DCF
Non-GAAP Reconciliation – Adjusted EBITDA & DCF The Company believes Adjusted EBITDA and DCF are useful because they allow the Company to more effectively evaluate its operating performance and compare the results of its operations from period to period and against its peers without regard to financ
Slide 24: Non-GAAP Reconciliation – Growth Capital
Non-GAAP Reconciliation – Growth Capital Management believes the presentation of capital investments and growth capital investments is useful for investors to assess Altus' expenditures related to our midstream capital activity. We define capital investments as costs incurred in midstream activities
Slide 25: Glossary of Terms
Glossary of Terms ► Adjusted EBITDA is defined as net income (loss) including noncontrolling interest before financing costs (net of capitalized interest), net interest expense, income taxes, depreciation, and accretion and adjusting for such items, as applicable, from income from equity method inte
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