Kinetik Holdings Inc. · NYSE:KNTK
Kinetik — Altus Midstream Company — Merger or Acquisition (January 2022)
27 slides from Kinetik's merger presentation, Jan 5, 2022
Slide 1: Combination with BCP Raptor Holdco LP
ALT U S M ID ST R EAM C O M PANY Combination with BCP Raptor Holdco LP January 2022 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: Transaction Highlights
Transaction Highlights ► All-stock combination creating an unparalleled, fully-integrated Delaware Basin midstream company • 50 million ALTM Class C shares to be issued to BCP Raptor Holdco LP (“BCP”) Unitholders • Ownership ~50% Blackstone, >20% I Squared Capital, ~20% Apache and >5% Public / Manag
Slide 4: Investment Highlights
Investment Highlights • Only scale publicly-traded pure-play Permian midstream business Creates a leading, pure-play • Solely focused on Permian Basin midstream logistics and long-haul transportation Permian midstream company • Third-largest natural gas processor in the entire Permian Basin(1) • ~2
Slide 5: Pro Forma Altus' Competitive Positioning
Pro Forma Altus’ Competitive Positioning Altus’ JV Pipelines transport residue gas and NGLs from one of the world’s most productive hydrocarbon basins (Permian) to one of the world’s largest natural gas and NGL demand centers (U.S. Gulf Coast) Combined business opportunistically primed for future gr
Slide 6: Critical Infrastructure in One of the World's Most Productive Basins
Critical Infrastructure in One of the World’s Most Productive Basins 34% 66% Pipeline Crude JV Pipes Midstream Transportation 1% Logistics NGL JV Pipes 5% Gas JV Pipes 28% Gas Gathering & Processing Mont Katy Belvieu 60% Sabine Pass Freeport Water Disposal 3% Agua Dulce Corpus Christi Crude Gatherin
Slide 7: Compelling Super-System
Compelling Super-System Sierra Grande Terminal Super-System Highlights ► Integrated complexes (Diamond Cryo, East Toyah, Pecos Bend, Pecos) Sierra Grande Gas Plant Stampede Terminal ► Enhances operational reliability and flow assurance • System wide amine treating improves operational flexibility ►
Slide 8: Rapidly Accelerating Activity Across Pro Forma Footprint
Rapidly Accelerating Activity Across Pro Forma Footprint Recent Southern Delaware Basin M&A by Acquiror Indexed Delaware Basin Rig Count by County Conoco Reeves Loving Culberson Ward Lea Eddy 450 Reeves County leads the Delaware Basin, 400 with active rig counts increasing 3x since Percussion 350 th
Slide 9: A Full-Service, Integrated Midstream Model
A Full-Service, Integrated Midstream Model Produced Water Water Pipelines Water Disposal Well Permian Highway and Gulf Coast Express Residue Gas Takeaway Natural Pipelines Gas Natural Gas Shin Oak Pipelines Gas Processing Mixed NGLs Takeaway Pipelines Crude Oil Crude Oil EPIC Crude Pipeline Crude Oi
Slide 10: Pro Forma Organizational Structure (Prior to Refinancing)
Pro Forma Organizational Structure (Prior to Refinancing) Public Investors Altus Midstream(1) (ALTM) $800MM $661MM Altus Midstream LP Series A Credit Facility Preferred(2) 100% interest 100% interest Midstream Logistics Pipeline Transportation 100% interest 100% interest 100% interest 100% interest
Slide 11: Pro Forma Organizational Structure (Post Refinancing)
Pro Forma Organizational Structure (Post Refinancing) Fully unsecured pro forma capital structure • No asset level or structurally senior debt • Overall refinancing contemplates long-dated Notes/Bonds Altus Midstream • New Revolving Credit Facility will ensure adequate liquidity (ALTM) • Target inve
Slide 12: Overview of BCP Raptor Holdco
Overview of BCP Raptor Holdco 12
Slide 13: History and Timeline of BCP
History and Timeline of BCP ► EagleClaw Midstream Ventures was formed in 2012 ► Blackstone and I Squared acquired their ownership in June 2017 and November 2018, respectively EagleClaw Midstream Announced FID on Ventures formed with Acquired PennTex Permian Highway Acquired PDC Announced equity comm
Slide 14: BCP Assets and Operations
BCP Assets and Operations ► Full-service, midstream platform with strong BCP Asset Map operating and safety record • Weighted avg. contract life of ~12 years(1) Sierra Grande Terminal • Over 1 Bcfpd of rich-gas volumes d Sierra Grande Gas Plant 1• Gas gathering, compression and processing assets wit
Slide 15: Migration to a Stronger Credit Profile
Migration to a Stronger Credit Profile 2020 Gross Profit by Customer Credit Rating 2022E Gross Profit by Customer Credit Rating A+ 0% A- 3% 4% Non-rated expected to be 23% A-rated AA- 1% A-rated down ~60% from 2020 companies companies NR 9% A+ 1% AA- 9% BBB 2% NR 27% A- 13% BBB- 32% B- 33% BBB 14% B
Slide 16: Potential Targa Grand Prix Pipeline Dropdown Opportunity
Potential Targa Grand Prix Pipeline Dropdown Opportunity Blackstone (pro forma ALTM’s largest shareholder) owns a 25% interest in Grand Prix, which if dropped into ALTM, would drive additional cash flow accretion Historical Throughput Volumes (Mbpd)(1) Grand Prix’ Connectivity Throughout the Permian
Slide 17: Pro Forma Financial and ESG Overview
Pro Forma Financial and ESG Overview 17
Slide 18: Pro Forma Financial Summary
Pro Forma Financial Summary 2022E Adjusted EBITDA by Segment ► Strong volume performance and cost management leads to 34% impressive earnings and cash flow growth Pipeline Transportation • Preliminary 2022E Adjusted EBITDA estimate of $800MM to $850MM(1) Gas • >10% YoY Adjusted EBITDA growth vs. ~1%
Slide 19: Expect $50MM+ of Annual EBITDA Synergies
Expect $50MM+ of Annual EBITDA Synergies ► System integration unlocks over $30MM per year • Processing enhancement and optimization • Ability to leverage Altus’ idle treating equipment • Replace leased compression on EagleClaw system with excess equity compression from Altus ► $20MM per year of imme
Slide 20: Capital Allocation Trends Across S&P 500 Sectors
Capital Allocation Trends Across S&P 500 Sectors Return of Capital to Shareholders(2)/ 2022E FCF As % of Cash Flow From Operations(1) CFFO Yield(3) (4) ATLM ~15% ~70% ~70% ~12%(5) (6) Midstream 27% 59% 59% 11% Select S&P 500 Real Estate 16% 63% 63% 4% Sectors Industrials 18% 37% 37% 5% Utilites 123%
Slide 21: Strong Cash Flows Underpinned by Quality Counterparties
Strong Cash Flows Underpinned by Quality Counterparties 2022E Gross Profit by Customer Credit Rating 2022E Gross Profit Weighted Remaining Contract Life NR AA- 9 AA- A+ 9% 11% 2% A+ 10 B- A- 7 15% A- BBB+ 13 14% Weighted average BBB 8 ~11 years B customer credit weighted average 0.4% remaining term
Slide 22: Pro Forma Company Committed to Strong Governance
Pro Forma Company Committed to Strong Governance Board Governance Management • Experienced Board consisting • Pro forma Company will • BCP management to assume of 11 Directors incorporate listing exchange current roles at Altus and public company • Four directors will be • Executives aligned with lo
Slide 23: Pro Forma Leadership Team
Pro Forma Leadership Team Jamie Welch President & CEO Trevor Howard Matt Wall Steve Stellato Annie Psencik Todd Carpenter Chief Administrative Kris Kindrick Tyler Milam VP, Finance & Chief Operating Chief Strategy Officer General Counsel Officer & Chief VP, Commercial VP, Commercial Planning Officer
Slide 24: Focus on Sustainability and Community
Focus on Sustainability and Community Sustainable Reporting BCP’s 2020 ESG Report ► Pro Forma Altus to adopt BCP’s sustainability standards while incorporating Altus best practices • 2021 ESG Report to be published mid-2022 • BCP’s inaugural ESG report with detail on par with public midstream peers
Slide 25: Key Takeaways
Key Takeaways 1 $6.00 per share dividend through 2023 with 5% growth 7 thereafter(1) 2 Committed to leading the industry in Commitment to sustainability achieve 3.5x leverage standards 6 3 Significant revenue synergies, reduced Sector leading free controllable costs and cash flow conversion capital
Slide 26: Pro Forma Altus at a Glance
Pro Forma Altus at a Glance THE LARGEST INTEGRATED MIDSTREAM MIDSTREAM LOGISTICS FOR COMPANY IN THE DELAWARE BASIN NEARLY 30 Offices in Midland and Houston, TX CUSTOMERS OPERATES 4 MAJOR COMPLEXES EQUITY INTERESTS IN INTERESTS IN & OVER 1,700 MILES OF PIPELINE LONG-HAUL PIPELINES: 4.1 Bcfpd ACROSS F
Slide 27: Glossary of Terms
Glossary of Terms ► Gross Profit is defined as revenues less cost of goods sold (exclusive of depreciation and amortization) ► Adjusted EBITDA (EBITDA) is defined as net income (loss) including noncontrolling interest before financing costs (net of capitalized interest), net interest expense, income
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