Usa Compression Partners, Lp · NYSE:USAC
Usa Compression Partners, Lp — RBC Capital Markets 2018 Midstream Conference
27 slides from Usa Compression Partners, Lp's conference presentation, Nov 14, 2018
Slide 1: USA Compression Partners, LP at RBC Capital Markets 2018 Midstream Conference
USA Compression Partners, LP RBC Capital Markets 2018 Midstream Conference November 14, 2018
Slide 2: Disclaimer
Disclaimer 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,” “expect
Slide 3: Q3 2018 Recap
Q3 2018 Recap Attractive Marketplace; Solid Quarter; Continued Integration ■ Q3 2018 fleet HP of 3.6 million / average revenue generating HP of 3.2 million ■ Average active HP up ~75,000 over Q2 Operational ■ Average horsepower utilization of 92.8% Update ■ Upward rate movement & continued strong de
Slide 4: Macro Overview & Demand Drivers
Macro Overview & Demand Drivers
Slide 5: Domestic Natural Gas Supply & Demand Growth
Domestic Natural Gas Supply & Demand Growth Natural Gas Supply & Demand Continues to Grow… as does the need for midstream infrastructure to move it through the pipeline system EIA projects significant increase in natural gas demand by 2050 Projected Natural Gas Demand (Bcf/d)(1) Exports to Mexico: ‐
Slide 6: 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 – 2017 est. ~ 15 Tcfe of s
Slide 7: Key Industry Drivers for Compression Services
Key Industry Drivers for Compression Services Compression is Critical Midstream Infrastructure for Producing & Transporting Hydrocarbons ■ ~85% of USAC’s business (by HP) is installed in natural gas‐based infrastructure applications Overall Gas (“Midstream”) Demand & ■ Projected increasing natural g
Slide 8: Customer Activity
Customer Activity E&P Activity Benefitting from Efficiencies ■ Drilling activity has moderated ■ Producers continue to be active in attractive areas, but takeaway bottlenecks having an impact ■ Recent crude oil volatility causing some pause; gas demand/supply increase continues Marcellus Rig % Chg T
Slide 9: USAC Overview
USAC Overview [USA COMPRESSION
Slide 10: USAC Overview
USAC Overview Large Horsepower Strategy at Core of USAC Business Business Overview USAC Market Statistics ■ Geographically diversified provider of compression ($ in billions) services LP Equity Value $1.4 billion – Focused primarily on large horsepower (1,000 HP+) applications Preferred Equity 0.5 b
Slide 11: Geographic Presence
Geographic Presence CDM Acquisition Expanded Geographic Footprint Northeast Mid‐Con Region ~ 23% Region (OK) ~ 17% Permian Southeast Region ~ 29% Region (ArkLa, Rockies, NE Texas) ~ 15% Gulf Coast Region (LA, TX Coast, TX South) – 16% CDM USAC Note: Regional % breakdowns represent active fleet horse
Slide 12: 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) 52.2% 39.5% LP LP Non‐econ Preferred GP; Unitholders 8.3% LP Preferred Units USA Compression Partners, LP Note: Percentages reflect USAC
Slide 13: Key Strategic Priorities
Key Strategic Priorities • Continued focus on integrating all aspects of CDM into USAC Successful CDM • Back office migration substanbtially complete Integration • Alignment of strategy / policies / procedures is critical; build a single culture • Synergies on target, expect full run‐rate during 201
Slide 14: Business Model Allows for Prudent Capital Spending
Business Model Allows for Prudent Capital Spending….. ■ Large HP focus ideally suited for growth and stability ■ Shale production has changed the industry: demand for larger, more flexible assets ■ Assets provide growth when marketplace demands (and willing to pay) ■ Ability to rein in spending and
Slide 15: Leading to Cash Flow and Asset Stability Through Cycles
…..Leading to Cash Flow and Asset Stability Through Cycles Utilization, which was impacted by lower CDM fleet utilization, Horsepower Utilization has now returned to higher levels HH Nat Gas $ /MMBTU 100.0% $14 90.0% $12 Horsepower 80.0% utilization average: ~93% for over a 70.0% decade $10 60.0% $8
Slide 16: USAC Customer Overview
USAC Customer Overview Top 20 Customers: Diverse Counterparties & Long‐Term Relationships % of Length of Total % of Length of Total Customer Rev(1) relationship HP Customer Rev(1) relationship HP Independent Public E&P 8% 17 Years 283K Major O&G 2% 4 Years 69K Large Private E&P 4% 20 Years 115K Priv
Slide 17: Large Horsepower Gas Applications Drives Stability
Large Horsepower Gas Applications Drives Stability Compression Unit Size Matters USAC Focus: Gas Compression Industry: Key Characteristics by Size Small Medium Large Ex. Large XX Large Commentary Compression More 400 – 1,000 – 1,500 – 2,300 – Unit 0 – 400 HP horsepower HP Range 1,000 HP 1,500 HP 2,3
Slide 18: Balancing Distribution Stability and Leverage
Balancing Distribution Stability and Leverage Annualized Distributions per Common Unit Stability in Distribution through the cycle USAC Historical Leverage(2) Note: Reflects USAC standalone for all periods prior to April 1, 2018. Q2 2018 and Q3 2018 reflect USAC and CDM combined. 1. Historical lever
Slide 19: USAC Standalone Operational and Financial Performance
USAC Standalone Operational and Financial Performance Avg. Revenue Generating HP (000s) Revenue ($MM) $mm HP 500 2007 – 2017 3,500 3,212 2007 – 2017 15% CAGR $412 3,000 15% CAGR 400 2,500 $280 300 $271 $266 2,000 $222 1,409 1,378 1,506 1,500 1,201 200 $153 902 $119 1,000 750 $91 $95 $92 $99 489 517
Slide 20: 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 natural gas to end markets Midstream ■ Shale gas continues to reward
Slide 21: Appendix
Appendix cy—— COMPRESSION
Slide 22: 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 23: Non-GAAP Reconciliations
Non‐GAAP Reconciliations Three m onths ended Septem ber 30, June 30, March 30, 2018 2018 2018 Net income (loss) (563) $ 3,197 $ (23,370) Interest expense, net 25,443 25,682 - Depreciation and amortization 59,403 52,868 44,672 Income tax expense (benefit) (918) (271) (435) EBITDA $ 83,365 $ 81,476 $
Slide 24: Non-GAAP Reconciliations, cont'd.
Non‐GAAP Reconciliations, cont’d. Years Ended December 31, ($ in 000's) 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Net income (loss) $ 11,440 $ 12,935 $ (154,273) $ 24,946 $ 11,071 $ 4,503 $ 69 $ 10,479 $ 21,228 $ 20,911 $ 7,122 Interest expense, net 25,129 21,087 17,605 12,529 12,488 15
Slide 25: Non-GAAP Reconciliations, cont'd.
Non‐GAAP Reconciliations, cont’d. Three m onths ended Septem ber 30, June 30, March 30, 2018 2018 2018 Net income (loss) $ (563) $ 3,197 $ (23,370) Plus: Non-cash interest expense 1,516 2,039 - Plus: Non-cash income tax expense (benefit) (1,038) (390) (435) Plus: Depreciation and amortization 59,403
Slide 26: Non-GAAP Reconciliations, cont'd. (Guidance)
Non‐GAAP Reconciliations, cont’d. Guidance Net loss $(18.0) million to $(8.0) million Plus: Interest expense, net $78.3 million Plus: Depreciation and amortization $216.3 million Plus: Income tax expense $(1.6) million EBITDA $275.0 million to $285.0 million Plus: Interest income on capital lease $0
Slide 27: 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, Adjusted EBITDA Margin Percentage, Distributable Cash Flow, Distributable Cash Flow Coverage Ratio and Cash Coverage Ratio, as well as horsepower utilizati
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