Kinetik Holdings Inc. · NYSE:KNTK
Kinetik — Altus Midstream Company — U.S. Capital Advisors Midstream Corporate Access Day (January 2019)
32 slides from Kinetik's conference presentation, Jan 22, 2019
Slide 1: Altus Midstream Company January 2019
Altus Midstream Company January 2019
Slide 2: Disclaimer: Forward Looking Statements
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: Disclaimer: Use of Non-GAAP Financial Measures
Disclaimer USE OF NON-GAAP FINANCIAL MEASURES This presentation includes non-GAAP financial measures, including EBITDA and distributable cash flow of Altus Midstream. Altus Midstream believes EBITDA and distributable cash flow are useful because they allow Altus Midstream to more effectively evaluat
Slide 4: Altus Midstream Overview
Altus Midstream Overview 4
Slide 5: Altus Midstream Summary Overview
Altus Midstream Summary Overview Commentary Simplified Structure ► Kayne Anderson and Apache Corporation formed a new, publicly-traded midstream C-corp – Altus Midstream Company Public Apache Corporation (“Altus” or “Altus Midstream”) Real C-corp governance / no IDRs 21% 79% 67,616,277 Shares 257,
Slide 6: New Way to Invest in Midstream…and it's in the Permian!
New Way to Invest in Midstream…and it’s in the Permian! Sponsor controls production & development Super-system with large contiguous acreage dedication Pure-play Permian Integrated Permian to Gulf Coast midstream value chain JV pipelines provide diversity and long term contracts C-corp structure wit
Slide 7: Investment Merits
Investment Merits ► Independent E&P with 64-year operating history and global footprint Premier E&P ► Dedicated to long-term development plan for Alpine High Sponsor ► Transaction achieves Apache’s desire to create a fully integrated midstream company Exposure to ► ~340,000 contiguous net acres; mul
Slide 8: Apache's Vision for Alpine High
Apache’s Vision for Alpine High ► Alpine High is a multi-decade growth platform for Apache Resource in place (as of September 2016) of ~3 billion barrels of oil and ~75 Tcf of gas in Barnett and Woodford formations alone Apache has invested >$2 billion on E&P activities and >$1 billion on midstr
Slide 9: Gathering & Processing Overview
Gathering & Processing Overview Pipeline Map Current Asset Highlights ► Rich Gas Processing: 380 MMcf/d of capacity in service ► Lean Gas Treating / Compression: 400 MMcf/d of capacity in service ► Gathering Pipelines: ~125 miles in service Primarily 20-30 inch pipe ► Residue Pipelines / Market Co
Slide 10: Joint Venture Pipelines Overview
Joint Venture Pipelines Overview Pipeline Map Commentary ► Altus owns or has the option to participate in five joint venture pipelines 15%(1) of KMI’s Gulf Coast Express Nat Gas 27% of KMI’s Permian Highway (Option) 33% of EPD’s Shin Oak (Option) NGLs Katy 50% of Salt Creek NGL (Option) Mark
Slide 11: Altus Financial Forecast
Altus Financial Forecast ►Altus financial forecast is underpinned by identified sources of growth Majority of growth driven by JV pipelines placed in-service in 2019-2020 For G&P business, 2019-2020 volume is in-line with Apache’s public guidance ranges (and Apache represents >95% of forecasted
Slide 12: Additional Avenues for Growth
Additional Avenues for Growth Strategic Relationship with Apache Third Party Growth ► Altus has ROFO on water systems at ► Leverage asset footprint for additional third Alpine High party volumes outside of Apache’s Alpine High footprint ► Altus has ROFO on any new long-haul pipelines / Gulf Coast as
Slide 13: Alpine High Overview
Alpine High Overview 13
Slide 14: Alpine High: A World-Class Resource Play
Alpine High: A World-Class Resource Play Alpine High Acreage Map(1) ► Unprecedented hydrocarbon column >5,000 feet ► Vertically stacked oil, rich gas, and lean gas Ward fairways Scale ► ~340,000 contiguous net acres(1) ► 5,000+ locations identified as of October Reeves 2017 ► ~3 billion bbls / ~75 T
Slide 15: Stacked Pay From Landing Zones
Stacked Pay From 13 Landing Zones Parasequences Parasequences 3rd BONE SPRINGS High frequency, rapidly rising and falling sea level 13 environment landing WOLFCAMP zones so far; UNCONFORMITY PENNSYLVANIAN >5,000 vertical feet Source Rock Source Rock Tranquil marine BARNETT environment, gradually ris
Slide 16: Measured Approach to Optimization
Measured Approach to Optimization ► Apache has taken a very methodical approach so far Focus on delineation, not optimization Delineation phase completion design allows isolation of geologic Delineation / variations Science • Short laterals • Light proppant volumes • Lots of room for improvement
Slide 17: Alpine High: Transitioning to Full-field Development
Alpine High: Transitioning to Full-field Development ► Apache’s methodical approach to developing Alpine High 2014 - 2016 2016 - 2017 2018 and Beyond concept testing and confirmation + Formulation of concept, Areal and vertical delineation = Transition to full field development Optimized spacing,
Slide 18: Alpine High: Significant Production Ramp Underway
Alpine High: Significant Production Ramp Underway Key Statistics ► Averaged 8 rigs and ~2 frac crews in 3Q 2018 ► More than 90 wells expected to be placed on production in 2018 Total during 2018 is nearly double the amount placed online in 2016 and 2017 ► Net production averaged ~49 MBoe/d in 3Q 2
Slide 19: Alpine High: Attractive Rich Gas Economics
Alpine High: Attractive Rich Gas Economics ► Representative economics for rich gas wells are fully burdened (4,400’ lateral); optimized development should enhance returns Typical Well Upper Range Well EUR (Bcfe) 9 - 15 EUR (Bcfe) 16 - 21 Well Cost ($MM) $4 - $6 Well Cost ($MM) $4 - $6 Product Mix Pr
Slide 20: Alpine High: Premium Capital Efficiency
Alpine High: Premium Capital Efficiency Typical Well Upper Range Well $/BOE Top-tier recycle ratios highlight APA’s ability to generate cash and re-invest 30 30 580% recycle 24.78 10.49 433% ratio 25 recycle 25 ratio $62.75 OIL 21.16 9.79 20 20 $62.75 15 14.29 15 $24.33 NGL $21.51 11.37 10 10 5 3.30
Slide 21: Alpine High Evolution
Alpine High Evolution September 2016 November 2018(1) 2020(1) Rig Count 3 8 10 - 11 Total Wells 14 180 425 – 450 at year-end Drilled Total Wells on 9 125 350 – 375 at year-end Production Net Production Nm ~55 160 – 180 (Mboe/d) Location 2,000 – 3,000+ 5,000+ Ongoing Testing Count Confirmed Landing 2
Slide 22: Financial Overview
Financial Overview 22
Slide 23: Financial Philosophy
Financial Philosophy ►Altus Midstream’s simple structure is a key point of differentiation vs. its midstream peers No debt and undrawn revolver provide strong liquidity No incentive distribution rights ►The Company has ~$625 million of cash(1) and an undrawn $800 million(2) unsecured credit faci
Slide 24: Financial Plan & Valuation
Financial Plan & Valuation Commentary Valuation & Projected Leverage Ratio Conservative Financial Plan Equity Value $2,785 Plus: Debt – ► No debt at closing with run-rate leverage ratio Less: Cash (625) of less than 3x by year-end 2020 (assuming Enterprise Value $2,160 100% debt financing) Plus: Ext
Slide 25: Financial Flexibility
Financial Flexibility Revolving Credit Facility ► At closing, Altus entered into a five year revolving credit facility with flexible terms and competitive pricing including two one-year extension options ► $450 MM available during Initial Period(1) ramping up to $800 MM after Initial Period(1) (Init
Slide 26: Financial Guidance
Financial Guidance Altus Midstream Gathered Volumes(1) Altus Midstream Growth Capex(2) (MMcf/d) ($ in millions) % Attributable to JV Pipelines 1,470 - 1,800 35% - 40% 75% - 85% 40% - 50% 0% $1,450 - $1,750 1,030 - 1,260 600 - 730 $550 - $650 $400 - $500 $260 - $320 2019E 2020E 2021E Q4 2018E 2019E 2
Slide 27: Appendix
Appendix 27
Slide 28: Details on Joint Venture Pipelines
Details on Joint Venture Pipelines Gulf Coast Permian Salt Creek Shin Oak EPIC Crude Express Highway NGL Line Product Natural Gas Natural Gas NGL NGL Crude Operator Kinder Morgan Kinder Morgan Enterprise Products ARM EPIC Pipeline Cost $1.75 billion $2 billion Undisclosed(1) $100 million $2.1 billio
Slide 29: Altus Midstream Agreements with Apache
Altus Midstream Agreements with Apache ► The area of dedication encompasses a total of ~540,000 gross acres (as denoted by the red outline) Reeves Includes existing Apache acreage and future acreage acquired by Apache(1) ► Midstream services dedicated to Altus: Gas gathering, compression and pro
Slide 30: Forecast Key Assumptions
Forecast Key Assumptions ► “Effective Date” for transaction closing of September 30, 2018 ► Financing plan does not include future issuances of common equity ► No dividend expected to be paid through 2020 ► Altus gathering and processing (“G&P”) volumes are based on (i) Apache’s public guidance for
Slide 31: Alpine High Takeaway
Alpine High Takeaway ► Apache has contracted takeaway capacity (through a combination of volume commitments and acreage/plant dedications) from Altus Midstream’s infrastructure Provides flow assurance to liquid markets at attractive netbacks ► 550 MDth/d volume commitment for residue gas takeaway
Slide 32: Description of Earn-Out Consideration
Description of Earn-Out Consideration ► In addition to the 257 million shares issued to Apache at closing, Apache can potentially be issued 37.5 million additional shares in Altus if certain thresholds are met (the “Earn-Out Shares”) ► 12.5 million shares when Altus Midstream’s share price equals or
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