Usa Compression Partners, Lp · NYSE:USAC
Usa Compression Partners, Lp — Citi One-on-One Midstream / Energy Infrastructure Conference 2020
29 slides from Usa Compression Partners, Lp's conference presentation, Aug 12, 2020
Slide 1: USA Compression Partners, LP
USA Compression Partners, LP Citi Midstream / Energy Infrastructure Conference August 12-13, 2020
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements relating to the operations of USA Compression Partners, LP (the “Partnership”) that are based on management’s current expectations, estimates and projections about its operations. You can identify many of these forward-looking statemen
Slide 3: Important Note Regarding Non-Predecessor Information
Important Note Regarding Non-Predecessor Information On April 2, 2018, the Partnership consummated the acquisition of CDM Resource Management LLC and CDM Environmental & Technical Services LLC, which together represent the CDM Compression Business (the “USA Compression Predecessor”), from Energy Tra
Slide 4: USAC Overview
USAC Overview USA COMPRESSION
Slide 5: USAC Overview
USAC Overview Large Horsepower Strategy Critical for Domestic Natural Gas Infrastructure Business Snapshot USAC Market Statistics ■ USAC provides compression services across a ■ Public since 1/2013 (NYSE: USAC) geographically–diversified operating area ■ Current Unit Price: $12.07 ■ 22+ year history
Slide 6: Q2 2020 Recap
Q2 2020 Recap Resuming Stability After Events of March ■ Q2 2020 fleet HP of 3.7 million / average revenue generating HP of 3.2 million ■ Q2 2020 average horsepower utilization of 88% Operational Update ■ Moderating pricing; demand for large HP units held up ■ ~17,000 large HP delivered in Q2 2020 ■
Slide 7: USAC Offers a Stable Infrastructure Opportunity
USAC Offers a Stable Infrastructure Opportunity Natural Gas Has Proven Itself as a Long-Term Fuel; Compression is Critical! ■ Bullish on natural gas production & demand, both in US and globally Supportive Macro: Gas Isn’t ■ LNG exports, petchem feedstock and power gen driving continued gas usage Goi
Slide 8: Why Focus on Midstream Compression?
Why Focus on Midstream Compression? Operational / Cash Flow Stability with Strong Counterparties Wellhead (Gas & Oil) Midstream Downstream Uses Gas Lift Regional Gathering Interstate Pipelines Gas Reinjection Central Delivery Point Trunkline Gathering Processing Plants Gas Storage Customer Base Broa
Slide 9: USAC Customer Overview
USAC Customer Overview Top 20 Customers: Diverse Counterparties & Long-Term Relationships % of Length of % of Length of Customer Rev(1) relationship Total HP Customer Rev(1) relationship Total HP Independent Public E&P 8% > 10 years 279K Independent Public E&P 2% > 10 Years 59K Large Private E&P 4%
Slide 10: Business Model Allows for Prudent Capital Spending
Business Model Allows for Prudent Capital Spending….. Historical Balance Between Capital Spending and Cash Flow Stability ■ Large HP focus ideally suited for growth and stability ■ Assets provide growth based on marketplace demands ■ Ability to rein in spending and operate for stable cash flow when
Slide 11: Leading to Cash Flow and Asset Stability Through Cycles
…..Leading to Cash Flow and Asset Stability Through Cycles Post-CDM Pre-CDM Acquisition Non-Predecessor (1) Acquisition (2) Horsepower Utilization HH Nat Gas Utilization has remained at $ /MMBTU higher, fully-utilized levels 100.0% $14 90.0% $12 Horsepower 80.0% utilization average: ~93% for over a
Slide 12: Diversification – The "Right" Operating Regions
Diversification – The “Right” Operating Regions Rockies = Northeast = ~5% ~23% Mid- Continent = ~15% Permian/ Louisiana / Delaware Basin = East TX = ~34% ~8% Gulf Coast = ~16% Note: Regional % breakdowns represent active fleet horsepower at June 30, 2020; excludes non-compression equipment. 11 © 202
Slide 13: Natural Gas: Not Going Away!
Natural Gas: Not Going Away! USA = COMPRESSION
Slide 14: Moderating Rig Count Should Cause Near-Term Production Decreases
Moderating Rig Count Should Cause Near-Term Production Decreases Slowing Rig Count / Production in Face of Strong Demand Should Bode Well for Nat Gas ■ Overall domestic rig counts are down (~75% off recent highs) (1) – Gas-directed rigs are down >90% off 2008 highs, as economics of gassy oil plays (
Slide 15: Global Natural Gas Demand
Global Natural Gas Demand Natural Gas Is Not Going Away ■ World energy usage expected to grow with growing GDP – Total energy usage expected to grow by ~50% by 2050 (1) – Renewables growing quickly, but gas will still be critical ■ Natural gas and petroleum still expected to meet much of energy need
Slide 16: Domestic Natural Gas Demand
Domestic Natural Gas Demand Rising Baseload Natural Gas Demand ■ Natural gas domestic consumption was up ~3% in 2019 from 2018 – Longer term: Up ~15% (~11Bcf/d) since 2014 to 85 Bcf/d in 2019 (1) – Majority of increase over time (~6.4 Bcf/d) took place in 2018 ■ Largest driver has been domestic powe
Slide 17: Domestic Natural Gas Demand Growth
Domestic Natural Gas Demand Growth ■ Natural Demand Continues to Grow…with Large Increases from… Projected Natural Gas Demand (Bcf/d)(1) Exports to Mexico: 140 ~23% growth - Growing power needs to be met by US over 30 years! 118 shale gas 120 113 109 - ~6 Bcf/d to Mexico by 2020 100 96 88 LNG Export
Slide 18: Appendix
Appendix hy—— COMPRESSION
Slide 19: 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) 52.4% 39.3% LP LP Non-econ Preferred GP; Unitholders 8.3% LP Preferred Units USA Compression Partners, LP Note: Percentages reflect USAC
Slide 20: Large Horsepower Gas Applications Drive Stability
Large Horsepower Gas Applications Drive Stability Compression Unit Size Matters USAC Focus: Gas Compression Industry: Key Characteristics by Size Small - Large X Large XX Large XXX Large Commentary Medium Compression 400 – 1,000 – 1,500 – 2,300 – More Unit 0 – 400 HP horsepower HP Range 1,000 HP 1,5
Slide 21: Balancing Distribution Stability and Leverage
Balancing Distribution Stability and Leverage Annualized Distributions per Common Unit Stability in Distribution through the cycle Post-CDM $2.50 Pre-CDM Acquisition Non-Predecessor (1)(2) Acquisition (2)(4) $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.00 $1.50 Q3 2017
Slide 22: Operational and Financial Performance
Operational and Financial Performance Avg. Revenue Generating HP (000s) Revenue ($MM) Post-CDM Post-CDM Pre-CDM Acquisition Non-Predecessor (1) Pre-CDM Acquisition Non-Predecessor (1) Acquisition (1)(2) Acquisition (1)(2) 4,000 $800 $698 3,279 3,256 $584 3,000 2,760 $600 2,000 1,506 $400 $348 1,409
Slide 23: Macro Thesis: The "Shift to Shale"
Macro Thesis: The “Shift to Shale” Shale Gas Expected to be the Primary Source in Future ■ Shale Ramp: Production from shale has now pulled ■ Shale gas is typically produced at lower wellhead even with all other sources pressures (0-50 PSIG) in contrast to conventional gas – 2019 est. ~ 26 Tcfe of s
Slide 24: Compression Throughout the Value Chain
Compression Throughout the Value Chain Midstream Compression Offers Cash Flow & Customer Stability Lower (Sm. Volumes) Pressure Regime Higher (Lg. Volumes) Crude Oil Wells Rate-Base Applications • Gas Lift Midstream Applications • Interstate Pipeline • Gas Reinjection • Regional Gathering • Trunklin
Slide 25: Non-GAAP Reconciliations
Non-GAAP Reconciliations 24 © 2020 USA COMPRESSION PARTNERS, LP | CONFIDENTIAL
Slide 26: Non-GAAP Reconciliations, cont'd.
Non-GAAP Reconciliations, cont’d. Years Ended December 31, ($ in 000's) 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Net income (loss) $ 39,132 $ (10,551) $ 11,440 $ 12,935 $ (154,273) $ 24,946 $ 11,071 $ 4,503 $ 69 $ 10,479 $ 21,228 $ 20,911 $ 7,122 Interest expense, net 127,146
Slide 27: Non-GAAP Reconciliations, cont'd.
Non-GAAP Reconciliations, cont’d. 26 © 2020 USA COMPRESSION PARTNERS, LP | CONFIDENTIAL
Slide 28: Non-GAAP Reconciliations, cont'd.
Non-GAAP Reconciliations, cont’d. 2020 Guidance Guidance Net loss $(600.0 million) to ($580.0 million) Plus: Interest expense, net 128.5 million Plus: Depreciation and amortization 231.0 million Plus: Income tax expense 0.5 million EBITDA $(240.0 million) to $(220.0 million) Plus: Interest income on
Slide 29: 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 gross margin, Adjusted EBITDA, Distributable Cash Flow and Distributable Cash Flow Coverage Ratio. EBITDA, a measure not defined under U.S. generally accepted acco
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