Usa Compression Partners, Lp · NYSE:USAC
Usa Compression Partners, Lp — 2021 Citi One-on-One Midstream / Energy Infrastructure Conference
30 slides from Usa Compression Partners, Lp's conference presentation, Aug 19, 2021
Slide 1: USA Compression Partners, LP 2021 Citi One-on-One Conference
USA Compression Partners, LP 2021 Citi One-on-One Midstream / Energy Infrastructure Conference August 19, 2021
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 } 3 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: $15.40 ■ 22+ year history
Slide 6: Q2 2021 Recap
Q2 2021 Recap Continued Stability through 1H21 ■ Q2 2021 fleet HP of 3.7 million / average revenue generating HP of 2.9 million ■ Q2 2021 average horsepower utilization of 82% Operational Update ■ Quote activity and contracting activity for 2H21 growing ■ Q2 Growth Capex: $8.2mm ■ Improving compress
Slide 7: USAC Operates Critical Assets with Positive Fundamentals
USAC Operates Critical Assets with Positive Fundamentals Natural Gas Has Proven Itself as a Long-Term Fuel; Compression is Critical! ■ Bullish on demand for natural gas, 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 9% > 10 years 298K Private Midstream 2% < 5 Years 25K Major O&G 5% > 10 years 149
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 degradation similar to past HH Nat Gas Utilization cycles, but over shorter timeframe; $ /MMBTU recent stability 100.0% $14 90.0% $12 80.0% Horsepower ut
Slide 12: Diversification – The "Right" Operating Regions
Diversification – The “Right” Operating Regions Dry Gas Areas Have Seen Increased Activity Lately Rockies = Northeast = ~5% ~25% Mid- Continent = ~13% Permian/ Louisiana / Delaware Basin = East TX = ~35% ~6% Gulf Coast = ~16% Note: Regional % breakdowns represent active fleet horsepower at June 30,
Slide 13: Natural Gas: Not Going Away!
Natural Gas: Not Going Away! USA COMPRESSION
Slide 14: Resilient US Natural Gas Demand in 2020
Resilient US Natural Gas Demand in 2020 2020 Nat Gas Demand Off Slightly from 2019 ■ Natural gas continues to play an important role in the US & global economy ■ Natural gas is a critical fuel for economy: power generation, industrial feedstock and residential/commercial demand = 90%+ of usage ■ 202
Slide 15: Longer Term Natural Gas Demand Growing
Longer Term Natural Gas Demand Growing Driven by Industrial Use and LNG Exports ■ Consumption growth between 2020 and 2050 concentrated in exports and industrial use: – Net exports (primarily LNG) add 4.7 Tcf/year by 2050 • Continued near/record LNG volumes – Industrial uses add 3.6 Tcf/year by 2050
Slide 16: Natural Gas Remains Critical to US Electricity Production
Natural Gas Remains Critical to US Electricity Production Renewables Becoming More Important, But Nat Gas Remains Vital for Electricity ■ More electricity in the US is produced from natural gas than any other fuel ■ Natural gas share projected to decline slightly, but remains critical for US electri
Slide 17: Natural Gas Production
Natural Gas Production E&P Activity Pullback in 2020 Expected to Impact Near-Term Natural Gas Production ■ Following COVID and OPEC actions in Spring 2020, E&P activity curtailment negatively affected gas volumes – Q2 2020 saw ~5% decline before stabilizing for remainder of the year – Forward years
Slide 18: Appendix
Appendix Tk—— COMPRESSION
Slide 19: Organizational Chart
Organizational Chart Energy Transfer Combined, the Energy Family Transfer family owns ~47% of USAC Public Unitholders USA Compression GP, LLC (our general partner) 52.6% 39.2% LP LP Non-econ Preferred GP; Unitholders 8.2% 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 More 400 – 1,000 – 1,500 – 2,300 – 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 $2.50 $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 $1.50 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
Slide 22: Operational and Financial Performance
Operational and Financial Performance Avg. Revenue Generating HP (000s) Revenue ($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 3,279 $800 3,140 $698 2,970 $668 3,000 2,760 $584 $600 2,000 1,409 1,378
Slide 23: Macro Thesis: The Shift to Shale
Macro Thesis: The “Shift to Shale” Shale Gas Expected to Continue to be the Primary Source of US Natural Gas ■ Shale Dominance: Production from shale shadows ■ Shale gas is typically produced at lower wellhead all other sources pressures (0-50 PSIG) in contrast to conventional gas – 2020 est. ~29 Tc
Slide 24: Compression Throughout the Value Chain
Compression Throughout the Value Chain Midstream Compression Offers Cash Flow & Customer Stability Lower (Sm. Volumes) Pressure Regime Higher (Lg. Volumes) Crude Oil Wells Rate-Base Applications • Gas Lift Midstream Applications • Interstate Pipeline • Gas Reinjection • Regional Gathering • Trunklin
Slide 25: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Ended June 30, March 31, ($ in 000's) 2021 2021 Total revenues $ 156,562 $ 157,513 Cost of operations, exclusive of depreciation and amortization (45,604) (48,628) Depreciation and amortization (59,227) (61,030) Gross margin $ 51,731 $ 47,855 Depreciation and am
Slide 26: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Ended June 30, March 31, ($ in 000's) 2021 2021 Net income (loss) $ 2,688 $ 371 Interest expense, net 32,350 32,288 Depreciation and amortization 59,227 61,030 Income tax expense 152 126 EBITDA $ 94,417 $ 93,815 Interest income on capital lease — 48 Unit-based c
Slide 27: Non-GAAP Reconciliations, cont'd.
Non-GAAP Reconciliations, cont’d. Notes: Represents the results of operations of the USA Compression Predecessor only for the three months ended March 31, 2018 and the results of operations of the Partnership, which includes the USA Compression Predecessor, for the nine months ended December 31, 201
Slide 28: Non-GAAP Reconciliations, cont'd.
Non-GAAP Reconciliations, cont’d. Three Months Ended June 30, March 31, ($ in 000's) 2021 2021 Net income (loss) $ 2,688 $ 371 Non-cash interest expense 2,297 2,281 Depreciation and amortization 59,227 61,030 Non-cash income tax expense (benefit) (34) (99) Unit-based compensation expense 4,260 4,182
Slide 29: Non-GAAP Reconciliations, cont'd. – 2021 Guidance
Non-GAAP Reconciliations, cont’d. 2021 Guidance Net income $0.0 to $20.0 million Plus: Interest expense, net 130.0 million Plus: Depreciation and amortization 241.0 million Plus: Income tax expense 1.0 million EBITDA $372.0 million to $392.0 million Plus: Unit-based compensation expense 13.0 million
Slide 30: 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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