Kinetik Holdings Inc. · NYSE:KNTK
Kinetik — Kayne Anderson Acquisition — SPAC Merger (August 2018)
37 slides from Kinetik's SPAC merger presentation, Aug 8, 2018
Slide 1: Altus Midstream Company
Exhibit 99.2 August 2018 Altus Midstream Company Exhibit 99.2 August 2018 Altus Midstream Company
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 KAAC. KAAC believes EBITDA and distributable cash flow are useful because they allow KAAC to more effectively evaluate its operating performance and c
Slide 4: Introduction to Altus Midstream Company
Introduction to Altus Midstream Company ► Leading independent E&P company with 64-year ► Leading investor in the energy industry ($17 billion in (1) operating history and global footprint energy investments) with a 20-year track record of investing in MLPs and other midstream companies ► State of th
Slide 5: Transaction Overview
Transaction Overview ► KAAC has entered into an agreement with Apache Corporation to create Altus Midstream Company (1) (“Altus”, “Altus Midstream” or the “Company”) § Company will own Apache’s Alpine High related midstream assets and JV pipelines ► As part of the transaction, Altus has raised $572
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: Altus Midstream Overview
Altus Midstream Overview 7 Altus Midstream Overview 7
Slide 8: 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 (1) ► ~340,000 contiguous net acres; multi-decad
Slide 9: 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 October 2017) of ~3 billion barrels of oil and ~75 Tcf of gas in Barnett and Woodford formations alone § Apache has invested >$1.6 billion on E&P activities and >$900 million on mids
Slide 10: Significant Scale in the Delaware Basin
Significant Scale In the Delaware Delaware Basin Planned Processing Capacity (MMcf/d) Publicly Traded Private Midstream Companies Midstream Companies (MMcf/d) Only pure-play 1,500 Permian midstream (1) 1,380 company that is publicly traded Private Midstream Companies Catalyst JV 1,000 500 0 ETE WES
Slide 11: Fully Integrated Midstream Company
Fully Integrated Midstream Company ► Altus is world-class midstream business – “wellhead to water” connectivity § Growing G&P business with fixed fee, market-based rates and acreage dedication contract terms • 1 Bcf/d of cryogenic processing capacity expected to be in place by the end of 2020 § Equi
Slide 12: Pipeline JVs Add Size, Integration and Customer Diversity
Pipeline JVs Add Size, Integration and Customer Diversity ► Altus Midstream will own options to participate in five joint venture pipelines § KMI’s Gulf Coast Express (15% interest in natural gas pipeline to Agua Dulce) § KMI’s Permian Highway Pipeline (up to 33% interest in natural gas pipeline to
Slide 13: Growth Profile
Growth Profile EBITDA ($ in millions) Growth profile based on Alpine High G&P G&P JV Pipelines assets and JV pipelines $500 - $600 $350 - $420 $120 - $140 2019E 2020E 2021E Additional Avenues for Growth Strategic Relationship with Apache Third Party Growth ► Altus has ROFO on other midstream assets
Slide 14: Alpine High Overview
Alpine High Overview 14 Alpine High Overview 14
Slide 15: Alpine High: A World-Class Resource Play
Alpine High: A World-Class Resource Play (1) Alpine High Acreage Map ► Unprecedented hydrocarbon column >5,000 feet ► Vertically stacked oil, rich gas, and lean gas Ward fairways Scale (1) ► ~340,000 contiguous net acres ► 5,000+ locations identified as of October Reeves 2017 ► 3 billion bbls / 75 T
Slide 16: Stacked Pay From Landing Zones
Stacked Pay From 11 Landing Zones rd 3 BONE SPRINGS High frequency, rapidly rising and falling sea level 11 environment landing WOLFCAMP zones so far; PENNSYLVANIAN UNCONFORMITY >5,000 vertical feet BARNETT Tranquil marine environment, gradually rising worldwide sea WOODFORD level conditions ORGANIC
Slide 17: Superior to Established Resource Plays
Superior to Established Resource Plays Alpine High SCOOP Marcellus Eagle Ford Parameter (Woodford/Barnett) (Woodford) (Rich Gas) (Condensate) TOC (weight %) 4%-10% 4%-10% 1%-5% 1%-7% Primary Mineralogy Silicate Silicate Silicate Carbonate Clay Content 10%-20% 20%-35% 20%-35% 10%-40% Total Porosity 8
Slide 18: 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 19: Alpine High: Where Do Things Stand?
Alpine High: Where Do Things Stand? ► Apache has taken a long-term view to developing Alpine High with careful planning and methodical execution ► Focus on reducing costs, increasing efficiency and maximizing recovery 2014 - 2016 2016 - 2017 2018 and Beyond Formulation of concept, Transition to full
Slide 20: Significant Production Ramp Underway at Alpine High
Significant Production Ramp Underway at Alpine High Key Statistics ► Averaged 8 rigs and ~2 frac crews in 2Q 2018 ► ~92 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 ~32 MBoe/d in 2Q 2018, up
Slide 21: Alpine High: Attractive Economics
Alpine High: Attractive Economics ► Outlined below are the fully burdened economics for the rich gas wells (4,400’ lateral) 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 Product Mix % Oil 3% - 15% % Oil 0% - 8% % NGL 51
Slide 22: 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 ratio 24.78 433% 10.49 25 25 recycle ratio 21.16 OIL $62.75 9.79 20 20 $62.75 14.29 15 15 $21.51 NGL $24.33 11.37 10 10 5 5 3.
Slide 23: Recent Results Demonstrate First Steps of Optimization
Recent Results Demonstrate First Steps of Optimization Optimization Strategic Pad / Well Description Results (gross) Implications Test • Recent production of 102 Increase Woodford (1) MMcf/d and 200 Bopd 12-well pad Multi-zone Pad landing zones from 2 to Blackfoot • Rates still rising on clean up 3
Slide 24: Financial Overview
Financial Overview 24 Financial Overview 24
Slide 25: Financial Philosophy
Financial Philosophy ► Altus Midstream’s simple structure is a key point of differentiation vs. its midstream peers § No debt at closing and undrawn revolver provide strong liquidity § No incentive distribution rights ► The Company will have ~$920 million of cash on hand at closing ► Altus expects t
Slide 26: Financial Guidance
Financial Guidance (1) (2) Altus Midstream Gathered Volumes Altus Midstream Growth Capex (MMcf/d) ($ 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 Q4 2018E 2019E 2020E 2021E 2019E
Slide 27: Conservative Financial Plan
Conservative Financial Plan ► Altus Midstream will have no debt at closing and is expected to have a run-rate leverage ratio of less than 3x by year-end 2020 (assuming growth capex financed with free cash flow and borrowings) § Pipeline JV interests provide additional financing flexibility (asset le
Slide 28: Valuation Overview
Valuation Overview Calculation of Forward EV / EBITDA ► Distributable cash flow per share CAGR that is unrivaled by Day 1 Equity Value $3,544 peers Plus: Debt -- § Expect this to continue beyond guidance period Less: Cash (920) Day 1 Enterprise Value $2,624 ► Trades “cheaper” than peer averages on 2
Slide 29: Appendix
Appendix 29 Appendix 29
Slide 30: Executive Officers
Executive Officers Brian Freed – Chief Executive Officer Ben Rodgers – Chief Financial Officer ► SVP of Midstream & Marketing at Apache ► VP & Treasurer at Apache ► Selected previous experience: ► Selected previous experience: § SVP of Western US Commercial Operations at § SVP at EIG Global Energy P
Slide 31: Anticipated Transaction Timeline
Anticipated Transaction Timeline Date Event August 8 ► Transaction announced Late August ► Preliminary Proxy Materials Filed with the SEC September / October ► SEC Review Period October ► Mail Final Proxy Materials to Shareholders November ► Hold Shareholder Vote and Close Transaction 31 Anticipated
Slide 32: Forecast Key Assumptions
Forecast Key Assumptions ► Certain projected metrics throughout this presentation are based on the following assumptions: § “Effective Date” for transaction closing of September 30, 2018 (actual closing date currently expected to be in November 2018) § ~$920 million of cash and no borrowings at clos
Slide 33: Details on Joint Venture Pipelines
Details on Joint Venture Pipelines Gulf Coast Salt Creek (1) EPIC Shin Oak Permian Highway Express NGL Line Product Natural Gas Crude NGL NGL Natural Gas Salt Creek Operator Kinder Morgan EPIC Enterprise Products Kinder Morgan Midstream Pipeline Cost $1.75 billion NA $100 million NA $2.0 billion Alt
Slide 34: Transaction Sources & Uses / Capitalization
Transaction Sources & Uses / Capitalization Sources ($ in millions) Ownership (shares in millions) Sources At Close Ownership At Close Equity to Apache $2,519 Public Investors 95 (1) KAAC Cash in Trust 380 Apache 252 PIPE Issuance Cash Proceeds 572 Kayne Sponsor 8 (2) Kayne Sponsor Shares 76 Total 3
Slide 35: Up-C Structure
Up-C Structure (1) Commentary Structure Chart ► Entity will be structured using Up-C format Kayne KAAC IPO PIPE Apache Sponsor Investors Investors Corp. (2) § Operating assets will be held at Altus Shares Midstream LP (“OpCo”) 29% 71% § Management of OpCo and all governance (Class A) (Class C) will
Slide 36: Description of Earn-Out Consideration
Description of Earn-Out Consideration ► In addition to the 252 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
Slide 37: Illustrative Fully Diluted Share Count and Ownership
Illustrative Fully Diluted Share Count and Ownership Illustrative Altus Midstream Company Share Price $10.00 $11.00 $12.00 $13.00 $14.00 $15.00 $16.00 $17.00 $18.00 IPO Shares 37.7 37.7 37.7 37.7 37.7 37.7 37.7 37.7 37.7 Apache Shares 251.9 251.9 251.9 251.9 251.9 251.9 251.9 251.9 251.9 (1) Apache
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