2. Forward-looking Information
Certain matters contained in this presentation include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. We make these forward-looking statements in reliance on the safe harbor protections
provided under the Private Securities Litigation Reform Act of 1995.
All statements, other than statements of historical fact, included in this presentation including the prospects of our industry, our anticipated financial performance,
our anticipated annual dividend growth rate, management's plans and objectives for future operations, planned capital expenditures, business prospects, outcome
of regulatory proceedings, market conditions and other matters, may constitute forward-looking statements. Although we believe that the expectations reflected in
these forward-looking statements are reasonable, we cannot assure you that these expectations will prove to be correct. These forward-looking statements are
subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in
these forward-looking statements. Factors that might cause actual results to differ include, but are not limited to, the ability of SemGroup Corporation (SemGroup)
to generate sufficient cash flow from operations to enable it to pay its debt obligations and its current and expected dividends or to fund its other liquidity needs;
insufficient cash from operations following the establishment of cash reserves and payment of fees and expenses for SemGroupโs subsidiary, Rose Rock
Midstream, L.P. (Rose Rock), to pay current, expected or minimum quarterly distributions; any sustained reduction in demand for, or supply of, the petroleum
products we gather, transport, process, market and store; the effect of our debt level on our future financial and operating flexibility, including our ability to obtain
additional capital on terms that are favorable to us; our ability to access the debt and equity markets, which will depend on general market conditions and the credit
ratings for our debt obligations and equity; the loss of, or a material nonpayment or nonperformance by, any of our key customers; the amount of cash distributions,
capital requirements and performance of our investments and joint ventures; the amount of collateral required to be posted from time to time in our purchase, sale or
derivative transactions; the impact of operational and developmental hazards and unforeseen interruptions; our ability to obtain new sources of supply of petroleum
products; competition from other midstream energy companies; our ability to comply with the covenants contained in our credit agreements and the indentures
governing our senior notes, including requirements under our credit agreements to maintain certain financial ratios; our ability to renew or replace expiring storage,
transportation and related contracts; the overall forward markets for crude oil, natural gas and natural gas liquids; the possibility that the construction or acquisition
of new assets may not result in the corresponding anticipated revenue increases; changes in currency exchange rates; weather and other natural phenomena,
including climate conditions; a cyber attack involving our information systems and related infrastructure, or that of our business associates; in the case of
SemGroup, the risks and uncertainties of doing business outside of the U.S., including political and economic instability and changes in local governmental laws,
regulations and policies; costs of, or changes in, laws and regulations and our failure to comply with new or existing laws or regulations, particularly with regard to
taxes, safety and protection of the environment; the possibility that our hedging activities may result in losses or may have a negative impact on our financial results;
general economic, market and business conditions; as well as other risk factors discussed from time to time in each of SemGroupโs and Rose Rockโs documents
and reports filed with the SEC.
Readers are cautioned not to place undue reliance on any forward-looking statements contained in this presentation which reflect management's opinions only as of
the date hereof. Except as required by law, we undertake no obligation to revise or publicly release the results of any revision to any forward-looking statements.
SemGroup and Rose Rock Midstream use their Investor Relations website and social media outlets as channels of distribution of material company information.
Such information is routinely posted and accessible on our Investor Relations websites at ir.semgroupcorp.com and ir.rrmidstream.com.
Both companies are present on Twitter and LinkedIn, follow us at the links below:
SemGroup Twitterย and LinkedIn Rose Rock Midstream Twitter and LinkedIn
2
3. Non-GAAP Financial Measures
This presentation includes financial measures which are not U.S. generally accepted accounting principles (GAAP) measures and are not intended to be used in
lieu of GAAP measures. These measures may be used periodically by management when discussing our financial results with investors and analysts and are
presented as management believes they provide additional information and metrics relative to the performance of our businesses. These non-GAAP financial
measures have important limitations as analytical tools because they exclude some, but not all, items that affect the most directly comparable GAAP financial
measures. You should not consider non-GAAP measures in isolation or as substitutes for analysis of our results as reported under GAAP. Management
compensates for the limitations of our non-GAAP measures as analytical tools by reviewing the comparable GAAP measures, understanding the differences
between the non-GAAP measure and the most comparable GAAP measure and incorporating this knowledge into its decision-making processes. We believe that
investors benefit from having access to the same financial measures that our management uses in evaluating our operating results. Because all companies do not
use identical calculations, our presentations of non-GAAP measures may be different from similarly titled measures of other companies, thereby diminishing
their utility.
SemGroup
SemGroupโs non-GAAP measures, Adjusted EBITDA and cash available for dividends, are not GAAP measures and are not intended to be used in lieu of GAAP
presentation of net income (loss), which is the most closely associated GAAP measure. Adjusted EBITDA represents earnings before interest, taxes, depreciation
and amortization, adjusted for selected items that SemGroup believes impact the comparability of financial results between reporting periods. Although
SemGroup presents selected items that it considers in evaluating its performance, you should also be aware that the items presented do not represent all items
that affect comparability between the periods presented. Variations in SemGroupโs operating results are also caused by changes in volumes, prices, exchange
rates, mechanical interruptions and numerous other factors. These types of variances are not separately identified in this presentation. Cash available for
dividends is based on Adjusted EBITDA, as described above, adjusted to exclude the earnings of our subsidiary, Rose Rock Midstream, cash income taxes, cash
interest expense and maintenance capital expenditures and include cash distributions received from Rose Rock Midstream.
Rose Rock Midstream
Rose Rockโs non-GAAP financial measures, Adjusted gross margin, Adjusted EBITDA and distributable cash flow, are not GAAP measures and are not intended
to be used in lieu of GAAP presentation of operating income (loss) which is the GAAP measure most directly comparable to Adjusted gross margin, net income
(loss) and cash provided by (used in) operating activities which are the GAAP measures most directly comparable to Adjusted EBITDA, and net income (loss)
which is the GAAP measure most directly comparable to distributable cash flow. Adjusted gross margin represents total revenues minus cost of products sold
and unrealized gain (loss) on derivatives. Adjusted EBITDA represents net income before interest expense, income tax expense (benefit), depreciation and
amortization, earnings from equity method investments and any other non-cash adjustments to reconcile net income to net cash provided by operating activities
plus cash distributions from equity method investments. Distributable cash flow represents Adjusted EBITDA, as described above, adjusted to exclude cash
income taxes, cash interest expense and maintenance capital expenditures.
3
4. $400
$300
$200
$100
$0
2014 2015 2016E
SEMG Adjusted EBITDA
(in millions)
First Quarter 2016 Results
$305
$287
$270 - $320
4
$200
$150
$100
$50
$0
2014 2015 2016E
RRMS Adjusted EBITDA
(in millions)
$175
$128
$165 - $185
Adjusted EBITDA(1)
1Q 2016 4Q 2015 2016 Guidance
SemGroup(2) $77.7 million $79.3 million $270 - $320 million
Rose Rock Midstream $49.0 million $46.6 million $165 - $185 million
(1) Non-GAAP Financial Data Reconciliations are included in the Appendix to this presentation
(2) SemGroup includes fully consolidated Rose Rock Midstream
5. 2016 Capital Expenditure Guidance
2016 Capital Expenditures โ $455 million
n Maurepas Pipeline
n Rose Rock Midstream
n Natural Gas
n Other Growth Projects
n Maintenance
$325
10%
72%
1%
12%
$45
$5
$55
__
ยฌ Key Committed Projects
- Crude Projects
โข Maurepas Pipeline (expected completion 4Q 2016): $325 million
โข Isabel Pipeline (completed March 2016): $9 million
- Natural Gas Projects
โข Northern OK well connects & compression: $15 million
โข KA Plant Projects: $18 million
โข Wapiti Pipeline Expansion (expected completion 3Q 2016): $9
million
- Maintenance Capital
โข SemGroup: $45 million
โข Rose Rock: $10 million
ยฌ Focus on completing projects already in progress and
maintain existing assets
ยฌ Prudent organic capital investments at attractive EBITDA
multiples
5
$25
5%
Capital market access not needed in 2016
6. First Quarter 2016 Adjusted EBITDA(1)
(1) Non-GAAP Financial Data Reconciliations are included in the Appendix to this presentation
(2) Rose Rock Transportation segment adjusted EBITDA includes equity method investments on a cash basis
Segment Adjusted EBITDA
(in millions, unaudited) 1Q 2016 4Q 2015
Crude - Transportation $32.0 $31.3
Crude - Facilities 9.6 8.3
Crude - Supply and Logistics 9.3 9.5
SemGas 12.4 12.5
SemCAMS 10.3 11.1
SemLogistics 2.8 2.6
SemMaterials Mexico 2.6 1.5
SemStream 4.9 4.8
Corporate and Other (6.2) (2.3)
SemGroup $77.7 $79.3
Transportation(2) $31.8 $29.4
Facilities 9.6 8.3
Supply and Logistics 9.3 9.5
Corporate and Other (1.7) (0.6)
Rose Rock Midstream $49.0 $46.6
6
7. Leverage & Liquidity
(in millions, unaudited)
SemGroup(1) Rose Rock
March 31, 2016 March 31, 2016
$500 million revolver - 2018 $70.0
$585 million revolver - 2018 24.0
7.500% Senior unsecured notes - 2021 300.0
5.625% Senior unsecured notes - 2022 400.0
5.625% Senior unsecured notes - 2023 350.0
Total consolidated debt $370.0 $774.0
Compliance leverage ratio(2) 1.5x 4.1x
Target leverage 3.0x 4.5x
Liquidity:
Cash and cash equivalents(3) $43.3 $10.7
Revolver availability(4) 424.7 527.6
Total liquidity $468.0 $538.3
(1) SemGroup stand-alone basis
(2) Calculated per revolving credit agreement definitions; maximum total leverage covenant of 5.5x
(3) SemGroup cash excludes Rose Rock and SemMaterials Mexico
(4) Revolver availability excludes outstanding letters of credit
$1 Billion of Combined Liquidity
7
8. 8
A Look Ahead
Preserve Balance
Sheet Strength
Ample Liquidity - No
Capital Market Needs
in 2016
Focus on
Downstream
Opportunities
Maintain Dividends &
Distributions
13. SemGroup Consolidated Balance Sheets
(in thousands, unaudited, condensed) March 31,
2016
December 31,
2015
ASSETS
Current assets $ 449,102 $ 480,381
Property, plant and equipment, net 1,629,751 1,566,821
Goodwill and other intangible assets 194,504 210,255
Equity method investments 503,914 551,078
Other noncurrent assets, net 24,561 45,374
Total assets $ 2,801,832 $ 2,853,909
LIABILITIES AND OWNERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 27 $ 31
Other current liabilities 316,699 376,996
Total current liabilities 316,726 377,027
Long-term debt, excluding current portion 1,122,588 1,057,816
Other noncurrent liabilities 204,150 222,710
Total liabilities 1,643,464 1,657,553
Total owners' equity 1,158,368 1,196,356
Total liabilities and owners' equity $ 2,801,832 $ 2,853,909
13
14. SemGroup Consolidated Statements of Operations and Comprehensive Income
(in thousands, except per share amounts, unaudited, condensed) Three Months Ended
March 31, December 31,
2016 2015 2015
Revenues $ 314,851 $ 298,310 $ 382,493
Expenses:
Costs of products sold, exclusive of depreciation and amortization shown below 196,947 192,072 268,680
Operating 50,192 53,090 57,286
General and administrative 21,060 32,310 19,094
Depreciation and amortization 24,047 23,734 26,452
Loss on disposal or impairment, net 13,307 1,058 9,993
Total expenses 305,553 302,264 381,505
Earnings from equity method investments 23,071 20,559 20,687
Gain (loss) on issuance of common units by equity method investee (41) โ 352
Operating income 32,328 16,605 22,027
Other expenses net 59,981 6,087 19,082
Income (loss) from continuing operations before income taxes (27,653) 10,518 2,945
Income tax expense (benefit) (21,407) 4,742 3,921
Income (loss) from continuing operations (6,246) 5,776 (976)
Loss from discontinued operations, net of income taxes (2) โ (1)
Net income (loss) (6,248) 5,776 (977)
Less: net income (loss) attributable to noncontrolling interests 9,020 4,310 (1,661)
Net income (loss) attributable to SemGroup Corporation $ (15,268) $ 1,466 $ 684
Net income (loss) attributable to SemGroup Corporation $ (15,268) $ 1,466 $ 684
Other comprehensive loss, net of income taxes (4,109) (9,060) (7,671)
Comprehensive loss attributable to SemGroup Corporation $ (19,377) $ (7,594) $ (6,987)
Net income (loss) per common share
Basic $ (0.35) $ 0.03 $ 0.02
Diluted $ (0.35) $ 0.03 $ 0.02
Weighted average shares (thousands):
Basic 43,870 43,717 43,824
Diluted 43,870 43,940 43,971
14
15. SemGroup Non-GAAP Adjusted EBITDA Calculation
(in thousands, unaudited) Three Months Ended
March 31, December 31,
Reconciliation of net income to Adjusted EBITDA: 2016 2015 2015
Net income (loss) $ (6,248) $ 5,776 $ (977)
Add: Interest expense 18,935 14,591 19,092
Add: Income tax expense (benefit) (21,407) 4,742 3,921
Add: Depreciation and amortization expense 24,047 23,734 26,452
EBITDA 15,327 48,843 48,488
Selected Non-Cash Items and
Other Items Impacting Comparability 62,340 21,139 30,837
Adjusted EBITDA $ 77,667 $ 69,982 $ 79,325
Selected Non-Cash Items and
Other Items Impacting Comparability
Loss on disposal or impairment, net $ 13,307 $ 1,058 $ 9,993
Loss from discontinued operations, net of income taxes 2 โ 1
Foreign currency transaction (gain) loss 1,469 (519) 132
Remove NGL equity losses (earnings) including gain on issuance of common units (2,191) 305 (346)
Remove loss (gain) on sale or impairment of NGL units 39,764 (7,894) โ
NGL cash distribution 4,873 5,015 4,839
M&A transaction related costs โ 10,000 โ
Inventory valuation adjustments including equity method investees โ 1,187 1,810
Employee severance expense 259 โ 48
Unrealized loss (gain) on derivative activities (4,548) 2,645 5,330
Depreciation and amortization included within equity earnings 6,539 6,376 6,173
Bankruptcy related expenses โ 189 โ
Non-cash equity compensation 2,866 2,777 2,857
Selected Non-Cash items and
Other Items Impacting Comparability $ 62,340 $ 21,139 $ 30,837
15
16. SemGroup Cash Available for Dividends
(in thousands, unaudited) Three Months Ended
March 31, December 31,
Reconciliation of net income to cash available for dividends: 2016 2015 2015
Net income (loss) $ (6,248) $ 5,776 $ (977)
Add: Interest expense 18,935 14,591 19,092
Add: Income tax expense (benefit) (21,407) 4,742 3,921
Add: Depreciation and amortization expense 24,047 23,734 26,452
EBITDA 15,327 48,843 48,488
Selected non-cash items and other items impacting comparability 32,163 (12,346) 1,201
SemGroup stand-alone Adjusted EBITDA 47,490 36,497 49,689
Less: Cash interest expense 5,913 6,021 6,227
Less: Cash paid for income taxes 1,137 3,299 1,008
Less: Maintenance capital expenditures 14,523 3,308 11,353
Cash available for dividends $ 25,917 $ 23,869 $ 31,101
Dividends declared $ 19,736 $ 16,632 $ 19,877
Coverage 1.3x 1.4x 1.6x
16
17. SemGroup Cash Available for Dividends (Continued)
(in thousands, unaudited) Three Months Ended
March 31, December 31,
2016 2015 2015
Selected Non-Cash Items and
Other Items Impacting Comparability
Remove Rose Rock EBITDA $ (46,798) $ (32,749) $ (24,691)
Rose Rock distributions received 19,606 10,290 19,602
Loss (gain) on disposal or impairment, net 13,013 906 (107)
Loss (income) from discontinued operations, net of income taxes 2 โ 1
Foreign currency transaction (gain) loss 1,469 (519) 132
Remove NGL equity losses (earnings) including gain on issuance of common units (2,191) 305 (346)
Remove loss (gain) on sale or impairment of NGL units 39,764 (7,894) โ
NGL cash distribution 4,873 5,015 4,839
M&A transaction related costs โ 10,000 โ
Employee severance expense 259 โ โ
Bankruptcy related expenses โ 189 โ
Non-cash equity compensation 2,166 2,111 1,771
Selected Non-Cash items and
Other Items Impacting Comparability $ 32,163 $ (12,346) $ 1,201
17
18. SemGroup Non-GAAP Financial Data Reconciliations
(in thousands, unaudited) Three Months Ended
March 31, December 31,
2016 2015 2015
Net income $ 19,296 $ 15,750 $ 6,057
Add: Interest expense 264 156 254
Add: Depreciation and amortization expense 5,859 8,618 8,822
EBITDA 25,419 24,524 15,133
Selected Non-Cash Items and
Other Items Impacting Comparability 6,606 6,531 16,137
Adjusted EBITDA $ 32,025 $ 31,055 $ 31,270
Selected Non-Cash Items and Other Items Impacting Comparability
Loss on disposal or impairment, net $ 67 $ 155 $ 9,461
Employee severance expense โ โ 48
Depreciation and amortization included within
equity earnings 6,539 6,376 6,173
Inventory valuation adjustments including equity method investees โ โ 455
Selected Non-Cash items and
Other Items Impacting Comparability $ 6,606 $ 6,531 $ 16,137
18
Crude - Transportation Segment
19. SemGroup Non-GAAP Financial Data Reconciliations
(in thousands, unaudited) Three Months Ended
March 31, December 31,
2016 2015 2015
Net income $ 7,703 $ 7,033 $ 6,705
Add: Depreciation and amortization expense 1,884 1,369 1,603
EBITDA 9,587 8,402 8,308
Selected Non-Cash Items and
Other Items Impacting Comparability โ โ โ
Adjusted EBITDA $ 9,587 $ 8,402 $ 8,308
19
Crude - Facilities Segment
20. SemGroup Non-GAAP Financial Data Reconciliations
(in thousands, unaudited) Three Months Ended
March 31, December 31,
2016 2015 2015
Net income $ 13,461 $ 2,512 $ 2,598
Add: Interest expense 140 99 132
Add: Depreciation and amortization expense 40 39 40
EBITDA 13,641 2,650 2,770
Selected Non-Cash Items and
Other Items Impacting Comparability (4,321) 3,715 6,685
Adjusted EBITDA $ 9,320 $ 6,365 $ 9,455
Selected Non-Cash Items and Other Items Impacting Comparability
Loss (gain) on disposal or impairment, net $ 227 $ (3) $ โ
Unrealized loss (gain) on derivative activities (4,548) 2,531 5,330
Inventory valuation adjustments including equity method investees โ 1,187 1,355
Selected Non-Cash items and
Other Items Impacting Comparability $ (4,321) $ 3,715 $ 6,685
20
Crude - Supply and Logistics Segment
21. SemGroup Non-GAAP Financial Data Reconciliations
(in thousands, unaudited) Three Months Ended
March 31, December 31,
2016 2015 2015
Net income (loss) $ (13,469) $ 4,891 $ 16
Add: Interest expense 3,555 2,851 3,538
Add: Depreciation and amortization expense 8,922 7,138 8,705
EBITDA (992) 14,880 12,259
Selected Non-Cash Items and
Other Items Impacting Comparability 13,391 200 238
Adjusted EBITDA $ 12,399 $ 15,080 $ 12,497
Selected Non-Cash Items and Other Items Impacting Comparability
Loss (gain) on disposal or impairment, net $ 13,052 $ (1) $ (62)
Non-cash equity compensation 339 201 300
Selected Non-Cash items and
Other Items Impacting Comparability $ 13,391 $ 200 $ 238
21
SemGas Segment
22. SemGroup Non-GAAP Financial Data Reconciliations
(in thousands, unaudited) Three Months Ended
March 31, December 31,
2016 2015 2015
Net income $ 2,756 $ 1,199 $ 3,646
Add: Interest expense 2,226 3,112 2,243
Add: Income tax expense 965 551 1,319
Add: Depreciation and amortization expense 3,951 3,066 3,489
EBITDA 9,898 7,928 10,697
Selected Non-Cash Items and
Other Items Impacting Comparability 383 424 397
Adjusted EBITDA $ 10,281 $ 8,352 $ 11,094
Selected Non-Cash Items and Other Items Impacting Comparability
Foreign currency transaction (gain) loss $ 6 $ (44) $ (1)
Non-cash equity compensation 377 468 398
Selected Non-Cash items and
Other Items Impacting Comparability $ 383 $ 424 $ 397
22
SemCAMS Segment
23. SemGroup Non-GAAP Financial Data Reconciliations
(in thousands, unaudited) Three Months Ended
March 31, December 31,
2016 2015 2015
Net income (loss) $ (246) $ (1,926) $ 1,276
Add: Interest expense 376 465 405
Add: Income tax expense (benefit) 59 (369) (1,823)
Add: Depreciation and amortization expense 1,960 2,040 2,176
EBITDA 2,149 210 2,034
Selected Non-Cash Items and
Other Items Impacting Comparability 687 805 598
Adjusted EBITDA $ 2,836 $ 1,015 $ 2,632
Selected Non-Cash Items and Other Items Impacting Comparability
Foreign currency transaction loss $ 510 $ 651 $ 425
Non-cash equity compensation 177 154 173
Selected Non-Cash items and
Other Items Impacting Comparability $ 687 $ 805 $ 598
23
SemLogistics Segment
24. SemGroup Non-GAAP Financial Data Reconciliations
(in thousands, unaudited) Three Months Ended
March 31, December 31,
2016 2015 2015
Net income $ 696 $ 3,011 $ 42
Add: Income tax expense 607 990 215
Add: Depreciation and amortization expense 941 1,053 993
EBITDA 2,244 5,054 1,250
Selected Non-Cash Items and
Other Items Impacting Comparability 370 219 234
Adjusted EBITDA $ 2,614 $ 5,273 $ 1,484
Selected Non-Cash Items and Other Items Impacting Comparability
Loss on disposal of long-lived assets, net $ (39) $ (19) $ (20)
Foreign currency transaction loss 256 131 111
Non-cash equity compensation 153 107 143
Selected Non-Cash items and
Other Items Impacting Comparability $ 370 $ 219 $ 234
24
SemMaterials Mรฉxico Segment
25. SemGroup Non-GAAP Financial Data Reconciliations
(in thousands, unaudited) Three Months Ended
March 31, December 31,
2016 2015 2015
Net income (loss) $ (36,200) $ 8,908 $ 1,708
Add: Interest expense (income) (1,382) (1,322) (1,366)
EBITDA (37,582) 7,586 342
Selected Non-Cash Items and
Other Items Impacting Comparability 42,447 (2,574) 4,494
Adjusted EBITDA $ 4,865 $ 5,012 $ 4,836
Selected Non-Cash Items and Other Items Impacting Comparability
Remove NGL equity losses (earnings) including gain on issuance of common units $ (2,191) $ 305 $ (346)
Remove loss (gain) on sale or impairment of NGL units 39,764 (7,894) โ
NGL cash distribution 4,873 5,015 4,839
Non-cash equity compensation 1 โ 1
Selected Non-Cash items and
Other Items Impacting Comparability $ 42,447 $ (2,574) $ 4,494
25
SemStream Segment
26. SemGroup Non-GAAP Financial Data Reconciliations
(in thousands, unaudited) Three Months Ended
March 31, December 31,
2016 2015 2015
Net loss $ (244) $ (35,602) $ (23,025)
Add: Interest expense 13,756 9,230 13,886
Add: Income tax expense (benefit) (23,038) 3,570 4,210
Add: Depreciation and amortization expense 490 411 624
EBITDA (9,036) (22,391) (4,305)
Selected Non-Cash Items and
Other Items Impacting Comparability 2,777 11,819 2,054
Adjusted EBITDA $ (6,259) $ (10,572) $ (2,251)
Selected Non-Cash Items and Other Items Impacting Comparability
Loss from discontinued operations, net of income taxes $ 2 $ โ $ 1
Loss on disposal or impairment, net โ 926 614
Foreign currency transaction (gain) loss 697 (1,257) (403)
Employee severance expense 259 โ โ
Unrealized loss on derivative activities โ 114 โ
M&A transaction related costs โ 10,000 โ
Bankruptcy related expenses โ 189 โ
Non-cash equity compensation 1,819 1,847 1,842
Selected Non-Cash items and
Other Items Impacting Comparability $ 2,777 $ 11,819 $ 2,054
26
Corporate & Other Segment
27. SemGroup 2016 Adjusted EBITDA Guidance
(1) Guidance is on a cash basis for equity investments in NGL, includes fully consolidated Rose Rock Midstream
(in millions, unaudited) 2016 Guidance(1)
Mid-point
Net income $ 34.0
Add: Interest expense 83.0
Add: Income tax expense 10.0
Add: Depreciation and amortization 126.0
EBITDA $ 253.0
Selected Non-Cash and Other Items Impacting Comparability 42.0
Adjusted EBITDA $ 295.0
Selected Non-Cash and Other Items Impacting Comparability
Depreciation and amortization included within equity earnings $ 28.0
Non-cash equity compensation 14.0
Selected Non-Cash and Other Items Impacting Comparability $ 42.0
27
28. SemGroup 2016 Cash Available for Dividends Guidance
(in millions, unaudited) 2016 Guidance
Mid-point
Net income $ 34.0
Add: Interest expense 83.0
Add: Income tax expense 10.0
Add: Depreciation and amortization 126.0
EBITDA 253.0
Selected non-cash and other items impacting comparability (63.0)
SemGroup stand-alone Adjusted EBITDA $ 190.0
Less: Cash interest expense 29.0
Less: Cash paid for income taxes 10.0
Less: Maintenance capital expenditures 45.0
Cash available for dividends $ 106.0
Expected dividends declared $ 79.0
Coverage 1.3x
Selected non-cash and other items impacting comparability
Rose Rock EBITDA $ (148.5)
Rose Rock distributions received, net of General Partner support 74.5
Non-cash equity compensation 11.0
Selected Non-Cash and Other Items Impacting Comparability $ (63.0)
28
29. Rose Rock Midstream Consolidated Balance Sheets
(in thousands, unaudited, condensed) March 31,
2016
December 31,
2015
ASSETS
Current assets $ 290,474 $ 319,614
Property, plant and equipment, net 443,415 441,596
Equity method investment 433,572 438,291
Other noncurrent assets, net 45,376 46,089
Total assets $ 1,212,837 $ 1,245,590
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities $ 229,164 $ 283,029
Long-term debt 756,921 732,356
Total liabilities 986,085 1,015,385
Partnersโ capital 226,752 230,205
Total liabilities and partners' capital $ 1,212,837 $ 1,245,590
29
30. Rose Rock Midstream Consolidated Statements of Income
(in thousands, except per unit data, unaudited) Three Months Ended
March 31, December 31,
2016 2015 2015
Revenues, including revenues from affiliates
Product $ 176,622 $ 106,567 $ 218,020
Service 27,329 28,126 27,609
Total revenues 203,951 134,693 245,629
Expenses, including expenses from affiliates
Costs of products sold, exclusive of depreciation
and amortization 151,391 96,237 207,155
Operating 21,407 20,799 19,603
General and administrative 4,900 5,620 4,797
Depreciation and amortization 7,893 10,143 10,613
Loss on disposal or impairment, net 294 152 10,100
Total expenses 185,885 132,951 252,268
Earnings from equity method investments 20,839 20,864 20,693
Operating income 38,905 22,606 14,054
Other expenses:
Interest expense 12,437 8,006 12,494
Other income โ โ (24)
Total other expenses, net 12,437 8,006 12,470
Net income $ 26,468 $ 14,600 $ 1,584
30
31. (in thousands, except per unit data, unaudited) Three Months Ended
March 31, December 31,
2016 2015 2015
Net income allocated to general partner $ 5,868 $ 4,742 $ 5,366
Net income (loss) allocated to common unitholders $ 20,600 $ 9,858 $ (3,782)
Net income (loss) per limited partner unit:
Common unit (basic) $ 0.56 $ 0.28 $ (0.10)
Common unit (diluted) $ 0.56 $ 0.28 $ (0.10)
Basic weighted average number of limited partner units outstanding:
Common units 36,809 34,804 36,796
Diluted weighted average number of limited partner units outstanding:
Common units 36,835 34,847 36,831
Rose Rock Midstream Consolidated Statements of Income (Continued)
31
32. Rose Rock Midstream Non-GAAP Financial Data Reconciliations
(in thousands, unaudited) Three Months Ended
March 31, December 31,
2016 2015 2015
Reconciliation of operating income to Adjusted gross margin:
Operating income $ 38,905 $ 22,606 $ 14,054
Add:
Operating expense 21,407 20,799 19,603
General and administrative expense 4,900 5,620 4,797
Depreciation and amortization expense 7,893 10,143 10,613
Loss on disposal or impairment, net 294 152 10,100
Less:
Earnings from equity method investments 20,839 20,864 20,693
Non-cash unrealized gain (loss) on derivatives, net 4,548 (2,531) (5,330)
Adjusted gross margin $ 48,012 $ 40,987 $ 43,804
Reconciliation of net income to Adjusted EBITDA:
Net income $ 26,468 $ 14,600 $ 1,584
Add:
Interest expense 12,437 8,006 12,494
Depreciation and amortization expense 7,893 10,143 10,613
Cash distributions from equity method investments 26,913 26,065 25,241
Inventory valuation adjustment โ 1,187 1,355
Provision for uncollectible accounts receivable 38 โ 257
Non-cash equity compensation 365 298 341
Loss on disposal or impairment, net 294 152 10,100
Less:
Earnings from equity method investments 20,839 20,864 20,693
Impact from derivative instruments:
Total gain (loss) on derivatives, net 3,354 (644) 4,955
Total realized gain (loss) (cash flow) on derivatives, net 1,194 (1,887) (10,285)
Non-cash unrealized gain (loss) on derivatives, net 4,548 (2,531) (5,330)
Adjusted EBITDA $ 49,021 $ 42,118 $ 46,622
32
33. Rose Rock Midstream Non-GAAP Financial Data Reconciliations
(in thousands, unaudited) Three Months Ended
March 31, December 31,
2016 2015 2015
Reconciliation of net cash provided by operating activities to Adjusted EBITDA:
Net cash provided by (used in) operating activities $ 14,530 $ (7,070) $ 30,549
Less:
Changes in operating assets and liabilities, net (16,811) (36,508) 140
Add:
Interest expense, excluding amortization of debt issuance costs 11,606 7,479 11,664
Distributions from equity method investments in excess of equity in earnings 6,074 5,201 4,549
Adjusted EBITDA $ 49,021 $ 42,118 $ 46,622
33
34. Rose Rock Midstream Distributable Cash Flow
(in thousands, unaudited) Three Months Ended
March 31, December 31,
2016 2015 2015
Reconciliation of net income to distributable cash flow:
Net income $ 26,468 $ 14,600 $ 1,584
Add:
Interest expense 12,437 8,006 12,494
Depreciation and amortization expense 7,893 10,143 10,613
EBITDA 46,798 32,749 24,691
Add:
Loss on disposal or impairment, net 294 152 10,100
Cash distributions from equity method investments 26,913 26,065 25,241
Provision for uncollectible accounts receivable 38 โ 257
Inventory valuation adjustment โ 1,187 1,355
Non-cash equity compensation 365 298 341
Less:
Earnings from equity method investments 20,839 20,864 20,693
Non-cash unrealized gain (loss) on derivatives, net 4,548 (2,531) (5,330)
Adjusted EBITDA $ 49,021 $ 42,118 $ 46,622
Less:
Cash interest expense 11,587 7,454 11,640
Maintenance capital expenditures 2,148 927 2,458
Distributable cash flow $ 35,286 $ 33,737 $ 32,524
Distribution declared $ 30,251 $ 28,379 $ 30,224
Distribution coverage ratio 1.2 x 1.2 x 1.1 x
34
35. Transportation Segment
Rose Rock Midstream Non-GAAP Financial Data Reconciliations
(in thousands, unaudited) Three Months Ended
March 31, December 31,
2016 2015 2015
Reconciliation of operating income to Adjusted gross margin:
Operating income $ 19,733 $ 15,906 $ 6,299
Add:
Operating expense 18,451 18,328 17,110
General and administrative expense 1,138 1,905 2,610
Depreciation and amortization expense 5,859 8,618 8,822
Loss on disposal or impairment, net 67 155 9,461
Less:
Earnings from equity method investments 20,839 20,864 20,693
Adjusted gross margin $ 24,409 $ 24,048 $ 23,609
Reconciliation of net income to Adjusted EBITDA:
Net income $ 19,469 $ 15,750 $ 6,066
Add:
Interest expense 264 156 254
Depreciation and amortization expense 5,859 8,618 8,822
Cash distributions from equity method investments 26,913 26,065 25,241
Provision for uncollectible accounts receivable 38 โ 257
Loss on disposal or impairment, net 67 155 9,461
Less:
Earnings from equity method investments 20,839 20,864 20,693
Adjusted EBITDA $ 31,771 $ 29,880 $ 29,408
35
36. Facilities Segment
Rose Rock Midstream Non-GAAP Financial Data Reconciliations
(in thousands, unaudited)
Three Months Ended
March 31, December 31,
2016 2015 2015
Reconciliation of operating income to Adjusted gross margin:
Operating income $ 7,703 $ 7,033 $ 6,705
Add:
Operating expense 2,118 2,271 2,134
General and administrative expense 1,174 732 1,045
Depreciation and amortization expense 1,884 1,369 1,603
Adjusted gross margin $ 12,879 $ 11,405 $ 11,487
Reconciliation of net income to Adjusted EBITDA:
Net income $ 7,703 $ 7,033 $ 6,705
Add:
Depreciation and amortization expense 1,884 1,369 1,603
Adjusted EBITDA $ 9,587 $ 8,402 $ 8,308
36
37. Supply and Logistics Segment
Rose Rock Midstream Non-GAAP Financial Data Reconciliations
(in thousands, unaudited) Three Months Ended
March 31, December 31,
2016 2015 2015
Reconciliation of operating income to Adjusted gross margin:
Operating income $ 13,601 $ 2,611 $ 2,730
Add:
Operating expense 838 193 366
General and administrative expense 566 163 242
Depreciation and amortization expense 40 39 40
Loss (gain) on disposal or impairment, net 227 (3) โ
Less:
Non-cash unrealized gain (loss) on derivatives, net 4,548 (2,531) (5,330)
Adjusted gross margin $ 10,724 $ 5,534 $ 8,708
Reconciliation of net income to Adjusted EBITDA:
Net income $ 13,461 $ 2,512 $ 2,598
Add:
Interest expense 140 99 132
Depreciation and amortization expense 40 39 40
Inventory valuation adjustment โ 1,187 1,355
Loss (gain) on disposal or impairment, net 227 (3) โ
Less:
Impact from derivative instruments:
Total gain (loss) on derivatives, net 3,354 (644) 4,955
Total realized gain (loss) (cash flow) on derivatives, net 1,194 (1,887) (10,285)
Non-cash unrealized gain (loss) on derivatives, net 4,548 (2,531) (5,330)
Adjusted EBITDA $ 9,320 $ 6,365 $ 9,455
37
38. Corporate and Other Segment
Rose Rock Midstream Non-GAAP Financial Data Reconciliations
(in thousands, unaudited) Three Months Ended
March 31, December 31,
2016 2015 2015
Reconciliation of operating income to Adjusted gross margin:
Operating loss $ (2,132) $ (2,944) $ (1,680)
Add:
Operating expense โ 7 (7)
General and administrative expense 2,022 2,820 900
Depreciation and amortization expense 110 117 148
Loss on disposal of long-lived assets, net โ โ 639
Adjusted gross margin $ โ $ โ $ โ
Reconciliation of net income to Adjusted EBITDA:
Net loss $ (14,165) $ (10,695) $ (13,785)
Add:
Interest expense 12,033 7,751 12,108
Depreciation and amortization expense 110 117 148
Non-cash equity compensation 365 298 341
Loss on disposal of long-lived assets, net โ โ 639
Adjusted EBITDA $ (1,657) $ (2,529) $ (549)
38
39. Rose Rock Midstream 2016 Adjusted EBITDA and DCF Guidance
(in millions, unaudited) 2016 Guidance
Mid-point
Net income $ 48.5
Add: Interest expense 51.0
Add: Depreciation and amortization 49.0
EBITDA $ 148.5
Non-Cash and Other Adjustments 26.5
Adjusted EBITDA $ 175.0
Less:
Cash interest expense 48.0
Maintenance capital expenditures 10.0
Add:
General Partner support 4.0
Distributable cash flow $ 121.0
Expected cash distributions declared $ 121.0
Coverage 1.0x
Non-Cash and Other Adjustments
Earnings from equity method investments $ (77.0)
Cash distributions from equity method investments (1) 102.0
Non-cash equity compensation 1.5
Non-Cash and Other Adjustments $ 26.5
(1) Distributions from equity method investment includes the cash distributions from White Cliffs and Glass Mountain
attributable to Rose Rock
39
40. (in thousands, unaudited) Year Ended
December 31, 2015
Crude -
Transportation
Crude -
Facilities
Crude -
Supply and
Logistics SemStream SemCAMS SemLogistics SemMexico SemGas
Corporate
and other Consolidated
Net income (loss) $ 44,771 $ 27,928 $ 27,567 $ 31,283 $ 7,879 $ (1,624) $ 8,725 $ 16,704 $ (121,708) $ 41,525
Add: Interest expense (income) 778 โ 462 (5,376) 10,742 1,746 46 13,162 48,115 69,675
Add: Income tax expense (benefit) โ โ โ โ 4,847 (2,195) 2,611 โ 29,554 34,817
Add: Depreciation and amortization expense 35,500 5,829 159 โ 12,940 8,543 4,076 31,803 2,032 100,882
EBITDA 81,049 33,757 28,188 25,907 36,408 6,470 15,458 61,669 (42,007) 246,899
Selected Non-Cash Items and
Other Items Impacting Comparability 35,600 โ 4,491 (6,857) 773 1,399 1,193 2,777 19,007 58,383
Adjusted EBITDA $ 116,649 $ 33,757 $ 32,679 $ 19,050 $ 37,181 $ 7,869 $ 16,651 $ 64,446 $ (23,000) $ 305,282
Selected Non-Cash Items and Other Items Impacting Comparability
Loss (gain) on disposal of long-lived assets, net $ 9,621 $ โ $ (3) $ โ $ (917) $ โ $ 85 $ 1,832 $ 854 $ 11,472
Loss from discontinued operations, net of income taxes โ โ โ โ โ โ โ โ 4 4
Foreign currency transaction (gain) loss โ โ โ โ 103 799 605 โ (2,574) (1,067)
Remove NGL equity earnings including gain on issuance of common
units โ โ โ (11,416) โ โ โ โ โ (11,416)
Remove gain on sale of NGL units โ โ โ (14,517) โ โ โ โ โ (14,517)
NGL cash distribution โ โ โ 19,074 โ โ โ โ โ 19,074
Employee severance expense 75 โ 4 โ โ โ โ โ 11 90
Unrealized loss (gain) on derivative activities โ โ 1,900 โ โ โ โ โ 114 2,014
M&A transaction related costs โ โ โ โ โ โ โ โ 10,000 10,000
Depreciation and amortization included within
equity earnings 25,307 โ โ โ โ โ โ โ โ 25,307
Inventory valuation adjustment including equity method investees 597 โ 2,590 โ โ โ โ โ โ 3,187
Bankruptcy related expenses โ โ โ โ โ โ โ โ 224 224
Legal settlement โ โ โ โ โ โ โ โ 3,394 3,394
Non-cash equity compensation โ โ โ 2 1,587 600 503 945 6,980 10,617
Selected Non-Cash Items and
Other Items Impacting Comparability $ 35,600 $ โ $ 4,491 $ (6,857) $ 773 $ 1,399 $ 1,193 $ 2,777 $ 19,007 $ 58,383
SemGroup Reconciliation of Net Income to Adjusted EBITDA
40
41. (in thousands, unaudited) Year Ended
December 31, 2014
Crude -
Transportation
Crude -
Facilities
Crude -
Supply and
Logistics SemStream SemCAMS SemLogistics SemMexico SemGas
Corporate
and other Consolidated
Net income (loss) $ 31,301 $ 26,921 $ 24,610 $ 70,632 $ 14,318 $ (10,072) $ 5,900 $ 6,792 $ (118,345) $ 52,057
Add: Interest expense (income) 11,727 โ 502 (5,140) 13,558 1,528 166 8,570 18,133 49,044
Add: Income tax expense (benefit) โ โ โ โ 3,135 (2,231) 4,053 โ 41,556 46,513
Add: Depreciation and amortization expense 33,679 5,365 549 โ 14,295 10,005 6,031 26,353 2,120 98,397
EBITDA 76,707 32,286 25,661 65,492 45,306 (770) 16,150 41,715 (56,536) 246,011
Selected Non-Cash Items and
Other Items Impacting Comparability 21,582 (34) 4,004 (42,165) 590 (1,083) 621 21,053 36,862 41,430
Adjusted EBITDA $ 98,289 $ 32,252 $ 29,665 $ 23,327 $ 45,896 $ (1,853) $ 16,771 $ 62,768 $ (19,674) $ 287,441
Selected Non-Cash Items and Other Items Impacting Comparability
Loss (gain) on disposal of long-lived assets, net $ 467 $ (34) $ (42) $ โ $ (950) $ (2,490) $ (53) $ 20,092 $ 15,602 $ 32,592
Loss (income) from discontinued operations, net of income taxes โ โ โ โ โ (1) โ โ 2 1
Foreign currency transaction (gain) loss โ โ โ โ 42 821 279 โ (1,228) (86)
Remove NGL equity earnings including gain on issuance of common
units โ โ โ (31,363) โ โ โ โ โ (31,363)
Remove gain on sale of NGL units โ โ โ (34,211) โ โ โ โ โ (34,211)
NGL cash distribution โ โ โ 23,404 โ โ โ โ โ 23,404
Employee severance expense 9 โ โ โ 150 โ โ 41 20 220
Unrealized loss (gain) on derivative activities โ โ (1,621) โ โ โ โ โ (113) (1,734)
Change in fair value of warrants โ โ โ โ โ โ โ โ 13,423 13,423
Depreciation and amortization included within
equity earnings 18,992 โ โ โ โ โ โ โ โ 18,992
Inventory valuation adjustment including equity method investees 2,114 โ 5,667 โ โ โ โ โ โ 7,781
Recovery of receivables written off at emergence โ โ โ โ (664) โ โ โ โ (664)
Bankruptcy related expenses โ โ โ 1 โ โ โ 150 1,159 1,310
Charitable contributions โ โ โ โ โ โ โ โ 3,379 3,379
Non-cash equity compensation โ โ โ 4 2,012 587 395 770 4,618 8,386
Selected Non-Cash Items and
Other Items Impacting Comparability $ 21,582 $ (34) $ 4,004 $ (42,165) $ 590 $ (1,083) $ 621 $ 21,053 $ 36,862 $ 41,430
SemGroup Reconciliation of Net Income to Adjusted EBITDA
41
42. (in thousands, unaudited) Year Ended
December 31,
2015 2014
Net income $ 49,673 $ 62,925
Add:
Interest expense 43,188 21,279
Depreciation and amortization expense 41,998 40,035
Distributions from equity method investment 100,468 66,768
Inventory valuation adjustment 2,590 5,667
Non-cash equity compensation 1,354 943
Loss on disposal of long-lived assets, net 10,257 319
Provision for uncollectible accounts receivable 257 โ
Less:
Earnings from equity method investment 76,355 57,378
White Cliffs cash distributions attributable to noncontrolling interests โ 11,008
Impact from derivative instruments:
Total gain on derivatives, net 8,145 17,351
Total realized gain (cash outflow) on derivatives, net (10,045) (15,730)
Non-cash unrealized gain (loss) on derivatives, net (1,900) 1,621
Adjusted EBITDA $ 175,330 $ 127,929
Rose Rock Reconciliation of Net Income to Adjusted EBITDA
42
43. Rose Rock Reconciliation of Net Cash Provided by Operating Activities to
Adjusted EBITDA
(in thousands, unaudited) Year Ended
December 31,
2015 2014
Net cash provided by operating activities $ 82,851 $ 111,093
Less:
Changes in operating assets and liabilities, net (28,044) 1,296
White Cliffs cash distributions attributable to noncontrolling interests โ 11,008
Add:
Interest expense, excluding amortization of debt issuance costs 40,322 19,750
Distributions in excess of equity earnings of affiliates 24,113 9,390
Adjusted EBITDA $ 175,330 $ 127,929
43
