Produced Water | Session XII - A. Judson Hill


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The Water/Energy nexus

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Produced Water | Session XII - A. Judson Hill

  1. 1. Capitaland Sponsorshipfor the Natural Resources Industry Since 1988 THE WATER/ENERGY NEXUS JUNE 2013
  2. 2. – 23-year longevity – 31% Gross IRR (21% Net IRR) since inception in 1988 – Top quartile performance since inception in 1988 – No senior leadership turnover – Proprietary deal flow throughout platform – Consistently applied investment process Natural Gas Partners Unparalleled Track Record Offices: Irving, TX (Dallas); Houston, TX; Santa Fe, NM; Stamford, CT; Washington, DC Confidential: Not for Reproduction or Distribution. Francis J. Harvey Robert W. Jordan Thomas R. Pickering James R. Schlesinger PaulD. Wolfowitz Pat Wood, III Strategic Advisory Council Natural Gas Partners IX, L.P.Natural Gas Partners IX, L.P.Natural Gas Partners IX, L.P.Natural Gas Partners IX, L.P.Natural Gas Partners IX, L.P.Natural Gas Partners IX, L.P.Natural Gas Partners IX, L.P.Natural Gas Partners IX, L.P.Natural Gas Partners IX, L.P.  Mezzanine Debt  Midstream  In “Harvest” Period  Focus Folded into NGP X NGP MIDSTREAM & RESOURCES, L.P. NASDAQ: NGPC Total:$1.4 Billion II, L.P.  Energy Technology Growth Capital ─ Energy Efficiency ─ Power Technologies ─ AlternativeEnergy ─ Oilfield Services Technologies Total:$496MM 2004 2007 2008 2005 1988 1994 1995 1996 1998 2000 2003 2005 2007 $100 MM $37 MM $30 MM $150 MM $320 MM $370 MM $600 MM $1,300MM $4,000MM $148 MM $348 MM NGP Natural Resources X, L.P. 2012$3,586MM  Energy Assets and Services (>90%) ─ Oil & Gas Resources ─ Oilfield Services ─ Pipeline and Processing  Other (up to 10%) ─ Food & Agriculture ─ Water Infrastructure & Services Total:$10.5 Billion FIRMOVERVIEW Founded in 1988, NGP Energy Capital Management is a Premier Investment Franchise in the Natural Resources Industry, Which Together With Its Affiliates Has Managed $13.0 Billion in Cumulative Committed Capital 22 Note: Past Performance is not indicative of future results. See Performance Notes in the Appendix.
  3. 3. NGP GLOBAL ADAPTATION PARTNERS Interesting Water Facts WATERFACTOIDS • Water is heavy (7 lbs/gal) and expensive to move – Which makes it very local and leads to virtual water strategies • Water has no substitute at any price – Which makes it “perfectly price inelastic” (unlike energy and other natural resources) • Water is becoming a much more constrained and limited resource – There are many examples across the world of over-drafting of ground water • Water can not remain a “free good” – Prices continue to increase to reflect full value – Higher prices should lead to better stewardship 3
  4. 4. NGP GLOBAL ADAPTATION PARTNERS The Water Value Chain in Fracing • The owner/drilling customer is beginning to consider the entire water value chain • (e.g. sourcing, transpiration, storage, Recycle /Reuse (clean brine and desal water) and disposal • Flow back vs. produced water strategy changes with fracing activity • Logistics is the primary valuation metric (reduce windshield time) • Hub and spoke vs. empty back haul • proven simple and reliable water solutions win the day…no silver bullet • Solutions and strategy are different form by formation (Marcellus is very different from Eagle ford) • Price does matter…but so does safety, reliability and good old fashion customer service • Top down MSA’s without local relationships is a flawed strategy 4
  5. 5. NGP GLOBAL ADAPTATION PARTNERS SUMMARY • Water and energy are inextricably tied as critical global resources and fundamental to all economies • NGP’s investment thesis is to partner with smart executive teams and bring both capital and domain expertise in energy and water sectors • U.S. statesmen, Ben Franklin, stated “We will know the value of water when the well runs dry” 5 Summary
  6. 6. Founded in 1988, NGP Energy Capital Management is a premier investment franchise in the natural resources sector Santa Fe, NM 100 North Guadalupe Street Suite 205 Santa Fe, NM 87501 (505) 983-8400 Irving, TX 125 East John Carpenter Fwy. Suite 600 Irving, TX 75062 (972) 432-1440 Stamford, CT 1266 East Main Street 6th Floor Stamford, CT 06902 (203) 504-5072 Houston, TX 5 Houston Center 1401 McKinney Suite 1025 Houston, TX 77010 (713) 579-5700 NATURAL GAS PARTNERS • NGP GLOBAL ADAPTATION PARTNERS Houston, TX 811 Main Street Suite 4200 Houston, TX 77002 NGP MIDSTREAM & RESOURCES, L.P. Houston, TX 909 Fannin Street Suite 3800 Houston, TX 77010 (713) 752-0062 NGPC NGP Capital Resources Company Washington, DC 1700 K Street NW Suite 750 Washington, DC 20006 (202) 536-3920 NGP ENERGY TECHNOLOGY PARTNERS