![Connections for America’s Energy
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PRB Economics Attracting High-Quality Producers
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Third-party operators provide opportunity for incremental G&P volume growth
PRB Front and Center on Q2 Earnings
“Anadarko has established a core position of more than 300,000
gross acres…developed a play concept focused on the turner
formation and drilled wells in this play, with rates >2000 BOE per
day, having a greater than 80% oil cut” – Anadarko 8/2018
“We're very pleased with what we're seeing. Every [Turner] well
that we bring on is really some of the higher rate of return wells
that we have… later this year, we'll not only pick up a 2nd rig, We
get to the 3rd rig.” – Devon Energy 8/2018
“While we currently anticipate our production will reach 38
MBbls/d by year-end, we've already increased our net oil
production in the PRB by 90% year-to-date with additional growth
that will come” – Chesapeake Energy 8/2018
Note: Producer logo locations are approximations of acreage positions.
(1) Per Chesapeake Energy investor presentation.
Turner formation
drilling
economics offer
>100% RORs at
current strip
pricing(1)
CHK Acreage Delineated](https://image.slidesharecdn.com/crestwoodinvestordeckaugust2018vfinal-180809011434/75/Crestwood-investor-deck-august-2018-v-final-20-2048.jpg)
Crestwood investor deck august 2018 v final
- 1. Presentation Title Presentation Subtitle CrestwoodMidstream Partners LP Crestwood Equity Partners LP Connections for America’s Energy ™ ™ Presentation Title Presentation Subtitle Crestwood Midstream Partners LP Crestwood Equity Partners LP Connections for America’s Energy ™ ™ Presentation Title Presentation Subtitle Crestwood Midstream Partners LP Crestwood Equity Partners LP Connections for America’s Energy ™ ™ 8/8/2018 Presentation Title Presentation Subtitle Crestwood Midstream Partners LP Crestwood Equity Partners LP Connections for America’s Energy ™ ™ Presentation Title Presentation Subtitle Crestwood Midstream Partners LP Crestwood Equity Partners LP Connections for America’s Energy ™ ™ Connections for America’s Energy ™ ™ Investor Presentation August 2018
- 2. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ The statements in this communication regarding future events, occurrences, circumstances, activities, performance, outcomes and results are forward-looking statements. Although these statements reflect the current views, assumptions and expectations of Crestwood’s management, the matters addressed herein are subject to numerous risks and uncertainties which could cause actual activities, performance, outcomes and results to differ materially from those indicated. Such forward-looking statements include, but are not limited to, statements about the benefits that may result from the merger and statements about the future financial and operating results, objectives, expectations and intentions and other statements that are not historical facts. Factors that could result in such differences or otherwise materially affect Crestwood’s financial condition, results of operations and cash flows include, without limitation, the possibility that expected cost reductions will not be realized, or will not be realized within the expected timeframe; fluctuations in crude oil, natural gas and NGL prices (including, without limitation, lower commodity prices for sustained periods of time); the extent and success of drilling efforts, as well as the extent and quality of natural gas and crude oil volumes produced within proximity of Crestwood assets; failure or delays by customers in achieving expected production in their oil and gas projects; competitive conditions in the industry and their impact on our ability to connect supplies to Crestwood gathering, processing and transportation assets or systems; actions or inactions taken or non-performance by third parties, including suppliers, contractors, operators, processors, transporters and customers; the ability of Crestwood to consummate acquisitions, successfully integrate the acquired businesses, realize any cost savings and other synergies from any acquisition; changes in the availability and cost of capital; operating hazards, natural disasters, weather-related delays, casualty losses and other matters beyond Crestwood’s control; timely receipt of necessary government approvals and permits, the ability of Crestwood to control the costs of construction, including costs of materials, labor and right-of-way and other factors that may impact Crestwood’s ability to complete projects within budget and on schedule; the effects of existing and future laws and governmental regulations, including environmental and climate change requirements; the effects of existing and future litigation; and risks related to the substantial indebtedness, of either company, as well as other factors disclosed in Crestwood’s filings with the U.S. Securities and Exchange Commission. You should read filings made by Crestwood with the U.S. Securities and Exchange Commission, including Annual Reports on Form 10-K and the most recent Quarterly Reports and Current Reports for a more extensive list of factors that could affect results. Readers are cautioned not to place undue reliance on forward-looking statements, which reflect management’s view only as of the date made. Crestwood does not assume any obligation to update these forward-looking statements. Company Information 2 Forward-Looking Statements Contact Information Corporate Headquarters 811 Main Street Suite 3400 Houston, TX 77002 (1) Market data as of 8/6/2018. (2) Unit count and balance sheet data as of 6/30/2018. Crestwood Equity Partners LP NYSE Ticker CEQP Market Capitalization ($MM)(1,2) $2,649 Enterprise Value ($MM)(2) $5,071 Annualized Distribution $2.40 Investor Relations investorrelations@crestwoodlp.com (713) 380-3081 No IDRs Corporate Structure
- 3. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ 3 Well-Positioned for DCF per Unit Growth
- 4. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ Key Investor Highlights We Have the Right Strategies in Place to be a Sector Leader 4 EXECUTION UNITHOLDER ALIGNMENT FINANCIAL DISCIPLINE SELF-FUNDED GROWTH Crestwood’s 5-year plan is focused on delivering increased DCF per unit • Well-positioned assets and strong fundamentals support volume growth • 4%, 14% and 22% y-o-y YTD 2018 growth on oil, gas and water gathering volumes, respectively • Best-in-class midstream operator for safety, customer service, community and environmental responsibility • No incentive distribution rights • Management and insiders own >30% of common LP units • General Partner First Reserve committed ~$500MM to support CEQP growth in Delaware Basin • Committed to long-term leverage ratio of 4.0x or below • Strong distribution coverage of 1.2x or above • Opportunistically managing capital structure to reduce cost of capital • No equity required to fund $300MM-$350MM capital program in 2018 • Asset divestitures and excess cash flow used to finance growth • Strategic joint-ventures with Shell Midstream, Williams, Con Edison and First Reserve • High quality projects in Bakken, Delaware Basin, Powder River Basin and NE Marcellus • Committed to accretive organic growth projects offering 5x – 7x build multiples • ~$120MM+ expected EBITDA contribution from current projects by 2021
- 5. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ First Half 2018 Drives Results and Outlook Significant Momentum Supports 3-year EBITDA Growth Outlook 5 Strong Financial Results Best-in-class Operations Fully integrated assets and strong producer supply development supports growth Crestwood’s self-funding and integrated asset strategy drives exceptional results in the first half 2018 and strong confidence in future growth • Q2 Adj. EBITDA of $103MM, 6% above Q2:17 and 1% above Q1:18 • 2018E Adj. EBITDA guidance tightened to $400MM to $420MM • Leverage and coverage ratios of 4.0x and 1.3x, respectively Bakken • Arrow debottlenecking in-service Q3 2018; cash flow ramp beginning in Q4 2018 • 120 MMcf/d Bear Den 2 plant in service Q3 2019; Secured NGL takeaway capacity in ONEOK Elk Creek NGL pipeline Delaware Basin • 200 MMcf/d Orla plant placed in- service Q2 2018; Fully integrated with Willow Lake and Nautilus Systems • Secured NGL takeaway capacity/ownership in EPIC pipeline and long-term PSA with Chevron Phillips Powder River Basin • Expanding Bucking Horse 2 plant and Jackalope system to 345 MMcf/d • Combined O&M and G&A expenses reduced 13% over Q2:17 • Improved annual safety metrics results in lower insurance • Crestwood Transportation named a 2018 CCJ Innovator of the Year
- 6. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ Multiple High-Growth Basins Strong Fundamentals Drive Midstream Infrastructure Investment 6 Diversified midstream portfolio with operating scale along the value chain • 5-Yr Growth Strategy Driven by 4 Core Growth Areas − Bakken – 2018+ − Delaware Basin – 2019+ − Powder River Basin – 2019+ − NE Marcellus Shale – 2020+ • Remaining portfolio of assets provide stable cash flows, optimization alternatives and upside optionality Bakken Northeast MarcellusPowder River Basin Delaware Basin
- 7. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ 7 Bullish Outlook and Producer Activity Crestwood’s Assets are Located in the Right Place! Crestwood’s growth capital investments are building scalable franchise positions in the Bakken, Delaware Basin and Powder River Basin >50% of US onshore rigs are operating in Crestwood’s top-3 core growth areas; Crestwood is investing in all the right places! Bakken Permian Basin Powder River Basin / Niobrara Core Growth Asset Basin Crude Oil Growth Forecast Rig Count Sources: Bakken production data per East Daley. Permian and Powder River forecasts per wall street research. Rig count data provided by Baker Hughes and DrillingInfo as of 8/3/2018. 1.3 MMBbls/d Q2:18 2.0 MMBbls/d by 2021 +55% 56+6% Y-O-Y 480+27% Y-O-Y 20+233% Y-O-Y 3.2 MMBbls/d Q2:18 5.7 MMBbls/d By 2021+80% 0.6 MMBbls/d Q2:18 1.2 MMBbls/d by 2021+100%
- 8. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ Balanced Portfolio; High Quality Customers Excellent Diversity of Services, Customers and Markets CEQP Contract Portfolio 8 8 Variable Rate Contracts 14% Take-or-Pay and Fixed-Fee Contracts 86% ~86% of Crestwood 2018 EBITDA from take-or-pay and fixed-fee contracts; Key assets protected from commodity volatility and volume declines Long-Term Contract Profile With High Quality Customers(1) 2018 Forecasted EBITDA (1) Not inclusive of all Crestwood customers. Stable cash flows supported by fixed-fee contracts, top-tier customer base and balanced commodity exposure G&P assets backed by 1.1 million acreage dedication; High quality producer mix Top-tier NE Gas Storage & Transportation franchise; Largely investment grade Diversified NGL Marketing, Supply & Logistics business Gas Oil NGLs Volumes by Commodity EBITDA by Commodity 60%25% 15% 50% 30% 20%
- 9. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ 0 50,000 100,000 150,000 200,000 250,000 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018E Q2 2018E Q3 2018E Q4 2018E Q1 2019E Q2 2019E Q3 2019E Q4 2019E 0 100,000 200,000 300,000 400,000 500,000 600,000 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018E Q2 2018E Q3 2018E Q4 2018E Q1 2019E Q2 2019E Q3 2019E Q4 2019E 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018E Q2 2018E Q3 2018E Q4 2018E Q1 2019E Q2 2019E Q3 2019E Q4 2019E 40,000 50,000 60,000 70,000 80,000 90,000 100,000 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018E Q2 2018E Q3 2018E Q4 2018E Q1 2019E Q2 2019E Q3 2019E Q4 2019E 9 Volume Growth Drives Investments and Returns Producer Activity Driving Volume Growth YTD 2018 oil, gas and water gathering volumes up 4%, 14% & 22% YOY Powder River Basin Delaware BasinBakken - Water Bakken – Natural GasBakken – Oil 2017-2019E +65% Growth (1) MVCs through 2018 term; however, all current and future cash flow reflective of actual throughput and rate (no cash flow cliff). 2017-2019E +240% Growth SW Marcellus and Barnett SW Marcellus(1) Barnett 10%/yr decline 5-10%/yr decline2017-2019E +170% Growth 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018E Q2 2018E Q3 2018E Q4 2018E Q1 2019E Q2 2019E Q3 2019E Q4 2019E 2017-2019E +60% Growth 0 50,000 100,000 150,000 200,000 250,000 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018E Q2 2018E Q3 2018E Q4 2018E Q1 2019E Q2 2019E Q3 2019E Q4 2019E 2017-2019E +110% Growth
- 10. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ $300 $350 $400 $450 $500 $550 $600 2017 2018E 2019E 2020E EstimatedAdjustedEBITDA($MM) 10 High Return Projects Drive EBITDA/DCF Growth Crestwood’s visible project backlog will drive >15% 3-yr EBITDA and DCF/unit CAGR; Near-term growth focused in the Bakken, Delaware Basin and Powder River Basin 2018 Drivers • Arrow, Nautilus and Jackalope growth • Bear Den Processing Plant 2 • Powder River Basin – Jackalope system expansion – Bucking Horse Plant 2 • Increased Stagecoach contribution • Arrow gathering system expansions and debottlenecking • Bear Den Processing Plant 1 • Nautilus gathering system growth • Orla Express and Processing Plant 1 • Increased Stagecoach contribution 2020+ • Arrow, Nautilus and Jackalope volume growth • Orla and Bucking Horse Processing Expansions • Northeast Marcellus expansion • Joint-venture consolidations Organic Projects Drive Accretive Growth Growth Capital $300 million - $350 million 5x-7x build multiples Est. Growth Capital(1) $250 million - $300 million 5x-7x build multiples Guidance $400MM-$420MM >15% Growth >15% Growth TBD 2019 Drivers (1) Estimates based on projects currently underwritten in 2018. >15% 3-YR DCF/Unit CAGR
- 11. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ -20% -10% 0% 10% 20% 30% 40% 50% 9.3x 10.0x 11.1x 11.4x 11.9x 12.0x 12.4x 13.2x 13.2x 13.9x 15.4x 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x 14.0x 16.0x 18.0x Peer 1 CEQP Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 2019EEV/EBITDA 11 Near-term Growth Catalysts Provide Unrecognized Value Crestwood Driving Unitholder Value Unrecognized Value to Further Propel Valuation Crestwood has been a leader in the sector’s transformation by checking all the right boxes for unitholder value creation • Strong fundamentals in the areas we operate Sub-4x Leverage and Coverage above 1.2x NO Incentive Distribution Rights Limited regulatory exposure Visible, accretive growth projects Committed to MLP structure Crestwood Has Delivered Strong Performance Yet Still…Offers Significant Upside With Continued Execution Peer Group Includes: DCP, ENBL, ENLK, ETP, OKE, PAA, SMLP, TRGP, WES, and WPZ. Market trading data per NYSE Connect as of 8/6/2018. 2019 EV/EBITDA data per Wall Street research as of 8/6/2018. CEQP +44% Peers +18% Alerian +5% YTD Relative Price Performance Median = 12.2x
- 12. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ 12 Attractive Set of Near-term Organic Growth Projects
- 13. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ Bakken Growth Strategy 13 Crestwood actively expanding the Arrow Gathering System and Bear Den Processing Plants as producer volume growth forecasts exceed expectations Arrow Overview Oil Natural Gas Water • Arrow Gathering system expected to generate Adj. EBITDA of $165MM in 2018; ~40% increase from 2017 • >1,500 drilling locations identified on dedicated acreage • Diversified and balanced group of producers: WPX, QEP, XTO, EnerPlus, Bruin, Rimrock, PetroShale • 8-year weighted average contract length and Crestwood purchases 100% of oil and gas volumes at the wellhead • The Arrow system will be Crestwood’s largest driver of cash flow growth in ’18/’19 3-Product Growth Strategy • Oil gathering volumes expected to increase ~15% in 2018 based on improved well performance • Connected to DAPL in 2017; led to significant improvement in producer net-backs • Gas gathering volumes expected to increase ~50% in 2018 with reduced flaring • Bear Den Plants reduce reliance on 3rd party processing, provide flow assurance and better net-backs • Water gathering volumes expected to increase ~60% in 2018 • Significant produced water being trucked today; expanded water gathering and new SWD wells 1 2 3 Forecasted Volume Growth 80 well connects per year through 2021 drives 15-20% EBITDA CAGR – 25 50 75 100 125 2013 2014 2015 2016 2017 2018 2019 2020 2021 Oil (MBbl/d) Water (MBbl/d) Gas (MMcf/d)
- 14. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ 0 30 60 90 120 150 YE 2017 YE 2019 Capacity(MMcf/d) 0 30 60 90 120 150 YE 2017 YE 2019 Capacity(MBbls/d) 0 30 60 90 120 YE 2017 YE 2019 Capacity(MMcf/d) 0 20 40 60 80 100 YE 2017 YE 2019 Capacity(MBbls/d) Arrow System Expansion Projects 14 Arrow gathering and processing projects increase capacity to support long- term development plans based on improving FBIR well performance Gathering Projects New Oil & Water Pumps New Compressor Station Bear Den Plant Phase 1: 30 MMcf/d Phase 2: 120 MMcf/d SWD Expansions Crude Gathering Water Gathering Gas Gathering Gas Processing +50% +70% +120% +400% 2017-2019 Debottlenecking projects offer sub-4x build multiple economics Q2 2018 Average Volumes
- 15. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ Bear Den Processing Plants 15 Gas Processing Overview Processing Capacity Growth Timeline Bear Den plant phase-1 Crestwood is expanding Arrow’s processing capacity to meet producer forecasts and improve flow assurance; Bear Den Phase 2 scheduled in-service for Q3 2019 • Bear Den Processing Strategy is a two phase solution to provide 150 MMcf/d processing for Arrow gas volumes; focus on reduced flaring, flow assurance and improved net-backs • Phase 1: 30 MMcf/d RJT unit to process excess gas volumes previously flared or above third-party processing contracts – Commissioned late Q4 2017; 100% full • Phase 2: 120 MMcf/d cryogenic plant to process 100% of Arrow gas volumes by 2019 – Targeted in-service Q3 2019 • NGL Marketing: signed anchor shipper agreement with ONEOK Elk Creek project with COLT NGL by rail loading as backup • Attractive total project returns of sub-6x; Phase 1 project immediately accretive to 2018 DCF 0 20 40 60 80 100 120 140 160 2017 2018 2019 2020 2021 ProcessingVolume(MMcf/d) CEQP Bear Den - Phase 2 CEQP Bear Den - Phase 1 Third-Party Processing
- 16. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ Bakken’s Full-Service Business Model 16 Crestwood’s integrated Bakken franchise offers Arrow producers full-service midstream solution to ensure flow assurance and competitive pricing out of the Basin 2 1 Wellhead Services - Fully Integrated G&P System • Expanding gathering and processing capacities to meet growing producer forecasts • Crestwood’s #1 Arrow goal is to optimize producer netbacks!! COLT Hub and Trucking Services • COLT Hub offers storage and crude oil and NGL rail loading to West and East Coast markets • Crestwood’s MS&L segment optimizes crude and NGL marketing services in the Basin • Trucking adds value services for crude and water Premium Downstream Connectivity • Crestwood secured agreements to move product gathered at Arrow to premium downstream markets via DAPL (Arrow and COLT Hub), Northern Border (Arrow) and Elk Creek (Bear Den) pipelines • Pipeline agreements scaled to support Bear Den volume growth Dakota Access (DAPL) Elk Creek 3 Best-in-class integrated Bakken G&P system with premium downstream connectivity fully supports Arrow producers and FBIR off-set producers; Elk Creek NGL agreement integrates Crestwood’s Bakken and Powder River Basin systems
- 17. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ Delaware Basin Growth Strategy 17 Asset MapDelaware Basin Overview Crestwood operates a fully integrated G&P system in the heart of the Delaware Basin through 50/50 JV with First Reserve (CPJV) and CPJV JV with Shell Midstream • Fully integrated G&P system is supported by long-term fixed contracts and spans from Eddy County, NM to Reeves County, TX • Current assets include the Orla cryo-plant, Willow Lake and Nautilus gathering systems, and EPIC Y-grade pipeline interest – Total gathering capacity of 650 MMcf/d – Total processing capacity of 255 MMcf/d – Total Y-grade long-haul capacity of 80 MBbls/d • Future expansion opportunities: – Orla processing expansions; Orla 2 planning underway – Crude oil gathering, terminalling and condensate stabilization/blending – Produced water gathering and disposal • Shell sold dedicated southern Ward Co. acreage to Halcon Resources in Q1 2018; Potential to accelerate build-out • Joint venture strategy with First Reserve and Shell Midstream supports long-term growth strategy(1) Fully integrated G&P system in the core of the Delaware Basin with a long-term NGL takeaway solution enhances competitive advantage; Crestwood pursuing incremental undedicated third-party volumes around existing systems Over 200K dedicated acres X 6 X 3 (1) Crestwood and First Reserve each own 50% of Willow Lake and Orla Plant and 25% of Nautilus system; Shell Midstream owns 50% of the Nautilus system.
- 18. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ 18 Delaware Basin Full-Service NGL Solution Crestwood’s Delaware Basin competitive advantage enhanced with recent acquisition of EPIC NGL pipeline capacity and favorable PSA with Chevron Phillips; Provides G&P customers guaranteed NGL capacity and pricing to premium Gulf Coast markets Orla Downstream Marketing Long-term Y-grade sales agreement with Chevron Phillips at Benedum, TX; Provides greater flow assurance and improves net-backs for Orla’s customers NGL Pipeline Capacity CPJV acquired undivided joint ownership in Orla-to-Benedum segment of EPIC Y-grade pipeline; 80 MBbls/d capacity provides Orla customers NGL takeaway capacity to favorable Gulf Coast markets Crestwood’s Delaware Basin footprint provides customers full midstream value chain services and flow assurance in a very competitive Basin 2 3 Fully Integrated G&P System 200 MMcf/d Orla cryogenic gas processing plant placed into service in July 2018; Willow Lake and Nautilus gathering systems support high quality producers in the core of the Basin 1
- 19. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ Powder River Basin Growth Strategy 19 Overview Large-scale G&P system expansions underway driven by recent volume growth and future development activity Powder River Basin has emerged as Chesapeake's “Oil Growth Engine”; Stacked play economics drive Chesapeake development and off-set producer activity Chesapeake Forecasting Substantial Volume Growth in 2018+ $25/Bbl - $35/Bbl Breakeven 2,780 undrilled inventory 388,000 dedicated acres CHK production volume growth exceeds previous forecasts; total volumes now expected to double by YE 2019 Source: Chesapeake Energy investor presentation. • Strategic 50/50 JV with Williams • Chesapeake Energy currently operating five rigs; potential sixth rig in 2019 • PRB assets to reach capacity in 2H 2018 or early 2019 − Jackalope gathering system capacity of 180 MMcf/d − Bucking Horse plant processing capacity of 120 MMcf/d (upgraded to 145 MMcf/d in 2H 2018) • Expanding Jackalope and Bucking Horse processing plant to 345 MMcf/d capacity by Q4 2019 • Crude opportunity in 2H18 • CEQP Niobrara JV has long-term financing partners Recent Turner tests: − 2,886 Boe/d with 51% oil cut − 2,560 Boe/d with 80% oil cut − 1,700 Boe/d with 80% oil cut
- 20. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ PRB Economics Attracting High-Quality Producers 20 Third-party operators provide opportunity for incremental G&P volume growth PRB Front and Center on Q2 Earnings “Anadarko has established a core position of more than 300,000 gross acres…developed a play concept focused on the turner formation and drilled wells in this play, with rates >2000 BOE per day, having a greater than 80% oil cut” – Anadarko 8/2018 “We're very pleased with what we're seeing. Every [Turner] well that we bring on is really some of the higher rate of return wells that we have… later this year, we'll not only pick up a 2nd rig, We get to the 3rd rig.” – Devon Energy 8/2018 “While we currently anticipate our production will reach 38 MBbls/d by year-end, we've already increased our net oil production in the PRB by 90% year-to-date with additional growth that will come” – Chesapeake Energy 8/2018 Note: Producer logo locations are approximations of acreage positions. (1) Per Chesapeake Energy investor presentation. Turner formation drilling economics offer >100% RORs at current strip pricing(1) CHK Acreage Delineated
- 21. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ • Strategic 50/50 JV with Consolidated Edison • FERC regulated storage and pipeline assets located at center of prolific NE Marcellus − Connected to 5 Bcf/d supplies • SGS rates/returns expected to be unaffected by recent FERC ruling; majority of revenues from market-based and negotiated rates • Near-term growth: JV Cash Flow − Stagecoach generated ~$135MM Adjusted EBITDA in 2017 − June 2018/2019: Cash flow distribution to CEQP steps to 40% and 50%, respectively • Long-term growth potential: − Evaluating incremental takeaway projects out of the basin − Current pipeline constraints and announced projects stymied by regulatory environment − NE production needs an additional 3-5 Bcf/d of take-away capacity NE Marcellus is the most prolific US gas basin; Stagecoach is strategically located to capture infrastructure expansion opportunities from NE gas demand growth NE Marcellus Provides Long-Term Growth Potential 21 Strategic Position in NE Natural Gas MarketStagecoach Overview Stagecoach Assets 15 14 13 12 11 10 9 8 7 Bcf/d NE Marcellus Gas Production Constrained in 2020+ Production – More Pipe Production – Base Case Production – Less Pipe Pipeline Capacity (Base) Pipeline Capacity (Less) Pipeline Capacity (More) Source: Northeast production data per BTU Analytics. Stagecoach Assets − 41 Bcf storage capacity − 3.1 Bcf/d of deliverability and 5 Bcf/d of supply access
- 22. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ 22 Balance Sheet Strength, Disciplined Capital Allocation, Accretive DCF Growth
- 23. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ 23 2018E Financial Outlook Marketing, Supply & Logistics • Adjusted EBITDA(2): $50MM - $55MM • NGL marketing business driven by seasonal propane and butane demand in the Northeast • US Salt divested for $225MM in 2017 at ~11x cash flow; West Coast NGL assets divested for $58MM Segment Outlook Storage & Transportation • Adjusted EBITDA(2): $70MM - $75MM • Stagecoach distribution to increase 5% in June 2018 and 10% in June 2019 • COLT Hub $10MM-$15MM cash flow contribution in 2018 and 2019 • Tres Palacios rate improvement driven by Gulf Coast LNG and Mexican gas demand Gathering & Processing • Adjusted EBITDA(2): $345MM - $355MM • Arrow gathering system expansions and debottlenecking • Bear Den Processing Plant 1 • Nautilus gathering system growth • Orla Express and Processing Plant 1 • SW Marcellus / Barnett modest declines Crestwood tightened Adjusted EBITDA guidance range upward to reflect strong performance in the first half 2018 and new growth capital investments Adjusted EBITDA Distributable Cash Flow Distribution Coverage Ratio 2018E Leverage Ratio Growth Capital Maintenance Capital (1) >1.2x 4.0x – 4.5x $300 million – $350 million $15 million – $20 million $400 million – $420 million $195 million – $225 million Note: Please see accompanying tables of non-GAAP reconciliations for Adj. EBITDA and DCF. (1) Excludes maintenance capital contribution from joint ventures expected to be $3-$5MM net to Crestwood. (2) Segment Adjusted EBITDA excludes corporate G&A of $65MM. REVISED REVISED
- 24. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ Self-Funded 2018E Capital Program 24 (1) 2018E range of $300 million to $350 million represents growth capital net to CEQP. • Crestwood is committed to maintaining a strong balance sheet and excess distribution coverage as it pursues organic growth projects • Crestwood’s current capital program is fully financed with no public equity requirements to maximize project returns and DCF/unit value creation • Growth capital will be funded by 1) reinvesting retained DCF, 2) available liquidity under revolving credit facility, 3) joint- venture partners and 4) non-core asset divestitures 2018E Growth Capital By Region 2018E Growth Capital by Quarter Highly accretive growth projects expected to generate 5x – 7x build multiples 2018E Maintenance Capital by Quarter Crestwood has underwritten $300MM-$350MM(1) in 2018 to expand gathering and processing capacity in the Bakken, Delaware Basin and Powder River Basin - $2 $4 $6 $8 $10 Q1:18A Q2:18 Q3:18 Q4:18 Bakken 72% Delaware Basin 11% Powder River 16% Other 1% - $20 $40 $60 $80 $100 $120 $140 $160 Q1:18A Q2:18A Q3:18 Q4:18
- 25. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ $0 $200 $400 $600 $800 2017 2018 2019 2020 2021 2022 2023 2024 2025 25 Strong Balance Sheet and Liquidity Balance Sheet Positioned for Strength Current Capitalization No Near-Term Debt Maturities ($MM) RCF 6.25% Notes 5.75% Notes Issue Price Yield 2023 102.50 5.2% 2025 101.50 5.4% Crestwood is committed to maintaining a very strong balance sheet and financial flexibility; Crestwood targets YE 2018 leverage of 4.0x-4.5x Note: Senior note price and yield data per Bloomberg as of 8/6/2018. • Top-tier leverage position – Q2 2018 leverage of 4.0x – Current borrowing capacity over $600 million – Over $1 billion of debt reduction over past 3-years • Committed to long-term leverage <4.0x once growth projects come online • No near-term maturities; attractive long- term capital • Committed to funding 2018 and 2019 current capital program without accessing the public equity markets Actuals Actuals Actuals Actuals ($ millions) FY 2015 FY 2016 FY 2017 Q2 2018 Cash $1 $2 $1 $6 Revolver $735 $77 $318 $385 Senior Notes 1,800 1,475 1,200 1,200 Other Debt 9 6 8 6 Total Debt $2,544 $1,558 $1,526 $1,591 Total Leverage Ratio 4.8x 3.7x 4.1x 4.0x
- 26. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ 26 Key Investment Highlights Unrecognized Value Generated by Near-term Growth Catalysts to Further Drive Value Creation for Unitholders!!! • Solid fundamentals across diverse nationwide asset portfolio • Long-term leverage sub-4x and coverage >1.2x • NO Incentive Distribution Rights • Disciplined and prudently financed capital program • Scalable accretive organic growth projects • Forecasted >15% 3-yr DCF/Unit CAGR
- 27. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ Appendix 27 27 Appendix:
- 28. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ 28 Crestwood’s Industry Recognition in 2017 Customer Service Community Engagement Ranked #1 in the EnergyPoint Research Customer Satisfaction Survey for 2015- 2017 In 2017, Crestwood was recognized for its unwavering commitment to best in class customer service, community engagement, environmental stewardship and unitholder alignment Unitholder Alignment Crestwood was awarded the NDPC Excellence in Community Engagement Award for our commitment to the communities where we operate ~1/3rd common units owned by insiders; Crestwood scored #1 in Wells Fargo’s December 2017 midstream investor alignment report(1) Environmental Stewardship Recognized by the EPA as a SmartWay Partner, as a Company that demonstrates a standard of operations that minimizes their environmental footprint Crestwood’s culture of excellence positions the partnership to be a responsible steward of capital and an attractive midstream investment (1) Wells Fargo research report titled “The Midstream Alignment Scorecard.” Published on 12/5/2017. Ranking based on unit ownership, governance , safety metrics, structure and incentive compensation. Customer Service Unitholder Alignment Environmental Stewardship Community Engagement Customer Service Community Engagement Environmental Stewardship Unitholder Alignment
- 29. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 0 50 100 150 200 250 300 350 400 Q1:16 Q2:16 Q3:16 Q4:16 Q1:17 Q2:17 Q3:17 Q4:17 Q1:18 Q2:18 GatheringVolumes(MMcf/d) • Crestwood & BlueStone have 10-year agreement – Fixed-fee and percent-of-index fee structure for both natural gas and NGLs – Contract structure provides significant upside as commodity prices rebound • BlueStone brought 7 DUCs online in the first quarter 2017 • Active workover program designed to eliminate system declines and modestly grow volumes • BlueStone evaluating new development and refrac opportunities Barnett Update 29 BlueStone’s workover activities and recent DUC completions offset natural volume declines in 2017 Asset Overview Barnett Gathering Volumes Increased volumes combined with fixed-fee/percent-of-index contract structure drive cash flow outperformance Natural Gas Prices Since 2016(1) BlueStone Begins System Reactivation April 15th: BlueStone Agreement (1) Source: EIA Henry Hub Natural Gas Spot Price. 2017 Workovers Offset Natural Field Decline
- 30. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ • 20-year, fixed-fee gathering and compression services with Antero Resources • 140,000 acreage dedication; System capacity of 875 MMcf/d • 100 MMcf/d compression services on AM gathering in Western Area (90% utilized) • MVCs through 2018 term; however, all current and future cash flow reflective of actual throughput and rate (no cash flow cliff) • 21 DUCs brought online in 2017 SW Marcellus Update 30 Gathering volumes up 36% in 2017 as Antero completes DUC Inventory Overview Highlights • ~275 wells have been connected to Crestwood’s system – No dry holes • Avg. 30D IP rate ~8.0 MMcf/d; Avg. EURs between 8–12 Bcf(1) • 800+ liquid-rich (>1,100 BTU) drilling locations and 1,000+ dry gas drilling locations remain • Growing NGL processing at the Sherwood plant with increased market takeaway capacity out of the basin • Multiple large SW Marcellus operators hold acreage positions contiguous to Crestwood’s eastern AOD East AOD Western Area Arsenal Resources EQT Noble Energy EQT SWN (1) Source: Wood Mackenzie. 200,000 250,000 300,000 350,000 400,000 450,000 500,000 550,000 600,000 J-16 F-16 M-16 A-16 M-16 J-16 J-16 A-16 S-16 O-16 N-16 D-16 J-17 F-17 M-17 A-17 M-17 J-17 J-17 A-17 S-17 O-17 N-17 Asset Map Gathering Volumes Since FY 2016 21 DUCs in 2017 increased daily volumes >150 MMcf/d Well connections in 2017 highlight exceptional reservoir quality and significant upside growth potential with incremental activity Mcf/d
- 31. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ CEQP Non-GAAP Reconciliations 31 Expected 2018 Range Low - High Net income Interest and debt expense, net Depreciation, amortization and accretion Unit-based compensation charges Earnings from unconsolidated affiliates Adjusted EBITDA from unconsolidated affiliates Adjusted EBITDA Cash interest expense(a) Maintenance capital expenditures(b) Adjusted EBITDA from unconsolidated affiliates Distributable cash flow from unconsolidated affiliates Cash distribution to preferred unitholders(c) Distributable cash flow attributable to CEQP(d) (110) - (115) 105 - 110 (d) Distributable cash flow is defined as Adjusted EBITDA, adjusted for cash interest expense, maintenance capital expenditures, income taxes, and our proportionate share of our unconsolidated affiliates' distributable cash flow. Distributable cash flow should not be considered an alternative to cash flows from operating activities or any other measure of financial performance calculated in accordance with GAAP as those items are used to measure operating performance, liquidity, or the ability to service debt obligations. We believe that distributable cash flow provides additional information for evaluating our ability to declare and pay distributions to unitholders. Distributable cash flow, as we define it, may not be comparable to distributable cash flow or similarly titled measures used by other companies. $35 - $65 CRESTWOOD EQUITY PARTNERS LP Full-Year 2018 Adjusted EBITDA and Distributable Cash Flow Guidance Reconciliation to Net Income (in millions, unaudited) (a) Cash interest expense less amortization of deferred financing costs. (b) M aintenance capital expenditures are defined as those capital expenditures which do not increase operating capacity or revenues from existing levels. (c) Includes cash distributions to preferred unitholders and Crestwood Niobrara preferred unit holders. 25 188 102-107 (75) - (80) 110 - 115 $390 - $420 $195 - $225 (75) (95) - (100) (15) - (20)