Crestwood investor deck december 2017
- 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 ™ ™ 12/4/2017 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 December 2017
- 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 12/1/2017. (2) Unit count and balance sheet data as of 9/30/2017. Crestwood Equity Partners LP NYSE Ticker CEQP Market Capitalization ($MM)(1,2) $1,719 Enterprise Value ($MM)(2) $4,015 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 4 • Focused on execution • Attractive balance sheet • Strong distribution coverage • Disciplined growth strategy • Self-funded capital program • Significant insider ownership Increased 2017E guidance reaffirmed Long-term Leverage Ratio <4.0x 1.2x-1.3x Long-term Coverage Ratio No equity required to fund ’17/’18 capital programs ~32% LP units; alignment of interest with LP’s Bakken, Delaware Basin, PRB Niobrara, Marcellus
- 5. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ Diversified Assets in Active Basins 5 Crestwood assets offer operating scale, fixed-fee services & DCF growth • 5-Yr Growth Strategy Driven by 4 Core Growth Areas − Bakken – 2018+ − Delaware Basin – 2019+ − PRB – 2019+ − Marcellus Shale – 2020+ • Remaining portfolio of assets provide stable cash flows, optimization alternatives and upside optionality Bakken Northeast MarcellusPRB Niobrara Delaware Basin
- 6. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ Balanced Portfolio; High Quality Customers CEQP Contract Portfolio 6 6 Variable Rate Contracts 15% Take-or-Pay and Fixed-Fee Contracts 85% ~85% of Crestwood 2017 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) 2017 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 by volume and EBITDA G&P assets backed by 1.1 million acreage; High quality producer mix Top-tier NE Gas Storage & Transportation franchise; Largely investment grade Diversified NGL Marketing, Supply & Logistics business 60% 20% 20% 48% 29% 23% Gas Oil NGLs Volumes by Commodity EBITDA by Commodity
- 7. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 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 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 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 0 20,000 40,000 60,000 80,000 100,000 120,000 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‐17 200,000 220,000 240,000 260,000 280,000 300,000 320,000 340,000 360,000 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‐17 200,000 250,000 300,000 350,000 400,000 450,000 500,000 550,000 600,000 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 7 SW Marcellus • +42% YTD volume growth • 21 DUCs completed in 2017 • 10%/yr PDP decline rate in 2018(1) Improved Fundamentals Drive Volume Growth System DriversKey Asset Volumes Since FY 2016 Barnett • 4% YTD modest volume decline • Active workover program in 1H:17 • 5-10%/yr PDP decline rate in 2018 Bakken • +31%/13% YTD oil/gas volume growth • 100-110 well connects in 2017 • 20-25% volume growth in 2018 Delaware Basin • +215% YTD volume growth • 2-3 active rigs in 2017 • >20% volume growth in 2018 2017 YTD oil, gas and water volumes up 31%, 27% & 33%; continued growth expected from 2018 drilling plans PRB Niobrara • +43% YTD volume growth • 3 active rigs in 2017 • 4 rigs forecasted in 2018 BarnettSW Marcellus Delaware Basin PRB Niobrara Bakken – Natural GasBakken – Oil 30,000 40,000 50,000 60,000 70,000 80,000 90,000 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 Third-party curtailments +31% +13% +215% +42% +43% (4%) (1) MVCs through 2018 term; however, all current and future cash flow reflective of actual throughput and rate (no cash flow cliff).
- 8. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ 8 Disciplined Organic Growth Strategy Project Region Key Customer(s) 2017-2018 Capital ($MM) In-Service Date Nautilus System Delaware Basin Shell $130MM/~$32MM net to CEQP IN-SERVICE Arrow Debottlenecking – Phase 1 Bakken Arrow Producers $45MM IN-SERVICE Bear Den Processing Plant - Phase 1 Bakken Arrow Producers $115MM IN-SERVICE Arrow Debottlenecking – Phase 2 Bakken Arrow Producers $85MM 2018 / 2019 Orla Processing Plant and Pipeline Delaware Basin Multiple(1) $170MM/$10MM net to CEQP(2) Q3 2018 Bear Den Processing Plant - Phase 2 Bakken Arrow Producers ~$185MM Q2 2019 Incremental Annual Cash Flow Impact from Capital Projects Committed high return expansion projects drive accretive DCF growth in 2017-2021 (1) Current customers include Concho, Mewbourne, Matador, Cimarex, Marathon and ExxonMobil. Significant third party customers within close proximity of the Orla Plant’s anticipated location. (2) Assumes First Reserves covers $160 million of plant capital in return for a 50% ownership in the Willow Lake gathering and processing assets. Highlights • High-grading organic expansion around core assets; focused on driving greatest DCF per unit accretion • High rate of return project build multiples of 5x to 7x • ~$120MM+ expected EBITDA contribution from current projects by 2021 Focused on 5x to 7x organic build multiples vs 12x to 15x M&A multiples $0 $20 $40 $60 $80 $100 $120 2017 2018 2019 2020 2021 Incremental Annual Cash Flow ($US Millions) Bakken Delaware Basin
- 9. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ 9 Self-Funded 2017 and 2018 Capital Programs US Salt Divestiture Crestwood is committed to maintaining a strong balance sheet and excess distribution coverage as it pursues organic growth projects • Divested US Salt LLC, a non-core business in the MS&L segment, for approximately $225 million • Valuation is ~11x 2017E distributable cash flow • Transaction closed December 1, 2017 Crestwood is self-funding its 2017 and 2018 capital programs to maximize project returns and DCF/unit value creation Retained DCF Joint-Venture Strategy • Forecasted cash flow growth allows Crestwood to maintain distribution coverage >1.2x and leverage <4.0x • Crestwood will reinvest cash flow into accretive organic projects in Q4 2017 and FY 2018 • Strategic joint-ventures minimize project risk and capital commitments, while enhancing commercial opportunities: – Delaware Basin: First Reserve and Shell Midstream (NYSE: SHLX) – NE Marcellus: Consolidated Edison (NYSE:ED) – PRB Niobrara: Williams Partners (NYSE:WPZ) 1 2 3
- 10. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ 10 Attractive Set of Near-term Organic Growth Projects
- 11. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ Bakken Growth Strategy 11 Crestwood continues to expand the Bakken Arrow System to offer producers full value-chain services and meet growing volume forecasts Arrow Overview Oil Natural Gas Water • Arrow Gathering system expected to generate ~$120MM of Adj. EBITDA in 2017; ~$90MM in 2016 Adj. EBITDA • >1,500 drilling locations identified on dedicated acreage • Diversified and balanced group of producers: WPX, QEP, XTO, EnerPlus, Bruin, Rimrock • 8-year weighted average contract length and Crestwood purchases 100% of oil and gas volumes at the wellhead • Crestwood expects to connect >100 wells in both 2017 and 2018 • The Arrow system will be Crestwood’s largest driver of cash flow growth in ’17/’18 3-Product Growth Strategy • Oil gathering volumes expected to increase ~15% in 2018 • Current projects: Increasing oil gathering capacity to 120 MBbls/d • Gas gathering volumes expected to increase ~50% in 2018 • Current Projects: (1) Increasing gas gathering capacity to 120 MMcf/d and (2) Bear Den Plant: 2-phase 150 MMcf/d plant; Evaluating downstream NGL solutions to optimize producer netbacks and project returns • Water gathering volumes expected to increase ~60% in 2018 • Current projects: Increasing water gathering capacity to 90 MBbls/d 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)
- 12. 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 12 Arrow expansions nearly double capacity to support long-term development plans and increasing Bakken 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%
- 13. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ 13 Arrow Bear Den Processing Plant Crestwood’s Bear Den West pipeline and Phase 1 plant commissioned in late November 2017; Phase 2 scheduled for Q2 2019 as Arrow volumes ramp up Greatly enhances Flow Assurance and “control of our own destiny” Project Rationale Project Overview • Bear Den Processing Plant is a two phase processing solution that will provide 150 MMcf/d of combined processing capacity • Phase 1: “Immediate solution” - 30 MMcf/d RJT unit sized to process excess gas volumes currently flaring or above third-party contracts – Phase 1 project cost $115MM – Commissioned late November 2017 • Phase 2: “Long-term solution” - 120 MMcf/d cryogenic plant sized to process 100% of Arrow gas by 2019 – Phase 2 project expected cost ~$185MM – Targeted in-service Q2 2019 • Attractive total project returns of sub-6x; Phase 1 project accretive to DCF in 2018 Bear Den Plant – Phase 1 Better netbacks and more reliable service for Arrow producers than existing processor and competing proposals Improves competitive position and ability to attract incremental third parties in the area Enables Crestwood to utilize integrated midstream value chain with incremental volumes Bear Den plant phase-1: final stages of construction Crestwood purchases 100% of oil and gas volumes at the wellhead from its producers; full control of processing volumes
- 14. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ Delaware Basin Growth Strategy 14 Asset MapAsset Overview & Strategy Crestwood is building competitive scale and fully integrated systems in the heart of the Delaware Basin, the most active shale play in the US • 50/50 joint venture with First Reserve • Current assets includes Willow Lake gathering & processing and Nautilus gathering & compression – Total gathering capacity of 335 MMcf/d – Total processing capacity of 85 MMcf/d • Current growth projects: In-Service – 30 MMcf/d dew point control skid Complete – Orla Express Pipeline Q3 2018 – 200 MMcf/d Orla Processing Plant Q3 2018 • Future expansion opportunities: – Crude oil gathering, terminalling and condensate stabilization/blending – Produced water gathering and disposal >$100 million of total Delaware Basin EBITDA potential by 2021 from identified expansion opportunities
- 15. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ Delaware Basin Current G&P Assets 15 Willow Lake and Nautilus gathering systems, combined gather over 110 MMcf/d, are at the center of significant development activity in the Delaware Basin Delaware System MapsWillow Lake System • Willow Lake Gathering and Processing System is at the epicenter of Northern Delaware Basin development in Eddy and Lea counties, NM – ~82 miles low pressure gathering system – Current processing capacity of 85 MMcf/d (includes 30 MMcf/d expansion to handle volume growth during 3Q17-2Q18) • Existing acreage/well dedications with Concho and Mewbourne supported by 100,000 acre AMI around plant/system • The Orla Express pipeline will connect the Willow Lake system to the Orla Processing Plant in 1H 2018 Nautilus System Asset Ownership: Willow Lake Orla Plant Nautilus Crestwood 50% 50% 25% First Reserve 50% 50% 25% Shell Midstream - - 50% • Nautilus Natural Gas Gathering System supports Shell’s Delaware Basin development program – 20-year tiered fixed-fee gathering and compression contract – 100,000 acreage dedication in Loving and Ward counties, TX • ~$90MM of capital invested in 2017 at a ~5.0x build-multiple • October 2017 – Shell Midstream exercises option to acquire 50% interest in the system; further aligning Crestwood’s and Shell’s interests Over 200K dedicated acres The Permian basin is the most important asset within Shell’s unconventional portfolio, Shell has around 270k acres in the Permian, and intends to invest $1 billion per year to grow production to 155 MBbls/d by 2020.” –SHLX Q2’17 Earnings Call
- 16. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ Orla Express Pipeline & Orla Processing Plant 16 200 MMcf/d processing plant and super-header integrates asset footprint to compete across the entire primary Delaware Basin catchment area Premier G&P Footprint in Delaware Basin Core WES/ETP Bone Spring Project Overview • Construction underway on 33 miles of 20” pipeline and 200 MMcf/d cryogenic gas plant in Orla, TX – Plant capacity expandable to 600 MMcf/d – Plant location offers multiple residue and NGL takeaway options • Initial phase connects Willow Lake gathering to Orla Express and Orla plant – Base scope capital of ~$170 million – Targeted in-service date Q3 2018 • Expansion phase will connect the Nautilus system to Orla plant and new laterals connecting additional producers Orla Plant: 200 MMcf/d cryogenic gas processing plant Orla Express Pipeline connecting existing Willow Lake system to new Orla gas processing plant (1) (1) Assumes First Reserves covers $160 million of plant capital in return for a 50% ownership in the Willow Lake gathering and processing assets.
- 17. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ Delaware Basin Water Solutions Next Leg of Growth 17 Scalable infrastructure solutions for Delaware Basin water requirements; potential next phase of Delaware Basin growth strategy Delaware Water Production • Based on Crestwood’s current capture area, 2.4 MMBbls/d of produced water is forecasted by 2021 • Crestwood’s existing assets well-positioned to offer water gathering and disposal services to producers • Crestwood has extensive experience gathering and disposing produced water in the BakkenCapture Area. 1.0 1.2 1.6 2.0 2.4 – 0.5 1.0 1.5 2.0 2.5 3.0 2017 2018 2019 2020 2021 Source: DrillingInfo and Wood Mackenzie. (1) Water forecast based on capture area gas forecast and converted to water based on GORs and WORs for the Wolfcamp and Bone Spring type curves per Wood Mackenzie. Eddy Lea Culberson Jeff Davis Loving Pecos Reeves Ward Winkler Daily Production (BBL) 5-YR Delaware Basin Water Forecast(1) MMBbls/d
- 18. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ • Strategic 50/50 JV with Consolidated Edison (“Con Edison”) • Extensive network of FERC regulated storage and pipeline assets located at center of prolific Marcellus dry-gas resource play − 2.9 Bcf/d delivery capacity; over 180 miles of pipes − 41 Bcf storage capacity • Evaluating incremental takeaway projects out of the NE Marcellus basin with downstream pipeline partners • Stagecoach generated ~$145MM Adjusted EBITDA in 2016; Current CEQP cash flow distribution is 35% − June 2018: Cash flow distribution steps up 5% to 40% − June 2019: Cash flow distribution steps up 10% to 50% NE Marcellus is largest US gas supply base and best potential for demand growth; Stagecoach is strategically positioned to capture growth opportunities 23% 49% 28% 79% 13% 9% NE Marcellus - Stagecoach Gas Services JV 18 Assets MapStagecoach Overview Stagecoach Storage Customers Producers Marketers Marketers Utility / LDCs Producers Stagecoach Transportation Customers Utility/ LDCs CON EDISON SERVICE AREA
- 19. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ PRB Niobrara – Jackalope G&P JV 19 CHK PRB Net Production Potential Source: Chesapeake Energy Company Presentations. • PRB Jackalope JV - Crestwood (50%) and Williams (50%) owns 180 MMcf/d gas gathering system and 120 MMcf/d processing plant in Converse Co., Wyoming • 20-year fixed fee contract; Includes minimum revenue guarantees for 5 – 7 years • Chesapeake is currently drilling in the Turner, Parkman, Mowry and Sussex formations in addition to Niobrara − Current gas volumes at >60 MMcf/d up from 46 MMcf/d from FY 2016 − Recent Turner test: 2,886 Boe/d with 51% oil cut 2,560 Boe/d with 80% oil cut 1,700 Boe/d with 80% oil cut • Potential to grow production to more than 100,000 boe/d over the next five to seven years Overview New G&P contract allows Chesapeake to accelerate development plans and achieve full potential of PRB Niobrara acreage 388K Dedicated Acres 2,600 Drilling Locations Chesapeake is currently running 3 rigs on the Jackalope system and one dedicated frac crew; expect to add a 4th rig in Q1 2018 CHK Outperforming Industry Offsets 5 Productive Zones
- 20. 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 Q3:15 Q4:15 Q1:16 Q2:16 Q3:16 Q4:16 Q1:17 Q2:17 Q3:17 Gathering Volumes (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 G&P Update 20 BlueStone’s workover activities and recent DUC completions off-set natural volume declines in 2017; Stable 4% YTD volume decline Asset Overview Barnett Gathering Volume Growth 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. 1H:17 Workovers Offset Natural Field Decline
- 21. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ • 20-year, fixed-fee gathering and compression services w/ 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 G&C Update 21 Gathering volumes up 42% YTD 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
- 22. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ 22 Balance Sheet Strength, Disciplined Capital Allocation, Accretive DCF Growth
- 23. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ Delivering on 2017 Guidance 23 EBITDA * DCF * Growth Capital * Leverage Coverage Commitment to execution, lower cost structure and consistent quarterly results; delivering on increased 2017 financial guidance $360 $390 $400$380 $200 $230$210 $130 $150 $250$225 4.0x 4.5x 1.2x 1.4x Original Guidance Range Increased Guidance Range *Dollar amounts shown in $US millions.
- 24. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ $0 $200 $400 $600 $800 2017 2018 2019 2020 2021 2022 2023 2024 2025 Strong Balance Sheet & Liquidity 24 • Top-tier leverage position – Q3 2017 leverage of 4.1x or 3.8x pro forma for US Salt divestiture – Current borrowing capacity ~$650 MM • Committed to long-term leverage <4.0x once growth projects come online • No near-term maturities; attractive long-term capital • Evaluating divestitures to ensure leverage targets Balance Sheet Positioned for Strength Current Capitalization Preferred Equity Overview • Crestwood has ~$650MM preferred equity outstanding • Annual distribution of 9.25% payable quarterly • Crestwood began cash payments attributable to the Q3 2017 distribution • Preferred equity holders have option to convert 1- for-10 after Q2 2017 (~7.1MM common units) – Investor conversion unlikely and no forced conversion Crestwood strengthened its balance sheet by repaying approximately $1 billion of debt in 2Q 2016; Crestwood targets YE 2017 leverage of 4.0x-4.5x No Near-Term Debt Maturities ($MM) RCF 6.25% Notes 5.75% Notes Issue Price Yield 2023 104.00 4.9% 2025 103.00 5.1% Actuals Actuals Actuals Pro Forma ($ millions) 2015 2016 Q3 2017 US SALT Cash $1 $2 $1 $1 Revolver $735 $77 $444 $219 Senior Notes 1,800 1,475 1,200 1,200 Other Debt 9 6 2 2 Total Debt $2,544 $1,558 $1,647 $1,422 Total Leverage Ratio 4.8x 3.7x 4.1x 3.8x
- 25. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ The Crestwood Investment Opportunity 25 Focused on aggressively executing growth opportunities while maintaining financial strength • SELF-FUNDED near-term gathering and processing growth opportunities in the Bakken and Delaware Basin • Long-term PRB and northeast Marcellus pipeline projects In the meantime… • Crestwood is well-positioned to deliver attractive yield to investors(1) – Current Yield = 9.8%; Coverage Ratio = 1.2x; Leverage Ratio = 3.8x • Diversified business mix and strong contract portfolio • No incentive distribution rights • Assets leveraged to volume growth with commodity price improvement • Reversion to Peer Group / Alerian yield provides significant upside for units Execution Drives Significant Upside Return Opportunity; CASH FLOW PER UNIT GROWTH TO RESUME IN 2018 (1) Current yield data as of 12/1/2017. Coverage ratio and leverage ratio as of 9/30/2017 and pro forma for the US Salt divestiture for $225 million.
- 26. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ Appendix 26 26 Appendix:
- 27. Connections for America’sEnergy ™ ™ ™ ™ ™ ™ CEQP Non-GAAP Reconciliations 27 CRESTWOOD EQUITY PARTNERS LP Full Year 2017 Adjusted EBITDA and Distributable Cash Flow Guidance Reconciliation to Net Income (in millions) (unaudited) Net income (loss) $(13) - $7 Interest and debt expense, net 105 Loss on modification/extinguishment of debt 38 Depreciation, amortization and accretion 195 Unit-based compensation charges 25 Earnings from unconsolidated affiliates (50) - (55) Adjusted EBITDA from unconsolidated affiliates 80 - 85 Adjusted EBITDA $380 - $400 Cash interest expense (a) (100) Maintenance capital expenditures (b) (20) - (25) Cash distributions to preferred unitholders (c) (45) Distributable cash flow attributable to CEQP common unitholders (d) $210 - $230 (a) Cash interest expense less amortization of deferred financing costs plus bond premium amortization plus or minus fair value adjustments. (b) Maintenance capital expenditures are defined as those capital expenditures which do not increase operating capacity or revenues from existing levels. (c) Includes cash distributions to Crestwood Niobrara preferred unitholders and cash distributions to preferred unitholders. (d) Distributable cash flow is defined as Adjusted EBITDA, less cash interest expense, maintenance capital expenditures, income taxes, deficiency payments (primarily related to deferred revenue). 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 generally accepted accounting principles 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 corporations and partnerships.