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Crestwood investor deck march 2018
- 1. Presentation Title Presentation Subtitle Crestwood Midstream Partners LP Crestwood Equity Partners LP Connections for Americaâs Energy ⢠⢠Presentation Title Presentation Subtitle Crestwood Midstream Partners LP Crestwood Equity Partners LP Connections for Americaâs Energy ⢠⢠Presentation Title Presentation Subtitle Crestwood Midstream Partners LP Crestwood Equity Partners LP Connections for Americaâs Energy ⢠⢠3/15/2018 Presentation Title Presentation Subtitle Crestwood Midstream Partners LP Crestwood Equity Partners LP Connections for Americaâs Energy ⢠⢠Presentation Title Presentation Subtitle Crestwood Midstream Partners LP Crestwood Equity Partners LP Connections for Americaâs Energy ⢠⢠Connections for Americaâs Energy ⢠⢠Investor Presentation March 2018
- 2. Connections for Americaâs Energy ⢠⢠⢠⢠⢠⢠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 Crestwoodâs 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 Crestwoodâs 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 Crestwoodâs 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 Crestwoodâs 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 Crestwoodâs 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 managementâs 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 3/9/2018. (2) Unit count and balance sheet data as of 12/31/2017. Crestwood Equity Partners LP NYSE Ticker CEQP Market Capitalization ($MM)(1,2) $2,009 Enterprise Value ($MM)(2) $4,184 Annualized Distribution $2.40 Investor Relations investorrelations@crestwoodlp.com (713) 380-3081 No IDRs Corporate Structure
- 3. Connections for Americaâs Energy ⢠⢠⢠⢠⢠⢠3 Well-Positioned for DCF per Unit Growth
- 4. Connections for Americaâs Energy ⢠⢠⢠⢠⢠⢠Key Investor Highlights: Solid Execution in 2017 Sets Up Crestwood for Stronger 2018 4 EXECUTION UNITHOLDER ALIGNMENT FINANCIAL DISCIPLINE SELF-FUNDED GROWTH Focused on generating increased DCF per unit to enhance unitholder value on a Price/DCF basis ⢠2017 Adj. EBITDA of $395MM achieves upper end of increased 2017 guidance ⢠29%, 23% and 24% y-o-y growth on oil, gas and water gathering volumes, respectively ⢠Recognized by EnergyPoint, NDPC and the EPA as a best-in-class midstream operator for safety, customer service, community and environmental responsibility ⢠No incentive distribution rights (âIDRsâ) ⢠Management and insiders own >30% of common LP units ⢠First Reserve continues to commit over $500MM of new capital to support CEQP growth; Highlights First Reserveâs long-term committee to Crestwood ⢠Attractive balance sheet; 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 $250MM-$300MM capital program in 2018 ⢠Asset divestitures used to reduce debt; US Salt divested in Q4 2017 for ~$225MM ⢠Highly strategic joint-ventures with Shell Midstream, Williams, Con Edison and First Reserve reduce capital requirements ⢠High quality growth in the Bakken, Delaware Basin, Powder River Basin and NE Marcellus ⢠Committed to accretive organic growth projects offering 5x â 7x build projects ⢠~$120MM+ expected EBITDA contribution from current projects by 2021
- 5. Connections for Americaâs Energy ⢠⢠⢠⢠⢠⢠($US Millions) Q4 2017 Actuals Consensus Adjusted EBITDA $110.9 $104 (-) Cash Interest Expense (23.5) (-) Maintenance Capital (5.9) (-) Other (5.9) (-) Distribution to Preferred Holders (18.8) Distributable Cash Flow $56.8 $55 ($US Millions) FY 2017 Actuals 2017 Guidance Adjusted EBITDA $395 $380 â $400 Distributable Cash Flow $228 $220 â $230 Growth Capital $214 $225 â $250 Maintenance Capital $22 $20 â $25 Coverage Ratio 1.4x 1.2 â 1.3x Leverage Ratio 4.1x 4.0x â 4.5x 5 Q4 and FY 2017 Financial Results Outperform Crestwood exceeded the mid-point of its increased guidance targets and outperformed consensus estimates in 2017 Fourth Quarter 2017 Results FY 2017 Actuals vs. Guidance
- 6. Connections for Americaâs Energy ⢠⢠⢠⢠⢠⢠Diversified Assets in Active Basins 6 Crestwood assets offer operating scale, fixed-fee services & DCF growth ⢠5-Yr Growth Strategy Driven by 4 Core Growth Areas â Bakken â 2018+ â Delaware Basin â 2019+ â Powder River Basin â 2019+ â NE Marcellus Shale â 2020+ ⢠Remaining portfolio of assets provide stable cash flows, optimization alternatives and upside optionality Bakken Northeast MarcellusPowder River Basin Delaware Basin
- 7. Connections for Americaâs Energy ⢠⢠⢠⢠⢠⢠Balanced Portfolio; High Quality Customers CEQP Contract Portfolio 7 7 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 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 Gas Oil NGLs Volumes by Commodity EBITDA by Commodity 60%25% 15% 50% 30% 20%
- 8. Connections for Americaâs Energy ⢠⢠⢠⢠⢠⢠20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 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 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 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 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 8 SW Marcellus ⢠23% 2017 volume growth ⢠21 DUCs completed in 2017 ⢠10%/yr PDP decline rate in 2018(1) Strong 2018-2019 Growth Outlook by Basin System DriversProducer Activity Driving Volume Growth Barnett ⢠8% 2017 volume decline ⢠Active workover program in 1H:17 ⢠5-10%/yr PDP decline rate in 2018 Bakken ⢠29%/4%/24% 2017 oil/gas/water volume growth ⢠System expansions in 2018 Delaware Basin ⢠217% 2017 volume growth ⢠3 active rigs in 2018 ⢠Halcon adding rig on So. Nautilus FY 2017 oil, gas and water volumes up 29%, 23% & 24%; continued volume growth expected from 2018 drilling plans Powder River Basin ⢠88% 2017 volume growth ⢠3 active rigs in 2017 ⢠4 rigs forecasted in 2018 Powder River BasinSW Marcellus and Barnett Delaware BasinBakken - Water Bakken â Natural GasBakken â 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 +60% Growth 2017-2019E +110% Growth 2017-2019E +240% Growth SW Marcellus Barnett 10%/yr decline 5-10%/yr decline 2017-2019E +70% Growth 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 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
- 9. Connections for Americaâs Energy ⢠⢠⢠⢠⢠⢠9 2018E Financial Outlook Marketing, Supply & Logistics ⢠Adjusted EBITDA(1): $50MM - $55MM ⢠US Salt divested for $225MM in 2017 at ~11x cash flow ⢠NGL marketing business driven by seasonal propane and butane demand in the Northeast ⢠West Coast stable and primarily based on butane demand from local refiners Segment OutlookSegment Outlook Storage & Transportation ⢠Adjusted EBITDA(1): $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(1): $335MM - $355MM ⢠Bakken growth driven by system de- bottlenecking and new processing capacity ⢠Powder River growth driven by improved contract and rig activity; 4 expected in 1H 2018 ⢠Delaware Basin growth driven by increased gathering volumes and Orla processing plant in-service in mid-2018 ⢠SW Marcellus / Barnett modest declines Crestwood expects to resume cash flow growth in 2018 as volumes in the Bakken, Delaware Basin, and Powder River Basin benefit from increased activity Adjusted EBITDA Distributable Cash Flow Distribution Coverage Ratio 2018E Leverage Ratio Growth Capital Maintenance Capital >1.2x 4.0x â 4.5x $250 million â $300 million $15 million â $20 million $390 million â $420 million $195 million â $225 million Note: Please see accompanying tables of non-GAAP reconciliations for Adjusted EBITDA and DCF. (1) Segment Adjusted EBITDA excludes corporate G&A of $65MM.
- 10. Connections for Americaâs Energy ⢠⢠⢠⢠⢠⢠10 Attractive Set of Near-term Organic Growth Projects
- 11. Connections for Americaâs Energy ⢠⢠⢠⢠⢠⢠2018E Growth Capital 11 2018E Growth Capital By Region(1) 2018E Growth Capital by Quarter Growth Capital Summary by Region Bakken 81% Delaware Basin 13% Powder River 4% Other 2%  â $25 $50 $75 $100 Q1:18 Q2:18 Q3:18 Q4:18 ⢠Bakken â Gathering and compression de-bottlenecking projects for oil, gas and water systems â Bear Den processing Phase 1 and 2 plant expansions; target Phase 2 in-service date Q3 2019 â Salt water disposal wells and water upgrades â Growth projects drive 15% - 20% EBITDA 5-yr CAGR ⢠Delaware Basin â Orla processing plant (200 MMcf/d); target in-service date July 2018 â High pressure pipelines connecting Willow Lake to Orla and Nautilus to Orla â Gathering system expansions for Shell, Concho, Marathon and Mewbourne ⢠Powder River Basin â Well connects and gathering system expansions â Monitoring processing capacity at Bucking Horse plant; Current capacity of 120 MMcf/d â CHK plans to run 4 rigs on PRB acreage in 2018 Crestwood plans to invest $250MM-$300MM in 2018 to expand gathering and processing capacity in the Bakken, Delaware Basin and Powder River Basin Highly accretive growth projects expected to generate 5x â 7x build multiples (1) 2018E range of $250 million to $300 million represents growth capital net to CEQP.
- 12. Connections for Americaâs Energy ⢠⢠⢠⢠⢠⢠Bakken Growth Strategy 12 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 generated ~$120MM of Adj. EBITDA in 2017 ⢠>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 ⢠The Arrow system will be Crestwoodâs largest driver of cash flow growth in â18/â19 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 â 25 50 75 100 125 2013 2014 2015 2016 2017 2018 2019 2020 2021 Oil (MBbl/d) Water (MBbl/d) Gas (MMcf/d)
- 13. Connections for Americaâs Energy ⢠⢠⢠⢠⢠⢠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 13 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%
- 14. Connections for Americaâs Energy ⢠⢠⢠⢠⢠⢠Bakken Processing Expansion Projects 14 Overview Processing Capacity Growth Timeline Bear Den plant phase-1 Crestwood is investing growth capital to expand Arrowâs processing capacity to meet producer drilling forecasts; Bear Den Phase 2 scheduled in-service for Q3 2019 ⢠Bear Den Processing Plant is a two phase processing solution that will provide 150 MMcf/d of combined processing capacity ⢠Phase 1: âImmediate solutionâ - 30 MMcf/d RJT unit sized to process excess gas volumes previously flared or above third-party contracts â Phase 1 project cost ~$100MM (includes Bear Den pipeline) â Commissioned late November 2017 ⢠Phase 2: âLong-term solutionâ - 120 MMcf/d cryogenic plant sized to process 100% of Arrow gas by 2019 â Phase 2 project cost ~$195MM â Targeted in-service Q3 2019 ⢠Attractive total project returns of sub-6x; Phase 1 project accretive to DCF in 2018 0 20 40 60 80 100 120 140 160 2017 2018 2019 2020 2021 Processing Volume (MMcf/d) CEQP Bear Den â Phase 2 CEQP Bear Den â Phase 1 ThirdâParty Processing
- 15. Connections for Americaâs Energy ⢠⢠⢠⢠⢠⢠Delaware Basin Strategy and Overview 15 Asset MapAsset Overview & Strategy Crestwood is building competitive scale and fully integrated systems in the heart of the Delaware Basin through 50/50 JV with First Reserve ⢠Current assets includes Willow Lake gathering & processing and Nautilus gathering & compression â Total gathering capacity of 335 MMcf/d â Total processing capacity of 85 MMcf/d ⢠Current growth projects: In-Service â 200 MMcf/d Orla Processing Plant Q3 2018 â Nautilus to Orla Pipeline Q3 2018 â Willow Lake to Orla Pipeline Q3 2018 ⢠Future expansion opportunities: â Crude oil gathering, terminalling and condensate stabilization/blending â Produced water gathering and disposal ⢠Halcon Resources acquired southern Ward Co. acreage from SWEPI â Q1 2018 â Potentially accelerates development and build- out of southern Nautilus system Willow Lake and Nautilus systems expected to be fully connected to the Orla Processing plant by July 2018; Crestwood pursuing incremental undedicated third- party volumes around existing systems
- 16. Connections for Americaâs Energy ⢠⢠⢠⢠⢠⢠Delaware Basin Current G&P Assets 16 Willow Lake and Nautilus gathering systems, combined gather over 140 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 â ~82 miles low pressure gathering system â Current processing capacity of 85 MMcf/d (includes 30 MMcf/d expansion to handle volume growth through 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 Shellâs Delaware Basin development program; Joint venture with Shell Midstream LP â 20-year tiered fixed-fee gathering and compression contract â 100,000 acreage dedication in Loving and Ward counties, TX ⢠~$90MM of capital invested in 2017 at a ~5.0x build-multiple ⢠The Nautilus-to-Orla pipeline will connect the Nautilus system to the Orla Processing Plant in 1H 2018 Over 200K dedicated acres The Permian basin is the most important asset within Shellâs 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.â â Shell Midstream
- 17. Connections for Americaâs Energy ⢠⢠⢠⢠⢠⢠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 Crestwoodâs current capture area, 2.4 MMBbls/d of produced water is forecasted by 2021 ⢠Crestwoodâs 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 â 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 Americaâs Energy ⢠⢠⢠⢠⢠⢠Powder River Basin Strategy and Overview 18 Overview Recent volume growth and future development activity may provide meaningful gathering and processing expansion opportunities in 2H 2018 or early 2019 Powder River Basin is gaining traction as a very economic stacked play; Chesapeake development and off-set producer activity provide growth potential for Crestwood Stacked Pay and Large Inventory Offer High Growth Potential $25/Bbl - $35/Bbl Breakeven 2,780 undrilled inventory 388,000 dedicated acres CHK projects PRB production of ~200 Mboe/d by 2022 2016/2017 delineation program proved concept across acreage position Source: Chesapeake Energy investor presentation dated 2/13/2018. ⢠Powder River Basin system experiencing meaningful volume growth due to multiple bench production ⢠Crestwood and Williamsâs (50/50 JV) assets may reach capacity in 2H 2018 or early 2019 â Jackalope gathering system capacity of 180 MMcf/d â Buckinghorse plant processing capacity of 120 MMcf/d ⢠Chesapeake Energy currently operating three rigs with the expectation of adding a fourth in 1Hâ18 â Turner drilling program offers over 100% RORs â 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
- 19. Connections for Americaâs Energy ⢠⢠⢠⢠⢠⢠⢠Strategic 50/50 JV with Consolidated Edison ⢠FERC regulated storage and pipeline assets located at center of prolific NE Marcellus ⢠SGS rates/returns expected to be unaffected by recent FERC ruling as they are market based rates which have historically been below cost of service based rates ⢠Near-term growth: JV Cash Flow â Stagecoach generated ~$135MM Adjusted EBITDA in 2017 â June 2018/2019: Cash flow distribution steps to 40% and 50%, respectively ⢠Long-term growth potential: â Evaluating incremental takeaway projects out of the basin â Pipeline constraints will continue in NE for the next 10 years â NE production needs an additional 3-5 Bcf/d of take-away capacity to catch up with the available production NE Marcellus is the most prolific US gas basin and best potential for demand growth; Stagecoach is strategically positioned to capture growth opportunities NE Marcellus Provides Long-Term Growth Potential 19 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 â More Pipe Production â Base Case Production â Less Pipe Pipeline Capacity (Base) Pipeline Capacity (Less) Pipeline Capacity (More) Source: Northeast production data per BTU Analytics. Stagecoach Assets â 41 Bcf storage capacity â 3.1 Bcf/d of deliverability and 5 Bcf/d of supply access
- 20. Connections for Americaâs Energy ⢠⢠⢠⢠⢠⢠20 Balance Sheet Strength, Disciplined Capital Allocation, Accretive DCF Growth
- 21. Connections for Americaâs Energy ⢠⢠⢠⢠⢠⢠21 Self-Funded 2018 Capital Program 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 2018 capital program 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 FY 2018 ⢠Strategic joint-ventures minimize project risk and capital commitments, while enhancing commercial opportunities: â Delaware Basin: First Reserve and Shell Midstream (NYSE: SHLX) â NE Marcellus: Consolidated Edison (NYSE:ED) â Powder River Basin: Williams Partners (NYSE:WPZ) 1 2 3
- 22. Connections for Americaâs Energy ⢠⢠⢠⢠⢠⢠$0 $200 $400 $600 $800 2017 2018 2019 2020 2021 2022 2023 2024 2025 22 Strong Balance Sheet and Liquidity ⢠Top-tier leverage position â YE 2017 leverage of 4.1x â Current borrowing capacity ~$500 MM â Substantial debt reduction over past 2- years ⢠Committed to long-term leverage <4.0x once growth projects come online ⢠No near-term maturities; attractive long-term capital ⢠Committed to funding 2018 capital program without accessing the public equity markets â Excess cash re-invested into accretive growth projects â Substantial revolver capacity â Additional potential non-core divestitures Balance Sheet Positioned for Strength Current Capitalization No Near-Term Debt Maturities ($MM) RCF 6.25% Notes 5.75% Notes Issue Price Yield 2023 102.5 5.4% 2025 100.5 5.6% Crestwood is committed to maintaining a very strong balance sheet and financial flexibility; Crestwood targets YE 2018 leverage of 4.0x-4.5x Actuals Actuals Actuals ($ millions) 2015 2016 2017 Cash $1 $2 $1 Revolver $735 $77 $318 Senior Notes 1,800 1,475 1,200 Other Debt 9 6 8 Total Debt $2,544 $1,558 $1,526 Total Leverage Ratio 4.8x 3.7x 4.1x Note: Senior note price and yield data per Bloomberg as of 3/9/2018.
- 23. Connections for Americaâs Energy ⢠⢠⢠⢠⢠⢠8.8x 8.9x 9.5x 9.6x 10.6x 10.9x 12.4x 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x 14.0x CEQP Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 23 CEQP Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 2018E Leverage Ratio <4.25x 2018E Coverage Ratio >1.25x No IDRS Self-Funded 2018E CAPEX Significant Insider Ownership Execution in 2018 to Drive Value Creation 2018E Price/DCF 2018E P/DCF peer average = 10.3x; Implies >20% CEQP unit price upside to ~$34/unit Source: DCF data provided by industry research dated 2/9/2018. G&P Peers Include: AMID, DCP, ENBL, ENLK, MPLX and WES. Note: Significant insider ownership defined as management and Board of Directors common unit ownership over 5% of outstanding units.
- 24. Connections for Americaâs Energy ⢠⢠⢠⢠⢠⢠The Crestwood Investment Opportunity 24 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) â Current Yield = 8.5%; Coverage Ratio = 1.4x; Leverage Ratio = 4.1x ⢠Diversified business mix and strong contract portfolio ⢠No incentive distribution rights ⢠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 3/9/2018. Coverage ratio and leverage ratio as of 12/31/2017.
- 25. Connections for Americaâs Energy ⢠⢠⢠⢠⢠⢠Appendix 25 25 Appendix:
- 26. Connections for Americaâs Energy ⢠⢠⢠⢠⢠⢠26 Crestwoodâs Commitment to Excellence was Recognized 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 Fargoâs 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 Crestwoodâs culture of excellence positions the partnership to be a responsible steward of capital and an attractive midstream investment (1) Wells Fargo research report titled âThe Midstream Alignment Scorecard.â 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 Customer Service Community Engagement Community Engagement Environmental Stewardship Environmental Stewardship Unitholder Alignment Unitholder Alignment
- 27. Connections for Americaâs Energy ⢠⢠⢠⢠⢠⢠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 Q4:17 Gathering Volumes (MMcf/d) $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 ⢠Crestwood & BlueStone have 10-year agreement â Fixed-fee and percent of index fee structure for both Natural Gas and NGLs â 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 Overview 27 BlueStoneâs workover activities and recent DUC completions offset natural volume declines in 2017 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. 2017 Workovers Offset Natural Field Decline
- 28. Connections for Americaâs Energy ⢠⢠⢠⢠⢠⢠⢠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 Overview 28 Gathering volumes up 36% in 2017 as Antero completes DUC Inventory Overview Highlights ⢠~275 wells have been connected to Crestwoodâs system â No dry holes ⢠Avg. 30D IP rate ~8.0 MMcf/d; Avg. EURs between 8â12 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 Crestwoodâs 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 Jâ16 Fâ16 Mâ16 Aâ16 Mâ16 Jâ16 Jâ16 Aâ16 Sâ16 Oâ16 Nâ16 Dâ16 Jâ17 Fâ17 Mâ17 Aâ17 Mâ17 Jâ17 Jâ17 Aâ17 Sâ17 Oâ17 Nâ17 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
- 29. Connections for Americaâs Energy ⢠⢠⢠⢠⢠⢠CEQP Non-GAAP Reconciliations 29 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)