West Virginia Oil and Natural Gas Association 2017 Spring Meeting - - PowerPoint PPT Presentation

west virginia oil and natural gas association 2017 spring
SMART_READER_LITE
LIVE PREVIEW

West Virginia Oil and Natural Gas Association 2017 Spring Meeting - - PowerPoint PPT Presentation

West Virginia Oil and Natural Gas Association 2017 Spring Meeting Blue Racer Midstream May 16, 2017 Blue Racer Midstream, LLC. Nature of Information Presented: The following information has been prepared by Blue Racer Midstream, LLC to provide


slide-1
SLIDE 1

Blue Racer Midstream May 16, 2017

West Virginia Oil and Natural Gas Association 2017 Spring Meeting

slide-2
SLIDE 2

1

Blue Racer Midstream, LLC.

Nature of Information Presented: The following information has been prepared by Blue Racer Midstream, LLC to provide current and forward-looking information on our business and operations to members of our commercial banking syndicate. This information is derived from a variety of sources, many of which have not been independently verified by Blue Racer Midstream, LLC. This information also contains financial projections, which may vary materially from actual results in the future. Blue Racer Midstream, LLC believes such projections have been prepared based on reasonable assumptions, but makes no representation or warranty as to the accuracy or completeness of such projections, other forward looking information and information of a general economic or industry specific nature. This presentation does not constitute an offer or solicitation to sell or purchase any securities. This presentation has not been prepared with a view toward public disclosure under state or federal securities laws or otherwise and may not be reproduced, disseminated, quoted or referred to, in whole or in part, without the prior written consent of Blue Racer Midstream, LLC. Forward-Looking Statements: This presentation contains forward‐looking statements based on the beliefs of the company, as well as assumptions made by, and information currently available to

  • ur management team. When used in this presentation, words such as “anticipate,” “project,” “expect,” “plan,” “seek,” “goal,” “estimate,” “forecast,” “intend,” “could,”

“should,” “will,” “believe,” “may,” “potential” and similar expressions and statements regarding our plans and objectives for future operations, are intended to identify forward‐looking statements. Although management believes that the expectations reflected in such forward‐looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. You should not put undue reliance on any forward‐looking statements, which speak only as of their dates. Forward‐looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those expected, including insufficient cash from operations, adverse market conditions, governmental regulations, the possibility that tax or other costs or difficulties related thereto will be greater than expected, the impact of competition and other factors. All forward‐looking statements attributable to Caiman Energy II, LLC, Blue Racer Midstream, LLC or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained herein. Except as required by law, we do not intend to update or revise our forward‐looking statements, whether as a result of new information, future events or otherwise.

slide-3
SLIDE 3

2

1.

As of December 31, 2016, unless otherwise noted

2.

As of April 12, 2017

3.

Owned by Williams Partners, EnCap Flatrock Midstream, Oaktree Capital Management, L.P., management and certain non-institutional investors

Blue Racer Midstream

Caiman Energy II, LLC.(3) Blue Racer Midstream, LLC. Dominion Energy, Inc. Blue Racer Finance Corp. Senior Unsecured Notes Senior Secured Credit Facility 50%

Overview(1)

Headquarters Dallas, TX Founded 2012 Employees 164 Total Assets ~$2.3B Senior Secured Credit Facility $1.0B Senior Unsecured Notes $850MM Senior Unsecured Notes Rating B3/B- Senior Unsecured Notes Price/Yield(2) $101.8 / 5.75%

50%

Strong and Supportive Sponsors Expansive footprint throughout Utica and Marcellus

slide-4
SLIDE 4

3

Blue Racer Midstream Timeline

Access to Capital Markets and Supportive Sponsors

December 2012 Caiman & Dominion form Blue Racer Midstream, a $1.4 Billion Joint Venture. August 2013 Natrium I Processing & Fractionation Complex Dropped Down to Blue Racer August 2013 Blue Racer closes $800MM Senior Secured Credit Facility June 2014 Senior Secured Credit Facility Upsized to $1.0B November 2014 $550MM Senior Notes Offering July 2015 $300MM Senior Notes Follow-on Offering Q2 2016 – Q4 2016 Reinvested ~$120MM of distributions March 2017 Senior Secured Credit facility amended and extended to March 2022

$0 $20 $40 $60 $80 $100 $120

  • 100

200 300 400 500 600 700 800 WTI [$/Bbl] Processed Volumes [MMcf/d] Processed Volumes WTI

Ability to grow through a challenging environment

slide-5
SLIDE 5

4

Safety and Operational Focus

 Safety-first culture

– Consistent safety training – Perform safety reviews and employee performance

monitoring

– Monitor KPIs Safety Focused Culture Operational Results

 Operational excellence

– Maintain focus on operational efficiencies – Monitor KPIs

1. Excludes planned outages

2015: 99% 2016: 99%

80% 85% 90% 95% 100% 105%

Run-time(1)

30-Day Run-time Adjusted 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00

TRIR

OSHA TRIR (YTD) Target Goal = 1.46 12-Mo Rolling TRIR 11.94 6.10

slide-6
SLIDE 6

5

Pipeline System Overview

Extensive pipeline network allows efficient and economically advantaged connectivity across rich and lean acreage

 Upstream

– System currently serves 20 customers – Pipelines serve lean gathering, rich gathering and

condensate gathering

 Midstream

– Full value chain service – “Super-system” - largest network of gathering pipeline

spanning throughout the wet gas and lean Utica

► ~400 miles of pipeline from Dominion ► ~316 miles of pipeline constructed from formation

through 2016

 Downstream

– Connectivity to multiple markets and end users maximizes

producer netbacks

► Residue pipelines ► NGL pipelines ► Rail ► Barge ► Truck

slide-7
SLIDE 7

6

 Located in Northwest Monroe County, Ohio

– 420 MMcf/d of processing capacity

► Two 210 MMcf/d cryogenic processing plants ► Site can accommodate one additional processing

facility

► Condensate: 10,000 Bbl/d of onsite stabilization

capacity

Facilities Overview

Natrium

 Located along the Ohio River in West Virginia

– 450 MMcf/d of processing capacity

► Two cryogenic processing plants ► 123,000 Bbl/d fractionation plant (C2+) ► Site can accommodate up to four processing

plants

► Condensate: 2,500 Bbl/d of onsite stabilization ► Product takeaway facilities include pipeline, rail,

truck and barge Berne

slide-8
SLIDE 8

7

Residue Markets

Increased takeaway projects reduce basis differentials and increase producer netbacks

 Natrium

– Dominion Energy Transmission, Inc. (“DTI”) – Texas Eastern Transmission Company (“TETCO”) – Rockies Express Pipeline (“REX”)

 Berne

– TETCO

 Future Pipelines to provide ~6.2 Bcf/d of new

capacity by the end of 2017

– Q317: Rover (Natrium and Berne) – Q417: Leach Xpress / Mountaineer Xpress

(Natrium)

– Q417: NEXUS (Natrium and Berne)

1.

Includes Western System sold to DEO on December 1, 2016 Source: Northeast Takeaway Projects from BTU Analytics 1Q17 Northeast Gas Outlook;

slide-9
SLIDE 9

8

NGL Markets

Increased takeaway projects help flatten seasonal differentials and increase producer netbacks

 Ethane

– Connection to ATEX, Mariner East I and Mariner

West via G-151 and WPZ/OVM

 Propane

– Connection to TEPPCO via G-150 – Connection to Mariner East II via G-150 (on ME

IIs completion)

– On-site rail/truck loading – On-site barge loading

 Butanes

– Connection to Mariner East II via G-150 (on ME

IIs completion)

– On-site rail loading

 NGLs/Condensate

– On-site rail loading – On-site barge loading – On-site truck loading

slide-10
SLIDE 10

9

Business Outlook

1.

Half cycle well analysis with assumed F&D, midstream, operating, and royalty expenses. Strip pricing as of 02/09/17 – WTI: 2017: $54.95, 2018: $55.82, 2019: $55.33, 2020: $55.27, 2021+: $55.49 // HHUB 2017: $3.32, 2018: $3.09, 2019: $2.89, 2020: $2.88, 2021+ $2.87. Future price differentials applied Source: NYMEX – Dom. South as of 02/09/2017; BTU Analytics – Dom. South from BTU Analytics 4Q16 Northeast Gas Outlook

Improving Economics

Healthy Half Cycle Well Returns(1)

15% 37% 28% 32% 50% 59% 0% 10% 20% 30% 40% 50% 60% 70% Condensate Western Central Eastern Core Utica Lean [IRR] Condensate Western Central Eastern Core Utica Lean

Half Cycle Well Returns

 At assumed pricing, producers’ margins are attractive

Continue to see an increase in permit and rig activity within our footprint

 Basis differentials continue to improve as access to

demand centers increases Commentary

slide-11
SLIDE 11

10

Increasing Processed Volumes

Financial Summary

Growing EBITDA Scalable Capital Expenditures

1.

Volumetric Commitments represent deficient volumes that are not processed

Focused on Leverage Reduction

  • 100

200 300 400 500 600 700 800 2013 2014 2015 2016 [MMcf/d] $- $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 2013 2014 2015 2016 [$000] $- $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 2013 2014 2015 2016 [$000] (1.00)x 0.00x 1.00x 2.00x 3.00x 4.00x 5.00x 6.00x Compliance Leverage Total Maximum Leverage Ratio

214% CAGR 386% CAGR(1) 20% Reduction ~$1.6B spent to date

slide-12
SLIDE 12

11

U.S. Northeast Natural Gas Production Scenarios

5 10 15 20 25 30 35 40 45 Production (Bcf/d) Northeast

Cutback Advance Growth Contraction

slide-13
SLIDE 13

12

Net Northeast Inflows (+) / Outflows (-)

RBN Source: PointLogic Energy

slide-14
SLIDE 14

13

Northeast Inflows/Outflows by Target Region

RBN Source: PointLogic Energy

slide-15
SLIDE 15

14

Northeast Project Timing & State/Federal Progress

Projects Capacity (MMcf/d) Current Official ISD BTU Analytics ISD FERC Final EIS/EA FERC Certificate Appoval Notes TGT - Northern Supply Access 384 Mar-17 Mar-17 1/2016 3/2016

Requested a two year extension to bring online the last 100 MMcf/d of capacity; Having difficulty marketing the capacity after the previous holder, Triad Hunter, went bankrupt.

TCO - Leach Xpress 1,500 Nov-17 Nov-17 9/2016 1/2017

Tree clearing extension requested and subsequently received by FERC. Construction activities underway

CGT - Rayne Express 1,000 Nov-17 Nov-17 9/2017 1/2017

Construction started 2/8/17

ET Rover 3,250 Jul-17 (Ph 1) Dec-17 (Ph 2) Jul-17 (Ph 1) Dec-17 (Ph 2) 7/2016 2/2017

Tree felling completed prior to 3/31/2017 deadline. Construction on track

Nexus 1,500 Mar-17 Nov-17 11/2015 (2/2017)

FERC quorum required before Certification. DTE stands by Q4 2017 in-service date

NFG -- Northern Access 497 Nov-17

  • 3/2015

2/2017

Denied required water permit by NYDEC; Project timeline highly uncertain

Atlantic Sunrise 1,700 Mid-18 Nov-18 3/2015 2/2017

Phase 1 compressor stations under construction. Phased-in

  • fficial ISD; partial in-service 2H 2017 full in-service

11/1/18

PennEast 1,000 Nov-18 Nov-20 9/2015 (7/2017)

NJDEP and Army Corps of Engineers returned application as incomplete, July Certificate decision requires FERC quorum

Atlantic Coast Pipeline 1,500 Nov-19 Nov-20 9/2015 (9/2017)

Official ISD delayed form Q4 2018 to Q4 2019 due to prolonged FERC review process; received DEIS on 12/30/16

Mountain Valley Pipeline 2,000 Nov-18 Nov-20 10/2015 (9/2017)

Release of FEIS delayed by three months

Note: Total is 14.3 Bcfd. Dates within parentheses are scheduled dates published by FERC. These dates are subject to revision as project timelines change.

slide-16
SLIDE 16

15

Appalachia Takeaway Capacity – East Corridor

slide-17
SLIDE 17

16

Northeast Natural Gas Pipeline Projects (2017-2020)

slide-18
SLIDE 18

17

Summary

 Production growth from this world class resource is astonishing

5 Bcfd in 2011

– 20 Bcfd in 2017 – 25 Bcfd to 40 Bcfd projected 2022

 The northeast became a net exporter year round in 2015  Pipeline infrastructure is crucial to further improvement in basis

– 2017: 6.1 Bcfd – 2018: 3.2 Bcfd – 2020: 3.5 Bcfd

 Current and future markets are diverse

– Southeast: 4.0 Bcfd – Midwest and Canada: 4.9 Bcfd – Gulf Coast: 4.0 Bcfd – East: 2.8 Bcfd – Waterborne: 0.7 Bcfd

slide-19
SLIDE 19

18

Blue Racer Midstream Full-Value Midstream Provider Strategic Assets Located in Top Shale Plays Experienced Management Team with Strong Equity Ownership Base Large Growth Potential