cautionary statements & non-gaap measures · this presentation includes forward-looking...
TRANSCRIPT
Investor PresentationDecember 2013
PA
RT
NE
RS
HIP
PR
ES
EN
TA
TIO
N
NYSE
QEPMCAUTIONARY STATEMENTS & NON-GAAP MEASURES
This presentation includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can be identified by words such as
“anticipates,” “believes,” “forecasts,” “plans,” “estimates,” “expects,” “should,” “will” or other similar expressions. Such statements are based on
management’s current expectations, estimates and projections, which are subject to a wide range of uncertainties and business risks. These
forward-looking statements include statements regarding the stability and predictability of cash flows of QEP Midstream Partners, LP (QEPM);
QEPM’s financial flexibility and strong capital structure and ability to maintain same; quality of QEPM’s assets; potential of drop-down of
assets from QEP Resources, Inc. (QEP); plans to pursue third-party acquisition opportunities; increase in throughput by capturing third-party
volumes; increase in production at QEP; and stability of QEPM’s fee-based business and plans to focus on such business. Actual results may
differ materially from those included in the forward-looking statements due to a number of factors, including weather conditions; global
geopolitical and macroeconomic factors; the U.S. federal budget and debt ceiling crisis; acts of terrorism; changes in oil, natural gas and NGL
prices; outcome of pending litigation; demand for oil and natural gas storage and transportation services; defaults by large customers;
legislative or regulatory changes; actions taken by third-party operators, processors and transporters; and the other risks discussed in
QEPM’s filings with the Securities and Exchange Commission, including the Risk Factors section of QEPM’s Registration Statement on Form
S-1, as amended, effective August 8, 2013 (QEPM’s Registration Statement). QEPM undertakes no obligation to publicly correct or update
the forward-looking statements in this news release, in other documents, or on the website to reflect future events or circumstances. All such
statements are expressly qualified by this cautionary statement.
Adjusted EBITDA is defined as net income attributable to QEPM’s Predecessor or QEPM before the following items: depreciation and
amortization, interest and other income, interest expense and deferred revenue associated with minimum volume commitment payments.
Adjusted EBITDA is used as a supplemental financial measure by management and by external users of our financial statements, such as
investors and commercial banks, to assess: (1) QEPM’s operating performance as compared to those of other companies in the midstream
sector, without regard to financing methods, historical cost basis or capital structure; (2) the ability of QEPM’s assets to generate sufficient
cash flow to make distributions to its partners; (3) QEPM’s ability to incur and service debt and fund capital expenditures; and (4) the viability
of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities. For a reconciliation
of QEPM’s Adjusted EBITDA to net income for the three months ended March 31, 2013, please see QEPM’s Registration Statement.
1
PA
RT
NE
RS
HIP
PR
ES
EN
TA
TIO
N
NYSE
QEPMINVESTMENT HIGHLIGHTS
• Affiliation with QEP Field Services
• Stable and Predictable Cash Flows
• Strategically Located Asset Base
• Experienced Management and Operating Teams
• Financial Flexibility and Strong Capital Structure
• On Dec 2nd, QEP announced its intentions to separate QEP Field Services and ownership interest in QEPM (GP and LP) from QEP Resources
2
PA
RT
NE
RS
HIP
PR
ES
EN
TA
TIO
N
NYSE
QEPMOVERVIEW
3
Transaction Overview
Units outstanding (MM) 54.5
Units sold to public (MM) (includes over-allotment) 23.0
Unit price at IPO (Pre-IPO range $19-$21) $21
First day of trading August 9th
Net cash proceeds to QEPM ($MM) $451
Adjusted EBITDA contributed (twelve months ended - 3/31/13, $MM) $82.2
Contributed gathering assets located in Colorado, North Dakota, Utah and Wyoming
Ownership Overview
QEP General Partner (includes all incentive distribution rights)2% $0.25 - $0.2875; 15% $0.2875 - $0.3125; 25% $0.3125 - $0.375; 50% above $0.375
2.0%
QEP subordinated units 49.0%
QEP common units 6.8%
Public common units 42.2%
PA
RT
NE
RS
HIP
PR
ES
EN
TA
TIO
N
NYSE
QEPMOWNERSHIP STRUCTURE
4
QEP Resources, Inc.
(Parent)
QEP Midstream Partners, LP
NYSE: QEPM
QEP Midstream Partners Operating, LLC
QEP Midstream Partners GP, LLC
(General Partner)
2.0% General Partner Interest
& IDRs
100% Ownership
78% Ownership Interest
Three Rivers
Gathering, L.L.C.
Public Unitholders
55.8% Limited
Partner Interest 42.2% Limited
Partner Interest
100% Ownership
50% Ownership Interest
Rendezvous Gas
Services, L.L.C.
Rendezvous Pipeline
Company, L.L.C.
QEPM Gathering I, LLC
100% Ownership Interest
100% Ownership Interest
LTIP Participants
Less than 1%
Limited Partner
Interest
PA
RT
NE
RS
HIP
PR
ES
EN
TA
TIO
N
NYSE
QEPMSTRATEGY
• Growth
– Significant drop-down potential from QEP Field Services
– Pursue third-party acquisition opportunities in existing and new areas
– Increase throughput by capturing third-party volumes and increased production from QEP
• Stability
– Focus on stable, fee-based businesses
– Maintain a conservative and flexible capital structure
5
PA
RT
NE
RS
HIP
PR
ES
EN
TA
TIO
N
NYSE
QEPMASSET OVERVIEW
6
• Over 2.6 Bcf/d and 54 MBbls/d throughput capacity
• Access to three prolific oil and natural gas basins in the Rockies
• Interconnects to six interstate natural gas pipelines providing access to multiple markets
• Fully integrated system provides wellhead to market services and prevents rate stacking
QEP Field
Services Total 1
QEP Midstream
Partners, LP
Miles of Gathering and Transmission Pipeline 2,415 1,507
Total Natural Gas Throughput Capacity (MMcf/d) 4,975 2,650
Total Oil Throughput Capacity (Bbls/d) 54,937 54,937
Approximate Receipt Points 3,259 1,062
Total Processing Capacity (MMcf/d) 1,583 0
Total Treating Capacity (MMcf/d) 600 0
Total Fractionation Capacity (Bbls/d) 15,000 0
Compression Horsepower 145,390 77,024
1 Includes M LP assets
PA
RT
NE
RS
HIP
PR
ES
EN
TA
TIO
N
NYSE
QEPMGREEN RIVER GATHERING
• Green River Gathering System gathers production in the Pinedale and Moxa Arch fields in Wyoming
• Pinedale System
– Approximately 220 miles of natural gas, crude oil and produced/flowback water gathering pipelines
– 36,065 bhp of compression and 679 MMcf/d of natural gas throughput capacity
– Natural gas delivered into the Rendezvous Gas system
– Crude oil transported on 61-mile, FERC-regulated crude pipeline to the Rocky Mountain Pipeline System
• Throughput capacity of approximately 40,800 Bbls/d
• Moxa Arch System
– Approximately 323 miles of low-pressure gas gathering pipelines and 4,988 bhp of gas compression
– Approximately 58 MMcf/d of natural gas capacity
7
RendezvousGas Services
RendezvousPipeline
Company
Moxa Arch System
Pinedale System
PA
RT
NE
RS
HIP
PR
ES
EN
TA
TIO
N
NYSE
QEPMRENDEZVOUS GAS SERVICES• Rendezvous Gas Services is a joint venture
between QEPM and Western Gas
– QEPM operates and owns 78%
– Transports gas from the Pinedale and Jonah fields to processing facilities owned by QEP or Western Gas
– Approximately 1,032 MMcf/d of capacity and 7,800 bhp of gas compression
– Three parallel, 103-mile high-pressure natural gas pipelines
• To support the joint venture, QEP and Western Gas dedicated natural gas gathered within an area of mutual interest
8
RendezvousGas Services
PA
RT
NE
RS
HIP
PR
ES
EN
TA
TIO
N
NYSE
QEPMRENDEZVOUS PIPELINE COMPANY• 21-mile, FERC-regulated transmission
pipeline that transports natural gas from QEP’s Blacks Fork processing complex to the Kern River Pipeline
– FERC-regulated, but utilizes market-based rates negotiated with each customer
• Total throughput capacity of 460 MMcf/d
9
RendezvousPipeline
Company
PA
RT
NE
RS
HIP
PR
ES
EN
TA
TIO
N
NYSE
QEPMVERMILLION GATHERING
• Gas gathering systems and compression assets located in southern Wyoming, northwest Colorado and northeast Utah
– Approximately 518 miles of low-pressure, gas gathering pipelines
– Approximately 206 MMcf/d of throughput capacity and 23,197 bhp of compression
• Volumes are underpinned by “life-of-reserves” and long-term, fee-based gathering agreements with MVCs
• Volumes are ultimately delivered into Questar Pipeline Company’s interstate pipeline system
10
PA
RT
NE
RS
HIP
PR
ES
EN
TA
TIO
N
NYSE
QEPMTHREE RIVERS GATHERING• Three Rivers Gathering is a 50/50
joint venture between QEPM and Ute Energy Midstream Holdings, LLC
– Approximately 52 miles of gathering pipeline and 4,735 bhpof gas compression
• Volumes primarily underpinned by long-term, fee-based gas gathering agreements with MVCs
– Currently fully subscribed, easily expanded through incremental compression
– Aggregate MVCs of 212 thousand MMBtu/d through 2018
• Natural gas delivered to either QEP’s Uinta processing complex or a third-party processing facility
11
Three Rivers Gathering
PA
RT
NE
RS
HIP
PR
ES
EN
TA
TIO
N
NYSE
QEPMWILLISTON BASIN GATHERING• Crude oil and natural gas gathering system
located in McLean County, North Dakota
– Approximately 30 miles of crude oil and gas gathering pipelines, with 239 bhp of gas compression
– Current throughput capacity of 7,000 Bbls/d and 3 MMcf/d for crude oil and natural gas, respectively
– Crude oil and natural gas handling facility on the Fort Berthold Indian Reservation
• Volumes supported by long-term, fee-based, agreements with MVCs
– Aggregate MVCs of approximately 5,600 Bbls/d of crude oil and 5,000 MMBtu/d of gas through 2026
12
Williston Basin Gathering
QEP Field Services Overview
PA
RT
NE
RS
HIP
PR
ES
EN
TA
TIO
N
NYSE
QEPMPOTENTIAL DROP-DOWNS – “NORTHERN TIER”
14
Green River Basin
Blacks Fork Processing
505 MMcf/d cryogenic
330 MMcf/d J-T
Emigrant Trail Processing
55 MMcf/d cryogenic
Blacks Fork Fractionation
15,000 Bbls/d
Vermillion Basin
Vermillion Processing
43 MMcf/d cryogenic
Blacks Fork Processing Complex
Emigrant Trail Processing Plant
Vermillion Processing
Plant
NGL sales42%
Gathering30%
Processing28%
QEP Field ServicesRemaining Revenue
Based on LTM ending March 31, 2013, less QEPM
PA
RT
NE
RS
HIP
PR
ES
EN
TA
TIO
N
NYSE
QEPMPOTENTIAL DROP-DOWNS – “SOUTHERN TIER”
15
Haynesville Gathering
200 miles gathering pipeline
2,000 MMcf/d throughput capacity
600 MMcf/d treating capacity
Uinta Basin
Stagecoach Processing
200 MMcf/d refrigeration
Iron Horse Processing
310 MMcf/d cryogenic
Red Wash/24B Processing
140 MMcf/d refrigeration
Uinta Gathering
609 miles pipeline
299 MMcf/d throughput capacity
Uintah Basin Field Services (38% JV with Ute
Energy)
99 miles gathering pipeline
26 MMcf/d throughput capacity
Uintah Basin Field Services
Uinta Gathering
Stagecoach/Iron
Horse Processing Complex
Treating Facility
24B Processing Plant
Haynesville Gathering
PA
RT
NE
RS
HIP
PR
ES
EN
TA
TIO
N
NYSE
QEPMWHY INVEST IN QEPM?
• Affiliation with QEP Field Services
– Substantial drop-down potential
• Stable and Predictable Cash Flows
– Primarily long-term, fee-based contracts
• Strategically Located Asset Base
• Experienced Management and Operating Teams
• Financial Flexibility and Strong Capital Structure
– $500 million credit facility, undrawn on Sept. 30th
16
PA
RT
NE
RS
HIP
PR
ES
EN
TA
TIO
N
NYSE
QEPMPARTNERSHIP INFORMATION
• Analyst Contacts
Richard J. Doleshek, Executive Vice President and CFO
303-640-4242
Greg Bensen, Director, Investor Relations
303-405-6665
QEP Midstream Partners, LP
1050 17th Street, Suite 500
Denver, CO 80265
www.qepm.com
17