Antero Midstream Partners Mergers and Acquisitions Presentation Deck | Slidebook.io

Antero Midstream Partners Mergers and Acquisitions Presentation Deck

November 2018, 49 slides

| Antero Midstream Partners

legal disclaimer no offer or solicitation a a this presentation discusses a previously announced proposed business combination transaction between midstream partners midstream and midstream this presentation is for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to buy any securities or solicitation of any vote or approval in any jurisdiction pursuant to the transaction or otherwise nor shall there be any sale issuance exchange or transfer of the securities in this document in any jurisdiction in contravention of applicable law no offer of securities shall be made except by means of a prospectus meeting the referred to requirements of section of the securities act of as amended additional information and where to find it in connection with the transaction will file with the securities and exchange commission sec a registration statement on form that will include a joint proxy statement of midstream and and a prospectus of the transaction will be submitted to midstream and shareholders for their consideration and may also file other documents with the sec regarding the transaction the definitive joint proxy statement prospectus will the registration statement and joint proxy be sent to the shareholders of and of midstream this presentation is statement prospectus that will be filed with the sec or any other documents that or midstream may file with the sec or send to shareholders of or of midstream in connection with the transaction investors and security holders of midstream and are urged to read the registration statement and the joint proxy statement prospectus regarding the transaction when it becomes available and all other relevant documents that are filed or will be filed with the sec as well as any amendments or supplements to these documents carefully and in their entirety because they will contain important information about the transaction and related matters not a substitute for investors and security holders will be able to obtain free copies of the registration statement and the joint proxy statement prospectus when available and all other documents filed or that will be filed with the sec by or midstream through the maintained by the sec at sec copies of documents filed with the sec by midstream will be made available free of charge on at under the heading sec filings or by directing a request to investor relations midstream partners street colorado no at of by directing a request to investor relations midstream street colorado no documents available copies charge made sec with free filed the on by be of of participants in the solicitation resources corporation resources midstream and the directors and executive officers of and midstream respective general partners and of resources may be deemed to be participants in the solicitation of proxies in respect to the proposed transaction information regarding the directors and executive officers of midstream general partner is contained in midstream annual report on form filed you can obtain a free copy of this document at the sec at sec with the sec on and certain of its currant reports on form or by accessing midstream at information regarding the executive officers and directors of general partner is contained in annual report on form filed with the sec on and certain of its current reports on form you can obtain a free copy of this document at the sec at sec or by accessing at information regarding the executive officers and directors of is contained in resources annual report on form filed with the sec on and certain of its current reports on form you can obtain a free copy of this document at the sec at sec or by accessing resources at investors may obtain additional information regarding the interests of those persons and other persons who may be deemed participants in the proposed transaction by reading the joint proxy statement prospectus regarding the proposed transaction when it becomes available you may obtain free copies of this document as described above | Antero Midstream Partners

forward looking statements a a this presentation contains forward looking statements all statements other than statements of historical facts included in this presentation that address activities events or developments that midstream partners and its subsidiaries collectively the partnership or midstream and its subsidiaries other than the partnership collectively as applicable expect believe or anticipate will or may occur in the future are forward looking statements the words believe expect anticipate plan intend estimate project foresee should would could or other similar expressions are intended to identify forward looking statements however the absence of these words does not mean that the statements are not forward looking without limiting the generality of the foregoing forward looking statements contained in this presentation specifically include the timing of the consummation of the transaction if all expectations of plans strategies objectives and anticipated financial and operating results the partnership and resources corporation resources these statements are based on certain assumptions made the partnership and resources based on management experience and perception of historical trends current conditions anticipated future developments and other factors believed to be appropriate the partnership cautions you that these forward looking statements are subject to risks and uncertainties that may cause these statements to be inaccurate and readers are cautioned not to place undue reliance on such statements these risks include but are not limited to the expected timing and likelihood of completion of the transaction including the ability to obtain requisite regulatory and shareholder approval and the satisfaction of the other conditions to the consummation of the proposed transaction risks that the proposed transaction may not consummated or the benefits contemplated therefrom may not be realized the cost savings tax benefits and any other synergies from the transaction may not be fully realized or may take longer to realize than expected resources expected future growth resources ability to meet its drilling and development plan commodity price volatility inflation environmental risks drilling and completion and other operating risks regulatory changes the uncertainty inherent in projecting future rates of production cash flow and access to capital the timing of development expenditures and the other risks discussed or referenced under the heading item risk factors in the partnership annual report on form for the year ended and in the partnership subsequent filings with the sec the partnership ability to make future distributions is substantially dependent upon the development and drilling plan of resources which itself is substantially dependent upon the review and approval by the board of directors of resources of its capital budget on an annual basis in connection with the review and approval of the annual capital budget by the board of directors of resources the board of directors will take into consideration many factors including expected commodity prices and the existing contractual obligations and capital resources and liquidity of resources at the time any forward looking statement speaks only as of the date on which such statement is made and neither or the partnership undertakes no obligation to correct or update any forward looking statement whether as a result of new information future events or otherwise except as required by applicable law this presentation includes certain financial measures that are not calculated in accordance with generally accepted accounting principles these measures include i adjusted distributable cash flow and free cash flow please see the appendix for the definition of each of these measures as well as certain additional information regarding these measures including the most comparable financial measures calculated in accordance with | Antero Midstream Partners

midstream simplification transaction results in in one publicly traded midstream infrastructure corporation with no and as its shareholder status quo structure bye sponsors management sponsors management incentive distribution rights poe gee eta a interest sponsors midstream profs het by ante units shares midstream presentation | Antero Midstream Partners

highest dividend growth among top mids new am will be a unique midstream vehicle with scale low leverage and high distribution growth all in a corp structure my corp leverage eliminated year dividend morgan i plains all energy partners see shell energy midstream partners a gas a resources enable midstream a enterprise products pam energy jams enlink midstream partners am one of only eight corp sit highest distribution growth and leverage of entities have simplified and of are corps source pro for or panes top con and net debt adjusted midstream presentation | Antero Midstream Partners

agate strong tens as a ree ary a a a a my eke | Antero Midstream Partners

core liquids rich inventory in a pia peek tear new york are core liquids rich undrilled locations total rigs locations virgin of core sas rich locations are held by peers rig per as of i wan cling and we beet acreage count nef of acreage disclosed ventures midstream integrated strategy strong growing supportive sponsor | Antero Midstream Partners

undrilled core drilling inventory undrilled core locations liquids rich locations dry locations a dry locations who can consistently drill long laterals who has the running room a aas undrilled liquids rich locations in inventory on i a lateral length ascot cog and saw based on anes of undeveloped i of bag nuts plays midstream integrated strategy strong growing supportive sponsor | Antero Midstream Partners

is one of the producers in the top producers consensus significant production and underlying liquids rich resource base a i nigh i he i cag fractionation cop oxy consensus production midstream integrated strategy strong growing supportive sponsor | Antero Midstream Partners

outstanding corporate level well a well economics support investment as serra aes cost of capital corporate level full cycle single well economics excluding hedges full cycle half cycle full cycle at half cycle at cash cost returns oil to strip assumes hedging impact sees wace i corporate level returns to completion program completion program ale half cycle way far an one fin via fees full burdened with a allocated costs of am fees and coats see appeals how fig singe weal woe dated midstream integrated strategy strong growing supportive sponsor | Antero Midstream Partners

ars lower capital higher liquids free cash over of targeted free cash flow from to at strip pricing including maintenance land capital expenditures i stand alone free cash flow outspend oil gas case stand alone free cash flow strip pricing at base case gas case pin free cash flow a guidance target target target target capital investment fully funded with cash flow midstream min integrated strategy strong growing supportive sponsor | Antero Midstream Partners

ate | Antero Midstream Partners

midstream at a glance status am highlights pau market cap in yews enterprise value adjusted gathering compression net debt corporate debt rating market cap net debt midstream assets a i new processing facility civil work under war thee to ape an processing facility existing eel pee i cap a lewis an stonewall compressor station facility gathering pipeline came fresh water pipeline see stonewall pipeline compressor station in service processing facility a equity marker data to of i a non measure as a sat of as of midstream presentation this measure soe non in the for | Antero Midstream Partners

a foo i integrated system in the core of the and shales delivering wellhead gas directly to key processing plants and long haul pipelines joint venture with aligns the liquids rich resource base with the dominant processing and fractionation footprint in world for shale oil and gas operations premier integrated midstream assets delivery system in that has a track record of timely fresh water deliveries to completions treatment facility in the | Antero Midstream Partners

high growth midstream throughput am high growth throughput driven by development plan and resource base low pressure gathering compression a gas processing toe a a a a period applicable midstream presentation | Antero Midstream Partners

year identified project inventory of plus an additional of potential downstream opportunities upstream sie a paar a am assets ami assets potential am opportunities downstream project backlog fractionation ame pares terminals storage well pad compression gas processing pressure gathering a ethane propane pipeline a investment organic project backlog interest plant regional gathering pipeline interest i i energy a long haul pipeline a i i note third party company of premier integrated midstream assets i interconnect | Antero Midstream Partners

gathering and compression asset significant long term volumetric visibility from supports efficient gathering and compression infrastructure and attractive project returns asset strategy just in time capital investment philosophy appropriately sizing infrastructure for visible production growth from a a get on pipe rates an rates a asset continued focus on expense reduction strategi fixed fee revenues historical compression utilization capacity a volumes a utilization rich gas east mountain connector gathering ongoing am a a south canton wick expansion east mountain expansion morris total a pooh premier integrated midstream assets | Antero Midstream Partners

new joint venture processing site new processing site northeast processing fractionation am and are beginning civil construction on a new processing site named in county strategically located miles west of with site layout for plants with of processing capacity integrated with dominant infrastructure footprint connects to major long haul pipelines including rover stonewall and local firm transportation county a he premier integrated midstream assets | Antero Midstream Partners

a joint venture aligns the core resource base with processing and fractionation footprint in asset strategy processing capacity support rich gas and volume growth at investing just in time capital along side by year end is expected to be the processing facility in the fixed fee supported by processing and fractionation projects full processing plant processing plant processing plant fractionator processing plant processing plant note own in or net premier integrated midstream assets full | Antero Midstream Partners

delivery asset overview due to the reliability of am buried fresh water pipeline system am has a track record of timely fresh water deliveries to completions past merle provide timely service to allow to maintain its development pace and flexibility reduce footprint eliminated truck tips and tons of emissions in alone fixed fee with am firm water service at the pad saves an estimated per barrel for fresh water water per foot used in completions fresh water projects to miles to buried line river to pioneer buried line fresh water impoundment river withdrawal facility miles miles min surface line connects ongoing wells serviced by fresh water system wells by system low end a a a at a a wells serviced by system high end average lateral length feet a a a a a a premier integrated midstream assets | Antero Midstream Partners

facility asset overview the facility is the advanced treatment facility in the world for shale oil and gas operations asset strategy midstream ahead built and will operate and will fund and own the facility treat and recycle produced and water and deliver it into fresh water system creating additional year round water source for completions target third party business until volumes utilize of capacity facility details currently treating of capacity of adjusted at utilization marketable by products used in oil and gas operations i i pipeline to fresh water system a me we treatment capacity volumes i i advanced treatment capacity produced volumes so for party anna premier integrated midstream assets | Antero Midstream Partners

high graded organic project backlog of from primary focus on rich gas infrastructure project backlog by area project backlog by function processing fractionation low pressure gathering organic project backlog with peer leading returns | Antero Midstream Partners

midstream return on invested capital am return on invested capital of in conn of am future organic growth capital leverages pads to service tess a source consensus estimates see appendix for calculation a a on invested can a non measure for information regarding live please non in premier integrated midstream assets | Antero Midstream Partners

long term distribution and coverage unchanged capital investment philosophy with disciplined financial policies result in ability to target peer leading distribution growth through long term distribution targets and coverage distribution guidance mid point distribution target coverage targets mid point implied yield a fare tox a a a guidance target target target target implied yield based on am price as of tap am peer leading distribution growth and coverage | Antero Midstream Partners

well positioned midstream family self funding with top tier distribution growth low leverage and free cash flow generation sustainable cash flow growth targeting year free cash flow before distributions eye project level returns averaging to corporate return on invested capital and visibility to distribution targets through free gash flow a non measure free flow in midstream presentation is see mon in he appendix | Antero Midstream Partners

vice overview unmatched yield growth | Antero Midstream Partners

long term distribution targets as a result of am targeting distribution growth in and is targeting distribution growth of and in and long term distribution targets aes he distributions per share year over year distribution growth guidance target target target note represents of target range growth based on full year of share based on share as of unmatched yield growth | Antero Midstream Partners

leads the pack visible and development plan am organic growth strategy results in peer leading distribution growth is in it early stage growth phase sit pure play vehicle debt free balance sheet general partner unmatched yield growth unmatched yield growth | Antero Midstream Partners

i | Antero Midstream Partners

guidance summary net income adjusted distribution growth coverage maintenance growth total guidance appendix guidance | Antero Midstream Partners

capital and contribution organic capital budget fully funded with retained cash flow and credit facility borrowings capital expenditures hay processing fractionation processing fractionation stonewall pipeline capital budget adjusted guidance appendix year outlook leveraging existing core asset base | Antero Midstream Partners

liquidity debt term structure a oam credit facility pore am senior notes credit facility for am extended its average debt maturity out to no maturities until midstream liquidity and balance sheet | Antero Midstream Partners

organic growth drives attractive rates of return am organic multiples am organic investment to multiple a invested through on midstream am builds at to other that drop down buy organic project backlog with peer leading returns a a a a drop down see appendix for organic multiple multiple based on drop down per wall research | Antero Midstream Partners

weighted of year organic backlog gathering gathering compression fresh water delivery advanced treatment processing fractionation organic project backlog with peer leading returns | Antero Midstream Partners

development focused on am dedicated net production am throughput tag liquids rich acreage dedicated i nee be year development plan focused on am dedicated acreage net production net production yoy growth a gathering yoy growth appendix year outlook leveraging existing core asset base | Antero Midstream Partners

advanced completions utilize more water vintage completions use of water applies completions in utilizing more water vintage budget plan i completions water per foot used in completions budget plan completions a a i i i target a a a appendix year outlook leveraging existing core asset base | Antero Midstream Partners

fresh water delivery volume growth wells serviced by fresh water delivery system and lateral length serviced by system low end average lateral length wells serviced by system high end a i a a mele average lateral length barrels of meal note lateral lengths based on wells serviced by system and vary completions due to timing lag of wells serviced by system line appendix year outlook leveraging existing core asset base | Antero Midstream Partners

gathering fresh water delivery waste water estimated waste water high end nee estimated waste water low end a a appendix year outlook leveraging existing core asset base | Antero Midstream Partners

maintenance capital methodology maintenance capital calculation methodology low pressure gathering estimate the number of new well connections needed during the forecast period in order to offset the natural production decline and maintain the average throughput volume on our system over the period compare this number of well connections to the total number of well connections estimated to be made during such period and designate an equal percentage of our estimated low pressure gathering capital expenditures as maintenance capital expenditures maintenance capital calculation methodology fresh water distribution estimate the number of wells to which we would need to distribute fresh water during the forecast period in order to maintain the average fresh water throughput volume on our system over the period compare this number of wells to the total number of new wells to which we expect to distribute fresh water during such period and designate an equal percentage of our estimated water line capital expenditures as maintenance capital expenditures maintenance capital expenditures are cash expenditures including expenditures for the construction or development of new capital assets or the replacement improvement or expansion of existing capital assets made to maintain over the long term our operating capacity or revenue example aes production production forecast production connections decline of average throughput to be replaced with production volume from new well average i forecast period appendix | Antero Midstream Partners

midstream non measures a non financial measures and definitions midstream views adjusted as an important indicator of the partnership performance midstream defines adjusted as net income before interest expense depreciation expense impairment expense accretion of contingent acquisition consideration equity based compensation expense excluding equity in earnings of unconsolidated affiliates and including cash distributions from unconsolidated affiliates midstream uses adjusted to assess the financial performance of the partnership assets without regard to financing methods in the case of adjusted capital structure or historical cost basis its operating performance and return on capital as compared to other publicly traded partnerships in the midstream energy sector without regard to financing or capital structure and the viability of acquisitions and other capital expenditure projects the partnership defines distributable cash flow as adjusted less interest paid income tax withholding payments and cash reserved for payments of income tax withholding upon vesting of equity based compensation awards cash reserved for bond interest and ongoing maintenance capital expenditures paid midstream uses distributable cash flow as a performance metric to compare the cash generating performance of the partnership from period to period and to compare the cash generating performance for specific periods to the cash distributions if any that are expected to be paid to distributable cash flow does not reflect changes in working capital balances the partnership defines free cash flow as cash flow from operating activities before changes in working capital less capital expenditures management believes that free cash flow is a useful indicator of the partnership ability to internally fund infrastructure investments service or incur additional debt and assess the company financial performance and its ability to generate excess cash from its operations management believes that changes in operating assets and liabilities relate to the timing of cash receipts and disbursements and therefore may not relate to the period in which the operating activities occurred the partnership defines return on invested capital as net income plus interest expense divided by average total liabilities and partners capital excluding current liabilities management believes that return on invested capital is a useful indicator of the partnership return on its infrastructure investments the partnership defines adjusted operating cash flow as net cash provided by operating activities before changes in current assets and liabilities see non measures for additional detail appendix | Antero Midstream Partners

the financial measure nearest to adjusted operating cash flow is cash flow from operating activities as reported in a useful midstream consolidated financial statements management believes that adjusted operating cash flow is indicator of the company ability to internally fund its activities and to service or incur additional debt management believes that changes in current assets and liabilities which are excluded from the calculation of these measures relate to the timing of cash receipts and disbursements and therefore may not relate to the period in which the operating activities occurred and generally do not have a material impact on the ability of the company to fund its operations management believes that free a useful measure for assessing the company financial performance and measuring its ability to generate cash flow is excess cash from its operations there are significant limitations to using adjusted operating cash flow and free cash flow as measures of performance including the inability to analyze the effect of certain recurring and non recurring items that materially affect the company net income the lack of comparability of results of operations of different companies and the different methods of calculating adjusted operating cash flow does not represent funds adjusted operating cash flow reported by different companies available for discretionary use because those funds may be required for debt service capital expenditures working capital income taxes and other commitments and obligations midstream has not included reconciliations of adjusted operating cash flow and free cash flow to their nearest financial measures for because it would be impractical to forecast changes in current assets and liabilities a reconciling item between free cash flow and its most midstream is able to forecast capital expenditures which is comparable financial measure for the to period forecasts cumulative capital expenditures of billion resources non measures and definitions are included in the resources analyst day presentation which can be found on appendix | Antero Midstream Partners

midstream non ere a adjusted and distributable cash flow are non financial measures the measure most directly comparable to adjusted and distributable cash flow is net income the non financial measures of adjusted and distributable cash flow should not be considered as alternatives to the measure of net income adjusted and distributable cash flow are not presentations made in accordance with and have important limitations as an analytical tool because they include some but not all items that affect net income and adjusted you should not consider adjusted and distributable cash flow in isolation or as a substitute for analyses of results as reported under midstream definition of adjusted and distributable cash flow may not be comparable to similarly measures of other partnerships midstream has not included a reconciliation of adjusted and distributable cash flow to their nearest financial measure for because it cannot do so without unreasonable effort and any attempt to do so would be inherently imprecise midstream is able to forecast the following reconciling items between adjusted and distributable cash flow and net income in thousands depreciation expense equity based compensation expense accretion of contingent acquisition consideration equity in earnings of unconsolidated affiliates so distributions from unconsolidated affiliates twelve months ended low high the partnership cannot forecast interest expense due to the timing and uncertainty of debt issuances and associated interest rates additionally midstream cannot reasonably forecast impairment expense as the impairment is driven by a number of factors that will be determined in the future and are beyond midstream control currently appendix | Antero Midstream Partners

the following table reconciles consolidated total debt to consolidated net debt net debt as used in this presentation in thousands bank credit facility am notes net unamortized debt issuance costs consolidated total debt cash and cash equivalents consolidated net debt the following table reconciles net income to adjusted for the twelve months ended as used in this presentation in thousands net income interest expense impairment of property and equipment expense depreciation expense accretion of contingent acquisition consideration accretion of asset retirement obligations equity based compensation equity in of unconsolidated affiliate distributions from unconsolidated affiliates gain on sale of asset resources adjusted twelve months ended | Antero Midstream Partners

midstream non measures the following table reconciles net income to adjusted for the years ended as used in this presentation in thousands reconciliation of net income to segment and consolidated adjusted and distributable cash flaw net income interest expense impairment of property and equipment expense accretion of equity based equity in earns of unconsolidated affiliates from unconsolidated affiliates gain on sale of assets segment and consolidated adjusted year ended a | Antero Midstream Partners

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