Inaugural Drop Downinvestors.nblmidstream.com/~/media/Files/N/Noble... · 2017-06-21 · DevCo LP from NBL $270mm purchased price; expected to close concurrent with PIPE offering

www.nblmidstream.com

Inaugural Drop DownTransaction Overview

June 21, 2017


Forward Looking Statements and Non-GAAP Measures

This presentation contains certain “forward-looking statements” within the meaning of the federal securities law. Words such as“anticipates”, “believes”, “expects”, “intends”, “will”, “should”, “may”, “estimate” and similar expressions may be used to identifyforward-looking statements. Forward-looking statements are not statements of historical fact and reflect Noble MidstreamPartners LP’s (“the Partnership” or “Noble Midstream”) current views about future events. No assurances can be given that theforward-looking statements contained in this presentation will occur as projected, and actual results may differ materially fromthose projected. Forward-looking statements are based on current expectations, estimates and assumptions that involve anumber of risks and uncertainties that could cause actual results to differ materially from those projected. These risks include,without limitation, the ability of Noble Energy, Inc. (“NBL”) to meet its drilling and development plans, changes in generaleconomic conditions, competitive conditions in the Partnership’s industry, actions taken by third-party operators, gatherers,processors and transporters, the demand for crude oil and natural gas gathering and processing services, the Partnership’sability to successfully implement its business plan, the Partnership’s ability to complete internal growth projects on time and onbudget, the price and availability of debt and equity financing, the availability and price of crude oil and natural gas to theconsumer compared to the price of alternative and competing fuels, and other risks inherent in the Partnership’s business,including those described under “Risk Factors” and “Forward-Looking Statements” in the Partnership's Annual Report on Form10-K for the fiscal year ended December 31, 2016 and in the other reports the Partnership files with the Securities and ExchangeCommission. These reports are also available from the Partnership’s office or website, www.nblmidstream.com. Forward-lookingstatements are based on the estimates and opinions of management at the time the statements are made. Noble Midstreamdoes not assume any obligation to update forward-looking statements should circumstances or management's estimates oropinions change.

This presentation also contains certain measures of financial performance that are not calculated in accordance with generallyaccepted accounting principles in the United States (“GAAP”) that management believes are good tools for internal use and theinvestment community in evaluating Noble Midstream’s overall financial performance.

In this presentation, we refer to certain results as “attributable to the Partnership.” Unless otherwise noted herein, all resultsincluded in this release reflect the results of our predecessor for accounting purposes, for periods prior to the closing of ourinitial public offering (“IPO”) on September 20, 2016, as well as the results of our Partnership, for the period subsequent to theclosing of the IPO. We refer to certain results as “attributable to the Partnership,” which excludes the non-controlling interests inthe development companies (“DevCos”) retained NBL. We believe the results “attributable to the Partnership” provide the bestrepresentation of the ongoing operations from which our unitholders will benefit.

2


NBLX is acquiring the remaining 20% interest in Colorado River DevCo LP and an additional 15% interest in Blanco River DevCo LP from NBL

$270mm purchased price; expected to close concurrent with PIPE offering

$143mm PIPE offering , $25mm placed to NBL, and $102mm borrowings under NBLX’s credit facility

Second transaction of the year (Advantage JV); combined financing of the two transactions of ~50% equity / 50% cash and credit facility

Attractive purchase price valuation of ~ 8.2x - 9.2x NTM EBITDA1

Immediately accretive to distributable cash flow per unit

Management has recommended to the Board of Directors a one-time distribution increase of ~8.5% per LP unit in 2Q172

~$180mm pro forma liquidity to fund future midstream development

Preserves liquidity to support future growth capex at attractive organic build multiples and other complimentary growth opportunities

Acquisition Summary

3

Colorado River DevCo (DJ Basin)

Acquiring remaining 20% interest

Generated substantially all of the Partnership’s 1Q 2017 Gathering Revenue

Mature but growing cash flows at current activity levels

Forecasting 15% growth 2Q vs 1Q 2017 in oil and gas throughput

~125 miles of total gathering pipelines in Wells Ranch and East Pony

Wells Ranch facility oil gathering capacity: 45 MBPD

DevCo

NBLX Ownership

IDPDedicated Acres (~)

Crude OilGathering

GasGathering

Prod.Water

Gathering

Fresh Water

DeliveryCurrent Pro Forma

Colorado River 80% 100%DJ Basin: Wells Ranch 78k

DJ Basin: East Pony 44k

Blanco River 25% 40% Delaware Basin 111k

Blanco River DevCo (Delaware Basin)

Acquiring additional 15% interest

Increases attractive single digit organic build exposure to Delaware Basin

Contributes to Partnership goal of ~50% Permian EBITDA contribution by 2020

40 - 50% of 2017 Gross Capital Budget

~180 miles total gathering pipelines by 2018

Planned facilities oil capacity: 120 MBPD by 2018

1. Includes Non-GAAP measures; see reconciliations to GAAP measures in Appendix.

2. Subject to close of the acquisition and formal approval from Noble Midstream GP LLC Board of Directors at the second quarter board meeting


Transaction Rationale

4

Accretive Transaction Provides Scale and Additional Delaware Basin Exposure

Immediately accretive to distributable cash flow per unit

Drop down of interest from both Colorado River DevCo and Blanco River Devco provides unique opportunity to immediately add scale and additional organic build exposure to high growth Delaware Basin at combined 8.2x – 9.2x NTM EBITDA1 multiple

Management has recommended a 2Q ’17 DPU increase of 8.5% above 1Q ’17 of $.4108 per unit2

One time distribution step-up

To resume 20% long-term distribution per unit (“DPU”) growth objective in 3Q ’172

Preserves Liquidity and Financial Flexibility

Supports future growth capital requirements for projects expected to generate attractive organic build multiples

Enables NBLX to remain positioned for complimentary growth opportunities

Strong Sponsor Support

NBL’s election to take units shows continued commitment

Maintains over 50% LP ownership

Recent Well Performance Provides Upside to Outlook

Anticipating 15% higher NBLX volume throughput in 2Q 2017 as compared to 1Q 2017 with consistent rig activity

1. Includes Non-GAAP measures; see reconciliations to GAAP measures in Appendix

2. Subject to close of the acquisition and formal approval from Noble Midstream GP LLC Board of Directors at the second quarter board meeting


NBLX Structure (Pro Forma Drop Down)

5

LaramieRiver

BlancoRiver

GreenRiver

San JuanRiver

GunnisonRiver

TrinityRiver

ColoradoRiver

ControllingInterest

Non-ControllingInterest

Noble MidstreamServices, LLC

Public Unitholders (LP)

White Cliffs Pipeline L.L.C.

ROFR Assets:• East Pony Gas Gathering• East Pony Gas Processing• Eagle Ford Shale Midstream• Additional DJ Acreage• Additional Delaware Basin Services

Noble EnergyNYSE: NBL

Noble MidstreamPartners LPNYSE: NBLX

Noble Midstream GP LLC50.1% Limited

Partner Interest

100%

100%5%25%25%40%100%100%

60% 75% 75%

3.33% Non-OperatingMembership Interest

49.9% LimitedPartner Interest

100%

Non-Economic GeneralPartner Interest

95%

Drop down assets


1Q 2017Actuals

Prior Guidance (May 1)Revised

Guidance

2Q 2017 (E) FY 2017 (E) FY 2017 (E)

Fin

an

cia

ls (

$M

M)

(1)

Gross EBITDA $37 $33 – $36 $146 – $162 $155 – $168

Net EBITDA $26 $25 – $28 $110 – $122 $130 – $145

Distributable Cash Flow $24 $22 – $25 $96 – $107 $112 – $125

Distribution Coverage (2) 1.8x 1.6x – 1.8x 1.7x – 1.9x 1.8x – 2.0x

Gross Capex (3) $77 $110 – $125 $365 – $405 $365 – $405

Net Capex (3) $60 $65 – $75 $185 – $205 $215 – $235

2017 Guidance Detail

6

1. Includes Non-GAAP measures, see reconciliations to GAAP measures in Appendix 2. Estimates include a forecasted DPU annual growth3. Excludes $66.5 million for Advantage JV acquisition, includes Advantage integration capital, excludes drop down purchase price

Proposed acquisition is immediately accretive to distributable cash flow per unit

Gross EBITDA increases ~5% at midpoint to prior FY expectations

Net EBITDA up ~19% for 2017 due to:

~6-months of contribution from drop down transaction

YTD performance and impact to balance of year

Distributable Cash Flow increases ~17% at midpoint from prior FY guidance

Assuming 8.5% 2Q 2017 distribution increase (vs. 1Q 2017), FY coverage expected at 1.8x – 2.0x from 1.7x – 1.9x

Highlights the accretive nature of the transaction


Trinity

River*

10%

Green

River

8%

Laramie River

41%

10%

31%

$215 - $235 MM

10%Laramie River

47%

Green

River

10%

Trinity

River*

11% 22%

$185 - $205 MM

Expected 2017 Net Capital increases approximately $30MM for acquired DevCo interest adjustments

Expected net capital allocation of ~40% to Delaware Basin post acquisition

Blanco River: 31%

Trinity River: 10%

Colorado River 2017 Capital Projects

~24 miles of gathering lines

Wells Ranch produced water expansion

Blanco River 2017 Capital Projects

4 central gathering facilities and infrastructure build out

1st CGF est. to be complete in June 2017

2nd CGF est. to be complete 4Q 2017

3rd and 4th CGF est. to be complete in 1H 2018

Colorado

River

6%

Laramie

River

24%

Green River

21%

Trinity

River*

6%

Blanco

River

43%

Gross Capital *

$365 - $405MM

2017 Capital Budget

7

* Excludes $66.5 million Advantage acquisition, includes capital for Advantage integration, excludes drop down purchase price

Net Capital *(attributable to the Partnership)

Pre Drop Down Drop Down Adjusted

DevCo Associated with Drop Down

22% Blanco River 31%

10% Colorado River 10%


2020 Outlook

8

2H 2017 -2020 CAGR(1)

Pro Forma Drop Down

Net EBITDA > 20% P

Distributable Cash Flow > 20% P

Distribution per Unit 20% P

Coverage (in all years) > 1.3x P

Leverage (in all years) < 2.5x P

1. Non-GAAP measures

Growth outlook is reaffirmed following inaugural drop down transaction

Maintaining 20% distribution growth forecast through 2020+

8.5% quarterly distribution increase in Q2-17 resets distribution at higher base level

$1.76

$2.11

$2.54

$3.04 $1.81

$2.19

$2.63

$3.16

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

2017 2018 2019 2020

Pre-Drop Updated Guidance

Distribution / L.P. Unit

NOTE: Does not include future potential drop downs


Consistently Enhancing Top-Tier Growth Outlook

9

2017 – 2020 DPU Growth Objective (Sep. 2016) 20%

Enhancements Since IPO:

Fresh Water Delivery Per Well Demand Nearly Triples Enhanced completions driving increased fresh water demand

NBL USO UpdateHigher activity + increased type curves in both DJ and Delaware

Advantage Pipeline JV AcquisitionDelaware Basin crude transmission added to portfolio

Delaware Basin Gas Gathering DedicationNBL’s legacy 47,000 Delaware Basin acres

Clayton Williams Gathering DedicationOil, gas and produced water gathering on 64,000 Delaware Basin acres

Record Oil and Gas System ThroughputEnhanced completions driving record May throughput

Announced Inaugural Drop Down TransactionAccretive transaction that increases exposure to accelerating Permian activity

Proposed 8.5% 2Q Distribution Increase Above 1Q DistributionIncreases the base distribution for long-term 20% DPU target

2017 – 2020+ DPU Growth Objective (June 2017) 20%

Extends 20% Growth Horizon

Durability to Distribution Through Commodity Cycles

Improves Already Strong Coverage and Leverage Outlook

Provides Financial Flexibility for Complementary Growth Opportunities

Sep. ’16

Nov. ’16

Feb. ’17

Apr. ’17

Apr. ’17

May ’17

June ‘17


Appendix

10


($ in millions)StatusQuo Adj.

ProForma

Cash $ 20 $ 20

NBLX Debt

Revolving Credit Facility $ 90 $ 102 $ 192

Capital Lease 4 4

Total Debt $ 94 $ 102 $ 196

Liquidity

Revolving Credit Facility $ 350 $ 350

Amount Drawn (90) (102) (192)

Cash 20 20

Total Liquidity $ 280 $ 178

Pro Forma Financial Overview

11

1. Excludes all transaction fees and expenses

2. Includes Non-GAAP measures; see reconciliations to GAAP measures in Appendix

Drop Down Metrics

NBLX – 6/30/2017 (E)

Sources and Uses (1) Debt and Liquidity (1)

ValueNTM EBITDA2

Multiple

Purchase Price $ 270 8.2x – 9.2x

Sources

PIPE Offering Proceeds $ 143

Common Units Issued to NBL 25

Revolver Borrowings 102

Total Sources $ 270

Uses

Purchase Price $ 270

Total Uses $ 270


Delaware Basin

Midstream Services Portfolio

12

Dedicated Service

DevCoNBLX

Ownership IDP ProducerDedicated Acres (~)

Crude OilGathering

GasGathering

Prod. WaterGathering

Fresh WaterDelivery

Crude OilTransmission

Colorado River 100%Wells Ranch

NBL78k

East Pony 44k

Blanco River 40% Delaware BasinNBL 111k

Trinity River 100% Delaware Basin *

Laramie River 100% Greeley CrescentSRCI 33k

NBL 32k

Green River 25% Mustang NBL 75k

San Juan River 25% East Pony NBL 44k

Gunnison River 5% Bronco NBL 36k

Blanco River

40% Interest

DJ Basin

* NBL Legacy Delaware Basin Acres (~47k) Dedicated to Advantage Pipeline JV ; Remaining 64k Acres Dedicated to NBLX

Advantage

Pipeline

Trinity River

100% Interest

Dropdown assets

Colorado River

100% Interest

Laramie River

100% Interest

Gunnison River

5% Interest

Green River

25% Interest

San Juan River

25% Interest

EASTPONY

MUSTANG

BRONCO

GREELEYCRESCENT

WELLSRANCH

NBL Acreage

3rd Party Acreage

NBL ROFR Acreage

Existing NBLX Pipelines

Planned NBLX Pipelines

Central Gathering Facility

Oil Treating Facility

Integrated Development Plan Areas (“IDPs”)


EBITDA Reconciliation

13

Non-GAAP Financial Measures

This presentation includes EBITDA, Distributable Cash Flow, and Distribution Coverage, all of which are non-GAAP measures that management believes are good tools for internal use and the investment community in evaluating our overall financial performance. The following presents a reconciliation of each of these non-GAAP financial measures to their nearest comparable GAAP measure.

We define EBITDA as net income before income taxes, net interest expense, depreciation and amortization. EBITDA is used as a supplemental financial measure by management and by external users of our financial statements, such as investors, industry analysts, lenders and ratings agencies, to assess:• our operating performance as compared to those of other companies in the midstream energy industry, without regard to financing methods, historical cost basis or capital structure;• the ability of our assets to generate sufficient cash flow to make distributions to our partners;• our ability to incur and service debt and fund capital expenditures; and• the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.

We define Distributable Cash Flow as EBITDA less estimated maintenance capital expenditures and cash interest expense. Distributable Cash Flow is used by management to evaluate our overall performance. Our partnership agreement requires us to distribute all available cash on a quarterly basis, and Distributable Cash Flow is one of the factors used by the board of directors of our general partner to help determine the amount of available cash that is available to our unitholders for a given period. We calculate our Distribution Coverage ratio as Distributable Cash Flow for a given quarter divided by the aggregate amount of distributions declared in respect of such quarter. The Distribution Coverage ratio is used by management to illustrate our ability to make our distributions each quarter.

We believe that the presentation of EBITDA and Distributable Cash Flow provide information useful to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to EBITDA and Distributable Cash Flow are net income and net cash provided by operating activities. EBITDA and Distributable Cash Flow should not be considered alternatives to net income, net cash provided by (used in) operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP.

EBITDA and Distributable Cash Flow exclude some, but not all, items that affect net income or net cash, and these measures may vary from those of other companies. As a result, EBITDA and Distributable Cash Flow as presented in the following pages may not be comparable to similarly titled measures of other companies.

EBITDA and Distributable Cash Flow should not be considered as alternatives to GAAP measures, such as net income, operating income, cash flow from operating activities, or any other GAAP measure of financial performance.

Revised

Guidance

1Q '17 2Q '17 (E) 2017 (E) 2017 (E)

Net Income 35$ $31 - $33 $135 - $147 $145 - $152

Add: Depreciation and Amortization 2 2 - 3 10 - 14 10 - 14

Add: Interest Expense, Net of Amount Capitalized 0 0 1 0 - 2

Add: Income Tax Provision - - - -

EBITDA 37$ $33 - $36 $146 - $162 $155 - $168

Less: EBITDA Attributable to Noncontrolling Interests 11 8 36 - 40 25 - 23

EBITDA Attributable to NBLX 26$ $25 - $28 $110 - $122 $130 - $145

Less: Maintenance Capital Expenditures & Cash Interest 2 3 14 - 15 18 - 20

Distributable Cash Flow of NBLX 24$ $22 - $25 $96 - $107 $112 - $125

Distribution Coverage 1.8x 1.6x - 1.8x 1.7x - 1.9x 1.8x - 2.0x

Prior Guidance (May 1)

Attributable to the Partnership

Net Income $27.5 - $29.9

Add: Depreciation and Amortization 2 - 3

Add: Interest Expense, Net of Amount Capitalized 0

Add: Income Tax Provision -

EBITDA $29.5 - $32.9

Next Twelve Months

July 2017 - June 2018


1001 Noble Energy WayHouston, TX 77070


Contact Information

Chris Hickman

VP, Investor Relations

[email protected]

281.943.1622

Documents

Inaugural Drop Downinvestors.nblmidstream.com/~/media/Files/N/Noble... · 2017-06-21 · DevCo LP from NBL $270mm purchased price; expected to close concurrent with PIPE offering