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Pipeline Construction Cost Estimate 400$ 30%
Initial Equity Investment 200$ 8%
Debt5 200$ 2%
Operating Model Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Total
Net Revenue 160$ 160$ 160$ 160$ 160$ 160$ 160$ 160$ 160$ 1,440$
Cost of Goods Sold 30 30 30 30 30 30 30 30 30 270
Gross Profit 130 130 130 130 130 130 130 130 130 1,170Gross Margin % 77% 77% 77% 77% 77% 77% 77% 77% 77% 77%
Selling, General and Admin 3 3 3 3 3 3 3 3 3 27
EBIT 127 127 127 127 127 127 127 127 127 1,143
Interest Expense (8%) 16 16 16 16 16 16 16 16 16 144
Tax (30%) 38 38 38 38 38 38 38 38 38 343
Net Income 73$ 73$ 73$ 73$ 73$ 73$ 73$ 73$ 73$ 656$
Money on Invested Capital (MOIC) 3.3x
NI - Internal Rate of Return (IRR) 11%
Operating Model Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Total
Net Revenue 160$ 160$ 160$ 160$ 160$ 160$ 160$ 160$ 160$ 1,440$
Cost of Goods Sold 30 30 30 30 30 30 30 30 30 270
Gross Profit 130 130 130 130 130 130 130 130 130 1,170Gross Margin % 77% 77% 77% 77% 77% 77% 77% 77% 77% 77%
Selling, General and Admin 3 3 3 3 3 3 3 3 3 27
EBIT 127 127 127 127 127 127 127 127 127 1,143
Interest Expense (2%) 4 4 4 4 4 4 4 4 4 36
Tax (30%) 38 38 38 38 38 38 38 38 38 343
Net Income 85$ 85$ 85$ 85$ 85$ 85$ 85$ 85$ 85$ 764$
Status 8 (a) Incentives
New Market Tax Credit6 22 22 22 22 22 22 22 - - 154
Employment Tax Credit7 4 4 4 4 4 4 4 4 4 36
5% Super 8(a) Subsidy8 20 20
Equipment / Machinery Incentive 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 5
Adjusted Net Income 131$ 111$ 111$ 111$ 111$ 111$ 111$ 89$ 89$ 954$
Money on Invested Capital (MOIC) 4.8x 45% Increase due to Native American Rights
NI - Internal Rate of Return (IRR) 24% 117.5% Increase due to Native American Rights
1. Assumes 16 inch crude line with a capacity of 115,000 bpd
2. Assumes $4.00 average pipeline tariff
3. Assumes pipeline at capacity for the duration of the analysis
4. Only line items that can be effected by 8(a) and Super 8(a) were modified and highlghted in yellow
5. Low interest debt estimated at LIBOR for project financable projects
6. NMTC calculated ( ($400 million) * (39%))/ 7 years of tax credits = $22 million per year
7. Employment Tax Credits calculated based on 200 employees with a $20,000/year tax credit
8. Super 8(a) rebate applied to equity only
Notes
Assumptions ($mm)1,2 ,3,4
Pipeline Economics without Native American Rights ($mm)
Pipeline Economics with Native American Rights ($mm)
Tax Rate
Corporate Interest Rate
8(a) Status Interest Rate
Date Target Buyer(s) SegmentAmount
($ in Mil)
TEV/
Rev
TEV/
EBITDA6/19/2017 Rice Energy, Inc. EQT Corp. Exploration & Production 6,696.26 6.48x 11.06x
5/30/2017 Atwood Oceanics, Inc. Ensco Plc Exploration & Production 1,726.03 - -
5/18/2017 CONE Midstream Partners LP Quantum Energy Partners LLC Midstream Oil & Gas 2,439.56 10.34x 16.21x
5/18/2017 Penntex Midstream Partners LP Energy Transfer Partners LP Midstream Oil & Gas 562.59 7.33x 25.32x
4/28/2017 Enbridge Energy Partners LP (Midcoast Gas Bus) Enbridge Energy Co., Inc. Midstream Oil & Gas 2,150.00 - -
4/17/2017 Williams Olefins LLC (Oklahoma) NOVA Chemicals Corp. Refining & Marketing 2,100.00 - -
4/17/2017 EagleClaw Midstream Services LLC Blackstone Corporate Private Equity Midstream Oil & Gas 2,000.00 - -
4/13/2017 ConocoPhillips (San Juan Basin Assets) Hilcorp Energy Co. Exploration & Production 3,000.00 - -
4/11/2017 Navigator Energy Services LLC NuStar Energy LP Midstream Oil & Gas 1,475.00 - -
4/3/2017 Rockies Express Pipeline LLC Tallgrass Energy Partners LP Midstream Oil & Gas 1,600.64 - -
11 6
10
33
- -
5
10
15
20
25
30
35
Midstream Oil &Gas
Refining &Marketing
Equipment &Services
Exploration &Production
Integrated Oil &Gas
Strategic93%
Financial7%
Financial Buyer Inv. Date Select Corporate Acquisitions2/9/2017 ▪ Axeon Marketing LLC11/1/2016 ▪ Delta House FPS, LLC7/25/2016 ▪ LOGOS Resources, LLC12/28/2015 ▪ GULF OIL LP9/15/2015 ▪ Hovensa, LLC, Shuttered Refinery on St. Croix's South Shore
7/28/2016 ▪ Raisa Energy, LLC7/28/2016 ▪ Fortis Minerals, LLC5/6/2016 ▪ Felix Energy II12/31/2015 ▪ Verdun Oil Company, LLC9/21/2015 ▪ Council Oak Resources, LLC
12/5/2016 ▪ Streamline Production Systems, Inc.10/10/2016 ▪ Gas Natural, Inc.9/12/2016 ▪ Applied-Cleveland Holdings, Inc.8/10/2016 ▪ Chesapeake Energy Corporation, Barnett Shale Operating Area in North Texas2/24/2016 ▪ Western Gas Partners LP
7/18/2016 ▪ Sabinal Energy, LLC4/11/2016 ▪ Phoenix Natural Resources, LLC1/13/2016 ▪ Invictus Energy LLC8/17/2015 ▪ Monadnock Resources, LLC7/16/2015 ▪ Oak Ridge Natural Resources, LLC
5/18/2017 ▪ CONE Midstream Partners LP11/8/2016 ▪ Xplorer Midstream LLC10/14/2016 ▪ Freeport-Mcmoran, Inc. /California Oil & Gas Properties/4/27/2016 ▪ Sentinel Peak Resources LLC7/30/2015 ▪ Basic Energy Services, Inc. (NYSE:BAS)
EnCap Investments LP
First Reserve Management LP
Kayne Anderson Capital Advisors, LP
Quantum Energy Partners LLC
ArcLight Capital Partners
Strategic Buyer Inv. Date Select Corporate Acquisitions3/15/2017 ▪ Valley Center Propane12/18/2015 ▪ Gasco Energy Supply, LLC6/1/2015 ▪ Bridger Logistics, LLC7/1/2014 ▪ Wise Choice Propane, LLC5/5/2014 ▪ Viking Propane, Inc.
2/7/2017 ▪ Double Eagle Energy Permian Operating LLC (Subs (3))8/15/2016 ▪ Undeveloped Acreage And Producing Oil And Gas Properties In Glasscock County5/23/2016 ▪ 30,000 Acres Mineral Rights In Pecos And Reeves Counties5/23/2016 ▪ 885 Net Acres in Pecos and Reeves Counties
4/4/2016 ▪ Riverbend Permian, LLC (8,800 Gross Acres)
11/21/2016 ▪ Energy Transfer Partners LP9/26/2016 ▪ 50% Stake in SunVit Pipeline LLC and Crude Oil Business in West Texas2/26/2015 ▪ West Texas Gulf Pipe Line Company3/18/2014 ▪ Explorer Pipeline, Inc.
5/8/2013 ▪ Sunoco Inc., Marcus Hook Facility
12/28/2016 ▪ Endymion Oil Pipeline Co. LLC7/25/2016 ▪ Explorer Pipeline, Inc.5/17/2016 ▪ 30% interest in Zydeco Pipeline ,1% in interest Bengal Pipeline and 3% interest in
Colonial Pipeline7/1/2015 ▪ Poseidon Oil Pipeline Company, LLC5/13/2015 ▪ 19.5% of Zydeco Pipeline Company, LLC and 1.388% of Colonial Pipeline Company
11/17/2016 ▪ Western Refining, Inc.7/1/2016 ▪ Kenai Pipe Line Company and Tesoro Alaska Terminals LLC6/28/2016 ▪ Dakota Prairie Refining, LLC12/9/2015 ▪ 15 High Value ARCO Sites12/8/2015 ▪ Great Northern Midstream LLC
Ferrellgas Partners LP
Parsley Energy LLC
Sunoco Logistics Partners LP
Shell Midstream Partners LP
Tesoro Corporation
