Blue Racer Midstream
May 16, 2017
West Virginia Oil and Natural Gas Association2017 Spring Meeting
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1. How many gallons are in a barrel of NGLs?B. 42 gallons
n A single barrel of NGLs is equivalent to 42 gallons.n There are 31.5 gallons in one fluid barrel.n There are 26.25 dry gallons in one dry barrel. n According to Wine Country Getaways, there are 60
gallons in a barrel of wine. And if you didn’t know, one ton of grapes will yield about 2 barrels of wine.
Multiple Choice
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2. Who was the father of propane?A. Dr. Walter Snellingn According to NGPA, “In 1910, a Pittsburgh motor car
owner walked into chemist Dr. Walter Snelling's office, complaining that the gallon of gasoline he had purchased was half a gallon by the time he got home. Consumers were being cheated, he said, because the gasoline was evaporating at a rapid and expensive rate, and he asked Dr. Snelling to investigate. Dr. Snelling took up the challenge. Using coils from an old hot-water heater and other miscellaneous pieces of laboratory equipment, he built a still that could separate the gasoline into its liquid and gaseous [forms]
Multiple Choice
Ethylene is made by chemical manufacturers from ethane in a cracker, but how is ethylene also produced in nature?D.Plantstoripenfruit
• Ethyleneisaplanthormonethatworkstoincreasetherateofripening
• Canbecontrolled…increaseordecreaseethyleneproductionthroughbiotechnology(Flavr Savr Tomatoes)orbyexposingfruitstoethylene
• Onebadappledoesspoilthewholebunchbyproducinglotsofethylene
C. “Silly Putty”, a trademark of Crayola, made in Easton, PA. Since 1950, more than 300 million Silly Putty eggs have been sold and still sells at the rate of 20,000 eggs per day. Silly Putty is also used today in Super Balls and Solar Panels.
What substance is formed when a silicone based plastic and boric acid are mixed?
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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 our 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.
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1. AsofDecember31,2016,unlessotherwisenoted2. AsofApril12,20173. OwnedbyWilliamsPartners,EnCap Flatrock Midstream,Oaktree CapitalManagement,L.P.,managementandcertainnon-institutionalinvestors
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
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Blue Racer Midstream TimelineAccess to Capital Markets and Supportive Sponsors
December 2012Caiman & Dominion
form Blue Racer Midstream, a $1.4
Billion Joint Venture.
August 2013Natrium I
Processing & Fractionation
Complex Dropped Down to Blue Racer
August 2013Blue Racer closes $800MM Senior Secured Credit
Facility
June 2014Senior Secured Credit Facility
Upsized to $1.0B
November 2014$550MM Senior Notes Offering
July 2015$300MM Senior Notes Follow-on
Offering
Q2 2016 – Q4 2016Reinvested
~$120MM of distributions
March 2017Senior Secured
Credit facility amended and
extended to March 2022
$0
$20
$40
$60
$80
$100
$120
-
100
200
300
400
500
600
700
800
WTI
[$/B
bl]
Proc
esse
d Vo
lum
es [M
Mcf
/d]
Processed Volumes WTI
Ability to grow through a challenging environment
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Safety and Operational Focus
n Safety-first culture– Consistent safety training– Perform safety reviews and employee performance
monitoring– Monitor KPIs
Safety Focused Culture Operational Results
n Operational excellence– Maintain focus on operational efficiencies– Monitor KPIs
1. Excludesplannedoutages
2015: 99% 2016: 99%
80%
85%
90%
95%
100%
105%
Run-time(1)
30-Day Run-time Adjusted
0.000.501.001.502.002.503.003.504.004.505.00
TRIR
OSHA TRIR (YTD) Target Goal = 1.46 12-Mo Rolling TRIR
11.94 6.10
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Pipeline System OverviewExtensive pipeline network allows efficient and economically
advantaged connectivity across rich and lean acreage
n Upstream– System currently serves 20 customers– Pipelines serve lean gathering, rich gathering and
condensate gatheringn 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 2016n Downstream
– Connectivity to multiple markets and end users maximizes producer netbacks
► Residue pipelines► NGL pipelines► Rail► Barge► Truck
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n 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 OverviewNatrium
n 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
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Residue MarketsIncreased takeaway projects reduce basis
differentials and increase producer netbacksn Natrium
– Dominion Energy Transmission, Inc. (“DTI”)– Texas Eastern Transmission Company
(“TETCO”)– Rockies Express Pipeline (“REX”)
n Berne– TETCO
n 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. IncludesWesternSystemsoldtoDEOonDecember1,2016Source:NortheastTakeawayProjectsfromBTUAnalytics1Q17NortheastGasOutlook;
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NGL MarketsIncreased takeaway projects help flatten seasonal
differentials and increase producer netbacksn Ethane
– Connection to ATEX, Mariner East I and Mariner West via G-151 and WPZ/OVM
n 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
n Butanes– Connection to Mariner East II via G-150 (on ME
IIs completion)– On-site rail loading
n NGLs/Condensate– On-site rail loading– On-site barge loading– On-site truck loading
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Business Outlook
1. HalfcyclewellanalysiswithassumedF&D,midstream,operating,androyaltyexpenses.Strippricingasof02/09/17– WTI:2017:$54.95,2018:$55.82,2019:$55.33,2020:$55.27,2021+:$55.49//HHUB2017:$3.32,2018:$3.09,2019:$2.89,2020:$2.88,2021+$2.87.Futurepricedifferentialsapplied
Source:NYMEX– Dom.Southasof02/09/2017;BTUAnalytics– Dom.SouthfromBTUAnalytics4Q16NortheastGasOutlook
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
n At assumed pricing, producers’ margins are attractive Continue to see an increase in permit and rig activity within our footprint
n Basis differentials continue to improve as access to demand centers increases
Commentary
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Increasing Processed Volumes
Financial Summary
Growing EBITDA
Scalable Capital Expenditures
1. VolumetricCommitmentsrepresentdeficientvolumesthatarenotprocessed
Focused on Leverage Reduction
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100
200
300
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800
2013 2014 2015 2016
[MM
cf/d
]
$-
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
2013 2014 2015 2016
[$00
0]
$-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
2013 2014 2015 2016
[$00
0]
(1.00)x
0.00x
1.00x
2.00x
3.00x
4.00x
5.00x
6.00x
Compliance Leverage Total Maximum Leverage Ratio
214% CAGR386% CAGR(1)
20% Reduction
~$1.6B spent to date
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U.S. Northeast Natural Gas Production Scenarios
05
1015202530354045
Prod
uctio
n (B
cf/d
)
Northeast
CutbackAdvance Growth Contraction
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Net Northeast Inflows (+) / Outflows (-)
RBN Source:PointLogic Energy
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Northeast Inflows/Outflows by Target Region
RBN Source:PointLogic Energy
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Northeast Project Timing & State/Federal Progress
ProjectsCapacity(MMcf/d)
CurrentOfficialISD
BTUAnalyticsISD
FERCFinalEIS/EA
FERCCertificateAppoval Notes
TGT- NorthernSupplyAccess 384 Mar-17 Mar-17 1/2016 3/2016
Requestedatwoyearextensiontobringonlinethelast100MMcf/dofcapacity;Havingdifficultymarketingthecapacityafterthepreviousholder,TriadHunter,wentbankrupt.
TCO- LeachXpress 1,500 Nov-17 Nov-17 9/2016 1/2017TreeclearingextensionrequestedandsubsequentlyreceivedbyFERC.Constructionactivitiesunderway
CGT- RayneExpress 1,000 Nov-17 Nov-17 9/2017 1/2017 Constructionstarted2/8/17
ETRover 3,250Jul-17(Ph1)Dec-17(Ph2)
Jul-17(Ph1)Dec-17(Ph2) 7/2016 2/2017
Treefellingcompletedpriorto3/31/2017deadline.Constructionontrack
Nexus 1,500 Mar-17 Nov-17 11/2015 (2/2017)FERCquorumrequiredbeforeCertification.DTEstandsbyQ42017in-servicedate
NFG-- NorthernAccess 497 Nov-17 - 3/2015 2/2017
DeniedrequiredwaterpermitbyNYDEC;Projecttimelinehighlyuncertain
AtlanticSunrise 1,700 Mid-18 Nov-18 3/2015 2/2017
Phase1compressorstationsunderconstruction.Phased-inofficialISD;partialin-service2H2017fullin-service11/1/18
PennEast 1,000 Nov-18 Nov-20 9/2015 (7/2017)NJDEPandArmyCorpsofEngineersreturnedapplicationasincomplete,JulyCertificatedecisionrequiresFERCquorum
AtlanticCoastPipeline 1,500 Nov-19 Nov-20 9/2015 (9/2017)
OfficialISDdelayedformQ42018toQ42019duetoprolongedFERCreviewprocess;receivedDEISon12/30/16
MountainValleyPipeline 2,000 Nov-18 Nov-20 10/2015 (9/2017) ReleaseofFEISdelayedbythreemonthsNote:Totalis14.3Bcfd.DateswithinparenthesesarescheduleddatespublishedbyFERC.Thesedatesaresubjecttorevision asprojecttimelineschange.
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Appalachia Takeaway Capacity – East Corridor
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Northeast Natural Gas Pipeline Projects (2017-2020)
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Summaryn Production growth from this world class resource is astonishing
– 5 Bcfd in 2011– 20 Bcfd in 2017– 25 Bcfd to 40 Bcfd projected 2022
n The northeast became a net exporter year round in 2015n Pipeline infrastructure is crucial to further improvement in basis
– 2017: 6.1 Bcfd– 2018: 3.2 Bcfd– 2020: 3.5 Bcfd
n 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
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Blue Racer Midstream
Full-Value Midstream Provider Strategic Assets Located in Top Shale Plays
Experienced Management Team with Strong Equity
Ownership BaseLarge Growth Potential