Morgan Keegan MLP Conference May 18th, 2010/media/Files/E/... · We Navigated the Storm . $0 $2 $4...
Transcript of Morgan Keegan MLP Conference May 18th, 2010/media/Files/E/... · We Navigated the Storm . $0 $2 $4...
Morgan Keegan MLP Conference
May 18th, 20101
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Forward Looking StatementsThis presentation contains forward looking statements within the meaning of the federal securities laws. Forward looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. The future results of Crosstex Energy, L.P. and its affiliates (collectively known as “Crosstex”) may differ materially from those expressed in the forward‐looking statements contained throughout this presentation and in documents filed with the SEC. Many of the factors that will determine these results are beyond Crosstex’s ability to control or predict. These statements are necessarily based upon various assumptions involving judgments with respect to the future, including, among others, the ability to achieve synergies and revenue growth; national, international, regional and local economic, competitive and regulatory conditions and developments; technological developments; capital markets conditions; inflation rates; interest rates; the political and economic stability of oil producing nations; energy markets; weather conditions; business and regulatory or legal decisions; the pace of deregulation of retail natural gas and electricity; the timing and success of business development efforts; and other uncertainties. You are cautioned not to put undue reliance on any forward looking statement. Crosstex has no obligation to publicly update or revise any forward looking statement, whether as a result of new information, future events or otherwise.
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Strategically Positioned for Performance and Growth
Well positioned assets
Lean organization
Financially strong
Poised to take advantage of the macro environment
Focused on long‐term growth
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We Navigated the Storm
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Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10
Crosstex announces saleof South Texas and
Miss./Ala. assets for $220 MM
Crosstex announces sale of Treating
assets for $266 MM
Crosstex announces $125MM of Equity from GSO/Blackstone
Crosstex Energy LP (XTEX)
Crosstex announces acquisition of
Intracoastal and sale of ETX assets
Crosstex completes long term re‐financing ($725 MM bonds & $425
MM Credit Facility)
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Midstream energy services company focused
on full value chain
Assets strategically located in key producing
areas and market regions
Focus on Barnett and Haynesville shale plays
Focused Midstream Company Diversity of Services
Over 3,300 miles of natural gas gathering
and transmission pipeline
9 natural gas processing plants
2 fractionators
Over 400 miles of NGL pipeline
2.4 MM barrels of NGL storage capacity
Wellhead
Gathering, Dehydration & Compression
Processing , Conditioning & Treating
Transmission Lines
NGL Transportation & Fractionation
Natural Gas Consumers
NGL Markets
We Span the Value Chain
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Crosstex Energy GP, L.P.
Public/OtherShareholders
100%
Public Unitholders
51%
2% GP Interest100% IDRs
Crosstex Energy, Inc.(NASDAQ: XTXI)
Directors / Executive Officers
87% 13%
2%
25%
Crosstex Energy Services, L.P.
All Assets and Operations
Crosstex Energy, L.P.(NASDAQ: XTEX)
22%
GSO Crosstex
Holdings
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Crosstex Corporate Structure
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Strategically Positioned Assets North Texas
~780 miles of pipeline3 processing plants
LIG ~2,100 miles of pipeline2 processing plants
Processing & NGLs ~440 miles of NGL pipeline
4 processing plants2 fractionation facilities
$113 $80
$23 2009 Operated Income ($MM)
NTX LIG PNGL
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Strategically Positioned Organizationally
Successful execution has created momentum
Lean, focused organization
Front line management focused on continued execution
Significant acquisition and organic growth experience
Board of directors provides strong support
Strategically Positioned Financially
Strong balance sheet
Disciplined financial guidelines
Continue to de‐leverage, de‐risk Business
Use highly predictable cash flows to set distributions
Allocate capital to high‐return projects
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Wide gas to crude relationship is expected to continue
EIA predicts demand will grow from 53 Bcf/d in 2010 to 70
Bcf/d in 2025
Unconventional gas basins will fill this gap
Shift in supply will drive need for new infrastructure
XTEX is well positioned to take advantage of this trend
Strategically Positioned for the Macro Environment
Source: Modified from Morgan Stanley Jan. 13, 2010 E&P Research Report * NYMEX Henry Hub as of 05/04/10
Shales will Provide Significant Opportunities
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$3.50 $3.50 $3.50$3.70
$3.90 $4.00$4.20
$5.00$5.40
$7.00
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0 Deep Bossier (E. Texas)
Granite Wash (Horizontal)
Haynesville
Fayetteville (2.6 Bcf)
Marcellus
Woodford (Anadarko)
Barnett (Core/Tier 1)
Eagleford
Powder River (CBM
)
Piceance (Highlands)
* Current 2010/2011 NYMEX Strip NYMEX Prices Needed to Achieve 10% IRR
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Macro environment will provide opportunities
Capitalize on strategic positions around core assets
Focus on high‐return projects
Continue to reduce risk in the business
Disciplined financial guidelines will guide growth
Clear path to restoring distributions and dividends
Strategically Positioned for Long-Term Growth
North Texas
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Well Positioned Assets (current capacity) :
NTPL – 375 MMcfd
NTX Gathering Assets – 1 Bcfd +
Azle plant – 50 MMcfd
Goforth plant – 30 MMcfd
Silvercreek plant – 200 MMcfd
North Texas Gathering SystemsNorth Texas Pipeline
Processing Plant
NTX: Strategically Positioned in the Barnett Shale
NTX: Operating Income 2007 - 2010
Note: 2010 represents mid‐point of guidance 15
$‐
$20,000,000
$40,000,000
$60,000,000
$80,000,000
$100,000,000
$120,000,000
$140,000,000
2007 2008 2009 2010
NTX G&T Op Income NTX Processing Op Income
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Diverse Customer Base
NSAI’s Barnett Shale Volume Projections
17Source: Netherland, Sewell & Associates, Inc.
Majors have moved into the Barnett Shale
NSAI study projects that over 50% of future production will occur
within 3 miles of our existing infrastructure
To date over 12,000 successful wells have been drilled
14,000 additional locations to drill
~85% of Crosstex dedicated acres are in Core/Tier 1
Major infrastructure already in place to provide service for base case
volumes18
NTX: Strategically Positioned for Long-Term Growth
LIG
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LIG: Strategically Located Assets
LIG System NGL System Processing Plant
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Well Positioned Assets (current capacity) :
LIG – 1Bcfd+
Gibson Plant – 145 MMcfd
Plaquemine Plant – 225 MMcfd
LIG: Operating Income 2007 - 2010
Note: 2010 represents mid‐point of guidance 21
$‐
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000
$80,000,000
$90,000,000
2007 2008 2009 2010
LIG Mktg. & Transport Op Income LIG Processing Op Income
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Diverse Customer Base
Haynesville Provides Abundant Near- Term Opportunities
Haynesville ProjectsCapacity MMcf/d Contract
In Service Total Contracted Term
N. LIG Contracted Projects
Red River Project Q3 2007 240 240 7 yr
North LIG Expansion Phase I Q4 2008 35 35 10 yr
North LIG Expansion Phase II Q2 2009 100 100 10 yr
Black Lake Interconnect Phase III – Part I Q4 2009 35 35 3 yr
Red River Amine Unit (120 MMcf/d Capacity) Q4 2009 3yr
Black Lake Interconnect Phase III – Part II Q2 2010 25 25 1.5 yr
LIG Phase IV Expansion‐ Part I Q3 2010 30 30 5 yr
Total Contracted 465 465
Current Expansion Project –
Partial System Loop; Phase IV Expansion Part II Q4 2010 est 115 Working
All Projects 580 465 23
Franchise position
Exceptional connectivity to interstate markets
Access to river market on S. LIG
All N. LIG volumes are firm transport
Highly attractive inventory of growth projects
LIG: Strategically Positioned for Long-Term Growth
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Processing and NGL’s
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PNGL: Strategically Located Assets
LIG System
NGL System
Processing Plant
Intracoastal 26
PNGL: Operating Income 2007 - 2010
Note: 2010 represents mid‐point of guidance 27
$‐
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
$45,000,000
2007 2008 2009 2010
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Diverse Customer Base
PNGL: Strategically Positioned for Long-Term Growth
Favorable processing environment
Improved GOM drilling and recent lease sales encouraging
Potential consolidation opportunities
Fractionation capacity constraints
Recent Acquisitions:
₋ Eunice⁻ Intracoastal pipelineIncreased rich gas production creates opportunities
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Financial Overview
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Summary Operating IncomeOperating Income ($ MM) 2008 2009 2010 (3)
North Texas $103 $113 $111
LIG $82 $80 $74
PNGL (1) $12 $23 $35
Shared Operating Exp. & Other ($14) ($14) ($13)
Total Continuing Operations $183 $202 $207(4)
Discontinued Operations(2) $91 $50 $0
Total $274 $252 $207
(1) Includes impact of Eunice lease buy‐out in 2009 and Intracoastal acquisition‐‐ $2 MM impact in 2009 and $13 MM impact in 2010
(2) Includes contributions from sold assets (STX, Miss, Ala, Treating, Seminole interest, Arkoma, and ETX)
(3) 2010 represents mid‐point of guidance
(4) 2010 continuing operations includes ~$8MM in LC Fee’s that are re‐classed as interest expense 31
Gross Margin By Contract Type Ex Discontinued Ops 2008-2010
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58%
10%
17%
15%
2008
G& T Fee POL Proc Margin
66%
12%
13%
9%
2009
G& T Fee POL Proc Margin
71%
16%
11%2%
2010
G& T Fee POL Proc Margin
Non‐commodity based margins have increased from ~68% in 2008 to ~87% in 2010
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Growth & Maintenance Capital
Historical and Projected Growth Capital Expenditures($ in millions)
Historical and Projected Maintenance Capital Expenditures($ in millions)
Crosstex has significantly scaled back growth capital spending
⁻ Focused on execution of projects within the operating footprint
⁻ Scalable nature of current asset base generates high‐return projects
Low maintenance requirements on existing assets
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$404
$259
$136
$25 $‐
$100
$200
$300
$400
$500
2007 2008 2009 2010
$11
$18
$11
$15
$‐
$4
$8
$12
$16
$20
2007 2008 2009 2010
*
*
* Represents low end of 2010 guidance
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Total Year 2010Low High
Net income $ (41) $ (10)
Depreciation and amortization 113 113
Stock‐based compensation 6 6
LOC Fees & Interest 80 79
Taxes and other 2 2
Adjusted EBITDA $ 160 $ 190
Taxes and other $ (3) $ (3)
LOC Fees & Interest $ (80) $ (79)
Maintenance capital expenditures $ (15) $ (12)
Distributable cash flow $ 62 $ 96
Growth Capital $ 25 $ 30
Key Assumptions for Forecast
Weighted Average Liquids Price ($/gallon) $ 0.80 $ 1.09
Crude ($/Bbl) $ 69.37 $ 94.52
Natural Gas ($/MMBtu) $ 6.00 $ 5.00
Natural Gas Liquids to Gas Ratio 149.9% 245.0%
XTEX Distribution per Unit $ 0.30
XTXI Dividends per Share $ 0.10 34
Guidance for 2010
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Maintain a conservative capital structure and leverage ratios
Maintain adequate liquidity
Fund organic growth and strategic opportunities with internal
cash flows and a balanced mix of debt and equity
Maintain a balanced contract mix and an active commodity
price hedging program
Conservative Financial Guidelines
Strategically Positioned Financially
Strong balance sheet
Disciplined financial guidelines
Continue to de‐leverage, de‐risk Business
Use highly predictable cash flows to set distributions
Allocate capital to high‐return projects
Clear path to restoring dividends and distribution
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Q & A
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Appendix
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Reconciliation to Net IncomeNet Income to DCF Reconciliation: Years Ended($ in millions) December 31
2009 2008(Unaudited)
Net income (loss) attributable to Crosstex Energy, L.P. $ 104 $ 11 Depreciation, amortization and impairments (1) 132 163 Stock‐based compensation 9 11 Interest expense, net (2) 130 105 Loss on extinguishment of debt 5 ‐Gain on sale of property (184) (51)Taxes and other 8 6
Adjusted EBITDA 204 245 ‐ ‐
Interest (2)(3)(4) (121) (83)Cash taxes and other (5) (3) (3)Maintenance capital expenditures (11) (18)Distributable cash flow $ 68 $ 141
(1) Excludes minority interest share of depreciation and amortization of $290 and $286K for the year ended 2009 and the year ended 2008 respectively. Includes depreciation, amortization and impairments related to discontinued operations of $10.7 and $26.4 million for the year ended 2009 and the year ended 2008 respectively.
(2) Includes interest expense allocated to discontinued operations of $34.9 and $30.0 million for the year ended 2009 and the year ended 2008, respectively.
(3) Excludes $4.3 million of debt issuance cost amortization, and $5.2 million of senior secured note make‐whole and call premium paid‐in‐kind interest resulting from repayment of such notes from the proceeds of asset sales, for the year ended 2009.
(4) Excludes noncash interest rate swap mark to market of ($797K) for the year ended 2009, and $22.1 million for the year ended 2008.
(5)Includes Seminole Adjustment of $39 million for the year ended 2008.