Third Quarter 2019 Financial...

Third Quarter 2019 Financial Results

November 7, 2019

Third Quarter 2019 Results November 7, 2019

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Non-GAAP Financial MeasuresSemGroup’s non-GAAP measures, Adjusted EBITDA, Cash Available for Dividends (CAFD) and Total Segment Profit, are not GAAP measures and are not intended to be used inlieu of GAAP presentation of their most closely associated GAAP measures, net income (loss) for Adjusted EBITDA and CAFD and operating income for Total Segment Profit.

Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization, adjusted for selected items that SemGroup believes impact the comparability of financialresults between reporting periods. In addition to non-cash items, we have selected items for adjustment to EBITDA which management feels decrease the comparability of ourresults among periods. These items are identified as those which are generally outside of the results of day to day operations of the business. These items are not considered non-recurring, infrequent or unusual, but do erode comparability among periods in which they occur with periods in which they do not occur or occur to a greater or lesser degree.Historically, we have selected items such as gains on the sale of NGL Energy Partners LP common units, costs related to our predecessor’s bankruptcy, significant businessdevelopment related costs, significant legal settlements, severance and other similar costs. Management believes these types of items can make comparability of the results of dayto day operations among periods difficult and have chosen to remove these items from our Adjusted EBITDA. We expect to adjust for similar types of items in the future. Althoughwe present selected items that we consider in evaluating our performance, you should be aware that the items presented do not represent all items that affect comparabilitybetween the periods presented. Variations in our operating results are also caused by changes in volumes, prices, mechanical interruptions and numerous other factors. We do notadjust for these types of variances.

CAFD is based on Adjusted EBITDA, as defined above, and reduced for cash income taxes, cash interest expense, preferred stock cash dividends, maintenance capitalexpenditures and CAFD attributable to noncontrolling interests, as adjusted for selected items which management feels decrease the comparability of results among periods. CAFDis a performance measure utilized by management to analyze our performance after the payment of cash taxes, servicing debt obligations and making sustaining capitalexpenditures.

Total Segment Profit represents revenue, less cost of products sold (exclusive of depreciation and amortization) and operating expenses, plus equity earnings and is adjusted toremove unrealized gains and losses on commodity derivatives and to reflect equity earnings on an EBITDA basis. Reflecting equity earnings on an EBITDA basis is achieved byadjusting equity earnings to exclude our percentage of interest, taxes, depreciation and amortization from equity earnings for operated equity method investees. For our investmentin NGL Energy, we exclude equity earnings and include cash distributions received. Segment profit is the measure by which management assess the performance of our reportablesegments.

These measures may be used periodically by management when discussing our financial results with investors and analysts and are presented as management believes theyprovide additional information and metrics relative to the performance of our businesses. These non-GAAP financial measures have important limitations as analytical tools becausethey exclude some, but not all, items that affect the most directly comparable GAAP financial measures. You should not consider non-GAAP measures in isolation or as substitutesfor analysis of our results as reported under GAAP. Management compensates for the limitations of our non-GAAP measures as analytical tools by reviewing the comparable GAAPmeasures, understanding the differences between the non-GAAP measure and the most comparable GAAP measure and incorporating this knowledge into its decision-makingprocesses. We believe that investors benefit from having access to the same financial measures that our management uses in evaluating our operating results. Because allcompanies do not use identical calculations, our presentations of non-GAAP measures may be different from similarly titled measures of other companies, thereby diminishing theirutility.

SemGroup does not provide guidance for net income, the GAAP financial measure most directly comparable to the non-GAAP financial measure Adjusted EBITDA, because NetIncome includes items such as unrealized gains or losses on derivative activities or similar items which, because of their nature, cannot be accurately forecasted. We do not expectthat such amounts would be significant to Adjusted EBITDA as they are largely non-cash items.


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Certain matters contained in this presentation include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of theSecurities Exchange Act of 1934, as amended. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities LitigationReform Act of 1995.

All statements, other than statements of historical fact, included in this presentation including the prospects of our industry, our anticipated financial performance, our anticipated annualdividend growth rate, management's plans and objectives for future operations, planned capital expenditures, business prospects, outcome of regulatory proceedings, market conditions,the expected merger of SemGroup with and into Merger Sub, LLC, a wholly owned subsidiary of Energy Transfer (“Merger Sub”) pursuant to the Agreement and Plan of Merger betweenus and Energy Transfer LP and Merger Sub, dated September 15, 2019 (the “merger”) and other matters, may constitute forward-looking statements. Although we believe that theexpectations reflected in these forward-looking statements are reasonable, we cannot assure you that these expectations will prove to be correct. These forward-looking statements aresubject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-lookingstatements. Factors that might cause actual results to differ include, but are not limited to, our ability to consummate the merger on the expected time frame or at all, including due to theinability to obtain all approvals necessary or the failure of other closing conditions; our ability to generate sufficient cash flow from operations to enable us to pay our debt obligations andour current and expected dividends or to fund our other liquidity needs; any sustained reduction in demand for, or supply of, the petroleum products we gather, transport, process,market and store; the effect of our debt level on our future financial and operating flexibility, including our ability to obtain additional capital on terms that are favorable to us; our ability toaccess the debt and equity markets, which will depend on general market conditions and the credit ratings for our debt obligations and equity; the loss of, or a material nonpayment ornonperformance by, any of our key customers; the amount of cash distributions, capital requirements and performance of our investments and joint ventures; the consequences of anydivestitures of non-strategic operating assets or divestitures of interests in some of our operating assets through partnerships and/or joint ventures; the amount of collateral required tobe posted from time to time in our commodity purchase, sale or derivative transactions; the impact of operational and developmental hazards and unforeseen interruptions; our ability toobtain new sources of supply of petroleum products; competition from other midstream energy companies; our ability to comply with the covenants contained in our credit agreements,continuing covenant agreement, and the indentures governing our notes, including requirements under our credit agreements and continuing covenant agreement to maintain certainfinancial ratios; our ability to renew or replace expiring storage, transportation and related contracts; the overall forward markets for crude oil, natural gas and natural gas liquids; thepossibility that the construction or acquisition of new assets or other business combination activities may not result in the corresponding anticipated benefits; any future impairment ofgoodwill resulting from the loss of customers or business; changes in currency exchange rates; weather and other natural phenomena, including climate conditions; a cyber attackinvolving our information systems and related infrastructure, or that of our business associates; the risks and uncertainties of doing business outside of the U.S., including political andeconomic instability and changes in local governmental laws, regulations and policies; costs of, or changes in, laws and regulations and our failure to comply with new or existing laws orregulations, particularly with regard to taxes, safety and protection of the environment; the possibility that our hedging activities may result in losses or may have a negative impact onour financial results; general economic, market and business conditions; as well as other risk factors discussed from time to time in each of our documents and reports filed with theSEC.

We use our Investor Relations website and social media outlets as channels of distribution of material company information. Such information is routinely posted and accessible on ourInvestor Relations website at ir.semgroup.com. We are present on Twitter and LinkedIn.

Forward-Looking Information

http://ir.semgroup.com


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• 8% volume growth quarter over quarter in Canada processing volumes• 5% increase in YTD segment profit year over year, reflecting increased earnings from investments at U.S. Liquids &

Canada segments• 3Q19 dividend declared for $0.4725 per share - to be paid on November 21, 2019

Third Quarter 2019 Results SummaryÑ 3Q19 Highlights

Ñ Key Projects on Track

Ñ SemGroup & Energy Transfer Merger Update

• Moore Road project is on track and completion expected for late 4Q19• White Cliffs NGL conversion: construction complete and commissioning in late November• Patterson Creek Plant expansion: completed• Smoke Lake Plant on track for completion in 4Q19• Platteville to Suncor connection project is underway and set to be in-service 3Q20

• Hart-Scott-Rodino (HSR) and S-4 filed October 3rd

◦ October 16 - FTC granted early termination of the required waiting period under HSR◦ October 28 - amended S-4 filed

• SemGroup shareholder meeting set for December 4th to vote on proposed merger with Energy Transfer◦ Closing anticipated early December 2019


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($USD in millions, except per share)

Net Income (loss) $8.5 $3.0 ($3.3) ($12.9) ($5.5)

Adjusted EBITDA $96.5 $105.4 $103.0 $105.5 $94.3

Cash Available for Dividends (CAFD) $50.8 $56.9 $46.4 $43.7 $33.9

Common Dividend declared per share $0.4725 $0.4725 $0.4725 $0.4725 $0.4725

Dividend Coverage Ratio 1.4x 1.5x 1.3x 1.2x 0.9x

Non-GAAP Financial Data Reconciliations are included in the Appendix to this presentation

Third Quarter 2019 Consolidated Results

• Improved quarter over quarter primarily due to one-time loss on disposal recognized in2Q19

3Q18 4Q18 1Q19 2Q19 3Q19

NetIncome

AdjustedEBITDA

CAFD

Ñ Third Quarter 2019 vs Second Quarter 2019

• Lower Adjusted EBITDA partially offset by lower maintenance capital and favorable netcash taxes

• Decrease primarily due to lower marketing results within the US Liquids segment• Increased earnings in Canada related to volume growth at Patterson Creek and Wapiti gas

plants

Key Financial Metrics Trend


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Third Quarter 2019 Consolidated Results

($USD in millions)

U.S. Liquids $75.5 $85.5 $89.5 $85.2 $67.5U.S. Gas $19.8 $17.6 $12.1 $11.0 $13.7Canada $20.5 $17.3 $22.7 $29.7 $34.9Corp & Other ($0.9) ($0.2) ($0.2) ($0.2) ($1.5)

Total Consolidated Results $114.9 $120.2 $124.1 $125.7 $114.6

Ñ Segment Profit: Third Quarter 2019 vs Second Quarter 2019

U.S.Liquids

• Lower 3Q19 White Cliffs volumes and Cushing throughput due to one WCPL crude line out of servicefor NGL conversion, as well as take-or-pay contract expirations

• Lower crude marketing margins in 3Q19 primarily due to inventory timing, expect partial recovery in4Q19

U.S.Gas

• Higher STACK volumes and margin per mcf

Canada • Volume growth at Patterson Creek and Wapiti gas plants

3Q18 4Q18 1Q19 2Q19 3Q19Segment Profit Trend


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Key Asset Volumes 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19

U.S. LiquidsWhite Cliffs Pipeline Crude Volumes (mbpd) (1) 107 135 112 144 147 106 93

Cushing Terminal Utilization (2) 98% 97% 94% 98% 100% 90% 90%

Houston Terminal Utilization 97% 97% 96% 96% 98% 98% 98%

U.S. Gas (Texas volumes excluded)

Total Oklahoma Average Processing Volumes (mmcf/d) 293 353 380 355 290 301 311

Canada (3)

Total Average Processing Volumes (mmcf/d) 441 382 434 430 460 590 638

KA 174 112 190 174 163 162 180K3/Wapiti system 267 270 244 256 255 293 297

K3 267 270 244 256 226 234 214Wapiti '--------------------------------------------- 39 (4) 59 83

Patterson Creek '--------------------------------------------- 122 (5) 135 161

Operational Summary

(1) White Cliffs Pipeline volumes declined primarily due to one crude line taken out of service for NGL conversion in early May 2019 (2) Lower utilization due to tanks out of service for routine inspections and repairs(3) Canada volumes include total average processed volumes - K3/Wapiti system, KA/West Fox Creek and Patterson Creek facilities (4) Wapiti volumes represent a partial first quarter, the plant came online January 27, 2019, full first quarter average processing volumes were 29 mmcf/d(5) Patterson Creek volumes represent a partial first quarter, acquisition closed on February 25, 2019, full first quarter average processing volumes were 42 mmcf/d


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Leverage and Liquidity($USD in millions, unaudited) Interest Rate 9/30/2019Revolving Credit Facility - $1.0 billion due 2021 $—Senior unsecured notes due 2022 5.625% 400Senior unsecured notes due 2023 5.625% 350Senior unsecured notes due 2025 6.375% 325Senior unsecured notes due 2026 7.250% 300

Total SemGroup Debt (B2 / B+) 6.16% $1,375Term Loan due 2025 4.800% 593Hurricane Ike Bonds due 2050 2.951% 225

Total HFOTCO Debt (Ba3 / BB-) 4.29% $818Revolving Credit Facility - C$525 million due 2024 4.539% 67Term Loan due 2024 4.840% 264

Total SemCAMS Midstream Debt 4.78% $331

Cash Available $214

Consolidated Net Debt 5.37% $2,310

SemGroup LTM Adjusted EBITDA $408Plus Material Project Addbacks 9Plus LTM Canada Acquisition (Patterson Creek) 14

Consolidated LTM Adjusted EBITDA $431

Consolidated Leverage Ratio 5.4x

SemGroup Covenant Leverage Ratio 3.0x

Consolidated Available Liquidity (1) $1,493

(1) Available liquidity is reduced for outstanding letters of credit

Appendix



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Consolidated Balance Sheets

(in thousands, unaudited, condensed) September 30, 2019

December 31, 2018

ASSETSCurrent assets $877,580 $715,825Property, plant and equipment, net 3,927,645 3,457,326Goodwill and other intangible assets 783,085 622,340Equity method investments 283,638 274,009Other noncurrent assets, net 151,017 140,807Right of use assets, net 89,665 —Total assets $6,112,630 $5,210,307

LIABILITIES, PREFERRED STOCK AND OWNERS' EQUITYCurrent liabilities:

Current portion of long-term debt $15,912 $6,000Other current liabilities 633,417 631,157

Total current liabilities 649,329 637,157

Long-term debt, excluding current portion 2,477,326 2,278,834Other noncurrent liabilities 274,612 94,337Total liabilities 3,401,267 3,010,328

Preferred stock 379,285 359,658Subsidiary preferred stock 258,376 —Owners' equity 2,073,702 1,840,321Total liabilities, preferred stock and owners' equity $6,112,630 $5,210,307


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Consolidated Statements of Operations and Comprehensive Income (Loss)(in thousands, except per share amounts, unaudited, condensed) 2019 2018

1Q 2Q 3Q YTD 1Q 2Q 3Q 4Q FY2018Revenues $567,232 $674,940 $562,410 $1,804,582 $661,609 $595,794 $633,996 $611,863 $2,503,262Expenses:

Costs of products sold, exclusive of depreciation and amortizationshown below 403,372 493,580 377,174 1,274,126 496,132 412,089 468,871 446,003 1,823,095Operating 63,207 77,997 73,619 214,823 69,791 90,245 64,835 59,898 284,769General and administrative 29,547 25,520 29,662 84,729 26,477 22,886 21,904 20,301 91,568Depreciation and amortization 59,036 64,011 61,489 184,536 50,536 51,755 53,598 53,365 209,254Loss (gain) on disposal or impairment, net (1,444) 8,936 (373) 7,119 (3,566) 1,824 (383) (1,438) (3,563)Total expenses 553,718 670,044 541,571 1,765,333 639,370 578,799 608,825 578,129 2,405,123

Earnings from equity method investments 13,951 12,695 9,065 35,711 12,614 14,351 14,528 16,179 57,672Operating income 27,465 17,591 29,904 74,960 34,853 31,346 39,699 49,913 155,811Other expenses, net 35,385 36,574 39,389 111,348 44,805 37,685 33,935 40,410 156,835Income (loss) from continuing operations before income taxes (7,920) (18,983) (9,485) (36,388) (9,952) (6,339) 5,764 9,503 (1,024)Income tax expense (benefit) (4,606) (6,085) (4,019) (14,710) 23,083 (3,613) (2,697) 6,531 23,304Income (loss) from continuing operations (3,314) (12,898) (5,466) (16,212) (33,035) (2,726) 8,461 2,972 (24,328)Net income (loss) (3,314) (12,898) (5,466) (21,678) (33,035) (2,726) 8,461 2,972 (24,328)Less: net income attributable to noncontrolling interest 3,525 12,689 7,042 23,256 — — — 2,421 2,421Net income (loss) attributable to SemGroup (6,839) (25,587) (12,508) (44,934) (33,035) (2,726) 8,461 551 (26,749)

Less: cumulative preferred stock dividends 6,541 6,657 6,773 19,971 4,832 6,211 6,317 6,430 23,790Less: cumulative subsidiary preferred stock dividends 1,857 2,577 2,604 6,288 — — — — —Less: accretion of subsidiary preferred stock to redemption value 13,749 237 255 14,241 — — — — —

Net income (loss) attributable to common shareholders ($28,986) ($35,058) ($22,140) ($85,434) ($37,867) ($8,937) $2,144 ($5,879) ($50,539)Net income (loss) ($3,314) ($12,898) ($5,466) ($21,678) ($33,035) ($2,726) $8,461 $2,972 ($24,328)Other comprehensive income (loss), net of income taxes (14,233) 27,387 (6,317) 6,837 18,171 6,180 3,352 (25,149) 2,554Comprehensive income (loss) ($17,547) $14,489 ($11,783) ($14,841) ($14,864) $3,454 $11,813 ($22,177) ($21,774)

Net income (loss) per common share:Basic ($0.37) $ (0.45) ($0.28) ($1.09) ($0.48) ($0.11) $0.03 ($0.08) ($0.65)Diluted ($0.37) $ (0.45) ($0.28) ($1.09) ($0.48) ($0.11) $0.03 ($0.08) ($0.65)

Weighted average shares (thousands):Basic 78,492 78,668 78,677 78,613 78,198 78,319 78,353 78,378 78,313Diluted 78,492 78,668 78,677 78,613 78,198 78,319 78,977 78,378 78,313


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(in thousands, unaudited) 2019 2018Segment Profit: 1Q 2Q 3Q YTD 1Q 2Q 3Q 4Q FY2018

U.S. Liquids $89,511 $85,189 $67,508 $242,208 $68,056 $80,393 $75,500 $85,474 $309,423U.S. Gas 12,165 11,040 13,661 36,866 14,277 15,437 19,754 17,602 67,070Canada 22,693 29,669 34,931 87,293 22,113 21,448 20,543 17,226 81,330Corporate and other (1) (237) (219) (1,527) (1,983) 10,963 (172) (913) (152) 9,726

Total Segment Profit 124,132 125,679 114,573 364,384 115,409 117,106 114,884 120,150 467,549Less:

General and administrative expense 29,547 25,520 29,662 84,729 26,477 22,886 21,904 20,301 91,568Other income (979) (1,347) (1,075) (3,401) (950) (533) (400) (497) (2,380)

Plus:M&A related costs 4,635 1,676 4,790 11,101 1,156 648 290 1,058 3,152Employee severance and relocation 159 73 731 963 137 211 43 758 1,149Non-cash equity compensation 2,632 2,232 2,808 7,672 2,196 3,398 2,738 3,190 11,522

Consolidated Adjusted EBITDA $102,990 $105,487 $94,315 $302,792 $93,371 $99,010 $96,451 $105,352 $394,184

Segment Profit and Adjusted EBITDA

(1) 1Q 2018 reflects earnings from divested businesses


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Non-GAAP Adjusted EBITDA Calculation

(in thousands, unaudited) 2019 2018Reconciliation of net income to AdjustedEBITDA: 1Q 2Q 3Q YTD 1Q 2Q 3Q 4Q FY2018Net income (loss) ($3,314) ($12,898) ($5,466) ($21,678) ($33,035) ($2,726) $8,461 $2,972 ($24,328)

Add: Interest expense 36,652 38,910 39,663 115,225 42,461 35,904 35,318 36,031 149,714Add: Income tax expense (benefit) (4,606) (6,085) (4,019) (14,710) 23,083 (3,613) (2,697) 6,531 23,304Add: Depreciation and amortizationexpense 59,036 64,011 61,489 184,536 50,536 51,755 53,598 53,365 209,254

EBITDA 87,768 83,938 91,667 263,373 83,045 81,320 94,680 98,899 357,944Selected Non-Cash Items and

Other Items Impacting Comparability 15,222 21,549 2,648 39,419 10,326 17,690 1,771 6,453 36,240Adjusted EBITDA $102,990 $105,487 $94,315 $302,792 $93,371 $99,010 $96,451 $105,352 $394,184

Selected Non-Cash Items andOther Items Impacting ComparabilityLoss (gain) on disposal or impairment, net ($1,444) $8,936 ($373) $7,119 ($3,566) $1,824 ($383) ($1,438) ($3,563)Foreign currency transaction loss (gain) (288) (989) 801 (476) 3,294 2,314 (983) 4,876 9,501Adjustments to reflect equity earnings on anEBITDA basis 4,710 4,718 4,633 14,061 4,883 4,886 4,926 4,837 19,532M&A transaction related costs 4,635 1,676 4,790 11,101 1,156 648 290 1,058 3,152Employee severance and relocation expense 159 73 731 963 137 211 43 758 1,149Unrealized loss (gain) on derivative activities 4,818 4,903 (10,742) (1,021) 2,226 4,409 (4,860) (6,828) (5,053)Non-cash equity compensation 2,632 2,232 2,808 7,672 2,196 3,398 2,738 3,190 11,522Selected Non-Cash items and

Other Items Impacting Comparability $15,222 $21,549 $2,648 $39,419 $10,326 $17,690 $1,771 $6,453 $36,240


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Reconciliation of Operating Income to Total Segment Profit

(in thousands, unaudited) 2019 20181Q 2Q 3Q YTD 1Q 2Q 3Q 4Q FY2018

Operating income $27,465 $17,591 $29,904 $74,960 $34,853 $31,346 $39,699 $49,913 $155,811Plus:

Adjustments to reflect equity earnings onan EBITDA basis 4,710 4,718 4,633 14,061 4,883 4,886 4,926 4,837 19,532Unrealized loss (gain) on derivatives 4,818 4,903 (10,742) (1,021) 2,226 4,409 (4,860) (6,828) (5,053)General and administrative expense 29,547 25,520 29,662 84,729 26,477 22,886 21,904 20,301 91,568Depreciation and amortization 59,036 64,011 61,489 184,536 50,536 51,755 53,598 53,365 209,254Loss (gain) on disposal or impairment, net (1,444) 8,936 (373) 7,119 (3,566) 1,824 (383) (1,438) (3,563)

Total Segment Profit $124,132 $125,679 $114,573 $364,384 $115,409 $117,106 $114,884 $120,150 $467,549


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Cash Available for Dividends

(in thousands, unaudited) 2019 20181Q 2Q 3Q YTD 1Q 2Q 3Q 4Q FY2018

Adjusted EBITDA $102,990 $105,487 $94,315 $302,792 $93,371 $99,010 $96,451 $105,352 $394,184 Less: Cash interest expense 35,626 36,458 37,817 109,901 32,530 34,870 36,377 35,372 139,149 Less: Maintenance capital 10,600 8,073 7,603 26,276 7,729 11,550 8,635 8,664 36,578 Less: Cash paid for income taxes (1) 910 796 6,570 8,276 1,800 12,900 600 1,500 16,800 Less: CAFD attributable to SemCAMS Midstream noncontrolling interest 2,844 9,840 10,549 23,233 — — — — — Less: Distributions to Maurepas Class B shareholders 6,613 6,595 6,595 19,803 — — — 2,932 2,932

Less: Preferred stock dividends (2) — — — — — — — — —Selected items impacting comparability: Add back: Cash income taxes related to SemCAMS Midstream formation — — 8,700 8,700 — — — — — Add back: Mexico disposal cash taxes — — — — — 10,955 — — 10,955Cash available for dividends $46,397 $43,725 $33,881 $124,003 $51,312 $50,645 $50,839 $56,884 $209,680

Dividends declared $37,061 $37,161 $37,177 $111,399 $37,004 $37,022 $37,022 $37,034 $148,082

Dividend coverage ratio 1.3x 1.2x 0.9x 1.1x 1.4x 1.4x 1.4x 1.5x 1.4x

(1) Third quarter 2019 includes $8.7 million related to SemCAMS Midstream JV formation, partially offset by a Canadian tax refund(2) To date preferred stock dividends have been paid-in-kind

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