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| 8-K - FORM 8-K DATED NOVEMBER 27, 2012 - DAKOTA PLAINS HOLDINGS, INC. | dakota124917_8k.htm |
Investor Presentation
November 2012
www.dakotaplains.com
11/27/2012
1
Forward Looking Statements
Statements made by representatives of Dakota Plains Holdings, Inc. (“Dakota Plains” or the “Company”) during the course of this presentation that are not historical facts, are forward-looking statements. These statements are based on certain assumptions and expectations made by the Company which reflect management’s experience, estimates and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or anticipated in the forward-looking statements. These include risks relating to global economics or politics, our ability to obtain additional capital needed to implement our business plan, minimal operating history, loss of key personnel, lack of business diversification, reliance on strategic, third-party relationships, financial performance and results, prices and demand for oil, our ability to make acquisitions on economically acceptable terms, and other important factors that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. Dakota Plains undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information or future events.
11/27/2012
2
Dakota Plains Holdings, Inc. Overview
Dakota Plains Holdings, Inc. (OTCBB:DAKP) is a publicly traded company focused on developing
transloading facilities, marketing and transporting of crude oil and related products from and into
the
Williston Basin oil fields of North Dakota. The Company was founded in 2008 and is based in
Wayzata, MN.
The Company focuses on marketing and transporting oil produced from the Bakken Shale, which
was named the largest on-shore oil deposit in North America by the US Geological Society.
Publicly traded effective March 2012
North Dakota is the 2nd largest oil producing state in the USA.
World Class Relationships
World Fuel Services (NYSE:INT) – $2.7 B market cap, Marketing and Transloading Partner
Prairie Field Services – Trucking Services Partner
Strobel Starostka Transfer – Premier national logistics and transloading operations company
Canadian Pacific – One of two Class 1 rail lines operating in the Williston Basin
Three Business Lines
Transloading Oil Products
Marketing Williston Basin Crude Oil
Trucking
11/27/2012
3
Business Segments
Transloading
50/50 joint venture with World Fuel Services (NYSE:INT)
Land is owned by Dakota Plains, infrastructure investments shared through 2021
Crude focus started August 2010 with two tracks each capable of 40 tank cars
Doubled facility’s onsite capacity in July 2011 to four 40 car tracks
Approximately 5.6 million barrels of crude oil transloaded in 2011
Approximately 5.5 million barrels of crude oil transloaded through September 2012
Marketing
50/50 joint venture with World Fuel Services (NYSE:INT) through 2021
Initiated marketing of crude oil in July 2011
1,104 tank cars under long term lease, average 7 years remaining
Approximately 1.2 million barrels of crude oil marketed in 2011
Approximately 5.7 million barrels of crude oil marketed through September 2012
Trucking
50/50 joint venture with Prairie Field Services through 2021
Established in September 2012
Immediate focus is hauling crude oil
Extensive expansion opportunities
Phase 1 & Phase 2
11/27/2012
4
November 2012 – 192 Rigs
Source: North Dakota Industrial Commission – https://www.dmr.nd.gov/OaGIMS/viewer.htm. 11-02-12.
Location, Location, Location:
Dakota Plains’ rail terminal is located
in the heart of the Bakken and Three
Forks play in Mountrail County, ND.
11/27/2012
5
New Town Area Wells – November 2012
Source: North Dakota Industrial Commission – https://www.dmr.nd.gov/OaGIMS/viewer.htm. 11-02-12
Location, Location, Location:
All crude leaving the peninsula is forced
to cross the Dakota Plains Rail Terminal.
Likely 1,300+ wells from 168 current
spacing units in this captive geography.
11/27/2012
6
New Town – Site Today
GGC Photo 01-17-12
Top Tier Logistics:
The site is connected to the Canadian
Pacific line and is currently managed
by Strobel Starostka, a national leader
in transloading logistics and operations.
Expansion Opportunity:
Dakota Plains and WFS are planning
the addition of a more efficient, double
loop track on this site, to be constructed
without affecting existing operations.
11/27/2012
7
Williston Basin Crude Production Forecast
Source: North Dakota Pipeline Authority 09-20-12 presentation.
North Dakota
1,000,000 bpd
Q2 2014
2012 North Dakota Results
January = 546,547 bpd
February = 558,558 bpd
March = 577,478 bpd
April = 609,503 bpd
May = 639,277 bpd
June = 660,332 bpd
July = 676,249 bpd
August = 701,409 bpd
September = 728,494 bpd
11/27/2012
8
Williston Basin Crude Oil Pipelines
Source: North Dakota Pipeline Authority 09-20-12.
Tesoro 68,000 bbls/day
Enbridge 235,000 bbls/day
Belle Fourche, Bridger, Butte,
Little Missouri & Plains 145,000 bbls/day
TransCanada ? bbls/day
Total Capacity Roughly 448,000 bbls/day
Tesoro Mandan
Refinery
Baker, MT
11/27/2012
9
Williston Basin July 2012 Takeaway
Source: North Dakota Pipeline Authority 09-20-12.
July 2012
ND Avg = 676,249 bpd
E. MT Avg 64,000 bpd
Pipe 317,382 bpd
Tesoro 59,050 bpd
Rail 346,906 bpd
July 2011
ND Avg = 425k bpd
E. MT Avg ≈ 65k bpd
Pipe ≈ 328k bpd
Tesoro ≈ 58k bpd
Rail ≈ 83k bpd
11/27/2012
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Williston Basin Sept. 2012 Takeaway
Source: North Dakota Pipeline Authority November 2012
September 2012
ND Avg = 728,494 bpd
E. MT Avg 66,900 bpd
Pipe 310,204 bpd
Tesoro 63,632 bpd
Rail 405,650 bpd
11/27/2012
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Dakota Plains
New Town
50k bbls/day
3rd Party OK
Storage = 90k
EOG
Stanley
70k bbls/day
NO 3rd Party
Storage = 240k
Lario Logistics
Bakken Oil Express
Dickinson
100k bbls/day
Belle Fourche Pipe
Storage = 210k + 200K
Global/Basin
Zap
70k bbls/day ?
3rd Party OK
No Storage
Port of ND
Minot
30k bbls/day ?
3rd Party OK
No Storage
Savage
Trenton
90K bbls/day
2-Gathering Lines
Storage = 300k
Rangeland COLT
Epping ≈ $70m
80k bbls/day
Beaver Lodge Pipe
Storage = 600k
Hess
Tioga ≈ $48m
70k bbls/day
Gathering
3rd Party ?
Storage = 180k +
Global/Basin
Stampede
70k bbls/day ?
3rd Party OK
Storage = 100k
Centennial Energy
Donnybrook
10k bbls/day ?
3rd Party ?
No Storage
Tesoro Logistics
Refinery
Mandan
58k bbls/day
Musket Corp.
Dore
70k bbls/day
Banner Pipeline
3rd Party OK
Storage = 90k
Enbridge
Berthold
80k bbls/day
Gathering
Storage = 300k
Musket Corp.
Dickinson
8k bbls/day ?
3rd Party OK
No Storage
Great Northern
Power Development
Fryburg ≈ $45m
BakkenLink Pipeline
70k bbls/day
Storage = 300k
Plains All American
Ross – 350 acres
65k bbls/day
Gathering
Robinson Lake Pipe
Storage = 200K +
USD
Van Hook
65K bbls/day?
3rd Party OK
Storage ≈ 12k + 285K
ND Crude By Rail Sites
Rail has a Bright Future:
Pipeline companies such as
Enbridge and Plains All
American, as well as top
operators like EOG and
Hess have made substantial
investments in Williston
Basin crude
terminals.
Pipeline Capacity will
consistently be unable to
handle current and
anticipated Bakken
production volumes.
11/27/2012
12
Crude Oil Pipelines & Markets
Are New Pipelines such as Keystone a Threat to
Dakota Plains?
Keystone’s capacity is projected at 700K BOPD.
600K oil sand barrels will already be in the pipe as it
crosses the US border. Other pipeline projects are
many
years out, but once online, Dakota Plains may
transition its marketing efforts to pipeline if needed
and use rail for both outbound crude and inbound
commodities and supplies.
11/27/2012
13
Current Destinations
Galveston, TX
St. John, NB
Irving Oil
Albany, NY
Global
Petroleum
“Philadelphia”
St. James, LA
US Development
and NuStar
Terminals
Shreveport, LA
Calumet
Bakersfield, CA
Kern
Walnut Hill, FL
Genesis Energy
Bakken Pipelines are Limited in their Destination
Crude by rail provides access to markets that
current pipelines cannot access, allowing Dakota
Plains to take advantage of the WTI to Brent/LLS
spread in several markets. Numerous
new
destinations are being constructed and planned.
11/27/2012
14
New Town - Future
Existing Tracks:
After the loop tracks are finished,
the 10,000 feet of existing tracks
will be used for inbound
commodity transloading.
Loop Tracks:
Expansion at New Town in the
form of a new double loop track
will significantly expand takeaway
capacity.
Margin Improvements:
Loop tracks are the most efficient,
and Class 1 railroads traditionally
incentivize the owners investment
via lower cost structures for
shipments.
11/27/2012
15
Business Segments – Phase 2
Transloading
Double loop tracks capable of handling 120 car unit trains
All crude by rail operations transition to loop tracks
Crude by rail volumes increase 50-100%
Inbound commodity transloading launches on Tracks 1-4
Additional revenue stream for storage of sand, pipe, ceramics, etc.
Marketing
No down time during construction of loop tracks
Loop track efficiencies drive better Canadian Pacific freight rates
Easily launch 100+ car unit trains
Onsite storage solutions
Volume allocations secured in pipelines
Trucking
Turnkey solution for hauling inbound commodities out to wells
Continued expansion of crude hauling
Enter the water hauling segment
11/27/2012
16
2013 Operational Targets
EBITDA of $31 Million ($0.74/Share) Driven By:
11 Million Barrels Transloaded
13 Million Barrels Marketed
5.5 Million Barrels Trucked
Expansion of Offsite Marketed Barrels
Inbound Transloading, Storage & Trucking
Successful Completion of Loop Track
Successful tie-in to localized gathering systems
11/27/2012
17
Financial Overview
Dakota Plains reports its financials using the “Equity Method” which nets out nearly all of Dakota Plains’
true revenues and expenses associated with each of their three JVs to one
line item “Other Income” located
below GAAP Revenue and Income from Operations on the Income Statement. As such, normal GAAP top-
line revenue and GAAP income from operations are not appropriate performance metrics.
Dakota Plains has continued to increase production in both barrels transloaded and marketed. Year to date,
Dakota Plains has seen an increase in barrels marketed by 363.5% over 2011
Totals. Barrels transloaded is
also outpacing 2011 Totals and through three quarters is almost even with 2011 Totals.
As of Q3 Filing Date 11/14/2012
Note: Enterprise Value calculation includes Restricted Cash Balance
Note: Refer to Company’s SEC filings for a reconciliation of Adjusted EBITDA to Net Income
Source: CapIQ, Company Filings
Growth in Operations
Company Financial Highlights
Symbol
DAKP
Stock Price
$2.58
Market Cap (MM)
$107.9
Shares Outstanding (MM)
41.8
52 Week High
$12.50
52 Week Low
$2.25
Cash (MM)
$5.0
Restricted Cash (MM)
$25.0
Total Debt (MM)
$26.6
Enterprise Value (MM)
$104.5
Total Assets (MM)
$39.0
2012 9 Mos. Adjusted EBITDA (MM)
$10.0
11/27/2012
18
INVESTMENT CASE
Current Market Price approximately 3x 2013 Target EBITDA of $0.74/Share
No Net Debt, Approximately $30 Million in Cash, $26.6 Long Term Debt
Solid and Experienced JV Partners Across all Business Lines
Extensive Expansion Opportunities
Premier Site Offering Competitive Advantage in Marketing & Transloading
Attractive Acquisition Target For Mid-Stream MLP
Bakken Production Expected to More Than Double From Current Level
Dakota Plains Owns all Property and Infrastructure
JV Partners Pay for 50% share of Any Improvements
11/27/2012
19
Questions and Answers
11/27/2012
20