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| 8-K - 8-K - ANDEAVOR LOGISTICS LP | tllp8-k.htm |
| EX-99.1 - EXHIBIT - ANDEAVOR LOGISTICS LP | tllpex991.htm |
2014 Wells Fargo Energy Symposium December 9, 2014 Driving Distinctive Growth Exhibit 99.2
2 Forward Looking Statements This Presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to, among other things, the following: execution of our strategy and vision, including organic investments for growth and expansion projects (including the resulting volumetric improvements), acquisition opportunities and commercial opportunities; the results of our efforts to improve operational efficiency and maximize asset utilization; growth in third party business and revenues; possible future logistics asset acquisition opportunities from Tesoro Corporation and its affiliates and the potential EBITDA generated by such assets; EBITDA estimates for Tesoro Logistics and various portions of our businesses (including the EBITDA contribution from completed acquisitions, capital projects and other organic investment); the timing and amount of capital expenditures; expected timeframe for construction projects; the outlook for natural gas production and related pricing in our Rocky Mountain operating areas; expectations regarding our leverage ratio and target debt to EBITDA level; expectations regarding unitholder distribution growth and coverage levels; and other aspects of future performance. We have used the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should,” “will,“ “potential” and similar terms and phrases to identify forward-looking statements in this Presentation. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. Our operations involve risks and uncertainties, many of which are outside of our control, and any one of which, or a combination of which, could materially affect our results of operations and whether the forward-looking statements ultimately prove to be correct. Actual results and trends in the future may differ materially from those suggested or implied by the forward-looking statements depending on a variety of factors which are described in greater detail in our filings with the SEC. Please see our Risk Factor disclosures included in our 2013 Annual Report on Form 10-K and our quarterly reports on Form 10-Q. All future written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the previous statements. We undertake no obligation to update any information contained herein or to publicly release the results of any revisions to any forward-looking statements that may be made to reflect events or circumstances that occur, or that we become aware of, after the date of this Presentation. We have included EBITDA, adjusted EBITDA, and distributable cash flow and results of operations excluding Predecessors, each of which is a non-GAAP financial measure, for the company. Please see the Appendix for the definition and reconciliation of these amounts.
3 Driving Distinctive Growth • Leading provider of upstream and downstream logistics services in Western United States • Distinctive logistics growth strategy for crude oil, natural gas and refined products • Balanced approach through optimization, organic and strategic growth • Strong sponsor support and well-positioned assets Continued delivery of high distribution growth
4 Overview of Current Assets San Juan Denver Julesburg (Niobrara) Powder River Key Metrics Crude Oil, refined product and Natural gas pipelines 3,500+ miles Natural gas throughput capacity 2,900+ MMcf/d Natural gas inlet processing capacity 1,500+ MMcf/d High Plains pipeline throughput 100+ MBD High Plains trucking volume 50+ MBD Marketing terminal capacity 645+ MBD Marine terminal capacity 795 MBD Rail terminal capacity 50 MBD Dedicated storage capacity 9,200+ MBBLS Green River Martinez Mandan Salt Lake City Los Angeles Kenai Anacortes Bakken Refinery Tesoro Corporation Tesoro Logistics Gathering High Plains crude oil pipelines Trucking Natural gas gathering pipeline Processing Natural gas processing complex Terminalling and Transportation Northwest Products System pipeline Crude oil and refined product terminal Marine terminal Rail unloading facility Pipeline Uinta
5 Strategic Initiatives Focus on Stable, Fee- Based Business • Focused fee-based business with long-term minimum commitments • Maintain minimal commodity risk • Provide full-service logistics offering Optimize Existing Asset Base • Improve operational efficiency and maximize asset utilization • Leverage commercial capabilities to expand third-party business • Capture Tesoro volumes moving through non-TLLP assets Pursue Organic Expansion Opportunities • Identify and execute low-risk, high-return growth projects • Invest to capture the full commercial value of logistics assets Grow through Strategic Acquisitions • Pursue attractive opportunities in strategic footprint • Strategically partner with Tesoro for new growth initiatives • Methodically acquire Tesoro assets Execution drives EBITDA growth
6 Competitive Advantage Well-Positioned Assets • High Plains System positioned in core Bakken area • Rockies natural gas system in low cost basins • Southern California system supports high demand market Strategic Sponsorship • Integral to Tesoro’s value chain • Delivers Tesoro’s requirement for advantaged crude oil • Significant opportunity for future acquisitions
7 Tesoro Driven Logistics Opportunities • Marine terminals • Crude oil pipelines • Marine barges • Railcars • Refinery tank terminals • Marine terminals • Rail terminals • Petroleum Coke handling • Refined products distribution terminals • Refined products pipelines • Rail unloading terminals • Truck unloading terminals • Marine terminals Potential drop downs of at least $500 million of EBITDA Product Sales Feedstock Acquisition Inbound Logistics Refining Outbound Logistics
8 Proven Business Model 0 20 40 60 80 100 120 2011 2012 2013 2014 YTD Crude Oil Gathering MBD 0 10 20 30 40 50 2011 2012 2013 2014 YTD Crude Oil Trucking MBD 0 200 400 600 800 1,000 2011 2012 2013 2014 YTD Terminalling MBD 0 100 200 300 400 500 600 700 800 2011 2012 2013 2014 YTD Pipeline Transportation MBD Visible track of growing the business, driving unitholder returns 1 1 1 1 1) YTD Through 9/30/2014 Third-Party Tesoro
9 Track Record of Delivering Value 42 35 84 2011 EBITDA 2012 2013 2014 EBITDA Guidance Expected EBITDA growth of over $250 million since IPO $ in millions 1) CAGR = Compound Annual Growth Rate for 2011 EBITDA through the midpoint of 2014 EBITDA Guidance Note: EBITDA shown is Adjusted EBITDA , which excludes any gain or loss on asset disposals, impairments and inspection and maintenance expenses associated with Northwest Products System and Predecessor results 300-315
10 Strategic Growth Accomplishments 2014 accomplishments drive significant future growth 2014 Accomplishments Expected Annual EBITDA Contribution1 Acquisition of QEP Field Services 250-275 65 MBD High Plains Crude Oil Pipeline Reversal project 25 360,000 barrels of Bakken commercial storage capacity 4 Initial construction of 60 MBD Connolly Gathering System 23 Acquisition of West Coast Logistics Assets 28 1) Expected 2015 EBITDA contribution $ in millions
11 QEP Field Services Transaction • Business acquired December 2, 2014 • Transaction enterprise value of $2.5 billion • Including 58% ownership interest of QEPM • Transaction financing – $1.3 billion from TLLP common equity – $1.3 billion from senior unsecured notes • Natural gas and NGL commodity exposure assumed by Tesoro – Five year contract with annual price adjustment 2015 unitholder accretion expected to be 5%
12 Distinctive Growth Strategy $ in millions 2014 2015 2016 2017 Gathering (Incl. natural gas) 60-65 265-285 310-340 335-395 Processing N/A1 120-140 140-160 150-180 Terminalling and Transportation 260-270 285-315 300-330 310-340 Tesoro Asset Acquisitions N/A2 50-75 100-150 150-225 Expected EBITDA3 300-315 675-765 785-940 900-1,075 1) Expect minimal EBITDA contribution from Processing segment in Q4 2014 2) Expected annual EBITDA contribution of $28 million for the West Coast Logistics assets acquisition 3) Expected EBITDA includes general & administrative expenses that is not allocated to each segment or Tesoro Asset Acquisitions 2017 EBITDA target of $1 billion
13 Gathering • Deliver 2015 expected EBITDA of $265 to $285 million • Expand capacity on High Plains System through organic growth projects • Drive natural gas gathering growth 19 30 37 60-65 265-285 310-340 335-395 2011 2012 2013 2014E 2015E 2016E 2017E Expected EBITDA $ in millions Expand third-party business through full-service logistics offering
14 Crude Oil Gathering • Investing $250 million in crude oil gathering opportunities in 2015 – Complete Connolly Gathering System – Add 50 MBD of additional North- South throughput capacity – Additional rail interconnection points – Expand Bakken Area Storage Hub Lake Sakakawea High Plains Pipeline Third-party pipelines Crude oil flow Third-party rail loading facility Interconnection point (1) Lignite (2) Ramberg (3) Keene (4) Johnson Corner (5) Connolly Station (6) Richey (4) (3) (2) (1) (6) Enbridge Enbridge High Plains Pipeline Map North Dakota (5)
15 Growing Rockies Natural Gas Production • Expected production growth of 15% to 25% through 2017 • Incremental infrastructure required to support production growth • Supportive price environment exists for Rockies supply • Acquired capabilities drive new Bakken opportunities Natural Gas Production Outlook Rockies Operating Areas MMBTU/d 0 400 800 1200 1600 2014 2015 2016 2017 2018 2019 Green River Basin Uinta Vermillion Sources: MHA Petroleum Consultants, Tesoro Logistics internal estimates
16 Natural Gas Gathering • Investing $100 million in natural gas gathering opportunities in 2015 – Add compression to Pinedale system to increase gathering and processing volumes – Add gathering and compression to Vermillion system to increase gathering volumes – Expand Uinta gathering and compression to capture increased production – $400 - $500 million additional opportunities in 2016 - 2019
17 Processing • Deliver 2015 expected EBITDA of $120 to $140 million • Increase utilization through gathering new production and commercial initiatives • Leverage capabilities to provide full-service solutions in Rockies and Bakken 120-140 140-160 150-180 2014E 2015E 2016E 2017E Expected EBITDA $ in millions 1) Expect minimal EBITDA contribution from Processing segment in Q4 2014 1 Balanced approach drives future growth
18 Processing • Identified Opportunities – Increase utilization of Uinta and Pinedale capacity with growing production and commercial capabilities – Potential processing expansion in Uinta and Vermillion to support production growth in 2017-2018
19 Terminalling & Transportation • Deliver 2015 expected EBITDA of $285 to $315 million • Focus organic growth capital within Southern California Distribution System • Increase utilization of assets acquired from Tesoro 27 57 141 260-270 285-315 300-330 310-340 2011 2012 2013 2014E 2015E 2016E 2017E Expected EBITDA $ in millions Strong demand in core West Coast market
20 Terminalling & Transportation • Investing $50 million in 2015 – New Anacortes, WA products terminal – Southern California pipeline interconnects – Evaluating new renewable fuels unit train facility in Southern California
21 Capital Plan Overview 40 60 70 70 160 300 260 250 90 110 100 2014E 2015E 2016E 2017E Capital Spend Total Maintenance Base Growth Natural Gas Growth Note: All capital spend is gross of any Tesoro reimbursements 70 150 200 225 2015E 2016E 2017E 2018E Cumulative EBITDA Organic Investment & Optimization Organic investment of $1.3 billion drives over $200 million of growth $ in millions
22 Financial Discipline Conservative leverage and ample liquidity • $900 million revolver, expandable to $1.5 billion • Expect leverage ratio to return to target range by end of 2015 • Leverage target of 3x to 4x EBITDA Pursue balanced capital structure • Maximize flexibility to fund growth • Issue equity and/or permanent debt to reload revolver Protect and grow distribution • Target prudent distribution coverage of 1.1x • Financial flexibility for continued distribution growth • Intend to continue historical distribution rate Maintain flexibility to achieve strategic objectives and grow distributions
23 Value Proposition to Unitholders 9 17 13 14 16 18 20 23 25 34 36 571 50 51 2Q 1 1 3Q 1 1 4Q 1 1 1Q 1 2 2Q 1 2 3Q 1 2 4Q 1 2 1Q 1 3 2Q 1 3 3Q 1 3 4Q 1 3 1Q 1 4 2Q 1 4 3Q 1 4 10 18 14 14 17 20 26 29 32 48 53 75 70 79 2Q 1 1 3Q 1 1 4Q 1 1 1Q 1 2 2Q 1 2 3Q 1 2 4Q 1 2 1Q 1 3 2Q 1 3 3Q 1 3 4Q 1 3 1Q 1 4 2Q 1 4 3Q 1 4 Adjusted EBITDA $ in millions3 1.35 1.40 1.45 1.51 1.64 1.82 1.89 1.96 2.04 2.18 2.26 2.36 2.46 2.57 2Q 1 1 3Q 1 1 4Q 1 1 1Q 1 2 2Q 1 2 3Q 1 2 4Q 1 2 1Q 1 3 2Q 1 3 3Q 1 3 4Q 1 3 1Q 1 4 2Q 1 4 3Q 1 4 90% Since IPO in 2Q 2011 1.1x Target coverage ratio 1) 1Q14 distributable cash flow excludes $9.7 million proceeds from sale of legacy Boise Terminal 2) CAGR = Compound Annual Growth Rate for 2011 EBITDA through the midpoint of 2014 EBITDA Guidance 3) Adjusted EBITDA excludes any gain or loss on asset disposals and impairments and inspection and maintenance expenses associated with Northwest Products System and Predecessor results Note: See Appendix for definition of EBITDA and distributable cash flow and reconciliation of EBITDA to Net Income Distributions Per LP Unit $ annualized Distributable Cash Flow $ in millions
24 Continuing to Drive Unitholder Value Well-Positioned Assets Stable Cash Flow Experienced Management Team Strong Sponsorship Attractive, Visible Growth Opportunities • Organic growth prospects • Optimization opportunities • Drop down assets • Long-term contracts • Fee-based, inflation protected and fixed minimum commitments • Minimal direct commodity exposure • Successful track record of acquiring and expanding assets • Poised to benefit from Bakken and Rockies crude oil and natural gas production growth • West Coast refined product distribution footprint • Operate critical West Coast import/export facilities • Tesoro committed to logistics driving higher proportion of consolidated EBITDA • Leverage low cost of capital to support growth and value creation
Appendix
26 Non-GAAP Financial Measures (In thousands) Tesoro Logistics LP 1Q 2Q 3Q 4Q Year 1Q 2Q 3Q 4Q Year 1Q 2Q 3Q 4Q Year 1Q 2Q 3Q Year Reconciliation of EBITDA and Distributable Cash Flow to Net Income: Net income — 7,895$ 15,127$ 11,546$ 34,568$ 11,556$ 13,085$ 15,578$ 16,572$ 56,791$ 18,678$ 19,173$ 21,053$ 20,750$ 79,654$ 44,498 32,766 32,315 109,579 Depreciation and amortization expenses — 1,684 2,017 2,024 5,725 2,001 2,526 2,908 3,534 10,969 4,081 6,338 13,028 13,947 37,394 15,525 16,460 18,091 50,076 Interest and financing costs, net — 461 601 548 1,610 511 1,039 1,810 5,632 8,992 5,604 6,571 12,284 15,123 39,582 17,747 17,473 28,220 63,440 Interest income — — — — — — — — (48) (48) (23) (470) — (9) (502) — — — — EBITDA — 10,040$ 17,745$ 14,118$ 41,903$ 14,068$ 16,650$ 20,296$ 25,690$ 76,704$ 28,340$ 31,612$ 46,365$ 49,811$ 156,128$ 77,770 66,699 78,626 223,095 Loss (gain) on asset disposals and impairments — 1 — — 1 — — 13 278 291 164 — 13 — 177 (4,748) 132 204 (4,412) Inspection and maintenance costs associated with the Northwest Products System — — — — — — — — — — — — 1,901 3,114 5,015 2,149 2,789 403 5,341 Adjusted EBITDA — 10,041$ 17,745$ 14,118$ 41,904$ 14,068$ 16,650$ 20,309$ 25,968$ 76,995$ 28,504$ 31,612$ 48,279$ 52,925$ 161,320$ 75,171 69,620 79,233 224,024 Interest and financing costs, net — (461) (601) (548) (1,610) (511) (1,039) (1,810) (5,632) (8,992) (5,604) (6,571) (12,284) (15,123) (39,582) (17,747) (17,473) (20,566) (55,786) Proceeds from sale of assets — — — — — — — — — — — — — — — 9,721 — — 9,721 Maintenance capital expenditures — (312) (260) (1,172) (1,744) 70 (1,184) (3,793) (3,794) (8,701) (1,896) (4,246) (3,260) (4,333) (13,735) (1,664) (4,628) (13,655) (19,947) Reimbursement for maintenance capital expenditure — — 8 — 8 — 532 2,396 3,241 6,169 1,183 2,404 767 621 4,975 486 1,011 2,492 3,989 Non-cash unit-based compensation expense — 123 178 178 479 378 334 151 328 1,191 430 488 490 492 1,900 347 570 442 1,359 Change in deferred revenue — — — — — — 267 (88) 130 309 383 746 (131) 844 1,842 (294) 450 201 357 Interest income — — — — — — — — 48 48 23 470 — 9 502 — — — — Amortization of debt issuance costs and other — 111 155 154 420 159 225 983 (220) 1,147 416 406 586 703 2,111 787 794 3,322 4,903 Distributable Cash Flow — 9,502$ 17,225$ 12,730$ 39,457$ 14,164$ 15,785$ 18,148$ 20,069$ 68,166$ 23,439$ 25,309$ 34,447$ 36,138$ 119,333$ 66,807$ 50,344$ 51,469 168,620 RECONCILIATION OF AMOUNTS REPORTED UNDER U.S. GAAP 2011 2012 2013 2014
27 Non-GAAP Financial Measures (In thousands) Predecessors 1Q 2Q 3Q 4Q Year 1Q 2Q 3Q 4Q Year 1Q 2Q 3Q 4Q Year 1Q 2Q 3Q Year Reconciliation of EBITDA and Distributable Cash Flow to Net Income (Loss): Net income (loss) (9,997)$ (4,954)$ (4,826)$ (4,234)$ (24,011)$ (5,647)$ 301$ (682)$ (2,725)$ (8,753)$ (1,746) (7,396)$ (20,462)$ (15,107)$ (44,711)$ (1,890) (2,266) 86 (4,070) Depreciation and amortization expenses 3,179 1,490 1,152 1,161 6,982$ 1,171 713 929 786 3,599$ 388 1,374 3,340 2,380 7,482$ 440 444 133 1,017 EBITDA (6,818) (3,464) (3,674) (3,073) (17,029) (4,476) 1,014 247 (1,939) (5,154) (1,358) (6,022) (17,122) (12,727) (37,229) (1,450) (1,822) 219 (3,053) Loss on asset disposals and impairments 25 2 — 1 28 236 — 8 — 244 — — — — — — — — — Adjusted EBITDA (6,793) (3,462) (3,674) (3,072) (17,001) (4,240) 1,014 255 (1,939) (4,910) (1,358) (6,022) (17,122) (12,727) (37,229) (1,450) (1,822) 219 (3,053) Maintenance capital expenditures (415) (303) (4,494) (1,936) (7,148) (1,014) (597) (1,352) (1,570) (4,533) (1,339) (1,807) (2,144) (1,094) (6,384) 211 (39) (153) 19 Non-cash unit-based compensation expense 17 16 17 16 66 47 (21) 116 10 152 73 (20) (23) 64 94 (24) 28 4 8 Distributable Cash Flow (7,191) (3,749) (8,151) (4,992) (24,083) (5,207) 396 (981) (3,499) (9,291) (2,624) (7,849) (19,289) (13,757) (43,519) (1,263) (1,833) 70 (3,026) Combined Consolidated Results 1Q 2Q 3Q 4Q Year 1Q 2Q 3Q 4Q Year 1Q 2Q 3Q 4Q Year 1Q 2Q 3Q Year Reconciliation of EBITDA and Distributable Cash Flow to Net Income: Net income (9,997) 2,941 10,301 7,312 10,557 5,909 13,386 14,896 13,847 48,038 16,932 11,777 591 5,643 34,943 42,608 30,500 32,401 105,509 Depreciation and amortization expenses 3,179 3,174 3,169 3,185 12,707 3,172 3,239 3,837 4,320 14,568 4,469 7,712 16,368 16,327 44,876 15,965 16,904 18,224 51,093 Interest and financing costs, net — 461 601 548 1,610 511 1,039 1,810 5,632 8,992 5,604 6,571 12,284 15,123 39,582 17,747 17,473 28,220 63,440 Interest income — — — — — — — — (48) (48) (23) (470) — (9) (502) — — — — EBITDA (6,818) 6,576 14,071 11,045 24,874 9,592 17,664 20,543 23,751 71,550 26,982 25,590 29,243 37,084 118,899 76,320 64,877 78,845 220,042 Loss (gain) on asset disposals and impairments 25 3 — 1 29 236 — 21 278 535 164 — 13 — 177 (4,748) 132 204 (4,412) Inspection and maintenance costs associated with the Northwest Products System — — — — — — — — — — — — 1,901 3,114 5,015 2,149 2,789 403 5,341 Adjusted EBITDA (6,793) 6,579 14,071 11,046 24,903 9,828 17,664 20,564 24,029 72,085 27,146 25,590 31,157 40,198 124,091 73,721 67,798 79,452 220,971 Interest and financing costs, net — (461) (601) (548) (1,610) (511) (1,039) (1,810) (5,632) (8,992) (5,604) (6,571) (12,284) (15,123) (39,582) (17,747) (17,473) (20,566) (55,786) Proceeds from sale of assets — — — — — — — — — — — — — — — 9,721 — — 9,721 Maintenance capital expenditures (415) (615) (4,754) (3,108) (8,892) (944) (1,781) (5,145) (5,364) (13,234) (3,235) (6,053) (5,404) (5,427) (20,119) (1,453) (4,667) (13,808) (19,928) Reimbursement for maintenance capital expenditures — — 8 — 8 — 532 2,396 3,241 6,169 1,183 2,404 767 621 4,975 486 1,011 2,492 3,989 Non-cash unit-based compensation expense 17 139 195 194 545 425 313 267 338 1,343 503 468 467 556 1,994 323 598 446 1,367 Change in deferred revenue — — — — — — 267 (88) 130 309 383 746 (131) 844 1,842 (294) 450 201 357 Interest income — — — — — — — — 48 48 23 470 — 9 502 — — — — Amortization of debt issuance costs and other — 111 155 154 420 159 225 983 (220) 1,147 416 406 586 703 2,111 787 794 3,322 4,903 Distributable Cash Flow (7,191) 5,753 9,074 7,738 15,374 8,957 16,181 17,167 16,570 58,875 20,815 17,460 15,158 22,381 75,814 65,544 48,511 51,539 165,594 2011 2012 2013 2014 RECONCILIATION OF AMOUNTS REPORTED UNDER U.S. GAAP 2011 2012 2013 2014
28 Non-GAAP Financial Measures (In millions) Unaudited Tesoro Logistics LP Distinctive Growth Strategy Annual EBITDA 2011A Gathering(1) Terminalling and Transportation Net earnings $ 17 $ 23 Add interest and financing costs, net - - Add depreciation and amortization expense 2 4 EBITDA $ 19 $ 27 Gain (loss) on asset disposals and impairments - - Adjusted EBITDA $ 19 $ 27 (In millions) Unaudited Tesoro Logistics LP Distinctive Growth Strategy Annual EBITDA 2012A Gathering(1) Terminalling and Transportation Net earnings $ 27 $ 49 Add interest and financing costs, net - - Add depreciation and amortization expense 3 8 EBITDA $ 30 $ 57 Gain (loss) on asset disposals and impairments - - Adjusted EBITDA $ 30 $ 57 1) For the purposes of the Gathering, Terminalling & Transportation, and Processing segments, interest expense is only recorded at a consolidated level and is excluded from these reconciliations
29 Non-GAAP Financial Measures (In millions) Unaudited Tesoro Logistics LP Distinctive Growth Strategy Annual EBITDA 2013A Gathering(1) Terminalling and Transportation Net earnings $ 33 $ 103 Add interest and financing costs, net - - Add depreciation and amortization expense 4 33 EBITDA $ 37 $ 136 Gain (loss) on asset disposals and impairments - - Inspection and maintenance costs associated with the Northwest Product System - 5 Adjusted EBITDA $ 37 $ 141 1) For the purposes of the Gathering, Terminalling & Transportation, and Processing segments, interest expense is only recorded at a consolidated level and is excluded from these reconciliations
30 Non-GAAP Financial Measures Reconciliation of Forecasted EBITDA to Forecasted Net Income QEPFS Assets 2015E Forecasted Net Income $32 - 57 Add: Depreciation and amortization expense 132 Add: Interest and financing costs, net 86 Forecasted Annual EBITDA $250 - 275 Gathering: Reconciliation of Forecasted EBITDA to Forecasted Net Income Tesoro Logistics LP Gathering Segment Forecasted EBITDA 2014E 2015E 2016E 2017E Forecasted Net Income $54 - 59 $158 - 178 $195 - 225 $206 - 266 Add: Depreciation and amortization expense 6 107 115 129 Forecasted Annual Segment EBITDA (a) $60 - 65 $265 - 285 $310 - 340 $335 - 395 Terminalling and Transportation: Reconciliation of Forecasted EBITDA to Forecasted Net Income Tesoro Logistics LP Terminalling and Transportation Segment Forecasted EBITDA 2014E 2015E 2016E 2017E Forecasted Net Income $196 -206 $220 - 250 $231 - 261 $238 - 268 Add: Depreciation and amortization expense 64 65 69 72 Forecasted Annual Segment EBITDA (a) $260 - 270 $285 - 315 $300 - 330 $310 - 340 Processing: Reconciliation of Forecasted EBITDA to Forecasted Net Income Tesoro Logistics LP Processing Segment Forecasted EBITDA 2015E 2016E 2017E Forecasted Net Income $90 - 110 $110 - 130 $120 - 150 Add: Depreciation and amortization expense 30 30 30 Forecasted Annual Segment EBITDA $120 - 140 $140 - 160 $150 - 180 a) For the purposes of the Gathering, Terminalling & Transportation, and Processing segments, interest expense is only recorded at a consolidated level and is excluded from these reconciliations.
31 Non-GAAP Financial Measures Reconciliation of Forecasted annual EBITDA to Forecasted Net Income: Annual EBITDA Contributions from Tesoro Asset Acquisitions 2014E 2015E 2016E 2017E Forecasted Net Income $ 20 $28 - 53 $56 - 106 $84 - 159 Add: Depreciation and amortization expenses 2 2 4 6 Add: Interest and financing costs, net 6 20 40 60 Forecasted Annual EBITDA $ 28 $50 - 75 $100 - 150 $150 - 225 Annual Expected EBITDA: Reconciliation of Forecasted EBITDA to Forecasted Net Income Tesoro Logistics LP Annual Expected EBITDA 2014E 2015E 2016E 2017E Forecasted Net Income $150 - 165 $285 - 375 $361 - 516 $437 - 612 Add depreciation and amortization expense 70 204 218 237 Add interest and financing costs, net 80 186 206 226 Forecasted Annual Segment EBITDA (a) $300 - 315 $675 - 765 $785 - 940 $900 - 1,075 Reconciliation of Forecasted EBITDA to Forecasted Net Income EBITDA from Potential Drop Downs Forecasted Net Income $344 Add depreciation and amortization expense 23 Add interest and financing costs, net 133 Forecasted Annual EBITDA $500 a) For the purposes of the Gathering, Terminalling & Transportation, and Processing segments, interest expense is only recorded at a consolidated level and is excluded from these reconciliations.
32 Non-GAAP Financial Measures Reconciliation of Forecasted annual EBITDA to Forecasted Net Income: High Plains Crude Oil Pipeline Reversal Project Bakken Commercial Storage Connolly Gathering System Acquisition of West Coast Logistics Assets Forecasted Net Income $ 22 $ 3 $ 12 $ 20 Add: Depreciation and amortization expenses 2 1 7 6 Add: Interest and financing costs, net 1 0 4 2 Forecasted Annual EBITDA $ 25 $ 4 $ 23 $ 28 Reconciliation of Forecasted annual EBITDA to Forecasted Net Income: Cumulative EBITDA from Organic Investments 2015E 2016E 2017E 2018E Forecasted Net Income $ 59 $ 110 $ 133 $ 133 Add: Depreciation and amortization expenses 7 25 42 58 Add: Interest and financing costs, net 4 15 25 34 Forecasted Annual EBITDA $ 70 $ 150 $ 200 $ 225 a) For the purposes of the Gathering, Terminalling & Transportation, and Processing segments, interest expense is only recorded at a consolidated level and is excluded from these reconciliations.
33 Refinery Shutdown Force Majeure High Plains Pipeline Transportation Agreement Apr-11 10 Years 2 x 5 Years 49 mbpd FERC Index High Plains Trucking Agreement Apr-11 5 Years (1) 1 x 5 Years 32 mbpd Market Comp Master Terminalling Agreement Apr-11 10 Years 2 x 5 Years 108 mbpd CPI Salt Lake City Storage Agreement Apr-11 10 Years 2 x 5 Years 878,000 bbls CPI Salt Lake City Short Haul Pipeline Agreement Apr-11 10 Years 2 x 5 Years 54 mbpd CPI Martinez Marine Terminal Use and Throughput Agreement Apr-12 10 Years 2 x 5 Years 65 mbpd CPI Anacortes Track Use and Throughput Agreement Nov-12 10 Years 2 x 5 Years 40 mbpd CPI Carson Crude Storage Services Agreement Jun-13 10 Years 2 x 5 Years 1,920,000 bbls CPI Southern California Master Terminalling Services Agreement Jun-13 10 Years 2 x 5 Years CPI Terminalling Services (amended Dec - 13) Jun-13 10 Years 2 x 5 Years 154 mbpd CPI Dedicated Storage (amended Dec - 13) Jun-13 10 Years 2 x 5 Years 2,927,143 bbls CPI Long Beach Storage Services Agreement Dec-13 10 Years 2 x 5 Years 1,995,197 bbls CPI Coke Handling Service Agreement Dec-13 10 Years 2 x 5 Years 2,212 MTPD CPI Long Beach Berth Throughput Agreement (amended Dec-13) Dec-13 10 Years 2 x 5 Years 295 mbpd CPI Long Beach Pipeline Throughput Agreement (amended Dec - 13) Dec-13 10 Years 2 x 5 Years 30 mbpd CPI Southern California Pipeline Throughput Agreement Dec-13 10 Years 2 x 5 Years 458 mbpd CPI Anacortes Terminalling Agreement Jul-14 10 Years 2 x 5 Years 8 mbpd CPI Anacortes Marine Storage Agreement Jul-14 10 Years 2 x 5 Years 1,542,000 bbls CPI Martinez Terminalling Agreement Jul-14 10 Years 2 x 5 Years CPI Terminalling Services Jul-14 10 Years 2 x 5 Years 25 mbpd CPI Dedicated LPG Storage Jul-14 10 Years 2 x 5 Years 10,908 bbls CPI Nikiski Terminalling Agreement Jul-14 10 Years 2 x 5 Years 3 mbpd CPI 29 mbpd Winter 33 mbpd Summer Tesoro Alaska Pipeline 10 Years 2 x 5 Years RCA 12 Month notice (2) Termination Provisions Initation Date Term Renewals Fixed Minimum Volume Commitment Tarrif/Fee Escalators Tesoro Logistics can declare (unilateral) N/A Sep-14 Commercial Agreements with Tesoro 1) Shorter term primarily reflects typical commercial arrangements 2) Fixed minimum volumes remain in effect during routine turnarounds