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© 2015 Tesoro Corporation. All Rights Reserved.
TLLP Investing $1.1 Billion in Acquisitions
Strengthens Position as a Leading
Integrated Midstream Services Company
November 21, 2016
Tesoro Logistics 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:
• anticipated completion of the acquisitions in North Dakota; • the expected benefits of transactions, including accretion to unitholders ; our expected
annual distribution growth; • the anticipated impact of the acquisitions on net earnings, EBITDA and revenues; • estimates regarding volumes and
capital expenditures; • expectations regarding drilling activity in North Dakota, asset utilization and the composition of our portfolio of assets ; • our
ability to meet 2017 revenue and EBITDA targets; and • expected growth opportunities.
We have used the words “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “predict”, “project”, “should”, “will” 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 and anticipated transactions
involve risks and uncertainties, many of which are outside 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. 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.
Our management uses a variety of financial and operating measures to analyze operating segment performance and also uses additional measures
that are known as “non-GAAP” financial measures in its evaluation of past performance and prospects for the future to supplement our financial
information presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). These measures are
significant factors in assessing our operating results and profitability and include earnings before interest, income taxes, and depreciation and
amortization expense (“EBITDA”). We have included various estimates of EBITDA, each of which is a non-GAAP financial measure, throughout the
presentation. Please see the Appendix for reconciliation of these EBITDA estimates.
Tesoro Logistics 3
TLLP Positioned for Significant Growth
• Acquiring North Dakota integrated crude oil and natural gas gathering
and processing assets from Whiting Oil and Gas Corporation, GBK
Investments, LLC and WBI Energy Midstream, LLC for $700 million
• Acquired terminalling and storage assets in Northern California from
Tesoro Corporation for $400 million
• Transactions expected to be immediately accretive to unitholders
• Tesoro to waive $100 million of general partner incentive distribution
rights over the next two years
• TLLP expects annual distribution growth of 12% – 15% for 2017
Acquisitions strengthen TLLP’s portfolio and support distribution growth
Tesoro Logistics 4
North Dakota Gathering and Processing Acquisition
Asset Description
• Over 650 miles of crude oil, natural gas and
produced water gathering pipeline
• Two processing facilities with 170 MMcf/d of
processing capacity with 18,700 barrels per day
fractionation capacity
Strategic Highlights
• Attractive purchase multiple expected to drive
immediate accretion to unitholders
• Significant growth potential from drilling locations
in core Bakken producing zones
• Highly utilized assets at current production levels
• Complements existing North Dakota footprint
Financial Highlights
• Total consideration of $700 million
• Expected annual net earnings of $79 – $89 million;
annual EBITDA of $100 – $110 million
• Revenues are approximately 90% fee-based and
supported by existing production
BASH Facility
TSO Fryburg Rail
Terminal
High Plains
Pipeline
TSO BakkenLink
Pipeline
Robinson Lake
Gathering &
Processing
Belfield
Gathering &
Processing
Mountrail
Billings
Dunn
Stark
Tesoro Logistics 5
0
20
40
60
80
100
120
140
160
180
200
2017 2018 2019
Committed Acreage Natural
Gas Production Profile1
MMcf/d
North Dakota Acquisition Projections
$ in millions 2017E 2018E
Volume
Natural Gas Gathering & Processing
(MMcf/d)
125 - 135 130 - 140
Crude Oil Gathering (Mbpd) 15 25
Water Gathering (Mbpd) 15 15
Net Earnings 79 – 89 82 – 97
EBITDA 100 – 110 105 – 120
Maintenance CAPEX2 5 5
1) Source: RBC Capital Markets and internal company projections
2) Included in 2017E net maintenance capital expenditures on slide 8
Existing Production New Drilling
Tesoro Logistics 6
Northern California Terminalling and Storage Acquisition
Asset Description
• 5.8 million barrels of crude oil, feedstock and
refined product storage capacity
• Marine terminal with 35,000 BPD of feedstock
and refined product throughput
Strategic Highlights
• Strategically located assets integrated with
TLLP and TSO current operations
• Expect 10% – 15% improvement in asset
utilization over next several years
• Additional organic growth opportunities
Financial Highlights
• Total consideration of $400 million
• Expected annual net earnings of $28 – $33
million; annual EBITDA of $45 – $50 million
• Initial 10 year, fee-based contract for storage
capacity and terminalling throughput
• $400 million total consideration, consisting of
borrowings under revolving credit facilities and
common and general partner units to Tesoro
Martinez
Refinery
Marine Terminal
Martinez Truck Rack
and Rail Loading
Marine
Terminal
Martinez
Refinery
Martinez
Storage
Tesoro Logistics 7
Balanced Portfolio with Minimal Commodity Exposure
• Resulting portfolio remains
balanced with 50% – 55% of
expected EBITDA from
Terminalling and Transportation
• Maintaining key revenue targets:
− Strong, fee-based business
− Approximately 50% third-party
− Approximately 1% direct commodity
exposure
2017E Pro Forma TLLP EBITDA
Profile
Terminalling &
Transportation
50%-55%
Gathering
25%-30%
Processing
15%-20%
Tesoro Logistics 8
Growth Outlook
• On target to achieve $635 million of net earnings and $1 billion of
EBITDA in 2017
• Expect 2017 annual distribution growth of 12% – 15%
• Expect 2017 growth capital expenditures of $230 million and net
maintenance capital of $65 million
• Transactions expected to be immediately accretive to unitholders
• Tesoro IDR waiver supports balanced growth of GP and LP
interests
• Continuing execution of drop down portfolio; at least $500 million
of annual earnings remain available
Tesoro Logistics 9
Continuing to Drive Unitholder Value
9
Well-Positioned Assets
Attractive, Visible
Growth Opportunities
Experienced
Management Team
Strong
Sponsorship
Stable, Fee-Based Cash
Flow
© 2015 Tesoro Corporation. All Rights Reserved.
Appendix
Tesoro Logistics 11
Non-GAAP Financial Measures
Expected Annual EBITDA Contribution
North Dakota Gathering and Processing
Assets Acquisition
Northern California
Terminalling and
Storage Assets
Acquisition
2017E 2018E 2017E
Reconciliation of Projected Net Earnings to Projected Annual EBITDA
Projected net earnings $ 79 - 89 $ 82 - 97 $ 28 - 33
Add: Depreciation and amortization expenses 15 17 8
Add: Interest and financing costs, net 6 6 9
Projected Annual EBITDA $ 100 - 110 $ 105 - 120 $ 45 - 50
Tesoro Logistics
LP EBITDA
Reconciliation
(in millions) Unaudited 2017E
Projected net earnings $ 635
Add depreciation and amortization expense 180
Add interest and financing costs, net 185
Projected EBITDA $ 1,000