Noble Midstream Partners LP - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - July 14, 2017

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Exhibit 99.1

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information is derived from the historical consolidated financial statements of Noble Midstream Partners LP (the “Partnership”) and has been adjusted to reflect the following transactions:
(1)
On June 20, 2017, the Partnership entered into a Contribution Agreement (the “Contribution Agreement”) by and among the Partnership, Noble Midstream GP LLC, the general partner of the Partnership (the “General Partner”), Noble Midstream Services, LLC, NBL Midstream, LLC (“NBL Midstream”), a subsidiary of Noble Energy, Inc. (“Noble”) and Blanco River DevCo GP LLC (“Blanco River DevCo GP”). Pursuant to the terms of the Contribution Agreement, the Partnership, on June 26, 2017, acquired from NBL Midstream (i) the remaining 20% limited partner interest in Colorado River DevCo LP and (ii) a 15% limited partner interest in Blanco River DevCo LP (collectively, (i) and (ii) are referred to herein as the “Contributed Assets”). In consideration for the acquisition of the Contributed Assets, the Partnership agreed to pay NBL Midstream total aggregate consideration of $270 million, consisting of (i) consideration of $245 million in cash and (ii) 562,430 common units representing limited partner interests in the Partnership (“Common Units”) issued to NBL Midstream.
(2)
On June 20, 2017, the Partnership entered into a Common Unit Purchase Agreement (the “Unit Purchase Agreement”) with certain institutional investors (the “Investors”) and on June 26, 2017 sold 3,525,000 Common Units in a private placement for gross proceeds of approximately $143 million (the “Private Placement”).
(3)
On April 3, 2017, Trinity River DevCo LLC, an indirect wholly owned subsidiary of the Partnership, and Plains Pipeline, L.P., a wholly owned subsidiary of Plains All American Pipeline, L.P., completed the Advantage Pipeline L.L.C (“Advantage”) acquisition for $133 million through a newly formed 50/50 joint venture. Trinity contributed $66.5 million of cash in exchange for its 50% interest in the joint venture. 
The unaudited pro forma consolidated balance sheet as of March 31, 2017 gives effect to the transactions as if they had occurred on March 31, 2017. The unaudited pro forma consolidated statements of operations for the three months ended March 31, 2017 and the year ended December 31, 2016 both give effect to the transactions as if they had occurred on January 1, 2016. This financial information reflects the assets, liabilities and results of operations of our Predecessor for periods prior to September 20, 2016, the date on which we completed our initial public offering (“Offering”). Certain pro forma adjustments reflect a proration between our Predecessor and the Partnership.





Noble Midstream Partners LP
Unaudited Pro Forma Consolidated Balance Sheet
As of March 31, 2017
(in thousands)

 
Historical
 
Financing
 
 
 
Sponsor Contribution and Advantage Acquisition Adjustments
 
 
 
Pro Forma
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Current Assets
 
 
 
 
 
 
 
 
 
 
 
Cash and Cash Equivalents
$
38,859

 
$
32,364

 
(a)
 
$
(68,164
)
 
(d)
 
$
3,059

Accounts Receivable — Affiliate
21,209

 
—

 
 
 
—

 
 
 
21,209

Other Current Assets
263

 
—

 
 
 
—

 
 
 
263

Total Current Assets
60,331

 
32,364

 
 
 
(68,164
)
 
 
 
24,531

  Property, Plant and Equipment
 
 
 
 
 
 
 
 
 
 
 
Total Property, Plant and Equipment, Gross
386,756

 
—

 
 
 
—

 
 
 
386,756

Less: Accumulated Depreciation and Amortization
(34,018
)
 
—

 
 
 
—

 
 
 
(34,018
)
Total Property, Plant and Equipment, Net
352,738

 
—

 
 
 
—

 
 
 
352,738

Investments
12,392

 
—

 
 
 
68,164

 
(d)
 
80,556

Deferred Charges
1,717

 
—

 
 
 
—

 
 
 
1,717

Total Assets
$
427,178

 
$
32,364

 
 
 
$
—

 
 
 
$
459,542

LIABILITIES
 
 
 
 
 
 
 
 
 
 
 
Current Liabilities
 
 
 
 
 
 
 
 
 
 
 
Accounts Payable — Affiliate
$
740

 
$
—

 
 
 
$
—

 
 
 
$
740

Accounts Payable — Trade
55,548

 
—

 
 
 
—

 
 
 
55,548

Current Portion of Capital Lease
4,060

 
—

 
 
 
—

 
 
 
4,060

Other Current Liabilities
2,399

 
—

 
 
 
—

 
 
 
2,399

Total Current Liabilities
62,747

 
—

 
 
 
—

 
 
 
62,747

  Asset Retirement Obligations
5,486

 
—

 
 
 
—

 
 
 
5,486

Other Long-Term Liabilities
659

 
140,000

 
(a)
 
—

 
 
 
140,659

Total Liabilities
68,892

 
140,000

 
 
 
—

 
 
 
208,892

EQUITY
 
 
 
 
 
 
 
 
 
 
 
Partners' Equity
 
 
 
 
 
 
 
 
 
 
 
Limited Partner
 
 
 
 
 
 
 
 
 
 
 
Common Units — Public (17,900 units outstanding as of March 31, 2017)
316,772

 
142,586

 
(a)
 
—

 
 
 
454,499

 
(4,497
)
 
(a)
 
 
 
 
 
(362
)
 
(b)
 
 
 
 
Common Units — Noble (2,090 units outstanding as of March 31, 2017)
(3,027
)
 
(28,458
)
 
(c)
 
5,362

 
(e)
 
(26,165
)
 
(42
)
 
(b)
 
 
 
Subordinated Units — Noble (15,903 units outstanding as of March 31, 2017)
(31,519
)
 
(216,542
)
 
(c)
 
40,799

 
(e)
 
(207,583
)
 
(321
)
 
(b)
 
 
 
Noncontrolling Interests
76,060

 
—

 
 
 
(46,161
)
 
(e)
 
29,899

Total Equity
358,286

 
(107,636
)
 
 
 
—

 
 
 
250,650

Total Liabilities and Equity
$
427,178

 
$
32,364

 
 
 
$
—

 
 
 
$
459,542


The accompanying notes are an integral part of these unaudited pro forma financial statements.





Noble Midstream Partners LP
Unaudited Pro Forma Consolidated Statement of Operations and Comprehensive Income
Three Months Ended March 31, 2017
(in thousands, except per unit amounts)

 
Historical
 
Financing
 
 
 
Sponsor Contribution and Advantage Acquisition Adjustments
 
 
 
Pro Forma
Revenues
 
 
 
 
 
 
 
 
 
 
 
Midstream Services — Affiliate
$
50,314

 
$
—

 
 
 
$
—

 
 
 
$
50,314

Costs and Expenses
 
 
 
 
 
 
 
 
 
 
 
Direct Operating
11,401

 
—

 
 
 
—

 
 
 
11,401

Depreciation and Amortization
2,449

 
—

 
 
 
—

 
 
 
2,449

General and Administrative
2,742

 
—

 
 
 
—

 
 
 
2,742

Total Operating Expenses
16,592

 
—

 
 
 
—

 
 
 
16,592

Operating Income
33,722

 
—

 
 
 
—

 
 
 
33,722

Other (Income) Expense
 
 
 
 
 
 
 
 
 
 
 
Interest Expense, Net of Amount Capitalized
267

 
805

 
(f)
 
—

 
 
 
1,072

Investment Income
(1,065
)
 
—

 
 
 
(94
)
 
(i)
 
(1,159
)
Total Other (Income) Expense
(798
)
 
805

 
 
 
(94
)
 
 
 
(87
)
Income (Loss) Before Income Taxes
34,520

 
(805
)
 
 
 
94

 
 
 
33,809

Income Tax Provision
—

 
—

 
 
 
—

 
 
 
—

Net Income (Loss) and Comprehensive Income (Loss)
34,520

 
(805
)
 
 
 
94

 
 
 
33,809

Less: Net Income Attributable to Noncontrolling Interests
10,178

 
—

 
 
 
(5,534
)
 
(j)
 
4,644

Net Income Attributable to Noble Midstream Partners LP
$
24,342

 
$
(805
)
 
 
 
$
5,628

 
 
 
$
29,165

 
 
 
 
 
 
 
 
 
 
 
 
Net Income Attributable to Noble Midstream Partners LP Per Limited Partner Unit — Basic and Diluted
 
 
 
 
 
 
 
 
 
 
 
Common Units
$
0.77

 
 
 
 
 
 
 
 
 
$
0.81

Subordinated Units
$
0.77

 
 
 
 
 
 
 
 
 
$
0.81

 
 
 
 
 
 
 
 
 
 
 
 
Weighted Average Limited Partner Units Outstanding — Basic
 
 
 
 
 
 
 
 
 
 
 
Common Units — Public
14,375

 
3,525

 
(g)
 
—

 
 
 
17,900

Common Units — Noble
1,528

 
562

 
(h)
 
—

 
 
 
2,090

Subordinated Units — Noble
15,903

 
—

 
 
 
—

 
 
 
15,903

 
 
 
 
 
 
 
 
 
 
 
 
Weighted Average Limited Partner Units Outstanding — Diluted
 
 
 
 
 
 
 
 
 
 
 
Common Units — Public
14,381

 
3,525

 
(g)
 
—

 
 
 
17,906

Common Units — Noble
1,528

 
562

 
(h)
 
—

 
 
 
2,090

Subordinated Units — Noble
15,903

 
—

 
 
 
—

 
 
 
15,903


The accompanying notes are an integral part of these unaudited pro forma financial statements.





Noble Midstream Partners LP
Unaudited Pro Forma Consolidated Statement of Operations and Comprehensive Income
Year Ended December 31, 2016
(in thousands, except per unit amounts)

 
Historical
 
Financing
 
 
 
Sponsor Contribution and Advantage Acquisition Adjustments
 
 
 
Pro Forma
Revenues
 
 
 
 
 
 
 
 
 
 
 
Midstream Services — Affiliate
$
160,724

 
$
—

 
 
 
$
—

 
 
 
$
160,724

Costs and Expenses
 
 
 
 
 
 
 
 
 
 
 
Direct Operating
29,107

 
—

 
 
 
—

 
 
 
29,107

Depreciation and Amortization
9,066

 
—

 
 
 
—

 
 
 
9,066

General and Administrative
9,914

 
—

 
 
 
—

 
 
 
9,914

Total Operating Expenses
48,087

 
—

 
 
 
—

 
 
 
48,087

Operating Income (Loss)
112,637

 
—

 
 
 
—

 
 
 
112,637

Other (Income) Expense
 
 
 
 
 
 
 
 
 
 
 
Interest Expense, Net of Amount Capitalized
3,373

 
3,745

 
(f)
 
—

 
 
 
7,118

Investment Income
(4,526
)
 
—

 
 
 
(2,717
)
 
(i)
 
(7,243
)
Total Other (Income) Expense
(1,153
)
 
3,745

 
 
 
(2,717
)
 
 
 
(125
)
Income (Loss) Before Income Taxes
113,790

 
(3,745
)
 
 
 
2,717

 
 
 
112,762

Income Tax Provision (Benefit)
28,288

 
(1,025
)
 
(k)
 
744

 
(n)
 
28,007

Net Income (Loss) and Comprehensive Income (Loss)
85,502

 
(2,720
)
 
 
 
1,973

 
 
 
84,755

Less: Net Income (Loss) Prior to the Offering on September 20, 2016
45,990

 
(1,666
)
 
(l)
 
1,210

 
(l)
 
45,534

Net Income (Loss) Subsequent to the Offering on September 20, 2016
39,512

 
(1,054
)
 
(m)
 
763

 
(m)
 
39,221

Less: Net Income (Loss) Attributable to Noncontrolling Interests Subsequent to the Offering on September 20, 2016
11,054

 
—

 
 
 
(6,588
)
 
(j)
 
4,466

Net Income Attributable to Noble Midstream Partners LP Subsequent to the Offering on September 20, 2016
$
28,458

 
$
(1,054
)
 
 
 
$
7,351

 
 
 
$
34,755

 
 
 
 
 
 
 
 
 
 
 
 
Net Income Subsequent to the Offering on September 20, 2016 Per Limited Partner Unit — Basic and Diluted
 
 
 
 
 
 
 
 
 
 
 
Common Units
$
0.89

 
 
 
 
 
 
 
 
 
$
0.97

Subordinated Units
$
0.89

 
 
 
 
 
 
 
 
 
$
0.97

 
 
 
 
 
 
 
 
 
 
 
 
Average Limited Partner Units Outstanding — Basic and Diluted
 
 
 
 
 
 
 
 
 
 
 
Common Units — Public
14,375

 
3,525

 
(g)
 
—

 
 
 
17,900

Common Units — Noble
1,528

 
562

 
(h)
 
—

 
 
 
2,090

Subordinated Units — Noble
15,903

 
—

 
 
 
—

 
 
 
15,903


The accompanying notes are an integral part of these unaudited pro forma financial statements.



Noble Midstream Partners LP
Notes to Unaudited Pro Forma Consolidated Financial Statements


Note 1. Basis of Presentation
The unaudited pro forma combined financial information has been derived from the historical consolidated financial statements of the Partnership. The unaudited pro forma combined balance sheet as of March 31, 2017 gives effect to the transactions as if they had occurred on March 31, 2017. The unaudited pro forma combined statements of operations for the three months ended March 31, 2017 and the year ended December 31, 2016 both give effect to the transactions as if they had occurred on January 1, 2016.
Note 2. Pro Forma Adjustments and Assumptions
The pro forma adjustments are based on currently available information and certain estimates and assumptions and, therefore, the actual effects of these transactions will differ from the pro forma adjustments. We have only included adjustments that are directly attributable to the transactions, factually supportable and, with respect to the statements of operations, expected to have a continuing impact on the combined results. A general description of these transactions and adjustments is provided as follows:
(a)
Represents the cash transactions associated with financing and paying for the acquisition of the Contributed Assets. The cash transactions are as follows (in thousands):
Borrowing on Revolving Credit Facility
$
140,000

Gross Proceeds Received from the Private Placement
142,586

Total Cash Inflow
282,586

Less: Cash Consideration Paid for the Contributed Assets
245,000

Less: Equity Offering Related Costs
4,497

Less: Legal, Accounting and Advisory Fees
725

Net Cash Inflow
$
32,364

(b)
Represents the allocation of the $0.7 million in legal, accounting and consulting fees within limited partner equity. The allocation is based on the number of units within each class.
(c)
Represents the allocation of the $245 million in cash consideration paid for the acquisition of the Contributed Assets to Noble's share of equity. The allocation is based on the number of units Noble owns of each class.
(d)
Represents the Partnership's total cash investment in the Advantage joint venture as well as the Partnership's basis in the equity method investment.
(e)
Represents the allocation of Noble's $46.2 million basis in the Contributed Assets.
(f)
Represents the net interest expense associated with drawing $140 million on our revolving credit facility. The interest rate on our revolving credit facility is 2.5%.
(g)
Represents the 3,525,000 Common Units sold to the Investors in the Private Placement.
(h)
Represents the equity component of the consideration, 562,430 Common Units, provided to Noble for the acquisition of the Contributed Assets.
(i)
Represents the Partnership's share of income from the Advantage equity method investment.
(j)
Represents the Net Income of the Contributed Assets that is no longer included in noncontrolling interests.
(k)
Represents the income tax effect of the net interest expense associated with the outstanding balance on our revolving credit facility. Our Predecessor's effective tax rate was 38.1%.
(l)
Represents the portion of income earned prior to the Partnership's Offering that was subject to federal income taxes.
(m)
Represents the portion of income earned subsequent to the Partnership's Offering. Subsequent to the Offering, the Partnership is not a taxable entity for U.S. federal income tax purposes or for the majority of states that impose an income tax and taxes are generally borne by our partners through the allocation of taxable income.
(n)
Represents the income tax effect of the Partnership's share of income from the Advantage equity method investment. Our Predecessor's effective tax rate was 38.1%.



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