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Hiland Partners, LP (HLND)Hiland Holdings GP, LP (HPGP)
2006 RBC Master Limited Partnership ConferenceFour Seasons Hotel at Las Colinas, Dallas, TXNovember 16 & 17, 2006
Randy MoederChief Executive Officer, President and Director
2
Risks and Forward-Looking StatementsInvestment in the common units of Hiland Partners, LP and Hiland Holdings GP, LP (collectively “Hiland” or the “Partnership”) involves risks associated with the Partnership’s business, the Partnership’s structure and the tax characteristics of the common units. These risks can significantly impact the market value of Hiland’s common units.
The statements made by representatives of Hiland during the course of this presentation that are not historical facts are forward-looking statements. Although Hiland believes that the assumptions underlying these statements are reasonable, investors are cautioned that such forward-looking statements are inherently uncertain and necessarily involve risks that may affect Hiland’s business prospects and performance, causing actual results to differ from those discussed during this presentation. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements included in Hiland’s various filings with the Securities & Exchange Commission (“SEC”).
Any forward-looking statements made are subject to all of the risks and uncertainties, many of which are beyond management’s control, involved in gathering, compressing, dehydrating, treating, processing and marketing natural gas, fractionating NGLs and providing air compression and water injection services for oil and gas secondary recovery operations. These risks include the risks described in the Preliminary Prospectus. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Hiland’s actual results and plans could differ materially from those expressed in any forward-looking statements.
The Partnership undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information or future events.
3
An Overview of Hiland
Hiland Holdings GP, LP
(Nasdaq: HPGP)
Hiland Partners, LP
(Nasdaq: HLND)
2.0% G.P.Interest
57% L.P.Interest 41% L.P.
Interest
Ownership Structure
All Assets & Operations
Public Unitholders
Strong operational and financial attributes
– Modern, strategically located assets
– Proven track record of executing growth strategy
Over $248 million of acquisitions / internal growth projects announced / closed in the last twelve months
– Visible inventory of growth prospects
– Strong distribution coverage
– Financial flexibility to fund growth
– Broad range of midstream services
– Experienced management team
Management’s interests are aligned with unitholdersHPGP Market Capitalization: $525 million
HLND Market Capitalization: $450 million
4
Business Strategy
Engage in construction and expansion opportunities
– Unique relationship with Continental Resources, Inc.
– Construct and expand systems to meet growing demand
Pursue complementary acquisitions
– Target opportunities that offer operational efficiencies and increased utilization
Increase volumes on existing assets
Reduce exposure to commodity price risk
Grow distributions to unitholders
5
Background & Continental Resources, Inc. Relationship
Hiland’s predecessor formed in 1990 to support privately-held Continental Resources, Inc.’s (“CRI”) E&P activities
CRI is a large E&P company with an active drilling program– Mid-Continent and Rocky Mountain regions – Specializes in horizontal drilling and large exploration activities – Focuses on areas without existing gathering infrastructure
HLND, HPGP and CRI are separate entities with Harold Hamm as thecontrolling equity holder of both
CRI contributed 31% of HLND’s total natural gas revenue for the nine months ended September 30, 2006
Hiland’s relationship with CRI has enabled it to significantly expand its asset base– Bakken Acquisition– Badlands Expansion
6
Midstream Natural Gas Industry
TransmissionLines
End Users
TransmissionLines
Wellhead
Gathering, Dehydrationand Compression
Processing, Treating and Fractionation
NGL ProductsTransportation
MarketableNGL
Products
Hiland Partners’
Midstream Focus
7
HLND Distribution Growth Since IPO
Hiland Partners has increased its cash distribution every quarter since its IPO
__________________1. Represents the MQD of $0.45 ($1.80 annualized). A pro rata portion of the MQD ($0.225) was paid for the first quarter of 2005.
An
nual
ized
Qu
arte
rly
Dis
trib
uti
on
$1.80 $1.85$2.05
$2.50 $2.60 $2.70 $2.80
$0.00
$0.40
$0.80
$1.20
$1.60
$2.00
$2.40
$2.80
$3.20
05Q1 05Q2 05Q3 05Q4 06Q1 06Q2 06Q3
56% growthQ3 '06 vs. Q1 '05
(1)
8
Strong Price Performance Since IPO• Consistent track record of organic and acquisition-oriented growth and
increased distributions
75
100
125
150
175
200
225
250
2/10/05 5/11/05 8/9/05 11/4/05 2/6/06 5/5/06 8/3/06 10/31/06
Hiland Partners, LP Hiland Holdings GP, LP S&P 500
+116.4%
+29.7%
+15.1%
Inde
xed
Pri
ce P
erfo
rman
ce (
%)
2/10/05: HLND prices IPO at $22.50 per unit with MQD of $1.80 per unit.
7/26/05: HLND announces distribution increase to $1.85 per unit (annualized).
9/12/05: HLND announces Bakken acquisition ($95 million).
11/10/05: HLND announces Badlands expansion ($40 million).
3/30/06: HLND announces acquisition of Enogex gathering assets ($93 million).
7/25/06: HLND announces distribution increase to $2.70 per unit (annualized).
10/25/05: HLND announces distribution increase to $2.05 per unit (annualized).
1/24/06: HLND announces distribution increase to $2.50 per unit (annualized).
4/26/06: HLND announces distribution increase to $2.60 per unit (annualized).
8/23/06: HLND announces planned expansion projects ($15 million).
10/24/06: HLND announces distribution increase to $2.80 per unit (annualized).
9/19/06: HPGP prices IPO at $18.50 per unit with MQD of $0.74.
10/24/06: HPGP announces initial distribution increase to $0.81 per unit (annualized).
Asset Overview
10
Hiland Cash Flow Growth Supported by High Quality Asset Base
Enid Pipeline
Driscoll
Stovall
Enid, OKCorporate Headquarters
Matli Gathering SystemKinta Gathering System
Badlands Gathering System
Cedar Hills Compression Facility
Bakken Gathering System
Eagle Chief Gathering System
Worland Gathering System
Hiland Partners is a growth-oriented midstream MLP– 1,800 miles of pipelines
– 13 gathering systems
– 5 processing plants
– 3 treating facilities
– 3 fractionation facilities
– 2 air compression facilities
– Water injection plant
Nine months ended September 30, 2006:– 64.8 MMBtu/d of natural gas sales
– 72.7 MMBtu/d of natural gas gathered
– 3,256 Bbls/d of NGL sales
HLND EBITDA for the LTM ended 9/30/06 of ~ $40.5 million(1)
1. EBITDA is defined as net income (loss) plus interest expense, provision for income taxes and depreciation, amortization and accretion expense..
11
Execution of Business Strategy
Acquired in Sept. 2005 for $95 million from an affiliate of Hiland’s G.P.
Expansion of gathering and compression infrastructure to improve efficiency
– Expected to be completed in 4Q 2006
Expansion of NGL fractionation facilities
– Increased volumes from Bakken and Badlands Plants
– Expected to be completed in 2Q 2007
Major Gas Suppliers:– Enerplus– CRI– Burlington
Operating Highlights– 302 miles of pipelines
– 207 wells connected– 25,000 Mcf/d processing
plant capacity– Fractionation facility
– 34.8% of total segment margin for the nine months ended September 30, 2006
Bakken Gathering System
12
Execution of Business Strategy
Announced significant expansion of system in Nov. 2005
– $40 million capex in 2006; $9.5 million in 2007
– Constructing a 40 MMcf/d nitrogen rejection plant
– Expanding gathering infrastructure
– 15 year agreement with CRI
– 50% / 50% POP (with fees)
$3 million project to expand into South Dakota
– Completed on October 10, 2006
Major Gas Suppliers:– CRI– Luff– Burlington
Operating Highlights– 141 miles of pipeline
– 105 wells connected
– 5,000 Mcf/d processing plant capacity
– Treating facility
– Fractionation facility
– 7.6% of total segment margin for the nine months ended September 30, 2006
Badlands Gathering System
13
Execution of Business Strategy
Badlands Air Compression and Water Injection Facilities
CRI secondary recovery operations
8 compression units
29,300 of horsepower in aggregate
Compress air to 4,000 psig
Inject water at 2,000 psig
Fixed-fee “take-or-pay” type contracts
8.0% of total segment margin for the nine months ended September 30, 2006
14
Execution of Business Strategy
Natural gas supplied under long-term POI contracts
Residue gas sold to intrastate markets
Major Gas Suppliers:– CRI– KCS
Operating Highlights– 151 miles of pipeline
– 94 wells connected
– 8,000 Mcf/d processing plant capacity
– Treating facility
– Fractionation facility
– 7.8% of total segment margin for the nine months ended September 30, 2006
Worland Gathering System
15
Execution of Business Strategy
Matli Gathering System
Announced construction of a new natural gas plant
– 25 MMcf/d of capacity
– Additional capacity for increased system volumes
– $2.8 million capex
– Expected to be operational 4Q 2006
Major Gas Suppliers:– CRI– Range
Operating Highlights– 49 miles of pipelines
– 44 wells connected
– Currently, 10,000 Mcf/d processing plant capacity
– Treating facility
– 6.6% of total segment margin for the nine months ended September 30, 2006
16
Execution of Business Strategy
Eagle Chief Gathering System
Announced expansion of pipeline and compression facilities in Aug. 2006
– Increase system capacity to ~35,500 Mcf/d
– Expected to be completed by 4Q 2006
Major Gas Suppliers:– Chesapeake– CRI
Operating Highlights– 569 miles of pipelines
– 404 wells connected
– 35,000 Mcf/d processing plant capacity
– 20.1% of total segment margin for the nine months ended September 30, 2006
17
Execution of Business StrategyKinta Gathering System
Acquired for $93 million effective May 1, 2006
Fixed fee contracts
Installation of four amine-treating facilities
– Removes excess CO2 from gas
– Expected to be completed in 1Q 2007
Additional compression facilities to increase capacity by 11,000 Mcf/d
– Expected to be completed in 1Q 2007
Major Gas Suppliers:– BP America– Chesapeake– Chevron
Operating Highlights– Five gathering systems
– 572 miles of pipeline
– 691 wells connected
– Gathering approximately 137,000 Mcf/d (avg. May – September 2006)
– 14.1% of total segment margin for the nine months ended September 30, 2006
18
Project Summary Time Line
10/1/06 11/1/06 12/1/06 1/1/07 2/1/07 3/1/07 4/1/07 5/1/07
Kinta CompressorProject
NE Wildlife Treating Facility
(Kinta)
Eagle Chief Expansion Project
Bakken Compression
Project
Matli Processing
Plant
Badlands Gathering Expansion
Bakken Rail Spur
(Fully Operational)
Badlands Processing Plant
Bakken Frac Train Expansion
Dow Treating Facility (Kinta)
Harthshorne Treating Facility
(Kinta)
Panther Mountain Treating Facility
(Kinta)
November 16, 2006
19
Midstream Segment Contract Mix
Eagle Chief
Matli
Worland
Badlands - 100.0% Fixed Fee
- 59.8% POP- 36.8% POI- 3.4% Fixed Fee
- 95.7% POI- 4.3% Fixed Fee
Total Inlet Volumes (MMBtu/d)(1) Total System Margin(1)
Bakken
For 2006, 50% of HLND’s gross margin is either hedged or subject to fixed-fee arrangements
For 2007 and 2008, 75% of HLND’s gross margin is either hedged or subject to fixed-fee arrangements
Fixed-Fee65.8% (2)
Percent of Index8.4%
Percent ofProceeds25.8%
- 100% POP
Kinta- 100.0%POP
- 100% Fixed Fee
__________________1. Represents data for the nine months ended September 30, 2006.2. Includes both fixed-fee purchase arrangements and fixed-fee gathering arrangements.
Financial Overview
21
HLND Operational and Financial Highlights
Natural Gas Sales (MMBtu/d)
31,148
41,457 44,063 47,096
64,796
0
20,000
40,000
60,000
80,000
2002 2003 2004 2005 9/30/06
CAGR=20%
NGL Sales (Bbls/d)
1,232 1,1771,437
1,965
3,256
0
1,000
2,000
3,000
4,000
2002 2003 2004 2005 9/30/06
CAGR=28%
__________________Note: Historical 2002-2004 data reflects the combined results of Hiland’s predecessor and Hiland Partners, LLC.1. EBITDA is defined as a net income (loss) plus interest expense, provision for income taxes and depreciation, amortization and accretion expense.
CAGR=64%
Revenues
$40,952
$86,580
$112,631
$166,601 $163,415
0
50,000
100,000
150,000
200,000
2002 2003 2004 2005 389909 monthsended
9/30/2006
CAGR=60%
EBITDA (1)
$5,383
$10,446
$17,402
$23,875
$30,879
0
10,000
20,000
30,000
40,000
2002 2003 2004 2005 389909 monthsended
9/30/2006
22
Strong Balance Sheet
• HLND has $65.9 million of available capacity under its existing $200 million credit facility
September 30, 2006
Book Value Capitalization Ratio(unaudited - $’s in 000’s)
Capitalization:
Total debt $134,064 43.9%
Total partners’ capital 171,248 56.1%
Total capitalization $305,312 100.0%
23
Comparable MLPs
• HLND has demonstrated strong distribution growth in the past andhas significant potential to grow in the future relative to peers
Relative Market Capitalization (1)
0
2,000
4,000
6,000
8,000
10,000
12,000
EPD ETP VLI MMP BPL XTEX NRGY ARLP PVR APL HLND
Equ
ity
Ma
rket
Cap
($
mill
ions
)
MLP Distribution Growth – LTM (2)
50%
37%
23% 21%
12% 11%7% 7% 7% 7% 5%
0%
10%
20%
30%
40%
50%
60%
ETP HLND PVR ARLP XTEX MMP VLI EPD BPL NRGY APL
% I
ncre
ase
in D
istr
ibut
ion
__________________1. Market capitalization based on closing unit prices as of November 6, 2006.2. LTM as of 9/30/06.
Questions and Answers
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