Extends Annual 20% Distribution per Unit Organic Growth Target and Financial Outlook through 2022
HOUSTON–(BUSINESS WIRE)–Noble Midstream Partners LP (NYSE: NBLX) (“Noble Midstream” or the “Partnership”) today announced its 2018 capital budget and guidance as well as an updated long-term outlook through 2022.
2018 Guidance Highlights include:
- GAAP Net Income of $220 – $260 million
- Gross Oil and Gas gathering volumes of 200 – 235 thousand barrels of oil equivalent per day (MBoe/d), up 144% year over year at the midpoint
- Gross Produced Water gathering volumes of 80 – 110 thousand barrels of water per day (MBw/d), up over 3 times 2017 levels at the midpoint
- Gross Fresh Water delivery volumes of 130 – 190 MBw/d, up 3% from 2017 at the midpoint
- Adjusted EBITDA1 of $275 – $315 million, or $215 – $235 million attributable to the Partnership, a 45% increase to the Partnership as reported to 2017
- Targeted 2018 distribution per unit (DPU) growth of 20%
- Distributable Cash Flow (DCF)1 coverage of 1.9x – 2.1x
- Capital budget of $485 – $535 million, or $255 – $285 million attributable to the Partnership¹
Long-Term Outlook Highlights include:
- Extension of the outlook period by two years to 2022, now providing five forward looking years
- 20% DPU annual growth target excluding drop downs extended through 2022
- DCF1 coverage exceeding 1.3x in each year through 2022
- Portfolio positioned for self-funding, with potential for DCF1 to fund approximately 90% of distributions and capex cumulatively from 2019 – 2022E in the base organic plan
- Return on average capital employed, ROACE2, of between 13 – 16%
- Gathering business represents approximately 76% of cumulative net EBITDA between 2019-2022E
- Reaffirming target of 50% Partnership EBITDA contribution from the Permian by the end of 2020
“Entering 2018, we are focused on executing key development projects as well as integrating Black Diamond Gathering. Our capital program this year supports strong throughput growth at attractive returns and reflects the beginning of a multi-year capital efficiency benefit as we leverage existing backbone infrastructure,” stated Terry R. Gerhart, Chief Executive Officer of Noble Midstream.
“The combined impact of portfolio enhancements and continued customer success with enhanced completions over the past year has been transformational. In addition, with commercial success at Advantage materially exceeding initial expectations, I am confident in the Partnership’s ability to drive rapid value creation at Black Diamond Gathering. As a result, we are extending our best in class distribution growth through 2022 and remain committed to financial strength. Our portfolio and assets are capable of self-funding as an increasing percentage of capital is allocated to capital efficient well connects,” Gerhart continued.
Volumes from Black Diamond Gathering, LLC (“Black Diamond Gathering”) are included in total Partnership financial statements beginning with the January 31, 2018 Saddle Butte acquisition close date. The Partnership’s 54.4% ownership of Black Diamond Gathering will be consolidated for accounting purposes and be held through its wholly owned subsidiary, Laramie River DevCo LP. Greenfield Midstream, LLC owns 45.6% of Black Diamond Gathering.
Noble Midstream refers to certain results as “attributable to the Partnership,” which excludes the non-controlling interests in the development companies (“DevCos”) retained by Noble Midstream’s sponsor, Noble Energy, Inc. (“Noble Energy”). We believe the results “attributable to the Partnership” provide the best representation of the ongoing operations from which our unitholders will benefit.
Full Year 2018 Volume Guidance
Full year throughput is anticipated to grow significantly in 2018, and accelerate in the second half of the year, as customers increase activity and multiple new projects are expected to be placed in service.
The core gathering business should experience sequential quarterly growth in every quarter. In the DJ Basin, key drivers include third party volume growth at Laramie River and a second half gathering volume ramp at Green River. In the Delaware Basin, volumes benefit from a full year of Billy Miner I and Jesse James central gathering facilities (CGFs), with growth accelerating in the second half of the year once all five CGFs are online.
Also contributing to throughput growth is an increase in equivalent wells connected, as approximately 700 equivalent wells are anticipated to be connected in 2018 as compared to 308 in 2017. Approximately 60% of these well connections are anticipated in the second half of the year.
Total fresh water delivery volumes are anticipated to be 130 to 190 MBw/d. Based on our current customer development plans, we are anticipating a modest sequential increase in volumes during 1Q at the midpoint of guidance followed by a decline in 2Q. At the guidance midpoint, we currently expect second half 2018 fresh water delivery volumes be approximately 45% above first half 2018 volumes on activity timing.
Advantage Pipeline throughput is anticipated to be between 90 to 100 MBbl/d, an increase of 121% versus the April to December period of ownership during 2017. These volumes are not included in our oil and gas gathering volume guidance given accounting treatment classification as equity from investment income.
2018 Capital Budget
Excluding acquisition capital, Noble Midstream’s 2018 capital budget is $485 – $535 million, or $255 – $285 million attributable to the Partnership, primarily on growth projects in the DJ Basin and the Delaware Basin. The capital budget does not assume any drop-downs.
Blanco River DevCo (NBLX ownership: 40%)
Approximately 45% of Noble Midstream’s gross capital is expected to be deployed in the Blanco River DevCo building backbone infrastructure for oil, gas, and produced water gathering services to support Noble Energy’s activity. The Partnership is constructing 3 CGFs, with an online date of approximately one per month starting in mid March. This will bring total gathering capacity in the Delaware Basin to 90 MBbl/d for oil, 150 million cubic feet per day (MMcf/d) for gas and 240 MBbl/d for produced water.
Trinity River DevCo (NBLX ownership: 100%)
The Trinity River DevCo holds the Partnership’s interest in the Advantage Pipeline joint venture as well as the newly added compression service in the Delaware Basin for Noble Energy. 2018 capital reflects approximately $30 million of initial funding of the compression segment for 120 MMcf/d of capacity staged into service to closely match Noble Energy’s volume ramp. In addition, Noble Midstream’s budget includes approximately $10 million gross capital for three additional pumps at Advantage, expanding pipeline throughput by over 30% to 200 MBbl/d to accommodate future growth.
Laramie River DevCo (NBLX ownership: 100%)
During 2018, 29% of the Partnership’s gross capital budget is expected to be allocated to the Laramie River DevCo. Our infrastructure now drives efficient capital deployment, supporting 8 to 10 rigs in this area for the year. The Partnership also expects providing fresh water delivery for multiple pads for SRC Energy during 2018. Black Diamond Gathering capital for the year is associated with well connections, additional looping infrastructure and an expansion at the Milton terminal to 300 MBbl/d.
Green River DevCo (NBLX ownership: 25%)
Noble Midstream plans to spend an estimated 13% of its gross capital budget in the Green River DevCo to continue the build out of backbone infrastructure in Noble Energy’s Mustang integrated development plan (IDP). The Partnership will provide crude oil, gas, and produced water gathering, as well as fresh water delivery services in the Mustang IDP. The fresh water delivery system is operationally ready for deliveries which are anticipated to commence at the end of the first quarter. The spec gathering system is anticipated to be online at mid-year, supporting well connections in the second half of 2018.
Colorado River DevCo (NBLX ownership: 100%)
The Partnership plans to continue expanding its Colorado River DevCo system, spending an estimated 4% of its capital budget on highly efficient capital projects in Noble Energy’s Wells Ranch IDP. Capital also reflects the expansion of gas throughput capacity at Wells Ranch to 200 MMcf/d. Noble Midstream provides crude oil, gas and produced water gathering and fresh water delivery in Wells Ranch for Noble Energy.
Additional average daily volume guidance, including guidance by DevCo and by product, is included in the presentation materials for the Partnership’s conference call to be held today Tuesday, February 20, 2018, which will be accessible on the ‘Investors’ page on the Partnership’s website at www.nblmidstream.com. For additional information, see “Conference Call and Supplemental Information” below. First quarter 2018 guidance information is also included in the presentation materials.
The Partnership anticipates organic DPU growth of 20% annually through 2022 excluding drop downs from Noble Energy of its retained DevCo interests or wholly owned midstream assets. Additionally, DCF¹ coverage is expected to exceed 1.3x in all years through the same period.
2018 Guidance Table
|Year Ended December 31,|
|Oil Gathered (MBbl/d)||66||160 – 190||165%|
|Gas Gathered (BBtu/d)||181||285 – 350||75%|
|Oil and Gas Gathered (MBoe/d)||89||200 – 235||144%|
|Produced Water Gathered (MBw/d)||24||80 – 110||296%|
|Fresh Water Delivered (MBw/d)||156||130 – 190||3%|
|Financial Information – Gross (in millions)|
|Net Income||$||164||$ 220 – 260||46%|
|Adjusted EBITDA1||$||179||$ 275 – 315||65%|
|Financial Information – Attributable to the Partnership (in millions)|
|Adjusted EBITDA1||$||155||$ 215 – 235||45%|
|Distributable Cash Flow1||$||138||$ 180 – 195||36%|
|Distribution Coverage Ratio1, 3||2.1x||1.9x – 2.1x||—|
|Equivalent Wells Connected||308||~700||>100%|
Results “attributable to the Partnership” exclude the non-controlling interests in the DevCos retained by Noble Energy. Adjusted EBITDA, DCF, Distribution Coverage Ratio and ROACE are not financial measures calculated in accordance with Generally Accepted Accounting Principles (“GAAP”). For definitions of these non-GAAP measures, see “Non-GAAP Financial Measures” below.
Return on capital employed: EBIT/(Average Total Assets – Average Current Liabilities)
Assumes 20% Distribution Growth
Conference Call and Supplemental Information
Noble Midstream will host a webcast and conference call today at 1:00 p.m. Central Time to discuss fourth quarter and full 2017 financial and operational results as well as 2018 guidance. The live audio webcast and related presentation material is accessible on the ‘Investors’ page of the Partnership’s website at www.nblmidstream.com. Conference call numbers for participation are 877-883-0383, or 412-902-6506 for international calls. The passcode number is 0571805. A replay of the conference call will be available at the same web location following the event.
About Noble Midstream Partners LP
Noble Midstream is a growth-oriented Delaware master limited partnership formed by Noble Energy, to own, operate, develop and acquire domestic midstream infrastructure assets. Noble Midstream currently provides crude oil, natural gas, and water-related midstream services in the DJ Basin in Colorado and the Delaware Basin in Texas. For more information, please visit www.nblmidstream.com.