HOUSTON–(BUSINESS WIRE)–Noble Midstream Partners LP (NYSE: NBLX) (Noble Midstream or the Partnership) today announced its 2019 guidance, including planned capital expenditures, anticipated volumes and expected financial outcomes.
“Entering 2019, we are extremely focused on driving significant capital efficiencies in our base gathering business, while our recently announced equity investments will meaningfully expand Noble Midstream’s presence in the Permian Basin. Our team has done a fantastic job transforming the company from a single customer gatherer to a more diverse multi-basin MLP, providing services to a growing customer base. The added stability of Partnership cash flows increases our confidence in delivering on our promises to unitholders,” stated Terry R. Gerhart, Chief Executive Officer of Noble Midstream.
“In a $50 per barrel oil price environment, we continue to believe the Partnership’s strong business fundamentals and significant Permian additions have enhanced an already strong growth outlook and offer further support for our 20% distribution per unit growth target. This is coupled with very strong distribution coverage. We have secured transformational Permian investments in the EPIC and Delaware Crossing pipelines while committing to a prudent long-term leverage target of approximately three times, organically, as these projects begin contributing meaningfully to the Partnership.”
2019 Guidance Highlights:
2019 guidance assumes no impact from EPIC projects to financials with the exception of leverage targets and incremental interest expense from project investment
- GAAP Net Income expected in the range of $229 to $268 million
- Adjusted EBITDA1 between $340 and $390 million, a 24% to 42% increase as reported to 2018
- Adjusted EBITDA1 attributable to the Partnership anticipated between $245 and $270 million, an 11% to 22% increase to the Partnership as reported to 2018
- Capital budget attributable to the Partnership in the range of $180 to $210 million, a 24% to 35% decrease to the Partnership versus 2018 (excluding Delaware Crossing and EPIC investments)
- In addition, Noble Midstream estimates combined equity investments in the Delaware Crossing, EPIC Crude, and EPIC Y-Grade pipelines of between $570 and $615 million, prior to any financing specific to Noble Midstream’s EPIC Crude investment
- The core gathering segment is expected to represent over 80% of Adjusted EBITDA1 attributable to the Partnership
- Targeted 2019 distribution per unit (DPU) growth of 20%, or $2.63 per unit
- Distributable Cash Flow (DCF)¹ coverage of 1.5x – 1.7x
- Combined gross oil, gas and produced water gathering growth of nearly 40% in the DJ Basin and approximately 80% in the Delaware Basin at the midpoint of guidance
2020 Preview and Long-Term Outlook:
- Anticipate adjusted EBITDA1 attributable to the Partnership of at least $300 million in 2020, representing at least 17% growth versus the midpoint of 2019 guidance, prior to contribution from the EPIC Crude and EPIC Y-Grade pipelines. This assumes a $50 per barrel crude oil price
- Exiting 2020, expect Noble Midstream’s proportionate share of annualized EPIC Crude and Y-Grade equity cash flows totaling $50-70 million and anticipate combined long-term equity investment multiple compression to between 6x and 7x; these figures are prior to any financing specific to Noble Midstream’s EPIC Crude investment
- Continuing 20% annual DPU growth with at least a 1.3x DCF coverage1 through 2022
- Annualized year-end leverage1 is anticipated to be between 4.0x and 4.25x in 2019 during the construction period for the Delaware Crossing and EPIC pipeline projects; annualized leverage1 is anticipated to gradually decline to approximately 3.5x by year-end 2020 with a long term target of approximately 3x
- Reaffirming target of 50% Partnership Adjusted EBITDA1 contribution from the Permian by the end of 2020
|Adjusted EBITDA, Annualized Leverage, and DCF are not Generally Accepted Accounting Principles (GAAP) measures. Definitions and reconciliations of these non-GAAP measures to their most directly comparable GAAP reporting measures appear in Schedule 1 of the financial tables which follow.|
The Partnership’s results are consolidated to include the non-controlling interests in the Partnership’s development companies (DevCos) retained by Noble Energy, Inc. (Noble Energy) as well as Greenfield Midstream, LLC’s (Greenfield Midstream) 45.6% ownership of Black Diamond Gathering, LLC (Black Diamond Gathering); however, certain results are shown as “attributable to the Partnership,” which exclude the aforementioned non-controlling interests retained by Noble Energy and Greenfield Midstream. Noble Midstream believes the results “attributable to the Partnership” provide the best representation of the ongoing operations from which the Partnership’s unitholders will benefit.
2019 Gross Gathering and Fresh Water Volume Outlook
Gathering throughput growth in 2019 will be led by activity in the Green River, Laramie River and Blanco River DevCos, somewhat offset by a decline in the Colorado River DevCo, driven primarily by East Pony oil.
Noble Midstream anticipates 2019 gross oil and gas gathering and sales volumes of 297 to 328 thousand barrels of oil equivalent per day (MBoe/d), up 44% compared to 2018 at the midpoint. In total, the Partnership anticipates approximately 500 well connections in 2019, excluding our investments in the Advantage Pipeline and Delaware Crossing systems.
Produced water gathering throughput is anticipated to be 160 to 190 thousand barrels of water per day (MBw/d), up 73% compared to 2018 at the midpoint.
Based on our current customer development plans, total gross fresh water delivery volumes are anticipated to be 150 to 190 thousand barrels of water per day (MBw/d), down 3% compared to 2018 volumes at the midpoint. Noble Midstream anticipates delivery to approximately three completion crews in the DJ Basin. Noble Energy completion activity is anticipated in the Green River, Colorado River and San Juan River DevCos.
2019 Capital Budget
Noble Midstream’s 2019 capital budget is anticipated between $335 and $375 million, or $180 to $210 million attributable to the Partnership. In addition, Noble Midstream estimates combined equity investments in the Delaware Crossing, EPIC Crude, and EPIC Y-Grade pipelines of between $570 and $615 million, prior to any financing specific to Noble Midstream’s EPIC Crude investment.
Approximately 65% of capital attributable to the Partnership will be spent supporting customer well connections in the DJ and Delaware Basins. Other 2019 capital projects include:
- Blanco River DevCo (NBLX ownership: 40%) The Partnership is constructing a trunkline connecting the Billy Miner and Jesse James central gathering facilities (CGFs) in the Northern portion of Noble Energy’s Delaware Basin acreage. This will optimize the use of facility capacity and ensure high utilization rates
- Laramie River DevCo (NBLX ownership: 100%) On the wholly-owned system, the Partnership is expanding fresh and produced water backbone infrastructure in the Southern portion of the customer’s acreage position to support 2019 and 2020 activity plans. In addition, capital is planned at Black Diamond Gathering for expansion of the Milton terminal to 360 thousand barrels of oil per day (MBbl/d) (54.4% Noble Midstream ownership, 45.6% Greenfield Midstream ownership)
Delaware Crossing (50% equity interest)
Noble Midstream’s 50% share of the Delaware Crossing system buildout in 2019 is anticipated at approximately $75 to $85 million. The Delaware Crossing crude oil pipeline and gathering system in the Delaware Basin will have an initial capacity of 160 MBbl/d, which is expandable to 210 MBbl/d. The 95-mile, 16-inch diameter pipeline system will originate in Pecos County, Texas, with additional connections in Reeves County and Winkler County, Texas. Gathering is anticipated to commence during the third quarter of 2019, with the main trunkline to Wink complete in the fourth quarter of 2019.
EPIC Crude Pipeline (30% equity interest) and EPIC Y-Grade Pipeline (15% equity interest)
Both pipelines are anticipated to be funded through non-recourse project level debt as well as equity commitments from project partners.
Noble Midstream’s total cash equity investment is anticipated to be approximately $165 to $180 million for the EPIC Y-Grade Pipeline, with substantially all of the investment anticipated in 2019. Noble Midstream intends to fund its equity investment in the EPIC Y-Grade pipeline with its revolving credit facility.
Noble Midstream’s total cash equity investment is anticipated to be approximately $330 to $350 million for the EPIC Crude Oil Pipeline, with substantially all of the investment anticipated in 2019. Noble Midstream intends to fund its equity investment with its revolving credit facility and is evaluating a $200 million financing specific to the Partnership’s EPIC Crude investment. Closing of the Partnership’s equity interest in the EPIC Crude Oil Pipeline is anticipated in the first quarter of 2019 and subject to certain conditions precedent.
Because of high customer demand for crude oil transportation, EPIC announced in October 2018 the decision to utilize the third and final phase of its EPIC Y-Grade Pipeline from Crane, Texas to Corpus Christi, Texas for crude oil service while the EPIC Crude Oil Pipeline and EPIC NGL fractionator remains under construction. Interim service remains on track for startup in the third quarter of 2019. The EPIC Y-Grade Pipeline will convert back to NGL service at completion of the EPIC Crude Oil Pipeline in the first quarter of 2020.
Assumes no impact from EPIC projects to 2019 financials with the exception of incremental leverage and interest expense from project investment.
|Year Ended December 31,|
|2019 (E)||% Change|
|Oil Gathered (MBbl/d)||177||235 – 260||39%|
|Gas Gathered (MMcf/d)||239||370 – 410||63%|
|Oil and Gas Gathered (MBoe/d)||217||297 – 328||44%|
|Produced Water Gathered (MBw/d)||101||160 – 190||73%|
|Fresh Water Delivered (MBw/d)||176||150 – 190||-3%|
|Financial Information – Gross (in millions)|
$229 – 268
$340 – 390
|Financial Information – Attributable to the Partnership (in millions)|
$245 – 270
|Distributable Cash Flow1,4||$185||
$190 – 215
|Distribution Coverage Ratio1, 3,4||2.0x||1.5x – 1.7x||—|
|(1)||Results “attributable to the Partnership” exclude the non-controlling interests in the DevCos retained by Noble Energy.|
|(2)||Adjusted EBITDA, DCF, and Distribution Coverage Ratio 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.|
|(3)||Assumes 20% Distribution Growth|
|(4)||Assumes no impact from EPIC projects to 2019 financials with the exception of incremental leverage and interest expense from project investment|
Noble Midstream will host a webcast and conference call today at 1:00 p.m. Central Time to discuss fourth quarter and full year 2018 financial and operational results as well as 2019 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 9351622. 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.