Fourth Quarter and Full Year 2017 Results MARCH 22, 2018 1 4Q - - PowerPoint PPT Presentation

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MARCH 22, 2018

Fourth Quarter and Full Year 2017 Results

Brian Sullivan

Vice President, Investor Relations 4Q & FULL YEAR 2017 RESULTS

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FORWARD‐LOOKING STATEMENTS This presentation includes various “forward looking statements” within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. All statements,

• ther than statements of historical fact, regarding BP Midstream Partners LP’s (“BP Midstream,” “we,” “us” or “our”) strategy, future operations, financial position, estimated revenues and losses,

projected costs, prospects, plans and objectives of management are forward‐looking statements. These statements often include the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions are intended to identify forward‐looking statements, although not all forward‐looking statements contain such identifying words. These forward‐looking statements are based on BP Midstream's current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. In accordance with “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, these statements are accompanied by cautionary language identifying important factors, though not necessarily all such factors, which could cause future outcomes to differ materially from those set forth in forward‐looking statements. In particular, expressed or implied statements concerning future actions, future drop downs, volumes, capital requirements, conditions or events, future impact of prior acquisitions, future operating results or the ability to generate sales, the potential exposure of BP Midstream to market risks, and statements relating to expected Adjusted EBITDA, future growth, income, cash flow and the amount of distributions are forward‐looking statements. Forward‐looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Future actions, conditions or events and future results of operations may differ materially from those expressed in these forward‐looking statements. Forward‐looking statements speak only as of the date of this presentation, and we disclaim any obligation to update such statements for any reason, except as required by law. All forward‐looking statements contained in this presentation are expressly qualified in their entirety by the cautionary statements contained

• r referred to in this paragraph. Many of the factors that will determine these results are beyond our ability to control or predict. These factors include the risk factors described in BP Midstream’s

annual report for the year ended December 31, 2017 and filed with the Securities and Exchange Commission (the “SEC”) on March 22, 2018, as updated by our subsequent filings with the SEC. If any

• f those risks occur, it could cause our actual results to differ materially from those contained in any forward‐looking statement. Because of these risks and uncertainties, you should not place undue

reliance on any forward‐looking statement. This presentation has been prepared by BP Midstream and includes market data and other statistical information from sources believed by BP Midstream to be reliable, including independent industry publications, government publications or other published independent sources. Some data are also based on BP Midstream’s good faith estimates, which are derived from its review of internal sources as well as the independent sources described above. Although BP Midstream believes these sources are reliable, it has not independently verified the information and cannot guarantee its accuracy and completeness. NON‐GAAP FINANCIAL MEASURES BP Midstream has included the non‐GAAP financial measures Adjusted EBITDA and cash available for distribution based on information in its financial statements. Adjusted EBITDA and cash available for distribution are supplemental financial measures that management and external users of BP Midstream’s financial statements, such as industry analysts, investors, lenders and rating agencies may use, to assess: (i) BP Midstream’s operating performance as compared to other publicly traded partnerships in the midstream energy industry, without regard to historical cost basis

• r, in the case of Adjusted EBITDA, financing methods; (ii) the ability of BP Midstream’s business to generate sufficient cash to support its decision to make distributions to its unitholders; (iii) BP

Midstream’s ability to incur and service debt and fund capital expenditures; and (iv) the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities. BP Midstream believes that the presentation of Adjusted EBITDA and cash available for distribution provides useful information to management and investors in assessing its financial condition and results of operations. The GAAP measures most directly comparable to Adjusted EBITDA and cash available for distribution are net income and net cash provided by operating activities. Adjusted EBITDA and cash available for distribution should not be considered as an alternative to GAAP net income or net cash provided by operating activities, respectively. Adjusted EBITDA and cash available for distribution have important limitations as analytical tools because they exclude some but not all items that affect net income and net cash provided by operating activities. Adjusted EBITDA or cash available for distribution should not be considered in isolation or as a substitute for analysis of results as reported under GAAP. Additionally, because Adjusted EBITDA and cash available for distribution may be defined differently by other companies in the industry, BP Midstream’s definition of Adjusted EBITDA and cash available for distribution may not be comparable to similarly titled measures of other companies, thereby diminishing its utility. For reconciliations of Adjusted EBITDA and cash available for distribution to their most directly comparable GAAP measures, see “Supplementary Information”. References to “proforma asset portfolio” mean our asset portfolio immediately following our initial public offering on October 30, 2017, presented if we owned such assets for full years 2016 and

• 2017. BP Midstream presents such data on a proforma basis for illustrative purposes only. The presentation of data on a proforma basis does not purport to project (and should not be read as

projecting) our future performance on a 12‐month basis or in any other future time period.

Cautionary Statement

BPMP 4Q & FULL YEAR 2017 RESULTS

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Rip Zinsmeister

Chief Executive Officer 4Q & FULL YEAR 2017 RESULTS

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Agenda

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Overview Highlights & operational results Financial results & guidance Asset dropdowns Q&A

BPMP 4Q & FULL YEAR 2017 RESULTS

Overview of BP Midstream Partners Our Key Strengths

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What we do Asset portfolio Conservative financial Conservative financial strategy strategy Deliver consistent, top- Deliver consistent, top- tier distribution growth tier distribution growth

Strong relationship with BP Strategically located, highly integrated asset portfolio Stable cash flows Financial flexibility Significant management experience

BPMP 4Q & FULL YEAR 2017 RESULTS

Our sponsor - BP

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Integrated energy business Extensive portfolio of midstream assets Well capitalized, investment grade credit rating Maintains a significant interest in BPMP Monetize midstream assets while retaining control

Strategic relationship with BP

BPMP 4Q & FULL YEAR 2017 RESULTS

Differentiated investment proposition

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Stability Growth

Throughput & deficiency agreements

• Minimum volume

commitments Strategically located, highly integrated assets No material reduction due to FERC order Organic growth

• Without capital spend by

the partnership Inorganic growth –

• Significant inventory of

dropdown candidates remaining at sponsor 7 year, Right of First Offer, on BP Pipeline’s asset portfolio1

Deliver unit holders consistent, top-tier distribution growth

BPMP 4Q & FULL YEAR 2017 RESULTS (1) As owned by BP Pipelines at the closing of the initial public offering of BPMP.

2017 Highlights

INITIAL PUBLIC OFFERING

47.8million

common units

THROUGHPUT GROWTH

+15%

gross throughput annual growth

• f proforma asset portfolio

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PRORATED DISTRIBUTION

$0.18cents1

quarterly distribution per common unit

(1) Amount has been rounded. Actual distribution declared was $0.179755 per unit. BPMP 4Q & FULL YEAR 2017 RESULTS

• 500

1,000 1,500 2016 2017 Endymion Proteus Cleopatra Caesar Mars Diamondback River Rouge BP2

Performance indicators

Gross Throughput1,2

kboepd

(1) Cleopatra gas volumes are converted to kboepd by dividing MMscf/d by 5.8 (2) Assumes proforma asset portfolio for full years 2016 and 2017 (3) Based on reported revenues from transportation and allowance oil divided by delivered barrels over the same time period

Average Revenue per Barrel1,2,3

$ per boe

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+15%

BPMP 4Q & FULL YEAR 2017 RESULTS

• 0.50

1.00 1.50 Total Wholly Owned Assets Mars Mardi Gras Joint Ventures 2016 2017

Craig Coburn

Chief Financial Officer 4Q & FULL YEAR 2017 RESULTS

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Fourth quarter and full year 2017 results

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BPMP 4Q & FULL YEAR 2017 RESULTS

$million 4Q16 3Q17 4Q17 2016 2017 Revenue 21.5 27.0 27.6 103.0 108.2 Costs and expenses 8.4 8.5 10.7 28.2 31.7 Operating income 13.1 18.5 16.9 74.8 76.5 Income from equity method investments

• 17.9
• 17.9

Other income 0.2 0.4 0.1 0.5

• Interest expense, net
• 0.1
• 0.1

Income tax expense 5.2 7.4 2.0 29.4 25.3 Net income 8.1 11.5 32.8 45.9 69.0 Less: Predecessor net income prior to the IPO on October 30, 2017 8.1 11.5 2.9 45.9 39.1 Net income subsequent to the IPO

• 29.9
• 29.9

Less: Net income attributable to noncontrolling interests N/A N/A 8.1 N/A 8.1 Net income attributable to the Partnership subsequent to the IPO N/A N/A 21.8 N/A 21.8 Adjusted EBITDA attributable to the Partnership subsequent to the IPO N/A N/A 23.5 N/A 23.5 Cash available for distribution attributable to the Partnership N/A N/A 23.3 N/A 23.3

Post-IPO period results

NET INCOME

$22million $23million

ADJUSTED EBITDA

$23million

CASH AVAILABLE FOR DISTRIBUTION 4Q 2017 PRORATED DISTRIBUTION

$19million

DISTRIBUTION COVERAGE RATIO1

1.2times

$15million

DEBT AVAILABLE CREDIT

$585million

0.6times

DEBT TO ADJUSTED EBITDA RATIO

$29million

CASH PROVIDED BY OPERATING ACTIVITIES

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at December 31, 2017 at December 31, 2017

(1) Coverage ratio is calculated as cash available for distribution attributable to the Partnership divided by total cash distributions BPMP 4Q & FULL YEAR 2017 RESULTS

Financial frame

2018

Existing asset portfolio Gross throughput ~1.5 million boed Average revenue per bbl1 Broadly flat with 20173 Maintenance Estimated Total Maintenance Spend ~$6 million Cash available for distribution > $126 million Debt $15 million for a portion of the year

Through 2020

Organic and inorganic Sufficient to support 5 – 6% organic distribution growth Consistent with 20184 Sufficient for mid-teens, per annum, unit distribution growth Debt to Adjusted EBITDA ratio not to exceed 3.5 times; target credit metrics consistent with investment grade

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Sufficient to support 5 – 6% organic distribution growth

2017

Proforma asset portfolio 1.4 million boed Wholly owned: $0.73 Mars: $1.41 Mardi Gras JV: $0.67 Total Actual Maintenance Spend $8 million2 Subsequent to IPO: $23 million As at Dec 31, 2017: $15 million

BPMP 4Q & FULL YEAR 2017 RESULTS (1) Cleopatra gas volumes are converted to kboepd by dividing MMscf/d by 5.8 (2) Based on financials for our predecessor prior to October 30, and financials for BPMP, including our post-IPO asset portfolio, from October 30 to December 31, 2017 (3) On a portfolio basis (4) Subject to future dropdown activity

Asset dropdowns

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Extensive portfolio of dropdown candidates from sponsor

• 7 year ROFO on pipeline

business assets1 Downstream pipelines Adjusted EBITDA inventory provides multi- year runway at guided inorganic growth rates Anticipate dropdowns from other asset categories to extend guided inorganic growth rate Financing optionality Subject to market conditions, forecast at least 1 dropdown a year – 2018 drop in 2H18 Dropdown candidates from BP

BPMP 4Q & FULL YEAR 2017 RESULTS (1) As owned by BP Pipelines at the closing of the initial public offering of BPMP

Rip Zinsmeister

Chief Executive Officer 4Q & FULL YEAR 2017 RESULTS

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Rip Zinsmeister

Chief Executive Officer 4Q & FULL YEAR 2017 RESULTS

Craig Coburn

Chief Financial Officer

Brian Sullivan

Vice President, Investor Relations

Q&A

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4Q & FULL YEAR 2017 RESULTS

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Supplementary Information

Initial portfolio summary

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BPMP 4Q & FULL YEAR 2017 RESULTS

Initial portfolio summary

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Minimum volume commit Minimum volume commitmen ents

BPMP 4Q & FULL YEAR 2017 RESULTS

Pipeline Period Minimum Throughput Commitment (kbpd) Transportation Fee BP2 Q4 2017 – 2018 303 Posted Tariff BP2 2019 310 Posted Tariff BP2 2020 320 Posted Tariff River Rouge Q4 2017 – 2020 60 Posted Tariff Diamondback Q3 2017 – Q2 2020 23 Posted Tariff Diamondback Q4 2017 – 2020 20 Posted Tariff

Reconciliation of Adjusted EBITDA and CAFD to Net Income

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BPMP 4Q & FULL YEAR 2017 RESULTS

$million 4Q16 3Q17 4Q17 2016 2017 Net income 8.1 11.5 32.8 45.9 69.0 Add: Depreciation 0.7 0.7 0.7 2.6 2.7 Gain from disposition of property, plant and equipment

• Income tax expense

5.2 7.4 2.0 29.4 25.3 Interest expense, net

• 0.1
• 0.1

Cash distributions received from equity method investments

• 29.9
• 29.9

Less: Income from equity method investments

• 17.9
• 17.9

Adjusted EBITDA 14.0 19.6 47.6 77.9 109.1 Less: Distributions of prorated fourth quarter joint venture dividends to prior owners N/A N/A 9.4 N/A 9.4 Adjusted EBITDA attributable to Predecessor prior to the IPO on October 30, 2017 N/A N/A 5.2 N/A 66.7 Adjusted EBITDA attributable to noncontrolling interests N/A N/A 9.5 N/A 9.5 Adjusted EBITDA attributable to the Partnership subsequent to the IPO N/A N/A 23.5 N/A 23.5 Continues on next slide

Reconciliation of Adjusted EBITDA and CAFD to Net Income

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BPMP 4Q & FULL YEAR 2017 RESULTS

$million 4Q16 3Q17 4Q17 2016 2017 Adjusted EBITDA attributable to the Partnership subsequent to the IPO N/A N/A 23.5 N/A 23.5 Less: Maintenance capital expenditure attributable to the Partnership subsequent to the IPO N/A N/A 0.1 N/A 0.1 Net adjustments from volume deficiency payments attributable to the Partnership subsequent to the IPO N/A N/A 0.2 N/A 0.2 Add: Net interest received by the Partnership subsequent to the IPO N/A N/A 0.1 N/A 0.1 Cash available for distribution attributable to the Partnership N/A N/A 23.3 N/A 23.3 Continues from previous slide

Reconciliation of Adjusted EBITDA and CAFD to Net Cash Provided by Operating Activities

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BPMP 4Q & FULL YEAR 2017 RESULTS

$million 4Q16 3Q17 4Q17 2016 2017 Net cash provided by operating activities 8.2 13.8 35.0 49.8 69.2 Add: Income tax expense 5.2 7.4 2.0 29.4 25.3 Interest expense, net

• 0.1
• 0.1

Distributions in excess of earnings from equity method investments

• 7.2
• 7.2

Less: Non-cash adjustments (0.3) (0.5)

• 0.4

0.7 Total change in operating assets and liabilities (0.3) 2.1 (3.3) 0.9 (8.0) Adjusted EBITDA 14.0 19.6 47.6 77.9 109.1 Less: Distributions of prorated fourth quarter joint venture dividends to prior owners N/A N/A 9.4 N/A 9.4 Adjusted EBITDA attributable to Predecessor prior to the IPO on October 30, 2017 N/A N/A 5.2 N/A 66.7 Adjusted EBITDA attributable to noncontrolling interests N/A N/A 9.5 N/A 9.5 Adjusted EBITDA attributable to the Partnership subsequent to the IPO N/A N/A 23.5 N/A 23.5 Continues on next slide

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BPMP 4Q & FULL YEAR 2017 RESULTS

$million 4Q16 3Q17 4Q17 2016 2017 Adjusted EBITDA attributable to the Partnership subsequent to the IPO N/A N/A 23.5 N/A 23.5 Less: Maintenance capital expenditure attributable to the Partnership subsequent to the IPO N/A N/A 0.1 N/A 0.1 Net adjustments from volume deficiency payments attributable to the Partnership subsequent to the IPO N/A N/A 0.2 N/A 0.2 Add: Net interest received by the Partnership subsequent to the IPO N/A N/A 0.1 N/A 0.1 Cash available for distribution attributable to the Partnership N/A N/A 23.3 N/A 23.3 Continues from previous slide

Reconciliation of Adjusted EBITDA and CAFD to Net Cash Provided by Operating Activities

Debt to Adjusted EBITDA attributable to the Partnership

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BPMP 4Q & FULL YEAR 2017 RESULTS

$million 4Q16 3Q17 4Q17 Gross debt

• 15.0

Adjusted EBITDA attributable to the Partnership subsequent to the IPO

• 23.5

Debt to adjusted EBITDA attributable to the partnership subsequent to the IPO ratio (times)

• 0.6