Wells Fargo Energy Symposium Investor Presentation

December 2015
WELLS FARGO ENERGY SYMPOSIUM
NEW YORK
VTTI ENERGY PARTNERS LP
INVESTOR PRESENTATION
1
VTTI MARKET POSITIONING
VTTI is a unique global terminal MLP, well differentiated from its peers
Cash flow
stability
Attractive growth
characteristics
Positive long-term
trends
Premium
portfolio
1099 filer
• Long-term, take or pay contracts
• No direct commodity price exposure
• Dropdown inventory approximately 3x existing MLP capacity
• Active in highly fragmented international terminal market
• Driven by supply-demand imbalances and product demand growth
• Not dependent on upstream investment in US (or elsewhere)
• High quality, strategically located assets with leading customer service
• Resilient financial performance in different market pricing structures
• VTTI unitholders receive an annual 1099
• No K-1s
2
CORPORATE OVERVIEW
VTTI Energy Partners LP
was listed in August 2014 by
the global independent
energy storage company:
VTTI B.V.
Simplified Organizational and Ownership Structure
VIP
50%
7 Terminals*
ROFO assets
VTTI B.V.
• IPO August 2014 (NYSE: VTTI)
• ~$0.8bn market capitalization
50%
51%
57.4%
49%
PUBLIC
UNITHOLDERS
• 49% of Partnership is publicly owned
42.6%
• Investors receive 1099 tax form
VTTI MLP B.V.
• Partnership owns 42.6% of VTTI Op’g
(VTTI OPERATING)
• Multiple growth options available
6 Terminals
35.5 MMBbls*
4 Continents
• Sufficient liquidity to finance growth
Amsterdam, Netherlands
Rotterdam, Netherlands
Antwerp, Belgium
Seaport Canaveral, USA
Fujairah, UAE
Johor, Malaysia
* Gross capacity
* Including ATB Phase 2
3
HISTORY OF VTTI B.V.
VTTI B.V. has grown rapidly to become one of the largest global
independent storage companies
• Created to own, operate,
develop and acquire refined
petroleum product and crude
oil terminals, and related
energy infrastructure
~40% CAGR
• Today comprises 12 terminals
in 5 continents with ~1,000
employees
54.0
MMBbls
Acquisitions
2015
34.3
MMBbls
• Demonstrated track record of
rapid growth through
expansions and acquisitions
• Fee-based, growth-oriented
company with large global
portfolio in strategic locations
16.8
MMBbls
2.9
MMBbls
2006
Organic
(greenfield & brownfield
expansions)
3 Terminals
3 Continents
12 Terminals
5 Continents
4
VTTI Operating Assets
VTTI B.V. ASSET GROWTH
ETT
FTL 2
Rotterdam,
The Netherlands
Fujairah,
UAE
ETT 3
Rotterdam,
The Netherlands
Florida, USA
ETA
FTL
ETA 2
ETT 2
ATPC
ATB
ATPC 2
Amsterdam,
The Netherlands
Fujairah,
UAE
Amsterdam,
The Netherlands
Rotterdam,
The Netherlands
Antwerp,
Belgium
Johore,
Malaysia
Antwerp,
Belgium
2007
2008
2009
2010
2012
2013
BNK
VNT
Vitco 2
Navgas
VTTI Kenya
Vitco 3
VTTV
Kaliningrad,
Russia
Ventspils,
Latvia
Zarate,
Argentina
Lagos,
Nigeria
Mombasa,
Kenya
Zarate,
Argentina
Vasiliko,
Cyprus
2006
ROFO Assets
Seaport
Canaveral
Vitco
Zarate,
Argentina
2011
2014
6
ACQUISITIONS
6
GREENFIELD
9
BROWNFIELD
2015
ATB 2
Johore,
Malaysia
FTL 3
Fujairah,
UAE
5
GLOBAL ENERGY MARKET
GLOBAL OIL TRADE FLOWS
Long-term trends support
growth in storage demand
MMBbls / day
• International oil trade flows have grown
steadily over the last 3 decades, driving need
for midstream infrastructure
60
49.3
56.7
36.6
40
25.1
20
0
1984
• Continued growth in refined product demand
globally forecasted
• Structural trends not dependent upon shape of
curve; although contango typically positive for
storage demand
2004
2014
Source: BP Statistical Review
• Ongoing refinery closures in OECD countries
and new worldscale refineries in non-OECD
countries
PROJECTED LIQUIDS CONSUMPTION
MMBbls / day
• Differential quality specifications between and
within regions
1994
140
120
100
80
60
40
20
0
91.4
96.6
2014
2020
104.5
2030
115.0
2040
Source: EIA
6
IMPORTANCE OF VTTI TERMINALS TO VITOL
VTTI Energy Partners’ Assets are Strategic and Core to Vitol’s Business
7
VTTI EP TERMINALS
• Portfolio currently comprises six terminals
located in four major global energy market hubs
• Well interconnected to sea, road, pipelines and
railroads
• ~400 tanks, comprising 35.5 million barrels of
capacity
• Newly constructed/retrofitted and fully
automated infrastructure with extremely efficient
operations
• Highly flexible, industry leading customer
service and responsiveness
• Significant opportunities for expansion
Europe
Locations
Middle East
Asia
North America
Amsterdam
Rotterdam
Antwerp
Fujairah
Johore (Malaysia)
Florida
Gross Capacity (MMBbls)
8.4
7.0
4.2
7.4
5.6
2.8
No. of Tanks
211
28
45
47
41
24
Refined products
Refined products
Refined products
Crude oil
Refined products
Crude oil
Refined products
Refined products
Products
Maximum draft (feet)
Connectivity
46
69
46
54
56
39
Ship
Barge
Road
Railroad
Ship
Barge
Road
Railroad
Pipeline
Ship
Barge
Road
Railroad
Pipeline
Ship
Barge
Road
Pipeline
Ship
Barge
Road
Ship
Barge
Road
Pipeline
8
REGIONAL IMBALANCES AND GROWING OVERALL DEMAND
•
•
•
Predominantly located in key global energy hubs and markets with sustainable product imbalances, which drives need for terminaling capacity
Highly efficient operations in optimal locations result in high utilization (averaged 97% over past 4 years)
High barriers to entry given limited availability of suitable land and ports
Mbpd
(947)
2014
Diesel/Gasoil
2020
Gasoline
1,960
1,850
2014
2020
Mbpd
Diesel/Gasoil Balances
Middle East
United States Gulf Coast
Fuel Oil
390
Product Balances
Mbpd
Diesel
416
(406)
Malaysia / Australia
Gasoline
Product Balances
Mbpd
Northwest Europe
VTTI Terminals
713
471
188
(324)
2014
2020
Diesel/Gasoil
Gasoline
625
41
2014
2020
Diesel/Gasoil Balances
Source: Wood Mackenzie
9
NORTHWEST EUROPE LIQUID BULK THROUGHPUT
Northern Europe
Import Volume (2014)
Other Ports
25%
746 Mbpd(1)
Amsterdam
1.4 MMbpd(1)
ARA
75%
Rotterdam
Product Balances
883 Mbpd(1)
Main Waterway
CEPS: Central European Pipeline System
RRP: Rotterdam Rhine Pipeline
416
Mbpd
Northwest Europe
Antwerp
390
(406)
(947)
2014
Diesel/Gasoil
2020
Gasoline
DSM: Naptha Pipeline
RMR: Rhein Main Rohrleitung
RAPL: Rotterdam Antwerp Pipeline
Total: Crude Pipeline
Source: Port Statistics, EIA and Wood Mackenzie (2014)
(1) Assumes barrel to tonne ratio of 7:1
10
GROWTH OPPORTUNITIES
Multiple sources of significant growth
Drop downs
Organic growth
Acquisitions
ROFO on all current and future VTTI
B.V. assets
Continuously evaluating organic
development opportunities
Highly fragmented international
terminaling market provides
opportunity for additional consolidation
Assets outside of MLP:
5.0 MMBbls of organic projects
recently completed (Cyprus, 3.4
MMbls, Malaysia Phase II, 1.6
MMbls)
20.4 MMBbls gross storage capacity
(57.4% proportional) in VTTI Operating
18.5 MMBbls gross storage capacity at
VTTI B.V. (including assets under
construction)
Progressing number of other
projects including Fujairah (2.7
MMBbls) and Cape Town (0.8
MMBbls storage)
~40MMbls
~9MMbls
of gross terminal storage capacity
available for dropdowns
of terminal storage capacity recently
completed, under construction or
planned
~3 Bn of capacity globally vs ~1 Bn US
Top 10 independents own 16% outside
US vs 53% in US
NON U.S. STORAGE CAPACITY
Top 10
independents
16%
3.3
BNBbls
Balance of
capacity
84%
Source: PortStorage Group-OPIS/STALSBY TankTerminals.com
Database
11
VTTI B.V. DEVELOPMENT UPDATE
•
1.6 MMbls
ATB expansion
•
Project is well within budget and on schedule
(Malaysia)
•
Operational in Q3 2015
•
Commercial contracts agreed
•
2.7 MMbls
FTL expansion
•
Project is within budget and on schedule
(U.A.E.)
•
Forecast to be operational in Q2 2016
•
Customer contract secured prior to construction
•
0.8 MMbls
•
Permits secured, EPC contract signed
•
Forecast to be operational early 2017
•
Commercial contract portfolio largely in place
Cape Town
greenfield project
(South Africa)
12
VTTI GROUP TERMINAL CAPACITY (MMBbls)
60
54.0
50
18.5
40
30
20.4
20
15.1
12.8
2.3
10
0
Q2 2015
1.
2.
Dropdown
Q3 2015
VTTI Operating
VTTI BV
Total
Numbers shown are on gross ownership basis
Includes greenfield Cape Town project
13
FINANCIAL PROFILE
100% of our revenue is from fee-based services under longterm contracts with c.90% coming from fixed tariff “take or pay”
revenue. No direct commodity price exposure
•
STORAGE AND
THROUGHPUT
FEES
•
Fixed monthly fee paid for
storage and associated
liquid throughput
handlings
Independent of actual
capacity usage, i.e. no
volume risk
1.3%
9%
•
ANCILLARY FEES
•
EXCESS
THROUGHPUT
Ancillary fees are paid for
services including mixing,
blending, heating, and
transferring products
between tanks or to rail or
truck
1.4%
8%
FY
LTM
2014
H1 2015
90%
90%
Excess throughput fees are
paid if total number of
“tank turns” for the year
exceed the contractually
agreed threshold
14
MISC-VITOL INVESTMENT PARTNERSHIP ("VIP") TRANSACTION
Vitol Contract Extensions (1)
Terminal
Country
Omnibus
Guarantee
Revised
Expiration
VIP
Capacity
Amsterdam Netherlands
Jun 19
Dec 19
2.9
Rotterdam
Netherlands
Jun 19
Sep 19
5.1
Fujairah
UAE
Jun 19
Jun 19
7.4
Antwerp
Belgium
Jun 17
Dec 18
2.3
Seaport
US
Jun 17
Mar 19
2.8
50%
interest
50%
interest
VTTI BV
ROFO assets
(Sponsor)
20.5
PUBLIC
UNITHOLDERS
▪ VIP, an investment vehicle sponsored by Vitol, has acquired the MISC
50% stake in VTTI B.V.
▪ Completed on 9 November 2015
VTTI MLP B.V.
(VTTI OPERATING)
▪ Two new VIP Board representatives replacing MISC representatives
▪ Vitol contract extensions have replaced the VTTI B.V. rate guarantee
provided in the Omnibus Agreement
(1)
6 MLP Terminals
Operating companies
Johore Malaysia terminal was not included in the Omnibus Guarantee; contract expiration is September 2019
15
VTTI FINANCIAL PERFORMANCE SINCE IPO
(1)
Note Next Twelve Month ("NTM") Forecast for Q3 2014 to Q2 2015 inclusive, no forecast provided for Q3 2015
16
Q3 2015 CORPORATE AND OPERATING REVIEW
• First dropdown completed and effective from 1 July 2015 6.6% of VTTI Operating: $75m
equity value, $110m enterprise value
Corporate
Update
• Priced new senior secured notes for $245 million and €180 million with weighted
average fixed interest rate of 3.9% and tenors of 7, 10, and 12 years; settlement
expected in December 2015. Proceeds will be used to repay existing RCF
• VIP acquisition of MISC 50% stake in VTTI B.V.
• Strong revenue performance and utilization compared to Q2 2015
Operating
Highlights
• $9.3m final lump sum income receipt
• Excess throughputs for Q4 likely to be down on prior years
• Extension of certain Vitol contracts underpins future revenues
17
Q3 2015 FINANCIAL AND DEVELOPMENT REVIEW
• Malaysia Phase 2 assets became operational in August 2015 and added 1.6MMbls to
existing drop down inventory(1)
Growth
Projects
• Fujariah expansion in progress and is expected to be operational in mid-2016 and will
add 2.7MMbls to drop down inventory
• Continue to be actively pursuing organic development and M&A opportunities
• Adjusted EBITDA for Q3 2015 of $57.1m compared to $53.1m in Q2 2015
Financial
Highlights
• Raised dividend by 3.9% over prior quarter in line with mid-teen annual distribution
growth target from $0.2815 to $0.2925 per unit
• Net debt implies a net debt to annualized Adjusted EBITDA ratio of 2.7x
• Additional $75m of related party debt at VTTI Energy Partners LP level as of July 1, 2015
(1)
(2)
Malaysian Phase 2 assets are economically for the benefit of VTTI B.V.
Excludes Affiliate Debt
18
Q3 2015 SUMMARY FINANCIALS
Adjusted EBITDA and Distributable Cash Flow
$ MM
Q3 2015
Q2 2015
Adjusted EBITDA
57.1
53.1
Cash interest expense
(4.6)
(3.7)
0.0
0.0
(3.4)
(5.6)
(31.2)
(29.6)
Distributable cash flow
17.9
14.2
Total distribution
12.0
11.6
Coverage ratio
1.49x
1.22x
Cash income tax expense
Maintenance capital expenditures
Cash flow attributable to non-controlling interest
• Adjusted EBITDA $57.1m includes $9m final
lump sum receipt of other income
(compared to $5m Q2 2015)
• Maintenance capex is lower primarily due
to seasonal deferral of spend into Q4 2015
• Interest costs higher due to additional debt
for drop down transaction
• Distributable cash flow and coverage ratio
are materially higher than prior quarter
19
BALANCE SHEET UPDATE
VTTI Energy Partners LP
(USD $mm)
Actual
Sept 30 2015
VIP
Cash
Cash and cash equivalents(1)
37.8
Debt
RCF FACILITY
$270mm CAPACITY
~$200m UNDRAWN
VTTI Operating Revolving Credit Facility(2)
553.0
Net debt
515.2
VTTI B.V.
Net debt / annualized Adjusted EBITDA (3)
$75m
Loan
2.7x
Financial Targets
PUBLIC
RCF FACILITY
€580mm CAPACITY
~$100m UNDRAWN
VTTI MLP B.V.
•
Net Debt / EBITDA threshold of 3.0x - 3.5x
•
Look to extend non-USD FX hedging each year
•
Average ~4 years of non-USD net cashflows largely hedged
(VTTI OPERATING)
(1) Excluding restricted cash
(2) Excluding affiliate debt
(3) Net debt/annualized Adjusted EBITDA excludes $9.3 million of other revenue receipts
20
OUTLOOK
• Regional product imbalances and product demand growth continue to drive
fundamental requirement for storage
Market
Dynamics
• Currently looking to capitalize on current contango market in certain products,
although financial benefit limited due to largely contracted portfolio
• Excess throughputs for Q4 likely to be down on prior years due to market structure
• Opportunity to grow existing footprint and enter new markets through development
projects
Growth
• Actively monitoring several ongoing processes and have ROFO on all current and
future VTTI B.V. assets
• Liquidity available to finance further growth
• Next dropdown will likely be 6-12 months from last dropdown
Dropdowns
• Investigating alternative sources of funding
• Continue to target mid-teens annual distribution growth, in line with the distribution
increase level delivered in last three successive quarters
21
VTTI ENERGY PARTNERS LP
THANK YOU
22
FINANCIAL DETAIL Q3 2015
Income Statement (unaudited)
$ MM
Actual
Q3 2015
Revenues
74.3
Operating expenses (incl. D&A)
Other operating income
Total operating income
Total other expense, net
Income before income tax expense
43.9
9.3
39.7
(3.4)
36.3
Income tax expense
Net income
Interest expense, including affiliates
(10.7)
25.6
4.1
Other items(1)
(0.8)
Depreciation and amortization
17.5
Income tax expense
10.7
Adjusted EBITDA
57.1
(1) Other items comprise primarily the impact of FX and related derivatives on our financial results and the receipt of other miscellaneous revenues
23
FINANCIAL DETAIL Q3 2015
Balance Sheet September 30, 2015 (unaudited)
$ MM
Cash and cash equivalents(1)
Property, plant & equipment
September 30, 2015
37.8
1,246.7
Other assets
284.4
Total assets
1568.9
Debt(2)
553.0
Other liabilities
311.9
Total equity
704.0
Total liabilities and equity
Net debt
Net debt / Annualized adjusted EBITDA ratio (3)
1,568.9
515.2
2.7x
(1)
Cash and cash equivalents excludes restricted cash
Debt excludes affiliate debt
(3) Ratio excludes the effect of other revenue $9.3 million lump sum revenue receipt from our Rotterdam terminal received in Q3 2015
(2)
24
VTTI GROUP ASSET SUMMARY
Ownership
Interest
Gross
Capacity
Capacity
in MLP
at 42.6%
Remaining
ROFO
Capacity
Europe / Amsterdam
100%
8.4
3.6
4.8
Europe / Rotterdam
90%
7.0
3.0
4.0
Europe / Antwerp
100%
4.2
1.8
2.4
Middle East / Fujairah
90%
7.6
3.2
4.4
Asia / Malaysia
100%
5.6
2.4
3.2
North America / Florida
100%
2.8
1.2
1.6
35.6
15.2
20.4
Region / Location
Wor ld: Eur ope Cent er ed
VTTI Terminal Locations (2)
OpCo
OpCo Capacity
TopCo
Europe / Latvia
49%
7.5
̶
7.5
Europe / Russia
100%
0.3
̶
0.3
Europe / Cyprus
100%
3.4
̶
3.4
South America / Argentina
100%
1.3
̶
1.4
Africa / Kenya
100%
0.7
̶
0.7
Africa / Nigeria
50%
0.1
̶
0.1
Asia / Malaysia terminal expansion
100%
1.7
̶
1.7
Middle East / Fujairah expansion (COD 2016)
90%
2.7
̶
2.7
Cape Town (COD 2017)
100%
0.8
̶
0.8
TopCo Capacity (1)
18.5
̶
18.5
Total VTTI Capacity
54.1
15.2
38.9
<1.0
MMBbls
(1)
(2)
~8.5
MMBbls
Includes Fujairah expansion and Cape Town projects under construction
Circles denote relative terminal size
25