bp midstream partners 4q and full year 2018 · 2/28/2019 · 3) predecessor financials january...

BP MIDSTREAM PARTNERS 4Q & FULL YEAR 2018 RESULTS 1

BP MIDSTREAMPARTNERS

BP Midstream Partners4Q and full year 2018 Results

February 28, 2019 BP MAD DOGOffshore deepwater Gulf of Mexico


BP MIDSTREAMPARTNERSCautionary statement

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, other 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-lookingstatements. 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-lookingstatements 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 andtiming 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 suchfactors, 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 andfuture 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 statementsfor 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 or referred to in this paragraph. Many of the factors thatwill 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, 2018 as filed with the Securities and ExchangeCommission (the “SEC”) on February 28, 2019, as updated by our subsequent filings with the SEC. If any of those risks occur, it could cause our actual results to differ materially from those contained in any forward-looking statement. Because ofthese 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 orother 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 Midstreambelieves 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 financialmeasures 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 otherpublicly traded partnerships in the midstream energy industry, without regard to historical cost basis or, in the case of Adjusted EBITDA, financing methods; (ii) the ability of BP Midstream’s business to generate sufficient cash to support itsdecision 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 ofvarious 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 measuresmost 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 toGAAP 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 incomeand 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 andcash 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 othercompanies, thereby diminishing its utility. For reconciliations of Adjusted EBITDA and cash available for distribution to their most directly comparable GAAP measures, see “Supplementary Information”.

The Partnership is unable to provide financial guidance for projected net income or net cash provided by operating activities without unreasonable effort, and, therefore, is unable to provide a reconciliation of its Adjusted EBITDA and cashavailable for distributions projections to net income or net cash provided by operating activities, the most comparable financial measures calculated in accordance with GAAP.

The Partnership has not included a reconciliation of projected cash available for distribution to the nearest GAAP financial measure for 2018 because it cannot do so without unreasonable effort and any attempt to do so would be inherentlyimprecise.


BP MIDSTREAMPARTNERSAgenda

2018 Highlights

Results Operational

results

Financial results

Financial frame

Organic growth Whiting

refinery

Gulf of Mexico deepwater

Asset dropdowns

Q&A


2018 Highlights



BP WHITING REFINERY


BP MIDSTREAMPARTNERS2018 Highlights

Successfully completed first asset acquisition

Enhanced corporate governance with appointment of independent directors

Delivered unitholders mid-teens distribution growth

1

3

2

Positioned for future delivery

4

Built track record of operational and financial delivery; exceeded IPO forecasts

5BP ATLANTISOffshore deepwater Gulf of Mexico


BP MIDSTREAMPARTNERSEstablished solid track record

1) 4Q18 includes contribution from assets acquired as part of the 2018 asset dropdown. IPO forecast does not include this contribution.2) Cumulative amounts.3) As measured by comparing the quarterly distribution declared in relation to 4Q17 (not pro-rated) and the quarterly distribution declared in relation to 4Q18.

Adjusted EBITDA attributable to the Partnership ($ million)1,2

2018 Adjusted EBITDA exceeded IPO forecast

Cash available for distributionto the Partnership ($ million)1,2

2018 Cash Available For Distribution exceeded IPO forecast

Annualized quarterly distribution($ per common unit)

Mid-teens distribution growth delivered3

IPO forecastIPO forecast MQD

$ 37

$ 69

$ 103

$ 144

1Q18 2Q18 3Q18 4Q18

$ 1.05 $ 1.07

$ 1.09

$ 1.17 $ 1.21

4Q17 1Q18 2Q18 3Q18 4Q18

$ 35

$ 69

$ 107

$ 149

1Q18 2Q18 3Q18 4Q18


Results



BP WHITING REFINERY


BP MIDSTREAMPARTNERSOperational results

Pipeline Gross Throughput1,2

mboedPipeline Average Revenue per Barrel1,2,3

$ per boe

1) Cleopatra gas volumes are converted to mboed by dividing mmscfd by 5.8.2) 4Q17 based on proforma asset portfolio.3) Based on reported revenue from transportation and allowance oil divided by delivered barrels over the same time period.

3Q18 4Q184Q17

BP2

Caesar Proteus

Diamondback

Cleopatra

River rouge Mars

Endymion

Ursa

0

500

1,000

1,500

2,000

4Q17 3Q18 4Q180.00

0.50

1.00

1.50

Total WhollyOwnedAssets

Mars Mardi GrasJoint

Ventures

Ursa


BP MIDSTREAMPARTNERSFinancial results1 ($ million)

1) Rounding convention has been modified to ensure key line items sum correctly.2) Predecessor financials October 1–29, 2017; BPMP financials October 30–December 31, 2017.3) Predecessor financials January 1–October 29, 2017; BPMP financials October 30–December 31, 2017.

4) 4Q18 Revenue includes $4.1 million of deficiency revenue recognized under the throughput and deficiency agreements.

5) 4Q17 and 2017 shown subsequent to the IPO.

Operating income

Net income subsequent to the IPO

Net income

Net income attributable to the Partnership

Revenue4

Costs and expenses

Income from equity method investments

Other income

Interest expense, net

Income tax expense

Less: Predecessor net income prior to the IPO on October 30, 2017

Less: Net income attributable to non-controlling interests

Adjusted EBITDA attributable to the Partnership5

Cash available for distribution attributable to the Partnership5

3Q184Q172 4Q18

32.1

11.2

20.9

22.6

-

43.5

43.5

8.3

35.2

37.7

34.1

-

-

-

27.6

10.7

16.9

17.9

0.1

32.8

29.9

8.1

21.8

23.5

23.3

0.1

2.0

2.9

28.8

11.7

17.1

28.1

3.9

41.3

41.3

4.5

36.8

43.0

40.7

-

-

-

20173 2018

108.2

31.7

76.5

17.9

0.1

69.0

29.9

8.1

21.8

23.5

23.3

-

25.3

39.1

116.4

41.1

75.3

94.4

4.0

165.7

165.7

32.6

133.1

149.4

143.9

-

-

-


BP MIDSTREAMPARTNERSFinancial frame

Gross throughput1

Terminals – Distribution

Cash available for distribution

Through 20204

Organic and inorganic

Sufficient for

mid-teens per unit annual distribution growth

5-6%organic distribution growth

Sufficient to support

20194

Existing portfolio

~1.7mboed

$5-6m

Debt Gross Debt to Adjusted EBITDA ratio not to exceed 3.5 times; target credit metrics consistent with investment grade

Financing costsConsistent with

2019

Average revenue per barrel1,2

Pipelines

Broadly flat with 20183

3 month LIBOR+ 0.85%5

~$1-2m

Consistent with

2019

$160-170m

TotalCapex (included in Total)

Maintenance6

~$15m

1) Pipeline gross throughput and average revenue/bbl for Mars, Mardi Gras and Ursa joint ventures are presented on a full year, 100% basis.

2) Cleopatra gas volumes are converted to mboed by dividing mmscf/d by 5.8.3) Portfolio basis. Average revenue/bbl for 2018: Wholly owned: $0.73; Mars $1.25; Mardi Gras JV: $0.65.4) Subject to change with future dropdown activity and capital structure adjustments.

5) Calculated on balances outstanding under the Partnership’s revolving credit facility. Excludes customary fees, such as a commitment fee of 0.10% and a utilization fee of 0.20%.

6) ‘Total’ includes maintenance capital expenditure and revex for wholly owned assets and maintenance capital incurred by joint ventures. ‘Capex’ is a subset of the ‘Total’ and includes maintenance capital expenditure for wholly owned assets only.


Organic growth



BP WHITING REFINERY


BP MIDSTREAMPARTNERSAdvantaged feedstock growth at Whiting refinery

Largest refinery in US Midwest and in BP’s global refining portfolio

Refinery configuration provides flexibility to optimize feedstock mix

Geographically advantaged to access Canadian crudes and serve the US Midwest market

Plans to expand heavy crude processing capacity towards 350,000 barrels per day by 2020; minimal capital spend by the Partnership

Pipeline throughput MVCs1 through 2020

1

3

2

4

5BP WHITING REFINERY

1) Minimum volume commitments.


BP MIDSTREAMPARTNERSAchieving growth in Gulf of Mexico

Since our IPO in 2017

FID has been taken on several new projects BP – Atlantis Phase 3 Shell - Vito

New projects have started up in 2018 BP – Thunder Horse North West Expansion Shell - Kaikias Chevron – Big Foot Hess - Stampede

Several new discoveries & resource extensions have been announced Power Nap Norphlet – Rydberg, Ballymore, Fort Sumter, Dover 1 bn boe around Thunder Horse2

400 mn boe around Atlantis2

1) Not intended to be an exhausted list of future growth projects2) Hydrocarbons initially in place.

Project Operator Production Capacity

EstimatedStart-up

Mars PipelineVito Shell 100 2021Kaikias Shell 40 2018Power Nap Shell 35 TBD

Amberjack Deliveries to Mars PipelineJack St. Malo Chevron 94 2014Big Foot Chevron 75 2018Stampede Hess 80 2018

Proteus / EndymionAppomattox Shell 175 2019Norphlet Various ~65 TBD

Caesar & CleopatraHeidelberg Anadarko 80 2015Mad Dog II BP 110 2022Atlantis III BP 200 2020Atlantis options BP TBD TBDMad Dog options BP TBD TBDThunder Horse options BP TBD TBD

Select Gulf of Mexico projects1


BP MIDSTREAMPARTNERSGulf of Mexico deepwater

High margin, competitive business; resilience to commodity prices

New technologies and ways of working unlocking additional resources

Uniquely positioned to capture future growth

1

4

3

Significant near and long term growth potential2

BP THUNDER HORSEOffshore deepwater Gulf of Mexico


BP MIDSTREAMPARTNERSPortfolio positioned to capture next wave of growth

SS332

Louisiana OffshoreOil Port (LOOP)

Green Canyon

Walker Ridge

Desoto CanyonMississippi Canyon

HeidelbergMadDog

Atlantis

Neptune

Shenzi

SP89E

Fourchon

Olympus Mars A

Ursa ThunderHawk

Thunder Horse

Appomattox

Dantzler field

Big Bend field

Holstein

Atlantis Phase 3

Atlantis Phase 4&5

Atlantis Water Injection Expansion

Thunder Horse South Expansion 2

Thunder Horse Shallow

Norphlet

Vito

Power Nap

Mars oil pipeline

Proteus oil pipeline

Endymion oil pipeline

Ursa oil pipeline

Cleopatra gas pipeline

Caesar oil pipeline

Connecting third party pipeline

Future connecting third party pipelines

BP-operated platform

Non-operated or third party platform

Future growth potential

Catchment areas

Pipeline hub platform

BPMP Pipelines

Future project – not yet sanctioned

Future project - sanctioned

Kaikias

Map not to scale; for illustrative purposes only

Mad Dog Phase 2

Mag Dog North West Water Injection

Mad Dog South West Expansion

Big Foot

Stampede

Jack/St Malo

WD143


Asset dropdowns



BP WHITING REFINERY


BP MIDSTREAMPARTNERSAsset dropdowns

Deliver unit holders consistent, top-tier distribution growth

Mid-teens per unit annual distribution growth through 2020

Organic Growth 5 – 6% per annum per unit

Inorganic Growth

ROFO1 assets

Bottom two layers of dropdown inventory pyramid (i.e. Downstream pipelines & Midstream assets in US fuels & trading business)

Assets BP may acquire

Strong Sponsor

Strategic, highly integrated assets to BP

Pre-investment by BP

Capital recycling alignment

Pipeline throughput increases(i.e. new production from sanctioned projects in GoM2)

Business development opportunities

Minimal or no capital

+

1) Right of first offer.2) Gulf of Mexico offshore.

2018 dropdown provides embedded organic distribution growth of mid-teens through 2019


BP MIDSTREAMPARTNERSQ&A

Chief Financial Officer

CraigCoburn

Vice President, Investor Relations

BrianSullivan

Rip Zinsmeister

Chief Executive Officer


Supplementary information





3.9

Net income

Adjusted EBITDA


Reconciliation of Adjusted EBITDA and CAFD to Net Income1

1) Rounding convention has been modified to ensure key line items sum correctly.2) Predecessor financials October 1–29, 2017; BPMP financials October 30–December 31, 2017.3) Predecessor financials January 1–October 29, 2017; BPMP financials October 30–December 31, 2017.

4) These amounts represent 100% of the cash distributions from Mars, Ursa, KM Phoenix and Mardi Gras joint ventures prior to distribution to non-controlling interests.

5) 4Q17 and 2017 shown subsequent to the IPO.

Depreciation

Income from equity method investments

($ million)

Add:

Income tax expense


Cash distributions received from equity method investments4

Less:

Adjusted EBITDA attributable to non-controlling interests

3Q184Q172 4Q18

43.5

0.7

-

27.8

22.6

-

37.7

-

49.4

32.8

0.7

2.0

29.9

17.9

9.4

23.5

0.1

47.6

41.3

0.7

-

31.1

28.1

-

43.0

48.9

Less:

Distributions of prorated fourth quarter joint venture dividends to prior ownersAdjusted EBITDA attributable to Predecessor prior to IPO on October 30, 2017

9.5

5.2

11.7

-

5.9

-

4.0

20173 2018

69.0

2.7

25.3

29.9

17.9

9.4

23.5

0.1

109.1

165.7

2.7

-

117.8

94.4

-

149.4

195.8

9.5

66.7

46.4

-



Adjusted EBITDA attributable to the Partnership

Cash available for distribution attributable to the Partnership

Reconciliation of Adjusted EBITDA and CAFD to Net Income1

1) Rounding convention has been modified to ensure key line items sum correctly.2) 4Q17 and 2017 shown subsequent to the IPO.3) Acquisition financing expenses.

Net adjustments from volume deficiency agreements

($ million)

Add:

Net interest paid/(received)

Maintenance capital expenditures

Less:

3Q184Q172 4Q18

37.7

(2.7)

-

0.9

34.1

23.5

(0.2)

(0.1)

0.1

23.3

43.0

1.8

0.3

40.7

Continues from previous slide

(0.1)

Cash reserves3 - 3.9

20172 2018

23.5

(0.2)

(0.1)

0.1

23.3

149.4

-

1.6

143.9

-

- 3.9-



Net cash provided by operating activities

Adjusted EBITDA


Reconciliation of Adjusted EBITDA and CAFD to Net Cash Provided by Operating Activities1

1) Rounding convention has been modified to ensure key line items sum correctly. 2) Predecessor financials October 1–29, 2017; BPMP financials October 30–December 31, 2017.3) Predecessor financials January 1–October 29, 2017; BPMP financials October 30–December 31, 2017..4) 4Q17 and 2017 shown subsequent to the IPO.

Income tax expense

Non-cash adjustments

($ million)

Add:


Distributions in excess of earnings from equity method investments

Change in operating assets and liabilities

Less:

Adjusted EBITDA attributable to non-controlling interests

3Q184Q172 4Q18

45.7

--

0.5

0.1

11.7

37.7

4.3

49.4

35.0

2.0

0.1

(3.3)

-

9.5

23.5

7.2

47.6

40.3

-

(0.4)

5.9

43.0

4.3

48.9

Less:

-

Distributions of prorated fourth quarter joint venture dividends to prior ownersAdjusted EBITDA attributable to Predecessor prior to the IPO on October 30, 2017

5.2

9.4 -

-

-

-

3.9

20173 2018

69.2

25.3

0.1

(8.0)

0.7

9.5

23.5

7.2

109.1

173.8

-

1.5

46.4

149.4

19.7

195.8

0.2

9.4

66.7

-

-

4.0



1) Rounding convention has been modified to ensure key line items sum correctly.2) 4Q17 and 2017 shown subsequent to the IPO.3) Acquisition financing expenses.

Adjusted EBITDA attributable to the Partnership

Cash available for distribution attributable to the Partnership

Reconciliation of Adjusted EBITDA and CAFD to Net Cash Provided by Operating Activities1

Net adjustments from volume deficiency agreements

($ million)

Add:

Net interest paid/(received)

Maintenance capital expenditures

Less:

3Q184Q172 4Q18

37.7

(2.7)

-

0.9

34.1

23.5

(0.2)

(0.1)

0.1

23.3

43.0

1.8

Continues from previous slide

Cash reserves3

0.3

40.7

(0.1)

3.9

20172 2018

23.5

(0.2)

(0.1)

0.1

23.3

149.4

-

1.6

143.9

-

3.9---


BP MIDSTREAMPARTNERSGross Debt to annualized Adjusted EBITDA

attributable to the Partnership1

1) Rounding convention has been modified to ensure key line items sum correctly.2) Calculated by multiplying Adjusted EBITDA for the quarter by 4.

Gross Debt to annualized Adjusted EBITDA attributable to the partnership ratio2

($ million)

Annualized Adjusted EBITDA attributable to the Partnership2

3Q184Q17 4Q18

-

-

15.0

N/A3

N/A3

172.0

2.7

Gross debt 468.0


BP MIDSTREAMPARTNERSBPMP asset portfolio

Entity/ Asset Product Type

BPMP Ownership

Interest

BP USPL Retained

Ownership Interest

Pipeline Length (miles)

Mainline Capacity

(kbpd)

ContractStructure

% of Estimated 2019 CAFD

Crude 100.0% – 00 12 475 FERC tariff

45-50%Refined Products

100.0% –%0 244 80 FERC tariff

Diluent 100.0% –%0 42 135 FERC tariff/ Long term contract

Refined 25% –% NA NA Terminalling < 5%

Crude 28.5% –%0 163 400FERC and state tariffs/ Lease

dedication; Portion with guaranteed return

45-50%

Crude 22.69% –% 47 150 FERC and state tariffs/ Lease dedication

65.0% 35.0%

Crude 36.4% 19.6% 115 450 Lease dedication

Natural Gas 34.5% 18.5% 115 500 Lease dedication



Mars

BP2

River Rouge

DiamondbackOns

hore

Mardi Gras

Endymion

Proteus

Caesar

Off

shor

e

(1)

(3)

(6)(5)

(4)

(3)

Cleopatra

Ursa

KM Phoenix

(2)

Notes continue on next slide


BP MIDSTREAMPARTNERSBPMP asset portfolio

Continues from previous slide(1) The approximate capacity information presented is in thousand barrels per day (“kbpd”) with the exception of the approximate capacity related to Cleopatra gas gathering system, which is presented in million standard cubic feet per day (“MMscf/d”). Pipeline capacities arebased on current operations and vary depending on the specific products being transported and delivery point, among other factors.(2) Total cash available for distribution used in calculating percentages shown does not give effect to incremental general and administrative expense related to being a publicly traded partnership and other expenses to be incurred at the partnership level, including certain insuranceexpenses related to Mars and each of the Mardi Gras Joint Ventures and the initial $13.3 million annual administrative fee paid to BP Pipelines for reimbursement to BP Pipelines and its affiliates for the provision of certain general and administrative services to us under the omnibusagreement. Please read “Certain Relationships and Related Party Transactions—Agreements Governing the Formation Transactions—Omnibus Agreement.” Please read “Cash Distribution Policy and Restrictions on Distributions” for important information as to the assumptions we havemade for our financial forecast and for a reconciliation of cash available for distribution to net income for Mars and each of the Mardi Gras Joint Ventures. Our forecast is a forward-looking statement and should be read together with our historical financial statements andaccompanying notes included elsewhere in this prospectus, our unaudited pro forma condensed combined financial statements and accompanying notes included elsewhere in this prospectus and “Management’s Discussion and Analysis of Financial Condition and Results ofOperations.”(3) BP has historically been the sole shipper on BP2 and River Rouge.(4) Represents Mars mainline capacity of the approximately 54 mile segment from the connections to Ursa, Medusa and Olympus pipelines at the West Delta 143 platform complex to Fourchon, Louisiana where Mars has a connection with Amberjack pipeline for ultimate delivery toClovelly, Louisiana. The capacity of the Mars pipeline system ranges from 100 kbpd to 600 kbpd depending on the pipeline segment and the type of crude oil transported.(5) Our ownership interest and BP Pipelines’ and its affiliates’ retained ownership interest in each of Caesar, Cleopatra, Proteus and Endymion represents 20.0% and 80.0%, respectively, of the 56.0%, 53.0%, 65.0% and 65.0% ownership interests in such Mardi Gras Joint Ventures,respectively, held by Mardi Gras.

(6) Our 20.0% interest in Mardi Gras will be a managing member interest that provides us with the right to vote BP Pipelines’ and its affiliates’ retained ownership interest in the Mardi Gras Joint Ventures.


BP MIDSTREAMPARTNERSDropdown inventory pyramid

(e.g. 35% of Mardi Gras)

bp midstream partners 4q and full year 2018 · 2/28/2019 · 3) predecessor financials january...

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