COMPANY OVERVIEW
AUGUST 2014
CANYON MIDSTREAM PARTNERS
Company Overview
Formed in 2012 to focus on greenfield development opportunities in the midstream sector across North America with
$300 million of equity commitments from Kayne Anderson and management
Experienced Team with a Proven Track Record
Canyon is led by Michael Walsh (President and CEO), Dale Harper (Senior VP of Engineering & Operations), and Mark
Fuqua (Senior VP of Commercial & Business Development)
Prior to forming Canyon, the management team originated, developed and constructed the Laser Northeast gathering
system in Pennsylvania, which was sold to Williams Partners in 2011
Canyon currently has 35 employees in the field and its Houston headquarters
Diverse and Growing Portfolio of Midstream Opportunities
Operating in multiple basins (Permian, Eaglebine, TMS) with liquids driven growth
Originated projects have superior capital efficiency and organic growth potential
Emphasizing fixed-fee contracts
Marketing
CANYON MIDSTREAM OVERVIEW
Canyon Midstream Partners, LLC (CMP) is an independent midstream company that provides gathering, treating, processing, transportation and marketing services in North American producing regions
The CMP team has an established track record of successfully developing, acquiring and operating midstream systems and assets
As a single provider, CMP delivers a full spectrum of midstream services in a responsive, reliable, and efficient manner
Our success is measured by our ability to maximize product value to the producer by providing creative, integrated midstream solutions in dynamic market environments
CMP Management team commits equity to every project
Natural Gas
Gathering
Treating
Processing
Compression
Transmission
Oil
Gathering
Storage
Transportation
NGLs
Transportation
Logistics
Upgrading
Stabilizing
Water
Sourcing
Transportation
Handling
Disposal
End User
Services
Producer
Services
Current and Past Customers
KAYNE ANDERSON CAPITAL ADVISORS
$300 million equity capital committed from Kayne Anderson Energy Funds, Institutional Investors, and Canyon Management
– Canyon investors could provide up to $500 million additional equity capital for growth opportunities
Kayne Anderson Capital Advisors manages nearly $30 billion in assets and has approximately 260 employees with eight offices across the United States
Houston-based Kayne Anderson partners on CMP Board
Over $26 billion (90% of firm assets) dedicated to the energy industry
Energy Private Equity
(“KAEF”)
$4.51billion raised Middle market oil and gas private equity investments
Real Estate
$1.5 billion assets Niche real estate private equity
investments
Other Private Equity
and Credit Financing
$1.5 billion assets Growth equity, mezzanine and
specialty credit financing $22 billion assets
Energy Infrastructure
Public securities (NYSE: KYN, KYE), structured private
investments in MLPs
Note: As of 6/30/2014.
Permian Central Basin Platform
In service Q4 2014; 105 MMcf/d capacity
>50 MMcf/d contracted volumes from , ,
Expanding pipeline into Midland Basin and adding second plant (Mustang)
Growth from Wolfcamp development in northern Midland Basin
FERC regulated compression and pipeline in Matagorda County, TX Interconnection between FGT ( ) and Transco ( )
Firm transport contract with ; 7+ years remaining term
Significant cash flow and minimal operating expenses
Good results from most recent
Goodrich (GDP) wells; GDP increasing to 5 rigs
First mover advantage; ~50k acres dedicated from GDP
Increased producer activity in the area ( , , )
GEOGRAPHIC DIVERSITY AND ORGANIC GROWTH
James Lake
Trinity River
Growing volumes from accelerated drilling
Best in region recoveries from high GPM gas
25 MMcf/d plant capacity expandable to 70 MMcf/d
Buyer of TEP acreage likely to increase drilling activity
Arroyo
WHAT SETS CANYON APART FROM COMPETITORS
Kayne Anderson has invested $2.5 billion in 86 E&P companies
Kayne Anderson team includes experienced reservoir and petroleum engineers; reservoir analysis allows Canyon to share upstream risk with Producer
Canyon is Kayne Anderson’s only midstream investment and largest capital commitment to date
Backed by Investor
with E&P Mindset
Contractual commitment to superior operational performance with ‘Producer friendly’ release language and/or economic consequences
Economic commitment to successful project timelines
Willing to share producer risk through acreage commitment vs. volume commitment
Contractually
Aligned with
Producer
Size pipeline diameter for growth and lower pressure at the receipt point
Builds systems not plants; distributed model creates redundancy and improves runtime
Midstream system is designed for reliability through material selection, multiple plants/trains, spare parts, and spare compression
Design for Growth
and Reliability
Canyon Team building James Lake sour gas system in Permian basin; on track for in-service date December 1, 2014, 11 months from contract signing
Project design, engineering, construction management conducted in-house allows for timely execution; control of execution serves as risk mitigation to the producer
Best in-class build costs allow Canyon to provide superior pricing to our customers
JAMES LAKE MIDSTREAM
Project Overview Sour gas gathering and processing in Andrews and Ector Counties in Texas
Phase I will consist of a cryogenic gas processing plant with 105 MMcf/d of capacity, acid gas injection well, 30 miles of 12” steel pipe, six central compression facilities and 40 connections with 20 miles of low-pressure gathering for a December 2014 in service date
– XTO with 20 MMcf/d of production from 500+ wells on ~ 38k
dedicated acres
– Apache with up to 15 MMcf/d of production by 2015 – Oxy with 12 - 15 MMcf/d of current production
Phase II will add 40 miles of 12” steel pipeline and a second plant in Martin County
11 months from contract execution to in-service data
Strategic Rationale
Rapid increase in development activity; natural gas
gathering and processing capacity in the Permian Basin is extremely constrained
Oil production is impacted by gas infrastructure constraints on legacy midstream systems
Establishes a footprint in an area in highly statistical area with significant growth potential; early stage evaluation of horizontal drilling
TRINITY RIVER MIDSTREAM
Project Overview Gas gathering and processing in Houston and Madison Counties in Texas
In 2012, Canyon acquired a 21-mile gas gathering system and surface site in Houston and Madison Counties of east Texas. Subsequently, Canyon installed a 25 MMcf/d gas processing plant, compressors, gathering lines and other related equipment
Current customers are Energy & Exploration Partners and Seidler Oil and Gas
TRM plant has highest NGL recovery rates in the region
– 88% C3+ Recovery from JT/Refrigeration facility
Strategic Rationale
Relationship with Kayne Anderson was critical in understanding the opportunity to increase producer
economics for Treadstone and establish an early footprint in an emerging play
Treadstone’s legacy gathering assets were inadequate to support growing production
Limited gas processing capacity, NGL transportation infrastructure for third-party operators in the area
Development activity in the region is expected to increase significantly during 2014
Growing with Producers
Adding NGL and residue lines, ~30 well connects
ARROYO MIDSTREAM
Project Overview
Wellhead gas processing to support Goodrich resource
evaluation of the Tuscaloosa Marine Shale
Arroyo is a joint venture between Canyon and Gas
Processors, Inc., a local oilfield services company
(60/40)
Arroyo currently operating 5 skid mounted JT units to
recover NGLs from associated gas at 6 Goodrich wells
Arroyo receives dedication on ~8,000 acres
surrounding each wellhead
Installing 10 MMcf/d refrig JT plant and gathering
trunkline in Q4 2014
Strategic Rationale
First mover advantage to establish midstream footprint
in large scale emerging resource play with one of the
largest acreage holders
Goodrich plans to spend 60% - 80% of 2014 capital
expenditures on the TMS (est. $225 - $300 million;
24-32 wells)
Non-existent midstream infrastructure; good access to
markets for gas and liquids
ROBUST PIPELINE OF GROWTH PROSPECTS
Opportunity
Region
Potential Capital
Expenditures
Producer RFP for gas gathering & processing service; potential forintegrated system with > 250 MMcf/d volumes West Texas; Midland Basin ~ $300 million
Producer Joint Venture for 200 MMcf/d cryo with high-pressure
gathering system West Texas; Delaware Basin ~ $150 million
Industrial end user contract for ethane export terminal on US Gulf
Coast and regasification terminal US Gulf Coast; Caribbean ~ $150 million
Mustang Plant & pipeline integration into James Lake system West Texas; Midland Basin ~ $100 million
Producer RFP for dedicated gas processing plant with minimum 100
MMcf/d capacity West Texas; Delaware Basin ~ $75 million
Cryogenic plant at TRM, gathering and processing for 3rdparty
producers East Texas; Woodbine ~ $50 million
Gathering & processing for offset producers in TMS MS, LA; Tuscaloosa Marine Shale ~ $25 million
James Lake trunkline system expansion West Texas; Central Basin Platform ~ $25 million
Additional CDPs and LP gathering to James Lake system West Texas; Central Basin Platform ~ $25 million
Gas gathering system with 40k acre acreage dedication Oklahoma; Woodford Shale ~ $15 million
Negotiated transaction to develop oil gathering system for private
ORGANIZATION CHART
M Walsh President & CEO M Fuqua SVP BD C Rundlof Director BD M Lund Finance Assoc. H Risberg Finance Director R Khalili Gas Acctng L Nagy Office Mgr K Lato Receptionist D Harper SVP Eng & OpsProject Dev & Management G Kellison Team1: Lead Engineer J Larsen Process Engineer H Smith Project Mgmt J Chouinard Team 2: Lead Engineer [Indentified] Process Engineer K Fuqua Eng. Tech. Operations TRM & Arroyo S Carter Ops Manager James Lake R Maggard Ops Manager
