The August 2016 investor presentation for SemGroup and Rose Rock Midstream is a dense, data-heavy document designed for institutional investors in the energy sector. Spanning 39 slides (with 10 key slides analyzed here), the deck focuses on the strategic positioning of midstream assets across North America and the United Kingdom. It emphasizes 'long-term value creation' through a strong balance sheet and organic growth, specifically highlighting the Maurepas Pipeline. The deck is notable for its exhaustive financial transparency, dedicating multiple slides to non-GAAP Adjusted EBITDA reconcil…
Key takeaways
- The presentation highlights a combined liquidity of $1.2 billion between SemGroup and Rose Rock as of June 30, 2016 (Slide 21).
- A geographical asset map identifies operations across major basins including the Bakken, Permian, and Montney, as well as international assets in the UK and Mexico (Slide 9).
- The company projects visibility to incremental cash flow from the Maurepas Pipeline starting in early 2017 (Slide 5).
- Cushing storage facilities are reported at a 7.6 million barrel capacity, with a shift toward more uncontracted space by 2019 (Slide 13).
- Supply and logistics volumes showed growth from 125.6 thousand barrels per day in 1Q 2015 to 198.5 in 2Q 2016 (Slide 13).
- The deck provides detailed non-GAAP reconciliations, showing a SemGroup Adjusted EBITDA of $67.6 million for the three months ended June 30, 2016 (Slide 25).
- Rose Rock Midstream's compliance leverage ratio was reported at 4.2x against a target of 4.5x (Slide 21).
- The presentation uses construction photography to provide physical evidence of project progress on the Maurepas Pipeline (Slide 17).
Executive Overview: The Midstream Infrastructure Play
The August 2016 investor presentation for SemGroup and Rose Rock Midstream represents a mature, industrial-scale approach to fundraising and investor relations. At this stage, the 'pitch' is less about a revolutionary idea and more about operational excellence, geographical footprint, and financial discipline. The deck serves as a progress report on existing assets and a roadmap for upcoming cash-flow-positive projects.
Slide 1: Title and Branding
The cover slide establishes a professional, industrial tone. It features high-resolution photography of midstream infrastructure (valves and piping), immediately signaling the capital-intensive nature of the business. The dual branding of SemGroup and Rose Rock Midstream indicates a complex corporate structure, likely involving a Master Limited Partnership (MLP) model common in the energy sector during this period.
Slide 5: Strategic Positioning
This slide outlines the core value proposition. The company emphasizes a "strong balance sheet, sound business model, [and] clear strategic growth plan." Key bullet points include visibility into cash flow from the Maurepas Pipeline by early 2017 and a focus on a "lower for longer" commodity price environment. This suggests the company was positioning itself as a defensive play capable of weathering low oil prices through diversified midstream services rather than direct commodity exposure.
Slide 9: Geographical Asset Map
Slide 9 is a comprehensive map of North America and the United Kingdom, detailing the company's reach. It categorizes assets by type: Crude Oil, Natural Gas, Refined Products, and Asphalt. The map shows a heavy concentration in the mid-continent (DJ Basin, Permian, Mississippi Lime) and significant gathering and processing footprints in Western Canada. By listing specific basins like the Bakken Shale and Eagle Ford, the company demonstrates its alignment with the most productive shale plays in North America.
Slide 13: Crude Key Performance Metrics
This slide provides a quantitative deep dive into the crude segment. It breaks down performance into four quadrants:
Facilities - Cushing Storage: Shows a 7.6 million barrel capacity, with a projection that uncontracted space will grow to 5.1 million barrels by 2019. · Supply and Logistics Volumes: Displays a growth trend from 125.6 thousand barrels per day (mbpd) in 1Q 2015 to 198.5 mbpd in 2Q 2016. · Transportation Volumes: Shows steady performance, ending 2Q 2016 at 197.6 mbpd. · Joint Venture Transportation Volumes: Details the throughput of the White Cliffs and Glass Mountain pipelines, totaling 177.4 mbpd in 2Q 2016.
Slide 17: Maurepas Pipeline Construction
Visual evidence is a powerful tool in industrial decks. Slide 17 uses a collage of construction photos to prove that the Maurepas Pipeline is not just a theoretical project but an active build. Showing pipes in the ground and heavy machinery on-site helps de-risk the project for investors who are waiting for the "early 2017" cash flow mentioned on Slide 5.
Slide 21: Leverage & Liquidity
This is a critical financial health slide. It presents a side-by-side comparison of SemGroup and Rose Rock's debt profiles as of June 30, 2016. Total consolidated debt for Rose Rock stood at $791.0 million, while SemGroup (stand-alone) was at $300.0 million. The slide highlights a combined liquidity of $1.2 billion , providing a cushion for operations and future capital expenditures. The mention of "Compliance leverage ratios" (0.4x for SemGroup and 4.2x for Rose Rock) shows the company is operating within its bank covenants.
Slides 25, 29, 33, & 37: The Non-GAAP Reconciliations
These four slides represent the "heavy lifting" of the financial section. In the midstream space, Net Income is often obscured by heavy depreciation and non-cash charges. The company provides exhaustive reconciliations to Adjusted EBITDA and Adjusted Gross Margin .
Slide 25: Shows SemGroup's consolidated Adjusted EBITDA falling slightly from $80.0 million in 2Q 2015 to $67.6 million in 2Q 2016. · Slide 29: Breaks down the SemGas segment, showing an Adjusted EBITDA of $12.5 million for 2Q 2016. · Slide 33: Details the Corporate & Other segment, which reported a negative Adjusted EBITDA of $5.6 million in 2Q 2016. · Slide 37: Focuses on the Rose Rock Facilities segment, showing a growth in Adjusted EBITDA from $7.9 million in 2Q 2015 to $9.3 million in 2Q 2016.
What Works in This Deck
The deck is exceptionally transparent. By providing segment-level reconciliations, the company allows analysts to build precise models of their cash flow. The use of geographical mapping (Slide 9) effectively communicates the scale of the operation without requiring pages of text. Furthermore, the inclusion of construction photos (Slide 17) provides a necessary reality check for the growth narrative, moving the project from the 'spreadsheet' phase to the 'physical asset' phase.
What Is Missing
Because this is a 2Q 2016 update rather than a seed-stage pitch, it lacks a traditional "Team" slide (though management is likely listed in the full 39-slide version) and a "Problem/Solution" slide. It also omits detailed unit economics on a per-barrel basis for each pipeline, opting instead for aggregate volume and EBITDA figures. There is no explicit "Ask" or use of proceeds, as this deck is likely intended for a broad audience of existing shareholders and debt holders rather than a specific new investor group.
Lessons for Founders
Founders in capital-intensive industries (Energy, Manufacturing, Infrastructure) should take note of the Liquidity Slide (Slide 21) . In these sectors, investors care deeply about your ability to service debt and your 'runway' in terms of available credit lines. Additionally, the Non-GAAP Reconciliation (Slide 25) is a masterclass in how to explain a complex business. If your startup has high upfront costs that lead to GAAP losses, you must be able to clearly reconcile those losses back to a metric that shows the underlying health of your operations.
Frequently asked questions
- What is the primary focus of the SemGroup/Rose Rock deck?
- The deck focuses on operational scale and financial stability. Unlike early-stage decks that sell a problem-solution narrative, this presentation is an update for stakeholders, emphasizing asset utilization rates, pipeline construction progress, and the health of the balance sheet during a 'lower for longer' commodity price environment.
- How does the company handle financial reporting in this deck?
- The company utilizes extensive non-GAAP reporting. Slides 25, 29, 33, and 37 are dedicated to reconciling net income to Adjusted EBITDA. This level of detail is intended to show investors the 'true' cash-generating power of the business by stripping out one-time impairments, non-cash equity compensation, and unrealized derivative gains/losses.
- What specific growth projects are highlighted?
- The Maurepas Pipeline is the centerpiece of the growth narrative. Slide 5 identifies it as a source of 'secure cash flow' for 2017, and Slide 17 uses a photo collage to demonstrate that construction is actively underway, reducing execution risk in the eyes of the investor.
- What are the key operational metrics for the crude segment?
- The company tracks four primary crude metrics: Cushing storage capacity, supply and logistics volumes, transportation volumes, and joint venture transportation volumes. For instance, Slide 13 shows that pipeline transportation volumes remained relatively stable, hovering around 111 thousand barrels per day in 2Q 2016.
- How is the company's debt structured?
- Slide 21 breaks down debt into revolvers and senior unsecured notes maturing between 2021 and 2023. Rose Rock carried significantly more debt ($791 million) compared to SemGroup's stand-alone debt ($300 million), resulting in a higher leverage ratio for the Rose Rock entity.
