1. business and industrial
2. energy
3. natural gas

Investor Presentation
May 2015
Disclaimer
This presentation includes certain forward-looking information to provide information about the Company and management's assessment of its
future plans and operations, which may not be appropriate for other purposes. Forward-looking information is typically identified by words such as
"anticipate", "expect", "project", "estimate", "forecast", "plan", "intend", "target", "believe" and similar words suggesting future outcomes or
statements regarding an outlook. Forward-looking information in this presentation include statements regarding (i) the Company’s ability to
consummate the transactions with Marlin described herein, (ii) the benefits such transactions will provide to the Company, including Marlin,
including the ability to successfully make future acquisitions and to capitalize on certain commercial and operational synergies and the ability of
Marlin to maintain or increase future distributions and (iii) the anticipated financial performance of the Company, including Marlin, following the
completion of the transactions. Although we believe that our forward-looking information is reasonable based on the information available today
and processes used to prepare it, such statements are not guarantees of future performance and you are cautioned against placing undue reliance
on forward-looking information. Forward-looking information inherently involves a variety of assumptions, risks, uncertainties and other factors
which may cause actual results, levels of activity and achievements to differ materially from those expressed or implied in our forward-looking
information. Material assumptions include: expected supply and demand for crude oil, natural gas and natural gas liquids; prices of crude oil,
natural gas and natural gas liquids; expected exchange rates; inflation; interest rates; availability and price of labor and pipeline construction
materials; operational reliability; customer project approvals; maintenance of support and regulatory approvals for the Company’s projects;
anticipated in-service dates; and weather.
Our forward-looking information is subject to risks and uncertainties pertaining to operating performance, regulatory parameters, project approval
and support, construction schedules, weather, economic and competitive conditions, exchange rates, interest rates, commodity prices and supply
and demand for commodities. The impact of any one risk, uncertainty or factor on any particular forward-looking information is not determinable
with certainty as these are interdependent and our future course of action depends on management's assessment of all information available at
the relevant time.
Except to the extent required by law, the Company assumes no obligation to publicly update or revise any forward-looking information, whether as
a result of new information, future events or otherwise. All forward-looking information in this presentation is expressly qualified in its entirety by
these cautionary statements.
This presentation may make reference to certain financial measures which are not recognized under U.S. generally accepted accounting
principles.
Azure Enterprise Overview
Azure Midstream Enterprise Overview
Azure Midstream Enterprise Overview
Azure Midstream Partners, LP
• The Azure Midstream Enterprise is comprised of Azure Midstream Partners, LP
(NYSE: AZUR) and its parent company Azure Midstream Holdings, LLC (“Azure
Holdings”) and affiliate NuDevco Partners, LLC (“NuDevco”)
In millions, except per unit data, as of 5/15/15
• The Azure Midstream Enterprise is a growth-oriented midstream organization
focused on:
Subordi na ted Uni ts
― Owning, operating, developing, and acquiring midstream energy
infrastructure located in core producing areas in the United States
• The Azure Midstream Enterprise will provide natural gas gathering,
transportation, compression, treating, processing, NGL transportation, and
crude oil transloading services in:
Common Uni ts
Total Units Outstanding
9.20
8.72
(1)
Pri ce a s of 5/15/15
Ca s h
― Liquids-rich high-Btu Cotton Valley formation, and
Enterprise Value
― Crude oil fields in Utah, Wyoming, and New Mexico
52 Week Pri ce Ra nge a s of 5/15/15
• 270 MMcf/d processing capacity
• 2 NGL transportation pipelines with 20,000 Bbls/d takeaway capacity
• The Azure Midstream Enterprise was enhanced through the transformational
transaction closed on February 27, 2015:
— Azure Midstream Holdings through its wholly owned subsidiary Azure
Midstream Energy, LLC acquired the GP and 90% of the IDRs of Marlin
Midstream Partners, LP (“Marlin” or “FISH”)
$302.4
(1)
Revol vi ng Credi t Fa ci l i ty Borrowi ngs
• 3 crude oil transloading facilities
$16.9
Market Capitalization
― Prolific dry-gas Haynesville and Bossier shale formations
• ~1,430 miles of pipeline with access to 17 major pipelines and plants
(collective throughput capacity of ~3,500 MMcf/d)
17.92
$5.5
(1)
182.8
$479.7
High
$24.18
Low
$16.40
Current Yi el d
8.8%
AZUR Uni ts Owners hi p
% of AZUR LP Units - Public
~40%
% of AZUR LP Units - NuDevco
~60%
% of AZUR IDRs - Azure Holdings
90%
% of AZUR IDRs - NuDevco
10%
— Marlin Midstream Partners, LP agreed to acquire the Legacy gathering
system from Azure Holdings for $162.5 million and granted Azure
Holdings rights to 2.14MM FISH LP units
Note: As of May 20, 2015 Marlin Midstream Partners, LP announced a name change to Azure Midstream Partners, LP and plans to de-list ticker FISH from the NASDAQ and list the ticker AZUR on the NYSE
effective May 29, 2015.
(1) As of March 31, 2015.
1
Diversified Midstream Operating Footprint
Gas Gathering & Processing in East TX & North LA and Crude Logistics in the San Juan, Powder River and Uinta Basins
Azure Midstream Assets
• Gas Gathering: Legacy Gathering System,
Lake Murvaul and Oak Hill Lateral
• Gas Processing: Panola 1 and 2 and Tyler
Big Horn
Horn
Big
Horn
Big
Horn
Big
Big
Horn
• NGL Pipelines: Turley Creek
Wildcat
Wildcat
Wildcat
• Logistics – Transloaders: Wildcat, Bighorn
and Sandoval facilities
Sandoval
Sandoval
Sandoval
Sandoval
Sandoval
Azure Holdings Assets
Legacy
Legacy
Legacy
Legacy
Legacy
Marlin
Marlin
Marlin
Marlin
Marlin
Holly
Holly
Holly
Holly
Holly
Holly
Center
Center
Center
Center
Center
• Holly, East Texas Gathering and Shelby
systems
2
Note: Center gathering system is comprised of the ETG gathering system and the Shelby gathering system.
Azure Midstream Enterprise Organizational Structure
Azure Midstream
Management
Co-Investors
33%
29%
29%
3.5%
Azure Midstream Holdings, LLC
NuDevco
Midstream
Development, LLC
Public
Unitholders
10% of IDRs
&
~60% LP Units
90% of IDRs
&
2% GP Interest
3.5%
2%
100%
Azure Midstream Energy, LLC
100%
~40% LP Units
Operating Subsidiaries
Azure Midstream Partners, LP
(NYSE: AZUR)
Publicly
Traded
MLP
$250MM Revolving Credit
Facility
100%
Marlin Midstream, LLC
Marlin Logistics, LLC
East TX
Gathering
System
100%
Shelby
System
100%
Holly
System
Legacy System
Note: Simplified organizational structure pro forma for Azure Midstream Energy, LLC’s acquisition of the Marlin Midstream Partners, LP’s GP and 90% IDRs and sale of the
Legacy gathering system by Azure Midstream Energy, LLC to Azure Midstream Partners, LP (formerly Marlin Midstream Partners, LP).
3
Transaction Rationale
Strong Sponsor
Support / Aligned
Interests
• Azure Sponsorship: Azure is financially incentivized to support the Partnership’s growth through
additional dropdowns
• Strong Senior Leadership: Experienced leadership team brings over 130 years of experience with
history of growth execution and successful value creation at public MLP’s
• Complementary Assets: Azure’s Haynesville and Cotton Valley focused Legacy gas gathering system
Increased Size,
Scale and Diversity
Greater Cash Flow
Stability and
Visibility
Double Digit
Distribution
Growth
Potential
Significant Revenue
and Cost Synergies
complements existing gas gathering and processing asset base
• Financial Scale: Total market value of combined Partnership is ~$600 million
• Financial Benefits: Substantially improved cost of capital and greater access to capital markets
• Customer Base Diversification: The Legacy system brings additional customers to Marlin’s midstream
natural gas segment
• Limited Commodity Price and Volumetric Risk: 86% of AZUR’s 2015 margin is contracted under fixedfee agreements and 45% is contracted under firm, minimum volume commitment agreements with
no volumetric or commodity price risk
• Potential Dropdowns from Sponsor: Azure’s remaining midstream assets are expected to be
dropped down into AZUR over time
• Organic Growth: Experienced management team with established track record of organic growth
project development and execution
• Third Party Acquisitions: Prepared to structure and execute material and complex acquisitions,
restructurings, financings and major midstream development infrastructure
• Significant Financial Impact: Highly complementary assets and business operations provide ability to
realize annual revenue and cost synergies of ~$6 - $13 million over the next 12 - 24 months
4
Experienced Senior Leadership and Commercial Team
• President of Azure Midstream since July 2012
• Founded Laser Midstream Company (Laser II), which developed a 1.4 Bcf/d gas gathering system in Northeast
I.J. (“Chip”)
Berthelot
President
Pennsylvania and Southern New York
• Founded Laser Midstream Company (Laser I) which focused on natural gas gathering and processing in Texas and
Louisiana and sold to Eagle Rock Energy Partners, L.P. in 2007
• President of a privately owned midstream company (2002 – 2004)
• Served as Chief Operating Officer, Executive VP, and a member of the Board of Directors at MidCoast Energy
Resources, Inc, the predecessor gathering and processing business of Enbridge Energy Partners, L.P.
Eric T. Kalamaras
Chief Financial Officer
• Chief Financial Officer of Azure Midstream since January 2014
• Senior Vice President and CFO for Valerus Energy Holdings, L.P., a multi-billion dollar field service company
• Executive Vice President & Chief Financial Officer for Delphi Midstream Partners, LLC (Principle asset – Laser
Northeast Gathering Company – was sold to Williams Partners, L.P. for $750 MM in 2011)
• Executive Vice President & CFO of Atlas Pipeline Partners (NYSE: APL) from 2009-2011
• Previous investment banker with Wells Fargo and Bank of America with extensive transactional and capital raising
background with placement of over $30 billion of debt and equity, primarily focused on Master Limited Partnerships
David Garrett
•
•
•
•
Vice President of Business Development for Azure Midstream since July 2012
Senior Vice President for DCP Midstream Partners, L.P. (NYSE: DPM)
21 years with DCP Midstream as Director of Gas Supply and Commercial Vice President
Previous roles at Texas Oil and Gas, Acadian Gas Pipeline and McRae Oil and Gas
Jeremy Ham
•
•
•
•
>10 years of commercial, corporate development and financial experience
VP of Business Development for NuDevco Development Partners
Commercial Representative at Enterprise Products Partners
VP of Hoover Energy Partners, an Energy Spectrum midstream portfolio company
Vice President of
Commercial
Vice President of
Business Development
Amanda Bush
VP of Strategic
Planning
•
•
•
•
>10 years of finance and accounting experience in the oil and gas industry
Previously served as CFO of Spark Energy and Marlin Midstream Partners LP
Former public accountant at PricewaterhouseCoopers, LLC
Certified Public Accountant licensed in the State of Texas
5
Azure Midstream Partners, LP Overview
Azure Midstream Partners, LP Overview
Growth-oriented midstream MLP engaged in natural gas gathering, transportation, compression, dehydration, treating,
processing, NGL transportation, and crude oil transloading services
Investment Highlights (1)
Stable and
Predictable
Fee-based
Cash Flows
Modern,
Strategically
Located
Asset Base
Current AZUR Operating Footprint
• 83% fee based revenue (TTM ended March 31, 2015)
• 85%+ of throughput from dedicated acreage with 4 to 8yr
terms
• Substantially all gathering revenue has minimum volume
commitments (“MVC”), minimum revenue commitments
(“MRC”), or acreage dedications
• NGL-Rich Gas Assets - Capitalize on the long-lived, natural
gas production from East TX
• Assets well positioned in the liquids-rich Cotton Valley
Formation
• Favorable drilling economics in various commodity price
environments
• 99% of net revenues from remaining Azure Holdings assets
Visible
Growth From
Drop Downs
are fixed-fee
• Upon full drop of the assets, AZUR’s fee based revenue
will increase to 91%
• Pursue growth opportunities developing midstream projects
and acquiring complementary systems within current areas
of operation
1Q 2015 AZUR Operating Data
Gas Gathering
Legacy
System
Mi l es
(1)
Gas Processing
Lake
Oak Hill
Total Gas
Murvaul
Lateral
Gathering
Panola 1 Panola 2
Tyler (2)
NGL Pipelines
Logistics
Total Gas
Turkey Creek
Total NGL
Processing
(Bbls/d)
Pipeline
Total
Total
658
54
11
723
N/A
N/A
N/A
N/A
13
13
736 Tra ns l oa ders
Ga s Compres s i on
(bhp)
14,125
6,300
N/A
20,425
8,220
10,400
4,640
23,260
N/A
N/A
43,685 MVC (Bbl s /hr)
Ca pa ci ty
(MMcf/d except a s
noted)
500
100
100
700
100
120
80
300
20,000
20,000
Wildcat
Bighorn
Sandoval
Logistics
3
2
1
6
10,120
8,860
3,548
22,528
21,000
Note: Financial metrics are pro forma for three months Marlin and three months Legacy.
(1) For the period ending March 31, 2015.
(2) The Legacy Gathering System was acquired on February 27, 2015 in connection with the closing of the Transactions, and is currently operational.
(3) The Tyler processing facility includes three trains: one 40 MMcf/d, which is active and two idled 20 MMcf/d trains.
6
Azure Midstream’s Fee-Based Cash Flows Limit Commodity Exposure
Revenues Backed by Fee-based Contracts with Minimum Volume Commitments
• Fee-based contracts with annual inflation adjustments
and remaining lives ranging from 1 to 5 years
• Nearly 100% of gross margin is generated under feebased commercial agreements, with a substantial
amount underpinned by minimum volume
commitments
Segment Gross Margin – Pro Forma
Twelve months ended
March 31, 2015
$16,009
20%
Midstream Natural Gas
$65,095
80%
• Fee-based gathering and processing agreements with
additional recovery economics
• Midstream segment representing approximately 80% of
the total gross margin for the twelve months ending
March 31, 2015
Logistics
Gathering &
Processing
% Fee Based Gross Margin – Pro Forma
Twelve months ended
March 31, 2015
• 100% fee-based transloading services agreements with
AES containing minimum volume commitments
through February 2020
• Logistics segment representing approximately 20% of
the total gross margin for the twelve months ending
March 31, 2015
Logistics
Commodity
Price
Exposure
17%
No direct
commodity
exposure
83%
7
Note: Financial metrics pro forma for three months Marlin and three months Legacy.
Legacy System – Asset Overview
658 miles of high- and low-pressure gathering lines, serving ~100,000 dedicated acres with
access to seven major downstream markets
Asset Summary
Legacy System Footprint
• Located in Harrison, Panola and Rusk counties in Texas and
Caddo parish in Louisiana
• Serves the Cotton Valley formation, the Haynesville Shale
formation and the shallower producing sands in the Travis
Peak formation
• 10 compressors providing 14,125 horsepower of compression
• Access to 7 major downstream markets via 750 MMcf/d
interconnect capacity (~3.5x current throughput) provides bestin-class producer marketing flexibility
$10,249
• Access to AZUR’s processing and 3 other third-party processing
plants, including the Carthage Hub
• 158 MMcf/d current throughput as of March 31, 2015
• Azure Midstream Partners, LP completed the acquisition of the
Legacy Gathering system from Azure Holdings on February 27,
2015
Legacy System Customer Base (1)
• $162.5 million cash consideration, representing a ~10.0x
acquisition multiple on 2014 EBITDA (implied ~$16 million)
Other (2)
33%
30.7%
55.2% (1)
Company A
57%
39.3%
Company B
10%
(1) For three months ending March 31, 2015.
(2) Combines producers that represent less than 10% into “Other”.
14.1%
8
Gas Processing Plants – Asset Overview
Panola County: 2 cryogenic processing plants (220 MMcf/d capcity), NGL pipeline (10,000 Bbls/d takeaway capacity)
Tyler County: 1 cryogenic processing plant (40 MMcf/d current operating capacity expandable to 80 MMcf/d nameplate capacity)
Asset Summary
Gas Processing System Footprint
Panola County
• Plants 1 & 2 came into service April 2007 and May 2012,
respectively
• The two plants, are operated as a single integrated facility,
processing primarily Cotton Valley Sands and Haynesville
Shale gas
• 18,620 bhp gas compression from 11 total dedicated units
• Ability for deep cryo or ethane rejection recoveries
• 65 miles of gathering pipeline
Tyler County
• Tyler plant was constructed in two phases by F&C, with Phases I
and II becoming fully operational in April 2006 and 2007,
respectively
• Located on 10 acres northeast of Woodville, TX, processing
Gas Processing Customer Base (1)
natural gas from the Austin Chalk and Eaglebine Formations
Other (2)
2%
• 4,640 bhp gas compression from 3 total compressor units
• Two 200 GPM amine units
• Ability for deep cryo or ethane rejection recoveries
(1) For three months ending March 31, 2015. Does not include Transloading.
(2) Combines producers that represent less than 10% into “Other”.
Company B
42%
Company A
56%
9
Logistics – Asset Overview
6 total transloaders with minimum volume commitments of 22,528 Bbls/d across Utah, Wyoming and New Mexico
Asset Summary
Logistics Footprint
• AZUR’s logistics assets contribute ~20% of pro forma 2014
EBITDA with 10% MVC
• AZUR’s transloaders unload crude oil from tanker trucks and
load crude oil into railcars
• Skid transloaders were custom made to AZUR’s specifications to
maximize capacity and flexibility of operations
• 6 total transloaders with minimum volume commitments of
$10,249
22,528 Bbls/d
• Wildcat facility: 3 transloaders with minimum volume
commitments of 10,120 Bbls/d
• Bighorn facility: 2 transloaders with minimum volume
commitments of 8,860 Bbls/d
• Sandoval facility: 1 transloader with minimum volume
commitments of 3,548 Bbls/d
• AZUR’s top-loading, heated skid transloaders handle multiple
grades of crude oil, including heavy and waxy crudes
10
Azure Midstream Has Stable Fee-based Cash Flows
Low Direct Commodity Price Exposure Risk Relative to Selected Peers
MIDSTREAM ENERGY LLC
Commodity price
exposure, 2% (1)
Commodity price
exposure, 17% (1)
No direct
commodity
exposure, 83%
No direct
commodity
exposure,
50%
No direct
commodity
exposure 98%
Commodity
Price
Exposure,
50%
No direct
commodity
exposure,
50%
Commodity
Price
Exposure,
26%
No direct
commodity
exposure,
74%
Commodity
Price
Exposure,
50%
No direct
commodity
exposure,
55%
Commodity
Price
Exposure,
45%
11
1 Twelve
months ending March 31, 2015.
Source: Based on FY 2014 gross margin; Investor presentations, company filings and Wall Street Resources.
Strategically Positioned Assets in the Cotton Valley
Cotton Valley Provides Meaningful Liquids Upside Potential
• Horizontal drilling and fracture stimulation have led to a renaissance of production in the Cotton Valley formation
― Discovered in 1936, the Cotton Valley has produced over 13.7 Tcf to date through vertical productions(1)
― Producers are transitioning to horizontal drilling, spuds have increased 20% from the prior year and are averaging 14 per month(2)
― Significant opportunity for volume growth, IP rates of approximately 9.1 MMcfd and 9.8 Bcf EUR(3)
• Cotton Valley natural gas production is approximately 30% NGLs and Condensate, enhancing producer rates of return
― Horizontal Cotton Valley wells have an 8x EUR uplift over vertical wells
• The Cotton Valley is located near key market hubs and existing legacy infrastructure, providing additional producer benefit
― Proximity to Mont Belvieu, TX fractionation complex reduces transportation and differential expense for NGL production
― Favorably situated near Henry Hub, providing minimal natural gas basis differentials and increased marketing flexibility
Active Cotton Valley Permitting (4)
Cotton Valley Horizontal Well Vintages
125
98
100
75
50
74
55
35
104
28
19
50
26
41
0
10
5
13
15
Q1 2014
Q2 2014
Q3 2014
Q4 2014
CV Vertical
CV Horizontal
48
64
25
(1)
(2)
(3)
(4)
LA
25
13
32
TX
3
Q1 2015
Rich Haynesville
Memorial Production Partners, Sabine Oil & Gas
HPDI as of November 2014
Oil & Gas Investor, November 2014 “East Texas Cotton Valley”
Includes Cotton Valley and “Wet” Haynesville
12
Well Positioned To Capitalize on Expanding LNG and NGL Markets
LNG and NGL Demand Creates Substantial Opportunity for Growth
• Majority of the approved and proposed LNG export facilities in the United States are situated on the Southeast Texas and Southwest
Louisiana gulf coast
• Increasing demand for natural gas driven by robust North America LNG exports
• Up to 6 Bcfd of LNG liquefaction capacity foreseeable
• Supply and demand imbalance for natural gas in Asia provides significant opportunities for U.S. export
• EIA forecasts the U.S. to begin exporting LNG by 2016
• High-quality off-take agreements already in place for proposed projects
• Additionally, AZUR’s wet gas benefits being close to Mont Belvieu, the largest, most liquid trading and storage hub due to its massive
infrastructure, fractionation, distribution and end use consumption
• NGL production from AZUR’s Panola County facilities is delivered into one of its Turkey Creek pipelines, which extends to TEPPCO
Partners, L.P.’s Panola Pipeline for redelivery to the Enterprise fractionation facilities at the Mont Belvieu
OK
OK
Global LNG Market Demand (2015E – 2025E)
AR
AR
Bcf/d
LA
LA
70
60
50
40
32
35
38
41
45
47
49
52
53
55
58
TX
TX
Cameron
Cameron
Golden
Golden Pass
Pass
30
Lavaca
Lavaca Bay
Bay
20
MS
MS
AL
AL
Lake Charles
Charles
Lake
Gulf LNG
LNG
Gulf
Sabine Pass
Pass
Sabine
Freeport
Freeport
Corpus Christi
Christi
Corpus
10
0
2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E
Source: Wood Mackenzie
LNG Export Terminals
NGL Fractionator
13
Logistics Business Upside in the Uinta Basin
Uinta Basin – Significant Oil Resource Provides Meaningful Upside for AZUR’s Wildcat Transloading Facility
• Due to the high paraffin content in Uinta oil, the crude has traditionally been transported from the wellhead in heated trucks to refineries within a
300-mile radius
• Given that the five Salt Lake City refineries are the only refineries within this radius, the Uinta Basin waxy crude typically trades at a discount
to WTI of around 15-20%; leading to higher net backs for complex refineries capable of handling high paraffin crudes
• There has been an increasing trend of crude by rail transportation to markets outside of the typical Salt Lake City refineries
• There has been an ~119% increase in crude by rail transportation out of the Rocky Mountain area, with ~63% of the crude going to the Gulf
Coast and away from Salt Lake City refineries
• The increase in potential end markets outside of The Salt Lake City refineries provides an opportunity to drive increased throughput at our
Wildcat facility to capitalize on subsequent increases in production in the area
Historical Uinta Production and
Projected 2015E Production (1)
Production (MMBbls)
MMBbl
40.0
35.0
30.0
22.8
25.0
19.0
20.0
15.0
10.0
5.0
0.0
2011
2012
Significant Increase in Crude by Rail Transportation out of
the Rocky Mountain Region (PADD 3) (3)
Annualized 2015E Production
32.9
1 year ago
MBbl/d
1 month ago
250
33.6
195
200
27.0
30.8
157
150
107
100
50
2.8
2013
2014
Feb-15
2015E
(2)
122
89
69
7
26 29
0
East Coast
0
15 16
Midwest
13 9
Gulf Coast
28
West Coast
Total
Shipment Destinations
(1) Utah Division of Oil, Gas and Mining – Department of Natural Resources as of January 2015.
(2) 2015 data through January, full year 2015E annualized.
(3) EIA report dated April 29, 2015.
14
Azure Holdings Overview
Azure Midstream Holdings Overview
Gas gathering and processing assets with a book value of ~$900 million focused on the Haynesville,
Cotton Valley and Bossier formations
Investment Highlights
Top-Tier
Assets
Long-Term
Visible
Growth
Current Azure Holdings Footprint
• Premier footprints in dynamic shale plays
• Growth underpinned by high-quality producers and
~100% fee-based contracts
• Significant potential EBITDA contribution to AZUR via
drop downs
• Incubating assets at Azure Holdings creates financial
flexibility for AZUR
• Organic capital expenditures create ongoing
Opportunities
for Expansion
Relationships
with Large and
Committed
Sponsors
•
•
•
•
opportunities within each basin
Commercial presence increases economies of scale
Substantial backlog of active pipelines for potential drop
downs
Large equity commitment from two experienced energy
investors
• Energy Spectrum and Tenaska Capital Management
Source of accretive transactions to increase operating
scale and footprint
Overview of Azure Holdings Assets
Current Throughput
System
Miles of Pipeline
(MMcf/d)
(1)
Throughput
Treating
Gross Dedicated
Primary
Capacity (Bcf/d)
Capacity (Bcf/d)
Acreage
Formations
Haynesville/Bossier/Cotton
Valey
Haynesville/Bossier/Cotton
Valey / James Lime
Holly
335
438
2.1
1.00
69,000
East Texas Gathering
255
65
1.2
1.45
336,000
Shelby
118
87
0.6
0.25
40,000
Total
708
590
3.9
2.7
445,000
Note: Center gathering system is comprised of the ETG gathering system and the Shelby gathering system.
(1) As of March 2015.
Haynesville/Bossier
15
Holly System – Asset Overview
335 miles of high- and low-pressure pipeline serving ~69,000 dedicated gross acres with throughput of ~438 MMcf/d
Holly System Summary
Holly System Overview
• 438 MMcf/d throughput (three months ending March 2015)
• 335 miles of gathering pipeline with ~69,000 gross dedicated acres
• 96% Haynesville/Bossier shale and 4% conventional Cotton Valley gas
Holly
Miles of Pipeline
Current Throughput (MMcf/d)
Throughput Capacity (Bcf/d)
• Estimated ultimate recovery (“EUR”) ~10 Bcf per well
Gross Dedicated Acreage
• Significant market access via 3.4 Bcf/d interconnect capacity (>3x
throughput)
• Four amine treating plants with combined capacity of 920 MMcf/d,
two 1,340 horsepower compressors and connects to eight downstream
access points
Minimum Volume Commitment
Minimum Revenue Commitment
Average Contract Term
Primary Formations
• EXCO Resources, Inc. operated gas represents ~95% of throughput;
other producers operated gas represents ~5% of throughput
• EXCO Resources, Inc. and BG Group acreage is 99% held by production
and is contracted by Azure for the life-of-lease
Counties / Parishes
Downstream Pipelines
438
467
2.1
69,000
584 MMcf/d through December 2018
N/A
Life of lease
Haynesville/Bossier/Cotton Valley
DeSoto, Red River, Caddo
Regency, ETC Tiger, Acadian, Gulf South Legacy,
Gulf South 42, Crosstex / LIG, Enable, Wildcat
16
ETG and Shelby Systems – Asset Overview
Combined 373 miles of high-pressure pipeline serving ~376,000 dedicated gross acres
ETG and Shelby System Summary
ETG System Overview
• 1.8 Bcf/d throughput (March 2015)
ETG
255
Miles of Pipeline
• 373 miles of gathering pipeline and 376,000 gross dedicated acres
• Access to five major interconnect points via 0.9 Bcf/d capacity that
offer our customers superior deliverability
• Poised to expand access to Ship Channel, Carthage/Perryville, and/or
Gulf Coast pending market moves
Current Throughput (MMcf/d)
65
Throughput Capacity (Bcf/d)
1.2
336,000
Gross Dedicated Acreage
Minimum Revenue Commitment
$8,212,500/year through 12/31/2020 with EOG
5 years
Average Contract Term
Primary Formations
Haynesville, Bossier, Cotton Valley, James Lime
Counties / Parishes
DeSoto, San Augustine, Nacogdoches, Panola, Shelby
Five interconnections with major interstate pipelines
NGPL, Gulf South and Centerpoint
Downstream Pipelines
• Additional capacity equipped to support incremental growth on
undedicated and undeveloped acreage without deploying large
amounts of capital
• Five amine treating plants with combined capacity of 1.45 Bcf/d and
one 2,680 horsepower compressor station
• Gas Processing: Fairway Plant liquids processing capacity of 10MMcf/d
Shelby System Overview
Shelby
Miles of Pipeline
118
Current Throughput (MMcf/d)
87
Throughput Capacity (Bcf/d)
Gross Dedicated Acreage
Minimum Volume Commitment
Average Contract Term
0.6
40,000
EXCO/BG contract includes an aggregate MVC of
600,000 MMBtu/d (584 MMcf/d) for the Holly and
Shelby system. EXCO and BG have the right to ship
any or all of this commitment on either or both of
these systems in accordance with the contract
Life of Lease
Primary Formations
Haynesville/Bossier
Counties / Parishes
San Augustine, Nacogdoches, Shelby, Cherokee
TETCO, NGPL, East Texas Gathering and ETC
Lumberjack
Downstream Pipelines
Note: Center gathering system is comprised of the ETG gathering system and the Shelby gathering system.
17
MLP Financial Overview
AZUR’s Sustainable and Growing Cash Flow
Historical Distributable Cash Flow
$10.0
$10.0
$9.0
$8.5
$8.7
$9.0
$8.8
$8.0
$5.0
$4.0
1.08x
1.2x
1.10x
1.0x
$6.0
0.8x
$5.0
$4.0
$3.0
$3.0
$2.0
$2.0
$0.6
$0.8
$0.2
$0.2
$0.2
$0.6
$0.0
3Q'13
1.22x
$7.0
$6.7
$0.1
1.23x
$8.0
$7.7
$6.0
$1.0
1.4x
1.33x
1.23x
$9.0
$8.6
In Millions
In Millions
$7.0
1.31x
4Q'13
1Q'14
Adjusted EBITDA
2Q'14
3Q'14
4Q'14
1Q'15
$7.6
$7.8
$8.6
$8.1
0.6x
$7.1
$7.2
0.4x
$5.3
0.2x
$1.0
(1)
Maintenance Capital
• Sustainable and growing EBITDA stream
• Low maintenance capital supports high distributable cash
flow and reduces recurring funding requirements
Distribution Coverage Ratio
Historical Adjusted EBITDA
$0.0
3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15
(1)
0.0x
Distribution Coverage Ratio (RHS)
• Continued focus on stable distributable cash flows
from existing assets
• Consistently overachieved target coverage ratio of
1.10x each quarter since the IPO
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(1) Financial metrics are pro forma for three months Marlin and one month Legacy.
Combination Creates Top-Tier Distribution Growth
With over $900 million of drop-down inventory at the general partner level, AZUR has a 10-14% 3-year distribution CAGR
target that positions us favorably relative to our G&P MLP Peer Group
16.0%
14.0%
14.0%
12.9%
3 Year Distribution CAGR
12.0%
10.0%
10.6%
10.0%
8.9%
8.0%
7.4%
6.0%
6.5%
Peer Median = 7.0%
5.7%
5.1%
4.0%
2.6%
2.0%
1.9%
1.8%
1.5%
0.6%
0.0%
AZUR
WES
RMP
SMLP
ENLK
ENBL
MWE
DPM
NGLS
AMID
MEP
SXE
CMLP
19
Source: Wall Street Research.
AZUR Retains Financial Flexibility To Fund Forward Growth
Long Term Debt
in millions
IPO
PF
$182.8
$130.9
2Q'13
• Outstanding debt as of March 31, 2015: $182.8 million
• AZUR currently has lower leverage relative to its peer universe
and the industry average
• AZUR will maintain a disciplined financial strategy targeting
long-term total leverage of 3.0x to 4.0x and will initiate the
following actions to reduce leverage
$8.5
$4.0
$5.0
$6.0
$11.0
$11.0
$11.0
3Q'13
4Q'13
1Q'14
2Q'14
3Q'14
4Q'14
1Q'15
― Potential for an at-the-market equity program to create a
structural and perpetual debt reduction mechanism
Leverage Comparison – Total Debt / 2015E EBITDA
G&P Peers
Peer Average: 3.1x
3.1x
3.3x
3.4x
ENBL
ENLK
WES
3.5x
3.6x
3.7x
DPM
SMLP
AZUR
4.1x
4.3x
4.3x
4.5x
4.6x
AMID
MWE
MEP
CMLP
NGLS
4.9x
2.3x
0.0x
0.0x
AM
RMP
0.3x
CNNX
EQM
Source: Wall Street research, as of the latest 10-K, pro forma for acquisitions.
SXE
20
10 Year Historical Commodity Prices
Historically, troughs in West Texas Intermediate (WTI) and Henry Hub (HH) prices
have not lasted more than 10 – 15 months
$160
~9.5 months (HH)
~4.5 months (WTI)
~14 months (HH)
~5 months (WTI)
~10.5 months (HH)
~5 months
(WTI and HH)
$16
$120
$12
$100
$10
$80
$8
$60
$59.69
$6
$40
$4
Henry Hub ($)
$14
WTI ($)
$140
$2.96
$20
$0
Apr-04
$2
Sep-05
Jan-07
Jun-08
Oct-09
WTI
Source: Bloomberg as of May 15, 2015.
Mar-11
Henry Hub
Aug-12
Dec-13
$0
May-15
21
Azure’s Disciplined and Thoughtful Growth Financial Strategy
• Evaluate additional equity capital as part of growth strategy
• Use balanced amount of equity to finance growth
• Utilize unsecured debt to manage total senior secured credit risk
• Target long-term leverage of 3.0x – 4.0x EBITDA (excluding acquisition or system
development cycles)
22