BP Midstream Partners LP : 2019 Fourth Quarter Results Webcast Slides

BP MIDSTREAM

PARTNERS

BP Midstream Partners 4Q and full year 2019

Results

February 27, 2020

Cautionary statement

BP MIDSTREAM PARTNERS

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-looking statements. 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-looking statements 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 and timing 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 such factors, 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 and future 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 statements for 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 that will 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, 2019 as filed with the Securities and Exchange Commission (the "SEC") on February 27, 2020, 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 of these 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 or other 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 Midstream believes 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 financial measures 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 other publicly 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 its decision 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 of various 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 measures most 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 to GAAP 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 income and 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 and cash 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 other companies, 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 cash available 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 2019 because it cannot do so without unreasonable effort and any attempt to do so would be inherently imprecise.

BP MIDSTREAM PARTNERS 4Q & FULL YEAR 2019 RESULTS PRESENTATION	2

Agenda

BP MIDSTREAM

PARTNERS

2019 Highlights

Results

 Operational results  Financial results

Looking to 2020

2020 Guidance

	Q&A
BP Midstream Partners
4Q and full year 2019
Results presentation	3

2019 Highlights

1 Achieved mid-teens distribution growth for a second year

BP MIDSTREAM

PARTNERS

Cash Available For Distribution1 ($ million)

2

3

4

5

Strong operational results - delivered higher throughput, consistent with guidance

Increased Adjusted EBITDA attributable to the Partnership by ~31%2

Increased Cash available for distribution by ~25%2, above top end of guidance range

Maintained a robust 1.28x coverage ratio3; built cash by ~$40 million2

							$180
						$144
					$128
				$103
			$83
		$69
$37	$40
1Q18	1Q19	2Q18	2Q19	3Q18	3Q19	4Q18	4Q19

Total distribution including IDRs

2019 CAFD guidance ($165-175m)

1. Shown as cumulative year to date at end of the quarter.
2. Full year 2019 compared with full year 2018.

1. On a full year basis.

BP MIDSTREAM PARTNERS 4Q & FULL YEAR 2019 RESULTS PRESENTATION	4

Operational results

PARTNERS

BP MIDSTREAM

Quarterly Pipeline Gross Throughput1

Full Year Pipeline Gross Throughput1

thousand boed

thousand boed

BP2

River rouge

Diamondback

Mars

Ursa

Caesar

Cleopatra

Proteus

Endymion

		2,000	+6%
1,604	1,649	1,722	1,657
1,560
		1,500
		1,000
		500
		0
		2018		2019
1) Cleopatra gas volumes are converted to mboed by dividing mmscfd by 5.8.
BP MIDSTREAM PARTNERS 4Q & FULL YEAR 2019 RESULTS PRESENTATION			5

Financial results1 ($ million)								PARTNERS
										BP MIDSTREAM
			4Q18		3Q19		4Q19		2018			2019
	Revenue		28.8		34.6		35.0		116.4			128.4
	Costs and expenses		11.7		10.5		10.8		41.1			43.0
	Operating income		17.1		24.1		24.2		75.3			85.4
	Income from equity method investments		28.1		30.1		33.4		94.4			116.8
	Interest expense, net		3.9		3.8		3.8		4.0			15.1
	Net income		41.3		50.4		53.8		165.7			187.1
	Less: Net income attributable to non-controlling		4.5		4.6		6.2		32.6			19.2
	interests
	Net income attributable to the Partnership		36.8		45.8		47.6		133.1			167.9
	Adjusted EBITDA attributable to the Partnership		43.0		51.9		54.2		149.4			196.3
	Cash available for distribution attributable to		40.7		45.0		52.8		143.9			180.4
	the Partnership

1. Rounding convention has been modified to ensure key line items sum correctly.

BP MIDSTREAM PARTNERS 4Q & FULL YEAR 2019 RESULTS PRESENTATION	6

Looking to 2020

BP MIDSTREAM PARTNERS

2020

BP MIDSTREAM PARTNERS 4Q & FULL YEAR 2019 RESULTS PRESENTATION	7

2020 Guidance

Annual distribution growth ~10%1

BP MIDSTREAM PARTNERS

Pipelines	~1.8 million boed
Gross throughput2,3
Average revenue per barrel2,3	Broadly flat with 20194
Maintenance	~$22m, comprising:
Expense	~$6m
Wholly owned assets
Equity method investments5	~$4m
Capex	~$6m
Wholly owned assets6
Equity method investments5	~$6m
Financing costs	~$3m lower than 2019
Debt	Gross Debt to Adjusted EBITDA ratio not to exceed 3.5 times;
target credit metrics consistent with investment grade
Distribution coverage ratio	1.1-1.2 times
Adjusted EBITDA attributable to the Partnership	$200-210m
Cash available for distribution	$185-195m

1. Excludes dropdown transaction.
2. Pipeline gross throughput and average revenue/bbl for Mars, Mardi Gras and Ursa joint ventures are presented on a full year, 100% basis.
3. Cleopatra gas volumes are converted to mboed by dividing mmscf/d by 5.8.

1. Portfolio basis.
2. Maintenance expenses and capex associated with equity method investments are deducted prior to receiving cash distributions.
3. Includes $4 million relating to Griffith station repairs; we expect to receive insurance proceeds of the same amount in 2020.

BP MIDSTREAM PARTNERS 4Q & FULL YEAR 2019 RESULTS PRESENTATION	8

Q&A

BP Midstream Partners 4Q and full year 2019 Results presentation

Rip

Zinsmeister

Chief Executive Officer

Craig

Coburn

Chief Financial Officer

Brian

Sullivan

Vice President, Investor Relations

BP MIDSTREAM

PARTNERS

9

Supplementary information

BP Midstream Partners 4Q and full year 2019 Results presentation

BP MIDSTREAM

PARTNERS

10

Reconciliation of Adjusted EBITDA and CAFD to Net Income1BPPARTNERSMIDSTREAM

($ million)

		4Q18		3Q19		4Q19		2018		2019
	Net income	41.3		50.4		53.8		165.7		187.1
	Add:
	Depreciation	0.7		0.7		0.7		2.7		2.6
	Interest expense, net	3.9		3.8		3.8		4.0		15.1
	Cash distributions received from equity method investments2	31.1		32.4		36.6		117.8		131.5
	Less:
	Income from equity method investments	28.1		30.1		33.4		94.4		116.8
	Adjusted EBITDA	48.9		57.2		61.5		195.8		219.5
	Less:
	Adjusted EBITDA attributable to non-controlling interests	5.9		5.3		7.3		46.4		23.2
	Adjusted EBITDA attributable to the Partnership	43.0		51.9		54.2		149.4		196.3

1. Rounding convention has been modified to ensure key line items sum correctly.

1. 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.

BP MIDSTREAM PARTNERS 4Q & FULL YEAR 2019 RESULTS PRESENTATION	11

Reconciliation of Adjusted EBITDA and CAFD to Net Income1

Continues from previous slide

BP MIDSTREAM PARTNERS

($ million)

	4Q18	3Q19	4Q19		2018		2019
Adjusted EBITDA attributable to the Partnership	43.0	51.9	54.2		149.4		196.3
Add:
Net adjustments from volume deficiency agreements	1.8	(3.0)	2.8		-		-
Maintenance capital recovery2	-	-	0.3		-		0.3
Less:
Net interest paid/(received)	(0.1)	(0.1)	3.8		-		15.1
Maintenance capital expenditures	0.3	0.1	0.7		1.6		1.1
Cash reserves3	3.9	3.9	-		3.9		-
Cash available for distribution attributable to the Partnership	40.7	45.0	52.8		143.9		180.4

1. Rounding convention has been modified to ensure key line items sum correctly.
2. Relates to the portion of maintenance capital for Griffith Station Incident reimbursable by insurance.
3. Acquisition financing expenses.

BP MIDSTREAM PARTNERS 4Q & FULL YEAR 2019 RESULTS PRESENTATION	12

Reconciliation of Adjusted EBITDA and CAFD to Net	PARTNERS
							BP MIDSTREAM
Cash Provided by Operating Activities1
($ million)
4Q18		3Q19		4Q19		2018			2019
Net cash provided by operating activities	40.3		55.0		47.1		173.8			189.3
Add:
Interest expense, net	3.9		3.8		3.8		4.0			15.1
Distributions in excess of earnings from equity method investments	4.3		1.7		3.2		19.7			11.6
Less:
Change in operating assets and liabilities	(0.4)		3.2		(7.4)		1.5			(4.8)
Non-cash adjustments	-		0.1		-		0.2			0.3
Impairment and other, net2	-		-		-		-			1.0
Adjusted EBITDA	48.9		57.2		61.5		195.8			219.5
Less:
Adjusted EBITDA attributable to non-controlling interests	5.9		5.3		7.3		46.4			23.2
Adjusted EBITDA attributable to the Partnership	43.0		51.9		54.2		149.4			196.3

1. Rounding convention has been modified to ensure key line items sum correctly.

1. This includes $6.0 million of costs related to the Griffith Station Incident (impairment charge of $4.4 million and $1.6 million as a response expense), net of $5.0 million in offsetting insurance receivable. The net charge of $1.0 million reflects our insurance deductible.

BP MIDSTREAM PARTNERS 4Q & FULL YEAR 2019 RESULTS PRESENTATION	13

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

BP MIDSTREAM PARTNERS

Continues from previous slide

($ million)
4Q18	3Q19	4Q19		2018		2019
Adjusted EBITDA attributable to the Partnership	43.0	51.9	54.2		149.4		196.3
Add:
Net adjustments from volume deficiency agreements	1.8	(3.0)	2.8		-		-
Maintenance capital recovery2	-	-	0.3		-		0.3
Less:
Net interest paid/(received)	(0.1)	(0.1)	3.8		-		15.1
Maintenance capital expenditures	0.3	0.1	0.7		1.6		1.1
Cash reserves3	3.9	3.9	-		3.9		-
Cash available for distribution attributable to the Partnership	40.7	45.0	52.8		143.9		180.4

1. Rounding convention has been modified to ensure key line items sum correctly.
2. Relates to the portion of maintenance capital for Griffith Station Incident reimbursable by insurance.
3. Acquisition financing expenses.

BP MIDSTREAM PARTNERS 4Q & FULL YEAR 2019 RESULTS PRESENTATION	14

Gross Debt to annualized Adjusted EBITDA attributable to the Partnership1

($ million)

BP MIDSTREAM PARTNERS

	4Q18		3Q19	4Q19
Gross debt	468.0		468.0	468.0
Annualized Adjusted EBITDA attributable to the Partnership2	172.0		207.6	216.8
Gross Debt to annualized Adjusted EBITDA attributable to the partnership ratio2	2.7		2.3	2.2

1)

Rounding convention has been modified to ensure key line items sum correctly.

2)

Calculated by multiplying Adjusted EBITDA for the quarter by 4.

BP MIDSTREAM PARTNERS 4Q & FULL YEAR 2019 RESULTS PRESENTATION	15