Investor Presentation December 2013
NYSE CAUTIONARY STATEMENTS & NON-GAAP MEASURES QEPM This presentation includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can be identified by words such as “anticipates,” “believes,” “forecasts,” “plans,” “estimates,” “expects,” “should,” “will” or other similar expressions. Such statements are based on management’s current expectations, estimates and projections, which are subject to a wide range of uncertainties and business risks. These forward-looking statements include statements regarding the stability and predictability of cash flows of QEP Midstream Partners, LP (QEPM); QEPM’s financial flexibility and strong capital structure and ability to maintain same; quality of QEPM’s assets; potential of drop-down of assets from QEP Resources, Inc. (QEP); plans to pursue third-party acquisition opportunities; increase in throughput by capturing third-party volumes; increase in production at QEP; and stability of QEPM’s fee-based business and plans to focus on such business. Actual results may differ materially from those included in the forward-looking statements due to a number of factors, including weather conditions; global geopolitical and macroeconomic factors; the U.S. federal budget and debt ceiling crisis; acts of terrorism; changes in oil, natural gas and NGL prices; outcome of pending litigation; demand for oil and natural gas storage and transportation services; defaults by large customers; legislative or regulatory changes; actions taken by third-party operators, processors and transporters; and the other risks discussed in QEPM’s filings with the Securities and Exchange Commission, including the Risk Factors section of QEPM’s Registration Statement on Form S-1, as amended, effective August 8, 2013 (QEPM’s Registration Statement). QEPM undertakes no obligation to publicly correct or update the forward-looking statements in this news release, in other documents, or on the website to reflect future events or circumstances. All such statements are expressly qualified by this cautionary statement. P A R T N E R S H I P P R E S E N T A T I O N Adjusted EBITDA is defined as net income attributable to QEPM’s Predecessor or QEPM before the following items: depreciation and amortization, interest and other income, interest expense and deferred revenue associated with minimum volume commitment payments. Adjusted EBITDA is used as a supplemental financial measure by management and by external users of our financial statements, such as investors and commercial banks, to assess: (1) QEPM’s operating performance as compared to those of other companies in the midstream sector, without regard to financing methods, historical cost basis or capital structure; (2) the ability of QEPM’s assets to generate sufficient cash flow to make distributions to its partners; (3) QEPM’s ability to incur and service debt and fund capital expenditures; and (4) the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities. For a reconciliation of QEPM’s Adjusted EBITDA to net income for the three months ended March 31, 2013, please see QEPM’s Registration Statement. 1
NYSE INVESTMENT HIGHLIGHTS QEPM • Affiliation with QEP Field Services • Stable and Predictable Cash Flows • Strategically Located Asset Base • Experienced Management and Operating Teams P A R T N E R S H I P P R E S E N T A T I O N • Financial Flexibility and Strong Capital Structure • On Dec 2 nd , QEP announced its intentions to separate QEP Field Services and ownership interest in QEPM (GP and LP) from QEP Resources 2
NYSE OVERVIEW QEPM Transaction Overview Units outstanding (MM) 54.5 Units sold to public (MM) (includes over-allotment) 23.0 Unit price at IPO (Pre-IPO range $19-$21) $21 August 9 th First day of trading Net cash proceeds to QEPM ($MM) $451 Adjusted EBITDA contributed (twelve months ended - 3/31/13, $MM) $82.2 Contributed gathering assets located in Colorado, North Dakota, Utah and Wyoming Ownership Overview P A R T N E R S H I P P R E S E N T A T I O N QEP General Partner (includes all incentive distribution rights) 2.0% 2% $0.25 - $0.2875; 15% $0.2875 - $0.3125; 25% $0.3125 - $0.375; 50% above $0.375 QEP subordinated units 49.0% QEP common units 6.8% Public common units 42.2% 3
NYSE OWNERSHIP STRUCTURE QEPM QEP Resources, Inc. (Parent) 100% Ownership Public Unitholders QEP Midstream Partners GP, LLC (General Partner) 55.8% Limited 42.2% Limited 2.0% General Partner Interest Partner Interest Partner Interest & IDRs QEP Midstream Partners, LP NYSE: QEPM LTIP Participants 100% Ownership Less than 1% Limited Partner QEP Midstream Partners Operating, LLC P A R T N E R S H I P P R E S E N T A T I O N Interest 100% Ownership Interest 50% Ownership Interest QEPM Gathering I, LLC Three Rivers Gathering, L.L.C. 100% Ownership Interest 78% Ownership Interest Rendezvous Pipeline Rendezvous Gas Company, L.L.C. Services, L.L.C. 4
NYSE STRATEGY QEPM • Growth – Significant drop-down potential from QEP Field Services – Pursue third-party acquisition opportunities in existing and new areas – Increase throughput by capturing third-party volumes and increased production from QEP • Stability – Focus on stable, fee-based businesses P A R T N E R S H I P P R E S E N T A T I O N – Maintain a conservative and flexible capital structure 5
NYSE ASSET OVERVIEW QEPM • Over 2.6 Bcf/d and 54 MBbls/d throughput capacity • Access to three prolific oil and natural gas basins in the Rockies • Interconnects to six interstate natural gas pipelines providing access to multiple markets • Fully integrated system provides wellhead to market services and prevents rate stacking P A R T N E R S H I P P R E S E N T A T I O N QEP Field QEP Midstream Services Total 1 Partners, LP Miles of Gathering and Transmission Pipeline 2,415 1,507 Total Natural Gas Throughput Capacity (MMcf/d) 4,975 2,650 Total Oil Throughput Capacity (Bbls/d) 54,937 54,937 Approximate Receipt Points 3,259 1,062 Total Processing Capacity (MMcf/d) 1,583 0 Total Treating Capacity (MMcf/d) 600 0 Total Fractionation Capacity (Bbls/d) 15,000 0 Compression Horsepower 145,390 77,024 1 Includes M LP assets 6
NYSE GREEN RIVER GATHERING QEPM Pinedale System • Green River Gathering System gathers production in the Pinedale and Moxa Arch fields in Wyoming • Pinedale System – Approximately 220 miles of natural gas, crude oil and produced/flowback water gathering pipelines – 36,065 bhp of compression and 679 MMcf/d of natural gas throughput capacity Rendezvous Gas Services – Natural gas delivered into the Rendezvous Gas system Moxa Arch – Crude oil transported on 61-mile, FERC- System regulated crude pipeline to the Rocky Mountain Pipeline System P A R T N E R S H I P P R E S E N T A T I O N • Throughput capacity of approximately Rendezvous 40,800 Bbls/d Pipeline • Moxa Arch System Company – Approximately 323 miles of low-pressure gas gathering pipelines and 4,988 bhp of gas compression – Approximately 58 MMcf/d of natural gas capacity 7
NYSE RENDEZVOUS GAS SERVICES QEPM • Rendezvous Gas Services is a joint venture between QEPM and Western Gas – QEPM operates and owns 78% – Transports gas from the Pinedale and Jonah fields to processing facilities owned by QEP or Western Gas – Approximately 1,032 MMcf/d of capacity and 7,800 bhp of gas Rendezvous compression Gas Services – Three parallel, 103-mile high-pressure natural gas pipelines • To support the joint venture, QEP and P A R T N E R S H I P P R E S E N T A T I O N Western Gas dedicated natural gas gathered within an area of mutual interest 8
NYSE RENDEZVOUS PIPELINE COMPANY QEPM • 21-mile, FERC-regulated transmission pipeline that transports natural gas from QEP’s Blacks Fork processing complex to the Kern River Pipeline – FERC-regulated, but utilizes market- based rates negotiated with each customer • Total throughput capacity of 460 MMcf/d P A R T N E R S H I P P R E S E N T A T I O N Rendezvous Pipeline Company 9
NYSE VERMILLION GATHERING QEPM • Gas gathering systems and compression assets located in southern Wyoming, northwest Colorado and northeast Utah – Approximately 518 miles of low- pressure, gas gathering pipelines – Approximately 206 MMcf/d of throughput capacity and 23,197 bhp of compression • Volumes are underpinned by “life - of- reserves” and long -term, fee- based gathering agreements with P A R T N E R S H I P P R E S E N T A T I O N MVCs • Volumes are ultimately delivered into Questar Pipeline Company’s interstate pipeline system 10
NYSE THREE RIVERS GATHERING QEPM • Three Rivers Gathering is a 50/50 joint venture between QEPM and Ute Energy Midstream Holdings, LLC – Approximately 52 miles of gathering pipeline and 4,735 bhp Three Rivers Gathering of gas compression • Volumes primarily underpinned by long-term, fee-based gas gathering agreements with MVCs – Currently fully subscribed, easily expanded through incremental compression P A R T N E R S H I P P R E S E N T A T I O N – Aggregate MVCs of 212 thousand MMBtu/d through 2018 • Natural gas delivered to either QEP’s Uinta processing complex or a third- party processing facility 11
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