THIRD QUARTER 2015 RESULTS Earnings Conference Call - November 6, 2015

Transcription

1 THIRD QUARTER 2015 RESULTS Earnings Conference Call - November 6, 2015

2 Forward-looking Information Certain matters contained in this presentation include "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. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of All statements, other than statements of historical fact, included in this presentation including the prospects of our industry, our anticipated financial performance, our anticipated annual dividend growth rate, management's plans and objectives for future operations, planned capital expenditures, business prospects, outcome of regulatory proceedings, market conditions and other matters, may constitute forward-looking statements. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that these expectations will prove to be correct. These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. Factors that might cause actual results to differ include, but are not limited to, our ability to generate sufficient cash flow from operations to enable us to pay our debt obligations or to fund our other liquidity needs; our ability to comply with the covenants contained in the instruments governing our indebtedness and to maintain certain financial ratios required by our credit facilities; the effect of our debt level on our future financial and operating flexibility, including our ability to obtain additional capital; the ability of our subsidiary, Rose Rock Midstream L.P. (NYSE: RRMS), to make minimum quarterly distributions; the operations of NGL Energy Partners LP (NYSE: NGL), which we do not control; any sustained reduction in demand for the petroleum products we gather, transport, process and store; our ability to obtain new sources of supply of petroleum products; our failure to comply with new or existing environmental laws or regulations or cross border laws or regulations; the possibility that the construction or acquisition of new assets may not result in the corresponding anticipated revenue increases; changes in currency exchange rates; cyber attacks involving our information systems and related infrastructure; the risks and uncertainties of doing business outside of the U.S., including political and economic instability and changes in local governmental laws, regulations and policies; and the possibility that our hedging activities may result in losses or may have a negative impact on our financial results; as well as other risk factors discussed from time to time in each of our documents and reports filed with the SEC. Readers are cautioned not to place undue reliance on any forward-looking statements contained in this presentation which reflect management's opinions only as of the date hereof. Except as required by law, we undertake no obligation to revise or publicly release the results of any revision to any forward-looking statements. SemGroup and Rose Rock Midstream use their Investor Relations website and social media outlets as channels of distribution of material company information. Such information is routinely posted and accessible on our Investor Relations websites at ir.semgroupcorp.com and ir.rrmidstream.com. Both companies are present on Twitter and LinkedIn, follow us at the links below: SemGroup Twitter and LinkedIn Rose Rock Midstream Twitter and LinkedIn 2

3 Non-GAAP Financial Measures SemGroup Adjusted EBITDA is presented in this presentation for certain periods. Adjusted EBITDA is not a U.S. generally accepted accounting principles ( GAAP ) measure and is not intended to be used in lieu of a GAAP presentation of net income (loss). Adjusted EBITDA is presented in this presentation because SemGroup believes it provides additional information with respect to its performance. Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortization, adjusted for selected items that SemGroup believes impact the comparability of financial results between reporting periods. Although SemGroup presents selected items that it considers in evaluating its performance, you should also be aware that the items presented do not represent all items that affect comparability between the periods presented. Variations in SemGroup s operating results are also caused by changes in volumes, prices, exchange rates, mechanical interruptions and numerous other factors. These types of variances are not separately identified in this presentation. Because all companies do not use identical calculations, SemGroup s presentation of Adjusted EBITDA may be different from similarly titled measures of other companies, thereby diminishing its utility. Reconciliations of net income (loss) to Adjusted EBITDA for the periods presented are included in the appendix of this presentation. Rose Rock Midstream This presentation includes the non-gaap financial measures of Adjusted gross margin, Adjusted EBITDA and distributable cash flow, which may be used periodically by management when discussing our financial results with investors and analysts. The appendix of this presentation provides reconciliations of these non-gaap financial measures to their most directly comparable financial measures calculated and presented in accordance with GAAP. Adjusted gross margin, Adjusted EBITDA and distributable cash flow are presented as management believes they provide additional information and metrics relative to the performance of our business. Operating income (loss) is the GAAP measure most directly comparable to Adjusted gross margin, net income (loss) and cash provided by (used in) operating activities are the GAAP measures most directly comparable to Adjusted EBITDA, and net income (loss) is the GAAP measure most directly comparable to distributable cash flow. Our non-gaap financial measures should not be considered as alternatives to the most directly comparable GAAP financial measures. These non-gaap financial measures have important limitations as analytical tools because they exclude some, but not all, items that affect the most directly comparable GAAP financial measures. You should not consider Adjusted gross margin, Adjusted EBITDA or distributable cash flow in isolation or as substitutes for analysis of our results as reported under GAAP. Because Adjusted gross margin, Adjusted EBITDA and distributable cash flow may be defined differently by other companies in our industry, our definitions of these non-gaap financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility. Management compensates for the limitation of Adjusted gross margin, Adjusted EBITDA and distributable cash flow as analytical tools by reviewing the comparable GAAP measures, understanding the differences between Adjusted gross margin, Adjusted EBITDA and distributable cash flow, on the one hand, and operating income (loss), net income (loss) and net cash provided by (used in) operating activities, on the other hand, and incorporating this knowledge into its decision-making processes. We believe that investors benefit from having access to the same financial measures that our management uses in evaluating our operating results. 3

4 Business Review Overview Industry facing headwinds in low price environment Targeting to maintain or grow volumes in key asset areas Reducing full year Adjusted EBITDA guidance due to market conditions and and foreign currency impact - SemGroup Updated Adjusted EBITDA Guidance of $305 - $315 million - Rose Rock Midstream Updated Adjusted EBITDA Guidance of $175 - $185 million SemGroup Dividend Increased Increased third quarter 2015 dividend by 50% over third quarter 2014 Maintain 2015 guidance of 50-60% year-over-year growth Rose Rock Midstream Distribution Increased Increased third quarter 2015 distribution by nearly 15% over third quarter 2014 Maintain 2015 guidance of 15-20% year-over-year growth Financial Flexibility No immediate capital market needs; revolver availability to fund capex projects SemGas drop-down structure flexibility Potential M&A Strong balance sheet Focused on strategic opportunities 4

5 Regional Update Gulf Coast Maurepas Pipeline on-track for a Q completion, approximately $55 million capex shift to 2016 Continued effort to expand footprint Actively pursuing acquisitions in this region DJ Basin Economically advantaged basin Key producers suggest that they will continue to focus capital on their positions in the DJ Basin Increased gathering capacity for White Cliffs Pipeline Increased competitive takeaway capacity Mississippi Lime Inventory of drilled but uncompleted wells to support production volumes Anticipate maintaining third quarter 2015 processing volumes through 2016 Montney/Duvernay Announced commissioning of the KA North Condensate pipeline and the restart of the KA condensate stabilizer Strong incumbent position to serve industry's growing infrastructure needs 5

6 Third Quarter 2015 Adjusted EBITDA (1) 3Q Q Q months ending 9/30/15 9 months ending 9/30/14 Crude (2) $ 42.2 $ 43.8 $ 41.6 $ $ SemGas SemCAMS SemLogistics (0.8) SemMaterials Mexico SemStream Corporate and Other (4.1) (3.7) (6.4) (14.2) (11.9) SemGroup $ 76.0 $ 80.0 $ 70.0 $ $ Rose Rock Midstream $ 41.9 $ 44.7 $ 42.1 $ $ 82.8 Key Highlights (3Q 2015 vs 2Q 2015) Crude decreased $1.6 million - decrease in marketing was partially offset by lower operating and G&A expenses SemGas decreased $2.0 million - decrease due to lower gathering and processing volumes Key Highlights (3Q YTD 2015 vs 3Q YTD 2014) Crude increased $21.6 million due to higher pipeline transportation volumes and marketing margins SemGas increased $7.4 million as a result of a 53% increase in Northern Oklahoma processing volumes 6 (1) Non-GAAP Financial Data Reconciliations are included in the Appendix to this presentation (2) Crude segment includes fully consolidated Rose Rock Midstream

7 2015 Capital Expenditure Guidance 2015 Capital Expenditures $650 million $245 38% $355 54% $45 7% Natural Gas Crude Other Growth Projects Maintenance $5 1% Project update - Platteville expansion completed - Maurepas Pipeline on-track for a Q completion Growth capex guidance reduced $90 million to reflect timing of capital spend Reduced capex guidance $35 million primarily a result of a decrease in SemGas well connects More than 90% of capital expenditures are focused on growth capital Targeting EBITDA multiples of 5-8x on organic growth projects in key asset plays 7

8 2015 Updated Capital Expenditure Guidance (in millions) Estimated Completion Date 2015 Capex 2016 Capex Segment Description SemGroup Crude Maurepas Pipeline 4Q SemGas Northern Oklahoma gas gathering & processing expansion varies SemCAMS Wapiti Pipeline Expansion varies SemCAMS K3 Plant projects varies SemCAMS KA Plant projects varies Other/undesignated growth projects varies Maintenance Total SemGroup $500 Rose Rock Midstream Crude White Cliffs Pipeline capacity expansion (1) 1H Crude Isabel Pipeline 1Q Crude Platteville truck unloading expansion October Crude Wattenberg Oil Trunkline extension 1Q Other/undesignated growth projects 30 Maintenance Total Rose Rock Midstream $150 Total $650 $500-$600 Total Project (1) Investment in affiliate; reflects our proportional capex 8

9 SemGroup Corporation Dividend Growth (1) 2015 Target Dividend Growth 50-60% year-over-year $ $ $ $ $ $ $ $ Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE (1) Assumes no further drop downs to Rose Rock or 3rd party acquisitions 9

10 Rose Rock Midstream Distribution Growth (1) 2015 Target Annual Coverage Ratio 1.1x-1.2x 2015 Target Distribution Growth 15-20% year-over-year $ $ $ $ $ $ $ $ $ $ Q 4Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE (1) Assumes no further drop downs from SemGroup or 3rd party acquisitions 10

11 Leverage & Liquidity (in millions, unaudited) Revolving credit facility - December 2018 Revolving credit facility - September 2018 SemGroup Rose Rock September 30, 2015 September 30, % Senior unsecured notes $ % Senior unsecured notes $ % Senior unsecured notes Total consolidated debt $300.0 $750.0 Compliance leverage ratio (1) 1.08x 3.96x Liquidity: Cash and cash equivalents Revolver availability (2) Total liquidity $641.5 $590.1 More than $1.2 Billion of Combined Liquidity (1) Calculated per credit agreement definitions (2) Revolver availability less outstanding letters of credit 11

12 Growing today with a focus for tomorrow Safety SemCAMS K3 Plants Canada 12 Disciplined Investment Execution SemGas Rose Valley Plant Oklahoma Crude Storage Oklahoma Increase Equity Holders Return

13 APPENDIX

14 SemGroup s Fee-based Business Model Margin Contribution (1) 88% 6% 6% Fixed Fee Variable Fee Marketing SemGas (2) 72% 28% SemCAMS 100% SemLogistics 100% SemMaterials Mexico 100% White Cliffs Pipeline 100% Rose Rock Midstream (3)(4) 85% 15% Fixed Fee Variable Fee Marketing Margin Descriptions Fixed Fee Storage fees Transportation fees Unloading fees Gathering and processing fees Variable Fee Gas processing percent of proceeds Marketing Back-to-back marketing and blending transactions 14 (1) LTM September 30, 2015 (2) SemGas 3Q 2015 margin contribution 73% fixed fee, 27% variable fee (3) Rose Rock Midstream includes White Cliffs and Glass Mtn Pipeline proportionate cash distributions (4) Marketing margin reduced by intercompany trucking expense

15 Crude Key Performance Metrics Crude Cushing Storage 7.6 million Barrels Capacity Contracted (1) Operational / Marketing Uncontracted Crude Transportation Volumes (Thousand Barrels per Day) Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Pipeline Volumes (2) Wattenberg Oil Trunkline Field Services (3) Joint Venture Transportation Volumes (Thousand Barrels per Day) Crude Marketing Volumes (Thousand Barrels per Day) Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q White Cliffs Pipeline Volumes (4) Glass Mountain Pipeline Volumes (5) 15 (1) 100% of storage contract volumes are included in year of contract expiration (2) Pipeline volumes include KS/OK system, ND transportation and Tampa pipeline (3) Includes intercompany trucking volumes; 14.0kbpd in 3Q 2015 (4) White Cliffs Pipeline is owned 51% by RRMS; reflects 100% throughput (5) Glass Mountain Pipeline is owned 50% by RRMS; average volumes for 1Q 2014 for two months operational; reflects 100% throughput

16 Natural Gas Business SemGas Northern OK Avg Processed Volume (mmcf/d) Q Q Q 3Q 4Q 1Q 2Q Q 2014 Capacity Processing Volumes SemCAMS Avg Throughput Volume (mmcf/d) Q 1Q 2Q 3Q Q 1Q 16 3Q n 2Q K3 Plant 2015 n KA Plant

17 SemGroup Consolidated Balance Sheets (in thousands, unaudited, condensed) September 30, 2015 ASSETS December 31, 2014 Current assets $ 571,241 $ 479,280 Property, plant and equipment, net 1,474,947 1,256,825 Goodwill and other intangible assets 222, ,391 Equity method investments 547, ,920 Other noncurrent assets, net 61,500 44,386 Total assets $ 2,877,568 $ 2,589,802 LIABILITIES AND OWNERS' EQUITY Current liabilities: Current portion of long-term debt $ 37 $ 40 Other current liabilities 378, ,622 Total current liabilities 378, ,662 Long-term debt, excluding current portion 1,044, ,092 Other noncurrent liabilities 220, ,611 Total liabilities 1,643,406 1,370,365 Total owners' equity 1,234,162 1,219,437 Total liabilities and owners' equity $ 2,877,568 $ 2,589,802 17

18 SemGroup Consolidated Statements of Operations and Comprehensive Income (in thousands, except per share amounts, unaudited) Three Months Ended Nine Months Ended September 30, June 30, September 30, Revenues $ 397,065 $ 594,235 $ 377,226 $ 1,072,601 $ 1,575,342 Expenses: Costs of products sold, exclusive of depreciation and amortization shown below 274, , , ,869 1,211,703 Operating 53,267 69,377 60, , ,579 General and administrative 23,045 23,296 22,917 78,272 63,882 Depreciation and amortization 26,022 25,200 24,674 74,430 70,899 Loss (gain) on disposal or impairment of long-lived assets, net (951) 1,376 1,372 1,479 20,633 Total expenses 376, , ,921 1,032,207 1,546,696 Earnings from equity method investments 16,237 14,223 23,903 60,699 48,372 Gain on issuance of common units by equity method investee ,772 5,897 6,033 26,899 Operating income 37,416 49,918 53, , ,917 Other expenses (income), net 17,829 (6,368) 9,809 33,725 30,618 Income from continuing operations before income taxes 19,587 56,286 43,296 73,401 73,299 Income tax expense 10,006 24,090 14,861 29,609 33,944 Income from continuing operations 9,581 32,196 28,435 43,792 39,355 Loss from discontinued operations, net of income taxes (1) (2) (3) (5) Net income 9,580 32,196 28,433 43,789 39,350 Less: net income attributable to noncontrolling interests 4,707 6,934 5,136 14,153 18,184 Net income attributable to SemGroup Corporation $ 4,873 $ 25,262 $ 23,297 $ 29,636 $ 21,166 Net income attributable to SemGroup Corporation $ 4,873 $ 25,262 $ 23,297 $ 29,636 $ 21,166 Other comprehensive income (loss), net of income taxes (20,210) (10,331) 5,520 (23,750) (6,618) Comprehensive income (loss) attributable to SemGroup Corporation $ (15,337) $ 14,931 $ 28,817 $ 5,886 $ 14,548 Net income per common share Basic $ 0.11 $ 0.59 $ 0.53 $ 0.68 $ 0.50 Diluted $ 0.11 $ 0.59 $ 0.53 $ 0.67 $ 0.49 Weighted average shares (thousands): Basic 43,808 42,708 43,798 43,775 42,674 Diluted 43,971 43,013 44,013 43,969 42,976 18

19 SemGroup Non-GAAP Adjusted EBITDA Calculation (in thousands, unaudited) Three Months Ended Nine Months Ended September 30, June 30, September 30, Reconciliation of net income to Adjusted EBITDA: Net income $ 9,580 $ 32,196 $ 28,433 $ 43,789 $ 39,350 Add: Interest expense 19,170 14,807 16,822 50,583 34,394 Add: Income tax expense 10,006 24,090 14,861 29,609 33,944 Add: Depreciation and amortization expense 26,022 25,200 24,674 74,430 70,899 EBITDA 64,778 96,293 84, , ,587 Selected Non-Cash Items and Other Items Impacting Comparability 11,171 (16,868) (4,764) 27,546 25,647 Adjusted EBITDA $ 75,949 $ 79,425 $ 80,026 $ 225,957 $ 204,234 Selected Non-Cash Items and Other Items Impacting Comparability Loss (gain) on disposal or impairment of long-lived assets, net $ (951) $ 1,376 $ 1,372 $ 1,479 $ 20,633 Loss from discontinued operations, net of income taxes Foreign currency transaction (gain) loss (385) 128 (295) (1,199) (388) Remove NGL equity earnings including gain on issuance of common units 742 (14,290) (12,117) (11,070) (30,976) Remove gain on sale of NGL units (26,748) (6,623) (14,517) (26,748) NGL cash distribution 4,752 6,450 4,468 14,235 17,462 M&A transaction related costs 10,000 Inventory valuation adjustments including equity method investees ,377 Employee severance expense Unrealized gain on derivative activities (4,546) (411) (1,415) (3,316) (656) Change in fair value of warrants 5,550 23,499 Depreciation and amortization included within equity earnings 6,412 4,887 6,346 19,134 12,588 Bankruptcy related expenses Charitable contributions 3,298 3,298 Legal settlement expense 3,394 3,394 Recovery of receivables written off at emergence (664) Non-cash equity compensation 1,556 2,686 3,427 7,760 6,482 Selected Non-Cash items and Other Items Impacting Comparability $ 11,171 $ (16,868) $ (4,764) $ 27,546 $ 25,647 19

20 SemGroup 2015 Adjusted EBITDA Guidance (in millions, unaudited) 2015 Guidance (1) Mid-point Net income $ 62.0 Add: Interest expense 69.0 Add: Income tax expense 38.0 Add: Depreciation and amortization EBITDA $ Selected Non-Cash and Other Items Impacting Comparability 37.0 Adjusted EBITDA $ Selected Non-Cash and Other Items Impacting Comparability Depreciation and amortization included within equity earnings 25.5 Loss on disposal 1.5 Foreign currency transaction gain (1.2) Inventory valuation adjustments including equity method investees 1.4 Remove gain on sale of NGL units (14.5) Non-cash equity compensation 10.9 M&A related transaction costs 10.0 Legal settlement expense 3.4 Selected Non-Cash and Other Items Impacting Comparability $ 37.0 (1) Guidance is on a cash basis for equity investments in NGL, includes fully consolidated Rose Rock Midstream 20

21 Crude Segment Adjusted EBITDA Calculation (in thousands, unaudited) Three Months Ended Nine Months Ended September 30, June 30, September 30, Net income (1) $ 9,834 $ 15,950 $ 13,954 $ 33,450 $ 44,182 Add: Interest expense 16,202 10,525 13,088 39,936 20,388 Add: Depreciation and amortization expense 10,634 8,395 10,608 31,385 27,153 EBITDA 36,670 34,870 37, ,771 91,723 Selected Non-Cash Items and Other Items Impacting Comparability 5,497 5,698 6,134 22,781 14,240 Adjusted EBITDA $ 42,167 $ 40,568 $ 43,784 $ 127,552 $ 105,963 Selected Non-Cash Items and Other Items Impacting Comparability Loss (gain) on disposal of long-lived assets, net $ (603) $ 291 $ (79) $ (530) $ 230 Employee severance expense Unrealized gain on derivative activities (4,546) (411) (1,415) (3,316) (656) Depreciation and amortization included within equity earnings 6,412 4,887 6,346 19,134 12,588 Inventory valuation adjustments including equity method investees ,377 Legal settlement expense 3,394 3,394 Non-cash equity compensation ,213 2,683 2,069 Selected Non-Cash items and Other Items Impacting Comparability $ 5,497 $ 5,698 $ 6,134 $ 22,781 $ 14,240 (1) Crude segment includes fully consolidated Rose Rock Midstream 21

22 SemGas Adjusted EBITDA Calculation (in thousands, unaudited) Three Months Ended Nine Months Ended September 30, June 30, September 30, Net income (loss) $ 4,754 $ 7,448 $ 7,043 $ 16,688 $ (1,555) Add: Interest expense 3,504 2,330 3,269 9,624 6,032 Add: Depreciation and amortization expense 8,601 7,064 7,359 23,098 19,312 EBITDA 16,859 16,842 17,671 49,410 23,789 Selected Non-Cash Items and Other Items Impacting Comparability ,778 2,539 20,748 Adjusted EBITDA $ 17,420 $ 17,102 $ 19,449 $ 51,949 $ 44,537 Selected Non-Cash Items and Other Items Impacting Comparability Loss (gain) on disposal of long-lived assets, net $ 445 $ (12) $ 1,450 $ 1,894 $ 20,092 Bankruptcy related expenses Non-cash equity compensation Selected Non-Cash items and Other Items Impacting Comparability $ 561 $ 260 $ 1,778 $ 2,539 $ 20,748 22

23 SemCAMS Adjusted EBITDA Calculation (in thousands, unaudited) Three Months Ended Nine Months Ended September 30, June 30, September 30, Net income $ 2,119 $ 5,310 $ 915 $ 4,233 $ 12,604 Add: Interest expense 2,270 3,918 3,117 8,499 11,869 Add: Income tax expense 2,361 2, , Add: Depreciation and amortization expense 3,198 5,113 3,187 9,451 11,021 EBITDA 9,948 16,363 7,835 25,711 36,367 Selected Non-Cash Items and Other Items Impacting Comparability (745) Adjusted EBITDA $ 9,203 $ 16,836 $ 8,532 $ 26,087 $ 36,480 Selected Non-Cash Items and Other Items Impacting Comparability Foreign currency transaction (gain) loss $ 3 $ 1 $ 145 $ 104 $ (21) Gain on disposal of long-lived assets, net (917) (35) (917) (950) Recovery of receivables written off at emergence (664) Employee severance Non-cash equity compensation ,189 1,658 Selected Non-Cash items and Other Items Impacting Comparability $ (745) $ 473 $ 697 $ 376 $

24 SemLogistics Adjusted EBITDA Calculation (in thousands, unaudited) Three Months Ended Nine Months Ended September 30, June 30, September 30, Net income (loss) $ (1,077) $ (6,057) $ 103 $ (2,900) $ (6,099) Add: Interest expense ,341 1,107 Add: Income tax expense (benefit) (170) (1,038) 167 (372) (1,565) Add: Depreciation and amortization expense 2,173 2,543 2,154 6,367 7,593 EBITDA 1,359 (4,156) 2,867 4,436 1,036 Selected Non-Cash Items and Other Items Impacting Comparability 670 1,898 (674) 801 (1,845) Adjusted EBITDA $ 2,029 $ (2,258) $ 2,193 $ 5,237 $ (809) Selected Non-Cash Items and Other Items Impacting Comparability Loss from discontinued operations, net of income taxes $ $ $ $ $ 4 Gain on disposal of long-lived assets, net 1,139 (2,495) Foreign currency transaction (gain) loss (873) Non-cash equity compensation Selected Non-Cash items and Other Items Impacting Comparability $ 670 $ 1,898 $ (674) $ 801 $ (1,845) 24

25 SemMaterials México Adjusted EBITDA Calculation (in thousands, unaudited) Three Months Ended Nine Months Ended September 30, June 30, September 30, Net income $ 2,473 $ 1,484 $ 3,199 $ 8,683 $ 4,534 Add: Interest expense Add: Income tax expense 642 1, ,396 3,134 Add: Depreciation and amortization expense 993 1,655 1,037 3,083 4,538 EBITDA 4,152 4,331 5,002 14,208 12,372 Selected Non-Cash Items and Other Items Impacting Comparability Adjusted EBITDA $ 4,632 $ 4,451 $ 5,262 $ 15,167 $ 12,571 Selected Non-Cash Items and Other Items Impacting Comparability Gain (loss) on disposal of long-lived assets, net $ 124 $ (7) $ $ 105 $ (35) Foreign currency transaction loss (gain) (51) Non-cash equity compensation Selected Non-Cash items and Other Items Impacting Comparability $ 480 $ 120 $ 260 $ 959 $

26 SemStream Adjusted EBITDA Calculation (in thousands, unaudited) Three Months Ended Nine Months Ended September 30, June 30, September 30, Net income $ 603 $ 42,301 $ 20,064 $ 29,575 $ 61,467 Add: Interest expense (1,352) (1,292) (1,336) (4,010) (3,833) EBITDA (749) 41,009 18,728 25,565 57,634 Selected Non-Cash Items and Other Items Impacting Comparability 5,494 (34,585) (14,271) (11,351) (40,257) Adjusted EBITDA $ 4,745 $ 6,424 $ 4,457 $ 14,214 $ 17,377 Selected Non-Cash Items and Other Items Impacting Comparability Remove NGL equity losses (earnings) including gain on issuance of common units $ 742 $ (14,290) $ (12,117) $ (11,070) $ (30,976) Remove gain on sale of NGL units (26,748) (6,623) (14,517) (26,748) NGL cash distribution 4,752 6,450 4,468 14,235 17,462 Non-cash equity compensation Selected Non-Cash items and Other Items Impacting Comparability $ 5,494 $ (34,585) $ (14,271) $ (11,351) $ (40,257) 26

27 SemGroup Corporate & Other Adjusted EBITDA Calculation (in thousands, unaudited) Three Months Ended Nine Months Ended September 30, June 30, September 30, Net loss $ (9,126) $ (34,240) $ (16,845) $ (45,940) $ (75,783) Add: Interest expense (1,931) (1,170) (1,761) (4,853) (1,335) Add: Income tax expense 7,173 22,014 13,314 24,057 31,502 Add: Depreciation and amortization expense ,046 1,282 EBITDA (3,461) (12,966) (4,963) (25,690) (44,334) Selected Non-Cash Items and Other Items Impacting Comparability (786) 9,268 1,312 11,441 32,449 Adjusted EBITDA $ (4,247) $ (3,698) $ (3,651) $ (14,249) $ (11,885) Selected Non-Cash Items and Other Items Impacting Comparability Loss from discontinued operations, net of income taxes $ 1 $ $ 2 $ 3 $ 1 Loss on disposal or impairment of long-lived assets, net ,791 Foreign currency transaction loss (gain) (1,253) (475) 339 (2,171) (536) Employee severance expense M&A transaction related costs 10,000 Change in fair value of warrants 5,550 23,499 Bankruptcy related expenses Charitable contributions 3,298 3,298 Non-cash equity compensation ,455 1,473 Selected Non-Cash items and Other Items Impacting Comparability $ (786) $ 9,268 $ 1,312 $ 11,441 $ 32,449 27

28 Rose Rock Midstream Consolidated Balance Sheet (in thousands, unaudited, condensed) ASSETS September 30, 2015 December 31, 2014 (1) Current assets $ 348,645 $ 274,769 Property, plant and equipment, net 425, ,066 Equity method investment 430, ,635 Other noncurrent assets, net 68,862 65,793 Total assets $ 1,273,495 $ 1,006,263 LIABILITIES AND PARTNERS' CAPITAL Current liabilities $ 270,452 $ 265,682 Long-term debt 744, ,092 Total liabilities 1,014, ,774 Partners capital 258, ,489 Total liabilities and partners' capital $ 1,273,495 $ 1,006,263 (1) Prior period financial information has been recast to reflect the effects of the dropdown of the Wattenberg Oil Trunkline 28

29 Rose Rock Midstream Consolidated Statements of Income (in thousands, except per unit data, unaudited) Three Months Ended Nine Months Ended September 30, June 30, September 30, Revenues, including revenues from affiliates (1) (1) Product $ 211,881 $ 346,496 $ 193,525 $ 511,973 $ 879,873 Service 29,205 30,360 29,778 87,109 81,653 Total revenues 241, , , , ,526 Expenses, including expenses from affiliates Costs of products sold, exclusive of depreciation and amortization 195, , , , ,928 Operating 19,081 22,130 23,656 63,688 54,783 General and administrative 4,339 4,444 6,329 16,288 14,382 Depreciation and amortization 10,634 8,395 10,608 31,385 27,153 Total expenses 229, , , , ,246 Earnings from equity method investments 17,115 16,289 17,683 55,662 39,660 Operating income 28,903 24,530 27,260 78,769 60,940 Other expenses: Interest expense 12,491 8,010 10,197 30,694 13,127 Other income (9) (5) (14) (21) Total other expenses, net 12,482 8,010 10,192 30,680 13,106 Net income 16,421 16,520 17,068 48,089 47,834 Less: net income attributable to noncontrolling interests 7,758 Net income attributable to Rose Rock Midstream, L.P. $ 16,421 $ 16,520 $ 17,068 $ 48,089 $ 40,076 1) Prior period financial information has been recast to reflect the effects of the dropdown of the Wattenberg Oil Trunkline 29

30 Rose Rock Midstream Consolidated Statements of Income (Continued) (in thousands, except per unit data, unaudited) Three Months Ended Nine Months Ended September 30, June 30, September 30, (1) (1) Net income allocated to general partner $ 5,658 $ 2,193 $ 5,323 $ 15,723 $ 4,065 Net income allocated to common unitholders $ 10,763 $ 10,370 $ 11,745 $ 32,366 $ 25,989 Net income allocated to subordinated unitholders $ $ 4,226 $ $ $ 11,086 Net income (loss) allocated to Class A unitholders $ $ (269) $ $ $ (1,064) Net income (loss) per limited partner unit: Common unit (basic) $ 0.29 $ 0.50 $ 0.32 $ 0.90 $ 1.37 Common unit (diluted) $ 0.29 $ 0.50 $ 0.32 $ 0.89 $ 1.36 Subordinated unit (basic and diluted) $ $ 0.50 $ $ $ 1.32 Class A unit (basic and diluted) $ $ (0.07) $ $ $ (0.36) Basic weighted average number of limited partner units outstanding: Common units 36,792 20,574 36,790 36,136 19,029 Subordinated units 8,390 8,390 Class A units 3,750 2,953 Diluted weighted average number of limited partner units outstanding: Common units 36,831 20,646 36,839 36,179 19,088 Subordinated units (2) 8,390 8,390 Class A units (3) 3,750 2, (1) Prior period financial information has been recast to reflect the effects of the dropdown of the Wattenberg Oil Trunkline (2) The Subordinated Units converted to Common Units on February 17, 2015 (3) The Class A units converted to Common Units on January 1, 2015

31 Rose Rock Midstream Non-GAAP Financial Data Reconciliations (in thousands, unaudited) Three Months Ended Nine Months Ended September 30, June 30, September 30, (1) (1) Reconciliation of operating income to Adjusted gross margin: Operating income $ 28,903 $ 24,530 $ 27,260 $ 78,769 $ 60,940 Add: Operating expense 19,081 22,130 23,656 63,688 54,783 General and administrative expense 4,339 4,444 6,329 16,288 14,382 Depreciation and amortization expense 10,634 8,395 10,608 31,385 27,153 Less: Earnings from equity method investments 17,115 16,289 17,683 55,662 39,660 Non-cash unrealized gain on derivatives, net 4, ,415 3, Adjusted gross margin $ 41,296 $ 42,799 $ 48,755 $ 131,038 $ 116,942 Reconciliation of net income to Adjusted EBITDA: Net income $ 16,421 $ 16,520 $ 17,068 $ 48,089 $ 47,834 Add: Interest expense 12,491 8,010 10,197 30,694 13,127 Depreciation and amortization expense 10,634 8,395 10,608 31,385 27,153 Cash distributions from equity method investments 23,602 17,029 25,560 75,227 45,081 Inventory valuation adjustment 48 1,235 Non-cash equity compensation , Loss (gain) on disposal of long-lived assets, net (22) Less: Earnings from equity method investments 17,115 16,289 17,683 55,662 39,660 White Cliffs cash distributions attributable to noncontrolling interests 1,658 11,008 Impact from derivative instruments: Total gain (loss) on derivatives, net 6,036 4,047 (2,202) 3,190 1,298 Total realized loss (gain) (cash flow) on derivatives, net (1,490) (3,636) 3, (642) Non-cash unrealized gain on derivatives, net 4, ,415 3, Adjusted EBITDA $ 41,872 $ 32,202 $ 44,718 $ 128,708 $ 82,806 Reconciliation of net cash provided by operating activities to Adjusted EBITDA: Net cash provided by operating activities $ 32,431 $ 21,152 $ 26,941 $ 52,302 $ 46,270 Less: Changes in operating assets and liabilities, net 8,710 (4,441) (386) (28,184) (29,999) White Cliffs cash distributions attributable to noncontrolling interests 1,658 11,008 Add: Interest expense, excluding amortization of debt issuance costs 11,664 7,527 9,515 28,658 12,124 Distributions from equity method investments in excess of equity in earnings 6, ,876 19,564 5,421 Adjusted EBITDA $ 41,872 $ 32,202 $ 44,718 $ 128,708 $ 82,806 (1) Prior period financial information has been recast to reflect the effects of the dropdown of the Wattenberg Oil Trunkline 31

32 Rose Rock Midstream 2015 Adjusted EBITDA Guidance (in millions, unaudited) 2015 Guidance Mid-point Net income $ 70.3 Add: Interest expense 43.0 Add: Depreciation and amortization 42.0 EBITDA $ Non-Cash and Other Adjustments 24.7 Adjusted EBITDA $ Less: Cash interest expense 40.0 Maintenance capital expenditures 10.0 Distributable cash flow $ Non-Cash and Other Adjustments Earnings from equity method investments $ (77.0) Distributions from equity method investments (1) 99.0 Inventory valuation adjustment 1.2 Non-cash equity compensation 1.5 Non-Cash and Other Adjustments $ (1) Distributions from equity method investment includes the cash distributions from White Cliffs and Glass Mountain attributable to Rose Rock

33 Rose Rock Midstream Distributable Cash Flow (in thousands, unaudited) Three Months Ended Nine Months Ended September 30, June 30, September 30, (1) (1) Reconciliation of net income to distributable cash flow: Net income $ 16,421 $ 16,520 $ 17,068 $ 48,089 $ 47,834 Add: Interest expense 12,491 8,010 10,197 30,694 13,127 Depreciation and amortization expense 10,634 8,395 10,608 31,385 27,153 EBITDA 39,546 32,925 37, ,168 88,114 Add: Loss (gain) on disposal of long-lived assets, net (22) Cash distributions from equity method investments 23,602 17,029 25,560 75,227 45,081 Inventory valuation adjustment 48 1,235 Non-cash equity compensation , Less: Earnings from equity method investments 17,115 16,289 17,683 55,662 39,660 White Cliffs cash distributions attributable to noncontrolling interests 1,658 11,008 Non-cash unrealized gain (loss) on derivatives, net 4, ,415 3, Adjusted EBITDA $ 41,872 $ 32,202 $ 44,718 $ 128,708 $ 82,806 Less: Cash interest expense 11,364 7,502 9,764 28,582 12,049 Maintenance capital expenditures 2,892 1,850 4,855 8,674 4,236 Distributable cash flow $ 27,616 $ 22,850 $ 30,099 $ 91,452 $ 66,521 Distribution declared $ 30,221 $ 18,866 $ 29,483 $ 88,083 $ 49,487 Distribution coverage ratio 0.91 x 1.21 x 1.02 x 1.04 x 1.34 x (1) Prior period financial information has been recast to reflect the effects of the dropdown of the Wattenberg Oil Trunkline 33

34 SemGroup Reconciliation of Net Income to Adjusted EBITDA (in thousands, unaudited) Three Months Ended March 31, 2015 Crude SemStream SemCAMS SemLogistics SemMexico SemGas Corporate and other Consolidated Net income (loss) $ 9,662 $ 8,908 $ 1,199 $ (1,926) $ 3,011 $ 4,891 $ (19,969) $ 5,776 Add: Interest expense 10,646 (1,322) 3, ,851 (1,161) 14,591 Add: Income tax expense (benefit) 551 (369) 990 3,570 4,742 Add: Depreciation and amortization expense 10,143 3,066 2,040 1,053 7, ,734 EBITDA 30,451 7,586 7, ,054 14,880 (17,266) 48,843 Selected Non-Cash Items and Other Items Impacting Comparability 11,150 (2,574) ,915 21,139 Adjusted EBITDA $ 41,601 $ 5,012 $ 8,352 $ 1,015 $ 5,273 $ 15,080 $ (6,351) $ 69,982 Selected Non-Cash Items and Other Items Impacting Comparability Loss (gain) on disposal of long-lived assets, net $ 152 $ $ $ $ (19) $ (1) $ 926 $ 1,058 Foreign currency transaction (gain) loss (44) (1,257) (519) Remove NGL equity losses including gain on issuance of common units Remove gain on sale of NGL units (7,894) (7,894) NGL cash distribution 5,015 5,015 M&A transaction related costs 10,000 10,000 Unrealized loss on derivative activities 2,645 2,645 Depreciation and amortization included within equity earnings 6,376 6,376 Inventory valuation adjustment including equity method investees 1,187 1,187 Bankruptcy related expenses Non-cash equity compensation ,057 2,777 Selected Non-Cash Items and Other Items Impacting Comparability $ 11,150 $ (2,574) $ 424 $ 805 $ 219 $ 200 $ 10,915 $ 21,139 34

35 SemGroup Reconciliation of Net Income to Adjusted EBITDA (in thousands, unaudited) Year Ended December 31, 2014 Crude SemStream SemCAMS SemLogistics SemMexico SemGas Corporate and other Consolidated Net income (loss) $ 57,495 $ 70,632 $ 14,318 $ (10,072) $ 5,900 $ 6,792 $ (93,008) $ 52,057 Add: Interest expense 31,072 (5,140) 13,558 1, ,570 (710) 49,044 Add: Income tax expense (benefit) 3,135 (2,231) 4,053 41,556 46,513 Add: Depreciation and amortization expense 40,035 14,295 10,005 6,031 26,353 1,678 98,397 EBITDA 128,602 65,492 45,306 (770) 16,150 41,715 (50,484) 246,011 Selected Non-Cash Items and Other Items Impacting Comparability 28,159 (42,165) 590 (1,083) ,053 34,255 41,430 Adjusted EBITDA $ 156,761 $ 23,327 $ 45,896 $ (1,853) $ 16,771 $ 62,768 $ (16,229) $ 287,441 Selected Non-Cash Items and Other Items Impacting Comparability Loss (gain) on disposal of long-lived assets, net $ 319 $ $ (950) $ (2,490) $ (53) $ 20,092 $ 15,674 $ 32,592 Loss (income) from discontinued operations, net of income taxes (1) 2 1 Foreign currency transaction (gain) loss (1,228) (86) Remove NGL equity earnings including gain on issuance of common units (31,363) (31,363) Remove gain on sale of NGL units (34,211) (34,211) NGL cash distribution 23,404 23,404 Employee severance expense Unrealized gain on derivative activities (1,734) (1,734) Change in fair value of warrants 13,423 13,423 Depreciation and amortization included within equity earnings 18,992 18,992 Inventory valuation adjustment including equity method investees 7,781 7,781 Recovery of receivables written off at emergence (664) (664) Bankruptcy related expenses ,159 1,310 Charitable contributions 3,379 3,379 Non-cash equity compensation 2, , ,826 8,386 Selected Non-Cash Items and Other Items Impacting Comparability $ 28,159 $ (42,165) $ 590 $ (1,083) $ 621 $ 21,053 $ 34,255 $ 41,430 35

36 SemGroup Reconciliation of Net Income to Adjusted EBITDA (in thousands, unaudited) Year Ended December 31, 2013 Crude SemStream SemCAMS SemLogistics SemMexico SemGas Corporate and other Consolidated Net income (loss) $ 57,228 $ 38,071 $ (3,136) $ (6,769) $ 5,377 $ 14,701 $ (39,660) $ 65,812 Add: Interest expense 14,923 (4,810) 18,928 1, ,268 (8,790) 25,142 Add: Income tax expense (benefit) 6,348 (5,699) 2,589 (20,492) (17,254) Add: Depreciation and amortization expense 23,708 10,766 9,426 5,991 14,517 2,001 66,409 EBITDA 95,859 33,261 32,906 (1,607) 14,145 32,486 (66,941) 140,109 Selected Non-Cash Items and Other Items Impacting Comparability 10,764 (15,624) 1, (722) 1,221 51,979 48,909 Adjusted EBITDA $ 106,623 $ 17,637 $ 34,086 $ (1,496) $ 13,423 $ 33,707 $ (14,962) $ 189,018 Selected Non-Cash Items and Other Items Impacting Comparability Loss (gain) on disposal of long-lived assets, net $ (56) $ 6 $ $ $ (854) $ 665 $ $ (239) Income from discontinued operations, net of income taxes (59) (59) Foreign currency transaction (gain) loss (23) (391) (177) (1,042) (1,633) Remove NGL equity earnings (33,996) (33,996) NGL cash distribution 18,321 18,321 Mid-America Midstream Gas Services acquisition cost 3,600 3,600 Employee severance expense Unrealized gain on derivative activities (974) (974) Change in fair value of warrants 46,434 46,434 Depreciation and amortization included within equity in earnings of White Cliffs 9,520 9,520 Bankruptcy related expenses Non-cash equity compensation 2, , ,446 7,330 Selected Non-Cash Items and Other Items Impacting Comparability $ 10,764 $ (15,624) $ 1,180 $ 111 $ (722) $ 1,221 $ 51,979 $ 48,909 36

37 SemGroup Reconciliation of Net Income to Adjusted EBITDA (in thousands, unaudited) Year Ended December 31, 2012 Crude SemStream SemCAMS SemLogistics SemMexico SemGas Corporate and other Consolidated Net income (loss) $ 64,554 $ 4,919 $ 4,097 $ (3,552) $ 1,467 $ (264) $ (39,324) $ 31,897 Add: Interest expense (409) (3,449) 18,727 2, ,461 (10,228) 8,902 Add: Income tax expense (benefit) 720 (7,736) 2,285 2,653 (2,078) Add: Depreciation and amortization expense 12,131 10,589 9,780 6,171 7,043 2,496 48,210 EBITDA 76,276 1,470 34, ,237 8,240 (44,403) 86,931 Selected Non-Cash Items and Other Items Impacting Comparability 9,532 6, ,236 48,034 Adjusted EBITDA $ 85,808 $ 8,422 $ 34,183 $ 1,492 $ 10,358 $ 8,869 $ (14,167) $ 134,965 Selected Non-Cash Items and Other Items Impacting Comparability Loss (gain) on disposal of long-lived assets, net $ (3,501) $ 214 $ $ $ (290) $ 46 $ $ (3,531) Loss (income) from discontinued operations, net of income taxes (2,985) (2,939) Foreign currency transaction (gain) loss 26 (370) Remove NGL equity earnings NGL cash distribution 9,218 9,218 Employee severance expense Unrealized loss on derivative activities 1,196 1,196 Change in fair value of warrants 21,310 21,310 Depreciation and amortization included within equity in earnings of White Cliffs 10,181 10,181 Defense costs 5,899 5,899 Recovery of receivables written off at emergence (858) (858) Non-cash equity compensation 1, ,348 6,503 Selected Non-Cash Items and Other Items Impacting Comparability $ 9,532 $ 6,952 $ 50 $ 514 $ 121 $ 629 $ 30,236 $ 48,034 37

38 SemGroup Reconciliation of Net Income to Adjusted EBITDA (in thousands, unaudited) Year Ended December 31, 2011 Crude SemStream SemCAMS SemLogistics SemMexico SemGas Corporate and other Consolidated Net income (loss) $ 39,241 $ 16,752 $ 2,868 $ (41,440) $ 2,430 $ 6,308 $ (23,347) $ 2,812 Add: Interest expense 3,749 17,152 24,685 1, ,346 10,836 60,138 Add: Income tax expense (benefit) 552 (3,331) 629 (160) (2,310) Add: Depreciation and amortization expense 11,379 3,501 10,233 9,271 6,502 5,986 2,951 49,823 EBITDA 54,369 37,405 38,338 (34,495) 9,926 14,640 (9,720) 110,463 Selected Non-Cash Items and Other Items Impacting Comparability 8,293 (48,513) (2,296) 45, ,806 5,082 Adjusted EBITDA $ 62,662 $ (11,108) $ 36,042 $ 10,788 $ 9,983 $ 15,092 $ (7,914) $ 115,545 Selected Non-Cash Items and Other Items Impacting Comparability Loss (gain) on disposal of long-lived assets, net $ 64 $ (45,821) $ (8) $ 44,663 $ (200) $ 4 $ 1,599 $ 301 Loss (income) from discontinued operations, net of income taxes (1) 9, (126) 9,548 Foreign currency transaction (gain) loss 39 (2,674) (921) (3,450) Employee severance expense 3, ,374 Unrealized gain on derivative activities (787) (13,247) (80) (14,114) Change in fair value of warrants (5,012) (5,012) Reversal of allowance on goods and services tax receivable (4,144) (4,144) Depreciation and amortization included within equity in earnings of White Cliffs 10,630 10,630 Defense costs 1,000 1,000 Recovery of receivables written off at emergence (2,692) (2,692) Non-cash equity compensation 1, ,958 8,641 Selected Non-Cash Items and Other Items Impacting Comparability $ 8,293 $ (48,513) $ (2,296) $ 45,283 $ 57 $ 452 $ 1,806 $ 5,082 (1) SemStream Arizona has been reported as a discontinued operation at December 31, Prior periods have been recast to conform with the presentation. 38

39 Rose Rock Reconciliation of Net Income to Adjusted EBITDA (in thousands, unaudited) Three Months Ended Year Ended March 31, December 31, (1) Net income $ 14,600 $ 62,925 $ 37,515 $ 23,954 $ 23,235 Add: Interest expense 8,006 21,279 8,181 1,912 1,823 Depreciation and amortization expense 10,143 40,035 23,708 12,131 11,379 Distributions from equity method investment 26,065 66,768 16,999 Inventory valuation adjustment 1,187 5,667 Non-cash equity compensation Loss (gain) on disposal of long-lived assets, net (31) (1) 64 Provision for (recovery of) uncollectible accounts receivable (916) Less: Earnings from equity method investment 20,864 57,378 17,571 White Cliffs cash distributions attributable to noncontrolling interests 11,008 Impact from derivative instruments: Total gain (loss) on derivatives, net (644) 17,351 (1,593) 149 (386) Total realized (gain) loss (cash outflow) on derivatives, net (1,887) (15,730) 2,567 (1,345) 1,173 Non-cash unrealized gain (loss) on derivatives, net (2,531) 1, (1,196) 787 Adjusted EBITDA $ 42,118 $ 127,929 $ 68,633 $ 39,500 $ 34,798 (1) Prior period financial information has been recast to reflect the effects of the dropdown of the Wattenberg Oil Trunkline 39

40 Rose Rock Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA (in thousands, unaudited) Year Ended December 31, 2014 (1) Net cash provided by operating activities $ 111,093 $ 72,528 $ 35,097 $ 51,085 Less: Changes in operating assets and liabilities, net 1,296 11,265 (2,850) 18,082 White Cliffs cash distributions attributable to noncontrolling interests 11,008 Add: Interest expense, excluding amortization of debt issuance costs 19,750 7,370 1,553 1,795 Distributions in excess of equity earnings of affiliates 9,390 Adjusted EBITDA $ 127,929 $ 68,633 $ 39,500 $ 34,798 (1) Prior period financial information has been recast to reflect the effects of the dropdown of the Wattenberg Oil Trunkline 40