Document
false0001647513 0001647513 2020-02-12 2020-02-12


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 FORM 8-K
 CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 12, 2020
https://cdn.kscope.io/133d73a134c43e71d36d0bf17ab6ee11-nblxupdatedlogoa57.jpg 
NOBLE MIDSTREAM PARTNERS LP
(Exact name of Registrant as specified in its charter) 
 
 
 
 
 
 
 
 
Delaware
 
001-37640
 
47-3011449
(State or other jurisdiction of
incorporation or organization)
 
Commission
File Number
 
(I.R.S. Employer
Identification No.)
 
 
 
 
1001 Noble Energy Way
 
 
 
77070
Houston,
Texas
 
 
 
(Address of principal executive offices)
 
 
 
(Zip Code)
 
 
 
 
 
 
 
 
Registrant’s telephone number, including area code:
(281)
872-3100
(Former name, former address and former fiscal year, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Units, Representing Limited Partner Interests
 
NBLX
 
The Nasdaq Stock Market LLC
 
 
 
 
(Nasdaq Global Select Market)
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.





Item 2.02. Results of Operations and Financial Condition.
On February 12, 2020, Noble Midstream Partners LP (the “Partnership”) issued a press release announcing results for the fiscal year and quarter ended December 31, 2019. A copy of the press release issued by the Partnership is furnished as Exhibit 99.1 to this Current Report and will be published on the Partnership’s website at www.nblmidstream.com.
The information in this Item 2.02 (including the exhibit) shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and is not incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act.
Item 7.01. Regulation FD Disclosure.
In addition, on February 12, 2020, the Partnership posted a fourth quarter presentation on the Partnership’s website at www.nblmidstream.com.
The information furnished in this Item 7.01 shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, and is not incorporated by reference into any filing under the Securities Act or the Exchange Act.
Item 9.01. Financial Statements and Exhibits.
(d)
Exhibits.
 
99.1
 
104
Cover page Interactive Data File (embedded within the Inline XBRL document).





SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Partnership has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
 
 
 
 
 
 
 
 
 
 
NOBLE MIDSTREAM PARTNERS LP
 
 
 
 
By: Noble Midstream GP, LLC,
       Its General Partner
 
 
 
 
 
 
Date:
February 12, 2020
 
 
By: 
 
/s/ Thomas W. Christensen
 
 
 
 
 
 
Thomas W. Christensen
 
 
 
 
 
 
Chief Financial Officer



Exhibit


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Exhibit 99.1

NEWS RELEASE
 
 
 
February 12, 2020
Noble Midstream Partners Reports Fourth Quarter and Full Year 2019 Results
Provides Updated 2020 Guidance Highlighting Improved Capital Efficiency

Houston, Texas - Noble Midstream Partners LP (NASDAQ: NBLX) (Noble Midstream or the Partnership) today reported fourth quarter and full year 2019 financial and operational results. The Partnership’s results are consolidated to include the non-controlling interests in the Partnership’s development companies (DevCos) retained by Noble Energy, Inc. (Noble Energy) as well as Greenfield Midstream, LLC’s (Greenfield Midstream) 45.6% ownership of Black Diamond Gathering, LLC (Black Diamond Gathering).
Certain results are shown as “attributable to the Partnership,” which exclude the aforementioned non-controlling interests retained by Noble Energy and Greenfield Midstream. Noble Midstream believes the results “attributable to the Partnership” provide the best representation of the ongoing operations from which the Partnership’s unitholders will benefit. Due to the acquisition of the remaining DevCo interests during the quarter, results to the Partnership include 45 days of the Partnership's previous ownership in the acquired DevCos, including 25% ownership in Green River DevCo and San Juan River DevCo and 40% ownership in Blanco River DevCo.
Fourth-Quarter, Full-Year 2019 and Recent Highlights
Invested $48 million in fourth-quarter 2019, well below the low end of guidance of $60 to $70 million
Executed a $149 million net capital program in 2019 with material well-connect savings
Achieved record gross oil and gas gathering throughput of 355 thousand barrels of oil and gas equivalent per day (MBoe/d) and 219 thousand barrels of produced water per day (Mbw/d), in fourth-quarter 2019; increased gross annual combined gathering and sales volumes for oil, gas and produced water more than 40%
Generated $51 million in net income or $39 million attributable to the Partnership, and $95 million of Gross EBITDA1 or $73 million of Adjusted Net EBITDA1 attributable to the Partnership
Completed the simplification transaction, which eliminated the General Partner's Incentive Distribution Rights

1 Adjusted EBITDA and DCF are not Generally Accepted Accounting Principles (GAAP) measures. Definitions and reconciliations of these non-GAAP measures to their most directly comparable GAAP reporting measures appear in Schedule 4 of the financial tables which follow.
1


Acquired substantially all the remaining DevCo interests from Noble Energy, increasing the Partnership's exposure to high margin growth opportunities in the DJ and Delaware Basins
Exercised accordion feature of the Partnership's unsecured revolving credit facility and ended 2019 with $568 million in liquidity

2020 Investment Program and Guidance Highlights
$190 to $230 million in 2020 net organic Capital Expenditures, approximately 25% below original 2020 guidance provided in November 2019
348 to 377 MBoe/d of oil and gas gathering volumes, an annual increase of 13% at the midpoint in 2020
185 to 205 Mbw/d of produced water volumes, adjusted lower from previous guidance to account for the sale of certain water assets
$500 million to $540 million in Adjusted EBITDA attributable to the Partnership, updated to reflect most recent customer plans and partnership forecasts
$325 million to $355 million of Distributable Cash Flow1 (DCF) with coverage ratio of 1.2x to 1.4x
Acquired 20% ownership of the Saddlehorn Pipeline in the DJ Basin through Black Diamond joint venture, effective February 1, 2020


“2019 marked an impressive year for Noble Midstream, whereby we continued to grow the core business, progressed our equity method investments and positioned the partnership for success into the next decade through the elimination of the Incentive Distribution Rights and acquisition of the remaining DevCo interests. Our performance in 2019 showcases our ability to enhance cost efficiencies and create sustainable unitholder value in 2020. We have the talent in place and portfolio to grow the business efficiently and set ourselves on a path to generate free cash flow longer term.” stated Brent J. Smolik, Chief Executive Officer of the general partner of Noble Midstream.


1 Adjusted EBITDA and DCF are not Generally Accepted Accounting Principles (GAAP) measures. Definitions and reconciliations of these non-GAAP measures to their most directly comparable GAAP reporting measures appear in Schedule 4 of the financial tables which follow.
2


Strong Throughput Enabled Record Quarterly Gathering
During the fourth quarter, Noble Midstream achieved record oil and gas volumes of 355 MBoe/d from its core gathering business, up 11% sequentially and above the top end of guidance. Produced water gathering throughput was up 22% sequentially and came in above the top end of guidance. Fresh water delivered in fourth-quarter 2019 averaged 126 MBw/d, down 7% from the third quarter due to lower operator activity levels at the end of the year.
Fourth-quarter 2019 revenue totaled $191 million, up 12% compared to the third quarter. An increase in revenue from gathering and crude oil sales was partially offset by lower fresh water delivery revenue and lower equity method income from investments. Fourth-quarter 2019 net income and Adjusted EBITDA attributable to the Partnership were impacted by a $10 million EBITDA loss on EPIC interim oil service due to lower than forecasted interim service volumes and realized tariffs, as well as other one-time accruals.
Maintenance capital expenditures attributable to the Partnership totaled $7.0 million during the fourth-quarter 2019. Along with the strong operational performance, this resulted in DCF attributable to the Partnership of $65 million and a Distribution Coverage Ratio of 1.1x, or 1.3x pro-forma for the acquisition.
Enhanced Capital Efficiency
Capital expenditures in the fourth quarter primarily reflected spending for customer well connections in the DJ Basin and Delaware Basin. Fourth-quarter gross capital expenditures of $67 million and capital expenditures attributable to the Partnership of $48 million were below guidance and reflect 2019's progress on reduced costs and increased capital efficiency through contracting practices, pipeline installation costs, and the use of existing facility and infrastructure.
The Partnership contributed $105 million to equity investments during fourth-quarter 2019 at the low end of guidance. This primarily included capital contributions of $83 million related to the EPIC Crude, $3 million for the EPIC Y-Grade, and $19 million for the Delaware Crossing joint ventures.

3


 
 
 
4Q 2019 Capital Expenditures (in millions)
DevCo
Basin
NBLX Ownership**
Gross
Net
Colorado River
DJ
100%
$
7

$
7

Green River
DJ
25%
$
13

$
9

Laramie River *
DJ
100%
$
33

$
21

Blanco River
Delaware
40%
$
10

$
7

Trinity River
Delaware
100%
$
4

$
4

Total Capital Expenditures
$
67

$
48

Additions to Equity Investments
$
105

$
105

Capital Expenditures and Investments
$
172

$
153

*
Includes capital expenditures for Black Diamond, in which Noble Midstream owns 54.4%
** As of November 15, 2019, all DevCo interests increased to 100%
Continued DJ Basin Activity
In the Partnership's wholly-owned DJ Basin assets, oil and gas gathering throughput was 166 MBoe/d, up 3% sequentially. Average produced water volumes of 37 MBw/d were down from 42 MBw/d in the third-quarter 2019. The Partnership connected 37 wells in the fourth quarter, including 25 Noble Energy wells, focused in East Pony and Wells Ranch. Completion activity in the Mustang development area resumed in the fourth-quarter 2019. The Partnership delivered fresh water volumes of 126 MBw/d to two crews during the quarter. In 2020, the fresh water minimum volume commitment at Wells Ranch will increase from 50 MBw/d to 60 MBw/d, effective through 2021.
Fourth-quarter 2019 Black Diamond oil gathering and sales volumes averaged 103 thousand barrels of oil per day (MBo/d), up 12% from the third-quarter 2019. The Partnership connected a combined 35 wells during the fourth quarter on Black Diamond's gathering system, lower than the prior quarter due to timing of pad completions. As a result, the Partnership expects the first-quarter 2020 volumes to trend lower before inflecting mid-year 2020.
Increasing Third-Party Volumes in the Delaware Basin
In the Delaware Basin, oil and gas gathering throughput was a record 85 MBoe/d of oil and gas during fourth-quarter 2019, up 13% sequentially. Produced water gathering volumes were also up more than 25% on a sequential basis. The growth in gathering throughput reflects 15 new well connections during the quarter, including 2 third-party customer wells. Volumes also reflect contributions from nine third-party wells that came online on the last day of the third-quarter 2019. The Partnership completed 11 third-party well connections in the second half of 2019,

4


compared to two in the first half of the year. In 2020, third-party volume contribution is expected to approach 10% to 15% of total Delaware Basin volumes.
Fourth-quarter 2019 volumes on the Advantage Pipeline system totaled 80 MBo/d, compared to 70 MBo/d during the third quarter. The Partnership expects 2020 annual volumes to remain flat with the partner on the pipeline returning to match volumes late in the fourth quarter.
Permian Basin Equity Investments Nearing Completion
EPIC interim crude service first oil volumes were transported in July and increased in the back half of 2019 on the EPIC Y-Grade pipeline via the Advantage Crane West interconnect. While lower-than-expected tariffs and utilization rates impacted financials in fourth-quarter 2019, the Partnership expects an improvement from interim service in first-quarter 2020.
The Delaware Crossing JV construction is progressing as planned with the completion of the Wink crude terminal during the quarter. The Partnership assumed operatorship during the fourth quarter and is currently transporting dedicated volumes on the northern portion of the pipeline. The Liberty Terminal is more than 90% complete and the 16-inch mainline connecting the two terminals is beginning line fill later this month. Associated gathering projects are progressing as planned. All core infrastructure construction was completed in early January 2020.
Balance Sheet Management while Executing Growth Opportunities
As of December 31, 2019, the Partnership had $13 million in cash on hand. During the quarter, Noble Midstream exercised the $350 million accordion feature on its unsecured revolving credit facility, expanding the facility to $1.15 billion and increasing liquidity at year end 2019 to $568 million.
The balance of the preferred equity commitment for the EPIC Crude pipeline was $106 million at the end of the fourth quarter, up from $103 million in the third quarter.
Quarterly Distribution Realigned with Current Market Environment
Concurrent with the IDR simplification and acquisition during the quarter, Noble Midstream has restated its distribution growth rate from 20% to 10% per unit.

5


As a result, on January 23, 2020, the board of directors of Noble Midstream’s general partner, Noble Midstream GP LLC, declared a fourth quarter cash distribution of $0.6878 per unit, a 17% increase from the fourth quarter 2018 and a 2.4% sequential increase.
Reduced Full-Year 2020 Capital Outlook on Continued Capital Efficiency Gains
Noble Midstream expects 2020 organic capital expenditures of  $190 to $230 million. The Partnership has lowered previously-issued full-year 2020 organic net capital expectations by 25%, due to 2019 progress on sustainable costs savings and better line of sight to customer activity.
In addition, Noble Midstream expects combined equity investments of $220 to $260 million, including the Saddlehorn commitment. This is an increase to 2020 guidance as a result of scope changes, phasing of investments from 2019 to 2020, and cost assumptions to complete the projects.
First-quarter 2020 organic net capital expectations are $60 to $70 million and equity investment capital expectations are $180 to $220 million. The Partnership's 2020 gross total capital expectations are expected to decrease more than 50% annually as continued efficiencies are realized within core operating areas and equity investments start up in the first half of the year.
2020 gathering throughput growth will be driven by Mustang and Wells Ranch in the DJ Basin, as well as additional completion activity in the Delaware Basin. The Partnership expects to connect more than 500 wells in 2020. Noble Midstream anticipates 348 to 377 MBoe/d 2020 gross oil and gas gathering and sales volumes, up 13% annually. In 2020, the Partnership expects 160 to 170 well connections in the wholly-owned DJ Basin assets. We anticipate 110 to 120 Noble Energy connections, driven mostly by Mustang with 80 to 90 wells online and Wells Ranch with 20 to 30 wells. Activity is expected to pick up in Mustang in first-quarter 2020 with 10 to 14 connections. Completion activity is expected to increase in 2020 on Black Diamond with 250 to 300 well connections.
In the Delaware Basin, the Partnership anticipates similar activity levels to 2019 with 60 to 75 well connections, including 10 to 15 third-party wells. Overall, the 2020 connection schedule in the Delaware and DJ Basin will be more weighted to the second and third-quarter 2020 and drive a second-half volume ramp.

6


Produced water gathering throughput is anticipated to be 185 to 205 MBw/d, a slight increase to 2019 volumes. These volumes have been adjusted due to accounting changes on the commercial terms of certain produced water assets in the Permian Basin.
Full-year 2020 Adjusted EBITDA attributable to the Partnership is anticipated to be $500 million to $540 million, compared to prior guidance of $500 million to $560 million. This update reflects better visibility into operator activity and forecasts in the DJ and Delaware Basin as well as deferred capital projects.
First-quarter 2020 Adjusted EBITDA attributable to the Partnership is expected to increase to a range of $94 to $101 million. Full-year 2020 Distribution Coverage Ratio remains unchanged at 1.2x to 1.4x. First-quarter 2020 fresh water delivery volumes are anticipated to be 210 to 230 MBw/d. The Partnership expects fresh water delivered volumes to increase in first-half 2020 as completion activity resumes.
Noble Midstream expects to delever through 2020 as equity investment projects generate income and anticipates Net Debt to Trailing 12 Month (TTM) 2020 EBITDA of 3.3x to 3.7x.
Conference Call
Noble Midstream will host a webcast and conference call today at 10:30 a.m. Central Time to discuss fourth quarter and full year 2019 financial and operational results as well as 2020 guidance. The live audio webcast and related presentation material is accessible on the Investors page of the Partnerships website at www.nblmidstream.com. Conference call numbers for participation are 877-883-0383, or 412-902-6506 for international calls. The passcode number is 6304607. A replay of the conference call will be available at the same web location following the event.

About Noble Midstream Partners
Noble Midstream is a growth-oriented Delaware master limited partnership formed by Noble Energy, to own, operate, develop and acquire domestic midstream infrastructure assets. Noble Midstream currently provides crude oil, natural gas, and water-related midstream services in the DJ Basin in Colorado and the Delaware Basin in Texas. For more information, please visit www.nblmidstream.com.






7



Forward Looking Statements

This news release contains certain “forward-looking statements” within the meaning of federal securities law.
Words such as “anticipates”, “believes”, “expects”, “intends”, “will”, “should”, “may”, “estimates”, and similar expressions may be used to identify forward-looking statements. Forward-looking statements are not statements of historical fact and reflect the Partnership’s current views about future events. No assurances can be given that the forward-looking statements contained in this news release will occur as projected and actual results may differ materially from those projected. Forward-looking statements are based on current expectations, estimates and assumptions that involve a number of risks and uncertainties that could cause actual results to differ materially from those projected. These risks include, without limitation, the Partnership's customers’ ability to meet their drilling and development plans, changes in general economic conditions, competitive conditions in the Partnership’s industry, actions taken by third-party operators, gatherers, processors and transporters, the demand for crude oil and natural gas gathering and processing services, the Partnership’s ability to successfully implement its business plan, the Partnership’s ability to complete internal growth projects on time and on budget, the ability of third parties to complete construction of pipelines in which the Partnership holds equity interests on time and on budget, the price and availability of debt and equity financing, the availability and price of crude oil and natural gas to the consumer compared to the price of alternative and competing fuels, and other risks inherent in the Partnership’s business, including those described under “Risk Factors” and “Forward-Looking Statements” in the Partnership’s most recent Annual Report on Form 10-K and in other reports we file with the Securities and Exchange Commission. These reports are also available from the Partnership’s office or website, www.nblmidstream.com. Forward-looking statements are based on the estimates and opinions of management at the time the statements are made. Noble Midstream does not assume any obligation to update forward-looking statements should circumstances, management’s estimates, or opinions change.
This news release also contains certain non-GAAP measures of financial performance that management believes are good tools for internal use and the investment community in evaluating Noble Midstream’s overall financial performance. Please see the attached schedules for reconciliations of the non-GAAP financial measures used in this news release to the most directly comparable GAAP financial measures.

8


This release serves as a qualified notice to nominees and brokers as provided for under Treasury Regulation Section 1.1446-4(b) that 100% of the Partnership’s distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, the Partnership’s distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate. Nominees, and not the Partnership, are treated as withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors.



Contact:
Park Carrere
Investor Relations
(281) 872-3208
park.carrere@nblenergy.com



9


Schedule 1
Noble Midstream Partners LP
Revenue and Throughput Volume Statistics
(unaudited)
 
Three Months Ended December 31,
 
Year Ended December 31,
 
2019
 
2018
 
2019
 
2018
DJ Basin
 
 
 
 
 
 
 
Crude Oil Sales Volumes (Bbl/d)
10,935

 
6,027

 
9,354

 
6,129

Crude Oil Gathering Volumes (Bbl/d)
190,216

 
184,246

 
182,121

 
143,095

Natural Gas Gathering Volumes (MMBtu/d)
531,559

 
351,717

 
476,605

 
308,929

Natural Gas Processing Volumes (MMBtu/d)
47,712

 
59,076

 
50,039

 
61,766

Produced Water Gathering Volumes (Bbl/d)
37,122

 
39,611

 
39,629

 
29,903

Fresh Water Delivery Volumes (Bbl/d)
125,823

 
179,653

 
164,524

 
175,754

 
 
 
 
 
 
 
 
Delaware Basin
 
 
 
 
 
 
 
Crude Oil Gathering Volumes (Bbl/d)
59,671

 
47,266

 
49,842

 
34,032

Natural Gas Gathering Volumes (MMBtu/d)
200,491

 
120,556

 
155,155

 
78,875

Produced Water Gathering Volumes (Bbl/d)
181,581

 
121,852

 
148,886

 
91,312

 
 
 
 
 
 
 
 
Total Gathering Systems
 
 
 
 
 
 
 
Crude Oil Sales Volumes (Bbl/d)
10,935

 
6,027

 
9,354

 
6,129

Crude Oil Gathering Volumes (Bbl/d)
249,887

 
231,512

 
231,963

 
177,127

Natural Gas Gathering Volumes (MMBtu/d)
732,050

 
472,273

 
631,760

 
387,804

Total Barrels of Oil Equivalent (Boe/d)
354,675

 
298,087

 
322,312

 
232,974

Natural Gas Processing Volumes (MMBtu/d)
47,712

 
59,076

 
50,039

 
61,766

Produced Water Gathering Volumes (Bbl/d)
218,703

 
161,463

 
188,515

 
121,215

 
 
 
 
 
 
 
 
Total Fresh Water Delivery
 
 
 
 
 
 
 
Fresh Water Services Volumes (Bbl/d)
125,823

 
179,653

 
164,524

 
175,754




10



Schedule 2
Noble Midstream Partners LP
Consolidated Statements of Operations
(in thousands, except per unit amounts, unaudited)
 
Three Months Ended December 31,
 
Year Ended
December 31,
 
2019
 
2018
 
2019
 
2018
Midstream Services Revenues
 
 
 
 
 
 
 
Gathering and Processing — Affiliate
$
92,985

 
$
76,660

 
$
337,086

 
$
265,505

Gathering and Processing — Third Party
22,381

 
20,779

 
76,645

 
54,017

Fresh Water Delivery Affiliate
10,765

 
12,492

 
77,566

 
69,266

Fresh Water Delivery — Third Party
4,196

 
6,413

 
12,591

 
19,345

Crude Oil Sales — Third Party
57,938

 
31,709

 
189,772

 
141,490

Other — Affiliate
790

 
996

 
3,183

 
3,976

Other — Third Party
1,710

 
2,101

 
6,958

 
5,136

Total Midstream Services Revenues
190,765

 
151,150

 
703,801

 
558,735

Costs and Expenses
 
 
 
 
 
 
 
Cost of Crude Oil Sales
56,173

 
30,538

 
181,390

 
136,368

Direct Operating
27,763

 
27,209

 
116,675

 
95,852

Depreciation and Amortization
25,396

 
22,815

 
96,981

 
79,568

General and Administrative
11,789

 
5,014

 
25,777

 
25,910

Other Operating Expense

 
1,806

 
(488
)
 
2,159

Total Operating Expenses
121,121

 
87,382

 
420,335

 
339,857

Operating Income
69,644

 
63,768

 
283,466

 
218,878

Other (Income) Expense
 
 
 
 
 
 
 
Interest Expense, Net of Amount Capitalized
4,734

 
4,261

 
16,236

 
10,447

Investment Loss (Income)
12,720

 
(5,464
)
 
17,748

 
(16,289
)
Total Other (Income) Expense
17,454

 
(1,203
)
 
33,984

 
(5,842
)
Income Before Income Taxes
52,190

 
64,971

 
249,482

 
224,720

Income Tax Provision
796

 
1,946

 
4,015

 
8,001

Net Income
51,394

 
63,025

 
245,467

 
216,719

Less: Net Income Prior to the Drop-Down and Simplification
1,692

 
6,430

 
12,929

 
27,843

Net Income Subsequent to the Drop-Down and Simplification
49,702

 
56,595

 
232,538

 
188,876

Less: Net Income Attributable to Noncontrolling Interests
10,306

 
14,423

 
72,542

 
26,142

Net Income Attributable to Noble Midstream Partners LP
39,396

 
42,172

 
159,996

 
162,734

Less: Net Income Attributable to Incentive Distribution Rights

 
2,421

 
13,967

 
5,836

Net Income Attributable to Limited Partners
$
39,396

 
$
39,751

 
$
146,029

 
$
156,898

 
 
 
 
 
 
 
 
Net Income Attributable to Limited Partners Per Limited Partner Unit  Basic
 
 
 
 
 
 
 
Common Units
$
0.65

 
$
1.00

 
$
3.09

 
$
3.96

Subordinated Units
$

 
$
1.00

 
$
3.86

 
$
3.96

 
 
 
 
 
 
 
 
Net Income Attributable to Limited Partners Per Limited Partner Unit  Diluted
 
 
 
 
 
 
 
Common Units
$
0.65

 
$
1.00

 
$
3.08

 
$
3.96

Subordinated Units
$

 
$
1.00

 
$
3.86

 
$
3.96

 
 
 
 
 
 
 
 
Weighted Average Limited Partner Units Outstanding  Basic
 
 
 
 
 
 
 
Common Units
60,431

 
23,688

 
40,083

 
23,686

Subordinated Units

 
15,903

 
5,795

 
15,903

 
 
 
 
 
 
 
 
Weighted Average Limited Partner Units Outstanding  Diluted
 
 
 
 
 
 
 
Common Units
60,454

 
23,703

 
40,105

 
23,701

Subordinated Units

 
15,903

 
5,795

 
15,903


11



Schedule 3
Noble Midstream Partners LP
Consolidated Balance Sheets
(in thousands, unaudited)

 
December 31,
2019
 
December 31,
2018
ASSETS
 
 
 
Current Assets
 
 
 
Cash and Cash Equivalents
$
12,676

 
$
14,761

Accounts Receivable — Affiliate
42,428

 
41,812

Accounts Receivable — Third Party
44,093

 
23,459

Other Current Assets
8,730

 
5,875

Total Current Assets
107,927

 
85,907

Property, Plant and Equipment
 
 
 
Total Property, Plant and Equipment, Gross
2,006,995

 
1,752,122

Less: Accumulated Depreciation and Amortization
(244,038
)
 
(181,199
)
Total Property, Plant and Equipment, Net
1,762,957

 
1,570,923

Investments
660,778

 
82,317

Intangible Assets, Net
277,900

 
310,202

Goodwill
109,734

 
109,734

Other Noncurrent Assets
6,786

 
33,095

Total Assets
$
2,926,082

 
$
2,192,178

LIABILITIES, MEZZANINE EQUITY AND EQUITY
 
 
 
Current Liabilities
 
 
 
Accounts Payable — Affiliate
$
8,155

 
$
7,182

Accounts Payable — Trade
107,705

 
94,265

Other Current Liabilities
11,680

 
13,790

Total Current Liabilities
127,540

 
115,237

Long-Term Liabilities
 
 
 
Long-Term Debt
1,495,679

 
559,021

  Asset Retirement Obligations
37,842

 
30,533

Other Long-Term Liabilities
4,160

 
832

Total Liabilities
1,665,221

 
705,623

Mezzanine Equity
 
 
 
Redeemable Noncontrolling Interest, Net
106,005

 

Equity
 
 
 
Parent Net Investment

 
170,322

Partners’ Equity
 
 
 
Limited Partner
 
 
 
Common Units (90,136 and 23,759 units outstanding, respectively)
813,999

 
699,866

Subordinated Units (15,903 units outstanding as of December 31, 2018)

 
(130,207
)
General Partner

 
2,421

Total Partners’ Equity and Parent Net Investment
813,999

 
742,402

Noncontrolling Interests
340,857

 
744,153

Total Equity
1,154,856

 
1,486,555

Total Liabilities, Mezzanine Equity and Equity
$
2,926,082

 
$
2,192,178



12



Schedule 4
Noble Midstream Partners LP
Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures
Non-GAAP Financial Measures
This news release, the financial tables and other supplemental information include Adjusted EBITDA, Distributable Cash Flow, and Distribution Coverage Ratio, all of which are non-GAAP measures which may be used periodically by management when discussing our financial results with investors and analysts.
As a result of our increased investment in midstream entities during first quarter 2019, we have refined our presentation of Adjusted EBITDA to adjust for items with respect to our equity method investments. We now define Adjusted EBITDA as net income before income taxes, net interest expense, depreciation and amortization, transaction expenses, unit-based compensation and certain other items that we do not view as indicative of our ongoing performance. Additionally, Adjusted EBITDA reflects the adjusted earnings impact of our equity method investments by adjusting our equity earnings or losses from our equity method investments to reflect our proportionate share of the EBITDA of such equity method investments. The tables below also reflect Adjusted EBITDA prior to Drop-Down and Simplification Transaction. Prior period Adjusted EBITDA has been reclassified to conform to the current period presentation.
Adjusted EBITDA is used as a supplemental financial measure by management and by external users of our financial statements, such as investors, industry analysts, lenders and ratings agencies, to assess:
our operating performance as compared to those of other companies in the midstream energy industry, without regard to financing methods, historical cost basis or capital structure;
the ability of our assets to generate sufficient cash flow to make distributions to our partners;
our ability to incur and service debt and fund capital expenditures;
and the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.
As a result of our increased investment in midstream entities during first quarter 2019, we have also refined our presentation of distributable cash flow to adjust for items with respect to our equity method investments. We now define distributable cash flow as Adjusted EBITDA plus distributions received from our equity method investments less our proportionate share of Adjusted EBITDA from such equity method investments, estimated maintenance capital expenditures and cash interest paid. The tables below also reflect Adjusted EBITDA prior to Drop-Down and Simplification Transaction. Prior period distributable cash flow has been reclassified to conform to the current period presentation.
Distributable Cash Flow is used by management to evaluate our overall performance. Our partnership agreement requires us to distribute all available cash on a quarterly basis, and Distributable Cash Flow is one of the factors used by the board of directors of our general partner to help determine the amount of available cash that is available to our unitholders for a given period. We define Distribution Coverage Ratio as Distributable Cash Flow divided by total distributions declared. The Distribution Coverage Ratio is used by management to illustrate our ability to make our distributions each quarter.
We believe that the presentation of Adjusted EBITDA, Distributable Cash Flow, and Distribution Coverage Ratio provide information useful to investors in assessing our financial condition and results of operations. The GAAP measure most directly comparable to Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio is net income. Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio should not be considered alternatives to net income or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio exclude some, but not all, items that affect net income, and these measures may vary from those of other companies. As a result, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio as presented herein may not be comparable to similarly titled measures of other companies.
Noble Midstream does not provide guidance on the reconciling items between forecasted Net Income, forecasted Adjusted EBITDA, forecasted Distributable Cash Flow and forecasted Distribution Coverage Ratio due to the uncertainty regarding timing and estimates of these items. Noble Midstream provides a range for the forecasts of Net Income, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio to allow for the variability in timing and uncertainty of estimates of reconciling items between forecasted Net Income, forecasted Adjusted EBITDA, forecasted Distributable Cash Flow and forecasted Distribution Coverage Ratio. Therefore, the Partnership cannot reconcile forecasted Net Income to forecasted Adjusted EBITDA, forecasted Distributable Cash Flow or forecasted Distribution Coverage Ratio without unreasonable effort.
In addition to Net Income, the GAAP measure most directly comparable to Adjusted EBITDA and Distributable Cash Flow is net cash provided by operating activities. Adjusted EBITDA and Distributable Cash Flow should not be considered alternatives to net income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Due to the forward-looking nature of net cash provided by operating activities, management cannot reliably predict certain of the necessary components of the most directly comparable forward-looking GAAP measures, such as future impairments and future changes in working capital. Accordingly, Noble Midstream is unable to present a quantitative reconciliation of the aforementioned forward-looking non-GAAP financial measures to net cash provided by operating activities. Amounts excluded from these non-GAAP measures in future periods could be significant.

13



Schedule 4 (Continued)
Noble Midstream Partners LP
Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures


Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP)
and Distributable Cash Flow (Non-GAAP)
(in thousands, unaudited)
 
Three Months Ended December 31,
 
2019
 
2018
Reconciliation from Net Income (GAAP)
 
 
 
Net Income (GAAP)
$
51,394

 
$
63,025

Add:
 
 
 
Depreciation and Amortization
25,396

 
22,815

Interest Expense, Net of Amount Capitalized
4,734

 
4,261

Tax Provision
796

 
1,946

Transaction and Integration Expenses
6,163

 
52

Proportionate Share of Equity Method Investment EBITDA Adjustments
6,330

 
(221
)
Unit-Based Compensation and Other
369

 
1,335

Adjusted EBITDA (Non-GAAP)
95,182

 
93,213

Less:
 
 
 
Adjusted EBITDA Prior to Drop-Down and Simplification Transaction
4,593

 
11,892

Adjusted EBITDA subsequent to Drop-Down and Simplification Transaction (Non-GAAP)
90,589

 
81,321

Less:
 
 
 
Adjusted EBITDA Attributable to Noncontrolling Interests
17,202

 
22,393

Adjusted EBITDA Attributable to Noble Midstream Partners LP (Non-GAAP)
73,387

 
58,928

Add:
 
 
 
Distribution from Equity Method Investments
1,480

 
2,900

Less:
 
 
 
Proportionate Share of Equity Method Investment Adjusted EBITDA
(7,247
)
 
4,090

Cash Interest Paid
9,772

 
5,065

Maintenance Capital Expenditures
7,011

 
5,721

Distributable Cash Flow of Noble Midstream Partners LP (Non-GAAP)
$
65,331

 
$
46,952

Distributions (Declared)
$
62,004

 
$
25,613

Distribution Coverage Ratio (Declared)
1.1x

 
1.8x



14



Schedule 4 (Continued)
Noble Midstream Partners LP
Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures


Reconciliation of Net Cash Provided by Operating Activities (GAAP) to
Adjusted EBITDA (Non-GAAP) and Distributable Cash Flow (Non-GAAP)
(in thousands, unaudited)
 
Three Months Ended December 31,
 
2019
 
2018
Reconciliation from Net Cash Provided by Operating Activities (GAAP)
 
 
 
Net Cash Provided by Operating Activities (GAAP)
$
95,106

 
$
85,608

Add:
 
 
 
Interest Expense, Net of Amount Capitalized
4,734

 
4,272

Changes in Operating Assets and Liabilities
(5,261
)
 
7,526

Transaction and Integration Expenses
6,163

 
52

Equity Method Investment EBITDA Adjustments
(8,729
)
 
(1,609
)
Other Adjustments
3,169

 
(2,636
)
Adjusted EBITDA (Non-GAAP)
95,182

 
$
93,213

Less:
 
 
 
Adjusted EBITDA Prior to Drop-Down and Simplification Transaction
4,593

 
11,892

Adjusted EBITDA subsequent to Drop-Down and Simplification Transaction (Non-GAAP)
90,589

 
81,321

Less:
 
 
 
Adjusted EBITDA Attributable to Noncontrolling Interests
17,202

 
22,393

Adjusted EBITDA Attributable to Noble Midstream Partners LP (Non-GAAP)
73,387

 
58,928

Add:
 
 
 
Distribution from Equity Method Investments
1,480

 
2,900

Less:
 
 
 
Proportionate Share of Equity Method Investment Adjusted EBITDA
(7,247
)
 
4,090

Cash Interest Paid
9,772

 
5,065

Maintenance Capital Expenditures
7,011

 
5,721

Distributable Cash Flow of Noble Midstream Partners LP (Non-GAAP)
$
65,331

 
$
46,952

Distributions (Declared)
$
62,004

 
$
25,613

Distribution Coverage Ratio (Declared)
1.1x

 
1.8x


15