Noble Midstream Partners Reports Third Quarter 2018 Results

Noble Midstream Partners LP (NYSE: NBLX) (Noble Midstream or the Partnership) today reported third quarter 2018 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); however, 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.

Third Quarter Highlights Include:

• Net Income of $49 million, or $45 million attributable to the Partnership
• Adjusted EBITDA¹ of $71 million, a 48% increase over the third quarter of 2017
• Adjusted EBITDA¹ attributable to the Partnership of $59 million, a 29% increase over the third quarter of 2017
• Declared a 20% annual increase in distribution per unit to $0.5597, with a distribution coverage ratio¹ of 2.1x
• Combined gathering and sales volumes for oil, gas and produced water nearly tripled from the third quarter of 2017

"Noble Midstream delivered another quarter driven by strong underlying fundamentals and activity: gathering throughput volumes increased across the DJ and Delaware Basins, capital intensity declined with the completion of our growth projects, and we achieved our peer-leading distribution growth with a coverage ratio over two times,” Terry R. Gerhart, Chief Executive Officer of Noble Midstream stated. "Additional progress towards our goal of 50% EBITDA contribution from the Permian Basin by the end of 2020 and the continued build-out of our third-party customer platform further enhance the resiliency of our portfolio and project backlog.”

Third Quarter 2018 Results

Oil and gas gathering and sales, produced water gathering, and fresh water delivery volumes were consistent with or above guidance ranges for the third quarter.

In the gathering business, oil and gas gathering and sales volumes of 225 thousand barrels of oil equivalent per day (MBoe/d) were up 17% compared to second quarter 2018 volumes. The Partnership realized sequential growth in oil and gas gathering throughput in the Blanco River, Green River and Laramie River DevCos. Produced water gathering throughput of 122 thousand barrels of water per day (MBw/d) was up 41% from the second quarter of 2018 due to higher activity levels in the Delaware Basin over the past several quarters.

Average fresh water delivered in the third quarter in the DJ Basin was 22% higher than the second quarter of 2018. The Partnership delivered water to a total of three Noble Energy completion crews in the Colorado River and Green River DevCos and two third-party completion crews in Laramie River DevCo.

Third quarter investment income of $3.9 million is primarily comprised of approximately $0.9 million from the Partnership’s minority ownership in White Cliffs Pipeline LLC and approximately $3.0 million from the Partnership’s 50% ownership in the Advantage Pipeline, L.L.C.

Strong operating performance drove net income ahead of guidance at $49 million for the quarter. Adjusted EBITDA¹ was $71 million in the third quarter, or 11% above the prior quarter, while Adjusted EBITDA¹ attributable to the Partnership was up 20% from the second quarter to $59 million. The gathering segment represented approximately 75% of total Adjusted EBITDA¹ attributable to the Partnership for the third quarter. Quarterly adjustments to earnings include approximately $300 thousand in integration expenses associated with the Saddle Butte acquisition.

In the third quarter, cash interest expense attributable to the Partnership was $4.7 million and maintenance capital expenditures attributable to the Partnership totaled $5.4 million, resulting in DCF¹ attributable to the Partnership of $49 million and a distribution coverage ratio¹ of 2.1x.

Blanco River DevCo

Oil and gas gathering volumes at Blanco River DevCo of 45 MBoe/d for the third quarter were up over 60% compared to the second quarter of 2018. The Partnership connected 19 wells during the quarter. Noble Midstream commenced third-party oil, gas and produced water gathering services in Blanco River, connecting the first well on the customer’s 13,000 acre position. Average central gathering facility availability was 98.4% during the third quarter.

Trinity River DevCo

Strong customer demand at the Advantage Pipeline system continued during the third quarter, with quarterly volumes of 106 thousand barrels of oil per day (MBbl/d), flat from the second quarter of 2018 and up nearly three times on an annual basis. Expansion of the Advantage Pipeline nameplate capacity to 200 MBbl/d from 150 MBbl/d was completed in July 2018.

Subsequent to the quarter, Noble Midstream entered into a letter of intent with Salt Creek Midstream LLC (Salt Creek) to form a 50/50 joint venture (the Joint Venture) on a crude oil pipeline and gathering system in the Delaware Basin, with initial capacity of 200 MBbl/d. The 95-mile, 20-inch diameter pipeline system will originate in Pecos County, Texas, with additional connections in Reeves County and Winkler County, Texas.

The Joint Venture will be underpinned by approximately 180,000 dedicated acres from Noble Energy and five other Southern Delaware Basin producers. The Partnership anticipates the execution of definitive agreements and closing of the transaction to occur in the fourth quarter of 2018.

Green River DevCo

Green River results during the third quarter reflect the significant contribution of oil, gas and produced water spec gathering services for Noble Energy’s Mustang development in the DJ Basin. A total of 30 wells are currently tied into the gathering system, driving average oil and gas gathering throughput to approximately 7 MBoe/d and produced water volumes to 8 MBw/d during the third quarter of 2018. Oil and gas gathering throughput exited the third quarter at over 20 MBoe/d. Fresh water infrastructure for the second row of development at Mustang was completed during the quarter.

Laramie River DevCo

Oil gathering and sales volumes during the third quarter were up 20% compared to the second quarter of 2018. Black Diamond Gathering third quarter throughput averaged 71 MBbl/d, representing a 23% increase over the second quarter 2018 and a 29% increase since the Black Diamond Gathering acquisition close in January 2018. The Partnership connected a combined 70 wells during the quarter on Black Diamond Gathering's system and the Partnership’s wholly-owned third party gathering system.

Colorado River DevCo

Colorado River oil and gas gathering volumes were down 6% compared to the second quarter of 2018 at 88 MBoe/d, with no well connections occurring during the quarter.

Capital Expenditures

Organic capital in the third quarter of $79 million was within guidance and down 49% on a sequential basis. Capital attributable to the Partnership of $40 million was down 44% quarter-over-quarter and was at the low end of guidance. The capital expenditures credit at Trinity River during the quarter reflects the move of two compressor units to inventory for future build-out. Gross and net capital by DevCo is as follows:

* Includes capital expenditures for Black Diamond, which is 54.4% owned by Noble Midstream.

Liquidity

As of September 30, 2018, the Partnership had $757 million of liquidity with $7 million in cash on hand (excluding $12 million of cash at Black Diamond Gathering) and $750 million available under its $800 million unsecured revolving credit facility.

Quarterly Distribution

On October 25, 2018, the Board of Directors of Noble Midstream’s general partner, Noble Midstream GP LLC, declared a third quarter cash distribution of $0.5597 per unit, a 20% increase from the third quarter 2017 and 49% above the minimum quarterly cash distribution. The third quarter distribution is payable on November 13, 2018, to unitholders of record as of November 5, 2018.

Fourth Quarter and Full Year 2018 Guidance

Fourth quarter 2018 guidance details, for capital, volumes and key financial metrics can be found in the table below. In total, we are raising our expectation for oil and gas gathering and sales volume growth, somewhat offset by lower contributions from the fresh water segment during the fourth quarter compared to prior guidance.

We are raising fourth quarter oil and gas gathering and sales volume guidance by 10% at the midpoint; volumes are expected to average 241 to 259 MBoe/d, 11% above the third quarter average at the midpoint. This is primarily driven by strong performance and continued growth in the Laramie River DevCo and Green River DevCo. Produced water gathering guidance for the fourth quarter remains unchanged at 130 to 145 MBw/d, with the midpoint of guidance representing 13% sequential growth over third quarter records.

Full year 2018 oil and gas gathering volumes are now anticipated to average 206 to 211 MBoe/d, approximately 134% above the 2017 average, and produced water is expected to average 97 to 100 MBw/d, an increase of over four times compared to the 2017 average.

Oil throughput on the Advantage Pipeline is expected to average approximately 115 to 125 MBbl/d in the fourth quarter, approximately 13% above the third quarter average. The Partnership continues to expect exit rate throughput on the Black Diamond Gathering system to be between 80 and 90 MBbl/d; throughput during October averaged over 80 MBbl/d.

Noble Midstream is currently forecasting fresh water delivery to four completion crews during the fourth quarter, compared to five crews during the third quarter. Fourth quarter fresh water delivery volumes are expected to increase approximately 3% from the third quarter at the midpoint.

Net income in the fourth quarter is expected between $52 million and $57 million, and $184 million and $189 million for the full year 2018.

Fourth quarter adjusted EBITDA is expected to range between $75 million and $80 million, approximately 9% above the third quarter. Adjusted EBITDA attributable to the Partnership guidance is unchanged and is anticipated to range between $57 million and $62 million.

Full year 2018 Adjusted EBITDA is expected between $268 million and $273 million, or $219 million and $225 million attributable to the Partnership. DCF and distribution coverage ratio is anticipated in the fourth quarter between $48 million and $53 million and 1.9x and 2.1x, respectively, and between $184 million and $190 million and 2.0x and 2.1x, respectively, for the full year 2018.

Fourth quarter 2018 capital is unchanged and expected to be between $55 million and $66 million, or $31 million to $36 million attributable to the Partnership.

Full year 2018 capital is anticipated to range between $538 million to $550 million, or $270 million to $275 million attributable to the Partnership, as compared to the prior full year 2017 capital guidance of $530 million to $550 million, or $270 million to $285 million attributable to the Partnership.

Further details with respect to the third quarter results and guidance can be found in the supplemental presentation on the Partnership's website, www.nblmidstream.com.

¹ Includes crude oil sales volume

² Results "attributable to the Partnership” exclude the non-controlling interests in the DevCos retained by Noble Energy. Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio are not financial measures calculated in accordance with Generally Accepted Accounting Principles (GAAP). For definitions of these non-GAAP measures, see Schedule 4 of the financial tables which follow.

³ Assumes 20% annualized distribution growth

Conference Call

Noble Midstream will host a webcast and conference call today at 1:00 p.m. Central Time to discuss third quarter 2018 financial and operational results and updated 2018 guidance. The live audio webcast and related presentation material is accessible on the ‘Investors’ page of the Partnership’s 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 7584496. A replay of the conference call will be available at the same web location following the event.

About Noble Midstream Partners

Noble Midstream Partners LP is a growth-oriented master limited partnership formed by Noble Energy, Inc. 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.

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, our 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 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.

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.

^{(1) Includes crude oil gathering volumes as well as crude oil that is sold to customers and transported on our gathering systems.}

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.

We define Adjusted EBITDA as net income before income taxes, net interest expense, depreciation and amortization, transaction expenses and unit-based compensation. 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.

We define Distributable Cash Flow as Adjusted EBITDA less estimated maintenance capital expenditures and cash interest expense. 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.

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