BreitBurn Energy Partners' CEO Presents At Barclays CEO Energy-Power Conference (Transcript)

BreitBurn Energy Partners L.P. (BBEP)

Barclays CEO Energy-Power Conference

September 6, 2012, 11:45 a.m. ET

Executives

Hal Washburn – Director & CEO

Analysts

Name – Title

Presentation

Unidentified Male

We’d like to get started with our next presentation. I’m pleased to welcome BreitBurn Energy Partners to our conference. Our speaker today from Breitburn is Hal Washburn, who is one of the cofounders of BreitBurn and is the company’s CEO. I’ll turn it over to Hal.

Hal Washburn

Thank you. I hate to compete with lunch, so I hope you do enjoy yourself. I apologize in advance. I am recovering, I hope, from the flu, and I’ve got a cough that just doesn’t want to go away so if I have to step away from the mic and cough, I apologize now. Hopefully that won’t happen, though.

I am Hal Washburn. I’m the cofounder and CEO of BreitBurn Energy Partners. We’re an oil and gas partnership in upstream MLP. We’ve been in business since 1988. My partner Randy and I actually went to college together. We were engineers at Stanford. We started the business about four years after undergrad. And our strategy in 1988 is really unchanged from the strategy we pursue today, and we really had a belief, and the belief was that technology had driven the energy industry from the beginning. We believed it would continue to drive the industry and we believed that it would actually drive the industry harder and faster as time went by, and the technology would just allow us to get more and more oil and gas out of existing fields and new, unconventional sources around the United States. So we didn’t think the United States was a dead area for oil and gas like most thought in 1988. Rather, we thought it was an area where we’d continue to get more oil and gas out of the ground, and we built our business based on that. We built our business based on using new technologies, working oil in existing fields to get more reserves, more production, more cash flow and more value.

We acquire and exploit. We don’t drill wild cat wells. That’s very important to understand. Our business is built on acquiring, exploiting, producing and continuing to acquire. We’re focused on distributions. We are an MLP, and we’re focused on delivering consistent and growing distributions. We have an internal target of mid-single digit growth per year in distributions. We look to be at the top of our peer group in distribution growth. To that end, we’ve increased distributions nine consecutive quarters.

I’ll show a map that shows where we are, but we’re [inaudible] broken into two divisions, a northern division and a southern division. As of the end of last year, we had about 150 million BEO of proved reserves. A very high percentage of that, 87%, proved developed. That’s a very important component of, and a very important metric for MLPs. 87% of the reserves that we have in our books at the end of 2011 will be produced from existing wells, and wells that have already been drilled. Very low-risk, very low execution risk on these reserves and on these productions. You’re not counting on us drilling thousands of wells to cover two produce reserves that are on our books.

We like to be balanced between oil and gas, and our production is roughly balanced at 50-50 oil and gas. We have an equity market cap at about 1.5 billion, total debt of about $775 million, an enterprise value of $2.3 billion. Some of the slides have been updated, some haven’t. We did an overnight deal last night of 10 million units that, the end trading today, and that was about $18.51. So, some of the numbers are updated on these slides and some are not to reflect that equity deal.

So as I said before, I’ll show you where we are. We’re across the country and that’s by design. High growth [inaudible] is focused on one area and has success there if you leverage that growth and growth exponentially. It could grow, you know, many X times their factor by leveraging success in one basin. We’re not that type of business. We’re looking for slow but sustainable growth, we don’t want to be tied to one basin, we don’t want to be tied to one play, we don’t want to be tied to one commodity. We want to have diversification across many basins, plays and commodities. Therefore, we are across the United States.

We started in California. California remains a very important part of our business but it’s no longer even the largest part of our business. Wyoming is a larger business force, Michigan is a larger business force. We’re the largest gas producer in the state of Michigan. We are a top ten producer in Wyoming, a top five to ten producer in California, very large producer in Florida, not saying much because there are a lot of producers in Florida. We’ve made two large acquisitions for us in West Texas this year. I’ll talk about those in more detail, but we think the Texas, and West Texas in particular, will become a larger and larger part of our business as we go forward.

We are acquire and exploit business. We said at the beginning of 2012 that we were targeting between $300 and 500 million of acquisitions. We also said that we would be focusing on organic growth, primarily in our oil-producing properties. We’ve actually now increased our capital budget twice from our original capital plan of about 70 million to about 137 million. We’ll be drilling a number of oil wells throughout our portfolio, Wyoming, California, Florida and now West Texas. We’re targeting about 21% year-over-year production growth in 2012, a combination of organic drilling as well as acquisitions. We’ve completed five acquisitions in the last just over a year, about $650 million. As I said, we targeted 300 to 500 in 2012, on top of the deals we had done last year. So far we’re making good progress on our target for ’12. We’ve completed three transactions, totaling about $313 million, two in West Texas for $220 million, and one [inaudible] in Wyoming for $93 million. I’ll talk a little bit more about those in a second.

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