Baird Investment Banking Pitch Book
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SUMMARY TERMS OF WATER EARN-OUT
AR is considering a proposal whereby AM would accelerate the earn-out payment associated with the
2015 water drop-down
In September 2015, AR sold its integrated water business to AM for $1.05 billion, plus an additional $250 million
subject to the following Earn-Out provisions:
Payment of $125 million at year-end 2019 upon AM delivering a total of 176,295,000 barrels of water from 2017-2019
(equating to an average of 161 Mbbld)
Earn-Out Period
Payment of $125 million at year-end 2020 upon AM delivering a total of 219,200,000 barrels of water from 2018-2020
(equating to an average of 200 Mbbld)
36-month Period Ending 12/31/19
36-month Period Ending 12/31/20
Payment
to AR
(SMM)
$125
$125
Cumulative
Earn-out
Threshold
(Mbbl)
176,295
219,200
AR Projections (Cumulative)
Projected
Earn-Out
Volumes
% of Proj.
Volumes
(Mbbl)
197,539
221,999
112%
101%
I
Daily
Earn-out
Threshold
(Mbbld)
Confidential
161
200
Note, AR is agnostic to the source of the delivered water volumes from AM (freshwater, Veolia, etc.)
There is no "banking" concept associated with the water earn-out volumes
No explicit terms preventing AR from taking volumes for the purpose of reaching earn-out payments
Source: Sept 2015 Water Services Agreement and Contribution Agreement in connection with the contribution of water assets from AR to AM. Base Case projections as of March 23.
BAIRD
AR Projections (Daily)
Projected Earn-Out
Avg. Volumes % of Proj.
(Mbbld)
Volumes
180
203
Project Bronco
112%
101%
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