Evercore Investment Banking Pitch Book
For
Reference Only
Preliminary Valuation of SIRE Common Units
Valuation Methodologies
Evercore utilized the following methodologies to analyze the value of SIRE's Common Units:
Methodology
Description
Discounted
Cash Flow
Analysis
Peer Group
Trading
Analysis
Precedent M&A
Transaction
Analysis
Discounted
Distributions
Analysis
Premiums
Paid
Analysis
EVERCORE
■ Values SIRE Common Units based on the concepts of the time value of
money
■ Using management's projections, Evercore:
► Utilized varying WACC discount rates and terminal values to derive
valuation ranges for the SIRE Common Units
■
► Cash flows were discounted using WACC given allocated EBITDA-
based cash flows
Values SIRE Common Units based on peer group's current market
enterprise value multiples of relevant EBITDA
■ Peer group selected based on assets similar to those owned by SIRE
■
► Calculated terminal values based on a range of multiples of EBITDA
as well as assumed perpetuity growth rates
Values SIRE Common Units based on transactions involving assets and
businesses similar to those owned by SIRE
Values SIRE Common Units based on the present value of the future
cash distributions to SIRE Common Unitholders
■ Implied value of SIRE Common Units based on historical premiums
paid in selected relevant cash midstream mergers
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Confidential - Preliminary and Subject to Change
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Metrics / Assumptions
Discounted the projected cash flows to assumed December 31, 2022
effective date
WACC based on the Capital Asset Pricing Model ("CAPM")
Unitholder effective tax rate of 29.6% (80.0% of 37.0% top bracket) from
2023E to 2025E and 37.0% thereafter
For the terminal value, tax depreciation assumed to equal maintenance
capital expenditures
EBITDA exit multiple of 5.5x to 8.0x and a perpetuity growth rate of
0.5% to 1.5%
Sensitivity Case #2: Unit 8 Expansion's implied net present value per
SIRE unit, calculated using discount rates ranging from 10.0% to 15.0%
(the "Implied Unit 8 NPV per Unit'"), was added to Sensitivity Case #1's
implied SIRE unit value
Enterprise value / EBITDA multiples applied to 2022E, 2023E and
2024E Adjusted EBITDA
Sensitivity Case #2: the Implied Unit 8 NPV per Unit was added to
Sensitivity Case #1's implied SIRE unit value
Transaction value / EBITDA multiples applied to 2023E EBITDA
Sensitivity Case #2: the Implied Unit 8 NPV per Unit was added to
Sensitivity Case #1's implied SIRE unit value
Discounted projected distributions to assumed December 31, 2022
effective date
Terminal yield range of 8.0% to 12.0%
Cost of equity of 9.0% to 11.0% based on CAPM
Sensitivity Case #2: the Implied Unit 8 NPV per Unit was added to
Sensitivity Case #1's implied SIRE unit value
Median 1-Day and 30-Day premiums paid applied to relevant equity
prices
Sensitivity Case #2: the Implied Unit 8 NPV per Unit was added to
Sensitivity Case #1's implied SIRE unit value
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