second quarter 2016 resultss21.q4cdn.com/.../2016/semgroup-earnings-presentation-q2-2016_fi… ·...

Second Quarter 2016 ResultsEarnings Conference Call - August 5, 2016

Forward-looking InformationCertain matters contained in this presentation include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended,and Section 21E of the Securities Exchange Act of 1934, as amended. We make these forward-looking statements in reliance on the safe harbor protectionsprovided under the Private Securities Litigation Reform Act of 1995.

All statements, other than statements of historical fact, included in this presentation including the prospects of our industry, our anticipated financial performance,our anticipated annual dividend growth rate, management's plans and objectives for future operations, planned capital expenditures, business prospects, outcomeof regulatory proceedings, market conditions and other matters, may constitute forward-looking statements. Although we believe that the expectations reflected inthese forward-looking statements are reasonable, we cannot assure you that these expectations will prove to be correct. These forward-looking statements aresubject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected inthese forward-looking statements. Factors that might cause actual results to differ include, but are not limited to, the closing, expected timing, and benefits of theproposed transaction pursuant to which SemGroup Corporation (“SemGroup”) will acquire all of the outstanding common units of its subsidiary, Rose RockMidstream, L.P. (“Rose Rock”), not already owned by SemGroup; the ability of SemGroup to generate sufficient cash flow from operations to enable it to pay its debtobligations and its current and expected dividends or to fund its other liquidity needs; insufficient cash from operations following the establishment of cash reservesand payment of fees and expenses for Rose Rock to pay current, expected or minimum quarterly distributions; any sustained reduction in demand for, or supply of,the petroleum products we gather, transport, process, market and store; the effect of our debt level on our future financial and operating flexibility, including ourability to obtain additional capital on terms that are favorable to us; our ability to access the debt and equity markets, which will depend on general market conditionsand the credit ratings for our debt obligations and equity; the loss of, or a material nonpayment or nonperformance by, any of our key customers; the amount of cashdistributions, capital requirements and performance of our investments and joint ventures; the amount of collateral required to be posted from time to time in ourpurchase, sale or derivative transactions; the impact of operational and developmental hazards and unforeseen interruptions; our ability to obtain new sources ofsupply of petroleum products; competition from other midstream energy companies; our ability to comply with the covenants contained in our credit agreements andthe indentures governing our senior notes, including requirements under our credit agreements to maintain certain financial ratios; our ability to renew or replaceexpiring storage, transportation and related contracts; the overall forward markets for crude oil, natural gas and natural gas liquids; the possibility that theconstruction or acquisition of new assets may not result in the corresponding anticipated revenue increases; changes in currency exchange rates; weather andother natural phenomena, including climate conditions; a cyber attack involving our information systems and related infrastructure, or that of our businessassociates; in the case of SemGroup, the risks and uncertainties of doing business outside of the U.S., including political and economic instability and changes inlocal governmental laws, regulations and policies; costs of, or changes in, laws and regulations and our failure to comply with new or existing laws or regulations,particularly with regard to taxes, safety and protection of the environment; the possibility that our hedging activities may result in losses or may have a negativeimpact on our financial results; general economic, market and business conditions; as well as other risk factors discussed from time to time in each of SemGroup’sand Rose Rock’s documents and reports filed with the SEC.

Readers are cautioned not to place undue reliance on any forward-looking statements contained in this presentation which reflect management's opinions only as ofthe date hereof. Except as required by law, we undertake no obligation to revise or publicly release the results of any revision to any forward-looking statements.

SemGroup and Rose Rock Midstream use their Investor Relations website and social media outlets as channels of distribution of material company information.Such information is routinely posted and accessible on our Investor Relations websites at ir.semgroupcorp.com and ir.rrmidstream.com. Both companies are present on Twitter and LinkedIn, follow us at the links below:SemGroup Twitter and LinkedIn Rose Rock Midstream Twitter and LinkedIn

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In connection with the proposed merger of SemGroup and Rose Rock, SemGroup filed a registration statement on Form S-4 with the Securities and ExchangeCommission (the "Commission") that includes a joint solicitation statement/prospectus and other relevant documents concerning the proposed transaction. YOUARE URGED TO READ THE JOINT SOLICITATION STATEMENT/PROSPECTUS AND THE OTHER RELEVANT DOCUMENTS FILED WITH THECOMMISSION BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT SemGroup, Rose Rock AND THE PROPOSED TRANSACTION. The jointsolicitation statement/prospectus and the other documents filed with the Commission may be obtained free of charge at the Commission’s website, www.sec.gov.In addition, you may obtain free copies of the joint solicitation statement/prospectus and the other documents filed by SemGroup and Rose Rock with theCommission by requesting them in writing from SemGroup Corporation, Two Warren Place, 6120 S. Yale Avenue, Suite 700, Tulsa, Oklahoma 74136-4216,Attention: Investor Relations, or by telephone at (918) 524-8100, or from Rose Rock Midstream, L.P., Two Warren Place, 6120 S. Yale Avenue, Suite 700, Tulsa,Oklahoma 74136-4216, Attention: Investor Relations, or by telephone at (918) 524-7700.

SemGroup and Rose Rock and their respective directors and executive officers may be deemed under the rules of the Commission to be participants (as defined inSchedule 14A under the Exchange Act) in respect of the proposed transaction. Information about SemGroup’s directors and executive officers and their ownershipof SemGroup common stock is set forth in SemGroup’s proxy statement on Schedule 14A filed on April 13, 2016 with the Commission. Information about thedirectors and executive officers and their ownership of RRMS common units representing limited partnership interests is set forth in Rose Rock’s Annual Report onForm 10-K for the year ended December 31, 2015 filed on February 26, 2016 with the Commission. Information regarding the identity of the potential participants,and their direct or indirect interests in the proposed transaction, by security holdings or otherwise, is contained in the joint solicitation statement/prospectus andother materials filed by SemGroup with the Commission, as amended from time to time. Stockholders may obtain additional information about the interests of thedirectors and executive officers in the proposed transaction by reading the joint solicitation statement/prospectus.

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Where You Can Find Additional Information

Non-GAAP Financial MeasuresThis presentation includes financial measures which are not U.S. generally accepted accounting principles (GAAP) measures and are not intended to be used inlieu of GAAP measures. These measures may be used periodically by management when discussing our financial results with investors and analysts and arepresented as management believes they provide additional information and metrics relative to the performance of our businesses. These non-GAAP financialmeasures have important limitations as analytical tools because they exclude some, but not all, items that affect the most directly comparable GAAP financialmeasures. You should not consider non-GAAP measures in isolation or as substitutes for analysis of our results as reported under GAAP. Managementcompensates for the limitations of our non-GAAP measures as analytical tools by reviewing the comparable GAAP measures, understanding the differencesbetween the non-GAAP measure and the most comparable GAAP measure and incorporating this knowledge into its decision-making processes. We believe thatinvestors benefit from having access to the same financial measures that our management uses in evaluating our operating results. Because all companies do notuse identical calculations, our presentations of non-GAAP measures may be different from similarly titled measures of other companies, thereby diminishing theirutility.

SemGroupSemGroup’s non-GAAP measures, Adjusted EBITDA and cash available for dividends, are not GAAP measures and are not intended to be used in lieu of GAAPpresentation of net income (loss), which is the most closely associated GAAP measure. Adjusted EBITDA represents earnings before interest, taxes, depreciationand amortization, adjusted for selected items that SemGroup believes impact the comparability of financial results between reporting periods. Although SemGrouppresents selected items that it considers in evaluating its performance, you should also be aware that the items presented do not represent all items that affectcomparability between the periods presented. Variations in SemGroup’s operating results are also caused by changes in volumes, prices, exchange rates,mechanical interruptions and numerous other factors. These types of variances are not separately identified in this presentation. Cash available for dividends isbased on Adjusted EBITDA, as described above, adjusted to exclude the earnings of our subsidiary, Rose Rock Midstream, cash income taxes, cash interestexpense and maintenance capital expenditures and include cash distributions received from Rose Rock Midstream.

Rose Rock MidstreamRose Rock’s non-GAAP financial measures, Adjusted gross margin, Adjusted EBITDA and distributable cash flow, are not GAAP measures and are not intended tobe used in lieu of GAAP presentation of operating income (loss) which is the GAAP measure most directly comparable to Adjusted gross margin, net income (loss)and cash provided by (used in) operating activities which are the GAAP measures most directly comparable to Adjusted EBITDA, and net income (loss) which isthe GAAP measure most directly comparable to distributable cash flow. Adjusted gross margin represents total revenues minus cost of products sold andunrealized gain (loss) on derivatives. Adjusted EBITDA represents net income before interest expense, income tax expense (benefit), depreciation andamortization, earnings from equity method investments and any other non-cash adjustments to reconcile net income to net cash provided by operating activitiesplus cash distributions from equity method investments. Distributable cash flow represents Adjusted EBITDA, as described above, adjusted to exclude cashincome taxes, cash interest expense and maintenance capital expenditures.

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$400

$300

$200

$100

$02014 2015 2016E

SEMG Adjusted EBITDA(in millions)

Second Quarter 2016 Results

$305$287$270 - $320

5

$300

$200

$100

$02014 2015 2016E

RRMS Adjusted EBITDA(in millions)

$175$128

$165 - $185

Adjusted EBITDA(1)

2Q 2016 1Q 2016 2016 GuidanceSemGroup(2) $67.6 million $77.7 million $270 - $320 millionRose Rock Midstream $44.9 million $49.0 million $165 - $185 million

(1) Non-GAAP Financial Data Reconciliations are included in the Appendix to this presentation(2) SemGroup includes fully consolidated Rose Rock Midstream

2016 Capital Expenditure Guidance2016 Capital Expenditures – $455 million

n Maurepas Pipelinen Rose Rock Midstreamn Natural Gasn Other Growth Projectsn Maintenance

$325

10%

72%

1%12%

$45

$5$55__

¬ Key Committed Projects - Crude Projects

• Maurepas Pipeline (expected completion early 2017): $325 million• Isabel Pipeline (completed March 2016): $9 million

- Natural Gas Projects• Northern OK well connects & compression: $15 million• KA Plant Projects: $18 million • Wapiti Pipeline Expansion (expected completion 3Q 2016): $9 million

- Maintenance Capital• SemGroup: $45 million • Rose Rock: $10 million

¬ Focus on completing projects already in progress andmaintain existing assets

¬ Prudent organic capital investments at attractive EBITDAmultiples

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$255%

Second Quarter 2016 Results

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SemGroup(1)

As Reported (in millions, excluding EPS, unaudited) 2Q 2016 1Q 2016Net income (loss) attributable to SemGroup $ 8.0 $ (15.3)

Net income (loss) per share - diluted $ 0.18 $ (0.35)EBITDA(2) $ 58.5 $ 15.3Selected Non-Cash Items and Other Items Impacting Comparability(2) $ 9.1 $ 62.4Adjusted EBITDA(2) $ 67.6 $ 77.7

Rose RockAs Reported (in millions, excluding EPU, unaudited) 2Q 2016 1Q 2016

Net income $ 9.9 $ 26.5

Net income per unit - diluted $ 0.12 $ 0.56EBITDA(2) $ 30.6 $ 46.8Selected Non-Cash Items and Other Items Impacting Comparability(2) $ 14.3 $ 2.2Adjusted EBITDA(2) $ 44.9 $ 49.0

(1) SemGroup includes fully consolidated Rose Rock Midstream (2) Non-GAAP Financial Data Reconciliations are included in the Appendix to this presentation

Second Quarter 2016 Adjusted EBITDA(1)

(1) Non-GAAP Financial Data Reconciliations are included in the Appendix to this presentation(2) SemGroup includes fully consolidated Rose Rock Midstream (3) Rose Rock Transportation segment adjusted EBITDA includes equity method investments on a cash basis

Segment Adjusted EBITDA(in millions, unaudited) 2Q 2016 1Q 2016

Crude - Transportation $27.1 $32.0Crude - Facilities 9.4 9.6Crude - Supply and Logistics 10.1 9.3SemGas 12.5 12.4SemCAMS 9.3 10.3SemLogistics 2.2 2.8SemMaterials Mexico 2.6 2.6Corporate and Other (5.6) (1.3)

SemGroup(2) $67.6 $77.7

Transportation(3) $27.8 $31.8Facilities 9.4 9.6Supply and Logistics 10.1 9.3Corporate and Other (2.4) (1.7)

Rose Rock Midstream $44.9 $49.0

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Leverage & Liquidity

SemGroup(1) Rose Rock(in millions, unaudited) June 30, 2016 June 30, 2016$500 million revolver - 2018$585 million revolver - 2018 $41.0

7.500% Senior unsecured notes - 2021 $300.05.625% Senior unsecured notes - 2022 400.05.625% Senior unsecured notes - 2023 350.0

Total consolidated debt $300.0 $791.0

Compliance leverage ratio(2) 0.4x 4.2x

Target leverage 3.0x 4.5x

Liquidity:Cash and cash equivalents(3) $226.5 $7.9Revolver availability(4) 494.0 506.3

Total liquidity $720.5 $514.2

(1) SemGroup stand-alone basis(2) Calculated per revolving credit agreement definitions; maximum total leverage covenant of 5.5x(3) SemGroup cash excludes Rose Rock and SemMaterials Mexico(4) Revolver availability excludes outstanding letters of credit

$1.2 Billion of Combined Liquidity

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A Look Ahead

Strong BalanceSheet

High Return GrowthProjects & Strategic

Acquisitions

Focus on PortfolioBalance and Secure

Cash Flows

Dividend GrowthBeyond 2016

APPENDIX

SemGroup’s Fee-based Business Model

Margin Descriptions

¬ Fixed Fee– Storage fees– Transportation fees– Unloading fees– Gathering and processing fees

¬ Variable Fee– Gas processing – percent of

proceeds

¬ Marketing– Back-to-back marketing and

blending transactions

(1) LTM June 30, 2016

Fixed Fee Variable Fee MarketingSemGas 75% 25%SemCAMS 100%SemLogistics 100%SemMaterials Mexico 100%White Cliffs Pipeline 100%Rose Rock Midstream 84% 16%

Margin Contribution(1)

n Fixed Fee n Variable Fee n Marketing

88%

7%5%

12

250

200

150

100

50

0

1Q 2Q 3Q 4Q 1Q 2Q

125.6 151.0 157.2191.2 209.8 198.5

250

200

150

100

50

0

1Q 2Q 3Q 4Q 1Q 2Q

111.1 119.1 109.4 109.6 102.4 111.3

76.893.2 91.6 91.5 93.8 86.3

250

200

150

100

50

0

1Q 2Q 3Q 4Q 1Q 2Q

139.2 121.3 120.7 130.3 142.3 124.9

64.9 71.8 61.5 59.9 58.952.5

2015 2016

Crude Key Performance Metrics

(1) Weighted average term of storage contracts(2) Prior period volumes recast to include intersegment volumes for comparability(3) Volumes on pipelines 100% owned by RRMS(4) Reflects 100% throughput on Joint Venture pipelines

Transportation Volumes(Thousand Barrels per Day)

Supply and Logistics Volumes(2)

(Thousand Barrels per Day)Facilities - Cushing Storage

7.6 million Barrels Capacity

Joint Venture Transportation Volumes

(Thousand Barrels per Day)(4)

n Third-party contracted(1) n Operational / Marketing n Uncontracted

n White Cliffs Pipeline n Glass Mountain Pipeline

0.7

13

2015 2016

2015 2016

187.9212.3 201.0 201.1 196.2

8

6

4

2

0

2016 2017 2018 2019

6.3 5.5 4.6

1.1

1.31.4

1.4

1.4

1.6

5.1

n Pipelines(3) n Field Services

197.6

SemCAMS Avg Throughput Volume (mmcf/d)

600500400300200100

0

1Q 2Q 3Q 4Q 1Q 2Q

302.5 288.8 254.6 267.4 270.4157.0

91.9 96.6 93.4 106.0 114.3147.1

SemGas Northern OK Avg Processed Volume (mmcf/d)

Capacity Processing Volumes

600500400300200100

0

1Q 2Q 3Q 4Q 1Q 2Q

369.0 384.2 368.0 336.1 325.9 290.6

2015 2016

Natural Gas Key Performance Metrics

384.7394.4 385.3 348.0 373.4

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2015 2016Capacity n K3 Plant n KA Plant

304.1

SemGroup Consolidated Balance Sheets

(in thousands, unaudited, condensed) June 30, 2016

December 31, 2015

ASSETSCurrent assets $ 765,603 $ 480,381Property, plant and equipment, net 1,648,962 1,566,821Goodwill and other intangible assets 191,315 210,255Equity method investments 446,938 551,078Other noncurrent assets, net 44,156 45,374Total assets $ 3,096,974 $ 2,853,909

LIABILITIES AND OWNERS' EQUITYCurrent liabilities:

Current portion of long-term debt $ 25 $ 31Other current liabilities 443,938 376,996

Total current liabilities 443,963 377,027

Long-term debt, excluding current portion 1,070,363 1,057,816Other noncurrent liabilities 207,320 222,710Total liabilities 1,721,646 1,657,553

Total owners' equity 1,375,328 1,196,356Total liabilities and owners' equity $ 3,096,974 $ 2,853,909

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SemGroup Consolidated Statements of Operations and Comprehensive Income(in thousands, except per share amounts, unaudited, condensed) Three Months Ended Six Months Ended

June 30, March 31, June 30,2016 2015 2016 2016 2015

Revenues $ 287,377 $ 377,226 $ 314,851 $ 602,228 $ 675,536Expenses:

Costs of products sold, exclusive of depreciation and amortization shown below 176,842 244,158 196,947 373,789 436,230Operating 54,707 60,800 50,192 104,899 113,890General and administrative 20,775 22,917 21,060 41,835 55,227Depreciation and amortization 25,048 24,674 24,047 49,095 48,408Loss on disposal or impairment, net 1,685 1,372 13,307 14,992 2,430Total expenses 279,057 353,921 305,553 584,610 656,185

Earnings from equity method investments 17,078 23,903 23,071 40,149 44,462Gain (loss) on issuance of common units by equity method investee — 5,897 (41) (41) 5,897Operating income 25,398 53,105 32,328 57,726 69,710Other expenses net 10,807 9,809 59,981 70,788 15,896Income (loss) from continuing operations before income taxes 14,591 43,296 (27,653) (13,062) 53,814Income tax expense (benefit) 4,658 14,861 (21,407) (16,749) 19,603Income (loss) from continuing operations 9,933 28,435 (6,246) 3,687 34,211Loss from discontinued operations, net of income taxes (2) (2) (2) (4) (2)Net income (loss) 9,931 28,433 (6,248) 3,683 34,209

Less: net income attributable to noncontrolling interests 1,922 5,136 9,020 10,942 9,446Net income (loss) attributable to SemGroup Corporation $ 8,009 $ 23,297 $ (15,268) $ (7,259) $ 24,763Net income (loss) attributable to SemGroup Corporation $ 8,009 $ 23,297 $ (15,268) $ (7,259) $ 24,763Other comprehensive income (loss), net of income taxes 6,591 5,520 (4,109) 2,482 (3,540)Comprehensive income (loss) attributable to SemGroup Corporation $ 14,600 $ 28,817 $ (19,377) $ (4,777) $ 21,223Net income (loss)per common share

Basic $ 0.18 $ 0.53 $ (0.35) $ (0.16) $ 0.57Diluted $ 0.18 $ 0.53 $ (0.35) $ (0.16) $ 0.56

Weighted average shares (thousands):Basic 45,236 43,798 43,870 44,553 43,758Diluted 45,647 44,013 43,870 44,553 43,975

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SemGroup Non-GAAP Adjusted EBITDA Calculation(in thousands, unaudited) Three Months Ended Six Months Ended

June 30, March 31, June 30,Reconciliation of net income to Adjusted EBITDA: 2016 2015 2016 2016 2015Net income (loss) $ 9,931 $ 28,433 $ (6,248) $ 3,683 $ 34,209

Add: Interest expense 18,875 16,822 18,935 37,810 31,413Add: Income tax expense (benefit) 4,658 14,861 (21,407) (16,749) 19,603Add: Depreciation and amortization expense 25,048 24,674 24,047 49,095 48,408

EBITDA 58,512 84,790 15,327 73,839 133,633

Selected Non-Cash Items and Other Items Impacting Comparability 9,121 (4,764) 62,340 71,461 16,375

Adjusted EBITDA $ 67,633 $ 80,026 $ 77,667 $ 145,300 $ 150,008

Selected Non-Cash Items andOther Items Impacting ComparabilityLoss on disposal or impairment, net $ 1,685 $ 1,372 $ 13,307 $ 14,992 $ 2,430Loss from discontinued operations, net of income taxes 2 2 2 4 2Foreign currency transaction (gain) loss 1,543 (295) 1,469 3,012 (814)Remove NGL equity losses (earnings) including loss (gain) on issuance of common units — (12,117) (2,191) (2,191) (11,812)Remove loss (gain) on sale or impairment of NGL units (9,120) (6,623) 39,764 30,644 (14,517)NGL cash distribution — 4,468 4,873 4,873 9,483M&A transaction related costs — — — — 10,000Inventory valuation adjustments — 48 — — 1,235Employee severance and relocation expense 836 21 259 1,095 21Unrealized loss (gain) on derivative activities 4,477 (1,415) (4,548) (71) 1,230Depreciation and amortization included within equity earnings 7,138 6,346 6,539 13,677 12,722Bankruptcy related expenses — 2 — — 191Non-cash equity compensation 2,560 3,427 2,866 5,426 6,204

Selected Non-Cash items andOther Items Impacting Comparability $ 9,121 $ (4,764) $ 62,340 $ 71,461 $ 16,375

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SemGroup Cash Available for Dividends

(in thousands, unaudited) Three Months Ended Six Months EndedJune 30, March 31, June 30,

Reconciliation of net income to cash available for dividends: 2016 2015 2016 2016 2015Net income (loss) $ 9,931 $ 28,433 $ (6,248) $ 3,683 $ 34,209

Add: Interest expense 18,875 16,822 18,935 37,810 31,413Add: Income tax expense (benefit) 4,658 14,861 (21,407) (16,749) 19,603Add: Depreciation and amortization expense 25,048 24,674 24,047 49,095 48,408

EBITDA 58,512 84,790 15,327 73,839 133,633Selected non-cash items and other items impacting comparability (16,412) (30,786) 32,163 15,751 (37,703)SemGroup stand-alone Adjusted EBITDA 42,100 54,004 47,490 89,590 95,930

Less: Cash interest expense 5,857 6,034 5,913 11,770 12,055Less: Cash paid for income taxes 1,199 2,406 1,137 2,336 5,705Less: Maintenance capital expenditures 7,004 7,324 14,523 21,527 10,632

Cash available for dividends $ 28,040 $ 38,240 $ 25,917 $ 53,957 $ 67,538

Dividends declared $ 23,624 $ 18,358 $ 19,736 $ 43,360 $ 34,990

Coverage 1.2x 2.1x 1.3x 1.2x 1.9x

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SemGroup Cash Available for Dividends (Continued)


2016 2015 2016 2016 2015Selected Non-Cash Items andOther Items Impacting ComparabilityRemove Rose Rock EBITDA $ (30,591) $ (37,873) $ (46,798) $ (77,389) $ (70,622)Rose Rock distributions received 19,611 18,166 19,606 39,217 33,891Loss (gain) on disposal or impairment, net (29) 1,394 13,013 12,984 2,294Loss (income) from discontinued operations, net of income taxes 2 2 2 4 2Foreign currency transaction (gain) loss 1,543 (295) 1,469 3,012 (814)Remove NGL equity losses (earnings) including gain on issuance ofcommon units — (12,117) (2,191) (2,191) (11,812)Remove loss (gain) on sale or impairment of NGL units (9,120) (6,623) 39,764 30,644 (14,517)NGL cash distribution — 4,468 4,873 4,873 9,483M&A transaction related costs — — — — 10,000Employee severance and relocation expense 730 — 259 989 —Bankruptcy related expenses — 2 — — 191Non-cash equity compensation 1,442 2,090 2,166 3,608 4,201Selected Non-Cash items and

Other Items Impacting Comparability $ (16,412) $ (30,786) $ 32,163 $ 15,751 $ (37,703)

19

SemGroup Non-GAAP Financial Data Reconciliations


2016 2015 2016 2016 2015Net income $ 11,797 $ 10,844 $ 19,296 $ 31,093 $ 26,594

Add: Interest expense 193 101 264 457 257Add: Depreciation and amortization expense 6,171 9,038 5,859 12,030 17,656

EBITDA 18,161 19,983 25,419 43,580 44,507Selected Non-Cash Items and

Other Items Impacting Comparability 8,954 6,324 6,606 15,560 12,855Adjusted EBITDA $ 27,115 $ 26,307 $ 32,025 $ 59,140 $ 57,362

Selected Non-Cash Items and Other Items Impacting Comparability

Loss (gain) on disposal or impairment, net $ 1,714 $ (22) $ 67 $ 1,781 $ 133Employee severance and relocation expense 102 — — 102 —Depreciation and amortization included within

equity earnings 7,138 6,346 6,539 13,677 12,722Selected Non-Cash items and

Other Items Impacting Comparability $ 8,954 $ 6,324 $ 6,606 $ 15,560 $ 12,855

20

Crude - Transportation Segment



2016 2015 2016 2016 2015Net income $ 7,450 $ 6,557 $ 7,703 $ 15,153 $ 13,590

Add: Depreciation and amortization expense 1,921 1,406 1,884 3,805 2,775EBITDA 9,371 7,963 9,587 18,958 16,365

Selected Non-Cash Items and Other Items Impacting Comparability 4 — — 4 —

Adjusted EBITDA $ 9,375 $ 7,963 $ 9,587 $ 18,962 $ 16,365


Employee severance expense $ 4 $ — $ — $ 4 $ —Selected Non-Cash items and

Other Items Impacting Comparability $ 4 $ — $ — $ 4 $ —

21

Crude - Facilities Segment



2016 2015 2016 2016 2015Net income $ 5,370 $ 12,241 $ 13,461 $ 18,831 $ 14,753

Add: Interest expense 182 112 140 322 211Add: Depreciation and amortization expense 40 40 40 80 79


Other Items Impacting Comparability 4,477 (1,346) (4,321) 156 2,369Adjusted EBITDA $ 10,069 $ 11,047 $ 9,320 $ 19,389 $ 17,412


Loss (gain) on disposal or impairment, net $ — $ — $ 227 $ 227 $ (3)Employee severance expense — 21 — — 21Unrealized loss (gain) on derivative activities 4,477 (1,415) (4,548) (71) 1,116Inventory valuation adjustments — 48 — — 1,235Selected Non-Cash items and

Other Items Impacting Comparability $ 4,477 $ (1,346) $ (4,321) $ 156 $ 2,369

22

Crude - Supply and Logistics Segment



2016 2015 2016 2016 2015Net income (loss) $ (321) $ 7,043 $ (13,469) $ (13,790) $ 11,934

Add: Interest expense 3,431 3,269 3,555 6,986 6,120Add: Depreciation and amortization expense 9,194 7,359 8,922 18,116 14,497

EBITDA 12,304 17,671 (992) 11,312 32,551Selected Non-Cash Items and

Other Items Impacting Comparability 256 1,778 13,391 13,647 1,978Adjusted EBITDA $ 12,560 $ 19,449 $ 12,399 $ 24,959 $ 34,529


Loss (gain) on disposal or impairment, net $ (1) $ 1,450 $ 13,052 $ 13,051 $ 1,449Employee severance expense 13 — — 13 —Non-cash equity compensation 244 328 339 583 529Selected Non-Cash items and

Other Items Impacting Comparability $ 256 $ 1,778 $ 13,391 $ 13,647 $ 1,978

23

SemGas Segment



2016 2015 2016 2016 2015Net income $ 2,021 $ 915 $ 2,756 $ 4,777 $ 2,114

Add: Interest expense 2,235 3,117 2,226 4,461 6,229Add: Income tax expense 451 616 965 1,416 1,167Add: Depreciation and amortization expense 4,294 3,187 3,951 8,245 6,253


Other Items Impacting Comparability 381 697 383 764 1,121Adjusted EBITDA $ 9,382 $ 8,532 $ 10,281 $ 19,663 $ 16,884


Foreign currency transaction (gain) loss $ (1) $ 145 $ 6 $ 5 $ 101Non-cash equity compensation 382 552 377 759 1,020Selected Non-Cash items and

Other Items Impacting Comparability $ 381 $ 697 $ 383 $ 764 $ 1,121

24

SemCAMS Segment



2016 2015 2016 2016 2015Net income (loss) $ (1,447) $ 103 $ (246) $ (1,693) $ (1,823)

Add: Interest expense 353 443 376 729 908Add: Income tax expense (benefit) (273) 167 59 (214) (202)Add: Depreciation and amortization expense 1,983 2,154 1,960 3,943 4,194

EBITDA 616 2,867 2,149 2,765 3,077Selected Non-Cash Items and

Other Items Impacting Comparability 1,562 (674) 687 2,249 131Adjusted EBITDA $ 2,178 $ 2,193 $ 2,836 $ 5,014 $ 3,208


Foreign currency transaction loss (gain) $ 1,391 $ (873) $ 510 $ 1,901 $ (222)Non-cash equity compensation 171 199 177 348 353Selected Non-Cash items and

Other Items Impacting Comparability $ 1,562 $ (674) $ 687 $ 2,249 $ 131

25

SemLogistics Segment



2016 2015 2016 2016 2015Net income $ 1,187 $ 3,199 $ 696 $ 1,883 $ 6,210

Add: Interest expense — 2 — — 2Add: Income tax expense 194 764 607 801 1,754Add: Depreciation and amortization expense 949 1,037 941 1,890 2,090


Other Items Impacting Comparability 244 260 370 614 479Adjusted EBITDA $ 2,574 $ 5,262 $ 2,614 $ 5,188 $ 10,535


Gain on disposal of long-lived assets, net $ (28) $ — $ (39) $ (67) $ (19)Foreign currency transaction loss 153 94 256 409 225Non-cash equity compensation 119 166 153 272 273Selected Non-Cash items and

Other Items Impacting Comparability $ 244 $ 260 $ 370 $ 614 $ 479

26

SemMaterials México Segment



2016 2015 2016 2016 2015Net loss $ (16,126) $ (12,469) $ (36,445) $ (52,571) $ (39,163)

Add: Interest expense 12,481 9,778 12,374 24,855 17,686Add: Income tax expense (benefit) 4,286 13,314 (23,038) (18,752) 16,884Add: Depreciation and amortization expense 496 453 490 986 864

EBITDA 1,137 11,076 (46,619) (45,482) (3,729)Selected Non-Cash Items and

Other Items Impacting Comparability (6,757) (11,803) 45,224 38,467 (2,558)Adjusted EBITDA $ (5,620) $ (727) $ (1,395) $ (7,015) $ (6,287)


Loss (gain) on disposal or impairment, net $ — $ (56) $ — $ — $ 870Loss from discontinued operations, net of income taxes 2 2 2 4 2Foreign currency transaction (gain) loss — 339 697 697 (918)Remove NGL equity earnings including gain on issuance of commonunits — (12,117) (2,191) (2,191) (11,812)Remove loss (gain) on impairment or sale of NGL units (9,120) (6,623) 39,764 30,644 (14,517)NGL cash distribution — 4,468 4,873 4,873 9,483M&A transaction related costs — — — — 10,000Employee severance and relocation expense 717 — 259 976 —Unrealized loss on derivative activities — — — — 114Bankruptcy related expenses — 2 — 191Non-cash equity compensation 1,644 2,182 1,820 3,464 4,029Selected Non-Cash items and

Other Items Impacting Comparability $ (6,757) $ (11,803) $ 45,224 $ 38,467 $ (2,558)

27

Corporate & Other Segment

SemGroup 2016 Adjusted EBITDA Guidance

(1) Guidance is on a cash basis for equity investments in NGL and includes fully consolidated Rose Rock Midstream

(in millions, unaudited) 2016 Guidance(1)

Mid-point

Net income $ 34.0

Add: Interest expense 83.0

Add: Income tax expense 10.0

Add: Depreciation and amortization 126.0

EBITDA $ 253.0

Selected Non-Cash and Other Items Impacting Comparability 42.0Adjusted EBITDA $ 295.0

Selected Non-Cash and Other Items Impacting Comparability

Depreciation and amortization included within equity earnings $ 28.0

Non-cash equity compensation 14.0

Selected Non-Cash and Other Items Impacting Comparability $ 42.0

28

SemGroup 2016 Cash Available for Dividends Guidance(in millions, unaudited) 2016 Guidance(1)

Mid-pointNet income $ 34.0

Add: Interest expense 83.0Add: Income tax expense 10.0Add: Depreciation and amortization 126.0

EBITDA 253.0Selected non-cash and other items impacting comparability (63.0)

SemGroup stand-alone Adjusted EBITDA $ 190.0

Less: Cash interest expense 29.0Less: Cash paid for income taxes 10.0Less: Maintenance capital expenditures 45.0

Cash available for dividends $ 106.0

Expected dividends declared $ 79.0

Coverage 1.3x

Selected non-cash and other items impacting comparabilityRose Rock EBITDA $ (148.5)Rose Rock distributions received, net of General Partner support 74.5Non-cash equity compensation 11.0

Selected Non-Cash and Other Items Impacting Comparability $ (63.0)

29

(1) Cash available for dividends guidance does not reflect any pro forma impacts for the proposed merger

Rose Rock Midstream Consolidated Balance Sheets

(in thousands, unaudited, condensed) June 30, 2016

December 31, 2015

ASSETSCurrent assets $ 421,534 $ 319,614Property, plant and equipment, net 443,327 441,596Equity method investment 427,961 438,291Other noncurrent assets, net 44,606 46,089Total assets $ 1,337,428 $ 1,245,590

LIABILITIES AND PARTNERS' CAPITALCurrent liabilities $ 356,248 $ 283,029Long-term debt 774,488 732,356Total liabilities 1,130,736 1,015,385

Partners’ capital 206,692 230,205Total liabilities and partners' capital $ 1,337,428 $ 1,245,590

30

Rose Rock Midstream Consolidated Statements of Income(in thousands, except per unit data, unaudited) Three Months Ended Six Months Ended

June 30, March 31, June 30,2016 2015 2016 2016 2015

Revenues, including revenues from affiliatesProduct $ 143,201 $ 193,525 $ 176,622 $ 319,823 $ 300,092Service 25,943 29,778 27,329 53,272 57,904

Total revenues 169,144 223,303 203,951 373,095 357,996

Expenses, including expenses from affiliatesCosts of products sold, exclusive of depreciation

and amortization 128,763 173,133 151,391 280,154 269,370Operating 19,726 23,678 21,407 41,133 44,477General and administrative 5,428 6,329 4,900 10,328 11,949Depreciation and amortization 8,235 10,608 7,893 16,128 20,751Loss (gain) on disposal or impairment, net 1,714 (22) 294 2,008 130Total expenses 163,866 213,726 185,885 349,751 346,677

Earnings from equity method investments 17,078 17,683 20,839 37,917 38,547Operating income 22,356 27,260 38,905 61,261 49,866

Other expenses:Interest expense 12,434 10,197 12,437 24,871 18,203Other income — (5) — — (5)Total other expenses, net 12,434 10,192 12,437 24,871 18,198

Net income $ 9,922 $ 17,068 $ 26,468 36,390 31,668

31

(in thousands, except per unit data, unaudited) Three Months Ended Six Months EndedJune 30, March 31, June 30,

2016 2015 2016 2016 2015Net income allocated to general partner $ 5,537 $ 5,323 $ 5,868 $ 11,405 $ 10,065Net income allocated to common unitholders $ 4,385 $ 11,745 $ 20,600 $ 24,985 $ 21,603

Net income per limited partner unit:Common unit (basic) $ 0.12 $ 0.32 $ 0.56 $ 0.68 $ 0.60Common unit (diluted) $ 0.12 $ 0.32 $ 0.56 $ 0.68 $ 0.60

Basic weighted average number of limited partner units outstanding:Common units 36,838 36,790 36,809 36,823 35,803

Diluted weighted average number of limited partner units outstanding:Common units 36,915 36,839 36,835 36,873 35,849

Rose Rock Midstream Consolidated Statements of Income (Continued)

32

Rose Rock Midstream Non-GAAP Financial Data Reconciliations (in thousands, unaudited) Three Months Ended Six Months Ended

June 30, March 31, June 30,2016 2015 2016 2016 2015

Reconciliation of operating income to Adjusted gross margin:Operating income $ 22,356 $ 27,260 $ 38,905 $ 61,261 $ 49,866Add:

Operating expense 19,726 23,678 21,407 41,133 44,477General and administrative expense 5,428 6,329 4,900 10,328 11,949Depreciation and amortization expense 8,235 10,608 7,893 16,128 20,751Loss (gain) on disposal or impairment, net 1,714 (22) 294 2,008 130

Less:Earnings from equity method investments 17,078 17,683 20,839 37,917 38,547Non-cash unrealized gain (loss) on derivatives, net (4,477) 1,415 4,548 71 (1,116)

Adjusted gross margin $ 44,858 $ 48,755 $ 48,012 $ 92,870 $ 89,742Reconciliation of net income to Adjusted EBITDA:

Net income $ 9,922 $ 17,068 $ 26,468 $ 36,390 $ 31,668Add:

Interest expense 12,434 10,197 12,437 24,871 18,203Depreciation and amortization expense 8,235 10,608 7,893 16,128 20,751Cash distributions from equity method investments 24,782 25,560 26,913 51,695 51,625Inventory valuation adjustment — 48 — — 1,235Provision for uncollectible accounts receivable — — 38 38 —Non-cash equity compensation 366 357 365 731 655Loss (gain) on disposal or impairment, net 1,714 (22) 294 2,008 130

Less:Earnings from equity method investments 17,078 17,683 20,839 37,917 38,547Impact from derivative instruments: —

Total gain (loss) on derivatives, net (7,127) (2,202) 3,354 (3,773) (2,846)Total realized gain (loss) (cash flow) on derivatives, net 2,650 3,617 1,194 3,844 1,730

Non-cash unrealized gain (loss) on derivatives, net (4,477) 1,415 4,548 71 (1,116)Adjusted EBITDA $ 44,852 $ 44,718 $ 49,021 $ 93,873 $ 86,836

33

Rose Rock Midstream Non-GAAP Financial Data Reconciliations


2016 2015 2016 2016 2015Reconciliation of net cash provided by operating activities toAdjusted EBITDA:

Net cash provided by operating activities $ 14,080 $ 26,941 $ 14,530 $ 28,610 $ 19,871Less:

Changes in operating assets and liabilities, net (11,462) (386) (16,811) (28,273) (36,894)Add:

Interest expense, excluding amortization of debt issuance costs 11,606 9,515 11,606 23,212 16,994Distributions from equity method investments in excess of equity inearnings 7,704 7,876 6,074 13,778 13,077

Adjusted EBITDA $ 44,852 $ 44,718 $ 49,021 $ 93,873 $ 86,836

34

Rose Rock Midstream Distributable Cash Flow(in thousands, unaudited) Three Months Ended Six Months Ended

June 30, March 31, June 30,2016 2015 2016 2016 2015

Reconciliation of net income to distributable cash flow:Net income $ 9,922 $ 17,068 $ 26,468 $ 36,390 $ 31,668

Add:Interest expense 12,434 10,197 12,437 24,871 18,203Depreciation and amortization expense 8,235 10,608 7,893 16,128 20,751

EBITDA 30,591 37,873 46,798 77,389 70,622Add:

Loss (gain) on disposal or impairment, net 1,714 (22) 294 2,008 130Cash distributions from equity method investments 24,782 25,560 26,913 51,695 51,625Provision for uncollectible accounts receivable — — 38 38 —Inventory valuation adjustment — 48 — — 1,235Non-cash equity compensation 366 357 365 731 655

Less:Earnings from equity method investments 17,078 17,683 20,839 37,917 38,547Non-cash unrealized gain (loss) on derivatives, net (4,477) 1,415 4,548 71 (1,116)

Adjusted EBITDA $ 44,852 $ 44,718 $ 49,021 $ 93,873 $ 86,836Less:

Cash interest expense 11,582 9,764 11,587 23,169 17,218Maintenance capital expenditures 5,793 4,855 2,148 7,941 5,782

Distributable cash flow $ 27,477 $ 30,099 $ 35,286 $ 62,763 $ 63,836

Distribution declared $ 30,257 $ 29,483 $ 30,251 $ 60,508 $ 57,862

Distribution coverage ratio 0.9 x 1.0 x 1.2 x 1.04 x 1.10 x

35

Transportation SegmentRose Rock Midstream Non-GAAP Financial Data Reconciliations


2016 2015 2016 2016 2015Reconciliation of operating income to Adjusted gross margin:

Operating income $ 12,250 $ 10,946 $ 19,733 $ 31,983 $ 26,852Add:

Operating expense 16,616 21,127 18,451 35,067 39,455General and administrative expense 1,098 2,581 1,138 2,236 4,486Depreciation and amortization expense 6,171 9,038 5,859 12,030 17,656Loss (gain) on disposal or impairment, net 1,714 (22) 67 1,781 133

Less:Earnings from equity method investments 17,078 17,683 20,839 37,917 38,547


Net income $ 12,057 $ 10,845 $ 19,469 $ 31,526 $ 26,595Add:

Interest expense 193 101 264 457 257Depreciation and amortization expense 6,171 9,038 5,859 12,030 17,656Cash distributions from equity method investments 24,782 25,560 26,913 51,695 51,625Provision for uncollectible accounts receivable — — 38 38 —Loss (gain) on disposal or impairment, net 1,714 (22) 67 1,781 133

Less:Earnings from equity method investments 17,078 17,683 20,839 37,917 38,547

Adjusted EBITDA $ 27,839 $ 27,839 $ 31,771 $ 59,610 $ 57,719

36

Facilities SegmentRose Rock Midstream Non-GAAP Financial Data Reconciliations

(in thousands, unaudited) Three Months Ended Six Months Ended

June 30, March 31, June 30,



Operating expense 2,422 2,398 2,118 4,540 4,669General and administrative expense 1,033 1,041 1,174 2,207 1,773Depreciation and amortization expense 1,921 1,406 1,884 3,805 2,775Gain on disposal or impairment, net — — — — (34)


Net income $ 7,450 $ 6,557 $ 7,703 $ 15,153 $ 13,590Add:

Depreciation and amortization expense 1,921 1,406 1,884 3,805 2,775Adjusted EBITDA $ 9,371 $ 7,963 $ 9,587 $ 18,958 $ 16,365

37

Supply and Logistics SegmentRose Rock Midstream Non-GAAP Financial Data Reconciliations




Operating expense 689 155 838 1,527 348General and administrative expense 503 233 566 1,069 396Depreciation and amortization expense 40 40 40 80 79Loss (gain) on disposal or impairment, net — — 227 227 (3)

Less:Non-cash unrealized gain (loss) on derivatives, net (4,477) 1,415 4,548 71 (1,116)


Net income $ 5,370 $ 12,241 $ 13,461 $ 18,831 $ 14,753Add:

Interest expense 182 112 140 322 211Depreciation and amortization expense 40 40 40 80 79Inventory valuation adjustment — 48 — — 1,235Loss (gain) on disposal or impairment, net — — 227 227 (3)

Less:Impact from derivative instruments:

Total gain (loss) on derivatives, net (7,127) (2,202) 3,354 (3,773) (2,846)Total realized gain (loss) (cash flow) on derivatives, net 2,650 3,617 1,194 3,844 1,730

Non-cash unrealized gain (loss) on derivatives, net (4,477) 1,415 4,548 71 (1,116)Adjusted EBITDA $ 10,069 $ 11,026 $ 9,320 $ 19,389 $ 17,391

38

Corporate and Other SegmentRose Rock Midstream Non-GAAP Financial Data Reconciliations



Operating loss $ (2,896) $ (2,596) $ (2,132) $ (5,028) $ (5,540)Add:

Operating expense (1) (2) — (1) 5General and administrative expense 2,794 2,474 2,022 4,816 5,294Depreciation and amortization expense 103 124 110 213 241

Adjusted gross margin $ — $ — $ — $ — $ —Reconciliation of net income to Adjusted EBITDA:

Net loss $ (14,955) $ (12,575) $ (14,165) $ (29,120) $ (23,270)Add:

Interest expense 12,059 9,984 12,033 24,092 17,735Depreciation and amortization expense 103 124 110 213 241Non-cash equity compensation 366 357 365 731 655

Adjusted EBITDA $ (2,427) $ (2,110) $ (1,657) $ (4,084) $ (4,639)

39

Rose Rock Midstream 2016 Adjusted EBITDA and DCF Guidance(in millions, unaudited) 2016 Guidance(1)

Mid-pointNet income $ 48.5

Add: Interest expense 51.0Add: Depreciation and amortization 49.0EBITDA $ 148.5

Non-Cash and Other Adjustments 26.5Adjusted EBITDA $ 175.0

Less:Cash interest expense 48.0Maintenance capital expenditures 10.0

Add:General Partner support 4.0

Distributable cash flow $ 121.0

Expected cash distributions declared $ 121.0

Coverage 1.0x

Non-Cash and Other AdjustmentsEarnings from equity method investments $ (77.0)Cash distributions from equity method investments (2) 102.0Non-cash equity compensation 1.5

Non-Cash and Other Adjustments $ 26.5

(1) Guidance does not reflect any pro forma impacts for the proposed merger (2) Distributions from equity method investment includes the cash distributions from White Cliffs and Glass Mountain

attributable to Rose Rock40

(in thousands, unaudited) Year EndedDecember 31, 2015

Crude -Transportation

Crude -Facilities

Crude -Supply andLogistics SemCAMS SemLogistics SemMexico SemGas

Corporateand other Consolidated

Net income (loss) $ 44,771 $ 27,928 $ 27,567 $ 7,879 $ (1,624) $ 8,725 $ 16,704 $ (90,425) $ 41,525Add: Interest expense (income) 778 — 462 10,742 1,746 46 13,162 42,739 69,675Add: Income tax expense (benefit) — — — 4,847 (2,195) 2,611 — 29,554 34,817Add: Depreciation and amortization expense 35,500 5,829 159 12,940 8,543 4,076 31,803 2,032 100,882EBITDA 81,049 33,757 28,188 36,408 6,470 15,458 61,669 (16,100) 246,899Selected Non-Cash Items and Other Items Impacting Comparability 35,600 — 4,491 773 1,399 1,193 2,777 12,150 58,383Adjusted EBITDA $ 116,649 $ 33,757 $ 32,679 $ 37,181 $ 7,869 $ 16,651 $ 64,446 $ (3,950) $ 305,282


Loss (gain) on disposal of long-lived assets, net $ 9,621 $ — $ (3) $ (917) $ — $ 85 $ 1,832 $ 854 $ 11,472Loss from discontinued operations, net of income taxes — — — — — — — 4 4Foreign currency transaction (gain) loss — — — 103 799 605 — (2,574) (1,067)Remove NGL equity earnings including gain on issuance of common units — — — — — — — (11,416) (11,416)Remove gain on sale of NGL units — — — — — — — (14,517) (14,517)NGL cash distribution — — — — — — — 19,074 19,074Employee severance expense 75 — 4 — — — — 11 90Unrealized loss (gain) on derivative activities — — 1,900 — — — — 114 2,014M&A transaction related costs — — — — — — — 10,000 10,000Depreciation and amortization included within equity earnings 25,307 — — — — — — — 25,307Inventory valuation adjustment including equity method investees 597 — 2,590 — — — — — 3,187Bankruptcy related expenses — — — — — — — 224 224Legal settlement — — — — — — — 3,394 3,394Non-cash equity compensation — — — 1,587 600 503 945 6,982 10,617Selected Non-Cash Items and Other Items Impacting Comparability $ 35,600 $ — $ 4,491 $ 773 $ 1,399 $ 1,193 $ 2,777 $ 12,150 $ 58,383

SemGroup Reconciliation of Net Income to Adjusted EBITDA

41

(in thousands, unaudited) Year EndedDecember 31, 2014

Crude -Transportation

Crude -Facilities

Crude -Supply andLogistics SemCAMS SemLogistics SemMexico SemGas

Corporateand other Consolidated

Net income (loss) $ 31,301 $ 26,921 $ 24,610 $ 14,318 $ (10,072) $ 5,900 $ 6,792 $ (47,713) $ 52,057Add: Interest expense (income) 11,727 — 502 13,558 1,528 166 8,570 12,993 49,044Add: Income tax expense (benefit) — — — 3,135 (2,231) 4,053 — 41,556 46,513Add: Depreciation and amortization expense 33,679 5,365 549 14,295 10,005 6,031 26,353 2,120 98,397EBITDA 76,707 32,286 25,661 45,306 (770) 16,150 41,715 8,956 246,011Selected Non-Cash Items and Other Items Impacting Comparability 21,582 (34) 4,004 590 (1,083) 621 21,053 (5,303) 41,430Adjusted EBITDA $ 98,289 $ 32,252 $ 29,665 $ 45,896 $ (1,853) $ 16,771 $ 62,768 $ 3,653 $ 287,441


Loss (gain) on disposal of long-lived assets, net $ 467 $ (34) $ (42) $ (950) $ (2,490) $ (53) $ 20,092 $ 15,602 $ 32,592Loss (income) from discontinued operations, net of income taxes — — — — (1) — — 2 1Foreign currency transaction (gain) loss — — — 42 821 279 — (1,228) (86)Remove NGL equity earnings including gain on issuance of common units — — — — — — — (31,363) (31,363)Remove gain on sale of NGL units — — — — — — — (34,211) (34,211)NGL cash distribution — — — — — — — 23,404 23,404Employee severance expense 9 — — 150 — — 41 20 220Unrealized loss (gain) on derivative activities — — (1,621) — — — — (113) (1,734)Change in fair value of warrants — — — — — — — 13,423 13,423Depreciation and amortization included within equity earnings 18,992 — — — — — — — 18,992Inventory valuation adjustment including equity method investees 2,114 — 5,667 — — — — — 7,781Recovery of receivables written off at emergence — — — (664) — — — — (664)Bankruptcy related expenses — — — — — — 150 1,160 1,310Charitable contributions — — — — — — — 3,379 3,379Non-cash equity compensation — — — 2,012 587 395 770 4,622 8,386Selected Non-Cash Items and Other Items Impacting Comparability $ 21,582 $ (34) $ 4,004 $ 590 $ (1,083) $ 621 $ 21,053 $ (5,303) $ 41,430

SemGroup Reconciliation of Net Income to Adjusted EBITDA

42

(in thousands, unaudited) Year EndedDecember 31,

2015 2014Net income $ 49,673 $ 62,925

Add:Interest expense 43,188 21,279Depreciation and amortization expense 41,998 40,035Distributions from equity method investment 100,468 66,768Inventory valuation adjustment 2,590 5,667Non-cash equity compensation 1,354 943Loss on disposal of long-lived assets, net 10,257 319Provision for uncollectible accounts receivable 257 —

Less:Earnings from equity method investment 76,355 57,378White Cliffs cash distributions attributable to noncontrolling interests — 11,008Impact from derivative instruments:Total gain on derivatives, net 8,145 17,351Total realized gain (cash outflow) on derivatives, net (10,045) (15,730)Non-cash unrealized gain (loss) on derivatives, net (1,900) 1,621Adjusted EBITDA $ 175,330 $ 127,929

Rose Rock Reconciliation of Net Income to Adjusted EBITDA

43

Rose Rock Reconciliation of Net Cash Provided by Operating Activities toAdjusted EBITDA

(in thousands, unaudited) Year EndedDecember 31,

2015 2014Net cash provided by operating activities $ 82,851 $ 111,093Less:Changes in operating assets and liabilities, net (28,044) 1,296White Cliffs cash distributions attributable to noncontrolling interests — 11,008Add:Interest expense, excluding amortization of debt issuance costs 40,322 19,750Distributions in excess of equity earnings of affiliates 24,113 9,390Adjusted EBITDA $ 175,330 $ 127,929

44

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