td securities calgary energy conference › wp-content › uploads › ...conference... · certain...
TRANSCRIPT
TD Securities
Calgary Energy Conference
July 7 – 8, 2015
Forward-Looking and Non-GAAP Information Advisory
Certain information contained in this presentation constitutes forward-looking information under applicable Canadian securities laws. All information, other than
statements of historical fact, which addresses activities, events or developments that we expect or anticipate may or will occur in the future, is forward-looking
information. Forward-looking information typically contains statements with words such as "may", "estimate", "anticipate", "believe", "expect", "plan", "intend",
"target", "project", "forecast" or similar words suggesting future outcomes or outlook. Forward-looking statements in this presentation include, but are not limited
to, statements with respect to: the returns provided by the Dawson MSA, timing for sanctioning of Sunrise and Tower and the Saturn expansion, annual
distributions in respect of the Ruby Preferred Interest, expected returns and contributions to cash flow from Ruby, future markets from Ruby, future growth
prospects of Ruby, and the ability of Veresen to recognize synergies between Ruby and the Jordan Cove LNG project, potential future increases in production in
the Cutbank Ridge region; opportunities for future midstream infrastructure investment; our ability to pay future dividends; the ability of Alliance to successfully
implement new services; the sources of additional rich-gas supplies for transportation on the Alliance pipeline and for processing at Aux Sable’s Channahon
facility; the cost estimate and timing of the Aux Sable expansion, the cost estimate, timing of, and our ability to successfully obtain regulatory approvals for
Jordan Cove LNG and the Pacific Gas Connector Pipeline, the timing of decisions to proceed with construction of, and the in-service date of the Jordan Cove
LNG and the Pacific Gas Connector Pipeline; and the ability of each of our businesses to generate distributable cash in 2015. The risks and uncertainties that
may affect the operations, performance, development and results of our businesses include, but are not limited to, the following factors: our ability to successfully
implement our strategic initiatives and achieve expected benefits; levels of oil and gas exploration and development activity; the status, credit risk and continued
existence of contracted customers; the availability and price of capital; the availability and price of energy commodities; the availability of construction services
and materials; fluctuations in foreign exchange and interest rates; our ability to successfully obtain regulatory approvals; changes in tax, regulatory,
environmental, and other laws and regulations; competitive factors in the pipeline, NGL and power industries; operational breakdowns, failures, or other
disruptions; and the prevailing economic conditions in North America. Additional information on these and other risks, uncertainties and factors that could affect
our operations or financial results are included in our filings with the securities commissions or similar authorities in each of the provinces of Canada, as may be
updated from time to time. Although we believe the expectations conveyed by the forward-looking information are reasonable based on information available to
us on the date of preparation, we can give no assurances as to future results, levels of activity and achievements. Readers should not place undue reliance on
the information contained in this presentation, as actual results achieved will vary from the information provided herein and the variations may be material. We
make no representation that actual results achieved will be the same in whole or in part as those set out in the forward-looking information. Furthermore, the
forward-looking statements contained herein are made as of the date hereof, and, except as required by law, we do not undertake any obligation to update
publicly or to revise any forward-looking information, whether as a result of new information, future events or otherwise. We expressly qualify any forward-looking
information contained in this presentation by this cautionary statement.
Certain financial information contained in this presentation may not be standard measures under Generally Accepted Accounting Principles ("GAAP") in the
United States and may not be comparable to similar measures presented by other entities. These measures are considered to be important measures used by
the investment community and should be used to supplement other performance measures prepared in accordance with GAAP in the United States. For further
information on non-GAAP financial measures we use, see the section entitled “Non-GAAP Financial Measures” contained in our annual Management Discussion
and Analysis, filed with Canadian securities regulators.
2
3
Veresen Today High-quality infrastructure well-positioned to serve market needs
• 6,000+ km of regulated gas transmission
• 1,300+ km of NGL transportation
Pipelines
• 900 km of gathering systems
• 670 mmcf/d of processing
• 100,000 HP of compression
• 100,000+ bbls/d of fractionation
Midstream
• 13 plants
• 830 MW of generation
• 17 years average PPA
Power
4
Build
Connect
Optimize
Build
Optimize
Our Corporate Strategy
Pursuing market driven opportunities to connect energy supply to markets
• Build a strong base of assets
where we have strategic advantage
• Midstream
• Pipelines
• LNG
• Power
• Connect asset base
• Expand service offering via
connectivity of assets
• Optimize our assets
• Drive productivity
• Commercial optimization of
business
We are building a strong mix of near-term to long-term growth opportunities and entering into partnerships and customer relationships that distinguish Veresen from its peers
Growth Opportunities
5
• Large opportunity set will
transform Veresen over the
next several years
• Fee-based growth supported
by customer demand and
long-term contracts
• Expanding platform will add
incremental opportunities
going forward
Enterprise Value
(as at March 31 15)
Proprietary
Growth
Opportunities
Start-up 2019+
Start-up
2015 - 2018
~$7 billion ~$12 billion
Veresen Today
• Multi-year, large scale contracted
growth profile
• Area is the most prolific and actively
developed gas play in Canada
• Demonstrated strong growth through
low gas price environments
• Development in region is infrastructure
constrained
• Creates scale and a powerful platform
for growth in the Montney; significant
third party activity in the region
• 50/50 ownership Veresen and KKR
6
Shell
Murphy
ARC
Conoco
Crew Tourmaline
CNRL
Encana/CRP
Veresen Midstream A leading independent natural gas gathering and processing business
7
200 MMcf/d
Saturn
compressor in
service
400 MMcf/d
Sunrise gas
plant – final
investment
decision
200 MMcf/d
gas plant –
final
investment
decision
Incremental
200 MMcf/d
compression &
400 MMcf/d
refrigeration
capacity to
Saturn
compressor
June
2015
Summer
2015
Fall
2015 Late 2015 /
early 2016
Tower and
Sunrise
gas plants
in service
Incremental
compression
and
refrigeration
capacity at
Sunrise in
service
To be sanctioned
2nd half
2017
Mid-
2018
In-service In-service
These projects, along with the build-out of associated gathering pipelines and Veresen Midstream’s acquisition of infrastructure earlier this year, collectively represent in excess of $3 billion of capital investment.
•
Veresen Midstream Growth Projects
Built-in Material Growth Profile
8
Q2 - Q4 2015 2016 2017 2018 2019
Capex (Projects
Under Development)
EBITDA(1)
• With start-up of Saturn, Veresen Midstream’s annual run-rate EBITDA is expected to be
between $145 million and $155 million
• Additional cash flow potential through attracting third-party volumes
1. Includes operating Dawson infrastructure, Sunrise, Tower, and Saturn gas plants, and
gathering system build-out. Excludes Hythe / Steeprock.
2. Capital spending excludes $760 million paid on closing in 2015.
3. Capital spending and EBITDA are not shown on the same scale.
4. All capital investment is subject to investment decisions by CRP.
Ruby Pipeline
• Acquired a 50% a convertible preferred interest in Ruby for US$1.4 billion
• Own a large interest in a long-haul natural gas pipeline with strong market fundamentals
• Attractive strategic and financial attributes
• Stable, long-term contracted cash flows with significant expected growth
• Ruby provides direct access to the U.S. West Coast through the proposed Pacific Connector Gas
Pipeline which would supply the proposed Jordan Cove LNG terminal
• Provides significant future upside associated with Jordan Cove LNG
9
10
Fill the Fractionator
Fill the Remaining Space on the Pipe
Seek Regulatory Approval for
Services and Tolls
Optimize the system and develop growth projects
Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16
Contract with producers
who have choices for
how they would manage
their liquids rich gas to
ship to our NGL
fractionator in Chicago
An amount of firm gas capacity remains to be filled
with dry gas and interruptible service –
to commence in the fall of 2015
NEB hearings completed;
FERC application
submitted; Approvals
anticipated in the summer
of 2015
Once sufficient progress has been
made on filling the fractionator and
pipe, consider debottlenecking projects
and system optimization opportunities
Alliance’s re-contracting has been successful and shipper commitments for 1.325 bcf/d of receipt capacity, for approximately 5 years, have been secured.
Alliance Pipeline
Design capacity of ~1 bcf/d for 6 mtpa LNG
terminal requirements
Expandable to 1.5 bcf/d
232-mile, 36-inch diameter pipeline
Ownership: 50% Veresen; 50% Williams
Jordan Cove LNG Project Components
11
6 mtpa facility (phase 1)
expandable to 9 mtpa (later date)
400+ acre site includes:
marine facility;
two 160,000 m3 LNG tanks;
four – 1.5 mtpa liquefaction trains;
two gas treatment facilities; and,
420 MW power plant.
Ownership: 100% Veresen
Terminal: Jordan Cove LNG Pipeline: Pacific Connector
Power Plant Liquefaction
Key Work Streams to Reach a Final
Investment Decision
12
Regulatory EPC Contract
Commercial
Off-take
Agreements
Project
Financing
+
FERC Notice to Proceed;
all state and federal permits Final EPC contract in place
Customers for 100% of capacity Debt / equity financing
