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Investor and Analyst Meeting – Dominion Resources, Inc.

Dominion Resources, Inc. · Mar 4, 2013 · 88 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 1
    Investor and Analyst Meeting March 4, 2013
  2. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 2
    Todays Agenda Tom Farrell Mark McGettrick Dominion Strategy Earnings Guidance 2013 Guidance Growth Plan Update Long-Term Growth Drivers Blue Racer JV Merchant Asset Sale Cove Point Blue Racer JV Regulatory Cove Point…
  3. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 3
    Safety Record Best safety year in Dominions history 2.40 1.87 1.40 1.15 1.15 0.95 0.92 0.74 2005 2006 2007 2008 2009 2010 2011 2012 OSHA Recordable Incidents Rates* * Dominion incidents rate = number of recordables x…
  4. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 4
    Dominion Strategy Tom Farrell 5
  5. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 5
    Dominion in 2006 P/E Discount Operating Forward Earnings Mix P/E Ratios 16 2006 Actual October 2006 14 Regulated P/E Multiple 12 10 Un- 46% 8 Regulated 54% 6 -12% Avg. Discount to Peers 4 2 0 Note: Operating…
  6. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 6
    Transaction Timeline 2007-2010 E&P assets Peoples LDC Cove Point divestiture Sale expansion 2007 2008 2009 2010 Va. Re-regulation Bear Garden Appalachian act rider approval E&P assets VCHEC divestiture rider approval…
  7. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 7
    Dominion in 2010 Elimination of P/E Discount Operating Forward Earnings Mix P/E Ratios 16 2010 Actual Analyst Day 2010 14 Regulated P/E Multiple 12 10 29% Un- 8 Regulated 6 +2% Avg. Premium to Peers 71% 4 2 0…
  8. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 8
    Transaction Timeline 2007-2012 Salem Harbor & Kewaunee E&P assets Peoples LDC State Line Cove Point decommissioning divestiture Sale divestiture expansion announcement 2007 2008 2009 2010 2011 2012 2013 Bear Garden VCHEC Blue…
  9. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 9
    Forward P/E Ratios Then & Now 18 October 2006 Analyst Day 2010 Analyst Day 2013* 16 14 12 P/E Multiple 10 8 6 -12% +2% +10% Avg. Discount to Peers Avg. Premium to Peers Avg. Premium to Peers 4 2 0 2007 2008 2009…
  10. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 10
    Growth Plan Review 11
  11. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 11
    Growth Plan Overview Continue to build on strategy of commodity risk reduction and execution of regulated infrastructure build out Regulated infrastructure investment plan in place to support future earnings growth 2013 2017 plan…
  12. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 12
    Utility Generation 2007 2012 Ladysmith CTs VCHEC (2012) Three units totaling 480 600 MWs MWs 1.8 billion Provide essential Ability to co-fire up to 20% biomass peaking capacity to One of the cleanest coal plants in US Northern VA…
  13. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 13
    Dominion Virginia Power 2007 2012 Electric Transmission 500 kV Total Investment of 3.6 billion projects Pleasant View to Hamilton Meadow Brook to Loudoun Dominions 500 kV Loop The backbone of our electric transmission system…
  14. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 14
    Dominion Energy 2007 2012 Gas Transmission Cove Point Expansion & Pier Total Investment of 3.6 billion Modernization USA Storage Natural gas transmission, Dominion Hub I-III gathering and storage pipeline Natural gas storage…
  15. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 15
    Progress So Far Growth in Regulated Net Plant 30 75% increase 25 11 billion 20 in 6 years Billions 15 10 5 0 2007 2008 2009 2010 2011 2012 Net Plant at 2006 Regulated Electric Growth Regulated Gas Growth Please…
  16. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 16
    Future Growth 17
  17. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 17
    Growth Plan Fall 2012 This Years Plan Planned growth capex (billions) Additional capex of 2.5 - 3.5 billion 13.5 - 14.5 billion for Cove Point liquefaction 11.0 8.8 4.0 6.6 3.0 4.7 2.2 4.5 1.7 3.7 2.0 2.8 0.7 1.9 2.1…
  18. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 18
    Updated Growth Plan Planned growth capital (billions) Growth Plan includes: 14.1 - 14.5 billion Reduction of 450m for Blue Racer JV Capex of 3.4 - 3.8 billion for Cove Point export project 3.4 - 3.8 4.0 3.0 2.2 4.5 1.7…
  19. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 19
    Utility Growth 20
  20. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 20
    Utility Generation Planned growth capital (billions) Growth Plan includes: 14.1 - 14.5 billion Reduction of 450m for Blue Racer JV Capex of 3.4 - 3.8 billion for Cove Point export project 3.4 - 3.8 4.0 3.0 2.2 4.5 1.7 3.7…
  21. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 21
    Utility Generation Capacity Growth 2013 PJM Demand Forecast of 1.8% Growth Per Year in DOM Zone 25,000 Future Growth Under 23,000 Development Generic 21,000 Completed Brunswick CC County VCHEC Warren MWs 19,000 Bear…
  22. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 22
    Utility Generation 2013 2017 2012 2013 2014 2015 2016 2017 VCHEC 4.0 billion Uprates planned growth capex Biomass Conversions 2013-2017 Bremo Conversion Warren County Brunswick County Future CC Please refer to page 2…
  23. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 23
    Dominion Virginia Power Planned growth capital (billions) Growth Plan includes: 14.1 - 14.5 billion Reduction of 450m for Blue Racer JV Capex of 3.4 - 3.8 billion for Cove Point export project 3.4 - 3.8 4.0 3.0 2.2 4.5 1.7…
  24. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 24
    Electric Transmission 2013 2017 2012 2013 2014 2015 2016 2017 Mt. Storm - Doubs 2.6 billion planned growth capex Cloverhill - Liberty 2013-2017 Dooms - Bremo Cannon Branch - Cloverhill Skiffes Creek Fentress - Yadkin…
  25. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 25
    Electric Distribution 2013 2017 Meet forecasted load growth Projected Data Center Average annual sales growth Demand Growth of 2% 1000 +455 MW 1,000 900 Average annual new connects 940 885 of 35,000 - 40,000 800 800 Data…
  26. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 26
    Electric Distribution Dominion Data Center Services Group Leveraging inherent Dominion Service Territory advantages to expand data Existing Data Centers center presence Pre-Certified Sites Highest concentration of technology…
  27. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 27
    Energy Growth 28
  28. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 28
    Dominion Energy Planned growth capital (billions) Growth Plan includes: 14.1 - 14.5 billion Reduction of 450m for Blue Racer JV Capex of 3.4 - 3.8 billion for Cove Point export project 3.4 - 3.8 4.0 3.0 2.2 4.5 1.7 3.7…
  29. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 29
    Gas Transmission and Distribution Well-positioned in Marcellus and Utica regions 11,000 miles of natural gas transmission, NY gathering and storage pipeline 947 Bcf of natural gas storage operated Cove Point LNG Facility Natrium…
  30. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 30
    Dominion Energy 2013 2017 2012 2013 2014 2015 2016 2017 Appalachian Gateway 2.2 billion Ellisburg to Craigs planned growth capex Northeast Expansion 2013-2017 Natrium Phase I Ethane Project 5.6 6.0 billion with Cove Point Tioga…
  31. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 31
    Growth Plan Summary Forward progress on long-term plan Regulated infrastructure investment plan in place to support future earnings growth Track record of successful execution 2013 2017 plan now 3 billion per year growth capex…
  32. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 32
    Growth in Regulated Net Plant 40 35 160% increase 30 24 billion 25 since Billions 2006 20 15 10 5 0 2007 2008 2009 2010 2011 2012 2013* 2014* 2015* 2016* 2017* Net Plant at 2006 Regulated Electric Growth Regulated Gas…
  33. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 33
    Key Developments Blue Racer Cove Point Regulatory 34
  34. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 34
    35
  35. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 35
    Blue Racer Midstream Joint Venture Strategic Rationale Current state of the Utica Shale Permitted DTI 2.5 million acres of wet gas Marcellus Drilled/Producing acreage Utica wet gas Over 1.5 million acres of wet gas acreage are…
  36. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 36
    Blue Racer Midstream Joint Venture Strategic Rationale Why form a Joint Venture Utica Wells Feb 2012 Feb 2013 Permitted 176 512 Opportunity to contract remaining Drilled 71 223 available wet gas acreage Producing 17 50 Caimans…
  37. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 37
    Blue Racer Midstream Joint Venture Partnership Overview 50-50 partnership with Caiman Energy Dominion to contribute assets, Caiman to contribute equity capital to fund the midstream growth plan Caiman will fund all capex until…
  38. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 38
    Blue Racer Midstream Joint Venture Key Focus Areas Existing assets will provide JV access Defined Area of to wet gas, dry gas & oil/condensate Mutual Interest windows in Utica JV will initially focus on wet gas window and provide…
  39. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 39
    Blue Racer Midstream Joint Venture Dominion assets contributed to the JV Contributed at Closing Asset Location East Ohio Wet Gas Gathering System 125 miles of large-diameter pipe converted from dry gas transmission 2013…
  40. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 40
    Blue Racer Midstream Joint Venture Future Opportunities NY Blue Racer JV PA OH MD WV 41 Please refer to page 2 for risks and uncertainties related to projections and forward looking statements.
  41. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 41
    Blue Racer Midstream Joint Venture Strategic Value Capture value of assets in Utica Shale area Supports 5-6% annual EPS growth Provides near-term midstream earnings clarity and long-term upside Reduces 5-year planned capex by…
  42. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 42
    Cove Point 43
  43. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 43
    Dominion Cove Point Current Facilities 7 storage tanks with 14.6 Bcf storage capacity 1.8 Bcf daily send-out capacity Connects to the major Mid- Atlantic gas transmission systems and the Marcellus Shale Enhancements to pier…
  44. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 44
    Dominion Cove Point Liquefaction Siting Please refer to page 2 for risks and uncertainties related to projections and forward looking statements. 45
  45. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 45
    Dominion Cove Point Proximity to Major Northeast Pipeline Interconnections DTI Marcellus Utica wet gas Leidy Hub Interconnects with: Transco Tennessee Texas Eastern National Fuel South Point Hub Natrium Interconnects…
  46. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 46
    Cove Point LNG Export Timeline Key Milestones Date Status DOE Export to FTA Countries October 2011 Approved FERC Pre-Filing June 2012 Filed DOE Economic Impact Study December 2012 Study supports benefits of exports Ruling in…
  47. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 47
    Regulatory 48
  48. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 48
    Va. Re-Regulation Legislation Summary The foundations of the 2007 law remain unchanged Provides for forward-looking ratemaking ROE peer group floor Timely and current cash return on approved rider projects Incentive ROE for…
  49. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 49
    Va. Re-Regulation Legislation Overview of Primary Amendments Changes to the legislation Revision of earnings collar for future Biennial Reviews Expands the definition of excess earnings from 50 bps to 70 bps above authorized ROE…
  50. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 50
    2013 Biennial Review Top of ROE range of 11.4% used for Earnings Test Analysis VA Power will make filing with an earned ROE of 10% for 2011-2012 period Includes the following impacts that cannot be amortized: Effects of mild…
  51. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 51
    Key Investment Advantage 52
  52. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 52
    Key Investment Advantage Visible and diverse growth plan 2013 2017 plan now 3 billion per year growth capex Growth across all five regulated businesses 3.4 3.8 billion in capex for Cove Point Export 80 - 90% of operating earnings…
  53. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 53
    Financial Overview Mark McGettrick 54
  54. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 54
    Earnings Guidance 55
  55. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 55
    2013 Operating Earnings Guidance 3.50 4th Quarter 2013 Drivers Drivers Return to normal weather 3.20 0.22 hurt in 2012 3.05 Gas transmission growth Elimination of Merchant drag Regulated electric sales and riders Higher…
  56. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 56
    2013 Operating Earnings Guidance Expected 2013 growth vs. 2012 mostly in 3Q & 4Q 3.50 22 Weather 1Q 2Q 3.05 3Q 4Q 3.20 Core growth Core growth Core growth Core growth 3.05 offset by offset by plus the plus the Retail and…
  57. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 57
    Long-term Earnings Growth Drivers Long-term path to 5-6% annual growth Gas Trans. & Distr. 3.50 Revenue 22 Growth Weather VA Power 3.20 DD&A Riders O&M 3.05 3.05 Interest, Merchant VA Power Tax & Gen Revenue Other…
  58. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 58
    Long-Term Earnings Drivers Sales Growth Rider Projects Blue Racer JV Pension Bonus Depreciation O&M Expenses Please refer to page 2 for risks and uncertainties related to projections and forward looking statements. 59
  59. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 59
    Long-Term Earnings Drivers Regulated Electric Sales Growth Average annual sales growth of New Connects 2% 50,000 35,000 Economic indicators have turned 20,000 the corner: 2007 2008 2009 2010 2011 2012 New Connects Va.…
  60. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 60
    Long-Term Earnings Drivers Rider Projects 1,200 Generic CC Brunswick Rate Adjustment Clause EBIT (millions) 1,000 County Warren County 800 VCHEC Bear Garden East Ohio 600 PIR 400 Electric Transmission 200…
  61. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 61
    Blue Racer Midstream Joint Venture Long-Term Earnings Forecast Provides near-term earnings clarity and long-term earnings upside 85 - 95 Midstream earnings ( millions) 75 - 85 70 - 80 65 - 75 45 - 55 44 2012 2013…
  62. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 62
    Hedged Power Update Millstone Hedge 2013 2014 2015 Position 89% 73% 48% 53.05 49.00 49.27 47.97 47.84 46.49 46.26 /MWH 36.06 2012 2013 2014 2015 NEPOOL Baseload Avg. Hedge Price NEPOOL ATC Power Price 2013…
  63. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 63
    Long-Term Earnings Drivers Pension, Bonus Depreciation, and O&M Pension expense Increasing pension expense due to lower discount rate Discount rate reduced to 4.4% from 5.5% Incremental expense of 52 million in 2013 Expect higher…
  64. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 64
    Long-Term Earnings Drivers O&M Expense Management Plan Forecast 1-2% annual increase in non-rider O&M expenses 3.0 2.8 O&M Expense ( billions) 2.6 2.4 2.2 2.0 2013 2014 2015 2016 Please refer to page 2 for risks…
  65. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 65
    Merchant Asset Sale 66
  66. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 66
    Merchant Generation Map of Assets Kewaunee (shutting down) Brayton Point (selling) Elwood (selling) Manchester Millstone Kincaid (selling) Fairless Excludes wind assets Millstone Fairless Manchester Lowest-cost…
  67. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 67
    Merchant Asset Sale Timeline 2012 2013 Sept Oct Nov Dec Jan Feb Mar Apr May June Announced Sale of Brayton Point, Preliminary Kincaid & Elwood bids received power stations Selected Final Final bids Bidding Group received…
  68. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 68
    Merchant Asset Sale Expected Proceeds 600 - 700m Expected Uses of Proceeds Eliminate market equity needs for 2013 Reduce debt needs Help fund growth plan capital needs Significantly reduces liquidity needs Net after tax…
  69. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 69
    70
  70. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 70
    Blue Racer Midstream Joint Venture Long-Term Earnings Forecast Provides near-term earnings clarity and long-term earnings upside 85 - 95 Midstream earnings ( millions) 75 - 85 70 - 80 65 - 75 45 - 55 44 2012 2013…
  71. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 71
    Blue Racer Midstream Joint Venture Supporting Future Growth High pressure gathering system capable of handling up to 2bcf per day Up to 2bcf per day of Petersburg Lewis incremental processing Natrium II Lewis Petersburg…
  72. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 72
    Blue Racer Midstream Joint Venture Partnership equalization realized between 2014-2016 Opportunities after equalization: Form MLP Initial Public Offering Continue to grow the JV as a 50-50 partnership using non-recourse…
  73. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 73
    Cove Point 74
  74. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 74
    Cove Point LNG Timeline Cove Point Import 2002 2003 2009 2011 2017 2022 - 2023 Dominion acquires Phase 2 Significant reduction in Cove Point in-service Phase 2 contract service Reactivation of Phase 1 Amend Phase 2 Expiration of…
  75. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 75
    Cove Point Export Financing Time Line and Assumptions Projected capex of 3.4 - 3.8 billion Mandatory Convertible securities are ideal for long-lead projects with significant cash flows upon completion 2013 to 2017 2016 to 2020…
  76. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 76
    Cove Point LNG Export Projected Earnings Profile 0.50 0.09 to 0.15 per share 0.18 to 0.25 per share 0.27 to 0.40 per share Range of annual contribution offsetting amended import + Avg. 10-year growth incremental to original…
  77. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 77
    Cove Point LNG Export Summary of Financial Expectations No dilution during construction period Equity dilution absorbed during first 3 years of operation Ongoing project earnings and cash flow creates growing EPS stream Extends…
  78. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 78
    Financing Plan 79
  79. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 79
    2013 Financing Plan Equity Mandatory Debt Convertibles 1.8 - 2.4b 1.5b 500m - 1b 300m DRIP Program Maturities Issuances . Please refer to page 2 for risks and uncertainties related to projections and forward…
  80. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 80
    Financial Review 2013 operating earnings guidance remains 3.20-3.50 per share Year-over-year growth mostly in 3Q and 4Q 2013-2017 expected annual earnings growth remains 5-6% Long-term earnings drivers in place Cove Point Export…
  81. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 81
    Investment Consideration 82
  82. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 82
    Growth in Dividends 7% increase for 2013 2.25 2.11 Represents 1.97 67% payout 1.83 ratio of the midpoint of 2013 operating Dividend earnings Per guidance** Share 2010 2011 2012 2013* * All dividend declarations are…
  83. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 83
    Investment Proposition 10% Total Return Potential Above Average Total Constructive Return Regulatory Potential Climate Diverse Business Lines Visible Project Growth Dividend Growth 5-6% EPS Growth Please refer to…
  84. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 84
    Visit our website at www.dom.com/investors.
  85. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 85
    Appendix 86
  86. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 86
    GAAP Reconciliation 2011 Original Earnings Earnings Per Share (diluted) Reconciliation of measures prepared in accordance with Generally Accepted Accounting Principles (GAAP) versus non-GAAP measures The net effects of the following…
  87. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 87
    GAAP Reconciliation 2012 Earnings Earnings Per Share (diluted) Reconciliation of measures prepared in accordance with Generally Accepted Accounting Principles (GAAP) versus non-GAAP measures The net effects of the following items, all…
  88. Investor and Analyst Meeting – Dominion Resources, Inc. – slide 88
    GAAP Reconciliation 2013 Earnings Expectations Earnings Per Share (diluted) Reconciliation of measures prepared in accordance with Generally Accepted Accounting Principles (GAAP) versus non-GAAP measures 1Q 2013 Operating Earnings…

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