Energy Business September 9, 2014 Ray Reipas, Senior VP, Energy
Agenda Building an Energy Business Fort Hills Logistics Solutions Market Access Options Summary 3
Mined Oil Sands Are In Tecks Sweet Spot Strategic diversification Large truck & shovel mining projects World-class resources Long-life assets Competitive margins Minimizing execution risk Tax effective Mining-friendly…
The Real Value of Long-Life Assets Fort Hills Project Indicative Rolling NPV1 Significant value created over long term 60% of PV of cash flows beyond year 5 IRR of 50 year life only 1% 20 year life asset Options for…
Fort Hills Is Expected to Provide Long-Life Cash Flow* Extends duration of corporate portfolio, reducing 50-years of strong, stable cash flow reinvestment risk. Provides long-term exposure to potentially higher oil prices.…
World Class Energy Reserves & Resources Bitumen Reserves Tecks Share World-Class (million bbl) Energy Proved Reserves & Resources Probable Proved Plus Probable 1 Fort Hills 414 194 608 Contingent Bitumen Resources2 Project Tecks…
Building an Energy Business Unit Fort Hills is Tecks first oil sands Tecks Potential Production Profile* project 300 - Significant initial production of 250 36,000 bpd - Working with Suncor, the most 200 experienced oil sands…
Agenda Building an Energy Business Fort Hills Logistics Solutions Market Access Options Summary 9
Fort Hills Is Part Of A New Breed Of Mineable Oil Sands Projects Legacy Oil Sands Mining Projects (30 Years Ago) Diluted Bitumen Synthetic Oil (Doesnt meet commercial pipeline specs) Naphtha froth treatment process Mine &…
Logistics Solutions Planned Between Fort Hills, Edmonton and Hardisty Fort Hills Nominal Teck Mine Terminal Pipeline/Terminal Operator Capacity Capacity (kbpd) (kbpd) Northern Courier TransCanada 202 40.4 Hot Bitumen East Tank…
Agenda Building an Energy Business Fort Hills Logistics Solutions Market Access Options Summary 13
Forecast Western Canadian Crude Oil Supply vs. Takeaway Capacity Capacity Including Existing Pipelines & Rail 9,000 8,000 7,000 6,000 5,000 kbpd 4,000 3,000 2,000 1,000 0 2010 2011 2012 2013 2014…
Forecast Western Canadian Crude Oil Supply vs. Takeaway Capacity Capacity Including Existing Pipelines, Rail & Prospective Pipelines 9,000 8,000 7,000 6,000 5,000 kbpd 4,000 3,000 2,000 1,000 0 2010 2011…
Multiple Options To Reach International Markets From Western Canada Common Carriage Pipeline No take or pay commitments When pipe capacity is constrained, access to capacity Markets may be apportioned and netback prices are…
Growing Take-Away Capacity In North American Pipelines Keystone XL Southern Leg Keystone XL Northern Leg Routing Cushing to Routing Hardisty to Houston/Port Cushing Arthur Fort Hills Size 580 710 kbpd Size 700-830 kbpd Timing 2018…
Flanagan South Pipeline Option Gulf Coast Access - Chicago/Flanagan IL to Houston/Port Arthur TX Flanagan South Pipeline Phase 1 & 2: 600 kbpd Phase 3 opportunity: 100-200 kbpd Seaway Pipeline & Twin Expansions Expansion up to…
Energy East Pipeline Option Tidewater Access - Hardisty AB to Saint John NB Multiple Eastbound Market Options Conversion + New Pipeline Build One of several parallel pipelines will be converted Europe New pipeline from…
Rail Is A Viable Alternative From Western Canada Western Canadian Market Options, Rail Capacity Including Cycle Times & Estimated Cost 1.5 1.0 Mbpd 0.5 0.0 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017 Q1 2018…
Teck Has A Significant Advantage Vs. Smaller, Conventional Oil Producers Teck can commit to a long-term take-or-pay pipeline agreement A 50-year resource Solid financial position Pipeline access planned to Hardisty; diluent…
Agenda Building an Energy Business Fort Hills Logistics Solutions Market Access Options Summary 22
Albertas Oil Royalties In Two Phases And Based On WTI Base royalty until the initial capital costs are recovered Phase 1 - Interest is accrued on initial capital costs at the long-term bond Prior to yield Capital Payment is 1-9% of…
Significant Long-Term Value Creation Potential Contribution from Fort Hills1 Tecks share of annual production (36,000 bpd) 13 Mbpa Netback 65/bbl2 Cash margin 40/bbl3 Alberta oil royalty 5/bbl4 Net margin 35/bbl Annual…
Summary Market access & marketing issues are in the process of being resolved - Pipeline capacity planned to Hardisty - Multiple options to access international markets - Capacity to enter into long-term take-or-pay pipeline…
Energy Business September 9, 2014 Ray Reipas, Senior VP, Energy
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