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ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited

Altagas Limited · Nov 14, 2006 · 50 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. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 1
    AltaGas Income Trust Investor Day November 14, 2006
  2. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 2
    Forward-looking information Certain information presented today may constitute forward-looking statements. Such statements reflect the Trusts current expectations, estimates, projections and assumptions. These forward-looking…
  3. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 3
    AltaGas Strategy A Tradition of High Performance Our vision To be the leading Canadian integrated energy infrastructure organization by capitalizing on our solid underlying business, operational expertise and financial…
  4. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 4
    AltaGas business model Create, operate and grow an integrated energy midstream business Own and operate physical assets that deliver time- sensitive, essential services to customers who produce or consume energy Disciplined…
  5. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 5
    AltaGas business model results Enterprise value 2000 1,863 1,796 1,591 1500 ( thousands) 1,123 1000 853 665 500 0 2001 2002 2003 2004 2005 Sept. 30/06 5 AltaGas strategy Experience, knowledge and…
  6. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 6
    AltaGas strategy Day-to-day operations Day-to-day operations involve: Detailed, in-depth and real-time financial analysis to monitor performance Rigorous operating discipline to identify value creation levers and options for…
  7. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 7
    Track record of growing ROE 25% 23.1% Return on average equity 20% 18.4% 15.7% 15% 10.9% 9.8% 10% 7.3% 5% 0% 9 2001 2002 2003 2004 2005 2006 TTM AltaGas Greater than the sum of its parts millions 240…
  8. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 8
    Diversified integrated energy business Net Book Value EBITDA At December 31, 2005 YTD 2006 4% Field Gathering and Processing 27% 24% Extraction and Transmission 49% Power Generation 49% 13% Energy Services 23% Corporate…
  9. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 9
    Power Generation Building on Profitable Assets Power Generation segment 4 key responsibilities 1. Manage generating assets 2. Execute hedges 3. Supply power to other segments 4. Develop Bear Mountain Wind project…
  10. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 10
    Current generating assets Sundance B AltaGas owns 50% of Sundance B Acquired in 2001; expires in 2020 Ownership rights through PPA 2 x 353 MW coal-fired generators Units owned and operated by TransAlta TransAlta plans to…
  11. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 11
    Sundance B PPA structure limits exposure to outages Availability incentive payments for actual generation above or below target capacity Above target, AltaGas pays TransAlta 30-day rolling average price (RAPP) Below target,…
  12. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 12
    Earnings stability through hedging Hedge strategy provides stable earnings No speculative trading Focus on 12-24 months forward using financial swaps with investment-grade counterparties Hedges include 50 MW of supply for…
  13. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 13
    Alberta power market AESO outlook Generation (with Retirements) AIL + 18% Reserve Margin Alberta Internal Load (AIL) 9 Bear Mountain Wind Farm Strategic growth in renewable energy 120 MW development near Dawson…
  14. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 14
    Bear Mountain layout Bear Mountain Wind project looking east, with photo-insert of turbines 11 Power Generation outlook Strong power prices in Alberta expected to maintain or increase earnings from current assets…
  15. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 15
    Energy Services Stable, Low-risk Earnings with Linkages across AltaGas Energy Services segment 3 components 1. Energy Management 2. Gas Services 3. Oil and Gas Production (non-core) 14
  16. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 16
    Energy Services segment Generates low-risk earnings Primarily a services business - not capital intensive Long-term contracts create stable future earnings Organic growth 15 Energy management services…
  17. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 17
    Energy management How the agency service works AltaGas (ECNG) makes arrangements with supplier on behalf of customer, but does not take title to the energy supply In most cases billing is through utility, giving customer a…
  18. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 18
    Gas services Overview of services Buy/sell gas for Energy Management end-user customers Exchange gas deliveries at connections to our Transmission pipelines Market gas for our FG&P producers in Alberta 19 Gas services…
  19. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 19
    Integration across AltaGas 30 Bcf FIELD ENERGY GATHERING & SERVICES PROCESSING 30 Bcf 10 MW 25 Bcf 40 1 5 Bcf B M cf W EXTRACTION & POWER TRANSMISSION GENERATION 21 18 MW Competitive…
  20. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 20
    Performance 2006 YTD operating statistics show growth which will generate long-term earnings: Energy management customer contracts 8% Gas services volumes marketed 6% 23 Energy Services outlook Continued organic…
  21. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 21
    Extraction and Transmission Integrated Infrastructure - Low-risk Earnings Extraction and Transmission 539 Mmcf/d extraction inlet capacity, including Albertas newest extraction plant 2006 YTD average production 12,895…
  22. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 22
    Edmonton Ethane Extraction Plant 3 Extraction process Shrinkage make-up 56 Mmcf/d (63,000 GJ/d) Inlet gas Cryogenic Process Market demand 349 Mmcf/d (393,000 GJ/d) (393,000 GJ/d) Fuel 0.5 Mmcf/d (500 GJ/d) NGL…
  23. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 23
    Ethane product chain Antifreeze Residue Gas Ethylene Polyester Glycol Film Shampoo, Cosmetics Ethane in Pharmaceuticals Natural Gas Ethylene Gas Ethane Polyethylene Bottles Pipe Ethane Toys Cracker Other Styrene NGL -…
  24. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 24
    Demand based extraction Secure supply Long-term market TCPL intra-Alberta Pipelines Judy Creek Edmonton residential market Golden Spike EEEP Pembina Industrial markets Homeglen Volumes to date 334 Mmcf/d 7 EEEP…
  25. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 25
    Transmission pipelines 5 natural gas and 1 condensate Primarily cost of service, take-or-pay, fixed fee contracts More than 99% of revenue not dependent on volumes transported Linked with Energy Services and Field Gathering…
  26. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 26
    Mitigating risk Risk What were doing Competition for natural gas Long-term cost of service or supply/volume changes fixed fee contracts Process Energy Services volumes Commodity price volatility COS arrangements buyer…
  27. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 27
    Integration in action EEEP control room Peaking plant locations EEEP 13 E&T outlook Stable returns Capitalize on integration across the company Existing asset growth Deep cut potential at EGLJV Expand pipeline…
  28. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 28
    Field Gathering and Processing Sustainable Growth 15 Field Gathering and Processing 74 facilities with 1.0 Bcf/d of capacity, including sour gas capacity Moveable facilities 6,000 km of gathering lines Ability to rapidly…
  29. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 29
    FG&P business drivers Volumes Pricing Processing commitments Capital efficiency 17 Maintaining gas deliverability Northwest Region (Bcf/d) Central Region (Bcf/d) Southern Region (Bcf/d) Legend FG&P…
  30. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 30
    Growing volumes 600 575 Throughput (Mmcf/d) 550 525 500 475 450 425 400 2003 2004 2005 2006 2007 19 Forecast AltaGas capital efficiency W6 W5 W4 W3 British Columbia Alberta…
  31. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 31
    Increasing processing fees 0.80 17% increase since 2003 0.70 0.60 0.50 /Mcf 0.40 0.30 0.20 0.10 0.00 Forecast 21 2003 Q1 Q2 2004 Q3 Q4 Q1 Q2 2005 Q3 Q4 Q1 Q2 2006 Q3 Q4 Q1 Q2 Q3 FG&P operating cost…
  32. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 32
    Strong contractual underpinning Areas of mutual interest Approximately 14 million acres or 21,500 sections of land under AMI 28 of 29 operating areas have AMI provisions 23 Strong contractual underpinning Take or pay…
  33. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 33
    FG&P capital additions Current Capacity Throughput Plant Composition District Meridian Mmcf/d Mmcf/d Blair Creek sweet NW BC 24 7.5 Clear Prairie sweet NW W6 15 2.5 Princess sour S W4 20 14.0 Clear Hills sour NW W6 10 8.5…
  34. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 34
    The Clear Hills project Producer owned plant Producer owners reluctant to: allow third-party access add capital for third parties AltaGas solution Equitable access Skid-mounted facilities close to both production source and…
  35. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 35
    The AltaGas advantage Skid-mounted assets Geographic diversity in WCSB Customer diversity Operational expertise 29 Field Gathering and Processing outlook Producer focus is exploration and development Strong…
  36. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 36
    Growth Strategy Continued Strong Growth Our growth plan Capitalize on gas industry activity and growth in power demand 100 million of internal financing capability Financial discipline and efficient use of capital…
  37. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 37
    Balanced capital spending 250 FG&P E&T Power Generation Energy Services 200 Capex in millions 150 100 50 0 3 2001 2002 2003 2004 2005 2006 Field Gathering and Processing Continued focus on organic growth 40…
  38. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 38
    Sweetening of the basin West Central Alberta production 2005 = 1.2 Bcf/d 2010 = 1.4 Bcf/d 17% 47% 44% 18% 65% 9% Sweet Sour CBM & EDM 5 Source: AJM Petroleum Consultants Coalbed methane Main Mannville in the…
  39. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 39
    Extraction and Transmission Extraction Increase ownership interests in facilities Expand processing capacity Transmission Service new markets Capitalize on business opportunities with other segments 7 Power…
  40. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 40
    Partnership advantage Relationships with power developers provide access to greater number of opportunities To source and develop renewable and fossil fuel generation opportunities in North America AltaGas provides development…
  41. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 41
    AltaGas integrated business model 11 11 Targeted growth 12 12
  42. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 42
    Financial Strategy Growth Through Disciplined Management A strong track record of growth 3.50 Net income CAGR = 35% 3.00 2.50 Per unit 2.00 1.50 1.00 0.50 0.00 2001 2002 2003 2004 2005 2 Net income Funds…
  43. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 43
    Net income 100 90.3 87.2 90 80 70 65.8 millions 60 50 40 38.3 29.4 30 20 10 0 2002 2003 2004 2005 YTD 2006 3 Q1 Q2 Q3 Q4 Net income per unit 1.80 1.67 1.60 1.58 1.40 1.33 1.20 per unit 1.00 0.84…
  44. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 44
    EBITDA 155.5 160 133.4 140 128.6 121.9 120 94.8 millions 100 80 60 40 20 0 2002 2003 2004 2005 YTD 2006 5 Funds from operations 140 128.2 119.8 120 108.6 100 90.2 millions 80 70.8 60 40 20…
  45. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 45
    Track record of growing ROE 25% 23.1% 20% 18.4% 15.7% 15% 10.9% 9.8% 10% 7.3% 5% 0% 2001 2002 2003 2004 2005 2006 TTM 7 Strong financial position Strong liquidity and balance sheet Investment grade credit…
  46. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 46
    Disciplined distribution growth 200 Distributions 160 Funds From Operations TTM ( millions) 120 80 40 0 Q3-04 Q4-04 Q1-05 Q2-05 Q3-05 Q4-05* Q1-06 Q2-06 Q3-06 Payout Ratio 40% 54% 66% 77% 76% 75% 71% 71% 68% 9 *…
  47. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 47
    Financial targets Maximizing value and financial flexibility Target Target Rationale Description Credit rating BBB- to BBB+ Efficient access to capital markets 70-80% of Underpin AltaGas market Distribution funds from…
  48. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 48
    Strong liquidity 425mm in total credit facilities Operational liquidity (1) Over 200mm available Smaller, organic, (1) 38mm non-distributed cash flow high return projects up to 100mm Debt capacity Larger, Debt & equity…
  49. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 49
    Tax update 31.5% tax on income component of distributions begins 2011 Income component of distribution treated as dividend for tax purposes Return of capital component of distributions not subject to proposed tax Tax pools…
  50. ALTAGAS INCOME TRUST INVESTOR DAY – Altagas Limited – slide 50
    Strong governance Director Independent Committees David W. Cornhill Chairman, President E&S & CEO Allan L. Edgeworth AC, E&S Denis C. Fonteyne HRCC, E&S Daryl H. Gilbert AC, HRCC Robert B. Hodgins AC, GC Myron F. Kanik Lead…

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