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2011 Guidance Update Call – EP Energy Corp

EP Energy Corp · Jan 27, 2011 · 39 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. 2011 Guidance Update Call – EP Energy Corp – slide 1
    INTERSTATE PIPELINES EXPLORATION & PRODUCTION El Paso Financial & Operational Outlook January 27, 2011
  2. 2011 Guidance Update Call – EP Energy Corp – slide 2
    Defining Our Purpose El Paso Corporation provides natural gas and related energy products in a safe, efficient, and dependable manner 3
  3. 2011 Guidance Update Call – EP Energy Corp – slide 3
    Vision & Values the place to work the neighbor to have the company to own 4
  4. 2011 Guidance Update Call – EP Energy Corp – slide 4
    2010 Accomplishments Pipelines Five expansions in serviceon-time/100 MM under budget More Marcellus projects Pipeline integrity program achieves 92% milestone Midstream JV provides balance sheet-friendly platform Compelling…
  5. 2011 Guidance Update Call – EP Energy Corp – slide 5
    2010 Accomplishments E&P Results confirm rise to top tier Capital focused on four core programs Leveraging Haynesville success to Eagle Ford Established Wolfcamp as new core program Inventory larger, more repeatable, more…
  6. 2011 Guidance Update Call – EP Energy Corp – slide 6
    2010 AccomplishmentsFinancial Met 2010 funding challenges quickly/decisively Established attractive hedge positions Maximized MLP opportunity Finished year with 2011 funding needs in good shape Outstanding outcomes on all fronts…
  7. 2011 Guidance Update Call – EP Energy Corp – slide 7
    2011Big Picture Balance sheet improvement throughout the year No change in MLP strategy E&P ramps up oil opportunities Pipeline near the end of 8 billion backlog No change in Ruby forecast All other expansions on time/budget…
  8. 2011 Guidance Update Call – EP Energy Corp – slide 8
    2012 Gets Exciting Adjusted EPS increases 15% Significant free cash flow Investment grade profile Net Debt/EBITDA drops below 3.5x Oil production up 50% Improving returns on capital More options for cash: further deleveraging,…
  9. 2011 Guidance Update Call – EP Energy Corp – slide 9
    Pipelines
  10. 2011 Guidance Update Call – EP Energy Corp – slide 10
    Pipelines 2011 Overview 1.7 billion capital budget 1.3 billion growth, 0.4 billion pipeline integrity and maintenance Five major projects in service Ruby, TGP 300 Line, FGT Phase VIII, Gulf LNG, SNG South System III* About half…
  11. 2011 Guidance Update Call – EP Energy Corp – slide 11
    Ruby Pipeline No change in existing guidance Completed mountainous section before heavy snows Critical path items: Weather Permitting Fish & game windows 12
  12. 2011 Guidance Update Call – EP Energy Corp – slide 12
    Other Projects In-service in 2011 April October FGT Phase VIII Gulf LNG 2011 June SNG South System III* November TGP 300 Line 1.3 billion of capital investments Excellent progress to date; all on-time/on-budget *Phase two…
  13. 2011 Guidance Update Call – EP Energy Corp – slide 13
    2011 Rate Cases TGP Adjusts for changes in flows, fuel usage, and maintenance capital invested since 1996 More stable with 90% revenue in demand charges EPNG Economically challenged market Rates remain competitive CIG Settlement…
  14. 2011 Guidance Update Call – EP Energy Corp – slide 14
    Midstream
  15. 2011 Guidance Update Call – EP Energy Corp – slide 15
    Midstream 2011 Overview Successful Midstream re-entry with KKR JV Manageable capital outlook with 50% partner 125 MM payment from KKR provides capital to redeploy Expanding capacity for two key E&P programs Altamont gathering &…
  16. 2011 Guidance Update Call – EP Energy Corp – slide 16
    Midstream Major Projects MEPS Only pipeline project to best ethane market in U.S. Advantaged by use of existing infrastructure Very price competitive Camino Real Potential to utilize TGP capacity Targeting EP and other…
  17. 2011 Guidance Update Call – EP Energy Corp – slide 17
    Exploration & Production
  18. 2011 Guidance Update Call – EP Energy Corp – slide 18
    E&P 2011 Overview 1.3 billion capital budget Overall, flat with 2010 More domestic (9095%) More drilling & completion capital Solid production growth Focused activity Eagle Ford (oil), Haynesville, Altamont, Wolfcamp Oil…
  19. 2011 Guidance Update Call – EP Energy Corp – slide 19
    Proved Reserve Summary Total Reserves (Bcfe) 2009 2010 22% 2.04 Total RRC 1.40 3,362 2,750 1.57 Domestic RRC* 1.65 212% Reserve Replacement 347% Ratio 16% Liquids 6:1 22% 10 R/P (Years) 12 2009 2010 2010 performance…
  20. 2011 Guidance Update Call – EP Energy Corp – slide 20
    Inventory Growth Net Risked Resource (Tcfe) 2009 2010 8.0 0.2 34% Liquids 6:1 48% 6.0 2.2 0.6 3.7 4.2 2.0 0.7 82% Domestic 90% 0.8 4.3 1.8 1.5 2.5 0.5 1.1 0.9 0.6 0.9 1.3 46% Core Programs* 61% 2007 YE 2008 YE 2009 YE 2010…
  21. 2011 Guidance Update Call – EP Energy Corp – slide 21
    Increasing Oil-Related Activity Current Program Update 2011 Drilling Rig Profile 1520 Haynesville 58 wells producing Altamont (34) Net production up to 210 MMcf/d Eagle Ford Eagle Ford Oil 2 rigs operating in liquids rich area…
  22. 2011 Guidance Update Call – EP Energy Corp – slide 22
    Key 2011 E&P Metrics 1.3 billion capital Total production grows to 790840 MMcfe/d Up to 7% growth Oil production expected to rise 30%-40% to 1718 MBbl/d Oil revenue contribution grows 50% Unit cash costs: 1.701.90/Mcfe DD&A…
  23. 2011 Guidance Update Call – EP Energy Corp – slide 23
    Financial
  24. 2011 Guidance Update Call – EP Energy Corp – slide 24
    2011 Financial Overview Enter 2011 with significant liquidity: 2.4 billion* Capital budget: 3.2 billion Debt maturities: 500 MM Current liquidity & operating cash flow sufficient to fund capital plan *Does not include cash or…
  25. 2011 Guidance Update Call – EP Energy Corp – slide 25
    2011 Capital Program Total Capital Spend & Allocation Key 2011 Takeaways Billions 4.3 Pipelines 1.3 B Growth / 0.4 B Maintenance 3.2 5 Projects In-service / 8 B Backlog Complete 2.9 Midstream 1.7 0.1 B Growth Capital 0.2…
  26. 2011 Guidance Update Call – EP Energy Corp – slide 26
    2011 Guidance Assumptions Pipelines E&P Enterprise Ruby 10%15% 790840 MMcfe/d 4.25 MMBtu Henry over original budget production Hub; 85 Bbl WTI Budgeting for high 23 MLP drop-down end of guidance range 1.701.90/Mcfe transactions…
  27. 2011 Guidance Update Call – EP Energy Corp – slide 27
    2011 Financial Targets Billions, Except EPS 3.33.5 2.12.3 2.22.4 2.22.3 1.71.8 0.901.05 1.11.2 0.60.7 Adjusted Operating Total Pipes E&P Total Pipes E&P Diluted EPS* Cash Flow Adjusted Adjusted Segment EBIT* Segment EBITDA*…
  28. 2011 Guidance Update Call – EP Energy Corp – slide 28
    Natural Gas & Oil Hedges Natural Gas Production Hedges Volume % of U.S. Gas EP Avg. Hedge Price1 Current Market Year (Bcf) Production (/MMBtu) Prices (NYMEX) 2011 178 75% 5.95 4.61 2012 105 45% 6.01 5.03 Oil Production Hedges…
  29. 2011 Guidance Update Call – EP Energy Corp – slide 29
    MLP Strategy No change in strategywin/win for EP & EPB 1.4 billion MLP equity raised in 2010 Plenty of suitable pipeline assets to drop down EP value proposition Cost of capital advantage, valuation uplift, incentive distribution…
  30. 2011 Guidance Update Call – EP Energy Corp – slide 30
    Financial Objectives Improve balance sheet Continue to execute MLP strategy Progress toward investment-grade profile Continue to manage commodity risk Positioning EP for growth & increased financial flexibility Result: Enhanced…
  31. 2011 Guidance Update Call – EP Energy Corp – slide 31
    Summary EP on a great path Will deliver more significant milestones in 2011: Complete original 8 billion pipeline backlog Achieve material oil production growth Regain financial flexibility In 2012 we achieve many goals…
  32. 2011 Guidance Update Call – EP Energy Corp – slide 32
    Save the Date Investor & Analyst Meeting May 24, 2011 33
  33. 2011 Guidance Update Call – EP Energy Corp – slide 33
    INTERSTATE PIPELINES EXPLORATION & PRODUCTION El Paso Financial & Operational Outlook January 27, 2011
  34. 2011 Guidance Update Call – EP Energy Corp – slide 34
    Appendix
  35. 2011 Guidance Update Call – EP Energy Corp – slide 35
    New Segment Financial Measures 2010 Definitions 2011 Definitions EBIT: EBIT is defined as net income (loss) adjusted Segment EBIT: Segment EBIT is defined as net for (i) interest and debt expense; (ii) income taxes; income (loss)…
  36. 2011 Guidance Update Call – EP Energy Corp – slide 36
    2011 Segment EBIT & Segment EBITDA Reconciliation Twelve Months Ending ( Billions) December 31, 2011 Adjusted Segment EBITDA 1, 2 3.33.5 Less: DD&A 1.1 Adjusted Segment EBIT1 , 2 2.22.4 Less: Interest and debt expense 0.9 Less:…
  37. 2011 Guidance Update Call – EP Energy Corp – slide 37
    Adjusted EPS Reconciliation ( Billions, Except EPS) After-tax Diluted EPS Net income attributable to EPC common stockholders 0.40.5 0.540.69 Adjustments related to derivatives1 0.3 0.36 Adjusted net income attributable to EPC…
  38. 2011 Guidance Update Call – EP Energy Corp – slide 38
    Unproved Resources Unconventional: Unconventional resources primarily consist of the companys Haynesville, Eagle Ford, and Wolfcamp shale plays and coal bed methane operations in the Raton, Black Warrior and Arkoma Basins.…
  39. 2011 Guidance Update Call – EP Energy Corp – slide 39
    Production Related Derivative Schedule 2011 2012 Notional Notional Average Average Natural Gas Volume Hedge Price Volume Hedge Price (TBtu) (TBtu) Economic - EPEP Fixed Price - Legacy 4.6 3.86 2.3 3.93 Fixed Price 147.8 6.00…

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