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Q3 2009 Earnings Call – EP Energy Corp

EP Energy Corp · Nov 4, 2009 · 68 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. Q3 2009 Earnings Call – EP Energy Corp – slide 1
    Third Quarter 2009 Financial & Operational Update November 4, 2009 Interstate Pipelines Exploration & Production
  2. Q3 2009 Earnings Call – EP Energy Corp – slide 2
    Our Purpose El Paso Corporation provides natural gas and related energy products in a safe, efficient, and dependable manner 3
  3. Q3 2009 Earnings Call – EP Energy Corp – slide 3
    Our Vision & Values the place to work the neighbor to have the company to own 4
  4. Q3 2009 Earnings Call – EP Energy Corp – slide 4
    Revisiting Our 2009 Goals Pipelines Exploration & Production Construct backlog on-time/budget Create value; prioritize investments 1.2 billion incremental EBITDA* Preserve inventory of opportunities Be selective on new opportunities…
  5. Q3 2009 Earnings Call – EP Energy Corp – slide 5
    YTD 2009 ScorecardOverall Maintained very strong liquidity2.4 billion 1.3 billion financings 0.2 billion MLP drop-downs 0.3 billion asset sales Actions taken to improve long-term returns Hedges protect downside, maintain upside…
  6. Q3 2009 Earnings Call – EP Energy Corp – slide 6
    YTD 2009 ScorecardPipelines Execution story intact 4 projects YTDon time/on budget 3 projects in service now2010on time/on budget Balance of backlog in good shape Pipeline integrity program on-track 86% complete by year-end Ruby…
  7. Q3 2009 Earnings Call – EP Energy Corp – slide 7
    YTD 2009 ScorecardE&P Best operational year so far Domestic production ahead of plan Haynesville success Altamont increased activity Cost management Continuation of mix-shift Conventional-to-unconventional Offshore/traditional…
  8. Q3 2009 Earnings Call – EP Energy Corp – slide 8
    YTD 2009 ScorecardE&P Significant growth in inventory Haynesville Egypt Eagle Ford entry Camarupim finally on-stream E&Ps best year overall 9
  9. Q3 2009 Earnings Call – EP Energy Corp – slide 9
    Midstream Strategy Leverage existing footprint E&P Pipes Leverage existing skill sets Project execution Moving gas Understanding subsurface Managing surface issues Serving customers Supply chain economies Deep-keeled…
  10. Q3 2009 Earnings Call – EP Energy Corp – slide 10
    More Recent Actions 150 MM of cost reductions in 2010 300 MM500 MM asset sales in 2010 112 MM annual cash savings from dividend action Organizational realignment 11
  11. Q3 2009 Earnings Call – EP Energy Corp – slide 11
    Benefits of Recent Actions Increase returns Improve performance Build financial strength and protect credit profile Deliver on growth in all conditions 12
  12. Q3 2009 Earnings Call – EP Energy Corp – slide 12
    Interstate Pipelines Exploration & Production Financial Results
  13. Q3 2009 Earnings Call – EP Energy Corp – slide 13
    Financial Results: Quarters Ending September 30 Millions, Except EPS Adjusted Adjusted Year-to-Date Diluted EPS1 EBITDA2 Operating Cash Flow 0.35 2,051 969 1,781 782 0.23 2009 2008 2009 2008 2009 2008 Strong operating…
  14. Q3 2009 Earnings Call – EP Energy Corp – slide 14
    Items Impacting 3Q 2009 Results Diluted ( Millions, Except EPS) Pre-tax After-tax EPS Net income attributable to EPC common stockholders 58 0.08 Adjustments1 Ceiling test charges 5 5 0.01 Change in fair value of power contracts 6 4…
  15. Q3 2009 Earnings Call – EP Energy Corp – slide 15
    Business Unit Contribution Quarters Ended September 30, 2009 Adjusted ( Millions) EBIT DD&A EBITDA EBITDA Core Businesses Pipelines 326 104 430 473 E&P before ceiling test charges 93 93 186 326 Core business subtotal 419 197 616…
  16. Q3 2009 Earnings Call – EP Energy Corp – slide 16
    Marketing Financial Results Millions Quarters Ended Nine Months Ended September 30, September 30, EBIT 2009 2008 2009 2008 Strategic Change in fair value of production-related derivatives 14 (59) Other Change in fair value of…
  17. Q3 2009 Earnings Call – EP Energy Corp – slide 17
    Operating Cash Flow and Capital Investment Millions Nine Months Ended September 30, 2009 2008 Net income (loss) (775) 878 Non-cash adjustments 2,360 1,385 Subtotal 1,585 2,263 Working capital changes and other 196 (212) Cash…
  18. Q3 2009 Earnings Call – EP Energy Corp – slide 18
    Ruby Financing Update Ruby expected to be capitalized 50/50 debt/equity 1.4 billion debt financing expected to consist of: Traditional bank project financing Project finance bonds, private debt, other Positive interest from…
  19. Q3 2009 Earnings Call – EP Energy Corp – slide 19
    Significant Price Protection Through 2011 Natural Gas Oil /MMBtu /Bbl Collars Swaps 14.35 74.63 56.48 8.66 9.02 7.24 6.41 6.00 20091 2010 2011 2009 2010 70% 75% 60% 85% 60% Note: Percentage hedged based on 2009E…
  20. Q3 2009 Earnings Call – EP Energy Corp – slide 20
    Liquidity Remains Strong Billions 3.3 2.3 2.4 2.2 1.8 1.9 0.8 1.0 1.0 1.2 1.2 1.5 1.5 1.4 0.7 9/30/2008 12/31/2008 3/31/2009 6/30/2009 9/30/2009 Bank Lines Cash Expect 1.6B1.7B liquidity at year-end Note: Liquidity…
  21. Q3 2009 Earnings Call – EP Energy Corp – slide 21
    Interstate Pipelines Pipeline Group
  22. Q3 2009 Earnings Call – EP Energy Corp – slide 22
    3Q 2009 Highlights Strong financial results SNG rate case settlement Solid progress on existing growth projects Additional emerging opportunities 23
  23. Q3 2009 Earnings Call – EP Energy Corp – slide 23
    Pipeline Group Financial Results Millions Quarters Ended Nine Months Ended September 30, September 30, 2009 2008 2009 2008 EBIT before non-controlling interest 341 285 1,087 978 Less non-controlling interest (15) (7) (38) (24)…
  24. Q3 2009 Earnings Call – EP Energy Corp – slide 24
    Throughput by Region YTD % 2009 vs. 2008 Throughput Ups Downs TGP -5% Weather/Supply area SNG -2% Power Gen Industrial EPNG -9% Arizona and California CIG 6% Rockies supply, expansions 2% overall decrease reflects lower…
  25. Q3 2009 Earnings Call – EP Energy Corp – slide 25
    SNG Rate Case Settlement Uncontested agreement filed with FERC Contract extensions through August 2013 Rate certainty through September 2012 Expect FERC approval early 2010 Solid regulated returns continue 26
  26. Q3 2009 Earnings Call – EP Energy Corp – slide 26
    Committed Backlog Provides Visible Growth 41% increase in invested capital1 Solid regulated returns 90% subscribed 1030 year contracts TGP 300 Line Primarily investment-grade customers Project 0.6 Billion 2011 340 MMcf/d WIC…
  27. Q3 2009 Earnings Call – EP Energy Corp – slide 27
    Executing on the Pipeline Backlog Nine operated projects completed since Jan. 08 400 MM project capital (net to EP) Within 3% of budgeted levels 1.0 billion of projects in service by YE 2010 Elba Express Pipeline Elba III Phase A…
  28. Q3 2009 Earnings Call – EP Energy Corp – slide 28
    Progress on Major Projects Ruby: Received preliminary determination; expect final EIS in December 2009 Expect Ruby FERC certificate 1Q 2010 FGT Phase VIII: Final EIS issued SNG South System III / SESH Phase II: Received FERC…
  29. Q3 2009 Earnings Call – EP Energy Corp – slide 29
    New GrowthTGP Northeast TGP 300 Line Project NH VT 0.6 billion of capital FERC application filed in July 340 MMcf/d capacity MA Fully subscribed by EQT for NY 15 years CT RI PA NJ Marcellus Business 200 MMcf/d flowing OH 40…
  30. Q3 2009 Earnings Call – EP Energy Corp – slide 30
    Pipeline Summary Financial performance remains strong Executing well on backlogon-time/on-budget Premium franchise continues to attract new opportunities 31
  31. Q3 2009 Earnings Call – EP Energy Corp – slide 31
    Exploration & Production Exploration & Production
  32. Q3 2009 Earnings Call – EP Energy Corp – slide 32
    3Q 2009 Highlights Solid execution on drilling programs Capital and expense deflation being realized Domestic unit cash costs coming down Estimate 1 billion capital in 2009 On track for 745765 MMcfe/d production for 2009…
  33. Q3 2009 Earnings Call – EP Energy Corp – slide 33
    E&P Financial Results Quarters Ended Nine Months Ended September 30, September 30, ( Millions, except unit costs) 2009 2008 2009 2008 EBIT before ceiling test charges1 93 533 549 1,086 Ceiling test charges (5) (1) (2,085) (8) EBIT…
  34. Q3 2009 Earnings Call – EP Energy Corp – slide 34
    Production Shifting to Unconventional Resources 3Q 2009 Central & Western Divisions Production Update* Percent of Total Company Production* MMcfe/d MMcfe/d X% X% X% X% *Includes proportionate share of Four Star equity…
  35. Q3 2009 Earnings Call – EP Energy Corp – slide 35
    Total Per-Unit Cash Costs /Mcfe 1.88 1.97 2.00 0.29 1.68 1.78 0.31 0.44 0.24 0.06 0.23 0.05 0.04 0.04 0.05 0.64 0.59 0.76 0.73 0.79 1.57 0.02 0.01 1.54 Camarupim 1.71 1.45 0.19 1.53 start-up costs 0.86 0.89 0.89 0.61…
  36. Q3 2009 Earnings Call – EP Energy Corp – slide 36
    Recent Developments Egypt exploration success Now operating 89 rig program 5 Haynesville 2 Altamont 12 South Texas First Eagle Ford well successful; significantly expanded leasehold position 6 Haynesville wells completed since…
  37. Q3 2009 Earnings Call – EP Energy Corp – slide 37
    Haynesville Shale 30 Day IPs 11 wells with 30 days or more production 38
  38. Q3 2009 Earnings Call – EP Energy Corp – slide 38
    Haynesville Shale Production Growth Forecasted Gross Actual Volumes Gross Volumes Range 150 6 new wells on line by year end 125 100 MMcfe/d 75 50 25 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Rigs 1 1 2 2 2 3…
  39. Q3 2009 Earnings Call – EP Energy Corp – slide 39
    Improved Haynesville Cost Trends Haynesville Gross Cost Trends 14 13.1 Per Well D&C Cost 11.6 10.7 10.1 Cut drill and completion days by 12 10 half from the 1st well ( MM) 8 7.4 6 Eliminated the need for pilot holes 4…
  40. Q3 2009 Earnings Call – EP Energy Corp – slide 40
    Improved Haynesville Well Performance Haynesville Average IP Rates 25 Laterals now 4,000 feet Gross Production 20 21 20 18 (MMcfe/d) 15 Up to 14 frac stages 11 10 5 More fluid and proppant in 5 each stage 0 Pumped at…
  41. Q3 2009 Earnings Call – EP Energy Corp – slide 41
    Eagle FordEl Paso Focus Area Very successful first well Oil Window Gas-Condensate 7 MMcfe/d with 5,000 psi Window Still cleaning up with improving flow rate Dry-Gas Expanded lease position Window from 60,500 to 112,000 net…
  42. Q3 2009 Earnings Call – EP Energy Corp – slide 42
    Brazil Update Camarupim Development Potiguar (Espirito Santo) On production First well producing 90 MMcfe/d ( 20MMcfe/d net to EP) Camamu Pinauna Development (Camamu) Advancing regulatory approvals Rio de Janeiro Espirito…
  43. Q3 2009 Earnings Call – EP Energy Corp – slide 43
    Egypt Update Three wells drilled in South Alamein Acquired 2-D seismic in First well proved oil Tanta Block Second well tested 1,700 BOPD Third well unsuccessful El Paso Acreage Tanta South Mariut 818k gross acres RWE 60% WI (op.)…
  44. Q3 2009 Earnings Call – EP Energy Corp – slide 44
    E&P Summary Domestic drilling program delivering outstanding results Focusing capital on most economic programs Haynesville Altamont Eagle Ford Realizing capital and expense savings Growing inventory of projects for future…
  45. Q3 2009 Earnings Call – EP Energy Corp – slide 45
    Summary Pipelines continue to deliver E&P executing well Opportunities continue to grow Recent steps enhance: Performance Returns Future profits More to come on December 10 46
  46. Q3 2009 Earnings Call – EP Energy Corp – slide 46
    Third Quarter 2009 Financial & Operational Update November 4, 2009 Interstate Pipelines Exploration & Production
  47. Q3 2009 Earnings Call – EP Energy Corp – slide 47
    Interstate Pipelines Exploration & Production Appendix
  48. Q3 2009 Earnings Call – EP Energy Corp – slide 48
    Disclosure of Non-GAAP Financial Measures The SECs Regulation G applies to any public disclosure or release of material information that includes a non-GAAP financial measure. In the event of such a disclosure or release, Regulation G…
  49. Q3 2009 Earnings Call – EP Energy Corp – slide 49
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  50. Q3 2009 Earnings Call – EP Energy Corp – slide 50
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  51. Q3 2009 Earnings Call – EP Energy Corp – slide 51
    2009 Analysis of Working Capital and Other Changes Millions Nine Months Ended September 30, 2009 Changes in price risk management activities (586) Net cash receipts from derivative instruments 557 Net changes in trade…
  52. Q3 2009 Earnings Call – EP Energy Corp – slide 52
    Items Impacting YTD 2009 Results Diluted ( Millions, Except EPS) Pre-tax After-tax EPS Net income (loss) attributable to EPC common stockholders (841) (1.21) Adjustments1 Ceiling test charges 2,085 1,349 1.94 Change in fair value…
  53. Q3 2009 Earnings Call – EP Energy Corp – slide 53
    Items Impacting 3Q 2008 Results Diluted ( Millions, Except EPS) Pre-tax After-tax EPS Net income attributable to EPC common stockholders 436 0.58 Adjustments1 Change in fair value of power contracts (63) (40) (0.05) Change in fair…
  54. Q3 2009 Earnings Call – EP Energy Corp – slide 54
    Items Impacting YTD 2008 Results Diluted ( Millions, Except EPS) Pre-tax After-tax EPS Net income attributable to EPC common stockholders 827 1.12 Adjustments1 Change in fair value of power contracts 83 53 0.07 Change in fair…
  55. Q3 2009 Earnings Call – EP Energy Corp – slide 55
    Reconciliation of EBIT/EBITDA Quarters Ended Nine Months Ended September 30, September 30, ( Millions) 2009 2008 2009 2008 EBITDA 558 1,173 179 2,883 Less: DD&A 200 292 653 903 EBIT 358 881 (474) 1,980 Interest and debt expense (256)…
  56. Q3 2009 Earnings Call – EP Energy Corp – slide 56
    Business Unit Contribution Nine Months Ended September 30, 2009 Adjusted ( Millions) EBIT DD&A EBITDA EBITDA Core Businesses Pipelines 1,049 310 1,359 1,473 E&P before ceiling test charges 549 334 883 1,261 Core businesses…
  57. Q3 2009 Earnings Call – EP Energy Corp – slide 57
    Business Unit Contribution Quarter Ended September 30, 2008 Adjusted ( Millions) EBIT DD&A EBITDA EBITDA Core Businesses Pipelines 278 97 375 410 E&P before ceiling test charges 533 191 724 549 Core businesses subtotal 811 288…
  58. Q3 2009 Earnings Call – EP Energy Corp – slide 58
    Business Unit Contribution Nine Months Ended September 30, 2008 Adjusted ( Millions) EBIT DD&A EBITDA EBITDA Core Businesses Pipelines 954 295 1,249 1,348 E&P before ceiling test charges 1,086 600 1,686 1,669 Core businesses…
  59. Q3 2009 Earnings Call – EP Energy Corp – slide 59
    Reconciliation of Adjusted Pipeline EBITDA Quarters Ended Nine Months Ended September 30, September 30, ( Millions) 2009 2008 2009 2008 Citrus equity earnings 20 20 54 52 50% Citrus DD&A 14 13 41 40 50% Citrus interest 16 10 42 28…
  60. Q3 2009 Earnings Call – EP Energy Corp – slide 60
    Reconciliation of Adjusted E&P EBITDA Quarters Ended Nine Months Ended September 30, September 30, ( Millions) 2009 2008 2009 2008 Four Star equity earnings (loss) (7) 10 (29) 36 Proportionate share of Four Star DD&A 7 6 22 17…
  61. Q3 2009 Earnings Call – EP Energy Corp – slide 61
    Reconciliation of Adjusted Other Businesses EBITDA Quarters Ended Nine Months Ended September 30, September 30, ( Millions) 2009 2008 2009 2008 Marketing EBITDA (28) 82 34 (131) Adjustments Change in fair value of power contracts 6…
  62. Q3 2009 Earnings Call – EP Energy Corp – slide 62
    PJM Basis MTM Impact & Cash Settlements 75 50 25 0 (25) (50) MTM impact (75) Cash settlements (100) (125) (150) Q305 Q405 Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309 63
  63. Q3 2009 Earnings Call – EP Energy Corp – slide 63
    Excellent 2009 Hedge Positions Positions as of November 4, 2009 (Contract Months Oct Forward) 32.0 TBtu Ceiling Average cap 14.35/MMBtu 38.2 TBtu 29.9 TBtu 2.1 TBtu 2009 Gas 9.11 14.83 ceiling 7.37 floor fixed price Floor…
  64. Q3 2009 Earnings Call – EP Energy Corp – slide 64
    2010 Gas Hedge Positions Positions as of November 4, 2009 112.5 TBtu Ceiling Average cap 7.24/MMBtu 122.9 TBtu 60.4 TBtu 52.1 TBtu Balance at 6.50 8.14 6.19 Market Price floor ceiling fixed price Floor 175.0 TBtu Average floor…
  65. Q3 2009 Earnings Call – EP Energy Corp – slide 65
    2011 Gas Hedge Positions Positions as of November 4, 2009 136.1 Btu Ceiling Average cap 8.66/MMBtu 120.5 TBtu 120.5 TBtu 15.6 TBtu Balance at 6.00 9.00 5.99 Market Price floor ceiling fixed price Floor 136.1 TBtu Average…
  66. Q3 2009 Earnings Call – EP Energy Corp – slide 66
    Production-Related Derivative Schedule 2009 2010 2011 2012 Notional Avg. Hedge Notional Avg. Hedge Notional Avg. Hedge Notional Avg. Hedge Volume Price Volume Price Volume Price Volume Price Natural Gas (TBtu) (/MMBtu) (TBtu)…
  67. Q3 2009 Earnings Call – EP Energy Corp – slide 67
    E&P Cash Costs FY 2007 FY 2008 1Q 2009 2Q 2009 3Q 2009 Total Per Unit Total Per Unit Total Per Unit Total Per Unit Total Per Unit ( MM) (/Mcfe) ( MM) (/Mcfe) ( MM) (/Mcfe) ( MM) (/Mcfe) ( MM) (/Mcfe) Total operating expenses 1,414…
  68. Q3 2009 Earnings Call – EP Energy Corp – slide 68
    Production Volumes Equivalents, MMcfe/d 3Q 2008 4Q 2008 1Q 2009 2Q 2009 3Q 2009 Central 236 236 245 252 259 Western 156 157 164 162 147 Gulf Coast 315 277 313 280 246 International 11 9 9 9 9 Total consolidated 718 679 731 703 661…

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