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Q2 2008 INVESTOR UPDATE – Altagas Limited

Altagas Limited · Aug 12, 2008 · 62 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. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 1
    whats NEXT. Investor Update August 12, 2008
  2. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 2
    Forward-looking information Certain information presented today may constitute forward-looking statements with respect to AltaGas Income Trust (the Trust). Such statements reflect the Trusts current expectations, estimates,…
  3. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 3
    Agenda Our History Leadership Team Strategy Our Busines Gas Power Financial Position Whats Next 3
  4. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 4
    Our History 1994 1996 2002 2007 FUTURE Gas Gas Power Gas Gas Power Power Gas AltaGas formed 2.9 million 61 million 126.6 million Balanced portfolio April 1, 1994 operating income operating operating income of natural gas…
  5. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 5
    AltaGas Today 2.2 billion diversified energy infrastructure trust: Units (TSX) ALA.UN Market Value 1.7 billion Enterprise Value 2.2 billion Distributions 0.18 per unit per month Target Payout Ratio 65 75% of funds from operations Yield…
  6. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 6
    Six Months 2008 Record Results millions, except per unit amounts Six months ended June 30 2008 2007 Net income 70.5 45.6 per unit 1.06 0.80 Funds from operations 117.3 92.7 per unit 1.62 1.36 Distributions Declared 70.3…
  7. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 7
    Leadership Executive Committee AltaGas leadership team brings over 300 years of combined experience to lead the company. David Cornhill, B.Sc., MBA +25 Years Chairman, President and CEO Richard Alexander, BBM, CFA, CMA +30 Years…
  8. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 8
    Leadership Operating Committee Greg Aarssen, B.Sc., MBA, LLB +22 Years Vice President Corporate Affairs Richard Alexander +30 Years President and Chief Operating Officer Nancy Anderson, MBA, B.Sc., P.Eng. +20 Years Vice President…
  9. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 9
    Leadership Operating Committee Jeff Perry, B.Sc., P.Eng. 30 Years Divisional Vice President Gathering and Processing Debbie Stein, BA, CA, CPA +25 Years Vice President Finance and Chief Financial Officer Kent Stout, B.Comm, CHRC +20…
  10. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 10
    AltaGas geographic footprint 10
  11. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 11
    Solid Asset Base Gas Interests in 6 ethane and NGL extraction plants 1.6 Bcf/d inlet and 86,000 Bbls/d NGL production capacity Five natural gas and three NGL transmission systems 554 Mmcf/d gas and 151,600 Bbls/d NGL capacity 77…
  12. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 12
    Business Overview and Growth Strategy
  13. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 13
    Our gas and power business - Making connections along the energy value chain Integrated energy infrastructure and services organization Creates value by strategically linking asset and service components of the energy value chain…
  14. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 14
    A large and diversified business 2007 EBITDA Q2-08 EBITDA 24% Extraction & Transmission Field Gathering & Processing 37% Energy Services 44% 51% Power Generation 22% 3% 1% 18% 173.7 Million 69.5 Million (Q1-07: 41.2…
  15. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 15
    A growing base business Percentage of Q2-08 net revenue 13% 36% Fixed return and op cost flowthrough 16% Fixed margin/hedged Fixed fee Unhedged commodity 35% 15
  16. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 16
    A low-risk business model Not driven by commodity price cycles Diversification of businesses Offsetting commodity prices NGL, natural gas and power Large fee-for-service component Downside protection in extraction, with…
  17. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 17
    The most diversified energy infrastructure trust today Enbridge EPCOR Fort Inter AltaGas Income Keyera Pembina Power Chicago Pipeline Fund Field Gathering 9 9 and Processing Extraction 9 9 9 9 9 Transmission 9 9 9 9 9 9…
  18. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 18
    Strategy execution - Gas The Taylor acquisition 9 Long-life, low-risk assets 9 Complementary assets/businesses 9 Better balanced AltaGas business 40% E&T, 10% FG&P, 50% Power 9 Asset optimization potential 9 Harmattan, RET,…
  19. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 19
    Strategy execution - Power The NovaGreen acquisition 9 195 MW Forrest Kerr project in NW BC; 9 One of North Americas largest single location run-of-river projects; 9 Three other development projects with potential run-of-river…
  20. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 20
    Gas Business
  21. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 21
    NEXT for gas Building on existing assets and executing on new initiatives Integrate businesses Diversify businesses New opportunities Focus areas 21
  22. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 22
    Gas business strategy Deliver strong sustainable earnings and cash flow from diversified infrastructure assets and services along the energy value chain Manage risks to enhance stable revenue streams Maintain operational excellence…
  23. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 23
    Our gas business infrastructure Diversified, balanced and integrated energy infrastructure touching more than 2 Bcf/d of natural gas Interests in 6 NGL extraction facilities with 1.6 Bcf/d of inlet capacity and 81,000 Bbls/d of NGL…
  24. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 24
    Development Opportunities - Gas Sarnia gas storage 50% ownership Additional gas storage assets in Eastern Canada Sarnia Burlington 5 Bcf of working capacity storage Storage Deliverability of 52 Mmcf/d 3 new wells, compressor…
  25. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 25
    Focus on unconventional gas sources Shale Mannville Horseshoe CBM Canyon Potential CBM Potential 25
  26. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 26
    Focus on active gas production areas Montney Play Pouce Coupe facility 26
  27. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 27
    Pouce Coupe sour gas plant expansion 25 million, 20 Mmcf/d planned expansion to existing sweet processing site 27
  28. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 28
    Power Business
  29. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 29
    NEXT for power Integration, development and renewables Successful risk mitigation strategy Strong outlook for Alberta power market Increase balance and diversification of power portfolio Integrate and grow with gas business…
  30. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 30
    Power business strategy Deliver strong, sustainable earnings and cash flow through effective hedging strategy and continued growth of power generation portfolio Drive stable, predictable cash flow from long-term power sales…
  31. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 31
    Our power business infrastructure Supplies 5% of Albertas electricity demand Rights to 353 MW of coal-fired generation until 2020 39.4 MW of gas-fired peaking capacity 195 MW Forrest Kerr run-of-river Project plus potential…
  32. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 32
    Development opportunities Diversification of power portfolio by 2010 By geographic location (Alberta 85%, B.C. 15%) By fuel type (coal 77%, gas 8.5%, wind 10%, hydro 4.5%) Pursuing renewable, gas and coal generation 100 MW Bear…
  33. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 33
    Alberta gas-fired peakers Integration and diversification of AltaGas businesses Aerial photograph of AltaGas Bantry gas processing plant east of Calgary Peaking plant location 33
  34. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 34
    Gas-fired peaking plants Bantry 34
  35. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 35
    39 MW of gas peaking capacity 35
  36. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 36
    Wind Power Operations Opportunity to invest in approximately 1,440 MW of wind power over the next five years Growing demand for renewable generation Long-life assets Long-term contracts with creditworthy counterparties Provides…
  37. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 37
    Bear Mountain Wind Park Enercon E-82 turbines in Germany 37
  38. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 38
    Bear Mountain Foundation Construction First Pour July 23, 2008 First Wind Power Turbine in British Columbia; Project includes 34 sites in total; Foundation for Site 33; Expected completion October 2008 38
  39. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 39
    Bear Mountain under construction Site preparation and road construction Site for turbine 34 (furthest south) and south access road 39
  40. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 40
    Run-of-river projects Hydro generation Hydro generation under development Source: Google maps 40
  41. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 41
    Acquisition Strategy Criteria in evaluating opportunities includes: Long-life, low-risk assets Complementary and integrated assets/businesses Potential to further optimize value/asset Accretive to earnings and cash flow…
  42. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 42
    Growth in Net Revenue through Acquisitions NovaGreen & millions 160 GreenWing Taylor NGL Jul / Aug 08 CAGR 10.3% Nov. 07 140 Sarnia (2002 2007) 14.4 MW Apr 07 Storage 120 Sept 07 Corbett Cr. 100 Early 07 Clear Hills Premstar…
  43. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 43
    Financial Position
  44. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 44
    Our Financial Strategy Maintain investment grade ratings Maintain distribution levels to support market valuations and growth Disciplined project evaluation and hurdle rates Access multiple sources and markets for capital Minimize…
  45. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 45
    Financial strategy Target Target Rationale Description Efficient access to capital markets and credit Credit Rating BBB- to BBB+ support to Energy Services and Power Generation Distribution 65-75% of funds from Underpin AltaGas…
  46. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 46
    Annual Distribution Growth 2.50 Compound Annual Growth Rate 2.12 2.07 CAGR 42% 2.00 2.00 1.85 (2001 2008) 1.50 /Unit/Year 1.31 1.00 0.50 0.38 0.28 0.18 0.00 2001 2002 2003 2004 2005 2006 2007 2008* * * 2008…
  47. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 47
    Annual EBITDA per Unit /Unit/Year 3.50 Compound Annual Growth Rate 3.12 3.03 2.88 3.00 CAGR 9.7% 2.68 2.70 (1998 - 2007) 2.50 2.24 1.83 2.00 1.62 1.50 1.77 1.31 1.50 1.00 0.50 0.00 1998 1999 2000 2001 2002 2003 2004 2005 2006…
  48. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 48
    Annual Earnings per Unit /Unit/Year 2.50 Compound Annual Growth Rate 2.00 CAGR 18% 2.06 (1998 - 2007) 1.99 1.50 1.67 1.33 1.00 1.06 0.84 0.70 0.50 0.46 0.50 0.39 0.43 0.00 1998 1999 2000 2001 2002 2003 2004 2005 2006 *…
  49. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 49
    Consistent Earnings Growth millions Net Income 140 120 114.5 108.8 100 90.3 80 70.5 65.8 60 38.3 40 20 0 2003 2004 2005 2006 2007 2008 Q1 Q2 Q3 Q4 49
  50. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 50
    Growth in Funds from Operations Funds from Operations millions 200 36% CAGR 175 161.7 162.9 (2003 2007) 150 Q4 129.0 125 108.6 Q3 106.9 100 90.2 Q2 75 Q1 50 25 0 2003 2004 2005 2006 2007 1H 08 50
  51. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 51
    A stable and growing gas and power business millions Operating Income by Segment 100.0 94.6 90.9 90.0 80.0 70.0 63.4 60.0 59.3 60.0 55.3 52.6 47.8 48.7 50.0 40.0 35.8 30.0 20.0 10.0 0.0 2004 2005 2006 2007 1H 08 Gas…
  52. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 52
    Disciplined risk mitigation strategies with upside Frac hedges for 60% of exposed volumes in place at 23/Bbl for remainder of 2008 and 27/Bbl for 2009 45 Forward Market Frac Spread (/Bbl) 40 35 30 25 20 15 10 5 0…
  53. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 53
    Disciplined risk mitigation strategies with upside Approximately two-thirds of 2008 PPA volumes hedged at 76/MWh, up from 66/MWh in 2007 Power price AECO price 90 10 80 9 AECO Gas Price (/GJ) 8 Power Price (/MWh) 70…
  54. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 54
    Planned capital expenditures 225 million in 2008 and 250 million in 2009 On August 6, AltaGas announced an increase to 2008 Capex from 150 million to 225 million. 2009 Capex guidance remains at 250 million. POWER PROJECTS Target…
  55. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 55
    Planned Capital Expenditures GAS PROJECTS Target In- Total Estimated 2008 2009 Projects Service Date Project Cost 25 M for our Sarnia Airport Gas Storage Mid-2009 50% interest Harmattan co-streaming Mid-2010 70 - 90 M 124.0…
  56. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 56
    Financial structure Committed to investment grade rating Debt as a percentage of total capital* Trust stability rating 60% 52.2% S&P: SR-3 50% 42.6% DBRS: STA-3 (middle) 40% 36.0% 36.4% Rating on medium-term notes 33.4%…
  57. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 57
    Strong results expected in 2008 and 2009 Earnings per unit growth in mid-to-high single digits for 2008 Strong performance from base business Significant power and NGL production hedged at high prices Strong forward power prices and…
  58. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 58
    Post-2010 transition Characteristics of a leading corporation Strong earnings growth Low payout ratio Low effective tax rate Growth in capital spending Investment-grade credit ratings 58
  59. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 59
    Well-positioned for 2011: As a trust or a corporation Focus on traditional metrics Earnings per unit ROE Strong financial position Strong balance sheet Approximately 750 million in tax pools Conservative tax planning Conservative…
  60. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 60
    Prepared and positioned for 2011 Currently assessing the proposed conversion legislation and believe we are well positioned to convert to a corporation based upon: 9 Earnings focused and strong track record of growing earnings 9…
  61. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 61
    Positioned for Future Performance Balanced asset base Excellent business outlook for gas and power Capable and experienced management team Excellent portfolio of high-quality growth opportunities Financially disciplined…
  62. Q2 2008 INVESTOR UPDATE – Altagas Limited – slide 62
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