AltaGas Ltd. Delivering superior returns Investor Day 2012 September 17, 2012
Agenda 1:45 - 1:50 p.m. Welcome Shaun Toivanen, Treasurer 1:50 - 2:05 p.m. Strategic overview David Cornhill, Chairman & Chief Executive Officer 2:05 - 2:50 p.m. Gas Randy Toone, President Gas 2:50 - 3:05 p.m. Break 3:05 - 3:45 p.m.…
Strategic Overview David Cornhill Chairman and Chief Executive Officer
AltaGas vision To be a leading North American energy infrastructure company with a focus in Canada and the northern and western United States See Forward-Looking Statements & Information 1
Our business strategy Deliver sustainable returns for investors over the long term balancing income and growth Optimize existing businesses Invest and grow energy infrastructure Invest in infrastructure with long economic life and…
Strategic business focus Gas Natural Gas Distribution Extraction Expand and diversify our Utilities Grow volumes Power FG&P Increase facility size and Expand and grow power op cost flow through capacity Energy Services Reduce…
Were a leading energy infrastructure company 4
Weve far exceeded our 2B growth target Today over 4.5 billion in growth from 2009 including acquisitions See Forward-Looking Statements & Information 5
Adding over 200 million EBITDA in 2012 Closed SEMCO acquisition Harmattan Costream in August 30 service third quarter Addition of stable, long-life asset Utilities in Alaska and Michigan 20-year cost-of-service agreement 10 percent…
Increasing earnings and cash flow Expect EBITDA to double by 2014 from 2011 Double digit compounded annual growth in earnings and cash flow to 2016 See Forward-Looking Statements & Information 7
We know where we are growing SEMCO increases Utility EBITDA Equally balanced portfolio with NW projects on stream 2015 Pie charts represent total business EBITDA See Forward-Looking Statements & Information 8
Increasing our geographic diversification Growing AltaGas U.S. EBITDA Pie charts represent business EBITDA See Forward-Looking Statements & Information 9
Stable earnings and cash flow Over 80% from stable earnings Less than 10% of 2013 EBITDA generated by commodity sales See Forward-Looking Statements & Information *Excludes Corporate G&A 10
WCSB natural gas supply Flat to growing natural gas production in the WCSB Increasing natural gas supply Proven geology Technological advances High oil prices Declining dry natural gas supply 11
Growing natural gas demand Natural gas prices flat through 2012 with recovery potential Natural gas demand drivers Oilsands Power generation Industrial CNG/LNG LNG export to markets in Asia Transportation Residential 12
Strong power generation growth North American electricity generation Natural gas and renewable power forecast to increase substantially over generation capacity forecast to the next 20 years increase substantially over the next 20…
Reducing our carbon footprint Growing power generation while lowering emissions See Forward-Looking Statements & Information 14
Stable long life assets Natural gas distribution utilities in US and Canada 1.2 billion rate base More than 540,000 customers Strong rate base growth Enhances stable cash flow See Forward-Looking Statements & Information 15
2012 milestones Growth projects Area Accomplishments for 2012 Status Power tunnel excavation 85 percent complete On track Forrest Kerr Power Headwork / intake construction 75 percent complete On track Complete powerhouse excavation Q2…
Track record of strong shareholder return Total shareholder return of over 60 percent since beginning of 2011 17
A leading energy infrastructure company 2012 to 2014 2014 2014 Post 2014 Significant potential opportunities present post 2014 18
Over 1.5 billion in projects under review today Attractive opportunity set already identified for future growth LNG related expansions Gas processing infrastructure Power generation infrastructure CNG opportunities See…
Opportunities across businesses and geographies 20
Delivering strong earnings and cash flow growth Strong, diversified base of gas, power and utility assets Attractive portfolio of energy Capital growth focused on stable, long-term contracted infrastructure assets projects and regulated…
Randy Toone President, Gas
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One of Canadas largest natural gas processors Process 2.0 Bcf/d Produce 50,000 Bbls/d of C2+ Over 150,000 Bbls/d of NGL pipeline capacity Transport 0.4 Bcf/d of natural gas Two-thirds of processing capacity serving liquid rich…
Growing the Gas business in 2012 75 million annualized EBITDA Throughput growth of 0.5 Bcf/d Long-term contracts with strong counterparties Serving customers in the WCSB 4
Growing Canadian resource picture Existing Conventional Tight Gas Shale Gas Northern Coalbed Methane Offshore Produced 390 TCF 700 - 1300 TCF 70 years of supply 100+ years of supply Source: Canadian Society for…
Canadian natural gas supply Price Recovery Case Prices recover to at least a level of 5.50/GJ Eastern Canada Alberta Shale Bcf/d Horn & Cordova Montney CBM Conventional Continued Low Prices Case Prices do not exceed…
Growing demand for natural gas Medium to long-term developments Growing demand from oil sands Fuel switching in manufacturing Growing gas-fired power generation CNG, LNG, and gas-to-liquids opportunities Natural gas prices will…
Gas strategy Long-life assets Strong contractual underpinning Integrated assets and services along the natural gas value chain Increase value through deep-cut processing Growing processing volumes Growing earnings and cash flow…
Meeting producers needs in the WCSB Focus on liquid rich plays Well understood geology Technological advances Access to processing capacity and markets Strong demand for liquids See Forward-Looking Statements & Information 9
Strategically located in key liquid rich gas plays Canadian natural gas plays gas equivalent pricing C/Mcf Liquids Value Gas Value Source: Peters & Co. Limited estimates. FY 2012 prices based on YTD AECO-C and Edmonton PAR…
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Expanding Blair Creek to serve liquid rich area 50 Mmcf/d completed and commissioned in August 2012 Represents 5% increase in total gas processed and adds 8-10 million in annualized EBITDA Long term committed contracts with three…
Growing deep-cut processing capacity Gordondale In service: late 2012 Adding 30-35 million annualized EBITDA 120 Mmcf/d deep cut capacity 94 percent of capital costs committed* Long term committed contract with Encana Successful…
Gordondales deep cut advantage 20% increase in price at wellhead Recovery Rate 30 90 (Bbl/Mmcf) 14
Gordondale video 15
Growing throughput at Harmattan in 2012 In service: Q3 2012 Adding approximately 30 million annualized EBITDA 250 Mmcf/d, 100 km pipeline increases throughput to near full capacity of 490 Mmcf/d 20-year cost-of-service agreement…
Future growth at Harmattan Positioned to grow Opportunities Licensed capacity Evaluating of 490 Mmcf/d opportunities to Currently connect additional processing 150 supplies of rich gas Mmcf/d of raw gas Compressor Deep-cut…
Growing throughput at JEEP Acquired interest in Gilby Plant Processing Duvernay and Glauconitic gas Connect Gilby and Sylvan Lake to JEEP with 70km pipeline Long-term contract, dedicated for life-of- reserves Fully utilize…
Higher and more stable EBITDA Growing earnings Adding highly contracted, long-life infrastructure Enhancing earnings stability See Forward-Looking Statements & Information 19
2012 Gas milestones Planned Growth Project Description Status accomplishments Blair Creek 50 Mmcf/d facility expansion In service Q2 2012 Q3 Harmattan Tie-in 250 Mmcf/d of TCPL gas In service Q2 2012 Q3 Co-stream to Harmattan…
35 B in infrastructure investment required Source: Ziff Energy 21
AltaGas strategically located assets 22
Whats next Increase natural gas netbacks to our customers Acquire and develop new natural gas infrastructure assets to meet customers needs Well positioned to provide processing infrastructure to meet demand See…
Delivering superior returns Focus on earnings and cash Strategically located flow stability long life assets Long-term contracts Disciplined hedging Optimize plant performance and operating efficiencies Capture opportunities…
Presentations will resume after a short break
John Lowe President, Utilities
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Well diversified Utility business 2
Diversity and scale in our Utility business Over 1.2 billion in rate base Over half a million customers 3
Strong cash flow from utilities in 2013 Canada US Total of customers 120K 420K 540K Miles of pipeline 15,370 9,290 24,660 2013 rate base C0.6 B US0.7 B C1.2 B* Regulated ROE ** 10% 11.3% - Approved debt ** 6.25% 5.70% - 2013 EBITDA…
Clear strategy Stable, long-life assets Regulated returns Experienced teams Economies of scope and scale Grow rate base Organic growth opportunities Major project opportunities Grow earnings and cash flow 5
1.4 billion in Utility growth in last nine months SEMCO acquisition US1.135 billion in August 2012 PNG acquisition 230 million in December 2011 Approximately 300 percent increase in rate base to 1.2 billion Over half a million…
Service territories in the U.S. 7
Our US utilities SEMCO ENSTAR Cook Inlet Natural Gas (Michigan) (Alaska) Storage (CINGSA) Michigans third Alaskas largest Natural gas largest natural natural gas utility storage facility gas utility serving Cook Inlet Headquarters in…
Growing our U.S. utilities Future rate base U.S. rate base growth 900 growth Millions System betterment Greenfield 800 expansion Economic growth 700 Fuel switching CNG/LNG 600 2012 2013 2014 2015 2016 2017 See…
Service territories in Canada 10
Our Canadian utilities Pacific Northern Heritage Gas Alberta Utilities Gas (PNG) Limited (HGL) Inc. (AUI) Only pipeline in Nova Scotias only Albertas second LNG corridor natural gas utility largest natural gas Serves multiple utility…
Growing our Canadian utilities Future rate Canadian rate base growth 800 base growth Millions System betterment 700 Greenfield expansion Economic growth 600 Fuel switching CNG/LNG 500 2012 2013 2014 2015 2016 2017…
Our opportunities Growth opportunities in Alaska Organic rate base growth Rate base expansion opportunities Future infrastructure opportunities 13
Alaska: Organic rate base growth Customer growth Rate base growth 2.5% compounded annual growth in customers 14
Alaska: Rate base expansion opportunities Supporting gas supply growth CINGSA gas storage expansion Continued service area expansion Extension of gas service to the City of Homer Opportunity to add approximately 2,900 customers (0.6…
Alaska: Future infrastructure opportunities North Slope pipeline Gas from North Slope could potentially tie into south-central Alaska Abundant natural gas reserves in Prudhoe Bay 2009 Department of Energy report estimates 31.8 Tcf…
Our opportunities Compressed Natural Gas (CNG) A pipeline on wheels In-service in 2013 17
CNG: A pipeline on wheels The opportunity Delivering compressed natural gas (CNG) by truck to consumers who do not have access to natural gas by pipeline Attractive cost savings for customers Price gap between the low cost of CNG…
CNG: In-service in 2013 HGL Signed Memorandum of Agreements with two major customers Expect to begin service to customers in 2013 Benefits to utility business New customers Continued credibility with regulators and the public…
CNG distribution system 20
Our opportunities LNG Related Infrastructure 35B infrastructure investment required AltaGas has strategically located assets Significant LNG activity drives rate base growth 21
LNG: 35B in infrastructure investment required Source: Ziff Energy 22
LNG: Northern Pacific advantage LNG export opportunities 35 Tcf reserves in North Slope 150 Tcf reserves in the Montney* *June 2012 Conservative Resource Estimate. Source: GeoScout, CIBC World Markets. 23
LNG: AltaGas strategically located assets 24
LNG: Significant rate base growth potential Utilizing existing capacity Feasibility study to expand on PNG Western System PNG Western System 30-year transportation LNG Partners has LNG arrangement with LNG export licence for 250…
2012 Utilities Milestones Growth Description Planned accomplishments Status SEMCO 1.135 billion utility in U.S. Close transaction Q3 2012 Expand PNG western LNG development pipeline system Commence feasibility study Organic…
Higher and diversified EBITDA Increasing earnings and cash flow Adding strong utilities Enhancing earnings stability and diversity 5% 34% See Forward-Looking Statements & Information 27
Delivering superior returns Focus on earnings and cash Stable and regulated flow stability cash flow Focused regulatory strategy Strong regulatory expertise Optimize customer rates and Capture opportunities operating efficiencies…
David Harris President, Power
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Our diversified power generation portfolio Over 550 MW power generating capacity: Alberta 353 MW coal 72 MW gas British Columbia 114 MW renewable United States approximately 50 MW renewable TTM EBITDA 95 million 3
Growing the Power business in 2012 Growing U.S. Power Assets Adding 10 million with long-term PPAs EBITDA in 2012 Biomass Harmattan Cogeneration II Approximately 35 MW of biomass power generation 15 MW gas-fired assets at Craven…
We deliver clean power to the BC grid Bear Mountain Wind Farm 34 turbines, gross capacity 102 MW British Columbias first wind farm 25-year indexed EPA with BC Hydro Renewable energy credits owned by AltaGas Built on-time and…
Biomass facilities 30 percent working interest in the 37 MW Grayling Generating Station in Michigan 50 percent working interest in the 48 MW Craven County Station in North Carolina Fuel supply for the biomass facilities include…
Alberta power market Forecast average load growth of 3.2% for next 20 years 275 MW per year new generation required just to keep pace with projected load growth 6,000 MW of new generation capacity needed in next 10 years to offset…
Alberta growth with gas fired generation Alberta 2012 gas fired Gas fired Generation generation generation Fleet: growth growth potential 353 MW coal Gordondale Peaker Peakers: 3.4 MW enhancement 72 MW gas fired program: 8-15 MW…
Alberta reserve margins Minimal impact to reserve margin from return of Sundance A 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2010 2011 2012E 2013E 2014E 2015E Average demand Peak demand Installed…
Hydro impact to Alberta power market 10
Building a diversified power business Approximate generating capacity: Approximate generating capacity: 600 MW 870 MW See Forward-Looking Statements & Information 11
Reducing our carbon footprint Growing power generation while lowering emissions See Forward-Looking Statements & Information 12
Annual emissions in tonnes 2012 comparative CO2e emissions per 30 annum from power generation 25 CO2 e tonnes (millions) 20 15 10 5 0 Company A AltaGas Ltd. Company B Company C Company D Company E 13
Growing the Power business 130 million annualized EBITDA 1.0 billion in service 2014/2015 Constructing 261 MW run-of-river projects 16 MW run-of- river project in advanced development 60-yr fully CPI indexed contracts with…
Run-of-river projects Forrest Kerr 195 MW capacity Under construction In-service: mid-2014 McLymont and Volcano Creek Approximately 82 MW capacity Volcano Creek: under development McLymont: under construction In-service: late…
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Forrest Kerr In-service: mid-2014 287 kV, 37 km long Approximately 100 million transmission line, which annualized EBITDA interconnects with the Northwest Transmission Line 195 MW capacity enough at Bob Quinn substation. to power…
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