Agenda I. Introduction of Management Michael Campbell SVP and CFO II. Strategic Overview John Sherman Chairman and CEO III. Corporate Development Overview Brooks Sherman President, Inergy Will Moore VP, Corporate Development IV.…
Strategic Overview John Sherman Chairman and Chief Executive Officer 4
Investment Highlights Core energy infrastructure across the hydrocarbon chain in prolific Strategically shale production areas and near large demand markets Located Assets Assets positioned to link fundamental energy supply with…
Infrastructure Investment Opportunity Estimated 250 billion midstream infrastructure investment by 2035(a) High quality resource plays will continue to attract capital Focus on connecting production to end use demand markets…
Significant Transformation At the initial public offering of NRGM, management laid out several objectives to reposition the partnership for long-term value. August 9, 2011 Press Release Objective Status Inergy's objectives from…
Significant Transformation (cont.) Today Inergy, L.P. (NYSE: NRGY) General partner of NRGM with incentive Retail Propane distribution rights and NRGM IPO Divestiture significant LP As of September 2011 ownership Inergy, L.P.…
Significant Transformation (cont.) As a result of executing the previously mentioned transformational events, Inergy was able to achieve several objectives that were expected to take multiple years in a period of approximately a year.…
What We Do Natural Gas NGLs Crude Oil Expertise Supply Inergy Midstream Demand Prolific and emerging Solutions Refineries shale plays Pet-chems Marcellus Industrial Eagle Ford Bakken Power Utica generation Monterey…
Strategically Located Assets An integrated asset and services portfolio positioned to link fundamental energy supply with fundamental energy demand across geography and time Core natural gas infrastructure in Northeast US in the…
Stable, Fee-Based Cash Flows Diversity and stability of revenue streams result in consistent cash flow performance across various operating environments Natural gas storage and transportation assets predominately contracted with firm…
Visible Growth Disciplined capital investment strategy continues to create cash flow diversity and significant value for investors Top priority is ensuring stability and improving cash flow from current asset base High-return…
Strong Financial Profile Inergy and Inergy Midstream are diverse midstream energy companies with a combined enterprise value of 3.7 billion(a) Goal of maintaining financial flexibility to execute growth projects and capitalize on…
Experienced Management Management Characteristics Leadership Focus Management team has significant expertise The right people and a proven track record in owning, Focus on hiring quality team members with the capabilities developing…
Key Focus Areas Deliver Operational Excellence Disciplined Growth Strategy Continue to build out service offerings for Identify and execute on-time, on-budget customers focusing on long-term capital expansions around existing asset…
Corporate Development Overview Brooks Sherman President William Moore Vice President, Corporate Development 17
Two Currencies for Growth NRGY positioned as midstream MLP with significant LP and GP ownership Inergy, L.P. Retained midstream assets add cash flow diversity and are positioned (NYSE: NRGY) for future opportunities Benefits from…
Capital Investment Strategy Premier midstream service provider with Strategies and Examples focus on prolific shale basins Focus on high value services for Expansion of business in existing established and emerging shale basins…
Capital Investment Opportunities Current Environment How will we deliver growth Abundant capital seeking opportunities to Focus on opportunity identification both invest internally and externally Migration of MLP qualifying assets…
Recent Acquisition: COLT Hub Long-term contracted cash flows adding geographic and product diversification while capitalizing on Inergys logistics expertise Newly constructed crude terminalling system in the heart of the Bakken shale:…
Positioned for Future Opportunity Inergys recent events provide meaningful progress to positioning the company for the creation of long-term value for investors High-return organic projects move the partnership forward and further…
Natural Gas Storage & Transportation Overview Ron Happach SVP, Midstream Operations 23
Business Strategy Shale to Market operating strategy Operate state-of-the-art assets in prolific shale producing regions as an integrated platform Concentrate on developing assets located in or near premier demand centers Continue to…
Business Overview Two gas storage platforms with 92% overall contracted capacity located between major shale plays and premium demand markets (a) Capable of expansion to 100 Bcf of fee-based, Pipelines in Northeast add deliverability…
Natural Gas Market Overview Historical Natural Gas Seasonal Spreads (/MMBtu) 3.00 Increasing Demand Coal-to-gas switching 2.50 Industrial demand 2.00 LNG Exports 1.50 Intrinsic value further out on curve remains low due to…
Asset Overview 27
Strategically Located Assets Northeast assets provide critical midstream infrastructure Northeast storage & transportation hub with access to multiple gas and NGL supply sources and pipeline interconnects into premium demand…
Gas Storage Facilities Thomas Seneca Tres Stagecoach Steuben Corners Lake Palacios 26.3 Bcf working gas 5.7 Bcf operational 6.2 Bcf working gas 1.5 Bcf working gas 38.4 Bcf working gas capacity working gas capacity capacity capacity…
Stagecoach Gas Storage Overview Located 150 miles northwest of New York City - Closest storage facility to NYC 26.25 Bcf working gas capacity 6 depleted reservoirs; Oriskany sandstone geology 100% contracted operational capacity…
Thomas Corners Gas Storage Overview Located in Steuben county, NY, 40 miles from Stagecoach 5.7 Bcf initial working gas capacity (certificated for 7 Bcf) - Devonian reef geology Market-based rate structure with 100% contracted…
Steuben Gas Storage Overview Located in Steuben County, NY 40 miles from Stagecoach 6.2 Bcf working gas capacity Devonian reef geology 100% contracted operational capacity with weighted average maturity of 2017 with primarily…
Seneca Lake Gas Storage Overview Located in Schuyler County, NY and situated on Inergys US Salt property 1.5 Bcf working gas capacity - underground bedded salt geology Facility is expandable by 0.5 Bcf with minimal capital outlay…
Texas Natural Gas Storage and Transportation Platform Overview Located 100 miles southwest of Houston in Matagorda County, TX 38.4 Bcf of working gas capacity Expansion potential to 47.9 Bcf at attractive multiple 2.5 Bcf/day (max)…
Transportation Asset Overview North-South Pipeline FERC regulated firm transportation and wheeling services between TGP, Millennium and all points in between 325,000 MMcf/d capacity 100% contracted with 5 year terms Phase II may add…
Commonwealth Pipeline Project Commonwealth Pipeline Project Proposed 120 mile, 30 natural gas pipeline project with 800 MMcf/d capacity extending from southern end of Marc I pipeline to Chester County, PA Jointly developed by NRGM,…
Storage and Transportation Profit Drivers Strong demand for our services drives long-term contracted revenues Market-based rate structure allow for additional opportunities 100% of Northeast operationally available storage capacity…
Continued Growth Opportunity Inergys natural gas storage and transportation assets are strategically well-positioned for continued growth Focus efforts on opportunities complementary to our existing asset base as well as new…
Salt Operations Overview Mitchell Dascher President, US Salt 39
US Salt Business Strategy Strategically located assets; complimentary to existing platform Provides Scale & Diversifies and vertically integrates existing Midstream Diversity to business into MLP-qualifying salt production and…
Salt Industry Overview Dry salt is manufactured through three primary processes: Sources of Types of Salt Salt Underground Evaporated Deposits Solution Mining Salt US Salt Rock Salt Ocean/Lake Brine Solar Salt…
Salt Market Segmentation Salt has nearly 15,000 uses across a variety of end markets Evaporated Salt High Grade Lower Grade Chemical Food Processing Pharmaceutical General Industrial Water Treatment Agriculture Chlorine/Caustic…
United States Salt Market Evaporated salt produces the highest United States Salt Sales grade salt and is used in the most diverse ( in Millions) 2,000 and highest margin applications 1,687 138 The U.S. is the worlds second largest…
US Salt Operations High Quality Assets Located outside of Watkins Glen, NY on the shores of Seneca Lake Provides significant sustained source of future capacity in energy storage platform 1 Bcf per year natural gas storage…
Operations Overview Solution Mining and Processing Salt Process Brine is produced through two separate salt well galleries Once above ground, the brine is sent via pipeline into the salt refinery for purification and evaporation…
Revenue Drivers & Growth Opportunities Salt Volumes Growth Opportunities Annual salt production 300K tons Continued focus on customer service Facility runs at high rate of capacity Focus on improving efficiency and Volume and pricing…
NGL & Crude Oil Business Overview Bill Gautreaux President, Inergy Services 47
NGL and Crude Oil Business Overview Tailgate to Burner Tip Solutions Provide assured flow and optimal value for producers and refiners/processors in the rich shale plays such as the Marcellus, Utica, Eagle Ford, Bakken and other…
Business Strategy Grow facility and transport asset base organically or through acquisition in rich shale markets where we have existing assets or commercial activity Opportunities: Assets & Storage & terminals Transportation…
NGL Supply Fundamentals Greater Gas Production Shale and unconventional gas plays Gas Surplus Production capability exceeding demand Expansion of NGL Markets Low Gas Prices Relative to crude and NGLs US markets gaining…
NGL Market Overview Shale plays are transforming the outlook for NGLs Large scale re-distribution of supply and demand underway Resulting challenge for producers and G&P service providers: physically flow NGL volumes and monetizing…
Facilities and Transport Asset Overview 52
NGL Storage & Terminal Overview Bath Facility Watkins Glen Project 1.5 MMBbl of NGL Developing 2.1 MMBbl of underground storage underground NGL storage Located in Steuben County, NY Located in Schuyler County, NY 100% contracted…
West Coast NGL Facility West Coast Facility Strategically located near Bakersfield, CA between major West Coast refining centers Inergys West Coast capabilities 12,000 BPD fractionator 8,000 BPD butane isomerization unit 24…
Transportation Fleet Transportation Overview Transportation fleet of 275 tractors and 531 trailers A mobile asset: operations can be moved to most active and highest value areas 63,000 BPD of NGLs hauled in FY 2012 Y-grade,…
NGL Supply and Logistics 56
NGL Supply & Logistics Services Provided Key Relationships Provides producers and refinery customers NGL production takeaway achieving flow assurance and optimal netbacks Ability to toll molecules through Inergy- controlled assets…
COLT Crude Oil Hub Acquisition Overview 58
Premier Bakken Crude Oil Terminal Highly integrated network of crude oil rail car loading, pipeline, and storage assets located in the heart of the Bakken Long-term strategic value Newly constructed and strategically located 90% of…
North Dakota Crude Oil Production Overview North Dakota Production Forecast 1,800 The Bakken shale is situated within the 1,600 Williston Basin, which is located between the 1,400 states of North Dakota and Montana and the…
North American Crude Oil Pipelines No existing or planned pipeline access to PADD V from Bakken 74% of PADD V refinery inputs are imported (a) No significant existing or planned pipeline access to PADD I 96% of PADD I refinery…
Refiner Economics Rangeland facility provides valuable supply to demand-pull refinery customers seeking to secure reliable supply at advantaged economics Seattle Bakken Beaver Lodge Parity vs. ANS 2011 = 96.69 2011 = (4.81) 2012 YTD…
COLT Hub Asset Overview COLT Terminal Overview Dry Fork Terminal Overview Located in Epping, ND Located at the intersection of four major Commenced commercial operation in May 2012 pipelines at the Beaver Lodge/Ramberg pipeline…
NGL and Crude Oil Business Summary Assets & Transportation The combination of logistics expertise and strategically End-to-End positioned assets against the NGL and backdrop of prolific shale Crude Oil Solutions production will…
Financial Overview Mike Campbell SVP & CFO 67
Commitment to the Balance Sheet Strong Balance Sheet Fee-based Cash Flow Financial Flexibility Balanced Funding Objectives Focus on balance sheet management and target long-term investment grade credit metrics Proven access to both…
Delivering on Strategic Objectives 2012 Strategic Objectives Open up New Lower Cost of Strengthen Balance 2012 Opportunities Capital of Growth Sheet & Increase Events Internally & Businesses Financial Flexibility Externally…
Transforming the Business Inergy has repositioned itself as a pure-play midstream services provider FY 2012 Consolidated Adjusted EBITDA Run-rate Adjusted EBITDA Contribution Salt 7% Retail Propane NGL and 43% Crude Supply…
Flexible Capital Structure NRGY well-positioned to support growth initiatives Ability to take back NRGM equity to help finance drop- downs and 3rd-party acquisitions Inergy, L.P. 550mm Senior Secured Bank Strong balance sheets…
Historical Financial Performance (Excluding Retail Propane) Gross Profit (a) Consolidated gross profit and adj. EBITDA, MM excluding the divested retail propane 300 272 operations, have increased over the last 3 years 222 225…
NRGM Capitalization As of September 30, 2012 ( in millions) Historical As adjusted Cash .. - - Revolving general partnership credit facility .. 416.5 132.5 (a) (a) 6% senior unsecured notes due 2020 - 500.0 Total Debt . 416.5…
NRGY Capitalization (excl. NRGM debt) ( in millions) As of September 30, 2011 As of September 30, 2012 Cash .. 11.5 - Revolving general partnership credit facility .. 81.2 311.7 Term loan facility .. 300.0 - Senior unsecured…
NRGM 2013 Guidance Fiscal Year Ended September 30, ( in Millions) 2013 Net Income (a) 49 Interest Expense (a)(b) 32 (a)(c) Depreciation and amortization 99 Income Taxes (a) - Adjusted EBITDA (a) 180 Maintenance Capital…
NRGY Consolidated 2013 Guidance Fiscal Year Ended September 30, ( in Millions) 2013 Net Income (a) 28 Interest Expense (a)(b) 48 (a)(c) Depreciation and amortization 183 Income Taxes (a) 1 Adjusted EBITDA (a) 260 Maintenance…
Investment Highlights Core energy infrastructure across the hydrocarbon chain in prolific Strategically shale production areas and near large demand markets Located Assets Assets positioned to link fundamental energy supply with…
Q&A 78
Appendix 79
NRGY Historical Financials 80
Historical Financial Overview & Non-GAAP Reconciliations Inergy, L.P. Consolidated Statement of Operations FYE Sept. 30 2010 2011 2012 (in MMs) (audited) (audited) (audited) Statement of Operations Data: (a) Revenues 1,786.0…
Historical Financial Overview & Non-GAAP Reconciliations (cont.) Inergy, L.P. Selected Financial Data FYE Sept. 30 2010 2011 2012 (in MMs) (audited) (audited) (audited) EBITDA Reconciliation: Net income (loss) 46.4 (10.6) 565.9…
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