Investor Day Presentation TSX: IPL November 17, 2014
Presenters Christian Bayle Martyn Lyons President & CEO Managing Director, Europe Joined IPL in 1997 Joined IPL in 2005 Brent Heagy Bernard Perron Chief Financial Officer VP, Project Development Joined IPL in 2014 Joined IPL in…
Agenda Agenda Presenter Time Introduction Jeremy Roberge 12:00 pm Strategic Overview Christian Bayle Oil Sands Transportation Jeff Marchant Conventional Oil Pipelines Jeff Marchant NGL Extraction Jim Madro Bulk Liquid Storage…
World Scale Energy Infrastructure Assets Oil Sands Conventional NGL Bulk Liquid Transportation Oil Pipelines Extraction Storage Over 2.2 million 3,700 km Process 40% of 19 million b/d of barrels of pipeline network natural gas…
Areas of Operation 2014 September YTD EBITDA Fort McMurray /%(57 66.7&+(:1 SCOTLAND DENMARK Edmonton North Sea Hardisty Cochrane IRELAND %& Extraction ENGLAND GERMANY Plant Calgary Empress II & V FRANCE…
2014 Developments 9 First phase of the 1.4 billion Polaris expansion placed into commercial service in July 2014; 90 million in annual EBITDA Commercial 9 Announced 100 million expansion of Mid-Sask pipeline system 9 Announced…
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Vision Statement Inter Pipeline Ltd. is one of Canadas leading energy infrastructure businesses, providing our customers with safe, reliable, market responsive and cost-effective services Grow through the development and expansion…
Investment Value Proposition Strategic Financial Infrastructure Financial Strength Strength Assets Majority underpinned Solid balance sheet by stable cost of service revenue Strong Investor Excellent access to Returns capital…
Dividend Growth /Share *Based on actual dividends to November 2014 and 0.1225/share per month thereafter 9
5-Year Dividend CAGR 15.0% 13.6% 10.0% 9.3% 7.0% 4.8% 5.0% 3.6% 2.0% 0.0% 0.0% Peer 1 Inter Pipeline Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 -5.0% -4.8% CAGR from 2009 to 2014E; 2014E is based on actual dividends…
Enterprise Growth Million 11
Year-to-Date Total Return Peer 1 43% Inter Pipeline 42% Peer 2 30% Peer 3 30% Peer 4 29% Peer 5 24% Peer 6 18% Peer 7 17% Peer 8 17% S&P TSX Index 10% 0% 10% 20% 30% 40% 50% For the period from January 1, 2014…
5-Year Total Return Peer 1 307% Inter Pipeline 276% Peer 2 211% Peer 3 186% Peer 4 169% Peer 5 141% Peer 6 126% Peer 7 78% S&P TSX Index 43% 0% 50% 100% 150% 200% 250% 300% 350% For the period from January 1, 2010…
Strengths & Challenges Strengths Challenges Pure play energy infrastructure European bulk liquid storage business that has created business continues to face near significant shareholder value term capacity utilization challenges…
Opportunities Opportunities Massive development potential within the regional oil sands transportation sector On going renaissance in conventional oil production is yielding new opportunities Large-scale investment in liquids…
2014 September YTD EBITDA 44% 16
Agenda Overview of Oil Sands Transportation Business Oil Export & Diluent Supply Capacity Developing Projects Growth Opportunities 17
Business Overview Three major oil sands pipeline systems with Fort McMurray combined ultimate Corridor Pipeline capacity of 4.5 million b/d Polaris Pipeline System System 9 Corridor 9 Cold Lake* 9 Polaris Cold Lake Pipeline…
EBITDA Generation EBITDA by Contract Type EBITDA by Pipeline System Oil Sands EBITDA of 228 million September 2014 YTD *Original Cold Lake TSA based on modified cost of service 19
Cold Lake Pipeline System Integrated bitumen blend Fort McMurray and diluent system Transports blend to FCCL Narrows Lake Edmonton & Hardisty hubs CNR Kirby FCCL Foster Creek Cost effective options for CNR Primrose/ Imperial…
Cold Lake Pipeline Capacity 000s b/d 1,900 1,800 2,000 Available Capacity 1,600 673 1,400 63 14 1,200 500 1,000 Contracted 800 Volumes 650 600 1,227 400 200 0 Original Cold FCCL CNR Kirby South Osum Orion Ultimate…
Corridor Pipeline System Integrated system moving AOSP AOSP blend to Scotford Fort McMurray Upgrader and products to/from Edmonton Anchor shippers committed at 465,000 b/d blend Significant capacity for Fort Saskatchewan…
Polaris Pipeline System Largest merchant diluent Imperial Suncor Kearl Husky transportation system to the Sunrise Fort McMurray AOC Alberta oil sands Jacos /Nexen Hangingstone Hangingstone Currently the only diluent CNR…
Oil Sands Forecast vs. Capacity Million b/d Heavy Blend + SCO Supply to Market 7.0 Northern Gateway 6.0 TCPL Energy East 5.0 TMPL Expansion Production / Capacity 4.0 Keystone XL Rail (Expansion) 3.0 Alberta Clipper…
Expansion vs. New Build Reduced scope leads to: Time 9 Lower construction risk Financing Land 9 Reduced regulatory risk Regulatory Regulatory 9 Quicker in service Materials RISK Labour Labour Other RISK…
Inter Pipelines Advantage Producer Needs IPL Strengths Pipelines in service with significant Minimize regulatory risk available capacity Shorter, flexible construction Highly predictable schedule schedule Accommodate multi-phase…
Oil Sands Growth Long-Term Capital Cost Implied System Project EBITDA, (mm) Multiple (mm) Imperial Kearl Suncor Polaris Imperial Kearl 190 36 5.3 x Husky Sunrise Fort McMurray Imperial Kearl Polaris 45 19 2.4 x Jacos/Nexen…
Oil Sands Growth Opportunities Identified 4+ billion of Imperial Kearl Husky Sunrise Expansion potential opportunities Imperial Aspen Cenovus - Telephone Lake from 2015+ Fort McMurray AOC Hangingstone 9 Identified 1.3 million b/d…
Services Integration: Terminals & Storage Extending reach Imperial Kearl Husky Sunrise Expansion Imperial Aspen across the liquids Fort McMurray Cenovus - Telephone Lake supply chain AOC Hangingstone Expansion Cheecham Nexen -…
Services Integration: Terminals & Storage Pipeline Pipeline capacity (million b/d) Stream (b/d) 9 Lamont diluent up to 1.6 9 Lamont blend up to 1.5 9 Hardisty blend up to 1.4 Multi-Modal Storage Connections 9 Cheecham diluent…
What Sets Inter Pipeline Apart Business is anchored by long-term contracted capacity, connecting to successful oil sands projects 9 Over 2.2 million b/d contracted on oil sands systems Pipelines are well-positioned to reach new…
2014 September YTD EBITDA 24% 36
Agenda Overview of Conventional Oil Pipelines Business Competitive Landscape Conventional Crude Oil Outlook Growth Opportunities 37
Business Overview Edmonton 3,700 km of oil pipelines /%(57 servicing 135 producers Hardisty 100% fee based business, 66. Stettler excluding midstream marketing Kerrobert Kindersley IPL ships 15% of WCSB Calgary conventional…
EBITDA Generation EBITDA by Contract Type EBITDA by Pipeline System Conventional EBITDA of 123 million September 2014 YTD 39
Conventional Crude Oil Value Chain Gathering & Transmission Storage STORAGE Midstream Marketing TERMINALS TRANSMISSION PIPELINES GATHERING WELLHEAD PRODUCER / PIPELINES THIRD PARTY TREATING FACILITIES…
Competitive Dynamics Third Party Common for producer facility Truck Terminal to be connected to the pipeline Historical competition has been trucking Truck Rail provides an alternative Around 9 Driven by diluent IPL IPL…
Tolling Impact on Producers CAD / bbl 120 12.0% 100 10.0% 80 8.0% 60 6.0% 40 4.0% 20 2.0% 0 0.0% 2008 2009 2010 2011 2012 2013 WTI (CAD/bbl) Avg Toll as % of WTI 10% CAGR in tolls from 2008 to 2013 43
Conventional Oil Plays Edmonton Large original oil in place /%(57 66. with multiple producing formations Hardisty New technologies are Stettler reviving mature fields Kerrobert 9 Optimized drilling 50-55/bbl 9 Multi-stage…
Saskatchewan Viking Growth Number of Wells Production (b/d) 1,200 60,000 IPL pipeline services Viking producers 1,000 50,000 100 million expansion in progress 800 40,000 Increases available capacity by 95,000 b/d 600 30,000…
What Sets Inter Pipeline Apart Conventional gathering business provides cash flow diversification Resurgence in drilling and development activity has negated historical declines IPL is well positioned to support increasing volume…
2014 September YTD EBITDA 20% 48
Agenda Overview of NGL Extraction Gas Supply 9 Cochrane 9 Empress Product Sales 9 Ethane 9 Propane Plus Growth Opportunities 49
Business Overview Three large scale extraction Edmonton /%(57 plants produced 95,700 b/d of NGLs* Strategically located on the TransCanada Alberta system Cochrane 2.5 bcf/d 9 6.2 bcf/d of extraction Capacity 66.7&+(:1 capacity…
NGL Extraction Facilities Cochrane Large scale, operationally flexible extraction facility Ethane sold under fee based contracts Propane Plus sold under a commodity based contract Empress V Low cost, highly efficient facility…
EBITDA Generation EBITDA by Contract Type EBITDA by Extraction Plant NGL EBITDA of 100 million September 2014 YTD 52
NGL Extraction Value Chain Cochrane Extraction Plant Rich Inlet Gas Lean Residue Gas 2,500 MMCF/D 2,350 MMCF/D Transmission Lines (sales quality gas) Ethane Propane Plus Field Processing 65,000 b/d 33,000 b/d Plant…
Gas Supply Forecast bcf/d Conventional gas is being displaced with liquids rich shale gas Source: TransCanada annual forecast; see forward-looking information 54
NGL Recovery bbl/mmcfd Cochrane Recover Rates vs. Weighted Average of Alberta Straddle Plants Cochrane Ethane Recovery Cochrane Propane Plus Recovery zd WW WW Cochrane Extraction Plant continues to yield…
Cochrane Gas Flows bcf/d Western Canada to Pacific North West 4.0 3.0 2.0 1.0 0.0 W. Canada to PNW W. Canada to PNW Forecast Cochrane Extraction Inlet Western flows expected to increase by 0.4 bcf/d from 2013 to…
Empress Gas Flows bcf/d Western Canada to Mid-Continent 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 West Canada Inflows West Canada Inflow Forecast Empress II/V Inlet Eastern flows expected to decrease by 1.5 bcf/d from 2013…
2013 NGL Production b/d 100,000 93,000 92,000 80,000 58,000 60,000 50,000 44,000 40,000 36,000 26,000 21,000 20,000 17,000 12,000 0 Company Company Company Company Company Company Company Company Company 1 2 3 4 5 6…
Ethane Market Overview Gathering Petrochemical Company Industrial/Consumer Straddles System Producer Primary Intermediate Intermediate End Use Ethylene Polyethylene Polyethylene Plastic Bags Styrene Polystyrene Packaging Film…
Alberta Ethane Supply & Demand 000s b/d 600 Import from Vantage pipeline actual forecast 500 Supply from oil sands off-gas Supply from conventional gas actual forecast 400 IPL total production Alberta demand 300 To provide…
Propane Plus Overview Field plants remove 60% of Propane Plus Components Propane Plus along with impurities to meet pipeline Pentane 8% specs Butane 20% Balance of Propane Plus flow to straddle plants for deeper cut…
Historical Propane Pricing US / US Gal Mont Belvieu vs Edmonton Propane 2.50 2.00 1.50 1.00 0.50 0.00 2011 2012 2013 2014 Belvieu Propane Edmonton Propane Belvieu pricing is historically favorable compared to…
US Propane Supply & Demand Million b/d 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 2012 2013 2014 2015 2016 2017 2018 2019 Petchem Res/Comm Exports Total Supply Propane supply/demand is balanced into…
Value Chain Opportunities Natural Gas Value Chain Power Utilities Gathering & Extraction Storage Marketing Pipelines Processing LNG Natural Gas Liquids Value Chain LPG Terminaling, Fractionation Pipelines Marketing &…
Future Opportunities New developments require additional infrastructure /%(57 66. Leverage IPLs strengths in: 9 Pipelines MONTNEY 9 Plant operations 9 Terminals 9 Major project DUVERNAY development Edmonton Opportunities to…
What Sets Inter Pipeline Apart Base contractual framework enhanced and extended 9 Average contract term of nine years with credit worthy counterparties 9 Cash flow quality improved with greater percentage from fixed fee contracts…
2014 September YTD EBITDA 12% 67
Agenda Overview of Bulk Liquid Storage Business Competition and Market Outlook Barriers to Entry Contango & Backwardation Growth Opportunities 68
Business Overview Petroleum and petrochemical storage facilities SCOTLAND DENMARK NORTHERN North Sea Approximately 19 million barrels IRELAND of storage capacity Tyne Seal Sands WALES Riverside Asnaes Immingham West…
EBITDA Generation EBITDA by Contract Type EBITDA by Business Bulk Liquid Storage EBITDA of 63 million September 2014 YTD 70
Revenue Contribution Revenue by Product Revenue by Payment Structure 4% 10% 36% 35% 64% 51% Bulk Liquid Storage Revenue of 128 million September 2014 YTD 71
Revenue and Customer Composition 12% 8% Other Top 5 Average revenue per 29% Customers barrel per month*: 39% 7% Chemical 1.46 Other Large Customers 6% Petroleum 0.46 32% 6% Biofuel 1.47 Diverse customer base with no…
Competition Million bbl Wholly independent Partially independent Maintain position as 4th largest 2nd largest operator of chemical wholly independent player in storage in Germany Europe 3rd largest in Scandinavia, but 1st in…
Market Outlook: Oil Demand Europe UK Net Product Flows 2012 Increased demand for diesel more than offsets fall in demand for Net Exports Net Imports gasoline Further refinery closures expected Gasoline Diesel Russian fuel oil…
Market Outlook: Baltic Fuel Oil, Vacuum Gas Oil (VGO), Diesel/Gas Oil Russian fuel oil and VGO exports Fuel Oil Exports from the to US and Far East creates storage Baltics & North West Europe demand at cargo building Million bbl…
Market Outlook: Chemical Demand European chemical production has increased in the past four quarters Strong demand for chemical storage at Germany and UK terminals Building 6 new stainless steel tanks in Germany for chemical…
Bulk Liquid Storage Barriers to Entry Terminal Locations 9 Must be located near oil refineries, chemical plants and key transport routes to facilitate product trade flows Legislation 9 Regulator requires demonstration of…
Contango and Backwardation US / MT 100 Gas Oil Futures 80 6 month vs. 1 month 60 40 20 0 -20 -40 -60 -80 -100 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Contango and backwardation affect the oil market…
Impact of Contango and Backwardation Denmark Backwardation has directly impacted the Gulfhavn distillate terminal Stigsnaes, Asnaes and Ensted fuel oil / VGO terminals have been indirectly impacted by backwardation UK &…
Historical Growth Expenditure Million Greenergy 2006 to 2013 growth 21 capital expenditures Immingham of 180 million New Tanks 19 Large Capital expenditure Other Projects on large projects was Growth World 80 32% 8 Fuels 60…
Acquisition Growth Opportunities Aquisition opportunities in NW Europe: Conversion of refinery tank storage to regional import terminals Opportunities to acquire oil distribution terminals as major oil companies focus upstream…
Organic Growth Opportunities 57,000 bbl new stainless steel chemical tanks under construction in Germany Assessing demand for additional chemical tankage at Seal Sands and Tyne Tank upgrades to provide storage for a broader…
What Sets Inter Pipeline Apart Long-life infrastructure assets Strong organic investment potential Geographic diversification, mature markets Stable political and regulatory environments Fee-based cash flow Experienced…
Break 85
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Agenda Overview of Project Management Project Execution Safety Leadership Global Procurement Construction Forecast 87
Project Development Video 88
Proven Execution Experience Corridor In last 8 years, IPL constructed Polaris over 4.5 billion worth of projects including: 9 1,400 km of new pipelines Cold Lake 9 12 pump stations and 12 receiving facilities These projects have…
Superior Execution Structure Project Business Development Project Managers Development Group Contracts and Procurement Project Development Cost Control Health and Safety Operations Environment Concept Detailed Construction…
Performance Based Partners Engineering (EP) Partners Long term relationships with Stantec 40% of IPL workload well established industry WorleyParsons 20% of IPL workload leaders UniversalPegasus 30% of IPL workload Upside 10% of IPL…
Safety Leadership First program of its kind in the pipeline industry Unprecedented commitment from all parties to eliminate all injuries on the construction sites 9 Trained 6,000+ workers over the last 2 years 9 Only two lost time…
Global Reach for Quality Motors Raw Steel Pipe Manufacturing Actuators Pumps Cables Pipe Valves Valves Manufacturing Motors Raw Steel Meters 93
Pipeline Construction Forecast Construction Spreads Forecast Large Diameter Construction Spreads per Season* 30 25 20 15 10 5 0 Winter 2015 Summer 2015 Winter 2016 Summer 2016 Winter 2017 Summer 2017 IPL is well…
What Sets Inter Pipeline Apart Track record of completing projects on time in heated environments; placed over 4.5B of projects in service since 2006 Superior project execution model driving efficiencies into the construction…
Operations Overview 833 employees 6,400+ kms of pipeline 685 storage tanks 24.7 million barrels of storage 6.2 bcf/d of extraction capacity 95,700 b/d of NGLs %& produced* 1.1 million b/d of petroleum products shipped* 9.3…
Operations Framework Overview Focused approach to managing a complex operating environment 99
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