Agenda 1:30 1:35 p.m. Welcome 1:35 2:45 p.m. AltaGas 2020 and beyond David Cornhill, Chairman and Chief Executive Officer Business Overview David Harris, President and Chief Operating Officer Executing the strategy - Northeast B.C.…
AltaGas 2020 and beyond David Cornhill Chairman and Chief Executive Officer 3
Newest executive members John OBrien President AltaGas Services U.S. John has more than 20 years of experience in the energy industry with specific focus on government and regulatory affairs and operations. Tim Watson Executive…
Added bench strength Robert Beekhuizen Senior Vice President Engineering, Procurement and Construction Robert is a professional engineer with 30 years of industry experience managing and executing major projects and construction…
Clear vision and strategy Vision Strategy Energy To be a leading North To realize opportunities infrastructure American energy created by the Develop, construct, operate infrastructure company renaissance of natural gas and own and…
Energy infrastructure Renaissance of natural gas drives our business Processing 4,000 Tcf natural gas Gas-fired power generation Liquids separation Renewable power generation Storage & logistics Natural gas distribution…
Well diversified energy infrastructure Segment EBITDA1 2 Bcf/d of natural gas transacted Processing and moving natural gas 25% to key markets including Asia 35% Gas Utilities 50% 40% 2,050 MW2 of power generation Canadian Power in…
Our social values AltaGas is committed to building long-term, mutually beneficial working relationships with First Nations and other Aboriginal peoples; recognizing and respecting individual values, traditions and land. AltaGas…
Investing in communities Annual sponsorship commitments Committed to making a difference where we live, work and do business See forward-looking statements & information 10
AltaGas and our people An employer of choice 1,700 dedicated employees across Canada and the U.S. See forward-looking statements & information 11 11
Senior leadership team David Harris John OBrien President and President AltaGas Chief Operating Officer Services U.S. Tim Watson Debbie Stein Executive Vice President Executive Vice President and Chief Financial Officer…
Business overview David Harris President and Chief Operating Officer 13
Significant competitive advantages Competitive service offering across the energy value chain Unique access to international markets Meeting producer needs for new markets and higher netbacks Powering communities with clean energy…
Strong commitment to safety and environment Board of Directors commitment Declining trend in IFR1 among segments Management EOH&S committee: 16 Providing recommendations and ensuring 12 Frequency the implementation of corporate 8…
Best in class operations Reliability Facilities operate with best in class reliability Harmattan Co-Stream Gordondale 2014 98.4% 2014 99.5% 2015 98.1% 2015 100% Blair Creek Blythe 2014 99.1% 20141 93.8% 2015 99.3% 2015 96.2%…
Significant customer focus Proven track record of optimizing, de-bottlenecking and adding new lines of business to existing facilities Collaborative approach with customers Coordinate outages Solve technical issues for mutual benefit…
Extensive construction experience Our Engineering, Procurement and Construction team is designed to deliver certainty to the customer on their investment. Well-respected relationships with government agencies and First Nations in project…
Executing construction projects A clearly defined scope accomplished through: Integrated and disciplined process considering customer needs, operability/flexibility, maintainability, constructability, cost and schedule Commercial terms &…
Over 2 billion successfully completed or under construction Millions 2,500 2,000 1.7 billion completed 1,500 600 million 1,000 under construction 500 0 Bear Mountain Harmattan Co- Gordondale Forrest Kerr & McLymont…
NWP construction success Forrest Kerr completed on time Volcano Creek on two years and on budget ahead of schedule See forward-looking statements & information 21
Better than expected efficiencies Forrest Kerr output M3/s See forward-looking statements & information 22
Strong capacity factor1 of 55 to 60 percent Discharge (M3/s) Predictable, sustainable hydrology1 10-year average snow pillow vs. 2015 YTD 1200 1100 Snow Water (mm) 1000 900 800 700 600 500 400 300 200 Design…
NWP Pricing CPI growth lower than anticipated over the past seven years1 25% 20% Cumulative CPI Impact Cumulative 15% inflation impact of 10/MWh 10% 5% 0% 1/1/2009 1/1/2010 1/1/2011 1/1/2012 1/1/2013 1/1/2014…
Townsend phase 1: under construction 198 Mmcf/d shallow-cut natural gas processing facility enhanced with logistical infrastructure and gathering systems Townsend plant and associated infrastructure: 325 - 350 million Processing…
California: significant increases in clean energy Increasing reliance on renewables strengthens the need for reliable back-up power in the form of flexible natural gas-fired generation 20111 20141 Renewables Renewables 14% 21%…
Significant retirements driven by regulations 15,000 MW new generation required Reducing greenhouse gas emissions to MW Cumulative once-through-cooling plants 20,000 compliance by year 1 1990 levels by 2020 Once-through-cooling…
Over 1 billion investment in clean power US 642 million acquisition of Tracy Tracy, Hanford and Henrietta plants Expected to deliver CAD 95 million in EBITDA on yearly basis Fully contracted with PG&E through to fourth quarter 2022…
Utilities rate base continues to grow 1 billion capital spend program 2016 2020 600 million increase in rate base over the next five years Millions 6.8% 800 Capital spend CAGR Depreciation1 700 600 500 400 300 200 100…
Montney will drive significant growth Continued growth in NGL production Upward trend in new well additions Montney NGL production forecasted to triple Lower commodity prices have forced drilling between 2014 and 2022…
Montney competitive at current prices North American natural gas curves supply costs1 7.17 8.27 5.00 4.50 YTD NYMEX (US/mmbtu) 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 1 RBC Capital Markets Estimates See forward-looking…
Higher netback solutions for producers AltaGas strategy will allow producers to move natural gas and natural gas liquids to all markets AltaGas plays a part in the Fort Saskatchewan traditional gas hub E moving gas to the east AltaGas…
Over 4 billion in near-term growth opportunities Assets brought into service Near-term growth 3.0B SEMCO expansion Blythe II Two liquids separation facilities 1.5B 1.3B Two processing facilities B.C. propane export…
Longer-term growth is significant Near-term growth Future growth 3.0B 1.5B Committed Under Development 2020 + (2016 2020 Growth capex) See forward-looking statements & information 34 34
Committed to creating shareholder value Attractive yield + growth CFPS CAGR 1 7 10% Yield 4 6% Total 11 16% 5 year total shareholder return achieved 2 CAGR Cumulative Return 15% 97% 1 Based on achieved growth rates over…
Executing the strategy- Northeast B.C. John Lowe Executive Vice President 38
Ultimate potential from the Montney Montney estimated to have more than 4,000 Tcf of gas in place1 Most active/low cost Most actively developed and one of the lowest cost natural gas plays in western Canada High production growth Gas…
Continued strength in Montney drilling Trend in drilling in the Montney remains positive compared to the previous 10 years Montney drilling forecast1 1200 1000 800 Area 8 - AB East Area 7 - AB Rich Sweet of wells Area 6 -…
Montney gas volumes continue to grow Gas volumes from the Montney expected to exceed 6 bcf/d by 20201 1 RBC Energy Insight Montney Evolution, October 7, 2015 See forward-looking statements & information 41
Stable production volumes Stable production volumes Strategically situated facilities Blair Creek 2014 60 Mmcf/d 2015 65 Mmcf/d Gordondale 2014 101 Mmcf/d Younger 2015 1101 Mmcf/d Blair Creek Harmattan 2014 132 Mmcf/d 2015…
Building infrastructure to serve new markets From wellhead to markets Existing assets Growth projects North Rail, truck Fort Sask. American Definitive project & hub2 Markets agreement NGL Storage, rail & truck…
2 billion growth opportunities in northeast B.C. Increase gas processing capacity 198 Mmcf/d Townsend I under construction; in service expected mid-2016 Potential Townsend II Additional gathering and processing facilities Liquid…
Painted Pony strategic alliance Strategic alliance Development of processing infrastructure and marketing services for Painted Ponys natural gas and NGL Provides significant opportunity to build out further infrastructure Townsend…
Painted Pony continues growing production Painted Pony anticipates 57% compound annual production growth between 2015 and 2019 2nd AltaGas Townsend Plant 2nd AltaGas (48 MMcf/d) Townsend Plant (150 MMcf/d) 1st AltaGas Townsend…
Significant producer activity requires new infrastructure Active drilling programs by producers in region Demand anticipated for deep-cut facilities and liquids infrastructure Townsend expansions to match increasing production In…
Fort St. John hub development Fort St. John Development of a liquids separation and processing facility to serve producers in the Montney 20,000 Bbls/d of C3+ and 20,000 Bbls/d of C5+ liquids separation and processing capacity…
West coast has clear shipping advantage to Asia Arriving in Chiba, Japan Arriving at Ferndale, WA Middle East 1 18 days Demand: Supply: Japan / North Korea 1 America 1 Demand: Supply: 10 days Demand: Supply: 27 days 10…
Global markets: Future demand growth Global LPG demand growth led by Asia1 Mb/d 12 10 8 6 4 2 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 0 U.S./Canada Latin America Europe/CIS Middle East Asia/Pacific Africa…
Historical global propane pricing Key to long term sustainability will be cost competiveness (US/Gallon) Global Propane Pricing - Monthly Averages 1.80 1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 Sep-14 Nov-14 Jan-15…
Convergence of global prices Expect increasing exports from USGC to result in convergence of global prices. Pricing in far east markets to be set by USGC index plus terminal fees and ocean transport Fort Saskatchewan Today: MTB…
Ferndale continues to surpass expectations Exporting LPG to Asia 750,000 barrels of on-site storage capacity Target shipments of 50% propane / 50% butane Record product movements in 2015 Operated by AltaGas See…
B.C. propane exports moving forward Definitive project agreement for the development of a propane export facility in B.C. Currently negotiating sub-lease for land Initial engagement with First Nations and stakeholders is underway…
Douglas Channel LNG Image for illustrative purposes only. See forward-looking statements & information 55
Executing the strategy U.S. operations & utilities John OBrien President AltaGas Services United States 56
Strong focus on clean energy Our power assets generate 2,050 MW1 83% from clean energy sources2 389 MW 417 MW 11 MW 85 MW 1,124 MW(1) 24 MW Growing our power portfolio - 768 MW purchased or put into service in 2015 1…
Growing demand for flexible natural gas-fired generation 4 GW of new gas-fired generation required in California1 GW 76 Capacity at equilibrium (2021) 74 72 70 68 66 64 62 60 Beyond the need to provide green firming…
Renewables require back-stopping 1 1 Rapid response, high efficiency plants like Sonoran are required to supplement lost renewable energy at a moments notice Duck curve displays the system under normal operations Should…
GWF1 adds 523 MW generation PPA extends to 2022 adding EBITDA Expanding our clean energy footprint of 95 million annually into northern California Increases clean energy portfolio by adding natural gas-fired generation Increases…
Tracy clean combined-cycle facility Consistent with AltaGas strategy of increasing its clean energy portfolio Converted to an air-cooled combined cycle power facility and favorably recontracted in 2012 Tracys position on the natural…
Hanford and Henrietta facilities Gas-fired simple cycle power facilities Hanford Facility 97 MW Designed for fast start, simple cycle operations Seven-year remaining PPA, favorably recontracted in 2012 Opportunity for expansion…
Ripon and Pomona1 Facilities Heat rate is 9,900 Btu/kWh Ripon 50 MW PPA through 2018 Located in San Joaquin Valley near renewable power sources Preliminary stages of permitting to increase generation capacity by adding an LMS…
Facilities located in growing regions The South Coast and San Joaquin Valley had some of the highest growth rates of all regions in California between 2011 and 20141 1.2% 1.10% 1.0% 0.90% 0.80% 0.82% 0.8% 0.75% California Average:…
Doubling the existing 507 MW Blythe facility Sonoran Site is at the convergence of transmission lines; multiple options available for counter parties Direct access to two interstate natural gas pipelines The CAISO is moving…
Competitively positioned within CAISO CAISO dispatch curve1 1 PA consulting Group GWF Energy Inc. report, May 2015 2 Potential future development 3 San Gabriel plant would be repowered with new technology (Pomona) 66 See…
Regulatory changes increasing demand Coal plant retirements Reducing nuclear power by 4,200 MW1 by 2030 21,047 MW1 by 2030 Increasing renewable standards 29 States2 currently have renewable portfolio standards Increase…
Market conditions driving new opportunities The electric systems in many parts of the U.S. are undergoing significant transitions Low natural gas prices New and pending environmental regulations See forward-looking statements &…
Alberta power market dynamic Market currently oversupplied due to a combination of new generation and lower demand growth Mid to long term prospects remain attractive with federal coal retirements Provincial Climate Change policy…
Powering British Columbia Growth opportunities are closely tied to LNG projects 1,000 MW required to meet the electricity needs of proposed LNG projects BC Hydro forecasts a 40% increase in load requirements over the next 20…
North American strategy Focus on robust markets with demand for clean energy Long-term PPA/tolling agreements Strong fundamentals for recontracting including asset retirements, demand growth and RPS standards Liquidity to establish…
Delivering clean and affordable energy Our natural gas utilities deliver clean, reliable and affordable natural gas to homes and businesses across North America 5 Utilities1: Serving over 560,000 customers; 22% Canada; 78% US Rate…
Unique opportunities for rate base growth Historically stable service areas, now one of Canadas highest projected growth regions Increased demand in northeast B.C. related to: Drilling activity B.C. Hydro Site C construction Regional…
Major projects Douglas Channel LNG interconnecting pipeline Capacity of up to 1 Bcf Regulatory approval received for construction of 10 or 30 diameter pipe System reactivation project PNG main transmission line operates four…
Growing rate base Prudent capital investment in normal course capital focused on operational efficiencies, safety and reliability Implementation of Automated Meter Reading technology to improve reliability, accuracy and customer…
Capital tracker programs Improving system safety and reliability Multi-year programs to replace aging infrastructure Invest in new pipelines to address security of gas supply See forward-looking statements & information 76
Significant opportunity for rate base growth Natural gas is a new premium fuel source in Nova Scotia which has over 250,000 households: Residential space & water heating energy Residential space & water heating energy choices in Canada1…
Securing growth Securing natural gas supply is a primary focus, storage and new transportation expected to be available 2017-2018 Transition to a residential customer focus Capital program focused on infilling Rate Base…
Improving economic climate in Michigan New home construction has continued to improve steadily over the past five years Michigan monthly single family housing starts1 2,500 Customer conversions from alternative 2,000 500% growth…
Upside potential Electric generation Natural gas for new electric generation including the Marquette, MI area and a potential 35-mile transmission line Industrial growth projects Working with several industrial customers looking to…
Growing rate base Gas distribution growth through system reinforcement, facility upgrades and expansion to new franchise areas Upgrading technology in existing Automated Meter Reading system Investing in infrastructure - pipeline…
Expansion opportunities Potential natural gas pipeline expansions from Cook Inlet to Fairbanks and Donlin Gold mine State Government invested in solving the energy cost and air quality crisis in central Alaska See forward-looking…
Supportive regulatory environment Utility Regulatory CPCN application for interconnect pipeline for DCLNG approved by regulator October 2015 2016/2017 two year revenue requirement applications to be filed by end of November 2015…
Utilities rate base continues to grow 1 billion capital spend program 2016 2020 600 million increase in rate base over the next five years Millions 6.8% 800 Capital spend CAGR Depreciation1 700 600 500 400 300 200 100…
Low-risk business platform + Strong financial position to support growth + Successful capital allocation strategy = Shareholder value creation Tim Watson Executive Vice President and Chief Financial Officer 85
Key financial principles 300 MM common equity Ensure strong access offering to capital markets Increased common dividend twice in 2015 USD125 MM FRN New 5 billion base shelf filed Maintain competitive Efficient access to debt and…
Substantial total enterprise value Well positioned with a substantial total enterprise value and an attractive diversified mix of business lines Millions Enterprise Value 25,000 20,000 Power Midstream 15,000 Utilities…
Diversification Grew three times in size within the last five years with a more diversified EBITDA structure, leading to a more consistent cash flow profile Enterprise value growth EBITDA Growth Midstream Utilities Power…
Diversification EBITDA By Business AltaGas One of the most Enbridge Income Fund Midstream diversified energy Gibson infrastructure Inter Pipeline Power companies in the Keyera Utilities sector Pembina Veresen 0% 20% 40%…
Growing presence in B.C. diversifies Western Canadian base Gas 3 2020 Montney infrastructure development 2015 LNG & LPG exports 2009 Regional LNG expansion Power Completed NW Hydro Projects totaling 277 MW, 1 Billion 2…
Long term contracted and utility EBITDA Substantial increase in long term contracted and utility EBITDA 2016F 2010 34% 23% 13% 4% 20% 29% 36% Contracted PPA Midstream fee for service/TOP/cost of service Utilities…
Track record of growth Successful track record of delivering EBITDA growth over time Millions EBITDA 800 600 400 200 0 2010 A 2011 A 2012 A 2013 A 2014 A 2015 F + GWF* Midstream Power Utilities See…
Gas plant throughput High grade asset base with core plants in sustainable plays that drive growth Mmcf/d Gross Annual Throughput 1,600 1,200 800 400 0 2013 A 2014 A 2015 F 2016 F Other Extraction Other FG&P…
Alberta power prices Alberta power price no longer a significant driver to our business EBITDA exposed to Alberta power price Sundance PPA has been a very profitable investment See forward-looking statements & information 2009…
Key sensitivities Foreign Exchange Key variables +/- 0.05 US/CAD 2016 Impact EBITDA 14 MM Frac Spread Key variables +/- 1/bbl 2016 Impact EBITDA 1 MM Alberta Power Price Key variables +/- 1/MWh 2016 Impact EBITDA 2 MM…
Strong and diversified counterparties We have a diversified 100% counterparty exposure 9% which is primarily 80% investment grade quality 40% 60% Investment grade 40% 51% 20% 0% 2015 A category BBB category BB…
Debt capital cost Strong and efficient access to debt capital markets underpins our low cost of capital AltaGas cost of debt (10-year new issue yield) 10-year new issue credit spread (bps) 300 10% 9% 280 8% 260 7% 2.98% 240…
Balanced debt and capital structure Strong balance sheet and a well balanced debt maturity profile Well balanced capital structure1 Debt maturities1 Millions 600 500 400 300 47% 200 100 0 2016 2017 2018 2019 2020…
Strong financial position Strong balance sheet Debt-to-capitalization Ample bank line capacity 70% Target Millions 60% 2,000 50% 1,600 40% 1,200 30% 800 20% 10% 400 0% 0 2010 2011 2012 2013 2014 Q3 2015 2010 Q3 2015…
Proven track record of capital market access Internal common equity (i.e. FCF) DRIP Executed financing history Equity capital Millions Preferred shares 2,500 2,000 Common shares 1,500 1,000 Bank credit facilities 500…
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