Our team presenting today Agenda Presenter Time (approx.) Introduction + Strategic Overview Mick Dilger Mick Dilger President & Chief Executive Officer Challenges & Panel 8:30 am 9:30 am Opportunities Discussion Market Dynamics Scott…
Introduction + Strategic Overview Mick Dilger
Pembina remains well positioned in a rapidly changing world Investment highlights Integrated, strategic and difficult to replicate asset base largely supported by long-term, fee-for-service contracts Industry leading record of…
Pembinas vision For our stakeholders to view us as being the leader in the Canadian energy infrastructure sector Our Stand: 1. Ensure no harm to people or the environment 2. We are the first choice by customers to cost effectively…
We remain confident in our strategy Financial Objective (Stand-Item 3) We provide sustainable industry-leading returns to our shareholders Strategy: Preserve value by providing safe, cost-effective, reliable services Diversify our…
Pembinas 'guard rails' through 2018 Overview Current Positioning Maintain target of 80% fee-for-service contribution to 1 On-track for 80% - 85% fee-for-service EBITDA EBITDA Financial metrics remain within BBB range with both…
Pembinas strategic investment criteria 1 6 Mitigate risk even if the results have modest returns Integration with the existing value chain Longevity (capture long-life economic hydrocarbon 2 7 Maintain or enhance customer…
Actionable short-term and longer-term strategies All are subject to Pembinas Guard Rails and Strategic Investment Criteria Short-term strategy Longer-term strategy Execute Target: cost savings of 5 percent on 5 Deploy Target…
A proven history of strategic expansions along the value chain Pembinas operating margin (MM) Expansion / exploitation of asset base 1 Expansion into crude oil midstream operations Gas services creation value chain extension…
Our strategy continues to work well Volumes continue to increase As does financial performance 2,000 1,150 1,118 1,789 Operating Margin (MM) 1,800 1,720 1,100 1,078 1,660 1,050 1,600 1,000 1,400 949 950 1,200 900 1,000 850…
Challenges & Opportunities Panel Discussion
Hows Pembinas strategy holding up Any changes required (Frequently asked questions over the past 12 months) 1 Are your customers profitable in this commodity pricing environment 2 Are volumes on your pipeline systems / gas plants…
1 Our business operates in prolific geology ALBERTA SASKATCHEWAN OIL SANDS MONTNEY (Resource life 185 years) (Resource Life TAYLOR 140 years) FORT MCMURRAY PELICAN LAKE SWAN HILLS DEEP BASIN (Resource Life 40 years)…
1 Customer considerations development of the WCSB continues for key areas Illustrative WCSB geology Duvernay Montney 350 7.0 CAGR 150%+ CAGR 20% 300 6.0 250 5.0 Mmcfe/d Bcfe/d 200 4.0 150 3.0 100 2.0 50 1.0 - -…
1 Customer considerations newly drilled or licensed wells in the WCSB Producers continue to drill cautiously and invest given supportive geology Source: GeoScout. Map illustrates newly spud or licensed wells from March 1, 2015 to…
1 Customer considerations cash costs of 'Pembina' plays Indicative cash operating cost analysis by play type (Q4 2015) (C/Boe)(1) Field costs (C/Boe) Corporate costs (C/Boe) 30.00 28.02 Royalties Transportation Operating Costs G&A…
1 Customer considerations cash costs of 'Pembina' customers Illustrative cash costs vs. revenues at forward strip pricing by customer(1) 45.00 0% - 30% oil weighted 30% - 60% oil weighted 60%+ oil weighted 40.00 35.00 30.00…
1 Customer considerations driving capital efficiency Gas weighted producers Oil weighted producers 16 66% capital efficiency improvement 9.0 35 55% capital efficiency improvement 3.0 14 30 12 8.5 25 2.5 Capital…
1 Customer considerations best wells in 2015, by area Top 5 British Colombia Montney wells drilled in 2015 Top 5 Alberta Montney wells drilled in 2015 2,500 2,000 1,896 2,033 2,000 1,781 1,744 1,428 Calendar Rate (Boe/d)…
2 Volume considerations Pembinas systems volume history Conventional Pipelines physical volumes(1) Gas Services physical volumes(1,2) 700 1,000 Illustrative Resthaven Shutdown Impact 900 600 800 500 700 MMcf/d Mbpd 600…
3 Commodity price considerations impact of pricing downturn Sustained financial performance Long-term record of dividend growth Growing dividends and funding growth 1,200 160 2.00 160 900 1.80 800 140 140 1,000 1.60 700 120…
3 Commodity price considerations crude oil pricing impact on Pembinas Crude Oil Midstream business Historical WTI pricing vs. Crude Oil Midstream operating margin 120 200 114 110 111 110 107 180 160 100 140 90 87 120 US /…
4 Credit considerations counterparty credit stats 60 day credit exposure(1,3) Additional credit exposure considerations Non Investment Grade AAA 1% Overall 60 day credit exposure: AA- to AA+ 21% 17% 60% with investment grade…
4 Credit considerations top 10 counterparty overview Top 10 counterparty exposure out of total Top 10 counterparty exposure(1) Top 10 counterparty credit ratings(2) exposure(1) Counterparty Credit rating Counterparty 1 BBB- / Ba2…
5 Execution considerations track record of success (pre-2016) Capital Cost Project Date in-service Completed on-time Completed on-budget Safety metric(1) (MM) Heavy Oil & Oil Sands Mitsue: ahead of schedule 1,100,000+ man hours &…
5 Execution considerations 2015 execution highlights 1.3 billion of strategic, largely fee-for-service assets were placed in service in 2015 Throughout 2015, Pembina commissioned numerous large-scale infrastructure projects across…
5 Execution considerations 2016 project updates Commissioning update Commercial / regulatory updates Edmonton North Terminal expansion Canadian Diluent Hub (CDH) 550 mbbls of additional storage capacity Commercial agreements for in…
6 Growth considerations future opportunities Super Majors + other well capitalized producers continue to commit significant capital to the Gas Services development of the Montney and Duvernay resources plays Large-scale…
6 Growth considerations M&A opportunities in all markets EV / operating margin multiple at acquisition Current EV / operating margin multiple 12.0x 11.6x 11.6x 11.3x 12.0x 10.0x 10.0x 10x 10.0x 9.7x 9.8x 10.0x 9.2x 8.0x 8.0x…
7 Funding considerations access to capital remains strong Financing considerations Total capital raised (2013 YTD 2016) 5.7 billion raised since 2013 (inclusive of DRIP 3.0 proceeds) Total capital raised 5.7 billion 2.4 billion…
8 Balance sheet considerations peer comparison 7.0x 6.0x 5.0x Debt / EBITDA (2016E) 4.0x 3.0x 2.0x 1.0x - BBB+ BBB BBB A- BBB+ A- A BBB BBB+ BBB BBB Ba2 NR Pembina continues to employ less leverage…
9 Phase III project update Phase III Expansion ALBERTA Phase III Expansions Phase III Expansion (under construction) Capital investment of 2.44 billion (tracking under Completed Phase III Expansion segment budget) Pembina crude…
Market Dynamics Scott Burrows
Volatility remains the key theme in commodity markets Historical crude oil pricing Historical natural gas pricing Historical indicative fractionation spread(1) 120 6.00 60 100 5.00 50 80 4.00 40 US / Bbl US / Bbl…
The worst might be over for North American propane markets Propane inventories + pricing US propane production (mbpd) US propane exports vs. capacity 1,600 120 US 1.60 1,400 100 1.40 1,400 1.20 80 1,200 1.00 US/Gal…
Condensate market dynamics Western Canada condensate supply and demand(1) Pembinas Canadian Diluent Hub 700 Reduction Due to Rail Forecast Demand (Bitumen Blending) 600 Supply - Base Case (WCSB Production) Supply - High Case…
Time-lapse Video of RFS II Construction
Break (15 mins)
Crude Oil Value Chain Paul Murphy
Crude oil value chain Pembina's integrated service offering Production Consumption Conventional & Oil Midstream Sands Pipelines Midstream Production Field Terminalling &Treatment LVP Feeder Terminalling Logistics & Spec…
Conventional Pipeline expansions could bring Alberta capacity to 1.5 million bpd 1,600 1,500 mbpd 1,400 260 1,200 420 Achievable through 1,000 modest investment in additional pump stations Mbpd 800 55 53 45 52 600…
Our Conventional Pipeline revenue volumes continue to grow Solid industry performance and strategically located assets have led to strength in Pembina's throughput profile 650 700 mbpd 614 mbpd 575 mbpd 600 492 mbpd 456 mbpd…
Strategic pipeline lateral program NEBC Expansion estimated late 2017 in-service ALBERTA 150 km, up to 12 HVP/LVP batched pipeline, underpinned by long-term, cost-of-service agreement Base capacity of up to 75 mbpd Taylor Altares…
Our Midstream assets are well-positioned and interconnected Synthetic Redwater Synthetic Diluent Oil Sands Diluent Pipelines Crude Namao Canadian Diluent Hub Local Refineries Export Crude Pipelines Edmonton Diluent…
Midstream assets are positioned to create significant optionality PNT-H (Canadian Redwater Diluent Hub Complex PNT-N (Namao) PNT-E (Edmonton North Terminal) Pembina Crude Oil Pipelines Pipeline Pembina NGL Pipelines…
Major development project update (LVP) Expected Tracking Tracking Regulatory Approval Project Status In-Service On Time On Budget Midstream Canadian Diluent Hub Yes Under Development Mid 2017 On Time Optimized Scope…
Expanding to meet customer demand Gas Services secured growth projects Total gas processing capacity (bcf/d) 2,000 1.8 140 4.5 1,800 1,600 470% Increase in capacity by H2 2017 100 100 Bcf/d 120 4.5 5.0 Bcf/d 100 4.0…
Paramount Kakwa acquisition top tier geology Overview Additional resource considerations The Alberta Montney is one of fastest Cretaceous land base resource growing areas within the WCSB potential of 11 Tcf of gas + liquids…
Paramount Kakwa acquisition (Newest member of the Cutbank Complex) Acquisition overview Illustrative regional map Pembina entered into an agreement to acquire Paramounts Musreau gas processing infrastructure for 556 MM Transaction…
NGL Midstream update (2014 2016) Operating / financial overview 2015 highlights + 2016 outlook NGL sales volumes (mboe/d) 2015 Highlights 130 Y-o-Y change -3% Another year of safe, reliable operations across all facilities 119 120…
Significantly growing our NGL fractionation capacity 300 248 250 mbpd 18 200 55 mbpd 150 73 100 9 8 50 85 - Sarnia & RFS I RFS Debottleneck RFS C3+ Debottleneck RFS II RFS III RFS III De-ethanizer Total (Q1…
Over 1 billion in capital projects at Redwater Rail Loading RFS I RFS II RFS III Operating & Under Construction Operating In service Under Construction Expanding facility to handle 250+ cars per 73,000 bpd C2+ fractionator 415 million…
Major development project update (NGL) Expected Tracking Tracking Regulatory Approval Project Status In-Service On Time On Budget Resthaven Expansion Yes In-Service Mid 2016 On Time Under Budget Services Gas Musreau III Yes…
NGL value chain Pembina's integrated service offering Downstream Production Consumption Conventional Gas Services Pipelines Midstream Propane Dehydrogenation & Propylene Production Propane Gathering, Export Mainline…
Value Chain Extension Stu Taylor
Alberta feedstock advantage creates 'value add' opportunities Feedstock Supporting assets Value add opportunity End use / value added product Natural Gas (C1) Gas processing Gas-to-Liquids Conversion Gasoline, Diesel, Methanol 4.5…
Doing more with the molecule propane market dynamics Illustrative WCSB propane supply & demand(1) Additional market considerations The revolution in unconventional drilling and liquids 200 WCSB Propane Supply Range production has…
Doing more with the molecule LPG export terminal LPG export terminal opportunity Shortest route to NE Asia from North America West Coast Pembina value chain extension opportunity Global opportunity Growing North American production…
Doing more with the molecules uses of polypropylene Polypropylene (PP) pellet type & selected end use Canadian PP Demand(1) 700 600 Volume ('000 Metric Tons) 500 400 300 200 PP Conversion 100 - Canadian PP…
Doing more with the molecule polypropylene market Polypropylene (PP) overview World plastic demand by polymer (2015)(1) PP is a downstream petrochemical product derived from the olefin monomer, PE derivatives propylene PP 224 mmta…
Kuwait Petroleum Corporation Qualifications Subsidiary Petrochemical Industries Companies (PIC) has agreed to a Joint Feasibility study with Pembina (Announced April 2016) PDH Experience PIC has 25% stake in SK Gas 600kTa PDH in…
Strategic project location Rail access Proximate to major pipelines Zoned heavy industry Salt cavern storage rights Lands available for world-scale development Pembina has secured an ideal site for potential PDH + PP development…
PDH considerations 'Investment Criteria' / 'Guard Rails' Pursue fixed price / turn-key EPC solutions to limit capital cost exposure / risks Evaluate project finance maintain a strong balance sheet and a strong investment grade credit…
Track record of value chain investment & extension Initial Extension Follow -on Pembinas Integrated NGL Value Chain Growth Results Investment Investment Pembina system Pipeline capacity now over 1,000,000 bpd 1954 - constructed to…
Capital Program Scott Burrows
Pembinas secured capital program progression Capital Revised Capital Paramount Program Program Acquisition 5.3 BB of (5.0 BB) assets to go into service 5.0 BB of Altares Lateral (70 2.9 BB left Aggregate revised assets MM) to…
We are pursuing a fee-for-service growth portfolio Relative Growth Project Portfolio S e c ure d G rowth P roje c ts In- S e rvic e Ca pita l Cost ( MM) Phase III Pipeline Expansions (1) Mid 2017 2,440 30% 28% NEBC Expansion (1) Late…
Project timelines & in-service dates Committed capital expected in-service date(1) Expected project timelines(1) SEEP 1.2 4.0 billion of capital expected to be put into service in 2016 Saturn II 3.5 Phase II Expansion…
Summary of individual project contributions 2,000 Phase III Laterals 600 - 950 million RFS III Fractionator RFS II Fractionator of potential incremental annual run-rate EBITDA 1,500 Canadian Diluent Hub once Pembinas committed…
We are committed to a low-risk business platform Summary of operating margin by type (MM)(1) 2 1% 2 15% 2 1% Total fee- 12% based = 1 17% 2% 84% Total fee- 1 17% 15% 1% based = 82% 1 14% Total fee- 22% 17% based = 81% 1 20%…
Strong Financial Platform Scott Burrows
Financing objectives Finance growth 50/50 debt/equity Maintain BBB rating with conservative balance sheet metrics Manage through the investment cycle Ensure ample liquidity to fund capital program Ensure financing flexibility to…
Debt metrics Total Debt / EBITDA Funds from Operations / Total Debt 5.0x 30% 4.0x 20% 3.0x % x 2.0x 10% 1.0x - - (1) (1) 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Total Debt / Total Book…
Long-dated debt maturity profile Pembina debt maturity profile Pembinas debt portfolio is more conservative 700 Senior Debt Convertible Debentures than its peer group: 600 Weighted average maturity of 14 years 500 400 vs. peer…
Funding plan and capital structure are equipped for growth Funding plan (2016 - 2017)(1) Capital structure (March 31, 2016) 4.0 3.5 BB (2016 2017) 3.5 Paramount (2) Paramount (2) 28% Paramount Equity Financing Equity Financing…
Dividend growth supported by growing cash flow 3.00 2.50 4.9% Dividend increase announced March 2016 2.00 / Share 1.50 1.00 0.50 - 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Dividend per share…
Conclusion Mick Dilger
We continue driving shareholder value 330 % total shareholder return* *Jan 1, 2006- Apr 1, 2016, inclusive of dividends reinvested. 5.0 % CAGR in dividends per share* * 2006 - 2015 4.1 billion in dividends paid since…
We produce exceptional performance Total return Pembina vs. S&P/TSX 700 Relative Total Return (100 = January 1, 2006) 600 500 330% 400 300 200 60% 100 - 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016…
Key take-away we are doing the important things right Strategically located and well-established infrastructure Extensive and diversified asset footprint with high barriers to entry, serving long-life, economic hydrocarbon reserves…
Non-GAAP, additional GAAP and other measures This presentation uses certain terms that are excluding preferred share dividends and (physical throughput on Pembinas systems). not defined by GAAP but are used by acquisition-related…
Business Overview
Pembina represents a unique investment opportunity Pure play energy infrastructure company that TSX: PPLNYSE: PBA allows investors to participate in the oil and Common shares outstanding(1) 387 million natural gas liquids industry…
Pembinas assets and businesses at a glance Midstream 155 mbpd of Redwater fractionation capacity; 20 truck terminals; 14.3 MMbbl storage; product marketing; 2.4 bcf/d extraction; Nexus Terminal hubs Gas Services(1) 468 MMcf/d…
Business Segment Overviews
Conventional Pipelines Pipeline operational excellence: 97%+ reliable (2015) ALBERTA Proximal to prolific geology FORT Q4 2015 revenue volumes: 621 mbpd (2% increase from Q4 2014) MCMURRAY DUNVEGAN TAYLOR 2015 revenue volumes: 614…
Crude Oil Midstream Develop and provide terminal, hub & storage services to ALBERTA ALBERTA support the energy industry Over 900 mbbls of above ground crude oil and FORT MCMURRAY condensate storage capacity + expansion potential…
Oil Sands & Heavy Oil Syncrude Pipeline Operational excellence Horizon Pipeline Cheecham Lateral 99+% reliable (2015) Nipisi Pipeline Mitsue Pipeline Diverse connectivity to various industry hubs for crude oil and Peace Pipeline…
Gas Services Operational excellence ALBERTA 97% reliable (2015) Positioned in active and emerging NGL rich plays FORT Provide gas gathering, compression and shallow/deep cut MCMURRAY processing services 468 MMcf/d shallow cut…
NGL Midstream Gas Processing Plant Fractionator Redwater West: Midstream Storage Facility Truck Terminal 155 mbpd of NGL fractionation capacity and 7.8 mmbbls of Rail Terminal Pembina Pipelines finished product cavern storage Third…
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