May 2017 Investor Presentation – Pembina Pipeline Corp

Pembina Pipeline Corp · May 16, 2017 · 125 slides

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Slides

Investor Day M a y 1 6 , 2017 TSX: PPL; NYSE: PBA
Our team presenting today and agenda Agenda and Presentation Outline Presenter Introduction and Pembina Overview Mick Dilger Mick Dilger Scott Burrows The 'Purpose' of Pembina Mick Dilger President & Vice President Chief Executive…
Introduction and Pembina Overview Mick Dilger
Update since last Investor Day 8.9 million hours worked safely by employees since 2014 (3rd consecutive year of no employee lost-time injuries)(1) Record 2016 adjusted EBITDA of 1.2 BB and ACFPS of 2.54 Record Gas Services volumes of…
Veresen combination highlights Near-term secured growth increases from One of Canada's 4 BB Low risk business to largest energy infrastructure platform: 5.8 Bcf/d companies: 6 BB 85%+ of combined gas processing by 33 BB…
Pembina represents a unique investment opportunity Pembina Veresen Combined Common shares outstanding(1) 401 million 314 million 501 million TSX common share trading price (1) 43.25 18.45 43.25 TSX 52-week trading range (1) 36.36 -…
MONTNEY (Resource Life 140 years) OIL SANDS Combined Pembina and (Resource Life 145 years) Veresen Asset Base DEEP BASIN FORT McMURRAY (Resource Life 40 years) TAYLOR Pembina Gas Processing Plant Veresen Gas Processing Plant…
MONTNEY (Resource Life 140 years) OIL SANDS (Resource Life 145 years) Combined Pembina and DEEP BASIN FORT McMURRAY (Resource Life 40 years) Veresen Asset Base SWAN HILLS Pembina Gas Processing Plant Veresen Gas Processing Plant…
Integrated, customer-focused value chain Empress, Sarnia and Corunna Value chain extension opportunities (Mainline Extraction, Fractionation, Distribution) Gas & NGL Propane Via NGTL exports NGL Storage Fractionation…
Key strategic rationale diversification Pembina Veresen Pro Forma 3% Pipelines 25% 27% Processing Operating Segment 34% 53% 58% (2018 EBITDA)(1) 13% 70% 17% Midstream (NGL & Crude) 6% 13% Crude Oil 35% 33% Hydrocarbon Mix…
Holistic approach to creating value: The 'purpose' of Pembina Mick Dilger
The 'Purpose' of Pembina For our stakeholders to view us as being the leader in the Canadian energy infrastructure sector, namely: We ensure no harm to people or the environment; We are the 'first choice' by customers to…
Ensure no harm to people or the environment Employee recordable injury rates per 200,000 hours worked in 2016 Employee lost-time injury rates per 200,000 hours worked in 2016 1.00 0.5 0.50 0.4 0.1 0.1 - 0 0.0 CEPA CEPA…
We are our customers' 'first choice' Multi-product service offering Potential discounts for multiple service commitments Volume discounts Ability to align commitments across the value chain (i.e. outage coordination) Linked…
We provide sustainable industry-leading returns to our shareholders (10 years) Total return: Pembina vs S&P/TSX Energy Infrastructure 700 440% Relative Total Return (100 = January 1, 2007) 600 500 400 300 200…
We provide sustainable industry-leading returns to our shareholders .00 Possible 2018 EBITDA/share range 2006 2016 Increase (Combined) .50 (MM) (MM) (%) 5.10 - 5.50(1) .00 Consolidated Operating Margin 215 1,335 520% Conventional…
We have a trustworthy, respectful, collaborative and fair work culture making us the 'employer of choice' Employee summary Recognized for being a top employer An employee culture that gives back Employee engagement and…
We set the standard for harmonious relationships with all of our stakeholders Historical Community Investment 2016 Community Investment Aboriginal Relations 4.0 3.8 Supported/invested in: 36 MM in procurement to Aboriginal 31…
Staying true to our strategy of increasing value and decreasing risk Mick Dilger
We remain confident in our strategy Pembina's strategy Veresen's alignment Preserve value Both companies have a proven record of supporting safe, reliable and by providing safe, cost-effective, reliable services cost-effective…
A proven track record of value chain investment and extension Initial Extension Follow on Integrated Value Chain Highlights Investment Investment Pembina system constructed to Largest NGL feeder system in bring product from Drayton…
The evolution of Pembina's value chain Pembina's operating margin (MM) Gas services creation value chain extension 1 (attract liquids to conventional pipelines) 0 Provident acquisition value chain extension 0 2 (downstream services…
Pembina and our largest Canadian peers WCSB Liquids Gathering Capacity(1) and Estimated Throughput(2) WCSB Above and Below Ground Hydrocarbon Storage Capacity(1) 3,000 Phase III and IV (Mid -2017 Capacity Contracted Throughput 12…
Large-scale combined growth capex program 0 (Unsecured Growth) Pembina 0 Veresen 20 BB 0 Alliance Expansion Incremental 0 Veresen Midstream (Secured Growth) PDH/PP Facility 0 Peace Expansion Export Terminal 6 BB Duvernay 0 2.4…
Pembina is on very strong growth trajectory Historical Adjusted EBITDA and 2018 Outlook 2.55 BB to 2.75 BB 1.8 BB to 1.9 BB 1,189 MM 983 MM 920 MM Contribution from growth projects Commodity prices (1) 2014 2015 2016…
Dividend growth supported by growing cash flow 3.00 2.50 2.00 /Share 1.50 1.00 0.50 - 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E Dividend per share Adjusted cash flow from operating…
Proven M&A track record EV/operating margin multiple at acquisition Current EV/operating margin multiple 12.1x (2018E) 11.8x 12.0x 11.6x 11.6x 12.0x 10.0x 10.0x 10x 10.0x 10.0x 9.2x 8.7x 8.9x 8.9x 8.0x 8.0x 7.5x 6.0x 6.0x…
Investing for tomorrow Historical integrity and support infrastructure spending(1) Pipeline and facility integrity 300 Volumetric management systems 200 Project development and governance frameworks MM Accounting…
Stabilizing macro environment supporting our resilient customer base Stu Taylor
Modest recovery to stability in commodity prices Crude oil pricing Natural gas pricing Indicative fractionation spread(1) 120 6.00 60 100 5.00 50 80 4.00 40 US / Bbl US / Bbl C / Gj 60 3.00 30 40 2.00 20 20…
Market conditions are supporting increased activity WCSB rig count WCSB rig utilization 700 60% 51% 600 500 39% 40% 37% 400 30% 26% 26% 300 23% 23% 20% 200 20% 13% 12% 100 8% - Jan Feb Mar Apr May Jun Jul Aug Sep Oct…
Propane markets have continued to improve Propane inventories US propane production US propane exports vs. capacity 1,600 120 US 1,400 100 1,400 80 mmbbls 1,200 60 1,200 40 1,000 20 - 1,000 800 mbpd Jan Feb Mar…
WCSB resource plays and top 10 producers Montney(1) Duvernay(1) 7.0 400 4,050 producing wells CAGR 23% 405 producing wells CAGR 245% 6.0 (70% of total) (95% of total) Total Production (MMcfe/d) Total Production (Bcfe/d)…
2016 was a year of repositioning for customers Producers have seen share prices recover They completed strategic transactions 180 1.4 BB 1.9 BB 170 160 700 MM 625 MM Relative Performance (Base = 100) 150 148 556 MM 538 MM…
Attractive netbacks in key WCSB resource plays Illustrative resource play analysis (Q4 2016) (C/Boe)(1) Deep Montney Montney Swan Cardium Basin (Gas) DuvernayMontney (Oil) (Oil) Hills Oil Oil Estimated cash netback Deep Basin…
Our customers focus on long-life economic reserves North American Gas resource play break even(1) North American Oil resource play break even(1) 3.50 Denotes plays which Pembina serves Denotes plays which Pembina serves 60 3.00…
Building something extraordinary: commissioning 4 billion of new capital projects and positioning for long-term growth Paul Murphy
Hydrocarbon pipeline transportation capacity 3,500 Hydrocarbon Liquids Natural Gas 3.2 MMboed 125 In-service 3,000 138 Project under development 330 Uncommitted Project 250 2,500 180 2,000 420 Mboed 230 1,500 389…
Summary of major projects completed in 2016 (LVP) Horizon Expansion Expansion of the existing system to 250 mbpd Included upgrading of mainline pump stations and other facility modifications Completed on time and under budget…
Project execution highlights LVP Value Chain Safety metric(1) Capital Cost LTI Project In-service date Completed on-time Completed on-budget Man Hours Travel (km) (MM) Frequency Heavy Oil & Oil Sands Horizon Expansion 130 July 2016…
Pembina Crude Oil Pipelines 3 Pembina NGL Pipelines Railway TAYLOR FORT McMURRAY GIBBONS 4 FORT SASKATCHEWAN NAMAO JOSEPHBURG 2 Pembina Gas Processing Plant Veresen Gas Processing Plant 1 4 Pembina Fractionator…
1 Phase III Conventional Pipelines Project overview Construction update Largest expansion project in Pembina's history Expected Key accomplishments in 2016 capital investment of 2.44 billion Received AER approval in April 2016 880…
1 Phase III Construction Photos Conventional Pipelines 44
2 Phase IV and Phase V Conventional Pipelines Project overview Construction update Ongoing customer demand additional pipeline Key activities and accomplishments in 2017 expansions Phase IV: Phase IV: 75 million in capital Move…
3 NEBC Montney Expansion Conventional Pipelines Project overview Construction update Large-scale pipeline expansion Expected capital Key accomplishments in 2016 investment of 235 million Completed detailed engineering design…
3 NEBC Montney Expansion Construction Photos Conventional Pipelines 47
4 Canadian Diluent Hub Crude Oil Midstream Project overview Construction update Large-scale diluent terminal designed to accommodate diluent Key accomplishments in 2016 supply from Pembina's integrated value chain Expected Started…
4 CDH Overview Crude Oil Midstream CDH will be cost competitive with alternative routing to CDH offers storage to third parties in either cavern or above connected delivery pipelines ground tanks Cavern Storage at RFS Currently in…
4 Canadian Diluent Hub Construction Photos Crude Oil Midstream 50
5 Edmonton North Terminal (ENT) Crude Oil Midstream Project overview Construction update Original storage on site 300 mbbls Key accomplishments in 2016 Provides strategically-located storage upstream of pipeline alley Completed Swan…
5 Edmonton North Terminal Construction Photos Crude Oil Midstream 52
6 Potential Alliance Pipeline Expansion Expansion considerations Illustrative Alliance map In response to shipper demand to access the premium Chicago Septimus Gas Plant market, Alliance is evaluating a potential expansion to…
Drone footage Aerial footage of Pembina's LVP growth projects 54
Building something extraordinary: commissioning 4 billion of new capital projects and positioning for long-term growth Stuart Taylor
Summary of major projects completed in 2016 (HVP) Musreau III 100 MMcf/d shallow cut facility with liquids capacity of 3,000 bpd Completed on time and under budget in April 2016 Leverages engineering and design work from our existing…
Project execution highlights HVP Value Chain Safety metric(1) Capital Cost LTI Project Date in-service Completed on-time Completed on-budget Man Hours Travel (km) (MM) Frequency Gas Services Musreau III 85 April 2016 Ahead of…
Creating the WCSB's largest third-party gas processor 7,000 In-service 5.8 Project under development + Duvernay Potential Bcf/d 6,000 470 5,000 4.2 897 60 100 Bcf/d 243 4,000 MMcf/d 3,000 2,088 2,000 325 234…
Fractionation capacity across three NGL market hubs 350 300 Edmonton Sarnia, Ontario US Midcontinent mbpd 300 250 56 250 mbpd 20 18 200 Mbpd 55 150 73 100 (2012) 9 8 50 65 - RFS I RFS RFS C3+ RFS II RFS III…
Significant growth in hydrocarbon storage capacity Hydrocarbon storage capacity (underground and above ground) 6.0 Underground Storage Capacity (Redwater and Veresen) Above Ground Storage Capacity 14.2 In-Service Project Under…
HVP Value Chain Growth Pembina Gas Processing Plant Veresen Gas Processing Plant 4 2 III RFS Pembina Fractionator TAYLOR Pembina Conventional Pipelines RFS II Pembina Oil Sands Pipelines Pembina Gas Gathering Pipelines 6…
1 Duvernay I Gas Services Project overview Construction update Development of a new 100 MMcf/d shallow cut gas plant Key accomplishments in 2016 Expected capital investment of 125 million (gross) Completed design engineering NGL…
1 Duvernay I Construction Photos Gas Services X 63
2 Duvernay Field Hub Gas Services Project overview Construction update Developing an infrastructure network that extends the Key accomplishments in 2016 reach of Pembina's Duvernay I facility Expected capital Completed 1.2 km access…
2 Duvernay Field Hub Construction Photos Gas Services 65
3 Duvernay infrastructure development opportunity Illustrative Duvernay development map(1) Overview Infrastructure development and service agreement with Chevron Canada Limited (Chevron) 20-year agreement with a significant area of…
4 RFS III NGL Midstream Project overview Construction update New 55 mbpd C3+ fractionator at Pembina's Redwater site Key accomplishments in 2016 Expected capital investment of 415 million Delivery and installation of all equipment…
4 RFS III Construction Photos NGL Midstream 68
5 Terminalling Services for NWR Sturgeon Refinery NGL Midstream Project overview Construction update Provide terminalling services for Sturgeon Refinery (North Key accomplishments in 2016 West Redwater Partnership) under a 30-year…
5 Terminalling Services for NWR Sturgeon Refinery Photos NGL Midstream 70
6 Gas Processing Facilities Veresen Midstream Construction Photos Project overview (gross capacities) Construction update 400 MMcf/d sweet gas processing plant Estimated cost: 860 MM (gross) 5,700 bpd NGL (C3+) recovery Overall…
7 Burstall Ethane Storage Cavern Veresen growth project Construction Photos Project overview Construction update Salt cavern ethane storage facility with a Key accomplishments in 2016 capacity of 1 million barrels Completed site…
Drone footage Aerial footage of Pembina's HVP growth projects 73
The future doing more with molecules we already handle Challenge the WCSB is oversupplied Opportunity economically advantaged feedstock with numerous hydrocarbons supports value-add infrastructure development Product Value-add…
Illustrative WCSB propane supply/demand considerations 250 200 Propane Volume (Mbpd) 150 100 50 - 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Alberta Demand Eastern Canadian Demand CKPC…
LPG export terminal LPG export terminal opportunity Illustrative shipping considerations Global opportunity Growing North American production and robust international market demand Decrease of traditional markets Eastern Canada…
Assessing LPG West Coast Export Terminal Opportunity Watson Island potential site highlights Signed a non-binding letter of intent with the City of Prince Rupert Site features sheltered berth, adequate existing dock infrastructure,…
Proposed PDH/PP Facility Overview Proposed PDH/PP Facility Different grades of PP have different characteristics Automotive Pembina and PIC are progressing a proposed world-scale integrated Housewares PDH/PP production facility to be…
PDH/PP Uses/Supply/Demand World Plastic Demand by Polymer(1) Canadian PP Demand(1) Polyethylene 700 PP 250 mmta derivatives account 600 for a combined 92 Volume ('000 MT) Other 26% 500 36% mmta (38%) with 400 PP having the…
Project update key developments since announcement Completed detailed feasibility study reviewed target markets, preliminary engineering, logistics and cost-competitiveness Executed 50/50 Joint Venture (JV) agreements, including:…
Jordan Cove LNG overview Project Considerations Illustrative Site Layout Why Jordan Cove Jordan Cove LNG Terminal Price competitive with USGC brownfield 7.8 MMTPA(1) (1.3 Bcf/d) greenfield on a delivered into Tokyo basis liquefied…
Committed to maintaining our financial 'Guard Rails' Scott Burrows
Financial 'Guard Rail' considerations Pembina Pembina Combined (2015A) (pre-transaction) Maintain target of 80% fee-for-service 84% 87% 1 77% (2018 2022) (2018 2022) contribution to EBITDA 16% 20% 20% 2 Maintain 'strong' BBB…
Maintain target of 80% fee-for-service 1 contribution to EBITDA Contribution by contract type (MM) Fee-based = Fee-based = Fee-based = Fee-based = Fee-based = 77% 77% 80% 83% 86% 3 4% 3 10% 4% 16% 2 5% 13% 2 15% 18% 4% 1%…
2 Commitment to a strong 'BBB' credit rating (Managing toward target credit metrics) Considerations Debt/Adjusted EBITDA (2018 Forecast)(1) Unwavering long-term financial strategy: 4.5x Financing growth 50% debt/50% equity 4.0x…
Target 75% credit exposure from investment grade 3 and secured counterparties 60-day credit exposure(1,3) Credit considerations AA- to AA+ Non Investment Grade 20% Pembina assesses all counterparties during on-boarding 20% process…
Target
5 Pembina is on a very strong growth trajectory Historical Adjusted EBITDA and 2018 Outlook 2.55 BB to 2.75 BB 1.8 BB to 1.9 BB 1,189 MM 983 MM 920 MM Contribution from growth projects Commodity prices (1) 2014 2015…
Continuing financial strength and ability to access markets to fund growth Scott Burrows
Larger and stronger together Total enterprise value (BB)(1) Relative positioning (EV BB)(1,2) 35 Veresen Pembina 33 Market Capitalization Net Debt 30 106 106 Pro Forma 23 25 20 45% 15 Increase 10 5 - Current Combined 2018…
Commodity price considerations Sustained financial performance Long-term record of dividend growth Growing dividends and funding growth 1,600 160 2.00 160 1,200 1,400 140 140 1,000 1.60 1,200 120 120 800 1,000 100 100…
Capital expenditure and financing objectives 20142015 2017 Capital expenditure and funding 2016 2017 (Standalone) 2018 (Combined) (Combined) Financing objectives 3.0 2017/2018 Capital 3.5 BB Finance growth 50/50 debt/equity…
Pembina's access to capital remains strong Financing considerations Total capital raised 7.6 billion (2013 2017 YTD) 7.6 billion raised since 2013 (inclusive of DRIP(1) 3.5 proceeds) 3.1 3.1 billion of debt raised since 2013 3.0…
Leverage comparison across industry Select Canadian and US energy infrastructure peer comparison 7.0x 6.0x 5.0x Debt / EBITDA (2018E) (Combined) 4.0x 3.0x 2.0x 1.0x - BBB A- A- BBB+ A BBB+ BBB+ BBB BBB…
Historical balance sheet review Historical debt/trailing twelve month (TTM) Adjusted EBITDA and capital expenditures 4.5x 800 4.0x 700 3.5x 600 3.0x Debt / TTM EBITDA (x) 500 2.5x MM 400 2.0x 300 1.5x 200…
Long-dated debt maturity profile Pembina's debt portfolio is more conservative Pembina's current debt maturity profile(1) 600 than its peer group: Senior Debt Convertible Debentures Weighted average maturity of 13 years 400 vs.…
Conclusion Mick Dilger
We continue driving shareholder value (past 10 years) 5% Dividend growth rate(1) 8 - 10% 440% Total shareholder Target adjusted return(2) cash flow per share growth 18% 5.1 BB Average compound annual return(2) in dividends…
Key deliverables for the next 12 months Maintain exemplary safety and reliability record Deliver 6 billion of growth capital projects on time and on budget Successfully close and integrate the Veresen acquisition Deliver…
Closing thoughts Proven history of safe and reliable operations while developing enduring relationships with local communities Our long-term strategy remains unchanged and continues to create significant shareholder value The…
Contact Us: Pembina Pipeline Corporation Suite 4000, 585 8th Avenue S.W. Calgary, AB T2P 1G1 www.pembina.com investor-relationspembina.com Toll Free: 1-855-880-7404 Phone: (403) 231-3156