STRATEGY OVERVIEW Steve Spaulding President & Chief Executive Officer
Oil Infrastructure Focused 4 ~75% of 2020E EBITDA from core Terminals & Pipelines and ~85% Infrastructure POWDER RIVER SCOOP/ STACK PERMIAN BAKKEN UINTA EAGLE FORD EDMONTON HARDISTY OILSANDS DUVERNAY MONTNEY HARDISTY…
The Strategy Remains Consistent (1) Refers to EBITDA before inclusion of capital lease costs and is not comparable to figures prepared prior to the application of IFRS 16. (2) Based on 2020E. 2020E assumes a mid-cycle Marketing…
Delivery of January 2018 Strategy 6 Continue to deliver on all aspects of the strategy outlined at prior Investor Day Strengthen Balance SheetReduce Leverage & Payout Fund Capital Growth Internally Key Deliverables Outlined at…
Relative Total Return Performance 7 Outperformed the peer average in 2018, leading to ~125% return since IPO (1) Midstream Peer group includes; ENB, TRP, PPL, IPL and KEY. Total Return Since Investor Day 2018 vs Since Gibson IPO(1)…
Terminals Strategy 8 Crown jewel assets offering growing base of stable, long-term cash flows Supportive Long-Term Macroeconomic Outlook ? Demand for heavy crude in PADD II and PADD III continues to increase ? Once in service,…
Canadian Outside the Fence ? Network of ~500 km of 100% owned and operated pipelines driving volume into the Hardisty Terminal ? Existing connectivity into egress pipelines and access to storage at Hardisty Terminal provides…
U.S. Strategy 10 Seek to establish a platform for long-term infrastructure growth in the U.S. ? Execution focus, seeking to place both the Pyote system and connection into Wink into service by end of 2019 ? Important to continue to…
Marketing Capabilities 11 Creates value for customers and drives volumes to Gibson’s infrastructure assets ? Physically source hydrocarbons, providing increased liquidity and creating market access solutions for Gibson’s customers ?…
Financial Outlook Summary 12 Visibility to ~10% per share growth to 2020E; platform to sustain future growth Distributable Cash Flow(1) (C$ millions) / (C$ per Share ) Line of sight to delivering DCF CAGR of ~10% between 2017A and…
Long-Term Capital Allocation Priorities 13 Near-term focus on remaining fully-funded; steady dividend growth longer-term Fund the Business Return Capital to Shareholders ? Intention to provide steady, long-term dividend growth to…
Key Takeaways 14 Visibility to ~10% per share growth through 2020 Focused oil-infrastructure asset based with stable, long-term cash flows Delivering on all aspects of Gibson’s strategy Platforms to support attractive long term…
CORE TERMINALS POSITION Doug Atkins Vice President, Terminals
Flow of Canadian Heavy Crude Oil 16 Hardisty and Edmonton strategically positioned as hubs for Canadian exports OILSANDS EDMONTON TERMINAL HARDISTY TERMINAL ALBERTA & BC CONVENTIONAL PRODUCTION ~900 kbbl/d OIL SANDS PRODUCTION…
Role of Storage in Canadian Crude Flows 17 Storage critical infrastructure in day to day flows of crude in Canada Oil sands production is of many different grades, and since producers do not want it mixed with other grades, it…
Benefits and Relative Cost of Tankage 18 Tankage provides effective insurance for market access issues at a low cost Illustrative Netback for Canadian Heavy Crude Barrels Benchmark Gulf Coast Heavy Crude Price Without Tankage With…
WCSB Tankage Landscape 19 Gibson is a key player within its long-term focused target market Tankage at Hardisty Terminal(1) Uses of Tankage Gibson Other Tankage at Edmonton Terminal (mmbbl) Gibson Other (mmbbl) (1) Other…
Hardisty Competitive Position 20 Gibson has built all new third-party tankage placed into service in last decade Hardisty East Terminal 0.9 mmbbl 2015 Hardisty West Terminal Expansion 0.9 mmbbl 2016 Hardisty Top of Hill Phase 1 1.1…
Best-in-Class Connectivity at Hardisty 21 ? Flexibility offered by Gibson’s existing best-in-class connectivity provides a wide moat at Hardisty ? Key consideration for customers as it helps production volumes reach market at the best…
Gibson’s Other Advantages Hardisty Replicating Gibson’s competitive position not possible and cost prohibitive Land Position ? Located at the heart of the Hardisty footprint ? 240 acres of land adjacent to existing tankage, plus…
Expansion at Hardisty Terminal Continue to grow at Hardisty at an attractive 5x – 7x EBITDA build multiple HARDISTY WEST HARDISTY EAST HARDISTY TERMINAL BELLSHILL PROVOST Gibson connection to 180 mbbl/d rail facility(1) COLD…
Edmonton Terminal ? Edmonton Terminal benefits from advantageous positioning located next to two major refineries, access to both the CN and CP railway lines and being near both major egress pipelines ? Provides flexibility to offer both…
Supply & Demand of Western Canadian Crude 25 U.S. demand for Canadian heavy crude growing, but is limited by egress issues Western Canadian Supply & Egress (kbbl/d) (kbbl/d) Canadian Heavy Crude Exports to U.S. (kbbl/d) 0 1,000…
500 kbbl 1000 kbbl 1500 kbbl 2000 kbbl 4 - 6 8 - 12 12 - 18 16 - 24 Tankage Demand Outlook ? Near-term tankage at Hardisty largely driven by need for more flexibility and solutions for customers to move crude out of the basin in an…
Key Takeaways 27 Gibson’s position at Hardisty likely impossible to replicate Typical EBITDA investment multiple of 5x – 7x Expect to sanction 2 – 4 tanks per year on run-rate basis Underpinned by long-term contracts with…
OPERATIONAL CAPABILITY Michael Lindsay Senior Vice President, Operations & Engineering
Safety Performance and Objectives 29 Health and Safety a key competent of focus on Operational Excellence (injuries per 100 worker years) (injuries per 100 worker years) 1.40 TERMINALS PEER BENCHMARK 1.15 GIBSON 3-YEAR AVERAGE…
Operational Track Record 30 Gibson has built a track record of delivering projects on time and budget Hardisty Top of Hill (Phase 4) 1 Tank On or Ahead Trending In-line Hardisty Top of Hill (Phase 3) 2 Tanks On or Ahead Trending…
US STRATEGY Orin Atkins Vice President, Business Development
Strategy From 2018 Investor Day 32 Delivering on all facets of U.S. strategy well ahead of initial schedule 1 Hire U.S. Team Hired experienced U.S. commercial and operations teams Driving volumes to injection stations, with strong…
Pyote Gathering System 33 Connection into Wink in Q4 2019; anticipated EBITDA of $20-25mm in 2020E PYOTE EAST PIPELINE IN-SERVICE Q3 2019 EXISTING PYOTE PIPELINE PLAINS / EXXON JV PERMIAN PIPELINE IN-SERVICE MID 2021 MAGELLAN…
Future Opportunities at Pyote / Wink 34 Seek to further expand Pyote system and be part of build-out of Wink Hub ? Attract legacy production near existing Pyote pipelines onto the system ? Secure sufficient volumes on Pyote West…
Central Basin Platform Opportunities In discussions to add volumes on existing system and other opportunities in basin 35 PYOTE WARD PYOTE WEST SYSTEM PYOTE EAST SYSTEM CRANE ECTOR WINKLER ANDREWS LEA LOVING MIDLAND MARTIN…
Why Gibson is Winning in the U.S. 36 Approach tailored to the needs of the U.S. market is driving results Independent provider focused on tailored solutions for each customer Local U.S. commercial and operations teams with…
Key Takeaways 37 Expect to deploy $50 - $100mm per year on Infrastructure Growth Positioning to be part of build-out of Wink Hub Pyote and Andrews systems to provide platform for future growth Approach tailored to the needs of the…
FINANCIAL OUTLOOK Sean Brown Chief Financial Officer
Segment Profit Outlook ? Significant growth in the core Infrastructure segment over time, with a ~20% CAGR between 2011 and 2020E ? Infrastructure expected to generate $300 – $320 million in Segment Profit in 2019E, $360 – $380 million…
Distributable Cash Flow Outlook 40 Growth in core Infrastructure driving per share growth Marketing Outperformance Divested Business Mid-Cycle Marketing Core Infrastructure (Less Corporate Expenses) Distributable Cash Flow With…
Strong Financial Position 41 Leverage and payout ratio currently below target ranges (x) (%) Targeting long-term leverage of 3.0x – 3.5x Targeting long-term payout of 70% to 80% (1) Debt leverage ratio for covenant purposes as…
Funding Position Through End of 2019 42 Fully-funded for currently sanctioned capital, with cushion continuing to build 2018 Growth Capital 2018 Retained DCF & Associated Leverage Disposition Proceeds 2019 Growth Capital (1)…
Long-Term Funding Approach 43 Infrastructure capital to be funded with combination of debt and equity Capital Deployed Run-Rate EBITDA at 5x – 7x Target Leverage on Investment Implied Leverage Required Retained DCF (C$mm)…
Funding Position For 2020 & 2021 44 Fully funded through 2021, with cushion for additional capital 2018-2019 Carry-Over (1) Assumes target leverage of 50-60% on Infrastructure investment. (2) Illustrative funding analysis may not be…
Growth Capital Outlook 45 Expect to sanction $200 to $300 million of infrastructure growth per year ? Long-term take-or-pay and stable feebased, with weighted average remaining contract life of nearly 10 years ? ~85% Investment Grade…
Internal Return Metrics ? Gibson’s core Hardisty and Edmonton Terminals have offered consistent, attractive returns since IPO and are expected to continue to create meaningful value at target 5x – 7x EBITDA build multiples ? Anticipate…
Complete Transformation of Business (1) 2014 and 2017 EBITDA adjusted for estimated finance lease payments to be comparable to 2020E under IFRS 16. (2) Take-or-pay intercompany contracts currently represent approximately 20% of…
Contract Quality & Balance Sheet Comparison 48 Attractive contract quality and best-in-class leverage relative to peer group (x) 0.0x 2.0x 4.0x 6.0x Peer A Peer B Peer C Peer D Peer E GEI Source: Peer ratios per CIBC Capital…
Impact of Reaching Investment Grade Investment grade rating reflective of major improvement in credit quality Benefits of Reaching Investment Grade Decreased Cost of Capital Access to Cdn. Preferred Market Access to Longer Term…
Governing Principles 50 Committed to maintaining a strong financial position by managing to key targets Quality of Cash Flows Funding Model Financial Flexibility Creditworthy Counterparties Strong Balance Sheet Maintain & Improve…
CONCLUDING COMMENTS Steve Spaulding President & Chief Executive Officer
Concluding Comments 52 Continue to deliver on all facets of the strategy, with visibility to further growth Infrastructure Growth Strong Balance Sheet Focused Asset Base ? Leverage to remain with target 3.0x – 3.5x Debt / EBITDA range…
GIBSON ENERGY 2019 INVESTOR DAY APPENDIX
Board of Directors Complementary, deep and specialized experience JAMES ESTEY 8 YEARS DOUGLAS BLOOM 3 YEARS JAMES CLEARY 6 YEARS MARSHALL McRAE 8 YEARS MARY ELLEN PETERS 5 YEARS ? Chair of the Board, Chair of the Corporate…
Shift in Corporate Culture 55 Transformation includes change in culture and focus on employee share ownership ? Fundamental belief that employees throughout the organization need to also be owners ? Drives alignment with external…
Oil Sands Development 56 Projects currently under development or expected to be sanctioned by 2025 Inflight Growth Projects(1) Near-Term Growth Projects(1,2) Source: TD Securities Inc, Gibson Internal Estimates. (1) Assumes…
Infrastructure Growth Capital 57 Invested $1.5B in Infrastructure since 2011, including 10.5 mmbbl of tankage Infrastructure Growth Capital Expenditure 2011A - 2019E (C$ millions) 2019E to be ~$250 2 Tanks, 0.6 mmbbl 2 Tanks, 0.8…
Loading...
