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Analyst Day – Questar Corp

Questar Corp · Mar 7, 2014 · 108 slides

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Slides

  1. Analyst Day – Questar Corp – slide 1
    Analyst Day Salt Lake City, Utah March 7, 2014 Making lives better by developing and delivering essential energy
  2. Analyst Day – Questar Corp – slide 2
    CORPORATE DATA ANALYST CONTACT: Ticker symbol and stock exchange: STR-NYSE Tony Ivins At March 5, 2014 Vice President Investor Relations Average daily trading volume (3 mos.): 926,000 shares & Corporate Treasurer Closing Price: 23.80…
  3. Analyst Day – Questar Corp – slide 3
    Introduction and Overview Making lives better by developing and delivering essential energy
  4. Analyst Day – Questar Corp – slide 4
    Questar Gas Achieved 1. Generate net income of 50.5MM // Adjusted net income was 52.8MM 2. Hold unit O&M expense to 145 per customer // O&M expense was 144 per customer 3. Earn authorized 10.35% return on equity // Adjusted ROE was…
  5. Analyst Day – Questar Corp – slide 5
    Maintain and grow our vertically integrated business model Overall Strategy Develop and deliver essential energy in the western U.S. Manage commodity-price exposure and earnings volatility Meet customers energy needs through safe,…
  6. Analyst Day – Questar Corp – slide 6
    Western United States IDAHO Primarily Utah, WYOMING Wyoming and Idaho UTAH Wexpro develops low-cost natural gas for Questar Gas utility customers under the 1981 Wexpro Agreement Questar Pipeline transports and stores natural gas in…
  7. Analyst Day – Questar Corp – slide 7
    2013 Adj. Earnings 213.6MM* Wexpro - 19.9% earned ROE (2013) Wexpro - 100% equity capitalization 110.6 MM - 590 MM investment base (Dec 2013) 52% QPC* 60.6 MM QGC Wexpro 28% Questar Pipeline (QPC) 52.8 MM 25% - 11.75% allowed…
  8. Analyst Day – Questar Corp – slide 8
    Jim Livsey EVP & COO Making lives better by developing and delivering essential energy
  9. Analyst Day – Questar Corp – slide 9
    Jim Livsey EVP & COO - Introduction and cost-of-service growth opportunities Brady Rasmussen VP Administration - Wexpro Agreement overview Jimmy Druce GM Operations - Operations Justin Woody VP Engineering & Geoscience - Reserves…
  10. Analyst Day – Questar Corp – slide 10
    Ohio Oil discovers South Baxter gas field in 1922 Pipeline of 1929 - moves gas to SLC utility Mountain Fuel Supply incorporated in 1935 Since its inception the company has always had an ongoing exploration and production program to…
  11. Analyst Day – Questar Corp – slide 11
    Powell (1974) Mesa (1955) Dry Piney (1957) Baxter Birch Creek Bruff (1922) (1957) Creston (1961) Church Buttes (1972) (1946) Trail & Canyon Creek Brady (1941) (1972) Powder Wash Clay Basin (1931) (1927) Hiawatha…
  12. Analyst Day – Questar Corp – slide 12
    Jim Livsey EVP & COO Justin Woody Jimmy Druce Brady Rasmussen Bill Davey Chris Beilby VP Engineering & General Manger VP Administration Manager Manager Geoscience Operations Drilling Completions Brent Greenhalgh Gary Stidham…
  13. Analyst Day – Questar Corp – slide 13
    Questar Gas retained production from existing gas wells - Future production from productive gas reservoirs delivered at cost-of-service Established oil revenue sharing mechanism - 54% of oil profits credited to utility customers -…
  14. Analyst Day – Questar Corp – slide 14
    Wexpro earns a specified return on successful wells - Includes recovery of income taxes - Producing wells existing at the date of the Wexpro Agreement earn at utility return - currently 7.64% - New Wexpro investment earns at base…
  15. Analyst Day – Questar Corp – slide 15
    Primary oversight assigned to - Utah Division of Public Utilities - Staff of the WY PSC - Agreement provides for two independent monitors Hydrocarbon Monitor (David Evans) Accounting Monitor (Eide Bailly) Arbitration procedures…
  16. Analyst Day – Questar Corp – slide 16
    Major Provisions Capital Expenditures Operating Costs Successful wells & Dry holes Questar Gas reimburses costs non-drilling costs Excluded from Wexpro receives a return on No profit component investment base - investment base…
  17. Analyst Day – Questar Corp – slide 17
    Production Tax 7% LOE 6% G&A 7% Royalties 13% Depreciation 24% 67% Finding Cost Return On Investment Driven With Fed+St. Tax Reimbursement 43% 17
  18. Analyst Day – Questar Corp – slide 18
    Investment Base Successful wells * Net Income (Millions) Depletion (Millions) Deferred taxes 589.7 110.6 103.9 531.1 95.2 474.4 88.1 456.6 431.9 80.7 410.6 73.9 2008 2009 2010 2011 2012 2013 2008 2009 2010 2011 2012 2013…
  19. Analyst Day – Questar Corp – slide 19
    300 259 250 236 214 199 200 187 167 MM 150 100 50 0 2008 2009 2010 2011 2012 2013 19
  20. Analyst Day – Questar Corp – slide 20
    8.00 1,750 Cumulative savings for Questar Gas customers (MM) 7.00 1,500 (Source: Wexpro records) Purchased 6.00 gas /Dth 1 Forward curve 1,250 5.00 1,000 4.00 750 3.00 500 2.00 1.00 250 Cost-of-service /Dth 2 0.00 0…
  21. Analyst Day – Questar Corp – slide 21
    Water disposal is one of our largest operational costs New evaporation facilities in Vermillion are projected to reduce water disposal costs by 60% Trail facility went into operation Jan 9th, 2014 Canyon Creek facility will begin…
  22. Analyst Day – Questar Corp – slide 22
    8.00 Wexpros 4Q-2013 total cost structure versus 12 E&P peers* (LOE + production taxes + G&A + interest + DDA) 7.00 Peer Average 6.00 Wexpro 4.17/Mcfe 5.00 2.83/Mcfe* (Excl. 20% AT return) 4.00 3.00 2.00 1.00 0.00 Low costs and…
  23. Analyst Day – Questar Corp – slide 23
    Real-Time Data SCADA Analytics Dashboards (Spotfire) Field Production Operations Engineering 23
  24. Analyst Day – Questar Corp – slide 24
    1000 100 900 90 800 80 Production NRI Bcfe 700 70 Reserves NRI Bcfe 600 60 500 50 400 40 300 30 200 20 100 10 0 0 Reserves Production Reserves Replacement R/P Ratio 177 Bcfe / 64 Bcfe = 276% 845 Bcfe /…
  25. Analyst Day – Questar Corp – slide 25
    140,000 120,000 100,000 41% 51% 48% 49% 49% 32% 80,000 MDth 60,000 40,000 59% 68% 52% 49% 51% 51% 20,000 - 2008 2009 2010 2011 2012 2013 Equity Purchased 25
  26. Analyst Day – Questar Corp – slide 26
    Wexpro Drilling 2014 Program PA-C MM Pinedale-Mesa 11 41 SEIS provides for: Recompletions 2 1 6 sq. mile CDA (Concentrated Development Area) General Plant 7 South to north movement TOTAL 13 49 Once on pad - stay on pad not to…
  27. Analyst Day – Questar Corp – slide 27
    1.81 1.80 1.82 1.44 1.35 1.08 2008 2009 2010 2011 2012 2013 * NOTE: Includes Wexpro-operated and non-operated development wells and recompletions. 27
  28. Analyst Day – Questar Corp – slide 28
    Evaluating 3 basins/800 fields Acquisition analysis focused on fields that could provide COS at reasonable prices Green - Finding cost should work for COS Blue - Finding cost is borderline for COS Red - Finding cost doesnt work…
  29. Analyst Day – Questar Corp – slide 29
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  30. Analyst Day – Questar Corp – slide 30
    Green River Uinta-Piceance Basin Basin Green Green River River Wasatch Wasatch Fort Union Lance Fox Hills Lewis Mesaverde Almond Mesaverde Rollins Canyon Creek & Trail Sands…
  31. Analyst Day – Questar Corp – slide 31
    Most of our operations are in this area Dry-gas basin Long exploration history Abundant mature fields Existing Questar infrastructure PDP assets with PUD growth potential 31
  32. Analyst Day – Questar Corp – slide 32
    Significant oil, gas and liquids potential Established gas, oil & liquids plays Existing Questar infrastructure 32
  33. Analyst Day – Questar Corp – slide 33
    Dry-gas basin Production-heavy assets Good PUD growth potential 33
  34. Analyst Day – Questar Corp – slide 34
    Big Horn 700-800 future development locations Wind River 1.1 billion of future identified Pinedale 40 Locations investment WYOMING Annual investment driven by Moxa Green River 140 Locations pace of field development,…
  35. Analyst Day – Questar Corp – slide 35
    Key Provisions - Provides mechanism to acquire Rockies gas properties for future development - Modeled on provisions of original Wexpro Agreement Initial investment earns utility rate of return currently 7.64% Future development…
  36. Analyst Day – Questar Corp – slide 36
    Trail acquisition - Approved Utah 1/17/2014 Wyoming 1/27/2014 - Approximately 103 million will be treated as cost-of-service effective 2/1/2014 - Major issue in obtaining approval was cost-of-service gas supply percentage Parties…
  37. Analyst Day – Questar Corp – slide 37
    Acquire producing properties with future drilling potential - Having a property immediately available allows quicker execution of new cost-of-service arrangements - Reaching out to nearby utilities and large end-use customers Utility…
  38. Analyst Day – Questar Corp – slide 38
  39. Analyst Day – Questar Corp – slide 39
    Allan Bradley President & CEO Transmission Storage G&P Energy Services Making lives better by developing and delivering essential energy
  40. Analyst Day – Questar Corp – slide 40
    Key Facts & Statistics Map of Operations Serves Questar Gas, other utilities and major export pipelines from four Rockies hubs WYOMING Questar Pipeline IDAHO Overthrust Pipeline Provides transportation and underground storage…
  41. Analyst Day – Questar Corp – slide 41
    Operational efficiency and effectiveness Safety and reliability best in class Flexibility to meet changing demands Commercial Excellence Fully-contracted Hub of the Rockies Reputation of trust, responsiveness, compliance…
  42. Analyst Day – Questar Corp – slide 42
    EBITDA ( millions) Average Deliveries (Mdth/d) 250 3500 3000 2891 200 2765 182 182 181 177 2537 176 2450 165 2500 2178 150 2000 128 1711 1500 100 1009 1000 50 500 312 330 309 307 320 293 327 0 0 2007 2008 2009 2010 2011…
  43. Analyst Day – Questar Corp – slide 43
    O&M/dth includes Storage and 50% of WRH without QPC Contract 6,000,000 25.00 5,000,000 20.00 Contract 4,000,000 Demand 15.00 O&M/dth 3,000,000 10.00 2,000,000 5.00 1,000,000 0 0.00 2006 2007 2008 2009 2010 2011 2012…
  44. Analyst Day – Questar Corp – slide 44
    Remain cost-competitive with regional pipelines Competitive cost Re-contract with customers Rate case strategy and new tariff Gathering Re-contract services and with processing customers Focus on incremental projects services…
  45. Analyst Day – Questar Corp – slide 45
    Total: 11,000 MW NAUGHTON - 637 MW BRIDGER 1,412 MW Coal Fired: 8,640 MW Natural Gas Fired: 2,360 MW Questar Served: 2,360 MW LITTLE MOUNTAIN - 14 MW GADSBY - 475 MW CRAIG 1,274 MW KENNECOTT - 275 MW HEBER - 30 MW HAYDEN -…
  46. Analyst Day – Questar Corp – slide 46
    46 Project Name: PacifiCorp Lake Side 2 Questar Pipeline Contracted Capacity 90,000 dth/d CLAY QGC High Pressure Line BASIN Investment 19.7 MM Rate (/dth) 0.14 KERN RIVER Revenue (Annual) 4.6 MM PacifiCorp Lake Side…
  47. Analyst Day – Questar Corp – slide 47
    Inland California Express Union Pacific Rail System WEST HYNES New Pipeline RAIL TERMINAL Completed Tasks - Spec Services engineering analysis for pipeline re-commission and extension - Harris completes 10% of design for 2…
  48. Analyst Day – Questar Corp – slide 48
    QFS Price Liquefier Questar Pipeline QFS Gathering Other Pipelines Project Name: QFS Price Liquefier Capacity 100,000 gal/d Investment 44.1 MM QFS Liquefier Rate 0.40/gal (DGE 0.62/gal) XTO Revenue/year 14.5 MM In Service…
  49. Analyst Day – Questar Corp – slide 49
    Kim Blair, PE Gen. Mgr. Engineering and Project Management Engineering Integrity Systems and Automation Pipeline Design and Management Projects Operations Reservoir
  50. Analyst Day – Questar Corp – slide 50
    High Priority and Emphasis upon Improvement of Integrity Management and Compliance Functions Full Support for Regulatory and Industry Goals and Initiatives (PHMSA and INGAA) 50
  51. Analyst Day – Questar Corp – slide 51
    Active Internal Inspection Program, Greatly Exceeds Federal Requirements to Inspect only High Consequence Areas - 30.6 Miles HCA (1.2 % of System) - 1,263 Miles Inspected to Date (47.7 % of System) - 188 Miles Inspected during 2013…
  52. Analyst Day – Questar Corp – slide 52
    ML3 Coalville to Sunset Stn. ML16 Coalville to Porters Lane 52
  53. Analyst Day – Questar Corp – slide 53
    Records Research/Records Validation for All Pipeline Facilities Main Line Block Valve Remote Operation/Automatic Shut-in Controls Installed in 14 Locations. Area-Specific Emergency Isolation Plans Prepared Integrity Internal…
  54. Analyst Day – Questar Corp – slide 54
    Comprehensive Integrated Audit of QPC System Completed during 2013 - 2 Weeks Records Review - 5 Weeks Field Review Final Report Pending, No Significant Findings Verbally Reported by Auditors 54
  55. Analyst Day – Questar Corp – slide 55
    Approved Budget is 120.9 Million QPC Capital Budget (MM) Facility Integrity and Upgrade Budget is 76.6 Million Upgrade & Maintenance Projects Include: - M. L. 3 Replacement - M. L. 68 AC Mitigation - Line Break Valve…
  56. Analyst Day – Questar Corp – slide 56
    2009 2010 2011 (Weber Canyon) 2014 2015 Length 1.2 miles 9.3 miles 13 miles 3.3 Miles 1.5 Miles 16 API 5L PSL2 16 API 5L PSL2 16 API 5L PSL2 16 API 5L PSL2 0.250 16 API 5L PSL2 New Pipe Type 0.250 X-65 0.250 X-52 0.250 X-52 X-52…
  57. Analyst Day – Questar Corp – slide 57
    3.3 Miles of 16 replacement. Estimated project cost = 29.4 million. 0.75 Miles of standard construction. 2.5 miles of very constrained construction. 1.1 miles of temporary debris fence required, 1 mile of earth berm/mesh fence. FERC…
  58. Analyst Day – Questar Corp – slide 58
    Ron Jorgensen General General Manager - Operations Manager Gas Management Operations Gas Control Scheduling East District West District Operations Southern Measurement Core Services Training Trails Business System…
  59. Analyst Day – Questar Corp – slide 59
    QPC Operations Number of 162 Employees Employees 45 43 40 34 35 30 26 25 16 18 20 11 15 9 5 10 5 0 0-5 5-10 10-15 15-20 20-25 25-30 30-35 35 Years of Service 59
  60. Analyst Day – Questar Corp – slide 60
    Hub of the Rockies: 2,662 miles of pipeline Key Field Services Highlights Four Pipeline Systems up to 36 diameter, 1440 psig (QPC, Overthrust, WRH, So. Trails) Safe, Efficient, Reliable 51 Compressor Units at 22 Stations up…
  61. Analyst Day – Questar Corp – slide 61
    Employee Safety Contractor Safety Public Safety (Facility Safety) 61
  62. Analyst Day – Questar Corp – slide 62
    Credit (graphic): Patrick Smyth, National Energy Board (Canada) - 2/27/14 slide presentation at PHMSA Safety Management Systems workshop, Washington DC. 62
  63. Analyst Day – Questar Corp – slide 63
    QPC O&M Expense per Dth of Contract Demand 8.00 5,800,000 O&M Expense per Dth Cntract Demand 7.00 5,600,000 6.00 5,400,000 Contract Demand Dth/day 5.00 5,200,000 4.00 5,000,000 3.00 4,800,000 2.00 4,600,000…
  64. Analyst Day – Questar Corp – slide 64
    Regulatory Issue OSHA Process Safety Management Skull Creek processing plant Price / Raptor processing plants Clay Basin processing plant Gas storage reservoirs DOT Material Records Verification Digs Class 3 / HCA locations DOT…
  65. Analyst Day – Questar Corp – slide 65
    MM dths Clay Basin Working Gas Inventory Tools in the Toolbox 60 Experienced workforce Clay Basin storage 50 Peaking aquifers Integrated QPC and 40 Overthrust systems Bi-directional capability 30 No-notice service 20 Reliable gas…
  66. Analyst Day – Questar Corp – slide 66
    QPC Maximum Delivery Days by Year Tools in the Toolbox Experienced workforce 6,000,000 Clay Basin storage Peaking aquifers 5,000,000 Integrated QPC and Overthrust systems 4,000,000 Bi-directional capability No-notice service…
  67. Analyst Day – Questar Corp – slide 67
  68. Analyst Day – Questar Corp – slide 68
    Craig Wagstaff EVP & COO Making lives better by developing and delivering essential energy
  69. Analyst Day – Questar Corp – slide 69
    Key Facts & Statistics Cities served 277 Customers 12/31/2013 945,971 Customer growth 2013: +15,211 +1.6% Deliveries (2013) 184 MMdth System miles (12/31/2013) 27,861 miles Rate base (12/31/2013) 1,042 MM Allowed Utah ROE (beg. 3/1/2014)…
  70. Analyst Day – Questar Corp – slide 70
    Rate Case Summary: Allowed ROE of 9.85% (previously 10.35%) Annual revenue increase of 7.6 million or 2.6% Expansion of infrastructure tracker from 55 to 65 million annually Transportation customers moving toward full-cost Basic…
  71. Analyst Day – Questar Corp – slide 71
    25 20 US 14.33 15 UTAH 9.99 10 5 0 WI FL TN WV LA WA IN WY ID SC PA AR TX IA IL NV SD DE VT AL RI NC AZ NH DC NY KY VA KS CT US…
  72. Analyst Day – Questar Corp – slide 72
    18.00 16.00 14.00 US 12.00 10.00 UTAH 8.00 6.00 4.00 2.00 National Avg UT Avg 0.00 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012…
  73. Analyst Day – Questar Corp – slide 73
    Key performance metrics: Return on equity Earns at or near allowed ROE Efficiency Among lowest 5% in O&M/customer Customer rates Among the very lowest in the nation Customer growth 1.5% to 2.5% growth forecast Market penetration Greater…
  74. Analyst Day – Questar Corp – slide 74
    Key regulatory attributes Return on equity 9.85% (effective 3/1/2014 Revenue decoupling Protects revenue and returns Conservation program Encourages energy efficiency Infrastructure upgrades Tracker avoids recovery lag Weather…
  75. Analyst Day – Questar Corp – slide 75
    In regards to delivering safe, reliable, natural gas service, and receiving high customer-satisfaction marks, the PSC stated in the recent rate case order from February 21, 2014: We are pleased with these results and believe Questars…
  76. Analyst Day – Questar Corp – slide 76
    Expansion and upgrade of high-pressure Questar Gas natural gas feeder lines and IHP belt mains Rate-base forecast Infrastructure replacement and customer growth drives significant rate-base growth over the next 5+ years Supports…
  77. Analyst Day – Questar Corp – slide 77
    1980s: All cast iron pipe replaced 1990s: All bare steel pipe replaced 2000s: Reconditioned high-pressure pipe in high-consequence areas and IHP belt mains Invest 65 million annually over the next 5 years. 77
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  79. Analyst Day – Questar Corp – slide 79
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  80. Analyst Day – Questar Corp – slide 80
    1,650 miles of HP 150 to 1,000 MAOP 4 to 24 diameter 80
  81. Analyst Day – Questar Corp – slide 81
    PRE 1940 1940 -1949 1950 -1959 1960 -1969 10 miles 5 miles 110 miles 178 miles Target replacement of 303 miles of pre1970 pipe 81
  82. Analyst Day – Questar Corp – slide 82
    Transmission Distribution 82
  83. Analyst Day – Questar Corp – slide 83
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  84. Analyst Day – Questar Corp – slide 84
    1995 through 2006 - 162,000 linear feet - 37,600,000 2007 through 2009 - 205,000 linear feet - 93,600,000 84
  85. Analyst Day – Questar Corp – slide 85
    2010 through 2013 - 369,000 linear feet - 203,850,000 Projects identified through 2028 Approximately 100,000 feet per year 55,000,000 85
  86. Analyst Day – Questar Corp – slide 86
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  87. Analyst Day – Questar Corp – slide 87
    2011 Allentown and Philadelphia 2012 Austin 7 deaths reported CAST IRON 100 PERCENT RETIRED SINCE 1992 87
  88. Analyst Day – Questar Corp – slide 88
    BARE STEEL 100 PERCENT RETIRED SINCE 1994 88
  89. Analyst Day – Questar Corp – slide 89
    Replace 70 miles of Belt Main 10 years 10,000,000 Densely populated area, downtown Look to the south of this room 89
  90. Analyst Day – Questar Corp – slide 90
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  91. Analyst Day – Questar Corp – slide 91
    SAFETY Customer RISK RELIABILITY MITIGATION Shareholder Questar Gas 91
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  94. Analyst Day – Questar Corp – slide 94
    Questar Gas CNG Refueling Map 94
  95. Analyst Day – Questar Corp – slide 95
    *Westport Investor Slide Deck http://www.westport.com/company/media/presentations/corporate-update 95
  96. Analyst Day – Questar Corp – slide 96
    A recent Navigant Research report* projects: - Approximately 200,000 heavy-duty natural gas powered trucks to be sold over the next nine years Approximately 85% of these trucks are projected to be CNG North American NGV Sales…
  97. Analyst Day – Questar Corp – slide 97
    The Fuel price difference between petroleum products and natural gas products presents a significant opportunity. 97
  98. Analyst Day – Questar Corp – slide 98
    3.00 2.50 2.00 Commodity Cost 1.50 Taxes 1.00 Compression, Land, G&A, Operating Expenses, Return 0.50 - 4/ MMBtu 5/ MMBtu 6/ MMBtu 7/ MMBtu 8/ MMBtu * Assumes that 1 GGE of CNG contains 125,000 Btu ** Numbers…
  99. Analyst Day – Questar Corp – slide 99
    Vehicle Fuel Component *Clean Skies Foundation Report: Driving on Natural Gas Figure 17 99
  100. Analyst Day – Questar Corp – slide 100
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