INVESTOR DAY DECEMBER 11, 2014 INTEGRATED MIDSTREAM SOLUTIONS
Senior Management Team A. Stewart Hanlon Rodney J. Bantle President and Chief Executive Officer SVP, Truck Transportation Donald A. Fowlis Stephen L. Bart Chief Financial Officer SVP, Terminals & Pipelines Brian J. Recatto…
Agenda Agenda Presenter Time Company Overview Stew Hanlon 9:00am Corporate Profile Strategy Total Return Model Business Environment Doug Wilkins Customer Base Overview Rick Wise Canadian Business Panel Discussion Senior Team…
GIBSON ENERGY CORPORATE PROFILE TSX: GEI Gibson Energy Inc. Integrated Midstream Solutions 5
Corporate Profile Well established company Integrated capability along the midstream value chain Low direct exposure to commodity price volatility Strong growth opportunities Attractive quarterly dividend Strong balance sheet and…
Corporate Profile One of Canadas oldest but newest energy infrastructure companies TSX: GEI Gibson Energy Inc. Integrated Midstream Solutions 7
Gibson Energy The Beginning First oil sale (366 Entered pipeline business Gibson Petroleum barrels) and first with construction of Hardisty Terminal is incorporated purchase of tank trucks Bellshill Pipeline built (40,000 barrels)…
Gibson Energy 1960s to 1980s Purchased first two semi-trailers Built Edmonton Terminal for crude hauling Entered LPG hauling business Constructed Provost pipeline 1961 1969 1975 1988 TSX: GEI Gibson Energy Inc. Integrated Midstream…
Gibson Energy 1990s to Today Acquired OMNI Energy Services; announced Acquired Canwest Acquired Moose Jaw initial Hardisty storage Propane Asphalt Inc. Acquired Taylor Logistics Completed IPO on TSX expansion 1990 2002 2010 2011…
Gibson Energy Today Gibson Energy Growth-oriented Solutions-based Integrated midstream energy company 225 operating locations throughout North America Offering shareholders low risk exposure to oil and liquids production…
Gibson Energy Today TSX Symbol GEI Shares outstanding 124 million Market Capitalization* 3.2 billion Net Debt 1.0 billion Net Debt/ Trailing EBITDA 2.2x Enterprise Value* 4.2 billion * Based on December 5, 2014, closing price of…
Gibson Energy Today Experienced Board of Directors instrumental in shaping value creation strategy James M. Estey Mary Ellen Peters Chairman of the Board and Independent Director Independent Director Chair of the Corporate…
Gibson Strategy We Solve Problems Focus on midstream solutions for oil and liquids production Provide integrated customer solutions Touch the barrel multiple times throughout the value chain Minimize commodity price exposure Health,…
Gibson Strategy - Touch the Barrel Asphalt Roofing Flux Distillates Industrial Use Heating Demand TSX: GEI Gibson Energy Inc. Integrated Midstream Solutions 15
Gibson Strategy Minimize Commodity Price Exposure Purposefully structured over the past 60+ years Business processes designed to minimize price risk Fee based businesses dominate revenue growth profile Margin based businesses employ…
Gibson Strategy HSS&E Excellence Vision: To be established as an industry leader in health, safety, security and environmental performance. Mission: Strengthening our commitment to HSS&E through Execution, Accountability, Engagement…
Gibson Strategy Employ the Best Proud of our talented, customer focused and community engaged workforce Video TSX: GEI Gibson Energy Inc. Integrated Midstream Solutions 18
TOTAL RETURN MODEL TSX: GEI Gibson Energy Inc. Integrated Midstream Solutions 19
Total Return Growth: Energy infrastructure industry is experiencing a secular growth trend Gibson is well positioned with a visible runway of growth opportunities Dividends: Investor demand for yield reduces cost of capital Dividend…
Total Return Gibson takes a balanced approach between growth and income: Dividends enhance capital discipline Appropriate pace of growth enhances capital efficiencies Growth Dividends TSX: GEI Gibson Energy Inc. Integrated…
Growth Corporate history resulted in an underdeveloped asset base Enhanced access to capital facilitated growth profile Gibson has just begun to capitalize on its growth opportunities Growth Capital and Acquisition Expenditures…
Growth On track for growth capital expenditures of 375M in 2014 Year to date growth achievements on time and on budget Year to date acquisitions enhanced scale and profitability of our Processing & Distribution segment Growth…
Growth 2015 growth capital budget 435 Million Preliminary 2016 growth capital budget 450 Million Total 885 Million 70% of 2015-2016 growth capital target Terminals & Pipelines projects 60% of 2015-2016 growth capital is underpinned…
Cash Flow Growth 17% CAGR in Distributable Cash Flow per share since IPO (2011-2013) 2013 and 2014 capital investments now converting to cash flow Capital Expenditures/Cash Flow 700 3.50 Acquisition Growth Capital 600 3.00…
Dividend Growth Quarterly dividend reviewed by board of directors Target dividend payout ratio at 50%-60% of Distributable Cash Flow Dividend increased four times since IPO 1.30 Increase in Dividend Dividend per Share 1.20 9%…
BUSINESS ENVIRONMENT TSX: GEI Gibson Energy Inc. Integrated Midstream Solutions 27
Five Key Drivers North American oil production growth Crude quality / refinery demand Canadian diluent demand growth Propane supply / demand Oilfield water and associated waste growth TSX: GEI Gibson Energy Inc. Integrated…
North American Oil Production 16 Current -2020 12 million bbl/d 14 current production 50% increase since 2009 U.S. 12 Other 12% increase 10 to 9.6 million bbl/day Mbbl/d 8 U.S. Tight Oil 6 Canada 4 Other 50%…
Canadian Oilsands Outlook 63% of CAPP forecast is currently under construction High growth visibility with multi-phased development profile In situ development exhibits larger number of small footprint projects Increasing demand for…
U.S. Tight Oil Outlook Improving technology yields positive resource revisions New plays adding to total recoverable oil resources Drilling efficiencies improving initial production rates Tight oil development offers increased…
North American Oil Play Economics Key plays offer competitive economics Full-Cycle Break-Even Costs1 WTI Oil Price, U.S. per barrel 100 100 Average = 61.08 75 75 69.00 65.41 65.95 63.50 63.50 63.57 60.00 57.67 57.90 50 50…
Oil Market Logistics Canadian heavy oil production needs to access spare capacity in PADD III Lighter U.S. production displacing waterborne imports Edmonton Hardisty Eastern Canada: 1,104 55 246 PADD V: 2,524 195 642 PADD II:…
Oil Market Logistics Midstream industry continues to work on solving logistics issue with pipeline, Northern Gateway rail and waterborne solutions 25 MBPD Est. 2018+ Producers demanding optionality with Enbridge Mainline 2.5…
Oil Market Logistics Canadian heavy oil production requires imported diluent for transportation requirements Top 5 oil sands developers represent Edmonton Hardisty 66% of forecasted diluent demand High visibility to phased growth…
Propane Market Outlook Increasing North American production levels Regional supply/demand and price imbalances Increasing export and domestic consumption logistics required 1800 12 180 1600 1400 11 170 1200 000s bbl/day…
Environmental Services Market Increasing Oilfield Water Prodution Canada Oilfield Water Production 5% CAGR 18 16 17 15 15 16 14 14 14 13 12 10 11 11 12 Oil wells account for Mbbl/d 10 8 6 95% of water production 4 2…
Environmental Services Market Maturing base production = increasing watercuts Dominance of horizontal drilling and unconventional development results in increasing demand for water and waste solutions 1,600 3.1X 1,400 1,200…
CUSTOMER PROFILE TSX: GEI Gibson Energy Inc. Integrated Midstream Solutions 39
Customer Profile North American Scope Long-standing relationships as a provider of multiple solutions for our customers Terminals Processing & Environmental Truck Transportation Marketing and Pipelines Distribution Segments…
Customer Profile North American Scope Top 10 customers = employ an average of 4.5 Gibson solutions Top 20 customers = employ an average of 3.7 Gibson solutions Growth opportunity: Convert low touch customers toward multiple…
Customer Profile North American Scope Broad customer base 90% weighted to North American oil industry 10% weighted to construction/industrial segment Focused on oil and liquids production vs drilling activity Geographic and…
CANADIAN BUSINESS PANEL DISCUSSION TSX: GEI Gibson Energy Inc. Integrated Midstream Solutions 43
Customer Profile Canadian Panel Discussion Typical Canadian E&P customer Oil sands development focused on in situ projects Multi-zone, condensate rich natural gas in the deep basin Montney Alberta Oilsands Light oil in west…
Customer Profile Canadian Panel Discussion Typical Canadian E&P customer demand characteristics: Optimize development efficiencies Integrated logistics for drilling and completion phases Alberta Solutions based partner Montney…
Gibson Solutions Processing & Wellsite Fluids TSX: GEI Gibson Energy Inc. Integrated Midstream Solutions 46
Processing & Wellsite Fluids Gibsons Moose Jaw facility: Processes 18,500 bbl/day Feedstock flexibility and 1.0 million bbl of storage capacity to minimize input costs Flexible throughput process to maximize revenue Multiple…
Processing & Wellsite Fluids Moose Jaw facility output: Tops light, sour crude oil for refinery market Wellsite fluids oil based drilling and completion products Roofing flux high quality, consistent material for asphalt shingle…
Processing & Wellsite Fluids Flexible plant processes to optimize revenue per barrel Spot, seasonal and/or cyclical market opportunities can be captured Moose Jaw Facility Production 18,000 Road Asphalt Roofing Flux Tops 15,000…
Processing & Wellsite Fluids Customer requires supply and delivery logistics for drilling, completion and production fluids: Multi-stage completion techniques Sensitive reservoir characteristics High quality and consistent…
Processing & Wellsite Fluids Gibson produces a suite of specialty wellsite fluid products: Tops Drilling base oils Oil based drilling mud Completion fluids Wellsite Fluids Production workover solvents Roofing Flux Gibson…
Processing & Wellsite Fluids Gibson also provides ancillary services: Wholesale mud blending at Sexsmith facility Frac fluid recycling Sexsmith services at Edson facility Increasing demand for integrated logistics drives Edson…
Gibson Solutions Truck Transportation TSX: GEI Gibson Energy Inc. Integrated Midstream Solutions 53
Truck Transportation Gibson is the largest independent oilfield logistics provider in Canada: Transportation of oil, condensate and emulsion production Demand drivers: Areas underserved by pipelines Congested processing and…
Truck Transportation Gibson provides specialized transportation solutions, Trucking to rail highly trained staff and (Rail Transloading) leading HSSE track record Integrates with other Trucking to terminal assets: (Truck…
Truck Transportation Gibson offers integrated solutions: Truck Transportation Environmental Services Terminal access Grande Cache Edmonton TSX: GEI Gibson Energy Inc. Integrated Midstream Solutions 56
Gibson Solutions Environmental Services TSX: GEI Gibson Energy Inc. Integrated Midstream Solutions 57
Environmental Services Gibson provides access to a network of flexible and efficient processing facilities Key Oil Terminals in the WCSB: Environmental Services Facilities 14 custom treating and Landfill PRD terminals Rycroft…
Environmental Services Drilling and Completion: Drill cuttings disposal Flowback fluids disposal Workover fluids disposal Production: Water Requires treatment and downhole disposal Oil Requires segregation, measurement and…
Environmental Services PRD Schematic Approved Approved engineered water disposal Mainline pipeline landfill formation Centrifuge Clean oil tank Waste receiving tanks Treater Emulsion tank Production, drilling & Water &…
Environmental Services Customer requires processing of emulsion production and other waste streams: Demand Growth: Increasing proportion of horizontal wells Longer lateral sections Multi-well pads Maturing production results in…
Environmental Services Gibsons southeast Saskatchewan network offers: Key Oil Terminals Midale full service waste Environmental Services Facilities management facility Landfill solid waste, waste water Rycroft Sexsmith…
Gibson Solutions - Marketing TSX: GEI Gibson Energy Inc. Integrated Midstream Solutions 63
Marketing Crude Oil Gibson provides field level aggregation and marketing solutions: Purchases and sells 50,000 bbl/d Integrates with other Gibson segments to provide a single invoice and a comprehensive netback solution…
Marketing Crude Oil Customer requires transaction counterparty for oil, condensate & emulsion production: Insufficient volumes for minimum batch sizes Crude quality issues Lack of pipeline access Insufficient in-house marketing…
Marketing Crude Oil Gibson offers a competitive netback focusing on: Plato North Logistics solution 67 km pipeline Quality solution Coordinated with Plato South Environmental Services on location and quality opportunities…
Marketing Wholesale Propane and NGLs Customer requires transaction counterparty and evacuation of propane production: 80% of WCSB propane is exported 20% 80% TSX: GEI Gibson Energy Inc. Integrated Midstream Solutions 67
Marketing Wholesale Propane and NGLs Purchases and sells 30,000 bbl/d North American scope with multiple quality and pricing options Ability to leverage infrastructure assets: 1,000 rail cars 5 wholesale propane storage…
Processing & Distribution Retail Propane TSX: GEI Gibson Energy Inc. Integrated Midstream Solutions 69
Processing & Distribution Retail Propane Gibsons Canwest subsidiary is one of Western Canadas largest propane suppliers: 670 million liters of propane distributed annually 35 operating locations in Western Canada 60,000 rental…
Processing & Distribution Retail Propane Customer requires fuel for field based heating and process demands: Year round operations Heavy oil batteries require seasonal heat and for water/oil separation Pumpjacks consume propane…
Processing & Distribution Retail Propane Gibsons Canwest subsidiary offers full service solutions: Rental tanks, trained installation staff and other services create long-term customers Rack plus pricing ensures Gibson does not…
Gibson Solutions Terminals and Pipelines TSX: GEI Gibson Energy Inc. Integrated Midstream Solutions 73
Terminals and Pipelines - Overview WCSB oil & liquids production growth is being driven by key resource play development Alberta Oilsands Montney Duvernay/Deep Basin Cardium Viking Shaunavon Bakken/Three Forks TSX:…
Terminals and Pipelines - Overview WCSB oil & liquids production growth is being driven by key resource play development Network of small diameter gathering pipelines service field level product evacuation TSX: GEI Gibson…
Terminals and Pipelines - Overview WCSB oil & liquids production growth is being driven by key resource play development Network of small diameter gathering pipelines service field level product evacuation Edmonton Larger…
Terminals and Pipelines - Overview All export pipelines originate in Edmonton and Hardisty hubs Gibson has strategic and difficult to replicate terminal assets at Edmonton and Hardisty Gibson offers 5.6 million barrels of total…
Terminals & Pipelines Diluent Opportunity Customer requires supply aggregation, batching and terminaling of diluent for heavy oil needs and export of 1 bbl 0.25 bbl diluted bitumen heavy oil diluent Each barrel of heavy oil…
Terminals & Pipelines Diluent Opportunity Insufficient WCSB diluent production requires industry solutions: Import pipelines Rail car logistics Under-blended crude by rail exports Diluent return units Western Canada Condensate…
Terminals & Pipelines Storage Demand Export pipeline batching schedules dictate storage requirements Inbound pipeline Inbound production to Hardisty arrives at export terminal Export pipeline TSX: GEI Gibson Energy Inc.…
Terminals & Pipelines Storage Demand Export pipeline batching schedules dictate storage requirements Inbound pipeline Inbound production to Hardisty fills storage tank Export pipeline TSX: GEI Gibson Energy Inc. Integrated…
Terminals & Pipelines Storage Demand Export pipeline batching schedules dictate storage requirements Inbound pipeline Inbound production to Hardisty fills storage tank Export pipeline TSX: GEI Gibson Energy Inc. Integrated…
Terminals & Pipelines Storage Demand Export pipeline batching schedules dictate storage requirements Inbound pipeline Terminal storage to Hardisty tank is full Outbound shipping is dependent on export pipeline schedule…
Terminals & Pipelines Storage Demand Export pipeline batching schedules dictate storage requirements Inbound pipeline Export pipeline to Hardisty schedule aligns Export pipeline TSX: GEI Gibson Energy Inc. Integrated…
Terminals & Pipelines Storage Demand Export pipeline batching schedules dictate storage requirements Inbound pipeline Terminal storage to Hardisty tank injects batch Export pipeline TSX: GEI Gibson Energy Inc. Integrated…
Terminals & Pipelines Storage Demand Export pipeline batching schedules dictate storage requirements Inbound pipeline Terminal storage to Hardisty tank injects batch Export pipeline TSX: GEI Gibson Energy Inc. Integrated…
Terminals & Pipelines Storage Demand Export pipeline batching schedules dictate storage requirements Inbound pipeline Inbound production to Hardisty cycle repeats Export pipeline TSX: GEI Gibson Energy Inc. Integrated…
Terminal and Pipelines Edmonton Terminal Developing merchant storage capacity with industry leading interconnectivity: 5 inbound connections 2 outbound connections 65 rail loading spots 7 truck loading/offloading Edmonton bays…
Terminals & Pipelines Edmonton Terminal TSX: GEI Gibson Energy Inc. Integrated Midstream Solutions 89
Terminals & Pipelines Edmonton Terminal Storage Optimization Polaris Statoil pump Tank station TSX: GEI Gibson Energy Inc. Integrated Midstream Solutions 90
Terminals & Pipelines Hardisty Terminal Provides merchant storage capacity with industry leading interconnectivity: 10 inbound crude oil pipelines 7 outbound crude oil pipelines Exclusive access to new unit train loading…
Terminals & Pipelines Hardisty Terminal Major hub for crude oil transportation Exclusive unit train loading capability Un-paralleled pipeline connectivity TSX: GEI Gibson Energy Inc. Integrated Midstream Solutions 92
Terminals & Pipelines Hardisty Terminal Enhanced Athabasca pipeline connectivity East terminal expansion Enhanced Cold Lake pipeline connectivity TSX: GEI Gibson Energy Inc. Integrated Midstream Solutions 93
Terminals & Pipelines Unit Train Loading Facility 120,000 bbl/day phase 1 commissioned on July 1, 2014 Ramped to full capacity by Oct 31, 2014 Phase 2 under consideration to double loading capacity TSX: GEI Gibson Energy Inc.…
Terminals & Pipelines Unit Train Loading Facility Unit Train Video TSX: GEI Gibson Energy Inc. Integrated Midstream Solutions 95
Gibson Solutions - Marketing TSX: GEI Gibson Energy Inc. Integrated Midstream Solutions 96
Marketing Crude Oil Customer requires transaction counterparty for larger batch volumes at key export hubs: Sourced from WCSB gathering pipelines to Edmonton and Hardisty terminals Increased opportunities with lower quality and…
Marketing Crude Oil Gibson purchases and sells 300,000 bbl/day of stream based volumes: Coordinated with Terminals & Pipelines segment to capitalize on Sexsmith pricing inefficiencies: Time Edmonton Quality Hardisty Location…
Marketing Crude Oil Publicly available information on Canadian crude pricing is limited: WTI light oil price benchmark at Cushing WCS heavy oil differential at Hardisty MSW light sweet oil differential at Edmonton Crude Oil…
Marketing Crude Oil Gibson is active in 40 different non-marker grades of Canadian crude oil Integration with Edmonton and Hardisty terminal assets enables blending for price optimization Crude Oil Differentials WTI 20 120 WCS -…
Marketing Crude Oil Minimize commodity price exposure: No discretionary tankage Inventory limited to line fill and working stock requirements Transactions structured to occur within the same index month TSX: GEI Gibson Energy Inc.…
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