PEMBINA PIPELINE CORPORATION 2015 INVESTOR DAY DOING THE IMPORTANT THINGS RIGHT TSX: PPL; NYSE: PBA
Our team presenting today AGENDA PRESENTER Mick Dilger Overview & Value Proposition Mick Dilger President & Chief Executive Officer Market Dynamics Scott Burrows Scott Burrows Crude Oil Value Chain Focus Paul Murphy Vice President,…
OVERVIEW & VALUE PROPOSITION Mick Dilger
Pembina: a unique investment opportunity Pure play energy infrastructure company that allows TSX: PPLNYSE: PBA investors to participate in the oil and natural gas Common shares outstanding(1) 339 million liquids industry across Canada…
Our assets and businesses at a glance Gas Processing Plant Conventional Pipelines Redwater Fractionator 8,800 km network transports hydrocarbon Midstream Storage Facility products and extends across much of Alberta Truck Terminal…
Our assets and businesses operate in prolific geology ATHABASCA OIL SANDS MONTNEY TAYLOR SEAL PELICAN LAKE SWAN HILLS Gas Processing Plants DEEP BASIN Redwater Fractionator EDMONTON Pembina Conventional Pipelines DUVERNAY…
We remain confident in our strategy OBJECTIVE: To provide highly competitive and reliable returns to investors through monthly dividends while enhancing the long-term value of our shares. STRATEGY: Preserve value by providing safe,…
Doing the important things right: 2014 review The situation: What Pembina is doing right: Overall, 2014 was a very strong year Secured 1.4 billion in new capital opportunities Many opportunities for business Expanded risked and…
Weathering the storm Large degree of business is fee-for-service 64 percent in 2014 and expected to increase to greater than 80 percent in 2018 Many take-or-pay agreements customers are responsible for toll/fee payment regardless of…
Strategic short-term and long-term strategies Short-term strategy Long-term strategy EXECUTE EXTEND Target: capital cost savings of 5 Seek value chain extension percent = 250 million of savings opportunities, new emerging growth…
We have had great success securing unrisked projects 12,000 1.9 billion of capital expenditures planned for 2015 Cumulative Capital Expenditures(1) (MM) 10,000 Announced 1.4 billion of new 8,000 committed capital in 2014…
We are pursuing a fee-for-service growth portfolio Projects (all fee-for-service) Capital (CMM) Relative Growth Project Portfolio Conventional Pipelines Phase II NGL/Crude Expansions 695 Phase III Pipeline Expansions (1) 2,440…
Project timelines & in-service dates Committed Capital Expected In-Service Date* Expected Project Timelines* Musreau III 1.7 4,000 billion of capital 3,660 MM Saturn II 3,500 expected to be put SEEP into service in 2015…
We are continuing to de-risk our business 700-1,000 4% 14% 14% million of potential incremental EBITDA 22% generated per year on a run-rate basis once 64% 82% Pembina's committed projects are all in-service* 2014 2018…
Evolution of Pembinas acquisitions EV/NOI multiple at acquisition date Current EV/NOI multiple 11.6X 11.6X 11.3X 10.0X 10.0X 9.8X 8.6X 8.4X 6.8X 7.1X Cutbank Edmonton Provident Vantage Weighted Cutbank Edmonton Provident…
Our business in 2018 Now In 2018. Conventional Pipelines Largest conventional crude oil and NGL feeder system in Canada 8,800 km network 13% increase in km (adding 1,120+ km with Phase III and laterals) Fox Creek to Namao capacity at…
MARKET DYNAMICS Scott Burrows
Doing the important things right: reducing exposure The situation: What Pembina is doing right: Markets over the past several Growing fee-for-service portion of business months have been dramatically Developing market egress…
Transition of North American propane markets to export focus US & Canadian propane inventories remain at all time highs US propane production is continuing to grow 100,000 90 1,100,000 90,000 1,000,000 80 Production (bpd)…
Paradigm shift in global propane markets The US has become the world's largest propane exporter Asia-Pacific propane long-term fundamentals remain strong 1,200 2,500 US Propane Exports 1,000 2,000 800 1,500 mbpd mbpd…
Ethane market dynamics support Albertas petrochemical industry 400 Supply from oil sands off-gas Import from Vantage pipeline Pembina is one of the WCSBs largest Alberta Ethane Supply & Demand (mbpd) Supply from conventional…
Butane supply continues to grow while demand remains tepid 800 700 600 500 mbpd 400 300 200 100 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014(E) 2015(E) 2016(E) US Butane Demand US Butane Supply…
Condensate supply shortfall driven by demand from oil sands Western Canada condensate supply and demand forecast Top 8 oil sands condensate usage ranked by operating production 700 900 Reduction Due to Rail Cenovus (Conoco) Demand…
CRUDE OIL VALUE CHAIN Paul Murphy
Doing the important things right: crude oil value chain The situation: What Pembina is doing right: Record volumes and significant Highly reliable pipeline operations expansion in conventional pipelines Pipelines are 100%…
Crude oil value chain Pembina's integrated service offering PRODUCTION CONSUMPTION CONVENTIONAL & MIDSTREAM OIL SANDS PIPELINES MIDSTREAM Production Field Terminalling &Treatment LVP Feeder Terminalling Logistics & Spec…
Important crude oil resource plays remain economic at current prices Canadian crude oil plays break-even price (half-cycle) US crude oil plays break-even price (half-cycle) 70 72 60 70 68 50 66 CAD / bbl 40 US / bbl…
Conventional Pipelines overview Pipelines operational excellence: 99% reliable ALBERTA Proximal to prolific geology FORT TAYLOR DUNVEGAN MCMURRAY Q4 2014 throughput: 612 mbpd (22% increase from Q4 2013) FORT ST JOHN 2014…
Solid business platform: contract overview 100% of revenue is fee-for-service No direct commodity exposure Re-contracting: majority of base volumes under long-term contract Flexible commercial framework, standard terms: Longer-term,…
We are investing to drive growth Capital Expenditures Capital Spending Details 4,500 2014 (actual): 628 million 4,000 Spent to progress Phase II HVP and LVP, complete 3,500 Simonette to Kakwa expansion and on other expansion…
Our throughput continues to grow Solid industry performance and strategically located assets have led to strength in Pembina's throughput profile January 2015: reached a weekly all-time high peak throughput of over 662,000 bpd 575 mbpd…
Expansions could bring Alberta capacity to 1.5 million bpd 1,600 1,508 mbpd 1,400 1,200 420 1,000 (mbpd) 800 55 53 52 40 600 175 400 200 453 Pre-Expansion Phase I Phase II Phase III Phase III (Ultimate…
Increasing Peace and Northern volumes under long-term contract 692,000 Phase II LVP & HVP Standalone & contracts Phase III contracts Phase I contracts 170,000 bpd bpd of crude oil, 160,000 bpd 362,000 bpd condensate and NGL…
Phase III Expansion making a good thing better System Capacity (mbpd) Capital Expenditure (MM) Contracted Volumes (mbpd) 800 3,000 700 680 2,540 700 2,500 2,440 600 600 500 2,000 1,949 500 420 Installation 400 362…
Pipeline lateral and expansion program 210 MM NEBC Expansion 160 km, up to 12 HVP pipeline, underpinned by long-term, cost-of-service ALBERTA agreement Base capacity of up to 75 mbpd Parallels Pembinas existing BC pipelines Subject…
Vantage Pipeline acquisition & expansion Vantage Pipeline, SEEP and Vantage Expansion Acquisition cost: 730 million(1) 700 km ethane pipeline originates in Tioga, North EDMONTON Dakota and terminates near Empress, Alberta Fort…
Looking ahead Expect to have Phase III Expansion in-service by mid 2017 Additional lateral opportunities arising from increased mainline capacity Continue to focus on Bakken opportunities Continue to fill mainline and expand…
Oil Sands & Heavy Oil overview Syncrude Pipeline Operational excellence Horizon Pipeline Cheecham Lateral 99+% reliable over operating history Nipisi Pipeline Mitsue Pipeline Diverse connectivity to various industry hubs for crude…
Crude Oil Midstream overview ALBERTA Develop and provide terminal, hub & storage services to support the energy industry FORT MCMURRAY 630 mbbl of above ground crude oil and TAYLOR condensate storage capacity, with 540 mbbl under…
We are investing to drive growth Capital Expenditures Capital Spending Details 700 2014 (actual): 63 million 600 Spent to complete Cynthia full-service terminal Capital Expenditures (MM) and progress above ground storage at…
Our assets are well-positioned and interconnected CANADIAN DILUENT HUB Crude oil Dilbit Synthetic Crude Diluent Heavy Export Red indicates Pembina-owned existing and proposed pipelines and connections Dashed lines and/or…
Expanding above ground storage Edmonton North Terminal (PNT-E) Above Ground Storage Potential Complete tanks Hydrotest 2,000 1.8 By Q3 2015 Coat and paint MMbbls 1,600 Pipe rack construction 600 Complete pipe connections Q3…
Canadian Diluent Hub (CDH) is well-situated 350 million diluent receipt and delivery terminal Ideal site location for diluent terminal Site is in close proximity to: major oil sands pipeline rights-of-way Redwater Project details…
PROJECT EXECUTION OVERVIEW Michael Massecar
Doing the important things right: project execution The situation: What Pembina is doing right: Success in securing projects has resulted in We have significant in-house project execution expertise largest project execution program…
Well-established and proven project approach In-house project expertise Project development efficiencies Continue to improve all aspects of project life cycles Repeatability & standardized designs (leveraging design through growing…
Project track record Capital Project & Cost Date in-service Completed on time Completed on budget Safety Metric Business Unit (CMM) Mitsue: ahead of 1,152,065 man hours & 8,420,896 Nipisi & Mitsue Under budget by 40 400 August 2011…
PROJECTED CAPITAL SPEND PROFILE AND PROJECT STATUS Project UPDATE development status looking forward Projects (in construction/ Capital Regulatory Expected Tracking Project Status development) (CMM) Approval In-Service On…
Construction: Phase II, Phase III and lateral program ALBERTA Phase III Expansion Phase III Expansion (under construction) Completed Phase III Expansion segment Previously announced Phase II Expansion Pembina crude oil and condensate…
Phase II LVP & HVP construction update 695 million expansion: near term in-service date Increase capacity by 55 mbpd on Peace and Northern NGL system Project Increase capacity by 53 mbpd on LVP system details Obtained all…
Phase III construction update 2.44 billion expansion: underway 880 km total of new pipeline (previously 540 km) Initial capacity of 420 mbpd between Fox Creek and Edmonton, with ability to Project increase capacity to over 680 mbpd by…
NGL VALUE CHAIN Stu Taylor
Doing the important things right: NGL value chain The situation: What Pembina is doing right: Large resource in place: Montney, Gas Services is in heavy execution phase (four projects to be completed by Deep Basin and Duvernay mid…
NGL value chain Pembina's integrated service offering PRODUCTION CONSUMPTION CONVENTIONAL GAS SERVICES PIPELINES MIDSTREAM Gathering, Propane Mainline Terminalling Logistics Consumption Production Processing, HVP Feeder…
Integrated value chain case study Gas Plant Case Study: Overview NOI Contribution by Value Chain (MM) 200 MMcf/d of ethane-plus extraction capacity 60 26 MM incremental NOI created on top of and up to 13,000 bpd of NGL with 70 km NGL…
58 Eagle Ford US American shale gas break-even price (half-cycle) Dry Gas Haynesville Shale - LA Important gas resource plays remain economic at current prices Haynesville Shale - TX Barnett Shale Diversity of…
Gas Services overview Operational excellence ALBERTA 96% reliable Positioned in active and emerging NGL rich plays FORT MCMURRAY Provide gas gathering, compression and shallow/deep cut processing services Seven facilities in…
Gas Services: contract overview 100% fee-for-service revenue Underpinned by long-term contracts 75% of 2014 revenue protected with take-or-pay commitments Flexible to offer commercial framework; standard terms include: Longer-term,…
We are investing to drive growth Capital Expenditures Capital Spending Details 1,200 2014 (actual): 295 million Spent to progress the multi-year construction Capital Expenditures (MM) 1,000 projects at Resthaven and Saturn II…
And to support growing volumes 700 673 MMcf/d Resthaven & Musreau II: in service Q4 2014 600 500 Saturn I: in service Q4 2013 400 MMcf/d 300 200 100 - 2009 2010 2011 2012 2013 2014 Jan-15 Gas processing…
Saskatchewan Ethane Extraction Plant (SEEP) construction update 110 million, 60 MMcf/d deep cut gas plant in Saskatchewan Bakken Acquired under-construction plant as part of Vantage acquisition Deliver ethane to the Vantage Pipeline…
Resthaven Expansion construction update 145(1) million, 100 MMcf/d (gross) expansion & pipeline lateral Bring total plant capacity to 300 MMcf/d(2) Project Constructing 28 km 12 gathering pipeline to deliver gas into facility…
Musreau III construction update 105 million, 100 MMcf/d shallow cut gas plant Liquids extraction capacity of 3,000 bpd Underpinned by long-term, take-or-pay service agreement Project Leverages engineering and design from Musreau I…
Saturn II construction update 170 Million, 200 MMcf/d deep cut gas plant Liquids extraction capacity of 13,000 bpd Project Leverage engineering work completed for Saturn I details 10-year firm-service contract for 130 MMcf/d (65% of…
Looking ahead Majority of Pembina's Gas Services assets have been located within the same geology; plan to expand into/increase our presence in other areas including the Montney, Duvernay and Bakken Continue to assess acquisition…
Solid business platform: contract overview Standard terms for NGL fractionation agreements include: Longer-term take-or-pay volume commitment (10 years) Payment of fixed capital fee on volume processed Payment of pro-rata share of…
We are investing to drive growth Capital Expenditures Capital Spending Details 2,000 2014 (actual): 327 million 1,800 Spent to progress RFS II as well as NGL storage Capital Expenditures (MM) 1,600 caverns and associated…
NGL fractionation growth 300 250 RFS II mbpd New 415 million 73 mbpd C2+ fractionator 250 Committed take-or-pay revenue streams for 10-year 55 term from in-service date, for 97% of the operating 200 capacity 9 Expected on-stream…
NGL salt cavern storage potential Substantial storage cavern 40 38 development potential MMbbls 35 30 Cavern development: (MMbbls) 25 At Redwater 20 2.6 15 13 caverns in-service 10 17.5 5 in development 5…
Progressing RFS II construction RFS II site in August 2013 RFS II & RFS III site in December 2014 RFS II site in May 2014 Redwater positioned to be Canada's largest fractionation site 74 See Forward-looking statements &…
RFS II construction update 415 million, 73 mbpd ethane-plus fractionator 10-year take-or-pay contracts for 100% of operating capacity Project Leverage engineering work completed for RFS I details Erected de-propanizer; completing…
RFS III construction update 400 million, 55 mbpd propane-plus fractionator 10-year, take-or-pay contracts for 100% of operating capacity Leverage engineering work completed for RFS I & II Project details De-ethanization tower can be…
Corunna facilities 45 million product handling capacity expansion Rail offload and cavern injection pumps to increase offloading capacity from 3,800 cars per year to 6,200 cars per year Adding rail track, new truck bay, brine pond,…
Looking ahead Potential expansion at Younger Expanding rail fleet Aim to exploit assets in Sarnia with possibility of recreating our western asset footprint in support of Marcellus and Utica development Bakken NGL egress strategy…
Propane export extending Pembina's value chain participation Global opportunity Growing North American production and robust Existing NGL Western Value Chain Asian demand Canada Decrease of traditional markets Eastern Canada and…
Proposed propane export terminal project timeline Potential US500 million export terminal Continue public consultation and engagement (throughout project) Prepare and submit regulatory applications Prepare detailed engineering 2015…
Opportunities for growth: North Dakota Bakken/Williston Basin NGL Production Forecast Drivers of growth opportunities 800 Robust current production 160 mbpd of NGL 700 Recent flaring regulation setup 600 significant future NGL…
Bakken NGL egress & opportunity Current Egress Alternatives Potential Opportunities Transported on Third Party pipelines Construction of straddle plant infrastructure Vantage Pipeline Further expansion of the Vantage Pipeline…
DEDICATED TO ASSET INTEGRITY & SAFETY Allan Charlesworth
Doing the important things right: asset integrity The situation: What Pembina is doing right: We continue to add new assets, expand Focus on maintaining safe and reliable operations existing assets, and renewed long- We have a…
Comprehensive and continuous evaluation of all threats IN-LINE INSPECTION (ILI) FACILITY INTEGRITY Metal loss Governs operation, inspection, monitoring Crack detection and mitigation (if required) for all pressure vessels and tanks…
Rigorous in-line inspection program using latest technology Pembina has over 460 ILI capable Main tool technologies pipeline segments Magnetic flux leakage (MFL) Pembina completes an average of 60- Geometry (deformations) 80…
Robust geotechnical program INSPECTION PROGRAM 1,731 water crossings, 430 slopes Typically over 400 inspections/year MONITORING PROGRAM Depth-of-cover surveys: typically over 200/year Slope surveys and instrumentation: typically…
Innovative tube storage inspection Tool development and testing was completed in August 2014 Multi-diameter inspection tool, able to inspect 48-54-inch tubes Execution of inspection runs were successful, with quality data…
Focus on continuous risk reduction initiatives Continue to evaluate all threats to our pipelines and facilities (corrosion, geohazards, crack, geometry, etc.) Using (developing) new technologies to enhance detection and analysis of…
Our priority is on safety and reliability Employee Safety Safe Driving Employee near-miss reporting increased by 45% in 2014 Mandatory AMA Collision Avoidance program Over 1,100 employees worked more than 2.3 million hours Back-in…
STRONG FINANCIAL PLATFORM Scott Burrows
Doing the important things right: financing The situation: What Pembina is doing right: With our large portfolio of We continue to execute well-timed, well-priced financings secured capital, we have We are committed to our…
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 35% 30% 4.0x 25% 3.0x 20% 2.0x 15% 10% 1.0x 5% 0.0x - (1) 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Total Debt / Total Book Capitalization…
Clean balance sheet 8.0x 7.0x 6.0x 2014 Debt / EBITDA(1) 5.0x 4.0x 3.0x 2.0x 1.0x 0.0x BBB- A BBB BBB+ A- BBB A A- BBB+ BBB BB NR Pembina continues to employ significantly less leverage than its…
Access capital at attractive rates Medium term notes (2013-YTD) Preferred shares (2013-YTD) Common shares (2013-YTD) 700 700 700 600 600 600 600 600 500 500 500 400 400 400 345 MM MM MM 321 286 266 300 300 250 250…
Debt maturity profile Senior Debt Maturity Profile Majority Fixed Rate Debt 600 Amount outstanding (MM) 500 400 300 200 96% Fixed Rate 100 0 Weighted average cost of debt: 4.6%(1) 120 million drawn on the 1.5 billion…
Funding plan and capital structure is equipped for growth Funding Plan Prudent and flexible capital structure1 6,000 5 B 24% (2015 2018) 5,000 4,000 Debt 4% MM 3,000 8% 64% Capital Preferred Expenditures 2,000 DRIP…
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