DAVID G. SMITH PRESIDENT & COO BENPOSIUM 2012

Transcription

1 DAVID G. SMITH PRESIDENT & COO BENPOSIUM 2012

2 Forward Looking Information In the interests of providing Keyera Corp. ( Keyera or the Company ) shareholders and potential investors with information regarding Keyera, including Management s assessment of future plans and operations relating to the Company, this document contains certain statements and information that are forward-looking statements or information within the meaning of applicable securities legislation, and which are collectively referred to herein as forward-looking statements". Forward-looking statements in this document include, but are not limited to statements and tables (collectively statements ) with respect to: capital projects and expenditures; strategic initiatives; anticipated producer activity and industry trends; and anticipated performance. Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature, forward-looking statements involve numerous assumptions, as well as known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur and which may cause Keyera s actual performance and financial results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by the forward-looking statements. These assumptions, risks and uncertainties include, among other things: Keyera s ability to successfully implement strategic initiatives and whether such initiatives yield the expected benefits; future operating results; fluctuations in the supply and demand for natural gas, NGLs, crude oil and iso-octane; assumptions regarding commodity prices; activities of producers, competitors and others; the weather; assumptions around construction schedules and costs, including the availability and cost of materials and service providers; fluctuations in currency and interest rates; credit risks; marketing margins; potential disruption or unexpected technical difficulties in developing new facilities or projects; unexpected cost increases or technical difficulties in constructing or modifying processing facilities; Keyera s ability to generate sufficient cash flow from operations to meet its current and future obligations; its ability to access external sources of debt and equity capital; changes in laws or regulations or the interpretations of such laws or regulations; political and economic conditions; and other risks and uncertainties described from time to time in the reports and filings made with securities regulatory authorities by Keyera. Readers are cautioned that the foregoing list of important factors is not exhaustive. The forward-looking statements contained in this document are made as of the date of this document or the dates specifically referenced herein. For additional information please refer to Keyera s public filings available on SEDAR at All forward-looking statements contained in this document are expressly qualified by this cautionary statement. 2

3 Keyera One of Canada s Largest Midstream Operators» Natural gas gathering and processing Focused in western part of Western Canada Sedimentary Basin (WCSB)» NGL facilities Fractionation, storage, transportation and terminalling» Marketing Propane, butane, condensate, iso-octane Providing Essential Services to Producers 3

4 Company Snapshot Trading Symbols (TSX): KEY; KEY.DB.A Common Shares Outstanding 1 : 76,727,195 1 Basic shares outstanding at April 30, Based on closing share price at May 9, First quarter 2012 daily average. Share Price 2 : $42.40 Market Capitalization 2 : $3.3B Enterprise Value 2 : $3.8B Trading Volume 3 : 302,545 Monthly Dividend: $0.17 Current Yield 2 : 4.8% Track Record of Stability and Growth 4

5 Two Integrated Business Lines Gathering & Processing Gathering & Compression Raw Gas Processing NGL Mix NGL Infrastructure NGL Fractionation Ethane Propane Condensate Butane Liquids Business Unit Terminalling NGL Marketing End-use Customers Wholesalers Refineries Petrochemicals Sales Gas AEF NGL Storage Iso-octane» 52% of 2011 Operating Margin*» Fee-for-service revenues» Largely flow-through operating costs» Essential service for producers» 23% of 2011 Operating Margin*» Fee-for-service revenues» No frac spread exposure» 25% of 2011 Operating Margin*» Margin business» No frac spread exposure * Non-GAAP measure. See Keyera s Year End 2011 MD&A for a definition of Operating Margin. Creating Value through Business Integration 5

6 Gathering and Processing Franchise Facilities West of 5 th Meridian» Large flexible gas processing plants Operate 15 of 17 gas plants Licensed capacity of 2.6 bcf/d NGL extraction Sweet and sour gas processing capability» Extensive gathering systems Large capture areas create franchise regions» Long life assets» Fee-for-service revenues with no commodity exposure 6

7 NGL Infrastructure Positioned for Growth» Providing services to NGL & bitumen producers at Canada s energy hub Fractionating NGL mix into ethane, propane, butane and condensate Storing NGLs, including diluent Transporting NGLs to and from the Edmonton/Fort Saskatchewan hub Rail and truck terminalling to load and offload NGLs and other liquids Manufacturing iso-octane Fractionation (80,000 bbls/d) Storage (10.9 million bbls) Rail & Truck Racks (19) Pipelines (7) Rail Cars (800+) Sales Terminals 7

8 Strategic NGL Infrastructure in Edmonton/Fort Saskatchewan Fort Saskatchewan Edmonton Terminal 30,200 bbls/d fractionation capacity Pipeline system to & from Edmonton market hub 10.6 million bbls of underground storage in 11 caverns Potential to add 9 additional caverns Storage expansion program underway Logistics & transportation hub Pipeline control centre Rail and truck terminal Above ground storage Multiple pipeline connections Oil midstream business 8

9 Strategic NGL Infrastructure In Edmonton/Fort Saskatchewan Alberta Diluent Terminal (ADT) Alberta EnviroFuels (AEF) Condensate & solvent distribution terminal 20 car rail offloading 200 car rail yard Unit train capability Connected to CP and CN railways Above ground storage Ability to offload up to 50,000 bbls/d Truck loading & offloading Largest iso-octane plant in North America Produces up to 14,000 bbls/d iso-octane from butane feedstock Pipeline connected to Edmonton Terminal, ADT, Suncor refinery & Kinder Morgan TransMountain Pipeline Rail & truck loading via Edmonton Terminal (Q4 2012) 80 acres of undeveloped land Adding Value along the NGL Value Chain 9

10 Natural Gas & NGL Outlook A Canadian Perspective Source: Bentek As U.S. Natural Gas Production has Grown, Canadian Production has Declined 10

11 NGL (Bpd) NGL Production Has Also Declined Alberta Natural Gas and NGL Production 250,000 16,000 14, ,000 12, , ,000 10,000 8,000 6,000 Gas Prod. (mmcfd) 50,000 4,000 NGL (Bpd) Gas Prod. (mmcfd) 2, Source: ERCB Largest 70 plants in Alberta, including straddle and ethane extraction facilities But the Outlook Is Shifting 11

12 Drilling Activity Canada vs. U.S.» Drilling activity in Canada declined earlier than in U.S. Decline driven largely by changes to Alberta royalty regime in 2007, which have since been fixed» Canadian rig count has stabilized in recent years Average Gas Rig Counts» Rig counts mask recent shift to higher productivity horizontal wells, focused on liquids-rich horizons YTD Canada U.S Canada U.S. Source: Baker Hughes Canada s Gas Development Is Beginning to Recover 12

13 Canada s Liquids-Rich Gas Development» Renewed focus on liquids-rich gas resource development in WCSB Multiple well-understood geological horizons High liquids content Improved Alberta royalty regime Application of technologies Access to available processing & transportation capacity MONTNEY DUVERNAY» Tight gas plays Cardium, Glauconite, Montney CARDIUM» Duvernay significant potential from deep shale GLAUCONITE 13

14 Canadian Liquids-Rich Natural Gas Competitive with U.S. Plays Breakeven Gas Price (US$/Mcf) Natural Gas Liquids (Bbl/Mmcf) $ $6.00 U.S. Shale Plays WCSB Plays 180 $5.50 $5.00 Liquids Content 160 $ $ $3.50 $ $ $ $1.50 $ $ $ * Source: Peters & Co. Limited. Half-cycle break-even price, based on a 10% discount rate and full-year 2012 AECO-C: C$2.16/Mcf and C$95.39/barrel Edmonton par. 14

15 Canadian Natural Gas & NGL Outlook» Canadian gas development will continue Substantial natural gas resource potential Economically attractive, with available processing & transportation capacity Favourable regulatory environment Liquids-rich development focus Growing natural gas demand in western Canada, along with LNG export projects, will compensate for declining exports to U.S.» NGL production is expected to grow Implications for North American NGL markets will vary by product Canada Is (Still) Important to North American Energy Scene! 15

16 Ethane» Petrochemical feedstock (polymers, chemicals, plastics)» Canadian pricing typically based on negotiated margin over gas price under long-term agreements (no spot market)» Declining volume extracted at border straddle facilities» Few buyers 16

17 Propane» Limited Canadian demand, primarily for heating fuel» Approximately 60 to 70% exported to U.S.» Significant seasonality of demand» Strong demand for storage 17

18 Propane Distribution Challenges Midwest & eastern markets served by pipelines Cochin pipeline to be re-purposed in 2013 Western markets reliant on rail supply 18

19 Butane» Mostly consumed in Alberta (refineries, AEF, oil blending)» Increasingly used as solvent by in situ bitumen producers» Canadian supply shortfalls met by rail imports from U.S. 19

20 Condensate»Used as diluent for bitumen production from Canadian oil sands»significant & growing demand requires imports from U.S.»Edmonton/Fort Saskatchewan is condensate logistics hub 20

21 Room Temperature (cp) Bitumen Viscosity 1,000, ,000 10,000 Ketchup Cold Lake Bitumen Peanut Butter Athabasca Bitumen 1, Pancake Syrup Honey 10 1 Water Light Crude Oil Olive Oil Source: BP 0 Diluent Required for Pipeline Movement 21

22 Bitumen Production Growth Drives Increasing Diluent Demand 5,000 Bitumen Production Forecast Risked (MBbl/d) 1,100 Condensate Demand Forecast Risked (MBbl/d) 4,500 4,000 1, Mining (bitumen) 3,500 3,000 Mining (bitumen, upgraded) , ,000 1,500 1,000 In-situ (SAGD, CSS, other thermal) In-situ (SAGD, CSS, other thermal) Source: Peters&Co. Diluent Demand Growth Driving Condensate Imports 22

23 Keyera s Condensate Logistics» Keyera s fractionation, storage, transportation & terminal facilities provide hub services for bitumen producers» Long-term fee-for-service agreements with Imperial Oil and Husky for Kearl and Sunrise oil sands projects» Condensate imports by: Rail Enbridge Southern Lights Pipeline (2010) Kinder Morgan Cochin Pipeline (2013?) Edmonton/Fort Saskatchewan is Key Condensate Logistics Hub 23

24 Condensate Infrastructure Investing for the Future» Keyera and Enbridge have signed MOU to pursue diluent transportation initiatives» Soliciting interest from oil sands producers to support construction of: South Cheecham Rail and Truck Terminal enable receipt of diluent or solvents via railcar (Keyera 50%/Enbridge 50%) Norlite Pipeline diluent pipeline from Fort Sask. to Athabasca oil sands region (Enbridge 70%/Keyera 30%) Meeting the Needs of Canadian Bitumen Producers 24

25 In Summary»Canada continues to be a key part of shifting North American gas & NGL supply/demand fundamentals»keyera is well positioned for: Growing production of Canadian liquids-rich gas & associated NGLs Growing diluent & solvent logistics needs for Canadian oil sands development 25

26 For Further Information Contact: John Cobb Director, Investor Relations KEYERA 600, TH AVENUE S.W. CALGARY, ALBERTA T2P 3N4