Enbridge Energy Partners, L.P. Capital Link Master Limited Partnership Investing Forum Mark A. Maki, President, Enbridge Energy Partners, L.P.

Transcription

1 Enbridge Energy Partners, L.P. Capital Link Master Limited Partnership Investing Forum Mark A. Maki, President, Enbridge Energy Partners, L.P. March 5, 2015 enbridgepartners.com

2 Legal Notice This presentation includes forward-looking statements and projections, which are statements that do not relate strictly to historical or current facts. These statements frequently use the following words, variations thereon or comparable terminology: anticipate, believe, continue, could, estimate, expect, forecast, intend, may, plan, position, projection, should, strategy, target, will and similar words. Although Enbridge Energy Partners, L.P. (the Partnership ) believes that such forward-looking statements are reasonable based on currently available information, such statements involve risks, uncertainties and assumptions and are not guarantees of performance. Future actions, conditions or events and future results of operations may differ materially from those expressed in these forward-looking statements. Many of the factors that will determine these results are beyond the Partnership s ability to control or predict. Specific factors that could cause actual results to differ from those in the forward-looking statements include: (1) changes in the demand for or the supply of, forecast data for, and price trends related to crude oil, liquid petroleum, natural gas and NGLs, including the rate of development of the Alberta Oil Sands; (2) the Partnership s ability to successfully complete and finance expansion projects; (3) the effects of competition, in particular, by other pipeline systems; (4) shut-downs or cutbacks at the Partnership s facilities or refineries, petrochemical plants, utilities or other businesses for which the Partnership transports products or to whom the Partnership sells products; (5) hazards and operating risks that may not be covered fully by insurance, including those related to Line 6B and any additional fines and penalties assessed in connection with the crude oil release on that line; (6) changes in or challenges to the Partnership s tariff rates; (7) changes in laws or regulations to which the Partnership is subject, including compliance with environmental and operational safety regulations that may increase costs of system integrity testing and maintenance; and (8) permitting at federal, state and local levels in regards to the construction of new assets. Forward-looking statements regarding drop-down growth opportunities from Enbridge Inc. are further qualified by the fact that Enbridge Inc. is under no obligation to offer to sell us interests in its U.S. projects, and we are under no obligation to buy any such interests. Similarly, any forward-looking statements regarding potential drop-down transactions of interests in Midcoast Operating to Midcoast Energy Partners are further qualified by the fact that we are under no obligation to sell to Midcoast Energy Partners, L.P. any such interests, and Midcoast Energy Partners, L.P. is under no obligation to buy any such interests. As a result, we do not know when or if any such transactions will occur. The Partnership s forward looking statements are subject to risks and uncertainties pertaining to operating performance, regulatory parameters, project approval and support, weather, economic conditions, interest rates and commodity prices, including but not limited to those discussed more extensively in our filings with the U.S. securities regulators. The effect of any one risk, uncertainty or factor on any particular forward looking statement is not determinable with certainty as these are independent and our future course of action depends on management s assessment of all information available at the relevant time. Except to the extent required by law, we assume no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise. Reference should also be made to the Partnership s filings with the U.S. Securities and Exchange Commission (the SEC ), including its Annual Report on Form 10-K for the year ended December 31, 2014, for additional factors that may affect results. These filings are available to the public over the Internet at the SEC s web site ( and at the Partnership s web site. 1 enbridgepartners.com

3 Investment Highlights One of the longest established pipeline MLPs (1991) Enterprise Value - Large-Cap MLP Strong Investment Grade (S&P, Moody s, DBRS) Highlights Track record of consistently delivering cash distributions (never reduced) Largest pipeline transporter of crude oil production growth from Western Canada Largest pipeline transporter of crude oil production growth from Bakken formation Commercially secured organic growth underway $140,000 $120,000 $100,000 $80,000 Low-risk transformative growth underway Total Unitholder Return 2014 Highlights Delivered 41% total unitholder return; increased distribution 4.9% Equity restructure to reset IDRs and establish single tier IDR structure Completed $1 billion drop-down acquisition from ENB ENB is reviewing potential restructuring plan to drop-down its U.S. liquids pipeline assets to EEP (1) ~$2.3 billion of growth capital placed in service $60,000 $40,000 $20,000 $ *Enterprise Value as of 1/30/15; **Return CAGR since inception to 12/31/2014 (nominal) 2 enbridgepartners.com (1) On December 3, 2014, Enbridge Inc. ("Enbridge" or "ENB") announced it is reviewing a potential restructuring plan that would involve the transfer of its directly held U.S. liquids pipeline assets to Enbridge Energy Partners, L.P., a U.S. affiliate of Enbridge. This review is underway and has not progressed to a conclusion.

4 Strength of of GP GP Enbridge Inc. Inc. ENB: North American leader in energy delivery Owner and operator of largest crude oil pipeline system ~$41 billion equity market cap Strong investment grade (A-, Baa1) Proven track record: industry leading EPS and DPS growth 19% 10-year TSR CAGR 12% 10-year DPS CAGR 33% dividend increase in %-16% DPS growth forecast Strategy aligned with Partnership ~$44 billion organic growth program underway 62% 65% Note: Standard & Poor s/moody s credit ratings respectively. Market capitalization as of February 25, enbridgepartners.com

5 Strategic Position Competitive Advantages Norman Wells Refiners: Access to multiple crude streams Producers: Access to multiple premium markets Zama WCSB Flexible system Fort McMurray Size and scale unmatched: Will expand to Edmonton Hardisty ~2.85 MMb/d in 2017 Seattle Portland Salt Lake City Regina BAKKEN Casper Cromer Clearbrook Superior Flanagan St. John Montreal Ottawa Toronto Buffalo Sarnia Toledo Chicago Philadelphia Patoka Positioned for Long-Term Growth Direct connection to growing supply basins (Heavy & Light) High quality customer base Cushing Wood River ENB and EEP Strategically Aligned Houston St. James EEP Contract Storage EEP Liquids Pipelines ENB Liquids Pipelines 4 enbridgepartners.com

6 WCSB Crude Oil Fundamentals and Outlook Long-term investment horizon of Western Canadian producers 6,000 5,000 Jan 2015: CAPP updated production forecast 4,000 3,000 2,000 1,000 Near Term Oil Sands Projects in Service Near Term Oil Sands Projects in Service Sources: CAPP Crude Oil Forecast, Markets and Pipelines (June 2014) with January 2015 updates, NEB, Enbridge 5 enbridgepartners.com Actual Forecast WCSB Alternate Scenario

7 Bakken Crude Supply Forecast vs Take Away Capacity 3,500 3,000 2,500 Rail Transport Capacity 2,000 1,500 1,000 3 rd Party Pipelines 500 Enbridge Pipelines Local Refinery Enbridge 2014 Forecast NDPA Case 2 (Alternate Supply) Sources: Enbridge, North Dakota Pipeline Authority (January 9, 2015) 6 enbridgepartners.com

8 Rail Perspective Pipelines provide the most economical transportation to market Rail Transportation Costs Forecast Rail Volumes From Western Canada $8.65 to $16.05 Western Canada $8.00 to $11.00 Bakken $16.30 to $ Alternate Senario Using CAPP Supply $13.10 to $18.40 $15.60 to $21.50 $12.00 to $ Forecast Rail Volumes From Bakken $12.00 to $13.00 $15.30 to $ All prices are USD/bbl Using NDPA Case 2 Sources: CAPP, Genscape, Enbridge, North Dakota Pipeline Authority (January 9, 2015) 7 enbridgepartners.com 7

9 Strong Commercial & Fundamental Underpinnings Defensive nature of cash flows position EEP to navigate through commodity price uncertainty Low-risk business model largely mitigates volume sensitivity Demand for crude oil and pipeline capacity from Western Canada and Bakken remains strong Customer demand & connectivity Enbridge/Partnership s system is currently oversubscribed Pipelines provide the most economical transportation to market still plenty of supply moving by rail from WSCB and Bakken 2015e EBITDA EBITDA attributable to EEP (after deducting NCI) Cost of Service/Take-or-Pay. Fee-based: Commodity Sensitive: Liquids pipeline system volume outlook remains strong despite low crude oil prices 8 enbridgepartners.com

10 Market Access Well Advanced Transformative low-risk organic growth expected to provide substantial cash flow growth Three major initiatives provide 1.7 MMbpd of increased market access and diversification Organic Growth Projects: Commercially secured Low risk framework Long-term contracts Western USGC Access Eastern Access Light Oil Market Access Incremental Market Access by 2017: +1.0MMbpd of Heavy; +0.7MMbpd of Light Light Heavy 9 enbridgepartners.com

11 Low Cost Expansion & Extension Opportunities Low cost phased expansions are attractive in a low crude price environment Market Access Opportunities NTD: Map to be updated 1 Eastern Gulf Coast Access Flanagan South / Seaway Expansions Line 9 Expansion Ex-Superior Expansion Opportunities 1 Line 61 Twin SAX Expansion 150 Upstream of Superior Expansion Opportunities Sandpiper Expansion/ Bakken Interconnect Idle Line 2A/LSR Expansion Line 2B/4 Capacity Recovery Line 3 at New Build HP Upgrades 10 enbridgepartners.com

12 Priority One Focus on Safety & Operational Reliability Operational Risk Management Program Third Party Damage Avoidance and Detection Incident Response Capacity Leak Detection Capability and Control Systems Employee and Contractor Occupational Safety Integrity Management Industry Leadership Public Safety and Environmental Protection State-of-the art Liquids Pipelines control center Most extensive maintenance, integrity and inspection program in the history of the North American pipeline industry Liquids Pipelines completed 615 in-line inspections and 8,975 verification digs ( ) 11 enbridgepartners.com

13 Drop Downs Boost Distributable Cash Flow Substantial drop down opportunities from ENB supports Partnership s long-term growth outlook Initial Drop Down: $1 billion drop down from Enbridge closed 1/2/ % interest in the U.S. segment of Alberta Clipper pipeline (Line 67) Immediately accretive 2.7% distribution increase announced No public equity required by EEP Drop Down Outlook: Enbridge reviewing potential larger scale drop down plan to Partnership (1) Over $10 billion of U.S. liquids pipeline assets available Eastern Access & Mainline Expansion 15% upsize options at cost Enhances EEP s distribution growth potential Line 67 Enbridge reviewing potential larger scale drop-down plan to EEP (1) 12 enbridgepartners.com (1) On December 3, 2014, Enbridge Inc. announced it is reviewing a potential restructuring plan that would involve the transfer of its directly held U.S. liquids pipeline assets to Enbridge Energy Partners, L.P., a U.S. affiliate of Enbridge. This review is underway and has not progressed to a conclusion.

14 Key Takeaways Low-risk business model Well positioned in current uncertain commodity price environment Targeting 2% 5% annual distribution growth Transformative growth underway Organic growth on-track: coverage continues to strengthen as projects enter service Low cost organic growth potential Low cost bolt-on expansion and extension opportunities remain plentiful in low crude price environment Strategic alignment with Enbridge supports long-term growth outlook Enbridge reviewing potential larger scale drop down plan to EEP (1) Safety and operational reliability are cornerstones that underpin our business and growth outlook 13 enbridgepartners.com (1) On December 3, 2014, Enbridge Inc. announced it is reviewing a potential restructuring plan that would involve the transfer of its directly held U.S. liquids pipeline assets to Enbridge Energy Partners, L.P., a U.S. affiliate of Enbridge. This review is underway and has not progressed to a conclusion.

15 Supplemental Slides Enbridge Energy Partners, L.P. Investment Community Presentation March 2015

16 Corporate Structure 11.7% of listed shares 100% voting interest Enbridge Inc. (NYSE: ENB) (Baa1 / A-) Enbridge Inc. owns ~43% of EEP Public Unitholders 88.3% of listed shares Enbridge Energy Management, L.L.C. (NYSE: EEQ) 14.8% LP interest (I-units) 2% GP interest 38.8% LP interest (indirect) Enbridge Energy Partners, L.P. (NYSE: EEP) (Baa2 / BBB+) 44.4% LP interest Public Unitholders 2% GP interest 52% LP interest Public Unitholders 48.4% LP interest Midcoast Energy Partners, L.P. (NYSE: MEP) 46% LP interest 51.6% LP interest Midcoast Operating, L.P. Midcoast Operating Corporate structure as of February 13, enbridgepartners.com

17 Enbridge Liquids Pipelines Drop-Down Potential: $10 Billion + Distributable Cash Examples: Pipeline System Upsize Option Capital Cost/ Book Value* Eastern Access $0.4 (2016/2017) ~ $1.5 Mainline Expansion $0.4 (2016/2017) ~ $1.4 Line 3 Replacement** $0.4 (2018) ~ $0.9 Southern Access Extension - ~ $0.6 Flanagan South - ~ $2.8 Seaway/Seaway Twin - ~ $2.4 ~ $10B + Substantial drop-down opportunities from parent supports long-term growth outlook * Estimated capital cost or net book value of assets held by Enbridge Inc. ** Line 3 Replacement Joint Funding Agreement under consideration by a Special Committee of the independent Board of Directors., including an option to upsize EEP ownership by 15% one year after the in-service date. Capital cost assumes 50% estimated funding by Enbridge Inc.. 16 enbridgepartners.com