PEMBINA PIPELINE CORPORATION

Transcription

1 PEMBINA PIPELINE CORPORATION TD Securities Conference (July 2015) TSX: PPL; NYSE: PBA

2 Forward-looking statements & information This presentation is for information purposes only and is not intended to, and should not be construed to constitute, an offer to sell or the solicitation of an offer to buy, securities of Pembina Pipeline Corporation ("Pembina"). This presentation and its contents should not be construed, under any circumstances, as investment, tax or legal advice. Any person accepting delivery of this presentation acknowledges the need to conduct their own thorough investigation into Pembina and its activities before considering any investment in its securities. This presentation contains certain forward-looking statements and information that are based on Pembina's expectations, estimates, projections and assumptions in light of its experience and its perception of historical trends as well as current market conditions and perceived business opportunities. In addition this presentation contains forward-looking statements attributed to third-party industry sources.. In some cases, forward-looking information can be identified by terminology such as "expects", "anticipates", "plans", "potential", "will", "continue", and similar expressions suggesting future events or future performance. In particular, this presentation contains forward-looking statements, including certain financial outlooks, pertaining to financial and business objectives, corporate strategy (capital expenditures, schedules, expected capacity, approval and contracting strategy and expectations with respect to current and potential projects), the timing of regulatory and environmental approvals, financial performance and future financing sources, the stability and sustainability of cash dividends, expansion and diversification opportunities, expectations regarding future commodity market supply, estimated quantities of hydrocarbons available for development, anticipated life of resource plays, demand and pricing and supply and demand for hydrocarbon services. Undue reliance should not be placed on these forward-looking statements and information as they are based on assumptions made by Pembina as of the date hereof regarding, among other things, industry conditions, the availability and sources of capital, operating costs, the ability to reach required commercial agreements, and the ability to obtain required regulatory or governmental approvals. This presentation also includes certain estimates derived from independent third party and industry data. While Pembina believes this data to be reliable, it has not independently verified this data or evaluated the underlying assumptions. The figures used in the third party estimates are meant to be illustrative and for discussion purposes only. While Pembina believes the expectations and assumptions reflected in these forward-looking statements are reasonable as of the date hereof, there can be no assurance that they will prove to be correct. Forward-looking statements are subject to known and unknown risks and uncertainties which may cause actual performance and financial results to differ materially from the results expressed or implied, including but not limited to: the impact of competitive entities and pricing; reliance on key alliances and agreements; the strength and operations of the oil and natural gas industry and related commodity prices; regulatory environment; fluctuations in operating results; the availability and cost of labour and other materials; the ability to finance projects on advantageous terms; and tax laws and tax treatment. Additional information on these factors as well as other factors that could impact Pembina's operational and financial results are contained in Pembina's Annual Information Form and Management's Discussion and Analysis, and described in our public filings available in Canada at and in the United States at Readers are cautioned that this list of risk factors should not be construed as exhaustive. The forward-looking statements contained in this document speak only as of the date of this document. Except as expressly required by applicable securities laws, Pembina and its subsidiaries assume no obligation to update forward-looking statements and information should circumstances or management's expectations, estimates, projections or assumptions change. The forward-looking statements contained in this document are expressly qualified by this cautionary statement. Readers are cautioned that management of Pembina approved the financial outlooks contained herein as of the date of this presentation. The purpose of the financial outlooks contained herein is to give the reader an indication of the value of Pembina's current and anticipated growth projects. Readers should be cautioned that the information contained in the financial outlooks contained herein may not be appropriate for other purposes. In this presentation, we refer to certain financial measures such as EBITDA, total enterprise value ("TEV"), adjusted cash flow from operating activities, cash flow from operating activities per common share, adjusted cash flow from operating activities per common share and operating margin that are not determined in accordance with International Financial Reporting Standards ("Canadian GAAP"). For more information about these non-gaap and additional GAAP measures, see the Appendix to this presentation. All financial information is expressed in Canadian dollars unless otherwise specified. 2

3 Pembina: a Unique Investment Opportunity Pure play energy infrastructure company that allows investors to participate in the oil and natural gas liquids industry across Canada and North Dakota. We: are well-positioned for growth have a strong demand for our services have a solid and sustainable business platform with only moderate exposure to commodity prices TSX: PPL NYSE: PBA Common shares outstanding (1) 343 million TSX common share trading price (1) $40.37 TSX 52-week trading range (1) $ $53.04 Market capitalization (2) Total enterprise value (2) Common Share Dividend $14.3 billion $18.3 billion $1.83/share annualized ($0.1525/share monthly) Yield (1) 4.5% Corporate credit rating (3) BBB Member of the TSX/S&P 60 One of the largest energy infrastructure companies in Canada with a sector leading secured growth platform See "Forward-looking statements & information. (1) As at June 30, (2) As at April 30, Market capitalization includes common shares. TEV includes convertible debentures, preferred shares and senior debt. See "Non-GAAP and additional GAAP measures." (3) DBRS and S&P. 3

4 Integrated, Customer-Focused Value Chain Gas/HVP Value Chain: Gas Services Conventional Pipelines Midstream Gathering and processing Mainline Extraction Transportation on Conventional Pipelines Fractionation at Redwater Production Gathering, Processing, Field Extraction HVP Feeder Pipelines Terminalling & Marketing Fractionation Logistics & Distribution Propane export Consumption Oil/Condensate/LVP Value Chain: Truck and full-service terminals Pipeline transportation Storage, logistics, distribution Production Mining/In-situ Midstream Field Terminalling &Treatment Upgrading Conventional & Oil Sands Pipelines LVP Feeder Pipelines Midstream Terminalling & Marketing Diluent Logistics & Distribution Refining Spec Products Logistics & Distribution Consumption Integrated asset base creates an exceptional customer service 4

5 A Review of Key Regional Resource Plays

6 Production (Mboe/d) Pembina s Foundation The Cardium Resource Play Overview Drilling activity in the Cardium started in the early 1950 s supported the formation of Pembina Pipeline Corporation The formation is marked by a lowpermeability sandstone reservoir The Cardium is one of the largest accumulations of conventional crude oil in the WCSB Illustrative potential resource of 3 BB Bbls+ 1 Currently the Cardium produces 180 Mboe/d Key play operators include Vermillion, Bonterra, ARC Resources and others TAYLOR Resource Play Location KAMLOOPS ALBERTA Historical Production CAGR 19% CALGARY EDMONTON SASKATCHEWAN FORT McMURRAY EMPRESS MONTANA TIOGA, NORTH DAKOTA Resource Play Highlights Illustrative Net Backs 1 $30 / Boe Current Production (180 Mbpd) 1 Pipelines Potential Resource Life ~40 Years Pembina Exposure Potential Resource (3 BB Bbls) 1 Drayton Valley and Brazeau systems Combined LVP & HVP capacity of 250 Mbpd The Cardium supported Pembina in its infancy and has played a key role in our growth 1 See appendix for supporting assumptions. Source: CIBC World Markets, BMO Capital Markets, Scotiabank GBM, GPMI, EIA, CAPP. 6

7 Production (Bcfe/d) What is Old is New Again The Deep Basin Resource Play Overview Resource Play Location Resource Play Highlights Prolific resource play located along the Alberta / British Columbia Border with prolific multi-zone geology The formation is marked by a silt/sandstone reservoir TAYLOR ALBERTA EDMONTON SASKATCHEWAN FORT McMURRAY Illustrative Net Backs 1 $10 / Boe Current Production (~7 Bcfe/d) 1 Potential Resource (63 Tcf) 1 Originally vertical well drilling targeted conventional reservoirs multi-stage horizontal fracing has reinvigorated play Illustrative potential resource of 63 Tcf 1 Currently the Deep Basin produces ~7 Bcfe/d Key play operators include, Conoco, Tourmaline, Canadian Natural and others KAMLOOPS Historical Production CAGR 41% CALGARY EMPRESS MONTANA TIOGA, NORTH DAKOTA Pipelines & Gas Processing Potential Resource Life ~23 Years Pembina Exposure Combined ultimate Peace & Northern capacity of 1.5 MMbpd Ultimate gas processing capacity of 1.4 Bcf/d by mid 2016 Pembina s Conventional Pipelines & Gas Services Businesses are ideally situated to capitalize on Deep Basin production growth 1 See appendix for supporting assumptions. Source: CIBC World Markets, BMO Capital Markets, Scotiabank GBM, GPMI, EIA, CAPP. 7

8 Production (Bcfe/d) Est. Liquids (Mbpd) LNG Supply & Liquids Opportunities The Montney Resource Play Overview Resource Play Location Resource Play Highlights The Montney spans North East BC through the Alberta Foothills and has intervals of shale, silt and sandstone reservoirs With significant gas resource and relative proximity to tidewater, the Montney is set to be the key source for Canada s LNG development The Alberta side of the resource play holds significant liquids rich gas potential Illustrative potential resource of 312 Tcf makes it one of the world s largest gas resource plays Currently, the Montney produces 5 Bcfe/d (~70 Mbpd of estimated liquids production) Key play operators include Encana, Petronas, Shell, Seven Generations TAYLOR KAMLOOPS ALBERTA Historical Production CAGR 46% CALGARY EDMONTON SASKATCHEWAN FORT McMURRAY EMPRESS MONTANA TIOGA, NORTH DAKOTA Total Production Est. Liquids Production Illustrative Net Backs 1 $20 / Boe Current Production (~5 Bcfe/d) 1 Pipelines & Gas Processing Potential Resource Life ~170 Years Pembina Exposure Potential Resource (312 Tcf) 1 $220 MM NEBC Expansion (up to 75 Mbpd by H2-17) Ultimate gas processing capacity of ~1.8 Bcf/d by mid 2016 Younger + Gas Services secured growth Pembina remains committed to developing its North East BC infrastructure + Alberta gas processing asset base ideally situated 1 See appendix for supporting assumptions. Source: CIBC World Markets, BMO Capital Markets, Scotiabank GBM, GPMI, EIA, CAPP. 8

9 Production (Mmcfe/d) Est. Liquids (Mbpd) The WCSB s Next Frontier The Duvernay Resource Play Overview Resource Play Location Resource Play Highlights The Duvernay is located in western Alberta and is composed of a true shale formation With a large-scale potential resource and modest current production, the Duvernay has the potential to be the next growth engine of the WCSB TAYLOR ALBERTA CALGARY EDMONTON SASKATCHEWAN FORT McMURRAY EMPRESS Illustrative Net Backs 1 $26 / Boe Current Production (150 Mcfe/d) 1 Potential Resource (113 Tcf) 1 Illustrative potential resource of 113 Tcf 1 Currently, the Duvernay produces 150 Mcfe/d Third-party forecasts show potential Duvernay production reaching Bcfe/d over the long-term The Duvernay has attracted some of the world s largest producers including Exxon, Chevron, Shell and PetroChina KAMLOOPS Historical Production CAGR 150%+ MONTANA TIOGA, NORTH DAKOTA Total Production Est. Liquids Production Pipelines + Future Opportunities Potential Resource Life ~500 Years Pembina Exposure Combined ultimate Peace & Northern capacity of 1.5 MMbpd Active area of business development for Pembina Pembina s $2.4 BB+ Phase III Expansion project traverses the key Duvernay fairway 1 See appendix for supporting assumptions. Source: CIBC World Markets, BMO Capital Markets, Scotiabank GBM, GPMI, EIA, CAPP. 9

10 Oil Production (MMBpd) A World Scale Resource Play US Williston Basin Resource Play Play Overview Resource Play Location Resource Play Highlights The US Williston Basin is multi-zone formation spanning North Dakota and Montana including both the Bakken and the Three Forks shales The onset of multi-stage horizontal fracking in 2008 revolutionized the US Bakken and supported production growth from ~180 Mbpd to current level of ~ 1.3 MMbpd MONTANA SASKATCHEWAN TIOGA NORTH DAKOTA Illustrative Net Backs 1 $33 / Boe Current Production (1.3 MMbpd) 1 Potential Resource (32 BB Bbls) 1 The US Bakken is among only 20 plays worldwide that reached over 1 MMbpd Key US Bakken producers include Whiting, Hess, Oasis, and Continental Historical Production CAGR 32% Potential Resource Life 68 Years Pembina Exposure Illustrative potential resource of 32 Bbls significant additional potential resource through multi-zone geology Legislation mandating gas flaring reduction creates NGL potential of 350 Mbpd+ over the long-term (based on a third-party forecast) Pipelines Vantage pipeline + Expansion Ultimate capacity of 68 Mbpd by early 2016 Our acquisition & expansion of Vantage Pipeline provides Pembina a platform for growth in the US Bakken 1 See appendix for supporting assumptions. Source: CIBC World Markets, BMO Capital Markets, Scotiabank GBM, GPMI, EIA, CAPP. 10

11 Production (Mbpd) A Resource for the Next Century Canada s Oil Sands Resource Play Overview Resource Play Location Resource Play Highlights Canada s oil sands span an area of over 140,000 square KM (representing ~20% of Alberta s land mass) Bitumen is extracted through a combination of mining and in-situ techniques majority of oil sands growth is through in-situ expansions TAYLOR ALBERTA CALGARY EDMONTON SASKATCHEWAN FORT McMURRAY EMPRESS Illustrative Net Backs 1 $25 / Bbl Current Production (2.3 MMbpd) 1 Potential Resource (167 BB Bbls) 1 Currently, the oil sands produces 2.3 MMbpd Through 2020 production from Canada s Oil Sands is expected to more than double to ~3 MMbpd Key play operators include CNRL, Suncor, Syncrude, Imperial, Total and others Estimate of potential resource of 167 BB bbls 2,500 2,000 1,500 1, KAMLOOPS Historical Production CAGR 10% Pipelines Potential Resource Life 200 Years+ Pembina Exposure Pembina has developed a large-scale network of strategically located assets to support Canada s oil Sands MONTANA TIOGA, NORTH DAKOTA Syncrude, Horizon and Nipisi & Mitsue and Cheecham systems Combined capacity of 880 Mbpd 1 See appendix for supporting assumptions. Source: CIBC World Markets, BMO Capital Markets, Scotiabank GBM, GPMI, EIA, CAPP. 11

12 Enormous Resource Potential has Created Sector Leading Growth for Pembina

13 Ideally Situated Across Prolific Geology ALBERTA SASKATCHEWAN MONTNEY (Resource Life ~170 years) TAYLOR FORT MCMURRAY OIL SANDS (Resource life 200+ years) SEAL & PELICAN LAKE DEEP BASIN (Resource Life ~23 years) SWAN HILLS Fort Saskatchewan DUVERNAY (Resource Life ~500 years) EDMONTON CARDIUM (Resource Life ~40 years) Conventional Pipelines Oil Sands & Heavy Oil Pipelines Gas Processing Plants Redwater Fractionator KAMLOOPS CALGARY EMPRESS MONTANA TIOGA, NORTH DAKOTA Pembina s assets are ideally situated to capitalize on growth in top tier resource plays NORTH DAKOTA WILLISTON BASIN (Resource Life 68 years) Map for illustrative purposes only. Does not include US drilling activity. 13

14 Our Business is at a Turning Point NOW IN 2018 Conventional Pipelines 8,800 km network Fox Creek to Namao capacity at 260 Mbpd Largest conventional crude oil and NGL feeder system in Canada 13% increase in km (~10,000 km with Phase III and lateral additions) 162% increase in Fox Creek to Namao capacity (to 680 Mbpd+) Midstream 73 Mbpd fractionator 13.9 MMbbl storage capacity at Redwater Gas Services 468 MMcf/d net natural gas processing capacity 535 MMcf/d ethane-plus extraction capacity Oil Sands & Heavy Oil 1,650 km of pipeline with 880 Mbpd capacity under contract Largest fractionation facility in Canada and handler of condensate 187% increase in fractionation capacity (to 210 Mbpd+) 19% increase in storage capacity at Redwater (to 16.5 MMbbl+) One of the largest straddle plant and underground storage owners One of the largest gas processors in Canada 49% increase in field processing capacity (to 1.5 Bcf/d) 67% increase in ethane-plus extraction capacity (to 895 MMcf/d) Long-life contracts continue to provide stable cash flows Investment-grade counterparties Second largest transporter of synthetic crude Leader in energy infrastructure See "Forward-looking statements & information." 14

15 Committed Capital / Current TEV We are pursuing a fee-for-service growth portfolio Projects (all fee-for-service) (1) Subject to regulatory and environmental approval. (2) If Resthaven partners participate in expansion, Pembina s capital will decrease to $145 million. Capital (C$MM) Phase II NGL/Crude Expansions $ 695 Phase III Pipeline Expansions (1) $ 2,440 NEBC Expansion (1) $ 220 Vantage Expansion (1) $ 85 Laterals $ 155 Conventional Pipelines Subtotal $ 3,595 Musreau III Facility $ 105 SEEP $ 110 Saturn II Facility $ 170 Resthaven Expansion (2) $ 170 Gas Services Subtotal $ 555 Cavern Development $ 130 Canadian Diluent Hub (1) $ 350 Terminal and Hub Services $ 75 RFS II Fractionator $ 415 RFS III Fractionator $ 400 Sturgeon Refinery $ 180 Other (1) $ 220 Midstream Subtotal $ 1,770 Horizon Expansion $ 125 Oil Sands & Heavy Oil Subtotal $ 125 Committed Capital $ 6,045 Proposed Propane Export Terminal (USD) (3) $ 500 Uncommitted Opportunities $ 925 Total Unrisked Capital Opportunities $ 7,595 35% 30% 25% 20% 15% 10% 5% - 32% 26% ~$6 billion in committed projects underway Relative Growth Project Portfolio Pembina has the largest committed growth capital program compared to any of its Canadian peers on a relative basis through the end of % 16% 13% 13% Peer 2 Peer 1 Peer 3 Peer 5 Peer 4 Peer 6 Source: Company filings, Street Research (peers include: AltaGas, Enbridge, Inter Pipeline, Keyera, TransCanada, Veresen). (3) Subject to project sanctioning, reaching commercial agreements and regulatory and environmental approvals. See "Forward-looking statements & information" and "Non-GAAP & additional GAAP measures." 2% 15

16 Incremental Operating Margin ($MM) Growing incremental operating margin $1,200 $1,000 $800 $600 $400 $ Phase II - LVP/HVP Phase III - Mainline Phase III - Laterals Phase III - NEBC Vantage Stateline Horizon Pipeline Expansion Saturn II Resthaven II Expansion Musreau III SEEP Gas Plant Heartland Development (CDH) Edmonton Terminal FST Strategy Cavern Development RFS II & III Sturgeon Refinery Proposed Propane Export Terminal Potential to grow operating margin by 70 to 100% through 2018 * Various projects subject to to regulatory and environmental approvals. Most conservative expected dates shown above; actual dates may vary. See "Forward-looking statements & information." See "Forward-looking statements & information." 16

17 We are continuing to de-risk our business 22% 14% 64% 14% 4% 82% $700-$1,000+ million of potential incremental EBITDA generated per year on a run-rate basis once Pembina's committed projects are all in-service* In excess of 80% of EBITDA is expected to be generated from fee-for-service contracts in 2018 * Based on approximately $6 billion of committed capital projects with in-service dates between end of 2014 and mid Upper end of range depending on utilization above take-or-pay levels. See "Forward-looking statements & information." 17

18 Why Pembina? Assets Growth Stability Responsible The right assets for today that are undergoing a marked transformation to support tomorrow's growth Sector leading growth portfolio: ~$6 billion of committed opportunities across the HVP and LVP value chains Creating a stable foundation to support long-term dividend growth and stability 80% of operating margin will be driven by fee-for-service An unwavering commitment to our stakeholders exemplified by a proven track record of safety and supporting the communities we operate in The right assets for now, growth for tomorrow and a commitment to our stakeholders See "Forward-looking statements & information" and "Non-GAAP & additional GAAP measures." 18

19 PEMBINA PIPELINE CORPORATION TD Securites Conference (July 8, 2015) TSX: PPL; NYSE: PBA

20 Non-GAAP and additional GAAP measures This presentation uses certain terms that are not defined by GAAP but are used by management of Pembina to evaluate Pembina's performance. Non-GAAP and additional GAAP financial measures do not have a standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other companies. Pembina uses the non- GAAP terms "total enterprise value" (market value of Pembina's common shares plus preferred shares and convertible debentures plus senior debt less cash and cash equivalents), EBITDA (results from operating activities plus share of profit from equity accounted investees (before tax, depreciation and amortization) plus depreciation and amortization (included in operations and general and administrative expense) and unrealized gains or losses on commodity-related derivative financial instruments), adjusted cash flow from operating activities (cash flow from operating activities plus the change in non-cash working capital and excluding preferred share dividends and acquisition-related expenses), cash flow from operating activities per common share, adjusted cash flow from operating activities per common share and the additional GAAP term "operating margin" (gross profit before depreciation and amortization included in operations and unrealized gain/loss on commodity-related derivative financial instruments). Financial ratios are used to demonstrate financial leverage (extent to which debt is used in a company s capital structure) which include Total Debt (Total Senior Debt outstanding plus face value of Convertible Debentures as per the financial statements of the corresponding reporting year), Interest Coverage (EBITDA divided by Net Interest Paid (interest paid plus interest received), Total Debt to Total Capitalization (Total Debt divided by Total Equity less noncontrolling interest) and Funds From Operations to Total Debt (Adjusted Cash Flow from Operating Activities divided by Total Debt). Management believes these non-gaap measures provide an indication of the results generated by Pembina's business activities and the value those businesses generate. Investors should be cautioned that these non-gaap measures should not be construed as an alternative to net earnings, cash flow from operating activities or other measures of financial performance determined in accordance with GAAP as an indicator of Pembina's performance. For additional information with respect to financial measures which have not been identified by GAAP, including reconciliations to the closest comparable GAAP measure, see Pembina's Management's Discussion and Analysis for the fiscal year ended December 31, 2014, available on SEDAR at or in Pembina's annual report on Form 40-F for the fiscal year ended December 31, 2014 available on EDGAR at 20

21 Supporting Assumptions Numerous assumptions supported the analysis completed in the presentation. Figures are meant to be illustrative and for discussion purposes only. Additional details on select assumptions included below. 1. Sources for reserve / resource figures include: NEB, CAPP, EIA, AER, CIBC, GPMI, USGS, etc. Some figures have been adjusted for presentation purposes 2. Production based on estimate for calendar 2015 (YTD average used when forecast not available) 3. Commodity prices assume C$60 / Bbl Oil, C$3.15 / Mcf Gas, C$45 / Bbl NGL (price realizations by play vary) 4. Netback calculation: Total Revenue (By product, Oil, Gas, NGLs) Less: Total Costs (Operating, Transportation, Royalties) Individual operating costs vary by source play 21

22 CONTACT US Pembina Pipeline Corporation Suite th Avenue S.W. Calgary, Alberta T2P 1G1 investor-relations@pembina.com Toll free: Phone: