RBC Capital Markets MLP Conference Partnership Overview November 15, 2007 Dallas, Texas

Transcription

1 RBC Capital Markets MLP Conference Partnership Overview November 15, 2007 Dallas, Texas

2 Forward Looking Statements Some of the statements in this presentation concerning future performance will be forwardlooking within the meanings of the securities laws. Forward-looking statements are not guarantees of future performance or an assurance that our current assumptions and projections are valid. Actual results may differ materially from those projected. Except for historical information contained herein, the matters discussed in this presentation include forward looking statements that involve risks and uncertainties. You are encouraged to closely consider the additional disclosures and risk factors contained in the prospectus that discuss in detail the factors that could cause future results to be different than contemplated in today s discussion. Investing in common units involves risks associated with Spectra Energy Partners business, the partnership structure and tax characteristics of the common units. Please read the Risk Factors section of the prospectus. In addition, today s presentation includes certain non-gaap financial measures as defined under SEC Regulation G. A reconciliation of those measures to the most directly comparable GAAP measures is available in the prospectus. 2

3 SEP Representatives Name Greg Harper President & Chief Executive Officer Position Background 20 year Spectra Energy veteran 1 year as GVP responsible for Spectra Energy spinoff 3 years as GVP of Duke Energy North America commercial operations 3 years as East Tennessee Natural Gas commercial lead 13 years with Texas Eastern/PanEnergy engineering, operations, and marketing M. Sean Blakley Director, Investor & Public Relations 7 years in Spectra Energy tax research & planning group 17 years experience in tax research & planning in the energy industry Certified Public Accountant in Texas 3

4 SEP Management Team Name Martha B. Wyrsch C. Gregory Harper Lon C. Mitchell, Jr. Position Chairman of the SEP Board President, Chief Executive Officer & Director Vice President & Chief Financial Officer 4

5 SEP Board of Directors Name Martha B. Wyrsch GP Board Position Chairman of the Board Affiliation President and CEO, Spectra Energy Transmission C. Gregory Harper Director President and CEO of SEP William S. Garner, Jr. Director Group Executive, General Counsel and Secretary of Spectra Energy Gregory J. Rizzo Director Group Vice President of U.S. Regulatory and Project Management for Spectra Energy Transmission Steven D. Arnold Independent Director President of Bordley Management Co. Former SVP, Prudential Capital Group Stewart A. Bliss Nora M. Brownell Independent Director Independent Director Independent financial consultant and senior business advisor Former lead director of Kinder Morgan, Inc. Former FERC Commissioner Former SVP, Meridian Bancorp 5

6 Key Investment Highlights Elements of SEP s Compelling Investment Profile Attractive Assets Growth Opportunities Strong Sponsorship Experienced Management Portfolio Strategically Positioned Provides Stable Cash Flows Growth-Oriented Business Strategies Visible Growth from Identified Organic Projects Focus on Acquisitions Increase Contracted Capacity by Marketing Diverse Supply Sources / Attractive End Markets Storage Poised to Capture Gulf Coast LNG Opportunities Beneficial Affiliation with Spectra Energy Alignment of Interests Access to Deal Flow Provides Support Services Veteran Leadership Team with Extensive Industry Experience Access to and Alignment with Senior Management of Spectra Energy Financial Strength Strong and Flexible Financial Position 6

7 Asset Portfolio East Tennessee Natural Gas (100%) 1,400 mile interstate natural gas pipeline 1.3 Bcf/d of capacity 19 receipt points 175 delivery points 1.0 Bcf LNG storage facility Gulfstream Natural Gas (24.5%) 690 mile interstate natural gas pipeline 1.1 Bcf/d of capacity 1.25 Bcf/d by receipt points 19 delivery points Market Hub Partners (50%) 2 high deliverability salt cavern storage facilities 35 Bcf capacity 58 miles of pipeline 12 interconnects Roanoke Nashville Knoxville Moss Bluff Houston Texas Eastern Egan Chattanooga Mobile Atlanta Tampa Orlando East Tennessee Natural Gas Market Hub Partners Gulfstream Miami Note: Texas Eastern pipeline will be retained by Spectra Energy. 7

8 Cash Flow Certainty Capacity Reservation Fees Underpin Stable Cash Flows 2006 Revenue Composition East Tennessee Gulfstream Market Hub Capacity Reservation Fees Variable Fees Interruptible Contracts 97.7% 1.7% 0.6% 85.6% 2.9% 11.5% 90.0% 0.0% 10.0% $85 million of estimated cash flow available for distribution, almost equally contributed by each asset 8

9 East Tennessee Natural Gas The Partnership s Cornerstone Asset IL TN Midwestern Gas IN KY NASHVILLE Tennessee Gas Texas Eastern Columbia Gulf KNOXVILLE East Tennessee Jewell Ridge Lateral NC WV Patriot Saltville Extension Gas Storage Kingsport LNG Facility Transco ROANOKE CHARLOTTE VA Managed on a fully-integrated basis with Spectra Energy s U.S. pipeline and storage assets Base market provides solid foundation; new markets provide growth Geographic region provides significant barriers to entry Offers consumers diversity of supplies Tennessee Gas Columbia Gulf MS Texas Eastern AL CHATTANOOGA Southern Natural Gas GA ATLANTA SC Offers producers market reach Current expansion projects: Jewell Ridge in service (228 Mdth/d) Equitable Nora in service (10 Mdth/d) Glade Spring Q (50 Mdth/d) Ability to reach off-system customers Primary transportation alternative for on-system customers; off-system customers represent growth opportunity Note: Texas Eastern pipeline and Saltville Gas Storage retained by Spectra Energy. 9

10 Gulfstream Natural Gas System Key Growth Vehicle for the Partnership State-of-the-art interstate natural gas transmission system Southeast Supply Header AL GA Cypress Pipeline Project One of two major pipelines that serves the nation s fourth most populous state System is only 5 years old MS CODEN Florida Gas Transmission PENSACOLA TALLAHASSEE JACKSONVILLE Approximately $1.7 billion invested to date Gulfstream TAMPA ORLANDO Long-term firm transportation contracts in place Phase IV Meaningful long-term growth opportunities Phase III 2H 2008 / 1H 2009 Phase IV 2H 2008 / 1H 2009 G2 (potential future expansion) Open season results being compiled FL Phase III MIAMI 10

11 Market Hub Partners Strategically Located Storage Facilities TX Growing Onshore Supply Moss Bluff LA Egan MS Growing SE Markets Growing NE Markets Two high deliverability salt cavern natural gas storage facilities Aggregate working gas storage capacity of approximately 35 Bcf Planned expansions take capacity to approximately 47Bcf by 2011 Access to natural gas supplies from Texas, Louisiana and growing imports of LNG to the Gulf Coast SEP owns a 50% interest Interconnecting Pipelines Egan Moss Bluff Emerging LNG Supply ANR Columbia Gulf Florida Gas Tennessee Texas Eastern Texas Gas Trunkline Gas Enterprise Intrastate Kinder Morgan Texas NGPL Kinder Morgan Tejas Texas Eastern Well positioned to serve growing demand for storage services, including requirements of LNG imports 11

12 Financial Objectives/Highlights/Performance SEP Maintaining a Strong and Flexible Financial Position Objectives Highlights Performance Maintain stable and increasing distributable cash flows Maintain strong balance sheet Provide flexibility for opportunistic growth and expansion Pursue potential acquisitions from third parties and / or Spectra Energy Attractive cash flow profile Strong distributable cash position New contracts and expansions Short term firm and interruptible contracts One time benefits and favorable timing of expenses Ample liquidity for planned organic growth projects Visible growth opportunities being executed Almost no direct commodity price exposure Strong initial quarter as a public company New earnings from projects at East Tennessee and Market Hub Partners Higher demand for interruptible transportation and storage services Lower operating costs, partially due to timing Significant progress permitting contracted expansions Gulfstream Phase III and IV, Egan Cavern 3 On schedule to deliver earnings contributions by 2008 Available credit capacity $500 Million credit facility executed at IPO Net Debt at September 30, 2007: $ million 12

13 Third Quarter Financial Results Ongoing Net Income of $23.8 million Cash Available for Distribution of $37.1 million On track for S-1 estimate of $85 million for the first 12 months Strong results in our initial quarter 13

14 Earnings Summary ($ millions) Three Months Ended September 30, Operating Revenues $ 23.8 $ 18.6 Operating Expenses Operating Income Equity earnings in Gulfstream our 24.5% Equity earnings in Market Hub our 50% Other Income and Expenses, Net Interest Income Interest Expense (6.5) (2.1) Earnings Before Income Taxes Income Tax Expense (Benefit) (110.4) 1.5 Net Income $ $ 13.6 Less: Reversal of Income Tax Payable (110.5) - Ongoing Net Income $ 23.8 $

15 Cash Available for Distribution ($ millions) Three Months Ended September 30, 2007 Adjusted EBITDA $ 16.6 Cash Available from Gulfstream - Our 24.5% 14.0 Cash Available from MHP - Our 50% 9.7 Less: Cash Interest Expense (net) 1.0 Maintenance Capital Expenditures 2.2 Total Cash Available for Distribution $ 37.1 On track to meet the estimated $85 million for the first twelve months as set forth in Form S-1 15

16 Minimum Cash Flow for Distributions ($ in millions, except per unit data) Twelve months ending June 30, 2008 Net Income $72.4 Add: Depreciation and amortization 21.5 Interest expense 26.9 Less: Equity in earnings from Gulfstream and MHP 53.6 Interest income 8.4 Adjusted EBITDA 55.9 Add: Interest income 8.4 Estimated cash available for distribution from Gulfstream 23.8 Estimated cash available for distribution from MHP 32.9 Less: Cash interest expense (income), net 26.9 Maintenance capital expenditures 11.8 Estimated cash available for distribution $85.1 Less: Cash Reserve 4.0 Estimated minimum cash available for distribution $81.1 Per Unit minimum annual distribution $

17 Questions and Answers Key Investment Highlights Attractive Assets Growth Opportunities Maritimes & Northeast Strong Sponsorship Algonquin Experienced Management Roanoke Financial Strength Texas Eastern Knoxville Nashville Chattanooga Atlanta Moss Bluff Egan Mobile East Tennessee Natural Gas Houston Orlando Tampa Market Hub Partners Gulfstream Miami Note: Texas Eastern, Algonquin, Maritimes & Northeast pipelines retained by Spectra Energy. 17