WTI claws back to $40 mark

Transcription

1 Title: Weekly Energy Infrastructure Review March 21, 2016 The NBF Daily Bulletin Weekly Comment Weekly Energy Infrastructure Review WTI claws back to $40 mark PRICING DATA Price 3/18/16 Week Prior % Chg Yr. Prior WTI (US$/bbl) % NYMEX (US$/mcf) % 2.74 Ratio 21.2x 21.7x -2.1% 16.0x Edm Synthetic (US$/bbl) % WCS (US$/bbl) % AECO (Cdn$/mcf) % 2.60 Ratio 33.2x 33.6x -1.1% 18.2x U.S. $ / Cdn $ % 1.27 Frac-spread (US$/bbl) % Propane (US$/bbl) % % WTI 49% 52% -5.0% 47% Butane (US$/bbl) % % WTI 55% 58% -4.2% 54% Condensate (US$/bbl) % % WTI 96% 97% -0.2% 107% AB Power (Cdn$/MWh) % S&P TSX Index 13,497 13, % 14,874 NBF E.I. Index % Year Cdn Bond (%) % Year U.S. Bond (%) % 1.97 BBB to Cdn 10yr (%) (1) % 2.24 (1) Note, credit spreads represent prior week's spread. NBF Forecasts Price 2015A 2016E 2017E Longterm WTI (US$/bbl) NYMEX Gas (US$/mcf) Ratio 18.5x 15.7x 15.6x 17.1x Canadian Par (Cdn$/bbl) AECO Gas (Cdn$/mcf) Ratio 21.3x 20.4x 18.3x 19.1x Frac-spread (Cdn$/bbl) AB Power ($/MWh) Cdn 10-year bond (%) BBB Spread (%) U.S. $ / Cdn $ Source: Bloomberg, NBF Estimates Jan-05 Jan-06 Source: Bloomberg INDEX PERFORMANCE Jan-07 Jan-08 NBF Energy Infrastructure Index S&P/TSX Composite Index Jan-09 Jan-10 Jan-11 TOP PICKS SUMMARY High Payout Low Payout Enbridge IF (ENF) Capital Power (CPX) Gibson (GEI) Enbridge (ENB) Inter Pipeline (IPL) Keyera (KEY) INDUSTRY RATING (NBF Econ. & Strategy) Overweight: N/A Market Weight: Energy Equipment & Services; Oil, Gas & Consumable Fuels Underweight: Chemicals; Utilities Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Macro highlights WTI crude prices gained 2% to finish the week at US$39.44/bbl, while Edmonton Synthetic and Canadian Heavy crude benchmarks traded up 5% and 12% to end the week at US$44.89/bbl and US$28.14/bbl, respectively. On the gas front, AECO prices jumped 6% to $1.35/mcf, while NYMEX prices rose 5% to end the week at US$1.86/mcf. In Alberta, last week s spot power price averaged $15/MWh, up 12% from the prior week, but remaining well below the long-term average of ~$65/MWh. Last Wednesday, the U.S. Federal Reserve announced that it will keep its benchmark interest rate steady, while cutting its forecast on U.S. economy performance. Overall, the 10-year U.S. bond yield declined 11 bps to 1.87%, while the 10-year Cdn bond yield decreased 7 bps to 1.29%. Sector highlights Individual comments on the following are available at TRP March 17: Announced an agreement to acquire Columbia Pipeline Group, Inc. (CPGX: NYSE) for ~US$13 billion (including US$2.8 bln of debt). Columbia owns one of the largest interstate natural gas pipeline systems in the United States, servicing the U.S. Northeast, Midwest, Mid-Atlantic and Gulf Coast regions. TRP expects to close the acquisition in H2 2016, funding the transaction with a concurrent $4.2 billion ($4.4 bln including over-allotment) Subscription Receipt financing, as well as the planned monetization of its U.S. Northeast merchant power assets and a minority interest in its Mexican natural gas pipeline business. We are currently restricted on TRP. PPL March 17: Announced the acquisition of certain sour natural gas processing assets from Paramount Resources Ltd. (TSX: POU) for ~$556 million, adding 250 mmcf/d of processing capacity and 22,500 bpd of condensate stabilization in Northwest Alberta. Pembina also agreed to fund a $35 million debottlenecking initiative, while optimizing existing transportation agreements to match Paramount s anticipated production growth but keeps Pembina whole on a net present value basis. In connection with the transaction, PPL announced a 4.9% dividend increase, commencing with the May 2016 monthly payment. Pembina expects to close the transaction in Q2 2016, funding the transaction with a concurrent $300 million common equity financing ($345 mln including over-allotment) and available credit facilities. We are currently restricted on PPL. Upcoming Events Sun Mon Tues Wed Thurs Fri Sat VNR AGM Good Friday Apr PPL Investor Day ALA AGM Source: NBF, Company Reports, Industry Associations, Government Agencies Patrick Kenny, CFA (403) patrick.kenny@nbc.ca Associate: Michael Nguyen (416) michael.nguyen@nbc.ca

2 Page 2 6.0% 5.0% KEY DATA CDN AND U.S. 10-YEAR BOND RATES (%) CDN Bond Rates U.S. Bond Rates INVESTMENT STANCE POSITIONING FOR DIVIDEND GROWTH 4.0% 3.0% 2.0% 1.0% Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Source: Bloomberg BBB BOND SPREAD TO CDN 10-YEAR (%) 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% Jan-16 In 2015, the Pipelines, Utilities & Energy Infrastructure sector fell 22%, in line with the S&P TSX Energy Index total return of -23%, while underperforming the S&P TSX's total return of -8%. That said, year-to-date the sector is up 7% versus a 4% gain in the S&P TSX Composite Index. Since the beginning of 2015, the Canada 10-year bond rates have moved down a further ~50 bps to 1.3%. Looking ahead, our Economic and Strategy Group is forecasting a Canada 10-year bond rate of ~2.4% by the end of Of note, our cost of capital assumptions within our valuations is now anchored by a long-term 10-year Government of Canada bond rate assumption of 2.5%. On the credit spread front, we now assume a long-term BBB 10-year spread of 3.5%. 0.0% Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Source: Bloomberg C3+ FRAC SPREAD (1) $/bbl Actual Forecast Average: ~$30/bbl; ~$0.75/gal Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 (1) C3+ mix: 70% Mont Belvieu propane, 21% Mont Belvieu butane, 9% Flint Hills condensate. Gas price mix: AECO 50/50 spot/one-month fwd gas. Source: Bloomberg, NBF ALBERTA POWER PRICE ($/MWh) $/MWh $ Actual Forecast $ $90.00 $60.00 $30.00 $0.00 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Since mid-2014 crude oil prices have been cut by more than half with WTI currently sitting at sub-us$40/bbl, putting downward pressure across the board on the Pipeline / Midstream names as the market becomes concerned about counterparty risk. As such, we have rolled up our sleeves and combed through assets and customers to dig up each company's counterparty risk to the energy sector. Of note, we separate Supermajors / Integrates from regular E&Ps as we believe these counterparties are very well positioned to make it through the cycle - both from balance sheet and profitability perspective as downstream profits mitigate the impact of upstream losses. Meanwhile, most companies on our coverage list also generate a healthy portion of cash flow from non-e&ps (large Chemical companies, refineries, propane retailers, etc.). That said, we highlight an average cash flow exposure of ~18% to regular E&Ps (i.e., excluding Supermajors / Integrates) across our space. Combining our counterparty risk analysis with balance sheet strength (i.e., D/EBITDA), we note the most attractive valuations being Outperform-rated CPX, ENB, GEI, and ENF. More than just a silver lining, several companies stand to make out like bandits should the Canadian dollar stay south of our longterm US$0.80 assumption (i.e., well below near-term hedging positions). Top U.S.-denominated AFFO profiles included EMA, ENF, TRP, and we highlight ~10% valuation upside for these stocks assuming spot FX long-term. Overall, our top picks for 2016 include Capital Power (CPX), Enbridge (ENB), Enbridge Income Fund (ENF), Gibson Energy (GEI), Inter Pipeline (IPL), Keyera (KEY). Note: Based on quarterly averages. Source: AESO, NBF Estimates

3 Page 3 WEEKLY AND YTD PERFORMANCE WEEKLY PRICE PERFORMANCE (Ending March 18) 2016 YTD PRICE PERFORMANCE SPB GEI VSN IPL CUS TA TRP PPL ALA CU GEI VNR CU TRP KEY ACO'X TWM ENB S&P TSX EMA VNR NBF SECTOR AVG. ACO'X ALA NBF SECTOR AVG. ENF PPL H EMA FTS IPL TWM ENF S&P TSX H VSN FTS KEY ENB CUS TA CPX CPX -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% SPB -45.0% -30.0% -15.0% 0.0% 15.0% 30.0% 45.0% Sources: Bloomberg, NBF

4 Page 4 POTENTIAL ASSETS FOR SALE Financial Advisor Company Location Area Production (boe/d) FirstEnergy Enerplus Corp. Alberta Leland / Cherhill / Joarcam 1,056 Rock Energy Inc. Alberta / Saskatchewan Viking 3,933 Peters & Co. TriAxon Oil Corp. Alberta Harmattan / Crossfield 55 Nordegg Resources Inc. Alberta Dawson / Caribou / Pembina 2,000 Kinwest 2008 Energy Inc. Saskatchewan Various 514 Cequence Energy Ltd. Alberta Simonette 1,682 Twin Butte Energy Ltd. Alberta Provost / Lloydminister 16,303 Scotia Waterous Husky Oil Operations Ltd. Alberta / B.C. / Saskatchewan Various 59,530 RBC Rundle Centrica Energy Canada Alberta / Saskatchewan Various 6,350 Western Divestments Ravens Cross Energy Ltd. Saskatchewan Viking n/a BMO Pengrowth Energy Corp. Alberta Swan Hills n/a Note: Includes all deals in market and post bid. Excludes all joint venture opportunities available. Source: Financial Advisor's websites PURCHASE (SALE) OF SHARES Company None noted Transaction Date INSIDER TRADING ACTIVITY WEEK ENDING MARCH 16, 2016 Insider Shares Purchased (Sold) Average Price (C$) Total Purchased (Sold) (C$) Shares Held Comments SHARE REPURCHASES Transaction Company Date None noted Insider Shares Repurchased Average Price (C$) Total Repurchased Shares Held Comments EXERCISE OF OPTIONS / PURCHASE PLANS Company None noted Transaction Date Insider Shares Acquired Average Price / Strike Price(C$) Total Purchased (Sold) / Total Proceeds (C$) Shares Held Comments 1) Includes net trade activities > or = 5,000 shares and excludes grants of shares/units, stock dividends, exercise of rights and exercise of option sales. Shares held includes direct & indirect ownership of our coverage list. 2) Further adjustments/corrections as reported in SEDI are only included for differences in units purchased or sold. 3) Shares held only includes shares, units and exchangeable shares only (direct and indirect). Source: OSC Bulletin, Company Reports

5 Page 5 NBF PIPELINES, UTILITIES & INFRASTRUCTURE COMPARABLES Market Ent. Net Debt/ Cash AFFO Price/ Price/ Price/ EV/ EV/Free- 12 mo. Total TSX Price Cap Value D / EV EBITDA Yield Payout Earnings CF AFFO EBITDA EBITDA Target Return Ratings Ticker 18-Mar-16 $mln $mln % 2017e % 2017e 2017e 2017e 2017e 2017e 2017e High Payout AltaGas ALA $ ,872 10,038 51% 6.1x 6.2% 78% n/a 9.5x 11.6x 12.9x 14.8x $ % SP Canexus CUS $1.28 R R R R R R R R R R R R R R Enbridge Income Fund ENF $ ,344 37,569 38% 4.8x 6.2% 73% n/a 10.0x 10.7x 12.9x 13.6x $ % OP Gibson Energy GEI $ ,217 3,670 40% 3.4x 7.5% 73% n/a 7.8x 9.5x 8.7x 9.9x $ % OP Inter Pipeline IPL $ ,720 13,528 36% 4.6x 6.0% 76% n/a 11.1x 11.9x 13.5x 14.2x $ % OP Keyera KEY $ ,883 8,855 22% 2.9x 4.0% 55% n/a 11.4x 12.5x 12.4x 13.3x $ % OP Pembina Pipeline PPL $35.00 R R R R R R R R R R R R R R Superior Plus SPB $9.22 R R R R R R R R R R R R R R Tidewater Midstream TWM $1.54 R R R R R R R R R R R R R R Valener VNR $ % 2.3x 5.3% 88% n/a 16.0x 16.0x 15.5x 15.5x $ % SP Veresen VSN $8.02 2,537 4,400 42% 4.2x 12.5% 106% n/a 1.0x 8.6x 11.3x 11.4x $ % SP High Payout Average 36% 4.1x 6.8% 79% n/a 9.6x 11.5x 12.4x 13.2x 18.0% Low Payout ATCO ACO'X $ ,857 16,344 46% 4.8x 3.0% 29% 12.5x 4.8x 8.9x 8.4x 11.6x $ % SP Canadian Utilities CU $ ,464 19,001 50% 5.6x 3.7% 42% 19.0x 6.7x 10.6x 10.7x 15.0x $ % SP Capital Power CPX $ ,758 3,703 53% 3.1x 8.4% 48% 14.2x 4.5x 5.3x 7.0x 7.9x $ % OP Emera EMA $ ,840 26,354 63% 5.8x 4.1% 57% 17.4x 6.7x 12.8x 9.6x 13.0x $ % SP Enbridge ENB $ ,551 99,525 54% 6.4x 4.2% 56% 24.1x 9.9x 12.1x 13.5x 15.2x $ % OP Fortis FTS $ ,712 39,347 60% 5.8x 3.9% 43% 15.3x 5.8x 10.5x 10.0x 13.5x $ % SP Hydro One H $ ,310 25,040 43% 5.4x 3.5% 60% 19.0x 8.5x 16.4x 11.6x 18.7x $ % SP TransAlta TA $6.01 1,707 7,702 78% 4.6x 2.7% 18% 23.1x 2.9x 6.8x 7.2x 10.6x $ % SP TransCanada TRP $48.44 R R R R R R R R R R R R R R Low Payout Average 56% 5.2x 4.2% 44% 18.1x 6.2x 10.4x 9.8x 13.2x 12.4% Note: UP = Underperform; SP = Sector Perform; OP = Outperform; NR = Not Rated Source: Company Reports, NBF Estimates, ThomsonOne U.S. ENERGY INFRASTRUCTURE COMPARABLES Market Ent. Net Debt/ Cash AFFO Price/ Price/ Price/ EV/ EV/Free- 12 mo. Total NYSE Price Cap Value D / EV EBITDA Yield Payout Earnings CF AFFO EBITDA EBITDA Target Return % Ratings Ticker 18-Mar-16 $mln $mln % 2017e % 2017e 2017e 2017e 2017e 2017e 2017e High Payout AmeriGas Partners, LP APU $ ,219 5,670 43% 3.6x 8.5% n/a n/a 9.1x n/a 8.3x n/a NR NR NR Boardwalk Pipeline Partners, LP BWP $ ,249 6,706 52% 4.6x 2.9% n/a n/a 7.0x n/a 8.9x n/a NR NR NR Buckeye Partners, LP BPL $ ,825 12,664 30% 3.8x 6.9% n/a n/a 11.5x n/a 12.6x n/a NR NR NR DCP Midstream Partners, LP DPM $ ,864 5,286 46% 3.5x 11.5% n/a n/a 7.0x n/a 7.7x n/a NR NR NR Enbridge Energy Partners, LP EEP $ ,141 23,063 34% 3.9x 12.6% n/a n/a 6.2x n/a 11.3x n/a NR NR NR Enterprise Products Partners, LP EPD $ ,687 74,359 30% 3.9x 6.0% n/a n/a 11.6x n/a 12.6x n/a NR NR NR Ferrellgas Partners, LP FGP $ ,580 3,669 57% 5.4x 11.5% n/a n/a 7.0x n/a 9.5x n/a NR NR NR Kinder Morgan, Inc. KMI $ ,544 74,768 55% 5.0x 11.0% n/a n/a 6.1x n/a 9.0x n/a NR NR NR Oneok Partners, LP OKS $ ,776 16,120 46% 4.1x 9.8% n/a n/a 5.4x n/a 9.0x n/a NR NR NR Plains All American Pipeline, LP PAA $ ,246 20,593 55% 4.2x 11.5% n/a n/a 6.7x n/a 7.6x n/a NR NR NR Williams Partners, LP WPZ $ ,528 38,108 51% 3.8x 16.6% n/a n/a 4.5x n/a 7.3x n/a NR NR NR High Payout Average 45% 4.1x 9.9% 7.5x 9.4x Low Payout - Transmission Dominion Resource, Inc. D $ ,251 69,595 41% 4.7x 3.5% n/a 11.5x 11.5x n/a 11.5x n/a NR NR NR ONEOK Inc. OKE $ ,603 17,485 51% 5.1x 7.9% n/a 10.0x 8.7x n/a 10.0x n/a NR NR NR Sempra Energy SRE $ ,113 38,326 37% 3.8x 2.7% n/a 10.1x 9.9x n/a 10.1x n/a NR NR NR Spectra Energy Corp. SE $ ,409 33,852 43% 4.7x 4.8% n/a 10.9x 12.7x n/a 10.9x n/a NR NR NR Low Payout - Electric Consolidated Edison ED $ ,840 32,170 41% 3.5x 3.5% n/a 8.5x 8.9x n/a 8.5x n/a NR NR NR Southern Company SO $ ,205 71,539 38% 3.8x 4.2% n/a 10.0x 8.8x n/a 10.0x n/a NR NR NR Low Payout Average 42% 4.2x 4.4% 10.2x 10.1x 10.2x Note: UP = Underperform; SP = Sector Perform; OP = Outperform; NR = Not Rated Source: Bloomberg, ThomsonOne

6 Page 6 NBF ENERGY INFRASTRUCTURE DEBENTURE ANALYSIS Company Ticker Last Price 18-Mar Coupon Conversion Price Maturity Date Option Value (1) Implied Straight Bond Price Implied Straight Bond YTM (2) BBB Yield Differential (3) Pipeline and Other Pembina PPL.DB.f % Dec % 6.21% Average - Pipelines and Other 10.59% 6.21% (1) Estimated using the Black-Scholes model (risk-free rate = yield on treasury bond with closest maturity date and 1-year share price volatility). (2) Yield-to-maturity. (3) Implied straight bond YTM less average five-year BBB corporate bond rate. Source: Company Reports, NBF, pricing per ThomsonOne Patrick Kenny, CFA (403) patrick.kenny@nbc.ca Associate: Michael Nguyen (416) michael.nguyen@nbc.ca

7 Page 7 DISCLOSURES: Ratings And What They Mean: PRIMARY STOCK RATING: NBF has a three-tiered rating system that is relative to the coverage universe of the particular analyst. Here is a brief description of each: Outperform The stock is expected to outperform the analyst s coverage universe over the next 12 months; Sector Perform The stock is projected to perform in line with the sector over the next 12 months; Underperform The stock is expected to underperform the sector over the next 12 months. SECONDARY STOCK RATING: Under Review Our analyst has withdrawn the rating because of insufficient information and is awaiting more information and/or clarification; Tender Our analyst is recommending that investors tender to a specific offering for the company s stock; Restricted Because of ongoing investment banking transactions or because of other circumstances, NBF policy and/or laws or regulations preclude our analyst from rating a company s stock. INDUSTRY RATING: NBF has an Industry Weighting system that reflects the view of our Economics & Strategy Group, using its sector rotation strategy. The three-tiered system rates industries as Overweight, Market Weight and Underweight, depending on the sector s projected performance against broader market averages over the next 12 months. RISK RATING: NBF utilizes a four-tiered risk rating system, Below Average, Average, Above Average and Speculative. The system attempts to evaluate risk against the overall market. In addition to sector-specific criteria, analysts also utilize quantitative and qualitative criteria in choosing a rating. The criteria include predictability of financial results, share price volatility, credit ratings, share liquidity and balance sheet quality. General National Bank Financial (NBF) is an indirect wholly owned subsidiary of National Bank of Canada. National Bank of Canada is a public company listed on Canadian stock exchanges. The particulars contained herein were obtained from sources which we believe to be reliable but are not guaranteed by us and may be incomplete. The opinions expressed are based upon our analysis and interpretation of these particulars and are not to be construed as a solicitation or offer to buy or sell the securities mentioned herein. Research Analysts The Research Analyst(s) who prepare these reports certify that their respective report accurately reflects his or her personal opinion and that no part of his/her compensation was, is, or will be directly or indirectly related to the specific recommendations or views as to the securities or companies. NBF compensates its Research Analysts from a variety of sources. The Research Department is a cost centre and is funded by the business activities of NBF including, Institutional Equity Sales and Trading, Retail Sales, the correspondent clearing business, and Corporate and Investment Banking. Since the revenues from these businesses vary, the funds for research compensation vary. No one business line has a greater influence than any other for Research Analyst compensation. Canadian Residents In respect of the distribution of this report in Canada, NBF accepts responsibility for its contents. To make further inquiry related to this report, Canadian residents should contact their NBF professional representative. To effect any transaction, Canadian residents should contact their NBF Investment advisor. U.S. Residents With respect to the distribution of this report in the United States, National Bank of Canada Financial Inc. (NBCFI) is regulated by the Financial Industry Regulatory Authority (FINRA) and a member of the Securities Investor Protection Corporation (SIPC). This report has been prepared in whole or in part by, research analysts employed by non-us affiliates of NBCFI that are not registered as broker/dealers in the US. These non-us research analysts are not registered as associated persons of NBCFI and are not licensed or qualified as research analysts with FINRA or any other US regulatory authority and, accordingly, may not be subject (among other things) to FINRA restrictions regarding communications by a research analyst with the subject company, public appearances by research analysts and trading securities held a research analyst account. All of the views expressed in this research report accurately reflect the research analysts personal views regarding any and all of the subject securities or issuers. No part of the analysts compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this research report. The analyst responsible for the production of this report certifies that the views expressed herein reflect his or her accurate personal and technical judgment at the moment of publication. Because the views of analysts may differ, members of the National Bank Financial Group may have or may in the future issue reports that are inconsistent with this report, or that reach conclusions different from those in this report. To make further inquiry related to this report, United States residents should contact their NBCFI registered representative. UK Residents In respect of the distribution of this report to UK residents, National Bank Financial Inc. has approved the contents (including, where necessary, for the purposes of Section 21(1) of the Financial Services and Markets Act 2000). National Bank Financial Inc. and/or its parent and/or any companies within or affiliates of the National Bank of Canada group and/or any of their directors, officers and employees may have or may have had interests or long or short positions in, and may at any time make purchases and/or sales as principal or agent, or may act or may have acted as market maker in the relevant securities or related financial instruments discussed in this report, or may act or have acted as investment and/or commercial banker with respect thereto. The value of investments can go down as well as up. Past performance will not necessarily be repeated in the future. The investments contained in this report are not available to retail customers. This report does not constitute or form part of any offer for sale or subscription of or solicitation of any offer to buy or subscribe for the securities described herein nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever. This information is only for distribution to Eligible Counterparties and Professional Clients in the United Kingdom within the meaning of the rules of the Financial Conduct Authority. National Bank Financial Inc. is authorised and regulated by the Financial Conduct Authority and has its registered office at 71 Fenchurch Street, London, EC3M 4HD.. National Bank Financial Inc. is not authorised by the Prudential Regulation Authority and the Financial Conduct Authority to accept deposits in the United Kingdom. Copyright This report may not be reproduced in whole or in part, or further distributed or published or referred to in any manner whatsoever, nor may the information, opinions or conclusions contained in it be referred to without in each case the prior express written consent of National Bank Financial. NBF is a member of the Canadian Investor Protection Fund. NBF quarterly ratings summary and the total ratings by month can be found on our website under Research and Analysis/Equities/About NBF Research/Quarterly Ratings Summary (link attached) The NBF Research Dissemination Policy is available on our website under Legal/Research Policy (link attached) Click on the following link to see the company specific disclosures Click on the following link to see National Bank Financial Markets Statement of Policies If a company specific disclosure is not found herein for a listed company, NBF at this time does not provide research coverage or stock rating for the company in question.

8 Page 8 ADDITIONAL COMPANY RELATED DISCLOSURES ACO.X ALA 2,3,4,5,6,7 CPX 2,3,4,5,6,7 CU 6,7 CUS 6,7 EMA 2,3,4,5,6,7 ENB 6,7 ENF 2,3,4,5,6,7 FTS 6,7 GEI 6,7 H 2,3,4,5,7 ** IPL 2,3,4,5,6,7 KEY 6,7 PPL 2,3,4,5,7,10 SPB 2,3,4,5,6,7 TA 2,3,4,5,6,7,14 * TRP 2,3,4,5,6,7 TWM 2,3,4,5,7 VNR 6,7,10 VSN 2,3,4,5,6,7 LEGEND FOR COMPANY RELATED DISCLOSURES: 2 National Bank Financial Inc. has acted as an underwriter with respect to this issuer within the past 12 months. 3 National Bank Financial Inc. has provided investment banking services for this issuer within the past 12 months. 4 National Bank Financial Inc. or an affiliate has managed or co-managed a public offering of securities with respect to this issuer within the past 12 months. 5 National Bank Financial Inc. or an affiliate has received compensation for investment banking services from this issuer within the past 12 months. 6 National Bank Financial Inc. or an affiliate has a non-investment banking services related relationship during the past 12 months. 7 The issuer is a client, or was a client, of National Bank Financial Inc. or an affiliate within the past 12 months. 8 National Bank Financial Inc. or its affiliates expects to receive or intends to seek compensation for investment banking services from this issuer in the next 3 months. 9 As of the end of the month immediately preceding the date of publication of this research report (or the end of the second most recent month if the publication date is less than 10 calendar days after the end of the most recent month), National Bank Financial Inc. or an affiliate beneficially own 1% or more of any class of common equity securities of this issuer. 10 National Bank Financial Inc. makes a market in the securities of this issuer, at the time of this report publication. 11 A partner, director, officer or research analyst involved in the preparation of this report has, during the preceding 12 months provided services to this issuer for remuneration other than normal course investment advisory or trade execution services. 12 A research analyst, associate or any other person (or a member of their household) directly involved in preparing this report has a financial interest in the securities of this issuer. 13 A partner, director, officer, employee or agent of National Bank Financial Inc., is an officer, director, employee of, or serves in any advisory capacity to the issuer. 14 A member of the Board of Directors of National Bank Financial Inc. is also a member of the Board of Directors or is an officer of this issuer. * Richard Fortin is a member of the Board of Directors or is an officer of this issuer. Lino A Saputo, Jr is also a member of the Board of Directors or is an officer of this issuer. Raymond Bachand is a member of the Board of Directors or is an officer of this issuer. ** National Bank Financial Markets acted as financial advisor to Hydro One Limited. Hydro One Inc. has entered into a purchase agreement to acquire from Brookfield Infrastructure various entities that own and control Great Lakes Power Transmission LP.