A p r i l C O R P O R AT E P R O F I L E

Transcription

1 A p r i l C O R P O R AT E P R O F I L E

2 disclaimer 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 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, forwardlooking 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 well positioned in uncertain environment strong track record & conservative financial strategy essential services to natural gas and oil sands producers strategically located assets with sustainable economics financial flexibility to fund growth opportunities 3

4 conservative financial strategy % % % cagr d i s t r i b u t a b l e c a s h f l o w p e r s h a r e 1, 3 cagr d i v i d e n d p e r s h a r e 2, p a y o u t r a t i o 3, 4 1 Compound annual growth rate from 5/30/2003 to 12/31/ Compound annual growth rate from 7/15/2003 to 4/1/ Not a standard measure under GAAP. 4 From 1/1/2015 to 12/31/2015, inclusive. focused on growing shareholder value 4

5 the most integrated canadian midstreamer GAT HERING& PROCESSING LIQUIDS BUSINESS UNIT F E E F O R S E R V I C E & T A K E O R P A Y C O N T R A C T S M A R G I N E X T R A C T I O N R AW G AS gathering compression sweetening NGL extraction fractionation storage transportation marketing E N D M A R K E T S C O N S U M P T I O N essential midstream infrastructure & services 5

6 diversified and growing operating margin OPERATING MARGIN (ROLLING LTM) 1,2 Millions $700 $600 $500 $400 $300 $200 $100 $0 Gathering & Processing NGL Infrastructure Marketing 1 Operating Margin shown excludes other income from production associated with Keyera s oil and gas reserves. 2 See Keyera s 4Q 2015 MD&A and Note 29 to the accompanying financial statements. fee-for-service business underpins balanced cash flow growth 6

7 investing in midstream infrastructure fostering growth in the western canada sedimentary basin 7

8 recently completed growth projects Completed Projects In-Service Date Capital Cost 1 (Net, in $ Millions) Zeta Creek New Gas Plant Construction September Rimbey Turbo Expander, Debottlenecking & Truck Offload Expansion July Josephburg Rail Terminal July Alder Flats New Gas Plant Construction (Phase I) May Twin Rivers Pipelines (Phases I & II) April Simonette Gas Plant Expansion (Condensate Stabilizer & Refrigeration Unit) March De-ethanizer at Keyera s Fort Saskatchewan Fractionation Facility March Wapiti Raw Gas and Condensate Pipelines January Hull Terminal Refurbishment October Alberta Crude Terminal September Wilson Creek Gathering System April Carlos Pipeline Offload April Some of the Completed Project Capital Costs are subject to change. $1,169 growing in response to customer demand 8

9 growth projects currently under development Approved Projects Capital Cost (Net, in $ Millions) Fort Saskatchewan Frac Expansion 176 NWR Sturgeon Refinery Condensate Pipeline Connection 50 Edmonton Terminal Condensate Tanks 90 Norlite Pipeline (JV with Enbridge) 390 Base Line Terminal Crude Oil Storage Project (JV with Kinder Morgan) 330 Fort Saskatchewan Condensate System Pipeline Expansion & Manifold South Grand Rapids Pipeline & Pump Station (JV with TCPL & Brion) Alder Flats New Gas Plant Construction (Phase II 3 ) 35 Other Projects (Caverns, Solvent Handling, Pipelines, Connections, etc.) >300 TOTAL >$1.5 Billion 1 Keyera s share of estimated capital cost. See Keyera s 4Q 2015 MD&A for capital investment risks and assumptions. 2 Pipeline portion of net capital cost will be paid upon completion of construction and is categorized as acquisition capital. 3 The capital budget and construction schedule for Alder Flats Phase II is being managed by Bellatrix Exploration Ltd. $600-$700 million of growth capital expected in

10 western canada sedimentary basin billion boe remaining e s t a blished reserves o f c rude o il, b itumen a n d n a t u ra l g a s 1 /Ellerslie /Fahler /Mannville Spirit River 1 Alberta Energy Regulator s ST : Alberta s Energy Reserves 2014 and Supply/Demand Outlook , June 2015 Sandstone/Siltstone Carbonate Shale globally unique multi-zone geology underlies the WCSB 10

11 gathering and processing business unit Well maintained, long-life facilities ~2.8 bcf/d licensed gross capacity 1 17 active gas plants; 15 operated by Keyera Montney Extensive gathering systems Significant gathering pipelines tied into existing gas plants >5,000 kilometres of pipelines operated by Keyera Capture areas create franchise regions Duvernay Fee-for-service revenues with negligible direct commodity exposure Largely flow-through operating costs Spirit River Cardium Glauconite 1 Licensed capacity is not equivalent to actual operating capacity. Actual operational capacity can be lower as it depends on operating conditions and capabilities of functional units at each plant. network of facilities supported by fee-for-service contracts 11

12 value provided to our customers Reliable and flexible system - Extensive, integrated network of assets Operational expertise - Years of experience operating safely - Completion of periodic maintenance turnarounds Critical mass to reduce operating costs - Strive to fill unused capacity - Several plants operating near capacity Maximize value of NGLs - Integrated infrastructure provides market access to help maximize netbacks for our customers - Storage and transportation options - Industry-leading condensate system essential services to oil and gas producers 12

13 spirit river economic at low commodity prices Low cost natural gas play - One of North America s most cost-effective zones to develop - Rivals the Utica, Marcellus and Montney Favorable geology - Broad, thick and extensive sand-rich valleys in the Notikewin, Falher and Wilrich channels - Majority of the top 25 highest deliverability wells in the WCSB in 2015 Keyera s gas plants well positioned - West Pembina, Minnehik Buck Lake, Alder Flats, Brazeau River, Nordegg River and Strachan gas plants located to handle Spirit River volumes Keyera Gas Plant in the heart of keyera s west central alberta assets 13

14 montney & duvernay continued investment Montney and Duvernay geological zones driving infrastructure investment Attractive producer economics with high levels of condensate and other NGLs Significant land positions by multinationals & others Recent Montney study 1 estimates marketable volumes of: ~449 tcf of natural gas ~14 billion bbls of NGLs and ~1 billion bbls of oil Montney has the potential to underpin west coast LNG projects 1 Source: National Energy Board; BC Oil Gas Commission; Alberta Energy Regulator; British Columbia Ministry of Natural Gas Development. well positioned to serve area producers Producers active in the area: ARC Resources Chevron CNRL Encana Imperial / Exxon NuVista Paramount Shell Seven Generations Tourmaline 14

15 southern duvernay significant infrastructure available Well positioned to serve Southern Duvernay: 14 plants with ~2.0 bcf/d gross licensed capacity 1 Extensive gathering systems already in place Deep-cut capacity at Ricinus, Cynthia, Rimbey, Gilby, Strachan and Minnehik Buck Lake gas plants Fractionation at Rimbey for plant and truckedin NGL mix Access to Edmonton/Fort Saskatchewan markets via pipeline from Rimbey gas plant Ethane from Rimbey delivered to Fort Saskatchewan via Alberta Ethane Gathering System (AEGS) Producers active in the area: Encana Shell Talisman/Repsol Sinopec Daylight ConocoPhillips Vermilion Enerplus Bonavista Bellatrix 1 Licensed capacity is not equivalent to actual operating capacity. Actual operational capacity can be lower as it depends on operating conditions and capabilities of functional units at each plant. midstream infrastructure creates value for customers 15

16 rimbey gas plant and energy complex Ethane, propane, butane, condensate and spec product sales to market Ethane egress tied into AEGS and area petrochemical plants NGL pipeline connected to Edmonton/Fort Saskatchewan energy hub Significant NGL rail loading capacity Added 400 mmcf/d turbo expander in July 2015 to enhance liquids extraction: Ethane extraction capacity up to 20,000 bbls/d Project underpinned by a long-term ethane purchase agreement Debottlenecked fractionator to expand capacity by 6,900 bbls/d to 28,000 bbls/d Expanded NGL mix truck offload capacity solutions for liquids-rich gas producers over a wide area 16

17 growing through selective acquisitions Past transactions: Partnered to construct new plants (2015) Alder Flats gas plant (35% non-op owner) 1 Zeta Creek gas plant (60% op owner) 2 Acquired interests in existing plants (2014) Cynthia gas plant (85% op owner) Ricinus gas plant (71% op owner) 1 Phase I of the Alder Flats gas plant came on stream in May 2015 and provides 110 mmcf/d of licensed capacity. Phase II with an additional 110 mmcf/d of licensed capacity is proposed for 1H18. 2 The Zeta Creek gas plant came on stream in September 2015 and provides 54 mmcf/d of licensed capacity. potential to acquire facilities when commodity prices are low 17

18 relatively stable throughput H I S TO R I C AL TH R O U G H P U T AN D TH E P E R C E N TAG E C H AN G E I N AE C O & W TI Gross Plant Throughput (MMcf/d) % Change in Commodity Price since January ,600 1,400 1,200 1, % 250% 200% 150% 100% 50% 0% -50% % Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Rimbey Strachan Edson Alder Flats West Pembina Simonette Nordegg Cynthia Nevis Minnehik Buck Lake Brazeau North & Pembina North Brazeau River Zeta Creek Ricinus Gilby Bigoray AECO Monthly Natural Gas Price (CA$) WTI Monthly Oil Price (US$) volumes remain steady as commodity prices fluctuate 18

19 liquids business unit FRACTIONAT ION STORAGE T RANSPORT AT ION M ARKETING e t h a n e p r o p a n e c o n d e n s a t e B U T A N E ABOVE G ROUND > 520,000 b b l s g ross w orking t ank capacity BELOW G ROUND 102,000 b b l s/d at five l o cations ~ 12.5 million b b l s g ross cavern capacity Rail and truck terminals and p i p elines t ransporting variety o f NGLs AEF ISO-OCTANE (13,600 bbls/d) unmatched infrastructure for NGL and oil sands customers 19

20 expanding keyera fort saskatchewan Added 30,000 bbls/d de-ethanizer Fractionates an ethane-rich stream of NGLs (C2+ mix) into spec products On stream in 1Q15 Adding 35,000 bbls/d of C3+ fractionation Currently under construction Net cost to Keyera ~$176 million Anticipate completion by 2Q Subject to finalization of project costs. 2 Assuming construction schedule is met. continued growth at the fort saskatchewan energy complex 20

21 oil sands production growth expected to continue Bitumen Production Forecast (Historical + Risked) Company Project Sanctioned and/or Under Construction Capacity (MB/d) Timing Imperial Oil Nabiye Pengrowth Lindbergh Phase Husky / BP Sunrise Phase Athabasca Oil Hangingstone Phase Imperial Oil / Exxon Kearl Phase Conoco/Total Surmont Phase PetroChina (Brion) MacKay Phase Top 7 Condensate Consumers Ranked by Production Cenovus / Conoco Foster Creek Phase G Cenovus / Conoco Christina Lake Phase F CNRL Horizon Phase 2B JACOS / CNOOC Hangingstone Expansion MEG Brownfield Expansion/RISER CNRL Horizon Phase Suncor / Total / Teck Fort Hills Cenovus / Conoco Christina Lake Phase G Source: Peters & Co. Limited estimates. January 2016 Total Capacity Sanctioned and/or Under Construction 861 major E&Ps and multi-nationals driving oil sands growth 21

22 extensive, flexible condensate infrastructure Most connected condensate hub in Western Canada Keyera s Condensate Network Major oil sands delivery options: Polaris Norlite Access FSPL Grand Rapids Supply through multiple receipt points: Local fractionators and refineries Kinder Morgan Cochin pipeline (sole receipt point) Enbridge Southern Lights pipeline and CRW pool Western Canada feeder pipelines Rail imports at the Alberta Diluent Terminal Storage at Keyera Fort Saskatchewan Long-term take-or-pay and fee-for-service agreements: Imperial Oil (Kearl) Husky/BP (Sunrise) Suncor (Fort Hills) North West Upgrading Cenovus (Christina Lake, Foster Creek) CNRL (Horizon, Kirby, Primrose) JACOS/Nexen (Hangingstone) Devon (Jackfish) industry-leading diluent handling services 22

23 norlite pipeline Diluent pipeline from Ft. Saskatchewan to Athabasca oil sands region Operated by Enbridge Keyera will be 30% non-operating owner Long-term take-or-pay agreement with owners of Fort Hills project Suncor, Total and Teck with the project s first oil production expected in 4Q17 Norlite shippers will have access to Keyera s condensate infrastructure in Edmonton/Fort Saskatchewan, including storage and rail Initial capacity of approximately 224,000 bbls/d with potential to expand to 400,000 bbls/d 1 Enbridge estimates completion in 2017 at gross cost of ~$1.3 billion 2 1 Pipeline capacities are estimated based on certain assumptions. 2 Cost and timing subject to construction schedule and scope-related variables. project will further enhance keyera s cash flow stability 23

24 south grand rapids pipeline 50/50 joint venture between Keyera and Grand Rapids Pipeline LP (TransCanada PipeLines and Brion Energy) 45-kilometre 20-inch diluent pipeline from Edmonton to Fort Saskatchewan Will provide Keyera with 225,000 bbls/d of net capacity 1 for diluent transportation, a portion of which will be used to meet commitments under existing customer agreements Remaining capacity available for Keyera to pursue new diluent transportation business Net capital cost to Keyera of $140 million 2 Expected in service 2H17 3 Keyera will operate the pipeline once complete 1 Pipeline capacities are estimated based on certain assumptions. 2 Cost and timing subject to finalization of scope, timely receipt of regulatory approvals and construction schedule variables. 3 Pipeline portion of net capital cost will be paid upon completion of construction and is categorized as acquisition capital. further enhancing and expanding our condensate hub 24

25 alberta crude terminal 50/50 joint venture with Kinder Morgan, operated by Keyera, completed in 3Q14 Land Acquired in 2014 Connection to Kinder Morgan s large area storage facility provides access to various crude streams Project underpinned by a multi-year takeor-pay agreement with Irving Oil CN and CP rail access ~40,000 bbls/d crude oil loading capacity flexible service offering with a continental reach 25

26 josephburg rail terminal a propane solution for industry Provides customers with new rail infrastructure to handle growing propane supply from liquids-rich production Improves propane egress into North American demand centres Approximate capacity of 40,000 bbls/d Commenced operations in July 2015 Flexibility to also handle butane Recently acquired land nearby for future opportunities helping provide market access for WCSB producers 26

27 base line terminal a crude oil storage solution 50/50 joint venture operated by Kinder Morgan 12 crude oil storage tanks with 4.8 million bbls of capacity to be constructed at Keyera s Alberta EnviroFuels site Base Line Terminal Concept Rendering (View Looking North) Connected to Kinder Morgan s Edmonton area storage and rail terminals Backstopped by take-or-pay contracts with 8 customers; contracts range up to 10 years in length Expected net capital cost to Keyera of $330 million 1 Potential to add additional tanks for total storage capacity of up to 6.6 million bbls, subject to customer demand Phased commissioning of tanks starting in 2H Cost and timing subject to finalization of scope, timely receipt of regulatory approvals and construction schedule variables. expanding and diversifying keyera s service offering 27 Tank Legend: Proposed = White Future = Brown

28 hull, texas an NGL terminal near Mont Belvieu Rail and truck facility in Hull, Texas commissioned in 4Q14 Near the Mont Belvieu NGL hub and Beaumont refining centre Handles NGL mix, propane, butane and iso-butane Complementary underground cavern storage agreement at Daisetta, Texas Significant amount of undeveloped adjacent land extending keyera s value chain to the US gulf coast 28

29 alberta envirofuels (AEF) Iso-octane (ic8) is a high octane, low vapour pressure gasoline additive Only merchant ic8 facility in North America Licensed capacity of 13,600 bbls/d Butane is the primary feedstock Supply networks and distribution infrastructure used to source feedstock while rail logistics broaden sales markets Liquid financial forward markets enable hedging of feedstock costs and product sales Increases in refinery utilization and fuel efficiency regulations driving continental demand for ic8 ic8 is seasonally complementary to propane and butane 29

30 iso-octane business & its margin components Strong demand for iso-octane - 13,600 bbls/d facility capacity serving ~1,267,000 bbls/d of total alkylate production capacity in the US 1 - Annual peak occurs during summer driving season Access to butane feedstock - Sourced locally and from the US - Utilize cavern storage assets and pipeline network to manage volumes and costs Operational expertise to maximize utilization Access to continental markets - Leverage Keyera s rail terminals, storage facilities and logistical expertise to identify best opportunities - Sell into regional hubs with the strongest demand across North America, including the US Gulf Coast and Midwest to maximize iso-octane premiums Revenue Components Risk Management Foreign Exchange (ic8 sold in USD) Iso-Octane (ic8) Premium over RBOB RBOB Spread over WTI WTI Cost Components Risk Management Periodic Plant Maintenance Plant Operating Expenses, Storage & Transportation Costs ~1.4 bbl of C4 per bbl of ic8 Butane (C4) as a Fraction of WTI (priced in USD) 1 Source: Energy Information Administration (EIA), Form EIA-820, Annual Refinery Report, July NOTE: Components are not indicative of scale or relative size in the margin equation. iso-octane is a high-value, low-volume business 30

31 marketing services Butane C4 Sourced and consumed in Alberta Feedstock for iso-octane production at Alberta EnviroFuels Seasonal imports from the U.S. Iso-octane ic8 Majority of sales in the U.S. High quality gasoline additive Produced from butane at Keyera s Alberta EnviroFuels plant Condensate C5 Keyera s C5 hub creates industry liquidity Consumed in Alberta as diluent for bitumen Demand from the oil sands greatly exceeds Alberta-based supply Significant imports required today Ethane Sold under long-term agreements to petrochemical producers in Alberta Limited spot market in western Canada Produced at three Keyera facilities C2 Propane C3 Supply exceeds demand in North America Majority sold into U.S. markets Producers bear a significant majority of the commodity price risk Demand varies seasonally diversified portfolio of logistics services 31

32 conservative capital structure L O N G - T E R M D E B T M A T U R I T I E S 3 2.3x Net debt to EBITDA 1 $300 $250 $200 $264 $CAD MM 18.9% Net Debt 1 to Enterprise Value 2 $150 $100 $50 $0 $167 $143 $125 $109 $97 $75 $60 $ Calculated as of December 31, 2015 in accordance with Keyera s debt covenants. For further information regarding covenant calculations, please see Keyera s 4Q 2015 MD&A or copies of the note purchase agreements, all of which are filed on SEDAR. 2 Enterprise value based on April 1, 2016 closing share price of $39.75 (TSX:KEY). 3 All US dollar denominated debt is translated into Canadian dollars at its swap rate. flexibility to fund Keyera s capital program 32

33 current financial results (Millions of Canadian dollars, except where noted) FY15 FY14 % Change 4Q15 4Q14 % Change Operating Margin Gathering & Processing % % NGL Infrastructure % % Marketing % % Other % % Total Operating Margin % % Adjusted EBITDA % % Net Earnings % % Distributable Cash Flow % % Per Share % % Payout Ratio 4 50% 53% -6% 52% 53% -2% 1 Total Operating Margin refers to total operating revenues less total operating expenses and general and administrative expenses associated with the Marketing segment. See Note 29 to the accompanying financial statements. 2 Adjusted EBITDA is not a standard measure under GAAP. See Keyera s 4Q 2015 MD&A for a definition of EBITDA and Adjusted EBITDA; for a reconciliation of Adjusted EBITDA to its related GAAP measure. 3 Distributable cash flow is not a standard measure under GAAP. See Keyera s 4Q 2015 MD&A for a definition of Distributable Cash Flow and for a reconciliation of Distributable Cash Flow to its related GAAP measure. 4 Payout ratio is not a standard measure under GAAP. Payout ratio is defined as dividends declared to shareholders divided by distributable cash flow. 16% total dividend increase in

34 investment summary TOTAL RETURN OF A $100 INVESTMENT IN KEYERA and THE S&P/TSX COMPOSITE INDEX $1,100 $900 $700 $500 $300 $100 1 Per Share (split-adj.) $3.00 $2.75 $2.50 $2.25 $2.00 $1.75 $1.50 $1.25 $1.00 $0.75 $0.50 $0.25 $- DISTRIBUTABLE CASH FLOW, PAYOUT RATIO & DIVIDENDS PER SHARE Payout Ratio 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% TSX Total Return Keyera Total Return 2 Distributable Cashflow per Share Payout Ratio 3 Dividends per Share 1 Total return includes the simple receipt of dividends paid by Keyera and the TSX between May 30, 2003 and April 1, 2016, but not the reinvestment of dividends. 2 Distributable cash flow is not a standard measure under GAAP. See Keyera s 4Q 2015 MD&A for a definition of distributable cash flow and for a reconciliation of distributable cash flow to its related GAAP measure. 3 Payout ratio is not a standard measure under GAAP. Payout ratio is defined as dividends declared to shareholders divided by distributable cash flow. delivering growth and income for shareholders 34

35 contact information Lavonne Zdunich, CA Director, Investor Relations & Communications Nick Kuzyk, MBA Manager, Investor Relations Keyera Corp Avenue SW Suite #200 - West Tower Calgary, Alberta T2P 3N4 35