Midcoast Energy Partners, L.P. NGSET Pipeline Roundtable Presentation March 2014
Forward Looking Statement This presentation includes forward-looking statements, which are statements that frequently use words such as anticipate, believe, continue, could, estimate, expect, forecast, intend, may, plan, position, projection, should, strategy, target, will and similar words. Although we believe 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 ability of Midcoast Energy Partners, L.P. ( MEP ) to control or predict. Specific factors that could cause actual results to differ from those in the forwardlooking 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 natural gas liquids, including the rate of development of the Alberta Oil Sands; (2) MEP s ability to successfully complete and finance expansion projects; (3) the effects of competition, in particular, by other pipeline and gathering systems, as well as other processing and treating plants; (4) shut-downs or cutbacks at MEP s facilities or refineries, petrochemical plants, utilities or other businesses for which MEP transports products or to whom MEP sells products; (5) hazards and operating risks that may not be covered fully by insurance; (6) changes in or challenges to MEP s rates; and (7) changes in laws or regulations to which MEP is subject, including compliance with environmental and operational safety regulations that may increase costs of system integrity testing and maintenance. Forward-looking statements regarding drop-down growth opportunities are further qualified by the fact that Enbridge Energy Partners, L.P. is under no obligation to offer to sell us additional interests in Midcoast Operating, and we are under no obligation to buy any such additional interests. As a result, we do not know when or if any such additional interests will be offered to us to purchase. In addition to the risks listed above, other risks include those detailed from time to time in MEP s Securities and Exchange Commission, or SEC, reports, including, without limitation, in MEP s prospectus related to its initial public offering, dated November 6, 2013 and filed with the United States Securities and Exchange Commission on November 8, 2013, and any subsequently filed annual, quarterly or current reports, which filings are available to the public at the SEC s website (www.sec.gov). 1
MEP Organizational Structure Enbridge Inc. (NYSE: ENB) ~21% interest (indirect) (including GP interest) Enbridge Energy Partners, L.P. (NYSE: EEP) 100% ownership interest Other Subsidiaries 100% ownership interest Midcoast Holdings, L.L.C. 52% LP interest Public Unitholders 21,275,000 Class A Common Units 2% GP interest 46% LP interest 61% LP interest Midcoast Energy Partners, L.P. (NYSE: MEP) 100% ownership interest 100% GP interest Midcoast OLP GP, L.L.C. 38.9999% LP interest 0.001% general partner interest Midcoast Operating, L.P. Midcoast Operating Ownership as of February 14, 2014 100% ownership interest Operating Subsidiaries 35% ownership interest Texas Express NGL System Joint Venture 2
Near-Term Current State Past State MEP: Focused Gas Operations Gas & Liquids Operations Gas-Focused Operations Liquids-Focused Operations Enhances Strategic Focus of Each Partnership Increases Ability to Respond to Market Opportunities Creates Drop-Down Opportunity for MEP Near-Term Actions 1 st Drop-down post-ipo mid-2014 (~$300 - $500 million) Execute on organic growth program 3
Atlas Pipeline Crestwood Regency Energy Midcoast DCP Midstream Targa Resources Markwest Summit Midstream Crosstex QEP Midstream Western Gas Access Midstream EQT Midstream FTSE NA REIT S&P 500 Utilities 10-Yr Treasury Notes S&P 500 Investment Highlights Attractive Yield MEP Business Overview 39% interest in Midcoast Operating 10% 9% 8% 7% 6% MEP: 6.1% Large scale natural gas/ngl midstream business positioned in key producing basins Offer integrated solutions across the midstream value chain Gathering, Processing, Treating, Compression and Transportation 5% 4% 3% Peer Average: 5.1% Natural Gas NGL Takeaway Logistics and Marketing Key Assets Deliveries of ~ 2.5 bcf/d 2% 1% Gathering & Transportation Pipelines Processing Capacity (26 plants) 11,400 miles of pipe 2.3 Bcf/d 0% * As of February 26, 2014 Midstream MLP s * Other Asset Classes* Treating Capacity (11 plants) 1.3 Bcf/d NGL Production 88,246 bpd (2013) Texas Express NGL system (35% interest) 280 Mbpd 4
Strong Sponsor and Management Leveraging Enbridge Inc. & Enbridge Energy Partners, L.P. Strong Sponsors Enbridge Inc. (ENB) A-/Baa1 $36 billion equity market capitalization Enbridge Energy Partners, L.P. (EEP) BBB/Baa2 $11 billion equity market capitalization Sponsor will continue to provide: Financial Support and Risk Management Operational Oversight and Management Major Project Execution and Risk Mitigation Energy Partners, L.P. Commercial and Investment Review Oversight Note: Standard & Poor s/moody s credit ratings respectively. Market capitalization as of December 31, 2013. MEP s Growth and Development Aligned with and Supported by Sponsors 5
Strategically Positioned Asset Base Anadarko System Ajax Processing Plant in service 3Q 2013 Midcoast Business Segments Gathering, Processing & Transportation: strong asset foundation ~ 90% EBITDA Logistics & Marketing ~ 10% EBITDA Texas Express NGL System In service 4Q 2013 North Texas System Petal East Texas System Beckville Processing Plant expected in service 1Q 2015 Logistics and Marketing 250 transport trucks, 300 trailers, 205 rail cars, TexPan Liquids Rail Facility 6
Business Opportunities Gathering, Processing & Transportation Logistics & Marketing Enhance end-market access Expand condensate treating, stabilization, and liquids takeaway Pursue vertical integration opportunities Specialty services for off-spec products CLINE SHALE COTTON VALLEY Optimize Asset and Commodity Value NGL Logistics & Marketing Accretive growth Capture rich gas processing opportunities New pipeline laterals, NGL laterals, and compression projects Increase processing capabilities System optimization Pursue accretive acquisitions Extend geographic reach Complement and diversify existing asset footprint Risk Management Natural Gas Marketing Gathering, Processing & Transportation Bundled Service Offering Market Origination & Downstream Pathing Condensate Marketing 7
Texas Express Overview of Assets Participation in natural gas and NGL value chain NGL Mainline System JV with Enterprise Products Partners (35%, operator), Midcoast Operating (35%), Anadarko Petroleum Corporation (20%) and DCP Midstream (10%) 580-mile, 20-inch NGL pipeline originates from Skellytown, TX to Mont Belvieu NGL hub Initial capacity of ~280,000 Bpd; expandable to ~400,000 Bpd Anchored by 10-year ship-or-pay contracts + 5-year dedication NGL Gathering Systems Description of Assets JV with Enterprise (45%), Midcoast Operating (35%, operator) and Anadarko (20%) Phase 1 of gathering system complete Entered service 10/31/2013; Total capital cost $1.1B 1 Strategic Benefits Addresses Mid-Continent, Rockies and West Texas NGL constraints Enhances our competitive position by providing greater access to Mont Belvieu fractionation Texas Express Footprint Skellytown New NGL Gathering Gathering Pipelines Under Construction Texas Express Mainline Proposed Gathering Pipelines Gathering Pipelines Under Construction Texas Express Mainline Proposed Gathering Pipelines (1) Estimated proportionate cost to Midcoast Operating for construction of both the mainline and gathering systems is $400 million; excludes linefill capex and capitalized interest. 8
Large Scale, Diversified Business Enhancing Competitive Position Offering Integrated Solutions Across Midstream Value Chain 9
Business Opportunities Large geographic footprint Cotton Valley and other rich gas formations Significant market outlets Highly productive dry gas wells Growth Program: Expand infrastructure into new areas of East Texas. Optimize existing infrastructure. Beckville Cryogenic Plant. Gathering / Transmission lines 3,900 miles Active treating plants 8 Treating capacity 1.1 bcf/d Active processing plants 5 Processing capacity 0.7 bcf/d 10
Large Scale, Diversified Business Enhancing Competitive Position Steve Marsh (Sr. Dir East Texas) (713) 821-2084 Mark DeRusse (Dir Transportation)(713) 821-6195 Patrick Martin (Dir - Asset Mgmt ) (713) 821-2159 Terry Parrish (Mgr Gas Supply) (713) 353-5657 Rick O Bannon (Mgr Gas Supply) (713) 821-2134 Derrick Haynes (Sr. Supply Rep) (713) 821-2121 Bent Johansen (Gas Supply Rep) (713) 353-6338 11