Investor Meetings January 2017
Important Note to Investors This presentation contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding and Midstream. The statements relate to, among other things, expectations, estimates and projections concerning the business and operations of and Midstream. We have used the words "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", outlook, "predict", "project", should, strategy, target, "will, potential and similar terms and phrases to identify forward-looking statements in this presentation. As outlined in our SEC filings, factors that could cause actual results to differ include, but are not limited to: unusual weather conditions and their effect on energy sales to customers and energy commodity prices; extreme weather events and other natural disasters; federal, state and local legislative and regulatory developments; changes to federal, state and local environmental laws and regulations, including proposed carbon regulations; cost of environmental compliance; changes in enforcement practices of regulators relating to environmental standards and litigation exposure for remedial activities; capital market conditions, including the availability of credit and the ability to obtain financing on reasonable terms; fluctuations in interest rates; changes in rating agency requirements or credit ratings and their effect on availability and cost of capital; impacts of acquisitions, divestitures, transfers of assets by to joint ventures or to Midstream, and retirements of assets based on asset portfolio reviews; receipt of approvals for, and timing of, closing dates for acquisitions and divestitures; the execution of Midstream s growth strategy; changes in demand for s services; additional competition in s industries; changes to regulated rates collected by ; changes in operating, maintenance and construction costs; timing and receipt of regulatory approvals necessary for planned construction or expansion projects and compliance with conditions associated with such regulatory approvals; the inability to complete planned construction projects within time frames initially anticipated; and the ability of Midstream to negotiate, obtain necessary approvals and consummate acquisitions from and third-parties, and the impacts of such acquisitions. Other risk factors are detailed from time to time in s and Midstream s quarterly reports on Form 10-Q or most recent annual report on Form 10-K filed with the Securities and Exchange Commission. The information in this presentation was prepared as of January 4, 2017. and Midstream undertake no obligation to update any forwardlooking information statement to reflect developments after the statement is made. Projections or forecasts shown in this document are based on the assumptions listed in this document and are subject to change at any time. Actual capital expenditures may be subject to regulatory and/or Board of Directors approval and may vary from these estimates. This presentation shall not constitute an offer to sell or the solicitation of an offer to buy securities. Any offers, solicitations or offers to buy, or any sales of securities will be made in accordance with the requirements of the Securities Act of 1933, as amended. This presentation has been prepared primarily for security analysts and investors in the hope that it will serve as a convenient and useful reference document. The format of this document may change in the future as we continue to try to meet the needs of security analysts and investors. This document is not intended for use in connection with any sale, offer to sell, or solicitation of any offer to buy securities. This presentation includes various estimates of EBITDA which is a non-gaap financial measure. Please see the third quarter 2016 Midstream Press Release for a reconciliation to GAAP. Please continue to regularly check s website at www.dom.com/investors and Midstream s website at www.dommidstream.com/investors. 2017 Investor Meetings 1
s Strategic Advantages Investment Consideration 2017-2020 ~90% Regulated Operations Diverse Capital Growth Gas / Electric Industry Leading 8% Dividend Growth* Large Project Execution 2017 Investor Meetings MLP Cash Flow Flexibility Large Step Change Growth Projects *Annual dividend rates subject to Board approval 2
2017 Investor Meetings Contents Capital Plan and Project Update Midstream Partners Fixed Income 4 9 18 2017 Investor Meetings 3
Total Capex 2016 2020 Growth Plan ($billions) ~$18 - $20 billion Growth Capex $3.0 - $4.0 $59 - $61 ~8% CAGR $3.8 $3.1 $3.0 - $4.0 Net Plant 1 $41 Net Plant $5.4 Average annual spend of ~$3.6 - $4.0 billion 2019 & 2020 growth opportunities include: Additional VA solar Clean power plan compliance Pipeline expansions Questar pipeline and storage Surry / North Anna license extensions 2015 2016 2017 2018 2019 2020 1 Excludes 2016-2020 DD&A and Maintenance Capex 2017 Investor Meetings 4
Growth Project Updates Virginia Power Strategic undergrounding SCC approved $122.5mm investment Electric transmission ~$800M growth capital planned in 2016 Generation Energy Greensville County 1,588 MW CCGT $1.3 billion investment, construction began in June Solar 1,400 MW solar under development or operating Expect 500+ MW in Virginia and North Carolina Cove Point Liquefaction Project on-line in late 2017 Atlantic Coast Pipeline on-line in 2H 2019 10 additional pipeline projects underway ~$1 billion investment to move ~1.5 Bcf/day by the end of 2018 2017 Investor Meetings 5
Energy Growth Project Update Cove Point Liquefaction Engineering is ~99% complete Procurement of engineered equipment is ~99% complete 2,000+ construction workers on-site Construction is On-time & On-budget Project is ~75% complete Heat exchanger * As of 10/31/2016. 2017 Investor Meetings 6
Energy Atlantic Coast Pipeline and DTI Supply Header Signed construction contract with Spring Ridge Constructors Received FERC Draft EIS Dec. 30, 2016 ACP OWNERSHIP STRUCTURE: Resources* 48% Duke Energy 47% Southern Company 5% SUPPLY HEADER OWNERSHIP: Resources* 100% Anticipate construction to start in 2H 2017 Expect completion in 2H 2019 Supply Header receipt points ACP DTI Pipeline Storage Cove Point Utica Shale Marcellus Shale * will construct, operate and manage the pipeline 2017 Investor Meetings 7
Questar Gas Distribution Territory Questar is Ideally Positioned to Serve Growing Regional Gas Demand Increased regional reliance on low-emission, gas-fired generation will be required to meet Clean Power Plan and renewable energy programs in the Western U.S. State Clean Power Plan target emissions reduction (2030)¹ Percent of generation from coal² Renewable energy target³ Montana 47% 51% 15% by 2015 Wyoming 44% 87% None Colorado 40% 60% 30% by 2020 Utah 37% 76% 20% by 2025 New Mexico 36% 63% 20% by 2020 Arizona 34% 38% 15% by 2025 Nevada 22% 18% 25% by 2025 Idaho 10% 1% None ¹ Clean Power Plan is source for carbon reduction targets at (www.epa.gov) CO 2 rate (lbs/net MWh) 2012 historic v. Final 2030+ goal ² Represents coal generation as a percentage of total 2014 generation per the U.S. Energy Information Administration (www.eia.gov) ³ Source for renewable portfolio standards/goals National Conference of State Legislatures (www.ncsl.org) Retiring or converting coal-fired generation facilities (~8 GW) 2017 Investor Meetings 8
Midstream Partners 2017 Investor Meetings 9
Midstream Partners Executing the Strategy Asset profile Sources of Growth & Financial Flexibility 22% distribution growth Stable and predictable cash flows Long-term contracted assets No commodity risk Questar Pipeline dropdown will cover DM until 2H 2018 Dropdown executed using variety of financing paths Dropdown strategy supports 22% annual growth rate Third quarter distribution 5% increase over 2Q 2017 Investor Meetings 10
Midstream Partners Low-cost Dropdown Financing Secured Among largest financing transactions by a publicly-traded MLP in 2016 Low-cost financing secured*: $500 million preferred equity issued with 4.75% initial distribution, lowest ever in MLP sector ~$500 million common equity issued at 2.9% discount to last price lowest in MLP market in 2016 Common equity offering was multiple times subscribed, leading to an upsized deal Confirms DM s access to capital markets to fund acquisitions of midstream assets from D to support 22% annual distribution growth Validates MLP value-creation proposition for * As of 10/31/2016. 2017 Investor Meetings 11
Midstream Partners Acquisition of Questar Pipeline DM acquired Questar Pipeline from for $1.725 billion Contribution represents a 10.3x 2016E EBITDA valuation multiple Transaction financing includes: Preferred equity Common equity DM debt / assumed debt Units to D Questar Pipeline dropdown will support DM s 22% distribution growth until 2H 2018 Updated Dropdown Strategy* Cove Preferred DCG Iroquois Questar Pipeline Cove Equity ACP / BRM IPO 2015 2016 2017 2018 2019 2020 * Dropdowns subject to DRI and DM Board approval. 2017 Investor Meetings 12
Midstream Partners Common Equity Financing Common equity ~$500 million 2.9% discount to last trade lowest in MLP market in 2016 Greater than 140x Average Daily Trading Volume ~80% of existing public float Deal Size $663 Re-offer Discount Mult. of Avg. Vol. % of Public Float 7.2% +140x ~80% $500 100x 4.0% 46% $243 2.9% 35x 20% Midstream 2016 Average 2016 High Midstream 2016 Average 2016 Low Midstream 2016 Average 2016 High Midstream 2016 Average 2016 High Note: Data per company filings. Reflects bought and CMPO MLP equity offerings in 2016. *Includes public and private common units and exercise of the greenshoe. * Data as of 10/31/2016. 2017 Investor Meetings 13
Initial Coupon Rate Midstream Partners Preferred Equity Financing Preferred equity $500 million to external investors Lowest initial distribution in MLP history 4.75% Conversion premium of 15% Placed with a group of private investors led by Stonepeak Infrastructure Partners Historical MLP Convertible Preferred Equity Issuance 1 9.25% 9.50% 8.50% 8.00% 8.00% 10.75% 6.50% 4.75% $800M 2 $1,000M $500M $1,600M $700M $500M $1,000M $240M DM ¹ Per Company filings. 2 Includes $300M to. * As of 10/31/2016. 2017 Investor Meetings 14
Midstream Partners Total Projected Cash Flow to ($ billions) Questar Pipeline dropdown financing generates ~$1.2 billion of cash for to paydown debt Validates model to generate ~$7 - $8 billion in cash for from 2016-2020* 2016/2017 2017 2018 2019 2020 Drop Down Proceeds LP Distributions GP Distributions *Pre-tax 2017 Investor Meetings 15
Midstream Partners Adding Value to Shareholders Uses of DM Cash Contributions 2018 & Beyond Strengthen Balance Sheet Delever DRI as a percent of overall leverage to ~30% - 40% by 2020 Support high triple-b target rating at DRI Grow the Dividend Grow dividends at more than 8% annually beginning in 2018* Reduce Equity Needs 2017 Investor Meetings Optimize cash flows to fund growth projects and / or buyback common shares *Annual dividend rates subject to Board approval 16
Cash Proceeds MLP Drop Down Cash Flow Mechanics Questar Pipeline Dropdown Assets $1.7bn Cash / Units Distributions / IDRs Use of DM Cash Contributions: 1. Strengthen Balance Sheet 2. Grow the Dividend 3. Reduce Equity Needs Public ~$1.3bn Questar Pipeline Drop* 1. Common equity $500mm 2. Preferred equity $500mm 3. DM term loan $300mm Midstream allows to recycle capital and finance projects / acquisitions more efficiently *Includes public and private common units and includes exercise of the greenshoe. Transaction closed on December 1, 2016. 2017 Investor Meetings 17
Fixed Income 2017 Investor Meetings 18
Financing Structure with Operating Segments DRI * VEPCO* Gas* Midstream Utility Generation Transmission Merchant Generation Atlantic Coast Pipeline**(48.0%) Carolina Gas Electric Transmission East Ohio Questar Gas* Blue Racer** (50.0%) Iroquois Pipeline (25.9%) Electric Distribution Iroquois Pipeline (24.1%) Cove Point** Cove Point Preferred Equity Applicable Operating Segments Questar Pipeline Virginia Power Generation Energy * Indicates current issuer of registered debt securities ** s interests in ACP, Blue Racer and Cove Point are subject to ROFOs which have been granted to the MLP. 2017 Investor Meetings 19
Financial Management Credit Ratings Profile Target Credit Ratings: DRI: High Triple-B range Utility OpCos: Single-A range Committed to A-2/P-2/F2 ratings for the Commercial Paper Program at DRI Resources, Inc. Moody's S&P Fitch Corporate/Issuer Baa2 BBB+ BBB+ Senior Unsecured Debt Securities Baa2 BBB BBB+ Junior Subordinated Notes Baa3 BBB BBB Enhanced Junior Subordinated Notes Baa3 BBB- BBB- Short-Term/Commercial Paper P-2 A-2 F2 Outlook Stable Stable Stable Virginia Electric and Power Company Moody's S&P Fitch Corporate/Issuer A2 BBB+ A- Senior Unsecured Debt Securities A2 BBB+ A Short-Term/Commercial Paper P-1 A-2 F2 Outlook Stable Stable Stable Gas Holdings, LLC Moody's S&P Fitch Corporate/Issuer A2 BBB+ A- Senior Unsecured Debt Securities A2 BBB+ A- Short-Term/Commercial Paper P-1 A-2 F2 Outlook Stable Stable Stable Questar Gas Moody's S&P Fitch Corporate/Issuer A2 BBB+ TBD Senior Unsecured Debt Securities A2 BBB+ TBD Short-Term/Commercial Paper P-1 A-2 TBD Outlook Stable Stable TBD Questar Pipeline Moody's S&P Fitch Corporate/Issuer A3 BBB TBD Senior Unsecured Debt Securities A3 BBB TBD Outlook Stable Stable TBD 2017 Investor Meetings 20