A final base shelf prospectus containing important information relating to the securities described in this document has been filed with the securities regulatory authorities in each of the provinces of Canada. A copy of the final base shelf prospectus, any amendment to the final base shelf prospectus and any applicable shelf prospectus supplement that has been filed, is required to be delivered with this document. This document does not provide full disclosure of all material facts relating to the securities offered. Investors should read the final base shelf prospectus, any amendment and any applicable shelf prospectus supplement for disclosure of those facts, especially risk factors relating to the securities offered, before 0 making an investment decision.
DISCLAIMER Certain information contained herein may constitute forward-looking statements that involve risks and uncertainties. Readers are cautioned not to place undue reliance on forward-looking statements, including, but not limited to, statements regarding the anticipated benefits of the Williams Canada acquisition and growth opportunities associated with the Williams Canada acquisition, the completion, size, funding and timing of the Williams Canada acquisition and the completion, size and timing of the offering of subscription receipts. Such statements reflect the current views of Inter Pipeline with respect to future events and are subject to certain risks, uncertainties and assumptions that could cause the results of Inter Pipeline to differ materially from those expressed in the forward-looking statements. Factors that could cause actual results to vary from forwardlooking information or may affect the operations, performance, development and results of Inter Pipeline's businesses include, among other things: risks relating to closing of the Williams Canada acquisition; the potential for undisclosed liabilities associated with the Williams Canada acquisition and realizing the expected benefits from the Williams Canada acquisition; risks and assumptions associated with operations, such as Inter Pipeline's ability to successfully implement its strategic initiatives and achieve expected benefits. With respect to the anticipated benefits from the Williams Canada acquisition and statements with regards to this transaction being accretive to funds flow from operations, such factors also include, but are not limited to: synergies may not be realized in the time frame anticipated, the ability to promptly and effectively integrate the businesses, reputational risks, and diversion of management time on acquisition-related matters. Such information, although considered reasonable by Inter Pipeline at the time of preparation, may later prove to be incorrect and actual results may differ materially from those anticipated in the statements made. For this purpose, any statements that are not statements of historical fact may be deemed to be forward-looking statements. Forwardlooking statements often contain terms such as "may", "will", "should", "anticipate", "expects" and similar expressions. Such risks and uncertainties include, but are not limited to, risks associated with operations, such as loss of markets, regulatory matters, environmental risks, industry competition, potential delays and cost overruns of construction projects, and the ability to access sufficient debt or equity capital from internal and external sources. You can find a discussion of those risks and uncertainties in Inter Pipeline s securities filings at www.sedar.com. The forwardlooking statements contained in this news release are made as of the date of this document, and, except to the extent required by applicable securities laws and regulations, Inter Pipeline assumes no obligation to update or revise forward-looking statements made herein or otherwise, whether as a result of new information, future events, or otherwise. The forward-looking statements contained in this document are expressly qualified by this cautionary note. Certain financial measures referred to in this Investor Presentation including EBITDA and funds from operations are not measures recognized by Canadian generally accepted accounting principles (GAAP), as outlined in the Chartered Professional Accountant (CPA) Handbook Part I, and used by management to evaluate the performance of Inter Pipeline and its business segments. Since certain non-gaap financial measures may not have a standardized meaning, securities regulations require that non-gaap financial measures are clearly defined, qualified and reconciled with their nearest GAAP measure. See the "Non-GAAP Financial Measures" section in Inter Pipeline's most recently filed management's discussion and analysis available at www.sedar.com for further information on the definition, calculation and reconciliation of non-gaap financial measures. All dollar values are expressed in Canadian dollars unless otherwise noted. 1
ACQUISITION SUMMARY Inter Pipeline is acquiring a Canadian Natural Gas Liquids ( NGL ) midstream business ( Williams Canada ) from The Williams Companies Inc. for ~CAD $1.35 billion Diversifies and strengthens Inter Pipeline s existing large-scale NGL Extraction business Provides platform to develop Canada s first propane dehydrogenation ( PDH ) facility and expand Inter Pipeline s NGL value chain Acquisition is expected to be immediately accretive to funds from operations and close Q3 2016 Inter Pipeline has concurrently entered into a $600 million subscription receipt bought deal financing Remainder to be financed using new term debt and available credit capacity Inter Pipeline anticipates increasing the size of its $1.25 billion revolving facility to $1.50 billion prior to closing Premium DRIP reinstated upon acquisition close 2
STRATEGIC RATIONALE Large scale, integrated energy infrastructure assets with high barriers to entry Acquired a ~40,000 barrel per day (b/d) NGL and olefins extraction and fractionation business in a low commodity price environment Historic pricing advantage over traditional NGL processing due to higher-value olefin liquids, a synthetic petrochemical that does not naturally exist in large quantities Williams Canada has an established 16 year history in Canada Significant value creation Approximately $2.5 billion has been invested into Williams Canada s offgas assets Acquisition price of $1.35 billion represents a 45% discount to original cost Well positioned to generate significant cash flow when commodity prices recover Tax synergies are expected to reduce Inter Pipeline's annual cash taxes by approximately $70 million in 2017 through 2019 Long life assets underpinned by multi-decade supply and sales agreements Long term oil sands offgas supply contracts with investment grade counterparties Ethane-ethylene mix sold under a long term fee based agreement Remaining NGL and olefinic liquids sold under shorter term arrangements 3
STRATEGIC RATIONALE Additional platform to pursue future growth opportunities Opportunity to build, own and operate Canada's first PDH facility Expand NGL extraction and fractionation capacities through debottlenecking activities and securing additional offgas sources Diversifies Inter Pipeline s major growth opportunities beyond oil sands transportation Supports Inter Pipeline s commitment to responsible environmental stewardship Processing the offgas reduces Alberta s annual emissions of carbon dioxide (CO 2 ) and sulphur dioxide (SO 2 ) by approximately 500,000 tonnes and 5,500 tonnes, respectively CO 2 is a major contributor to greenhouse gases and SO 2 is a contributor to acid rain Additional offgas expansions would further reduce CO 2 and SO 2 emissions 4
ASSET OVERVIEW Offgas Facilities Liquids Extraction Plants CNRL Suncor Extraction Plants Upgrader Capacity Description ~40,000 b/d Two liquid extraction plants located in the Fort McMurray region Offgas dedication for NGL and olefins extraction Boreal Pipeline NGL Olefin Pipeline Asset Capacity Description Boreal Pipeline ~43,000 b/d Wholly-owned 420 km NGL and olefins pipeline Low-cost expansion (up to 125,000 b/d) with additional pump stations Redwater Olefinic Fractionator Fractionation and Storage Asset Capacity Description Redwater Olefinic Fractionator ~40,000 b/d Fractionates NGL and olefins mix into high value products Extensive storage and distribution system (over one million barrels of storage capacity) Operated by a 3 rd party 5
OVERVIEW OFFGAS BUSINESS 1 AECO Liquid Extraction Plants Offgas 2 Pipeline Capacity of ~43,000 b/d liquids Boreal Pipeline Redwater Olefinic Fractionator Ethane-Ethylene Mix 3 AECO Offgas Marketed Products Propane Normal Butane Olefinic Condensate Polymer Grade Propylene Alky Feed 1 2 3 Extraction of natural gas liquids from offgas received directly from Suncor and Canadian Natural Resources Horizon upgraders Liquids transported to Redwater Olefinic Fractionator via Boreal pipeline system Liquids fractionated into NGL and olefins; sold under short and long term agreements 6
OFFGAS EXTRACTION Natural gas liquids and olefins extracted from offgas, a byproduct of oil sands upgrading operations Offgas supply is underpinned by long term agreements from Suncor and CNRL Stable source of gas supply with minimal reserve decline risk Strong investment grade counterparties 7
COMMERCIAL ARRANGEMENTS Ethane-ethylene mix is sold under a multi-decade fee based agreement Provides stable cash flow not directly subject to commodity price Long term agreement with Nova Chemicals Corporation to supply up to 17,000 b/d of ethane-ethylene NGL are sold under shorter term commodity based agreements Counterparties include various US and Canadian energy marketers and refiners Historical pricing advantage over traditional NGL processing due to high value olefin liquids (propylene and alky feed) 8
HISTORICAL THROUGHPUT AND COMPOSITION 000 s b/d Ethane-Ethylene 30 Contract In Service 25 20 15 Product 2016 Q2 YTD Product Mix Composition Ethane-Ethylene ~40% Propane ~30% Polymer Grade Propylene ~10% Normal Butane ~8% Alky Feed ~8% Olefinic Condensate ~4% 10 5 0 2011 2012 2013 2014 2015 2016 Q2 YTD Average Suncor Offgas Volumes Average CNRL Offgas Volumes CNRL liquid extraction plant in service since February 2016 adding 15,000 b/d of production capacity Volumes for 2016 Q2 YTD were negatively impacted by: Wildfires in the Fort McMurray region Planned Suncor upgrader turnaround 9
PDH OPPORTUNITY The PDH facility is a proposed petrochemical complex that will convert propane into polymer grade propylene Proposed facility would be amongst the largest in North America PDH facility has a design capacity to produce ~525,000 tonnes per year of polymer grade propylene and would consume ~22,000 b/d of propane Majority of propane feedstock sourced from Williams Canada s offgas business Potential to receive royalty credits under the Alberta Government s Petrochemical Diversification Program Approximately $250 million invested to date in the PDH facility PDH facility to be located near the Redwater Olefinic Fractionator Total capital expenditures estimated to be ~$1.85 billion, with targeted in service date of 2020 Inter Pipeline expects to make a final investment decision in this project by the end of 2016 10
PDH INTEGRATION OVERVIEW Market Propane 4 1 AECO Liquid Extraction Plants Offgas 2 Boreal Pipeline 3 rd Party Rail Volume Ethane- Ethylene Mix Redwater Olefinic Fractionator Redwater Propane PDH Facility Polymer Grade Propylene AECO Offgas 3 Marketed Products 1 2 Extraction of natural gas liquids from offgas received directly from Suncor and CNRL Horizon Upgraders Liquids transported to Redwater Olefinic Fractionator via Boreal pipeline 3 4 Liquids fractionated into NGL and olefins Propane sourced from Redwater Olefinic Fractionator and the local market will be processed at PDH facility into polymer grade propylene 11
KEY TAKEAWAYS Highly complementary to our existing NGL Extraction business Acquisition completed at well below original cost Underpinned by long term supply and ethane-ethylene sales agreements Expected to be immediately accretive to funds from operations Positioned to capture additional upside when commodity prices recover Opportunity to develop world-class PDH facility 12
CONTACT INFORMATION CHRISTIAN BAYLE PRESIDENT & CEO BRENT HEAGY CHIEF FINANCIAL OFFICER JEREMY ROBERGE VICE PRESIDENT, CAPITAL MARKETS 1 SUITE 3200, 215 2ND STREET SW CALGARY, ALBERTA T2P 1M4 PHONE: 1 866 716 7473 PHONE: (403) 290 6000 FAX: (403) 290 6090 WEB: INTERPIPELINE.COM INVESTORRELATIONS@INTERPIPELINE.COM 13