Keyera Corp. TD Securities London Energy Conference 2012 Jim - - PowerPoint PPT Presentation

Keyera Corp.

TD Securities London Energy Conference 2012 Jim Bertram, CEO

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Disclaimer

• The information contained in this presentation (“Presentation”) has been prepared by Keyera Corp. (“Keyera”) and is being

delivered for informational purposes and only in relation to shares of Keyera. The Presentation has not been independently verified and the information contained within is subject to updating, completion, revision, verification and further amendment. The Presentation does not purport to contain all information that a prospective investor may require. While the information contained herein has been prepared in good faith, neither Keyera nor its shareholders, directors, managers, agents, employees or advisors give, have given or have authority to give, any representations or warranties (express or implied) as to, or in relation to, the accuracy, reliability or completeness of the information in this Presentation, or any revision thereof, or of any other written or oral information made or to be made available to any person (all such information being referred to as “Information”) and liability therefor is expressly disclaimed. Accordingly, neither Keyera nor any of its shareholders, directors, managers, agents, employees

• r advisers take any responsibility for, or will accept any liability whether direct or indirect, express or implied, contractual,

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Who is Keyera?

• Energy infrastructure services business
• Key service provider to crude oil and

natural gas producers in Western Canada

• Two integrated business lines
• Gathering & Processing - poised to

capture new liquids-rich gas production

• Liquids Business Unit - positioned to

benefit from increased NGL production and growing oil sands sector

One of Canada’s Largest Midstream Companies

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Strong History of Income and Growth

dividend increases1 CAGR2 in dividends per share

24% compound annual total return3 to shareholders

1 Since going public in 2003 2 From 2003, including the November 2011 dividend 3 From 2003 to Dec 30, 2011

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KEY Daily Closing Share Price and Dividends

KEY Dividend KEY Share Price $0.00 $0.05 $0.10 $0.15 $0.20 $0.25 $0.30 $0 $10 $20 $30 $40 $50 $60

Conservative Balance Sheet with Financial Flexibility

Debt1 / EBITDA1.7x YTD1 2011 payout ratio 67%

1 As of September 30, 2011, including convertible debentures 2 As of January 5, 2012

Net debt1 / Enterprise Value212%

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Attractive Metrics

$ Canadian

Trading Symbols (TSX) Market Capitalization1 Enterprise Value1 Share Price1 Dividend Current Yield2

KEY; KEY.DB.A C$ 3.6B C$ 4.1B C$ 50.51 C$ 0.17 per share per month C$ 2.04 per share annually 4.0%

1 Based on closing share price at January 5, 2012. 2 Based on closing share price at January 5, 2012 and an annual dividend of $2.04 per share.

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Rich History of Legacy Assets

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1998 2004 2005

• Gulf Canada

Resources enters into 50:50 partnership with KeySpan Corp.

• Partnership is

named Gulf Midstream Services

• Includes several of

Alberta’s large gas plants and related natural gas and NGL infrastructure

• KeySpan Corp.

buys Gulf’s remaining 50% interest in Gulf Midstream Services

• Name changes to

KeySpan Energy Canada

2000 2003

• Begins trading on

the TSX under the name KeySpan Facilities Income Fund (TSX:KEY.UN) as a publicly listed income trust

• $170M initial

public offering representing 39%

• f entity
• Acquires EnerPro

Midstream Company from Chevron Canada

• Includes all of

Chevron’s Western Canadian gas gathering and processing facilities and NGL infrastructure assets

• KeySpan

Facilities Income Fund becomes 100% publicly

• wned as

KeySpan Corp. divests its remaining interest in the business

• Name changes

to Keyera Facilities Income Fund: “Key facilities for a new Era”

2011

• Keyera Facilities

Income Fund converts to a corporate structure and is renamed Keyera Corp.

What Drives Our Success?

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Majority of services provided are

essential (non-discretionary) to oil and gas producers

Strategically located assets and

broad customer base

70% of operating margin from fee-

for-service revenue streams

Numerous growth opportunities

−Liquids-rich natural gas developments in Gathering & Processing business −Oil sands growth provides

• pportunities in Liquids Business Unit

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Creating Value All Along the Value Chain

Propane

Two Integrated Business Lines

Gathering & Processing NGL Infrastructure NGL Marketing

Gathering & Compression Sales Gas

NGL Mix

Raw Gas Processing NGL Storage Terminalling

Butane Condensate

End-use Customers Wholesalers Refineries Petrochemicals

• 47% of 2010 Operating Margin*
• Fee-for-service revenues
• Largely flow through operating costs
• Essential service for producers
• 23% of 2010 Operating Margin*
• Fee-for-service revenues
• No frac spread exposure
• 30% of 2010 Operating Margin*
• Margin business
• No frac spread exposure

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Ethane

Liquids Business Unit

NGL Fractionation

* Non-GAAP measure. See Keyera’s Q3 2011 MD&A for a definition of Operating Margin.

Western Canada Sedimentary Basin

A Prolific Natural Gas Basin

1 Since going public in 2003, including the November 2011 dividend 2 From 2003, including the November 2011 dividend 3 From 2003 to Oct 31, 2011

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Western Canada Sedimentary Basin (WCSB)

Source: CAPP

• Canada is home to some of the most economic natural gas plays in North America
• Larger, liquids-rich gas reserves being developed rapidly
• Multi-zone gas potential on the deeper (west) side of WCSB
• “Game changing” horizontal drilling & multi-stage completions unlocking tight

reservoirs and shale gas

• NEB permits issued to export LNG off west coast to Asian markets

Surface Cardium

Sandstone/Siltstone Carbonate Shale

Notikewin Wilrich Glauconite Nordegg Montney Pekisko Bakken Duvernay Muskwa SlavePoint/Swan Hills

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Canadian Natural Gas Production Forecast

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Production Growth From Tight and Shale Gas Horizons

Source: CAPP June 2011

*Assuming C$5.50/GJ AECO-C pricing New Forecast Wedge

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Strategically Located Near Liquids-Rich Resource Plays

Gathering and Processing

Franchise Facilities west of 5th Meridian

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• Large flexible processing plants

− Operate 16 of 18 gas plants − Licensed capacity of 2.6 billion cubic feet per day (one of largest processors in WCSB) − Natural gas liquids (NGL) extraction − Sweet and sour gas processing capability

• Extensive gathering systems

− 3,400 km of gathering systems − Large capture areas create franchise regions

• Long-life assets

− Technology has increased the amount of gas able to be economically recovered − Positioned for growth in “unconventional” resource developments

• Fee-for-service revenues

Increasing NGLs Benefits Both Business Units

Liquids (NGL) Content in Gas Stream Supports Drilling Activity

* Based on Peters & Co. Ltd. estimates. Full-Year 2011 prices based on year-to-date AECO- C and Edmonton PAR pricing and forward strip prices over the remainder of the year.

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Rimbey Strachan Gilby Simonette Strachan MBL Pembina Brazeau Nordegg Edson Brazeau Pembina Brazeau Pembina Caribou Edson Simonette West Pembina Brazeau Edson Brazeau Simonette Rimbey Strachan MBL Gilby

Keyera Plants

C$/mcf

Source: Peters & Co.

Equivalent Natural Gas Price Including Value of NGLs

$5.38 $4.17 $1.73 $3.67 $4.00 $0.63 $0.76 $0.99 $1.46 $0.57

Liquids Gas

Simonette

Liquids Business Unit

NGL Infrastructure & NGL Marketing

Fractionation (80,000 bbls/d) Storage (10.4 MM barrels) Rail & Truck Racks (19 ) Pipelines (7) Rail Cars (~800) Sales Terminals

NGL Infrastructure: providing services to

NGL & oil sands producers at Canada’s energy hub

− Fractionating NGL mix into ethane, propane, butane and condensate − Storing NGLs, including diluent − Transporting NGL products to and from the Edmonton/Fort Saskatchewan energy hub − Rail and truck terminalling to load and offload NGLs and other liquids

NGL Marketing

• Purchase & sale of NGLs to North American markets

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Oil Sands – Multi-Decade Production

• Large reserve base (170 Billion barrels

recoverable1)

• Represents approximately half of world
• il reserves not under sovereign

control1

• Majority of future production expected

to come from in-situ developments

• Bitumen expected to be sent to

upgraders across North America for processing

• Condensate is required to dilute

bitumen to facilitate pipeline movement

Oil Sands Producers Will Require Diluent Transportation, Storage and Terminalling Services

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1 Source: CAPP

Oil Sands Projects

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In-Situ Projects Mining Projects

Fort McMurray Cold Lake Fort Hills Horizon Joslyn Creek Syncrude Suncor Muskeg River Albian Dover MacKay River Firebag Hangingstone Long Lake Surmont Christina Lake (ECA) Foster Creek Wolf Lake/Primrose Hilda Lake Cold Lake Tucker Lake Jackfish Kearl Lake Jackpine Peace River Peace River Seal Peace River Peace River Seal Northern Lights White Sands

Source: CAPP Feb./11

• Current oil sands production

capacity is ~ 2.1 mmbpd (60% mining/40% in-situ).

• 2 mining projects (210 kbpd)

and 28 in-situ projects (800 kbpd) are either under construction or approved for production by 2015

• Another 425 kbpd announced

but not yet approved.

Source: Imperial Oil

• Water

Olive Oil Pancake Syrup Honey

Ketchup Cold Lake Bitumen Peanut Butter Athabasca Bitumen

Light Crude Oil

CAPP June/08

Bitumen Viscosity

Diluent Required for Pipeline Movement

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Keyera Continues to Add Strategic Condensate Infrastructure at the Hub

Demand for Diluent Creates Opportunity

• 500

1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

CONDENSATE Demand Forecast – Risked (MBbl/d) BITUMEN Production Forecast – Risked (MBbl/d)

Source: Peters & Co. Source: Peters & Co.

In-situ (SAGD, CSS, other thermal) Mining (bitumen, upgraded) In-situ (SAGD, CSS , other thermal)

Mining (bitumen)

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Established Supplier of Diluent Logistics Services

Kearl and Sunrise Oil Sands Projects

Long-term fee-for-service

arrangements with Imperial Oil and Husky for Kearl and Sunrise

• il sands projects

Keyera to provide diluent

transportation, storage and terminalling services

Large portion of revenue stream

not dependent on throughput volumes

New infrastructure will enhance

connectivity to diluent supply, pipelines and markets

Ability to serve other oil sands

players

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Combining Expertise in Pipelines and Diluent Logistics

Diluent Transportation MOU

Keyera and Enbridge have entered into

a Memorandum of Understanding (MOU) to pursue diluent transportation initiatives

Soliciting interest from oil sands

producers to support construction of:

−Norlite pipeline – diluent pipeline from Fort Saskatchewan to Athabasca oil sands region (Enbridge 70%/Keyera 30%) −South Cheecham Rail and Truck Terminal – enable receipt of diluent or solvents via railcar for delivery to oil sands sites (Keyera 50%/Enbridge 50%)

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A World Class Asset

Alberta EnviroFuels Acquisition

Acquiring assets of Alberta

EnviroFuels (“AEF”)

AEF manufactures iso-octane, a

low vapour pressure, high octane gasoline blending additive

Pipeline connected to Keyera’s

Edmonton Terminal (~1 km away), ADT and Fort Saskatchewan

Acquisition provides vertical

integration along butane value chain

Purchase price US$198 MM plus

working capital (~$50 MM)

Anticipate closing in early 2012

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AEF - Benefits to Keyera

AEF an existing butane customer Facility already tied into Keyera infrastructure

in Edmonton area

Existing Keyera NGL infrastructure (pipelines,

storage, rail) beneficial to AEF feedstock supply

Keyera’s marketing group has skills to source

butane feedstock and sell iso-octane

Significant undeveloped land for future

development

An Extension of Keyera’s NGL Value Chain

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NGL Marketing

Purchase NGLs from producers in

western Canada and U.S.

Utilize Keyera’s NGL facilities to

fractionate NGL mix into spec products (ethane, propane, butane, condensate)

Utilize Keyera’s well connected

facilities and logistics expertise to move spec products to markets across North America

Utilize Keyera’s storage facilities for

NGLs as required to meet demand and operational fluctuations

Integration with Other Business Lines Key to Success

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Respecting the Environment

Environmental Initiatives

−Acid gas injection (H2S and CO2 sequestration) at 5 gas plants −CO2 liquefaction and vapour recovery at Rimbey gas plant −Waste heat recovery at Strachan gas plant −“De-grandfathering” gas plants to meet current emission standards

Recipient of Emerald Award for

Environmental Excellence

Environmental Excellence & Good Business Practice

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Keyera’s Growth Strategy

• Near term organic growth opportunities

− Gas plant expansion and pipeline construction projects driven by liquids-rich gas development − Fractionation & storage expansions to handle increasing liquids production − Storage, terminalling & pipeline opportunities from

• il sands growth
• Pursue projects & acquisitions that leverage

existing facilities and expertise

• Typical organic project characteristics

− Scalable to meet changing industry environment − Flexible − Driven by industry needs

Integration with Other Business Lines Key to Success

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A Focused Approach to Growing Our Business

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Summary

Track record of steady value

creation

Focused strategy, disciplined

approach

Stable cash flows with

demonstrated growth

Positioned to benefit from liquids-

rich gas production

Positioned to capitalize on growth

in oil sands activities

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Forward Looking Information

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 (collectively “statements”) 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, forward-looking 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 and crude oil; 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

• perations 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 www.sedar.com. All forward-looking statements contained in this document are expressly qualified by this cautionary statement.

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FOR FURTHER INFORMATION CONTACT: John Cobb Director, Investor Relations Heidi Christensen Brown, Senior Advisor, Investor Relations

www.keyera.com

888-699-4853 403-205-7670 ir@keyera.com KEYERA 600, 144 – 4th Avenue S.W. Calgary Alberta T2P 3N4