Logistics Services for the Heavy Oil Sector
Peters & Co. 2013 Energy Conference David G. Smith, President and COO
Logistics Services for the Heavy Oil Sector Peters & Co. 2013 - - PowerPoint PPT Presentation
Logistics Services for the Heavy Oil Sector Peters & Co. 2013 Energy Conference David G. Smith, President and COO Forward-Looking Information In the interests of providing Keyera Corp. (Keyera or the Company) shareholders and
Logistics Services for the Heavy Oil Sector
Peters & Co. 2013 Energy Conference David G. Smith, President and COO
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 growth and performance; anticipated producer activity and industry trends; geological predictions such as the future importance of the WCSB as a source of gas supply and future demand for condensate;; anticipated timing associated with capital projects and future revenue streams; and objectives of or involving Keyera. 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, 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
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 www.sedar.com. All forward-looking statements contained in this document are expressly qualified by this cautionary statement.
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One of Canada’s Largest Midstream Operators
About Keyera (TSX:KEY)
fee-for-service activities
– Focus on liquids-rich drilling – Increasing demand for oilsands services
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compound annual total return1 to shareholders
CAGR3 in
dividends per share
dividend increases
since IPO in 2003
$2.40
per share per year2
1 From May 30, 2003 to May 31, 2013 2 Effective with August dividend payable September 16, 2013 3 From June 24, 2003 to August 31, 2013Delivering Midstream Energy Solutions Along the Value Chain
Integrated Business Lines – Superior Service Offering
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* Includes intersegment transactions. See Keyera’s Second Quarter 2013 MD&A for a definition of Operating Margin.
Fee-For-Service Business Underpins Cash Flow for Dividends
Growing the Business
74% Fee-for-service4
(66% YTD 2013)
1 Operating margin excludes other income from production.2 Non-GAAP measure. 3 See Keyera’s Q2 2013 MD&A for a definition of operating margin and EBITDA. 4 Fee-for-service operating margin includes fees paid by Marketing to NGL Infrastructure. 5 2009 normalized to exclude $29.2 million paid out as a special dividend.$0 $50 $100 $150 $200 $250 $300 $350 $400
2008 2009 2010 2011 2012
NGL Marketing - margin based NGL Infrastructure - fee-for-service Gathering & Processing - fee-for-service
Operating Margin1,3
$ Millions
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$0 $50 $100 $150 $200 $250 $300 $350 $400
2008 2009 2010 2011 2012
EBITDA Dividends⁴
EBITDA2,3,5
$ Millions
Franchise Facilities in the Right Locations
Gathering and Processing Business Unit
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– 2.4 Bcf/d licensed gross capacity – Keyera operates 14 of 15 plants – NGL extraction capability at 95% of plants
– ~4,000 km of 4”-12” diameter pipelines – Capture areas create franchise regions
direct commodity exposure
– Largely flow-through operating costs
MONTNEY CARDIUM DUVERNAY GLAUCONITE
Liquids Business Unit
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– 80,000 bbls/d of fractionation capacity at 5 locations – Rail & truck handling facilities at 17 Locations, including a 1,300+ rail car fleet – 11.4 million barrels of underground storage at 12 caverns plus >300,000 barrels of above ground storage – Iso-octane production at Alberta EnviroFuels
– Purchasing propane, butane and condensate from producers in western Canada and the U.S. – Fractionating NGL mix into spec products – Storing NGLs as required to meet demand and
– Utilizing Keyera’s integrated facilities and logistics expertise to move spec products to markets across North America
Growth Projects Increasing Cash Flow
Strong Suite of Growth Opportunities
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Operational
solvent handling
market
Under Development
Terminal
Under Evaluation
plants
Significant Organic Growth Projects Underway
Projects Capital Cost $ Millions1 2013 2014 2015 Rimbey turbo expander 210 Wapiti raw gas and condensate pipelines 155 Simonette plant modifications 90 Strachan sulphur projects 65 South Cheecham Rail & Truck Terminal 68 Fort Saskatchewan de-ethanizer 111 Alberta Crude Terminal 65 Hull Terminal refurbishment 35 Fort Saskatchewan storage projects 29 Total 828
2013 Growth Capital Budget1 - $400 million to $450 million
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1 Keyera’s share of estimated capital cost. See Keyera’s Q2 2013 MD&A for capital investment risks and assumptions.Keyera Ideally Suited to Provide Diluent Handling Services
Diluent Business Opportunity
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hydrocarbon, called diluent, for movement via pipeline
will be transported by pipeline to upgraders – Condensate is diluent of choice – Approximately 1 barrel condensate is blended with 3 barrels of bitumen
Source: Imperial Oil
1 10 100 1,000 10,000 100,000 1,000,000
Viscosity at Room Temperature (cP)
Water Olive Oil Pancake Syrup Honey Ketchup Peanut Butter Athabasca Bitumen Light Crude Oil Cold Lake Bitumen
Diluent Imports Required to Meet Oilsands Growth
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Providing Customers with Significant Receipt and Delivery Flexibility
and terminalling services in Edmonton/Fort Saskatchewan
diluent streams in Alberta
attracting new business:
– 25-year diluent transportation services began July 2012 – 15-year storage services agreement
− Services to begin in 2014 − Storage and transportation agreement
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Keyera’s Fort Saskatchewan Condensate System
Integrated Approach to Condensate Logistics
Projects to Enhance Keyera’s Condensate Network
– Adding new condensate stabilizer – Building a 90km condensate pipeline from the Wapiti region to Simonette
– Evaluating debottlenecking
fractionation capacity – Evaluating expansion of pipeline system (natural gas + condensate)
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– Condensate delivery to KFS,
2014.
evaluation: – Norlite pipeline – Edmonton storage tanks – Future Hull Terminal expansion
– Adding NGL mix truck
System – Soliciting producer interest to underpin construction of a new pipeline system – System would enable producers to transport NGL mix and condensate from the Deep Basin to Fort Saskatchewan
pipeline projects are approved and completed
qualities and deliver to any markets is expected to support rail delivery longer- term
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Source: CAPP “Crude Oil Forecast, Markets and Transportation”
Providing Market Access by Expanding Rail Loading Facilities
condensate by rail since Keyera’s inception in 1998
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Strategic Rail Terminal Development
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Existing Terminal Business
ADT
Edmonton
loading/offloading
Rimbey Plant
Terminals Under Construction / Evaluation
South Cheecham
loading Alberta Crude Terminal (ACT)
Hull, USA
Phase 1
Josephburg
Alberta Diluent Terminal South Cheecham Rail and Truck Terminal
Meeting the Needs of Canadian Oil Sands Producers
South Cheecham Terminal – Extending our Logistics Footprint
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Truck Terminal underway with completion expected in Q3
Keyera constructing and will operate facility
solvents and loading dilbit onto railcars for delivery to upgraders
Alberta Crude Terminal – Developing Crude By Rail Loading in Edmonton Area
Bbls/d
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Strong Balance Sheet for Growth and Flexibility
Conservative Capital Structure
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Laddering of Maturities Reduces Financing Risk
Key Debt Metrics (as at June 30, 2013)
1.8 x
Net debt and convertible debentures / LTM EBITDA1
12%
Net debt and convertible debentures / Enterprise value2
1 Net debt and conv. debs. $631.0 million. LTM EBITDA $353.1 million (adjusted for IFRS and non-GAAP measure. See Keyera’s Q2 2013 MD&A for comparable GAAP measure). 2 Enterprise value based on Sept 4, 2013, closing prices: $56.87 (KEY) and $288.11 (KEY.DB.A).
$45 $85 $60 $125 $104 $60 $144 $100 $100 $8
$0 $20 $40 $60 $80 $100 $120 $140 $160 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
$CAD MM
Senior Notes Convertible Debentures NOTE: Notes maturing in 2025 and 2028 are part of a private placement that is expected to close on October 10, 2013
In Summary - Our Platform for Success
production
activities
history
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For Further Information Contact: John Cobb Vice-President, Investor Relations
Julie Puddell Manager, Investor Relations 888-699-4853 ir@keyera.com Keyera Corp. 600, 144 – 4 Avenue SW Calgary, Alberta T2P 3N4 WWW.KEYERA.COM