TD Securities 2014 London Energy Conference Jim V. Bertram, CEO - - PowerPoint PPT Presentation

Infrastructure Growth for the Canadian Energy Sector

TD Securities 2014 London Energy Conference Jim V. Bertram, CEO January 13, 2014

2

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

• r 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 or advisers take any responsibility for, or will accept any liability whether direct or indirect, express or implied, contractual, tortuous, statutory or otherwise, in respect of the accuracy or completeness of the Information or for any of the opinions contained herein or for any errors, omissions or misstatements or for any loss, howsoever arising, from the use of this Presentation. In furnishing this Presentation, Keyera does not undertake or agree to any obligation to provide the recipient with access to any additional information or to update this Presentation or to correct any inaccuracies in, or omissions from, this Presentation which may become

• apparent. This Presentation should not be considered as the giving of investment advice by Keyera or any of its shareholders, directors, managers,

agents, employees or advisors. In particular, any estimates or projections or opinions contained herein necessarily involve significant elements of subjective judgment, analysis and assumption and each recipient should satisfy itself in relation to such matters. This Presentation does not constitute,

• r form part of, any offer or invitation to sell or issue, or any solicitation of any offer to subscribe for or purchase any securities of Keyera, nor shall it,
• r the fact of its distribution, form the basis of, or be relied upon in connection with, or act as any inducement to enter into, any contract or commitment

whatsoever with respect to any such securities. The delivery or distribution of this Presentation in or to persons in certain jurisdictions may be restricted by law and persons into whose possession this Presentation comes should inform themselves about, and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of the laws of the relevant jurisdiction. In particular, this Presentation has not been approved by an authorised person pursuant to Section 21 of the Financial Services and Markets Act 2000 (“FSMA”) of the United Kingdom and accordingly in the United Kingdom it is only being delivered to and directed at persons who fall within paragraphs 19 (investment professionals) and 49 (high net worth companies, unincorporated associations, etc) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005. Any investment or investment activity to which the Presentation relates is available only to such persons or will be engaged in only with such persons, and persons who do not have professional experience in matters relating to investments, and persons of any other description, should not rely or act upon

• it. This Presentation has not been approved as a prospectus by the UK Financial Services Authority ("FSA") under Section 87A of FSMA and has not

been filed with the FSA pursuant to the United Kingdom Prospectus Rules. In addition, neither this Presentation nor any copy of it may be taken or transmitted into the United States of America or Canada or distributed, directly or indirectly, in the United States of America or Canada, or to any resident thereof. Any failure to comply with these restrictions may constitute a violation of applicable U.S. or Canadian securities laws. By accepting this Presentation, the recipient represents and warrants that it is a person to whom this Presentation may be delivered or distributed without a violation

• f the laws of any relevant jurisdiction. This Presentation must not be copied, published, reproduced or distributed in whole or in part at any time

without the prior written consent of Keyera, or used for any other purpose, and any other person who receives this Presentation should not rely or act upon it. Nothing in this disclaimer shall be effective to limit or exclude any liability which by law cannot be limited or excluded.

Large Resource Base Driving Infrastructure Expansion Opportunities

Keyera - One of the Largest Midstream Operators in Canada

3

and no construction delays

• Natural gas producers require

significant infrastructure to support growing natural gas activity Liquids-rich natural gas production

• Bitumen producers require

diluent handling and other logistics services Oil sands development Keyera Business Driver Canadian Industry Focus

7.8%

CAGR2 in dividends per share

$900MM

Approximate Growth Capital for 2013/20143

Providing Investors with Income and Growth

Keyera (TSX:KEY) – Strong History of Financial Performance

4

21.9%

Compound annual TSR1

$100 $200 $300 $400 $500 $600 $700 $800 $900

Total Cumulative Return of $100 Investment Since 2003

KEY S&P/TSX Composite

Opportunities to Add Infrastructure Across Entire Value Chain

Integrated Business Lines Provide Customers Access to Full Service Offering

5

* Includes intersegment transactions. See Keyera’s Third Quarter 2013 MD&A for a definition of Operating Margin.

Liquids-Rich Development Expected to Drive Facility Expansions

6

• Well maintained, long-life facilities

– 2.4 Bcf/d licensed gross capacity – Keyera operates 14 of 15 plants – NGL extraction capability at 95% of plants

• Extensive gathering systems

– ~4,000 km of 4”-12” diameter pipelines – Capture areas create franchise regions

• Fee-for-service revenues with

negligible direct commodity exposure

– Largely flow-through operating costs

• Expansion of gas processing and

liquids handling capacity, as well as addition of gas gathering pipelines, expected

MONTNEY CARDIUM

DUVERNAY

GLAUCONITE

Gathering and Processing Business Unit

New Area Experiencing Significant Liquids-Rich Development

Simonette – Expanding to Handle New Gas Production

• Opening new capture area northwest of plant in

Wapiti / Elmsworth area activity where producers drilling liquids-rich Montney zone

• Building two 90-km pipelines; a 12-inch sour gas

gathering pipeline and a 6 inch condensate pipeline

• Modifying plant to add 100 MMcf/d of processing

capacity & improve condensate handling

• Pipeline capital cost ~$180 million, including inlet

separation; anticipate pipelines on stream by Q2 20141

• Plant capital cost estimated at ~$90 million,

including condensate stabilization; anticipate plant expansion start up in second half 20141

7

Producers active in area

• NuVista
• Paramount
• 7 Generations
• Sinopec Daylight
• Harvest
• Exxon
• CIOC

Northern Duvernay Region Requires Significant Infrastructure

• Emerging natural gas resource

development east of Simonette

• Initial indications are that Duvernay

gas contains high levels of condensate and other NGLs

• Significant infrastructure required to

develop resource – Raw gas processing – Condensate stabilization – NGL mix transportation to Fort Saskatchewan – Additional NGL fractionation

8

Sources: Peters & Co. Limited ,geoSCOUT.

Duvernay – Potential World Class Resource

Producers active in Simonette/Kaybob area

• Exxon
• Athabasca Oil Corp.
• Encana
• Trilogy
• Chevron
• Shell
• ConocoPhillips
• Yoho

Can the Duvernay be Accelerated to Take Advantage of Existing Infrastructure?

Southern Duvernay – Significant Infrastructure in Place Today

• Keyera is well positioned

– 10 plants (1.9 bcf/d processing capacity and liquids recovery) – Extensive gathering systems in place

• Existing deep-cut capacity at Rimbey,

Gilby, Strachan and Minnehik Buck Lake gas plants

• Full fractionation at Rimbey plant for plant

and trucked-in NGL mix

• Access to Edmonton/ Fort Saskatchewan

NGL market via pipeline from Rimbey gas plant

• Ethane from Rimbey to Alberta Ethane

Gathering System (AEGS) for delivery to Alberta’s petrochemical facilities

9

Sources: Peters & Co. Limited ,geoSCOUT.

Producers active in the West Central Area:

• Encana.
• Shell
• Talisman
• Sinopec Daylight
• ConocoPhillips
• Vermilion
• Enerplus
• Bonavista

Liquids Business Unit

10

• NGL Infrastructure is a fee-for-service business providing:

– 80,000 bbls/d of fractionation capacity at 5 locations – Rail & truck handling facilities, including a 1,500+ 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

• Marketing provides various support services including:

– Purchasing and fractionating NGL mix into spec products (propane, butane, and condensate) – Storing NGLs as required to meet demand and

• perational fluctuations

– Utilizing Keyera’s integrated facilities and logistics expertise to move spec products to markets across North America

Strategically Integrated Assets at the Edmonton/Fort Saskatchewan Energy Hub

Oil Sands Production – Diluent Requirements Rapidly Growing

Keyera’s Fort Saskatchewan Condensate System 100 200 300 400 500 600 700 800 900

Mining In Situ FORECAST

MB/d

Oil Sands Condensate (Diluent) Demand (Risked)

Providing Customers with Significant Receipt and Delivery Flexibility

11

Sources: Peters & Co. Limited estimates, AER, and geoSCOUT.

An Opportunity to Expand our Condensate Service Offering

Norlite Pipeline – Leveraging our Condensate Infrastructure

12

• Enbridge proceeding with development of Norlite pipeline, a

diluent pipeline from Fort Saskatchewan to Athabasca oil sands region underpinned by Fort Hills project (Suncor, Total, Teck)

• Norlite shippers may access Keyera’s extensive condensate

infrastructure in Edmonton/Fort Saskatchewan region

• In addition to pipeline capacity, shippers may need other Keyera

services, such as storage rail and truck terminalling services

• Keyera currently evaluating its right to participate as a 30% non-
• perating owner
• As an owner, Keyera’s share of capex could be ~$400 million

13

Adding De-ethanization at KFS

• Adding a 30 Mbbls/d de-ethanizer at Keyera’s Fort

Saskatchewan Fractionation and Storage Facility (KFS)

• Project will enable fractionation of an ethane-rich stream of

NGLs (C2+ mix) and increase the flexibility of KFS

• Creates specification ethane for consumption by Alberta’s

petrochemical industry

• Project underpinned by a large deep basin producer
• Gross costs of ~$155 million, including pipeline

connections and conversion of cavern to C2+ raw feed storage

• Expected on-stream in 2nd half 20141

Continuing to Grow our Fort Saskatchewan Energy Complex

Expanding C3+ Fractionation at Fort Saskatchewan

• Producers increasingly looking for NGL

fractionation and marketing services tied to natural gas processing services

• Alberta fractionators, including Keyera’s, are
• perating near capacity
• Adding 35,000 Bbls/d C3+ fractionation

capacity and other ancillary facilities

• Long-term agreements in place; negotiating

agreements with producers for remaining capacity

• Gross project cost ~$220 million
• Anticipate online Q1 20161

14

Alberta Crude Terminal – Developing Crude By Rail Loading in Edmonton Area

• 50/50 partnership with Kinder Morgan
• Access to all crude qualities from Kinder Morgan
• Project underpinned by Irving Oil
• Served by CN and CP railways
• 40,000 Bbls/d crude oil loading facilities
• Potential for up to 125,000 Bbls/d incremental

capacity

• Net capital cost to Keyera of ~$65 million;

anticipate online in Q2 20141

15

Meeting the Growing Rail Needs of Canadian Oil Sands Producers

South Cheecham Terminal – Extending our Logistics Footprint

16

• South Cheecham Rail and Truck

Terminal completed in Q3, 2013

• Ownership Keyera 50%, Enbridge

50%

• Terminal capable of receiving

diluent and solvents and loading dilbit and bitumen onto railcars for delivery to upgraders

• Agreements in place with Statoil

and JACOS

• Gross costs of ~$124 million
• Evaluating facility expansion

Significant Growth Investments Available and Underway

17

Alberta EnviroFuels (AEF) 2012 Acquisition Turbo Expander at Strachan and MBL Alberta Diluent Terminal (ADT) 24/7 Operations South Cheecham Rail and Truck Terminal 12th Storage Cavern Fort Saskatchewan Condensate System Delivering Iso-Octane by Rail New Gas Gathering Pipelines Alberta Crude Terminal Rimbey Turbo Expander Wapiti Pipelines (2 x 90km) Simonette Modifications Strachan Sulphur Expansion Hull, Texas Terminal Refurbishment New Gas Gathering Pipelines 13th and 14th Storage Caverns KFS De-ethanizer NGL Fractionation Expansion 4th Brine Pond Norlite Diluent Pipeline to Oilsands South Cheecham Expansion Hull, Texas Terminal Expansion New Gas Gathering Pipelines Alberta Liquids Pipeline System (ALPS) Simonette Future Expansion New Rail Terminals Enhancing NGL Recoveries at Gas Plants Future Storage Caverns ACT Future Expansion

Under Evaluation Under Development Operational

Cochin Pipeline Tie-In at KFS

Trading Metrics

18

KEY Trading Symbols (TSX) $64.83 Common Share Price1 $5.1 B Market Capitalization1 $5.8 B Enterprise Value1,2 79.2 M Common Shares Outstanding3 166,234 Daily Trading Volume4 $2.40 Annualized Dividend per Share (20¢/month) 3.7 % Current Dividend Yield1 61 % Payout Ratio5

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, crude oil and iso-

• ctane; 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 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.

19

For Further Information Contact: John Cobb Vice-President, Investor Relations

• r

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