Pembina Pipeline Corporation · TSX:PPL
Pembina Pipeline — Merger or Acquisition (May 2017)
19 slides from Pembina Pipeline's merger presentation, May 5, 2017
Slide 1: Combination Presentation
Pembina Pipeline Corporation 1sx:pr. tse: psa Veresen In. tsx:vsn Combination Presentation | May1,2017_ PEMBINN'
Slide 2: Forward-looking statements and information
Forward-looking statements and information This presentation is for information purposes only and is not intended to, and should not be construed to constitute, an offer to sell or the solicitation of an offer to buy, securities of Pembina Pipeline Corporation ("Pembina"). This presentation and its
Slide 3: Transaction overview
Transaction overview • Offer to acquire all outstanding shares of Veresen in exchange for 0.4287 common shares of Pembina Transaction or $18.65 in cash for each Veresen share, subject to pro ration(1) Overview • 21.8% premium to Veresen's 20-day weighted average share price of $15.31 • Increases Pem
Slide 4: Transaction highlights
Transaction highlights Near-term secured growth increases from One of Canada's ~$4 BB Low risk business largest energy To infrastructure platform 5.8 Bcf/d Companies ~$6 BB 85%+ of combined gas $33 BB fee-for-service cash flows processing by mid-2018 Total enterprise Combined (pro forma average (net
Slide 5: Strong alignment in strategy
Strong alignment in strategy Pembina's strategy Veresen's alignment Preserve value Both companies have a proven record of supporting safe, reliable and by providing safe, cost-effective, reliable services cost effective midstream services for their customers Diversify our asset base Extends and furt
Slide 6: Key strategic rationale
Key strategic rationale diversification 8% 8% 17% Pembina Veresen 8% Pro Forma 52% 5% 8% 17% 17% 52%18% 5% 3% 8% 52% 5% 18% 11% 17% Conventional Pipelines Gas Proc 5%Conventional Pipeline 27% 52% 17% 18% Gas Processing Oil Sands & Heavy Oil Operating Margin 23% 46% 35%& Heavy Oil Pipelines Convent
Slide 7: Pembina Gas Processing Plant
y Pembina Gas Processing Plant Pembina Storage Facility Pembina Fractionator Veresen Gas Processing Plant Veresen Storage Facility Veresen Fractionator Pembina Oil Sands & Heavy Oil Pipelines es sa Deep Basin Duvernay \ Calgary : | | Beach Third Party Pipelines Pacific Connector Gas Pipeline —— Albe
Slide 8: Integrated, customer-focused value chain
Integrated, customer-focused value chain Value chain extension opportunities Redwater + Empress East + Sarnia & Corunna Mainline Extraction, Fractionation, Distribution Propane Gas/NGL Via NGTL exports NGL Storage Fractionation Distribution Value Chain Conventional Pipelines NGL Midstream ("HVP")
Slide 9: Creating the WCSB's largest third-party gas processor
Creating the WCSB's largest third-party gas processor 7,000 In-service ~5.8 6,000 Project under development Bcf/d 470 5,000 ~4.2 897 60 100 Bcf/d 243 4,000 MMcf/d 3,000 2,088 2,000 325 234 400 1,000 250 455 318 - Cutbank - Cutbank - Kakwa River Saturn Resthaven Younger Empress SEEP Duvernay I Pembin
Slide 10: Fractionation capacity across three NGL market hubs
Fractionation capacity across three NGL market hubs 350 Edmonton Sarnia, Ontario US Midcontinent ~300 Mbpd 300 ~250 56 250 Mbpd 20 18 200 Mbpd 55 150 73 100 9 8 50 65 - RFS I RFS RFS C3+ RFS II RFS III RFS III Growth Sarnia Pembina Aux Sable (Net) Total Debottleneck Debottleneck (Q1 2016) (Q3 2017)
Slide 11: Hydrocarbon pipeline transportation capacity
Hydrocarbon pipeline transportation capacity 3,500 Hydrocarbon Liquids Natural Gas ~3.2 MMboed 125 In-service 3,000 138 Project under development 330 2,500 Uncommitted Project 250 180 2,000 420 Mboed 230 1,500 389 1,000 106 250 263 205 Mboed 500 ~2.9 Converted at 6/1 628 MMbpd ratio - Pre Expansion
Slide 12: Financial 'Guard Rail' considerations
Financial 'Guard Rail' considerations Pembina Combined Maintain target of 80% fee-for-service contribution to ~84% ~87% 1 EBITDA (2018 – 2022) (2018 – 2022) 2 Maintain 'strong' BBB credit rating >20% FFO / Debt >20% FFO / Debt Target 75% credit exposure from investment grade 3 80% 81% and secured co
Slide 13: Larger and stronger together
Larger and stronger together Total enterprise value ($BB)(1) Relative peer positioning (EV $BB)(2) $35 Veresen Pembina $33 Market Capitalization Net Debt $30 $106 $105 Pro Forma $23 $25 $20 ~45% $15 Increase $10 $5 - Current Combined 2018 Adjusted EBITDA ($BB) $3.0 Veresen Pembina $2.55 - $2.75 $40
Slide 14: We are committed to a low-risk business platform
We are committed to a low-risk business platform Summary of operating margin by type ($MM)(1) ~4% Total fee- ~10% based = 86% ~4% ~24% Total fee- ~5% ~13% based = 83% Total fee- ~18% ~4% ~15% based = 80% ~1% Total fee- ~19% ~19% based = ~22% Total fee- ~13% 77% ~63% based = ~33% 77% ~65% ~61% ~64% ~
Slide 15: Pembina's financial outlook and considerations
Pembina's financial outlook and considerations Capital expenditure funding Financing considerations 2014 2015 2016 2017 2018 $3.0 2017 / 2018 Capital • Commitment to Pembina's financial objectives: ~$3.5 BB − Financing growth 50% debt / 50% equity over the investment cycle − Conservative credit me
Slide 16: Commitment to a strong 'BBB' credit rating
Commitment to a strong 'BBB' credit rating (Managing toward target credit metrics) Credit Highlights Debt / Adjusted EBITDA (x) (2018 Forecast)(1) • Increased size, scale and asset diversity serve to create 4.5x enhanced credit profile 4.0x 3.75x - 4.25x • Combined balance sheet remains strong onl
Slide 17: Pembina is on very strong growth trajectory
Pembina is on very strong growth trajectory Historical Adjusted EBITDA and 2018 Outlook ~$2.55 BB - ~$2.75 BB ~$1.8 BB -~$1.9 BB $1,189 $983 $920 Contribution from growth projects Commodity prices 2014 2015 2016 2018 2018 (Combined) Pembina is delivering on its promise and creating a foundation for
Slide 18: Conclusions
Conclusions Proven history of safe and reliable operations while developing enduring relationships with local communities Our long term strategy remains unchanged and continues to create significant shareholder value Committed to delivering 2018 Adjusted EBITDA of $2.55 BB to $2.75 BB (pro forma) Th
Slide 19: Non-GAAP measures
Non-GAAP measures This presentation uses certain terms that are not defined by GAAP but are used by management of Pembina to evaluate the Veresen transaction. Non-GAAP financial measures do not have a standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar meas