Tc Energy Corporation · TSX:TRP
Tc Energy — TransCanada — Investor Day (November 2018)
114 slides from Tc Energy's investor day presentation, Nov 13, 2018
Slide 1: TransCanada Investor Day
TransCanada Investor Day November 13, 2018
Slide 2: Forward Looking Information and Non-GAAP Measures
Forward Looking Information and Non‐GAAP Measures This presentation includes certain forward looking information, including future oriented financial information or financial outlook, which is intended to help current and potential investors understand management’s assessment of our future plans and
Slide 3: Strategic Overview
Strategic Overview Russ Girling President and Chief Executive Officer
Slide 4: Key Themes
Key Themes Businesses Performing Very Well • Demand for our services has never been greater • Record financial results expected in 2018 Proven Strategy – Low‐Risk Business Model • Invested ~$85 billion in our core businesses since 2000 • Delivered 12% average annual total shareholder return Diversif
Slide 5: Proven Capital Allocation Framework Delivers Results
Proven Capital Allocation Framework Delivers Results Critical Energy Infrastructure Assets Generate ~40% Stable, Long‐Term Cash Flow Streams Growing ~60% Dividends Living Within Our Means Supported by Strong Earnings and Cash Flow Disciplined Investment Coverage Ratios in Complementary Low‐Risk Asse
Slide 6: ~$85 Billion Invested Since 2000
~$85 Billion Invested Since 2000 $Billions 100 $94B Acquired Total Assets Acquired Columbia Pipeline ANR and Built Keystone and Group and Canadian Natural Remainder of Acquired Partner’s Columbia Pipeline Gas Pipelines 75 Partners Great Lakes 50% Interest U.S. Natural Gas Acquired Pipelines Acquired
Slide 7: Track Record of Living Within Our Means
Track Record of Living Within Our Means Acquired Columbia Pipeline Group Acquired Columbia Acquired ANR Built Keystone and Pipeline and Acquired Partner’s Partners Acquired Remainder of 50% Interest GTN Great Lakes Acquired Acquired Interest in Ravenswood Common Shares Outstanding Bruce Power (Milli
Slide 8: Investment has Created Significant Value
Investment has Created Significant Value Dollars 8 7 6 5 4 3 2 1 0 2000 2006 2012 2018E Comparable Earnings Per Share Comparable Funds Generated From Operations per Share Delivering Substantial Growth on a Per Share Basis Comparable Earnings per Common Share and Comparable Funds Generated from Opera
Slide 9: Eighteen Consecutive Years of Common Share Dividend Increases
Eighteen Consecutive Years of Common Share Dividend Increases $2.76 ~7% CAGR $0.80 2000 2006 2012 2018 Supported by Growth in Earnings and Cash Flow and Strong Coverage Ratios
Slide 10: Performance Has Resulted in Significant Share Price Appreciation
Performance Has Resulted in Significant Share Price Appreciation Dollars 70 Common Share Price ‐ TSX 60 50 40 30 20 10 0 2000 2006 2012 2018 Source: FactSet 12% Average Annual Total Shareholder Return Since 2000
Slide 11: Superior Total Shareholder Return
Superior Total Shareholder Return Percent 1000 TransCanada TSX Composite 800 S&P 500 773% 600 400 185% 200 166% 0 ‐200 2000 2006 2012 2018 Source: FactSet data from January 1, 2000 to October 31, 2018 Outperforming Broader Market
Slide 12: TransCanada Today
TransCanada Today One of North America’s Largest Natural Gas Pipeline Networks • 91,900 km (57,100 mi) of pipeline • 653 Bcf of storage capacity • 23 Bcf/d; ~25% of continental demand Premier Liquids Pipeline System • 4,900 km (3,000 mi) of pipeline • 590,000 Bbl/d Keystone System transports ~20% of
Slide 13: Financial Highlights – Nine Months Ended September 30 (Non-GAAP)
Financial Highlights – Nine Months Ended September 30 (Non‐GAAP) Comparable Comparable Comparable Funds Earnings per Common Share* EBITDA* Generated From Operations* (Dollars) ($Millions) ($Millions) 24% Increase 12% Increase 11% Increase 2.82 6,110 5,474 2.27 4,641 4,191 2017 2018 2017 2018 2017 20
Slide 14: 2018 Accomplishments
2018 Accomplishments Generating record financial results Navigated through U.S. Tax Reform and 2018 FERC Actions Advanced $36 billion secured capital program • Added $12 billion to project backlog in 2018 • Placed $3 billion of assets in‐service • Expect to place an additional $10 billion of a
Slide 15: Six Key Strategic Priorities
Six Key Strategic Priorities Deliver energy safely and reliably, every day Maximize value of our $94 billion asset base Execute $36 billion secured capital program Advance over $20 billion of projects under on‐time, on‐budget development Cultivate a portfolio of additional low‐risk Maint
Slide 16: Environmental, Social and Governance Commitment
Environmental, Social and Governance Commitment Safety and reliability are critical priorities • Operating objectives, targets and results Long history of working collaboratively with stakeholders • Customers, landowners, Indigenous groups, governments, regulators and local communities • Active thro
Slide 17: Advancing $36 Billion Secured Capital Program Through 2023
Advancing $36 Billion Secured Capital Program Through 2023* NGTL Buckeye XPress/ System Other $0.6 US$0.5 Mountaineer XPress NGTL US$3.0 System Villa de $1.7 Canadian Coastal Reyes Mainline GasLink US$0.8 Tula $0.2 $6.2 WB Mod II US$0.7 XPress US$1.1 US$0.9 2018 2019 2020 2021 2022 2023 NGTL Sur de
Slide 18: Secured Capital Program Drives Significant Growth
Secured Capital Program Drives Significant Growth Comparable EBITDA Outlook ($Billions) ~10.0 ~9% CAGR Energy Liquids Pipelines 7.4 6.6 Mexico Natural Gas 6.1 Pipelines 5.9 Energy Q3 U.S. Natural Gas Pipelines Liquids Pipelines Mexico Natural Gas Pipelines Q2 U.S. Natural Gas Pipelines Canadian Natu
Slide 19: Dividend Growth Outlook
Dividend Growth Outlook Annual Growth of 8 to 10 Percent Expected Through 2021 $2.76 $2.50 $2.26 $2.08 2015 2016 2017 2018 2019E 2020E 2021E Supported by Expected Growth in Earnings and Cash Flow and Continued Strong Coverage Ratios
Slide 20: $20 Billion+ of Projects Under Development
$20 Billion+ of Projects Under Development Natural Gas Pipelines • Expansions across our extensive network including NGTL, Columbia and other pipelines serving premium markets Liquids Pipelines • Keystone XL • Grand Rapids Phase II • Heartland Pipeline • Keystone Hardisty Terminal Energy • Bruce Pow
Slide 21: Strong Industry Fundamentals
Strong Industry Fundamentals 164 Billion Bbl North American Natural Gas North American of Oil Reserves Demand Growth Crude Oil Supply Outlook Bcf/d Million Bbl/d 924 Tcf of Natural 140 Gas Reserves 18 120 16 100 14 12 80 10 60 8 40 6 20 4 1,144 Tcf of 0 2 Natural Gas 2015 2030E 0 Reserves LNG Export
Slide 22: Multiple Growth Platforms that Cannot be Replicated
Multiple Growth Platforms that Cannot be Replicated NGTL System is uniquely Canadian Mainline is a critical positioned over 924 TCF of conduit to eastern markets WCSB natural gas reserves Bruce Power generates 30% of Ontario’s power Keystone corridor provides a direct link to world’s largest Columbi
Slide 23: Our Executive Leadership Team
Our Executive Leadership Team Don Marchand Russ Girling Executive VP and President and Chief Executive Officer Chief Financial Officer Karl Johannson Stan Chapman Executive VP and President, Executive VP and President, Canada and Mexico Natural Gas Pipelines and Energy U.S. Natural Gas Pipelines Pau
Slide 24: Strategic Overview
Strategic Overview Russ Girling President and Chief Executive Officer
Slide 25: Canadian Natural Gas Pipelines
Canadian Natural Gas Pipelines Tracy Robinson Executive Vice President, Canadian Natural Gas Pipelines
Slide 26: Integrated High-Demand Natural Gas Pipeline Footprint
Integrated High‐Demand Natural Gas Pipeline Footprint Well‐positioned assets with access to North America’s two most prolific natural gas supply basins WCSB • 91,900 km (57,100 mi) of pipeline • 653 Bcf of storage capacity Diversified customer base Large intra‐basin demand in Alberta and the Appalac
Slide 27: Substantial North American Natural Gas Resources
Substantial North American Natural Gas Resources WCSB Resource Estimate 2007 ‐ 165 Tcf 2007 2017 ‐ 924 Tcf 2017 Rockies / San Juan 2007 ‐ 354 Tcf 2017 ‐ 552 Tcf Appalachian 2007 ‐ 95 Tcf 2017 ‐ 1,144 Tcf Mid‐Continent / Permian 2007 ‐ 311 Tcf 2017 ‐ 488 Tcf N.A. Remaining Resource Estimate: Gulf Coa
Slide 28: Connecting Growing Natural Gas Supply to Market
Connecting Growing Natural Gas Supply to Market North American Natural Gas Demand Growth Outlook Bcf/d 160 140 120 100 Electric Generation 80 60 Industrial 40 Commercial 20 Residential 0 Fuels Source: TransCanada Forecast
Slide 29: Canadian Natural Gas Pipelines
Canadian Natural Gas Pipelines NGTL System • 24,500 km (15,300 mi) of pipeline • Over 1,100 receipt and 300 delivery points • Transports approximately 12 Bcf/d or 75% of WCSB production • Provides connection to North American markets Canadian Mainline • 14,100 km (8,800 mi) of pipeline • 7.1 Bcf/d o
Slide 30: 2018 Accomplishments
2018 Accomplishments Increasing Utilization of Existing Assets to Provide Access to North American Demand • NGTL and Canadian Mainline receipts/deliveries continue to grow • Recent long‐term fixed‐price open season for Empress to North Bay Junction and downstream markets Advancing Regulatory Applica
Slide 31: Canadian Natural Gas Pipeline Volumes
Canadian Natural Gas Pipeline Volumes NGTL System Receipts Mainline Western Receipts Bcf/d Flows vs Contracts Bcf/d 14 4 12 10 3 8 2013‐2018 2 6 NGTL System • Receipts and deliveries up ~22% 4 1 2 Canadian Mainline • Receipt flows up ~52% 0 0 2013 2018 2013 2018 • Firm contracts more than doubled Fl
Slide 32: NGTL System - Expanding to Connect Growing WCSB Supply to Markets
NGTL System ‐ Expanding to Connect Growing WCSB Supply to Markets Intra Basin 1.3 Bcf/d $9.1 billion expansion program • ~1,400 km (875 mi) of 16 to 48 inch pipe • 23 compressor units (650 MW) East Gate 1.3 Bcf/d Average Investment Base Foothills $Billions 20 16 West Gate 0.6 Bcf/d 12 8 4 0 2018E 20
Slide 33: West Coast LNG - First Direct Access to World Market for WCSB Production
West Coast LNG ‐ First Direct Access to World Market for WCSB Production West Coast LNG 2.1 Bcf/d Coastal GasLink Pipeline Project • $6.2 billion project to begin construction in 2019 • Initial capacity of 2.1 Bcf/d expandable to 5 Bcf/d • Fully permitted • Signed long‐term Project Agreements with a
Slide 34: Canadian Mainline - Critical Conduit to Eastern Markets
Canadian Mainline ‐ Critical Conduit to Eastern Markets Average Investment Base $Billions 4 3 • Enabling competitive access for WCSB production to North American markets • Advancing $200 million capital expansion 2 • Positive response to recent Empress to North Bay Junction open season 1 • Over 500
Slide 35: Canadian Natural Gas Pipelines Secured Capital Program
Canadian Natural Gas Pipelines Secured Capital Program Estimated Expected • $9.1 billion expansion of NGTL Project Capital Cost In‐Service system to 2022 Canadian Mainline 0.2 2018‐2021 NGTL System 0.6 2018 • $6.2 billion Coastal GasLink pipeline 2.8 2019 • $200 million Eastern Mainline 1.7 2020 exp
Slide 36: Canadian Natural Gas Pipelines Financial Outlook
Canadian Natural Gas Pipelines Financial Outlook Average Investment Base Net Income NGTL Canadian Mainline Foothills NGTL Canadian Mainline Foothills $Billions $Billions 20 1.0 8% CAGR 8% CAGR 16 12 0.5 8 4 0 0.0 2015 2016 2017 2018 2021E 2015 2016 2017 2018 2021E (9 months) (9 months) Growing Inves
Slide 37: Key Focus Areas and Future Opportunities in Canada
Key Focus Areas and Future Opportunities in Canada • Execute secured capital program safely, • Facilitate growth in WCSB production and access to market on‐time, on‐budget • Leverage competitive Canada / U.S. footprint to • Complete NGTL $9.1 billion capital maximize options for our customers progra
Slide 38: Canadian Natural Gas Pipelines
Canadian Natural Gas Pipelines Tracy Robinson Executive Vice President, Canadian Natural Gas Pipelines
Slide 39: U.S. Natural Gas Pipelines
U.S. Natural Gas Pipelines Stan Chapman President, U.S. Natural Gas Pipelines
Slide 40: Premier System Connects Prolific Gas Supplies to High Growth Markets
Premier System Connects Prolific Gas Supplies to High Growth Markets Broad National Network • ~31,000 miles (50,000 km) of FERC‐regulated pipelines with operations across 40 states WCSB • 535 Bcf of regulated storage • 183 miles (295 km) of non‐regulated midstream pipelines • Serves ~25% of U.S. nat
Slide 41: U.S. Supply/Demand Outlook - Continued Growth Opportunities
U.S. Supply/Demand Outlook ‐ Continued Growth Opportunities WCSB Daily Production 2027 – 23 Bcf/d 2017 – 15 Bcf/d 2027E 2010 – 14 Bcf/d 2017 2010 The U.S. has technically recoverable gas resources of Rockies/San Juan Appalachia 3,158 Tcf 2027 – 8 Bcf/d 2027 – 44 Bcf/d 2017 – 11 Bcf/d Mid‐Con 2017
Slide 42: 2018 - Transformative Year Positions Us for Continued Success
2018 ‐ Transformative Year Positions Us for Continued Success On‐track to complete US$7.2 billion of US$7.4 billion growth project portfolio • Placed US$2.7 billion of growth projects in‐service • US$4.5 billion of additional growth projects tracking for year end in‐service Completed US$1.5 billion
Slide 43: Realizing Synergies with Canada Gas and Accessing International Demand Centers
Realizing Synergies with Canada Gas and Accessing International Demand Centers North American supply continues to Appalachian grow; new flow patterns emerging Supply 50 Realizing synergies with NGTL and 40 Canadian Mainline 30 • GTN 20 10 • Northern Border 0 • Great Lakes/ANR 2010 2017 2027E • PNGTS
Slide 44: Completion of Growth Program Extends Our Long-Term EBITDA Outlook
Completion of Growth Program Extends Our Long‐Term EBITDA Outlook Estimated Capital Cost Estimated Spend to Date Expected CAPEX / EBITDA Project (US $Billions) (US $Billions)* In‐Service Date Multiple Leach XPress 1.7 1.7 In‐Service Rayne XPress 0.4 0.4 In‐Service Cameron Access 0.3 0.3 In‐Service W
Slide 45: Comparable EBITDA Outlook for U.S. Natural Gas Pipelines
Comparable EBITDA Outlook for U.S. Natural Gas Pipelines US$Billions 3 10.5% CAGR 2 1 0 2015 2016 2017 2018 2021E (9 months) Comparable EBITDA is a non‐GAAP measure. See the non‐GAAP measures slide at the front of this presentation for more information.
Slide 46: Key Focus Areas and Future Opportunities in the U.S.
Key Focus Areas and Future Opportunities in the U.S. Execution of near‐term growth program • Mountaineer XPress, Gulf XPress, WB XPress East nearing completion Optimization of existing assets • Synergies with Canada Gas increase utilization and provide growth opportunities • Successfully navigating
Slide 47: U.S. Natural Gas Pipelines
U.S. Natural Gas Pipelines Stan Chapman President, U.S. Natural Gas Pipelines
Slide 48: Mexico Natural Gas Pipelines
Mexico Natural Gas Pipelines Karl Johannson President, Canada and Mexico Natural Gas Pipelines and Energy
Slide 49: Sur de Texas Landfall Tunnel
Sur de Texas Landfall Tunnel
Slide 50: Mexico Demand and Supply Forecast
Mexico Demand and Supply Forecast Natural Gas Demand Forecast (Bcf/d) Natural Gas Supply Forecast (Bcf/d) 10.7 10.7 8.2 8.2 Power Industrial/Other Mexico Domestic Production Pipeline Imports from US LNG Imports Mexico Demand through 2030E (Bcf/d): Mexico Supply through 2030E (Bcf/d): Gas Fired Power
Slide 51: 2018 Accomplishments
2018 Accomplishments • Advancing US$2.9 billion capital program • Completion of Sur de Texas is scheduled for December and in‐service early January 2019 • Topolobampo in full operation in June 2018 • CFE recognized force majeure events for Tula and Villa de Reyes projects with payments for fixed cap
Slide 52: Mexico - Solid Position and Growing
Mexico – Solid Position and Growing • Four revenue‐generating pipelines • Tamazunchale • Guadalajara • Mazatlán • Topolobampo • Three new projects expected to enter service which will increase portfolio to ~US$5 billion • Tula – US$0.7 billion • Villa de Reyes – US$0.8 billion • Sur de Texas – US$1.
Slide 53: Opportunities to Increase Natural Gas Deliveries
Opportunities to Increase Natural Gas Deliveries Growing Demand Expected to Enhance the Value of Our Infrastructure
Slide 54: Comparable EBITDA Outlook for Mexico Natural Gas Pipelines
Comparable EBITDA Outlook for Mexico Natural Gas Pipelines Solid Position and Growing Driven by Secured Projects US$Billions 0.6 22% CAGR 0.4 0.2 0.0 2015 2016 2017 2018 2021E (9 months) Comparable EBITDA is a non‐GAAP measure. See the non‐GAAP measures slide at the front of this presentation for mo
Slide 55: Key Focus Areas and Future Opportunities in Mexico
Key Focus Areas and Future Opportunities in Mexico • Execute capital program • Pursue organic growth opportunities • Provide connections and increase capacity through efficient expansions to new end‐users • Capitalize on dominant position in the northwest of the country • Connect high demand markets
Slide 56: Mexico Natural Gas Pipelines
Mexico Natural Gas Pipelines Karl Johannson President, Canada and Mexico Natural Gas Pipelines and Energy
Slide 57: Liquids Pipelines
Liquids Pipelines Paul Miller President, Liquids Pipelines
Slide 58: Sustainable Performance
Sustainable Performance NORTHERN COURIER GRAND RAPIDS • Long‐term take‐or‐pay contracts EDMONTON HARDISTY • Highly contracted portfolio • Strong demand for uncommitted capacity KEYSTONE WOOD RIVER PATOKA CUSHING PORT ARTHUR HOUSTON
Slide 59: High-Quality EBITDA
High‐Quality EBITDA WHITE SPRUCE NORTHERN COURIER GRAND RAPIDS EDMONTON HARDISTY • Keystone: >90% contracted • Marketlink: ~80% contracted • Grand Rapids: recovery through base contracts KEYSTONE • Northern Courier: 100% contracted WOOD RIVER • White Spruce: 100% contracted PATOKA CUSHING PORT ARTHU
Slide 60: Strong U.S. Gulf Coast Fundamentals
Strong U.S. Gulf Coast Fundamentals Marketlink • Well positioned to respond to market demand • Strong demand for transportation service • Growing U.S. light crude oil production • Wide differentials CUSHING PORT ARTHUR HOUSTON
Slide 61: Marketlink Response
Marketlink Response • Increasing capacity in response to demand • Increasing contracts with increased capacity • Launched open season • Optimizing uncommitted capacity
Slide 62: Wide price differentials / Strong Market Demand
‐50 ‐45 ‐40 ‐35 ‐30 ‐25 ‐20 ‐15 ‐10 ‐5 0 $/Bbl 03‐Jan‐2017 03‐Feb‐2017 03‐Mar‐2017 03‐Apr‐2017 03‐May‐2017 03‐Jun‐2017 03‐Jul‐2017 03‐Aug‐2017 03‐Sep‐2017 03‐Oct‐2017 03‐Nov‐2017 03‐Dec‐2017 03‐Jan‐2018 Wide price differentials 03‐Feb‐2018 WCS Discount to WTI 03‐Mar‐2018 03‐Apr‐2018 03‐May‐2018 Stro
Slide 63: Growing Comparable EBITDA
Growing Comparable EBITDA $Billions 2 • ~80% of EBITDA contracted • Strong demand for capacity • Similar total results expected in 2019‐2021 1 0 2016 2017 2018 (9 months) Keystone Intra‐Alberta Other Comparable EBITDA is a non‐GAAP measure. See the non‐GAAP measures slide at the front of this presen
Slide 64: Attractive Keystone XL Investment
Attractive Keystone XL Investment • Expected to be fully contracted NORTHERN COURIER GRAND RAPIDS • Return on total capital consistent EDMONTON HARDISTY with similar projects • Commercial model largely unchanged KEYSTONE XL KEYSTONE • Development costs and capex risk shared with shippers WOOD RIVER
Slide 65: Contracted Integrated System
Contracted Integrated System • Highly contracted integrated system EDMONTON HARDISTY • Capacity ~1.4 million Bbl/d Select contracts • Long‐haul commitments tracking move to ~1.2 million Bbl/d Keystone XL • Remaining capacity for spot reservation • Capacity enhancement opportunities WOOD RIVER PATOKA
Slide 66: Keystone XL Progress
Keystone XL Progress • NEB approved NORTHERN COURIER GRAND RAPIDS • U.S. permits EDMONTON HARDISTY • Presidential Permit challenges • Nebraska Public Service Commission KEYSTONE XL challenge KEYSTONE • Other Federal permits WOOD RIVER PATOKA CUSHING PORT ARTHUR HOUSTON
Slide 67: Permitted Growth Opportunities
Permitted Growth Opportunities Grand Rapids NORTHERN Phase II COURIER GRAND RAPIDS EDMONTON Heartland Pipeline HARDISTY Keystone Keystone XL facilitates further development Hardisty Terminal • Grand Rapids Phase II KEYSTONE XL • Heartland Pipeline KEYSTONE • Keystone Hardisty Terminal WOOD RIVER PAT
Slide 68: Alberta Regional Growth
Alberta Regional Growth White Spruce Pipeline • 72 km pipeline to connect CNR Horizon WHITE SPRUCE NORTHERN COURIER crude oil volumes GRAND RAPIDS • $200 million investment Fort McMurray • Construction commenced in Q3/2018 Heartland • In‐service Q2/2019 Edmonton Hardisty
Slide 69: Canadian Production Growth
Canadian Production Growth Western Canadian Sedimentary Basin • Declining production in Latin America • Significant opportunity for Canadian heavy crude oil in the U.S. Gulf Coast Million Bbl/d Million B/d 5.0 Oil Sands Production Growth 3.5 4.5 Other heavy crude imports Canadian heavy crude imports
Slide 70: U.S. Production Growth
U.S. Production Growth U.S. Light Tight Oil (LTO) • Williston (Bakken) • DJ/Niobrara LTO destined for export markets • SCOOP/STACK (Oklahoma) • Permian Permian and Bakken lead growth Million Bbl/d 12 Actual Projections Niobrara Million Bbl/d U.S. Crude Oil Exports 2.5 Other Shale 10 Eagle Ford 2 8 B
Slide 71: Well Positioned Assets
Well Positioned Assets Oil Sands HARDISTY • Maximize value of existing assets Williston • Leverage footprint • Strategic corridor Powder River • Proximate to growing supply basins DJ • Accesses key U.S. markets • Significant growth projects identified Scoop Stack CUSHING Permian PORT ARTHUR Eagle Fo
Slide 72: Comparable EBITDA Outlook for Liquids Pipelines
Comparable EBITDA Outlook for Liquids Pipelines $Billions 2 10% CAGR 1 0 2015 2016 2017 2018 2021E (9 months) • Growing EBITDA • Highly contracted portfolio • Sustainable performance • Outlook does not include Keystone XL and Keystone XL‐related projects, which would significantly increase EBITDA ou
Slide 73: Liquids Pipelines
Liquids Pipelines Paul Miller President, Liquids Pipelines
Slide 74: Energy
Energy Karl Johannson President, Canada and Mexico Natural Gas Pipelines and Energy
Slide 75: Energy - A Proven Platform
Energy – A Proven Platform One of the largest private sector power generators in Canada 11 power plants, 6,615 MW • Generating enough to power over 6 million homes • Low‐emissions portfolio Power Capacity by Fuel Type Nuclear 47% 53% Natural Gas Two non‐regulated natural gas storage facilities with
Slide 76: Energy Portfolio Underpinned by Long-term Contracts
Energy Portfolio Underpinned by Long‐term Contracts Plant Capacity (MW)* Counterparty Contract Expiry Coolidge 575 Salt River Project 2031 Bécancour 550 Hydro‐Québec 2026 Grandview 90 Irving Oil 2024 Halton Hills 683 IESO 2030 Portlands 275 IESO 2029 Bruce Power Units 1‐8 3,094 IESO Up to 2064 20 Ye
Slide 77: 2018 Accomplishments
2018 Accomplishments Generating solid results Construction progressing on the 900 MW Napanee project • Expected in‐service in the first quarter of 2019 Advancing Bruce Power life extension program for Unit 6 • First Major Component Replacement (MCR) program to begin in 2020 Closed sale of Cartier Wi
Slide 78: Ontario - Core Market
Ontario – Core Market New planning forecast by the Ontario Independent Electricity System Operator (IESO) identifies: • Ongoing new supply need beginning in 2023 of approximately 2 GW • A need for existing contracted capacity in the post contract expiry periods • A need for refurbished Bruce units O
Slide 79: Napanee Generating Station
Napanee Generating Station • 900 MW natural gas‐fired combined cycle plant • 20 year firm PPA contract with the Ontario IESO • Construction progressing • Expect in‐service in the first quarter of 2019 • Capital cost of $1.6 billion Adds to Stable, Predictable, Contracted EBITDA
Slide 80: Bruce Power Critical Component of Ontario's Electricity Market
Bruce Power Critical Component of Ontario’s Electricity Market • 6,400 MW or ~30% of Ontario’s needs • 48.3% ownership interest • Power sales contracted through 2064 with the Ontario IESO • Spent fuel and decommissioning liabilities are the responsibility of Ontario Power Generation • $8+ billion in
Slide 81: Refurbishment Readiness
Refurbishment Readiness Comprehensive plant condition and scoping exercise complete Significant project governance in place Improved processes, systems, people and project controls Unit condition assessments undertaken on all six units Project cost and execution schedule are well developed
Slide 82: Life Extension Program
Life Extension Program • The Life Extension Program, Major Component Replacement (MCR) and Asset Management (AM), remain on schedule and on budget • Bruce Power submitted the Final Basis of Estimate for the Unit 6 MCR on September 28, 2018 • The Unit 6 MCR will proceed as planned in early 2020 • MCR
Slide 83: Alberta - Core Market
Alberta ‐ Core Market • Own and operate four natural gas‐fired cogeneration plants with total capacity of 448 MW • Also own two non‐regulated natural gas storage facilities with 118 Bcf of capacity • Long history of power generation and marketing services in the province • The Alberta Electric Syste
Slide 84: Comparable EBITDA Outlook for Energy
Comparable EBITDA Outlook for Energy Comparable EBITDA Growth Driven by Secured Projects $Billions 1.5 10% CAGR 1.0 Sale of Assets* 0.5 0.0 2015 2016 2017 2018 2021E (9 months) * U.S. NE Power generation assets sold in Q2, 2017; Ontario solar portfolio sold in Q4, 2017; Cartier Wind sold in Q4, 2018
Slide 85: Key Focus Areas and Future Opportunities
Key Focus Areas and Future Opportunities • Maximize the value of our assets through safe and optimized operations • Complete Napanee plant construction • Advance Bruce Power Life Extension Program • Pursue growth in contracted power infrastructure with a focus on our core markets of Alberta and Onta
Slide 86: Energy
Energy Karl Johannson President, Canada and Mexico Natural Gas Pipelines and Energy
Slide 87: Finance
Finance Don Marchand Executive Vice President and Chief Financial Officer
Slide 88: Financial Strategy
Financial Strategy • Invest in low‐risk, high‐quality assets that generate predictable and enduring growth in earnings and cash flow • Balance prudent and sustainable dividend growth with reinvestment in our businesses focusing on per share metrics • Finance long‐term assets with long‐term capital •
Slide 89: Delivering on Columbia Pipeline Acquisition Commitments
Delivering on Columbia Pipeline Acquisition Commitments Commitments Action Acquire Columbia Pipeline Group (CPG) Closed acquisition on July 1, 2016 Achieved targeted US$250 million of annual synergies Realize CPG Synergies Developing integrated natural gas platform Acquired Columbia Pipeline
Slide 90: 2018 Funding Complete
2018 Funding Complete $Billions 18 16 CGL Cost Reimbursement Debt Maturities Cartier Wind Asset Sale $9+ billion raised through an array of ATM 14 DRP competitive funding options 12 • $6.1 billion of long‐term debt in Canadian and U.S. markets 10 Senior Debt Issued, Capital Program Commercial Paper
Slide 91: Executed Balanced Program to Fund $57 Billion of Capital Needs
Executed Balanced Program to Fund $57 Billion of Capital Needs $Billions 2016‐2018E 60 Portfolio Management 7 Acquisitions 50 Discrete Equity 15 U.S. Northeast Power 8 Ontario Solar ATM Cartier Wind Hybrid Securities & DRP 1 Project Recoveries 40 Debt Maturities Preferred Shares 2 Avg Price $57.15 A
Slide 92: Deleveraging While Growing Per Share Earnings
Deleveraging While Growing Per Share Earnings Times Debt/EBITDA Dollars Comparable EPS 8 5 4 6 Target ‘High Fours’ 3 4 2 2 1 0 0 2016 2017 2018E 2019E 2016 2017 2018E 2019E On Track to Achieve and Maintain Targeted Credit Metrics *EBITDA is a non‐GAAP measure. See the non‐GAAP measures slide at the
Slide 93: Diversified North American Portfolio
Diversified North American Portfolio 2018E Comparable EBITDA* Multiple platforms that cannot Diversified across business lines be replicated 9% Canadian Natural Gas Pipelines 27% U.S. Natural Gas Pipelines Highly utilized critical energy Mexico Natural Gas Pipelines infrastructure 21% Liquids 40% Pl
Slide 94: Portfolio Generates High-Quality, Long-Life Cash Flows
Portfolio Generates High‐Quality, Long‐Life Cash Flows 2018E Comparable EBITDA* 1% 4% Approximately 95% of Minimal Variability Comparable EBITDA from Regulated regulated assets or long‐term Contracted contracts Commodity Risk 32% Volumetric Risk High visibility to sustained 40% EBITDA well into the
Slide 95: Prudent Management of Financial Exposures
Prudent Management of Financial Exposures Positioned for Rising Interest Rate Environment • Cash flows largely immune to fluctuating interest rates • Long‐term assets funded with long‐term capital • 21‐year average term of debt; 14 years reflecting hybrid first call • Predominantly fixed rate (~90%)
Slide 96: Advancing $36 Billion Secured Capital Program Through 2023
Advancing $36 Billion Secured Capital Program Through 2023 Estimated Invested Expected Commercial Underpinning Project Project Cost* to Date* In‐Service Date* Canadian Mainline 0.2 0.1 2018‐2021 NGTL System 0.6 0.5 2018 2% WB XPress US 0.9 US 0.8 2018 Mountaineer XPress US 3.0 US 2.2 2018 Gulf XPres
Slide 97: Capital Expenditure Outlook 2019-2021
Capital Expenditure Outlook 2019‐2021 $Billions 10.5 Approximately $18 billion* to be 10 invested over the next three years related to: 8 • Secured growth portfolio 6.6 • Maintenance capital 0.2 6.1 6 1.5 0.2 5.3 • ~85% has opportunity to earn a 1.5 0.2 return on and of through 0.5 4 0.2 0.4 0.4 1.5
Slide 98: Funding Program Outlook 2019-2021
Funding Program Outlook 2019‐2021 $Billions 30 Numerous Levers Available to Fund Portfolio Management, Secured Capital Program 2019 DRP & Other 25 Capital Hybrid Securities • Strong, predictable and growing Program Senior Debt, Commercial Paper & Cash cash flow from operations (including 2019 DRP De
Slide 99: Debt Maturity Profile 2019-2021
Debt Maturity Profile 2019‐2021 Debt Maturities in Home Currency $Billions 3 Solid Liquidity and Market Access • ~$10 billion* of committed and undrawn 2 credit lines • Well supported commercial paper programs • Canada – $2.0 billion 1 • U.S. – US$3.5 billion* • Shelf facilities in place which allow
Slide 100: Comparable EBITDA Outlook 2015-2021E
Comparable EBITDA Outlook 2015‐2021E $Billions ~10.0 10 Energy 9 ~9% CAGR 8 Liquids 7.4 7 6.6 Mexico Natural Gas 6.1 Pipelines 6 5.9 5 Q3 U.S. Natural Gas Pipelines 4 3 Q2 2 Canadian Natural Gas Pipelines 1 Q1 0 2015 2016 2017 2018 (9 months) 2021E Realizing Significant Growth Comparable EBITDA is a
Slide 101: Continuing Long Track Record of Dividend Growth
Continuing Long Track Record of Dividend Growth 8‐10% CAGR 2.76 7% CAGR 2.50 2.26 2.08 1.84 1.92 1.68 1.76 1.52 1.60 1.36 1.44 1.22 1.28 1.08 1.16 1.00 0.90 0.80 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19E '20E '21E Supported by Expected Growth in Earnings and Ca
Slide 102: Stability and Longevity of Core Asset Base
Stability and Longevity of Core Asset Base Comparable EBITDA* ($Billions) 10 Uncontracted Liquids Pipelines, Alberta Power & Storage 8 Contracted Power Contracted Liquids Pipelines 6 Contracted Mexico Gas Pipelines 4 U.S. Regulated Gas Pipelines 2 Canadian Regulated Gas Pipelines 0 2015 2020E 2025E
Slide 103: Proven Business Model Through All Points of Business Cycle
Proven Business Model Through All Points of Business Cycle Long‐term Contracted Assets Prudently Funded with Long‐term Capital Platforms that cannot be replicated Internal cash flow and numerous financing levers Simple and understandable corporate structure Value ‘A’ grade credit ratings Predictable
Slide 104: Finance
Finance Don Marchand Executive Vice President and Chief Financial Officer
Slide 105: Closing Remarks
Closing Remarks Russ Girling President and Chief Executive Officer
Slide 106: A Leading North American Energy Infrastructure Company
A Leading North American Energy Infrastructure Company 2000 2018 2000 2018E Total Assets $20 Billion $94 Billion Comparable EBITDA ~$2.5 Billion > $8 Billion Secured Capital Program $0.5 Billion $36 Billion Platforms for Future Growth 1 5
Slide 107: Key Takeaways
Key Takeaways Business Performing Very Well • Record financial results expected in 2018 Diversified Portfolio of Critical Energy Infrastructure Assets • 95% of Comparable EBITDA from regulated assets or long‐term contracts Visible Growth • $36 billion portfolio of secured projects • $20+ billi
Slide 108: Closing Remarks
Closing Remarks Russ Girling President and Chief Executive Officer
Slide 109: Price Earnings Multiple
Price Earnings Multiple 25 TransCanada 20 14.0 15 13.8 10 2000 2006 2012 2018 Source: FactSet Trading at Historically Low Multiple Despite Record Performance
Slide 110: Historic Yields
Historic Yields 6% 5% 4% 3% 2% 2000 2018 TransCanada Dividend Yield 4.7% 5.5% 1% 10‐Year Government of Canada Bond 5.4% 2.5% 10‐Year U.S. Treasury 5.1% 3.2% 0% 2000 2006 2012 2018 TransCanada 10‐Year Government of Canada Bond 10‐Year U.S. Treasury Source: FactSet The Spread Between our Dividend Yiel
Slide 111: Appendix – Reconciliation of Non-GAAP Measures
Appendix – Reconciliation of Non‐GAAP Measures
Slide 112: Appendix – Reconciliation of Non-GAAP Measures
Appendix – Reconciliation of Non‐GAAP Measures (unaudited) (millions of dollars, except per share amounts) Three months Nine months ended September 30 ended September 30 2018 2017 2018 2017 Net Income Attributable to Common Shares 928 612 2,447 2,136 Specific items (net of tax): U.S. Northeast power
Slide 113: Appendix – Reconciliation of Non-GAAP Measures continued
Appendix – Reconciliation of Non‐GAAP Measures continued (unaudited) (millions of dollars) Three months Nine months ended September 30 ended September 30 2018 2017 2018 2017 Comparable EBITDA(1) 2,056 1,667 6,110 5,474 Depreciation and amortization (564) (506) (1,669) (1,532) Comparable EBIT(1) 1,49
Slide 114: Appendix – Reconciliation of Non-GAAP Measures continued
Appendix – Reconciliation of Non‐GAAP Measures continued (unaudited) (millions of dollars) Three months Nine months ended September 30 ended September 30 2018 2017 2018 2017 Net Cash Provided by Operations 1,299 1,185 4,516 3,840 Increase in operating working capital 284 86 130 224 Funds Generated f