AltaGas Ltd. · TSX:ALA

AltaGas — AltaGas Income Trust — Investor Presentation (June 2004)

38 slides from AltaGas's investor presentation, June 2004

  1. Slide 1: 10 Years of Extraordinary Growth - June 2004 Equity Offering

    ALTAGAS 10 Years of Extraordinary Growth June 2004 Equity Offering

  2. Slide 2: AltaGas Senior Leadership Team

    AltaGas Senior Leadership Team Title At AltaGas Since David Cornhill Chairman and CEO 1994 (inception) Gary Holden President and COO 2003 Patricia Newson SVP Finance and CFO 1996 Dennis Dawson VP General Counsel 1997 and Corporate Secretary Kent Stout VP Corporate Resources 1998 Marilyn Pfaefflin Tr

  3. Slide 3: AltaGas in the News

    AltaGas in the News ƒ Entrepreneur of the Year Award Recipient (Ernst & Young) ƒ 2nd ranked Energy CEO and 30th ranked overall CEO (National Post) ƒ Canada’s Top 100 Employers (MediaCorp) ƒ Top 30 Fastest Growing Companies in Alberta (Alberta Venture Magazine) ƒ 205th by profit in the Top 1000 large

  4. Slide 4: Presentation Agenda

    Presentation Agenda ƒ Introduction ƒ Business Overview ƒ Investment Highlights ƒ Financial Review ƒ Offering Summary 4

  5. Slide 5: AltaGas Income Trust on the TSX

    AltaGas Income Trust on the TSX ƒ AltaGas Income Trust effective May 1, 2004 ƒ Market capitalization almost $1 billion ƒ Started in 1994 with $37,000 of equity ƒ Nearly $1 billion in assets today ƒ Included in indexes May 14, 2004 ƒ S&P/TSX Capped Income Trust Index ƒ S&P/TSX Capped Energy Trust Ind

  6. Slide 6: Investment Highlights

    Investment Highlights ƒ Demonstrated track record of exceptional growth and value creation ƒ Integrated energy business with a diversified portfolio of assets and services ƒ Stable long-term cash flow from essential industry services ƒ Strong industry fundamentals provide attractive growth opportuni

  7. Slide 7: Creating Long-Term Value

    Creating Long-Term Value Total Per Annum Equity Returns SINCE CompoundASE AnnualLISTING (July Growth Rates 1999) Since IPO SINCE Compound JANUARY Annual Growth 2003 Rates Since January 2003 AltaGas 15.2% AltaGas 65.5% Infrastructure Infrastructure Trust Peer 12.2% Trust Peer 14.3% Group Group S&P /

  8. Slide 8: Large Cap Liquid Income Trust

    Large Cap Liquid Income Trust $mm Market Capitalization $2,500 Infrastructure Trusts $2,000 Energy Related Business Trusts $1,500 $1,000 $500 $0 S r as lta n na er o et ge r er lo e C rio a ag lin G M w A y w Sp bi C id Ta lta ew pe Po c Po pe m az br ey hi A Pe Su N G En Pi C lta da K rt r sA a te

  9. Slide 9: Business Overview

    ALTAGAS Business Overview 10 Years of Extraordinary Growth

  10. Slide 10: Midstream Energy Value Chain

    Midstream Energy Value Chain Energy Services Natural Gas Gathering and Processing Distribution Field Gathering and Processing Transmission Extraction ƒ AltaGas creates value by opportunistically linking all components of the midstream energy business 10

  11. Slide 11: Five Major Midstream Businesses

    Five Major Midstream Businesses ƒ FIELD GATHERING NET BOOK VALUE AND PROCESSING At December 31, 2003 BC ALBERTA SASK. ƒ EXTRACTION $ 778.9 million ƒ TRANSMISSION 7% 16% ƒ POWER SERVICES ƒ NATURAL GAS 49% DISTRIBUTION 13% Edmonton Northwest Territories Nova Scotia 15% Calgary Inuvik Halifax 11

  12. Slide 12: Flexible Core Business Line

    Flexible Core Business Line ƒ FIELD GATHERING AND PROCESSING ƒ 69 facilities with 901 mmcf/d of capacity ƒ moveable facilities BC ALBERTA SASK. ƒ 62% capacity utilization ƒ 40% of revenue from take-or-pay and capital and operating recovery contracts ƒ 60% of revenue has geographic franchise and area

  13. Slide 13: Strategically Located Facilities

    Strategically Located Facilities ƒ FIELD GATHERING AND PROCESSING ƒ EXTRACTION ƒ 4 extraction plants with 539 mmcf/d inlet BC ALBERTA SASK. capacity, including Alberta’s newest plant ƒ one field fractionation plant ƒ 9,000 bbls/d production in Q1 2004 ƒ 70% of operating margin based on cost of servi

  14. Slide 14: Long Term Stability

    Long Term Stability ƒ FIELD GATHERING AND PROCESSING ƒ EXTRACTION BC ALBERTA SASK. ƒ TRANSMISSION ƒ 6 transmission pipelines totaling 750 km ƒ 396 mmcf/d volumes ƒ attractive cost-of-service assets ƒ Suffield pipeline backed by long-term transport- or-pay from EnCana Edmonton Suffield Transmission C

  15. Slide 15: Adding Value by Managing Risk

    Adding Value by Managing Risk ƒ FIELD GATHERING AND PROCESSING ƒ EXTRACTION BC ALBERTA SASK. ƒ TRANSMISSION ƒ POWER SERVICES ƒ supply 4% of Alberta’s power capacity ƒ 3,300 MWh sold at $47/MWh in 2003 ƒ predictable cash flows provided by active Edmonton hedging strategies Sundance B Calgary Power Pl

  16. Slide 16: Cost of Service Returns

    Cost of Service Returns ƒ FIELD GATHERING AND PROCESSING ƒ EXTRACTION BC ALBERTA SASK. ƒ TRANSMISSION ƒ POWER SERVICES ƒ NATURAL GAS DISTRIBUTION ƒ 60,000 customers ƒ 6% of Alberta natural gas distribution market Edmonton ƒ regulated cost of service returns Northwest Territories Nova Scotia Calgary

  17. Slide 17: Recent Developments

    Recent Developments ƒ May 26, 2004 – Premstar Energy Canada Ltd. ƒ announced intention to acquire Premstar for $22 million payable by way of 993,789 AltaGas treasury trust units and $1.2 million in cash ƒ one of Canada's leading energy agency businesses, specializing in the procurement and supply of

  18. Slide 18: Comparison to Peer Group

    Comparison to Peer Group Enbridge Fort Inter KeySpan Pembina Taylor Income Chicago Pipeline Facilities Pipelines NGL Fund Field Gathering and Processing 9 9 9 Extraction 9 9 9 Transmission 9 9 9 9 9 9 Gas Services 9 9 Power Services 9 Natural Gas Distribution 9 18

  19. Slide 19: Investment Highlights

    - ‘j Investment Highlights \

  20. Slide 20: Investment Highlights

    Investment Highlights ƒ Demonstrated track record of exceptional growth and value creation ƒ Integrated energy business with a diversified portfolio of assets and services ƒ Stable long-term cash flow from essential industry services ƒ Strong industry fundamentals provide attractive growth opportuni

  21. Slide 21: Exceptional Value Creation

    Exceptional Value Creation ƒ Demonstrated track record of exceptional growth and value creation ƒ Canada’s first publicly traded pure-play midstream energy business ƒ Incorporated in 1994 with an investment of $37,000 ƒ Now one of the largest infrastructure based business trusts in Canada’s energy s

  22. Slide 22: Lower Risk Profile from Integration and Diversification

    Lower Risk Profile from Integration and Diversification ƒ Integrated energy business ƒ Capturing value through all components of the midstream value chain ƒ Diversified portfolio of assets and services provides stability ƒ 5 major businesses • underlying commodities – natural gas, natural gas liquid

  23. Slide 23: Lower Risk Profile from Integration and Diversification

    Lower Risk Profile from Integration and Diversification Cash Flow Horizon 2003 NET BOOK VALUE At December 31, 2003 $ 778.9 million 100 90 Basin Proven 80 Field Gathering Net Book Value (%) Reserve Life 70 Index and Processing 60 50 Power Services 40 Extraction 30 20 Transmission 10 Natural Gas 0 Dis

  24. Slide 24: Stable Long-Term Cash Flows

    Stable Long-Term Cash Flows ƒ Stable long-term cash flow from essential industry services ƒ Gathering and Processing • substantial revenues from take/transport-or-pay and cost recovery contracts • area of mutual interest and life of reserves contracts ƒ Energy Services • managed commodity price expo

  25. Slide 25: Attractive Growth Opportunities

    Attractive Growth Opportunities ƒ Strong industry fundamentals provide attractive growth opportunities ƒ Gathering and Processing • internal growth with low investment combined with accretive acquisitions • strong E&P activity expected in 2004 with 192 wells tied in year to date (107 in 2003) ƒ Ener

  26. Slide 26: Conservative Financial Management

    Conservative Financial Management ƒ Conservative financial management with low ongoing capital requirements ƒ Long term management to maintain strong balance sheet ƒ Debt as a percentage of total capital • targeted range – 45% to 50% • pro forma – 45% ƒ Investment grade credit rating since 1998 ƒ Ma

  27. Slide 27: Financial Overview

    Financial Overview 27

  28. Slide 28: Strength and Diversity

    Strength and Diversity CAPITAL INVESTMENT Approximately ($ millions) $960 million 1000 Energy EnergyServices Services Disciplined growth through successful 800 execution of strategies Natural Natural GasGas Distribution Distribution 600 Transmission Transmission 400 Gathering and Field Gathering Fie

  29. Slide 29: Strength and Diversity

    Strength and Diversity ASSETS EBITDA At December 31, 2003 For the year ended December 31, 2003 $ 919.3 million $ 121.9 million 15% 12% 18% 54% 34% 67% Gathering and Processing Gathering and Processing Energy Services Energy Services Natural Gas Distribution Natural Gas Distribution 29

  30. Slide 30: Financial Stability and Growth

    Financial Stability and Growth FUNDS GENERATED FROM ƒ Exceptional track record OPERATIONS ($ Millions) of profitable growth 105 ƒ Annual growth rates since inception 90 ƒ Assets: 75% 75 57% CAGR ƒ Net revenues: 54% 60 ƒ Funds from operations: 57% 45 ƒ Net income: 49% 30 ƒ Low ongoing capital 15 requ

  31. Slide 31: Excellent Outlook for 2004

    Excellent Outlook for 2004 EBITDA BY QUARTER ƒ Strong performance in ($ Millions) Q1 2004 35 ƒ Q2 normally affected by 30 seasonality 25 ƒ Q2 2004 expected to show 20 year over year growth 15 10 5 0 Q1 Q2 Q3 Q4 2002 24.0 21.1 21.9 27.8 2003 30.7 27.4 29.1 34.7 2004 31.2 31

  32. Slide 32: Conservative Financial Structure

    Conservative Financial Structure ƒ Reaffirmed investment Debt as a Percentage of Total Capital grade rating on medium term notes 60% ƒ S&P: BBB- 50% ƒ DBRS: BBB(low) Target range 40% ƒ Move debt as a proportion 30% of the capital structure down over time 20% ƒ Historical target 50 - 55% 10% ƒ Trust

  33. Slide 33: Income Trust Strategy

    Income Trust Strategy ƒ Pay stable monthly cash distributions to Trust unitholders ƒ Includes both trust units and exchangeable securities ƒ Funded from AltaGas’ existing operations ƒ First monthly distribution is $0.15 per unit to be paid on June 15, 2004 to unitholders of record at the close of bu

  34. Slide 34: Offering Summary

    Offering Summary 34

  35. Slide 35: Comparables

    Comparables Unit Market Enterprise Net Debt2 / Price Cap.1 Value Ent. Val. Dist. Est.3 Yield ($mm) ($mm) % % % Pipeline and Midstream Trusts Pembina Pipeline Income Fund $11.41 $1,142 $1,833 37.7% $1.05 9.2% Inter Pipeline Fund $7.72 $1,066 $1,203 11.3% $0.72 9.3% Fort Chicago Energy Partners L.P. $

  36. Slide 36: Offering Summary

    Offering Summary ƒ Amount: Approximately $75 million (10% over-allotment option) ƒ Issue Price: Context of the market ƒ Use of Proceeds: Reduce bank indebtedness, which may be redrawn and used for general corporate purposes including AltaGas’ ongoing capital program, funding the acquisition of the E

  37. Slide 37: Investment Highlights

    Investment Highlights ƒ Demonstrated track record of exceptional growth and value creation ƒ Integrated energy business with a diversified portfolio of assets and services ƒ Stable long-term cash flow from essential industry services ƒ Strong industry fundamentals provide attractive growth opportuni

  38. Slide 38: 10 Years of Extraordinary Growth - June 2004 Equity Offering

    ALTAGAS 10 Years of Extraordinary Growth June 2004 Equity Offering

AltaGas Income Trust — Investor Presentation (June 2004) on 6ix