TC Energy Corporation · TSX:TRP
TC Energy — TD Securities Energy Virtual Conference 2020
45 slides from TC Energy's conference presentation, June 2020
Slide 1: Corporate Profile
Corporate Profile ¢ June 2020
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: A leading North American energy infrastructure company
A leading North American energy infrastructure company • Proven strategy with a low-risk business model • Delivered 13% average annual total shareholder return since 2000 • Generated strong first quarter 2020 financial results • Asset footprint provides multiple platforms for growth • Five operating
Slide 4: TC Energy today
TC Energy today • One of North America’s largest natural gas pipeline networks • 93,300 km (57,900 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%
Slide 5: First Quarter 2020 accomplishments
First Quarter 2020 accomplishments Continued to reliably deliver essential energy services across North America during this unprecedented time • Business continuity plans implemented with a focus on the health and safety of our employees, contractors and the communities where we work in light of the
Slide 6: Financial highlights – Three months ended March 31 (Non-GAAP)
Financial highlights – Three months ended March 31 (Non-GAAP) Comparable Comparable Comparable funds earnings per common share* EBITDA* generated from operations* (Dollars) ($Millions) ($Millions) 10% increase 6% increase 17% increase *Comparable earnings per common share, comparable EBITDA and comp
Slide 7: Asset footprint provides a strong competitive advantage
Asset footprint provides a strong competitive advantage NGTL System is uniquely Canadian Mainline is a critical positioned over 1,383 Tcf of conduit to eastern markets WCSB natural gas resources Bruce Power generates ~30% of Ontario’s power Keystone corridors provide a direct link to continent’s lar
Slide 8: Line of sight to over $50 billion of growth opportunities
Line of sight to over $50 billion of growth opportunities Natural Gas Pipelines Liquids Pipelines Power and Storage • NGTL expansions • Keystone XL • Bruce Power Life Extension • Columbia expansions • Grand Rapids Phase II • Other growth in contracted power • Coastal GasLink • Heartland Pipeline and
Slide 9: Advancing $43 billion secured capital program through 2023
Advancing $43 billion secured capital program through 2023 ~$6 billion of projects expected to be completed in 2020 * Billions of dollars. Certain projects are subject to various conditions including corporate and regulatory approvals. ** Represents 100 per cent of Coastal GasLink required capital *
Slide 10: Secured growth program very high-quality and long duration
Secured growth program very high-quality and long duration Average contract term (years) $2.4 billion Regulated Rate Bases $6.6 US$1.7 billion billion US$1.5 (100%) US$9.1 billion billion $9.8 billion NGTL System and U.S. Natural Gas Coastal GasLink Mexico Natural Keystone XL Bruce Power Canadian Ma
Slide 11: Comparable EBITDA outlook 2015-2022E
Comparable EBITDA* outlook 2015-2022E $Billions 10+ 9.4 Power and Storage 2023+ Power and Storage Normalizing items Liquids Pipelines • Coastal GasLink • Asset sales Mexico Natural Gas Pipelines • NGTL System 2023 Liquids Pipelines • Bruce Power Unit 6 • Bruce Power Unit 6 5.9 • Volumetric and Mexic
Slide 12: Dividend growth outlook
Dividend growth outlook 5-7% Expected organic growth per year 8-10% 2021+ CAGR 3.24* • $43 billion secured growth program • $10+ billion development portfolio 7% CAGR • Alberta liquids 2.08 • Future Bruce refurbishments • Further “in-corridor” expansions • Growth rate will depend on project mix, cad
Slide 13: Funding program continued to advance in early 2020
Funding program continued to advance in early 2020 Strong, predictable and growing cash flow from operations • Comparable funds generated from operations of $2.1 billion in the first quarter, 17 per cent higher than last year Accessed capital markets on compelling terms in April • $2.0 billion of 7-
Slide 14: 2020 Funding program
2020 Funding program $Billions $7+ billion of expected funds generated from operations • ~95% of comparable EBITDA from regulated assets and/or long-term contracts $10+ billion raised through an array of attractive funding levers • $2.0 and US$1.25 billion of medium term notes and senior unsecured n
Slide 15: Unparalleled footprint is a competitive advantage
Unparalleled footprint is a competitive advantage High-quality asset footprint cannot be replicated • 93,300 km (57,900 mi) of natural gas pipelines • 653 Bcf of storage capacity WCSB Access to abundant, cost-competitive supply • Assets on top of two of the most prolific, low-cost basins in North Am
Slide 16: Abundant, low-cost supply
Abundant, low-cost supply WCSB 2007 - 165 Tcf • North American resource estimate has 2019 - 1,383 Tcf grown by approximately 300% since 2007 • Over 100 years of recoverable supply Rockies / San Juan • WCSB and Appalachia are the fastest- 2007 - 354 Tcf 2019 - 631 Tcf Appalachia 2007 - 95 Tcf growing
Slide 17: Capital expansion program adding egress options for WCSB gas
Capital expansion program adding egress options for WCSB gas NGTL Coastal $9.4 billion GasLink Maintenance capital +2.1 Bcf/d ~$0.6 billion/year $6.6 billion* Intra Basin +1.7 Bcf/d West Path Canadian +0.5 Bcf/d Mainline +0.6 Bcf/d East Gate $0.4 billion +1.3 Bcf/d $16 billion capital program provid
Slide 18: NGTL capital program continues to add delivery capacity
NGTL capital program continues to add delivery capacity $9.4-billion capital program through 2023 supported by long-term firm receipt and delivery contracts Adds 3.5 Bcf/d of incremental delivery capacity to market • Intra-Alberta delivery capacity to increase by 1.7 Bcf/d ~1.7 Bcf/d • Export capaci
Slide 19: Coastal GasLink – Expanding WCSB access to market
Coastal GasLink – Expanding WCSB access to market • $6.6 billion capital cost • Initial capacity of 2.1 Bcf/d expandable to 5 Bcf/d • Fully permitted • Signed Project Agreements with 20 First Nations along the right of way • Construction underway, $1.9 billion invested through first quarter 2020 • C
Slide 20: Canadian Mainline - Critical conduit to eastern markets
Canadian Mainline - Critical conduit to eastern markets • Enabling competitive access for WCSB production to North American markets • Advancing $400 million capital expansion • Canadian Energy Regulator recently approved long-term toll settlement with customers: • Encompasses a six-year term (2021-2
Slide 21: U.S. Natural Gas Pipelines system overview
U.S. Natural Gas Pipelines system overview Broad national network • ~32,700 miles (52,600 km) of FERC-regulated pipelines with operations across 40 states • 535 Bcf of regulated storage • Serves ~25% of U.S. natural gas demand Diversified assets with strong base in advantaged basins • Best in class
Slide 22: Pipelines experiencing record demand
Pipelines experiencing record demand Pipeline* Contracted Capacity GTN 100% Northern Border 100% Millennium 100% Columbia Gulf 100% Portland 100% North Baja 100% ANR 100% Tuscarora 100% Columbia Gas 93% Iroquois 83% Great Lakes 52% Bison 37% 93% of revenues from long-term, take-or-pay contracts Cros
Slide 23: Sustainable value driven by new growth projects
Sustainable value driven by new growth projects Capacity Capital Cost Projects Supply / Demand (Bcf/d) (US$Millions) Projects in-service since 2016 7.7 7,860 Buckeye XPress Supply 0.3 195 Westbrook XPress(1) Demand 0.1 125 Grand Chenier XPress Demand 1.1 225 Louisiana XPress Demand 0.8 385 East Late
Slide 24: Accessing global demand via LNG exports
Accessing global demand via LNG exports LNG Facilities supplied by TC Energy: Operational LNG Facility LNG Facility under construction LNG Facility under development (FID pending) E Our U.S. pipelines provide supply to five existing and three planned LNG export facilities Source: TC Energy
Slide 25: Mexico – solid position and growing
Mexico – solid position and growing • Five revenue-generating pipelines • Tamazunchale Guadalajara l • Mazatlán Topolobampo l • Sur de Texas • Villa de Reyes expected to enter service in 2020 • Tula expected to enter service two years after successful Indigenous consultations • Portfolio value incre
Slide 26: Mexico – growth potential
Mexico – growth potential Short-term growth • Increasing capacity through efficient expansions • Connecting new demand centres through extensions • Central: Abundant U.S. gas enabling industrial and power generation fuel switching • Northwest: Only pipeline system in the region • Ancillary services
Slide 27: Liquids Pipelines – connecting North American supply to markets
Liquids Pipelines – connecting North American supply to markets Keystone Pipeline System • Transports ~20% of Western Canadian crude oil exports • Delivers U.S. production to market • Market access to ~6 million Bbl/d of refining capacity Intra-Alberta pipelines • Crude oil pipeline gathering and di
Slide 28: Strong demand for Canadian crude oil in key refining markets
Strong demand for Canadian crude oil in key refining markets U.S. Heavy Crude Oil Imports in Key Markets • Significant opportunity for Canadian heavy crude in USGC and other markets • Declining Latin American production • Oil sands responsible, sustainable and globally cost competitive • Value of TC
Slide 29: Keystone XL
Keystone XL Announced decision to build pipeline on March 31 • Underpinned by new 20-year contracts for 575,000 bbl/d that are expected to generate incremental EBITDA of ~US$1.3 billion annually • Additional investment of ~US$8.0 billion funded through: • US$1.1 billion Government of Alberta equity
Slide 30: Power and Storage asset overview
Power and Storage asset overview Power • 7 power plants, approximately 4,200 MW • Portfolio of low-cost, low-emission, baseload generation • Underpinned by long-term contracts Storage • Alberta non-regulated natural gas storage facilities • 118 Bcf of capacity • Approximately one-third of the provin
Slide 31: Bruce Power overview
Bruce Power overview • 6,400 MW or ~30% of Ontario’s needs • 48.4% ownership interest • Power sales contracted with Ontario IESO through 2064 • Ontario Power Generation responsible for spent fuel and decommissioning liabilities • 2017 to 2019 was the highest power production output period in facilit
Slide 32: Bruce Power Life Extension Program
Bruce Power Life Extension Program • Major Component Replacement (MCR) and Asset Management (AM) continues to progress • Unit 6 MCR commenced on January 17, 2020 • Force Majeure declared on Unit 6 MCR and certain AM work as a result of COVID-19 restrictions • Operations and core planned outage activ
Slide 33: Financial principles
Financial principles Adherence to Long-term view grounded in established, conservative risk Simple model and fundamentals preferences corporate structure Footprint is irreplaceable Assets are resilient and earn Business is understandable appropriate returns Capital allocation balances Financial stre
Slide 34: Diversified portfolio of critical energy infrastructure
Diversified portfolio of critical energy infrastructure 2019 Comparable EBITDA* Multiple business lines ▪ Foreign Exchange • EBITDA ~60% USD and ~40% CAD • Significant U.S. dollar debt and associated interest serve as natural hedge • Residual exposure actively managed one-year forward ▪ Interest Rat
Slide 35: Proven capital allocation framework delivers results
Proven capital allocation framework delivers results ~40% Critical energy infrastructure assets generate stable, long-term cash flow streams ~60% Growing dividends Disciplined investment in supported by strong complementary low-risk assets earnings and cash flow coverage ratios Produced double-digit
Slide 36: Invested ~$100 billion in three core businesses since 2000
Invested ~$100 billion in three core businesses since 2000 2000: ~$25 billion total assets 2019: ~$100 billion total assets *Comparable EBITDA is a non-GAAP measure. See the forward looking information and non-GAAP measures slide at the front of this presentation for more information.
Slide 37: Investment has created significant value
Investment has created significant value Dollars Dollars 7% 6% CAGR CAGR Substantial growth in earnings and cash flow per share *Comparable earnings per common share and comparable funds generated from operations per common share are non-GAAP measures. See the forward looking information and non-GAA
Slide 38: Low-risk business model has consistently produced results
Low-risk business model has consistently produced results Dollars MLP Oil Supported by distress price collapse ✓ Strong business fundamentals Shale ✓ Regulated assets Financial crisis revolution ✓ Long-term contracts IPP downfall ✓ Interest rate/inflation protection ✓ Limited commodity exposure ✓ Cr
Slide 39: Twenty consecutive years of common share dividend increases
Twenty consecutive years of common share dividend increases 7% CAGR Supported by growth in earnings and cash flow and strong coverage ratios *Annual rate based on second quarter dividend declared of $0.81 per share
Slide 40: Performance has resulted in significant share price appreciation
Performance has resulted in significant share price appreciation Dollars Common share price - TSX 13% average annual total shareholder return since 2000 Source: FactSet data from January 1, 2000 to May 29, 2020
Slide 41: Environmental, Social and Governance commitment
E S G Environmental, Social and Governance commitment Safety and reliability are critical priorities • Operating objectives, targets and results • Zero is real Long history of working collaboratively with stakeholders • Customers, landowners, Indigenous groups, governments, regulators and local comm
Slide 42: Delivering the energy people need, every day
E S G Delivering the energy people need, every day Investing over $1 billion annually in pipeline integrity Monitoring pipelines 24 hours a day from control centres Conducting over 100 emergency response training exercises each year Working with approximately 100,000 landowners Engaging with more th
Slide 43: Corporate Profile
Corporate Profile ¢ June 2020
Slide 44: Appendix – Reconciliation of non-GAAP measures
Appendix – Reconciliation of non-GAAP measures (millions of dollars) Three months ended March 31 2020 2019 Comparable EBITDA(1) 2,535 2,383 Depreciation and amortization (630) (608) Interest expense (578) (586) Allowance for funds used during construction 82 139 Interest income and other included in
Slide 45: Appendix – Reconciliation of non-GAAP measures continued
Appendix – Reconciliation of non-GAAP measures continued (millions of dollars) Three months ended March 31 2020 2019 Net Cash Provided By Operations 1,723 1,949 Increase/(Decrease) in operating working capital 371 (142) Funds Generated From Operations(1) 2,094 1,807 Specific items: U.S. Northeast po
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