cibc fixed income conference - keyera · financial measure” and “forward-looking statements”...

CIBC Fixed Income Conference

A p r i l 1 0 , 2 0 1 9

Disclaimer

2

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 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-octane; 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.

Keyera Representatives

3

Steven Kroeker

• Senior Vice President & Chief Financial Officer

Eileen Marikar

• Vice President, Finance

Avery Reiter

• Director, Treasury

KFS Frac and Storage

Image input resolution: minimum 1510 x 835 pixels @ 96 ppi

Keyera at a Glance1

4 One of Canada’s largest midstream companies

1. All information as at December 31, 2018, unless otherwise stated.

2. As at March 31, 2019.

3. DBRS and S&P.

Key Metrics

Market Capitalization2 ~$6.6 billion

Enterprise Value2 ~$8.8 billion

2018 Adjusted EBITDA $807 million

2018 Payout Ratio 56%

Dividend $1.80/share p.a. ($0.15/share per month)

Dividend Yield2 ~5.71%

Corporate Credit Ratings3 BBB/Stable

Net Debt/EBITDA 2.6x

2019 Growth Capital Program $800-$900 million


2018 Record Year even in a Challenging Environment

5

Record volumes • Simonette Gas Plant

• Ft Saskatchewan Fractionator

• Condensate system

• Marketing services

Invested ~$1.3B in 2018

Record Financial Performance Operational Milestones

1. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization, accretion, impairment expenses, unrealized gains/losses and any other non-cash items such as

gains/losses on the disposal of property, plant and equipment.

2. See section of the MD&A in Keyera’s 2018 Year End Report titled “EBITDA” for a reconciliation of Adjusted EBITDA and “Divdends: Distributable Cash Flow” for a reconciliation of distributable cash

flow respectively, for their most closely related GAAP measures.

$617

$807

2017 2018

Adjusted EBITDA1,2

($ Millions)

$2.70

$3.08

2017 2018

Distributable Cash Flow2

($ per share)

$290

$394

2017 2018

Net Earnings ($ Millions)

Integrated Value Chain

6

1. Percentage of total realized margin for the year ended December 31st 2018 (2017 - 80%). Realized margin is defined as operating margin excluding unrealized gains and losses from risk management

contracts from the Marketing segment. Realized margin is not a standard measure under GAAP.

Realized Margin by Segment

7

* All figures represent last twelve month results as of December 31.

1. Includes intersegment transactions.

2. “Other” includes production segment.

• Keyera’s Gathering and Processing and

Liquids Infrastructure businesses are

predominately fee-for-service

• Marketing segment had an excellent

2018, resulting in a lower fee-for-

service proportion of realized margin

• Keyera’s Marketing business is backed

by ownership in assets

Realized Margin ($ millions)

2016 2017 2018

Fee-for-Service Segments1 $536 $556 $598

Marketing $137 $128 $296

Other2 $11 $14 $13

Total $684 $698 $907

Segment Realized Margin as a % of Total Realized Margin

2016 2017 2018

Fee-for-Service Segments1 78% 80% 66%

Marketing 20% 18% 33%

Other2 2% 2% 1%

Total 100% 100% 100%


Solid Contractual Foundation

8

• Keyera’s current cash flows are well supported by fee-for-service contracts, including take-or-pay

contracts

• Adjusted EBITDA from Keyera’s current ~$2.1 billion capital program will be supported by a

combination of fee-for-service, take-or-pay and area dedication agreements

66%

33%

1%

2018 Realized Margin

Fee-for-Service

Marketing

Other

43%

57%

Take-or-Pay Revenue as a % of 2018 Adjusted EBITDA

Take-or-Pay

Non Take-or-Pay


Low Counterparty Credit Risk

9

Consolidated1,2,3

• Keyera provides essential

infrastructure and marketing services

to industry

• ~82% of Keyera’s total revenue in

2018 came from investment

grade/secured or split rated

counterparties

• Credit risk management strategies

include: letters of credit, netting

agreements, pre-payments

• Broad domestic and international

customer base

1. Based on 2018 revenues.

2. Counterparty ratings are representative of the counterparties’ rating as of March 15th, 2019. Where parental guarantees are in place, the credit rating of the parent is used. The secured category

includes counterparties who are on prepay terms or have posted a letter of credit.

3. Split denotes counterparties with an investment grade rating by one rating agency and non-investment grade rating by another agency.

Gathering and Processing

Liquids Infrastructure Marketing

69%

13%

18% InvestmentGrade/Secured

Split

Non-IG

30%

11%59%

InvestmentGrade/Secured

Split

Non-IG

93%

1%

7%InvestmentGrade/Secured

Split

Non-IG72%

14%

14% InvestmentGrade/Secured

Split

Non-IG


$-

$200

$400

$600

$800

$1,000

$1,200

$1,400

12/31/13 12/31/14 12/31/15 12/31/16 12/31/17 12/31/18 12/31/19e

Millions ANNUAL CAPITAL EXPENDITURES

Growth Capital Upper End of Growth Capital Range Acquisitions Maintenance Capital

1. Acquisition capital in 2017 reflects the $55 million purchase price for undeveloped land in the Industrial Heartland of Alberta completed in 1Q17, among other actual YTD costs.

2. Keyera’s 50% acquisition of the South Grand Rapids pipeline is included in 2018 Acquisitions.

Investment Opportunities Continue

$800 – $900 Million of Growth Capital Investment in 2019 10

1 2


Approved Projects Capital Cost (Net, in $ Millions)1

2018 2019 2020

Wapiti Area Gathering & Processing Complex (Phase I) 575

Wapiti Gas Plant (Phase II) & North Wapiti Pipeline System 325

Wapiti Water Disposal System 100

Simonette Inlet & Acid Gas Injection Enhancements 100

Simonette Plant Expansion 85

Pipestone Plant (Phase I) 2 600

Wildhorse Terminal US185

Storage Cavern Development Program at Keyera Fort Saskatchewan 110

TOTAL ~$2.1 Billion

Growth Projects Currently Under Development

11 $2.1B Program expected to achieve 10-15% return on capital3

1. Keyera’s share of estimated capital cost. See Keyera’s 2018 Year End MD&A for capital investment risks and assumptions. 2. Pipestone plant expected to start up in 2021. 3. Return on Capital is defined

as operating margin divided by the estimated capital cost of the projects noted on this slide. Keyera expects to achieve this return, in 2022 once all projects achieve their annual run rate. See “non-GAAP

Financial Measure” and “Forward-Looking Statements” in Keyera’s 2018 Year End MD&A for further details.


Gathering and Processing Business Unit

12

Wapiti

Plant

Growing Presence in Liquids-Rich Area of NW Alberta

Supporting Producer Growth Plans in Liquids-Rich Developments 13

Gross Sour Gas Processing Capacity (Year End) Condensate Handling Capacity (Year End)

300 300

450 450 450

150

300 300

200

0

100

200

300

400

500

600

700

800

900

1000

2017 2018 2019 2020 2021

mm

cf/

d

Simonette Wapiti Pipestone

10,000

27,000 27,000 27,000 27,000

25,000 25,000 25,000

14,000

14,000 14,000

38,000

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

2017 2018 2019 2020 2021

bb

ls/d

Simonette Wapiti Pipestone

950

mmcf/d 90,000

b/d


HISTORICAL THROUGHPUT & THE PERCENTAGE CHANGE IN AECO & WTI TO December 31 , 2018

Relatively Stable Throughput

14

Liquids Business Unit

Unmatched Infrastructure for NGL and Oil Sands Customers 15


Keyera Fort Saskatchewan

Gilby Gas Plant

3,650 bbls/d gross (2,930 bbls/d net) of C3+ fractionation capacity

Nevis Gas Plant

3,740 bbls/d of C3+ fractionation capacity

Rimbey Gas Plant


20,000 bbls/d gross (19,740 bbls/d net) of de-ethanization capacity



Dow Fort Saskatchewan



Fractionation at Multiple Locations

Adding Value by Processing NGLs from the Gas Stream 16


Oil Sands Production Continues to Grow

17 Bitumen Production Growth Driving Condensate Demand

Diluent Demand > Condensate Supply

0

500

1,000

1,500

2,000

2,500

3,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

MB

bl/d

Actual CIBC World Markets Forecast

0

100

200

300

400

500

600

700

800

900

1,000

2018A 2019E 2020E 2021E 2022E 2023E 2024E 2025E

MB

bl/

d

WCSB Supply Forecast Demand

Bitumen Production Growing

Source: Estimates as per CIBC World Markets.


Extensive, Flexible Condensate Infrastructure

• Most connected condensate hub in Western Canada

• Major oil sands delivery options:

• Supply through multiple receipt points:

• Local fractionators and refineries

• Kinder Morgan Cochin pipeline

• Enbridge Southern Lights pipeline and CRW pool

• Western Canada feeder pipelines

• Canadian Diluent Hub

• Rail imports at the Alberta Diluent Terminal

• Storage at Keyera Fort Saskatchewan

• Long-term take-or-pay and fee-for-service agreements:

Industry-Leading Diluent Handling Services 18

– Polaris

– Norlite

– Access

– FSPL

– Grand Rapids

– South Cheecham

– Imperial Oil (Kearl)

– Husky/BP (Sunrise)

– Suncor/Teck/Total (Fort Hills)

– North West Upgrading

– Cenovus (Christina Lake)

– CNRL (Kirby, Primrose)

– JACOS/Nexen (Hangingstone)

– Devon (Jackfish)


Crude Oil Storage

Expanding and Diversifying Keyera’s Service Offering 19

Wildhorse

Terminal

Baseline

Tank

Terminal


Marketing Services

Diversified Portfolio of Logistics Services 20

C3

Propane

• Supply exceeds demand in North America

• Majority sold into U.S. markets

• Demand and pricing vary seasonally

• Keyera uses its storage and logistics to

access markets

C2 Ethane

• Sold under long-term agreements to

petrochemical producers in Alberta

• Limited spot market in western Canada

• Produced at three Keyera facilities

C4

Butane

• Sourced and consumed in Alberta

• Feedstock for iso-octane production at

Alberta EnviroFuels

• Seasonal imports from the U.S.

iC8

Iso-octane

• Majority of sales in the U.S.

• High quality gasoline additive

• Produced from butane at Keyera’s

Alberta EnviroFuels facility

C5+ Condensate

• Keyera’s C5+ hub creates industry liquidity

• Consumed in Alberta as diluent for bitumen

• Significant imports required today to meet

demand

• Facilities based marketing

• Prudent risk-management hedging strategy


Alberta EnviroFuels (AEF)

• Iso-octane (iC8) is a high octane, low vapour pressure gasoline additive

• Butane is the NGL feedstock

• Only merchant iC8 facility in North America

• Licensed capacity of 13,600 bbls/d

• Supply networks and distribution infrastructure used to source feedstock while rail logistics broaden sales markets

• Financial forward markets enable hedging of feedstock costs and large portion of iC8 margin

• iC8 demand driven by premium gasoline demand

• Seasonality is complementary to propane and butane

21 iC8 is a Premium Value-Added Product Produced in Alberta


1. Calculated as of December 31, 2018 in accordance with Keyera’s debt covenants. For further information regarding covenant calculations, please see

Keyera’s 2018 Year End Report MD&A or copies of the note purchase agreements, all of which are filed on SEDAR.

2. All US dollar denominated debt is translated into Canadian dollars at its swap rate. 2019 maturities as of February 1, 2019.

LONG-TERM DEBT MATURIT IES 2 (exc ludes d rawings under revo l ve r )

2.6x

Net Debt1 to EBITDA

Conservative Capital Structure

22 Well Positioned to Fund Keyera’s $2.1 Billion Capital Program

Issuer Credit Ratings:

• DBRS Limited: BBB with a Stable trend

• S&P Global: BBB/Stable

cibc fixed income conference - keyera · financial measure” and “forward-looking statements”...

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