corporate profile - keyera · corporate credit ratings: bbb/stable4 net debt/ebitda3: 3.0x5 2019...
TRANSCRIPT
CORPORATE PROFILE
M a y 2 0 1 9
Forward-Looking & Non-GAAP Financial Measures
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. This document also includes financial measures that are not determined in accordance with Generally Accepted Accounting
Principles (“GAAP”). For additional information on non-GAAP measures and forward-looking statements, refer to Keyera’s public filings
available on SEDAR at www.sedar.com and available on the Keyera website at www.keyera.com.
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Keyera at a Glance1
Market capitalization: $7.1 billion2
Enterprise value: $9.6 billion2
LTM Adjusted EBITDA3: $782 million
LTM Payout Ratio3: 62%
Dividend: $1.80/share p.a. ($0.15/share per month)
Dividend yield: 5.4%2
Corporate credit ratings: BBB/Stable4
Net Debt/EBITDA3: 3.0x5
2019 growth capital program: $800-$900 million
Leading Canadian Integrated Midstream Company
3
1. All information as at March 31, 2019, unless otherwise stated. 2. As at May 16, 2019. 3.Adjusted EBITDA, Payout Ratio, and EBITDA are not standard measures under GAAP. See “non-GAAP Financial
Measures” in Keyera’s 2019 First Quarter MD&A for further details. 4. DBRS and S&P. 5. Calculated in accordance with Note Agreements and Covenants.
4
Focused on Generating Long-Term Value
Integrated Business, Difficult to Replicate
Customer Focused, Reliable Operator
Focused on Dividend & Cash Flow Growth (per share basis)
Responsible Stewards of Capital
Dedicated to Financial Strength & Flexibility
5
Our Commitment
Prioritizing our people & safety - Named top Employer in Canada & Alberta
- Zero employee lost-time incidents in 2018
- Committed to Operational Excellence
Improving our environmental performance - Pursuing opportunities to reduce green house gas &
methane emissions
- Full compliance with environmental laws and regulations
Helping our communities - Volunteered >8,200 hours to community causes in 2018
- Strong relationships and partnerships with local residents
& Indigenous communities
- Conducted 80 emergency training sessions in 2018
Doing the right thing, for the right reasons, every time
6
Delivering Rewarding Returns for Investors
8%
Dividend/Share
CAGR1
12%
Distributable Cash
Flow/Share
CAGR2,3
19%
Annual Total
Shareholder Return2,4
1 Compound annual growth rate from 7/15/2003 to 3/31/2019. 2 Compound annual growth rate from 5/30/2003 to 3/31/2019. 3 Not a standard measure under GAAP. 4 Includes reinvestment of dividends.
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Long History of Steady Dividend Growth
7
$-
$0.30
$0.60
$0.90
$1.20
$1.50
$1.80
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Dividend per Share
7% dividend increase declared in 2018
Current dividend: $1.80/share per year ($0.15/share per month)
Business is Highly Integrated & Difficult to Replicate
8
1. Percentage of total realized margin for the last twelve months ended March 31st 2019. Realized margin is defined as operating margin excluding unrealized gains and losses from commodity-related risk
management contracts. Realized margin is not a standard measure under GAAP.
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1. Realized margin is defined as operating margin excluding unrealized gains and losses from commodity-related risk management contracts. Realized margin is not a standard measure under GAAP.
Includes intersegment transactions. This graph excludes other income from production associated with Keyera’s oil and gas reserves. 2. Includes Take-or-Pay, non Take-or-Pay, and area or facility
dedications.
Fee-for-Service Business Continues to Grow
Fee-for-Service Business Has Doubled Over Last 5 Years 9
30%
39%
31%
AEF
Turnaround AEF
Outage
Fee-for-Service2
Marketing Services Enhance Returns
10 Marketing’s 2019 Expected Realized Margin is $280 - $320 million
Utilizes Keyera’s infrastructure to create value − $1 billion of cash flow generated over last five years
− Enhances return from our fee-for-service businesses
− Provides additional source of funding for capital projects
Estimated to deliver base Realized Margin of between $180 and $220 million, annually
Iso-octane business provides a strong foundation − Typically contributes over 50% of Marketing services’ cash flow
− Earns margin by upgrading low-value butane into iso-octane, a premium gasoline additive, at Keyera’s
AEF facility
Condensate marketing & liquids blending also strong contributors
Effective risk management program − Program intended to lock in attractive sales margins and supply costs, and protect the value of
inventory
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$-
$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
Investment Opportunities Continue
$800 Million to $900 Million of Growth Capital Investments in 2019 11
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Approved Projects Capital Cost (Net, in $ Millions)1
2019 2020 2021
Wapiti Gas Plant Complex 1,000
Wapiti Phase I (including Water Disposal System) and NWPS
Wapiti Phase II and Compressor & Gathering System Expansion
Simonette Acid Gas Injection & Inlet Enhancements 100
Simonette Plant Expansion 85
Pipestone Plant (Phase I) 600
Wildhorse Terminal US185
Storage Cavern Development Program at Keyera Fort Saskatchewan 110
KAPS (Key Access Pipeline System)2 650
Sulphur Handling Project2 58
TOTAL ~$2.9 Billion
Growth Projects Currently Under Development
12 Plan to Fund Current Program Without Issuing Common Equity, excl. DRIP
1. Keyera’s share of estimated capital cost. See Keyera’s 2019 First Quarter Report MD&A for capital investment risks and assumptions.
2. Projects expected to be completed in 2022 subject to timely receipt of regulatory approvals and construction schedule variable.
3. Return on Capital is defined as operating margin divided by the estimated capital cost of projects. See “non-GAAP Financial Measures” and “Forward-Looking Statements” in Keyera’s 2019 First Quarter MD&A for further details.
$1.1 Billion Invested as of March 31, 2019
13
Attractive Growth Projects on Track
1. Return on Capital is defined as operating margin divided by estimated cost of capital projects. Keyera expects to achieve this return in 2022 for the projects shown above, except for KAPS which is
expected to achieve this return starting in 2024. See “non-GAAP Financial Measures” and “Forward-Looking Statements” in Keyera’s 2019 First Quarter MD&A for further details.
Capital Program Expected to Achieve 10 to 15% Return on Capital1
KAPS
2022
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Solid Contractual Base
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Adjusted EBITDA from Keyera’s current ~$2.9 billion capital program will be supported by a combination
of fee-for-service, take-or-pay and area dedication agreements
Cash Flow Well Supported by Fee-for-Service Contracts, including ToP
66%
33%
1%
Fee-for-Service
Marketing
Other
2018 Realized Margin1 2018 Fee-for-Service Revenue2
1.Realized Margin is not a standard measure under GAAP. 2. Includes inter-segment transactions. Fee-for-Service Revenue is not a standard measure under GAAP.
37%
63%
Fee-for-SerivceTake-or-Pay
Fee-for-SerivceNon Take-or-Pay
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Low Counterparty Credit Risk
15
Consolidated1,2,3 Credit worthy counterparties – ~82% of Keyera’s 2018 revenue from investment
grade/secured and split rated counterparties
Mitigating credit risk – Letters of credit, netting agreements, pre-payments
Broad domestic & international customer base – Over 125 different fee-for-service customers
1. Based on 2018 revenues. 2. Counterparty ratings are 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-IG93%
1%
7%InvestmentGrade/Secured
Split
Non-IG72%
14%
14% InvestmentGrade/Secured
Split
Non-IG
Keyera Provides Essential Services to Industry
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Gathering and Processing Business Unit
Well maintained, long-life facilities – ~3.1 bcf/d licensed gross capacity1
– 19 active gas plants; 17 operated by Keyera
Extensive gathering systems – Network of gathering pipelines tied into existing gas plants
– >4,000 kilometres of pipelines operated by Keyera
– Large capture areas create franchise regions
Fee-for-service revenues with negligible direct commodity exposure
Network of Facilities Supported by Fee-for-Service Contracts
1. Licensed capacity is not equivalent to actual operating capacity. Actual operating capacity can be lower as it depends on
operating conditions and capabilities of functional units at each plant.
16
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HISTORICAL THROUGHPUT & THE PERCENTAGE CHANGE IN AECO & WTI TO March 31 , 2019 1
Diversified G&P Portfolio Enhances Stability
17
200
400
600
800
1000
1200
1400
1600
-100%
-50%
0%
50%
100%
150%
200%
250%
300%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Gross Plant Throughput (MMcf/d)
% Change in AECO Price Since January 2003
Gas Plant Throughput (MMcf/day) AECO (%) WTI (%)
1.Gross throughput from Keyera Gathering & Processing plants since 2003. Plants acquired after 2003 are presented as if Keyera owned them since 2003 or since start-up of plant. Source: Internal and Alberta
regulatory data.
Developing Significant Position in the Liquids-Rich Montney
Supporting One of the Most Attractive Developments in the WCSB 18
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
Montney Plants Underpinned by Long-Term Agreements
Keyera’s Simonette, Wapiti and Pipestone gas plants will provide 950 mmcf/d of gas processing
capacity & 90,000 bbls/d of condensate handling facilities in 2021.
Take-or-Pay Contracts often combined with Area Dedications 19
KAPS – Montney Condensate and NGL Pipeline System
20 Platform for Future Growth
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KAPS - Montney Condensate and NGL Pipeline System
Strategic Asset Enhancing Keyera’s Integrated Value Chain 21
Highly desired liquids pipeline Supports growing liquids-rich Montney and Duvernay production
in northwestern Alberta Initially connecting to Keyera’s Pipestone, Wapiti and Simonette gas plants along with numerous
third party gas plants
Long-term contracts with significant TOP Initial capacity over 70%1 contracted Multiple long-term agreements, averaging 14 years Contracts include 75% take-or-pay commitments Meaningful commitments from investment grade producers
Strong returns & well positioned to fund Expected to generate return on capital2 of 10-15% starting in 2024 Plan to fund without additional common equity, excluding DRIP
Strategic 50/50 partnership with SemGroup & KKR Two midstream companies with nine gas plants along KAPS route
Significant future growth opportunities Could include gas & condensate processing, NGL infrastructure
and other value-added services
1. Includes volumes from Keyera Marketing 2.Return on Capital is defined as expected annual operating margin divided by estimated capital cost of the project.
22
KAPS Benefits Keyera and Customers
Expected benefits to Keyera
Generates stable, long-term, take-or-pay, fee-for service revenues
Improves the integration of Keyera’s value chain
Creates a platform for numerous future investment opportunities
Provides long-term growth for Keyera
Expected benefits to customers
Provides a competitive transportation alternative
Enhances customer condensate netbacks
Increases the liquids takeaway capacity from the region, ensuring customers can grow their volumes
Liquids Business Unit
Unmatched Infrastructure for NGL and Oil Sands Customers 23
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Keyera Fort Saskatchewan (“KFS”)
Fractionation Unlocks Value from the Gas Stream
Fractionation Services in High Demand in Alberta 24
Keyera Fort Saskatchewan – 65,200 bbls/d of C3+ Fractionation Capacity
– 30,000 bbls/d of C2+ Fractionation Capacity
– Room for expansion
Other fractionation capacity includes – Rimbey, Gilby, Nevis, Dow Fort Saskatchewan
– Total Net Capacity
~90,000 bbls/d of C3+ Fractionation Capacity
~50,000 bbls/d of C2+ Fractionation Capacity
Future growth opportunities – Room for expansion at KFS
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Continuing to Expand Underground Storage at KFS
Capacity of 15 million barrels
Expansion underway – 16th and 17th caverns currently being
washed; expected in-service 1H201 and1H211
– 18th cavern currently being drilled
– Expected net cost of $110 million2 to complete three cavern program, including brine pond expansion
Growing Demand as Customers Value the Flexibility Storage Offers
1 Timing subject to receipt of remaining regulatory approvals and completion of final work to bring into service. 2 Costs subject to construction and schedule variables.
25
Keyera Fort Saskatchewan
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Strong Condensate Fundamentals Benefit Keyera
26 Bitumen Production Growth Driving Condensate Demand
Keyera’s condensate system connected to all major delivery & receipt points, with
significant storage capacity
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 Condensate Shortage
Source: CIBC World Markets Inc.
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Most Connected Condensate Hub in Canada
Major oil sands delivery options such as:
– Polaris, Access, Norlite, Grand Rapids
Multiple supply and receipt points such as:
– Local fractionators and refineries
– Southern Lights and Cochin pipeline from the US
– Western Canada feeder pipelines
– Rail imports at the Alberta Diluent Terminal
Storage at Keyera Fort Saskatchewan
Long-term take-or-pay agreements
– Investment grade & creditworthy counterparties
– Virtually all major oil sands producers including Imperial
Oil, Suncor, Teck, Total, Husky, BP, CNRL, Cenovus,
North West Upgrading, Devon, CNOOC, JACOS
A Well Contracted Industry-Leading Diluent Hub 27
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1. Calculated as of March 31, 2019 in accordance with Keyera’s debt covenants. For further information regarding covenant calculations, please see Keyera’s
2019 First Quarter 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. 3. Midstream Peer Group includes ENB, GEI, IPL, PPL, and TRP. 4. Source
Peters & Co. as of May 6, 2019
LONG-TERM DEBT MATURIT IES 2 (exc ludes d rawings under revo l ve r )
3.0x
Net Debt1 to EBITDA vs Midstream Peer Group3 Average >4.7x4
Conservative Capital Structure
28 Well Positioned to Fund Keyera’s $2.9 Billion Capital Program
Issuer Credit Ratings:
• DBRS Limited: BBB with a Stable trend
• S&P Global: BBB/Stable
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1 Total return includes the reinvestment of dividends paid by Keyera and the TSX between May 30, 2003 and March 31, 2019. 2 Distributable cash flow is not a standard measure under GAAP. See Keyera’s 2018 Year End Report for a definition of distributable cash flow and for a reconciliation of distributable cash flow to its related
GAAP measure. 3 Payout ratio is not a standard measure under GAAP. Payout ratio is defined as dividends declared to shareholders divided by distributable cash flow.
Investment Summary
Providing Growth and Income for Shareholders 29
2 3
1
30
Investment Highlights
Integrated Business that is Difficult to Replicate
Focused on Dividend & Cash Flow Growth, on a Per Share Basis
Responsible Stewards of Capital
Dedicated to Financial Strength & Flexibility
20 Year Track Record of Profitable Operations & Project Execution
Customer Focused, Reliable Operator
31
Appendix - Business & Asset Overview
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Simonette Gas Plant – Record Volumes in 2018
Gas plant expansion − Increasing processing capacity by 150 mmcf/d
− Expanded plant will have 450 mmcf/d of gas processing capacity with 27,000 bbls/d of condensate handling facilities
− Project expected to be completed 4Q191 at an estimated cost of $85 million1
Acid gas injection & other enhancements − Moving to acid gas injection which is the most reliable
and environmentally responsible method to dispose of acid gas, virtually eliminating emissions
− Project expected to be operational in 3Q191 at an estimated cost of $100 million1,2
− Backed by gas handling agreements, including take-or-pay commitments and facility dedications
Future growth opportunities
Ability to connect to Keyera’s Wapiti gas plant
Supporting Liquids-Rich Montney and Duvernay Developments
1 Project costs and timing are subject to construction and commissioning schedules. 2 Includes costs to improve inlet capabilities of the plant as well.
32
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Wapiti Gas Plant Complex – Phase I Complete
Phase I infrastructure includes 150 mmcf/d of sour gas processing capacity
25,000 bbls/d of condensate handling capacity
Water disposal system
Raw gas gathering and field compression system
Acid gas injection, the most reliable and environmentally responsible method to dispose of acid gas, virtually eliminating emissions
Phase I fully contracted Long-term gas handling agreement with Paramount
Includes area dedication and take-or-pay commitments
Phase II expected to be completed mid-20201
Incremental 150 mmcf/d of sour gas processing capacity
Compressor and gas gathering system expansion
Future growth opportunities Ability to connect to Keyera’s Simonette & Pipestone
gas plants
Phase I 100% Contracted Under Long-term Agreements
1 Project timing subject to timely receipt of all regulatory approvals and timely construction schedule variables.
33
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North Wapiti Pipeline System – Increases Capture Area
Extends Wapiti Gas Plant capture area north of Wapiti River
New infrastructure includes 12-inch sour gas gathering pipeline 8-inch condensate and water pipeline Compressor station Expected to be completed in 2H19
Project backed by long-term agreements Long-term take-or-pay obligation for raw gas handling
and processing as well as pipeline transportation Long-term NGL fractionation and marketing services Anchored by Pipestone Energy Corp. (privately backed)
Future growth opportunities Secured volume commitments to support Phase II of the
Wapiti Gas Plant, which is under construction Opportunity to secure additional volumes and fully
contract Phase II as producers increase production north of the Wapiti River
Ability to connect to Keyera’s Pipestone Gas Plant
Keyera Wapiti
Gas Plant
NWPS
Compressor
Station
Grande
Prairie
Wapiti River
Smoky River
North Wapiti
Gathering Pipeline
Producers in the
Pipestone area:
• CNRL
• Encana
• Hammerhead
• Inception
• Iron Bridge
• NuVista
• Paramount
• Pipestone Energy
• Seven Generations
• Shell
• Sinopec
• Velvet
Montney Well
34 Attracting Production Volumes North of the Wapiti River
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Pipestone Gas Plant – Construction on Schedule
Phase I 100% Contracted Under Long-Term Agreements
1 Project timing and cost subject to timely receipt of regulatory approvals, completing engineering and cost estimates, and construction schedule variables. Estimate excludes the cost of the Liquids Hub.
35
Pipestone Liquids
Hub and Plant
Source: Peters & Co.
Strategic partnership with Encana Major gas producer focused on developing the liquids-
rich Montney; contracted 85% of the available capacity Keyera will own the facilities with the option to operate
after five years from plant start up
Construction currently on time & on budget Expected to be completed in 2021 Estimated cost of $600 million1
New infrastructure includes: 200 mmcf/d of sour gas processing capacity 24,000 bbls/d of condensate processing facilities Liquids hub with an additional 14,000 bbls/d of
condensate processing capacity (completed in 2018) Acid gas injection, the most reliable and
environmentally responsible method to dispose of acid gas, virtually eliminating emissions
Project backed by long-term agreements Includes an area dedication and revenue guarantee In May new customer contracted available capacity
with long-term take-or-pay commitment
Future growth opportunities Phase 1 fully contracted; ability to expand gas plant by
additional 200 mmcf/d
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Keylink NGL Gathering Pipeline System
– Connects eight Keyera gas plants to the Rimbey gas
plant for on site fractionation
– Provides a safe, reliable and economically improved
transportation alternative
– Enhanced service offering as Rimbey is pipeline
connected to Keyera’s Edmonton Terminal and Ft.
Saskatchewan fractionation and storage complex
– Completed on time in 2018 for $125 million, $25 million
lower than original forecast
– Capacity of ~22,000 bbls/d1
NGL gathering solution enhancing Keyera’s integrated service offering
An Integrated & Economic NGL Transportation Solution
1 Capacity is estimated based on certain assumptions
36
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New Expected Oil Sands Production
37 Bitumen Production Growth Driving Condensate Demand
Company
Select Projects Sanctioned
and/or Under Construction Capacity (MB/d) Timing
MEG Christina eMSAGP / Brownfield 20 2018-2020
Cenovus Christina Lake Phase G 50 2019-2020
Canadian Natural Kirby North Phase 1 40 2019
Imperial / Exxon Kearl Reliability 20 2020
CNOOC / Nexen Long Lake Southwest Expansion 26 2021
Imperial Aspen Phase 1 75 2022-2023
Total Capacity Additions of Certainty 231
Company Projects with a High Likelihood
Capacity
(MB/d) Timing
Canadian Natural Horizon Debottlenecks (SCO) 40 2020-2023
Suncor Fort Hills Debottleneck 30 2020-2023
Cenovus Foster Creek Phase H 30 2021-2022
Imperial Cold Lake Expansion Project 55 2022-2023
Suncor / CNOOC Meadow Creek East Phase 1 40 2022-2023
Cenovus Narrows Phase A 65 2022-2023
Canadian Natural Kirby Phase 2 (North or South) 40 2022-2023
Cenovus Christina Lake Phase H 50 2022-2023
Canadian Natural Horizon PFT Expansion (Bitumen) 45 2024
Total Capacity Additions of High Likelihood 395 Sourc
e:
Pete
rs &
Co.
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Norlite Pipeline
Provides Additional Stable Long-Term Cash Flows
1 Pipeline capacities are estimated based on certain assumptions.
38
Diluent pipeline supporting Fort Hills oil sand project − 30% joint venture interest, operated by Enbridge
− Project in service in June 2017
Provides stable long-term cash flows − Backed by long-term take-or-pay agreement with owners of Fort
Hills project (Suncor, Total & Teck)
− Creditworthy counterparties
Future growth opportunities Initial capacity of 218,000 bbls/d with potential to expand up to
465,000 bbls/d1
Ability to generate fees in other parts of our condensate system, such as storage, rail and marketing
Since start up, three new shippers have contracted to both Norlite and Keyera’s condensate system
Ability to continue to contract additional volumes
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South Grand Rapids Pipeline
Further Enhancing and Expanding our Condensate Network
1 Pipeline capacities are estimated based on certain assumptions.
39
Diluent pipeline supporting oil sands growth − 50/50 joint venture between Keyera and Grand Rapids
Pipeline LP (ie. TransCanada PipeLines and PetroChina
Canada)
− Operated by Keyera
Enhances Keyera’s condensate network − Provides redundancy and reliability between Keyera’s
Edmonton and Fort Saskatchewan assets
− Provides Keyera with an additional 225,000 bbls/d of net
capacity1 for diluent transportation
− 45-kilometre 20-inch diluent pipeline
Future growth opportunities A portion of the available capacity will be used to meet
commitments under existing customer agreements
Keyera will pursue new diluent transportation business with the remaining capacity available
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Base Line Terminal
Crude oil storage for WCSB Provides customers with optionality & flexibility 50/50 joint venture operated by Kinder Morgan
Fully contracted with 100% take-or-pay contracts Long-term contracts up to 10 years in length
Backstopped by 8 creditworthy customers
New infrastructure includes 12 crude oil storage tanks with 4.8 million barrels of capacity
Located on Keyera’s Alberta EnviroFuels site in Edmonton
Connected to Kinder Morgan’s Edmonton Terminal
Future growth opportunities Potential to additional tanks for total storage capacity of up to
6.6 million barrels, subject to customer demand
Completed in 4Q18 for $315 million1, net to Keyera
Expanding and Diversifying Keyera’s Service Offering
1 Subject to finalization of outstanding costs.
40
Close
proximity
to pipelines
and railroads
Keyera holds
salt rights
beneath
most of these
lands
166 undeveloped acres 1290 undeveloped acres 132 undeveloped acres
Keyera Josephburg Terminal (KJT) Keyera Fort Saskatchewan (KFS)
350 undeveloped acres
Keyera’s Hull Terminal in Texas
Undeveloped Land for Future Growth
Strategic Optionality in the Industrial Heartland of Alberta 41
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Wildhorse Crude Oil Terminal at Cushing, OK
Strategic crude oil storage and blending terminal1
Located at a major liquids hub in the US Extension of Keyera’s liquids handling expertise Provides significant commercial opportunities by blending
lower value products into higher value product streams Backed by fee-for-service take-or-pay storage contracts
ranging from 2 - 6 years in length
New infrastructure includes 12 crude oil storage tanks with 4.5 million barrels of working
storage capacity under construction Terminal will initially be pipeline connected to two existing
storage terminals in Cushing, OK
Expected to be in service in mid-2020 with a net capital cost to Keyera of US$185 million2
Future growth opportunities Complemented by acquisition of Oklahoma Liquids Terminal,
a nearby logistics and diluent blending facility
Subject to customer demand, site allows for additional tanks
Expanding Keyera’s Presence at a Major Liquids Hub
1 90/10 joint venture with an affiliate of Lama Energy Group 2 Cost and timing subject to construction and schedule variables.
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Cushing, OK
Unparalleled
connectivity with
90 mmbls of storage
Wildhorse
Terminal
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Hull Terminal and Pipeline System
Enhancing Keyera’s Access to Mont Belvieu
South pipeline system completed in 2Q18
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Enhancing Keyera’s access to markets
Extension of Keyera’s liquids handling expertise Provides connections to Beaumont and Mont Belvieu,
North America’s largest NGL hub Rail, truck and pipeline terminal handles NGL mix,
propane, butane and iso-butane
Growth opportunities Provides commercial opportunities for Keyera’s
marketing business along with 3rd party fee-for-service opportunities
Agreement with major US midstream company securing storage and other midstream services in Mont Belvieu
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Marketing Services
Utilizing Keyera’s Infrastructure to Create Value 44
C3
Propane
• Demand and pricing vary seasonally
• Keyera uses its storage and logistics to
access markets
• Majority sold into U.S. markets
• Supply exceeds demand in North America
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
• High quality gasoline additive
• Produced from butane at Keyera’s
Alberta EnviroFuels facility
• Majority of sales in the U.S.
C5+ Condensate
• Keyera’s C5+ hub creates industry liquidity
• Consumed in Alberta as diluent for bitumen
• Significant imports required to meet
demand
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Alberta EnviroFuels (AEF)
AEF upgrades low-value butane into a iso-octane
Iso-octane is a high-octane, low vapour gasoline
additive
Demand is driven by premium gasoline demand
Iso-octane trades at a premium to gasoline prices
Seasonality is complementary to propane & butane
Keyera is the only merchant facility in North America
Butane is the feedstock, majority sourced from
Keyera’s facilities
Licensed capacity of 13,600 bbls/d
Financial forward markets enable hedging of large
portion of feedstock costs
45 Iso-octane is a Premium Value-Added Product
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Iso-octane Business and its Margin Components
46 Iso-octane is a High-Value, Niche Business
NOTE: Components are not indicative of their relative size in the margin equation.
Cost
Components
Revenue
Components
Risk Management Hedges
Foreign Exchange
(iC8 sold in USD)
Iso-Octane (iC8)
Premium over RBOB
RBOB Premium over WTI
WTI
Strong demand for iso-octane - 13,600 bbls/d of facility capacity
- Annual peak occurs during summer driving season
Access to low value butane feedstock - Sourced locally and from the US
- Utilize cavern storage assets and pipeline network to
manage volumes and costs
Operational expertise to maximize utilization
Access to continental markets - Leverage Keyera’s rail terminals, storage facilities
and logistical expertise to identify best opportunities
- Sell into regions with the strongest demand across
North America, including the US Gulf Coast and
Midwest to maximize iso-octane premiums
Risk Management Hedges
Periodic Plant Maintenance
Plant Operating Expenses,
Storage & Transportation Costs
~1.4 bbl of C4 per bbl of iC8
Butane (C4) cost is a Fraction
of WTI (priced in USD)
www.keyera.com
Contact Information
Lavonne Zdunich, CPA, CA
Director, Investor Relations & Communications
Calvin Locke, P.Eng, MBA
Manager, Investor Relations
888-699-4853
Keyera Corp. Sun Life Plaza West Tower
200, 144 4 Avenue SW
Calgary, Alberta
T2P 3N4
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