Jefferies 2013 Global Energy Conference

Transcription

1 Jefferies 2013 Global Energy Conference Phil Kramer Executive Vice President November 12, 2013

2 Forward-Looking Statements & Non-GAAP Financial Measures Disclosure This presentation contains forward-looking statements, including, in particular, statements about the plans, strategies and prospects of Plains All American Pipeline, L.P. ( PAA ) and Plains GP Holdings, L.P. ( PAGP ). These forward-looking statements are based on PAA s current assumptions, expectations and projections about future events as of the date of our most recent guidance furnished on November 4, 2013, unless otherwise noted. Although PAA and PAGP believe that the expectations reflected in these forward-looking statements are reasonable, they can give no assurance that these expectations will prove to be correct or that synergies or other benefits anticipated in the forward-looking statements will be achieved. Important factors, some of which may be beyond PAA s or PAGP s control, that could cause actual results to differ materially from management s expectations are disclosed in PAA s and PAGP s respective filings with the Securities and Exchange Commission. This presentation also contains non-gaap financial measures relating to PAA. A reconciliation of these measures to the most directly comparable GAAP measures is available in the appendix to this presentation. For additional detail regarding selected items impacting comparability, please visit the Investor Relations section of PAA s website at -2-

3 Brief History of PAA / PAGP Formed as a sub of publicly traded Exploration & Production company in the early 1990s to market its oil and gas production (Plains Resources -- PLX) Expanded footprint to market 3 rd party production and narrowed focus to crude oil in 1993 Completed construction of the Cushing Terminal in 1994 with an initial investment of ~$30 million Acquired the All American Pipeline in July 1998 PAA IPO November 17, 1998 Significant acquisitions and organic growth since PAA IPO PAGP IPO October 16, 2013 PAA Market Capitalization at IPO: ~$600 million PAA / PAGP Market Capitalization Currently: $32.1 billion Adjusted EBITDA Growth ($MM) $2,107 $2,242 $1,598 Less than $10MM per year $34 $87 $108 $110 $130 $169 $252 $408 $511 $779 $887 $1,022 $1, (G) Note: Adjusted EBITDA excludes the impact of selected items impacting comparability. See website for reconciliation of EBITDA ( to comparable Non-GAAP measures. 2013(G) based on guidance furnished in Form 8-K on November 4, 2013.

4 Plains All American Structure Two Ways to Invest (NYSE: PAA & PAGP) Structured as a limited partnership, but has checked the box to be taxed as a C-Corp. (Investor Receives 1099) Lower initial yield (~2.7%), higher growth (~20%+) Public Investors Plains GP Holdings (NYSE: PAGP) 20.4% economic interest Receive all economic rights Plains AAP, L.P. (AAP) 100% of GP + IDRs Voting rights General Partner Owners Occidental Petroleum 23% Public Investors (via Up-C Structure) 20% Kayne Anderson (et al.) 20% EMG (et. al.) 20% Management 10% Others 7% Direct AAP Owners AAP Management Units Master Limited Partnership (MLP) (Investor Receives K-1) Lower initial yield (~4.7%), higher growth (~10%+) Plains All American Pipeline, L.P. (NYSE: PAA) Operating Subsidiaries & Assets Public PAA Investors

5 Plains All American Current Profile Two Large Cap Companies (NYSE: PAA & PAGP) Financial Profile (1) Total Enterprise Value $39.6 B PAA Equity Market Cap $17.6 B PAGP Equity Market Cap $14.5 B Total LT Debt $7.5 B Current PAA Yield ~4.7% Current PAGP Yield ~2.7% PAA Total Assets $21.4 B PAA S&P / Moody s Ratings BBB / Baa2 PAA Public Guidance Mid-point 2013 Adjusted EBITDA (2) $2,242 MM 2013 Adj. Net Income (2) $1,431 MM Pipelines (active miles) (4) Liquids Storage (4) Natural Gas Storage Fractionation Facilities (5) Natural Gas Processing (6) Crude & NGL Rail Facilities 23 18,000 miles >115 MMBbls 93 Bcf 210,000 Bbl/d 7.5 Bcf/d Crude & NGL Railcars (7) 5,400 Truck Fleet Barge Fleet Crude, Product & NGL Volumes: PAA Assets (3) 1,500 Trailers 800 Trucks 100 Barges 50 Tugs >3.5 MMBbl/d (1) As applicable, based on balance sheet data as of 9/30/13 and 10/31/13 closing unit price. (2) Adjusted EBITDA and Adjusted Net Income Attributable to Plains, which has been abbreviated as Adj. Net Income, are the mid-point of PAA s public guidance furnished via form 8-K on 11/4/13 and exclude selected items impacting comparability. (3) Assets as of 12/31/12. All amounts are approximate. (4) Pipeline mileage and storage capacity has been adjusted for the sale/expected sale of refined products pipelines and related storage announced on 2/22/13. (5) Amount represents gross capacity. (6) Amount represents net capacity. Natural gas processing capacity also includes approximately 2.5 Bcf per day for a long-term liquid supply contract. (7) Net of railcars subleased to other parties -5-

6 PAA is One of the Largest Crude Oil Infrastructure Providers in North America (1) Assets as of 12/31/

7 PAA s Activities Are Conducted on Four Product Platforms Crude Oil is the Largest by Far Areas of involvement reflected in Yellow Crude Oil (Leased) Natural Gas Liquids Refined Products Natural Gas Storage (PNG) Refineries Gas Stations Barge Storage Common Carrier Pipelines Tanker -7-

8 PAA Has Three Reporting Segments Each Underpinned by Substantial Assets Reporting Segments(1) Supply & Logistics (Margin Based -- includes fee-based equivalent + upside) 800 Trucks, 925 Trailers 5,400 Railcars (2) 16 MMBbls of Linefill & Long-Term Inventory Facilities (Fee Based) 1,400 miles of Pipelines; 95 MMBbls Storage (3) 93 Bcf Nat Gas Storage 23 Crude & NGL Rail Facilities 7 Fractionation Plants; 1 Isomerization Unit 11 Processing Plants Transportation (Fee Based) 16,600 miles of Pipelines 20 MMBbls Storage Capacity 580 Trailers 100 Barges (4) 50 Tugs (4) Adjusted Segment Profit (5) (G) Preliminary 2014(G) Transportation Facilities Supply & Logistics Strong Fee-Based Cash Flow (6) ~25% Margin- Based (Includes feeequivalent) ~75% Fee- Based Anticipate fee-based contribution to approach ~80% over time driven by continued organic capital investments & return to Baseline Supply & Logistics (1) Assets as of 12/31/12. All amounts are approximate. Pipeline mileage and storage capacity has been adjusted for sale/expected sale of refined products pipelines and related storage announced on 2/22/13. (2) Net of railcars subleased to other parties. (3) Represents crude, refined products and NGL storage capacity. (4) Ownership through 50% interest in Settoon Towing. (5)Supply and Logistics amounts include Other Income, Net Transportation segment results include a ~$33 mm impact of pipeline releases or weather related downtime (6)Based on preliminary 2014 (G). 2013(G) Based on midpoint guidance provided via Form 8K on 11/04/

9 $ per barrel $ per barrel $ $ $ $90.00 $70.00 $50.00 $30.00 $10.00 $4.00 $2.00 $0.00 ($2.00) ($4.00) ($6.00) ($8.00) ($10.00) (5.00) (15.00) PAA Has Delivered Solid Performance Throughout Volatile Markets and Fluctuating Petroleum Supply and Demand NYMEX Crude Oil Prices Jan-02 Jan-02 Jul-01 Mar-03 Dec-04 Sep-06 Jun-08 Mar-10 Mars WTS Midland WTI HLS LLS EIC Bonito Sep-03 Source: Bloomberg Sep-03 May-05 May-05 POS Jan-07 Crude Oil Market Structure (2) Differentials to WTI Source: Bloomberg (Domestic) Source: Argus Jan-07 Sep-08 Backwardation Contango Sep-08 May-10 Differentials to WTI May-10 Jan-12 Jan-12 Dec-11 Sep-13 Sep-13 Sep-13 Adjusted EBITDA ($MM) Adjusted EBITDA ($MM) $2,250 $2,000 $1,750 $1,500 $1,250 $1,000 $750 $500 $250 $0 PAA Adjusted EBITDA : Actual Performance vs. Guidance (1) Met or Exceeded Guidance for over 11 Years (47 Consecutive Quarters) $800 $700 $600 $500 $400 $300 $200 $100 $0 Outperformance BOY Annual Guidance (G) Guidance Range Projected Performance Quarterly Historical Performance 1Q02 3Q04 1Q07 3Q09 1Q12 (1) 2013(G) annual guidance based on guidance provided in Form 8-K furnished on 11/4/13. (2) Crude Oil Market Structure chart does not include 9/22/08 data point on which the backwardated spread widened to over $11/barrel. -9-4Q13 (G) 21,000 20,500 20,000 19,500 19,000 18,500 18,000 17,500 17,000 6,500 6,000 5,500 5,000 4,500 4,000 4,000 3,500 3,000 2,500 2,000 1,500 1, (500) U.S. Petroleum Consumption U.S. Crude Oil Production Total U.S. Lower U.S. Products Imports/Exports Net Imports Imports Exports

10 North American Crude Oil Markets Current Environment is Very Attractive for PAA

11 US & Canada Continue to Lead the World in Crude Oil Production Growth Crude Oil Production (April 2013 MMBbls/d) (1) 7.4 World s 10 Largest Oil Producers 2.2 Crude Oil Production Growth (December 2008 April 2013 MMBbls/d) (1) Russia Saudi Arabia United States China Canada Iran Iraq UAE Kuwait Mexico United States Canada Saudi Arabia U.S. and Canadian Crude Oil Production Growth (MMBls/d) (1) Iraq Russia China UAE Kuwait Mexico Iran YE YE 2009 YE YE 2010 YE YE 2011 YE April United States Canada (1) Source: EIA. Production numbers are the one-month average daily volumes. The production growth numbers reflect the change from the one-month average daily production in December 2008 versus the one-month average daily production in the years represented. -11-

12 US & Canadian Production Growth Expected to Continue Quality Imbalances Creating Logistical Complications MMBbls/d US & Canada Expected to Continue to Lead the World in Crude Oil Production Growth Historical & Projected Crude Oil Production Growth (1) ~2.9 mmb/d YE 2008 YE 2012 YE 2016 U.S. Crude Production ~3.1 mmb/d (1) Canadian Crude Production Rockies Mid-Continent Williston (Bakken) Permian Basin Eagle Ford Gulf of Mexico Canada YE 2012 U.S. & Canada imported ~ mmb/d, but quality of imports do not match quality of expected production increases (1) PAGP s estimates. PAGP estimated 3.1 MMBbls/d production increase assumes a 75 MBbls/d cumulative production decrease in other areas not indicated above However, variations in crude quality & economics due to differentials and well costs will impact regional supply Condensate Light & Medium Sweet Light & Medium Sour Heavy Sour ~1.9 MMBbls/d ~1.2 MMBbls/d resulting in volatility, increased need for flexible infrastructure, and additional investment opportunities

13 PAA is a Top Provider of Flexible Midstream Assets In Substantially All Major N.A. Crude Oil Resource Plays Volume Growth Driving Increased Infrastructure Requirements Projected North American Crude Oil Production Growth YE2012 YE2016 ~3.1 MMBbls/d(1) ( 30%) Rockies Mid-Continent Canada:+950 MBbls/d (+25%) Bakken Area Bakken Area: +500 MBbls/d (+55%) Permian Basin Eagle Ford Gulf of Mexico Rockies: +150 MBbls/d (+40%) Canada Mid-Continent: +125 MBbls/d (+20%) Permian Basin: +550 MBbls/d (+40%) Eagle Ford: +500 MBbls/d (+60%) Crude amounts shown represent the change in production in these areas over the next four years based on PAGP s estimates. Map only includes PAA s most significant assets as of 04/30/13. Some assets shown are not yet in-service. (1) PAGP s estimates. PAGP estimated 3.1 MMBbls/d production increase assumes a 75 MBbls/d cumulative production decrease in other areas not indicated above. GOM: +400 MBbls/d (+25%) -13-

14 PAA Has a Sizable Presence in Most of the Major N.A. Crude Oil Market Hub / Demand Areas Including Rail PAA Also Has a Meaningful Presence in Key Natural Gas and Canadian NGL Market Hubs (In billions of barrels) Summary of Capacity at PAA Facilities (all locations(1)) Edmonton Kerrobert Liquid Storage (MMBbls) >115 Announced Crude Oil Rail Unloading (MBbls/d) ~400+ Ft. Laramie Patoka LA Area Yorktown Cushing Wichita Falls Midland Legend(2) Mobile St. James (1) (2) Includes storage capacity in both the Facilities and Transportation segments as of 12/31/12. Crude rail unloading represents PAA s expected rail unloading capacity upon completion of announced projects. Map only includes most significant PAA assets in the area as of 4/30/13. Some assets shown are not yet in-service Sizeable PAA Crude Oil Facilities

15 Solid Industry Fundamentals + Asset Base + Business Model Support Continued High Levels of Organic Capital Investment Annual Levels of Organic Investment $1,600 $1,650 $1,500 - $1,300 Strong Visibility for Growth (In Millions) $1,200 $800 $400 $430 $530 $1,200 Multi-Billion Dollar Organic Project Portfolio In various stages of progression Provides visibility for significant levels of organic investment for next several years Primarily fee-based projects with minimal direct commodity exposure Attractive returns relative to cost of capital $0 Avg (G) 2014(P) 2013 (G) is planned investment. 2014(G) is from the view of the 2014 investment range as furnished via form 8-K on November 4,

16 PAA s $1.65 B 2013 Capital Program - Investing in Growth Areas PAA 2013 Investment in Approved Projects (In Millions) Mississippian Lime Pipeline $175 Western Oklahoma Expansion $55 Cushing Terminal Projects $35 Rainbow II Pipeline $135 Ft. Saskatchewan Project $60 Gulf Coast Pipeline $110 Gulf Coast Gas Processing Facility Enhancements $35 St. James Terminal Projects $55 Eagle Ford Area Pipeline Projects $90 Eagle Ford JV Project $60 Cactus Pipeline $70 Spraberry Area Pipeline Projects $50 Yorktown, VA Terminal Project $110 White Cliffs Expansion (35.7%) $75 Shafter Expansion $30 Rail Terminal Projects $85 PNG (Multiple Projects) $44 Other Projects (Various Areas) $376 Total Investment: $1,650 Capital program highlighted by smaller scalable projects Diversity of capital program mitigates impact of delays or cost overruns on any one project West Coast 4% Rockies/Bakken 5% Canada 24% Permian Basin 9% -16- Note: All amounts are approximate. Other 5% Eagleford 11% Mid-Continent 21% Projected N.A. Crude Oil Production Growth YE2012 YE2016 Gulf Coast 15% ~3.1 MMBbls/d (1) ( 30%) Rockies Mid-Continent Williston Permian Basin Eagle Ford Gulf of Mexico East Coast 7% Canada

17 Acquisitions Expected to be Additive to Organic Growth PAA Remains Active, but Disciplined $2.0 Acquisitions Total: ~$10 Billion ( ) 2006 ~$3.1B 2012 ~$2.3B In billions $1.5 $1.0 $ Avg: ~$300 MM/yr Avg: ~$900 MM/yr $ YTD Acquisitions are a key element of PAA s growth strategy, and have historically provided platform for subsequent organic growth Strong track record of consummating and integrating accretive acquisitions Effectively identified and executed on commercial and operational synergies Consummating large acquisitions provide substantial option value for PAGP PAA has strong balance sheet and is positioned to act opportunistically Could make >$1.5 B cash acquisition & remain w/in targeted credit metrics Current market very competitive; PAA will remain active, but disciplined Note: The number of transactions excludes certain acquisitions less than $5 million

18 PAA Has the Financial Flexibility to Support Substantial Levels of Growth Investment Capitalization (in millions) 9/30/13 Long-term debt $ 7,018 Partner s capital 7,684 Total book capitalization $ 14,702 Credit Stats & Liquidity Long-term Debt / Book Cap 48% ~45-50% Total Debt / Book Cap (1) 50% ~60% Adj. EBITDA / Interest (2) 6.7x >3.3x Long-term Debt / Adj. EBITDA (3) 3.1x ~3.5x-4.0x Credit Rating BBB/Baa2 BBB+/Baa1 Committed Liquidity (4) $2.9 bn -18- Target Demonstrated financial discipline during period of substantial growth Invested ~$14 billion (over 10 yrs) while remaining within -or favorable tocurrently targeted credit metrics PAA strategy includes prefunding capital investments PAA 10-year distribution coverage: ~135% (5) ~$2.0 billion excess cash flow reinvested over 10+ yr. period Retained Cash Flow = Lowest Cost Equity Capital Meaningful benefit to sustainable limited partner distribution Debt Capacity Provides Acquisition Optionality (1) Includes short-term debt. (2) Calculated using adjusted EBITDA and Interest Expense for quarter ended 09/30/13. (3) 09/30/13 metric calculated using 2013 midpoint guidance adjusted EBITDA furnished via form 8-K on November 4, Please see non- GAAP reconciliations on our website at (4) Represents PAA and PNG cash balance and liquidity available on PAA and PNG credit facilities as of 09/30/13. (5) Includes 2013 guidance furnished via form 8-K on November 4, 2013.

19 PAA Continues to Generate Meaningful Cash Flow in Excess of Distributions (in millions except per unit amounts) $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 Distribution Coverage: $762 $80 $682 $ % $1,156 $365 $791 $ % $1,550 $1,614 $582 $968 $ % ~$454 ~$1,160 $ (G) 139% $3.25 $2.75 $2.25 $1.75 Distributions Paid Excess Cash Flow $/ LP Unit Dist. Paid 139% implied distribution coverage for 2013; Implied retained cash flow = ~$454mm (1) 2013(G) amount includes distributions paid thus far in 2013 and the distribution to be paid in November (1) Represents the average distributions paid or to be paid during the period presented. Please see non-gaap reconciliations on our website at

20 Consistent Execution Of PAA s Strategy Has Driven Attractive Distribution Growth & Total Returns Over Multi-Year Periods $2.75 $2.50 $2.25 $2.00 $1.75 $1.50 $1.25 $1.00 $0.75 $0.50 $1.20 $1.35 Annualized Year-end Distributions (1) Increased in 36 of 38 quarters $1.50 $1.68 $1.79 $1.84 $1.90 $1.99 $2.17 $ (P) 9.0% 10.6% Target ~10% Growth 5-Yr Annualized Total Return (2) PAA AMZ Index S&P 500 DJIA 10-Yr Annualized Total Return (2) PAA AMZ Index S&P 500 DJIA 28.1% 23.0% 15.2% 13.9% 20.4% 15.6% 7.5% 7.4% (1) Distribution amounts through 2013 are the annualized distributions paid/declared for November of the respective year, 2014(P) yellow bar represents 10% growth in distribution from declared November 2013 distribution through November CAGR is calculated using 1Q04 ($1.125) through 3Q13 ($2.40). (2) Annualized total return amounts are calculated via Bloomberg for the five and ten year periods ended 10/31/13. Note: Distributions prior to October 2012 have been adjusted to reflect two-for-one unit split. -20-

21 PAA & PAGP Are Targeting Continued Strong Growth for 2014 & Beyond Execution of PAA plan to deliver ~10% PAA distribution growth (1) in 2014 leads to 20+% PAGP growth PAA Distributions Paid & Unit Count (distribution/unit) $2.75 $2.50 $2.25 $2.00 $1.75 $1.50 $1.25 $1.00 $0.75 $0.50 $ yr. Distribution Coverage = ~135% (P) PAA Distribution per Unit ~10% (2) (3) Partnership Units Outstanding Note: Historical PAA distributions per unit and PAA units outstanding adjusted for two-for-one unit split completed on October 1, (1) PAA is targeting 10% growth in distributions to be paid in November 2014 over distributions declared for November (2) Represents distributions paid/declared. CAGR is calculated using 1Q04 ($1.125) through 3Q13 ($2.40). (3) Represents average units outstanding as of the record date for each quarterly distribution paid during the (units in millions) period, November 2013 distributions based on units outstanding as of 10/31/13. (4) 2014 (P) reflects distributions paid in 2014 based on PAA achieving 10% November over November distribution growth through ratable quarterly increases. This equates to ~20.4% November over November growth at AAP (assuming L.P. unit count remains constant at level as of 9/27/13 and ~23% growth in yearover-year distributions paid to AAP Cash Received by GP (PAGP / AAP) Cash Distributions Paid to AAP During Periods Shown ($ in millions) $500 $400 $300 $200 $100 $0 $11 $19 $38 $81 $137 $115 $ % $216 $285 $369 (4) (4) (P) IDR Reductions Total

22 PAA/PAGP Investment Considerations Strategically located, geographically diverse & operationally flexible assets Well positioned to benefit from dynamic crude markets and service high-growth liquids resource plays Proven business model & management team Long history of solid operational and financial performance in a variety of industry and financial market environments Strong balance sheet and significant liquidity Investment-grade credit rating and credit metrics favorable to targets; $2.9 billion of committed liquidity Absent significant acquisition activity, no need for overnight or marketed equity offering in 2013 or 2014 Strong visibility for continued growth Investing $1.65 billion on organic growth projects in 2013 and preliminary plan includes $1.3 $1.5 billion of investment for 2014 Expect attractive, high return organic projects to drive continued growth in EBITDA and Distributions PAA is targeting 10% distribution growth for 2014; anticipate ~112% coverage Equates to ~20% distribution growth for PAGP -22-

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