Corporate Presentation July 2016
Forward-Looking and Non-GAAP Information Advisory Certain information contained in this presentation constitutes forward-looking information under applicable Canadian securities laws. All information, other than statements of historical fact, which addresses activities, events or developments that we expect or anticipate may or will occur in the future, is forward-looking information. Forward-looking information typically contains statements with words such as "may", "estimate", "anticipate", "believe", "expect", "plan", "intend", "target", "project", "forecast" or similar words suggesting future outcomes or outlook. Forward-looking statements in this presentation include, but are not limited to, statements with respect to: distributable cash to be generated by our businesses in 2016 and 2018; sources and uses of funding for Veresen in 2016, 2017 and 2018; NGL market conditions through 2016; increases in U.S. ethylene capacity; the potential for Aux Sable to contribute distributable cash and EBITDA; future cost structure of Ruby Pipeline; EBITDA multiples and amount of EBITDA to be realized by, and capital costs of, Veresen Midstream projects under construction; EBITDA generated by our power business in 2016; the timing of the closing of the sale of the Glen Park power facility; the potential for recontracting of AEGS; and opportunities for future midstream infrastructure investment. The risks and uncertainties that may affect the operations, performance, development and results of our businesses include, but are not limited to, the following factors: our ability to successfully implement our strategic initiatives and achieve expected benefits; levels of oil and gas exploration and development activity; the status, credit risk and continued existence of contracted customers; the availability and price of capital; the availability and price of energy commodities; the availability of construction services and materials; fluctuations in foreign exchange and interest rates; our ability to successfully obtain regulatory approvals; changes in tax, regulatory, environmental, and other laws and regulations; competitive factors in the pipeline, NGL and power industries; operational breakdowns, failures, or other disruptions; and the prevailing economic conditions in North America. Additional information on these and other risks, uncertainties and factors that could affect our operations or financial results are included in our filings with the securities commissions or similar authorities in each of the provinces of Canada, as may be updated from time to time. Although we believe the expectations conveyed by the forward-looking information are reasonable based on information available to us on the date of preparation, we can give no assurances as to future results, levels of activity and achievements. Readers should not place undue reliance on the information contained in this presentation, as actual results achieved will vary from the information provided herein and the variations may be material. We make no representation that actual results achieved will be the same in whole or in part as those set out in the forward-looking information. Furthermore, the forward-looking statements contained herein are made as of the date hereof, and, except as required by law, we do not undertake any obligation to update publicly or to revise any forward-looking information, whether as a result of new information, future events or otherwise. We expressly qualify any forward-looking information contained in this presentation by this cautionary statement. Certain financial information contained in this news release may not be standard measures under Generally Accepted Accounting Principles ("GAAP") in the United States and may not be comparable to similar measures presented by other entities. These measures are considered to be important measures used by the investment community and should be used to supplement other performance measures prepared in accordance with GAAP in the United States. US GAAP requires us to equity account for our investments in jointly-controlled businesses. However, we have chosen to provide some information on our jointly-controlled businesses on a proportionate basis to assist the reader. For further information on other non-gaap financial measures used by Veresen see Management s Discussion and Analysis, in particular, the section entitled Non-GAAP Financial Measures contained in the annual Management Discussion and Analysis, filed by Veresen with Canadian securities regulators. 2
TSX Ticker Common Shares Outstanding VSN 307 million Share Price (June 30 th, 2016) $10.95 52-Week Trading Range $6.73 - $16.99 Market Capitalization Annualized Dividend $3.5 billion $1.00/share Annualized Yield ~9.1% Credit Rating Head Office BBB Stable (S&P/DBRS) Calgary, Alberta, Canada 3
Our Strategy Well positioned for growth even in the context of current market dynamics Veresen s Strategy Build the best connected network of natural gas and NGL infrastructure in our geographic footprint in order to provide our customers with the highest value solutions Core Principles Commercial / Growth Principles Concentrate assets on connecting competitive supply regions and high value markets Focus on primarily fee-based structures that generate predictable long-term earnings and cash flow Pursue focused growth within the Western Canada U.S. Midwest Pacific Northwest triangle Leverage existing footprint to give us a strong competitive advantage Delivery Principles Consistently deliver safe and reliable operations, control costs, as well as ensure effective project development and construction management Maintain strong access to competitively priced capital at all times Establish and maintain a high-performing team culture passionately committed to accountability, innovation, results achievement and customer centricity 4
Integrated Asset Base Focused on top supply regions and high value markets 631 MW (net) of primarily renewable and gas fired generation Gathering and processing in the infrastructure constrained Montney Transport liquids rich gas to high value US mid-west market AEGS Veresen Midstream Alliance Pipeline Burstall Power Developing LNG project to access Pacific markets Ruby Pipeline Transport Rockies gas towards high value California market Aux Sable Channahon Fractionator Dry gas & liquids access to mid-west, eastern and Gulf Coast markets 5
Significant Evolution of the Business In Last Five Years Business today is comprised of a diverse mix of contracted infrastructure Distributable Cash by Business Segment (1) 35% Commodity Based 35% 100% 5% 12% AEGS Power 35% 50% Aux Sable Alliance Alliance 2011A 15% 2016G (2) Veresen Midstream AEGS 6% Power Ruby 9% 65% 65% Fee-Based Effectively 100% Fee-Based 30% 38% (1) Before Veresen corporate costs (2) Based on mid-point of published guidance range 6
Strategy Has Materially Grown Fee-Based Cash Flows Nearly all distributable cash is generated from take-or-pay contracts $1.40 Distributable Cash ($ / Share) $1.20 $1.00 Aux Sable $1.08 $0.94 2016G midpoint assumes no Aux Sable contribution $0.80 $0.60 $0.40 Fee Based $0.20 $0.00 2011A 2012A 2013A 2014A 2015A 2016G (1) (1) 2016G bar represents published guidance ranges 7
Best in Class Growth Under Construction $1.4 billion of capital projects under construction starting up by 2018 Project Net Capital Target Economics Veresen W.I. Total Invested (1) Leverage (2) EV / EBITDA % $ millions $ millions % x Target In-Service Aux Sable Frac Expansion 43% US$56 US$37 Variable Mid-2016 Sunrise Gas Plant 48% $413 $128 55%-60% 8x - 10x Q4 2017 Tower Gas Plant 48% $343 $68 55%-60% 8x - 10x Q4 2017 Saturn Phase II Gas Plant 48% $446 $57 55%-60% 8x - 10x Mid-2018 Burstall Ethane Storage 100% $140 $13 8x - 9x Q3 2018 Total Construction (3, 4) $1,416 $315 (1) As of March 31, 2016 (2) Veresen Midstream leverage is at the partnership level, with debt being non-recourse to Veresen (3) Does not include incremental Veresen Midstream gathering pipelines and other minor capital projects (4) Assumes a C$1.32/US$ exchange rate 8
Existing Projects to Drive Growth Significant growth within Veresen Midstream through 2018 Projected Distributable Cash by Business Segment (1) 2016E 2018E AEGS Aux Sable Power AEGS Power Alliance Veresen Midstream Alliance Veresen Midstream Ruby Ruby (1) Distributable Cash shown prior to Veresen corporate costs and preferred dividends 9
Funding Strategy Fully funded without need to access equity beyond DRIP Illustrative Veresen Funding Outlook (Net of Amounts Funded with Veresen Midstream Non-Recourse Debt) Veresen Credit Facility GP Sale DRIP (1) Jordan Cove Aux Sable Burstall Veresen Midstream Credit Facility DRIP Burstall Veresen Midstream DRIP Burstall Veresen Midstream Distributable Cash Common Dividend Distributable Cash Common Dividend Distributable Cash Common Dividend Sources Uses Sources Uses Sources Uses 2016E 2017E 2018E (1) Glen Park sale assumes an exchange rate of C$1.30/US$ at closing. 10
Overview of Key Businesses 11
Alliance Pipeline Fully re-contracted with supportive market fundamentals MMcf/d 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 2016 Contract Profile Interruptible US Firm Receipt & FTS Canada Firm Receipt & FTS Seasonal Firm MONTNEY DUVERNAY Alliance Pipeline BAKKEN CHANNAHON FRACTIONATION New model implemented in Dec 2015 Fixed-price firm tolls Market-based seasonal and interruptible services Firm capacity fully contracted with new take-or-pay agreements Recent seasonal firm full-path open season was significantly oversubscribed Asset Overview 3,800 km rich gas pipeline connecting the WCSB to Chicago market Delivers to Aux Sable fractionation facility in Channahon, Illinois 36 pipeline with nameplate capacity of ~1.65 Bcf/d In-service since 2000 Contract Structure Fixed-price firm receipt tolls Market-based seasonal and interruptible services Diversified group of ~30 shippers 5 year W.A. term Veresen Interest & Considerations 50 / 50 joint control with equal governance Enbridge is 50% partner 12
Aux Sable Integral to Alliance; NGL option value in current market environment U.S. Ethylene Capacity (1) SEPTIMUS MMTPA 50 40 Expected to increase >25% Under Construction MONTNEY DUVERNAY HEARTLAND BAKKEN 30 20 Ethane prices expected to recover as markets rebalance PALERMO CHANNAHON FRACTIONATION 10 0 Existing NGL margins are cyclical and currently very weak in a historical context Asset Overview Contract Structure Veresen Interest & Considerations Expected to persist through 2016 U.S. petrochemical expansions and exports will rebalance the market, though timing of margin recovery uncertain Aux Sable s scale provides the potential for it to be a significant contributor when margins recover (1) Source: Wood Mackenzie 131,500 bbl/d capacity at Channahon (post expansion) Provides WCSB producers access to U.S. Mid-West NGL pricing Includes Heartland offgas facility, Septimus plant & pipeline, Palermo plant, and Prairie Rose pipeline Channahon plant a mix of fixed fee and margin sharing structures Extraction plants are primarily fee based Long-term NGL marketing contract with BP provides downside protection 42.7% ownership interest in Aux Sable Liquids Enbridge and Williams are partners 50% ownership interest in Aux Sable Canada Enbridge is partner 13
Ruby Pipeline Stable preferred distribution secured by investment grade shippers MMcf/d 1,200 1,000 800 600 400 Volumes by Shipper Credit Rating Preferred distribution secured by investment grade shippers MALIN HUB OREGON IDAHO Ruby Pipeline ROCKIES BASIN BIG HORN WIND RIVER GREEN RIVER OPAL HUB UINTA PICEANCE POWDER RIVER WYOMING CHEYENNE HUB DENVER / JULESBURG 200 NEVADA UTAH COLORADO 0 A BBB <BBB CALIFORNIA RATON Illustrative Cost Structure Over Time Common Distribution Veresen Pref. Dist. (US$91MM) Debt Service O&M and G&A Today Future Revenue requirement for preferred distribution Asset Overview 1,100 km natural gas pipeline from Opal Hub, WY to Malin Hub, OR 42 pipeline with capacity of ~1.5 Bcf/d; expandable to 2.0 Bcf/d through additional compression Operated by Kinder Morgan In-service for 5 years since 2011 Contract Structure Preferred distribution of US$91MM ~1.1 Bcf/d in takeor-pay contracts W. A. remaining term of ~7 years ~90% of volumes contracted by investment grade entities; supports full preferred distribution Veresen Interest & Considerations 50/50 joint control with equal governance Veresen holds option to convert to 50% common ownership with no expiry Debt amortization continues to reduce volumes required to support the preferred distribution 14
Veresen Midstream A leading independent natural gas gathering and processing business Second largest independent gatherer and processor of Montney gas Focused on the most economic areas of the B.C. Montney Significant third party activity in the region SPECTRA PIPELINE TOWER SATURN SUNRISE BC AB TRANSCANADA PIPELINE ALLIANCE PIPELINE Reliable operator 100% average reliability since inception in 2012 NATURAL GAS PIPELINE STEEPROCK HYTHE Growth potential Area is the most prolific and actively developed gas play in Canada Development in region is infrastructure constrained Strong capitalization Jointly-owned and controlled by Veresen and KKR Asset Overview Agreement with Cutbank Ridge Partnership Encana 60%, Mitsubishi 40% 0.5 Bcf/d of existing processing capacity at Hythe / Steeprock 1.0 Bcf/d of facilities under development at Sunrise, Tower and Saturn Contract Structure Hythe / Steeprock under take-or-pay structure with 16 years remaining Development at Dawson governed by 30 year feefor-service agreement New infrastructure dedicated within an area of mutual interest (AMI) Veresen Interest & Considerations Veresen currently owns ~48% 50 / 50 joint governance with Veresen and KKR Partnership debt facilities are nonrecourse to Veresen 15
Opportunity The Montney Montney gas is highly economic today and competitive with top N. A. plays The Montney has shown strong growth even through low gas price environments due to decreasing well costs and technological advances CRP/Veresen Midstream AMI acreage is economic at < US$2.00/mcf (1) PIR 1.50x Top 15 North American Plays (1) Mcf/d 10,000 Top BC Gas Wells On Stream (2) 1.40x 8,000 1.30x 6,000 1.20x 4,000 1.10x 2,000 1.00x 0 16 Dawson Montney Gas Dodsland Viking Oil NE PA Core Marcellus Dry Gas SE SK Viewfield Bakken Oil Sunrise Montney Gas Karnes Trough Eagle Ford Cond Tower Montney Oil Parkland/Doe Montney Gas SW SK Upper Shaunavon Oil Kakwa/Musreau Montney Lq-Rch Karr Dunvegan Oil SE SK Border Midale Oil Seal Cold Heavy Oil (Multi-Lateral) Brazeau Belly River Oil Septimus Montney Gas ECA CRP - Sunrise ECA CRP - Sunrise TOU - Doe TOU - Doe ECA CRP - Sunrise ECA - Dawson ECA - Dawson PPY - Town ECA CRP - Sunrise ECA CRP - Sunrise (1) PIR defined as defined as the present value of future cash flow (after tax, 9% discount rate) divided by the initial investment. Analysis assumes US$40 WTI and US$2.25 HHUB at US$0.70/C$. Source: Scotiabank GBM Playbook as at Sept 2015 (2) First three month raw gas calendar day rate as per Scotiabank GBM Top Oil & Gas Well Report. Data to end of January 2016
Veresen Midstream: Large-Scale Growth Platform Provides Veresen with industry leading growth under construction Facilities under development to triple processing capacity by 2018 100% fee-based business with no direct commodity exposure Mix of volumetric and minimum cash flow commitments All infrastructure under very long-term contracts Operating Segment Commercial Model Gross Invested Capital (1) Multiple Investment Gross Annualized EBITDA (2) $ millions x $ millions Hythe / Steeprock - Take-or-pay - Escalating fee profile - Contracted to 2032 Hythe / Steeprock $920 12x $80 Assets Contributed at Inception Dawson - Fee-for-service (2) - Area dedication Dawson $660 8x - 10x $65 - $85 Total Existing $1,580 10x - 11x $145 - $165 Sunrise $860 8x - 10x $85 - $110 Tower $715 8x - 10x $70 - $90 Saturn Phase II $930 8x - 10x $95 - $115 Hythe Liquids Recovery $25 8x - 10x $2 - $3 Total Under Construction $2,530 8x - 10x $252 - $318 Veresen Midstream Total Existing and Under Construction $4,110 9x - 10x $397 - $483 Growth to Date Current Run-Rate On stream by mid-2018 Potential Pro Forma (1) Gross acquisition price for Hythe / Steeprock and invested capital in operating infrastructure at Mar. 31, 2016 for Dawson (2) Unit capital fees set for individual components in order to achieve a target rate of return based on invested capital and expected throughput; facility fees fixed 12 months after commercial operations, gathering fees reset at defined periods based on actual throughput. Provision for return of capital after eight years. 17
Power Reliable income stream supported by long term contracts Waste Heat 27 131 Renewables 631 MW Net 301 Gas Fired Dasque - Middle EnPower NRGreen NRGreen PEI District Energy System District Energy 172 Clowhom Furry Creek York Energy Centre Grand Valley I, II, & III St. Columban East Windsor Waste Heat London District Energy London Cogeneration 6% Asset Overview Contract Structure Veresen Interest & Considerations Renewables 44% 2016E EBITDA 7% 42% District Energy Gas Fired 863 MW (631 MW net) portfolio 13 plants Primarily renewables and gas fired, with district energy and waste heat Recently completed Grand Valley III and St. Columban wind projects Fixed capacity or price offtake W.A. remaining PPA term of 17 years Counterparties largely government entities Developing London District Energy Cogen II, an 18 MW expansion Sale of Glen Park hydro facility expected to be completed in Q3 18
AEGS Largest transporter of ethane to Alberta petrochemical facilities Backbone of Alberta petrochemical industry; exclusive ethane transporter in province 1,334 km integrated system connecting ethane sources to storage and petrochemical facilities BC ALBERTA SASKATCHEWAN AEGS 1,334 km integrated system connecting ethane sources to storage and petrochemical facilities DOW CHEMICAL FORT SASKATCHEWAN NOVA CHEMICALS JOFFRE Expect re-contracting of existing take-orpay agreements expiring at end of 2018 Asset Overview 1,334 km length ethane transport pipeline Aggregate design capacity of 320+ mbbl/d Exclusive major ethane transport pipeline to Alberta petrochemical facilities Contract Structure Take-or-pay contracts with a remaining term of 2.5 years Largest shippers are NOVA Chemicals and DOW Veresen Interest & Considerations Burstall Ethane storage project is being developed near the Empress terminus of the system 19
Jordan Cove Potential Game Changer For Veresen Shortest shipping distance to Asia, with no Panama Canal or hurricane risk, provides cost advantage Price-competitive with brownfield Gulf of Mexico projects on a delivered basis Nine shipping days to Asia MALIN HUB GTN RUBY PIPELINE GTN pipeline accesses Western Canadian Sedimentary Basin ROCKIES BASIN Finalized the key commercial terms for at least 50% of liquefaction capacity Includes world s largest LNG buyer Continue to negotiate additional agreements Addressing permitting requirements Final Environmental Impact Statement received Sept. 30, 2015 Final order and certificate denied; filed for rehearing and currently under tolling order Strong state and community support Asset Overview 6 MMTPA (~1.0 Bcf/d) liquefaction design capacity Competitive with brownfield Gulf Coast projects on a delivered to Tokyo Bay basis Shortest shipping distance to Asia with no Panama Canal risk Canadian and U.S. Rockies supply Contract Structure Finalized key commercial terms for at least 50% of the terminal s initial design capacity Executed natural gas transportation service precedent agreements representing in excess of 75% of the rated capacity of Pacific Connector Veresen Interest & Considerations Continue to progress both regulatory and commercial processes 20
Supplementary Information 21
2016 Guidance Distributable Cash of $0.94 $1.08 per Share 2016 Forecast (1) C$ per Share C$ millions Low High Low High Veresen 0.94 1.08 294 335 Pipeline Alliance Distributions 0.47 0.53 145 163 Ruby Distributions 0.38 0.40 117 123 AEGS 0.06 0.06 18 20 Midstream Veresen Midstream Distributions 0.20 0.20 62 62 Aux Sable Distributions, net of support payments Fixed 0.13 0.14 40 43 Variable (0.18) (0.09) (55) (28) Power 0.15 0.17 46 52 Corporate General and Administrative (0.10) (0.09) (31) (28) Debt Service (Principal & Interest) (0.12) (0.11) (37) (34) Taxes 0.00 0.00 0 0 Preferred Share Dividends (0.09) (0.09) (26) (26) Cdn/U.S. Exchange Rate - Average 1.29 1.35 Average Number of Common Shares Outstanding (MM) 313 310 (1) The low and high estimates applicable to each line item are not intended to be additive and therefore will not add to the low and high forecast distributable cash 22
Contract Structures Effectively 100% fee-based with >90% take-or-pay % of 2016G (1) Contract Structure Contract Length Distributable Cash Weighted Average Years % Pipeline Alliance Take-or-Pay 5 years 38% Ruby Take-or-Pay 7 years 30% AEGS Take-or-Pay 3 years 5% Midstream Aux Sable Mitigated Frac Spread 10 years 0% Veresen Midstream Hythe/Steeprock Take-or-Pay 16 years 8% Dawson Fee-For-Service 29 years 7% Power Fixed Capacity & Price Offtake 17 years 12% Total Take-or-Pay / Fixed Structures 8 years 93% Total Fee-For-Service Structures 29 years 7% Total Fee-Based Structures 9 years 100% (1) Distributable Cash shown prior to Veresen corporate costs and preferred dividends 23
Proportionate Consolidation (1) First Quarter 2016 Pipeline Segment Alliance (2) Ruby (3) AEGS Midstream Veresen Midstream Aux Sable Power Corporate Total EBITDA (4) 82 52 6 18 3 25 (9) 177 Interest (13) (16) (1) (6) - (5) (8) (49) Principal Repayment (22) (12) (1) (1) - (4) - (40) Maintenance Capex (2) - - - (1) (2) - (5) Other (5) (5) 7-4 (1) (2) (5) (2) Distributable Cash 40 31 4 15 1 12 (22) 81 Senior Debt 768 729 81 547-389 975 3,489 Growth Capital (4) - - - 69 15-6 90 (1) This table contains non-gaap measures. Balances for our jointly controlled businesses represent our proportional share based on our ownership interest, and includes consolidation adjustments. (2) Approximately 53% of Alliance EBITDA was earned in C$. (3) Ruby EBITDA presented as a 50% proportionate share with benefit of preferred distribution structure reflected in other. (4) Corporate EBITDA and growth capital do not include $40 million of Jordan Cove project development spend expensed during the quarter. (5) Corporate other includes preferred share dividends of $6 million. 24
Veresen Midstream Initial Structure $500 million for 50% equity interest 50% cash dividend-paying units 50% PIK units Equal governance >35% ownership $500 million for 50% equity interest 100% cash dividend-paying units Day-to-day management Non-recourse Debt US$575MM Term Loan B Cdn $1,350MM Credit Facilities Hythe & Steeprock Assets Acquired by Veresen in 2012 for $920 million Long-term take-or-pay contract with Encana Dawson Assets ~$760 million of assets day 1 Contract with Encana & CRP for build out of up to ~$5 billion of additional Montney midstream assets Future Assets Future assets to be built for 3rd parties Could involve new facilities, expansions, NGL assets, etc. Cutbank Ridge Partnership (CRP) 60% 40% a subsidiary of 25
Veresen Midstream Initial Structure (cont d) Structure provides Veresen with a disproportionate share of cash flow during the construction period, prior to the Sunrise and Tower gas plants being placed in-service Equal governance >35% ownership Class A pays cash dividend Class B paid-in-kind ( PIK ) at Class A yield +4% Class A 50% 25% Class B (PIK) - 25% Total 50% 50% 26