Enbridge Energy Partners, L.P. First Quarter 2015 Earnings Presentation May 1, 2015 enbridgepartners.com
Legal Notice This news release includes forward-looking statements and projections, which are statements that do not relate strictly to historical or current facts. These statements frequently use the following words, variations thereon or comparable terminology: “anticipate,” “beli eve ,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “position,” “projection,” “should,” “strategy,” “target,” “will” and similar words. Although the Partnership believes that such forward-looking statements are reasonable based on currently available information, such statements involve risks, uncertainties and assumptions and are not guarantees of performance. Future actions, conditions or events and future results of operations may differ materially from those expressed in these forward-looking statements. Many of the factors that will determine these results are beyond the Partnership’s ability to control or predict. Specific factors that could cause actual results to differ from those in the forward-looking statements include: (1) changes in the demand for or the supply of, forecast data for, and price trends related to crude oil, liquid petroleum, natural gas and NGLs, including the rate of development of the Alberta Oil Sands; (2) the Partnership’s ability to successfully complete and finance expansion projects; (3) the effects of competition, in particular, by other pipeline systems; (4) shut-downs or cutbacks at the Partnership’s facilities or refineries, petrochemical plants, utilities or other businesses for which the Partnership tra nsports products or to whom the Partnership sells products; (5) hazards and operating risks that may not be covered fully by insurance, including those related to Line 6B and any additional fines and penalties assessed in connection with the crude oil release on that line; (6) changes in or challenges to the Partnership’s tariff rates; (7) changes in laws or regulations to which the Partnership is subject, including compliance with environmental and operational safety regulations that may increase costs of system integrity testing and maintenance; and (8) permitting at federal, state and local levels in regards to the construction of new assets. “Enbridge” refers collectively to Enbridge Inc. and its subsidiaries other than the Partnership and its subsidiaries. Forward-looking statements regarding “drop - down” growth opportunities from Enbridge are further qualified by the fact that Enbridge is under no obligation to offer to sell us interests in its U.S. projects, and we are under no obligation to buy any such interests. Similarly, any forward- looking statements regarding potential “drop - down” transactions of interests in Midcoast Operating to Midcoast Energy Partners are further qualified by the fact that we are under no obligation to sell to Midcoast Energy Partners, L.P. any such interests, and Midcoast Energy Partners, L.P. is under no obligation to buy any such interests. As a result, we do not know when or if any such transactions will occur. Except to the extent required by law, we assume no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise. Reference should also be made to the Partnership’s filings with the U.S. Secu rities and Exchange Commission (the “SEC”), including its Annual Report on Form 10 -K for the year ended December 31, 2014 and any subsequently filed Quarterly Report on Form 10-Q for additional factors that may affect results. These filings are available to the public over the Internet at the SEC’s web site ( www.sec.gov ) and at the Partnership’s web site. 1 enbridgepartners.com
Agenda 1. Project Execution 2. Crude Oil Supply Fundamentals 3. Drop-Down Outlook 4. 1Q Financial Results 5. Question & Answer 2 enbridgepartners.com
Market Access Growth Projects 2015 growth projects on-track Organic growth projects deliver low-risk, highly certain cash flow growth 2015 Project Capital Timing ($MM) 1 In-service Line 67 Alberta Clipper $240 3Q 2015 +230 kbpd 1 Line 61 Southern Access 2Q 2015 $395 + 240 kbpd 2 3Q15- Storage & Tankage $360 2Q2016 1 Line 78 3 $495 3Q 2015 + 570 kbpd 2 Organic Growth Projects: Commercially secured 3 Low-risk framework Long-term contracts 1 Represents 100% of forecasted capital cost. Eastern Access and US Mainline Expansion projects are jointly funded 75% by Enbridge and 25% by EEP. 3 enbridgepartners.com
Project Execution - Sandpiper Positive step in regulatory process Stakeholder support for Sandpiper Pipeline Project in Minnesota • North Dakota approval Total Secured Capital = $2.6 B received June 2014 • ALJ recommends Certificate of Need permit for approval by Minnesota Public Utility Commission (MPUC) • MPUC decision expected in June • Review of proposed pipeline route to follow • Target in service 2017 4 enbridgepartners.com
WCSB and Bakken Crude Oil Supply Outlook 6,000 Western Canadian Crude Oil 5,000 Supply Outlook 4,000 • Producers have a long-term kbpd 3,000 investment horizon 2,000 • Strong demand for pipeline 1,000 takeaway from the region 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Actual Forecast Sources: CAPP Crude Oil Forecast, Markets and Pipelines (June 2014) with January 2015 updates Bakken Crude Oil Supply Outlook • Tight sand and shale oil production comparatively more sensitive to short-term price changes • Pipeline access to market enhances producer netbacks 5 enbridgepartners.com
Strong Commercial & Fundamental Underpinnings Defensive nature of cash flows position EEP to navigate through commodity price uncertainty Low-risk business model largely mitigates 2015e EBITDA volume sensitivity Demand for crude oil and pipeline capacity from Western Canada and Bakken remains strong Customer demand & connectivity Enbridge/Partnership’s system is currently oversubscribed Pipelines provide the most economical EBITDA attributable to EEP (after deducting NCI) Cost of Service/Take-or-Pay transportation to market Fee-based Commodity Sensitive Still plenty of supply moving by rail from WSCB and Bakken Liquids pipeline system volume outlook remains strong despite low crude oil prices 6 enbridgepartners.com
Low-Cost Expansion & Extension Opportunities Low-cost phased expansions are attractive in a low crude price environment NTD: Map to be updated Market Access Opportunities kbpd 1 Eastern Gulf Coast Access 350+ 2 3 4 2 Flanagan South / Seaway Expansions 200 3 1 3 Line 9 Expansion 70 1 Ex-Superior Expansion Opportunities kbpd 1 Line 61 Twin 550+ 2 SAX Expansion 150 2 2 Upstream of Superior Expansion Opportunities kbpd 1 Sandpiper Expansion/ 1 Bakken Interconnect Idle 170 2 Line 2A/LSR Expansion 100 2 New Build 3 Line 2B/4 Capacity Recovery 120 HP Upgrades 4 Line 3 at 760 370 7 enbridgepartners.com
Enbridge Liquids Pipelines Drop-Down Enbridge reviewing potential larger scale drop-down plan to EEP (1) Distributable Cash Examples: Capital Cost/ Pipeline System Upsize Option Book Value* Eastern Access $0.4 (2016/2017) ~ $1.5 Mainline Expansion $0.4 ( 2016/2017 ) ~ $1.4 Line 3 Replacement** $0.4 (2018) ~ $0.9 Southern Access - ~ $0.6 Extension Flanagan South - ~ $2.8 Seaway/Seaway Twin - ~ $2.4 ~ $10B + Substantial drop-down opportunities from parent supports long-term growth outlook * Estimated capital cost or net book value of assets held by Enbridge . ** Line 3 Replacement Joint Funding Agreement under consideration by a Special Committee of the independent Board of Directors., including an option to upsize EEP ownership by 15% one year after the in-service date. Capital cost assumes 50% estimated funding by Enbridge . (1) On December 3, 2014, Enbridge announced it is reviewing a potential restructuring plan that would involve the transfer of U.S. 8 enbridgepartners.com liquids pipeline assets to Enbridge Energy Partners, L.P., a U.S. affiliate of Enbridge. This review is underway and has not progressed to a conclusion.
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