Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT_99-1 - CEO REMARKS - JOHN W. SOMERHALDER II - SOUTHERN Co GAS | exhibit_99-1.htm |
| EX-99.2 - EXHIBIT_99-2 - SOUTHSTAR - MICHAEL A. BRASWELL - SOUTHERN Co GAS | exhibit_99-2.htm |
| EX-99.4 - EXHIBIT_99-4 - GAAP RECONCILIATIONS - SOUTHERN Co GAS | exhibit_99-4.htm |
| 8-K - FORM 8-K - SOUTHERN Co GAS | form8_k.htm |
Pivotal
Dana Grams - President, Pivotal Energy Development
Pivotal Energy Overview
• Customers include utilities, gas marketers and E&P companies
• Favorable storage locations with significant pipeline interconnectivity
• Current operating facilities:
o Jefferson Island Storage & Hub
(JISH) near Henry Hub in South
Louisiana
(JISH) near Henry Hub in South
Louisiana
o Golden Triangle Storage (GTS) in
East Texas
East Texas
o Pivotal Propane of Virginia (PPOV)
• Option to develop:
o Triple Diamond Storage (TDS)
Golden Triangle
Storage
Storage
Jefferson Island
Storage & Hub
Storage & Hub
Pivotal
Propane of
Virginia
Propane of
Virginia
Triple Diamond
Storage
Storage
Pivotal is focused on high deliverability salt dome storage and related business
development opportunities.
development opportunities.
2010 Accomplishments
• Jefferson Island Storage & Hub
o Settled lawsuit over mineral rights
o Re-filed permit application for expansion
o Completed mechanical integrity tests
o Initiated limited trading activity
• Golden Triangle Storage
o Stopped leaching Cavern 1 at 6 Bcf in
June 2010
June 2010
o Interim commercial service September
2010
2010
o Completed dewatering December 2010
o Started leaching Cavern 2
GTS Cavern 1 - Three
Dimensional Sonar Picture
Dimensional Sonar Picture
1,250 Ft
Empire State
Building
Building
Jefferson Island Storage & Hub
JISH Facility
• Purchased by AGL in 2004 for $90 MM
• Two current caverns with combined 7 Bcf
working gas capacity in operation since 1995
working gas capacity in operation since 1995
• Significantly upgraded the facility’s
compression, header and meter capacities
compression, header and meter capacities
• 15 miles dual 16” header with 9 interconnects
• Injection / Withdrawal - 360 / 720 Mdth
• Contract Status:
o 82% contracted for 2011; weighted average
term of 2.2 years
term of 2.2 years
o Optimizing remaining capacity in 2011
JISH Expansion
• Filed key applications for Department of
Natural Resources (DNR) permit and Corps of
Engineers permit
Natural Resources (DNR) permit and Corps of
Engineers permit
• Process slowed due to gulf spill and
subsequent drain on resources of Louisiana
regulators
subsequent drain on resources of Louisiana
regulators
• Project will commence based on commercial
conditions and will consist of:
conditions and will consist of:
o Completing the raw water and disposal well
facilities
facilities
o Solution mining Caverns 3 & 4, adding 12
Bcf of working gas capacity
Bcf of working gas capacity
Delcambre
Erath
Jefferson Island
Storage and Hub
Storage and Hub
Columbia Gulf Transmission
Gulf South Pipeline
Natural Gas Pipeline Co. of America
Sabine Pipeline
Sea Robin Pipeline
Tennessee Gas Pipeline
Texas Gas Transmission
”
2
-
16
”
Pipelines
-
5.2 miles
Cavern #1
Cavern #2
4-12” Pipelines - 0.8 miles
Trunkline
Gas Pipeline
Columbia Gulf Transmission
Gulf South Pipeline
Natural Gas Pipeline Co. of America
Sabine Pipeline
Sea Robin Pipeline
Tennessee Gas Pipeline
Texas Gas Transmission
Crosstex LIG
9.4 miles
2
-
16
”
Pipelines
-
5.2 miles
Lake Peigneur
Jefferson Island Station
Facilities
Facilities
Cavern #1
Cavern #2
Trunkline
2-16” Pipelines -
Golden Triangle Storage
GTS Facility
• FERC permitted December 2007
• Commenced construction May 2008
• Cavern 1 in-service with 6 Bcf working gas capacity
• Cavern 2 expected to be 7.2 Bcf by 12/31/2011
• Commercial service of Cavern 2 can begin 2Q12
• 9 miles of dual 24” pipeline with 6 interconnects
• Injection / Withdrawal - 300 / 600 Mdth
Contract Status
• 2 Bcf firm capacity contracted for 5yr
term
term
• Optimizing and marketing remaining
capacity for 2011
capacity for 2011
Capital Expenditures
• Total project cost ~ $325 MM
• Remaining capex of $41 MM (as of
1/1/2011) to complete, which is largely
pad gas for Cavern 2
1/1/2011) to complete, which is largely
pad gas for Cavern 2
Texas
Eastern
Eastern
Houston
Pipeline
Pipeline
Florida Gas
Transmission
Transmission
Kinder
Morgan
TX
Morgan
TX
Centana
Golden
Pass
Pipeline
Pass
Pipeline
Golden Triangle
Storage and Hub
Storage and Hub
Golden Triangle
Pipeline Header
Pipeline Header
2-24”
1-24”
2-24”
Orange
County
County
Neches
River
River
Beaumont
Cavern #1
Cavern #2
Market Fundamentals
• Storage fundamentals are cyclical
o Natural gas market is growing
o Significant barriers now exist to develop new storage
• Uncertainty favors natural gas
o Commodity price of natural gas remains low relative to oil
o Inflation
o Declining deliverability of shale wells increases need for storage alternatives
o Initial production from new basins showing promise
o Renewable energy sources are growing, but economics often require subsidies
o Carbon / greenhouse gas legislation signifies shift away from coal and oil
• Maintaining long-term view
• Salt-dome storage valuations remain high
Key Storage Rate Drivers
NYMEX Monthly Volatility 1990-2011
April - 2011
Overall Supply / Demand
April - 2011
Source: BENTEK
Sources: Wood Mackenzie, EIA, FERC, Pivotal
201 Bcf
Storage Additions Lag Behind Use
On average, from 1995-2010 growth in storage capacity has lagged behind
the estimated growth in maximum stored capacity by over 35 Bcf/year.
the estimated growth in maximum stored capacity by over 35 Bcf/year.
2011 Priorities and Objectives
• 2011 Priorities
o Jefferson Island Storage & Hub
– Continue permitting process for Caverns 3 & 4 (expected early 2012)
– Enhance commercial and marketing efforts
o Golden Triangle Storage
– Contract remaining 4 Bcf at Cavern 1
– Successfully leach Cavern 2 to ~7.2 Bcf working gas capacity
– Obtain FERC certificate for Caverns 3 & 4
• Pivotal long-term business strategy
o Permitting measured expansions
o Increased optionality
o Long-term portfolio value
• Pivotal advantages
o Well capitalized
o Good locations with low cost expansion opportunities
o Strong customer focus
o Experienced management team / sustainable organization
Cautionary Statements and Supplemental Information
Forward-Looking Statements
Certain expectations and projections regarding our future performance referenced in this presentation, in other reports or statements we file with the SEC or otherwise release to the public, and on our
website, are forward-looking statements. Senior officers and other employees may also make verbal statements to analysts, investors, regulators, the media and others that are forward-looking.
Forward-looking statements involve matters that are not historical facts, such as statements regarding our future operations, prospects, strategies, financial condition, economic performance (including
growth and earnings), industry conditions and demand for our products and services. Because these statements involve anticipated events or conditions, forward-looking statements often include
words such as "anticipate," "assume," "believe," "can," "could," "estimate," "expect," "forecast," "future," "goal," "indicate," "intend," "may," "outlook," "plan," "potential," "predict," "project," "seek,"
"should," "target," "would," or similar expressions. Forward-looking statements contained in this presentation include, without limitation, statements regarding future earnings per share, dividend growth
and EBIT contribution, our priorities for 2011 and the proposed merger with Nicor Inc. Our expectations are not guarantees and are based on currently available competitive, financial and economic
data along with our operating plans. While we believe our expectations are reasonable in view of the currently available information, our expectations are subject to future events, risks and
uncertainties, and there are several factors - many beyond our control - that could cause results to differ significantly from our expectations.
website, are forward-looking statements. Senior officers and other employees may also make verbal statements to analysts, investors, regulators, the media and others that are forward-looking.
Forward-looking statements involve matters that are not historical facts, such as statements regarding our future operations, prospects, strategies, financial condition, economic performance (including
growth and earnings), industry conditions and demand for our products and services. Because these statements involve anticipated events or conditions, forward-looking statements often include
words such as "anticipate," "assume," "believe," "can," "could," "estimate," "expect," "forecast," "future," "goal," "indicate," "intend," "may," "outlook," "plan," "potential," "predict," "project," "seek,"
"should," "target," "would," or similar expressions. Forward-looking statements contained in this presentation include, without limitation, statements regarding future earnings per share, dividend growth
and EBIT contribution, our priorities for 2011 and the proposed merger with Nicor Inc. Our expectations are not guarantees and are based on currently available competitive, financial and economic
data along with our operating plans. While we believe our expectations are reasonable in view of the currently available information, our expectations are subject to future events, risks and
uncertainties, and there are several factors - many beyond our control - that could cause results to differ significantly from our expectations.
Such events, risks and uncertainties include, but are not limited to, changes in price, supply and demand for natural gas and related products; the impact of changes in state and federal legislation and
regulation including changes related to climate change; actions taken by government agencies on rates and other matters; concentration of credit risk; utility and energy industry consolidation; the
impact on cost and timeliness of construction projects by government and other approvals, development project delays, adequacy of supply of diversified vendors, unexpected change in project costs,
including the cost of funds to finance these projects; the impact of acquisitions and divestitures; direct or indirect effects on our business, financial condition or liquidity resulting from a change in our
credit ratings or the credit ratings of our counterparties or competitors; interest rate fluctuations; financial market conditions, including recent disruptions in the capital markets and lending environment
and the current economic downturn; general economic conditions; uncertainties about environmental issues and the related impact of such issues; the impact of changes in weather, including climate
change, on the temperature-sensitive portions of our business; the impact of natural disasters such as hurricanes on the supply and price of natural gas; acts of war or terrorism; and other factors
which are provided in detail in our filings with the Securities and Exchange Commission. Forward-looking statements are only as of the date they are made, and we do not undertake to update these
statements to reflect subsequent changes.
regulation including changes related to climate change; actions taken by government agencies on rates and other matters; concentration of credit risk; utility and energy industry consolidation; the
impact on cost and timeliness of construction projects by government and other approvals, development project delays, adequacy of supply of diversified vendors, unexpected change in project costs,
including the cost of funds to finance these projects; the impact of acquisitions and divestitures; direct or indirect effects on our business, financial condition or liquidity resulting from a change in our
credit ratings or the credit ratings of our counterparties or competitors; interest rate fluctuations; financial market conditions, including recent disruptions in the capital markets and lending environment
and the current economic downturn; general economic conditions; uncertainties about environmental issues and the related impact of such issues; the impact of changes in weather, including climate
change, on the temperature-sensitive portions of our business; the impact of natural disasters such as hurricanes on the supply and price of natural gas; acts of war or terrorism; and other factors
which are provided in detail in our filings with the Securities and Exchange Commission. Forward-looking statements are only as of the date they are made, and we do not undertake to update these
statements to reflect subsequent changes.
Supplemental Information
Company management evaluates segment financial performance based on earnings before interest and taxes (EBIT), which includes the effects of corporate expense allocations and on operating
margin. EBIT is a non-GAAP (accounting principles generally accepted in the United States of America) financial measure that includes operating income, other income and expenses. Items that are
not included in EBIT are financing costs, including debt and interest expense and income taxes. The company evaluates each of these items on a consolidated level and believes EBIT is a useful
measurement of our performance because it provides information that can be used to evaluate the effectiveness of our businesses from an operational perspective, exclusive of the costs to finance
those activities and exclusive of income taxes, neither of which is directly relevant to the efficiency of those operations. Operating margin is a non-GAAP measure calculated as operating revenues
minus cost of gas, excluding operation and maintenance expense, depreciation and amortization, and taxes other than income taxes. These items are included in the company's calculation of
operating income. The company believes operating margin is a better indicator than operating revenues of the contribution resulting from customer growth, since cost of gas is generally passed
directly through to customers. In addition, in this presentation, the company has presented its earnings per share excluding expenses incurred with respect to the proposed Nicor merger. As the
company does not routinely engage in transactions of the magnitude of the proposed Nicor merger, and consequently does not regularly incur transaction related expenses with correlative size, the
company believes presenting EPS excluding Nicor merger expenses provides investors with an additional measure of the company’s core operating performance. EBIT, operating margin and EPS
excluding merger expenses should not be considered as alternatives to, or more meaningful indicators of, the company's operating performance than operating income, net income attributable to AGL
Resources Inc. or EPS as determined in accordance with GAAP. In addition, the company's EBIT, operating margin and non-GAAP EPS may not be comparable to similarly titled measures of another
company. We also present certain non-GAAP financial measures excluding the effects of our proposed merger with Nicor. Because we complete material mergers and acquisitions only occasionally,
we believe excluding these effects from certain measures is useful because they allow investors to more easily evaluate and compare the performance of the Company's core businesses from period
to period. Reconciliations of non-GAAP financial measures referenced in this presentation are available on the company’s Web site at www.aglresources.com
margin. EBIT is a non-GAAP (accounting principles generally accepted in the United States of America) financial measure that includes operating income, other income and expenses. Items that are
not included in EBIT are financing costs, including debt and interest expense and income taxes. The company evaluates each of these items on a consolidated level and believes EBIT is a useful
measurement of our performance because it provides information that can be used to evaluate the effectiveness of our businesses from an operational perspective, exclusive of the costs to finance
those activities and exclusive of income taxes, neither of which is directly relevant to the efficiency of those operations. Operating margin is a non-GAAP measure calculated as operating revenues
minus cost of gas, excluding operation and maintenance expense, depreciation and amortization, and taxes other than income taxes. These items are included in the company's calculation of
operating income. The company believes operating margin is a better indicator than operating revenues of the contribution resulting from customer growth, since cost of gas is generally passed
directly through to customers. In addition, in this presentation, the company has presented its earnings per share excluding expenses incurred with respect to the proposed Nicor merger. As the
company does not routinely engage in transactions of the magnitude of the proposed Nicor merger, and consequently does not regularly incur transaction related expenses with correlative size, the
company believes presenting EPS excluding Nicor merger expenses provides investors with an additional measure of the company’s core operating performance. EBIT, operating margin and EPS
excluding merger expenses should not be considered as alternatives to, or more meaningful indicators of, the company's operating performance than operating income, net income attributable to AGL
Resources Inc. or EPS as determined in accordance with GAAP. In addition, the company's EBIT, operating margin and non-GAAP EPS may not be comparable to similarly titled measures of another
company. We also present certain non-GAAP financial measures excluding the effects of our proposed merger with Nicor. Because we complete material mergers and acquisitions only occasionally,
we believe excluding these effects from certain measures is useful because they allow investors to more easily evaluate and compare the performance of the Company's core businesses from period
to period. Reconciliations of non-GAAP financial measures referenced in this presentation are available on the company’s Web site at www.aglresources.com
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