Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - CENTERPOINT ENERGY RESOURCES CORP | d503419d8k.htm |
| EX-99.1 - EX-99.1 - CENTERPOINT ENERGY RESOURCES CORP | d503419dex991.htm |
 Investing Today for Tomorrow’s Energy Infrastructure
Investor Introduction and Overview
March 2013
NYSE: CNP
investors.centerpointenergy.com
NYSE: OGE
oge.com/investor-relations
Exhibit 99.2 |
 2
investors.centerpointenergy.com
March 2013
oge.com/investor-relations
Forward Looking Statement
This document does not constitute an offer to sell or a solicitation of an offer to
buy any securities described herein, nor shall there be any sale of such
securities in any state or jurisdiction in which such an offer, solicitation
or sale would be unlawful prior to registration or qualification under the securities laws of any
such jurisdiction. Any such offering may be made only by means of a
prospectus. This document includes forward-looking statements. Actual
events and results may differ materially from those projected. The
statements in this document regarding the anticipated closing of the partnership
formation, including the anticipated benefits and a possible initial public
offering of the partnership, and other statements that are not historical
facts are forward-looking statements. Each forward looking statement
contained in this document speaks only as of the date of this document. Factors that could affect
actual results include the satisfaction or waiver of the conditions to closing the
transaction, the receipt of applicable regulatory approvals and the
termination rights of the parties under the master formation agreement
for
the
transaction,
and
other
factors
discussed
in
CenterPoint
Energy’s
and
its
subsidiaries’
and
OGE Energy Corp.’s Form 10-Ks for the fiscal year ended December 31, 2012,
and other filings with the SEC.
Pursuant to a registration rights agreement to be entered into upon the closing of
the transaction, OGE and CenterPoint Energy will agree to initiate the
process for the sale of an equity interest in the Midstream
Partnership
in
an
initial
public
offering
(IPO)
after
formation.
The
parties
can
give
no
assurances
that
the
IPO will be consummated. Prior to consummating the IPO, OGE, CenterPoint Energy and
the partnership will determine the financial and other terms of the offering
in conjunction with ArcLight. In addition, consummation of the IPO is
subject to market conditions. |
 3
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March 2013
oge.com/investor-relations
CenterPoint Energy (“CNP”), OGE Energy Corp. (“OGE”) and
ArcLight Capital (“ArcLight”) are forming a midstream partnership
composed of CNP’s Field Services and Interstate Pipelines and OGE’s and
ArcLight’s Enogex Midstream business
–
An existing subsidiary of CenterPoint Energy Resources Corp. will become the
Midstream partnership –
100% of CNP Field Services and Interstate Pipelines and 100% of OGE’s and
ArcLight’s Enogex will be contributed Transaction Overview
Transaction
Summary
Partnership
Structure
Private master limited partnership upon formation
Control and governance of the General Partner will be equally managed by CNP and
OGE Sponsors intend to pursue an IPO of the partnership, creating a publicly
traded MLP Timing &
Approvals
Normal regulatory approvals expected
Anticipate transaction closure in second or third quarter 2013
Sponsor
Ownership
Accounting
Treatment
Limited partner ownership expected to be 59% CNP, 28% OGE and 13% ArcLight
Incentive distribution rights of the general partner: CNP 40%, OGE 60%
CNP and OGE expect to account for their investment in the partnership using the
equity method of accounting
Gain associated with the step-up of asset value, if any, will be determined at
the time of formation Financing
&
Credit
Target leverage of 2.5x LTM EBITDA
Expected to be self-financing with adequate liquidity provided by $1.4 billion
revolving credit facility $1.05 billion three-year bank term loan
expected to be used to repay debt owed to CNP subsidiary Anticipate
receiving investment grade credit ratings |
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March 2013
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Midstream Partnership
Formation
50%
Governance
40% IDR Interest
60% IDR Interest
CNP Assets:
Pipelines and Field Services
Enogex Assets
59%
LP
Interest
28%
LP
Interest
13%
LP
Interest
50%
Governance
(NYSE:OGE)
(NYSE:CNP)
Midstream
Partnership
General
Partner |
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March 2013
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CenterPoint Energy Resources Corp. (CERC)
A Subsidiary of CenterPoint Energy
Strong Credit Metrics and Liquidity
(1)
The Midstream Partnership Term Loan will have a limited guarantee of collection
from CenterPoint Energy Resources Corp. (2)
General Partner
DEBT
Three-Year Bank Term Loan
$1,050
(1)
Notes to CERC Sub
363
Enogex Sr Notes
450
(3)
Enogex Term Loan
250
(3)
Total
$2,113
LIQUIDITY
Five-Year Revolver
$1,400
(2)
Total
$1,400
Liquidity is expected to be provided by a $1.4 billion Five-Year Senior Unsecured Revolving Credit
Facility which is anticipated to be syndicated prior to transaction close. Approximately
$144 million is expected to be drawn under such facility at transaction close assuming the close occurs on June 1, 2013. Enogex’s existing
revolver will be terminated commensurate with the closing of the $1.4 billion facility.
(3)
The Enogex Senior Notes and Enogex Term Loan will be guaranteed by the Midstream
Partnership. Midstream Partnership |
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March 2013
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Benefits of the Partnership
Enhanced scale, with more than $10.7 billion of combined assets
Geographic diversification, with operations in major natural gas
and liquids-
rich producing areas of Oklahoma, Texas, Arkansas and Louisiana
Significant asset positions in a broad range of basins, including the Granite
Wash, Tonkawa, Mississippi Lime, Cana Woodford, Haynesville, Fayetteville,
Barnett and Woodford plays
Enhanced supply and market access
Meaningful operating and commercial synergies
Stable and predictable cash flows from a balanced and diversified portfolio of
assets
Independent access to capital |
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March 2013
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Midstream Partnership
Increased Scale, Scope and Supply Diversity |
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March 2013
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Diversified Asset Base
Source: SEC Form 10-K as of December 31, 2012 and other Company
materials. Area
CNP Midstream
Enogex
New Midstream Partnership
8,400 miles Interstate pipelines
Nearly 2,300 miles Intrastate pipelines
8,400 miles Interstate pipelines
Nearly 9 TBtu/d throughput capacity
Nearly 2,300 miles Intrastate pipelines
3.7 TBtu/d throughput volume
2.1 TBtu/d throughput volume
Nearly 9 TBtu/d throughput capacity
Perryville Hub™
5.8 TBtu/d throughput volume
Perryville Hub™
4,600 miles of gathering
6,640 miles of gathering
11,240 miles of gathering
2.5 Bcf/d gathered
1.4 Bcf/d gathered
3.9 Bcf/d gathered
2 major plants
9 major plants
11 major plants
0.6 Bcf/d inlet capacity
1.3 Bcf/d inlet capacity
1.9 Bcf/d inlet capacity
Rich Gas Header System
Rich Gas Header System
6 storage facilities
2 storage facilities
8 storage facilities
67 Bcf of storage
24 Bcf storage
91 Bcf/d storage
Barnett
Haynesville
Granite Wash
Cana Woodford
Fayetteville
Cana Woodford
Fayetteville
Woodford
Mississippi Lime
Granite Wash
Barnett
Tonkawa
Haynesville
Cana Woodford
Mississippi Lime
Tonkawa
Woodford
2012 EBITDA
$566 Million
$292 Million
$858 Million
Total Assets
$6.5 Billion
$4.2 Billion
$10.7 Billion
Net PPE
$4.7 Billion
$2.3 Billion
$7 Billion
Storage
Key Gathering
Basins
Pipelines
Gathering
Processing |
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March 2013
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Balanced Mix of Dry Gas and Liquids-Rich Plays
Significant Producer Activity Across Key Conventional and Shale Basins
Unconventionl Plays
Wet Gas
Predominantly Dry gas
Heat Map Index
0 –
25 Rigs
26 –
50 Rigs
51 –
75 Rigs
76+ Rigs |
 10
investors.centerpointenergy.com
March 2013
oge.com/investor-relations
Expanded High Quality Producer Customer Base
Minimal Customer Overlap
Average Throughput, MMBtu/d
Table reflects each Company’s top ten producer throughput as of December 31,
2012 CenterPoint Energy Field Services
Enogex |
 11
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March 2013
oge.com/investor-relations
APPENDIX: Background Information |
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March 2013
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CenterPoint Energy Background Information |
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March 2013
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CenterPoint Energy, Inc (NYSE: CNP)
Domestic Energy Delivery with 147 Year Operating History
Strategically located assets and attractive service territories that provide
operating scale and diversification of risk
Regulated and fee-based operations provide over 90 percent of operating income
with stable earnings and cash flow
Opportunity to leverage
market position as a leading
provider of gas
infrastructure services,
particularly in shale plays
Organic growth opportunities
across all businesses
Committed to a secure,
competitive dividend with growth
Houston, TX headquartered
Regional offices in AR, LA, MS, MN, OK, TX |
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March 2013
oge.com/investor-relations
Southeast Supply Header
CenterPoint Energy Interstate Pipelines
2012A
2013E
2014E
2015E
2016E
2017E
$132
$201
$212
$128
$136
$126
–
Long-term agreements with affiliated LDCs extended into 2021
–
Nearly 40% of contracted demand serves LDCs and industrial load in and around
system –
Continued focus on shifting short-term contracts to longer-term
arrangements –
Initiated FERC rate proceeding for MRT (first since 2001)
–
Initiated settlement process with CEGT customers
Developing on-system customer growth, pipeline extensions and greenfield
projects –
Perryville
Hub™
Trading
Point
provides
ready
access
to
Gulf
Coast
–
Diverse supply basins
–
Continue to pursue extension opportunities especially power generation load and
producer laterals –
Pursue SESH expansion opportunities as well as expansion opportunities on core
system Capital
expenditures
–
Maintenance capital expected to average $60 to $80 million annually
–
New environmental regulations (e.g. RICE MACT) will increase
environmental capital expenditures
–
Expanded integrity management programs likely from pending pipeline
safety regulation
(in millions, source 2012 Form 10-K)
Three pipeline segments across nine states- CEGT with Line CP, MRT, SESH |
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March 2013
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CenterPoint Energy Field Services
(1)
Includes capital expenditures and acquisitions
2012A
(1)
2013E
2014E
2015E
2016E
2017E
$414
$271
$114
$88
$70
$71
Secure core business through superior customer service and product offerings
–
Attractive margins despite highly competitive business dynamics
–
Relatively low risk business model utilizing volume commitments and guaranteed
return contract terms –
Strategic footprint in both traditional and shale basins with operational
flexibility for both dry and wet processing Significant
increase
in
throughput
driven
primarily
by
shale
gas
infrastructure
investments
–
Average throughput of 2.5 Bcf per day in 2012 and anticipate similar levels in
2013 –
Attractive long-term contracts position business for solid long-term
growth Haynesville –
2 Bcf per day gathering and treating capacity
Fayetteville –
800 MMcf per day gathering capacity
Woodford –
500 MMcf per day gathering, 400 MMcf per day treating capacity
Amoruso –
200 MMcf per day gathering
Waskom
–
0.3 Bcf processing, over 200 MMcf per day gathering and 14,500 barrels per day
fractionation plant Actively pursuing other opportunities in liquids-rich
shale plays –
Bakken Open Season initiated February 19, 2013
Capital expenditures (in millions, source 2012 Form
10-K) |
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March 2013
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OGE Background Information |
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March 2013
oge.com/investor-relations
OGE Energy Corp. (NYSE: OGE)
Domestic Energy Delivery with 111 Year Operating History
Key financial objectives:
–
5% to 7% long-term earnings growth
rate
–
Stable and growing dividend
–
Strong credit metrics
–
Reduce earnings volatility by growing
fee-based business
Headquartered in Oklahoma City
Vertically integrated electric utility (OG&E) and natural gas midstream
business (Enogex)
Over 90% of earnings derived from utility or fee-based midstream business
Strategically located assets in a stable and growing service territory, prolific
natural gas basins and wind corridor |
 18
investors.centerpointenergy.com
March 2013
oge.com/investor-relations
Enogex, LLC
Expanding midcontinent footprint primarily in the
gathering and processing businesses
–
Over 2.5 million acres of long-term acreage dedications in
Western Oklahoma, the Texas Panhandle and the
Southeast Cana regions
–
Since 2011, over $1 billion of capital invested in gathering,
compression, processing facilities and acquisitions
–
Super processing header system allows for optimization
and high system reliability
Transportation and storage are stable fee-based
businesses with high quality utility customers
–
Delivers natural gas to 15 gas-fired power plants in
Oklahoma including OG&E and AEP’s Public Service
Company of Oklahoma
–
Interconnections with 13 long-haul interstate pipelines
allows customers to access multiple markets in the U.S.
–
24 Bcf of working storage is primarily fee-based on a long-
term and short-term basis |
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March 2013
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Detailed Asset Overview
CenterPoint Energy Midstream |
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March 2013
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CenterPoint Energy Midstream Asset Overview |
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March 2013
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Diverse supply sources from Haynesville, Fayetteville, Woodford and Barnett shale
plays Access
to
Gulf
Coast
via
Perryville
Hub™
/
SESH
Diverse customer base with strong credit profile
Note: The above data does not reflect shippers on CEGT’s Line CP
CenterPoint Energy Gas Transmission (CEGT)
CEGT Top Customers (% Revenues)
CNP Gas Operations
Laclede Group
Southwestern Electric Power
Oneok Energy Services
ANR pipeline
Other |
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March 2013
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Sub-segment of CEGT with its own fixed fuel treatment running from Carthage, TX
to Perryville, LA Provides market access for supply from the Barnett and
Haynesville Shales Access
to
Gulf
Coast
and
other
off-system
markets
via
Perryville
Hub™
/
SESH
provides
key
differentiator
in
oversupplied
corridor
Note: The above data only reflects shippers on Line CP and does not reflect
shippers on the rest of CEGT as a whole
CNP’s Line CP
Line CP Top Customers (% Revenues) |
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March 2013
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SONAT PV Core
CGT PV Core
SESH FM-65 Core
TENN 800 Core
SESH / SONAT Header
GSPL Header
MEP Header
CGT CP
ANR CP
TGC CP
TGT CP
TGT PV core
TENN 100 Core
TGC Core
ANR PV Core
TETCO W
Monroe Core
GSPL W Monroe Core
MRT PV Core
Storage Header (4Q 2013)
Delhi
Alto
LGS Sterlington
Core
Midla Core
CEGT
Core
Line CP
Perryville Hub Header
Bi-directional Meters
Delivery Meters (Receipts
by Displacement)
Delivery Meter
Receipt Meter (Deliveries
by Displacement)
Diverse supply sources
ANR:
ANR Pipeline
CGT:
Columbia Gulf Transmission
GSPL: Gulf South Pipeline
CNP’s Perryville Hub®
(PVH)
Access to multiple end user markets
Highly liquid delivery/receipt point
–
Substantial
Volume
Accessibility
–
Over
30
Bcf/d
of
receipt & delivery capacity
–
Supply
&
Market
Optionality
–
more
than
20
separate
interconnects with 7 bi-directional
–
Established Perryville Hub™
Trading Point
MEP:
Midcontinent Express
TGT:
Texas Gas Transmission
TGC:
Trunkline Gas Company
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Barnett, Fayetteville, Woodford, Haynesville, Cana-Woodford,
Mississippi Lime, and Granite Wash shale plays
Traditional Arkoma, Ark-La-Tex, and Anadarko Basins
|
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March 2013
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Barnett
Shale
Woodford
Shale
Fayetteville
Shale
Haynesville
Shale
Access to key supply source shale plays
Significant demand from large LDC customer
Access
to
Gulf
Coast
via
Perryville
Hub™
/
SESH
CNP’s Mississippi River Transmission (MRT)
MRT Top Customers (% of Revenues)
Laclede Group
CEGT
Ameren IIIinois
CenterPoint Energy Services
US Steel
Other |
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investors.centerpointenergy.com
March 2013
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CNP’s Southeast Supply Header (SESH)
50/50 joint venture between
CenterPoint and Spectra
Energy
–
CenterPoint provides field
operations
–
Spectra provides commercial
operations
–
SONAT undivided interest in first
115 miles (500 MM/d capacity
entitlement)
Pipeline capacity of 1.5 Bcf/d
Gwinville (Sonat) and 1.0
Bcf/d to Florida
11 interconnections with
existing natural gas pipelines
Access to 3 high deliverability
storage facilities, with another
2 facilities expected
Pipeline Summary |
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investors.centerpointenergy.com
March 2013
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–
Anadarko basin
–
Arkoma basin (includes Woodford
and Fayetteville shales)
–
Ark-La-Tex basin (includes
Haynesville shale)
CenterPoint Energy Field Services (CEFS)
Statistics reflect July 2012
Anadarko Basin
Arkoma Basin
Ark-La-Tex Basin
Basin Revenues (%)
Assets in three major gas traditional and shale basins
ARK-LA-TEX
ARKOMA
ANADARKO |
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March 2013
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Detailed Asset Overview
Enogex LLC |
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Enogex Asset Overview |
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Large acreage dedications
Western Oklahoma, the Texas Panhandle and Mississippi Lime
Greater Granite Wash
(Tonk/Clev/Marm/GW)
(rich)
Apache PVR
Chesapeake Questar
Devon Cimarex
NW Cana
(less rich)
Devon Cimarex
Continental Questar
SE Cana
(rich)
Continental Newfield
Marathon EagleRock
Chevron Chesapeake
Mississippi Lime
(oil / rich gas)
Devon Slawson
Various Others |
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March 2013
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Enogex Rich Gas Header System
Source: Enogex management presentation (November 2012)
|
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investors.centerpointenergy.com
March 2013
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Enogex Processing Plants
Source: Enogex management presentation (November 2012)
Nameplate
Processing
Year
Capacity
Plant
Installed
Type of Plant
(MMcf/d)
Calumet
1969
Lean Oil
250
Thomas
1981
Cryogenic
135
Wetumka
1983
Cryogenic
60
Cox City
1994
Cryogenic
60
Canute
1996
Cryogenic
60
Roger Mills
2008
Refrigeration
100
Clinton
2009
Cryogenic
120
Cox City Train 4
2011
Cryogenic
120
South Canadian
2011
Cryogenic
200
Wheeler
2012
Cryogenic
200
McClure*
2013
Cryogenic
200
Total Pro Forma Capacity
1,505
*Presently under construction. |
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March 2013
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Enogex Expanding Position in the Mid-Continent |
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Enogex Transportation
Strategically located transportation assets
–
~2,250 miles intrastate transportation pipelines
Average throughput of ~2.1 TBtu/d
–
OG&E and PSO are two largest customers
–
Deliver natural gas to 15 electric generation
facilities in Oklahoma
Two natural gas storage facilities
–
Approximately 24 Bcf of aggregate working gas
capacity
Well positioned with multiple outlet
alternatives
–
Connected to 13 major third-party pipelines at 64
pipeline interconnect points |
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March 2013
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Enogex Storage Overview
The two natural gas storage facilities on the east side of the Enogex
system provide approximately 24 Bcf of working gas capacity to
customers.
The Wetumka storage field
–
Services the majority of the power plant load on the system.
–
In operation since 1973
–
Total working storage capacity is 18 Bcf
–
Consists of 34 active injection/withdrawal wells, which equates to a maximum
deliverability and injection capacity of 450 MMcf/d
The Stuart storage field
–
In operation since 1994
–
Total working storage capacity is 6 Bcf
–
Contains 11 active storage wells for injection and withdrawal. Maximum
deliverability and injection capacity is 200 MMcf/d.
Both fields have historically been fully contracted. |
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March 2013
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CenterPoint Energy, Inc (CNP) and OGE Energy Corp (OGE) have included the
non-GAAP financial measure EBITDA based on information in their
respective 2012 Form 10-K and the combined partnership. EBITDA is a supplemental non-
GAAP financial measure used by external users of the Company's financial statements
such as investors, commercial banks and others, to assess:
CNP provides a reconciliation of EBITDA to its operating income attributable to
CNP’s Field Services and Pipelines business reported
in
CNP
and
CenterPoint
Energy
Resources
Corp.
2012
Form
10-K,
which
is
considered
to
be
most
directly
comparable financial measure as calculated and presented in accordance with
GAAP. OGE provides a reconciliation of EBITDA to net income
attributable to Enogex Holdings, which Enogex considers to be its most directly comparable financial
measure
as
calculated
and
presented
in
accordance
with
GAAP.
The
non-GAAP
financial
measure
of
EBITDA
should
not
be
considered as an alternative to GAAP accounting attributable to each company.
EBITDA is not a presentation made in accordance with GAAP and has important
limitations as an analytical tool. EBITDA should not be considered in isolation or
as a substitute for analysis of each company’s results as reported under GAAP.
Because EBITDA excludes some, but not all, items that affect each
company’s reported financial results and is defined differently by different companies in the
midstream energy sector, each company’s definition of EBITDA may not be
comparable to a similarly titled measure of other companies.
To compensate for the limitations of EBITDA as an analytical tool, CNP and OGE
believe it is important to review the comparable GAAP measure and understand
the differences between the measures. Non-GAAP Financial Measure
•
The financial performance of assets without regard to financing methods, capital
structure or historical cost basis; •
Operating
performance
and
return
on
capital
as
compared
to
other
companies
in
the
midstream
energy
sector,
without
regard to financing or capital structure; and
•
The viability of acquisitions and capital expenditure projects and the overall
rates of return on alternative investment opportunities.
|
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Reconciliation of EBITDA to GAAP
(A)
As of November 1, 2010, Enogex Holdings' earnings are no longer subject to tax
(other than Texas state margin taxes) and are taxable at the individual partner level.
(B)
Includes amortization of certain customer-based intangible assets associated
with the acquisition from Cordillera in November 2011, which is included in gross margin for financial reporting
purposes.
As reported ($ millions)
Field Services
Interstate Pipelines
Midstream Group
Operating Income
214
$
207
$
421
$
Add:
Depreciation and amortization
50
56
106
Equity in earnings of unconsolidated affiliates
5
26
31
Distributions in excess of
earnings
3
5
8
EBITDA
272
$
294
$
566
$
Net Income attributable to Enogex Holdings
147.8
$
Add:
Interest expense, net
32.6
Income tax expense
(A)
0.2
Depreciation and amortization expense
(B)
111.6
EBITDA
292.2
$
Combined EBITDA
858.2
$
Year Ended December 31, 2012
CenterPoint Energy
Enogex Holdings |