0
James C. Yardley
   President & Chief Executive Officer
El Paso Pipeline GP Company, L.L.C.
            IPAA MLP Conferenc...
Forward Looking Statements
This release includes forward-looking statements and projections, made in reliance on the safe ...
Overview of El Paso Corporation


• Purpose

• Culture

• Assets

• MLP Formation




                                    ...
Defining Purpose




 El Paso Corporation provides
 natural gas and related energy
products in a safe, efficient, and
    ...
Focus on Culture




     the place to work
the neighbor to have
 the company to own




                                 ...
Overview of El Paso Corporation
                                   Wyoming
                  Colorado
                    ...
MLP Formation Rationale


                                   Optimize
       Highlight
                                   ...
El Paso Pipeline Partners, L.P.




                             8
El Paso Pipeline Partners L.P.
                      Successful IPO November 15, 2007

                        $25.00
• 28...
Investment Highlights
                 • El Paso is the premier U.S. natural gas pipeline franchise
   Strong
            ...
Overview of El Paso Pipeline Partners
                                               • Primary focus is natural gas transm...
MLP Opportunities
High


                                                           • Price stability
                    ...
Stable Cash Flow
Capacity Reservation Charges
Result in Stable Cash Flows
                                                ...
Best Positioned Assets
Major Flow Changes 2006–2016 (Bcf/d)
                                                              ...
Wyoming Interstate Company
                             Medicine Bow Expansion — $32 MM                             POWDER...
Colorado Interstate Gas
                                                                  High Plains Pipeline — $196 MM (...
Southern Natural Gas
                                                   Cap Ex      Capacity                 In-          ...
Contracted Organic Growth is Highly Visible
$ Millions

                       2007          2008–2009        2010 & Beyon...
Committed To Growth

                                • Most pipeline assets
• Three sources of future
                    ...
The MLP to Own
                                                   Strong sponsorship
                                     ...
James C. Yardley
   President & Chief Executive Officer
El Paso Pipeline GP Company, L.L.C.

       IPAA MLP Conference
  ...
Appendix




           22
Strong Sponsorship
     Public Unitholders
                                                            28,437,786 EPB Comm...
Strong Financial Flexibility
$ Millions
                                                                             9/30/...
Minimum Cash Flow for Distributions
                                                              Twelve Months
($ in mill...
Experienced Senior Management
                                                                                     Years
N...
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Transcript of "el paso Yardley_IPAAMLPConference1"

  1. 1. James C. Yardley President & Chief Executive Officer El Paso Pipeline GP Company, L.L.C. IPAA MLP Conference January 17, 2008
  2. 2. Forward Looking Statements This release includes forward-looking statements and projections, made in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. El Paso Pipeline Partners and El Paso Corporation have made every reasonable effort to ensure that the information and assumptions on which these statements and projections are based are current, reasonable, and complete. However, a variety of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this presentation, including, without limitation, the ability to obtain necessary governmental approvals for proposed pipeline projects and to successfully construct and operate such projects; operating hazards, natural disasters, weather-related delays, casualty losses and other matters beyond our control; the risks associated with recontracting of transportation commitments; regulatory uncertainties associated with pipeline rate cases; actions taken by third-party operators, processors and transporters; conditions in geographic regions or markets served by WIC, El Paso Pipeline Partners and their affiliates or where their operations and affiliates are located; the effects of existing and future laws and governmental regulations; competitive conditions in our industry; changes in the availability and cost of capital; and other factors described in El Paso Pipeline Partners’ and El Paso Corporation’s (and their affiliates’) Securities and Exchange Commission filings. While these statements and projections are made in good faith, El Paso Pipeline Partners, El Paso Corporation and their respective management teams cannot guarantee that anticipated future results will be achieved. Reference must be made to those filings for additional important factors that may affect actual results. El Paso Pipeline Partners and El Paso Corporation assume no obligation to publicly update or revise any forward-looking statements made herein or any other forward-looking statements made, whether as a result of new information, future events, or otherwise. 2
  3. 3. Overview of El Paso Corporation • Purpose • Culture • Assets • MLP Formation 3
  4. 4. Defining Purpose El Paso Corporation provides natural gas and related energy products in a safe, efficient, and dependable manner 4
  5. 5. Focus on Culture the place to work the neighbor to have the company to own 5
  6. 6. Overview of El Paso Corporation Wyoming Colorado Tennessee Interstate Interstate Gas Gas Pipeline Cheyenne Mojave Plains Pipeline Pipeline Southern Natural Gas El Paso Elba Island Natural Gas LNG Gulf LNG Florida Gas (50%) Transmission (50%) 2011 Premier Pipeline Franchise Top 10 independent E&P • $1.2 billion of 2006 EBIT • 2.6 Tcfe YE ’06 proved reserves • 43,000 miles of interstate pipeline with • Top 10 independent domestic gas unmatched connectivity producer • More than $2 billion of organic projects • 5 years of project inventory with firm customer commitment • Portfolio upgrade underway 6
  7. 7. MLP Formation Rationale Optimize Highlight Capital Franchise Structure Value Enhance Competitive Position A strong performing MLP currency provides El Paso with a strategic vehicle to grow its business 7
  8. 8. El Paso Pipeline Partners, L.P. 8
  9. 9. El Paso Pipeline Partners L.P. Successful IPO November 15, 2007 $25.00 • 28.75 MM units sold to public at $20/unit $24.00 $23.00 • El Paso retained 64.8% LP units+ $22.00 2% GP interest 1/16/08: $23.54 and incentive ’08 Est. Distribution: $1.15 distribution rights $21.00 Yield: 4.9% $20.00 • Unit value up 18% Nov-07 Dec-07 Jan-08 since IPO 9
  10. 10. Investment Highlights • El Paso is the premier U.S. natural gas pipeline franchise Strong • Alignment of interests (67% ownership + IDRs) Sponsorship • Strategic growth vehicle for El Paso • 90%+ revenue from capacity reservation charges Stable Cash Flow • Average contract life of approximately 6 years • Strategically located high quality assets • $1.1 billion of contracted growth projects ($336 MM to the MLP) Growth Vehicle • Growth through potential acquisitions - third party, drop down or both • Unparalleled experience in the pipeline industry Experienced • Includes some of El Paso’s most senior officers with an average of Management over 26 years of energy industry experience Financial • Strong and flexible financial position Flexibility 10
  11. 11. Overview of El Paso Pipeline Partners • Primary focus is natural gas transmission and storage assets • Three FERC regulated interstate pipelines: – 100% of WIC: 700 miles, 2.3 Bcf/d – 10% of CIG: 4,000 miles, 3.0 Bcf/d – 10% of SNG: 7,600 miles, 3.7 Bcf/d • Demand based revenues from high quality customers with strong credit profiles • Several organic expansions underway WIC SNG CIG Diverse, Growing Supply Regions High Connectivity to Growing Markets 11
  12. 12. MLP Opportunities High • Price stability • Long-term firm Interstate Cash Flow Stability Pipelines demand contracts • Stable asset base Majority of alternative MLP’s Low Low High Asset Life 12
  13. 13. Stable Cash Flow Capacity Reservation Charges Result in Stable Cash Flows 2006 Revenue Composition (1) WIC CIG SNG Capacity Reservation Charges 97.8% 92.3% 89.0% 1.8% 6.0% 7.0% Variable Charges 0.4% 1.7% 4.0% Interruptible Contracts Weighted Average 6.8 6.1 5.8 Contract Life (years) $100 MM of 2008 estimated cash flow available for distribution (1) Excludes liquids and fuel retention revenues. 13
  14. 14. Best Positioned Assets Major Flow Changes 2006–2016 (Bcf/d) -2.0 Canada 0.7 Declining -0.4 exports to the USA -1.2 Eastern Demand -1.0 Growth Especially -0.5 Southeast 3.4 2.8 1.5 2.9 0.6 4.7 Rockies 4.0 (1) Increasing supplies 0.4 leaving region 1.2 1.4 1.3 LNG 5.4 Expanding current facilities, Gulf Coast additions Source: EEA/ICF International July 2007 Base Case 0.8 (1) Elba Island Facility not owned by El Paso Pipeline Partners. 14
  15. 15. Wyoming Interstate Company Medicine Bow Expansion — $32 MM POWDER RIVER BASIN • Adds 330 MMcf/d capacity from Douglas WIND RIVER Powder River Basin Compressor • Low cost Rockies BASIN Station • Fully contracted takeaway pipeline • In-service July 2008 GREATER GREEN RIVER BASIN Leased Capacity on Contracted • Stable growing Medicine Bow Wamsutter CIG’s Powder River Line Capacity Lateral Compressor cash flow Opal Hub Station Kanda Interconnect Echo Springs Lateral • Organic growth WIC Kanda Lateral & Compression — $164 MM Wyoming with superior • 400 MMcf/d from Uinta Basin Utah • Fully contracted Colorado Cheyenne Hub returns DJ BASIN • In-service January 2008 Northwest Pipeline Interconnect UINTA BASIN B Piceance Lateral Piceance Basin Expansion $62 MM Anadarko • 219 MMcf/d Chapita Plant • Fully contracted PICEANCE BASIN • Initial in-service 4Q’08 $395 MM of growth cap ex with approximately $120 MM to be spent (1) (1) As of November 15, 2007 15
  16. 16. Colorado Interstate Gas High Plains Pipeline — $196 MM (100%) POWDER RIVER • Leading Rockies BASIN • Fully contracted Legend interstate system • 164 miles of 24quot; and 30quot; pipeline Major hubs WYOMING • 900 MMcf/d overall capacity CIG Storage Fields WIND RIVER • Access to growing BASIN High Plains • In-service October 2008 CIG NEBRASKA Rockies Basins GREATER GREEN RIVER BASIN Opal Hub • Directly serves OVERTHRUST BASIN Denver/Front DENVER-JULESBURG Cheyenne Hub BASIN Range markets UINTA BASIN PICEANCE UTAH BASIN KANSAS Totem Gas Storage — $120 MM (100%) COLORADO • Fully contracted Beaver Compressor • 7 Bcf of capacity Raton Basin — $13 MM (100%) Station • Interconnect with High Plains Pipeline • 30 MMcf/d; 11 miles of looped RATON OKLAHOMA pipeline; compression BASIN • In-service July 2009 • Fully contracted TEXAS ANADARKO BASIN • In-service September 2007 $171 MM of growth cap ex; $128 MM to be spent; $13 MM net to EPB(2) (1) 100% to JV of which CIG will be responsible for 50% (2) As of November 15, 2007 16
  17. 17. Southern Natural Gas Cap Ex Capacity In- Southern SESH ($ MM) (MMcf/d) Service Natural Gas Chattanooga an El Paso Company Phase I 74 136 Jun 2008 • Franchise system in Huntsville Phase II 96 349 Oct 2010 growing Southeast Columbia Muldon Atlanta Augusta Birmingham • Excellent Bear Creek connectivity Macon Columbus Jackson Montgomery Savannah Elba • Growing supply Island (1) sources Albany Tallahassee Jacksonville Cap Ex Capacity In- Cap Ex Capacity In- SSIII ($ MM) (MMcf/d) Service Cypress ($ MM) (MMcf/d) Service Phase I 122 Oct 2010 Phase I 255 215 May 2007 Phase II $286 122 Jun 2011 Phase II 19 114 May 2008 Phase III 122 Apr 2012 Phase III 82 161 Jan 2011 $833 MM of growth cap ex; $526 MM to be spent; $53 MM net to EPB(2) (1) Not owned by El Paso Pipeline Partners (2) As of November 15, 2007 17
  18. 18. Contracted Organic Growth is Highly Visible $ Millions 2007 2008–2009 2010 & Beyond WIC Kanda Lateral Kanda Lateral Medicine Bow Medicine Bow Piceance Basin CIG High Plains High Plains Totem Storage Totem Storage Raton SNG Cypress I Cypress (II&III) Cypress III SESH SESH SESH SSIII SSIII 100% Share $385 $376 $334 Net to EPB 191 112 33 18
  19. 19. Committed To Growth • Most pipeline assets • Three sources of future suitable for MLP growth – Organic • $2.4 billion NOL (post IPO) – Drop downs from El Paso • Review on ongoing – Third-party acquisition basis • Proceeds available for reinvestment, share buy backs, debt reduction 19
  20. 20. The MLP to Own Strong sponsorship Stable cash flow Growth vehicle Experienced management Financial flexibility WIC SNG CIG Diverse, Growing Supply Regions High Connectivity to Growing Markets 20
  21. 21. James C. Yardley President & Chief Executive Officer El Paso Pipeline GP Company, L.L.C. IPAA MLP Conference January 17, 2008
  22. 22. Appendix 22
  23. 23. Strong Sponsorship Public Unitholders 28,437,786 EPB Common Units 28,750,000 EPB Common Units 27,727,411 EPB Subordinated Units GP interest and incentive distribution rights 33.2% LP 64.8% LP Pipelines 2.0% GP E&P Other 100% 10% 10% Wyoming Interstate Colorado Interstate Southern Natural Company Gas Company Gas Company “WIC” “CIG” “SNG” 90% 90% 23
  24. 24. Strong Financial Flexibility $ Millions 9/30/07 Pro Forma As Adjusted Cash $ 1 $ 1 Note payable to affiliate 225 – Revolving borrowings – 425 Capital lease obligations 8 8 Total debt 233 433 Partners’ capital 544 346 Total capitalization $ 777 $ 779 Credit Statistics Debt/capitalization 30% 56% Debt/2008E adjusted EBITDA 1.7x 3.1x Undrawn revolver capacity of $325 million(1) ; revolver capacity expandable by $500 million (1) Based on balance at IPO close (11/21/07) 24
  25. 25. Minimum Cash Flow for Distributions Twelve Months ($ in millions) Adjusted EBITDA Ending 12/31/08 ($ Millions) Net Income $84 Add: R Depreciation and amortization 26 AG Interest and debt expense, net 30 C 17% Estimated cash distributions from CIG 12 $138 Estimated cash distributions from SNG 20 Less: Equity in earnings from CIG (14) $108 (1) Equity in earnings from SNG (20) (1) $100 Adjusted EBITDA $138 Less: Provides 1.05x Coverage Ratio Cash reserve (5) Cash interest expense, net (29) Maintenance capital expenditures (2) Other income, net (2) Minimum estimated cash available for distribution $100 Minimum annual distribution per unit $1.15 Annual distributions to: Public common unitholders $33 2006 PF LTM PF 2008E El Paso 67 9/30/07 $100 Total distributions to unitholders and GP (1) Twelve months ended December 31, 2006 and September 30, 2007 are net of $4 MM of incremental G&A expenses associated with being a public company. 25
  26. 26. Experienced Senior Management Years Name El Paso Title MLP Title Experience Ronald Kuehn, Jr. Chairman of the Board Chairman of the Board 37 Doug Foshee President, Chief Executive Director 25 Officer & Director Mark Leland EVP & CFO Director 21 Jim Yardley Chairman, El Paso Pipeline Director, President and CEO 29 Group J.R. Sult SVP,CFO & Controller of SVP, CFO and Controller 26 the Pipeline Group; SVP, CAO & Controller (EP) Jim Cleary President, Western Pipeline SVP 28 Group Norman Holmes SVP, CCO & Director of SVP 28 Southern Natural Gas Arthur Reichstetter Independent Director Nominee 31 26
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