Dominion Energy, Inc. · NYSE:D
Dominion Energy — FY2015 Earnings Presentation
26 slides from Dominion Energy's earnings presentation, Feb 1, 2016
Slide 1: Combination with Questar and 2015 Earnings & 2016 Guidance
Combination with Questar and 2015 Earnings & 2016 Guidance February 1, 2016
Slide 2: Today's Agenda
Today’s Agenda • Transaction Overview and Strategic Rationale • Combined Company Profile and Financial Outlook • 2015 Earnings Results and 2016 Guidance • Operating and Regulatory Review and Growth Project Update • Q&A 2/1/2016 Questar Combination and 2015 Earnings 2
Slide 3: Important Note to Investors
Important Note to Investors This presentation contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding Dominion and Dominion Midstream. The statements relate to, among other things, expectations, estimates and projections concer
Slide 4: Important Note to Investors (Cont.'d)
Important Note to Investors Cont.’d Additional information and where to find it This communication may be deemed to be solicitation material in respect of the merger Questar into Dominion. In connection with the merger, Questar intends to file relevant materials with the SEC, including a proxy state
Slide 5: Transaction Overview and Strategic Rationale
Transaction Overview and Strategic Rationale Tom Farrell 2/1/2016 Questar Combination and 2015 Earnings 5
Slide 6: Transaction Overview
Transaction Overview – Dominion Resources and Questar Corporation (NYSE: STR) to combine in a $4.4 billion equity value transaction • Consideration of $25 per share in cash represents a ~30% premium to Questar shareholders based on 20-trading day volume-weighted average price – $6.0 billion enterpri
Slide 7: Strategic Rationale
Strategic Rationale – Well-aligned with Dominion and Dominion Midstream’s strategic focus • ~70% of Questar’s current EBITDA is MLP-eligible (~$425 million) • Combination of integrated natural gas asset profiles with extensive supply, transportation, storage and distribution experience – Enhanced sc
Slide 8: Strategic Rationale (Cont.'d)
Strategic Rationale (Cont.’d) – Complementary cultures of commitment to communities and employees • Well-managed operations • Conduct business with integrity and honesty • Provide safe and reliable service – Excellent business risk profile • Gas utility: Low risk margins through constructive regulat
Slide 9: Pro Forma Geographic and Asset Profile
Pro Forma Geographic and Asset Profile Bridging the “Hub of the Mid-Atlantic” With the “Hub of the Rockies” The combination ideally positions Dominion Resources to serve both Eastern U.S. and Western U.S. natural gas markets Ruby Dominion gas utility Questar gas utility Cove Point Dominion gas pipel
Slide 10: Gas Distribution Territory
Gas Distribution Territory Questar is Ideally Positioned to Serve Growing Regional Gas Demand Increased regional reliance on Clean Power Plan Percent of Renewable low-emission, gas-fired target emissions generation energy generation will be required to State reduction (2030)¹ from coal² target³ meet
Slide 11: Benefits to Dominion Shareholders
Benefits to Dominion Shareholders – Immediately EPS accretive with limited impact on Dominion’s balance sheet – Additive to Dominion’s inventory of top-quality, low-risk, MLP-eligible assets • Allows Blue Racer to be retained at Dominion until 2020 or beyond • Adds ~$425 million in MLP-eligible EBIT
Slide 12: Combined Company Profile and Financial Outlook
Combined Company Profile and Financial Outlook Mark McGettrick 2/1/2016 Questar Combination and 2015 Earnings 12
Slide 13: Questar Corporation Overview
Questar Corporation Overview Regulated Rockies-Based Integrated Natural Gas Company Includes a Growing Regulated Gas Utility and Additional MLP-Eligible Assets Current EBITDA State Questar’s integrated service regulated territory recognized as best Regulated Gas utility State- gas supply 86% 30% sta
Slide 14: Pro Forma Business Profile
Pro Forma Business Profile Expansion of Dominion’s Regulated Gas Infrastructure Business 63% 58% Category Dominion Questar Pro Forma (% increase) 6% 13% $3.5 Rate base ($ billion) $2.4* $1.1 Gas utility (LDC) 9% (+46%) 10% 2.3M Utility customers 1.3M 1.0M (+77%) 63% 56% 6% 14% 53,200 Pipeline miles
Slide 15: Existing and Pro Forma EBITDA Contribution
Existing and Pro Forma EBITDA Contribution Pro Forma EBITDA Contribution 63% 58% Dominion Resources Dominion Resources—Pro Forma 6% 13% 2015 EBITDA 2015 EBITDA 11% 9% 12% State regulated electric 19% State regulated gas1 20% FERC regulated gas 56% 7% 62% Other 56% 14% 13% 69% state- 70% state- regul
Slide 16: Impact to Dominion Midstream
Impact to Dominion Midstream Increases D inventory of quality, low-risk, MLP-eligible assets – ~$425 million of MLP-eligible EBITDA added to Dominion’s extensive inventory of high quality, MLP-eligible assets • Blue Racer retained at Dominion until 2020 or beyond Questar Current • Reduces Cove Point
Slide 17: Financing and Financial Impact
Financing and Financial Impact – Prudently financed in line with our previously stated credit ratings targets • D Equity • D Debt • D Mandatory Convertibles • DM Equity – Accretive to Dominion EPS – Supportive of 2017 earnings per share growth rate and allows Dominion to achieve or exceed the top en
Slide 18: Fourth Quarter and Year End 2015 Earnings Results
Fourth Quarter and Year End 2015 Earnings Results 2/1/2016 Questar Combination and 2015 Earnings 18
Slide 19: Operating Earnings Summary
Operating Earnings Summary Fourth Quarter 2015 versus Guidance Guidance from 3rd Quarter Actual Operating Earnings $0.95 $3.69 $0.70 $3.44 4th Quarter Drivers $0.85 $3.59 $2.74 Weather Timing of farmout restructuring Tax-related items Fourth Qtr 2015 Full Year Third Qtr YTD Fourth Qtr 2015 Implied A
Slide 20: December 2015 Weather Impact
December 2015 Weather Impact Driver for Fourth Quarter Earnings Mildest Winter Weather in 50 Years December 400 Warmer than Normal 2015 300 Deviation from Normal (˚F) Cumulative Degree Day 200 100 0 Deviation from Normal -100 -200 -300 -400 Colder than Normal 1965 1975 1985 1995 2005 2015 Please ref
Slide 21: Dominion Midstream Partners Fourth Quarter 2015 Earnings and Distribution
Dominion Midstream Partners (DM) Fourth Quarter 2015 Earnings and Distribution – Financial Results in line with Management expectations • Net Income $25.1 million • Adjusted EBITDA $23.6 million* • Distributable Cash Flow $24.7 million* – Distribution Results • Board declared 4Q 2015 cash distributi
Slide 22: Cash Flow and Financing Activities
Cash Flow and Financing Activities Fourth Quarter 2015 and 2016 Guidance – Cash Flow & Liquidity • $4.5 billion in funds from operations for the year • $3.1 billion in net commercial paper and letters of credit outstanding • $4.5 billion of credit facilities • $1.4 billion of liquidity – Financing •
Slide 23: Operating Earnings Guidance
Operating Earnings Guidance Full Year 2016 10% Growth to Guidance Midpoint $4.00 2016 Drivers $3.44 $3.60 Growth Projects Lower Capacity Expense Capacity Performance Revenue Lower Effective Tax Rate Depreciation Share Dilution 2015 Actual 2016 Guidance* Operating EPS* *See pages 35 and 38 of the fou
Slide 24: Growth Projects Update
Growth Projects Update Major Projects are All On-Time and On-Budget – Generation • Brunswick 96% complete • Greensville hearing in January, SCC Order expected in April • 345 MWs of contracted solar expected to come on-line in 2016* • Solar strategy shifting to Virginia Several solar projects in Vi
Slide 25: Concluding Remarks
Concluding Remarks Tom Farrell – Questar will be a premium-quality addition to Dominion and Dominion Midstream’s portfolio Consistent with strategic focus on core energy infrastructure Additive to Dominion’s significant inventory of top-quality, low- risk, MLP-eligible assets Enhances the regu
Slide 26: Questar Combination and 2015 Earnings
2/1/2016 Questar Combination and 2015 Earnings 26