TC Energy Corporation · TSX:TRP
TC Energy — CIBC Western Institutional Investor Conference 2020
54 slides from TC Energy's conference presentation, January 2020
Slide 1: Corporate Profile
Corporate Profile January 2020
Slide 2: Forward looking information and non-GAAP measures
Forward looking information and non‐GAAP measures This presentation includes certain forward looking information, including future oriented financial information or financial outlook, which is intended to help current and potential investors understand management’s assessment of our future plans and
Slide 3: A leading North American energy infrastructure company
A leading North American energy infrastructure company • Proven strategy with a low‐risk business model • Delivered 14% average annual total shareholder return since 2000 • Business performing very well • Record financial results expected again in 2019 • Asset footprint provides multiple platforms f
Slide 4: TC Energy today
TC Energy today • One of North America’s largest natural gas pipeline networks • 92,600 km (57,500 mi) of pipeline • 653 Bcf of storage capacity • 23 Bcf/d; ~25% of continental demand • Premier liquids pipeline system • 4,900 km (3,000 mi) of pipeline • 590,000 Bbl/d Keystone System transports ~20%
Slide 5: Major 2019 Accomplishments
Major 2019 Accomplishments Generated record financial results through the first nine months • Comparable earnings were $3.11 per share, up 10% • Comparable funds generated from operations of $5.3 billion, up 14% Advanced $30 billion secured capital program • Expect to place ~$10 billion of proje
Slide 6: Financial highlights – Nine months ended September 30 (Non-GAAP)
Financial highlights – Nine months ended September 30 (Non‐GAAP) Comparable Comparable Comparable funds earnings per common share* EBITDA* generated from operations* (Dollars) ($Millions) ($Millions) 10% increase 15% increase 14% increase *Comparable Earnings per Common Share, Comparable EBITDA and
Slide 7: North American industry fundamentals through 2040
North American industry fundamentals through 2040 North American Natural Gas Demand North American Crude Oil Production, North American Power Capacity, and LNG Exports, 2015 and 2040* 2015 and 2040* 2015 and 2040* Bcf/d MMb/d GW Highlights the need for new energy infrastructure *Source: IEA World En
Slide 8: Asset footprint provides a strong competitive advantage
Asset footprint provides a strong competitive advantage Canadian Mainline is a critical NGTL System is uniquely conduit to eastern markets positioned over 924 Tcf of WCSB natural gas resources Bruce Power generates ~30% of Ontario’s power Keystone corridor provides a direct link to world’s largest C
Slide 9: Line of sight to over $50 billion of growth opportunities
Line of sight to over $50 billion of growth opportunities Natural Gas Pipelines Liquids Pipelines Power and Storage • NGTL expansions • Keystone XL • Bruce Power Life Extension • Columbia expansions • Grand Rapids Phase II • Other growth in contracted power • Coastal GasLink • Heartland Pipeline and
Slide 10: Advancing $30 billion secured capital program through 2023
Advancing $30 billion secured capital program through 2023 Estimated Capital Expected Project Invested to Date* Cost* In‐Service Date* NGTL System 2.5 2.4 2019 Modernization II US 1.1 US 0.7 2019‐2020 Villa de Reyes US 0.9 US 0.7 2020 NGTL System 2.1 0.8 2020 Other Liquids Pipelines 0.1 ‐ 2020 Canad
Slide 11: Secured growth program very high-quality and long duration
Secured growth program very high‐quality and long duration Average contract term (years) $2.2 billion Regulated Rate Bases $6.6 US$1.7 billion billion US$1.5 (100%) billion $10.4 billion NGTL System and U.S. Natural Gas Coastal GasLink Mexico Natural Bruce Power Canadian Mainline Pipelines Gas Pipel
Slide 12: Comparable EBITDA outlook 2015-2022E
Comparable EBITDA* outlook 2015‐2022E $Billions 10+ 9.3 Power and Storage 2023+ Normalizing items Liquids Pipelines • Coastal GasLink • Asset sales • NGTL System 2023 • Bruce Power Unit 6 Mexico Natural Gas Pipelines • Bruce Power Unit 6 5.9 • Volumetric and commodity variability Power and Storage •
Slide 13: Stability and longevity of core asset base
Stability and longevity of core asset base Comparable EBITDA* • Five growth platforms ($Billions) • Balance sheet strength • Supportive fundamentals • Irreplaceable corridors ~$10 billion of base EBITDA visible through 2030 • Completion of $30 billion secured growth program • Maintenance capital • N
Slide 14: Continuing long track record of dividend growth
Continuing long track record of dividend growth 5‐7% Expected organic 8‐10% growth per year 2021+ CAGR 3.00 • $30 billion secured growth program • Further “in‐corridor” expansions 7% • $20 billion development portfolio 2.08 CAGR • Keystone XL • Alberta liquids • Further Bruce refurbishments • Merric
Slide 15: 2019 Funding complete
2019 Funding complete $Billions $7.8 billion raised in 2019 through an array of attractive funding options • $3.4 billion from monetization of Coolidge, Northern Courier and certain Columbia Midstream assets • Additional $2.9 billion to be realized on sale of Ontario gas‐fired power plants in first
Slide 16: Balanced program has funded $72 billion of capital needs
Balanced program has funded $72 billion of capital needs $Billions 2016‐2019E Portfolio Management Acquisitions Discrete Equity ATM Debt Maturities Hybrid Securities & DRP Senior Debt, Preferred Shares Commercial Paper & Cash Capital Program Funds Generated from Operations Dividends & NCI Distributi
Slide 17: Deleveraging while growing per share earnings
Deleveraging while growing per share earnings Times Dollars “Low Fours” “High Fours” Target credit metrics achieved with simultaneous improvement in quantum and quality of EPS *Comparable EPS is a non‐GAAP measure. See the forward looking information and non‐GAAP measures slide at the front of this
Slide 18: Capital expenditure outlook 2020-2022
Capital expenditure outlook 2020‐2022 $Billions • Secured growth portfolio 7.2 • Coastal GasLink contributions 6.2 assume 25% ownership and project‐level construction 4.6 financing • Maintenance capital • ~90% has opportunity to earn a return on and of capital through current and future tolls • Capi
Slide 19: Funding program outlook 2020-2022
Funding program outlook 2020‐2022 $Billions Numerous levers available Debt issuance, • Strong, predictable and growing cash commercial paper and other flow from operations Dividends, Ontario natural distributions and gas‐fired power plants • Solid access to capital markets other • Portfolio manageme
Slide 20: Debt maturity profile 2020-2022
Debt maturity profile 2020‐2022 $Billions Solid liquidity and market access • ~$10 billion of committed and undrawn credit lines • Well supported commercial paper programs • Canada – $2.0 billion • U.S. – US$3.5 billion • Shelf facilities in place which allow for expedited access to global capital m
Slide 21: Unparalleled footprint is a competitive advantage
Unparalleled footprint is a competitive advantage High‐quality asset footprint cannot be replicated • 92,600 km (57,500 mi) of natural gas WCSB pipelines • 653 Bcf of storage capacity Access to abundant, cost‐competitive supply • Assets on top of two of the most prolific, low‐cost basins in North Am
Slide 22: Abundant, low-cost supply
Abundant, low‐cost supply WCSB 2007 ‐ 165 Tcf • North American resource estimate has 2019 ‐ 924 Tcf grown over 250% since 2007 • Over 100 years of recoverable supply Rockies / San Juan • WCSB and Appalachia are the fastest‐ 2007 ‐ 354 Tcf 2019 ‐ 632 Tcf Appalachia 2007 ‐ 95 Tcf growing production ba
Slide 23: Capital expansion program adding egress for WCSB gas
Capital expansion program adding egress for WCSB gas NGTL Coastal $10.0 billion GasLink Maintenance capital +2.1 Bcf/d Intra Basin ~$0.6 billion/year $6.6 billion +1.5 Bcf/d West Path Canadian +0.7 Bcf/d Mainline +0.5 Bcf/d East Gate $0.4 billion +1.3 Bcf/d $17 billion capital program provides 5.6 B
Slide 24: Expanding WCSB access to market – NGTL
Expanding WCSB access to market – NGTL • $10 billion capital program underway • Expand access to markets and reduce system constraints • Increase access to low‐cost North Montney supply • Continue to facilitate growth of local markets • Advance rate design and revenue requirement • Portfolio of pred
Slide 25: Expanding WCSB access to market – Coastal GasLink
Expanding WCSB access to market – Coastal GasLink • $6.6 billion capital cost • Initial capacity of 2.1 Bcf/d expandable to 5 Bcf/d • Fully permitted • Signed Project Agreements with 20 First Nations along the right of way • Construction underway, $800 million invested to date • Entered agreement to
Slide 26: Critical conduit to Eastern markets – Canadian Mainline
Critical conduit to Eastern markets – Canadian Mainline • $400 million capital expansion • Strong demand for Mainline and Eastern Triangle capacity • Reclaiming eastern market share • Contract term increasing • Recently reached a long‐term toll settlement with customers that: Mainline • Encompasses
Slide 27: U.S. Natural Gas Pipelines system overview
U.S. Natural Gas Pipelines system overview Broad national network • ~31,000 miles (50,000 km) of FERC‐regulated pipelines with operations across 40 states • 535 Bcf of regulated storage • Serves ~25% of U.S. natural gas demand Diversified assets with strong base in advantaged basins • Best in class
Slide 28: Pipelines experiencing record demand
Pipelines experiencing record demand Pipeline* Contracted Capacity GTN 100% Northern Border 100% Millennium 100% Columbia Gulf 100% Portland 100% North Baja 100% ANR 100% Tuscarora 100% Columbia Gas 93% Iroquois 83% Great Lakes 52% Bison 37% 93% of revenues from long‐term, take‐or‐pay contracts Cros
Slide 29: Sustainable value driven by new growth projects
Sustainable value driven by new growth projects Capacity Capital Cost Projects Supply / Demand (Bcf/d) (US$Millions) Projects in‐service since 2016 7.7 7,860 Buckeye XPress Supply 0.3 195 Westbrook XPress(1) Demand 0.1 125 Grand Chenier XPress Demand 1.1 225 Louisiana XPress Demand 0.8 385 East Late
Slide 30: Accessing global demand via LNG exports
Accessing global demand via LNG exports LNG Facilities supplied by TC Energy: Operational LNG Facility LNG Facility under construction LNG Facility under development (FID pending) Our U.S. pipelines provide supply to five existing and three planned LNG export facilities Source: TC Energy
Slide 31: Mexico – solid position and growing
Mexico – solid position and growing • Five revenue‐generating pipelines • Tamazunchale Guadalajara • Mazatlán Topolobampo • Sur de Texas • Villa de Reyes expected to enter service in 2020 • Tula expected to enter service two years after successful Indigenous consultations • Portfolio value inc
Slide 32: Mexico – growth potential
Mexico – growth potential Short‐term growth • Increasing capacity through efficient expansions • Connecting new demand centres through extensions • Central: Abundant U.S. gas enabling industrial and power generation fuel switching • Northwest: Only pipeline system in the region • Ancillary services
Slide 33: Liquids Pipelines – connecting North American supply to markets
Liquids Pipelines – connecting North American supply to markets Keystone Pipeline System • Transports ~20% of Western Canadian crude oil exports • Delivers U.S. production to market • Market access to ~6 million Bbl/d of refining capacity Intra‐Alberta pipelines • Crude oil pipeline gathering and di
Slide 34: Strong demand for Canadian crude oil in key refining markets
Strong demand for Canadian crude oil in key refining markets U.S. Heavy Crude Oil Imports in Key Markets • Significant opportunity for Canadian heavy crude in USGC and other markets • Declining Latin American production • Oil sands responsible, sustainable and globally cost competitive • Value of TC
Slide 35: Well positioned for strong market fundamentals
Well positioned for strong market fundamentals Maximize value of existing assets Strategic corridor • Proximate to growing supply basins • Connected to key U.S. markets Leverage footprint • Enhance connectivity to expand supply and market access • Re‐purpose existing infrastructure Significant growt
Slide 36: Progressing Keystone XL
Progressing Keystone XL Canadian NEB approved U.S. federal permit status • New Presidential Permit issued • Final SEIS issued • Record of Decision expected to lead to Bureau of Land Management permits • Remaining federal permits expected in early 2020 State‐level permit status • Nebraska Public Serv
Slide 37: Power and Storage asset overview
Power and Storage asset overview Power • 10 power plants* • Approximately 6,000 MW* • Portfolio of low‐cost, low‐emission, baseload generation • Underpinned by long‐term contracts Storage • Alberta non‐regulated natural gas storage facilities • 118 Bcf of capacity • Approximately one‐third of the pr
Slide 38: Assets deliver high-quality EBITDA
Assets deliver high‐quality EBITDA Long‐term contracted Plant Counterparty Contract expiry capacity (MW)* Bruce Power Units 1‐8 3,109 IESO Up to 2064 Bécancour 550 Hydro‐Québec 2026 Alberta plants 127 various 2022‐2027 Grandview 90 Irving Oil 2024 Plant held for sale** 20 Years from Napanee*** 900 I
Slide 39: Bruce Power overview
Bruce Power overview • 6,400 MW or ~30% of Ontario’s needs • 48.4% ownership interest • Power sales contracted with Ontario IESO through 2064 • Ontario Power Generation responsible for spent fuel and decommissioning liabilities • Unit 1 achieved one year of continuous generation, eclipsing previous
Slide 40: Bruce Power Life Extension Program
Bruce Power Life Extension Program • Major Component Replacement (MCR) and Asset Management (AM) on schedule and on budget • Unit 6 MCR to begin in January 2020 • MCR and AM capital reflected in power price • Price increased from ~$68/MWh to ~$78/MWh in April 2019 • Future MCR‐related price adjustme
Slide 41: Financial principles
Financial principles Adherence to Long‐term view grounded in established, conservative risk Simple model and fundamentals preferences corporate structure Footprint is irreplaceable Assets are resilient and earn Business is understandable appropriate returns Capital allocation balances Financial stre
Slide 42: Diversified portfolio of critical energy infrastructure
Diversified portfolio of critical energy infrastructure 2019E Comparable EBITDA* Multiple business lines Foreign Exchange • EBITDA ~60% USD and ~40% CAD • Significant U.S. dollar debt and associated interest serve as natural hedge • Residual exposure actively managed one‐year forward Interest Ra
Slide 43: Proven capital allocation framework delivers results
Proven capital allocation framework delivers results ~40% Critical energy infrastructure assets generate stable, long‐term cash flow streams ~60% Growing dividends Disciplined investment in supported by strong complementary low‐risk assets earnings and cash flow coverage ratios Produced double‐digit
Slide 44: Invested ~$100 billion in three core businesses since 2000
Invested ~$100 billion in three core businesses since 2000 2000: ~$20 billion total assets 2019: ~$100 billion total assets *Comparable EBITDA is a non‐GAAP measure. See the forward looking information and non‐GAAP measures slide at the front of this presentation for more information. **Represents c
Slide 45: Investment has created significant value
Investment has created significant value Dollars Dollars 7% 6% CAGR CAGR Substantial growth in earnings and cash flow per share *Comparable earnings per common share and comparable funds generated from operations per common share are non‐GAAP measures. See the forward looking information and non‐GAA
Slide 46: Low-risk business model has consistently produced results
Low‐risk business model has consistently produced results Dollars MLP Oil Supported by distress price Strong business fundamentals collapse Shale Regulated assets Financial crisis revolution Long‐term contracts IPP downfall Interest rate/inflation protection Limited commodity exposure Cr
Slide 47: Nineteen consecutive years of common share dividend increases
Nineteen consecutive years of common share dividend increases 7% CAGR Supported by growth in earnings and cash flow and strong coverage ratios
Slide 48: Performance has resulted in significant share price appreciation
Performance has resulted in significant share price appreciation Dollars Common share price ‐ TSX 2019 14% average annual total shareholder return since 2000 Source: FactSet data from January 1, 2000 to December 31, 2019
Slide 49: Environmental, Social and Governance commitment
E S G Environmental, Social and Governance commitment Safety and reliability are critical priorities • Operating objectives, targets and results • Zero is real Long history of working collaboratively with stakeholders • Customers, landowners, Indigenous groups, governments, regulators and local comm
Slide 50: Delivering the energy people need, every day
E S G Delivering the energy people need, every day Investing over $1 billion annually in pipeline integrity Monitoring pipelines 24 hours a day from control centres Conducting over 100 emergency response training exercises each year Working with approximately 100,000 landowners Engaging with more th
Slide 51: Corporate Profile
Corporate Profile January 2020
Slide 52: Appendix – Reconciliation of non-GAAP measures
Appendix – Reconciliation of non‐GAAP measures (millions of dollars, except per share amounts) Three months ended September 30 Nine months ended September 30 2019 2018 2019 2018 Net Income Attributable to Common Shares 739 928 2,868 2,447 Specific items (net of tax): Loss on sale of Columbia Midstre
Slide 53: Appendix – Reconciliation of non-GAAP measures continued
Appendix – Reconciliation of non‐GAAP measures continued (millions of dollars) Three months Nine months ended September 30 ended September 30 2019 2018 2019 2018 Comparable EBITDA(1) 2,344 2,056 7,051 6,110 Depreciation and amortization (610) (564) (1,839) (1,669) Interest expense (573) (577) (1,747
Slide 54: Appendix – Reconciliation of non-GAAP measures continued
Appendix – Reconciliation of non‐GAAP measures continued (millions of dollars) Three months Nine months ended September 30 ended September 30 2019 2018 2019 2018 Net Cash Provided by Operations 1,585 1,299 5,256 4,516 (Decrease)/increase in operating working capital (140) 284 (329) 130 Funds Generat
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