David G. Smith – President and COO
NATIONAL BANK FINANCIAL
PIPELINE AND MIDSTREAM CONFERENCE
SEPTEMBER 5, 2012
Forward-Looking Information
In the interests of providing Keyera Corp. (“Keyera” or the “Company”) shareholders and potential investors with
information regarding Keyera, including Management’s assessment of future plans and operations relating to the
Company, this document contains certain statements and information that are forward-looking statements or
information within the meaning of applicable securities legislation, and which are collectively referred to herein as
“forward-looking statements". Forward-looking statements in this document include, but are not limited to statements
and tables (collectively “statements”) with respect to: capital projects and expenditures; strategic initiatives; anticipated
producer activity and industry trends; and anticipated performance. Readers are cautioned not to place undue reliance
on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which
they are based will occur. By their nature, forward-looking statements involve numerous assumptions, as well as
known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the
predictions, forecasts, projections and other forward-looking statements will not occur and which may cause Keyera’s
actual performance and financial results in future periods to differ materially from any estimates or projections of future
performance or results expressed or implied by the forward-looking statements. These assumptions, risks and
uncertainties include, among other things: Keyera’s ability to successfully implement strategic initiatives and whether
such initiatives yield the expected benefits; future operating results; fluctuations in the supply and demand for natural
gas, NGLs, crude oil and iso-octane; assumptions regarding commodity prices; activities of producers, competitors
and others; the weather; assumptions around construction schedules and costs, including the availability and cost of
materials and service providers; fluctuations in currency and interest rates; credit risks; marketing margins; potential
disruption or unexpected technical difficulties in developing new facilities or projects; unexpected cost increases or
technical difficulties in constructing or modifying processing facilities; Keyera’s ability to generate sufficient cash flow
from operations to meet its current and future obligations; its ability to access external sources of debt and equity
capital; changes in laws or regulations or the interpretations of such laws or regulations; political and economic
conditions; and other risks and uncertainties described from time to time in the reports and filings made with securities
regulatory authorities by Keyera. Readers are cautioned that the foregoing list of important factors is not exhaustive.
The forward-looking statements contained in this document are made as of the date of this document or the dates
specifically referenced herein. For additional information please refer to Keyera’s public filings available on SEDAR at
www.sedar.com. All forward-looking statements contained in this document are expressly qualified by this cautionary
statement.
2
One of Canada’s Largest Midstream Operators
Why Invest in Keyera
» Track record of steady value creation
» Stable cash flows from largely
fee-for-service activities
» Strategically positioned assets:
• Multi-zone producing regions
• Key North American NGL hub
» Inventory of opportunities tied to:
• Liquids-rich gas production
• Growth in oil sands activities
» Focused strategy, disciplined approach
3
Rich History of Legacy Assets
Strong Track Record – Income and Growth
4
21% compound annual total return1 to shareholders
9 dividend increases2
7.2% CAGR1 in dividends per share
Acquired 50%
of Gulf Canada’s
midstream assets
Acquired
remaining 50%
from Gulf;
changed name
to KeySpan
Completed
$170 million IPO.
Initial monthly
distribution:
Acquired Chevron
Canada’s
midstream assets
Changed name
to Keyera
Converted to
corporate
structure
Acquired Alberta
EnviroFuels.
Current monthly
dividend:
9.08¢ per unit
17¢ per share
1 From 2003 to June 30, 2012. 2 Since going public in 2003.
Trading Metrics
5
KEY; KEY.DB.A Trading Symbols (TSX)
$44.79 Common Share Price1
$37.50 – $51.60 Trading Range2
$3.5 B Market Capitalization1
$3.9 B Enterprise Value1
77.1 M Common Shares Outstanding3
256,221 Daily Trading Volume4
$2.04 Annualized Dividend per Share (17¢/month)
4.6% Current Dividend Yield1
1 Based on closing share price at August 30, 2012. 2 52-weeks ending August 30, 2012. 3 Basic shares outstanding at July 31, 2012. 4 Second quarter 2012 daily average.
Delivering Midstream Energy Solutions Along the Value Chain
Integrated Business Lines Integral to Success
6
* Non-GAAP measure. See Keyera’s Second Quarter 2012 MD&A for a definition of Operating Margin.
Location, Location, Location
A Strategic Geographic Footprint
7
»Strategically located
facilities
– West Central,
Foothills, Deep Basin
producing regions
– Edmonton/Fort
Saskatchewan
NGL Hub
»Diversified assets
and customers
Franchise Facilities West of the 5th Meridian
Gathering and Processing – The Core of our Business
»Well maintained, long life assets
– 2.6 Bcf/d licensed capacity
– 15 of 17 plants Keyera operated
– Sweet/sour gas processing
expertise
– NGL extraction capability
»Extensive gathering systems
– Over 3400 km of large diameter
pipelines
– Capture areas create franchise
regions
»Fee-for-service revenues with
no direct commodity exposure
– Largely flow-through operating costs
8
The Right Facilities in the Right Places
Liquids-Rich Natural Gas Development (W5M)
» Renewed focus on liquids-rich
gas resource development
– Multiple geological horizons,
well-understood
– High liquids content enhances
producer economics
– Improved Alberta royalty regime
– Application of technologies
– Access to available infrastructure
» Cardium, Glauconite, Montney
tight gas plays
» Duvernay – significant potential
from deep shale
9
MONTNEY
CARDIUM
DUVERNAY
GLAUCONITE
Increasing NGL Production Benefits Keyera’s Businesses
Liquids (NGL) Content in Gas Stream Supports Drilling Activity
$-
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
Dry Gas NotikewinHz.
Wilrich Hz. Montney atDawson Hz.
Montney atTown Hz.
Deep BasinGas
Verticals
Wilrich atResthaven
Montney atKaybob Hz.
Montney atResthaven
Hz
Cardium Hz. GlauconiteHz.
DuvernayHz.
C$/Mcf Equivalent Natural Gas Price Including Value of NGLs
Liquids
Natural Gas
10
* Source: Peters & Co. Reflects revenue (before royalties) per Mcf of natural gas produced. Based on full-year 2012 AECO-C: C$2.16/Mcf and C$86.20/barrel Edmonton par.
Rimbey
Strachan
Gilby
Simonette Strachan
MBL
Pembina
Brazeau
Nordegg
Edson
Brazeau
Pembina
Brazeau
Pembina
Caribou Edson
Simonette
West Pembina
Brazeau
Keyera
Plants
Simonette Simonette Rimbey
MBL
North American Natural Gas Plays Breakeven Price and Liquids Content
11
0
20
40
60
80
100
120
140
160
180
200
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
$5.00
$5.50
$6.00
$6.50
U.S. Shale Plays
WCSB Plays
Liquids Content (Bbl/MMcf)
Breakeven Gas Price (US$/Mcf) Natural Gas Liquids (Bbl/MMcf)
* Source: Peters & Co. Limited. Half-cycle break-even price, based on a 10% discount rate and full-year 2012 AECO-C: C$2.16/Mcf and C$86.20/barrel Edmonton par.
Stable Plant Throughput Despite Natural Gas Price Volatility
12
$-
$3.00
$6.00
$9.00
$12.00
-
300
600
900
1,200
1,500
Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11
Average AECO Price (C$/gJ)
Gross Plant Throughput (MMcf/d)
Rimbey Edson Strachan
Simonette Brazeau River Nevis
Paddle River Nordegg Caribou
Minnehik Buck Lake Bigoray Gilby
Brazeau North & Pembina North Med River Chinchaga
West Pembina AECO Natural Gas Price
Significant Producer Activity in the Region
Rimbey Gas Plant – West Central Alberta
»Glauconite zone
–High liquids content driving activity
–Numerous producers active in area
»Duvernay shale
–Producers have acquired a significant
Duvernay land position west of Rimbey
–Some producers have expressed
interest in a new pipeline to the area
»Evaluating addition of turbo expander to
enhance liquids extraction
13
Producer Activity Driving Expansion Opportunities
Simonette Gas Plant – Deep Basin
»Producers targeting liquids-rich
natural gas plays
– Historically have targeted
Montney and Wilrich zones
– More recently drilling into
Duvernay shale
» Incremental gas volumes expected
in late 2012 from two new producer-
built pipelines
»Seeking support from producers to
expand the Simonette plant
– Increase inlet capacity
– Improve NGL recoveries through
addition of turbo-expander
14
Keyera Positioned to Benefit from Montney Development
Caribou Gas Plant – Northeast British Columbia
»Keyera’s 105 MMcf/d Caribou gas plant
adjacent to Progress Energy lands
–Petronas recently acquired Progress
Energy with the intention of exporting
gas from west coast of B.C.
»Petronas expects to develop gas in
50 MMcf/d pods
»Third-party pipeline from Lily block to
Caribou plant under construction
– Incremental gas volumes expected to
begin flowing to Caribou gas plant in
Q4 2012
15
NGL Infrastructure in Key Energy Hub
Keyera Enviro Fuels
Enbridge
Shell Pipeline Alley
Kinder Morgan
Enbridge
Keyera Edmonton Terminal
16
Imperial Oil
Plains Midstream
Inter Pipeline
Gibson
Suncor
Imperial Oil Imperial Oil Strathcona Refinery
Gibson
Suncor Edmonton Refinery
Keyera Alberta Diluent
Terminal
Pembina
Providing essential services to producers at Canada’s NGL hub
NGL Infrastructure Supports Western Canadian Producers
17
» Services to NGL producers at
Canada’s energy hub
– NGL Fractionation
• propane, butane and condensate
– NGL Logistics Services
• Storage
• Pipelines
• Rail and Truck Terminals
Fractionation
(80,000 bbls/d)
Storage
(10.9 MM barrels)
Pipelines
(7) Rail Cars
(~1,000)
Sales Terminals
Rail & Truck Racks
(19)
Keyera Ideally Suited to Provide Diluent Handling Services
Oil Sands Growth Driving Need for Diluent Logistics Services
18
0
1
10
100
1,000
10,000
100,000
1,000,000
Water
Olive
Oil
Pancake
Syrup
Honey
Ketchup
Peanut
Butter
Athabasca Bitumen
Light Crude
Oil
» Majority of future bitumen
production will be
transported by pipeline
to upgraders
– Bitumen must be thinned
with a lighter
hydrocarbon, called
diluent, for movement
via pipeline
– Alberta expected to
experience significant
shortage of diluent
– Imports of diluent creating
opportunities for storage
and logistics services
Viscosity at Room Temperature (cP)
Cold Lake Bitumen
Source: Imperial Oil
Significant Condensate Imports Anticipated to Meet Demand
Bitumen Production Growth Driving Diluent Demand
0
300
600
900
1200
0
1000
2000
3000
4000
5000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Condensate Demand Forecast – Risked
(Mbbls/d)
Bitumen Production Forecast – Risked
(Mbbls/d)
Bitumen Production
Condensate Demand
Source: Peters & Co.
19
Capacity to Serve Other Oil Sands Players
Oil Sands Logistics Services » Keyera providing diluent transportation,
storage and terminalling services in
Edmonton/Fort Saskatchewan hub
» Kearl (Imperial Oil)
– Solvent services – December 2011
– Diluent services – July 2012
» Sunrise (Husky Oil)
– Services to begin in 2014
» Long-term fee-for-service
arrangements
» Large portion of revenue stream not
dependent on throughput volumes
20
Meeting the Needs of Canadian Bitumen Producers
South Cheecham Terminal – Extending Logistics Footprint
21
» Proceeding with construction of South
Cheecham Rail and Truck Terminal
» Ownership Keyera 50%, Enbridge 50%;
Keyera will construct and operate facility
» Terminal will be capable of receiving
diluent or solvents and loading dilbit onto
railcars for delivery to upgraders
» Agreement with Statoil provides contractual
underpinning
» Expected gross capital cost of $90 million;
expected completion mid-year 2013
Provides Vertical Integration Along Butane Value Chain
Alberta EnviroFuels (AEF) – A World Class Iso-Octane Facility
» Iso-octane is a low emission, high octane
gasoline blending additive
» Butane is the primary feedstock in the
production of iso-octane
» Existing Keyera NGL pipelines, storage
and rail beneficial to AEF feedstock supply
» Adding new iso-octane customers in
Alberta and the U.S.
22
Infrastructure and Expertise Provide Access to High-Value Markets
NGL Marketing
» Liquids-rich drilling across North
America creating oversupply, resulting
in price weakness for some NGLs
(particularly propane)
» Margin based revenues means less
focus on absolute price of commodity
» Weaker butane prices support Keyera’s
feedstock needs at AEF
» Adopted propane hedges in 2012 in
response to changing market dynamics
23
Ethane
Propane
Butane
Condensate
Natural Gas Liquids
Majority of Operating Margin From Fee-For-Service Revenues
Stable, Diversified Cash Flow
NGL
Infrastructure
Gathering &
Processing
NGL
Marketing Margin-based
25% in 2011
(15% in H1/12)
Fee-for-service3
75% in 2011
(85% in H1/12)
1 Operating margin excludes other income from production. 2 Non-GAAP measure. See Keyera’s Second Quarter 2012 MD&A for a definition of operating margin. 3 Fee-for-service operating margin includes fees paid by Marketing to NGL Infrastructure.
Operating Margin1,2
$0
$50
$100
$150
$200
$250
$300
2006 2007 2008 2009 2010 2011
Gathering & Processing NGL Infrastructure NGL Marketing
$ Millions
24
Strong Balance Sheet for Growth and Acquisitions
Conservative Capital Structure
25
$53 $46
$97
$60
$125 $109
$60
$143
$13
$0
$25
$50
$75
$100
$125
$150
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
$C
AD
MM
Convertible Debentures
Senior Notes
Laddering of Maturities Reduces Financing Risk
Key Debt Metrics (as at June 30, 2012)
2.2 x Net debt and convertible debentures / LTM EBITDA1
14% Net debt and convertible debentures / Enterprise value2
1 Net debt and conv. debs. $549 million. LTM EBITDA $249 million (adjusted for IFRS and non-GAAP measure. See Keyera’s Q2 2012 MD&A
for comparable GAAP measure.) 2 Enterprise value based on August 30, 2012 closing prices: $44.79 (KEY) and $234.41 (KEY.DB.A).
A Focused Approach to Growing Our Business
Keyera’s Growth Strategy
26
»Near term organic growth opportunities
– Gas plant expansion/enhancement and pipeline
construction projects driven by liquids-rich gas
development
– Fractionation and storage expansions to handle
increasing NGL production
– Storage, terminalling and pipeline opportunities from
oil sands growth
»Projects and acquisitions that leverage existing
facilities and expertise
»Typical organic project characteristics
– Scalable to meet changing industry environment
– Flexible
– Driven by industry needs
One of Canada’s Largest Midstream Operators
Summary
» Solid track record
» Stable, diversified cash flow
» Strategic assets
» Inventory of opportunities
» Strong balance sheet
» Focused strategy
» Disciplined approach
27
For Further Information Contact:
John Cobb Vice-President, Investor Relations
888-699-4853 [email protected]
KEYERA CORP.
600, 144 – 4 AVENUE SW
CALGARY, ALBERTA
T2P 3N4
WWW.KEYERA.COM