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CONFIDENTIAL TO QUALIFYING
ACCREDITED AND SOPHISTICATED INVESTORS
DISCLAIMER: This presentation (the “Presentation”) in respect of Midstream Canada Ltd. (“MCL” or the “Company”) and its financial plans has been prepared by the Company solely for use by qualified exempt investors to assist in their evaluating the Company.
Nothing in this report is, or should be relied on as, a promise or representation, as to the future. All discussions about future events and expectations are speculative and merely management’s belief in that future based upon their reasonable knowledge and limited experience to date. In furnishing this Presentation, neither MCL, nor any of its affiliates undertake to provide the recipient with access to any additional information or to update this Presentation or to correct any inaccuracies therein which may become apparent. This Presentation is confidential to the recipient and his advisers. It and any further confidential information made available to the prospective investor must be held in complete confidence and documents containing such information may not be used or disclosed without prior written consent of the Company.
Prospective investors should not construe the contents of this Presentation as investment, legal, business, accounting, tax or other advice. In making an investment decision, prospective investors must rely on their own examination of MCL and the terms of the offering, including the merits and risks involved. The Company is a start-up company with all the risks inherent and management’s experience is limited and unproven in this endeavour. Each prospective Investor should consult his own attorneys, business advisers and/or tax advisers as to legal, business, accounting, tax and related matters concerning this offering. An investment in MCL involves significant risks. Investors should have the financial ability and willingness to accept the risk characteristics of an investment in MCL including the risk of losing the entirety of their investment.
NOTICE TO READER: The information contained herein is confidential and is intended only for the user or the person to whom it is directly given by a director or officer of MCL. Neither the plan nor any part of it may be copied, disclosed or transferred without express written consent of MCL.
MIDSTREAM CANADA LTD. (MCL)
INTRODUCTION
Opportunity
Vision
Execution Plan
Project Metrics
Repeatable Business Model
PROJECTS
Projects In Development
Projects for Development
Project for Execution – Quirk Creek
Description
Assumptions
Pro-forma
EXPERIENCE
Management Team
Strategic Relationships
APPENDIX
Finance
Capital Schedule
Capital Structure
Development Plan
Foothills Gas Development
North Coleman, Savanna Creek, Sullivan Creek
Gas Plant
Methanol Facility
Demand
Process / Technology
Project Description
Potential Locations
Compared to Liquefied Natural Gas (LNG)
Strategic Relationships
BSG Engineering
3
OPPORTUNITY
Current commodity market for oil and gas products has created extreme pressure on Producers to de-risk balance sheet, de-leverage debt ratio; a forced sale of assets, both resource and facilities
Traditional facility transactions will not create sufficient capital for Producers
Need for more than just a “Midstream Company”
Non-traditional midstream option for Producer exit
“New” and “Traditional” approach to Midstream/Resource relationship
Application of seasoned team with experience in
Midstream
Upstream resource development
Facility and Upstream Operations
Facility Design and Construction
“Energy Value Chain” Business Development
4
VISION
Repeatable Investments:
Strong EBITDA from infrastructure
Disciplined “Key Project Metrics”
Multi-year growth plan and deal flow
Multi-Billion dollar Market Cap
Numerous small to medium size projects
Multiple Commodity Markets
Price to Earnings Ratio for Infrastructure Companies > 10
5
Large CapEnterprise Product Partners
17.35
Kinder Morgan
36.49
Spectra Energy
19.1
Ultrapar Participacoes
17.26
Plains Midstream
17.2
Mid CAPMartin Midstream Partners
34
Valero Energy Partners
23.9
NGL Energy Partners
33
Philips 66 Partners
27.2
Semgroup Corp
31.2
Small CAPBluenight Energy Partners
18.0
Delek Logistics Partners
11.9
Par Pete Corp
12.0
Transmontaign Partners
11.6
World Point Terminals
13.8
Methanol/UreaMethanex
29.9
Methanol Chemicals Co.
30.0
*Price to Earnings ratio (P/E
for illustration only
EXECUTION PLAN
New & Traditional approach to Midstream/Resource relationship
New
To Purchase existing brownfield facilities
To take resources as the current and future fee to allow Producers to white map an area
Current commodity prices offer limited exposure to further resource write-down
Midstream Canada’s resource ownership positioned for resource value appreciation
Traditional
To help Producers monetize assets into fee for service business
To provide mezzanine financing and Cost-of-Service models
To target expansion into other low-risk energy opportunities
To de-risk full cycle hydrocarbon resource economics
Over riding objective
Long-term win-win relationship/partnership Producer to provide menu of financial
leveraging products
Arms length and independent commercial relationship, yet symbiotic
Low risk investment with growth opportunity
6
PROJECT METRICS
Pro Forma
18-22% Internal rate of Return (IRR)
15+ year project life cycle
Sustainable at low commodity price
Oil price WTI $40 USD / bbl
Gas price AECO $2.25 CDN / MMBtu
Located in Western Canada
Working Experience & Relationships
Talent Pool
Geo-Political Environment
Canadian dollar
7
REPEATABLE BUSINESS MODEL
Acquisitions based on 3 – 5 x Net Operating Income
Sound Economics
Expandable Facilities
Low commodity prices allow
Active deal flow
Cash flow positive opportunities
Project execution
Upside opportunity projects on new acquisitions
Sustainable revenue
Higher commodity prices means increased IRR than anticipated
Utilize progressive hedging which removes price volatility,
provides predictable and bankable revenue stream.
8
PROJECTS IN DEVELOPMENT9
Facility Location
Capacity
(MMScfd /
kbpd)
Current
(MMScfd /
kbpd)
Capital
(MM$ CDN)
EBITDA
(MM$ CDN)
Per yearStatus
Gas Plant Alberta 91 21 15 6.5 Operating
Gas Plant Alberta 23 0 ->23 44 8 Brown Field
Gas Plant Alberta 12 0->12 22 5 Brown Field
Gas Plant Alberta 25 0->25 48 9 Brown Field
Gas Plant Alberta 125 59 ->125 240 46 Operating
Gas Plant Alberta 273 120 267 53 Operating
Gas Plant Alberta 286 135 234 47 Operating
Battery Alberta 18 1 10 3 Operating
Methanol TBC–AB/BC/SK 67 67 495 126 Producing / Brown Field
Methanol/Urea TBC–AB/BC/SK 67 67 455 126 Producing / Brown Field
Total 969 417 1,830 418
*Data is in development phase, Battery not included in Total and Current Capacity
PROJECTS FOR DEVELOPMENT10
Facility Location
Capacity
(MMScfd /
kbpd)
Current
(MMScfd /
kbpd)
Capital
(MM$ CDN)
EBITDA
(MM$ CDN)
Per yearStatus
Gas Plant Alberta 91 21 15 6.5 Operating
Gas Plant Alberta 23 0 ->23 44 8 Brown Field
Gas Plant Alberta 12 0->12 22 5 Brown Field
Methanol TBC–AB/BC/SK 67 67 495 126 Green Field
Total 193 95 576 145
*Data is in development phase
PROJECTS FOR EXECTION11
Facility Location
Capacity
(MMScfd /
kbpd)
Current
(MMScfd /
kbpd)
Capital
(MM$ CDN)
EBITDA
(MM$ CDN)
Per yearStatus
Gas Plant Alberta 91 21 15 6.5 Operating
Total 91 21 15 6.5
GAS PLANT
90MM Scfd Sour Gas Plant with Sulfur Recovery
1 hour SW of Calgary
High replacement cost due to location
Letter of Interest (LOI) due January 26, 2016-completed
Acquisition Price $15 MM agreed by both parties
Adjusted Net Operating Income – Base case
2016 $6.5 MM / year
2.1-year payout / 2.3 x adjusted net operating income
Upside opportunities
20%+ additional acquired gas
50%+ additional fee gas
Adjusted Net Operating Income – High case
2016 $9.9MM / year
1.5-year payout / adjusted net operating income
Adjusted Net Operating Income – Low case
8 year payout at $1.50 / M Scf
12
GAS PLANT13
2012 2013 2014 2015
Capacity (MM Scfd) 90.5 90.5 90.5 90.5
Raw Gas (MM Scfd) 37 29 30 28
Sales Gas (MM Scfd) 27 19 20 21
NGL (bpd) 1850 1830 1810 590
Sulphur (ton/d) 115 75 93 68
Annual Fee ($MM) $13.5 $10.6 $10.9 $8.4
*Data is in development phase
RESERVERS14
Producer Field Formation Production Reserves
Mississippian 9.4 MMScfd 45 Bcf 1P
56 Bcf 2P
Mississippian 10.9 MMScfd tbd
Cardium 0.6 MM Scfd tbd
Gas Plant Background
Plant includes gas sweetening & sulphur
recovery and NGL mix recovery
FINANCIAL ASSUMPTIONS15
Base Case
Acquired resource production
9.4 MM Scfd (Sales)
590 bpd Natural Gas Liquids
68 t/d Sulphur
3% decline, 20 year reserve life
Fee Income Gas
0.7 MM Scfd @ $0.7/M Scf Crimson Oil & Gas (Raw)
10.9 MM Scfd @ $1.61M Scf Crescent Point (Raw)
Revenue Adjustments
Sproule 2014 commodity pricing
$0.15 / M Scf transportation cost
Operating expense Adjustments
$4.6 MM/year annualized turn around costs
$1 MM/ year abandonment fund
High Case
Add 2 MM Scfd shut-in from acquired resource
production
Add 5 MM Scfd shut-in from 3rd Party fee
income @ $1.00 / m Scf
Low Case
Aeco at $1.50 / M Scf
Fee Income Gas reduced by 25% due to
commodity prices, however AER regulations
would likely keep the wells flowing to avoid
significant suspension / abandonment costs
PRO FORMA –Base16
Acquisition:Capital Cost $15 million CDN
Capacity 91 MMScfd
Current 21 MMScfd
Economics:IRR (BT/AT) 77 / 54%
10% NPV $66 million CDN
Cum. Cash Flow $110 million CDN
Pay-Out 2.1 years
0.000
5.000
10.000
15.000
20.000
25.000
2016 2018 2020 2022 2024 2026 2028 2030
mm
cf/
d
year
Forecast
Crescent Point Crimson Oil & Gas Pengrowth Quirk Crk. - Gas
PRO FORMA –High17
Acquisition:Capital Cost $15 million CDN
Capacity 91 MMScfd
Current 30 MMScfd
Economics:IRR (BT/AT) 125 / 81%
10% NPV $96 million CDN
Cum. Cash Flow $145 million CDN
Pay-Out 1.51 years
0.000
5.000
10.000
15.000
20.000
25.000
2016 2018 2020 2022 2024 2026 2028 2030
mm
cf/
d
year
Forecast
Crescent Point Crimson Oil & Gas Pengrowth Quirk Crk. - Gas
0.000
5.000
10.000
15.000
20.000
25.000
30.000
2016 2018 2020 2022 2024 2026 2028 2030
mm
cf/
d
year
Forecast
Crescent Point Crimson Oil & Gas + "Other" New Gas Pengrowth Quirk Crk. - Gas
PRO FORMA –Low18
Acquisition:Capital Cost $15 million CDN
Capacity 91 MMScfd
Current 18 MMScfd
Economics:IRR (BT/AT) 0 / 0%
10% NPV $66 million CDN
Cum. Cash Flow NA
Pay-Out 8 years
0.000
5.000
10.000
15.000
20.000
25.000
2016 2018 2020 2022 2024 2026 2028 2030
mm
cf/
d
year
Forecast
Crescent Point Crimson Oil & Gas Pengrowth Quirk Crk. - Gas
0.000
2.000
4.000
6.000
8.000
10.000
12.000
14.000
16.000
18.000
20.000
2016 2018 2020 2022 2024 2026 2028 2030
mm
cf/
d
year
Forecast
Crescent Point Crimson Oil & Gas Pengrowth Quirk Crk. - Gas
MCL TEAM
Experienced Management Team
Strategic Relationships
BSG Engineering – EPCM
Construction being finalized
19
MANAGEMENT TEAM
Neeky Noor-Ali, P.Eng., President, Director
B.Sc. Mechanical Engineering, University of Calgary
20+years experience
Founder and President of BSG Engineering – EPC on over $500
million Surface Facilities projects in just over 7 years
Founder of Bitumen Energy – Heavy Oil Technology Solutions
TBC, Vice President Finance
B. Comm., University of Saskatchewan
25+ years experience
Director of Optimization, Director of Natural Gas Suncor Energy
Vice President Commodity Marketing, Trading and Risk Management
Deloitte
Ben VanRootselaar, P.Eng. Vice President Engineering
B.Sc. Mechanical Engineering, University of Alberta
35+ years experience
Development Engineer Talisman Midstream
Vice President Engineering Trafina Energy
Vice President Operations Tornado Resources
Senior Engineer Gas Department and Sothern Production Supervisor,
Reservoir Engineer, Joint Venture Coordinator Dome Petroleum
Sujit Sarkar, P.Eng., Vice President Operations
B.Sc. Mechanical Engineering, University of Newcastle-Upon Tyne
M.Sc. Material Engineering, Council of National Academic Awards
40+ years experience
Founder and President of ACS Engineering
Three new technologies Sulfire, BFU, Enhanced BFU
Technical Director of Process & Mechanical for Fluor Daniel
o Head of the Heat Transfer Group Worldwide
o Direct hands on engineering experience for 44 major clients
worldwide (including Suncor, Syncrude, Shell, Esso, CNRL,
Methanex) development of specifications, start-ups, shutdown
logics, feasibility and economic studies, process simulations,
design engineering, procurement, commissioning
Tony Kuehne, Vice President Business Development
B. Ma. Economics, University of Lethbridge
30+ years experience
VP Gas Marketing and Business Development Quicksilver Canada
Team Leader Strategic Development, Talisman Energy
Director Business Development/Transmission AltaGas
20
SUMMARY
Opportunity
Low Commodity Prices
De-Risk Full Cycle Hydrocarbon Resource Economics
Vision
Multi-billion dollar Market Cap Potential
Business Plan
Starter Kit with Immediate Cash Flow i.e. Return on Investment
Steady growth with repeatable business model
Experienced Team
Business Development
Finance
Engineering & Operations
21
Contact Information
Nèeky Noor-Ali, P.Eng., President
Tel: 403-630-4148
Email: [email protected]
Address:
400, 909 17 Avenue SW
Calgary, Alberta
T2T 0A4
22
EXPERIENCE MATRIX
NAME DICIPLINEYRS
of
EXP
Pip
elin
es
Natu
ral
Gas
Faci
lities
Oil F
aci
lities
Refi
nin
g
Ch
em
ical
/ P
etr
och
em
ical
Po
wer
Pla
nt &
Utilities
Pro
ject
Man
agem
en
t
Pro
cess
Desi
gn
Mech
an
ical
Equ
ipm
en
t
En
vir
on
men
tal
Sta
rt-u
p /
Co
mm
issi
on
ing
Pla
nt Safe
ty/O
ps
HA
SO
Ps
EU
/ N
A C
od
e S
tan
dard
s
Ele
ctri
cal
Desi
gn
Fo
un
datio
n/
Site P
rep
Co
gen
era
tio
n
Nu
mb
er
of
Majo
r C
lien
ts
S. Sarkar, P.Eng. Mechanical Engineer 35+ 44
N. Noor-Ali, P.Eng. Project Management 20+ 5
R. Langen, P.Eng. Project Management 35+ 8
S. Noor-Ali, P.Eng. Process Engineer 35+ 16
T. Morris, P.Eng. Process Engineer 35+ 18
P. Cechmanek, P.Eng. Mechanical Engineer 35+ 10
G. Silverberg Mechanical Engineer 35+ 9
L. Sobry, P.Eng. Electrical Engineer 30+ 17
E. McHeriuk, P.Eng. Electrical Engineer 35+ 14
J. Mellepurran Design 25+ 8
B. Gilbert Procurement 35+ 12
PROJECTS
Enhanced Oil Recovery
Kerrobert, Saskatchewan Water Flood Project
40,000 bbl/day water injection facilities
100+ wells tied in with more than 200km pipeline
Oil Treating Battery and Gas Plant Upgrade
Regulatory, Engineering, Procurement, Construction Management
Oil Production Facilities
100+ producing wells tied to Satellites and pipeline to Central Processing Facility
100km main truck pipeline
Standardized Design for efficient execution
Regulatory, Engineering, Procurement, Construction Management
Midstream Pipeline & Storage
8” 54 km Sales Oil Pipeline
10,000 bbl/day pumping station with sales meter
30,000 bbl tank farm
Internal & 3rd Party trucking facilities
Regulatory, Engineering, Procurement, Construction Management
Oil Treating Facility
Plato, Saskatchewan Oil Treating Battery
10,000 bbl/d capacity
Fast Track green field project
Regulatory, Engineering, Procurement, Construction Management
Expertise Provided with CoMmitment (EPCM)
Oilsands Steam Generation
Fort McMurray, Alberta Oilsands Project
30,000 bbl/day oil production facility
Trouble shooting Once Through Steam Generators for steam injection into the bitumen reservoir
Fertilizer Plant Upgrade
Carseland, Alberta
De-bottleneck and improve production by retrofitting equipment
Reformer simulation and modifications
Methanol Facility
Trinidad Grass Roots Facility
5,000 tone per day production
Engineering review and design
Methanol MTBE Facility
Umm Sa’id, Qatar
2,500 tone per day methanol and 1,630 tonne per day MTBE production
Front end engineering, design and procurement of long lead equipment
Facility design including utilities, offsites and infrastructure
Expertise Provided with CoMmitment (EPCM)
Consultant Specialist
PROJECTS
PROJECT LIFE-CYCLE
Expertise Provided with CoMmitment (EPCM)
SCOPE
• Simulation
• Concept Design
• Estimate
• Feasibility Studies
• Regulatory
• Site Planning
DESIGN
• Front End Engineering and Design
• Detail Engineering
• Project Controls
• Procurement
• Safety
CONSTRUCTION
• Cost Control
• Technical Support
• Contractors
• Equipment mobilization
• Material planning
• Quality Control
• HSE
START-UP
• Commissioning
• Systems check
• Turn over
OPERATIONS & MAINTENANCE
• Optimization
• Equipment Management
• Integrity Programs
• Maintenance Turn around
CLEAN UP/DISPOSAL
• Environmental remediation
• Decontamination
• Demolition