Wachovia Securities Houston May 16, 2006 www.sug.com Trunkline - - PowerPoint PPT Presentation
Wachovia Securities Houston May 16, 2006 www.sug.com Trunkline LNG History 1978 Trunkline LNG terminal construction begins nine miles southwest of Lake Charles, La. 1981 terminal construction completed on 382-acre site 630 MMcf/ d
Houston May 16, 2006
www.sug.com
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miles southwest of Lake Charles, La.
–630 MMcf/ d of sendout capacity –6.3 Bcf of storage –3 LNG storage tanks –7 gas-fired water bath vaporizers
through April 2006
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Company since June 2003
largest operating facilities
credit quality counterparty – BG Group – until 2028
LNG sector
calorific cargoes
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– 23 miles of 36” loop to mainline – 2.1 Bcf/ d of capacity – S everal (6+) new or expanded delivery points
LNG Terminal Longville Kaplan Centerville Trunkline Loop
LA
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capacity to 1.2 Bcf/ d
capacity to 9 Bcf
service April 5, 2006
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capacity to 1.8 Bcf/ d
Bcf/ d
unloading dock
mid-2006
Above: Artist's rendering of expanded facility.
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Trunkline LNG will install new facilities at the Lake Charles terminal to allow for Ambient Air Vaporization of LNG and for Natural Gas Liquids processing.
– Mid 2008
– Ambient Air Vaporization (AAV) capable of providing 2.1 Bcf/ d of sendout – Natural Gas Liquids (NGL) extraction equipment
– Gas quality control mechanism – Lower fuel consumption – Increased supply to TGC
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– High credit counterparty – BG Group – Long term contract - 2028 – Minimal financial impact related to terminal usage – reservation based
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Filed with FERC Mid 2008 $35-$40 $250 Vaporization & NGL extraction Trunkline LNG IEP Under construction Mid 2006 $16 $82 600 MMcf/d Trunkline LNG Phase II Complete April 5, 2006 $28 $137 570 MMcf/d 2.7 Bcf storage Trunkline LNG Phase I Comments Comments In Service In Service
($MM) ($MM)
($MM) ($MM) Capacity Capacity Project Name Project Name
* Note: EBIT is equivalent to operating income under GAAP.
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2003 2001 2002 2004 2005 2006
GROWING FORWARD
Four Four LDCs LDCs
Acquisition of Panhandle Panhandle
Sale of Texas Gas Gas Acquisition of Acquisition of CrossCountry CrossCountry
Acquisition of Sid Richardson Sid Richardson
Sale of PG Energy Energy
Sale of RI LDC
Southern Union entered the 21 Southern Union entered the 21 st
st
century as the owner of four century as the owner of four regulated gas LDC’s regulated gas LDC’s Five years later, Southern Union is the second Five years later, Southern Union is the second-
largest owner and operator of gas pipelines in the U.S. with an unprecedented number of the U.S. with an unprecedented number of growth opportunities growth opportunities
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$0 $5 $10 $15 $20 $25 $30
F e b
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$0 $5 $10 $15 $20 $25 $30
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CAGR = 14.7%
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– 2003: Panhandle/ Texas Gas – 2004: Investment in Cross Country – 2006: S id Richardson/ PG Energy & Rhode Island
– Integration of Panhandle and Cross Country – MGE rate structure – S hared services
– Reinvest in growth proj ects – Optimize debt level – maint ain ratings/ maximize return
– Change in FY from June to December – Cash dividend – Improved transparency of disclosures
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torage
–Panhandle Energy
ea Robin Pipeline
torage
–CrossCountry Energy (50% equity interest)
)
)
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– S
ervices
– Missouri Gas Energy – New England Gas Company (RI under contract for sale) – PG Energy (under contract for sale)
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Line (PEPL)
–6,500 mile 4-line system –2.8 Bcf/ d capacity
–3,500 mile 2-line system –1.5 Bcf/ d capacity
–450 mile offshore system –1.0 Bcf/ d capacity
–2,400 mile bi-directional flow system –2.1 Bcf/ d capacity (1.2 Bcf/ d west; 800 MMcf/ d east) –1.2 Bcf/ d S an Juan to mainline capacity
–5,000 mile system –2.1 Bcf/ d capacity
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Trunkline LNG is a Leading Player in LNG Sector
largest operating facilities
credit quality counterparty— BG Group— until 2028
end out capacity to be expanded to 1.8 Bcf/ d by mid 2006
and NGL extraction to be in service by 2008
Above: Artist's rendering of expanded facility.
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Wilkes-Barre, PA
erves approximately 160,000 customers
erves 13 counties in northeastern and central PA
Pennsylvania PUC
PA assets to UGI for $580 million
Providence, RI
erves approximately 300,000 customers
erves the state of Rhode Island and S E Massachusetts
and the Massachusetts DT&E
assets to National Grid for $575 million including assumed debt
Missouri Gas Energy Missouri Gas Energy PG Energy PG Energy New England Gas Co. New England Gas Co.
Kansas City, MO
erves approximately 500,000 customers
erves 34 counties throughout MO
Missouri PS C
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Pipelines Total Miles 4,750 Producer Delivery Points 1,754 Current Throughput 596 Bbtu/ d (1) Field Compression HP 104,840 Gas Processing Plants Active Plants (2) 4 Processing Capacity
(3)
470/ 410 MMcfd Processing Throughput 388 MMcf/ d (1) Field Compression HP 127,520 Treating Plants Active Plants 6 Treating Capacity 765/ 590 MMcfd Treating Throughput 426 MMcf/ d (1) Compression HP (4) 7,200
SU Gas Services SU Gas Services – – Area of Operations Area of Operations
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id Richardson Energy S ervices and related companies acquired by S UG March 1, 2006
ervices
with proceeds from asset sales and appropriate permanent financing within the calendar year
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processing services in the Permian Basin
trong producer relationships
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– High pressure “ backbone” connects local systems – Treatment and blending – Can accept a variety of gas qualities
– Fixed recoveries – Ease of administration – Fixed F F & U
– Market responsiveness – Rej ect/ blend modes – Low F F & U
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Inter-Connected Assets Inter Inter-
Connected Assets Assets Attractive Contract Structure Attractive Attractive Contract Structure Contract Structure Operational Reliability Operational Operational Reliability Reliability
Converts NGL spread exposure into more manageable natural gas price exposure
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100 200 300 400 500 600 700 800 900
10 20 30 40 Processing Spread (Cents/Gal) SUGS Total & Net Processing Margin (M$/Day) 100 200 300 400 500 600 700 800 900
10 20 30 40 Processing Spread (Cents/Gal) SUGS Total & Net Processing Margin (M$/Day)
Data from Nov/ Dec 2005 Daily Processing Model
Gas price averaged for the period
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UG has put options in place to limit downside and reduce exposure to commodity price risk – $11 floor for 2006 on 85%
– $10 floor for 2007 on 50%
appropriate entry points
due to fixed recovery contract structure; eliminates exposure to NGL’s and to basis risk
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Filed with FERC 25% Mid 2007 $6 - $14 $60 - $100 100 – 160 MMcf/ d Florida Gas Phase VII Filed with FERC 100% Mid 2008 $35-$40 $250 Vaporization & NGL extraction Trunkline LNG IEP Under construction 100% Mid 2006 $16 $82 600 MMcf/ d Trunkline LNG Phase II Complete 100% April 5, 2006 $28 $137 570 MMcf/ d 2.7 Bcf storage Trunkline LNG Phase I Comments Comments SUG % SUG % In Service In Service
($MM) ($MM)
($MM) ($MM) Capacity Capacity Project Project Name Name
* Note: EBIT is equivalent to operating income under GAAP.
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Under Negotiation Under Negotiation
($MM) ($MM) Early 2008 $500 - $600 500 MMcf/ d Phoenix Lateral Late 2007 $90 - $110 600 MMcf/ d Trunkline North Texas In Service In Service
($MM) ($MM) Capacity Capacity Project Name Project Name
Note: All data shown above is subj ect to revision based upon final proj ect specifications.
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$0.00 $0.50 $1.00 $1.50 $2.00 FY 2003 FY 2004 CY 2005 CY 2006E
Diluted EPS $0.66 $1.24 $1.58*
* - 2005 Diluted EPS excludes a non-cash charge of $175 million related to the impairment of goodwill for the distribution properties expected to be sold in 2006. Reported EPS was $.03 per share. Note: Prior period EPS amounts have been adj usted to reflect the 5% stock dividend paid to shareholders on S eptember 1, 2005. Previously issued 2006 GAAP guidance included contributions from S U Gas Services for ten months, closing of the LDC sales prior to the end of the third quarter, and excludes proj ected one-time charges related to the announced LDC sales.
$1.70 - $1.90
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$0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000
($000) 2003 2004 2005 CFFO
Cash Flow From Operations
(Before Changes in Working Capital)
Note: Data shown represents fiscal year ended June 30, 2003 and calendar years ended December 31, 2004 and 2005.
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$0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000
($000) 2002 2003 2004 2005 Distribution Transportation
Note: Data shown represents fiscal years ended June 30, 2002 and 2003 and calendar years ended December 31, 2004 and
distribution businesses under contract to be sold in 2006. Reported operating income for the distribution segment was a loss of $42.5 million.
As we have changed our asset focus, we have demonstrated measured growth…
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35% 65% 37% 63% 47% 53%
0% 20% 40% 60% 80% 100% 2003 2004 2005 Equity Debt
… and improved our balance sheet. We have accomplished this with a combination
and strong internal equity formation.
Note: Debt/ Cap ratio as of December 31 for periods shown; provides 100% equity credit for preferred stock and convertible equity units.
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$213,589 $31,218 $30,865 $151,506 Total EBIT $27,859 $256 $27,603 Corporate & other $37,572 $7,583 $29,989 Distribution $18,065 $5,4002 $5,552 $7,113 Midstream $130,093 $25,8181 $17,474 $86,801 Transportation Adj . EBITDA Adj . EBITDA Adj . Adj . D&A D&A EBIT EBIT S egment S egment
UG’ s 50%
$23 million plus S UG’ s 25%
million non-cash income related to the time value portion of the hedge.
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$93,606 Net earnings available to common shareholders $4,341 Preferred dividends $24,529 Net earnings from discontinued operations $73,418 Net earnings from continuing operations $35,867 Taxes $42,221 Interest $151,506 Total EBIT