enbridge energy partners, l.p./media/eepeeqmep...third quarter 2015 earnings presentation november...

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Enbridge Energy Partners, L.P. Third Quarter 2015 Earnings Presentation

November 2, 2015

1 enbridgepartners.com

Legal Notice

This presentation includes forward-looking statements and projections, which are statements that do not relate strictly to historical or current

facts. These statements frequently use the following words, variations thereon or comparable terminology: “anticipate,” “believe,” “continue,”

“could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “position,” “projection,” “should,” “strategy,” “target,” “will” and similar words.

Although the Partnership believes that such forward-looking statements are reasonable based on currently available information, such

statements involve risks, uncertainties and assumptions and are not guarantees of performance. Future actions, conditions or events and future

results of operations may differ materially from those expressed in these forward-looking statements. Many of the factors that will determine

these results are beyond the Partnership’s ability to control or predict. Specific factors that could cause actual results to differ from those in the

forward-looking statements include: (1) changes in the demand for or the supply of, forecast data for, and price trends related to crude oil, liquid

petroleum, natural gas and NGLs, including the rate of development of the Alberta Oil Sands; (2) the Partnership’s ability to successfully

complete and finance expansion projects or drop-down opportunities; (3) the effects of competition, in particular, by other pipeline systems; (4)

shut-downs or cutbacks at the Partnership’s facilities or refineries, petrochemical plants, utilities or other businesses for which the Partnership

transports products or to whom the Partnership sells products; (5) hazards and operating risks that may not be covered fully by insurance,

including those related to Line 6B and any additional fines and penalties assessed in connection with the crude oil release on that line; (6)

changes in or challenges to the Partnership’s tariff rates; (7) changes in laws or regulations to which the Partnership is subject, including

compliance with environmental and operational safety regulations that may increase costs of system integrity testing and maintenance; and (8)

permitting at federal, state and local levels in regards to the construction of new assets.

“Enbridge” refers collectively to Enbridge Inc. and its subsidiaries other than the Partnership and its subsidiaries.

Forward-looking statements regarding “drop-down” growth opportunities from Enbridge are further qualified by the fact that Enbridge is under

no obligation to offer to sell us interests in its U.S. projects, and we are under no obligation to buy any such interests. Similarly, any forward-

looking statements regarding potential “drop-down” transactions of interests in Midcoast Operating to Midcoast Energy Partners are further

qualified by the fact that we are under no obligation to sell to Midcoast Energy Partners, L.P. any such interests, and Midcoast Energy Partners,

L.P. is under no obligation to buy any such interests. As a result, we do not know when or if any such transactions will occur.

Except to the extent required by law, we assume no obligation to publicly update or revise any forward looking statements, whether as a result

of new information, future events or otherwise. Reference should also be made to the Partnership’s filings with the U.S. Securities and

Exchange Commission (the “SEC”), including its Annual Report on Form 10-K for the year ended December 31, 2014 and any subsequently

filed Quarterly Report on Form 10-Q for additional factors that may affect results. These filings are available to the public over the Internet at

the SEC’s web site (www.sec.gov) and at the Partnership’s web site.

http://www.sec.gov/

http://www.sec.gov/

http://www.sec.gov/

http://www.sec.gov/

http://www.sec.gov/


Agenda

1. Financial Results

2. Project Execution

3. Low-Risk Business Model

4. Drop-Down Outlook

5. Looking Ahead

6. Question & Answer

Delivering long-term sustainable value and growth to EEP unitholders

Drop-downs

from Sponsor

EEP


Q3 2015 Financial Summary Projects delivering meaningful earnings and cash flow growth

1 Adjusted EBITDA includes non-controlling interest. 2 Distributable cash flow and Coverage metric excludes deferred distribution attributable to preferred unitholders. 3 Cash coverage excludes Paid-in-Kind distribution. 4 Debt-to-EBITDA metric considers 50% equity treatment for the hybrid financing instruments; MEP debt and MOLP EBITDA deconsolidated; includes distributions received by EEP from MOLP and MEP.

Earnings (in $millions, except per unit amounts)

3Q15 3Q14 %

Change

Adjusted EBITDA1 $460.7 $406.7 ~13%

Distributable Cash Flow2 $248.8 $210.1 ~18%

Distribution Coverage 0.96x 0.95x

Cash Coverage3 1.15x 1.14x

Debt/EBITDA4 4.3x 4.1x

Meaningful cash flow contributions from growth projects

Strong liquids pipeline deliveries

Unaudited; adjusted results exclude the effect of: (a) non-cash, mark-to-market net gains and losses; and other adjsutements not in current period.

Refer to the Non-GAAP Reconciliation tables presented in the supplemental slides.

2.17 2.19 2.33 2.21 2.34

0.19 0.22 0.20 0.22

0.22 0.35 0.36 0.34 0.37 0.33

-

0.50

1.00

1.50

2.00

2.50

3.00

3Q14 4Q14 1Q15 2Q15 3Q15

Volu

me b

y S

yste

m

(mm

bpd)

Lakehead Mid-Continent North Dakota

Liquids Pipelines Deliveries

$734 YTD 3Q15

$900-$960MM

guidance range Distributable Cash Flow

$1,315MM YTD 3Q15

Adjusted EBITDA

$1,680-$1,780

guidance range

On-Track to Achieve High End of Full Year 2015 Adjusted EBITDA and

Distributable Cash Flow Guidance

Financial Results


Capital Expenditures and Available Liquidity

2015 Capital Expenditures ($ millions)

1 Eastern Access and US Mainline Expansion capital expenditures are forecasted net of joint funding, with assumed Enbridge 75% funding; U.S. segment of Line 3 Replacement project

funding assumes estimated 50% funding by Enbridge and 50% estimated funding by EEP. Participation levels under consideration by Independent Special Committee and have not

been determined. Sandpiper capital expenditures are forecasted net of 37.5% joint funding from Marathon Petroleum Corp. 2 Represents EEP’s share of Natural Gas capital expenditures of Midcoast Operating, L.P., (“MOLP”) which will be proportionately funded between EEP and Midcoast Energy Partners,

L.P. (“MEP”). Forecast reflects current base 48.4% funding by EEP and 51.6% by MEP.

Eastern Access1 70

US Mainline Expansions1 225

Sandpiper1 195

Line 3 Replacement1 65

Liquids Integrity 260

Liquids Other Growth Enhancements 120

Natural Gas Growth Projects2 120

Maintenance Capital Expenditures2 80

Total Capital Expenditures $1,135 725

95

0

500

1,000

1,500

2,000

2,500

10/6/2015pro-forma

9/30/2015

$ m

illio

ns

Credit Facilities Cash Pro-forma

$820

$2,080

$1.6 billion

senior

unsecured

notes closed

October 6, 2015

Available Liquidity

Strong liquidity position to fund capital program


Executing on Funding Program Significant progress to secure funding

Maintaining Investment Grade Credit Rating Remains a Top Priority (BBB/Baa3) (1)

Demonstrated access to capital markets

~$300 million equity closed March 2015

~$1.6 billion debt closed October 2015

Joint-funding with Enbridge enhances financing flexibility

Line 3 Replacement project funding level under consideration by EEP

special committee

Manageable equity needs

(1) Credit ratings by Standard & Poor’s and Moody’s. Outlook ‘Stable’ by both agencies


• Hedging program largely mitigates commodity

price risk

Low-Risk Business Model Delivers Stable Cash Flows Liquids pipeline business provides ~90% of Partnership’s distributable cash flow

2015e EBITDA (1)

• Utility style regulatory model: ‘return-of’

and ‘return-on’ invested capital

• Highly predictable cash flows

- No volume and commodity price

sensitivity

• Rate base comprised of equity and debt

components

Liquids Segment

~90% of fee-based component

• Pipeline toll indexed to PPI + 2.65%

• System highly utilized

Natural Gas Segment

~10% of fee-based component

Fee-Based

Cost of Service (Liquids Segment)

Commodity Sensitive(2) (Natural Gas Segment)

(1) Contribution is based on revenues from Liquids segment and gross margin from Natural Gas segment, after deducting non-controlling interest.

(2) Commodity sensitive gross margin forecast is before hedging; Approx. 90% of 2015e commodity sensitive gross margin is hedged substantially above current market prices.

Organic growth program transitions EEP to even lower-risk business model


Effective Credit Risk Management

Strong counterparty credit risk profile

Shipper 1 AAA/Aaa

Shipper 2 A/Baa1

Shipper 3 BBB/Baa2

Shipper 4 AA-/A1

Shipper 5 B-/B3 (credit enhancement provided)

Shipper 6 BBB/Baa2

Shipper 7 AA-/Aa1

Shipper 8 A-/A3

Shipper 9 BB/Ba3 (credit enhancement provided)

Shipper 10 BBB+/A3

Top 10 Mainline Shippers EEP Customer Credit Quality (1)

Investment Grade / Security Received

Non-Investment Grade

(1) EEP consolidated (including MEP) and net of Accounts Receivable purchased by affiliate of Enbridge Inc.


1

2

3

2015 Projects

Capital

($MM)(1) Timing

Line 67 Mainline Expansion

+230 kbpd $240 July 2015


+ 240 kbpd

+ 150 kbpd

Storage & Tankage

$395

$360

May 2015

Oct 2015

3Q15-3Q16


+ 570 kbpd $495 4Q 2015

Market Access Growth Projects 2015 growth projects on-track

Organic growth projects deliver low-risk, highly certain cash flow growth

Organic Growth Projects:

Commercially secured

Low-risk framework

Long-term contracts

(1) Represents 100% of forecasted capital cost. Eastern Access and US Mainline Expansion projects are jointly funded 75% by Enbridge and 25% by EEP.

1

2

3


Matching Supply Push and Demand Pull Lakehead deliveries continuing to increase as additional market access projects enter service

Regional takeaway:

long-term take-or-pay

Downstream markets:

long-term take-or-pay

EEP Lakehead System

matches supply and demand

Total: 8,680 kBpd

Montreal

Patoka

Ontario/PADD I

Eastern PADD II

Cushing/USGC

Chicago

Northern Tier

Enbridge Access

to Refining Capacity

Source: EIA 2015


EEP Distribution Growth Potential

2015 2016 2017 2018 2019 Embedded Organic Growth

Mainline

Expansions

Eastern

Access

Mainline

Expansion

Sandpiper

Line 3

Replacement

Book Value Call Options

Eastern

Access

(~$400)

Mainline

Expansion

(~$350)

Line 3

Replacement

(TBD)

Selective Drop Downs(1)

$1,000(2)

(Complete) ~$500 ~$500 ~$500 ~$500

Base plan

With selective drop downs

5%+ CAGR

Illustrative Distribution Growth Profile

Selective drop-downs enhance distribution growth outlook

Enbridge evaluating

systematic future drop-

downs to EEP (1)

EEP expects to exercise

‘call-options’ to upsize

interest in Eastern Access

and Mainline Expansion

projects (at cost)

Strategic alignment

supports long-term growth

outlook

(1) ENB is considering selective drop down opportunities of US liquids pipelines assets to EEP. The above illustrates one potential plan. Numbers shown are in $millions.

(2) Alberta Clipper drop down acquisition by EEP closed Jan 2, 2015


Looking Ahead Reliable, low-risk business model attractive in all market conditions

• Expected continued high utilization of our liquids pipeline systems

• Full year contribution from 2015 growth projects

• Final phase of Eastern Access expansion in early 2016 ~$300 million

• Eastern Access and Mainline Expansion call options ~$750 million

• Extension of Preferred Unit distribution deferral enhances DCF

outlook ($90 million/year)

• $1.9 billion of funding in 2015; strong available liquidity

• Indicative drop-down plans from Enbridge(1) ~$500 million/year

• Significant progress made to strengthen Gathering & Processing

business

• Interest costs attributable to recent debt offering

(1) ENB is considering selective drop down opportunities of US liquids pipelines assets to EEP. The above illustrates one potential plan. Numbers shown are in $millions.


Key Takeaways

On-track to deliver high end of 2015 full-year financial guidance

• Meaningful cash flow contributions from growth projects; strong system deliveries

Project execution

• Growth projects progressing

Financial execution

• Significant progress to secure funding; manageable equity needs through 2019

Low-risk, reliable business model provides stable earnings and cash flow

• Coverage strengthens as growth projects enter service

Strategic alignment with Enbridge supports long-term growth outlook

• Selective drop-downs from Enbridge would enhance distribution growth potential above

2-5% annual growth target

Reliable, low-risk business model attractive in all market conditions

enbridge energy partners, l.p./media/eepeeqmep...third quarter 2015 earnings presentation november...

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