Attached files
| file | filename |
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| 8-K - FORM 8-K - INERGY HOLDINGS, L.P. | d8k.htm |
 Tres
Palacios Natural Gas Storage
Acquisition Overview
September 7, 2010
Exhibit 99.1 |
 2
Forward Looking Statements
NYSE: NRGY, NRGP
Cautionary Statement Regarding Forward-Looking Statements
This communication contains “forward-looking statements” within
the meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 that are not limited to historical facts, but
reflect Inergy’s and Inergy Holdings’ current beliefs, expectations
or intentions regarding future events. Words such as “may,”
“will,” “could,” “should,” “expect,” “plan,” “project,” “intend,” “anticipate,”
“believe,” “estimate,” “predict,”
“potential,” “pursue,” “target,” “continue,” and similar expressions are intended to identify such forward-
looking statements. These forward-looking statements include, without
limitation, Inergy’s and Holdings’ expectations with respect to the
synergies, costs and other anticipated financial impacts of the proposed
transaction; future financial and operating results of the combined
company; the combined company’s plans, objectives, expectations and
intentions with respect to the expectation that the closing conditions
will be satisfied and the Tres Palacios acquisition will close, the accretion expectations as a result of Tres Palacios, the availability
and timing of any expansion possibilities at Tres Palacios, the expectation that
the acquisition will be funded by a combination of debt and equity, the
impact on EBITDA, the anticipated future storage capacity at storage projects as well as future demand for such capacity and
the timing of the pending simplification transaction with Inergy Holdings,
L.P. All forward-looking statements involve significant risks, uncertainties and
assumptions that could cause actual results to differ materially from
those in the forward-looking statements, many of which are generally outside the control of Inergy and Holdings and are difficult to
predict. Examples of such risks, uncertainties and assumptions include,
but are not limited to, weather conditions that vary significantly from
historically normal conditions, the demand for high deliverability natural gas storage capacity in the Northeast and in Texas, the
general level of natural gas and other hydrocarbon product demand, the
availability of natural gas, the price of natural gas to the consumer
compared to the price of alternative and competing fuels, our ability to
successfully implement our business plan for midstream expansion, our
ability to generate available cash for distribution to unitholders, the outcome of certificate and rate decisions issued by the Federal
Energy Regulatory Commission, and the costs and effects of legal, regulatory,
and administrative proceedings against us or which may be brought against
us. Inergy and Inergy Holdings caution that the foregoing list of factors is not
exclusive. Additional information concerning these and other risk factors
is contained in Inergy’s and Inergy Holdings’ most recently filed Annual Reports on Form 10-K, subsequent Quarterly Reports
on Form 10-Q, recent Current Reports on Form 8-K and other SEC
filings. All subsequent written and oral forward-looking statements
concerning Inergy, Inergy Holdings, the proposed merger and related transactions
and the Tres Palacios acquisition or other matters and attributable to
Inergy or Inergy Holdings or any person acting on their behalf are expressly qualified in their entirety by the cautionary
statements above. Neither Inergy nor Inergy Holdings undertakes any
obligation to publicly update any of these forward-looking statements
to reflect events or circumstances that may arise after the date hereof. |
 3
Transaction Summary
Inergy
has executed a definitive agreement to purchase Tres
Palacios Gas Storage LLC,
the owner of the Tres
Palacios natural gas storage facility located ~100 miles southwest
of Houston in Matagorda County, TX for $725 million (plus reimbursement of certain
capital expenditures and customary working capital adjustments)
High-deliverability salt dome natural gas storage asset located near
metropolitan demand markets of Houston and San Antonio and connected to 10
intrastate and interstate pipelines serving multiple U.S. demand
markets –
38.4 Bcf
of working gas capacity with planned expansion to 47.9 Bcf
Transaction positions Inergy
as the largest independent natural gas storage operator in
the U.S.
–
Total
combined
working
gas
capacity
of
~80
(a)
Bcf,
expandable
to
~100
Bcf
with
planned
expansion
projects
–
Significantly
expands
Inergy’s
existing
natural
gas
storage
operations
and
establishes
a
new
gas
storage
platform
for
future growth
–
Identified
expansion
opportunities
in
addition
to
current
Tres
Palacios
operations
Inergy
has secured committed financing to fund the transaction and expects to utilize a
combination of long-term debt and equity consistent with its goal of
maintaining a strong balance sheet
Transaction expected to create significant long-term strategic value and
provide Inergy unitholders
attractive economic returns
__________________
(a)
Pro forma for Seneca Lake and Tres
Palacios acquisitions. |
 4
Transaction Benefits
__________________
(a)
Forecast run rate FY 2012 Adjusted EBITDA.
Significantly expands natural gas
storage operations
–
Creates largest independent natural gas storage operator
in the U.S. with ~80 Bcf
of working gas storage
capacity, expandable to ~100 Bcf
Establishes new midstream market
platform with additional growth
opportunities
Further strengthens and diversifies
cash flow profile
–
Pro forma adjusted EBITDA contribution from
midstream operations expected to be ~43% in FY 2011
and ~50% in FY 2012
Expected to be immediately accretive to
Inergy
unitholders
Transaction economics consistent with
expected returns outlined under
NRGY/NRGP merger
27.1
38.4
47.9
0
10
20
30
40
50
60
Current
Expected Q4 2010
Expected 2014
Tres Palacios Working Gas Capacity
Pro Forma Adjusted EBITDA
(a)
Midstream
~50%
Propane
~50% |
 5
Pipeline
Interconnects
&
Markets
Served
Northeast
Midwest
Mid-Atlantic
Southeast
Florida
Barnett
Shale
Pemex
/ MGI
Eagle Ford Shale
Waha
Freeport
Sabine Pass
Golden Pass
Florida Gas Transmission Co
Natural Gas Pipeline Co
Tennessee Gas Pipeline Co
Texas Eastern Transmission LP
Transcontinental Gas Pipe Line
Kinder Morgan Intrastate System
Enterprise Intrastate System
Tres
Palacios Storage
LNG Terminal
Inergy
Northeast Storage Hub |
 6
Tres
Palacios Asset Overview
27.1
Bcf
working
gas
capacity
currently
in
service
(Cavern
1
and
2)
Cavern
3
provides
additional
11.4
Bcf
of
working
gas
capacity
(expected
in-service
Sep-2010)
–
Cavern 3 substantially complete; FERC and TRC authorizations to place
in-service received –
$18 million incremental capex
(including base gas)
Cavern
4
provides
additional
9.5
Bcf
(expected
in-service
by
or
before
2014)
–
$67.5
million
incremental
capex
to
complete
(including
base
gas)
at
attractive
investment
returns
High deliverability characteristics (6+ turns)
–
Maximum
withdrawal
capacity
–
2.5
Bcf/day;
maximum
injection
capacity
–
1
Bcf/day
Compression
-
24,000
HP
existing
(48,000
HP
permitted)
–
40 mile, 24”
bi-directional header system is connected to 10 intrastate and interstate
pipelines serving Texas markets as well as U.S. markets in the
Northeast, Midwest, Southeast, Mid-Atlantic and Mexico
Rights to develop all caverns leached by Texas Brine on Markham salt dome
Five potential future additional interconnects
–
Trunkline, Crosstex, Gulf South, Dow Pipeline and KM Texas
Asset Characteristics
Future Growth Opportunities |
 7
Commercial Opportunities
Tres
Palacios is strategically positioned to supply large daily needs of the Texas
gas-fired power generation market
Facility offers more interconnects than any competing storage asset in Texas
market –
Offers the ability to serve multiple demand markets in Texas as well as
Midwestern, Southeastern, Mid-Atlantic, Northeastern U.S. and
Mexico ~90%
of
existing
storage
capacity
under
firm
contracts–Inergy
expects
to
contract
100%
of
existing
and incremental storage capacity under firm storage contracts
Provides
ability
to
wheel
gas
between
pipeline
systems,
offering
customers
added
flexibility
Pooling point for Intercontinental Exchange (ICE); hub for Gulf Coast
Adjacent
to
Eagle
Ford
shale
and
connected
to
the
Perdido
gas
play;
access
to
LNG
regasification
plants and import pipelines
Creates synergy opportunities with Inergy’s
existing natural gas storage assets in the Northeast via
common connections to Tennessee Gas and Transcontinental Pipelines
–
Creditworthy
customer
base
has
significant
crossover
with
Inergy’s
Northeast
natural
gas
storage
facilities |
 8
Tres Palacios Facilities Map |
 9
Tres Palacios Storage Facility |
 10
Committed to Generating Industry-Leading Returns to
Our Investors |