Attached files
| file | filename |
|---|---|
| EX-99.2 - EXHIBIT 99.2 - DTE ENERGY CO | heismanreleasefinal9-263.htm |
| 8-K - 8-K - DTE ENERGY CO | a8-kgspacquisition9262016.htm |
Gas Midstream Acquisition
and 2016 Guidance Update
September 27, 2016
EXHIBIT 99.1
Safe Harbor Statement
2
Certain information presented herein includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of
1995 with respect to the financial condition, results of operations, and businesses of DTE Energy. Words such as “anticipate,” “believe,” “expect,”
“projected,” “aspiration,” and “goals” signify forward-looking statements. Forward-looking statements are not guarantees of future results and
conditions, but rather are subject to numerous assumptions, risks, and uncertainties that may cause actual future results to be materially different
from those contemplated, projected, estimated, or budgeted. Many factors may impact these forward-looking statements including, but not limited
to, the following: the failure to consummate the transaction, the risk that we will not achieve expected synergies, the risk that the operations being
acquired in the acquisition will not be successfully integrated or that such integration will take longer than expected, the risk that the operations
being acquired will not perform as expected; and the risks discussed in our public filings with the Securities and Exchange Commission.
Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. New factors emerge from
time to time. We cannot predict what factors may arise or how such factors may cause results to differ materially from those contained in any
forward-looking statement. Any forward-looking statements speak only as of the date on which such statements are made. We undertake no
obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect
the occurrence of unanticipated events. This document should also be read in conjunction with the Forward-Looking Statements section of the joint
DTE Energy and DTE Electric 2015 Form 10-K and 2016 Forms 10-Q (which sections are incorporated by reference herein), and in conjunction
with other SEC reports filed by DTE Energy.
DTE Energy Investor Relations
www.dteenergy.com/investors
(313) 235-8030
3
Contact Us
• Gas Midstream Acquisition
• 2016 Guidance Update
4
Delivers solid
economics underpinned
by long-term contracts
and high-quality
reserves
Expands our footprint in
the most prolific geology
in the country spanning
the heart of the SW
Marcellus/Dry Utica
Provides platform for
new value creation with
significant growth
potential
Complements our
existing gas midstream
business
5
Entered into an agreement to purchase gas midstream assets, Appalachia
Gathering System (AGS) and Stonewall Gas Gathering (SGG)* in the
SW Marcellus/Dry Utica region for $1.3 billion
1
3 4
2
DTE Energy is purchasing a new asset in the
SW Marcellus / Dry Utica region
* Antero Resources also has the option to sell DTE an additional portion of the SGG asset
6
Acquisition of attractive gas midstream assets
complements our existing gas midstream business
Connects market to demand in
Michigan, Ohio, Chicago and
Ontario, Canada through NEXUS
Connects geographically and
strategically to our current assets
Provides access to high quality
reserves in the
SW Marcellus/Dry Utica
Broadens and strengthens our
producer relationships and market
reach
1
Utica Shale
Marcellus
Shale
AGS
SGG
NEXUS Pipeline
7
% DTE Ownership 100% 55%
In-Service 2012-2013 2015
Length (miles) 110 67
Diameter 16”- 24” 36”
Capacity (Bcf/d) 0.7 1.5
Partners
Expands footprint in most prolific geology in the
country spanning SW Marcellus/Dry Utica
2
Customers
AGS SGG
AGS
SGG
/
Contracts
Average Tenor (Years)
Contracted (Percent)
10
80
8
This asset lies in one of the most economically
favorable shale basins
$ / MMBtu
2
$0 $1 $2 $3 $4 $5
Marcellus Shale NE Core
Marcellus Shale SW
Source: Credit Suisse February 2016 report and Wright and Company
Feeds Bluestone/
Millennium
Basin feeding
AGS/SGG
US Shale Basin Economics
NYMEX Gas Price Required for 15% After-Tax IRR
The assets overlay ~40 Tcf of the
Marcellus resource and is economic
at sub $3 prices
These Marcellus reserves alone are
able to fill this system for over 40
years
Our discussions with producers and
3rd party evaluators indicate that this
region is poised for rapid growth
Significant stacked play opportunities
in Dry Utica / Upper Devonian
Platform for new value creation with significant
growth potential
Expansion potential over
1 Bcf/d
New set of producer
relationships
U
p
si
d
e
P
o
tentia
l
3
9
Synergies with NEXUS
Significant stacked play
opportunities
10
Positive impact to our GSP business 4
* Reconciliation to GAAP reported earnings included in the appendix
GSP
Operating Earnings*
2010 2016E 2020E
$115 - $120
$195
$51 Pipelines
Gathering
Storage
• GSP has a solid track
record for earnings results
• Trend continues with
projected earnings CAGR of
14% through 2020
(millions)
11
Transaction economics are strong and provide
excellent returns
Purchase Price $1.3 billion
EPS Accretion
Accretive beginning in 2017 and $0.10 accretive in 2020
with potential to be significantly higher in out years
Operational /
Regulatory
Construction and regulatory risks eliminated
Financing Plan*
50% mandatory convertible equity units / 50% senior
unsecured debt
Credit Rating Target solid investment grade ratings
Business Mix Within target range of 75%-80% utility
Required Approval Hart-Scott-Rodino
Close Date Expected close in Q4
4
* No Offer or Solicitation
This communication is not intended to and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy or an invitation
to purchase or subscribe for any securities.
12
In summary, this transaction adds another platform for
growth and is complementary to DTE’s current portfolio
Supports DTE’s strategy to invest in strategically situated assets…
…gateway to multiple growth opportunities in the area creating synergies with
existing assets
Complements existing assets…
…develops new strategic relationships with producers that will allow for future
partnering and growth opportunities
Provides a new platform for additional value creation with significant upside…
…over 1 Bcf/d of potential economic expansions
…lateral and gathering opportunities in the area
Economics of the acquisition are sound…
…returns in line with other midstream assets; EPS and cash accretive in 2017
• Gas Midstream Acquisition
• 2016 Guidance Update
13
* Reconciliation to GAAP reported earnings included in the appendix
** Total DTE Energy excluding Energy Trading
Prior 2016
Guidance
2016
YTD 2Q
Actuals
DTE Electric
DTE Gas
Gas Storage & Pipelines
Power & Industrial Projects
Corporate & Other
Growth segments**
Growth segments operating EPS
Energy Trading
DTE Energy
Operating EPS
Avg. Shares Outstanding 180
$262
100
65
38
(30)
$435
$2.42
16
$451
180
$2.51
(millions, except EPS)
14
Increasing our 2016 operating EPS* guidance
2016
Revised
Guidance
$5.01 - $5.21
$5.09 - $5.35
$615 - $625
135 - 141
115 - 120
90 - 100
(55) - (51)
$900 - $935
15 - 25
$915 - $960
180
$4.85 - $5.08
$4.91 - $5.19
$589 - $605
135 - 141
110 - 115
90 - 100
(50) - (46)
$874 - $915
10 - 20
$884 - $935
15
Use of Operating Earnings Information – DTE Energy management believes that operating earnings provide a more meaningful representation of the company’s earnings from ongoing
operations and uses operating earnings as the primary performance measurement for external communications with analysts and investors. Internally, DTE Energy uses operating
earnings to measure performance against budget and to report to the Board of Directors. Operating earnings are presented both with and without Energy Trading. The term “Growth
Segments” refers to DTE Energy without Energy Trading and represents the business segments that management expects to generate earnings growth going forward.
June YTD 2016 Reconciliation of Reported to
Operating Earnings YT 2016
DTE
Electric DTE Gas
Gas Storage
and Pipelines
Power and
Industrial
Projects
Corporate
and Other
Growth
Segments
Energy
Trading DTE Energy
Reported Earnings 262$ 100$ 65$ 32$ (30)$ 429$ (30)$ 399$
Plant closure - - - 6 - 6 - 6
Certain mark-to-market transactions - - - - - - 46 46
Operating Earnings 262$ 100$ 65$ 38$ (30)$ 435$ 16$ 451$
Net Income (millions)
YTD 2016
DTE
Electric DTE Gas
Gas Storage
and Pipelines
Power and
Industrial
Projects
Corporate
and Other
Growth
Segments
Energy
Trading DTE Energy
Reported Earnings 1.46$ 0.56$ 0.36$ 0.18$ (0.17)$ 2.39$ (0.17)$ 2.22$
Plant closure - - - 0.03 - 0.03 - 0.03
Certain mark-to-market transactions - - - - - - 0.26 0.26
Operating Earnings 1.46$ 0.56$ 0.36$ 0.21$ (0.17)$ 2.42$ 0.09$ 2.51$
EPS
Reconciliation of 2010 Reported to Operating
Earnings
16
Use of Operating Earnings Information – DTE Energy management believes that operating earnings provide a more meaningful representation of the company’s earnings from ongoing
operations and uses operating earnings as the primary performance measurement for external communications with analysts and investors. Internally, DTE Energy uses operating
earnings to measure performance against budget and to report to the Board of Directors.
2010
DTE
Energy
Electric
Utility
Gas
Utility
Gas
Storage &
Pipelines
Unc. Gas
Prod.
Power &
Indust.
Projects
Energy
Trading
Corporate
& Other
Reported Earnings $630 $441 $127 $51 ($11) $85 $6 ($69)
Perform ce Excellence Process -
Cos t Achi ve Deferral* (20) - (20) - - - - -
Settlement with Detroit Thermal (3) (3) - - - - - -
Operating Earnings $607 $438 $107 $51 ($11) $85 $6 ($69)
Net Income (millions)
2010
DTE
Energy
Electric
Utility
Gas
Utility
Gas
Storage &
Pipelines
Unc. Gas
Prod.
Power &
Indust.
Projects
Energy
Trading
Corporate
& Other
R ported Earnings $3.74 $2.62 $0.75 $0.30 ($0.06) $0.50 $0.04 ($0.41)
Performance Excellence Process -
Cost to Achieve Deferral* (0.12) - (0.12) - - - - -
Settlement with Detroit Thermal (0.02) (0.02) - - - - - -
Operating Earnings $3.60 $2.60 $0.63 $0.30 ($0.06) $0.50 $0.04 ($0.41)
EPS
* Deferral of previously expensed cost to achieve as allowed for in June 3, 2010 MPSC order (case - U-15985)
Use of Operating Earnings Information – DTE Energy management believes that operating earnings
provide a more meaningful representation of the company’s earnings from ongoing operations and uses
operating earnings as the primary performance measurement for external communications with analysts
and investors. Internally, DTE Energy uses operating earnings to measure performance against budget
and to report to the Board of Directors.
In this presentation, DTE Energy provides guidance for future period operating earnings. It is likely that
certain items that impact the company’s future period reported results will be excluded from operating
results. A reconciliation to the comparable future period reported earnings is not provided because it is not
possible to provide a reliable forecast of specific line items. These items may fluctuate significantly from
period to period and may have a significant impact on reported earnings.
17
Reconciliation of Other Reported to Operating
Earnings