Opportunities for Growth:
Sequent Energy Management
Doug Schantz
President, Sequent Energy Management
2007 Analyst Conference
March 22, 2007
New York
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Business Model – “How We Make Money”
What We Are:
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A company with a core strength in physical logistics and optimization of transportation and storage
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Locational spreads (transportation capacity)
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Physical storage spreads (cash, futures, time)
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A business that adds and creates value by understanding and meeting customers’ needs as well as by optimizing gas flows from supply basin to market center
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Service provider (asset management, producer & peaking services)
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Leading manager of contractual storage and transportation assets in theEastern part of the U.S.
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An organization of 130 people supported by strong systems, processes and controls
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Business Model – “How We Make Money”
What We Are Not:
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Holder of large outright speculative positions
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Modest risk limits (VaR, credit, basis)
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Financial market-maker
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Sequent’s business model includes a portfolio of assets and services that enable it to capture value in a variety of market
conditions.
conditions.
In any given year:
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The proportion of segmentschanges with market conditions
•
Sequent has the ability tocapture value in a dynamic environment
For example:
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2005 – heavy transportation activity
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2006 – heavy storage activity
Dynamic Model
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Egan
JISH
Moss
Bluff
Pipeline Capacity
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Business conducted on 55 pipelines
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Significant transport on:
TranscoTETCO GulfSouth
FGT ANR Sonat
Dominion Columbia Tennessee
El Tenn. Northwest Texas Gas
Sabine
Storage Capacity
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More than 88 Bcf of capacity under
management
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Includes 5 Bcf of salt-dome storage at Egan, Moss Bluff and Jefferson Island
Pipelines & Storage
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Material Asset Management Transactions
Egan
JISH
Saltville
Pipelines
Boise, Idaho
Moss
Bluff
Material Asset Management
Transactions
Transactions
A Strategic Portfolio of Contractual Storage and Transportation Assets
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A Story of Growth
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A Story of Growth (cont.)
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Analysis of 2006 and Bridge to 2007
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Weighted average portfolio credit rating of A-
As of January 31, 2007
Credit Metrics
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Growth Initiatives
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Move west and into Canada
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More penetration of the power generation business
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Contract additional salt dome storage capacity
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Contract key West to East transportation corridors
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Aggressively expand producer services activities
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Set up and build commercial and industrial marketing effort
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2007/2008
Current Footprint
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Geographic Footprint Expansion
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Sequent Beyond 2007
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“Song Remains the Same” – the business model is sound
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Growth in “baseline earnings” of about 10% / year
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Opportunity to earn more with high volatility
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Leverage investments in systems and processes
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“Economies of scale” benefit in mid and back office
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Focus on bench strength will provide headroom
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Provide AGL Resources with substantial market intelligence
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Questions?
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