Exhibit 99.1
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NiSource Investor Day
Millennium Broadway Hotel New York, New York September 12, 2012
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From the Gulf Coast through the Midwest to the Northeast, our portfolio of companies serves some of the nation’s highest-value energy markets, with services ranging from natural gas transmission, storage and local distribution, to electricity generation, transmission and distribution.
NYSE: NI
Gas Distribution
• One of the Nation’s Largest Natural Gas
Distribution Companies Serving More Than
3.3 Million Customers
• Established Best-in-Class Platform for Sustainable Earnings Growth Through:
– Comprehensive Long-Term Infrastructure-Investment Programs
– Responsive Customer Programs
– Creative Regulatory Approaches
Gas Transmission & Storage
• 15,000 Mile Network of Interstate Natural Gas Pipelines
• One of the Nation’s Largest Market-Area Storage
Systems
• Unparalleled Strategic Footprint in the Marcellus and Utica Shale Production Region
• Deep Inventory of Attractive Investment Opportunities
• Long-Term Pipeline System Modernization Program
Electric Generation & Distribution
• More than 450,000 Industrial, Commercial and Residential Electric Customers in a Stable Marketplace
• Environmentally Compliant Fleet of Electric Generation Facilities
• Total Generating Capability of 3,300 Megawatts
• Long-Term Infrastructure Investment Program
FINANCIAL HIGHLIGHTS (9/5/2012)
Stock Price $24.92
Common Shares Outstanding ~285M
Annual Dividend $0.96
Market Capitalization ~$7.1B
TOTAL SHAREHOLDER RETURN *
NI 49%
S&P DJ Utilities Utilities 17% 17%
NI 21%
S&P Utilities DJ
9% Utilities 7%
NI 40%
S&P DJ Utilities Utilities 20% 20%
2009 2010 2011
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| Stock Appreciation + Reinvested Dividend (Indices are average) |
STABLE CREDIT RATINGS
S&P BBB-
Moody’s Baa3
Fitch BBB-
CONTACT INFORMATION
Randy Hulen
Managing Director, Investor Relations 219.647.5688 rghulen@nisource.com
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Forward Looking Statements
Today’s presentations contain forward-looking statements within the meaning of federal securities laws. These forward-looking statements are subject to various risks and uncertainties. Examples of forward-looking statements in these presentations include statements and expectations regarding future dividends, operating earnings growth, earnings per share growth, capital investments, financing needs and plans, and investment opportunities. Factors that could cause actual results to differ materially from the projections, forecasts, estimates and expectations discussed in these presentations include, among other things, weather; fluctuations in supply and demand for energy commodities; growth opportunities for NiSource’s businesses; increased competition in deregulated energy markets; the success of regulatory and commercial initiatives; dealings with third parties over whom NiSource has no control; actual operating experience of NiSource’s assets; the regulatory process; regulatory and legislative changes; changes in general economic, capital and commodity market conditions; and counter-party credit risk, and the matters set forth in the “Risk Factors” section in NiSource’s 2011 Form 10-K (which section is incorporated herein by reference) and in conjunction with other SEC reports filed by NiSource, many of which are beyond the control of NiSource. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. Future earnings are illustrative only and do not constitute guidance by the Company. NiSource expressly disclaims a duty to update any of the forward-looking statements contained in these presentations.
With regard to Net Operating Earnings Guidance for 2012 – it should be noted that there will likely be differences between net operating earnings and GAAP earnings for matters including, but not limited to, weather, restructuring costs and accounting changes. NiSource is not able to estimate the impact of such items on GAAP earnings and, as such, is not providing earnings guidance on a GAAP basis.
Regulation G Disclosure Statement
Today’s presentations include certain non-GAAP financial measures as defined by the SEC’s Regulation G. A reconciliation of those measures to the most directly comparable GAAP measures is contained in [Schedules 1 and 2 of the NiSource quarterly earnings release and pages 8 and 15 through 18 in the 2011 Statistical Summary Book, both of which are available on the NiSource Investor Relations website at http://ir.nisource.com/results.cfm and http://ir.nisource.com/annuals.cfm.
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Today’s Agenda
Building Investment-Driven Growth
Strategic Framework
Bob Skaggs and Key Takeaways
Business Unit NiSource Gas Distribution, Joe Hamrock NIPSCO Electric, Jimmy Staton
Discussions NiSource Gas Transmission & Storage, Jimmy Staton
Financial Profile Steve Smith
Closing Remarks Bob Skaggs
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Speaker Bios
Bob Skaggs
President & Chief Executive Officer
Robert (Bob) Skaggs, Jr., is president and chief executive officer of NiSource Inc. He is responsible for the strategic direction of the company as well as for overseeing its day-to-day operations. Bob was named president in Oct. 2004 and added the CEO responsibilities effective July 2005. Bob earned a bachelor’s degree in economics from Davidson College, a law degree from West Virginia University and a master’s degree in business administration from Tulane University. .
Steve Smith
Executive Vice President & Chief Financial Officer
Stephen (Steve) Smith is executive vice president and chief financial officer of NiSource Inc. He is responsible for the company’s corporate finance functions, information technology, supply chain services, and real estate and facilities management.
Steve earned a bachelor’s degree in petroleum engineering from the Colorado School of Mines and a master’s degree in business administration from the University of Chicago Graduate School of Business.
Glen Kettering
Senior Vice President, Corporate Affairs
Glen Kettering is senior vice president, Corporate Affairs at
NiSource Inc. He is responsible for leading the company’s investor relations, communications and federal government affairs functions. Glen earned a bachelor’s degree in business administration from West Virginia University and a doctor of jurisprudence degree from the West Virginia University College of Law.
Joe Hamrock
Executive Vice President & Group CEO NiSource Gas Distribution
Joseph (Joe) Hamrock serves as executive vice president and group CEO for NiSource Gas Distribution, which includes local gas distribution companies in Kentucky, Maryland, Massachusetts, Ohio, Pennsylvania and Virginia. In this role, he has profit-and-loss responsibility for all operations, regulatory and commercial functions. Joe received a bachelor’s degree in electrical engineering from Youngstown State University and a master’s degree in business administration from the Massachusetts Institute of Technology.
Jimmy Staton
Executive Vice President & Group CEO
NiSource Gas Transmission & Storage & NIPSCO
Jimmy Staton serves as executive vice president and group CEO for NiSource Gas Transmission & Storage (NGT&S) and also is responsible for Northern Indiana Public Service Company (NIPSCO) through Oct. 1, 2012. In these roles, he oversees all commercial, regulatory, operations and project development, and is responsible for execution of the business growth strategies. Jimmy earned a bachelor’s degree in petroleum engineering from Louisiana State
University.
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Strategic Framework and Key Takeaways
Bob Skaggs
President & CEO September 12, 2012
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NiSource Strategic Framework
Position, Build & Grow NiSource
Aspiration
Value
Proposition
Strategic Approach
North America’s Premier Regulated
Energy Company
Regulated/Fee-Based Infrastructure Investment-Driven Growth + Attractive & Growing Dividend
Balanced Four-Part Plan
• Gas Transmission, Storage and Midstream Expansion
• Infrastructure Modernization Programs Synched with Regulatory Initiatives
• Financial Management
• Cost & Process Excellence
Disciplined Capital Allocation Drives Accretive Investments
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Building Industry-Leading Investment Regulated -Driven Platform Growth
Industry-Leading Regulated Platform
Electric
$10B Investment Tracked Infrastructure 7-9% /Yr.
Inventory Investment + Operating Earnings
Customer Programs Growth
$6-8B Investment Tracked Infrastructure 7-9% /Yr.
Inventory Investment + Operating Earnings
Customer Programs Growth
Tracked Infrastructure 10-12% /Yr.
$8-10B Investment Investment +
Inventory Fee-Based Growth Operating Earnings
Investments Growth
Customer-Driven Proposition PLUS ~$1.5-1.8B/Yr.
Infrastructure Investment
D E L I V E R I N G
Sustainable Growth, Premium Valuation
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Key Takeaways
EPS Growth
Dividend Growth
Investment-
Grade Credit
Capital Funding
5-7% Long-Term Earnings Growth Attractive, Growing Dividend 3-5%
Investment-Grade Credit Profile with Strong Liquidity
Balanced Approach; Equity: 2015 Timeframe
Robust Growth With Solid Financial Profile
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Key Takeaways
Investment
Inventory
Investment
Profile
Revenue
Profile
$25-30B/Over 15-20+ Years
Modernization
Environmental $1.4-1.6B/Year
Core Growth Maintenance
Midstream Up to $300M/Year
90%+ Fee-Based
Identifiable, Deep and Low-Risk Inventory
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NiSource: A Compelling Investment
5-7% EPS Growth + 3-5% Dividend Growth
Balanced, Diverse and Highly Stable Portfolio of Regulated/Fee-Based Businesses
Substantial ($25-30B) Inventory of Accretive Investment Opportunities to Drive Long-Term Earnings Growth of 5-7% Strong Financial Profile; Balanced Approach to Funding the Business Commitment to Investment-Grade Credit Ratings Established Track Record of Execution with Full Transparency
Disciplined Capital Allocation Drives Accretive Investments
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Gas Distribution
Joe Hamrock
EVP & Group CEO September 12, 2012
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NiSource Gas Distribution (NGD)
NIPSCO Gas
• Largest LDC in Indiana
• ~800,000 Customers • ~17,000 Miles of Pipe
• Fair Value Rate Base ~$800M
Columbia Gas of Ohio
• Largest LDC in Ohio • 1.4 Million Customers • ~20,000 Miles of Pipe • Rate Base ~$1.3B
Columbia Gas of Kentucky
• Second Largest Gas-Only LDC in Kentucky
• 140,000 Customers
• ~2,600 Miles of Pipe
• Rate Base ~$173M
Columbia Gas of Virginia
• Third Largest LDC in Virginia • ~250,000 Customers • ~5,000 Miles of Pipe • Rate Base ~$417M
Columbia Gas of Massachusetts
• Largest Gas-Only LDC in Massachusetts • 300,000 Customers • ~4,800 Miles of Pipe • Rate Base ~$465M
Columbia Gas of Pennsylvania
• Third Largest LDC in Pennsylvania • 400,000+ Customers • ~7,400 Miles of Pipe • Rate Base ~$784M
Columbia Gas of Maryland
• Complementary to PA Operations
• 33,000 Customers
• ~750 Miles of Pipe
• Rate Base ~$54M
Growing Rate Base, Earning Allowed Returns
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NGD Market Profile
Stable Markets
~774 BCF
Power Generation 11%
Industrial 40%
Residential/ Commercial 49%
Throughput
$1.3 Billion/Year*
Industrial/ Power Generation 9%
Margin
Residential/ Commercial 91%
Minimal Revenue Variability
*2012 Non-GAAP estimate. Illustrative only.
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NGD Performance
Delivering for Our Customers, Communities and Other Key Stakeholders
Safety/ Reliability
Customer Experience
Stakeholder Relations
Customer Rates
Financial Performance
Top Decile/Quartile Performance Robust Programs and Satisfaction Scores Collaborative, Constructive Approach Competitive, Affordable, Innovative Designs
Growing Rate Base, Earning Allowed Returns
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NGD Business Strategy
Executing a Strategy for Sustainable Long-Term Growth
Long-Term Growth Through Investment in
Infrastructure Modernization and Innovative Rate Structures
• Expanded Infrastructure Programs Under Similar Policy Frameworks
• Total Asset Base Modernization
• Reliable, Safe and Economic Services for Customers
• Local Economic Development
~$10B Investment Opportunity Over 20+ Years
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NGD Business Strategy
A Long-Term Investment-Driven Growth Strategy
$600-650M
Annual Capital Investment
Expand Customer Programs
Grow Customer Base
Modernize Infrastructure
7-9%
Operating Earnings Growth
Growing Rate Base, Earning Allowed Returns
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Long-Term Infrastructure Modernization Investments
~75% Revenue-Enhancing Investments
OH IN PA MA VA KY MD Totals
Modernization
(Tracker) $180-189M $30-45M $150-155M $50M $35M $15M $9M $469-498M
/Growth
Maintenance $30-31M $30-45M $20-25M $30M $15M $5M $1M $131-152M
Total $210-220M $60-90M $170-180M $ 80M $ 50M $20M $10M $600-
650M
Annual Capital Investment Run-Rate of $600-650M
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NGD Investment Run-Rate ($M)
Growing Capability and “Flex” Ability
$600-$650M
$625 $550
$350 $400
73% 76% 475
400
79% 75%
300 275
21% 25% 24%
100 27% 150 150 75
2009 2010 2011 2012
Maintenance Tracker / Growth
A Strong Foundation of Long-Term Growth
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NGD Operating Earnings* ($M)
Attractive, Low-Risk, Investment-Driven
NGD
2009-2012
CAGR 11.3%
2012-2017
7-9% CAGR
* |
| Non-GAAP. For a reconciliation to GAAP, see page 15 of the 2011 NiSource Statistical Summary. |
** Represents Midpoint of Guidance Range
Operating Earnings Growth of 7-9% Going Forward
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NGD Business Strategy
NiSource’s Foundation
Expand Customer Programs
Grow Customer Base
Modernize Infrastructure
Ongoing Disciplined Execution
Sustain Growth Through Long-Term Investment in Infrastructure
Modernization
Maintain Innovative Rate Structures
Deliver Exceptional Customer Satisfaction and Experience
~$10B Investment Opportunity Over 20+ Years
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Appendix
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Modernizing our Business Model
Aligning Revenues, Costs and Investments
OH IN PA MA VA KY MD
Levelized Rates; Decoupling
Uncollectible Expense Tracker; Uncollectible Commodity Adj.
Pension/OPEB Tracker; Pension/OPEB Deferral
Environmental Tracker/Deferral Low Income Programs Energy Efficiency Programs
Quality Service, Programs and Reasonable Rates
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NIPSCO Electric
Jimmy Staton
EVP & Group CEO September 12, 2012
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Indiana’s Largest Combination Utility
450,000 Electric Customers Rate Base of ~$2.3B Strong Customer Service
Stable, Balanced Regulatory Environment
78 % Coal
22% Natural Gas
Strong Operations and Customer Service
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NIPSCO Electric Market Profile
Stable Markets
15,500 GWh
$0.9B/Yr.*
Industrial 43%
Residential/ Commercial 57%
Throughput
Industrial 22%
76% Demand
Residential/ Commercial 78%
Margin
Moderate Revenue Variability
*Illustrative. Based on Rate Case Approved December 2011.
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NIPSCO Performance
Delivering for Our Customers, Communities and Other Key Stakeholders
Safety/ Reliability
Customer Experience
Stakeholder Relations
Customer Rates
Financial Performance
Top Quartile/Decile Performance Robust Programs, Significant JD Power Gains Collaborative, Constructive Approach Competitive, Affordable
Growing Rate Base, Earning Allowed Returns
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NIPSCO Electric Business Strategy
Executing a Strategy for Sustainable Long-Term Growth
Long-Term Growth Based on:
• ‘Tracked’ Environmental Investments Ensuring Compliance
• ‘Tracked’ Transmission System Enhancements
• Modernizing Transmission and Distribution Infrastructure
• New Gas-Fired Generation Enhancing the Fleet
$6-8B Investment Opportunity Over 10-15 Years
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NIPSCO Electric Business Strategy
Investment-Driven Growth
$400-450M
Annual Capital Investment
Upgrade Generation Fleet
Enhance Transmission System
Modernize
Infrastructure
7-9%
Operating Earnings Growth
Growing Rate Base, Earning Allowed Returns
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NIPSCO Electric Business Strategy
Upgrade Generation Fleet
Plants Investment Compliance Recovery
Technology
Schahfer $525-775M FGDs Tracker
FGD Michigan City (SO2)
All Plants $80M—$ 200M Enhanced Mercury and Tracker
MATS Particulate Controls
All Plants $25M—$ 100M Enhanced Wastewater In S.B. 251
Treatment & Intake Tracker
Water Modification
All Plants $100M—$300M Upgraded Ash In S.B. 251
Ash Handling and Disposal Tracker
$700M-$1.4B Investment Opportunity
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NIPSCO Electric Business Strategy
Enhance Transmission System
Strategically Located at MISO/PJM SEAM
Two MISO Multi-Value Projects
Ongoing Work with MISO to Reduce Congestion
FERC Allowed Returns
Capital Investment
Reynolds to Hiple $250-300M
Reynolds to Greentown $150-200M
(Pioneer Partnership)
$500M-$1B Investment Opportunity
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NIPSCO Electric Business Strategy
Modernize Infrastructure
Systematic Replacement of Aging Infrastructure
Spurs Redevelopment Opportunities, Economic Growth & Jobs
Improved Reliability and System Integrity; Meets Increasing Customer Expectations
Developing DSIC-Type Legislation
$3-4B Investment Opportunity
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NIPSCO Electric Investment Run-Rate ($M)
Investment-Driven Growth
$400
69%
$275
275
$200 55% $150 50 150
25%
31% 17% 25 45%
83% 125 75% 150 125 125
2009 2010 2011 2012
$400-$450M
Maintenance Tracker / Growth
Growing Rate Base, Earning Allowed Returns
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NIPSCO Electric Operating Earnings* ($M)
Attractive, Low-Risk, Investment-Driven
2009-2012
CAGR 14.3%
2012-2017
7-9% CAGR
NIPSCO Electric
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| Non-GAAP. For a reconciliation to GAAP, see page 17 of the 2011 NiSource Statistical Summary. |
** Represents Midpoint of Guidance Range
Operating Earnings Growth of 7%-9% Going Forward
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NIPSCO Electric Business Strategy
Positioned for Growth
Upgrade Generation Fleet
Enhance Transmission System
Modernize Infrastructure
Deep Inventory of Investment Opportunities Synched with Rate Recovery
Stable, Balanced Regulatory Environment
Strong Operations and Customer Service
Strategic Transmission Position
$6-8B Investment Opportunity
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Gas Transmission & Storage
Jimmy Staton
EVP & Group CEO September 12, 2012
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NiSource Gas Transmission Storage (NGT&S)
Strategically Located Assets
Columbia Gas Transmission (TCO) Columbia Gulf Transmission (Gulf) Millennium Pipeline Crossroads Pipeline Shale Areas
15,000+ Pipeline Miles
1.3 Tcf Throughput Nearly 300 Bcf of Storage Capacity;
7.3 Bcf of Deliverability Rate Base: TCO ~$2.1B
Gulf ~$300M Serving Attractive Mid-Atlantic and East Coast Markets Access to Expanding Southeastern Markets
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NGT&S Footprint
Strategically Located Assets
Serving Market Across 16 State
2010 US Census
Population Density by County
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NGT&S
Positioned for Growth
Safety/ Reliability
Customer Experience
Stakeholder Relations
Customer Rates
Financial Performance
Solid Safety Results; Proactive Reliability Efforts Ongoing Engagement Focus, Satisfaction Gains Collaborative, Constructive Approach Highly Competitive, Fee-Based
Positioned for Ongoing, Robust Growth
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NGT&S Growth Strategy
‘4M’ Integrated Investment Strategy
Modernize Our Infrastructure
Reconfigure Our System for an Evolving Market Capture Emerging Midstream
Opportunities
Leverage Our Minerals Positions
Modernization
Marketing
Midstream
Minerals
Comprehensive, Balanced Portfolio
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NGT&S Growth Strategy
Regulated Pipeline & Storage
Rebuilding Our System in
Partnership with our
Customers
Linking New Supplies to Markets
$7-9B Investment Over 10-15 Years
Modernization
Marketing
Midstream & Minerals
Leveraging Strategic Assets and Footprint Developing Fee-Based Gathering and Processing Opportunities
$1-1.5B Investment Over 5-10 Years
Midstream
Minerals
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NGT&S Growth Strategy
Strengthening Our System Foundation
Linking New Supplies to Growing Markets
Providing Market Access for Shale Supplies
Leveraging Our Minerals Assets
$1-1.5B
Self-Funded
Investment
$3-4B
$4-5B
$ 10B Investment Inventory
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NGT&S Growth Strategy
‘4M’ Integrated Investment Strategy
$500-700M
Annual Capital Investment
Modernization
Marketing
Midstream
Minerals
10-12%
Operating Earnings Growth
Building Long-Term Sustainable Growth
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NGT&S Growth Strategy
Strengthening Our System Foundation
Modernization
Building Long-Term Sustainable Growth
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Strengthening Our System Foundation
System Modernization
Modernization
Systematically Rebuild Our Infrastructure Improve Public Safety Increase Customer Flexibility and Reliability Earn Consistent Returns on Investments
$ 5B Investment Opportunity
1,000+ Miles of Pipeline Replaced
100,000+ Horsepower Replaced
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Strengthening Our System Foundation
Unprecedented Settlement
Collaboration: Near-Unanimous Settlement Annual Investment: $300M
Minimal Regulatory Lag: Annual ‘Tracker’
Recovery of Return, Taxes & Depreciation Initial Term: 5 Years, With Extension Provisions Cost to Achieve: Within Expectations Timeline: FERC Filing September 4; Anticipate Approval Late 2012
Partnering With Our Customers
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NGT&S Growth Strategy
Linking New Supplies to Growing Markets
Marketing
Opportunistic, Disciplined Approach
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Linking New Supplies to Growing Markets
Marketing Strategy
Enhance Market Liquidity Increase Supply Optionality Provide Market Access for Emerging Appalachian Supplies Access East Coast and Gulf LNG Export Markets
4B Investment Opportuni
Underpinned by Fee-Based Contracts
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Linking New Supplies to Growing Markets
West Side Expansion
GOAL
Move Marcellus Supply to Growing Southeast Markets
INVESTMENT
CapEx: $200-250M 440 Mdt/d TCO Expansion 540 Mdt/d Gulf Expansion Line Looping at TCO
Re-Piping for Bi-Directional Flow on Gulf
CUSTOMERS
Antero Rice Petro Edge
Other Marcellus Producers
STATUS
FERC Filing: Spring 2013 In-Service: November 2014
Marketing
Shale Gas to the Southeast
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Linking New Supplies to Growing Markets
East Side Expansion
GOAL
Provide Northern Marcellus Supplies to Northeast and Mid-Atlantic Markets
INVESTMENT
CapEx: $200-300M
220-300 Mdt/d TCO Expansion Pipeline Looping; Interconnects
CUSTOMERS
East Coast LDCs Gas-fired Generation Producers
Negotiating Precedent Agreements In-Service: September 2015
Competing in the Northeast and Mi Atlanti
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Linking New Supplies to Growing Markets
Quick Link Expansion
GOAL
INVESTMENT
CUSTOMERS
STATUS
Deliver Utica Shale Supplies to Multiple Markets
CapEx: ~$300M
500 Mdt/d TCO Expansion Pipeline Looping, Extension
Various Utica Producers
In Development
In-Service Date: Q4 2015
Majorsville
Moving Utica Gas to market
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Linking New Supplies to Growing Markets
LNG Export Opportunities
GOAL
Deliver Shale Gas to LNG Export Hubs
INVESTMENT
CapEx: $0.5-1.3B
1-2 MMdt/d TCO/Gulf Expansion TCO Pipeline Looping/Expansion; Additional Compression and Reconfiguration of Gulf System
CUSTOMERS
LNG Exporters
STATUS
Negotiating Agreements In-Service: 2016+
Cameron
Accessing Multiple LNG
Market
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Cove Point
Linking New Supplies to Growing Markets
Gas-Fired Generation Strategy
GOAL
Fueling Coal-Fired Generation Conversions and New Builds
INVESTMENT
CapEx: ~$0.5-1B
Pipeline Looping and Expansion; Compression
CUSTOMERS
AEP
First Energy Dominion
STATUS
Customer Negotiations Under Way In-Service: 2015+
roposed lants
Coal or Oil Conversions
Currently Served
Capturing Power Generation Demand
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Linking New Supplies to Growing Markets
Warren County Expansion
GOAL
Additional Capacity to Serve New 1,300MW Generating Facility
INVESTMENT
CapEx: ~$35M
~250 Mdt/d TCO Expansion
2.5 Mile Pipeline Extension; Interconnect Facilities
CUSTOMERS
Dominion
STATUS
FERC Certificate: February 2012 In-Service: April 2014
Fueling Virginia’s
Electric Needs
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Linking New Supplies to Growing Markets
Millennium Pipeline
GOAL
Deliver Marcellus Shale Supplies to Multiple Markets
INVESTMENT
~$40M (NiSource’s Share)
Minisink Compressor: Expand Capacity by 120 MDt/d Hancock Compressor: Expand Capacity by 150 MDt/d
CUSTOMERS
Northeast PA Producers
STATUS
Minisink In-Service: Q1 2013 Hancock In-Service: Q4 2013
Hancock
Minisink
Moving North Marcellu Gas to Market
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NGT&S Growth Strategy
Providing Market Access for Shale Supplies
Midstream
Attractive Investment; Fee-Based Structures
51
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Providing Market Access for Shale Supplies
Midstream Strategy
Midstream
Leverage Location and Asset Base Develop Gathering and Processing Opportunities and Targeted Partnerships Create Franchise in Underserved Marcellus and Emerging Utica Areas
Pennant
Majorsville
Big Pine
$1B Investment Opportunity
Shale Areas NGT&S System Mineral Leases
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Providing Market Access for Shale Supplies
Evolving Midstream Opportunities
Utica Wells
Drilled to Date
Anadarko Antero Chesapeake Enervest Gulfport Hess Range Rex Shell
Shale Areas NGT&S System Mineral Leases
Developing Shale Play
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Providing Market Access for Shale Supplies
Evolving Midstream Opportunities
Current Active Lease Holders
Anadarko BP Chesapeake Chevron CNX/Hess Devon EnerVest Exxon – XTO Gulfport Halcon Hilcorp Range Seneca Shell
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| Million+ Acres Leased |
Shale Areas NGT&S System Mineral Leases
54
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Providing Market Access for Shale Supplies
Evolving Midstream Opportunities
First Mover in Underserved Areas Gathering, Processing and Partnership Opportunities Significant Expansion Opportunities
Pennant
Big Pine
Majorsville
Building the Midstream Franchise
Shale Areas NGT&S System Mineral Leases
55
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Providing Market Access for Shale Supplies
Majorsville Processing Complex Inlet/Outlet Pipelines
GOAL
Gather Wet Marcellus Gas to Processing Facility and Provide Downstream Pipeline Market Access
INVESTMENT
Repurposing Existing Pipeline; Adding New Interconnect $85M Gathering Extension
CUSTOMERS
Range CNX Chesapeake Chevron
STATUS
In Service: September 2010
ille
Repurposing Existing Asset
Shale Area NGT&S System
56
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Providing Market Access for Shale Supplies
Big Pine Gathering System
GOAL
Move Marcellus Gas to Market
Position NGT&S as ‘First Mover’ in
Region
INVESTMENT
CapEx: ~$150M ~400 Mdt/d Capacity
55 Miles of New Pipeline in Western PA in Existing ROW
Demand/Commodity Rate Structure Significant Acreage Dedication
Dominion Interconnect
CUSTOMERS
XTO Energy
Other Marcellus Producers
STATUS
XTO Contracts Executed In-Service: Q4 2012
20”
10”
Big Pine Gathe Columbia TETCO
Dominion
New Foothold in Marcellus Shal
57
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Providing Market Access for Shale Supplies
Pennant Midstream
GOAL
Establish Utica Franchise JV to Provide Gathering and Processing Services
INVESTMENT
$150M (NI Share -Phase 1) Expected Throughput ~400,000 Mdt/d 200 Mdt/d Initial Processing Capability Demand/Capacity Rate Structure 100,000 Acre Dedication
PARTNER
STATUS
In Execution
In-Service Date: Q3 2013
Initial Process
Project Area
20” Rich Gas
Header
Big Pine
Pennant Pipeline Columbia Tennessee Dominion
Future Phases Likel
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NGT&S Growth Strategy
Leveraging Our Mineral Assets
Minerals
Supports, Complements Midstream Strategy
59
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Leveraging Our Minerals Positions
Integrated Strategy
Optimize Our Minerals Position in Marcellus and Utica Shale Region Partner with Credible Producers Fund Investment With Working Interest Cash Flows
Shale Areas NGT&S System Mineral Leases
Measured Approach, Creating Long Term Value
60
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Leveraging Our Minerals Positions
Hilcorp Upstream Agreement
GOAL
Jointly Develop and Extract Value of ~100k Acres of Mineral Rights
INVESTMENT
Market-Based Cash Payment
• Consistent with market values
(e.g. Recent Halcon/NCL transaction)
• 50% ‘cash’; 50% ‘carry’
Working Interest of 5% Across AMI Overriding Royalty Interest of 0.7% Acreage Dedicated to Pennant
PARTNER
STATUS
Under Development
Strong Partnership, Creating Long Term Value
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Leveraging Our Minerals Positions
Significant Potential Minerals Opportunities
Expect Utica to Develop East to West Small Number of Wells Drilled to Date Area Continues to Evolve Continue to Monitor Devon and Anadarko Increased Drilling Expected Over Next Several Years
Majorsville
Shale Areas NGT&S System Mineral Leases
Measured Approach, Long Term Value Focus
62
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NGT&S Growth Strategy
Strengthening Our System Foundation
Linking New Supplies to Growing Markets
Providing Market Access for Shale Supplies
Leveraging Our Minerals Assets
$1-1.5B
Self-Funded
Investment
$4-5B
$3-4B
$ 10B Investment Inventory
63
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NGT&S Investment Run-Rate ($M)
Investment Driven Growth
$500-$700M
$475
58%
$300 $300 $300 275
25% 75 58% 50%
175 150
75%
50% 225 200
42% 150 42%
125
2009 2010 2011 2012
Maintenance Tracker/Growth
10-12% Operating Earnings Growth
64
|
NGT&S Operating Earnings*
Attractive Return on Investment
2012-2017
10-12% CAGR
NGT&S
Consistent Earnings Growth
* |
| Non-GAAP. For a reconciliation to GAAP, see page 16 of the 2011 NiSource Statistical Summary. |
** Represents Midpoint of Guidance Range
65
|
NGT&S Business Strategy
Positioned for Success
Modernization
Marketing
Midstream
Minerals
$8-10B Inventory of Investments
Demonstrated Execution
Disciplined Approach to the Evolving Marketplace
Positioned for 10-12% Operating Earnings Growth
Building Long-Term Sustainable Growth
66
|
Appendix
67
|
NGT&S Growth Investment Update
$3-4B Opportunity
1 |
| line WB $14M 2Q ‘12 |
2 |
| Smithfield $14M 2Q ‘12 |
3 |
| Rimersburg $6M 2Q ‘12 |
4 |
| millennium ~$85M (NI: $40M) 1Q & 4Q ‘13 |
5 |
| Warren County $35M Apr ‘14 |
6 |
| West Side $200—$250M Nov ‘14 |
7 |
| East Side $200—$300M Sep ‘15 |
8 |
| quick Link ~$300M 4Q ‘15 |
9 as-Fired Gen ~$0.5B—$1.0B 2015+
10 LNG Export ~$0.5B—$1.3B 2016+
$1-$1.5B Opportunity
$4-5B Opportunity
Columbia Gas
Modernization $300M/Yr Starting ‘13
Complete In Execution In Development
Utica Minerals Arrangement
Potential Minerals Opportunities
Drilling Begins 2H/2013
Under Evaluation
Self-Funded Investment
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|
Financial Profile
Steve Smith
Executive Vice President & CFO September 12, 2012
|
Ongoing Financial Commitments
EPS
Dividend
Credit
Investment
Inventory
5-7% Long-Term Earnings Growth
Attractive, Growing Dividend 3-5%
Investment Grade Credit Profile with Strong Liquidity
Disciplined Capital Allocation Applied to Large Inventory of Long-Term Growth Investments
70
|
Long-Term Financial Baselines
Earnings Growth and Attractive, Increasing Dividend
Highly Disciplined Capital Allocation Framework
Stable Credit Profile and Strong Liquidity
Sustainable EPS Growth of 5-7%
2012 Outlook Range Solidly In Line With Guidance ($1.40-
$1.50 NOEPS*)
Attractive, Growing Dividend
3-5%
Risk Reduction via Rate Design and Rate Case Activity
Highly Predictable Revenue Streams
Investment Inventory of
$25-30B Over 15-20+ Years
Disciplined Approach to Growth Capital
– Low-Risk
– Accretive
– Transparent Return Mechanisms
Disciplined O&M Management
Infrastructure Investment With Appropriate Risk-Adjusted Returns
Commitment to Investment Grade Rating and Stable Credit Metrics
DRIP Provides ~$50M/Yr. of Equity
Balanced Capital Funding (Equity Financing Anticipated 2015)
$1.5B Credit Facility in Place Through May 2017
* |
| Net Operating Earnings per Share (non-GAAP) |
71
|
Investment Inventory by Segment
Gas Distribution
Infrastructure Investment Trackers & Recovery Mechanisms Across Service Territory Complimentary Customer Programs – Energy Conservation and Payment Programs
Investment Inventory
$10B
20+ Yrs.
Electric
Environmental Tracker Investment
FERC Regulated Transmission Investment Transmission and Distribution Modernization
$6-8B
15-20 Yrs.
NGT&S
Modernization Marketing Midstream Minerals
$8-10B
15-20 Yrs.
Deep Inventory of Tracked and Growth Investments
$25-30B
72
|
Capital Expenditures
$1.8B
$1.5B
$1.5B
$1.1B
$.9B 67% $1.0B $.8B
55% $.6B 56% $.5B
63% $.5B
45% $.5B 33% $.5B 44% $.4B
37% $.3B
2009 2010 2011 2012
Maintenance—40% Tracker/Growth—60%
Sustainable Investment Run Rate of $1.5B to $1.8B Drives EPS Growth
73
|
Accretive Investment Opportunities
Gas Distribution
Electric
NGT&S
Total
$600M
$650M
~11%
Trackers, Rate Cases
& Investment Recovery Mechanisms
$400M
$450M
~11%
Trackers & Rate Cases
FERC Regulated Transmission Investment
$500M
$700M
12%-15%
Fee-Based Long-Term Contracts
FERC Approved Recovery Mechanism
$1.5B
$1.8B
~12%
Low-Risk Investment-Driven Growth
* |
| GAAP Operating Income divided by invested Capital |
74
|
NI Operating Earnings* ($M)
2012-2017
8-10% CAGR
2009-2012 CAGR 7.0%
* |
| Non-GAAP |
** Represents mid-point of guidance range
Attractive, Low-Risk Investments Drive
Operating Earnings Growth of 8% to 10% Going Forward
75
|
NOEPS Growth*
2009-2012
CAGR 10.7%
2012-2017
5-7% CAGR
* |
| Net Operating Earnings per Share (non-GAAP) |
** Represents mid-point of guidance range
Investment Drives EPS Growth of 5% to 7% Going Forward
76
|
Primary Sources & Uses of Cash
Position, Build & Grow NiSource
Growth CapEx
($1,000M-$1,300M)
Maintenance CapEx
(~$500M)
Dividend
($250M-$300M)
Primary Uses
Primary Sources
Annual Funding Requirement *
($500M-$750M)
DRIP (~$50M)
Funds From Operations
($1,100M-$1,300M)
Equity Issuance Anticipated in 2015
* |
| Net funding requirement |
77
|
Recent Financing Activity 2009-2012 ($M)
24
43 339 41 1,460 890 1,000 35 245 (287) (315)
(978) (1,170)
Financing 2009 2010 2011 2012
Debt Issuances $ 1,460 $ 245 $ 890 $ 1,000
Debt Maturities (1,170) (978) (287) (315)
DRIP 24 35 41 43
Equity Issuances ——— 339
Net Financing Requirements $ 314 $ (698) $ 644 $ 1,067
Weighted Avg. Life (yrs.) 7.0 8.0 9.5 10.0
Weighted Avg. Coupon 6.60% 6.25% 6.05% 5.77%
Floating Rate Debt 19.2% 25.6% 23.4% 13.6%
$1B of Debt Issuance in 2012
78
|
Stable Investment Grade Credit
Credit Metrics Summary
(Projected Year-End 2012)
Debt Balance $7.9B
Debt / Total Capitalization 58.7%
FFO + Interest / Interest 4.2x
FFO / Total Debt 16.8%
Stable Credit Ratings
Baa3 / BBB- / BBB- *
* |
| Moody’s / S&P / Fitch senior unsecured ratings |
79
|
Strong Liquidity Position ($M)
Current Liquidity
$ 1,500 May 2017
-
(134)
(19) |
|
52
$ 1,399
Credit Facility in Place Through May 2017
80
|
Summary
EPS
Dividend
Credit
Investment Inventory
5-7% Long-Term Earnings Growth Attractive, Growing Dividend 3-5%
Investment Grade Credit Profile with Strong Liquidity
Disciplined Capital Allocation Applied to Large Inventory of Long-Term Growth Investments
81
|
Appendix
82
|
Maturity Profile ($M)
As of July 31, 2012
$900
$750
$600 $450 $300
$150
$0
Weighted Average Maturity 10.22 yrs.
Weighted Average Coupon 5.77%
2012 2013
2014
2015 2016
2017
2018 2019
2020
2021 2022
2023
2024 2025
2026
2027 2028
2029
2030 2031
2032
2033 2034
2035
2036 2037
2038
2039 2040
2041
2042 2043
NIPSCO Columbia Gas of Mass. NiSource Capital Markets NiSource Finance
83