Overview of AltaGas(from the company)

AltaGas Ltd. (AltaGas), a Canadian corporation, is a North American diversified energy infrastructure business with a focus on owning and operating assets to provide clean and affordable energy to its customers. AltaGas' business strategy is underpinned by strong growth in natural gas supply and the growing demand for clean energy. More than 1,600 employees across North America are focused on executing AltaGas’ strategy through three business segments:

  • Gas, which transacts more than 2 Bcf/d of natural gas and includes natural gas gathering and processing, natural gas liquids extraction and separation, transmission, storage, and natural gas marketing, as well as AltaGas' indirectly held one-third interest in Petrogas Energy Corp. (Petrogas). The Gas segment has significant prospects for growth in British Columbia and Alberta;
  • Power, which includes generation assets located across North America with more than1,688MW of gross capacity, all from natural gas and renewable sources, and 20 MW of energy storage; andwith significant opportunities to expand in California and across the United States, as well as the potential opportunity to develop new gas-fired and renewable generation in Alberta to replace coal;
  • Utilities, serving over 575,000 customers1 through ownership of regulated natural gas distribution utilities across North America and a regulated natural gas storage utility in the United States, delivering clean and affordable natural gas to homes and businesses.

AltaGas is focused on maximizing the profitability of its assets; adding services that are complementary to its existing business segments; and growing through the acquisition and development of energy infrastructure, including infrastructure required to provide access to new markets and the potential for higher netbacks to producers in the Western Canadian Sedimentary Basin (WCSB).

With the physical and economic links along the energy value chain, from wellhead to burner tip; an experienced and talented workforce; and efficient, reliable and profitable assets, market knowledge and financial discipline, AltaGas has provided strong, stable and predictable returns to its investors.

1 Including transportation and non-regulated business lines.

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OTHER POINTS

The AltaGas website says the company has several natural gas processing facilities, an ethane extraction plant, a “biomass” facility (producing energy from organic waste material), some solar and electric storage facilities in California, a few gas pipelines (associated with its gas gathering and distribution from its processing facilities), and some power generation from gas-powered plants, hydroelectric and wind power developments. As I mentioned at the meeting, AltaGas also currently operates two small gas distribution companies in the United States that, including one in Alaska and one in the Upper Peninsula of Michigan which serves 35,000 customers.

The merger materials estimated that AltaGashas a total of 575,000 customers, which I believe refers to customers for gas service at residences or places of business.

Many of the customers appear to be in Canada:

"We currently supply natural gas, electricity, and green electricity (Renewable Energy Certificates) to customers in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, and Quebec . . . In Eastern Canada, AltaGasprovides a number of different energy services to customers including marketing natural gas gathered and processed by AltaGas; and buying and selling storage and transportation capacity for natural gas customers and local distribution companies in Eastern Canada."

The various statements online about their vision and prospects sound upbeat, but contain the required caveats that everything is speculative and shouldn’t be taken as a promise of any particular results. They have been hurt by the decline in the value of the Canadian dollar, helped by cold weather (which requires customers to use more natural gas for heat), and set back by some delays in completion of a few of their new facilities.

About the purchase of Washington Gas (described as “Strategic Acquisition of WGL”), the AltaGas website says: "The combination will bringtogether high quality, low-risk, long-lived infrastructure assets in North America with approximately$5 billion in secured growthprojects and approximately $2 billion of growth opportunities through 2021 which are in advanced stages of development”(not specifying what they’re talking about—how much of that isAltaGas v. WGL Holdings assets and growth opportunities?). . . .The WGL Acquisition is expected to provide material accretion to earnings per share (8-10 percent) andto normalized fundsfrom operations per share(15-20 percent) on average through 2021. Starting with the first full year (2019), the WGLAcquisition is also expected to support visible dividend growth of 8-10 percent per annum through 2021, while allowing AltaGasto maintain a conservative payout of normalized funds from operations."

It seems clear from their recent press release providing 3rd Quarter Results for 2017 that the acquisition of WGL requires a stretch for AltaGas. It mentions selling some of their assets to get cash for the purchase, taking out a bridge loan (described as a "bridge facilityfor the pending WGL Acquisition”)and selling equities or “subscriptions” to raise additional funds. See:

It is not clear how/where they are getting the additional $21 million they propose to use to increase payments/benefits to the District to make the proposal more appealing and more acceptable to the PSC and the residents and groups participating in the merger case.