Mr. Vern Yu reports

ALTAGAS ANNOUNCES 2024 GUIDANCE AND STRATEGIC PRIORITIES, SIX PERCENT DIVIDEND INCREASE, AND RELEASES 2023 ESG REPORT

AltaGas Ltd. has released its 2024 guidance and outlook, provided an update on its long-term strategic plan, and released its 2023 environmental, social and governance (ESG) report, including progress toward achieving ESG goals.

Highlights (all financial figures are unaudited unless otherwise noted):

• 2024 normalized EPS (earnings per share) guidance of $2.05 to $2.25 represents approximately 10-per-cent year-over-year growth using midpoint-to-midpoint guidance figures. Strong year-over-year growth is underpinned by strong business performance in each of the core segments.
• 2024 normalized EBITDA (earnings before interest, taxes, depreciation and amortization) guidance of $1,675-million to $1,775-million represents approximately 11-per-cent year-over-year growth using midpoint-to-midpoint guidance figures. Strong growth in AltaGas's mid-stream and utilities businesses is expected to more than offset the lost contribution from the Alaska Utilities sale, which was divested in the first quarter of 2023.
• AltaGas is maintaining a disciplined and equity self-financed capital program of $1.2-billion in 2024, excluding asset retirement obligations (ARO). The 2024 capital program is more weighted toward low-risk organic growth in the utilities, however, the program reflects a significant shift relative to prior years, with utilities 2024 capital accounting for approximately 58 per cent of the annual capital budget and mid-stream accounting for approximately 36 per cent. Higher annual mid-stream capital reflects the strong outlook for the mid-stream business and strong growth opportunities, including the Pipestone II project.
• AltaGas is increasing returns of capital to shareholders through a 6-per-cent increase to its anticipated common share dividend of $1.19 per share for 2024. The company remains committed to delivering regular, sustainable and annual dividend increases while maintaining a prudent dividend payout target range of 50 per cent to 60 per cent of earnings, which balances the need to return capital to shareholders and finance the company's significant organic growth program within an equity self-financing model.
• The mid-stream segment is positioned to deliver strong year-over-year organic growth in 2024 and beyond. This growth is underpinned by the Pipestone acquisition, continued facility optimization and growth initiatives across the value chain.
• AltaGas and its joint-venture partner, Royal Vopak, have commenced site clearing work at the Ridley Island energy export facility (REEF), representing another important step in the project's development. Site clearing activities including logging, clearing and drainage that will help determine the project's readiness prior to reaching a final investment decision (FID).
• Earnings growth within the utilities segment will be underpinned by operational excellence, stronger earned ROEs (return on equity), contribution from recent rate cases and continuing rate base growth from the company's accelerated pipeline replacement programs (ARPs).
• AltaGas remains committed to reducing financial leverage to move toward its 4.5 times net debt to normalized EBITDA. Monetization of the Mountain Valley pipeline (MVP) is the most immediate path to moving toward this goal, which will be evaluated in 2024 as the pipeline moves toward completion. AltaGas also expects a stronger period of financial flexibility to evaluate the optionality associated with its strong investment capacity, which could be used for leverage reduction, after the Pipestone II and REEF projects coming on-line, assuming REEF reaches a positive FID in the first half of 2024.
• AltaGas released its 2023 ESG report, which features 2022 performance data, and highlights progress made toward its ESG goals in the core areas of emission reductions, safety and diversity.

Chief executive officer message

"We look forward to executing on our strategic plan and delivering strong value for AltaGas's shareholders in 2024," said Vern Yu, AltaGas's president and chief executive officer. "We are exiting 2023 on a strong footing and expect to achieve financial results for 2023 in the upper half of our guidance ranges.

"AltaGas has a unique set of assets with strong competitive advantages that position the company to deliver industry-leading earnings and dividend growth. We remain committed to operating with an equity self-funding model and see a clear path to moving towards our 4.5 times net debt to normalized EBITDA target. We have a tremendous pipeline of growth projects, but we'll be disciplined in our capital allocation process to funnel these opportunities to ensure we deliver the best risk-adjusted returns and balance our competing priorities, including long-term leverage reduction.

"Our utilities have a bright future, with natural gas remaining the largest home energy source across all our jurisdictions where, on average, electrical substitution costs are more than three times the cost of natural gas on a delivered basis. We have visible and low-risk growth opportunities through new customer additions, system expansion and modernization opportunities. AltaGas will continue to act in our customers' best interests during this period of higher inflation and interest rates, balancing the critical needs of energy affordability and reliability with rate increases and regional climate goals.

"After a decade of being structurally challenged by a lack of take-away capacity, Canada is set to deliver significant natural gas and NGL [natural gas liquid] production growth in the years ahead, with our mid-stream business realizing strong growth opportunities. As liquified natural gas (LNG) projects on the Canadian West Coast come on-line in the next couple of years, we expect numerous customer-backed opportunities to add infrastructure to support these developments. This includes opportunities to connect increasing Canadian liquefied petroleum gases (LPGs) and other vital energy products into premiere downstream markets in Asia.

"As transporters of energy, we serve a crucial role delivering energy affordably, reliably and safely, while working towards a lower-carbon future. Today, with the release of our 2023 ESG report, we're pleased to highlight the progress we've made against our commitments to safety and reliability, emissions reductions, and diversity and inclusion. While it's clear that we need to reduce our GHG [greenhouse gas] emissions, we need to take a balanced approach, where affordability, reliability and energy security are part of the mix."

Two thousand twenty-four guidance

AltaGas expects to achieve normalized EPS of $2.05 to $2.25 and normalized EBITDA of $1,675-million to $1,775-million in 2024. These guidance figures represent AltaGas's expectations for continued growth in consolidated performance of the business.

Approximately 55 per cent of 2024 normalized EBITDA is expected to be generated by the utilities segment. Utilities normalized EBITDA growth is expected to be driven by positive contribution from the Maryland and District of Columbia rate cases, continued rate base growth through continuing capital investments through various ARPs, new customer metre growth, normal 2024 weather, and continuing cost management, which is being partially offset by the lost contribution of the Alaskan Utilities, which divestiture closed in the first quarter of 2023, and higher operating costs associated with a higher inflationary and cost environment.

Washington Gas currently has active rate case applications in Maryland and the District of Columbia. Within Maryland, the requested rates are designed to collect an incremental $49-million (U.S.) in annual revenue, while the District of Columbia requested rates are designed to collect an incremental $48-million (U.S.) in annual revenue, with rates forecasted to take effect in December, 2023, and the second quarter of 2024, respectively. AltaGas has ARPs in place across all three jurisdictions, within Washington Gas as well as SEMCO in Michigan. New meter growth is expected to continue across AltaGas's utilities jurisdictions at approximately 1 per cent over a multiyear time horizon.

AltaGas can grow rate base by up to an 8-per-cent CAGR (compound annual growth rate) through 2028, through population growth and new meter connects, and continuing modernization investments across the network, which are focused on long-term safety and reliability. The utilities growth rate in the year ahead will be a function of relative opportunities and calls on capital across the platform as AltaGas focuses on driving the best balanced outcomes for all stakeholders.

Approximately 45 per cent of 2024 normalized EBITDA is expected to be generated by the mid-stream segment. Strong year-over-year growth in normalized EBITDA is driven by the Pipestone and Dimsdale asset acquisition, strong global export volumes and higher margins, higher utilization at the company's existing northeastern British Columbia facilities, and the absence of wildfire impacts in Alberta. These positive factors are expected to be partially offset by a lower contribution from allowance of funds used during construction (AFUDC) on the MVP and lower cogeneration revenue at Harmattan.

AltaGas operates a fully integrated mid-stream platform that connects Western Canadian producers to global markets. From well head to tidewater, the company is focused on providing its customers with safe and reliable service. This includes providing access to global markets for North American LPGs, and providing North American producers and aggregators with the best netbacks for their propane and butane, while delivering diversity of supply and affordable lower-carbon energy to markets in Asia.

Strong macro fundamentals, commodity prices and improving natural gas egress out of Western Canada are providing a strong outlook for natural gas and natural gas liquids production growth in the coming years. This includes LNG terminals coming on-line mid-decade on the Canadian West Coast, which will bring associated LPGs. AltaGas continues to see increasing demand for LPG exports through the Ridley Island propane export terminal (RIPET) and Ferndale LPG export terminal, driven by the company's structural shipping advantage to serve demand markets in Asia and access to low-cost supply. This structural advantage has magnified recently due to restricted vessel traffic through the Panama Canal, caused by lower water levels, and is driving strong demand for more Canadian LPGs in Asia.

AltaGas continues to focus on derisking its business commercially through long-term tolling contracts while actively managing remaining commodity price exposure. In 2023, AltaGas made strong progress on this initiative with increased tolling within the global exports business and believes there is a clear path to push toward 60 per cent or higher tolling over a multiyear time horizon. AltaGas will also continue to actively and systematically hedge remaining merchant export volumes to lock in the structural margins and cash flows. The company has hedged approximately 73 per cent of AltaGas's 2024 expected global export volumes through tolling arrangements or financial hedges, with the latter including an average Far East Index (FEI) to North American financial hedge price of $15.60 (U.S.)/bbl (barrel) for non-tolled propane and butane volumes. The company is also 78 per cent hedged on ocean freight costs for expected 2024 export volumes through a combination of time-charters, tolling and financial hedges.

AltaGas also continues to derisk the global exports supply chain. In October, 2023, AltaGas entered a five-year transportation agreement with Canadian National Railway Company, which provides AltaGas, and its customers, cost and service predictability. AltaGas also expects to take delivery of two new very large gas carriers (VLGCs) in December, 2023, and March, 2024. These two seven-year time charters will reduce total shipping costs to Asia by approximately 25 per cent compared to normal pricing on a standard VLGC. The vessels' deployment will also remove pricing volatility and derisk maritime shipping costs on a long-term basis. Following the delivery of these two vessels, AltaGas will have three time charters operating in 2024 and a fourth under construction, which is set to be commissioned in the first half of 2026.

Two thousand twenty-four dividend increase

The company's board of directors approved a 6-per-cent increase to the annual common share dividend, to $1.19 per share annually for the 2024 calendar year, which equates to a rate of 29.75 cents per common share on a quarterly basis. Subject to approval of the board of directors, the first quarterly dividend of 29.75 cents per common share is expected to be effective for the March, 2024, dividend and will be paid on March 29, 2024, to common shareholders of record on March 15, 2024. These dividends are eligible dividends for Canadian income tax purposes.

Two thousand twenty-four capital

AltaGas's 2024 capital expenditure plan of approximately $1.2-billion, excluding ARO, is more weighted toward the low-risk utilities business, which is anticipated to deliver stable and transparent rate base growth, and strong risk-adjusted returns. The company is allocating approximately 58 per cent of AltaGas's consolidated 2024 capital to its utilities business and approximately 36 per cent to the mid-stream business. This represents a strong increase in capital allocation to the mid-stream segment versus recent years given the strong growth opportunities and relative capital returns that are projected, including the development of the Pipestone II project.

The company expects to maintain an equity self-financing model in 2024, for the fifth consecutive year, and will finance capital requirements through a combination of internally generated cash flows and investment capacity associated with rising EBITDA levels, with no expectation to issue equity, assuming the Pipestone acquisition closes prior to 2023 year-end. Asset sales will be considered on an opportunistic basis, with any potential proceeds to be used to delever and strengthen the balance sheet, and continue to increase financial flexibility of AltaGas.

Two thousand twenty-three ESG report

Today, AltaGas released its 2023 ESG report which features 2022 performance data for the company's ESG priority areas and highlights progress made toward its ESG goals. For more information, please see AltaGas's 2023 ESG report, available on the company's website.

Investor day and webcast details

The company will host its 2023 investor day today, Dec. 5, 2023. The event will be held in person in Toronto, Ont., with a virtual option. At the event, the company will provide an update on its corporate strategy and outlook, share its near- and long-term priorities, and discuss the road ahead. Register at the company's events and presentations webpage.

Date:  Tuesday, Dec. 5, 2023

Time:  9 a.m. ET to 12 p.m. ET

Registration:  register on-line

About AltaGas Ltd.

AltaGas is a leading North American infrastructure company that connects customers and markets to affordable and reliable sources of energy. The company operates a diversified, lower-risk, high-growth energy infrastructure business that is focused on delivering stable and growing value for its stakeholders.

We seek Safe Harbor.