#1Province of Alberta Investor Meetings November, 2017 Lowell Epp, Assistant Deputy Minister, Treasury and Risk Management Albertan Canada#22 Economic structure Alberta's economy at a glance · Between 2000-14, Alberta experienced broad-based industry growth that outpaced the rest of Canada Alberta's contribution to national GDP and exports in 2016 was around 15.5% Young, skilled population with highest employment rate (around 67%) in Canada, despite significant layoffs in 2015 and 2016 At 4.3 million people (2), Alberta represents about 12% of the national population Share of nominal GDP by industry in 2016(1) Transportation and warehousing. 5% Public administration 5% Health care and social assistance 6% Other 18% Professional, scientific and technical services Finance and Real estate 17% 6% Real GDP expected to rebound strongly by 3.1% in 2017 (1) Statistics Canada (2) Estimated July 1, 2017 Mining, quarrying, and oil and gas extraction 17% Construction 11% Trade -9% Manufacturing 6% Albertan Canada#3Economic structure Energy investment stabilizing, production continuing to grow 70 60 4,000 ($billion) 50 650 430 20 10 0 2009 2010 2011 2012 Oil Sands Investment (Left) -Production (Right) • ~$25-$55 USD/barrel T 2013 2014 2015 2016 2017f 2018f 2019f 2020f 0 3,000 2,000 1,000 Conventional Oil and Gas Investment (Left) Approximate breakeven Conventional oil projects • Enhanced $50-$60 USD/barrel Oil sands projects • Surface mine -$80 - $85 full cycle SAGD $45-$65 USD/barrel full cycle Sources: Alberta Treasury Board and Finance, e-estimate, f-forecast, Budget 2017. Albertan Canada (Mbpd) 3#4Economic structure Alberta's population continues to grow Change in the Alberta population by component (1) 140 120 Natural Increase (Left) Net Interprovincial (Left) Net International (Left) -Population Growth (Right) 100 80 60 (Thousands) 40 20 0 -20 -40 2006 2007 2008 2009 2010 2011 2012 2013 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 -0.5 2014 2015 2016 2017 2018f 2019f 2020f Alberta's population of 4.3 million(2) is forecast to expand faster than Canadian average, supporting consumer spending and housing 2004 2005 (1) Statistics Canada and Alberta Treasury Board and Finance, Budget 2017, f-forecast (2) Estimated July 1, 2017 Alberta Canada 4#5Economic structure Labour market improves gradually Alberta Labour Market Indicators 2,500 (%) 9.0 8.0 2,300 7.0 6.0 2,100 (000s) 5.0 4.0 1,900 3.0 2.0 1,700 1.0 1,500 0.0 2010 2011 2012 2013 2014 2015 2016 2017f 2018f 2019f 2020f Employment (left) -Unemployment Rate (right) Sources: Statistics Canada and Alberta Treasury Board and Finance, f-forecast *The number of people working or looking for work 5 Albertan Canada#66 Economic structure Long-standing economic prosperity Nominal GDP per capita 100 80 60 40 40 ($ Thousands) 20 20 0 1985 1989 1993 1997 2001 2005 2009 -Rest of Canada Average -Alberta Alberta has proven to be resilient in the face of tough economic times Sources: Statistics Canada, and TD Economics forecasts (September, 2017). Alberta Treasury Board and Finance numbers updated with Budget 2017. 2013 Albertan Canada 2017f#7Alberta has highest median total household income of all provinces Median Household Incomes Alberta $93,835 Saskatchewan $75,412 Ontario $74,287 British Columbia $69,995 Alberta $93,835 Manitoba $68,147 Newfoundland and $67,272 Labrador Prince Edward Island $61,163 Nova Scotia $60,764 Quebec $59,822 New Brunswick $59,347 Source: Statistics Canada https://twitter.com/hashtag/2016Census?src=hash 7 Albertan Canada#88 Fiscal policy Alberta's fiscal capacity Alberta still has a significant tax advantage compared to other provinces (1) British Columbia Saskatchewan Ontario New Brunswick Nova Scotia Manitoba Prince Edward Island Quebec Newfoundland & Labrador 0 4 8 12 16 20 24 ($billion) ■Sales / Value Added Tax ■Other Taxes / Carbon Charges (1) Alberta Treasury Board and Finance Albertan Canada#9Fiscal policy Revenue sources (1) evenue Rev (billions) $60 $50 $40 $30 $20 $10 $0 • Non-Renewable Resource Revenue can be large, but variable 2010-11A 2011-12A 2012-13A 2013-14A Non-Renewable Resource Revenue GoC Transfers 2017-18F 2018-19T 2014-15A 2015-16A 2016-17A Income and Other Taxes Investment Income 2019-20T Net Income from Gov Business Enterprises Premiums, Fees and Licences Other (1) A Actual, F= Forecast, T=Target. . Combined other sources provide stability and support growth • Transfers from GoC of $8B in 2017-18, or 18% of total revenue 9 Alberta Canada#10. Fiscal policy Contain rate of growth of government operating expense to the rate of population growth plus inflation Manage province's fiscal position with a long-term view - Maintain government services, instead of making drastic cuts Actual 2016-17 Q1 Forecast Budget 2017 Targets 2017-18 2018-19 2019-20 (Billions)(1) Consolidated Revenue 42.4 44.4 47.6 51.8 Consolidated Expense 53.2 54.7 56.7 58.0 Surplus/ (Deficit) (10.8) (10.3) (9.0) (6.2) Risk Adjustment (0.25) (0.7) (1.0) Surplus/ (Deficit) After Risk (10.8) (10.5) (9.7) (7.2) Adjustment Capital Plan 6.6 8.8 8.0 8.1 (1) Numbers may not add due to rounding. 10 Albertan Canada#11Financial management Borrowing platform 2017-18 Borrowing Borrowing Requirements ($ billions) 2017-18 2018-19 2019-20 Forecast Target Target Direct Borrowing Capital 5.0 5.8 6.1 Fiscal 4.9 7.9 6.5 $9.9 $6.2 Refinancing 0 0.5 3.8 Agencies (1) New 2.3 Refinancing 4.0 223 2.1 1.9 2.3 0.8 Total Financing Requirements 16.1 18.6 19.1 ■Direct Borrowing ■Provincial Corporations 2016-17 Actual 2017-18 Forecast 2018-19 2019-20 Target Target Total Liabilities(2) 33.3 43.3 58.7 71.1 (1) Includes amounts borrowed on behalf of the Balancing Pool; $494 million in 2017-18; $833 million in 2018-19; $699 million in 2019-20. (2) Includes liabilities for capital projects, Debt for pre-1992 Teacher's pension Plan and Direct borrowing for the Fiscal Plan. 11 Albertan Canada#12Fiscal policy Low debt burden 2017-18 Projected Net Debt to GDP(1) Quebec 46% Ontario 38% British Columbia 16% Alberta 6.8% 2019-20 Projected Net Debt to GDP 11.4% (1) RBC: Public accounts basis. Numbers are based on reports from individual governments and, due to accounting differences, are not strictly comparable between provinces. Sources include: Fiscal reference tables (Department of Finance Canada), various provincial budgets, budget updates and public accounts. As of September 26, 2017. 12 Albertan Canada#1313 $- $1.0 (Billions) $2.0 $3.0 $4.0 Financial management Maturity profile & liquidity(1) $6.0 $5.0 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 (1) As of November 14, 2017. Excludes Money Market amounts. 2029/30 2030/31 2031/32 2032/33 2033/34 2034/35 2035/36 2036/37 2037/38 2038/39 2039/40 2040/41 2041/42 2042/43 2043/44 2044/45 2045/46 Albertan Canada ◉ 2046/47 2047/48 2048/49#14Financial management Borrowing platform • Ensure domestic liquidity and control supply - Maintain larger domestic benchmark sized issues ($3-$5B) Target issuance of 30%-40% or more to international markets - More frequent large US$ benchmarks - Opportunistic multi-currency issues. Foreign currency borrowing • • Liquid US$ Global Issues in 3, 5, 7, and 10 years - SEC Registered, large US$ benchmarks US$ CP program launched in September 2017 Sterling Benchmarks across curve driven by investor demand Targeting Euro benchmark for 2017-18 • MTN and structured issues in other currencies, including under the new AUD program as opportunities arise 14 Albertan Canada#15YTD Borrowing activity Diversification YTD 74% 20% 3% 3% • Domestic Benchmarks - 3.05% Dec 1/48 - $4.1 B - 2.55% June 1/27 - $2.0B • Domestic Re-openings • · ■CAD ■ GBP ■ USD . ■ AUD - 1.60% Sep 1/22 - $0.75B ($1.8 B outstanding) Sterling Re-opening - 1.00% Nov 15/21 - £0.15B GBP (£0.8B outstanding) US SEC Registered Benchmark - 2.2% July 26/22 - $1.5B USD AUD Issuance - 3.6% Apr 11/28 - $0.25B AUD - 3.1% Dec 14/26 -$0.05B AUD ($0.25B outstanding) $9.3B borrowed YTD or 58% of 2017-18 requirement 15 Albertan Canada#16Summary Strong economic base; real GDP growth forecast to be 3.1% in 2017 and average 2.5% over the medium term • Demonstrated resiliency to past commodity price shocks • • . • Continued high level of fiscal capacity Strong bond ratings Multi-currency, multi-market borrowing platforms Strong secondary liquidity 16 Albertan Canada#17Appendix 17 Albertan Canada#18Assumptions 18 Appendix Q1 fiscal Actual Budget 2017 Update Fiscal Year (Apr- Mar 31) 2015-16 2016-17 2017-18 2017-18 2018-19 2019-20 WTI Oil (US$/bbl) 45 48 49 55 59 68 Light-Heavy Differential 13.40 13.93 12.20 16.00 18.00 18.60 (US$/bbl) Natural Gas (CDN$/GJ) 2.21 2.01 2.60 2.90 2.90 3.00 Exchange Rate 76.3 76.2 77.0 76.0 77.5 78.0 (US/CDN$) 2016 Calendar year 2017 Calendar year 2018 Calendar year Q1 fiscal Q1 fiscal Q1 fiscal Budget Budget Budget Calendar year Update Update Update Real GDP Growth (%) -3.5 -2.8 3.1 2.6 2.3 2.2 Employment Growth (%) -1.6 -1.6 1.3 0.9 1.6 1.4 Unemployment Rate (%) 8.1 8.1 7.8 8.0 7.3 7.6 Albertan Canada#19Budget 2017 Sensitivities Appendix Fiscal Sensitivities to Key Assumption, Budget 2017-18(1) Net Impact (2017-2018) Change Oil Price (WTI US$/bbl) -$1.00 -310 Light-Heavy Differential (US$/bbl) +$1.00 -285 Natural Gas Price (Cdn$/GJ) -10 Cents -45 Exchange Rate (US¢/Cdn$) +1 cent -215 Interest Rates +1% -230 Primary Household Income -1 % -160 (1) Sensitivities are based on current assumptions of prices and rates and show the effect for a full 12 month period. Sensitivities can vary significantly at different price and rate levels. The energy price sensitivities do not include the potential impact of price changes on the revenue from land lease sales. 19 Albertan Canada#20Federal support to provinces Appendix Main transfer programs to provinces Canada Health Transfer (CHT) Canada Social Transfer (CST) Equalization Transfer Grows in line with federal annual escalator (3%) and changes to Alberta's share of the national population • Grows in line with federal annual escalator and changes to Alberta's share of the national population . • • Ensures provinces have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation • Receiving provinces are free to spend the funds according to their own priorities Determined by provinces' fiscal capacity relative to the Canadian Average Alberta expects to receive $8 billion in federal transfers in 2017-18, including CHT and CST payments but no equalization 20 20 Albertan Canada#2121 Economic structure 3rd Largest reserves & production growing Alberta's oil reserves are massive and open to private investment(1) Canada Oil sands 171 Saudi Arabia Venezuela Despite price declines, production continues to rise (2) (US$/bbl) 120 80 40 -Western Canadian Select (left) Western Texas Intermediate (left) Oil Production (right) 0 2009 2010 2011 2012 2013 2014 (1) 2016 Global reserves: U.S. Energy Information Administration, Alberta Energy Regulator (2) Statistics Canada, Alberta Energy and Baytex Energy (August 24, 2017), f-forecast 267 300 2 1 2015 2016 2017f 2018f Albertan Canada 3 4 (million bpd) (Billions bbl)#22Economic structure Market access Appendix Pipeline and Refinery Capacity and Western Canada Heavy Oil Production 4,000 3,500 3,000 2,500 2,000 Total Western Canada Heavy Oil Production Kinder Morgan Trans Mountain Expansion Enbridge Line 3 Expansion + Clipper (Mbpd) 1,500 1,000 Current Pipeline Capacity 500 Western Canada Refinery Capacity Rail Commitment 0 2014 2015 2016e 2017f 2018f 2019f 2020f 2021f 2022f TMX and Line 3 to ease pipeline constraints 22 22 Albertan Canada#23Economic structure Market access remains key Proposed Canadian and U.S. crude oil pipelines (1) Appendix Vancouver. TRANS MOUNTAIN EXPANSION PROJECT ADDITIONAL CAPACITY: 590,000 b/d POTENTIAL MARKETS: Asia and California STATUS: Approved November 29, 2016 with 157 conditions by the federal government. Edmonton Hardisty Pipeline Proposals Winnipeg Baker Superior Steele City Cushing -Port Arthur - Patoka Lévis Saint John Montrdal TRANSCANADA ENERGY EAST ADDITIONAL CAPACITY: 1,100,000 b/d POTENTIAL MARKETS: Eastern Canada, U.S. East Coast, Europa, Africa and Asia STATUS: NEB hearing panding ENBRIDGE LINE 3 REPLACEMENT ADDITIONAL CAPACITY: 370,000 b/d POTENTIAL MARKETS: Central and Eastern Canada, U.S. Midwest and Gulf Coast STATUS: Approved November 29, 2016 with 89 conditions by the federal government. Tara Mountain Expansion Project Extating Pipeline Infrastructure to Gull Count TaraCanada Kantor DL Tara Canada Energy Fast **** Enbridge Line 3 Replacement TRANSCANADA KEYSTONE XL ADDITIONAL CAPACITY: 830,000 b/d POTENTIAL MARKETS: Heavy oil refineries along Gulf Coast STATUS: U.S. Presidential permit received on March 24, 2017. Continue to work to improve market access (1) Canadian Association of Petroleum Producers; 2017 Crude Oil Forecast, Markets and Transportation 23 Albertan Canada#2424 Economic structure Appendix Alberta firms more competitive through cost cutting Year-over-year change in non-residential construction price index 6 54321 Alberta -Calgary -Edmonton +2345 0 -2 -3 -4 -5 (%) Q3-11 Source: Statistics Canada Q1-12 Q3-12 Q1-13 Q3-13 Q1-14 Q3-14 Q1-15 Q3-15 Q1-16 Q3-16 Q1-17 Q3-17 Albertan Canada#25Economic structure Appendix Alberta's economy is very capital intensive 2017 Private Sector Capital Expenditures Intentions AB NL SK 엊주 MB BC QC ON Maritimes $0 $10 $20 $30 $40 $50 $60 (billions) Source: Statistics Canada 25 25 Albertan Canada#26Economic structure Appendix Highest employment rate and incomes Employment Rate (%) (1) 70 67.0% National Avg. 61.6% 60 50 40 NL PEI NS NB QC ON MB SK AB BC Average Weekly Earnings (2) National Avg $1,031 $1,250 $1,000 $750 $500 NL PEI NS NB QC (1) Share of adults (15+) employed as of October 2017. Source: Statistics Canada (2) Including overtime as of August 2017. Source Statistics Canada 26 26 $1,120 ON MB SK AB BC Albertan Canada#27Economic structure Appendix Solid housing starts; resale market cooling Annualized Alberta housing starts, existing home sales and the average resale home price* 80 70 60 50 (Thousands) 40 30 20 Oct-14 Dec-14 Apr-15 Feb-15 Aug-15 Jun-15 Housing Starts (left) Oct-15 Dec-15 Feb-16 Home prices hold steady Apr-16 Jun-16 Existing Home Sales (left) Sources: Canadian Real Estate Association, Canada Mortgage and Housing Corporation 27 22 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Average Resale Price (right) Albertan Canada 420 410 400 390 380 370 360 ($ Thousands)#28Financial management ATB Financial (1) - Appendix Professionally managed at arms-length basis from government Credit policies and other risk management not unlike those of any other financial institution Subject to regulatory oversight by provincial and national regulatory bodies An agent of the crown, assets and liabilities belong to the crown - - Potential economic loss relatively small in relation to Alberta's balance sheet, budget and borrowing requirement Less susceptible to the risk of a run due to provincial guarantee of deposits • ATB increased deposits during 2008/09 liquidity crisis Capital requirements set by the Minister of Finance • Total Assets $48.6B, Total Liabilities $45.4B and Equity $3.1B - Liabilities include: Loans from province $2.9B, Collateralized Borrowings $7.2B, as well as Deposits and Other totaling $35.2B 28 (1) As of March 31, 2017. Numbers may not add due to rounding. Albertan Canada#29Financial management Appendix Well funded public sector pensions Public Sector Pensions Fiscal Year Ending Mar 31 Net Pension Assets (billions) Aggregate Funded Status Liability for Province's employer share (billions) Total Government Unfunded Pension Liabilities (billions) • 2013 2014 2015 2016 $44.4 $52.2 $60.1 $67.1 $73.1 81.5% 87.1% 93.8% 99.5% 100.3% $1.8 $1.8 $1.7 $1.5 $1.2 2017 $10.9 $11.6 $11.2 $10.6 $10.0 $7.9B of total unfunded liability from a settlement with teachers to deal with an issue stemming from 1992 pension reform Aggregate Funded Status has greatly improved, while unfunded Pension Liability's absolute value has remained fairly static 29 29 Albertan Canada#30Financial management Credit ratings Appendix Long Term Short Term S&P Moody's A+ (Outlook stable) Aa1 (Outlook negative) DBRS AA (high) (Negative trend) A-1+ P-1 R-1 (high) (Stable trend) Albertson Canada#31Information and contact Website http://finance.alberta.ca/investor/ Contact Steve Thompson Executive Director, Capital Markets Province of Alberta 780-644-5011 [email protected] Chris Williams Senior Analyst, Investor Relations Province of Alberta 780-638-3876 [email protected] Disclosure Statement This presentation was compiled by the Alberta Department of Treasury Board and Finance. The information in this presentation is for general information purposes only and does not constitute an offer to sell or a solicitation of offers to purchase securities. Certain forward-looking information or forward-looking statements have been included in this presentation for such general information purposes. These statements are based on the Province of Alberta's current estimates or projections which the Province believes are reasonable. Such statements are not guarantees of future performance, and accordingly, you should not place undue reliance on them. Forward-looking information or statements involve known and unknown risks, uncertainties and other factors which could cause the state of the Province's economy to differ materially from the forecasts and economic outlook expressed or implied by any forward-looking information or statements. Forward-looking information or statements speak only as of the date they are made. Alberta undertakes no obligation to update any forward-looking information or statements to reflect new information, future events or otherwise, except as may be required under applicable law. While the information in this presentation, when posted or released, was believed to be reliable as of its date, no warranty is made as to the accuracy or completeness of this document or the information it contains. 31 Albertan Canada