Institutional Equity Research Earnings Update

May 5, 2013
Stock Rating:

Energy Inf rastructure

Sector Outperformer
Sector Weighting:

AltaGas Ltd.
Marketing Highlights

Market Weight
12-18 mo. Price Target ALA-TSX (5/3/13) Key Indices: None NM $27. 46-$37.94 120. 4M 120. 4M Shrs 236, 000 $4,486.1M $1.50 / 4.0% December $18. 83 per Shr 5.4% $2,737.0M $402.00M $1,991.3M No
Prev Current

$40. 00 $37. 26

3-5-Yr. EPS Gr. Rate (E) 52-week Range Shares Outstanding Float Avg. Daily Trading Vol. Market Capitalization Dividend/Div Yield Fiscal Year Ends Book Value 2013 ROE (E) Net Debt Preferred Common Equity Convertible Available
Earnings Per Share

We provide highlights from our marketing trip with AltaGas management. AltaGas is pursuing $2B to $5B of West Coast energy export-related projects. Most notable is the $1.5B, 600 mmcf/d near-term expansion of the Western Transmission pipeline (WTP) and the $0.5B LPG export terminal. The WTP expansion would bring additional natural gas to Kitimat and Prince Rupert. Additional capacity will likely be used for LNG export, intra -BC CNG and micro-LNG supply, power generation, and general utility demand growth. The expansion would earn a 10.15% ROE on 45% equity thickness. AltaGas' $1B of hydro projects are all ahead of schedule and on budget. The three northwest hydro projects are expected to generate $130M of EBITDA. The first and largest project, 195 MW Forrest Kerr facility, should start operations in May 2014 and the remaining two should start in mid -2015. AltaGas expects high-single digit dividend growth over the next several years based on currently secured growth projects. We see upside to this target should AltaGas capture some or all of the West Coast energy export opportunities. We maintain our SO rating with $2 higher $40 price target.

2012 2013 2014 P/E 2012 2013 2014

$1.08E $1.55E 34.5x 24.0x

$1.06A $0.99E $1.51E 35.2x 37.6x 24.7x

Stock Price Performance

EBITDA ($ mlns.) 2012 2013 2014 EV/EBITDA 2012 2013 2014

$488.5E $593.9E 15.7x 12.9x

$335.5A $488.5E $614.8E 22.8x 15.7x 12.5x

Source: Reuters

Company Description AltaGas Ltd. is a balanced energy infrastructure company. It has gas field gathering and processing, NGL infrastructure, gas utility, and power generation operations throughout Canada. www.altagas.ca

All figures in Canadian dollars, unless otherwis e stated.

13-122836 2013

CIBC World Markets does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. See "Important Disclosures" section at the end of this report for important required disclosures, including potential conflicts of interest. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report, where applicable.
CIBC World Markets Inc., P.O. Box 500, 161 Bay Street, Brookfield Place, Toronto, Canada M5J 2S8 (416) 594-7000

David Noseworthy, P.Eng, CFA 1 (416) 956-6197

David.Noseworthy@cibc.ca

Find CIBC research on Bloomberg, Reuters, firstcall.com and ResearchCentral. cibcwm.com

Ma rket ing Hi ghl ights - May 05, 2013

AltaGas Ltd.
ALA - TSX 5/3/13 12- To 18- Month Price Target: Energy Infrastructure Sector Weighting:
All figures in Canadian millions, except per share data. Price Target Calculation CIBC 12 Month Expected Dividend Target Yield CIBC 2014E EBITDA Target Multiple (EV/EBITDA) CIBC Price Target Implied Total Return 12 Month $1.55 4.25% 615 13.50x $40.00 11.5% 18 Month $2.39 4.25% 615 13.50x $40.00 13.8%

Sector Outperformer
$37.26 $40.00 Market Weight
Company Profile AltaGas Ltd. is an energy infrastructure company with gas field gathering and processing, NGL infrastructure, gas utility and power generation operations throughout Canada. Investment Thesis We recommend AltaGas Ltd. as a unique investment opportunity among the energy infrastructure players with an attractive mix of gas infrastructure, power infrastructure, and utility assets. We like AltaGas for its positive leverage to Canadian West Coast energy exports, growing cash flows, and improving corporate risk profile. Volumes 2010 38,106 423 386,004 2,854 2011 41,081 390 369,799 3,001 2012 39,979 373 356,489 3,317

David Noseworthy CFA, MBA, P.Eng (416-956-6197) David.Noseworthy@cibc.ca

0.07353731

Market Data Share Price Shares Outstanding Market Capitalization NTM Dividend Current Dividend Annualized Current Yield Trading Multiples EV/EBITDA P/E P/FFO P/Book Value Energy Infrastructure Sector Average EV/EBITDA Per Share Data Dividend Per Share Funds From Operation Per Share, fully diluted AFFO Per Share, fully diluted Payout Ratio, basic Earnings Per Share, fully diluted Book Value Per Share, basic Shares Outstanding, Closing EBITDA Gas EBITDA Utilities EBITDA Power EBITDA Corporate EBITDA Total EBITDA EBITDA Margin (Net Revenue) Net Revenue Net Income Return On Equity
Debt Metrics

$37.26 120 4,486 $1.55 $1.50 4.0% 2011A 29.6x 38.1x 15.2x 2.3x 24.8x 2011A $1.33 $2.45 $2.30 57% $0.98 $16.22 89 2011A 162 39 102 (45) 259 48% 535 84 6.2% 2011A 5.1x 49% 4.9x 2011A 4 (202) 3,542 1,324 1,201 200 0 1,163 2,766 2011A $95.07 $4.38 $40.62 $76.17 $0.99

Net Debt (inc. convert. debt & NCI) Preferred Shares NCI Enterprise Value

2,737 402 41 7,666

Extraction Volumes FG&P (Gross Throughput) Energy Services Power Sold

bbls/d Mmcf/d GJ/d MW/h

2012A 22.8x 35.2x 15.0x 1.8x 17.6x 2012A $1.40 $2.48 $2.34 58% $1.06 $20.69 105 2012A 154 102 91 (12) 336 52% 645 102 7.9% 2012A 8.0x 57% 5.5x 2012A 12 29 5,912 2,702 2,626 400 0 1,565 4,562 2012A $92.37 $2.75 $28.89 $64.25 $1.00

2013E 15.7x 37.6x 12.4x 1.8x 14.4x 2013E $1.49 $3.01 $2.84 52% $0.99 $20.94 119 2013E 213 187 116 (35) 488 52% 937 112 5.4% 2013E 6.3x 56% 4.3x 2013E (6) 111 6,599 3,050 3,050 407 0 1,977 5,322 2013E $90.00 $3.31 $27.00 $57.92 $1.03

2014E 12.5x 24.7x 10.1x 1.8x 13.1x 2014E $1.69 $3.69 $3.50 48% $1.51 $20.22 121 2014E 239 241 167 (32) 615 54% 1,143 182 9.0% 2014E 5.2x 56% 4.7x 2014E (1) 114 7,074 3,189 3,189 397 0 2,033 5,506 2014E $90.00 $4.25 $28.25 $60.00 $0.98

EBITDA Breakdown by Cash Flow

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 4%

14% 43% 38% 56% 65%

Cost-of-service EBITDA

43%

EBITDA with volume only risk 33% 53% 48% 24% 2011 2012 2013E 28% 25% 15% 2014E 11% 2015E EBITDA with commodity and volume risk

2013E EBITDA By Segment Excluding Corporate

Utility 36% Power 22% NGL Margin Exposed 5%

Gas (ex. NGL Margin Exposed) 37%

Net Debt / TTM EBITDA Total Debt / Total Capital EBITDA/ Interest Expense
Capital Structure

Major Sources, Uses of Cash

Cash & Cash Equivalents Working Capital Total Assets Total Debt (incl. Current) Long Term Debt (ex. Convertibles) Preferred Shares Convertible Debentures Shareholders Equity Total Capital
Commodity + FX Price Deck

$2,000M Debt Amort. $1,500M

Debt Debt Amort. Repay Debt FFO Capex Capex FFO Equity Dividends 2011 Equity Dividends 2012 Equity Dividends 2013E Debt Amort. Debt Capex FFO Dividends Equity 2014E

$ mlns.

$1,000M Debt Repay $500M Debt FFO

Capex

WTI Oil (USD/bbl) Henry Hub Gas (US$/mmbtu) CAD NGL (CAD/bbl) Average Alberta Power (CAD/MWh) USD/CAD Exchange

$0M

-$500M

Note: AltaGas increased its dividend to $0.125/share (from $0.12/share) effective with its May dividend payment. The dividend is currently $1.44/share annualized. 2013E EBITDA does not include Q1 transaction costs and unrealized gains/losses. Segment EBITDA may not add up to 2013E EBITDA.

Source: Company reports and CIB C World Markets I nc.

Ma rket ing Hi ghl ights - May 05, 2013

West Coast Energy Exports

We have revised our estimates to reflect a 50% risk-weighting for the 600 mmcf/d expansion of the Western Transmission project and a 25% risk-weighting for the 25,000 bbls/d LPG export facility . The Western Transmission project positively impacts our 2014 estimate s as we assume the regulator will allow AltaGas (ALA-SO) to earn on accumulated funds used during construction (AFUDC) and that construction begins in 2014. The LPG export terminal begins operations in H2/15 and therefore its contribution is beyond our forecast horizon. We have increased our target multiple to reflect the value of both projects not captured in our 2014 estimates. We assumed a higher probability for the Western Transmission pipeline than the LPG export terminal as there is no one project upon which it is dependent and therefore more likely to proceed in one form or another. We do not provide any value for an LNG export terminal, LNG related power generation, or LNG-related FG&P in our estimates. Should AltaGas proceed with both the Western Transmission pipeline expansion and the LPG export terminal, we would expect AltaGas to issue about $300 $400 million of equity by mid-2014. Exhibit 1 provides a graphical summary of AltaGas West Coast Energy Export Opportunities. We provide a full list of growth projects on pg 7 (Exhibit 5).

Exhibit 1. AltaGas' West Coast Energy Export Opportunities

Source: Company reports and CIB C World Markets I nc.

Ma rket ing Hi ghl ights - May 05, 2013

US Operations, US MLP, And US Listing

US operations will represent about 35% of 2016E EBITDA. AltaGas intends to grow its utility and power business segments in the US. Based on current operating and under-construction projects, US EBITDA is expected to represent about 35% of 2016 EBITDA. AltaGas, at present, does not intend to hedge its US free cash flows. Master Limited Partnerships (US MLP) Parity Act could represent an opportunity for AltaGas. On April 24, 2013, US Senator Chris Coons along with several Senate co-sponsors re-introduced legislation that would modify the U.S. Internal Revenue Code to allow US MLPs to include income from clean and renewable assets as qualifying income. This would allow those companies with renewable assets to establish a US MLP. This same legislation was also introduced in the US House of Representatives on the same day by a bipartisan group of legislators. A US MLP is a tax-efficient structure that passes-through the income and tax attributes of the income through distributions made to the holders (limited partners) of its publicly traded units. The US MLP and investor thus avoid the double taxation of corporate income tax and dividend tax. So instead of the US MLP paying taxes on its profits like a corporation, each limited partner is responsible on their own individual income tax for a proportional share of the US MLP's income allowing a higher cash flow payout to unitholders. Under the proposed legislation, income from the following assets would be regarded as qualifying income for inclusion within a U.S. MLP structure : (i) solar energy and equipment; (ii) wind energy and equipment; (iii) closed and open loop biomass; (iv) municipal solid waste; (v) hydropower; (vi) marine and hydrokinetic renewable energy; (vii) fuel cells; (viii) combined heat and power; (ix) certain biofuels; (x) energy-efficient buildings; (xi) electricity storage; (xii) carbon capture and storage; (xiii) renewable chemicals; and (xiv) waste-heat-to-power technologies. AltaGas has 4 operating facilities that could be restructured under a US MLP should the proposed legislation be passed. We summarize these assets in Exhibit 2. In our view, a tax-efficient US MLP structure would likely further enhance the growth of AltaGas US power operations.

Exhibit 2. AltaGas U.S. Operating Facilities

Net Capacity (MW) 507 15 24 11 557 Annual EBITDA ($M) $44 $1 $3 $1 $50

Asset Name Blythe Energy Busch Ranch Craven County Wood Energy Grayling Generating Station Total
Source: Co mpany reports and CIB C World Markets I nc.

Location California Colorado North Carolina Michigan

Type Natural Gas Wind Bio-mass Bio-mass

Interest 100% 50% 50% 30%

A dual listing for AltaGas on the New York Stock Exchange is not imminent . While clearly on the minds of management and US investors, AltaGas intends to prudently manage its free cash flows by avoiding additional issuance costs related to dual listing and applying these cash flows to its large host of committed and prospective growth projects.

Ma rket ing Hi ghl ights - May 05, 2013

AltaGas is actively improving its corporate risk profile. It has reduced its commodity exposure with its hedging program. In addition, AltaGas has been adding assets underpinned by regulated returns or long-term contracts. As a result, it is forecasting ~80% of its earnings to come from stable sources in 2013. Its overall target is 85% to come from stable earnings.

Lower Risk and Higher Dividend

Exhibit 3. Targeting 85% Stable Earnings

Source: Company reports and CIB C World Markets I nc.

As AltaGas improves the stability of its growing cash flows, expect continued dividend increases (see Exhibit 3). Concurrent with their Q1/13 results, AltaGas increased their dividend 4.2% to $1.50/share annualized from $1.44/share annualized. The new higher dividend is effective with the May 2013 dividend, two months earlier than we had expected. We expect another 4% increase by year-end. AltaGas targets an AFFOPS payout ratio between 40% 50% and an EPS payout ratio less than 100%. Based on its current committed growth projects, AltaGas expects high-single digit dividend growth over the next several years. We forecast a 9% compounded annual dividend growth rate between 2012 and 2016E (see Exhibit 4).

Ma rket ing Hi ghl ights - May 05, 2013

Exhibit 4. Dividend Forecast

2.50 We forecast 9% CAGR between 2012 and 2016E. 2.00 60% 80% 70%

Dividend Per Share

1.50

50% 40%

1.00

30% 20%

0.50 10% 2010 2011 2012 2013E 2014E 2015E 2016E 0%

Dividend Per Share (LHS)

Source: CIB C W orld Markets Inc.

Payout Ratio (RHS)

Payout Ratio

Ma rket ing Hi ghl ights - May 05, 2013

Exhibit 5. AltaGas Committed And Prospective Growth Projects

Estimated Capex ($M) $24 $100 $40 - $500 $300 - $800 $500 N/A N/A N/A N/A $164 $800 - $1,300 Est. Run-Rate EBITDA ($M) $5 $12.5 (1) $5 $25 - $40 - $72 $50 N/A N/A N/A N/A $23 $75.0 - $112

Type Gas Taiga Pipeline JEEP Spur pipeline Farmington C3+ and C5+ Pipeline West Coast LPG export terminal West Coast LNG export terminal Alton natural gas storage and pipeline project Michigan natural gas storage Harmattan - deep cut / additional raw gas processing Younger extraction plant - 70 Mmcf/d expansion Committed Subtotal Prospective Subtotal Power Forrest Kerr McLymont Creek Volcano Creek Narrow Inlet (Hydro) Harmattan Cogen III Gas-fired acquisitions and partnerships Potential gas-fired generation projects serving FG&P and LNG demand Committed Subtotal Prospective Subtotal Utility CNG - Heritage Gas 7 - 8 Bcf CINGSA storage expansion 600 Mmcf/d PNG Western System expansion PNG Rate Base for CNG supply to Alaska 2013 Rate Base Addition 2014 Rate Base Addition 2015 Rate Base Addition Committed Subtotal Prospective Subtotal Total Total Committed Total Prospective Committed Committed Committed Prospective Prospective Prospective Prospective Prospective Prospective

Net Total Capacity 65,000 GJ/d 70 km 45 km 25,000 bbls/d 285 Mmcf/d Initial: 4 - 6 Bcf Expandable to 20+ Bcf N/A N/A N/A

Est. COD July 2013 Late 2013 N/A 2016 2017 N/A N/A N/A N/A

Committed Committed Committed Prospective Prospective Prospective Prospective

$725 ~$260 ~$40 $190 $24 (3) N/A N/A $1,025 $214

$100 $30 $6 $3 N/A N/A $130 $9

195 MW 66 MW 16 MW 22.5 MW N/A N/A N/A

May 2014 (2) Mid 2015 Mid 2015 N/A N/A N/A N/A

Committed Prospective Prospective Prospective Prospective Prospective Prospective

$30 $44 (4) $1,500 - $265 $135 $105 $105 $110 $1,999 $30 - $2,129

N/A $7 $152 $19 (5) $16 $7 $12 - $36

N/A N/A 755 Mmcf/d N/A N/A N/A N/A

May 2013 N/A Q2/2015 N/A 2013 2014 2015

N/A $213 - $230 $450 - $504 $153 $297 - $351

$4.2 - $4.9 B $1.2 B $3.0 - $3.7 B

Note 1) EBITDA includes the Gilby to JEEP pipeline and JEEP deep-cut processing plant. 2) Will be mechanically completed by end of 2013. Electricity delivery will begin after the Northwest Transmission Line is complete. 3) Based on the capital cost of Harmattan Cogen II plant. 4) Capex and EBITDA estimate based on 65% ownership. 5) Based on PNG's 2012 revenue requirements for the Western system.
Source: Company reports and CIB C World Markets I nc.

Estimate Revisions
Our 2013E AFFOPS decreases $0.12 to $2.84 due to modeling adjustments regarding AltaGas capitalized interest expense (See Exhibit 6). Our 2014E AFFOPS decreases $0.01 to $3.50 due to modeling adjustments to capitalized interest expense, partially offset by the addition of a LPG export terminal risk weighted 25% and increasing the capital expenditure for the Western Transmission expansion project by $1 billion to a total of $1.5 billion, which remains risk-weighted 50%.

Ma rket ing Hi ghl ights - May 05, 2013

Exhibit 6. Cash Flow Estimate Revisions

(C$ millions; unless otherwise stated) Funds from Operation Add (Less): Maintenance Capital Mandatory Debt Repayment Preferred Dividends Other Adjusted Cash Flow (B) FFOPS ($/share) AFFOPS ($/share) Dividends paid (A) DPS ($/share) Payout Ratio (A/B) Earnings (C) EPS ($/share) Earnings Payout Ratio (A/C) Avg Shares Outstanding F.D. (M shares) Equity Funding Free Cash Flow (B - A) Add: DRIP and net proceeds from share issuance Total Equity Funding Growth Capital Expenditures
Source: Company reports and CIB C World Markets I nc.

2013E Current $363 -$15 -$4 -$19 $0 $325 $3.01 $2.84 $169 $1.49 52% $113 $0.99 150% 115

Previous $377 -$15 -$4 -$19 $0 $339 $3.13 $2.96 $169 $1.49 50% $124 $1.08 137% 115

2014E Current $462 -$20 -$4 -$19 $0 $420 $3.69 $3.50 $203 $1.69 48% $182 $1.51 112% 120

Previous $464 -$20 -$4 -$19 $0 $422 $3.71 $3.51 $203 $1.69 48% $186 $1.55 109% 120

$156 $460 $616 889

$170 $460 $630 889

$217 $77 $295 636

$219 $77 $296 394

Price Target Calculation

We increase our 12- to 18-month price target by $2.00 to $40.00 based on a combination of 13.5x EV/EBITDA (13.25x previously) using our 2014E EBITDA and an unchanged 4.25% target yield on our 2014E dividend estimate. We increase our EV/EBITDA multiple 0.25x to reflect increased cash flows in 2015 and 2016 from the risk-weighted Western Transmission pipeline expansion and LPG export terminal. We have assumed both are operational in H2/15. Our target yield represents a 231 bps spread over Q2/14 10-year implied forward swap government of Canada bond yield of 1.94%. This is slightly wider than the current yield spread of 226 bps over spot 10-year government Canada bond yield of 1.77%.

Key Risks To Price Target

Access To Capital And Financing Risks
AltaGas is involved in capital-intensive businesses and, as such, AltaGas operations rely on sufficient access to capital and affordable borrowing rates. Insufficient access to a reasonable cost of capital would ultimately limit AltaGas ability to grow. Additionally, when financing operations through debt, AltaGas faces risks from increases in interest rates on new or variable -rate debt. Customary covenants and financial tests associated with those debts may also constrain AltaGas finances in any moment.

Ma rket ing Hi ghl ights - May 05, 2013

AltaGas mitigates its capital and financial risks by careful management of its financial leverage, targeting a debt to total capitalization of 50% to 55%. Also, AltaGas aims to maintain 70% 75% of liabilities in fixed-rate funds to limit the impact of interest rate movement on its debt servicing costs.

Commodity Price Risk

Change s in commodity prices of AltaGas inputs and outputs can impact the companys financial standing in a number of ways. AltaGas NGL Extraction business is exposed to differentials between natural gas prices and NGL product prices. Narrowing of these differentials would squeeze NGL margins and negatively impact cash flows. Despite this effect, higher natural gas prices may also result in increased natural gas production and higher throughputs, increasing cash flows in AltaGas Field Gathering and Processing (FG&P), NGL Extraction, and Transmission businesses. AltaGas Power Segment is exposed to spot Alberta power prices through its Sundance B PPA. Alberta power prices are largely a function of natural gas prices, except during capacity-constrained periods or periods of high wind power production. The Sundance B power plant, however, is coal-fired and pays only the cost of extraction plus a small return to obtain coal from an adjacent mine . Therefore, higher natural gas prices that lead to higher Alberta power prices are generally beneficial to AltaGas cash flows in the Power Segment. To mitigate risks from commodity price volatility, AltaGas manages its exposure through power, NGL, and natural gas hedges. Furthermore, AltaGas benefits from the naturally offsetting operational hedges described above.

Legislation And Regulatory Risk

Changes in applicable legislation or other regulations could restrict AltaGas business activities or impose higher costs on AltaGas. For example, if agreements cannot be reached with producers, pipelines and facilities are subject to common carrier and common processor applications and possible rate setting by regulatory authorities. AltaGas may also face changes in environmental legislation at the local, provincial, territorial, or federal levels. Though current legislation is not burdensome, stricter environmental laws, regulations, or enforcement practices, and potential claims for damages against the company could impose significant new costs going forward. In January 2010, Environment Canada listed a new target of a 17% reduction in greenhouse gas (GHG) emissions from 2005 levels by 2020, but has not enacted any legislation. Recently, the federal government has signaled that incoming regulations to reduce emissions from coal-fired power plants would provide flexibility in how companies achieve reductions, instead of imposing plant-by-plant requirements, and would leave considerable authority with the provincial governments. In 2007, Alberta passed the Climate and Emissions Manageme nt Amendment Act, mandating emission reductions for large -emitter facilities. Only the Harmattan Complex qualified as a large emitter; however, since it is currently operating below the target intensity, it will face no penalties and will qualify for credits. In 2006, Alberta passed its Environmental Protection and Enhancement Act, regulating mercury emissions from coal-fired power plants. TransAlta (TASP), the owner of the Sundance generating station, has implemented technologies to achieve the necessary reductions.

Ma rket ing Hi ghl ights - May 05, 2013

Counterparties And Credit Risk

AltaGas also faces risks related to its reliance on other significant parties, particularly the risk of counterparties failing to fulfill agreements. In this eventuality, AltaGas revenues could be negatively impa cted, and AltaGas ability to fulfill other commitments could be limited. To mitigate the risk of counterparties failing to honor contracts, AltaGas performs continuous review of counterparty credit, adheres to credit thresholds based on conservative credit metrics, and spreads risk across many diverse customers and suppliers, most of whom have investment-grade credit ratings. Separately, AltaGas is partially liable for soil contamination damages caused by past activities at the Harmattan Complex. Depending on the extent of these damages, AltaGas may face significant new costs in the future. AltaGas has already negotiated an agreement with the relevant counterparties at the Harmattan Complex, largely reducing potential liability.

Execution Risks
Plans for future development, construction, and operation of AltaGas facilities are vulnerable to changes in the cost of construction, construction delays, and competition in the industry. These changes create uncertainties when planning future activities. AltaGas offsets these uncertainties with contractual tools, such as arrangements to recover cost overruns from customers or to establish fixed price quotes from contractors where appropriate. AltaGas also follows a structured project governance process to ensure smooth implementation.

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Ma rket ing Hi ghl ights - May 05, 2013

Our EPS estimates are shown below:

1 Qtr. 2012 Current 2013 Prior 2013 Current 2014 Prior 2014 Current $0.45A $0.45A $0.45A ---

2 Qtr. $0.28A ($0.02E) ($0.05E) ---

3 Qtr. $0.08A $0.06E $0.03E ---

4 Qtr. $0.25A $0.58E $0.55E ---

Yearly $1.06A $1.08E $0.99E $1.55E $1.51E

Our EBITDA ($mln) estimates are shown below:

1 Qtr. 2012 Current 2013 Prior 2013 Current 2014 Prior 2014 Current $93.6A $144.3A $144.3A ---

2 Qtr. $73.2A $79.7E $79.7E ---

3 Qtr. $59.4A $90.0E $90.0E ---

4 Qtr. $109.3A $174.5E $174.5E ---

Yearly $335.5A $488.5E $488.5E $593.9E $614.8E

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IMPORTANT DISCLOSURES:
Analyst Certification: Each CIBC World Markets research analyst named on the front page of this research report, or at the beginning of any subsection hereof, hereby certifies that (i) the recommendations and opinions expressed herein accurately reflect such research analyst's personal views about the company and securities that are the subject of this report and all other companies and securities mentioned in this report that are covered by such research analyst and (ii) no part of the research analyst's compensation was, is, or will be, directly or ind irectly, related to the specific recommendations or views expressed by such research analyst in this report. Potential Conflicts of Interest: Equity research analysts employed by CIBC World Markets are compensated from revenues generated by various CIBC World Markets businesses, including the CIBC World Markets Investment Banking Department. Research analysts do not receive compensation based upon revenues from specific investment banking transactions. CIBC World Markets generally prohibits any research analyst and any member of his or her household from executing trades in the securities of a company that such research analyst covers. Additionally, CIBC World Markets generally prohibits any research analyst from serving as an officer, director or adviso ry board member of a company that such analyst covers. In addition to 1% ownership positions in covered companies that are required to be specifically disclosed in this report, CIBC World Markets may have a long position of less than 1% or a short position or deal as principal in the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon. Recipients of this report are advised that any or all of the foregoing arrangements, as well as more specific disclosures set forth below, may at times give rise to potential conflicts of interest.

Important Disclosure Footnotes for AltaGas Ltd. (ALA)

2a 2c 2e 2g 7 AltaGas Ltd. is a client for which a CIBC World Markets company has performed investment banking services in the past 12 months. CIBC World Markets Inc. has managed or co -managed a public offering of securities for AltaGas Ltd. in the past 12 months. CIBC World Markets Inc. has received compensation for investment banking services from AltaGas Ltd. in the past 12 months. CIBC World Markets Inc. expects to receive or intends to seek compensation for investment banking services from AltaGas Ltd. in the next 3 months. CIBC World Markets Corp., CIBC World Markets Inc., and their affiliates, in the aggregate, beneficially own 1% or more of a class of equity securities issued by AltaGas Ltd.

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Ma rket ing Hi ghl ights - May 05, 2013

Important Disclosure Footnotes for Companies Mentioned in this Report that Are Covered by CIBC World Markets Inc.:
Stock Prices as of 05/05/2013: TransAlta Corporation (2a, 2c, 2e, 2g, 7, 9) (TA-TSX, $14.96, Sector Performer) Important disclosure footnotes that correspond to the footnotes in this table may be found in the "Key to Important Disclosure Footnotes" section of this report.

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Key to Important Disclosure Footnotes:

1 2a 2b 2c 2d 2e 2f 2g 3a 3b 3c 4a 4b 4c 5a 5b 6a 6b 7 8 9 CIBC World Markets Corp. makes a market in the securities of this company. This company is a client for which a CIBC World Markets company has performed investment banking services in the past 12 months. CIBC World Markets Corp. has managed or co-managed a public offering of securities for this company in the past 12 months. CIBC World Markets Inc. has managed or co -managed a public offering of securities for this company in the past 12 months. CIBC World Markets Corp. has received compensation for investment banking services from this company in the past 12 months. CIBC World Markets Inc. has received compensation for investment banking services from this company in the past 12 months. CIBC World Markets Corp. expects to receive or intends to seek compensation for investment banking services from this company in the next 3 months. CIBC World Markets Inc. expects to receive or intends to seek compensation for investment banking services from this company in the next 3 months. This company is a client for which a CIBC World Markets company has performed non -investment banking, securities-related services in the past 12 months. CIBC World Markets Corp. has received compensation for non-investment banking, securities-related services from this company in the past 12 months. CIBC World Markets Inc. has received compensation for non-investment banking, securities-related services from this company in the past 12 months. This company is a client for which a CIBC World Markets company has performed non-investment banking, non-securities-related services in the past 12 months. CIBC World Markets Corp. has received compensation for non-investment banking, non-securities-related services from this company in the past 12 months. CIBC World Markets Inc. has received compensation for non-investment banking, non-securities-related services from this company in the past 12 months. The CIBC World Markets Corp. analyst(s) who covers this company also has a long position in its common equity securities. A member of the household of a CIBC World Markets Corp. research analyst who covers this company has a long position in the common equity securities of this company. The CIBC World Markets Inc. funda mental analyst(s) who covers this company also has a long position in its common equity securities. A member of the household of a CIBC World Markets Inc. fundamental research analyst who covers this company has a long position in the common equity securities of this company. CIBC World Markets Corp., CIBC World Markets Inc., and their affiliates, in the aggregate, beneficially own 1% or more of a class of equity securities issued by this company. An executive of CIBC World Markets Inc. or any ana lyst involved in the preparation of this research report has provided services to this company for remuneration in the past 12 months. A senior executive member or director of Canadian Imperial Bank of Commerce ("CIBC"), the parent company to CIBC World Markets Inc. and CIBC World Markets Corp., or a member of his/her household is an officer, director or advisory board member of this company or one of its subsidiaries. Canadian Imperial Bank of Commerce ("CIBC"), the parent company to CIBC World Markets Inc. and CIBC World Markets Corp., has a significant credit relationship with this company. The equity securities of this company are restricted voting shares. The equity securities of this company are subordinate voting shares. The equity securities of this company are non-voting shares. The equity securities of this company are limited voting shares.

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CIBC World Markets Inc. Price Chart

HISTORICAL PERFORMANCE OF CIBC WORLD MARKETS INC. RECOMMENDATIONS FOR ALTAGAS LTD. (ALA)
Date 03/11/2012 07/23/2012 01/30/2013 03/25/2013 04/04/2013 04/08/2013 Change Type Closing Price 31.58 30.32 36.11 34.90 34.95 35.10 Rating SO SO SO R SO SO Price Target 36.00 35.00 37.50 37.50 38.00 Coverage Dav id Noseworthy, CFA Dav id Noseworthy, CFA Dav id Noseworthy, CFA Dav id Noseworthy, CFA Dav id Noseworthy, CFA Dav id Noseworthy, CFA P.Eng, P.Eng, P.Eng, P.Eng, P.Eng, P.Eng,

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CIBC World Markets Inc. Stock Rating System

Abbreviation Stock Ratings SO SP SU NR R O M U NA Sector Outperformer Sector Performer Sector Underperformer Not Rated Restricted Overweight Market Weight Underweight None Stock is expected to outperform the sector during the next 12-18 months. Stock is expected to perform in line with the sector during the next 12-18 months. Stock is expected to underperform the sector during the next 12-18 months. CIBC World Markets does not maintain an investment recommendation on the stock. CIBC World Markets is restricted*** from rating the stock. Sector is expected to outperform the broader market averages. Sector is expected to equal the performance of the broader market averages. Sector is expected to underperform the broader market averages. Sector rating is not applicable. Rating Description

Sector Weightings**

**Broader market averages refer to the S&P 500 in the U.S. and the S&P/TSX Composite in Canada. "Speculative" indicates that an investment in this security involves a high amount of risk due to volatility and/or liquidity issues. ***Restricted due to a potential conflict of interest.

Ratings Distribution*: CIBC World Markets Inc. Coverage Universe

(as of 05 May 2013) Sector Outperformer (Buy) Sector Performer (Hold/Neutral) Sector Underperformer (Sell) Restricted (as of 05 May 2013) Sector Outperformer (Buy) Sector Performer (Hold/Neutral) Sector Underperformer (Sell) Restricted Count 158 192 30 6 Count 3 3 0 0 Percent 40.8% 49.6% 7.8% 1.6% Percent 50.0% 50.0% 0.0% 0.0% Inv. Banking Relationships Sector Outperformer (Buy) Sector Performer (Hold/Neutral) Sector Underperformer (Sell) Restricted Inv. Banking Relationships Sector Outperformer (Buy) Sector Performer (Hold/Neutral) Sector Underperformer (Sell) Restricted Count 156 191 28 6 Count 3 3 0 0 Percent 98.7% 99.5% 93.3% 100.0% Percent 100.0% 100.0% 0.0% 0.0%

Ratings Distribution: Energy Infrastructure Coverage Universe

Energy Infrastructure Sector includes the following tickers: ALA, ENF, GEI, KEY, PPL, VSN. *Although the investment recommendations within the three -tiered, relative stock rating system utilized by CIBC World Markets Inc. do not correlate to buy, hold and sell recommendations, for the purposes of complying with NYSE and NASD rules, CIBC World Markets Inc. has assigned buy ratings to securities rated Sector Outper former, hold ratings to securities rated Sector Performer, and sell ratings to securities rated Sector Underperformer without taking into consideration the analyst's sector weighting.

Important disclosures required by IIROC Rule 3400, including potential conflicts of interest information, our system for rating investment opportunities and our dissemination policy can be obtained by visiting CIBC World Markets on the web at http://researchcentral.cibcwm.com under 'Quick Links' or by writing to CIBC World Markets Inc., Brookfield Place, 161 Bay Street, 4th Floor, Toronto, Ontario M5J 2S8, Attention: Research Disclosures Request.

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Legal Disclaimer
This report is issued and approved for distribution by (a) in Canada, CIBC World Markets Inc., a member of the Investment Industry Regulatory Organization of Canada (IIROC), the Toronto Stock Exchange, the TSX Venture Exchange and a Member of the Canadian Investor Protection Fund, (b) in the United Kingdom, CIBC World Markets plc, which is regulated by the Financial Services Authority (FSA), (c) in Australia to wholesale clients only, CIBC Australia Ltd, a company regulated by the ASIC with AFSL license number 240603 and ACN 000 067 256, and (d) in Japan, CIBC World Markets (Japan) Inc., a registered Type 1 Financial product provider with the registration number Director General of Kanto Finance Bureau #218 (collectively, CIBC World Markets) and (e) in the United States either by (i) CIBC World Markets In c. for distribution only to U.S. Major Institutional Investors (MII) (as such term is defined in SEC Rule 15a -6) or (ii) CIBC World Markets Corp., a member of the Financial Industry Regulatory Authority (FINRA). U.S. MIIs receiving this report from CIBC World Markets Inc. (the Canadian broker-dealer) are required to effect transactions (other than negotiating their terms) in securities discussed in the report through CIBC World Markets Corp. (the U.S. broker-dealer). This report is provided, for informational purposes only, to institutional investor and retail clients of CIBC World Markets in Canada, and does not constitute an offer or solicitation to buy or sell any securities discussed herein in any jurisdiction where such offer or solicitation would be prohibited. This document and any of the products and information contained herein are not intended for the use of private investors in the United Kingdom. Such investors will not be able to enter into agreements or purchase products mentioned he rein from CIBC World Markets plc. The comments and views expressed in this document are meant for the general interests of wholesale clients of CIBC Australia Ltd. This report has been prepared by the CIBC group and is issued in Hong Kong by Canadian Imperial Bank of Commerce, Hong Kong Branch, a registered institution under the Securities and Futures Ordinance, Cap 571 (the SFO). This report is intended for professional investors only (within the meaning of the SFO) and has been prepared for general circulation and does not take into account the objectives, financial situation or needs of any recipient. Any recipient in Hong Kong who has any questions or requires further information on any matter arising from or relating to this report should contact Canadian Imperial Bank of Commerce, Hong Kong Branch at Suite 3602, Cheung Kong Centre, 2 Queens Road Central, Hong Kong (telephone number: +852 2841 6111). Orders for Hong Kong listed securities will be executed by Canadian Imperial Bank of Commerce, Hong Kong Branch. Canadian Imperial Bank of Commerce, Hong Kong Branch has entered into an arrangement with its broker-dealer affiliates worldwide to execute orders for securities listed outside of Hong Kong for Hong Kong clients. This report is intended for distribution in Singapore solely to accredited investors, expert investors and institutional investors (each, eligible recipients). Eligible recipients should contact Danny Tan at Canadian Imperial Bank of Commerce, Singapore Branch at 16 Collyer Quay #04-02 Singapore 049318 (telephone number + 65-6423 3806) in respect of any matter arising from or in connection with this report. The securities mentioned in this report may not be suitable for all types of investors. This report does not take into account the investment objectives, financial situation or specific needs of any particular client of CIBC World Markets. Recipients should consider this report as only a single factor in making an investment decision and should not rely sole ly on investment recommendations contained herein, if any, as a substitution for the exercise of independent judgment of the merits and risks of investments. The analyst writing the report is not a person or company with actual, implied or apparent authority to act on behalf of any issuer mentioned in the report. Before making an investment decision with respect to any security recommended in this report, the recipient should consider whether such recommendation is appropriate given the recipient's particular investment needs, objectives and financial circumstances. CIBC World Markets suggests that, prior to acting on any of the recommendations herein, Canadian retail clients of CIBC World Markets contact one of our client advisers in your jurisdiction to discuss your particular circumstances. Non-client recipients of this report who are not institutional investor clients of CIBC World Markets should consult with an independent financial advisor prior to making any investment decision based on this report or for any necessary explanation of its contents. CIBC World Markets will not treat non-client recipients as its clients solely by virtue of their receiving this report. Past performance is not a guarantee of future results, and no representation or warranty, express or implied, is made regarding future performance of any security mentioned in this report. The price of the securities mentioned in this report and the income they produce may fluctuate and/or be adversely affected by exchange rates, and investors may realize losses on investments in such securities, including the loss of investment principal. CIBC World Markets accepts no liability for any loss arising from the use of information contained in this report, except to the extent that liabilit y may arise under specific statutes or regulations applicable to CIBC World Markets. Information, opinions and statistical data contained in this report were obtained or derived from sources believed to be reliable, but CIBC World Markets does not represent that any such information, opinion or statistical data is accurate or complete (with the exception of information contained in the Important Disclosures section of this report provided by CIBC World Markets or individual research analysts), and they should not be relied upon as such. All estimates, opinions and recommendations expressed herein constitute judgments as of the date of this report and are subject to change

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Legal Disclaimer (Continued)

without notice. Nothing in this report constitutes legal, accounting or tax advice. Since the levels and bases of taxation can change, any reference in this report to the impact of taxation should not be construed as offering tax advice on the tax consequences of investments. As with any inves tment having potential tax implications, clients should consult with their own independent tax adviser. This report may provide addresses of, or contain hyperlinks to, Internet web sites. CIBC World Markets has not reviewed the linked Internet web site of any third party and takes no responsibility for the contents thereof. Each such address or hyperlink is provided solely for the recipient's convenience and information, and the content of linked third party web sites is not in any way incorporated into this document. Recipients who choose to access such third -party web sites or follow such hyperlinks do so at their own risk. Although each company issuing this report is a wholly owned subsidiary of Canadian Imperial Bank of Commerce (CIBC ), each is solely responsible for its contractual obligations and commitments, and any securities products offered or recommended to or purchased or sold in any client accounts (i) will not be insured by the Federal Deposit Insurance Corporation (FDIC), the Canada Deposit Insurance Corporation or other similar deposit insurance, (ii) will not be deposits or other obligations of CIBC, (iii) will not be endorsed or guaranteed by CIBC, and (iv) will be subject to investment risks, including possible loss of the principal invested. The CIBC trademark is used under license. 2013 CIBC World Markets Inc. All rights reserved. Unauthorized use, distribution, duplication or disclosure without the prior written permission of CIBC World Markets is prohibited by law and may result in prosecution.

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