Inter Pipeline Fund Announces Record 2012 Financial and Operating Results

Inter Pipeline Fund Announces Record 2012 Financial and Operating Results 
CALGARY, ALBERTA -- (Marketwire) -- 02/21/13 -- Inter Pipeline Fund
("Inter Pipeline") (TSX:IPL.UN) announced today its financial and
operating results for the three and twelve month periods ended
December 31, 2012.  
2012 Highlights 

--  Funds from operations(i) increased to a record $423 million, up $28
    million or 7% over 2011 levels 
--  Low annual payout ratio before sustaining capital(i) of 68% 
--  Generated record net income of $307 million 
--  Total distributions to unitholders surpassed $2 billion since inception,
    including $285 million declared in 2012 
--  Throughput volumes on oil sands and conventional oil pipeline systems
    averaged a record 988,100 barrels per day (b/d), 31,900 b/d higher than
--  Oil sands transportation segment achieved record throughput of 812,600
--  Annual throughput volumes averaged 175,500 b/d on Inter Pipeline's
    conventional oil pipeline systems, an increase of 5,500 b/d over 2011 
--  Announced $2.2 billion integrated oil sands development program for Cold
    Lake and Polaris pipeline systems 
--  Polaris pipeline system entered commercial service for the Kearl oil
    sands project, which is expected to generate approximately $36 million
    of EBITDA(i) annually 
--  Issued $400 million in senior medium term notes at attractive interest
--  Completed $459 million acquisition of four petroleum storage terminals
    in Denmark, more than doubling European storage capacity to 19 million

Fourth Quarter Highlights 

--  Fourth quarter funds from operations(i) increased to $101 million, a
    gain of $11 million or 12% over fourth quarter 2011 levels 
--  Low quarterly payout ratio before sustaining capital(i) of 73% 
--  Announced 5.7% distribution increase to annual rate of $1.11 per unit,
    Inter Pipeline's ninth consecutive distribution increase 
--  Combined oil sands and conventional volume levels set a new quarterly
    record of 1,014,900 b/d 
--  Announced 5-year agreement to transport diluent for Suncor Energy 
--  Distributions to unitholders were $73 million or $0.2675 per unit

(i)Please refer to the "Non-GAAP and additional GAAP Financial
Measures" section of the MD&A 
Funds From Operations   
Inter Pipeline generated record financial results in 2012.  Funds
from operations totaled $422.6 million or $1.57 per unit, an increase
of $28.4 million or 7% over 2011 levels. This marks the 11th
consecutive year of increased funds from operations, with three of
Inter Pipeline's four business segments achieving record levels. The
oil sands transportation segment realized gains as the Polaris
pipeline system entered commercial service; the conventional oil
pipeline segment showed very strong cash flow on volume strength; and
the bulk liquid storage segment's results were boosted by the Danish
petroleum storage business which was acquired in early 2012.  
By business segment, the NGL extraction, oil sands transportation,
conventional oil pipelines and bulk liquid storage businesses
contributed $194.6 million, $172.8 million, $153.4 million and $80.2
million to funds from operations, respectively. Corporate costs,
including interest, income tax and general and administrative charges
were $178.4 million for the year.  
In the fourth quarter, funds from operations were $100.9 million, an
increase of $10.8 million or 12% over fourth quarter 2011 results.
Inter Pipeline's oil sands transportation segment set a new quarterly
record for cash flow at $46.2 million.  Fourth quarter funds from
operations from the NGL extraction, conventional oil pipelines and
bulk liquid storage businesses were $38.7 million, $38.7 million and
$20.0 million, respectively. Corporate costs were $42.7 million in
the quarter. 
Cash Distributions   
Distributions declared to unitholders increased to $285.2 million or
$1.055 per unit in 2012, compared to $251.7 million or $0.9675 per
unit declared in 2011.  Distributions were higher due to an increase
in the number of units outstanding and Inter Pipeline's decision to
increase annual distributions by $0.09 per unit effective with
payments in January 2012. Despite a higher distribution rate, Inter
Pipeline's payout ratio remained conservative at 67.5% before
sustaining capital and 74.6% after considering sustaining capital
expenditures of $40.1 million in 2012.  
In the fourth quarter, Inter Pipeline distributed $73.4 million or
$0.2675 per unit, representing a payout ratio of 72.8% before
sustaining capital and 86.0% after sustaining capital.  
Oil Sands Transportation   
In 2012, Inter Pipeline achieved record performances in the oil sands
transportation business segment and announced a major, multi-year
expansion program. Throughput levels on Inter Pipeline's oil sands
transportation systems averaged 812,600 b/d during the year, an
increase of 26,400 b/d over 2011 levels as both the Cold Lake and
Corridor pipeline systems set annual records.  Cash flow in the
segment set a new yearly record, with funds from operations totaling
$172.8 million.  
In the fourth quarter, throughput volumes in the oil sands
transportation segment reached 838,200 b/d. Cold Lake system volumes
averaged 529,400 b/d and Corridor volumes averaged 308,800 b/d. Both
systems recorded year over year gains due to strong production from
the oil sands operations of Imperial, Cenovus and Canadian Natural
Resources on the Cold Lake system, and increased production on the
Corridor system from Shell, Chevron and Marathon's Athabasca Oil
Sands Project. 
Inter Pipeline's third oil sands pipeline system, the Polaris diluent
transportation system, entered into commercial service in 2012.
Initial development of Polaris is supported by long-term contracts to
transport diluent to Imperial's Kearl oil sands project and to Husky
Energy's Sunrise oil sands project. Together, these projects are
expected to generate approximately $63 million in incremental EBITDA
once fully in service. In late 2012 Inter Pipeline announced a third
Polaris contract, a 5-year agreement to transport 10,000 b/d of
diluent for Suncor Energy. This agreement will add a further $10
million to EBITDA annually for the life of the contract, at a capital
cost of approximately $10 million. Inter Pipeline expects that all
three contracts will be contributing to cash flow in 2013.  
In 2012, Inter Pipeline announced a $2.2 billion development plan for
the Cold Lake and Polaris pipeline systems that will expand and
integrate transportation services across both systems. Anchoring
these developments is an arrangement to provide bitumen blend and
diluent transportation services to the Foster Creek, Christina Lake
and Narrows Lake projects jointly owned by ConocoPhillips and Cenovus
Energy. These development plans involve the construction of
approximately 840 kilometres of new pipeline and seven new pump
stations.  Inter Pipeline intends to provide approximately 850,000
b/d of firm bitumen blend and diluent capacity to the three oil sands
projects.  Subject to the execution of a binding transportation
agreement, new facilities are planned to be in service for the Foster
Creek and Christina Lake projects in phases beginning in mid-2014,
and for the Narrows Lake project in 2017. Inter Pipeline expects to
finalize the binding transportation agreement in the first quarter of
In addition, a $90 million pump station expansion of the Cold Lake
system is currently underway that will increase system capacity on
the west mainline segment from 535,000 b/d to approximately 650,000
b/d by mid 2013 to accommodate near term production forecasts.  
NGL Extraction    
The NGL extraction business segment generated very strong results in
2012, with funds from operations totaling $194.6 million. Results
were $7.9 million lower than in 2011 primarily due to a one-time
$20.5 million positive revenue adjustment related to the historical
pricing of NGL sales from a counterparty.   
Natural gas volumes processed at Inter Pipeline's NGL extraction
facilities at Cochrane and Empress, Alberta remained strong in 2012,
averaging roughly 2.7 billion cubic feet of natural gas per day
(bcf/d), similar to levels processed in 2011.  Higher throughput
volumes at the Cochrane extraction plant were offset by lower volumes
at Inter Pipeline's Empress facilities. Total liquid extraction
volumes, including ethane and propane-plus products, averaged 107,600
b/d, consistent with levels extracted in 2011.  
Margins on the sale of propane-plus products from the Cochrane
extraction facility moderated relative to 2011, but remained strong
compared to historical averages. Realized frac-spread prices averaged
$1.00 US per US gallon in 2012, higher than the 5-year average of
$0.91 US per US gallon.  
In the fourth quarter, Inter Pipeline's three NGL extraction
facilities processed 2.6 bcf/d, up from 2.3 bcf/d processed in Q4 of
2011 as throughput levels increased at Empress facilities. Fourth
quarter extracted liquid volumes were up correspondingly, totaling
105,900 b/d in the fourth quarter of 2012 compared to 99,200 b/d
extracted in the fourth quarter of 2011. 
Conventional Oil Pipelines    
The conventional oil pipeline segment had a very strong year,
generating record funds from operations of $153.4 million. This
represents an increase of $20.2 million or 15% over 2011 levels.
Strong results were driven by higher throughput levels and increased
transportation tolls. Average revenue per barrel on Inter Pipeline's
conventional oil pipeline systems averaged $2.91 in 2012 compared to
$2.68 per barrel realized in 2011.  
For the year, Inter Pipeline's conventional oil pipeline systems
maintained strong throughput levels, recording volume gains that more
than offset natural decline rates. The Bow River, Central Alberta,
and Mid Saskatchewan systems together transported an average of
175,500 b/d in 2012, an increase of 5,500 b/d over 2011 levels. In
the fourth quarter, conventional oil transportation volumes averaged
176,700 b/d, similar to fourth quarter 2011 levels. Inter Pipeline
continues to benefit from substantial oil drilling activity in
certain service areas as producers aggressively deploy new drilling
and well completion technologies.  
Bulk Liquid Storage   
Inter Pipeline's European bulk liquid storage business generated
significantly higher results in 2012 than in the year prior.  Funds
from operations were $80.2 million, more than double the $37.2
million generated in 2011. The increase was primarily due to the
inclusion of results from a Danish petroleum storage business which
Inter Pipeline acquired in January 2012.  
Tank utilization rates for the year averaged 90.0% compared to 97.0%
in 2011. Fourth quarter 2012 utilization rates reflected similar
trends, with Q4 2012 averaging 88.3% compared to 94.9% in the fourth
quarter of 2011. Utilization rates have remained strong despite a
weak European economic climate and the lack of contango in forward
oil commodity markets. In 2012, 75,000 barrels of new storage
capacity was added at the Immingham terminal in the United Kingdom,
and multiple tanks were refurbished to meet requirements of new
customer storage contracts.  
Financing Activity   
Inter Pipeline continues to maintain a strong balance sheet and took
additional measures throughout 2012 to ensure continued financial
flexibility. During the year, $2.3 billion of committed credit
facilities were extended by one year. In May, $400 million of senior
medium term notes were issued at an attractive interest rate. To
maintain a strong equity position, Inter Pipeline raised over $200
million in new equity capital through a highly successful
distribution reinvestment program over the course of the year. At
December 31, Inter Pipeline had access to approximately $700 million
in unutilized credit capacity. 
Debt levels were prudently managed during the year. Inter Pipeline's
total outstanding debt balance was approximately $3.1 billion at
December 31, resulting in a total debt to capitalization ratio of
65.3%. Excluding approximately $1.7 billion of non-recourse debt held
by Inter Pipeline (Corridor) Inc., Inter Pipeline's recourse debt to
capitalization ratio remained relatively low at 47.0%.  
Inter Pipeline continues to maintain strong investment grade credit
ratings, supported by our stable business performance and prudently
capitalized balance sheet.  Inter Pipeline is well positioned to
finance its long term capital expenditure program. 
Conference Call & Webcast   
Inter Pipeline will hold a conference call and webcast today at 2:30
p.m. (Mountain Time) / 4:30 p.m. (Eastern Time) to discuss fourth
quarter and year end 2012 financial and operating results.   
To participate in the conference call, please dial 866-226-1792 or
416-340-2216. A pass code is not required. A recording of the call
will be available for replay until February 28, 2013, by dialling
800-408-3053 or 905-694-9451. The pass code for the replay is
A webcast of the conference call can be accessed on Inter Pipeline's
website at by selecting "Investor
Relations" then "Webcasts & Conference Calls". An archived version of
the webcast will be available for approximately 90 days.     

Selected Financial and Operating Highlights                                 
(millions of dollars, except                                                
 where noted)                       Three Months Ended            Year Ended
                                          December 31,          December 31,
                                       2012       2011       2012       2011
Pipeline volumes (000 b/d)                                                  
  Oil sands transportation(1)         838.2      769.4      812.6      786.2
  Conventional oil pipelines          176.7      175.7      175.5      170.0
  Total pipeline volumes            1,014.9      945.1      988.1      956.2
Extraction production(1) (000                                               
  Ethane                               72.9       69.0       72.6       73.2
  Propane plus                         33.0       30.2       35.0       33.8
  Total extraction production         105.9       99.2      107.6      107.0
  Oil sands transportation       $     84.1 $     71.3 $    300.3 $    284.8
  NGL extraction                 $    133.5 $    129.1 $    499.9 $    584.6
  Conventional oil pipelines     $     62.0 $     46.3 $    231.2 $    177.8
  Bulk liquid storage            $     38.8 $     26.5 $    155.6 $    104.4
Total revenue                    $    318.4 $    273.2 $  1,187.0 $  1,151.6
Net income                       $     57.3 $     45.8 $    307.2 $    247.9
  Per unit (basic & diluted)     $     0.21 $     0.17 $     1.14 $     0.95
Funds from operations(2)         $    100.9 $     90.1 $    422.6 $    394.2
  Per unit(2)                    $     0.37 $     0.35 $     1.57 $     1.52
Cash distributions declared      $     73.4 $     65.1 $    285.2 $    251.7
  Per unit                       $   0.2675 $   0.2475 $   1.0550 $   0.9675
Payout ratio before sustaining                                              
 capital(2)                           72.8%      72.3%      67.5%      63.9%
Payout ratio after sustaining                                               
 capital(2)                           86.0%      78.5%      74.6%      67.2%
Capital expenditures                                                        
  Growth(2)                      $    125.7 $     34.2 $    339.5 $    132.6
  Sustaining(2)                  $     15.6 $      7.2 $     40.1 $     19.4
Total capital expenditures       $    141.3 $     41.4 $    379.6 $    152.0

(1) Empress V NGL production and Cold Lake volumes reported on a 100%
(2) Please refer to the "Non-GAAP Financial Measures" section of the
MD&A, Financial Statements & Notes   
The Management's Discussion and Analysis ("MD&A") and consolidated
financial statements provide a detailed explanation of Inter
Pipeline's operating results for the three month period and year
ended December 31, 2012 as compared to the three month period and
year ended December 31, 2011. These documents are available at and at 
Inter Pipeline Fund    
Inter Pipeline is a major petroleum transportation, bulk liquid
storage and natural gas liquids extraction business based in Calgary,
Alberta, Canada. Structured as a publicly traded limited partnership,
Inter Pipeline owns and operates energy infrastructure assets in
western Canada, the United Kingdom, Denmark, Germany and Ireland.
Additional information about Inter Pipeline can be found at  
Inter Pipeline is a member of the S&P/TSX Composite Index.  Class A
Units trade on the Toronto Stock Exchange under the symbol IPL.UN.  
Eligible Investors   
Pursuant to Inter Pipeline's limited partnership agreement dated
October 9, 1997, as amended, all unitholders are required to be
residents of Canada.  A copy of the limited partnership agreement can
be found at by selecting "Corporate
Governance". If a unitholder is a non-resident of Canada
("Non-Eligible Unitholder"), he will not be considered to be a member
of the partnership effective the date the Class A Units were
acquired. Inter Pipeline requires all Non-Eligible Unitholders to
dispose of their Class A Units in accordance with the limited
partnership agreement.  
In most cases, a unitholder with an address outside of Canada will be
a Non-Eligible Unitholder.  
Certain information contained herein may constitute forward-looking
statements that involve known and unknown risks, assumptions,
uncertainties and other factors.  Forward-looking statements in this
news release include, but are not limited to, statements regarding
timing and completion of, and EBITDA Inter Pipeline expects to
generate from, the Polaris and Cold pipeline projects and possible
future Cold Lake and Polaris pipeline expansions. Readers are
cautioned not to place undue reliance on forward-looking statements,
as such statements are not guarantees of future performance.  Inter
Pipeline in no manner represents that actual results, levels of
activity and achievements will be the same in whole or in part as
those set out in the forward-looking statements herein.  Such
information, although considered reasonable by the General Partner of
Inter Pipeline at the time of preparation, may later prove to be
incorrect and actual results may differ materially from those
anticipated in the statements made.  For this purpose, any statements
that are not statements of historical fact may be deemed to be
forward-looking statements.  Forward-looking statements often contain
terms such as "may", "will", "should", "anticipate", "expects" and
similar expressions.  Such assumptions, risks, uncertainties and
other factors include, but are not limited to, assumptions, risks and
uncertainties associated with: operations, such as loss of markets,
regulatory matters, environmental matters, industry competition,
potential delays and cost overruns of construction projects,
including the Polaris and Cold Lake pipeline system projects, the
status, credit risk and continued existence of customers having
contracts with Inter Pipeline and its subsidiaries, and the ability
to access sufficient capital from internal and external sources. You
can find a discussion of those risks and uncertainties in Inter
Pipeline's securities filings at  The forward-looking
statements contained in this news release are made as of the date of
this document, and, except to the extent required by applicable
securities laws and regulations, Inter Pipeline assumes no obligation
to update or revise forward-looking statements made herein or
otherwise, whether as a result of new information, future events, or
otherwise.  The forward-looking statements contained in this document
are expressly qualified by this cautionary note.  
All dollar values are expressed in Canadian dollars unless otherwise
Non-GAAP Financial Measures    
Certain financial measures referred to in this news release are not
measures recognized by GAAP. These non-GAAP financial measures do not
have standardized meanings prescribed by GAAP and therefore may not
be comparable to similar measures presented by other entities. 
Investors are cautioned that these non-GAAP financial measures should
not be construed as alternatives to other measures of financial
performance calculated in accordance with GAAP. 
Inter Pipeline Fund - Investor Relations:
Jeremy Roberge
Vice President, Capital Markets
403-290-6015 or 1-866-716-7473 
Inter Pipeline Fund - Media Relations:
Tony Mate
Director, Corporate and Investor Communications
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