CALGARY, May 7, 2013 /CNW/ - Keyera Corp. (TSX:KEY)(TSX:KEY.DB.A), announced
their 2013 first quarter results today, the highlights of which are included
in this press release. The entire earnings release can be viewed by visiting
Keyera's website at www.keyera.com or, to view the MD&A and financial
statements, visit either Keyera's website or the System for Electronic
Document Analysis and Retrieval at www.sedar.com.
-- Keyera delivered strong results in the first quarter of 2013
and announced a number of new growth initiatives.
-- Earnings before interest, taxes, depreciation and amortization
(1,2) ("EBITDA") were $97.8 million in the first quarter of
2013, 67% higher than the $58.5 million posted in the same
quarter of 2012.
-- Net earnings for the first quarter of 2013 were $23.4 million
($0.30 per share), compared to $33.9 million ($0.46 per share)
in the same period in 2012.
-- Distributable cash flow(1,2) was $83.3 million ($1.07 per
share) in first quarter 2013, 76% higher than the $47.2 million
($0.64 per share) recorded in the same period last year.
-- Keyera's Gathering and Processing business delivered stable
operating margin(3) of $39.9 million in the first quarter of
2013 compared to $39.0 million in the same quarter last year.
In the NGL Infrastructure segment, operating margin(3) was
$29.0 compared to $26.0 in the same quarter of 2012. Marketing
operating margin(3) was $23.9 million in first quarter of 2013,
or 89% higher than the $12.7 million posted in first quarter of
-- Work on a number of growth projects continued in the quarter,
including the South Cheecham rail and truck terminal, the Hull,
Texas rail and truck terminal, a raw gas gathering pipeline,
the de-ethanizer at Fort Saskatchewan and the new turbo
expander at the Rimbey gas plant.
-- Subsequent to the quarter, Keyera announced $210 million of
growth initiatives at the Simonette gas plant, including a new
90-kilometre sour gas pipeline into the Wapiti area of Alberta
and plant modifications that will enhance processing capability
and add 100 million cubic feet per day of processing capacity.
-- In April, Keyera, in conjunction with Plains Midstream Canada
ULC, began soliciting producer interest in the construction of
a jointly owned liquids pipeline system in northwest Alberta.
-- Total growth capital investment was $59.0 million in the first
quarter 2013, of which $3.9 million was acquisitions. Keyera
has reviewed its spending profile for 2013 and now expects its
2013 growth capital investment, excluding acquisitions, will be
between $400 million and $450 million.(4)
(1) See "Non-GAAP Financial Measures" on page 36 of the MD&A.
See page 30 and 31 of the MD&A for a reconciliation of
(2) distributable cash flow to cash flow from operating activities and
EBITDA to net earnings.
(3) See note 18 to the accompanying financial statements.
(4) See "Capital Expenditures and Acquisitions" on page 28 of the MD&A
for further discussion of Keyera's capital investment program.
Three Months Ended March 31,
Summary of Key Measures
(Thousands of Canadian dollars, except 2013 2012
Net earnings 23,445 33,870
Per share ($/share) - basic 0.30 0.46
Cash flow from operating activities 136,688 105,413
Distributable cash flow(1) 83,285 47,189
Per share( )($/share) 1.07 0.64
Dividends declared 42,074 37,421
Per share( )($/share) 0.54 0.51
Payout ratio %(1) 50% 79%
EBITDA(2) 97,848 58,468
Gathering and Processing:
Gross processing throughput (MMcf/d) 1,237 1,227
Net processing throughput (MMcf/d) 980 966
Gross processing throughput (Mbbl/d) 115 107
Net processing throughput (Mbbl/d) 40 39
Inventory value 144,263 164,010
Sales volumes (bbl/d) 116,800 99,000
Acquisitions (including business 3,907 247,079
Growth capital expenditures 53,116 23,653
Maintenance capital expenditures 2,007 1,671
Total capital expenditures 59,030 272,403
As at March 31,
Long-term debt (4) 625,966 475,310
Credit facilities 80,000 235,000
Working capital surplus(3, 4) (93,851) (178,382)
Net debt 612,115 531,928
Convertible debentures( 4) — 14,219
Net debt (including debentures) 612,115 546,147
Common shares outstanding - end of 78,013 76,620
Weighted average number of shares 77,862 73,276
outstanding - basic
Weighted average number of shares 78,381 74,069
outstanding - diluted
(1) Payout ratio is defined as dividends declared to shareholders
divided by distributable cash flow. Payout ratio and distributable
cash flow are not standard measures under GAAP. See page 30 for a
reconciliation of distributable cash flow to its most closely
related GAAP measure.
(2) Beginning in the first quarter of 2013, Keyera excludes unrealized
gains/losses from commodity related risk management contracts in
the calculation of EBITDA. These non-cash gains/losses have been
excluded because management believes it provides a better
reflection of the financial performance of the business in the
current period. The comparative amount has been adjusted to
reflect this change. EBITDA is defined as earnings (excluding
unrealized gains/losses) before interest, taxes, depreciation,
amortization, accretion, impairment expenses and any other non-cash
items such as gains/losses on the disposal of property, plant and
equipment. EBITDA is not a standard measure under GAAP. See
section titled "EBITDA" on page 31 of the MD&A for a reconciliation
of EBITDA to its most closely related GAAP measure.
(3) Working capital is defined as current assets less current
(4) Included in the calculation of working capital for Q1 2013 are
current liabilities related to the $52,500 of unsecured senior
notes due on August 26, 2013 and $9,212 of convertible debentures
due on December 31, 2013.
Message to Shareholders
Keyera had a successful start to 2013, delivering solid results in the first
quarter and continuing to advance a number of new growth initiatives.
Continued drilling in those areas of the Western Canada Sedimentary Basin
where the gas is rich in NGLs has contributed to Keyera's high level of
activity in all business segments. Increasing liquids-rich gas production is
resulting in new business opportunities at Keyera's gas processing facilities,
as well as generating increasing demand for fractionation, storage and
marketing services for the NGLs removed from the raw gas stream. In this
current business environment, the value of our integrated facilities and the
extensive complement of services we offer provides us with opportunities to
grow our business and deliver value to shareholders.
Keyera's fee-for service businesses delivered solid results again this
quarter, as did the Marketing segment. EBITDA was $97.8 million in the first
quarter of 2013, an increase of 67% from the same quarter last year.
Distributable cash flow increased 76% to $83.3 million ($1.07 per share)
compared to the same quarter last year. Dividends to shareholders totaled
$42.1 million ($0.54 per share), resulting in a payout ratio of 50%.
In the first quarter, Gathering and Processing operating margin was $39.9
million, a slight increase compared to the same period in 2012, and the second
highest result in Keyera's history. Producer activity resulted in growing
throughput at certain Keyera gas plants in the quarter. Repairs completed at
the Simonette and Strachan gas plants in the quarter reduced operating margin
In the Liquids Business Unit, operating margin in the NGL Infrastructure
segment was $29.0 million, a 12% increase compared to the first quarter last
year. Increased demand for offloading and handling services at ADT, as well as
incremental fees from our diluent handling agreement with Imperial Oil, were
the main contributors to the increase.
The Marketing segment generated strong operating margin of $23.9 million in
the first quarter, an increase of 89% compared to same quarter last year. A
return to more normal winter weather contributed to solid propane results this
quarter compared to the same quarter last year. Iso-octane sales volumes and
margins were also higher than last year.
Producers continued to focus on liquids-rich drilling in the first quarter of
2013, often within the capture area of Keyera plants. Most of their focus is
on production from the Glauconite, Cardium, Montney and Duvernay geological
horizons. Gross throughput at our gas plants increased 3% in the first
quarter, to 1,237 million cubic feet per day, compared to the fourth quarter
of 2012. Throughput was higher at the Minnehik Buck Lake, Strachan, Caribou,
Nordegg River and Brazeau River gas plants. This higher throughput was offset
somewhat by lower throughput at the Simonette gas plant, due to curtailment of
volumes and maintenance work on the sulphur facilities.
In December and May, we purchased newly constructed gathering pipelines which
deliver gas to the Strachan and Minnehik Buck Lake gas plants. Producers in
these areas had gas waiting to be processed, which resulted in an immediate
increase in throughput at both facilities. In January, we commissioned a new
turbo expander at the Strachan gas plant to increase plant reliability and
sustain high liquids recovery levels. Detailed engineering and procurement of
long lead items is underway at the Rimbey gas plant, where we are expanding
the plant's capability by installing a turbo expander.
In April, we announced plans to build a 90-kilometre pipeline from our
Simonette gas plant to the Wapiti area of Alberta. NuVista Energy Ltd. has
entered into a long-term processing agreement to underpin construction of the
pipeline and we are currently talking with other producers in the area who
might be interested in securing capacity on the line. We are also planning to
enhance Simonette's processing capability by adding 100 million cubic feet per
day of capacity and adding condensate stabilization facilities.
Also in April, we announced we had entered into an arrangement with Plains
Midstream Canada to solicit producer interest in the construction of the
Western Reach Pipeline System in northwestern Alberta. The proposed pipeline
is anticipated to be 570 kilometres in length and would consist of two
pipelines dedicated to NGL mix and condensate service. The proposed pipeline
route would travel through some of the most prospective geological areas being
developed in western Canada today, including the Montney and Duvernay zones.
With increasing liquids production in western Canada, many producers are
interested in securing NGL fractionation capacity in the Edmonton/Fort
Saskatchewan hub. In connection with the long-term processing agreement at
Simonette, NuVista also signed long-term agreements for fractionation and NGL
marketing services. In addition, demand for diluent in Alberta drove increased
storage activity at Fort Saskatchewan and higher rail traffic at our Alberta
Diluent Terminal in the first quarter.
Construction of the South Cheecham rail and truck terminal is well underway.
Pipelines have been installed, tanks constructed and track for the rail laid.
Completion of the terminal is still expected in the second half of 2013. There
continues to be significant interest in the terminal by other oil sands
producers and refiners.
Iso-octane was delivered to customers in the Gulf Coast via rail throughout
the first quarter and we continue to be pleased with customer interest. Some
potential new customers will need to make modifications to their facilities in
order to receive iso-octane by rail. However, based on our initial success in
moving volumes by rail into new markets, we are optimistic about our ability
to increase the utilization level of Alberta EnviroFuels throughout the
remainder of 2013.
At Fort Saskatchewan, our twelfth cavern is complete and is awaiting
regulatory approval before being put into service. Work on the brine pond will
continue through the summer and is scheduled to be put into service later this
year, and our thirteenth cavern is currently under development. Detailed
engineering is underway for our de-ethanizer project, long-lead items have
been ordered and fabrication of major equipment is underway.
The combination of newly announced projects and a review of the timing of
projects already underway have resulted in an update to Keyera's capital
investment forecast. We now anticipate our 2013 capital investments will be
between $400 and $450 million, excluding acquisitions.
May 30(th) marks Keyera's tenth anniversary as a public company. Our vision
when we went public was to provide our shareholders with stable and growing
cash flow per share. I'm proud to say that we have delivered on that
objective, and we have provided our shareholders with a compound annual growth
rate of 7.5% in dividends per share. Looking forward, I am confident that we
have the right mix of people, assets and opportunities to continue to deliver
value to shareholders.
On behalf of Keyera's directors and management team, thank you for your
Jim V. Bertram
Chief Executive Officer
Certain statements contained in this document contain forward-looking
statements. These statements relate to future events or Keyera's future
performance. Such statements are predictions only and actual events or
results may differ materially. The use of words such as "anticipate",
"continue", "estimate", "expect", "may", "will", "project", "should", "plan",
"intend", "believe", and similar expressions, including the negatives thereof,
is intended to identify forward looking statements. All statements other
than statements of historical fact contained in this document are forward
The forward looking statements reflect management's current beliefs and
assumptions with respect to such things as the outlook for general economic
trends, industry trends, commodity prices, capital markets, and the
governmental, regulatory and legal environment. In some instances, this
document may also contain forward-looking statements attributed to third party
sources. Management believes that its assumptions and analysis in this
document are reasonable and that the expectations reflected in the forward
looking statements contained herein are also reasonable. However, Keyera
cannot assure readers that these expectations will prove to be correct.
All forward looking statements involve known and unknown risks, uncertainties
and other factors that may cause actual results, events, levels of activity
and achievements to differ materially from those anticipated in the forward
looking statements. Such factors include but are not limited to: general
economic, market and business conditions; access to capital and debt markets;
operational matters, including potential hazards inherent in our operations;
risks arising from co-ownership of facilities; activities of other facility
owners; access to third party facilities, competitive action by other
companies; activities of producers and other customers and overall industry
activity levels; changes in gas composition; fluctuations in commodity prices
and supply/demand trends; processing and marketing margins; effects of weather
conditions; availability of construction crews and materials; fluctuations in
interest rates and foreign currency exchange rates; changes in operating and
capital costs, including fluctuations in input costs; actions by governmental
authorities; decisions or approvals of administrative tribunals; changes in
environmental and other regulations; reliance on key personnel; competition
for, among other things, capital, acquisition opportunities and skilled
personnel; changes in tax laws, including the effects that such changes may
have on unitholders, and in particular any differential effects relating to
unitholder's country of residence; and other factors, many of which are beyond
the control of Keyera, some of which are discussed in this document and in
Keyera's Annual Information Form dated February 14, 2013 filed on SEDAR and
available on the Keyera website at www.keyera.com.
Proposed construction and completion schedules and budgets for capital
projects are subject to many variables, including weather; availability and
prices of materials; labour; customer project approvals and expected in
service dates; regulatory approvals; and macro socio-economic trends. As a
result, expected timing, costs and benefits associated with these projects may
differ materially from the descriptions in this Document. Further, some of the
projects discussed in this document are subject to securing sufficient
producer/customer interest and may not proceed if sufficient commitments are
Readers are cautioned that they should not unduly rely on the forward looking
statements in this document. Further, readers are cautioned that the forward
looking statements in this document speak only as of the date of this document.
Any statements relating to "reserves" are deemed to be forward looking
statements as they involve the implied assessment, based on certain estimates
and assumptions, that the reserves described can be profitably produced in the
All forward looking statements contained in this document and accompanying
documents are expressly qualified by this cautionary statement. Further
information about the factors affecting forward looking statements and
management's assumptions and analysis thereof, is available in filings made by
Keyera with Canadian provincial securities commissions, which can be viewed on
SEDAR at www.sedar.com.
about Keyera, please visit our website at www.keyera.com or contact:
John Cobb, Vice President, Investor Relations and Information Technology or
Julie Puddell, Manager, Investor Relations
E-mail:email@example.com, Telephone: (403) 205-7670 / Toll Free: (888) 699-4853,
Facsimile: (403) 205-8425.
SOURCE: Keyera Corp.
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