Inter Pipeline Fund Announces Very Strong Second Quarter 2013 Financial and Operating Results

Inter Pipeline Fund Announces Very Strong Second Quarter 2013 Financial and 
Operating Results 
CALGARY, ALBERTA -- (Marketwired) -- 08/08/13 -- Inter Pipeline Fund
("Inter Pipeline") (TSX:IPL.UN) announced today its financial and
operating results for the three and six month periods ended June 30,

--  Funds from operations(i) totaled $105 million, in line with second
    quarter 2012 levels 
--  Low quarterly payout ratio(i) of 76% 
--  Declared cash distributions of $78 million or $0.28 per unit 
--  Throughput volumes on oil sands and conventional oil pipeline systems
    averaged 942,700 barrels per day (b/d) 
--  Conventional oil pipeline systems transported 170,900 b/d and generated
    record quarterly funds from operations of $43.5 million 
--  Announced a $0.03 per unit annualized distribution increase, Inter
    Pipeline's second increase in cash distributions in nine months 
--  Entered into a new long-term ethane sales agreement with NOVA Chemicals 
--  Increased capacity on Inter Pipeline's revolving credit facility from
    $750 million to $1.25 billion 
--  Announced internalization of general partner and plans for corporate
--  Normalized net income of $67 million after excluding one-time, non-cash
    internalization costs of $349 million

Subsequent Events 

--  Executed long-term agreement to provide bitumen blend transportation
    service to a new unit train loading facility owned by Canexus
--  Issued $500 million of 7-year notes at an attractive interest rate of
--  Announced Polaris pipeline expansion for additional diluent deliveries
    to Kearl oil sands project

(i) Please refer to the "Non-GAAP and additional GAAP Financial
Measures" section of the MD&A.  
Funds From Operations and Net Income 
Inter Pipeline's financial results were very strong in the second
quarter of 2013. Funds from operations totaled $105.4 million or
$0.37 per unit, similar to the $110.1 million generated in the second
quarter of 2012. Strong results in the oil sands and conventional oil
pipeline segments mitigated the impact of a scheduled 18-day
maintenance turnaround at the Cochrane NGL extrac
tion plant. 
During the quarter, each business segment contributed significantly
to funds from operations, with the conventional oil pipeline segment
setting a new quarterly record for cash flow. By segment, oil sands
transportation contributed $49.0 million; conventional oil pipelines,
$43.5 million; NGL extraction, $31.1 million; and bulk liquid
storage, $19.5 million. Corporate costs, including interest, income
tax and general and administrative charges were $37.7 million for the
In the second quarter, Inter Pipeline incurred a net loss of $281.6
million due largely to a one-time, $349 million non-cash charge
related to the "internalization" of Inter Pipeline's external
management contract. Excluding this non-recurring charge, net income
was $67 million. 
Cash Distributions 
Distributions declared to unitholders increased to $78.2 million or
$0.2800 per unit in the second quarter, compared to $70.6 million or
$0.2625 per unit in the second quarter of 2012. Payments were higher
due to annualized distribution increases of $0.06 per unit and $0.03
per unit in January and June 2013, respectively, and due to the
issuance of additional units under Inter Pipeline's distribution
reinvestment programs. Inter Pipeline's payout ratio for the second
quarter was conservative at 76%.  
Oil Sands Transportation 
In the second quarter of 2013, throughput volumes in the oil sands
transportation segment totaled 771,800 b/d, a decrease of 3 percent
from second quarter 2012 levels. Cold Lake system volumes averaged
465,300 b/d and Corridor system throughputs averaged 303,900 b/d.
Transported bitumen blend volumes were slightly lower due to
maintenance turnarounds at certain producer-owned oil production
facilities and the cyclical nature of steam injections at sites
connected to the Cold Lake pipeline system. 
The Polaris pipeline system transported volumes of 2,600 b/d during
the quarter. Throughput volumes represent initial diluent deliveries
to Imperial Oil's Kearl project and Suncor's oil sands operations
near Fort McMurray. Shipping arrangements with both Imperial and
Suncor are governed by take-or-pay contracts that allow Inter
Pipeline to receive its revenue requirement and recover operating
costs regardless of volumes shipped. 
Inter Pipeline is currently advancing over $2.7 billion in new
construction projects within its oil sands transportation segment.
These projects include the installation of new quarter point pumping
facilities on the west leg of the Cold Lake system, an integrated
expansion program on the Polaris and Cold Lake systems in support of
three oil sands projects jointly owned by Cenovus Energy and
ConocoPhillips, and a new diluent delivery connection to the Husky
Sunrise oil sands project. These major expansion projects are
expected to enter commercial service between late 2013 and mid 2017. 
In support of its large organic development program, Inter Pipeline
incurred costs of approximately $382 million during the quarter. 
Subsequent to quarter end, Inter Pipeline announced an agreement to
provide bitumen blend transportation service to Canexus Corporation's
unit train rail loading facility near Bruderheim, Alberta. Under
terms of the 10-year agreement, Inter Pipeline will construct a
13-kilometre pipeline lateral and metering facility to transport
bitumen blend from the Cold Lake pipeline system to Canexus-owned
facilities. Canexus has contracted for 100,000 b/d of firm capacity.
The agreement is expected to generate approximately $10 million per
year in incremental EBITDA once in service in mid-2014. 
Also subsequent to quarter end, Inter Pipeline announced that
Imperial Oil has elected to increase its firm capacity commitment on
the Polaris pipeline system for the expansion of its Kearl oil sands
project. Under the terms of an existing 25-year ship-or-pay
agreement, Imperial has exercised its option for an additional 60,000
b/d of diluent transportation capacity, bringing total diluent
commitments for Kearl to 120,000 b/d. Inter Pipeline will spend $45
million to re-commission three existing pump stations on the Polaris
system. The additional transportation service is expected to begin in
mid 2015. Inter Pipeline expects that the additional volume
commitment will generate approximately $19 million per year in
incremental EBITDA, bringing total annual contributions from the
Kearl agreement to approximately $56 million per year.  
NGL Extraction 
Inter Pipeline's NGL extraction business generated funds from
operations of $31.1 million in the second quarter of 2013 compared to
$48.5 million in the same quarter of 2012. Results were lower
primarily due to a scheduled 18-day maintenance turnaround at the
Cochrane NGL extraction facility and moderately lower pricing of
propane-plus product sales at the Cochrane plant. Realized
frac-spread prices averaged $0.89 US per US gallon in the second
quarter, compared to $1.00 in the second quarter of 2012. 
Natural gas volumes processed at Inter Pipeline's NGL extraction
facilities at Cochrane and Empress averaged 2.4 billion cubic feet
per day during the quarter. Combined ethane and propane-plus
production averaged 97,600 b/d. 
In the second quarter, Inter Pipeline entered into a new long term
agreement for et
hane sales to NOVA Chemicals. Under a new 10-year
agreement, NOVA will purchase the majority of ethane volumes produced
at the Cochrane extraction facility. The agreement will generate
approximately $20 million per year in incremental EBITDA over the
life of the contract, commencing on January 1, 2015. The existing
contract, which remains in effect until the end of 2014, has been
amended for the interim period, allowing Inter Pipeline to generate
additional EBITDA of $10 million per year in 2013 and 2014.  
Conventional Oil Pipelines 
The conventional oil pipeline segment generated record funds from
operations of $43.5 million during the second quarter of 2013,
compared to $35.3 million in the comparable period last year. Record
quarterly results were driven by a strong contribution from Inter
Pipeline's midstream marketing business and strong revenue growth. 
During the quarter, revenues on Inter Pipeline's Bow River, Central
Alberta and Mid-Saskatchewan pipeline systems averaged $2.93 per
barrel, compared to $2.75 per barrel generated in the second quarter
of 2012. Throughput levels averaged 170,900 b/d in the current
quarter, roughly equivalent to volumes shipped last year. 
Inter Pipeline achieved record cash flow on its conventional oil
gathering systems despite a refinery turnaround in Montana that
affected southbound flow rates on the Bow River pipeline system and
severe flooding conditions in southern Alberta.  
Bulk Liquid Storage 
Inter Pipeline's European bulk liquid storage business generated
funds from operations of $19.5 million, a decrease of $3.8 million
from the second quarter of 2012 as demand for storage services
Tank utilization rates averaged 82% compared to 95% in the same
period of 2012. Overall utilization rates have been impacted by the
lack of contango in forward commodity markets and weak economic
conditions in Europe. In the second quarter, over $2 million was
invested in tank modifications and tank life extension projects to
enable new storage contracting opportunities.  
Financing Activity 
Inter Pipeline maintains strong access to debt and equity capital
markets and is well positioned to finance its future capital
commitments. During the quarter, Inter Pipeline reached an agreement
with its lending syndicate to increase the capacity of its revolving
credit facility from $750 million to $1.25 billion. Inter Pipeline
also has the ability to increase its borrowing level to $1.5 billion
subject to lender approval. 
At June 30, Inter Pipeline's recourse debt to capitalization ratio
was 57.8%. This higher than normal debt ratio reflects a one-time,
non-cash charge to earnings in the second quarter related to the
"internalization" of Inter Pipeline's external management contract on
June 2, 2013. 
In the second quarter, Inter Pipeline issued over $55 million in new
equity capital under its distribution reinvestment programs.  
Subsequent to quarter end, Inter Pipeline raised $500 million in debt
capital through the issuance of 7-year notes. The notes were priced
at an attractive annual interest rate of 3.448%. Net proceeds of the
offering were used to reduce debt outstanding under Inter Pipeline's
revolving credit facility.  
Corporate Restructuring Activities 
On June 1, 2013, Inter Pipeline completed several internal
transactions related to the reorganization of its current limited
partnership structure, while positioning the business for a planned
conversion to a corporate form. 
As a first step, Inter Pipeline indirectly purchased its General
Partner for an initial consideration valued at $170 million, plus
$8.6 million in adjustments, and a future second instalment valued at
$170 million which is partly contingent on the outcome of certain
organic growth projects currently under development. These
transactions were designed to eliminate all future management,
acquisition, and divestiture and incentive fees payable to an
external manager. The accretive nature of this "internalization"
transaction allowed Inter Pipeline to increase its annualized cash
distributions to unitholders by $0.03 per unit, on a stand alone
basis, effective July 15, 2013. 
In a second step, Inter Pipeline has called a special meeting of
unitholders to consider its planned conversion from a Canadian
limited partnership structure to a dividend paying corporation. At
the special meeting, unitholders will also consider the exchange of
certain preferred shares held by the former shareholders of Inter
Pipeline's general partner into the common shares of Inter Pipeline's
corporate successor. The special meeting will be held in the Grand
Lecture Theatre of the Metropolitan Conference Centre, located at
333-4th Avenue S.W., Calgary, Alberta, on Thursday, August 22, 2013
at 9:00 am (Calgary time).  
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 second
quarter 2013 financial and operating results. 
To participate in the conference call, please dial 877-240-9772 or
416-340-8530. A pass code is not required. A recording of the call
will be available for replay until August 15, 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.     

                 Select Financial and Operating Highlights                  
(millions of dollars, except per                                            
 unit and percent amounts where                                             
 noted)                              Three Months Ended   Six Months Ended  
                                          June 30,            June 30,      
Throughput and Production                2013      2012      2013      2012 
 Pipeline volumes (000 b/d)                                                 
  Oil sands transportation(1)           771.8     796.1     830.6     787.5 
  Conventional oil pipelines            170.9     171.4     178.1     175.4 
  Total pipeline volumes                942.7     967.5   1,008.7     962.9 
 Extraction production(1) (000 b/d)                                         
  Ethane                                 67.6      67.9      73.0      73.3 
  Propane plus                           30.0      38.5      33.3      35.8 
  Total extraction production            97.6     106.4     106.3     109.1 
Financial Results(3)                                                        
 Revenue                               $320.3    $279.9    $648.0    $581.6
 Funds from operations(2)                                                   
  Oil sands transportation              $49.0     $44.0     $99.8     $88.1 
  NGL extraction                        $31.1     $48.5     $74.1    $105.5 
  Conventional oil pipelines            $43.5     $35.3     $83.9     $75.8 
  Bulk liquid storage                   $19.5     $23.3     $39.9     $42.6 
  Corporate costs                      $(37.7)   $(41.0)   $(82.9)   $(91.1)
  Total funds from operations(2)       $105.4    $110.1    $214.8    $220.9 
  Per unit(2)                           $0.37     $0.41     $0.77     $0.83 
 Net (loss) Income                    $(281.6)   $106.8   $(209.4)   $188.9 
Supplemental Financial Information                                          
 Net income attributable to                                                 
  unitholders                         $(283.9)   $104.4   $(214.2)   $184.0 
  Per unit (basic & diluted)           $(1.02)    $0.39    $(0.77)    $0.69 
 Cash distributions declared            $78.2     $70.6    $155.0    $140.5 
  Per unit                            $0.2800   $0.2625   $0.5575   $0.5250 
 Payout ratio(2)                         76.1%     65.8%     74.1%     65.3%
 Capital expenditures(2,3 )                                                 
  Growth                               $395.8     $68.6    $803.4    $108.8 
  Sustaining                             $5.8      $7.0     $11.7     $13.4 
 Total capital expenditures            $401.6     $75.6    $815.1    $122.2 
1.  Empress V NGL production and Cold Lake volumes reported on a 100% basis;
    Polaris volumes represent initial shipments that were prorated for the 6
    month period.                                                           
2.  Please refer to the "Non-GAAP Financial Measures" section of the MD&A.  
3.  Amounts reported on a 100% basis that includes non-controlling interest.

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 and six month periods
ended June 30, 2013 as compared to the three and six month periods
ended June 30, 2012. 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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