Keyera Corp. Announces Third Quarter 2013 Results

CALGARY, Nov. 5, 2013 /CNW/ - Keyera Corp. (TSX:KEY)(TSX:KEY.DB.A), announced 
their 2013 third 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 or, to view the MD&A and financial 
statements, visit either Keyera's website or the System for Electronic 
Document Analysis and Retrieval at 

    --  Net earnings for the third quarter of 2013 were $40.8 million
        ($0.52 per share), $26.6 million ($0.34 per share) higher than
        the third quarter of 2012.
    --  Earnings before interest, taxes, depreciation and amortization
        (1, 2) ("EBITDA") were $82.6 million in the third quarter of
        2013, 36% higher than the $60.8 million posted in the same
        period last year.
    --  Distributable cash flow(1, 2) was $50.5 million ($0.64 per
        share) in the third quarter of 2013, $31.7 million higher than
        the $18.8 million ($0.24 per share) recorded in the same
        quarter of 2012.
    --  Effective with its August dividend paid in September, Keyera
        increased its dividend by 11%, from $0.18 per share per month
        to $0.20 per share per month, or $2.40 per share annually. This
        was Keyera's eleventh increase since going public in 2003,
        representing an 8.1% compound annual growth rate in dividends
        per share.
    --  Keyera's Gathering and Processing business delivered operating
        margin(3) of $40.7 million in the third quarter of 2013
        compared to $35.6 million in the same quarter last year. In the
        NGL Infrastructure segment, operating margin(3) was $31.4
        million, the highest in history, compared to $29.9 million in
        the same quarter of 2012.  Marketing operating margin(3) was
        $33.2 million in the third quarter of 2013, $16.5 million
        higher than the third quarter of last year.
    --  Keyera is working with producers with respect to the
        construction of two proposed gathering pipeline systems. The
        proposed Twin Rivers pipeline is a 12-inch, 38 kilometre
        gathering pipeline that would deliver raw gas to Keyera's
        Brazeau River and West Pembina gas plants.  The proposed Wilson
        Creek pipeline system would deliver raw gas and condensate to
        the Rimbey gas plant through 12-inch raw gas and 6-inch
        condensate pipelines.  Both projects are subject to completing
        definitive agreements.
    --  In late September, Keyera completed construction of its South
        Cheecham Rail and Truck Terminal south of Fort McMurray.  The
        facility is currently receiving bitumen by truck and loading it
        onto railcars for delivery to end-use markets.
    --  Keyera's de-ethanizer project at Fort Saskatchewan received
        regulatory approval in August.  Site preparation continued
        during the third quarter and construction is expected to begin
        in the fourth quarter of 2013.
    --  Subsequent to the quarter, Keyera received regulatory approval
        and is proceeding with the Wapiti gathering pipelines from the
        Wapiti area of Alberta to the Simonette gas plant, including a
        dedicated 6-inch condensate pipeline.
    --  Keyera announced approximately $506 million of additional
        private placement debt financing in September. Of that amount,
        $200 million closed in October and the remainder is expected to
        close in November 2013 and April 2014, subject to normal
        closing conditions.
    --  Total growth capital investment, excluding acquisitions, was
        $93 million during the quarter and $192 million year-to-date.
        Keyera now expects its 2013 growth capital investment,
        excluding acquisitions, to be $325 million to $375 million.  In
        2014, growth capital investment, excluding acquisitions, is
        expected to be between $500 million and $600 million.(4)

(1)See "Non-GAAP Financial Measures" on page 37 of the MD&A.
(2)See page 32 and 33 of the MD&A for a reconciliation of 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 29 of the MD&A for 
further discussion of Keyera's capital investment program.
                                 Three months ended  Nine months ended
                                   September 30,       September 30,

Summary of Key Measures                                        

(Thousands of Canadian dollars,
except where noted)                 2013       2012      2013      2012

Net earnings                      40,822     14,238   112,440    73,950

  Per share ($/share) - basic       0.52       0.18      1.44      0.98

Cash flow from operating
activities                        26,584     92,899   212,497   211,926

Distributable cash flow(1)        50,544     18,771   213,088   125,477

  Per share( )($/share)             0.64       0.24      2.73      1.66

Dividends declared                45,529     39,379   129,835   115,991

  Per share( )($/share)             0.58       0.51      1.66      1.53

  Payout ratio %(1)                  90%       210%       61%       92%

EBITDA(2)                         82,589     60,777   279,850   201,930

Gathering and Processing:                                              

Gross processing throughput
(MMcf/d)                           1,274      1,154     1,268     1,204

Net processing throughput
(MMcf/d)                           1,040        937     1,023       955

NGL Infrastructure:                                                    

Gross processing throughput
(Mbbl/d)                             108         89       112        84

Net processing throughput
(Mbbl/d)                              30         32        34        33


Inventory value                  253,004    195,666   253,004   195,666

Sales volumes (Bbl/d)             82,500     82,800    94,000    85,700

Acquisitions (including business
combination)                          80     19,281    27,088   266,382

Growth capital expenditures       93,065     34,123   192,162    78,618

Maintenance capital expenditures  19,571     29,352    31,076    44,694

Total capital expenditures       112,716     82,756   250,326   389,694
                                                    As at September 30,
                                                         2013      2012

Long-term debt (4)                                    630,361   617,206

Credit facilities                                     290,000    95,000

Working capital surplus(3, 4)                       (239,350) (130,445)

Net debt                                              681,011   581,761

Convertible debentures( 4)                            —    11,875

Net debt (including debentures)                       681,011   593,636

Common shares outstanding - end
of period                                              78,591    77,324

Weighted average number of
shares outstanding - basic                             78,160    75,746

Weighted average number of
shares outstanding - diluted                           78,611    76,475


(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 32 of the
    MD&A 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 amounts have 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 33 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 Q3 2013 are
    current liabilities related to the $6,791 of convertible debentures
    due on December 31, 2013.

Message to Shareholders

Continuing demand for Keyera's services and products resulted in strong 
financial results for the third quarter of 2013. In addition, customer 
demand in both the Gathering and Processing and Liquids Business Units is 
creating significant new growth opportunities for Keyera. Several of these 
opportunities are underway, while others continue to be under evaluation. 
Further work is required to determine whether they will proceed.

EBITDA was $82.6 million in the third quarter of 2013, 36% higher than the 
$60.8 million posted in the same quarter of 2012. Distributable cash flow 
was $50.5 million ($0.64 per share) in the third quarter, $31.7 million higher 
than the $18.8 million ($0.24 per share) recorded in the third quarter last 
year. Two items affected distributable cash flow in the third quarter of 
2013. First, maintenance capital of $19.6 million was higher than expected, 
largely due to a catalyst replacement at AEF and higher than expected 
turnaround costs at the Simonette gas plant. Second, realized losses on 
financial contracts put in place to protect the value of our butane inventory, 
reduced the Marketing segment's operating margin by approximately $16 
million. A portion of these realized losses relate to butane that remained 
in inventory at the end of the third quarter. Higher operating margins are 
expected in future periods when the butane is sold or consumed as feedstock 
for the production of iso-octane.

In the Gathering and Processing Business Unit, several plants, including the 
Strachan, Minnehik Buck Lake and Caribou gas plants, benefitted from continued 
liquids-rich gas drilling activity in their regions. This activity has 
resulted in net throughput increasing 11% compared to the third quarter of 

We have a number of new gathering pipeline initiatives underway to handle 
anticipated new production from developments in west central Alberta. We are 
working with producers interested in supporting the construction of the Twin 
Rivers pipeline, a 38-kilometre, 12-inch pipeline that will deliver gas to our 
Brazeau River and West Pembina gas plants. Assuming the necessary agreements 
can be negotiated in a timely manner, the pipeline could be completed as early 
as second quarter 2014.

At the Rimbey gas plant, three pipeline initiatives are underway. We are 
proceeding with an expansion of the Carlos pipeline, which is currently 
operating near capacity, by constructing a short connector pipeline from 
Carlos to other existing pipeline infrastructure. This will enable us to 
offload certain volumes from Carlos for delivery to the Rimbey gas plant. We 
anticipate this project to be complete in the second quarter of next year. 
At the south end of the Carlos pipeline, a producer is constructing a pipeline 
to tie into the Carlos system. The producer expects it to be operational by 
year end 2013, at which time Keyera will purchase the pipeline. We have also 
signed a letter of intent with a producer in the Rimbey area to build the 
Wilson Creek pipeline system to deliver raw gas and condensate to Rimbey from 
west of the plant. The Wilson Creek system would consist of two pipelines: a 
12-inch raw gas pipeline and a 6-inch condensate pipeline. This project is 
subject to the parties signing definitive agreements.

In the Deep Basin area, several project initiatives are underway. We have 
received regulatory approval for the Wapiti pipeline system, clearing the way 
to commence construction of a 12-inch raw sour gas gathering pipeline and a 
6-inch condensate line from the Wapiti area of Alberta to the Simonette gas 
plant. Assuming construction proceeds as scheduled, we anticipate completing 
the pipelines in the second quarter of 2014. In conjunction with the new 
pipelines, upon receipt of regulatory approvals we intend to begin plant 
modifications at Simonette that will allow us to process an additional 100 
million cubic feet per day of raw natural gas and to handle the expected 
increase in condensate volumes.

A number of business initiatives are also underway in the Liquids Business 
Unit. In August, Keyera received regulatory approval for the construction of 
the de-ethanizer facility in Fort Saskatchewan. Site preparation is well 
underway and construction at the site is expected to begin shortly. In 
September, Keyera completed construction of the South Cheecham Rail and Truck 
Terminal located approximately 80 kilometres south of Fort McMurray. The 
facility is able to offload diluent delivered by rail for oil sands producers 
in the area, as well as receive and load undiluted and diluted bitumen onto 
rail cars for delivery to markets across North America. Deliveries of 
bitumen for loading onto rail cars began in late September and we look forward 
to providing additional services to customers in this area.

With North American demand for crude oil delivery by rail increasing, in July 
we announced plans to build the Alberta Crude Terminal, a crude oil rail 
loading facility adjacent to Keyera's Alberta Diluent Terminal in Edmonton. 
The Alberta Crude Terminal is a joint venture with Kinder Morgan, and the 
terminal will be pipeline connected to the Kinder Morgan crude oil storage 
terminal in Edmonton. This connection will enable customers to access 
multiple crude streams and qualities, providing them with substantial 
flexibility. Work is well underway on the Alberta Crude Terminal site.

We continue to work with producers to develop the proposed Alberta Liquids 
Pipeline System as a pipeline transportation alternative for NGL mix and 
condensate from the Deep Basin area of Alberta to Fort Saskatchewan. The 
Deep Basin is an area where considerable producer activity is expected over 
the coming years, as producers target the liquids-rich Montney, Duvernay and 
other liquids-rich geological zones.

We are also working with a number of producers who are interested in securing 
capacity in an expansion of our fractionator at Fort Saskatchewan. The 
proposed expansion would have a capacity of approximately 35,000 barrels per 
day of C3+ NGL mix. We are currently completing the front end engineering 
and design necessary to firm up the capital cost and project schedule and are 
also negotiating commercial terms with prospective customers. Depending on 
the level of commitment we can secure, a decision on whether to proceed with 
the expansion could be made by year-end.

We are pleased with Enbridge's success securing customer interest in the 
Norlite pipeline, a condensate transportation pipeline from the Edmonton/Fort 
Saskatchewan area to the Athabasca oil sands. As part of the service 
offering, on a limited basis the Norlite system may access certain existing 
capacity on Keyera's Fort Saskatchewan Condensate System. This would enable 
shippers to access condensate at numerous locations in the Edmonton/Fort 
Saskatchewan area, including Keyera's condensate storage facility. Keyera 
has the right to participate as a 30% non-operating owner in the Norlite 
pipeline and expects to make a decision in the near term.

We continued to develop new markets for iso-octane and the new demand has 
allowed us to increase utilization levels at Alberta EnviroFuels in 2013. 
Much of the incremental production is being delivered by rail using our 
loading facility at our Edmonton Terminal.

At this time, we anticipate that 2013 growth capital investment, excluding 
acquisitions, will likely be between $325 million and $375 million, lower than 
our previous guidance. This is largely due to adjustments in construction 
schedules, which have resulted in some of the work and capital expenditures 
originally planned for 2013 shifting to next year. In 2014, we currently 
anticipate growth capital investment, excluding acquisitions, will be between 
$500 million and $600 million. With the projects we have currently under 
evaluation, we anticipate that we will continue to make significant capital 
investments over the next several years.

This is an exciting period in Keyera's history and one where it is necessary 
to remain focused on the factors that have made us successful so far: 
developing a team of highly motivated, capable employees who understand and 
deliver superior customer service; operating in a manner that provides a 
healthy, safe and environmentally friendly workplace; and bringing a diligent 
and focused approach to our business and new business opportunities. It is 
these factors that will enable us to continue to provide steady and growing 
value for our shareholders.

On behalf of Keyera's directors and management team, thank you for your 
continued support.

Jim V. Bertram
Chief Executive Officer
Keyera Corp.


Certain statements contained in this document and accompanying documents 
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 looking statements.

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 and accompanying documents 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 shareholders, and in particular any differential effects relating to 
shareholder'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

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. 
Pipeline projects are also subject to Keyera's ability to secure the necessary 
rights of way. 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 not obtained. It is unclear whether Alberta's 
move toward a single regulator will affect processing times for projects that 
are subject to regulatory approval. Regulatory applications are also subject 
to intervention by interested parties which could result in delays.

Readers are cautioned that they should not unduly rely on the forward looking 
statements in this document and accompanying documents. 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 

SOURCE  Keyera Corp. 
 about Keyera, please visit our website or contact: 
John Cobb, Vice President, Investor Relations and Information Technology  or 
Julie Puddell, Manager, Investor Relations, Telephone: (403) 205-7670 / Toll Free: (888) 699-4853, 
Facsimile: (403) 205-8425. 
To view this news release in HTML formatting, please use the following URL: 
CO: Keyera Corp.
ST: Alberta
-0- Nov/05/2013 22:27 GMT
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