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 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.
-- 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
-- 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
-- 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
-- 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
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,
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
Jim V. Bertram
Chief Executive Officer
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 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.
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
SEDAR at www.sedar.com.
SOURCE Keyera Corp.
about Keyera, please visit our website atwww.keyera.com or contact:
John Cobb, Vice President, Investor Relations and Information Technology or
Julie Puddell, Manager, Investor Relations
E-mail:firstname.lastname@example.org, Telephone: (403) 205-7670 / Toll Free: (888) 699-4853,
Facsimile: (403) 205-8425.
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