Alterra Power Announces Results for the Quarter Ended September 30, 2013
VANCOUVER, Nov. 12, 2013
(under IFRS and all amounts in US dollars unless otherwise stated)
VANCOUVER, Nov. 12, 2013 /PRNewswire/ - Alterra Power Corp. (TSX: AXY) is
pleased to report its financial and operating results for the three and nine
months ended September 30, 2013. For further information on these results
please see Alterra's Condensed Consolidated Interim Financial Statements and
Management's Discussion and Analysis.
Alterra consolidates 100% of the HS Orka and Soda Lake operations and accounts
for its interests in the Toba Montrose, Dokie 1 and ABW Solar (third quarter
solar acquisition) facilities as equity investments. Alterra's results are
sometimes disclosed as Alterra's "net interest", which means the results that
Alterra would have reported if each of HS Orka (66.6%), Toba Montrose (40%),
Dokie 1 (51%), ABW Solar (10%) and Soda Lake (100%) had been reported in
accordance with Alterra's actual share of ownership. Management believes that
net interest reporting provides the clearest view of the Company's
Highlights for the current quarter include:
*Increased revenue and EBITDA (net interest): Revenue (including business
interruption proceeds) was $30.0 million and EBITDA was $18.3 million, up
3% from the comparative quarter, primarily due to increased contractual
revenue at HS Orka and higher water flow at Toba Montrose.
*Reliable power generation: Alterra's fleet of power projects generated
360,391 MWh of clean power (net interest), achieving 89% of budgeted
generation despite the Montrose hydro facility being offline for most of
the quarter. Generation would have been 103% of budget had the Montrose
plant not been offline. Total generation from plants operated by Alterra
was 669,344 MWh.
*ABW Solar acquisition completed: Alterra acquired a 10% interest in a 50
MW solar generation project in Ontario, Canada (ABW Solar) for $7.1
million, and will manage the project.
*Montrose facility back online: Penstock repairs at the Montrose hydro
facility were completed and the facility was brought back into service on
September 22, 2013. Several site improvements including protective berms
have also been completed and will significantly lessen the likelihood of
any future damage or interruption.
*Jimmie Creek project development:
*Construction timing: Alterra now plans construction for this 62 MW
run-of-river facility in 2014, and has executed a further limited
notice to proceed with SNC Lavalin in support of this schedule.
*PPA completed: The Jimmie Creek power purchase agreement ("PPA") was
finalized through an amendment completed subsequent to the quarter.
Under the contract, the project will sell 100% of its power to BC
Hydro for 40 years commencing in August 2016.
*Alterra to be 100% owner: Alterra completed an agreement to purchase
the 49% project stake currently owned by an affiliate of General
Electric Energy Financial Services. The transaction is expected to
close by December 2013.
*Shannon wind project: Alterra entered into an exclusivity agreement that
provides for an option to purchase a 200 MW wind generation development
project in Clay County, Texas, USA.
*Reykjanes Re-Injection Program: Alterra commenced drilling a new
large-diameter well in support of a field maintenance program. The well
was completed in November, with positive initial indications of
John Carson, Alterra's CEO, said "With our operations back to full strength
and delivering positive results, we are now focused on making 2014 a strong
year of growth for Alterra. Our plan is to place both Jimmie Creek and Shannon
Wind into construction in 2014, and I'm confident that we have the resources,
including people and access to capital, to make that a reality."
The following table shows key financial information extracted from the
(expressed in thousands of US dollars, except for generation)
Toba Dokie Soda Exploration Net
HS Orka Montrose 1 Lake ABW and Head Interest Consolidated
(66.6%) (40%) (51%) (100%) (10%) Office Total Results
Generation 206,791 113,474 26,423 12,631 1,072 - 360,391 323,128
Total 8,821 $ 12,143 $ $ 817 $ 434 - 24,993 14,062
Revenue $ 2,778 $ $ $
Interruption - 5,052 - - - - 5,052 -
Gross Profit 2,171 9,387 390 (1,035) 298 - 11,211 2,225
EBITDA ^(a) 4,787 14,541 1,266 (430) 268 (2,179) 18,253 20,385
Toba Dokie Soda Exploration Net
HS Orka Montrose 1 Lake ABW and Head Interest Consolidated
(66.6%) (40%) (51%) (100%) (10%) Office Total Results
Generation 198,406 154,208 34,085 12,308 - - 399,007 310,215
Total 8,338 $ 16,210 $ $ 806 $ - - 29,244 13,326
Revenue $ 3,890 $ $ $
Gross Profit 2,439 13,259 1,518 (1,473) - - 15,743 2,189
EBITDA ^(a) 4,077 14,092 2,429 (998) - (1,836) 17,764 19,808
Note (a) - Here and elsewhere, EBITDA is defined by Alterra as earnings
before interest, taxes, foreign exchange, depreciation and amortization, as
well as before deductions for change in fair value of bonds payable and
derivatives, foreign exchange gain (loss), write off of development costs and
other income (expense) except business interruption proceeds, amortization of
below market contracts, and value assigned to options granted less share of
income (loss) of equity accounted investees plus the Company's interest in
EBITDA of its equity accounted investees. Alterra discloses EBITDA as it is a
measure used by analysts and by management to evaluate Alterra's performance.
As EBITDA is a non-IFRS measure, it may not be comparable to EBITDA calculated
by others. In addition, as EBITDA is not a substitute for net earnings,
readers should consider net earnings in evaluating Alterra's performance. For
a reconciliation of consolidated EBITDA to Alterra's consolidated financial
statements refer to the Company's Management's Discussion and Analysis for the
three and nine months ended September 30, 2013.
Revenue was up 6% ($14.1 million compared to $13.3 million) due to increased
generation and contractual sales at HS Orka. Gross profit remained consistent
at $2.2 million as the increase in revenue was offset by increased maintenance
drilling at HS Orka.
Net income improved $1.7 million to $16.4 million, largely as a result of high
water flows and insurance proceeds received at Toba Montrose, which drove a
$7.5 million increase in Alterra's share of equity investments. Non-cash items
offsetting this increase include:
*A $2.3 million negative change in the fair value of bonds payable and
derivatives, related primarily to fluctuations in forecasted aluminum
*A $2.9 million negative movement related to foreign exchange.
*A $2.0 million negative change in write-offs of certain development costs
related primarily to the completion of joint ventures in Chile and Peru.
Consolidated cash and cash equivalents at September 30 were $37.1 million
($39.2 million at December 31, 2012).
Net Interest Results
Alterra's net interest in revenue and EBITDA increased 3% and 3% respectively
primarily due to increased contractual revenue at HS Orka, high water flow at
Toba Montrose resulting in increased generation, income from the Blue Lagoon
hf due to increased visitor attendance and the addition of ABW Solar. Offsets
to these increases include reduced generation at Dokie 1 due to low winds, and
slight increases in general and administrative expense related to
non-recurring transaction fees and office reductions for the Company's South
Iceland Operations (66.6% Interest)
The 100 MW Reykjanes plant generated 132,689 MWh of electricity (98% of
budget), and the 72 MW Svartsengi plant generated 74,102 MWh of electricity
(109% of budget), and continued to supply thermal energy for district heating.
Toba Montrose Operations (40% Interest)
The Toba Montrose facility generated 113,474 MWh of electricity, or 74% of
forecasted generation. Although the Montrose facility was offline for repairs
during the majority of the quarter, the measured water flow for purposes of
business interruption insurance payments (attributed generation) was 57,636
MWh, for a combined pro forma generation of 171,110, 112% of budget.
On December 13, 2012 a rockslide damaged a 300 meter section of the five
kilometer penstock (which supplies water from the intake to the power
generating plant) at the Montrose facility. The penstock repairs at the
Montrose hydro facility were completed during the third quarter and the
facility was brought back into service on September 22, 2013. Several site
improvements including protective berms were also completed and will
significantly lessen the likelihood of any future damage or interruption.
Business Interruption and property damage proceeds were paid by the insurer
during the quarter and eligible property costs and sub-limits with respect to
future payments for property damage are being reviewed with the insurer.
New property insurance for the project was obtained in September 2013 with
earth movement coverage capped at C$40.0 million. Toba Montrose has agreed to
defer distributions until a higher level of earth movement coverage is
re-established, which the Company expects to occur by the second quarter of
2014 or earlier.
Dokie 1 Operations (51% Interest)
The 144 MW Dokie 1 wind farm generated 26,423 MWh of electricity for the
quarter, or 72% of budget. Revenue decreased against the comparative quarter
due to lower wind.
ABW Solar Operations (10% Interest)
On August 23 Alterra acquired a 10% interest in a 50 MW solar generation
project in Ontario (ABW Solar), which will be held in a general partnership
with an affiliate of GE Energy Financial Services ("GE EFS") and managed by
Alterra. The project was built by First Solar, Inc. and achieved commercial
operations during the second quarter of 2013. The project will sell 100% of
its electricity to the Ontario Power Authority under 20-year PPAs. The project
generated 1,072 MWh for the quarter (beginning August 23), representing 113%
Soda Lake Operations (100% Interest)
The 15 MW Soda Lake geothermal plant generated 12,631 MWh of electricity for
the current quarter, or 98% of budget. The plant completed its annual
maintenance outage during the quarter as planned.
Expansion and Development Projects
Jimmie Creek hydro (formerly Upper Toba)
Alterra is currently finalizing plant design for the fully permitted 62 MW
Jimmie Creek project and in July 2013 signed a limited notice to proceed with
SNC Lavalin who will provide further pre-construction services. Alterra is now
targeting construction to begin in the first half of 2014.
On October 31 Alterra signed an agreement to purchase the 49% share of the
Jimmie Creek project currently owned by GE EFS, following which Alterra will
own 100% of the project. Alterra expects the transaction to close by year-end.
In November 2013 Alterra completed an amendment to the project's PPA to cover
the Jimmie Creek project only, at a nameplate capacity of 62 MW with projected
annual firm energy of 114 GWh and an August 1, 2016 completion date for
construction. Under the contract, the project will sell 100% of its power to
BC Hydro for 40 years. Alterrawill examine the possibility of constructing
the Upper Toba project at a later date under a future call for power.
Dokie 2 wind farm expansion
Alterra holds a 51% interest in a planned expansion of the Dokie 1 wind farm
(Dokie 2) with projected additions to capacity of up to 156 MW. During the
quarter Alterra continued to collect data, conduct engineering work and
perform other studies to complete the assessment of the project.
South American geothermal projects
In July 2013 Alterra completed a joint venture agreement with Energy
Development Corporation ("EDC") for the further development of the Mariposa
project in Chile and the Crucero, Loriscota, and Tutupaca Norte projects in
Peru on a joint basis. Under the terms of the joint venture, EDC will be
entitled to earn a 70% interest by funding the next $58.3 million in project
expenditures at Mariposa and $8.0 million on the Peruvian projects. Subsequent
project equity contributions and economic sharing would be on a pro rata basis
between the partners. EDC is now the managing partner for the development of
the Mariposa project and the Peruvian projects. The projects are now recorded
as equity investments by Alterra.
Alterra has commenced a reinjection program at the Reykjanes field, and will
refine the timeline for the Reykjanes expansion pending results from the
program. The key matters remaining prior to construction are conclusion of a
PPA, completion of project financing and confirmation of resource field.
Other development projects
Alterra continues to advance other early stage geothermal projects in Italy
and Peru, including exploration field work, data assessment and continued
community consultations. Alterra also continues to advance its British
Columbia hydro projects in 2013 through collection of hydrology data for the
Bute Inlet project and other early stage run of river and pumped storage hydro
projects. In Iceland, Alterra began an environmental assessment on the
Bulandsvirkjun hydroelectric project.
*Alterra Power will host a conference call to discuss financial and
operating results on Wednesday, November 13, 2013 at 11:30 am ET (8:30 am
*North American participants dial 1-888-390-0546 and International
participants dial 1-416-764-8688; the conference ID is 18533630.
*The call will also be broadcast live on the Internet at
*The call will be available for replay for one week after the call by
dialing 1-416-764-8677 and entering replay PIN 533630.
Cautionary Note regarding Forward-Looking Statements and Information
Certain statements included in this news release may contain information that
is forward-looking within the meaning of certain securities laws, including
information and statements regarding prospective results of operations,
financial position, cash flows or growth potential. These statements are based
on factors or assumptions that were applied in drawing a conclusion or making
a forecast or projection, including assumptions based on historical trends,
current conditions and expected future developments. Since forward-looking
statements relate to future events and conditions, by their very nature they
require making assumptions and involve inherent risks and uncertainties.
Alterra cautions that although it is believed that the assumptions are
reasonable in the circumstances, these risks and uncertainties give rise to
the possibility that actual results may differ materially from the
expectations set out in the forward-looking statements. Material risk factors
include those set out in the management's discussion and analysis section of
Alterra's most recent annual report and quarterly report, and in Alterra's
Annual Information Form. Given these risks, undue reliance should not be
placed on these forward-looking statements, which apply only as of their
dates. Other than as specifically required by law, Alterra undertakes no
obligation to update any forward-looking statements or information to reflect
new information, subsequent or otherwise.
SOURCE Alterra Power Corp.
Peter Lekich, Corporate Communications
Alterra Power Corp.
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