Veresen Announces 2014 First Quarter Results and Updates Guidance

 Veresen Announces 2014 First Quarter Results and Updates Guidance  /NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION  IN THE UNITED STATES./  CALGARY, May 6, 2014 /CNW/ - Veresen Inc. ("Veresen" or the "Company") (TSX:  VSN) announced today financial and operating results for the three months  ended March 31, 2014.  Highlights            --  Veresen generated distributable cash1 of $65.6 million ($0.33             per Common Share) in the first quarter of 2014 compared to             $54.6 million ($0.27 per Common Share) in the first quarter of             2013.         --  Net income attributable to Common Shares was $31.3 million             ($0.16 per Common Share) in the first quarter of 2014 compared             to $1.2 million ($0.01 per Common Share) in the first quarter             of 2013.         --  Cash from operating activities was $45.0 million in the first             quarter of 2014 compared to $37.4 million in the first quarter             of 2013.         --  Veresen received a conditional order from the U.S. Department             of Energy ("DOE") to export liquefied natural gas ("LNG") from             its proposed Jordan Cove LNG terminal to those countries that             do not have Free Trade Agreement ("FTA") status with the U.S.         --  Veresen successfully completed a common share offering, raising             gross proceeds of approximately $285 million.  "In the first quarter of 2014, we achieved a significant milestone with the  receipt of a non-FTA export license for our Jordan Cove LNG project," said Don  Althoff, President and CEO of Veresen. "While there is still a lot of work  ahead of us, having this export license in hand gives our LNG project first  mover advantage on the west coast of North America to serve premium Asian  markets."  "Maintaining our financial strength and flexibility is a key priority for  Veresen. With our recent equity offering and through asset sales, we have  bolstered our financial position as we advance our permitting and commercial  discussions for Jordan Cove. Proceeds from this offering will also be used to  fund our growth capital projects and reduce borrowings under our bank  revolver."                                                       Three months ended     FINANCIAL HIGHLIGHTS                                        March 31     ($ Millions, except per Common Share amounts)       2014        2013     Net income (loss) before tax                                             Pipeline                                            31.5        24.8     Midstream                                           33.9        11.4     Power                                              (3.7)         1.0     Veresen - Corporate                               (28.7)      (26.9)                                                         33.0        10.3     Gain on sale of assets                              14.3           -     Tax expense                                       (11.9)       (6.9)     Net income                                          35.4         3.4     Preferred Share dividends                          (4.1)       (2.2)     Net income attributable to Common Shares            31.3         1.2             Per Common Share ($)                        0.16        0.01     _________________________     1 This is not a standard measure under GAAP and may not be comparable     to similar measures used by other entities. See the reconciliation of     distributable cash to cash from operating activities in the tables     attached to this news release.  Financial Performance  For the three months ended March 31, 2014, Veresen generated net income  attributable to Common Shares of $31.3 million or $0.16 per Common Share  compared to $1.2 million or $0.01 per Common Share for the same period last  year. The increase in earnings was primarily driven by an unprecedented  widening of the Chicago-AECO natural gas price differential and gains on asset  sales.  The Midstream business generated net income of $33.9 million before tax for  the three months ended March 31, 2014 compared to $11.4 million for the same  period in 2013. The majority of this increase was generated by Aux Sable  entities which hold transportation capacity on the Alliance pipeline. These  entities captured value from the significant widening of the Chicago-AECO  natural gas price differential caused by extreme cold weather in the U.S.  Midwest this winter.  In February 2014, Veresen sold its Culliton Creek run-of-river development  project and its 50% interest in Alton Natural Gas Storage, a proposed  underground salt cavern facility, generating a combined pre-tax gain of $14.3  million.  First quarter results also reflect an increase in Pipeline earnings from  Alliance, primarily due to higher negotiated depreciation rates and  contributions from the Tioga Lateral pipeline, and lower Power earnings due to  a fair value loss on the interest rate hedge for the York Energy Centre.                                                      Three months ended     Distributable Cash                                         March 31     ($ Millions, except                                            2013     per Common Share                                         amounts)                                        2014     Pipeline                                        41.0           38.5     Midstream                                       42.7           27.2     Power                                            7.1            9.8     Veresen - Corporate                           (17.0)         (18.5)     Taxes                                          (4.1)          (0.2)     Preferred Share                                (4.1)          (2.2)     dividends     Distributable Cash          (1)                                             65.6           54.6           Per Common                                0.33             0.27     Share ($)     (1)  See the reconciliation of distributable cash to cash from     operating activities in the tables attached to this news release.  For the three months ended March 31, 2014, Veresen generated distributable  cash of $65.6 million or $0.33 per Common Share compared to $54.6 million or  $0.27 Common Share for the same period in 2013. Higher distributable cash  reflects increased contributions from the Pipeline and Midstream businesses,  partially offset by higher taxes and Preferred Share dividends, and lower  contributions from the Power business.  Overview of Business Segments  Pipelines  Alliance continues to be in active negotiations with prospective and existing  shippers with respect to re-contracting its pipeline capacity post-2015. The  signing of binding Precedent Agreements will be timed with the Rich Gas  Premium ("RGP") agreements that Aux Sable is negotiating with the producer  community. Alliance expects to file its application with the National Energy  Board for approval of its proposed new services, and related tolls and  tariffs, by mid-2014.  Midstream  As part of Veresen's ongoing commitment to asset integrity and reliability,  Veresen has scheduled a maintenance turnaround at the Steeprock natural gas  processing plant in British Columbia which will commence in June 2014. During  the first quarter, Veresen completed detailed planning for the turnaround,  which will see the Steeprock plant shut down for up to 16 days. The majority  of the costs associated with the turnaround will be recoverable under  Veresen's Midstream Services Agreement with Encana Corporation.  Aux Sable continues to work with producers within an economic radius of the  Alliance pipeline to provide options and value for natural gas and natural gas  liquids ("NGLs") to reach large and liquid U.S. markets. Aux Sable holds a  number of RGP agreements with producers that will enhance the value of the  producers' NGLs. A number of these RGP agreements have terms that extend  beyond 2014. Discussions to this point have largely focused on those producers  not yet connected to the Alliance pipeline who are developing new liquids-rich  fields in the Montney and Duvernay which are expected to come on-stream in and  after 2016.  In the first quarter of 2014, Aux Sable signed RGP agreements with Encana  Corporation and Phoenix Duvernay Gas (a joint venture participant of Encana).  These agreements provide for up to 195 mmcf/d of rich gas supply from the  emerging Duvernay shale play for connection to a receipt zone in Alberta,  starting in July 2014 and continuing through to 2020.  Power  Construction of the Dasque-Middle run-of-river project in northwest British  Columbia is progressing. This project is expected to be in-service in the  fourth quarter of 2014. Construction of the Company's 33 MW St. Columban Wind  Project commenced, with commercial in-service expected in the first half of  2015. The Company's 40 MW Grand Valley III Wind Project continues to advance  through the regulatory process.  Jordan Cove LNG Development Project  Veresen received a conditional order from the U.S. DOE to export LNG from the  proposed Jordan Cove LNG terminal to those countries that do not have FTA  status with the United States. Under the DOE order, Jordan Cove is permitted  to export natural gas to meet Jordan Cove's initial LNG capacity production of  6 million tonnes per annum ("mtpa"). Commercial LNG production is targeted for  early 2019. The DOE authorization is for a term of 20 years, commencing on the  date of first export. In the first quarter of 2014, Veresen also received  authorization from the DOE to import natural gas from Canada to serve the  proposed Jordan Cove LNG terminal.  From a regulatory perspective, the next critical path item for the project is  authorization from the U.S. Federal Energy Regulatory Commission ("FERC") to  commence construction. Veresen is making progress with the FERC and the  Company is confident it will obtain this critical permit.  Veresen is  currently waiting for the FERC to issue Jordan Cove a Draft Environmental  Impact Statement.  Veresen continues to work to secure long-term arrangements to produce LNG for  international customers and negotiations with several potential off-take  customers are advancing.  Veresen is advancing its analysis of the optimal ownership interest for the  Company in Jordan Cove, with the objective of maximizing shareholder value  while managing the risk profile of a project of this magnitude. Receipt of the  DOE non-FTA export license greatly enhances the value of the project, and  Veresen believes it is well-positioned to capture this value for its  shareholders.  Business Development  In April 2014, Veresen and NOVA Chemicals Corporation ("NOVA Chemicals")  entered into an agreement to explore the joint development and ownership of a  greenfield salt cavern storage facility near Burstall, Saskatchewan. The  facility would initially be designed for ethane storage in support of NOVA  Chemicals' operations and be connected via pipeline to Veresen's Alberta  Ethane Gathering System.  Corporate  On April 3, 2014, Veresen issued 17,250,000 common shares at a price of $16.50  per share. The gross proceeds from the offering were approximately $285  million. Net proceeds will be used to fund the development costs for the  Jordan Cove project, other capital expenditures and reduce indebtedness.  Organizational Changes  David Pope, Executive Vice President, Chief Commercial Officer, has decided to  return to retirement following eight months with the Company, where he advised  and guided Veresen with respect to certain commercial activities. Veresen  thanks David for his contributions and wishes him all the best in his  retirement.  To align with Veresen's strategic business priorities, the Company has made  the following organizational changes: Darren Marine has joined Veresen as  Senior Vice President, Business Joint Ventures to oversee the Company's  ownership in Alliance/Aux Sable and steward the Alliance re-contracting  process; Chris Rousch moves from managing the Company's independent midstream  operations to leading the midstream, pipeline and power business development  team as Vice President, Business Development; Vern Wadey will continue to  drive Veresen's business development efforts for Jordan Cove as Vice  President, Jordan Cove LNG; and Jesse Marble has assumed the role of Vice  President, Strategic Planning.  2014 Guidance Update  Veresen has narrowed its 2014 distributable cash to be in the range of $0.97  per Common Share to $1.20 per Common Share. The midpoint remains at $1.09 per  Common Share. Further details concerning 2014 guidance can be found in the  "Invest" section of Veresen's web site at www.vereseninc.com.  Conference Call and Webcast  Veresen will host a conference call and webcast on May 7, 2014 at 7:00 am MT  (9:00 am ET) to discuss its results.  Dial-in: 1 (888) 231-8191 or 1 (647) 427-7450 Conference ID 31519358  The link to the conference call webcast is available on Veresen's website by  selecting "Invest" and then "Events & Presentations".  A replay of the call will be available at approximately 10:00 am MT (12 pm ET)  on May 7, 2014 by dialing 1-855-859-2056 and 1-416-849-0833. The access code  is 31519358, followed by the pound sign. The replay will expire at midnight  (ET) on May 14, 2014.  MD&A, Financial Statements and Notes  Management's Discussion and Analysis ("MD&A") and consolidated financial  statements provide a detailed explanation of Veresen's financial results for  the first quarter ended March 31, 2014 compared to the first quarter ended  March 31, 2013 and should be read in conjunction with this news release. These  documents are available at www.vereseninc.com and at www.sedar.com.  About Veresen Inc.  Veresen is a publicly-traded dividend paying corporation based in Calgary,  Alberta, that owns and operates energy infrastructure assets across North  America. Veresen is engaged in three principal businesses: a pipeline  transportation business comprised of interests in two pipeline systems, the  Alliance Pipeline and the Alberta Ethane Gathering System; a midstream  business which includes ownership interests in a world-class natural gas  liquids extraction facility near Chicago, the Hythe/Steeprock complex, and  other natural gas and NGL processing energy infrastructure; and a power  business with a portfolio of assets in Canada and the United States. Veresen  is also actively developing a number of greenfield projects and, in the normal  course of its business, regularly evaluates and pursues acquisition and  development opportunities.  Veresen's Common Shares, Series A Preferred Shares, Series C Preferred Shares  and 5.75% convertible unsecured subordinated debentures, Series C due July 31,  2017 are listed on the Toronto Stock Exchange under the symbols "VSN",  "VSN.PR.A", "VSN.PR.C" and VSN.DB.C", respectively. For further information,  please visit www.vereseninc.com.  Forward-Looking Information  Certain information contained herein relating to, but not limited to, Veresen  and its businesses constitutes forward-looking information under applicable  securities laws. All statements, other than statements of historical fact,  which address activities, events or developments that Veresen expects or  anticipates may or will occur in the future, are forward-looking information.   Forward-looking information typically contains statements with words such as  "may", "estimate", "anticipate", "believe", "expect", "plan", "intend",  "target", "project", "forecast" or similar words suggesting future outcomes or  outlook.  Forward-looking statements in this news release include, but are not  limited to, statements with respect to: the ability of Aux Sable and Alliance  to implement new service offerings; the timing of completion of construction  and start-up of the Dasque-Middle hydro project and the St. Columban Wind  Project; the estimated capital cost and timing of the final investment  decision of the Jordan Cove Energy Project, Veresen's ability to negotiate  long-term service agreements with offtake customers for LNG; Veresen's ability  to realize its growth objectives; the availability of financing for current  capital projects and new investment opportunities; and the ability of each of  its businesses to generate distributable cash in 2014.  The risks and  uncertainties that may affect the operations, performance, development and  results of Veresen's businesses include, but are not limited to, the following  factors: the ability of Veresen to successfully implement its strategic  initiatives and achieve expected benefits; levels of oil and gas exploration  and development activity; the status, credit risk and continued existence of  contracted customers; the availability and price of capital; the availability  and price of energy commodities; the availability of construction services and  materials; fluctuations in foreign exchange and interest rates; Veresen's  ability to successfully obtain regulatory approvals; changes in tax,  regulatory, environmental, and other laws and regulations; competitive factors  in the pipeline, midstream and power  industries; operational breakdowns,  failures, or other disruptions; and the prevailing economic conditions in  North America.  Additional information on these and other risks, uncertainties and factors  that could affect Veresen's operations or financial results are included in  its filings with the securities commissions or similar authorities in each of  the provinces of Canada, as may be updated from time to time.  Readers are  also cautioned that the foregoing list of factors and risks is not exhaustive.   The impact of any one risk, uncertainty or factor on a particular  forward-looking statement is not determinable with certainty as these factors  are independent and management's future course of action would depend on its  assessment of all information at that time.  Although Veresen believes that  the expectations conveyed by the forward-looking information are reasonable  based on information available on the date of preparation, no assurances can  be given as to future results, levels of activity and achievements.  Undue  reliance should not be placed on the information contained herein, as actual  result achieved will vary from the information provided herein and the  variations may be material.  Veresen makes no representation that actual  results achieved will be the same in whole or in part as those set out in the  forward-looking information.  Furthermore, the forward-looking statements  contained herein are made as of the date hereof, and Veresen does not  undertake any obligation to update publicly or to revise any forward-looking  information, whether as a result of new information, future events or  otherwise. Any forward-looking information contained herein is expressly  qualified by this cautionary statement.  Certain financial information contained in this news release may not be  standard measures under Generally Accepted Accounting Principles ("GAAP") in  the United States and may not be comparable to similar measures presented by  other entities.  These measures are considered to be important measures used  by the investment community and should be used to supplement other performance  measures prepared in accordance with GAAP in the United States.   For further  information on non-GAAP financial measures used by Veresen see Management's  Discussion and Analysis, in particular, the section entitled "Non-GAAP  Financial Measures" contained in the annual Management Discussion and  Analysis, filed by Veresen with Canadian securities regulators.        Veresen Inc.                                                                                                                                          Consolidated Statement of Income                                                                                      Three months ended March 31     (Canadian $ Millions, except per Common     Share amounts; unaudited)                   2014                  2013                                                                                Equity income                               52.2                  28.4     Operating revenues                          92.0                  71.6     Operations and maintenance                (50.2)                (31.7)     General, administrative and project     development                               (22.9)                (20.6)     Depreciation and amortization             (24.1)                (22.4)     Interest and other finance                (14.5)                (15.5)     Foreign exchange and other                   0.5                   0.5     Gain on sale of assets                      14.3                    -      Net income before tax                       47.3                  10.3     Current tax                                (5.7)                 (1.0)     Deferred tax                               (6.2)                 (5.9)     Net income                                  35.4                   3.4     Preferred Share dividends                  (4.1)                 (2.2)     Net income attributable to Common Shares    31.3                   1.2                                                                                Net income per Common Share                                                  Basic and diluted                         0.16                  0.01                                                                                                                                                                                                                                      Consolidated Statement of Comprehensive     Income                                                                                                                Three months ended March 31     (Canadian $ Millions; unaudited)            2014                  2013                                                                                Net income                                  35.4                   3.4     Other comprehensive income                                                   Cumulative translation adjustment                                             Unrealized foreign exchange gain on       translation                               20.5                   9.3     Other comprehensive income                  20.5                   9.3     Comprehensive income                        55.9                  12.7     Preferred Share dividends                  (4.1)                 (2.2)     Comprehensive income attributable to     Common Shares                               51.8                  10.5                                                               Veresen Inc.                                                                                                  Consolidated Statement of Cash Flows                                                              Three months ended March 31     (Canadian $ Millions; unaudited)            2014                  2013                                                            Operating                                                 Net income before non-controlling        35.4                   3.4     interest        Equity income                          (52.2)                (28.4)        Distributions from jointly-controlled    64.2                  46.5     businesses        Depreciation and amortization            24.1                  22.4        Foreign exchange and other non-cash     (0.5)                 (1.4)     items        Deferred tax                              6.2                   5.9        Gain on sale of assets                 (14.3)                    -         Changes in non-cash working capital    (17.9)                (11.0)                                                 45.0                  37.4     Investing                                                 Proceeds from sale of assets             18.7                    -         Investments in jointly-controlled       (5.3)                (22.4)     businesses        Return of capital from                   11.2                    -      jointly-controlled businesses        Pipeline, plant and other capital      (40.6)                 (9.1)     assets        Restricted cash                         (0.9)                 (2.5)        Other                                   (0.3)                    -                                                (17.2)                (34.0)     Financing                                                 Restricted cash                             -                   3.9        Long-term debt repaid                   (2.2)                 (2.0)        Net change in credit facilities          26.3                  44.0        Common Share dividends paid            (39.5)                (38.8)        Preferred Share dividends paid          (4.1)                 (2.2)        Repayments from jointly-controlled        0.4                   0.3     businesses        Other                                     1.3                 (2.5)                                               (17.8)                   2.7                                                            Increase in cash and short-term             10.0                   6.1     investments     Effect of foreign exchange rate changes      0.1                   0.1     on cash and short-term investments     Cash and short-term investments at the      26.6                  16.1     beginning of the period     Cash and short-term investments at the      36.7                  22.3     end of the period                                                           Veresen Inc.                                                                                                                                            Distributable Cash                                                                                                      Three months ended March 31     (Canadian $ Millions, except where noted;     unaudited)                                   2014                  2013                                                                                 Pipeline                                     41.0                  38.5     Midstream                                    42.7                  27.2     Power                                         7.1                   9.8     Veresen-Corporate                          (17.0)                (18.5)     Current tax                                 (4.1)                 (0.2)     Preferred Share dividends                   (4.1)                 (2.2)     Distributable cash  (1)                      65.6                  54.6                                                                                 Distributable cash per Common Share ($)     (2)                                          0.33                  0.27                                                                                 Dividends paid/payable(3)                    50.4                  49.6                                                                                 Dividends paid/payable per Common Share     ($)                                          0.25                  0.25     (1) Distributable cash is not a standard measure under generally         accepted accounting principles in the United States and may         not be comparable to similar measures presented by other entities.         Distributable cash represents the cash available to Veresen         for distribution to common shareholders after providing for debt         service obligations, Preferred Share dividends, and any maintenance         and sustaining capital expenditures. Distributable cash does not         include distribution reserves, if any, available in         jointly-controlled         businesses, project development costs, or transaction costs         incurred in conjunction with acquisitions. Project development         costs are         discretionary, non-recoverable costs incurred to assess the         commercial viability of greenfield business initiatives unrelated         to the         Company's operating businesses. The Company considers transaction         costs to be part of the consideration paid for an acquired         business and, as such, are unrelated to the Company's operating         businesses. Distributable cash is an important measure used by         the investment community to assess the source and sustainability of         Veresen's cash distributions and should be used to supplement         other performance measures prepared in accordance with generally         accepted accounting principles in the United States. See the         following table for the reconciliation of distributable cash to         cash from operating activities.     (2) The number of Common Shares used to calculate distributable cash         per Common Share is based on the average number of Common         Shares outstanding at each record date.  For the three months ended         March 31, 2014 the average number of Common Shares         outstanding for this calculation was 201,983,974 (2013 -         198,405,736) and 207,889,729 (2013 - 204,312,244) on a basic and         diluted         basis, respectively. The number of Common Shares outstanding would         increase by 5,904,798 (2013 - 5,906,508) Common Shares if the         outstanding Convertible Debentures on March 31, 2014 were converted         into Common Shares.     (3) Includes $10.9 million of dividends for the three months ended         March 31, 2014, respectively (2013 - $10.8 million) satisfied         through the         issuance of Common Shares under the Company's Premium DividendTM         (trademark of Canaccord Genuity Corp.) and Dividend         Reinvestment Plan.         Veresen Inc.                                                                                                                                        Reconciliation of Distributable Cash to     Cash from Operating Activities                                                                                      Three months ended March 31     (Canadian $ Millions; unaudited)          2014                   2013                                                                               Cash from operating activities            45.0                   37.4     Add (deduct):                                                                Project development costs (4)           9.3                    6.7        Change in non-cash working capital     20.1                   12.8        Principal repayments on senior notes  (3.0)                  (2.8)        Maintenance capital expenditures      (2.6)                  (2.0)        Distributions earned greater (less)     than distributions received (5)          (0.7)                    3.9        Preferred Share dividends             (4.1)                  (2.2)        Current tax on Preferred Share     dividends                                  1.6                    0.8                                                                               Distributable cash                        65.6                   54.6     (4) Represents costs incurred by the Company in relation to projects         where the recoverability of such costs has not yet been         established.          Amounts incurred for the three months ended March 31, 2014 relate         primarily to the Jordan Cove LNG terminal project, the Pacific         Connector Gas Pipeline project, and various power development         projects.     (5) Represents the difference between distributions declared by         jointly-controlled businesses and distributions received.    SOURCE  Veresen Inc.  Dorreen Miller, Director, Investor Relations Phone: (403) 213-3633  Email:investor-relations@vereseninc.com  To view this news release in HTML formatting, please use the following URL:  http://www.newswire.ca/en/releases/archive/May2014/06/c6772.html  CO: Veresen Inc. ST: Alberta NI: OIL ERN CONF