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  
-0- May/06/2014 20:00 GMT
 
 
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