CALGARY, May 6, 2014 /CNW/ - Keyera Corp. (TSX:KEY) announced their 2014 first
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 were $55.2 million ($0.70 per share) in first
quarter 2014, $31.8 million ($0.40 per share) higher than the
$23.4 million ($0.30 per share) in first quarter 2013.
-- Earnings before interest, taxes, depreciation and
amortization1, 2 ("EBITDA") were $107.7 million in first
quarter 2014, 10% higher than the $97.8 million posted in first
-- Distributable cash flow1, 2 was $78.2 million ($0.99 per share)
in first quarter 2014 compared to $83.3 million ($1.07 per
share) recorded in first quarter 2013.
-- Keyera's Gathering and Processing business delivered record
operating margin3 of $48.3 million in first quarter 2014,
compared to $39.9 million in the same quarter last year. The
NGL Infrastructure segment also delivered record operating
margin3 of $39.1 million in first quarter 2014, 35% higher than
the $29.0 million recorded in first quarter 2013. Marketing
operating margin3 was $36.9 million in first quarter 2014,
compared to $23.9 million in first quarter 2013.
-- Keyera is increasing its dividend by 7.5%, from $0.20 per share
per month to $0.215 per share per month, or $2.58 per share
annually, beginning with its dividend payable on June 16, 2014.
This will be Keyera's twelfth increase since going public in
2003, representing a 7.5% compound annual growth rate in
dividends per share.
-- On May 1, Keyera closed its previously announced acquisition of
ownership interests in certain gas processing assets in west
central Alberta and associated oil and gas reserves. The total
purchase price was approximately $113 million. Some of the
assets are subject to third party claims, including certain
reserves which closed in escrow pending the exercise or expiry
of rights of first refusal.
-- Keyera's turbo expander project at Rimbey has received all
regulatory approvals and construction is now underway. The
turbo expander is expected to be operational in the first half
-- Keyera entered into a long-term, take-or-pay and
fee-for-service agreement to provide Cenovus Energy Inc. with
diluent handling services, including transportation and storage
capacity that will increase to the equivalent of approximately
three storage caverns by 2018.
-- Keyera has developed a plan for the next phase of cavern
development at Fort Saskatchewan, which could add approximately
four million barrels of additional storage capacity at the
site. As part of this program, Keyera expects to begin
drilling its fifteenth cavern later this year.
-- In April, Keyera closed the final $75 million portion of its
private debt placement announced in the third quarter of 2013.
-- Total growth capital investment was $198.6 million in the first
quarter of 2014, of which $5.8 million was acquisitions. In
2014, growth capital investment estimates, excluding
acquisitions, have been updated and are now expected to be
between $600 million and $700 million.4
1 See "Non-GAAP Financial Measures" on page 36 of the MD&A.
See page 32 and 33 of the MD&A for a reconciliation of distributable
2 cash flow to cash flow from operating activities and EBITDA to net
3 See note 15 to the accompanying financial statements.
4 See "Capital Expenditures and Acquisitions" on page 30 of the MD&A
for further discussion of Keyera's capital investment program.
Three Months Ended March 31,
Summary of Key Measures
(Thousands of Canadian dollars, except
where noted) 2014 2013
Net earnings 55,233 23,445
Per share ($/share) - basic 0.70 0.30
Cash flow from operating activities 119,493 136,688
Distributable cash flow1 78,220 83,285
Per share($/share) 0.99 1.07
Dividends declared 47,605 42,074
Per share($/share) 0.60 0.54
Payout ratio %1 61% 50%
EBITDA2 107,747 97,848
Gathering and Processing:
Gross processing throughput (MMcf/d) 1,356 1,237
Net processing throughput (MMcf/d) 1,114 980
Gross processing throughput (Mbbl/d) 122 115
Net processing throughput (Mbbl/d) 38 40
Inventory value 159,493 144,263
Sales volumes (bbl/d) 99,400 116,800
Acquisitions (including business
combination) 5,783 3,907
Growth capital expenditures 198,598 53,116
Maintenance capital expenditures 3,279 2,007
Total capital expenditures 207,660 59,030
As at March 31,
Long-term debt 1,098,347 625,966
Credit facilities — 80,000
Working capital surplus3 (158,832) (93,851)
Net debt 939,515 612,115
Common shares outstanding - end of period 79,417 78,013
Weighted average number of shares
outstanding - basic 79,301 77,862
Weighted average number of shares
outstanding - diluted 79,301 78,381
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 for a reconciliation
of distributable cash flow to its most closely related GAAP measure.
2 EBITDA is defined as earnings before interest, taxes, depreciation,
amortization, unrealized gains / losses, accretion, impairment
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
Message to Shareholders
Demand for Keyera's services continued to grow in the first quarter of 2014.
This demand is being driven by producer activities that are focused on
liquids-rich drilling and oil sands development. Our customers continue to
see value in our integrated service offering, which provides them with access
to the processing, transportation and logistics facilities necessary to turn
their production into cash flow. This is resulting in increased cash flow
from our existing business and opportunities to acquire and expand facilities
to provide added value for shareholders in the future.
Financially the year had a good start, with EBITDA in the first quarter of
2014 being 10% higher than the same period last year. Operating margins were
strong across all business segments once again this quarter, with both of our
fee-for-service segments reporting record results. With growing cash flow
from our business and a number of new projects under development, we are
pleased to announce an increase in our monthly cash dividend. Effective with
the May 2014 dividend, payable to shareholders on June 16, 2014, our dividend
will increase by 7.5% to 21.5 cents per share per month, or $2.58 per share
annually. This is Keyera's twelfth dividend increase since going public in
2003. Since that time, we have provided shareholders with a 7.5% compound
annual growth rate in dividends per share.
Our Gathering and Processing business reported operating margin of $48.3
million, 21% higher than in the first quarter of 2013, primarily due to
increased throughput at most of Keyera's facilities. Drilling activity around
many of our plants continues to be strong and the utilization of several of
our gas plants continues to increase. Net throughput increased in the first
quarter, averaging 1.1 billion cubic feet per day, 14% higher than the first
quarter of last year. This increased throughput is coming from a number of
geological horizons, including the Mannville, Cardium, Montney, Duvernay and
This increased producer activity has led to several gathering pipelines being
built to deliver incremental production to Keyera plants. In west central
Alberta, construction proceeded on two gathering pipelines to deliver raw gas
to the Rimbey gas plant. Modifications made to the Carlos pipeline system,
including construction of a short pipeline segment to connect to other
existing pipeline infrastructure, added an additional 40 million cubic feet
per day of capacity when the pipeline began operation in April. The Wilson
Creek pipeline system was completed in April, although it will not begin
operation until producer facilities are completed, which is expected in June.
In the first quarter we reached agreement with a producer to construct the
Twin Rivers pipeline, which will deliver production to the Brazeau River gas
plant from the southeast. Construction of that pipeline is expected to begin
later this year.
In the first quarter, we reached agreement with a Deep Basin producer
interested in securing the remaining capacity on the Wapiti pipeline.
Unfortunately, adverse weather conditions and an early spring breakup hampered
construction of the pipeline, requiring us to suspend work prior to
completion. The remaining work is expected to be completed in the summer and
we currently anticipate putting the pipeline into operation in the third
quarter if the remaining construction goes as planned.
In April, we received all regulatory approvals for our turbo expander project
at the Rimbey gas plant. Construction is now underway and, assuming there are
no further delays, we anticipate the turbo expander will be operational in the
first half of 2015.
On May 1 we closed our previously announced acquisition of ownership interests
in certain gas processing assets in west central Alberta and associated oil
and gas reserves. There are some rights of first refusal that we are working
through as we transition ownership of the assets. These assets are
complementary to our existing gas facilities in the west central area of
Alberta. We were also successful in increasing our ownership at the Rimbey,
Strachan, Brazeau River and Bigoray gas plants, increasing our net processing
capacity by approximately 13 million cubic feet per day and our ownership in
the Strachan and Bigoray gas plants to 100%.
Our NGL Infrastructure segment results also set a new record in the first
quarter, with operating margin of $39.1 million, a 35% increase over the first
quarter of 2013. The higher operating margin was due to higher level of
activity at our facilities, as well as increased fees for many of our
services. Our Marketing segment contributed significantly to our results,
with operating margin of $36.9 million in the first quarter of 2014 compared
to $23.9 million in the first quarter of last year.
Significant progress has been made on the agreements associated with the
Norlite pipeline and we anticipate announcing our participation as a 30%
non-operating owner shortly. The Norlite pipeline will be a diluent
transportation pipeline delivering condensate from the Fort Saskatchewan area
to the Athabasca oil sands region in northeast Alberta. Enbridge will
construct and operate the pipeline and anticipates having it in service in the
second quarter of 2017. The scope of the pipeline will be finalized later
this year, at which time we will receive an updated capital cost estimate from
Enbridge for the project. Keyera's diluent transportation system in the Fort
Saskatchewan area will deliver product into the Norlite Pipeline, providing
the Norlite shippers with access to multiple sources of diluent supply.
In January, we announced that we will be adding 35,000 barrels per day of C3+
fractionation capacity at our facility in Fort Saskatchewan. This is in
addition to the 30,000 barrels per day de-ethanizer currently under
construction and the existing 30,000 barrels per day fractionator at that
site. The fractionator and de-ethanizer projects are in response to the
growing demand for these types of services and support our customers'
liquids-rich drilling programs. Based on the current schedule, we estimate
that the de-ethanizer facility will be operational later in 2014, while the
fractionation expansion is expected to be onstream in the first quarter of
In March we entered into a long-term agreement with Cenovus Energy Inc. to
provide diluent transportation and storage services using our Fort
Saskatchewan Condensate System within the Edmonton/Fort Saskatchewan area.
The services will provide Keyera with long-term take-or-pay and
In order to meet the growing demand for diluent storage, Keyera is continuing
to add storage caverns at our facility in Fort Saskatchewan. Development of
the thirteenth cavern on the site is well underway and drilling of the well
bore for the fourteenth cavern was completed in the first quarter of 2014. We
have recently completed a plan that will allow us to wash both caverns
simultaneously and expect to begin this process once regulatory approval is
received. To support this additional storage capacity, we expect to put our
new brine pond into service this year. We have developed a plan for the next
phase of cavern development at Fort Saskatchewan, which could add
approximately four million barrels of additional storage capacity at the site.
As part of this program, Keyera expects to begin drilling its fifteenth
cavern later this year.
Late in the first quarter, Keyera completed the work necessary to tie the
Cochin pipeline into Keyera's Fort Saskatchewan Condensate System. In April,
the Cochin shippers began injecting linefill into the pipeline using
condensate previously stored within our caverns at Fort Saskatchewan. Kinder
Morgan, owner of the Cochin pipeline, expects to put the pipeline into service
in July of this year delivering condensate into Alberta. Keyera's Fort
Saskatchewan site is currently the only delivery point for condensate from
this pipeline, so all volumes shipped will pass through Keyera's
Keyera has received all necessary approvals for the Alberta Crude Terminal in
Edmonton which is being advanced as a 50/50 joint venture with Kinder Morgan.
Work on this project is well underway and the terminal is now expected to be
completed and operational in the third quarter. Once operational, the Alberta
Crude Terminal will provide up to 40,000 barrels per day of crude rail loading
services to Irving Oil.
In February, we announced construction of a propane rail loading terminal at
Josephburg, located near our fractionation and storage facility in Fort
Saskatchewan. The facility will provide an additional propane outlet to meet
the growing need for market access for western Canadian producers.
Alberta EnviroFuels performed well in the first quarter and continues to be an
important piece of Keyera's butane value chain. We continue to increase our
deliveries of iso-octane by rail and are taking advantage of the storage and
transportation services we have secured in the Gulf Coast region of the U.S.
By increasing our rail delivery capabilities, we have been able to expand our
access to new markets since we originally acquired Alberta EnviroFuels and
this is supporting increased utilization at the plant.
It is an exciting time for our industry and for Keyera. As a service
provider, we continually work with our customers to ensure that we are meeting
their infrastructure needs. With approximately $1.5 billion in projects
currently under development and several other projects under evaluation, we
are well positioned to meet our customers' needs into the future. As we look
to the future, we will remain focused on maintaining a customer driven mindset
and operating our business safely and reliably.
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 13, 2014, 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. The acquisition of the West
Pembina assets, including the Cynthia gas plant, is subject to third party
claims including the resolution of ROFR issues. Depending on the resolution of
these issues, Keyera's ownership and ability to operate these assets may
differ significantly. Alberta's move toward a single regulator has affected
approval processing times for projects that are subject to regulatory approval
and it is unclear whether this will continue. The new regulatory requirements
implemented with the transition to the AER, and possibly future changes as
integration of the regulatory bodies continues, create uncertainty for project
timing, requirements and compliance. 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
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