Keyera Corp. Announces First Quarter 2014 Results

 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 or, to view the MD&A and financial statements, visit  either Keyera's website or the System for Electronic Document Analysis and  Retrieval at  HIGHLIGHTS            --  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             quarter 2013.         --  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             of 2015.         --  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 $700 million.4     1  See "Non-GAAP Financial Measures" on page 36 of the MD&A.        See page 32 and 33 of the MD&A for a reconciliation of distributable     2  cash flow to cash flow from operating activities and EBITDA to net        earnings.     3  See note 15 to the accompanying financial statements.     4  See "Capital Expenditures and Acquisitions" on page 30 of the MD&A        for further discussion of Keyera's capital investment program.                                                                                               Three Months Ended March 31,     Summary of Key Measures     (Thousands of Canadian dollars, except     where noted)                                 2014               2013       Net earnings                                 55,233             23,445       Per share ($/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     NGL Infrastructure:                                                        Gross processing throughput (Mbbl/d)            122                115     Net processing throughput (Mbbl/d)               38                 40     Marketing:                                                                 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,                                                  2014               2013       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     Notes:     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        expenses        and any other non-cash items such as gains/losses on the disposal of        property, plant and equipment.  EBITDA is not a standard measure        under GAAP.  See section titled "EBITDA" on page 33 of the MD&A for        a reconciliation of EBITDA to its most closely related GAAP measure.     3  Working capital is defined as current assets less current        liabilities.  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  Glauconite zones.  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  2016.  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  fee-for-service revenues.  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  infrastructure.  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 Keyera Corp.  DISCLAIMER 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  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  future.  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    SOURCE  Keyera Corp.  about Keyera, please visit our website or contact:  John Cobb, Vice President, Investor Relations and Information Technology  or  Julie Puddell, Manager, Investor Relations, Telephone: (403) 205-7670 / Toll Free: (888) 699-4853  To view this news release in HTML formatting, please use the following URL:  CO: Keyera Corp. ST: Alberta NI: OIL ERN