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 

        --  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 $700 million.4
    1  See "Non-GAAP Financial Measures" on page 36 of the MD&A.
       See page 32 and 33 of the MD&A for a reconciliation of distributable
    2  cash flow to cash flow from operating activities and EBITDA to net
    3  See note 15 to the accompanying financial statements.
    4  See "Capital Expenditures and Acquisitions" on page 30 of the MD&A
       for further discussion of Keyera's capital investment program.
                                              Three Months Ended March 31,
    Summary of Key Measures
    (Thousands of Canadian dollars, except
    where noted)                                 2014               2013  
    Net earnings                                 55,233             23,445
      Per share ($/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
    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
    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 
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 

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 

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.

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 

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 

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
-0- May/06/2014 20:00 GMT
Press spacebar to pause and continue. Press esc to stop.