Inter Pipeline Announces Strong First Quarter 2014 Financial and Operating Results

Inter Pipeline Announces Strong First Quarter 2014 Financial and Operating 
CALGARY, ALBERTA -- (Marketwired) -- 05/12/14 --   Inter Pipeline
Ltd. ("Inter Pipeline") (TSX: IPL) announced today financial and
operating results for the three month period ended March 31, 2014. 
First Quarter Highlights 

--  Generated funds from operations(i) (FFO) of $132 million, a 20 percent
    increase over first quarter 2013 
--  Declared cash dividends of $100 million or $0.3225 per share 
--  Attractive quarterly payout ratio(i) of 78 percent 
--  Generated net income of $90 million, a gain of $17 million over first
    quarter 2013 results 
--  Incurred growth capital expenditures(i) of $519 million, primarily
    related to Inter Pipeline's $2.9 billion expansion program on the Cold
    Lake and Polaris systems 
--  Total pipeline throughput volumes averaged 1,028,800 barrels per day
--  Volumes transported on Inter Pipeline's conventional oil gathering
    pipelines reached the highest quarterly average in the past six years 
--  Issued $301 million of new capital in a highly successful public equity
--  Implemented several changes to the composition of Inter Pipeline's board
    of directors and senior management team, consistent with previously
    announced intentions and internal succession plans 

(i) Please refer to the "Non-GAAP and additional GAAP Financial
Measures" section of the MD&A. 
Financial Performance 
Inter Pipeline generated strong financial results in the first
quarter. Funds from operations totaled $131.7 million or $0.43 per
share, compared to $109.4 million in the first quarter of 2013. All
four of Inter Pipeline's business segments recorded higher results.
In Canadian pipeline operations, financial results improved due to
higher diluent shipments and strong throughput levels on Inter
Pipeline's Polaris pipeline system and conventional oil gathering
systems. Inter Pipeline's NGL extraction business also recorded
strong financial results, driven mainly by strong margins on product
By business segment, Inter Pipeline's oil sands transportation, NGL
extraction, conventional oil pipelines and bulk liquid storage
businesses contributed funds from operations of $63.4 million, $48.5
million, $46.0 million and $21.6 million, respectively. Corporate
costs, including interest, income tax and general and administrative
charges totaled $47.8 million in the first quarter. 
Cash Dividends 
Total dividends to shareholders increased 29.7% to $99.6 million in
the first quarter of 2014 compared to the same period in 2013. This
substantial increase is largely attributable to two monthly dividend
increases in 2013 and a greater number of shares outstanding. Inter
Pipeline announced an annualized dividend increase of $0.03 per share
last June and a further increase of $0.15 per share in September of
Inter Pipeline's payout ratio for the quarter remained conservative
at 78%. 
Oil Sands Transportation 
The oil sands transportation segment shipped 824,900 b/d during the
quarter. Throughput volumes were 7 percent lower than in the
comparable quarter of 2013 due to the inclement weather and the
impact of maintenance activities and steam injection cycles at
certain producer-operated facilities. The Cold Lake, Corridor and
Polaris pipeline systems transported 473,700 b/d, 319,000 b/d, and
32,200 b/d, respectively.  
Cash flow in the oil sands transportation segment is not materially
impacted by pipeline volume fluctuations due to the cost-of-service
structure of Inter Pipeline's major transportation agreements with
third party shippers. Funds from operations for the quarter totaled
$63.4 million, an increase of $12.6 million, or 25 percent, over the
prior year. Higher results were primarily due to a full quarter of
operations for the Polaris pipeline system, which entered service in
March 2013.  
The Cold Lake and Polaris pipeline systems are currently being
expanded under a $2.9(ii) billion development program that is
anchored by long-term contracts with the FCCL Partnership, a business
venture between Cenovus Energy and ConocoPhillips. Under these
contracts, Inter Pipeline will provide 850,000 b/d of bitumen blend
and diluent capacity for the Foster Creek, Christina Lake and Narrows
Lake projects through the installation of approximately 840
kilometres of new pipeline and associated facilities. New capacity is
expected to enter commercial service in phases beginning in mid-2014,
and generate up to $330 million in long-term annual EBITDA once fully
in service. In the first quarter, construction activities continued
according to plan, with approximately 90 percent of new pipeline now
installed and facility work advancing on schedule.  
In aggregate, Inter Pipeline is advancing a roughly $3 billion
capital program under contracts signed with the FCCL Partnership,
Canadian Natural Resources, Imperial Oil, Canexus and Athabasca Oil
Corporation. These investments are secured by ship-or-pay agreements
that will generate a total of approximately $400 million in
incremental, stable, long-term annual EBITDA. 
Conventional Oil Pipelines 
The conventional oil gathering segment continues to benefit from the
successful application of horizontal drilling and completion
technologies in the Viking and other light oil plays. Funds from
operations totaled $46 million for the three month period, an
increase of 14 percent over first quarter 2013 results. Gains were
driven by increased throughput levels, higher tolls, and strong
results from Inter Pipeline's midstream marketing business. Average
revenue per barrel was similar to the first quarter of 2013 at $2.91. 
Throughput volumes across Inter Pipeline's conventional oil gathering
systems increased by 10 percent over first quarter 2013 levels,
driven by increased drilling activity in certain service areas. The
Bow River, Central Alberta, and Mid-Saskatchewan systems transported
203,900 b/d in the first quarter compared to a first quarter 2013
average of 185,300 b/d. This represents the highest quarterly
throughput level experienced on our conventional oil gathering
systems in the past six years. Inter Pipeline is also advancing a $70
million capital program to accommodate growing demand for
conventional oil transportation services. Our current investment
program is the largest in the history of Inter Pipeline's
conventional oil transportation business segment. 
NGL Extraction 
Inter Pipeline's NGL extraction business generated strong results in
the first quarter, with funds from operations totaling $48.5 million.
This represents a gain of 13 percent over the $43 million generated
in the first quarter of 2013. Increased results were primarily tied
to higher propane-plus and ethane product pricing at the Cochrane NGL
extraction facility. Natural gas throughput levels and NGL production
volumes in the current quarter were similar to first quarter 2013
amounts. Extraction facilities at Cochrane and Empress processed a
combined 2.8 billion cubic feet per day (bcf/d) in the quarter, with
ethane and propane-plus production averaging 109,200 b/d.  
In the first quarter of 2014, frac-spread pricing on propane-plus
sales at the Cochrane facility averaged US$0.94 per US gallon, up
from the US$0.88 per US gallon realized in the first quarter of last
Bulk Liquid Storage 
Financial results in the bulk liquid storage business increased
compared to the first quarter of 2013. Favorable foreign exchange
rates and various one-time revenues from our UK subsidiary, Simon
Storage, more than offset the impact of lower tank utilization rates
at certain terminals. For the quarter, funds from operations totaled
$21.6 million, a gain of $1.2 million over first quarter 2013
Demand for bulk liquid storage at the Gulfhavn terminal in our Danish
subsidiary continues to be adversely impacted by the absence of
contango price relationships in the futures markets for certain
petroleum products. Overall, the utilization rate for our Danish
storage business dropped to 69% compared to 85% in the first quarter
of 2013. Simon Storage's performance remained solid, with utilization
rates flat at 91%. 
Financing Activity Board and Management Changes 
Inter Pipeline maintained a strong balance sheet in the first
quarter. In March, Inter Pipeline successfully issued $301 million in
equity capital at a strong share price of $28.90. Net proceeds were
used to reduce outstanding indebtedness on Inter Pipeline's revolving
credit facility. Dividend reinvestment plans also raised another $80
million in new equity capital in the three month period. Inter
Pipeline remains on track to successfully finance its current capital
investment program.  
At March 31, Inter Pipeline's recourse debt to capitalization ratio
was 50.7 percent compared to 52.8 percent at December 31, 2013. 
Board and Management Changes 
Effective January 1, 2014, several changes were made to the
composition of Inter Pipeline's board of directors and senior
management team. Richard Shaw, an independent director, was appointed
Chairman of the Board, following the retirement of our previous
Chairman, John Driscoll. David Fesyk was appointed Executive Vice
Chairman, with Christian Bayle succeeding Mr. Fesyk as President and
Chief Executive Officer. Alison Taylor Love also joined the Board and
is the new Chair of Inter Pipeline's Governance Committee. Finally,
on March 1, 2014, Brent Heagy was appointed Chief Financial Officer
after the retirement of Bill van Yzerloo.  
These changes were made to enhance Inter Pipeline's corporate
governance structure and were consistent with its internal succession
Conference Call & Webcast 
Inter Pipeline will hold a conference call and webcast on May 13th at
9:00 a.m. (Mountain Time) / 11:00 a.m. (Eastern Time) to discuss its
first quarter 2014 financial and operating results. 
To participate in the conference call, please dial 866-223-7781 or
416-340-2216. A pass code is not required. A recording of the call
will be available for replay until May 20, 2014, by dialling
800-408-3053 or 905-694-9451. The pass code for the replay is
A webcast of the conference call can be accessed on Inter Pipeline's
website at by selecting "Investor Relations"
then "Events & Webcasts/Conference Calls". An archived version of the
webcast will be available for approximately 90 days. 
Annual and Special Meeting 
Inter Pipeline will hold its Annual and Special Meeting of
Shareholders on May 12th, 2014 at 2:00 p.m. (Mountain Time) / 4:00
p.m. (Eastern Time) at the Metropolitan Conference Centre, 333 4th
Avenue S.W. in Calgary, Alberta. The meeting will be webcast live,
with a link to the webcast accessible on Inter Pipeline's website at by selecting "Investor Relations" then "Events
& Webcasts/Conference Calls". 
(ii)Represents Inter Pipeline's share of capital expenditures. 

                  Select Financial and Operating Highlights                 
(millions of dollars, except per share and                                  
 percent amounts where noted)                       Three Months Ended      
                                                         March 31,          
Throughput and Production                           2014           2013     
  Pipeline volumes (000 b/d)                                                
    Oil sands transportation(1)                         824.9          890.0
    Conventional oil pipelines                          203.9          185.3
    Total pipeline volumes                            1,028.8        1,075.3
  Extraction production(1)(000 b/d)                                         
    Ethane                                               72.8           78.4
    Propane plus                                         36.4           36.6
    Total extraction production                         109.2          115.0
Financial Results(3)                                                        
  Revenue                                              $410.7         $327.7
  Funds from operations(2)                                                  
    Oil sands transportation                            $63.4          $50.8
    Conventional oil pipelines                          $46.0          $40.4
    NGL extraction                                      $48.5          $43.0
    Bulk liquid storage                                 $21.6          $20.4
    Corporate costs                                   $(47.8)        $(45.2)
    Total funds from operations(2)                     $131.7         $109.4
    Per share(2)                                        $0.43          $0.40
  Net Income                                            $89.6          $72.2
Supplemental Financial Information                                          
  Net income attributable to shareholders               $86.1          $69.7
    Per share - basic                                   $0.28          $0.25
       - diluted                                        $0.27          $0.25
  Cash dividends declared                               $99.6          $76.8
    Per share                                         $0.3225        $0.2775
  Payout ratio(2)                                       78.0%          72.2%
  Capital expenditures(2,3)                                                 
    Growth                                             $544.7         $407.6
    Sustaining                                           $6.2           $5.9
  Total capital expenditures                           $550.9         $413.5
(1)  Empress V NGL production and Cold Lake volumes reported on a 100%      
     basis; 2013 Polaris volumes represent initial shipments that were      
     prorated for the 3 month period.                                       
(2)  Please refer to the "Non-GAAP Financial Measures" section of the MD&A. 
(3)  Amounts reported on a 100% basis that includes non-controlling         

MD&A, Financial Statements & Notes 
The Management's Discussion and Analysis ("MD&A") and consolidated
financial statements provide a detailed explanation of Inter
Pipeline's operating results for the three month period ended March
31, 2014 as compared to the three month period ended March 31, 2013.
These documents are available at and at 
Inter Pipeline Ltd. 
Inter Pipeline is a major petroleum transportation, bulk liquid
storage and natural gas liquids extraction business based in Calgary,
Alberta, Canada. Inter Pipeline owns and operates energy
infrastructure assets in western Canada and northern Europe.
Additional information about Inter Pipeline can be found at  
Inter Pipeline shares trade on the Toronto Stock Exchange under the
symbol IPL. 
Certain information contained herein may constitute forward-looking
statements that involve known and unknown risks, assumptions,
uncertainties and other factors. Forward-looking statements in this
news release include, but are not limited to, statements regarding
timing and completion of, and EBITDA Inter Pipeline expects to
generate from, the Polaris and Cold Lake pipeline and other projects
and possible future Cold Lake and Polaris pipeline expansions.
Readers are cautioned not to place undue reliance on forward-looking
statements, as such statements are not guarantees of future
performance. Inter Pipeline in no manner represents that actual
results, levels of activity and achievements will be the same in
whole or in part as those set out in the forward-looking statements
herein. Such information, although considered reasonable by Inter
Pipeline at the time of preparation, may later prove to be incorrect
and actual results may differ materially from those anticipated in
the statements made. For this purpose, any statements that are not
statements of historical fact may be deemed to be forward-looking
statements. Forward-looking statements often contain terms such as
"may", "will", "should", "anticipate", "expects" and similar
expressions. Such assumptions, risks, uncertainties and other factors
include, but are not limited to, assumptions, risks and uncertainties
associated with: operations, such as loss of markets, regulatory
matters, environmental matters, industry competition, potential
delays and cost overruns of construction projects, including the
Polaris and Cold Lake pipeline system projects, the status, credit
risk and continued existence of customers having contracts with Inter
Pipeline and its subsidiaries, and the ability to access sufficient
capital from internal and external sources. You can find a discussion
of those risks and uncertainties in Inter Pipeline's securities
filings at The forward-looking statements contained in
this news release are made as of the date of this document, and,
except to the extent required by applicable securities laws and
regulations, Inter Pipeline assumes no obligation to update or revise
forward-looking statements made herein or otherwise, whether as a
result of new information, future events, or otherwise. The
forward-looking statements contained in this document are expressly
qualified by this cautionary note.  
Effective September 1, 2013, Inter Pipeline completed a plan of
arrangement that resulted in the reorganization of Inter Pipeline
Fund, a limited partnership, into Inter Pipeline, a dividend paying
corporation. Pursuant to the arrangement, among other things, each
outstanding Class A unit of Inter Pipeline Fund was exchanged for one
common share of Inter Pipeline. Accordingly, any references to Inter
Pipeline for any period prior to September 1, 2013 refer to Inter
Pipeline Fund and its consolidated subsidiaries, as applicable, and
any references to Inter Pipeline subsequent to September 1, 2013
refer to Inter Pipeline Ltd. and its consolidated subsidiaries, as
applicable. Similarly, any references to common shares, shareholders
or dividends for any period prior to September 1, 2013, refer to
Class A units, unitholders and distributions of the former Inter
Pipeline Fund, and any references to common shares, shareholders or
dividends for any period on or after September 1, 2013 refer to
common shares, shareholders and dividends of Inter Pipeline Ltd. 
All dollar values are expressed in Canadian dollars unless otherwise
Non-GAAP Financial Measures 
Certain financial measures referred to in this news release are not
measures recognized by GAAP. These non-GAAP financial measures do not
have standardized meanings prescribed by GAAP and therefore may not
be comparable to similar measures presented by other entities.
Investors are cautioned that these non-GAAP financial measures should
not be construed as alternatives to other measures of financial
performance calculated in accordance with GAAP. 
Investor Relations:
Inter Pipeline Ltd.
Jeremy Roberge
Vice President, Capital Markets
403-290-6015 or 1-866-716-7473 
Media Relations:
Inter Pipeline Ltd.
Tony Mate
Director, Corporate and Investor Communications
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