Keyera Corp. Announces First Quarter 2013 Results
CALGARY, May 7, 2013 /CNW/ - Keyera Corp. (TSX:KEY)(TSX:KEY.DB.A), announced their 2013 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.
- Keyera delivered strong results in the first quarter of 2013 and announced a number of new growth initiatives.
- Earnings before interest, taxes, depreciation and amortization1,2 ("EBITDA") were $97.8 million in the first quarter of 2013, 67% higher than the $58.5 million posted in the same quarter of 2012.
- Net earnings for the first quarter of 2013 were $23.4 million ($0.30 per share), compared to $33.9 million ($0.46 per share) in the same period in 2012.
- Distributable cash flow1,2 was $83.3 million ($1.07 per share) in first quarter 2013, 76% higher than the $47.2 million ($0.64 per share) recorded in the same period last year.
- Keyera's Gathering and Processing business delivered stable operating margin3 of $39.9 million in the first quarter of 2013 compared to $39.0 million in the same quarter last year. In the NGL Infrastructure segment, operating margin3 was $29.0 compared to $26.0 in the same quarter of 2012. Marketing operating margin3 was $23.9 million in first quarter of 2013, or 89% higher than the $12.7 million posted in first quarter of last year.
- Work on a number of growth projects continued in the quarter, including the South Cheecham rail and truck terminal, the Hull, Texas rail and truck terminal, a raw gas gathering pipeline, the de-ethanizer at Fort Saskatchewan and the new turbo expander at the Rimbey gas plant.
- Subsequent to the quarter, Keyera announced $210 million of growth initiatives at the Simonette gas plant, including a new 90-kilometre sour gas pipeline into the Wapiti area of Alberta and plant modifications that will enhance processing capability and add 100 million cubic feet per day of processing capacity.
- In April, Keyera, in conjunction with Plains Midstream Canada ULC, began soliciting producer interest in the construction of a jointly owned liquids pipeline system in northwest Alberta.
- Total growth capital investment was $59.0 million in the first quarter 2013, of which $3.9 million was acquisitions. Keyera has reviewed its spending profile for 2013 and now expects its 2013 growth capital investment, excluding acquisitions, will be between $400 million and $450 million.4
|1||See "Non-GAAP Financial Measures" on page 36 of the MD&A.|
|2||See page 30 and 31 of the MD&A for a reconciliation of distributable cash flow to cash flow from operating activities and EBITDA to net earnings.|
|3||See note 18 to the accompanying financial statements.|
|4||See "Capital Expenditures and Acquisitions" on page 28 of the MD&A for further discussion of Keyera's capital investment program.|
| || ||Three Months Ended March 31,|
|Summary of Key Measures|| || || || |
|(Thousands of Canadian dollars, except where noted)|| || 2013|| || 2012|
|Net earnings|| ||23,445|| ||33,870|
| ||Per share ($/share) - basic|| ||0.30|| ||0.46|
|Cash flow from operating activities|| ||136,688|| ||105,413|
| || || || || |
|Distributable cash flow1|| ||83,285|| ||47,189|
| ||Per share ($/share)|| ||1.07|| ||0.64|
|Dividends declared|| ||42,074|| ||37,421|
| ||Per share ($/share)|| ||0.54|| ||0.51|
| ||Payout ratio %1|| ||50%|| ||79%|
|EBITDA2|| ||97,848|| ||58,468|
|Gathering and Processing:|| || || || |
|Gross processing throughput (MMcf/d)|| ||1,237|| ||1,227|
|Net processing throughput (MMcf/d)|| ||980|| ||966|
|NGL Infrastructure:|| || || || |
|Gross processing throughput (Mbbl/d)|| ||115|| ||107|
|Net processing throughput (Mbbl/d)|| ||40|| ||39|
|Marketing:|| || || || |
|Inventory value|| ||144,263|| ||164,010|
|Sales volumes (bbl/d)|| ||116,800|| ||99,000|
| || || || || |
|Acquisitions (including business combination)|| ||3,907|| ||247,079|
|Growth capital expenditures|| ||53,116|| ||23,653|
|Maintenance capital expenditures|| ||2,007|| ||1,671|
|Total capital expenditures|| ||59,030|| ||272,403|
| || ||As at March 31,|
| || ||2013|| ||2012|
|Long-term debt 4|| ||625,966|| ||475,310|
|Credit facilities|| ||80,000|| ||235,000|
|Working capital surplus3, 4|| ||(93,851)|| ||(178,382)|
|Net debt|| ||612,115|| ||531,928|
|Convertible debentures 4|| ||—|| ||14,219|
|Net debt (including debentures)|| ||612,115|| ||546,147|
| || || || || |
|Common shares outstanding - end of period|| ||78,013|| ||76,620|
|Weighted average number of shares outstanding - basic|| ||77,862|| ||73,276|
|Weighted average number of shares outstanding - diluted|| ||78,381|| ||74,069|
|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 30 for a reconciliation of distributable cash flow to its most closely related GAAP measure.|
|2||Beginning in the first quarter of 2013, Keyera excludes unrealized gains/losses from commodity related risk management contracts in the calculation of EBITDA. These non-cash gains/losses have been excluded because management believes it provides a better reflection of the financial performance of the business in the current period. The comparative amount has been adjusted to reflect this change. EBITDA is defined as earnings (excluding unrealized gains/losses) before interest, taxes, depreciation, amortization, 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 31 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.|
|4||Included in the calculation of working capital for Q1 2013 are current liabilities related to the $52,500 of unsecured senior notes due on August 26, 2013 and $9,212 of convertible debentures due on December 31, 2013.|
Message to Shareholders
Keyera had a successful start to 2013, delivering solid results in the first quarter and continuing to advance a number of new growth initiatives. Continued drilling in those areas of the Western Canada Sedimentary Basin where the gas is rich in NGLs has contributed to Keyera's high level of activity in all business segments. Increasing liquids-rich gas production is resulting in new business opportunities at Keyera's gas processing facilities, as well as generating increasing demand for fractionation, storage and marketing services for the NGLs removed from the raw gas stream. In this current business environment, the value of our integrated facilities and the extensive complement of services we offer provides us with opportunities to grow our business and deliver value to shareholders.
Keyera's fee-for service businesses delivered solid results again this quarter, as did the Marketing segment. EBITDA was $97.8 million in the first quarter of 2013, an increase of 67% from the same quarter last year. Distributable cash flow increased 76% to $83.3 million ($1.07 per share) compared to the same quarter last year. Dividends to shareholders totaled $42.1 million ($0.54 per share), resulting in a payout ratio of 50%.
In the first quarter, Gathering and Processing operating margin was $39.9 million, a slight increase compared to the same period in 2012, and the second highest result in Keyera's history. Producer activity resulted in growing throughput at certain Keyera gas plants in the quarter. Repairs completed at the Simonette and Strachan gas plants in the quarter reduced operating margin somewhat.
In the Liquids Business Unit, operating margin in the NGL Infrastructure segment was $29.0 million, a 12% increase compared to the first quarter last year. Increased demand for offloading and handling services at ADT, as well as incremental fees from our diluent handling agreement with Imperial Oil, were the main contributors to the increase.
The Marketing segment generated strong operating margin of $23.9 million in the first quarter, an increase of 89% compared to same quarter last year. A return to more normal winter weather contributed to solid propane results this quarter compared to the same quarter last year. Iso-octane sales volumes and margins were also higher than last year.
Producers continued to focus on liquids-rich drilling in the first quarter of 2013, often within the capture area of Keyera plants. Most of their focus is on production from the Glauconite, Cardium, Montney and Duvernay geological horizons. Gross throughput at our gas plants increased 3% in the first quarter, to 1,237 million cubic feet per day, compared to the fourth quarter of 2012. Throughput was higher at the Minnehik Buck Lake, Strachan, Caribou, Nordegg River and Brazeau River gas plants. This higher throughput was offset somewhat by lower throughput at the Simonette gas plant, due to curtailment of volumes and maintenance work on the sulphur facilities.
In December and May, we purchased newly constructed gathering pipelines which deliver gas to the Strachan and Minnehik Buck Lake gas plants. Producers in these areas had gas waiting to be processed, which resulted in an immediate increase in throughput at both facilities. In January, we commissioned a new turbo expander at the Strachan gas plant to increase plant reliability and sustain high liquids recovery levels. Detailed engineering and procurement of long lead items is underway at the Rimbey gas plant, where we are expanding the plant's capability by installing a turbo expander.
In April, we announced plans to build a 90-kilometre pipeline from our Simonette gas plant to the Wapiti area of Alberta. NuVista Energy Ltd. has entered into a long-term processing agreement to underpin construction of the pipeline and we are currently talking with other producers in the area who might be interested in securing capacity on the line. We are also planning to enhance Simonette's processing capability by adding 100 million cubic feet per day of capacity and adding condensate stabilization facilities.
Also in April, we announced we had entered into an arrangement with Plains Midstream Canada to solicit producer interest in the construction of the Western Reach Pipeline System in northwestern Alberta. The proposed pipeline is anticipated to be 570 kilometres in length and would consist of two pipelines dedicated to NGL mix and condensate service. The proposed pipeline route would travel through some of the most prospective geological areas being developed in western Canada today, including the Montney and Duvernay zones.
With increasing liquids production in western Canada, many producers are interested in securing NGL fractionation capacity in the Edmonton/Fort Saskatchewan hub. In connection with the long-term processing agreement at Simonette, NuVista also signed long-term agreements for fractionation and NGL marketing services. In addition, demand for diluent in Alberta drove increased storage activity at Fort Saskatchewan and higher rail traffic at our Alberta Diluent Terminal in the first quarter.
Construction of the South Cheecham rail and truck terminal is well underway. Pipelines have been installed, tanks constructed and track for the rail laid. Completion of the terminal is still expected in the second half of 2013. There continues to be significant interest in the terminal by other oil sands producers and refiners.
Iso-octane was delivered to customers in the Gulf Coast via rail throughout the first quarter and we continue to be pleased with customer interest. Some potential new customers will need to make modifications to their facilities in order to receive iso-octane by rail. However, based on our initial success in moving volumes by rail into new markets, we are optimistic about our ability to increase the utilization level of Alberta EnviroFuels throughout the remainder of 2013.
At Fort Saskatchewan, our twelfth cavern is complete and is awaiting regulatory approval before being put into service. Work on the brine pond will continue through the summer and is scheduled to be put into service later this year, and our thirteenth cavern is currently under development. Detailed engineering is underway for our de-ethanizer project, long-lead items have been ordered and fabrication of major equipment is underway.
The combination of newly announced projects and a review of the timing of projects already underway have resulted in an update to Keyera's capital investment forecast. We now anticipate our 2013 capital investments will be between $400 and $450 million, excluding acquisitions.
May 30th marks Keyera's tenth anniversary as a public company. Our vision when we went public was to provide our shareholders with stable and growing cash flow per share. I'm proud to say that we have delivered on that objective, and we have provided our shareholders with a compound annual growth rate of 7.5% in dividends per share. Looking forward, I am confident that we have the right mix of people, assets and opportunities to continue to deliver value to shareholders.
On behalf of Keyera's directors and management team, thank you for your continued support.
Jim V. Bertram
Chief Executive Officer
Certain statements contained in this document 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 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 unitholders, and in particular any differential effects relating to unitholder'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 14, 2013 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. 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.
Readers are cautioned that they should not unduly rely on the forward looking statements in this document. 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 www.sedar.com.
SOURCE: Keyera Corp.
about Keyera, please visit our website at www.keyera.com or contact:
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