CALGARY, Feb. 13, 2014 /CNW/ - Keyera Corp. (TSX:KEY) announced their
2013 year end results today, the highlights of which are included in
this press release. The entire press 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.
HIGHLIGHTS
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Net earnings were $146.8 million ($1.87 per share) in 2013, $16.2
million ($0.16 per share) higher than the $130.6 million ($1.71 per
share) in 2012.
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Earnings before interest, taxes, depreciation and amortization1, 2 ("EBITDA") were $379.3 million in 2013, 28% higher than the $297
million posted in 2012.
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Distributable cash flow1, 2 was $288.1 million ($3.68 per share) in 2013, 44% higher than the
$199.9 million ($2.62 per share) recorded in 2012.
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Keyera's Gathering and Processing business delivered record operating
margin3 of $157.5 million in 2013 compared to $150.9 million in 2012. In the
NGL Infrastructure segment, operating margin3 was $123.3 million in 2013, compared to $112.5 million in 2012.
Marketing operating margin3 was $132.9 million in 2013, $40.9 million higher than the prior year.
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Keyera's South Cheecham rail and truck terminal has been operational
since October 2013, receiving bitumen by truck for loading into
railcars and is now able to handle diluent, synbit and dilbit as well.
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Work has begun on several raw gas gathering pipelines. Construction of
the Wapiti pipeline system to the Simonette gas plant is progressing
well. Keyera commenced additions and modifications to the Carlos
pipeline system in January 2014 to accommodate incremental volumes, as
the current system is operating near capacity. Agreements relating to
the Wilson Creek pipeline, which will deliver gas to the Rimbey gas
plant, were finalized in January, and construction is underway.
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Subsequent to year end, Keyera announced an expansion of its C3+
fractionator at Fort Saskatchewan that will add an additional 35,000
barrels per day of new capacity. This expansion is in addition to the
30,000 barrel per day de-ethanizer project that is currently under
construction at Fort Saskatchewan. Keyera is also washing its 13th storage cavern and drilling the well bore for its 14th cavern.
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Today, Keyera announced it will be constructing a rail terminal at
Josephburg, located near Fort Saskatchewan, to optimize propane
movement out of western Canada. The terminal is expected to cost
approximately $95 million and Keyera is targeting start up for the
second half of 2015.
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In January 2014 Keyera secured access to capacity at Kinder Morgan's
Galena Park rail, storage and marine facility on the Gulf Coast. This
agreement will provide added flexibility to manage Keyera's iso-octane
inventory and provide access to additional markets.
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Keyera closed $431 million of new long-term private placement debt in
the fourth quarter, with an additional $75 million expected to close in
April 2014. Keyera also amended the bank credit facility by extending
the term to December 2017 and increasing the net debt to EBITDA ratio
covenant, bringing it in line with the covenants in Keyera's other debt
agreements.
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Total growth capital investment in 2013 was $332 million, of which $32
million was acquisitions. In 2014, growth capital investment,
excluding acquisitions, is expected to be between $500 million and $600
million.4
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1
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See "Non-GAAP Financial Measures" on page 44 of the MD&A.
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2
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See page 36 and 37 of the MD&A for a reconciliation of distributable
cash flow to cash flow from operating activities and EBITDA to net
earnings.
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3
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See note 30 to the accompanying financial statements.
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4
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See "Capital Expenditures and Acquisitions" on page 32 of the MD&A for
further discussion of Keyera's capital investment program.
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Three months ended
December 31,
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Twelve months ended
December 31,
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Summary of Key Measures
(Thousands of Canadian dollars, except where noted)
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2013
|
2012
|
2013
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2012
|
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Net earnings
|
34,396
|
56,651
|
146,836
|
130,601
|
|
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Per share ($/share) - basic
|
0.44
|
0.73
|
1.87
|
1.71
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Cash flow from operating activities
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172,597
|
26,053
|
385,094
|
237,979
|
|
|
|
|
|
|
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Distributable cash flow1
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74,975
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74,396
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288,063
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199,873
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Per share ($/share)
|
0.95
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0.96
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3.68
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2.62
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Dividends declared
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47,297
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41,104
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177,132
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157,095
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Per share ($/share)
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0.60
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0.53
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2.26
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2.06
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Payout ratio %1
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63%
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55%
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61%
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79%
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EBITDA2
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99,474
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95,069
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379,324
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296,999
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Gathering and Processing:
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Gross processing throughput (MMcf/d)
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1,283
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1,205
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1,272
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1,202
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Net processing throughput (MMcf/d)
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1,051
|
982
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1,030
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964
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NGL Infrastructure:
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Gross processing throughput (Mbbl/d)
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112
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116
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112
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92
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Net processing throughput (Mbbl/d)
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34
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39
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34
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35
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Marketing:
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Inventory value
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175,658
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183,165
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175,658
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183,165
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Sales volumes (bbl/d)
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117,200
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114,700
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99,800
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93,100
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Capital expenditures
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121,064
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56,655
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371,390
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446,349
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Long-term debt
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1,077,140
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619,666
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Credit facilities
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—
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135,000
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Working capital surplus3
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(306,817)
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(160,839)
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Net debt
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770,323
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593,827
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Convertible debentures
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—
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11,083
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Net debt (including debentures)
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770,323
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604,910
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Common shares outstanding - end of period
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79,187
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77,663
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Weighted average number of shares outstanding - basic
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78,316
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76,186
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Weighted average number of shares outstanding - diluted
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78,728
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76,884
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Notes:
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1
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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 36 for a reconciliation of
distributable cash flow to its most closely related GAAP measure.
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2
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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 amounts have 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 37 of the MD&A
for a reconciliation of EBITDA to its most closely related GAAP
measure.
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3
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Working capital is defined as current assets less current liabilities.
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Message to Shareholders
Keyera delivered excellent financial results in 2013 and announced a
number of strategic growth initiatives. We are pleased with our key
financial and operating metrics, reporting a year-over-year increase of
44% in distributable cash flow and a 28% increase in EBITDA. The
success of our business is a direct result of our focus on customer
service and the integration of our three business segments, which
enables us to generate incremental revenues all along our value chain.
It was a record year for each of Keyera's operating segments. Keyera's
Gathering and Processing Business Unit reported operating margin of
$157.5 million, 4% higher than 2012, primarily due to increased
throughput at many of Keyera's facilities. Net throughput in the
fourth quarter was 1,051 million cubic feet per day, 7% higher than the
same period last year. We have seen increased drilling activity around
many of our plants from producers focused on drilling liquids-rich gas
from the Mannville, Cardium, Montney, Duvernay and Glauconite zones.
Keyera is working on a number of projects to keep pace with this
activity. In the Rimbey area we have started working on modifications
to the Carlos pipeline system, which is currently operating near
capacity. With the proposed modifications we expect to be able to flow
an additional 40 million cubic feet per day to the Rimbey plant for
processing later this year. We are also working on a new pipeline to
extend the capture area of the Rimbey plant into the Wilson Creek area
where producers are targeting the Glauconite zone. The agreements
necessary to underpin construction of the Wilson Creek pipeline system
were completed in January 2014 and construction has since begun. This
new pipeline system will have the potential to deliver 190 million
cubic feet a day of raw gas and 25,000 barrels per day of condensate to
the Rimbey gas plant. If there is sufficient producer demand, we would
be able to extend this system further west to access production from
the Duvernay zone in the Willesden Green area.
We are working with producers interested in the proposed Twin Rivers
pipeline, to deliver gas directly to the Brazeau River gas plant and
onward to the West Pembina gas plant. We remain confident about the
need for this pipeline, but timing is dependent on successfully
reaching the commercial terms that would underpin this capital
commitment.
Work on the Wapiti pipeline system began in December and is progressing
well, despite challenging weather. This pipeline is underpinned by a
long-term fee-for-service agreement and Keyera is now working with
another producer interested in securing the remaining capacity. When
the Wapiti pipeline system is complete, we expect to see significant
amounts of new gas delivered to the Simonette gas plant. In light of
these anticipated volumes, we are continuing to work on the plant
expansion with all equipment having been ordered.
We are ready to start construction of the new 400 million cubic feet per
day turbo expander at the Rimbey gas plant. The new turbo expander
will allow producers to receive higher netbacks for their liquids-rich
gas, compared to the current situation where they do not receive full
value for their liquids once they leave the plant and enter the sales
gas stream. As a result, the project is strongly supported by
producers in the Rimbey area, as well as Dow Chemicals, who has agreed
to purchase the incremental ethane. Despite the project being delayed
in the regulatory process due to statements of concern filed by AltaGas
Ltd, Atco Energy Solutions Ltd, and NovaChemicals Corp, we remain
optimistic that the project will proceed.
Our Liquids Business Unit also delivered record operating results in
2013. The NGL Infrastructure segment benefitted from higher demand for
services and higher fees, posting operating margin of $123.3 million in
2013, a 10% increase over 2012. Our Marketing segment delivered strong
results in 2013, with operating margin of $132.9 million, $41 million
higher than 2012, due to higher volumes and margins in 2013 from our
NGL products and growth in our iso-octane business. Over the last
several years, we have expanded our infrastructure network in the
Edmonton/Fort Saskatchewan energy hub to provide the range of services
and flexibility needed to support liquids-rich gas drilling and oil
sands production growth. Today, customers are recognizing the value of
our integrated system and we are seeing growing demand for these
services.
Fractionation and storage at Fort Saskatchewan continue to be in high
demand. Subsequent to the quarter, we announced an expansion of our
C3+ fractionator in Fort Saskatchewan, adding 35,000 barrels per day of
capacity. This expansion is in addition to the 30,000 barrel per day
de-ethanizer project that was announced in 2013. The fractionator and
de-ethanizer projects enhance our service offering and support our
customers' liquids-rich gas drilling programs.
To meet the continued demand for storage services, we are continuing to
develop new underground storage caverns at our facility in Fort
Saskatchewan. In July, we commissioned our twelfth underground storage
cavern, increasing our gross underground storage capacity by
approximately 700,000 barrels to total over 11.4 million barrels. We
continue to develop our thirteenth cavern and have recently begun
drilling the well bore for the fourteenth cavern.
Keyera is well positioned to provide the loading services necessary for
the delivery of crude oil in western Canada. Our South Cheecham
terminal was completed in late September and is currently able to
handle bitumen, synbit, dilbit and diluent. Keyera is also working on
the development of the Alberta Crude Terminal ("ACT"), a joint venture
with Kinder Morgan, and is currently working through the regulatory
process for the facility. Assuming approvals are received in a timely
manner, we would expect to complete construction and commence
operations later this year. Once completed, ACT will provide up to
40,000 barrels per day of crude loading facilities under a joint
venture agreement with Kinder Morgan. With the entire capacity having
been committed to Irving Oil under a multi-year agreement, we are
currently looking at opportunities to expand the facility.
We continue to work with Enbridge on the agreements governing the
operation and ownership details for the Norlite pipeline, in which we
have the option to participate as a 30% non-operating owner. Our
intention is to participate in the project, assuming that both parties
are able to reach consensus on the details for the transaction.
We are currently building a pipeline tie-in at our Fort Saskatchewan
facility to allow us to receive condensate from the Kinder Morgan
Cochin pipeline when it begins diluent service later this year. This
connection, which is expected to be complete in the second quarter of
2014, will provide another inlet for our Fort Saskatchewan condensate
system. With the loss of the Cochin pipeline as an outlet for propane
from western Canada, Keyera has initiated construction of a rail
terminal at Josephburg, located near Fort Saskatchewan, to facilitate
propane movements out of western Canada by rail.
We were pleased with the growth of our iso-octane business in 2013 and
by the role the Alberta EnviroFuels facility continues to play in our
butane value chain. In January 2014, Keyera secured access to storage
and rail offload capacity at Kinder Morgan's Galena Park rail, storage
and marine facility on the Gulf Coast. This agreement should provide
added flexibility to manage Keyera's iso-octane inventory, provide
marine delivery options for customers not able to receive iso-octane by
rail and allow us to increase utilization at Alberta EnviroFuels.
As we look ahead, we believe that growing producer activity levels will
result in new value-added services being required by our customers in
each of our business lines. We remain focused on our strategy of
pursuing infrastructure projects and acquisitions that deliver
long-term growth and return for investors and currently have over $1.1
billion of growth capital investments underway. In the fourth quarter
of 2013, we extended the term of our unsecured revolving credit
facility to December 6, 2017, and have significant unutilized capacity
on that facility that provides us with considerable future financing
flexibility. Our strong balance sheet allows us to deliver both growth
and yield for Keyera shareholders.
In August 2013, we announced an 11% increase in our monthly cash
dividend from $0.18 to $0.20 per share. Since inception in 2003, we
have increased dividends per share 120% through eleven increases. This
represents a 7.8% compound annual growth rate in our dividends per
share, an accomplishment that I am very proud of.
In closing, 2013 marked Keyera's 10th year as a public company and 15th year as an independent business. As we celebrate these milestones,
there are many people I would like to thank for our success: our
shareholders for their support and confidence in the business; our
customers for allowing us to work with them to achieve their
objectives; our Board of Directors for their support and guidance; and
finally the employees of Keyera who have embraced our common vision and
come to work each day looking for ways to make us more successful.
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 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. It is unclear whether Alberta's move
toward a single regulator will affect processing times for projects
that are subject to regulatory approval. 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 www.sedar.com.
SOURCE Keyera Corp.
