Keyera Facilities Income Fund Announces 2008 Year End Results



    CALGARY, Feb. 24 /CNW/ - Keyera Facilities Income Fund announced their
2008 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

    -   Keyera delivered exceptional results in 2008, driven by record
        results in all three business segments.

    -   Net earnings for 2008 were $165.5 million ($2.62 per unit) compared
        to $14.5 million ($0.24 per unit) in 2007. The increase was primarily
        due to strong operational results in 2008 and recording $80.2 million
        of non-cash future income tax expense in 2007.

    -   Distributions to unitholders in 2008 totaled $105.5 million ($1.69
        per unit). Keyera raised distributions twice in 2008, a 20% increase.
        This is consistent with the objective of providing stable and growing
        distributions to unitholders. Distributions to unitholders in the
        fourth quarter totaled $28.1 million ($0.45 per unit).

    -   Distributable cash flow(1) in 2008 was $139.4 million ($2.23 per
        unit), 2.8% lower than 2007 ($2.35 per unit). Keyera's risk
        management program was effective in protecting its NGL inventory from
        the impact of falling product prices in 2008. If the non-cash
        unrealized gains from the risk management program were included,
        Keyera's 2008 distributable cash flow would have increased by $66.6
        million ($1.06 per unit). Fourth quarter distributable cash flow(1)
        was $40.3 million ($0.64 per unit).

    -   All three business segments recorded the highest annual results in
        Keyera's history, despite an uncertain business environment and a
        significant drop in commodity prices during the year. Contribution
        from Gathering and Processing was $109.6 million, 25% higher than
        2007; NGL Infrastructure contribution was $49.9 million, 7% higher
        than in 2007; contribution from the Marketing business was $102.4
        million, more than double 2007 results.

    -   Keyera also had a record year growing its business, investing $320
        million in internal growth projects and acquisitions to significantly
        expand its Gathering and Processing and NGL Infrastructure
        businesses. These initiatives were consistent with Keyera's growth
        strategy and will contribute incremental cash flow in 2009.

    -   Keyera continues to maintain a strong balance sheet, completing a
        public offering of $80 million of convertible debentures on December
        1, 2008 and reducing debt levels by $105 million since year end.

    (1) See "Non-GAAP Financial Measures" on page 4 and a reconciliation of
        distributable cash flow to cash flow from operating activities on
        page 28.



    -------------------------------------------------------------------------
                                     Three months ended  Twelve months ended
                                           Dec. 31,             Dec. 31,

    Summary of Key Measures
    (Thousands of Canadian dollars,
     except where noted)                 2008      2007       2008      2007
    -------------------------------------------------------------------------
    Net earnings                       50,877    40,027    165,485    14,479
      Per unit ($/unit) - diluted        0.79      0.64       2.62      0.24
    Cash flow from
     operating activities             115,760    45,497     91,302   119,825

    Distributable cash flow(2)         40,325    41,420    139,441   143,469
      Per unit(1) ($/unit)               0.65      0.68       2.23      2.35
    Distributions declared             28,141    22,965    105,501    90,206
      Per unit(1) ($/unit)               0.45      0.38       1.69      1.48

    Payout ratio %(2)                    69.8      55.4       75.7      62.9

    Gathering & Processing:
    Gross processing
     throughput (mmcf/d)                  867       882        870       843
    Net processing
     throughput (mmcf/d)                  676       695        671       654
    NGL Infrastructure:
    Gross processing
     throughput (mbbl/d)                   96       102         99        99
    Net processing
     throughput (mbbl/d)                   35        30         32        28
    Marketing:
    Inventory                          53,127    76,594     53,127    76,594
    Sales volumes (bbl/d)              75,700    53,800     60,400    50,800

    Capital expenditures
     ($ millions)                       188.6       9.0      321.9      32.0
    Dispositions ($ millions)            (0.7)     (0.5)      (1.3)     (4.7)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Long-term debt                                         313,561   333,243
    Credit facilities                                      249,000         -
    Cash and inventory                                     (53,240)  (92,251)
                                                          -------------------
    Net debt                                               509,321   240,992
    Convertible debentures                                  79,034    21,476
                                                          -------------------
    Net debt (including debentures)                        588,355   262,468

    Trust units outstanding - end of period                 62,888    61,264
    Weighted average number of
     units outstanding - basic                              61,694    61,098
    Weighted average number of
     units outstanding - diluted                            63,549    61,098
    -------------------------------------------------------------------------
    Notes:
    (1) Per unit measures are calculated using an implied number of trust
        units outstanding for the specified period. The implied number of
        trust units outstanding is calculated by using the distributions
        declared to unitholders and dividing by the actual distributions (on
        a per unit basis) paid for the specified period.
    (2) Payout ratio is defined as distributions declared to unitholders
        divided by distributable cash flow. Payout ratio and distributable
        cash flow are not standard measures under Canadian Generally Accepted
        Accounting Principles and, therefore, may not be comparable to the
        calculations of similar measures for other companies.
    

    Message to Unitholders

    I am pleased to report Keyera delivered exceptional results in 2008,
despite a number of challenges caused by the economic slowdown and a continued
decline in commodity prices during the fourth quarter. Record operating
results in all three business segments contributed to this strong showing.
This performance is the result of the application of focus and discipline to
our business affairs, and has allowed us to deliver stable and growing
distributions to unitholders. In 2008, we increased distributions to
unitholders by 20%, to our current annual distribution level of $1.80 per
unit. Since going public in 2003, we have paid distributions of $7.69 per unit
to unitholders and, including the appreciation in our unit price, at year end
we had delivered a total cumulative return to investors of 154%.
    In 2008, net earnings were $165.5 million ($2.62 per unit) compared to
$14.5 million ($0.24 per unit) in 2007. Distributable cash flow of $139.4
million ($2.23 per unit) was sufficient to pay distributions to unitholders of
$105.5 million ($1.69 per unit) and partially fund Keyera's 2008 growth
capital program. Our risk management program was successful in fully
offsetting a $77.8 million reduction in the value of our NGL inventory, due to
lower commodity prices in the latter half of 2008. These financial contracts
produced $116.5 million of gains, which are included in earnings. Of that
total, $66.6 million is unrealized and is excluded from Keyera's distributable
cash flow until the contracts are settled, largely in the first quarter of
2009.
    The Gathering and Processing segment had a record year, providing
contribution of $109.6 million, 25% higher than last year. Higher throughput
in 2008 and new facilities contributed to these results. Contribution from the
NGL Infrastructure segment was $49.9 million in 2008, about 7% higher than
last year. Our storage and logistics services business continued to operate
efficiently, meeting the service needs of our customers and providing
important support for our Marketing business. Our Marketing segment delivered
very strong results in 2008, despite challenging market conditions and a
significant decline in NGL prices later in 2008. Marketing contribution was
$102.4 million, more than double 2007, largely due to higher volumes and
attractive margins. The higher volumes were the result of our decision, made
earlier in 2008, to increase propane inventory levels and term sales to take
advantage of seasonally higher prices and margins in the winter months.
    This was also a record year for growth initiatives. In 2008, we invested
$320 million in growth capital projects on a number of very attractive
internal growth projects and acquisitions. In our Gathering and Processing
segment, we significantly expanded our processing capacity and capture area
through the acquisition of interests in the West Pembina and Nevis gas plants
and the purchase of additional interests in our Brazeau River and Rimbey
facilities. In our NGL Infrastructure business, our investments strengthened
our NGL business and contributed to the development of our oil sands growth
strategy. We completed a number of projects to enhance and increase the
operational flexibility of our pipeline, rail and truck infrastructure and
expanded several of our rail and truck terminals to increase handling
capacity. We added a fourth pipeline between Edmonton and Fort Saskatchewan
and expanded our NGL gathering system in west central Alberta through the
acquisition of ownership interests in the Judy Creek and Bonnie Glen pipeline
systems.
    Perhaps most important for the future growth of our oil sands services
business was the acquisition of a rail terminal and storage facility north of
our Edmonton Terminal. The Alberta Diluent Terminal, or ADT, will become a key
part of Keyera's growth strategy, providing size and scale to Keyera's diluent
delivery infrastructure, enabling Keyera to provide diluent services to the
largest oil sands producers.
    Over the past several months, we have witnessed a great deal of
uncertainty in the financial markets. In addition, the oil and gas sector has
been affected by the dramatic declines in the prices of crude oil, natural gas
and other related commodities, as well as credit and liquidity concerns for
some companies. In the short term, we are confident of our ability to execute
our business strategy in all three business lines. We continue to see
reasonable activity levels around most of our facilities, and our business
model provides insulation from short-term changes in activity levels. Revenues
from our Gathering and Processing and NGL Infrastructure businesses are
fee-for-service based, without any direct link in the fee structure to
commodity prices, and we recover the majority of our gas processing operating
expenses. As a result, the loss of revenues from any reduction in throughput
that we may see will be gradual. Furthermore, in times of capital constraint,
producers will focus on drilling their best prospects. Producers are currently
experiencing preliminary success using horizontal drilling and multi-stage
fracturing technology to target tight gas zones in the foothills area near a
number of our plants, and we may see this activity continuing throughout 2009.
Changes to the royalty regime in Alberta and British Columbia to deal with the
current economic situation may also assist in stimulating drilling activities.
    Despite the challenges in front of us, we continue to take a long-term
view of our business and believe we are well positioned to weather the storm
caused by these events. We base that belief on the location of our assets
within the Western Canada Sedimentary Basin, the strategic nature of the
products and services we provide in the NGL business and our experience gained
in previous business cycles. We have a conservative balance sheet with an
appropriate mix of long- and short-term debt and sufficient credit facilities
in place to support our existing business. In November, we successfully issued
$80 million of convertible debentures in a difficult market, to strengthen our
balance sheet and partially fund our 2008 capital program. Our recent
investments are consistent with our strategic direction, and will deliver
incremental cash flow in 2009.
    On behalf of Keyera and its employees, I thank you for your continued
support and look forward to continued success in 2009 and beyond.

    
    Jim V. Bertram
    President and CEO
    Keyera Facilities Income Fund
    

    ADVISORY
    This document contains forward-looking statements that involve known and
unknown risks and uncertainties, many of which are beyond Keyera's control.
The forward-looking statements are based on management's current expectations
and assumptions relating to Keyera's business and the environment in which it
operates. As the results or events predicted or implied in these
forward-looking statements depend upon future events, actual results or events
may differ materially from those predicted. Some of the factors which could
cause actual results or events to differ materially include the ability of
Keyera to successfully implement strategic initiatives, whether such
initiatives yield the expected benefits, operating and other costs, future
operating results and the components of those results, fluctuations in the
demand for natural gas, NGLs, crude oil and bitumen, changes in commodity
prices, the activities of producers, competitors and others, the weather,
overall economic conditions, proposed or actual legislative changes, including
any further announcements by the federal government with respect to the tax
treatment of income trusts and other known or unknown factors. There can be no
assurance that the results or developments anticipated by Keyera will be
realized or that they will have the expected consequences for or effects on
Keyera.
    For additional information on these and other factors, see Keyera's
public filings on www.sedar.com. Unless otherwise required by applicable laws,
Keyera does not intend to publicly update or revise forward-looking
statements, whether as a result of new information, future events or
otherwise.



    %SEDAR: 00019203E




For further information:

For further information: about Keyera Facilities Income Fund, please
visit our website at www.keyera.com or contact: John Cobb, Director, Investor
Relations or Bradley White, Investor Relations Advisor, E-mail: ir@keyera.com,
Telephone: (403) 205-7670, Toll Free: (888) 699-4853, Facsimile: (403)
205-8425


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