Fort Chicago announces 2007 second quarter results



    /NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
    DISSEMINATION IN THE UNITED STATES/

    Trading Symbol: FCE.UN
    Exchange: TSX

    CALGARY, Aug. 2 /CNW/ - Fort Chicago Energy Partners L.P. ("Fort
Chicago") today announced its results for the three and six months ended
June 30, 2007. Mr. Stephen H. White, President and Chief Executive Officer
commented, "We continue to make significant progress in developing a number of
accretive growth opportunities and expect to close our acquisition of
Countryside Power Income Fund by August 13, 2007. As well, each of our
businesses are performing well and continue to benefit from strong market
fundamentals."

    Operating and Financial Highlights

    Distributable cash for the second quarter of 2007 was $40.0 million or
$0.304 per Unit compared to $36.8 million or $0.282 per Unit for the second
quarter of 2006. This increase reflects continued strong NGL margins in the
second quarter of 2007, which supported the recognition of $12.7 million of
margin-based lease revenue under Aux Sable's NGL Sales Agreement with BP, a
$5.5 million increase from the second quarter of 2006. Second quarter 2007
distributable cash also reflects increased distributions from Alliance, which
benefited from higher income tax recoveries in its 2007 tolls. NRGreen, which
placed its first waste heat facility into service at the end of 2006, also
made a positive contribution to 2007 distributable cash. These increases were
partially offset by the absence of a tax recovery recorded in the second
quarter of 2006 due to the elimination of federal large corporation's tax. For
the six months ended June 30, 2007, distributable cash was $70.6 million or
$0.538 per Unit compared to $66.8 million or $0.513 per Unit for the same
period in 2006, reflecting the same factors that impacted second quarter
distributable cash, as well as Aux Sable's first quarter 2006 sale of NGL
inventory to BP and undistributed prior year distributable cash, each of which
were distributed in the first quarter of 2006.
    Net income for the three months ended June 30, 2007 was $22.8 million or
$0.17 per Unit compared with $30.3 million or $0.23 per Unit for the three
months ended June 30, 2006. For the six months ended June 30, 2007, net income
was $36.7 million or $0.28 per Unit compared to $46.9 million or $0.36 per
Unit for the same period in 2006. The decrease in net income reflects income
tax rate reductions that were recognized in the second quarter of 2006.
Current year-to-date results also reflect increased Alliance net income,
resulting from higher recoveries for income taxes, partially offset by a lower
return on equity due to the depreciating investment base, as well as the
recognition of $12.7 million of Aux Sable NGL margin-based lease revenue, up
from $7.2 million recognized in the first half of 2006, offset by a
$1.4 million non-cash charge related to an asset disposal, and the impact of
the 2006 sale of inventory to BP.
    During the first half of 2007, Aux Sable generated $16.1 million of
margin-based lease revenue, of which $3.3 million has not yet been recognized
in distributable cash or net income. These amounts reflect the underlying
strength in NGL markets and are expected to be recognized over the balance of
the year.
    During the first half of 2007, each of Fort Chicago's businesses
performed in a reliable manner. Alliance exceeded its contracted 1.325 bcf/d
of firm-service capacity throughout the first half of 2007, with shippers
utilizing record levels of the Authorized Overrun Service ("AOS") available on
the system. Actual transportation deliveries, including utilized AOS, averaged
1.641 bcf/d (23.9 percent in excess of firm capacity). Year-to-date toll
volumes of 312.4 mbbls/d on AEGS approximated volumes for the comparable
period in 2006, while Aux Sable volumes decreased by four percent to
68.0 mbbls/d. The decrease in Aux Sable volumes was primarily attributable to
a planned major overhaul of a fractionation train, which occurred from
mid-March to early April 2007.

    Key Strategic Initiatives

    On June 20, 2007, Fort Chicago announced it had entered into a definitive
agreement pursuant to which the Partnership has offered to acquire all of the
outstanding units of Countryside Power Income Fund ("Countryside") for cash
consideration of approximately $199.8 million. Fort Chicago has also offered
to acquire all of the outstanding 6.25 percent exchangeable subordinated
debentures ("Exchangeable Debentures") of Countryside Canada Power Inc., a
wholly-owned subsidiary of Countryside, at a price equal to 101 percent of the
face value thereof, or approximately $47 million. Countryside's assets are
comprised of a 49-megawatt and a 44-megawatt gas-fired cogeneration facility
in northern and southern California and two district energy systems. In
addition to these operating facilities, Countryside has a number of near-term
and medium-term growth opportunities, including a 17-megawatt gas-fired
cogeneration facility currently under construction in London, Ontario, with
commercial start-up expected in mid-2008, which will sell its electrical
output under a long-term agreement with the Ontario Power Authority. The
Countryside acquisition aligns with Fort Chicago's strategy of investing in
long-life, energy infrastructure assets and will contribute to its growing
power business segment. Its assets are strategically located in key
energy-consuming markets where growth opportunities can be capitalized upon.
Further, the existing facilities are underpinned with long-term contracts,
which will provide Fort Chicago and its Unitholders with steady, reliable and
accretive streams of cash flow. A take-over-bid circular, dated July 5, 2007,
containing the terms of Fort Chicago's offers has been mailed to Countryside
unitholders and holders of the Exchangeable Debentures. Unless extended or
withdrawn, the offers will expire on August 10, 2007. The acquisition is
conditional upon acceptance by not less than 66 2/3 percent of Countryside's
units as well as receipt of all necessary regulatory approvals and other
customary conditions and will be financed with cash balances on hand at
closing and Fort Chicago's existing three-year credit facility.
    During the quarter, East Windsor Cogeneration LP ("East Windsor"), in
which Fort Chicago holds a 50 percent ownership interest, completed and filed
with the Ontario Ministry of the Environment an environmental assessment in
respect of its proposed 84-megawatt cogeneration facility to be located in
Windsor, Ontario. In addition, East Windsor finalized the terms of its fixed
price, turnkey engineering, procurement and construction ("EPC") contract. As
a result, the aggregate cost of the project, including financing costs
incurred during construction of $15 million, is estimated to be $207 million
(100 percent). Construction of the facility will begin once all environmental
approvals, permits and licenses are granted and financing of the project is
finalized, which is expected to occur in the third quarter of this year.

    Distributions

    For the three and six months ended June 30, 2007, Fort Chicago paid
distributions of $0.2325 per Unit and $0.465 per Unit, respectively,
consistent with distributions paid for the same periods last year. To June 30,
2007, the payout ratio was 86 percent, excluding $3.3 million of margin-based
fees related to Aux Sable's NGL Sales Agreement with BP that has not been
recognized in distributable cash. At June 30, 2007, the Partnership's
Distribution Account was approximately $33.0 million, an increase of
$2.0 million from December 31, 2006 due primarily to increased distributable
cash being generated in 2007. Fort Chicago will continue to use this account
to fund project development costs and to maintain the continued stability of
its distributions.

    Outlook

    Over the balance of the year Fort Chicago expects relatively stable
earnings and cash flows from Alliance, NRGreen and AEGS, driven by their
long-term contracts. Aux Sable is expected to benefit from continued strong
NGL margins in the second half of the year, supported by high oil prices,
solid petrochemical demand, and lower relative gas prices. Based on Fort
Chicago's year-to-date performance and current outlook, 2007 distributable
cash earned is expected to be in the range of $1.05 per Unit to $1.15 per
Unit. Its payout ratio for the year is expected to be between 81 percent and
89 percent. This guidance does not include the positive contribution from
Countryside, in the event Fort Chicago's take-over offer is successful.
Further details concerning 2007 guidance can be found in the Investor
Information section of Fort Chicago's website at www.fortchicago.com.
    Longer term, Fort Chicago remains confident that each of its businesses
possesses a number of competitive advantages that bode well for future growth
and Fort Chicago intends to pursue opportunities to grow and improve upon its
operational and financial performance. Fort Chicago is also committed to
continuing its pursuit of accretive investment opportunities in new or
complementary long-life assets with the view to increase the value of its
Units and provide Unitholders with stable and growing per-unit cash
distributions.

    Conference Call
    ---------------
    Fort Chicago will hold a conference call at 9:00 a.m. Mountain time
(11:00 a.m. Eastern time) on Friday, August 3, 2007, to discuss the second
quarter results of 2007. The call can be accessed at 1-800-732-9307 or
1-416-644-3415. A replay will be available shortly thereafter at
1-877-289-8525 and 1-416-640-1917. The access code in each case is 21236473
(followed by the number sign).

    Fort Chicago is a publicly traded limited partnership. Its Class A Units
are listed on the TSX under the symbol FCE.UN and have been assigned a
stability rating by Dominion Bond Rating Service and Standard & Poor's of
STA-2 (low) and SR-2, respectively. Fort Chicago's principal businesses
include a 50 percent interest in the Alliance Pipeline, an approximate 42.7
percent interest in Aux Sable and Alliance Canada Marketing and a 100 percent
interest in the Alberta Ethane Gathering System ("AEGS"). The Alliance
Pipeline is a 3,000 kilometre mainline natural gas pipeline, which extends
from northeastern British Columbia to delivery points near Chicago, Illinois.
Aux Sable operates natural gas liquids extraction, fractionation and delivery
facilities near Chicago. AEGS is a 1,324 kilometre ethane pipeline system,
which delivers ethane feedstock to Alberta's petro-chemical industry.

    Fort Chicago's consolidated financial statements and Management's
Discussion and Analysis for the three and six months ended June 30, 2007 are
available on Fort Chicago's website at www.fortchicago.com.

    
                     Class A Unit Ownership Restrictions
    

    Fort Chicago is organized in accordance with the terms and conditions of
a limited Fort Chicago agreement which provides that no Class A Units may be
transferred to, among other things, a person who is a "non-resident" of
Canada, a person in which an interest would be a "tax shelter investment" or a
Fort Chicago which is not a "Canadian Fort Chicago" for purposes of the Income
Tax Act (Canada).

    Certain information contained herein relating to Fort Chicago and its
businesses constitutes forward-looking information under applicable securities
laws. All statements, other than statements of historical fact, which address
activities, events or developments that we expect or anticipate may or will
occur in the future, are forward-looking information. Forward-looking
information typically contains statements with words such as "may",
"estimate", "anticipate", "believe", "expect", "plan", "intend", "target",
"project", "forecast" or similar words suggesting future outcomes or outlook.
The following discussion is intended to identify certain factors, although not
necessarily all factors, which could cause future outcomes to differ
materially from those set forth in the forward-looking information. The risks
and uncertainties that may affect the operations, performance, development and
results of our businesses include, but are not limited to, the following
factors: the ability of Fort Chicago to successfully implement its strategic
initiatives and achieve expected benefits; the status, credit risk and
continued existence of contracted customers; the availability and price of
energy commodities; fluctuations in foreign exchange and interest rates; the
regulatory environment; competitive factors in the pipeline, NGL and power
industries; and the prevailing economic conditions in North America. The
reader is cautioned that these factors and risks are difficult to predict and
that the assumptions used in the preparation of such information, although
considered reasonably accurate by Fort Chicago at the time of preparation, may
prove to be incorrect or may not occur. Accordingly, readers are cautioned
that the actual results achieved will vary from the information provided
herein and the variations may be material. Readers are also cautioned that the
foregoing list of factors and risks is not exhaustive. Additional information
on these and other risks, uncertainties and factors that could affect Fort
Chicago's operations or financial results are included in our filings with the
securities commissions or similar authorities in each of the provinces of
Canada, as may be updated from time to time. There is no representation by
Fort Chicago that actual results achieved will be the same in whole or in part
as those set out in the forward-looking information. Furthermore, the
forward-looking statements contained herein are made as of the date hereof,
and Fort Chicago does not undertake any obligation to update publicly or to
revise any forward-looking information, whether as a result of new
information, future events or otherwise. Any forward-looking information
contained herein is expressly qualified by this cautionary statement.

    Certain financial information contained in this news release may not be
standard measures under Generally Accepted Accounting Principles ("GAAP") in
Canada and may not be comparable to similar measures presented by other
entities. These measures are considered to be important measures used by the
investment community and should be used to supplement other performance
measures prepared in accordance with GAAP in Canada. For further information
on non-GAAP financial measures used by Fort Chicago see Management's
Discussion and Analysis, in particular, the section entitled "Non-GAAP
Financial Measures" contained in the annual Management Discussion and
Analysis, filed by Fort Chicago with Canadian securities regulators.



    
    Fort Chicago Energy Partners L.P.
    -------------------------------------------------------------------------

    Consolidated Statement of Financial Position
    -------------------------------------------------------------------------
                                                  June   December       June
    ($ Thousands; unaudited)                  30, 2007   31, 2006   30, 2006
    -------------------------------------------------------------------------

    Assets
    Current assets
      Cash and short-term investments           46,522     44,718     55,075
      Transportation security deposits
       and revenue adjustments                   4,741      9,510      9,795
      Receivables                               49,804     40,368     71,823
      Inventory                                    824        698      1,814
      Prepaid expenses                           3,676      4,190      4,367
    -------------------------------------------------------------------------
                                               105,567     99,484    142,874

    Long-term receivables                      216,329    217,523    194,377
    Pipeline, plant and other capital
     assets                                  2,274,505  2,384,360  2,372,525
    Other assets                                 5,269     16,185     15,887
    -------------------------------------------------------------------------
                                             2,601,670  2,717,552  2,725,663
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities
    Current liabilities
      Payables                                  52,958     63,846     83,969
      Transportation security deposits           6,034      6,298      6,300
      Distribution payable                      10,154     10,049      9,540
      Deferred revenue                           9,158        821      9,487
      Current portion of long-term
       senior debt and capital leases           62,801     64,398     61,852
      Current portion of subordinated
       convertible debentures                   25,967          -          -
    -------------------------------------------------------------------------
                                               167,072    145,412    171,148

    Long-term senior debt and capital
     leases                                  1,429,103  1,484,582  1,496,923
    Subordinated convertible debentures         23,715     52,922     56,490
    Future taxes                               171,046    172,268    150,187
    Other long-term liabilities                 40,832     43,872     41,945
    -------------------------------------------------------------------------
                                             1,831,768  1,899,056  1,916,693
    -------------------------------------------------------------------------

    Partners' Equity
    Partners' capital account                  988,077    985,595    981,165
    Cumulative other comprehensive
     loss                                      (97,665)   (70,892)  (102,773)
    Cumulative net income                      435,198    398,487    364,419
    Cumulative distributions                  (555,708)  (494,694)  (433,841)
    -------------------------------------------------------------------------
                                               769,902    818,496    808,970
    -------------------------------------------------------------------------
                                             2,601,670  2,717,552  2,725,663
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Fort Chicago Energy Partners L.P.
    -------------------------------------------------------------------------

    Consolidated Statement of Income and Cumulative Income
    -------------------------------------------------------------------------
                                        Three months           Six months
                                        ended June 30         ended June 30
    -------------------------------------------------------------------------
    ($ Thousands, except per
     unit amounts; unaudited)          2007       2006       2007       2006
    -------------------------------------------------------------------------

    Revenues
      Transportation                 96,753     97,063    197,355    194,694
      Natural gas liquids            37,422     45,539     61,566     91,592
      Interest and other              1,770      1,218      3,231      1,870
    -------------------------------------------------------------------------
                                    135,945    143,820    262,152    288,156
    -------------------------------------------------------------------------
    Expenses
      Natural gas, natural
       gas liquids and
       transportation                10,459     24,958     22,026     55,998
      Operations and maintenance     21,582     21,502     43,914     42,849
      Depreciation and
       amortization                  29,866     28,994     61,001     58,424
      Interest and other finance     26,766     28,039     54,136     56,235
      General, administrative
       and project development       17,277     16,093     32,766     27,722
      Foreign exchange and other       (215)     1,219      1,765      3,117
    -------------------------------------------------------------------------
                                    105,735    120,805    215,608    244,345
    -------------------------------------------------------------------------
    Net income before taxes          30,210     23,015     46,544     43,811
      Current taxes                      31       (528)       121        298
      Future taxes                    7,370     (6,760)     9,712     (3,373)
    -------------------------------------------------------------------------
    Net income                       22,809     30,303     36,711     46,886
    Cumulative net income at
     the beginning of the period    412,389    334,116    398,487    317,533
    -------------------------------------------------------------------------
    Cumulative net income at
     the end of the period          435,198    364,419    435,198    364,419
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net income per Unit
      Basic and diluted                0.17       0.23       0.28       0.36
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Comprehensive Income and Cumulative Other
    Comprehensive Income
    -------------------------------------------------------------------------
                                        Three months           Six months
                                        ended June 30         ended June 30
    -------------------------------------------------------------------------
     ($ Thousands; unaudited)          2007       2006       2007       2006
    -------------------------------------------------------------------------

    Net income                       22,809     30,303     36,711     46,886
    Other comprehensive loss,
     net of taxes
      Cumulative translation
       adjustment
        Unrealized foreign
         exchange loss on
         translation of self
         sustaining foreign
         operations                 (27,997)   (16,977)   (31,817)   (15,811)
        Deemed realization of
         cumulative translation
         adjustment reclassified
         to net income                2,140      2,728      4,324      4,609
      Other                             720          -        720          -
    -------------------------------------------------------------------------
                                    (25,137)   (14,249)   (26,773)   (11,202)
    -------------------------------------------------------------------------
    Comprehensive income (loss)      (2,328)    16,054      9,938     35,684
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Cumulative other comprehensive
     loss at the beginning of the
     period                         (72,528)   (88,524)   (70,892)   (91,571)
    Other comprehensive loss,
     net of taxes                   (25,137)   (14,249)   (26,773)   (11,202)
    -------------------------------------------------------------------------
    Cumulative other comprehensive
     loss at the end of the period  (97,665)  (102,773)   (97,665)  (102,773)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Fort Chicago Energy Partners L.P.
    -------------------------------------------------------------------------

    Consolidated Statement of Cash Flows
    -------------------------------------------------------------------------
                                        Three months           Six months
                                        ended June 30         ended June 30
    -------------------------------------------------------------------------
    ($ Thousands; unaudited)           2007       2006       2007       2006
    -------------------------------------------------------------------------

    Operating
      Net income                     22,809     30,303     36,711     46,886
      Less: Non-cash
             transportation
             revenue                 (3,891)    (8,140)   (10,094)   (16,369)
      Add:  Depreciation,
             amortization and
             other non-cash
             items                   30,567     29,370     60,057     59,091
            Unrealized foreign
             exchange                  (912)     1,252        614      3,542
            Future taxes              7,370     (6,760)     9,712     (3,373)
      Changes in non-cash
       working capital              (22,254)    (1,492)    (4,821)    28,426
    -------------------------------------------------------------------------
                                     33,689     44,533     92,179    118,203
    -------------------------------------------------------------------------
    Financing
      Long-term debt issued,
       net of issue costs            29,465      3,010     43,141     18,511
      Long-term debt repaid         (30,570)   (30,963)   (33,205)   (35,112)
      Distributions paid            (30,613)   (28,285)   (60,993)   (57,741)
      Other                               -          -          -        986
    -------------------------------------------------------------------------
                                    (31,718)   (56,238)   (51,057)   (73,356)
    -------------------------------------------------------------------------
    Investing
      Pipeline, plant and other
       capital assets               (18,412)    (7,289)   (31,658)   (11,651)
      Changes in non-cash
       investing working capital     (1,514)     1,564     (4,557)     1,969
    -------------------------------------------------------------------------
                                    (19,926)    (5,725)   (36,215)    (9,682)
    -------------------------------------------------------------------------
    Increase (decrease) in cash
     and short-term investments
     before the effect of foreign
     exchange rate changes on
     cash and short-term
     investments                    (17,955)   (17,430)     4,907     35,165
    Effect of foreign exchange
     rate changes on cash and
     short-term investments          (2,853)    (1,628)    (3,103)    (1,463)
    Cash and short-term
     investments at the
     beginning of the period         67,330     74,133     44,718     21,373
    -------------------------------------------------------------------------
    Cash and short-term
     investments at the end
     of the period                   46,522     55,075     46,522     55,075
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Fort Chicago Energy Partners L.P.
    -------------------------------------------------------------------------

    Distributable Cash(1)
    -------------------------------------------------------------------------
                                        Three months           Six months
                                        ended June 30         ended June 30
    -------------------------------------------------------------------------
    ($ Thousands except
     where noted; unaudited)           2007       2006       2007       2006
    -------------------------------------------------------------------------

    Cash inflows
      Alliance/NRGreen
       distributions, prior to
       withholdings for capital
       expenditures and net of
       debt service                  28,433     27,758     59,182     57,449
      Aux Sable distributions
       received/receivable,
       net of support payments,
       non-recoverable debt
       service costs and
       maintenance capital           12,610      8,904     13,740     10,759
      AEGS distributable cash,
       after non-recoverable
       capital expenditures
       and debt service               4,078      4,169      7,839      8,347
      Interest income                   230        179        469        327
      Realized foreign
       exchange gains                    30        179         16        204
    -------------------------------------------------------------------------
                                     45,381     41,189     81,246     77,086
    Cash outflows
      General and
       administrative                 1,892      1,423      3,619      2,984
      Interest and other
       finance                        1,755      1,603      3,335      3,194
      Interest on convertible
       debentures                       918      1,058      1,844      2,102
      Taxes                              22       (528)       106        295
      Principal repayments on
       senior debt                      814        841      1,696      1,703
    -------------------------------------------------------------------------

    Distributable cash(1)            39,980     36,792     70,646     66,808
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Distributable cash per
     Unit ($)(2)                      0.304      0.282      0.538      0.513
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Distributions paid/payable       30,590     30,323     61,015     60,551
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Distributions paid/payable
     per Unit ($)                    0.2325     0.2325      0.465      0.465
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Distributable cash is not a standard measure under generally accepted
        accounting principles in Canada and may not be comparable to similar
        measures presented by other entities. Distributable cash represents
        the cash available to Fort Chicago for distribution to holders of
        Units after providing for debt service obligations and any capital
        expenditures that are not growth-oriented or recoverable and does not
        include distribution reserves, if any, available in Alliance and Aux
        Sable. Distributable cash is an important measure used by the
        investment community to assess the source and sustainability of Fort
        Chicago's cash distributions and should be used to supplement other
        performance measures prepared in accordance with generally accepted
        accounting principles in Canada. See reconciliation of distributable
        cash to cash flow from operating activities contained in Fort
        Chicago's Management Discussion and Analysis.
    (2) The number of Units used to calculate distributable cash per Unit is
        based on the average number of Units outstanding at each record date.
        For the three months ended June 30, 2007, the average number of Units
        outstanding for this calculation was 131,226,180 (2006 - 130,422,781)
        and 136,483,012 (2006 - 136,288,024) on a basic and diluted basis,
        respectively. For the six months ended June 30, 2007, the average
        number of Units outstanding for this calculation was 131,214,237
        (2006 - 130,217,909) and 136,483,012 (2006 - 136,203,593) on a basic
        and diluted basis, respectively. The number of Units outstanding
        would increase by 5,174,167 (2006 - 5,833,059) Units if the
        outstanding Convertible Debentures as at June 30, 2007 were converted
        into Units.
    





For further information:

For further information: Stephen H. White, President and C.E.O., Hume D.
Kyle, Vice President, Finance and C.F.O., Fort Chicago Energy Partners L.P.,
Stock Exchange Tower, 2150, 300 Fifth Avenue S.W., Calgary, AB, T2P 3C4,
Phone: (403) 296-0140, Fax: (403) 213-3648, www.fortchicago.com

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