Fort Chicago announces solid 2009 third quarter results and updated 2009
guidance
/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/ Trading Symbol: FCE.UN Exchange: TSX
"I am also pleased Aux Sable has entered into a strategic alliance with Crew Energy Inc. to develop infrastructure in the Montney region of British Columbia. The arrangement with Crew is an important step in the advancement of our strategy to target liquids-rich gas with the view to enhancing the heat content of natural gas transported on Alliance and NGL recovery at Aux Sable's fractionation facility."
Highlights - Net income of $30.8 million or $0.23 per Unit for third quarter 2009 - Distributable cash of $45.4 million or $0.33 per Unit for third quarter 2009 - Cash from operating activities of $89.4 million for third quarter 2009 - $22.1 million of margin-based lease revenues recognized for third quarter 2009; additional $0.9 million generated but not yet recognized - Aux Sable's strategic alliance with Crew Energy Inc. and agreement to acquire the Septimus Gas Plant in the liquids-rich Montney region Financial Highlights Three months ended Nine months ended September 30 September 30 ------------------------------------------------------------------------- ($ Thousands, except per Unit amounts) 2009 2008 2009 2008 ------------------------------------------------------------------------- Revenues Pipeline(1) 102,786 100,705 312,643 310,036 NGL 42,478 55,754 92,175 152,060 Power 17,840 24,362 57,682 70,242 Fort Chicago - Corporate 62 79 760 463 ------------------------------------------------------------------------- 163,166 180,900 463,260 532,801 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net income (loss) before tax Pipeline 26,514 26,154 80,540 87,801 NGL 20,063 27,440 23,412 65,527 Power 5,719 2,953 1,520 9,657 Fort Chicago - Corporate General, administrative and project development (5,817) (5,220) (19,311) (17,184) Interest (4,181) (4,160) (9,820) (13,019) Depreciation (1,011) (1,029) (3,043) (3,254) Foreign exchange gains (losses) 456 (5,742) 2,296 (19,888) ------------------------------------------------------------------------- (10,553) (16,151) (29,878) (53,345) ------------------------------------------------------------------------- 41,743 40,396 75,594 109,640 Taxes (10,977) (13,110) (13,565) (30,192) ------------------------------------------------------------------------- Net income 30,766 27,286 62,029 79,448 Per Unit ($) 0.23 0.20 0.46 0.59 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Adjustments to net income for non-recurring (gains) losses (net of tax) Fair value loss reclassified from other comprehensive income - - 2,288 - Alliance shipper claim settlement - - - (6,840) Gain on dilution of investment - - - (3,660) ------------------------------------------------------------------------- Adjusted Net income(2) 30,766 27,286 64,317 68,948 Per Unit ($) 0.23 0.20 0.48 0.52 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) Net of intersegment eliminations. (2) This item is not a standard measure under GAAP and may not be comparable to similar measures presented by other entities. The Partnership believes its use of Adjusted Net Income provides useful information to management and investors by improving the ability to compare financial results among reporting periods and by enhancing the understanding of the Partnership's operating performance and ability to fund distributions. See section entitled "Non-GAAP Financial Measures" contained in Fort Chicago's 2008 Management's Discussion and Analysis.
For the third quarter of 2009 the Partnership generated net income of
The NGL business generated third quarter net income before tax of
The Power business generated net income before tax of
Corporate costs before income taxes for the third quarter were
Three months ended Nine months ended September 30 September 30 ------------------------------------------------------------------------- ($ Thousands, except per Unit amounts) 2009 2008 2009 2008 ------------------------------------------------------------------------- Distributable cash(3) Pipeline 33,295 31,400 101,763 104,077 NGL 21,068 30,077 26,650 68,925 Power 7,018 8,059 16,847 9,087 Fort Chicago - Corporate (15,944) (16,251) (30,194) (44,424) ------------------------------------------------------------------------- 45,437 53,285 115,066 137,665 Per Unit 0.33 0.40 0.85 1.04 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (3) This item is not a standard measure under GAAP and may not be comparable to similar measures presented by other entities. See section entitled "Non-GAAP Financial Measures" contained in Fort Chicago's 2008 Management's Discussion and Analysis. A reconciliation of Distributable Cash to Cash from Operating Activities is provided elsewhere in this news release.
Distributable cash for the third quarter of 2009 was
Three months ended Nine months ended September 30 September 30 ------------------------------------------------------------------------- ($ Thousands, except per Unit amounts) 2009 2008 2009 2008 ------------------------------------------------------------------------- Cash from Operating Activities Pipeline 75,784 69,874 176,702 176,388 NGL 19,977 21,861 22,766 64,353 Power 7,096 958 21,313 6,810 Fort Chicago - Corporate (13,408) (4,471) (53,725) (24,218) ------------------------------------------------------------------------- 89,449 88,222 167,056 223,333 ------------------------------------------------------------------------- -------------------------------------------------------------------------
The Partnership generated cash from operating activities of
Operating Highlights
During the third quarter of 2009 the Alliance pipeline continued to operate in a reliable manner, fully meeting its contracted 1.325 billion cubic feet per day of firm-service shipping capacity. Actual third quarter transportation deliveries averaged 1.559 bcf/d, a slight increase from volumes of 1.546 bcf/d delivered during the same period last year. AEGS third quarter toll volumes of 278.8 thousand barrels per day decreased relative to 298.4 mbbls/d in the same period last year, due primarily to lower ethane receipts from Empress-area extraction plants during the quarter. Aux Sable processed 97.5 percent of the natural gas delivered by Alliance during the third quarter. Average NGL daily volumes were 66.3 mbbls/d for the quarter, up from 64.6 mbbls/d for the third quarter of 2008. Fort
Aux Sable's Agreement to Acquire Septimus Gas Plant
On
Aux Sable has entered into a committed term sheet with a Canadian financial institution to fund up to 60 percent of the acquisition cost of the Septimus gas plant, to a maximum of
Crew has the option to repurchase 50 percent of the plant and to share in the ownership of future developments associated with the plant. Aux Sable and Crew are currently proposing an expansion that would increase the Septimus gas plant's capacity to 50 mmcf/d and a 21-kilometre rich gas pipeline to interconnect with the Alliance pipeline. The proposed pipeline would allow for the delivery of Montney natural gas and liquids to export markets and provide processing and transportation alternatives for producers in the Septimus area.
Updated 2009 Guidance
Over the balance of the year the Partnership expects NGL market fundamentals to continue to support solid earnings and cash flows from Aux Sable. The Pipeline business is expected to continue to generate stable earnings and cash flows, which are underpinned by long-term contracts. Earnings and cash flows from the Power business are expected to be impacted by planned maintenance at the California cogeneration facilities. Based on the Partnership's year-to-date performance and its current outlook, 2009 distributable cash is now expected to be in the range of
Conference Call ---------------
Fort
Fort
Class A Unit Ownership Restrictions
Fort
Certain information contained herein relating to, but not limited to, Fort
Certain financial information contained in this news release may not be standard measures under Generally Accepted Accounting Principles ("GAAP") in
Fort Chicago Energy Partners L.P. ------------------------------------------------------------------------- Consolidated Statement of Financial Position ------------------------------------------------------------------------- September December 30, 31, ($ Thousands; unaudited) 2009 2008 ------------------------------------------------------------------------- Assets Current assets Cash and short-term investments 88,037 56,064 Restricted cash 3,517 20,280 Transportation security deposits and revenue adjustments 2,066 7,989 Receivables 60,406 61,935 Inventory 4,578 3,913 Prepaid expenses and other 4,596 12,349 ------------------------------------------------------------------------- 163,200 162,530 Long-term receivables 364,350 273,392 Pipeline, plant and other capital assets 2,347,837 2,547,701 Intangible assets 105,362 121,267 Other assets 22,567 22,789 ------------------------------------------------------------------------- 3,003,316 3,127,679 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities Current liabilities Payables 97,671 112,623 Transportation security deposits and revenue adjustments 5,367 5,581 Distribution payable 6,776 11,162 Current portion of long-term senior debt and capital leases 123,215 89,176 Exchangeable debentures 24,543 25,717 ------------------------------------------------------------------------- 257,572 244,259 Long-term senior debt and capital leases 1,594,786 1,758,958 Subordinated convertible debentures 24,017 23,909 Future taxes 324,258 239,823 Other long-term liabilities 55,660 60,143 ------------------------------------------------------------------------- 2,256,293 2,327,092 ------------------------------------------------------------------------- Partners' Equity Partners' capital account 1,042,345 1,013,278 Cumulative other comprehensive loss (50,478) (7,306) Cumulative net income 608,172 546,143 Cumulative distributions (853,016) (751,528) ------------------------------------------------------------------------- 747,023 800,587 ------------------------------------------------------------------------- 3,003,316 3,127,679 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Fort Chicago Energy Partners L.P. ------------------------------------------------------------------------- Consolidated Statement of Income and Cumulative Income ------------------------------------------------------------------------- Three months ended Nine months ended September 30 September 30 ------------------------------------------------------------------------- ($ Thousands, except per Unit amounts; unaudited) 2009 2008 2009 2008 ------------------------------------------------------------------------- Revenues Operating revenues 162,081 180,294 459,465 515,865 Interest and other 1,085 606 3,795 16,936 ------------------------------------------------------------------------- 163,166 180,900 463,260 532,801 ------------------------------------------------------------------------- Expenses Operations and maintenance 44,451 56,981 141,491 171,302 Depreciation and amortization 34,334 32,265 106,329 94,851 Interest and other finance 25,578 26,558 77,104 81,277 General, administrative and project development 20,385 18,956 63,874 55,756 Foreign exchange and other (3,325) 5,744 (1,132) 19,975 ------------------------------------------------------------------------- 121,423 140,504 387,666 423,161 ------------------------------------------------------------------------- Net income before taxes 41,743 40,396 75,594 109,640 Current taxes 7,588 8,510 10,407 19,781 Future taxes 3,389 4,600 3,158 10,411 ------------------------------------------------------------------------- Net income 30,766 27,286 62,029 79,448 Cumulative net income at the beginning of the period 577,406 536,806 546,143 484,644 ------------------------------------------------------------------------- Cumulative net income at the end of the period 608,172 564,092 608,172 564,092 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net income per Unit Basic and diluted 0.23 0.20 0.46 0.59 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Consolidated Statements of Comprehensive Income and Cumulative Other Comprehensive Income ------------------------------------------------------------------------- Three months ended Nine months ended September 30 September 30 ------------------------------------------------------------------------- ($ Thousands; unaudited) 2009 2008 2009 2008 ------------------------------------------------------------------------- Net income 30,766 27,286 62,029 79,448 Other comprehensive income (loss), net of taxes Cumulative translation adjustment Unrealized foreign exchange gain (loss) on translation of self-sustaining foreign operations (36,288) 15,403 (62,174) 25,240 Deemed realization of cumulative translation adjustment reclassified to net income 1,097 5,182 2,135 21,079 Gain (loss) on hedge of self-sustaining foreign operation 6,514 (3,304) 14,384 (5,744) Fair value loss transferred to net income - - 1,427 - Other 187 (4,178) 1,056 (641) ------------------------------------------------------------------------- (28,490) 13,103 (43,172) 39,934 ------------------------------------------------------------------------- Comprehensive income 2,276 40,389 18,857 119,382 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Cumulative other comprehensive loss at the beginning of the period (21,988) (75,261) (7,306) (102,092) Other comprehensive income (loss), net of taxes (28,490) 13,103 (43,172) 39,934 ------------------------------------------------------------------------- Cumulative other comprehensive loss at the end of the period (50,478) (62,158) (50,478) (62,158) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Fort Chicago Energy Partners L.P. ------------------------------------------------------------------------- Consolidated Statement of Cash Flows ------------------------------------------------------------------------- Three months ended Nine months ended September 30 September 30 ------------------------------------------------------------------------- ($ Thousands; unaudited) 2009 2008 2009 2008 ------------------------------------------------------------------------- Operating Net income 30,766 27,286 62,029 79,448 Non-cash transportation revenue (2,192) (2,179) (3,444) (5,687) Depreciation, amortization and other non-cash items 35,642 32,475 109,484 89,039 Unrealized foreign exchange loss (gain) (4,866) 6,352 (4,644) 21,056 Future taxes 3,389 4,600 3,158 10,411 Changes in non-cash working capital 26,710 19,688 473 29,066 ------------------------------------------------------------------------- 89,449 88,222 167,056 223,333 ------------------------------------------------------------------------- Financing Long-term debt issued, net of issue costs 198,115 - 198,115 - Long-term debt repaid (929) (971) (38,216) (36,785) Net change in credit facilities (205,852) 39,244 (199,395) 53,663 Distributions paid (21,258) (33,443) (76,810) (99,426) Other 472 - (40) (402) ------------------------------------------------------------------------- (29,452) 4,830 (116,346) (82,950) ------------------------------------------------------------------------- Investing Acquisition of Brush II Generation Facility, net of cash acquired - (34,015) - (34,015) Pipeline, plant and other capital assets (8,017) (32,133) (22,091) (96,901) Restricted cash 4,852 12,241 16,763 43,038 Other 858 - (150) (11,307) Changes in non-cash investing working capital (534) (1,516) (9,335) (1,801) ------------------------------------------------------------------------- (2,841) (55,423) (14,813) (100,986) ------------------------------------------------------------------------- Increase in cash and short-term investments before the effect of foreign exchange rate changes on cash and short-term investments 57,156 37,629 35,897 39,397 Effect of foreign exchange rate changes on cash and short-term investments (1,347) 1,288 (3,924) 1,943 Cash and short-term investments at the beginning of the period 32,228 49,614 56,064 47,191 ------------------------------------------------------------------------- Cash and short-term investments at the end of the period 88,037 88,531 88,037 88,531 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Fort Chicago Energy Partners L.P. ------------------------------------------------------------------------- Distributable Cash (1) ------------------------------------------------------------------------- Three months ended Nine months ended September 30 September 30 ------------------------------------------------------------------------- ($ Thousands, except where noted; unaudited) 2009 2008 2009 2008 ------------------------------------------------------------------------- Cash inflows Alliance distributions, prior to withholdings for capital expenditures and net of debt service 29,403 27,527 90,576 92,210 AEGS distributable cash, after non-recoverable capital expenditures and debt service 3,892 3,873 11,187 11,867 Aux Sable distributions, net of support payments, non-recoverable debt service costs and maintenance capital 21,068 30,077 26,650 68,925 Fort Chicago Power distributable cash, after maintenance capital expenditures and debt service 6,578 7,559 15,527 8,062 NRGreen distributions, prior to withholding for project development costs 440 500 1,320 1,025 Realized foreign exchange gains (losses), interest income and other (358) 79 3,989 449 ------------------------------------------------------------------------- 61,023 69,615 149,249 182,538 Cash outflows General and administrative (3,463) (2,955) (11,917) (10,219) Interest and other finance (3,854) (4,099) (9,486) (12,590) Taxes (7,452) (8,494) (10,142) (19,718) Principal repayments on senior debt (817) (782) (2,638) (2,346) ------------------------------------------------------------------------- (15,586) (16,330) (34,183) (44,873) ------------------------------------------------------------------------- Distributable cash(1) 45,437 53,285 115,066 137,665 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Distributable cash per Unit ($)(2) 0.33 0.40 0.85 1.04 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Distributions paid/payable 34,240 33,494 101,541 99,618 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Distributions paid/payable per Unit ($) 0.25 0.25 0.75 0.75 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (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 but does not include distribution reserves, if any, available in Fort Chicago's jointly held businesses, or project development costs, which represent discretionary costs, the recoverability of which has not been established, incurred to assess the commercial viability of new greenfield business initiatives unrelated to the Partnership's operating businesses. 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 the following table for the reconciliation of distributable cash to cash flow from operating activities. (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 September 30, 2009, the average number of Units outstanding for this calculation was 136,796,843 (2008 - 134,110,877) and 139,058,464 (2008 - 136,372,498) on a basic and diluted basis, respectively. For the nine months ended September 30, 2009, the average number of units outstanding for this calculation was 135,371,692 (2008 - 132,905,440) and 137,633,313 (2008 - 136,433,895) on a basic and diluted basis, respectively. The number of Units outstanding would increase by 2,261,621 (2008 - 2,261,621) Units if the outstanding Convertible Debentures as at September 30, 2009 were converted into Units. Fort Chicago Energy Partners L.P. ------------------------------------------------------------------------- Reconciliation of Distributable Cash to Cash Flow from Operating Activities ------------------------------------------------------------------------- Three months ended Nine months ended September 30, 2009 September 30, 2009 ------------------------------------------------------------------------- ($ Thousands; unaudited) 2009 2008 2009 2008 ------------------------------------------------------------------------- Consolidated cash flow from operating activities 89,449 88,222 167,056 223,333 Add (deduct): Cash flow generated from operating activities applicable to jointly held businesses(1) (41,148) (22,721) (82,031) (67,889) ------------------------------------------------------------------------- Cash flow from operating activities applicable to wholly-owned businesses(2) 48,301 65,501 85,025 155,444 Add (deduct) amounts applicable to wholly-owned businesses: Project development costs 2,442 2,693 8,408 8,122 Change in non-cash working capital (3,553) (6,335) 14,156 (13,781) Principal repayments on senior notes (1,464) (1,378) (4,544) (4,134) Maintenance capital expenditures (603) 805 (585) (6,645) Distributions earned greater than distributions received(3) 314 (8,001) 12,606 (1,341) ------------------------------------------------------------------------- Distributable cash 45,437 53,285 115,066 137,665 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) Represents the cash flow from operating activities applicable to jointly held businesses which is not under the sole control of the Partnership and, as a consequence, is not included in distributable cash until such time as distributions are declared by the jointly held businesses. (2) Net of support payments made to Alliance Canada Marketing of $2.4 million and $6.5 million for the three and nine months ended September 30, 2009 respectively (2008 - $0.5 million and $2.2 million, respectively). (3) Represents the difference between distributions declared by jointly held businesses and distributions received.
For further information: For further information: Stephen H. White, President and Chief Executive Officer; Richard G. Weech, Vice President, Finance and Chief Financial Officer; Fort Chicago Energy Partners L.P., Livingston Place, Suite 440, 222 - 3rd Avenue S.W., Calgary, AB, T2P 0B4, Phone: (403) 296-0140, Fax: (403) 213-3648, www.fortchicago.com
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