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 $0.9 million generated but not yet
recognized
- Aux Sable's strategic alliance with Crew Energy Inc. and agreement to
acquire the Septimus Gas Plant in the liquids-rich Montney region
Financial Highlights
Three months ended Nine months ended
September 30 September 30
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($ Thousands, except per
Unit amounts) 2009 2008 2009 2008
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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
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163,166 180,900 463,260 532,801
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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)
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(10,553) (16,151) (29,878) (53,345)
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41,743 40,396 75,594 109,640
Taxes (10,977) (13,110) (13,565) (30,192)
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Net income 30,766 27,286 62,029 79,448
Per Unit ($) 0.23 0.20 0.46 0.59
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Adjustments to net income
for non-recurring
(gains) losses (net of tax)
Fair value loss reclassified
from other comprehensive
income - - 2,288 -
Alliance shipper
claim settlement - - - (6,840)
Gain on dilution
of investment - - - (3,660)
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Adjusted Net income(2) 30,766 27,286 64,317 68,948
Per Unit ($) 0.23 0.20 0.48 0.52
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(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
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($ 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)
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45,437 53,285 115,066 137,665
Per Unit 0.33 0.40 0.85 1.04
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(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
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($ Thousands, except per
Unit amounts) 2009 2008 2009 2008
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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)
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89,449 88,222 167,056 223,333
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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.
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Consolidated Statement of Financial Position
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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
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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
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3,003,316 3,127,679
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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
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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
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2,256,293 2,327,092
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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)
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747,023 800,587
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3,003,316 3,127,679
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Fort Chicago Energy Partners L.P.
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Consolidated Statement of Income and Cumulative Income
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Three months ended Nine months ended
September 30 September 30
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($ Thousands, except per
Unit amounts; unaudited) 2009 2008 2009 2008
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Revenues
Operating revenues 162,081 180,294 459,465 515,865
Interest and other 1,085 606 3,795 16,936
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163,166 180,900 463,260 532,801
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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
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121,423 140,504 387,666 423,161
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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
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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
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Cumulative net income at the
end of the period 608,172 564,092 608,172 564,092
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Net income per Unit
Basic and diluted 0.23 0.20 0.46 0.59
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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)
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(28,490) 13,103 (43,172) 39,934
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Comprehensive income 2,276 40,389 18,857 119,382
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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
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Cumulative other comprehensive
loss at the end of the period (50,478) (62,158) (50,478) (62,158)
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Fort Chicago Energy Partners L.P.
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Consolidated Statement of Cash Flows
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Three months ended Nine months ended
September 30 September 30
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($ 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
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89,449 88,222 167,056 223,333
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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)
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(29,452) 4,830 (116,346) (82,950)
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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)
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(2,841) (55,423) (14,813) (100,986)
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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
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Cash and short-term
investments at the end
of the period 88,037 88,531 88,037 88,531
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Fort Chicago Energy Partners L.P.
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Distributable Cash (1)
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Three months ended Nine months ended
September 30 September 30
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($ Thousands, except
where noted; unaudited) 2009 2008 2009 2008
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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
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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)
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(15,586) (16,330) (34,183) (44,873)
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Distributable cash(1) 45,437 53,285 115,066 137,665
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Distributable cash
per Unit ($)(2) 0.33 0.40 0.85 1.04
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Distributions paid/payable 34,240 33,494 101,541 99,618
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Distributions paid/payable
per Unit ($) 0.25 0.25 0.75 0.75
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(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.
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Reconciliation of Distributable Cash to Cash Flow from Operating
Activities
-------------------------------------------------------------------------
Three months ended Nine months ended
September 30, 2009 September 30, 2009
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($ 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)
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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)
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Distributable cash 45,437 53,285 115,066 137,665
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(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: 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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