Keyera Facilities Income Fund Announces 2009 First Quarter Results

    CALGARY, May 5 /CNW/ - Keyera Facilities Income Fund (TSX:KEY.UN, KEY.DB,
KEY.DB.A) ("Keyera") announced their 2009 first quarter 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 or, to
view the MD&A and financial statements, visit either Keyera's website or the
System for Electronic Document Analysis and Retrieval at


    -   Keyera delivered strong first quarter financial results from all
        business segments. Net earnings were $54.4 million ($0.86 per unit).

    -   Cash metrics were exceptionally strong in the first quarter,
        reflecting a typical first quarter sale of inventory and $59.3
        million of proceeds from the settlement of financial contracts put in
        place to protect the inventory. Cash flow from operating activities
        was $168.2 million, almost triple the first quarter of 2008.
        Distributable cash flow(1) was $117.6 million ($1.87 per unit),
        exceeding Keyera's current annualized distribution payment of $1.80
        per unit.

    -   Distributions to unitholders totaled $28.3 million in the first
        quarter ($0.45 per unit), resulting in a payout ratio of 24%.

    -   All business segments delivered solid first quarter results.
        Contribution from Gathering and Processing of $29.3 million was up
        slightly from the first quarter of 2008. Contribution from NGL
        Infrastructure was $13.7 million, 7% higher than the same period last
        year. The Marketing business also had a strong quarter, delivering
        contribution of $34.2 million, 26% higher than the first quarter of

    -   Keyera strengthened its financial position by completing a $97
        million private placement of long term debt on April 30, 2009.
        Proceeds will be used to repay $90 million of existing long term debt
        when it matures in October 2009. In addition, Keyera reduced its bank
        credit facilities by $119 million during the quarter.

    -   Keyera announced the implementation of a Premium Distribution(TM) and
        Distribution Reinvestment Plan, effective with the May distribution,
        to enhance liquidity and financial flexibility.

    (1) See "Non-GAAP Financial Measures" and a reconciliation of
        distributable cash flow to cash flow from operating activities in
        Keyera's 2009 First Quarter MD&A.

    Summary of Key Measures                                Three months ended
                                                                 March 31,
    (Thousands of Canadian dollars,
     except where noted)                                      2009      2008
    Net earnings                                            54,360    55,502
      Per unit ($/unit) - basic                               0.86      0.91
    Cash flow from operating activities                    168,213    58,412

    Distributable cash flow(1)                             117,587    40,502
      Per unit ($/unit)                                       1.87      0.66
    Distributions declared                                  28,330    25,661
      Per unit ($/unit)                                       0.45      0.42

    Payout ratio %(1)                                          24%       63%

    Gathering & Processing:
    Gross processing throughput (mmcf/d)                       940       843
    Net processing throughput (mmcf/d)                         793       663
    NGL Infrastructure:
    Gross processing throughput (mbbl/d)                       100       100
    Net processing throughput (mbbl/d)                          37        28
    NGL Inventory at March 31, 2009                         44,119    36,701
    Sales volumes (bbl/d)                                   70,521    66,126

    Capital expenditures                                    27,600    49,800
    Dispositions                                                 -      (200)

    Long-term debt                                         223,650   313,298
    Working capital deficit (surplus)(2)                   141,491   (56,099)
    Net debt                                               365,141   257,199
    Convertible debentures                                  78,982    20,981
    Net debt (including debentures)                        444,123   278,180

    Trust units outstanding - end of period                 62,999    61,355
    Weighted average number of
     units outstanding - basic                              62,934    61,295
    Weighted average number of
     units outstanding - diluted                            67,514    63,105
    (1) 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.
    (2) Working capital is defined as current assets less current

    Message to Unitholders

    Keyera continued to deliver strong operating results in all three
business segments during the first quarter. When combined with the proceeds
from settlement of our financial risk management contracts in our Marketing
business unit, first quarter cash metrics were exceptionally strong. These
results were achieved during a period of economic uncertainty and low
commodity prices. Keyera's success is a result of the stability and diversity
of our business model, the location of our assets and the investments we have
made in strategic infrastructure over the past several years. Like others,
Keyera will face challenges in this economic environment; however, we are well
positioned to meet these challenges and I am confident about our prospects for
the future.
    First quarter net earnings were $54.4 million as a result of strong
operational results. First quarter cash flow from operating activities was
$168.2 million, $109.8 million higher than the first quarter of 2008.
Distributable cash flow was $117.6 million, or $1.87 per unit, exceeding
Keyera's current annualized distribution of $1.80 per unit. First quarter
distributable cash flow was almost triple the $40.5 million, or $0.66 per
unit, recorded in the same period last year. Strong operational results
combined with $59.3 million from the settlement of financial risk management
contracts resulted in these exceptional cash metrics. Distributions to
unitholders were $28.3 million in the first quarter, or $0.45 per unit. Cash
was used to reduce our bank credit facilities by $119 million during the
quarter and fund capital expenditures. At the end of the quarter, $130 million
was drawn on our $330 million of established credit facilities.
    All three of our business lines contributed to these strong results.
First quarter Gathering and Processing contribution was $29.3 million, up
slightly from the first quarter of 2008. Contribution from our NGL
Infrastructure business was $13.7 million, 7% higher than the same period last
year. Marketing contribution of $34.2 million was $7.1 million, or 26%, higher
than the first quarter of 2008.
    Our Gathering and Processing business benefited from a number of new well
tie-ins, particularly at our Strachan, Nordegg River and Brazeau River gas
plants. The ownership interests we acquired in December at the Brazeau River,
Rimbey and Nevis gas plants performed as expected in the first quarter. Our
NGL Infrastructure business experienced strong terminal and storage demand in
the first quarter, to support additional propane demand during the winter
heating season. Fractionation volumes were also strong. In the Marketing
business, favorable market conditions continued into the first quarter and
resulted in higher NGL sales volumes and margins.
    Keyera continued to develop a number of organic growth projects during
the quarter, many of which were initiated in 2008. The ethane extraction
project at the Rimbey gas plant is well underway. The pipeline portion of the
project is complete and foundations and other construction at the plant
continued throughout the quarter. The process equipment is expected to arrive
on site in the second quarter and start up is still expected by mid year,
assuming construction continues as planned. Once operational, all ethane
produced will be sold to a major petrochemical customer under a long-term
sales contract. At the Strachan gas plant, we completed a de-bottlenecking
project during the quarter to enable additional sweet gas volumes to be
processed at the plant.
    In addition to the continued uncertainty in the financial markets, the
prices of crude oil, natural gas and other related commodities continued to be
low during the quarter, relative to 2008. As a result, a number of oil and gas
producers have slowed the pace of their drilling and development activities
across western Canada, and in some cases, in the areas adjacent to Keyera
operations. We are encouraged by the success a number of producers have had
using horizontal drilling and multi-stage fracturing technology to target
tight gas in a number of zones in the foothills area. The recent changes in
royalty rates that came into effect on April 1, 2009, combined with royalty
credits for deep gas drilling, are also beneficial to our customers. In the
short-term, we believe that our business model provides insulation from
short-term changes in activity levels and, should we see a reduction in
throughput at our facilities, the effect on our revenues will be gradual.
    Some of Keyera's internal growth projects support producer initiatives.
As a result, these developments can be subject to the timing of producers'
plans. In British Columbia, we have decided to defer completion of the plant
expansion at the Caribou gas plant, as low prices have resulted in a slow down
in drilling by a number of producers in the area. The remaining work will be
completed when drilling activity recovers. Given the franchise nature of many
of our facilities, these sorts of projects are not lost but simply deferred
until such time as the new capacity is required.
    We continued to strengthen our infrastructure network during the quarter
in the Edmonton/Fort Saskatchewan area. Modifications to ADT were completed in
the first quarter, including piping connections to our Edmonton terminal, and
the facility began operating in February on a limited basis. At Fort
Saskatchewan, washing of the new storage cavern continued throughout the
quarter and it is expected to be operational by mid 2010. These projects, as
well as several smaller ones underway in the area, enhance our base NGL
business while continuing to develop the pipeline connections necessary to
strengthen our operational flexibility. The integration of our infrastructure
with other plants and facilities in the area is a key piece of our growth
    The strength of our business model and our conservative approach to
financial matters has allowed us to access the credit markets over the past
two quarters, despite the general economic concerns over credit and liquidity.
In April, we completed a $97 million private placement of long-term notes in
anticipation of a long-term notes repayment due in October 2009. This
financing follows the issuance of $80 million of convertible debentures in
December to partially finance our gas plant acquisitions. Earlier this month,
we announced the implementation of a Premium Distribution(TM) and Distribution
Reinvestment Plan, beginning with the May distribution, which will enhance
liquidity and financial flexibility.
    On behalf of the Fund's directors and management team, I thank you for
your continued support and look forward to continued success in 2009.

    Jim V. Bertram
    President and CEO
    Keyera Facilities Income Fund

    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 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

    %SEDAR: 00019203E

For further information:

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

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