Keyera Facilities Income Fund Announces 2009 Second Quarter Results

    CALGARY, Aug. 5 /CNW/ - Keyera Facilities Income Fund (TSX:KEY.UN,
KEY.DB, KEY.DB.A) ("Keyera") announced their 2009 second 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


    -  Strong performance in all three business lines enabled Keyera to
       deliver strong financial results in the second quarter.

    -  Keyera's distributable cash flow(1) was $53.0 million ($0.84 per
       unit), slightly lower than the record $56.6 million ($0.92 per unit)
       second quarter results posted last year. Distributions to unitholders
       totaled $28.4 million in the second quarter ($0.45 per unit),
       resulting in a payout ratio of 54%. Net earnings were $21.1 million
       ($0.33 per unit) in the second quarter compared to $22.7 million
       ($0.37 per unit) in the same period in 2008.

    -  All business segments delivered strong second quarter results.

       -  Additional plant ownership and solid throughput volumes enabled the
          Gathering and Processing segment to deliver contribution of $31.7
          million, 10% higher than the second quarter of 2008, despite lower
          drilling activity this year.

       -  Contribution from the NGL Infrastructure segment was $15.0 million,
          32% higher than the same period last year, driven by strong demand
          for storage and fractionation services.

       -  Driven by strong butane demand, Marketing segment contribution,
          while lower than the exceptionally strong contribution of $18.6
          million posted in the second quarter of 2008, was solid at $8.4

    -  Keyera invested $23.1 million in growth capital initiatives during
       the second quarter, including the acquisition of an additional 6%
       interest in the Strachan gas plant, to bring its ownership in that
       facility to 91%.

    -  The ethane extraction project at the Rimbey gas plant was completed
       in July and, in early August the facility began generating cash
       flow through the sale of ethane under a long-term contract.

    -  Keyera currently expects to convert to a dividend paying corporation
       in January 2011, assuming unitholder and other required
       approvals.(2) Upon conversion, Keyera is positioned to maintain
       current distribution levels. Overall, its conversion strategy is
       designed to facilitate Keyera's growth plan and maximize unitholder

       (1) See "Non-GAAP Financial Measures" on page 28 and a reconciliation
           of distributable cash flow to cash flow from operating activities
           on page 24.

       (2) See the section titled "Corporate Conversion" in the 2009 Q2 MD&A
           for a further discussion of the factors and assumptions underlying
           Keyera's proposed conversion strategy.

    Summary of Key Measures
                                       Three months ended   Six months ended
    (Thousands of Canadian                    June 30,           June 30,
     dollars, except
     where noted)                         2009      2008      2009      2008
    Net earnings                        21,057    22,729    75,417    78,231
      Per unit ($/unit) - basic           0.33      0.37      1.20      1.28
    Cash flow from operating
     activities                         63,640     2,391   231,853    60,803

    Distributable cash flow(1)          53,045    56,576   170,183    96,277
      Per unit ($/unit)                   0.84      0.92      2.70      1.57
    Distributions declared              28,438    24,882    56,768    50,543
      Per unit ($/unit)                   0.45      0.41      0.90      0.82

    Payout ratio %1                        54%       44%       33%       52%

    Gathering & Processing:
    Gross processing throughput (MMcf/d)   915       896       927       870
    Net processing throughput (MMcf/d)     766       684       779       675
    NGL Infrastructure:
    Gross processing throughput (Mbbl/d)    98        95        99        98
    Net processing throughput (Mbbl/d)      30        31        34        30
    NGL Inventory                       51,055   139,902    51,055   139,902
    Sales volumes (Bbl/d)               66,800    48,600    68,600    57,400

    Capital expenditures                23,648    41,895    51,258    91,692
    Dispositions                         2,995         -     2,995       150

    Long-term debt                                         316,342   313,398
    Working capital deficit (surplus)(2)                    45,290   (40,659)
    Net debt                                               361,632   272,739
    Convertible debentures                                  78,646    20,436
    Net debt (including debentures)                        440,278   293,175

    Trust units outstanding - end of period                 63,390    61,478
    Weighted average number of
     units outstanding - basic                              63,031    61,353
    Weighted average number of
     units outstanding - diluted                            67,579    63,131
    (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

    Based on strong performance in all three business segments, Keyera once
again delivered solid second quarter results. Building on the success we
achieved in the first quarter this year, our second quarter results
demonstrated our ability to deliver value to our unitholders despite the
economic slowdown. I believe that achieving these strong results in this
challenging environment is a testament to our business model and the
opportunities we are able to generate. The integration of our business lines,
the size and strategic location of our assets, our broad customer base and our
responsible approach to financial and risk management contribute to our
continuing business success.
    Distributable cash flow in the second quarter was $53.0 million, or $0.84
per unit, slightly lower than the $56.6 million, or $0.92 per unit, recorded
in an exceptionally strong second quarter last year. Distributions to
unitholders were $28.4 million in the second quarter, or $0.45 per unit,
resulting in a payout ratio of 54%. Second quarter net earnings were $21.1
million, compared to $22.7 million in the same period of 2008.
    Second quarter Gathering and Processing contribution was $31.7 million,
10% higher than the second quarter of 2008, despite turnarounds at two
facilities during the quarter and a steep decline in drilling activity across
the Western Canada Sedimentary Basin this year. We were encouraged by
increased throughput at a number of our facilities during the quarter and the
contribution we are seeing from the acquisitions we completed in 2008. In
Keyera's areas of operations, producers are still selectively drilling wells,
often focusing on horizontal drilling and multi-stage fracturing techniques
and targeting gas that is rich in natural gas liquids. The recent decision by
the Alberta government to extend its incentive programs for an additional year
may help encourage drilling activity.
    Within Keyera, we are continuing to work with our producer customers to
deliver cost effective and value added services intended to help enhance their
economics, while at the same time increasing throughput and efficiencies at
our gathering and processing facilities. During the quarter, a number of
producers tied new gas production into Foothills Region plants, particularly
along the Garrington pipeline which delivers gas to the Strachan gas plant. At
Brazeau River, we were successful in attracting gas which had previously been
processed elsewhere, increasing throughout at that facility. In July, a
producer announced that it had identified 165 horizontal drilling locations on
lands it acquired around the Rimbey gas plant. This multi-zone area gives
producers exposure to emerging resource plays in a number of geological
    We are also very pleased to announce that we have begun operation of the
ethane extraction plant at the Rimbey gas plant. The facility produces
approximately 5,000 barrels per day of ethane, which is sold to a major
petrochemical customer under a long-term sales contract.
    Contribution from our growing NGL Infrastructure business was $15.0
million, up 32% from the same period last year. Strong demand for storage and
fractionation services in the second quarter was the primary reason for the
strong NGL Infrastructure results.
    Typical seasonal market conditions in the second quarter of 2009 resulted
in the Marketing contribution being down compared to the first quarter, as
well as the near record contribution of $18.6 million recorded in the second
quarter of 2008. Despite this decrease, we were pleased with our Marketing
contribution of $8.4 million. Sales volumes were higher than previous years,
with increased supply volumes secured for this contract year. In particular,
butane sales and margins were strong during the quarter.
    Our strong, well developed network of NGL storage, fractionation,
transportation and terminalling facilities within and connected to the
Edmonton/Fort Saskatchewan energy hub, together with our logistics expertise,
allow us to provide essential services to our customers and partners and are
key factors to the success of our Marketing business. We are committed, and
well positioned financially, to add to our infrastructure when appropriate
opportunities arise. Examples of this include the commissioning of ADT earlier
this year, and the development of a new storage cavern at Fort Saskatchewan
that we expect to be operational by mid 2010.
    Based on our ongoing monitoring of activity levels and supply/demand
trends, our operational flexibility and our approach to risk management, we
believe we can effectively adapt to meet NGL market needs. With respect to
condensate in particular, oil sands development will be a key factor in
determining demand. We expect condensate margins to continue to be relatively
low in the third quarter, but indications are that condensate demand may
strengthen towards the end of the year, as supply and demand become more
balanced. During periods of oversupply, Keyera expects to continue to be a
provider of condensate storage services; in periods of increasing demand, we
expect to see increased use of our rail, pipeline and logistics services, as
well as additional opportunities to import condensate from the United States.
    While indications are that natural gas prices will continue to be low for
the balance of the year, I am confident in Keyera's ability to continue
delivering value added services to our customers, building unitholder value
and growing our business. In addition, over the past 18 months we have made
several investments in facility expansions and acquisitions, as we position
Keyera for natural gas and oil sands growth over the next several decades. As
the economic situation improves, we expect these assets to deliver significant
additional cash flow.
    As we look ahead to 2011, Keyera is continuing to develop its plans for
dealing with the changes to the tax treatment of income trusts. At this time,
we anticipate that Keyera will convert to a corporation in January 2011
subject to unitholder and regulatory approvals. Given our current payout
ratio, conservative balance sheet and complement of growth opportunities, we
also believe that Keyera is positioned to be able to maintain current
distribution levels upon conversion to a dividend paying corporation, assuming
no material changes in the interim. As we move forward, our corporate
conversion strategy and related corporate dividend policy will be driven by
our business objectives of strategic growth and value creation for our
unitholders. I encourage readers to refer to the "Corporate Conversion"
section of the 2009 Second Quarter Management's Discussion and Analysis for a
further discussion of our conversion strategy and the factors and assumptions
that will continue to shape it.
    Overall, the diversified business drivers underlying our three business
lines, combined with the steps we have taken to strengthen our balance sheet,
contribute to our ability to adapt to the changing environment. Going forward,
we plan to use our strong financial position to pursue opportunities, both
internally and through acquisitions, to enhance our business and create value.
    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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