CALGARY, March 16, 2020 /CNW/ -Due to the unprecedented environment and the sharp decline in Keyera's share price, Keyera Corp. (TSX:KEY) ("Keyera") is providing the following information to address investor inquiries. Keyera remains confident in its business outlook given its strong financial position and integrated portfolio of diverse assets and services that serve both natural gas and oil sands producers.
Keyera's Strong Financial Position Keyera's financial position includes the following:
a strong balance sheet with Net Debt to Adjusted EBITDA of 2.7x as of December 31, 2019, including 50% of the subordinated hybrid notes as debt;
a long-term payout ratio target range of between 50% and 70% (2019 – 67%; 2018 – 56%);
BBB investment grade corporate credit ratings from DBRS Limited and S&P Global;
a $1.5 billion line of credit ($90 million drawn as of December 31, 2019); and
no meaningful long-term debt maturities in the next five years (less than 15% of total long-term debt).
Keyera's 2020 Marketing Guidance Based on year-to-date performance and negotiation of natural gas liquids ("NGL") supply agreements for the contract year beginning April 1, Keyera expects 2020 realized margin for the Marketing segment to range between $270 million and $310 million, which exceeds the base guidance range of between $180 million and $220 million. The expected range for 2020 reflects Keyera's effective risk management program, Marketing's strong contribution year-to-date and the following assumptions: i) current forward pricing for any unhedged volumes in the remainder of 2020; ii) AEF operating near capacity; iii) no significant logistics or transportation curtailments; and iv) a risk adjustment for contracted NGL supply volumes. Keyera plans to provide a further update for its Marketing business outlook in its first quarter 2020 financial release.
Keyera's 2020 Cash Tax Recovery and Maintenance Capital Expenditures As previously disclosed, in 2020 Keyera expects to benefit from a cash tax recovery of between $15 million and $25 million (2019 – $98 million cash tax expense) and maintenance capital expenditures of between $35 million and $45 million (2019 – $105 million).
Keyera's Growth Capital Program Keyera takes a long-term view of its business and remains committed to its strategy of delivering steady disciplined growth to create long-term value for shareholders. Currently, Keyera continues to expect to invest between $700 million and $800 million in 2020 to complete the second phase of the Wapiti gas plant and the Wildhorse terminal, as well as to advance the Pipestone gas plant and the KAPS pipeline system. With the capital investment for KAPS expected to commence in the second half of this year, Keyera will closely monitor market conditions and the needs of its customers and adjust its plans if necessary. Capital expenditures in 2021 are expected to decrease to between $400 million and $500 million as the Company completes its current growth capital program. With a strong balance sheet, Keyera expects to fund this capital program without issuing common equity, apart from the existing dividend reinvestment plan.
Keyera's Credit Worthy Customer Base With three business segments, Keyera provides a variety of essential services to a diverse group of gathering and processing, liquids infrastructure and marketing customers. Overall, Keyera's broad customer base includes a high proportion of investment grade counterparties.
"While this is a challenging and uncertain time in our industry, I am confident in Keyera's business outlook," said David Smith, Keyera's CEO. "We have always been disciplined in the execution of our strategy, with a strong balance sheet, dedicated team, commitment to safety, and diverse portfolio of assets and services. During this time, we will continue to carefully navigate the short-term challenges and enhance the long-term success of Keyera and our customers. Keyera is closely monitoring the unfolding COVID-19 crisis and taking all prudent steps to ensure the health and safety of our employees and maintain reliable operations at our facilities."
Keyera Corp. (TSX:KEY) operates an integrated Canadian-based energy infrastructure business with extensive interconnected assets and depth of expertise in delivering energy solutions. Its predominantly fee-for-service based business consists of natural gas gathering and processing; natural gas liquids processing, transportation, storage and marketing; iso-octane production and sales; and an industry-leading condensate system in the Edmonton/Fort Saskatchewan area of Alberta. Keyera strives to provide high quality, value-added services to its customers across North America and is committed to conducting its business ethically, safely and in an environmentally and financially responsible manner.
In order to provide readers with information regarding Keyera, including its assessment of future plans, and operations, certain statements contained herein contain forward-looking statements under applicable securities laws. These statements relate to future events or Keyera's future performance. Such statements are predictions only and actual events or results may differ materially. Forward-looking statements are typically identified by words such as "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should", "plan", "intend", "believe", and similar words or expressions, including the negatives or variations thereof. All statements other than statements of historical fact contained in this news release are forward-looking statements, including, without limitation, statements regarding:
industry, market and economic conditions and any anticipated effects on Keyera;
Keyera's future financial position and operational performance and future financial contributions and margins from its business segments;
business strategy, anticipated growth and plans of management;
budgets, including future capital, operating or other expenditures, and the manner of funding such expenditures;
the operation and effectiveness of risk management programs; and
expectations regarding Keyera's ability to maintain its competitive position, raise capital and add to its assets through acquisitions or internal growth opportunities.
The forward-looking statements reflect Keyera's beliefs and assumptions with respect to such things as the outlook for general economic trends, industry trends, commodity prices, capital markets, the integrity and reliability of Keyera's assets, and the governmental, regulatory and legal environment. Management believes that its assumptions and analysis contained herein (and in the documents incorporated by reference) are reasonable and that the expectations reflected in the forward-looking statements contained herein are also reasonable based on the information available on the date such statements are made and the process used to prepare the information. However, it cannot assure readers that these expectations will prove to be correct.
All forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, events, levels of activity and achievements to differ materially from those anticipated in the forward-looking statements. For information about the risk factors that could cause actual results to differ materially from forward-looking statements, as well as other assumptions used to develop the forward looking statements, please refer to Keyera's filings made with Canadian provincial securities commissions, including Keyera's Management Discussion & Analysis dated February 26, 2020 and Keyera's Annual Information Form dated February 26, 2020, which can be viewed on SEDAR at www.sedar.com and on the Keyera website at www.keyera.com. In addition, the effects and impacts of the recent coronavirus disease (COVID-19) outbreak on Keyera's business, the global economy and markets are unknown at this time and could cause Keyera's actual results to differ materially from the forward-looking statements contained in this news release.
Readers are cautioned that the foregoing list of important factors is not exhaustive and they should not unduly rely on the forward-looking statements included herein. Further, readers are cautioned that the forward-looking statements contained herein are made as of the date of this news release. Unless required by law, Keyera does not intend and does not assume any obligation to update its forward-looking statements. All forward-looking statements contained in this news release are expressly qualified by this cautionary statement. Further information about the factors affecting forward-looking statements and management's assumptions and analysis thereof, is available in filings made by Keyera with Canadian provincial securities commissions available on SEDAR at www.sedar.com.
For further information about Keyera, please visit our website at www.keyera.com or contact:
Keyera Corp. operates one of the largest natural gas midstream businesses in Canada. Its business consists of natural gas gathering and processing as well as the processing, transportation, storage and marketing of natural gas liquids (NGLs) and crude oil midstream...