Pembina Pipeline fund boosts Q1 distributions
Pembina Pipeline Income Fund PIF
Shares issued 89,598,171 Apr 30 close $120.51
Wed 1 May 2002 News Release
Mr. R.B. Michaleski reports
PEMBINA PIPELINE INCOME FUND FIRST INTERIM REPORT FOR THE THR ...
The fund has declared unitholder distributions totalling 26.25 per unit in
three equal monthly increments of 8.75 cents per unit during the quarter.
Per unit distributions were consistent with those declared during the first
quarter of 2001.
Distributed cash of $23.5-million was generated during the first quarter of
2002, 19 per cent higher than the same period of 2001. Increased cash
distributions are supported by higher cash flow generated by the further
expansion of Pembina's pipeline network following the Dec. 31, 2001,
completion of the Alberta Oil Sands Pipeline Ltd. (AOSPL) acquisition.
The inclusion of the AOSPL operations boosted Pembina's first quarter 2002
operating and financial results to record levels.
Pipeline throughput averaged 743,000 barrels per day during the first
quarter of 2002 compared with 525,000 barrels per day during the same
period of the previous year.
Net operating income increased by 27 per cent to $36.9-million for the
quarter, up from $29.2-million a year earlier.
Peace system volume averaged 202,000 barrels per day during the first
quarter 2002, relatively unchanged from the year earlier level of 205,200
barrels per day. Peace continued to experience strong receipts of natural
gas liquids from the Deep basin area and northeastern British Columbia. Two
new connections to the Peace system were initiated during the quarter. A
new truck unloading facility and the connection of a crude oil battery at
Greencourt, scheduled for completion during the second quarter, will see
combined incremental volume of about 600 barrels per day on this system.
Strong capital spending by oil and gas producers in the Peace service area
in the previous year, which is expected to continue into 2002, has resulted
in opportunities for new and expanded pipeline service on this system.
The combined Federated pipelines contributed 201,100 barrels per day in the
first quarter of 2002 compared with 207,000 during the same quarter of
2001. Restoration of service on the southern segment of the Western system
is scheduled for mid-2002, and work continues in preparation for the
hydrotest and repair of this line and installation of a pressure reduction
system.
Operating results for the AOSPL system are included in Pembina's
consolidated results effective Dec. 31, 2001. This system transported an
average 234,700 barrels per day in the first quarter 2002. Returns
generated by this pipeline system are contract based, therefore independent
of throughput and expenses. Expansion of AOSPL capacity, to be undertaken
in conjunction with the Syncrude stage-three production expansion which is
currently under way, is in the planning phase and Pembina expects to
escalate activity on this project later this year. Full operation of this
system by Pembina commenced in early April when control centre operations
were switched over to the Edmonton Control Centre (ECC).
Pembina system throughput averaged 87,900 barrels per day compared with
92,900 barrels per day a year earlier. Crude oil receipts were roughly
equivalent, quarter-over-quarter, however condensate volumes were down
significantly. Development activity in the Pembina region continues.
Construction of a new connection commenced during the quarter with expected
incremental volume to the system of about 300 barrels per day starting
midyear.
The NEBC (northeast British Columbia) pipelines transported an average of
39,900 barrels per day during the first quarter of 2002. Installation of a
new SCADA system, providing monitoring and leak detection for the NEBC
pipelines, will be completed in April, 2002, and the system will be
operated from the newly expanded ECC.
Expansion of the ECC was completed in March, 2002, providing integrated
monitoring, leak detection and pipeline control across Pembina's pipeline
network. AOSPL system operations were switched over on April 5 and the
Drayton valley SCADA system was moved to the ECC on April 9. Work continues
on the implementation and testing of a comprehensive back-up control centre
located at Drayton valley, in Alberta, that will be capable of providing
duplicate ECC functions in the event of an emergency.
Expenses, liquidity and capital resources
Operating expense totalled $19.6-million through the first quarter of 2002
compared with $18.2-million for the same period of the prior year. The
increase in total costs reflects inclusion of the AOSPL system operations,
partially offset by the impact of lower power costs. General and
administrative expense incurred in the first quarter of 2002 of
$2.9-million was $700,000 higher than the same period of the prior year.
Pembina's general and administrative expense has increased modestly in
relation to growth in its underlying operations. On a per barrel basis, the
first quarter 2002 G&A rate of four cents is 4 per cent lower than for the
same period of 2001. Management fees of $227,000 for the first quarter of
this year are $60,000 higher than the year earlier level, rising in concert
with the higher distributed cash base.
Development capital spending for the quarter of $2.5-million compares with
$1.6-million in the first quarter of 2001. Of the total spent to date in
2002, $500,000 is related to the testing and repair of the southern segment
of the Western System, $500,000 was expended to consolidate Pembina's
control centre operations in an expanded facility and to establish a
back-up facility and, the remaining expenditures include new connections
and upgrades on Pembina's pipeline systems. Maintenance capital totalled
$500,000 through the end of the first quarter 2002, compared with $200,000
for the previous year, reflecting the increased scope of Pembina's
maintenance programs.
Pembina has a total of $550-million in credit facilities in place with a
syndicate of Canadian chartered banks. The facilities consist of a $265
revolver, a $65-million term loan due June 30, 2003, a $190-million
revolving expansion facility and a $30-million operating line of credit.
The $190-million revolving facility is committed for funding the future
expansion of the AOSPL system and will be drawn in stages to maturity at
Dec. 31, 2004. As at March 31, 2002, the aggregate facilities were drawn
$319.3-million, resulting in a debt to total capitalization ratio of 22 per
cent. This compares to values for this ratio of 25 per cent at the end of
2001 and 30 per cent at the end of the first quarter of 2001.
New developments and outlook
Active oil and gas exploration and development by producers in the areas
served by Pembina's pipelines has resulted in increased requests for new
connections, increased deliveries to Pembina's truck unloading facilities
and strong receipts of natural gas liquids from Deep basin area gas plants.
These new developments, when combined with Pembina's stringent cost control
and realization of synergies associated with the integration of Pembina's
expanded pipeline network, have supported the strong operating results
posted by Pembina through the first quarter of this year. The addition of
the AOSPL system to Pembina's portfolio of pipeline systems provides the
opportunity to participate in the exciting growth associated with
development of the Athabasca oil sands, one of Canada's largest natural
resources.
Unitholders are invited to attend the annual general and special meeting of
the fund, which will be held in Calgary, Alta., on May 2, 2002.
CONSOLIDATED STATEMENT OF EARNINGS
Three months ended March 31
(thousands of dollars)
2002 2001
Revenue $ 56,540 $ 47,423
Operating
expenses 19,595 18,245
------ ------
Net operating
income 36,945 29,178
General and
administrative 2,859 2,166
Management fee 227 170
Depreciation
and
amortization 16,645 15,417
Interest
expense 3,613 5,112
Other expense 147 7
------ ------
Earnings before
taxes and
good will
amortization 13,454 6,306
Capital and
other taxes (300) (375)
Future income
tax reduction 3,600 4,600
------ ------
Earnings before
good will
amortization 16,754 10,531
Good will
amortization (5,130)
------ ------
Net earnings 16,754 5,401
====== ======
Earnings to date,
beginning of
period 131,900 95,655
Interest on
convertible
debentures (2,187) (149)
------ ------
Earnings to date,
end of period $ 146,467 $ 100,907
------ ------
Earnings per
trust unit $ 0.19 $ 0.07
Diluted earnings
per trust unit $ 0.17 $ 0.07
CONSOLIDATED STATEMENT
OF DISTRIBUTED CASH
Three months ended March 31
(thousands of dollars)
2002 2001
Net earnings $ 16,754 $ 5,401
Add (deduct)
Depreciation
and
amortization 16,645 20,547
Interest on
convertible
debenture (2,187) (149)
Future income
tax reduction (3,600) (4,600)
Maintenance
capital
expenditures (495) (239)
Debt repayments (1,875) (2,871)
Decrease
(increase)
in working
capital reserve (1,761) 1,559
Distributed
cash $ 23,481 $ 19,648
Distributed
cash per
trust unit $ 0.2625 $ 0.2625
Diluted
distributed
cash per
trust unit $ 0.2533 $ 0.2600
(c) Copyright 2002 Canjex Publishing Ltd. stockwatch.com |
