EARNINGS / IPL Energy First Quarter Earnings Advance Nine
Percent
TSE, ME SYMBOL: IPL
NASDAQ SYMBOL: IPPIF
APRIL 30, 1998
CALGARY, ALBERTA--(April 30, 1998) - IPL Energy Inc. today
announced earnings of $62.2 million for the three months ended
March 31, 1998, an increase of nine percent from the $57.0 million
for the first quarter of 1997. On a per share basis, earnings
increased to $0.86 from $0.84 in the corresponding quarter of
1997.
The Energy Transportation segment contributed $33.1 million (1997
- $29.6 million) to earnings, reflecting increased deliveries and
incentive allocations from Lakehead Pipe Line Partners, L.P. in
the United States, as well as improved contributions from the
recently completed Colombia pipeline project.
The contribution from the Energy Distribution segment amounted to
$35.6 million (1997 - $36.3 million). The segment includes the
results of The Consumers' Gas Company Ltd. as well as earnings of
approximately $8.4 million from the Noverco Inc. investment
acquired August 27, 1997.
First quarter earnings include the results of Consumers Gas for
its first fiscal quarter, October to December 1997, on a quarter
lag basis of consolidation. These results reflect both warmer
weather and the impact of a lower allowed rate of return on
equity. Warmer weather patterns persisted throughout the second
quarter of Consumers Gas, during the heating season. The winter of
1998, as measured by degree day deficiency, was 20 percent warmer
than average and 16 percent warmer than last year. IPL Energy's
second quarter earnings will include contributions from Consumers
Gas for the January to March period of 1998 amounting to $92.8
million, down from the $114.1 million recorded during the
corresponding period of 1997.
Brian F. MacNeill, President & Chief Executive Officer, said that
"management is pursuing strategies across the IPL Energy group of
companies to mitigate the adverse effects of weather on 1998
earnings. These measures include cost reduction initiatives,
operational efficiencies and other corporate actions. Combined
with contributions from growth-oriented projects, 1998 earnings
are expected to exceed those reported in 1997."
A quarterly dividend of $0.545 per common share was declared
payable June 1, 1998 to shareholders of record May 15, 1998.
Mr. MacNeill also said that as the energy markets change to
reflect the new business norms of incentive regulation, unbundling
and convergence, IPL Energy will continue to capitalize on its
strengths and market position.
In the Energy Transportation segment the second phase of the
System Expansion Program (SEP II) to increase mainline capacity by
120,000 at a cost of $140 million in Canada was completed. The
U.S. portion of SEP II continues with anticipated completion in
December, 1998. Additionally, the Terrace project, a phased
Interprovincial/Lakehead system expansion that will ultimately
provide an additional 520,000 barrels per day of heavy crude oil
capacity for Western Canadian producers seeking greater access to
U.S. Midwest markets, made significant progress. The estimated
investment for the project is $840 million for the Canadian
portion of the expansion, and U.S. $380 million for the portion in
the United States.
The National Energy Board hearing on the facility application
concluded on April 16 after two days of deliberation. This is the
shortest hearing time for a crude oil project of this magnitude
and reflects significant industry support for the project. The
first phase of the Terrace project will provide an initial 95,000
barrels per day increase in capacity as early as January of next
year, rising to 170,000 barrels by the end of 1999, at an
investment of $610 million in Canada and U.S. $138 million in the
United States. Subsequent phases in the program will provide the
balance of 350,000 barrels per day of added capacity.
The tolling structure for the Terrace program is based upon an
agreement with the Canadian Association of Petroleum Producers.
The agreement, which is subject to Canadian and U.S. regulatory
approvals, provides for a fixed toll increase of $0.05 per barrel,
or approximately 3.5 percent, for transportation from Edmonton,
Alberta, to Chicago, Illinois.
Mr. MacNeill said, "the tolling agreement builds upon the
company's pioneering agreement with shippers reached in 1995, the
first liquids pipeline incentive tolling arrangement on the
continent, as well as the 'risk sharing' agreement developed with
shippers for the SEP II in 1996. For a small increase in overall
tolls, the Terrace tolling agreement provides shippers with toll
stability and certainty. At the same time, the fixed toll increase
provides IPL Energy with a favourable base return with the
opportunity to enhance that return as throughput increases through
construction of the additional phases."
Construction also commenced on the Wild Rose Pipeline project to
transport heavy crude oil from the Athabasca and Cold Lake regions
of Alberta to Hardisty, Alberta, following the Alberta Energy and
Utilities Board approval of the project on April 17. The $475
million, 570,000 barrel per day capacity pipeline will be
constructed and owned by IPL Energy through wholly owned Wild Rose
Pipe Line Inc., with completion anticipated in the first quarter
of 1999. A 30-year arrangement with Suncor Energy Inc., the
initial shipper, ensures that IPL Energy will receive an
acceptable return on its investment while providing the scope for
enhanced returns when additional shippers are attracted in the
future.
During the quarter, the 21 percent owned Alliance Pipeline
project, announced the preordering of approximately $1.4 billion
worth of materials. The proposed pipeline will transport natural
gas from Fort St. John, British Columbia, to U.S. Midwest markets,
including Chicago. An accord reached within the natural gas
production and transportation industry to enhance competitiveness
should benefit the Alliance project by facilitating the progress
of its regulatory proceedings. Adding to timely completion of the
Alliance project is the recent cancellation of a competing
proposal.
Both the Vector and Millenium pipeline projects, which connect
with the Alliance pipeline, continue on schedule. The Vector
pipeline, a project sponsored by IPL Energy, expects to receive a
Preliminary Determination from the Federal Energy Regulatory
Commission during the second quarter.
On April 8, 1998, IPL Energy was awarded a consulting contract
valued at U.S. $11.6 million by PEMEX Refining, a subsidiary of
Petr›leos Mexicanos, the national oil company of Mexico. The
18-month contract provides conceptual design and advisory
services for the modernization of Mexico's national crude oil and
refined products pipeline system.
In the Energy Distribution segment the company announced its
participation in consortium to seek natural gas distribution
rights in the province of New Brunswick. IPL Energy holds a 67
percent interest in the consortium that would distribute natural
gas from Sable Island to residential, commercial and industrial
customers.
IPL Energy Inc. is a leader in energy delivery and services,
operating the world's longest crude oil and liquids pipeline
through the combined Interprovincial Pipe Line Inc. and Lakehead
Pipe Line Partners, L.P. system, and Canada's largest natural gas
distribution company through The Consumers' Gas Company Ltd.
which serves 1.4 million residential, commercial and industrial
customers in south central and eastern Ontario, Quebec and Upper
New York State. IPL Energy's common shares trade on the Toronto
and Montreal stock exchanges in Canada under the symbol "IPL". In
the United States the shares trade on The NASDAQ National Market
under "IPPIF". Lakehead's preference units trade on the New York
Stock Exchange under "LHP".
/T/
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IPL ENERGY INC.
HIGHLIGHTS (1)
(unaudited;
Canadian dollars in millions, except per share amounts)
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Three months ended March 31,
1998 1997
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FINANCIAL
Energy Transportation 33.1 29.6
Energy Distribution (2) 35.6 36.3
Corporate (6.5) (8.9)
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Segmented Earnings 62.2 57.0
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Operating Revenue (2) 628.1 620.4
Capital Expenditures 191.1 96.4
Cash from Operating Activities (2) 50.9 (7.4)
Dividends 40.4 34.8
Per Share Amounts
Earnings 0.86 0.84
Cash from operating activities 0.70 (0.11)
Dividends 0.545 0.515
Weighted Average Shares Outstanding
(millions) 72.2 67.5
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OPERATING
Energy Transportation (3)
Deliveries (thousands of
barrels per day) 2,169 1,966
Barrel miles (billions) 193 189
Average haul (miles) 991 1,067
Energy Distribution
Gas distribution volumes
(billion cubic feet) 112 110
Number of active customers
(thousands) 1,389 1,335
Degree day deficiency (4)
Actual 1,306 1,351
Forecast based on normal
weather 1,408 1,348
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/T/
(1) Highlights of Energy Distribution reflect the results of The
Consumers' Gas Company Ltd. and other gas distribution assets on a
quarter lag basis of consolidation for the three months ended
December 31, 1997 and 1996.
(2) Due to the seasonal nature of gas distribution operations, the
amounts shown for the three month period are not indicative of the
results for the full fiscal year.
(3) Energy Transportation operating highlights include the
statistics of the 16.6 percent owned portion of the mainline
system located in the United States.
(4) Degree day deficiency is a measure of coldness which is
indicative of volumetric requirements of natural gas utilized for
heating purposes in all markets. It is calculated by accumulating
from October 1 the total number of degrees each day by which the
daily mean temperature falls below 18 degrees Celsius. The
figures given are those accumulated in the Toronto area. |
