ENERGY TRUSTS / Pembina Pipeline Income Fund reports 1st 3 months Results
- Pembina generated distributable cash of $15.0 million or $0.24 per
Unit in the first quarter, setting the pace to achieve the forecast
1998 distributable income of $59.3 million or $0,95 per Unit.
- First quarter revenue of $27.7 million and net earnings of $7.3
million were on target with the forecast in the October 1997
prospectus.
- Throughput averaged 362,248 barrels per day during the first quarter,
reflecting the impact of the 66,000 bpd expansion of the Peace system
in September 1997 and three new connections to the system completed
during the quarter.
- The commissioning of Northstar Energy Corporation's pipeline from
Taylor, BC to Dawson Creek, BC in early April connects major crude oil
gathering systems to Pembina's pipeline system. The new 19,000 barrel
per day pipeline will allow Pembina and Northstar to provide pipeline
service to the rapidly-expanding crude oil and condensate fields in
northeastern BC.
Results from Operations
Pembina's first quarter 1998 revenues of $27.7 million are consistent
with the forecast first quarter revenues in the prospectus. Throughputs on
the Peace system which contributes 70 percent of Pembina's revenues have been
increasing as expected, while throughputs on the Pembina, Bonnie Glen and
Wabasca systems have been stable. The year-to-date results will be augmented
by the Northstar connection, Pembina's condensate expansion and the Novagas
connection, to achieve the full year operating results forecast in the
prospectus.
Expenses
First quarter operating expense of $9.8 million, reflected normal
operating expenses and $1.0 million in maintenance programs.
Capital expenditures for new connections ($1.2 million), upgrading ($2.7
million) and maintenance ($0.5 million) totalled $4.4 million which was
financed from existing cash on hand.
Distributable Cash
Distributable cash is directly related to cash flow from Pembina's
pipeline operations less maintenance capital expenditures, debt repayments and
working capital reserve. The first quarter distribution of $0.24 per Unit,
paid April 15, 1998 to Unitholders of record on March 31, 1998 sets the pace
for Pembina to meet its forecast annual cash distribution of $0.95 per Unit,
of which approximately 65 per cent is expected to be taxable in the hands of
Unitholders. The non-taxable portion is considered a return of capital and
will reduce the cost base of each Unit for purposes of calculating the capital
gains amount upon disposition of the Unit.
Outlook
Pembina's pipeline systems transport almost one third of Alberta's
conventional light crude oil production and about one fifth of the growing
condensate and NGL production in the province. The connection to production
volumes from northeastern BC via the Northstar pipeline and the completion of
the 10,000 barrel per day expansion of Pembina's condensate gathering system
in central Alberta in April augment this strong market position. The latter
was in response to growing demands for condensate transportation in the
Brazeau River area. Pembina expects Novagas to begin ramping up this summer
for full delivery of 20,000 barrels per day of NGLs at La Glace, Alberta in
August. Also, drilling activity, particularly in the Deep Basin area of the
Peace system, continues to be strong. Pembina continues to work with existing
and potential customers to identify new opportunities for growth either by
expansion or acquisitions.
As a transportation service provider, Pembina's revenue is not directly
impacted by commodity prices. Pembina's systems carry light oil, condensate
or natural gas liquids. We charge a fee for the transportation of those
products based on posted tariffs or contracts which are not linked in any way
to commodity prices.
Pembina is actively monitoring several proposed pipeline projects that
could have a competitive impact on the Fund's performance. Pembina is well
positioned to expand its services and remain a low cost service provider in
key growth areas for the oil and gas industry. We believe that our
unregulated tariff structure and healthy inventory of transportation contracts
will allow the Fund to continue to offer competitive services to our
customers.
Management believes that as the investment community begins to recognize
Pembina's stability and the operational and competitive factors that
differentiate the Fund from other oil and gas related investments - be they
conventional or income funds - unitholders will be exposed to value growth.
Consequently, the Fund will increase its efforts to communicate this
differentiation in the coming months.
On behalf of the Board of Trustees of the Pembina Pipeline Income Fund,
-----------------------------------
William R. Stedman
President and Chief Executive Officer
April 30, 1998
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Consolidated Balance Sheet
March 31, 1998
(in thousands of dollars)
March 31 December 31
1998 1997
(Unaudited) (Audited)
------------------------------------------------------------------------
Assets
Current assets:
Cash and term deposits $ 16,128 $ 14,034
Final instalment receivable 242,083 238,761
Accounts receivable 15,894 15,996
Income taxes receivable 5,950 5,840
Inventories 2,770 2,718
------------------------------------------------------------------------
282,825 277,349
Property, plant and equipment 543,497 546,836
Other assets 7,718 8,144
------------------------------------------------------------------------
$834,040 $832,329
------------------------------------------------------------------------
Liabilities and Unitholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 10,353 $ 10,539
Distributions payable to Unitholders 14,982 8,740
Final instalment bank loan 242,083 238,761
------------------------------------------------------------------------
267,418 258,040
Unitholders' equity:
Trust Units 578,473 578,473
Earnings to date 11,871 4,556
Distributions to date (23,722) (8,740)
------------------------------------------------------------------------
566,622 574,289
------------------------------------------------------------------------
$834,040 $832,329
------------------------------------------------------------------------
Consolidated Statement of Earnings and Distributable Cash
For the three months ended March 31, 1998
(in thousands of dollars, except per Trust Unit amount) (Unaudited)
------------------------------------------------------------------------
Operating revenue $27,651
Expenses:
Operations 9,830
General and administrative 2,055
Management fee 225
Depreciation and amortization 8,221
------------------------------------------------------------------------
20,331
------------------------------------------------------------------------
Operating earnings 7,320
Interest income 120
Capital and other taxes (125)
------------------------------------------------------------------------
Net earnings 7,315
Items not involving cash
Depreciation and amortization 8,221
------------------------------------------------------------------------
Cash flow from Operations 15,536
Deduct:
Maintenance capital expenditures (454)
Working capital reserve (100)
------------------------------------------------------------------------
Distributable cash $14,982
------------------------------------------------------------------------
Distributable cash per Trust Unit $0.24
------------------------------------------------------------------------
Consolidated Statement of Cash Flows
For the three months ended March 31, 1998
(in thousands of dollars) (Unaudited)
------------------------------------------------------------------------
Cash provided by (used in):
Operations:
Net earnings $ 7,315
Item not involving cash:
Depreciation and amortization 8,221
------------------------------------------------------------------------
Cash flow from operations 15,536
Change in non-cash working capital (246)
------------------------------------------------------------------------
15,290
Financing:
Final instalment receivable (3,322)
Final instalment bank loan 3,322
Distributions to Unitholders (8,740)
------------------------------------------------------------------------
(8,740)
Investments:
Development capital expenditures (4,002)
Maintenance capital expenditure (454)
------------------------------------------------------------------------
Change in cash 2,094
Cash and term deposits, beginning of period 14,034
------------------------------------------------------------------------
Cash and term deposits, end of period $16,128
------------------------------------------------------------------------
>>
Registrar and Transfer Agent:
Montreal Trust Company of Canada
600, 530 - 8th Avenue S.W.
Calgary, Alberta T2P 3S8
Stock Exchange Listing:
The Toronto Stock Exchange
Stock symbol: PIF.IR |
