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Keyera Reducing its Capital Program and Suspending its Dividend Reinvestment Plan


CALGARY – Keyera Corp. (TSX:KEY) (“Keyera”) announced today that it is preserving its financial flexibility by reducing its 2020 capital program following a decision to defer construction of the KAPS pipeline system for approximately one year. Keyera is also suspending its Premium DividendTM and Dividend Reinvestment Plan (“DRIP”). These actions are in response to challenging industry conditions related to the unfolding COVID-19 crisis and the significant decrease in global oil prices.

One Year Deferral of the KAPS Capital Project
Keyera along with its partner, SemCAMS Midstream ULC, have agreed to defer construction of KAPS, the previously approved Montney condensate and natural gas liquids pipeline system, for approximately one year. Regulatory activities will continue throughout 2020, positioning the project for construction activities in the second half of 2021. The project remains highly desired by industry as it provides an additional and alternative transportation solution for condensate and natural gas liquids from liquids-rich developments in northwestern Alberta. With the cooperation of the KAPS customers, all transportation agreements have been amended to support the one-year deferral. There have been no changes to the long-term volume commitments as a result of this deferral; accordingly, expectations at this time are that economic returns will be materially consistent with prior guidance.

Keyera’s Revised Growth Capital Guidance
With this decision, Keyera now expects to invest growth capital of between $475 million and $525 million in 2020. (Previously, Keyera expected to invest between $700 million and $800 million in 2020.) This capital investment will complete the second phase of the Wapiti gas plant in the Montney, the Wildhorse crude oil storage and blending terminal in Cushing, Oklahoma, and the Pipestone gas plant in the Montney.

Suspension of the Dividend Reinvestment Plan
Both the regular and premium components of the DRIP have been suspended. Shareholders who have been participating in either component of the DRIP will receive the full cash dividend declared beginning with the dividend to be paid in May 2020.

Cost Structure Review and Reductions
Keyera continues to take measures to ensure its business is positioned for the long term, including reducing its overall cost structure. In parallel with its gathering and processing optimization plan and reduced capital program, Keyera is reviewing alternatives to further reduce its operating costs and general and administrative expenses.

In support of this initiative, Keyera’s officer team and Board of Directors have agreed to reductions in their compensation. Salaries for Keyera’s CEO and Keyera’s President and Chief Commercial Officer have been reduced by 20%, while salaries for other members of Keyera’s officer team have been reduced by 10%. All fees for Keyera’s Board of Directors have been reduced by 20%. These changes were effective April 16, 2020.

“While this is a difficult and uncertain time in our industry, Keyera is committed to taking prudent steps to address the short-term challenges and enhance the long-term success of the company and our customers,” said David Smith, Keyera’s CEO. “With a dedicated team, disciplined strategy and a strong financial position, I am confident that Keyera will successfully navigate the current challenges and strengthen our foundation for future growth.”

ABOUT KEYERA

Keyera Corp. (TSX:KEY) operates an integrated Canadian-based energy infrastructure business with extensive interconnected assets and depth of expertise in delivering energy infrastructure 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.

FORWARD-LOOKING STATEMENTS

To provide readers with information regarding Keyera, including its assessment of future plans, and operations, this news release contains certain forward-looking information and statements under applicable securities laws. These statements relate to future events, developments and/or Keyera’s future performance and are based on Keyera’s current expectations, estimates, projections and assumptions, including in light of its experience and its perception of historical trends.

Such statements are therefore 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”, “to be”, “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, future plans, 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 enhance or maintain its competitive position, raise capital and add to its assets through acquisitions or internal growth opportunities.

These forward-looking statements reflect Keyera’s beliefs, projections 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, relationships with partners and stakeholders, 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 these forward-looking statements 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, risks and impacts related to widespread epidemic or pandemic outbreaks, including the coronavirus disease (COVID-19), adverse general economic and/or market conditions in CanadaNorth America or worldwide, including changes or prolonged weaknesses, as applicable in commodity prices, interest rates, foreign currency exchange rates, supply/demand trends and overall industry activity levels, changes in credit ratings or counterparty credit risk on Keyera’s activities, business plans, financial position or results and/or strategic objectives  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 publicly update or revise 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.

ADDITIONAL INFORMATION

For further information about Keyera, please visit our website at www.keyera.com or contact:

Lavonne Zdunich, Director, Investor Relations,
Calvin Locke, Manager, Investor Relations, or
Beata Graham, Senior Analyst, Investor Relations
Email: ir@keyera.com; Telephone: 403.205.7670 / Toll Free: 888.699.4853



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