Gibson Energy Inc. Reports Strong 2011 Second Quarter Results

Aug 11, 2011

All financial figures are in Canadian dollars unless noted otherwise

CALGARY, Aug. 11, 2011 /CNW/ - Gibson Energy Inc. ("Gibson or the "Company"), TSX: GEI, announced today its financial and operating results for the second quarter of 2011.

Segment profit1 increased by 124% to $48.2 million in the three months ended June 30, 2011 from $21.5 million in the three months ended June 30, 2010, and by 78% to $114.7 million in the six months ended June 30, 2011 from $64.4 million in the six months ended June 30, 2010, with increases across all of the Company's operating segments. The key segment highlights were:

  • Significant increase in Terminals and Pipelines segment profit largely due to increased activity through the Hardisty Terminal and increased profits from Custom Terminals;
  • Sizeable increase in Truck Transportation segment profit primarily driven by the impact of the Taylor acquisition in 2010;
  • Increase in Propane and NGL Marketing and Distribution segment profit from both retail and wholesale components;
  • Increased margins for tops and distillate resulting in an increase in Processing and Wellsite Fluids segment profit; and
  • Widening differentials and rising prices resulting in a substantial increase in Marketing segment results.

Adjusted EBITDA2 increased by 183% to $42.1 million in the second quarter of 2011 compared to $14.9 million in the second quarter of 2010.  Adjusted EBITDA in the six months ended June 30, 2011 increased by 87% to $99.1 million compared to $53.1 million in the six months ended June 30, 2010.  Pro Forma Adjusted EBITDA3 for the twelve months ended June 30, 2011 was $199.0 million.

Cash provided by operations in the three and six months ended June 30, 2011 was $23.5 million and $87.1 million, respectively, compared to $20.3 million and $43.7 million in the three and six months ended June 30, 2010, respectively.

"Our suite of integrated assets continues to benefit from favorable crude oil and liquids industry fundamentals" said Stew Hanlon, President and Chief Executive Officer.  "Gibson business segments all produced solid results in the second quarter even though areas such as trucking, processing and wellsite fluids and propane tend to be negatively impacted by seasonality issues in the spring."


(1)     Segment profit is defined as revenue minus (i) cost of sales; and (ii) operating costs. It excludes depreciation, amortization, impairment charges, stock based compensation and corporate expenses.
(2)     Adjusted EBITDA is defined as consolidated net income (loss) before interest expense, income taxes, depreciation, amortization, accretion, other non-cash expenses and charges deducted in determining consolidated net income (loss), including movement in the unrealized gains and losses on the Company's financial instruments, stock based compensation expense, impairment of goodwill and intangible assets, and non-cash inventory write-downs. It also takes into account the impact of foreign exchange movements in the Company's U.S. dollar denominated long-term debt, management fees, debt extinguishment costs and other adjustments that are considered non-recurring in nature.
(3)     Pro Forma Adjusted EBITDA differs from Adjusted EBITDA in that it also includes the pro forma effect of acquisitions that took place in each fiscal year as if the acquisitions took place at the beginning of the fiscal year in which such acquisitions occurred.

Corporate Highlights for the Three and Six Months Ended June 30, 2011:

  • On January 7, 2011, the Company completed the disposition of its Edmonton North Terminal to Pembina Midstream Limited Partnership for consideration of approximately $54.3 million, realizing a gain on the sale of $20.4 million. Contribution to 2010 segment profit by the Edmonton North Terminal was not material. The terminal was a remotely operated facility that no longer strategically fit our needs. As part of the consideration received, the Company secured important pipeline assets and connections that will provide access to crude oil streams within the Edmonton area, thereby allowing the Company to expand and grow its Edmonton South Terminal;
  • On June 15, 2011, the Company completed an initial public offering of its common shares for gross proceeds of $500.0 million and entered into a series of transactions to refinance its existing indebtedness, whereby the Company entered into a new senior secured first lien term loan facility in an aggregate principal amount of U.S.$650.0 million with a term of seven years, and a revolving credit facility of up to U.S.$275.0 million with a term of five years; and
  • In the six months ended June 30, 2011, the Company's internal growth projects included: the expansion of its truck transportation fleet; the continued expansion of its Canwest Propane truck fleet and tankage; and the construction of new tankage and pipeline connections at both its Hardisty Terminal and its Edmonton South Terminal.  No acquisitions were completed in the six months ended June 30, 2011.

"In the first half of 2011, we made significant progress in growing our asset base and strengthening the Company's balance sheet." said Mr. Hanlon.  "Going forward, we expect to continue with our long-range strategic plan to evaluate organic growth opportunities and potential acquisitions of complementary midstream businesses."

2011 Second Quarter Conference Call

A conference call to discuss Gibson's second quarter results will be held at 7:00 a.m. MT (9:00 a.m. ET) on Thursday, August 11, 2011 for interested investors, analysts and media representatives.

The conference call dial-in numbers are:

  • 1-877-353-9586 from Canada and the US; 
  • 403-532-8075 from Calgary and International;
  • Participant Pass Code:  45954 #.

A live webcast of the conference call can be accessed by entering http://events.digitalmedia.telus.com/gibsons/081111/index.php in your web browser.  Shortly after the call, an audio archive will be posted on the Investor Relations and Media section of the Company's website at www.gibsons.com.

MD&A, Financial Statements & Notes

The Management's Discussion and Analysis and the condensed Consolidated Financial Statements provide a detailed explanation of Gibson's operating results for the three and six months ended June 30, 2011 as compared to the three and six months ended June 30, 2010.  These documents are available at www.gibsons.com and at www.sedar.com.

Forward-Looking Statements

Certain statements contained in this news release constitute forward-looking statements. These statements relate to future events or the Company's future performance. All statements other than statements of historical fact are forward-looking statements. The use of any of the words ''anticipate'', ''plan'', ''contemplate'', ''continue'', ''estimate'', ''expect'', ''intend'', ''propose'', ''might'', ''may'', ''will'', ''shall'', ''project'', ''should'', ''could'', ''would'', ''believe'', ''predict'', ''forecast'', ''pursue'', ''potential'' and ''capable'' and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. No assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon. These statements speak only as of the date of this news release. In addition, this news release may contain forward-looking statements and forward-looking information attributed to third party industry sources. Actual results could differ materially from those anticipated in these forward-looking statements as a result of numerous risks and uncertainties including, but not limited to, the risks and uncertainties described in "Forward-Looking Statements" and "Risk Factors" included in the Company's Supplemented Prep Prospectus dated June 7, 2011 as filed on SEDAR and available on the Gibson website at www.gibsons.com.

This news release refers to certain financial measures that are not determined in accordance with Canadian generally accepted accounting principles ("Canadian GAAP"). Adjusted EBITDA and Pro Forma Adjusted EBITDA are not measures recognized under International Financial Reporting Standards ("IFRS") or Canadian GAAP and do not have standardized meanings prescribed by IFRS or Canadian GAAP. Management considers these to be important supplemental measures of the Company's performance and believes these measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in its industries with similar capital structures. See ''Summary of Quarterly Results" in the Company's MD&A for a reconciliation of EBITDA to net income (loss), the IFRS and Canadian GAAP measure most directly comparable to EBITDA, and for a reconciliation of Adjusted EBITDA and Pro Forma Adjusted EBITDA to EBITDA. Investors are encouraged to evaluate each adjustment and the reasons the Company considers it appropriate for supplemental analysis. Investors are cautioned, however, that these measures should not be construed as an alternative to net income (loss) determined in accordance with IFRS or Canadian GAAP as an indication of the Company's performance.

Second Quarter - Selected Financial Highlights

  Three months ended June 30,   Six months ended June 30,
  2011   2010   2011   2010
  (in thousands)
               
Segment Profit:              
Terminals and Pipelines  $17,075   $7,461   $33,811   $15,843
Truck Transportation  13,177   11,382   29,413   21,004
Propane and NGL Marketing and Distribution  4,660   4,092   22,208   17,267
Processing and Wellsite Fluids  3,777   573   14,905   9,716
Marketing  9,501   (2,046)   14,327   588
Total Segment Profit  48,190   21,462   114,664   64,418
               
Statement of Cash Flows Data:              
Cash flows provided by (used in):              
Operating Activities  $23,532   $20,271   $87,103   $43,652
Investing Activities  (34,331)   (164,966)   1,775   (195,347)
Financing Activities  35,557   (6,165)   (18,769)   161,423
               
Other Financial Data:              
Capital Expenditures:              
Internal Growth Projects  $22,459   $7,305   $37,418   $14,106
Upgrade and Replacement Capital  13,149   6,662   21,617   8,398
Acquisitions  -   153,851   -   178,546
               
Adjusted EBITDA  $42,147   $14,895   $99,086   $53,116
Adjusted EBITDA per share (1)   0.43   0.15   1.01   0.54
  Twelve
months ended
June 30, 2011
           
Pro Forma Adjusted EBITDA  $198,957            
Pro Forma Adjusted EBITDA per share (1)   2.03            


(1)      Based on a fully diluted basis of 98,781,717 shares


 

For further information:

Ken Hall
Vice President Investor Relations and Communications
(403) 781-2899
ken.hall@gibsons.com