Gibson Energy Inc. Reports Strong 2011 Third Quarter Results

Nov 07, 2011

All financial figures are in Canadian dollars unless noted otherwise

CALGARY, Nov. 7, 2011 /CNW/ - Gibson Energy Inc. ("Gibson" or the "Company"), TSX: GEI, announced today its financial and operating results for the third quarter of 2011.

Segment profit1 increased by 53% to $67.3 million in the three months ended September 30, 2011 from $44.1 million in the three months ended September 30, 2010, and by 68% to $182.0 million in the nine months ended September 30, 2011 from $108.5 million in the nine months ended September 30, 2010, with increases across most of the Company's operating segments. The key segment highlights for the three months ended September 30, 2011 versus the same period in 2010 were:

  • A significant increase in Terminals and Pipelines segment profit largely as a result of increased activity through the Hardisty Terminal and higher profit being generated from the Company's custom terminal operations due to wider price differentials between crude oil types;
  • An increase in Truck Transportation segment profit as a result of an increase in volumes and revenues, offset by slightly higher operating expenses;
  • A decrease in Propane and NGL Marketing and Distribution segment profit as a result of lower NGL marketing margins and an increase in operating costs, offset by higher propane margins;
  • A sizeable increase in Processing and Wellsite Fluids segment profit as a result of higher volumes and margins for all products; and
  • Higher marketing segment margins which were positively impacted by wider pricing differentials between crude oil types, which are generally beneficial for segment profitability.

Adjusted EBITDA2 increased by 52% to $64.9 million in the third quarter of 2011 compared to $42.8 million in the third quarter of 2010.  Adjusted EBITDA in the nine months ended September 30, 2011 increased by 71% to $163.9 million compared to $95.9 million in the nine months ended September 30, 2010.  Pro Forma Adjusted EBITDA3 for the twelve months ended September 30, 2011 was $220.6 million.

Cash provided by operations in the three and nine months ended September 30, 2011 was $84.3 million and $171.4 million, respectively, compared to $44.8 million and $88.5 million in the three and nine months ended September 30, 2010, respectively.

"I am very pleased with our financial and operating results as we continue to execute our growth strategy" said Stew Hanlon, President and Chief Executive Officer.  "Our integrated oil levered assets are structured to provide diversified cash flow and stability through various commodity cycles. This was particularly evident in the third quarter as we generated significant profit in a period where WTI crude prices experienced considerable volatility and showed a downward trend."

(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 Nine Months Ended September 30, 2011:

  • During the three months ended September 30, 2011, the Company completed and commissioned the Enbridge Line 4 and Cold Lake pipeline connections at the Company's Hardisty Terminal;
  • During the three months ended September 30, 2011, the Company entered into a long-term service agreement with a major customer providing the customer with the use of a storage tank at its Hardisty Terminal. As a result, all four tanks acquired as part of the Company's acquisition of the remaining 75% interest in Battle River Terminal ULC  on August 25, 2010 have been leased out to customers on a long term basis with each agreement providing for fixed monthly fees plus additional usage fees based on monthly volume throughput;
  • In the three months ended September 30, 2011, the Company declared a dividend of $0.28 per common share for a total dividend of $26.2 million, of which $9.0 million was paid in cash on October 21, 2011 with the remainder of the dividend being settled with the issuance of common shares to shareholders participating in the dividend reinvestment plan ; and
  • In the nine months ended September 30, 2011, capital expenditures were $106.3 million of which $77.3 million related to internal growth projects. Internal growth project expenditures include the construction of tankage and pipeline connections at the Company's terminals and the expansion of the Truck Transportation and Canwest fleets.

On October 17, 2011, subsequent to quarter end, the Company announced an expansion of its water strategy in western Canada. "The acquisition of the remaining shares of Palko Environmental Ltd, combined with our recent investment in the Plato pipeline and planned developments at our Rimbey custom terminal, has provided a strong platform for Gibson to be a significant player in the emulsion treating, water disposal and oilfield waste management space. Over time, we expect to expand these same services across emerging oil plays in North America." said Mr. Hanlon.

2011 Third Quarter Conference Call

A conference call to discuss Gibson's third quarter results will be held at 7:00 a.m. MT (9:00 a.m. ET) on Tuesday, November 8, 2011 for interested investors, analysts and media representatives.

The conference call dial-in numbers are:

  • 1-866-696-5910 from Canada and the US;
  • 416-340-2217 from Toronto and International;
  • Participant Pass Code:  6600386.

Shortly after the call, an audio archive will be posted on the Investor Relations and Media section at

The call will also be recorded for playback 60 minutes after the meeting end time, until May 8, 2012, using the following dial in process:

  • 905-694-9451 / 800-408-3053;
  • Pass code:  6174170.

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 nine months ended September 30, 2011 as compared to the three and nine months ended September 30, 2010.  These documents are available at and at

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. The Company does not undertake any obligations to publicly update or revise any forward looking statements except as required by securities law. 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

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.

Third Quarter - Selected Financial Highlights

          Three months ended
September 30,
    Nine months ended
September 30,
          2011     2010     2011     2010
          (in thousands)
Segment Profit:                            
Terminals and Pipelines          $15,961     $10,590     $49,772     $26,433
Truck Transportation          19,545     17,900     48,958     38,904
Propane and NGL Marketing and Distribution          3,645     4,919     25,853     22,186
Processing and Wellsite Fluids          22,393     14,242     37,298     23,958
Marketing          5,795     (3,599)     20,122     (3,011)
Total Segment Profit          67,339     44,052     182,003     108,470
Statement of Cash Flows Data:                            
Cash flows provided by (used in):                            
Operating Activities          $84,302     $44,844     $171,405     $88,496
Investing Activities          (42,790)     (74,617)     (41,015)     (269,964)
Financing Activities          (12,149)     18,403     (30,918)     179,826
Other Financial Data:                            
Capital Expenditures:                            
Internal Growth Projects          $39,916     $6,172     $77,334     $20,278
Upgrade and Replacement Capital          7,367     14,642     28,984     23,040
Acquisitions          -     54,849     -     233,395
Adjusted EBITDA          $64,852     $42,769     $163,938     $95,882
months ended
30, 2011
Pro Forma Adjusted EBITDA          $220,626                  
For further information:
Ken Hall
Vice President Investor Relations and Communications
(403) 781-2899