Gibson Energy Inc. Reports Second Quarter 2013 Financial Results and Announces Higher Growth Capital Spending Estimates for 2013 and 2014

Aug 07, 2013

CALGARY, ALBERTA--(Marketwired - Aug. 7, 2013) -

All financial figures are in Canadian dollars unless otherwise stated.

Gibson Energy Inc. ("Gibson" or the "Company"), (TSX:GEI), announced today results for the second quarter 2013.

Highlights include:

  • Adjusted EBITDA1 in the three months ended June 30, 2013 increased 41% to $87.2 million compared to $62.0 million in the three months ended June 30, 2012. Pro Forma Adjusted EBITDA2 for the twelve months ended June 30, 2013 was $400.4 million;

  • Segment profit3 increased by 38% to $89.0 million in the three months ended June 30, 2013 compared to $64.7 million in the three months ended June 30, 2012 with increases in all segments except for Truck Transportation;

  • In May 2013, the Company announced that it had received committed support from a large oil sands producer for a 500,000 bbl oil storage tank at the Hardisty Terminal. This is the fourth large storage tank to be announced since November 2012 on the Hardisty east lands for a combined total of 1.7 million barrels of planned new storage capacity;

  • In July 2013, the Company signed a long-term contract with Statoil Canada Ltd. to build infrastructure at the Edmonton Terminal. This infrastructure will enable the Edmonton Terminal to emulate the business model of the Hardisty Terminal providing merchant storage, flexible delivery options and pipeline connectivity to its customers;

  • In early August 2013, the Company announced that it had partnered with US Development Group LLC. ('USDG") to construct a new state-of-the-art unit train rail loading facility near Hardisty, Alberta, with pipeline connectivity from Gibson's Hardisty Terminal. The Company will install required pumping equipment and construct a pipeline for the transfer of crude from its Hardisty Terminal to the USDG crude-by-rail facility.

  • The Company has increased its expected 2013 growth capital spending forecast by 6% from $235 million to $250 million. For 2014, growth capital spending is now expected to increase significantly, by 50%, from a minimum of $200 million to a minimum of $300 million primarily related to expansion of the Company's Hardisty and Edmonton Terminals of which over half has been previously announced; and

  • On August 7, 2013, the Board of Directors approved a quarterly dividend rate of $0.275 per common share to shareholders of record at the close of business on September 30, 2013 that is payable on October 17, 2013.
  1. Adjusted EBITDA is defined as net income (loss) before interest expense, income taxes, depreciation, amortization, 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 or asset impairment changes. 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.
  2. Includes pro forma effect of acquisitions that took place in the twelve month period as if the acquisitions took place at the beginning of the twelve month period in which the acquisition occurred.
  3. 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.

"Our integrated midstream services model continued to produce solid results despite the poor weather experienced in Canada and the northern U.S. late in the second quarter causing a temporary slowdown in parts of our business," said Stewart Hanlon, Gibson's President and Chief Executive Officer. "I am very pleased that we continue to execute on long-term contracts with customers to build infrastructure on the strategic land positions at our Edmonton and Hardisty Terminals. Based on continuing discussions with several customers, we expect to sign more contracts in the near future. These prospects combined with the capital required for our recent announcements have improved our capital visibility; therefore, we have increased our 2014 capital spending estimates by 50%."

Other Highlights for the Second Quarter and Six Months ended June 30, 2013:

  • Cash provided by operations in the three and six months ended June 30, 2013 was $80.5 million and $168.5 million, respectively, compared to $56.1 million and $120.8 million in the three and six months ended June 30, 2012, respectively. The increase was primarily attributable to an increase in overall segment profitability in the three and six months ended June 30, 2013 compared to the three and six months ended June 30, 2012;

  • Capital expenditures were $95.2 million in the six months ended June 30, 2013, of which $66.4 million related to growth projects. Growth project expenditures are primarily related to the construction of tankage and pipeline connections at the Company's facilities, in particular at Hardisty and the expansion of the Environmental Services business;

  • The Company declared a dividend of $0.275 per common share in each of the first two quarters of 2013 for total dividends of $33.3 million in the three months ended June 30, 2013 and $66.6 million in the six months ended June 30, 2013. For the twelve months ended June 30, 2013, distributable cash flow was $240.7 million resulting in a dividend payout ratio of 51%;

  • On June 28, 2013, the Company completed the refinancing of its existing senior secured credit facilities by offering (the "Offering") to issue and sell U.S.$500 million principal amount of 6.75% Senior Unsecured Notes due July 15, 2021 and $250.0 million principal amount of 7.00% Senior Unsecured Notes due July 15, 2020. The net proceeds from the Offering were used to repay outstanding principal of U.S.$643.5 million under its existing senior secured credit facilities, with the remaining proceeds of $74.1 million to be used to fund growth initiatives and for general corporate purposes; and

  • Concurrently with the closing of the Offering, the Company entered into a new $500.0 million senior secured revolving credit facility and terminated its U.S.$375.0 million revolving credit facility due June 2016.

"The refinancing and extension of the Company's capital structure this past June shifted us to unsecured, fixed rate debt with more flexible financial covenants and an extended maturity." said Donald Fowlis, Gibson's Chief Financial Officer. "This balance sheet change has improved our operating and financial flexibility and helps us to execute our growth plans."

Management's Discussion and Analysis and Financial Statements

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, 2013 as compared to the three and six months ended June 30, 2012. These documents are available at and at

2013 Second Quarter Results Conference Call

A conference call to discuss Gibson's second quarter will be held at 7:00 a.m. MT (9:00 a.m. ET) on Thursday, August 8, 2013 for interested investors, analysts and media representatives.

The conference call dial-in numbers are:

  • 866-696-5910 from Canada and the US
  • 416-340-2217 from Toronto and International
  • Participant Pass Code: 7015666#

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

The call will also be recorded and available for playback 60 minutes after the meeting end time, until November 5, 2013, using the following dial in process:

  • 905-694-9451 / 800-408-3053
  • Pass Code: 6991702#

About Gibson

Gibson is a large, independent midstream energy company in Canada and an integrated service provider to the oil and gas industry in the United States. Gibson is engaged in the movement, storage, blending, processing, marketing and distribution of crude oil, condensate, natural gas liquids, water, oilfield waste and refined products. Gibson transports energy products by utilizing its network of terminals, pipelines, storage tanks, and trucks located throughout western Canada and through its significant truck transportation and injection station network in the United States. Gibson also provides emulsion treating, water disposal and oilfield waste management services in Canada and the United States and is the second largest retail propane distribution company in Canada.

Forward-Looking Statements

Certain statements contained in this news release constitute forward-looking information and statements (collectively, "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 Annual Information Form dated March 5, 2013 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 International Financial Reporting Standards ("IFRS"). Adjusted EBITDA and Pro Forma Adjusted EBITDA are not measures recognized under IFRS and do not have standardized meanings prescribed by IFRS. 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 measure most directly comparable to EBITDA, and for a reconciliation of Adjusted EBITDA and Pro Forma Adjusted EBITDA to EBITDA. Distributable cash flow is used to assess the level of cash flow generated from ongoing operations and to evaluate the adequacy of internally generated cash flow to fund dividends. See "Distributable Cash Flow" in the Company's MD&A for a reconciliation of distributable cash flow to cash flow from operations, the IFRS measure most directly comparable to distributable cash flow. 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 as an indication of the Company's performance.

Second Quarter- Selected Financial Highlights

Three months ended
June 30
Six months ended
June 30
2013 2012 2013 2012
(in thousands)
Segment Profit:
Terminals and Pipelines $ 22,000 $ 19,966 $ 44,742 $ 39,355
Truck Transportation 17,996 20,950 38,675 40,312
Environmental Services 19,260 4 36,195 3,668
Propane and NGL Marketing and Distribution 6,462 5,585 25,927 20,919
Processing and Wellsite Fluids 5,361 1,737 23,019 12,466
Marketing 17,937 16,409 47,426 26,365
Total Segment Profit 89,016 64,651 215,984 143,085
Statement of Cash Flows Data:
Cash flows provided by (used in):
Operating Activities $ 80,521 $ 56,114 $ 168,487 $ 120,755
Investing Activities (44,048 ) (43,865 ) (83,268 ) (78,520 )
Financing Activities 47,711 (32,428 ) (16,689 ) (52,631 )
Other Financial Data:
Capital Expenditures:
Growth Capital $ 32,192 $ 32,967 $ 66,397 $ 66,017
Upgrade and Replacement Capital 16,396 12,877 28,851 21,856
Acquisitions - 4,640 - 4,640
Adjusted EBITDA $ 87,176 $ 62,044 $ 208,220 $ 133,833

Twelve months ended June 30, 2013
Pro Forma Adjusted EBITDA $ 400,426
Gibson Energy Inc.
Ken Hall
Vice President Investor Relations and Communications
(403) 781-2899