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AltaGas Ltd. reported a net loss before income tax of $36.99 million (CAD 51 million) for the third quarter, compared to a net income before income tax of $34.81 million (CAD 48 million) in the prior-year period.
Normalized EBITDA was $182.76 million (CAD 252 million) in the third quarter, compared to $168.98 million (CAD 233 million) in the third quarter of 2022, Altagas said in an earnings release. Normalized earnings per share (EPS) was ahead of AltaGas’ expectations at $0.073 (CAD 0.10) for the quarter, which “strongly positions the company to deliver on its 2023 guidance, including current expectations of achieving results in the upper half of the guidance range”, the Calgary-based energy company said.
The company’s Midstream segment reported normalized EBITDA of $134.17 million (CAD 185 million) in the third quarter compared to $78.33 million (CAD 108 million) in the prior-year quarter. The largest drivers of the year-over-year results were “meaningfully stronger performance from global exports business due to solid operational execution, strong volumes and pricing, and benefit of Allowance for Funds Used During Construction (AFUDC) on the Mountain Valley Pipeline (MVP) as the project progresses to final completion in early 2024”, according to the release.
Altagas’ Utilities segment reported normalized EBITDA of $51.49 million (CAD 71 million) in the quarter, compared to $83.4 million (CAD 115 million) in the third quarter of 2022. The company said the largest driver of the year-over-year decrease in financial contribution was “the lack of the larger-than-normal asset optimization that was present in last year’s results”, as well as the lost contribution of its Alaskan Utilities, which were divested on March 1.
Altagas said that it was “pleased” with the construction progress on the MVP, which it said would provide critical energy security to customers in the Eastern U.S. The updated aggregate capital cost of the pipeline is $7.2 billion with AltaGas’ cash contribution contractually capped at its original $352 million investment for a 10 percent equity interest in a non-dilutive ownership stake, according to the release.
“We are pleased with the third quarter operating and financial results and where we sit on a year-to-date basis”, AltaGas President and CEO Vern Yu said. “This performance strongly positions the company to deliver on our 2023 guidance, including our current expectation to deliver results in the upper half of our guidance range, and continue to drive value creation for our stakeholders”.
“Performance in the Midstream segment was robust and reflected record export volumes and the west coast advantage for Canadian LPGs”, Yu continued. “The company has been actively working on de-risking Midstream while using strong risk management practices for residual commodity exposure. The Canadian upstream industry will deliver robust natural gas and NGL production growth in the coming years and we believe that AltaGas is positioned to provide the best value for LPG customers in North America and Asia”.
Speaking on the company’s Utilities segment, Yu said it performed in line with expectations and “was reflective of the typical seasonal low for natural gas usage during the shoulder season”. Yu added, “Our Utilities have a bright future with natural gas remaining the largest home energy source across all our jurisdictions where, on average, electrical substitution costs are more than three times the cost of natural gas on a delivered basis”.
“AltaGas has made tremendous progress on restructuring the platform over the past four years, including streamlining operations, refocusing the business, and de-risking the balance sheet. This includes significant leverage reduction, a shift in the debt portfolio with approximately 90 percent of the company’s debt being fixed under a properly staggered maturity ladder, and having built in optionality for additional debt repayments. These moves have strongly positioned AltaGas for the current operating environment and protected the company from the material increases in interest rates over the past 18 months”, Yu said.
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