Kinder Morgan Canada (KML) has reported a net income of $1,349.4m in the third quarter, up from $42.4m in the same period last year, primarily due to the $1,308m gain, net of tax, on the sale of the Trans Mountain pipeline system. 

“KML’s strategic infrastructure operations across western Canada had a strong third quarter, underpinned by multi-year take-or-pay contracts with high quality customers and stable cash flows,” said KML Board Chairman and CEO Steve Kean. 

“Earnings in our Terminals segment were roughly flat compared to the third quarter of 2017, while Pipeline segment earnings were down as a result of the Trans Mountain sale. Contributions from our Edmonton-area terminals were slightly higher than the third quarter of 2017, driven by our new Base Line Terminal joint venture, where all tanks are now in service, as well as higher rates on re-contracted tank leases at our North 40 and Edmonton South terminals,” noted John Schlosser, KML President. 

“These increased contributions were partially offset by tank lease costs at our Edmonton South Terminal following the sale of Trans Mountain and the expiration of a third party rail terminalling contract at our Edmonton Rail Terminal joint venture. Contributions from our Vancouver Wharves facility were lower compared to the third quarter of 2017 with earnings negatively impacted by lower fertiliser and agricultural product volumes as well as higher labor costs.”

On August 31, 2018, the Trans Mountain pipeline system and expansion project were indirectly acquired by the Government of Canada through Trans Mountain Corporation (a subsidiary of the Canada Development Investment Corporation) for cash consideration of approximately $4.43bn, which is the contractual purchase price of $4.5bn net of a preliminary working capital adjustment. The sale price is subject to a customary final true up of the estimated working capital calculation as provided in the purchase agreement.

For the fourth quarter, representing the first full quarter without Trans Mountain earnings but with nearly a full quarter of Base Line Terminal earnings, KML anticipates that the remaining assets in the Pipelines and Terminals segments will generate Adjusted EBITDA of $50m to $55m.

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19th October 2018

 

19th October 2018