Inter Pipeline Ltd. has reported strong financial and operating results in the second quarter, despite recording reduced results for its bulk liquid storage segment.
Funds from operations (FFO) totalled $262m, a 26 percent increase over second quarter 2017. Net income for the quarter was $136m, up from $102.3m in the same period last year.
Inter Pipeline’s bulk liquid storage segment generated funds from operations of $17.4m in the quarter, compared to $25.3m in the second quarter of 2017. Storage demand for certain petroleum products in Europe continued to be impacted by a backwardated commodity pricing environment.
Average storage utilisation rates during the second quarter were 84 percent compared to 98 percent for the same period a year ago. The decline in overall utilisation was largely reflective of unfavourable market conditions in Denmark. Utilisation remained strong in Sweden and Germany, where facilities are operating near capacity.
NGL processing generated record funds from operations of $101.3m, up $72.9m from the second quarter of 2017. This strong performance was driven by favourable frac-spread pricing and a full quarter of normal operations.
Civil construction and fabrication activities at the $3.5bn Heartland Petrochemical Complex advanced considerably during the quarter. Piling activities were completed for the propane dehydrogenation facility, with more than 3,000 in place, and concrete work well underway. Fabrication in Alberta and globally is progressing on schedule and on budget including the approximately 90-metre propane/propylene splitter and an 800-tonne reactor, which are expected to move to the Heartland Complex site near Fort Saskatchewan, Alberta in early 2019.
In the quarter, $153.5m of capital was invested on this project with $279.3m spent year to date. Inter Pipeline expects to invest approximately $700m in total during 2018. Once the Heartland Complex begins producing polypropylene in late 2021, Inter Pipeline expects to earn approximately $450 to $500m per year in long-term average annual EBITDA.
Funds from operations for Inter Pipeline’s conventional oil pipelines business segment was $48.2m during the second quarter of 2018, a decrease of $4.5m compared to the same period in 2017.
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13th August 2018