Nalcor Energy delivers financial and business update

May 14th, 2015

Ed Martin, President and Chief Executive Officer and Derrick Sturge, Vice President and Chief Financial Officer presented Nalcor Energy’s 2015 first quarter update today.

“Over the past several years, Nalcor and the Province have made important investments in Newfoundland and Labrador’s valuable energy assets, including the provincial electricity system,” said Ed Martin. “As a result, Nalcor’s total asset base has grown from approximately $2 billion to nearly $11 billion, revenue has increased substantially, and the company’s balance sheet is in a strong position. As we execute on our plan, assets currently under development will begin generating additional income for the people of the province in the years to come, further strengthening Newfoundland and Labrador as an energy leader.”

Nalcor is reinvesting its revenue, along with equity contributions from the Government of Newfoundland and Labrador, into provincial assets which will return value to the province. Combined with internal revenue sources that Nalcor generates from its own operations, the company is using this investment for Muskrat Falls, oil and gas developments, Churchill Falls and the ongoing maintenance and improvement of the provincial electricity system. “The investments we are making in our energy resources are for the long-term benefit of the people of the province,” said Martin.

Nalcor’s Q1 2015 profit was $29.5 million, a decrease of $5.7 million from the same period last year. This was primarily driven by decreased production volumes and lower oil prices in Oil and Gas and lower export prices in Energy Marketing. Hydro Regulated’s loss in Q1 2015 was $4.2 million lower than the same period in 2014 primarily due to lower power purchased costs. Churchill Falls profit was up $8.3 million over the same period last year largely due to additional energy sales from the former Twinco Block to Hydro. Overall, forecasted earnings for 2015 are currently tracking consistent with 2014 levels, while Hydro ‘s income will be impacted by the outcome of the General Rate Application.

Construction progressed on all components of the Muskrat Falls Project during the quarter. In the oil and gas business, agreements were signed in the first quarter for acquisition of new seismic and electromagnetic data in 2015, which will be used to evaluate the province’s frontier oil and gas potential in advance of future license rounds.

Nalcor is also taking action to contain and reduce costs. While major capital projects are ongoing with expenditures committed towards protecting and refurbishing aging assets and building new investments, Nalcor is reducing or cancelling non-critical planned expenditures that will not impact operations negatively.

“Safety remains our top priority, and our commitment to long-term asset management and to improving operating performance across Nalcor’s business lines continues,” said Martin.
Last Fall, Nalcor began publicly reporting its results by quarter, as part of the company’s commitment to timely, open and transparent information about its business operations and financial performance.

A copy of the first quarter report and a recording of the public call will be available at www.nalcorenergy.com.

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Nalcor Energy’s business includes the development, generation, transmission and sale of electricity; the exploration, development, production and sale of oil and gas; industrial fabrication and energy marketing. Focused on sustainable growth, the company is leading the development of the province’s energy resources and has a corporate-wide framework which facilitates the prudent management of its assets while continuing an unwavering focus on the safety of its workers and the public. Nalcor has six lines of business: Newfoundland and Labrador Hydro, Churchill Falls, Oil and Gas, Lower Churchill Project, Bull Arm Fabrication and Energy Marketing.

Media Contact:
Deanne Fisher
Corporate Communications and Stakeholder Engagement
t: 709.733.5299
c: 709.697.3418
e: dfisher@nalcorenergy.com

Key Financial Highlights YTD 2015

• Total assets and regulatory deferrals of $10.9 billion as of March 31, 2015, an increase of $0.3 billion over Dec. 31, 2014.
• Q1 2015 Profit of $29.5 million. Lower profit in Q1 compared to the same period in 2014 largely a result of decreased oil production volumes and lower oil prices in Oil and Gas and lower export market prices in Energy Marketing.
• Increased Q1 2015 profit in Churchill Falls over the same period in 2014 largely a result of additional energy sales from the former Twinco Block to Hydro.
• Continued execution of Nalcor’s capital plan, with capital expenditures of $0.4 billion in Q1 2015, and forecast 2015 capital expenditures of $2.7 billion.
• 68.3% debt-to-capital as at March 31, 2015.
• Forecasted 2015 profit on par with last year. The outcome of the GRA will have a significant impact on profit.