Nalcor Energy Releases Business and Financial Report for 2018

April 9th, 2019

Nalcor Energy released its annual Business and Financial Report today, including the Annual Audited Consolidated Financial Statements for the year ended December 31, 2018.

“Nalcor’s overall financial performance in 2018 was strong. In fulfilling our mandate to responsibly develop and manage Newfoundland and Labrador’s energy resources, we rely on the skills of our dedicated workforce and I am very proud of the work they do,” said Stan Marshall, President and CEO.

Financial Highlights:

  • Profit for the year was $180 million compared to $51 million in 2017, an increase of $129 million. The increase is largely driven by higher oil prices and production and non-recurring expenses recognized in 2017 related to the impairment of exploration intangible assets and Gull Island project costs. These increases were partially offset by higher oil production costs and exploration expense along with lower revenue related to the ExxonMobil Canada Properties sublease that ended in 2017.
  • Capital expenditures for the year, excluding the Maritime Link, were $1.4 billion compared to $2.8 billion in 2017, a decrease of $1.4 billion. The decrease was driven by lower costs associated with the Lower Churchill Project assets as they move closer to in-service and Hydro’s completion of new island transmission assets in 2017.
  • Total assets continued to grow to $18.8 billion in 2018, compared to $18.0 billion in 2017, primarily due to capital expenditures.
  • Debt to capital for the year was 64% compared to 67% in 2017.

Marshall said that despite challenges, significant progress was achieved as the company remained focused on getting the job done safely and meeting targets.

“We made significant progress across all areas of the Lower Churchill Project,” Marshall said. “Due to the hard work and dedication of thousands of skilled women and men, we reached 96 per cent overall project completion at the end of 2018.”

Initial energization of the Lower Churchill Project transmission assets was achieved in early 2018. In June, power flowed for the first time from the existing Churchill Falls Generating Station in Labrador to the island over the Labrador-Island Transmission Link. Commissioning and integrating into the existing electrical system is ongoing.

At the Muskrat Falls generation site, concrete placement on the North Dam was completed with a total of 243,000 cubic metres of concrete placed. The North Dam is the third and final dam required for the generating facility and is now ready for operation. In the powerhouse, installation and assembly of the turbine and generators has started.

Hydro continued to invest responsibly in the province’s electricity system to ensure reliability for the 2018/2019 winter season. Approximately 150 capital projects were carried out across the system, including refurbishments and upgrades to several key assets. Hydro completed critical work across the transmission and distribution system including the integration of the Maritime Link into the provincial electricity system, commissioning of transmission line 266 that runs from Hardwoods to Soldiers Pond, as well as completion of other assets at Soldiers Pond.

In 2018, Hydro also filed a Reliability and Resource Adequacy Study with the Board of Commissioners and Public Utilities. The study addresses the long-term approach to providing continued least-cost, reliable service to electricity customers across Newfoundland and Labrador.

Over the last four years, oil and gas exploration efforts have helped create over $3.9 billion in work commitments with eight new oil and gas companies committing to carry out work in offshore Newfoundland and Labrador. In addition, a record single license round bid of $621 million was realized in 2018.

In March of this year, the Province introduced legislation that will see a new oil and gas crown corporation formed. The Bull Arm Fabrication division will become a subsidiary of this new oil and gas corporation.

“As we look forward to 2019, we are committed to building on the great success we saw across the company in 2017 and 2018,” said Marshall. “We are well positioned to begin delivering power from the Muskrat Falls generating station later this year. As we move closer to first power, we are also focused on finding all reasonable measures to manage costs and minimize the impact on electricity rates for our customers.”

Nalcor will provide a further overview of the 2018 business and financial results at its Annual Meeting taking place today, Tuesday, April 9 at 10:30 a.m. at the Holiday Inn in St. John’s. To register, please visit www.nalcorenergy.com or email info@nalcorenergy.com. The meeting will also be available on live webcast on Nalcor’s site.

Nalcor’s 2018 Business and Financial Report is available online at www.nalcorenergy.com.

-30-

Media Contact:

Deanne Fisher, Director, Corporate Affairs and Stakeholder Engagement

t: 709.733-5299       I   c: 709.697-3418   I   e: deannefisher@nalcorenergy.com