Nalcor Energy reports second quarter financial results

August 14th, 2017

August 14, 2017, St. John’s, NL – Nalcor Energy reported its financial results for the second quarter of 2017 today.

“Nalcor Energy continues to have strong earnings at end the of the second quarter and has grown total assets by $3.5 billion since the end of last year. As a company, we continue to advance our work for the benefit of Newfoundlanders and Labradorians.”

“This quarter has been a difficult time; the tragic loss of life during Hydro’s construction of the new transmission line from Bay D’Espoir to the Avalon has been a stark reminder of our need to remain relentless in our focus on safety. Families rely on us to ensure their loved ones make it home safely and the communities in which we operate have the right to assume our work is always undertaken with their safety in mind. This is our number one priority.”

Stan Marshall, President and CEO

Second Quarter Financial Highlights

  • Profit for the quarter of $78 million increased by $69 million over the same period in 2016. Year-to-date profit of $135 million increased by $98 million over the same period in 2016.
  • Funds from operations for the quarter of $121 million increased by $79 million over the same period in 2016. Year-to-date funds from operations of $221 million increased by $119 compared to the same period in 2016.
  • Earnings before interest, taxes, depreciation, depletion, amortization and accretion (EBITDA) for the quarter of $138 million increased by $79 million compared to the same period in 2016. Year-to-date EBITDA of $253 million increased by $117 million compared to the same period in 2016.
  • Year-to-date capital expenditures (excluding Maritime Link) of $1,343 million increased by $166 million compared to the same period in 2016.
  • Total assets as of June 30, 2017 of $17.6 billion increased by approximately $3.5 billion over the $14.1 billion as of December 31, 2016.
  • Debt to capital as of June 30, 2017 was 68% compared to 61% at December 31, 2016.

Second Quarter Earnings and Capital Expenditures

Profit for the three months ending June 30, 2017 was $78 million, compared to $9 million for the same period in 2016. The primary factors contributing to the $69 million increase were: higher oil revenues as a result of increased production and higher oil prices; the recognition of a one-time adjustment to the Bull Arm lease revenue related to the close-out value of the ExxonMobil Canada Properties (EMCP) sublease agreement; and favourable regulatory adjustments in Hydro Regulated associated with the conclusion of the 2013 General Rate Application (GRA). These increases were partially offset by higher depletion associated with increased production in Oil and Gas; higher depreciation and amortization in Hydro Regulated and Oil and Gas; losses on disposal in Oil and Gas; and lower gains on the settlement of oil commodity contracts.

Capital expenditures (excluding Maritime Link) for the six months ended of $1.3 billion were in-line with budget and $166 million higher than the same period in 2016, primarily due to increases in capital incurred related to the ongoing construction of Muskrat Falls and LCP Transmission, as well as increases in Hydro Regulated according to the capital plan. Total capital expenditures for 2017, excluding Maritime Link, are forecast to be approximately $3.1 billion.

Nalcor’s debt to capital as of June 30, 2017 was 68%, compared to 61% at December 31, 2016.  The increase was primarily due to the issuance of $2.9 billion additional debt in Muskrat Falls and LCP Transmission.

Other Recent Developments

On May 25, 2017, the Muskrat Falls Project received additional debt proceeds of $2.9 billion, guaranteed by the Government of Canada, for the purposes of funding the remaining construction costs of the Muskrat Falls hydroelectric generation facility, the Labrador Transmission Assets and the Labrador-Island Link. This additional financing reduces the equity required from the Provincial Government to the project by $2.7 billion. Construction continued to advance during the second quarter on both the generation and transmission components bringing the overall construction of the projects to 78% completion. On June 23, 2017, Nalcor provided an update on the Muskrat Falls Project forecasting a revised facilities capital cost estimate of $10.1 billion bringing the total project cost, including financing, to $12.7 billion.

During the quarter, Hydro Regulated received approval from the Public Utilities Board (PUB) for implementation of rates effective July 1, 2017, reflecting the 2013 GRA and the annual Rate Stabilization Plan. In addition, in May, Hydro’s Net Metering Program received approval from the PUB. The Net Metering Program was created to allow Newfoundland and Labrador electricity customers to generate power from small scale renewable sources for their own use and supply surplus power to their electricity utility, when available.

In Oil and Gas, the White Rose Wellhead Platform Project was sanctioned in the second quarter with Oil and Gas holding a 5% interest in the White Rose Extension portion of the project. Oil and Gas’ anticipated investment in the project is expected to be $115 million to first oil in 2022. As well, in June 2017, the Hebron Project met a significant milestone as the platform was towed out to field. First oil is expected by the end of this year. This quarter, Bull Arm finalized the close-out value of the EMCP agreement and recorded a one-time adjustment to lease revenue of approximately $26 million.  Since its call for Expressions of Interest for future use of the site, a number of submissions were received and are now being reviewed.  Information collected will help inform the long-term planning process and may result in the issuance of a more detailed Request for Proposals later this year.

Nalcor’s second quarter webcast will take place today, August 14 at 11:00 a.m. A copy of the quarterly report and a recording of the webcast will be available at www.nalcorenergy.com.

 

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Media Contact:

Deanne Fisher

Corporate Communications and Stakeholder Engagement

t: 709.733.5299  c: 709.697.3418 e: deannefisher@nalcorenergy.com