Keyera swung to a loss in the latest quarter as the Canadian energy-infrastructure company faced higher costs and a weakened operating margin, though underlying earnings were boosted by recent acquisitions.
Keyera, which runs a largely fee-for-service business gathering, processing and transporting natural gas and gas liquids, logged a net loss of 67.7 million Canadian dollars (US$45.9 million), or C$0.23 a share, for the third quarter, against year-earlier earnings of C$82.2 million, or C$0.37 a share.
The result included increased finance costs and a rise in depreciation and amortization expenses, as well a C$140 million drop in the operating margin due mainly to an unrealized loss on risk-management contracts from the company's marketing segment and C$160 million of higher realized margin.
Earnings before interest, taxes, depreciation and amortization on an adjusted basis rose to C$462 million from C$280.6 million a year earlier, topping the C$424 million analysts polled by FactSet were expecting. Excluding transaction and integration costs related to the acquisition of Plains All American Pipeline's natural-gas-liquids business in Canada, adjusted Ebitda was C$466 million, Keyera said.
Distributable cash flow for the quarter strengthened to C$244 million, or C$0.83 a share, from C$181 million, or C$0.79 a share, in the same period last year.
The Calgary, Alberta, in May finalized the C$5.3 billion acquisition of Plains All American Pipeline's natural-gas-liquids business in Canada, a move that established a natural-gas-liquids corridor in Canada for the company. In June, it completed the C$1.22 billion purchase of the remaining 50% stake in the KAPS pipeline connecting production in the Montney and Duvernay resource plays in Western Canada to downstream markets.
"The third quarter marked an important milestone for Keyera, with the first full-quarter contributions from the Plains acquisition and our increased ownership in KAPS," Chief Executive and President Dean Setoguchi said.
Setoguchi said the company is making strong progress integrating the expanded platform, and advancing growth projects and securing new opportunities to meet growing customer demand. Reliability at its Alberta EnviroFuels, or AEF, iso-octane production facility remains a challenge and Keyera is focused on executing its plan to restore sustained performance, he said.
Keyera previously said it expects AEF to operate at above 70% capacity while equipment is replaced and after it came back on line in early June following a five-month outage for repairs.
The company said that following the third quarter, heat-exchanger performance at AEF deteriorated more rapidly than anticipated, further constraining production. It plans an interim outage of about four weeks in early January to complete repairs and restore some operating capacity, with a return to full production expected by the end of May. The total expected impact on Keyera's 2027 marketing realized margin from the outages and reduced production is roughly C$85 million.
Keyera also has faced an unexpected disruption on Enbridge's Line 5 pipeline, which is used by Keyera to transport natural-gas-liquids mix from its Fort Saskatchewan and Empress operations in Alberta to its Sarnia fractionation facility in Ontario. That further offset earnings growth in the latest quarter.
The company said it now forecasts a marketing realized margin in 2026 of between C$400 million and $430 million, compared with a previous target of C$320 million to C$350 million, thanks to acquired Plains inventory and associated hedges that were revalued. The revised outlook also reflects stronger-than-anticipated iso-octane margins and increased margins from butane sales, and assumes average AEF utilization of about 50% for the remainder of 2026.
Keyera's marketing segment recorded a realized margin of C$95 million in the third quarter, against last year's C$73 million.
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