02.22
Keyera (KEY.UN) – $26.10 – Results Slightly Below Expectations
Outperform, Average Risk, Price Target: $26.00
Keyera reported Q4 results that were slightly weaker than expected, with ACFFO per unit of $0.64 compared to RBC CM’s estimate of $0.68. Lower Gathering & Processing contribution coupled with higher general & administrative costs were partially offset by strong results from the Marketing segment. Management noted the recent resumption of drilling activity, particularly
near its Strachan, Nordegg River, Brazeau and Rimbey facilities. Several wells were tied into Keyera’s Rimbey facility in December 2009. Unitholder approval for a conversion to a corporation will be sought at Keyera’s annual meeting on May 11, 2010. Subject to obtaining the necessary consents and approvals, the fund expects to implement its new corporate
structure effective January 1, 2011. Due to available tax pools and a low payout ratio, Keyera should be able to maintain its distribution in 2011. Given previous guidance regarding a conversion to a corporation coupled with the maintenance of the distribution at current levels, the conversion to a corporation should not have a material impact on the unit price.
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