Incitec Pivot Ltd T.IPL

TD Waterhouse Initial Comments

[hawk35]

Inter Pipeline Ltd.
(IPL-T) C$14.10

First Glance: IPL Q2/20 Results

Event: Inter Pipeline Ltd. (IPL) Q2/20 AFFO/share of $0.43 was above our forecast of $0.33,
consensus of $0.36, and below Q1/19 AFFO/share of $0.49.
 
Impact: SLIGHTLY POSITIVE
 
Q2/20 Results Higher than Expectations: IPL Q2/20 results were above
expectations, largely due to a higher-than-expected contribution from NGL
processing, where it appears we overestimated the impact of the commodity
downturn on the business resulting from the COVID-19 pandemic. Also
contributing to the beat was lower-than-forecast sustaining capex, and slightly
lower corporate expenses compared to our estimates.
 
Oil Sands: Q2/20 FFO of $151.8 million increased slightly from $149.7mm in
Q2/19, largely due to increased cold lake capital fee revenue.
 
NGL Processing: Q2/20 FFO of $37.1 million decreased roughly $35 million from
Q2/19. The decrease was due to lower olefinic and propane frac-spread pricing,
which were negatively impacted by the COVID-19-related commodity downturn.
 
Conventional Oil Pipelines: Q2/20 FFO of $34.1 million was down nearly half
from Q2/19 FFO of $49.6 million. The large decrease was due to production
curtailments and reduced blending activity in the quarter stemming from the global
commodity downturn that drastically impacted Q2/20.
 
Bulk Liquid Storage: Q2/20 FFO of $34.2 million increased 27% from $26.9
million in Q2/19 due to increased demand that stimulated higher utilization and
contracted rates. Utilization overall in the segment was 98% in Q2/20, versus 83%
in Q2/19.
 
Conference Call Today at 11:00 am ET: Telephone: [phone]. Replay:
1-855-859-2056, Passcode: 7889542.