TD Raise Target Keyera Corp.
(KEY-T) C$31.89
Q4/23 Results
Event
Keyera Corp. (KEY) reported Q4/23 AFFO/share of $1.02, in line with our estimate
of $1.02, and above the recent consensus estimate of $0.94 and Q4/22 AFFO/ share
of $0.47.
Impact: SLIGHTLY POSITIVE
Q4/23 Results: While fourth-quarter results were overall in line with our
expectations, performance across all operating segments was above our forecasts
and offset by higher-than-anticipated spending, notably maintenance capital.
Relative to Q4/22, Liquids Infrastructure results were primarily driven by incremental
contribution from the acquired 21% working interest in KFS, higher contracted
volumes, and incremental contribution from KAPS. Marketing performance was
above management guidance and benefited from higher iso-octane premiums, sales
volumes, and motor gasoline pricing. Results from the G&P business were driven by
higher contribution from the Pipestone and Cynthia gas plants.
Contracting Update: KEY reported an additional ~30,000 bbl/d of new long-term
commitments on KAPS, with a weighted average contract term of ~12 years at
75% take-or-pay. KEY also reported an additional ~33,000 bbl/d of fractionation
commitments, with a weighted average contract term of ~13 years at 85% take-or-
pay.
Financial Forecasts Updated: We have updated our financial forecasts for Q4/23
results and have rolled forward our target-price valuation to be fully based off our
2025 estimates. When combined with our updated outlook, this results in our target
price increasing a dollar to $38.00.
TD Investment Conclusion
We believe KEY is well-positioned to provide an integrated offering to WCSB
producers as production grows over the medium term. We view KEY's solid balance
sheet and incumbent franchise as advantages in navigating a dynamic oil-and-gas
industry environment and transitioning to societies consuming lower-carbon energy
sources in the long term.