Keyera Corp T.KEY

Ink Research

[retiredcf]

Morning Report: Keyera joins the INK Energy Top 30 

February 27, 2024

Today, we published the February INK Top 30 Energy Report. One of the additions to the list was Keyera (KEY) which took the number 21 spot. Keyera primarily focuses on natural gas gathering and processing, and natural gas liquids (NGL) processing, transportation, storage, and marketing. The bulk of its operations are in Alberta. In the summer, it completed the 575-kilometre KAPS pipeline that transports NGL and condensate from northwestern Alberta to the company's NGL infrastructure and condensate network in Fort Saskatchewan, Alberta. KAPS is s 50/50 joint venture with Stonepeak, an alternative investment firm specializing in infrastructure. The pipeline can carry 350,000 barrels per day of NGLs and condensate from the liquids-rich Montney and Duvernay basins to Keyera's liquids processing and storage hub in Fort Saskatchewan. Keyera is banking on KAPS as part of its growth strategy and is upbeat about its prospects, believing it offers a competitive transportation alternative for northwestern Alberta producers.

When Keyera reported results for 2023 on February 14th, basic EPS was $1.85 versus $1.48 a year earlier. Cash flow from operating activities was $975.5 million compared to $925.3 million in 2022. A favoured metric for the company is adjusted EBITDA which came in at $1,211.8 million in 2023 versus $1,032.5 million the year before. Keyera has an adjusted EBITDA (holding marketing constant) compound annual growth rate target of 6 to 7% through to 2025. As of February 14th, it believes it is on track to achieve the upper end of that. Keyera has declared a quarterly dividend of $0.50 per share payable on March 28th to shareholders on record as of March 15th. That works out to a prospective annual yield of 5.88% as of February 26th which helps to support the stock's valuation ranking. There has also been some modest insider buying recently.