AltaGas Ltd. Reports Strong 2017 Fourth Quarter and Year End Results

CALGARY, March 1, 2018 /CNW/ -

Highlights
(all financial figures are unaudited and in Canadian dollars unless otherwise noted )

• Achieved record normalized EBITDA¹ of $797 million, an increase of approximately 14 percent over 2016;
• Increased normalized funds from operations¹ by 11 percent to $615 million in 2017;
• Increased common share dividend by 4.3 percent to $2.19 per share annually;
• Safely commissioned the 99 Mmcf/d Townsend 2A shallow-cut processing facility and the first 10,000 Bbls/d train of the North Pine NGL Facility, both ahead of schedule and under budget;
• Significantly advanced construction of the Ridley Island Propane Export Terminal (RIPET) including the completion of the concrete outer wall for the propane tank;
• Received approval from the Michigan Public Service Commission (MPSC) to construct, own, and operate the Marquette Connector Pipeline (MCP);
• Awarded a Resource Adequacy contract at the Ripon Facility for June through September 2018, further advancing AltaGas' California strategy; and
• Made significant progress on the $8.4 billion pending acquisition of WGL Holdings, Inc. (WGL Acquisition).

AltaGas Ltd. (AltaGas) (TSX:ALA) today reported that normalized EBITDA in 2017 increased $96 million to $797 million, compared to 2016. Normalized funds from operations were $615 million ($3.60 per share) for 2017, compared to $554 million ($3.52 per share) in 2016. On a U.S. GAAP basis, net income applicable to common shares for 2017 was $30 million ($0.18 per share) compared to $155 million ($0.99 per share) in 2016. Normalized net income¹ was $204 million ($1.19 per share) for 2017, compared to $153 million ($0.98 per share) in 2016.

"2017 was a significant year for AltaGas. Our base business performed exceptionally well and delivered consistently strong results to end the year with record normalized EBITDA and FFO," said David Harris, President and Chief Executive Officer of AltaGas. "We also significantly advanced our northeast B.C. and energy export strategies with the completion of the Townsend 2A and North Pine Facilities, as well as considerably advancing the construction of RIPET, Canada's first ever propane export terminal off of the west coast. We also made great progress on our pending acquisition of WGL and remain on track with our expectations of closing the acquisition by mid-2018. Together we will be a more diverse and stronger company with a complementary set of energy businesses that will open up even more opportunities to provide significant value for all of our stakeholders."

Financial Results

2017 normalized EBITDA was $797 million, compared to $701 million in 2016. All three of AltaGas' business segments contributed to the strong year-over-year growth. 

EBITDA in AltaGas' Gas segment increased 36 percent over 2016 to $221 million as a result of a full year of contributions generated from the Townsend Facility, the commencement of commercial operations at Townsend 2A in October 2017, higher realized frac spread and frac exposed volumes, higher equity earnings from Petrogas Energy Corp. (Petrogas), and higher NGL marketing revenue and storage margins.

Normalized EBITDA in AltaGas' Utilities segment increased 8 percent over 2016 to $298 million as a result of colder weather experienced at the Alaska, Alberta, and Michigan utilities, as well as rate and customer growth across the segment.

In Power, contributions from the Pomona Energy Storage Facility and higher prices at the Northwest Hydro Facilities drove a 6 percent increase in normalized EBITDA for the operating segment.

Overall normalized EBITDA increases were partially offset by the impact of the sale of the EDS and JFP transmission assets, the impact from the weaker U.S. dollar on reported results from U.S. assets, lower ethane revenue due to lower volumes, and lower rates at the Blair Creek facility.

Normalized funds from operations for 2017 were $615 million ($3.60 per share), compared to $554 million ($3.52 per share) in 2016, reflecting the same drivers as normalized EBITDA, partially offset by lower distributions from Petrogas and higher current income tax expense. For the year ended December 31, 2017, AltaGas received $13 million of dividend income from Petrogas Preferred Shares (2016 - $6 million) and $5 million in common share dividends from Petrogas (2016 - $24 million). Petrogas retained cash to fund its growth capital program and for general corporate purposes.  

AltaGas recorded an income tax recovery of $34 million for the year ended December 31, 2017 compared to income tax expense of $33 million in 2016. The decrease in income tax expense was mainly due to the tax recovery recognized on provisions on assets taken during 2017 and the impact of the Tax Cuts and Jobs Act (the U.S. tax reform), which was enacted on December 22, 2017, and required AltaGas to revalue its U.S. deferred tax assets and liabilities using the lower federal corporate tax rate of 21 percent. The revaluation resulted in a decrease in income tax expense of approximately $34 million. These decreases were partially offset by higher income tax expense due to a portion of transaction costs incurred on the pending WGL Acquisition and the unrealized losses on certain risk management contracts not being tax deductible, the absence of a $10 million tax recovery related to the disposition of certain non-core natural gas gathering and processing assets in Alberta to Tidewater Midstream and Infrastructure Ltd. (the Tidewater Gas Asset Disposition) in the first quarter of 2016, and the absence of a $8 million tax recovery related to the dissolution of the ASTC Power Partnership (ASTC) in the fourth quarter of 2016.

Net income applicable to common shares for the year ended December 31, 2017 was $30 million ($0.18 per share) compared to $155 million ($0.99 per share) in 2016. The decrease in net income applicable to common shares for the year ended December 31, 2017 was mainly due to the transaction costs incurred on the pending WGL Acquisition of approximately $53 million after-tax, higher unrealized losses on risk management contracts, higher interest and depreciation and amortization expense, higher losses on sale of assets, higher preferred share dividends, and provisions on assets, partially offset by the lower income tax expense and the same previously referenced factors resulting in the increase in normalized EBITDA. In addition, net income per common share decreased for the year ended December 31, 2017 compared to the same period in 2016 as a result of the same factors impacting net income, as well as the increase in common shares outstanding in 2017.

Normalized EBITDA for the fourth quarter of 2017 was $213 million, compared to $194 million for the same quarter in 2016. The increase was mainly due to higher realized frac spread and frac exposed volumes, higher river flows and prices at the Northwest Hydro Facilities, commencement of commercial operations at Townsend 2A, contributions from the Pomona Energy Storage Facility, shorter planned outages at the Craven facility, higher NGL marketing revenue, colder weather in Michigan and Alberta, and higher rates at ENSTAR. These increases were partially offset by the impact from the weaker U.S. dollar on reported results from U.S. assets, higher operating and administrative expenses, the impact of the sale of the EDS and the JFP transmission assets, and lower ethane revenue. For the three months ended December 31, 2017, the average Canadian/U.S. dollar exchange rate decreased to 1.27 from an average of 1.33 in the same quarter of 2016, resulting in a decrease in normalized EBITDA of approximately $5 million.      

Normalized funds from operations for the fourth quarter of 2017 were $179 million ($1.03 per share), compared to $172 million ($1.04 per share) for the same quarter in 2016, reflecting the same drivers as normalized EBITDA, partially offset by lower distributions from Petrogas and higher current income tax expense. In the fourth quarter of 2017, AltaGas received $3 million of dividend income from the Petrogas Preferred Shares (2016 - $3 million) and $1 million of common share dividends from Petrogas (2016 - $6 million).  

AltaGas recorded an income tax recovery of $76 million for the fourth quarter of 2017 compared to income tax expense of $6 million in the same quarter of 2016. The decrease in income tax expense was mainly due to the tax recovery recognized on provisions on assets taken during the quarter of approximately $54 million and the impact of U.S. tax reform. This was partially offset by the absence of the $8 million tax recovery recorded on the dissolution of ASTC in the fourth quarter of 2016 and a portion of transaction costs incurred on the pending WGL Acquisition not being tax deductible.

Net loss applicable to common shares for the fourth quarter of 2017 was $11 million ($0.06 per share) compared to net income applicable to common shares of $38 million ($0.23 per share) for the same quarter in 2016. The decrease was mainly due to the provisions on assets recognized during the quarter as discussed above, transaction costs incurred on the pending WGL Acquisition of approximately $14 million after-tax, and higher interest expense, preferred share dividends and unrealized losses on risk management contracts. These decreases were partially offset by the impact of the U.S. tax reform, higher gains on long-term investments, and the same previously referenced factors resulting in the increase in normalized EBITDA.

2018 Outlook

AltaGas expects the WGL Acquisition to close in mid-2018. As a combined entity, AltaGas expects normalized EBITDA to increase by approximately 25 to 30 percent and normalized funds from operations to increase by approximately 15 to 20 percent.

Included in the above forecast are AltaGas' expectations of normalized EBITDA and normalized FFO being reduced by approximately 5 percent as a result of the U.S. tax reform. The impact to normalized net income is expected to be neutral. The lower tax rates at the combined regulated Utilities will provide customers with decreased rates while providing the opportunity to drive rate base growth. The U.S. non-regulated Gas and Power segments are expected to record higher normalized net income as a result of the lower U.S. federal tax rate, partially offset by limitations on the deductibility of interest expense for U.S. tax purposes.

"The impact of the U.S. tax reform is not overly material to AltaGas, nor is it overly material to the combined AltaGas and WGL entity," said Mr. Harris. "The acquisition of WGL remains highly accretive to both earnings and cash flow per share and it is instrumental to our long-term strategy and vision, providing a significant platform for future growth across North America in all three of our business segments."

The WGL Acquisition is expected to drive growth in all three business segments. The combined Utilities segment is expected to have the largest contribution to EBITDA, followed by the Gas segment. Specifically for Utilities, the combined segment is expected to have an overall rate base of approximately $5 billion and is expected to grow through planned capital investments in 2018. The number of customers is also expected to increase by approximately 1.2 million. The Gas segment is expected to benefit from the addition of WGL's pipeline investments in the prolific Marcellus/Utica gas resource regions as well as a gas supply agreement associated with the Cove Point LNG terminal which is in the final stages of commissioning. WGL's investment in the Stonewall Gas Gathering System is currently in-service and WGL expects the Central Penn and Mountain Valley pipelines to be operational by the end of 2018. The Gas segment will also benefit from a full year of contributions from AltaGas' Townsend 2A and the first train of the North Pine Facility. Finally, the Power segment is expected to benefit from the addition of WGL's distributed generation assets to its portfolio.

The overall forecasted normalized EBITDA and funds from operations for the combined business include assumptions around the timing of closing of the WGL Acquisition, the U.S./Canadian dollar exchange rate, the impact of certain contemplated asset monetizations and other financing initiatives as part of the WGL financing plan, and the impact of U.S. tax reform. Any variance from AltaGas' current assumptions could impact the forecasted increase to normalized EBITDA and funds from operations.

On a standalone basis, excluding the WGL Acquisition and potential asset monetizations, AltaGas expects a moderate increase to both normalized EBITDA and funds from operations in 2018 compared to 2017 related to its base business, mainly as a result of growth in the Gas segment. The moderate increase to normalized EBITDA and funds from operations for AltaGas' standalone base business is primarily due to full year contributions from Townsend 2A and the first train of the North Pine Facility, higher realized frac spread mainly due to higher hedged prices, higher expected earnings from the Northwest Hydro Facilities due to contractual price increases and continued efficiency improvements, and rate base growth at certain of the Utilities. These increases may be partially offset by the impact of a weaker U.S. dollar on reported results of the U.S. assets, the impact of planned turnarounds at the Harmattan and JEEP facilities, and the expiry of the PPA at the Ripon facility in the second quarter of 2018. The U.S. tax reform is expected to be immaterially negative to normalized EBITDA and funds from operations for AltaGas' U.S. businesses while, on a net income basis, the impact of the U.S. tax reform is expected to be immaterially positive. This 2018 outlook does not include any potential upside associated with new developments in either the Gas or Power segments.

AltaGas estimates an average of approximately 10,000 Bbls/d will be exposed to frac spreads prior to hedging activities. For 2018, AltaGas has frac hedges in place for approximately 7,500 Bbls/d at an average price of approximately $33/Bbl excluding basis differentials.

Strategic Pending Acquisition of WGL Holdings, Inc.

On January 25, 2017, AltaGas announced it had entered into a merger agreement (the "Merger Agreement") to indirectly acquire WGL Holdings, Inc., a diversified energy infrastructure company. The combination will bring together high quality, low-risk, long-lived infrastructure assets in North America with approximately $4.5 billion in secured growth projects and approximately $1.5 billion of additional growth opportunities through 2021 which are in advanced stages of development.

The WGL Acquisition is expected to provide strong accretion to earnings per share and normalized funds from operations per share¹ through 2021. Starting with the first full year (2019), the WGL Acquisition is also expected to support visible dividend growth of 8 to 10 percent per annum through 2021, while allowing AltaGas to maintain a conservative payout of normalized funds from operations.

On April 24, 2017, AltaGas filed regulatory applications with the public utility commissions in Maryland, Virginia and Washington D.C. On the same date, AltaGas and WGL also filed their voluntary Joint Notice to the Committee on Foreign Investment in the United States (CFIUS), and an application with the United States Federal Energy Regulatory Commission (FERC). In addition, on June 15, 2017, a pre-merger Notification and Report Form on the WGL Acquisition was filed in accordance with the requirements of the Hart-Scott-Rodino Act (HSR Act).

On May 10, 2017, common shareholders of WGL voted in favor of the Merger Agreement. On July 6, 2017, the FERC found that the transaction is consistent with the public interest and is now approved. Also as of July 17, 2017 when the waiting period required by Section 7A(b)(1) of the HSR Act expired, the merger was deemed approved by the Federal Trade Commission and the Department of Justice, such approval being valid for one year. On July 28, 2017, CFIUS provided its approval for the merger. The Commonwealth of Virginia State Corporation Commission approved the transaction on October 20, 2017.

On December 4, 2017, AltaGas and WGL announced the achievement of a significant milestone in the regulatory approval process in Maryland, with the signing of a settlement agreement with the Maryland Energy Administration (MEA), Montgomery County, Prince George's County, and the Laborers' International Union of North America, its affiliated District Council, and Local Unions serving or located in Washington D.C. (collectively, LiUNA) on key terms for the merger of AltaGas and WGL currently before the Maryland Public Service Commission (Maryland PSC). A final decision from the Maryland PSC is expected on or before April 4, 2018.

In Washington, D.C., the District of Columbia Public Service Commission (DCPSC) hearings concluded on December 13, 2017, and a decision is expected in the first half of 2018.

AltaGas believes that closing of the WGL Acquisition will occur in mid-2018. AltaGas plans to fund the WGL Acquisition with the proceeds from its aggregate $2.6 billion bought deal and private placement of subscription receipts, which closed in the first quarter of 2017. In addition, AltaGas has US $3 billion available under its fully committed bridge facility, which can be drawn at the time of closing. With all funding required for the closing of the WGL Acquisition in place, AltaGas can evaluate and pursue its asset sale process in a prudent and timely fashion in step with the regulatory process and consistent with AltaGas' long-term strategic vision. Management has presently identified a total of over $4.0 billion of assets from the AltaGas Gas, Power and Utilities business segments in respect of which it is evaluating various options for monetization that could include the sale of either minority and/or controlling interests. Management expects to realize over $2 billion from its asset sale process in 2018. With the present optionality available to AltaGas and in light of a number of factors including recent developments in the California Resource Adequacy markets, AltaGas has discontinued the previously announced sale process of its California power assets. AltaGas will instead continue to pursue other structuring and commercial opportunities to unlock the value of the California assets. Additional financing steps could include offerings of senior debt, hybrid securities, and equity-linked securities (including preferred shares), subject to prevailing market conditions.

Growth Capital

Based on projects currently under review, development or construction, AltaGas expects net capital expenditures in the range of $500 to $600 million (excluding WGL) for 2018. AltaGas' Gas segment will account for approximately 55 to 60 percent of the total capital expenditures, while AltaGas' Utilities segment will account for approximately 25 to 30 percent and the Power segment will account for the remainder. Gas and Power maintenance capital is expected to be approximately $25 to $35 million of the total capital expenditures in 2018. The majority of AltaGas' capital expenditures is focused on the continued construction at RIPET as well as maintaining and growing rate base at its existing Utilities. AltaGas continues to focus on enhancing productivity and streamlining businesses, including the disposition of smaller non‑core assets.

AltaGas' 2018 committed capital program is expected to be funded through internally‑generated cash flow and the DRIP. If required, AltaGas also has sufficient borrowing capacity available under its credit facilities, as well as access to capital markets.

Following the close of the WGL Acquisition, the consolidated 2018 capital program on a combined basis including capital for WGL, is expected to be in the range of approximately $1.0 to $1.3 billion. Close to half of this total will be allocated to Gas, with the majority of the remaining expected capital for Utilities, followed by Power. AltaGas expects that the largest portion of WGL's 2018 capital program subsequent to close will be allocated to investments in the Central Penn and Mountain Valley gas pipeline developments in the Marcellus region. Capital allocated to WGL's Utilities business will represent most of the remaining 2018 capital subsequent to close, with spending consistent with recent levels.

Ridley Island Propane Export Terminal
On January 3, 2017, AltaGas reached a positive Final Investment Decision (FID) on RIPET, having received approval from federal regulators. AltaGas has executed long-term agreements securing land tenure along with rail and marine infrastructure on Ridley Island. 

RIPET is expected to be the first propane export facility off the west coast of Canada. The site is near Prince Rupert, British Columbia, and is subleased from Ridley Terminals Inc. (RTI), which has a headlease with the Prince Rupert Port Authority (PRPA). The site has a locational advantage given very short shipping distances to markets in Asia, notably a 10-day shipping time compared to 25 days from the U.S. Gulf Coast. The brownfield site also benefits from excellent railway access and ample deep water access to the Pacific Ocean. AltaGas' arrangements with RTI give AltaGas access to extensive land and water rights and a world class marine jetty, which allows for the efficient loading of Very Large Gas Carriers that can access key global markets. Propane from British Columbia and Alberta will be transported to the facility using 50-60 rail cars per day through the existing CN rail network. The construction cost of RIPET is estimated to be approximately $450 to $500 million and RIPET is expected to ship 1.2 million tonnes of propane per annum (which is equivalent to approximately 40,000 Bbls/d of export capacity).

On May 5, 2017, AltaGas LPG Limited Partnership, a wholly-owned subsidiary of AltaGas, and Vopak Development Canada Inc. (Vopak), a wholly-owned subsidiary of Royal Vopak, a public company incorporated under the laws of the Netherlands, formed Ridley Island LPG Export Limited Partnership (RILE LP) to develop, own, and operate RIPET. AltaGas' subsidiaries hold a 70 percent interest while Vopak holds a 30 percent interest in RILE LP. The construction cost of RIPET will be funded by AltaGas LPG and Vopak in proportion to their respective interests in RILE LP. As part of the arrangements, AltaGas entered into a long-term agreement for the capacity of RIPET with RILE LP, and AltaGas and certain of its subsidiaries will provide construction and operating services to RILE LP. RILE LP will be consolidated by AltaGas.

Based on production from its existing facilities and forecasts from new plants under construction and in active development, AltaGas anticipates having physical volumes equal to approximately 50 percent of the expected capacity of 1.2 million tonnes per annum. The remaining 50 percent is expected to be supplied by producers and other suppliers. AltaGas has entered into negotiations with a number of producers and other suppliers and expects to underpin approximately 40 percent of RIPET's annual expected capacity under tolling arrangements with producers and other suppliers.

AltaGas LPG and Astomos Energy Corporation have entered into a multi-year agreement for the purchase of at least 50 percent of the 1.2 million tonnes per annum of propane expected to be available to be shipped from RIPET each year. Commercial discussions with Astomos and several third party off-takers for further capacity commitments are proceeding.

Construction of RIPET commenced during the second quarter of 2017 and is proceeding pursuant to an agreement with RILE LP. AltaGas is using its self-perform model that has been successfully used to execute its other projects on time and on budget. Crews have completed work on the concrete outer wall for the propane tank and the inner steel tank roof was installed at the end of January 2018. The balance of plant fabrication and civil work is on track and the first modules are scheduled to be installed in the first quarter of 2018. All long-lead equipment has been ordered with delivery schedules aligned with the construction schedule. RIPET is expected to be in-service in the first quarter of 2019.

Marquette Connector Pipeline
On August 23, 2017, the MPSC approved SEMCO Gas' application to construct, own, and operate the MCP. The MCP is a proposed new pipeline that will connect the Great Lakes Gas Transmission Pipeline to the Northern Natural Gas Pipeline in Marquette, Michigan, which will provide system redundancy and increase deliverability, reliability and diversity of supply to SEMCO Gas' approximately 35,000 customers in Michigan's Western Upper Peninsula. The MCP is estimated to cost between US$135 to $140 million. Engineering and property acquisitions are expected to begin in 2018 and construction is expected to be completed in 2019, with an anticipated in-service date by the end of the fourth quarter of 2019, which is earlier than the initial estimate of mid-2020.

Monthly Common Share Dividend and Quarterly Preferred Share Dividends

• The Board of Directors approved a dividend of $0.1825 per common share. The dividend will be paid on April 16, 2018, to common shareholders of record on March 26, 2018. The ex‑dividend date is March 23, 2018. This dividend is an eligible dividend for Canadian income tax purposes;
• The Board of Directors approved a dividend of $0.21125 per share for the period commencing December 31, 2017 and ending March 30, 2018, on AltaGas' outstanding Series A Preferred Shares. The dividend will be paid on March 29, 2018 to shareholders of record on March 15, 2018. The ex‑dividend date is March 14, 2018;
• The Board of Directors approved a dividend of $0.21760 per share for the period commencing December 31, 2017 and ending March 30, 2018, on AltaGas' outstanding Series B Preferred Shares. The dividend will be paid on March 29, 2018 to shareholders of record on March 15, 2018. The ex‑dividend date is March 14, 2018;
• The Board of Directors approved a dividend of US$0.330625 per share for the period commencing December 31, 2017 and ending March 30, 2018, on AltaGas' outstanding Series C Preferred Shares. The dividend will be paid on March 29, 2018 to shareholders of record on March 15, 2018. The ex‑dividend date is March 14, 2018;
• The Board of Directors approved a dividend of $0.3125 per share for the period commencing December 31, 2017, and ending March 30, 2018, on AltaGas' outstanding Series E Preferred Shares. The dividend will be paid on March 29, 2018 to shareholders of record on March 15, 2018. The ex‑dividend date is March 14, 2018;
• The Board of Directors approved a dividend of $0.296875 per share for the period commencing December 31, 2017, and ending March 30, 2018, on AltaGas' outstanding Series G Preferred Shares. The dividend will be paid on March 29, 2018 to shareholders of record on March 15, 2018. The ex-dividend date is March 14, 2018;
• The Board of Directors approved a dividend of $0.328125 per share for the period commencing December 31, 2017, and ending March 30, 2018, on AltaGas' outstanding Series I Preferred Shares. The dividend will be paid on March 29, 2018 to shareholders of record on March 15, 2018. The ex‑dividend date is March 14, 2018; and
• The Board of Directors approved a dividend of $0.3125 per share for the period commencing December 31, 2017, and ending March 30, 2018, on AltaGas' outstanding Series K Preferred Shares. The dividend will be paid on March 29, 2018 to shareholders of record on March 15, 2018. The ex-dividend date is March 14, 2018.

AltaGas' audited Consolidated Financial Statements and accompanying notes for the year ended December 31, 2017, as well as the related Management's Discussion and Analysis, are now available online at: http://altagas.ca/invest/financials. All documents will be filed today with the Canadian securities regulatory authorities and are posted under AltaGas' SEDAR profile at www.sedar.com.

Consolidated Financial Review

CONFERENCE CALL AND WEBCAST DETAILS:

AltaGas will hold a conference call today at 9:00 a.m. MT (11:00 a.m. ET) to discuss 2017 fourth quarter results, progress on construction projects, the pending WGL Acquisition and other corporate developments.

Members of the investment community and other interested parties may dial 1-888-231‑8191. Please note that the conference call will also be webcast. To listen, please go to http://www.altagas.ca/invest/events-and-presentations. The webcast will be archived for one year.

Shortly after the conclusion of the call, a replay will be available by dialing 1‑855‑859‑2056. The passcode is 9394869. The replay will expire at 10:00 p.m. (MT) on March 8, 2018.

Additional information relating to AltaGas' results can be found in the Management's Discussion and Analysis and audited consolidated financial statements for the year ended December 31, 2017 available through AltaGas' website at www.altagas.ca  or through SEDAR at www.sedar.com.

AltaGas is an energy infrastructure company with a focus on natural gas, power and regulated utilities. AltaGas creates value by acquiring, growing and optimizing its energy infrastructure, including a focus on clean energy sources. For more information visit: www.altagas.ca.

FORWARD LOOKING INFORMATION

This news release contains forward-looking information (forward-looking statements). Words such as "may", "can", "would", "could", "should", "will", "intend", "plan", "anticipate", "believe", "aim", "seek", "propose", "contemplate", "estimate", "focus", "strive", "forecast", "expect", "project", "target", "potential", "objective", "continue", "outlook", "vision", "opportunity" and similar expressions suggesting future events or future performance, as they relate to the Corporation or any affiliate of the Corporation, are intended to identify forward-looking statements. In particular, this news release contains forward-looking statements with respect to, among other things, business objectives, expected growth, results of operations, performance, business projects and opportunities and financial results.  Specifically, such forward-looking statements included in this document include, but are not limited to, statements with respect to the following: the expectation that RIPET will be Canada's first propane export terminal off the West Coast; the expected closing and timing of closing of the WGL Acquisition; the anticipated benefits of the WGL Acquisition and the performance of the combined company, including expected increases in normalized EBITDA, normalized funds from operations and dividend growth; expected impacts of the US tax reform; the expected rate base and utilities growth of the combined company; the expected growth in the Gas segment in the combined company, including benefits and timing of the Marcellus pipeline investments; the expected benefits of WGLs' distributed power assets on the Power segments; the expected growth and sources of growth in normalized EBITDA and normalized funds from operations of the base business; planned turnarounds; expected earnings at Northwest Hydro; expected frac spreads and exposure to frac spreads; expected contributions of Townsend 2A and North Pine; expected growth projects and opportunities for the combined company; expected financing plan, including funding, timing and sources of funds to finance the WGL Acquisition; potential assets identified and potential options for monetization of such assets, including minority and/or controlling interests; AltaGas' ability to pursue its asset sale process in a prudent and timely manner;  ; expected proceeds from asset sales; potential structuring and commercial opportunities for the California assets; expected capital expenditures of AltaGas and its segments and projects, and expected capital expenditures of the combined company, its segments and projects; expected rail usage at RIPET; expected cost, timing, shipping volumes and commercial advantages at RIPET; expected sources of supply and purchasers for RIPET volumes; and the expected cost and timing of the MCP.

These statements involve known and unknown risks, uncertainties and other factors that may cause actual results, events and achievements to differ materially from those expressed or implied by such statements. Such statements reflect AltaGas' current expectations, estimates and projections based on certain material factors and assumptions at the time the statement was made.  Material assumptions include: expected commodity supply, demand and pricing; volumes and rates; exchange rates; inflation; interest rates; credit rating; regulatory approvals and policies; future operating and capital costs; project completion dates; capacity expectations; implications of recent U.S. tax legislation changes; the outcomes of significant commercial contract negotiation; financing of the WGL Acquisition; and timing and completion of the WGL acquisition.  AltaGas' forward-looking statements are subject to certain risks and uncertainties which could cause results or events to differ from current expectations, including, without limitation: access to and use of capital markets; market value of AltaGas' securities; AltaGas' ability to pay dividends; AltaGas' ability to service or refinance its debt and manage its credit rating and risk; prevailing economic conditions; potential litigation; AltaGas' relationships with external stakeholders, including Aboriginal stakeholders; volume throughput and the impacts of commodity pricing, supply, composition and other market risks; available electricity prices; interest rate, exchange rate and counterparty risks; the Harmattan Rep agreements; legislative and regulatory environment; underinsured losses; weather, hydrology and climate changes; the potential for service interruptions; availability of supply from Cook Inlet; availability of biomass fuel; AltaGas' ability to economically and safely develop, contract and operate assets; AltaGas' ability to update infrastructure on a timely basis; AltaGas' dependence on certain partners; impacts of climate change and carbon taxing; effects of decommissioning, abandonment and reclamation costs; impact of labour relations and reliance on key personnel; cybersecurity risks; risks associated with the acquisition of WGL, the financing of the WGL acquisition and the underlying business of WGL; and the other factors discussed under the heading "Risk Factors" in the most recent AIF.

Many factors could cause AltaGas' or any particular business segment's actual results, performance or achievements to vary from those described in this news release, including, without limitation, those listed above and the assumptions upon which they are based proving incorrect. These factors should not be construed as exhaustive. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in this news release as intended, planned, anticipated, believed, sought, proposed, estimated, forecasted, projected, targeted, or expected, and such forward-looking statements included in this news release, should not be unduly relied upon. The impact of any one assumption, risk, uncertainty or other factor on a particular forward-looking statement cannot be determined with certainty because they are interdependent and AltaGas' future decisions and actions will depend on management's assessment of all information at the relevant time. Such statements speak only as of the date of this news release. AltaGas does not intend, and does not assume any obligation, to update these forward-looking statements except as required by law. The forward-looking statements contained in this news release are expressly qualified by these cautionary statements.

Financial outlook information contained in this news release about prospective financial performance, financial position or cash flows is based on assumptions about future events, including economic conditions and proposed courses of action, based on management's assessment of the relevant information currently available. Readers are cautioned that such financial outlook information contained in this news release should not be used for purposes other than for which it is disclosed herein.

This news release contains references to certain financial measures that do not have a standardized meaning prescribed by US  GAAP and may not be comparable to similar measures presented by other entities. The non-GAAP measures and their reconciliation to US GAAP financial measures are shown in AltaGas' Management's Discussion and Analysis (MD&A) as at and for the period ended December 31, 2017. These non-GAAP measures provide additional information that management believes is meaningful regarding AltaGas' operational performance, liquidity and capacity to fund dividends, capital expenditures, and other investing activities. The specific rationale for and incremental information associated with each non-GAAP measure is discussed in AltaGas' MD&A as at and for the period ended December 31, 2017. Readers are cautioned that these non-GAAP measures should not be construed as alternatives to other measures of financial performance calculated in accordance with US GAAP.

Normalized EBITDA is a measure of AltaGas' operating profitability prior to how business activities are financed, assets are amortized, or earnings are taxed. EBITDA is calculated from the Consolidated Statement of Income using net income adjusted for pre‑tax depreciation and amortization, interest expense, and income tax expense. Normalized EBITDA includes additional adjustments for unrealized gains (losses) on risk management contracts, gains (losses) on long-term investments, transaction costs related to acquisitions, gains (losses) on the sale of assets, accretion expenses, foreign exchange gains (losses), provision on investment accounted for by the equity method, provisions on assets, restructuring costs, dilution loss on an investment accounted for by the equity method, the Sundance B PPAs termination costs, the recovery of development costs for the PNG Pipeline Looping Project, and certain non-capitalizable project development costs. AltaGas presents normalized EBITDA as a supplemental measure. Normalized EBITDA is frequently used by analysts and investors in the evaluation of entities within the industry as it excludes items that can vary substantially between entities depending on the accounting policies chosen, the book value of assets and the capital structure.

Normalized net income represents net income applicable to common shares adjusted for the after-tax impact of unrealized gains (losses) on risk management contracts, gains (losses) on long-term investments, transaction costs related to acquisitions, gains (losses) on the sale of assets, provisions on investments accounted for by the equity method, provisions on assets, restructuring costs, dilution loss on investment accounted for by the equity method, the Sundance B PPAs termination costs, the tax recovery on the dissolution of ASTC, the recovery of development costs for the PNG Pipeline Looping Project, certain non-capitalizable project development costs, financing costs associated with the bridge facility for the pending WGL Acquisition, and the impact of the U.S. tax reform. This measure is presented in order to enhance the comparability of AltaGas' earnings, as it reflects the underlying performance of AltaGas' business activities.

Normalized funds from operations is used to assist Management and investors in analyzing the liquidity of the Corporation without regard to changes in operating assets and liabilities in the period and non‑operating related expenses (net of current taxes) such as transaction costs related to acquisitions, the Sundance B PPAs termination costs, the recovery of development costs for the PNG Pipeline Looping Project, certain non-capitalizable development costs, and restructuring costs. Funds from operations are calculated from the Consolidated Statement of Cash Flows and are defined as cash from operations before net changes in operating assets and liabilities and expenditures incurred to settle asset retirement obligations. Management uses this measure to understand the ability to generate funds for capital investments, debt repayment, dividend payments and other investing activities. Funds from operations and normalized funds from operations should not be viewed as an alternative to cash from operations or other cash flow measures calculated in accordance with U.S. GAAP.

SOURCE AltaGas Ltd.

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