AltaGas Ltd. press release
ALTAGAS REPORTS STRONG SECOND QUARTER 2025 RESULTS
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Robust Performance Across Platform Led by Midstream
CALGARY, AB , Aug. 1, 2025 /CNW/ - AltaGas Ltd. ("AltaGas" or the "Company") (TSX: ALA) reported second quarter 2025 financial results and provided an update on its operations, projects and other corporate developments.
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SECOND QUARTER HIGHLIGHTS
(all financial figures are unaudited and in Canadian dollars unless otherwise noted)
FINANCIAL RESULTS
Normalized EPS 1 was $0.27 in the second quarter of 2025 compared to $0.14 in the second quarter of 2024, while GAAP EPS 2 was $0.59 in the second quarter of 2025 compared to a loss of $0.14 in the second quarter of 2024. Normalized EBITDA 1 was $342 million in the second quarter of 2025 compared to $295 million in the second quarter of 2024, while income before income taxes was $226 million in the second quarter of 2025 compared to a loss of $46 million in the second quarter of 2024. The 16 percent year-over-year increase in normalized EBITDA was driven by strong performance across AltaGas' Midstream assets and Utilities growth from continued modernization investments. The Midstream segment reported normalized EBITDA of $215 million in the second quarter of 2025 compared to $175 million in the second quarter of 2024, while income before taxes was $263 million in the second quarter of 2025 compared to $46 million in the second quarter of 2024. The 23 percent year-over-year increase in normalized Midstream EBITDA was driven by strong global exports performance, higher gas processing volumes – particularly from AltaGas' Montney facilities, and improved earnings from the Mountain Valley Pipeline ("MVP"). The Utilities segment reported normalized EBITDA of $134 million in the second quarter of 2025 compared to $122 million in the second quarter of 2024, while income before taxes was $95 million in the second quarter of 2025 compared to $31 million in the second quarter of 2024. The 10 percent year-over-year increase in normalized Utilities EBITDA was driven by modernization investments, improved asset optimization, and colder weather in Michigan , partially offset by lower retail contributions. AltaGas' adjusted net debt to normalized EBITDA 1 exited the second quarter of 2025 at 4.6x on a trailing twelve-month basis, including 50 percent debt treatment for its subordinated hybrid notes and preferred shares. This is below the Company's long-term leverage target of 4.65x and compares to 5.1x at 2024 year-end.
| _ | | (1) Non-GAAP measure; see discussion and reconciliation to US GAAP financial measures in the advisories of this news release or in AltaGas' Management's Discussion and Analysis (MD&A) as at and for the period ended June 30, 2025, which is available on www.sedarplus.ca. (2) GAAP EPS is equivalent to Net income applicable to common shares divided by shares outstanding. |
OPERATIONAL AND BUSINESS HIGHLIGHTS
AltaGas delivered record second quarter LPG export volumes of 127,814 Bbl/d to Asia , up four percent year-over-year despite a nine-day turnaround at the Ridley Island Propane Export Terminal ("RIPET"). This included 12 Very Large Gas Carriers ("VLGCs") shipped from RIPET and eight from the Ferndale Terminal ("Ferndale"). Midstream throughput was strong, with gas processing volumes up eight percent year-over-year, driven by a 12 percent increase from Montney assets, led by Townsend , Pipestone I, and Blair Creek . AltaGas' global exports business continues to benefit from robust demand for open-access terminal capacity under long-term tolling agreements with upstream and downstream customers. Recent agreements include: Keyera Corp ("Keyera") committing to an additional 12,500 Bbl/d of LPG tolling capacity over 15 years starting in 2028, doubling its total contracted capacity with AltaGas to 25,000 Bbl/d. Pembina Pipeline Corporation ("Pembina") signing a long-term tolling agreement to export an additional 10,000 Bbl/d of LPGs starting in April of 2026 and an additional 10,000 Bbl/d of LPGs starting in April of 2027 at AltaGas' global exports facilities. The agreement builds on Pembina's previous 10,000 Bbl/d of tolling capacity at RIPET. BASF Intertrade AG ("BASF") signing a long-term butane export capacity agreement at the Ridley Island Energy Export Facility ("REEF"). The agreement will provide BASF with reliable Western Canadian supply and diversify its cracker feedstock portfolio, and strengthen Canada - Asia trade ties.
MVP delivered strong second quarter results, with higher year-over-year contributions as the comparative period only included a partial contribution when the pipeline was being brought into service. The 2.0 Bcf/d pipeline is backed by 20-year investment grade contracts and is expandable through additional compression and extendable into North Carolina through the Southgate project, both of which are progressing towards near-term final investment decisions ("FIDs"). AltaGas continues to advance a potential monetization of its interest in MVP with proceeds to be used for leverage reduction. On July 31, 2025 , Washington Gas filed a rate case application to the Virginia State Corporation Commission ("SCC of VA") seeking a US$65 million increase to base rates, net of the transfer of US$39 million of charges currently being recovered under the modernization rider. Interim rates are expected by early 2026.
PROJECT UPDATES
REEF construction remains on budget and on track for a year-end 2026 in-service date ("ISD"). Site prep is effectively complete while LPG accumulators are 85 percent fabricated and expected on-site in the fourth quarter of 2025. Jetty progress includes nearly 60 percent of piles placed and 30 percent of trestle fabrication complete. Approximately 70 percent of project costs are incurred or committed, with nearly 60 percent of the total capital cost under fixed-price engineering, procurement and construction ("EPC") contracts. AltaGas is advancing engineering and other work to progress near-term optimization projects at REEF that will allow the Company to move incremental volumes through Phase I, which is currently under construction. This includes evaluating options to increase throughput by 15,000–20,000 Bbl/d within the first year following REEF's 2026 year-end ISD as well as advancing engineering, permitting and stakeholder work to move up to another 60,000 Bbls/d of exports by the end of the decade, when there is sufficient demand for additional export capacity. Pipestone II construction continues to be on budget and on track for a late 2025 ISD, with the facility construction now over 85 percent complete and the remaining work under fixed price contracting. The gas gathering system is currently in operation and being utilized to optimize throughput at AltaGas' Pipestone I deep cut facility. Pipestone II is fully contracted under long term take-or-pay agreements and will provide critical gas processing and liquids handling capacity in one of the most active liquids-rich natural gas producing regions in Canada . AltaGas continues to advance growth projects across its Utilities and has received regulatory approval for the Keweenaw Connector Pipeline in Michigan's Keweenaw Peninsula . The 30-mile pipeline is expected to have an approximate capital cost of US$120 million with a 2027 ISD. SEMCO has also been awarded a contract to construct a natural gas interconnect for DTE Energy's Belle River coal-to-natural gas power plant conversion project in Michigan , which is expected to be completed in the fourth quarter of 2025. AltaGas' Utilities continue to work with a number of data center developers and are actively advancing projects with front-end engineering and design ("FEED") studies across Virginia , Michigan and Maryland . The Company is focused on pursuing these ventures on a de-risked basis by building pipeline interconnects to onsite power generation through rate regulated investments.
2025 GUIDANCE
Following AltaGas' strong second quarter of 2025, the Company is reiterating its 2025 full-year guidance, including normalized EBITDA of $1,775 million to $1,875 million and normalized EPS of $2.10 to $2.30 .
CEO MESSAGE
"We're pleased with our strong second-quarter performance, which reflects continued execution of our strategic priorities and positions us well to meet our 2025 guidance," said Vern Yu , President and CEO of AltaGas.
"As demonstrated this quarter, we continue to make meaningful progress on our strategic priorities. We've optimized our asset base to maximize returns by increasing Midstream throughput and reducing operating costs in our Utilities segment. We continue to actively de-risk our portfolio through long-term tolling agreements and by pursuing weather normalization in the District of Columbia . Our balance sheet is stronger, with trailing leverage now below our target. We're maintaining disciplined capital allocation while executing on our growth through network modernization and expansion in the Utilities and construction of our Pipestone II and REEF projects.
"Customer demand for our open-access export terminals is robust, as reflected in the agreements we've announced with Keyera, BASF, and Pembina. We're advancing optimization projects at REEF that will enable us to move incremental volumes through Phase I. This includes finalizing detailed engineering and costing to increase near-term throughput by 15,000 to 20,000 Bbl/d within the first year of the terminal's year-end 2026 in-service date, as well as progressing engineering, permitting, and pre-engagement stakeholder work to support up to an additional 60,000 Bbl/d of export capacity by the end of the decade, when there is sufficient demand for export capacity.
"We're excited about the long-term outlook for our Utilities, which continue to deliver the most reliable and cost-effective energy for space heating across our jurisdictions. The delivered cost of electricity is almost four times that of natural gas, and we're operating in a period of growing energy insecurity, particularly in the PJM market, where concerns about power capacity shortfalls are rising. In response, we're making significant investments to connect new customers and modernize our network to enhance long-term safety, reliability, and energy security. This includes securing regulatory approval for projects like the Keweenaw Connector Pipeline and advancing infrastructure to serve emerging opportunities such as data centers. We will continue to advocate on behalf of our customers against public policies that undermine reliability, affordability, and consumer choice – as the economic future of these regions depends on it.
"We're excited about AltaGas' future and the value we can unlock through disciplined execution of our long-term strategy. We remain confident in the strong macro-outlook for natural gas, NGLs, and the enterprise."
RESULTS BY SEGMENT
| Normalized EBITDA (1) | Three Months Ended
June 30 | | | ($ millions) | 2025 | 2024 | | Utilities | $ 134 | $ 122 | | Midstream | 215 | 175 | | Corporate/Other | (7) | (2) | | Normalized EBITDA (1) | $ 342 | $ 295 |
| (1) | Non‑GAAP financial measure; see discussion in Non‑GAAP Financial Measures section of this news release. |
| Income (Loss) Before Income Taxes | Three Months Ended
June 30 | | | ($ millions) | 2025 | 2024 | | Utilities | $ 95 | $ 31 | | Midstream | 263 | 46 | | Corporate/Other | (132) | (123) | | Income (Loss) Before Income Taxes | $ 226 | $ (46) |
BUSINESS PERFORMANCE
Midstream
The Midstream segment reported normalized EBITDA of $215 million in the second quarter of 2025 compared to $175 million in the second quarter of 2024, while income before income taxes was $263 million in the second quarter of 2025 compared to $46 million in the second quarter of 2024. The 23 percent year-over-year increase in normalized Midstream EBITDA was driven by strong global exports, higher gas processing volumes – particularly from AltaGas' Montney facilities, and stronger earnings from MVP. The quarter was also aided by lower processing operating expenses and stronger realized frac spreads.
AltaGas exported 127,814 Bbl/d of LPGs to Asia through its open access terminals in the second quarter of 2025 across a total of 20 VLGCs, which included 12 ships at RIPET and eight at Ferndale . This represented a second quarter record with volumes up four percent year-over-year as the Company continues to focus on operational execution and logistics and expects to deliver year-over-year volume growth over the balance of 2025. AltaGas is positioned to benefit from the long-term fundamentals of growing Canadian natural gas and NGL production, strong Asian LPG demand, and the Company's structural shipping advantage from the west coast of North America to Asia .
Performance across the balance of the Midstream platform was strong with gas processing volumes up eight percent year-over-year, driven by the Company's Montney exposed infrastructure, which saw 12 percent year-over-year volume growth. Extraction volumes increased by eight percent year-over-year with AltaGas benefiting from exposure to some of North America's leading gas resource plays, which continue to grow, despite soft Canadian natural gas prices.
AltaGas continues to advance regulatory, engineering and commercial work for the Company's backlog of Midstream growth projects. This includes Pipestone III, North Pine , and the Dimsdale natural gas storage expansion project. The Company is advancing engineering and capital cost work for two optimization initiatives that will increase REEF's phase I throughput capacity. REEF is a multi-phased project that is positioned to meet Canada's long-term LPG export needs through low-cost capacity additions that will ensure Canada's excess LPGs are delivered to the strongest markets globally, which will benefit all stakeholders.
Consistent with the Company's de-risking focus, AltaGas' Midstream operations are well-hedged for 2025 with approximately 98 percent of the remaining 2025 expected global export volumes tolled or financially hedged. Merchant volumes are hedged at an average Far East Index ("FEI") to North American financial hedge price of US$18.00 /Bbl while tolling volumes are in line with historical rates.
Approximately 84 percent of the Company's 2025 expected frac exposed volumes are hedged at US$26.48 /Bbl, prior to transportation costs. AltaGas continues to actively manage risk across the Midstream platform through commercial contracting and a systematic hedging program to manage its commodity price exposure. For the remainder of 2025, AltaGas has materially hedged all of its expected Baltic freight exposure through time charters, financial hedges, and tolled volumes.
| Midstream Hedge Program | Q3 2025 | Q4 2025 | Remainder of 2025 | | Global Exports volumes hedged (%) (1) | 100 | 96 | 98 | | Average propane/butane FEI to North America hedge (US$/Bbl) (2) (3) | 17.00 | 19.58 | 18.00 | | Fractionation volume hedged (%) (3) | 88 | 79 | 84 | | Frac spread hedge rate - (US$/Bbl) (3) | 26.56 | 26.42 | 26.48 |
| (1) | Approximate expected volumes hedged based on AltaGas' internally assumed export volumes. Hedged amounts include contracted tolling volumes and financial hedges. | | (2) | Does not include physical differential to FSK for C3 volumes. Butane is hedged as a percentage of WTI. | | (3) | Approximate average for the period. |
Utilities
Utilities reported normalized EBITDA of $134 million in the second quarter of 2025 compared to $122 million in the second quarter of 2024, while income before income taxes was $95 million in the second quarter of 2025 compared to $31 million in the second quarter of 2024. The 10 percent year-over-year increase in normalized Utilities EBITDA was driven by modernization investments, stronger asset optimization, and colder weather in Michigan , partially offset by lower retail contributions.
Washington Gas recently filed a new rate case in Virginia with the SCC where requested rates are designed to collect an incremental US$65 million in annual revenue, net of US$39 million in ARP surcharge related to Washington Gas' SAVE rate rider. The filing uses a December 2024 test year with select forward looking adjustments. Interim rates are expected to come into effect by early 2026. The Company also continues to work with the PSC of D.C. on the August 2024 rate case and anticipates resolution by year-end 2025.
Washington Gas continues to work with the PSC of D.C. on the US$215 million asset modernization extension application under review in D.C. through its Strategic Accelerated Facilities Enhancement ("District SAFE") plan. The Company is continuing ARP work in the PROJECTpipes 2 modernization program with the program extended to December 31, 2025 with the additional US$34 million of modernization capital added from May 1, 2025 . The extension of PROJECTpipes 2 ensures uninterrupted pipeline modernization work continues while District SAFE is being reviewed.
AltaGas' Utilities continue to see progress on key growth initiatives and received regulatory approval for the Keweenaw Connector Pipeline in Michigan . The 30-mile transmission line is expected to be in service in early 2027 with the majority of the US$120 million capital spend expected to take place through 2026. AltaGas' Utilities continue to work with a number of data center developers and are actively advancing projects with front-end engineering and design ("FEED") studies across Virginia , Michigan and Maryland . The Company is focused on pursuing these ventures on a de-risked basis by building pipeline interconnects to onsite power generation through rate regulated investments.
AltaGas continued to actively invest in its Utilities business during the second quarter of 2025 with $160 million of capital deployed across the Company's Utilities network. This included investing approximately $96 million in the quarter toward the Company's asset modernization programs. These investments improve the safety and reliability of the system while connecting customers to the critical energy they continue to rely on. AltaGas remains committed to making these investments, while balancing the need for ongoing customer affordability.
Corporate/Other
The Corporate/Other segment reported normalized EBITDA for the second quarter of 2025 of a loss of $7 million , compared to a loss of $2 million in the same quarter of 2024. Loss before income taxes in the Corporate/Other segment was $132 million in the second quarter of 2025, compared to $123 million in the same quarter of 2024. The year-over-year decrease in normalized EBITDA was primarily driven by higher expenses related to employee incentive plans.
CONSOLIDATED FINANCIAL RESULTS
| | Three Months Ended
June 30 | | | ($ millions) | 2025 | 2024 | | Normalized EBITDA (1) | $ 342 | $ 295 | | Add (deduct): | | | | Depreciation and amortization | (126) | (117) | | Interest expense | (114) | (111) | | Normalized income tax expense | (15) | (13) | | Preferred share dividends | (5) | (4) | | Other (2) | (1) | (9) | | Normalized net income (1) | $ 81 | $ 41 | | | | | | Net income (loss) applicable to common shares | $ 175 | $ (42) | | Normalized funds from operations (1) | $ 228 | $ 180 | | Cash from operations | $ 365 | $ 452 | | | | | | ($ per share, except shares outstanding) | | | | Shares outstanding - basic (millions) | | | | During the period (3) | 299 | 297 | | End of period | 299 | 297 | | | | | | Normalized net income - basic (1) | 0.27 | 0.14 | | Normalized net income - diluted (1) | 0.27 | 0.14 | | | | | | Net income (loss) per common share - basic | 0.59 | (0.14) | | Net income (loss) per common share - diluted | 0.58 | (0.14) |
| (1) | Non‑GAAP financial measure; see discussion in _Non-GAAP Financial Measures _section at the end of this news release. | | (2) | "Other" includes accretion expense, net income applicable to non-controlling interests, foreign exchange gains (losses), and unrealized foreign exchange losses (gains) on intercompany balances. | | (3) | Weighted average. |