Stillwater Critical Minerals Corp. press release

ALTAGAS REPORTS STRONG 2022 RESULTS

2023-03-02

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AltaGas Delivers Solid Fourth Quarter and Annual Results; Closes Alaskan Utilities Divestiture; Reaffirms 2023 Guidance; and Continues to Take Steps to Advance Long-term Strategic Plan

CALGARY, AB , March 2, 2023 /CNW/ - AltaGas Ltd. ("AltaGas" or the "Company") (TSX: ALA) today reported fourth quarter and full year 2022 financial results, announced closing the divestiture of the Alaskan Utilities, reaffirmed 2023 financial guidance, announced recent contract awards, and provided an update on its operations.

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

Normalized EPS 1 was $0.63 in the fourth quarter and $1.89 for the full year of 2022 while GAAP EPS 2 was $0.19 in the fourth quarter and $1.42 for the full year of 2022. Full year normalized EPS increased approximately 10 percent year-over-year, which was above the upper-half of AltaGas' 2022 EPS guidance range of $1.80 - $1.95 . Normalized EBITDA 1 was $454 million in the fourth quarter and $1,537 million for the full year of 2022, while income before income taxes was $78 million in the fourth quarter and $716 million for the full year of 2022. Full year normalized EBITDA increased approximately 4.5 percent year-over-year, which was in the upper-half of the Company's 2022 guidance range of $1.50 billion - $1.55 billion . Normalized FFO per share 1 was $1.32 in the fourth quarter and $4.28 for the full year of 2022 while Cash from Operations per share 3 was $(1.02) in the fourth quarter and $1.92 for the full year of 2022. The Utilities segment reported normalized EBITDA 1 of $294 million in the fourth quarter of 2022 compared to $238 million in the fourth quarter of 2021 while income before taxes was $80 million in the fourth quarter of 2022 compared to $64 million in the fourth quarter of 2021. The fourth quarter year-over-year increase in normalized EBITDA was driven by strong asset optimization activities, continued infrastructure investments on behalf of our customers, beneficial foreign exchange rates, the Virginia rate case interim rates, and colder weather in Michigan and the District of Columbia (D.C.), partially offset by higher operating and administrative expenses. The Midstream segment reported normalized EBITDA 1 of $163 million in the fourth quarter of 2022 compared to $95 million in the fourth quarter of 2021 while income before taxes in the segment was $113 million in the fourth quarter of 2022 compared to loss before taxes of $151 million in the fourth quarter of 2021. The fourth quarter year-over-year increase in normalized EBITDA was driven by strong volumes and propane margins within the export facilities, higher earnings at the extraction facilities, and lower operating costs at the processing facilities, which was partially offset by the lost contribution from the Aitken Creek gas processing facility. On March 1, 2023 , AltaGas closed the divestiture of its Alaskan Utilities to TriSummit Utilities Inc. for US$800 million (approximately CAD$1.1 billion ), prior to closing adjustments. Sale proceeds will initially be used to reduce debt while providing AltaGas with the financial flexibility to advance its strong growth opportunities across the Midstream and Utilities platforms over the coming years. On February 28, 2023 , the Mountain Valley Pipeline received a favourable biological opinion from the U.S. Fish and Wildlife Service. The consortium expects to receive the incremental permits and approvals over the coming months and will be positioned to mobilize construction crews in the summer of 2023 and have the pipeline in-service by 2023 year-end. As previously disclosed, AltaGas views its investment in the pipeline as a potential divestiture candidate to reduce leverage and move toward the Company's long-term leverage targets. In February 2023 , AltaGas reached an agreement with Southern California Edison for the purchase of resource adequacy attributes from the Blythe facility from January 1, 2024 , through December 31, 2027 . AltaGas believes that the agreement reiterates the long-term demand for Blythe to provide stable and affordable power supply, and support California's longer-term energy needs. In February 2023 , AltaGas reached an agreement with an investment grade counterparty to extend the existing throughput and marketing agreement at the Ferndale liquefied petroleum gases (LPG) Export Terminal by five years through 2033. The extension is aligned with AltaGas' long-term focus of de-risking the global exports business and operating in strong partnership with its customers to drive the best collective outcomes for all parties. On December 22, 2022 , Washington Gas filed an application with the Public Service Commission of the District of Columbia (PSC of DC) for the third phase of PROJECTpipes (PROJECTpipes 3), seeking approval of approximately US$672 million for the five-year period from 2024 to 2028. AltaGas is reaffirming 2023 full year guidance ranges for normalized EBITDA 1 of $1.5 billion to $1.6 billion , and normalized EPS 1 guidance of $1.85 - $2.05 , compared to actual normalized EPS 1 of $1.89 and GAAP EPS 2 of $1.42 in 2022.

| | | (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 December 31, 2022, which is available on www.sedar.com . (2) GAAP EPS is equivalent to Net income applicable to common shares divided by shares outstanding. (3) Cash from Operations per share is equivalent to cash from operations divided by shares outstanding. |

CEO MESSAGE

"We delivered strong operational and financial results in 2022, delivering on our strategic priorities, and continuing to advance our diversified energy infrastructure model," said Randy Crawford , President, and Chief Executive Officer. "2022 Normalized EPS grew by approximately 10 percent and normalized EBITDA increased approximately 4.5 percent year-over-year. This growth is impressive considering the outsize contribution from AltaGas' U.S. Transportation and Storage business in the first quarter of 2021, which was subsequently divested in the second quarter of 2021, and did not contribute to AltaGas' financial results in 2022.

"Operationally, our businesses performed exceptionally well in 2022, despite some challenges and volatility in Asian-to-North American butane spreads and other factors during the second half of 2022. Full-year financial results landed in the upper-half our 2022 guidance ranges for both normalized EBITDA and normalized EPS.

"Through continued infrastructure investments on behalf of our customers within Utilities, we delivered an 18 percent year-over-year increase in normalized EBITDA in U.S. dollar terms. Asset optimization activities, which are designed to benefit both the Company and consumers, helped fuel this performance, as well as lower rates to customers. Over the past three years, by making critical investments across our network to provide improved safety and reliability, reduce operating costs, and improving the customer experience, the Utilities segment has delivered an 11 percent compounded annual growth rate (CAGR) in normalized EBITDA in U.S. Dollar terms, delivering an incredible performance from where we started, while driving better outcomes for all our stakeholders.

"Our Midstream business, despite experiencing some market and inflationary headwinds in the second and third quarters of 2022, finished the year strong delivering a 14 percent year-over-year increase in export volumes. The platform continues to position for significant future growth as the Asian economy continues to recover.

"As we look ahead to 2023, we welcome the return of strong demand fundamentals that are being seen in Asia as economies continue to reopen. We expect the return of strengthening Asian LPG pricing premiums that were realized in the fourth quarter to continue through 2023 and beyond. We also have a new tolling agreement from an investment grade counterparty in Asia at the Ridley Island Propane Export Terminal (RIPET) and extended a long-term tolling structure by five years until 2033 at Ferndale , underscoring the market value and credibility of AltaGas' export platform and Canada's reputation for reliable supply. We look forward to continuing to connect our Canadian and Asian customers through increased long-term tolling arrangements in the years ahead.

"Our financial performance is a testament to our diversified business model, which produces a lower-risk, high-growth platform that continues to demonstrate resiliency through market cycles and periods of volatility, while providing our shareholders with steady and growing earnings and cash flow. We continue to strengthen our balance sheet and financial flexibility with the closing of divestiture of the Alaskan Utilities and expect to approach our medium-term 5x net debt-to-Normalized EBITDA target."

RESULTS BY SEGMENT

| Normalized EBITDA (1) | Three Months Ended

December 31 | Year Ended

December 31 | | | | ($ millions) | 2022 | 2021 | 2022 | 2021 | | Utilities | $ 294 | $ 238 | $ 933 | $ 771 | | Midstream | 163 | 95 | 607 | 717 | | Corporate/Other | (3) | 1 | (3) | (16) | | Normalized EBITDA (1) | $ 454 | $ 334 | $ 1,537 | $ 1,472 |

| Income (Loss) Before Income Taxes | Three Months Ended

December 31 | Year Ended

December 31 | | | | ($ millions) | 2022 | 2021 | 2022 | 2021 | | Utilities | $ 80 | $ 64 | $ 548 | $ 538 | | Midstream | 113 | (151) | 526 | 242 | | Corporate/Other | (115) | (75) | (358) | (334) | | Income (Loss) Before Income Taxes | $ 78 | $ (162) | $ 716 | $ 446 |

| (1) Non-GAAP financial measure; see discussion in the Non-GAAP Financial Measures advisories of this news release. |

BUSINESS PERFORMANCE

Utilities

The Utilities segment reported normalized EBITDA of $294 million in the fourth quarter of 2022 compared to $238 million in the fourth quarter of 2021 while income before income taxes was $80 million in the fourth quarter of 2022 compared to $64 million in the fourth quarter in 2021. Fourth quarter financial results were reflective of typical seasonality when natural gas demand rises in the autumn and winter heating seasons. Strong year-over-year growth in normalized EBITDA in the fourth quarter was driven by higher asset optimization activities at Washington Gas, the benefits of interim rates in the Virginia rate case that went into effect in December, higher revenue from ongoing investments into Accelerated Replacement Programs (ARPs), colder weather in Michigan and the D.C., favourable foreign exchange rates, and other factors, which were partially offset by higher operating and administrative expenses. Strong asset optimization activity at Washington Gas in the fourth quarter of 2022 continued to produce considerable positive impacts for the Company's customers as approximately half of the benefit created through this activity is flowed back to customers in the form of rate relief. As such, the Company's efforts related to this activity is providing strong financial benefits to AltaGas' customers and helping to reduce absolute utility bills during this most recent period of higher energy costs.

AltaGas continued to upgrade critical infrastructure executing on the Company's various ARPs during the quarter with a sustained focus on replacing aging infrastructure to improve the safety and reliability of the system, while delivering long-term operating cost and environmental benefits. AltaGas deployed $272 million of invested capital during the fourth quarter of 2022 that was focused on driving better long-term outcomes for its customers, including $90 million deployed within the Company's various ARPs. AltaGas executed on extensive planned network upgrades in 2022 with $824 million of invested capital for the full year of 2022, which collectively increased the Utilities rate base by approximately 12 percent year-over-year to approximately US$5.2 billion in 2022, compared to approximately US$4.7 billion at the end of 2021.

On December 22, 2022 , Washington Gas filed an application with the PSC of DC for PROJECTpipes 3 seeking approval of approximately US$672 million for the five-year period from January 1, 2024 , to December 31, 2028 .

Midstream

The Midstream segment reported normalized EBITDA of $163 million in the fourth quarter of 2022 compared to $95 million in the fourth quarter in 2021, while income before taxes was $113 million in the fourth quarter of 2022 compared to a loss of $151 million in the fourth quarter of 2021. Fourth quarter results were reflective of higher earnings at the global exports facilities due to strong volumes and propane margins, partially offset by lower butane margins and elevated rail and freight logistics costs (including fuel surcharges), higher earnings at the extraction facilities driven by higher frac spreads, and lower operating costs at the processing facilities, partially offset by the impact of the lost contribution from the Aitken Creek facility sale. Other factors impacting normalized EBITDA in the Midstream segment during the fourth quarter of 2022 relative to the fourth quarter of 2021 included the favourable resolution of certain commercial disputes and contingencies, and stronger contribution from a number of AltaGas' ancillary businesses, partially offset by lower margins from the marketing business, and a write down of natural gas storage inventory to its net realizable value.

AltaGas exported a robust 97,152 Bbls/d of cleaner burning LPGs to Asia in the fourth quarter of 2022, including 16 fully loaded Very Large Gas Carriers. This included an average of 63,465 Bbls/d of propane exported at RIPET and an average of 33,687 Bbls/d of combined propane and butane exported at Ferndale . Global LPG export volumes for the full year of 2022 averaged 101,654 Bbls/d across 68 ships from RIPET and Ferndale , which was a 14% year-over-year increase over 2021 volumes. Stronger global exports contribution in the fourth quarter of 2022 relative to the same quarter of last year was driven by fewer rail outages that allowed higher export volumes, robust offtake demand within Asia , and growing LPG supply within Western Canada .

AltaGas remains focused on partnering with Western Canadian producers and aggregators to increase direct global market access through long-term tolling arrangements that can drive the best collective outcomes for all parties, while also having an active hedging program to proactively lock in structural margins and de-risk cashflows for merchant exports. The Company is targeting to increase hedges over the coming months and be highly hedged for the new natural gas liquids (NGL) contracting year starting on April 1 . This hedging philosophy is also expected to be utilized in future years.

AltaGas is encouraged by the B.C. Government and Blueberry River First Nations reaching a historic agreement in January 2023 that will provide a pathway for a partnership approach on land, water, and resource stewardship with the Treaty 8 First Nations. The Montney is one of the most prolific resource plays in North America and has the potential to provide decades of steady lower-carbon natural gas and NGLs to support Canada's domestic demand and play a larger role in meeting global energy needs. AltaGas looks forward to continuing to work with all stakeholders in Northeastern B.C. on sustainable resource development in partnership with local communities and delivering on the growing global demand for responsibly developed energy supplies.

AltaGas' realized frac spread averaged $25.14 /Bbl, after transportation costs, as most of AltaGas' frac exposed volumes were hedged at approximately $34.01 /Bbl in the fourth quarter of 2022, prior to transportation costs. AltaGas is well hedged for 2023 with approximately 77 percent of its 2023 expected frac exposed volumes hedged at approximately US$27 /Bbl, prior to transportation costs. In addition, approximately 62 percent of AltaGas' 2023 expected global export volumes are either tolled or financially hedged with an average Far East Index (FEI) to North American financial hedge price of approximately US$12 /Bbl for non-tolled propane and butane volumes.

2023 Midstream Hedge Program

| | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | FY 2023 | | Global Exports volumes hedged (%) (1) | 77 | 71 | 76 | 25 | 62 | | Average propane/butane FEI to North America average hedge (US$/Bbl) (2) | 13.80 | 11.06 | 10.81 | 21.76 | 12.17 | | Fractionation volume hedged (%) (3) | 59 | 82 | 96 | 72 | 77 | | Frac spread hedge rate (US$/Bbl) (3) | 26.80 | 26.83 | 26.83 | 26.83 | 26.83 |

| (1) | Approximate expected volume hedged. Includes contracted tolling volumes and financial hedges. Based on AltaGas' internally assumed export volumes. AltaGas is hedged at a higher percentage for firmly committed volumes. | | (2) | Approximate average for the period. Does not include tolling volumes. Does not include physical differential to FSK for C3 volumes. Butane is hedged as a percentage of WTI. | | (3) | Approximate average for the period. |

Corporate/Other

The Corporate/Other segment reported normalized EBITDA for the fourth quarter of 2022 was a loss of $3 million , compared to normalized EBITDA of $1 million in the same quarter in 2021. The decrease in normalized EBITDA was mainly due to higher operating and administrative expenses.

Loss before income taxes in the Corporate/Other segment was $115 million in the fourth quarter of 2022, compared to $75 million in the same quarter in 2021. In the fourth quarter of 2021, the Corporate/Other segment recognized a pre-tax provision on assets of $5 million relating to non-core projects no longer being developed at the Parks at Walter Reed thermal plant in Washington, D.C.

CONSOLIDATED FINANCIAL RESULTS

| | | | | | | | Three Months Ended

December 31 | Year Ended

December 31 | | | | ($ millions) | 2022 | 2021 | 2022 | 2021 | | Normalized EBITDA (1) | $ 454 | $ 334 | $ 1,537 | $ 1,472 | | Add (deduct): | | | | | | Depreciation and amortization | (112) | (105) | (439) | (422) | | Interest expense | (99) | (67) | (330) | (275) | | Normalized income tax expense (1) | (52) | (40) | (156) | (173) | | Preferred share dividends | (7) | (13) | (40) | (53) | | Other (2) | (6) | (10) | (42) | (68) | | Normalized net income (1) | $ 178 | $ 99 | $ 530 | $ 481 | | | | | | | | Net income (loss) applicable to common shares | $ 54 | $ (156) | $ 399 | $ 230 | | Normalized funds from operations (1) | $ 371 | $ 280 | $ 1,204 | $ 1,180 | | | | | | | | ($ per share except shares outstanding) | | | | | | Shares outstanding - basic (millions) | | | | | | During the period (3) | 282 | 280 | 281 | 280 | | End of period | 282 | 280 | 282 | 280 | | | | | | | | Normalized net income - basic (1) | 0.63 | 0.35 | 1.89 | 1.72 | | Normalized net income - diluted (1) | 0.63 | 0.35 | 1.87 | 1.71 | | | | | | | | Net income (loss) per common share - basic | 0.19 | (0.56) | 1.42 | 0.82 | | Net income (loss) per common share - diluted | 0.19 | (0.56) | 1.41 | 0.82 |

| 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, and NCI portion of non-GAAP adjustments. The portion of non-GAAP adjustments applicable to non-controlling interests are excluded in the computation of normalized net income to ensure consistency of normalizations applied to controlling and non-controlling interests. These amounts are included in the "net income applicable to non-controlling interests" line item on the Consolidated Statements of Income. | | 3. | Weighted average. |

Normalized EBITDA for the fourth quarter of 2022 was $454 million , compared to $334 million for the same quarter in 2021. The largest factors leading to the variance are described in the Business Performance sections above.