Stillwater Critical Minerals Corp. press release

ALTAGAS REPORTS FOURTH QUARTER AND FULL YEAR 2023 RESULTS

2024-03-08

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AltaGas Delivers on Full Year Guidance and Advances Key Strategic Priorities that will Drive Long-term Value Creation

CALGARY, AB , March 8, 2024 /CNW/ - AltaGas Ltd. ("AltaGas" or the "Company") (TSX: ALA) reports fourth quarter and full year 2023 financial results, reaffirms 2024 financial guidance, and provides an update on its operations and other corporate developments.

HIGHLIGHTS

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

Normalized EBITDA 1 was $502 million in the fourth quarter and $1,575 million for the full year of 2023, while income before income taxes was $161 million in the fourth quarter and $912 million for the full year of 2023. Full-year normalized EBITDA was in the upper-half of the Company's 2023 guidance range of $1.5 billion - $1.6 billion and included strong performance across the Midstream platform and ongoing enterprise growth. Normalized EPS 1 was $0.76 in the fourth quarter and $1.90 for the full year of 2023, while GAAP EPS 2 was $0.40 in the fourth quarter and $2.27 for the full year of 2023. Full year normalized EPS was slightly below the mid-point of the Company's 2023 EPS guidance range of $1.85 - $2.05 , principally due to higher interest costs weighing on strong operating performance across the business. Normalized FFO per share 1 was $1.33 in the fourth quarter and $4.00 for the full year of 2023, while cash from operations per share 3 was $0.54 in the fourth quarter and $3.98 for the full year of 2023. Normalized FFO per share for the quarter increased slightly year-over-year due to higher normalized EBITDA, partially offset by non-cash items included in normalized EBITDA, higher normalized current income tax expense, and higher interest expense. The Utilities segment reported normalized EBITDA 1 of $311 million in the fourth quarter of 2023 compared to $294 million in the fourth quarter of 2022, while income before taxes was $207 million in the fourth quarter of 2023 compared to $80 million in the fourth quarter of 2022. The largest drivers of the fourth quarter year-over-year increase were strong contributions from WGL's retail business, lower operating and administrative expenses, continued rate base growth, and the Virginia rate case. These positive factors were partially offset by the Company's Alaska Utilities divestiture, lower asset optimization, and warmer weather in Michigan and the District of Columbia ("DC"). The Midstream segment reported normalized EBITDA 1 of $182 million in the fourth quarter of 2023 compared to $163 million in the fourth quarter of 2022, while income before taxes in the segment was $79 million in the fourth quarter of 2023 compared to $113 million in the fourth quarter of 2022. The largest drivers of the fourth quarter year-over-year increase in normalized EBITDA 1 included strong performance from the global exports business, allowance for funds used during construction ("AFUDC") on the Mountain Valley Pipeline project ("MVP"), and the absence of inventory write downs. The global exports business shipped 90,996 Bbl/d of liquified petroleum gases ("LPGs) in the fourth quarter of 2023 and an average of 106,071 Bbls/d during 2023 from the Ridley Island Propane Export Terminal ("RIPET") and the Ferndale terminal ("Ferndale"). Although the fourth quarter is a seasonally low quarter for exports, volumes were below internal expectations this quarter due to delayed ship arrivals at both terminals during December 2023 , which were loaded in the first quarter of 2024. Despite these timing impacts in the fourth quarter, AltaGas continued to demonstrate the multi-year growth trajectory that has been demonstrated since 2019 while connecting the Canadian upstream and Asian downstream markets and driving stronger Canadian industry netbacks. On December 22, 2023 , AltaGas closed the acquisition of natural gas processing and storage infrastructure assets in the Pipestone area of the Alberta Montney (the "Pipestone Acquisition"), including Pipestone natural gas processing plant phase I ("Pipestone Phase I"), the Pipestone Phase I expansion project ("Pipestone Phase II"), the Dimsdale natural gas storage facility, and ancillary assets from Tidewater Midstream and Infrastructure Ltd. ("Tidewater"). AltaGas also declared a positive final investment decision ("FID") on Pipestone Phase II with 100 percent of the capacity contracted under long-term take-or-pay agreements. AltaGas continued to advance key activities on the Ridley Island Energy Export Facility ("REEF") during and subsequent to the fourth quarter of 2023. This included commencing site clearing work, including logging, clearing, and drainage work that will further solidify the project's readiness to reaching FID, which is expected during the second quarter of 2024. In December 2023 , AltaGas commissioned the first of two new very large gas carriers ("VLGCs"), the Boreal Pioneer, which made its maiden voyage from Ferndale to Asia in early January 2024 . The second VLGC, the Boreal Voyager, was commissioned in February 2024 . These two seven-year time charters with optional extensions will reduce and de-risk shipping costs with materially all of AltaGas' expected Baltic freight exposure protected through time charters, financial hedges, and tolled volumes in 2024. On October 20, 2023 , Washington Gas executed a definitive agreement with Opal Fuels Inc. ("Opal Fuels") to support a renewable natural gas ("RNG") project at the Prince William County Landfill in Virginia . As part of the agreement, Washington Gas will become an offtake customer for RNG production and purchase key interconnect infrastructure for approximately US$25 million and continue to advance long-term climate goals. On December 14, 2023 , the Public Service Commission of Maryland ("PSC of MD") approved a US$10 million rate increase with a 9.5 percent return on equity and 52 percent equity thickness. The new rates became effective immediately. On December 22, 2023 , the Public Service Commission of the District of Columbia ("PSC of DC") approved an increase of approximately US$20 million in revenues, net of approximately US$5 million of costs collected through the PROJECTpipes surcharge. This included a 9.65 percent return on equity and 52 percent equity thickness. The new rates went into effect January 19, 2024 . On March 1, 2023 , AltaGas closed the divestiture of its Alaskan Utilities for US$800 million (approximately CAD$1.1 billion ), prior to closing adjustments. Sale proceeds were 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 December 5, 2023 , AltaGas' Board of Directors approved a 6 percent increase to its annual common share dividends to $1.19 per common share annually ( $0.2975 per common share quarterly). This change will be effective for the dividend that will be paid on March 29, 2024 , with long-term dividends expected to continue to compound by five to seven percent per annum in the years ahead, subject to annual Board approval. On December 5, 2023 , AltaGas released its 2023 ESG Report, highlighting 2022 data for key topics and outlining progress towards the Company's sustainability goals within the areas of climate, diversity and inclusion and safety. AltaGas is pleased with the construction progress on MVP. The pipeline is now 99 percent complete and expected to be placed into service in the second quarter of 2024 and will provide critical energy security to customers in the Eastern U.S. As previously disclosed, AltaGas does not consider its equity stake in MVP as core and will consider value maximizing opportunities as part of the Company's plan to reach its 4.5x net debt to normalized EBITDA target once the pipeline is fully operational. AltaGas had a series of financing during and subsequent to the fourth quarter, including: On October 19, 2023 , Washington Gas issued US$200 million in private placement notes, which includes US$150 million of notes with a 6.06 percent interest rate, maturing on October 14, 2033 , and US$50 million of notes at a 6.43 percent interest rate, maturing on October 15, 2053 . On November 10, 2023 , AltaGas issued $200 million of Hybrid 8.90 percent Fixed-to-Fixed Rate Subordinated Notes, Series 3, due November 10, 2083 . On December 31, 2023 , AltaGas used the proceeds of the hybrid issuance to redeem all of its issued and outstanding Series E Preferred Shares for $25 per Series E Share, together with all accrued and unpaid dividends. On January 8, 2024 , AltaGas issued $400 million of senior unsecured medium-term notes with a 4.67 percent coupon. The net proceeds were used to pay down existing indebtedness under AltaGas' credit facilities (part of which was incurred to fund the debt portion of the Pipestone Acquisition), to fund working capital, and for general corporate purposes.

AltaGas is reiterating the Company's 2024 full year guidance, including normalized EBITDA 1 of $1,675 million to $1,775 million , and normalized EPS 1 of $2.05 - $2.25 .

| | | (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, 2023, which is available on www.sedarplus.ca . (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 are pleased with the results delivered during 2023," said Vern Yu , President and Chief Executive Officer of AltaGas. "The performance demonstrates the strength of our platform and the actions we have taken to drive long-term value.

"Fourth quarter Midstream performance was strong with normalized EBITDA up 12 percent year-over-year, despite delays on two LPG export vessels that had loadings pushed into the first quarter of 2024. Canadian upstream development remains strong as the industry prepares for improved egress and the arrival of LNG Canada. This was reflected in AltaGas realizing higher year-over-year throughput volumes across our gas processing, fractionation, and liquids handling businesses during the fourth quarter, as we fill latent capacity and prepare for potential brownfield expansions to support industry development.

"The recent issues in the Panama Canal reiterated the importance of connecting Canadian LPGs to key Asian downstream markets and the mutual benefits of a growing Canadian-Pacific energy partnership. We estimate that Canadian producers realized an approximate US$9.50 per barrel better propane netback through long-term tolling at RIPET during the fourth quarter compared to selling domestically in the U.S.

"Despite warmer weather in Michigan and DC, the Utilities performed relatively in line with our expectations and were aided by strong performance from the Retail platform in the fourth quarter. Our Utilities are critical to balancing long-term energy reliability, affordability, and climate needs across our jurisdictions and have a bright future as the largest home heating source across each jurisdiction.

"The past year was an active period for AltaGas, including the Pipestone Acquisition, solidifying our REEF joint-venture, closing the Alaskan Utilities sale, advancing key Midstream commercial de-risking initiatives, and continuing to steadily grow our Utilities. I am excited about the road ahead, continuing to leverage the strong long-term fundamentals for natural gas and natural gas liquids ("NGLs"), and building on the strong successes of 2023."

RESULTS BY SEGMENT

| Normalized EBITDA (1) | Three Months Ended

December 31 | Year Ended

December 31 | | | | ($ millions) | 2023 | 2022 | 2023 | 2022 | | Utilities | $ 311 | $ 294 | $ 886 | $ 933 | | Midstream | 182 | 163 | 684 | 607 | | Corporate/Other | 9 | (3) | 5 | (3) | | Normalized EBITDA (1) | $ 502 | $ 454 | $ 1,575 | $ 1,537 |

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

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

December 31 | Year Ended

December 31 | | | | ($ millions) | 2023 | 2022 | 2023 | 2022 | | Utilities | $ 207 | $ 80 | $ 886 | $ 548 | | Midstream | 79 | 113 | 460 | 526 | | Corporate/Other | (125) | (115) | (434) | (358) | | Income (Loss) Before Income Taxes | $ 161 | $ 78 | $ 912 | $ 716 |

BUSINESS PERFORMANCE

Midstream

The Midstream segment reported normalized EBITDA of $182 million in the fourth quarter of 2023 compared to $163 million in the fourth quarter in 2022, while income before taxes was $79 million in the fourth quarter of 2023 compared to $113 million in the fourth quarter of 2022. The year-over-year increase in normalized EBITDA in the fourth quarter of 2023 was driven by strong performance from the global exports business, contribution from AFUDC on MVP as the pipeline moves towards completion, strong marketing performance, and lower operating expenses across a number of businesses. These factors were partially offset by lower frac spreads and volumes at the extraction facilities, lower power revenue at Harmattan due to power prices, and the absence of the certain acquisition related commercial disputes and contingencies present in the fourth quarter of 2022.

Fourth quarter 2023 results included a year-over-year improvement in the profitability of the global exports business due to stronger Asian-to-North American LPG prices during the quarter. This was partially offset by lower merchant volumes as AltaGas was successful at increasing long-term tolling, merchant volumes being highly hedged in the quarter, and lower-than-expected overall export volumes. AltaGas exported 90,996 Bbls/d of LPGs to Asia during the fourth quarter of 2023, including ten VLGCs at RIPET, and five VLGCs at Ferndale . Although global export volumes traditionally realize lower volumes in the fourth quarter due to a lack of LPG supply coming from Washington refineries at Ferndale and weather-related impacts on logistics, volumes were lower-than-expected due to one delayed ship arrival at RIPET and one delayed ship at Ferndale due to a rail outage.

Over the longer-term, AltaGas continues to see growing demand for LPG exports driven by its structural shipping advantage to Asia and access to low-cost Canadian supply. This structural advantage has amplified recently due to the restricted vessel traffic through the Panama Canal, which is driving additional demand for reliable and ratably-sourced Canadian LPGs and highlights the mutual benefits of a growing Canadian-Pacific energy partnership. AltaGas estimates that Canadian producers realized an approximate US$9.50 per barrel better propane netback through long-term tolling at RIPET during the fourth quarter of 2023 compared to selling domestically in the U.S. at Conway .

Performance across the balance of the Midstream platform was strong and in line with the Company's expectations during the fourth quarter. This included strong year-over-year volume increases at Townsend and Harmattan and nine percent year-over-year growth across AltaGas' Montney footprint during the quarter. This demonstrates the strong resumption of development activity in the basin and the Montney being at the center of the long-term basin development plans. Fractionation volumes were up four percent year-over-year during the fourth quarter of 2023, due to higher volumes at Harmattan, Younger, and North Pine . AltaGas' realized frac spread averaged $23.13 /Bbl, after transportation costs, as most of AltaGas' frac exposed volumes were hedged in the fourth quarter of 2023.

AltaGas is well-hedged for 2024 with 90 percent of full year 2024 expected global export volumes tolled or financially hedged with merchant volumes hedged at an average Far East Index ("FEI") to North American financial hedge price of approximately US$17.88 /Bbl. This includes AltaGas entering the year with approximately 40 percent of global exports tolled with the expectation of being 50 percent tolled or higher by the end of 2024. Based on AltaGas' signed deals and existing customer conversations, the Company expects to achieve or exceed this level of tolling. Approximately 80 percent of the Company's 2024 expected frac exposed volumes are hedged at approximately US$27.04 /Bbl, prior to transportation costs. AltaGas continues to actively manage risk across the Midstream platform through commercial constructs and a systematic hedging program that covers key revenue and operating costs.

In December 2023 , AltaGas commissioned the first of two VLGCs, the Boreal Pioneer, which made its maiden voyage from Ferndale to Asia in early January 2024 . The second VLGC, the Boreal Voyager, was commissioned in February 2024 . These two seven-year time charters with optional extensions will reduce total shipping costs to Asia by approximately 25 percent compared to a standard VLGC. These two seven-year time charters, combined with financial hedges, and tolled volumes have principally eliminated AltaGas' expected Baltic freight exposure in 2024.

Midstream Hedge Program

| | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | FY 2024 | | Global Exports volumes hedged (%) (1) | 99 | 88 | 90 | 84 | 90 | | Average propane/butane FEI to North America average hedge (US$/Bbl) (2) | 18.47 | 17.37 | 16.54 | 19.24 | 17.88 | | Fractionation volume hedged (%) (3) | 75 | 91 | 91 | 66 | 80 | | Frac spread hedge rate (US$/Bbl) (3) | 28.13 | 27.51 | 27.51 | 25.06 | 27.04 |

| 1) | Approximate expected volumes 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 physical differential to FSK for C3 volumes. Butane is hedged as a percentage of WTI. | | 3) | Approximate average for the period. |

Utilities

Normalized EBITDA in the Utilities segment was $311 million in the fourth quarter of 2023, compared to $294 million in the same quarter in 2022 while income before taxes was $207 million in the fourth quarter of 2023 compared to $80 million in the fourth quarter of 2022. The quarter included strong performance from WGL's retail marketing business, customer growth, higher revenue from rate base additions from ongoing investments in Accelerated Replacement Programs ("ARPs"), the impact of Washington Gas' Virginia rate case, and lower operating and administrative expenses. These factors were partially offset by the lost contribution of the Alaskan Utilities, which were divested in March of 2023, and had contributed $25 million of normalized EBITDA in the fourth quarter of 2022, larger-than-normal asset optimization contribution at Washington Gas in the fourth quarter of 2022, and warmer weather in Michigan and the DC during the fourth quarter of 2023, which do not have weather normalization or decoupled rate structures. Other positive factors impacting year-over-year normalized EBITDA included foreign exchange hedge gains and lower operating and administrative expenses.

AltaGas' continues to make investment across its Utilities network to improve the safety and reliability of the system on behalf of its customers. During the fourth quarter of 2023 AltaGas invested $192 million across the Utilities network, including $130 million across the Company's various modernization programs. These investments continue to be directed towards improving the safety and reliability of the system and connecting customers to the critical energy they require to carry out everyday life. These investments should also reduce leak rates and bring long-term operating cost benefits to our customers. AltaGas will continue to make these critical investments, while balancing the need for ongoing customer affordability, which is particularly important during the current economic environment of higher interest rates and inflation. AltaGas continues to be acutely focused on cost management across the Utilities platform, managing capital investments, and driving the best outcomes for its customers and stakeholders.