Gibson Energy reports solid financial results

Calgary based Gibson Energy Inc. (TSX: GEI), announced this week its financial and operating results for the three months ended March 31, 2020.

“Gibson delivered strong operational and financial results in the first quarter, driven by the continued growth of stable, long-term cash flows from our Infrastructure segment, which have increased over 40% in the last two years and are expected to represent roughly 80% of our business in 2020,” said Steve Spaulding, President and Chief Executive Officer.  “During the quarter, we witnessed a profound shift in the near to medium-term outlook for the global energy industry with the outbreak of COVID-19.  Most importantly, I am proud of the Gibson Energy team, and the numerous efforts we made, and continue to advance, to protect our people and ensure the safe, reliable operation of our assets.” 

Mr. Sean Brown, Senior Vice President and Chief Financial Officer added, “From a financial perspective, though these are very challenging times for our customers, and our industry as a whole, I am comforted by the fact that by re-focusing the Company around high-quality oil-infrastructure businesses we are positioned well.  We have built significant resiliency into our business with long-term, stable cash flows from predominantly investment grade counterparties and maintaining a conservative balance sheet with a fully-funded model for growth capital.”

Financial Highlights:

  • Distributable cash flow from combined operations of $86 million in the first quarter, a $3 million or 4% increase over the first quarter of 2019 due a meaningful increase in contribution from the Infrastructure segment more than offsetting the decrease in the Marketing segment from a robust quarter in 2019
  • Infrastructure segment profit of $98 million in the first quarter, a $23 million or 31% increase over the first quarter of 2019, primarily due to additional tankage in service at Hardisty as well as the expansion of the HURC Facility and the expansion of the Moose Jaw Facility
  • Marketing segment profit of $36 million in the first quarter, a $25 million or 41% decrease over the first quarter of 2019, with the comparative quarter having benefitted from opportunities created by volatility in crude differentials and a stronger market for Refined Products
  • Adjusted EBITDA from continuing operations of $129 million in the first quarter, a $10 million or 9% increase over the first quarter of 2019, leading to Net Debt to Pro Forma Adjusted EBITDA at March 31, 2020 of 2.7x, below the Company’s 3.0x – 3.5x target range and reflective of Gibson’s strong financial position
  • Remain fully-funded for all sanctioned capital and continue to maintain ample liquidity through a $750 million Revolving Credit Facility that was effectively undrawn net of cash at the end of the first quarter
  • Payout ratio on a trailing twelve-month basis of 62%, well below the Company’s 70% to 80% target range

Strategic Developments and Highlights:

  • Finalized all required commercial agreements with ConocoPhillips Canada to fully underpin and sanction the construction of the initial phase of the DRU at 50,000 barrels per day of inlet bitumen capacity under long-term, take-or-pay agreements, and also received all required regulatory approvals from the Government of Alberta to proceed with the construction of the DRU
  • Subsequent to the end of the quarter, DBRS Morningstar reaffirmed its Issuer Rating of “BBB (low)” with a “Stable” trend, citing Gibson’s contracted cash flows, competitive position and reasonable financial metrics