Keyera Announces 2025 Second Quarter Results and Raises Dividend

Executive Summary

• Keyera Corp. reported its Q2 2025 financial results, highlighting a 4% increase in its dividend supported by strong fee-for-service cash flow growth.
• The company announced the acquisition of Plains' Canadian NGL business for $5.15 billion in cash, expected to close in Q1 2026, which is projected to be mid-teens accretive to Distributable Cash Flow (DCF) per share.
• Keyera sanctioned three major growth projects (KFS Frac II, KFS Frac III, and KAPS Zone 4) and secured over 100,000 barrels per day of new long-term contracted volumes on KAPS.

Key Details

• Financial Results (Q2 2025):
  • Adjusted EBITDA: $252 million (down from $326 million in Q2 2024), including $12 million in transaction costs related to the Plains acquisition.
  • Distributable Cash Flow (DCF): $159 million ($0.69 per share), down from $202 million ($0.88 per share) in Q2 2024.
  • Net Earnings: $127 million (down from $142 million in Q2 2024).
  • Fee-for-Service Realized Margin: $255 million, up 8.4% year-over-year.
• Dividend Increase:
  • Dividend increased by 4%, reflecting confidence in the stability and growth of fee-for-service cash flows.
  • Q2 Dividend per share: $0.52 (up from $0.50 in Q2 2024).
  • Payout Ratio: 75% for Q2 2025 (vs. 57% in Q2 2024).
• M&A Activity (Plains Canadian NGL Business):
  • Agreed to acquire substantially all of Plains' Canadian NGL business plus select U.S. assets for $5.15 billion in cash.
  • Transaction expected to close in Q1 2026, subject to regulatory approvals.
  • Expected to be mid-teens accretive to DCF per share in the first full year, inclusive of ~$100 million in near-term run-rate synergies.
  • Expected to increase fee-based adjusted EBITDA by approximately 50%.
  • Funded partially by a $2.07 billion bought-deal offering of subscription receipts closed during the quarter.
• Capital Projects & Contracting:
  • KFS Frac II Debottleneck: Sanctioned Feb 2025; 8,000 bbl/d capacity; $85M cost; expected in service mid-2026.
  • KFS Frac III Expansion: Sanctioned May 2025; 47,000 bbl/d capacity; $500M cost; expected in service mid-2028.
  • KAPS Zone 4: Sanctioned June 2025; 85-km extension; ~$220M net cost; expected in service mid-2027.
  • Secured >100,000 bbl/d of new long-term contracted volumes on KAPS Zones 1-4 (up from 75,000 bbl/d in early June).
  • KFS complex (including Frac II and III) is substantially all contracted.
• 2025 Guidance Update:
  • Marketing Segment Realized Margin: $310M - $350M (inclusive of ~$50M impact from AEF outage).
  • Growth CapEx: $275M - $300M (reduced from previous $300M-$330M due to timing shift to 2026).
  • Maintenance CapEx: $70M - $90M (unchanged).
  • Cash Taxes: $100M - $110M (unchanged).
• Segment Performance (Q2 2025):
  • Gathering & Processing: Realized margin $111M (up from $102M); North region accounted for >70% of margin.
  • Liquids Infrastructure: Realized margin $143M (up from $133M); driven by long-term contracted volumes on KAPS and high fractionation utilization.
  • Marketing: Realized margin $60M (down from $136M); decline attributed to lower commodity prices.
• Balance Sheet:
  • Net Debt to Adjusted EBITDA: 2.0 times (below target range of 2.5-3.0 times).
  • Long-term debt: $3,338.8 million.

Notable Quotes

• "Keyera delivered strong results this quarter, reflecting the strength of our integrated value chain and continued growing customer demand... This growth in stable, fee-for-service cash flow allows us to sustainably increase the dividend." — Dean Setoguchi, President and CEO
• "The acquisition of Plains' Canadian NGL business marks a defining moment for Keyera and a step change in our platform. It significantly expands the scale, reach, and resilience of our operations..." — Dean Setoguchi, President and CEO