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Press release from CNW Group

Veresen Announces 2013 Second Quarter Results and Updates Guidance

Wednesday, August 07, 2013

Veresen Announces 2013 Second Quarter Results and Updates Guidance

15:45 EDT Wednesday, August 07, 2013

/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES./

CALGARY, Aug. 7, 2013 /CNW/ - Veresen Inc. ("Veresen" or the "Company") (TSX: VSN) announced today its financial and operating results for the three months ended June 30, 2013.

Highlights:

  • Second quarter financial results:
  • Distributable cash1 of $49.2 million or $0.25 per Common Share.

  • Net income attributable to Common Shares of $11.5 million or $0.06 per Common Share.

  • Cash from operating activities of $55.0 million.

  • Alliance Pipeline advanced to the next stage of the recontracting process, offering firm capacity on its system for natural gas transportation services effective December 1, 2015.

  • The Jordan Cove Energy Project and the Pacific Gas Connector Pipeline each filed an application with the U.S. Federal Energy Regulatory Commission ("FERC") to construct and operate a liquefied natural gas ("LNG") export terminal and natural gas pipeline, respectively, on the west coast of the United States.

  • Veresen successfully completed a major turnaround at its Hythe natural gas processing plant, under budget and ahead of schedule.

"During the second quarter, we continued to advance several key strategic initiatives," said Don Althoff, President and CEO.  "The initiation of Alliance's precedent agreement process is the culmination of months of consultation with potential shippers and is the exciting next stage in Alliance's efforts to contract the system beyond 2015. While expressions of interest for capacity will officially start in mid-August, Alliance has already received positive feedback from the shipper community."

"The filing of the FERC applications for approval to construct the Jordan Cove LNG terminal and the Pacific Connector pipeline was another major milestone achieved this quarter. Fulfilling these significant regulatory requirements, combined with our U.S. Department of Energy application for approval to export LNG to non-Free Trade Agreement countries, takes us further down the path of realizing our growth objectives."

Mr. Althoff added, "Operationally, I'm particularly proud our midstream team successfully completed the turnaround at the Hythe plant. The team achieved outstanding results in protecting the health and safety of our workforce and the environment. The meticulous planning and execution of the turnaround allowed us to resume operations ahead of plan. We also completed critical tie-ins for a future debottleneck project that will expand the plant's capacity to meet growing demand for processing services. I'm excited about the many opportunities that lie ahead for our independent Canadian midstream business given the significant need for infrastructure in the growing Montney and Duvernay resource plays."

__________________________________
1 This is not a standard measure under GAAP and may not be comparable to similar measures used by other entities. See the reconciliation of distributable cash to cash from operating activities in the tables attached to this news release.

FINANCIAL HIGHLIGHTS                 
        Three months ended
June 30
   Six months ended
  June 30 
($ Millions, except per Common Share amounts)               2013     2012 (1) (2)            2013   2012 (1) (2)
Net income (loss) before tax and non-controlling interest                        
  Pipeline     27.5 24.0 52.3 48.1
  Midstream     15.6 21.7 27.0 34.5
  Power     9.5 (2.3) 10.5 0.5
  Veresen - Corporate     (26.6) (23.2) (53.5) (47.2)
      26.0 20.2 36.3 35.9
Tax expense     (12.3) (8.4) (19.2) (14.5)
Net income attributable to non-controlling interest     - - - (0.1)
Net income     13.7 11.8 17.1 21.3
Preferred Share dividends     (2.2) (3.3) (4.4) (3.3)
Net income attributable to Common Shares     11.5 8.5 12.7 18.0
  Per Common Share  ($)     0.06 0.04 0.06 0.09

(1)      Effective January 1, 2013, certain costs have been reclassified between Power and Veresen - Corporate. As a result, comparative
results for Power and Veresen - Corporate have been restated.
(2)      Comparative figures for the six months ended June 30, 2012 have been revised. See Veresen's June 30, 2013 consolidated
financial statements.
   

Financial Performance

For the second quarter of 2013, Veresen generated net income attributable to Common Shares of $11.5 million or $0.06 per Common Share compared to $8.5 million or $0.04 per Common Share for the same period in 2012. Each of Veresen's businesses performed in line with expectations in the second quarter and, with the exception of Aux Sable, delivered consistent or higher earnings before interest, taxes, depreciation and amortization ("EBITDA2") in comparison to the same period last year. As anticipated, Aux Sable earnings continued to be under pressure due to ongoing weak market fundamentals, driven by the continued oversupply of ethane in Aux Sable's market regions and high propane inventory levels.

The Company's continued focus on growth resulted in higher development spending in respect of the Jordan Cove LNG project.  Second quarter earnings also reflect a higher fair value gain on the interest rate hedge for the York Energy Centre compared to the same period last year.

Distributable Cash    
     Three months ended June 30   Six months ended June 30
($ Millions, except per Common Share amounts)                 2013 2012              2013 2012
Pipeline 37.9 36.9 76.4 73.4
Midstream 23.7 31.5 50.9 54.2
Power 7.1 7.3 16.9 9.8
Veresen - Corporate (15.8) (15.6) (34.3) (31.8)
Current tax (1.5) (6.0) (1.7) (8.8)
Preferred Share dividends (2.2) (2.2) (4.4) (3.3)
Distributable Cash (1) 49.2 51.9 103.8 93.5
  Per Common Share ($) 0.25 0.26 0.52 0.49
(1) See the reconciliation of distributable cash to cash from operating activities in the tables attached to this news release.

__________________________________
2 This is not a standard measure under GAAP and may not be comparable to similar measures used by other entities. See the reconciliation of distributable cash to cash from operating activities in the tables attached to this news release.

In the second quarter of 2013, Veresen generated distributable cash of $49.2 million or $0.25 per Common Share, a slight decrease from $51.9 million or $0.26 per Common Share for the same period last year. As was the case with EBITDA, second quarter distributable cash from Veresen's Pipeline, Power and independent Midstream businesses approximated or exceeded amounts generated during the same period last year, but were offset by the reduction in distributions from Aux Sable.

Business Segment Overview

Pipelines

On July 15, 2013, Alliance announced the offering of capacity on its system for natural gas transportation services effective December 1, 2015. Customers can express interest in capacity through a process which begins on August 15, 2013, with the execution of precedent agreements expected over the next several months. 

The transportation service offerings are consistent with the new services framework introduced by Alliance in October 2012, and have been refined based on feedback received from potential customers. One such refinement includes Alliance's intent to apply for regulatory approval to amend its hydrocarbon dewpoint tariff specification as of December 1, 2015. This change will facilitate an increase in the NGL component of the natural gas Alliance transports, further enhancing Alliance's rich gas advantage.

Construction of Alliance's 127-km (79-mile) Tioga Lateral Pipeline and associated facilities in North Dakota is proceeding, with commercial in-service expected in the third quarter of 2013. The Tioga Lateral will transport liquids-rich gas from the anchor shipper's processing facility to an interconnection point on the Alliance pipeline for onward shipment to Aux Sable's Channahon facility.

Midstream

During the second quarter, Veresen successfully completed a scheduled major turnaround at the Hythe natural gas processing plant. Turnaround activities were performed in a manner reflecting Veresen's ongoing commitment to the health and safety of its employees and contractors and safeguarding the environment. The turnaround was completed under budget and ahead of schedule, demonstrating Veresen's operational excellence.

While the Hythe plant was out of service, Veresen proactively completed key tie-ins that will facilitate a future debottleneck project to expand the Hythe plant's processing capacity. The Company's midstream team is currently soliciting producer interest to undertake such an expansion, with positive feedback to date.

In addition to developing strategic plans for growth through leveraging its existing midstream assets, Veresen continues to explore new opportunities to grow its midstream footprint in the Western Canadian Sedimentary Basin, driven by its view that additional infrastructure will be required to support the growing Montney and Duvernay resource plays.

Aux Sable continues to work with producers within an economic radius of the Alliance pipeline to provide options and value for natural gas and NGLs to reach large and liquid U.S. markets. Aux Sable holds a number of rich gas premium agreements with producers that will enhance the value of the producers' NGLs.

Power

Veresen continues to construct the Dasque-Middle run-of-river hydro facility located in northwest British Columbia. This project has experienced delays due to challenges in progressing the civil works, with the project's previous primary sub-contractor being placed into receivership. Veresen is in the process of securing the necessary sub-contractors to complete the remaining civil works. Consequently, commercial in-service is expected to be delayed until 2014. The 13-MW Whitecourt waste heat facility, currently being constructed by NRGreen (50% owned by Veresen), is proceeding and is expected to be placed into service late in the third quarter of 2013.

LNG Development Project

In May 2013, Jordan Cove Energy Project filed an application with the FERC to construct and operate an LNG export facility on the west coast of the U.S. within the international Port of Coos Bay, Oregon. Filing of the FERC application followed more than a year of engineering and design activities, public consultation, and working closely with the FERC to ensure a completed application. Veresen expects to receive a certificate approving the construction and operation of the Jordan Cove LNG facility within approximately 12 to 18 months from the date of filing.

Veresen is awaiting a response from the U.S. Department of Energy ("DOE") regarding the Company's application for a license to export natural gas to non-Free Trade Agreement countries. Jordan Cove Energy Project's application is well-positioned in the queue, ranking within the next five projects for review by the DOE.

Pacific Connector Gas Pipeline, L.P. has also filed its application with the FERC to construct a 234-mile, 36-inch diameter pipeline. The Pacific Connector pipeline will extend from the Malin, Oregon natural gas trading hub to the Jordan Cove terminal and the South Dunes Power Plant facilities. The South Dunes power facility, wholly-owned by Veresen, is a proposed natural gas-fueled, combined-cycle power plant with a planned base-load capacity of 420 MW.  Dedicated to the operation of Jordan Cove, and sited adjacent to the LNG facility, South Dunes is currently undergoing the permitting process with the Oregon Energy Facility Siting Council.

Veresen continues to engage in discussions to secure a long-term arrangement to produce LNG for international customers.

2013 Guidance

As the year progresses, Veresen is able to narrow its guidance range. For 2013, Veresen expects distributable cash to be in the range of $1.00 to $1.15 per Common Share, with a midpoint of $1.08 per Common Share. This reflects a $0.03 and $0.02 per Common share increase in the low end and midpoint, respectively, of the range relative to guidance issued May 8, 2013. Further details concerning 2013 guidance can be found in the "Invest" section of Veresen's web site at www.vereseninc.com.

Conference Call and Webcast

Veresen will host a conference call and webcast at 3:00 pm MT (5:00 pm ET) today to discuss its results.

Dial-in: 1 (888) 231-8191 or 1 (647) 427-7450, Conference ID: 20497075

The link to the conference call webcast is available on Veresen's website under Invest, Events & Presentations.

A replay of the call will be available at approximately 5:00 pm MT (7:00 pm ET) on August 7, 2013 by dialing 1 (855) 859-2056 and 1 (416) 849-0833. The access code is 20497075, followed by the pound sign. The replay will expire at midnight (ET) on August 14, 2013.

MD&A, Financial Statements and Notes

Management's Discussion and Analysis ("MD&A") and consolidated financial statements provide a detailed explanation of Veresen's financial results for the second quarter ended June 30, 2013 compared to the second quarter ended June 30, 2012 and should be read in conjunction with this news release. These documents are available at www.vereseninc.com and at www.sedar.com.

About Veresen Inc.

Veresen is a publicly-traded dividend paying corporation based in Calgary, Alberta, that owns and operates energy infrastructure assets across North America.  Veresen is engaged in three principal businesses: a pipeline transportation business comprised of interests in two pipeline systems, the Alliance Pipeline and the Alberta Ethane Gathering System; a midstream business which includes ownership interests in a world-class natural gas liquids extraction facility near Chicago, the Hythe/Steeprock gas gathering and processing complex, and other natural gas and NGL processing energy infrastructure; and a power business with renewable and gas-fired facilities and development projects in Canada and the United States, and district energy systems in Ontario and Prince Edward Island. Veresen and each of its pipeline, midstream and power businesses are also actively developing a number of greenfield projects.  In the normal course of its business, Veresen and each of its businesses regularly evaluate and pursue acquisition and development opportunities.

Veresen's Common Shares, Series A Preferred Shares, and 5.75% convertible unsecured subordinated debentures, Series C due July 31, 2017 are listed on the Toronto Stock Exchange under the symbols "VSN", "VSN.PR.A" and VSN.DB.C", respectively. For further information, please visit www.vereseninc.com.

Forward-Looking Information

Certain information contained herein relating to, but not limited to, Veresen and its businesses constitutes forward-looking information under applicable securities laws. All statements, other than statements of historical fact, which address activities, events or developments that Veresen expects or anticipates may or will occur in the future, are forward-looking information.  Forward-looking information typically contains statements with words such as "may", "estimate", "anticipate", "believe", "expect", "plan", "intend", "target", "project", "forecast" or similar words suggesting future outcomes or outlook.  Forward-looking statements in this news release include, but are not limited to, statements with respect to: the ability of Alliance to implement new service offerings; the timing of completion of construction and start-up of the Dasque-Middle hydro project, the Tioga Lateral Pipeline and the Whitecourt waste heat facility; Veresen's ability to realize its growth objectives; the availability of financing for current capital projects and new investment opportunities; the timing and receipt of the U.S. FERC and DOE regulatory approvals for the Jordan Cove Energy Project, and the ability of each of its businesses to generate distributable cash in 2013.  The risks and uncertainties that may affect the operations, performance, development and results of Veresen's businesses include, but are not limited to, the following factors: the ability of Veresen to successfully implement its strategic initiatives and achieve expected benefits; levels of oil and gas exploration and development activity; the status, credit risk and continued existence of contracted customers; the availability and price of capital; the availability and price of energy commodities; the availability of construction services and materials; fluctuations in foreign exchange and interest rates; Veresen's ability to successfully obtain regulatory approvals; changes in tax, regulatory, environmental, and other laws and regulations; competitive factors in the pipeline, midstream and power  industries; operational breakdowns, failures, or other disruptions; and the prevailing economic conditions in North America.  Additional information on these and other risks, uncertainties and factors that could affect Veresen's operations or financial results are included in its filings with the securities commissions or similar authorities in each of the provinces of Canada, as may be updated from time to time.  Readers are also cautioned that the foregoing list of factors and risks is not exhaustive.  The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these factors are independent and management's future course of action would depend on its assessment of all information at that time.  Although Veresen believes that the expectations conveyed by the forward-looking information are reasonable based on information available on the date of preparation, no assurances can be given as to future results, levels of activity and achievements.  Undue reliance should not be placed on the information contained herein, as actual result achieved will vary from the information provided herein and the variations may be material.  Veresen makes no representation that actual results achieved will be the same in whole or in part as those set out in the forward-looking information.  Furthermore, the forward-looking statements contained herein are made as of the date hereof, and Veresen does not undertake any obligation to update publicly or to revise any forward-looking information, whether as a result of new information, future events or otherwise. Any forward-looking information contained herein is expressly qualified by this cautionary statement.

Certain financial information contained in this news release may not be standard measures under Generally Accepted Accounting Principles ("GAAP") in the United States and may not be comparable to similar measures presented by other entities.  These measures are considered to be important measures used by the investment community and should be used to supplement other performance measures prepared in accordance with GAAP in the United States.   For further information on non-GAAP financial measures used by Veresen see Management's Discussion and Analysis, in particular, the section entitled "Non-GAAP Financial Measures" contained in the annual Management Discussion and Analysis, filed by Veresen with Canadian securities regulators.

Veresen Inc.          
           
Consolidated Statement of Financial Position          
           
           
(Canadian $ Millions; number of shares in Millions; unaudited) June 30, 2013          December 31, 2012 (1)      
           
Assets          
Current assets          
  Cash and short-term investments 27.8 16.1       
  Restricted cash 4.8 5.8       
  Distributions receivable 36.1 39.9       
  Receivables 88.6 72.6       
  Other 13.5 11.5       
  170.8 145.9       
           
Investments in jointly-controlled businesses 849.1 807.0       
Rate-regulated asset 38.3 43.8       
Pipeline, plant and other capital assets 1,445.1 1,443.8       
Intangible assets 443.6 455.0       
Other assets 63.6 65.5       
  3,010.5 2,961.0       
           
Liabilities          
Current liabilities          
  Payables 73.6  63.4       
  Dividends payable 12.9  12.9       
  Current portion of long-term senior debt 12.1  11.7       
  98.6  88.0       
           
Long-term senior debt 1,308.5  1,247.6       
Subordinated convertible debentures 86.2  86.2       
Deferred tax liability 280.9  262.0       
Other long-term liabilities 45.5  46.2       
  1,819.7  1,730.0       
           
Shareholders' Equity          
Share capital          
  Preferred shares 195.2  195.2       
  Common shares (199.6 and 197.8 outstanding at June 30, 2013 and                                1,826.1  1,804.3       
     December 31, 2012, respectively)          
Additional paid-in capital 4.3  4.3       
Cumulative other comprehensive loss (140.1) (164.8)      
Accumulated deficit (694.8) (608.1)      
  1,190.7  1,230.9       
Non-controlling interest 0.1  0.1       
  1,190.8  1,231.0       
  3,010.5  2,961.0       

(1) Certain comparative figures as at December 31, 2012 have been revised. See Note 1 in Veresen's June 30, 2013 consolidated financial statements.
   

 

Veresen Inc.                            
                             
Consolidated Statement of Income                            
        Three months ended June 30     Six months ended June 30    
(Canadian $ Millions, except per Common Share amounts; unaudited)     2013           2012 (1)     2013                     2012 (1)    
                             
Equity income     41.2                      32.6      69.6              68.1     
Operating revenues     89.8      70.0      161.4              125.0     
Operations and maintenance     (47.0)     (27.5)     (78.7)             (53.8)    
General, administrative and project development     (21.2)     (16.9)     (41.8)             (35.4)    
Depreciation and amortization     (22.3)     (23.4)     (44.7)             (39.9)    
Interest and other finance     (15.6)     (15.0)     (31.1)             (28.0)    
Foreign exchange and other     1.1      0.4      1.6              (0.1)    
Net income before tax and non-controlling interest     26.0      20.2      36.3              35.9     
Current tax     (2.4)     (6.0)     (3.4)             (8.8)    
Deferred tax     (9.9)     (2.4)     (15.8)             (5.7)    
Net income before non-controlling interest     13.7      11.8      17.1              21.4     
Non-controlling interest                             -                                  -              (0.1)    
Net income     13.7      11.8      17.1              21.3     
Preferred Share dividends     (2.2)     (3.3)     (4.4)             (3.3)    
Net income attributable to Common Shares     11.5      8.5      12.7              18.0     
                             
Net income per Common Share                            
  Basic and diluted     0.06      0.04      0.06              0.09     

(1) Certain comparative figures for the three and six months ended June 30, 2012 have been revised. See Note 1 in Veresen's June 30, 2013 consolidated financial statements. 
   

Consolidated Statement of Comprehensive Income                          
            Three months ended June 30              Six months ended June 30     
(Canadian $ Millions; unaudited)     2013     2012 (1)       2013     2012 (1)  
                           
Net income before non-controlling interest     13.7      11.8      17.1      21.4   
Other comprehensive income                          
  Cumulative translation adjustment                          
    Unrealized foreign exchange gain on translation     15.4      8.1      24.7      5.3   
Other comprehensive income     15.4      8.1      24.7      5.3   
Comprehensive income before non-controlling interest     29.1      19.9      41.8      26.7   
Comprehensive income attributable to non-controlling interest                          (0.1)  
Comprehensive income     29.1      19.9      41.8      26.6   
Preferred Share dividends     (2.2)     (3.3)     (4.4)     (3.3)  
Comprehensive income attributable to Common Shares     26.9      16.6      37.4      23.3   

(1) Certain comparative figures for the three and six months ended June 30, 2012 have been revised. See Note 1 in Veresen's June 30, 2013 consolidated financial statements.
   

Veresen Inc.                          
                           
Consolidated Statement of Cash Flows                          
        Three months ended June 30               Six months ended June 30    
(Canadian $ Millions; unaudited)     2013     2012 (1)     2013       2012 (1)  
                           
Operating                          
  Net income before non-controlling interest     13.7      11.8      17.1      21.4   
  Equity income     (41.2)     (32.6)     (69.6)     (68.1)  
  Distributions from jointly-controlled businesses     45.5      42.6      92.0      97.3   
  Depreciation and amortization     22.3      23.4      44.7      39.9   
  Foreign exchange and other non-cash items     0.6      0.2      (0.8)     (2.3)  
  Deferred tax     9.9      2.4      15.8      5.7   
  Changes in non-cash working capital     4.2      (10.9)     (6.8)     (27.6)  
      55.0      36.9      92.4      66.3   
Investing                          
  Acquisitions, net of cash acquired                             -      (8.0)                             -      (889.2)  
  Investments in jointly-controlled businesses     (13.5)     (13.1)     (35.9)     (29.0)  
  Pipeline, plant and other capital assets     (15.0)     (16.5)     (24.1)     (33.5)  
  Restricted cash     (0.4)         (2.9)     0.4   
  Other      0.1      (0.1)     0.1      (0.3)  
      (28.8)     (37.7)     (62.8)     (951.6)  
Financing                          
  Restricted cash                             -      (0.1)     3.9      347.0   
  Short-term debt issued, net of issue costs                             -                                  -      249.1   
  Short-term debt repaid                             -                                  -      (250.0)  
  Long-term debt issued, net of issue costs                             -                                  -      347.8   
  Long-term debt repaid     (3.8)     (3.5)     (5.8)     (5.6)  
  Net change in credit facilities     23.0      (17.0)     67.0      64.0   
  Preferred Shares issued, net of issue costs                             -                                  -      193.7   
  Common Share dividends paid     (38.8)     (18.0)     (77.6)     (27.1)  
  Preferred Share dividends paid     (2.2)     (3.3)     (4.4)     (3.3)  
  Repayments from (advances to) jointly-controlled businesses     0.4          0.7     (21.5)  
  Other     0.6          (1.9)     (2.6)  
      (20.8)     (41.9)     (18.1)     891.5   
                           
Increase (decrease) in cash and short-term investments     5.4      (42.7)     11.5      6.2   
Effect of foreign exchange rate changes on cash and short-term investments            0.1      0.2      0.2      0.2   
Cash and short-term investments at the beginning of the period     22.3      70.8      16.1      21.9   
Cash and short-term investments at the end of the period     27.8      28.3      27.8      28.3   

(1) Certain comparative figures for the three and six months ended June 30, 2012 have been revised. See Note 1 in Veresen's June 30, 2013 consolidated financial statements.
   

Veresen Inc.                          
                           
Distributable Cash                          
        Three months ended June 30       Six months ended June 30  
(Canadian $ Millions, except where noted; unaudited)     2013     2012     2013     2012  
                           
Alliance distributions, prior to withholdings for capital expenditures and net of debt service     33.7      33.0      67.6      65.6   
AEGS distributable cash, after non-recoverable capital expenditures and debt service     4.2      3.9      8.8      7.8   
Hythe/Steeprock distributable cash, after non-recoverable maintenance capital expenditures     17.7      16.9      35.3      26.4   
Aux Sable distributions, net of support payments, non-recoverable maintenance capital    
  expenditures and debt service
    6.0      14.6      15.6      27.8   
Power distributable cash, after maintenance capital expenditures and debt service     7.1      7.3      16.9      9.8   
      68.7      75.7      144.2      137.4   
Corporate                          
  General and administrative     (5.7)     (6.1)     (14.2)     (14.2)  
  Interest and other finance     (10.1)     (9.5)     (20.1)     (17.6)  
      (15.8)     (15.6)     (34.3)     (31.8)  
  Current tax     (1.5)     (6.0)     (1.7)     (8.8)  
  Preferred Share dividends     (2.2)     (2.2)     (4.4)     (3.3)  
      (19.5)     (23.8)     (40.4)     (43.9)  
                           
Distributable cash  (2)     49.2      51.9      103.8      93.5   
                           
Distributable cash per Common Share ($) (3)     0.25      0.26      0.52      0.49   
                           
Dividends paid/payable (4)     49.8      48.8      99.4      95.0   
                           
Dividends paid/payable per Common Share ($)     0.25      0.25      0.50      0.50   

(2) Distributable cash is not a standard measure under generally accepted accounting principles in the United States and may not be comparable to similar measures presented by
other entities. Distributable cash represents the cash available to Veresen for distribution to common shareholders after providing for debt service obligations, Preferred Share
dividends, and any maintenance and sustaining capital expenditures. Distributable cash does not include distribution reserves, if any, available in jointly-controlled businesses,
project development costs, or transaction costs incurred in conjunction with acquisitions. Project development costs are discretionary, non-recoverable costs incurred to assess
the commercial viability of greenfield business initiatives unrelated to the Company's operating businesses. The Company considers transaction costs to be part of the
consideration paid for an acquired business and, as such, are unrelated to the Company's operating businesses. Distributable cash is an important measure used by the
investment community to assess the source and sustainability of Veresen's cash distributions and should be used to supplement other performance measures prepared in
accordance with generally accepted accounting principles in the United States. See the following table for the reconciliation of distributable cash to cash from operating activities.
(3) The number of Common Shares used to calculate distributable cash per Common Share is based on the average number of Common Shares outstanding at each record date. 
For the three months ended June 30, 2013 the average number of Common Shares outstanding for this calculation was 199,282,658 (2012 - 195,474,685) and 205,189,167
(2012 - 201,381,193) on a basic and diluted basis, respectively. For the six months ended June 30, 2013 the average number of Common Shares outstanding for this calculation
was 198,844,197 (2012 - 190,065,393) and 204,750,705 (2012 - 195,972,018) on a basic and diluted basis, respectively. The number of Common Shares outstanding would
increase by 5,906,508 (2012 - 5,906,508) Common Shares if the outstanding Convertible Debentures on June 30, 2013 were converted into Common Shares.
(4) Includes $11.0 million and $21.8 million of dividends for the three and six months ended June 30, 2013, respectively (2012 - $20.7 million and $57.8 million) satisfied through
the issuance of Common Shares under the Company's Premium DividendTM and Dividend Reinvestment Plan (trademark of Canaccord Genuity Corp.).
   

 

Veresen Inc.                          
                           
Reconciliation of Distributable Cash to Cash from Operating Activities                                          
        Three months ended June 30       Six months ended June 30  
(Canadian $ Millions; unaudited)     2013     2012     2013     2012  
                           
Cash from operating activities     55.0      36.9      92.4      66.3   
Add (deduct):                          
  Project development costs (5)     9.1      6.4      15.8      12.0   
  Change in non-cash working capital     (4.5)     12.7      8.3      31.1   
  Principal repayments on senior notes     (3.0)     (3.5)     (5.8)     (5.6)  
  Maintenance capital expenditures     (1.8)     (2.5)     (3.8)     (3.4)  
  Distributions earned greater (less) than distributions received (6)     (4.2)     5.2      (0.3)     (3.6)  
  Preferred Share dividends     (2.2)     (3.3)     (4.4)     (3.3)  
  Current tax on Preferred Share dividends     0.8          1.6       
                           
Distributable cash     49.2      51.9      103.8      93.5   

(5) Represents costs incurred by the Company in relation to projects where the recoverability of such costs has not yet been established.  Amounts incurred for the three and six months ended June 30, 2013 relate primarily to the Jordan Cove LNG terminal project, the Pacific Connector Gas Pipeline project, and various power development projects.
(6) Represents the difference between distributions declared by jointly-controlled businesses and distributions received.
   

 

 

SOURCE: Veresen Inc.

For further information:

Dorreen Miller, Director, Investor Relations
Phone: (403) 213-3633
Email: investor-relations@vereseninc.com

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