SaskEnergy Incorporated First Quarter Report $14.00
AECO Monthly Index Historical Prices
March 31, 2011
Conventional Natural Gas
$12.00
$10.00
$8.00
Shale Gas Revolution
$6.00
Forward Price at December 31, 2016
$4.00
$2.00
$0.00
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
CONSOLIDATED FINANCIAL RESULTS
Consolidated Net Income
Three months ended December 31
Nine months ended December 31
2016
2015 Change
2016
2015 Change
(millions)
Income before unrealized market value adjustments Impact of fair value adjustments Revaluation of natural gas in storage
$
45 13 13
$
35 69 27
$
57
$
(12)
$
39
$
(4)
(5) (1)
18 14
(8) (1)
77 28
$
71
$
131
Consolidated net income
$
51
$
20
$
30
$
101
Income before unrealized market value adjustments was $35 million for the nine months ended December 31, 2016, $4 million unfavourable compared to the $39 million net income in 2015. Delivery rate increases effective January 1 and November 1, 2016 combined with a transportation rate increase effective January 1, 2016 have addressed growing operating cost pressure and are contributing to higher revenues compared to 2015. Both operating and maintenance, and depreciation are increasing compared to 2015, a result of recent growth in the Corporation’s natural gas infrastructure and customer base. Customer capital contributions are lower than 2015 as the provincial economy and customer growth has slowed in 2016. The customer capital contribution revenue in the quarter ending December 31, 2015 also included the impact of changing the estimate of deferred customer contribution revenue related to transmission projects. Aggressive management of operating costs is evidenced by employee benefits expense declining as the Corporation continues to manage overtime and staffing levels. Commodity rate decreases effective January 1 and November 1, 2016 reduced the realized commodity margin in 2016 compared to 2015. The gas marketing margin declined in 2016 as natural gas market prices increased through 2016. This reduced price differentials between current and forward market prices and limited gas marketing opportunities. During April through December 2016, higher priced natural gas purchase contracts related to the Corporation’s commodity business expired, which had a positive impact on unrealized fair value adjustments. In addition, natural gas market prices recovered significantly by the end of June 2016 and continued through to December. The AECO near-month natural gas spot
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2016-17 THIRD QUARTER REPORT
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