Financing Activities
SaskEnergy Incorporated First Quarter Report Cash provided by financing activities was $47 million through the six months ending September 30, 2019, compared to $32 million provided by financing activities in 2018-19. The Corporation used $27 million for interest payments, $43 million for dividends, and $34 million to pay short-term debt. The Corporation borrowed an additional $161 million in long-term debt to support its capital investment requirements and repay short-term debt. SaskEnergy’s debt ratio at the end of September 30, 2019 of 57 per cent debt and 43 per cent equity is slightly higher than the debt ratio of 55 per cent debt and 45 per cent equity at the end of 2018-19 and is slightly better than the Corporation’s long-term target range of 58 to 63 per cent debt.
Debt Ratio - September
March 31, 2011
62.2%
60.0% 59.2%
57.1% 56.7%
2015 2016 2017 2018 2019
CAPITAL EXPENDITURES
Capital expenditures, as reported in the consolidated financial statements, were as follows:
Three months ended September 30
Six months ended September 30
(millions)
2019
2018 Change
2019
2018 Change
Customer growth and system expansion
$
43 31
$
13
$
65 44
$
28 11
$
56 40
$
93 55
Safety and system integrity
9
Information systems
4 3
-
6 4
-
4 1
6 3
Vehicle & equipment, buildings, furniture
(2)
(1)
$
81
$
20
$
119
$
38
$
101
$
157
Capital expenditures during 2019-20 of $157 million were higher than in the prior year to meet the increasing load growth in the province and to move natural gas lines away from highly populated areas. Capital expenditures of $93 million for customer growth and system expansion are $28 million higher than the prior year. Safety and system integrity spending of $55 million are $11 million higher than the prior year primarily driven by increasing regulatory requirements. The increasing demand and lower Saskatchewan production requires additional Alberta supply to be brought onto SaskEnergy’s transmission system. TransGas is currently increasing the supply from NGTL with its Cold Lake Alberta receipt expansion project. It is a cost effective capacity investment that increases the Corporation’s ability to meet customer’s firm contracted Alberta supply requirements. The expansion also provides supply directly into a delivery growth area and helps leverage existing mainline transmission and compression infrastructure to other key areas of the system with potential future capacity improvements. This project incurred $11 million in costs through the six months ending September 30, 2019. Growth in and around the City of Saskatoon has resulted in a multi-year initiative that will address increased natural gas capacity and move high pressure transmission lines further away from populated areas. This accounted for the majority of the increased spending in 2019-20 compared to the same period in the prior year. The capital expenditure increases in 2019-20 on these projects were partially offset by installing compression at the Rush Lake interconnect in the prior year at a cost of $11 million to help mitigate the requirement for additional Alberta supply. It was cost effective for the Corporation to receive additional supply on the Loomis to Herbert gas line, which is owned by the Many Islands Pipe Lines (Canada) Limited subsidiary, with the gas being sourced from the TC Energy Mainline or Foothills Pipelines. This project was completed in 2018-19. OUTLOOK With the Corporation’s fiscal period beginning April 1, peak winter heating loads begin to have a positive impact on the financial results in the third and fourth quarters. Without revenue from heating loads it is not uncommon for SaskEnergy to experience minimal net income and even losses through the first two quarters. Factors that are expected to affect SaskEnergy in the near future include the continued growth of the provincial economy, resulting in increased reliance on imported natural gas, and higher customer expectations for safe, reliable natural gas services.
11
2019-20 SECOND QUARTER REPORT
Made with FlippingBook Ebook Creator