Three months ended June 30
SaskEnergy Incorporated First Quarter Report (millions) Cash provided by operating activities
2019
2018
Change
March 31, 2011 59 $
$
61
$
2
Cash used in investing activities Cash used in financing activities
(56) (11)
(38) (18)
(18)
7
(Decrease)/increase in cash and cash equivalents
$
(6)
$
3
$
(9)
Operating Activities
Cash provided by operating activities was $61 million for the three months ending June 30, 2019, an increase of $2 million from 2018-19. Cash flows from operations are up due to the impact of a higher transportation revenue. Also, the impact of a colder winter provided higher delivery revenue and cash flows.
Investing Activities
Cash used in investing activities totalled $56 million for the three months ending June 30, 2019, $18 million more than the three month period ending June 30, 2018. Capital investment levels increased in 2019-20 due to higher system growth combined with higher system integrity spending compared to 2018-19. The majority of capital investment to the end of June 2019 focused on $37 million of customer growth and system expansion projects, which were a result of Saskatchewan residential and industrial growth, as well as safety and system integrity programming of $15 million - a sign of the Corporation’s ongoing commitment to a safe, reliable system.
Financing Activities
Cash used in financing activities was $11 million through the three months ending June 30, 2019, compared to $18 million used in financing activities in 2018-19. The Corporation used $19 million for interest payments, $43 million for dividends, and $47 million to pay short-term debt. The Corporation borrowed an additional $106 million in long- term debt to support its capital investment requirements and repay short-term debt. SaskEnergy’s debt ratio at the end of June 30, 2019 of 55 per cent debt and 45 per cent equity is equal to the debt ratio at the end of 2018-19. This is slightly better than the Corporation’s long-term target range of 58 to 63 per cent debt.
CAPITAL EXPENDITURES
Capital expenditures, as reported in the consolidated financial statements, were as follows:
Three months ended June 30
(millions)
2019
2018
Change
Customer growth and system expansion
$
37 15
$
22 13
$
15
Safety and system integrity
2
Information systems
2 2
2 1
-
Vehicle & equipment, buildings, furniture
1
$
56
$
38
$
18
Capital expenditures during 2019-20 of $56 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 $37 million for customer growth and system expansion are $15 million higher than the prior year. 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 $7 million in costs through the three months ending June 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.
10
2019-20 FIRST QUARTER REPORT
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