SaskEnergy Incorporated First Quarter Report
March 31, 2011
AECO Monthly Index Historical Prices
$14.00
Conventional Natural Gas
$12.00
$10.00
$8.00
Shale Gas Revolution
$6.00
Forward Price at June 30, 2017
$4.00
$2.00
$0.00
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
CONSOLIDATED FINANCIAL RESULTS
Consolidated Net Income
Three months ended June 30
(millions)
2017
2016 Change
(Loss) before unrealized market value adjustments Impact of fair value adjustments Revaluation of natural gas in storage
$
(8)
$
(3)
$
(5)
6
46 11
(40) (15)
(4)
Consolidated net (loss) income
$
(6)
$
54
$
(60)
The loss before unrealized market value adjustments was $8 million for the three months ended June 30, 2017, $5 million unfavourable compared to the $3 million loss in 2016, due primarily to impairments taken on non-core storage and gathering, treatment and compression assets. The long term price of natural gas is in backwardation which means that there are less favourable price differentials between current and forward market prices and limited opportunities to use storage to generate gas marketing margins. With respect to core operations, the delivery rate increase effective November 1, 2016 combined with increased transportation loads is contributing to higher revenues compared to 2016. Both operating and maintenance, and depreciation have increased compared to 2016, a result of growth in the Corporation’s natural gas infrastructure and customer base. Continued cost management efforts have resulted in employee benefits remaining unchanged from the prior year. A large portion of SaskEnergy’s revenue is dependent on customer’s use of natural gas to heat their premises. Normally, customers do not use a lot of gas in the first quarter of the fiscal year and when weather is warmer than normal , as May proved to be, generating net income during the first quarter is challenging. However, excluding the impairments taken on non-
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2017-18 FIRST QUARTER REPORT
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