SaskEnergy Second Quarter Report - September 30, 2018

AECO Monthly Index Historical Prices

SaskEnergy Incorporated First Quarter Report $14.00

March 31, 2011

Conventional Natural Gas

$12.00

$10.00

$8.00

Shale Gas Revolution

$6.00

$4.00

Forward Price at September 30, 2018

$2.00

$0.00

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

CONSOLIDATED FINANCIAL RESULTS

Consolidated Net Income

Three months ended September 30

Six months ended September 30

(millions)

2018

2017 Change

2018

2017 Change

Income (Loss) before unrealized market value adjustments Impact of fair value adjustments Revaluation of natural gas in storage

$

1 7 4

$

5

$

(4)

$

7 1

$

(3)

$

10

-

7 7

6

(5)

(3)

16

(7)

23

Consolidated net income (loss)

$

12

$

2

$

10

$

24

$

(4)

$

28

Net income before unrealized market value adjustments was $7 million for the six months ended September 30, 2018, $10 million favourable compared to the $3 million net loss in 2017, primarily due to a $13 million impairment recovery relating to two natural gas liquid extraction plants that have been reclassified as assets held for sale. The sale of the two plants is effective October 1, 2018. Higher commodity, delivery and transportation and storage revenue also contributed to the favourable variance over 2017. With respect to core operations, the delivery rate increase effective November 1, 2017 combined with increased transportation loads and a transportation rate increase effective May 1, 2018 will continue to contribute to higher revenues compared to 2017. A large portion of SaskEnergy’s revenue is dependent on customers’ use of natural gas to heat their premises. Weather was 15 per cent colder than normal through the six months ending September 30, 2018 compared to 8 per cent warmer than normal for the same period in 2017, which also contributed to higher delivery revenue. Employee benefits and operating and maintenance costs remain relatively comparable to 2017 as cost management efforts have continued to be a focus while continuing to provide safe and reliable service.

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2018-19 SECOND QUARTER REPORT

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