CALGARY – Gibson Energy Inc. (“Gibson” or the “Company”) (TSX: GEI), announced today that its Board of Directors has approved a 2020 growth capital expenditure budget of approximately $300 million, comprised predominantly of sanctioned growth projects. Additionally, the Board of Directors has approved the allocation of approximately $25 million in replacement capital expenditures.
“Gibson’s ability to continue growing our long-term infrastructure businesses, ensuring we meet or exceed our distributable cash flow per share growth targets despite the egress challenges facing western Canada, speaks to the strength of our asset base and our transition into a commercial, execution-focused organization,” said Steve Spaulding, President and Chief Executive Officer. “We expect to sanction the construction of additional tankage over the next month, and remain confident in our ability to continue sanctioning tankage at our target of two to four tanks per year over the next several years. We are also pursuing numerous other opportunities in both Canada and the U.S. that will result in sanctioned capital increasing through the year. Importantly, we have a strong balance sheet as to be fully-funded for all our sanctioned capital, with the ability to expand capital in 2020 and maintain our fully-funded position.”
Gibson’s 2020 growth capital expenditure budget is expected to be allocated as follows:
(1) Includes Gibson’s share of the estimated capital costs for construction of proposed Diluent Recovery Unit (“DRU”) expected to be incurred in 2020, based on currently contracted 50,000 bbl/d of inlet capacity
(2) Construction of the DRU remains subject to certain conditions, including obtaining agreements to underpin the economics of the project and receipt of required regulatory approvals, including from the Alberta Energy Regulator. Please see the Company’s press release dated December 3, 2019 and supplementary information referred to therein for a further description of the DRU.
The Company now expects 2019 capital expenditures to be approximately $265 million.
Gibson remains fully-funded for all sanctioned capital, with an estimated 2020 internal funding capacity of approximately $400 million. This 2020 funding position is the result of solid performance of the business in 2018 and 2019 increasing retained cash flows and further strengthening Gibson’s balance sheet. It is also based on a conservative outlook for the Marketing segment and the Company’s target leverage on new infrastructure capital of between 50% and 60%.
Updated Outlook for Marketing Segment
As a result of strong performance in its Crude Oil Marketing business, Gibson now expects that the Marketing Segment is positioned to deliver segment profit of approximately $40 million or greater in the fourth quarter of 2019.
Gibson is a Canadian-based oil infrastructure company with its principal businesses consisting of the storage, optimization, processing, and gathering of crude oil and refined products. Headquartered in Calgary, Alberta, the Company’s operations are focused around its core terminal assets located at Hardisty and Edmonton, Alberta, and also include the Moose Jaw Facility and an infrastructure position in the U.S.
Gibson shares trade under the symbol GEI and are listed on the Toronto Stock Exchange. For more information, visit www.gibsonenergy.com.