All financial figures are in Canadian dollars unless noted otherwise.
CALGARY, Dec. 14, 2011 /PRNewswire/ - Gibson Energy Inc. (TSX: GEI) ("Gibson" or the "Company"), is pleased to announce that its Board of Directors has approved a 2012 capital budget of $173 million for internal growth investments, strategic investments and for the upgrade and replacement of existing assets.
Approximately $113 million - or 65% - of the 2012 capital expenditure is directed towards growth investments. About 55% of the growth investments are earmarked for the Terminals and Pipelines segment, which includes Custom Treating and Terminals. Significant investments are also planned for both the Truck Transportation and Processing and Wellsite Fluids segments.
"Gibson's 2012 capital expenditure program is directly aligned with the Company's long-term objective of generating stable and growing cash flow for shareholders," said Stew Hanlon, President and Chief Executive Officer. "Planned spending is well balanced between business segments, which should enable our integrated oil levered assets to provide diversified cash flow and stability through various commodity cycles."
2012 Capital Expenditure Strategic Objectives
The strategic objectives of Gibson's 2012 capital expenditure program are:
- Continued growth at the Hardisty Terminal via additional large tank construction backstopped by long term contracts;
- Growth at the Edmonton Terminal by leveraging new feeder pipeline connectivity;
- Expanding Gibson's integrated service offerings in growing North American oil plays, such as the Western Canadian Sedimentary Basin, Bakken, Niobrara, Granite Wash and Eagleford regions, by:
- Building and expanding on the investment platform the Company established in 2011 in emulsion treating, water disposal and oilfield waste management;
- Exploring alternatives to expand the terminal and pipeline business in the United States; and
- Expanding Truck Transportation services into new product offerings and to meet growing demand;
- Fund the capital program from cash on hand, cash flow from operations and, if necessary, the Company's existing credit line; and
- Preserve the Company's strong balance sheet to maintain financial flexibility. The Company does not budget for acquisitions but will evaluate opportunities as they arise.
2012 Capital Expenditure Highlights
In 2012, approximately $113 million is allocated towards internal growth investments of which $69 million represents spending associated with previously approved projects. Significant investments include:
- Terminals and Pipelines for $63 million, primarily related to the Hardisty West project, the development of treating facilities, disposal wells and landfills and expansion opportunities at the EdmontonTerminal;
- Truck Transportation for $24 million, relating to growth in both Canadaand the United States; and
- Processing and Wellsite Fluids for $21 million, largely at Moose JawRefinery, to increase the Stoney Beach pipeline capacity to realize transportation and supply benefits and to complete construction of a finished product tank.
In addition, capital expenditure of $10 million is allocated to purchase additional land in Alberta and to upgrade the recently acquired Sexsmith property near Grande Prairie, Alberta. These investments are strategic in nature and will provide important infrastructure and market access for the Company's trucking, wellsite fluids and propane businesses.
Upgrade and replacement capital is approximately $50 million in 2012. The planned spending will largely be focused on ensuring safety, reliability and efficiency of existing operations.
The amount and allocation of capital expenditures for 2012 is subject to review and modifications by management on an ongoing basis throughout the year. In addition, the Board of Directors regularly reviews the capital program during the year in light of business and economic conditions and may modify the 2012 Capital Expenditure Plan during the year.
2012 Capital Expenditure Program
| Upgrade | ||||||
| and | ||||||
| (in millions) | Growth | Strategic | Replacement | TOTAL | ||
| TERMINALS AND PIPELINES | $63 | $- | $13 | $76 | ||
| TRUCK TRANSPORTATION | 24 | - | 24 | 48 | ||
| PROPANE AND NGL MARKETING AND DISTRIBUTION | 5 | - | 5 | 10 | ||
| PROCESSING AND WELLSITE FLUIDS | 21 | - | 4 | 25 | ||
| OTHER CORPORATE | - | 10 | 4 | 14 | ||
| TOTAL | $113 | $10 | $50 | $173 | ||
About Gibson
Gibson Energy is one of the largest independent midstream energy companies in Canada and a major participant in the crude oil transportation business in the United States. Gibson transports hydrocarbons and water by utilizing its integrated network of terminals, pipelines and truck fleet, located throughout western Canadaand the United States. Gibson shares trade on the Toronto Stock Exchange under the symbol GEI.
Gibson's primary objective is to generate stable and growing cash flows for shareholders through an attractive dividend and a growing asset base.
Forward-Looking Statements
Certain statements contained in this news release constitute forward-looking
statements. These statements relate to future events or the Company's
future performance. All statements other than statements of historical
fact are forward-looking statements. The use of any of the words
'anticipate', 'plan', 'contemplate', 'continue', 'estimate',
'expect', 'intend', 'propose', 'might', 'may', 'will',
'shall', 'project', 'should', 'could', 'would', 'believe',
'predict', 'forecast', 'pursue', 'potential' and 'capable'
and similar expressions are intended to identify forward-looking
statements. These statements involve known and unknown risks,
uncertainties and other factors that may cause actual results or events
to differ materially from those anticipated in such forward-looking
statements. No assurance can be given that these expectations will
prove to be correct and such forward-looking statements included in
this news release should not be unduly relied upon. These statements
speak only as of the date of this news release. In addition, this news
release may contain forward-looking statements and forward-looking
information attributed to third party industry sources. The Company
does not undertake any obligations to publicly update or revise any
forward looking statements except as required by securities law. Actual
results could differ materially from those anticipated in these
forward-looking statements as a result of numerous risks and
uncertainties including, but not limited to, the risks and
uncertainties described in "Forward-Looking Statements" and "Risk
Factors" included in the Company's Supplemented Prep Prospectus dated
June 7, 2011 as filed on SEDAR and available on the Gibson website at www.gibsons.com.
SOURCE Gibson Energy Inc.
