Keyera’s Q3 Results Look Weak; Higher KAPS Costs and Weaker Marketing Outlook

Keyera’s third-quarter results were weak, in our view. After updating our model, we will maintain our no-moat rating and CAD 30 fair value estimate. The biggest disappointment was another increase in costs for the KAPS project to CAD 1 billion from CAD 900 million. The project’s costs were at a midpoint of CAD 840 million earlier this year at 70% complete. The higher costs are primarily caused by poor weather, but the pipeline (currently 90% complete) is expected to be in service at the end of the first quarter of 2023.