Keyera Earnings: KAPS Is Finally in Service, and Strong Marketing Performance Is Good Start to 2023

Keyera’s first quarter was strong with the KAPS pipeline finally entering service in April (with a new 50% owner in Stonepeak) and its marketing business outperforming during the quarter. The firm’s marketing margin is now expected to be a midpoint of CAD 350 million compared with earlier guidance of CAD 265 million and our CAD 297 million forecast. The primary drivers of the outperformance are lower butane feedstock costs and high iso-butane premiums. The recently acquired capacity at the Fort Saskatchewan complex contributed to a record margin of CAD 119 million in the liquids infrastructure segment. After updating our model to boost our marketing forecast modestly, our fair value estimate of CAD 30 and our no-moat rating are unchanged.