Alterra Power Announces Results for the Quarter Ended September 30, 2013
(under IFRS and all amounts in US dollars unless otherwise stated)
VANCOUVER, Nov. 12, 2013 /CNW/ - Alterra Power Corp. (TSX: AXY) is pleased to report its financial and operating results for the three and nine months ended September 30, 2013. For further information on these results please see Alterra's Condensed Consolidated Interim Financial Statements and Management's Discussion and Analysis.
Alterra consolidates 100% of the HS Orka and Soda Lake operations and accounts for its interests in the Toba Montrose, Dokie 1 and ABW Solar (third quarter solar acquisition) facilities as equity investments. Alterra's results are sometimes disclosed as Alterra's "net interest", which means the results that Alterra would have reported if each of HS Orka (66.6%), Toba Montrose (40%), Dokie 1 (51%), ABW Solar (10%) and Soda Lake (100%) had been reported in accordance with Alterra's actual share of ownership. Management believes that net interest reporting provides the clearest view of the Company's performance.
Highlights for the current quarter include:
- Increased revenue and EBITDA (net interest): Revenue (including business interruption proceeds) was $30.0 million and EBITDA was $18.3 million, up 3% from the comparative quarter, primarily due to increased contractual revenue at HS Orka and higher water flow at Toba Montrose.
- Reliable power generation: Alterra's fleet of power projects generated 360,391 MWh of clean power (net interest), achieving 89% of budgeted generation despite the Montrose hydro facility being offline for most of the quarter. Generation would have been 103% of budget had the Montrose plant not been offline. Total generation from plants operated by Alterra was 669,344 MWh.
- ABW Solar acquisition completed: Alterra acquired a 10% interest in a 50 MW solar generation project in Ontario, Canada (ABW Solar) for $7.1 million, and will manage the project.
- Montrose facility back online: Penstock repairs at the Montrose hydro facility were completed and the facility was brought back into service on September 22, 2013. Several site improvements including protective berms have also been completed and will significantly lessen the likelihood of any future damage or interruption.
- Jimmie Creek project development:
- Construction timing: Alterra now plans construction for this 62 MW run-of-river facility in 2014, and has executed a further limited notice to proceed with SNC Lavalin in support of this schedule.
- PPA completed: The Jimmie Creek power purchase agreement ("PPA") was finalized through an amendment completed subsequent to the quarter. Under the contract, the project will sell 100% of its power to BC Hydro for 40 years commencing in August 2016.
- Alterra to be 100% owner: Alterra completed an agreement to purchase the 49% project stake currently owned by an affiliate of General Electric Energy Financial Services. The transaction is expected to close by December 2013.
- Shannon wind project: Alterra entered into an exclusivity agreement that provides for an option to purchase a 200 MW wind generation development project in Clay County, Texas, USA.
- Reykjanes Re-Injection Program: Alterra commenced drilling a new large-diameter well in support of a field maintenance program. The well was completed in November, with positive initial indications of permeability.
John Carson, Alterra's CEO, said "With our operations back to full strength and delivering positive results, we are now focused on making 2014 a strong year of growth for Alterra. Our plan is to place both Jimmie Creek and Shannon Wind into construction in 2014, and I'm confident that we have the resources, including people and access to capital, to make that a reality."
Financial Results
The following table shows key financial information extracted from the consolidated results.
(expressed in thousands of US dollars, except for generation)
| For the three months ending September 30, 2013 | ||||||||||||||||
| HS Orka (66.6%) |
Toba Montrose (40%) |
Dokie 1 (51%) |
Soda Lake (100%) |
ABW (10%) |
Exploration and Head Office |
Net Interest Total |
Consolidated Results |
|||||||||
| Generation (MWh) | 206,791 | 113,474 | 26,423 | 12,631 | 1,072 | - | 360,391 | 323,128 | ||||||||
| Total Revenue | $ | 8,821 | $ | 12,143 | $ | 2,778 | $ | 817 | $ | 434 | $ | - | $ | 24,993 | $ | 14,062 |
| Business Interruption Insurance Proceeds | - | 5,052 | - | - | - | - | 5,052 | - | ||||||||
| Gross Profit (Loss) | 2,171 | 9,387 | 390 | (1,035) | 298 | - | 11,211 | 2,225 | ||||||||
| EBITDA (a) | 4,787 | 14,541 | 1,266 | (430) | 268 | (2,179) | 18,253 | 20,385 | ||||||||
| For the three months ending September 30, 2012 | ||||||||||||||||
| HS Orka (66.6%) |
Toba Montrose (40%) |
Dokie 1 (51%) |
Soda Lake (100%) |
ABW (10%) |
Exploration and Head Office |
Net Interest Total |
Consolidated Results |
|||||||||
| Generation (MWh) | 198,406 | 154,208 | 34,085 | 12,308 | - | - | 399,007 | 310,215 | ||||||||
| Total Revenue | $ | 8,338 | $ | 16,210 | $ | 3,890 | $ | 806 | $ | - | $ | - | $ | 29,244 | $ | 13,326 |
| Gross Profit (Loss) | 2,439 | 13,259 | 1,518 | (1,473) | - | - | 15,743 | 2,189 | ||||||||
| EBITDA (a) | 4,077 | 14,092 | 2,429 | (998) | - | (1,836) | 17,764 | 19,808 | ||||||||
Note (a) - Here and elsewhere, EBITDA is defined by Alterra as earnings before interest, taxes, foreign exchange, depreciation and amortization, as well as before deductions for change in fair value of bonds payable and derivatives, foreign exchange gain (loss), write off of development costs and other income (expense) except business interruption proceeds, amortization of below market contracts, and value assigned to options granted less share of income (loss) of equity accounted investees plus the Company's interest in EBITDA of its equity accounted investees. Alterra discloses EBITDA as it is a measure used by analysts and by management to evaluate Alterra's performance. As EBITDA is a non-IFRS measure, it may not be comparable to EBITDA calculated by others. In addition, as EBITDA is not a substitute for net earnings, readers should consider net earnings in evaluating Alterra's performance. For a reconciliation of consolidated EBITDA to Alterra's consolidated financial statements refer to the Company's Management's Discussion and Analysis for the three and nine months ended September 30, 2013.
Consolidated Results
Revenue was up 6% ($14.1 million compared to $13.3 million) due to increased generation and contractual sales at HS Orka. Gross profit remained consistent at $2.2 million as the increase in revenue was offset by increased maintenance drilling at HS Orka.
Net income improved $1.7 million to $16.4 million, largely as a result of high water flows and insurance proceeds received at Toba Montrose, which drove a $7.5 million increase in Alterra's share of equity investments. Non-cash items offsetting this increase include:
- A $2.3 million negative change in the fair value of bonds payable and derivatives, related primarily to fluctuations in forecasted aluminum prices.
- A $2.9 million negative movement related to foreign exchange.
- A $2.0 million negative change in write-offs of certain development costs related primarily to the completion of joint ventures in Chile and Peru.
Consolidated cash and cash equivalents at September 30 were $37.1 million ($39.2 million at December 31, 2012).
Net Interest Results
Alterra's net interest in revenue and EBITDA increased 3% and 3% respectively primarily due to increased contractual revenue at HS Orka, high water flow at Toba Montrose resulting in increased generation, income from the Blue Lagoon hf due to increased visitor attendance and the addition of ABW Solar. Offsets to these increases include reduced generation at Dokie 1 due to low winds, and slight increases in general and administrative expense related to non-recurring transaction fees and office reductions for the Company's South American projects.
Iceland Operations (66.6% Interest)
The 100 MW Reykjanes plant generated 132,689 MWh of electricity (98% of budget), and the 72 MW Svartsengi plant generated 74,102 MWh of electricity (109% of budget), and continued to supply thermal energy for district heating.
Toba Montrose Operations (40% Interest)
The Toba Montrose facility generated 113,474 MWh of electricity, or 74% of forecasted generation. Although the Montrose facility was offline for repairs during the majority of the quarter, the measured water flow for purposes of business interruption insurance payments (attributed generation) was 57,636 MWh, for a combined pro forma generation of 171,110, 112% of budget.
On December 13, 2012 a rockslide damaged a 300 meter section of the five kilometer penstock (which supplies water from the intake to the power generating plant) at the Montrose facility. The penstock repairs at the Montrose hydro facility were completed during the third quarter and the facility was brought back into service on September 22, 2013. Several site improvements including protective berms were also completed and will significantly lessen the likelihood of any future damage or interruption. Business Interruption and property damage proceeds were paid by the insurer during the quarter and eligible property costs and sub-limits with respect to future payments for property damage are being reviewed with the insurer.
New property insurance for the project was obtained in September 2013 with earth movement coverage capped at C$40.0 million. Toba Montrose has agreed to defer distributions until a higher level of earth movement coverage is re-established, which the Company expects to occur by the second quarter of 2014 or earlier.
Dokie 1 Operations (51% Interest)
The 144 MW Dokie 1 wind farm generated 26,423 MWh of electricity for the quarter, or 72% of budget. Revenue decreased against the comparative quarter due to lower wind.
ABW Solar Operations (10% Interest)
On August 23 Alterra acquired a 10% interest in a 50 MW solar generation project in Ontario (ABW Solar), which will be held in a general partnership with an affiliate of GE Energy Financial Services ("GE EFS") and managed by Alterra. The project was built by First Solar, Inc. and achieved commercial operations during the second quarter of 2013. The project will sell 100% of its electricity to the Ontario Power Authority under 20-year PPAs. The project generated 1,072 MWh for the quarter (beginning August 23), representing 113% of budget.
Soda Lake Operations (100% Interest)
The 15 MW Soda Lake geothermal plant generated 12,631 MWh of electricity for the current quarter, or 98% of budget. The plant completed its annual maintenance outage during the quarter as planned.
Expansion and Development Projects
Jimmie Creek hydro (formerly Upper Toba)
Alterra is currently finalizing plant design for the fully permitted 62 MW Jimmie Creek project and in July 2013 signed a limited notice to proceed with SNC Lavalin who will provide further pre-construction services. Alterra is now targeting construction to begin in the first half of 2014.
On October 31 Alterra signed an agreement to purchase the 49% share of the Jimmie Creek project currently owned by GE EFS, following which Alterra will own 100% of the project. Alterra expects the transaction to close by year-end.
In November 2013 Alterra completed an amendment to the project's PPA to cover the Jimmie Creek project only, at a nameplate capacity of 62 MW with projected annual firm energy of 114 GWh and an August 1, 2016 completion date for construction. Under the contract, the project will sell 100% of its power to BC Hydro for 40 years. Alterra will examine the possibility of constructing the Upper Toba project at a later date under a future call for power.
Dokie 2 wind farm expansion
Alterra holds a 51% interest in a planned expansion of the Dokie 1 wind farm (Dokie 2) with projected additions to capacity of up to 156 MW. During the quarter Alterra continued to collect data, conduct engineering work and perform other studies to complete the assessment of the project.
South American geothermal projects
In July 2013 Alterra completed a joint venture agreement with Energy Development Corporation ("EDC") for the further development of the Mariposa project in Chile and the Crucero, Loriscota, and Tutupaca Norte projects in Peru on a joint basis. Under the terms of the joint venture, EDC will be entitled to earn a 70% interest by funding the next $58.3 million in project expenditures at Mariposa and $8.0 million on the Peruvian projects. Subsequent project equity contributions and economic sharing would be on a pro rata basis between the partners. EDC is now the managing partner for the development of the Mariposa project and the Peruvian projects. The projects are now recorded as equity investments by Alterra.
Reykjanes Expansion
Alterra has commenced a reinjection program at the Reykjanes field, and will refine the timeline for the Reykjanes expansion pending results from the program. The key matters remaining prior to construction are conclusion of a PPA, completion of project financing and confirmation of resource field.
Other development projects
Alterra continues to advance other early stage geothermal projects in Italy and Peru, including exploration field work, data assessment and continued community consultations. Alterra also continues to advance its British Columbia hydro projects in 2013 through collection of hydrology data for the Bute Inlet project and other early stage run of river and pumped storage hydro projects. In Iceland, Alterra began an environmental assessment on the Bulandsvirkjun hydroelectric project.
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Cautionary Note regarding Forward-Looking Statements and Information
Certain statements included in this news release may contain information that is forward-looking within the meaning of certain securities laws, including information and statements regarding prospective results of operations, financial position, cash flows or growth potential. These statements are based on factors or assumptions that were applied in drawing a conclusion or making a forecast or projection, including assumptions based on historical trends, current conditions and expected future developments. Since forward-looking statements relate to future events and conditions, by their very nature they require making assumptions and involve inherent risks and uncertainties. Alterra cautions that although it is believed that the assumptions are reasonable in the circumstances, these risks and uncertainties give rise to the possibility that actual results may differ materially from the expectations set out in the forward-looking statements. Material risk factors include those set out in the management's discussion and analysis section of Alterra's most recent annual report and quarterly report, and in Alterra's Annual Information Form. Given these risks, undue reliance should not be placed on these forward-looking statements, which apply only as of their dates. Other than as specifically required by law, Alterra undertakes no obligation to update any forward-looking statements or information to reflect new information, subsequent or otherwise.
SOURCE: Alterra Power Corp.
Peter Lekich, Corporate Communications
Alterra Power Corp.
Phone: 604.235.6719
Email: [email protected]
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