What Keyera (KEY) Said on Its Q3 Earnings Call

Key Points

• Plains acquisition boosted results: Keyera posted record liquids infrastructure margins of CAD 272 million, while adjusted EBITDA was CAD 466 million and distributable cash flow was CAD 247 million. The acquired assets performed ahead of expectations, and the company had achieved CAD 115 million in run-rate synergies by September.
• AEF reliability work will constrain operations: Keyera expects a four-week outage in January 2027 to repair a heat exchanger, followed by permanent equipment replacement in May. The company is bringing forward maintenance and prioritizing reliability over short-term production.
• Guidance and investment plans: Keyera raised its 2026 marketing margin outlook to CAD 400 million–CAD 430 million and increased maintenance spending guidance by CAD 20 million. It forecast CAD 630 million–CAD 670 million in growth capital for 2027, while leverage stood at about 3.6 times and is expected to peak at year-end.

Keyera TSE: KEY reported record liquids infrastructure margins in the third quarter of 2026 as newly acquired Plains assets contributed for a full quarter, while executives outlined plans to address continuing reliability problems at its AEF isooctane facility.

The company reported adjusted EBITDA of CAD 466 million and distributable cash flow of CAD 247 million, or CAD 0.84 per share, excluding transaction and integration costs related to the Plains acquisition. Keyera recorded a net loss of CAD 68 million for the quarter, Chief Financial Officer Eileen Marikar said.

President and CEO Dean Setoguchi said the acquired Plains assets were performing ahead of expectations and that major growth projects remained on schedule and at or below budget.

Plains assets lift fee-based results

Liquids infrastructure realized margin reached a record CAD 272 million, reflecting a full quarter of contributions from the Plains assets and Keyera’s additional 50% interest in the KAPS pipeline, along with strong throughput. Gathering and processing realized margin was CAD 125 million, with the Wapiti and Simonette facilities approaching full operating capacity, Setoguchi said.

Marketing realized margin was CAD 95 million. Marikar said results were affected by the previously disclosed disruption to Enbridge’s Line 5 system and lower utilization at AEF, partly offset by stronger isooctane pricing and butane sales.

Brad Slessor, senior vice president of gathering and processing and NGL pipelines, said Keyera had delivered CAD 115 million in run-rate synergies from the Plains acquisition by the end of September. That compares with the company’s target of CAD 120 million to CAD 140 million within 12 months of the transaction’s May 2026 closing.

Setoguchi said the acquired business was also benefiting from higher volumes and liquid yields than Keyera had modeled. He pointed to capital savings and potential investments that were not included in the original deal thesis or counted as synergies.

AEF faces January outage and May equipment replacement

Keyera expects to take an approximately four-week outage at AEF in early January to repair a heat exchanger whose performance has deteriorated faster than expected. The company plans to install permanent replacement equipment in May 2027 and expects full production to resume by the end of that month.

Jamie Urquhart, senior vice president of the liquids business unit, said the January work should bring the facility close to or at full capacity initially, although the exchanger’s effectiveness is expected to decline again before the permanent replacement. The replacement will use a design that had operated reliably at the facility for more than 25 years, he said.

Urquhart said Keyera has shifted its operating approach away from maximizing short-term production toward defined reliability parameters and more frequent planned maintenance. Work previously proposed for 2028 will be brought forward into the May outage, with the aim of avoiding another outage in 2028.

Marikar said Keyera expects to provide its 2027 marketing margin guidance in May alongside first-quarter results. That outlook will depend on assumptions including AEF operating as expected for the rest of the year.

Marketing outlook raised as spending continues

Keyera increased its 2026 marketing realized margin guidance to CAD 400 million to CAD 430 million. Marikar said the revision reflects stronger-than-anticipated isooctane and butane contributions, as well as approximately CAD 50 million in incremental benefits from revaluing inventory and related hedges associated with the Plains acquisition.

The company left its 2026 growth capital guidance unchanged but raised its expected maintenance spending by CAD 20 million to a range of CAD 260 million to CAD 280 million. It forecast cash taxes of CAD 55 million to CAD 75 million for the year.

For 2027, Keyera expects growth capital of CAD 630 million to CAD 670 million, primarily for projects already underway. Maintenance capital is forecast at CAD 250 million to CAD 280 million, including approximately CAD 20 million for AEF equipment replacement and related work and CAD 20 million for one-time IT integration projects. Cash taxes are expected to be CAD 130 million to CAD 150 million.

Keyera ended the third quarter with net debt to adjusted EBITDA of approximately 3.6 times. Marikar said leverage is expected to peak at year-end and return to the company’s long-term target range in 2028, as major project spending declines and completed projects contribute earnings.

Condensate expansion and northern demand

Keyera plans to increase capacity on its Fort Saskatchewan condensate system by approximately 15% through a debottlenecking project expected to enter service early in 2027. Urquhart said the additional capacity is essentially contracted and that the company is discussing a further expansion with major oil sands producers.

In northern gathering and processing, Slessor said Keyera is working on potential debottlenecking projects at Wapiti and Simonette as customer demand approaches available capacity. He said the company expects to provide more information next year.

About Keyera (TSE:KEY)

Keyera Corp. TSX: KEY operates an integrated Canadian-based energy infrastructure business with extensive interconnected assets and depth of expertise in delivering energy solutions. Its predominantly fee-for-service based business consists of natural gas gathering and processing; natural gas liquids processing, transportation, storage and marketing; iso-octane production and sales; and an industry-leading condensate system in the Edmonton/Fort Saskatchewan area of Alberta. Keyera strives to provide high quality, value-added services to its customers across North America and is committed to conducting its business ethically, safely and in an environmentally and financially responsible manner.

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