Mr. Dean Setoguchi reports

KEYERA ANNOUNCES 2023 YEAR END RESULTS AND PROVIDES COMMERCIAL UPDATE

Keyera Corp. has released its 2023 year-end financial results, the highlights of which are included in this news release. To view management's discussion and analysis (the MD&A) and financial statements, visit either Keyera's website or its filings on SEDAR+.

"Keyera continues to execute on its strategy, achieving record annual adjusted EBITDA and distributable cash flow per share, driven by best-ever contributions from all three business segments," said Dean Setoguchi, president and chief executive officer. "KAPS continues to deliver growth for Keyera while providing a much-needed alternative transportation solution for customers. In 2023, customers committed to significant additional long-term volumes on KAPS and across our integrated system, demonstrating its value. With strategically located assets and a strong production growth outlook for the basin, we are well positioned to continue to maximize value for our customers and shareholders."

Fourth quarter and year-end highlights:

• Financial results:
  • Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) were a record $339-million for the quarter (Q4 2022 -- $212-million) and a record $1.21-billion for the full year (2022 -- $1.03-billion). Distributable cash flow (DCF) was $234-million or $1.02 per share for the quarter (Q4 2022 -- $104-million or 47 cents per share) and a record $855-million or $3.73 per share for the full year (2022 -- $654-million or $2.95 per share). The year-over-year increases were driven by record contributions from all three business segments.
  • Net earnings were $49-million for the fourth quarter (Q4 2022 -- net loss of $82-million) and $424-million for the full year (2022 -- $328-million). These results include a non-cash impairment charge of $210-million in the fourth quarter related to the Wildhorse terminal.
• KAPS driving integrated commercial success -- in 2023, the company added significant long-term integrated agreements with several producers to provide transportation on KAPS, fractionation, storage and product marketing. This includes approximately 30,000 barrels per day of incremental volumes on KAPS and 33,000 barrels per day of extended and incremental fractionation contracts at Keyera Fort Saskatchewan (KFS) (more detail provided below).
• Pipestone expansion on-line and fully utilized -- the Pipestone expansion was completed in the fourth quarter, adding 40 million cubic feet per day (MMcf/d) of capacity, for a total of 260 MMcf/d. The project was completed ahead of schedule for $58-million, below the expected cost range of $60-million to $70-million. The expansion is fully contracted under long-term take-or-pay agreements and the plant has been operating at full capacity since coming on-line.
• Record fee-for-service results -- the gathering and processing (G&P) segment delivered record quarterly realized margin of $116-million (Q4 2022 -- $93-million), and an annual record of $395-million (2022 -- $347-million). These results include one-time turnaround recovery fees of $8-million in the fourth quarter and $17-million for the full year. The liquids infrastructure segment achieved record quarterly realized margin of $130-million (Q4 2022 -- $102-million), and an annual record of $496-million (2022 -- $406-million) supported by KAPS, strong utilization at KFS and record volumes through the company's industry-leading condensate system.
• Marketing segment delivers record year -- the marketing segment delivered record annual realized margin1 of $479-million (2022 -- $397-million), above the previously announced 2023 guidance range of $420-million to $450-million. These results were driven by record sales volumes for the segment, including record sales at Alberta EnviroFuels (AEF) and the continued strength of the iso-octane business.
• Strong financial position -- the company ended the year with net debt to adjusted EBITDA of 2.2 times, below the targeted range of 2.5 to three times. During the third quarter, the company received a credit upgrade from S&P and in early January issued $250-million of 30-year notes. The 2023 dividend payout ratio was 53 per cent of DCF, at the low end of the targeted range of 50 per cent to 70 per cent. In 2024, the company is expected to generate strong free cash flow after financing dividends and growth capital investments.
• Progressing ESG priorities -- the company published its latest ESG (environmental, social, governance) performance summary in the fourth quarter. Highlights include lower scope 1 and 2 emissions and lower emissions intensity compared with the prior reporting period. The company is now more than halfway toward achieving its target of reducing emissions intensity by 25 per cent by 2025. Furthermore, the company has secured power purchase agreements to provide 40 per cent of its commercial power needs from carbon-free sources by 2025.

KAPS driving integrated commercial success

Keyera continues to leverage the strength of its integrated value chain to maximize value for customers and shareholders. During the fourth quarter and throughout the year the company added significant long-term agreements with several producers to provide integrated services.

Details include:

• Added approximately 30,000 barrels per day of new long-term KAPS commitments with a weighted average contract term of 12 years at 75 per cent take-or-pay. Approximately half of these volumes begin contributing midway through 2024 and ramp up to 2029.
• Added approximately 33,000 barrels per day of fractionation commitments at KFS with a weighted average contract term of 13 years at 85 per cent take-or-pay. Approximately half of these volumes are new commitments with the remainder being renewals of existing contracts.
• Added various contracts for storage at KFS and other ancillary services such as pipeline connectivity, terminalling services and product marketing.
• Minimal additional capital is required to accommodate these incremental volumes.
• Substantially all of these contracts are with highly credit worthy counterparties.

The fee-for-service contracts support Keyera reaching the upper end of its compound annual growth rate (CAGR) target for adjusted EBITDA holding marketing constant of 6 to 7 per cent, from 2022 out to 2025, and support continued growth beyond 2025. Incremental volumes through Keyera's marketing segment support the company's previously announced increase to its base marketing realized margin guidance of $310-million to $350-million.

2023 guidance update:

• Growth capital spending excluding capitalized interest was $191-million, below the latest guidance range of $200-million to $220-million. The decrease was primarily driven by lower spending on the Pipestone expansion project and various other capital projects.
• Maintenance capital spending was $120-million, above the latest guidance range of $95-million to $105-million. The increase was primarily driven by higher turnaround costs at Rimbey and Pipestone and higher maintenance costs at Wapiti. Substantially all turnaround costs at Pipestone were recovered in 2023.
• Cash taxes were nil.

2024 guidance unchanged:

• On track to reach the upper end of the company's CAGR target for adjusted EBITDA holding marketing constant of 6 to 7 per cent from 2022 out to 2025.
• Growth capital expenditures are expected to range between $80-million and $100-million. This includes about $60-million of sanctioned capital for various optimization projects at Simonette, Wapiti, KAPS and AEF. The remaining $20-million to $40-million is contingent on the sanctioning of KAPS zone 4 and fractionation capacity expansions at KFS.
• Maintenance capital expenditures are expected to range between $90-million and $110-million of which about $20-million is recoverable in 2024 with another $15-million recoverable within the next few years.
• Base marketing realized margin guidance was increased in the fourth quarter and is now expected to range between $310-million to $350-million (previously $250-million to $280-million). Consistent with prior years, marketing segment realized margin guidance will be provided with the first quarter results in early May, after the conclusion of the NGL (natural gas liquids) contracting season.
• Cash taxes for 2024 are expected to range between $45-million and $55-million.

AEF outage

AEF continues to operate well achieving record production in 2023 and strong year-to-date performance. Keyera will be taking the facility off-line for approximately six weeks in the spring of 2024 to pro-actively complete maintenance activities. These maintenance activities are intended to facilitate AEF's continued reliable operations at full capacity until its next scheduled turnaround in 2026. The work is expected to impact 2024 realized margin for the marketing segment by approximately $35-million to $45-million with no impact to maintenance capital. Due to strong near-term market fundamentals, the company still expects to be within its stated base marketing realized margin guidance of $310-million to $350-million for 2024. Keyera will update 2024 marketing segment realized margin guidance with Q1 results in May.

CEO's message to shareholders

"Our strategy is delivering exceptional results. Keyera delivered record results in 2023, as we continued to execute on our strategy of increasing competitiveness; enhancing and extending our integrated value chain; financial discipline and ESG leadership. Results included record financial results driven by record realized margin across all three of our business segments, lower emissions, and best-ever safety performance. Keyera ended the year in a strong financial position, with net debt to adjusted EBITDA at 2.2 times, below our target range of 2.5 to three times.

"KAPS integration strengthens long-term competitive position. The completion of KAPS in 2023 marked the beginning of the next phase of growth for Keyera. We now offer Montney and Duvernay producers a much-needed, competitive alternative to get their products to market. Today we announced that we've added significant long-term integrated agreements with several producers to provide transportation on KAPS, fractionation, storage, other ancillary services and product marketing. These commitments are a testament to the effectiveness of our strategy and competitiveness of our value chain. Going forward, we are better able to compete for volumes and maximize the return on those volumes at each step through our integrated system.

"Record fee-for-service growth. We ended the year with record annual performance from our fee-for-service business segments. The filling of available capacity at the Wapiti and Pipestone gas plants, on our KAPS pipeline system and our increased working interest at KFS, all contributed to the growth of our fee-for-service business in 2023. With continued strong performance from these investments, we are on track to reach the upper end of our CAGR target for adjusted EBITDA holding marketing constant of 6 to 7 per cent from 2022 out to 2025. Continued growth of our fee-for-service business lays the foundation for sustainable future dividend growth.

"Marketing advantage boosts corporate returns. The marketing segment delivered a record $479-million of realized margin this year driven by record sales volumes and continued strength of the company's unique iso-octane business. Our ability to leverage our physical assets and logistics expertise to deliver products throughout North America provides Keyera with a distinct competitive advantage. In 2023, marketing continued to produce strong cash flows that contributed to a strong corporate return on invested capital. Marketing cash flows are reinvested into long-life infrastructure projects, in turn driving growth in higher-quality fee-for-service cash flows.

"Strong free cash flow with clear capital allocation priorities. Two thousand twenty-four is anticipated to be a year of strong free cash flow generation with continued growth from the business and lower capital spending relative to the past five years. Our capital allocation priorities have not changed. They are to first maintain the strength of our balance sheet and then to balance between increasing returns to shareholders and investing in additional capital-efficient growth opportunities. Our strong balance sheet provides maximum optionality to bring forward growth investments when they are ready. Investments will be directed toward opportunities that grow our underlying business and continue to compound returns throughout our integrated value chain.

"Basin growth supports capital efficient growth opportunities. Fractionation expansion opportunities at KFS and a KAPS zone 4 expansion represent capital efficient investment opportunities that support Keyera's growth outlook. Natural gas and crude oil production from the basin hit record highs in the fourth quarter and the Trans Mountain expansion and LNG Canada support the next phase of near-term basin growth. Demand for Canada's energy has never been stronger, and Keyera is positioned to participate in a meaningful way.

"On behalf of Keyera's board of directors and management team I want to thank our employees, customers, shareholders, indigenous rights holders and other stakeholders for their continued support."

Mr. Setoguchi

President and CEO

Keyera

Fourth quarter and year-end 2023 results conference call and webcast

Keyera will be conducting a conference call and webcast for investors, analysts, brokers and media representatives to discuss the financial results for the fourth quarter and year-end of 2023 at 8 a.m. Mountain Time (10 a.m. Eastern Time) on Wednesday, Feb. 14, 2023. Callers may participate by dialling 888-664-6392 or 416-764-8659. A recording of the conference call will be available for replay until 10 p.m. Mountain Time on Feb. 28, 2024 (12 a.m. Eastern Time on Feb. 29, 2024), by dialling 888-390-0541 or 416-764-8677 and entering passcode 274210.

To join the conference call without operator assistance, you may register and enter your phone number to receive an instant automated call back.

A live webcast of the conference call can be accessed through Keyera's website. Shortly after the call, an audio archive will be posted on the website for 90 days.

About Keyera Corp.

Keyera 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.

We seek Safe Harbor.