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Keyera Corp KEY

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Morningstar’s Analysis

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A Revamped Look at No-Moat Keyera; Updating Our Fair Value Estimate to CAD 27

Stephen Ellis Sector Strategist

Analyst Note

| Stephen Ellis |

After taking a fresh look at Keyera, we reaffirm our no-moat rating and update our fair value estimate to CAD 27. In the near term, we are optimistic that Keyera will benefit from a healthy commodity price outlook and are supportive of the firm’s KAPS (Key Access Pipeline System) project, which is part of a larger pivot toward more stable long-term cash flows. The pipeline will stretch from northwest of Grand Prairie to Keyera’s Fort Saskatchewan liquids hubs and will consist of pipelines for condensate and NGL mix. It will be connected to the firm’s Northern plants (Pipestone, Wapiti, and Simonette) concomitantly with several third-party plants. The system is set to come online in early 2023 and is already 70% contracted with long-term agreements averaging 14 years. More broadly, we expect strong fundamentals and steady output from upstream producers in the region to bolster Canadian midstream, and Keyera is in an opportune position to benefit given the geographical positioning of its assets.

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Company Profile

Business Description

Keyera is a midstream energy business that operates primarily out of Alberta, Canada. Its primary lines of business consist of the gathering and processing of natural gas in western Canada, the storage, transportation, and liquids blending for NGLS and crude oil, and the marketing of NGLs, iso-octane, and crude oil. The firm currently has interests in over a dozen active gas plants and operates over 4,000 km of pipelines.

144 - 4th Avenue SW, Suite 200, 2nd Floor
Calgary, AB, T2P 3N4, Canada
T +1 403 205-7670
Sector Energy
Industry Oil & Gas Midstream
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 959