(under IFRS and all amounts in US dollars unless otherwise stated)
VANCOUVER, May 11, 2017 /PRNewswire/ - Alterra Power Corp. (TSX: AXY) ("Alterra" or the "Company") is pleased to report its financial and operating results for the quarter ended March 31, 2017. For further information on these results please see Alterra's Condensed Consolidated Interim Financial Statements and Management's Discussion and Analysis ("MD&A").
At March 31, 2017, Alterra consolidated 100% of the results of operations from its Icelandic subsidiary HS Orka, while Alterra's interests in the Toba Montrose, Dokie 1, Shannon, Jimmie Creek, and Kokomo renewable power projects were accounted for as equity investments. In certain statements in this news release, Alterra's results are disclosed as Alterra's "net interest", by which the Company means the effective portion of operating results that the Company would have reported if each of HS Orka (66.6%), Toba Montrose (40%), Dokie 1 (25.5%), Shannon (50% sponsor equity interest), Jimmie Creek (51%), and Kokomo (90% sponsor equity interest). Management believes that net interest reporting, although a non-IFRS measure, provides the clearest view of Alterra's performance. Refer to our MD&A for further information on non-IFRS measures. The Company also has disclosed information below regarding Adjusted EBITDA, another non-IFRS measure. Please refer to the Company's definition of Adjusted EBITDA and further commentary thereto, which is incorporated in the Financial Results table below.
Highlights for the quarter and subsequent period include:
- Revenue and Adjusted EBITDA: Consolidated revenue increased by 22% to $18.2 million in 2017, and net interest revenue increased by 19% to $16.6 million, predominantly due to increased retail sales and an increase in aluminum prices during the quarter at HS Orka (21% of sales at HS Orka are linked to the price of aluminum), and increased unit pricing received at Shannon under its power hedge. Adjusted EBITDA increased over 2% on a consolidated and net interest basis to $6.6 million and $4.4 million, respectively, primarily due to increased unit pricing at Shannon.
- Fleet generation: The Company achieved fleet-wide generation of 97.0% of its budgeted generation (net interest) for the current quarter.
- Geothermal field improvement at Reykjanes: Field enhancement efforts (including well venting and turbine pressure adjustments) have achieved positive results, arresting the previous generation decline and resulting in increased generation compared to the fourth quarter of 2016. The Company expects further field and plant output improvement from the drilling of planned new wells, well work-overs, and potentially from the recent deep drilling project well drilled in Iceland.
- Completion of potential high output well at Reykjanes field: A deep drilling program at Reykjanes was completed in January 2017 ("IDDP 2"), reaching a depth of 4,650 meters, making it the deepest well drilled in Iceland. Initial well readings (427oC temperature, 340 bars pressure) indicate supercritical conditions at the base of the well. Based on these early readings, if IDDP 2 is able to be utilized for electric production, it may produce as much as 30-50 MW of electrical output at the Reykjanes plant. The final production potential for the well will not be known until late 2018 after further tests and research are completed.
- 200 MW Flat Top wind project:
- Offtake: The Company is currently negotiating a power hedge as Flat Top's primary revenue contract and anticipates the agreement to be finalized in the second quarter of 2017.
- Project financing: The Company has agreed to terms and entered exclusivity with lenders and tax equity providers to provide 100% of the Flat Top project financing, and the drafting of definitive documents for the financing is nearly complete. The Company also plans on selling a 49% project partnership interest in conjunction with closing project financing, and has advanced to late-stage negotiations with select parties.
- Acquisition of Boswell Springs:
- In April, the Company acquired a 320 MW portfolio of wind development projects located in Albany County, Wyoming. The Company expects the project to achieve commercial operations in 2020, selling 100% of its output under a 20-year power purchase agreement with Rocky Mountain Power. The Company commenced construction of the project's main power transformers in 2016 in anticipation of closing the acquisition in 2017, and the project is expected to qualify for production tax credits at the full rate.
- The Company anticipates capital costs to be in-line with current industry standard for a project of this size and will be advancing the project in the normal course, with permitting, transmission and other customary project development-related work still to be completed. The Company expects that the project will generate approximately $20.0 million of Adjusted EBITDA per year over the first five full years of operations. This estimate of Adjusted EBITDA constitutes a "forward-looking statement" and "forward-looking financial information", subject to the cautionary notes discussed herein. Readers are cautioned that actual results may vary materially from this forward-looking financial information.
- Advancement of other USA wind projects: The Company continued advancement of several other wind projects in its USA development portfolio (comprised of projects that are owned and projects subject to cooperation with other developers), including resource and transmission studies, submissions into offtake requests for proposals and other development activities.
- Spartan: Preliminary construction for the 13.5MWDC solar project in East Lansing, Michigan ("Spartan") commenced in March 2017, and commercial operations are expected to commence in the fourth quarter. The project will sell 100% of its power to Michigan State University for 25 years. Alterra will co-own the project with Inovateus Solar, LLC on completion of project financing, which is expected in mid-2017. The Company anticipates owning at least 85% of the project at closing.
- Distributions: The Company received distributions during the quarter from equity investments of $1.7 million and another $0.2 million subsequent to quarter-end. HS Orka declared a dividend of which the Company's share is $2.5 million and is expected to be paid in 2017.
- Shareholder dividends: A quarterly cash dividend of C$0.0125 per common share was paid on March 15, 2017. Subsequent to March 31, 2017, the Company approved a quarterly dividend in the amount of C$0.0125 per common share. The cash dividend will be distributed on or about June 15, 2017, to holders of record of common shares as of the close of business on May 31, 2017.
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