News

AltaGas Reports Second Quarter Earnings

August 05, 2009

CALGARY, ALBERTA--(Marketwire - Aug. 5, 2009) - AltaGas Income Trust (AltaGas or the Trust) (TSX:ALA.UN) today announced net income of $36.9 million ($0.47 per unit - basic) for the three months ended June 30, 2009, compared to $32.9 million ($0.49 per unit - basic) for the same period of 2008. Net income for the six months ended June 30, 2009 was $74.4 million ($0.96 per unit - basic), compared to $70.5 million ($1.06 per unit - basic) for the same period in 2008.  "Our second quarter earnings reflect the benefits of AltaGas' stable operations, diversified gas and power assets and disciplined risk management. While parts of our business faced a challenging economic environment during the quarter, overall our energy infrastructure business reported good results," said David Cornhill, Chairman and CEO of the Trust. "We expect 2009 to be another year of strong earnings as current growth projects come online and contribute to earnings. In the second quarter we issued $300 million of medium-term notes, which extended our debt maturity profile to better match our long-term assets and significantly increased our financial flexibility to support AltaGas' growth strategy."  AltaGas declared a distribution of $0.18 per trust unit and exchangeable unit payable on September 15, 2009 to unitholders of record on August 25, 2009. The Trust declared total cash distributions of $0.54 per unit in second quarter 2009.   AltaGas expects to convert to a corporation in the second half of 2010. AltaGas expects to continue to implement its growth strategy, while seeking to provide investors with a balance between income and growth. As a corporation, AltaGas' management expects to pay a dividend between $1.10 and $1.40 per share on an annual basis to support the Trust's growth strategy going forward. At the time of conversion, the Board of Directors will approve the dividend policy subject to economic and financial conditions at that time. Until its anticipated conversion, AltaGas expects to continue to pay a monthly distribution of $0.18 per trust unit. "We remain committed to delivering strong returns to investors. AltaGas' business model will remain unchanged, whether our business is structured as a trust or a corporation," said David Cornhill. "We continue to grow our gas and power businesses by optimizing existing infrastructure and developing new assets to increase value for our investors. With 1,900 megawatts (MW) of renewable energy developments and a number of gas business opportunities under assessment, we have secured future growth options for AltaGas."  AltaGas expects capital expenditures for 2009 and 2010 to increase by approximately 20 percent and 30 percent to $300 million and $200 million, respectively. The $240 million committed to date for 2009 is for the completion of the Bear Mountain Wind Park, the completed Sarnia storage and various gas projects. Almost all of the uncommitted $60 million relates to gas projects. Estimated capital expenditures for 2010 are anticipated to be split 80 percent for gas and 20 percent for power.  In the gas business, AltaGas is working closely with producers to pursue plant expansions and new facility developments. These projects are with senior gas producers and focused in northeast B.C. and northwest Alberta, areas of stable and considerable drilling and production activity. AltaGas is also pursuing a sizable gas storage development in Michigan. The Sarnia Storage Project, AltaGas' first storage asset, was completed on time and on budget by the end of second quarter and began to contribute to earnings.  AltaGas' regulatory application for the Harmattan Co-stream Project is currently under review by the Alberta Energy Resources Conservation Board (ERCB). The Trust recently entered a Memorandum of Understanding (MOU) with NOVA Chemicals Corporation (NOVA Chemicals) which provides that AltaGas would deliver all co-stream gas products on a full cost-of-service basis to NOVA Chemicals for an initial term of 20 years, subject to execution of definitive agreements.  The Trust's 1,500 MW of wind power opportunities are dispersed throughout western North America and include two mature developments located in California and Alberta. AltaGas also has 400 MW of run-of-river hydro power opportunities located in B.C. The Log Creek and Kookipi Creek projects, two 10-MW projects with 40-year power purchase arrangements with BC Hydro, are currently in the permitting phase. AltaGas has submitted bids into BC Hydro's 2008 Clean Call for Power for three other run-of-river projects totaling 275 MW.  The Trust's $200 million, 102-MW Bear Mountain Wind Park started delivering clean energy into British Columbia's power grid on July 23, 2009 and is on track to meet or beat its targeted in-service date of November 2009. Upon completion, Bear Mountain Wind Park will feature 34 turbines and will be British Columbia's first operational wind park. To date 24 towers have been erected and two turbines are fully installed with interconnection to the British Columbia power grid.  The unaudited interim Consolidated Financial Statements and Management's Discussion and Analysis, which contains additional notes and disclosures, are available on the AltaGas website (www.altagas.ca).  FINANCIAL HIGHLIGHTS(1):  - Earnings before interest, taxes, depreciation and amortization (EBITDA) were $63.5 million ($0.80 per unit) for second quarter 2009, compared to $53.7million ($0.80 per unit) for the same quarter in 2008.  - Funds from operations were $46.1 million ($0.58 per unit) for second quarter 2009, compared to $50.6 million ($0.75 per unit) for the same period in 2008.  - Total net debt on June 30, 2009 was $592.8 million, compared to $540.2 million at March 31, 2009 and $582.0 million at December 31, 2008. The Trust's debt-to-total capitalization ratio as at June 30, 2009 was 36.1 percent, versus 33.6 percent at March 31, 2009 and 37.8 percent at the end of 2008.  (1) Includes Non-GAAP financial measures. See previous public disclosures available at www.altagas.ca or www.sedar.com for definitions  IN THE SECOND QUARTER:  - Standard & Poor's (S&P) upgraded the Trust's credit rating from BBB- to BBB. S&P indicated that the upgrade reflects AltaGas' increased exposure to long-term contracted gas infrastructure business, prudent financial practices, and effective strategy execution.  - AltaGas submitted its application for the Harmattan Co-stream Project to the ERCB. The project would allow 250 Mmcf/d of rich, sweet natural gas sourced from the NGTL Western Alberta System to be processed using spare capacity at the Harmattan Complex in order to recover ethane and natural gas liquids. Upon approval from the ERCB, construction of the project would take approximately 14 months to complete. The project is expected to commence operations and contribute to operating income in late 2010. Capital cost estimates for the project range between $100 and $120 million.  - AltaGas completed two issues of senior unsecured medium-term notes. The first issue was completed in April for $200 million, carries a coupon rate of 7.42 percent and matures on April 29, 2014. The second was completed the last week of June for $100 million, carries a coupon rate of 6.94 percent and matures on June 29, 2016.  - The Sarnia Storage Project was substantially completed and available to receive injections at the end of June.  SUBSEQUENT TO THE SECOND QUARTER:  - AltaGas acquired common shares of Magma Energy Corp. (Magma) through an additional investment of $6.2 million. Magma completed its initial public offering and began trading on the TSX July 7, 2009. The incremental shares purchased maintained AltaGas' ownership of approximately 5 percent in Magma.  - AltaGas announced that it had entered into a MOU with NOVA Chemicals related to liquids extraction at the Trust's Harmattan Complex as part of the proposed Harmattan Co-stream Project. The MOU provides that the definitive agreements between AltaGas and NOVA Chemicals would be for an initial term of 20 years, AltaGas will deliver all liquids or co-stream gas products on a full cost-of-service basis to NOVA Chemicals and would provide that all capital expenditures and operating costs related to the proposed project will be fully recovered through fees under normal operations. The MOU is subject to normal conditions precedent, including execution and delivery of mutually satisfactory definitive agreements between AltaGas and NOVA Chemicals and a favourable decision on the Harmattan Co-Stream application made by AltaGas to the ERCB.  - AltaGas has erected the first of 34 turbines at its 102-MW Bear Mountain Wind Park ahead of schedule and is delivering power into British Columbia's power grid. Owned and operated by AltaGas, the $200 million project is on track to become British Columbia's first fully operational wind park.  AltaGas will hold a conference call today at 2 p.m. MT (4 p.m. ET) to discuss the second quarter 2009 financial and operating results and other general issues and developments concerning the Trust.  Members of the media, investment community and other interested parties may dial (416) 340-9534 or call toll free at 1 877-240-9772. No pass code is required. Please note that the conference call will also be webcast. To listen, please connect here: http://events.onlinebroadcasting.com/altagas/080509/index.php.  Shortly after the conclusion of the call, a replay will be available by dialing (416) 695-5800 or 1-800-408-3053. The passcode is 5642521. The replay expires at midnight (ET) on August 12, 2009. The webcast will be archived for one year.  FORWARD LOOKING INFORMATION  This Release contains forward-looking statements. When used in this Release the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "seek", "propose", "estimate", "expect", and similar expressions, as they relate to the Trust or an affiliate of the Trust, are intended to identify forward-looking statements. In particular, this Release contains forward-looking statements with respect to, among others things, business objectives, expected growth, results of operations, performance, business projects and opportunities and financial results. Specifically, such forward-looking statements are set forth under: "Consolidated Outlook" and "Capital Projects".  These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Such statements reflect the Trust's current views with respect to future events based on certain material factors and assumptions and are subject to certain risks and uncertainties including without limitation, changes in market competition, governmental or regulatory developments, changes in tax legislation, general economic conditions and other factors set out in the Trust's public disclosure documents.  Many factors could cause the Trust's or any of its business segment's actual results, performance or achievements to vary from those described in this Release, including without limitation those listed above as well as the assumptions upon which they are based proving incorrect. These factors should not be construed as exhaustive. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in this Release as intended, planned, anticipated, believed, sought, proposed, estimated or expected, and such forward-looking statements included in this Release herein should not be unduly relied upon. These statements speak only as of the date of this Release. The Trust does not intend, and does not assume any obligation, to update these forward-looking statements except as required by law. The forward-looking statements contained in this Release are expressly qualified as cautionary statements.  Financial outlook information contained in this Release about prospective results of operations, financial position or cash flows is based on assumptions about future events, including economic conditions and proposed courses of action, based on management's assessment of the relevant information currently available. Readers are cautioned that such financial outlook information contained in this Release should not be used for the purposes other than which it is disclosed herein.  Additional information relating to AltaGas can be found on its website at www.altagas.ca. The continuous disclosure materials of the Trust, including its annual MD&A and Consolidated Financial Statements, Annual Information Form, Information Circular, and Proxy Statement, material change reports and press releases issued by the Trust, are also available through the Trust's website or directly through the SEDAR system at www.sedar.com.  ALTAGAS INCOME TRUST  The material businesses of the Trust are operated by AltaGas Ltd., AltaGas Operating Partnership, AltaGas Limited Partnership, AltaGas Pipeline Partnership and Taylor NGL Limited Partnership (Taylor), as well as AltaGas Energy Limited Partnership and ECNG Energy L.P. (collectively the operating subsidiaries). The cash flow of the Trust is solely dependent on the results of the operating subsidiaries and is predominantly derived from interest earned on loans to the operating subsidiaries and from dividends or returns of capital from equity interests held within the Trust structure.  AltaGas General Partner Inc., through its Board of Directors, the members of which are elected by the Trust at the direction of the holders of the units, has been delegated by the trustee of the Trust to manage or supervise the business and affairs of the Trust. AltaGas Ltd. provides all management, administrative and operating services to the Trust and its subsidiaries.  /T/  CONSOLIDATED FINANCIAL RESULTS       Three Months Ended    Six Months Ended (unaudited)                                     June 30             June 30 ($ millions)                             2009      2008      2009      2008 ----------------------------------------------------------------------------  Revenue                                 285.8     487.1     640.4     931.5 Unrealized gain (loss) on risk  management                               5.9      (2.9)      6.5      (2.3) Net revenue(1)                          114.3     117.3     226.4     228.0 EBITDA(1)                                63.5      53.7     125.6     117.3 EBITDA before unrealized gain (loss)  on risk management(1)                   57.6      56.6     119.1     119.6 Operating income(1)                      45.5      36.9      90.0      84.5 Operating income before unrealized  gain (loss) on risk management(1)       39.6      39.8      83.5      86.8 Net income                               36.9      32.9      74.4      70.5 Net income before tax-adjusted  unrealized gain (loss) on risk  management(1)                           32.3      34.4      69.3      71.8 Net income before tax(1)                 37.7      30.7      76.7      71.2 Total assets                          2,253.0   2,069.2   2,253.0   2,069.2 Total long-term liabilities             966.5     784.6     966.5     784.6 Net additions to capital assets          58.8      17.2      84.6     671.2 Distributions declared(2)                42.7      35.7      83.9      70.3 Cash flows  Cash from operations                    66.7      79.1      97.4     117.2  Funds from operations(1)                46.1      50.6     103.1     106.8 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------                                       Three Months Ended    Six Months Ended                                                 June 30             June 30 ($ per unit)                             2009      2008      2009      2008 ----------------------------------------------------------------------------  EBITDA(1)                                0.80      0.80      1.63      1.77 EBITDA before unrealized gain (loss)  on risk management(1)                   0.73      0.84      1.54      1.81 Net income - basic                       0.47      0.49      0.96      1.06 Net income - diluted                     0.46      0.49      0.96      1.06 Net income before tax-adjusted  unrealized gain (loss) on risk  management(1)                           0.41      0.51      0.90      1.08 Net income before tax(1)                 0.48      0.46      0.99      1.08 Distributions declared(2)                0.54     0.525      1.08      1.05 Cash flows  Cash from operations                    0.84      1.17      1.26      1.77  Funds from operations(1)                0.58      0.75      1.33      1.61 Units outstanding - basic (millions)  During the period(3)                    79.0      67.4      77.3      66.2  End of period                           79.2      70.9      79.2      70.9 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (1) Non-GAAP financial measure; see previous public disclosures. (2) Distributions declared of $0.18 per unit per month commenced in August     2008. January 2008 to July 2008 distributions of $0.175 per unit per     month were declared. (3) Weighted average.  /T/  CONSOLIDATED FINANCIAL REVIEW  Three Months Ended June 30  Net income for the three months ended June 30, 2009 was $36.9 million or 10 percent higher than the $32.9 million reported for the same period in 2008. Net income was $0.47 per basic unit in the current quarter which was less than comparable quarter of $0.49 per basic unit due largely to the equity offerings of February 2009 and June 2008. During the quarter, the gas business performed well despite lower commodity prices and lower drilling activity in the Western Canada Sedimentary Basin (WCSB). The power business reported lower results primarily due to lower revenue from sales at spot power prices, but benefited from hedged prices that were significantly higher than spot prices. Unrealized gains, short-term investment income and lower administrative expenses recorded in the Corporate segment contributed to earnings compared to an operating loss reported in the comparable quarter. The Trust also reported higher interest expense because of the term debt financing undertaken by the Trust in the first half of 2009 which replaced floating debt that had lower effective interest rates. Income tax expense was higher in second quarter 2009 compared to the same quarter in 2008 due to tax on unrealized gains reported in the Corporate segment.  Operating income from the gas business was $24.6 million in second quarter 2009 compared to $23.7 million in same quarter 2008. Results were relatively flat despite the challenging economic environment faced by the gas business. Operating income increased due to no major turnarounds unlike the second quarter of 2008 when the gas business reported $4.9 million lower operating income as a result of turnarounds. Operating income also increased due to an adjustment to Energy Services liabilities related to natural gas transactions, higher extraction volumes processed and higher contracted transmission volumes. These increases were partially offset by lower throughput within most Field Gathering and Processing (FG&P) areas and lower NGL frac spreads.  In the power business, operating income was $19.6 million in second quarter 2009 compared to $29.4 million in second quarter 2008. Operating income decreased due to historic lower spot prices compared to second quarter 2008 when power prices were at historic highs, higher power volumes sold at spot prices and lower contributions from gas-fired peaking plants. The power business benefited from fixed-rate hedges that were higher than the spot prices for electricity during the quarter, as well as lower environmental compliance costs.  On a consolidated basis, net revenue for the quarter ended June 30, 2009 was $114.3 million compared to $117.3 million in same quarter 2008. In the gas business, net revenue decreased due to lower spot commodity prices, lower throughput in most FG&P areas and lower operating cost recoveries. These decreases were partially offset by the adjustment to Energy Services liabilities, higher extraction volumes and higher contracted transmission volumes. In the power business, net revenue decreased due to lower revenue from the sale of power at spot power prices which were partially offset by strong hedge prices and lower costs. The Corporate segment reported higher net revenue due to unrealized gains and short-term investment income.  Operating and administrative expense for second quarter 2009 was $50.8 million, down from $63.4 million in same quarter 2008. The decrease was a result of no turnarounds in second quarter 2009 compared to second quarter 2008 when approximately $6.0 million in turnaround costs were recorded, $2.6 million charge for project development costs in second quarter 2008 and lower administrative costs due to cost control measures in the Corporate segment. The decreases were partially offset by higher costs incurred to support the Trust's growth initiatives in both the gas and power business.  Amortization expense for second quarter 2009 was $18.0 million compared to $16.8 million in the same quarter last year. The increase was due to the growth in AltaGas' asset base from acquisition and construction activities.  Interest expense for second quarter 2009 was $8.0 million compared to $6.3 million in same quarter 2008. The increase was due to a higher average borrowing rate because of the $200 million MTN issuance in April 2009 at a 7.42 percent coupon rate. Interest rate increases were partially offset by lower average debt balances of $590.6 million compared to $615.9 million for the same period in 2008. The average borrowing rate was 6.2 percent in second quarter 2009 compared to 4.6 percent for second quarter 2008.  Income tax expense in second quarter 2009 was $0.8 million compared to income tax recovery of $2.2 million in the same period 2008. The increase was largely due to the tax impact of unrealized gains from risk management contracts.  Six Months Ended June 30  Net income for the six months ended June 30, 2009 was $74.4 million, higher than net income from the same period in 2008 of $70.5 million. Net income was $0.96 per basic unit for the first six months of 2009 which was less than comparable period of $1.06 per basic unit due largely to the equity offerings of February 2009 and June 2008. During the first half of 2009, the gas business performed well despite lower commodity prices and lower drilling activity within WCSB. The power business reported lower results primarily due to lower revenue from sales at spot power prices compared to the same period last year, but benefited from strong hedge prices and lower costs. Unrealized gains and lower administrative expenses recorded in the first half of 2009 in the Corporate segment contributed to a lower operating loss in this segment compared to the same period last year. The Trust reported slightly higher interest expense in the first half of 2009 compared to the same period in 2008 due to higher interest rates but was partially offset by lower average debt balances. Income tax expense was higher in the six months ended June 30, 2009 compared to the same period in 2008 due to higher taxes on unrealized gains partially offset by lower income subject to tax.  Operating income from the gas business was $53.0 million in the first half of 2009 compared to $52.6 million in same period 2008. Results were relatively flat in spite of the challenging economic environment faced by the gas business. Operating income increased primarily due to no major turnarounds in the first half of 2009, the adjustment to Energy Services liabilities, higher extraction volumes processed and higher contracted volumes in the transmission business. These increases were partially offset by lower throughput in most FG&P areas and lower NGL frac spreads received on the unhedged volumes.  In the power business, operating income was $43.7 million in the first half of 2009 compared to $55.3 million in same period 2008. Operating income decreased due to lower revenue from sales at spot power prices, partially offset by stronger hedge prices and lower costs.   The operating loss incurred by the Corporate segment decreased primarily due to higher unrealized gains, no one-time charges unlike the $2.6 million for project development costs in second quarter 2008 and lower administrative expenses primarily due to cost control measures initiated in late 2008.  On a consolidated basis, net revenue for the six months ended June 30, 2009 was $226.4 million compared to $228.0 million in same period 2008. In the gas business, net revenue decreased due to lower throughput in most FG&P areas, lower spot commodity prices and lower operating cost recoveries, partially offset by adjustments to Energy Services liabilities, higher extraction volumes and higher contracted transmission volumes. In the power business, net revenue decreased due to lower revenue from the sale of power at spot power prices, partially offset by strong hedge prices and lower costs. The Corporate segment reported higher net revenue due to unrealized gains and short-term investment income.  Operating and administrative expense for the six months ended June 30, 2009 was $100.8 million, down from $110.6 million in same period last year. The decrease was largely due to no turnarounds unlike the same period last year, when $6.0 million of turnaround costs were recorded. The decrease is further explained by a $2.6 million charge for project development costs in the same period last year. Cost control measures have also resulted in a decline in administrative costs. These decreases were partially offset by incremental costs associated with the addition of new assets and businesses acquired by the Trust during the second half of 2008.  Amortization expense for the six months ended June 30, 2009 was $35.6 million compared to $32.8 million in the same period last year. The increase was due to the growth in AltaGas' asset base from acquisition and construction activities.  Interest expense for the six months ended June 30, 2009 was $13.6 million compared to $13.3 million in the same period last year. The increase was due to a higher average borrowing rate, partially offset by lower average debt balances of $579.6 million compared to $596.6 million for the same period in 2008. The average borrowing rate was 5.4 percent in the first half of 2009 compared to 4.9 percent in the same period in 2008.  Income tax expense in the first half of 2009 was $2.3 million compared to $0.8 in the same period 2008. The increase was due to the tax impact of risk management contracts, partially offset by lower income subject to the tax provision.  Consolidated Outlook  AltaGas is well positioned to deliver another year of strong results in 2009, despite a challenging economic environment. The majority of the Trust's earnings are underpinned by long-term, fee-for-service, cost-of-service or minimum volume commitment contracts. To the extent that the Trust is exposed to NGL frac spreads and Alberta power prices, the Trust has a disciplined hedging strategy which mitigates the impact of NGL frac spread and power price volatility. For the remainder of 2009, two-thirds of NGL and power volumes exposed to spot prices have been hedged at prices similar to hedged prices in 2008. For 2010, over 20 percent of volumes exposed to frac spreads have been hedged at approximately $24/Bbl and approximately 50 percent of Alberta power volumes have been hedged at $77/MWh.  Gas business results are expected to be relatively unchanged in 2009 compared to 2008 since revenue contributions from completed capital projects and fewer turnarounds are expected to offset lower commodity prices. Management expects current producer drilling rates to remain unchanged into the fall of 2009; however, management believes natural gas prices may modestly strengthen when the lack of drilling adjusts the balance between North American natural gas supply and demand. Although this presents a short-term challenge for the FG&P segment, AltaGas believes it is well positioned when the economic environment improves. AltaGas is working closely with its customers to find ways to optimize gas processing capacity in an effort to reduce costs for its customers and rationalize processing capacity in its operating areas. The Trust is also working with producers on engineering estimates and feasibility studies for plant expansions and consolidations. Despite continued low gas prices, the Trust is expediting plans to take advantage of these opportunities.  The gas business is also expected to benefit from the capital projects undertaken in 2008 to increase plant efficiencies and throughput at the Harmattan Complex, the operation of the Sarnia Storage Project and the expansion of the Ethylene Delivery System (EDS), as well as measures to improve efficiencies at other facilities.  The power business results are expected to be lower based on the current forward spot price for power. Lower power prices are expected to be partially offset by the Bear Mountain Wind Park, which is expected to be in commercial service in November 2009. The power segment is also expected to benefit from measures taken to reduce environmental costs.   /T/  RESULTS OF OPERATIONS BY BUSINESS  Operating Income                     Three Months Ended    Six Months Ended                                                 June 30             June 30 ($ millions)                             2009      2008      2009      2008 ---------------------------------------------------------------------------- Gas                                      24.6      23.7      53.0      52.6 Power                                    19.6      29.4      43.7      55.3 Corporate                                 1.3     (16.1)     (6.7)    (23.4) ----------------------------------------------------------------------------                                          45.5      37.0      90.0      84.5 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------   Consolidated Balance Sheets (unaudited)                                                       June 30    December 31 ($ thousands)                                           2009           2008 ----------------------------------------------------------------------------  ASSETS Current assets  Cash and cash equivalents                       $   116,628   $     18,304  Short-term investment                                32,481              -  Accounts receivable                                 154,342        220,280  Inventory                                               506            775  Restricted cash holdings from customers              33,532         24,017  Risk management                                      82,474         92,842  Other current assets                                  7,881          7,705 ----------------------------------------------------------------------------                                                      427,844        363,923 Capital assets                                     1,492,694      1,436,686 Energy arrangements, contracts and relationships     133,931        138,913 Goodwill                                             143,840        143,840 Risk management                                       26,077         31,147 Long-term investments and other assets                28,569         17,744 ----------------------------------------------------------------------------                                                  $ 2,252,955   $  2,132,253 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------  LIABILITIES AND UNITHOLDERS' EQUITY Current liabilities  Accounts payable and accrued liabilities        $   117,550   $    198,232  Distributions payable to unitholders                 14,256         12,943  Short-term debt                                         651          4,493  Current portion of long-term debt                     1,396          1,363  Customer deposits                                    33,532         24,017  Deferred revenue                                      3,233          2,777  Risk management                                      48,408         57,423  Other current liabilities                            16,764         21,927 ----------------------------------------------------------------------------                                                      235,790        323,175 Long-term debt                                       674,193        559,412 Asset retirement obligations                          45,092         41,708 Future income taxes                                  207,572        211,256 Risk management                                       16,792         16,745 Convertible debentures                                16,609         16,682 Other long-term liabilities                            6,268          5,833 ----------------------------------------------------------------------------                                                    1,202,316      1,174,811 Unitholders' equity                                1,050,639        957,442 ----------------------------------------------------------------------------                                                  $ 2,252,955   $  2,132,253 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------  See accompanying notes to the Consolidated Financial Statements.    Consolidated Statements of Income and Accumulated Earnings (unaudited)                                    Three Months Ended       Six Months Ended ($ thousands except                          June 30                June 30  per unit amounts)                  2009        2008        2009       2008 ----------------------------------------------------------------------------  REVENUE  Operating                    $  274,469  $  489,832  $  627,922 $  932,294  Unrealized gain (loss)   on risk management               5,904      (2,896)      6,539     (2,268)  Other                             5,524         149       5,993      1,510 ----------------------------------------------------------------------------                                  285,897     487,085     640,454    931,536 ----------------------------------------------------------------------------  EXPENSES  Cost of sales                   171,609     369,800     414,019    703,503  Operating and administrative     50,848      63,505     100,846    110,707  Amortization:   Capital assets                  15,524      14,448      30,583     27,965   Energy arrangements,    contracts and relationships     2,491       2,376       4,982      4,860 ----------------------------------------------------------------------------                                  240,472     450,129     550,430    847,035 ----------------------------------------------------------------------------  Foreign exchange gain                186          58         337        113 Interest expense  Short-term debt                     444         389         637      1,173  Long-term debt                    7,508       5,929      13,019     12,144 ---------------------------------------------------------------------------- Income before income taxes        37,659      30,696      76,705     71,297 Income tax expense (recovery)  Current income tax                  179         198         266        217  Future income tax                   618      (2,413)      2,042        590 ---------------------------------------------------------------------------- Net income                        36,862      32,911      74,397     70,490 Accumulated earnings,  beginning of period             711,271     547,991     673,736    510,412 ---------------------------------------------------------------------------- Accumulated earnings,  end of period                $  748,133  $  580,902  $  748,133 $  580,902 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------  Net income per unit  Basic                        $     0.47  $     0.49  $     0.96 $     1.06  Diluted                      $     0.46  $     0.49  $     0.96 $     1.06  Weighted average number of  units outstanding (thousands)  Basic                            78,955      67,382      77,288     66,223  Diluted                          79,962      68,302      78,247     67,157  See accompanying notes to the Consolidated Financial Statements.    Consolidated Statements of Comprehensive Income and Accumulated Other Comprehensive Income (unaudited)                                    Three Months Ended       Six Months Ended                                              June 30                June 30 ($ thousands)                       2009        2008        2009       2008 ----------------------------------------------------------------------------  Net income                    $   36,862  $   32,911  $   74,397 $   70,490  Other comprehensive income  (loss), net of tax  Unrealized net gain (loss)   on derivatives designated   as cash flow hedges             (5,300)    (11,480)      4,397    (14,866)  Reclassification of   available-for-sale financial   assets as a result of   business acquisition                 -           -           -    (17,873)  Reclassification to net   income of net gain (loss)   on derivatives designated as   cash flow hedges pertaining   to prior periods               (10,596)        477     (15,056)    (2,423) ----------------------------------------------------------------------------                                  (15,896)    (11,003)    (10,659)   (35,162) ---------------------------------------------------------------------------- Comprehensive income          $   20,966  $   21,908  $   63,738 $   35,328 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------  Accumulated other  comprehensive income,  beginning of period          $   36,806  $    3,010  $   31,569 $   27,169 Other comprehensive income,  net of tax                      (15,896)    (11,003)    (10,659)   (35,162) ---------------------------------------------------------------------------- Accumulated other  comprehensive income,  end of period                $   20,910  $   (7,993) $   20,910 $   (7,993) ---------------------------------------------------------------------------- ----------------------------------------------------------------------------  See accompanying notes to the Consolidated Financial Statements.    Consolidated Statements of Cash Flows (unaudited)                                    Three Months Ended       Six Months Ended                                              June 30                June 30 ($ thousands)                       2009        2008        2009       2008 ---------------------------------------------------------------------------- Cash from operations  Net income                   $   36,862  $   32,911  $   74,397 $   70,490  Items not involving cash:   Amortization                    18,015      16,824      35,565     32,825   Accretion of asset    retirement obligations            771         498       1,537        955   Unit-based compensation           (113)         95         (64)       195   Future income tax expense    (recovery)                        618      (2,413)      2,042        590   Gain on sale of assets             (28)       (311)        (28)      (318)   Equity income                     (464)        (36)     (1,070)      (581)   Unrealized (gain) loss         (10,466)      2,896     (11,101)     2,268   Other                              885         115       1,791        395  Asset retirement obligations   settled                              4        (161)       (145)      (217)  Net change in non-cash working   capital                         20,616      28,644      (5,558)    10,597 ----------------------------------------------------------------------------                                   66,700      79,062      97,366    117,199 ---------------------------------------------------------------------------- Investing activities  Increase (decrease) in customer   deposits                        (5,591)     (6,022)     (9,515)       354  Decrease in note receivable           -       5,500           -      5,500  Capital expenditures            (54,182)    (32,545)    (88,544)   (84,233)  Disposition of capital assets         -       8,843           -      8,843  Distributions from equity   investments                         81          61         299        137  Acquisition of short-term   investments                    (27,920)          -     (27,920)         -  Acquisition of long-term   investments and other assets         -        (399)    (10,000)  (261,005) ----------------------------------------------------------------------------                                  (87,612)    (24,562)   (135,680)  (330,404) ---------------------------------------------------------------------------- Financing activities  Repayment of short-term debt       (429)     (7,260)     (3,842)    (1,252)  Net issuance (repayment)   of revolving long-term debt   (145,717)   (126,130)   (184,301)   153,666  Issuance of long-term debt      295,476           -     295,476          -  Repayment of long-term debt        (347)       (733)       (684)      (733)  Distributions to unitholders    (42,583)    (34,868)    (82,617)   (68,066)  Net proceeds from issuance   of units                         7,131     117,713     112,606    125,424  Net proceeds from issuance   of warrants                          -           -           -      4,500 ----------------------------------------------------------------------------                                  113,531     (51,278)    136,638    213,539 ---------------------------------------------------------------------------- Change in cash and cash  equivalents                      92,619       3,222      98,324        334 Cash and cash equivalents,  beginning of period              24,009       9,563      18,304     12,451 ---------------------------------------------------------------------------- Cash and cash equivalents,  end of period                $  116,628  $   12,785  $  116,628 $   12,785 ----------------------------------------------------------------------------  See accompanying notes to the Consolidated Financial Statements.   Supplementary Quarterly Financial Information (unaudited)  ($ millions unless otherwise  indicated)                   Q2-09     Q1-09     Q4-08     Q3-08     Q2-08 ---------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS(1) Net Revenue(2)  Gas business   Extraction and Transmission  42.4      44.6      42.7      43.8      44.1   Field Gathering and   Processing                   32.6      33.4      33.6      38.1      40.6   Energy Services               6.1       6.1       3.3       4.4       3.0 ----------------------------------------------------------------------------                                81.1      84.1      79.6      86.3      87.7  Power Generation              23.4      27.5      35.9      32.8      31.9  Corporate                     11.3       1.2      10.1       3.6      (2.8)  Intersegment Elimination      (1.5)     (0.7)      0.2         -       0.5 ----------------------------------------------------------------------------                               114.3     112.1     125.8     122.7     117.3 ----------------------------------------------------------------------------  EBITDA(2)  Gas Business   Extraction and Transmission  28.1      29.9      29.0      25.4      25.7   Field Gathering and    Processing                   8.7      10.5      10.3      14.2      12.8   Energy Services               3.0       3.0       0.1       1.4      (0.4) ----------------------------------------------------------------------------                                39.8      43.4      39.4      41.0      38.1  Power Generation              21.9      26.0      34.4      31.8      31.4  Corporate                      1.8      (7.1)     (2.9)     (4.7)    (15.7) ----------------------------------------------------------------------------                                63.5      62.3      70.9      68.1      53.8 ----------------------------------------------------------------------------  Operating Income (Loss)(2)  Gas Business   Extraction and Transmission  20.6      22.7      22.2      18.0      18.8   Field Gathering and    Processing                   1.4       3.2       3.1       7.2       5.8   Energy Services               2.6       2.5      (0.3)      0.8      (0.9) ----------------------------------------------------------------------------                                24.6      28.4      25.0      26.0      23.7  Power Generation              19.6      24.1      32.5      30.1      29.4  Corporate                      1.3      (7.8)     (3.4)     (5.4)    (16.1) ----------------------------------------------------------------------------                                45.5      44.7      54.1      50.7      37.0 ----------------------------------------------------------------------------  (1) Columns may not add due to rounding. (2) Non-GAAP financial measure.   Supplementary Quarterly Operating Information (unaudited)                                Q2-09     Q1-09     Q4-08     Q3-08     Q2-08 ---------------------------------------------------------------------------- OPERATING HIGHLIGHTS Extraction and Transmission  Extraction inlet gas   processed (Mmcf/d)(1)         798       882       790       781       759  Extraction volumes   (Bbls/d)(1)                39,334    42,898    35,426    35,591    35,335  Transmission volumes   (Mmcf/d)(1)(3)                345       348       367       381       390  Frac spread - realized   ($/Bbl)(1)(4)               22.05     25.29     28.41     26.02     27.61  Frac spread - average spot   price ($/Bbl)(1)(4)         16.34     15.20     18.58     36.92     30.32 Field Gathering and  Processing  Capacity (gross Mmcf/d)(2)   1,172     1,172     1,172     1,178     1,178  Throughput (gross   Mmcf/d)(1)                    475       480       521       545       554  Capacity utilization (%)(1)     41        41        44        46        47 Energy Services  Energy management service   contracts(2)                1,727     1,707     1,711     1,572     1,514  Average volumes transacted   (GJ/d)(1)                 287,315   374,113   291,353   298,608   303,212 Power Generation  Volume of power sold  (GWh)(1)                       672       664       664       651       648  Average price realized on   sale of power ($/MWh)(1)    63.84     74.33     87.30     83.10     89.46  Alberta Power Pool average   spot price ($/MWh)(1)       32.31     63.01     95.18     80.36    107.56 ----------------------------------------------------------------------------  (1) Average for the period.  (2) As at period end. (3) Excludes natural gas liquids pipeline volumes. (4) AltaGas reports an indicative frac spread or NGL margin, expressed in     dollars per barrel of NGL, which is derived from Edmonton postings for     propane, butane and condensate and the daily AECO natural gas price.   Other Information  DEFINITIONS  Bbls/d          barrels per day Bcf             billion cubic feet GJ              gigajoule GWh             gigawatt-hour Mcf             thousand cubic feet Mmcf/d          million cubic feet per day MW              megawatt MWh             megawatt-hour  /T/  ABOUT ALTAGAS  AltaGas Income Trust is one of Canada's largest and fastest growing integrated energy infrastructure organizations. The Trust creates value by growing and optimizing gas and power infrastructure, including a focus on renewable energy sources.  AltaGas Income Trust's units are listed on the Toronto Stock Exchange under the symbol ALA.UN. The Trust is included in the S&P/TSX Composite Index, the S&P/TSX Income Trust Index and the S&P/TSX Capped Energy Trust Index.

Media: AltaGas Income Trust Adrianne Lovric (403) 691-9873 Email: adrianne.lovric@altagas.ca or Investment Community: AltaGas Income Trust Sheena McKellar (403) 691-9855 Email: sheena.mckellar@altagas.ca or AltaGas Income Trust Investor Relations 1-877-691-7199 Email: investor.relations@altagas.ca Website: www.altagas.ca