Q1 2020 Earnings Call
All participants who started by your conference is now ready to begin.
Good morning, ladies and gentleman welcome to the TC pipelines LP Twentytwenty first quarter results conference call I'd now like turn the meeting over to MS. Rhonda Amundson. Please go ahead itself and so.
Thank you operator, and good morning, everyone welcome to TC pipelines first quarter 2020 conference call.
I'm joined today by our President Nathan Brown.
In General manager Jeanine Watson, and our principal financial Officer, John Morris.
Please note that a slide presentation will accompany they remark is available on our web site at TC pipelines LP Dot com, where it can be found in the investor section under the heading events and presentations.
Nathan will begin the call today with a review of TC pipelines 2021st quarter results.
He will provide a commercial update on the partnership's assets and our growth program, following which Chuck will provide a review of our financial results for the first quarter.
I'm, a little bit churn and wrap up my remarks, and close with some key take away.
Following their prepared remarks, I will ask the conference operator to coordinate your question.
Before we begin I would like to remind you that certain statements made during this conference will be forward looking regarding future events and our future financial performance.
All forward looking statements are based on our belief as well as assumptions made by information currently available to us.
These statements reflect our current views with respect to future that's and are subject to various risks uncertainties assumptions as discussed in detail in or 2900, 10-K, as well as or subsequent filings with the Securities Exchange Commission.
If one or more of these risks or uncertainties materialize or is the underlying assumptions prove incorrect actual results may differ materially from those described in the forward looking statements.
Please also note that we use the non-GAAP financial measures EBITDA, adjusted EBITDA and distributable cash flow during our presentation.
EBITDA and adjusted EBITDA or approximate measures of our operating cash flow during the current earnings period and reconcile directly to net income.
Attributable cash flows presented to provide a measure of cash generated during the period to evaluate our cash distribution capability.
As stated in our press release. This morning, we've made a definition will change to adjusted EBITDA and this will be covered later in the call they check.
These measures are provided as a supplement to GAAP financial results and we provided a reconciliation to the most closely related GAAP measures in our SEC filings with that I'll turn the call over to Nathan.
Thanks, Rhonda good morning, everyone and thank you for joining us today.
Let me begin by saying that with living an unprecedented times koby 19 pandemic habits at a significant impact on people around the world.
On behalf of everyone TC pipelines, we truly help you in your families are healthy and say, it's really going to certain times I'd also like express our sincere thanks to the frontline healthcare and other essential service workers.
Well, we're seeing a personal safety and sure well being of others.
We have Tc pipelines in concert with our sponsor PC energy are very focused on the health and safety of our employees contractors and which we operate.
Well the World Health organization Workover Nineteena global endemic in early March or business continuity plan to put in place across our companies I've got to continue to safely and effectively operator assets and execute on our capital programs.
Services, we provide a broadly considered essential critical give an important role our infrastructure plays and delivering energy to people in businesses across the United States.
To do this many of US are working remotely while those but it must physically be at work are falling winglets health hygiene and distancing verticals.
These actions in surety energy that is vital to the daily lives in so many continues to be delivered seamlessly across our country.
I'll now for our first quarter financial results.
As outlined in our news release of looking at Slide four I'm pleased to report TC pipelines solid quarterly results, what our portfolio pipeline Apis continuing to perform as expected.
Definitely 90% of our cash flow coming from long term take or pay contracted assets worth when do a great degree from the recent volatility associated with volume throughput and commodity prices being experienced by many others in the energy business.
Customer demand for our service remains strong despite the impact of in 19 on the bottom North American economy.
Aside from the attack normal maintenance activities planned regulatory adjustments and seasonal factors to date, we've not seen any meaningful change in utilization of our assets, which further reinforces the critical nature of our infrastructure.
We generate $88 million net income during the first quarter 2020 slightly less than the 93 million in the same period.
[music].
EBITDA was 134 million for the first quarter and adjusted EBITDA was 138 million compared to 142 billion and 152 million respectively generated between 19 over same period.
Decreases were largely result in negotiated rate decreases on certain of our pipeline.
Together with lower short term discretionary sales related to the warmer winter, we all experienced this year.
The rate decreases were anticipated coming into 2020, and seasonally warm winter weather acted to essentially limit our upside compared to the additional margin revenue, we're able to achieve in the colder winter last year.
We generate 88 million distributable cash flow in the first quarter 2020, compared to 20 or 2019, where do you see up with 116.
Decrease is largely a result of lower revenues as already discussed together with higher maintenance and integrity capital expenditures.
Our maintenance costs, although a drag on distributable cash flow for lots of positive environment of higher natural gas flows and these costs will be added to rate base and enjoy a return on capital since usually homes.
We paid out 47 million a distributions to unit holders during the first quarter together with 8 million for our class B units.
The partnership also declared its first quarter distribution of 65 cents per common unit, which is consistent with a quarterly this just distributions in 2019 for each quarter and tweaking.
The stability of our low risk business model is underpinned by long term take or pay contracts and strong demand for our central energy services provides the basis for a solid financial performance and our ability to maintain the distributions to unit holders even in periods of at the economic stress and uncertainty.
Chuck will discuss financial results and a little more detail that are in the call.
We also continue to that organic growth program work continued on both our Geez you Express project in test workstation.
Our kids and she has organic projects are progressing well will provide for incremental capacity on a PNG to U.S. pipeline system in the northeast.
So to speak the changes to work practices and other restrictions put in place by government and health authorities in response to tell the 19 and then it could have an impact on construction timeline.
We didn't we believe this will not be material their operation, but long term impact kilobit 19 in fact and associated effect is certainly it's uncertain at this time.
We continue to develop other projects across our portfolio, including your question has to buy compression projects in North laws Express project, which are discussed in previous calls rather low impact personally projects.
Janine will discuss these and other commercial developments in more detail and remember too.
During the first quarter within our financial position or bank leverage ratios Bucks Me 3.4 times distribution coverage also made very strongly to possibly 1.9 times.
<unk> financial performance and the returns we have generate for unitholders. Your ongoing success depends on our ability to bounce profitability with safety environmental and social responsibility.
Well, I stressed and safety and related to their critical priorities for us.
Our general partner Theater. He has the five year track record of safe and reliable operations were committed affecting environment and all that we do.
Our natural gas assets are critical to the quality of life excuse me, Sir the believes our systems will be important contributors in cheating greenhouse gas emission targets for approved carpet for North American beyond.
I'll turn call over gene watching our VP and general manager for additional color on our assets or commercial developments together with the market outlook.
Thanks, Thanks, Nathan and good morning, everyone.
Moving onto slide five.
TPP is assets are highly contracted critical infrastructure.
Good evidence in their steady performance this past quarter.
As Nathan noted these pipeline systems have affirmed take or pay contract structures, but largely insulate them from volatility associated with fluctuations in markets for throughput.
Despite the slowdown of economic activity due to cobot 19, we saw no meaningful changes in utilization of our assets in Q1, when compared to our expectation and based on prior year thick experience other than those we expect to see as the weather changes during the spring months or that are tied to our maintenance activities.
And our assets encountered no material credit issue. During this period nor were there any noteworthy contract expirations are non renewal.
Turning to our largest assets effective January 1st GTN implemented the 6.6% recourse rate step down agreed to in its 2018 settlement with its shipper.
Mild weather conditions experienced in the Pacific Northwest This spring and the absence of major disruptions on other neighboring system meant that our marketing team did not have as many opportunities to make short term sales as was the case in Q1 of 2019.
Nonetheless, GTN large portfolio of long term take or pay contract together with the incremental flows coming down to kingsgate as the result of TC energies ongoing debottlenecking projects upstream enable GTN to be solid performer for TCP.
Looking forward, we anticipate about 250000 Dekatherms a day of additional upstream capacity will become available for transportation to GTN in the second half of Twentytwenty.
As discussed in past calls these volume increases will bring the upstream system capacity up to parity with GTN current maximum capacity.
Northern borders equity earnings for Q1, we're slightly elevated when compared to the same time frame last year.
As northern borders team successfully marketed its operational capacity in the final months of winter.
And in more recent developments on me first northern border filed a tariff and then with the FERC to establish a well 111000 be to you.
Right.
11000, BP you heat content safe Harbor provision for the natural gas it receives into many receipt points across the system.
This step with taken in response to the increased production and higher Btwos supply coming out of the Wilson Basin, which has resulted in the BP levels above 1100 being present at many Bakken receipt points onto northern border.
By proposing a safe harbor BP level of 1100 as opposed to a maximum BP level or a hard cap.
Northern border can continue to receive natural gas and excessive that's level, but only as long as it is able to blend the overall system content to a level of no higher than 1100 BT.
The the change of being proposed are designed to ensure that continued safe and reliable transportation of natural gas to northern border system and to downstream market.
And we remain committed to working towards an economical expansion project to provide incremental take away capacity out of the Bakken a potential projects that could include reversing the direction of flow on our bites and pipeline.
Now the impact of recent global events on the development of this project cannot be fully assessed at this point.
But we may experience, a slow down of our development activities compared to the pace, we were expecting at the beginning of this year and potentially a push back at the project in service date by perhaps six to 12 months into the second half of 2023.
Moving on Great Lakes continues to be a steady performer with equity earnings roughly on par with Q1 of 2019.
And in light of current market uncertainties, we find it significant the great lakes with recently able to hold a successful open season for firm capacity. This April marketing a total of about 570000 Deco Therms the day via multiple contracts with various parties.
For an average term of just over 18 months.
About half of these arrangements are set to commence in November of this year. So some have start dates in 2021 and twentytwenty too.
We believe this is a positive indicator of the ongoing value of our asset base, even during a challenging times as challenging as the current cobot 19 crisis.
40, <unk> quarterly results on the remainder of our transmission system, we're all roughly comparable to Q1 of 2019.
These assets are highly contracted on affirm basis, and each has the opportunity to make incremental short term sales.
Mild weather meant that not many incremental sales opportunities arose this past quarter versus quarter Q1 of last year.
And finally, all of our assets operated at high levels of availability with no significant safety or operational issue.
Turning now to slide six.
We introduced this chart last quarter and it illustrates our capex outlook for our major projects over the 2020 to 2023 period.
It is largely unchanged from what we presented in February.
We continue to advance the projects that make up Tc pipelines significant platform for growth with business continuity plans in place across our footprint.
Allowing our operator to continue to effectively operate our assets and execute on our capital program.
To date, we've experienced no slowdown of our permitting preconstruction or construction activities, nor any material changes to our planned capital expenditures.
However, it is too early to determine whether the pandemic will have any long term impact on our capital programs.
We continue to monitor the impact that the cobot related safety protocols will have on productivity as we execute on our projects.
The bars on the graph represent Tc pipelines proportionate share.
Oh, the estimated capex based on our ownership levels.
North Baja Iroquois. These projects are of course still subject to a few extra layers that further approval.
But we have included them given their advanced stages of development.
Permit acquisition work on both these project has continued as anticipated in Q1.
[noise] PNG T. Atlas project also continues to proceed as anticipated.
They threem of Portland Express is currently under construction with the contractor, having put cobot 19 safety protocols into effect.
And the project remains on schedule to be in service on November one of this year.
We continue to proceed with the Westbrook Express project at PNG T.S. with the FERC section seven feet permits for phases, two and three anticipated to be filed in about July of this year.
These two phases requires certain capacity enhancement work to be completed upstream of PNG T. S to achieve their planned in service dates of November of 2021 and Twentytwenty too.
Engineering and permit acquisition efforts continued to be on track for GTN Express.
And we are progressing are tough Gray express project as per normal ports.
We continue to plan to self fund the capital during this period through a combination of debt at the outset levels and contribution from TC pipelines. The latter funded with cash from operations together with our revolving credit facility if required.
Though a small portion of our planned maintenance activities in Q1 have been shifted to subsequent quarters. If here as the result of our business continuity Nuti planning in response to Cobot 19, our proportionate share of maintenance Capex is still expected to be about 113 million and Twentytwenty again self funded.
As always this capex is expected to be added to our pipeline systems effective bases.
And.
Effective rate basis, and recovered through fixed negotiated rate contracts or recourse rates over time.
I'll now turn the call over to Chuck Norris, Our principal financial officer to discuss our first quarter in more detail.
Thanks, Good morning, everyone.
Moving on to slide seven they'll know review the partnership's first quarter 2020 financial results.
Net income attributable to controlling interests in the first quarter was $88 million for dollar 21 person, that's compared to $93 million or dollar 20 presented in the first quarter of 2019.
This represents a 5% decrease year over year and was primarily reflect the of the scheduled reproductions on certain of our pipelines. The other with warmer winter weather. This year that offered fewer opportunities to benefit from short term sales.
These decreases were partially offset by additional revenue from our new contracts with PGT offs that came into service in late 2019.
EBITDA was $134 million in Q1 of the 2020 versus $142 million, the previous year or 6% lower primarily as a result at the lower revenues fell in our consolidated a pipe ones that I just noted.
Well. It also led to highlight the we've made a change in how we calculate adjusted EBITDA.
Passed we have included this measure.
And adjusted for nonrecurring items, so were significant but not reflective of underlying operations.
Going forward, we would also adjusted EBITDA to remove earnings generated from our equity investments and our cash distributions received from those equity investments.
We have retest the results from our quarter ended March 31st 29 team to conform to this new presentation.
We believe that this revised measure more closely aligns with similar non-GAAP measures presented by your peers and provides a better representation of our operating performance.
Southern Hansman or adjusted EBITDA for the first quarter of 2020 was $138 million compared to $152 million and 29 team approximately 9% lower.
The decrease was the result of the lower revenues together with a war distribution from our equity investment in New York Wall.
Your husband, making quarterly payments to its owners of surplus cash on its balance sheet from the date of our investment required and the Q4 2019 payment Mark the final installment associated with that obligation.
The partnership distributions of $47 million to common unit holders in the first quarter.
So we know that was paid in Q1 or 29 team.
Also paid $8 million World class B units, and 20 $25 million lower than that was food and 29 team.
Election year over year resulted from our maintenance capex or GTN, which produced distributable cash flows generated.
As mentioned earlier, we declared our first quarter 2020 distribution of 65 cents per common unit.
This is consistent with that declared in previous quarters in 2019 and for each quarter in 2018.
I'm just a real cash flows were $88 million in the first quarter of 2020 $28 million lower year over year.
The primary drivers for the decrease were lower earnings and adjusted EBITDA.
Together with higher maintenance and integrity capital expenditures of GTN, resulting from higher system utilization.
The higher maintenance costs, although drag on distributable cash flow.
<unk> looks like the positive environment, apart or natural gas flows and these costs will be added three days lower truck the return on invested capital through future tolls.
Partially offsetting these factors was a 3 million dollar reduction in interest expense attributable to our 68 million dollar lower average debt balance in the first quarter or 2020 compared to the same period in 2019.
Turning to slide eight.
Revenues from our consolidated pipelines of $101 million for the first quarter of 2020 were lower than that at the same quarter last year by $12 million.
This is probably really resulted the schedule rate reduction was 6.6% on June tea on the effect of January 1st of this year and a 10.8% decrease on Tuscarora effective August 1st of 2019.
Other with lower discretionary services sold by GTN, PNG, Pos and north Baja during the period.
These decreases were partially partially offset by the new revenues from P. and she's just as Gokul drugs that went into service on November for some 29 team.
Equity earnings in the first quarter of 2020 were $1 million higher than under the same quarter in 2019.
Operating maintenance in administrative expenses during the first quarter were $2 million lower than in the second quarter 2019, as result of lower property taxes on buys and MPN GTS and overall decrease and allocated employee costs.
Preciation expense was unchanged from the first quarter and 29 team and financial charges were $3 million were 14% lower in the first first quarter 2020 versus the same period in 2019.
Ongoing reductions and her outstanding debt balance, which was $68 million lower at March 31st 2020 compared to the previous year.
Moving onto our financial position on slide nine.
Or help me financial position is reflective of the proactive measures that we have taken over the past two years.
Our balance sheet as strong with a solid capital structure underpinned by our high quality energy infrastructure pipeline now subs.
Our investment grade credit ratings, including our one notch upgraded by S&P from Triple B minus Triple B bloodless your provide us with the financial flexibility as we look to organically grow portfolio in the future and we believe the ratings reflect are solid financial condition and outlook.
A significant portion of our long term contracted revenues with investment grade Counterparties, we have not experienced any collection issues on our receivables to date.
Well execute our suite of organic growth projects on a self funding basis without the need to access the equity capital markets.
Helpful market conditions, and 2020 of them significantly impacted by the Kogut 19 pandemic.
Oil price decline, resulting in periods of heightened volatility reduced liquidity.
Despite this our liquidity position remains strong underpinned by a stable cash flow from operations cash on hand, and full access to EUR 500 million dollar revolving credit facility.
Additionally, we expect to refinance Stookey owns 100 million dollar senior notes due June 20, Twond and test scores 23 million dollar unsecured term loan due in August of 2020, the other with additional funding that will be used to finance a portion of GTN Express and Tuscarora Express.
Consistent with our self funding model in order to build capacity for future organic growth.
Reduced our overall average debt balance, resulting in a bank leverage ratio of approximately 3.4 times.
As we've noted as noted on previous earnings calls the bank leverage ratio is expected to migrate to the high threes to low four times area or the impact of previous toll settlements and the de calling tracking or buys.
We maintained our quarterly distribution at 65 cents per common unit, resulting in a solid distribution coverage ratio of 1.9 times for the quarter ended March 31st 2020.
It does make an engine you know one earlier, we continue to execute on an organic growth program.
And you can express Tuscarora Express and PNG Justice projects with both PXP and West was brokers breast proceeding on time and on budget.
We continue to use our steel on the ground advantage or cross our pipeline system to explore additional growth opportunities.
That concludes my remarks on the first quarter financial results I'll now turn the call back over to make them.
Thanks, Chuck I'll refer to slide 10.
As I mentioned at the outset, but a very good quarter. This year and our assets continued to perform well for me out there resilience and strong low risk business model.
And for our cash flow continues to be derived from our portfolio of critical natural gas pipeline infrastructure assets underpinned by long term take that they've gone drafts of credit where to shippers.
In aggregate our citizens are approximately 90% contract that on a long term typically basis.
We continue to prudently manage our financial position and believe our actions that resulted in a strong balance sheet our.
Our bank leverage ratio is currently 3.4 times distribution coverage. This year quarter is very healthy 1.9 times.
These healthy metrics are enabling us to five self fund organic growth as we outlined earlier on each of our GTN Tuscarora.
Yes projects.
Well the term, we're targeting a to maintain or bank leverage ratio in the high three below four times area and distribution coverage ratio of roughly 1.3 to 1.4 times.
We reiterate that we do not need access the equity capital markets to fund our current growth program as Chuck.
As Jeff noted consistent with our self funding model and in order to build capacity for that growth. We've continued to pay down debt levels execute on or de levering program.
Our focus remains a revision to the central energy services together with the optimization of our asset portfolio No continued organic growth over time.
We're very excited to be pursuing approximately 700 million of growth projects across our suite of assets.
These include our current GTN Tuscarora agency has expressed projects together with our work off airport development opportunities.
We continue to conservatively manage our financial position self fund are ongoing capital expenditures and maintain or data prudent levels.
We are well positioned if under obligation for the long period of disruption should occur.
It's an all available information and no debt today, we expect to deliver consistent financial performance going forward and our business.
Vince to support our currently quarterly distribution level of 65 cents per common unit.
I'll now turn call back over on it.
Thank you Nathan I'd now like to open the call up for questions. Operator go ahead.
Thank you.
Well now take questions from the telephone lines.
You have a question and you are using a speakerphone. Please lift your handset before making your selections. If you have the question. Please press star one honor telephone keypad and any time you can come from your question by pressing the downside.
So please press star one at this time if your other question there will be a brief pause all the participants register.
Thank you for your patience.
The first question is from Germany today from JP Morgan Please.
Please go ahead your line is open.
Good morning.
I want to start off with up.
A couple of development projects here, just hoping to get a little bit more details on the latest for ball Hahn air acquiring more specifically I guess what exactly.
I was waiting for for both of projects and any other you know milestones we should be watching foreign kind of how you think the timeline is progressing at this point.
Yeah. Thanks, a question Jeremy so starting with with Bahar the weighting on approval there.
The final that's I'd like Debra.
There are on their coast facility, so that that's going to run its course, and certainly that they have a number of things that they're working hard to get to that if they do but things continue on pace.
For that hopefully within the next quarter or so.
Yeah, certainly as things develop there are there any changes will communicate grew but for that one on that timeframe. We're looking for the next quarter and a and where they're listening for a person for its next step in their decision making.
Within that within your core and he EPCI project up there things are progressing through the permitting a permitting and regulatory process.
In due course.
Certainly every stage has its.
The hearings and had ability for interveners to ask questions and it's going to normal course on that creates a no no extraordinary interventions there no extraordinary push back from the regulators understand everything seems fairly normal course certainly.
Taking a very measured approach as is Ah.
Well at this time and ended that jurisdiction and I think the Majestene Iroquois is very focused on getting that done the right way. So that's proceeding no real time lunch ended on that either so we're just we're watching that then woken is any changes as they develop.
Got it that's helpful and then.
Just want to pivot to northern border permanent here for could with regards to the new tariff <unk> 101 that I think that you're talking about there.
Just wondering it seems like the dynamic situation right now with regard to Bakken production slowing down a bit here and then you had kind of similar dynamics in Canada. So I'm wondering how do you see that mix shifts kind of changing here as those two screens change a bit and are you kind of thought that limit.
Now and where do you see I guess progressing over time could there be a scenario where you would reject.
Yes, because it's too hot or was that your sports extraction, just trying to better understand that thing that thing.
Well you got to put your finger on it there, it's pretty it's pretty volatile pretty dynamic and certainly one of the only one of the inputs to that equation is the limit content that we talked about it really this is a bit a developing situation that we've been talking to Oh, Oh interested parties up and down northern border for a while to make sure that.
ER and users had the gap that they can actually use and then the marketers and producers are able to find the outlook for the got fab.
So with with the limit introduced its more of a mechanism and make sure that we don't get outside the that is it possible that there should be there could be some from gas rejected yet, but it's more of a.
It's more of a tool.
Milestone and thus signposts to point to make sure everyone's on the same paid with what we can do operationally.
As far as blending goes and the dynamics with Western Canadian got blending in with the Bakken.
That said, it's a it's a volatile situation and the users of the of the pipe.
Optimized square or the volumes you needed where the within that backs are good for them.
And fundamentally I think we keep pointing back to a lead.
The very economical.
Commercial situation that northern border represents for folks, whether they're coming out of Western Canada order or they're going out of the Bakken It fundamentally advantage pipe with the depreciated rate base very.
Very economical a cold for them to find out for their products. So on the whole so like the.
For the borders position for this as far as how were simply the gas is gonna be source out of.
That's definitely going to change with the with good.
Evolving market condition, but Ah, but long term.
We like the my position.
Got it but as of right now the Pike still flowing full right I mean, there's still flaring to be captured and keep it even if there's curtailments or shut in.
I don't have kind of up to the mid or because we flow data from from which season coming in and their seasonal fluctuations on on border in any case, but the the clothes are not anything out of the ordinary.
That's helpful. That's it for me thanks.
Thank you.
Thank you.
Next question, Matthew Taylor from Tudor, Pickering, Holt <unk> company.
Please go ahead your line is open.
Yeah. Thanks for taking my questions just a follow up there the Germans questions on northern border is there a financial impact from this new tariff for those that want it could tissue continue pushing harder gas and and then more context and blending seal minded because our customers paying a premium for you to blended down or do they need to make goes away.
That's on their own.
Yeah that we don't do any blending ourselves so we got to except for the second gas, we can get but we're limited by what our end users can accepted. So we're we're trying to work really across the value chain here to make sure that everything is workable <unk> for the different specs that that folks may have what.
It's on our Interstate transmission system, the gathering systems, the feed into us or in users.
So its a.
It's a less than direct and sort of line of sight into what is what it strictly staff, but we're working toward more this definition around that and that's what the the tariff filing is done.
When when we talk about blending in this case really what we're talking about blending the gas screens that we do receive on northern words normal course, the the processing that done it for western Canadian gas.
Lends itself to being dryer upon receipt at a at BACE for Northern border then the gas it comes in in the Bakken So good or historically that the gap never had heat content issue that anyone had to worry about and were decided to add some definition around that to make sure everyone has had the net.
When it comes to to get that said back on this that so to the extent that there's there's blending from additional streams. We've got we've got a little definition around that and the tariff. So that if we're if there is relatively drier gas coming out of the Bakken from points. So you can one that and with the growth of the water gas and stuff like that 1100 number or if we've got a greater for <unk>.
Portion coming out of Western Canada, a it may not be of issue on any kind of getting paid point, but it's a dynamic issue. We really look at this is a tool to be able to manage that and and will be a employing it as necessary but.
I don't don't see it as a.
The big.
Operational shift its is more representative of the way we operate the 500 I give a day, but maybe more transparent.
There are any terror discrimination Meredith if you do want to flow in excess of 1100 or is this just sit definitional change.
Yeah definitely when look at his discrimination a it gives us the ability if we if we approached the 1100, though to potentially turns on back, but it's not a discriminatory business.
Okay, and just be Crystal clear, there's there's no change and actual dollar amount of the Tara.
No that doesn't have any any impact on rate.
Great. Thanks, and then on counterparty risk I know you mentioned that you haven't seen any collection issue today. It looks like your ownership profile mentioned about 70% is your customer base is investment grade have have you seen that number shift at all given all the recent downgrades and I'm. Just curious if you could that maybe just highlight pipes that that might have the most exposure to.
Non investment grade come parties, and potentially could t. collection issues.
Yeah sure, there's certainly doesn't downgrades across the space, none nonsignificant, they get us into non investment grade territory.
The other thing that said, it's it's hard to say because we've got a fair amount of customers who are not rated publicly that we would sort of internally all to be a investment grade ourselves or sort of staying in that same space. So the 70% number but your your references the publicly rated folks and we've got another 20.
Present, or so that we would put in the same categories. They were publicly rated so [noise].
Again, so that puts us in the 90% range of investment grade Counterparties that we are that we deal with.
And that seems to be persisting or even through the.
The current commodity price environment.
That's to say, we don't have large exposure to.
The folks that are really feeling the particular page at the moment, but the.
Large counterparties apart from or affiliates on the T. synergy side of the house or a large marketing and trading operations.
Also other a pivot to the extent we have upstream customers that are directly contracting on the on the pipes. There, they're very strong and are relatively a relatively well in the space and have a a strong gas focus that's a less reliant upon.
As for line on liquids prices to support them.
Excellent yeah, thanks for taking my questions there.
Thank you.
Next question is from might go lapidus.
From Goldman Sachs. Please go ahead your line is open.
Thank you for taking my question and congrats on a good starts the year I actually have 301 is Nathan we think about or when do you think the company will be positioned to reinstate distribution growth for shareholders. That's the first one the second is can you remind us what because her.
It's sort of state approvals are good for the Iroquois project and then third is there any update on or kind of re contracting or the roper northern border.
Okay. Yeah. Thanks for the question, Michael So it's pretty personal distribution growth really what we're focusing on right. Now is the execution of the growth project portfolio. We've gotten part of US obviously, you've got a fair amount of a of estimation going into these things prior to them being executed.
And woman once we get there make it clear line of sight on precisely what the expenditures going to be when they're going to come and when the cash flows mr.
Coming back positive out of these projects.
Then we can modeled out of coal financial picture and have a line of sight into into potential distribution growth in the future, but we're taking a very measured approach to that making sure. We keep our flexibility open mixture of your balance sheet healthy to be able to execute on these projects and absorb it even more growth in the near term or as we see a to potentially coming to pass so really it's a it's not a.
Timeframe thing, it's more of a a project execution thing and once we get to a level of comfort with the with all of these and the cash flow timing. They will we'll be able to kind of printer focus into into the next phase that really the spaces. They did in organic growth internally funded.
That phase for us and we think that that'd be the best way to build that stability and build that the value to be able to sort it out to the two unit holders out in the future.
On your airport projects or your core part of question.
I think Janine or do you mind that take a shot at what the last round of.
Regulatory stuff is going through on that one.
Yeah sure thing Hi, Michael Kuwait.
He is working through it FERC process right now and I can say that they are at the age stage that appears to be going and then in the ordinary course.
An unusual or a differentiating a different feature of their application is the they're thinking a three year construction window for this project.
That allows us to go through the FERC process and you know fully determine this the types of equipment, we are going to need to have to meet that regulatory process ahead of actually ordering long lead time.
Equipment, So I think that's an important.
Feature that were you think that handle some of the regulatory risk in that territory.
Once they get there are assuming they do get there for permit which we anticipate in Q1 of next year.
We would then need to get air permit at each of the comparisons cited site says so that the New York D C permit as well as one from equivalent in Connecticut.
As well as some.
Storm water discharge type permits that at various and sundry other state level permits.
So you know, we're working closely with all those agencies or and things seem to be progressing well there.
Of course, as Nathan mentioned because of the geography and the time we are.
Trying to be very prudent in how we stepped forward.
Got it and then on the last question about northern border and Oh right of first refusal some of the customers have and kind of re contracting for the early 2020.
Yes, so that doesn't have it continues as it has I think a northern border has shown great value has been running.
Chockfull for about a decade now the fundamental value there of the path of the pipe is very very strong I think what we've seen over that two three years is increasing pressure UBS of supply push for associated gas coming out of the Bakken and while that may slack off for a period of months here.
That doesn't change the underlying strength of the of the pipe for Western Canadian.
Yes coming out so are you still think that that production need to find a marketing it's gonna do it on a on a very economic path. So that's what northern borders got going for it so for northern borders Roper provision within its tariff again, that's that drives a large portion of what you see if you look at.
It's kind of.
Simplified looked at our contract tenure that we've got out there that's going to drive down what looks like we've got for long term contract and simply because that is large incumbent positions that were.
And go uncontested and really what they have on on only a five year bid.
So as those kinda for for read that we've got a we've got strong positions.
When the when your customers, who when they exercise the Roper do they did that is that just exercising on the capacity or does it also they take the same tariff.
Well there no recourse rig contracts yep, so to the extent, we have reported rate change of doing that so those were doing syndromes.
Got it thanks, Nathan much appreciate it guys.
Thank you.
Ladies and gentlemen, this concludes the question answer session.
It's a new food true questions. Please contact Investor Relations Tc pipelines LP.
Turning to call over Toronto.
Great. Thank you everyone for your participation today, we appreciate your interest in TC pipelines and we sincerely hope you in your families are staying healthy I for now.
Thank you. The conference has now ended please disconnect your lines at this time and we thank you for your participation.
This conference is no longer being recorded no interest from all does it go home.
This conference is no longer being recorded no she's promoted coffeehouse it does that won't be.
[music].
<unk>.