Q1 2020 Earnings Call

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All participants please stand by your confidence is ready to begin.

Good afternoon, ladies and gentlemen, welcome to the PC energy 2021st quarter results Conference call I would now like to turn the meeting over to Mr., David Moneta, Vice President Investor Relations. Please go ahead and if in the data.

Oh. Thank you thanks, very much and good afternoon, everyone I'd like to welcome you to TC Energy's 2021st quarter Conference call. Joining me today, our Russ Girly, President and Chief Executive Officer, Don Marchand Executive Vice President strategy in corporate development, and Chief Financial Officer Francois.

<unk> Chief operating officer, Unprecedent power in storage and Mexico, Crazy Robinson, President Canadian natural gas pipelines stand Chapman, President U.S. natural gas pipelines.

All Miller, President liquids pipelines Bevan worth Spa senior Vice President liquids pipelines and Glenn The news Vice President and controller Rustand Dawn will begin today with some opening comments on our financial results and certain other company developments a copy of the slide presentation that will accompany their remarks is available on.

Our website it can be found in the investor section under the heading events and presentations. Following their prepared remarks, we will take questions from the investment community. If you are a member of the media. Please contact Gimi hurting following this call and should be happy to address your questions in order to provide everyone from the investment community with an equal opportunity to.

Participate we ask that you limit yourself to two questions. If you have additional questions. Please reenter the queue also we ask that you focus your questions on or industry, our corporate strategy recent developments and key elements of our financial performance.

If you have detailed questions relating to some of our smaller operations, where your detailed financial models Hunter and I would be pleased to discuss them with you following the call.

Before us begins I'd like to remind you that are remarks. Today will include forward looking statements that are subject to important risks and uncertainties for more information on these risks and uncertainties. Please see the reports filed by TC energy with Canadian Securities regulators and with the U.S. Securities Exchange Commission.

And finally during this presentation will refer to measures such as comparable earnings comparable earnings per share comparable earnings before interest taxes, depreciation and amortization or comparable EBITDA and comparable funds generated from operations. These and certain other comparable measures are considered to be non-GAAP measures as a result.

All they may not be comparable to similar measures presented by other entities. They are used to provide you with additional information on T.C. Energy's operating performance liquidity and its ability to generate funds to finance its operations with that I'll now turn the call over to Ross.

Thank you David and good afternoon, everyone and thank you all very much for joining us today.

Clearly we're living in an unprecedented times with cobot 19 add pandemic, having a significant impact on millions of people around the world.

Happens Tc energy and I'd like to start expressing my sincere thanks to the frontline health care and other essential service workers, who are risking their personal safety to ensure the well being of others. Your selfless acts and during this difficult time are truly courageous.

At TC energy as always we too are focused on health and safety of our employees our contractors in the communities in which we operate.

When the World Health organization declared Cobot 19, a global pandemic in early March our business continuity plans were put in place across the organization, allowing us to continue to effectively operate our assets and execute on our capital programs.

Services, we provide our broadly considered essential are critical in Canada, the United States in Mexico, given the important role or infrastructure plays in delivering energy to people across the continent.

And the risk or at the responsibility, we take very seriously like many others thousands of our employees are now working remotely well those that must be physically adder work sites are following rigorous health hygiene and distancing protocols I want to acknowledge and banker employees and their families for their ongoing efforts to ensure the energy that is vital to the daily.

Lives of so many continues to be delivered seamlessly across North America and your efforts are truly making a difference.

Turning now to our first quarter financial results and certain other recent developments across our three core businesses.

With approximately 95% of our comparable EBITDA coming from the regulated or long term contracted assets. We are largely insulated from the volatility associated with volume throughput and the commodity prices that are being experienced by many others.

Aside from the impact of normal maintenance activities Encino seasonal factors to date, we have not seen any meaningful change in the utilization of our assets, which further reinforces their critical nature to North America.

As a result as highlighted in our first quarter report, our $100 billion portfolio high quality long life energy infrastructure assets continue to produce strong financial results and we continue to capitalize where we continue to realize the growth expected from our industry leading capital program.

Today that program that we advancing its $43 billion secured capital projects and it now includes Keystone XL. In addition, we continue to advance more than $10 billion or projects under development, including the refurbishment of another five reactors at Bruce power as part of their long term life extension program.

Over the last four months, we took significant steps to fund our 2020 capital expenditure program and to maintain our strong financial position despite challenging capital market conditions more specifically, we enhanced our liquidity by more than $9 billion through the issuance of long term debt in both Canada and the United States at very attractive rates.

The establishment of incremental committed credit facilities and the sale of three Itero natural gas fired power plants.

When combined with our predictable and growing cash flow from operations and the sale of 65% interest in the coastal gaslink.

Project, which is.

Scheduled to close in the second quarter, we believe that we're very well positioned to continue to fund our capital program and other obligations through a prolonged period of disruption in capital markets if that was to occur.

Looking forward, we expect our solid operating and financial performance to continue with 2020 comparable earnings per share still anticipated to be similar to the recorded record results that we produced in 2019.

Well, we're proud of our financial performance in the significant returns we generated for our shareholders. We know that our ongoing success depends on our ability to bounce prop profitability with safety and environmental and social responsibility. We have 65 year track record of safe and reliable operations, but we recognize that we can always improve.

If you better informed we have published several investor focus DSG documents over the past year. They describe some of the work we're doing to ensure our business remains resilient in an ever evolving energy landscape.

All of this can be found on our website at Tc energy Dotcom.

With that as an overview I'll explain some of the recent developments beginning with a brief review our first quarter financial results Don will provide more detail of our results and liquidity in just a few minutes.

Excluding certain specific items comparable earnings were $1.1 billion or $1.18 group a dollar an 18 cents per common share for the three months ended March 30, onest compared to $1 billion or dollar seven per share in 2019, which was an increase of 10% on a per share basis comparable EBITDA of two and.

$5 billion was 6% higher than the Mt reported for the same period last year, while comparable funds generated from operations was $2.1 billion, which was 17% higher than the comparable period.

Each of these amounts reflects the strong performance of our legacy assets as well as contributions from another $1.6 billion of new long term contracted and rate regulated assets placed into service in early 2020.

Next I'll make a few comments on our three core businesses, starting with our natural gas pipeline business.

Customer demand for services remained strong despite the cobot 19 impacts.

On the broader North American economy evidence of this can be seen in the volumes transported across our systems with the NGL system field receipts, averaging about 12.2 Bcf a day the Canadian mainline western receipts, averaging 3.2 Bcf a day, our broader U.S. pipeline network moving approximately 26 Bcf a day at our Mexican pipeline.

Moving approximately 1.5 Bcf a day.

Each of these amounts are similar to or greater than the volumes moved over the same period last year at the same time, we continued to advance more than $27 billion of capital projects associated with our natural gas pipeline businesses.

The program includes significant extension of our NGL system.

Lastly additions of our to our U.S. network to be at array pipeline that to a project and our coastal Gaslink pipeline project in British Columbia, which will play an important role in delivering Canadian natural gas to Asian markets.

It's too early to determine whether the cobot 19, a pandemic will have any long term impacts on our capital programs. What I would say is directionally, we would expect some slowdown of our construction activities and capital expenditures in 2020, because the global the global health crisis and the impact.

The cobot related safety programs.

Safety protocols will have on our construction productivity.

Finally in natural gas pipelines last week were pleased to announce at five your revenue requirement settlement with our customers on the NGL system.

Settlement, which runs from January 2020 through December 2024 at the base equity return of 10.1% on 40% deems common equity and includes incentive mechanisms for certain operating costs were variances from projected amounts would be shared between Tc energy and our customers.

The says settlement was result of a collaborative process between us and our customers and as responsive to their needs. During this challenging time, while providing us with the stable return as we invest billions of dollars and pipeline infrastructure to enhance their connectivity and of natural gas supply to premium markets.

Turning now to our liquids pipeline business, which generated solid results during the first quarter, despite extraordinary volatility in global crude oil markets.

The volatility did have an impact on our market linked and liquids marketing.

The businesses.

Just don't continue to produce solid results as it serves an important market in the U.S. Midwest and Gulf Coast and is underpinned by long term take or pay contracts with strong Counterparties also in liquids pipelines, we recently announced that we would commence construction of Keystone pipeline or Keystone XL pipeline.

Keystone XL is the fourth phase of the Keystone system and continues to be in very very important project for both Canada and the United States, who are create it will create thousands of jobs advanced energy security for both nations and environmentally and sustainable way.

The project is underpinned by a new 20 year take or pay contracts that are expected to generate and approximately 1.3 billion us an incremental EBITDA on an annual basis. Once the pipeline is placed into service.

Keystone XL will require an additional investment of approximately $8 billion U.S. and as expected enter service in 2023.

Advanced the project, we have entered into a partnership with the government of Alberta, who will invest approximately $1.1 billion equity into the project in fully guarantee a 4.2 billion dollar U.S. project level credit facility.

Once the project is completed and placed into service, we expect to acquire the upper to governments equity investment and refinanced the credit facility.

We appreciate the ongoing backing of landowners customers indigenous groups and numerous other partners in the U.S. and Canada, who have helps secure project support and key regulatory approvals for this very important energy infrastructure projects.

In addition, I'd like to thank them any government officials across North America for their support without which this project could not have advanced.

Moving forward, we will continue to carefully managed various legal and regulatory and energy matters. As we construct this pipeline, which will have the capacity to move about 830000 barrels a day of responsibly produced energy from the Canadian oil sands to the continents largest refining market in the us Gulf Coast.

Turning now to power and storage, where Bruce power continued to produce solid results through the first three months of this year.

After years of preparation in January Bruce power commenced work on the unit six major component replacement or MCR outage. When they took it offline here in January we expect to invest approximately $2.4 billion in that program as well as the ongoing asset management program through 2023, when the unit.

Six refurbishment is targeted to be done Unfortunately, because of cobot 19 on March 25th 2020, Bruce Power declared force majeure under its contract with the independent electric system. Operator. This portion is your notice covers the unit at six MCR and certain asset management work at the time. The portion is your was declared.

The unit six NCR program was ahead of schedule.

Despite the force Majeure, Bruce power has been able to continue limited work on critical path activities as well as training for the MCR contractors in late April move remobilization of the MCR workforce began with strict coded Nike measures in place with respect to worker safety.

The measures include shift adjustments to reduce headcount increased personal protective equipment, physical distancing and a reduction in non critical work.

Operations and planned outages on all other units are expected to continue as normal.

Finally in power earlier this week, we completed the sale of three natural gas fired power plants in Ontario, Napanee halt and hills and our interest in the Portland's Energy Center net proceeds of approximately $2.8 billion will be used to help fund our industry leading capital program.

So in summary today, we are advancing $43 billion secured growth projects that are expected to enter service by 2023.

We have invested approximately $12 billion under this program to date with approximately $6 billion of these projects expected to be completed by the end of 2020, notably they are all underpinned by cost of service regulation or long term contracts, giving us visibility to earnings and cash flows they will generate as they enter service.

Based on the strength of our recent financial performance and our promising outlook for the future in February TC Energy Board of directors declared a first quarter 2020 dividend at 81 cents per common share, which is equivalent to $3 and 24% on an annual basis. This represents an 8% increase over the Mt declared for the same period in 2019.

And as the Twentyth consecutive year that Theyre board that our board of directors has raised the dividend.

Over that same time crank frame, we have maintained consistently strong coverage ratio ratios with our dividend on average representing a payout of approximately 80% of comparable earnings and 40% of comparable funds generated from operations, leaving us with significantly internally generated cash flow to invest in our businesses.

Based on the continued strong performance our base business, the organic growth and the organic growth, we expect to realize as we advance our $43 billion secured capital program.

We expect our dividends to grow at an annual average rate of 8% to 10% through 2021, and 5% to 7% thereafter.

So in summary of lead to with the following key messages today, we are leading North American energy infrastructure company with a strong track record of delivering long term shareholder value our assets provide an essential service to the functioning of the North American Society, and its economy and the demand for our services remains strong looking forward.

We have five significant platforms for growth Canadian you asked a Mexican natural gas pipelines liquids pipelines and power in storage as we advance our $43 billion secured capital program, we expect to build on our long track record of growing earnings cash flow and dividends per share.

We have also more than $10 billion Kroger project in the advanced stages of development and expect numerous other in corridor organic growth opportunities emanate from our extensive critical asset footprint.

Looking.

Realty working in accordance with our values and responding quickly to market signals and sign posts to ensure we remain industry, leading and resilient as we continue to grow shareholder value.

Ill now turn the call over to Don will provide more details on our first quarter results and our financial position gone over to you.

Thanks, Ross and good afternoon, everyone.

Outlined in our results issued earlier today net income attributable to common shares is $1.15 billion for dollar 22 per share in the first quarter of 2020.

The $1 billion or dollar nine per share for the same period in 2019.

First quarter results included a positive 281 billion dollar income tax valuation allowance release, following a reassessment of deferred tax assets that are deemed more likely than not to be realized as a result of our decision to proceed with Keystone XL.

This was partially offset by an incremental after tax loss at $77 million related to the Ontario natural gas fired power plants held for sale.

First quarter 2019 also included certain specific items outlined on the slide and discuss further and our first quarter 2020 with shareholders.

Specific items as well as on realized gains and losses from changes in risk management activities are excluded from comparable earnings.

Comparable earnings in the first quarter rose by $122 million to 1.1 billion or $1.18 per share compared to $987 million or dollar seven per share in 2019, representing a 10% increase on a per share basis.

Turning to our business segment results on slide 14.

In the first quarter comparable EBITDA from or five operating segments was $2.5 billion $152 million increase compared to 29 team.

Canadian natural gas pipeline is comparable EBITDA of $597 million was 41 million higher than the same period last year, primarily on account of increased rate base earnings as well as flow through depreciation and financial charges on the NGL system from additional facilities placed in service.

This was partially offset by lower flow through income taxes on both the NGL system and the Canadian mainline as a result of accelerated tax depreciation measures enacted by the Canadian Federal government in June 2019.

NGL system net income increased $22 million compared to first quarter 2019, as a result of a higher average investment base and continuing system expansions and reflects an early of 10.1% on 40% deemed equity.

Net income for the Canadian mainline decreased $5 million year over year, largely due to lower incentive earnings.

You asked natural gas pipelines comparable EBITDA of 766 million U.S., So 1.32 billion Canadian in the quarter rose by $36 million, U.S. or 60 million Canadian compared to the same period in 2019.

The increase was mainly due to contributions from Columbia gas in Columbia Gulf growth projects placed in service, partially offset by the sales certain Columbia midstream assets in August 2019.

Mexico natural gas pipelines comparable EBITDA of 198 million us or 269 million Canadian.

Was 88 million us or 123 million Canadian above first quarter 2019.

The increase was primarily due to higher earnings in certain the Texas, including US $55 million associated with one time fees realized as a result for the successful completion of the project.

The contract targets as well as fees received from operating the pipeline.

Liquids pipelines comparable EBITDA declined by $118 million to $445 million first quarter 2020, driven by lower Uncontracted volumes on the Keystone pipeline system.

A decrease contribution from liquids marketing activities due to lower margins and reduced earnings as a result of the partial monetization of northern Courier in July 2019.

Power in storage comparable EBITDA rose by $43 million year over year to 194 million due to higher Bruce power results, which were augmented by an increase realize power price and higher production real resulting from fewer outage days.

Partially offset by losses on funds invested for post retirement benefits.

The higher contribution from Bruce power was modestly offset by lower Canadian power results largely due to an outage at our Mcarthur River Cogeneration facility, which began late fourth quarter 2019, and the sale of the Coolidge generating station in May 2019.

For all our businesses with US dollar denominated income, including U.S. natural gas pipelines, Mexico natural gas pipelines and close of liquids pipelines.

EBITDA was translated into Canadian dollars using an average exchange rate of 1.3 core.

In first quarter 2020 compare similar to the rate used for the same period in 2019.

As a reminder of our approach to managing foreign exchange exposure. Our U.S. dollar denominated revenue streams are partially hedged for interest on U.S. dollar denominated debt. We then asked if we manage the residual exposure on a rolling one year forward basis with realized gains and losses on this program reflected in comparable interest income and others.

Now turning to the other income statement items on slide 15.

Depreciation and amortization of $630 million increased $22 million versus first quarter 2019, largely due to new projects placed in service in Canadian natural gas pipelines and U.S. natural gas pipelines.

Depreciation and Canadian natural gas pipelines is recoverable and tools on the flow through basis.

Interest expense of 578 million for first quarter, 2020 was 8 million lower year over year, primarily due to the net effect of higher capitalized interest related to coastal gaslink and Keystone XL.

Lower interest rates on higher levels of short term borrowings and long term debt issuances net of maturities.

Hey, AFUDC decreased $57 million for the three months ended March 31, 2020, compared to the same period and 29 team.

Largely due to Columbia gas Bill projects placed in service during 2019.

And the suspension of recording AFUDC effective January Onest 2020 on to due to continuing construction delays.

Comparable interest income and others increased by $19 million in first quarter.

Versus 2019, primarily due to unrealized foreign exchange gains on peso denominated deferred income tax liabilities, reflecting the weakening of the Mexican peso and first quarter 2020.

Income tax expense included in comparable earnings was $211 million in first quarter 2020, compared to 228 million for the same period last year.

$17 million decrease was mainly due to lower closer to income taxes on Canadian regulated pipelines inclusive of a lower Alberta corporate income tax rate.

Partially offset by lower foreign tax rate differentials and increased pre tax earnings.

Excluding Canadian regulated pipelines will income taxes are a flow through item and thus quite variable along with equity AFUDC income in us and Mexico natural gas pipelines, we expect our 2020 full year effective tax rate to be in the mid to high teens after normalizing for these items.

Comparable net income attributable to non controlling interest of $96 million in the first quarter decreased by $5 million related to the same period last year, primarily due to lower earnings and Tc pipelines LP.

And finally preferred share dividends were comparable to first quarter 2019.

Now turning to slide 16.

During the first quarter, we invested approximately $2.3 billion and capital program, which reflects 100% of coastal gaslink spending sending close of the equity sale, the KKR and Aimco expected in the second quarter.

Capital expenditures were largely funded was comparable funds generated from operations of $2.1 billion, along with cash on hand in notes payable.

As everyone is acutely aware capital market conditions have been significantly impacted by coded 19, resulting in periods of dramatically heightened volatility and reduced liquidity.

In response to this we secured approximately $6.6 billion of additional financial capacity in early April through long term debt issuances in Canada, and the U.S. on compelling returns along with the establishment of US $2 billion incremental committed credit facilities.

Our solid financial position was bolstered earlier this week with the completion of the disposition of our three Ontario natural gas fired power plants through $2.8 billion.

The sale will result in the final estimated after tax loss of $370 million of which 271 million was realized at March 31st 2020.

The remaining amount will be recorded on clothes and reflected in second quarter 2020 results.

These transactions have collected we added over $9 billion, an incremental liquidity over the past months.

Enhancing our financial flexibility and demonstrating our continued access to capital markets under stressed market conditions.

Looking forward.

Our financial strength will improve further upon completing the partial monetization of in establishing project level financing for coastal gaslink.

In late April we executed and credit agreement with the syndicate of banks, extending nonrecourse project level financing to fund the majority of the projects construction costs.

Credit facilities will be available to be drawn once conditions precedent have the net including the closing of the equity purchase agreements with KKR, an income which is expected to occur in the second quarter.

As was highlighted we have also secured government of Alberta support for Keystone XL in the form of the US $1.1 billion equity contribution.

And US 4.2 billion dollar loan guarantee.

Now turning to slide 17.

This graphic high rates are forecasted sources and uses of funds in 2020.

Starting in the left column or long term debt maturities of $3.7 billion.

Dividend and non controlling interests distributions of approximately $3.3 billion.

In 2020 capital expenditures, which are now projected to be approximately $10 billion with the addition of Keystone XL and reflecting 100% of coastal gaslink up to close of the equity purchase agreement.

Please I total funding requirements for the year to approximately $17 billion.

The second column highlights aggregate sources of approximately $17 billion, including forecast internally generated cash flow of approximately 7 billion.

Proceeds from the sale of Ontario, natural gas fired power plants, a 2.8 billion.

The sale the 65% interest in coastal Gaslink and associated the project level financing, which are together expected to generate approximately 2.2 billion I.

The government of Alberta equity investment in Keystone, XL, 1.1 billion us or 1.5 billion Canadian.

$3.7 billion long term debt that was issued in April.

With the completion of these finance activities, we are effectively fully funded for 2020 and along with more than $13 billion of committed credit facilities in place and well supported commercial paper programs in both Canada and the less.

Physician to assured we navigate a prolonged periods disruption we should that occur.

In conjunction with the Keystone XL, if I'd, we announced the dividend reinvestment plan will be reinstated in 2021, and 2022 that helped fund our portion of the project spend profile.

Further to provide additional financial flexibility in support of our credit metrics and overall capital program, we intend to file a 1 billion dollar equity shell to enable an aftermarket equity issuance program, which will be utilized if and as deemed appropriate.

We continue to firmly believe there's value in maintaining credit ratings there at the top of our industry.

Now turning to slide 18.

In closing I offer the following comments.

Our solid financial and operational results in the first quarter continue to highlight our diversified lowest business strategy and reflect the robust performance for both our blue chip legacy portfolio, along with the contribution of equally high quality assets from our ongoing capital program.

Our overall financial position remains strong.

We're well placed to fund our $43 billion secured capital program through resilient and growing internally generated cash flow and an array of attractive funding options.

Our portfolio of critical energy infrastructure projects is poised to generate high quality long life earnings and cash flow for our shareholders underpinned by strong fundamentals solid counterparties in premium service offerings.

As well as germinate further attractive and executable in corridor opportunities.

That is expected to support annual dividend growth of 8% to 10% in 2021 in 5% to 7% organic growth thereafter.

Finally, we will continue to maintain financial strength and flexibility at all points of the economic cycle.

That's the end of my prepared remarks, I'll now turn the call back over to David for the today.

Thanks, Don just a reminder, before I turn it over to the conference coordinator for questions from the investment community. We would ask that you limit yourself to two questions in order to give everybody an opportunity.

With that I'll turn it over to the conference coordinator.

Thank you. Please press star one if you have a question at this time, if you are using a speakerphone. Please lift your handset before making a selection.

And should you wish to care for your question. Please press the pound.

Our first question is from Robert Cavalier. Please go ahead, Sir your line is now open.

Hi, Thank you printer potentially comments today have a couple of questions first one is on the pros force merger I just wanted to confirm it sounds like it was entirely due to covert 19, but can you confirm that there were no issues related to supply chain management.

So a little difficulty hitting any equipment or anything like that what was the response to the course Mercer client.

Hi, Robert its upfront 12, I'll take that one so yes, I can confirm that the force majeure event was related to covert 19.

A lot of the work taking place in that reactor is.

Under close quarters.

With respect to our supply chain.

We've had a very modest.

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Number of suppliers, none of them critical with some some issues and we've actually have been working hard to result for our those issues with that is very small number suppliers and we don't expect any.

Any of those issues too to interrupt progress for the project.

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Okay and my second question maybe.

For us are gone.

So happy to see that Youve confirm the dividend growth outlook.

Despite the significant volatility in the markets.

Not too much and the fact that these other the major growth project.

So.

Just curious as to.

What it might take too.

Take the sanctity of the dividend growth outlook, and really what I'm getting are those whether or not.

I think you'll get.

You'll get value for that premium dividend growth rate, particularly the.

It's a 10% 2021.

I'll start.

Trust and maybe Don wants to augment that as you know, we we take a long term view on on our capital allocation policy. It's been an unchanged for for almost two decades here and we use 60% of our free cash flow and where you reinvest in our core businesses.

And we take 40% of it and we return it to our shareholders in the form of the dividends.

We have maintained that sort of a payout ratio for a long period of time and and as you point out you don't necessarily get value at Ford at all points in the cycle, but we believe over the long term.

Stability and predictability and is it values. It says depot and as as we said before and when we provided that guidance is based at 10% through 2021. It was underpinned by growth in earnings and cash flow per share.

And I have to be our plan to maintain similar payout ratios. There that we had in the past going forward and that I don't see any any any need to change that are any reason to change that Don.

Yes, I concur us.

Again, when we when we give dividend guidance, it's really with that long term perspective in mind and as we outlined at Investor day.

95% of our EBITDA.

Comes from regulated long term contracted assets that will increase to 98% one keats once Keystone XL is in service.

And we believe we have fairly solid visibility to the absence of Keystone XL EBITDA, that's largely locked in the $10 billion range at the end of this decade. So.

I get it speaks to the criticality of our assets and.

And just how how important they are to the north American economy. So we are comfortable.

With that guidance and.

So with what we consider.

Payout ratios that are eminently affordable and hopefully value.

Okay. Thank him stay safe.

Thanks, Rob.

Thank you. Our next question is from Robert Kwan from RBC Capital markets. Please go ahead, Sir your line is now open.

Good afternoon.

If I can start with a question on the GTL settlement and specifically just under the settlement agreements can you just talked about the treatment.

Variances as well as any impact of customer bankruptcies suffers cheap and second.

How on the timing of cash true ups.

Sure and else it doesn't matter where on the system.

Theres either volume variances are customer bankruptcy is gee, you that support system versus something around the I'd, just like north Montney mainline.

Hi, Robin Stracey here.

So the revenue the revenue requirement agreement that.

We just completed.

When I say as Ralph said earlier with an effort collaboratively across the system and really kind of an alignment of our interest so.

We think about it when it does is it gives.

Our customers can that through less incentives.

For total crescent kind of extend prudently.

And to manage our told down which is what they were you know what they're really concerned about and for us and gives us the assurances of the return on equity over periods of time, we'll do that expansion. So it's really around.

Making sure that were both aligned in the growth in the health of the basin as it comes to the more specific issues around what happens if there are bankruptcies, rather it doesn't doesn't deal with those things specifically be 10 in 17 laid regulated system I remain completely intact under this agreement.

And I'll leave it there and you can perform a little if you mutations.

Sure I, just kind of one follow up so does that get parts I assume I guess part into a deferral accounts are you able to dispose of that.

During the agreement period or do you have to wait for the fighters element to be to be done just wear to work it back into new range.

Total system the tool arrangement of determining tour opened the disagreement things that would normally be.

What the what the incentive structure is it but we've established with our customers when what we would predict tools to be in the future and if we can work our capital program and our expenses in a manner that took fall below that projected level than there are some benefits to us.

Thank you literally in depreciation.

Tools come in above those baseline numbers.

Then the agreement can be open not the return on equity, but the agreement and the other provisions in the agreement can be revisited.

There is also.

And incentive structure embedded in the agreement not dissimilar to what you've seen before in the Angie tail agreement around cost operating costs and so there's no specific.

Provisions around deferrals.

Got it.

And then if I can just finish turning to the liquids switch on Keystone in market lengths are you able to give an update as to why its.

Slows and specifically either price sensitive or interruptible slows our on both systems today compared to where you were in the first quarter and then is there also an update on the distill analysis and the pipe that was for evaluations.

Sure evolve it so it's here.

Paul here on the on the first question.

All right Keystone system ex artist, Steve just about just under capacity.

And I recall with the spill we had late last year, we were going to be ramping up throughout the first quarter. So we ran just below capacity we.

And that compares a bump the same as where we were.

Q1 of 19 and on a uncontracted a spot basis. We were slightly ahead of where we were in Q1 19 on in Q1 20, probably above it.

Almost a penny higher.

On the solvent end of our system. This is where we saw a reduction in flows we probably had a boat.

Probably had a boat.

Let's call it.

Three cents screen, a half cents lower earnings generated from our market Lincoln.

Q1 20 versus.

Q1 19.

On the.

Bill Cosby, what Weve.

What the independent cause failure analysis determined that the the failure was the result of a.

Due to all well defect with the pipe from the manufacturer.

We have developed in the process of developing technology that will allow us to detect these types of features elsewhere in the system and we continue to do.

Other maintenance and integrity work across entire system as a result of the enberg.

Spell.

I think what that's going to need for us going forward on Keystone system is we will probably see flows in Q2 Q3.

Both the same as we saw in Q1 as we looked at various integrity programs on the system.

Seven with public so slot slows that's really friction no more of the work you're doing rather than what's being put you discussed demanded.

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Yes kind of the combination of August I see the.

Keystone continues to enjoy.

Hi demand notwithstanding some of the supply cuts, we've seen particularly in Alberta, we have a lot of features.

Shippers find attractive as far as our ability to get to the market quicker with a competitive toll.

And we'll also see more light volume come into the system and with our full line design, we have exceptional product quality, which becomes even more important as you move on later volume. So we continue to.

Hi, good volumes through the system.

But there will be I think extra capacity available to us with some of the supply decreases were going to take advantage of perhaps some of those lower supplies and bring someone that maintenance and integrity work for it so could it be a bit of a combination.

Thank you very much.

Okay.

Thank you. Our next question if some Jeremy Tonet with JP Morgan. Please go ahead. Your line is now open.

Hi, good afternoon.

Just wanted to start off with.

I think counterparty concerns a big issue in the marketplace right. There and you guys seem to be in a pretty good position I think you talk about fiveg being kind of a month material percentage of big counterparty. There, but was wondering if you could share a bit more color as far as percentage wise or any other details as far as what your exposure to investment grade versus non investment grade.

It is right now and when you're talking to your producer customers and different basins do you sense any kind of stress their expectations just bankruptcy in general how that might impact too if that were to come to fruition.

Jeremy its around here I'll start up and I'll I'll turn it over to my colleagues here with little more color and their specific business areas.

Where our customer base is heavily investment grade.

And I think the value of the service is indicated and a couple ways. One is just a high capacity utilization we continue to see here.

And things like the NGL Delaware.

We have supply push customers for the most part willing to signed a five year.

A five year deal with us too.

To underpin.

The system there.

Where we.

Where we have I.

I guess more strain counterparties or lesser investment grade counterparties be concentrated more in the supply push side in the WCS be in Appalachian.

But to dates our revenue cycles aren't showing anything anomalistic in terms of.

Payments and again.

System utilization remains very high and these are very advantage basin. So maybe I'll turn it over to up to stand and Tracy to tied a little more color on your respective customer bases.

Hey, Jeremy this is static.

That's helpful question, and while we have seen several producer downgrades over the past couple of weeks overall, our view of how we're handling the for exposure really hasn't changed.

We're still holding about $1 billion of collateral predominantly in the form of letters of credit we're still seeing high load factors are with more than half of our large producers flowing at load factors in excess of 90%.

Tells us that producers are continuing to get proper value for that capacity that they hold on our system.

Specifically, given the fact that at CECO pool, the Columbia gas trading point trades at a premium to Tetco mtwo or Dominion South point.

Many of our producers have attractive hedges in place for 2020, and the recent price right up we've seen on the Nymex curve for 21 in particular, where prices are up almost 40 cents, although it could allow for for higher cash flow and realized prices, but also better hedge positions for 2021.

More good news.

But our markets seem to be opening up to the producers and we're seeing some says that has been completed and some producers are using these proceeds to to buyback debt at this kind of values or Q3 purchase outstanding equity shares.

And that in turn is driving equity valuations up pretty much across the board over the past 30 days it it for so so our producer exposure and argue continues to be manageable and it's good to hear some positive news on that product with respect to our overall customer mix at least within us gas business.

You could generically think of US is having about a third of our portfolio being covered by end users at third producers and that a third market or if at least for the at the top 40 of our customers that generate about 70 or 75% of our revenues.

Jeremy I'm, a little bit on add on the WCS fee family that.

Yes, a metric.

Add a little bit on the WCS the at much of the same about Tom.

Two thirds of our customers our revenues rather come from investment grade customers and nearly 90% is credit worthy and for those others that are out there we have collateral percentage to turn to both the tariff in the contract so.

That is dealt though we're watching very closely and we do know that there are some of our customers that they really are struggling with some near term issues on equity valuations and liquidity. The federal government of course in Canada has announced a program that we think offers the prospect of helping some of that in the near term.

And we believe in hope it of course this in the near term issue because it's down to the fundamental gas right now are largely unchanged. If you look at the price curve as you go out. This is some not a bad place to be right now so we are positive.

And Jeremy its Paul here, maybe I'll, just give it better visibility and on the on the liquid side on the Keystone shippers, we have a small number of all on large credit worthy investment grade Counterparties. The vast majority are integrated well they have arrangements in place to move production was too.

Associated refineries.

Yeah.

Yes.

I would say that probably weighted average in that triple B plus range, so generally well capitalize and diversified.

Super Group.

Thank you. Our next question is from Linda Ezergailis with TD Securities. Please go ahead. Your line is now open.

Thank you.

Just want to get a better understanding of.

How we might think of the path forward for Keystone XL to the extent that.

You are running some scenarios potentially I'm just wondering at what point the project progress might be bottlenecked if from the permit 12 issue.

Not resolved and it starts to become a critical path and maybe.

You can walk us through at some understanding of where on the U.S. route what percentage potentially crosses wetlands and waterways and what we're could be done.

In the U.S. in advance of resulting that permit specifically.

Hi, Linda this is bevan I'll take that question.

So yes, as as you say that district Court and Federal District Court in Montana.

Vacated our nationwide permit 12 on April 15th on the 29, we filed a motion to state that order.

And we have a number of options that were working with respect to.

During.

Both see regulatory and legal aspects of.

Of that as you are likely well aware that nationwide Kermit 12 is utilized by many industries across.

The United States for any such.

Utility related type project that crosses a waterways. So we are.

Working those options and feel like we have the our strategy formed there and there will be they will evolve to the circumstances with respect to the scope, we had always anticipated and.

The need to be agile than our construction management in our planning and to have the availability of of Optionality of scope through the balance of the construction windows.

And so as we're continuing even today to progress the border crossing which is.

Ahead of schedule.

We are moving pipe.

Around.

Pipe yards, continuing cam construction and looking at the various pumps stations and pipe spreads that we could achieve.

In the event that were completely.

Blocked by this.

This current ruling or current situation.

To your question on how much of the right away is it would prohibit us to advance there are there is an ability to pursue.

Individual permits there are there is the ability to advance.

Construction in different ways and avoid certain routes.

Those all come with.

Income mental adjustments to the project that we're considering and weighing against the alternatives, but we do believe that our current plans today.

So obviously, our preferred path as to March forward with the spreads that we have identified for the U.S.

But we do maintain that we will be able to complete a significant amount of work in the United States in 2020, even if it isn't.

The same scope under which we began the year.

Just also want to comment Linda that we have had the ability to.

Progress well in Canada, and those say activity in Canada will not be subject to those that nationwide permit 12.

That's very helpful context, thank you.

Maybe just a bigger picture question and I realize it's early days, but I'm wondering if the board and management have put some thought too.

How this pandemic and some of the industry challenges might prompt Tc energy to reassess their approach to a long term strategic plan and focus whether it be potential changes in consumer behavior preferences.

The government policy or regulations potentially shifting in markets that you operate including.

Uhhuh government support for certain parts of the industry and.

And I guess within that I guess, it's unknowable in terms of the effects. The long term effects. We know there will be significant but I'm just wondering if it might warrant a bit of a permanent shift in how you approach.

Strategic priorities.

So.

And I guess it is early to address.

Pretty early to determine whether or not there's any shift required in our long term plan and I think what was evident over the last few weeks is then the critical nature.

What we view I think is all of our business.

Business unit lease your pointed out every part of our system is operating at a high load factor.

As well you know every part of our construction program across North America had been deemed essential service.

So while they are the debate will continue in terms of the form of energy there will be required going forward at Theres no question that that demand for reliable affordable energy will continue for some time to calm and owning existing infrastructure in footprints will be a huge advantage in that in cap.

During that growth. So I don't think that we've got the current samarasinghe any shift in strategy, but maybe more just reconfirmation of what we focused on is that and.

Demand for energy will continue to grow and and we're looking at the at the most efficient way of.

Achieving that and where we began around our existing footprint in corridor seems to be.

Hey, doable thing and I suspect you I think look forward it will become even more doable. Obviously, so some of our protocols will have the adjusted on a construction sites in media in the coming weeks and months. We've been introduced the protocols that have been that required to date I expect to see more of those.

But we're seeing no pushback at all.

Terms and getting construction and I guess, maybe the last point that would make is we're hearing from governments, both local and state provincial and federal and that that construction ready projects are going to be critical to and putting people back to work as that as we.

Emerged from this crisis.

And then b.

To knock on effects that come with your economic stimulus people buying.

And your parts and pieces tires trucks all of those things are going to be huge boosted the economy in at least what we're seeing today.

And no pushback in terms of that tens of thousands of people that were going to have on the ground working so I'd say directionally all things 0.2 reaffirmation of our strategy as are poised as opposed to a change in direction.

Thank you.

Thank you. Our next question is from Andrew Kuske equally previously. Please go ahead your line open.

Thank you good afternoon, though we've obviously seen a number of severe dislocation cycles before this one is obviously, you're making a number of specs.

And then those dislocation cycles, we assume a duck raters move the goal posts various times.

So you've had a situation of growing the business deleveraging the company, but I guess the questions or where do you really want to land that like what metrics are focused on.

And what credit ratings are you focused on.

Hi, Andrew just on here.

Theres really been no change to our thinking here, we continue to target long term debt to EBITDA in the high fours and and FFO to debt in the 15% area. We think that's appropriate for a business risk or.

The corporate structures of corporate structure that we have.

And the right balance between equity that we believe that triangulate into the current ratings that we have and we have recently.

Leading up to the Keystone XL announcement engaged the rating agencies or in a fairly extensive review of our business and our plans to execute our project.

And you saw what came out of that so.

Aside from moving goalpost, which we have seen before.

Or retroactive.

Decision, making were macro calls.

We're we're fairly comfortable with with our capital structure with our coverages and we look to the rating agencies.

Recent pronouncements.

This what we have in front of them should keep us at the very top end of our industry, which is where we want to be in terms of the credit rating.

Okay. That's helpful. And then maybe just one follow up and it's in the geeky details of the notes the financials and that's really just on the derivative marks obviously, there's a lot of volatility in Q1.

And the marks have you had the traditional quite a bit but maybe just on the interest rate derivatives.

What portion of the interest rate derivatives were for existing versus plan to issuance over the course of the year.

Yeah. The anomaly in Q1 is early this year once we executed the coastal Gaslink joint venture agreement, we entered into interest rate hedges.

On the construction financing project financing for that project, which will get rolled into the.

The final financing an amortized over the life of those.

Of those instruments. So that is the big change in this quarter that those positions were into entered into in very early 2020.

That's great. Thank you.

Thank you. Our next question from Robert Hope from Scotiabank. Please go ahead. Your line is now open.

Hello, everyone. Just one question for me.

Just want to get a sense of how you're thinking about allocation of capital.

You look relatively fully funded for 2020, but you did add some liquidity and just wanted to think about your willingness to add on new projects or M&A.

In an environment, where you significantly out into your backlog with Keystone XL, which does.

Some upward pressure on your metrics over the next two years.

Merit.

I think you've pointed out correctly me, we've got a lot on our slate.

And a pretty good visible plan to continue to growing cash flow earnings and dividends over the coming years and that said mean will outpace the reason that we've maintained and.

I would say that the best credit rating ratings in the industry and ensure that we have some financial flexibility and continued access to markets feel the active it's good opportunities that add shareholder value arise, where we're not actually you on the on hunt for any of those things right now but.

Obviously for the right circumstance that would that would add shareholder value. We what we would accurate but currently we have are pretty comfortable with their plans, we've got lots to do.

I think its and pointed out again by all of our business leads and Don you all of our businesses underpinned by strong fundamentals first.

Our growth projects that theres still needed in the market Weve, obviously retested that here in the short run with all of our customers do you still want us to continue to build and the answer is been unequivocally, yes, and backed by strong credit worthy Counterparties construction progress will be.

Potentially a little bit slower than we anticipated, but that because they're a great regulated or or underpinned by long term contracts are pretty good visibility cash flow and earnings. So we've got a great plan in front of that's our.

Focused right now is on execution.

But if the right things come along we will we will happen to portfolio I certainly expect that we will see continued smaller projects that those 500 million dollar to billion dollar additions to our footprint will continue to come to us that those haven't had stopped coming and so I would you can act.

DSD able to continue to try to add those the portfolio here over over the coming years in terms of large scale, new Greenfield and large scale Bill I don't really see bad on the horizon, we don't have that.

Many of those in our portfolio today, the kinds of things were sue shooting for a more niche oriented things like the pump storage project in Ontario, those kinds of things that the on the larger scale and buy but they are out there quite a few years from from today I.

I don't know Donahue on add anything to that.

Yeah, I'll just a couple other comments here, even if you do and anything Thats fits greenfield in nature Brownfields, it's generally by the time you get through a permitting process.

A couple of years out for your spending any significant capital on their opportunity and a from a credit metrics perspective by embarking on Keystone XL.

With the mixture and financing that we we've indicated here, which is pretty much all subordinated it's it's turning on the drift and our hybrid issue.

We don't see huge upward pressure on our credit metrics, our debt to EBITDA temporarily goes into a call for low fives.

Through what we hope is a compressed sorry construction period, there than returns back into the high fours ones Keystone XL is completed.

Okay. That's great. Thank you.

Thank you our next question from Jeremy Tonet with JP Morgan. Please go ahead.

My questions have been addressed thank you.

Thank you. Our next question external Assi sang with Bank of America. Please go ahead. Your line is now open.

Thanks, Good afternoon, if I could go to Keystone, XL and Montana and on permit tool was wondering if you could provide your thoughts on.

The next watch items for investors.

And any sense of potential delay in some of the options that truly exploring.

Sure. Thank you this grew seven minutes.

Pilings or motions to vacate permit that broad could have up to a year delay on the ultimate.

Project.

Much like many of the.

Many of the circumstances that Weve faced historically, however, we've been mitigating.

Those types of impacts by way of pursuing other forms of the scope in parallel.

Which was work we had anticipated prior to taking a Friday is that.

We have been following the regulatory standards and the rule of law and we feel that will ultimately cure the issues that are present in front of us right now and be able to continue pursuing activities.

Don't.

I believe it's appropriate for me to commented to ditch to speculate on what the what what maybe the next one another turn of events could be right. Now we feel we have our plans in place to either construct a scope that we had shared with the market or we have an alternative plan.

That is well underway.

To satisfy moving that project forward.

Appreciate it and.

Just on that if I could.

Hi, skew a big picture questions could you speak to the M&A environment. Currently how do you compare this cycle to previous ones any broad thoughts.

I guess, maybe does it.

As I think about you started M&A cycle are.

Well, we tend to be counter cyclical in our M&A activity and so what we look for his opportunities to buy high quality assets at reasonable prices. Our experience has been historically that those potentially come available in these kinds of death tightened liquidity and where it's.

And with a lower cost form of accessing liquidity to sell assets than maybe some of the other options that they companies might have so I think thats were opportunity might lie for us again and that in the current time or not we're not seeing that but as you think about the times. We've acted in transacted in the past its been at those times where.

We've been able to use our strong competitive financial position when others didn't have that that same capacity at the acting by.

Really good assets at at reasonable prices. So it has some of the current environment has some of the attributes of what we've seen before the financial crisis and and the like add that we've seen in the past that add to date, we haven't seen anything and come available.

Thank you.

Thank you. Our next question from Patrick Kennedy with National Bank Financial. Please go ahead. Your line is now open.

Yeah. Good afternoon, everybody just wanted to go back to the discussion surrounding force majeure due to cobot.

But thinking more specifically about your contracts on the base Keystone.

As mentioned, Paul we haven't seen any real.

Volume reduction yet.

But of course.

Depending on how deep producers cut capex and shut in production over the coming months.

I know its hypothetical at this point, but I'm just wondering if you can confirm what exposure you might have within your take or pay agreements assuming a shipper does try to declare force majeure on Keystone.

Patrick under our take or pay contracts.

It is no provision for forces your bid for supply or production upsets or otherwise.

And I think where we set.

We had with Keystone when you consider the.

Markets, we serve when you consider all around.

The advantages within the marketplace as far as the protocol product quality the direct path.

The visibility into delivery times.

I feel confident that we will continue to run that high volume then you consider the take or pay nature of our contracts and being 94% contracted on Keystone I don't foresee any.

On a significant reduction.

In the throughput notwithstanding.

What we're seeing on the supply side and not well notwithstanding what we've seen with some of the challenges with some differentials.

Okay, great. Thanks for that clarification.

And then on the liquidity fronts and.

Looking at the upcoming sale of coastal Gaslink.

The project financing in place, but just curious what conditions and consents to close the deal.

Might be at risk in this environment.

Are there any construction milestones outstanding by the end of the quarter or.

Any clarification required by the buyers with respect to the deal between auto and their editor Chiefs. Just just wondering if there could be any speed bumps to delay closing at this point.

Hi, its Don.

I'll start out by saying that the project financing. The construction facility has closed in escrow. So we believe we're on track to completing the equity purchase agreement in late May and the conditions precedent in the path to closure there there's really.

Nothing particularly unusual in there.

Other than normal conditions precedent and the passage of notification periods.

Patrick it might be interesting that just to note as well that the agreement you referenced between the federal government. The government is.

British Columbia, and the what system is not related in any way to project. It speaks to the told the broader issues around our rights and title.

Okay. That's great. That's it for me guys. Thanks.

Thank you next question is from Shneur Gershuni Gershuni from you get please go ahead. Your line is now open.

Hi, good afternoon, everyone.

My questions have been asked and answered at this stage at this late stage.

Maybe I just wanted to revisit the dividend question that was asked at the very beginning I do appreciate.

The color commentary you gave with respect to the targets over the longer term period, but I'm kind of wondering if there was a more vigorous debate if the board level. This this time around just given the impact of course with my team. The fact that it could last longer then when people are forecasting and contrasting now.

With the fact that you're now turning to drift back online, we're talking about an ATM and so forth in so did it makes sense to maybe lower the targets a little bit in the near term.

In sort of we review it or or.

It was that really not part of that especially at all.

No. It wasn't part of the discussion and what are the discussion.

Around dividend really hinges on the visibility and sustainability of cash flow in earnings growth going forward and as we sat down with our board.

You know here here over the last couple of days and we looked at that that the cash flow of the base business any have potential impacts on that going forward and impacts on our ability to to get capital in the ground and that and get a the projects that we've got.

In progress that cash flowing and at the current time, we don't see any disruption you your neither of those.

And therefore, I mean, no impact on their view as to answer as to what are our dividends should be on on a go forward basis. When you think about something like.

Keystone XL and the.

By the issuance of out of some equity and is a way to finance a long term project it will bring and.

Long term cash flow.

On to our to our shareholders. So it's very it's an accretive and project and.

In terms of of the risk capital going in between now and the year for example.

Thats, primarily covered by buying equity injection from the Alberta government. Once we get post the end of year at two thirds of the capital comes from the credit facility. This provided from and the government of Alberta and as joint Don pointed out you know those are all mezzanine level and so these it shouldn't impact.

Our our credit worthiness in any way so as we think about financing long term projects.

We have never look to you on comparing or dividend growth rate and we never got a too far ahead of ourselves we've never and.

And then I think two anemic, we found a place that as I said is about 40% of our cash flow going back to back to our shareholders.

And then you're using the 60% to add to grow the company and what we found is investing that 60%.

Has driven a growth rate of iOS, seven and 8% over the last that number of years and we'd be able to augment that by doing.

Projects that could have a return that's greater than it's been about 8% and when you look at the accretive Minnesota.

I've Keystone XL I think as we sort of look at the overall value to our shareholders. It makes sense for us to financing in the way that we have and suggested and not impairing our dividend growth rates done enough you want to add to that but a exits that I think that playing with your and add dividend.

Payout ratios on a short term basis and to try to.

And.

Yeah.

Get the best possible value out of the market add to give any instances in time is fraught with risk. We believe that long term consistency and discipline around to capital allocation program over the long term yields the best results for our shareholders and I think we've proven that out over the last that 20 years as that.

Folks have come at us with different questions at different times in the cycle of whether we would accelerate or decelerate are our capital allocation program and our dividend payout ratios and that we stuck to the discipline that we have and we believe that has produced good long term shareholder value and stability.

So that definitely makes a ton a sense there maybe to just to follow up a little bit you know when they sort of think about North American midstream company. After that ill say capex reduction was I think you've kind of bucked that trend a little bit.

Is it more effective that your business has to be more regulated it nature contracted in nature and there's really.

Not that kind of an adjustment process that you have to be and thats kind of a differentiating factor for Tc energy or how should how should we think about that is to her you've been different than many others.

Well again, I would I would I can't speak to others programs, but our focus has been on and at.

Assets that are underpinned by long term fundamentals and.

And you think of something like at Bruce power or Keystone XL coastal Gaslink and long term fundamentals were and we believe that infrastructure will be used and useful and utilized for many decades to come and maybe a differentiating factors, we don't bet on that and we and we.

That reconfirmed with with long term contracts or rate regulated contracts, where regulator approves and those assets for for the long term and when you look across our assets and our $43 billion capital program.

We haven't taken commodity risk and and we havent taken what I would call back end contract risk and I think those are two things that.

People are probably struggling with right now is if capital projects are subjected to commodity risks and that you have the kind of volatility. We've seen you have to and adjust your programs accordingly, but if you think of what we're doing for the most park on the pipeline side as were building access more market access for our customers there.

Single greatest.

On impediment to and.

Netback crisis has been not being able to build the infrastructure required to get to market and and very wide differentials and so as we went back to our shippers are the Best example, I would have is that it is the five year agreement that we just put in place with our shippers that gives us the stability and to continue to attract capital.

To build the grass that they need for the long term.

And and and again, so reaffirmed refer inflows, we understand that some of those shippers are facing.

Near term liquidity issues that said that are fairly cute, but at the same time recognize that their long term interest or best served by continuing to build the infrastructure and to support the industry over the long term. We believe the Western Canada. For example is one of the lowest cost basins in North America, why lowest cost basins in the world.

And that into will continue to compete for market share going forward, but what any market access to be able to do that so.

I think where we made a unique and but that's certainly the discipline that we've had in looking at every project that we take on as it has to have those characteristics and I think by sticking to that discipline and has has served us very well.

Perfect. Thank you very much guys stay safe and enjoy the retail.

Thank you too.

Thank you next question from Matthew Taylor with Tudor Pickering, Holt and company. Please go ahead. Your line is now open.

Hey, thanks, everyone.

From 2020 earnings guidance, and only one quarter end, but pretty fast start out of the gate, 10% higher year over year I'm, just curious what parts of your business there.

Impacted Ur cobot 19 related or other weakness in the next couple of quarters that you felt like leaving the February earnings guidance with consistent with 2019 unchanged.

Yeah, it's done here.

Some pluses and minuses that largely net out.

The day.

Weve, so we've been expecting the onetime ish.

Benefit from the sort of Texas fees, so there and that's in there, but when you look at things like visibility to liquids marketing market Wink.

Got some tax pluses and minuses et cetera.

We generally come back to.

To where we started the year with earnings largely consistent with 2019, so it's a bunch of pluses and minuses, there's nothing I would say, particularly kobin related.

That's pervasive in that in that outlook right now we kind of studies goes.

With some limited visibility and just some pockets of the business right now.

That's great. Thanks dominant me one more housekeeping question, if I if I can on the 2020 Capex guidance. So 10 billion does that does that include the expected slowdown I know you guys said, it's uncertain at this point in time button spending on projects like Bruce power and coastal Gaslink and then does that include the full assumption of utilizing the government.

Equity investment in 2020.

Yes, its Don again here.

So we were at 8 billion in February and they in the annual report its 10 billion now they essentially the entire delta is the inclusion of Keystone XL.

In the vast majority about will be funded by the government Albertus equity contributions so.

Both the uses and sources are up.

And largely not out there in terms of our togut related.

Slowdowns.

I wouldn't say, we've we've incorporated much in there because it's early days and we were not entirely sure.

How material. This this might be so that's something we'll look at and becoming coming weeks and months here as we assess the.

The restart conditions on our projects any.

Anything that that May change there, it's not necessarily supply demand related is it is really how how fast we safely build things.

Within governmental and health authority regulations.

Thanks, So much appreciate it thanks for taking my question.

Thank you once again, please press star one if you have a question.

Our next question if some Michael the P., that's with Goldman Sachs. Please go ahead. Your line is now open.

Hey, guys very thorough conference call mind that asked and answered much appreciated.

Thanks, Michael.

I have no further questions registered at this time.

Okay great.

Thank you and thanks to all of you for participating today.

We obviously very much appreciate your interest to Tc energy.

We look forward to talking to you again soon.

In the meantime, obviously, we wish you and your families could help.

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Thank you. The conference has now ended please disconnect your lines at this time, we thank you for your participation.

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