Q3 2020 Inter Pipeline Ltd Earnings Call
Good morning, ladies and gentlemen, welcome to enter pipeline third quarter 2020 conference call and blood cash.
And now like to turn the meeting over to Mr., Jeremy Jeremy Real Bearish, Vice President Finance and Investor Relations of Inter pipeline. Please go ahead Mr. Roberto.
Thank you Mariama and good morning, everyone on the call with me today are Chris Bill Inter body, once President and Chief Executive Officer, Brent Shaky, Chief Financial Officer, Jeff Morshed Senior Vice President Transportation Inquiry, Neufeld, Vice President NGL.
On today's call, Chris will discuss recent developments and Britain will conclude with remarks on our Q3 2020 financial and operating performance.
Well I like to remind you that certain information on this conference call maybe may contain forward looking information and involves risks uncertainties and assumptions.
Such information, although considered reasonable by your pipeline at this time and leader prove incorrect and actual results may differ materially from those stated or implied by our comments today.
Undue reliance should not be placed and such information discussed.
Discussion of related risk factors, and uncertainties and assumptions is available inter mdna, which you can find and a website or SEDAR dot com.
Go ahead, Chris.
Thanks, Jeremy and good morning, everyone.
It's been an active third quarter free to pipeline and the advancement of a number of initiatives to move the business forward. Despite the economic environment and challenges presented by the pandemic.
Yesterday, we announced the closing of the sale and the majority of our European book liquid storage business to the C.L. age group.
Well seats from this transaction were 420 million pounds per approximately 715 million Canadian dollars before closing adjustments.
The divestiture includes all storage assets residing within the UK, Ireland, Germany, and the net wins totaling 15 terminals and approximately 18 million barrels of storage capacity.
This transaction allows us to flow, we focus on developing our higher growth Canadian businesses.
Seats will be used to strengthen our balance sheet by reducing debt and assist with internally financing our capital expenditure program, including parts and petrochemical complex.
And we'll continue to own and operate approximately 19 million barrels storage across eight terminals, and Denmark, and Sweden and.
All the remaining assets are not part of our long term asset portfolio, we expect and and you benefiting from the current strong storage demands.
Oh from Tempur 28, we announced the acquisition of the Milk River pipeline system from claims and Canada and exchange from 100% do you, 100% owned and pursue and 50% owned and first five strength.
And your pipeline will also receive $35 million and cash proceeds as part of this transaction.
No progress that's connect directly to our board and pipeline system to provide better access for enterprise wide and our customers to the Montana and finding region.
We expect to generate approximately 25 million of annual EBITDA from the milk River system, including both tolling arrangements and.
Midstream marketing activities.
This transaction is expected to close and we 2021 following the completion of customary closing conditions and regulatory approvals.
Finally, we continue and that's the process to secure a partner from material and trust and the heart and petrochemical complex.
That work will continue into next year.
And we'll take into next year to conclude the process. However, there is no assurance that a transaction will be completed.
In the interim we continue to execute HPC and a standalone basis and remain highly focused on the construction as well as commercial and operational readiness activities.
I'm pleased to report that onsite productivity remains strong and the project continues to track. According to the $4 billion revised budget schedule and service date early 2022.
Now I'd like to turn things over to Brett to discuss our financial results. Please go ahead Brent.
Thanks, Chris and good morning, everyone. During the third quarter of 2020 and or pipeline generated funds from operations and 196 million or four.
The six cents per share compared to 204 million or 49 cents per share during the same period and 2019.
From operating results generated from our oil sands and storage and NGL processing segment, partially offset by conventional results, which continued to be impacted by lower commodity price environment.
In addition quarterly results were impacted by higher all corporate costs, including approximately 9 million a one time transaction fees relating to the partial sale and the bulk liquid storage business and a 9.6 million unrealized foreign exchange loss and.
And our pipeline oil Sands transportation business continues to provide stable cash flow supported by long term cost of service contracts that are not materially impacted by Q put volume or commodity price fluctuations there.
Segment generated a 155 million and f. all during the quarter, representing a 3 million increase compared to Q through Q3 2019.
Our conventional pipeline business generated quarterly EPS, and almost 32 million versus 40 million and the comparable quarter of 2019.
The decrease as a result, and the weaker commodity price environment during the quarter, which reduced throughput to 160000 barrels per day and impacted midstream marketing activities.
And that's always decreased relative to Q2, and the 19 conventional results improved from the second quarter of 2020 as volume increased by approximately 20000 barrels per day.
Moving to the NGL processing segment and AFFO for the quarter was 51 million compared to 46 million in Q3 2019.
A 10% increase is primarily result of higher per Fannie frac spread pricing and lower operating costs operationally redwater sales volumes of 31700 barrels per day represented a 22% increase over the prior period volumes were positively impacted by lower turnaround activity and pioneer one and two.
As well and lower third party upgrader maintenance activity and unplanned shutdowns.
Our current inlet volumes were also strong and 2.1 billion cubic feet per day during the third quarter.
Fourth quarter inlet volumes are expected to be impacted as a result of maintenance activities with October inlet volumes of approximately 1.6 billion cubic feet per day.
Expected to trend upwards through cash.
Warner.
Our liquid storage business generated 36 million and AFFO during Q3, 2020, representing a 19% increase over the comparable period and 2019.
The increase is a direct result of higher demand for oil products start, particularly in Denmark and.
On a consolidated basis utilization rates average, 99% during the third quarter and we anticipate strong utilization rates to continue through 2020.
Turning to the balance sheet inter pipeline remains committed to maintaining financial flexibility and.
That's a temper thirtyth, we have invested 2.9 billion and the Heartland chemical complex with approximately 1.1 billion remaining we are well positioned to fund the project on a standalone basis from a 2.1 billion of Undrawn committed credit capacity internally generated cash flow and proceeds from the majority sale of our book.
Storage business. We also ended the quarter, but the net debt to total capitalization ratio of 44.5%, which is significantly below our maximum bank covenant level of 65%.
So this concludes the formal portion of our conference call and I would now like to turn the meeting back to Mariama to open the floor for questions. Thank you.
Thank you very much as a reminder to ask a question you will need to press star one on your telephone.
Draw your question press, the pound or hash key please stand by while we compile the Q and a roster.
[noise] [noise]. Your first question comes from Linda Ezergailis with TD Securities. Your line is open.
Thank you.
And I'm wondering and.
If you can help us understand your initial thoughts about.
The Alberta incentive program as it relates to petrochemicals, that's been introduced and how interplay might capitalize on that.
And.
And how that evolved your thinking on potential initiatives and the future as well.
Well its good question Linda and good morning, you know first off I think we would definitely like to applaud. The government's efforts in this regard we think it's a very sensible and interesting program for spring and their petrochemical investment in Alberta.
The fact that it has a structured and logical approach and it's not based on any particular window for applications. It's a it's a multi year program.
Makes it a very competitive with other jurisdictions and North America. So regarding our view you know first off of course, we're looking at it closely in regards to our Heartland petrochemical complex and how it may or may not all play a role in regard to that project.
And also it certainly makes other future petrochemical and investments and proves economics with them because you know that's a meaningful reduction and such you offsetting capital and capital spend in Alberta.
Well, if we can qualify for that what is about 12%.
Right and they stopped from certain aspects of capital and that could materially improved economics and the future. So.
I think that's generally our view on the from process and and we see it as a big positive.
Good day, and maybe and I realize that a there's a lot of moving parts to progressing on your various work streams for each PC, but can you comment on any progress or any change and emphasis and your contracting and when you might.
In a position to a share.
More details around that with us.
Well.
I guess I can just make two simple points, we continue to successfully progress the contracting.
And we don't have anything to say today, regardless to the.
And fixed around the contracting due to the much talked about.
Competitiveness, we're trying to create around the overall contracting program. So.
And it's steady as she goes we continue to move forward.
Okay, and maybe just specifically on your NGL business can you comment on what you're seeing in terms of forward pricing and how you might think of that hedging over the next from a while if at all given what you're seeing.
Sure and it's called news.
Go ahead, Jeremy Okay. Thanks, I've got those forward curves here and.
For the balance of 2020, which is obviously not a lot left we're looking at these are clock and Frac spreads book 41 cents net U.S. my sense pretty much gallon per.
2021 day for calendar year, you looking around 38 cents again U.S. cents per U.S. gallon and currently around 40 cents again U.S. cents per U.S. gallon. A court did you have any other comments on that.
Oh, that's good Jeremy.
Thank you I'll jump back in the queue.
Your next question comes from Jeremy Tonet with JP Morgan Your line is open.
Hi, This is Joe on for Jeremy.
Wanted to ask the Ghana on Heartland and I understand some of the commercial.
Okay, and contractor or you're not able to disclose at this time, but more I guess and the ramp and what you know I guess, what should we expect with from what the infrastructure can handle.
Well the facility have the infrastructure to run kind of near full capacity and its initial completion or would that kind of increase over time.
Well all the infrastructure will definitely be in place at start up what would be sort of complicated integrated facilities. There is a a significant ramp up period rich do you want to arrive at some sort of safe stable operating level and and then.
Italy increase from there.
Which is typical for all facilities of this nature. So we'll provide more transparency and 2021 and how viewed the ramp up profile for HPC.
What do you want to do.
Okay that makes sense and then just a follow up but not I guess, if if IPO markets any of it themselves.
Would then would you need to enter into any kind of contracts for Ral. How did you guys book that I thought at this point or is it still kind of too early there.
Oh no.
We have all of our rail arrangements in place today, that's definitely something you wouldn't want to leave to last minute.
So we are well connected to does see and sorry, the CP rail network and we are also and inter switch with pretty much all and North American.
Real providers at various locations throughout North America.
Okay. That's helpful. And then if I can ask just one more just trying to.
Gauge the impact of the <unk> and book liquid storage sale as well as the asset swap with plans I know you mentioned I guess 2019 EBITDA for bulk liquid storage, but anything you can say about I guess, what the assets sold contributed and a third quarter or thus far this year and and also anything you can say.
Related to kind of an EBITDA impact from the asset swap with clients.
Well spread here I will talk about the bulk liquid storage and I'll, let someone else talk about the asset swap but.
I think there is some numbers out there for at least around.
And the Nordics assets, and we are retaining and I think there's around a 40 million dollar EBITDA, but it was when we had about an 82% utilization rate.
So today and we're at 99% so I'll, let you do the math from there. So its obviously you know the nordics are going to be contributing north and that number on a go forward basis I'll just make a comment you know as we head into 21 certainly.
Certainly and organic assets are performing quite well and as far as he has to do with the IMO 2020, and also to we did see a contango certainly strong contango markets, a while back and our folks over there we're able to unlock and some contracts one and a 21. So you know the remaining business it looks pretty positive.
As we head into 2021.
Got it and then I guess.
Sorry, it's Jeff and I can just comment quickly on the the plains transaction the apply.
Supply and here for us to take on owner and operator ship and no rubber assets were current expecting annual EBITDA of around 25 million and that's made up of both tolling revenue as well as midstream marketing activities. So that gives you a flavor of what what we expect out of that asset.
Thank you and and sorry, just one clarification and that that 40 million you mentioned for bulk liquid storage is that and was that that's the the retained assets right and that 40 million Canadian.
Yes.
Okay. Thank you.
Your next question comes from Robert Catellier with RBC. Your line is open.
Hey, good morning, everyone I just wanted to start with.
Interest income and cases, we've seen here generally.
You know across the population and whether that's had any impact on net productivity and HPC or if that's factoring into Oh, and the department and process or a contracting.
Good morning, Rob, It's Chris I'll take that one.
Well, you know I guess cobot, managing our cobot <unk> on site overall has it certainly has had an impact on the project.
Meaningful chunk of the incremental $500 million that we're estimating a spend.
Spend on the project, but 150 million of that is just is our corporate management and mitigation expenditures and an estimate for.
I would say rather modest drop and overall productivity on site.
So.
But that said you know I remain very very pleased with how our teams and our contractors have managed their way through this difficult environment productivity is astoundingly high onsite. We're we're at about 3000 people our mitigation efforts for covert our working had no.
Verified cases of onsite transmission of Covance.
And remain confident that we're going to be able to manage our way through through these difficult times, even as cases ramp up.
So fingers crossed but things are looking contain.
When it comes to.
The question I think was around contract and was it and the others.
Absolutely and I and partner.
Right.
You know I don't certainly when it comes to the partnering.
This is <unk>.
Just create a different dynamics and just just from a budget just logistical excuse me.
Standpoint, and usually you'll have management presentations and site visits or obviously extremely important for these types of processes that becomes logistically a bit more challenging and this and part of it particularly when we literally have have.
Dispensed from around the world interested and this this process, so, but we'll manage through that but it does add a bit and I would say a bit more time to the process that otherwise might be expected, but we're planning for that.
And it comes to contracting no. We don't there's there's no impact a cold and has on that process.
Okay, So just to confirm that and.
The I think this press release from the earnings first time, you had a day associated with trying to contract book for Bruce down from 2021 per.
Obviously I don't think there was a day, but you were talking about at least into the early part of 2020 watts and part of the weighted.
There's no real change and you're sure timeline expectations.
We weren't trying to signal anything we're just trying to clear and can be sometime in the first six months rather than just.
So big Big we speed to 2021.
Okay, and then I think if I understand correctly from presentation your 70% the rest at this point.
HPC is there a year and target and is the path to get there simply product to really get the centers or something else.
No its just productivity and site where.
Maybe a better way to describe it from kind of picture little better like we intend to be mechanically complete and PDH, which is by far and more complex of the two.
And by late Spring next year. So, it's it's coming up very quick.
And then Pete Pete will follow.
And later in 2021.
So this project is getting into the final stages.
Okay. It sounds like things are going well there. So just one last question for me is just on the propane side.
As you're aware seen a slowdown oil production and the province, and Oh, our new sources of demand.
Coming from those export terminal so I.
If that had any impact on net.
Contract negotiations with producers or on margin expectations for spot volumes.
No actually the.
Honestly, we don't consider ex the west coast exports and the man. That's just additional export capacity, it's no different from net flicks assay that is and the Gulf.
It's just it's just a different location and the price the.
The price points between those two export locations aren't that material, though.
The material the differences aren't that material. So we're looking at.
Edmonton propane prices today are are lower than the historical average as we've seen since the kosher and pipeline reversal.
And when there was.
Maybe I'll speak a bit to the polypropylene vs Edmonton propane spread you.
They were they took up a pounding and Q2 and I remember sitting in this room on the Q2 call and I think that the number is slightly under a thousand U.S. dollars per tonne low.
Well just wait just wait a few months, they're now back up to about 30% to just over 1300, Dollarss and time, which is right in line with historical averages. So the margins are strong.
Okay. Thanks for those answers.
Your next question comes from Robert Kwan with RBC capital markets. Your line is open.
Good morning.
Just starting with the Alberta and petrochemical.
Petrochemical program, just with your experience to date.
Thanks.
And your desire or approach to building more petrochemical facilities, whether that be and like I said.
Or something else.
Well I think it's just.
Frankly, it's just another enhancement it just provides more transparency and certainty to a project.
I wouldn't like ourselves in terms of how to look at the long term economic so book petrochemical investment, which which is great and.
And I just.
My earlier comments, it really applaud the government, putting such a sensible structure around these sorts of investments, which which are going to be a big deal for Alberta over the coming decades.
So and.
Other than that and our approach remains the same we are to reiterate highly focused on the completion and commercial operations of Heartland and as our primary.
Primary commercial focus right now and and the future investments will we'll talk about in due course.
And just in terms of your expense.
And Smith and the.
Construction contracting.
Would that change if you pursued and other chemicals facility, how you would approach.
Roche sweaters.
Whether its partnership funding.
Or would it be very similar to <unk>.
And then how our lenders procedure.
Well [laughter].
I would say.
Our view is definitely and call it evolves I guess and how to approach contracting and financing when it comes to these sort of major investments the.
Uh huh.
You know the world can be extremely volatile as the last few years and.
And especially when you have a long build.
The company has to work through so if you're asking me would we construct wall contracting another facility like Heartland I think the EPS would be no.
Contracts come first.
When it comes to the execution, the physical execution I wouldn't change and thing with how our project execution teams have operated year, our execution has been first class.
We have first class safety performance and cost to be has been high and Uh huh.
Confident and our team's capabilities there.
When it comes to financing Yeah, you know.
Obviously.
Theres a variety approaches you can take from your financing large projects a bit something like an acrylic acid plant that's frankly.
Frankly, not that expense of $5 million to $600 million, that's relatively easy to finance, if you're approaching multibillion dollar projects and then obviously partnering at the gate.
Things can make some sense.
And we'll just continue to evolve our thinking in that regard.
Okay.
Just a finer cash.
Just a nuance or something is intended but just in the beach.
And the second quarter reported.
And absent a partnership for Sumit under a self fund.
Funding model and and this quarter the whole self funding model wording spend dropped is that just because you lose tiered storage or is there some non.
No, we certainly weren't and tending to signal anything there we've got.
The.
The closure of the.
European transaction, we've got to nearly 3 billion worth of capacity. So we clearly can operate under a self funding model to complete heartland.
Okay, and then just to finish on conventional pipeline appreciate the color on the sequential improvement just wondering what you've seen quarter to date is that followed.
In terms of just continued improvement and volumes and on your systems.
Yeah, Rob it's Jeff here, we are continuing to see growth I think our low was back in may.
About 30% down from what we exited 2019 right now were we.
We recovered two being about 10% down and and in fact in October just finishing were.
We're just approaching 168 69000 barrels a day. So we are continuing on that path, albeit a little bit.
Slower than what we probably talked about back in Q2, but it is heading in the right direction.
Great appreciate the color. Thank you.
Your next question comes from Andrew Kuske, <unk> with Credit Suisse. Your line is open.
Thank you good morning.
Just on HPC and you've you spent 2.9 billion to date, you've got 1.1 to go.
Within that amount how much is a contingency and out.
Within your budget, how much buffer do you have.
Yeah. It's good question, we've never spoken publicly about the.
The level of contingency I I guess, what I can say is we're quite comfortable that we have.
A reasonable amount of contingency left and that number for the current level of completion and the project.
Okay, and and then I mean, you mentioned you know the all the heavy lifting that's going on and the PDH side of it which is the more complicated side and that's you.
Coming to late spring completion, and and mechanical sense.
Could you give us a bit of guidance as far as your capex ex patients and to 21.
Sorry can you repeat that question again.
It's really the quarterly run rate on how do you anticipate the Capex looking to 1.1 to go how is that going to be skewed over over 21, and <unk> Q4 to 21.
Well you know if.
If you just wait a month, we're going to put out our.
From guidance on our capital spend for for 2021.
The company.
Okay Fair fair enough and then maybe just different direction just on yeah.
And the residual oil storage business that you have.
Do you have a process that's ongoing for the sale of that business.
No. We currently don't.
So you don't we.
I think we've been telling everybody that we're going to retain this business for now, but and is still non core to us. So we'll see how things per seat and you know we'll be able to get the the EBITDA from that business, which is not stuck and pretty positive as I mentioned before and my comments.
But you know at some point in time, we do anticipate selling those assets and the future, but we do not have a formal process ongoing right now.
Okay. That's great. Thank you very much.
Yes.
Your next question comes from Patrick Kenny with National Bank Financial Your line is open.
Hey, good morning, guys I'm, sorry, just to follow up on the contracting front for HPC and I appreciate not wanting to disclose anything until the search for partners complete but.
Say the middle of next year, but I just wanted to confirm that you are expecting to disclose what percentage of your EBITDA guidance is locked in with contracts. It at some point before commissioning or is there a scenario, where we could get to early 2022 HPC is online and we still don't have visibility on how much capacity.
Steve is spoken for.
No we we have.
We have committed that we will either.
Disclose once we hit the at least the lower level of our targeted contracting which is 70% or when the project goes into service.
Provide that transparency.
Perfect. Okay. Thanks.
And then just on the asset swap with plains.
Obviously, there's still a big counterparty for you on the NGL front. So just curious any other opportunities to optimize your commercial arrangements with them or.
Ownership of assets over the coming years.
So your question is regarding is it specifically planes.
Yeah with planes, and Oh, I guess and thinking.
Obviously at Cochrane, the commercial contract there and you know maybe you could speak to.
You know the potential to expand Cochrane at some point.
There's a little bit of tail risk, obviously with some some west coast cities banning natural gas and.
And maybe you can comment as well and whether or not this tail risk.
Causes you to take a pause on this expansion or does that bring an opportunity.
So the table for planes to to take a little bit of that expansion.
Well I think and in terms of physical assets. We've we've made the moves that are beneficial from both planes and us. So we think that's kinda done and dusted no.
Regarding cash.
Expansions and Cochrane and are are.
Our big folk focus pad is is the.
How whether it's fee based cash for commodity cash flow, we're far more focused on creating anchoring and expansion of Cochrane under a fee based arrangement than any other method.
And until we can find a methodology that gets us there were likely to sit on the sidelines with corporate expense and even though the volumes are there to underpin one.
Got it okay, that's great Chris Thanks.
Your next question comes from Funny Satish with Wells Fargo. Your line is open.
Thanks, Good morning.
If you don't if you don't find a partner and at the end of each 121 would you be open to finding a partner after HPC is up and running and 2022 and the cash flow is more visible or should we assume that if you don't find a partner than your.
You're basically inclined to manage the project so low into the foreseeable future.
Well I think our motivation to have a partner would certainly be different once the project is and service. So you know you never you never close the door, but again I think the motivation is clearly a.
That's a different level at that point.
Got it and.
And then can you just maybe talk from a high level about your willingness to contract less than the targeted 70% and leave a greater portion of HPC for your marketing group I think.
As you mentioned the polypropylene margins are solid and there's there's strong demand here from polypropylene because of pp gloves and the like.
You know, we're we're in energy infrastructure company. So contracting the cash flow is a top priority and we're fourth and willing to give up a piece of a piece of the pie to accomplish that cash flow stability no matter what the margin is.
Got it that's it from me thank you.
Your next question comes from Rob Hope with Scotia Bank. Your line is open.
Good morning, everyone I'm just.
Just a follow up question on the Heartland Aspartic look at 2021, what are the current at key milestones, you're looking for there and with the PDH mechanically complete and thus.
Spring when do you think you will start to me and play puts and propane and there and then I guess also how will you treat the PDH and and their side.
Oh, sorry, yeah, the propylene and the other side.
And the way we view.
Call it the quarter GAAP between mechanical completion of the two facilities is it.
A bigger and bigger the GAAP and more opportunity for us.
And we're very prudent commissioning process. So we're not we're not focused on trying to produce propylene call. It early.
Early where.
Were more focused on making sure we lined out the PDH plant and that's essentially as possible so that with both plants.
Go into service in early 2022, we get a good stable and meaningful operating rate and at the gate.
Yeah.
All right that's helpful and.
And then how do you how are you looking at the royalty credit and given to you by the government. How would you look to monetize that would you look to do it over and a number of years or something more upfront.
Well one of the really nice benefits of this new program the bird and governments just rolled out at the end of last month is that we have an opportunity to roll the.
PDP credits that we have for Pete the PDH plant into the new program and it changes from a royalty credit to essentially a cash payment and therefore, there is no weekends leakage potential leakage in terms of having to monetize a royalty credit so that that's up its.
What might be a modest benefit but its benefit nonetheless, so we don't have any issues now regarding how to manage a royalty credit if we decide to roll.
BD PDP credits into the new program.
That's helpful. Thank you.
Your next question comes from Ben Pham with BMO. Your line is open.
Hi, Thanks, and at our question and come back to the part one and.
I'm wondering can you comment on the liquidity of the hedge and quite properly and or even even the propane side of things and is that where there's a range of contracting 70 to 85 per.
Percents and is there a way to de risk those cash flows and away where you can you can hedge out a relatively long one day that's trip.
Well good day.
It certainly is a liquid market for both so yes, you can hedge that spread.
You know, it's not obviously, it's not like a currency hedge where you can't go low.
Many many years, but off the top of my head with Corey what is a hedge how deep is the hedge marker for propane year to 18 months, maybe yes, yes, I believe 18 months C GAAP and.
I'll stop my head and I couldn't say how long you can go on the PB side, but it's it's probably something similar if not a bit longer.
Okay and is the piece I, that's just like <unk> and like many accounts it and is it.
Would it be a price that that'd be key I as low as our correlation or is there is actually pretty pretty active market out there.
Well, it's an active market, there's usually be.
It was EUR 8000, kilo tons, a year of pp is consumed and North America. So there there is an index directly for that commodity.
Okay.
And you mentioned earlier to around and having Apple logistics capability to the market the product so the rails and and whatnot.
And then also.
Apply in a situation, where maybe you're contracted per center says and get it as 70 80, 85% and that if it's lower and you need to invest and more storage.
Laser and and logistics that assets.
To capture a spread there.
No.
A way to think about it Ben is we're we're going to be and pipe is going to be tasked with the marketing of the vast majority of the actual physical pellets and and day out the contracting is irrelevant compared to how you physically.
Put the pellets into the marketplace. So all the transportation and logistics the.
The.
And.
Net sales points around done North America, all that kind of infrastructure will be in place.
Regardless of where contracted.
Level or are fully contracted.
That makes sense.
And it does.
And Ah interesting swap book.
Great and and whatnot and they're there.
As any and every other sort of interesting opportunities like that where its asset swap and more modest transactions that you can you're seeing out there.
Not really you know that the book River, one where we'll acknowledge aside this is and massively material stuff, but it is a very good sensible transaction for both planes and us and in fact this is something that we've been talking about from a very long time. It just took now with the kind of crystallize the right environment to make it happen.
And we don't see a lot of other opportunities like that from us.
And the bulk river and force deal, we just completed.
Yes.
All right thanks very much.
<unk>.
And there are no further questions I will now turn the call back over to Jeremy Roberts for closing remarks.
Great well, thank you and thank you everyone for participating on our conference call today, we certainly look forward to discussing our fourth quarter.
2020 results with you on February 12 2021.
Thank you and goodbye.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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