Q3 2022 Keyera Corp Earnings Call
Good morning, My name is Laura and I will be conference operator today.
At this time I would like to welcome everyone to Kieran third quarter Conference call.
All lines have been placed on mute to prevent all while Cowen.
After the Speakers' remarks, there will be a question and answer Stephane. If you would like to ask a question. During this time simply press Star then the number one on your telephone keypad. If you would like to withdraw your question please back to par.
Thank you I would now like to turn the call over to Kelvin lot manager of Investor Relations you may begin.
Yes.
Thank you and good morning, joining me today will be Dean Setoguchi, President and CEO Ali.
Ali Mericarp senior Vice President and CFO , Jamie Urquhart, Senior Vice President and Chief Commercial Officer, and Jerry <unk> Senior Vice President operations and engineering.
We will begin with some prepared remarks from Dean and I lead after which we will open the call to questions.
I would like to remind listeners that some of the comments and answers that we will give you today relate to future events.
These forward looking statements are given as of today's date and reflect events or outcomes that management currently expects.
In addition, we will refer to some non-GAAP financial measures.
<unk> information on non-GAAP measures and forward looking statements refer to <unk> public filings available on SEDAR and on our website with that I'll turn the call over to Dean.
Thanks, Kelvin and good morning, everyone.
I'm pleased to share that <unk> delivered solid third quarter operational performance, leading to strong financial results.
I'll hit on a few of the highlights.
We had record performance from our gathering processing segment, where we continue to fill available capacity due to strong demand.
Gas processing volumes were up by 9% year over year.
We had another steady quarter from our liquids infrastructure segment, we completed a successful turnaround at our <unk> facility.
Our assets remain highly utilized.
In our marketing segment, we remain on track to deliver a record year.
These Q3 results are a testament to the effectiveness of our strategy designed to extract maximum value from our integrated business.
Given our insight into customer activity, we expect more volumes to hit our system in 2023 further supporting the growth of our business.
With that context, I'd now want to shift gears to talk about caps.
Which remains an important strategic asset for <unk>.
In our release this morning, we shared that as of the end of October caps with 90% complete and is anticipated to be operational at the ended the first quarter of 2023.
We also shared that project costs have increased by $100 million net.
We've had a range of challenges largely related to abnormally wet weather in the spring that impacted productivity and required additional resources.
This increased our exposure to inflation supply chain issues and labor shortages.
It's been challenging to forecast.
Today, the cost pressures in real time.
Going forward, we have confidence in our new estimates and here's why.
Firstly, we now have only 10% left to go with 90% of the work behind us.
And secondly, the remaining spend of $150 million debt carries a significant contingency up 25% to address remaining risks including weather.
While costs are higher.
The strategic importance of caps does not change.
Captures a producer driven project that is about to end a multi decade pipeline monopoly.
It will provide a much needed competitive alternative.
Basin producers.
For Kiara Kap physically connects our north region gas plants, and other third party facilities to our fractionation storage condensate and marketing businesses.
This allows us to better compete for volumes and provides more opportunity to earn returns at each step of our integrated value chain.
I'll now turn it over to Eileen to provide an update on <unk> financial and business performance for the quarter.
Thanks, Steve.
He mentioned, we delivered strong quarterly financial results.
Adjusted EBITDA was $247 million compared with $214 million for the same period in 2021 and.
And distributable cash flow was $162 million compared to $149 million for the same period last year. Both results were driven by strong performance across our three business segments.
We continue to maintain our strong financial position with all outstanding term debt at fixed interest rate and no material debt maturities until 2025.
Net debt to adjusted EBITDA is currently at two four times. This is below the bottom end our target range of two and a half to three times, excluding hybrid and we expect to exit 2022 within this range.
Moving to our guidance for 2020 to.
Marketing guidance remains unchanged, which realized margin expected to be between $380 million and $410 million as we progress towards a record year.
Growth capital spending is now expected to be between $770 million and $800 million. This is above the previous range of $680 million to 720 million excluding capitalized interest.
The increase is primarily driven by the Kaps project.
So maintenance capital guidance and cash tax guidance remain unchanged.
Moving to 2023.
Consistent with our plan shared at our March Investor Day, 2023 will be a year of balancing more modest capital spending with strengthening the balance sheet and returning cash to shareholders.
Gross capital expenditures are expected to range between $140 million and $180 million excluding capitalized interests.
This includes approximately $50 million related to the completion of our Kaps project.
$45 million to $55 million related to our Pipestone expansion project that we are progressing towards sanction.
Maintenance capital expenditures are expected to range between $75 million and $85 million and include approximately $40 million related to turnarounds at the RMB and pipestone gas plants.
And lastly, our cash tax expense is expected to range between 10 million and $25 million. Thank.
Thank you I'll now turn it back to Dave.
Thanks Ali.
Our business is strong and performing well.
Looking to the future the increasing need for secure access to clean and responsibly produced energy will continue to drive higher long term demand for natural gas and natural gas liquids.
<unk> is well positioned to benefit and grow from this trend.
On behalf of tiers board of directors and management team.
I, thank our employees customers shareholders indigenous peoples and other stakeholders for their continued support.
With that I'll turn it back to the operator for Q&A.
Thank you ladies and gentlemen, we will now begin the question and answer session. So do you have a question. Please press the star followed by the number one on your Touchtone phone. If you would like to withdraw your request. Please press star followed by the number Q.
Speaker phone please lift the handset before pressing.
One moment. Please for your first question.
Your first question comes from the line of Rob Hope from Scotia Bank. Please go ahead.
Good morning, everyone. First question is on caps, just given the line of sight to commissioning as well as we're seeing some improving volumes in the basin as well as Capex moving up for producers can you give us an update on on the tone of contracting discussions.
Not only on the base system, but also on the northern leg.
Good morning.
Robyn. Thank you very much for the for the question I think it's a great question given what we're seeing in our basin.
When you look from a macro perspective, I mean, I look back at a year a year ago and a lot of people are wondering where the growth would come from.
Our basin increased by over a Bcf a day within a very short period of time so.
I think it just demonstrates the.
The resiliency and the economics in our base and then that producers have the inventory and the balance sheet. You can you can.
To grow so with that we have.
Had a lot of.
Continued.
Fruitful conversations with our with our producer customers.
And.
We believe that's going to lead to a lot more contracting the days to come.
I do want to point out that.
Specifically with the fact that we're getting much closer to having our pipe in service, which is going to happen and obviously early next year and as I said before that.
Producers have very strong balance sheets and the inventory to continue to grow so I think that they can satisfy their stakeholder base by continuing to.
Improve their balance sheets returned capital to shareholders, but also grow at same time.
Alright, I appreciate that and then maybe taking a look at 2023 guidance. So I know you typically give an outlook for marketing in the spring.
That being said just shaping up where Q1 is going to be taking a look at your cash tax guidance.
Can you walk us through the headwinds and tailwind is that youre seeing in the marketing business in 2023.
Now, let's turn it over to Jamie sure Rob. Thanks for the question, Yes in 'twenty three.
We're expecting to.
Realize how utilization it just as a reminder, we did have a six week outage.
Yes that span between September and October .
So right now we're seeing.
Strong <unk> pricing and octane values, they're below the 2023 levels and that's important to remember.
And 'twenty three we had extraordinary pricing and WTO INR, Bob cracks that benefited our <unk>, sorry, our isooctane business and our liquids blending business, but.
But we're still seeing values that are stronger than historical averages and then.
One of the reasons why we typically wait for providing guidance.
Two.
Post.
Q1 is to get through our contracting season for butane, which is a fundamentally.
Important.
Part of the equation with respect to.
How we view our marketing business in 2023.
Right now butane is trading at a lower level than it would have this time next year. So.
It's early days, but where we see a potential for slightly lower butane pricing in the 'twenty three 'twenty four contract season.
Alright, I appreciate the color. Thank you.
Thank you. Your next question comes from the line of Robert Kwan from RBC Capital markets. Please go ahead.
Good morning.
If I can start with caps.
Dean you talked about good volumes hitting the system. So I think you've got a better line of sight.
Okay contracting.
Yes caps at the new cost still within the returns still in that 10 to 15.
15% range.
Hi, good morning, Robert.
Thank you for the question.
And yes, we do have a return threshold of 10% to 15% for our capital projects and that would include gaps.
We're not there yet, but that's certainly our target.
There is a couple of points that I just want to make sure that we remember why we still think we can get there and.
First of all the downstream benefits of caps will obviously improve our overall corporate returns.
But secondly.
On caps contracts, we envision negotiations continue to accelerate.
And there are several reasons for that obviously the macro environment is very supportive.
When we sanction this pipeline.
This would be the high end of our wildness dreams of what would happen our basin both from <unk>.
Demand perspective for natural gas.
And.
Associated natural gas pricing the egress in our basin that we're getting in and also the growth that we're seeing and we were forecasting for the future. So with that macro backdrop, obviously, we're not we're much closer to having a pipe in the ground and and again as I mentioned before producers are at.
Never been stronger in my 30, plus year career I've never seen producers in the position that we're in today, So I think that they have.
Inventory of supply to continue to grow and we're going to continue to see that and benefit from from not only cap sputter a whole integrated system.
Got it so if I can just clarify if I'm not mistaken I think the prior messaging now with caps on a.
Fully contracted basis, but just the system as Youre building would have been in the 10% to 15% range. So without pays for without any downstream benefits. So just to be clear is that still the case that on the standalone fully contracted.
The capital that you are still looking at 10 to 15.
Yes, Robert that's a 100% correct.
We've been very clear that we're not there today with our contracting but that is certainly our target.
Okay.
And just as it relates to the other half of cap such our sale previously you effectively stated that you are not.
Looking to buy the other half.
Has anything changed from your perspective on that.
Yes.
Obviously, that's a very relevant question.
Roberts and a good one.
You know what we're not.
Maybe to where where the processes on the other 50% of caps and we've never really commented whether we are we're in the process or not because that's just not our policy to comment on confidential processes. So what I would say is that we follow our our capital discipline. So we want to make sure.
Sure that any acquisition that we do pursue.
Make sure that.
Within our financial guidelines in terms of our balance sheet management and it has to be strategic.
To our company and also accretive.
Okay. That's great. Thank you very much.
Thank you.
Thank you. Your next question comes from the line of Arun Mcgill from TD Securities. Please go ahead.
Thank you.
Recognizing that we're in a dynamic environment I'm wondering if you can comment on.
<unk>.
How you are.
Preparing for future opportunities as it relates to.
Hum.
Future.
Build around caps, whether it be another frac et cetera, what sort of contingencies partnerships other mitigation to some of these inflationary pressures.
And potential labor disruptions supply chain disruptions that you might be seeing with you factor in including potentially reconsidering your project hurdle rates to be potentially higher.
Good morning, Linda.
Very good questions that youre asking.
Maybe I'll try to.
Attack some of these in order and then maybe I'll pass it on.
But overall, we see a lot of benefits from caps and whether it's a potential zone four or downstream.
At our Frac storage complex.
Yes.
We feel that we have a very good position there.
Frac Frac capacity is very tight I think everyone knows that so.
What we are working with our customers and should we should there be sufficient demand.
And we can contract up our base.
One in Frac two.
We're certainly also working towards contracting your Frac III and if we have sufficient support.
We will.
That project, but.
Again, we'll be very financially disciplined to make sure that.
<unk> been in place before we sanction any further projects.
I think that from a cost inflation perspective.
I think that's very real and obviously, we have to reevaluate our cost of capital and our return thresholds.
On a continual basis, especially in the environment that we're in.
Maybe just with respect to just.
Inflation and how we manage that.
I can pass it over to Gerry.
Morning, Linda Yes, really good question I think.
I think about what we can learn from jobs in particular, and so I think it's important to look at all aspects of the project and particularly how we assess risk and abnormal are rapidly changing business environment. As you noted and so when I think about some of those leaders that we can pull around managing inflation, it's really around things like locking in prices. When we can trying to indexes when we can't.
Looking for economies of scale, where we can consolidate things where it's appropriate to do so.
In terms of acquisition of new materials, it's derisking equipment deliveries through early procurement building and leveraging relationships with suppliers. So we can push ourselves to the front of the line and things like increasing inventory for critical parts that are difficult to come by so we don't get stuck. So those are some of the mitigation that we'd look to apply going forward.
Thank you and maybe on a separate note can you just help us understand.
Some of the areas in your system that have a little bit of a white space on what sort of operating leverage there is and how we might think of potentially even a sensitivity to that.
Sure, maybe I'll turn that over to Jamie.
Yes, Linda.
Where we see the white space right now would be traditionally in our in our gathering and processing side of our business.
So.
In the north where we're seeing.
Record activities around wapiti.
Obviously, we've telegraphed that we're looking at a potential expansion at.
Pipestone and we did note that we we re licensed pipestone.
In Q3 to go from 200 to 220, that's that was immediately highly utilized.
But Simon is a facility that we're seeing a lot of activity specifically is as white cap purchase X T O and then in the south as well we were seeing unprecedented active.
Activity with some very strong producers in that area as well.
The the basin assets are liquid infrastructure is highly utilized but we're also leveraging relationships to be able to help our producers.
With their growth plans, there as well that bridges into some of the things that Steve just talked about with respect to opportunities around expanding our fractionation.
And storage business as well so lots of opportunities.
We do we do see the highest work in our business. If we can utilize white space and certainly confident that we're going to.
Seeing that growth in the quarters to come.
And maybe if I could just add I think that we should also remember that we.
Have a very strong condensate business and with key NPL expansion being in place.
Say early in 2024.
There'll likely be more demand for condensate in our system and also.
Storage. So BTT is it's going to be.
Thank you.
Thank you Gary next.
Next question comes from the line of Robert <unk> from CIBC Capital. Please go ahead.
Yes, just.
A question here on the cops cost overruns, what impact you expect on zone. Four can you reprice for that segment, given its not sanction and what happens to the relative competitive positioning in the system.
Yes in terms of.
Hi.
Thats a good question Rob.
We're still working with our partner to try to.
Secure the volumes necessary to commercially sanctioned.
Sanction that project, we are advancing estimates on the on the cost and obviously we have.
Real real time experience in terms of cost and productivity on our top pipeline, which we're obviously, we're revising at the same time.
So.
Again, all I can say is that we.
We will stick to our <unk>.
Financial return thresholds of.
The 10% to 15%.
In order for us to sanction that project, but again with the with the growth in the basin.
And along that segment.
Right.
Just.
Just strategically for the producers even if the poles higher isn't just the utility of having that zone four segment. So important.
That.
It was down a little toll variability or increase relative to where our costs have gone.
Yes.
And I can't speak to specifics, but what I can say is that.
The need for competition and VC is no different than than Alberta, and obviously there'll be a lot of growth, particularly with <unk>.
Coastal gas link and Ken to LNG coming service in a few years. So so again I think that's an area that needs more industry competition and again, we have a solution that we can provide.
Okay and just.
I'm just wondering.
What has to happen to move the pipes on expansion.
It just seems like.
Pretty significant amount of capital in the budget for Gabon, developing that asset for something that's not.
Sanctioned.
It's a competitive area so what.
What are we to take away from the substantial development.
On nature related to that.
Sure. So on the Pipestone expansion, yes at this point Robert It is it is.
His unsanctioned, but we have I mean, we're getting much much closer towards that that's why it's included in our guidance and I would say that we haven't put out the details yet ftes what's that.
The new capacity could be but it will be at the higher end of our.
Return threshold is kind of what we're looking out there.
Sorry, Im not sure we fully understood. Your question. So we should just clarify.
Yes.
It just seems like a lot of capital for something Thats still under development. So I mean, it sounds like the probabilities or perhaps higher than you're suggesting despite it being a competitive area.
Are we looking at that the right way or.
How are you looking at.
Sorry, Robert I want to clarify that I was referring to the pipestone expansion of the 45% to 55 not selling for so they are no cap.
In our in our guidance first on floor at this time as Dean mentioned, we will remain very disciplined when it comes to sanctioning that before so there's no nothing in the capital budget.
I understand that was asking about.
About pipestone, but maybe I'll move on to the.
Hydrogen project.
The recently got from mountain sponsorship from the Alberta petrochemical plant.
Yes.
Jarrod see any upside there any development potential from that.
Project.
So Robert I'm, not familiar with the project that you're referring to.
Our liquid air.
Margin and project just receive a little bit of.
Government support.
So.
As we look at.
Hydrogen is a.
And opportunity.
Can't speak specific to whether we.
Whether we're involved in that project or not.
But certainly in certain applications.
Within the.
The regulatory landscape, specifically around the clean fuel standards, we certainly see a golfer for blue hydrogen.
In Alberta, and an opportunity based on the very.
Gil.
Advanced phases of Sidoti capture and sequestration that the Alberta government has has been a leader in that.
That ties nicely into that opportunity and as a result, I think we've shared that we do see opportunities with respect to the Sidoti transportation.
Frustration.
Side of the business.
We've got opportunities that we're working on in that space, but I can't speak specifically to that to that particular project.
Okay. Thank you.
Thank you. Your next question comes from the line of Bon ton from BMO. Please go ahead.
Hi, Thanks, good morning on.
The caps process the sale.
View on.
Taken in caps changed at all over loss.
Since the beginning of the year what are strategic layer.
And just the way you calculate on accretion.
Good morning, Ben.
Just making sure I understand the question, so youre, saying with with the tap sales does this change your outlook on on taxes was that the question.
Hey, Dana I'm more curious about how are you looking at differently because I just.
Maybe I'm reading tea.
He leaves a bit more just sounded like you were shut down.
Taken an early just this year quite more quickly.
Like as you've gone through a process. It seems like it's more needs to be accretive needs to be strategic clearly, it's probably strategic so it sounds like it's more of a.
Accretion exercise now.
Well when you say I mean.
I think if I understand your question, Ben Youre, asking specifically to the other 50% of taps and how we're looking at that and if that's the case.
Again, we don't comment on specific M&A type of opportunities.
But.
What I can say for all the M&A opportunities.
It has to meet our financial parameters in terms of just making sure our balance sheet is in line.
It's got to be strategic and it has to be accretive so whether that applies to the other 50% of caps or any other opportunity we might look at it we sort of look at it very similarly.
Okay, Dana I can't confirm your your accretion is that.
Is that DCF per share and then is that is that going.
Well that's a good question.
DCF would be the primary measure we do look at a number of different measures, but DCF would certainly be a primary one and.
I think we look at things over over a longer period of time, but we do.
Recognize the need to have near term accretion and whether that's in year, one or year or two it has to be within a very sort of short visible timeframe.
Generally would be the expectation.
Okay got it and what are to capture me editor.
<unk> opportunity how do you think about funding now you have a balance sheet in good shape exiting this year a lot of cash flow generation next year, where our Capex budget is I mean, if you could could you take on caps yourself about equity.
The remaining 50%.
I think again Q Dean what he said those are things that.
The process well along.
How far along on the other 50% and I don't think we can comment on.
With regards to the advocate.
Okay, but you really like here.
Going into next year, you're it sounds like you're going be quite under Levered.
The cash flow that you are spending on next year.
Okay.
That's correct, yes, I think I think it's probably good to just step back and look at our overall capital allocation priorities right. It really nothing has changed compared to what we talked about at our Investor day in March it's really balancing two things. One is first priority is maintaining the balance sheet and I think the modest capital program that we have for next year.
We'll support that and it's prudent given the inflationary risks that we see and are likely to persist into next year and that's going to be balanced with.
Our next priority, which is returning cash to shareholders.
Whether it's dividend growth or buybacks.
The way we look at the dividend is really it needs to grow with our fee for service business and we continue to expect an EBITDA compound annual growth rate of 6% to 7% and that's from 2022 to 2025 from our fee for service business.
Okay, and maybe just maybe.
Maybe just add to aileen.
Like she mentioned our capital allocation priorities are our balance sheet, obviously, returning capital to shareholders.
Shareholders, but also evaluating sort of the merits of new projects and adding yields overall were trying to add value to our shareholders. So it's those three items in terms of how we look at allocating capital.
Okay. Thank you.
Thank you.
Thank you. Your next question comes from the line of Andrew Kuske from Credit Suisse. Please go ahead.
Thanks, Good morning.
Maybe just a big picture kind of question and it relates to your conversations with customers.
And how do you really think about the trajectory of.
Natural gas flows over the next couple of years in particular, as we head closer to that moment, where the flip the switch got flipped on LNG, Canada.
Good morning, Andrew.
Well I think that's a great question.
<unk>.
I do think that the world is going to need more natural gas and a lot of that is LNG.
I do think that producers generally in the world are still being disciplined so youre not getting a super big supply glut.
Response, like we've maybe seen in previous cycles. So I think that's going to be positive for the supply demand balance.
We should remember in in Western Canada that we are adding more egress on Tc system alone. They are adding about one five bcf a day of additional.
Additional capacity so.
Our basin has a very competitive supply cost relative to global standards. So I certainly believe that with increased egress, we're going to see.
Additional volume growth in the basin like we just saw in the last year with a Bcf a day being added so on a based on not only produces 17 Bcf a day if you add another.
BB and a half before Ken.
<unk> LNG comes in service still.
Still a lot of growth for our base and then and we're very well positioned to capture the incremental volumes associated with that.
Okay. Appreciate the color and then maybe somewhat related.
When you think about.
The storage position that you have.
When you think of the outlook for bringing on incremental caverns.
And just some of the roadblocks that exist with.
The amount of water thats needed and just.
Others trying to pursue storage alternatives to I guess, how many <unk> do you think you could bring on.
In a given year and then how much industry capacity exists when we start to think about water usage and all the other sort of impediments that exist.
Yes, maybe ill start with this and I'll pass it over to Jamie.
Good question I mean storage is very valuable asset inter basin.
I think sometimes are one.
For commercial and operational reasons because.
Flow of product doesn't always happen Ratably. So you have to you have to manage.
Some upsets and you have to have enough.
Inventory, sometimes just to just to manage operation so.
Our storage business is very strong and we have the largest.
Capacity in Fort Saskatchewan, and our Salt caverns. So we have over 15 million barrels. So we actually have a lot of storage capacity.
Even handle more incremental business already so we're very fortunate from that perspective.
As there is.
More requirements and demand for more.
Carbon storage, we have a lot of capacity not just at <unk>, but on our Heartland lens, we have all the salt salt rates there as well.
You are right, we do have some water wells that we have on site to in addition to access to.
To river access water.
On top of that I think longer term.
I can certainly see us.
Also trying to and we are looking at opportunities to recycle water as well in the area, which would be.
Great solution from an environmental perspective.
So, let's just still in development, but.
Maybe I'll turn it over to Jamie <unk> got any other comments to add.
Yes.
You hit it on the <unk>.
Al on the head is that these are assets that are very difficult to duplicate and to answer your question with respect to timing I think we will mine a cavern in the order of about a million barrels that takes multiple years to mine so having those catherine's already developed.
As extremely valuable asset for this organization and ultimately one that we expect that we will be able to offer to the basin.
Certainly in the near term as Dean said.
Condensate business is growing continuing to grow and seen.
The importance of storage within the base and then the growth.
Requirements, specifically to support a lot of import.
Condensate that we're seeing coming into western Canada, but also operational storage.
With respect products.
To enable whether it's our marketing group or our customers to be able to hit the highest value markets.
Seasonally and also.
Throughout the world So can we.
Just to sum up storage is a big part of our business, it's very strategic parts and it's theirs.
I wouldn't say necessarily a high barrier of entry currently with respect to People's ability to mine storage.
But certainly from a timing perspective, it's not a part of the business would be easily replicated within probably a five year timeframe.
<unk>.
Okay. That's very helpful. Thank you.
Yes.
Thank you. Your next question comes from the line of Patrick Kenny from National Bottle. Please go ahead.
Thank you yeah. Good morning, just wondering if you could provide a bit more color on this sequestration project most of GP.
Yes.
<unk> size and scope of the hub.
And also commercially.
We should view this as more of a one off Standalone project or if youll look to integrate this service with caps, the frac expansion or perhaps incremental processing capacity contracts.
Hi, Patrick good morning.
Yes, that's a great question and very soon have you to see to see that we were awarded some Reits.
Maybe I'll take a stab at it and get I'll pass it over to Jamie.
Overall, I mean, the world is going towards decarbonization, and maybe there's less emphasis on its currently just because of the crisis that we see in Europe .
In Asia right now in the high prices.
And the demand for a reliable supply of energy. So I don't think that thats ever going to stop.
I do believe that the narrative of decarbonization.
It's going to continue.
No that carbon taxes will continue to rise and there is other.
Legislation that's in place are going to be in place that is going to drive more of that direction.
We think that areas like.
Fort Saskatchewan.
On the industrial Heartland, and also grandparent prairie or areas, where you have higher concentrations of industrial activity and emissions.
And we certainly see.
Please sequestration next aspect of it gathering.
Sequestration aspect of decarbonization as a midstream opportunity.
So we think so anyway, we're positioning yourselves there.
Positioning ourselves, obviously and in the industrial Heartland in Edmonton, and Fort Saskatchewan, as well and leveraging off of existing infrastructure, where we have it and also our expertise that we have as well but.
Jamie I have anything else you want to add I think thanks for the question Patrick the only thing I'd add is that and this is a common theme for our organization as you'll note we have partners in that project.
In our minds strategic partners with respect to we all bring different things to the table in that project.
We've had a lot of interest from.
From <unk>.
Potential off takers for that project and is one of the reasons why we chose that.
That that area in that specific project. There is lots of other parts of the basin that we could have.
<unk>.
Throwing our hat in the ring, so to speak as well and we chose that area for a reason.
And.
And then I guess the other thing just to tie to your last observation is is that it's just another service offering in our mind that that we can use to create value for our customer and attract business into our entire value chain.
Got it okay. Thanks for that guys.
And then maybe just a quick follow up given the overruns on caps.
Wondering if you might look to revisit some of the noncore capital recycling opportunities that you had highlighted.
Highlighted earlier in the year.
I know you still expect to land within your leverage targets, but perhaps just to give you a little bit more cushion on the balance sheet as you.
Perhaps look to grow the capital budget for 2023 more towards historical levels.
And Thats a very good question and I think our business is that we have to be remain very focused and as we've grown over time. There is theres assets in our portfolio that are less strategic than and less relevant. So I think we always have to continue to to look at that opportunity and we will certainly do that going forward.
Okay perfect. Thanks, I'll leave it there.
Thank you.
Thank you, ladies and gentlemen, as a reminder, should you have a question. Please press star followed by the number one.
There are no further questions at this time ill be turning the call over over back to Kathy. Please go ahead.
Thank you.
Thanks, all for joining US again today and please feel free to reach out to our Investor relations team with any additional questions you may have.
Thanks.
Ladies and gentlemen, this concludes the conference call for today, we thank you for participating.
Please disconnect your lines have a great day.