Q4 2022 Keyera Corp Earnings Call
Good morning, My name is <unk> and I will be your conference operator today at this time I would like to welcome everyone to kiosk VITAS from 'twenty two year end conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be question and answer session.
We'd like to ask a question. During this time simply press Star then the number one on your telephone keypad.
We'd like to withdraw your question. Please press Star then the number two thank you and I would now like to turn the call over to Mr. Colvin Lock manager of Investor Relations you may begin.
Thank you and good morning.
Joining me today will be Dean Setoguchi, President and CEO , Aileen Merrick Park, Senior Vice President and CFO , Jamie Urquhart, Senior Vice President and Chief Commercial Officer, and Europe is Germany, 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 for additional information on non-GAAP measures forward looking statements. Please refer to <unk> public filings available on SEDAR and on our website.
That I will turn the call over to Pete.
Thanks, Kelvin and good morning, everyone.
Europe delivered outstanding results in 2020 to generating more than $1 billion in annual adjusted EBITDA for the first time in our history.
This result was driven by record gathering processing and marketing contributions and solid liquids infrastructure performance.
We saw 8% year over year volume growth in our G&P business as customers remain in a strong financial position, while continuing to take advantage of attractive economics and our capture areas.
Our Alberta and Biofuels team delivered record run time before taking the facility offline the fall to complete a six week planned turnaround.
<unk> strong performance helped drive a record marketing year and the success of this turnaround will support continued.
Continued high performance from this facility.
We are well positioned to continue to earn strong results for shareholders as we execute our strategy by leveraging our integrated value chain to support continued patient growth.
We have several recent notable achievements.
First we're expanding our pipestone gas plant.
This project is supported by long term take or pay agreements.
It increases our capacity by 40 million cubic feet per day and is expected to be completed in the first quarter of 2024.
Secondly, we acquired additional capacity at our core GFS complex.
The acquisition closed this week.
Added significant fractionation jeopardized nation storage and pipeline capacity.
Eliminating newbuild risk in an inflationary environment.
The immediate addition of capacity in a high demand frac market strengthens our ability to add incremental volumes.
Long term contracts across our value chain, including caps.
Thirdly.
We progressed caps towards completion and line fill is underway.
<unk> is now 99% complete and we're on track to bring the pipeline into service in the second quarter.
Our final cost estimate remains unchanged at 1 billion net.
With caps and service Keira can provide montney and duvernay producers a much needed competitive alternative for all services from wellhead to end markets, including liquid transportation on a new pipeline.
With fully integrated assets, we can better compete for volumes that earn full value chain returns.
Kaps has been years in the making and it's a platform that propels us forward on what we do best delivering value for customers and shareholders.
Yes.
In the past in the last five years, we have invested significantly to establish a footprint in the montney and strengthen our integrated value chain.
Projects like Wapiti, and Pipestone caps and a recent PFS acquisition, all contribute to high quality fee for service cash flows.
This supports our annual adjusted EBITDA growth rate of 6% to 7% from our fee for service business laying the groundwork for future sustainable dividend growth.
Consistent with our Investor Day, I'll look last March our go forward capital allocation priorities are first to ensure continued financial strength than to balance increasing returns to shareholders with future capital investments.
I'll now turn it over to Eileen to provide an update on <unk> financial performance for the quarter.
Thanks Dean.
Adjusted EBITDA with $212 million for the quarter at a record 1.03 billion for the full year.
<unk> $294 million and $956 million at the same periods last year results were driven by strong performance across our three business segments, including record contributions from GNP and marketing.
Distributable cash flow was $104 million for the quarter and $654 million for the full year compared to $207 million and $669 million for the same period in 2021.
2022 Bcf was impacted by higher maintenance capital spending related to the AF turnaround, which occurs once every four years.
We recorded a net loss of $82 million for the fourth quarter and net earnings of $328 million for the full year compared to net earnings of $90 million at $324 million for the same period last year.
The fourth quarter result was impacted by $180 million noncash impairment charge, mostly related to the fact that Scott.
Yes.
Sure continues to maintain a strong financial position ending the year with net debt to adjusted EBITDA of two and a half time at the low end of our target range of two five to three times.
This result includes the cash received from the equity funding completed in December to fund the <unk> acquisition that closed in February .
Moving to our guidance for 2023.
Gross capital expenditures are now expected to range between $200 million and $240 million excluding capitalized interest.
This is up from the previous range of between $140 million to $180 million and is primarily related to cap spending deferred our 2022 to 2023.
Maintenance capital expenditures are expected to remain unchanged at between $75 million at $85 million.
Consistent with prior year's annual marketing segment guidance will be provided with our first quarter results in early may.
After the conclusion of the NGL contracting season.
Cash tax expense is now expected to be down for the previous guidance of 10 million to $25 million I'll now turn it back to Steve.
Thanks Aileen.
<unk> infrastructure will continue to play an important role enabling based on growth.
In 2022, you are based and set new records for both natural gas and crude oil production and is positioned for continued growth in 2023.
Looking further ahead, we see energy security demand growth and energy transition as catalysts supporting long term natural gas and natural gas liquids demand.
On behalf of cures 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 should you have a question. Please press the star followed by the one on your telephone keypad, you'll hear Tristan Comped acknowledging request questions will be taken in the order. It was received should Ya Li She comes from request. Please press the star followed by that too.
If you are using a speaker phone please move to handset before pressing any keys one moment. Please for your first question.
Your first question comes from the line of probe Hull from Scotiabank. Please go ahead.
Okay.
Good morning, everyone. First question is on caps now that we're seeing line fill on the projects and almost completion can you give us an update.
On your contracting efforts, there whether or not we've seen additional contracts added in recent.
<unk>.
And we've seen a tone change just given that the projects all of those in service as well as the fact that we have seen an operational incident on competing pipelines.
Good morning, Rob.
Dean.
Thanks for your question.
Listen I understand the significance of your question and wanted to get an update on that will provide an update later this year, but I just wanted to make sure that we take a step back.
Press one to hear the previous party line, Chris to just skip to the next party line press three.
I E.
Yes Hello.
Hi.
Get disconnected.
No Sir you're still on the line.
That comes from the line of Mr. Rob Hope.
Should we move to the next question comes from the line of Robert Kwan from RBC. Please go ahead.
No. We don't we can answer Robert question, we were just interrupted so we didn't know if we got disconnected so.
Okay, sorry, sorry Raul.
Ken Let me just.
One.
We will provide an update later this year.
But I just want to make sure we step back look at the broader picture.
I'm sure you can appreciate that.
Just given the situation that we're in.
Sensitivity of contracts.
We will wait a little bit later in the year to provide an update and keep in mind that the other 50% of caps is yet to fully be completed here, which we would expect it is going to happen in the next few months.
But taxes will be in service as soon as you heard in the outlook for the basin has never been stronger.
When you look back to what.
We disclosed at Investor day, we disclosed a 6% to 7% CAGR on our EBITDA and in the near Yours, a lot of that's going to be driven by filling white space from assets that we've already made an investment in.
And just filling white space, but as you start to get out.
2020 for 2025 and beyond you're going to see taps cash flows continue to grow and we're very confident about that.
So.
We.
We will provide an update later this year, but we feel very confident with where contracting is going.
Hey, Dan did you want me to ask my question Robert.
That's right, but you can go ahead.
Oh, perfect Alright excellent.
So.
I just think about your prior strategy was to finish up cats.
And then.
Our reduced capex generate a lot of free cash flow get the balance sheet back in shape before taking on major growth, but you've had great performance marketing has been strong for the balance sheet.
Leverage is at the low end of your target range. So are there things that you wanted to previously do that.
Hi, Dan.
<unk>.
That you can now take on from a growth perspective or should we still be thinking about.
Lacks the cash flow come on caps integrate that with.
The new capacity at <unk>.
And capex should be relatively low for the next couple of years.
Yes.
Thanks for the question Robert.
That is a good question.
When we think about our overall strategy.
Definitely we see a lot of opportunity ahead, but.
Where we are today is.
Is that this is a major project that we're putting the service. We finally have that fully integrated asset base, we can leverage.
Full service offering rates from wellhead to end market and so we see a lot of opportunities. This year just to get the asset into service and to deliver on our cash flow growth not only for this year, but to position ourselves for future years.
Do we see more opportunities for growth beyond caps, absolutely, but our primary focus this year again as balance sheet.
Just really making your asset sweat and filling them up and.
Again continue to build that growth profile for the future as well.
Got that.
I can just finish with a question on the pipestone expansion.
I guess.
First is just with the contracts are those volumes flowing on the caps and into Capex and then the second part is what this is a relatively small project you've talked a lot at a high level about your deploying capital you want those long term.
Take or pay contracts.
Covering your entire return so just as it relates to this here can you just talk about how much of the capacity is covered by take or pay contracts what the average duration is.
Basically the multiple or the return just based on the long term contracts in place.
Yeah, I mean listen that's a great question great question.
We're very excited about the <unk>.
Pipestone expansion and.
We don't speak specifically for for obvious reasons, a boat commercially sensitive.
Youll transactions that we sign.
But.
These are long term contracts with.
With high take or pay.
And.
I can say generally that we have signed integrated deals associated with that incremental capacity.
Okay.
I can see.
So you've had that 10% to 15% target return is that entire return on the capital here being covered by.
The longer term projects you have in place or do you need okay. Okay. Perfect. Thanks, Yes, absolutely and it would be at the high end of our expectations.
Alright. Thanks.
Thank you and your next question comes from the line of Linda <unk> from TD Securities. Your line is now open.
Thank you.
Can you help us understand.
Zone four.
How that is looking any sort of updates on conversations their activity.
Sort of.
Inflationary pressures.
Any context, you can provide would be appreciated.
Sure Good morning, Linda.
That's a very relevant question, particularly when you consider the news.
With the Blueberry first nations group in the Treaty eight and.
BC.
I think it's really encouraging overall.
I think what we're seeing here is that it's positive because it's a collaborative decision to support future development in the area.
But there's still a lot of information that we still have to learn and still has to be disclosed. So we we wait for that.
But overall, we think that it's positive for future development in D C and.
And the possibility of zone four when we think about the cost of zone four.
I think there is we have much better experience with our caps zone one to three so we feel like the cost estimates.
So we have help us to better estimate what that cost is and also execute that project. If we do choose to sanction it in the future.
The other thing I'd say is that there's a lot of large.
Pipeline projects that are underway in capsules, one of them, but obviously this coastal gas link it with a lot of work being done on the NGL system.
There's tea MPL as well, but a lot of these projects will be completed in the next.
Year on year, and a half so when you combine that with steel prices coming off.
I think that there will be a better time for construction in the future.
Sure.
But offsetting that is obviously a regulation is increasing.
Increasing so I think what it also means is that the infrastructure that you have in the ground is only going to become more valuable over time.
But overall again like I say I think we're excited with the progress of what we're seeing in B C and the potential indications work zone four.
Thank you.
Thank you and your next question comes from the line of Robert <unk> from CIBC capital markets. Please go ahead.
Hey, good morning, everyone I, just wondered if you could give us some update on what youre seeing in terms of customer activity. Both following the Blueberry River first nation <unk> agreement and also in light of the lower.
Client prices in particular natural gas.
Yes.
Very good question.
Roberts.
But overall I mean, we.
We saw tremendous growth in our basin for both crude.
Crude oil and natural gas in 2022.
We believe that there is.
Certainly room for growth in 2023.
And the reasons for that is.
The producers at least in my 30, plus year career I've never seen him in a stronger position that they're in today.
Economics are still very strong.
We know that there's going to be some some more maintenance on TC system. So we know that has could create some softness during periods of 2023 for April .
Overall, we think the environment is.
Very positive.
What we're told from our customers that they are going to continue to grow.
In our capture areas.
They see great economics, which is all good for our infrastructure. So we see continued growth based on macro factors and also are the discussions we have with our customers.
Okay and then just.
Now that you've closed the <unk>.
Transaction, one operational and capital enhancements quite genre.
And why.
Yeah, well first of all Jeff first we're very excited to have closed that transaction. This week.
If you ask the two previous CFO Ceos, Jim and Dave I would say that the they worked in that transaction for a long time and so they are both very happy that we finally got it done.
We see this as a fantastic opportunity because this is our core.
The nucleus of our whole NGL business and.
And to get a lot of extra capacity, especially for Frac, which is very tight right now.
But also the optimization, we talked about storage and also the pipes that connect between Edmonton and Fort Saskatchewan.
It's just super values to our business and the services that we can use to help leverage to provide.
More services across a whole integrated network.
And particularly on the product.
So now we're just going to make sure that we leverage the capacity that we acquired.
But in the future, we certainly see a potential for a debottleneck at our.
Existing product that we have.
And.
Longer term there could be a frac III, but in the short term again, where we're going to focus on maximizing the value what we acquired.
The Debottleneck would be the next thing we look at.
Okay. That's helpful last question for me just.
I'm curious on why the write down on assignment.
It's clear the volumes of decline there over the last year or so.
But only only by about 12%.
Caps coming on.
Would seem to me that makes the plant a more attractive option for producers Hawaii.
Noncash write down.
Yes, that's a very very very good observation Robyn.
You know what the NIM is accounting standards, obviously that we comply with but I'll turn that over <unk> in just a minute, but I'd like to share maybe some my perspectives first.
I've never been more optimistic about the the whole montney fairway as I am today, and let me tell you why when I think about just the future growth in our basin over the next two to three years, particularly with <unk>.
Turn to LNG coming into service on the horizon.
Some more expansions on the NGL system.
We certainly see future basin growth.
When you look at the Montney fairway in and where it overlays with our capture area for some minutes, it's in a great area.
I certainly believe that the montney.
Especially in that neck of the woods is still underdeveloped.
We also see an emerging duvernay play and would you be more a little bit more to the east of our of our <unk>.
<unk> gas plant and the economics now and that player.
Very good and that play is just emerging so to me that's in the very very early stages of development.
When you also add that all up with a lot of land in that area.
<unk> turned over in the last two years, including X GL ex fuels land position in shelter in position, which are huge land walks, where there was minimal development. So I think the activity in this area is going to be very robust for decades to come but having said that again, we we comply with accounting standards.
And let me turn it over to our lean and she can speak.
Speak to that in more detail.
Thanks, Steve Hey, Rob.
So as you can appreciate we have long term contracts in place at high fees to underpin capital. So as we see these contracts begin to roll off near the really the backend of the decade.
These are expected to be lower so again as Dave mentioned, we see development in volume growth.
Likely at lower fees than what we've seen through these long term contracts. This is largely what drove the write downs for accounting purposes.
Okay. Thanks very much.
Thanks Robyn.
Thank you and your next question comes from the line of Andrew Kuske from Credit Suisse. Please go ahead.
Hi, Thanks, Good morning Deane.
Dean I think you mentioned, Jim and David worked on a capex deal for years, So I guess youre sort of third time Lucky.
On getting the deal over the goal line.
Ill luck Ed.
Okay.
Our hard work and perseverance over all the years.
Maybe if you could just talk a little bit about the Frac dynamics you see on a go forward basis, because obviously the market is tight right. Now there is one expansion project Thats probably going to go ahead, you have consolidated capex.
How do you think of the lay of the land on the Frac market, because you've got more gas production coming.
More NGL production production coming out of the ground. So how do you think of the lay of the land right now.
Yes, that's a good.
Great question Andrew.
When I think about the Fracs dynamics, obviously the market is very very tight.
When I think back to just the NGL volumes in our base and even going back to 2020, what surprised me is that dry gas drops.
Pretty pretty dramatically.
But if you look at the <unk>.
Natural gas production remained relatively flat and I think what that indicated is that a lot of the drilling really shifted to the liquids rich drilling because it was more economic so now that we've added a bcf a day DCF in a half a day in the last year or so.
Obviously, theres just with that as a big influx of more Ngls.
And you know what there is something going to be some maybe some field frac projects where.
Some of that will go maybe straight to end markets, whether that's the west coast or local markets, but I think that the hub will always still be in.
Enforced, Saskatchewan, and obviously and we have a great position there with our campus Frac and storage site.
We're very happy as I said before about the acquisition that we made because that's.
That's capacity that we have available now and we can use that in a very tight market again to leverage our entire integrated value chain to generate that that broader cash flow stream. So I think that's a big advantage and again theres no execution risk on that incremental capacity.
We think it's also a great opportunity that we think theres potential too.
Do a debottleneck and we're debottlenecking that has less risk.
As our engineering construction team tells me less risky than doing a brownfield and obviously a greenfield development. So again, we see it as an incremental step to add more capacity with less execution risk.
Longer term again, whereas.
Well positioned as anybody to add more frac capacity should the basin still needed with a third a third fractionator.
So again overall, we are very well positioned and we can do this all incrementally starting with the acquisition that we just closed this week.
Appreciate that color and then maybe if I look across your portfolio.
Some good evidence in examples over the years with partnering with others.
So if you do decide to go build a new frac is that sort of on the table would you look to align with somebody else.
And maybe lower the cost burden or the capital cost burden on the front end and maybe someone else brings some other elements to the table that are just helpful for all of our return profile.
Listen we get asked that question a lot of mainly from people that want to partner with us on our.
<unk> complex and add more capacity there that is our crown jewel. So I guess I'd never say never to anything, but if we did partner with something they would have to bring a significant amount of value to the equation.
That is a very high <unk>.
<unk> Center for our company and.
And we won't give that away to anybody unless again, they can bring something significant.
To the equation.
Okay.
Okay.
And maybe just lastly, when we when we look at our long term forecast we've been very clear that we want to have a self funded program, we could certainly self finance future frac.
Expansions that are needed so with our cash flow. So again, we don't we don't see funding as a barrier to future growth at that complex.
Thanks, Thanks for your question.
Okay.
Thank you and your next question comes from the line of Ben Pham from BMO. Please go ahead.
Hi, Thanks, Good morning, I know you mentioned the coastal gas link.
Wondering if you can.
Maybe unpack.
Potentially the benefit on your.
Value chain and how early do you think you can benefit from that.
Do you expect to maybe have a greater share of the basin growth.
Barclay.
Yes, that's a great question, Ben I think it's a very exciting development for for the whole basin.
When you think of bulk.
Coastal gas link and Canada LNG I mean, this is something that it's.
Ben talked about for a long time, but now we're getting towards the final stages, where we can see visibility to when this is all up and running.
And.
Certainly I guess the way I envisioned and does that a lot of the production.
NBC is going to flow to to fill that two bcf of initial demand.
And a lot of it is going to be backfield. Some it's going to be in D. C someone's going to be in Alberta.
And when you have a critical essential integrating infrastructure like ours.
It helps support that base and growth and so we're going to benefit from those increased volumes across our entire integrated value chain.
Jamie do you have any other comments went out.
No I just think obviously that project is good for the basin and as the basin builds out.
It's going to create opportunities for us downstream.
And do you anticipate if let's say you keep your market share you have today is this.
Really an industry need to.
Invest.
Our next wave of Capex and.
And then for Shropshire U.
It's more really utilization.
Moving up.
Well.
I think certainly with with overall growth in the basin.
We can help support that with capacity that we have already.
We certainly have more capacity at our gas plants, we saw some of that growth already.
Over the last year, we had 8% year over year growth in our in our G&P business.
And to US that's the best volumes, we can add because the capital has already deployed so it's obviously just adding to our returns to our shareholders.
On top of that we have other I mean, we have our kaps pipeline that we're putting into service and again, we think that we're going to benefit from a lot of future volumes that those are going to come online.
For that that system, that's going to feed our downstream business. So I think over time as I said before that likely there'll be more.
We required more in Fort Saskatchewan, where lot of the capacity is tighter there, but again with the acquisition that we just made we have still extra.
Capacity at our pipes.
Pasty and our storage.
And our D S as well so we can support future growth in the basin, it's really the practice and the tightest demand.
And then beyond that.
What we also see on the Horizon is just more energy transition projects and we're very excited about the.
The future of our industrial Heartland lands to 1300 acres that we own there and that's going to position us for future growth over the long term.
Okay, Great and then maybe another topic I wanted to explore that you mentioned.
Return on capital and how it's improved.
The years.
Can you share maybe caps is little bit of work to go on.
R O C but.
How is your gas processing.
Returns Dan is it.
Right Zone and then.
The second part of it I mean, my last question to us.
You mentioned you mentioned an integrated return on capital are you are you more emphasizing that more.
And integrate a return of capital versus how you looked at them individually in the past.
Yes.
Let me just maybe answer your second question and then I'll turn the return of capital question back to Aileen.
Sure.
As we said we're extremely excited about our kaps pipeline because.
This is the first time, especially in the Montney, where a lot of the basin growth is occurring today is that this will be the first time that we can offer that full integrated service. So you know.
Obviously, we're jumping all over that.
We see an opportunity with our gas plants caps frac storage.
Terminalling services and marketing services so.
When we can when we can just clip a few dollars all the way through our every time that molecule touches each part of our system. That's how we generate.
Outsized returns for our shareholders. So again this is why <unk> is so strategic for us and again we're.
Cited that it's near completion and commercially yes, we have an opportunity to fully integrated our deals and we are doing that today, so with that I'll turn the first question over to Aileen.
Yeah. So in terms of return on capital for Gaslog.
Think about the new ones right really wapiti and Pipestone and currently our <unk> on those investments are in the mid middle of that 10% to 15% I think that's a really good range and we see crop. So they are performing extremely well.
And in terms of maybe that integrated RFC.
We do disclose our return on invested capital and it's I think it was 16% at the end of 2022, and that's really to show that.
All three of our segments gathering and processing liquid plus.
Marketing in that power able to really generate.
Best in class return.
Okay very helpful. Thank you.
Thank you and your next question comes from the line of Patrick Kenny from National Bank Financial. Please go ahead.
Thank you good morning.
Just on the higher throughput in the South region.
I know your team has done a good job, bringing in new volumes.
Just with respect to the comment in the release, where you see an opportunity to grow your operating margin.
Just given I'll call it the normalizing natural gas price environment curious, what other factors might be helping to support.
Not only higher producer activity in the area throughout the year, but.
Also your margin expansion potential even if gas prices don't strengthen from here.
Okay. Thanks for the question I'll, just turn that over to Jamie and he can provide more color on that one yes.
Yes, so thanks for the question and it's a really good one.
It's an exciting area for us.
Yes.
Coming back to sort of some of the themes that deans talk to both.
Earlier in the call is that these assets are in the right part of the basin. So they could mean.
What we've found is that the returns that the producers that are drilling up wells in this area.
Yes.
They're they're best in class in a lot of that is driven around the amount of liquids that we're seeing and the strength of those liquids prices as they are correlated to crude.
So.
As you think about.
The economics, and ultimately the activity or perhaps facilities. Its just not all about natural gas prices. That's the first thing.
I pointed out.
So as we as we think about filling up those those assets.
Like any.
Supply demand.
The equation is that we look at the.
The ability to be able to as contracts come off and Dean alluded to a lot of stuff that we're doing we'd like to think is good execution not good fortune, but I'd.
This is probably good fortune as Thats the majority of our significant contracts in the south have come off or are about to come off in the last few months and as a result of that we've been very successful in being able to renegotiate.
Longer term processing deals with more significant take or pay terms and higher fees as a result of the tightening capacity in the south so striking this fall.
Nor taken brasow are becoming clear.
Most to fall <unk> Alder flats is close to full so as producers have conversations with us about being able to get comfort that they're going to drill a well and actually get a process.
We're in a position to be able to offer that service and it's a valuable service and be able to get.
What we think is more represented a value for that service and perhaps we were able to three or four years ago. When there was excess capacity in the system and the customer had a lot more choice and they use that choice two blocks negotiate probably more favorable terms than they are in a position to be able to do now.
I hope that makes sense.
It does yes, no. Thanks for that Jamie how that's great color and then maybe just.
Just sticking with the execution theme sweating the existing assets.
On your Josephberg land position curious, where you're at in terms of expanding the storage and the rail capabilities to.
To handle.
The increase in NGL production across the basin.
And perhaps also to support the low carbon hub strategy.
Yes, I think those are great questions and you know what before I pass it over to Jamie.
First of all I want to clarify that.
Are the expansions that we require for our NGL business.
Especially as it relates to Frac DFS storage.
We have a lot more capacity available at our existing <unk> site.
That would be the most economic area, if we required more capacity to add it at that site. We do have the potential to do that at the Heartland site, but again more capital efficient as the <unk>.
First step to do Capex, but with that maybe I can just turn it over to Jamie that you can talk a little bit about the potential heartland developments.
Yes.
So I. Thank you.
You've hit the nail on the head with respect to sort of how we view that terminal evolving over time is that certainly we continue to have lots of very encouraging conversations with folks around.
There.
Energy transition projects, whether its citing in locating those projects on our lands which are.
As mentioned in previous calls very strategic in relation to adjacent to Dow shell Scott <unk>.
Our and pleases Fort Saskatchewan fractionation facilities, but as we look at building out that.
That terminal, we think about it in phases and the first phase would be more on the conventional <unk>.
Gas liquid side because of the growth in the demand for.
Additional takeaway capacity on rail and more efficient takeaway capacity on rail that is it is a differentiator relative to people's decisions around putting a more conventional manifest rail facility in and because of the.
The location, we can aggregate three or four companies aspirations to build out rail egress into one common efficient facility and then as we build out the initial infrastructure on that terminal on the more conventional sites than we see opportunities probably.
So the mid to later part of the decade to build that facility out and leverage off the existing bones, if you will to to offer up being able to move.
<unk> product that's lower carbon.
Okay.
Okay. That's great. Thank you very much I appreciate it.
Thanks Pat.
Thank you once again should you have a question. Please press star followed by the one.
And your next question comes from the line of Anthony Linton from Barclays. Please go ahead.
Hey, good morning, and thank you for taking my questions.
Maybe maybe just to start and just kind of echoing some of the questions. We've already heard today, just just on the <unk>.
Just just thinking about on return of capital leverage is.
The lower end of the range exiting the year, how are you sort of thinking about a dividend and the buyback as we move through the year.
Yes.
Okay.
Obviously, a great question.
We've always.
Communicated to the market what our plan was which was to get <unk> into service again. This is a $1 billion projects. So it's very significant for our company.
And.
From there we would obviously want to fly.
Our cash flow streams to wrap up as we expected and again I think <unk> guided.
In our reports that we expect to generate a 6% to 7% EBITDA growth out to 2025.
No.
We certainly believe that that's going to support long term sustainable dividend growth and I would add too with with the acquisition of <unk> that would put us.
Probably more on the high end of that of that 6% to 7% range. So we feel pretty good about that so again, we want to get the pipe into service.
We will evaluate where our balance sheet is but this year, it's going to be the focus on our base business, Jamie talked a lot about some of the long term contracts that were we're starting to sign here and we think that there is more on the fairway, let's kind of set us up for future dividend growth.
We're not in a position to comment when that is whether that's later this year or next year, but we certainly see that.
It's definitely something on the horizon.
Okay got you that's helpful. And then maybe just on the marketing side of the segment I. Appreciate you kind of give full guidance as we get into the spring, but could you just give us some color on the headwinds and the tailwind you may be seeing as we move through Q1 right now.
Yeah.
Sure for sure.
We obviously you had a.
Rate year in 2022, a record year, almost hitting $400 million, which is pretty spectacular, but why don't I turn that over to you Jamie and he can provide more.
I was going to joke 44 minutes into the call to get to March 15.
Yeah.
Please go ahead.
On an overall beyond marketing, but as Dean said 2022 is an exceptionally strong year.
But that said, we always come back to our base guidance, which remains at $2 50 to $2 80 per year, but there are a couple of factors that are encouraging for 2023 and I'll touch on those I guess is that.
There is the potential for a lower butane supply cost in.
In our business and we.
We are big consumer of butane.
Yes.
Asked in other parts of our business and then also just pointing out that we don't have any yet turnaround this year.
<unk> continues to run.
Reliably.
We see obviously 'twenty three relative to 'twenty two.
Ability to to see the benefit of running.
At full capacity.
Fundamentally.
Commodity prices as we alluded to are are strong in North America, driven primarily based on exports really Canada and the U S. As a combination feeds.
More and more feeding the world's demand.
And as we see the macro fundamentals.
On the planet.
Supports more low carbon.
Later in hydrocarbons.
We're very bullish on.
On commodity prices and the strength of those commodity so overall things look very favorable in 2023.
But we will provide our updated guidance.
At our Q1 release.
So stay tuned.
Awesome, Okay. That's great color, that's all for me I'll turn it back thank you.
Thanks for the question.
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