Q2 2023 Keyera Corp Earnings Call
Good morning, My name is Laura and that will be a conference operator today.
At this time I would like to welcome everyone Stickier, a quiet second quarter conference call all.
All lines have been placed on mute to prevent any background noise. After.
The speaker's remarks, there will be a question and answer session. 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 press star followed by the number killed. Thank you I would now like to turn the call over to Calvin lot manager of Investor Relations.
You May go ahead Sir.
Thank you and good morning.
Joining me today will be Dean Setoguchi, President and CEO , Aileen, Americar Senior Vice President and CFO , Jamie Urquhart Senior Vice President and Chief Commercial Officer, and Jared is still need senior Vice President operations and engineering.
We will begin with some prepared remarks from gene and I lead <unk>.
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 and forward looking statements. Please 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 announce that our board of directors have approved a four 2% dividend increase.
Returning to euro to its long history of sustainable dividend growth.
The increase was supported by the growth of cures fee for service business segments.
Over the last five years, we've been investing significantly to create a fully integrated service offering from the Montney and duvernay plays through to our core liquids infrastructure and Edmonton and Fort Saskatchewan.
These strategic investments continue to deliver volume and cash flow growth.
We remain on track to reach our targeted annual 6% to 7% fee for service EBITDA growth out to 2025.
Our liquids infrastructure segment delivered 21% year over year growth, reaching a new quarterly record of $119 million.
Cap is now fully in service with the second of two pipelines shipping its first volumes in June .
<unk> integrates our value chain, making us more competitive and enhances our ability to attract new volumes.
Our platform offers customers a much needed competitive alternative from wellhead to end markets.
In our G&P segment, we delivered $84 million in realized margin.
This result was achieved despite the impact of Alberta wildfires.
Again wed like to thank all emergency responders and care personnel, who ensure that everyone remains safe and that our assets were largely unimpeded.
That will work remained strong for our G&P business.
We foresee continued filling of available capacity, particularly at Wapiti and Simon that's as producer activity ramps up.
The expansion of the Pipestone gas plant is on track for completion in the first quarter of 2024.
Our G&P customers are in a strong financial position and have multiyear growth plans.
This is driving continued growth of this segment, while at the same time, increasing the length of contracts and improving cash flow stability.
Our marketing segment had another strong quarter supported by the strength of our isooctane and condensate businesses.
This segment delivered $134 million of realized margin in the quarter and $251 million year to date.
We are increasing our 2023 guidance for this segment to range between $380 million to $410 million of realized margin.
With the major investments of the last five years behind us, we expect growth spending to be lower going forward.
This means we will have more free cash flow to allocate.
Our capital allocation priorities are unchanged.
They are first to ensure financial strength.
And then the balance between increasing returns to shareholders and disciplined capital investments.
Our debt leverage metrics are well within our targeted range and now we increased our dividend.
In terms of future growth investments.
There'll be primarily focused on projects that leverage and enhance our existing core asset position in western Canada.
This could include a debottleneck or existing Frac, a new frac expansion and a potential caps zoned for extension.
And the incremental investments need to generate a strong return underpinned by long term contracts.
I'll now turn it over to <unk> to provide an update on cures for natural performance for the quarter.
<unk> adjusted EBITDA for the quarter with $293 million compared to $316 million for the same period last year.
Distributable cash flow was 207 million or <unk> 90 per share compared to 209 million or <unk> 94 per share for the same period in 2022.
Net earnings were $159 million compared to $173 million for the same period last year.
These results were driven by record performance from our liquids infrastructure segment.
And the third best ever quarterly marketing segment margin.
<unk> continues to maintain a strong financial position ending the quarter with net debt to adjusted EBITDA at two six times at the lower end of our targeted range of 253 times.
Moving to our guidance for 2023 as Dean mentioned, we now expect our marketing segment to contribute between $380 million and $410 million of realized margin. In 2023. This is up from our previous guidance of 330 million to 370 million.
Our revised guidance takes into account financial hedges currently in place and assumes a F run at capacity there are no significant logistics or transportation curtailments and current forward commodity pricing for any unhedged volumes for the remainder of the year.
Growth capital guidance remains unchanged at between $200 million to $240 million.
Maintenance capital guidance is now expected to be between $95 million and $105 million up from the previous range of 75 million to $85 million.
Half the increase is due to the completion of work that was already prepaid.
All of that the increase includes additional maintenance costs, the pipestone gas plant, which is expected to be recovered through increased future revenue.
Cash tax expense is expected to be now.
Now I'll turn it back.
Thanks, David.
The macro outlook for our business environment remains very positive.
Canada's energy resources will be essential in meeting the world's growing energy demand.
Our basin continues to grow and set new records for both natural gas and crude oil production.
LNG, Canada, and the Trans mountain pipeline expansion will unlock future growth.
We're excited to contribute to this growth by being an essential infrastructure service provider.
On behalf of <unk> Board of directors and management team.
I want to thank our employees contractors indigenous rights holders and other stakeholders for their continued support.
With that I'll turn it back to the operator for Q&A.
Thank you, Sir ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the number one on your Touchtone phone and then that star followed by the number one if you would like to with via request. Please press star followed by the number.
No.
Your first question comes from the line of Rob Hope from Scotiabank. Please go ahead.
Good morning, everyone and thanks for taking my questions.
First off wanted to maybe get a little bit of an update on caps.
Volumes ramped relative to your kind of base expectations, just given I guess, it's early days, but just given some.
Dynamics in the basin as well as now that the pipeline is in service have had.
Have discussions with customers accelerated have any additional contracts from clients.
Hey, good morning, Rob.
It's Dean Setoguchi.
Glad you're participating here in our call in the middle of August so.
Read into for your vacation.
Listen it's a great question that you have on tap so they I would've expected that first of all we're very pleased that the pipeline is fully in service with the second pipeline again delivering volumes in June so again, its like any asset when you bring it up.
You know everything doesn't just turn on all at once.
But I would say that that process works very very smoothly.
We worked very closely with our customers and now that it's in service and certainly there is a lot more visibility to growth in the basin. We have a lot of great discussions with our with our producers and again I want to emphasize that first of all we have a fully integrated system now so we can offer that bundled service.
Again, I always like to use the analogy of of your your Internet cable and cell phone and the security home security provider I'd say almost everybody uses a bundled service because it's more efficient and obviously our bundled packages. The same way. So I think that's a great advantage.
What we're seeing is that our volumes are a little bit ahead of where we would have expected to start up.
But again, it's still early days, yet we've always guided to the market that this would be a slow ramp up and we still expect that but as of where we are today.
We are a bit ahead of schedule.
But I would reiterate that as a final note that we did guide 6% to 7% deeper service EBITDA growth out to 2020 slides.
Lot of that is coming from our GNP business and filling our white space, there, but part of it as well as caps and the caps wrap up to 2025, the great thing about tap is that especially with the basin growth that we're seeing we expect it to continue to grow in terms of volumes and cash flow right through the end of the decade.
Alright, I appreciate that.
And then as a follow up just I wanted to dive a little bit deeper into the comments you made on capital allocation.
Specifically with how you will take a look at our performance in marketing so.
Good to see another sustainable sustainable dividend increase.
But when you take a look at moving forward, how do you balance dividend increases versus growth capital and in an environment, where you could see outsized marketing.
Margins like 2023.
Would you look to return those to shareholders via buybacks.
Yeah listen, it's a great question and before I turn that over time lean.
I would just say that we're very pleased with the position that we're in today.
We have we've undergone.
Undergone a number of years of very significant capital for the last five six years and we built a very strong montney position fully integrated montney position over that period of time and we have those expenditures behind us we have a very strong balance sheet and we have growing cash flow. So that puts us in a great spot where now we have options as to.
Where we allocate capital to add the most value for our investors, but with that I'll turn it over to Eileen. Thanks, Steve Hi, Rob Yeah that is a great question I think it is important to take it back to our overall priorities.
Our first priority will always be to maintain our balance sheet strength and were certainly there today.
This year, we are prioritizing paying down short term debt from the higher marketing contribution.
On the balance sheet, our objective really is to grow distributable cash flow on a per share basis. So that we can continue to grow the dividend and this can really be achieved in two ways, one buying back shares or reinvesting in the business as we look out to next year. It will be a competition for capital between these two options.
Our preference would be to do smaller sized but impactful growth projects that meet our investment criteria and really by small I mean smaller relative to the large scale projects that we've undertaken over the past few years.
Thank you.
Thank you. Your next question comes from the line of Robert Kwan from RBC Capital markets. Please go ahead.
Great. Thank you.
I think maybe just continue on the capital allocation topic.
Yes.
I mean clear.
Clearly you are prioritizing the balance sheet I am just kind of wondering.
The low debt to EBITDA is partly a function here of strong marketing.
So.
Do you introduce a third priority.
And even just the physical dividend of reducing leverage like how are you looking at that leverage range is it on the long term marketing number.
Are you.
Even though you have a long term number you kind of just planning for something that's closer to what Youre doing.
The other way you can grow DCF per share is to just continue to repay debt and save the interest as well.
Thanks, Robert Yeah, that's a great question and when we planned leverage I mean that two and a half to three times is is very conservative and certainly through various cycles. It has protected us from from taking any drastic measures like for example, cutting the dividend during Covid, we never had to do that.
So we're very very much.
We want to stick to those in those principles and when it comes to those marketing castles Youre absolutely right. We don't take into account in our plan for outside marketing as we think about leverage going forward, we're really more to that base marketing guidance.
Okay. So is the bias than.
Whether if you can get the growth Capex that's great.
Or is the bias into 2024 to maybe continue to repay debt versus direct to share buybacks.
I think this year like I said that's.
It really is.
Repay use those strong marketing cash flows to reduce our short term debt in terms of the rest of our debt profile. We don't have anything material that's coming due for the next.
Until 2025, and so as we look at next year. It is what if we have some great projects or if it's spread returning cash through buybacks. We will we will look at both options going into next year.
Okay. That's great. If I can just finish with a couple of questions here on caps.
First is are you able to disclose what the actual contribution was.
In the quarter and also confirm that what was booked into the liquids infrastructure was all third party.
Margin the second as Jess.
With your new partner here has there been anything just stumpy, having a fresh set of eyes on caps, whether it's the contracting or expansion potential that you have been able to get out of the partnership so far.
Yes, maybe.
Thanks for the questions Rob Robert.
Maybe just the last question with the new partner, they've been really great to work with.
They are very engaged.
Our team has worked Jamie teams work very closely with them.
So yes, we think that they've been very positive in terms of attracting new business.
So we.
We're going to continue to build that relationship and we're very aligned in terms of what we want to accomplish with this pipeline. So that's all been great.
Your first question.
Yeah.
So disclosing about.
We're not going to disclose the amount of how much caps contributed in the second quarter I would say it was pretty modest just because again it came on middle of the sort of mid mid quarter, but also.
There is a ramp up profile like each customers sort of come on sequentially. So it wasn't like everything came on at once the volumes.
Bonds that we do have so I would say it was modest in the second quarter.
Okay and was it all third party.
Revenue or are you booking.
You have to enter courtyard third party.
Third party and that's been as you know we have a notes I cant remember off top of my head of any any sort of intercompany.
Allocations, but.
Can't confirm it with third party revenue.
Second quarter.
Alright, thank you.
Thank you.
Our next question comes from the line of Robert <unk> from CIBC capital markets. Please go ahead.
Yes, I'd add some interested in knowing what the contribution is and also the schedule of the ramp up over the next couple of years, but it looks like that might not be forthcoming today. So maybe dean you.
Can talk about the actual physical operating performance of the assets since it's been placed into service.
And second.
Okay.
Yeah.
The zone for where you stand with that today and what's your vision for now.
A reasonable timeline for making a decision there.
Yeah. Thanks for the question Rob.
It's great to get the three Rob questions right.
Right off the bat in sequence.
First of all just maybe add more color to the wrap up of caps is that obviously a lot of the.
The discussions we have with customers.
Is very commercially sensitive so we have to be mindful of that their confidentiality provisions put in place.
We will update at.
At the right time, when it's when it's good for our shareholders, but also respecting the confidentiality and sensitivity of those those discussions.
With respect to zone four.
What we remain optimistic on zone four.
Especially as.
We see Canada LNG.
It's not that far away now and once that gets put into service that's going to be another couple of bcf of demand.
And we certainly see our base and growing to fulfill that demand. So I think that's going to be great for our whole NGL value chain. So.
With that some of that is going to be NBC, we've obviously seen a lot of progress with.
The Blueberry first Nations group and also the treaty eight.
So with that Theres more overall optimistic optimism in D. C and so we continue to have a lot of engaging discussions.
With with customers in that zone, four in Alberta, and also in the BC.
Tractor volumes right through the caps and into Fort Saskatchewan, So timing on that I think that we would we'd probably expect more in the first half of next year, but we do we.
We do have really great conversations on that perspective and again.
The whole the whole rationale for.
In a wide producers are really interested as a they want to have a competitive alternative.
They are investing.
Billions of dollars alone that Montney fairway.
From a reliability perspective.
It's nice to have two systems to get your your your volumes into Fort Saskatchewan, where the market hub is.
And second of all ball commercially it's always nice to have.
Two parties that you can negotiate with to for your service. So we're happy to be that competitive alternative.
And I'd also maybe stay as a third point is that we have a brand new pipe. So from a reliability perspective, we think we will have really really stellar run run performance over the next several years.
Maybe just on the on the.
The operating performance on capsule I'll turn that over to.
You're going to Jared here, but I do commend the group for the great job. They did in commissioning and bringing that project up here went to seamless as one could hope for.
Yes, good morning, Robert It's Jaret here, Yes, we're really pleased with how that project came online and ramped up.
Dean described it was really a staged approach with various customers and really on both lines rather than kind of one shot at a time and really pleased with how our ops and business teams worked with the customers and worked with each other to really bring all of those up smoothly and we've been very pleased with the operational performance of that line so far so.
It's allowed us to be a bit ahead of volumes as you heard but it's early days in that ramp up in that operational performance is really key for us in giving our existing customers' confidence in our ability to attract new customers and again really really pleased out of the gate.
Okay. Thanks for that answer.
Similar question on Frac capacity, but it looks like.
Pretty high in terms of your utilization and that's not uncommon in the industry right now.
Leads me to believe that maybe the debottlenecking.
Although it's capital efficient.
Curious, if it's really enough capacity.
Related to that I'm curious about your appetite for being in the market for a new frac.
More significant expansion at the same time that.
I am always in the market with theirs.
Yes, that's a great question I mean, obviously frac capacity is tight and when you look at the forecast for Nat gas volume growth in the basin over the next three or four years is very significant and with that we're going to see a lot more liquids that get stripped out of the gas stream as well. So we think that's a great opportunity for our Frac complex at <unk>.
Yes.
Again, we're very pleased that we're able to add capacity in a very tight market with their acquisition of the 21% acquisition of.
Interest in <unk> earlier this year, so that helps us out.
Youre right I mean, we've been telling everyone that we've certainly been doing the engineering on the Debottleneck, which is.
<unk> likely going to be a great opportunity for us, but we certainly have our eyes set on potential frac expansion in the future as well because more capacity will be required and what we provide a great service out of our out of our GFS side, it's very very well connected from a pipe perspective and for all commodities, but also.
For rail and truck egress as well Jamie is there anything else you wanted to add on that.
Yes, I think you hit the high points I think the only thing I'd add as well is that.
The opportunity exists and that we're making really good progress on actually re contracting our existing frac as well. So you made note that we've stepped into the other 21% of Carefirst, but.
The opportunity is now to be able to re contract and extend existing agreements out into the future.
That's been our first focus where we're we've been very happy with the success on that front and then as Dean alluded to we're looking at opportunities to either debottleneck or expand on our site.
I think I mean, obviously with the fully integrated system out of the Montney.
With caps in place we're looking for those all bundled package deals where we can offer.
GMP services.
NGL transportation and fractionation and marketing services.
So trying to trying to provide that full service and obviously that helps boost our corporate.
Profits overall.
Okay last question for me.
It was related.
I'm happy to say that 2023 marketing guidance increase but as you've heard me say before I had been expecting.
Directionally long term increase so at some point as.
Frac capacity, the bottleneck for being able to do that or is there something else you need to see.
To take a second look at the long term marketing guidance. Thank you.
Yes, I mean, that's a.
Great question regarding our marketing guidance, obviously, we have a very good track record with our with our marketing business and I do want to emphasize that our marketing business is really leveraging off of the physical assets that we own and the volumes that we have their systems. So.
It's a way to really maximize profitability across our entire value chain, but maybe.
Maybe with respect to the guidance.
Potential increase I'll turn that over tiling alright.
Alright, Thanks, Robert Yes, I know this is a great question, because we have consistently outperformed that guidance.
Just a little context on the base guidance, it's meant to represent a level of contribution that we have a high degree of achieving within like certain normal or typical assumption. So and those are laid out in the MD&A, but the record margins that we saw last year and the increase in guidance. This year is largely driven by exceptionally strong.
Octane premiums that cannot be hedged as well as our BOP pricing.
Well above the five year average.
<unk> said, we do plan to revisit our base guidance later this year in light of having access to more volumes now that caps is online and with the additional frac capacity that we just acquired so more to come on that.
Okay. Thanks, everyone.
Thank you.
Thank you.
Our next question comes from the line of Linda every gallon from TD Securities. Please go ahead.
Thank you recognizing that it's a board decision on the dividend increase.
On your.
50% to 70% payout ratio guardrails, how might we think of the frequency and growth rate of future dividend increases.
It's kind of a default be typically once a year or maybe.
Prospectively, we might see.
As new accretive assets, whether they're built or acquired come in and contribute maybe a bit more of a bump then.
Hey, good morning, Linda and Great question on the dividend.
First of all.
I reiterate that we're very pleased to return to dividend growth again.
You would know as well as anybody that that's really the <unk>.
<unk> of our company we.
We started out as a trust 20 years ago. This is our 20th year as a public company.
And we've distributed and dividend out a lot of money over that period of time, we took a bit of a hiatus. After 2019 and part of that was we hit we hit the Covid period, but we also have a had a heavy capital spend with with caps and.
But I do want to reiterate though during that time, we shut off our drip. So we actually self funded caps during that period of time, we didn't increase our dividend but.
Now the cap is behind US, we're able to do that now and we've never had.
We've never reduced our dividend so anytime we increased our dividend it's got to be sustainable, but let me just turn it over to Eileen and she can maybe speak about our philosophy on dividends going forward. Thanks, Steve Yeah, Linda it's really tied to growing that distributable cash flow on a per share basis, so EBITDA, but after taking into account interest taxes.
And maintenance expenses.
And it has to be supported by growth in our fee for service business. So we're on track to achieve that 6% to 7% EBITDA growth out to 2025 that comes from our fee for service business and that does support than growth in DCF per share, but ultimately the timing and the amount of future increases will be.
Yes.
That's the framework.
Okay. Thank you and just as a follow up to 6% to 7% growth.
What is I mean, I'm, assuming it's a high confidence that you can achieve that.
What.
Element of that if any might be coming from future capital investments, even if they're small.
Upon projects versus the white space that you already have or the projects that are under construction.
Yeah, that's a great question.
The great thing is is that most of that 6% to 7% increase as capital that has already been invested already and we've we've we've spent the money. So it's really our G&P business and filling up white space. There. There is some capital associated with the pipes pipestone expansion. So that's in the $50 million to $60 million range, but we've disclosed.
Does that.
Some of that is tied to R. R.
The acquisition of the 21% acquisition of TFS.
And then obviously, we see contribution from our kaps pipeline, that's going to wrap up overtime.
And as I said, that's going to contribute to our EBITDA growth well into the end of the decade, So that will continue to grow.
So we will enhance.
I mean, obviously new projects will have a lead time in terms of build and being able to generate a return off of that but we do see some good projects to two build to add future growth.
For the future as well.
Okay. Thank you and just another quick follow up as it relates to cash flows recognizing that.
There is some below the line moving parts below EBITDA.
Can you talk about the current.
Medium and longer term outlook for your cash taxes and your capital expenditures.
Lighten up in terms of.
Your tax pools, and how they are depleting and how we might think of the cash.
Cash taxes ramping up over the next five years.
Thanks Linda.
Yes, cash taxes, I mean, really we don't provide specific guidance on that we will in the third quarter for next year, but as you think about our pools certainly the <unk> acquisition gave us significant pools.
As well as the large capital projects that we've undertaken that will help for certainly a period of time, but youre absolutely right that there comes a point where taxes is something that is definite.
And we'll comment so that's just something that that we will continue to manage.
Thank you.
Thank you.
Next question comes from the line of Patrick Kenny from National Bank Financial. Please go ahead.
Thank you good morning, just to follow up on the liquids infrastructure segments.
Just wanted to confirm that.
You see this higher demand for your storage and fractionation services as being.
Repeatable I guess under current commodity prices.
And if so what opportunities there might be to exceed that 6% to 7% adjusted EBITDA growth outlook simply from sweating the assets either through optimizing your commercial framework of <unk> or perhaps looking at new ways to maximize.
Throughput in NGL handling capacity at <unk>.
Alright.
Well.
Listen I mean, we still have white space in our system. So we're not forecasting a 100% utilization of all of our assets. So is.
There are possibilities to exceed our 6% to 7% growth I would say that the best opportunities are still there G&P business and also in our <unk> pipeline, where we would have the most most capacity to do that but.
We'll have to see and timing of when when those volumes show up but we do believe that we're going to help enable the base and to grow and we will see more volumes to the system over time.
In terms of higher demand for our liquids infrastructure assets.
Maybe I can turn that over to Jamie if you can provide a bit more color on that.
Yes, so thanks for the question Pat.
I think what you are.
Your question points to is something that we've always done in our organization is trying to either optimize our existing assets physically and we've been able to do that over the years and continue to look to do that.
<unk> asset, but also with the App as well.
We've gotten.
A few extra percent of capacity coming on over turnaround last fall and we've got other ideas to.
Increment up the capacity at <unk>.
Tens of percent, but.
Single digit percent so over the next few years and then.
As you were alluding to a capex. So physically we can do it and then as you alluded to.
Sure My groups mandate is to obviously optimize commercially.
<unk>.
How we can sweat the assets as you said so.
I think there is there is opportunities, but as Dean says I think the more impactful opportunities will lie in the wapiti pipe stones.
The caps.
<unk> that we have that's what's driving.
Our targeted around EBITDA growth.
Maybe just to add to what Jamie said Pat is that it.
We always talk about the 21% interest that we acquired <unk>.
It was talk about the frac, but with it also came storage storage capacity and also the pipeline capacity on our <unk> system between Edmonton and Fort Saskatchewan. So.
As volumes grow we think that theres going to be.
Certainly more demand for that.
That storage our pipeline capacity and that also more volumes also translates to likely more business through our terminals as well so.
I think it's a pretty positive outlook.
And then I guess with respect to.
Throughput in the South region, you mentioned in the MD&A that you expect deep basin volumes to.
Remained relatively strong just given.
The financial strength of producers, but just curious if theres any other.
Amortization or consolidation opportunities across the asset base in the south as you look into say 2024.
Yes.
We will talk about our montney business, which.
Where the majority of our of our G&P.
Margins are generated but.
We shouldn't forget about the deep basin, because the deep basin is still an attractive place. The geology is still very strong not just with.
Some of the conventional plays that have been developed over time, and playing better technologies to drilling completing them, but we're seeing more emergence of the of the duvernay.
That's starting to become a <unk>.
Emerging play down there, which I think it could be exciting for us.
So we see opportunities, but we still have a lot of we still have white space down in our south portfolio. So our primary focus is going to be to fill that filled out and make it as profitable as possible.
But at the same time, maybe maybe Jamie can comment to you I mean I.
I think we're starting to see opportunities to re contract some of the some of the volumes that we have gone through our facilities there but.
And that's been looking good as well yes.
Give a little bit more flavor and I alluded to this I can't remember who was last last quarter or the quarter before is that we.
We are seeing relatively high utilization in our strike in Norway Brasow complex that's connected.
With pipe and as Dean alluded to is that we.
We've been in the last six months in the process of re contracting.
With customers around those assets and based on the fact that there is limited.
Capacity available.
We're pleased to with the results of that re contracting.
The white space that loose two is probably more in the <unk> area, but as dean alluded to is that.
That is where we're starting to see some pretty encouraging results from from the Duvernay.
We have.
Yes.
We are optimistic with respect to.
Being able to support those producers growth.
At the Rimbey gas plant and that that gas plant is fully integrated into our value chain pipeline connected all the way into Fort Saskatchewan.
When so.
That's a key key asset for us.
In the South G&P assets.
Base.
Alright, that's great guys I'll leave it there thanks.
Thanks Pat.
Thank you.
Next question comes from the line of sung Wong from BMO. Please go ahead.
Alright, Thanks, good morning, a couple.
Couple of questions on.
On key our new ventures.
I'm wondering.
Maybe a commercial update on on.
On your key projects.
And new ventures, and thinking more about potential sanctioning.
And I'm also curious around any thoughts around the track legislation on tax credits.
We can maybe comment on how you think for your balance sheet and entities.
Opportunities.
Yes.
The defendant.
Really great questions and we are excited about our new ventures opportunities.
Certainly they are I would say, they're more longer term looking at the back half of the decade.
But again, we think that we're very well positioned to capture more opportunity there as I said before I mean as a as an infrastructure company, we provide essential services to conventional hydrocarbon business, mainly on the gas and NGL side.
But for the <unk>.
Enablement of of low carbon products you need the same kind of services you need pipelines, you need storage above ground below ground storage you need.
Truck and rail logistics and you also need to have processing capabilities as well all things that we have a lot of strengths and so we see a great opportunity there to maybe repurpose some of the assets that we have in the greater Edmonton and Fort Saskatchewan area and specifically we have.
A really great undeveloped land block there that we wanted to develop a low carbon.
Industrial park, but with that I mean, this is all under Jamie's group and maybe I'll turn it over to him to provide more color on that.
Yes so.
Think I can provide a little bit more flavor around.
Some of the things that we've announced previously with respect to.
Relationships that we have with CN around rail I can share with you that we've gotten.
A lot of interest and uptake with respect to customers with respect to the unit train.
Opportunity that we see with CN on our.
Joining lands up.
Up in the Fort Saskatchewan area. So.
We are progressing with.
Understanding those opportunities a little bit more with spending some money on engineering to afford that opportunity.
Similarly, we are in conversations with.
Other entities around.
Carbon capture sequestration to really make our lands.
The preferred location for some of the opportunities that that that others are looking at.
Specific with respect to tax credits not exactly sure.
What what what.
Where youre leaning with respect to that question and perhaps you can just reach out to our Investor Relations group to maybe pose that question and get the answers you're looking for.
Okay. Thanks for that.
I was more curious if.
The legislation is anything different in <unk> than you were expecting I'm, probably not more checking on that.
I can you can you also talk about.
Are you is there anything with these parties projects related to ammonia.
Value chain and.
And could you comment also already is more in the context of multibillion dollars how about capital opportunity.
Maybe just from a general macro perspective, we are seeing general interest in ammonia and <unk>.
I think I think Japan, they are expressing an interest for.
Ammonia they have incentives in place.
How real that is.
Only time will tell but there's certainly a lot of interest.
<unk> heard different projects that have been out there we've been approached for citing some some opportunities on our lands.
But again, it's still very early days. The great thing is is that is this is a real opportunity we have.
I'd say one of the best locations, if not the best locations.
<unk> ammonia project and again, it's just because of our connectivity in the area.
We have industrial zone land, we have cavern underground cavern capacity.
We have the potential for rail terminal with CN to egress.
Ammonia to the West coast, but again, it's still early days and.
I think theres got to be a lot of work even from a transportation perspective.
And the safety of transporting ammonia through communities all the way to the West coast. So maybe they lost the advantage. We have is we're very close to.
Where you would connect to carbon capture line.
So again, all things that you would need for for ammonia project, but.
Early days, but we're seeing we're certainly seeing interest there.
Okay, and then maybe lastly anything on.
Wild horse.
I'll look there.
Yeah.
Great question, we haven't talked about <unk> in a while.
That asset just based on where crude was trading given the fact that.
Backwardation that we've seen over the last couple of years.
<unk>.
Okay.
When it started up we had an existing customer.
Customer base contracted the facility.
We haven't seen a ton of Av.
Volumes moving through the terminal, but that has actually started to change in the last quarter.
We're really optimistic now based on the unique characteristics of that terminal.
And the capabilities that terminal and getting familiar with the entities that.
Do do commerce in Cushing.
That asset is starting to perform the way we envisioned when we originally sanctioned that asset.
So a timely question.
I would probably had a less rosy outlook to share if it <unk> pose that question a year ago or even six months ago.
Okay, great. Thanks for that.
Thank you.
Thank you.
There are no further questions at this time I would now like to turn the call back over to Mr. Kelvin Locke for any closing remarks.
Thank you all once again for joining us today and please feel free to reach out to <unk> Investor Relations team with any additional questions you may have.
<unk>.
Thank you presenters, ladies and gentlemen. This concludes your conference call for today, we thank you for participating and ask could you. Please disconnect your lines have a lovely day.