Q1 2024 TC Energy Corp Earnings Call

Operator: TransCanada. Thank you for standing by. This is the conference operator. Welcome to the TC Energy first quarter 2024 financial results conference call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star, then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star, then zero. I would now like to turn the conference over to Gavin Wylie, Vice President, Investor Relations. Please go ahead.

Thank you for standing by this is the conference operator, welcome to the TC Energy first quarter 2024 financial results Conference call. As a reminder, all participants are in listen only mode and the conference is being recorded.

After the presentation there'll be an opportunity to ask questions to join the question queue. You May Press Star then one on your telephone keypad should.

Should you need assistance during the conference call you May signal, an operator by pressing Star then zero I would now like to turn the conference over to Gavin Wylie Vice President of Investor Relations. Please go ahead.

Gavin Wylie: Thanks very much and good morning. I'd like to welcome you to TC Energy's 2024 First Quarter Conference. Joining me today are Francois Poirier, President and Chief Executive Officer, and Joel Hunter, Executive Vice President and Chief Financial Officer, along with other members of our senior leadership. Francois and Joel will begin today with some comments on our financial results and operational highlights. A copy of the slide presentation that will accompany their remarks is available on our website under the Investors section. Following their remarks, we will take questions from the investment community. We ask that you limit yourself to two questions, and if you're a member of the media, please contact our media team.

Gavin Wylie: Thanks, very much and good morning, I'd like to welcome you to TC Energy's 2024 first quarter Conference call. Joining me are Francois Poirier, President Chief Executive Officer.

Joel Hunter Executive Vice President and Chief Financial Officer, along with other members of our senior leadership team.

Gavin Wylie: Francois and Joel will begin today with some comments on our financial results and operational highlights a copy of the slide presentation that will accompany their remarks is available on our website under the investors section.

Speaker Change: Following their remarks, we will take questions from the investment community. We ask that you limit yourself to two questions and if you're a member of the media. Please contact our media team.

Gavin Wylie: Before Francois begins, I'd like to remind you that today's remarks will include forward-looking statements that are subject to important risks and uncertainties. For more information, please see the reports filed by TC Energy with the Canadian Securities Regulator and the U.S. Securities Exchange Commission. Finally, during the presentation, we will refer to certain non-GAAP measures that may not be comparable to similar measures presented by other entities. These measures are used to provide additional information on TC Energy's operating performance. TransCanada Corp. A reconciliation of various GAAP and non-GAAP measures is contained in the appendix of this presentation. With that, I'll turn the call over to Francois.

Speaker Change: Before first of all begins I'd like to remind you that today's remarks will include forward looking statements that are subject to important risks and uncertainties for more information. Please see the reports filed by TC energy with Canadian Securities regulators and the U S Securities Exchange Commission.

Speaker Change: Finally during the presentation, we will refer to certain non-GAAP measures that may not be comparable to similar measures presented by other entities.

Speaker Change: These measures are used to provide additional information on Tc Energy's operating performance liquidity and its ability to generate funds to finance its operations a.

A reconciliation of various GAAP and non-GAAP measures is contained in the appendix of this presentation with that I'll turn the call over to Francois.

Yeah.

Francois Lionel Poirier: Thanks, Gavin, and good morning, everyone. We set out with three clearly defined priorities for 2024 that focus on maximizing the value of our assets, Project Execution, and Enhancing Our Balance Sheet Strength. And I'm pleased to report that we continue to deliver on all of these commitments. We saw another quarter of record earnings with comparable EBITDA up 11% compared to the first quarter of last year.

Francois Lionel Poirier: Thanks, Kevin and good morning, everyone.

Francois Lionel Poirier: We set out with three clearly defined priorities for 2024 that focus on maximizing the value of our assets.

Francois Lionel Poirier: Project execution, and enhancing our balance sheet strength and I'm pleased to report that we continue to deliver on all of these commitments.

Francois Lionel Poirier: We saw another quarter of record earnings with comparable EBITDA up 11% compared to the first quarter of last year.

Francois Lionel Poirier: With a relentless focus on safety and operational excellence, the company saw high availability and utilization across our asset base, including multiple first-quarter all-time records. Our Secured Capital Program continues to progress on plan, and we are tracking the cost and schedule with our major projects, Southeast Gateway and the Bruce Power Unit 3 MCR. In March of 2024, the U.S. $300 million Gillis Access Project was placed into service with a bill multiple of approximately six times.

Francois Lionel Poirier: With a relentless focus on safety and operational excellence the company saw high availability and utilization across our asset base.

Francois Lionel Poirier: <unk> multiple first quarter all time records.

Our secured capital program continues to progress on plan and we are tracking to cost and schedule with our major projects South East Gateway and the Bruce Power unit three M. C. R.

Francois Lionel Poirier: In March of 'twenty 'twenty four the U S $300 million Gillis access project was placed into service with a build multiple of approximately six times.

Francois Lionel Poirier: This Greenfield pipeline system connects gas production from the Gillis Hub to downstream markets in southeast Louisiana. Gillis, along with projects on our NGTL system, means that we've placed approximately $1 billion of projects into service so far this year, largely on budget. Additionally, $200 million of maintenance capital was placed into service over the quarter. We continue to execute against our $3 billion asset divestiture program with the recent sale of PNGTS for expected pre-tax proceeds of approximately Canadian $1.1 billion, which includes the assumption by the purchaser of U.S. $250 million of senior notes outstanding at PNGTS.

Francois Lionel Poirier: This greenfield pipeline system connects gas production is sourced from the Gillis hub to downstream markets in South East Louisiana.

Gillis, along with projects on our N G T L system.

Francois Lionel Poirier: I mean that we've placed approximately $1 billion of projects into service. So far this year largely on budget.

Francois Lionel Poirier: Additionally, $200 million of maintenance capital was placed into service over the quarter.

We continue to execute against our $3 billion asset divestiture program with the recent sale of P. N. G. T. S. Four expected pre tax proceeds of approximately Canadian $1.1 billion, which includes the assumption by the purchaser of U S $250 million of senior notes outstanding.

Francois Lionel Poirier: <unk> P M G T S.

Francois Lionel Poirier: We also continue to progress the proposed spin-off of South Bow. As you saw a couple of weeks ago, we released our management information circular, and the shareholder vote is scheduled for June 4th. Finally, we're pleased to announce Sean O'Donnell as our incoming Executive Vice President and Chief Financial Officer, effective May 15, following Joel's decision to pursue another opportunity. We're grateful for Joel's 26 years with TC Energy and the incredible impact he's made on the company.

Francois Lionel Poirier: We also continue to progress the proposed spin off of South pole.

Francois Lionel Poirier: And I'll reserve a few more thank yous for Joel in my closing remarks. As for Sean... He joined TC Energy six months ago as part of our succession planning and brings 30 years of invaluable energy industry experience, including past roles as CFO. This, paired with his tenure in corporate finance and private equity, aligns directly with our clear set of strategic priorities. In Mexico, we continue to achieve milestones in the construction of Southeast Gateway. The total offshore pipe installation is now over 70% complete. The offshore portion represents about 670 of the total 715 kilometers of pipeline length.

Francois Lionel Poirier: As you saw a couple of weeks ago, We released our management information circular and the shareholder vote is scheduled for June 4th.

Francois Lionel Poirier: Finally, we're pleased to announce Sean O'donnell, as our incoming executive Vice President and Chief Financial Officer effective May 15.

Francois Lionel Poirier: Following joes decision to pursue another opportunity.

We're grateful for Joel is 26 years with TC energy and the incredible impact. He has made on the company and I'll Reserve a few more thank yous for Joel in my closing remarks.

Francois Lionel Poirier: As for Sean.

Francois Lionel Poirier: He joined TC energy six months ago as part of our succession planning.

Francois Lionel Poirier: And brings 30 years of invaluable energy industry experience, including past roles as CFO.

Francois Lionel Poirier: This paired with his tenure in corporate finance and private equity aligns directly with our clear set of strategic priorities.

Francois Lionel Poirier: In Mexico, we continued to achieve milestones in the construction of South East Gateway.

Francois Lionel Poirier: Total offshore pipe installation is now over 70% complete.

The offshore portion represents about 670 of the total 715 kilometers of pipeline length.

Francois Lionel Poirier: Onshore, all critical permits for construction have been obtained, and we have completed construction on all three landfall sites. Importantly, the project continues to track schedule and the expected cost of U.S. $4.5 billion. Continued high utilizations across our integrated natural gas system in the first quarter reflect continued demand growth for natural gas in the markets we serve. Total NGTL system deliveries in Canada averaged 15.3 BCF a day, with a new daily record high of 17.3 BCF achieved in January.

Francois Lionel Poirier: [noise] onshore all critical permits for construction had been obtained and we have completed construction on all three landfall sites.

Francois Lionel Poirier: Accordingly, the project continues to track schedule and expected cost of U S $4 $5 billion.

Francois Lionel Poirier: Continued high Utilizations across our integrated natural gas system in the first quarter reflect continued demand growth for natural gas and the markets we serve.

Francois Lionel Poirier: Total N G T L system deliveries in Canada averaged 15.3 Bcf a day with a new daily record high of 17.3 Bcf achieved in January.

Francois Lionel Poirier: In the U.S., daily average flows of 30 BCF were up 5% compared to the first quarter of last year. Once again, various pipelines achieved record throughput volumes, including in our Columbia Gas, Columbia Gulf, and Great Lakes systems. Natural gas demand growth is continuing, in Powering the U.S. as Electricity Demand Grows.

Francois Lionel Poirier: In the U S. Daily average flows of 30 Bcf were up 5% compared to the first quarter of last year.

Once again, various pipelines achieved record throughput volumes, including in our Columbia gas Columbia Gulf and Great Lakes systems.

Francois Lionel Poirier: Natural gas demand growth is continuing.

Francois Lionel Poirier: Empowering the U S as electricity demand growth.

Francois Lionel Poirier: 2023 was a record year for power burn across the U.S., and that strength is continuing into 2024. Mirroring that, our assets continue to support record demand, and we set a first quarter record for deliveries to power generators of 2.9 BCF per day, up 11% versus the first quarter of 2023. New growth drivers like data centers will help continue that positive growth momentum. In Mexico, average daily throughput was nearly 3.0 BCF per day, up 13% versus the first quarter of last year.

2023 was a record year for power burn across the U S and that strength is continuing into 2024.

Francois Lionel Poirier: Mirroring that our assets continue to support the record demand and we set a first quarter record for deliveries to power generators of 2.9 Bcf per day up 11% versus the first quarter of 2023.

Francois Lionel Poirier: New growth drivers like data centers will help continue that positive growth momentum.

In Mexico average daily throughput was nearly three points zero Bcf per day up 13% versus the first quarter of last year.

Francois Lionel Poirier: In our power business, our power assets were available to deliver power when it was needed most, resulting in an increase to comparable EBITDA of 14% versus the first quarter of last year. As you all know, Bruce Power produces 30% of the electricity in Ontario. And Bruce met continued demand in the first quarter by providing and delivering availability of 92%. We continue to expect average availability in the low 90s percent range for 2024, which is a significant and gradual improvement over the last decade or so.

Francois Lionel Poirier: And our power business, our power assets were available to deliver power when it was needed most resulting in an increase the comparable EBITDA of 14% versus the first quarter of last year.

Francois Lionel Poirier: As you all know Bruce power produces 30% of the electricity in Ontario.

Francois Lionel Poirier: And Bruce met to continued demand in the first quarter by providing and delivering availability of 92%.

Francois Lionel Poirier: We continue to expect average availability in the low ninety's percent range for 'twenty, 'twenty, four which is a significant and gradual improvement over the last decade or so.

Francois Lionel Poirier: The Bruce Power Major Component Replacement Program to extend the asset life for the next 40 years continues to progress on plan. Unit 3 is tracking cost and schedule, and Unit 4 received the ISO's approval to begin in early 2025. Our Alberta co-generation fleet also delivered strong performance and reliability in the quarter with overall portfolio availability of 98.7%. There continues to be strong demand for our transportation service in our liquids business. And Keystone is meeting this demand, achieving 96% operational reliability in the first quarter. This operational strength... supported a 28% increase in comparable EBITDA as compared to the first quarter of last year.

Francois Lionel Poirier: The Bruce power, a major component component replacement program to extend the asset life for the next 40 years continues to progress on plan.

Francois Lionel Poirier: Unit three is tracking cost and schedule and unit four received the Iso's approval to begin in early 2025.

Francois Lionel Poirier: Our Alberta Cogeneration fleet also delivered strong performance and reliability in the quarter with overall portfolio availability of 98, 7%.

Francois Lionel Poirier: There continues to be strong demand.

Francois Lionel Poirier: For our transportation service in our liquids business and Keystone is meeting this demand achieving 96% operational reliability in the first quarter.

Francois Lionel Poirier: This operational strength supported a 28% increase in comparable EBITDA as compared to the first quarter of last year.

Francois Lionel Poirier: Turning to Southbow and the proposed spinoff of the liquids pipeline business, Bevin and the Southbow team continue to make meaningful progress towards the Southbow business transitioning to a stand-alone public company. We are confident we will have a successful launch of an independent South Bow by late Q3 or Q4 of this year. We do not anticipate any material disc synergies related to Southbow, as the liquids business was operated mostly as a standalone business within the broader TC Energy, and we intend to offset any potential disc synergies in the year in which they would have otherwise been incurred.

Turning to south bow in the proposed spin off of the liquids pipeline business.

Francois Lionel Poirier: Even in the South bow team continue to make meaningful progress towards the south both business transitioning to a standalone public company.

Francois Lionel Poirier: We are confident we will have a successful launch of an independent south pole in late Q3 or Q4 of this year.

Francois Lionel Poirier: We do not anticipate any material dis synergies related to south pole as the liquids business was operated mostly as a standalone business within the broader Tc energy and we intend to offset any potential dis synergies in the year in which they would have otherwise been incurred.

Francois Lionel Poirier: In addition, the team plans to develop the Black Rod Connection Project. This project is expected to underwrite a meaningful portion of South Bow's near-term comparable EBITDA growth target. We issued our management information circular on April 16th, and you may have seen that leading proxy advisor, ISS, has come out with a supportive recommendation for the transaction. As described in the circular, favorable tax rulings have now been received in both Canada and the U.S. Our 2024 annual and special meeting will be held on June 4th. I hope you take the time to look at the information in the circular and on our website to support your voting decision. And now, I'll turn the call over to Joel.

Francois Lionel Poirier: Further the team plans to develop the black Rod connection project. This project is expected to underwrite a meaningful portion of south both near term comparable EBITDA growth targets.

Francois Lionel Poirier: We issued our management information circular on April 16th and you may have seen that leading proxy advisor ISS has come out with a supportive recommendation for the transaction.

Francois Lionel Poirier: As described in the circular favorable tax rulings have now been received in both Canada and the U S.

Francois Lionel Poirier: Our 'twenty 'twenty four annual and special meeting will be held on June 4th I Hope you take the time to look at the information in the circular and on our website to support your voting decision.

Francois Lionel Poirier: And now I'll turn the call over to Joel.

Joel E. Hunter: Thanks, Francois, and good morning. Exceptional operational performance during the first three months of the year delivered 11% year-over-year growth in comparable EBITDA. As Francois mentioned, we saw strong year-over-year increases across all of our businesses, including a 14% increase in power and energy solutions, driven by increased availability. And in our liquids business, a 28% increase in comparable EBITDA, driven by higher utilization of both the Keystone and MarketLink systems. We also delivered a 4% increase in quarterly comparable earnings relative to Q1 of last year.

Joel: Thanks, Francois and good morning.

Joel: Exceptional operational performance during the first three months of the year delivered 11% year over year growth in comparable EBITDA.

Joel: As Francois mentioned, we saw strong year over year increases across all of our business units, including a 14% increase in power and energy solutions, driven by increased availability and in our liquids business at 28% increase in comparable EBITDA driven by higher Utilizations on both the Keystone and market link systems.

We also delivered a 4% increase in quarterly comparable earnings relative to Q1 of last year.

Joel E. Hunter: This largely resulted from increased comparable EBITDA, partially offset by higher net income attributable to non-controlling interests following the Columbia sale in 2023, and higher interest expense primarily due to long-term debt issuances, net of maturities, partially offset by reduced levels of short-term borrowings and higher capitalized interest.

Joel: This largely resulted from increased comparable EBITDA, partially offset by higher net income attributable to noncontrolling interests. Following the Columbia sale in 2023.

Joel: And fire interest expense, primarily due to long term debt issuances net of maturities, partially offset by reduced levels of short term borrowings and higher capitalized interest.

Joel E. Hunter: We reaffirm our outlook for 2024, which does not take into consideration the proposed liquids pipeline spin-off. As a reminder, in 2024, we expect comparable EBITDA to be between $11.2 and $11.5 billion. This growth is primarily driven by an increase in the NGTL system, the full year impact of projects placed into service last year, and approximately $7 billion of new projects expected to be placed into service this year. As a reminder, the $7 billion includes Coastal GasLink, which is expected to be placed into commercial service later this year.

Joel: We reaffirm our outlook for 'twenty, 'twenty, four which does not take into consideration the proposed liquids pipelines spinoff.

Joel: As a reminder, in 2024, we expect comparable EBITDA to be between 11 point to an 11 $5 billion.

This growth is primarily driven by an increase in the NGL system. The full year impact of projects placed into service last year and approximately $7 billion at new projects expected to be placed into service this year.

Joel: As a reminder, the $7 billion includes close to gasoline, which is expected to be placed into commercial in service later this year.

Joel E. Hunter: At the end of April, we placed approximately $1 billion of projects into service, including Gillis Access and the Columbia Gas Virginia Electrification Project. Comparable earnings per common share are expected to be lower than 2023, largely due to higher net income attributable to non-controlling interests related to the Columbia sale. Total net capital expenditures for this year are expected to be approximately $8-8.5 billion.

Joel: At the end of April we placed approximately $1 billion of projects into service, including Keyless access in the Columbia gas of Virginia electrification project.

Joel: Comparable earnings per common share is expected to be lower than 2023, largely due to higher net income attributable to noncontrolling interests related to the Columbia sale.

Joel: Total net capital expenditures for this year are expected to be approximately eight to $8 $5 billion.

Joel E. Hunter: We continue to actively manage our fixed and floating interest rate mix, which helps to insulate us from rising rates. Approximately 92% of our debt is fixed with an average term to maturity of approximately 17 years and a pre-tax weighted average coupon of approximately 5.3%. We are making progress towards our asset divestiture program with the announced sale of PNGTS, which will put us over a third of the way towards our $3 billion target for 2024. This transaction implies a valuation multiple of approximately 11 times 2023 comparable EBITDA.

Joel: We continue to actively manage our fixed floating interest rate mix, which helps insulate us from rising rates.

Joel: 92% of our debt is fixed with an average term to maturity of approximately 17 years and a pretax weighted average coupon of approximately five 3%.

Joel: We are making progress towards our asset divestiture program with the announced sale of P&G T S, which would put us over a third of the way towards our $3 billion target for 2024.

Joel: This transaction implies a valuation multiple of approximately 11 times 2023 comparable EBITDA.

Joel E. Hunter: We remain committed to achieving our 4.75x debt-to-eBITDA target in 2024, the upper limit to which we will manage to, and expect to announce incremental asset sales in the coming months. As regards the Liquid spin-off, shareholders of TC Energy, as of the distribution record date established for the spin-off, will receive one new TC common share and 0.2 Southboat common shares in exchange for each TC common share. As highlighted on this slide, dividends are expected to remain whole following the liquid spinoff.

Joel: We remain committed to achieving our 475 times debt to EBITDA target in 2024, the upper limit to which we will manage to and expect to announce incremental asset sales in the coming months.

Joel: Related to the liquid spin off shareholders at TC energy as the distribution record date established for this spin off will receive one U P. C common share and zero point to sell both common shares in exchange for each T C common share.

Joel: As highlighted on this slide dividends are expected to remain whole formula liquid spinoff in.

Joel E. Hunter: In addition, we expect to have the capital structure in place prior to the spinoff, subject to a successful shareholder vote on June 4th. Anticipated proceeds from the senior and subordinated debt issued at South Bow will be used to repay approximately $7.9 billion of TC Energy debt and help meet future funding requirements. Our long-standing value proposition sets the foundation for continued operational and financial strength, insulating us well from volatility we see in the broader market. Our stable, low-risk business model and highly-utilized asset portfolio provide stability in our comparable EBITDA and cash flows.

Joel: In addition, we expect to have the capital structure in place prior to the spinoff subject to a successful shareholder vote on June 4th.

Joel: Anticipated proceeds from the senior and subordinated debt issued at South pole, we used to repay approximately $7.9 billion of Tc energy debt and help meet future funding requirements.

Joel: Our long standing value proposition sets the foundation for continued operational and financial strength insulating us well from volatility we see in the broader market.

Joel: Our stable low risk business model and highly utilized asset portfolio provides stability in our comparable EBITDA and cash flows.

Sean O'donnell: TC Energy's Board of Directors has declared a second quarter 2024 dividend of $0.96 per common share, which is equivalent to $3.84 per share on an annual basis. As we look ahead, both TC Energy and Southbow are expected to maximize their respective value propositions in a manner that will benefit shareholders for years to come. I've had a great career here at TC Energy. As you know, I'm moving on to a new opportunity, but I am truly grateful for my time with the company.

Joel: [noise] Tc Energy's Board of Directors has declared a second quarter 2024 dividend of 96 cents per common share, which is equivalent to $3 84 per share on an annual basis. As we look ahead, both Tc energy and self bow are expected to maximize respective value propositions in a manner that will benefit shareholders for years to come.

Joel: Some.

Sean O'donnell: TC Energy has been a great place to work, and I appreciate everything I've been able to accomplish during my time here. As Francois mentioned, effective May 15th, Sean O'Donnell will step into the role of Executive Vice President and Chief Financial Officer, and I will remain part of the team as an Executive Advisor until my last day on July 1st to support a seamless transition. TC Energy is in good hands with Sean, who has a tremendous amount of experience in the energy industry and expertise across North America. Now, with that, I'll pass the call over to Sean for a few words.

Speaker Change: I've had a great career here at TC energy as you know I'm moving on to a new opportunity, but I am truly grateful for my time with the company TC energy has been a great place to work and I appreciate everything that I've been able to accomplish during my time here.

Speaker Change: It's Francois mentioned effective may 15th Sean O'donnell will step into the role of executive Vice President and Chief Financial Officer, and I will remain part of the team and as an executive advisor until my last day on July 1st to support a seamless transition.

Unknown Attendee: TC energy is in good hands with Sean who has tremendous amount of experience in the energy industry and expertise across North America now with that I'll pass the call over to Sean for a few words.

Sean O'donnell: Thanks, Joel, and good morning, everyone. As I've mentioned to many of our stakeholders over the past several weeks, I am very excited for the opportunity to succeed you as the next CFO of TC. For our shareholders, I want to highlight that, like Joel, I will be focused on the continued successful execution of the 2024 strategic priorities that Francois detailed earlier. I look forward to connecting in person with as many shareholders as possible over the coming months. But for now, I'll turn the call back over to Francois for his closing remarks.

Unknown Attendee: Thanks, Joe and good morning, everyone.

Unknown Attendee: As Ive mentioned to many of our stakeholders over the past several weeks I am very excited for the opportunity to succeed you as the next CFO of T C.

Unknown Attendee: For our shareholders I want to highlight that I like Joel will be focused on the continued successful execution of the 2024 strategic priorities that Francois detailed earlier.

Unknown Attendee: I look forward to connecting in person with as many shareholders as possible over the coming months, but for now I'll turn the call back over to Francois for his closing remarks.

Francois Lionel Poirier: Thanks, Sean.

Francois Lionel Poirier: I'm happy to share that we've once again delivered record results, supported by a relentless focus on safety and operational excellence. Our priorities for this year are very clear.

I'm happy to share that we once again delivered record results supported by our relentless focus on safety and operational excellence.

Our priorities for this year are very clear first continue to maximizing the value of our assets through safety and operational excellence second.

Francois Lionel Poirier: First, continue to maximize the value of our assets through safety and operational excellence. Second, remain focused on project execution, delivering our projects on time and on budget, including Southeast Gateway and Bruce Powers Unit 3 MCR. And third, we will continue on our path to achieving and sustaining our 4.75 debt to EBITDA upper limit by the end of the year by advancing our divestiture program and continuing to streamline our business through efficiency efforts.

Francois Lionel Poirier: Remaining focused on project execution, delivering our projects on time and on budget, including Southeast Gateway and Bruce Power's unit, three MCR and third we will continue on our path to achieving and sustaining our 475 debt to EBITDA upper limit by the end of.

Francois Lionel Poirier: The year by advancing our divestiture program and continuing to streamline our business.

Francois Lionel Poirier: Through efficiency efforts.

Francois Lionel Poirier: Before I turn it over to the operator, I would like to take a moment to thank Joel for his contributions to TC Energy over his 26 years with the company. Joel, you've been a valued member of TC Energy. I know you share our passion and commitment to the strategic path we're on, and I look forward to working with you until midyear. Also, on behalf of the entire team, we wish you the best in your next opportunity. I'll now turn the call back to the operator for questions.

Speaker Change: Before I turn it over to the operator, I would like to take a moment to thank Joe for his contributions to TC energy over his 26 years with the company.

Speaker Change: Joel you've been a valued member of the TC energy team.

I know you share our passion and commitment to the strategic path, we're on and I look forward to working with you until mid year.

Also on behalf of the entire team.

Speaker Change: We wish you the best in your next opportunity.

Speaker Change: I'll now turn the call back to the operator for questions.

Operator: Thank you. We will now begin the question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. You will hear a tone acknowledging your request. Please limit your questions to 2, and if you should have additional questions, please re-enter the queue. If you are using a speakerphone, please pick up your handset before pressing any key. To withdraw your question, please press star, then two. Our first question comes from Ben Pham of BMO. Please go ahead.

Speaker Change: Thank you we will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad.

Speaker Change: You will hear a tone acknowledging your request please limit your questions to two and if you should have additional questions. Please re.

Speaker Change: Enter the queue.

Speaker Change: If you are using a speakerphone. Please pick up your handset before pressing any keys to withdraw your question. Please press Star then two.

Speaker Change: Our first question comes from Ben Pham of BMO. Please go ahead.

Benjamin Pham: Hi, thanks for having me. Let me start off on asset sales. You mentioned potential additional asset sales in the coming months. Can you talk about that then? Has really anything changed with respect to the buyer interest? Does the federal budget perhaps change some of the discussions on the NGTO and the federal loans? Guarantee for First Nations. And then there's a CSE. A purchase that you've disclosed, is that going to be included in that $3 billion target?

Benjamin Pham: Hi, Thanks, good morning.

Benjamin Pham: It may start off on the asset sales you mentioned.

Benjamin Pham: Potential additional asset sales in the coming months.

Benjamin Pham: Can you talk about then.

Benjamin Pham: Just really anything has changed as well.

Benjamin Pham: Spec to the buyer.

Benjamin Pham: Interests does the federal budget.

Benjamin Pham: James perhaps some of the discussions on the N N G T on a favorite alone.

Benjamin Pham: Guarantee for her first nations.

And then there's the cfe.

Benjamin Pham: Right.

Benjamin Pham: Purchase that you've disclosed is that going to be included in that $3 billion target.

Francois Lionel Poirier: Hi Ben, it's Francois. Thanks very much for the question. Things have been progressing very well on all fronts in our divestiture program. I can report that, yes, the CFE's purchase of an equity interest in TGNH is included in that number. I can report that the CFE has received all approvals for its investment.

Benjamin Pham: Hi, Ben its Francois thanks, very much for the question things have been progressing very well on all fronts on our divestiture program I can report that and yes. The cfe is a purchase of an equity interest in T. G. And H is included in that number I can report that the Cfe has received all approvals.

Francois Lionel Poirier: They have secured the funds, and we are in the final throes of negotiating documentation. We can expect to receive proceeds in exchange for an approximately 15% interest, perhaps as early as next week. I will remind everyone that this transaction was negotiated at the outset of the Southeast Gateway Sanctioning and Consideration, provided by CFE, including not only cash but also assets in kind, as well as them agreeing to take on certain risks, disproportionately around land acquisition and permitting, as well as a disproportionate percentage of cost overruns by virtue of them taking on 50% of those with only a minority interest in TGNH.

<unk> for its investment they have secured the funds and we are in the final throes of negotiating documentation.

Benjamin Pham: And we can expect to receive proceeds in exchange for an approximately 15% interest perhaps as early as next week.

I will remind everyone that this transaction was negotiated at the outset of the South East Gateway sanctioning and consideration provided.

Benjamin Pham: Provided by Cfe includes not only cash, but also assets in kind as well as them agreeing to take on certain risks disproportionately around land acquisition and permitting as well as a disproportionate.

Benjamin Pham: Percentage of cost overruns by virtue of them, taking on 50% of those with only a minority interest in T. G and H. So I'm, we're very optimistic about that occurring as early as next week on other asset sales.

Francois Lionel Poirier: So we're very optimistic about that occurring as early as next week. On other asset sales, we're focusing on Canada in the nearer term. The budget does not have any impact on our ability to proceed, nor have we seen any impact on prospective valuations.

Benjamin Pham: We're focusing on Canada in the near term.

Benjamin Pham: The budget does not have any impact on our ability to proceed nor have we seen any impact on prospective valuations. We have a couple of processes that are reasonably well advanced in Canada, and we could expect AR.

Francois Lionel Poirier: We have a couple of processes that are reasonably well advanced in Canada, and we could expect to announce additional divestitures in the second quarter if progress continues on the positive path it is on. Beyond that, we continue to focus on other divestiture opportunities to progress our divestiture plans and deleveraging plans, whether it's in Mexico, where we are in conversations with a number of parties. We're also exploring FIBRA-E as a potential alternative, as well as a number of other assets, smaller assets in our portfolio. So we're very confident in the $3 billion number, and we look forward to announcing more positive progress over the coming months.

Benjamin Pham: To announce additional divestitures in the second quarter. If progress continues on a positive path that it has on.

Benjamin Pham: Beyond that we continue to focus on other divestiture opportunities to progress our divestiture plans and deleveraging plans, whether it's in Mexico, where we are in conversations with a number of parties. We're also exploring a fever AE as a potential alternative oh.

Benjamin Pham: As well as a number of other assets smaller assets in our portfolio. So we're very confident in the $3 billion number and we look forward to announcing more positive progress over the coming months.

Benjamin Pham: Okay. Thank you, Francois. We'll get back in the queue.

Speaker Change: Okay, I guess, that's why I'll get back in the queue.

Speaker Change: You bet.

Robert Hope: Our next question comes from Rob Hope of Scotiabank. Please go ahead.

Speaker Change: Our next question comes from Rob Hope of Scotiabank. Please go ahead.

Robert Hope: Good morning. I want to ask a question on increasing power demand driving increasing gas demand, which you noted in your prepared remarks. You know, how are you seeing this kind of manifest itself across your system? And what opportunities does it provide in both your gas and pipeline, or gas pipeline, and power business? And I guess, you know, as a kind of offset, there would be, you know, renewed interest in, you know, additional power investments, you know, on a longer term basis? And what kind of what does this mean for the Ontario storage project?

Robert Hope: Good morning.

Robert Hope: I wanted to ask a question on increasing power demand driving increasing gas demand. What you noted in your prepared remarks how.

Robert Hope: How are you seeing this kind of manifest itself across your system and what opportunities does it provide in both your gas and pipeline.

Gas pipeline and power business and I guess.

They kind of offset there would be no could we see you know.

Robert Hope: Renewed interest in additional power investments.

Robert Hope: On a longer term basis and kind of what does this mean for the Ontario storage project.

Stan: Good morning, Rob. This is Stan.

Robert Hope: Good morning, Rob. This is Stan I will start and then pass it over to Ansley I want to make sure that you all have a proper appreciation for the really strong growth story, that's going on right now due to the operational excellence that our teams have demonstrated we're seeing record deliveries across all of our jurisdictions in Canada.

Stan: Outflows on the NGL system are up 5% quarter over quarter, including strong deliveries not only to power generators, but also within the oil sands.

Stan: In Mexico, our flows are up 13% quarter over quarter led by higher volumes on both our <unk> system and the top of the Bombay system and assimilate across the U S. Our throughput was up 5% quarter over quarter with new record deliveries to power generators, leading the way our power generation deliveries were up over 11% a quarter.

Stan: Over quarter matter of fact over the past six months six of our 13 pipelines in the U S set new record peak day deliveries again, just showing the demand for the for the assets that we have and we're well positioned to continue to capture that growth with projects like our Heartland project on the Anr system that we announced last quarter.

Stan: <unk>.

Speaker Change: Somebody is probably going to ask you about datacenters in particular, so it's probably a good time to bring that up right now, we do see a meaningful load and growth opportunity and increased demand in coming years due to data centers.

Annesley: I will start and then pass it over to Annesley. I want to make sure that you all have a proper appreciation for the really strong growth story that's going on right now. Due to the operational excellence that our teams have demonstrated, we're seeing record deliveries across all of our jurisdictions. When we look at the math, we think somewhere between 6 to 8 BCF of increased gas demand between now and 2030 is more than reasonable, but there are also higher forecasts out there that exceed 10 BCF a day.

Speaker Change: When we look and do the math that we think somewhere between six to eight Bcf of increased gas demand between now and 2030 is more than reasonable, but there are also higher forecast out there that exceed 10 Bcf a day.

Stan: Reliability requirements associated with data centers are also driving increased appreciation for the role that natural gas is going to play in supporting those loads as well. However, we believe that much of the data center load is likely to materialize behind LDCs as opposed to being directly connected to our mainline pipes. And given that, and given our best-in-class pipeline footprint, which happens to connect to eight of the ten largest LDCs across the U.S., it's just a reinforcement of our strategy to increase connectivity with LDCs via permittable, constructible, in-corridor expansions with long-term take-or-pay contracts, particularly in data center-hungry areas like Virginia and Wisconsin. So if you notice, the disproportionate Thanks.

Speaker Change: Reliability requirements associated with data centers are also driving increased depreciation for the role that natural gas is going to play in supporting those loads as well.

Speaker Change: We believe that much of the data center load is likely to materialize behind L. D. CS as opposed to be directly connected to our mainline pipes and given that and given our best in class pipeline footprint, which happens to connect to eight of the 10 largest L. D. CS across the U S. It's just a reinforcement of our strategy.

Speaker Change: To increase connectivity with Ldc's vehicle permissible construct the ball in corridor expansions with long term take or pay contracts, particularly in data set are hungry areas like Virginia, and Wisconsin. So if you noticed the disproportionate amount of the projects that we announced over the past couple of quarters or in those two states and that's why.

Annesley: Thanks, Stan. So, I'll speak to the power part of your question, Rob. Our power and energy solution strategy really remains for the near term to focus our investment in nuclear and pumped hydro. We have continued a great opportunity through our investment in Bruce Power to deploy capital dollars. Nuclear power is base load generation that will continue to support the grid. And then our Ontario Pumped Storage Project, which I think you spoke to specifically, we continue to have really great support from municipalities and local communities.

Speaker Change: Thanks, Dan and I'll speak to the power part of your question Rob or.

Speaker Change: Power and energy solution strategy I really remain for the near term to focus our investment in nuclear and pumped hydro we have continued great opportunities through our investment in Bruce power to deploy capital dollars nuclear is base load generation that well continue.

Speaker Change: To support the grid and then our Ontario pumped storage project, which I think you spoke to specifically and we continue to have really great support from municipalities and local communities. We received just in the last couple of weeks another city municipal council vote insert.

Annesley: We have received, just in the last couple of weeks, another City Municipal Council vote in support of the project. We also feel really strongly, along with our partners, the Saugeen Ojibwe Nation, that the project will offer Ontario really good socioeconomic benefits, $6.8 billion to the economy in present value terms over the life of the project, 90% of which will benefit Ontario directly, and much of that is in rural communities. That said, as we continue to progress the project, we are very mindful that we will not continue to invest capital dollars without having a cost recovery and commercial framework in place. We're very optimistic. We continue to work with the province, but that is sort of what our near-term focus is, securing that agreement.

Speaker Change: Part of the project and we also feel really strongly along with our partners Celgene Ojibwe nation that the project will offer Ontario.

Speaker Change: Really good socioeconomic benefits a $6 8 billion to the economy in present value terms over the life of that project, 90% of which will benefit our Ontario directly and much of that is in rural communities and that said as we continue to progress.

Speaker Change: The projects are we.

Speaker Change: We are very mindful that we will not continue to invest capital dollars without having a cost recovery Inc. Commercial framework are in place. We are very optimistic we continue to work with the province, and but that is sort of what our near term focus is on securing that agreement.

Robert Hope: And then maybe, as a follow-up, and more broadly, you know, through the years, we've seen TC Energy kind of shift capital between its power and pipeline.

Speaker Change: I appreciate that and then maybe as a follow up and more broadly you know through the years. We've seen you know Tc energy kind of shift capital between its power and pipeline business.

Francois Lionel Poirier: You know, recognize right now on the power side, the focus is on, you know, pump storage, as well as nuclear. But, you know, in a world where North America will be short of power for a number of years, if, you know, gas power generation can give you good risk-adjusted returns and good contractual backlogs, you know, could we see you kind of reinvigorate your development pipeline on that side of the business?

Speaker Change: Recognize right now on the power side and focuses on the pump storage as well as nuclear but.

Speaker Change: In a world, where North America short power in a number of years.

Speaker Change: You know gas fired generation can give you good risk adjusted returns and good contractual backlogs you know could we see you kind of reinvigorate our kind of your development pipeline on that side of the business.

Annesley: For right now, we really are focused in the near term on nuclear and pumped hydro. We're committed to adhering to our $6 to $7 billion capital spend commitment. It's not to say that we wouldn't opportunistically look at those opportunities, given exactly what you've described relative to power demand, but it would have to fit within that $6 to $7 billion limit.

Speaker Change: But for right now we really are focused in the near term on nuclear and pumped hydro we're committed to adhering to our $6 billion to $7 billion capital spend.

Speaker Change: Commitment.

It's not to say that we went in Opportunistically look at them those opportunities given exactly what you've described relative to power demand, but it would have to sit within that 60.

Six to 7 billion dollar limit.

Francois Lionel Poirier: And what I would add, Rob, and Francois is that, you know, we've had a couple of assets talks with potential customers about extending and entering into new contracts just to continue to perpetuate those cash flows. So the dynamic around natural gas demand and power demand is very positive. That's exactly at the intersection of the strategy for the new TC. We are a gas and power company focusing on growing our gas franchises in all three countries as well as growing our investment in primarily emissionless power going forward, but also extending the life of our existing natural gas power generation.

Speaker Change: What I would add Rob is French wise that you know we've had a couple of our assets.

Speaker Change: Achieve our reach contract expiry, and we've been able to renew and extend those contracts, which obviously protects the terminal value of our businesses.

Speaker Change: The one example, I would point you to is in New Brunswick are co. Gen. We were able to extend that contract and.

Speaker Change: We've got other assets such as Big Hong Kong, where we are in very positive conversations with potential.

Speaker Change: Customers about extending and entering into new contracts just to continue to perpetuate those cash flows. So the dynamic around natural gas demand and power demand is very positive that's exactly at the intersection of the strategy for the New T. C. We are a gas and power.

Speaker Change: Our company focusing on growing our gas franchises in all three countries as well as growing our investment in.

Speaker Change: Primarily emission less power going forward, but also extending the life of our existing natural gas power generation assets.

Robert Hope: All right, thank you. And Joel, all the best in his new role. And Sean, congratulations. Thanks, Rob. Thank you.

Speaker Change: Alright, thank you.

Speaker Change: Joel all the best and they are a new role and Sean congratulations as well.

Speaker Change: Thank you.

Jeremy Bryan Tonet: Our next question comes from Jeremy Tonet of J.P. Morgan. Please go ahead.

Speaker Change: Our next question comes from Jeremy Tonet of Jpmorgan. Please go ahead.

Jeremy Bryan Tonet: Hi, good morning.

Jeremy Bryan Tonet: Good morning, Jeremy.

Jeremy Bryan Tonet: Joel, want to wish you, you know, best wishes going forward as well. Sean, congratulations. And just wanted to, I guess, start off, it seems like the business continues to kind of perform pretty well and exceed expectations again here. And just wondering, I guess, how you see things performing versus analysts' day expectations at that point and, you know, how you think things will unfold going forward.

Jeremy Bryan Tonet: Joe want to wish you know best wishes going forward as well Sean congratulations.

And just wanted to I guess start off it seems like the business continues to perform pretty well and exceeding expectations again here and just wondering I guess, how you see things.

Jeremy Bryan Tonet: Yes, performing versus expect analyst day expectations at that point and you know how you think things unfold going forward.

Francois Lionel Poirier: I appreciate the question, Jeremy, and the acknowledgement of the strong performance we've delivered. This is why we have a very short set of priorities for 2024, just as we did in 2023, and it begins and ends with strong execution. We are laser focused on improving the return on invested capital on our existing assets and then delivering on our new projects on time and on budget and, essentially, delivering the business cases that we brought forward to our board of directors, and we are performing exactly on that plan, giving effect to the SPIN transaction because the timing could move around plus or minus a month. At $11.2 to $11.5 billion of EBITDA, we remain confident and reaffirm that guidance

Speaker Change: I appreciate the question, Jeremy and the acknowledgment of the strong performance we've delivered them.

Speaker Change: This is why we have a very short set of priorities in 2024, as we did in 2023 and it begins and ends with strong execution.

Speaker Change: We are laser focused on improving the return on invested capital on our existing assets and then delivering on our new projects on time and on budget and essentially delivering the business cases that we brought forward.

Speaker Change: To our to our board of directors and we are performing.

Speaker Change: Performing exactly on that plan, we reaffirmed our guidance for <unk> for 2024.

Speaker Change: Prior to them.

Speaker Change: Giving effect to the spin transaction because of the timing could move around plus or minus a month at 11 point $211 5 billion of EBITDA, we remain confident and reaffirm that guidance.

Francois Lionel Poirier: And there are a lot of things that contribute to where you end up in that band or outside of that band. Asset availability is a critical driver. It's a great opportunity to create upside with no capital. You've seen the laser focus of our operating group. A huge focus on increasing the availability of our assets. We've talked about that in our prepared remarks in a fair amount of detail. We see that as low-hanging fruit to continue to perform or even beat our expectations. For now, we're going to under-promise and over-deliver and reiterate our guidance as is for the remainder of the year.

Speaker Change: And there are a lot of things that contribute to where you end up in that band or outside of that band.

Speaker Change: Asset availability is a critical driver, it's a great opportunity to create upside with no capital you've seen through laser focus of our operating groups.

Speaker Change: Huge focus on increasing the availability of our assets, we've talked about that in our prepared remarks, and a fair amount of detail, we see that as low hanging fruit to continue to perform or even beat our expectations for now we're going to.

Speaker Change: Under promise and over deliver and and reiterate our guidance are as is for the remainder of the year.

Jeremy Bryan Tonet: Got it. Understood. Thank you for that. And there seems to be some debate in the marketplace with regard to credit rating agencies and if S&P were to downgrade TRP, just wondering if you could walk us through what type of impact that would have on the company, the hybrids, etc.

Speaker Change: Got it understood. Thank you for that and there.

Speaker Change: There seems to be some debate in the marketplace with regard to credit rating agencies in S&P were to downgrade TRP. Just wondering if you could walk us through what type of impact that would have on the company hybrids et cetera.

Francois Lionel Poirier: I'll provide a couple of overall comments and then pass it on to Sean, who, as our SVP Capital Markets and Planning, has been managing the dialogue with the rating agencies, and all I will say, first off, is that we are performing exactly to the plan we provided all the rating agencies in our review last summer in advance of the announced intention to spin our business, and we continue to execute against that plan. Now, over to you, Sean.

Speaker Change: I'll provide a couple of overall comments and then pass it on to Sean who as our SVP of <unk>.

Unknown Attendee: Capital markets and planning has been managing the dialogue with the rating agencies and all I will say first off is that we are performing exactly to the plan. We provided all rating agencies in our review last summer in advance of the announced intention to spin our business and we.

Unknown Attendee: To execute against that plan, but over to you Shaun.

Sean O'donnell: Thanks Francois. Jeremy, it's good to be connected.

Shaun: Yeah. Thanks, Fred Smith, Jeremy Good B connected I, just want to reiterate there's a new voice on the phone.

Shaun: The commitment to these deleveraging plans remain exactly intact on picking up where Joel left often and as it relates to what the agencies are doing.

Sean O'donnell: I just want to reiterate, as a new voice on the phone, the commitment to these deleveraging plans remains exactly intact. I'm picking up where Joel left off, and as it relates to what the agencies are doing. Back to Francois' comment, we engaged with them significantly last year across their advisory service in developing these plans. They know very well all of the moving parts, and we remain in regular contact with each of the agencies quarterly.

Shaun: Back to Francoise comment, we engage with them last year significantly across their advisory services developing these plan. They know they know very well all of the moving parts and we remain in.

Shaun: In regular contact with each of the agencies quarterly we've put on the phone and all of this week and as interim updates whenever they ask for it for each of our kind of ongoing initiatives. So.

Sean O'donnell: We've been on the phone with them all this week, and we give them interim updates whenever they ask for them, for each of our kinds of ongoing initiatives. So while I don't believe any company can or should predict, you know, what any one agency may or may not do, your specific question about a particular notch downgrade, we've seen some of our peers get downgraded in the last couple of weeks, and the bond market didn't move, but for a basis point, no market reaction whatsoever.

Shaun: While I.

Shaun: I don't believe any company can or should predict you know what any one agency may or may not do your specific question about a particular notch downgrade we've seen some of our peers.

Shaun: Get downgraded in the last couple of weeks in the bond market didn't move but for a basis point no market reaction whatsoever, and I think you have such disparate views across the agencies invest.

Sean O'donnell: And I think you have such disparate kinds of views across the agencies. You know, investors are just taking kind of their own point of view on it. And as it relates to what would be the pricing impact across our complex, you know, the JSNs are pretty far out, right? We've got a call date, but our maturity stack on the JSNs doesn't really arrive until 2027, so we've got a lot of time. And importantly, our deleveraging plan that sits with all the agencies shows this 4.75, very stable for the long term. So we feel really good about it, and it will have virtually no impact should anything like that happen.

Shaun: Investors are just taking kind of their own point of view on it.

Shaun: And as it relates to what would be the pricing impact across our complex.

Shaun: The J S ends are pretty far out right. We've got a call date, but our maturity stack on the jazz and doesn't really arrive until 2027, we've got a lot of time and importantly, our deleveraging plan that sits with all the agencies shows this for about 75 very stable for the long term. So we feel really good about it.

Shaun: And virtually no no impact or anything like that happen.

Shaun: Yeah.

Jeremy Bryan Tonet: Got it. That's very helpful. Thank you for that.

Speaker Change: Got it that's very helpful. Thank you for that.

Linda Ezergailis: Our next question comes from Linda Ezergailis of TD Cowan. Please go ahead.

Speaker Change: Our next question comes from Linda is a gearless of TD Cowen. Please go ahead.

Linda Ezergailis: Thank you. I have a two-pronged question. Your Alberta natural gas storage business appears to have outperformed significantly in the quarter. I'm wondering if you could just help us understand maybe a breakdown between that and your lower business development cost to just get a sense of the magnitude of the outperformance. And is it something one-time in nature, or can there be some new emerging opportunities given some of the shifts in market dynamics?

Linda: Thank you I have a two pronged question your Alberta natural gas storage.

Linda: The business appears to have outperformed significantly in the quarter and what just help us understand maybe a breakdown between that and your lower business development costs or just get a sense of the magnitude of the outperformance and is there something onetime in nature or can there be some new emerging opportunities given some of the shifts in market.

Linda: Dynamics.

Annesley: Hi Linda, it's Annesley. Thanks for the question. So the outperformance in the gas storage business in Q1 was what drove the results there. The impact of business development costs was much less significant. And the operational outperformance was really a result of us being able to capitalize on the severe weather event that happened in January. The storage business benefits from price volatility in the market. And we were able to deliver those results.

Hi, Linda its Anthony Thanks for the question so the outperformance in the gas storage business in Q1.

Anthony: Was what drove the results there and the impact of the business smelting cost plays a much less significant and the operational outperformance was really a result of us being able to capitalize on the severe weather events that happened in January so the storage.

Anthony: Business benefits from the price volatility in the market and we weren't able to deliver those results.

Annesley: It isn't something that you would expect to see quarter over quarter because it is related to the severe weather event. But we have demonstrated an ability to take advantage of those types of events in the past, and to the extent they were to happen in the future, we would expect the same.

Anthony: It isn't something that you would expect to see a quarter over quarter, because it was related to the.

Anthony: The severe weather event, but we have demonstrated an ability to take advantage of those types of events in the past and to the extent they were to happen in the future. We would expect the same thing.

Linda Ezergailis: Thank you Annesley. Just as a follow-up, recognizing that this might be somewhat opportunistic and provide a valuable service during some extreme times for the industry, how are you seeing the economics potentially improving for natural gas storage? Is there any contemplation of brownfield or potentially greenfield storage anywhere in your network? And can you comment on how that might become an increasing proportion of your natural gas related infrastructure opportunities? And maybe that is also a question for Stan.

Speaker Change: Thank you Anthony and just as a follow up recognizing that.

Anthony: This might be somewhat opportunistic and provide a valuable service during some extreme times for the industry.

Speaker Change: How are you seeing the economics potentially improving for natural gas storage is there any contemplation of brownfield or potentially a greenfield storage anywhere in your network and can you comment on how that might become an increasing proportion of your natural gas related infrastructure.

Speaker Change: And maybe this is also a question Christine.

Christine: I don't know.

Annesley: Yeah, I can start, and then I'll pass it over to Stan. I think with respect to the unregulated gas storage business that we have in Canada, our focus is really just to continue to maximize the value of the exceptional assets that we have as part of that business. But Stan, maybe you want to comment further. Good morning, Linda.

Christine: Yeah, I can start and then I'll pass it over to Stan I think with respect to that unregulated gas storage business that we have are in Canada and our focus is really just to continue to maximize the value of the exceptional assets that we have them as part of that business a bit.

Stan: Maybe you want to comment further good morning, Linda as you know, we're one of the largest storage owner operators in North America, and do see a lot of value in storage going forward in the aggregate. We operate about 650 Bcf of capacity with about 530 that are here in the U S with respect to our storage position in the U S. A high demand for it continues we're in our eighth.

Stan: As you know, we're one of the largest storage owner-operators in North America and do see a lot of value in storage going forward. In the aggregate, we operate around 650 pieces of capacity, with about 530 of that here in the U.S. With respect to our storage position in the U.S., high demand for it continues. We're in our eighth consecutive year of having 100% of our storage capacity fully contracted for. Our storage is heavily located in our market area, and over 80% of the storage is subscribed by our LDC customers who rely on it as a source of their peak day needs.

Linda: Second year of having 100% of our storage capacity fully contracted for our storage is heavily located in our market area and over 80% of the storage is subscribed by our LDC customers, who rely on it as a source of their peak day needs.

Stan: Maybe a bit in contrast, much of the discussion going on today with respect to new storage is pertaining to locales in the Gulf Coast in response to demand volatility around LNG exports. And there are meaningful differences between those types of merchant storage activities versus our more integrated storage approach, with our storage being integrated with our LDC customers that come with long-term contracts that are take-or-pay in nature and have synergies back to the pipeline.

Linda: Maybe a bit in contrast, much of the discussion going on today with respect to new storage is pertaining to locales in the golf coast in response to the Mad volatility around LNG exports and theres meaningful differences between those types of merchant storage activities versus our more integrated storage approach with our store.

Linda: <unk> is being integrated with our LDC customers that come with long term contracts that are take or pay in nature and have synergies back to the pipeline. So from my perspective, when I look at the opportunities going forward I don't see us chasing these mercury opportunities that do not have synergies are not integrated with our assets, but I do see us building more storage.

Stan: So from my perspective, when I look at the opportunities going forward, I don't see us chasing these merchant opportunities that do not have synergies or are not integrated with our assets, but I do see us building more storage that complements our best-in-class footprint through either enhancements and drilling new wells to our existing storage footprint or, in some cases, constructing new storage or even LNG peaking facilities as we have operated historically in the eastern part of our

Linda: That complements our best in class footprint through either enhancements in drilling new wells to our existing storage footprint or in some cases, constructing new storage or even LNG, peaking facilities as we have operated historically and the eastern part of our system.

Speaker Change: Thank you.

Praneeth Satish: Our next question comes from Praneeth Satish of Wells Fargo. Please go ahead.

Our next question comes from <unk> Satish of Wells Fargo. Please go ahead.

Praneeth Satish: Thanks. Good morning. If I could switch to Southbow,

Satish: Thanks, Good morning, if I could switch to south both so you've talked about an initial leverage ratio. There are five times has anything changed with respect to your thinking of the capital structure. There in light of the higher interest rate environment and then secondly can you comment on any discussions you you mentioned that you're talking to the rating agencies.

Satish: Frequently any discussions with them as it relates to the credit worthiness itself, though and and what leverage profile would be consistent with our investment grade credit rating.

Bevin: So you've talked about an initial leverage ratio there five times. Has anything changed with respect to your thinking of the capital structure there in light of the higher interest rate environment? And then, secondly, can you comment on any discussions?

Satish: Yeah.

Satish: Excuse me, sorry, Puneet, that's bevan here.

Satish: So first off.

Bevan: I'll address your last question first I guess is.

Bevin: You mentioned that you're talking to the rating agencies frequently. Any discussions with them as it relates to the credit worthiness of Southbow and what leverage profile would be consistent with investment to create a credit rating? Yeah, excuse me. Sorry, Praneeth.

Bevan: We just recently went back to the credit agencies here just a few weeks ago with my CFO Van Dafoe.

Joel E. Hunter: It's Bevin here. So first off, I'll address your last question first, I guess, is that we just recently went back to the credit agencies here just a few weeks ago with my CFO, Van Deyfo, outlining the update to our plan. You've seen the outperformance this past quarter of the business, as well as bringing forward the Black Rod project, which is credit accretive and so very solid ground with respect to our leverage profile of Southbow with the agencies coming out as investment grade, a commitment that we made in the information circular that that went out.

Bevan: Outlining the update of our plan you've seen the outperformance this past quarter of the business as well as bringing forward. The Blackrock project, which is credit accretive and so very solid ground with respect to our leverage profile.

Bevan: Of of South Boe with the agencies coming out being investment grade a commitment that we've made in the information circular that that went out.

Bevan: With respect to.

Joel E. Hunter: With respect to our capital allocation priorities and your comment around interest rates, you know, our capital allocation priorities are first deleveraging the way we can because we believe that deleveraging is accretive to the equity investor. The way we can achieve that and on an accelerated basis compared to what we highlighted at Investor Day is allocating capital to BlackRod. Our second priority in capital allocation is organic growth in that build multiple range with BlackRod.

Our capital allocation priorities and your comment around the interest rates you know our capital allocation priorities are first our deleveraging the way we can because we believe that deleveraging is accretive to the equity investor.

Bevan: The way, we can achieve that on an accelerated basis compared to what we highlighted at Investor day is allocating capital to Blackrock.

Bevan: That project is a very short cycle.

Bevan: Project will be on in early 2026.

Bevan: <unk> flows can be created off that asset at the low end of our EBITDA build multiple range at the at the six times level that allows us to really accelerate.

Bevan: <unk> de levering in the face of that interest rate environment that you point out our second priority is in capital allocation as organic growth in that build multiple range with Blackrock, we achieve just about 60% of our EBITDA growth CAGR that we highlighted at Investor day. So that's strong.

Joel E. Hunter: We achieve just about 60% of the EBITDA growth CAGR that we highlighted at Investor Day, so that's strong. And then with discretionary capital, we want to look at the bottom, want to have the opportunity to do share buybacks or, over the long term, increase the dividend. As you know, starting with deleveraging is critical given the interest rate environment, but also getting our payout ratios closer to class with our peers is another priority.

And then with discretionary capital, we want to look at the bottom of it.

Bevan: One of them have the opportunity to do share buybacks or over the long term.

Bevan: <unk> increased the dividend and as as you may have pointed out a.

Bevan: Starting with Delevering deleveraging is critical given the interest rate environment.

Bevan: But also getting our payout ratios.

Bevan: Closer in class with our peers is another priority.

Praneeth Satish: You know, Praneeth, it's Joel here. I'll just add on a few comments. We've been working closely with Bevin's team as well. With the capital structure, it will be across the term spectrum anywhere from three years out to 30 plus years, including junior subordinated notes that will comprise about $1.5 billion of the capital structure. So nothing has changed from where we were last summer, and more importantly, interest rates. We looked at where we are today relative to where we were last summer.

Bevan: <unk>, it's Joel here I'll just add on a few comments here, we've been working closely with <unk> team as well.

Joel: With the capital structure, it will be across the term spectrum everywhere anywhere from three years out to 30 plus years, including junior subordinated notes that will comprise but $1 $5 billion of the capital structure. So nothing has changed from where we were last summer and more importantly in the interest rates, we looked at where we're at today relative to where we were last summer.

Praneeth Satish: Actually, the rates are in slightly. So again, despite the rise in rates over the last three or four months, on an all-in basis, they still remain very favorable to where we were when we first budgeted for this last summer.

Joel: Actually the rates are in slightly so again, despite the rise in rates over the last three or four months.

Joel: On an all in basis, they still remain very favorable to where we were when we first got budgeted for this last summer.

Praneeth Satish: Got it. No, that's helpful. I'm going to go back to the AI theme because it's an interesting one. So there are only, as you know, two pipelines that flow right through the heart of Datacenter Valley in northern Virginia. Columbia is one of them.

Speaker Change: Got it no that's helpful.

Speaker Change: You can go back to the AI theme because it because it's an interesting one so theres only as you know two pipelines that flow right through the heart of our data Center Valley in Northern Virginia, Colombia is one of them I mean, I know you touched on it but can you can you talk about any discussions you've had with utilities that are coming to you requesting or anticipating more gas.

Praneeth Satish: I mean, I know you touched on it, but can you talk about any discussions you've had with utilities that are coming to you, requesting or anticipating more gas in preparation for more load growth? And then, if so, you know, how easy do you think it'll be to accommodate this additional demand in terms of expanding your system? Let's say you pick up, you know, one or one to two BCF per day of that plus six to seven BCF of incremental gas demand that you quoted. I mean, how much can you handle with compression versus new buildings?

Speaker Change: In preparation for more load growth and then if so how easy do you think it'll be to accommodate this additional demand in terms of expanding your system, Let's say you pick up one or one to two bcf per day of that plus 6% to seven bcf of incremental gas demand that you quoted.

Speaker Change: How much can you handle with compression versus new build.

Stan: Yeah, Praneeth, this is Stan. I appreciate the question, and again, just to reiterate, the overall opportunity is probably somewhere around 6 PCF a day by 2030. When you look at places like Virginia, in particular, we do have one data center that we are already serving that is actually tied into our mainline facilities, but again, I think that that's a bit of an anomaly, data center growth, either directly contracting with power generation loads or behind the LDCs.

Stanley: Ifrit, this is Stanley.

Speaker Change: Yeah. This is Dan I appreciate the question and again just reiterate the overall opportunity is probably somewhere around six Bcf a day by 2030. When you look at places like Virginia. In particular, we do have one data center that we are already serving that is actually tied into our mainline facilities, but again I think that that's a bit of an anomaly.

Speaker Change: Data center growth either directly contracting with power generation loads are behind the LDC. So our strategy is going to be continue to increase our connectivity with the LDC loads. If you look at some of the annual plans at the LDC their filing youre seeing that they are they are representing that strong growth going forward in terms of assets that will take its probably going to take more than compressor.

Stan: So our strategy is going to be to continue to increase our connectivity with the LDCs. If you look at some of the annual plans that the LDCs are filing, you see that they are representing that strong growth going forward. In terms of assets that it'll take, it's probably going to take more than compression. It's going to be a combination of pipe and compression and back from a liquid supply source. So we continue to be bullish on Appalachian production. As we have said in the past, that production is constrained only by the takeaway path.

Speaker Change: And it's going to be a combination of pipe and compression and back from a liquid supply source. So we continue to be bullish on Appalachian production as we said in the past that production is constrained only by takeaway path and then we think that when you look at our systems and the path that we can deliver from from Teco pool over to these data centers in places like Virginia in particular.

Theresa Chen: And we think that when you look at our systems and the path that we can deliver from TECO Pool over to these data centers in places like Virginia, in particular, uniquely positions us amongst our peers. Got it. Thank you. Our next question comes from Theresa Chen of Barclays. Please go ahead. Good morning.

Speaker Change: <unk> uniquely positions us amongst our peers.

Speaker Change: Got it thank you.

Speaker Change: Okay.

Theresa Chen: Our next question comes from Theresa Chen of Barclays. Please go ahead.

Speaker Change: Our next question comes from Theresa Chen of Barclays. Please go ahead.

Theresa Chen: Good morning. Thank you for taking my question and I wanted to follow up on the Dean and the box about six D. C number I highlighted earlier, how did you come to that number what are the assumptions.

Theresa Chen: Assumptions, that's driving that as it relates to your system in terms of the cost out that's a follow up to <unk> question.

Kind of Capex should we think about them Paul.

Stan: Yeah, with respect to the 6 BCF a day number, again, I look at that as not anything that's proprietary to us, but a kind of a midpoint between the various analyst summaries that were done by parties like WoodMAC and EIA and others. Again, we're seeing estimates as high as 10 BCF, which I think are a little bit aggressive, given the fact that there are likely to be some supply chain challenges with associated I don't have any specifics for you with respect to capital investments.

With respect to the six Bcf a day number again I look at that is not anything thats proprietary to us, but a kind of a mid point of the various.

Theresa Chen: Analysts summaries that were done by parties like Woodmac, and EIA and others and again, we're seeing estimates as high as 10 Bcf, which I think are a little bit aggressive given the fact that there's likely to be some supply chain challenges with the associated build out and it's going to take a little bit longer.

I don't have specifics for you with respect to capital investments again to I think this is going to play out over the next several years through the end of the decade I can tell you that we are in discussions with various entities to get these types of loads attached to our system, that's going to play out what I'd add to that Theresa its francois is.

Stan: Again, I think this is going to play out over the next several years through the end of the decade. I can tell you that we are in discussions with various entities to get these types of loads attached to our system, but it's going to happen.

Francois Lionel Poirier: What I'd add to that, Theresa, it's Francois, is while we remain very focused on living within our means and the lower end of that $6-7 billion range, what this means is that, after giving effect to our maintenance capital of roughly $2 billion a year, and we've got about a billion dollars a year committed to Bruce, we have $3 billion a year, approximately, of discretionary opportunities to deploy capital. And that long-term trend presents us with a very high degree of confidence in being able to attract very high returns, attractive investment opportunities, and continue to be able to deliver a very healthy spread between earned returns on projects and our cost of capital. And maybe one last thing I would add, Theresa, is even

While we remain very focused on living within our means and that the lower end of that $6 billion to $7 billion range. What this means is that you know after giving effect to our maintenance capital of roughly 2 billion a year and we've got about $1 billion a year committed to Bruce.

Theresa Chen: We've got $3 billion, a year approximately of discretionary opportunities to deploy capital and that long term trend presents us with a very high degree of confidence of being able to attract very high return.

Theresa Chen: Tractive investment opportunities.

Theresa Chen: And continue to be able to deliver a very healthy spread between earned returns on projects and our cost of capital and maybe one last thing I would add three say is even though we're going to compete for and win our fair share of the datacenter load. There's another way to serve it indirectly which is by getting increased deliveries to the power generators and do keep in mind that.

Francois Lionel Poirier: And maybe one last thing I would add, Theresa, is even though we're going to compete for and win our fair share of the data center load, there's another way to serve it indirectly, which is by getting increased deliveries to the power generators. And do keep in mind that there are about 10 gigawatts of coal-fired power generating facilities that are scheduled to retire here by the end of 2030 that are within 15 miles of our assets. So I think we're well positioned to capture that part as well.

There is about 10 gigawatts of coal fired power generating facilities that are scheduled to retire here by the end of 2030 that are within 15 miles of our assets. So I think we're well positioned to capture that part as well.

Speaker Change: Thank you.

Robert Michael Kwan: Our next question comes from Robert Kwan of RBC Capital Markets. Please go ahead.

Speaker Change: Our next question comes from Robert Kwan of RBC capital markets. Please go ahead.

Robert Michael Kwan: Great, good morning. I can start with Southeast Gateway. You gave some updates on that, but I'm just wondering if you could compare where you are versus Surte Tejas, just in terms of some of the productivity, and then if you can also just comment on some of the major remaining critical path items, or basically what keeps you up at night on the rest of the project.

Robert Michael Kwan: Hey, good morning, if I can start with Sotheby's gateway either you had some updates on that but I'm. Just wondering if you can compare where you are versus sort of chaos.

Robert Michael Kwan: In terms of some of the productivity and then you can also just comment on some of the major remaining critical path items are basically what keeps you up at night on the rest of the project.

Stan: Yeah, Robert, this is Stan. Thanks for the question. We're in a really good place with respect to the project right now. As we noted earlier, 70% of the offshore pipeline is completed, which includes 100% of the northern segment. We recently brought the vessel into port for some scheduled maintenance. It's going to be going back out to complete about 189 kilometers of the southern portion of the deepwater pipeline here shortly. We're also progressing on the nearshore work as well as the facilities work, which is adding compressor stations at three landfalls.

Robert Michael Kwan: Hey, Robert This is Stan thanks for the question we're in a really good place with respect to the project right now as we noted earlier, 70% of the offshore.

Stan: Pipeline is completed which includes a 100% of the northern segment. How we recently brought the vessel into port for some unscheduled maintenance its going to be going back out to complete the about 189 kilometers of the southern portion of the deepwater pipe lay her shortly we're also progressing on.

Stan: And the fact that we have all three of our drills completed is a big deal for the team, so we're excited with respect to where the project is right now. In terms of challenges for the future, really, it boils down to weather risk and maintaining the productivity that we've seen both with the vessel offshore and the work that the team is doing onshore. When I think back to some of the lessons learned against Cerda Tejas that we're going to be implementing here, we're going to do the subsea tie-ins below the waterline rather than on the waterline, and that takes So the team is well engaged. We're in a good position, and I'm excited that we're remaining on track both with respect to scheduling costs for the project.

The nearshore work as well as the facilities work, which is adding compressor stations at three Landfalls and the fact that we have all three of our drilling completed is a big deal for the team. So we're we're excited with respect to where the project is right now in terms of challenges for the future no really it boils down to weather risk.

Stan: And maintaining the productivity that we've seen both with the vessel offshore and the work that the team is doing onshore when I think back to some of the lessons learned against there to tell us that we're going to be implementing here is we're going to do the subsea tie ins are below the water line rather than on the water line and that takes a lot of this weather risk out of place so.

Stan: The team is well engaged we're in a good position and I'm excited that we're remaining on track both with respect to schedule and cost for the project.

Robert Michael Kwan: Thank you. If I can just finish on the asset sale program, you've noted you've got multiple processes ongoing. But just due to the butterfly divestiture limits, you know, co-spin, does that cause you to focus a little bit more on the processes that you can close quickly? And or are you thinking about trying to monetize a little bit more than $3 billion just take out or de-risk the 2025 program.

Speaker Change: That's great. Thank you if.

If I can just finish on the asset sale program, you've noted you've got multiple processes ongoing.

Speaker Change: Just due.

Speaker Change: Due to the butterfly divestiture limits.

Speaker Change: So spin does that cause you to focus a little bit more on the processes that you can close quickly and or are.

Speaker Change: Are you thinking about trying to monetize a little bit more than $3 billion to take out or derisk.

The 2025 program.

Francois Lionel Poirier: Thanks, Rob. It's Francois, and I appreciate the question.

Speaker Change: Thanks.

Speaker Change: Rob It's a it's Francois and I appreciate the question base.

Francois Lionel Poirier: Based on the timelines, we have on our various processes, we see us being able to close a sufficient.

Francois Lionel Poirier: Based on the timelines we have for our various processes, we see us being able to close a sufficient amount of additional transactions prior to the spin such that the 10% limit that's included in the CRA order, if you will, is not going to impair our ability to complete our deleveraging program, whether it's all in 2024 or some of it leaks into 2025. So we're very comfortable with our ability to achieve that below our upper limit of 4.75 in 2024 and then remain there as we go forward.

Francois Lionel Poirier: Amount of additional transactions prior to the spin such that the 10%.

Francois Lionel Poirier: <unk> that's included in the CRA order if you will.

Francois Lionel Poirier: Is not going to impair our ability to complete our deleveraging program, whether it's all in 2024 or some of it leaks into 2025, so we're very comfortable with our ability to establish that achieve that.

Francois Lionel Poirier: Below our upper limit of 475 in 2024, and then remain there as we go forward and I will also point out that not only is 2020 for an anomaly with us.

Francois Lionel Poirier: And I will also point out that not only is 2024 an anomaly with us retaining a portion of the liquid ZBITDA for part of the year, but so is 2025. We're putting $9 billion of assets into service in 2025, but only have a partial year benefit there. Starting in 26, we're going to have the full year benefit of all of those assets, and that in itself is going to continue to accelerate our deleveraging below the 4.75 upper limit.

Francois Lionel Poirier: US retaining a portion of the liquids EBITDA for a part of the year. So it was 2025, we're putting $9 billion of assets into service in 2025, but only have a partial year benefit there starting in 2006, we're going to have the full year benefit for all of those assets and that in itself is going to continue to accelerate.

Francois Lionel Poirier: Our deleveraging below the $4 75 upper limit.

Robert Michael Kwan: Great, thank you very much, and all the best for this year.

That's great. Thank you very much Joe.

Speaker Change: All the best this year.

Speaker Change: Thanks Robert.

Robert Catellier: Our next question comes from Robert Catellier of CIBC Capital Markets. Please go ahead.

Speaker Change: Our next question comes from Robert <unk> of CIBC capital markets. Please go ahead.

Robert Catellier: Thank you and good morning everybody, and congratulations on the strong operating results. I wanted to go back to the capital structure questions starting with Southbow. You know, right now, TC Energy has the benefit of an enviable maturity profile. I wonder what you see as the average maturity profile for Southbow. What's your vision for that?

Robert: Thank you and good morning, everybody and congratulations on the strong operating results.

Robert: Go back to the capital structure questions, starting with self Boe.

Robert: You know right now Tc energy as the benefit of our enviable.

Robert: Maturity profile I'm wondering what you see as the average maturity profile for softball, what's your what's your vision for that.

unknown: Yeah, Rob, we'll access the full stack, but on average, you should use 10 years as a good rough guideline of the maturity profile that we'll be seeking. But we'll be putting 3s, 5s, 10s, 30s, all in the stack as we go out.

Boe: Yeah, Rob we'll access the full stack, but on average you should use 10 years is a good rough guideline of the maturity profile that will be seeking.

Boe: But we'll be putting from threes fives tens thirties, all all in the stock as we go out.

Robert Catellier: Okay, that's helpful. And then I have sort of the same question for TC Energy. Basically, when that capital stack stands up at South Pole and that $7.9 billion makes its way back to TC Energy, it sounds like you're very determined to stay at the $4.75 leverage or below. But do you have any thoughts on the term? Can you afford to shorten that term of 17, 18 years as you redeem debt to manage your interest rate exposure there?

Robert Hope: Okay. That's helpful and then.

Speaker Change: Sort of the same question for TC energy basically you win that.

Robert Hope: <unk> stock is stood up at South pole and.

Robert Hope: Seven 9 billion makes its way back to Tc energy.

Robert Hope: It sounds like you're very determined to stay at the 4.75 leverage or below.

Robert Hope: But is there any do you have any thoughts on the term.

Robert Hope: Can you afford to shorten the term of.

Robert Hope: Well you know 17 18 years as you redeem that too.

Robert Hope: Banners your interest rate exposure there.

Joel E. Hunter: I'll start here and then Sean, if you want to chime in. Great question, Rob. A couple of reminders.

Speaker Change: I'll start here and then Sean if you want to chime in Great question Rob.

Speaker Change: Reminders here the weighted average term of our debt is 17 years and over 90.

Unknown Attendee: Percent of our debt is fixed rate. So when we think about seven $9 billion coming back.

Unknown Attendee: T C. As it relates to self bell part of those funds will be used to just fund our capital program for this year part of the funds will be used to reduce our some of our long term debt.

Unknown Attendee: In the Grand scheme of things, it's not going to really change the weighted average, we'd rather have a longer term to maturity with our debt and have a very manageable maturity profile. It's the way we've always managed the capital structure within TC energy such that we average about $2 $5 billion per year of debt maturities and that will continue.

Unknown Attendee: Going forward.

Robert Catellier: The weighted average term of our debt is 17 years, and over 90% of our debt is at a fixed rate. So when we think about $7.9 billion coming back to TC as it relates to Southbow, part of those funds will be used to just fund our capital program for this year. Part of the funds will be used to reduce some of our long-term debt. So when we look at the money coming back here, again, part of it will be for the funding of this year's capital program, and part will be to reduce our debt, and it should have a negligible impact on our weighted average term to maturity for debt.

Unknown Attendee: So when we look at the the money coming back here again part of it will be for the funding of this year's capital program part will be to reduce our debt and if it should have a negligible impact on our weighted.

Unknown Attendee: Weighted average term to maturity of our debt.

Francois Lionel Poirier: Okay, great. The last one for me, I just wanted to go back to the NCTL potential sale there. My understanding was that the amount you could sell there is practically limited by the Indigenous loan guarantee programs, and I just wonder whether or not that's changed with the federal budget announcement for more loan guarantees.

Speaker Change: Okay, Great last one for me.

Speaker Change: I wanted to go back to the <unk> potential sale there.

Speaker Change: My understanding was that the amount you can tell there is practically limited by the indigenous.

Speaker Change: This loan guarantee programs and I just wonder.

Speaker Change: Whether or not that's changed with the would.

Speaker Change: With the federal budget announcements for more loan guarantees.

Robert Catellier: Robert, it's Francois. To the extent that we can avail ourselves of indigenous loan guarantees beyond the one that the AIOC is generously providing, we would certainly consider that, but I would highlight that we have a number of processes competing with one another at this time, and I think given the commercial sensitivities of our discussions, I won't comment further. Okay, that's fair. Thank you.

Speaker Change: Robert It's Francois to the extent, we can avail ourselves of indigenous loan guarantees beyond the one that the AI Oc is generously providing we would certainly consider that but I would highlight that we have a number of processes competing with one another at this time and I.

Speaker Change: Given the commercial sensitivities of our discussions I won't comment further.

Speaker Change: Okay. That's fair thank you.

Speaker Change: Yeah.

Keith Stanley: Our next question comes from Keith Stanley of Wolf Research. Please go ahead.

Speaker Change: Our next question comes from Keith Stanley of Wolfe Research. Please go ahead.

Keith Stanley: Good morning. The South Pole results were another really strong quarter. Just curious. How much of this do you view as sustainable as a run rate and how much is some of the spread-oriented upside on Keystone that's a little harder to predict in the future?

Keith Stanley: Hi, good morning.

<unk> results, another really strong quarter, just curious how.

Keith Stanley: How much of this do you view as sustainable for the run rate and how much is some of this spread oriented upside on Keystone, that's a little harder to predict in the future.

Bevin: Keith, it's Bevin. Yeah, the first thing is operational excellence. We achieved 96% of system operating factor in the first quarter. Having our systems available to capture the ARBs, you know, our strategic franchise connecting, you know, northern Alberta down to the Gulf Coast, making that corridor available can attract barrels, and having a system operating factor that high allows us to attract more barrels. So in the first quarter, we had, you know, outstanding results both on Keystone and on MarketLink, where we were able to add some additional contracts this year.

Keith Stanley: Keith at seven.

Keith Stanley: Yes.

Keith Stanley: First thing is operational excellence, we achieved 96% of system operating factor in the first quarter, having our systems available to capture the arbs are strategic franchise connecting.

Keith Stanley: You know northern Alberta down to the Gulf Coast are making that corridor available can attract can attract barrels and having a system operating factor that high allows us to attract more barrels so the first.

First quarter, we we had.

Keith Stanley: Outstanding results, both on Keystone, but also on market link, where we were able to add some additional contracts. This year so year over year on market link we've strengthened our contract profile on market link, adding around 200000 barrels. So when you think about our system and our corridor just strengthening of that franchise.

Bevin: So year over year on MarketLink, we've strengthened our contract profile on MarketLink by adding around 200,000 barrels. So when you think about our system and our corridor, just strengthening that franchise is just attracting barrels because that's where the barrels want to go, the Gulf Coast. We want to temper our outlook though, because we do have, we do have, you know, TMX line fill coming. It's starting right now.

Keith Stanley: Is just attracting barrels because that's where the barrels want to go as the Gulf Coast, we want to temper our outlook, though we have we do have a.

Keith Stanley: T M X line fill coming.

Keith Stanley: Starting right now and so we already have seen some narrowing of that are on the Keystone system, but I want to remind everyone that our Keystone contracts are effectively night are 94% contracted with an eight plus year term, so only 6% of that volume on Keystone is subject to spot.

Keith Stanley: And so we have already seen some narrowing of that ARB on the Keystone system. But I want to remind everyone that, you know, our Keystone contracts are effectively 94% contracted with an eight plus year term. So only 6% of that volume on Keystone is subject to spot or variable tolls. But, you know, our ability to continue to move spot barrels on our system is what we anticipate, but I don't anticipate us being as strong as in the first quarter.

Keith Stanley: Variable tolls, but you know our.

Keith Stanley: Our ability to continue to move spot barrels on our system is what we anticipate but I don't anticipate us being as strong as the first quarter.

Stan: That's helpful. Second question, just a follow-up on Southeast Gateway. It sounds like it's going very well. If it did come on early in 2025, would you expect to start collecting the contract fee early as well, or is that not necessarily the case? I'm just curious how that would work under the contract if you were early.

That's helpful.

Speaker Change: Second question, just a follow up on southeast Gateway.

Speaker Change: It sounds like its going very well.

Speaker Change: It did come on early in 2025.

Speaker Change: Would you expect to start collecting the contracts fee early as well or is that not necessarily the case I'm just curious how that would work under the contract. If you are early.

Stan: This is Stan. Under the contractual terms with CFDR counterparty, they will pay us upon the in-service date in the summer of 2025 and not necessarily earlier.

Stan: Yeah, this is Stan. Under the...

Speaker Change: Yes. This is stan under the contractual terms with the Cfe our counterparty they will pay us upon in service state in summer of 2025 and not necessarily earlier.

Speaker Change: Thank you.

John Ross Mackay: Our next question comes from John Mackay of Goldman Sachs. Please go ahead.

Speaker Change: Our next question comes from John Mccain of Goldman Sachs. Please go ahead.

John Ross Mackay: Hey, good morning. Thanks for the time. I wanted to circle on just some of the leverage comments around 25. Certainly understand the amount of EBITDA coming online mid-year. But I guess, are you guys still targeting necessarily hitting 475 by the end of 25 as well? And if so, on the last call, you talked about needing some incremental EBITDA or maybe some incremental asset sales, just how we should frame that up. Thanks.

John Ross Mackay: Hey, good morning, Thanks for the time I wanted to circle on just some of the leverage comments around 25, certainly understand the amount of EBITDA coming online mid year.

John Ross Mackay: But I guess are you guys still targeting necessarily hitting 475.

John Ross Mackay: By the end of 'twenty, five as well and if so you know last call you talked about needing some incremental EBIDTA or maybe some incremental asset sales.

John Ross Mackay: How we should frame that up thanks.

Francois Lionel Poirier: The short answer, John, is yes. With respect to... You know, filling any gap, the gap because of the partial year in 2025 is about 0.2, there are three sources of deleveraging that can fill that gap. The first is outperformance from an EBITDA perspective. You've seen us here in the first quarter deliver results that were above plan. That's come from excellence in operations. Our focus initiatives where we're reducing costs. FX has provided a nice tailwind for us here in the first quarter.

Speaker Change: The short answer John is yes.

Speaker Change: With respect to <unk>.

Speaker Change:

Speaker Change: You know feeling any gap the gap.

Speaker Change: The partial year in 2025 is about <unk> two.

Speaker Change: There are three sources of deleveraging that can fill that gap. The first is outperformance from an EBITDA perspective.

Speaker Change: You've seen us here in the first quarter deliver results that were above plan that's come from excellence in operations, our focus initiatives, where we're reducing cost.

Speaker Change: FX has provided a nice tailwind for us here in the first quarter.

Francois Lionel Poirier: Secondly, to the extent we're able to deliver on our projects below plan, that will also have a positive impact on our credit metrics. And then, only if the gap is not filled by the first two, would we consider additional asset sales to remain below that 4.75. And we're going to let the year play out a little bit before we make that kind of decision. Because, again, I think we're performing very well right now. And we see a line of sight to being able to address that gap from all three of those different levers.

Speaker Change: Secondly to the extent, we're able to deliver on our projects below plan that will also have positive.

Speaker Change: <unk> impact on our credit.

Speaker Change: Credit metrics, and then if and only if the gap is not filled by the first two we would consider additional asset sales to remain below that $4 75, and we're going to let the year play out a little bit before we make that kind of decision.

Speaker Change: Because again I think we're performing very well right now and we see line of sight to being able to address that gap from all three of those different levers.

John Ross Mackay: Alright, that's, that's very clear. I appreciate that. Maybe just one more from me.

Speaker Change: Alright, that's that's very clear appreciate that maybe.

Speaker Change: Just one more for me on the $6 7 billion of kind of out of your capital that you're committing to and more recently our language has kind of been holding felt lower and I guess just how much of that if we're looking forward. A couple of years is already spoken for existing projects and then how much would be in there for some of these incremental opportunities.

Speaker Change: Data centers etcetera that you could still add to the backlog without going above that.

Francois Lionel Poirier: You know, on the six to seven billion of kind of outer year capital that you're committing to, and more recently, your language has kind of been holding to that lower end. I guess just how much of that, if we're looking forward a couple years, has already spoken for existing projects, and then how much would be in there for some of these incremental opportunities? Data Centers, etc., that you could still add to the backlog without going above that level.

Speaker Change: Oh.

Speaker Change: I appreciate the question look Oh.

Speaker Change: Bias to the lower end of that 6% to seven is really important to us we value the option value of <unk>.

Francois Lionel Poirier: I appreciate the question. Look, you know, a bias to the lower end of that 6 to 7 is really important to us. We value the option value of performing to plan. So if we stay to the lower end of the six to seven in terms of the planned capital, if we perform to plan on time and on budget, that gives us up to an incremental $1 billion every year to either accelerate debt repayment or, eventually, perhaps even undertake some share buybacks.

Speaker Change: Performing to plan.

Speaker Change: So if we stay at the lower end of the six to seven in terms of the planned capital. If we performed to plan on time and on budget that gives us up to an incremental $1 billion every year to either accelerate debt repayment or eventually perhaps even undertake some share buybacks.

Francois Lionel Poirier: One of the beauties of our business is that we have a very predictable line of sight to allocating our capital in the future. I can tell you that, in terms of our internal plans, I have visibility to where the capital is going to go to specific projects with specific returns virtually till the end of the decade. That's the beauty of the predictability of our business. We do have an opportunity to add incremental projects at attractive returns.

Speaker Change: One of the beauties of our business is we have very predictable line of sight to allocating our capital in the future I can tell you that in terms of our internal plans.

Speaker Change: I have visibility to where the capital is going to go down to specific projects with specific returns virtually until the end of the decade, that's the beauty of the predictability of our business we.

Speaker Change: We do have an opportunity to add incremental projects at attractive returns going.

Francois Lionel Poirier: Going forward with some of the positive dynamics we're seeing in data centers and other demand growth, but that's more the middle of the decade and beyond. I will point out that it took us a couple of years to respond to the Wisconsin request to harden the infrastructure from the extreme cold that came from winter storm Uri. And so the data center and other electricity and natural gas demand increases we're seeing across the board are going to take a couple of years to materialize. So we do see an opportunity for us to crystallize some of those, but more in 2026, 2027, and beyond.

Speaker Change: Going forward with some of the positive dynamics, we're seeing in data centers and other demand growth.

But that's more middle of the decade and beyond.

Speaker Change: We'll point out that it took us a couple of years.

Speaker Change: To respond to the Wisconsin request.

Speaker Change: To harden the infrastructure from extreme cold that came from winter storm Yuri.

Speaker Change: And so the data center and other electricity and natural gas demand increases we are seeing across the board is going to take a couple of years to materialize. So we do see an opportunity for us.

Speaker Change: To crystallize some of those but more in 2027 and beyond.

John Ross Mackay: Thanks very much for your time.

Speaker Change: Thanks, very much for the time.

Speaker Change: Right.

Speaker Change: Yeah.

Patrick Kenny: Our next question comes from Patrick Kenny of National Bank Financial. Please go ahead.

Speaker Change: Our next question comes from Patrick Kenny of National Bank Financial. Please go ahead.

Patrick Kenny: Thank you, good morning everybody. Just on Coastal GasLink, can you remind us the scope of work to be done to support Cedar LNG? and what sort of EBITDA build multiple you might be able to achieve there. And then, any thoughts on any work that might be needed to prepare for a potential phase two from LNG Canada, or perhaps any other floating LNG projects that might come down the road into next year and beyond?

Patrick Kenny: Thank you and good morning, everybody.

Patrick Kenny: Just on coastal gas link can you remind us the scope of work to be done to support Cedar LNG.

Patrick Kenny: And what sort of EBITDA build multiple it might be able to achieve there.

And then any thoughts on any work that might be needed to to prepare for a potential phase two from LNG, Canada or.

Patrick Kenny: Perhaps any other floating LNG projects that might come down the road into next year and beyond.

Francois Lionel Poirier: Thanks, Patrick. It's Francois. I'll take this one.

Patrick Kenny: Thanks, Patrick It's Francois I'll take this one look on on Cedar Fair.

Francois Lionel Poirier: First of all we're having.

Francois Lionel Poirier: Having a very close relationship with the highest loan nation were.

Francois Lionel Poirier: I'm very excited and very happy for them to be.

Francois Lionel Poirier: Positive progress on the project, it's going to create.

Wealth for the nation and advance their socio economic goals.

Patrick Kenny: Look, on CEDAR, first of all, we have a very close relationship with the Haisla Nation. We're very excited and very happy for them to be making positive progress on the project. It's going to create wealth for the nation and advance their socioeconomic goals. This is a project that we are contractually committed to proceeding with. We are in the process of advancing our development of the project cost and execution plan, so we're not at this time able to share a bill multiple, but I will tell you that the allocation of risk between parties commercially is considerably different from what we experienced in Phase 1.

Francois Lionel Poirier: This is a project that we are.

Francois Lionel Poirier: <unk> committed to proceeding with.

Francois Lionel Poirier: We are in the process of advancing our development.

Francois Lionel Poirier: <unk> of the project cost and execution plan. So we're not at this time able to share a build multiple but I will tell you that.

Francois Lionel Poirier: The allocation of risk between parties commercially is considerably different from what we experienced on phase one.

Patrick Kenny: We're very comfortable with the quality of our estimate and the allocation of risk between parties, such that if we do allocate capital, and it would be modest capital from our perspective given that we own 35 percent of CGL, and there will be project financing to fund a significant component of the project cost, we're very comfortable in our ability to fit that equity capital within our $6 billion plan.

Francois Lionel Poirier: We're very comfortable with the quality of our estimate and the allocation of risk between parties.

Francois Lionel Poirier: Such that if we do allocate our capital and it would be modest capital from our perspective, given that we own 35% of C. G. L. A and there will be project financing to.

Francois Lionel Poirier: To fund a.

Francois Lionel Poirier: Significant component of the project cost, we're very comfortable in our ability to fit that equity capital within our $6 billion plan.

Francois Lionel Poirier: Okay, I got it. Thanks for that.

Speaker Change: Okay got it thanks for that and then.

Patrick Kenny: Maybe just back to your asset sale process. Just in light of the recent rule changes announced for the Alberta power market, I know it's not a huge part of the portfolio, but any thoughts around how you think your gas-fired power assets are positioned to perform once these new rules take effect? And then, B, your overall desire to remain a key participant in the Alberta power market going forward, just in light of these changes.

Speaker Change: Maybe just back to your asset sale process.

Speaker Change: Just in light of the recent rule changes here announced to the Alberta power market I know, it's not a huge part of the portfolio, but any thoughts around.

Speaker Change: You know how you think your gas fired power assets are positioned to perform once these new rules take effect.

Speaker Change: And then B you just your overall desire to remain a key participant in the Alberta power market going forward just in light of these changes.

Annesley: Thanks very much. It's Annesley, and I'll take the question.

Speaker Change: Thanks, very much it's Anthony and I'll take that question and so.

Anthony: With respect to the changes to the Alberta electricity market that has been announced we do not anticipate any direct impact to our co. Gen fleet in Alberta are it could be that as a result of the changes there are some indirect impact to the longer term outlook for <unk>.

Anthony: Power prices are but we have already considered this in our outlook and so don't anticipate any material changes there with respect to the overall strategy and again, our focus is really on maximizing the value of the co Gen assets that we have in Alberta, which.

Annesley: So with respect to the changes to the Alberta electricity market that have been announced, we do not anticipate any direct impact on our co-gen fleet in Alberta. However, it could be that, as a result of the changes, there are some indirect impacts to the longer-term outlook for power prices, particularly during peak pricing.

Anthony: Really comes down to ensuring really good operations strong operational excellence will lead to maximum availability, particularly during peak pricing.

Patrick Kenny: Okay, great. Thank you.

Speaker Change: Okay, great. Thank you.

Speaker Change: Thanks, Patrick.

Gavin Wylie: Ladies and gentlemen, this concludes the question and answer session. If there are any further questions, please contact Investor Relations at TC Energy. I will now turn the call over to Gavin Wylie.

Speaker Change: Ladies and gentlemen. This concludes the question and answer session. If there are any further questions. Please contact investor relations at TC Energy I will now turn the call over to Gavin Wylie. Please go ahead.

Gavin Wylie: Well, thank you and thanks to everyone for participating this morning. If we didn't get to your question or if you have any additional questions, obviously, the Investor Relations team is always at your disposal and happy to help out where we can. Send us a note, and we'll get back to you. Once again, thanks for your interest in TC Energy and we look forward to our next update. Thank you.

Gavin Wylie: Well, thank you and thanks, everyone for participating this morning, if we didn't get to your question. If you have any additional questions. Obviously, the investor Relations team is always at your disposal and happy to help out where we can send us a note and we'll get back to you.

Gavin Wylie: Once again, thank you for your interest in TC energy and we look forward to our next update thank you.

Gavin Wylie: This spring.

Operator: This brings to close today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.

Speaker Change: To close today's conference call you may disconnect your lines.

Speaker Change: Thank you for participating and have a pleasant day.

Speaker Change: [music].