Q2 2024 Pembina Pipeline Corp Earnings Call

Unknown Executive: Good morning, ladies and gentlemen. Thank you, Joanna. Thank you.

Unknown Executive: Good morning, ladies and gentlemen.

Joanna: Thank you, Joanna.

Unknown Executive: Thank you. Good morning and welcome to the Pembina Pipeline Corporation Q2 2024 results conference call. At this time, our lines are in illicit-only mode.

Unknown Executive: Good morning, and welcome to the Pembina Pipeline Corporation Q2 2024 Results Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct the question and answer session. If at any time during this call you need assistance, please press star zero for the operator. This call is being recorded on Friday, August 9th, 2024. I would now like to turn the conference over to Dan Tucunel, VP of Capital Markets. Please go ahead.

Good morning, ladies and gentlemen. Thank you, Joanna.

Speaker Change: Thank you. Good morning and welcome to the Pembina Pipeline Corporation Q2 2024 Results Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session.

Unknown Executive: Following the presentation, we will conduct a question-and-answer session. If at any time during this call, you need assistance, please press star zero for the operator.

Speaker Change: If at any time during this call you need assistance, please press star zero for the operator. This call is being recorded on Friday, August 9th, 2024. I would now like to turn the conference over to Dan Tucunel, VP of Capital Markets. Please go ahead.

Unknown Executive: This call is being recorded on Friday, August 9, 2024.

Dan Tucunel: I would now like to turn the conference over to Dan Tucunel, VPF Capital Markets.

Joanna: Please go ahead. Thank you, Joanna.

Dan Tucunel: Thank you, Joanna. Good morning, everyone.

Scott Burrows: Good morning, everyone. Welcome to Pembina's conference call and webcast to review highlights from the second quarter of 2024. On the call today, we have Scott Burrows, President and Chief Executive Officer, Cameron Goldade, Senior Vice President and Chief Financial Officer, along with other members of Pembina's leadership team, including Jaret Sprott, Janet Loduca, Stuart Taylor, and Chris Scherman. I would like to remind you that some of the comments made today may be forward-looking in nature and are based on Pembina's current expectations, estimates, judgments, and projections. For looking statements, we may express or imply today our subject to risks and uncertainties, which could cause actual results to differ materially from expectations.

Dan Tucunel: Thank you, Joanna. Good morning, everyone. Welcome to Pembina's conference call and webcast to review highlights from the second quarter of 2024.

Dan Tucunel: Welcome to Pembina's conference call and webcast to review highlights from the second quarter of 2024. On the call today, we have Scott Burrows, President and Chief Executive Officer, Cameron Goldade, Senior Vice President and Chief Financial Officer, along with other members of Pembina's leadership team, including Jaret Sprott, Janet Loduca, Stuart Taylor, and Chris Sherman. I would like to remind you that some of the comments made today may be forward-looking in nature and are based on Pembina's current expectations, estimates, judgments, and projections.

Speaker Change: On the call today, we have Scott Burrows, President and Chief Executive Officer, Cameron Goldade, Senior Vice President and Chief Financial Officer, along with other members of Pembina's leadership team, including Jaret Sprott, Janet Loduca, Stuart Taylor, and Chris Sherman.

Speaker Change: I would like to remind you that some of the comments made today may be forward-looking in nature and are based on Pembina's current expectations, estimates, judgments, and projections.

Dan Tucunel: Forward-looking statements we may express or imply today are subject to risks and uncertainties, which could cause actual results to differ materially from expectations. In addition, some of the information provided refers to non-GAAP measures. To learn more about these forward-looking statements and non-GAAP measures, please see the company's MD&A, dated August 8, 2024, for the period ended June 30, 2024, as well as the press release Pembina issued yesterday. All of these documents are available online at pembina.com and on both CDAR and EDGAR. I will now turn things over to Scott to make some opening remarks.

Speaker Change: The forward-looking statements we may express or imply today are subject to risks and uncertainties, which could cause actual results to differ materially from expectations.

Scott Burrows: Further, some of the information provided refers to non-GAAP measures to learn more about these forward-looking statements and non-GAAP measures. Please see the companies in DNA dated August 8, 2024, for the period ended June 30th, 2024, as well as the press release Pembina issued yesterday. All of these documents are available online at Pembina.com and on both Cedar and Edgar.

Speaker Change: Further, some of the information provided refers to non-GAAP measures.

Speaker Change: to learn more about these forward-looking statements.

Speaker Change: and non- GAAP measures , please see the company's MD&A, dated August 8, 2024, for the period ended June 30, 2024, as well as the press release Pembina issued yesterday.

Speaker Change: All of these documents are available online at pembina.com and on both CDAR and EDGAR. I will now turn things over to Scott to make some opening remarks.

Scott Burrows: I will now turn things over to Scott to make some opening remarks.

Scott Burrows: Thanks, Dan. Another strong quarter was highlighted by record-adjusted EBITDA of $1.091 billion, record-adjusted cash flow from operating activities of $837 million, and record-adjusted cash flow per share of $1.44. Record results were driven in part by the closing of the Alliance Huxable acquisition, effective April 1st, as Pembina benefited from increased ownership in those assets. Both Huxable and Alliance have been performing well, and we are excited to welcome new employees to the Pembina team. With the release of our second quarter results yesterday, we were also pleased to announce that we have acquired the remaining 14.6% interest in Auxable U.S. operations from Williams, effective August 1st.

Scott Burrows: Thanks, Dan. Another strong quarter was highlighted by record-adjusted EBITDA of $1.091 billion. Record-adjusted cash flow from operating activities of $837 million and record-adjusted cash flow per share of $1.44. Record results were driven and parked by the closing of the Alliance Office Abel acquisition, effective April 1, as Pemina benefited from increased ownership in those assets. Both Office Abel and Alliance have been performing well, and we are excited to welcome new employees to the Pemina team. With the release of our second quarter results yesterday, we were also pleased to announce that we have acquired the remaining 14.6 percent interest in Octsable US operations from Williams, effective August 1.

Scott Burroughs: Thanks, Dan. Another strong quarter was highlighted by record-adjusted EBITDA of $1.091 billion, record-adjusted cash flow from operating activities of $837 million, and record-adjusted cash flow per share of $1.44.

Scott Burroughs: Record results were driven, in part, by the closing of the Alliance-Hawks Sable acquisition, effective April 1st, as Pembina benefited from increased ownership in those assets. Both Hawks Sable and Alliance have been performing well, and we are excited to welcome new employees to the Pembina team.

Scott Burroughs: With the release of our second quarter results yesterday, we were also pleased to announce that we have acquired the remaining 14.6% interest in Auxable U.S. operations from Williams, effective August 1st.

Scott Burrows: Since the Williams Octsable acquisition and the Octsable assets have been outperforming Pembina's expectations, we are pleased to now have fully consolidated ownership of all Octsable assets, thereby further simplifying corporate reporting and enhancing the ability to pursue long-term opportunities. Pemina's business continues to deliver exceptional results. Volume growth across the Canadian energy industry is leading to higher volumes on our pipelines, gas plants, and fractionators, and while we would prefer to see higher natural gas prices for our producing customers, the current weakness along with robots and GL pricing and strong oil prices is leading to continued strength in Pemina's marketing business.

Scott Burrows: Since the Williams acquisition, Auxable and the Auxable assets have been outperforming Pembina's expectations, and we are pleased to now have fully consolidated ownership of all Auxable assets, thereby further simplifying corporate reporting and enhancing the ability to pursue long-term opportunities. Pembina's business continues to deliver exceptional results. Volume growth across the Canadian energy industry is leading to higher volumes in our pipelines, gas plants, and fractionators. And while we would prefer to see higher natural gas prices for our producing customers, the current weakness, along with robust NGL pricing and strong oil prices, is leading to continued strength in Pembina's marketing business.

Scott Burroughs: Since the Williams-Oxable acquisition and the Oxable assets have been outperforming Pembina's expectations, and we are pleased to now have fully consolidated ownership of all Oxable assets, thereby further simplifying corporate reporting and enhancing the ability to pursue long-term opportunities.

Scott Burroughs: Pembina's business continues to deliver exceptional results.

Scott Burroughs: Volume growth across the Canadian energy industry is leading to higher volumes in our pipelines, gas plants, and fractionators. And while we would prefer to see higher natural gas prices for our producing customers, the current weakness, along with robust NGL pricing and strong oil prices, is leading to continued strength in Pembina's marketing business.

Scott Burrows: Given the strong year-to-date results, the incremental benefit of the latest Octsable acquisition and our outlook for the remainder of the year, Pemina has raised its 2024 adjustity of a dog guidance range to $4.2 billion to $4.35 billion, which at the midpoint represents $100 million increase over the previous range.

Scott Burrows: Given the strong year-to-date results, the incremental benefit of the latest stable acquisition, and our outlook for the remainder of the year, Pembina has raised its 2024 Adjusted DBADA guidance range to $4.2 billion to $4.35 billion, which at the midpoint represents a $100 million increase over the previous range. Finally, the second quarter was high was further highlighted by three other exciting developments.

Scott Burroughs: Given the strong year-to-date results, the incremental benefit of the latest stable acquisition, and our outlook for the remainder of the year, Pembina has raised its 2024 Adjusted EBITDA guidance range to $4.2 billion to $4.35 billion, which at the midpoint represents a $100 million increase over the previous range.

Scott Burrows: Finally, the second quarter was further highlighted by three other exciting developments. The first was the positive final investment decision on the Cedar LNG project. We are excited to be moving forward with a project that will deliver industry-leading, low-carbon, cost-competitive Canadian LNG to overseas markets and contribute to global energy security, while delivering jobs and economic prosperity to the local region. The Cedar LNG project aligns squarely with Pemina's strategy, offers attractive economics, and is supported by a contracting strategy that prudently mitigates cost risks. The second was PGI's transaction with White Cap Resources, which included the acquisition of a 50% interest in White Cap's K-Bob Complex, and an obligation to fund further Latour area infrastructure development.

Scott Burrows: The first was a positive final investment decision on the Cedar LNG project. We are excited to be moving forward with a project that will deliver industry-leading, low-carbon, cost-competitive Canadian LNG to overseas markets and contribute to global energy security, while delivering jobs and economic prosperity to the local region. The Cedar LNG project aligns squarely with Pembina's strategy, offers attractive economics, and is supported by a contracting strategy that prudently mitigates cost risk. The second was PGI's transaction with Whitecap Resources, which included the acquisition of a 50% interest in Whitecap's K-BOB complex and an obligation to fund further Latour area infrastructure development.

Scott Burroughs: Finally, the second quarter was further highlighted by three other exciting developments.

Scott Burrows: We also signed long-term take or pay agreements on Pembina's pipelines and fractionators. The deal is another example of PGI and Pembina's ability to provide unique and value-added solutions to support the growth demands of our customers. And a third was bringing the Phase 8 Peace Pipeline expansion into service, marking the culmination of more than 10 years and more than $4 billion in an expansion program that was driven by growing customer demand for transportation services to support development in the WCSB, including the Montney, DuVernay, and other resource plays.

Scott Burroughs: The first was the positive final investment decision on the Cedar LNG project.

Scott Burroughs: We are excited to be moving forward with a project that will deliver industry-leading, low-carbon, cost-competitive Canadian LNG to overseas markets.

Scott Burroughs: and contribute to global energy security while delivering jobs and economic prosperity to the local region. The Cedar LNG project aligns squarely with Pembina's strategy, offers attractive economics, and is supported by a contracting strategy that prudently mitigates cost risk.

Speaker Change: The second was PGI's transaction with Whitecap Resources, which included the acquisition of a 50% interest in Whitecap's K-BOB complex and an obligation to fund further Latour area infrastructure development.

Scott Burrows: We also signed long-term take-or-pay agreements on Pemina Pipelines and for actionators. The deal is another example of PGI and Pemina's ability to provide unique and value-added solutions to support the growth demands of our customers.

Speaker Change: We also signed long-term take-or-pay agreements on Pembina's pipelines and fractionators. The deal is another example of PGI and Pembina's ability to provide unique and value-added solutions to support the growth demands of our customers.

Scott Burrows: And a third was bringing the phase A peace pipeline expansion into service, marking the culmination of more than 10% years and more than $4 billion expansion program that was driven by growing customer demand for transportation services, to support development in the WCSB, including the Montene, Juverne and other resource plays. The peace pipeline system plays an important role within Pemina's integrated value chain, and I would like to thank our many customers, employees, and communities that have supported Pemina to deliver this major infrastructure build-out. As a result of the expansions and ongoing optimization efforts, Pemina is confident that its extensive pipeline network is best positioned to capture future volatility and growth and allow the company to continue to offer customers unparalleled advantages through safe, reliable, flexible, and cost competitive services together with differentiated market access.

Speaker Change: And a third was bringing the Phase 8 Peace Pipeline expansion into service, marking the culmination of more than 10 years and more than $4 billion expansion program that was driven by growing customer demand for transportation services to support development in the WCSB, including the Montney, DuVernay, and other resource plays.

Scott Burrows: The Peace Pipeline system plays an important role within Pembina's integrated value chain, and I would like to thank our many customers, employees, and communities that have supported Pembina to deliver this major infrastructure build-out. As a result of the expansions and ongoing optimization efforts, Pembina is confident that its extensive pipeline network is best positioned to capture future volume growth and allow the company to continue to offer customers unparalleled advantages through safe, reliable, flexible, and cost-competitive services, together with differentiated market access. I will now turn the call over to Cam to discuss the highlights from our second quarter.

Speaker Change: The Peace Pipeline System plays an important role within Pembina's integrated value chain, and I would like to thank our many customers, employees, and communities that have supported Pembina to deliver this major infrastructure build-out.

Speaker Change: As a result of the expansions and ongoing optimization efforts, Pembina is confident that its extensive pipeline network is best positioned to capture future volume growth and allow the company to continue to offer customers unparalleled advantages through safe, reliable, flexible, and cost-competitive services, together with differentiated market access.

Cameron Goldade: I will now turn the call over to Cam to discuss highlights from our second quarter. Thanks, Scott. Scott noted Pemina reported a record second quarter adjusted EBITDA of $1.091 billion. This represents a 33% increase over the same period in the prior year, and remaining a 21% increase adjusting for the Alliance Luxable ownership.

Cameron Goldade: As Scott noted, Pembina reported a record second quarter adjusted EBITDA of $1.091 billion. This represents a 33% increase over the same period in the prior year and remains a 21% increase adjusting for the Alliance Oxable ownership in pipelines, factors impacting the second quarter primarily included. Higher adjusted EBITDA from Alliance due to stronger asset performance, combined with increased ownership following the Alliance Auxable acquisition. The Northern Pipeline System outage and wildfires in the second quarter of 2023, which had an impact of $29 million, with no similar impact in the second quarter of 2024. Contractual inflation adjustments on tolls and the earlier recognition of take or pay deferred revenue on the Peace Pipeline System and the reactivation of the Nipissi Pipeline in the third quarter of 2023.

Speaker Change: I will now turn the call over to Cam to discuss highlights from our second quarter.

Cam: As Scott noted, Pembina reported a record second quarter adjusted EBITDA of $1.091 billion. This represents a 33% increase over the same period in the prior year and remaining a 21% increase adjusting for the Alliance Auxable ownership.

Cameron Goldade: In pipelines, factors impacting the second quarter primarily included. Higher adjusted EBITDA from Alliance due to stronger asset performance combined with increased ownership following the Alliance Luxable acquisition, the Northern Pipeline System outage and wildfires in the second quarter of 2023, which had an impact of $29 million with no similar impact in the second quarter of 2024.

Cam: In pipelines, factors impacting the second quarter are primarily included.

Cam: Higher adjusted EBITDA from Alliance due to stronger asset performance, combined with increased ownership following the Alliance Oxable acquisition.

Cam: The Northern Pipeline System outage and wildfires in the second quarter of 2023, which had an impact of $29 million, with no similar impact in the second quarter of 2024.

Cam: Contractual Inflation Adjustments on Tolls and the Earlier Recognition of Take or Pay Deferred Revenue on the Peace Pipeline System, and the Reactivation of the Nipissi Pipeline in the Third Quarter of 2023.

Cameron Goldade: In addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition, in addition in addition, in addition, in addition, in addition, in addition in addition, in addition, Larger unrealized losses on renewable power purchase agreements, and unrealized loss on NGL-based derivatives compared to an unrealized gain in the second quarter of 2023, higher depreciation and amortization, net finance costs, and acquisition and integration fees.

Cameron Goldade: In facilities, factors impacting the second quarter included the inclusion within facilities of adjusted EBITDA from Oxsable following the Alliance Oxsable acquisition, the Northern Pipeline system outage and wildfires in the second quarter of 2023, which had an impact of $18 million, with no similar impacts in the second quarter of 2024, and higher interruptible volumes on certain PGIS. In marketing and new ventures, second quarter results reflect the net impact of increased ownership interest in Auxable following the Alliance Auxable acquisition, as well as higher NGL margins at Auxable.

Cam: In facilities, factors impacting the second quarter included the inclusion within facilities of adjusted EBITDA from OXABL following the Alliance OXABL acquisition.

Unknown Executive: Good morning, ladies and gentlemen. Thank you, Joanna. Thank you.

Cam: The Northern Pipeline System outage and wildfires in the second quarter of 2023, which had an impact of $18 million, with no similar impacts in the second quarter of 2024, and higher interruptible volumes on certain PGI assets.

Unknown Executive: Good morning and welcome to the Pembina Pipeline Corporation Q2 2024 Results Conference call. At this time, our lines are in illicit only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call, you need assistance, please press star zero for the operator.

Cam: In marketing and new ventures, second quarter results reflect the net impact of increased ownership interest in Auxable following the Alliance Auxable acquisition, as well as higher NGL margins at Auxable.

Unknown Executive: This call is being recorded on Friday, August 9th, 2024.

Dan Tucunel: I would now like to turn the conference over to Dan Tucunel, VPF Capital Markets. Please go ahead. Thank you, Joanna.

Cameron Goldade: Higher margins from the Western Canadian NGL marketing business due to higher marketed volumes, lower natural gas prices, and higher propane, butane, and condensate prices; realized losses on NGL-based derivatives compared to gains in the second quarter of 2023, partially offset by higher realized gains on crude oil-based commodity-related derivatives, as well as higher general and administrative expense. Finally, the corporate segment was largely unchanged.

Cam: Higher margins from the Western Canadian NGL marketing business due to higher marketed volumes, lower natural gas prices, and higher propane, butane, and condensate prices.

Scott Burrows: Good morning, everyone. Welcome to Pembina's conference call and webcast to review highlights from the second quarter of 2024.

Cam: Realized losses on NGL-based derivatives compared to gains in the second quarter of 2023, partially offset by higher realized gains on crude oil-based commodity-related derivatives, as well as higher general and administrative expense.

Scott Burrows: On the call today, we have Scott Burrows, President and Chief Executive Officer, Cameron Goldade, Senior Vice President and Chief Financial Officer, along with other members of Pembina's leadership team, including Jaret Sprott, Janet Loduca, Stuart Taylor and Chris Scherman. I would like to remind you that some of the comments made today may be forward-looking in nature and are based on Pembina's current expectations, estimates, judgments and projections. For looking statements, we may express or imply today are subject to risks and uncertainties, which could cause actual results to differ materially from expectations.

Cameron Goldade: Earnings in the second quarter were $479 million, which represents a 32% increase over the same period in the prior year. In addition to the factors impacting adjusted EBITDA, earnings in the second quarter were impacted by unrealized losses recognized by PGI on interest rate derivative financial instruments compared to gains in the second quarter of 2023. Gains associated with the derecognition of the provisions related to the financial assurances provided by Pembina, which were transferred to Cedar LNG following the positive FID in June.

Cam: Finally, the corporate segment was largely unchanged.

Cam: Earnings in the second quarter were $479 million. This represents a 32% increase over the same period in the prior year.

Cam: In addition to the factors impacting adjusted EBITDA, earnings in the second quarter were impacted by unrealized losses recognized by PGI on interest rate derivative financial instruments compared to gains in the second quarter of 2023.

Scott Burrows: Further, some of the information provided refers to non-GAP measures to learn more about these forward-looking statements and non-GAP measures, please see the company's MDNA stated August 8, 2024 for the period ended June 30, 2024, as well as the press release Pembina issued yesterday. All of these documents are available online at Pembina.com and on both Cedar and Edgar.

Cam: Gains associated with the derecognition of the provisions related to the financial assurances provided by Pembina, which were transferred to Cedar LNG following the positive FID in June . Larger unrealized losses on renewable power purchase agreements.

Cameron Goldade: Larger unrealized losses on renewable power purchase agreements, and an unrealized loss on NGL-based derivatives compared to an unrealized gain in the second quarter of 2023. Hire Depreciation and Amortization, Net Finance Costs, and Acquisition and Integration Fees.

Scott Burrows: I will now turn things over to Scott to make some opening remarks. Thanks, Dan. Another strong quarter was highlighted by Record Adjusted EBITDA of $1.091 billion. Record adjusted cash flow from operating activities of $837 million dollars and record adjusted cash flow per share of $1.44. Record results were driven in part by the closing of the Alliance Hawk Sable Acquisition, effective April 1, as Pemina benefited from increased ownership in those assets. Both Hawk Sable and Alliance have been performing well and we are excited to welcome new employees to Pembina team.

Cam: An unrealized loss on NGL-based derivatives compared to an unrealized gain in the second quarter of 2023.

Cam: Higher depreciation and amortization, net finance costs, and acquisition and integration fees.

Cameron Goldade: Pipeline volumes of 2.7 million barrels per day in the second quarter represent an 11% increase compared to the same period in the prior year. The increase was primarily due to the increase in ownership interest in Alliance, higher volumes on the Peace pipeline system, resulting from earlier recognition of take-or-pay deferred revenue, and the impact of the Northern pipeline system outage and the wildfires in the second quarter of 2023, combined with the reactivation of the Nipacy pipeline. Facilities volumes of approximately 0.9 million barrels per day in the second quarter represent a 14% increase compared to the same period in the prior year.

Cameron Goldade: Pipeline volumes of 2.7 million barrels per day in the second quarter represent an 11% increase compared to the same period in the prior year. The increase was primarily due to the increase in ownership interests in Alliance, higher volumes on the Peace Pipeline system, resulting from earlier recognition of take or paid deferred revenue, and the impact of the Northern Pipeline system outage and the wildfires in the second quarter of 2023, combined with the reactivation of the Nipissi Pipeline.

Cam: Pipeline volumes of 2.7 million barrels per day in the second quarter represent an 11% increase compared to the same period in the prior year.

Cam: The increase was primarily due to the increase in ownership interest in Alliance.

Cam: Higher volumes on the Peace Pipeline System, resulting from earlier recognition of take or pay deferred revenue and the impact of the Northern Pipeline System outage and the wildfires in the second quarter of 2023, combined with the reactivation of the Nipissi Pipeline.

Scott Burrows: With the release of our second quarter results yesterday, we were also pleased to announce that we have acquired the remaining 14.6 percent interest in Octsable U.S, operations from Williams effective August 1. Since the Williams Octsable Acquisition and the Octsable assets have been outperforming Pemina's expectations and we are pleased to now have fully consolidated ownership of all Octsable assets, thereby further simplifying corporate reporting and enhancing the ability to pursue long-term opportunities. Pemina's business continues to deliver exceptional results.

Cameron Goldade: Facility volumes of approximately 0.9 million barrels per day in the second quarter represent a 14% increase compared to the same period in the prior year. The increase was primarily due to Auxable volume recognition following the Alliance Auxable acquisition. Higher volumes at Younger as the second quarter of 2023 was impacted by the Northern Pipeline System outage and the wildfires, combined with higher interruptible volumes on certain PGIS. Turning to our outlook for 20

Cam: Facilities volumes of approximately 0.9 million barrels per day in the second quarter represent a 14% increase compared to the same period in the prior year.

Cameron Goldade: The increase was primarily due to oxable volume recognition following the alliance oxable acquisition. Higher volumes at younger, as the second quarter of 2023 was impacted by the northern pipeline system outage and the wildfires, combined with higher interruptible volumes on certain PGI assets.

Cam: The increase was primarily due to Auxable volume recognition following the Alliance Auxable acquisition. Higher volumes at Younger, as the second quarter of 2023 was impacted by the Northern Pipeline System outage and the wildfires, combined with higher interruptible volumes on certain PGI assets.

Scott Burrows: Volume growth across the Canadian energy industry is leading to higher volumes on our pipelines, gas plants and fractionators and while we would prefer to see higher natural gas prices for our producing customers, the current weakness, along with robots and GL pricing and strong oil prices, is leading to continued strength in Pemina's marketing business.

Cameron Goldade: 22, I would look for 2024. In addition to raising our 2024 Adjust the Epida Guidance, as Scott mentioned previously, PEMIN has also revised its 2024 capital investment program to $1.3 billion. The revised outlook reflects an approximate $140 million net increase when compared to our original 2024 budget of $1.16 billion, inclusive of then unsanctioned additional growth capital. Drivers of the increase primarily include the sanctioning of PGI's WAPDI expansion and K3 co-generation facility, other increases in revenue generating capital within pipelines, and additional non-recoverable sustaining capital. The revised capital investment program reflects approximately $300 million for contributions to equity accounted in besties, including $240 million of equity contributions to Cedar LNG, incurred in the first half of 2024, with no further contributions to Cedar expected in 2024.

Cameron Goldade: In addition to raising our 2024 adjusted EBITDA guidance, as Scott mentioned previously, Pembina has also revised its 2024 capital investment program to $1.3 billion. The revised outlook reflects an approximate $140 million net increase when compared to our original 2024 budget of $1.16 billion, inclusive of then unsanctioned additional growth capital. Drivers of the increase primarily include the sanctioning of PGI's WAPITI expansion and K3 co-generation facility, other increases in revenue-generating capital within pipelines, and additional non-recoverable sustaining capital.

Cam: [inaudible]

Cam: Turning to our outlook for 2024, in addition to raising our 2024 Adjusted EBITDA Guidance as Scott mentioned previously, Pembina has also revised its 2024 Capital Investment Program to $1.3 billion.

Scott Burrows: Given the strong year-to-date results, the incremental benefit of the latest Octsable Acquisition and our outlook for the remainder of the year, Pemina has raised its 2024 at the end of the year. We are excited to move forward with a project that will deliver industry leading, low-carbon cost competitive Canadian LNG to overseas markets and contribute to global energy security, while delivering jobs and equity. We are excited to move forward with a project economic prosperity to the local region.

Cam: The revised outlook reflects an approximate $140 million net increase when compared to our original 2024 budget of $1.16 billion, inclusive of then-unsanctioned additional growth capital.

Cam: Drivers of the increase primarily include the sanctioning of PGI's Wapiti expansion and K3 cogeneration facility, other increases in revenue generating capital within pipelines, and additional non-recoverable sustaining capital.

Cameron Goldade: The revised Capital Investment Program reflects approximately $300 million for contributions to equity-accounted investees, including $240 million of equity contributions to CDER LNG incurred in the first half of 2024, with no further contributions to CDER expected in 2024. Pembina continues to expect the capital program to be funded with cash flow from operating activities net of dividends, maintaining its strong balance sheet.

Cam: The revised Capital Investment Program reflects approximately $300 million for contributions to equity-accounted investees, including $240 million of equity contributions to CDER LNG incurred in the first half of 2024, with no further contributions to CDER expected in 2024.

Scott Burrows: The Cedar LNG project aligns squarely with Pemina's strategy, offers attractive economics and is supported by a contracting strategy that prudently mitigates cost The second was PGI's transaction with white cap resources, which included the acquisition of a 50% interest in white cap's K-bob complex and an obligation to fund further Latour area infrastructure development. We also signed long-term take-or-pay agreements on Pemina Pipelines and for Actionators. The deal is another example of PGI and Pemina's ability to provide unique and value added solutions to support the growth demands of our customers.

Cameron Goldade: PEMIN continues to expect the capital program to be funded with casual from operating activities and out of dividends, maintaining its strong balance sheet. At June 30, based on the trailing 12 months, the ratio of proportionally consolidated senior debt to Adjusted EBITDA was 3.6 times, which is at the low end of our target range. It's important to note, however, that given the April 1st closing date of the Alliance Oxable acquisition, the ratio includes all the debt associated with the transaction, but is currently only capturing one quarter of EBITDA contribution. On a normalized basis, this ratio would be approximately 3.3 times.

Cam: Pembina continues to expect the capital program to be funded with cash flow from operating activities net of dividends, maintaining its strong balance sheet.

Cameron Goldade: At June 30th, based on the trailing 12 months, the ratio of proportionally consolidated senior debt to adjusted EBITDA was 3.6 times, which is at the low end of our target range. It's important to note, however, that given the April 1st closing date of the Allianz Auxable acquisition, the ratio includes all the debt associated with the transaction, but it's currently only capturing one quarter of EBITDA contributions. On a normalized basis, this ratio would be approximately 3.3 times. I'll now turn things back to Scott. Thanks, Cam.

Cam: At June 30th, based on the trailing 12 months, the ratio of proportionally consolidated senior debt to adjusted EBITDA was 3.6 times, which is at the low end of our target range.

Cam: It's important to note, however, that given the April 1st closing date of the Alliance Oxable acquisition, the ratio includes all the debt associated with the transaction, but is currently only capturing one quarter of EBITDA contribution. On a normalized basis, this ratio would be approximately 3.3 times.

Scott Burrows: And a third was bringing the phase A peace pipeline expansion into service, marking culmination of more than 10% years and more than $4 billion expansion program that was driven by growing customer demand for transportation services to support development and the WCSB, including the Monteney, Duvernay and other resource plays. The peace pipeline system plays an important role within Pemina's integrated value chain. And I would like to thank our many customers, employees and communities that have supported Pemina to deliver this major infrastructure build out.

Scott Burrows: I'll now turn things back to Scott. Thanks, Cam.

Scott Burrows: Thanks, Cam. In closing, I'd like to reiterate that for all of us at Pembina, it has been a strong first half of 2024, and we are looking forward to continued growth throughout the remainder of the year. Amidst the backdrop of industry momentum and an expectation of robust volume growth, we continue to see increased utilization across our systems, pursue many opportunities to increasingly invest capital, and execute our strategy within our financial guardrails. Thank you for joining us this morning and for your continued support. Operator, please open the line up for questions. Thank you.

Scott Burrows: In closing, I'd like to reiterate that for all of us at PEMIN, it has been a strong first half of 2024, and we are looking forward to continued strength throughout the remainder of the year. Amidst the backdrop of industry momentum and an expectation of robust volume growth, we continue to see increased utilization across our systems, pursue many opportunities to credibly invest capital and execute our strategy within our financial guardrails.

Cam: I'll now turn things back to Scott.

Scott Burroughs: Thanks, Cam.

Scott Burroughs: In closing, I'd like to reiterate that for all of us at Pembina, it has been a strong first half of 2024, and we are looking forward to continued strength throughout the remainder of the year.

Scott Burrows: As a result of the expansions and ongoing optimization efforts, Pemina is confident that its extensive pipeline network is best positioned to capture future volume growth and allow the company to continue to offer customers unparalleled advantages through safe reliable, flexible and cost competitive services together with differentiated market access.

Speaker Change: Amidst the backdrop of industry momentum and an expectation of robust volume growth, we continue to see increased utilization across our systems, pursue many opportunities to creatively invest capital, and execute our strategy within our financial guardrails.

Scott Burrows: Thank you for joining us this morning and for your continued support.

Unknown Executive: Operator, please open the line-up for questions. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by the one on your touchstone phone. You will hear a prompt that your hand has been raised. If you are using a speaker phone, please lift the handset before pressing any keys.

Scott Burroughs: Thank you for joining us this morning and for your continued support. Operator, please open the line up for questions.

Unknown Executive: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number on your touchtone phone. You will hear a prompt that your hand has been raised. If you are using a speakerphone, please lift the handset before pressing any key.

Speaker Change: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. If you are using a speakerphone, please lift the handset before pressing any keys.

Cameron Goldade: I will now turn the call over to Cam to discuss highlights from our second quarter. Thanks, Scott. Scott noted Pemina reported a record second quarter adjusted EBITDA of $1.091 billion. This represents a 33% increase over the same period in the prior year and remaining a 21% increase adjusting for the Alliance Luxable Ownership. In pipelines, factors impacting the second quarter primarily included higher adjusted EBITDA from Alliance due to stronger asset performance combined with increased ownership following the Alliance Luxable acquisition.

Jeremy Tonet: Your first question comes from Jeremy Tonet at JP Morgan Chase. Please go ahead. Hi, good morning.

Jeremy Tonet: Your first question comes from Jeremy Tonet at JPMorgan Chase. Please go ahead.

Speaker Change: Your first question comes from Jeremy Tonet at JPMorgan Chase. Please go ahead.

Scott Burrows: Morning, Jeremy. I just want to dial in on the acquisitions a little bit more. Our stable alliance here seems like they're outperforming our expectations, and just wonder if you could talk a bit more, I guess, about the outperformance in, you know, really curious about looking forward. I guess it seems like full ownership would bring new opportunities to Pembina and how that kind of impacts, I guess, the marketing opportunities as well. Just any more color on how we should think about what's. It's possible they're going forward. Jeremy, a lot of the strength really was driven at the off-sable level.

Jeremy Tonette: Hi, good morning.

Scott Burrows: Just want to dial in on the acquisitions a little bit more. AuxAble Alliance, here, seems like they're outperforming our expectations. And just wondering if you could talk a bit more about the outperformance in, you know, really curious about looking forward. It seems like. Full ownership would bring new opportunities to Pembina and how that kind of impacts, I guess, the marketing opportunities as well. Just any more color on how we should think about what's possible there going forward.

Rick: Good morning, Jeremy.

Jeremy Tonette: Just want to dial in on the acquisitions a little bit more. AuxAble Alliance here seems like they're outperforming our expectations. I'm just wondering if you could talk a bit more, I guess, about the outperformance. I'm really curious about looking forward, I guess. It seems like...

Cameron Goldade: The northern pipeline system outage and wildfires in the second quarter of 2023, which had an impact of $29 million with no similar impact in the second quarter of 2024. Contractual inflation adjustments on tolls and the earlier recognition of takeer pay deferred revenue on the peace pipeline system and the reactivation of the nipacy pipeline in the third quarter of 2023. In facilities, factors impacting the second quarter included the inclusion within facilities of adjusted EBITDA from Luxable following the Alliance Luxable acquisition.

Jeremy Tonette: Full ownership would bring new opportunities to Pembina and how that kind of impacts, I guess, the marketing opportunities as well. Just any more color on how we should think about what's possible there going forward.

Scott Burrows: Jeremy, a lot of the strength really was driven at the auxable level. Obviously, the low gas price and high NGL prices had a strong impact on that business. As we pointed out in our comments, we'd obviously like a little higher gas price for all of our producing community and, hopefully, that will add to increased drilling. But in the short term, here, that low gas price has really led to strong frac spreads across the business, especially at Auxable.

Speaker Change: Jeremy, a lot of the strength really was driven at the Auxable level. Obviously, the low gas price and high NGL prices had a strong impact on that business. As we pointed out in our comments, we'd obviously like a little higher gas price for all of our producing community and hopefully add to increased drilling. But in the short term here, that low gas price has really led to strong frack spreads across the business, especially at Auxable.

Scott Burrows: Obviously, the low gas price and high NGL prices had had a strong impact on that business. As we pointed out in our comments, we'd obviously like a little higher gas price for all of our producing community and hopefully add to increase drilling. But in the short term here, that low gas price has really led to strong for experts across the business. Especially at at Ox able. You know, when you go back to our acquisition presentation and thesis, we talked about some of the longer term synergies, you know, more towards the end of the decade. And we think having full control of of ox able will allow us to continue to capture those and give us a leg up in terms of capturing those.

Cameron Goldade: The northern pipeline system outage and wildfires in the second quarter of 2023, which had an impact of $18 million with no similar impacts in the second quarter of 2024 and higher interoperable volumes on certain PGI assets. In marketing and new ventures, second quarter results reflect the net impact of increased ownership interest in oxable following the Alliance Luxable acquisition as well as higher NGL margins at oxable. Higher margins from the Western Canadian NGL marketing business due to higher market volumes, lower natural gas prices and higher propane butane and condensate prices. Realized losses on NGL based derivatives compared to gains in the second quarter of 2023, partially offset by higher realized gains on crude oil based commodity related derivatives as well as higher general and administrative expense.

Scott Burrows: When you go back to our acquisition presentation and thesis, we talked about some of the longer-term synergies more towards the end of the decade. We think having full control of Auxable will allow us to continue to capture those and give us a leg up in terms of capturing those. It's a little too early to start talking about what exactly those are in terms of where we're headed, but we're actively working and planning on them today.

Jeremy Tonette: You know, when you go back to our acquisition presentation and thesis.

Jeremy Tonette: We talked about some of the longer-term synergies, you know, more towards the end of the decade. And we think having full control of Oxfable will allow us to continue to capture those and give us a leg up in terms of capturing those. It's a little too early to start talking about what exactly those are in terms of...

Scott Burrows: It's a little too early to just start talking about what exactly those are in terms of where we're headed. But we're actively working and finding on those today.

Jeremy Tonette: where we're headed, but we're actively working and planning on those today.

Jeremy Tonet: Got it. Fair enough. Thank you for that. And in the release, I think there's language that highlights the expectations for 6% and 4% conventional gas processing volume growth, respectively, in 24. And just wondering, is this a similar trajectory you kind of see in the near term post 24 in general at a high level.

Jeremy Tonet: Got it. Fair enough. Thank you for that.

Cameron Goldade: Finally, the corporate segment was largely unchanged. Earnings in the second quarter were $479 million. This represents a 32% increase over the same period in the prior year. In addition to the factors impacting adjusted EBITDA, earnings in the second quarter were impacted by unrealized losses recognized by PGI on interest rate derivative financial instruments compared to gains in the second quarter of 2023. Gains associated with the de-recognition of the provisions related to the financial assurance is provided by Pamina, which were transferred to Cedar LNG following the positive FID in June.

Speaker Change: Got it. Fair enough. Thank you for that. And in the release, I think there's language that highlights the expectations for 6% and 4% conventional and gas processing volume growth, respectively, in 24. And just wondering, is this...

Speaker Change: A similar trajectory you kind of see in the near-term post-24 in general at a high level.

Jeremy Tonet: And I guess my question is, if you're expecting kind of a mid single digit growth, is this filling latent capacity on the system or this more capital intensity effectively, how much capital investment will be required to attain that kind of mid single digit growth mid cycle as it could be possible.

Speaker Change: And I guess my question is, if you're expecting kind of a mid-single-digit growth, is this

Jeremy Tonette: Billings.

Speaker Change: latent capacity on the system? Or is this more capital intensity effectively? How much capital investment will be required to attain that kind of mid single digit growth mid cycle as you as could be possible?

Cameron Goldade: Larger unrealized losses on renewable power purchase agreements, and unrealized loss on NGL based derivatives compared to an unrealized gain in the second quarter of 2023, higher depreciation and amortization, net finance costs, and acquisition and integration fees. Pipeline volumes of 2.7 million barrels per day in the second quarter represent an 11% increase compared to the same period in the prior year. The increase was primarily due to the increase in ownership interests in alliance, higher volumes on the peace pipeline system, resulting from earlier recognition of take or pay deferred revenue, and the impact of the northern pipeline system outage and the wildfires in the second quarter of 2023, combined with the reactivation of the nipacy pipeline. Facilities volumes of approximately 0.9 million barrels per day in the second quarter represent a 14% increase compared to the same period in the prior year.

Jeremy Tonet: And in the release, I think there's language that highlights the expectations for 6% and 4% conventional and gas processing volume growth, respectively, in 24. And just wondering, is this a similar trajectory you kind of see in the near term, post 24, in general at a high level? And I guess my question is, if you're expecting kind of mid single-digit growth, is this filling latent capacity in the system? Or is this more capital intensive? Effectively, how much capital investment will be required to attain that kind of mid single-digit growth mid cycle as you as possible?

Jaret Sprott: Hey Jeremy, it's Jared here. So first, I'll talk a little bit about what we're seeing kind of in 2024 with respect to our conventional volume growth. And then I'll touch on PGI just for a second. So you saw in our, I think in our press release, we dropped it from roughly 9% to 6%. You know, that really equates to approximately; it's not that much material amount of volume is roughly 30,000 barrels. And what we did see in the first half of the year, which you'll probably recall from the previous quarters, was we saw a significant reduction in volumes in January here in Western Canada due to some extreme weather.

Jeremy Tonette: Hey Jeremy, it's Jaret here. So first I'll talk a little bit about what we're seeing kind of in 2024 with respect to our conventional volume growth and then I'll touch on PGI just for a second.

Jaret Sprott: Oh, hey, Jeremy, it's Jared here. So first, I'll talk a little bit about what we're seeing kind of in 2024 with respect to our conventional volume growth, and then I'll touch on PGI just for a second. So you saw in our, I think in our press release, we dropped it from roughly nine to 6%. You know, that really equates to approximately, it's not that much of a material amount of volume, it's roughly 30,000 barrels.

Speaker Change: So you saw in our, I think in our press release, we dropped it from roughly nine to six percent, you know, that really equates to approximately, it's not that much material amount of volume, it's roughly 30,000 barrels.

Jaret Sprott: And what we did see in the first half of the year, which you'll probably recall from the previous quarters, was we saw a significant reduction in volumes in January here in Western Canada with some extreme weather. That obviously set a lot of our customers back, and they really didn't make that up. We saw a larger turnaround season kind of in that May, June than we expected from some of our third parties. All of the PGI turnarounds went as expected, and the phase eight went, that commissioning went extremely well.

Jeremy Tonette: and what we did see in the first half of the year which you'll probably recall from the previous quarters was we saw a significant reduction in volumes in January here in Western Canada with some

Jaret Sprott: That obviously set a lot of our customers back, and they really didn't really didn't make that up. We saw a larger turnaround season, kind of in that May, June, and then we expected from some of our third parties. All of the PGI turnarounds went as expected in the phase eight went, documenting when extremely well. And then we had a short unplanned outage at our flat complex, specifically RFS one, that restricted some C2 plus volume. So that's, that's a big portion of the overall reduction. And then the latter half of the year, you know, across a couple of hundred receipt points in the conventional system.

Jeremy Tonette: Extreme weather, that obviously set a lot of our customers back, and they really didn't make that up.

Jeremy Tonette: We saw a larger turnaround season kind of in that May-June than we expected from some of our third parties.

Jeremy Tonette: All of the PGI turnarounds went as expected and the phase 8 went, that commissioning went extremely well.

Jaret Sprott: And then we had a short unplanned outage at our frack complex, specifically RFS1, that restricted some C2 plus volume. So that's a big portion of the overall reduction. And then the latter half of the year, you know, across a couple of hundred receipt points in the conventional system, it's really just timing of development.

Cameron Goldade: The increase was primarily due to aksable volume recognition following the alliance, aksable acquisition, higher volumes at younger, as the second quarter of 2023 was impacted by the northern pipeline system outage and the wildfires, combined with higher interruptible volumes on certain PGI assets.

Jeremy Tonette: And then we had a short unplanned outage at our frack complex, specifically RFS1, that restricted some C2 plus volumes. So that's a big portion of the overall reduction.

Jeremy Tonette: And then the latter half of the year, you know, across a couple of hundred receipt points in the conventional system, it's really just timing of development. It, you know, that we're seeing from our customers, it's not that they're not drilling in these liquid-rich areas. It's just, you know, that forecasting of when the volumes are coming on.

Jaret Sprott: It's really just timing of development. It, you know, that that received from our customers. It's not that they're not drilling in these liquid-rich areas. It's just, you know, that that forecasting of when the volumes are coming on. That kind of leads into, you know, there's been some public disclosure recently around some drier gas, either being shut in or not completed. We're not really seeing the effects of that. As you know, like the majority of our PGI assets, all of our PGI assets. They produce significantly liquid rich gas, and you're actually seeing that in the overall revenue volume increase in PGI.

Jaret Sprott: What we're seeing from our customers, it's not that they're not drilling in these liquid-rich areas. It's just, you know, the forecasting of when the volumes are coming on. That kind of leads into, you know, there's been some public disclosure recently around some drier gas being shut in or not completed. But we're not really seeing the effects of that. As you know, like the majority of our PGI assets, all of our PGI assets, they produce significantly liquid-rich gas. And you're actually seeing that in the overall revenue volume increase for PGI. I think we talked from three to four, four to 5%.

Cameron Goldade: 22, I was lucky for 2024. In addition to raising our 2024 Adjust the Epidock Guidance, as Scott mentioned previously, Tim and has also revised its 2024 capital investment program to $1.3 billion. The revised outlook reflects an approximate $140 million net increase when compared to our original 2024 budget of $1.16 billion inclusive of then unsanctioned additional growth capital. Drivers of the increase primarily include the sanctioning of PGI's Wapiti Expansion and K3 Co-Generation Facility, other increases in revenue generating capital within pipelines, and additional non-recoverable sustaining capital. The revised capital investment program reflects approximately $300 million for contributions to equity accounted in besties, including $240 million of equity contributions to Cedar LNG incurred in the first half of 2024.

Jeremy Tonette: That kind of leads into, you know, there's been some public disclosure recently around some drier gas either being shut in or not completed.

Jeremy Tonette: We're not really seeing the effects of that, as you know, like the majority of our PGI assets, all of our PGI assets

Jeremy Tonette: They produce significantly liquid rich gas.

Jeremy Tonette: And you're actually seeing that in the overall revenue volume increase in PGI, I think we talked from three to four, four to five percent, you know, we're seeing, and we haven't brought on any new gas plants, so we're seeing really strong gas growth.

Jaret Sprott: I think we talked from three to four, or four to five percent. You know, we're seeing, and that we haven't brought on any new gas plants. We're seeing really strong gas growth where we have lots of condensate and lots of NGLs, which is extremely positive. And I think one of the features of our footprint is that we don't process a lot of the drier gas. With all that said, you know, our overall thesis for Western Canadian, you know, liquids growth hasn't really changed in that mid-digit. And as we think about latent capacity versus expanded capacity, when you're in Alberta, kind of now that phase eight's in service, kind of Gordon Dale, follow the map all the way down to Fox Creek and Edmonton.

Jaret Sprott: You know, we're seeing, and we haven't brought on any new gas plants. So we're seeing really strong gas growth where we have lots of condensate and lots of NGLs, which is extremely positive. And I think one of the features of our footprint is that we don't process a lot of the drier gas.

Jeremy Tonette: where we have the lots of condensate and lots of NGLs, which is extremely positive. And I think one of the features of our footprint.

Cameron Goldade: With all that said, you know, our overall thesis for Western Canadian, you know, liquids growth hasn't really changed in that mid-digit. And as we think about latent capacity versus expanded capacity, when you're in Alberta, kind of now that phase eight's in service, kind of Gordondale, follow the map all the way down to Fox Creek and Edmonton, that's going to be kind of latent capacity use and or pump station. No more linear assets are required to get those volumes into the Edmonton market.

Jeremy Tonette: is that we don't process a lot of the drier gas.

Cameron Goldade: There's no further contributions to Cedar expected in 2024. Tim and it continues to expect the capital program to be funded with cash flow from operating activities and out of dividends, maintaining its strong balance sheet. At June 30, based on the trailing 12 months, the ratio of proportionally consolidated senior debt to adjust the EBITDA was 3.6 times, which is at the low end of our target range. It's important to note, however, that given the April 1st closing date of the Alliance Oxable Acquisition, the ratio includes all the debt associated with the transaction, but it's currently only capturing one quarter of EBITDA contribution.

Jeremy Tonette: With all that said, you know, our overall thesis for Western Canadian, you know, liquids growth hasn't really changed in that mid-digit.

Jeremy Tonette: And, and as we think about latent capacity versus expanded capacity, when you're in Alberta, kind of now that phase eight's in service, kind of Gordondale

Cameron Goldade: On a normalized basis, this ratio will be approximately 3.3 times.

Jaret Sprott: That's going to be kind of latent capacity use and or pump station, no more linear assets required to get those volumes into the Edmonton market. And then, as you go west of Gordon Dale into Northeast BC, that's where we'll require some incremental pipelines, et cetera. So that's kind of the distinction, and that's kind of all been built into our, you know, three-year capital forecast and all part of our three-year cash flow for share guidance that we gave at investor day.

Jeremy Tonette: Follow the map all the way down to Fox Creek and Edmonton, that's going to be kind of latent capacity use and or pump station, no more linear assets required to get those volumes into the Edmonton market, and then as you go west of Gordondale into Northeast BC, that's where we'll require some incremental pipelines, etc. So that's kind of the distinction and that's kind of all been built into our, you know,

Cameron Goldade: And then as you go west of Gordondale into Northeast BC, that's where we'll require some incremental pipelines, et cetera. So that's kind of the distinction, and that's kind of all been built into our, you know, three-year capital forecast and all part of our three-year cashflow per share guidance that we gave at Investor Day. Anything else to add, Cameron?

Scott Burrows: I'll now turn things back to Scott. Thanks, Cam.

Jeremy Tonette: Three-year capital forecast and all part of our three-year cash flow per share guidance that we gave at investor day

Scott Burrows: In closing, I'd like to reiterate that for all of us at Pemina, it has been a strong first half of 2024, and we are looking forward to continued strength throughout the remainder of the year. Amidst the backdrop of industry momentum and an expectation of robust volume growth, we continue to see increased utilization across our systems, pursue many opportunities to a credibly invest capital and execute our strategy within our financial guardrails. Thank you for joining us this morning and for your continued support operator.

Scott Burrows: Anything else to ask you out there? So maybe just, I guess, mid-cycle cat-backs or near-term cat-backs run-right levels, any high-level thoughts there is the more processing cat-backs that's required to kind of hit that mid-single-vigit growth. Jeremy, I think I'd sort of go back to our message from Investor Day, which was if you sort of look at this year, next year, we're probably running right around that free cash flow and neutral level. So the levels that you're seeing in 2024, 2025, it's somewhere in between that billion to billion and a quarter range is probably the run rate for the next couple of years.

Cameron Goldade: Anything else to add, Cameron?

Cameron Goldade: So maybe just, I guess, mid-cycle CapEx or near-term CapEx run rate levels, any high-level thoughts there? Is there more processing CapEx that's required to kind of hit that mid-single-digit growth?

Cameron Goldade: So maybe just, I guess, mid-cycle CapEx or near-term CapEx run rate levels, any high-level thoughts there? Is there more processing CapEx that's required to kind of hit that mid-single-digit growth?

Jeremy Tonet: Jeremy, I think I'd sort of go back to our message from investor day, which was, you know, if you sort of look at this year, next year, you know, we're probably running right around that free cash flow neutral level, you know, so that the levels that you're seeing in, in 2024, you know, 2025, you know, it's somewhere in between that billion to billion and a quarter range is probably the Assuming that we continue to execute on the plan.

Unknown Executive: Please open the line up for questions. Thank you.

Cameron Goldade: Jeremy, I think I'd sort of go back to our message from yesterday, which was, you know, if you sort of look at this year, next year,

Unknown Executive: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. If you are using a speakerphone, please lift the hand set before pressing any keys.

Speaker Change: You know, we're probably running right around that free cash flow neutral level, you know, so the levels that you're seeing in

Jeremy Tonette: In 2024, 2025, it's somewhere in between that billion to billion and a quarter range is probably the run rate for the next couple of years.

Jeremy Tonet: Your first question comes from Jeremy Tonet at JP Morgan Chase. Please go ahead. Hi, good morning. Morning, Jeremy. I just want to dial in on the acquisitions a little bit more, Roxable Alliance here seems like they're outperforming our expectations and just wonder if you could talk a bit more, I guess, about the outperformance in, you know, really curious about looking forward, I guess, it seems like full ownership would bring new opportunities to Pembina and how that kind of impacts, I guess, the marketing opportunities as well.

Scott Burrows: Assuming we continue to execute on the plan and the projects that Jaret outlined. As Jaret mentioned, obviously a big part of that is obviously completing RFS 4, which comes into service in the first half of 2026. Likewise, as we continue to move forward and build out that Northeast BC capital, Northeast BC transportation capital that Jaret referred to, that will be in that same time frame as well, providing that all sort of goes ahead with that. So, and then once you get to sort of the 2026 time frame outward, obviously, the base core business capital starts to trail off as some of those assets come into service.

Jeremy Tonet: And, and the projects that Jaret outlined, as Jaret mentioned, obviously, a big part of that is obviously completing RFS4, which comes into service in the first half of 2026. And likewise, as we continue to move forward and build out that Northeast BC capital, the Northeast BC transportation capital that Jaret referred to, that'll be in that same timeframe as well, providing that, you know, everything sort of goes ahead with that.

Jeremy Tonette: Assuming we continue to execute on the plan and the projects that Jared outlined, as Jared mentioned, you know, obviously, a big part of that is, is obviously completing RFS 4, which comes into service in the first half of 2026.

Jeremy Tonette: And likewise, as we continue to move forward and

Speaker Change: and build out that Northeast BC capital, Northeast BC transportation capital that Jaret referred to, you know, that'll be in that same timeframe as well, providing that, you know, all sort of goes ahead with that. So, and then once you get to sort of the 2026 timeframe outward, obviously, you know, the base

Jeremy Tonet: So, and then once you get to sort of the 2026 timeframe, outward, obviously, the base core business capital starts to trail off as some of those assets come into service. Our BD teams are obviously very hard at work, and we continue to see opportunities, but for the next couple of years, I think that's probably the way we're thinking about it.

Jeremy Tonet: Just any more color on how we should think about what's up. How possible they are going forward. Jeremy, a lot of the strength really was driven at the oxable level. Obviously, the low gas price and high NGL prices had had a strong impact on that business as we pointed out in our in our comments, we'd obviously like a little higher gas price for all of our producing community and hopefully add to increase drilling, but in the short term here, that low gas price has really led to strong for experts across the business.

Speaker Change: core business capital starts to trail off as some of those assets come into service. Our BD teams are obviously very hard at work and we continue to see opportunities, but for the next couple of years, I think that's probably the way we're thinking about it.

Jeremy Tonet: Our BD teams are obviously very hard at work, and we continue to see opportunities. But for the next couple of years, I think that's probably the way where it's taken about it. Got it. That's very helpful. Thank you.

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

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

Praneeth Satish: Thank you. The next question comes from Praneeth Satish at Wells Fargo. Please go ahead.

Praneeth Satish: The next question comes from Prince Satish at Wells Fargo. Please go ahead.

Speaker Change: Thank you. The next question comes from Praneeth Satish at Wells Fargo. Please go ahead.

Jeremy Tonet: Especially at oxable. You know, when you go back to our acquisition presentation and thesis, we talked a bit with some of the longer term synergies, you know, more towards the end of the decade, and we think having full control of of oxable will allow us to continue to capture those and give us a leg up in terms of capturing those it's a little too early to just are talking about what exactly those are in terms of where we're headed.

Praneeth Satish: Hi all, thanks. Good morning.

Unknown Executive: Hi all.

Unknown Executive: Thanks.

Scott Burrows: Good morning. Maybe just on Cedar, if you can give us an update here in terms of reassigning the capacity that you hold with third parties, are you seeing your strong interest from customers there?

Bernice Satish: Hi all, thanks, good morning. Maybe just on CEDAR, if you can give us an update here in terms of reassigning the capacity that you hold with third parties, are you seeing

Scott Burrows: What's the timeline to announce that contract? And also, how committed are you to kind of reassigning that entire 1.5 mtpa, and could you keep more of it and end up marketing more than 0.3 mtpa with your marketing group?

Stuart Taylor: Maybe just on CDER, if you can give us an update here in terms of reassigning the capacity that you hold with third parties. Are you seeing strong interest from customers there? What's the timeline to announce that contract? And also, how committed are you to kind of reassigning the entire 1.5 MTPA, and could you keep more of it and end up marketing more than 0.3 MTPA with your marketing group?

Bernice Satish: your strong interest from customers there. What's the timeline to announce that contract? And also, how committed are you to reassigning that entire 1.5 MTPA and could you keep

Jeremy Tonet: But we're actively working and finding on those today. Got it fair enough. Thank you for that. And in the release, I think this language that highlights the expectations for 6% and 4% conventional gas processing volume growth respectively in 24 and just wondering, is this a similar trajectory, you kind of see in the near term post 24 in general at a high level.

Speaker Change: More of it and end up marketing more than 0.3 MTPA with your marketing group.

Unknown Executive: I insist too.

Stuart Taylor: Hi, it's Stu. So we're now following the FID announcement and progress. We are ramping up our marketing efforts. Looking at the remaining capacity of Cedar, I will say that as our project became more real with the FID announcement, our interest is high. We've been working with a number of potential offtakers with whom we've had conversations for a long period of time, but we do have some renewed and new interest coming in as well. So we're excited and optimistic about progressing those conversations to completion with a target to have as much of that completed in 2024. So we're optimistic and excited and continue to make progress with potential offtakers.

Scott Burrows: So we're now following the FID announcement and progress. We are ramping up our marketing efforts.

Speaker Change: Hi, it's Stu. So we're now following the FID announcement and progress. We are ramping up our marketing efforts.

Scott Burrows: Looking at the remaining capacity of Cedar, I will say that as our project became more real with the FID announcement, our interest is high. We've been working with a number of potential off takers that we've had conversations for a long period of time, but we do have some renewed and new interest coming in as well. So we're excited and optimistic of progressing those conversations to completion, with the target to have as much of that completed in 2024. So we're optimistic and excited and continue to make progress with potential off-takers.

Jeremy Tonet: And I guess my question is if you're expecting kind of the mid single digit growth, is this filling latent capacity on the system, or is this more capital intensity effectively how much capital investment will be required to attain that kind of mid single digit growth mid cycle as it could be possible.

Speaker Change: Looking at the remaining capacity of Cedar, I will say that as our project became more real with the FID announcement, our interest is high.

Speaker Change: We've been working with...

Speaker Change: You know, a number of potential offtakers that we've had conversations for a long period of time. But we do have some renewed and new interest coming in as well. So we're excited and optimistic of progressing those conversations to completion with a target to have, you know, as much of that, you know, completed in 2024. So we're optimistic, excited and continue to make progress with potential offtakers.

Jaret Sprott: Hey Jeremy, it's Jared here. So first I'll talk a little bit about what we're seeing kind of in 2024 with respect to our conventional volume growth and then I'll touch on PGI just for a second. So you saw in our, I think in our press release, we dropped it from roughly 9 to 6%. You know that really equates to approximately it's not that much material amount of volume is roughly 30,000 barrels.

Unknown Executive: First, got it.

Praneeth Satish: Got it. And maybe just switching gears and moving over to the Bakken, I have two questions on the Vantage pipeline. First, can you kind of remind us what the utilization is on the pipe and whether Vantage can be expanded any further with pumps. And then, secondly, to the extent that there is excess capacity, and it can be expanded at a low cost, can you satisfy all of your Dow ethane contract with Vantage? I guess, What would the cost be of moving ethane on Vantage versus some of the other options that you're considering?

Unknown Executive: And maybe just switching gears and moving over to the back in. I have two questions here on the Vantage pipeline. First, if you can kind of remind us what the utilization is on the pipe and whether Vantage can be expanded any further with pumps. And then secondly, to the extent that there is access capacity and it can be expanded at a low cost. Can you can you satisfy all of your Dow at saying, I mean, contract with, with Vantage, I guess what would the cost be of moving ethane on Vantage versus some of the other options that you're considering.

Speaker Change: Got it. And maybe just switching gears and moving over to the Bakken. I have two questions here on the the Vantage Pipeline.

Jaret Sprott: And what we did see in the first half of the year, which you'll probably recall from the previous quarters was we saw a significant reduction in volumes in January, here in Western Canada was some extreme weather that obviously set a lot of our customers back and they really didn't really didn't make that up. We saw a larger turnaround season kind of in that May, June, and then we expected from some of our third parties, all of the PGI turnarounds went as expected in the phase eight went, documenting when extremely well.

Speaker Change: First, if you can kind of remind us what the utilization is on the pipe and whether vantage can be expanded any further with pumps.

Speaker Change: And then secondly, to the extent that there is excess capacity and it can be expanded at a low cost, can you satisfy all of your Dow ethane contract with Vantage?

Speaker Change: I guess, what would the cost be of moving ethane on Vantage versus some of the other options that you're considering?

Unknown Executive: Good morning.

Jaret Sprott: And then we had a short unplanned outage at our flat complex, specifically RFS one that restricted some C2 plus volume. So that's, that's a big portion of the overall reduction. And then the latter half of the year, you know, across a couple of hundred receipt points in the conventional system, it's really just timing of development. It, you know, that that received from our customers. It's not that they're not drilling in these liquid rich areas.

Unknown Executive: Good morning.

Unknown Executive: Good morning. Thanks for the question. So yeah, we currently do have some white space on the vantage pipeline that is capable, obviously, of bringing more ethane up into the egg system and then into the petrochemical feedstock takers there in Western Canada. With respect to our portfolio, with respect to Dow, we're kind of taking a more diversified approach to this. So we think of it as ethane that comes out of our RFS complex, which is C2 plus being extracted in Western Canada and then broken into its parts and fed into the crackers here.

Unknown Executive: Thanks for the question. So yeah, we currently do have some white space on the vantage pipeline. That is capable, obviously, of bringing more ethane up into the big system and then into the petrochemical.

Speaker Change: Good morning. Thanks for the question. So, yeah, we currently do have some white space on the Vantage Pipeline that is capable, obviously, of bringing more ethane up into the egg system and then into the petrochemical.

Scott Burrows: Feet stock takers there in Western Canada, with respect to our portfolio with respect to Dow, we're kind of taking a more diversified approach to this. So we think of it as ethane that comes out of our RFS complex, that is C2 plus being extracted in Western Canada, and then broken into its parts and fed into the crackers here in Alberta. There is the C2 extraction component. That's more like mainline extraction, like our Empress or younger facilities that feed straight atting into the system, into the crackers, and then you have the Vantage system that can bring product up from North Dakota.

Pete Stock: Pete Stock

Speaker Change: and other stakeholders there in Western Canada. With respect to our portfolio, with respect to Dow, we're kind of taking a more diversified approach to this. So we think of it as ethane that comes out of our RFS complex.

Jaret Sprott: It's just, you know, that forecasting of when the volumes are coming on. That kind of leads into, you know, there's been some public disclosure recently around some drier gas, either being shut in or not completed. We're not really seeing effects of that. As you know, like the majority of our PGI assets, all of our PGI assets, they produce significantly liquid rich gas. And you're actually seeing that in the, in the overall revenue volume increase in PGI, I think we talked from three to four or four to five percent.

Speaker Change: that is C2 plus being extracted in Western Canada and then broken into its parts and fed into the crackers here. In Alberta, there is the C2 extraction component.

Unknown Executive: In Alberta, there is the C2 extraction component. That's more like mainline extraction, like our Empress or younger facilities that feed straight ethane into the system, into the crackers, and then you have the vantage system that can bring product up from North Dakota.

Speaker Change: That's more like mainline extraction, like our Empress or younger facilities that feed straight ethane into the system, into the crackers, and then you have the vantage system that can bring product up from North Dakota.

Scott Burrows: So across those kind of three portfolios right now we're just evaluating what's the best use of capital to basically fulfill our entire Dow commitment. So we won't really specifically talk to you know where the majority of that capital is going to go right now. I think in that industry we talked about here in the next couple of quarters will will be able to provide some more insight on where that capital would be going. But some advantages definitely a part of the overall portfolio consideration to meet that contract.

Jaret Sprott: You know, we're seeing and that we haven't brought on any new gas plants. We're seeing really strong gas growth, where we have lots of condensate and lots of NGLs, which is extremely positive. And I think one of the features of our footprint is that we don't process a lot of the drier gas with all that said, you know, our overall thesis for Western Canadian, you know, liquid growth hasn't really changed in that mid digit.

Unknown Executive: So across those three portfolios, right now, we're just evaluating what's the best use of capital to basically fulfill our entire Dow commitment. So we won't really specifically talk to you about where the majority of that capital is going to go right now. I think in that industry we talked about here, in the next couple of quarters, we'll be able to provide some more insight on where that capital will be going. But Vantage is definitely a part of the overall portfolio consideration to meet that contract.

Speaker Change: So across those kind of three portfolios, right now we're just evaluating what's the best use of capital to

Speaker Change: basically fulfill our entire Dow commitment. So we won't really specifically talk to you know where the majority of that capital is going to go right now. I think in that industry we talked about here in the next couple of quarters we'll be able to provide some more insight on where that capital will be going. But Vantage is definitely a part of the overall portfolio consideration.

Jaret Sprott: And as we think about latent capacity versus expanded capacity, when you're in Alberta, kind of now that phase eights in service, kind of Gordon Dale, follow the map all the way down to Fox Creek and Edmonton. That's going to be kind of latent capacity use and or pump station, no more linear assets required to get those volumes into the Edmonton market. And then as you go west of Gordon Dale into Northeast BC, that's where we'll require some incremental pipelines, etc.

Speaker Change: to meet that contract.

Speaker Change: Thank you.

Unknown Executive: Thank you. The next question comes from Patrick Kenny at National Bank Financial. Please go ahead.

Patrick Kenny: Next question comes from Patrick Kenny at National Bank Financial. Let's go ahead. Hey, good morning, guys.

Speaker Change: Thank you. Next question comes from Patrick Kenny at National Bank Financial. Please go ahead.

Patrick Kenny: Hey, good morning guys, just maybe quickly on the Auxable or Alliance and Auxable consolidation. I know there's some accounting noise in there, but maybe you can just walk through the headline, you know, $600 million loss on disposal of your equity interest and maybe what that means for your corporate affected tax rate going forward.

Cameron Goldade: Just maybe quickly on the ox able or aligns an ox able consolidation. There's some accounting noise in there, but maybe you can just walk through the headline, you know, 600 million dollar loss on the disposal of your equity interest. Maybe what that means for your corporate effect to actually going forward.

Patrick Kenney: Hey, good morning guys. Just maybe quickly on the Auxable or Alliance and Auxable consolidation. I know there's some accounting noise in there, but maybe you can just...

Jaret Sprott: So that's kind of the distinction and that's kind of all been built into our, you know, three year capital forecast and all part of our three year cash flow for share guidance that we gave it to investor day. Anything else to ask you on my stuff?

Patrick Kenny: Walking through the headline, you know, $600 million loss on disposal of your equity interest and maybe what that means for your corporate affected tax rate going forward.

Cameron Goldade: If that is its camera, you've just made our accounting team's day with the question.

Cameron Goldade: That is, it's Cam here. You just made our accounting team's day with the question. You know, it's not a really straightforward explanation, other than to say that the accounting standards are pretty clear about how you have to treat a step acquisition; you basically have to act as if you've disposed of what you've got as the equity accounted investment and then realize the entire fair value acquisition like you would any other acquisition.

Jaret Sprott: So maybe just, I guess, mid-cycle cat-backs or near-term cat-backs, run-right levels, any high-level thoughts there is the more processing cat-backs that's required to kind of hit that mid-single-vigit growth? Jeremy, I think I'd sort of go back to our message from investor day, which was if you sort of look at this year, next year, we're probably running right around that free cash flow and neutral level. So the levels that you're seeing in 2024, 2025, it's somewhere in between that billion to billion and a quarter range is probably the run rate for the next couple of years.

Cameron Goldade: You know it's not a really straightforward explanation other than to say that the accounting standards are pretty clear about how you have to treat a step acquisition. You basically have to act as if you've disposed what you've got as the equity accounted investment and then realize the, you know, the entire fair value acquisition like you would any other acquisition. So obviously you do the fair value on the existing interest and mark that to market. Obviously, I think what's important in recognizing that accounting is that there's an offsetting deferred tax recovery. on that de-recognition, which effectively nets you to about zero or so, it's about a $9 million gain when you net those two out, and then obviously then you go forward and you consolidate.

Speaker Change: It's not a really straightforward explanation other than to say that the accounting standards are pretty clear about how you have to treat

Speaker Change: a step acquisition, you basically have to act as if you've disposed what you've got as the equity accounted investment, and then realize the, you know, the entire fair value acquisition like you would any other acquisition. So obviously,

Cameron Goldade: So obviously, you do the fair value on the existing interest and mark that to market. Obviously, I think what's important in recognizing that accounting is that there's an offsetting deferred tax recovery on when to sign up. Click on the video to learn how...

Speaker Change: You do the fair value on the existing interest and mark that to market. Obviously, I think what's important in recognizing that accounting is that there's an offsetting deferred tax recovery

Jaret Sprott: Assuming we continue to execute on the plan and the projects that Jaret outlined. As Jaret mentioned, obviously, big part of that is obviously completing RFS 4, which comes into service in the first half of 2026. Likewise, as we continue to move forward and build out that Northeast BC capital, Northeast BC transportation capital that Jaret referred to, that will be in that same timeframe as well, providing that all sort of goes ahead with that.

Speaker Change: on that derecognition, which effectively nets you to about zero or so. It's about a $9 million gain when you net those two out.

Cameron Goldade: And then with the consolidation, now obviously we own 100% of the alliance, and now 100% of Oxalable but in Q2, obviously there was a small non-consolidated interest on Oxalable which just gets netted out the back end.

Speaker Change: and then obviously then you go forward and you consolidate and then with the consolidation now obviously we own 100% of Alliance and now 100% of Auxable but in Q2 obviously there was a small non-consolidated interest on Auxable which just gets netted out.

Cameron Goldade: Great, and then I guess going forward, just any impact positively or negatively on the Effective Tax Rate.

Cameron Goldade: Great, and then I guess going forward just any impact positively or negatively on the effect of tax rate. Yeah, I think there will be some positive effect on the effect of tax rate. As you've seen, there is some benefit to the acquisition potentially. The larger acquisition as a result of some opportunities in the US. And so we do get a benefit there, and I think that shows up in terms of the updated tax guy. So you'll see it come down ever so slightly.

Speaker Change: The back end.

Speaker Change: Great, and then I guess going forward, just any impact positively or negatively on the effective tax rate.

Jaret Sprott: So, and then once you get to sort of the 2026 timeframe outward, obviously, the base core business capital starts to trail off as some of those assets come into service. Our BD teams are obviously very hard to work and we continue to see opportunities. But for the next couple of years, I think that's probably the way where they kind of own it. Got it. That's very helpful.

Cameron Goldade: Yeah, I think there will be some positive effects on the, on the effective tax rate. You know, as you've seen, there is some benefit to the acquisition, potentially, the larger acquisition as a result of some opportunities in the US. And so we do get a benefit there, and I think that shows up in terms of the updated tax guidance. So, you know, you'll see it come down ever so slightly.

Speaker Change: Yeah, I think there will be some positive effect on the on the on the effect of tax rate. You know, as you've seen, there is some benefit to the acquisition, potentially the larger acquisition as a result of some opportunities in the US.

Unknown Executive: Thank you.

Speaker Change: And so we do get a benefit there and I think that shows up in terms of the updated tax guide. So, you know, you'll see it come down ever so slightly.

Cameron Goldade: Okay, great. Thanks for that.

Patrick Kenny: Thank you for that. And then maybe, just on the cost pressures you're experiencing on RFS4, maybe you can just walk us through some of the scope changes that might be embedded in that new budget. And then also, you know, given construction activity is really picking up here for large-scale projects in the Heartland area, just how we should be thinking about your ability to lock in costs from a labor productivity standpoint.

Praneeth Satish: The next question comes from Prince Satish at Wells Fargo. Please go ahead. Hi, all. Thanks. Good morning.

Patrick Kenny: And then maybe just still in the cost pressures here, you're experiencing on RFS4. Maybe you can just walk us through some of the scope changes that might be embedded in that new budget. And then also, you know, just given instruction activity really picking up here for large field projects in the Heartland area. Just how we should be thinking about your ability to lock in costs from a labor productivity standpoint.

Speaker Change: Okay, great. Thanks for that. And then maybe just on the cost pressures here you're experiencing on RFS-4, maybe you can just walk us through some of the scope changes that might be embedded in that new budget.

Jaret Sprott: Maybe just on on Cedar, if you can give us an update here in terms of reassigning the capacity that you hold with third parties, are you seeing your strong interest from customers there? What's the timeline to announce that contract? And also how committed are you to kind of reassigning that entire 1.5 mtpa and could you keep more of it and end up marketing more than 0.3 mtpa with your marketing group?

Speaker Change: And then also, you know, just given construction activity, really picking up here for large-scale projects in the Heartland area, just how we should be thinking about your ability to lock in costs from a labor productivity standpoint.

Scott Burrows: Great question, Pat. So think of the project increase kind of in the following three. The first bucket being projects changes and design modifications. This is really to enhance the overall operability of RFS4 specifically and the overall complex. As you know, that we can spread molecules to any one of the fracks. And it's specifically to accommodate a wider range of C3 plus feed stock composition. So depending on where your customer of your customer is extracting NGLs from, from a deep basin well versus a very, you know, oily, Montney well, you get a wide range of NGL composition.

Jaret Sprott: Great question, Pat. So think of the project increase in kind of terms of the following three buckets. The first bucket being project scope changes and design modifications. This is really to enhance the overall operability of RFS4 specifically, and the overall complex, as you know, like we can spread molecules to any one of the fracs. And it's specifically to accommodate a wider range of C3 plus feedstock composition. So depending on where your customer is extracting NGLs from a deep basin well versus a very, you know, oily Montany well, you get a wide range of NGL composition.

Pat: Great question, Pat.

Speaker Change: Think of the project increase kind of in the following three slides.

Speaker Change: The first bucket being project scope changes and design modifications.

Jaret Sprott: Hi, it's just you. So we're now following the FID announcement and progress. We are ramping up our marketing efforts. Looking at the remaining capacity of Cedar, I will say that as our project became more real with the FID announcement, our interest is high. We've been working with a number of potential off takers that we've had conversations for a long period of time, but we do have some renewed and new interest coming in as well.

Speaker Change: This is really to enhance the overall operability of RFS4 specifically and the overall complex. As you know, we can spread molecules to any one of the fracts. And it's specifically to accommodate a wider range of C3 plus feedstock composition.

Jaret Sprott: So we made a decision just to enhance the overall operability to have a wider range to take that product composition. The second bucket is we saw some incremental inflation over and above what we expected in the latter half of 23 when, obviously, there was a very large project sanctioned in Alberta here. So that was unexpected and caused some of the increase.

Speaker Change: So, depending on where your customer is, if your customer is extracting NGLs from a deep basin well versus a very, you know, oily montany well, you get a wide range of NGL composition. So this, we made a decision just to enhance the overall operability to have a wider range to take that product composition.

Scott Burrows: So this we made a decision just to enhance the overall operability to have a wider range to take that product composition. The second bucket is we saw some incremental inflation over and above what we expected in the latter half of 23 when. Obviously, there was a very large project sanctioned in Alberta here. So that was unexpected and caused some of the increase.

Jaret Sprott: So we're excited and optimistic of progressing those conversations to completion with a target to have as much of that completed in 2024. So we're optimistic and excited and continue to make progress with potential off takers. Got it.

Speaker Change: The second bucket is, we saw some incremental inflation over and above what we expected in the latter half of 2023, when obviously there was a very large project sanctioned in Alberta here, so that was unexpected and caused some of the increase.

Jaret Sprott: And then the third bucket is our decision when we sanctioned this project in February of 2023. It was going to be a typical Pembina project where we do all of the oversight and the execution. And as we saw these labor concerns, as you identified, the Heartland area getting busy, we decided to move to a lump sum to make sure that we could procure a tier one contractor that we were confident could get the fabrication shop space, make sure they had access to high quality labor, make sure that they were going to execute with respect to our safety expectations and values and indigenous content and deliver a high quality project on time.

Scott Burrows: And then the third bucket is our decision when we sanctioned this project in February of 2023. It was going to be a typical permanent project where we do all of the oversight in the execution. And as we saw these labor concerns, as you identify the heartland area getting busy. We decided to move to a lump sum to make sure that we could procure a tier one contractor. You know that we were confident could get the fabrication shop space. Make sure they had access to high-quality labor. Make sure that they were going to execute with respect to our safety expectations and values and Indigenous content.

Unknown Executive: And maybe just switching gears and moving over to the back in, I have two questions here on the vantage pipeline. First, if you can kind of remind us what the utilization is on the pipe and whether vantage can be expanded any further with pumps. And then secondly, to the extent that there is access capacity and it can be expanded at a low cost.

Speaker Change: And then the third bucket is our decision, when we sanctioned this project in February of 2023.

Speaker Change: It was going to be a typical Pembina project where we do all of the oversight and the execution. And as we saw these labor concerns, as you identified, the Heartland area getting busy.

Speaker Change: We decided to move to a lump sum to make sure that we could procure a tier one contractor, you know, that we were confident could get the fabrication shop space.

Unknown Executive: Can you, can you satisfy all of your Dow at saying, I mean, contract with, with vantage, I guess what would the cost be of moving ethane on vantage versus some of the other options that you're considering a good morning. Thanks for the question. So, yeah, we currently do have some some white space on the vantage pipeline. That is capable, obviously, of bringing more ethane up into the egg system and then into the petrochemical feedstock takers there in western Canada.

Speaker Change: Make sure they had access to high-quality labor, make sure that they were going to execute with respect to our safety expectations and values and Indigenous content, and deliver a high-quality project on time.

Scott Burrows: And deliver high quality project on time. So we've shifted roughly 70% of that total project, as we stated, to a lump sum. We'll execute kind of more of that outside the lease boundary outside the Prach area. We'll do a lot of that execution, but we have made that shift, and we did see, you know, with shifting that risk from yourself to a third party who's going to deliver that high quality labor and safety expectations. There's a little bit of a cost with that.

Jaret Sprott: So we've shifted roughly 70% of that total project, as we stated, to a lump sum. We'll execute kind of more of that outside the lease boundary, outside the frack area. We'll do a lot of that execution. But we have made that shift, and we did see that by shifting that risk from yourself to a third party, who's going to deliver that high quality labor and safety expectations, there's a little bit of a cost with that.

Speaker Change: So we've shifted roughly 70% of that total project, as we stated, to a lump sum.

Speaker Change: We'll execute kind of more of that outside the lease boundary, outside the frack area, we'll do a lot of that execution. But we have made that shift and we did see, you know, with shifting that risk from yourself to a third party, who's going to deliver that high quality labor and safety expectations, there's a little bit of a cost with that.

Unknown Executive: With respect to our portfolio with respect to Dow, we're kind of taking a more diversified approach to this. So, if you think of it as ethane that comes out of our RFS complex, that is C2 plus being extracted in western Canada and then broken into its parts and fed into the practice here. In Alberta, there is the C2 extraction component. That's more like mainline extraction like our Empress or younger facilities that feed straight ethane into into the system into the crackers and then you have the vantage system that can bring product up from North Dakota.

Scott Burrows: So that's kind of how we break up those three buckets, and overall the project, like we said, is still planned on being delivered on time, which is great. And then, with respect to the commercial side, you know, with this project coming out of the ground as we speak, we've been able to secure incremental contracts at the overall base complex, RFS 1, 2, and 3, which is obviously great for business. And then we've secured a lot of new contracts over and above our original base case when we sanction this with a board in February of 2023.

Jaret Sprott: So that's kind of how we break up those three buckets. And overall, the project, like we said, is still planned to be delivered on time, which is great. And then, with respect to the commercial side, you know, with this project coming out of the ground as we speak.

Speaker Change: So that's kind of how we break up those three buckets, and overall the project, like we said, is still planned on being delivered on time.

Speaker Change: which is great.

Speaker Change: And then with respect to the commercial side, you know, with this project coming out of the ground as we speak.

Jaret Sprott: We've been able to secure incremental contracts at the overall base complex, RFS 1, 2, and 3, which is obviously great for business. And then we've secured a lot of new contracts over and above our original base case when we sanctioned this with the board in February of 2023. And with the incremental cost, we have seen that the overall sanction metrics have actually gone up.

Speaker Change: We've been able to secure incremental contracts at the overall base complex, RFS 1, 2, and 3, which is obviously great for business, and then we've secured a lot of new contracts over and above.

Unknown Executive: So across those kind of three portfolios right now we're just evaluating what's the best use of capital to to basically fulfill our entire doubt commitments. So, we won't really specifically talk to, you know, where the majority of that capital is going to go right now. I think in that industry we talked about here in the next couple of quarters will will be able to provide some more insight on where that capital will be going. But some advantages definitely a part of the overall portfolio consideration to meet that contract. Thank you.

Scott Burrows: And with the incremental cost, we have seen that the overall sanction metrics have actually gone up. And then with respect to the overall portfolio, I'll just talk like the hard line is seeing a little bit of the increase, but overall our portfolio is still a project is still industry leading and we have the full confidence in our team to continue with the current projects to deliver on time, on budget and the future once.

Speaker Change: Our original base case, when we sanctioned this with the board in February of 2023, and with the incremental cost, we have seen that the overall sanction metrics have actually gone up.

Speaker Change: And then with respect to the overall portfolio, I'll just talk, like, the Heartland is seeing a little bit of increase, but overall, our portfolio is still, of projects, is still industry leading, and we have the full confidence in our team to continue with the current projects to deliver on time, on budget, and the future ones.

Patrick Kenny: And then with respect to the overall portfolio, I'll just talk about Heartland seeing a little bit of an increase. But overall, our portfolio of projects is still industry leading, and we have full confidence in our team to continue with the current projects to deliver on time, on budget and future ones.

Scott Burrows: Okay, that's great color. Appreciate that.

Patrick Kenny: Okay, that's great color, Jaret. Appreciate that. And maybe just real quick, what are the incremental costs here contemplated when with the PGI white cap transaction as well? In other words, the all-in economics of the deal, I know some of it has some downstream benefits embedded in the returns. Just wondering if those returns are still in line with your expectations with the new costs on RFS4.

Scott Burrows: And maybe just real quick, we're the incremental cost. You're contemplated when with the PGI way kept transaction as well. In other words, like the oil and economics of the deal, I know some of it has some downstream benefits embedded in the returns; just wondering if those returns are still in line with your expectations with the new cost. That's an RFS 4. Absolutely.

Speaker Change: Okay, that's great color Jaret, appreciate that and maybe just real quick, where the incremental costs here.

Patrick Kenny: Next question comes from Patrick Kenny at National Bank Financial. Hey, good morning guys. Just maybe quickly on the ox able or aligns an ox able consolidation. There's some accounting noise in there, but maybe you can just walk through the headline, you know, 600 million dollar loss on disposal. Whether you're equity interest in maybe what that means for your corporate effective to actually going forward.

Speaker Change: contemplated with the PGI white cap transaction as well.

Speaker Change: The oil and economics of the deal, I know some of it has some downstream benefits embedded in the returns just wondering if those returns are still in line with your expectations with the new costs on RFS 4. [inaudible]

Unknown Executive: Okay, I'll leave it there.

Patrick Kenny: Absolutely. Okay, I'll leave it there. Thank you.

Speaker Change: Absolutely.

Speaker Change: Okay, I'll leave it there. Thank you.

Rob Hope: Thank you. The next question comes from Rob Hope at Scotiabank. Please go ahead.

Rob Hope: Next question comes from Rob Hope at Skillshare Bank. Please go ahead.

Pat: Thanks, Pat.

Cameron Goldade: That is it's camera you just made our accounting teams day with the question. You know, it's it's not a really straightforward explanation other than to say that the accounting standards are pretty clear about how you have to treat a step acquisition. You basically have to act as if you've disposed what you've got as the equity accounted investment and then realize the, you know, the entire fair value acquisition like you would any other acquisition.

Speaker Change: Thank you. Next question comes from Rob Hope at Scotiabank. Please go ahead.

Rob Hope: Morning, everyone. I want to follow up on the FRAC discussion. You know, I guess there are two parts to it. First one is, are the incremental contracts that you signed on for the entire RFS complex reflective of the incremental capital for RFS 4? And then how much white space do you have at RFS? And kind of when could you need some incremental capacity beyond what you're building?

Unknown Executive: Morning, everyone.

Rob Hope: I want to follow up on the fracked discussion. You know, guys, I guess two parts there.

Rob Hope: Morning, everyone. I want to follow up on the on the FRAC discussion. You know, I guess two parts there. First one is

Scott Burrows: First one is. Are the incremental contracts that you signed on for the entire RFS complex reflective of the incremental capital for RFS 4. And then how much white space do you have at RFS and kind of when could you need some incremental capacity beyond what you're building? There's limited white space Rob at the complex and even with RFS 4 coming into service. So right now very focused on project execution of step one with respect to the execution teams. Obviously, the commercial teams are in constant conversations with our other customers, and you know, it's a balancing act between ensuring that we have the base load of the first three fracks.

Rob Hope: Are the incremental contracts that you signed on for the entire RFS complex reflective of the incremental capital for RFS4? And then how much white space do you have at RFS and kind of when could you need some incremental capacity beyond what you're building?

Cameron Goldade: So obviously you do the fair value on the existing interest and and mark that to market. Obviously, I think what's important in in recognizing that accounting is that there's an offsetting deferred tax recovery, on that de-recognition, which effectively nets you to about zero or so, it's about a $9 million gain when you net those two out. And then obviously then you go forward and you consolidate. And then with the consolidation, now obviously we own 100% of the alliance and now 100% of oxalibal but in Q2, obviously there was a small non-consolidated interest on oxalibal which just gets netted out the back end.

Unknown Executive: There's limited white space, Rob, at the complex and even with RFS4 coming into service. So right now, we are very focused on project execution of step one with respect to the execution teams. But obviously, the commercial teams are in constant conversations with our other customers.

Speaker Change: Cheers.

Speaker Change: There's limited white space, Rob.

Speaker Change: at the complex, and even with RFS4 coming into service. So right now, very focused on project execution of step one with respect to the execution teams.

Speaker Change: Obviously, the commercial teams are in constant conversations with our other customers, and you know, it's a balancing act between ensuring that we have the base load of the first three fracts.

Unknown Executive: And you know, it's a balancing act between ensuring that we have the base load of the first three fracts, long-term contract extensions, fill four under long-term deals, and then, you know, you know, then get focused on sanctioning number five. But right now, it's really focused on number four and getting that customer interaction for five going. I'd say that's a little bit further out. Um, with respect to your first question, I think you were asking about incremental contracts. Like, has anything changed specifically due to the cost increase? Is that accurate? Yeah.

Scott Burrows: Long term contract extensions fill for under long term deals and then, you know, you know, then get focused on sanctioning number five, but right now it's really focused on number four and getting that customer interaction for five. That's going.

Speaker Change: Long-term contract extensions.

Speaker Change: Fill four under long-term deals and then you know you know then get focused on sanctioning number five but but right now it's really focused on number four and getting that customer interaction for five going I'd say that's a little bit further out

Cameron Goldade: Great. And then I guess going forward just any impact positively or negatively on the effect of tax rate. Yeah, I think there will be some positive effect on the effect of tax rate. As you've seen, there is some benefit to the acquisition potentially. The larger acquisition as a result of some opportunities in the US. And so we do get a benefit there and I think that shows up in terms of the updated tax guy. So you'll see it come down ever so slightly.

Scott Burrows: I'd say that's a little bit further out.

Scott Burrows: With respect to your first question, I think you were asking about incremental contracts. Like has anything changed specific due to the cost increase? Is that accurate? Yeah, like are the incremental, you know, were fees adjusted up for the new capital cost and that's how. Returns will put back on site. Yeah, it's a combination of, it's specifically a combination of volume, fees, and then you also have the downstream auxiliary fees, such as rail loading and terminaling, etc. And then obviously the marketing business as well. Some customers choose Pemina to do their full suite of marketing, and some customers obviously, you know, do their own marketing, but we are, you know, advancing a lot of that business and, you know, and then you're obviously seeing the upside through, through the marketing earn as well.

Speaker Change: With respect to your first question,

Patrick Kenny: Okay, great. Thanks for that.

Speaker Change: I think you were asking about incremental contracts, like has anything changed specific due to the cost increase, is that accurate? Yeah, like are the incremental, you know, were fees adjusted up for the new capital cost and that's how returns were put back on side.

Unknown Executive: Yeah, like the incremental, you know, were fees adjusted up for the new capital cost, and that's how returns were put back on the side.

Unknown Executive: Yeah, it's a combination of volume, fees, and then you also have the downstream auxiliary fees, such as rail loading and terminaling, etc. And then, obviously, the marketing business as well. Some customers, you know, choose Pembina to do their full suite of marketing, and some customers, obviously, do their own marketing. But we are, you know, advancing a lot of that business. And, you know, and then you're obviously seeing the upside through the marketing arm as well.

Speaker Change: Yeah, it's a combination of, um...

Speaker Change: Thanks.

Speaker Change: Specifically, it's a combination of volume, fees.

Speaker Change: And then you also have the downstream auxiliary fees such as rail loading and terminaling, etc. And then obviously the marketing business as well.

Patrick Kenny: And then maybe just on the cost pressures here, you're experiencing on RFS4.

Patrick Kenny: Maybe you can just walk us through some of the scope changes that might be embedded in that new budget. And then also, you know, just given instruction activity really picking up here for large scale projects in the heartland area. Just how we should be thinking about your ability to lock in costs from a labor productivity standpoint. Great question, Pat. So think of the project being increased kind of in the following three.

Speaker Change: Some customers, you know, choose Pembina to do their full suite of marketing, and some customers obviously

Speaker Change: you know do their own marketing, but we are, you know, advancing a lot of that business, and, you know, and then you're obviously seeing the upside through through the marketing arm as well.

Scott Burrows: All right, thanks for that.

Rob Hope: Thanks for that. And then maybe just switching over to the ethane opportunities that were highlighted at the investor day, how are those progressing? And then, given the, we'll call it, tightening labor market in the heartland, could this de-emphasize the RFS 3DS and kind of focus more out in the field?

Scott Burrows: And then maybe just switching over to the essaying opportunities that were highlighted at the investor day, how are those progressing and then just given the, you know, we'll call it a tightening labor market in the heartland, you know, could this deemphasize an RFS 3DS and kind of focus more on the field. You know, I could say no right now, Rob, because, you know, that's a fairly, that's a fairly small project. You know, as we've stated before, our best three, and we just really need the tower. So it's not an extensive like, you know, it's not 500 people on site and it's, you know, it's building a few pieces of equipment and some select bad shops.

Speaker Change: Alright, thanks for that. And then maybe just switching over to the ethane opportunities that were highlighted at the Investor Day. How are those progressing? And then just given the

Patrick Kenny: The first bucket being projects, both changes in design modifications. This is really to enhance the overall operability of RFS4 specifically and the overall complex. As you know, like we can spread molecules to any one of the fracks. And it's specifically to accommodate a wider range of C3 plus feed stock composition. So depending on where your customer is extracting NGLs from from a deep basin well versus a very, you know, oily, motiny well, you get a wide range of NGL composition.

Speaker Change: We'll call it a tightening labor market in the heartland, you know, could this de-emphasize an RFS 3DS and kind of focus more out in the field?

Unknown Executive: Um, you know, I would say no right now, Rob, because, you know, that's a fairly small project, you know, as we've stated before, RFS3, and we just really need the tower. So it's not an extensive project, like, you know, it's not 500 people on site.

Speaker Change: You know.

Speaker Change: I would say no right now, Rob, because, you know, that's a fairly, that's a fairly small project, you know, as we've stated before, RFS3, and you just really need the tower. So it's not an extensive, like, you know, it's not 500 people on site. And it's, you know, it's building a few pieces of equipment and some select fab shops. So, you know, you might see a little bit of cost pressure in there, but I don't think that would be enough to deter us away from, from looking at that project. But since Investor Day, we have accelerated

Scott Burrows: So, you know, you might see a little bit of cost pressure there, but I don't think that would be enough to deter us away from looking at that project.

Patrick Kenny: So this we've made a decision just to enhance the overall operability to have a wider range to take that product composition. The second bucket is we saw some incremental inflation over and above what we expected in the latter half of 23 when when obviously there was a very large project sanctioned in Alberta here. So that was unexpected and and and cause some of the increase. And then the third bucket is our decision when we sanctioned this project in February of 2023.

Scott Burrows: But since Investor Day, we have accelerated a handful of projects through gate one funding. So that's, you know, small dollar amounts to get pre-feed kicked off, and then we'll be evaluating that near and upcoming, you know, couple quarters and making a decision on which projects go through gate two and ultimately gate three and which ones won't be. Yeah, I think Rob will be able to understand kind of what the, what current labor costs and what current costs are, which will help guide us in terms of which decision we make, which is the share pointed out previously.

Unknown Executive: And it's, you know, building a few pieces of equipment and some select batch shops. So, you might see a little bit of cost pressure there. But I don't think that would be enough to deter us from looking at that project. But since Investor Day, we have accelerated a handful of projects through gate one funding. So that's, you know, small dollar amounts to get pre-feed kicked off.

Speaker Change: A handful of projects through gate one funding, so that's, you know, small dollar amounts to get pre-feed kicked off, and then we'll be evaluating that in the upcoming, you know, couple of quarters and making a decision on

Unknown Executive: And then we'll be evaluating that in the near future, you know, couple of quarters and making a decision on which projects go through gate two and ultimately gate three and which ones won't. Yeah, I think Rob will be able to understand kind of what the current labor costs and what the current costs are, which will help guide us in terms of which decision we make. Which is, as Jared pointed out previously, one of the advantages we have is that we do have, you know, numerous sources that we can source the ethane from. And so any updated capital cost will go into that mix and our decision-making process.

Speaker Change: which projects go through gate two and ultimately gate three and which ones won't be. Yeah, I think, Rob, we'll be able to understand kind of what current labor costs and what current costs are, which will help guide us in terms of which decision we make, which is, as Jared pointed out previously, one of the advantages we have is we do have

Patrick Kenny: It was going to be a typical permanent project where we do all of the oversight in the execution. And as we saw these these labor concerns as you identify the heartland area getting busy. We decided to move to a lump sum to make sure that we could procure a tier one contractor. You know that we were confident could get the fabrication shop space. Make sure they had access to high quality labor.

Scott Burrows: One of the advantages we have is we do have, you know, numerous sources that we can source the ethane from, and so any updated capital cost will go into that mix and our decisions.

Speaker Change: You know, numerous sources that we can source the ethane from, and so any updated capital cost will go into that mix in our decision making.

Patrick Kenny: Make sure that they were going to execute with respect to our safety expectations and values and indigenous content and deliver high quality project on time. So we've shifted roughly 70% of that total project as as we stated to a lump sum. We'll execute kind of more of that outside the lease boundary outside the Prach area. We'll do a lot of that execution, but we have made that shift and we did see, you know, with shifting that risk from yourself to a third party who's going to deliver that high quality labor and safety expectations.

Speaker Change: Thank you.

Unknown Executive: Thank you. The next question comes from Robert Catellier from CIBC Capital Markets. Please go ahead.

Rob Hope: The next question comes from Robert Patelier from C IBC Capital Markets. Please go ahead. They answered most of my questions about this point, but I just wondered, given the massive development of the piece system over the last several years, what's your vision for developing it from here?

Speaker Change: Thank you. The next question comes from Robert Catellier from CIBC Capital Markets. Please go ahead.

Robert Catellier: I've answered most of my questions by this point, but I just wondered, given the massive development of the P system over the last several years, what's your vision for developing it from here? What further optimizations are possible from this point?

Robert Coutelier: Hey, you've answered most of my questions by this point, but I just wondered, given the massive development of the P system over the last several years, what's your vision for developing it from here? What further optimizations are possible from this point?

Scott Burrows: What, what further optimizations are possible from this point? So, Rob, I think there's a few different things.

Robert Catellier: So Rob, I think there are a few different things. And again, this question, given the breadth of the system, really depends on where the volumes show up. And so, you know, when you're in Alberta, for the most part, we will focus on optimization now that we have segregated lines and where can we use pump optimization, and product optimization to increase throughput. We've already found some wins across the system to unlock some incremental volumes.

Scott Burrows: And again, this question, given the breadth of the system, really depends on where the volumes show up. And so, you know, when you're in, when you're in Alberta, for the most part, we will focus on optimization now that we have segregated lines. And where can we use pump optimization product optimization to increase throughput? You know, we've already found some wins across the system to unlock some incremental volumes. We do have other areas where we can add low cost tons, like from Fox Creek, in to increase volumes there. And then we'll continue to look at opportunities in Northeast BC as LNG comes on, LNG phase one, and other opportunities come online, and we see incremental incremental growth there.

Speaker Change: So, Rob, I think there's a few different things, and again, this question, given the breadth of the system, really depends on where the volumes show up.

Patrick Kenny: There's a little bit of a cost with that. So that's kind of how we break up those three buckets and overall the project, like we said, is still planned on being delivered on time, which is great. [inaudible] and with respect to the overall portfolio, I'll just talk like the hard line is seeing a little bit of the increase but overall our portfolio is still a project is still industry leading. And we have the full confidence in our team to continue with the current projects to deliver on time on budget and the future ones.

Rob Hope: And so, you know, when you're in, when you're in Alberta, for the most part, we will focus on optimization now that we have segregated lines and where can we use pump optimization, product optimization to increase throughput. You know, we've already found some wins across the system to unlock some incremental volumes. We do have other areas where we can add low cost pumps like from Fox Creek in to increase volumes there. And then we'll continue to look at opportunities in Northeast BC as LNG comes on, LNG phase one and other opportunities come online and we see incremental growth there. So it's a tough question to answer. There's certain areas that are tough.

Robert Catellier: We do have other areas where we can add low-cost pumps, like from Fox Creek, to increase volumes there. And then we'll continue to look at opportunities in Northeast BC as LNG phase one and other opportunities come online, and we see incremental growth there. So it's a tough question to answer. There are certain areas that are tight, where we'll have to expand, and there are certain areas where we have utilization opportunities.

Scott Burrows: So it's a tough question to answer. There's certain, there's certain areas that are tight where we'll have to expand, and there's certain areas where we have utilization opportunities. Okay, understood.

Rob Hope: We're still a bit tight where we'll have to expand in those certain areas where we have utilization opportunities.

Unknown Executive: Okay, understood. And I'm just wondering what the thought is on spread hedging in light of both the current prices and your increased exposure now that you've consolidated.

Scott Burrows: And I'm just wondering about the thought on the Frax bread hedging in light of both the current prices and your increased exposure now that you've consolidated ox. So Rob, we have a pretty, you know, programmatic hedging program based on where Frax breads are in terms of, you know, from a statistical basis. P10 to P90 with very limited discretion as it relates to the hedging program. You know, one of the benefits we did talk about on the original Oxable acquisition, as well as with the new contract, was it made it a lot simpler to hedge. And so, you know, as we stand today, we're about 50% hedged in Canada.

Patrick Kenny: Okay, that's great color, Jared. Appreciate that. And maybe just real quick, we're the incremental cost. You're contemplated when. And with the PGI, we kept transaction as well. In other words, like the oil and economics of the deal, I know some of it has some downstream benefits embedded in the returns just wondering if those returns still in line with your expectations with the new cost on RFS 4. Absolutely. Yeah. Okay, I'll leave it there. Thank you. Thanks, Pat.

Speaker Change: Okay, understood. And I'm just wondering what the thought is on frack spread hedging in light of both the current prices and your increased exposure now that you've consolidated AUX.

Unknown Executive: So, Rob, we have a pretty, you know, programmatic hedging program based on where the track spreads are in terms of, you know, from a statistical basis, P10 to P90 with very limited discretion as it relates to the hedging program. You know, one of the benefits we did talk about on the original Auxable acquisition as well as with the new contract was that it made it a lot simpler to hedge. And so, you know, as we stand today, we're about 50% hedged in Canada, and we actually have about just under 50% of Auxable hedged for 2024 as well.

Speaker Change: So, Rob, we have a pretty...

Rob Hope: You know, programmatic hedging program based on on where track spreads are in terms of, you know, from a statistical basis.

Speaker Change: P-10 to P-90 with very limited discretion as it relates to the hedging program.

Speaker Change: You know, one of the benefits we did talk about on the original Auxable

Rob Hope: Thank you. Next question comes from Rob Hope at Skillshare bank. Please go ahead.

Speaker Change: acquisition, as well as with the new contract was it made it a lot simpler to hedge. And so, you know, as we stand today, we're about 50% hedged in Canada. And we actually have about just under 50% of Oxable hedged for for 2024 as well, you know, based on on how

Rob Hope: Morning, everyone. I want to follow up on the on the fracked discussion. You know guys, I guess two parts there. First one is, are the incremental contracts that you signed on for the entire RFS complex reflective of the incremental capital for RFS 4. And then how much white space do you have at RFS and kind of when could you need some incremental capacity beyond what you're building? There's there's limited white space Rob at the complex and even with RFS 4 coming into service.

Scott Burrows: And we actually have about just under 50% of oxable hedged for 2024 as well. You know, based on how Frax breads have trended, the forward curve for somewhere in the neighborhood of 10 to 15% hedge for 2025, but we'll likely be locking in incremental hedges just given where forward Frax breads are compared to, I'll call it the 5 to 10 year historical average.

Unknown Executive: You know, based on how frac spreads have trended on the forward curve, we're somewhere in the neighborhood of 10 to 15% hedged for 2025, but we'll likely be locking in incremental hedges just given where forward frac spreads are compared to, I'll call it the 5 to 10 year historical average.

Speaker Change: Frack spreads have trended the forward curve.

Speaker Change: We're somewhere in the neighborhood of 10-15% hedge for 2025, but we'll likely be locking in incremental hedges, just given where forward frac spreads are compared to, I'll call it the 5-10 year historical average.

Cameron Goldade: Understood, and last question: just a clarification from Cam. I think I understood from your previous discussion of tax was that the 24 current tax is not materially changed, despite the increased marketing guidance, is that correct? That's correct, Robert. Yeah, thanks.

Robert Catellier: And last question, just a clarification from Cam. I think I understood from your previous discussion of taxes that the current 24 current tax is not materially changed despite the increased marketing guidance. Is that correct?

Rob Hope: So right now, very focused on project execution of step one with respect to the execution teams. Obviously, the commercial teams are in constant conversations with with our other customers. And you know, it's a balancing act between ensuring that we have the base load of the first three fracks long term contract extensions fill four under long term deals and then, you know, you know, then get focused on sanctioning number five, but right now it's really focused on number four and getting that customer interaction for five.

Speaker Change: Understood. And last question, just a clarification from Cam. I think I understood from your previous discussion of taxes that the 24 current tax is not materially changed despite the increased marketing guidance. Is that correct?

Speaker Change: That's correct Robert. Yeah, thanks.

Benjamin Pham: Thank you. The next question comes from Ben Fam at Bimo, please go ahead. All right. Thanks.

Unknown Executive: Thank you. The next question comes from Ben Pham at BMO. Please go ahead.

Speaker Change: Thank you. The next question comes from Ben Pham at BMO. Please go ahead.

Benjamin Pham: Good morning.

Ben Pham: Can you guys talk about the M&A opportunities in Western Canada? Do you expect more of the white cap JV Source Structure? Do you think TE firms could be looking to monetize or even strategics looking to dispose of assets?

Scott Burrows: Can you just talk about the MNA opportunities in Western Canada to expect more of the white cap JV sort of structure? Is do you think key firms, we're looking to monetize or even strategic looking to dispose of assets? Hey, Ben, you know, it's really, it's a really hard thing to predict. I mean, we couldn't have predicted that the white cap transaction was going to happen, you know, six, seven months ago. So, you know, I don't, I don't know, you know, we're not seeing necessarily a lot right now. You know, you know, and there's still a fair number of producers that want to own that infrastructure, so it's very producer specific.

Ben Pham: Hi, thanks, good morning. Can you guys talk about the M&A opportunities in Western Canada? Do you expect more of the white cap?

Rob Hope: That's going I'd say that's a little bit further out. With respect to your first question, I think you were asking about incremental contracts like has anything changed specific due to the cost increase is that accurate? Yeah, like are the incremental, you know, we're fees adjusted up for the new capital cost and that's how returns will put back on site. Yeah, it's a combination of, it's specifically a combination of volume, fees, and then you also have the downstream auxiliary fees, such as rail loading and terminaling, etc.

Ben Pham: JV Tourist Structures. Do you think TE firms could be looking to monetize or even strategics looking to dispose of assets?

Unknown Executive: Hey, Ben, it's really, it's a really hard thing to predict. I mean, we couldn't have predicted that the white cap transaction was going to happen, you know, six, seven months ago.

Speaker Change: Hey, Ben, you know, it's really it's a really hard thing to to predict. I mean, we couldn't have predicted

Ben Pham: that the white cab transaction was going to happen, you know, six, seven months ago. So

Unknown Executive: So, you know, I don't I don't know, you know, we're not necessarily seeing a lot right now. You know, and there's still a fair number of producers that want to own that infrastructure. So it's very producer-specific.

Ben Pham: You know, I don't know, you know, we're not seeing necessarily a lot right now, you know, and there's still a fair number of producers that want to own that infrastructure. So it's very producer specific.

Unknown Executive: But we're certainly, you know, we don't have line of sight to a large M&A pipeline. And then as it relates to PE firms, again, I can't really speculate, but it still feels like a lot of the assets are relatively in their kind of early fund life. So, you know, we don't see anything that's kind of being driven by fund life. So I don't have a good insight now as to what PE firms may or may not be doing.

Scott Burrows: But we're certainly, you know, we don't have line of sight to a large MNA pipeline. And then, as it relates to PE firms, again, I can't really speculate. Still feels like a lot of the assets are relatively in their kind of early fund life. So, you know, we don't see anything that's kind of being driven by fun life. So, I don't have a, I don't have a good insight now as to what PE firms may or may not be doing.

Rob Hope: And then obviously the marketing business as well. Some customers, you know, choose a permanent to do their full suite of marketing, and some customers obviously, you know, do their own marketing. But we are, you know, advancing a lot of that business, and, you know, and then you're obviously seeing the upside through the marketing earn as well.

Ben Pham: But we're certainly, you know, we don't have line of sight to a large M&A pipeline. And then as it relates to PE firms, again, I can't really speculate, still feels like a lot of the assets are relatively

Ben Pham: in their kind of early fund life. So, you know, we don't see any anything that's kind of being driven by fund life. So I don't have a I don't have a good insight now as to what PE firms may or may not be doing.

Rob Hope: Thanks for that. And then maybe just switching over to the essaying opportunities that were highlighted at the investor day, how are those progressing, and then just given the, you know, we'll call it a tightening labor market in the heartland, you know, could this deemphasize an RFS 3DS and kind of focus more on the field. You know, I could say no right now, Rob, because, you know, that's a fairly, that's a fairly small project, you know, as we've stated before RFS 3, and we just really need the tower.

Ben Pham: Okay, understood, and I know there's also some comments on Alliance Ox, Exceeding Expectations, and then the Tucunel box about maybe solidifying the synergies a bit. Is that comment more suggesting that you might beat that, that eight times multiple that you've commented on? And then what about that acceleration of the marketing volumes? Does that change now?

Scott Burrows: Okay, understood. And I know there's also some comments on Alliance Ox exceeding expectations and then the talking of a box to maybe solidifying this energy that is that comment more suggesting that you might beat that. That eight times multiple of you've commented about, and then what about that? A celebration of the marketing volumes is that that change now.

Speaker Change: Okay, understood. And I know there's also some comments on Alliance OCs exceeding expectations and then the talking of OCs too, maybe solidifying the synergies a bit.

Speaker Change: Is that comment more suggesting that you might beat that eight times multiple that you've commented about, and then what about that acceleration of the marketing volumes? Does that change now?

Rob Hope: So it's not an extensive like, you know, it's not 500 people on site, and it's, you know, it's building a few piece of equipment and some select bad shops. So, you know, you might see a little bit of cost pressure there, but I don't think that would be enough to deter us away from from looking at that project. But since investor day, we have accelerated a handful of projects through gate one funding.

Scott Burrows: Yeah, Ben, I guess I would just say that I think, obviously, as Scott mentioned earlier, we've been fortunate in the sense that, obviously, the commodity complex has strengthened since we made the original acquisition and continues to show strength in this year and even outlooking next year. In terms of the synergies, I think it does. I mean, you know, any time you've got sort of full control of an asset, it obviously does, you know, put the wheel squarely in your hands to execute on the synergies. So I think it does support us in that regard.

Unknown Executive: Yeah, Ben, I guess I would just say that, as Scott mentioned earlier, we've been fortunate in the sense that, obviously, the commodity complex has strengthened since we made the original acquisition and continues to show strength this year and, you know, even in terms of the synergies. I mean, you know, anytime you've got sort of full control of an asset, it obviously does put the wheel squarely in your hands to execute on those synergies.

Speaker Change: Ben, I guess I would just say that I think, um...

Ben Pham: Obviously as Scott mentioned earlier

Speaker Change: We've been fortunate in the sense that obviously the commodity complex has strengthened since we made the original acquisition and continues to show strength in this year and even outlooking next year.

Rob Hope: So that's, you know, small dollar amounts to get pre-feed kicked off. And then we'll be evaluating that here in the upcoming, you know, couple quarters and making a decision on which projects go through gate two and ultimately gate three and which ones won't be. Yeah, I think Rob will be able to understand kind of what the, what current labor costs and what current costs are, which will help guide us in terms of which decision we make, which is this.

Speaker Change: In terms of the synergies, I think it does. I mean, you know, anytime you've got sort of full control of an asset, it obviously does, you know, put the wheel squarely in your hands to execute on those synergies. So I think it does.

Unknown Executive: So I think it does support us in that regard, and I do believe that, you know, we will see additional opportunities as we, you know, sort of get our arms wrapped around it and sort of keep moving things forward as we've done with other assets. You know, are we at a point yet where we're ready to put our hand in the fire and start to quantify these things? Not yet. But I think, you know, we're definitely seeing things evolve positively, and so far, I'm very pleased with the acquisition, the timing, and the returns that it's generating.

Scott Burrows: And I do believe that, you know, we will see additional opportunities as we, you know, sort of get our arms wrapped around and sort of keep moving things forward as we've done with other assets. You know, we had a point yet where we're ready to put our hand in the fire and start to quantify those, not yet, but I think, you know, we're definitely seeing things evolve positively and so far, you know, very pleased with the acquisition of the timing and the returns that it's generating. Okay, thank you. Thank you.

Rob Hope: Share pointed out previously, one of the advantages we have is we do have, you know, numerous sources that we can source the ethane from. And so any updated capital cost will go into that mix and our decisions.

Speaker Change: Support us in that regard. And I do believe that, you know, we will see additional opportunities as we, you know, sort of get our arms wrapped around and sort of keep moving things forward as we've done with other assets.

Rob Hope: Thank you.

Speaker Change: Are we at a point yet where we're ready to put our hand in the fire and start to quantify those? Not yet, but I think we're definitely seeing things evolve positively, and so far very pleased with the acquisition, the timing, and the returns that it's generating.

Robert Patellier: The next question comes from Robert Patelier from C IBC capital markets. Please go ahead.

Robert Patellier: They answered most of my questions about this point, but I just wondered given the massive development of the piece system over the last several years, what's your vision for developing it from here? What, what further optimizations are possible from this point? So Rob, I think there's a few different things. And again, this question given the breadth of the system really depends on where the volumes show up. And so, you know, when you're in, when you're in Alberta, for the most part, we will focus on optimization now that we have segregated lines and where can we use pump optimization, product optimization to increase throughput.

Speaker Change: Okay, thank you.

Robert Kwan: Thank you. The next question comes from Robert Kwan at RBC Capital Markets. Please go ahead. Thank you, Manal.

Robert Kwan: Next question comes from Robert Kwan at RBC Capital Markets. Please go ahead. Thanks.

Speaker Change: Thank you. Next question comes from Robert Kwan at RBC Capital Markets. Please go ahead.

Robert Kwan: Thanks, good morning. I can start with guidance and just kind of some of the thinking around the asymmetric. And just, you know, is that just more conservatism on the high end, whether it's around some of the volumes that Jaret and I talked about earlier, or maybe potentially anything you see on the rail side of things versus the low-end coming up and just the confidence you've got with some of the, some of the, well, just the mechanical changes with the Auxable acquisition and the like.

Robert Kwan: Good morning. I can start with guidance and just kind of some of the thinking around the asymmetric increase and just, you know, is that just more of conservatism on the high end, whether it's around some of the volumes that Jared talked about earlier or maybe potentially anything you see on the rail side of things versus the low end coming up and just the confidence you've got with some of this as well, just mechanical changes with the off-sable acquisition. Yeah, I think that's a fair comment, Robin. And, as you suggest, I mean, there's a number of things that go into it.

Robert Kwan: Thanks, good morning. If I can start with guidance and just kind of some of the thinking around the asymmetric.

Robert Kwan: increase? And just, you know, is that just more of conservatism on the high end, whether it's around some of the volumes of Jaret?

Speaker Change: I talked about earlier, or maybe potentially anything you see on the rail.

Speaker Change: side of things versus the low-end coming up and just the confidence you've got with some of the some as well just mechanical changes with the Auxable acquisition in the way.

Unknown Executive: Yeah, I think that's a fair comment, Rob. And as you suggest, I mean, there's a number of things that go into it. I think we obviously had confidence to bring the low end up meaningfully from where it was last time, just based on, you know, such a strong first half. When we look at the second half of the year, I mean, there's a couple things, obviously, that are coming into effect, which, you know, some with certainty, some with less certainty.

Speaker Change: i

Speaker Change: Yeah, I think that's a fair comment, Rob. And as you suggest, I mean, there's a number of things that go into it. I think we obviously had confidence to bring the low end up meaningfully from where it was last time, just based on, you know, such a strong first half.

Robert Patellier: But, you know, we've already found some wins across the system to unlock some incremental volumes. We do have other areas where we can add low cost tons like from Fox Creek in to increase volumes there. And then we'll continue to look at opportunities in Northeast BC as LNG comes on LNG phase one and other opportunities come online and we see incremental incremental growth there.

Robert Kwan: I think we obviously had had confidence to bring the low end up, meaningfully from where it was last time, just based on, on, you know, such a strong first half. When we look at the second half of the year, I mean, there's a couple of things, obviously, that are coming into a fact which, you know, some with certainty, some with less certainty. And so, obviously, as we look forward to the second half of 2024, we've got, you know, the quotient firm tolls are now under the revised tolling structure. You know, the, well, we continue to see strengths, you know, at the moment, obviously, you know, when you sort of look out in terms of interruptible flows through Q3, on alliance, you know, some uncertainty there could exceed our expectations, but obviously taking, you know, taking sort of what we know at the moment.

Speaker Change: When we look at the second half of the year, I mean, there's a couple things obviously that are coming into effect, which, you know, some, some with certainty, some with less certainty. And so obviously,

Unknown Executive: And so obviously, as we look forward to the second half of 2024, we've got, you know, the quotient firm tolls are now under the revised tolling structure. You know, the the, while we continue to see strength, you know, at the moment, obviously, you know, when you sort of look out, in terms of interruptible flows through through Q3, on Alliance, you know, some some uncertainty there could out could exceed our expectations, but obviously, taking, you know, taking sort of what we know at the moment.

Robert Patellier: So it's a tough question to answer. So there's certain, there's certain areas that are tight where we'll have to expand and there's certain areas where we have utilization opportunities.

Speaker Change: As we look forward to the second half of 2024, we've got, you know, the quotient firm tolls are now under the revised tolling structure.

Robert Patellier: Okay, understood, and I'm just wondering what the thought is on the Frax bread hedging and light of both the current prices and your increase exposure now that you've consolidated Ox. So Rob, we have a pretty, you know, programmatic hedging program based on on where Frax breads are in terms of, you know, from a statistical basis. P10 to P90, with very limited discretion as it relates to the hedging program, you know, one of the benefits we did talk about on the original oxable acquisition as well as with the new contract was it made it a lot simpler to hedge.

Speaker Change: You know, the...

Speaker Change: Well, we continue to see strength.

Speaker Change: You know, at the moment, obviously, you know, when you sort of look out in terms of interruptible flows through through Q3.

Speaker Change: on Alliance, you know, some uncertainty there could out could exceed our expectations, but obviously taking, you know, taking sort of what we know at the moment.

Robert Patellier: And so, you know, as we stand today, we're about 50% hedged in Canada, and we actually have about just under 50% of ox able hedged for 2024 as well. You know, based on on how Frax breads have trended the forward curve were somewhere in the neighborhood of 10 to 15% hedge for 2025, but we'll likely be locking in incremental hedge is just given given where forward Frax breads are compared to I'll call it the 5 to 10 year historical average.

Robert Kwan: And then lastly, clearly, the big outstanding item or range is obviously the marketing book and how that shapes up. Obviously, you know, some, some backwardation in the crude market here, you know, the Ford strip currently shows some strength in the gas market as we close out the year, but those are all uncertain.

Unknown Executive: And then lastly, clearly, the big outstanding item or range is obviously the marketing book can and how that shapes up. Obviously, you know, some backwardation in the crude market here, but the forward strip currently shows some strength in the gas market as we close out the year. But those are all uncertain. And so as we look at that, and then on top of it, as you point out a couple things which are outside of our control, you know, you've got a rail issue, you know, we're hopefully coming towards the tail end of wildfires in Alberta and Western Canada for the year.

Speaker Change: And then lastly, clearly the big outstanding item or range is obviously the marketing book and how that shapes up. Obviously, you know, some backwardation in the crude market here. You know, the forward strip currently shows some strength in the gas market as we close out the year, but those are all uncertain. And so as we look at that...

Robert Kwan: And so, as we look at that, and then on top of it, as you point out, a couple of things which are outside of our control, you know, you've got a rail issue. You know, we're hopefully coming towards the tail end of wildfires in Alberta and western Canada for the year, but, you know, that, that obviously always remains a risk to the summer here. So, a few things on our mind that we bake in there and obviously wanted to show strength by bringing up the bottom end and obviously, you know, bringing up the top end as well, but recognizing the uncertainty in the back end of the year.

Speaker Change: And then on top of it, as you point out, a couple of things which are outside of our control, you know, you've got a rail issue, you know, we're hopefully coming towards the tail end of

Unknown Executive: But you know that that obviously always remains a risk through the summer here. So a few things on our mind that we bake in there, and obviously wanted to show strength by bringing up the bottom end and, obviously, you know, bringing up the top end as well. But recognizing the uncertainty in the back end of the year.

Speaker Change: of wildfires in Alberta and Western Canada for the year, but, you know, that obviously always remains a risk through the summer here.

Speaker Change: A few things on our mind that we bake in there, and obviously we wanted to show strength by bringing up the bottom end, and obviously bringing up the top end as well, but recognizing the uncertainty in the back end of the year.

Scott Burrows: Yeah, I do. The only thing I'd add, Rob, to is it's just given the, given, you know, we don't control the closing of White Cap. None of that transaction is in that outlook.

Robert Kwan: Yeah, the only thing I'd add, Rob, too, is just given the given, you know, we don't control the closing of white cap, none of none of that transaction is in that outlook. Yeah, got it. Thanks.

Robert Kwan: Understood in last question, just a clarification from Cam. I think I understood from your previous discussion of taxes at the 24 current tax is not materially changed, despite the increased marketing guidance. Is that correct? That's correct, Robert. Yeah, thanks.

Speaker Change: Yeah, the only thing I'd add, Rob, too, is just given the, given, you know, we don't control the closing of Whitecap, none of that transaction is in that outlook.

Robert Kwan: Thank you.

Scott Burrows: If I can just turn to the RFS for costs and really just how do you think about the parallels, if any, or lack of parallels I just put that versus what you're seeing from Cedar, and one thing just to touch on is I think Cedar had some off site fabrication. And so is that going to put pressure on that component at a minimum on non project none none Rob and what Cedar we had the lump sum at the time we press release so that's all reflected in the cost and all the fabrications being done and over overseas not not really anything in the fort so we see zero parallels between the two.

Robert Kwan: If I can just turn to the RFS for costs and really just how do you think about the parallels? If any, or lack of parallels, I guess, with that versus what you're seeing from Cedar. And one thing just to touch on is, I think Cedar did some offsite fabrication. And so is that going to put pressure on that component at a minimum on non-projects?

Rob Hope: Got it, thanks.

Speaker Change: If I can just turn to the RFS for costs, and really just, how do you think about the parallels

Benjamin Pham: The next question comes from Ben fam at Bimo, please go ahead. All right. Thanks.

Speaker Change: if any, or lack of parallels, I guess, with that.

Benjamin Pham: Good morning. Can you talk about the MNA opportunities in Western Canada to expect more of the white cap JV sort of structure is do you think key from screw looking to to monetize or even strategic looking to dispose of assets? Hey, Ben, you know, it's really it's a really hard thing to to predict. I mean, we couldn't have predicted that the white cab transaction was going to happen, you know, six, seven months ago.

Speaker Change: versus

Speaker Change: What you're seeing from Cedar and one thing just to touch on is I think Cedar had some off-site Fabrication and so is that going to put pressure on that component at a minimum on non-project non

Robert Kwan: Non, None, Rob. Cedar, we had the lump sum at the time we released it, so that's all reflected in the cost and all the fabrications being done overseas, not really anything in the fort. So we see zero parallels between the two.

Speaker Change: None, Rob. Cedar, we had the lump sum at the time we press-released, so that's all reflected in the cost and all the fabrications being done overseas, not really anything in the fort, so we see zero parallels between the two.

Scott Burrows: Okay perfect, and then it's just the last just on the white cap deal. You know, can you just talk about, you know, within PGI you've got kind of the return that makes sense for the joint venture.

Robert Kwan: Okay, perfect. And then just the last on the white cap deal. You know, can you just talk about, you know, within PGI, you've got kind of a return that makes sense for the joint venture. How do you think about the upside you can get from all of the other pieces? I don't know if you want to quantify it, but just what are the different pieces that give you that upside, and specifically, do you just comment on the Muzro F-8 angle under the Dow contract?

Speaker Change: Okay, perfect. And then just the last, just on the white cap deal, you know, can you just talk about...

Benjamin Pham: So, you know, I don't, I don't know, you know, we're not seeing necessarily a lot right now. You know, and there's still a fair number of producers that want to own that infrastructure. So it's very producer specific. But we're certainly, you know, we don't have line of sight to to a large MNA pipeline and then as it relates to to PE firms again, I can't really speculate still feels like a lot of the assets are relatively in their kind of early fund life.

Speaker Change: You know, within PGI, you've got kind of the return that makes sense for the joint venture.

Scott Burrows: How do you think about the upsides can get from all of the other pieces? I don't know if you want to quantify it, but just what are the different pieces that you do that upside? And specifically, you just comment on the muds row at an angle under the doubt contract. Good morning, Robert. Yeah, so downstream, so obviously there's the basic acquisition of the K Bob facility through PGI, and then there's the capitalization of the Latour battery that White Cap will be executing, and then we'll be executing. The pipeline to tie into muzzle so really filling white space through our k tree facility as we connect that to the k bob facility down into the southeast and then when you go west right maximizing the utilization of our original cut bank complex or muzzle complex as we call it you know and then ultimately we have the opportunity to take more of that more gas through the deep cut at muzzle.

Speaker Change: How do you think about the upsides you can get from all of the other pieces, I don't know if you want to quantify it, but just what are the different pieces that give you that upside, and specifically you can just comment on the Muzro F-8 angle under the Dow contract.

Robert Kwan: Good morning, Robert. Yeah, so downstream, so obviously, there's the base acquisition of the KBOB facility through PGI. And then there's the capitalization of the Latorre battery, which Whitecap will be executing, and then we'll be executing the pipeline to tie into Muzero. So really, filling white space through our K3 facility as we connect that to the KBOB facility down into the southeast, and then when you go west, right, maximizing the utilization of our original cut bank complex or Muzero complex, as we call it, you know, So obviously, that, I think, can be part of our overall diversification portfolio to satisfy a Dow contract.

Robert: Good morning, Robert.

Benjamin Pham: So, you know, we don't see any anything that's kind of being driven by fun life. So I don't have a, I don't have a good insight now is so to what PE firms may or may not be doing. Okay. Understood. And I know there's also some comments on Alliance ox exceeding expectations and then the talking of a box to maybe solidifying the synergies of that. But is that comment more suggesting that you might beat that that A times multiple that you've commented about and then what about that acceleration of the marketing volumes is that that change now.

Speaker Change: Yeah, so downstream, so obviously, there's the base acquisition of the KVAB facility.

Speaker Change: through PGI, and then there's the capitalization of the Latour battery, that Whitecap will be executing that, and then we'll be executing the pipeline to tie into Masro, so really filling white space.

Speaker Change: through our K-3 facility as we connect that to the KBOB facility down into the into the southeast and then when you go west

Speaker Change: Right, maximizing the utilization of our original cut bank complex, our Muzro complex, as we call it, you know, and then ultimately we have the opportunity to take more of that, more gas through the deep cut at Muzro.

Scott Burrows: So obviously that I think can be part of our overall diversification portfolio to satisfy a doubt contract and then obviously you know you have current liquids that are extracted at K Tree and the K Bob facility and then with incremental gas going through the K Bob facility obviously there's incremental contracts required on through piece and through the fractionator. And then ultimately through the back end of the frack like termiling and rail etc. and then when you shift over to the tour, all of the incremental condensate will flow on the piece system. The incremental C3 plus that would be extracted from the gas and the C2 plus will obviously flow down the piece system and all of those barrels.

Benjamin Pham: Yeah, Ben, I guess I would just say that I think, obviously, as Scott mentioned earlier, we've been fortunate in the sense that obviously the commodity complex has strengthened since we made the original acquisition and continues to show strength in this year and even outlooking next year. In terms of the synergies, I think it does. Any time you've got full control of an asset, it obviously does put the wheel squarely in your hands to execute on the synergies.

Speaker Change: So obviously that I think can be part of our overall diversification portfolio to satisfy a Dow contract.

Robert Kwan: And then obviously, you know, you have current liquids that are extracted at K3 and the KBOB facility. And then with incremental gas going through the KBOB facility, obviously, there's incremental contracts required through PIECE and through the fractionator, and then ultimately through the back end of the frac, like terminaling and rail, etc. And then when you shift over to Latour, all of the incremental condensate will flow into the PIECE system, the incremental C3 plus that will be extracted from the gas, and the C2 plus will obviously flow down the PIECE system and all of those barrels.

Speaker Change: And then obviously, you know, you have current liquids that are extracted at K3 and the KBOB facility, and then with incremental gas going through the KBOB facility, obviously, there's incremental contracts required on through piece.

Speaker Change: and through the fractionator and then ultimately through the back end of the frac like terminaling and rail etc and then when you shift over to Latour all of the incremental condensate will flow on the P system the incremental C3 plus that will be extracted from from the gas and the C2 plus will obviously flow down the P system and all of those barrels.

Benjamin Pham: So I think it does support us in that regard. And I do believe that we will see additional opportunities as we get our arms wrapped around and keep moving things forward as we've done with other assets. You know, we had a point yet where we're ready to put our hand in the fire and start to quantify those. Not yet, but I think, you know, we're definitely seeing things evolve positively and so far, you know, very pleased with the acquisition, the timing and the returns that it's generating.

Benjamin Pham: Okay, thank you.

Scott Burrows: The condensate will be guided to various condensate outlets, and Edmonton, and the NGLs will go through the RFS complex. So that's kind of in totality how how the deal the entire deal works: based extensions on contracts and then new incremental volumes through the value chain.

Robert Kwan: The condensate will be guided to various condensate outlets in Edmonton, and the NGLs will go through the RFS complex. So that's kind of in totality how the deal, the entire deal works, based on extensions on contracts and then new incremental volumes through the value chain.

Speaker Change: The condensate will be guided to various condensate outlets in Edmonton and the NGLs will go through the RFS complex.

Speaker Change: So that's kind of in totality how the deal the entire deal works. Base extensions on contracts and then new incremental volumes through the value chain.

Scott Burrows: Kind of thanks to that, that's helpful. Could you see the magnitude of the stuff outside of them KDI. approaching the magnitude in terms of contribution of the acquired assets or.

Robert Kwan: That's helpful. Could you see the magnitude of the stuff outside of PGI? Um, approaching the magnitude in terms of contribution of the required assets, or. Rob, sorry, it's Scott.

Robert Kwan: Thank you. Next question comes from Robert Kwan at RBC Capital Markets. Please go ahead. Thanks. Good morning.

Speaker Change: Approaching the magnitude in terms of contribution of the

Robert Kwan: I can start with guidance and just kind of some of the thinking around the asymmetric increase and just, you know, is that just more of conservatism on the high end, whether it's around some of the volumes that Jared talked about earlier or maybe potentially anything you see on the rail side of things versus the low end coming up and just the confidence you've got with some of this as well, just mechanical changes with the off-sable acquisition in the way. Yeah, I think that's a fair comment, Rob.

Speaker Change: Acquired Assets or

Scott Burrows: Rob, sorry, I'm not sure what the how to add. Like, what can you rephrase the question maybe a little? Yeah, you talked about I don't know, maybe we put it kind of in the build multiple or acquisition multiple contexts, presumably what you did within. And the joint venture has to stand alone. So, you know, how much more of a ticker are you going to get from all the stuff that you would get downstream.

Robert Kwan: I'm just not sure how to ask, like, what, can you rephrase the question? Maybe we're a little, Yeah, you've talked about, I don't know, maybe we should put it kind of in the build multiple or acquisition multiple context, presumably what you did within the joint venture has to stand alone. So, you know, how much more of a kicker are you going to get from all the stuff that you would get downstream?

Speaker Change: Rob, sorry, it's Scott. I'm just not sure what the, how to, like, what, can you rephrase the question? Maybe I think we're just a little...

Speaker Change: Yeah, you've talked about, I don't know, maybe we put it kind of in the build multiple or acquisition multiple context, presumably what you did within the joint venture has to stand alone. So,

Speaker Change: You know, how much more of a kicker are you going to get from all this stuff?

Scott Burrows: Yeah, I mean, that's obviously what would disclose confidential information that I just don't think we can disclose at this stage. I mean, I think suffice to say Jaret Jaret tried to highlight the fact that in addition to the standalone PGI returns. You know, we secured incremental utilization of our facilities through existing and expanded contracts. So, you know, I think we've said what we needed to say on the actual acquisition release. And then upon close, you know, we'll update 2025, but overall, you know, we found the consolidated multiple in line with previous acquisition. If not, slightly better.

Unknown Executive: Yeah, I mean, that obviously would disclose confidential information that I just don't think we can disclose at this stage. I think, suffice to say, Jaret tried to highlight the fact that, in addition to the standalone PGI returns, we secured incremental utilization of our facilities through existing and expanded contracts. So, you know, I think we've said what we needed to say on the on the actual acquisition release. And then, upon close, you know, we'll update 2025. But overall, you know, we found the consolidated multiple in line with previous acquisitions, if not slightly better.

Robert Kwan: And as you suggest, I mean, there's a number of things that go into it. I think we obviously had had confidence to bring the low end up, meaningfully from where it was last time, just based on, on, you know, such a strong first half. When we look at the second half of the year, I mean, there's a couple things, obviously, that are coming into a fact which, you know, some with certainty, some with less certainty.

Speaker Change: Yeah, I mean, that's obviously.

Speaker Change: would disclose confidential information that I just don't think we can disclose at this stage. I mean, I think, suffice to say, Jaret tried to highlight the fact that, in addition to the standalone PGI returns,

Speaker Change: We secured incremental utilization of our facilities through existing and expanded contracts. So, I think we've said what we needed to say on the...

Robert Kwan: And so, obviously, as we look forward to the second half of 2024, we've got, you know, the quotient firm tolls are now under the revised tolling structure. You know, that the, well, we continue to see strengths, you know, at the moment, obviously, you know, when you sort of look out in terms of interruptible flows through Q3 on alliance, you know, some, some uncertainty there could out, could exceed our expectations, but obviously taking, you know, taking sort of what we know at the moment.

Speaker Change: on the actual acquisition release. And then upon close, you know, we'll update 2025. But overall, you know, we've we found the consolidated multiple in line with previous acquisitions, if not slightly better.

Scott Burrows: Okay, that's great.

Speaker Change: Okay, that's great. Thank you.

Scott Burrows: Thank you. We have no further questions. I will turn the call back over to Scott Burroughs for closing comments.

Unknown Executive: We have no further questions.

Scott Burrows: I will try to call back over to Scott Burrow for closing comments. Well, thank you. And especially thanks to the analyst who I know have had a busy two weeks, and we're at the tail end here. So appreciate all the questions and the quality notes last night, and to any of our employees, or to all of our employees listening to the call. Thanks for all the hard work. It was a really good quarter. Thanks, everyone.

Speaker Change: Thank you. We have no further questions. I will turn the call back over to Scott Burroughs for closing comments.

Scott Burrows: Well, thank you. And especially thanks to the analysts, who I know have had a busy two weeks, and we're at the tail end here. So, appreciate all the questions and the quality notes last night. And to any of our employees, or to all of our employees listening to the call, thanks for all the hard work. It was a really good quarter. Thanks, everyone. We'll see you again in November.

Scott Burroughs: Well thank you and especially thanks to the analysts who I know have had a busy two weeks and we're at the tail end here so appreciate all the questions and the quality notes last night and to any of our employees there to all of our employees listening to the call thanks for all the hard work it was a really good quarter thanks everyone we'll see you again in November

Robert Kwan: And then lastly, clearly, the big outstanding item or ranges is obviously the marketing book and how that shapes up. Obviously, you know, some, some backwardation in the crude market here, you know, the Ford strip currently shows some strength in the gas market as we, as we close out the year, but those are all uncertain. And so, as we look at that, and then on top of it, as you point out, a couple things which are outside of our control, you know, you've got a rail issue, you know, we're hopefully coming towards the tail end of wildfires in Alberta and western Canada for the year, but, you know, that, that, obviously, always remains a risk to the summer here.

Unknown Executive: We'll see you again in November. Thanks.

Unknown Executive: Ladies and gentlemen, this concludes your conference for today. We thank you for participating, and we ask that you please disconnect your lines.

Unknown Executive: Ladies and gentlemen, this concludes your conference for today. We thank you for participating, and we ask that you please disconnect your lines.

Scott Burroughs: Thanks.

Speaker Change: Ladies and gentlemen, this concludes your conference for today. We thank you for participating and we ask that you please disconnect your lines.

Speaker Change: [inaudible]

Robert Kwan: So, a few things on our mind that we bake in there, and obviously wanted to show strength by bringing up the bottom end, and obviously, you know, bringing up the top end as well, but recognizing the uncertainty in the back end of the year. Yeah, the only thing I'd add, Rob, too, is it's just given the, given, you know, we don't control the closing of white cap, none of that transaction is in, is in that outlook.

Robert Kwan: Okay, got to thanks. If I can just turn to the RFS for costs and really just, how do you think about the parallels, if any or lack of parallels, I just put that. That versus what you're seeing from Cedar and one thing just to touch on is, I think Cedar had some offsite fabrication. And so is that going to put pressure on that component at a minimum on non project, none, none Rob and what Cedar, we had the lump sum at the time we press release so that's all reflected in the cost and all the fabrications being done and. Over overseas, not really anything in the fort, so we see zero parallels between the two.

Robert Kwan: Okay, perfect. And then it's just the last just on the white cap deal. You know, can you just talk about, you know, within PGI, you've got kind of the return that makes sense for the joint venture. How do you think about the upsides you can get from all of the, the other pieces, I don't know if you want to quantify it, but just what are the different pieces that you do that upside and specifically you just comment on the month row at an angle under the doubt contract.

Robert Kwan: Good morning, Robert. Yeah, so downstream, so obviously there's the basic acquisition of the cave off facility through PGI. And then there's the capitalization of the Latour battery that white cap will be will be executing that and then we'll be executing the pipeline to tie into muzzle of so really filling white space through our K3 facility as we connect that to the cave off facility down into the into the southeast and then when you go west, right.

Robert Kwan: Like maximizing the utilization of of our original cut bank complex or muzzle complex as we call it, you know, and then ultimately we have the opportunity to take more of that more gas through the deep cut at muzzle. So obviously that I think can be part of our overall diversification portfolio to satisfy a doubt contract. And then obviously, you know, you have current liquids that are extracted at K3 and the cave off facility.

Robert Kwan: And then with incremental gas going through the cave off facility, obviously there's incremental contracts required on through piece and through the fractionator. And then ultimately through the back end of the frack, like termiling and rail, etc. And then when you shift over to the tour, all of the incremental condensate will flow on the piece system, the incremental C3 plus that would be extracted from from the gas and the C2 plus will obviously flow down the piece system and all of those barrels.

Robert Kwan: The condensate will be guided to various condensate outlets and Edmonton and the NGLs will go through the RFS complex. So that's kind of in totality how how the deal the entire deal works base extensions on contracts and then new incremental volumes through the value chain.

Robert Kwan: Kind of thanks to that. That's helpful. Could you see the magnitude of the staff outside of then KDI, approaching the magnitude in terms of contribution of the acquired assets or. Rob Sorry, I'm not sure what the how to add like what can you rephrase the question maybe I think was a little. Yeah you talked about I don't know maybe we put it kind of in the build multiple or acquisition multiple. Contact presumably what you did within.

Robert Kwan: And the joint venture has to stand alone so, you know, how much more of a ticker are you going to get. From all the stuff that you would get downstream. Yeah, I mean, that's obviously what would disclose confidential information that I just don't think we can disclose at this stage. I mean, I think suffice to say Jaret Jaret tried to highlight the fact that in addition to the standalone PGI returns. You know, we we secured incremental utilization of our facilities through existing and expanded contracts.

Robert Kwan: So, you know, I think we've said what we needed to say on the on the on the actual acquisition release and then upon close, you know, we'll update 2025, but overall, you know, we found the consolidated multiple in line with previous acquisition, if not slightly better.

Unknown Executive: Thank you.

Unknown Executive: We have no further questions.

Scott Burrows: I will try to call back over to Scott burrows for closing comments. Well, thank you, and especially thanks the analyst who I know have had a busy two weeks and we're at the tail end here. So appreciate all the questions and the quality notes last night and to any of our employees or to all of our employees listening to the call. Thanks for all the hard work. It was a really good quarter. Thanks everyone. We'll see you again in November. Thanks.

Unknown Executive: Ladies and gentlemen, this concludes your conference for today.

Unknown Executive: We thank you for participating and we ask that you please disconnect your lines.