Q2 2024 Keyera Corp Earnings Call

Ina: Good morning. My name is Ina, and I will be your conference operator today. At this time, I would like to welcome everyone to Keyera's 2024 second quarter conference call. All lines have been placed on mute to prevent any background noise.

Good morning. My name is Ina and I will be your conference operator today. At this time, I would like to welcome everyone to Keyera's 2024 second quarter conference call.

Ina: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, please press the back. I would now like to turn the call over to Mr. Dan Cuthbertson, Director of Investor Relations. You may begin.

All lines have been placed in mute to prevent any background noise.

After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press start and the number 1 on your telephone keypad. If you would like to withdraw your question, please press the back button.

Thank you. I would now like to turn the call over to Mr. Dan Cuthbertson, Director of Investor Relations. You may begin.

Dan Cuthbertson: Thanks and good morning. Joining me today will be Dean Setaguchi, President and CEO, Eileen Marikar, Senior Vice President and CFO, Jamie Urquhart, Senior Vice President and Chief Commercial Officer, and Jarrod Beztilny, Senior Vice President, Operations and Engineering. We will begin with some prepared remarks from Dean and Eileen, after which we'll open the call to questions. I'd like to remind listeners that some of the comments and answers we'll be giving today relate to future events.

Thanks and good morning. Joining me today will be Dean Setaguchi, President and CEO , Eileen Marikar, Senior Vice President and CFO , Jamie Urquhart, Senior Vice President and Chief Commercial Officer, and Jarrod Beztilny, Senior Vice President, Operations and Engineering.

We will begin with some prepared remarks from Dina and Eileen, after which we'll open the call to questions.

I'd like to remind listeners that some of the comments and answers we'll be giving today relate to future events. These forward-looking statements are given as of today's date and reflect events or outcomes that management currently expects.

Dan Cuthbertson: These forward-looking statements are given as of today's date and reflect events or outcomes that management currently expects. In addition, we will refer to some non-GAAP financial measures. For additional information on non-GAAP measures and forward-looking statements, please refer to Keyera's public filings available on CDAR and on our website. With that, I'll turn the call over to Dean.

In addition, we will refer to some non-GAAP financial measures. For additional information on non-GAAP measures and forward-looking statements, please refer to Keyera's public filings available on CDAR and on our website. With that, I'll turn the call over to Dean.

Dean Setaguchi: Thanks, Dan. Good morning, everyone.

Dean Setaguchi: Before we get started, I want to take this opportunity to acknowledge and thank the first responders who are working tirelessly to protect the people and communities who are affected by the ongoing wildfires in Western Canada. We wish everyone could stay safe. Turning now to our quarterly results, disciplined execution of our strategy is resulting in consistent growth and high-quality fee-for-service cash flow. This has allowed us to continue to deliver on a long history of sustainable dividend growth. Yesterday, we announced another dividend increase of 4% to $2.08 per share annually.

Thanks, Dan. Good morning, everyone.

Before we get started, I want to take this opportunity to acknowledge and thank the first responders who are working tirelessly to protect the people and communities who are affected by the ongoing wildfires in Western Canada. We wish everyone to stay safe.

Dean Setaguchi: This increase is also supported by a conservative payout ratio and a strong balance sheet. We remain on track to reach the upper end of our 6-7% EBITDA growth target out to 2025. Our gathering and processing segment delivered $102 million in realized margins, and this result was supported by record throughput volumes in the North region.

Turning now to our quarterly results, discipline execution of our strategy is resulting in consistent growth and high quality fee-for-service cash flow.

This has allowed us to continue to deliver on a long history of sustainable dividend growth.

Yesterday, we announced another dividend increase of 4% to $2.08 per share annually.

This increase is also supported by a conservative payout ratio and a strong balance sheet.

We remain on track to reach the upper end of our 6-7% EBITDA growth target out to 2025.

Our gathering and processing segment delivered $102 million in realized margin.

This result was supported by record throughput volumes in the North region.

Dean Setaguchi: Our liquids infrastructure segment delivered its second highest quarter ever with $133 million in realized margins. Driving this performance was a continued wrap-up of CAPT and growing demand for our fractionation, storage, and currency businesses. Our marketing segment continues to perform well, generating $136 million in realized margin in the quarter. This includes the impact of a planned six-week outage at AEF.

Our liquids infrastructure segment delivered its second-highest quarter ever, with $133 million in realized margin.

Driving this performance was a continued ramp-up of caps and growing demand for our fractionation, storage and condensate businesses.

Our marketing segment continues to perform well, generating $136 million in realized margin in the quarter.

This includes the impact of a planned six-week outage at AEF.

Dean Setaguchi: Due to strong year-to-date performance and market fundamentals, we're raising our marketing segment guidance to range between $450 and $480 million of realized margin in 2024. Our marketing segment is a distinct competitive advantage. Strong cash flow from this physical business has enabled us to consistently deliver above-average after-tax corporate returns. This cash flow is then reinvested into long-life infrastructure projects, in turn driving growth in high-quality fee-for-service cash flow. 2024 will be a year of strong free cash flow generation following the completion of several major growth projects last year, including CAPS. We continue to advance capital-efficient growth opportunities These opportunities leverage and enhance our existing core asset position in Western Canada. They include a fractionation de-bottleneck, a new fracture expansion, and a capped zone 4 extension.

Due to strong year-to-date performance and market fundamentals, we're raising our marketing segment guidance to range between $450 million and $480 million of realized margin in 2024.

our marking segment is a distinct competitive advantage

Strong cash flow from this physical business has enabled us to consistently deliver above-average after-tax corporate returns.

This cash flow is then reinvested into long-life infrastructure projects, in turn driving growth in high-quality fee-for-service cash flow.

2024 will be a year of strong free cash flow generation following the completion of several major growth projects last year, including CAPS.

We continue to advance capital efficient growth opportunities. These opportunities leverage and enhance our existing core asset position in Western Canada. They include a fractionation de-bottleneck, a new fracture expansion, and a capped Zone 4 extension.

Dean Setaguchi: We also continue to advance other opportunities and will speak to those when appropriate. With a strong balance sheet and an increased dividend, we will continue to balance disciplined capital investments with further increasing shareholder returns to maximize value. I'll turn it over to Eileen, who will provide an overview of our financial performance for the quarter and touch on the revised guidance for 2024. Thanks, Steve.

We also continue to advance other opportunities and will speak to those when appropriate.

With a strong balance sheet and an increased dividend, we will continue to balance disciplined capital investments with further increasing shareholder returns to maximize value.

Eileen Marikar: Adjusted EBITDA for the quarter was $326 million compared to $293 million for the same period last year. This result includes strong contributions from all three business segments. Distributable cash flow was $202,000,000 or $0.88 per share compared to $207,000,000 or $0.90 per share for the same period in 2023. Net earnings were $142 million compared to $159 million for the same period last year. The decrease was due to higher depreciation and interest

I'll turn it over to Eileen, who will provide an overview of our financial performance for the quarter and touch on the revised guidance for 2024.

Thanks, Dean. Adjusted EBITDA for the quarter was $326 million compared to $293 million for the same period last year. This result includes strong contributions from all three business segments.

distributable cash flow was two hundred two million or eighty eight cents per share compared to two hundred and seven million or ninety cents per share for the same period in two thousand and twenty three

Net earnings were $142 million compared to $159 million for the same period last year.

The decrease was due to higher depreciation and interest costs.

Eileen Marikar: We continue to maintain a strong financial position, exiting the border with net debt to adjusted EBITDA at two times, below our targeted range of two and a half to three times. This positions us well to pursue an equity self-funding opportunity that will enhance shareholder value. Moving on to our guidance for 2024, as Dean mentioned, we now expect our marketing segment to contribute between $450 million and $480 million of realized margin in 2024.

we continue to maintain a strong financial position exiting the border with net debt to adjusted ebitda at two times below our targeted range of two and a half to three times

This positions us well to pursue an equity self-fund opportunity that will enhance shareholder value.

Eileen Marikar: This is up from our previous guidance of $430 million to $470 million. The increase considers year-to-date realized margins of $250 million and a strong outlook for market fundamentals. Due to the increase in expected marketing contributions, cash taxes are now expected to range between $90 million and $100 million. This is up from $85 million to $95 million previously. Growth capital for 2024 remains unchanged at $80 million to $100 million. A reminder that this includes $20 to $40 million of capital that is contingent on the sanctioning of Cap Zone 4 and advancing FRAC expansion opportunities at KFS.

moving on to our guidance for two thousand and twenty four

As Dean mentioned, we now expect our marketing segment to contribute between $450 million and $480 million of realized margin in 2024. This is up from our previous guidance of $430 million to $470 million.

The increase considers year-to-date realized margins of $250 million and a strong outlook for market fundamentals.

Due to the increase in expected marketing contributions, cash taxes are now expected to range between $90 million and $100 million.

This is up from $85 million to $95 million previously.

Growth capital for 2024 remains unchanged at $80 million to $100 million.

A reminder that this includes $20 to $40 million of capital that is contingent on the sanctioning of Cap Zone 4 and advancing FRAC expansion opportunities at KFS. To move ahead, these projects will need to generate a strong return supported by long-term contracts.

Eileen Marikar: To move ahead, these projects will need to generate a strong return supported by long-term contracts. Maintenance capital is now expected to range between $120 million and $140 million. This is up from $90 million to $110 million previously, mostly due to increased costs for turnaround activities, which are largely recoverable over the next several years. I'll now turn it back to Dean. Thanks, Eileen.

Maintenance capital is now expected to range between $120 million and $140 million. This is up from $90 million to $110 million previously, mostly due to increased costs for turnaround activities, which are largely recoverable over the next several years.

Dean Setaguchi: A long-term outlook for volume growth in the basin remains strong. This growth will be supported by key developments, including TMX, LNG Canada, a growing petrochemical industry, and increasing LPG exports off the west coast of Canada. As an essential infrastructure service provider, Keyera will continue to play an important role in enabling basin volume growth while staying financially disciplined and maximizing value for customers and shareholders. On behalf of Keyera's board of directors and management team, I want to thank our employees, customers, shareholders, Indigenous rights holders, and other stakeholders for their continued support. With that, I'll turn it back to the operator for Q&A. Thank you.

I'll now turn it back to Dean.

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A long-term outlook for volume growth in the basin remains strong.

This growth will be supported by key developments including TMX, LNG Canada, a growing petrochemical industry and increasing LPG exports off the west coast of Canada.

As an essential infrastructure service provider, Keyera will continue to play an important role in enabling business volume, basin volume growth, while staying financially disciplined and maximizing value for customers and shareholders.

On behalf of Keyera's Board of Directors and management team, I want to thank our employees, customers, shareholders, Indigenous rights holders, and other stakeholders for their continued support. With that, I'll turn it back to the operator for Q&A.

Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by the 1 on your telephone keypad. You will hear a three-tone prompt acknowledging your request. Questions will be taken in the order received. Should you wish to cancel your request, please press star followed by 2. And if you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from the line of Rob Hope from Scotiabank. Please go ahead.

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Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star 521 on your telephone keypad.

You will hear a three-tone prompt acknowledging requests.

Questions will be taken in the order received. Should you wish to cancel your request, please press star followed by the two. And if you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question.

Your first question comes from the line of Rob Hope from Scotiabank. Please go ahead.

Rob Hope: Morning everyone. First question on the kind of three growth projects that you highlighted being the, you know, two expansions like KFS as well as Zone 4. Can you give us an update on where we are in terms of contracting as well as the engineering of these projects and kind of what gating milestones we should expect in the coming months ahead?

Morning everyone. First questions on the kind of three growth projects that you highlighted being the, you know, two expansions like KFS as well as Zone 4. Can you give us an update on where we are in terms of contracting as well as the engineering of these projects and kind of what gating milestones, you know, we should expect in the coming months ahead?

Dean Setaguchi: Hi, good morning, Rob. It's Dean.

Dean Setaguchi: And a great question. We're very excited about what we see in terms of opportunities for growth in this basin and what our company can do to help enable that. And, you know, certainly, we see continued growth in Montany on both sides of the border. So, first of all, with Zone 4, we're still very excited about the prospects of extending our pipeline to the BC border. And again, I just want to emphasize that customers really want competition.

Dean Setaguchi: They see the value that we brought with our CAHPS projects, Zones 1 to 3, and there's very good demand for, again, extending that pipeline to the BC border. So, we continue to have discussions there. Obviously, they're commercially sensitive, but certainly, you know, we think that we'll be getting to a decision here by the end of the year, and we will provide an update on that when appropriate.

Obviously there.

Commercially sensitive, but certainly we think that we'll be getting to a decision here by the by the end of the year and we will provide an update on that when appropriate.

Dean Setaguchi: I just say that, with CAHPS in general, we now have an integrated system. So, almost every deal that we are signing now is an integrated deal where we're involving, you know, GNP, CAHPS, FRAC, and our downstream business. So, a lot of this is all connected together. We see continued demand. Again, we really believe in the growth in the basin and how much NGL is going to get produced with that and the need for our integrated service.

I'd, just say that with with kaps in general.

We now have an integrated system. So almost every deal that we are signing now is the integrated deal where we're involving G&P caps frac in our downstream business a lot of this is all connected together, we see continued demand again we.

We really believe in the growth in the basin and how much Ngls is going to get produced with that and the need for our integrated service. So.

Dean Setaguchi: So, we are signing more contracts on our integrated system long term with good take or pace. We'll update that again when appropriate, just like we did earlier this year. But maybe I'll just turn it over to Jamie to maybe speak a bit more about our FRAC expansion project. Yeah, thanks, Dean.

We are signing more contracts on our integrated system long term with what could take or pays we'll update that again when when appropriate just like we did earlier this year, but maybe I'll just turn it over to Jamie to maybe speak a bit more about our frac expansion projects.

Jamie Urquhart: Yeah, thanks, Dean, and thanks for the question, Rob. So, you know, I can share that we're proceeding with ordering long leads for our FRAC2 expansion or de-bottleneck. And so, you know, very, very positive momentum on that project based on commercial support. And then we are, as we shared last quarter, proceeding with feed for FRAC3. So, from a timing perspective, we'll probably be in early 2025 before we fully understand the costs, though, you know, we have made the decision around sort of the design, and it's very similar in scope to our FRAC 2, including the bottlenecks. So, you know, we're certainly confident as we're talking to customers around what that project looks like and entails.

Thanks, Dean and thanks for the question Rob So.

I can share that we're proceeding with ordering long leads for our Frac two expansion our debottleneck.

And so.

Very very positive momentum on that project based on commercial support and then we are as we shared last quarter.

Proceeding with with feed for Frac tree, so from a timing perspective will probably be in early 2025 before we.

Fully understand the costs go.

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We have made the decision around sort of the design.

It's very similar in scope to our frac to including the.

The debottleneck so.

We're certainly confident as we're talking to customers around what what that project looks like it entails.

Alright, thanks for that.

Rob Hope: All right, thanks for that. And then, just moving over to capital allocation, Eileen mentioned that the next wave of growth could be easily funded with an equity funding model. Can you talk about kind of the conservatism based in your forecast, just given the fact that the dividend was increased 4% below the kind of 7% EBITDA you're tracking to, as well as what would be needed for an NCIB to be put out there, or are you seeing kind of the next wave of incremental growth coming at you sooner?

And then just moving over to capital allocation.

Ilene mentioned that to you at the next wave of growth can be easily funded with debt and equity self funding model.

Can you talk about kind of the conservatism based in your forecast just given the fact that the dividend was increased 4% below the kind of 7% EBITDA that you're tracking to.

As well as what would be needed for an NCI would need to be.

<unk> put out there or are you seeing kind of the next wave of incremental growth.

Coming out you're seeing that.

Dean Setaguchi: Thanks for the question, Rob, and that's a good one. All I can say, you know, before I turn this over to Eileen, is that we're in a great position to have a very strong balance sheet, and it gives us a lot of optionality right now. So, you know, I've talked a lot about growth opportunities in the basin, but, you know, a normal course issue is also a possibility, but I'll, I'll turn it over to Eileen. Thanks, and thanks, Rob. Good morning. Yeah, has it been released yet?

Thanks for the question Robyn.

That's a good one all they can say before I turn this over day lean is that.

We are in a great position to have a very strong balance sheet and it gives us a lot of.

Optionality right now so I've talked a lot about growth opportunity in the basin, but.

In normal course issuer bid is also a possibility, but ill turn it over time.

Eileen Marikar: Thanks. And thanks, Rob. Good morning. Yeah, as it relates to the dividend, I mean, we are a dividend growth company, and we're very proud of our long history of growing the dividend sustainably. We've never cut it before.

Thanks, and thanks, Rob Good morning, Yes.

Yes, as it relates to due to the dividend I mean, we are a dividend growth company and we're very proud of our long history of growing the dividend sustainably with never had it before.

Eileen Marikar: So, we certainly have confidence in the dividend increase that we just announced. It is underpinned by growing fee-for-service cash flows, and the payout remains at the low end of our target range. So, we like the flexibility that we have with both the strong balance sheet and the low payout. You know, just kind of piggyback on what Dean said, with regard to the balance sheet and where leverage is today, it's truly a competitive advantage.

So we certainly have confidence in the dividend increase that we just announced it is underpinned by growing fee for service cash flow and payout remains at the low end of our target range. So we like the flexibility that we have with both a strong balance sheet and a low payout.

Eileen Marikar: Given the growth we see in the basin, the financial strength we have now allows us to capture opportunities when they're available. So, as it relates to buyback specifically, you know, again, where we see the basin growing and the opportunities that Dean has talked about, but opportunities beyond that, we believe we can deliver really strong returns. That said, you know, we certainly understand the value proposition of buying back shares on an opportunistic basis.

Just kind of piggyback on what Dean said with regard to the balance sheet and where leverage is today, it's truly a competitive advantage given the growth we see in the basin. The financial strength. We have now allows us to capture opportunities when they are available so as it relates to buybacks, specifically again, where we see the base.

Growing and the opportunities that Dean has talked about but opportunities beyond that we believe we can deliver really strong returns that said, we certainly understand the value proposition of buying back shares on an opportunistic basis, so and it's a very simple process to put in an NCI be in place. So it does remain an op.

Eileen Marikar: And it's a very simple process to put an NCIB in place. So, it does remain an option. I'll just end by saying, like, the goal remains the same. It's to allocate capital to the highest-value option. That's organic, inorganic growth, or through buying back shares.

Sure.

I, just maybe just and with the goal remains the same is to allocate capital to the highest value option.

Organic inorganic growth or to buy back shares.

Okay.

Thank you.

Okay.

Spiro Dounis: Thank you, and your next question comes from the line of Spiro Dounis from Connecticut. Please go ahead.

Thank you and your next question comes from the line of Spiro <unk> from Citi. Please go ahead.

Spiro Dounis: Thanks, operator. Good morning, everybody.

Thanks, operator, good morning, everybody.

First question just wanted to touch on G&P volumes. It sounds like you hit record levels there in the north, but it sounds like producer curtailments and the south maybe drove a decline in overall volumes. So just curious how youre thinking about the cadence of shut in since the rest of the year just given that the north generate the higher margin should we expect that region to really kind of over.

Spiro Dounis: First question, I just want to touch on GMP volumes. Sounds like you hit record levels there in the north, but sounds like producer curtailments in the south maybe drove a decline in overall volumes. So, just curious how you're thinking about the cadence of shut-ins into the rest of the year, and just given that the north generates a higher margin, should we expect that region to really kind of overcome any impact from shut-ins from here?

Any impact from shut ins from here.

Dean Setaguchi: Good morning, and that's a great question before I turn this over to Jamie. I think it just really speaks to the issue.

Hey, good morning.

That's a great question.

Now before I turn this over to Jamie.

I think this really speaks to the.

Dean Setaguchi: You know, to the value of our North Montany G&P plants, where it's driven off of condensate economics. So, again, we're seeing record volume growth up there. But in the South, we're seeing some good developments too in the Duvernay, which is also going to be tied to more oil-weighted economics. So, while we're seeing some temporary declines now, we believe the gas price is going to firm up with LNG Canada coming on stream in the next 12 months and also continued development of the Duvernay. But, Jamie, you can add your thoughts. Yeah.

To the to the value of our north.

Montney G&P plants.

Where there is driven off of condensate economics. So again, we're seeing record volume growth up there.

But in the South we're seeing some good developments too in the Duvernay, which is also going to be tied to more oil weighted economics. So while we're seeing some temporary declines now.

We believe the gas price is going to firm up with.

LNG, Canada.

Coming on stream in the next 12 months and also our continued development of the Duvernay, but Jamie.

Jamie Urquhart: Yeah, I think the only thing that I'd add to that is that we went through a pretty extensive recontracting process last year in the South and were successful in getting some meaningful taker pay during that recontracting last year. So although we have seen producers shut in, certainly, the impact of that has been tempered quite significantly as a result of that recontracting effort last year. And we've been obviously telegraphed by the producers that have decided to shut in some volumes that they expect to bring those volumes back early in the fall in response to the expected increase in gas prices, which is meaningful, obviously, on the GMP side of our business, but also on the liquid side of our business because we are vertically integrated in our self-GMP assets as well.

Your thoughts, yes, I think the only thing that I'd add to that is that we went through a pretty extensive re contracting process last year in the south and west.

We're successful in getting some meaningful take or pace during that re contracting last year. So although we have seen.

Producers shut in certainly the impact of that is being tempered quite significantly as a result of that re contracting effort last year and we've been obviously telegraphed by the producers that have decided to shut in some volumes that they expect to bring those volumes back.

Early in the fall.

In response to the expected Inc.

The increase in gas price, which is meaningful obviously on the G&P side of our business, but also on the liquid side of our business because we are vertically integrated in our self G&P assets as well.

And maybe just one more thing to add.

Spiro Dounis: And maybe just one more thing to add. Just want to emphasize that 70% of our GEP margin is generated in the north, in our northern asset base, and 30% in the south. So even though we saw some volume declines, it doesn't have a material impact on our overall EBITDA.

Just want to emphasize that 70% of our GP margin is generated in the north and our north asset base at 30% of sales. So even though we saw some volume declines it doesn't have a material impact on our overall EBITDA.

Great Great and I appreciate the color there.

Second one maybe just go into caps quickly Dean if I heard you right. It sounds like you've been adding some contracted volumes in the background.

Spiro Dounis: Great, great, and I appreciate the color there. Second one, maybe just go to CAPS quickly. Dean, if I heard you right, it sounds like you've been adding some contracted volumes in the background, maybe not at a point yet where you're ready to kind of talk about it, but I guess if we think about filling up that pipeline over time, my understanding is that it's going to require some pump additions to get there. And so just curious, are you able to say how many pumps are operational now and maybe how to think about a CAPEX to sort of step change that capacity from here?

Not at a point, yet where you're already kind of talk about it but I guess as we think about filling up that pipeline over time. My understanding is that it's going to require some pump additions to get there and so just curious are you able to say Amit pumps are operational now and maybe how to think about the capex sort of step change that capacity from here.

Dean Setaguchi: Right? Good question.

Great.

Good question and I would remind you to that.

Dean Setaguchi: And I would remind you too that, part of the filling up of CAPS is also the contracts we have already, which step up over time. So, you know, in our CAPS volume forecast, that's included in our 6% to 7% EBITDA guidance for 2025. But our volume profile grows right to the end of the decade, and we're continuing to add on to that profile. So, you know, the great thing about CAPS is that it's a gift that will keep on growing for the next several years. But in terms of the cost of adding more pumping capacity, maybe I'll just turn that over to Jarrod, whom I can speak to.

Okay.

We have part of the filling up of caps as also the.

It is also the contracts we have already.

Step up over time.

And our cap volume forecasts that's included in our 6% to 7% EBITDA guidance out to 2025, but our volume profile grows right to the end of the decade, and we're continuing to add on to that profile. So the great thing about caps. That's the gift that will keep on growing for the next several.

Years, but in terms of the cost of adding more pumping capacity, maybe I'll, just turn that over to Jarrett I can speak to that I think.

Jarrod Beztilny: I can speak to that. I think you're right that there certainly is the ability to continue to expand CAPS from the initial capacity. It's always been the plan to take a phased approach to incrementally add the capacity over time as it's needed. We have the option to add multiple future pumping stations. These would be much smaller-scale capital projects relative to the original CAPS project. In terms of timing, it's really too early to provide specifics, but I anticipate them will be ongoing through the end of the decade.

Youre right that there is certainly is the ability to continue to expand taps from from the initial capacity.

He's been the plan to take a phased approach to incrementally add capacity over time as it's needed. So we have optionality to add multiple future pumping stations and these will be at a much much smaller scale capital projects relative to the original Kaps project in.

In terms of timing, it's really too early to provide specifics, but I would anticipate it will be ongoing through the end of the decade.

About it this way allows us to manage that capital more effectively by only adding that incremental capacity as it's needed. So caps as a long term asset that will play an important role, enabling that long term growth of the base and in our business and we look forward to that build out.

Jarrod Beztilny: Going about it this way allows us to manage that capital more effectively by only adding that incremental capacity as it's needed. CAPS is a long-term asset that will play an important role in enabling the long-term growth of the basin in our business, and we look forward to that build-out.

Spiro Dounis: Great color. I'll leave it there for today. Thanks, everyone.

Great color I'll leave it there for today thanks, everyone.

Operator: Thank you. Have a good day!

Thank you have a good day.

Robert Kwan: Thank you. And your next question comes from the line of Robert Kwan from RBC Capital Markets. Please go ahead.

Thank you and your next question comes from the line of Robert Kwan from RBC Capital markets. Please go ahead.

Robert Kwan: Thank you. Good morning.

Thank you good morning.

If you think about the ability that you have had we track volumes under the system you added some new contracts. The caps just wondering as the frac capacity gets tighter do.

Do you feel you need whether it's the debottleneck or Caf III.

Is that going to be important for you to be able to attract incremental volumes.

Robert Kwan: If you think about the ability that you've had to track volumes under the system, you've added some new contracts to the system. I'm just wondering, as the frack capacity gets tighter, do you feel you need, whether it's the de-bottleneck or KFS3, is that going to be important for you to be able to track incremental volumes on to caps, and if it is, or just anywhere in the system, you know, you've really committed to deploying capital with long-term contracts themselves, those taker pays generating the return.

Onto caps and if it were just anywhere in the system.

You have really committed to deploying capital with long term contracts themselves.

Those take or pays generating the return.

Robert Kwan: Do you feel that that's going to handcuff you going forward, or put differently, how steadfast are you in committing that new capital is going to be underpinned by long-term take-or-pay contracts generating that return, and everything else is kind of gravy on top of that?

Do you feel that thats going to handcuff, you going forward or put differently. How steadfast are you.

To committing new capital is going to be.

Underpinned by long term take or pay contracts generating that return and everything else is kind of gravy on top of that.

Yes.

Dean Setaguchi: I'll try to answer your question and also pass it over to Jamie as well, but if I understand you correctly, first of all, I think the producers see the opportunity for just more condensate demand generally with TMX, and you've seen the robust volumes still on line 3 even with TMX flowing. We're going to see some great growth here on the oil sands side of our business, and condensate demand is going to continue to increase, which is going to drive more development in that whole Montigny fairway. That drives more demand for caps. But you're right; with it comes some C3+ or NGL mix.

Now I'll try to I'll try to answer your question and also pass it over to Jamie as well, but if I understand you correctly I mean first of all I.

I think the producers see the opportunity for just more condensate demand generally with <unk> and you've seen the robust volumes still.

Still alive, three even with TNF slowing so.

Going to see some great growth here on.

The oilsands side of our business and condensate demand is going to continue to increase which is going to drive more development in that whole montney fairway, so that drives more demand for our caps, but youre right with it comes some some C III plus or NGL mix.

Dean Setaguchi: It's not just us that has full frack, so do our competitors. This is why we're putting a high urgency to advancing our 2 frack projects to have them on stream when the market needs them. Again, we're seeing a greater willingness for producers to step up to contract for that capacity. Jamie, your thoughts?

And it's not just us that has full frac so do our competitors.

This is why we're putting a high urgency to advancing our two frac projects to have them on stream when when the market needs. It.

And again, we're seeing a greater willingness for producers to step up to.

Contracts, where that capacity, but.

Jamie.

Jamie Urquhart: Yeah, I can only add a little bit more, Robert, is, you know, as we think about the frac capacity additions, we think about it in a phased manner, right? Like, I mean, so, frac 2, the bottleneck will be coming online in 2026, and likely frac 3 would be in the 2028 timeframe. That marries up nicely with respect to how we view the basin growth, not just along the Cass border, but also, as Dean alluded to, down in our southern region, specifically around Rimbi, because remind everybody that's on the call that we've got 28,000 barrels a day of frac capacity at the Rimbi gas plant, which is full right now, but it's full from lots of different, we truck in volumes, we do lots of different things to fill that capacity.

Yes, I can only add a little bit more Robert is.

As we think about the frac capacity additions, we think about it in a phased manner right. They can eat so frac to debottleneck will be coming online in 2026, and likely frac III would be into 2028 timeframe.

That marries up nicely with respect to how we view the basin growth not just along the cash quarter, but also as dean alluded to down in our southern region, specifically around the RMB because remind everybody thats on the call that we've got 28000 barrels a day of Frac capacity at the rabid gas plant, which is full right now.

But its full from lots of different trucking volumes, we we do lots of different things to fill that capacity. So as we see.

Jamie Urquhart: So, as we see growth around the Rimbi gas plant, and we've got the Rimbi pipeline that connects the Rimbi gas plant into the Port Saskatchewan area, we've got a ton of optionality to be able to move liquids. So, as Dean said, as we see that evolution, and as we're getting more comfortable around what the growth looks like across our entire asset base. Yo, that's going to give us the comfort, based on commercial agreements that we put in place and that we're working on right now to be able to, you know, hopefully make that announcement around Fractory, because we always stress that, you know, these have to be economic projects in order for us to send them.

Gross around the rimbey gas plant and we've got the Ruby pipeline that connects rimbey gas plant into the parts Saskatchewan area. We've got a ton of optionality be able to move liquids. So as we do.

<unk> said as we see that evolution and as we're getting more comfort around what the growth looks like across our entire asset base.

Operator: Good morning.

Ena: My name is Ena and I will be your conference operator today.

Operator: At this time, I would like to welcome everyone to Keyera's 2020-24-second quarter conference call. Online sub-inplace and mute to prevent any background noise.

That's going to give us the comfort.

Based on commercial agreements that we put in place and that we're working on right now to be able to.

Operator: After the speakers remarks, there will be a question in answer session. If you would like to ask the question during this time, simply press start and the number one on your telephone keypad. If you would like to enjoy your question, please press the start and the number two. Thank you.

Hopefully make that announcement around factory, because we always stress that these have to be economic projects in order for us to essentially.

Robert Kwan: Got it. And I guess just to clarify on the second part of my question, and Jamie, maybe you just did it right there, that if you're deploying capital into maybe a larger project like KFS3, given the deep bottlenecks, probably less capital, if you go ahead with KFS3, in and of itself, that project is going to be underpinned by long-term take or pay contracts that get you to that attractive return.

Got it and I guess just to clarify on the second part of my question and Jamie maybe you just did it right. There that if you are deploying capital into maybe a larger project by Caf III given the Debottleneck is probably less capital.

Dan Cuthbertson: I would like to turn the call over to Mr. Dan Cuthbertson, Director of Investor Relations. You may begin. Thanks and good morning.

Dan Cuthbertson: Joining me today will be Dean Sedebucci, President and CEO, Eileen Marikar, Senior Vice President and CFO, Jamie Urkart, Senior Vice President and Chief Commercial Officer, and Jared Beth Tilling, Senior Vice President, Operations and Engineering. We will begin with some prepared remarks from Dean and Eileen after which we'll open the call to questions. I'd like to remind listeners that some of the comments and answers we'll be giving today relate to future events.

If you go ahead with case in.

In and of itself that project is going to be underpinned by long term take or pay contracts that get you.

To that attractive return.

Correct.

Robert Kwan: Correct. Perfect. The last question I've got is on the marketing guidance. You've tended to be conservative as you put that forward, but one of the assumptions is that logistics remain smooth. So I'm just wondering what your take on a potential rail strike is and what that would do or not do for the guidance. Yeah, so thanks again for the question.

Perfect.

Question I've got just as on the marketing guidance, you've tended to be conservative as you put that forward.

One of the.

Assumptions is that logistics remains made it so I'm just wondering what's your take on potential rail strike and what does that you were not due to guidance.

Dan Cuthbertson: These forward-looking statements are given as today's date and reflect events or outcomes that management currently expects. In addition, we will refer to some non-gap financial measures. For additional information on non-gap measures and forward-looking statements, please refer to Kira's public filing available on Cedar and on our website.

Jamie Urquhart: Yeah, so thanks again for the question, Robert. Yeah, so, you know, as we think about the rail strike, obviously, this has happened to the industry in the past. You know, one of our great strengths is that we have physical assets to be able to manage our business. And so as we think about that potential rail site strike, we're proactively preparing for that potential outcome. And so that's where the value of on-site storage comes into play.

Yes, so thanks again for the question Robert.

Yes, so as.

As we think about the rail strike obviously.

What's happened to the industry in the past.

Dean Sedebucci: With that, I'll turn the call over to Dean. Thanks, Dan. Good morning, everyone.

<unk>.

One of our great strengths is that we have physical assets to be able to manage our business and so as we think about that potential rail strike. We are proactively preparing for that potential outcome and so thats, where the value of onsite storage comes into play we have significant onsite storage at the terminal that.

Dean Sedebucci: Before we get started, I want to take this opportunity to acknowledge and thank the first responders who are working tirelessly to protect the people and communities who are affected by the ongoing wildfires in Western Canada. We wish everyone to stay safe. Turning now to our quarterly results, discipline, execution of our strategy is resulting in consistent growth and high quality fee-for-service cash flow. This has allowed us to continue to deliver on our long history of sustainable dividend growth.

Jamie Urquhart: We have significant on-site storage at the terminal where we load our isooctane in particular. We obviously have a lot of storage at KFS as it pertains to loading propane railcars and ultimately butane as well. So we've got storage that we're going to utilize, and also we've got empty railcars and significant railcar storage at the terminal where we load isooctane to make sure that we can continue to run AEF and hopefully minimize any impact that we would see as a result of a rail disruption.

We load alright.

Alright, so octane in particular.

And we obviously have a lot of storage assets.

As it pertains to floating.

Railcars, and ultimately butane as well so.

We've got storage that we're going to utilize and also we've got empty railcars and the significant railcar storage at terminal that we load isooctane to make sure that we can continue to run.

Dean Sedebucci: Yesterday, we announced another dividend increase of 4% to $2.8 per share annually. This increase is also supported by a conservative pale ratio and a strong balance sheet. We remain on track to reach the upper end of our 6% to 7% EBITDA growth target out to 2025. Our gathering process this week's statement delivered 102 million in Realized Margin. This result was supported by record throughput volumes in the North region. Our liquid infrastructure statement delivered its second highest quarter ever with 133 million in Realized Margin.

Yes.

And hopefully minimize any impact that we would see as a result of our rail destruction.

Okay. That's great. Thank you.

Thank you.

Robert Catellier: Thank you. And your next question comes from the line of Robert Catellier from CIBC Capital Markets. Please go ahead.

Thank you and your next question comes from the line of Robert <unk> from CIBC capital markets. Please go ahead.

Robert Catellier: Good morning. Thank you. I just wondered if you could follow on to that last answer, you know, how long can you continue to operate during a rail strike based on your storage capacity? Before there ends up being a financial impact.

Good morning. Thank you just wondering if you could follow on to that last answer how long can you.

Continuing to operate during.

Rail strike based on your storage capacity.

Dean Sedebucci: Driving this performance was a continued wrap-up of caps and growing demand for our fractionation, storage, and concede businesses. Our marketing segment continues to perform well, generating 136 million in Realized Margin in the quarter. This includes the impact of a planned six-week outage at AESF. Due to strong near-to-date performance and market fundamentals, we're raising our marketing segment guidance to range between 450 and 480 million of Realized Margin in 2024. Our marketing segment is a distinct competitive advantage.

Before there in Virginia, there ends up being a financial impact.

Jamie Urquhart: Yeah, I think right now our estimate would be that at full rates at AEF, we'd be able to see a minimal impact on our financials for up to a 30-day disruption.

Yeah, I think right now our estimate would be that next fall Murray said, we'd be able to.

See a minimal impact to our financials for up to a 30 day disruption.

Robert Catellier: Okay. And just going back to capital allocation, you know, specifically, I'll start with the NCIB. How do you view an NCIB in light of the financial position that you have? It's obviously quite strong. And I'm just wondering if the strength of your financial position and the recent market volatility increased the impetus to look at an NCIB, or is the view that it's just easy enough to turn on that they're, you know, you can still afford to be patient.

Okay, and just going back to capital allocation.

Specifically.

Specifically I'll start with the NCI b.

How are you viewing in CIB in light of the financial position.

Yes.

Obviously quite strong.

And I'm just wondering if that the strength of your financial position and the recent market volatility increased the impetus to look at it and in CIB.

Dean Sedebucci: Strong cash flow from this physical business has enabled us to consistently deliver above average aftertax corporate returns. This cash flow is then reinvested into long life infrastructure projects in turn driving growth in high quality fee-for-service cash flow.

The view that it's just.

Easy enough to turn on the third.

You can still afford to be patient.

Robert Catellier: That's a good question, Rob. Eileen? Thanks, Robert. Yeah.

That's a good question Rob.

Eileen Marikar: Thanks, Robert. Yeah, as I said earlier, the financial strength we have is an advantage for us, the balance sheet strength, where it's at. In terms of NCIB specifically and buybacks, yeah, we certainly do understand the value of buying back shares on an opportunistic basis. So it is, as you said, a very simple process to put an NCIB in place, so it does remain a process.

Thanks, Robert Yeah, as I said earlier.

Dean Sedebucci: 2024 will be a year of strong free cash flow generation, following the completions of several major growth projects last year, including caps. We continue to advance capital-efficient growth opportunities. These opportunities, leverage and enhance our existing core asset position in western Canada. They include a fractionation de-blogal a new factory expansion and a capstone for extension. We also continue to advance other opportunities and will speak to those when appropriate. With a strong balance sheet and an increased dividend, we will continue to balance discipline capital investments with further increasing shareholder returns to maximize value.

Again.

Our financial strength. We have is is an advantage for us the balance sheet strength, we're at that.

Terms of NCI be specifically in buybacks, yes, we certainly do you understand the value of buying back shares on an opportunistic basis.

It is as you said, a very simple process to put in NCI be in place. So it does remain an option.

Okay and then.

Dean Setaguchi: Robert, it's obviously something that we think about. And, you know, the one thing that we're committed to doing is add value per share for our shareholders. So we know that that's a tool that's out there, and we've definitely had some discussions about it.

Robert itself, it's obviously something that we think about and.

The one thing that were committed to do is add value per share for our shareholders.

So we know that that's a tool that's out there and we've definitely had some discussions on it let's leave it at that.

Robert Catellier: Okay, thanks for that, Dean. And then just moving to M&A, I'm just curious what the appetite is like for M&A in, you know, in the context of being equity self-funded. You know, it's clear that you're equity self-funded for what you have on the go now, but would you look at M&A as having to honor the equity self-funded model, or do you look at M&A as a discrete transaction that you'd look at the financing at that time?

Eileen Marikar: I'll turn over to Eileen. We'll provide an overview of our financial performance for the quarter and touch on a revised guidance for 2024. Thanks, Dean. Adjusted EBITDA for the quarter was $326 million compared to $293 million for the same period last year. This result includes strong contributions from all three business segments. Distributable cash flow was $202 million or $0.88 per share compared to $207 million or $0.90 per share for the same period in 2023.

Okay. Thanks for that Dean and then.

Just moving to M&A.

I was just curious what.

The appetite for M&A in the <unk>.

Context of being.

Being equity self funded.

It's clear that you are.

Equity self funded for what you have on the go now but.

Would you look at M&A as having to honor.

The equity self funded model or do you look at M&A as a discrete transaction that you've done.

Look at the financing at that time.

Eileen Marikar: Net earnings were $142 million compared to $159 million for the same period last year. The decrease was due to higher depreciation and interest costs. We continue to maintain a strong financial position exiting the quarter with net debt to adjusted EBITDA at two times below our targeted range of two and a half to three times. This positions us well to pursue an equity self on opportunities that will enhance shareholder values.

Dean Setaguchi: Yeah, I mean, without speaking specifically to anything on the M&A front, I just say that you can do the math. I mean, we have tremendous optionality and something I spoke about with our balance sheet. So, we can execute our growth projects. And, you know, if we see some good tuck-in opportunities that would enhance our integrated platform, we have the wherewithal to do a certain amount of that. I mean, obviously, it's a question of magnitude, but we do have a lot of financial wherewithal because of the strength of our balance sheet. So, it's a great place to be. And again, we'll always be disciplined, and our goal is always to add and maximize shareholder value.

Yes.

Speaking specifically to.

Anything on the M&A front I would just say that you can do the math I mean, we have tremendous optionality.

Spoke to.

With our balance sheet, so we can execute our growth projects.

And if we see some good tuck in opportunities that would enhance our integrated platform.

Have the wherewithal to do a certain amount of that I mean, obviously, it's a question of the magnitude, but we do have a lot of.

Eileen Marikar: Moving on to our guidance for 2024. As Dean mentioned, we now expect our marketing segment to contribute between $450 million and $480 million of realized margin in 2024. This is up from our previous guidance of $430 million to $470 million. The increase considers year-to-date realized margins of $250 million and a strong outlook for market fundamentals. Due to the increase in expected marketing contributions, cash taxes are now expected to range between $90 million and $100 million.

Financial wherewithal because of the strength of our balance sheet. So it's a great place to be and again, we will always be disciplined and our goal is always to ads and maximize shareholder value.

Robert Catellier: Okay, my last question for you just has to do with the maintenance capital revision. I'm curious if it includes revised budgets for the Q3 turnarounds, or is it really just based on the impacts you felt during the second quarter turnaround?

Okay last question for me just has to do with the maintenance capital revision I'm curious if it <unk>.

Includes revised budget for the Q3 turnarounds or is it really just based on the.

The impacts it felt.

During the second quarter turnarounds.

Robert Catellier: Yeah, I'll turn that over to Jarrod. Yeah, it's a great question, Robert. And, you know, maintenance capital is key.

Yes, I'll turn that over to Jared that's a great question rather than maintenance capital is key for us in ensuring reliability of our operations and thats very important to our customers. So.

Jarrod Beztilny: That's a great question, Robert. Maintenance capital is key for us in ensuring the reliability of our operations, and that's very important to our customers. So, I'll speak to the main drivers for 24 and also what we're doing to manage that spend going forward. So, it is turnarounds that make up the bulk of that maintenance capital increase this year. And we've also had some other one-time maintenance activities arise across the portfolio. This year is our first full turnaround at Wapiti.

Eileen Marikar: This is up from $85 million to $95 million previously. Growth capital for 2024 remains unchanged at $80 million to $100 million. A reminder that this includes $20 to $40 million of capital that is contingent on the sanctioning of capstone for and advancing frack expansion opportunities at KFF. To move ahead, these projects will need to generate a strong return supported by long-term. Maintenance Capital is now expected to range between 120 million and 140 million. This is up from 90 million to 110 million previously. Mostly due to increased costs for turnaround activities, which are largely recoverable over the next several years.

I'll speak to the main drivers for 24 and also what we're doing to manage that spend going forward. So it is turnarounds that make up the bulk of that maintenance capital increase this year and we've also had some other onetime maintenance activities arise across our portfolio.

Jarrod Beztilny: So, as we've refined that scope and completed the planning, we've seen some cross-increases there, and some of that is also one-time expenditures that are associated with it being our first turnaround there. And as Eileen mentioned, most of that increased maintenance cap this year will be recoverable over the next two years. Now, going forward, we'll continue to optimize that spend by extending turnaround intervals as far as we safely can and continuing to enhance our maintenance management programs and shift more to risk-based rather than time-based inspections.

This series, our first full turnaround at Wapiti, so as we refine that scope and completed the planning we've seen some cross increase there and some of that is also one time expenditures that are associated with it being our first turnaround there and as Ilene mentioned most of that increase maintenance cap. This year will be recoverable over the next few years.

Now going forward, we'll continue to optimize that spend by extending turnaround intervals as far as we safely can and continuing to enhance our maintenance management programs and shift more to risk based rather than time based inspections in these strategies rollouts to defer spending where it makes sense to do so.

Jarrod Beztilny: And these strategies will allow us to defer spending where it makes sense to do so. The maintenance cap is really important, and it's certainly become a meaningful cost for us and one we'll work to drive down without compromising safety and reliability. But it really is the turnaround focus for the balance of the year that's driving the change that we communicated.

Dean Sedebucci: I'll now turn it back to Dean. Thanks, Eileen. A long-term outlook for volume growth in the basin remains strong. This growth will be supported by key developments including TMX, Energy Canada, a growing petrochemical industry, and increasing LPG exports off the west coast of Canada. As an essential infrastructure service provider, Keyera will continue to play an important role in enabling based and volume growth while staying financially disciplined and maximizing value for customers and shareholders.

Scott is really important and it's certainly become a meaningful cost for us and one we will work to drive down without compromising safety and reliability, but it really is the turnaround focus through the balance of the year, that's driving the change that we communicated.

Okay. Thank you.

Thanks Robert.

Patrick Kenny: Thank you. And your next question comes from the line of Patrick Kenny from National Bank Financial. Please go ahead.

Thank you and your next question comes from the line of Patrick Kenny from National Bank Financial. Please go ahead.

Patrick Kenny: Thank you. Good morning, everyone.

Thank you and good morning, everyone.

Dean Sedebucci: On behalf of Keyera's board of directors and management team, I want to thank our employees, customers, shareholders, indigenous rights holders, and other stakeholders for the continued support.

Just on your ongoing portfolio optimization plan with GMP.

Patrick Kenny: Just on your ongoing portfolio optimization plan with NGMP, you've been divesting of a couple gas plans so far this year. Wondering if you're pursuing further consolidation of your GMP exposure in the south? And then, on the flip side, you know, given the excitement around Zone 4 and the fracking expansion, how you're viewing perhaps a need to beef up your GMP exposure in the North region, especially in light of some of the heightened competition in the area.

EBIT divested of a couple of gas plants. So far this year I'm wondering.

Operator: With that, I'll turn it back to the operator for Q&A. Thank you.

If you're pursuing further consolidation of your G&P exposure in the south.

And then on the flip side given.

Operator: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star 4.1 on your telephone keypad. Good morning, everyone.

Given the excitement around zone four frac expansions.

How youre viewing.

Perhaps that need to beef up your G&P exposure in the North region.

Especially in light of some of the the heightened competition in the area.

Dean Setaguchi: Good morning, Patrick, and great questions. First of all, one thing that we're trying to do is just be uber-focused on our business and the growth of our platform. Some of the assets that we've had for a long time are not integral to our business in the longer term, so this is where we're looking to optimize our portfolio. As you know, we stopped several plants several years ago, and we did sell a couple of facilities, as you saw in our last release. We'll continue to do that.

Hey, good morning, Patrick and great questions.

First of all one thing that we're trying to do is just to be Uber focused on on our business and.

And the growth of our platform.

Some of the assets that we had.

We've had for a long time are not integral to our business longer term. So we this is where we're looking to optimize our portfolio as you know we suspended several plants.

Rob: First question is on the kind of three growth projects that you highlighted being the two expansions like KFS as well as Zone 4. Can you give us an update on where we are in terms of contracting as well as the engineering of these projects and kind of what dating milestones we should expect in the coming months ahead.

Three years ago, and we did sell a couple of facilities as you.

You saw on our and our last release.

We will continue to do that.

Dean Setaguchi: Just again, some of the smaller facilities that don't fit in our portfolio longer term, and we'll focus on our best and greatest growth opportunities. Certainly, we see more opportunities in the north. As I said, we see tremendous growth in our basin out to the end of the decade, and a lot of that growth is going to happen disproportionately up in the Montigny-Doubernay Fairway. We continue to look for opportunities, whether it be through acquisition or Greenfield or Brownfield opportunities to expand our platform up there and integrate, obviously, all the liquids that would come out of that into our caps and downstream service business.

Just again some of the smaller facilities that don't fit in our portfolio longer term and we will focus on our best and greatest growth opportunities.

Dean Sedebucci: Good morning, Rob. It's Dean and great question. We're very excited about what we see in terms of opportunities for growth in the space and what our company can do to help enable that. And you know, certainly we see continue growth in the mountain on both sides of the border. So, first of all, with Zone 4, we're still very excited about the prospects of extending our pipeline to the BC border. And again, I just want to emphasize that customers really want competition.

Certainly we see more opportunities in the north.

As I said, we see tremendous growth in our base to know till the end of the decade. So a lot of that growth is going to happen disproportionately up in the Montney Duvernay and fairway.

We continue to look for opportunities whether it be through.

Acquisition, or greenfield or brownfield opportunities to expand our platform up there.

And integrate obviously, the all the liquids that would come out of that into our caps and downstream.

Dean Sedebucci: They see the value that we brought with our caps projects Zone 1 to 3. And there's very good demand for again extending that pipeline to the BC border. So, we continue to have discussions there. Obviously, they're commercially sensitive. But certainly, you know, we think that we'll be getting to a decision here by the by the end of the year. And we will provide an update on that when appropriate. I just say that with with caps in general, we now have an integrated system.

<unk> business.

Patrick Kenny: Got it. And I guess with power prices coming down through the quarter, it looks like a bit of a tailwind for GMP margins. Can you just remind us how much of your power exposure is flow-through and if this net tailwind might be enough to offset some of the near-term pressures here on margins in the south just based on weaker drilling?

Got it and then I guess with power prices coming down through the quarter. It looks like a bit of a tailwind for G&P margins can you just remind us.

How much of your power exposure is flow through and if this net tailwind.

Might be enough to offset some of the near term pressures here on margins in the south just based on.

Dean Sedebucci: So, almost every deal that we are signing now is an integrated deal where we're involving, you know, GMP caps, frack and are downstream business. So, a lot of this is all connected together. We see continued demand. Again, we we really believe in the growth in the basin and how much NGL is going to get produced with that and the need for our integrated service. So, we are signing more contracts on our integrated system long term with with good takeer pace. We'll update that again when appropriate, just like we did earlier this year.

Kind of weaker drilling activity.

Jamie Urquhart: Jamie? Jamie's our power expert. Yeah, great. Expert is a relative term, Patrick.

Okay.

Jimmy there par expert yes, great.

Spirit is a relative term.

Jamie Urquhart: Yeah, a great question. We've been very proactive in managing our power costs in the past, so I wouldn't want there to be a great expectation that you're going to see a significant margin improvement on the gathering processing side, because through physical assets, through some of the PPAs with renewables, and with some financial hedging, in my opinion, we've done a very good job of managing the volatility that we've seen for pricing over the last couple of years

Yes, great question.

<unk> been very proactive in managing our power costs in the past so I wouldnt want there to be a great expectation that you're going to see significant margin improvement on the gathering processing side because.

We have through physical assets through some ppas with renewables and with some financial hedging.

In my opinion, we've done a very good job of managing the volatility that we've seen for pricing over the last couple of years. So.

Jamie Urquhart: So, I do think that, obviously, lower power prices are a positive tailwind for industry, and it will help us as well at certain facilities where we have more electric-intensive operations. But to repeat myself, we've consciously managed that in the past few years, in my mind, quite successfully. Yeah, Patrick, and, you know, maybe just add to your comment about just our, I think it was just maybe margins and competitiveness in our sales portfolio.

Yes.

Jamie Urkart: But maybe I'll just turn it over to Jamie to maybe speak a bit more about our frack expansion project. Yeah, thanks, Dean, and thanks for the question, Rob. So, you know, I can share that we're proceeding with ordering long-leads for our Fract2 expansion or D-bottle Mac. And so, you know, very, very positive momentum on that project based on commercial support. And then we are, as we shared last quarter, you know, proceeding with feed for Fract3.

I do think that obviously lower power prices as a positive tailwind for our industry and it will help us as well at certain facilities, where we have more electric intensive.

Jamie Urkart: So from a timing perspective, we'll probably be in early 2025 before we fully understand the costs. Though, you know, we have made the decision around sort of the design and, you know, it's very similar in scope to our Fract2, including the D-bottle Mac. So, you know, we're certainly confident as we're talking to customers around what that project looks like in entails.

Operations, but to repeat myself we.

<unk>.

Consciously managed that in the past few years in my mind quite successfully.

Jamie Urquhart: I'd just add that, you know, Jarrod's team is really working hard to specifically reduce our cost profile in our, in our sales facilities. And again, you know, I think they're making some, some good progress there.

Patrick maybe just just to add on your comment about.

Just or I think it was just maybe margins and competitiveness in our south portfolio I'd just add that <unk> team is really.

Working hard and specifically opportunities too.

Reduce our cost profile, and our and herself facilities and again I think they're making some some good progress there.

Dean Setaguchi: That's great. Maybe last one for me. Just given some of the progress lately that we've seen on the carbon capture front in the industrial heartland, I was curious if you had an update on where your partnerships are at with respect to participating in CCS, CO2, and hydrogen transportation, or any update on the cadence of some of your investment opportunities.

That's great maybe last one for me just given some of the progress lately that we've seen on the carbon capture front and the industrial Heartland.

Just curious if you had an update on where your partnerships are at.

With respect to participating in Ccs.

Rob: Alright, thanks for that. And then just moving over to capital allocation. Eileen mentioned that the next wave of growth could be easily funded with an equity funding model. Can you talk about kind of the conservatism based in your forecast? Just given the fact that, you know, the dividend was increased 4% below the kind of 7% EBITDA you're tracking to, as well as, you know, what would be needed for an NCIB to be put out there, or are you seeing kind of the next wave of incremental growth coming at you soon?

<unk> and hydrogen transportation.

Just any update on the cadence of some of your investment opportunities.

Dean Setaguchi: Yeah, I mean, Patrick, we've said this before that, you know, we are very well positioned to provide low carbon services up there, especially in the industrial heartland. I mean, we have a lot of assets up in that area already with pipes, and we do have some specific pipes that can transport both carbon and hydrogen. So, you know, when the demand is there, we can repurpose some of that infrastructure. Obviously, rail logistics for low-carbon projects are important as well. And we have assets that can help accommodate that. We are, you know, we're still very small.

Yes, I mean, we.

Patrick We said this before that we are.

We're very well positioned to provide low carbon services up and especially in industrial heartland.

We have a lot of assets up in that area already with.

With pipe.

And we do have some specific types that can transport.

Carbon.

Rob: Thanks for the question, Rob. And that's a good one. All I can see, you know, before I turn this over, Dylene is that we're in a great position to have a very strong balance sheet. And it gives us a lot of optionality right now. So, you know, I've talked a lot about growth opportunity in the basin.

<unk>.

And hydrogen.

So when the demand is there we can we can repurpose some of that infrastructure, obviously rail logistics for low carbon projects are are important as well.

We have assets that can help accommodate that we are we're still very.

Eileen Marikar: But, you know, in a normal course issue, it is also a possibility, but I'll turn over to Eileen. Thanks. And thanks, Rob. Good morning. Yeah, is it released to the dividend? I mean, we are a dividend growth company and we're very proud of our long history of growing the dividend sustainably. We've never cut it before. So we certainly have confidence in the dividend increase that we just announced. It is underpinned by growing fee for service cash flows and the payout remains at the low end of our target range.

Jamie Urquhart: We still work very closely with Shell, and I would remind you that the tie-in point for their carbon capture system is just on the northeast part of our heartland lands. So, it provides tremendous opportunities for us in the future. Jamie, is there anything else you want to add?

We worked very closely with shell still and I would remind you that the.

Tie end point for the carbon capture system is just on the north east part of our Heartland lands.

So it provides tremendous opportunities for us in the future Jamie.

Jamie is there anything else you want to add.

Dean Setaguchi: No, you know, I mean, other than the fact that during the quarter, Shell announced the sanctioning of the Atlas slash Polaris project, which is, you know, we're, we're very positive about that, as Dean said, given the proximity of the pipeline that feeds the well that disposes of that carbon. So, we continue to have conversations with Shell, but also, more importantly, customers that might look to locate their low carbon projects in the future on our Josephburg lands. And as Dean pointed out, the location of the land, but it's not just carbon, it's water supply, it's the rail egress component, and it's the connectivity that differentiates our piece of land up in

Other than the fact that during the quarter shell announced sanctioning of the Atlas Slash Polaris project, which is.

We're.

Eileen Marikar: So we like the flexibility that we have with both strong balance sheet and the low payout, you know, just kind of get you back on what Dean said, you know, with regard to the balance sheet and were leverages today. It's truly a competitive advantage. Given the growth we see in the basin, the financial strengths we have now allows us to capture opportunities when they're available. So as it relates to buyback specifically, you know, again, where we see the base and growing and the opportunities that Dean has talked about, but opportunities beyond that, we believe we can deliver really strong returns.

Very positive in that as Dean said, given the proximity of the pipeline.

<unk> that the well that disposes of that carbon so.

We continue to have conversations with shell, but also more importantly.

Customers that might look to locate.

They're low carbon projects in the future on our Josephberg lands.

As Dean pointed out is that the location of the land, but it's not just carbon it's it's water supply is the real key.

Eileen Marikar: That said, you know, we certainly understand the value proposition of buying back shares on an opportunistic basis. So, and it's a very simple process to put in an NCIB in place. So it does remain an option.

Dress component and Thats the connectivity.

Differentiates our piece of land up in the Heartland.

Patrick Kenny: Okay, that's great. Thanks, everybody. I'll leave it there.

Okay. That's great. Thanks, everybody I'll leave it there.

Thank you.

Dean Sedebucci: You know, I just maybe just end with like the goal remains the same. It's to allocate capital to the highest value option that's organic in organic growth or through buying back shares. Thank you.

A.J. O'Donnell: Thank you. And your next question comes from the line of A.J. O'Donnell from TPH. Please go ahead.

Thank you and your next question comes from the line of Egypt, AJ O'donnell from PVH. Please go ahead.

A.J. O'Donnell: Hey, good morning, guys. Just wanted to go back to the northern GMP and the strength that you were seeing there. Just wondering if the volumes are tracking in line or ahead of your expectations. Just any additional commentary you could provide would be greatly appreciated.

Hey, good morning, guys.

Just wanted to go back up to the northern GNP and the strength that youre seeing there.

Spiro Dounis: Thank you, and your next question comes from the line of Spiro Dounis from CD. Please go ahead. Thanks, operator. Morning, everybody. First question, just want to touch on G&P volumes. Sounds like you hate record levels there in the North, but some of the producers are for tablets in the South, maybe drop a decline on overall volumes.

Just wondering if the volumes are tracking in line or ahead of your expectations.

Any additional commentary you could provide would be greatly appreciated.

Jamie Urquhart: Thanks for your question. I'll turn that over to Jamie. Yeah, thanks, AJ.

Speaker Change: Thanks for your question.

Jamie Urquhart: Yeah, thanks, AJ. So, yeah, as you pointed out, there are really strong outcomes in the North GMP. And I would say that, yeah, the growth that we've seen is in line with what we expected, but it's extremely positive. We've always expected that, certainly based on the expansion that we did at Pipestone, that facility, and that expansion as well. We're getting to the stage now with a small de-bottleneck project that we're going to do at the Wapiti gas plant during the turnaround that we're expecting, based on some deals that we've done, that Wapiti is going to get close to full capacity, if not at full capacity, towards the back end of this year.

And that over to Jamie. Thanks, a J. So yes as you pointed out is really really strong outcomes in the north G&P and I would say that yes. The <unk>.

Dean Sedebucci: So just curious how you're thinking about the cadence of shutdown since the rest of the year, and just given that the North generates a higher margin, should we expect that region to really kind of overcome any impact from shutdowns from here? Good morning, and that's a great question. Now before I turn this over to Jamie, I think it just really speaks to the, you know, to the value of our North. There's a lot of money, G&P plants, where this driven off of quantity of economics.

Jamie: <unk> that we've seen is in line with what we expected but.

Jamie: It's extremely positive.

We've.

Speaker Change: Always expected that.

Speaker Change: Certainly based on the expansion that we did at pipestone that facility and that expansion is fall.

We're getting to the stage now with small debottleneck projects that we are going to do at the wapiti gas plant during turnaround.

We're expecting based on.

Dean Sedebucci: So again, we're seeing record volume growth up there. But in the South, we're seeing some good developments too in the, in the Doverney, which is also going to be tied to more oil weighted economics. So while we're seeing some temporary declines now, we believe the gas price is going to firm up with, you know, LNG Canada coming on stream in the next 12 months, and also a continued development of the Doverney, but Jamie, you can add your thoughts.

Dean: Some deals that we've done that wapiti is going to get close to full capacity if not at full capacity towards the backend of this year and then dean alluded to the activity that we're seeing around Simon and the meaningful conversations that we're having there.

Jamie Urquhart: And then Dean alluded to the activity that we're seeing around Simonette and the meaningful conversations that we're having there. And so, yeah, our existing assets, and then to Patrick's question before that, I believe it was Patrick, is around really focusing on the next opportunity up in the North in service of feeding volumes into CAPS and ultimately into our infrastructure down in the Fort Saskatchewan area.

Dean: Yes, so yes.

Yes.

Speaker Change: Our existing assets and then to Patrick's question before that I believe it was Patrick.

Around.

Speaker Change: Really focusing on.

The next opportunity up in the north in service of feeding volumes into caps and ultimately into our infrastructure down.

Dean Sedebucci: Yeah, I think the only thing that I'd add to that is that, you know, we went through a pretty extensive recontracting process last year in the South, then we're successful in getting some meaningful takeer pace during that recontracting last year. So although we have seen producers shut in, certainly the impact of that has been tempered quite significantly as a result of that recontracting effort last year. And we've been, you know, obviously telegraphed by the producers that have decided to shut in some volumes that they expect to bring those volumes back, you know, early in the fall in response to the expected increase in gas price.

In the Fort Saskatchewan area.

A.J. O'Donnell: Okay, thanks for that. Just one more from me. You know, there's a couple of things that are going on in B.C. between the Blueberry River First Nations tribe and I'm curious if what's happening there has had any impact on discussions with your producers or could have any impact on volumes really, you know, downstream on your pipes and tracks. Thanks. Yeah, thanks.

Speaker Change: Okay. Thanks for that just one more from me.

Speaker Change: There's a couple of things that are going on in BC between the Blueberry River first nations tribe.

Speaker Change: Im curious if whats happening there has had any impact on discussions.

Speaker Change: With your producers or could have any impact on volumes really downstream on your pipes and products.

Speaker Change: Sure.

Dean Setaguchi: Yeah, thanks for the question, and where I think it has the most relevance would be our zone 4 project, our cap zone 4 project, where we would connect to the BC border and then into North River midstreams' proposed project in BC. And what I'd say is, first of all, when you look at the big picture from a macro perspective, the geology is very good on the BC side of the border, just like it is in Alberta. So we certainly see more development in BC.

Speaker Change: Thanks for the question.

Dean Sedebucci: Which is meaningful, obviously, on the GMP side of our business, but also on the liquid side of our business because we are vertically integrated in our self GMP assets as well. And maybe just want to emphasize that 70% of our GP margin is generated in the north and our north asset base and 30% of the South. So even though we saw some volume declines, it doesn't have a material impact on our overall EBITDA. Great, great, and I appreciate the color there.

Speaker Change: Where I think the.

Speaker Change: It has the most relevance would be zoned for project a capstone for project, where we would connect to the BC border and then into north for midstream.

Speaker Change: Proposed project.

In BC.

Speaker Change: And what I'd say is first of all when you look at the Big picture.

Speaker Change: From a macro perspective, the geology is very good on the PC side of the border just like it is in Alberta, So we certainly see more development in BC.

Dean Setaguchi: Yes, there are still some challenges, I think, with producers, the government, and the Blueberry Group as well. But I believe that they will come to some resolution. It might take a bit of time, but I do want to emphasize that the customers that we're talking to and the areas that we are focused on are outside of the heart of that Blueberry area. So we still believe that our project is still very attractive, and it's not really contingent on that resolution happening.

Robert Kwan: The second one, maybe just going to caps quickly. Dean, have I heard you write sounds like you've been adding some contracted volumes in the background. Maybe not at a point yet where you're ready to kind of talk about it, but I guess we think about filling up that pipeline over time. I'm understanding that it's going to require some competitions to get there. And so, just curious, are you able to say I'm a pumper or operational now? I mean, you had to think about the capex to sort of step change that capacity from here.

Speaker Change: Yes, there is still some.

Speaker Change: Some some challenges I think with.

Speaker Change: Producers the government in the first.

Speaker Change: Blueberry group as well.

But I believe that.

Speaker Change: It will come to some resolution that might take a bit of time, but I do want to emphasize that the customers that we're talking to you in the areas that we're focused on are outside of that the heart of that blueberry area. So we still believe that our project is still.

Speaker Change: Very attractive.

Dean Sedebucci: Right, good question. And I would remind you too that, you know, we have part of the filling up of caps is also the, is also the contracts we have already, which step up over time. So, you know, when our caps volume forecast, that's included in our 67% EBITDA guidance out of the 2025. But our volume profile grows right to the end of the decade. And we're continuing to add on to that profile. So, you know, the great thing about caps, it's the gift that will keep on growing for the next several years.

Speaker Change: And it's not really contingent on that resolution happening.

A.J. O'Donnell: Thanks for the call, guys. That's it for me.

Speaker Change: Thanks for the color guys Thats it from me.

Speaker Change: Thank you very much.

Ben Pham: Thank you. And your next question comes from the line of Ben Pham from BMO. Please go ahead.

Speaker Change: Thank you and your next question comes from the line of Ben Pham from BMO. Please go ahead.

Ben Pham: Hi, thanks. Good morning. When you add up all the projects you've highlighted, Jonas called it the FRAC expansion, some Greenfield stuff in the Montney, are you sure it is a total investment opportunity and where returns can lie in the ranges that you've highlighted in the past?

Ben Pham: Alright, thanks, good morning.

Ben Pham: When do you add.

Hi.

Speaker Change: Add up all the projects.

Speaker Change: Fair enough.

Speaker Change: It's called the track expansion from Greenfield.

Speaker Change: In the Montney.

Speaker Change: Are you sure the total investment opportunity.

Jarrod Beztilny: But in terms of the cost of adding more pumping capacity, maybe I'll just turn that over to Jared. I can speak to that. I think, you know, you're right that there's certainly a disability to continue to expand caps from the initial capacity. And it's always been the plan to take a phase approach to incrementally add the capacity over time as it's needed. So, we have optionality to add multiple future pumping stations.

Speaker Change: And where returns can lie and that ranges that you've highlighted in the past.

Dean Setaguchi: Yeah, yeah, so the question is just the projects that we've discussed with our FRAC and Zone 4, are they going to be in our investment return range? Yeah, I just say that, you know, these are the ones that are, you know, we're advancing and we're very, I guess, openly discussing them. I would say that behind the scenes, there are other opportunities that we're pursuing as well. And, but, you know, maybe Eileen, you can speak specifically the returns on these three projects. Yeah, as

Speaker Change: Yes, yes. So the question is just the projects that we've discussed with our Frac in zone, four or theyre going to be in our investment.

Ben Pham: Return range, Yeah, I would just say that these are the ones that are.

Jarrod Beztilny: And these would be at a much, these would be much smaller scale capital projects relative to the original caps project. And, you know, in terms of timing, it's really too early to provide specifics. But, you know, I anticipate it will be ongoing through the end of the decade. And going about it this way allows us to manage that capital more effectively by only adding that incremental capacity as it's needed. So, you know, caps is a long-term asset that will play an important role in enabling that long-term growth of the base and in our business. And we look forward to that buildup.

Ben Pham: Were advancing were.

Ben Pham: We are very.

Ben Pham: Openly discussing them I would say that behind the scenes there are other opportunities that we're pursuing as well.

Ben Pham: And.

Speaker Change: But maybe you can speak specifically the returns on these three projects yeah as we've said.

Eileen Marikar: Yeah, as we've said before, we've put out that 10% to 15% ROC target, and we certainly are looking to achieve the higher end of that range on a standalone basis, but it's also beyond that, it's the integrated nature of the returns, and that's the key. Now we have the full system where we can attract returns and compound returns through the entire system, including marketing, and that's certainly our advantage. And when we think about these projects, so the 67% EBITDA guidance that we had provided to 2025, that's outside of these projects. So adding these types of projects just helps us to continue to extend the growth.

Speaker Change: Sure.

Speaker Change: Put out that 10% to 15%.

Ben Pham: As a target and we certainly are looking to achieve the higher end of that range on a standalone basis, but also beyond that it's the integrated nature of the returns and that the key I mean now we have the full system, where we can.

Operator: Great color.

Operator: I'll leave it there for today. Thanks, everyone. Thank you.

Operator: Have a good day.

Robert Kwan: Thank you, and your next question comes on the line of Robert Kwan from RBC Capital Markets. Please go ahead. Thank you.

Dan Cuthbertson: Can you also add? My question, too, is just total CapEx. If in any way, you can express it per annum or total CapEx opportunity?

Ben Pham: Attractive returns and compound returns through the entire system, including marketing and that's certainly our advantage and when we think about these projects. So the 6% to 7% EBITDA guidance that we had provided to 2025 that's outside of these projects. So adding these types of projects just help us to continue to.

Dean Sedebucci: Good morning. If you think about the ability that you've had to track volumes under the system, you've added some new contracts to caps. I'm just wondering, as the frack capacity gets tighter, do you feel you need, whether it's the debottle neck or KFS-3? Is that going to be important for you to be able to track incremental volumes onto caps? And if it is, or just anywhere in the system, you've really committed to deploying capital with long-term contracts themselves, those takeer pays, generating the return.

Ben Pham: Extend the growth into the future.

Speaker Change: Can you can you also add my question too is also just total capex pay rate you can express it per annum or total.

Speaker Change: Capex opportunity.

Ben Pham: We will likely provide guidance in December once we get, I think the big thing here is we're still waiting on cost information for whether it's Fract 3, the DeBottleneck, as well as Zone 4. So, we will provide an update on Grove CAPEX, you know, longer term, a longer run rate for that with our December update.

Speaker Change: We will likely provided guidance in December once we get I think the big thing here is we are still waiting on.

Dean Sedebucci: Do you feel that that's going to handcuff you? Going forward or put differently, how steadfast are you to committing that new capital is going to be underkinned by long-term takeer pay contracts, generating that return and everything else is kind of gravy on top of that? I'll try to answer your question and also pass it over to Jamie as well, but if I understand you correctly, I mean, you know, first of all, you know, I think the producers see the opportunity for just more condensate demand generally with TMX, and you've seen the robust volumes still online, even with TMX flowing.

Speaker Change: Cost information for whether it's factory the debottleneck as well as so far so we will provide an update on.

Speaker Change: Capex longer term a longer run rate for that with our December update.

Ben Pham: Okay.

Ben Pham: Thank you. And maybe, can you, uh, there's been some rumblings of data centers coming to Alberta, especially over the last week in Fort Saskatchewan. Are you able to share from your side of things, your commercial group, if there are any discussions you've had? How do you think you're positioned? Is this more of a self-region that could benefit? And do you think this is something like a cold gas? sort of opportunity in terms of BCF per day. Yeah, I mean it.

Speaker Change: And maybe can you theres been that.

Speaker Change: Some.

Speaker Change: Some rumblings of data centers coming of a brighter.

Speaker Change: Over the last week Fort Saskatchewan.

Speaker Change: 710.

Speaker Change: Are you able to share from your side of things your commercial group that is any discussions you've had.

Dean Sedebucci: So we're going to see some great growth here on the oil sand side of our business and condensate demand is going to continue to increase, which is going to drive more development in that whole Motnie fairway. So that drives more demand for caps, but you're right, with it comes some C3 plus or NGL mix, and you know, it's not just us that has full frack soda or competitors. So this is why we're putting a high urgency to advancing our two frack projects to have them on stream when the market needs it.

Speaker Change: Do you think your position is this more to solve region that could benefit and do you think this is something called a gas.

Speaker Change: The opportunity in terms of Bcf per day.

Dean Setaguchi: Yeah, I mean, you know, it's not something we can speak specifically about today, but we do think it's an opportunity. You know, when I think about it, I mean, we just have an abundance of natural gas. The cool ambient temperatures in Alberta certainly help with the data centers. In a lot of areas of Alberta, we have a great fiber optic network. So, yeah, I mean, certainly we look for opportunities where we can connect our system to high-value demand areas, which could be more power to data centers.

Speaker Change: Yes, I mean, it's not.

Speaker Change: It's something we can speak specifically about today, but we do think it's an opportunity.

Speaker Change: You would think about it I mean, we just have an abundance of natural gas.

Speaker Change: The cool ambient temperatures in Alberta, certainly helped with the data centers.

Speaker Change: And a lot of areas of Alberta, we have great fiber optic network. So yes, I mean, certainly we look for opportunities where we can.

Dean Sedebucci: And again, you know, we're seeing a greater willingness for producers to step up to the contract for that capacity, but Jamie, your thoughts? Yeah, I can only add a little bit more Robert is, you know, as we think about the frack capacity additions, we think about it in a phase manner, right? Like I mean, so frack to the bottleneck will be coming online in 2026 and likely frack three would be in the 2028 timeframe.

Speaker Change: Connect our system to high value demand.

Speaker Change: Areas, which could be more power to data centers.

Ben Pham: Okay, I got it. Thank you. Thank you very much. Have a good day.

Speaker Change: Okay got it thank you.

Speaker Change: Thank you very much have a good day.

Dan Cuthbertson: Thank you. There are no further questions at this time. I will now hand the call back to Mr. Dan Cuthbertson for any closing remarks.

Speaker Change: Thank you there are no further questions at this time I will now hand, the call back to Mr. Dan Cuthbertson for any closing remarks.

Dean Sedebucci: That marries up nicely with respect to how we view the basin growth, not just along the cast border, but also as Dean alluded to down in our southern region, specifically around RIMBY. Because remind everybody that's on the call that we've got 28,000 barrels a day of frack capacity at the RIMBY gas plant, which is full right now, but it's full from lots of different. We trucking volumes, we we do lots of different things to fill that capacity.

Dan Cuthbertson: Thank you very much, everyone, for joining us today. Please feel free to reach out to our Investor Relations team with any additional questions. We hope everyone enjoys the rest of the summer. Thank you.

Dan Cuthbertson: Thank you very much everyone for joining us today. Please.

Speaker Change: Please feel free to reach out to our Investor relations team with any additional questions and we hope everyone enjoys the rest of the summer. Thank you.

Operator: Thank you. And this concludes today's call. Thank you for participating. You may all disconnect.

Speaker Change: Thank you and this concludes today's call. Thank you for participating you may all disconnect.

Dean Sedebucci: So as we see growth around the RIMBY gas plant and we've got the RIMBY pipeline that connects RIMBY gas plant into the ports of scheduling area, we've got a ton of optionality be able to move liquids. So as we, you know, as Dean said, as we see that evolution and as we're getting more comfort around what the growth looks like across our entire asset base. You know, that's going to give us the comfort based on commercial agreements that we put in place, and that we're working on right now, to be able to, you know, hopefully make that announcement around factory because we always stress that, you know, these have to be economic projects in order for us to send.

Dean Sedebucci: And so I guess just to clarify, I'm the second part of my question, Jamie, maybe you just did it right there, that if you're deploying capital into maybe a larger project like KFS 3, give them the development, that's probably less capital. If you just, if you go ahead of KFS 3, in and of itself, that project is going to be underkinned by long term takeer pay contracts that get you to that attractive return. Correct.

Robert Kwan: Perfect.

Robert Kwan: The last question I got just on the marketing guidance, you tended to be conservative as you put that forward. But one of the assumptions is that logistics remains smooth. So I'm just wondering what's your take on a potential rail strike and what does that do or not do to guidance. Yeah, so thanks again for question, Robert. Yeah, so, you know, as we think about the rail strike, obviously this has happened to the industry in the past.

Robert Kwan: You know, we, one of our great strengths is that we have physical assets to be able to manage our business. And so as we think about that potential rail site strike, we're proactively pairing for that potential outcome. And so that's where the value of on site storage comes into play. We have significant on site storage at the terminal that we load. Alright, so octane in particular. And we obviously have a lot of storage at KFS as it pertains to loading, propane rail cars and ultimately butane as well.

Robert Kwan: So, you know, we're, we've got storage that we're going to utilize. And also we've got empty rail cars and significant rail car storage at the terminal that we load. ISO octane to make sure that we can continue to run a app. And hopefully minimize any impact that we would see as a result of a rail destruction.

Robert Kwan: That's great.

Robert Kwan: Thank you.

Robert Kwan: And your next question comes to the line of Robert Cutelier from C.A.V.C. Capitol Markets, please go ahead. Good morning. Thank you. I just wondered if you could follow on to that last answer. You know, how long can you continue to operate during rail strike based on your storage capacity? I hope for their other ends up bringing a financial impact. Yeah, I think right now our estimate would be that a full rate set a F. We'd be able to see a minimal impact to our financials for up to a 30 day destruction.

Robert Kwan: Okay.

Eileen Marikar: And just going back to a capital allocation. You know, specifically I'll start with the NCIB. How are you view an NCIB in light of the financial position that you have obviously quite strong. And I'm just wondering if that the strength of your financial position and the recent market volatility increased the appetite to look at an NCIB. Or as a view that it's just easy enough to turn on that they're, you know, you can still afford to be patient.

Eileen Marikar: That's a good question, Rob Eileen. Thanks, Robert. Yeah, as I said earlier, again, the financial strength we have is an advantage for us, the balance sheet strength, where is that? In terms of NCIB specifically in buybacks, we certainly do understand the value of buying back shares on an opportunistic basis. So it is, as you said, a very simple process to put an NCIB in place, so it does remain an option. Okay, and then, Robert, it's obviously something that we think about, and you know, the one thing that we're committed to do is add value for share for our shareholders. So we know that that's a tool that's out there, and we've definitely had some discussions on it.

Eileen Marikar: Let's mean. And then just moving to M&A, I'm just curious what the updates like for M&A in, you know, in the context of being equity-salt-funded, you know, it's clear that you're equity-salt-funded for what you have on the go now, but would you look at M&A as having to honor the equity-salt-funded model, or do you look at M&A as a discrete transaction that you'd look at the financing at that time? Yeah, I mean, you know, without speaking specifically to, you know, anything on the M&A front, I just say that you can do the math.

Eileen Marikar: I mean, we have tremendous optionality and selling spoke to with our balance sheet. So we can execute our growth projects, and, you know, if we see some good talking opportunities that would enhance our integrated platform, we have the awareness all to do a certain amount of that. I mean, obviously, it's a question of the magnitude, but we do have a lot of financial awareness all because of the strength of our balance sheet. So it's a great place to be, and again, we'll always be disciplined, and our goal is always to add and maximize the shareholder value.

Jarrod Beztilny: Okay, last question for me, it just has to do with the maintenance capital revision. I'm curious if it includes revised budgets for the Q3 turn rounds, or is it really just based on the impact we felt during the second quarter turn rounds? Yeah, I'll turn that over to Jared. That's a great question, rather than, you know, maintenance capital is key for us and ensuring reliability of our operations, and that's very important to our customers.

Jarrod Beztilny: So, you know, I'll speak to the main drivers for 24, and also what we're doing to manage that spend going forward. So it is turn rounds that make up the bulk of that maintenance capital increase this year, and we've also had some other one-time maintenance activities arise across the portfolio. This year is our first full turnaround at Wapiti, so as we refine that scope and complete the planning, we've seen some cross-increase there, and some of that is also one-time expenditures that are associated with it being our first turnaround there, and you know, as I lean mentioned, most of that increased maintenance cap this year will be recoverable over the next two years.

Jarrod Beztilny: Now, going forward, we'll continue to optimize that spend by extending turnaround intervals, as far as we safely can, and continuing to enhance our maintenance management programs and shift more to risk-based rather than time-based inspections, and these strategies will allow us to defer spending where it makes sense to do so. Maintenance cap's really important, and it's certainly become a meaningful cost for us, and when we'll work to drive down without compromising safety and reliability, but it really is the turnaround focus for the balance of the year that's driving the change that we communicated.

Robert Kwan: Okay, thank you. Thanks, Robert.

Patrick Kenny: Thank you, and your next question comes from the line of Patrick Kenny from National Bank Financial. Please go ahead. Thank you, good morning, everyone.

Patrick Kenny: Just on your ongoing portfolio optimization plans and GMP, even the, you know, domestic of a couple of gas lines so far this year, wondering, you know, if you're pursuing further consolidation of your GMP exposure in the south, and then on the flip side, you know, given the excitement around zone four and the fractal expansions, how you're viewing, perhaps that need to beef up your GMP exposure in the north region, especially in light of some of the heightened competition in the area. Yeah, good morning, Patrick, and great questions.

Patrick Kenny: You know, first of all, you know, one thing that we're trying to do is just be uber focused on our business and the growth of our platform. And, you know, some of the assets that we had, you know, we've had for a long time are not integral to our business longer term. So, you know, we, this is where we're looking to optimize our portfolio. As you know, we suspended several plans several years ago, and we did sell a couple of facilities as you, you saw in our last release.

Patrick Kenny: We'll continue to do that. Just, again, some of the smaller facilities that don't fit in our portfolio longer term, and we'll focus on our best and greatest growth opportunities. You know, certainly, we see more opportunities in the north. As I said, you know, we see tremendous growth in our base and out to the end of the decade. So, a lot of that growth is going to happen disproportionately up in the Montenegrobanay fairway.

Patrick Kenny: And we continue to look for opportunities whether it be through acquisition or green field or brown field opportunities to expand our platform up there. And into great obviously, all the liquids that would come out of that into our caps and downstream service business. Got it.

Patrick Kenny: And I guess with power prices coming down through the quarter, looks like a bit of a tailwind for GMP margins. Can you just remind us, you know, how much of your power exposure is flowed through? And, you know, if this net tailwind might be enough to offset some of the near term pressures here on margins in the south, just based on a weaker drilling activity. Jamie, they're power experts. Yeah, great. Expert is a relative term, Patrick.

Patrick Kenny: Yeah, great question. But we've been very proactive in managing our power costs in the past. So I wouldn't want there to be a great expectation that you're going to see a significant margin improvement on the gathering processing site, because, you know, we have through physical assets, through some of the PPAs with renewables and with some financial hedging. In my opinion, we've done a very good job of managing the volatility that we've seen for pricing over the last couple of years.

Patrick Kenny: So, you know, I do think that, you know, obviously lower power prices is positive tailwind for industry. And, you know, it will help us as well at certain facilities where we have more electric intensive operations. But to repeat myself, we've consciously managed that in the past few years, in my mind, quite successful. Patrick, you know, maybe just add, you know, on your comment about just our, I think it was just maybe margin and competitiveness in our self portfolio.

Patrick Kenny: I just add that, you know, Jarrod's team is really working hard and specifically opportunities to reduce our cost profile and our, and our self facilities. And again, you know, I think they're making some, some good progress there. That's great.

Patrick Kenny: Maybe the last one for me, just given some of the progress lately that we've seen on the carbon capture front and the industrial heartland, just curious if you had an update on where your partnerships are at, with respect to participating in CCS, CO2 and hydrogen transportation, just any update on the cadence of some of your investment opportunities. Yeah, I mean, we, Patrick, we said this before that, you know, we are very well positioned to provide low carbon services up in that, especially in industrial heartland.

Patrick Kenny: I mean, we have a lot of assets up in that area already with, with pipe and, and we do have some specific pipes that can transport both carbon and hydrogen. So, you know, when the demand is there, we can, we can repurpose some of that infrastructure. Obviously, real logistics for low carbon projects are important as well. And we have assets that can help accommodate that. We are, you know, we're still very, we worked very closely with Shell still and I would remind you that the tie-in point for the carbon capture system is just on the north east part of our heartland lands.

Patrick Kenny: So it provides tremendous opportunities for us in the future. Jamie, is there anything else you want to add? No, you know, we're giving other than the fact that during the quarter Shell announced that she knew the Atlas slash Polaris project, which is, you know, we're, we're very positive in that, as Dean said, given the proximity of the pipeline that feeds the well that disposes of that carbon. So, you know, we continue to have conversations with Shell, but also more importantly, customers that might look to locate their low carbon projects in the future on our Joseph bird lands.

Patrick Kenny: And as Dean pointed out is that, you know, the location of the land, but it's not just carbon. It's water supply, it's the rail, egress component, and it's the connectivity that this, you know, differentiates our piece of land up in the heartland.

Patrick Kenny: Okay, that's great. Thanks everybody. Only bit there. Thank you.

Operator: And your next question comes in the line of age, a day, old and old from PPH. Please go ahead.

AJ: Hey, good morning, guys. Just wanted to go back up to the northern GMP and the strength that you were seeing there. This wondering if the volumes are tracking in line or ahead of your expectations, just any additional commentary could provide would be greatly appreciated. Thanks for your question. I'll turn that over to Jamie. Yeah, thanks, AJ. So, yeah, as you pointed out, it's really, really strong outcomes in the NordGMP. And I would say that, yeah, the growth that we've seen is in line with what we expected, but it's extremely positive.

AJ: We've always expected that, certainly based on the expansion that we did at Pipestone, that facility, and that expansion is full. We're getting to the stage now with a small D-bondleneck project that we're going to do at the Waupiti gas plant during turnaround, that we're expecting based on some deals that we've done, that Waupiti is going to get close to full capacity, if not at full capacity, towards the back end of this year.

AJ: And then, you know, alluded to the activity that we're seeing around Simonette and the meaningful conversations that we're having there. And, yeah, so, yeah, you know, our existing assets. And then to Patrick's question before that, I believe it was Patrick, you know, is around, you know, really focusing on the next opportunity up in the North in service of feeding volumes into caps and ultimately into our infrastructure down in the fourth Saskatchewan area. Okay, thanks for that.

Dean Sedebucci: Just one more for me. You know, there's a couple of things that are going on in BC between the Blueberry River First Nations tribe. I'm curious if what's happening there has any impact on discussions, you know, with your producers, or could have any impact on volumes really, you know, downstream on your pipes and pracks. Thanks. Thanks for the question. And, you know, where, where I think the, it has the most relevance would be our zone for projects, a cap zone for project, where we would connect to the BC border.

Dean Sedebucci: And then into North River midstreams, you know, proposed project in BC. And, you know, what I'd say is, first of all, when you look at the big picture from a macro perspective, the geology is very good on the BC side of the border, just like it is in Alberta. So we certainly see more development in BC, you know, yes, there's still some some some challenges, I think, with, you know, producers, the government and the first, the blueberry group as well.

Dean Sedebucci: But I believe that, you know, they will come to some resolution, it might take a bit of time. But I do want to emphasize that the customers that we're talking to and the areas that we are focused on are outside of that, a heart of that blueberry area. So we still believe that, you know, our project is still very attractive, and it's not really contingent on that resolution happening. Thanks for the color, guys. That's it for me. Thank you very much. Thank you.

Fan: And your next question comes from the line up fan from the M.O. Please go ahead. Hi, thanks for morning. And when you add, add up all the projects you've all highlighted. Turners called the frack expansion, some greenfield stuff, and something to mount me. Are you supposed to share a total investment opportunity and where returns can lie in the ranges that you've highlighted in the past? Yeah, yeah, so the question is just the projects that we've discussed with our Fract and Zone 4, are they going to be in our investment return range?

Fan: Yeah, I just say that, you know, these are the ones that are, you know, we're advancing and we're very, I guess, openly discussing them. I would say that behind the scenes are other opportunities that we're pursuing as well. And, but, you know, maybe, I think you can speak specifically the returns on these three projects. Yeah, as we've, you know, said before, we've put out that 10 to 15% ROC as a target and we certainly are looking to achieve the higher end of that range on a standalone basis, basis, but it's also beyond that it's the integrated nature of the returns and that the key I mean, now we have the full system where we can attract returns and compound returns through the entire system, including marketing and that's that's certainly our advantage.

Fan: And when we think about these projects, so the 67% EBITDA guidance that we had provided to 2025, that's outside of these projects, so adding these types of projects just help us to continue to extend the growth into the future.

Dean Sedebucci: Can you can you also add my question to is was also just total capex anyway to express it per annum or total capex opportunity. We will likely provide a guidance in December, once we get, I think the big thing here is we're still waiting on, you know, cost information for whether it's fracturing the bottleneck as well as zone four, so we will provide an update on on growth capex. You know, longer term, a longer run rate for that with our December update. Okay.

Dean Sedebucci: And maybe can you, there's been some, some rumblings of data centers coming to Alberta, especially over the last week for Saskatchewan, digmonton. Are you able to share from your sort of things your commercial group is any discussions you've had? How do you think you're a position is this more to solve region that could benefit and is do you think this is something like a cold of gas? Sort of opportunity in terms of BCF per day.

Dean Sedebucci: Yeah, I mean, you know, it's not something we can speak specifically about today, but we do think it's an opportunity. You know, I think about it. I mean, we just have an abundance of natural gas. The cool ambient temperatures in Alberta certainly help with the with the data centers. In a lot of areas of Alberta, we have great fiber optic network. So yeah, I mean, certainly we look for opportunities where, you know, we can. Connect our system to high value demand areas, which could be more power to data centers. Okay, Carter, thank you. Thank you very much. Have a good day.

Operator: Thank you that there are no further questions at this time.

Dan Cuthbertson: I will now hand a call back to Mr. Dan Cuthbertson for any closing remarks. Thank you very much, everyone, for joining us today. Please feel free to reach out to our Invest Relations team with any additional questions.

Dan Cuthbertson: We hope everyone enjoys the rest of the summer. Thank you.

Operator: Thank you, and this concludes today's call. Thank you for participating. You may all disconnect. Thank you.