Q3 2024 Keyera Corp Earnings Call
Good morning, My name is Joe well and I will be your conference operator today at this time I would like to welcome everyone to key Erez 'twenty 'twenty four third quarter conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would.
To ask a question during this time simply press Star then the number one on your telephone keypad.
If you would like to withdraw your question. Please press star followed by the queue. Thank.
Speaker Change: Thank you I would now like to turn the call over to Dan Cuthbertson General manager of Investor Relations you may begin.
Dan Cuthbertson: Thanks, and good morning, joining me today will be deemed set of Gucci, President and CEO I leave Mark our senior Vice President and CFO, Jamie Urquhart, Senior Vice President and Chief Commercial Officer, and Jared, but Tony Senior Vice President operations and engineering.
Dan Cuthbertson: We'll begin with some prepared remarks from gene and Eileen after which we will open the call to questions I'd like to remind listeners that some of the comments and answers we will 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. In addition, we will refer to some non-GAAP financial measures.
For additional information on non-GAAP measures and forward looking statements. Please refer to <unk> public filings available on SEDAR and our website with that I will turn the call over to Dean.
Thanks, Dan and good morning, everyone.
Dean: We're pleased to deliver another solid quarter driven by strong performance from all three business segments.
Dean: We remain well on track to reach the upper end of our 6% to 7% EBITDA growth targets.
In our gathering processing segment, we delivered $99 million and realized margin.
Dean: This result was sorted supported by near record quarterly throughput from our North region up 15% year over year.
Dean: This included the partial impact of our turnaround at the Wapiti gas plant.
Dean: Our liquids infrastructure segment delivered its second highest quarter ever with $135 million in realized margin.
Dean: Driving this performance was the continued ramp up of caps and growing demand for fractionation storage and condensate businesses.
Our marketing statements.
Dean: You need to perform well generating $135 million in realized margin.
Dean: The increase relative to last year was due to higher propane condensate and isooctane sales volumes and margins.
Dean: Our marketing segments is a distinct competitive advantage.
Dean: <unk> cash flow from this physical business has enabled us to consistently deliver above average after tax corporate returns.
Dean: This cash flow has been reinvested into long life infrastructure projects in.
Dean: In turn driving growth in high quality fee for service cash flow.
Dean: We continue to advance capital efficient growth opportunities.
At <unk>, we have ordered long lead items for an 8000 barrel per day debottleneck of our Frac two.
Dean: We expect to officially sanction the project and the early part of 2025 to achieve an in service date late in 2026.
Dean: We continue to advance customer contracting and engineering on TFS Frac III.
Dean: This project would add about 47000 barrels per day of additional capacity.
Dean: Together. These two projects will increase our overall net fractionation capacity by about 60%.
Further strengthening our integrated value chain.
Dean: And our ability to service customers.
Dean: We finished the quarter and a very strong financial position.
Dean: This gives us tremendous flexibility to deploy capital in a matter that is most value accretive for shareholders.
Dean: Today, we announced that we will be seeking approval for share buybacks.
Dean: This will be used opportunistically and we carefully against other options for deploying capital.
Dean: As we said before.
Dean: Based on the opportunities we see our preference is to invest in.
Dean: And continuing to grow our integrated platform in Western Canada.
Dean: I'll now turn it over to Aileen, who will provide an overview of our financial performance for the quarter and speak to our guidance for 2024.
Aileen: Thanks, Dean net earnings were $185 million compared to 78 million for the same period last year.
Aileen: Adjusted EBITDA for the quarter was $322 million compared to $288 million for the same period last year.
Aileen: Distributable cash flow was 195 million or <unk> 85 cents per share compared to 186 million or <unk> 81 per share for the same period in 2023.
Aileen: These results were mostly driven by higher year over year contributions from all three business segments.
Aileen: We continue to maintain a strong financial position exiting the quarter with net debt to adjusted EBITDA at one nine times below our targeted range of two and a half to three times.
This positions us well to pursue opportunities that will continue to enhance shareholder value.
Aileen: Moving on to our guidance for 2024, we are reaffirming our marketing segment realized margin range at 450 million to $480 million.
Aileen: Capital for 2024, it is expected to come in at the high end of our previously guided range of 80 million to 100 million. This includes capital for it the Frac expansion.
Aileen: And additional plans for new customer volumes at the Wapiti gas plant.
Aileen: Maintenance capital remains unchanged at between $120 million and $140 million.
And lastly, cash taxes or to remain in the range of 90 to 100 million I'll now turn it back over to Dean.
Dean: Thanks Ali.
Speaker Change: Based on volume growth is materializing.
Speaker Change: This is evidenced by our growing fee for service cash flow.
Speaker Change: We're also seeing strong future demand for our services, allowing us to move forward with capital efficient growth projects.
Speaker Change: This continued growth supported by key developments, including T. M. Ex LNG, Canada are growing petrochemical industry and increasing LPG exports off the west coast of Canada.
Speaker Change: As an essential infrastructure service provider.
Speaker Change: <unk> will continue to play an important role in enabling basin growth.
Speaker Change: On behalf of <unk> Board of directors and management team.
Speaker Change: I want to thank our employees customers shareholders indigenous rights holders and other stakeholders for their continued support.
Speaker Change: With that I'll turn it back to the operator for Q&A.
Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the one on your Touchtone phone.
Speaker Change: You'll hear a prompt that your hand husband race should you wish to decline from the polling process. Please press.
Speaker Change: The star followed by the Q.
We are using a speaker phone please lift the handset before pressing any keith.
Speaker Change: First question comes from Rob Hope with Scotiabank. Your line is now open.
Rob Hope: Good morning, everyone.
Speaker Change: My first questions out of Q3 can you give maybe a little bit of color on how contracting discussions are they are previously you did speak to the potential that this could be sanctioned early 2025.
And then also have you started to order any equipment related to this project as well.
Speaker Change: Yes, good morning, Robyn Thanks for the question.
Frac demand in Western Canada is extremely tight.
Speaker Change: And so right now our fractionator is very full.
Speaker Change: As we've been talking about we certainly see a lot of growth in the basin with LNG, Canada, certainly a lot of demand for condensate with growing volumes on <unk>.
Speaker Change: And with that we just see a lot more natural gas development and part of that natural gas development, it's going to be weighted to liquids rich areas, which is going to drive more fractionation demand. So the point I'm getting to is that we see a lot of demand not only for our existing product, but for our future frac capacity. So we continue to advance that project and <unk>.
Speaker Change: Contracts, but.
I'll turn it over to Jamie and let him add any other comments on top of that yes, thanks, Dean and thanks for the question Rob.
Jamie Urquhart: I think the only thing that I can add from a factory perspective is.
Jamie Urquhart: Is that we've completed pre feed that was completed in the quarter and we proceeded immediately into feed.
Jamie Urquhart: And.
Speaker Change: As Dean alluded to and I can just reaffirm that we're very pleased with the progress that we've made on commercial contracting and as such we are gaining more confidence that we'll be able to move ahead with both those projects in 2025.
And I might also add Rob what we feel good about is that we're basically cloning, our frac two and a lot of ways. So it makes the.
Speaker Change: Just less less unknowns with respect to engineering and construction. So we feel very very comfortable the way that side of the project is advancing.
Speaker Change: Alright, good and then maybe just turning over to the optimization.
Speaker Change: Looks like you are moving forward with a number of small project that brazeau and wapiti as you've progressed through 2024 have you seen.
Speaker Change: The amount and magnitude of these smaller high return.
Speaker Change: Capital projects increasing is that.
Is that really the reason why the Capex is moving up towards the upper end of the band.
Yes first of all I mean.
Speaker Change: As we grow.
Speaker Change: We have to be very disciplined about optimizing our portfolio. So that we can focus our attention that our capital too.
Projects that are strategic to our long term vision.
Speaker Change: <unk>.
Speaker Change: So some of the smaller plants they still require a lot of resources that are big flatwoods. So.
Speaker Change: It's better another other people's hands. So we're pleased that we're able to.
Speaker Change: I guess consolidator and high grade our portfolio, but we do see a lot of great opportunities both in our north portfolio and also in ourselves.
Jamie Urquhart: Jamie I have anything else you want to add the only thing I'd add to that is as you keyed in on Rob is that we have specific hurdle rates that we need to meet for those smaller projects in all of the projects that we're working on right now that are frankly, driven by customer demand and increased utilization opportunities our facilities dates they all hit or.
Seed those hurdle rates.
Speaker Change: Thank you.
Speaker Change: Your next question comes from Northeast Chau with RBC capital markets. Your line is now open.
Speaker Change: Thanks, and good morning, everyone maybe to stick with.
Speaker Change: Hurdle rates and also moving the Frac projects you previously highlighted the importance of underpinning projects with long term contracts where to take or pay volumes supported 10% to 15% pretax.
Speaker Change: Doug I oversee.
With upside after that.
Speaker Change: From the spot volumes fall on contracts for marketing activities.
Speaker Change: Would that still be the case for these two projects as well as any future projects that you do.
Speaker Change: Hey, good morning, Marty.
Speaker Change: Thank you for the question.
Speaker Change: First of all yes.
Speaker Change: Thats generally true for our infrastructure projects and our Frac project it would be no different.
Speaker Change: We've been very we issued an update at the beginning of the year in terms of the contracting that we did there.
Speaker Change: On our frac, but our whole integrated system.
I am pleased with.
Speaker Change: The forward progress we've made on additional contracting since then.
Speaker Change: So we feel we feel pretty good about where we stand today and in our path to sanction. This project next year.
Speaker Change: And when we think about our whole system, we have integrated system and right now the biggest bottleneck is that our frac. So it makes a lot of sense that we're focusing a lot of time and attention and theres a lot of demand for that part of our service. So again everything continues to advance both on the Debottleneck in the Frac III.
Speaker Change: And we think both projects will generate strong returns for us.
Individual basis and on an integrated basis.
Speaker Change: Understood and if I can finish off with a question about volumes in your outlook for both GNP and ally.
Speaker Change: Obviously, any GPU front, the noss record volumes on near record volumes, but lower than a seller.
Speaker Change: And thoughts on the volumes on this part of the business given the lower gas prices and on the air.
Speaker Change: I cite anything outside of the Frac volumes that you could comment on on what you see in volumes.
Speaker Change: Yeah, well generally I mean, as I said before I mean, we're very optimistic about the growth for natural gas in our basin.
Speaker Change: We see the end of the decade.
Speaker Change: Getting to that five or six Bcf a day of growth, which is very significant and we think a lot of it is going to happen along the montney fairway, where we have a very good footprint up there, but at the same time.
Speaker Change: I really believe that setting aside where natural gas is today and where it's been in the summertime.
Speaker Change: With all this additional demand it is going to compress differentials.
Speaker Change: We will see more drilling and herself keep in mind that.
Speaker Change: Our sales portfolio. These are very mature assets.
Speaker Change: Earlier are almost fully depreciated so.
Speaker Change: We think that we can attract value down there in <unk>.
Speaker Change: It'd be very competitive with our with our service. So I think over time over the next five or six years, we are going to see growth in both areas but.
Jamie Urquhart: Jamie Yes so.
Speaker Change: The only thing I'd add there is is that we had previously announced in previous quarters at one of our customers had decided to shut in some gas behind the Brazeau River gas plant that gas has been.
Brought back and so our expectation in Q4 is that we're going to we're going to see an uptick in utilization primarily at the Brazeau River facility, a little bit at northern <unk> as well, but the other point I would like to make is that we still continue to be extremely encouraged by the development in the duvernay around <unk>.
Speaker Change: Some significant land sales in the last couple of weeks that point too.
Speaker Change: Some of the existing producers are new entrants don't know because it was behind the broker based similarly view and are very excited about the duvernay and so we.
We're starting to see some additional volumes behind a roomy gas by in particular, which is very well suited based on its ethane and ctrip plus extraction capabilities.
Speaker Change: So that's an area in the south that we continue to be extremely excited about in the future.
Speaker Change: Just as a quick follow up if you could just parse out the potential recovery in itself.
Speaker Change: Are we talking about it in a matter of like you know a couple of quarters or is it more about waiting until the LNG, Canada fully ramps up before receive appropriate itself.
Speaker Change: Yes, well I guess it will it will depend on how quickly gas prices bounce back in but also just the fundamentals of this is still relatively with liquids rich.
Speaker Change: Actual gas and our facilities in the south for the most part have high liquids recovery. So.
Speaker Change: Yes.
Speaker Change: I think the worst is behind us with respect to any reduction in utilization we've seen in the south.
Speaker Change: The utilization rate, where utilization impact is not that significant frankly.
Speaker Change: Yes, I think to Jamie's point I mean, we think its pretty positive that the duvernay is what can be pretty pretty commercial development.
Speaker Change: And so it's still in the very early stages and <unk>.
Speaker Change: Continues to get developed I mean, it's going to be just another play behind our facilities that is more oil weighted.
Speaker Change: <unk>.
Speaker Change: Like the Montney, So I think youll see.
Speaker Change: Less sensitivity to natural gas prices as the Duvernay gets gets developed.
Speaker Change: And just a reminder, I mean.
Speaker Change: Randy gas plant as a turbo expander gas plants with 200 million a day of Unutilized capacity, So, let's just like a.
Speaker Change: Like a full train of capacity that we have available down there to provide that service.
Speaker Change: Thank you very much.
Speaker Change: Thank you.
Speaker Change: Your next question comes from Spiro <unk> with Citi. Your line is now open.
Speaker Change: Thanks, operator, good morning team.
Speaker Change: Wanted to start with the buyback really quickly if we could add dean you made it pretty clear that the preference on capital allocation is for growth.
Certainly you've got several projects in the hopper here in front of it but I imagine this isn't an either or situation between those two choices and there will be some opportunities to weave in buybacks.
Speaker Change: From here, so just really want to get a better understanding of maybe some of the conditions you'll be looking for you to lead you to execute on that buyback.
Speaker Change: Hey, good morning, Spiro and thanks for the question overall.
Speaker Change: Overall, I will say, what we're here to do is to add value for our shareholders.
Speaker Change: The great thing is is that we're in enviable position with our balance sheet.
Speaker Change: So we have a lot of opportunities to do that but.
We see a lot of growth potential with what we see from the just the growth that's going to happen in the basin and the discussions we have with our customers. So we see some pretty good opportunities there, but I'll just turn it over Thailand for her comments. Thanks Spiro Thanks Dean.
Speaker Change: Yes, not too much to add to that I mean, it's nice now that we have the tool available to us. So that this is something that we look constantly be weighing against other capital allocation opportunities.
Speaker Change: Back to where we're at Dean was talking about we are in an enviable position our balance sheet strength is a competitive advantage and when you combine both the balance sheet with the growth we see in the basin.
Speaker Change: There's just so much opportunity to deliver high returns for shareholders, but at the end of the day our goal is unchanged.
Speaker Change: Capital to the highest value option, whether that be organic inorganic growth and now we have the ability to do buybacks when it makes sense.
Got it great and then I know you just touched on my second question, which is around inorganic growth.
Speaker Change: Seen some M&A activity over the last quarter with one of your peers. So just curious maybe just to get your updated thoughts on the M&A landscape for you and maybe some types of assets you would have an appetite for it right now.
Yes. Thank you for the question Spiro and.
Speaker Change: With our integrated platform, we see opportunities across.
Speaker Change: That asset base, where we can enhance it and create a more valuable service for our customers more competitive service as well so.
Speaker Change: We can talk specifically about anything that we may be interested in but I can say that.
Speaker Change: We think that there might be some opportunities that come forward, but we'll always be extremely disciplined.
Speaker Change: We need to make sure we're creating value with anything we do in.
Speaker Change: The great thing is.
He just said is that we have the optionality with our strong balance sheet that if.
Speaker Change: If we see something we really like at the right price.
Speaker Change: Can we can transact on it.
And add value.
Speaker Change: Great I'll leave it there for today.
Speaker Change: Thanks have a good day.
Your next question comes from Robert <unk> with CIBC capital markets. Your line is now.
Speaker Change: Wow, that's a first.
I just want to.
Speaker Change: Just ask you about zone four in light of the strong Franco look do you view the.
Speaker Change: Track, three or even the frac to debottleneck.
Speaker Change: Contingent on his own forward moving forward or the opposite you see some forward contingent on the Frac expansions.
Speaker Change: Yes, good morning Robyn.
Rob Hope: That's a great question.
Rob Hope: You know jamie's team has been very active.
Rob Hope: Contra, adding contracts for our Frac service.
Rob Hope: So I would say independent and that's obviously independent of zone four because we haven't sanctioned it yet.
So I'll, let Jamie maybe speak to that but overall again, we really like.
Jamie Urquhart: Just the momentum that we have in the basin with the growth that we see the growth outlook, we see.
Jamie Urquhart: And including for zone four in zone four happens that would have helped feed more volumes to the frac as well, but Jamie one add to that not much to add frankly.
Speaker Change: I think as Dean said is as we view Frac tree.
Speaker Change: Its not contingent on zone four proceeding, but we certainly see the Frac is a differentiator in order to attract customers.
Speaker Change: That would be.
Speaker Change: Capstone has one through three ore zones for as well.
Speaker Change: Okay that makes sense and then.
Speaker Change: Just going back to the big picture the macro outlook on volumes here.
Speaker Change: How does your view of the basin growth change if LNG, Canada doesn't make enough idea on phase II for a few years.
Yes, that's a good question.
Speaker Change: I think that overall, if it's two years off.
We just look at the longer term.
Speaker Change: Macro and if something is off by a year or two I mean does that really change anything the big picture I don't think so.
Speaker Change: I just look at the the logic of.
Speaker Change: Utilizing our base in our industry.
Speaker Change: Selling the full capacity of coastal gas link it just makes a lot of sense with all the advantages that we have to to export LNG also west coast of Canada and again. This is this is some of the lowest carbon LNG, that's going to ever at the market on the waterborne market. So I think it's a very attractive.
Speaker Change: Source of energy and the advantages are obviously theres less shipping time to get it across to Asia. So.
Speaker Change: It just seems to be a tremendous amount of logic for us to be.
Speaker Change: Maxing out the capabilities of at least.
Speaker Change: Coastal gasoline pipeline and hopefully there'll be more pipelines build beyond that.
Speaker Change: Cheap.
Speaker Change: Most competitive resource quick time to market low carbon it seems like.
Speaker Change: Seems like it should move forward.
Then to the.
Speaker Change: Over to me and CIB.
Speaker Change: Yes.
Speaker Change: I understand the.
Speaker Change: Opportunistic nature of the.
Speaker Change: The plan and why that makes sense for you I'm just curious about.
Speaker Change: What the implications are for dividend growth now that you have these two tools available today, not just dividend growth, but also the option to allocate towards.
Speaker Change: Share repurchases can we still expect dividend growth to follow.
Speaker Change: Fee for service EBITDA growth pretty closely over time or.
Speaker Change: Every dividend decision or dividend growth decision going to be.
Speaker Change: Hi.
Speaker Change: Pretty strictly weighed against fancy Ivy.
Speaker Change: Thanks, Rob for the question.
Speaker Change: 100%, we are a dividend growth company that is first and foremost to and fundamental to who we are so nothing changes in terms of.
Speaker Change: The dividend growing in line with growing our fee for service cash flow and underpinned by our low payout ratio. So absolutely nothing changes there. It's just that now we have the option for <unk>.
Speaker Change: Again weighing it between organic inorganic and buybacks.
Speaker Change: Okay, that's what I thought and congratulations on the momentum and I will turn it back.
Speaker Change: Thanks, Rob.
Speaker Change: Your next question comes from AJ O'donnell with T. P. H. Your line is now open.
Since I was wondering if I could maybe just start.
Speaker Change: Some volumes in the north.
Speaker Change: It seems like Youre seeing some pretty strong growth. There I was just curious about operational leverage that you got to continue some volume growth there I know.
Speaker Change: Maybe some of your plants are running closer to full.
Speaker Change: But could we expect any.
Speaker Change: Additional small projects for optimization, there or do you have the ability to move volumes around between.
Speaker Change: Those four plants up there.
Speaker Change: So thanks for the question Jay.
Yes, we've seen some growth pipestone with our expansion that we executed late last year.
Speaker Change: Pretty much fall.
Speaker Change: I think we've talked about this in the past we've got some ability at wapiti based on the fact that we do actually polson volumes currently north of the Wapiti River up by Grand Prairie, where we do see some potential in the future around how we might want to optimize.
Producer activity and ultimately how we provide our service.
Speaker Change: But we did share with the market this quarter that we've.
Speaker Change: Put in some smaller capital highly accretive opportunities to to increase the utilization of walking that can share with you. This week, we've hit record volumes at the walk Wapiti gas plant and then ultimately as we think about Simon that the.
Speaker Change: The gathering systems that we haven't determined yet.
Speaker Change: Reach into the same areas that feed the wapiti gas plant. So there is no physical interconnection that we have right now similar to where southern assets, but certainly that's something that we've seen value in the past that model in the south and we certainly would look.
And the right opportunity to replicate that in the north.
Speaker Change: And then finally assignment.
Speaker Change: Have identified in 2020 for some opportunities to be able to unlock some opportunities at the simonette gas plant that's.
Speaker Change: Based on some activity by multiple producers down in that area.
Speaker Change: We expect that we'll probably have some meaningful positive things.
Speaker Change: Things to share with the market in 2025.
Speaker Change: Great. Thanks for that I got one more just on marketing.
Speaker Change: You guys left the marketing guidance unchanged.
Speaker Change: 450 to $4 80 for the year, which.
Speaker Change: Kind of implies somewhat of a step down for Q4 relative to last year and Q3. So I was just wondering maybe if you could provide some additional color there and how youre thinking about the business heading into Q4.
Speaker Change: And maybe where some potential headwinds are coming from thank you.
Speaker Change: Yes, so I'm talking a lot on this call.
Speaker Change: But thanks again for the question Adrienne, we really frankly, great question expected it.
Speaker Change: So just as a reminder, step back our marketing segment really utilizes our physical assets our relationship across North America, coupled with a really strong focus on risk management right. So that's.
The foundation of our marketing business.
A couple of thoughts on our isooctane business, which really makes up roughly half of our marketing business.
Speaker Change: Long term fundamentals remain very strong gasoline demand has increased slightly year over year, but more importantly demand for higher octane gasolines used in newer industrial internal combustion engines is growing so that in the long term.
Speaker Change: <unk>.
Speaker Change: Positive on the fundamentals of that part of our business, but in the short term, we expect and we're seeing our Bob cracks and octane premiums to return to more historical levels versus the elevated pricing that we benefited from over the past couple of years.
And there's multiple reasons for that but really it's about getting more balanced in North America supply demand of the octane market. So we.
Speaker Change: We expect that to happen as well.
Speaker Change: Going forward, it's still strong pricing, but not as strong as we would have seen over the last couple of years. So.
Speaker Change: The final point I guess I'd make is we do remain very focused on continuing growing our sales volumes into higher value markets and those are higher priced markets that continue to grow due to some increasing compliance requirements.
But also high valued markets might be lower delivery costs as well and we've been very successful in the last couple of years and growing our sales into those markets.
Speaker Change: Bob.
Speaker Change: All told we remain confident in our 2024 guidance, but also achieving our long term base guidance that we've provided previously.
Speaker Change: Great. Thanks for all the detail.
Your next question comes from Ben Pham with BMO capital markets.
Speaker Change: Your line is now open.
Hi, Good morning, a couple of follow up questions on the two frac projects.
Speaker Change: And what are you expecting in terms of level of contracts.
Speaker Change: For you sanction.
Speaker Change: And are you expecting.
Speaker Change: To achieve those levels before sanction are you willing to move forward and as long as you get those contracts and by the end of 2026.
Hey, good morning, Ben and thank you for the question.
Speaker Change: What I'd say is that the demand for Frac services are our very strong and so we've been adding a lot of long term contracts for that service.
Speaker Change: <unk>.
Speaker Change: I'd, just say that it's commercially sensitive so.
Speaker Change: We're not prepared to divulge sort of where we are on contracting, but I would say that our expectation is that we will be able to deliver a strong return for those investments should they be sanctioned next year.
Speaker Change: Okay got it and can you can.
Speaker Change: Can you remind us.
Speaker Change: That those facilities and the land base you have beyond these two potential projects is there an ability to keep our networks expand potential fourth expansion some future cornerstone.
Speaker Change: That's a great question, Matt It's Jaret here, we do we do have capacity at the existing campus facility to continue to build out Super Frac four happened, we'd certainly have the potential to do that beyond that we do have a very large land base.
Speaker Change: Just east of the Capex facility, where we have 30 minute acres of undeveloped land and heavy industrial zoning, we have most of the salt right. Some excellent connectivity, so very well suited for continued growth in the region as well beyond beyond what we could do at the existing TFS footprint.
Speaker Change: Yeah.
Speaker Change: Okay got it and maybe this question is for.
I'll lean in and can you remind me in terms of the self funded messaging.
Speaker Change: What level of Capex can you fine without needing to tap the external capital markets.
Yes, I think the projects that we've talked about already the fact, the bottleneck the frac III expansion and zone four assuming that those.
Speaker Change: Our sanctioned we can absolutely cell phone that Barry.
Speaker Change: Okay, and then just lastly on the hybrid side of things.
Speaker Change: Is there any room.
Speaker Change: To access that now, especially with <unk>.
Speaker Change: Credit rating actions, you're saying.
Speaker Change: Yes at this time, you know given where our balance sheet is there is no need for us to add more hybrid we certainly have them in our structure and they serve the purpose that at this point, we don't see a need to add any more.
Speaker Change: Okay got it thank you.
Speaker Change: Ladies and gentlemen, as a reminder, should you have a question. Please press star one.
Speaker Change: Next question comes from Patrick Kenny.
Speaker Change: Financial your line is now open.
Thank you and good morning, everyone. I know, we're just at the wire. This morning, but just on this big divestiture by Paramount, including where we.
Speaker Change: Wapiti region.
Speaker Change: I guess I could dovetail listen with just a broader question around consolidation but.
Speaker Change: I'm wondering if you had any thoughts on new.
Speaker Change: <unk> is taking over that your anchor.
Speaker Change: Counterparties for your processing.
Speaker Change: [noise] agreements in the area of how this might change your outlook if at all for being able to accelerate throughput.
Speaker Change: Facilities as well as on the commercial side being able to.
Speaker Change: Locked down those those downstream commitments on both caps and carefirst.
Yes, good morning, Pat and thanks for the question.
Speaker Change: I'm wondering if anyone asked about that.
Speaker Change: First of all we we were not Privy to any of this information and so we read it this morning.
<unk>.
Speaker Change: So what I can say is that we have a very good relationship with with <unk> as we work with them very closely at our Pipestone facility and they have most of the volumes flowing through that facility and that's working out very well.
Speaker Change: Our overall objective is to provide the best service and add value for our customers and.
Speaker Change: Certainly it would be no different for <unk>.
Speaker Change: I think what we see here is.
Speaker Change: The potential because we have three gas plants that are rate embedded within their existing lens.
And the lines that they are acquiring and thats with our pipestone wapiti and <unk> facilities.
Speaker Change: So with a footprint like that I think that will have the potential to offer them a lot of optionality in terms of how the how they develop those land over time.
Speaker Change: So again, we think that could be of value.
Speaker Change: AD as a service for <unk>.
Speaker Change: So we'll work very closely with Brendan and his team again too.
Speaker Change: Sure that this acquisition is a success for them.
But at this point, we haven't had any discussions with them at the same time we.
Speaker Change: Worked with Paramount in the region for <unk>.
Speaker Change: Number of years now.
Speaker Change: We will certainly work very closely with Jim and his team as well too to make sure the transition goes very smoothly.
Speaker Change: Okay. Thanks for that and maybe as a related question to you and I know the turnarounds are largely flow through.
Speaker Change: But just given the distraction and while pretty turnarounds take about a week longer than expected.
Speaker Change: I think you touched on it last call, but if you could just remind us.
Speaker Change: If these delays were more supply chain related.
Maybe late labor productivity issues.
Speaker Change: Or just how youre thinking about resetting expectations for timing around your planned turnarounds into 2025 and beyond.
Speaker Change: That's a great question, Todd it's Jaret here.
Speaker Change: Both turnarounds took longer than expected.
Speaker Change: We know that extended downtime as an impact on our customers count on us to be running when we say we will in the case of striking that was really around some found work, which is which is always the risk of a turnaround. We did find some additional repairs required that that was really the bulk of the extra time at wapiti. It was our first full turnaround there and we completed a number of projects to increase Roe.
Speaker Change: Ability and utilization there and we have some found work as well and also some challenges with some of the initial equipment preparation and productivity throughout but that's really what it's about extension. So I think a key part for us of our whole turnaround program is learning and all of our turnarounds get a comprehensive what back similar to what you might do on our capital.
Speaker Change: Project and really to understand.
Speaker Change: But we want to repeat and where can we improve.
Speaker Change: Okay. Thanks for that Jerry maybe last one just a quick follow up for Jamie on your.
Your marketing comments there I appreciate the color into Q4, but.
Speaker Change: Just wondering you know as you think about coming out with the guidance for 2025 in early December.
Speaker Change: You gave a good rundown of how youre thinking about the isooctane business could you just bolt on a few comments.
Speaker Change: Whether or not youre seeing macro tailwind or headwinds at this point.
For the propane business as well as the crude and condensate as well and whether.
Speaker Change: Whether or not.
Speaker Change: Some of the volume tailwind.
Speaker Change: Youre seeing across your asset base might also support an upward bias going forward relative to that long term normalized rate.
Speaker Change: Yes, I think thanks for the question Pat.
Speaker Change: So spoke to isooctane.
Speaker Change: Hi.
Speaker Change: As Dean alluded to is that it can mean.
Speaker Change: Globally, we just see a poll from the Western Canadian Basin with respect to all of our hydrocarbon.
Speaker Change: Molecules.
Speaker Change: We have a fantastic.
Speaker Change: <unk>.
Speaker Change: I would say.
Speaker Change: Best in class.
Speaker Change: Connectivity for <unk> four.
Speaker Change: C. III has been a focus for us with respect to being able to ensure that our customers have access to.
Speaker Change: The highest selling market.
Speaker Change: That doesn't mean, just one market, though because the dynamics will change there is.
Like any commodity cycle and any.
Speaker Change: The basis.
Speaker Change: There will be times, where certain markets are higher value than others and so our model has always been to have the ability to touch all markets.
Speaker Change: We've worked really hard in 2024 to set ourselves up to be able to create that offering for our customers So and.
And with that we will be able to touch more molecules molecules to your point and ultimately be able to continue to make the historic margins off of those volumes that we touch that just maybe if I can expand on Jamie's comments Pat is again when I look back to the macro we see a lot of growth in the basin.
Speaker Change: And with our integrated system.
Speaker Change: That is going to end up back at Fort Saskatchewan, a lot of those Ngls that we see that it didn't get extracted from future growth.
Speaker Change: So there are two additional frac projects.
Speaker Change: End up with more spec products in Edmonton, and Fort Saskatchewan, and so we're a supply base space and so most of that product incremental product is going to have to.
Speaker Change: Clear to a different market and we have the assets that can get product to the highest value markets.
Speaker Change: And so I think about our marketing business a lot of it is really a logistics business.
Speaker Change: And we're just trying to find that product thats oversupplied in Western Canada, and we're taking it to a higher value market. So we're going to have opportunities obviously to <unk>.
Generally the margin and physical margin off of that.
Speaker Change: Generally we make more money in a higher price environment than a lower price environment, but I would say is as crude has softened a little bit.
Speaker Change: The FX the Canadian U S. FX has widened so.
Speaker Change: There was an offset to that as well. So overall I think the market isn't isn't too bad maybe not as high as what we've seen last couple of years, but generally.
Speaker Change: I think the conditions are relatively positive.
Speaker Change: Okay. That's great I appreciate all the color I'll leave it there.
Speaker Change: Thank you.
Speaker Change: There are no further questions at this time I will now turn the call over to Dan Cuthbertson for closing remarks.
Dan Cuthbertson: Thank you all once again for joining US today, please feel free to reach out to our Investor relations team with any additional questions I hope everyone has a great day.
Speaker Change: Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines.
Speaker Change: Yeah.