Q1 2025 Gibson Energy Inc Earnings Call
A a a a a a a a a a a a a
Thank you, Haley. Good morning and welcome to our first quarter earnings call. Joining me on the call this morning from Gibson Energy are Curtis, Philpon, President and Chief Executive Officer, and Riley Hicks, Senior Vice President and Chief Financial Officer.
We also have the rest of the senior management team in the room to help with questions and answers as required.
Listeners are reminded that today's call refers to non-GAT measures, forward looking information, and a subject to certain assumptions and adjustments, and may not be indicative of actual results.
Descriptions and qualifications of such measures and information are set out in our Investor presentation available on our website and our Continuous Disclosure Documents available on Cedar Plus. Now I would like to turn the call over to Curtis.
Curtis Philippon: Thanks Beth. Good morning and thank you for joining us to discuss our first quarter financial and operating results. I'll begin with a key highlights from the quarter. Our progress on strategic goals and overview of financial performance and priorities ahead before turning it over to Riley for a detailed review of our results and positions.
Curtis Philippon: The first quarter marked a strong start to the year, including a new record for infrastructure adjusted EBITDA. Our strategy in 2025 is anchored in five core themes, safety, delivering on gateway, growth, cost-focus, and building high-performance themes.
I'm pleased to report strong momentum across all five.
[inaudible]
Curtis Philippon: A prod update that we have recently celebrated 9 million hours without a lost time injury, and on a rolling 12-month basis, we set a new Gibson record for total recordable
Curtis Philippon: Safety's foundational to our success in this performance underscores the team's commitment.
[inaudible]
Curtis Philippon: Gateway, our export terminal on Ingliside, saw record volumes this quarter, supported by new supermajor customers. This is achieved even with partial dock restrictions due to dredging work.
Curtis Philippon: We're pleased to report that the Dredging Project was completed safely on time and on budget, positioning Gateway as one of only two Texas terminals able to load 1.6 million barrels on a VLCC or fully load a Suez-Max vessel.
Curtis Philippon: The Cactus-2 Connection Project remains on track for Q3 2025 completion and will add approximately 700,000 barrels per day of supply capacity to our terminal.
I'm sorry. I'm sorry.
[inaudible]
Speaker Change: Our overall growth strategy continues to focus on expanding our stable crude oil infrastructure platform. In Q1, we achieved a record 155 million in infrastructure adjusted EBITF, driven by a full-quarter contribution from NewTanks with Sonovus in Edmiston and Records Group of Gateway.
Curtis Philippon: In March, we announced the Strategic Partnership with Batex to develop infrastructure in the
Curtis Philippon: Their 10-year take-or-pay and area dedication agreement will deploy approximately $50 million in upstream oil batteries and gathering lines at an established rate of return.
Curtis Philippon: Batex will construct and operate the infrastructure with all crude volumes flowing through Edmonton Terminal. The project is on track to be in service by the year end 2025.
Curtis Philippon: Both Gibson and Bate XC opportunities to expand this partnership, and we're excited by the growth potential this model presents, leveraging our terminals to work closely with our customers and deliver scalable infrastructure solutions.
Curtis Philippon: On cost-focus, we set an ambitious company-wide goal to realize over $25 million in cost savings.
Curtis Philippon: In Q1, we internally launched the We Are All Owners Initiative to engage employees in implementing savings opportunities. We set a target of at least 50% employee participation.
Curtis Philippon: In the end, nearly 400 people action the saving initiative, representing the participation of almost 80% of our team.
Curtis Philippon: And it made a significant contribution to the overall cost campaign to date. To date, we have implemented over $18 million of cost savings well in our way to exceeding the $25 million
Curtis Philippon: People are the center of our success, and I'm pleased with the progress we've made across the organization on people and team alignment.
Speaker Change: Later this month, we'll welcome Dave Goss, as our new SVP and Chief Operating Officer. Dave brings deep experience and operational leadership, including his President of Energy Transfer Canada. In this role, he will lead all aspects of operations, engineering, supply chain, and environmental health and state speed.
[inaudible]
[inaudible]
Speaker Change: Q1 results reflect the strength of our infrastructure business and focus on execution. We reported $142 million in adjusted EBITDA and 91 million in a distributile cash flow with infrastructure performance offsetting muted marketing
Speaker Change: Infrastructure led the way with record volumes that both Edmonton and Gateway helping offset temporary docked orages due to direct dredging.
Speaker Change: Marketing results were in line with the break-even guidance we provided on our Q4 2024 call.
Speaker Change: Both the infrastructure segment and the overall consolidated results were positively impacted by the success of our cost focus campaign. We realized $6 million that both were occurring and non-recurring cost savings this quarter boosting the distributor's cash flow by 7% per share.
Speaker Change: Looking ahead, as we execute on gross capital projects, we'll also be deploying our largest ever maintenance capital program. This includes turnaround at both Moussa and the hardest D.R.U. during the second quarter, as well as required maintenance that selects terminal assets in both the second and third quarter.
Speaker Change: While the impact is not material to our infrastructure business, given these are all operating assets, we do expect some resulting interruptions during the quarter. The team is prepared well over the last year, and we're looking forward to the safe execution of these turnaround and some enhanced capabilities of our assets going into the third quarter. We're looking forward to the next quarter.
Speaker Change: In summary, we delivered a strong first quarter that reflects discipline, execution, operational momentum, and our focus on long-term value creation. I'll now turn the call over to Riley for more details on our financials.
[inaudible]
Riley Hicks: Record infrastructure adjusted EBITDA of $155 million in the first quarter was $3.5 million higher than the same quarter last year.
Riley Hicks: Driven primarily by record throughput at both gateway, achieved despite minor interruptions at the terminal due to our recently completed dredging project, and Edmonton, which benefited from a full-quarter contribution from two new tanks constructed for Sonolas and backs up by 15 year agreements.
Riley Hicks: Outperformance within the segment was also driven by the impact of cost savings initiatives realized within the quarter.
Riley Hicks: Turning to our marketing segment, adjusted EBITDA was break even for the first quarter. In line with the outlook we provided on our last quarterly call and a $33 million decrease from the first quarter of 2024.
Riley Hicks: The crude marketing business was impacted by sustained, elevated demand for Canadian heavy oil, resulting in persistent, steep backwardation and narrow differentials, thereby limiting storage, quality, and time-based opportunities within the quarter.
Riley Hicks: While we are seeing improvements in the crack spreads impacting a refined products business, these gains were offset by a seasonal reduction in demand for actual products, as well as the continued strength of the WCS differential, impacting our fee soft-costs at the facility.
[inaudible]
Riley Hicks: In terms of our marketing outlook for the second quarter, and the remainder of 2025, we are beginning to see some fundamental improvements within the market, especially with respect to our refined products business, as crack spreads have started to normalize, and we will benefit it from the seasonal increase in demand for asphalt-based products.
Riley Hicks: That being said, our upcoming turnaround at the Mooster Up Facility will impact our sales volumes through the second quarter, limiting the near-term impact of the improving fundamental outlook.
Riley Hicks: As such, when all factors are considered, we anticipate adjusted marketing EBITDA of $0 to $10 million for the second quarter.
Riley Hicks: Looking further into the year, we'll reduce the more constructive market than we have during the past two quarters. We forecast annual contribution from our marketing segment to be below our long-term guidance and within a range of 20 to 40 million for 2025.
Thank you.
Riley Hicks: Overall, on an adjusted EBITDA on a consolidated basis was $142 million in the first quarter. The $28 million decrease from the first quarter of 2024 primarily a result of lower contributions from the marketing segment and other previously mentioned factors.
Riley Hicks: Turning to Distributable Casual, Gibson generated approximately $91 million in the first quarter, a $24 million decrease relative to the first quarter of last year.
Riley Hicks: Consistent with previous commentary, the Delta was driven largely by lower marketing results and partially offset by increased infrastructure EBITDA and the impact of $6 million of cost savings initiatives realized within the quarter.
Riley Hicks: As Gibson has done today, we remain highly focused on adhering to our financial governing principles, which include maintaining a strong balance sheet, remaining fully funded for all-girled capital, and ensuring our dividends are fully covered by stable, long-term, take-or-pay cashews from our infrastructure segments.
Riley Hicks: As of the end of the first quarter, our debt to adjusted EBITO was 3.7 times, slightly above our 3-3.5-target range, while our consolidated payout ratio was 77% within our 70-80% target range.
Riley Hicks: On an infrastructure-only basis, both leverage of 3.6 times and payout of 73% were below or targets of less than 4 times and less than 100% respectively.
Riley Hicks: Well, consolidated leverage and pale are elevated. This is primarily a reflection of softer marketing segment performance and higher interest expenses.
Riley Hicks: We continue to view the factors impacting our marketing business as temporary, and we remain firmly committed to our financial governing principles moving forward.
Riley Hicks: We also remain to our capital allocation philosophy, which is focused on deploying growth capital towards high-quality infrastructure products, maintaining a solid balance sheet, and repurchasing shares with any excess cash flows.
Riley Hicks: As we previously communicated, given our capital program is heavily rated towards the first half of the year, we would be targeting any potential share buybacks in the second half.
Riley Hicks: With the significant market and geopolitical uncertainty we are seeing, we will continue to monitor our financial performance, leverage, sanctioned growth capital and our marketing outlook as we further assess the opportunity to execute this program and we continue to remain firmly committed to our key financial governing principles.
Curtis Philippon: I will now pass the call back to Curtis for some closing remarks.
[inaudible]
Curtis Philippon: Thank you, Riley. In summary, we're pleased to start at 2025 off with a strong quarter and a clear path to long-term growth. Record quarterly infrastructure even had driven by all-time high volumes of both Gateway and Edmonton. The marketing segment has been muted. We see this as temporary and we are already seeing signs of improvement. We are now seeing signs of improvement. We are now seeing signs of improvement.
Curtis Philippon: Although overall leverage currently exceeds the upper end of our target range, the pressures on the marketing segment are transitory, and we remain firmly committed to our financial governing principles and our focus on returning leverage to within the target range.
Curtis Philippon: Finally, putting our team in place and safely completing the Dredging Project are important milestones for Gibson, positioning us for a strong finish to the air.
Curtis Philippon: I will now turn the call over to the operator to open it up for questions.
Bye.
Speaker Change: Thank you. At this time, we will conduct the question and answer session. As a reminder to ask a question, you will need to press Star 1-1 on your telephone and wait for your name to be announced. To address your question, please press Star 1-1 again. Please stand by while we compile the Q&A roster.
[inaudible]
Speaker Change: Our first question comes from a line of air McNeil from TD Cohen. Your line is now open.
Hey, morning all. Thanks for taking my questions.
Speaker Change: Curtis, with a clear view on marketing and your prepared comments on leverage, are you still committed to the 50 million of buyback activity in the back half of the year, and if so, could you provide any clarity on when you might see Gibson repurchase shares?
I worn out. [inaudible]
[inaudible]
Speaker Change: So, from a shared buybacks group perspective, we always looked at those as being the back out for the years. We've got a busy front out for the year from a growth capital perspective.
Speaker Change: And we'll look at that in the back half of the year for the Fermi on where leverage is at the end of the year. Obviously, marketing performance is a key factor in that for us to go forward with the shared buyback. We're going to need to see some continued reasonable, some reasonable performance of the marketing segment. And we'll look at that in the back half of the year for the
Gotcha. Okay. And then maybe switching gears.
Do you see the Batex project as part of it?
Speaker Change: Under-served-market, you know, that the larger oil and liquids, mid-stream companies aren't focused on and...
Speaker Change: How do you think about it in terms of having the counterparty build and operate the asset? Is this largely financing, or is there any broader integration of the assets that might perform improvement?
Speaker Change: Excuse me. May improve performance of other assets in the Gibson portfolio.
Speaker Change: Yeah, we love the BTEC, the ultimate standpoint, that it's, you know, we offer solutions to our customers to solve an infrastructure problem for them,
We work closely with them to build some infrastructure.
Speaker Change: But we also importantly get the area of dedication and those barrels coming to rent and facility. So let's start.
Speaker Change: I love that it shows us working really well. The customer drives the nice infrastructure business, but in really key, really locks up those barrels into our empty facility.
Speaker Change: I definitely don't look at it as a pure financing transaction without those barrels and that strategic fit. This probably doesn't make sense for us, but with those barrels that provides a nice fit with the customer on a great return project for us.
Thanks, total sense. Thanks, her to filter it back.
Speaker Change: Thank you. Our next question comes from Line of Robert Cattiliar from CIBC Capital Markets. Your line is now open.
Robert Cotillier: Good morning. I just wondered if you could address your outlook for the U.S. particularly
Speaker Change: In light of the recently weaker commodity prices and maybe bigger picture, how you're approaching
Speaker Change: Growth in the U.S. in terms of capital deployment given he had a number of executive changes and just curious if that approach has changed at all.
Speaker Change: Yeah, Warren Robb. I think from a growth perspective, we'll talk overall on growth first. I think it's...
Speaker Change: Gibson's as an interesting spot from a growth perspective just by the nature of our size.
Speaker Change: We don't need major projects to drive a good stable growth rate for the business and really 50 $100 million dollar projects really matter for us.
Speaker Change: When I look out at across over across the asset days, I see there's a good backlog of projects we can go execute on over the next few years and drive that good steady rate of growth.
Speaker Change: We just finished the Dredging Project in Gateway and it's really key for us to complete the cactus project here in Q3. The combination of those two really unlocks a lot of potential for us in Gateway. That gets us pretty excited about what we can do with that asset. Going into the fourth quarter and really realize the full potential that in the next year.
from an overall view of, you know, what the macro impact of.
Speaker Change: Oil prices and different things like that on the U.S. business.
Speaker Change: I still see the Permian Barrel being an export barrel that's going up to the world markets and there's a lowest cost. Most decision way to get that barrel to market is through angle side and through the gateway terminal and so I still feel very good despite where the all price goes and any near-term volatility in the all price. And...
Speaker Change: on that asset, continuing to perform really well. And in fact, actually...
Speaker Change: I feel a lot of signposts that you'll see sort of increasing activity out of that asset over the next couple of years.
Speaker Change: Even with sort of near term volatility on all price, you still see a US administration that's very focused on using energy to have an influence on the world. And I believe that they want to see more energy exports out of the U.S.
Speaker Change: to address some of these trade deficits. And so I think the Ingleside facility is going to be a key part of that story.
Speaker Change: Okay, and then just turning to the marking a look curve here a bit.
Speaker Change: And thank you for the guidance we gave for Q2 in a year. I'm curious as to, um...
What the long-term view is, what has to happen to-
Speaker Change: We're turning the marketing business back to the Asian 120 on-term guidance range. Obviously, there's some complications this year with the turnaround, but in an...
Speaker Change: Normalized here. We don't have the turnaround activity, etc. Which of the items is more important for you to get the marketing guys back up? Is it differential? Or is it returned to a state of contango?
Sure.
Speaker Change: And from a marketing standpoint, really variability is not new to us than marketing. If you look back at...
Speaker Change: Gibson's marketing business over the last eight or nine years, on average.
Speaker Change: We've generated just over a hundred million dollars a year of you that are from the marketing business. So it's been a great contributor to the business. But boy, there's variability in its lumpy.
Speaker Change: There's only been two years where we were within the 80 to 120 range, and so it's typically had some variability to it, and...
That's why we, when we look at that business week...
Speaker Change: We love it, but we also recognize the importance of making sure that we fund our based business and our dividend offer infrastructure business. And we really look at the marketing business as a great opportunity.
Speaker Change: Fund incremental growth capital and to fund share buybacks. And so, you know, the variability is something we need to manage, but it's sort of as expected from our perspective.
Speaker Change: What needs to change for the marketing business to improve as you look forward?
Speaker Change: You know, a couple of big signposts that we see already that are exciting for us is we're looking to the back end of the year. It's constructive. The biggest thing at point that would be the refined products business.
Speaker Change: We're already seeing some improvement in refining track spreads and some good demand for products, but we're right in the middle of the turnaround.
Speaker Change: You know, really either between shutting down and actually doing the turnaround and starting up either sort of minimal impact from the facility in Q2. And so once you get into Q3 and Q4, you've got sort of that facility post.
Speaker Change: Turn around running with a little bit more increased capacity and capability and running into a good market. We expect a reasonable market. We expect in the back half of the year. And just naturally you have seasonal demand for asphalt that we'll pick up considerably to get into the third quarter.
Speaker Change: So I think those things give me a lot of confidence that as I talk about the 20 to 40 million in the back half of the year sort of sequentially getting better as you get into the into the end of the year. And that is something I think continues as you get into 2026 that we feel confident that you return back into the lower end of that 80 to 120 range as you get into 2026.
Speaker Change: Okay. That's a very helpful answer. A lot of color in there. Unless they missed it, I think you addressed marketing with respect to you.
Capital spending and repurchases, but-
Speaker Change: Maybe you can address the influence marketing has on the dividend and the dividend growth outlook. I think if I'm not mistaken, except the dividend to be sustainable on an emperor-only basis, fully loaded for interest taxes, maintenance capital.
Speaker Change: So the question really is, where do you need to see or what visibility do you need in the marketing business to maintain a different growth philosophy?
[inaudible]
Speaker Change: The dividend is fully funded on the infrastructure business, and so it's helpful to the marketing business to fund incremental share buybacks and incremental growth capital, but from funding the dividend and funding to the ongoing dividend growth, and we've had...
Speaker Change: At six years of, six consecutive years of growing dividends and that's something that we believe in firmly and I expect to see that continue to go on into the future.
Okay, thanks, everyone.
Thank you.
Speaker Change: Our next question comes online of Robert Holt from Scotia Bank. Your line is now open.
Robert Hope: Good morning, everyone. So, with the signing of the BTEC deal and where oil prices currently are at, are you seeing increased interest or in-bounds from other producers for similar partnerships to what you did for BTECs?
Yeah, thanks for all. Yeah, great, great question. Absolutely.
Robert Hope: I think Bass has turned into our commercial development person here as well with a lot of inbound calls following that press release. I think it was a real marker for us that...
Robert Hope: We sort of add an open for business for this type of project out to the market. And yes, there's some interesting options in particularly in the area around where we have the Batex transaction, but...
Robert Hope: We're selective on this. We want to make sure we've got an excellent partner that we're comfortable from a credit perspective.
Robert Hope: I want to make sure that there's a strategic fit on those projects that they drive volumes, or there's some other strategic fit with it. And so, I wouldn't say it's a blanket. We're open for business for every type of project in the infrastructure space, but there is some interesting additional opportunities, and I expect that's going to be...
Robert Hope: A key part of the growth story for us over the next couple of years. These are good actionable projects. Both actually with Batex and with other counterparties, other parties.
over the next few years.
Robert Hope: All right, that's great. And then maybe just moving down the corpus. Can you maybe just update us on how contracting discussions are for some incremental capacity there as well as the rollover capacity in the next little while just given where pricing is and now that you have some increased capacity. Thank you.
Robert Hope: Yeah, that's exciting for us that we're getting these projects done. So, this was...
This was a...
Robert Hope: The key thing for us to be able to get access to more barrels coming to the facility is to remind everybody to sort of access the cactus to give you an incremental 700,000 barrels of capacity. So it's significantly more volume available for customers.
Robert Hope: More volume and more customers available to come into the terminal.
Robert Hope: and the dredging allows us to be on par with the neighboring Enbridge facility.
Robert Hope: So, that's a key thing for us, that all of a sudden, that we are the most cost and benefit of a solution for getting barrels to the water. And I think that's attractive for people earlier this year. We added a couple new supermajor customers.
Robert Hope: into the terminal. And that's been interesting. They've outperformed what we expected they would do in the first quarter. And I think that's encouraging that. A couple of new customers into the mix and just, you know, I get people comfortable working with the Gateway terminal appreciating what a great facility it is and what a great team we've got out there in Ingallside. And I'm encouraged to see what that may bring down the road with sort of expanding their footprint in the facility. Thank you very much.
[inaudible]
Robert Hope: Other than that, we won't give up play-by-play on contract renegotiations as we go forward. I think we did that in the past and it really is not helpful as we go through these negotiations with customers. I would say, though, that...
the comment that I made earlier around.
Robert Hope: So, world markets are appreciating that the U.S. administration wants to move more barrels into the water and address trade deficits using energy is not lost on our customers, and that's a conversation we've heard of fair bit. But I would caution the one other side of that comment that we've heard is...
Robert Hope: All of this volatility in the world is having people pausing a little bit on some of those things. And as people are wanting to see a little bit more certainty over tariff environments and things like that before they fully commit to expanded programs, so that something will be hopefully watching for over the next six months.
That's great. Thank you.
Robert Hope: Thank you. And as a reminder to ask a question, please press star-1-1 on your telephone and wait for your name to be announced.
Speaker Change: Our next question comes on line of Maurice Choi from RBC Capital Markets. Your line is now open.
Maurice Choi: Thank you, and good morning. I just want to come back to the marketing guidance, and thank you for that. We've obviously seen a few U.S. upstream companies re-assess their 2035 CapEx plans, given the commodity price environment, no notable change from the Canadians so far.
Maurice Choi: So, when you look at your $20 to $40 million marketing guidance for this year, how would you describe your assumption of the market conditions that underpinned this outlook? And also, the way you came up with this outlook?
Maurice Choi: Is this materially different from, you know, back in Q3 conference call when you were giving guidance for the Q4?
Speaker Change: I think what you're seeing is what we are seeing with the $20 to $40 million guidance. We're really looking hard at what can we see right in front of us. And I think we've got a high degree of certainty when you look at specifically on the refineries what I'm keying on. And so I think there's other additional things and volatility that could happen in the market that could provide additional upside. But what we can see right in front of us today is very clear. On coming out of the turnaround, the increased impact we can have with the refiner.
Speaker Change: So it gives us a high degree of confidence on the 20 to 40. And I would say if you rewind back to that Q3 guidance you're referring to, there's probably a bit more opaque on that than whereas this is very clear and that gives us a lot of confidence on that range.
Speaker Change: I must admit, and if we just finish off on the maintenance program, you mentioned in your prepared remarks, this is the largest program this year with Moose Jaw and Hardest DDRU work. Can I just reconfirm the 60 million that you...
Speaker Change: That you got it to for the program late last year. And was there anything in particular about this program that you're trying to address? Or is this just a matter of, you know, then it should have solved being timed about the same time?
Speaker Change: It's more, it's 60 million. It's still a good number. So no change to the maintenance capital guidance. And it really is just timing of when those requirements happen to land at a similar time. And then just from a weather perspective, it was convenient to be doing that in the spring.
Thank you very much.
Thank you.
Speaker Change: Our next question comes from a line of Benjamin San from BMO. Your line is now open.
Benjamin Phan: Hi, thanks. I'm going to go back to the comments and you're treading above now.
Do you anticipate I'm just-
Benjamin Phan: Just digesting your marketing outlook and the path ahead. What quarter do you think your debty bidders are going to keep going and do you have a sense of how high it could go?
[inaudible]
[inaudible]
Riley Hicks: So when we think about our kind of debt to EBITO, we would see it likely staying above our target range for the remainder of this year given our marketing outlook. And then normalizing in 2026 as marketing recovers.
Riley Hicks: From a peak standpoint, what we're really looking at here is kind of our infrastructure leverage and our key rating HZ metrics and we feel very comfortable with it.
Riley Hicks: With where our balance sheet is on those factors. And so we do remain firmly committed to getting our leverage down back within our range. And that's a high priority for us. But we are comfortable with where we sit in terms of our investment-grade rating and our infrastructure leverage.
[inaudible]
[inaudible]
Okay, I've got it, um... [inaudible]
Speaker Change: And maybe next on the cost savings, he broke up between recurring, non-recurring, he can add a bit more details to the next, and then...
Speaker Change: What about the composition between all O&M reactions and capital? Is there also a difference between those two buckets in a 25 million plus?
Speaker Change: The cost we've been really impressed with the cost savings program today.
Speaker Change: So, to date, it's actually been interesting. I would say it's been a vote.
Speaker Change: 50-50 to date on how much is EBITDA impacting versus DCF impacting and also on the recurring versus non-recurring. It's a vinaigrette 50-50 to date on what we've seen. I think that's a bit of a nature of.
Speaker Change: Early on, there's a few more sort of one-off sort of findings that we're able to take advantage of. I think as you get a little bit deeper into the program over the course of the year, I expect that you'll see a little bit more on the...
This is a reoccurring side of things. You know what we've—
Speaker Change: Well, we've seen on the cost improvements that there's probably three main buckets to the cost savings. I would say when we look at what's coming in and where do we see the opportunity.
Speaker Change: So, the first opportunity is around adopting technology and really finding interesting ways to use both physical asset technology to drive more efficiencies but also AI and different things to drive different process efficiencies.
Speaker Change: I guess that's an interesting bucket. The second bucket we've seen is really just working really closely with supply chain and finding ways to really push back in inflation and find ways to work closely with different suppliers or with our current suppliers to find additional cost savings.
Speaker Change: And then the last bucket is really just looking for waste and really challenging ourselves. What are what things are really unnecessary and are distractions of business that we can remove? I think
Speaker Change: Today, there's been probably the biggest wins in that third box that we've been able to sort of eliminate some things that are just waste.
Speaker Change: And those are, tend to be fairly quick, and some of them tend to be somewhat one-off, where I'm probably most excited, though. I love those. Those are great. But where I'm most excited, though, is when you look at that first bucket and the use of technology and implementing new physical changes to processes.
Speaker Change: are really the sustained, really impactful changes and those tend to take a little bit more than a quarter to get fully up and running. And so I think you'll see more of that as we get it to the back half of the year. So I'm excited about what that sort of next phase brings.
Speaker Change: Okay, got it. It made just one kind of touch-up question on the...
The staffing sort of things you've added to CO.
Speaker Change: Is anything ahead in the horizon? Are you pretty much built up to high performing team structure?
Speaker Change: Yeah, we're pretty excited. We get so added out of Riley and the CFO seed earlier this year and with Dave and the COO fleet, we're in great shape from sort of the where the team is at and excited about the groups are leading us in the next chapter of Gibson. So I'm very excited about what we've got with both of us guys.
Okay, got it. Thank you.
Speaker Change: Thank you. Our next question comes online of Patrick Kinney from NBS. Your line is now open.
Patrick Kenny: Thank you. Good morning. Just maybe back on Gateway. I just wanted to do a clear fly, you know, post-dredging.
Patrick Kenny: And I'm sure we'll get an update in June on the tour, but just your expected utilization of the facility going forward and I guess the outlook for potentially moving forward with a third dock.
Patrick Kenny: Would that be contingent on, you know, seeing further growth out of the Permian or are there opportunities?
Patrick Kenny: Even if the Permian enters sort of a maintenance mode here in the current commodity environment.
Yeah.
Patrick Kenny: I think, Patrick. Yeah, so from a gateway utilization capacity, one of the things I'm most excited about is the sort of with these increased capacity that we've got in gateway. You know, we talked a lot about adding more volume into the LCC.
Patrick Kenny: I'd actually argue equally as important, is that we're now able to fully fill a Suez Max vessel. Not that.
Patrick Kenny: Something that I think actually drives the incremental new vessels into our facility. So, Suez X-Max vessels have different ports that are able to go participate in. And that ability to fully fill one of those drives the real efficiency of our customers. And we think that's quite attractive. And I think that brings some incremental volume, incremental vessels into the facility. On top of just more fills or more complete fills on current vessels.
Patrick Kenny: So, that's interesting. As we think about a third dock, I would not put the third dock in the supply and for 2026, but ...
Patrick Kenny: We absolutely have the capability to do that. We'll watch for how this plays out. I think it's interesting that some of these other deep water.
Patrick Kenny: A sort of option seems to be pulling back, and so that will create a situation where I think people will need to look for ways to get more barrels to water, and Ingleside is the most cost effective capital-efficient way to do that, and so I think that makes it quite interesting to think about expanding the dock, but I wouldn't put that on the horizon for the next 12 months, but that's interesting.
Patrick Kenny: I look forward to seeing you and a whole bunch of other folks down on Gateway down in early June . So we're looking forward to hosting a good group down there of investors and analysts and show off what a great asset we've got down there.
[inaudible]
Speaker Change: Okay, great. Thanks for that. And then maybe just with respect to some of the debt refinancing, I know it looks pretty manageable over the next year or two, but just in light of the leverage ratio being a little bit higher than where you want to see it.
Speaker Change: Just in terms of managing the working capital going forward, just wanted to check in to see...
Speaker Change: It looks like quite a bit of inventory was flushed out in the corner and given the outlook for subdued marketing margins.
Speaker Change: is the plan to sort of manage inventory levels going forward until...
Speaker Change: Some of these debt refinancings are executed, or are you thinking about inventory, I guess, overall?
Riley Hicks: Yeah, thanks, Patis. It's rally here. I think if you think about our retirees coming up, we obviously have one coming up this year. We feel like we're a great shape to refinance that at really good grades.
Riley Hicks: When we think about inventory really, you know, as we build inventory, we're building it for a reason. That's typically because there's quite an margin associated with it. So...
Riley Hicks: It doesn't really factor into how we would refinance our notes. And so the EFT opportunity is there to build inventory and make margin within the marketing business we will do so. And we don't think that would impact any of our ability to refinance our notes.
Okay, that's great. Thanks, guys, I'll leave there.
Thank you.
Speaker Change: Thank you. This concludes the question and answer session. I would now like to turn it back for Beth to best for closing remarks.
[inaudible]
Speaker Change: Thank you, Haley. And thank you for joining us for a 2025 First Quarter Conference call. Again, I would like to note that we have also made certain supplementary information available on our website, GibsonEnergy.com. If you have any further questions, please reach out to investor.relations at GibsonEnergy.com. Thank you.
Thank you.
Thank you for your participation in today's conference. This does conclude the program you may now disconnect.