Q1 2025 Keyera Corp Earnings Call

May 15, 2025

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 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 star two thank you I would now like to turn the call over to Dan Cuthbertson General.

Operator: by First Quarter Conference. All lines have been placed on mute to prevent any background 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 star. Thank you.

Operator: For our Q1 conference call, all lines have been placed on 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 * then the 1 on your telephone keypad. If you would like to withdraw your question, please press *2. Thank you. I would now like to turn the call over to Dan Cuthbertson, General Manager of Investor Relations. You may begin.

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

Monitor of Investor Relations you may begin.

Speaker Change: Thanks, and good morning, joining me today will be deemed set of Gucci, President and CEO Aileen America, Senior Vice President and CFO, Jamie Urquhart, Senior Vice President and Chief Commercial officer, and Jared, but Tony <unk> Senior Vice President operations and engineering.

Dan Cuthbertson: Thanks, good morning. Joining me today will be Dean Setoguchi, 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 will open the call to questions. I'd like to remind listeners that some of the comments and answers that we will give 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 Keyera's public filings available on SEDAR and on our website. With that, I'll turn the call over to Dean.

Dan Cuthbertson: 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 will open the call to questions. I'd like to remind listeners that some of the comments and answers that we will give today relate to future events. These forward looking statements are given as of today's date and reflect events or outcomes that management currently In addition, we will refer to some non-GAAP financial measures.

Speaker Change: We will begin with some prepared remarks from Dean and Eileen after which we will open the call to questions.

I'd like to remind listeners that some of the comments and answers that we will give 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 here as public.

Dan Cuthbertson: 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.

Dean: <unk> available on SEDAR and on our website with that I'll turn the call over to Dean.

Dean Setaguchi: With that, I'll turn the call over to Thanks, Dan. Good morning, everyone. Here I had a solid first quarter reflecting discipline, execution of our strategy, and the strength of integrated value chain. Back in December, we outlined a clear plan to grow our fee based adjusted EBITDA by 7 to 8% annually from 2024 to 2027. Five months later, we're progressing well against that plan, advancing growth projects, filling available capacity, and securing new long-term integrated contracts across our value chain. This morning we announced the sanctioning of KFS FRAC 3, a major expansion of our core FRAC complex in Fort Saskatchewan.

Dean: Thanks, Dan and good morning, everyone.

Dean: <unk> had a solid first quarter, reflecting disciplined execution of our strategy and the strength of our integrated value chain.

Dean Setoguchi: Thanks, Dan. Good morning, everyone. Keyera had a solid Q1, reflecting disciplined execution of our strategy and the strength of our integrated value chain. Back in December, we outlined a clear plan to grow our fee-based adjusted EBITDA by 7% to 8% annually from 2024 to 2027. Five months later, we're progressing well against that plan, advancing growth projects, filling available capacity, and securing new long-term integrated contracts across our value chain. This morning, we announced the sanctioning of KFS Frac III, a major expansion of our core FRAC complex in Fort Saskatchewan. When combined with the FRAC II debottleneck, these projects will increase our total FRAC capacity by about 60%. These investments are backed by long-term customer commitments with a high degree of take-or-pay and are essential to meeting the growing needs of the basin.

Dean: Back in December we outlined a clear plan to grow our fee based adjusted EBITDA by 7% to 8% annually from 2024 to 2027.

Dean: Five months later, we're progressing well against that plan advancing growth projects filling available capacity and securing new long term integrated contracts across our value chain.

Dean: This morning, we announced the sanctioning of <unk> III and.

Dean: A major expansion of our core Frac complex and Fort Saskatchewan.

Dean: When combined with the Frac to Debottleneck. These projects will increase our total frac capacity by about 60%.

Dean Setaguchi: When combined with the FRAC2 de-bottleneck, these projects will increase our total FRAC capacity by about 60%. These investments are backed by long term customer commitments with a high degree of taker pay and are essential to meeting the growing needs of the base. They also enhance the competitiveness of our integrated value chain and support our strategy of attracting and retaining volumes across the system. Both FRAC expansion projects are expected to deliver standalone returns within our targeted range of 10 to 15%. A large majority of frac capacity at KFS, including expansions, is now contracted for an average duration of eight years.

Dean: These investments are backed by long term customer commitments with a high degree of take or pay and are essential to meeting the growing needs of the basin.

Dean: They also enhance the competitiveness of our integrated value chain and support our strategy of attracting and retaining volumes across the system.

Dean Setoguchi: They also enhance the competitiveness of our integrated value chain and support our strategy of attracting and retaining volumes across the system. Both FRAC expansion projects are expected to deliver standalone returns within our targeted range of 10% to 15%. A large majority of FRAC capacity at KFS, including expansions, is now contracted for an average duration of 8 years. We're also advancing KAPS Zone 4 with commercial discussions nearing completion. We continue to see commercial momentum across the business. The Wapiti Gas Plant is now expected to reach effective capacity in 2026, a year earlier than anticipated. Several optimization projects are underway to support further growth at the plant. Volumes continue to ramp up at Simonette, and our condensate business continues to grow. Our Fort Saskatchewan Condensate System is nearing contractual capacity, and we're evaluating debottlenecking opportunities that can increase capacity to accommodate growing customer demand.

Dean: Both frac expansion projects are expected to deliver standalone returns within our targeted range of 10% to 15%.

Dean: A large majority of frac capacity at TFS, including expansions is now contracted for an average duration of eight years.

Dean: We're also advancing capstone for with commercial discussions nearing completion.

Dean Setaguchi: We're also advancing CAHPS Zone 4 with commercial discussions nearing completion. We continue to see commercial momentum across the business. The Wapiti gas plant is now expected to reach effective capacity in 2026, a year earlier than anticipated. Several optimization projects are underway to support further growth at the plant. Volumes continue to wrap up at Simonette. and our Consates business continues to grow. Our Fort Saskatchewan condensate system is nearing contractual capacity, and we're evaluating the bottlenecking opportunities that can increase capacity to accommodate growing customer demand. From a macro perspective, we remain confident in the long term growth outlook for volumes out of Western Canada.

Dean: We continue to see commercial momentum across the business.

Dean: The Wapiti gas plant is now expected to reach effective capacity in 2026, a year earlier than anticipated.

Dean: Several optimization projects are underway to support further growth at the plant.

Dean: Volumes continue to ramp up at <unk>.

Dean: And our condensate business continues to grow.

Dean: Our Fort Saskatchewan condensate system is nearing contractual capacity and we're reevaluating debottlenecking opportunities.

Dean: Increased capacity to accommodate growing customer demand.

Dean: From a macro perspective, we remain confident in the long term growth outlook for volumes out of Western Canada.

Dean Setoguchi: From a macro perspective, we remain confident in the long-term growth outlook for volumes out of Western Canada. Despite recent commodity market volatility, our basin remains resilient due to its quality of resource and low-cost structure. Importantly, we're seeing meaningful improvements in egress capacity across multiple products, whether it's crude on the Trans Mountain pipeline expansion, gas and LNG Canada, or increasing propane and butane export options. At the same time, intra-basin demand is rising. Oil sands producers are investing in expansions and debottlenecking. Over time, natural gas could play a larger role in meeting emerging demand from sectors like data centers. Our assets are well positioned to enable this growth, and we'll continue to invest where we see long-term sustainable growth, always with a focus on disciplined capital allocation. With that said, for Canada to realize its full potential, more is needed.

Dean: Despite recent commodity market volatility our basin remains resilient due to its quality of resource and low cost structure.

Dean Setaguchi: Despite recent commodity market volatility, our basin remains resilient due to its quality of resource and low-cost structure. Importantly, we're seeing meaningful improvements in egress capacity across multiple products. Whether it's crude on the Trowns Mountain Pipeline expansion, gas in LNG Canada, or increasing propane and butane export options. At the same time, intrabasin demand is rising. Oil sands producers are investing in expansions and de-bottlenecking. And over time, natural gas could play a larger role in meeting emerging demand from sectors like data centers. Our assets are well positioned to enable this growth, and we will continue to invest where we see long-term sustainable growth, always with a focus on disciplined capital allocation.

Dean: Importantly, we're seeing meaningful improvements and egress capacity across multiple products.

Dean: Its crude on the trends mountain pipeline expansion gas and LNG, Canada, we're increasing propane and butane export options.

Dean: At the same time intra basin demand is rising oilsands producers are investing in expansions and debottlenecking.

Dean: And over time natural gas could play a larger role in meeting emerging demand from sectors like data centers.

Dean: Our assets are well positioned to enable this growth.

Dean: And we will continue to invest where we see long term sustainable growth always with a focus on disciplined capital allocation.

Dean: With that said for Canada to realize its full potential more is needed.

Dean Setaguchi: With that said, for Canada to realize its full potential, more is needed. We need a competitive policy environment that attracts capital, enables responsible growth, and expands market access for the benefit of all Canadians.

Dean: We need a competitive policy environment that attracts capital.

Dean Setoguchi: We need a competitive policy environment that attracts capital, enables responsible growth, and expands market access for the benefit of all Canadians. With that, I'll turn it over to Eileen to walk through our financial results and guidance.

Dean: Enables responsible growth and expand market access for the benefit of all Canadians.

Dean: With that I'll turn it over to Eileen to walk through our financial results and guidance.

Eileen Marikar: With that, I'll turn it over to Eileen to walk through her financial results and guidance. Thank you, Dean. CARE delivered solid financial results in the first quarter. Adjusted EBITDA was $298 million compared to $314 million in Q1 last year. Distributable cash flow was $190 million or $0.83 per share. Net earnings were $130 million, up from $71 million in the same period last year. These results were supported by continued strong margin contributions from our fee-for-service segments, which were up 9% over the same period last year. Gathering and Processing delivered $109 million in realized margin with a new throughput record at WAPITI and continued momentum at Simon Elk.

Speaker Change: Thank you Dean Karen delivered solid financial results in the first quarter.

Eileen Marikar: Thank you, Dean. Keyera delivered solid financial results in Q1. adjusted EBITDA was CAD 298 million compared to CAD 314 million in Q1 last year. distributable cash flow was CAD 190 million or CAD 0.83 per share. Net earnings were CAD 130 million, up from CAD 71 million in the same period last year. These results were supported by continued strong margin contributions from our fee-for-service segments, which were up 9% over the same period last year. Gathering and Processing delivered CAD 109 million in realized margin, with a new throughput record at Wapiti and continued momentum at Simonette. Liquids Infrastructure delivered a near-record CAD 152 million in realized margin. This was supported by high utilization of our fractionation and condensate systems and the continued ramp-up of volumes on CAP. In the marketing segment, realized margin was CAD 78 million, primarily driven by iso-octane and propane sales.

Dean: Adjusted EBITDA was $298 million compared to $314 million in Q1 last year.

Dean: Distributable cash flow was $190 million or <unk> 83 per share.

Dean: Net earnings were $130 million up from $71 million in the same period last year.

Dean: These results were supported by continued strong margin contributions from our fee for service segments, which were up 9% over the same period last year.

Dean: Gathering and processing delivered $109 million and realized margin with a new throughput record at Wapiti and continued momentum at Simon that.

Dean: Liquids infrastructure delivered a near record $152 million and realized margin.

Eileen Marikar: Liquid Infrastructure delivered a near record $152 million in realized margins. This was supported by high utilization of our fractionation and condensation. and the continued ramp up of volumes on CAP. In the marketing segment, realized margin was $78 million, primarily driven by iso-octane and propane sales. The AEF facility has completed its startup following a maintenance outage that began in late March. The facility is now back to full operation. However, the work took longer than originally anticipated, extending to approximately seven weeks rather than six. As a result, the expected impact to annual marketing segment realized margin has increased to approximately $50 million compared to the previous estimate of $40 million.

Dean: This was supported by high utilization of our fractionation and condensate system and the continued ramp up of volumes on cap.

Dean: In the marketing segment realized margin was $78 million, primarily driven by isooctane and propane sales.

Dean: The facility has completed its start up following a maintenance outage that began in late March. The facility is now back to full operation. However, the work took longer than originally anticipated extending to approximately seven weeks rather than six.

Eileen Marikar: The AEF facility has completed its startup following a maintenance outage that began in late March. The facility is now back to full operations. However, the work took longer than originally anticipated, extending to approximately seven weeks rather than six. As a result, the expected impact to annual marketing segment realized margin has increased to approximately $50 million compared to the previous estimate of $40 million. We ended the quarter with a strong balance sheet and net debt to EBITDA of 2x, below our targeted range. Over the last two years, our net debt has been reduced by over $500 million. Our strong financial position gives us the flexibility to self-fund organic growth and return capital to shareholders. Turning to our 2025 guidance, we are reaffirming all key figures. We continue to expect marketing segment realized margin to be between $310 million and 350 million.

Dean: As a result, the expected impact to annual marketing segment realized margin has increased to approximately $50 million compared to the previous estimate of $40 million.

Dean: We ended the quarter with a strong balance sheet and net debt to EBITDA of two times below our targeted range.

Eileen Marikar: We ended the quarter with a strong balance sheet and net debt to EBITDA of two times, below our targeted. Over the last two years, our net debt has been reduced by over $500 million. Our strong financial position gives us the flexibility to self-fund organic growth and return capital to shareholders.

Dean: Over the last two years, our net debt has been reduced by over $500 million, our strong financial position gives us the flexibility to self fund organic growth and return capital to shareholders.

Dean: Turning to our 2025 guidance, we are reaffirming reaffirming all key figures. We continue to expect marketing segment realized margin to be between $310 million and $350 million. This includes the estimated $50 million impact from the outage and reflects the benefits of our disc.

Eileen Marikar: Turning to our 2025 guidance, we are reaffirming all key figures. We continue to expect marketing segment realized margin to be between 310 million and 350 million. This includes the estimated 50 million impact from the AEF outage and reflects the benefits of our disciplined risk management program. Growth capital expenditures are expected to range between $300 million and $330 million, supporting investments in Fract 2, Fract 3, Cap Zone 4, and other opportunities. Maintenance capital expenditures are expected to range between 70 and 90 And finally, cash taxes are expected to range between $100 million and $100 million.

Eileen Marikar: This includes the estimated CAD 50 million impact from the AEF outage and reflects the benefits of our disciplined risk management program. Growth capital expenditures are expected to range between CAD 300 million and 330 million, supporting investments in FRAC 2, FRAC 3, KAPS Zone 4, and other opportunities. Maintenance capital expenditures are expected to range between CAD 70 and 90 million. Finally, cash taxes are expected to range between CAD 100 million and 110 million. Thank you, and I'll now turn it back to Dean for closing remarks.

Dean: <unk> risk management program.

Dean: Growth capital expenditures are expected to range between $300 million and $330 million.

Dean: <unk> investments in Frac, two frac, three capstone for and other opportunities.

Dean: Maintenance capital expenditures are expected to range between 70 and $90 million and.

Speaker Change: And finally cash taxes are expected to range between $100 million and $110 million. Thank you and I'll now turn it back to Dean for closing remarks.

Dean Setaguchi: Thank you and I'll now turn it back to Dean for closing. Thanks, Eileen. We remain confident in the Basin's continued volume growth. Canada has one of the world's largest oil and gas resource base. Developed under some of the most stringent environmental and social standards anywhere.

Dean: Thanks Aileen.

Dean: We remain confident in the basins continued volume growth.

Dean Setoguchi: Thanks, Eileen. We remain confident in the basin's continued volume growth. Canada has one of the world's largest oil and gas resource bases, developed under some of the most stringent environmental and social standards anywhere. Now is the time to foster an environment that attracts investment and supports responsible growth. Our customers are in strong financial positions and continue to grow and adapt to changing conditions. Keyera helps enable this growth. We are executing a clear strategy and delivering capital-efficient growth. We're doing so while remaining disciplined with a long-term view of the Western Canadian Sedimentary Basin. On behalf of Keyera's Board of Directors and Management team, I want to thank our stakeholders for the continued support. With that, I'll turn it back to the operator for Q&A.

Dean: Canada has one of the world's largest oil and gas resource spaces.

Dean: Developed under some of the most stringent environmental and social standards anywhere.

Dean: Now is the time to foster an environment that attracts investment and supports responsible growth.

Dean Setaguchi: Now's the time to foster an environment that attracts investment and supports responsible growth. Our customers are in strong financial positions and continue to grow and adapt to changing conditions. and Kiera Helps enable this growth. We are executing a clear strategy and delivering capital efficient growth. And we're doing so while remaining disciplined with a long-term view of the Western Canadian Sedimentary Basin.

Dean: Our customers are in strong financial positions and continue to grow and adapt to changing conditions and.

Dean: And Keira helps enable this growth.

Dean: We are executing a clear strategy and delivering capital efficient growth.

Dean: And we're doing so while remaining disciplined.

Dean: With a long term view of the western Canadian sedimentary basin.

Dean: On behalf of <unk> Board of directors and management team I want to thank our stakeholders for their continued support.

Dean Setaguchi: On behalf of Keyera's board of directors and management team, I want to thank our stakeholders for the continued support. With that, I'll turn it back to the operator for Q&A. Thank you.

Dean: With that I'll turn it back to the operator for Q&A.

Speaker Change: 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.

Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press * followed by the one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press * followed by the two. 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 Robert Hope with Scotiabank. Your line is now open.

Operator: 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 touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the.

Speaker Change: Our pop your hand of memories should you wish to decline from the pooling process. Please press star followed by the <unk>.

Speaker Change: If you are using a speaker phone please lift the handset before pressing any keys one moment. Please for your first question.

Operator: If you are using a speakerphone, please lift the handset before pressing any One moment, please, for your first question.

Robert Hope: Your first question comes from Robert Hope with Scotiabank. Your line is now open.

Robert Hope: Your first question comes from Robert Hope with Scotiabank. Your line is now open. Thanks.

Josh: Thanks. Good morning. This is Josh <unk> on for Rob Hope I just wanted to start on the growth front. So regarding capstone for what are the remaining hurdles for sanctioning and are you now comfortable on it on the engineering side and also with construction cost for that project.

Jess Hoyle: Thanks. Good morning. This is Jess Hoyle on for Robert Hope. Regarding KAPS Zone 4, what are the remaining hurdles for sanctioning, and are you now comfortable on the engineering side and also with construction costs for that project?

Jessica Hoyle: Good morning. This is Jess Hoyle on for Rob Hope. I just wanted to start on the growth front. So regarding capstone four, what are the remaining hurdles for sanctioning? And are you now comfortable on it on the engineering side and also with construction costs for that project?

Dean Setoguchi: Hi, Good morning, just it's Dean Setoguchi speaking and thank you very much for the question.

Dean Setaguchi: Hi, good morning.

Dean Setoguchi: Hi. Good morning, Jess. It's Dean Setoguchi speaking. Thank you very much for the question. We're very excited about our Zone 4 project, working with NorthRiver Midstream. We certainly see a lot of demand and growth in the Montney. Therefore, certainly a service like ours, which would provide a competitive alternative for NGL transportation. Contracting is going very, very well, but we want to remain disciplined to make sure that we have all of those contracts buttoned up that will support this size of investment. As I said before, that's progressing very well. On the engineering front, we have a Class 3 estimate already complete. We've done all of our stakeholder engagements. We feel pretty good about our execution of this project.

Dean Setaguchi: Jeff, it's Dean Sataguchi speaking, and thank you very much for the question. We're very excited about our Zone 4 project, working with North River Midstream. We certainly see a lot of demand and growth in the Montagne, and therefore, certainly a service like ours, which would provide a competitive alternative for NGL transportation. So, contracting is going very, very well, but we want to remain disciplined to make sure that we have all those contracts buttoned up that will support this size of investment. And as I said before, that's progressing very well. On the engineering front, we have a Class 3 estimate already complete.

Dean Setoguchi: We're very excited about <unk>.

Speaker Change: Zoned for project working with North River midstream.

Speaker Change: We certainly see a lot of demand and growth in the Montney and therefore, certainly a service like ours, which would provide a competitive alternative for our NGL transportation. So contracting is going very very well.

Speaker Change: But we want to remain disciplined to make sure that we have all of those contracts buttoned up that will support the size of investment.

Speaker Change: And as I said before that is progressing very well on the engineering front, we have the class III estimates already complete we've done all of our stakeholder engagements.

Jarrod Beztilny: We've done all of our stakeholder engagements, and we feel pretty good about our execution of this project. You know, I was thinking back about, you know, Cap Zone 1 to 3, and we've said this before, but the terrain on Zones 1 to 3 are much more difficult to build pipe in and build a pipeline in. Zone 4 is much smaller in size, it's distance, it's only about 85 kilometres, versus about 580 on Zones 1 to 3, and the topography is a lot flatter, and the right of way is visible pretty much the whole distance from a paved road, so much, much different conditions.

Speaker Change: And we feel pretty good about our execution of this project.

Speaker Change: Thinking back about.

Speaker Change: Capstone, one one to three.

Dean Setoguchi: I was thinking back about KAPS Zones 1 to 3. We've said this before, but the train on Zones 1 to 3 are much more difficult to build pipe in and build a pipeline. KAPS Zone 4 is much smaller in size. It's distance. It's only about 85 km versus about 580 on KAPS Zones 1 to 3. The topography is a lot flatter, and the right-of-way is visible pretty much the whole distance from a paved road. Much different conditions. Also say that remember in KAPS Zones 1 to 3, we built that through COVID. We also had 2 very large pipeline projects being built at the same time, being Trans Mountain and Coastal GasLink. Just because of the availability of contractors and also the smaller project and better topography, we feel pretty good about it.

Speaker Change: We've said this before but the train on.

Speaker Change: Zones, one to three are much more difficult to to build pipe and build a pipeline.

Speaker Change: <unk> four is much smaller in size.

Speaker Change: Distance its only about 85 kilometers versus about 580, <unk> zones, one to three and the top auger fee is a lot flatter and the right of ways.

Speaker Change: Visible pretty much the whole distance from a paved road so much much different conditions and also say that remember in capstone one to three we built that through Covid and we also had two very large.

Jarrod Beztilny: And I'll also say that, you know, remember in Cap Zone 1 to 3, we built that through COVID, and we also had two very large pipeline projects being built at the same time, being Trans Mountain and Coastal GasLink, so just because of the availability of contractors, and also the smaller project and better topography, we feel pretty good about it, but Jared, is there anything else you want to add to that? I think you covered it well, Dean. The only couple of things I'd add would be that we have all our regulatory approvals in hand already, and we've secured the pipe and are in the final stages of securing our construction contractors, and there'll be some continuity there from Zones 1 to 3.

Speaker Change: Pipeline projects being built at the same time being trans mountain and coastal gas link.

Speaker Change: So just because of the availability of contractors and also the smaller projects and better typography, we feel pretty good about it but jarrett is there anything else you want to add to that I think you covered it well the only couple of things I would add would be that we have all of our regulatory approvals in hand already and we've secured the pipe.

Dean Setoguchi: Jarrod, is there anything else you want to add to that?

Jarrod Beztilny: Yeah. I think you covered it well, Dean. The only couple of things I'd add would be that we have all our regulatory approvals in hand already. We've secured the pipe and are in the final stages of securing our construction contractors. There'll be some continuity there from Zones 1 to 3. Both from our own team and the external folks that we use, there's lots of familiarity there from the prior project.

Speaker Change: Or in the final stages of securing our construction contractors and there'll be some continuity there from zones, one to three years. So both from our own team and external folks that we use we theres lots of familiarity there from the prior project.

Dean Setaguchi: So, both from our own team and the external folks that we use, there's lots of familiarity there from the prior project. Thanks for that.

Speaker Change: Thanks for that and moving over to marketing so commodity prices have been very volatile. So just how do you think about downside protection or dissolve it volatility give upside potential to the guidance range.

Jess Hoyle: Thanks for that. Moving over to marketing. Commodity prices have been very volatile. Just how do you think about downside protection or does volatility give upside potential to the guidance range?

Dean Setaguchi: And moving over to marketing. So commodity prices have been very volatile. So just how do you think about downside protection? Or does volatility give upside potential to the guidance range?

Speaker Change: Yes, maybe ill start off with this.

Dean Setaguchi: Yeah, well, maybe I'll start off with this response. Certainly, we've seen a lot of volatility, as you said, and a lot of it's tied to what President Trump says on any given day across the border. But I just want to remind our investors that we have a very, very disciplined risk management program. And so that's in place to protect ourselves when we see, you know, a downturn in commodity prices like we've seen recently. So that's working very, very well for us as it did back in 2020 and 2021.

Dean Setoguchi: Yeah. Well, maybe I'll start off with this response. Certainly, we've seen a lot of volatility, as you said, and a lot of it's tied to what President Trump says on any given day across the border. I just want to remind our investors that we have a very, very disciplined risk management program. That's in place to protect ourselves when we see a downturn in commodity prices like we've seen recently. That's working very well for us as it did back in 2020 and 2021. Maybe I'll just throw that over to Jamie, and maybe he can comment further.

Speaker Change: Response.

Speaker Change: Certainly we've seen a lot of volatility as you said a lot of it is tied to.

Speaker Change: What president Trump says on any given day across the border, but I just want to remind our investors that we have a very very disciplined.

Speaker Change: Risk management program.

Speaker Change: And.

Speaker Change: And so that's that's in place to protect ourselves when we see.

Speaker Change: A downturn in commodity prices like we've seen recently.

Speaker Change: So that's working very very well for us as it did back in 2020 in 2021, but maybe I'll just throw that over to Jamie and maybe he can comment further.

Jamie Urquhart: But maybe I'll just throw that over to Jamie and maybe he can comment further. Yeah, Dean, you've covered it really well. It's just as you pointed out in the last part of your question is that that volatility sometimes does create opportunities for us to be opportunistic when we do layer in our risk management program. And the team, as they have in the past, has done a very, very good job of setting us up for 2025 and into 2021. I appreciate the detail, thank you. Thank you. Thanks for the question.

Jamie: You've covered it really well it's just as you pointed out in the last part of your question is that volatility. Some does sometimes does create opportunities for us to be opportunistic when we do.

Jamie Urquhart: Yeah. Dean, you've covered it really well. As you pointed out in the last part of your question, that volatility sometimes does create opportunities for us to be opportunistic when we do layer in our risk management program. The team, as they have in the past, has done a very, very good job of setting us up for 2025 and into 2026.

Speaker Change: Layer in our risk management program and the team as they have in the past has done a very very good job of setting us up for 25 and into 2026.

Speaker Change: I appreciate the detail. Thank you.

Jess Hoyle: Appreciate the detail. Thank you.

Speaker Change: Thank you thanks for the question.

Dean Setoguchi: Thank you. Thanks for the question.

Robert Hope: Your next question comes from Robert <unk> with CIBC capital markets. Your line is now open.

Robert Catellier: Your next question comes from Robert Catellier with CIBC Capital Markets. Your line is now open. Hi, good morning.

Operator: Your next question comes from Robert Catellier with CIBC Capital Markets. Your line is now open.

Robert Hope: Hi, Good morning, I think I'll start with the Caf III congratulations on the sanctioning.

Robert Catellier: Hi. Good morning. I think I'll start with KFS3. Congratulations on the sanctioning. I just wanted to understand the CapEx guidance that you previously gave for 2024 to 2027. Obviously, it includes something for KFS3, but it looks like the scope of the project might be bigger with some additional egress. Is the entirety of the CAD 500 million accounted for in that prior guidance of CAD 350 million to 450 million for 2026 and 2027?

Dean Setaguchi: I think I'll start with KFS3. Congratulations on the sanctioning. I just wanted to understand. The CAPEX guidance that you previously gave for 2024-2027 obviously includes something for KFS-3, but it looks like the scope of the project might be a bit bigger with some additional egress. So is the entirety of the $500 million? accounted for in that prior guidance of 350 to 450 for 26 and 27.

Jamie: I just wanted to understand.

Speaker Change: The Capex guidance that you previously gave for 24 to 27, obviously includes something for <unk> III.

Jamie: It looks like the scope of the project might be a big bigger with some additional egress. So.

Jamie: The entirety of the $500 million.

Jamie: Accounted for in our prior guidance of $3 50 to $4 50 for 26% and 27.

Jamie: Yes.

Speaker Change: Turn that question over to Eileen right away, Rob but.

Dean Setaguchi: Yeah, you know what, I'll just turn that question over to Eileen right away, Rob. But I'm glad to see that you're still on the phone after the Leafs lost last night. And, you know, hopefully, they can bounce back next game.

Dean Setoguchi: Yeah. You know what? I'll just turn that question over to Eileen right away, Rob. I'm glad to see that you're still on the phone after the lease loss last night, and hopefully, they bounce back next game. Anyway, I'll turn that over to Eileen.

Speaker Change: Im glad to see that you are still on the phone after the lease loss last night and.

Speaker Change: Hopefully the cross back next game.

Speaker Change: But anyway, I'll turn that over to IV iron.

Eileen Marikar: But anyway, I'll turn that over to Eileen. Hi, Robert, thanks for the question. And yes, absolutely that, you know, the 500 million for FRAC 3 was part of that guidance that we provided for 2024 through to 2027. It would include both FRAC 2 to bottleneck FRAC 3 zone 4, as well as other projects, you know, as you can imagine, it takes several years to develop projects to get them to in service date, and really to be able to push out that growth well beyond 2027. So there is some capital for other projects. Okay, and then what is the The addition you're doing on the egress side with KFS3, is there anything notable there?

Speaker Change: Hi, Robert Thanks for the question and yes, absolutely that.

Eileen Marikar: Hi, Robert. Thanks for the question. Yes, absolutely, the CAD 500 million for FRAC 3 was part of that guidance that we provided for 2024 through to 2027. It would include both the FRAC 2, the bottleneck FRAC 3, Zone 4, as well as other projects. As you can imagine, it takes several years to develop projects to get them to in-service date and really to be able to push out that growth well beyond 2027. There is some capital for other projects as well.

Robert Hope: The 500 million for Frac III with part of that guidance that we provided for 2024 through to 2027. It would include both the Frac to Debottleneck factories, all four as well as other projects as you can imagine it takes several years to develop projects to get them to in service date, and really to be able to push out that.

Jamie: Growth well beyond 2027, so there is some capital for other projects as well.

Speaker Change: Okay, and then what is the.

Robert Catellier: Okay. What is the addition you're doing on the egress side with KFS3? Is there anything notable there? Is it just connectivity to storage, things like that?

Speaker Change: The addition, youre doing on the E.

Speaker Change: Gross side with us through is there anything notable there or is it just connectivity of the storage and things like that.

Jarrod Beztilny: Is it just connectivity to storage and things like that?

Jamie: Sure.

Gerry: Turn that over to Gerry wondering Robert as Jared I think it's pretty minor in nature.

Jarrod Beztilny: Gerald, I'll turn that over to Jarrod.

Dean Setoguchi: Sure. I'll turn that over to Jarrod.

Jarrod Beztilny: Morning, Robert. Jarrod, yeah, I think it's pretty minor in nature. When you build a brownfield project, there's work you need to do to integrate it with the existing FRACs. It's really just positioning some of the pumping and infrastructure on how we move products around the site to position us to move those products off-site. There's nothing significant around storage included in that because it's not required.

Jarrod Beztilny: Morning, Robert. It's Jarrod. Yeah, I think it's pretty minor in nature. It's, you know, when you build a brownfield project, and there's work you need to do to integrate it with the existing fracs. And it's really just positioning some of the pumping and infrastructure and how we move products around the site to position us to move it to move those products offsite. There's nothing significant around storage included in that because because it's not required. Yeah, it's a part of our course optimization, right? You bet. Yeah, it's just how do we how do we most efficiently integrate PRAC-3 with the existing facilities that we have there?

Jamie: When you build a brownfield project and there is work you need to do to integrate it with the existing Fracs and it's really just positioning some of the pumping and infrastructure on how we move products around the site to position us to move it to move those products off site Theres nothing significant around storage included in that because it's not required.

Jamie: So the part of our whole course optimization right.

Robert Catellier: Yeah. It's a sort of final course optimization, right?

Jamie: You bet, yes, just how do we how do we most efficiently integrate frac III with the existing facilities that we have there.

Jarrod Beztilny: You bet. Yeah. It's just how do we most efficiently integrate FRAC 3 with the existing facilities that we have there?

Jamie: That's all.

Jamie: The best service for our customers. So that we have maximum flexibility between the fracs.

Jarrod Beztilny: It's always the best service for our customers so that we have maximum flexibility between our fractions.

Dean Setoguchi: Yeah. It's always intentioned to make the best service for our customers so that we have maximum flexibility between our FRACs.

Jamie: Okay, Great and then.

Jamie: I'm just curious what you think is possible when you look at the portfolio of optimization options you have to expand the montney processing capacity.

Robert Catellier: Okay. Great. I'm just curious what you think is possible when you look at the portfolio of optimization options you have to expand that Montney processing capacity. Specifically, how do you see asset M&A fitting in terms of your menu of options to deal with those capacity constraints?

Robert Catellier: Okay, great.

Robert Catellier: And then. I'm just curious what you think is possible when you look at the portfolio of optimization options you have to expand the Montney processing capacity.

Jamie: And specifically, how do you see asset M&A fitting in.

Dean Setaguchi: and specifically, how do you see asset M&A fitting in terms of your menu of options to deal with those capacity Thanks for the question, Rob. And, you know, I think that we have various options, whether they're brownfield or greenfield options to add additional capacity. In addition to filling up our existing capacity, I want to make sure we're clear about that. And, you know, we do see a significant amount of demand to fill up both Wapiti and Simonette. So we're working on de-bottlenecking opportunities there to fully utilize that capacity. But, you know, and I'll let Jamie talk about just potential opportunities in the area for capacity, but certainly we have the financial wherewithal to also acquire assets that would be a fit into our integrated system, where, again, we could provide a more competitive services if we add those assets to our business.

Jamie: In terms of your menu of options to deal with those capacity constraints.

Speaker Change: Yeah. Thanks for the question Rob.

Dean Setoguchi: Yeah. Thanks for the question, Rob. I think that we have various options, whether they're brownfield or greenfield options to add additional capacity in addition to filling up our existing capacity. I want to make sure we're clear about that. We do see a significant amount of demand to fill up both Wapiti and Simonette. We're working on debottlenecking opportunities there to fully utilize that capacity. I know that Jamie talked about just potential opportunities in the area for capacity, but certainly we have the financial wherewithal to also acquire assets that would be a fit into our integrated system where, again, we could provide our more competitive services if we add those assets to our business and also integrate it to our downstream value chain, including CAPS in our FRAC business. Those are the opportunities we're looking for.

Speaker Change: I think that we have various options, whether they are brownfield or greenfield options to add additional capacity. In addition to filling up our existing capacity I want to make sure we're clear about that.

Jamie: We do see a significant amount of demand to fill up both wapiti and Simon yet. So we're working on debottlenecking opportunities there too you fully utilize that capacity but.

Jamie: And I'll, let Jamie talk about potential opportunities in area for capacity, but certainly we have the financial wherewithal to also acquire assets that would be a fit into our integrated system.

Jamie: Again, we can provide a more a.

Jamie: A more competitive services, if we add those assets to our to our business and also integrated to our downstream value chain, including cap center in our Frac business. So those are the opportunities. We're looking for we have the financial.

Dean Setaguchi: And also integrated to our downstream value chain, including Caps and our FRAC business. So those are the opportunities we're looking for. We have the financial wherewithal to transact if we find something that fits, but we'll be incredibly disciplined if we do acquire something along that fairway.

Dean Setoguchi: We have the financial wherewithal to transact if we find something that fits, but we'll be incredibly disciplined if we do acquire something along that fairway. Anything you want to add, Jamie?

Speaker Change: Wherewithal to to transact, if we find something that fits and but we'll be incredibly disciplined.

Speaker Change: If we do acquire something along that fairway.

Speaker Change: Do you want to add Jim No I think the only thing I'd add is that.

Jamie Urquhart: No, I think the only thing I'd add is that, you know, we have established a dedicated team, to Dean's point, to pursue those opportunities.

Jamie Urquhart: No. I think the only thing I'd add is that we have established a dedicated team, to Dean's point, to pursue those opportunities.

Dean Setoguchi: We have established a dedicated team to Dean's point to pursue those opportunities.

Speaker Change: Okay. Thank you jump back in queue.

Robert Catellier: Okay. Thank you. I'll jump back in the queue.

Robert Catellier: Okay, thank you, I'll jump back in queue.

Speaker Change: Thanks, Rob.

Speaker Change: Your next question comes from Patrick Kenny with National Bank Financial Your line is now open.

Patrick Kenny: Thanks, Rob. Your next question comes from Patrick Kenny with National Bank Financial. Your line is now open. Thank you. Good morning, everyone.

Dean Setoguchi: Thanks, Rob.

Operator: Your next question comes from Patrick Kenny with National Bank Financial. Your line is now open.

Patrick Kenny: Thank you and good morning, everyone.

Patrick Kenny: Maybe just back on the Frac III expansion.

Patrick Kenny: Thank you. Good morning, everyone. Maybe just back on the FRAC 3 expansion from a cost. Just confirm if any of the CAD 500 million budget is locked in with any fixed-price contracts or perhaps through procurement of steel or other materials. Maybe just a comment, too, on whether or not the recent delay by Dow might have a positive indirect impact on your access to labor in the region.

Patrick Kenny: Maybe just back on the factory expansion from a cost perspective. Can you just confirm if any of the $500 million budget is locked in with any fixed price contracts or perhaps through procurement of steel or other materials? And maybe just a comment, too, on whether or not the recent delay by Dow might have a positive indirect impact on your access to labor in the region.

Speaker Change: From a cost.

Jamie: Just to confirm if any of the $500 million budget is locked in with fixed price contracts or perhaps through procurement of steel or other materials.

Jamie: And maybe just comment too on whether or not the.

Jamie: Recent delay by Dow might have.

Jamie: Positive indirect impact on you or access to labor in the region.

Jamie: Good morning, Patrick.

Patrick Kenny: Yeah, good morning, Patrick. And, you know, I just made make a couple comments.

Dean Setoguchi: Yeah. Good morning, Patrick. I'll just maybe make a couple of comments, and I'll toss it over to Jared. I think very good observation about Dow. I mean, they have to run a business, I totally understand their decision to defer their cracker expansion. I do believe it'll be built at some point in the future. You're right. I do think that this is a good opportunity for us to have a build window because, as you know, our KFS site where FRAC 3 will be built is right across the road from Dow. We'd be competing for similar contractors. Obviously, we want the best contractors to be working on our project to give us the best shot at executing it well. With that, I'll turn it over to Jared.

Jamie: I'll, just maybe make a couple comments and I'll toss it over to Jared.

Dean Setaguchi: I'll toss it over to Jarrod. And, you know, I think, you know, very good observation about Dow. I mean, you know, they have to run a business. And, and, you know, so I totally understand their decision to defer their their cracker expansion, but I do believe it will be built at some point in the future. But you're right, I do think that this is a good opportunity for us to have a build window, because As you know, our KFS site where FRAC 3 will be built is right across the road from Dow. So we'd be competing for, you know, similar contractors.

Jamie: I think.

Jared: Very good observation about DAU.

Jared: They have to run a business in.

Jared: So I totally understand the decision to defer their their cracker expansion, but I do believe it will be built at some point in the future.

Jared: But youre right I do think that this is a.

Jared: A good opportunity for us to have a build window because.

Jared: As you know our <unk> sites, where frac III will be built is right across the road from Dow So we'd be competing for.

Jared: Some of our contractors and.

Jared: Obviously, we want the best contractors to be working on our project to give us the best shot at executing a well, but with that I'll turn it over to Gerry Good morning, Pat I think the first thing I'd note is that <unk> is essentially a twin of the bottleneck frac too. So we're not reinventing the wheel.

Jarrod Beztilny: And obviously, we want the best contractors to be working on our project to give us the best shot at executing it well.

Jarrod Beztilny: But with that, I'll turn it over to Jarrod. Good morning, Pat. I think the first thing I'd note is that FRAC 3 is essentially a twin of the bottleneck FRAC 2. So we're not reinventing the wheel. FRAC 2 is a great project for us, and we're leveraging that into FRAC 3. And so that in itself just gives us comfort from the nature of the work. In terms of what's locked in, it's still early days. You know, right now, we're in the midst of securing all the long lead equipment. And so a significant portion of that equipment will actually get ordered later this month or early June.

Jarrod Beztilny: Good morning, Pat. I think the first thing I'd note is that FRAC 3 is essentially a twin of the bottleneck FRAC 2. We're not reinventing the wheel. FRAC 2 was a great project for us, and we're leveraging that into FRAC 3. That in itself just gives us comfort from the nature of the work. In terms of what's locked in, it's still early days. Right now, we're in the midst of securing all the long lead equipment. A significant portion of that equipment will actually get ordered later this month or early June. That'll help give us certainty on those costs. We're also getting closer on advancing construction contracts, which will give us some certainty there.

Jared: <unk> is a great project for us and we're leveraging guidance refractory and so that in itself just gives us comfort in the nature of the work in terms of what's locked in and it's still early days right. Now we are in the midst of securing all the long lead equipment.

Jared: So a significant portion of that equipment will actually get ordered later this month or early June but it will help give us certainty on those costs and we're also getting any closer on advancing construction contracts, which will give us some certainty. There. So early days to have a sense for how much is really locked in but we are getting quite close to derisking a significant portion of the project and there are some other strategy.

Jarrod Beztilny: That'll help give us certainty on those costs. And we're also getting closer on advancing construction contracts, which will give us some certainty there. So early days to have a sense for how much is really locked in, but we're getting quite close to de-risking a significant portion of the project. And there's some other strategies as well that we're employing around, you know, how we'll manage contractor activity and provide oversight that we think will help mitigate cost schedule, quality risks, and all those types of things as well.

Jarrod Beztilny: Early days to have a sense for how much is really locked in, but we're getting quite close to de-risking a significant portion of the project. There's some other strategies as well that we're employing around how we'll manage contractor activity and provide oversight that we think will help mitigate cost, schedule, quality risks, and all those types of things as well.

Jared: As well that we're employing around how we'll manage contractor activity and provide oversight that we think will help mitigate cost schedule quality risks and all those types of things as well.

Jared: And I assume a good time to be looking at the Fort Saskatchewan condensate.

Jarrod Beztilny: And I assume a good time to be looking at the Fort Saskatchewan condensate system expansion as well. So, but maybe you can just confirm what the potential scope and timing might look like for that expansion.

Patrick Kenny: I assume a good time to be looking at the Fort Saskatchewan Condensate System expansion as well. Maybe you can just confirm what the potential scope and timing might look like for that expansion?

Jared: System expansion as well so.

Jared: But maybe you can just confirm what the potential scope and timing might look like for that expansion.

Jared: Yes, I can step in their pad like you mean.

Jarrod Beztilny: Yeah, I can step in there, Pat.

Jamie Urquhart: Yeah. I can step in there, Pat. I mean, it's really about just debottlenecking a little bit of pipe, looking to take advantage of using drag-reducing agents that are very effective for that type of service in condensate.

Jared: It's really about.

Jarrod Beztilny: Like, I mean, it's really about just de-bottlenecking a little bit of pipe, looking to take advantage of using drug-reducing agents that are very effective for that type of service in common. Bottom line though, the demand for that service has been very strong. So it's been great to see.

Jared: Just debottlenecking a little bit of pipe.

Jared: Looking to take advantage of using drag reducing agents that are very effective.

Jared: For that type of service and condensate.

Jared: Bottom line, though the demand for that service has been very strong so it's been great to see.

Dean Setoguchi: Yeah. Bottom line, though, the demand for that service has been very strong. It's been great to see.

Jared: Okay, and then last one from me Dean you had a comment in the release just on the.

Dean Setaguchi: Okay, and then last one for me, Dean, you had a comment in the release just on the, you know, the need to improve Canada's competitiveness through, I guess, policy reform. Can you just expand on what you think industry needs to see in order for the energy sector to, you know, reach its full potential? Yeah, well, you know, first of all, I'm, I'm, I'm optimistic that we're going to see some change, you know, cautiously optimistic, maybe I should say with with the new leadership in place. And, you know, in Canada, we have a we have a problem with affordability, and and we need to improve our GDP.

Patrick Kenny: Okay. Last one from me. Dean, you had a comment in the release just on the need to improve Canada's competitiveness through, I guess, policy reform. Can you just expand on what you think industry needs to see in order for the energy sector to reach its full potential?

Jared: The need to improve Canada's competitiveness through policy reform can you just expand on what you think industry needs to see in order for the.

Jared: Energy sector.

Jared: Reach its full potential.

Jared: Yes, well.

Jared: First of all.

Dean Setoguchi: Yeah. Well, first of all, I'm optimistic that we're going to see some change. Cautiously optimistic, maybe I should say, with the new leadership in place. In Canada, we have a problem with affordability, and we need to improve our GDP. We are a resource-based country. Where do we have the best opportunity to improve our GDP? It's our energy sector. I'm very hopeful that our prime minister understands a balance between the need to be environmentally responsible, which I think that we're tops on that front in our industry, but also balancing that with the need to be competitive if we want to grow and export our responsibly produced products around the world. What that means to me is we need to see improvements in policy and reevaluate the emissions cap, the clean energy policies.

Jared: <unk>.

Jared: I'm optimistic that we're going to see some change.

Jared: Actually optimistic maybe I should say with with.

Jared: The new leadership in place and.

Jared: In Canada, we have we have a problem with affordability and we need to improve our GDP and where our resource based countries and so where do we have the best opportunity to improve our GDP, it's our energy sector. So I'm very hopeful that our prime minister understands that bill.

Dean Setaguchi: And, you know, we are a resource based country. And so where do we have the best opportunity to improve our GDP, it's our energy sector. So I'm very hopeful that our Prime Minister understands the balance between, you know, the need to be environmentally responsible, which I think that we're tops on that, on that, on that front in our industry, but also balancing that with the need to be competitive if we want to grow and export our responsibly produced products around the world.

Jared: <unk> between the need to be environmentally responsible which I think that were Thompson.

Jared: On that front in our industry, but also balancing that with the need to be competitive if we want to grow and export. Our response, we produce the products around the world and so what that means to me is we need to see improvements in policy.

Dean Setaguchi: And so, you know, what that means to me is, you know, we need to see improvements in policy, you know, and reevaluate the emissions rate. The emissions cap, the the clean energy, you know, policies, we have to really have policies and permitting and regulations in place so that we can build more capacity to the West Coast, build more LNG, so that we have, you know, more customers to sell our products to versus being so captive to the United States. And, and we have to also break down interprovincial trade barriers, which, which is unbelievable that that's something that's self-created by ourselves.

Jared: And reevaluate the emissions cap the clean energy.

Jared: Policies.

Jared: We have two.

Jared: Really have policies and permitting and regulations in place. So that we can build more capacity to the west coast build more LNG. So that we have more customers to sell our products to versus being so captive to the United States and.

Dean Setoguchi: We have to really have policies and permitting and regulations in place so that we can build more capacity to the West Coast, build more LNG so that we have more customers to sell our products to versus being so captive to the United States. We have to also break down interprovincial trade barriers, which is unbelievable that that's something that's self-created by ourselves. If you can address some of those issues, our industry will perform very well. We have a very low-cost production based in Alberta and BC and a very big abundance of resource. We just have to have better policies to get it to market.

Jared: And we have to also breakdown the interprovincial trade barriers, which.

Jared: Which is unbelievable, but that's something that's self created by ourselves.

Jared: So if you can address some of those issues.

Dean Setaguchi: So, you know, if you can address some of those issues, our industry will, will perform very well. We have a very low cost production base in Alberta and BC, and a very big abundance of resource. So we just, we just have to have better policies to get it to market.

Jared: Our industry will perform very well we have a very.

Jared: Low cost.

Jared: Production.

Jared: Based in Alberta, and BC and a very big.

Jared: Big abundance of resource. So we just we just have to have better policies to get it to market.

Speaker Change: Alright, thanks for that I'll turn it back.

Dean Setaguchi: Alright, thanks for that.

Patrick Kenny: All right. Thanks for that. I'll turn it back.

Patrick Kenny: Thanks, Patrick.

Dean Setaguchi: I'll turn it back. Thanks Patrick. Thanks Win-Q by the Oilers last night. I think you're an Oilers fan.

Speaker Change: <unk> by the oil as I said I think you were already spent.

Dean Setoguchi: Thanks, Patrick. Nice wind cue by the Oilers last night. I think you're an Oilers fan.

Jared: Yes.

Speaker Change: Your next question comes from Ben Pham with BMO capital markets. Your line is now open.

Ben Pham: Your next question comes from Ben Pham with BMO Capital Markets. Your line is now open. Oh, thanks. Good morning, everybody.

Operator: Your next question comes from Ben Pham with BMO Capital Markets. Your line is now open.

Ben Pham: Oh, Thanks, good morning, everybody.

Ben Pham: Oh, thanks. Good morning, everybody. Maybe I'll start off a couple of questions on the FRAC capacity and market. Can you talk about how the FRAC capacity market's going to shake out the next couple of years? You sanctioned the phase 3, the deep bottleneck, your competition vetting capacity. Do you anticipate by 2028 that the market's going to be more of an oversupply situation, or do you think it's more of a runway even beyond that?

Ben Pham: To start off by a couple of questions on the.

Dean Setaguchi: May I start off with a couple of questions on the FRAC capacity and market? Can you talk about how the FRAC capacity market's going to shake out the next couple of years? You sanctioned the phase three, the deep bottleneck, your competition betting capacity. Do you anticipate by 2028 that the market's going to be more of an oversupplied situation? I think it's a more of a runway even beyond that.

Ben Pham: The frac capacity in <unk>.

Ben Pham: End market.

Speaker Change: Can you talk about.

Speaker Change: How the Frac capacity market is going to shake out. The next couple of years. It is sanctioned that phase that phase III at the Debottleneck competition betting.

Speaker Change: <unk> do you anticipate by 2028.

Speaker Change: The market is going to be more of an oversupply situation.

Speaker Change: More of a run rate even beyond that.

Ben Pham: Good morning, Ben.

Dean Setaguchi: Good morning, Ben. And, you know, that's a that's a really great question. And certainly, when we look forward, like when we look at the long term market fundamentals, our basin is going to grow. And again, a lot of that's just tied to what we see in growth, tied to LNG exports, mainly from LNG Canada. And, you know, we're hearing that there's more momentum around the sanction on phase two. But bottom line, there's going to be more natural gas growth in our basin, which is also going to drive growth in NGL as well. And so right now, we're, we're fully maxed out on on our capacity utilization, not just us, but our competitors as well, in terms of fact, frack utilization at Fort Saskatchewan.

Ben Pham: That's a really great question and certainly when we look forward like when you look at the long term market fundamentals. Our basin is going to growth and again a lot of that is just tied to what we see in growth tied to LNG exports, mainly from LNG, Canada.

Dean Setoguchi: Good morning, Ben. That's a really great question. Certainly, when we look forward, when we look at the long-term market fundamentals, our basin's going to grow. Again, a lot of that's just tied to what we see in growth, tied to LNG exports, mainly from LNG Canada. We're hearing that there's more momentum around a sanction on phase 2. Bottom line, there's going to be more natural gas growth in our basin, which is also going to drive growth in NGLs as well. Right now, we're fully maxed out on our capacity utilization, not just us, but our competitors as well in terms of FRAC utilization at Fort Saskatchewan. There's certainly a lot of demand for new capacity for a short period of time. Could it get overbuilt? It's quite possible.

Speaker Change: We're hearing that there is more momentum around the sanction on phase two but bottom line, there's going to be more natural gas growth in our basin, which is also going to drive growth in Ngls.

Speaker Change: Well and so right now where we're fully.

Speaker Change: Maxed out on capacity utilization, not just us, but our competitors as well in terms of frac utilization at Fort Saskatchewan. So there's certainly a lot of demand for for new capacity.

Dean Setaguchi: So there's certainly a lot of demand for for new capacity in the you know, for a short period of time, could it get overbuilt? It's quite possible. But the great thing is for us is that there's a lot of there's been a lot of demand for our service. And with that, we've contracted up about 85% of our whole frack complex. And that would include, you know, frack one, frack two, and the D bottleneck and frack three. So it's highly, highly contracted already. So we've mitigated that risk. And, and we think that, you know, we're gonna have more opportunities to to fill the last 15%.

Speaker Change: For a short period of time could it get overbuilt, it's quite possible, but the great thing is for US is that there's a lot of there's been a lot of demand for our service and with that we've contracted up.

Dean Setoguchi: The great thing for us is that there's been a lot of demand for our service. With that, we've contracted up about 85% of our whole FRAC complex. That would include FRAC 1, FRAC 2, and the deep bottleneck and FRAC 3. It's highly contracted already. We've mitigated that risk, and we think that we're going to have more opportunities to fill the last 15%.

Speaker Change: About 85% of our whole Frac complex and that would include Frac, one frac, two and the Debottleneck and Frac III. So it's highly highly contracted already.

Speaker Change: So we've mitigated that risk in and we think that we're going to have more opportunities to to fill the last 15%.

Speaker Change: Okay got it thanks, thanks for that.

Ben Pham: Okay. Got it. Thanks for that. Just staying on the FRAC side, can you remind me just how the contracts, I mean, you mentioned 85%, but was there some that you were recontracting 1 April? If so, just the overall commentary on the trend?

Dean Setaguchi: Got it. Thanks. Thanks for that.

Speaker Change: Okay.

Speaker Change: Just staying on the Frac side can you remind me.

Jamie Urquhart: And Just staying on the FRAC side, can you remind me just how the contracts, I mean, you mentioned 85%, but was there some that you were recontracting April 1st? And if so, just overall, a commentary on the trend?

Speaker Change: Just how the contracts.

Speaker Change: <unk>, 5%, but was there some that you are re contracting April 1st then.

Speaker Change: So just overall.

Speaker Change: Our commentary on the trend.

Speaker Change: Well.

Speaker Change: I can turn this over to Jamie, but generally we've been re contracting.

Jamie Urquhart: Well, you know, I can turn this over to Jamie. But generally, I mean, we've been recontracting at KFS for the last couple years. You know, if you remember, last year, we announced I think it was about 30,000 33,000 barrels a day of, of long term frack capacity contracts that were signed that were over 10 years in duration. And I can tell you over the past year, we signed a lot more contracts of similar nature. So, you know, we've, we've, we've done a really good job. And again, it's just something that we've been doing ongoing. The other thing I'd mentioned is that a lot of the frack contracts, in fact, almost all of them are integrated deals that are tied to other services, whether it's upstream with our G&P business caps, and also our downstream marketing business and logistics business.

Dean Setoguchi: Well, I can turn this over to Jamie, but generally, I mean, we've been recontracting at KFS for the last couple of years. If you remember, last year, we announced, I think it was about 33,000 barrels a day of long-term FRAC capacity contracts that were signed that were over 10 years in duration. I can tell you, over the past year, we've signed a lot more contracts of similar nature. We've done a really good job. Again, it's just something that we've been doing ongoing. The other thing I'd mention is that a lot of the FRAC contracts, in fact, almost all of them are integrated deals. They're tied to other services, whether it's upstream with our G&P business CAPS and also our downstream marketing business and logistics business. It's been very good for our company, and you can see it in our results.

Speaker Change: <unk> for the last couple of years.

Jamie: If you remember last year, we announced I think it is about 30000 33000 barrels a day of long term frac capacity contracts that were signed that were over 10 years in duration and I can tell you over the past year, we signed a lot more contracts of similar nature.

Jamie: No.

Jamie: <unk>.

Speaker Change: We've we've done a really good job and again, it's just something that we've been doing ongoing the other thing I'd mentioned is that a lot of the frac contracts in fact, almost all of them are integrated deals they're tied to other services, whether it's upstream with our G&P business caps and also our downstream marketing business and logistics business. So it's.

Speaker Change: It's been very good for our company and you can see it in our results.

Jamie Urquhart: So it's, it's, it's been very good for our company. And you can see it in our results So I think the thing that I would add to that, Ben, and it's a great question is that, as Dean said, is we've we've been recontracting and for duration, but we've also been proactive in blending and extending contracts that were due to be recontracted, so that we do stay out of that phenomena, as you pointed out, that we may find that our province a little bit overbuilt in the 28 timeframe. And the key was to make sure that we had as little amount of contracts renewing in that time period as possible.

Speaker Change: So I think the thing that I would add to that Ben and it's a great question is that as Dave said is we've been re contracting and for duration.

Jamie Urquhart: I think the thing that I would add to that, Ben, and it's a great question, is that, as Dean said, we've been recontracting and for duration, but we've also been proactive in blending and extending contracts that were due to be recontracted so that we do stay out of that phenomenon, as you pointed out, that we may find our province a little bit overbuilt in the 2028 timeframe. The key was to make sure that we had as little amount of contracts renewing in that time period as possible. We do that, as Dean said. Really, we believe KFS is the best connected FRAC to market. Obviously, the AltaGas deal that we announced last quarter is part of that. We have the best connectivity to butane in the province, and we have now a comparable, if not preferred, access for propane as well.

Speaker Change: But we've also been proactive in blending and extending contracts that were due to be re contracted so that we do stay out of that phenomenon. As you pointed out that we may find that.

Speaker Change: Our province, a little bit overbuilt in the 2008 timeframe and the key was to make sure that we had as little amount of contracts renewing in that time period as possible and we do that as Dean said really we believe <unk> has the best connected.

Jamie Urquhart: And we do that, as Dean said, really, we believe KFS is the best connected frack to market. And obviously, the AltaGas deal that we announced last quarter is part of that, but we have the best connectivity to butane in the province and we have now a comparable, if not preferred access for propane as well. So it sounds like it's a legacy comment that 50% of your capacity is recontracted April 1st. That's more of an old way of thinking about it. Yeah, I would think about it from the perspective of that. You know, we've got some opportunities over the next short period of time to have that fully contracted.

Speaker Change: Frac to market and obviously the out the gas deal that we announced last quarter as part of that but we have the best connectivity to butane in the province, and we have now.

Speaker Change: A comparable if not a pre.

Speaker Change: Preferred access for propane as well.

Speaker Change: Okay.

Speaker Change: Right.

Ben Pham: Okay. It sounds like it's a legacy comment that 50% of your capacity is recontracted 1 April. That's more of an old way of thinking about it.

Speaker Change: The legacy comment that 50% of your.

Speaker Change: The capacity is re contracted April for us that smoking I would pull the way of thinking about it.

Speaker Change: Yeah, I would think about it from the perspective of that.

Jamie Urquhart: Yeah. I would think about it from the perspective of that we've got some opportunities over the next short period of time to have that fully contracted. That's our goal, is to have that facility fully contracted probably within the next 12 months.

Speaker Change: We've got some opportunities over the next short period of time to to have that that fully contracted that's our goal is to have that facility fully contracted probably within the next 12 months than maybe maybe some of your comments are you like I would say if we went back five five plus years ago.

Dean Setaguchi: That's our goal, is to have that facility fully contracted, probably within the next 12 months. Ben, maybe some of your comments are tied to, like, I would say, if we went back five plus years ago, there was a lot more contracts that renewed on an annual basis every April. And what Jamie and his team have done is that they've really lengthened those contracts and put a lot of term to it. So that's why the average duration of our contracts now are like in the eight-year range, and again, a significant amount of them, 10 plus years.

Dean Setoguchi: Ben, maybe you're sending me comments are tied to I would say if we went back 5+ years ago, there was a lot more contracts that renewed on an annual basis every April. What Jamie and his team have done is that they've really lengthened those contracts and put a lot of term to it. That's why the average duration of our contracts now are in the 8-year range. Again, a significant amount of them, 10+ years.

Speaker Change: There is a lot more contracts that renewed on an annual basis every April and what Jamie and his team have done is that they've really linked in those contracts and put a lot of term to it. So that's why the average duration of our contracts now are like in a year range and and again, a significant amount of them 10 plus years.

Speaker Change: Yeah, Okay. That's great. Thank you.

Speaker Change: Thank you.

Dean Setaguchi: Yeah, okay. That's great.

Ben Pham: Yeah. Okay. That's great. Thank you.

Spiro Dounis: Thank you.

Speaker Change: Your next question comes from Spiro <unk> with Citi. Your line is now open.

Dean Setoguchi: Thank you.

Spiro Dounis: Your next question comes from Spiro Dounis with Citi. Your line is now open. Thanks, Operator. Good morning, team. Wanted to start with CAHPS, if we could, more specifically around zones one through three, actually. So Dean, I think you'd sort of talked about in the past, growing into that 10 to 15% return range for that segment of the pipeline. And obviously, some growth announced today between WAPITI sort of filling up sooner than expected, KFS3 now getting FID'd at least a little bit sooner than we'd expected. So I'm curious, maybe just a level set on the impact to that CAHPS zone one through three, and how you're tracking, you know, to that 10 to 15% range now.

Operator: Your next question comes from Spiro Dounis with Citi. Your line is now open.

Speaker Change: Thanks, operator, good morning team.

Speaker Change: Wanted to start with the caps, we could more specifically around zones <unk> three actually.

Ben Pham: Thanks, operator. Good morning, team. I wanted to start with KAPS, if we could, more specifically around Zones 1 to 3, actually. Dean, I think you'd sort of talked about in the past growing into that 10% to 15% return range for that segment of the pipeline. Obviously, some growth announced today between Wapiti sort of filling up sooner than expected, KFS3 now getting FID'd at least a little bit sooner than we had expected. I'm curious, maybe just to level set on the impact to that KAPS Zones 1 to 3 and how you're tracking to that 10% to 15% range now.

Spiro Dounis: Thanks, operator. Good morning, team. I wanted to start with KAPS, if we could, more specifically around Zones 1 to 3, actually. Dean, I think you'd sort of talked about in the past growing into that 10% to 15% return range for that segment of the pipeline. Obviously, some growth announced today between Wapiti sort of filling up sooner than expected, KFS3 now getting FID'd at least a little bit sooner than we had expected. I'm curious, maybe just to level set on the impact to that KAPS Zones 1 to 3 and how you're tracking to that 10% to 15% range now.

Speaker Change: So Dean I think you had sort of talked about in the past rolling into that 10% to 15% return range for that segment of the pipeline.

Speaker Change: And obviously, some some growth announced today between wapiti sort of filling up sooner than expected.

Speaker Change: There's three now getting at.

Speaker Change: At least a little bit sooner than we had expected. So I'm curious maybe just to level set on the impact to that capstone, one through three and how you're tracking to that 10% to 15% range now.

Speaker Change: Yes, good morning, and thank you for the question on Capstone of three.

Dean Setaguchi: Yeah, good morning. And thank you for the question on CAHPS Zone 3. And believe me, there's going to be a lot of growth, continued growth in Zones 1 to 3 that we're very excited about. And as you would have saw in our results, you know, our LI, liquids infrastructure performance was very strong this quarter. And, you know, some of that obviously is driven by growth that we're seeing on CAHPS Zones 1 to 3. You know, what we've been saying, and we stand behind our guidance is that our 7 to 8% fee-for-service EBITDA growth target out to 2027.

Dean Setoguchi: Yeah. Good morning. Thank you for the question on KAPS Zone 3. Believe me, there's going to be a lot of growth, continued growth in Zones 1 to 3 that we're very excited about. As you would have saw in our results, our LI Liquids Infrastructure performance was very strong this quarter. Some of that, obviously, is driven by growth that we're seeing on KAPS Zones 1 to 3. What we've been saying, and we stand behind our guidance, is that our 7% to 8% fee-for-service EBITDA growth target out to 2027. A lot of that is going to be from existing assets, including volume and margin growth on KAPS. We continue to see strong demand. We fully expect KAPS to continue to ramp up beyond 2027. It's going to contribute to our fee-for-service growth out to 2030 and beyond.

Speaker Change: And believe me there is going to be a lot of growth continued growth in zones. One to three that we're very excited about and as you would've saw in our results.

Speaker Change: Our ally liquids infrastructure performance was very strong this quarter and some of that obviously is driven by growth that we're seeing on caps zones one to three.

Speaker Change: <unk>.

Speaker Change: What we've been saying and we stand behind our guidance is that our 7% to 8% fee for service EBITDA growth target out to 2027.

Dean Setaguchi: You know, a lot of that is going to be from existing assets, including volume and margin growth on CAHPS. And we continue to see strong demand, we fully expect CAHPS to continue to ramp up beyond 2027. So it's going to contribute to our fee-for-service growth out to 2030 and beyond. And, and again, it's really helping us lock up integrated deals across our value chain, including FRAC 3, which is what we announced today.

Speaker Change: A lot of that is going to be from existing assets, including <unk>.

Speaker Change: <unk> and margin growth on caps.

Speaker Change: We continue to see strong demand, we fully expect <unk> to continue to ramp up beyond 2027. So it is going to contribute to our fee for service growth.

Speaker Change: 2030, and beyond and again, it's really helping us.

Dean Setoguchi: Again, it's really helping us lock up integrated deals across our value chain, including FRAC 3, which is what we announced today.

Speaker Change: Lockup integrated deals across our value chain, including Frac, III, which is what we announced today.

Speaker Change: Got it so that's great to hear.

Speaker Change: Second one maybe for you Ilene, just with respect to capital allocation here.

Dean Setaguchi: Got it. So it's great to hear.

Ben Pham: Got it. It's great to hear. Second one, maybe for you, Eileen, just with respect to capital allocation here and really focusing on the share repurchase program. I think it's safe to say that equities have been a little bit more volatile than normal this year. I guess I'm just curious, is this the type of market that your opportunistic program was built for? Have buybacks moved up in the capital stack lately, or are you still finding more growth opportunities are more attractive at this point?

Spiro Dounis: Got it. It's great to hear. Second one, maybe for you, Eileen, just with respect to capital allocation here and really focusing on the share repurchase program. I think it's safe to say that equities have been a little bit more volatile than normal this year. I guess I'm just curious, is this the type of market that your opportunistic program was built for? Have buybacks moved up in the capital stack lately, or are you still finding more growth opportunities are more attractive at this point?

Eileen Marikar: Second one, maybe for you, Eileen, just with respect to capital allocation here, and really focusing on the share repurchase program. I think safe to say that equities have been a little bit more volatile than normal this year. And so I guess I'm curious, is this the type of market that your opportunistic program was built for? Have buybacks moved up in the capital stack lately? Are you still finding more growth opportunities are more attractive at this point?

Speaker Change: And really focusing on the share repurchase program I think safe to say that in equities have been a little bit more volatile than normal this year and so I guess I'm. Just curious is this the type of market that you're opportunistic program was built for buybacks moved up in the capital stack lately are.

Speaker Change: Are you still finding more growth opportunities are more attractive at this point.

Speaker Change: Hi, Spiro. Thank you for the question.

Eileen Marikar: Hi, Spiro. Thank you for the question. Yeah, I think, you know, it really remains the same where we're really excited that we have the buyback option as a tool that we can continue to use opportunistically. But it really and it is something that we will continue to weigh as an option. But as we've said before, the preference is to grow our business with infrastructure that will be around for decades. And, you know, with all the commentary you heard from Dean earlier, as well, where we see the basin growing, there are opportunities well beyond what we've talked about today have been PrAC expansions and Zone 4.

Speaker Change: Yeah, I think it really remains the same where we're really excited that we have the buyback option as a tool that we can continue to use opportunistically, but it really and it is something that we will continue to weigh as an option, but as we said before the preference is to grow our business with infrastructure that.

Eileen Marikar: Hi, Spiro. Thank you for the question. Yeah, I think it really remains the same, where we're really excited that we have the buyback option as a tool that we can continue to use opportunistically. It is something that we will continue to weigh as an option. As we said before, the preference is to grow our business with infrastructure that will be around for decades. With all the commentary you heard from Dean earlier as well, where we see the basin growing, there are opportunities well beyond what we've talked about today of FRAC expansions and zone 4. Again, our preference is to allocate capital to continue to grow the business. Again, it remains unchanged. We will allocate capital to that highest value option, whether it's organic, inorganic growth, or buybacks.

Speaker Change: We'll be around for decades.

Speaker Change: All of the commentary you heard from Dean earlier, as well, where we see the base and growing there are opportunities well beyond what we've talked about today and then frac expansions in zone four so we again, our preference is to allocate capital to.

Eileen Marikar: So we, you know, again, our preference is to allocate capital to continue to grow the business. So again, it remains unchanged, you know, we will allocate capital to that highest value option, whether it's organic, inorganic growth or buyback.

Speaker Change: Continuing to grow the business. So again it remains unchanged, we will allocate capital to that highest value option, whether it's organic inorganic growth or buybacks.

Speaker Change: Alright, I will leave it there thanks, everyone.

Ben Pham: All right. I'll leave it there. Thanks, everyone.

Spiro Dounis: All right. I'll leave it there. Thanks, everyone.

Spiro Dounis: All right, I'll leave it there. Thanks, everyone.

Speaker Change: Thank you have a good day.

Speaker Change: Ladies and gentlemen, as a reminder, should you have a question. Please press star one. Your next question comes from Maurice Chow with RBC capital markets. Your line is now open.

Eileen Marikar: Thank you, have a good day.

Dean Setoguchi: Thank you. Have a good day.

Operator: Ladies and gentlemen, as a reminder, should you have a question, please press star one. Your next question comes from Maurice Choy with RBC Capital Markets. Your line is now open.

Operator: Ladies and gentlemen, as a reminder, should you have a question, please press star 1.

Maurice Chow: Your next question comes from Maurice Chow with RBC Capital. Your line is now. Thank you and good morning, everyone. I just wanted to come back to the marketing guidance. You mentioned that this guidance obviously reflects the $50 million impact from the outage, but also highlighted the risk management program that mitigates the impact of commodity price volatility. So I wonder if you could give us some examples of what you've done here. For example, were these positions that were in or out of the money, but you chose to close them a little bit early, given the uncertain commodity price environment?

Speaker Change: Thank you and good morning, everyone just wanted to come back to the marketing guidance you.

Maurice Choy: Thank you. Good morning, everyone. Just wanted to come back to the marketing guidance. You mentioned that this guidance, obviously, reflects the $50 million impact from the outage, but also highlighted the risk management program that mitigates the impact of commodity price volatility. I wonder if you could give us some examples of what you have done here. For example, were these positions that were in or out of the money, but you chose to close them a little bit early given the uncertain commodity price environment, or is there something else?

Speaker Change: You mentioned that this guidance, obviously reflects the $15 million impact from the outage.

Speaker Change: <unk> highlighted the risk management program that mitigates the impact of commodity price volatility. So I'm wondering if you could give us some examples of what you've done here for example, where these positions that we're in or out of the money, but you chose to quote them a little bit.

Speaker Change: Early given the uncertain commodity price environment or something else.

Speaker Change: Yes.

Speaker Change: Thank you for the question.

Jamie Urquhart: Yeah, thank you for the for the question.

Dean Setoguchi: Yeah. Thank you for the question. First of all, before I turn it over to Jamie, I'd just say that we are not making speculative decisions where the market goes up or down, we unwind everything, and then reset our book hoping the market goes back up. We're really just trying to make sure that we preserve margin. Anyway, with that, I'll turn it over to Jamie, and he can elaborate for us.

Speaker Change: First of all before I turn it over to Jamie I would just say that we are not.

Dean Setaguchi: And first of all, before I turn over to Jamie, I just say that we are not making speculative decisions where, you know, the market goes up or down and we unwind everything and then reset our book, hoping the market goes back up. We're really just trying to just make sure that we preserve margin. So but anyway, with that, I'll turn over to Jamie and he can elaborate. Yeah, well, I think you you made the point I was about to make because yeah, I would not want anybody to take away from my previous comments that we're in and out of the market based on volatility.

Speaker Change: Making speculative decisions were.

Speaker Change: The market goes up or down and we unwind everything and then reset our bookings, hoping the market goes back up.

Speaker Change: We're really just trying to just.

Speaker Change: Just to make sure that we preserve margin.

Speaker Change: But anyway with that I'll turn it over to Jamie if you can elaborate yes, well I think you made the point I was about to make because yes.

Jamie Urquhart: Yeah. Well, I think you made the point I was about to make because, yeah, I would not want anybody to take away from my previous comments that we're in and out of the market based on volatility. That is not how we run our book at all, right? It's just that it's being patient and not panicking when prices go down certain levels and ultimately understanding the market well enough to know when it's appropriate to layer in positions. We've done that very, very well over the years, and we continue to do that very, very well. It's set our ability to deliver on the results and the guidance that we've given and created the confidence that we will deliver to that guidance.

Speaker Change: One <unk>.

Speaker Change: Not anybody to take away from my previous comments that were in and out of the market based on volatility that is not how we run our book at all it's just that it's been patients.

Jamie Urquhart: That is not how we run our book at all. Right. It's just that it's it's it's being patient and not panicking when prices go down certain levels. And also ultimately understanding the market well enough to know when it's appropriate to layer in positions. And we've done that very, very well over the years. And we continue to do that very, very well. So and it's and it's it's set our ability to to deliver on the the the results that we've and the guidance that we've given and and created the confidence that we will deliver to that guidance.

Speaker Change: Not panicking when prices go down certain levels and also ultimately understanding the market well enough to know when it's appropriate to layer in positions and we've done that very very well over the years and we continue to do that very very well.

Speaker Change: So and et.

Speaker Change: It said our ability to deliver on the.

Speaker Change: The results that we have in the guidance that we've given in and created the confidence that we will deliver to that guidance.

Speaker Change: Maybe maybe just to one of the points that Jamie made earlier, though which is unrelated to hedging is that when you have a lot of volatility in markets sometimes markets dislocate.

Dean Setoguchi: Yeah. Maybe just to one of the points that Jamie made earlier, though, which is unrelated to hedging, is that when you have a lot of volatility in markets, sometimes markets dislocate. We have assets, and we have logistics and marketing expertise to take advantage of market dislocation. We can move products from one market to another market and make a margin off it. Sometimes those opportunities present themselves in environments like we see today. We'll see how 2026 plays out. Again, we can potentially enhance our book with some of those types of opportunities.

Dean Setaguchi: Yeah, maybe maybe just to one of the points that Jamie made earlier, though, which is unrelated to hedging, is that when you have a lot of volatility in markets, sometimes markets dislocate and we have assets and we have logistics and marketing expertise to take advantage of market dislocation. And so we can move products from one market to another market and and make a margin off it. And sometimes those opportunities, you know, present themselves in environments like we see today. So we'll see how 2026 plays out. And again, we can potentially enhance our book with some of those types of opportunities.

Speaker Change: And we have assets and we have logistics and marketing expertise to take advantage of market dislocation and so we can move products from one market when other market and make a margin off it and sometimes those opportunities.

Speaker Change: Present themselves in environments like we see today, So we'll see how 2026 plays out.

Speaker Change: And again, we can potentially enhance our book with some of those types of opportunities yeah.

Speaker Change: Until later on so that it's a great point that Dean makes is that we have been able to take more advantage of.

Jamie Urquhart: Yeah, and to layer on to that is and it's a great point that Dean makes is that, you know, we we have been able to take more advantage of of that those type of dislocations and or opportunities as a result of the additional storage that we bought a couple of years ago at the KFS complex from from our previous partner at that facility. So you will have seen the benefit of that additional storage over the last couple of years in our results, and you'll continue to see that benefit based on the fact that when there's volatility, that creates massive opportunities to take advantage of physical storage.

Jamie Urquhart: Yeah. To layer onto that, and it's a great point that Dean makes, is that we have been able to take more advantage of those type of dislocations and/or opportunities as a result of the additional storage that we bought a couple of years ago at the KFS complex from our previous partner at that facility. You will have seen the benefit of that additional storage over the last couple of years in our results, and you'll continue to see that benefit based on the fact that when there's volatility, that creates massive opportunities to take advantage of physical storage.

Speaker Change: That those type of dislocations and our opportunities as a result of the additional storage that we bought a couple of years ago at the <unk> complex from from our previous partner at that facility. So you will have seen the benefit of that additional storage over the last couple of years in our results and Youll continue to see that benefit based on.

Speaker Change: And the fact that when there is volatility that creates massive opportunities to take advantage of physical storage.

Speaker Change: Maybe just double clicking on that comment about dislocation and volatility I think in your prepared remarks.

Maurice Chow: Maybe just double-clicking on that comment about dislocation and volatility, I think in your prepared remarks, you highlighted a number of favorable long-term trends about the basin's growth, and I wonder if you could give us a little bit more of a shorter-term view. You've highlighted that you made some progress in filling the available capacity, but just your outlook about the basin over the coming months or quarters. Sorry, I just want to make sure I understand your question, Maurice. It's just, are you talking about just the General Basin? Or are you talking specifically to our marketing business?

Maurice Choy: Maybe just double-clicking on that comment about dislocation and volatility. I think in your preparatory marks, you highlighted a number of favorable long-term trends about the basin's growth. I wonder if you could give us a little bit more of a shorter-term view. You've highlighted that you made some progress on filling the available capacity, but just your outlook about the basin over the coming months or quarters.

Speaker Change: A number of.

Speaker Change: Favorable long term trends about the basins Coke and.

Speaker Change: And I Wonder if you could give us a little bit more of a shorter term view.

Speaker Change: You made some progress on filling the available capacity.

Speaker Change: Just outlook about basin over the coming months or quarters.

Speaker Change: So I just want to make sure I understand your question <unk> is just talking about just the general basin.

Dean Setoguchi: Sorry. I just want to make sure I understand your question, Maurice. Are you talking about just the general basin, and.

Speaker Change: In general basis.

Speaker Change: Our growth or are you talking about specifically to our marketing business.

Maurice Choy: General basin.

Dean Setoguchi: All in growth, or are you talking specifically to our marketing business?

Speaker Change: No general base and not the marketing specific mobile the base business.

Dean Setaguchi: No, General Basin, Malcolm R. more about the base. Yeah, you know what, our base business has been very, very stable. And we're seeing still continued demand. You know, what I find with the consolidation that we've seen, and I also watch what happens on north, sorry, south of the border, get my directions mixed up here. But you know, with with with more and more consolidation, like I looked down in the US, a lot of the majors now control a lot of the shell plays, and they've taken out a lot of the private guys and the smaller players that are drilling no matter what, just to grow and increase their valuation for sale.

Maurice Choy: No. General basin, not the marketing specific. More about the base business.

Speaker Change: Yeah.

Speaker Change: Our base business has been very very stable and we're seeing still continued demand.

Dean Setoguchi: Yeah. You know what? Our base business has been very, very stable, and we're seeing still continued demand. What I find with the consolidation that we've seen and I also watch what happens on north, sorry, south of the border. I get my directions mixed up here. With more and more consolidation, I look down in the US, a lot of the majors now control a lot of the shale plays, and they've taken out a lot of the private guys and the smaller players that are drilling no matter what just to grow and increase their valuation for sale. I think that all those players and that's happening, obviously, in Canada as well. You saw Tourmaline and ARC and another unknown producer buy some assets off of Strathcona. I just believe that those larger players have a longer-term view. They're more strategic.

Speaker Change: I find with the consolidation that we've seen and I also watch what happens the north south of the border and give them a directions mixed up here, but.

Speaker Change: With with more and more consolidation like I look down in the U S. A lot of the majors now control a lot of the shale plays and they've taken out a lot of the private guys and the smaller players that are drilling no matter, what just to grow and increase their valuation for sale. So.

Speaker Change: So I think that.

Speaker Change: All of those players and Thats happening, obviously in Canada, as well and you saw terminalling and arc and another unknown producer by some assets off of <unk>.

Dean Setaguchi: So, you know, I think that, you know, all those players, and that's happening, obviously, in Canada as well. And you saw Tourmaline and ARK and another unknown producer buy some assets off of Strathcona. I just believe that those larger players have a longer term view, they're more They have very strong balance sheets. And so and they also understand that, that infrastructure cannot be built overnight. I mean, just think about our frack three, it won't be in service for three years. So that's why they're making continued commitments across our value chain, because they anticipate what's happening with more egress being built, and volume growth in Canada, and they realize that we need critical infrastructure to enable the growth, which is what Kira has, and what Kira will continue to build in the future.

Speaker Change: Kona.

Speaker Change: I just believe that those larger players have a longer term view theyre more strategic.

Speaker Change: They have very strong balance sheets, and so and they also understand that that infrastructure cannot be built overnight.

Dean Setoguchi: They have very strong balance sheets. They also understand that infrastructure cannot be built overnight. I mean, just think about our FRAC 3. It won't be in service for 3 years. That's why they're making continued commitments across our value chain because they anticipate what's happening with more egress being built and volume growth in Western Canada. They realize that we need critical infrastructure to enable the growth, which is what Keyera has and what Keyera will continue to build in the future.

Speaker Change: Just think about our frac III it wont be in service for three years.

Speaker Change: So that's why they are making continued commitments across our value chain because they anticipate.

Speaker Change: What's happening with more egress being built.

Speaker Change: And volume growth in Western Canada, and they realize that we need critical infrastructure to enable the growth, which is what <unk> has and what <unk> will continue to build the future.

Speaker Change: Understood. Thank you.

Maurice Chow: Understood. Thank you. Thanks for the question.

Speaker Change: Thank you thanks for the questions.

Maurice Choy: Understood. Thank you.

Speaker Change: There are no further questions at this time I will now turn the call over to Dan for closing remarks.

Dean Setoguchi: Thank you. Thanks for the questions.

Dan Cuthbertson: And for the questions at this time, I will now turn the call over to Dan for closing remarks. Thanks all once again for joining us today. Feel free to reach out to our Investor Relations team if you have any additional questions. Everyone enjoy the rest of the day. Thank you.

Operator: No further questions at this time. I will now turn the call over to Dan for closing remarks.

Speaker Change: Thanks, all once again for joining us today feel free to reach out to our Investor Relations team. If you have any additional questions everyone enjoy the rest of the day. Thank you. Thank you.

Dan Cuthbertson: Thanks all once again for joining us today. Feel free to reach out to our investor relations team if you have any additional questions. Everyone, enjoy the rest of the day. Thank you.

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.

Dean Setoguchi: Thank you.

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

Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your line.

Q1 2025 Keyera Corp Earnings Call

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