Q2 2025 Gibson Energy Inc Earnings Call

Good morning everyone and welcome to the Gibson energy. Second quarter 2025 conference call. Please be advised, that this call is being recorded. I would now like to turn the meeting over to Beth Pollock, vice president, Capital markets and risk. Miss Pollock. Please go ahead.

Thank you, good morning and Welcome to our second quarter earnings call joining me today from Gibson energy are Curtis philippon, president and chief executive officer and Riley Hicks, senior vice president and Chief Financial Officer. The rest of our management team is also present to help with questions and answers as required listeners are reminded that today's call refers to non-gaap measures forward-looking information and is subject to certain assumptions and adjustments and may not be indicative of actual results.

Descriptions and qualifications of such measures and information are set out in our investor presentation available on our website and our continuous disclosure documents available on Cedar. Plus with that, I will turn the call over to Curtis

Thanks, Beth. Good morning, and thank you for joining us today to discuss our second-quarter financial and operating results.

Q2 was a great execution quarter for Gibson, we achieved many key Milestones, including the safe and efficient execution of several major capital projects.

Safety Gateway. Execution, growth cost, focus and building high performance teams.

During the second quarter, we completed the Gateway dredging project and turnarounds at the Moosejaw facility and the Hardesty Dru.

With all projects safely, executed on time and on or under budget. We also made significant progress on the cactus 2 connection at Gateway and Advanced Construction on the crude infrastructure in the duven being built. As part of our new long-term producer partnership with Becks. Both are on track and are expected to come online as planned in Q3 and Q4 respectively.

I'd like to thank Marcus Angel's team at Gateway Ken Martin and Cody Johnson's team at The Dru and our Moosejaw team. It was impressive to see the pride these teams took and the preparation and safe execution of their projects, their hard work. Set us up for a strong quarter. These projects will open up additional capabilities for Gibson going forward.

These major projects are completed with zero recordable incidents and we are proud of our continued top cortile, safety performance. Gibson is now achieved the new Milestone of over 9 and a half million hours without a lost time injury.

Our safe operations, provide a critical infrastructure, bridge to enable the reliable flow of energy to key markets across North America and globally.

We continue to grow with our customers and year to date. We have safely, moved over, 260 million Barrels in Canada and over 120 million barrels in the US. Representing year-over-year increases of 6 and 5 percent respectively.

Turning our Focus to Gateway during the second quarter, we completed dredging and observe the benefits of the project immediately with the draft. Now, increase the 52 ft, we are able to load vcc's up to 1.6 million barrels and suezmax vessels in full up to 1.1 million barrels.

Increasing Revenue per loading window and increasing average volumes for vlcc and suezmax vessels by more than 20%.

Following the completion of the project, average throughput at Gateway Rose increased from approximately 600,000 barrels per day to over 700,000 barrels per day, with a new record of 755,000 barrels per day achieved in June.

Higher volumes of the terminal. Resulted in our Corpus Christi market share, increasing to over 30% a new high for Gateway.

Looking forward, we expect the positive momentum to continue into the second half of 2025. The cactus 2 connection is on track to come a line in Q3 this connection constructed to meet. Our customer needs will provide them with long-term access to an incremental 700,000. Barrels per day of crude Supply completing this connection is an important step to unlock further growth potential at Gateway to date. We've grown to over 30% market, share in Corpus while only having access to 2/3 of the supply.

access to this additional Supply, enables more options for our current customers increases operational efficiencies, and expands the pool of customers for Gateway,

Commercially. We see an infrastructure ebit of per share growth rate of greater than 5% over the next 5 years. To drive this growth program, we've been adding key town to our teams in Canada. And the United States, including the recent addition of a new senior commercial director in Canada, Ryan Highland,

Across our business.

We also made significant progress with respect to our, we are all owners cost focused campaign.

If you recall, we set a target of realizing over $25 million in run rate cost savings by the end of 2025, and to do it with high levels of participation. We're on track to exceed the $25 million target, and the participation across the organization has been impressive, with 80% of Gibson employees implementing a change that contributes to this cost challenge.

This is a great example of the power of the ownership culture. At Gibson, over 95% of Gibson employees are shareholders, which helps drive a differentiated performance culture that is aligned with shareholders.

During the quarter, we realize the mix of 1-time and run rate, cost savings across all areas from a distributable cash flow perspective. This amounted to approximately 9 million or 5 cents per share bringing the total year to date DCF impact to over 50 million dollars or 9 cents for share.

Financially, the strength of our infrastructure business was showcased in Q2 as we finished the quarter with 146 million in adjusted, Ava, and 81 million in distributable, cash flow.

Infrastructure performance in Canada at both Edmonton and Hardesty as well as in the US at Gateway following the completion of the dredging project offset, the cash flow impact of business, interruptions that Gateway moose John Dru, while capital projects are completed and the muted marketing environment.

Overall.

Q2 was an important quarter for Gibson, as we successfully advanced our crude infrastructure strategy with the strong execution of major capital projects. We're looking forward to maintaining this momentum through the second half of the year with this. I'll pass it over to Riley Hicks, who will discuss our financial performance in more detail.

Thank you, Curtis and good morning. Everyone.

As discussed. The second quarter was another strong quarter for our Core Business.

In our infrastructure segment. We reported an adjusted ibida of 153 million.

Consistent with the same period last year and close to the high Watermark of 155 million achieved during the first quarter.

The solid results were driven by continued strong demand for services at both Edmonton and Hardisty, as well as increased throughput at Gateway. This performance helped to mitigate the impact of minor business interruptions during the execution of our dredging project and the planned turnarounds at both Moose Jaw and Hardisty.

Marketing results continued to improve during the quarter with adjusted IBA of 8 million. Landing at the top end of our prior guidance range of 0 to 10 million.

This represents an 8 million improvement over our first quarter results. Although it remains 12 million below the same period last year.

Marketing performance, reflected continued tight commodity differentials limited storage opportunities, and the impact to a refined products business resulting from the planned turnaround at our moo facility.

Looking forward with increased visibility into the second half of the year. We remain confident in our full year, marketing Outlook of 20 to 40 million. Consistent with the guidance, we shared on our first quarter call.

As for the third quarter, we expect marketing performance to be substantially in line with second quarter results.

While crude marketing is expected to benefit from an improved WTI price structure. This impact will partially be offset by take grade differentials driven by egress capacity out of the basin.

Further while crack spreads impacting, our refined product segments have improved, this will be partially offset by reduced North American Drilling rate activity which will impact sales of our drilling food products.

On a consolidated basis, second quarter adjusted EBITDA of $146 million was $13 million lower than the same period last year.

Primarily driven by the muted marketing results.

Looking at distributable cash flow. We generated 81 million in the second quarter. A 20 million decrease compared to the second quarter of 2024.

As noted earlier, this is primarily due to the lower marketing performance, which was only partially offset by the success of our cost savings initiatives, which have resulted in 9 million of operating GNA and replacement cost savings during the quarter.

Turning to our financial position, we remain committed to our financial governing principles and maintaining both a strong balance sheet and a sustainably growing dividend.

As expected, our debt to adjusted ibida ratio of 4 times, was above our long-term target range of 3 to 3. And a half times while infrastructure leverage of 3.8 times remained below, our Target of less than 4 times.

On a Consolidated payout ratio, of 83% was our target range of 70 to 80%. While our infrastructure only payout ratio of 73% was below our Target of less than 100%.

Our Consolidated metrics are temporarily long-term targets reflecting the impact of a heavy Capital program, during the first half of 2025 combined with softer marketing results and is fully aligned with our expectations heading into the year.

The majority of our 2025 growth capital projects are now complete. And with line of sight to a more stable marketing environment, we have a clear pathway to having both Consolidated, leverage, and payout back within our Target ranges by early 2026.

Finally, and in support of our conservative Financial profile, and our commitment to our investment grade rating. Dbrs has maintained our solid Triple B low rating with a stable Trend reaffirming their comfort with our long-term financial plan.

With this, I will now pass the call back to Curtis for a few closing remarks.

Thanks, Riley to close. We are pleased to have ended the first half of 25 with another solid quarter. We achieved key Milestones through the execution of major infrastructure capital projects.

Segment Eva, we maintained a strong and sustainable balance sheet and while infrastructure adjusted metrics remain within targeted levels. We are cognizant that a Consolidated, leverage, and payout metrics are currently above, and have line of sight to both returning within Target ranges by early 2026.

and finally,

we have made considerable advances with respect to the cactus 2 connection, and the new do Renee infrastructure as part of our producer partnership setting up for a strong second half of the year.

Thank you.

As a reminder.

For a star.

1 on your telephone and wait for your name to be announced to withdraw your question. Please press star 1 1 1 1 again.

Please stand by while we compile the Q&A roster.

Our first question comes from the line of Jeremy ton from JP Morgan Securities LLC.

Hi, good morning. This is Eli on for Jeremy. Uh, congrats on a strong quarter, maybe just wanted to start on. Um, the progress of commercialization at you know, post the Sgt GT. Um, just if you can talk about some of the longer term growth opportunities, you see, at Gateway, whether those are vertically integrated permanent bolt-ons or um, you know what that opportunity sale looks like?

Sure, thanks. Good morning, Eli. Uh, from we're pretty excited about what we're doing right now at Gateway. So, the dredging just recently completed and with this Cactus tie-in, you're going to see those benefits being something we're working on over the next few years. Really like there's some immediate volume increases that we're seeing, but the big benefits come from us fully utilizing this new capacity and and recontracting customers at a higher mvcs in the future now that we're able to fully load so as Max vessels and and Phil uh VC's uh to much larger capacity. Uh, so I think you're going to see us use that over the next few years. Like there's a lot of wood that chops still to fully realize the benefits that we got out of the capital project. So you completed this year um longer term you get pretty excited about what else you can do with Gateway. There's obviously interesting vertical integration options that you can have now that you have this, this Gateway platform, but this type of incredible capability out of Engleside. Uh, so what we'll watch for that and even longer term, we

We've talked about that as crude exports increase in the US Engleside, is the most cost-effective place to to export crude out of the us. And we see a good path to building a third dock at that location as well to facilitate that as exports grow in the US, and I think that that's still a number of years out, but that's still a very attractive project, I think in time for Gibson.

got it, that's helpful and then maybe shifting over to marketing um you know I appreciate that there's kind of some push and pull factors that you see progressing through the you know, second half of the year but maybe um

You know, just confidence in a turnaround in 26 and, you know, understanding what that could look like for the business. What would drive sort of stronger performance next year and um you know what you guys are seeing now. Thanks.

I think you're seeing a lot of factors all coming together this year to sort of temporarily have our our marketing segment, pretty muted this year. Um, we're we're pleased to see the sequential Improvement. We're seeing quarter of a quarter as as things are improving. As you get into the 26. I expect that you can continue to see that happen. The things that the things do improve and whether that's, uh, egress efficiency, uh, Refinery crack spreads or even, uh, things like drilling fluid, uh, demand. Uh, so we, we see some line of sight to things improving as you get into into 26, uh, but I, I still would say that we are, you know, we're still cautiously watching that as it's progressing, it's, it is improving. Uh, but, uh, you know, it's still, it's a little bit little bit out and really the marketing. The business depends on macro impacts, and I think we've we've done quite well to capitalize, on, on macro events and I think as you go forward, you'll see us do that, uh, in 26, as well. I think the 1 interesting thing in 25 is,

Uh you're going to have a little bit more efficiency challenges around egress and you're going to continue to see macro impacts and I I would argue that's something that's going to only increase in time and sort of increase opportunities for the marketing segment.

Got it. And then just really quick, one last one. If we could, um, was there any sort of change in July volumes at Gateway? I think there were some folks looking at seaborne exports data showing a drop. I'm not sure if you're seeing anything there. Sorry.

Yeah. There's there's always going to be a a little bit of uh weather related timing things. That'll that'll come up uh uh for her next work terminal, so nothing, nothing notable to comment on.

All right, thanks.

Thank you. 1 moment for our next question.

Our next question comes from the line of Aaron McNeel from TD Cowen.

Hey morning, all thanks for taking my questions. Um Curtis on Gateway. You know you disclose the record volumes growth and excessive you know 20% versus when you acquire the asset on a volume basis and we're yet to see the impact of cactus 2 so volumes could continue to increase.

In that context or in the context of your 15 to 20% ebit. Dog. Growth Target, do you think we could see Gibson exceed this range or do you think that you know there's some nuances in terms of why you know growth at the asset level uh in terms of volumes may not translate into to IBA?

And more nerd. I think. So volumes were already seeing the volumes up ticking already today with cactus tie and that will help us and what you'll see. Another increase in volume, we have 1 customer in particular that, uh, initially backs stop the, the connection that will bring additional volume to gateways. So, you'll see a bit of an uptick related to the volume. Uh, I I would say, you know, 1 from an ibida impact. We feel very good about what we've been messaging that in Q4 that we will.

Meet or exceed the 15 to 20% ibida growth rate that we said we were targeting is when we did the Gateway acquisition that we're going to, we're going to hit that run rate, increase by, by Q4 this year. Feel very good about that. But I would also say that boy we would have, we would have just got Gateway, uh, connected to the cactus to. So we're, we're still pretty early days on fully realizing the benefits of that connection. And so it gives you get into into 26. You're going to see us use that in an even bigger way and find additional efficiencies. We'll see what it does on the volume perspective, but we're always on the volume side. We're always relying on, uh,

The activity of our customers. But what we'll find is that there's just a lot more efficiencies that we can drive with additional capacity connections. I think just drives um, some good ebit opportunities in there and we we'll we'll see what it does to the volume. I expect a small uptick in volume with the cactus connection.

Gotcha. Okay. And then maybe to not to beat a dead horse here, but maybe to follow on, Eli's question on the marketing Outlook. You know what assumptions do we need to believe in terms of, you know, the heavy differential or 211 crack spread or inventory levels in order to get to the lower end of the previous guidance range?

I think in the marketing side, like 1 of the big things I would look at is, you know, is their production growth coming in in western Canada? I think we, we see that that we're seeing Western Canadian production growth coming at us. And, and that will inevitably lead to some tightening of of egress. And, and that will increase marketing opportunities. And so that's for us, that's, you know, probably the 1 of the big levers. There's a number of different levers in this business, to be able to full on, but that's, that's 1 to 1 to watch, for sure.

Thanks, I'll turn it back.

Thank you. 1 moment for our next question.

Our next question comes from the line of Robert Hope from Scotia Bank.

Uh, morning everyone, uh, appreciate the commentary on the South Texas growth Outlook. Um,

maybe moving North On the Border, can you give us an update on? You know, how the next wave of growth projects are? Uh, progressing across the business there.

Everybody, we love the nature of that agreement and that, you know, good guaranteed taker pay long-term agreement on that infrastructure. But importantly, the barrels are driven to our core facilities in Edmonton, in this case, and just drive additional throughput to our facilities. It's just a great way to help out our customer as well. So we love that type of agreement; we'd be happy to do more of that with Bex and with other producers, and we see some good opportunity around that.

And, and then the second part of the growth in Canada, I think near-term, uh, that I get excited about right now is there's a number of optimization type projects that we've been chipping away at some fairly significant major capital projects that Gibson over the last 18 months. Uh, and I, I would argue we've got a bit of a backlog of some of these optimization projects. So we've got to get around to and uh, no 1 of these is that uh, significant for, for that will sort of talk about in great detail but they're typically projects that are so anywhere from 1 to 15 million dollars but good. Excellent return projects that uh, also help out our customers and our sort of on the lower end of the 5 to 7 payback range as well. And uh, so nice, uh, nice projects to get done that. We've got a bit of a backlog that we're we're working through an engineering and our BD team right now.

I appreciate that. Um, and then just in terms of capital, allocation, uh, you know, commentary that uh you know, the debt will remain a little bit above Target this year. Getting back to the range next year. Uh, how are you thinking about, uh, share BuyBacks, uh, just given the continued muted outlook for marketing? And where the leverages

Yeah, thanks, Robert. It's Riley here. Um, you know, as we think about capital allocation and share buybacks specifically, you know, they're always going to be executed within the context of our balance sheet. So as we sit here today and look at our leverage profile, uh, we wouldn't expect to be executing any buybacks here in 2025, and it looks like more likely a 2026 buyback program.

Thank you.

Thank you. 1 moment for our next question.

Our next question comes from the line of Maurice Choi from RBC Capital markets.

Thank you and good morning, everyone. Um, just wanted to speak about the uh, 5 to 7 times Bill multiple that you you reference in terms of capital deployment, uh, you've been clear that you're going to be remaining disciplined and then she's also highlighted that. Some of your opportunities are at the lower end of that range. Uh, not that you need it. But when you look at m&a, what are some of the must-haves for you to go beyond this 5 to 7 times?

Sorry. Morris, we for sure are focused on the organic opportunities. We see a nice set of opportunities that are in that 5 to 7. Build. Multiple m&a, though is something we we constantly look at. And so 1 of the big things that we look at is, is there a, is there an integration with our current Assets in some way? And, uh, so that that's important, that that we look at. So, uh, is there a connection obviously crude Focus that tie to our current assets are are very interesting things. We spend time looking at, uh, you know, the other big thing is, I would say, is Gibson has done a phenomenal job over the years, to accumulate what I call sort of Crown, Jewel assets. Like, these are truly differentiated assets that are best in class and are integral to the energy story in North America and and will be that for the rest of our lifetime. Uh, and so those types of assets, uh, are often, they cost you something to get to acquire. And so those are the types of things that we'll we'll look at. And so uh in the case of Gateway that was 1 of those assets. So we looked at and said that is

Is a incredible strategic fit that has a long-term role to play a significant role to play and us in the US Energy picture and uh, we we saw the value of of stepping above that. 5 to 7, build multiple for sure to go acquire that asset and and so it would, it would require things like that. The things that we think are are truly additional crown jewels to add to the story that I've just that long runway in front of them.

With strong, contracted cash flows in in particular as well.

And just a quick follow-up to that, what consideration is there between an opportunity in Canada versus the U.S.?

I I so I see, I think there's good opportunities both on the, on the, on the capital deployment and on the m&a side on both sides of the Border,

Great. Um and just to finish off um, on marketing. Um, Curtis, I don't know on the last q1 call you suggested that you may reach the low end of the 80 to 120 million.

Marketing guidance for next year. Can you reconfirm this outlook, given your comments earlier about the macro environment, as well as the need to see production growth? Do you sense that this outlook has materially changed?

Its constructive that we're seeing that it's for a quarter over quarter improving. Uh so it gives you confidence that your tracking towards that. So probably a little bit too early to come out and say confidently. It's absolutely back in that range but we're we're

We're we're pleased with how this is tracking. And, you know, some of the good work being done by our marketing team, this year to to add additional capabilities to the, to our marketing effort. And and whether it's at the refinery or some of our us marketing activities that we're doing just to sort of expand the toolbox a little bit. I think that that also gives you some some good confidence that we're trending in the right way for that.

Thank you very much.

Thank you. 1 moment for our next question.

Our next question comes from the line of Sam Burwell from Jeffrey's.

Hey, good morning guys. Um, apologies for another uh Gateway related question, but wondering if we could dig in a little bit more on how you might be able to take share from the existing facilities, uh, in Corpus understanding that you guys have a, a nicely advantaged position. Um, but just curious is that a function of existing contracts rolling off or was the the lack of connection to Cactus to something that was really holding back and just curious how quickly, um, any sort of share games might be able to be realized

All right, so the yeah, I think when you look at Gateway, uh, and he looks specifically at Ingleside Ingleside, is just going to win, is that in Engleside is the most advantageous location. The export crew out of the US. And so you will see consistently more crude moving out to the angle side. And so, you're going to see, uh, you know, both ourselves and our neighbor do quite well, with that, this is by far the most advantageous location. You see the bulk of crude exports are, are exiting the US on vcc's and Sue. Max vessels. This is by far the best location to load those vessels in the US. And so you'll see volume continue to shift in that direction. It was really important for us to uh get the dredging completed in the cactus connection completed. And so,

We've sort of all the advantages and and uh, to available to our customers. Uh and then I I'd agree with your comment that the other factor is is really just time that there is a certain amount of contracts rolling off at other locations and and volume be able to shift over to Gateway.

Okay. Understood. Um, and then just sort of for the rest of the year. I mean, there are there any maintenance items, or construction related matters, that might, uh, influence volumes. I mean, notwithstanding the, the comment that you already made about sort of normal course of business month-to-month volatility, but, um, any sort of data items to call out there,

Yeah, we we're completed all the major turnarounds for the year, so we have a number of of tank turnarounds but those tend to have very minimal impact. Uh, so there is, there is maintenance work that's going on for the remainder of the year, but nothing that has a material uh, impact on the results.

Got it. Thank you.

Thank you. 1 moment for our next question.

Our next question comes from the line of Patrick Kenny from National Bank Financial.

Thank you. Uh, good morning, everyone. Just at hard to see and, um, on on the pullback in volumes and I guess, overall, demand for storage being experienced at the terminal. I know Trans Mountain is mainly to to blame here, pulling barrels, West, but I'm just curious if, if there might be any other factors at play driving that Trend as well, and

How are you thinking about mitigating the impact over the near term and just your overall outlook for Hardesty rebounding through the back half of the year and into 2026? Thanks.

Capacity growth in, in Canada between now and 28th. And I think that's a a good chunk of that. Uh, volume increase is going to come through Gibson facilities and will be a beneficiary of that both in Edmonton and Hardesty.

Also, be hard to see. Also in hard to see with note that we just recently welcomed, uh, Strathcona into the the Hardesty rail terminal and so, that's that is a, a great new partner for us in that facility. We're excited about what we can do with that partner, uh, on on the rail facility, is that that's still very early days but that's, uh, I think an interesting positive relationship that we look to grow.

Yeah, and on the the customer front, I guess on the potential acquisition of Mag here. Um,

You know, depending on how things play out. Just wondering if you have any thoughts, Curtis on what a takeout. Could mean for your business, just in terms of uh, presenting perhaps new commercial opportunities, or, you know, on the flip side, if you might need to manage any downside, risks associated with a change in ownership.

Yeah, we're just we're watching that like everybody Pat and just curious to see how that that plays out. I think it it goes to show that these oil sands assets are very attractive and I think there's going to be a lot of interest in those assets and just the growth potential. You look at North America and the most attractive areas of of oil. Growth are clearly the oil sands. And uh I think that's uh I think it's an that's a great macro story for for Gibson.

And uh we're we're watching how this Meg story plays out as well.

Uh, last one for me, I guess, for Riley. Um, so you had the notes mature in July, and

Um, looks like you just utilized your bank lines for now, but just wonder what the plan is to refi. Those notes, timing wise. Um,

Whether or not you have any, uh, concerns about, you know,

What terms can you tap the markets at here over the near term?

Concerns about refinancing the notes. We did put them on a revolver for.

Short term as we had any kind of the the summer, the summer months here. Uh, we'll look to refinance those in the fall here at the, you know, long-term notes. So, so no, no step change in. What we're doing on the financing side,

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

Thank you. 1 moment for our next question.

Our next question comes from the line of Robert Kilia from CIBC Capital Markets.

Hi good morning. I just wanted to go back to the uh parking for a second here. Courtesy touched on the fact that your us assets, can contribute over the long term. I I'm wondering what you think is possible there. What what uh

What, what do you think those? Um, us assets can eventually contribute to the, uh, marketing business?

Yeah, morning Rob. Where are on the US marketing side, where I get the most interested in that is, I think our customers are craving more Supply options at Gateway and I actually view the the marketing business as a key way for us to increase the utilization at Gateway. Uh, it's we move a significant volume to fill VCS out of that location, 1 of the bottle necks. For our customers is being able to get access to the supply they need when they need it. Um I I think uh we we're early days in doing a bit of this. But we're we're working and helping our customers through our marketing business, to help increase and give them access to more Supply. I think that's the key thing. There there is obviously a a marketing Eva benefit out of doing that. But I would say, more importantly for us is it's a way for us to really, you know, provide a service to our customers and and increase that utilization. Even further at Gateway.

Okay, that makes sense. And then um yeah what I wonder if you could give us your view uh on the outlook for the Permian while I'm screwing going forward and I think there's some competing views out there but what are you hearing from the major producers in the area about their their plants and how that informs your outlook?

A lot of great companies out there a lot of great resource, a lot of great people in The Firm. And I do think it will be muted in the near term, but I I I'd be a view that, uh, the pruriens got a lot of legs left in it. Still that there's still some very good growth here is to come out of the Parian, uh, but we'll, we'll watch that. It's, uh, it's not something that we, we need for the success of Gateway. But, uh, you know, I believe there's a, there's a lot more to come. So from the Parian,

Okay. Maybe finally for Riley, I'm wondering how the, um, the budget reconciliation act in the U.S.?

Impacts your us. Um strategy. The cash tax Outlook in particular

Yeah, I know, it's it's a it's a great question. Um you know I think as we looked at as we looked at the 1, big beautiful. Bill, we obviously saw some impacts from from section 8.99 back up. Pulled from the bill and so so that would have been the major the major impact to us as Gibson. Um you know we do sit back and and look at our kind of tax planning strategy for the long term. And and we'll be going through that process over the next few months to ensure that we're set up for success in the future.

Okay. Thanks everyone.

Thank you. As a reminder, to ask a question, please press *1, 1 on your telephone and wait for your name to be announced to withdraw your question. Please press *1, 1 again.

Our next question comes from the line of Benjamin fam. From BMO.

Hi, thanks. Good morning. Wanted to go back to your your leverage. Uh, guidance early, 2026 Target of of hitting that that ranges that you've uh, you have their

Can you comment on what what you're assuming in, in the marketing?

Side of things to achieve that. And then better question, I had on the leverages once. Once you do do reach their

uh, what do you

plan or, or Target in terms of being Within,

The portions of the range or do you.

Uh, eventually plan to be below.

The ranges over time.

Yeah, thanks. Thanks, Ben. I think, I think, when we think about getting our, our leverage back back down to where we like it within that 3 to 3 and a half times in, in, in early 2026, you know that would assume, you know, a, a still, a remaining a pretty muted, marketing assumption in there. So that doesn't require marketing, uh, getting back to, you know, the midpoint of our long-term range. You know, in that scenario we would de-lever quite a bit quicker. Um, so when we think about where our range is at that, we like the 3 to 3 and a half times, uh, we think that gives us lots of financial flexibility. I think anything below that is probably

Be a little bit under levered and and we look to buy back shares at that point. So uh, being within that range gives us lots of flexibility to to kind of execute our long-term capital allocation priorities.

Okay, got it. And uh next question on the the growth side. So you know, 1 example of a project, uh he quite positive on is the third doc that you mentioned.

Perhaps a couple of years out, any mention of a couple of smaller projects as you think about 2026? Do you anticipate that it's going to be more a year of cash harvesting and maybe more of these single-digit projects, and something that's larger in terms of sanction?

Yep. Then I just for Clarity on the the the third doc I'd say the third dock is, is still more than a couple years out. That I think there's there's we we're doing some good work on that on Regulatory and things like that to keep that advancing. But realistically long term for third doc, you need, you need to see that trend on the premium production, increasing, you need to see, uh, pipes the Corpus, uh, getting some expansions. And so there's a couple of things that are that we'd want to see before we're moving forward with that. We'd also like to, we would need a customer back stopping that as well. So, uh, I, I wouldn't put that in your model for the next couple of years, but the near-term growth, if there's actually, there's a number of these projects I don't, I wouldn't don't know that. I'd go to a sort of a cash harvesting sort of strategy for 26. There's a number of of good projects we've got in the queue.

For 26. Um, these producer Partnerships are quite interesting. These optimization projects are quite interesting and then additional tank capacity at, uh, you know, I I really had a few different locations. There's still things that we we're looking hard at for 426 and um, that uh, we we'll, we'll see, as we, we see depending on timing of customer, award will dictate that.

And Claire said thanks a lot for contacting. I also want to clarify and the third doc I mean we see it a few years out is that is that more cash?

Generation or is that is that more of FID in a few years? And then the cash comes later, subsequently.

Permian expansion Corpus, pipe expansion before you're at the point of FID. So you're, you're still, you're still at least a couple years out, I believe from an FID situation so that's just to be to be clear on that. I think there's there's a lot of work. We're able to do in the near term though to sort of Advance the engineering on that and the regulatory side of that so that we're effectively shovel ready on that project uh as demand comes for that. But that's that's something we're going to be working on in the background.

Okay, got it. Um,

maybe maybe 1 final 1, if I met on the cost reduction side of things that

you've messaged uh potentially exceeding, the 25 million can you

Share what what portion of that is recurring?

And then out of that $25 million, is there a portion that flows back to your customers versus the GI shared order?

So on the the 24th, I'm glad you asked about the 25th. I 1 of my favorite initiatives for the year, we've just seen such tremendous participation across the entire company and in every Department in the company. People really challenging costs and where do we find Opportunities? And boy, there's been wins all over the place from eliminating waste to sort of working with our vendors to find better Solutions. And now we're moving to this next phase of actually implementing process changes and Technology changes and capital projects to drive additional.

Of of cost savings. So I it is uh, 1 of the big success stories of the year for us, I could couldn't be prouder of the team for the for the great work that people are are doing around this. Uh, so we we feel very confident that we'll be by the end of the year, achieving the 25 million of run rate savings. Uh, that, that, uh, when I think about 25 million of run rate savings, I I look at that as sort of Gibson run rate savings and there's a mix of DCF and IBA impacting things but those are, those are true savings for us. I I I also would, uh, I think you're picking up on a good thing as well. I think some of these savings we've found are also in some of our capital projects. So we thought about different ways of doing some of our Capital project execution, we found some real savings which I believe going forward. Provide us with an interesting opportunity for us to increase our competitiveness with our customers, still drive great. Returns with our cut for on our projects, but also offer uh, a great low-cost solution for our customers as we're developing projects with them. So there there is a

Absolutely a customer benefit to this program as well.

Okay, got it. Thank you.

Thanks.

Thank you.

there are no further questions, I would now like to hand the call back to Beth

Thank you, uh, and thank you for joining us for Gibson, energies. Q2 2025 earnings call additional supplementary information is available on our website. Gibson energy.com for follow-up questions, please reach out to investor relations at Gibson. Energy.com, thank you.

This concludes today's conference call, thank you for participating. You may now disconnect