Q2 2026 Keyera Corp Earnings Call

August 6, 2026

Operator: Good morning. My name is Jenny, and I will be your Conference Operator today. At this time, I would like to welcome everyone to Keyera's 2026 Q2 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 star then the number one on your telephone keypad. If you would like to withdraw your question, please press star then the number two. Thank you. I would now like to turn the conference call over to Dan Cuthbertson, General Manager of Investor Relations. You may begin.

Speaker #1: 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 1 on your telephone keypad.

Speaker #1: If you would like to withdraw your question, please press star, then the number 2. Thank you. I would now like to turn the conference call over to Dan Cuthbertson.

Speaker #1: General Manager of Investor Relations, you may begin.

Speaker #2: Thanks, and good morning. Joining me today will be Dean Setoguchi, President and CEO. Eileen Marikar, Senior Vice President and CFO. Jamie Urquhart, Senior Vice President, Liquids Business Unit.

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, Liquids Business Unit, and Brad Slessor, Senior Vice President, G&P and NGL Pipeline Business Unit. We'll 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 our website. With that, I'll turn the call over to Dean.

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, Liquids Business Unit, and Brad Slessor, Senior Vice President, G&P and NGL Pipeline Business. We'll 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 our website. With that, I'll turn the call over to Dean.

Speaker #2: And Brad Schlesser, Senior Vice President, GMP and NGL Pipeline Business Unit. We'll begin with some prepared remarks from Dean and Eileen. After which, we will open the call to questions.

Speaker #2: 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.

Speaker #2: In addition, we will refer to some non-GAAP financial measures. For additional information on non-GAAP measures and forward-looking statements, please refer to KEYERA's public filings available on CDAR and our website.

Speaker #2: With that, I'll turn the call over to Dean.

Speaker #3: Thanks, Dan, and good morning, everyone. This quarter, we successfully closed two strategic acquisitions: the Plains Canadian NGL business and the remaining 50% interest and caps.

Dean Setoguchi: Thanks, Dan, and good morning, everyone. This quarter, we successfully closed two strategic acquisitions: the Plains Canadian NGL business and the remaining 50% interest in KAPS. These acquisitions are part of a strong foundation we have assembled for the next phase of disciplined growth and long-term value creation. Our focus now turns to integrating these investments, executing our growth projects, and delivering greater value to customers and shareholders. Our team is working hard on integrating the Plains business and continues to make meaningful progress on identifying and delivering synergies. We will continue to provide updates as that work progresses. After the quarter, Keyera also submitted its response to the Competition Tribunal regarding the Competition Bureau's notice of application.

Speaker #3: These acquisitions are part of a strong foundation we have assembled for the next phase of disciplined growth and long-term value creation. Our focus now turns to integrating these investments: executing our growth projects and delivering greater value to customers and shareholders.

Speaker #3: Our team is working hard on integrating the Plains business and continues to make meaningful progress on identifying and delivering synergies. We will continue to provide updates as that work progresses.

Speaker #3: After the quarter, Keyera also submitted its response to the Competition Tribunal regarding the Competition Bureau's notice of application. Because this is an ongoing litigation, we are limited in what we can say but remain confident in the strength of our case and look forward to demonstrating the value creation that will result from this transaction.

Dean Setoguchi: This is an ongoing litigation, we are limited in what we can say but remain confident in the strength of our case and look forward to demonstrating the value creation that will result from this transaction. Turning to our quarterly results. In Gathering, Processing, we delivered a new quarterly record for realized margin driven by strong contributions across the segment. We also set a new quarterly realized margin record in liquids infrastructure, reflecting contributions from the Plains Canadian NGL business. We continued to deliver and advance our growth projects. The KFS Frac II Debottleneck was brought into service in early June, more than one month ahead of schedule and 20% below its original budget. KFS North Debottleneck, KFS Frac III, KAPS Zone 4, and ACE Rail Terminal continue to progress well, all on time and on budget.

Speaker #3: Turning to our quarterly results. In gathering processing, we delivered a new quarterly record for realized contributions across the segment. We also set a new quarterly realized margin record in Liquids Infrastructure reflecting contributions from the Plains Canadian NGL business.

Speaker #3: We continue to deliver an advance our growth projects. The KFS for Activity Bottleneck was brought into service in early June more than one month ahead of schedule and 20% below its original budget.

Speaker #3: KFS North the Bottleneck, KFS frag 3, Cap Zone 4, and ACE Rail Terminal continue to progress well all on time and on budget. These projects are highly contracted and will contribute to growth and stable fee-for-service cash flow supporting the strength of our balance sheet and long-term dividend sustainability.

Dean Setoguchi: These projects are highly contracted and will contribute to growth and stable fee-for-service cash flow, supporting the strength of our balance sheet and long-term dividend sustainability. Yesterday, the board approved another 4% annual increase in the dividend. The dividend increase reflects our confidence in the business and allows us to preserve our balance sheet strength and financial flexibility to invest in further fee-based growth. Turning to AEF. The facility was restarted at the beginning of June and has been performing well. We continue to view this asset as an important part of our integrated value chain and a meaningful contributor to Keyera's long-term value creation. During the outage, we completed a comprehensive review of the facility and its associated operating plan and have identified opportunities to strengthen performance and reliability.

Speaker #3: Yesterday, the board approved another 4% annual increase in the dividend. The dividend increase reflects our confidence in the business and allows us to preserve our balance sheet strength and financial flexibility to invest in further fee-based growth.

Speaker #3: Now, turning to AEF, the facility was restarted at the beginning of June and has been performing well. We continue to view this asset as an important part of our integrated value chain and a meaningful contributor to KEYERA's long-term value creation.

Speaker #3: During the outage, we completed a comprehensive review of the facility and its associated operating plan and have identified opportunities to strengthen performance and reliability.

Speaker #3: Our objective is to maximize ISO octane production over the full four-year cycle while maintaining our focus on safe, reliable, and efficient operations. With that, I'll turn the call over to Eileen to discuss financial results and outlook.

Dean Setoguchi: Our objective is to maximize our isooctane production over the full four-year cycle while maintaining our focus on safe, reliable, and efficient operations. With that, I'll turn the call over to Eileen to discuss financial results and outlook.

Speaker #1: Thanks, Dean, and good morning, everyone. KEYERA's second quarter results reflect continued strength in our fee-for-service business, which was offset by lower marketing contributions. Excluding transaction costs related to the Plains acquisition, adjusted EBITDA was $309 million, and distributable cash flow was $101 million, or $39 cents per share.

Eileen Marikar: Thanks, Dean, and good morning, everyone. Keyera's Q2 results reflect continued strength in our fee-for-service business, which was offset by lower marketing contributions. Excluding transaction costs related to the Plains acquisition, adjusted EBITDA was CAD 309 million and distributable cash flow was CAD 101 million or CAD 0.39 per share. Net earnings for the quarter were CAD 308 million. In our fee-for-service segments, Gathering and Processing delivered record quarterly realized margin of CAD 128 million. In liquids infrastructure, we also delivered record realized margin of CAD 222 million. Results included contributions from the Plains Canadian NGL assets and the KAPS acquisition. Turning to the marketing segment, realized margin was CAD 36 million for the quarter. Decrease compared to last year was primarily attributable to the AEF outage and corresponding timing impacts related to risk management activities.

Speaker #1: Net earnings for the quarter were $308 million. In our fee-for-service segments, gathering and processing delivered record quarterly realized margin of $128 million. In Liquids Infrastructure, we also delivered record realized margin of $222 million.

Speaker #1: Results include contributions from the Plains Canadian NGL assets and the CAPS acquisition. Turning to the marketing segment. Realized margin was $36 million for the quarter.

Speaker #1: Decreased compared to last year was primarily attributable to the AEF outage. And corresponding timing impacts related to risk management activities. The risk management timing impacts are expected to partly offset over the second half of 2026 as physical volumes are sold.

Eileen Marikar: The risk management timing impacts are expected to partly offset over the H2 2026 as physical volumes are sold. Looking ahead, we continue to expect marketing to deliver strong contributions through the H2 of the year, and we are reaffirming our 2026 realized margin guidance range of CAD 360 to 390 million. We ended the quarter with net debt to adjusted EBITDA of 3.3 times above our long-term target range. The increase reflects higher net debt related to recent acquisitions and lower marketing contributions in the H1 2026. We remain focused on de-leveraging and returning to within our target range in 2028. We remain on track to deliver a 16% to 18% fee-based adjusted EBITDA per share CAGR from 2025 to 2027, and a 7% to 8% fee-based adjusted EBITDA per share CAGR from 2027 to 2029.

Speaker #1: Looking ahead, we continue to expect marketing to deliver strong contributions through the second half of the year, and we are reaffirming our 2026 realized margin guidance range of $360 million to $390 million.

Speaker #1: We ended the quarter with net debt to adjusted EBITDA of $3.3 times, above our long-term target range. The increase reflects higher net debt related to recent acquisitions and lower marketing contributions in the first half of 2026.

Speaker #1: We remain focused on deleveraging and returning to within our target range in 2028. We remain on track to deliver a 16 to 18 percent fee-based adjusted EBITDA per share CAGR from 2025 to 2027.

Speaker #1: And a 7 to 8 percent fee-based adjusted EBITDA per share CAGR from 2027 to 2029. This growth outlook is underpinned by several clearly defined drivers, including our current synergy target of $120 million to $140 million, the continued filling of available system capacity, and our portfolio of sanctioned growth capital projects.

Eileen Marikar: This growth outlook is underpinned by several clearly defined drivers, including our current synergy target of CAD 120 to 140 million, the continued filling of available system capacity, and our portfolio of sanctioned growth capital projects. Beyond those drivers, we continue to see meaningful potential upside from additional synergies, further capacity optimization of our condensate system, additional KAPS contracting, and capital-efficient investment opportunities across the entire asset base. As our integration work progresses, we're encouraged by the additional value creation opportunities we've identified. We're also identifying opportunities to further enhance reliability across the acquired assets, which may modestly increase maintenance capital requirements over the next couple of years as we continue to apply Keyera's operating standards. Lastly, Keyera's 2026 guidance for growth capital, maintenance capital and cash taxes remain unchanged. With that, I'll turn it back to Dean for closing remarks.

Speaker #1: Beyond those drivers, we continue to see meaningful potential upside from additional synergies further capacity optimization our condensate system additional CAPS contracting and capital efficient investment opportunities across the entire asset base.

Speaker #1: As our integration work progresses, we're encouraged by the additional value creation opportunities we've identified. We're also identifying opportunities to further enhance reliability across the acquired assets which may modestly increase maintenance capital requirements over the next couple of years as we continue to apply KEYERA's operating standards.

Speaker #1: Lastly, KEYERA's 2026 guidance for growth capital maintenance capital and cash taxes remain unchanged. With that, I'll turn it back to Dean for closing remarks.

Speaker #3: Thanks, Eileen. KEYERA continues to deliver its strategy to strengthen and extend our integrated value chain. Building a more connected and efficient system that supports customer markets.

Dean Setoguchi: Thanks, Eileen. Keyera continues to deliver its strategy to strengthen and extend our integrated value chain, building a more connected and efficient system that supports customer growth and improves access to key markets. Looking ahead, we'll remain focused on disciplined integration, continued execution of our growth projects, and delivering long-term value for our customers and shareholders. On behalf of our board and management team, I want to thank our employees, customers, shareholders, Indigenous rights holders and other stakeholders for their continued support. With that, we'll open the line for questions. Operator, please go ahead.

Speaker #3: Looking ahead, we'll remain focused on disciplined integration continued execution of our growth projects and delivering long-term value for our customers and shareholders.

Speaker #4: On behalf of our board and management team, I want to thank our employees, customers, shareholders, indigenous rights holders, and other stakeholders for their continued support.

Speaker #4: With that, we'll open the line for questions. Operator, please go ahead.

Speaker #1: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Could you have a question, please press the floor followed by the one on your touchdown phone.

Operator 2: Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press the star followed by the one on your touch-tone phone. If you wish to cancel your request, you may press star two. Once again, that is star one should you wish to ask a question. Your first question is from Rob Hope from Scotiabank. Your line is now open.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press the star followed by the one on your touch-tone phone. If you wish to cancel your request, you may press star two. Once again, that is star one should you wish to ask a question. Your first question is from Rob Hope from Scotiabank. Your line is now open.

Speaker #1: Would you wish to cancel your request, you may press store two. Once again, that is store one. Should you wish to ask a question, and your first question is from Rob Hope from Scotiabank.

Speaker #1: Your line is now open.

Speaker #5: Morning, everyone. First question is on the Liquids Infrastructure segment. So the $78 million of incremental contribution from Plains was, you know, quite a bit higher than we were expecting as well as commentary when the deal was first announced.

Rob Hope: Morning, everyone. First question is on the liquids infrastructure segment. The CAD 78 million of incremental contribution from Plains was quite a bit higher than we were expecting, as well as commentary when the deal was first announced. Can you maybe speak to the specific drivers of that strength, whether that can be annualized or were there, we'll call it, abnormally high volumes in Q2?

Speaker #5: Can you maybe speak to, you know, the specific drivers of that strength, whether that could be annualized or, you know, were there we'll call it abnormally high volumes in Q2?

Speaker #4: Hey, good morning, Rob, and thank you very much for the for the question. You know, I think the general comment that we'd like to emphasize here is that the Plains Canadian NGL business has been performing better than the way we'd originally modeled it and envisioned it.

Dean Setoguchi: Hey, good morning, Rob, and thank you very much for the question. I think the general comment that we'd like to emphasize here is that the Plains' Canadian NGL business has been performing better than the way we'd originally modeled it and envisioned it. That's right across the board from the core pipeline, the frac business in Fort Saskatchewan, and also Empress. The volumes have been strong and the extraction cuts there have been better than what we had modeled. Overall, the assets are performing and the business is performing very well. We're still getting up to speed, obviously. It's been less than three months since we've taken over the operatorship of those assets. We see a lot of great opportunities across the portfolio that we're getting more details on and trying to prioritize and get at them as soon as we can.

Speaker #4: And, you know, that's right across the board from, you know, their core pipeline. The frack business in Fort Saskatchewan and also Empress, the volumes have been strong, and the extraction cuts there have been better than what we had modeled.

Speaker #4: So overall, the assets are performing—and the business is performing—very well. We're still getting up to speed, obviously. It's been less than three months since we've taken over the operatorship of those assets.

Speaker #4: We see a lot of great opportunities across the portfolio that, you know, we're getting more details on and, you know, trying to prioritize and get at them as soon as we can.

Speaker #4: But I'd also like to caution that, you know, this is a partial quarter, and I would say it's premature to try to extrapolate a whole year's EBITDA based on a partial quarter right now.

Dean Setoguchi: I'd also like to caution that this is a partial quarter, and I would say it's premature to try to extrapolate a whole year's EBITDA based on a partial quarter right now. Generally, I want to emphasize that the business is performing very well.

Speaker #4: But generally, I want to emphasize that the business is performing very well.

Speaker #5: Great. I appreciate that. And then maybe moving over to your condensate assets, you know, a key theme this quarter has been kind of the outlook for increasing condensate demand and supplies in Western Canada.

Rob Hope: Great. Appreciate that. Maybe moving over to your condensate assets. A key theme this quarter has been kind of the outlook for increasing condensate demand and supplies in western Canada. Can you speak to how your business is positioned to handle an increasing condensate demand and what opportunities are you seeing?

Speaker #5: You know, can you speak to how your business is positioned to handle an increasing condensate demand and what opportunities are you seeing?

Speaker #4: Yeah, that's a great question. And, you know, first of all, I'd just like to comment that we are extremely excited with the developments that we've seen here and the cooperation that we've seen and Alberta government and also the federal government.

Dean Setoguchi: Yeah, that's a great question. First of all, I'd just like to comment that we are extremely excited with the developments that we've seen here and the cooperation that we've seen from the BC and Alberta government and also the federal government. With that, we feel a lot more optimistic that we're going to see a lot more pipeline egress out of the province, which is going to help more oil sands growth in the future. As you know, we have the hub for condensate, and roughly two-thirds of all the condensate that goes up to the oil sands for diluent originates off of our system.

Speaker #4: And with that, we feel a lot more optimistic that we're going to see a lot more pipeline egress out of the province. Which is going to, you know, help, you know, more oil sands growth in the future.

Speaker #4: As you know, you know, we have the hub for condensate and roughly two-thirds of all the condensate that goes up to oil sands for diluent.

Speaker #4: Originates off of our system. So you know, when we think about the growth in oil sands production over the last couple, two to three years with Transmountain coming into service, you know, we've seen that part of our business, you know, our pipelines that receive the condensate and our storage business and also our interest in the Norlight pipeline those volumes have been increasing very well.

Dean Setoguchi: When we think about the growth in oil sands production over the last couple, two to three years with Trans Mountain coming into service, we've seen that part of our business, our pipelines that receive the condensate and our storage business, and also our interest in Norlite Pipeline, those volumes have been increasing very well. That part of our business has been very, very strong. We anticipate more growth in the future with, again, more pipeline egress. We certainly envision more capital-efficient debottlenecks on that system to continue to provide that service.

Speaker #4: And so that part of our business has been very, very strong. We anticipate more growth in the future with, again, more pipeline egress. So you know, we certainly envision more capital efficient de-bottlenecks on that system to continue to provide that service.

Speaker #4: But what I would say is that it is a tailwind for our entire business because a lot of that condensate is also going to come from the liquids-rich Motney and also the Duvernay for which we're very, very well positioned.

Dean Setoguchi: What I would say is that it is a tailwind for our entire business because a lot of that condensate is also going to come from the liquids-rich Montney and also the Duvernay, for which we're very, very well positioned, both, I would say, in the Deep Basin and also up in the Montney fairway up to the northwest in Alberta and also into BC. I'd also like to emphasize, this is also part of the reason why we doubled down on KAPS, because we believe this is going to be an essential service that will be required by the industry for the next decade. We're very pleased to have 100% of that pipeline to provide that service. Incremental to that, we are looking at other solutions, which I think is premature right now.

Speaker #4: Both, I would say, in the deep basin and also up in the, you know, the Motney Fairway up to the northwest in Alberta and also to BC.

Speaker #4: So and I'd also like to emphasize, I mean, this is also part of the reason why we doubled down on caps because we believe this is going to be an essential service that will be required by the industry for, you know, for the next decade.

Speaker #4: So we're very pleased to have 100% of that pipeline to provide that service. Incremental to that, you know, we are looking at other solutions, which I think is premature right now.

Speaker #4: I mean, we have capabilities to rail in more condensate, but also looking at other solutions to provide more condensate or diluent as that demand increases.

Dean Setoguchi: We have capabilities to rail in more condensate, but also looking at other solutions to provide more condensate or diluent as that demand increases.

Speaker #5: All right. Appreciate the color. Thank you.

Rob Hope: All right. Appreciate the color. Thank you.

Speaker #1: Thank you. Your next question is from Robert Catelier from CIBC. Your line is now open.

Operator 2: Thank you. Your next question is from Robert Catellier from CIBC. Your line is now open.

Operator: Thank you. Your next question is from Robert Catellier from CIBC. Your line is now open.

Speaker #6: Hey, good morning. I just wanted to follow up on the condensate discussion. You know, maybe you can give us a little bit more color on your capabilities to deliver from Edmonton up to the oil sands and it looks like you're at contractual near contractual capacity in the Fort.

Robert Catellier: Hey, good morning. I just wanted to follow up on the condensate discussion. Maybe you can give us a little bit more color on your capabilities to deliver from Edmonton up to the oil sands. It looks like you're near contractual capacity in the Fort, so maybe some color on what you're looking at there to debottleneck and the timing of any potential opportunities. The timing in particular I wanted to talk about just because as the oil sands gets going, it might take a while before production ramps to meet the pipeline or the other egress in service dates.

Speaker #6: So maybe some color on what you're looking at there to de-bottleneck and, you know, the timing of any potential opportunities. And the timing in particular, I want to talk about just because, you know, as the oil sands gets going, it might take a while before production ramps to meet the pipeline or the other egress and service dates.

Speaker #4: Yeah, that's a great question, Rob. And you know what? I'll turn that over to Jamie and that's certainly part of his business and things that they're focusing on.

Dean Setoguchi: Yeah, that's a great question, Rob. You know what? I'll turn that over to Jamie, and that's certainly part of his business and things that they're focusing on.

Speaker #5: Yeah, thanks for the question, Robert. And I think I alluded to this last quarter as well— we have a very well-defined capital execution plan to increase the capacity of both the Fort Saskatchewan condensate system, and we're also working with our partner Enbridge on the Norlight pipeline.

Jamie Urquhart: Yeah. Thanks for the question, Robert. I think I alluded to this last quarter as well, is that we have a very well-defined sort of capital execution plan to basically increase the capacity of both the Fort Saskatchewan transit system, but also working with our partner, Enbridge, on the Norlite Pipeline. Those things can either be fairly quickly implemented, like DRA, drag-reducing agent, or installing pump stations or even looping pipe for a segment of the pipeline where we can increase capacity. We've identified all those. We believe that they're all very capital efficient, as Dean alluded to. Also I'd like to emphasize is that we are in conversations with all the oil sands players with respect to making sure that we're in their minds and we're their solution as they think to expand maybe two, three, five, 10 years out.

Speaker #5: You know, and you know, those things can either be fairly quickly implemented, like DRA drag reducing agent, or, you know, installing pump stations or even looping pipe for a segment of the pipeline where we can increase capacity.

Speaker #5: So we've identified all those. We believe that they're all, you know, very capital efficient as Dean alluded to. But also, I'd like to emphasize is that, you know, we are in conversations with all the oil sands players with respect to making sure that we're in their minds and we're their solution as they think to expand maybe two, three, five, ten years out.

Speaker #6: Okay. So lots going on. So we'll wait and see there. On the, I just want to touch on the frax spread you gave your levels, proportion of hedging and you've chosen not to disclose the price, but presumably you're hedging at levels above your underwriting case.

Robert Catellier: Okay. Lots going on, so we'll wait and see there. I just want to touch on the frac spread. You gave your levels, proportion of hedging and you've chosen not to disclose the price, but presumably, you're hedging at levels above your underwriting case. I'm just curious about the 2027 level, the 65% frac spread hedges. Is it all from the hedge level you had coming into the Plains deal, so the levels that were in place at closing, or has there been incremental hedging since then? Just pricing relative to your underwriting assumptions.

Speaker #6: So I'm just curious about the 27 level, the 65% frax spread hedge. Is that all from the hedge level you had coming into the Plains deal?

Speaker #6: So the levels that were in incremental hedging since then? And, you know, just pricing relative to your underwriting assumptions.

Speaker #4: Yeah, Rob, those are great questions. And we have layered in incremental hedges both this year and next year. So as you know, we had a 12-month hedge in place already with Plains.

Dean Setoguchi: Yeah, Rob, those are great questions. We have layered in incremental hedges both this year and next year. As you know, we had a 12-month hedge in place already with Plains. It left us more exposed in H2 2027 and we've layered in a significant amount of hedges in the second half as well as topping up again H1 2027 and the rest of this year. We think that's important for a number of reasons. One is the frac spreads have been very strong, so well above our deal thesis. Two, as Eileen mentioned, we're beyond our stated range of where we'd like our balance sheet. We're still in a very comfortable range, but we like to be in a more conservative range. This will ensure that we'll be able to deliver a balance sheet as Eileen described.

Speaker #4: So it left us, you know, more exposed in the second half of 2027. And we've layered in, you know, a significant amount of hedges in the second half as well as topping up, you know, again, the first half of '27 and the rest of this year so, you know, we think that's important for a number of reasons.

Speaker #4: One is the frax spreads have been very strong. So well above our deal thesis. And two is Eileen mentioned, you know, we're beyond our stated range of where we'd like our balance sheet.

Speaker #4: We're still in a very comfortable range, but we'd like to be in a more conservative range. And this will ensure that we'll be able to deliver a balance sheet as Eileen described.

Speaker #6: Okay, last one for me is just you're going to give an update, I think, on the synergies later in the year, but with what you know now, what areas are most likely to generate additional opportunities?

Robert Catellier: Okay, last one for me is just you're going to give an update, I think, on the synergies later in the year, but with what you know now, what areas are most likely to generate additional opportunities? Is that going to come from the cost side or the commercial side?

Speaker #6: Is that going to come from the cost side or the commercial side?

Speaker #4: Haha. I would say all of the above. You know, we as we've already announced that we delivered 90 million of synergies on day one.

Dean Setoguchi: I would say all of the above. As we've already announced that we delivered CAD 90 million of synergies on day one. We're still operating redundant systems and things like that. We weren't able to convert them all on day one. We still have G&A savings, I would say, yet to come. We have operating savings yet to come. Certainly, synergies in maintenance and turnarounds as well. We've talked about logistics opportunities for more optimization there. Generally, what we've seen across the board is there's been an under-investment in the business. We just see a lot of opportunities both to integrate our existing Keyera business and the business we just acquired, but also more growth opportunities, commercial opportunities on the Plains assets that we acquired as well. We're very optimistic about the upside we see.

Speaker #4: And, you know, we're still operating redundant systems and things like that. We weren't able to convert them all on day one. So, we still have G&A savings, I would say, yet to come.

Speaker #4: We have operating savings yet to come. Certainly synergies and maintenance and turnarounds. As well. We've talked about logistics opportunities for, you know, for more optimization there.

Speaker #4: And, you know, generally what we've seen across the board is there's been an underinvestment in the business. So we just see a lot of opportunities both to integrate our existing Kiara business and the business we just acquired, but also more growth opportunities, commercial opportunities on the Plains assets that we acquired as well.

Speaker #4: So we're very, we're very optimistic about the upside we see. We also, you know, would also caution too that there will likely be a little bit more maintenance costs in the first, you know, year, year and a half to two years, I would say.

Dean Setoguchi: We'd also caution, too, that there'll likely be a little bit more maintenance costs in the first year, one and a half to 2 years, I would say. There are a few things that we would like to accelerate to get it to the operating standard that we like and to get to a steady state after that. That initial maintenance cost that we might be exposed to, and we're still evaluating that, is very small relative to the upside prize that we see overall with the business.

Speaker #4: There are a few things that we would like to accelerate to get it to the operating standard that we like. And to get to a steady state after that.

Speaker #4: But that initial maintenance cost that we might be exposed to, and we're still evaluating that, is very small relative to the upside prize that we see overall with the business.

Speaker #6: Okay, thank you and congratulations on closing those two acquisitions.

Robert Catellier: Okay. Thank you, and congratulations on closing those two acquisitions.

Speaker #4: Yeah, thanks a lot, Rob.

Dean Setoguchi: Yeah. Thanks a lot, Rob.

Speaker #1: Thank you. Your next question is from Bentham from BML. Your line is now open.

Operator 2: Thank you. Your next question is from Ben Pham from BMO. Your line is now open.

Operator: Thank you. Your next question is from Ben Pham from BMO. Your line is now open.

Speaker #7: Hi, good morning. First question is on acquisitions. You've now closed two major ones. The Plains and the remaining caps. And I'm curious as you think the next couple of years going forward, should investors view Kiara as more of a harvest, you mentioned a de-leveraging focus or do you think of your footprint?

Ben Pham: Hi, good morning. First question is on acquisitions. You've now closed two major ones, the Plains and the remaining KAPS. I'm curious as you think the next couple of years going forward, should investors view Keyera as more of a harvest? You mentioned a deleveraging focus or do you think with your footprint, is there any white space or further M&A opportunities that you see in the next few years?

Speaker #7: Is any white space or further remaining opportunities that you see in the next few years?

Speaker #4: Yeah, good morning, Ben. Those are great questions. I really want to emphasize that our focus right now is 100% on capturing the opportunities that we see both in the CAPS acquisition and also the Plains NGL business.

Dean Setoguchi: Yeah. Good morning, Ben. Those are great questions. I really want to emphasize that our focus right now is 100% on capturing the opportunities that we see, both in the KAPS acquisition and also the Plains NGL business. Those opportunities are very significant in our mind, and we can deliver a lot of value for our customers and our shareholders for the visible future. Eileen described the upside that we talked about, the 16% to 18% from 2025 to 2027, fee-for-service EBITDA growth, then 7% to 8% out to 2029. We see growth opportunities well beyond that, especially when you think about the macro environment that we're in. I think that we're in a 10-year cycle of really great growth in our basin, for which we're very well positioned. Will we consider future M&A? Sure, we will.

Speaker #4: And those opportunities are very significant in our mind and we can deliver a lot of value for our customers. And our shareholders for the visible future.

Speaker #4: And, you know, Eileen described the upside that we talked about, the 16 to 18% from 25 to 27 fee for service EBITDA growth and then 7 to 8% out to 29.

Speaker #4: We see growth opportunities well beyond that, especially when you think about the macro environment that we're in. And I think that we're in a 10-year cycle of really great growth in our basin for which we're very, very well positioned.

Speaker #4: Will we consider future M&A? Sure we will. But I want to just emphasize that our primary focus is just delivering on the value that of the acquisitions we've already made and our base business.

Dean Setoguchi: I want to just emphasize that our primary focus is just delivering on the value of the acquisitions we've already made and our base business. We have a lot of big projects that we're also executing on, and we want to make sure that we do the best possible job on that as well.

Speaker #4: I mean, we have a lot of big projects that we're also executing on. And we want to make sure that we do the best possible job on that as well.

Speaker #7: Okay, got it. Thanks for that. Dean, maybe on the organic growth side, you had some good news on the KFS FRAC 2 execution. And I know it's a small project, big percentage.

Ben Pham: Okay, got it. Thanks for that, Dean. Maybe on the organic growth side, you had some good news on the KFS Frac II execution. I know it's a small project, big percentage benefit on the budget. As you think about your remaining projects, you're advancing them more. Do you see maybe potential read-throughs on similar optimizations? Just on that topic, too, can you remind us with cost savings versus budget, is that a benefit to Keyera customers? Is it a mix between the two?

Speaker #7: Benefit on the budget. As you think about your remaining projects, you're moving and advancing them forward. Do you see maybe potential read-throughs on similar optimizations?

Speaker #7: And just on that topic, can you remind us with cost savings versus budget, is that a benefit to Kiara customers? Is it a mix between the two?

Speaker #4: Yeah, well, maybe I'll start answering the question and I'll toss it over to Jamie, but you know, on the cost savings side, you know, we're pursuing both.

Dean Setoguchi: Yeah. Well, maybe I'll start answering the question, then I'll toss it over to Jamie. On the cost savings side, we're pursuing both. There are areas where it will accrue 100% to us, especially at places like Empress, but some of the costs also at our KFS North location. We also want to pursue opportunities where we create more value for our customers. If we can reduce our costs and those costs that flow through to our customer provide a better service to them and more value to them, we are equally as incentivized to pursue those as well. In terms of our overall execution of our program, maybe I can just turn it over to you, Jamie.

Speaker #4: So you know, there are areas where it will accrue 100% to us, especially places like Empress, but some of the costs also at our KFS North location.

Speaker #4: But we also want to pursue opportunities where we create more value for our customers. So if we can reduce our costs and those costs that flow through to our customer provide a better service to them in a more value to them, we are equally as incentivized to pursue those as well.

Speaker #4: But in terms of our overall execution of our program, maybe I can just talk turn it over to Jamie.

Speaker #2: Yeah, thanks, Dean. And thanks for the question, Ben. You know, like I mean, I think the factors behind ultimately the success that we've seen in the KFS 2 debottleneck and how we've seen success to date in the projects that we're executing in the bigger projects is multiple fold.

Jamie Urquhart: Yeah. Thanks, Dean, and thanks for the question, Ben. I think the factors behind, ultimately, the success that we've seen in the KFS II debottleneck and how we've seen success to date in the projects that we're executing, the bigger projects is multiple fold.

Speaker #2: You know, I think we've matured as an organization with respect to project execution. We've hit the market at a good time with respect to the service providers.

Jamie Urquhart: I think we've matured as an organization with respect to project execution. We've hit the market at a good time with respect to the service providers, the constructors in the field, but also shop spaces available. That's benefited us in the short term, but it's also, we believe, going to benefit us in the long term because we've consciously developed partnerships with those service providers that are long-term in nature. For us giving them line of sight to long-term business, we've reaped the benefits in the short term, but we also believe that we're going to reap the benefits in the long term because there will be a change in our environment. You can even see it unfolding right now in Western Canada with respect to more projects, putting pressure on the skill set that's available.

Speaker #2: The constructors in the field, but also shop spaces available. And that's benefited us in the short term, but it's also we believe going to benefit us in the long term because we've consciously developed partnerships with those service providers that our long-term in nature and for us giving them line of sight to long-term business, you know, we've reaped the benefits in the short term, but we also believe that we're going to reap the benefits in the long term because there will be a change in our environment.

Speaker #2: You can even see it unfolding right now in Western Canada with respect to more projects putting pressure on, you know, the skill set that's available.

Speaker #2: And we believe that that will give us a competitive advantage going forward as well.

Jamie Urquhart: We believe that that will give us a competitive advantage going forward as well.

Speaker #4: Yeah, and maybe just to add one more thing to Jamie's comments is that, you know, one thing that we've really put more focus on is just more oversight on, you know, on all our contractors, like in terms of fabrication shops and things like that.

Dean Setoguchi: Yeah, maybe just to add one more thing to Jamie's comments is that one thing that we've really put more focus on is just more oversight on all our contractors, like in terms of fabrication shops and things like that. We have our people right embedded in those shops to ensure that the quality of what we're getting that gets delivered to site is in accordance to the spec that we set out to deliver.

Speaker #4: We have our people right embedded in those shops. To ensure that the quality of what we're getting, that gets delivered to site is in accordance to the spec that we've set out to deliver.

Speaker #7: Okay, that's great color. Thank you.

Ben Pham: Okay, that's great color. Thank you.

Speaker #4: Thank you.

Dean Setoguchi: Thank you.

Speaker #1: Thank you, Andrew. Next question is from Maurice Choi from RBC Capital Markets. Your line is now open.

Operator 2: Thank you. Your next question is from Maurice Choy from RBC Capital Markets. Your line is now open.

Operator: Thank you. Your next question is from Maurice Choy from RBC Capital Markets. Your line is now open.

Speaker #7: Thank you and good morning, everyone. I wanted to take a high level overview about your cash flow profile. I wonder if you could discuss between the three buckets of take or pay fee for service that have volumetric exposure and then marketing.

Maurice Choy: Thank you, good morning, everyone. Wanted to take a high-level overview about your cash flow profile. I wonder if you could discuss between the three buckets of take-or-pay, fee-for-service that have volumetric exposure, then marketing. Directionally, where do you see a split today, where do you reckon you want to be by the end of your forecast period in 2029, and what gets you there?

Speaker #7: The direction, where do you see a split today and where do you reckon you want to be by the end of your forecast period in 2029?

Speaker #7: And what gets you there?

Speaker #4: Good morning, Maurice. I'll turn that question over to Eileen to answer.

Dean Setoguchi: Good morning, Maurice. I'll turn that question over to Eileen to answer.

Speaker #1: Thanks, Maurice. Great question. I would refer you back to when we announced the Plains acquisition. And you know, at that time, we were 70% fee for service on a pro forma basis, 30% was marketing.

Eileen Marikar: Thanks, Maurice. Great question. I would refer you back to when we announced the Plains acquisition. At that time, we were 70% fee-for-service on a pro forma basis, 30% was marketing. Of that 75%, 45% was take-or-pay with average contract lengths around 12 years, again, on a pro forma basis, which is very strong. That is just an average from 2026 to 2028. As we continue to bring on these projects and with more of the KAPS that we just acquired, 100% of KAPS, where the contracts are long duration, well over 10 years, 75% take-or-pay, Frac III, the ACE Terminal, all of these projects, that just continues to grow that very strong cash flow. We will provide an update, again, when we provide a greater update on some of the other items on what that revised cash flow looks like.

Speaker #1: Of that 75%, 20, sorry, 45% was take or pay with average contract lengths around 12 years. Again, on a pro forma basis, which is very strong.

Speaker #1: And that is just an average from 2026 to 2028. So as we continue to bring on these projects and with more of the caps that we just acquired, 100% of caps where the contracts are, you know, long duration, well over 10 years, 75% take or pay, FRAC 3, the ACE terminal, all of these projects, that just continues to grow that very, very strong cash flow.

Speaker #1: So, you know, we will provide an update again when we provide, you know, a greater update on some of the other items on what that revised cash flow looks like.

Speaker #1: But I can assure you it does continue to improve as we start to execute and bring on these projects.

Eileen Marikar: I can assure you it does continue to improve as we start to execute and bring on these projects.

Speaker #7: Understood. And if I could finish off with the question on the macro—and in this case, I'm going to request that you speak on behalf of the industry on this one.

Maurice Choy: Understood. If I could finish off with a question on the macro, in this case, I'm going to request that you speak on behalf of the industry on this one. You mentioned earlier that you believe on the macro side, we're on a 10-year cycle of growth. What, if anything, do you think the industry still needs, be that from the government, from other indicators, for this cycle of growth to proceed?

Speaker #7: You mentioned earlier that you believe on the macro side, we're on a 10-year cycle of growth. What, if anything, do you think the industry still needs be that from the government, from other indicators for this cycle to of growth to proceed?

Speaker #4: Yeah, that's a great question. Maurice, you know, first of all, I do want to emphasize because sometimes I think our industry we complain about the things we don't have.

Dean Setoguchi: Yeah, that's a great question, Maurice. First of all, I do want to emphasize, because sometimes I think our industry, we complain about the things we don't have, and we don't maybe sometimes stop and give enough credit for the tremendous progress that's been made. I want to give a lot of credit to our federal government. Our Prime Minister is driving us in the right direction, working with Premier Smith and also Premier Eby, too, in BC. When I think back two years ago and the things I worried about, it was the top three things I worried about were all government-related, mainly our federal government. That's much different now. Yes, we need more progress and more clarity in terms of policy and improvements in some regulations to streamline things.

Speaker #4: And we don't maybe sometimes stop and give enough credit for the tremendous progress that's been made and I just, I want to give a lot of credit to, you know, our federal government, you know, our prime minister is driving us in the right direction, working with Premier Smith and, you know, also Premier Ebby too in BC.

Speaker #4: And so, you know, when I think back two years ago and the things I worried about, it was the top three things I worried about were all government related, mainly our federal government.

Speaker #4: And that's much different now. So, yes, we need more progress and more clarity in terms of policy and improvements and some regulations to streamline things.

Speaker #4: But I just want to say there's a tremendous amount of momentum that's carrying us in the right direction. And I have a high level of confidence that, you know, our governments are going to get to where we need to be to be that energy superpower.

Dean Setoguchi: I just want to say there's a tremendous amount of momentum that's carrying us in the right direction, and I have a high level of confidence that our governments are going to get to where we need to be to be that energy superpower and for our industry to thrive and continue to grow for the benefit of all Canadians.

Speaker #4: And, you know, for our industry to thrive and continue to grow for the benefit of all Canadians.

Maurice Choy: Well, that's great to hear. Thank you very much.

Speaker #7: That's great to hear. Thank you very much.

Speaker #4: Thank you.

Dean Setoguchi: Thank you.

Speaker #1: Thank you. Your next question comes from Patrick Kenny from National Bank Capital Markets. Your line is now open.

Operator 2: Thank you. Your next question comes from Patrick Kenny from National Bank Capital Markets. Your line is now open.

Operator: Thank you. Your next question comes from Patrick Kenny from National Bank Capital Markets. Your line is now open.

Speaker #7: Thank you. Good morning, everyone. Maybe just back on the consolidation of caps and, you know, thinking outside of the financial accretion. Dean, maybe you can just expand on some of the other strategic benefits that you've alluded to.

Patrick Kenny: Thank you. Good morning, everyone. Maybe just back on the consolidation of KAPS and thinking outside of the financial accretion. Dean, maybe you can just expand on some of the other strategic benefits that you've alluded to. What other commercial opportunities, either upstream or downstream of the pipe that you might now be able to accelerate as 100% owner? I guess, with these opportunities in front of you, if you might consider further non-core asset sales as just a way to

Speaker #7: You know, what other commercial opportunities either upstream or downstream of the pipe that, you know, you might now be able to accelerate as a 100% owner?

Speaker #7: And then I guess, you know, with these opportunities in front of you, if you might consider further non-core asset sales as just a way to build some dry powder and also accelerate the timing back to three times.

Patrick Kenny: Build some dry powder and also accelerate the timing back to 3x.

Speaker #4: Yeah. Well, those are great, great questions, Pat. Maybe I'll start backwards on the asset sales. I mean, we I think we've been very disciplined about continuing to high grade our portfolio.

Dean Setoguchi: Well, those are great questions, Pat. Maybe I'll start backwards on the asset sales. I think we've been very disciplined about continuing to high-grade our portfolio and making sure that our resources are focused on the things that matter most for the company, not just today, but for the long-term future. We have sold a number of facilities over the last 3 years and we'll continue to high-grade our portfolio, especially the stuff that is not super core to our long-term strategy. Having said that, I wouldn't expect anything super significant in terms of a dollar value sale that is going to meaningfully change our debt position in the next 18 months.

Speaker #4: And making sure that our resources are focused on the things that matter most for the company, not just today, but for the long-term future.

Speaker #4: So, you know, we have sold a number of facilities over the last three years. And we'll continue to high grade our portfolio especially the stuff that is non super core to our long-term strategy.

Speaker #4: Having said that, I wouldn't expect anything super significant in terms of a dollar value sale that is going to meaningfully change our deposition in the next 18 months.

Speaker #4: As we mentioned, we have been very disciplined about locking in our hedges, especially on the frac spread, but also with our iso-octane business, to make sure that we have the cash flow to drive that leverage just with the performance of the business.

Dean Setoguchi: As we mentioned, we've been very disciplined about locking in our hedges, especially on the frac spread, but also with our isooctane business to make sure that we have the cash flow to drive that leverage just with the performance of the business. With respect to KAPS, when you go back on KAPS, I would say in my time, it's probably the biggest decision we ever made at the time, but probably the best decision we ever made. KAPS connects our downstream and upstream business. For us to provide the best value add service for our customers, KAPS is a core piece of that.

Speaker #4: With respect to caps, I mean, you know, when you go back on caps, it was, I would say in my time, it's probably the biggest decision we've ever made at the time.

Speaker #4: But probably the best decision we ever made and, you know, caps connects our downstream and upstream business. And so, for us to provide the best value-add service for our customers, caps is a core, core piece of that.

Speaker #4: And again, when you think about the NGLs and condensate that is going to get produced in this basin with all the pipeline egress that's going to get built for crude oil and more LNG facilities, that is going to be essential asset that, you know, we're going to fill it to capacity.

Dean Setoguchi: When you think about the NGLs and condensate that is going to get produced in this basin, with all the pipeline egress that is going to get built for crude oil and with more LNG facilities, that is going to be an essential asset that we are going to fill it to capacity. We just think that it is a core part of our overall integrated service to make our business work better and more competitive. Anything you guys want to add?

Speaker #4: So, you know, we just think that it's a core part of our overall integrated service to make our business work better and more competitive.

Speaker #4: I think I just want to add.

Speaker #3: No, like, I mean, I think, you know, as we think about our assets and the opportunity to integrate it with planes, like, I mean, as Dean alluded to, we're, you know, I think we're very pleasantly surprised with respect to the quality of the people.

Jamie Urquhart: No. I think as we think about our assets and the opportunity to integrate it with Plains, as Dean alluded to, I think we are very pleasantly surprised with respect to the quality of the people. We alluded to the assets are foundational core assets for us going into the future. We may need to spend a few dollars, I think, here in the next year or two to get them up to our standard as Dean said, but that will enable us to grow our collective business. I think one of the short-term benefits is being allowing to take the very talented people that we have brought into our organization to think more broadly around the system of assets that we have brought into the asset.

Speaker #3: You know, we alluded to the assets are foundational core assets for us going into the future. We may need to spend a few dollars, I think, here in the next year or two to get them up to our standard as Dean said.

Speaker #3: But that will enable us to, you know, grow our collective business. And I think the short-term, one of the short-term benefits is being allowing to take the very talented people that we brought into our organization to think more broadly around the system of assets that we've brought into the asset.

Speaker #3: They tended to look at things more within, on an asset-by-asset basis where they're highly integrated in the decisions we make at one asset impact other assets as well.

Jamie Urquhart: They tended to look at things more on an asset-by-asset basis, where they are highly integrated, and the decisions we make at one asset impact other assets as well. That is one of the short-term benefits that we have been able to see in action very quickly. Then as Dean alluded to, the long-term integration opportunities that we are extremely excited about. That would be all I would add to the Plains acquisition element of it.

Speaker #3: That's one of the short-term benefits that we've been able to see in action very quickly. And then, as Dean alluded to, you know, the long-term integration opportunities that we're extremely excited about.

Speaker #3: But, you know, that would be all I would add to the planes acquisition element of it.

Speaker #7: Okay, that's great, Keller. I appreciate that. And then maybe just to follow up on the marketing outlook, I know you're well hedged, but I guess just curious, given the strong crack spread, you know, refined product environment, if these market dynamics continue, you know, might there be some further tailwinds here for the ISO octane margins going forward and maybe just confirm, you know, where any potential outsized marketing contributions would first be directed?

Patrick Kenny: Okay. That is great color. I appreciate that. Then maybe just to follow up on the marketing outlook. I know you are well hedged, but I guess just curious, given the strong frac spread, refined product environment. If these market dynamics continue, might there be some further tailwinds here for the isooctane margins going forward? Maybe just confirm where any potential outsized marketing contributions would first be directed, namely, balance sheet versus growth.

Speaker #7: Namely, you know, balance sheet versus growth.

Speaker #1: Thanks, Pat. Great question. So, in terms of the marketing itself, I think, you know, we, again, for this year, the 360 to 390 million, we feel is still very appropriate.

Eileen Marikar: Thanks, Pat. Great question. In terms of the marketing itself, I think, again, for this year, the CAD 360 to 390 million, we feel is still very appropriate, weighted very much towards H2. Of course, it reflects the outage that we had in H1 at AEF. Again, as you said, as we look forward, we're set up really well for 2027 from a marketing perspective. As you noted, those RBOB to WTI spreads or what we refer to as RBOB cracks, have been incredibly strong, and we have been layering on RBOB hedges into next year, as well as even into 2028 because the values are that strong. I think that's a positive.

Speaker #1: Weighted very much towards the second half of the year. And of course, it reflects the outage that we had in the first half of the year at AEF.

Speaker #1: Again, as you said, as we look forward, we're set up well, really well for 2027 from a marketing perspective. And as you noted, those RBOP to WTI spreads are what we refer to as RBOP cracks have been incredibly strong.

Speaker #1: And we have been layering on RBOP hedges into next year as well as even into 2028 because the values are that strong. So, I think that is, that's a positive.

Speaker #1: And as, you know, Dean mentioned earlier on the FRAC spread side, we're more than like 65% of the volumes are also hedged at better values than our deal thesis.

Eileen Marikar: As Dean mentioned earlier on the frac spread side, where more than 65% of the volumes are also hedged at better values than our deal thesis. The propane business is also, in general, set up quite well. Again, our ability to export propane to Asia through AltaGas export facility, where demand remains strong. I think for next year, we're set up quite well. In terms of cash flow, yes, back to capital allocation, our priority is to bring the balance sheet back within the target range. You asked about asset sales, but the good thing is our leverage, it's conservative, that two and a half to three times, even though we're a bigger size, we don't need to sell assets. It's more just a matter of cleaning up the portfolio as part of normal course.

Speaker #1: And then the propane business is also in general set up quite well, you know, again, our ability to export propane to Asia through AltaGas's export facility where demand remains strong.

Speaker #1: So, I think for next year we're set up quite well. And in terms of cash flow, yes, you know, back to capital allocation, our priority is to bring the balance sheet back within the target range.

Speaker #1: And you asked about asset sales, the good thing is our leverage is still, it's conservative, that 2.5 to 3 times, even though we're a bigger size.

Speaker #1: And we don't need to sell assets. It's more just a matter of cleaning up the portfolio as part of the normal course.

Speaker #7: Okay, that's great. Thanks, Eileen. Thanks, everybody.

Patrick Kenny: Okay. That's great. Thanks, Eileen. Thanks, everybody.

Speaker #3: Thanks a lot.

Jamie Urquhart: Thanks a lot.

Dean Setoguchi: Thanks a lot.

Jamie Urquhart: Thanks a lot.

Speaker #1: Thank you once again. That is Star 1, should you wish to ask a question. And your next question is from Erin McNeil from CityCalend.

Operator 2: Thank you. Once again, that is star one should you wish to ask a question. Your next question is from Aaron Mckail from TD Cowen. Your line is now open.

Operator: Thank you. Once again, that is star one should you wish to ask a question. Your next question is from Aaron MacNeil from TD Cowen. Your line is now open.

Speaker #1: Your line is now open.

Speaker #8: Hey, morning all. Thanks for taking my questions. Dean, one of the strategic rationales for the planes transaction was increasing connectivity across the NGL value chain.

Aaron Mckail: Hey, morning, all. Thanks for taking my questions. Dean, one of the strategic rationales for the Plains transaction was increasing connectivity across the NGL value chain. Again, I'm not trying to get you to front-run a capital project or anything like that, but now that you've been operating the assets, I'm wondering if you could provide an example or an anecdote of something that would support that previous messaging that maybe you hadn't touched on in the past.

Aaron MacNeil: Hey, morning, all. Thanks for taking my questions. Dean, one of the strategic rationales for the Plains transaction was increasing connectivity across the NGL value chain. Again, I'm not trying to get you to front-run a capital project or anything like that, but now that you've been operating the assets, I'm wondering if you could provide an example or an anecdote of something that would support that previous messaging that maybe you hadn't touched on in the past.

Speaker #8: And again, I'm not trying to get you to front-run a capital. Project or anything like that. But now that you've been operating the assets, I'm wondering if you could provide an example or an anecdote of something that would support that previous messaging that maybe you hadn't touched on in the past.

Speaker #4: Yeah. Good morning, Erin. That's a great question. I mean, we're just tremendously excited by, you know, the combination of the two asset bases because our business was more centered in the West and also getting molecules down into the U.S.

Dean Setoguchi: Yeah. Good morning, Aaron. That's a great question. We're just tremendously excited by the combination of the two asset bases because our business was more centered in the West and also getting molecules down into the US. We've had our hands on this business now for two and a half months, and now we're getting more exposure out to the eastern markets and they're all priced off of Mont Belvieu. We just see tremendous opportunity to take those molecules to the east, but also to be able to distribute them in the mid-continent too, right from Empress, down in the US and accessing also into Wisconsin and Michigan as well. We just like those markets. We're a supply-based basin, so a big part of the value that we add is being able to access markets efficiently.

Speaker #4: And, you know, when we've had our hands on, you know, this business for now for two and a half months and, you know, now we're getting more exposure out to the Eastern markets and draw price off of Bellevue.

Speaker #4: And, you know, we just see tremendous opportunity to take those molecules to the East, but also to be able to distribute them in the Mid-Continent too right from Empress.

Speaker #4: Down in the U.S. and accessing also into Wisconsin and Michigan as well. So, we just like those markets. I mean, we're a supply-based business.

Speaker #4: And so, you know, a big part of the value that we add is being able to access markets efficiently. And, you know, while the Asian markets are very strong off the West Coast and we're well positioned there, you know, continentally, the Eastern markets are strong too, especially in the wintertime.

Dean Setoguchi: While the Asian markets are very strong off the West Coast, and we're well-positioned there, continentally, the eastern markets are strong too, especially in the wintertime. We're very happy to have the assets that can serve those markets as well. I don't know if there's anything else you guys want to add.

Speaker #4: And we're very happy to have the assets that can serve those markets as well. But I don't know if there's anything else you guys want to add.

Speaker #3: Yeah, no, I think just to add on to, you know, something I shared with the last answer to the question was, without getting into specifics, we certainly see opportunities to debottleneck the assets in a very capital-efficient way to, you know, to facilitate some of the opportunities that perhaps the previous owner just didn't have the commitment and the focus to pursue.

Jamie Urquhart: Yeah, no, I think just to add on to something I shared with the last answer to the question was, without getting into specifics, we certainly see opportunities to debottleneck the assets in a very capital-efficient way to facilitate some of the opportunities that perhaps the previous owner just didn't have the commitment and the focus to pursue. There's no big projects that I think we're in a position to be able to announce over the next little while. It's kind of boring, but I had a boss once that said, Bunt single score runs. There's just a lot of bunt singles that we're unearthing. That's going to result in some really impressive, I think, growth for our organization over the next year or two.

Speaker #3: And, you know, so there's no big projects that I think we're in a position to be able to announce over the next little while.

Speaker #3: It's kind of boring, but I, you know, I had a boss once that said bump single score runs. And there's just a lot of bump singles that were unearthing.

Speaker #3: And that's going to result in some really impressive, I think, growth for our organization over the next year or two.

Speaker #8: Like you said, my next question, I wanted to ask about bottlenecks, you know, I think that the caps volume ramp is well documented as are your fractionation and rail capacity additions.

Aaron Mckail: Like you sensed my next question. I wanted to ask about bottlenecks. I think that the KAPS volume ramp is well documented, as are your fractionation and rail capacity additions. Where do you see the greatest bottlenecks across the expanded platform over the next three to five years? Is it the Plains business? Is it something else? Is it G&P? How would you rank sort of what's most urgent to not as urgent?

Aaron MacNeil: Like you sensed my next question. I wanted to ask about bottlenecks. I think that the KAPS volume ramp is well documented, as are your fractionation and rail capacity additions. Where do you see the greatest bottlenecks across the expanded platform over the next three to five years? Is it the Plains business? Is it something else? Is it G&P? How would you rank sort of what's most urgent to not as urgent?

Speaker #8: So, like, where do you see the greatest bottlenecks across the expanded platform over the next three to five years? Is it the planes business?

Speaker #8: Is it something else? Is it GMP? Like, how do you, how would you rank sort of what's most urgent to not as urgent?

Speaker #4: Oh, that's a great question. I mean, you know, the great thing is that we, you know, we have sanctioned projects in place to address some of the bigger ones.

Dean Setoguchi: Oh, that's a great question. The great thing is that we have sanctioned projects in place to address some of the bigger ones. We still have capacity on KAPS. Yes, we'll have to add more pumping stations and things like that, but we still have great capacity there to serve the Montney and Duvernay developments at that part of the basin. We think that we can use our assets more effectively together, like some of our storage assets perhaps, to get better effective utilization out of the storage, as an example. I think that's positive. We talked about our oil sands assets, the pipe connectivity and the capacity on that between Edmonton, Fort Saskatchewan, and storage is included as part of that, but also the Norlite Pipeline.

Speaker #4: So, you know, with our FRAC projects and, you know, but we still have capacity on caps. And yes, we'll have to add more pumping stations and things like that.

Speaker #4: But we still have great capacity there to serve the Montney and Duvernay developments at that part of the basin. You know, we think that we can use our assets more effectively together.

Speaker #4: So, like some of our storage assets perhaps, you know, to get better effective utilization out of the storage as an example. So, I think that's positive.

Speaker #4: We talked about our oil sands. Assets. So, you know, the pipe connectivity and the capacity on that between Eventon, Fort, Saskatchewan, and, you know, storage is included as part of that.

Speaker #4: But also the Norlight pipeline. And so, you know, there might be debottlenecks that are required on those assets over time. And as Jamie just described, you know, there's debottlenecks that we're, but these are all generally low capital debottlenecks that I'm talking about now.

Dean Setoguchi: There might be debottlenecks that are required on those assets over time. As Jamie just described, there's debottlenecks that These are all generally low capital debottlenecks that I'm talking about now. I would envision that they're all very capital efficient and are going to generate very high returns for us overall. I'd say the biggest need, capital need over time is probably on the G&P front where to process all the incremental gas that's going to get developed, there's going to be likely more processing capacity. Brad, do you want to add some comments?

Speaker #4: So, you know, I would envision that they're all very capital-efficient. And are going to generate very high returns for us overall. So, I'd say the biggest need capital need over time is probably on a GDP front where, you know, to process all the incremental gas that's going to get developed is going to be likely more processing capacity and Brad want to add some comments.

Speaker #8: Yeah, thanks, Erin to Brad here. Really appreciate the question. I think as leveraging off what Dean said, as the oil sands continues to call for more condensate, we think that's going to come from the Montney and the Duvernay.

Brad Slessor: Yeah. Thanks, Aaron. It's Brad here. Really appreciate the question. I think as leveraging off what Dean said, as the oil sands continues to call for more condensate, we think that's going to come from the Montney and the Duvernay. We think we're very well-positioned to capture our fair share of that growth coming down the KAPS pipeline. All that drilling for condensate brings the need for more gas processing and more NGLs to make it to market as well. You've seen us talk in the past about a really capital efficient debottleneck at Simonette, at our Wapiti gas plant. We've also recently talked very briefly about getting in front of the incremental need for gas processing we see out in the basin, in the Montney, especially for sour gas processing, which is complex and is right in our area of expertise.

Speaker #8: We think we're well, very well positioned to capture our fair share of that growth coming down the caps pipeline. But all that drilling for condensate brings the need for more gas processing and more NGLs to make it to market as well.

Speaker #8: And you've seen us talk in the past about a really capital-efficient debottleneck set Simonette or Wapiti gas plant. And we've also recently talked very, very briefly about getting in front of the incremental need for gas processing we see out in the basin in the Montney, especially for sour gas processing, which is complex and is right in our area of expertise.

Speaker #8: And so that's some of the areas that our team is certainly focused on. And we look forward to chatting more about that in the coming quarters.

Brad Slessor: That's some of the areas that our team is certainly focused on, and we look forward to chatting more about that in the coming quarters.

Speaker #8: Gotcha. Thanks, everyone. I'll turn it back.

Aaron Mckail: Gotcha. Thanks, everyone. I'll turn it back.

Aaron MacNeil: Gotcha. Thanks, everyone. I'll turn it back.

Speaker #4: Thank you.

Dean Setoguchi: Thank you.

Speaker #1: Thank you. And your next question is from AJ O'Donnell from TPH. Your line is now open.

Operator 2: Thank you. Your next question is from AJ O'Donnell from TPH&Co.. Your line is now open.

Operator: Thank you. Your next question is from AJ O'Donnell from TPH. Your line is now open.

Speaker #7: Hey, good morning, everyone. I just wanted to focus on some of the macro interbasin. Just thinking about some of the incremental progress that's been made on the data center development and particularly like given your position in of land in the industrial heartland corridor, could you maybe talk about, you know, your surplus of land or maybe potential gas supply capability that could potentially support, you know, a similar power generation project or something data center adjacent opportunity?

AJ O'Donnell: Hey, good morning, everyone. I just wanted to focus on some of the macro intrabasin, just thinking about some of the incremental progress that's been made on the data center development. Particularly, given your position of land in the industrial heartland corridor, could you maybe talk about your surplus of land or maybe potential gas supply capability that could potentially support a similar power generation project or something data center adjacent opportunity?

Speaker #4: Yeah, good morning, AJ. You know, great question. I mean, I think that we're going to see a lot of opportunity for many developments in the industrial heartland.

Dean Setoguchi: Yeah. Good morning, AJ. Great question. I think that we're going to see a lot of opportunity for many developments in the industrial heartland. As you mentioned, we have 1,300 acres of land there that is situated in a very good spot. It has very good pipe connectivity right through those lands for pretty much every product. The pipes run right through the land, so that's a big advantage. We do have the salt rights to build cavern storage. We have our ACE rail terminal that's getting built, which we can multipurpose for other projects. Also, I'd point out that Shell's carbon capture line cuts through the northeast corner of that land as well. If there's any projects that require carbon sequestration, we have a short tie-in to get into their line. There's a lot of advantages there. I won't speak specifically to data centers.

Speaker #4: And as you mentioned, we have 1,300 acres of land there that is situated in a very good spot. It has very good pipe connectivity.

Speaker #4: Right through those lands for pretty much every product that the pipes run right through the land. So that's a big advantage. We do have the salt rights to build cavern storage.

Speaker #4: We have our ACE rail terminal that's getting built, which we can multipurpose for other projects. So, and also I'd point out that Shell's carbon capture line cuts through the northeast corner of that land as well.

Speaker #4: So, you know, if there's any projects that require, you know, carbon sequestration, we have a short tie-in to get into their line. So, you know, there's a lot of advantages there.

Speaker #4: You know, I won't speak specifically to, you know, data centers. I mean, that's always a possibility. And I think it's great to have more demand centers for our natural gas.

Dean Setoguchi: That's always a possibility, I think it's great to have more demand centers for our natural gas. I would just say that any developer that requires a reliable supply of feedstock, they're going to look to Alberta. This is a great place to do business. Again, I can't think of a better place to locate new opportunities in our lands and in that area. Our team, we have a business development team that's working on opportunities. It's too early to talk about what those opportunities look like, but I think that for the long-term future growth of Keyera, you're going to see a lot more development on that land because it's so well situated and has so many amenities that advantage it.

Speaker #4: But I would just say that any developer that requires reliable supply of feedstock, they're going to look to Alberta. This is a great, great place to do business.

Speaker #4: And, you know, again, I can't think of a better place to locate new opportunities on our, you know, in our lands. And in that area.

Speaker #4: So, you know, our team, we have a business development team that's working on opportunities. It's too early to talk about what those opportunities look like.

Speaker #4: But I think that for the long-term future growth of Kiera, you're going to see a lot more development on that land because it's so well situated and has so many amenities that advantage it.

Speaker #7: Okay. Thanks, Dean. And maybe just the last one, just thinking about your system and tying it back to the macro and just overall volume growth into the remainder of the year.

AJ O'Donnell: Okay. Thanks, Dean. Maybe just the last one, just thinking about your system and tying it back to the macro and just overall volume growth into the remainder of the year. Just wondering if you could refresh us all on how producer activity is tracking right now, what you're expecting for the cadence of volume ramp through next year or through the end of this year and into 2027. Thanks.

Speaker #7: Just wondering if you could refresh us all and kind of how producer activity is tracking right now, kind of what you're expecting for the cadence of volume wrap through next year or through the end of this year and into 2027.

Speaker #7: Thanks.

Speaker #4: Yeah. Well, listen, you know, as I mentioned before, I mean, we are very excited about the macro future, the long-term future, both short, medium, long-term.

Dean Setoguchi: Yeah. Well, listen, as I mentioned before, we are very excited about the macro future, the long-term future, both short, medium, long-term. Will there be some cycles and blips to there? Sure there will be, generally, I think there's a very strong tailwind for our entire business, that is good for Keyera. We have core basin infrastructure that helps to enable the basin to grow. We provide services that add value to our customers, the producers, which help them, incent them to continue to drill more because it's profitable for them. We've already published our guidance for our fee-for-service EBITDA growth, which again, I believe it's the very best out of all the midstream providers. 16% to 18% fee-for-service EBITDA growth from 2025 to 2027, and 7% to 8% from 2027 to 2029. That guidance is what we're locked in on delivering.

Speaker #4: Whether it be some cycles and blips to there, sure, there will be, but generally, I think there's a very strong tailwind for our entire business.

Speaker #4: And that is good for Keyera. We have core basin infrastructure that helps to enable the basin to grow. We provide services that add value to our customers, the producers.

Speaker #4: Which help them and send them to continue to drill more because it's profitable for them. You know, we so we've already published our guidance for our feed for service EBITDA growth, which again, is I believe it's a very best in out of all the midstream providers.

Speaker #4: 16 to 18% feed for service EBITDA growth from 2025 to 2027. And 7 to 8 from 2027 to 2029. So that guidance is what we're locked in on delivering.

Speaker #4: And as we said, we have we see a ton of opportunity that's going to carry our growth well beyond 2029. So we're very excited.

Dean Setoguchi: As we said, we see a ton of opportunity that's going to carry our growth well beyond 2029. We're very excited.

Speaker #7: All right. Thank you very much.

AJ O'Donnell: All right. Thank you very much.

Speaker #4: All right. Thanks. Have a great day.

Dean Setoguchi: All right, thanks. Have a great day.

Speaker #1: Thank you. There are no further questions at this time. Please proceed with the closing remarks.

Operator 2: Thank you. There are no further questions at this time. Please proceed with the closing remarks.

Operator: Thank you. There are no further questions at this time. Please proceed with the closing remarks.

Dan Cuthbertson: This is Dan Cuthbertson with Investor Relations. Thanks all again for joining us today. Please feel free to reach out to our IR team with any additional questions. With that, I hope everyone enjoys the rest of the summer.

Speaker #5: This is Dan Cuthbertson with Investor Relations. Thanks again to everyone for joining us today. Please feel free to reach out to our IR team with any additional questions.

Speaker #5: And with that, I hope everyone enjoys the rest of the summer.

Operator 2: Thank you. Ladies and gentlemen, that concludes the conference call for today. Thank you all for joining. You may now disconnect your lines.

Operator: Thank you. Ladies and gentlemen, that concludes the conference call for today. Thank you all for joining. You may now disconnect your lines.

Q2 2026 Keyera Corp Earnings Call

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