Keyera Corp . (TSX: TSX:KEY) has announced robust financial results for the third quarter of 2024, emphasizing their achievement towards the upper end of their 6% to 7% EBITDA growth target. Net earnings for the quarter reached $185 million, with adjusted EBITDA at $322 million and distributable cash flow at $195 million, or $0.85 per share. The company's Gathering and Processing segment reported a margin of $99 million, while both the Liquids Infrastructure and Marketing segments each contributed a margin of $135 million. The latter benefited from increased sales of propane, condensate, and iso-octane.
Key Takeaways
- Keyera achieved strong financial performance in Q3, with net earnings of $185 million.
- Adjusted EBITDA stood at $322 million, and distributable cash flow was reported at $195 million ($0.85 per share).
- The company is focusing on two major capital projects to boost capacity and is considering share buybacks.
- CFO Eileen Marikar reaffirmed the Marketing segment's guidance and highlighted Keyera's strong financial position.
- Management expressed confidence in long-term growth, driven by strategic investments and favorable market conditions.
Company Outlook
- Keyera is optimistic about the future demand for natural gas, particularly in the Montney Fairway, with expected utilization increases in Q4.
- The company anticipates growth in natural gas volumes, estimating an increase to 5-6 Bcf per day by the end of the decade.
- Executives are confident in Keyera's balance sheet and its ability to pursue growth opportunities while considering share buybacks and dividend growth.
Bearish Highlights
- The recent earnings call acknowledged challenges, including turnarounds at Strachan and Wapiti that took longer than expected, impacting customer operations.
- There is a potential decline in Q4 for the Marketing segment due to market adjustments.
- Crude prices have experienced a slight softening.
Bullish Highlights
- Keyera remains confident in the long-term fundamentals of the iso-octane sector and expects a return to historical pricing levels.
- The company is advancing major capital projects, including debottlenecking of Frac II and the development of Frac III, to significantly increase capacity.
- Management is optimistic about recovery in utilization at the Brazeau River Gas Plant and future growth at the Rimbey gas plant.
Misses
- The company faced unexpected repairs and initial equipment challenges during turnarounds, which have been learning experiences to improve future efficiency.
Q&A Highlights
- Executives discussed the capacity for expansion at the KFS facility, with potential for growth supported by substantial undeveloped land.
- The impact of Paramount's divestiture in the Wapiti region was mentioned, with optimism about maintaining strong customer relationships.
- The company is preparing for guidance in 2025, with market dynamics affecting propane and crude sales being a focus.
Keyera's management team conveyed a strong sense of optimism during their earnings call, backed by solid financial results and strategic initiatives aimed at long-term growth. The company's commitment to capital projects, market positioning, and operational improvements indicates a positive trajectory for the future. Keyera invites interested parties to reach out to their Investor Relations team for further inquiries.
Full transcript - None (KEYUF) Q3 2024:
Operator: Good morning. My name is Joelle, and I will be your conference operator today. At this time, I would like to welcome everyone to Keyera's 2024 Third Quarter Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the call over to Dan Cuthbertson, General Manager of Investor Relations. You may begin.
Dan Cuthbertson: Thanks, and good morning. Joining me today will be Dean Setoguchi, President and CEO; Eileen Marikar, Senior Vice President and CFO; Jamie Urquhart, Senior Vice President and Chief Commercial Officer; and Jarrod Beztilny, Senior Vice President, Operations and Engineering. We'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 we will be giving today relate to future events. These forward-looking statements are given as of today's date and reflect events or outcomes that management currently expects. In addition, we will refer to some non-GAAP financial measures. For additional information on non-GAAP measures and forward-looking statements, please refer to Keyera's public filings available on SEDAR and our website. With that, I'll turn the call over to Dean.
Dean Setoguchi: Thanks, Dan, and good morning, everyone. We are pleased to deliver another solid quarter, driven by strong performance from all three business segments. We remain well on track to reach the upper end of our 6% to 7% EBITDA growth target. In our Gathering and Processing segment, we delivered $99 million in realized margin. This result was sorted -- supported by near-record quarterly throughput from our North region, up 15% year-over-year. This included the partial impact of our turnaround at the Wapiti gas plant. Our Liquids Infrastructure segment delivered its second-highest quarter ever, with $135 million in realized margin. Driving this performance was the continued ramp-up of caps and growing demand for our fractionation, storage, and condensate businesses. Our Marketing segment continued to perform well, generating $135 million in realized margin. The increase relative to last year was due to higher propane, condensate, and Iso-octane sales, volumes, and margins. Our Marketing segment is a distinct competitive advantage. Strong cash flow from this physical business has enabled us to consistently deliver above average after-tax corporate returns. This cash flow is then reinvested into long-life infrastructure projects, in turn driving growth and high quality fee-for-service cash flow. We continue to advance capital efficient growth opportunities. At KFS, we have ordered long-lead items for an 8,000-barrel per day debottleneck of our Frac II. We expect to officially sanction the project in the early part of 2025 to achieve an in-service date late in 2026. We continue to advance customer contracting and engineering on KFS Frac III. This project would add about 47,000 barrels per day of additional capacity. Together, these two projects will increase our overall net fractionation capacity by about 60%, further strengthening our integrated value chain and our ability to service customers. We finished the quarter in a very strong financial position. This gives us tremendous flexibility to deploy capital in a manner that is most value accretive for shareholders. Today, we announced that we'll be seeking approval for share buybacks. This will be used opportunistically and weighed carefully against other options for deploying capital. As we said before, based on the opportunities we see, our preference is to invest in continuing to grow our integrated platform in Western Canada. I'll now turn it over to Eileen, who will provide an overview of our financial performance for the quarter, and speak to our guidance for 2024. Eileen?
Eileen Marikar: Thanks, Dean. Net earnings were $185 million compared to $78 million for the same period last year. Adjusted EBITDA for the quarter was $322 million compared to $288 million for the same period last year. Distributable cash flow was $195 million or $0.85 per share compared to $186 million or $0.81 per share for the same period in 2023. These results were mostly driven by higher year-over-year contributions from all three business segments. We continue to maintain a strong financial position, exiting the quarter with net debt to adjusted EBITDA at 1.9 times, below our targeted range of 2.5 times to 3 times. This positions us well to pursue opportunities that will continue to enhance shareholder value. Moving on to our guidance for 2024, we are reaffirming our Marketing segment realized margin range at $450 million to $480 million. Growth capital for 2024 is expected to come in at the high end of the previously guided range of $80 million to $100 million. This includes capital for the frac expansions and additional tie-ins for new customer volumes at the Wapiti gas plant. Maintenance capital remains unchanged at between $120 million and $140 million. And lastly, cash taxes are to remain in the range of $90 million to $100 million. I'll now turn it back over to Dean.
Dean Setoguchi: Thanks, Eileen. Basin volume growth is materializing. This is evidenced by our growing fee-for-service cash flow. We're also seeing strong future demand for our services allowing us to move forward with capital-efficient growth projects. This continued growth is supported by key developments, including TMX, LNG Canada, a growing petrochemical industry, and increasing LPG exports off the West Coast of Canada. As an essential infrastructure service provider, Keyera will continue to play an important role in enabling basin growth. On behalf of Keyera's Board of Directors and management team, I want to thank our employees, customers, shareholders, indigenous rights holders, and other stakeholders for their continued support. With that, I'll turn it back to the operator for Q&A.
Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Rob Hope with Scotiabank (TSX:BNS). Your line is now open.
Robert Hope: Good morning, everyone. My first question is on KFS III. Can you give maybe a little bit of color on how contracting discussions are there? Previously, you did speak to the potential that this could be sanctioned early 2025. And then, also, have you started to order any equipment related to this project as well?
Dean Setoguchi: Yeah. Good morning, Rob, and thanks for the question. Frac demand in Western Canada is extremely tight, and so right now, our fractionator is very full. As we've been talking about, we certainly see a lot of growth in the basin with LNG Canada. Certainly, a lot of demand for condensate with growing volumes on TMX. And with that, we just see a lot more natural gas development. And out of that natural gas development, it's going to be weighted to liquids-rich areas, which is going to drive more fractionation demand. So the point I'm getting to is that we see a lot of demand not only for existing frac but for future frac capacity. So we continue to advance that project and sign contracts. But I'll turn it over to Jamie and let him add any other comments on top of that.
James Urquhart: Yeah. Thanks, Dean. And thanks for the question, Rob. I think the only thing that I can add from a Frac III perspective is that, we've completed pre-FEED. That was completed in the quarter and we've proceeded immediately into feed. And as Dean alluded to, and I can just reaffirm that, we're very pleased with the progress that we've made on commercial contracting, and as such, we're gaining more confidence that we'll be able to move ahead with both those projects in 2025.
Dean Setoguchi: And I might also add, Rob, what we feel good about is that we're basically cloning our Frac II in a lot of ways. So it makes the -- just less unknowns with respect to engineering and construction, so we feel very comfortable the way that side of the project is advancing.
Robert Hope: All right, good. And then, maybe just turning over to the optimization. It looks like you're moving forward with a number of small projects at Brazeau and Wapiti. As you progress through 2024, have you seen the amount and magnitude of these smaller high-return capital projects increase? And is that really the reason why the CapEx is moving up towards the upper end of the band?
Dean Setoguchi: Yeah. First of all, I mean, as we grow, we have to be very disciplined about optimizing our portfolio so that we can focus our attention and our capital to projects that are strategic to our long-term vision, and so some of the smaller plants, they still require a lot of resources that a big plant would, so it's better in other people's hands. So we're pleased that we're able to, I guess, consolidate and high-grade our portfolio. But we do see a lot of great opportunities both in our North portfolio and also in our South. I don’t know, Jamie, you have anything else you want to add?
James Urquhart: Yeah. The only thing I'd add to that is, as you keyed in on, Rob, is that we have specific hurdle rates that we need to meet for those smaller projects and all of the projects that we're working on right now that are, frankly, driven by customer demand and increased utilization opportunities at our facilities, they all hit or exceed those hurdle rates.
Robert Hope: Thank you.
Operator: Your next question comes from Maurice Choy with RBC Capital Markets. Your line is now open.
Maurice Choy: Thanks and good morning, everyone. Maybe I could just stick with hurdle rates and also moving forward with the frac projects. You previously highlighted the importance of underpinning projects with long-term contracts, where the take or pay volumes support a 10% to 15% pre-tax target ROC with upside after that from spot volumes, full on contracts or marketing activities, would that still be the case for these two projects as well as any future projects that you do?
Dean Setoguchi: Yeah. Good morning, Maurice, and thank you for the question. First of all, yes, that's generally true for our infrastructure projects and our frac projects would be no different. We've been very -- we issued an update at the beginning of the year in terms of the contracting that we did there on our frac, but our whole integrated system, and I'm pleased with just the forward progress we've made on additional contracting since then. So we feel pretty good about where we stand today and our path to sanctioning this project next year. When we think about our whole system, we have integrated system, and right now, the biggest bottleneck is that a frac. So it makes a lot of sense that we're focusing a lot of time and attention and there's a lot of demand for that part of our service. So again, everything continues to advance both on the debottleneck and the Frac III. And we think both projects will generate strong returns for us on an individual basis and on an integrated basis.
Maurice Choy: Understood. And if I could finish off with a question about volumes and your outlook for both G&P and LI. Obviously, on the G&P front, the North record volumes are near-record volumes, but lower in the South, and thoughts on the volumes on this part of the business given the low gas prices? And on the LI side, anything outside of the frac volumes that you could comment on what you see in volumes?
Dean Setoguchi: Yeah. Well, generally, I mean, as I said before, I mean, we're very optimistic about the growth for natural gas in our basin. We see out to the end of the decade getting to that 5 or 6 bcf a day of growth, which is very significant. And we think a lot of it's going to happen along the Montney Fairway where we have a very good footprint up there. But at the same time, I really believe that setting aside where natural gas is today and where it's been in the summertime, I think with all this additional demand, it's going to compress differentials. And we will see more drilling in the South. Keep in mind that, our South portfolio, these are very mature assets that really are almost fully depreciated. So we think that we can attract value down there and be very competitive with our service. So I think over time, over the next five or six years, we're going to see growth in both areas, but Jamie?
James Urquhart: Yeah. So the only thing I'd add there is that we had previously announced in previous quarters that one of our customers had decided to shut in some gas behind the Brazeau River Gas Plant, but that gas has been brought back, and so our expectation in Q4 is that we're going to see an uptick in utilization, primarily at the Brazeau River facility, a little bit at Nordic River as well. But the other point I'd like to make is that we still continue to be extremely encouraged by the development in the Duvernay around Rimbey. And some significant land sales in the last couple of weeks that point to some of the existing producers or new entrants don't know because it was behind a broker, they similarly view and are very excited about the Duvernay. So we -- we're starting to see some additional volumes behind our Rimbey gas plant in particular, which is very well-suited based on its ethane and C3+ extraction capabilities. So that's an area in the South that we continue to be extremely excited about in the future.
Maurice Choy: Just as a quick follow-up, if you could just parse out this potential recovery in itself, are we talking about it in a matter of like a couple of quarters or is it more about waiting until the LNG Canada fully ramps up before we see recovery in the South?
James Urquhart: Yeah. Well, I guess it will depend on how quickly gas prices bounce back and -- but also just the fundamentals of this is still relatively liquids-rich natural gas. And our facilities in the South for the most part have high liquids recoveries. So, I think the worst is behind us with respect to any reduction in utilization we've seen in the South. And the utilization impact is not that significant frankly.
Dean Setoguchi: Yeah. I think to Jamie's point, I mean, we think it's pretty positive that the Duvernay is looking to be pretty commercial development and so it's still in the very early stages, and as that continues to get developed, I mean, it's going to be just another play behind our facilities that is more oil-weighted, so -- just like the Montney. So I think you'll see less sensitivity to natural gas prices as Duvernay gets developed. And just a reminder, I mean, our Rimbey gas plant is a turbo expander gas plant with 200 million a day of unutilized capacity. So that's just like a full train of capacity that we have available down there to provide that service.
Maurice Choy: Thank you very much.
Dean Setoguchi: Thank you.
Operator: Your next question comes from Spiro Dounis with Citi. Your line is now open.
Spiro Dounis: Thanks, operator. Good morning, team. I wanted to start with the buyback really quickly if we could. Dean, you made it pretty clear that the preference on capital allocation is for growth, and certainly, you've got several projects in the hopper here in front of you, but I imagine this isn't an either or situation between those two choices and there will be some opportunities to weave in buybacks opportunistically from here. So just really wanted to get a better understanding of maybe some of the conditions you'll be looking forward to you to execute on that buyback.
Dean Setoguchi: Good morning, Spiro, and thanks for the question. Overall, I'll say, what we're here to do is to add value for our shareholders, and -- we -- the great thing is that we're in an enviable position with our balance sheet and so we have a lot of opportunities to do that. But we see a lot of growth potential with what we see from the -- just the growth that's going to happen in the basin and the discussions we have with our customers. So we see some pretty good opportunities there, but I'll just turn it over to Eileen for her comments.
Eileen Marikar: Thanks, Spiro, and thanks, Dean. Yeah. Not too much to add to that. I mean, it's nice now that we have the tool available to us so that this is something that we will constantly be weighing against other capital allocation opportunities, and back to where Dean was talking about, we are in an enviable position. Our balance sheet strength is a competitive advantage, and when you combine both the balance sheet with the growth we see in the basin, this just -- there's just so much opportunity to deliver high returns for shareholders. But at the end of the day, our goal is unchanged, right? It's to allocate capital to that highest-value option, whether that be organic, inorganic growth, and now we have the ability to do buybacks when they make sense.
Spiro Dounis: Got it. Great. And then, Eileen, you just touched on my second question, which is around inorganic growth. We've seen some M&A activity over the last quarter with one of your peers, and so just curious maybe just get your updated thoughts on the M&A landscape for you and maybe some types of assets you'd have an appetite for right now.
Dean Setoguchi: Yeah. Thank you for the question, Spiro, and with our integrated platform, we see opportunities across that asset base where we can enhance it and create a more valuable service for our customers -- more competitive service as well. So we can't talk specifically about anything that we may be interested in, but I can say that, we think that there might be some opportunities that come forward, but we'll always be extremely disciplined too. We need to make sure we're creating value with anything we do. And the great thing is, as Eileen just said, is that we have the optionality with our strong balance sheet that if we see something we really like at the right price, we can transact on it and add value.
Spiro Dounis: Great. I'll leave it there for today. Thanks, team.
Dean Setoguchi: Thanks. Have a good day.
Operator: Your next question comes from Robert Catellier with CIBC (TSX:CM) Capital Markets. Your line is now open.
Robert Catellier: Well, that's the first. I just want to -- just ask you about Zone 4 in light of this strong frac outlook, do you view the Frac III or even the Frac II debottleneck contingent on Zone 4 moving forward or the opposite? Do you see Zone 4 contingent on the frac expansions?
Dean Setoguchi: Yeah. Good morning, Rob, and that's a great question. Jamie's team has been very active in adding contracts for our frac service, so I would say, independent -- and that's obviously independent of Zone 4 because we haven't sanctioned it yet. I'll let Jamie maybe speak to that, but overall, again, we really like just the momentum that we have in the basin with the growth that we see -- the growth outlook we see. And including for Zone 4, and if Zone 4 happens, that would help feed more volumes to the frac as well. But Jamie, do you want to add to that?
James Urquhart: Yeah. Not much to add, frankly. Like I mean, I think as Dean said, as we view Frac III, certainly, it's not contingent on Zone 4 proceeding, but we certainly see the frac as a differentiator in order to attract customers that would be on cash Zones 1 through 3 or Zone 4 as well.
Robert Catellier: Okay. That makes sense. And then just going back to the big picture, the macro outlook on volumes here, how does your view of the basin growth change if LNG Canada doesn't make an FID on Phase 2 for a few years?
Dean Setoguchi: Yeah. That's a good question. I think that overall, if it's two years off, I mean, we just look at the longer-term macro and if something is off by a year or two, I mean, does that really change anything in the big picture? I don't think so. I just look at the logic of utilizing our basin, our industry filling the full capacity of coastal gas link. It just makes a lot of sense with all advantages that we have to export LNG off the West Coast of Canada. And again, this is some of the lowest carbon LNG that's going to ever hit the market on the waterborne market. So I think it's a very attractive source of energy. And the advantages are, obviously, there's less shipping time to get it across to Asia. So it just seems to be a tremendous amount of logic for us to be maxing out the capabilities of at least the coastal gasoline pipeline, and hopefully, there'll be more pipelines built beyond that.
Robert Catellier: Yeah. Cheap cost-competitive resource, quick time to market, low carbon, it seems like -- it seems like it should move forward. Then to the -- over to the NCIB, it's -- I understand the opportunistic nature of the of the plan and why that makes sense for you. I'm just curious about what the implications are for dividend growth now that you have these two tools available to you, not just dividend growth, but also the option to allocate towards share repurchases. Can we still expect dividend growth to follow fee-for-service EBITDA growth pretty closely over time or is every dividend decision or dividend growth decision going to be pretty strictly weighed against the NCIB?
Eileen Marikar: Thanks, Rob for the question, 100% we are a dividend growth company that is first and foremost true and fundamental to who we are, do nothing changes in terms of the dividend growing in line with growing our fee-for-service cash flow and underpinned by a low payout ratio, so absolutely nothing changes there. It's just that now we have the option for again weighing it between organic, inorganic, and buybacks.
Robert Catellier: Okay. That's what I thought. And congratulations on the momentum, and I'll turn it back.
Dean Setoguchi: Thanks, Rob.
Operator: Your next question comes from A.J. O'Donnell with TPH. Your line is now open.
A.J. O'Donnell: I was wondering if I could maybe just start on some volumes in the North. It seems like you're seeing some pretty strong growth there, and I was just curious about operational leverage that you have to continue some volume growth there. I know some -- maybe some of your plants are running closer to full, but could we expect any additional small projects for optimization there or do you have the ability to move volumes around between those four plants up there?
Dean Setoguchi: So thanks for the question, A.J. Yeah, we've seen some growth. Pipestone, with our expansion that we executed late last year is pretty much full. We -- I think we've talked about this in the past. We've got some ability at Wapiti based on the fact that we do actually pull some volumes currently North of the Wapiti River up by Grand Prairie, where we do see some potential in the future around how we might want to optimize producer activity and ultimately how we provide our service. But we did share with the market this quarter that we've put in some smaller capital, highly-accretive opportunities to increase the utilization of Wapiti, and I can share with you this week, we've hit record volumes at the Wapiti gas plant. And then, ultimately, as we think about Simonette, the gathering systems that we have into Simonette reach into the same areas that feed the Wapiti gas plant. So there's no physical interconnection that we have right now similar to our Southern assets, but certainly, that's something that we've seen value in the past, that model in the South, and we certainly would look in the right opportunity to replicate that in the North. And then finally, at Simonette, we have identified, in 2024, some opportunities to be able to unlock some opportunities at the Simonette gas plant that based on some activity by multiple producers down in that area, we expect that we'll probably have some meaningful positive things to share with the market in 2025.
A.J. O'Donnell: Great. Thanks for that. I got one more just on marketing. I know you guys left the marketing guidance unchanged at $450 million to $480 million for the year, which kind of implies somewhat of a step-down for Q4 relative to last year and Q3, so I was just wondering maybe if you could provide some additional color there and how you're thinking about the business heading into Q4 and maybe where some potential headwinds are coming from? Thank you.
Dean Setoguchi: Yeah. So I'm talking a lot on this call, but thanks again for the question, AJ, and we're -- really, frankly, great question, expected it. So just as a reminder, step back, our marketing segment really utilizes our physical assets, our relationship across North America, coupled with a really strong focus on risk management, right? So that's -- that's the foundation of our marketing business. A couple of thoughts on our Iso-octane business, which really makes up roughly half of our marketing business. Long-term fundamentals remain very strong. Gasoline demand has increased slightly year-over-year, but more importantly, demand for higher octane gasolines used in newer -- internal combustion engines is growing. So that -- in the long-term, we're very positive on the fundamentals of that part of our business. But in the short-term, we expect and we're seeing RBOB cracks and octane premiums to return to more historical levels versus the elevated pricing that we benefited from over the past couple of years. And there's multiple reasons for that, but really it's about getting more balanced in North America around supply demand of the octane market. So -- and we expect that to happen as well. Going forward, still strong pricing, but not as strong as we would have seen over the last couple of years. So the final point, I guess I'd make is, we do remain very focused though on continuing growing our sales volumes into higher-value markets. And those are higher-priced markets that continue to grow due to some increasing compliance requirements, but also high-value markets might be lower delivery costs as well. We've been very successful in the last couple of years in growing our sales into those markets. But like I mean, all told, we remain confident in our 2024 guidance, but also achieving our long-term base guidance that we provided previously.
A.J. O'Donnell: Great. Thanks for all the detail.
Operator: Your next question comes from Ben Pham with BMO Capital Markets. Your line is now open.
Ben Pham: Hi. Good morning. A couple of follow-up questions on the two frac projects. What are you expecting in terms of level of contracts before you sanction and are you expecting to achieve those levels before sanction? Are you willing to move forward as long as you get those contracts in by the end of 2026?
Dean Setoguchi: Good morning, Ben, and thank you for the question. What I'd say is that the demand for our frac services are very strong and so we've been adding a lot of long-term contracts for that service, and I'd just say that it's commercially sensitive. So we're not prepared to divulge sort of where we are on contracting. But I would say that our expectation is that we'll be able to deliver a strong return for those investments should they be sanctioned next year.
Ben Pham: Okay. Got it. And can you remind us that those facilities and the land base you have beyond these two potential projects, is there more ability to debottleneck or expand a potential fourth expansion some future time?
Jarrod Beztilny: That's a great question, Ben. It's Jarrod here. We do -- we do have capacity at the existing KFS facility to continue to build out. So if a Frac IV happen, we'd certainly have the potential to do that. Beyond that, we do have a very large land base just East of the KFS facility where we have 1,300 acres of undeveloped land in heavy industrial zoning. We have most of the salt rights, some excellent connectivity, so very well-suited for continued growth in the region as well beyond what we could do at the existing KFS footprint.
Ben Pham: Okay. Got it. And maybe this question is for Eileen. And can you remind me in terms of the self-funded messaging? What level of CapEx can you fund without needing to tap the external capital markets?
Eileen Marikar: Yeah. I think the projects that we've talked about already, the Frac II bottleneck, the Frac III expansion, and Zone 4, assuming that those are sanctioned, we can absolutely self-fund that very easily.
Ben Pham: And then just lastly, on the pref hybrid side of things, is there any room to access that now, especially with some of the credit rating positive actions you're seeing?
Eileen Marikar: Yeah. At this time, given where our balance sheet is, there is no need for us to add more hybrids. We certainly have them in our structure and they serve the purpose. But at this point, we don't see a need to add any more.
Ben Pham: Okay. Got it. Thank you.
Operator: [Operator Instructions] Your next question comes from Patrick Kenny with National Bank Financial. Your line is now open.
Patrick Kenny: Thank you. Good morning, everyone. I know it just hit the wire this morning, but just on this big divestiture by Paramount, including their Wapiti region, I guess I could dovetail this in with just a broader question around consolidation, but wondering if you had any thoughts on new customers taking over as your anchor counterparties for your processing agreements in the area, how this might change your outlook if at all for being able to accelerate throughput facilities, as well as on the commercial side, being able to lock-down those downstream commitments on both caps and KFS?
Dean Setoguchi: Yeah. Good morning, Pat, and thanks for the question. I was wondering if anyone ask about that. First of all, we were not privy to any of this information and so we read it this morning, and so what I can say is that we have a very good relationship with Ovintiv (NYSE:OVV) as we work with them very closely at our Pipestone facility and they have most of the volumes flowing through that facility and it's working out very well. Our overall objective is to provide the best service and add value for our customers, and certainly, it would be no different for Ovintiv. I think what we see here is the potential because we have three gas plants that are right embedded within their existing lands and the lands that they're acquiring and that's with our Pipestone, Wapiti, and Simonette facilities. So with a footprint like that, I think that will have the potential to offer them a lot of optionality in terms of how they develop those lands over time. So, again, we think that could be a value add as a service for Ovintiv. So we'll work very closely with Brendan and his team again to make sure that this acquisition is a success for them. But at this point, we haven't had any discussions with them. At the same time, we've worked with Paramount in the region for a number of years now, and we'll certainly work very closely with Jim and his team as well to make sure the transition goes very smoothly.
Patrick Kenny: Okay. Thanks for that. And maybe as a related question to you, I know the turnarounds are largely flow-through, but just given this Strachan and Wapiti turnarounds took about a week longer than expected, I think you touched on it last call, but if you could just remind us, if these delays were more supply chain related, maybe labor productivity issues, or just how you're thinking about resetting expectations for timing around your planned turnarounds into 2025 and beyond?
Jarrod Beztilny: That's a great question, Pat, it's Jarrod here, and you're right, both turnarounds took longer than expected, and we know that extended downtime has an impact on our customers. They count on us to be running when we say we will. In the case of Strachan, it was really around some groundwork, which is always the risk of a turnaround. We did find some additional repairs that required, that was really the bulk of the extra time. And at Wapiti, it was our first full turnaround there and we completed a number of projects to increase reliability and utilization there. And we had some groundwork as well, and also some challenges with some of the initial equipment preparation and productivity throughout that really led to that extension. So I think a key part for us of our whole turnaround program is learning. And all of our turnarounds get a comprehensive look back similar to what you might do on a capital project and really to understand what went well that we want to repeat and where can we improve.
Patrick Kenny: Okay. Thanks for that, Jarrod. Maybe last one, just a quick follow-up for Jamie on your marketing comments there. I appreciate the color into Q4, but just wondering, as you think about coming up with the guidance for 2025 in early December, and you gave a good rundown of how you're thinking about the Iso-octane business, could you just bolt-on a few comments, whether or not you're seeing macro tailwinds or headwinds at this point for the propane business as well as the crude and condensate as well. And whether or not some of the volume tailwinds that you're seeing across your asset base might also support an upward bias going forward relative to that long-term normalized rate?
James Urquhart: Yeah. Thanks for the question, Pat. So spoke to Iso-octane, as Dean alluded to is that, like I mean, globally, we just see a pull from the Western Canadian Basin with respect to all our hydrocarbon molecules, and we have a fantastic, I would say, best-in-class connectivity for C5 and C4. I think C3 has been a focus for us with respect to being able to ensure that our customers have access to the highest selling market and that doesn't mean just one market though because the dynamics will change. There is, like any commodity cycle and any basis, there will be times where certain markets are higher value than others, and so our model has always been to have the ability to touch all markets and we've worked really hard in 2024 to set ourselves up to be able to create that offering for our customers. And with that, we'll be able to touch more molecules to your point and ultimately be able to continue to make the historic margins off of those volumes that we touch.
Dean Setoguchi: Yeah. Just maybe if I can expand on Jamie's comments, Pat, is, again, when I look back at the macro, we see a lot of growth in the basin, and with our integrated system, a lot of that is going to end up back at Fort Saskatchewan, a lot of those NGLs that we see that are get extracted from future growth. And so with our two additional frac projects, we're going to end up with more spec products in Edmonton, Fort Saskatchewan. And so we're a supply base basin, so most of that product -- incremental product is going to have to clear to a different market. And we have the assets that can get that product to the highest value markets. And so I think about our marketing business, a lot of it's really a logistics business, and we're just trying to find -- take that product that's oversupplied in Western Canada and we're taking it to a higher value market. So we're going to have opportunities obviously to generate a margin, a physical margin, off of that. Generally, we make more money in a higher price environment than a lower price environment. But I'd say, as crude has softened a little bit, the FX -- the Canadian-U.S. FX has widened, so there's an offset to that as well. So overall, I think the market isn't too bad, maybe not as high as what we've seen in the last couple of years, but generally, I think the conditions are relatively positive.
Patrick Kenny: Okay. That's great. I appreciate all the color. I'll leave it there.
Dean Setoguchi: Thank you.
Operator: There are no further questions at this time. I will now turn the call over to Dan Cuthbertson for closing remarks.
Dan Cuthbertson: Thanks all once again for joining us today. Please feel free to reach out to our Investor Relations team with any additional questions. Hope everyone has a great day.
Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.
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