Pembina Pipeline (PBA) Q2 2025 earnings call transcript

Thank you, Ina. Good morning, everyone. Welcome to Pembinar's conference call and webcast to review highlights from the second quarter of 2025. On the call today, we have Scott Burroughs, President and CEO, and Cameron Goldade, Senior Vice President and Chief Financial Officer, along with other members of Pembinar's senior leadership team. I would like to remind you that comments made today may be forward-looking in nature and are based on Pembinar's current expectations, estimates and judgments.

Forward-looking statements we may express or imply today are subject to risks and uncertainties, which could cause actual results to differ materially from expectations. Further, some of the information provided refers to non-gap measures. To learn more about these forward-looking statements and non-gap measures, please see the company's management's discussion and analysis dated August 7, 2025, for the period and the June 30, 2025, as well as the press release Pembinar issued yesterday.

All of these materials are available online at Pembinar. com and on both CDAR+, and Edgar. I will now turn things over to Scott.

Thanks, Dan. Yesterday, we reported our second quarter results, which were highlighted by quarterly adjusted EBITDA at $1.013 billion. We remain on track to deliver full-year results within our original 2025 adjusted EBITDA guidance range, but as Cam will discuss in more detail, as we are through the halfway point of the year, we have updated the range to $4.225 billion to $4.425 billion.

On the project front, Pembinar continues to demonstrate its ability to deliver capital projects that provide strong returns and a competitive service operate. The CDAR-LNG project continues to progress according to plan and remains on budget and on time with an expected in-service date of late 2028. We recently celebrated the achievement of a major milestone for the project as construction of the floating LNG vessel began with steel cutting on both the top-side facilities and the vessel hull.

Onshore activities are continuing and marine terminal clearing, drainage, erosion, and sediment control, pipeline ride weight clearing, and road upgrades have been completed. The market for LNG supply on the West Coast of North America remains strong, and Pembinar continues to progress remarketing of its 1.5 million tons per annum of CDAR-LNG project capacity to third parties and expects to finalize these efforts by the end of 2025.

The RFS4 project continues to progress towards an in-service date in the first half of 2026. Pembinar is pleased that the project is trending approximately 5% under the previous cost estimate with a revised expected total cost of approximately $500 million. On a cost per barrel of capacity basis, Pembinar is on track to deliver its expansion 15 to 20% lower than competing projects currently underway, highlighting Pembinar's advantage service offering.

Looking beyond 2025, strong business fundamentals continue to reinforce our outlook for low to mid-single-digit annual volume growth through the end of the decade across all WCSB products. The outlook is supported by the strong economics and long inventory lives of the monieformation and oil sands operations.

The resilience of our producer customers, despite the volatility and commodity prices in the broader economy, new egress projects including LNG and NGL export facilities and potential oil pipeline expansions combined with new demand from potential data centers and petrochemical facilities and a more supportive policy environment and momentum towards reshaping Canada's energy strategy in a way that could unlock Canada's abundant and diverse energy resources.

Against the backdrop of growing WCSB, Pembinar has differentiated itself as the only Canadian energy infrastructure company with an integrated value chain that provides a full suite of midstream and transportation services across all commodities, natural gas, NGL, condensate and crude oil. Our scope, scale and access to premium North American and global markets uniquely positions us to capture incremental new volumes while unlocking new avenues for growth.

Pembinar's ability to maintain and grow its position in the rapidly developing WCSB is supported by the recent developments and projects we highlighted in our list yesterday. Pembinar continues to strengthen its propane export capabilities and will soon have access to 50,000 barrels per day of highly competitive export capacity for its own and customers propane through our own Prince Rupert terminal and a new commercial agreement with Alte Gas for 30,000 barrels per day of LPG export capacity and the current Rippet and future reef facilities.

In addition, Pembinar has approved an optimization of the Prince Rupert terminal that through increased storage capacity will allow the use of medium gas carrier vessels. The optimization is expected to expand access to additional global markets with higher realized propane prices while significantly reducing shipping costs per unit, thereby improving netbacks for Pembinar and its customers. We also highlighted how Pembin and PGI continue to strengthen their relationship with leading WCSB producers and develop mutually beneficial solutions that support growing production while providing PGI with taker pay commitments and ensure the long-term utilization of its assets.

PGI recently acquired from WhiteCap, the remaining 8.3% interest in three gas plants and a sales gas pipeline from PGI's DuVernay Complex. Currently, WhiteCap entered into a long-term taker pay commitment for firm services of the DuVernay Complex and extended long-term taker pay agreements previously in place at PGI's CA plant. PGI has also entered into an agreement with a Monty producer to fund and acquire an under construction battery and additional infrastructure in the Wapiti North Gold Creek Monty area. The project enhances PGI's footprint in the Wapiti region connecting directly into PGI's existing Wapiti gas plant.

The North Gold Creek battery will be operated by the producer and highly contracted under a long-term taker pay agreement. Additionally, Pembinar continues to advance more than $1 billion of conventional NGL and condensate pipeline expansions to reliably and cost-effectively the rising transportation demand from growing production. These expansions include the Taylor to Gordon Dale project, which would be a new pipeline connecting mostly condensate volumes from Taylor, British Columbia to the Gordon Dale area, the Fox Creek to Nameo expansion, which is a proposed expansion of the Pies pipeline system that through the addition of new pump stations would add approximately 70,000 barrels per day of propane plus capacity to the market delivery points from Fox Creek, Alberta to Nameo, Alberta, and other expansions to support volume growth in Northeast BC, including new pipelines and terminal upgrades.

The growth is secured by long-term contracts underpinned by taker pay agreements, areas of dedication across the Monty and DuVernay formations, and other long-term agreements that ensure a strong base of committed volumes. Final investment decisions on the Fox Creek to Nameo expansion and the Taylor to Gordon Dale project are now expected by the end of 2025 and the first quarter of 2026, respectively.

These fully supported demand-driven pipeline expansion opportunities, along with the success we continue to have in re-contracting legacy volumes, are taking place against the backdrop of increased competition. We remain confident in our ability to continue to grow volumes across our conventional pipeline system. Our Northeast BC and Northern pipelines provide a full product integration across all commodities and connectivity both upstream and downstream. Combined with our marketing and export capabilities, we believe we offer customers the most competitive mid-stream service offer. As a reference point, the weighted average contract life on approximately 1 million barrels of firm contracted volumes on peace in Northern is approximately seven and a half years.

Despite the passage of time, this figure has remained relatively consistent over time and has in fact increased slightly over the past two years, reflecting our successful efforts to blend and extend existing contracts and sign incremental new long-term contracts. Building upon its position is the leading supplier of ethane to a growing Alberta petrochemical industry. Feminine continues to work closely with Dow Chemical Canada. We are evaluating the various auctions available to meet our commitment under the mutually binding 50,000 barrel per day ethane supply agreement. Most notably, engineering and commercial discussions are ongoing related to the addition of a de-ethnicization tower at RFS3 within the Redwater Complex, and a final investment decision is now anticipated by the end of 2025.

Finally, Feminine continues to advance opportunities to provide integrated solutions to support an emerging Alberta-based data center. Greenlight Electricity Center, a partnership between Feminine and Connecticut is developing an up to 1,800 megawatt gas-fired combined cycle power generation facility and is in active discussions with a data center customer to commercially underpin the project. Greenlight successfully advances phase one of the Alberta electric system operator allocation process and through subsequent commercial efforts has secured a sufficient megawatt allocation to achieve a viable scale for this project. In addition to the opportunity to invest in long-term contracted power infrastructure with an investment-grade counterparty, Feminine's well-position to leverage its existing and future value chain to further support this project. For example, the proximity of the Alliance Pipeline offers a potentially creative expansion opportunity to provide significant natural gas supply to the Greenlight Electricity Center.

In summary, the financial results continue to largely track our initial expectations for the year and we continue to execute our in-flight construction projects and pursue expansions and new initiatives to respond to growth in the WCSB. I will now turn things over to Cam to discuss in more detail the financial highlights of the second quarter.

Next slide. As Scott noticed, Pemma reported the second quarter of just the beta of $1.013 billion. This represents a 7% decrease over the same period in the prior year. In pipelines, factors impacting the quarter primarily included lower firm polls on the coach and pipeline due to re-contracting in July of 2024, lower revenue at the Edmonton terminals largely related to the decommissioning of the Edmonton South Rail Terminal in the second quarter of 2024, lower interruptable volumes and lower tolls on the vantage pipeline, higher volumes on the peace pipeline system due to higher contracted volumes and fewer outages compared to the prior period which was impacted by the planned outages related to the phase eight peace pipeline expansion, higher revenue on the peace pipeline systems due to increased tolls mainly related to contractual inflation adjustments, higher demand on seasonal contracts on alliance and higher contracted volumes on the nipacy pipeline.

In facilities, factors impacting the quarter included lower volumes due to planned outages at certain PGI assets and ongoing third-party egress restrictions impacting the Dawson assets, higher contribution from PGI primarily related to recent transactions with white cap. In marketing and new ventures, in marketing and new ventures, second quarter results reflected the net impact of lower net revenue due to a decrease in NGL margins as a result of lower butane and propane prices coupled with lower volumes resulting from third-party restrictions at the Shanahan facility and planned outages at both the Shanahan facility and the Redwater Complex as well as higher input natural gas prices at Oxable.

Finally, lower realized gains on crude oil-based derivatives partially offset by lower realized losses on NGL-based derivatives. Finally, in the corporate segment, second quarter results were higher than the prior period due to lower incentive costs driven by a change in Pemmena's share price in the period compared to the second quarter of 2024.

Earnings in the second quarter were $417 million. This represents a 13% decrease over the same period in the prior year. In addition to factors impacting a Justibita, the decrease in earnings in the second quarter was primarily due to the net impact of costs associated with an asset retirement at the Redwater Complex. Lower share of profit from PGI as a result of higher depreciation expense due a larger asset base following the recent transactions with white cap. Lower other income due to no similar gain to that recognized in the second quarter of 2024 related to Pemmena's financial assurances of sin by cedar LNG upon positive FID. Lower acquisition and integration costs and finally no similar net gain on acquisition to that recognized in the second quarter of 2024.

Total volumes in the pipeline and facility divisions were 3.6 million barrels of oil equivalent per day in the second quarter. This represents an increase of 1% over the same period in the prior year, reflecting the net impact of higher contracted volumes on the Nippus pipeline and piece pipeline system and lower volumes at PGI Redwater and Oxable due to planned outages.

Turning to the full year, as Scott mentioned, we updated our 2025 adjusted EBITDA guidance range to 4.225 billion to 4.425 billion dollars. Within our full year outlook due to seasonal and asset specific factors, Pemmen expects third quarter results to be largely consistent with second quarter results with stronger results expected in the fourth quarter.

First, while Pemmena continues to benefit from rising utilization throughout its conventional pipeline and gas processing assets that aligns with volume growth across the Western Canadian sedimentary basin, revenue volume growth at these assets is expected to be slightly lower than physical volume growth on a percentage basis as customers expand into their contractual take or pay commitments.

Second, we anticipate typical seasonality positively impacting aligns in the fourth quarter due to the ability to transport higher volumes during colder periods. This is expected to be offset by the impact of the previously announced settlement agreement with shippers.

Third, as usual, we expect a significant portion of our integrity and geotechnical costs on pipeline assets in the third and fourth quarters compared to the first half of the year.

Fourth, we are forecasting a higher contribution from PGI in the second half of 2025 compared to the first half of the year, including at the Dawson assets due to third party restrictions impacting the first half of the year and the startup of LNG benefiting the second half of the year, as well as at the Duvernay complex due to higher second half volumes.

Finally, we are forecasting a stronger fourth quarter contribution from the NGL marketing business relative to the second and third quarters due to typical seasonality of the WCSB RAC spread business. We have also revised our outlook for the company's 2025 capital investment program, including capital expenditures and contributions to equity-accounted investors who $1.3 billion, which is a $200 million increase compared to the prior outlook.

This update reflects continued progress on previously identified core business initiatives, as well as two talking acquisitions at PGI offset by certain projects being under budget. I'll now turn things back, Scott.

Thanks, Cam. In closing, we remain focused on delivering value to our investors by best serving our customers, employees, and communities. We are looking forward to delivering second half results in line with our full year 2025 guidance, progressing key proposed projects towards final investment decision over the coming few quarters, finalizing our Cedar LNG capacity assignment by year end, and continuing to progress new initiatives like the Greenlight Electricity Center and related expansion projects within Pemida's value chain. Thank you for joining us this morning. Enjoy the rest of summer, and we look forward to meeting with you and personers speaking to you soon. Please go ahead and open up the line for questions.

Thanks, Erin. It's a Scott here. There are a few things I think that we need to, I guess, level set or unpack on that question. I'll try to address it at a high level versus kind of going through every specific point. But to me, there's a difference between fundamentals and temporary noise. When you have kind of the extensive franchise that we have in the Canadian mid-stream space, I'd say the bar is very high and there's always going to be something to pick at. When I step back and get out of the noise and kind of look across the horizon of the fundamentals, I firmly believe that our business is rock solid and is driven today, as it always has been by customer demand for our services.

When you think about the resource and the money, it's unbelievable. The basin is growing and it's full of visible catalysts, whether it's gas egress through LNG, new LNG exports, tidewater egress for oil, and new avenues to create value for customers, hydrocarbons, whether that's incremental petrochemical demand or incremental gas to power. There's a lot of visible catalysts that we see coming at the basin. When I think about Pemina specifically, I think we're the only franchise that directly benefits and is involved in all of these catalysts. If you think about them one by one, there's direct LNG export ownership with the first of its kind partnership in Canada. We have significant LPG export capacity proprietary and in partnership with our midstream peers as we talked about.

There's local Alberta demand, East Coast starting access, and cost-effective unit trains across the US. We really have an unparalleled marketing basis when it comes to LPG. We hit all markets. We have a significant and growing condensate franchise supporting the oil sands growth, which we continue to see growing with the bottlenecks across the system. We're currently providing gas egress in a constrained environment with access to high value markets in the mid-continent in alignment with long-term shippers. We're supporting the stand-up of a world-scale cracker, both through feedstock supply and ancillary midstream services. We're continuing to look to extend our value chain and lead the way for our stakeholders and customers. We evolved the midstream sector in the early part of the last decade building the integrated value chain, which is the core of our franchise today.

Now we're continuing to lead the sector through value chain extension initiatives and provide optionality for our customers. Our competitors are looking to build the Pemina from eight to 10 years ago where we're trying to go to where the balls are going, not where it's been. What's undeniable is that the WCSB is growing and Pemina will capture its share of this growth for the reasons I just mentioned while continuing to execute on our disciplined customer-supported growth projects in the core business. I think a real-life proof point of that is the billion dollars of visible capital deployment that we talked about for peace capacity today. In a growing base and we and others are competing to provide value added services to our producer clients, and on that basis we are confident in the resilience of our performance.

We're not going to win every barrel. We know that, but we do believe we're going to win our fair share. The noise, as you mentioned, or death by a thousand cuts, it can be a distraction from what's important, but in my mind, long-term excellence and execution is what's important, and I believe that we have an unparalleled track record in the NGL mid-stream space.

Hopefully that answers your question. Happy to take any follow-on.

Sure, maybe just to address part of the question, you know, when I think about the capital program, what I think is important is the majority of that capital was due to the bolt-on acquisitions that we made in the quarter, as well as the advancement of some of our projects. Recall, when we put out the capital release, we talked about potential increments. We had a baseline capital, and then we had a bucket of incremental capital, should we advance some of our projects, and that's really what this is tied to, we're advancing projects.

I think what's lost in that mix, and I just want to point out is that it's offset by capital savings across our projects as we continue to execute our projects. So I just don't want to leave the listeners with an impression that that increase has anything to do with cost overruns. That's all incremental new growth, and it's actually offset by cost savings across many of our projects.

Yeah, and it's gared here too, and just kind of getting back to your original question, you were talking about some of the noise and maybe misconceptions. I think last week, one of Western Canada's largest producers came out and talked about some substantial growth, terminally, and talking about growing their overall production by 200,000 BOE a day in the next kind of six years. We view that as extremely positive, and I think all mid-streamers should view that as extremely positive the investment that that organization's making in Western Canada, and the quality of their reserves. We obviously got some in-bounds with respect to margin erosion, et cetera, with respect to some of their announcements, and that's where I think talked about a dollar per BOE that could be captured, but it required them to get to 850,000 BOE a day, and they also talked about how that value creation is split between operating costs, which I have to think is in their camp.

They're doing something different to save op-ex, and then they talked about 50% of that being transportation value creation. That transportation was represented in a BOE basis, so barrels of oil equivalent, not just straight-up liquids, so we only moved tourmalines liquids today, so that could be gas egress value creation, that could be rail value creation, that could be trucking, that could be liquids, pipelines, et cetera. Just what wanted to chat about that, and overall, I would say as customers in Western Canada grow physical barrels, typically their dollar per unit does go down. That's not uncommon, and specifically our Northeast BC pipeline, which they are a customer on, that's a cost of service pipeline, and as volumes go up, tools go down just like any other cost of service pipeline in North America.

Lastly, just what I think that a lot of our listeners probably don't know, in 2022, we announced a fairly large commitment with tourmaline for chunk of their Northeast BC development, and that long-term deal for pipe and frack, those tools don't change. Those are fixed tools that we offer the customer, and we take pride in giving fixed tools and providing highly reliable service. That's some of the noise that I think requires a little bit of clarity, but overall, we're extremely excited about one of Western Canada's customers growing by 200,000 BLE a day in the next couple of years.

Just to provide some color, and maybe I'll just close it out on your question on capital allocation, Aaron. I mean, listen, I think we've been pretty consistent for some time in terms of our approach to buybacks, looking at the relative risk adjusted economics. Obviously, we've been continuing to do that. We talked about our free cash flow profile over the next couple of years, likely staring at a modest amount of free cash flow in 2025, and likely flattish to perhaps offsetting that in 2026 based on the period of the cedar spend, and ultimately looking at it over a multi-year time period. I think, obviously, we continue to take data points and continue to look at the relative economics, and we'll do that, and sort of without signaling our intention either way or either way here today.

Obviously, it's something that we talk about sort of every week. Thanks, everyone. Thank you.

Yeah, thanks for the question, Maurice. I think, you know, from a guidance perspective at our last investor day, we provided our guidance out towards 2026, and that's the extent of our guidance at this stage. You know, as we move to the end of 25 and into 26, we will look to refresh that guidance going forward. So, you know, I'm not prepared to give you a multi-year EBITDA guidance outside of what we've already publicly disclosed, you know, but from a volumetric perspective, as we mentioned, in our prepared remarks and in what you've heard from us before, as we continue to see somewhere in the neighborhood of mid to high single-digit growth in volumes across the base, and mainly driven by the catalyst that we talked about previously.

So, no real change from what we talked about previously.

Maurice, it's Cam here. I guess I would just supplement and appreciate, you know, history is not always a perfect example of the future, but, you know, if you look at history just as one proxy, and you can look across our business, but, you know, just focusing on the conventional for a moment, because that's to be often talked about as a proxy. You go back five years, and actually, you know, our growth in that business and the growth in our business overall was always through a combination of volume growth, but also margin. And margin, you know, pieces, obviously, you know, we have some contractual elements to that. We do that through operational excellence and reducing our own cost structure.

But, you know, as much or more of the growth came from that piece. And so, I think, you know, as we think about the future, I think we actually see really constructive volume growth as we look out over the next five years, you know, perhaps even stronger than we've seen in the last five, depending on product and obviously egress restrictions. And obviously, you know, we're continuing to do the hard work internally to continue to make our service offering more competitive, more creative, and obviously continue to be able to generate value through through margin as well. So, I would say, you know, that partly underpins our view on the long term outlook.

Yeah, I think there's two areas to answer that question. One is obviously, you know, in the past couple of years, we've had a couple, you know, sort of meaningful toll resets on some cross-border assets, namely, caution and alliance. And obviously, that, you know, that has been a headwind on the margin side, tough to get away from that. But I think, you know, in the rest of the business, conventional business, our gas processing business, our frack business, you know, we've done a lot of really solid things and continue to do things. You know, for example, our Prince Rupert announcement yesterday in terms of median gas carriers, you know, that's a margin enhancement activity right there. And so we're looking for ways, you know, our team is really focused on doing that.

And I think, you know, obviously, that the business is evolving, you know, obviously competition is greater than it's ever been. But I think as Scott said in his introductory comments, you know, we continue to believe that we have the very best franchise across the board. And so that gives us an advantage in terms of maintaining and, frankly, growing that margin.

Mr. Murray is scared here. We have great questions. You know, first off, the competitiveness of Fort Saskatchewan in totality, not just feminist frack, I say, is still very attractive. Just, and the reason why I say that is that the majority of the NGOs that come into Fort Saskatchewan today, regardless of its Dow, Pemana, Chiara, Plains, et cetera, they're all coming from downstream of North Pine, right? So there's kind of like maybe an imaginary line where products want to come into Fort Saskatchewan, you know, and a significant amount of those are coming from Alberta, a very large amount of the NGOs coming from Alberta. So also then you need to look at the diversity and the rail connectivity.

So there's obviously going to be opportunities at a significantly smaller scale. If you looked at all the C3 plus capacity in Fort Saskatchewan, compared to North Pine 1, 2, or 3, even, they don't even compare in size and scale, rail connectivity, inlet storage, caverns, et cetera, et cetera, like there's a lot of efficiencies, pardon me, coming into Fort Saskatchewan. Further to that, pardon me, further to that, the Northeast BC, Brack, you're going to be dedicated solely to the West Coast. Now, you know, short-term FAY arbitrage is, you know, they look extremely good, and we believe long-term they're going to be good, but there is, we believe, and I think even some of our competitors have talked to this, there's optionality in having the ability to go to Sarnia, into Conway, into Mail Bellevue, and meeting kind of that diversified North American market while having access to the West Coast market.

So are there going to be opportunities to build smaller scale racks in certain areas? Absolutely, there is. If you're close to rail, and those types of things, if you want to do it at a massive scale, and, you know, provide that redundancy and that optionality for diversity, I think customers are going to continue to come to the Fort like they have been for a really long time, but I'm not saying that there's not small opportunity, niche opportunities.

Maurice, Cam, I'll just pile on one last thing. I think, you know, to complement what Jared said, you know, the analogy would be other products. So, you know, whether it's the natural gas value chain, whether it's the oil value chain, I mean, obviously, there's been export market opportunities in both of those, and, you know, customers have long chosen to diversify their market egress options for a number of reasons. And one of those is, obviously, market ARBs, premium markets do have been flow. There's operational redundancy reasons for that. So, you know, I think that's what we really like about our offering, and obviously, the export piece, you know, complemented by the announcements that we made yesterday, and obviously, the week before, absolutely enhanced that.

But we also really like sort of the other pieces of our portfolio, and I think it's a incredibly competitive offering, and frankly, one that no one else has.

So, thank you very much for that.

Hey, Rob, you know, I think, I think for us, I mean, if we back up and, again, look at the fundamentals on the macro, there is a significant amount of ethane, not just Pemina, but across the base and being produced and, quite frankly, re-injected in the WCSB. So, the amount of ethane available here could lead to various options, whether it's further petrochemical investments within the province or other opportunities, as it specifically relates to ethane. The challenge right now is the location of the ethane and where it's produced and where it needs to get to. And we do not believe, as of right now, you know, there's a scalable amount of ethane, call it in Northeast BC to support a pipeline, because this would need to be pipeline to the West Coast, and the economics just aren't there yet.

So, you know, we do believe that it's an opportunity in the future, but right now, the economics of it look challenged.

Yeah, you know, from our perspective, those assets exist today. They exist in planes in a very, in a very competent and, you know, very fierce competitor. So, from our perspective, not a lot changes in terms of assets that exist today, capacity exists today. So, you know, they were owned by a formidable competitor, and they're going into a formidable competitor's hand. So, not, you know, it's kind of business as usual for us.

Hey, Rob, it's Cam here. I'll take that. So, I guess what I would say is that the FRAX spread hedge book is substantially on, excuse me, the marketing plan is substantially on plan. You know, if you look at where we are on the NGL side, it's tracking very close to budget. You know, if you look at propane prices and gas prices, you know, they kind of bounced around. And frankly, that's in spite of a ton of variability and a ton of volatility. In Chicago, obviously, that gas has been a little bit stronger, which has obviously been, you know, net positive for Alliance and obviously a bit of a headwind for Oxable, but, you know, sort of net net, you know, and I think what we have observed is that the crude oil complex has clearly been highly variable.

You know, we're likely seeing, you know, somewhat, you know, more modest storage opportunities, albeit recognizing that that's a, you know, a relatively small piece of the marketing book, but I think if you take my comments and the guidance and the guidance update, you know, together, you know, we're sort of talking at the margin. Differentials have obviously been a little bit narrower than they were in the fall, so all those pieces together, you know, I'd say we're very close to where we were. Maybe just slightly, slightly lower than budget time, but, you know, clearly, I think what we do see as tailwinds is, you know, I think if you went back three, six months, we were looking at a stronger ACO strip as we got into the fourth quarter of this year.

And obviously, we've observed that as months have tipped by here, even following the startup of LNG Canada, you know, obviously, there's still a quite a bit of storage to work through on the Canadian gas side. And so that, you know, that strength has been pushed out. You know, that is obviously in the near term support of our NGL, our NGL business. As far as, as far as the 2026 outlook for hedges, you know, you'll remember that two or three years ago, you know, we went to a more dynamic hedging strategy, which effectively involved, you know, sort of looking at our looking at our own market knowledge, looking at the probabilistic outlook of where the business was and sort of right setting our hedge levels based on that.

As we sit looking at 2026 at the moment, you know, we're relatively modestly hedged, because, you know, we see the P levels, you know, sort of, kind of at, at or slightly below a P50 level. And so from that perspective, we do see some constructiveness coming, I think, particularly, as I mentioned, you know, in the natural gap space. And so we've really opted to defer our hedging probably a bit later than we have in the past, because we do believe that there's some constructiveness to the market.

Ben, it's too. Yeah, we, you know, the remarketing of our capacity, you know, we're very pleased with the progress that we've made to date. We've engaged in multiple counterparties and through that process in time, you know, we have continued to refine our discussions. We are exchanging agreements with counterparties at this point in time and looking to, as Scott already described, finalized a bit of agreements in 2025. As far as the capacity, you know, we've always had the intention of selling the capacity, a portion of it, and, you know, are open to and considering selling the entire 1.5 MPPA. And those conversations have began, and again, are part of what we expect and it's just the effort and details to get through some very large and complex discussions and agreements as we go forward.

So we remain optimistic that we're going to arrive at something that works for us and for our customer.

Morning Ben, Jared here. You absolutely nailed it. So Scott mentioned we had about a million barrels on the total piece northern system on the conventional system at about seven and a half years. So yeah, a lot of those contract roll-offs have been extended with incremental barrels with our customers.

And then just as a reminder, I mean, I just can say that's been a multi-year thing going all the way back, frankly, to 2019-2020, when we started talking about area of dedication and extensions through that, some of the extensions we've done over the past three or four years, it's been an ongoing and regular process each year.

Well, Ben, I think as we think about this year's capital program and next year's capital program, they're largely committed in terms of advancing FID projects like CDER, vast majority of next year's capital is CDER capital as well as pipeline capital. We've signed agreements that require us to build and expand the pipeline. So the majority of the capital is committed towards FID projects, but buying back stock versus growth capital is always a constant debate amongst our team here and with our board. But right now, as we've talked about capital dedicated to projects and the projects we are considering generally enhance our franchise, buying back stock is a nice economic outcome, but it doesn't necessarily enhance your franchise and enhance the service offerings that you can provide to your customers.

So it's always a balance and of course, as stock prices go down, it increases the discussion as it relates to buybacks. But right now, for this year and next year, the capital program is essentially locked down for existing projects.

Well, I think for now, we're happy with the two announcements that we made today. You know, obviously the the altagast 30,000 barrel a day incremental contract and the investment in our own in our own facility to optimize. For us right now, I think getting the MGCs up and running and advancing that project is a big focus. Like any asset, we will continue to look to optimize that facility. As Cam pointed out earlier, the MGCs are an optimization of that facility.

And as we as we get closer to in service of that, we will again look to optimize that whether it's you know, lowering continuing to lower the cost of that or potentially optimizing shipping and rail, which could increase capacity. So optimizations remain key. And then augmented with our altagast agreement, we're pretty satisfied. Now, that being said, if you listen to our comments around volume growth and pipeline growth, we continue to see growth in the NGL space.

And as those NGL volumes grow towards the end of the decade, you know, we will continue to assess where the optimal markets is is for those barrels. And as Jera pointed out, you know, it's always good to have optionality in any product and any marketing, because while ARBs are open right now, we know that ARBs aren't always open. And so we will, you know, look to continue to build out our assets in Fort Saskatchewan. And as we as we secure more barrels, we will look to where the optimal markets are. And that could be further barrels off the West Coast, or it could be to other markets, depending on the time and where the markets are open at that time.

You know, thanks. It's due again. Yeah. As you stated, I think we've made, you know, tremendous progress on the Greenlight Project with our partner, Connecticut. You know, we worked hard as a team and a group to successfully advance through phase one of the ASO allocation process. And with subsequent commercial efforts, you know, the project was able to sufficiently secure a megawatt allocation that will allow you have a viable scale that the project can move forward.

That was very exciting for us. That allocation of megawatts off the grid is a stock gap measure until we can get our facility built, the power generation facility.

You know, we're taking all the steps necessary to, you know, progress in all of the elements, such that our project could be in service in 2029. And so we're very excited about that. And, you know, we're working with, commercially working with the off-taker of that power. They would be in service. The data center itself would be in service in 27, consuming that grid power that I just talked about. And then switching over to the generated power from our site where we're having very good conversations with commercially and, you know, are expecting to, you know, further those through the remaining part of 2025 and are excited about, you know, the progress that's been made.

And Jeremy, I'll just maybe add that with our Alliance press release kind of there late in July with the settlement. We also talked about the expression of interest to expand the Alliance kind of that inter-provincial short haul. And the interest there, that would obviously, you know, feed a lot of the gas that would go into project greenlight. So, the interest there is extremely high. So, yeah, it's all coming together.

Yeah, I think from where we were a year ago, you know, we are FID, which is obviously a key milestone. We're a year closer to in service and the project's real. I mean, if we were, as I talked about with the steel cutting has happened, we were up in Kitimat last week. And the progress along the terminal in the right of ways is tremendous. So, that's garnered real interest from multiple counterparties, which has led to, you know, a broader process. And, you know, as Stu mentioned, we've seen significant interest and we're very optimistic about getting deals done here in the next quarter or two.

Morning Pat. Yeah. So, obviously, you know, when we created PGI, there was obviously some extreme, like having take care as a partner and they've been a great partner. It's been a tremendous outcome that businesses grow in tremendously and it continues. It seems like quarter of a quarter, Chris and his team are pumping out new integrated deals, speeding, feminist value chain. You know, their strategy really is to focus on number one, high quality resource, you know, focus on liquid rich resource that's going to feed the piece pipeline and into, you know, with fractionation complex, et cetera.

Focused obviously on customers who typically don't build their own process and the infrastructure and batteries and those types of things. So, there's a lot of opportunities out there, some recent acquisitions, some lands have changed hands and those types of things. You know, there's opportunities out there to build new greenfield, but there's a lot of opportunities for us to expand our existing footprint, like, you know, we're doing work at K3 right now, Wapiti expansion. We did a small expansion at our height complex, like, so there's a lot of brownfield opportunities, specifically in the sour gas space. That's obviously where Western Canada is ultimately constrained is sour gas processing and we have a lot of it, a big portfolio of it and extensive pipelines that interconnect a lot of that.

So, those are kind of the brownfield, greenfield, short opportunities. With respect to, you know, targets or acquisitions, can't really speak to that. Obviously, you know, I'd have to have cake cares backing to speak to anything like that, but we're always looking like we are here at Pemima and if it's the right opportunity presents itself, we will be on it.

And maybe I'll let Cam talk to the financing. Hey, Pat, just with respect to funding capacity, I think obviously what we've seen is that JV has been funded, you know, with a very supportive credit, bank credit market to date and obviously consistent contributions from both of the partners. You know, I would say that, you know, we've got some existing liquidity under the existing arrangements, you know, to the tune of a few hundred million dollars on the kind of the existing credit stack. We've also got an accordion facility there, which could provide, you know, another few hundred million dollars on top of that. And obviously, you know, there's always other opportunities to look at various markets.

So I don't see funding capacity being a constraint for PGI in the near term. Clearly, you know, I think that JV has done exactly what it was intended to do. And the performance from it has been very solid across the board and so continue to have strong access to capital to execute the strategy.

Yeah, sure. That's a great question, Pat. So first of all, I mean, I guess, reminder that, you know, we've been pretty clear and pretty consistent over time around our target leverage and our, I guess, our financial theory or our financial orientation, which has always been around a strong triple B rating. And ultimately, you know, looking at targeted proportionally consolidated debt deep, kind of in that at three and a half to four times, you know, obviously, we've had the official range kind of up to four and a quarter, and that's really meant to capture frankly, situations that we're in right now. And I think what, you know, what I speak to when I say that is obviously, you know, we're in the middle of a four-year build project with CDER-LNG and something that, you know, with a crewing debt each year, but with no positive either.

contribution until late 2028. And so obviously that, you know, that shows up in the leverage metrics, it'd be it'd be wrong to disregard that entirely. And so as you'd see our leverage metrics, you know, sort of notch up a little bit, you know, into 2026, it's really as a function of that. You know, if you start to back that out, we're really comfortable in the leverage range of where we are and really square within that target range.

As for, you know, what the funding looks like, you know, I would say, obviously, I mentioned earlier that, you know, we've got a bit of free cash flow this year, modest amount based on our current forecast. Next year, you know, we probably are slightly the other way. You know, we're probably modestly in a deficit position. But, you know, on a multi-year basis, I think we are our free cash flow neutral to slightly positive based on, you know, our three-year range that we disclosed back at Investor Day last year.

And so that, you know, continues to afford a, you know, a strong position, I think, as we've talked about and the ability to sort of still seize opportunities if and when they, you know, they come about because of our strong financial position.

Yeah, truthfully, it's Cam here. I'll point that we continue to reinforce is capital execution. And really why that's relevant is, you know, we think that capital execution from feminist perspective is a strategic advantage. We see ourselves on a dollar per unit basis of capacity, whether it's in a pipeline or the fracks sector being more competitive than our direct competitor. We obviously gave a, you know, the frackspace. That's really observable. You know, we've looked at other stats for comparable pipeline projects and believe, you know, the same sort of directional magnitude is also true. And so we sit there and look out and say, you know, over the long term, you know, we're in a very strong position to be able to compete and continue to offer competitive fees.

You know, I think the, you know, the advantage or the dynamic is that, you know, all of our tools are posted, you know, on our website for our customers and our competitors to see. You know, we don't have the same specific visibility there with our competitors. You know, I think obviously we get into conversations with our customers and are looking to provide the most efficient tools. But, you know, from our experience contracting, you know, over the past three years, you know, we have a sense that we are as equally competitive, you know, and obviously have the advantage of being an incumbent and all the connectivity and capital that exists today to serve our customers. And ultimately, we think that, you know, that gives us an advantage.

And just, just further to that, good morning, it's Garrett. I think, you know, we talked about, Cam talked a lot about capital tools. You know, when you're moving a very large number of physical barrels, our customers are very focused on operating costs. So, our operating costs amortized over a large denominator, obviously is a bit of a competitive advantage for Pemima. Also, the upstream connectivity.

When you're moving roughly, you know, when we got, you know, roughly a million barrels under contract, you have a lot of existing assets that are already connected to Pemima's infrastructure. And to, you know, obviously some assets are duly connected today and everyone knows that. And then some assets are the proximity to alternatives are extremely close. Some of them aren't. So, the capital that's required that's obviously incremental capital from the customers to connect into those pipes. And then when you think about downstream connectivity, we've been, you know, fairly public about this, that our pipelines connect into multiple condensate delivery points, multiple fractionators, et cetera, et cetera. And the alternatives don't necessarily do that. So, it doesn't provide the customer's redundancy.

And as you think about LNG growing and that gas needing to flow every day to LNG, you need your liquids to be able to flow. So, the redundancy of having, you know, a full suite of diversified pipelines like Pemima has. And then the redundancy that all of our pipelines connect into multiple receipt points in the Edmonton and Board Saskatchewan market, it provides those customers that redundancy to make sure that that gas can flow every day, you know, and to keep obviously their cash flow streams going. And then just the torque we have on the size and scale of our infrastructure, you know, the optimization we can do with respect to adding a pump station and or, you know, just optimization through technology on pushing the limits of our assets can provide some pretty high margin and needed space for our customers.

I would obviously the words coming out of Ottawa and the provinces are generally optimistic around future energy growth. You know, to me, one of the challenges that as an industry we face is due to the regulatory and political environment for the last decade. You know, there hasn't necessarily been a significant amount of say, Greenfield projects being engineered to go to the West Coast. So we're kind of starting from scratch. But I think what we're hearing from the government is relative support for industry to start to assess some of those situations. You know, we continue to believe incremental LNG is going to be needed off the West Coast and that that is a very logical outcome and it relates to the discussion around crude oil pipelines.

You know, it's interesting to talk about a pipeline, but if you still have an emissions cap and a tanker ban, that obviously is a huge impediment to a new oil pipeline. So there's certainly lots of things that need to be worked through, but we are positive in terms of what we're hearing and what we're seeing in the reach out to the industry. I just think it's complicated and it's going to take some time to work through the system.

Very Robert, did you say B discussions? Oh, the discussions. Oh, the discussions, sorry. You know, I think obviously we've been working very closely with DOW on that and it obviously they're, you know, they're analyzing the project and ultimately, you know, sort of right sizing the spend profile. You know, what I would say is that you know, we had a tour of our red water asset in July and I think the group there, you know, sort of would pass the work site. And I think speaking for most of those people, they were very pleasantly surprised to see the amount of activity that was still ongoing at that site. You know, not speaking for DOW, but it was clear that there was a ton of activity still ongoing.

I think you're correct. You know, in the words chosen, there's a mutually binding supply agreement there that with an agreement on our part to sell and on their part to buy 50,000 barrels a day of that thing. It's pretty clear.

Yeah, I think for now, we're not focused on future power opportunities. We're really happy with our with our JV, with Connectacore, and really focused on getting this potential data center opportunity up and build. You know, if we are successful and we FID, we've talked about this being multiple phases and a significant amount of capital. And therefore, you know, solely focused on this as it stands today. And just as a reminder, I mean, the rationale for this specific project was obviously the integration with all of the other elements of our business, the location of it, the fact that it's based around our Fort Saskatchewan land position, the to enable CO2 solution, the opportunity to enable GAS egress on both our processing business and, you know, hopefully Alliance.

So this was a really sort of hand-in-glove kind of opportunity for Pemino, which is why, you know, we thought it was interesting to pursue.

Got it. Thank you so much.

Hey, Bernice, it's Cam here. I guess what I'll sort of speak to is the guidance that we've got out there today, which is obviously a fee-based guidance. You know, obviously we would continue to see positive fee-based guidance, or excuse me, positive fee-based growth into 2026. You know, I think we would have, you know, obviously, you know, the Alliance settlement is an unavoidable setback to that for 2026. And so, you know, we can't ignore that. Outside of that, I think we're doing a tremendous amount of work, and we do see visible growth opportunities, you know, in the rest of the fee-based business.

And the team, you know, I can tell you the focus of our team, you know, really starting from, you know, a few months ago till now has been on opportunities for 2026 and adding value and new opportunities. So, you know, we feel constructive about 2026. You know, the marketing business will be what the marketing business will be. And I think, you know, I would point that despite the fact that, you know, it is a commodity exposed or a commodity related business, you know, the history of that business has been confined to a relatively, you know, narrow range over time. I mean, if you looked at the last two years on an apples to apples basis, you know, there's probably a couple hundred million dollar range there, you know, in most years.

So, you know, it'll be what it'll be. And we can probably get more pointed on that as we get closer to setting our guidance towards the end of this year. But would point to the fact that, you know, we continue to reiterate our four to six percent fee based diva dot per share guidance through 2026 and are obviously working hard on that.

First part? Yeah, you know, I'd say first of all, you know, I mean, you can obviously appreciate that it's a competitive market out there. You know, I think obviously we've been pretty transparent for a lot of years on our disclosure. And so, you know, the fact that the weighted average life has extended from, you know, just purely mathematically has to tell you that a meaningful portion of that has been re-contracted. I would also remind you that, you know, contracts do not equal capacity, you know, that those two are independent. Capacity came over time. And obviously a big, there was a lot of contracts that came with phase three. Subsequent to that, there have been to push to push that re-contracting out over time based on our service offering.

And just to follow up on your last question on Fox and Nimeo specifically, like if you take a look back and you look and you break down the entire suite of projects that Pemina has, we obviously, you know, Scott referenced the million barrels, but that's broken out between crude C2 plus C3 plus and C5 plus. And as you probably are well aware, Pemina has a segregated system of bringing those products into the Edmonton and Fort Saskatchewan markets. So, you know, with the increased demand and with, you know, obviously increased NGOs coming at the system as part of that, you know, single-digit growth, mid-single-digit growth that we're seeing here in Western Canada, we're really seeing an uptick on the C3 plus volumes.

And so, the specific Fox and Nimeo, like, you know, just, if I just looked into Northeast BC alone, you know, we've seen material re-contracting, we've seen, we've been public about three large Montney producers. And I think one of the things you need to look at is the producers that we have under contract that we've been public about, you know, of those three, we've talked about conical and tourmaline. But if you look into kind of go Edmonton West, we've been public about our previous Chevron, Kufek now, CNRL, Kufek 20-year area of dedication. I think through PGI, we've talked extensively about these long-term, fully integrated deals. And we've essentially captured a significant amount of all the volatile oil, Montney window, and the very liquids-rich Montney windows.

So, there's a lot of NGOs coming at us. And the reason I'm pointing that out is that when we see a constraint on a certain aspect of our system, that's where we need to deploy the capital. So, that capital, there wouldn't be, you know, a blend and extend. These are new contracts that our customers are taking to get their C3 plus into Fort Saskatchewan. And so, it wouldn't be like kind of a standalone project. It's in the need necessity of customers' demand.

I will now hand it back to Scott Burroughs for any closing remarks. Thank you for your time today. And as I said previously, I hope everybody has a great summer. Thanks, everyone.