Pembina Pipeline (PBA) Q4 2024 earnings call transcript

Thank you Constantine. Good morning everyone. Welcome to Pembina's conference call and webcast to review highlights from the fourth quarter of 2024. On the call today we have Scott Burroughs president and chief executive officer and Cameron Goldade senior vice president and chief financial officer. Along with other members of Pembina's leadership team including Jared Sprout, Janet Luduka, Stu Taylor, Eva Bishop and Chris Sherman.

I would like to remind you that some of the comments made today may be forward looking in nature and are based on Pembina's current expectations, estimates, judgments and projections. 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 February 27 2025 for the period ended December 31 2024, as well as the press release Pembina shoot yesterday, which are all available online at Pembina. com and on both Cedar plus and Edgar.

I will now turn things over to Scott.

Thanks, Dan. We were pleased yesterday to report our fourth quarter results, which included quarterly earnings of $572 million, record quarterly adjusted EBITDA of $1.254 billion, and record quarterly adjusted cash flow from operating activities of $922 million for $1.59 per share. We also delivered 2024 full year earnings of $1.874 million dollars, record annual adjusted EBITDA of $4.408 billion, and record full year adjusted cash flow from operating activities of $3.265 million or $5.70 per share. A record financial year reflects the positive impact of recent acquisitions, growing volumes in Western Canadian sedimentary basin, and a strong contribution from the marketing business.

In addition to strong financial and operational results, 2024 was marked by several accomplishments that highlighted the successful execution of Pembina's strategy and our focus on strengthening our existing franchise, increasing our exposure to lighter hydrocarbons and resilient and use markets, and accessing global market pricing for Canadian energy products. Highlight is included, growing our presence in resilient Northeast U. S. natural gas and NGL markets by fully consolidating ownership of Alliance and Oxable.

Furthering global market access for Canadian natural gas producers by reaching a positive FID on the Cedar LNG project, adding capital efficient, timely, and certain capacity to accommodating growing Western Canadian sedimentary basin production through completion of the phase eight piece pipeline.

Supporting growth focus in the Indubernet area, customers with tailored solutions through two PGI transactions that included an expected $700 million growth to PGI funding for further infrastructure development that will be underpinned by long term contracts and capitalizing on long term stable demand for ethane from Alberta's growing petrochemical industry by entering a 50,000 barrel per day ethane supply agreement with Dow. We also continued commercial successes across the business in 2024, including executing incremental contracts or renewing contracts for approximately 170,000 V. O. E. per day of pipeline transportation, primarily on Alliance and Peace Pipeline, as well as 25,000 barrels per day on the Nipacy pipeline. Over 6 million barrels of storage at the Edmonton terminals, approximately 200 million cubic feet per day of gas processing, primarily at Muzzaro, Patterson, Creek, and K3, and additional fractionation services across the Redwater Complex.

On the major project front, we continue to progress various inflight construction projects expected to enter service in 2026, including the RFS4 expansion, the Wapiti plant expansion, and the K3 co-generation facility. We are also looking forward to the start of construction of Cedar LNG's floating vessel in mid 2025.

Further, we are continuing to progress infrastructure solutions to meet Pemana's commitment under the 50,000 barrel per day ethane supply agreement with Dow. Pemana is seeking to fulfill his commitment in the most capital efficient manner possible, and is evaluating a portfolio of opportunities, including the addition of a de-ethnicizer tower at RFS3 within the Redwater Complex. By leveraging its existing assets and capabilities, Pemana now expects the total capital investment required to be less than $300 million below the low end of the range previously communicated, resulting in improved capital efficiency as there is no change in the forecasted adjusted EBITDA contribution associated with the Dow supply agreement.

And we are actively developing additional expansion opportunities to support growing demand for services on our conventional pipelines. These include the Taylor to Gordon Dale project, which is currently in the phase of the Canada energy regulators process and expansion of the pipeline system to add up to approximately 200,000 barrels per day of capacity to its market delivery pipeline from Fox Creek to the Mayo, and additional expansions to support volume growth in Northeast BC.

Finally, we were excited to announce yesterday two new business updates. The first was that Pemana has entered into agreements for a 50% interest in the Greenlight Electricity Centered Limited Partnership, which is developing a gas-fired combined cycle power generation facility to be located in Alberta's industrial heartland on land owned by Pemana adjacent to its Redwater Complex. The Greenlight Electricity Center has been and will continue to be developed by Connecticut Asset Management.

Greenlight is in active discussions with data center customers to commercially underpin the project and believe the lands within the Alberta industrial heartland are well suited given their proximity to transmission and utility infrastructure. The government Alberta has set an ambitious target of attracting $100 billion in data center investments by 2030, encouraging developers to bring their own power. Along with our direct investment in Greenlight, Pemana is well positioned to leverage its existing and future value chain to further support the project. The proximity of Alliance Pipeline offers potential and creative expansion opportunity to provide natural gas supply into Greenlight Electricity Center and the potential future development of Alberta Carbon Grid may provide a future emissions reduction solution. This is a great example of a project we had envisioned when we first announced the development of the Alberta Carbon Grid and the Pemana Low Carbon Complex.

We are excited to be partnering with Connecticut to extend our value chain even further to provide power to a promising new Alberta based data center industry. The second announcement was that Pemana has secured the sole extraction rights from the Yellow Head mainline, a 1 billion cubic feet per day natural gas delivery pipeline that is under construction by Atco. Pemana is currently advancing engineering of an up to 500 million cubic feet per day straddle facility at which up to 200 burst story, 25,000 barrels per day of NGO mix would be extracted from the natural gas stream and transported to 4th Saskatchewan Alberta for fractionation and sale.

The straddle facility would be located on Pemana's own land and complement are already significant experience building and operating liquids extraction facilities that include approximately 1.8 billion cubic feet per day of extraction capacity. To our Empress and younger facilities, the many successes of 2024 and followed by continued momentum into into early 2025. Together they reflect Pemana's leading position in the heart of the WCSB and the many opportunities available to enhance and expand our service alongside a growing Canadian energy industry. I will now turn things over to Cam to discuss in more detail the financial highlights for the fourth quarter and full year.

Thanks Scott. As Scott noted, Pemana reported record fourth quarter of just a diva of $1.254 billion. This represents a 21% increase over the same period in the prior year. In pipelines factors impacting the quarter primarily included a higher contribution from Alliance due to increased ownership following the Alliance Oxable Acquisition and higher demand for seasonal contracts. Higher revenue related to the timing of capital recovery recognition, higher volumes on the nipacy pipeline, higher contracted volumes on a piece pipeline system and contractual and placement adjustments on tolls, which were largely offset by earlier recognition of ticker paid deferred revenue during the first half of 2024.

And finally, lower net revenue on the coaching pipeline largely due to lower firm tolls and lower interruptable volumes during the period.

In facilities, factors impacting the quarter included the inclusion of Oxable following the Oxable Alliance Acquisition and a higher contribution from PGI due to higher revenue associated with oil batteries acquired in the fourth quarter of 2024, as well as higher volumes at certain PGI assets and the timing of capital recovery recognition. In marketing and new ventures, fourth quarter results reflect the net impact of higher net revenue from contracts with customers due to increased ownership interest in Oxable, higher NGL margins, and lower realized gains on commodity related derivatives.

Finally, in the corporate segment, fourth quarter results were higher than the prior period due to lower incentive costs. Earnings in the fourth quarter were $572 million. This represents an 18% decrease over the same period in the prior year. In addition to the factors impacting adjusted EBITDA, the decrease in earnings in the fourth quarter was primarily due to the net impact of the reversal of the previous impairment related to the nipacy pipeline, which impacted the fourth quarter of 2023. Unrealized gains recognized by PGI on interest rate derivative financial instruments compared to unrealized losses in 2023.

Unrealized losses on commodity related derivatives compared to unrealized gains in the prior period. Unrealized gains on interest rate derivative financial instruments recognized by Cedar LNG and higher interest expense and higher income tax expense.

Total volumes were 3.67 million barrels per day in the fourth quarter. This represents an increase of 6% over the same period in the prior year, reflecting the net impact of the alliance of stable acquisition, the reactivation of the nipacy pipeline. Lower volumes on the piece pipeline system due to earlier recognition of taker pay deferred revenue in the first half of 2024, which more than offset the increase from higher contracted volumes and lower interruptable volumes on the coaching pipeline. The fourth quarter contributed to full full year results that included earnings of $1.874 billion, record adjusted EBITDA of $4.408 billion, which was 15% higher than in 2023 cash flow from operating activities of $3.214 billion and record adjusted cash flow from operating activities of $3.265 billion.

Thanks to strong results in 2024, eminent generated meaningful free cash flow, which is allocated to strengthening the balance sheet and returning capital to shareholders by increasing the common share dividend by 3.4%. At December 31, 2024, based on the trailing 12 months, the ratio of proportionally consolidated debt to adjusted EBITDA was 3.5 times. Notably, this ratio reflects only three quarters of contribution from the increased ownership in alliance and unstable, but all of the debt associated with that transaction.

Our leverage remains at the low end of our targeted range reflected for strong balance sheet and supporting a strong triple B credit rating. I'll now turn things back to Scott.

Thanks, Cam. In closing, I'll once again say how excited we are about the opportunities ahead. We believe Pemina is best positioned to benefit from the growth we are seeing and expect to continue to see in the WCSB. Our extensive network of strategically placed assets provides a full suite of midstream and transportation services across all commodities, natural gas, NGLs, condensate, and crude oil. And we are confident that our customer service offering provides unmatched optionality and flexibility that our customers value.

We have an abundance of opportunities ahead of us and a clear pathway of growth with approximately $4 billion of secured projects currently under construction and more than $4 billion of additional projects in various stages of development. We are looking forward to the year ahead and continuing to share our progress with you. Thank you for joining us this morning.

And can you please open up the line for questions?

Good morning, AJ Jarrett here. Thanks for the question. So, yeah, like Scott mentioned is opening remarks. We were awarded exclusive extraction rights on the yellowhead mainline, which will go into service kind of latter half of 2027 based on public disclosure. We estimate we could build, you know, probably something in the neighborhood of maybe 500 million a day of extraction capacity, resulting in approximately 25,000 barrels of NGL extraction.

So what we're doing right now, AJ, is we're just evaluating our two supply portfolios of C two. One which we've been fairly public with lately supporting Dow's net to zero cracker. Just evaluating how would this C two fit into our overall portfolio. So that's ongoing and we expect to have a little bit more information on that, probably at the may call. But then obviously, so that that's the C two component of the opportunity. And then with the C three plus, obviously, we're actively building RFS four, which is an incremental 55,000 barrels of C five or C three plus extraction, which would be very complimentary to our marketing NGL book today.

We have a large portfolio of C three plus, it'd be very complimentary to that. And Chris and his team, you know, they would continue to find the best market for those products, either domestically into the United States and or internationally through West Coast exports. Scott did mention, you know, through the acquisition of boxable and closing that here this summer.

Pemmina does have a nice contiguous block of land right adjacent to Dow's cracker. And that will be the terminus essentially of where we would put our extraction facility. We have access to the eggs pipeline. That's the Alberta ethane gathering system right there. From this is just across the river and we have existing pipelines that go back and forth between today. So we have operations in the area.

We have actually between Shanahan, younger and Empress. We have well over three BCF of this type of operation. So we're well versed in how to build operate these types of assets.

Yes. Sorry. I just can also mention that the Alliance pipeline Scott mentioned the opportunity there is it. It, you know, comes in close proximity to green light, but also the Alliance pipeline goes right through this, this plot of land. So there'd be further evaluation down the road about, you know, potentially if we ever wanted to do, you know, straddling that pipeline down the road. So that's an option as well.

You know, with respect to the gas supply, you know, it's one of the things that attracted us to this opportunity. But, you know, what we have right now is each phase will consume approximately 80 million cubic feet per day of gas. That'll grow, you know, as the guys, the phases get built out, you know, obviously that's, that's a significant number for gas he grabs for the province as well. I'll let you talk more.

Yeah, just on the Alliance. So where we're at with respect to that file and talking a little bit about expansion. So we've essentially met all the CER obligations here in the month of February. And then we have ongoing bi-weekly meetings with the large shipper group. It's about 40 plus individuals and just working expeditiously to get a negotiated settlement here in 2025 and get that in front of the regulator. What I will say with respect to the expansion, there's some common themes that we continue to hear a number one. Our shippers on Alliance very much value the service that Alliance provides. They very much like the, you know, the end point getting their gas into Chicago, but also the high reliability availability and the cost structure of the pipeline.

And part of the conversation has got to expansion opportunities. So there is high demand for expansion opportunities. From the shipper group and we're just evaluating that right now. Would that be a short haul type expansion opportunity into the Fort Saskatchewan area is industrial manning demand increases? Or is that a long haul type expansion where we go all the way down down to the Chicago land area? If you recall, Alliance was originally set up to do what we call the B site compressors. So building up the B site compressors where Alliance already owns that land today. That would be the long haul and then we could do a shorter haul version just into the Fort Saskatchewan area.

So it is an active conversation. We're having with the shippers.

Yeah, I'm going to try to unpack those in order. So I think the first question was with respect to cost. An asset of this size, we believe would be in that neighborhood of four to $500 million. Now, this is fairly preliminary. We would, we're obviously going to be doing a significant amount of more work with respect to the engineering and as we progress through our gating system here at Pemma. But that's the rough order of magnitude. With respect to the composition of that 25,000, you would expect to be roughly call it 50% of that would be a thing. The remainder would be your C3 plus component. And then how does it fit into our overall portfolio?

So that's what we're talking about right now is we have our existing supply agreements. There's also demand for future expansions with us in Alberta. Dow has been very public about, you know, phase three, et cetera. So we're just evaluating right now. Do we put these barrels into part of our existing supply portfolio? Or do we make this part of the incremental? You mentioned RFS 3D, euthanizer. We've been fairly public about that. There is an opportunity there to we have existing barrels in our portfolio that we can add to the incremental demand. There is new opportunities, such as the RFS 3DF.

And then there's these barrels. So it's, it's a little bit too early and premature to be talking about the actual details, but expect to provide a lot more color at our May.

May conference call.

You know, we've been, we've been working hard since late 2024, working with potential choirs of this capacity. We're very pleased with the response that we've had. We've have a broad range of customers who are looking for LNG service, including both Canadian producers as well as NOC and IOC counterparts looking to participate. We've had, we've had term sheets out and term sheets returned well in excess of the capacity that we have. And so we're, we're working through that process. We will soon be looking to shortlist and begin more detailed negotiations with these counterparts. And we're very excited about where we sit at this point in time.

Yeah. So, so we're essentially 50% of the project. At this point in time, early days. We're looking at essentially, you know, $1.5 billion per phase of 450 megawatts. So up to 1,800 megawatts. So our share would be, again, 50% on a go forward basis.

Our plan, you know, we will be a phase development. There could be opportunity. As we staged this out, we could accelerate some of the phases and combine them. But at this point, at this point in time, it's a phase development of the four phases with construction, you know, FID beginning. We're targeting sometime in 26 and then construction through to 20, 30, 20, 29, 20, 30.

And maybe I'll just chime in. It's Cam here. And just as a reminder to all the listeners, you know, where we stand today, you know, following the Alliance and on fable acquisition, you know, our run rate of free cash flow. After dividends available for investment is in the range of about a billion and a quarter to about a billion and a half per year.

We've obviously said that, you know, through 2025 and 2026, as we're closing out, you know, some of the in-flight projects and the heaviest spend period on cedar, you know, we're running at, you know, probably a little above, a little excess free cash flow. But, you know, obviously closer to it. And then 20, 27 and beyond, we begin generating material free cash flow again available for all that investment. So that obviously lines up really well with the opportunities that we're talking about here.

Hey, Brittany, let me start with, I think it was your second question there. And I think one of the things that we really want to make sure is very clear is that obviously, you know, the power generation angle of this opportunity is a great project in its own right, but what really makes us excited about it as it relates to permanent value change is the integration potential. So the opportunity, obviously, you know, we have a significant gas business today through our gas processing business through Alliance.

Obviously, we, you know, we have an aspiring carbon carbon sequestration solution. So the integration of the opportunity with those projects is what really got us excited about it. It's sort of base returns consistent with a midstream infrastructure return. At this point, you know, probably a little early to start throwing out exact multiples, but I would say it's within that range.

And, you know, lastly, I think it is, of course, our intention to have a long-term contract underpinning this project. And obviously that's those negotiations are ongoing.

Yeah, Rob, thanks. It's shared here. So I would categorize the group into just a few buckets, right? So I mentioned there's obviously 40 plus folks in the room. You have long-term shippers. You have people who you play in the seasonal strip in the IT component and then some really large long-term shippers, and then you have some of our smaller shippers on the pipeline. So those are kind of the three groups that we're working with right now. Can't get into too much detail with respect to what everyone wants, but we are trying to hone into a mutual agreement that meets the needs of all 40 plus individuals.

And I can say it's going very well and the conversations have been extremely respectful and progressive as we continue to work with respect to the contracts. That is actually what some of the conversations are around. Depending on which route we go, there could be different outcomes and obviously people that have a lot of capacity on the pipeline want to keep that capacity because obviously it supports your condensate development plans and those types of things long-term. And there's obviously people who maybe don't have a lot of capacity on the asset, who would love to have more capacity on the asset. So that's something that we're working through. But at the end of the day, the takeaway is a little bit early.

I think in May we'll be able to give her a little bit more color, demand is high for the asset, and we just got to kind of quote unquote grind through it here for the next couple of weeks. Anything else, Cam, Scott, you want to add on that?

It's not so much savings, Rob. It's just really like we had a portfolio of projects that could add to the totality of our supply book. And it's really, we just got really diligent in just going through those and evaluating each one on a standalone basis. Where did we have extra capacity across our enterprise where we could, you know, maximize the ethane recoveries through existing assets. So that plays a portfolio, or sorry, a portion of the portfolio. So really just getting militant and grinding it down. And ultimately, you know, it's kind of, we've been signaling it's kind of honing into that red water three de-ethanolizer tower, which is the most capital efficient.

Red water three was built with a lot of the bells and whistles to accommodate that tower. So it was really just, you know, just doing the work and working through our portfolio of opportunities and getting the maximum, whatever existing.

Steel that we have in the ground. So through a combination of that, the team did a tremendous job of coming up with, you know, being at that low end of that capital range. And now yellow head, obviously, now we have to just take a step back and evaluate the entire portfolio with yellow head. Obviously comes a lot more C three plus. So just working that into the mix. But like I said earlier, there is incremental demand for incremental phases of polymer development here in Alberta.

It's a do again. So, you know, we've been working with the kinetic or development team for, you know, for over a year and a half. They are at the beginning of the, you know, our excitement with them is their expertise that they have and they just completed the cascade power plant in the edge scenario. As well as they progress the a so Q position.

And again, that's what excites a lot of our data center customers are the potential is the speed to market. You know, we are going to be in that turbine queue. You know, as we go out, we have not placed those orders at this point in time. And but again, when I mentioned FID is expected in 2026 and are in service date in the 2030 timeframe. So, you know, we're happy where we are with the Q. We're happy with the progress. We're engineering work to take place in 2025 and reaching that FID decision in 2026.

Go ahead, Aaron.

It's Chris Sherman. You know, we're certainly paying a lot of attention to what volume growth in general looks like. In the basin and this is a piece of it and undoubtedly continue to see the value of West Coast export. You know, I think we've talked about some of the efficiencies we're driving at our own facility. We've talked about some of the other projects that are that are on the go on the West Coast and undoubtedly, you know, each incremental barrel definitely supports supports those those export positions. So, we're keeping on them. We don't have anything specific link to or related to to yellowhead per se.

But obviously we're bullish West Coast export and like what we have there today and see that growth being supportive of the projects that are underway. But it should be noted that these these three plus barrels would be quote on like they would be proprietary pemma barrels. They wouldn't be the barrels of the shippers on the yellowhead pipeline taking my questions.

Yeah, thanks for the question. So project execution. I'll speak to probably just the three largest ones we have on the go here. So the K three cogent. The Wapiti expansion, Wapiti gas plant expansion and PGI for those projects. PGI projects. That's executing and then our RFS for. Frack expansion and rail expansion. So all three of those projects are going extremely well and and. No concerns with the spec to timing and or execution.

We've got through each one of those projects through some pretty material milestones. Equipment is showing up active boots on the ground at all three of those locations. So no supply chain concerns. And I would would like to just have a bit of a shout out with respect to. You know, throughout the last couple of months, there's been some pretty extreme weather here in Alberta.

The safety execution. Throughout the last couple of months and previous to that has been. Excellent. It's been world class and in Pamela's opinion and the cost structure continues to come in as expected. So, like I said, we're getting through some pretty key milestones here and equipment's getting delivered to site and and it's really. It's really impressive to see these new assets coming out of the ground.

Yeah, Scott here, you know, when we we use a lot of our own internal data and third party data and generally speaking there they're lining up. When we when we look at at third party data, we're generally seeing growth in that kind of mid single digit area. And I would say that that's relatively consistent with our own internal forecast. I would say the only hesitation I have right now is just given all the volatility in the market and the uncertainty that puts a little bit of a cloud over it. But absent that that's mid single digit is something that we continue to to forecast.

Maybe just add to that that. You know, although the average is mid single digit, some of them in as big as shippers. If you go into their detailed public public information, some of them are growing, you know, at higher than that. And it should be noted that some of our customers are drilling into taker pay contracts. Some of them would be over. So although the physical volumes will continue to grow, we believe that we're in a pretty good position to continue to meet their growth demand.

Yeah, Maurice, I mean, I think negotiations are ongoing. So I'm a little reticent to start to, you know, point to a specific data point. You know, I would just say, obviously, I mean, you've obviously painted the range of our return for file. Historically, and we would characterize it within that range. But, you know, given the stage and negotiations, I'm reluctant to sort of specifically quantify it at this stage.

You know, I think what we, you know, what we look at is, is obviously a full scale value chain across the business. And obviously, opportunities across that value chain, which, which continue to, to come. You know, I think part of it is obviously the commercial angle part of it is, is execution and control your costs and protecting that. I think, you know, Jared, Jared exemplified what we think is one of our advantages in that, you know, our track record on capital execution, I think has been incredibly strong, you know, historically.

And so for us, that gives us a lot of confidence, you know, to be able to, you know, sort of to be able to put forward a compelling proposition to the customers. In terms of the commerce, you know, obviously that's market facing. You know, I think we have a history of trying to find creative solutions. I think that shows up through a couple of the transactions that we did with PGI and what happened very over the course of this year. I think it's shown up historically in our contracting in our pipelines business.

And so we continue to, you know, to look for opportunities to be creative. Ultimately, the market drives what returns are. But I think we control what we can control. And when you look at, you know, sort of our capabilities in building assets specifically, you know, relative to competition, that is one area where we differentiate ourselves and where we believe we have a competitive advantage.

A percent, you know, this is all about the data center play, the value chain extension cited behind the fence on our land. You're not going to see us do an IPP in Lethbridge or something like that. This is this is very focused and targeted and on strategy.

Yeah, Scott here. You know, as we pointed out in, as you said, in the press release, no, no immediate financial impact from the tariffs. You know, from our perspective, we're hearing all the right things and now we need to start to see all the right things of, you know, and so from our perspective, we do see a sentiment change in terms of politicians in terms of the general public, which we think is generally positive for the industry. You know, we've been progressing lots of projects in the background and we will continue to progress those projects.

You know, and hopefully with what's happening, it would be obvious to the country that these projects need to get built. And so we think that there's definitely positive tailwinds. You're not going to see anything in the next day or two, obviously, but we continue to see tailwinds in terms of potentially, you know, regulation, deregulation, you know, speedier project approvals, which should benefit, you know, the industry long term.

As periods came here, you know, I think some of them have progressed along the way. I'd say it might be about half of that has has progressed along. I mean, one of the big pieces there was the de-ethanizer at RFS, you know, we're continuing to move through gates internally on that, as well as some of the Northeast BC spending, which continues to move through gates. So I would say that, you know, at this point, we're not all the way towards that upper end. We're marching through the range. And, you know, if you want to pick a point, probably about halfway.

Yeah, morning, Eli. So I think, you know, the way we would characterize the range is a couple of things. Obviously, there is seasonality in our business. And I think, you know, it comes from about three different places. Obviously, the first is obviously the inherent seasonality in the marketing business, which is weighted to Q1 and Q4. I think that's generally well understood, you know, with the advent of more West Coast egress for the liquids business in the last sort of two to three years. I mean, obviously that has moderated some. But even, you know, you still see that in large extent on the pricing side. And I think you'd see that this year as well. The second thing would be obviously the repair and integrity work portfolio that occurs in our business.

And so, you know, often that results in much of that occurring in the third quarter. Some of our work occurs in the first and the fourth quarter because of winter access only. But, you know, there is some seasonality in that just based on obviously getting through spring, getting to work and planning our work plan. And then the last piece would obviously be the Alliance Interruptible Profile.

So as we've seen in past years and continue to be out like this year is obviously, you know, winter seasons tend to see higher interruptible demand, consequently higher demand for service. And that would lead to a, you know, relatively softer Q2 and Q3 for that asset relative to Q1 and Q4. You know, in some cases, the seasonality has been in some years, you know, upwards of 15%. You know, like from a Q1 to Q2 type of sequential numbers. So I think we think about that and we see that. I think the last point I would make with respect to the overall guidance for the year is, I want to remind everyone that, you know, we do our guidance and our forecasting based on the forward strip as it relates to the direct commodity exposure part of our business in the marketing segment.

And if you look at that business today, obviously, you know, we've had a very good January so far. I mean, I think most of the pricing, you know, despite the tariff noise and volatility has shown up well, you know, we saw Bellevue propane, you know, in the 90 cent range. Obviously the dollar, a Canadian dollar has weekend and that's a net positive for our business.

But I think when you look at the curves for the balance of the year, I mean, if you were to look at a frack spread curve, for example, through the balance of the year, you know, there's, there's a effectively a $10 difference between January and December. So there's a fair amount of backwardation in the curves at the moment.

Obviously, if we continue to see each month churn by and not see that backwardation occur, you know, we only know what the market tells us right now or who we're willing to put our fingers on. And that's what's reflected in the guidance. I would just add as well, you know, there were some call it one time capital recoveries in Q4 and just ensuring that those obviously aren't annualized into 2025. Those were selected in 2024. So just ensuring everyone on the calls aware of that and doesn't carry that forward.

So let's do again. So again, we went out and like you stated, we do believe that we were de-risking the project. And, you know, we undertook and stepped up to FID the project as such. You know, we're out in the market. We've looked at, you know, to benefit from that de-risking at this point in time. And as I stated previously, we've had lots of response and lots of positive response from both multinational oil companies and Canadian producers and LNG offtakers today. So we're pretty excited about taking that next step and believe we are one de-risking the project as you stated, but at the same time improving the economics for the project as well.

Hi, Robert Stu. Again, you know, we started down the path and, you know, we've mentioned and talked about our land adjacent to the red water assets, our low carbon complex. And so we started looking for tenants and opportunities to utilize that land. And power generation was one of those opportunities. We looked at in the early days, you know, the carbon sequestration link and the connection to that. As things went on and we began working with the Connecticut core team.

And as the markets changed and where this power, what was the plan for the power sale, as opposed to just selling into, you know, into the grid as such. Connecticut changed and pivoted and we started talking about and began meeting with. You know, co locators and hyperscalers. And we've seen this opportunity to take the power generation right to, you know, a midstream type model with long term contracts off the back end. So it quickly became, you know, very appealing to Pemma that we could make this look exactly like one of our other businesses.

And as you mentioned, beyond beyond that and the success we see with that change in the data center growth, obviously the interconnection. We always talked about providing services, you know, gas supplies, potential. We have, we have the, you know, the capability and the infrastructure to provide gas to provide water by the land, as I've already mentioned. And so the integration opportunity just grew, but we like to project right from the start located on our land.

Rob, I'll start out. I mean, I think, first of all, our intention here is, is to match the power load with the need from the facility. So, you know, we don't see ourselves getting into the merchant power business. That's not what this is about. This is very much about leveraging the facilities in and around our existing assets, leveraging the integration and obviously having a really attractive.

You know, sort of long term annuity with, you know, very high quality high credit worthy counter parties and the ability to use that to leverage the rest of our business. In terms of how much capital, you know, we could see allocating to this. And then obviously, you know, we've talked about three phases as a part of this as sort of the initial piece. You know, I think we need to, you know, see where that goes. And what I mean by that is, you know, we haven't talked about more than that. You know, if the opportunities to grow are large, right? I think we'll analyze that as we always would. But, you know, to go back to my initial response, you know, this is not an intention to get into the merchant business.

This is a long term fee based annuities, just like the rest of our business.

Yeah. It's Chris Sherman. Yeah. You mentioned it timing isn't great for the for the NGL contract year as far as sort of getting those contracts button down. You know, but we've been largely positioning ourselves, not tariff specific, but largely positioning ourselves as much off the West Coast as possible. And so that that's really helped insulate us first of all. And then, and then I'd say secondly, at least, at least to date, we've seen a fairly reasonable approach with buyers where tariffs could have an impact. And I think we will certainly be adding terms that are, you know, tariff specific and, and finding the right way to get that, that business done. It's not, it's not a big concern for us going into the NGL year.

Hey, Ben. It's Cam here. Listen, I think, you know, in terms of, in terms of the guide, obviously, you know, we put it out last May, you know, we're sort of halfway through it. I would say that, you know, we're happy with what we're seeing. We're seeing good opportunities, you know, big focus on that time frame on productivity and sort of margin in the business. You know, certainly, you know, we're trending well and I'm sort of reluctant to quantify it at this point in terms of exactly where we are. But certainly, you know, we're very pleased with where we are tracking in the range.

And I think there, you know, there's a number of opportunities here, which the team is working on in some of them will occur in that time frame. Some of them will occur beyond. But, you know, like to sort of see that come to fruition before we start to, you know, stretch the timeline out even further. You know, I would sort of mention that I think, you know, when we look at our guidance, you know, lots of numbers out there in the peer group. You know, we, we always talk about ours on a fee based dollar per share.

And we think as we, as we look at some of those comparable numbers from some of our peers, you know, the four to six percent continues to stack up in line with our peers and well for the most part.

You've been Jared here. You can't really get into the details. I think my commentary around it, it's going well is, is we have routine meetings with the shipper group. The shipper group is, you know, we're having great conversations in the room. Really trying to get down to, you know, brass tacks on what, what all the parties want. So that is the encouragement here. And then I mentioned it earlier in the call, but hopefully in the May timeframe, we're able to give a lot more color with respect to the progression of commercial opportunities there.

Okay. Thanks.

That's the, you know, we, we in taking this step with green light and the JV that we've entered into. We look back and did our due diligence with respect to kinetic or their capabilities where they are sitting, you know, the progress that they've made to date and became comfortable. You know, we are, we are a 50% partner as described as we go forward. You know, we made sure that we secured the correct governance that we need to have this, you know, go forward on, you know, with our controls and in place and our oversight that we thought we needed as we would go. We're making sure that we have the right people to stay on top of the project from this position.

And we're comfortable where we're going.

Yeah, and just remind every, you know, again, these are, these are not new. They've just completed building cascade power plant. We're excited about, you know, working with them. And again, believe that we've made, you know, selected the correct partner for us in this endeavor.

Hey, Jared. Yeah, great question. So obviously Scott mentioned our call that we're actively proceeding. I can't mention we're deploying capital on our Northeast BC expansions. You know, with just what's in front of us with L and G Canada phase one cedar wood fiber, et cetera, we see a material amount of of NGLs condensate and obviously your C three plus coming out of that area. So, our long term view, the MAC review would be not only does feminist projects are going to be required, but there's probably other third party projects that are going to be required. And, you know, that we're supportive of taking place because the industry is going to require it, especially with L and G Canada phase two potentially on the horizon.

Maybe so we get a cedar two one day, et cetera, et cetera, but there's a lot of there's a lot of very good momentum with respect to West Coast exports with respect to fractionation. Our RFS four project continues, you know, really glad that we sanctioned that when we did, you know, it's we're going to deliver that at a very effective cost per barrel. When you do the math on that greenfield project, and it's, you know, it's getting, it's getting highly contracted and, you know, adding, you know, a bunch of more NGLs from yellow head to Sherman's book on our marketing business, you know, takes up more NGL capacity. So we do believe macro that another fractionator will be required to meet that NGL demand, obviously, because we're tight.

Growth opportunity as well.

Good question, Pat. So, yeah, you know, we shut down the southern portion of the Western line. I think in 2022 we took that out of service. You know, this pipeline is significantly older than myself. I would say that it's becoming, it's getting to its useful end of economic life. We're going to have to deploy more and more capital to to maintain the operability to save for liable operation of that asset.

And hence the abandonment application. The financial impact is very immaterial to our overall business taking the pipeline out of service. So we're just kind of working through that right now. I don't think I won't get into the magnitude of the capital that's required to keep it in service, but it's not a material amount. All things considered with respect to our overall integrity program, but it is a substantial amount of work internally for us to maintain that asset and keep it in the in the in the safe, reliable operation that that we expect across our asset base.

And Pat, I would just add that, of course, you know, there is a single customer on that line today and as has been the case, you know, it's a cost recovery mechanism for capital spent and for for repairs and maintenance. You know, we would continue to expect that if if investment was required going forward and that is obviously part of the, you know, the dynamic here is whether whether it can be operated in an economic life. Way in the future.

Thanks everybody for joining us today and we were very pleased to end the year with a very strong Q for and some exciting new growth project. So thanks to all of those on the call. Our investors, our shareholders, our employees, we look forward to a great 2025. Thank you.