Pembina Pipeline Corp. Ordinary Shares (Canada)

Thank you, Joanna. Good morning, everyone.

Welcome to Pemina's conference call and webcast to review highlights from the third quarter of 2024. On the call today, we have Scott Burrows, President and Chief Executive Officer, and Cameron Goldate, Senior Vice President and Chief Financial Officer, along with other members of Pemina's Senior Officer Leadership Team, including Jared Sprout, Janet LaDuca, Stu Taylor, Chris Sherman, and Ava Bishop. I would like to remind you that some of the comments made today may be forward-looking in nature and are based on PEMINA'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. Some of the information provided refers to non-GAAP measures. To learn more about these forward-looking statements and non-GAAP measures, please see the company's MD&A, dated November 5th, 2024, for the period ended September 30th, 2024, as well as the press release Pemina issued yesterday. All of these materials are available online at Pemina.com and on both CR Plus and Edcar. I will now turn things over to Scott to make some opening remarks.

Thanks, Dan. We were pleased yesterday to report our third quarter results, highlighted by adjusted EBITDA of $1.019 billion and adjusted cash flow from operating activities of $724 million, or $1.25 per share. Pemina is poised to deliver a record financial year, reflecting the positive impact of recent acquisitions, growing volumes in the Western Canadian sedimentary basin, and a strong contribution from the marketing business. As Cam will discuss further in a moment, We have narrowed our 2024 adjusted EBITDA guidance range by $25 million on either end to $4.225 billion to $4.325 billion. In addition to solid financial results, the third quarter was highlighted by three notable transactions. The first was the acquisition of the remaining 14.6% interest in Oxable's U.S. operations, resulting in fully consolidated ownership of all the Oxable assets. This transaction allows further simplification of our corporate reporting and enhances our long-term service offering from the Oxable assets. In addition, PGI, jointly owned by Pemmin and KKR, entered into two exciting transactions with growth-focused companies operating in the Montney and DuVernay. The first transaction with Whitecap included the acquisition of a 50% interest in Whitecap's KBOB complex and an obligation to fund future Latour area infrastructure development. Further, the second transaction PGI entered into agreements with Varon that included the acquisition of Varon's Gold Creek and Carr area oil batteries and support for future infrastructure development. We are pleased to have closed this transaction effective October 9th, 2024, and look forward to growing alongside Varon in the years to come. Under the agreement with Varon, PGI is committed to fund up to $300 million of future infrastructure, and we are pleased to be progressing a new battery and associated pipelines representing more than half of the funding commitment. More details will be provided upon completion of upcoming engineering milestones. Through these two transactions, we are realizing the vision set forth with the creation of PGI in 2022. We were successful with Whitecap and Barron because we have a unique ability to provide tailored and value-added solutions to support the specific needs of our customers. The opportunities arising from the creation of PGI have attractive economics and are expected to enhance asset utilization, enable future volume capture, and benefit Pemina's full value chain. We also continue to progress our various major projects. Portions of the Northeast BC midpoint pump station expansion have been completed. We are on track to be fully complete by year end. Notably, that project is trending under its $90 million budget, and while a smaller project, it is another example of Pemina's strong project execution. As well, we continue to advance further expansions to support volume growth in Northeast BC, and are pleased that the CER has determined our application for the Taylor to Gordondale expansion is complete, and we can proceed to the assessment phase. At our RFS 4 expansion, site clearing activities have been completed, while engineering and procurement activities and site construction continue. Finally, the Cedar LNG project, we reached an exciting early milestone with the start of onshore construction activities, including site clearing and other civil works. Detailed engineering is underway on the floating LNG facility, and we are looking forward to the start of construction in mid-2025. I'll now turn things over to Cam to discuss in more detail the financial highlights for the third quarter.

Thanks, Scott. As Scott noted, Pemina reported record third quarter adjusted EBITDA of $1.019 billion, consistent with the same period in the prior year. While results were essentially flat period over period, we saw strong performance across most of Pemina's business, primarily from the positive impacts of increased ownership of Alliance and OxAble, combined with growing volumes on certain systems and higher NGL margins. However, these results were offset by headwinds we faced on one specific asset, Potion Pipeline, and the combined impacts of various one-time and transitory events that impacted either the current quarter or the prior period. In pipelines, factors impacting the third quarter variance primarily included a higher contribution from Alliance to increased ownership following the Alliance stock stable acquisition, higher contribution from Alliance due to higher demand on seasonal contracts, and the reactivation of the Nipissi pipeline in late 2023. These positive impacts were offset by a lower contribution from the Cochin pipeline primarily due to lower tolls on new long-term contracts, lower volumes resulting from a contracting gap from mid-July to August 1st associated with the return of line fill to certain customers, lower interruptible demand resulting from narrower condensate price differential between Western Canada and the U.S. Gulf Coast, and higher integrity spending. Lower net revenue on the peace pipeline system due to the earlier recognition of take or pay deferred revenue in the first half of 2024 compared to 2023, which more than offset higher contract volumes. In facilities, factors impacting the third quarter variance included the inclusion within facilities of adjusted EBITDA from OxABLE following the Alliance OxABLE acquisition, partially offset by a gain on the recognition of a finance lease in the third quarter of the prior year. In marketing and new ventures, the third quarter variance reflected the net impact of higher net revenue from contracts with customers due to increased ownership interest in Oxable following the Alliance Oxable acquisition and higher NGL margins. These positive impacts were offset by the impact of a 90-day unplanned outage at Oxable and lower realized gains on commodity-related derivatives. finally the third quarter corporate segment results reflect higher long-term incentive costs driven by feminist share price performance partially offset by lower consulting costs earnings in the third quarter were 385 million dollars this represents an 11 increase over the same period in a prior year in addition to the factors impacting adjusted evita Earnings in the third quarter were impacted by unrealized losses recognized by PGI on interest rate derivative financial instruments due to falling interest rates compared to gains in the third quarter of the prior year. Unrealized losses recognized by Cedar LNG on interest rate derivative financial instruments. Unrealized gains on NGL-based derivatives and crude oil-based derivatives compared to unrealized losses in the third quarter of the prior year. larger unrealized losses on renewable power purchase agreements, a cost recovery related to a storage insurance settlement, and higher depreciation and amortization expense and net finance costs. Pipeline volumes of 2.7 million barrels per day in the third quarter represent a 6% increase compared to the same period in the prior year. The increase was primarily due to the increased ownership interest in Alliance and the reactivation of the NIPC pipeline. These factors were partially offset by lower volumes on Cochin Pipeline, the Drayton Valley Pipeline, and the Peace Pipeline system. Lower volumes on the Peace Pipeline system were a result of earlier recognition of take-or-pay deferred revenue in the first half of 2024 compared to the first half of 2023, which more than offset higher contracted volumes. If you normalize conventional pipeline volumes for the earlier take-or-pay recognition and outages, volumes were up approximately 2% over the prior period. Mayor Mrakas, facilities volumes of approximately 800 million barrels per day in the third quarter represent a 1% increase compared to the same period in the prior year. Mayor Mrakas, The increase was primarily due to the alliance on stable acquisition lower volumes at the redwater complex and at younger. and lower volumes on certain PGI assets due to the earlier recognition of take-or-pay deferred revenue in the first half of 2024 compared to the prior year, which more than offset higher PGI interruptible volumes. Turning to our outlook for the full year, Pemina has narrowed its 2024 adjusted EBITDA guidance range to $4.225 billion to $4.325 billion. Further, we are currently trending towards the midpoint of the guidance range based on prevailing forward commodity prices and the outlook for fourth quarter volumes. Through the first three quarters of the year, conventional pipeline volumes have been modestly impacted by various permanent and third party outages and lower than expected interruptible volumes on certain systems, leading to a slightly moderated volume growth in 2024 than originally expected. However, the broader outlook for growth in a WCSB and 10-minute business remains strong, and the revised guidance is based on an expectation for the fourth quarter of higher interruptible volumes on certain systems and the impact of new contracts. At September 30th, based on the trailing 12 months, the ratio of proportionally consolidated debt to adjusted EBITDA was 3.6 times, which is at the low end of the target range. It's important to note, however, that given the April 1st closing date of the Alliance Oxable acquisition, The ratio includes all of the debt associated with the transaction, but is currently only capturing two quarters of EBITDA contribution. On a normalized basis, this ratio would be approximately 3.4 times. I'll now turn things back to Scott.

Thanks, Cam. The first three quarters of 2024 has been tremendously exciting, highlighted by acquisitions and major project announcements. as well as the continued momentum from industry-wide growth catalysts, including the Trans Mountain pipeline expansion, the near startup of LNG Canada, new petrochemical facilities, and newer expanded LPG export capacity. As we work hard to close out the year strongly, our attention is also turned to 2025 and beyond, and how Pemina can continue to capitalize on the opportunities arising from this growth and deliver long-term and sustainable value for our shareholders. Thank you for joining us this morning. Operator, please go ahead and open up the line for questions.

Thank you, ladies and gentlemen, we will now begin the question and answer session, should you have a question, please press the star followed by the one on your touch tone phone. You will hear a prompt that your hand has been raised, if you are using a speakerphone please lift the handset before pressing any case. Your first question comes from Jeremy Tonette at JP Morgan, please go ahead.

Hi good morning. Morning Jeremy. Just wanted to start off with the conventional segment, if I could. I think you'd mentioned 2% period over period growth there. I think as some of the market, maybe we're expecting a little bit higher growth there. Just wondering if you could touch on a bit more dynamics as you see it there and the outlook into 25 and the potential for mid single digit growth, I guess, based on your producer customer conversation.

Yeah, I'll let Cam clarify the 2% comment. You know, when we look out towards the end of the year, we're still looking at kind of a 4% exit-to-exit growth rate on the conventional system. Again, the third quarter was impacted by Pemina and third-party turnarounds. But as we look forward to Q4, we're also seeing third-party facilities come online. So that 4% within that has some embedded growth from third-party facilities coming online, Jeremy. And then as we look out towards 2025, you know, we're still finalizing our 2025 budget and we'll have more to say in December, but we're still feeling confident in that 4 to 6% physical volume growth rate in 2025. And, you know, we're seeing that today in October. Volumes in October were quite strong compared to September. Now, some of that is new growth. Some of that is just normalized operations and those volumes returning to the system. So that's kind of more of the bigger picture. Cam, do you want to just clarify your 2% comment?

Yeah, sure. Jeremy, just to clarify the 2% comment in my prepared remarks. If you sort of look at Q3 over Q3, the take or pay recognition and the outages collectively were worth a little under 60,000 barrels a day of impact there. So that gets you to the 2%.

percent when you normalize for that uh obviously looking forward you know scott explained that well how we see that in excess of the two percent got it okay thank you so maybe some kind of turnaround noise in the quarter but i guess uh your longer term outlook unchanged for mid single digit growth if i got that correctly correct and then uh maybe just you know Pivoting over to Alliance now, having full ownership of the asset, if you could talk a bit more, I guess, as far as your outlook for what you can do there, how you can better optimize over time as legacy contracts roll, and, you know, could there be growth debauching or otherwise? Just wondering, you know, what's possible at this point?

Good morning, Jeremy. It's Jared here. Yeah, so integration continues to go extremely well, not only with the Alliance asset, but on the off-stable asset as well. And then when we look at the synergies, those also were going as planned, kind of the shorter term synergies. Longer term, you know, what we're hearing from our shippers and potential shippers is they continue to value the service offering. They very much like the high reliability that the asset provides to the shippers here in Western Canada and the Bakken, and demand for the asset remains extremely high. We are engaged, obviously, with our shippers, talking to them about how we can meet incremental demands, either full path or other opportunities, either out of the Bakken into the Chicagoland area or maybe some interprovincial opportunities into Port Saskatchewan or where other demand for gas is required. So just kind of working through those right now, but very encouraged with the conversations and just really trying to understand where the shippers want their gas to go and how we can unlock that value for them.

Got it. That's great to hear. That's it for me. Thank you.

Thank you. The next question comes from Paneesh Satish at Wells Fargo. Please go ahead.

Thanks. Good morning. Maybe turning to CEEDAR, you know, given the agreement that the existing contract that you have with with ARC there was secured prior to the start of construction and with construction at least partly underway now, I assume that the risk profile for CEDAR has decreased. So should we think about, you know, future offtake contracts that you sign on CEDAR carrying a higher rate to reflect that there's lower risk on the project now?

You know, I think the interesting point is upon FID of CEDAR, The interest in the project has increased just given that it's, you know, real in people's eyes now versus, you know, prior to FID. I think people were waiting to see that decision. So I think between the FID decision as well as continued progress on, the CGL expansion, people have more confidence in the project, in the in-service date, the profile of that. And what that's led to is increased interest. And with that increased interest, we do believe that coupled with the fact that this will be a scarce resource in terms of some of the only uncontracted LNG capacity off the west coast of Canada that it should garner a premium. So that's certainly something that we're thinking about. We have term sheets out in front of potential off-takers, and we are in discussions. As we noted in the press release, we expect those to continue into early 2025, but we are having good discussions.

Got it. And then, you know, on M&A, you've been active on the M&A front recent quarters, especially at TGI. But we've seen, you know, midstream valuations move higher over the past few months. Can you maybe help us understand how the bid-ask spread has evolved? Are you seeing actionable opportunities at reasonable multiples that meet your return thresholds? Or is it getting harder to find accretive deals?

I think given the transactions we did in 2024, we're focused right now on closing and integrating the acquisitions. We're not out actively pursuing M&A opportunities. We'll always look at something. If it comes for sale, we don't control the timing. So I'd say we're in reactive mode, not proactive mode, just because we have enough on our plate to integrate and capture the value from the previous acquisitions. Thank you.

Thank you. The next question comes from Rob Hope at Scotiabank. Please go ahead.

Yep. Morning, everyone. Just one question for me. Can you give us an update on the FAA and opportunities as you move through the year for the increasingly clear and could get a better definition of the next phase of opportunities?

Morning Rob, Jared here. You were kind of breaking up, but I just want to repeat you were talking about the ethane opportunities. I think with respect to probably our Dow supply agreement, you know, unfortunately it's a little bit more of the same story. We continue just to evaluate the entire portfolio of our ethane supply. You know we have kicked off, you know what we call internally gate zero and gate one funding to to progress engineering pre feed work and those types of things on on various opportunities and 2025. um you know in the first half of 2025 is where we'll sit down as a as a management team and really go through those opportunities and start to progress um which ones will go through gate two and gate three so you'll see a little bit more um you know probably in the in the latter half of 25 you know and then the majority of that capital obviously you know in 2025 will be spent in that engineering and and pre-feed phase 26 you know 27 when um when those assets come on stream is where you'll see the majority of that capital being deployed you know, bringing assets out of the ground.

Sounds like we may have lost Rob.

Operator, maybe we can go to the next question.

Thank you. The next question comes from Maurice Choi at RBC Capital Markets. Please go ahead.

Thanks, and good morning, everyone. If I could just come back to CDLNG, I think you mentioned that there has been increased interest from the off-taker perspective, and an update might come instead in early 2025. Obviously, these are complex discussions and do take time, but could you elaborate a little bit on how the discussions have generally evolved over recent months, be that in terms of the terms, the conditions, the volumes, or even the competitive tension along with the potential counterparties?

Hi, it's Stu. So our conversations continued, have been ongoing for the past year. We've regrouped and looked at, as Scott described, the opportunity, the risking of the opportunity, and have picked up conversations with NOCs and IOCs who we were talking to previously. We've added additional counterparts in those conversations. Term sheets are out to those parties. At the same time, we're in conversations with Canadian producers and the opportunity of Cedar perhaps being an outlet for natural gas on a go-forward basis. So we've been pushing those conversations, looking to get these term sheets out to people. Both parties now have, all the parties have term sheets, and those term sheets are reflective of similar terms that were in the ARC arrangement, but with some minor changes that have been warranted. And it's an iterative process, and we'll be having further conversations in 2024. And as described, we'll be looking to close on those conversations in 2025. Got it.

And if I could just switch over to a comment earlier about interruptible volumes on certain systems. I think the guidance includes some recovery of these volumes in Q4. Could you just elaborate a little bit more about these volumes and how sustainable these are beyond the quarter?

Exactly like what Scott was saying, seeing stronger physical volumes and revenue volumes into the fourth quarter. The IT barrel, we do outlook components of that. It's really around depending on which customer is really ramping up and how quickly they're ramping up that brings that IT barrel, but we are anticipating obviously a bit of a rebound into the quarter in Q4 with respect to that segment.

Got it. Thank you.

Thank you. The next question comes from Robert Cartelier from CIBC. Please go ahead.

Hey, good morning. Maybe I can start with a higher-level issue here. I'm curious what you think the BC election resultant changes at the Blueberry River First Nation mean for your growth plans in BC.

Yeah, hi, good morning. This is Janet. You know, with the NDP continuing to lead the government, and we actually see a smooth transition. We've been working closely with the folks in the BC government, with the Blueberry River First Nation and others, and We think this will be, again, just a smooth transition and a continued effort to continue to implement the agreement between the two parties.

Okay. Maybe a question for Cam. I'm curious what you see as the sensitivity or guidance to the work stoppage at the West Coast ports. How significant is that to your Q4 results?

Rob, it's fairly minimal. You know, right now we had the work stoppage previously. I can't remember exactly when that was, maybe last year. But it is somewhat immaterial to our Q4 outlook.

Okay. And then lastly, how are you seeing development change in the DuVernay, given that there's been some recent turnover in some of the key lands there?

Once again, Jared here. We see that recent transaction upon closing as being extremely positive. Obviously, the potential acquirer is a very prudent and technical savvy producer. The previous owner, we had a wonderful relationship with Chevron and continue to have so. But they were typically only allocating one, one and a half rigs on a calendar year basis. And, you know, we've had some early conversations with Canadian National Resources, just kind of outlining at high level how the contract works. And we're really excited about, you know, their understanding of the resource and, you know, kind of their get up and go to get after it and, you know, probably allocate more drilling rigs to the space. So, you know, we're expecting to see some higher utilizations in the future. That's for sure. We're excited.

Okay. Thanks, everyone.

Thank you. The next question comes from Ben Pham at BMO. Please go ahead.

Alright, there's a couple of questions on the decoction new contract. Can you comment on how how the the new toll compares to your original underwriting assumptions? And can you also talk about just maybe top down key factors that were driving the renegotiations?

Yeah, sure. Ben, it's Cam here. I'll take the first part. So I think, obviously, when you look at the variance that we saw in Q3, you know, sort of period over period, I mean, there's a handful of things, as we outlined in the disclosure, that contributed to that. Obviously, the, you know, the new toll framework, the revised firm tolls, you know, that is about a $20 million a quarter impact. And obviously, the biggest single piece of the variance quarter over quarter. We talked about obviously this nuance in the contract where with the foundational shippers on the initial term having provided line fill, we were required to return the line fill to them and effectively they shipped under that for that period in July. You know, that was that along with the the incremental integrity work for the quarter was about another, you know, sort of 12 to $14 million impact. And we obviously characterize those as as unusual or one time events. And then lastly, the, you know, the IT revenue portion in the quarter, was affected by both the combination of the spreads, which are a consistent driver, but also we had a temporary outage of one tank. associated with that asset, which put a natural limit on the ability to move interoperable volumes, that really took up the balance of the variance. And so as we look forward to that asset, I think we're obviously happy to have it recontracted. I'll let Jared speak to the dynamics of that exercise. But obviously, we see something that would exclude those one-time or extraneous events as we look forward to

just on the contract you know obviously our macro view of of condensate demand in western canada is very strong um be it from from the chicagoland area the gulf coast through caution southern lights or and you know obviously the domestic supply here from western canada so you know looking at those dynamics and then recall when we took over this asset the asset i'm going to use some round numbers here could do roughly 90 000 barrels a day of throughput Since then, we've taken that over and our technical services team has applied their expertise and we can rateably do significantly more than 100,000 barrels a day. So taking that into consideration that we have more white space to offer for IT when spreads are strong, the overall macro view that demand is strong for the asset, looking at our customers on the oil sand side and the buyers in Edmonton, and just Working through, we haven't talked about the tenure of the contracts and obviously longer term contracts with specific counterparties. You know, we can offer a little bit of a total discount on the exchange for those longer term contracts. So when you take all of those into consideration, we're pleased with the contracts that we executed and the counterparties in which we executed them with. And we have that incremental white space today with us expanding capacity that we can go out to the market and sell on a little bit of a shorter term basis. And we believe overall long-term the spreads will support us having the asset full on a physical basis every day. And yeah, overall happy with our acquisition and where we've recontracted it at.

Okay. Thanks for the comment.

Sorry, just for a moment. I think on caution, one thing I should close out by saying is it's important to remember that When we acquired that asset originally, it was flowing about 85,000 to 90,000 BUE a day. And through the work that we've done, great work by the operations team, You know, we've obviously increased the capacity of that asset, provide more egress and more access to condensate for our customers, and obviously more opportunities for Pemina. So we've, you know, we've grown that capacity meaningfully in terms of that size. Capacity is obviously well north of 100,000 barrels a day today. You know, some days closer to 110 or 115. So that's obviously helped support the underwriting thesis from the original acquisition.

Okay, I got it. So we should really look at Not just, I mean, obviously look at quarter over quarter, but also look at the initial volumes. That's good. And then I know no comment on tenor, but once it's up for renewal again, can ocean technically be converted to an oil pipeline or reverse, or that's not even in the cards at all, longer term?

I think the demand for condensate imports and the supply for the oil sands will continue to be strong enough, maybe one day, but it's not something we're looking at today.

Okay, I got you. And maybe just one cleanup, one in a piece, and there's reference to the $1.5 million deferred revenues booked in the earlier period. Are you suggesting that under your prior accounting policies, the piece would have been up? 15, 1.5 million more than in the third quarter results?

Or is there something else I was trying to... Yeah, what I'm suggesting, Ben, is that in the past years, you know, with less track record on the data, we would have deferred uh like for for example last year we would have deferred uh recognition of those volumes later in the year uh in 2024 we recognized them earlier so the net difference in terms of you know if we were apples to apples uh you know you would have seen a a 17 million dollar tailwind uh in q3 of 24 had it not been for that that sort of timing change i got you said it wasn't anything else uh nodal outside of that impacting piece um not not not more than what we said uh originally so obviously there was there was that piece there was uh there was some outages uh that also affected this quarter those were the two biggest effects okay all right got it thank you thank you the next question comes from aj o'donnell at tph please go ahead

Hey, good morning, everyone. Thanks for taking my question. Just wondering if I could go to the marketing business for a second. I think results were pretty strong despite seeing an unplanned outage at the Oxable facility. I was just wondering if you could comment about your outlook for frack spreads going forward, given where ACO prices are headed into the winter. Thanks.

Hey, Jay. It's Chris Sherman. You know, I think we expect a little bit more of the same here. through the rest of the year on frack spread. Gas price remains obviously challenged as we're still waiting on winter in most markets. And I think, you know, as we look through to 2025, there's definitely some things we're watching. LNG Canada is coming on. We're watching ecogas in that sense. We've got some incremental Gulf Coast frack capacity coming on without a lot of incremental egress. So we're watching that as well, but remains fairly constructive, in particular because of gas price.

Okay, thanks for that. Just one maybe on the Taylor to Gordondale project. I'm just curious if you could just give us a little bit more explanation on kind of what's going on there and what's needed during the assessment phase to kind of get that project moving along. Thanks.

Yeah, hi, good morning. Again, it's Janet. So in September, the CER issued its completeness determination. So essentially what that does is it kicks off a 430-day review process. So we'll be in the midst of that responding to information requests. We expect hearings to happen this summer and a decision from the CER later next year. And then that will take it over to the governor and council, who will have 90 days to make a decision from there. So the process is underway, and we look forward to working with the CER and the other interveners to answer their questions. There's obviously a high demand for this project, and so we expect the process to move forward.

And then just on the execution side, we continue to, you know, meet with landowners, Due to the engineering, archaeology digs, all of our regulatory work, you know, indigenous community capacity agreements, working with our customers. So we continue to spend real dollars on the asset as well and starting to order some long lead equipment in anticipation for the approval to meet our customers on stream dates. So things are going really well.

Appreciate the details. Thanks, everyone.

Thank you. The next question comes from Anthony Linton at Jefferies. Please go ahead.

Hey, good morning, guys, and thanks a lot for taking my questions. If you look at the two infrastructure deals you did already this year, I think those were relatively well telegraphed by their respective producers. Just wondering if you're able to give us a sense on how your conversations with customers are progressing today and the potential opportunity set that you might see there moving forward.

Are you asking in relation to future M&A opportunities? Yeah. I mean, I would say our conversations with producers in general are positive in terms of volume growth, again, based on some of the macro changes that we see from an egress perspective. I think people are relatively bullish, especially when you look at where the Canadian dollar is and the value of condensate, which drives a lot of value across our system. I think overall, just in general, the discussions are generally positive. Again, as it relates to M&A, You know, we're very focused on integrating the assets that we've acquired in 2024 and, you know, aren't in kind of active discussions on similar transactions. Not to say that we won't be if opportunities arise, but that's not part of the conversation today. Most of the conversation today is generally around future volume growth and how we can meet those needs through gas plants, pipe and frac.

Got it. Okay. No, that's helpful. And then maybe just one follow-on question. Just with those transactions with Pemina taking more of, call it a financial partner role than an operating role, does it change how you think about the strategy on the facilities side of the business? And I assume that's more driven by the producers than from Pemina. Is that the right way to think about it?

Morning, Jared here. Yeah, if you think about these two specific acquisitions that we just did, with Barron and Whitecap, one closed and one waiting on closing. You know, the operators, the upstream customers are going to really focus on, you know, their wellhead to their oil batteries. And we'll really focus on what we do well, processing natural gas, natural gas liquids, transporting those, and then obviously getting them through the frack and getting their condensate into markets. So it's not really a change at all. You know, all of their liquids are going to flow onto a PEM and operated system and through the value chain, and all of their gas is going to go through PEM and operated gas plants and gas facilities. So it doesn't really change our philosophy at all. They're really good at those types of things, so they should do that, and we'll stick to what we're really good at.

Okay, got it. That's helpful. Thank you very much.

Thank you. The next question comes from Manav Gupta at UBS. Please go ahead.

Good morning, guys. A quick question. Any update that you have on the progress you're making at Redwater Complex expansion and Wapati expansion? Thank you.

Good morning. Yeah, so the Redwater 4 expansion physically continues to go extremely well. It was just up there a couple weeks ago. Things are really coming out of the ground, so I'm excited to see that on a project execution side. With respect to the white space we have with respect to recontracting, recall that RFS4 was essentially kicked off due to obviously high demand from our upstream customers, but it's primarily due to three of the really big Montigny dedications that we have in Northeast BC. That's allowed us to get that project off the ground, and then we have X percent of white space. That X percent of white space, there is significant demand for it, so we're just being very strategic. For example, the two acquisitions that we just talked about, Whitecap and Barron, we were able to provide them incremental C3 plus fractionation services due to the fact that we're actively building a new C3 plus facility. We have other contracts that we just haven't been public about that we've executed. So it's going extremely well. Demand is high. Obviously, Chris just talked about ACO is low, so our customers are trying to extract every barrel of NGL out of the gas stream that they can due to the strong frack spreads here in Western Canada. So all in all, we're extremely happy with the project. It's going extremely well in execution and on the commercial side.

Thank you for taking my question.

Thank you. And the next question comes from Patrick Kenney at National Bank Financial. Please go ahead.

Thank you. Good morning, guys. Just back to Cedar LNG and apologies if I missed it, but any thoughts or comments around this litigation challenging the patent infringement or if you see any risk to the construction schedule as this legal process plays out?

Good morning. It's Jan again. You know, as we've said before, the steelhead patent is not something that we are concerned about. We don't believe that the CEDAR project infringes on the patent or that the patent is valid. There's currently a challenge that it has been ruled invalid in Canada. Steelhead has challenged that, and that appeal is going to be heard shortly. So, no, we don't anticipate any impacts to construction or in service date for the project.

Okay, thanks for that. And then just maybe on the NGL marketing front, I was just curious how your team is managing this relatively warm start to Q4 across North America, I guess with respect to sales volumes and how protected you might be on the hedging front relative to prior winters.

Yeah, it's Chris. You know, a good portion of our NGL team proprietary NGO comes out of our frack spread business, and we're about 50% hedged for the rest of the year on that, and about 25% through the next year, about 25% through 2025. As far as strategy goes, we've got a fairly robust portfolio, but a good portion of it is pointed at the West Coast, and so we're benefiting right now from that Far East uh pricing advantage and and um you know we try to structure it such that we're taking advantage of of that wherever possible especially in in the kind of market we're looking at right now so uh ngl season and recontracting season sort of upon us but uh as we're working through it we're definitely paying a lot of attention to the west coast okay that's great thank you

Thank you. We have no further questions. I will turn the call back over to Scott Burrows for closing comments.

Thanks, everybody. We look forward to finishing the year strong. Thanks for your time. Thanks to our employees for all their efforts. Thanks to our shareholders for your continued support. Thanks, everyone.

Ladies and gentlemen, this concludes your conference for today. We thank you for participating and we ask that you please disconnect your lines.