Keyera Corp.

Good morning. My name is Ina, and I will be your conference operator today. At this time, I would like to welcome everyone to KIARA's 2024 Second Quarter Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press Start and the number 1 on your telephone keypad. If you would like to withdraw your question, please press the back button. the start and the number two. Thank you. I'd now like to turn the call over to Mr. Dan Cuthbertson, Director of Investor Relations. You may begin.

Thanks, and good morning. Joining me today will be Dean Setaguchi, President and CEO, Eileen Markar, Senior Vice President and CFO, Jamie Urquhart, Senior Vice President and Chief Commercial Officer, and Jared Batilny, Senior Vice President, Operations and Engineering. We will begin with some prepared remarks from Dean and Eileen. after which we'll open the call to questions. I'd like to remind listeners that some of the comments and answers we'll be giving today relate to future events. These forward-looking statements are given as of today's date and reflect events or outcomes that management currently expects. In addition, we will refer to some non-GAAP financial measures. For additional information on non-GAAP measures and forward-looking statements, please refer to Kiara's public filings available on CDAR and on our website. With that, I'll turn the call over to Dean.

Thanks, Dan. Good morning, everyone. Before we get started, I want to take this opportunity to acknowledge and thank the first responders who are working tirelessly to protect the people and communities who are affected by the ongoing wildfires in Western Canada. We wish everyone to stay safe. Turning now to our quarterly results, disciplined execution of our strategy is resulting in consistent growth and high-quality fee-for-service cash flow. This has allowed us to continue to deliver on our long history of sustainable dividend growth. Yesterday, we announced another dividend increase of 4% to $2.08 per share annually. This increase is also supported by a conservative payout ratio and a strong balance sheet. We remain on track to reach the upper end of our 6% to 7% EBITDA growth target out to 2025. Our gathering and processing segment delivered 102 million in realized margin. This result was supported by record throughput volumes in the north region. Our liquids infrastructure segment delivered its second highest quarter ever with 133 million in realized margin. Driving this performance was a continued ramp up of caps and growing demand for our fractionation, storage, and condensate businesses. our marketing segment continues to perform well, generating 136 million in realized margin in the quarter. This includes the impact of a planned six-week outage at AEF. Due to strong year-to-date performance and market fundamentals, we're raising our marketing segment guidance to range between 450 and 480 million of realized margin in 2024. Our marketing segment is a distinct segment competitive advantage. Strong cash flow from this physical business has enabled us to consistently deliver above average after-tax corporate returns. This cash flow is then reinvested into long-life infrastructure projects, in turn driving growth in high-quality fee-for-service cash flow. 2024 will be a year of strong free cash flow generation following the completion of several major growth projects last year, including CAPS. We continue to advance capital efficient growth opportunities. These opportunities leverage and enhance our existing core asset position in Western Canada. They include a fractionation debottleneck, a new factory expansion, and a CAPS Zone 4 extension. We also continue to advance other opportunities and will speak to those when appropriate. With a strong balance sheet and an increased dividend, We will continue to balance disciplined capital investments with further increasing shareholder returns to maximize value. I'll turn it over to Eileen, who will provide an overview of our financial performance for the quarter and touch on a revised guidance for 2024.

Thanks, Dean. Adjusted EBITDA for the quarter was $326 million compared to $293 million for the same period last year. This result includes strong contributions from all three business segments. Distributable cash flow was $202 million, or $0.88 per share, compared to $207 million, or $0.90 per share, for the same period in 2023. Net earnings were $142 million, compared to $159 million for the same period last year. The decrease was due to higher depreciation and interest costs. We continue to maintain a strong financial position, exiting the border with net debt to adjusted EBITDA at two times. below our targeted range of 2.5 to 3 times. This positions us well to pursue an equity self-fund opportunities that will enhance shareholder value. Moving on to our guidance for 2024. As Dean mentioned, we now expect our marketing segment to contribute between $450 million and $480 million of realized margin in 2024. This is up from our previous guidance of 430 million to 470 million. The increase considers year-to-date realized margins of 250 million and a strong outlook for market fundamentals. Due to the increase in expected marketing contributions, cash taxes are now expected to range between 90 million and 100 million. This is up from 85 million to 95 million previously. Growth capital for 2024 remains unchanged at $80 million to $100 million. A reminder that this includes $20 to $40 million of capital that is contingent on the sanctioning of Cap Zone 4 and advancing frack expansion opportunities at KFS. To move ahead, these projects will need to generate a strong return supported by long-term contracts. Maintenance capital is now expected to range between $120 million and $140 million. This is up from $90 million to $110 million previously, mostly due to increased costs for turnaround activities, which are largely recoverable over the next several years. I'll now turn it back to Dean.

Thanks, Eileen. The long-term outlook for volume growth in the basin remains strong. This growth will be supported by key developments, including TMX LNG Canada, a growing petrochemical industry, and increasing LPG exports off the west coast of Canada. As an essential infrastructure service provider, CIERA will continue to play an important role in enabling business volume, basin volume growth while staying financially disciplined and maximizing value for customers and shareholders. On behalf of CIERA's board of directors and management team, I want to thank our employees, customers, shareholders, Indigenous rights holders, and other stakeholders for the continued support. With that, I'll turn it back to the operator for Q&A.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star five by the one on your telephone keypad. You will hear a three-tone talk, acknowledging requests. Questions will be taken in the order received. Should you wish to cancel your request, please press star five by the two. And if you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question.

Your first question comes from the line of Rob Hope from Scotiabank.

Please go ahead.

Morning, everyone. First questions on the kind of three growth projects that you highlighted being the, you know, two expansions like KFS as well as Zone 4. Can you give us an update on where we are in terms of contracting as well as the engineering of these projects and kind of what gating milestones, you know, we should expect in the coming months ahead?

Good morning, Rob. It's Dean, and great question. We're very excited about what we see in terms of opportunities for growth in this basin and what our company can do to help enable that. And certainly we see continued growth in the Montney on both sides of the border. So first of all, with Zone 4, we're still very excited about the prospects of extending our pipeline to the BC border. And again, I just do want to emphasize that customers really want competition. They see the value that we brought with our CAPS projects, zones one to three, and there's very good demand for, again, extending that pipeline to the BC border. So we continue to have discussions there. Obviously, they're commercially sensitive, but certainly, you know, we think that we'll be getting to a decision here by the end of the year, and we will provide an update on that when appropriate. I just say that with CAPS in general, we now have an integrated system. So, almost every deal that we are signing now is an integrated deal where we're involving, you know, GMP, CAPS, FRAC, and their downstream business. So, a lot of this is all connected together. We see continued demand. Again, we really believe in the growth in the basin and how much NGL is going to get produced with that and the need for our integrated service. We are signing more contracts on our integrated system long-term with good take or pays. We'll update that again when appropriate, just like we did earlier this year. But maybe I'll just turn it over to Jamie to maybe speak a bit more about our FRAC expansion project.

Yeah, thanks, Dean, and thanks for the question, Rob. So, you know, I can share that we're proceeding with ordering long leads for our FRAC 2 expansion or de-bottleneck. And so, you know, very positive momentum on that project based on commercial support. And then we are, as we shared last quarter, you know, proceeding with feed for Fractree. So, from a timing perspective, we'll probably be in early 2025 before we fully understand the costs, though, you know, we have made the decision around sort of the design and, you know, it's very similar in scope to our FRAC2, including the bottlenecks. So, you know, we're certainly confident as we're talking to customers around what that project looks like and entails.

Thanks for that.

And then just moving over to capital allocation, Eileen mentioned that the next wave of growth could be easily funded with an equity funding model. Can you talk about kind of the conservatism based in your forecast, just given the fact that the dividend was increased 4% below the kind of 7% EBITDA you're tracking to, as well as what would be needed for an NCIB to be put out there, or are you seeing kind of the next wave of incremental growth coming at you soon, if

Thanks for the question, Rob, and that's a good one. All I can say, you know, before I turn this over to Eileen, is that we're in a great position to have a very strong balance sheet, and it gives us a lot of optionality right now. So, you know, I've talked a lot about growth opportunity in the basin, but, you know, a normal course issue is also a possibility, but I'll turn it over to Eileen.

Thanks, and thanks, Rob. Good morning. Yeah, as it relates to the dividend, I mean, we are a dividend growth company, and we're very proud of our long history of growing the dividend sustainably. We've never cut it before. So we certainly have confidence in the dividend increase that we just announced. It is underpinned by growing fee-for-service cash flows, and the payout remains at the low end of our target range, so we like the flexibility that we have with both the strong balance sheet and the low payouts. Just kind of piggyback on what Dean said with regard to the balance sheet and where leverage is today, it's truly a competitive advantage. Given the growth we see in the basin, the financial strength we have now allows us to capture opportunities when they're available. So as it relates to buyback specifically, again, where we see the basin growing and the opportunities that Dean has talked about, but opportunities beyond that, we believe we can deliver really strong returns. That said, you know, we certainly understand the value proposition of buying back shares on an opportunistic basis. So, and it's a very simple process to put in an NCIB in place. So, it does remain an option. You know, I just maybe just end with, like, the goal remains the same. It's to allocate capital to the highest value option of organic, inorganic growth or through buying back shares.

Thank you. Thank you.

And your next question comes from the line of Spirit Junius from CD. Please go ahead.

Thanks, operator. Morning, everybody. First question, just wanted to touch on G&P volumes. Sounds like you hit record levels there in the north, but sounds like producer for TAMIS in the south maybe drove a decline on overall volumes. So, just curious how you're thinking about the cadence of shut-ins since the rest of the year and if Just given that the north generates a higher margin, should we expect that region to really kind of overcome any impact from shut-ins from here?

Good morning, and that's a great question.

And before I turn this over to Jamie, I think it just really speaks to the, you know, to the value of our north Monteney GMP plants. where it's driven off of condensate economics. So, again, we're seeing record volume growth up there. But in the cells, we're seeing some good developments, too, in the Duvernay, which is also going to be tied to more oil-weighted economics. So, while we're seeing some temporary declines now, we believe the gas price is going to firm up with, you know, LNG Canada coming on stream in the next 12 months. and also a continued development of the DuVernay. But Jamie, you can add your thoughts.

Yeah, I think the only thing that I'd add to that is that, you know, we went through a pretty extensive recontracting process last year in the south and were successful in getting some meaningful taker pays during that recontracting last year. So, although we have seen producers shut in, certainly the impact of that has been tempered quite significantly as a result of that recontracting effort last year. And we've been, you know, obviously telegraphed by the producers that have decided to shut in some volumes that they expect to bring those volumes back, you know, early in the fall in response to the expected increase in gas price, which is meaningful, obviously, on the GMP side of our business, but also on the liquid side of our business because we are vertically integrated in our self-GMP assets as well.

And maybe just one more thing to add. Great. I just want to emphasize that 70% of our GDP margin is generated in the north, in our north asset base, and 30% in the south. So, even though we saw some volume declines, it doesn't have a material impact on our overall EBITDA.

Great. Great. And I appreciate the color there.

Second one, maybe just going to caps quickly. Dean, if I heard you right, it sounds like you've been adding some contracted volumes in the background, maybe not at a point yet where you're ready to kind of talk about it. I guess if we think about filling up that pipeline over time, my understanding is that it's going to require some pump addition to get there. And so, just curious, are you able to say how many pumps are operational now and maybe how to think about the capex to sort of step change that capacity from here?

Right.

Good question. And I would remind you, too, that, you know, we have part of the filling up of caps is also the is also the contracts we have already, which step up over time. So, you know, in our caps volume forecast, that's included in our six to 7% EBITDA guidance of the 2025, but our volume profile grows right to the end of the decade. And we're continuing to add onto that profile. So, you know, the great thing about caps, it's the gift that will keep on growing for the next several years. But in terms of the cost of adding more pumping capacity, Maybe I'll just turn that over to Jared.

I can speak to that. I think, you know, you're right that there certainly is ability to continue to expand caps from the initial capacity. And it's always been the plan to take a phased approach to incrementally add the capacity over time as it's needed. So we have optionality to add multiple future pumping stations. And these would be much smaller scale capital projects relative to the original caps project. And, you know, in terms of timing, it's really too early to provide specifics. But, you know, I anticipate it will be ongoing. through the end of the decade. And going about it this way allows us to manage that capital more effectively by only adding that incremental capacity as it's needed. So, you know, CAPS is a long-term asset that'll play an important role enabling that long-term growth of the basin in our business. And we look forward to that buildup.

Great, Kyler. I'll leave it there for today.

Thanks, everyone. Thank you. Have a good day.

Thank you. And your next question comes from the line of Robert Quinn from RBC Capital and Markets. Please go ahead.

Thank you. Good morning. If you think about the ability that you've had to track volumes under the system, you've added some new contracts to caps. I'm just wondering, as the frack capacity gets tighter, do you feel you need, whether it's the de-bottleneck or KFS3 contracts, is that going to be important for you to be able to attract incremental volumes onto caps? And if it is, or just anywhere in the system, you know, you're really committed to deploying capital with long-term contracts themselves, those taker pays generating the return. Do you feel that that's going to handcuff you going forward or put differently? How steadfast are you? to committing that new capital is going to be underpinned by long-term take-or-pay contracts generating that return and everything else is kind of grading on top of that.

Yeah, I'll try to answer your question and also pass it over to Jamie as well. But if I understand you correctly, I mean, you know, first of all, you know, I think the producers see the opportunity for just more content demand generally with TMX. And you've seen the robust volumes Still on line three, even with TMX flowing. So we're going to see some great growth here on the oil sand side of our business and condensate demand is going to continue to increase, which is going to drive more development in that whole Montney fairway. So that drives more demand for caps, but you're right with it comes some C3 plus or NGL mix. And, you know, it's not just us that has a full frack. So do our competitors. So this is why we're putting a high urgency to advancing our two frac projects to have them on stream when the market needs it. And again, you know, we're seeing a greater willingness for producers to step up to the contract for that capacity. But Jamie, your thoughts?

Yeah, I can only add a little bit more, Robert. You know, as we think about the frack capacity additions, we think about it in a phased manner, right? Like, I mean, so frack two, the bottleneck, will be coming online in 2026, and likely frack three would be in the 2028 timeframe. That marries up nicely with respect to how we view the basin growth, not just along the Cass border, but also, as Dean alluded to, down in our southern region, specifically around Rimbey. because remind everybody that's on the call that we've got 28,000 barrels a day of frack capacity at the Rimby Gas Plant, which is full right now, but it's full from lots of different, we truck in volumes, we do lots of different things to fill that capacity. So, as we see growth around the Rimby Gas Plant, and we've got the Rimby Pipeline that connects Rimby Gas Plant into the Port Saskatchewan area, we've got a ton of optionality to be able to move liquids. you know, as Dean said, as we see that evolution and as we're getting more comfort around what the growth looks like across our entire asset base, you know, that's going to give us the comfort based on commercial agreements that we put in place and that we're working on right now to be able to, you know, hopefully make that announcement around factory. Because we always stress that, you know, these have to be economic projects in order for us to sanction.

And so I guess just to clarify on the second part of my question, and Jamie, maybe you just did it right there, that if you're deploying capital into maybe a larger project like KFS3, given the bottlenecks, probably less capital. But if you go ahead with KFS3 in and of itself, that project is going to be underpinned by long-term take or pay contracts that get you to that attractive return? Correct. Perfect. The last question I've got just is on the marketing guidance. You tended to be conservative as you put that forward, but one of the assumptions is that logistics remain smooth. So I'm just wondering what's your take on a potential rail strike and what does that do or not do to guidance?

Yeah, so thanks again for the question, Robert. Yeah, so, you know, as we think about the rail strike, obviously this has happened to the industry in the past. You know, we, one of our great strengths is that we have physical assets to be able to manage our business. And so, as we think about that potential rail site strike, we're proactively preparing for that potential outcome. And so, that's where the value of onsite storage comes into play. We have significant onsite storage at the terminal that we load our isooctane in particular. And we obviously have a lot of storage at KFS as it pertains to loading propane rail cars and ultimately butane as well. So, you know, we've got storage that we're going to utilize. And also, we've got empty rail cars and significant rail car storage at the terminal that we load isooctane to make sure that we can continue to run AEF. and hopefully minimize any impact that we would see as a result of a rail disruption.

And that's great. Thank you. Thank you.

Thank you.

And your next question comes from the line of Robert Cattelier from CIBC Capital Markets. Please go ahead.

Good morning. Thank you. I just wondered if you could follow on to that last answer, you know, how long can you, continue to operate during rail strike based on your storage capacity before there ends up being a financial impact?

Yeah, I think right now our estimate would be that full rate set AEF, we'd be able to see a minimal impact to our financials for up to a 30-day disruption.

Okay.

And just going back to capital allocation, You know, specifically, I'll start with the NCIB. How do you view an NCIB in light of the financial position that you have? It's obviously quite strong. And I'm just wondering if that strength of your financial position and the recent market volatility increased the impetus to look at an NCIB, or is the view that it's just easy enough to turn on that they're, you know, you can still afford to be patient?

That's a good question, Rob. Eileen?

Thanks, Robert. Yeah, as I said earlier, you know, again, the financial strength we have is an advantage for us. The balance sheet strength, where it's at. In terms of NCIB specifically and buybacks, yeah, we certainly do understand the value of buying back shares on an opportunistic basis. So it is, as you said, a very simple process to put an NCIB in place. So it does remain an option.

Robert, it's obviously something that we think about. And, you know, the one thing that we're committed to do is add value for share for our shareholders. So we know that that's a tool that's out there, and we've definitely had some discussions on it. Let's leave it at that.

Okay. Thanks for that, Dean. Just moving to M&A, I'm just curious what the appetite is like for M&A in the context of being equity self-funded. You know, it's clear that you're equity self-funded for what you have on the go now, but would you look at M&A as having to honor the equity self-funded model, or do you look at M&A as a discrete transaction that you'd look at the financing at that time?

Yeah, I mean, you know, without speaking specifically to, you know, anything on the M&A front, I just say that you can do the math. I mean, we have tremendous optionality, as Celine spoke to, with our balance sheet. So, we can execute our growth projects. And, you know, if we see some good tuck-in opportunities that would enhance our integrated platform, we have the wherewithal to do a certain amount of that. I mean, obviously, it's question of the magnitude, but we do have a lot of financial wherewithal because of the strength of our balance sheet. So it's a great place to be. And again, we'll always be disciplined and our goal is always to add and maximize shareholder value.

Okay. Last question for me, it just has to do with the maintenance capital revision. I'm curious if it includes revised budgets for the Q3 turnarounds, or is it really just based on the the impacts you felt during the second quarter turnarounds?

I'll turn that over to Jared. That's a great question, Robert. And, you know, maintenance capital is key for us in ensuring reliability of our operations, and that's very important to our customers. So, you know, I'll speak to the main drivers for 24 and also what we're doing to manage that spend going forward. So it is turnarounds that make up the bulk of that maintenance capital increase this year. And we've also had some other one-time maintenance activities arise across our portfolio. This year is our first full turnaround at Wapiti. So, as we've refined that scope and completed the planning, we've seen some costs increase there. And some of that is also one-time expenditures that are associated with it being our first turnaround there. And, you know, as Eileen mentioned, most of that increased maintenance cap this year will be recoverable over the next few years. Now, going forward, we'll continue to optimize that span by extending turnaround intervals as far as we safely can. and continuing to enhance our maintenance management programs and shift more to risk-based rather than time-based inspections. And these strategies will allow us to defer spending where it makes sense to do so. Maintenance cap's really important, and it's certainly become a meaningful cost for us, and one we'll work to drive down without compromising safety and reliability. But it really is the turnaround focus for the balance of the year that's driving the change that we communicated.

Okay. Thank you. Thanks, Robert.

Thank you, and your next question comes from the line of Patrick Kenney from National Bank Financial. Please go ahead.

Thank you. Good morning, everyone. Just on your ongoing portfolio optimization plan within GNP, you've been, you know, divested of a couple gas lines so far this year. Wondering, you know, if you're pursuing further consolidation of your GNP exposure in the south, and then on the flip side, you know, given the excitement around Zone 4, and the frac expansions, how you're viewing perhaps a need to beef up your GMP exposure in the north region, especially in light of some of the heightened competition in the area?

Yeah, good morning, Patrick, and great questions. You know, first of all, you know, one thing that we're trying to do is just be uber focused on our business and the growth of our platform. And, you know, some of the assets that we had, you know, we've had for a long time are not integral to our business longer term. So, you know, this is where we're looking to optimize our portfolio. As you know, we suspended several plants several years ago, and we did sell a couple of facilities, as you saw in our last release. We'll continue to do that. Just, again, some of the smaller facilities that don't fit in our portfolio longer term. And we'll focus on our best and greatest growth opportunities. You know, certainly we see more opportunities in the north. As I said, you know, we see tremendous growth in our basin out to the end of the decade. So a lot of that growth is going to happen disproportionately up in the Montney-Dubernay fairway. And we continue to look for opportunities, whether it be through acquisition or greenfield or brownfield opportunities to expand our platform up there. And integrate, obviously, all the liquids that would come out of that into our caps and downstream service business.

Got it.

And I guess with power prices coming down through the quarter, looks like a bit of a tailwind for GMP margins. Can you just remind us, you know, how much of your power exposure has flowed through and, you know, if this net tailwind might be enough to offset some of the near-term pressures here on margins in the south just based on kind of weaker drilling activity. Jimmy? Jimmy's a power expert.

Yeah, great. Expert is a relative term, Patrick. Yeah, great question. We've been very proactive in managing our power costs in the past, so I wouldn't want there to be a great expectation that you're going to see a significant margin improvement on the gathering processing side because You know, we have through physical assets, through some of the PPAs with renewables and with some financial hedging. In my opinion, we've done a very good job of managing the volatility that we've seen for pricing over the last couple of years. So, you know, I do think that, you know, obviously lower power prices is is positive tailwind for industry. And it, you know, it will help us as well at certain facilities where we have more electric intensive operations. But to repeat myself, we've consciously managed that in the past few years, in my mind, quite successfully.

Patrick, you know, maybe just add, you know, on your comment about just our I think it was just maybe margins and competitiveness in our self-portfolio. I'd just add that Jared's team is really working hard and specifically opportunities to reduce our cost profile in our self-facilities. And again, I think they're making some good progress there.

That's great. Maybe last one for me. Just given some of the progress lately that we've seen on the carbon capture front in the industrial heartland. Just curious if you had an update on where your partnerships are at with respect to participating in CCS, CO2 and hydrogen transportation. Just any update on the cadence of some of your investment opportunities.

Yeah, I mean, we, Patrick, we said this before that, you know, we are very well positioned to provide low carbon services up in that, especially in industrial heartland. I mean, we have a lot of assets up in that area already with pipe. And we do have some specific pipes that can transport both carbon and hydrogen. So, you know, when the demand is there, we can repurpose some of that infrastructure. Obviously, rail logistics for low carbon projects are important as well. And we have assets that can help accommodate that. We are, you know, we're still very, we work very closely with Shell still. And I would remind you that the tie in point for their carbon capture system is just on the north east part of our heartland lands. So it provides tremendous opportunities for us in the future. Jamie, is there anything else you want to add?

No, you know, other than the fact that during the quarter Shell announced sanctioning of the Atlas slash Polaris project, which is, you know, we're very positive in that, as Dean said, given the proximity of the pipeline that feeds the well that disposes of that carbon. So, you know, we continue to have conversations with Shell, but also, more importantly, customers that might look to locate their low carbon projects in the future on our Joseph Berg lands. And as Dean pointed out is that, you know, the location of the land, but it's not just carbon, it's water supply, it's the rail egress component, and it's the connectivity that, you know, differentiates our piece of land up in the heartland.

Yeah, that's great. Thanks, everybody. I'll leave it there. Thank you.

Thank you. And your next question comes from the line of AJ O'Donnell from PPH. Please go ahead.

Hey, good morning, guys. Just wanted to go back up to the northern GMP and the strength that you were seeing there. Just wondering if the volumes are tracking in line or ahead of your expectations. Just any additional commentary you could provide would be greatly appreciated. Thanks for your question.

I'll turn that over to Jamie.

Yeah, thanks, AJ. So, yeah, as you pointed out, it's really, really strong outcomes in the North GMP. And I would say that, yeah, the growth that we've seen is in line with what we expected, but it's extremely positive. We've, you know, we've always expected that, certainly based on the expansion that we did at Pipestone, that facility and that expansion is full. We're getting to the stage now with a small D bottleneck project that we're going to do at the Wapiti gas plant during turnaround that we're expecting based on some deals that we've done that Wapiti is going to get close to full capacity, if not at full capacity towards the back end of this year. And then Dean alluded to the activity that we're seeing around Simonette and the meaningful conversations that we're having there. And so, yeah, you know, our existing assets, and then to Patrick's question before that, I believe it was Patrick, you know, is around, you know, really focusing on the next opportunity up in the north in service of feeding volumes into CAPS and ultimately into our infrastructure down in the Fort Saskatchewan area.

Okay, thanks for that. Just one more from me. You know, there's a couple of things that are going on in BC between the Blueberry River First Nations tribe. Curious if what's happening there has any impact on discussions, you know, with your producers or could have any impact on volumes really, you know, downstream on your pipes and fracks. Thanks.

Thanks for the question. Where I think it has the most relevance would be our Zone 4 project, our CAP Zone 4 project, where we would connect to the BC border and then into North River Midstream's, you know, proposed project in BC. And, you know, what I'd say is first picture from a macro perspective, the geology is very good on the BC side of the border, just like it is in Alberta. So, we certainly see more development in BC. You know, yes, there's still some challenges, I think, with, you know, producers, the government and the blueberry group as well. But I believe that, you know, they will come to some resolution. It might take a bit of time. But I do want to emphasize that the customers that we're talking to and the areas that we are focused on are outside of the heart of that blueberry area. we still believe that our project is still very attractive, and it's not really contingent on that resolution happening.

Thanks for the call, guys. That's it for me. Thank you very much.

Thank you. And your next question comes from the line up, Ben Pham from BMO. Please go ahead.

Hi. Thanks. Good morning. When you – add up all the projects you've highlighted during this call, the frac expansion, some greenfield stuff in the Montney. Are you sure a total investment opportunity and where returns can lie in the ranges that you've highlighted in the past?

Yeah. Yeah.

So the question is just the projects that we've discussed with our frac and Zone 4, are they going to be in our investment return range? Yeah, I just say that, you know, these are the ones that are, you know, we're advancing and we're very, I guess, openly discussing them. I would say that behind the scenes, there are other opportunities that we're pursuing as well. But, you know, maybe, Eileen, you can speak specifically to returns on these three projects.

Yeah, as we've, you know, said before, we've put out that 10% to 15% ROC. And we certainly are looking to achieve the higher end of that range on a standalone basis. But it's also, beyond that, it's the integrated nature of the returns, and that's the key. I mean, now we have the full system where we can attract returns and compound returns through the entire system, including marketing. And that's certainly our advantage. And when we think about these projects, so the 67% EBITDA guidance that we had provided to 2025, that's outside of these projects. So adding these types of projects just help us to continue to extend the growth into the future.

Can you also add, my question too was also just total CapEx, if in any way you can express it per annum or total CapEx opportunity?

We will likely provide a guidance in December once we get, I think the big thing here is we're still waiting on, you know, cost information for whether it's BRAC 3, the bottleneck, as well as zone 4. So, we will provide an update on growth capex, you know, longer term, a longer run rate for that with our December update.

Okay. And can you, there's been some some rumblings of data centers coming to Alberta, especially over the last week, Fort Saskatchewan, Edmonton. Are you able to share from your side of things, your commercial group, if there's any discussions you've had, how do you think your position, is this more to solve region that could benefit? And do you think this is something like a coal to gas sort of opportunity in terms of BCM per day?

Yeah, I mean, it's not something we can speak specifically about today, but we do think it's an opportunity. When I think about it, I mean, we just have an abundance of natural gas. The cool ambient temperatures in Alberta certainly help with the data centers. In a lot of areas of Alberta, we have a great fiber optic network. So, yeah, I mean, certainly we look for opportunities where we can connect our system to high-value demand areas, which could be more power to data centers.

Okay, got it. Thank you. Thank you very much. Have a good day.

Thank you. There are no further questions at this time. I will now hand the call back to Mr. Dan Cuthbertson for any closing remarks.

Thank you very much, everyone, for joining us today. Please feel free to reach out to our Investor Relations team with any additional questions. We hope everyone enjoys the rest of the summer. Thank you.

Thank you, and this concludes today's call. Thank you for participating. You may all disconnect.