Good morning, ladies and gentlemen, and welcome to the Pemina Pipeline Corporation Q1 2025 Results Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star 0 for the operator. This call is being recorded on Friday, May 9, 2025. I would now like to turn the conference over to Dan Tugano, VP Capital Markets. Please go ahead.

Thank you, Joel. Good morning, everyone. Welcome to Pemina's conference call and webcast to review highlights from the first quarter of 2025. 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 officer team. 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. Further, 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 management's discussion and analysis dated May 8, 2025, for the period ended March 31, 1st, 2025, as well as the press release Pemina issued yesterday, which are all available online at Pemina.com and on both Cedar Plus and Edgar. I will now turn things over to Scott.

Thanks, Dan. Yesterday we reported our first quarter results, which were highlighted by quarterly adjusted EBITDA of $1.167 billion. This is a very strong start to the year and builds on the momentum from a record year in 2024, providing confidence in our full year outlook. As Cam will discuss in more detail, we are currently trending towards the midpoint of our 2025 adjusted EBITDA guidance range, $4.2 to $4.5 billion. Given the growth across Pemina's low-risk, fee-based business and confidence in the outlook for 2025 and beyond, we were pleased to yesterday announce a $0.02 per share or 3% increase in the quarterly common share dividend, beginning with the dividend to be paid in June. We recognize the importance of our sustainable, reliable, and growing dividend to our shareholders, and we are proud of our long track record in this regard. On the commercial front, Pemina has entered into commercial agreements with a leading Motney producer covering Pemina's full value chain, including transportation, fractionation, and marketing services. The agreements include significant new and extended long-term take-or-pay volume commitments on Pemina's Peace Pipeline, Cruise Capay Systems, and Northeast BC Pipeline. The new and extended fractionation agreements are expected to support higher utilization of Pemina's redwater complex, including RFS-4, currently under construction and the proposed RFS-3 deethanizer if sanctioned. Additionally, the process to remarket Pemina's capacity on the Cedar LNG project to third parties continues to progress well. We have now shortlisted the preferred counterparties and entered definitive agreement negotiations. Pemina continues to advance several in-flight construction projects to capitalize on growing WCSV volumes, diversify end market exposure, and serve our customers better. Pemina has built a strong competitive advantage by effectively delivering projects safely, on time, and on budget. Further, we believe that recent and current expansions have been and continue to be executed with superior capital efficiency compared to others in the industry. In addition, Pemina's progressing development of more than $4 billion portfolio of potential projects that includes conventional pipeline expansions such as the Taylor to Gordondale project, an expansion of the Peace Pipeline system to add capacity to the market delivery pipelines from Fox Creek to the Mayo, and further expansions to support volume growth in northeast B.C., including new pipelines and terminal upgrades. While reiterating their commitment to their Path to Zero project, Dow recently announced the delay in construction of the project to manage capital allocation in light of current market conditions and economic uncertainty. At this time, other than changing the in-service date of Dow's project, the announcement delay has no impact on Pemina's ethane supply agreement and the development of potential infrastructure to meet its commitments. To date, Pemina has not spent material capital to support the ethane supply agreement and will continue to progress these projects but may now have more time available to execute them. Pemina is evaluating the various options available to meet its ethane supply commitment under the agreement with Dow, including the addition of a deethonization tower at RFS III within the Redwater complex. Regarding Alliance Pipeline and ongoing Canadian energy regulator review process, Alliance is working collaboratively with its stakeholders and remains focused on delivering the highest standards of service that customers have come to expect. Based on discussions to date, Pemina expects lower future tolls on the Canadian portion of Alliance, reflecting a negotiated solution that continues to benefit both Pemina and Alliance shippers through an equitable sharing of value and risk. We expect Pemina will continue to earn appropriate risk-adjusted returns, while shippers will continue to benefit from Alliance's firm capacity, high reliability, and cost-effective access to premium U.S. natural gas markets. I will now turn things over to Cam to discuss in more detail the financial highlights for the first quarter.

Thanks, Scott. As Scott noted, Pemina reported first quarter adjusted EBITDA of $1.167 billion dollars. This represents a 12% 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 on Sable acquisition, favorable US foreign exchange rate, higher tolls mainly related to contractual inflation adjustments, higher contracted volumes on the Nipity pipeline and the peace pipeline system, higher contribution from Alliance due to higher demand on seasonal contracts, and lower firm tolls on the Cotian pipeline due to the recontracting that occurred in July of 2024. In facilities, factors impacting the quarter included the inclusion of Oxable following the Alliance Oxable acquisition, and higher contribution from PGI primarily related to the white cap and variant transactions, largely offset by lower interruptible volumes at Dawson due to third-party sales gas restrictions. In marketing and new ventures, first quarter results reflected the net impact of higher net revenue from contracts with customers due to increased ownership interest in Auxable, higher WCSB NGL margins and volumes, lower realized gains on commodity-related derivatives, lower Auxable NGL margins, and no similar gain to that recognized in the first quarter of 2024 from a change in the provision related to Pemina's financial assurances for Cedar LNG. Finally, in the corporate segment, first quarter results were lower than the prior period due higher incentive costs driven by the change in Pemina's share price and relative performance to peers in the period compared to the first quarter of 2024. Earnings in the first quarter were $502 million. This represents a 15% increase over the same period in the prior year. In addition to the factors impacting adjusted EBITDA, the increase in earnings in the first quarter was primarily due to the net impact of higher depreciation and amortization expense, largely due to the Alliance Oxable acquisition, unrealized losses recognized by PGI on interest rate derivative financial instruments compared to gains in the first quarter of 2024, higher unrealized gains on commodity-based derivative financial instruments recognized by PGI, lower unrealized losses on renewable power purchase agreements and crude oil-based derivatives, unrealized gains on NGL-based derivatives, unrealized losses on interest rate derivative financial instruments recognized by CDER LNG, higher income tax expense, higher net finance costs, and lower interest income. Total volumes in the pipelines and facilities divisions were 3.7 million barrels of oil equivalent per day in the first quarter. This represents an increase of 9% over the same period in the prior year, reflecting the net impact of the Alliance Oxable acquisition, higher contracted volumes on the Nipissi Pipeline and the Peace Pipeline system, higher volumes at PGI related to the Whitecap and variant transactions, and lower interruptible volumes at Dawson due to third-party restrictions. Thanks to strong results in the first quarter of 2025, Pemina generated meaningful free cash flow in the quarter, which was allocated to strengthening the balance sheet. Turning to the full year, as Scott mentioned, we are confident in our outlook and currently turning towards the midpoint of our 2025 adjusted EBITDA guidance range of $4.2 billion to $4.5 billion. Notably, the guidance range reflects the following full year and quarterly or seasonal assumptions. Peminent continues to see rising utilization on its conventional pipeline systems and at PGI that aligns with volume growth across the Western Canadian sedimentary basin. However, in 2025, Pemina's revenue volume growth within the conventional pipelines and gas processing assets is expected to be slightly lower than physical volume growth as certain customers expand into their contractual take-or-pay commitments. We expect a higher contribution from Alliance in the first and fourth quarters due to the ability to transport higher volumes during colder periods. Further, the current guidance assumes the existing Alliance toll is in effect for the For the second quarter, our outlook assumes planned maintenance at Oxable and Lyons, certain PGI facilities, and the Redwater complex, as well as restrictions on third-party natural gas egress within the basin. We expect the third and fourth quarters will have higher integrity and geotechnical costs across the conventional pipeline assets, and we expect stronger first and fourth quarter results in the NGL marketing business due to typical seasonality. Additionally, while marketing results in the first quarter exceeded Pemina's original guidance expectations, this has been offset by the outlook for the remainder of the year, which reflects lower commodity prices due to global economic uncertainty. As a result, Pemina's full-year adjusted EBITDA outlook for the marketing and new ventures division of $550 million remains unchanged. Pemina does not expect any material impacts to its guidance from tariffs on U.S. energy imports. At March 31st, 2025, based on the trailing 12 months, the ratio of proportionally consolidated debt to adjusted EBITDA was 3.4 times, and we expect to exit 2025 at 3.4 to 3.7 times. Our leverage remains well below the low end of our targeted range, reflective of our strong balance sheet and supporting a strong BBB credit rating. I'll now turn things back to Scott.

Thanks, Cam. In closing, I want to remind you that Pemina will hold its annual meeting of shareholders today at 2 p.m. Mountain Time, 4 p.m. Eastern Time. It will be a virtual-only meeting conducted via live audio webcast. Participants are recommended to register for the virtual webcast at least 10 minutes before the presentation start time. For further information on the annual meeting, please visit the Investors tab at www.pemina.com. Thank you for joining us this morning. 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 star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the hands before pressing any keys. Your first question comes from Jeremy Tonit with JP Morgan. Your line is now open.

Hi, good morning. Good morning, Jeremy. Thanks for the color today. Just want to kind of start off with maybe a bit more color on your producer-customer conversations at this point and how you see, I guess, drilling activity shaping up and, you know, should WTI be going below 60, staying there for some period of time? how in corresponding moves in condi prices, how you think that impacts Montany production and your outlook here, you know, granted Pembina has material contractual protections, but just wondering any thoughts you could share there.

Yeah, Jeremy, it's Scott. I'll start off and make some comments and Jared might chime in as well. But I would say to date, we haven't seen any material changes to drilling plans. I would say We have seen in the last couple of days, a couple of producers start discussing about moving completions into Q3 and Q4. So I would say we are starting to see some timing of completions, but overall reductions of CapEx to date, we really haven't seen that.

Got it. Thank you for that. And then maybe shifting over to Alliance, if I could, and recognize that you're in a place where you can only say so much at this juncture. But is it fair to kind of characterize, I guess, the range of outcomes at this point is relatively minor within the grand scheme of Pembina as far as what unfolds in the Canadian process here? And do you see, I guess, on the U.S. side, similar things materializing or any other color would be helpful?

Morning, Jeremy. Jared here. And, yeah, I appreciate you mentioning that we are obviously limited in what we can say. but what i what i can reassure you jeremy is that our customers continue to reiterate they enjoy the high reliability availability of the alliance asset they enjoy the high value end market delivering into the chicago area um and they they really value the risk sharing aspect um you know obviously pemina takes a material amount of operating cost risk uh we believe we're a good safe reliable operator um and they do appreciate that with respect to that asset that on the canadian side that's unlike any other of the major gas transmission pipelines in canada additionally we heard from our customers that they do not want us as part of the negotiated settlement to move to a cost of service model like a true traditional cost of service model so with all that said you know we continue to work with them expeditiously to um you know get to a negotiated settlement that we can get into the canadian energy regulator as quickly as possible um you know that ultimately will will provide pamina with that risk-based uh return um and that's unfortunately that's all we can really say right now due to the active um aspect of those negotiations got it and as far as the u.s side nothing to think about there you bet and then on the us side jeremy so um i believe it's december 1st of this year we'll be

submitting it's it's roughly it's every five years we have to submit our our information to the ferg and that's coming up i believe december december 1 of 2025. that's helpful thanks and a last one if i could just real quick uh pembina has done a great job getting the the balance sheet a very strong position and just wondering you know if there's the opportunity to go from defense to offense if uh different opportunities uh shake loose as far as potential you know smaller bolt Yeah, Jeremy, I would say that a couple of things.

One is that, you know, you've certainly seen us do that over the course of time on a on a targeted basis. You know, obviously, you know, we very, I think, successfully leveraged the PGI relationship to add some really exciting opportunities there over the past year or so. I would say that in terms of capital allocation, obviously, it's a pretty dynamic environment right now, and we're obviously monitoring things kind of in real time. But at the same time, we always stand ready to make our business better as opportunities present. I would say that the prospect for big game hunting is not something we're focused on. But certainly, you know, the smaller value-add opportunities, if they come about, you know, we're certainly going to be in a position to act on.

Got it. That's helpful. I'll leave it there. Thanks.

Your next question comes from Spiro Dunas with C. Your line is now open.

Thanks, operator. Morning, team. I wanted to start with the DS tower and the Dow contract. Sounds like your plan right now is still to develop it at some point, maybe even without Dow announcing their facility timeline once again. I just want to confirm, one, that's correct. Two, just curious if there's a point in that agreement with Dow where they would need to pay for the supply regardless of that cracker being online. And then lastly, sorry for the multi-part question here, but in the interim, this does seem to free up some capital if you're not developing this tower imminently. So just curious how you're thinking about redeploying some of that capital.

Good morning. Jared here. Maybe I'll just take a step back. So we announced, it was probably May of 2024, actually, we announced the supply agreement with Dow. And I think we've been saying quarter over quarter, we've been evaluating. Pemina has the luxury of having multiple supply sources across its entire portfolio. portfolio and we've just been taking a prudent approach to evaluating what's the most cost effective approach to that supply. And we have been signaling that RFS3, which was a clone of RFS2, does make a lot of logical sense to build the DF side of that asset as part of our overall portfolio. And we continue to believe that that still makes a lot of sense. there was minimal capital being spent on the portfolio of assets in the calendar year of 2025. So even with the most recent reprofiling or delay that Dow has mentioned, there isn't a material change to our overall capital in 2020, in 2025. And we still believe, you know, not knowing exactly when the new on stream date might be be announced, We believe that it's kind of that it's just normal routine execution doing the DF tower. Now, my team is probably cringing that I'm saying that, but it's not like a three or four year build for what we're doing. So we absolutely believe that when we do get a little bit more line of sight, we'll be able to act quickly and have that asset on to to meet our supply portfolio commitments.

Got it. That's good. color thanks for that uh second question going back to alliance quickly i don't think this was addressed in the prior question but you know i know at one point you've been talking about uh with these same customers discussion around expanding that pipeline uh just sort of curious where those stand right now if we're looking at maybe a singular integrated solution here when you announce the resolution here and how you're thinking about the timing i won't get into the specifics of of the negotiation but i can say that obviously demand for incremental gas egress is extremely strong and we have a couple of opportunities we you know obviously alliance was built for a full path expansion all the way down into the into the chicago market and there's

also opportunities to do shorter haul expansions with you know less compressor stations here on the canadian side into um the alberta heartland um so we're just continue to evaluate those and kind of in the pre-feed engineering stages of that but lots of demand for incremental liquids rich gassy dress understood that's great to hear uh i'll leave there for today thank you gentlemen thanks your next question comes from teresa chan with barclays your line is now open morning um i wanted to go back to the comments about um risk sharing within alliance um

to your comment about your customers appreciating that pembina is taking the risk um does that mean risk sharing or incremental risk shift from PEMBANET to customers is off the table or is that still a point of negotiation? And if so, if the risks were to move, what would that illustratively even look like?

I don't think I can get into too many of the details, but maybe I'll just provide some colour that unlike some of the other pipelines in Canada, we do take operating cost risk and the reason you know payment at the time in the joint venture previously was open to that is that we do believe that we're extremely good at providing safe reliable and cost-effective operations but with that said as we're the back and forth goes with the customers there could be changes to that overall risk sharing profile as different inputs into into you know into the economic bottle change so it's it's pretty live and dynamic right now but and that's all i i can say about

that okay fair enough um and to the earlier color about um the bifurcation between volumes and um revenue and ebidoc contribution due to the gap um as uh customers ramp into the nvcs when do you expect that to true up can you say it's cam here i i would say that that's a pretty consistent um that's a pretty consistent phenomenon or pretty consistent experience that we've seen.

And the reason being is that, you know, as you've seen from us and continues to be the case, we continue to sign up new contracts on a regular basis. So as we continue to sign up new contracts, and obviously, you know, the contracts are the leading indicator against the fiscal volumes. They typically come first, the volumes come second. We've continued to see that lag over time. I'm not sure that we will expect those to true up. I think we, you know, we continue to sign contracts as evidenced by this quarter, and so we will continue to see a gap between, you know, those revenue and physical volumes as a result of that.

And maybe I'll just add to that that you do have to delaminate the difference between, so what we call our high-vapor pressure products, so that's your C3 pluses and your C2 pluses versus your LVP, your low-vapor pressure, so your crude and your condensate. It is customer dependent and it is commodity dependent. Obviously, Pemina has a suite of pipelines in our conventional system, C2+, C3+, condensate and crude. So there is different dynamics happening. Some customers are over on certain aspects of their contracts, but overall, you will see that true up. But it's not a blanket statement that all of our customers are below their firm or their taker pay and they're all drilling into it. it is dynamic between asset commodity and customer and region.

Thank you for that detailed answer.

Your next question comes from Aaron McNeil with TD Cowan. The line is now open.

Morning all. Thanks for taking my questions. Obviously great to see the Motney contract with the quarter. Just wondering if you could provide any more detail beyond what's in the release. I can obviously appreciate that the disclosure is intentionally vague, but we're fielding the obvious questions from investors on you know magnitude of the contract volumetrically duration you know new level of contracting at both taylor to gordondale and rfs4 and and maybe just confirmation that it is a bc motney customer given the contracting on specific pipelines that that you noted so just you know open-ended anything you'd be comfortable sharing uh you the opportunity to do that yeah you bet appreciate the question so it is one of our um i can't say it is one of our largest customers it is a northeast bc customer

and i think what i'd like to leave the group with is that this announcement i think it just provides confidence that um our we recognize our customers do have a choice um to flow on other service providers and they continually to choose us for a safe reliable and cost-effective um options specifically around the conventional pipeline and it's not only the safe reliable operations and cost effective it is that suite of different assets that i just referred to the different pipelines connected to all of the fractionators in in the fort saskatchewan area connected to all the egress outlets um etc um so you know we do recognize they have choices and we do appreciate them choosing us to be their service provider um i will say that this is a much like i'll use the word material volume um you know it's existing volumes across the enterprise so the pipelines the fraction in our marketing business but it is also new and it's um there's kind of twofold here is one is that it shows the resiliency and the requirement for high utilization across the base assets but also reinforces the need and necessity for new expansions um albeit the taylor to Gordondale area, you know, new pump stations within Alberta, et cetera. We've referenced pump station expansions between Fox and the Mayo. These are all incrementally required as customers reaffirm their base volumes and sign up with new revenue barrels throughout our system.

Aaron, I'll just maybe add a couple of data points. You know, the renewal piece is obviously I've talked about it. But it's a very meaningful piece of our piece contract structure. It's not quite 10%, but it's pretty close. And obviously, the commitments beyond that flow through both the frack as well as other And so, when we talk about it being a fairly material contract, that's the renewal piece. Obviously, the new piece of it is obviously quite material, not quite to that magnitude obviously, but very meaningful on its own.

Well, okay. That was more than I expected to get. Thanks for that. I'm really sorry to go back to Alliance, but you did mention the risk sharing earlier and that you're not a cost-of-service pipeline. I just guess I bring that up because the original CER complaint essentially compared Alliance to rate-regulated pipelines.

So the question is, how do you define an appropriate risk adjusted return and is you know obviously it's not a rate regulated return but like is the right way to think about it you know in the context of prevailing industry built multiples or is there anything you can share there maybe i'll just i'll touch quickly on that it's that's that's one of the the biggest challenges through this negotiation is exactly what you just you just touched on um and you know it we are different than any other asset and we're just working through that what does that um risk premium look like um for bemina

yeah aaron the only thing i'd say is i mean obviously uh you know the the filings are the filings are public you can look at all the other pipelines which are you know effectively no-risk utility-type structure and see that the ROEs there have climbed into the mid-teens in some cases. And so that's a no-risk scenario. So if you sort of look at Alliance, obviously taking on the kind of risks that it does today, we believe that it's appropriate to earn a premium to that. And perhaps that's what we're getting at with an appropriate risk-adjusted premium. Probably as far as I can go there, but I just make those data points clear. That's super helpful.

Thanks.

Your next question comes from Praneeth Satish with Wells Fargo. Your line is now open.

Thanks. Good morning. Maybe let me get my alliance question out of the way here. It just kind of, you know, recognizing you're limited in what you can say, but can you clarify, you know, the timeline for when the tolls would take effect as it relates to EBITDA? I know sometimes that the timing of the actual settlement, it can be different than when you accrue it in EBITDA. And then second, without giving a specific number, are you able to confirm that any potential impact would be contained within the guidance range that you've provided within the midpoint to low end of the range?

So on the timing piece, I'd say that's still part of the negotiations, so no update.

And with that in mind, we really can't comment on 2025 guidance and and giving that clarity will just is another angle to try to figure out uh kind of where we're at our negotiations and it's just too confidential and sensitive so we're just not going to answer that question i apologize as soon as we can say more we will understood that's fine um and then switching gears maybe if we could get an update on the green light data center project and i guess specifically what i wanted to know is any more color on um you know whether the jv has entered the queue for gas turbines because um you know we're seeing the lead times elongate the prices go up have you um has the jv secured pricing uh

on on the turbines and other critical um equipment costs and just any broader update you can provide sure it's it's chris sherman thanks for the question um you know the the project's uh progressing nicely we're really focused on our interconnection applications at the minute at the moment and we haven't we haven't made any turbine long lead purchases but we are actively engaged with with equipment suppliers we're very alive to the the cost and timing uh dynamics that are they're unfolding out there and and we're going to be prudent with our um with our order placement and frankly the timing still aligns with our expectations um so everything's going well and

on track both commercially and on on the project side got it thank you your next question comes from rob holt who's kosha bank your line is now open hello everyone um first questions on the yellowhead straddle so acto continues to pursue that uh project even with the dow delay you know how do you think about uh the potential to straddle that asset uh you know in the context of a dow delay or you know could incremental ethane and c3 plus uh allow that project to stand on its own i think from from a timing perspective rob um you know nothing really changes on on our end in terms

of of that project that was always a late 2028 2029 project so you know without knowing the specifics uh around the extent of doubt delay i really can't comment on that but as of right now we're continuing to to progress that pipeline just due to you know when the in-service date was so no no change from that on our end and rob i would just add that um obviously you know the the announcement from dow and the assessment on our part and everything that comes with that is is is kind of happening in re in real time here um you know dow is obviously a big customer ours and a big partner um we were not spending material dollars on that uh in 2025 obviously it

you know it was obviously early works and so we're obviously going to get more information as the weeks and the next you know two three months tick by here and and you know we'll obviously make judgments at that point but but just want to make clear that we weren't spending material dollars on that in in 2025 obviously just some early works and engineering work but you did nail it rob that that oh sorry that there is a there is a creative c3 plus that can be extracted from the gas you know if this did go into service and you know the the fain component on the sales side was a little bit delayed um there is no i associated with this that would be accretive to the project all right appreciate that and then maybe you know diving deeper into the dow agreement so you know it appears that uh the commentary today is that it's a delay not a cancel, but if the delay from Dow is substantial, do you have a sunset date or any recourse?

I appreciate the question, Rob. I think out of respect for our partner, we're going to refrain from sort of getting into the nitty gritty of the agreement. I guess what I would say is that we feel very comfortable that we have capital protection for capital which we would spend, and outside of that, I don't think we want to sort of go much deeper than that.

Understandable. Thank you. I'll hop back in the queue.

Your next question comes from Patrick Kenney with National Bank Financial. Your line is now open.

Hey, good morning, guys. I'll try not to ask anything too commercially sensitive here, but just on the strategy to diversify your NGO markets, I just wanted to get a better sense as to where you're at today relative to, say, where you want to land in terms of exposure to various markets. And I guess if you add a bit more color on what kinds of opportunities you're looking at in order to access non-U.S. markets, both on a proprietary basis as well as utilizing third-party infrastructure, that'd be great.

It's Chris Sherman. You know, I think we've been fairly clear about our aspirations around propane and some of the optimism and bulk case we have for the west coast of Canada. You know, I think the positions we have today, both to our own facilities and others, are serving us well. We like that ratio as far as how it fits into our portfolio, but we've also talked about a desire to optimize Prince Ruber to increase some of the margins there. And honestly, if the price is right, we'll look at more off the West Coast for propane. As well, we're keenly watching butane. We're looking at a number of different projects to try to figure out where butane is going to fit best into North American market, other product markets, as well as potentially off the coast in the future. I can't get too much into that, but we're putting a lot of effort and time into all of those.

Okay, that's great. And then I guess just on the remarketing of the capacity of Cedar, would you say your patience is paying off here in terms of the geopolitical trends supporting higher demand and perhaps stronger economics for this capacity versus the first one and a half million tons? And just curious as well, if you can comment on the level of interest in the potential expansion at Cedar. Just wondering if, you know, counterparties are considering dovetailing an option for the expanded phase as well.

Yeah, yeah, it's Scott here. You know, I think it's more than just the geopolitical changes. I think it's also the fact that we continue to see growing gas out of northeast B.C. that needs an egress solution. You know, we're continuing to see strong arms between Canadian gas and and Asian gas prices. And so, you know, that that's that's driving pretty significant interest in in the cedar capacity. So we're pleased with where that's going. Also, the fact that, you know, obviously we're FID and we're a year into construction. and a year closer in service days. So I think all of those factors are leading to, you know, decent interest in this project, and we're pretty pleased with where we're going. So I would say the patience has paid off. I mean, at this stage, we are, you know, working very hard to turn the definitives into a final executable agreement, but they're big, complicated agreements. And as we've said for the last several months, that, you know, we'll do the right deal for Pemina, not the fastest deal for Pemina, and we continue to progress that. I would say as it relates to a potential CEDAR-2, certainly the gas demand is there. We saw that from our recontracting efforts. Based on early stages negotiations on CEDAR capacity, we believe there is demand for a CEDAR-2, but until we have line of sight to that gas on coastal gas link or other solutions, that's kind of the gating item, and that's something that we continue to work on.

Okay, that's great, Keller. I appreciate it, guys. I'll leave it there.

Your next question comes from Maurice Chow with RBC Capital Markets. Your line is now open.

Thank you, and good morning, everyone. I just wanted to take a broader picture about the long-term WCSP outlook and hone in on the Taylor to Gordendale MGL pipeline project. Clearly, there is a competing third-party project out there. They're obviously against your projects, the CR process so just just your thoughts just how you think the CR will resolve these sort of issues and taking one step further any reason why you would think there wouldn't be sufficient contract importance for both projects to proceed in the coming quarters.

Morning Maurice um Jared here so yeah we recognize that there's there is currently two two projects moving forward and and we're actually you may be surprised to hear this but I think I mentioned did before we're very supportive of both projects moving forward removing egress constraints for our western canadian sedimentary basin customers upstream customers is is critical that's what midstreamers do we've removed constraints so they can get to higher value markets and and overall between lng canada phase one heman is highly confident lng canada phase two happens for all the reasons scott just mentioned um world scale resource um and then low commodities uh you got your cedar you got other projects in the works and or in construction we believe that the overall ngl and condensate demand in canada we still import you know 250 000 plus barrels a day as as a nation and the ngls that are going to come with that incremental gas egress um need to get to need to get to a market need to get to a fractionator um need to get to a pet cam facility so um we're very bullish that both projects are required and and we'll continue to work with our customers and and work with the regulator to sat and the communities to satisfy the requirements to get ours across the finish line understood um okay just finish up with the cleanup question here um

Cam, I think in your prepared remarks, you mentioned you expect to exit 2025 at 3.4, 3.7 times. That's EBITDA, and I think that shifted a touch by about 0.1 from what you mentioned in the last conference call. So clearly still well below the low end of your target range, but just wondering what assumptions have changed, especially given that the guidance for EBITDA has perhaps some gross spending versus you, just so far there.

A little bit of timing of spend, Maurice, and also just assumptions on timing of cash flow. It really sort of speaks to timing of cash flow in the calendar year versus subsequent year. That has to do with changes in non-cash working capital, as well as the timing of our cash tax payments. So it's really more so timing than any sort of structural change.

And just to reconfirm the guidance that you have right now, Phil assumes interim alliance tools.

Correct.

Thank you.

Your next question comes from Robert Catelli with CIBC Capital Markets. Your line is now open.

Hey, just a follow-up on the situation with Dow. I wonder if you have any sense on what they need to see to resume this project. Was it delayed because of a trade-related issue? for example maybe their products less competitive because of tariffs or is it something about the economy or anything related to Canadian policies?

Rob, it's Scott here. That's a better question for Dow. Out of respect for our partner, I can't comment on that.

Okay, I understand that. And then just moving on to just tariffs in general.

What has the tariff uncertainty done to activity levels for watson island and the export outlook in general it's it's chris um well you know first of all tariffs have driven lots of lots of volatility which uh which we've all seen and undoubtedly some some trip shifting um trade patterns um you know i think in the short term um we've seen strong volumes off off the west coast which is you know really in line with increased demand for, frankly, Canadian propane as a result of some of the dynamics going on on the Gulf Coast and some of the, you know, curtailed supply from China. But I think in the long term, you know, it really positions Watson and really positions the West Coast of Canada really, really well. We've got, you know, tremendous resource in Western Canada. to we've got a really proven pathway to get product to the west coast and we've got supply security concerns for for a good part of the world that's going to be looking for alternate sources and Canada's a great a great piece of that and so we'll be looking to to leverage that as much as possible okay thanks everyone your next question comes from Sumantra Banerjee with UBS your line is now open.

All right. Thank you for taking the question. Just to go back to capital allocation and leverage, it's great to see that you increased the dividend and also the leverage target range went down. I just wanted to get any high-level thoughts on capital allocation priorities going forward.

Yeah. Good morning. It's Cam. As I mentioned earlier, I think it's something we've clearly been watching in real time as the markets evolved through the, you know, the greater macro volatility in the last couple of months here. You know, clearly in our guidance, we indicated a preference or, you know, sort of a base case disposition towards debt reduction in 2025 as we had free cash flow, which we expected to have and continue to expect that. I think as as we've seen things ebb and flow throughout the course of the year we've obviously uh you know taken that information in and and you know we obviously haven't uh changed that leading up to the q1 print here we were we're in blackout through april so uh you know we wouldn't have been in a position to execute any any share buybacks even if that you know would have would have made sense at the time uh and so uh you know we are sort of looking at at all the signals here and are looking at things on the back of the first quarter release and as we come out of blackout and obviously are reconsidering whether we shift some of that free cash flow towards share buybacks. You know, wouldn't put a pin in it at the moment, but certainly something with lots of active debate and will ultimately be market condition dependent.

Got it. Thank you. That's very helpful. And then just a more general one on guidance. And so you mentioned that you're tracking towards the midpoint currently, and of course, there's a lot of talk about volatility in the macro, but are there any projects or other factors that could push you more towards the top of the guidance?

You know, I would say that the biggest one would obviously be just in the near term is frankly probably going to be where we see the commodity business. I mean, I think it's no secret that that is the biggest driver of variability in our business. Obviously, you know, we do have some some interruptible volume exposure in our business and certainly where, you know, there are there are dislocations on competing pipelines or or alternatively egress constraints elsewhere. And, you know, we we stand to benefit from that. That's another driver of variability. You know, obviously, we do see, you know, we do see uh seasonality in our business as uh as we highlighted in the release and and certainly q2 and q3 you know we we do expect to be sequentially uh you know sequentially lower compared to q1 which is normal and that's a function of all the the elements we saw um you know the the cost picture on that side is is is largely well understood but really it's the revenue opportunities that could come on top of that so you know if I if I summarize that would continue to say that market price variability will be the biggest single driver and then lastly you know sort of that the interruptible volume situation as as egress you know on our own or on third party pipelines you know becomes available or or constrained thank you so much.

Your next question comes from Ben Pham with BMO Capital Markets. Your line is now open.

Hi, thanks. Good morning. A couple of questions on the marketing and the guidance you've maintained for the year. You've, you know, Q1, you've pretty much hit almost half of it so far.

Can you share details on hedging on that segment and also just the trend around propane barrels this is a trend over time from your advantage to move more barrels to the canadian west coast now how and if that could impact uh the long-term outlook in the market it's chris so so on the um on the hedging side our frack spread businesses you know in and around 50 percent hedged here um across the full year of of 25 and so we've got a degree of protection from the volatility that cam um that cam was mentioning on the on the frack spread side um and then as as to how we're thinking about um the market long term you know we we've been um i think fairly consistent for a while that we think you know the long-term resilient markets for the canadian you know wave of growth that's that's come and will continue to come um is is global um you know us demand um has been strong and there's lots there's lots of different you know narratives out there about how that might unfold over the next while but i think in the long term the most resilient markets are going to be going to be global and so um you know we'll be striving to get as much growth as possible access to those to those markets um you know we remain constructive

on on you know our portfolio and think we've got a nice balance at the moment between um you know some north american markets and and global markets but as we look forward we we truly think the most resilient markets are going to be uh going to be global oh and i would just add to that ben that you know in terms of the hedging chris mentioned that we're both 50 hedged we are hedged at levels which are in excess of the current you know sort of outlook for the balance of the year you know to the tune of uh you know 10 to 15 above current levels okay got it um and um just on alliance but i'm not gonna ask the polls i just wanted to go back when you when you under wrote that asset you had some synergy expectation just just want to work where you're where you attracted to that and then also just wasn't there something about the uxable marketing business in terms of our volumes and the the late decade time frame just where you at with that yeah hey ben uh good good call out um first thing i would say is that uh you know if you remember back to uh our announcement there i would say that the lion's share of the synergies uh the material amount of we're actually coming from the oxable business uh you know there's a significant amount of commercial opportunities in the oxable business you know some some small opportunities on the cost side across both assets but but more so on the commercial side and those are largely on the oxable side um i would say that you know so far our perspective is you know we're we're tracking very well to our plans timing uh i think we we communicated at the time you know a range of 40 to 65 million and that obviously had a ramp to it you know some of those come very quickly some of those take a little bit of time and and certainly for 2025 you know we're we're tracking towards uh our intention there which is probably at the at the at the lower end of the range as as we expected um and continue to see the you know the integration opportunities uh and we'll continue to look for more but but so far tracking uh according to time okay got it just one last

quick cleanup, and I don't think this applies to anything else in your asset space, but if anything, just think about that alliance. Any other assets through 2026? I guess that's your current guidance timeframe that's up for toll, challenges or reviews in an excellent event.

Those are the two assets. Obviously, the two assets here that are federally regulated would have been Cotian and Alliance. And obviously, you know, we've dealt with both of those. So nothing else.

Okay, got it.

There are no further questions at this time. I'll now turn the call over to Scott for closing remarks.

Well, thank you, everybody, for joining us today. And we look forward to speaking this afternoon at our AGM. Thank you.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating. And I thank you, please disconnect your lines.