Pembina Pipeline Corp (PBA) Q2 2026 Earnings Call Transcript

Ladies and gentlemen, thank you for joining us and welcome to Pembina Pipeline Corporation Quarter 2, 2026 results. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Dan Tucanel, Vice President, Capital Markets. Dan, please go ahead.

Thank you, Matthew. Good morning, everyone. Welcome to Pemina's conference call and webcast to review highlights from the second quarter of 2026. On the call today, we have Scott Burroughs, President and Chief Executive Officer, and Cameron Goldade, Chief Financial Officer, along with the other members of Pemina's leadership team. I would like to remind you that some of the comments made today would 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-gap measures. To learn more about these forward-looking statements and non-gap measures, Please see the company's management discussion and analysis, dated July 30th, 2026, for the period ended June 30th, 2026, as well as the press release Pemina issued yesterday, all of which are 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 second quarter results, which were highlighted by adjusted EBITDA of $1.064 billion. dollars it was another solid quarter that reflects a constructive industry environment coupled with strong underlying operational performance and new assets entering service as cam will discuss in more detail we have affirmed our 2026 adjusted ebitda guidance range of 4.35 billion to 4.55 billion dollars while noting we are trending midpoint of the range since our business update in april we've continued to build momentum across all three pillars of our 3c strategy and have further strengthened our visibility to long-term growth as a reminder our strategy is built around three complementary pillars first we aim to capture growing volumes across the western canadian sedimentary basin by leveraging our integrated midstream footprint and deep customer relationships second we strive to connect those volumes to the highest value markets through our and others transportation and export infrastructure and third we want to catalyze new sources of hydrocarbon demand that create growth in the wcsb and incremental opportunities across our value chain together we expect these pillars will provide multiple avenues for growth and allow us to create value across changing market environments over the past quarter within capture we placed rfs4 fractionator into service in late may on time and under budget adding 55 000 barrels per day of propane plus fractionation capacity at the red water complex further strengthening our industry-leading NGL franchise. Within Connect, Cedar LNG continues to make excellent progress toward first exports in late 2028. During the quarter, we achieved key construction milestones, including mechanical completion of the pipeline that will supply the facility and successfully moving the floating LNG vessel hull from dry dock to wet dock in South Korea. We also announced our participation in the proposed West Coast oil pipeline where we can contribute our development and execution expertise to a project that has the potential to further expand market access for Canadian energy. We are participating in a purposeful and prudent way through a disciplined approach to capital allocation and risk management. Within Catalyze, we sanction the Heartland Extraction Plant, a highly capital-efficient project that leverages existing infrastructure and monetizes our extraction rights on the Yellowhead pipeline. Equally important, the project was accompanied by an expansion of our long-term commercial relationship with Dow, increasing contracted ethane supply volumes by 15% and reinforcing the strength of our integrated NGL platform. We also reached a positive final investment decision on the Greenlight Electricity Center, a 932-megawatt gas-fired generation facility that will provide dedicated power to a new Alberta data center being developed by META. Greenlight represents an exciting new growth platform for Pemina, creating stable long-term cash flows while also driving incremental demand for western Canadian natural gas. Importantly, Greenlight has the potential to generate benefits across multiple parts of our existing business and we continue to advance discussions around additional gas to power and data center related opportunities and recently acquired additional land proximal to the Greenlight Electricity Centre and the Redwater Complex to support future projects. Taken together, the projects and announcements this quarter demonstrate the breadth of opportunities available across Pemina's franchise and our ability to identify and then convert those opportunities into tangible growth. Whether it's expanding our NGL platform, connecting Canadian production to global markets, or creating entirely new demand pathways for natural gas, we're seeing strong execution across each pillar of our 3C strategy. As a result, we remain confident in our ability to deliver our targeted five to seven percent compound annual fee-based adjusted EBITDA for share growth through 2030 and we continue adding potential new opportunities such as the west coast oil pipeline and are pursuing additional gas to power for data center projects that if converted will support extending our growth well into the next decade i'll now turn things over to cam thanks scott as scott noted pemina reported second quarter adjusted ebitda of 1.064 billion dollars compared to the second quarter of 2025 continued strong operational performance across the pipelines and facilities divisions and higher results in the marketing business were offset by

the impact of the new toll structure and revenue sharing mechanism on the alliance pipeline announced last year the net result in the second quarter was a 51 million or five percent increase in ebitda over the same period in the prior year looking at quarter over quarter results by division The major factors impacting the quarter in pipelines included higher contracted volumes on the Nipissi pipeline, higher revenue on the Cotian pipeline due to prior period tariff adjustments, and a lower contribution from the Alliance pipeline due to the negotiated settlement between Alliance and its shippers, partially offset by higher interruptible volumes and lower operating expenses. The facility segment benefited from the RFS4 Fractionator entering service in May and the Wapiti expansion in PGI entering service at the end of March, both on time and at or below budget, further extending PEMINA's track record of delivering solutions for our customers in a timely and capital efficient manner. In addition, the quarter was positively impacted by higher contributions from PGI due to stronger performance at the Dawson assets, fewer unplanned outages, and higher recoveries from an asset upgrade, and no comparable planned outage at Redwater as occurred in the second quarter of 2025. In marketing and new ventures, second quarter results reflected the impact of wider WCSB and U.S. NGL frack spreads, resulting from higher NGL prices, including the benefits of PEMMA's exposure to premium propane markets through West Coast exports, as well as benefits from higher crude oil prices and higher sales volumes. In addition, the quarter was impacted by higher realized losses on NGL-based derivatives and lower realized gains on crude oil-based derivatives. Finally, in the corporate segment, second quarter results were lower than the prior period primarily due to higher long-term incentive costs driven by an increase in Peminist share price and incentive multiplier during the quarter compared to a decrease in Peminist share price and incentive multipliers during the prior period. Earnings in the second quarter were $512 million dollars which represents a 23 percent increase over the same period in the prior year in addition to the factors impacting adjusted ebitda the change in earnings in the second quarter was due to higher unrealized gains on ngl based and crude oil based derivatives and unrealized losses from the cedar lng compared to unrealized gains in the second quarter of 2025. 5. Adjusted earnings were $415 million, or a 10% increase over the same period in the prior year. Compared to the factors related to earnings, the change in adjusted earnings excludes the impact of the unrealized gains on NGL-based and crude oil-based derivatives and the unrealized losses in Cedar LNG. Total volumes in the pipelines and facilities divisions were 3.7 million barrels of oil equivalent per day in the second quarter. This represents an increase of 3% over the same period in the prior year. Higher second quarter pipelines volumes were driven primarily by higher volumes on the Alliance pipeline, primarily driven by stronger operational performance, and higher contracted volumes on the Nipati pipeline, serving the Clearwater Formation. Higher second quarter facilities volumes were driven primarily by the impact of RFS-4 entering service in May and higher volumes from certain PGI assets, primarily from the Wapiti expansion and at the Dawson assets. Yesterday, PEMITA reaffirmed its 2026 adjusted EBITDA guidance of $4.35 billion to $4.55 billion, and we are currently trending towards the midpoint of that range. At the midpoint, due to seasonal factors, timing of spending and certain one-time items, Pemina anticipates that the adjusted EBITDA contribution in the third quarter will be lower than the second quarter, with a strong seasonal contribution expected in the fourth quarter. It is worth noting that over the past five years, the third quarter has contributed between 23 and 27 percent of the full year adjusted EBITDA. Our current outlook for 2026 has the third quarter contributing at the low end of that range. A few specific factors that are expected to impact the second half of the year are worth noting. First, seasonality in the WCSB NGL frack spread business resulting in a lower contribution in the third quarter and a higher contribution in the fourth quarter. On a quarterly basis, for the remainder of the year, Pemina has hedged approximately 90% of its NGL frack spread exposure in the third quarter and 40% in the fourth quarter. As a reminder, for the period from 2025 to 2026, our US and Canadian frack spread businesses combined are expected to account for approximately two-thirds of our marketing. Secondly, higher integrity and maintenance spend in the second half of the year compared to the first half of the year. Due to strong 2026 results and operational efficiencies, we have chosen to fast-track a portion of normal courses. I want to remind listeners that the third quarter is typically our highest quarter for operating expenses. In 2025, the third quarter accounted for 27% of the full-year operating expenses and this year is looking to follow a similar trend. Thirdly, lower contribution from Cochin pipeline in the second half of the year compared to the first half of the year is expected reflecting strong first half first half throughput as certain firm shippers advanced a greater portion of their annual taker pay commitments into the earlier part of the year as a result throughput above the remaining annual commitments for the second half of the year is expected to be highly correlated with condensate prices in 2025 approximately 60 percent of the full year adjusted ebitda on caution was generated in the first half and 2026 appears to be following a similar pattern fourthly sequentially lower contribution in the third quarter and higher contribution in the fourth quarter on alliance pipeline due to seasonality and the ability to transport higher volumes during colder periods and finally a higher contribution from pgi in the fourth quarter due to new assets entering service and non-recurring revenue recognition in aggregate the lower and upper ends of the 2026 guidance are framed primarily as a function of commodity prices and the resulting contribution from the marketing business interruptible volumes on key systems, the U.S.-Canadian dollar exchange rate, and Pemina's share price performance and its impact on incentive compensation costs. I'll now turn things back to Scott.

Thanks, Cam. In closing, I would offer once again that recent developments reflect tangible execution of our 3C strategy and highlight the breadth of opportunities available within Pemina's integrated business. The accomplishments over the past quarter reflected continued focus on discipline capital allocation, long-term contracted cash flows, and creating value for our shareholders. Operator, please go ahead and open up the line for questions.

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset closer to your mouth when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Jeremy Tonnet with JPMorgan Securities, LLC. Jeremy, your line is open. Please go ahead.

Hi, good morning.

Morning.

There's a lot of talk in the industry with regards to incremental WCSV oil egress, you know, Pembina, one of the projects being proposed. But I was just wondering if you could help me think a bit about the picture as a whole and how it impacts Pembina as it relates to condensate. It seems if there's sizable egress that's going to come on, that means there's sizable condensate needs. And I was just wondering how that gets solved. Is coaching expandable in any sense? Is in-basin production going to really tick up? Is it going to be a combination?

I mean, if it seems like in-basin is going to be part of the solution, that's a lot of volumes, a lot of growth to hit peminist system am i thinking about that the right way yeah jeremy i'll i'll give you our high level macro view and i'll let my colleagues um pitch in as well i mean that's one of our key fundamental tenants from our april strategy session we talk about the flywheel and we always start with you know oil sands growth and you know there's ranges out there between you know 600 000 to 2 million barrels of incremental uh oil so let's just pick a million barrels for ease you know if the west coast oil pipeline goes ahead a million barrels a day that's going to require somewhere in the neighborhood of 300,000 barrels a day of incremental condensate you know I think we have a firm view that the majority vast majority of that condensate needs to come from the WCSV and we know we have the resource here in the Motney and the Duvernay and so you You know, just condensate alone has has, you know, fairly significant running room, which is, you know, some of the reason we were getting ahead of some of our expansions in northeast B.C., de-bottlenecking the system in advance of what we anticipate to be strong condensate growth across the system. Now, of course, you don't drill for condensate alone. You drill for natural gas that condensate comes along with. So we are going to need to find incremental home for natural gas, whether that's LNG Canada Phase 2, you know, potential pushing incremental throughput through cedar, wood fiber, etc., as well as incremental data center demand. And, of course, the oil sands are going to need incremental gas in order to grow their production from the oil sands as well. And then lastly, of course, there's associated C2 plus and C3 plus that comes along with that natural gas, which should drive growth through PGI and fractionation and export as well. So just backing up a step, you know, it's that kind of general linking of all those projects and all that growth that really leads us to be, you know, extremely optimistic about the WCSV out to 2035.

And I think, Jeremy, it's Cam here. I would just pitch in, you know, you referenced Cotian. I think on top of what Scott said, I mean, reminder that when we acquired Cotian, you know, that asset was running at, you know, about 85 to 90,000 barrels a day through some great operational work by our team, you know, in the field and in Calgary here. we've managed to to increase the capacity of that system to about 120 000 barrels a day and it's running uh very firmly very strongly uh and i think will continue to be in high demand especially as as oil sands volumes continue to grow in the coming years you know that said i think the opportunity uh for more imported condensate you know is also a potential solution and and clearly you know with our franchise we'd be looking at uh the best way to serve customers across the board Got it.

That's very helpful there. And then I just wanted to go, I guess, towards greenlight, and I realize I'm getting well ahead of myself here, but I'll try nonetheless. We've seen in other areas where data centers have developed, there's been a tendency to cluster where initial toeholds have led to bigger developments over time. Just wondering, now that this project is in motion, thoughts about the potential for that way down the road?

Hey, Jeremy. It's Chris. Yeah, I mean, you know, the FID earlier this month really supported our thesis about gas to power as a business serving data centers in Alberta. You know, we think it's a scalable project. We think Alberta remains one of the best jurisdictions to build in. We've got a very supportive government, continue to have a first-mover advantage across land or adjacent businesses' expertise. And then to what you're referencing, like the customer demand and interest remains high, including around the concept of clustering. We certainly saw that happening elsewhere and have a view around the potential for that to happen in this area. You know, the team's already hard at work developing the next stage of the project. That includes acquiring some incremental strategic lands, proximate to our lands. We had an opportunity to consolidate some contiguous lands right around our existing green light site. And they're also progressing customer discussions. And all of that is really centered around, you know, some of what you're referencing, both from the, you know, initial customer perspective, of the probability or likelihood of the clustering, but then also how these facilities tend to group across a variety of customers in strategic areas like the Heartland.

Got it. Thank you for that.

Your next question comes from the line of Teresa Chen with Barclays. Your line is open. Please go ahead.

Following up on the green light side of things, with phase one underway and as you have already consolidated the contiguous lens and in the process of commercializing phase two and maybe beyond, would you expect the timeline for further phases to be a little quicker and anything to say on size and scope at this point?

Yeah, it's Chris again. I don't think we can get into timing a lot you know i think there's a few things happening in the market that you can look to is you know for a little bit of guidance uh the asos phase two large load allocation um that's underway and the continuation of the bring your own power strategy is is i think a bit of a guide to to think about um to think about timing you know i think we've got a relatively proven model on how to progress these these projects we're really focused now on getting those front end strategic you know sort of first mover components in place and we're working with customers to de-risk them much like we did on phase one so i can't really give a guide on exact timing but i can sort of tell you we're moving quickly and with with pace but but very much in a similar vein to how we've done it on the last go-round.

Understood. And on the diluent side of things, can you just lay out the economics of in-basin production versus importing incremental barrels of condensate? What do you think is the marginal relative cost to the customer at this point?

And if you move forward with the next phase of expansion for Cochin beyond the 120,000 barrels per day um what kind of uh size or economics should we think about related to that hi tracy it's cam here i think what i'll first say is that um you know uh we see the economics of the condensate barrel is as is being market driven meaning that um you know the price gets set based on the availability of the supply and clearly uh you know as scott said the vast majority of that supply gets filled domestically today. And obviously those economics in the basin for domestic condensate production are some of the most competitive available. In terms of your specific question around the marginal economics of bringing condensate up, I think it's a bit preliminary uh you know we're not at a stage yet where uh we can share something to that degree i think what we recognize is that both the scale uh and the economics have to have to have commercial support from the customers and i think with that uh you know we've made some positive first steps in terms of the mou with the government pathways group has secured um some signals that you know there is a desire to grow but the timeline of that ultimately remains subject to subject to their decisions and their capital allocation decisions and so as we always do we look forward to working with customers closely to to provide a value-added solution uh but uh you know probably a bit preliminary to start sharing math at this point thank you your next question comes from the line of Spiro Duny with Citi.

Your line is open. Please go ahead.

Thanks operator. Morning team. I wanted to revisit the 2030 growth outlook. I guess since you provided that update, you've now sanctioned another 3 billion of projects, which I believe underwrites about 6% of that 5% CAGR range. So first I'm sort of thinking about that right.

And as you think about that sort of remaining $2 billion bucket, fill up the sanction, how do you think about the ability to grow that opportunity set beyond 2 billion but still be within that 2030 time frame that could maybe even take you above that seven percent high end hey spiro it's cam here uh thanks for the question and first of all i think uh you know we would look at it similarly to you meaning that you know we've crystallized or de-risked a material portion of what was in that growth outlook uh you know, from 2026 through 2030, you know, as a reminder, that was somewhere between $1.50 to $2.15 of adjusted EBITDA, a fee-based adjusted EBITDA per share growth between 2026 and 2030. And, you know, we've obviously de-risked a material portion of that. You know, what remains in that is a combination of some core volume growth within our business and some core capital investment opportunities. I think the positive thing I would say about that is that much of that or effectively all of it is within our core franchise, our core business, and very much only gets better and more compelling with continued volume growth, which I think we have even more confidence around based on what we've seen more recently. And I think, you know, as we've said, you know, since April 7th, you know, probably the biggest near-term lever for us on that five to seven percent within the time frame is overall industry activity. And I guess I would couple that by saying and reminding everyone that, you know, the level of organic volume growth that was really embedded in our five to seven percent was was more historical looking you know i think i've said before and in the sort of two to three percent range for liquids and i think what what we take positive signals from is is some of the large customers in the basin and some of our large customers talking about multi-year volume growth in excess of that number through 2030 uh you know some customers talking about volume growth up to the likes of five percent even and so that would be uh obviously very capital efficient for us um and very very quick turnaround uh so i think there's that's probably the biggest opportunity for us and as scott signaled in his prepared remarks you know what we're really getting excited about whether it's future phases of green light whether it's the the west coast pipeline opportunity uh is the ability to extend that growth that we've signaled through 2030 into the next decade and i think you know based on some of those opportunities based on the condensate opportunity that we talked about earlier and and the breadth and the integration of our value chain which we truly believe is unmatched uh we stand very well positioned to continue to grow grow at that rate into the next decade that's a

Second, we'll be just going to the West Coast oil pipeline, actually. So, Scott, you had mentioned sort of taking a prudent approach here and wanted to dig into that a little bit further. I'm just curious how you're thinking about the need to sort of protect your capital and preserve your return if this project does go forward. And maybe perhaps more broadly, can you just talk about your overall decision to get involved here? I think, as has been highlighted on this call, you really benefit from WCSB growth almost regardless of the egress method. So curious, I mean, what some of the rationale was here?

Sure. You know, I think from a Pemina perspective, I mean, there was discussions, you know, over time of our involvement in TMX. And so I think that the southern route and that, you know, idea of getting our Canadian depressed prices higher through egress has always been a strategy and clearly is highlighted in our 3C strategy. So when I think about the strategy, this fits clearly in the connect bucket. You know, anything we can do in a basin, whether it's natural gas, LPGs, crude oil, to increase the production and the netback for our customers has that knock-on effect throughout the business. So just from a core strategic perspective, it fits directly in what we're talking about. I think we see an opportunity here, as we talked about previously, to be part of a consortium where we're able to lend our experience and really complement and not replace the project proponent and bring our skilled project execution discipline to it. So we're pretty excited about our role. And I would say that we approach this no different than how we approach many of our projects. You know, we look at the risk return trade-offs. We have our, you know, long track record of financial guardrails. You know, we're willing to put some money at risk, but it comes back to the risk reward. And when we stacked up all the key aspects of this project, we felt like it was something that we wanted to be involved in and are very excited about it, not just for Pemina, but what it can do for the basin as well.

Great. Appreciate it, Scott. I'll leave it there. Thanks, everyone.

Your next question comes from the line of Praneeth Satish with Wells Fargo. Your line is now open. Please go ahead.

Thanks. Good morning, everyone. Maybe just staying on green light here, I guess just broadly speaking, I know it's still early. but when you think about you know phase two when you think about another potential site should we expect the the economics and commercial structure and risk profile broadly to look like phase one now that you've got that out there is that kind of like the blueprint or the rough template for how you're pursuing some of these other projects or do you think they're all kind of you know a little bit different yeah it's it's it's chris here you know as i was saying earlier i think we really feel like we proved out our our sort of thesis on gas the power is a big street

business in in alberta and and part of that is certainly the commercial construct and how we thought about the the risk profile and the fit of the of the project with with how we think about our broader business uh and so you know it's still in motion certainly and still still underway but future phases uh you know we're targeting to structure them in a similar way uh to phase one they're going to be long term they're going to be you know fixed fee low risk uh arrangements that will fit align with with pembina's business model uh i think as you get out in into expansions and you know not necessarily everything always looks the same out into time but we've been really

effective across all of our businesses of of keeping that risk profile and keeping that that structure uh in line with our with our business model and this will be no different got it that makes sense and then um maybe just switching gears so there are a number of of pipeline projects being proposed in the u.s to serve um you know growing low demand in the midwest and alliance and oxable kind of sit right in the middle of that demand corridor so i'm just wondering if you see an opportunity to expand and extend south of Oxable and participate in some of that growth.

Good morning, Jared here. With respect to expanding downstream of the Terminus Alliance, you know, past the Shanahan extraction facility, I would say we're probably more focused in getting incremental gas egress unlocked out of Western Canada so our customers can produce more condensate, like scott talked about and cam talked about that entire flywheel needs to find egress for for all of those products as oil sands grows so i would say we're probably more inclined to look at getting more gas down into the midwest versus just extending the existing gas volume further down the value chain got it okay yeah no that's that's kind of what i was um suggesting here to kind of

bring some of that gas down and serve the the demand load but understood thank you your next question comes from the line of Aaron McNeil with TD Cohen. Your line is now open. Please go ahead.

Thanks for taking my questions. Cam, you sort of touched on this a bit already, but I wanted to put a finer point on it. Can you remind us of the basin growth assumptions that underpin your sort of April business update guidance and how you might take a crack at sensitizing the guidance in the event that production growth exceeds your assumption and And maybe as a follow-on, are there projects that were not referenced in that update that would be required, like a new fractionator or incremental pipeline expansions, would they be required to sort of realize that higher production-driven growth rate?

Sure, Aaron. So as I mentioned earlier, the volume growth that was embedded in our April 7th update in our 2026 to 2030 outlook was, again, in a bit of a historical sense. and we've seen liquids volume growth over the past uh four to five years in that two to three percent range and that's effectively what we embedded in our outlook um i think as as i mentioned earlier if you see that escalate beyond that uh you know our math is that there's a very direct relationship in terms of our growth and and and the basin growth uh stepping up so you know kind of percentage point for percentage point obviously depending on timing and when that comes but you know if you want to try and distill it to the highest level uh you know that's the way i would think about it in terms of uh the investment there you know i i think that we have uh one of the values of our franchise is the the breadth and the integration and as as you know you know we have de-bottlenecked various points of that franchise along the way certainly on the pipeline side we have uh we we de-bottlenecked upstream of fox creek significantly over the past five years we made the investment uh you know close to 10 years ago to create the corridor from fox creek in and we continue to have space there uh you know i will say if if we see activity and we do start to see you know a million barrels or more of new uh crude egress come to fruition and and the uh you know the requirements for condensate and and and the associated ngls that come along with that i think it's it's no surprise that we will be looking for additional fractionation capacity in the basin uh you know there may be uh devolved investment depending on where that supply comes from. But, you know, we certainly do have some running room in the near term here and the ability to respond quickly and capital efficiently where there isn't.

Nope, makes sense. And that's a helpful rule of thumb. I can appreciate your committed to self-funding growth today. So maybe just a hypothetical for now, but what market conditions would have to occur to incentivize you to deviate from that? And, you know, what might the funding plan look like in that scenario?

Yeah, I'll remind everyone that, you know, our target leverage range or our leverage guardrail has been three and a half times to 4.25 times senior debt, proportionally consolidated senior debt to EBITDA for a very long time now. And clearly, we've been well below that, because as you mentioned, we've been very much executing within free cash flow for the balance of the past five years. I think we look at that and when you look at whether or not we would go say beyond four times, which we haven't done, but whether we would do that, you sort of have to look at the overall risk profile of the business and the opportunity, where we've significantly mitigated all other risks in the business, you know, I think that gives you some confidence to be able to accept risk in other areas of the business. And so those are the conditions. And I think, you know, you need to see a very clear path to getting back towards the middle of your target range, which is where we prefer to operate. But I would say that clearly we are at a generational point in the industry at the moment and the type of investment opportunities that we're seeing, both in terms of ability, scale, and returns are very compelling. And so we really need to take a long-term perspective as we look at these investment opportunities to generate the most value.

Okay, great. Thanks. I'll turn it back.

Your next question comes from the line of Maurice Choi with RBC Capital Markets. Your line is now open. Please go ahead.

Thank you. And good morning, everyone. So to start with the West Coast oil pipeline, I suspect it might be too early to talk about customer volumes in the coming years, but maybe you could give us a vision as to what needs to happen between now and FID, whether that be between the industry, the governments, before we do see the first customer volumes get contracted.

Sure, Maurice, it's Scott here. You know, I don't think about this too different than any other major project when it comes to FID I mean clearly we'll need to have a regulatory approval with conditions under which we can construct we need to have a competitive cost estimate and then we'll need a certain level of volumes to underpin the investment and so all of that's going to happen over the next you know call it 18 months as we advance the project but I don't I don't see it really any different than any other major projects. So, you know, based on what we're seeing and hearing, we do think volumes are going to be there. So we're pretty optimistic. Yeah.

And if I could finish off with a question about power or more broadly about your growth platform, I think in your press release, you mentioned that Greenlight establishes an entirely new growth platform. And I think, Chris, you mentioned earlier that, you know, this Greenlight project obviously It proves out your gas to power thesis. I think in the past, you've mentioned that you're not looking to grow an IPP within the company. And sure, there's future phases of green light on the same site. But could you just talk to any plans to grow this platform beyond green light?

Thanks for the question, Chris. Chris, again. And so when we think about what was really attractive to us about this project and about this business, I mean, it really starts with the macro, right? The energy demand growth associated with data centers and AI and all the rest of it. And that demand being served by natural gas-fired power generation is pretty attractive for us. It catalyzes demand in our basin for natural gas. so that that that part all holds um then it's really about can we can we build it into the type of business you know that we really like uh and the midstream construct uh we really like and and the nature of green light fits that very well at this time merchant power does not fit into that or being an independent power producer does not um fit into that we think there's lots of running room on the model. We've proven out here with Greenlight and are not pointed down a path towards IPP or merchant power.

To be clear, but you're okay going down being a contracted IPP in Alberta?

We're contracted going down the path of, we're confident going down the path of deals that look similar to Greenlight in commercial structure and risk profile.

Thank you very much for that. Your next question comes from the line of Sam Burwell with Jeffries. Your line is now open. Please go ahead.

Hey, guys. Good morning. Of all the projects that you called out in the April business update that are still pre-FID, which would you say are the nearest and maybe the furthest away from sanctioning? And I guess specifically on the Nipity pipeline, Clearwater's gotten a lot of momentum, but with a fairly concentrated crew of producers. So I'm just curious what the progress is on that one in particular.

Yeah, thanks for the questions, Chris. You know, obviously we've seen tremendous growth out of the Clearwater Basin. The netbacks are phenomenal. And in this price environment, the growth has certainly reflected that. The result of which is it's filling our existing pipe that's there. That's been a tremendous success if you recall the history on that. We're working with producers today and still to chart a path forward that works for both of us and, you know, optimistic about the potential to expand that pipe in the not-too-distant future. But at this stage, it's in commercial negotiations.

Sam, it's Cam here. I'll just chip in on some of those other opportunities. You know, we've talked about the opportunity for butane value enhancement. You know, I think we saw length in the butane market in Western Canada for some time. And I think with, you know, what we're seeing as the opportunity in the future with greater crude egress and the flywheel effect of that, that is only growing from there. And so we continue to investigate a solution that involves butane value enhancement. Likewise, on some of the incremental pipe egress, particularly towards northeast BC. again I think we continue to work closely with customers around the timing of those needs and as usual you know people are very much into budgeting season here for the next year and the following years and you know I think it's a really a when if not if that occurs and outside of that it really comes down to just unlocking just rateable core volume growth as we see through existing capacity okay great um and i'll try to sneak another one in on the west coast pipeline so

it seems like you guys have tremendous optionality and do have some protections on cost but you also stated in the april business update that the max build multiple you consider would be 10 times so i would assume that holds for your potential participation in the west coast oil pipe but I'm curious if that contemplates the option to add the extra 10% after project completion, or if your returns would be effectively met through just the initial 10%.

It's Cam here, Sam. You know, I think what I would say is, you know, when we talked on April 7th about our history in terms of capital deployment, you know, it was very much, historically speaking, and with our current development portfolio, you know, in that six to eight times range historically for greenfield type opportunities. And so, you know, when you look at our model, a desire to grow in that mid-single-digit range over the long term, you know, really it sort of drives towards something that continues to need to be capital investment along those type of parameters with the right risk profile. So, again, we're very focused on both the return and the risk profile of the investment opportunity, and the West Coast Pipeline is no different. You know, it's a bit preliminary to sort of get into bright lines at this point because we have a lot of work to do on all fronts there. But suffice to say, as Scott said, and just to reinforce the capital allocation decision for that opportunity, you know, will be no different than it is for our other portfolio investments.

Okay, got it.

Your next question comes from the line of Robert Cattellier with CIBC Capital Markets. Your line is now open. Please go ahead.

Good morning, everyone. I just wanted to quickly go back to the NGL picture here. You continue to highlight the strong outlook for the basin and the strong NGL fundamentals. And of course, you have that exposure through your export facility and some contractual export exposure elsewhere. When you look at the evolution of the basin and what's possible if oil sands production does grow, as you mentioned, it's going to require more fractionation. I'm just wondering about your views in terms of fractionation and extraction in the field closer to the West Coast export points compared to red water where you have so much scale and so many tools already.

Good morning, Rob. Jared here. I think you're probably referencing a recent announcement of some incremental barrels going west from northeast B.C. So maybe I'll just take a step back and talk about our fractionation complex. We absolutely believe the size and scale of the Edmonton area does provide the customers with a significant amount of redundancy, storage, rail egress. You have multiple rail providers to go to different markets, depending on if pricing or swing. You can go to Eastern Canada, you can go around the States, you can go to international, you can go into Mexico, et cetera. So we still believe the fundamental thesis is that NGLs coming into the Edmonton, Port Saskatchewan area does provide customers with a lot of advantages. And I will note that just the majority of the barrels that come into that region are kind of like Alberta based. with respect to you know some niche opportunities going directly to the coast you know it's fairly relatively small I think it you know I think it works for certain customers in certain regions but overall it doesn't you know it was it's kind of anticipated in our five to seven CAGR that we put on out on April the 7th and and you have to realize that those customers are making a choice long-term to dedicate those small barrels to Asia, essentially. So it'd be very hard for them to capture an Eastern Canada price spike, for example. But overall, we still think Port Saskatchewan and Edmonton is extremely competitive and scalable.

Okay, great. And then I just wanted to move on to Cedar LNG here. It just looks like the construction is going incredibly well. So at this point, what do you see as the remaining risk factor to be able to hit those first cargoes in 2028?

Yeah, I think, Rob, the big unknown, I don't say this as a negative, will just be the ultimate hookup and commissioning of the ship. I think everything as of right now, the pipeline's done, as we talked about, the transmission line will be done early um uh our third party compressor station is wrapping up construction bc hydro is on track the ship is tracking slightly early for arrival so when you stack all of it up really the the unknown and again not not because i'm worried about it it's just will be the ultimate commissioning of the ship because everything that's in the our control or our third parties control right now is tracking very well okay thanks very much your next question

comes from the line of Sumantra Banerjee with UBS. Your line is now open. Please go ahead.

Hi, good morning. Thank you so much for taking the question. You mentioned that HEP would have, it was accompanied by amendments to an existing ethane supply agreement with Dow. So I was just curious about if you had any higher level of commentary on what you're seeing in terms of global ethane demand.

Oh, the questions around global ethane demand and the relationship to our existing arrangements. Is that right?

Yeah, definitely.

Yeah, yeah, it's Chris. I'm happy to take that. I mean, obviously, we've seen a lot of growth in Western Canada on the ethane demand front with Dow's announcement. There remains length in in the basin for sure and others have been out talking about the potential opportunity to to get that to Asian markets in particular and and you can see why if you pay attention to some of the pricing or watch closely some of the pricing that we've seen for for ethane sold off the dock in in the coast and landed in in certain parts of Asia it's a pretty it's a pretty compelling proposition. You know, we've spent time understanding and continue to spend time understanding the cost structure and all the rest of it associated with getting that product to Asia. I think we've, you know, we've got great partners in the basin and great partners in Western Canada in the, I think, crafting business that we've got tremendous relationships with, and we think there's even potential for more of that in the future, but certainly some of the the global price dynamics are are driving some some different exploration by by uh different participants got it that's very helpful also just curious if you're uh noticing anything on the storage front as well in terms of um incremental opportunities on the storage front um you know you know certainly certainly depends uh which which products um you know crude storage you You know, it's back-related state and at least a little bit of available capacity at the moment has not seen a ton of opportunities associated with it, but there certainly are opportunities popping up there. We continue to take advantage of seasonal and different storage opportunities on the NGL side. We've got a pretty substantial position there and then no real insights to provide on gas storage.

Got it. That makes sense. Thank you so much.

Your next question comes from the line of Benjamin Pham with BMO. Your line is now open. Please go ahead.

Thanks. Good morning. I just want to go back to the Canadian West Coast pipeline opportunity. Can you flesh out, I know there's some timelines that have been noted before in the press, but I'm just curious about, as we look forward to the key milestones for this pipeline into FID, when you're non-binding becomes binding, what that binding actually means, and then beyond that bind, what other key items to look for?

Sarah Holtzman- Yes, happy to. This is Sarah. Right now, obviously, it's been a very busy month since we made the announcement in June. We're working very closely with our government partners on the key work streams, the first one being, or a primary one being, obviously, the definitive agreements and working through working to support a major project office on their project national interest assessment so the first milestone as we look forward is really targeting that october 1st designation under the building canada act around that same time we are anticipating that definitive agreements will be finished and we will then move into proceeding with the CER or other regulatory applications that are required that's got referenced in order to get to an FID decision. So these are the sort of core pieces as we look forward. Obviously, there's a lot of compressed timelines and optimism as we look at this, but we will be pulling it together and targeting early commencement of operations next fall.

Got it. Maybe take a step back. I know you've already owned oil pipes. You have storage in the mix. You had looked at Trans Mountain in the past now, decaying West Coast pipe. You mentioned that you're supporting oil pipes. It benefits your business broadly in the basin. Do you have an appetite for anything beyond the Canadian West Coast Pipe? Because there's also a number of other alternatives being proposed out there that may be looking for partners or investments.

No, not right now. This is West Coast oil pipelines are focused.

Okay, got it. And just one quick one. It's really been night and day of your cost of capital over the last year. and that's creating a lot of value for organic growth just given returns have been still quite attractive. How do you think of the M&A landscape today especially in the U.S. side of things or assets you can shake out maybe build a new footprint there to build on?

Hey Ben it's Kim you know I think it's probably pretty consistent with our comments in the past which is you know one, we're always looking at how we can enhance the business strategically and what fits within the 3C strategy. Obviously, capture, connect and catalyze underpins all of that. You know, I think our view continues to be as it's been, you know, for some time that the opportunity that we see in front of us at the moment and for the near term is really probably more so with respect to Tuckian opportunities as they come and, you know, sort of have strong strategic fit with the rest of our business. You know, I think it sort of speaks to the opportunity in front of us organically and what we have. And as we said, you know, we have a very strong growth profile through the end of the decade and setting up to continue to have that into the next decade. And so, you know, our focus would be executing that, executing that well, pointing our company's resources towards doing a really strong execution job on those opportunities just like we have and, you know, sort of smaller tuck-in opportunities where they present themselves and fit strategically.

Okay, got it. Thanks a lot.

Your next and final question comes from the line of Robert Hope with Scotiabank. Your line is now open. Please go ahead.

Morning, everyone. Maybe just going back to the potential for incremental gas to power opportunities um you know acknowledge kind of your commentary on the commercial structure there but how should we think about the ownership structure if green light is expanded would that be with kinetico or if you are looking for you know other opportunities could you be the lead developer and 100 owner of those opportunities Hey, Robert.

It's Chris. We're really happy with the Kinetic Core team as the team that's leading this for us. We're also really happy with the partnership we have and the partner we have in place. We're seeing lots of alignment across the partners and the execution team to to really pursue what we're trying to to pursue in this space um so so with all that we think it really is in support of us having you know maintaining that first mover advantage it's really in support of us having all the the right expertise and capabilities and and financial wherewithal to to keep investing um in this space and so yeah like i mean at this time that's our team uh that's our partnership um we like it and that's going to be the vehicle we're pursuing these investments in i appreciate that uh and then maybe going over the west coast pipeline so

you know it is possible that uh the new west coast pipeline could operate as a kind of a common carrier or a common system with the existing trans mountain uh system there including moving uh ships to uh in between the docks when you think about that you know could there be an opportunity or is there a way to kind of we'll call it normalize your ownership interest in not only the west coast pipeline but in the broader overall system robert i would say at this time and stage you should think about them as two completely independent projects with independent owners and independent development so you know in this five minutes that's not being contemplated thank

here.

There are no further questions at this time. I will now turn the call back to Scott Burrows for closing remarks.

Thank you. It was an announcement-filled quarter at Pemina, and our successes reflect very strong momentum within the Canadian energy industry. Our ability to capture opportunities, both as a first mover through green light and a trusted project development partner, as showcased by the West Coast Oil Pipeline Project, continues to differentiate us among peers we are seeing new developments across all commodities within the wcsb and permanent integrated value chain is uniquely positioned to capture this momentum our confidence in the growth outlook both to 2030 but also well into the next decade is continuing to strengthen we hope you share our excitement as we continue to execute our strategy to capture connect and catalyze in service of creating value for our shareholders i'm incredibly proud of our amazing Pemina team in everything we have accomplished this quarter. Thanks for joining us today. Enjoy the rest of summer and we look forward to speaking to you again soon.

This concludes today's call. Thank you for attending. You may now disconnect.