Thanks, Valerie, and good morning, everyone. Thank you for joining us today for AltaGas’s first quarter 2021 financial results conference call.

Speaking on the call this morning will be Randy Crawford, President and Chief Executive Officer; and James Harbilas, Executive Vice President and Chief Financial Officer. Also joining us here this morning is Randy Toone, Executive Vice President and President of our Midstream business; Blue Jenkins, Executive Vice President and President of our Utilities business; and Jon Morrison, Senior Vice President, Investor Relations and Corporate Development.

In addition to the fourth quarter press release, financial statements, and MD&A that were released earlier today, we’ve also published a first quarter earnings summary presentation. The presentation, which walks through the quarter and highlights some of the key variances and non-recurring items that we would assume would be helpful for the market to understand and is available on our website under Events & Presentations.

As always, today’s prepared remarks will be followed by an analyst question-and-answer period. And I’ll remind everyone that we will be available after the call for any follow-up or detailed modeling questions that you might have.

We’ll proceed on the basis that everyone has had taken the opportunity to review the press release and our first quarter results. As for the structure of the call, we’ll start with Randy Crawford providing some comments on our first quarter financial performance, recent progress on our strategic priorities and what you can expect on the road ahead for AltaGas, followed by James Harbilas providing a more walk-through of the financial results, near-term outlook and 2021 guidance.

And then we’ll leave plenty of time at the end of the call for Q&A. Before we begin, we also remind everyone that we will refer to forward-looking information on today’s call.

This information is subject to certain risks and uncertainties, as outlined in the forward-looking information disclosure on slide 2 of our investor presentation, which can be found on our website, and more fully within our public disclosure filings on both SEDAR and EDGAR Systems. And with that, I’ll now turn the call over to Randy.

Thank you, Adam, and good morning everyone. As an organization, we have undergone significant changes over the past two years in terms of focus, process and business optimization.

And we believe the fruits of that labor were demonstrated in our operating results this quarter. Despite the ongoing effects of COVID-19, and the headwinds associated with the US dollar exchange rate, we delivered a record quarter with strength across the platform and are well positioned to execute upon our durable 2021 and beyond growth prospects.

Our global exports and midstream platform achieved record throughput and profits. Our utilities platforms continued to profitably deploy capital, control cost and improve returns and our finance team, continue to lower our debt cost and we are well positioned to continue to reduce our leverage ratios over 2021.

As a result of these factors, we grew normalized EPS by 63% year-over-year in the quarter. Excluding the profits in the US transportation and storage business, run rate normalized EPS increase 35% year-over-year in alliance with AltaGas focus on delivering durable and growing EPS and FFO per share that support steady dividend growth and provides the opportunity for ongoing capital appreciation.

Our utility segment continues to demonstrate ongoing resiliency and improved financial performance, where we continue to prioritize the health and safety of our employees, customers and stakeholders. Excluding onetime item, our US utility business delivered 11% year-over-year EBITDA growth in US dollar terms.

Due to combination of our judicious [ph] management of our cost, the acute capital discipline and profitable investments we are making to upgrade our infrastructure, we are driving both improved financial results and customer outcomes. The performance seen in the quarter continues to align with the strong long-term growth trajectory projections that we have shared with you in the past.

Through the recently approved Maryland and D.C. rate cases that came into effect March 26 and April 1, we continue to improve upon our ability to earn our allowed returns on invested capital.

The advancement of our network upgrade plans through the utilization of ARP programs continues across our jurisdictions. The investment of the this incremental capital remains focused on reducing leaks, lower operating costs and ensuring that we are well-positioned to continue to deliver affordable, reliable and lower carbon natural gas for our 1.7 million customers.

We are preserving the optionality of carbon free solutions in the future. Based on the progress we have made this quarter, I remain confident that we will close the remaining 150 basis points of ROE gap through 2021, which will allow our shareholders to realize appropriate rates of return on their invested capital across our utilities in 2022 and beyond.

We also realize robust performance across our recently expanded Midstream operations. Excluding the larger than expected profits from the US transportation and storage business in the quarter, AltaGas Midstream platform continued to show strong growth, including a full quarter of consolidation of Petrogas to deliver more than 85% year-over-year EBITDA growth.

The Midstream business is currently firing on all cylinders. With solid volume growth realized across our integrated platform, we continue to see strong demand for Canadian LPGs in Asia, and activity and production volumes continue to increase around our Montney focused platform in Northeast B.C.

We are also witnessing a strong rebound in production volumes in our non-Montney footprint. It’s only been four months of combined operation since the acquisition and consolidation of Petrogas, but the strength and efficiency of the assets combined with the increased scale and reach of the expanded platform and the bolstered expertise of the combined workforce is exceeding our expectations.

Given the headwinds of building new fossil fuel related export assets in the US, we believe that our Ferndale facility is not only strategic, but extremely valuable. Ferndale’s highly efficient operation in dual product optionality located on the Western US coast is difficult to replicate and creates a competitive advantage related to the delivery of cleaning burning LPGs to Asia.

We are realizing the benefits of operating both export facilities through greater optionality and flexibility in terms of supply and logistics and the allocation of propane and butane between the two terminals, as well as the benefits associated with integrating Petrogas, other transportation storage related assets. During the quarter, we exported a record average of 85,000 barrels a day of propane and butane to premium markets in Asia.

Improving Canadian realized pricing, as we continue to connect more Canadian production to global markets. Both export terminals are performing very well and aligned with our strong expectations.

Overall, our expanded midstream and energy platform provides us with great operational scale and commercial optionality and allowing us to provide better service, and improve outcomes for our customers. Last Friday, we took another step forward in advancing our strategy to refocus the company on a two core businesses, while continuing to strengthen and deliver the platform and reduce the volatility of cash flow through the monetization of our US transportation and storage business.

We are excited about closing this transaction as it accelerates our timeline of getting to our target of being five net debt to normalize EBITDA, and it brings us closer to contemplate in the journey that we have been on in the past two years. We’re also fortunate in our timing, to able to sell the business after a strong financial contribution the first quarter related to the weather driven gas pricing volatility, to recognize an incremental source of funds that augment this deleveraging event.

We are now positioned to reduce our net debt to normalize EBITDA ratio by up to 5.5x over the course of 2021 relative to the approximate 5.6 run rate level we exited 2020. And we remained focused on further derisking the platform over the long-term.

We are proud of the fact that for two years running, we have delivered normalized EPS growth that has materially eclipsed all of our US gas utility and Canadian midstream peers. Our stock performance has followed too and eclipsed all of our US utilities and Canadian midstream peers over this period.

The strong performance we achieved in the first quarter, provided the confidence to increase guidance, but now when using the midpoint for 2021 represent 22% year-over-year earnings per share growth. The progress made during the first quarter positions AltaGas to drive strong stakeholder outcomes in the year ahead and continue to build a platform that is focused on long-term sustainability.

We believe this is a testament to the perseverance and steady progress that we've made towards executing our strategy and delivering on our priorities. And its true reflection of the significant potential that lies within our diversified platform.

As we continue to move towards a more decarbonized ecosystem, we believe natural gas will be a critical part as the transition fuel of the future. Our Utilities network is comprised of critical infrastructure that enables us to deliver low-carbon natural gas today and provides a foundation for delivery of carbon-free solutions in the years ahead, including renewable natural gas and hydrogen.

We remained focused on executing upon our business plans and are confident that we will be very well positioned for the energy transition that is upon us. We’re committed to exploring and defining the next steps to introduce renewable natural gas and hydrogen into a natural gas distribution system.

There will be more information to come in the quarters ahead as we explore and position ourselves to execute on this promising opportunity. In summary, we've achieved record EBITDA growth, which allowed us to increase our earnings guidance for 2021.

Successfully integrated the Petrogas acquisition to execute outstanding year-over-year growth in the midstream business. We made significant progress towards earning our allowed rate of return of the utility and positioned ourselves to further reduce our debt and improve our leverage metrics.

And with that I'll turn the call over to James to dig into the operational and financial results of the quarter in more detail.

Thank you, Randy and good morning everyone. We are pleased to be here today to discuss our strong first quarter results, our increased 2021 guidance and the monetization of our US transportation and storage business that we announced last Friday.

A lot of which should drive an estimated $485 million of near-term de-leveraging and accelerate AltaGas towards our target for being below five times net debt to normalize EBITDA. Specific to the first quarter, we were very pleased with the record financial performance that we've produced, which builds on the financial and operational improvements we have demonstrated over the past two years, as we reposition the platform and sharpen our focus on delivering durable and growing EPS and FFO per share.

We support steady dividend growth and provides the opportunity for ongoing capital appreciation. During the first quarter of 2021, this included normalized EPS of CAD 1.29, compared to CAD 0.79 in the first quarter of 2020, representing a 63% year-over-year increase.

Normalized FFO per share of CAD 2.08 compared to CAD 1.51 in the first quarter of 2020, representing a 38% year-over-year increase. Normalized EBITDA of CAD 674 million compared to CAD 499 million in the first quarter 2020, representing a 35% year-over-year increase.

All of which was underpinned by solid performance across the entire platform. We highlighted in the earnings or release, the US transportation and storage business generated CAD 80 million in normalized EBITDA, over and above what we had originally forecast as we positioned the business to realize strong profitability from strong pricing moves in the US natural gas market while meeting the demand arising from the February winter storm, the grip parts of the continent.

Overall core performance in the quarter aligned with AltaGas’s corporate focus of delivering durable and growing EPS and FFO per share that support steady dividend growth and provides the opportunity for ongoing capital appreciation. Specific to the business units, the Utility segment reported normalized EBITDA of CAD 371 million, compared to CAD 369 million in Q1 2020.

Strong operating performance across the segment was largely offset by a CAD 20 million unfavorable move in the US to Canadian dollar exchange rate and CAD 16 million in negative headwinds associated with the sale of AltaGas Canada Inc. and the Virginia adjustment that were present in Q1 2020.

Excluding these one-time headwinds, Utility’s EBITDA was up 11% in US dollar terms. Our growth continued to be underpinned by ongoing system upgrades that are focused on improving the safety and reliability of network, reducing leak rates, and driving better environmental outcomes.

All of which are focused on serving our customers. During the first quarter, the Utility segment experienced slightly colder weather across all our utilities with the exception of Alaska, compared to the first quarter of 2020.

I'd also remind everyone that we have weather normalization mechanisms in place at Virginia and Maryland, our two largest operating jurisdictions, which protects our customers, and AltaGas from large weather driven volatility in any given quarter. WGL had a solid quarter with normalized EBITDA of CAD 276 million, compared to CAD 278 million in Q1 2020.

Excluding a $15 million negative impact the foreign exchange for the one-time impact of Virginia rate case adjustment of CAD 8 million in the first quarter 2020. WGL’s run rate normalized EBITDA increased approximately CAD 21 million, or 8% year-over-year.

Notable drivers include higher revenue from ongoing system improvements and ARP spending, lower operating expense, and continued customer growth, which were partially offset by ongoing impacts related to COVID-19. We continue to make solid progress towards earning our allowed returns at WGL through a combination of capital, regulatory, and cost discipline.

SEMCO and ENSTARs combined normalized EBITDA was CAD 82 million in the first quarter, down CAD 4 million for the same period last year. We are moving the negative impact of foreign exchange fluctuations, which totaled CAD 5 million SEMCO and ENSTARs run rate normalized EBITDA increased by approximately CAD 1 million as the colder weather in Michigan was largely offset by warmer weather in Alaska compared to the first quarter of 2020.

And finally, normalized EBITDA from retail energy marketing business was $13 million in the quarter, increase of $17 million year-over-year, driven by favorable gas margins and pricing, and the absence of widespread shutdowns experienced by C&I customers, as a result of COVID-19 that occurred last March. Within our Midstream segment, reporting to record $304 million of normalized EBITDA in the first quarter 2021 compared to $120 million in the first quarter of 2020, which represented a 153% year-over-year increase.

This included robust profits from the US transportation and storage business as well as strong performance across the Canadian midstream operations. If we adjust for the larger than expected performance from the US transportation and storage business, Midstream run rate EBITDA was still up approximately 87% year-over-year, including a full quarter of consolidating Petrogas.

EBITDA from global exports increased to approximately $7 million during the first quarter 2021 reflecting Petrogas consolidation and combined shipments at RIPET and Ferndale of approximately 85,000 barrels per day of LPGs to Asia, across 14 VLGCs. Our processing and fractionation business realized strong volume.

Volume increases across the Midstream platform with a 10% year-over-year increase in total inlet volumes, due to increased producer activity, as a result of improving fundamentals and commodity prices. As has been the case in the past few years, we continue to benefit from our industry leading footprint in the Montney as producers continue to complete drilling programs and increase production at our recently expanded Townsend and North Pine facilities, a trend we expect to continue in the coming period.

We remain focused on managing risks in the Midstream business in reducing commodity price exposure and volatility. We had approximately 95% of our frac exposed volumes hedged at $26 a barrel and realized an average frac spread of approximately $15 a barrel after transportation costs.

Approximately 60% of global exports projected volumes are collectively hedged, including our long-term tolling agreements. The balance of volumes are derisked through FEI to North American financial hedges that averaged approximately US$11 per barrel for propane and butane.

Depreciation and amortization expense for the first quarter of 2021 was $99 million compared to $105 million for the same quarter in 2020. The decrease was primarily due to lower US Midstream amortization and lower foreign exchange rates, which were partially offset by new assets placed into service and the amortization on the consolidated Petrogas assets.

Interest expense was $70 million, was in line with last year. Overall higher debt balances and lower capitalized interest was offset by lower average interest rates.

Turning now to our 2021 guidance and capital plan, we have increased our 2021 financial guidance ranges to reflect a robust start to the year and the confluence of tailwind, and headwinds that have unfolded, since our initial guidance back in December of 2020. This includes increasing our 2021 normalized EPS guidance range to $1.65 to $1.80 per share from $1.45 to $1.55 previously.

This presents 22% year-over-year growth using the new midpoint. We also increased our 2021 normalized EBITDA guidance range for $1.475 billion to $1.525 billion from $1.4 billion to $1.5 billion previously.

This represents 15% year-over-year growth in normalized EBITDA using the new midpoint. Our 2021 CapEx outlook remains unchanged at approximately $910 million.

The majority of that capital budget is being allocated to Utility segment, which is focused on system upgrades to drive better customer outcomes. We were also pleased to announce the sale and closing of a transaction to monetize the US transportation and storage business last Friday for total proceeds of CAD 344 million.

This noncore assets sale represents another important step in advancing AltaGas strategy of refocusing the company on its two core businesses, while continuing to reduce leverage and reduce the volatility of cash flows. This is a continuation of what has been a multi-year journey as we reposition all the guests, and we are pleased to be nearing our goal of getting to five times net debt to normalize EBITDA.

This concludes our prepared remarks, and we would be happy to turn it over to Q&A. Operator?

Yes. Good morning.

Just on the propane export business looks like the tolling arrangements are still at just 15% of the 90,000 combined capacity. I thought it was closer to 20% previously, but I just wanted to confirm that there have been no incremental long-term commitments made after the April 1st NGL supply re-contracting season?

And, I guess, if not, maybe an update on, how your discussions are progressing with some of your larger gas processing customers that might be interested in locking in their export capacity on a long-term basis?

Hey, Good morning, Patrick. Thank you for the question.

First of all, you're right. We're currently at 35% toll with that and we are targeting higher percentages post the April.

Conversations have been constructive and we speak with them regularly to secure additional tolling volumes. I think just to give you a more backup on a longer-term, you'd look at this and you said our capabilities and efficiencies that we've created of having these two West Coast export facilities have really put us in a position that producers, certainly, can't ignore the value proposition that we're proving to them and the recent strengthening and the fundamentals and improving commodity prices is really starting the conversation and we're seeing increased interest by producers and aggregators who want to be participating the upside and quite frankly, some of the consolidation, that's occurred as well, with larger balance sheets and customers able to make longer-term commitments, makes us optimistic that we'll continue to strengthen our position there, but thank you Patrick.

No, that's great, Randy. And I know it's still early days in the nearby Watson Island terminal being online, but any comment on having to compete for volumes or contracts or are you servicing completely different markets and we should not expect any near term pressure on volumes or margins at RIPET and Ferndale?

Yes. We don't see that the startup of Watson Island is going to have any significant impact on our business.

We believe that the Canadian propane market is going to continue to be the over supplied and the Montney continues to see strong drilling activity and remains a top play in North America. Overall though, when you think about our assets, intrinsically, the assets are great and gives us a return on the investment that's outstanding and the intrinsic value of the dislocation of values propane the ability to our propane and butane.

What that does is it provides us an incredible value that no one including Watson can replicate and so we're not a one -- we've acquired these assets and we can move far more propane and prior to the acquisition. And we also have the ability to segment prices line up differently between the two products to ship more butane and propane or vice versa.

So our position in the industry is leading the two facilities with the optionality access to the Asian markets and we -- when we look at -- we don't see others that have that ability so to me overall wants an island, smaller boats, different markets. And essentially, has some commercial challenges.

That's great. Thanks for confirming that.

And then just for James maybe, with the improved visibility here towards reaching your sub five times leverage target. Any update on your discussions with S&P regarding moving to triple B mid rating or is that still dependent on executing a sale of MVP.

Patrick, no it's good question. I mean at the end of the day, it would be fair to say that the sale of the US transportation storage business is moving us a little faster than we originally anticipated towards that five times net debt to EBITDA goal.

We've just come through a ratings update and confirmation process with S&P late in 2020. And so far, you know, and other rating agencies and so far we're exceeding some of the forecasts that we've put in front of them.

So I think that this is something we will discuss with them as we enter the ratings review cycle later this year. But you know if you look at the report, it would be a couple of years of us, hitting FFO to debt targets that in the 14% to 15% range, that would trigger an upgrade.

That’s perfect. Thanks guys.

I'll leave it there.

Thanks. Good morning.

I had a couple of questions on US stores sale. I'm curious, you mentioned as far as debt reduction is just curious what you meant by that is six months, one month and any sense of when you think you can get to there five times are going to get next year or the year afterwards or something or medium term?

James, you want to take that.

Sure. So I mean, when we release the press release on the US midstream sale, we've clearly identified that if you look at our run rate EBITDA at the end of 2020, and add a full year contribution from Petrogas, we would have been at about 5.6 times net debt to EBITDA.

This sale will take about 0.5 turns of leverage off of that so we're starting to get close to that five times net debt to EBITDA. Looking out into 2022, obviously if you layer in some growth that we forecasted being contributed by rate base investments, and when we will move closer to that five times for us to get below it, we obviously have additional dry powder at our disposal and levers to pull with some additional non core assets that we haven't moved on at this point.

We continue to identify MVP as a non core asset, but we're going to continue to be patient with that asset so that we fully de risk it and increase the value and move forward with the process at that point, which should take us below five times net debt to EBITDA.

That's great. And also it's an interesting transaction because even at a time where volatility is increasing.

And you know on a trailing basis looks like, we got a good multiple and on a forward basis, maybe not so much so I know you, can you characterize this transactions more accretive to your balance sheet versus accretion to your EPS or your unlevered EBITDA?

Well, you know, I think when you think about this transaction in the asset itself, right, it's pretty much of a non-core asset and the business is really, if you think about the business in the contractual businesses storage and transmission, it really has the – what you're doing that businesses, it has the intrinsic value that you hope to cover your cost, and then you set yourself up with the opportunity with intrinsic value that may happen one out of five or we believe 10 years. And so for us, very much a non-core asset, very small impact overall to earnings and it presented us with an opportunity to delever significantly and we made a strategic important decision to hold those assets to the end of the quarter for that opportunity and I think the team did an excellent job.

Okay.

And I wouldn't mind adding. Sorry, I just wanted to add to, on from an earnings standpoint, it's actually going to be somewhat, it's going to be neutral from an EPS standpoint, just if you look at the contribution its had on average over the last five years of about $16 million.

And you basically take interest expense out from proceeds that we're going to use to repay debt, and the depreciation and amortization that will avoid because of the recognition of that asset on sale, and it would be neutral to earnings going forward.

That makes sense. So you're ignoring this windfall or this year which makes a lot of sense and using that, that historical average.

Okay. And then maybe other thing is the MVP any – any change – I just had [indiscernible] any changes with some of the accounting like AFUDC and anything going on there if you just throw some notes on AFUDC?

I’ll let talk about the AFUDC, more broadly speaking, right I think we believe and continue to be confident, the pipeline will get built, and that it's a very critical asset for reliability in the US, in terms of the build out of the electric grid as well. So, but specifically AFUDC, do you want address that James?

Yes. We did record AFUDC through 2020 on the construction of that project ourselves and the consortium partners on MVPLC's recognition of AFUDC as it moves its way through the remaining milestones that it needs to achieve to get the in service date, so 2021 will not have any AFUDC, in our EBITDAR or EPS numbers.

Okay, perfect. Okay, thank you.

Yes. Thank you and good morning.

Congratulations on the sale of the US transit business, but just a follow up there. How do you look at the – how that impacts on future asset sales for example, just picking one at random play.

Its easier to just sell it and clean up that story or the analysis of financial flexibility a holdout for top dollar. And on a similar vein, we’re seeing some very strong valuation on utility sales in the market.

So, was there any incentives to maybe look at oncore utilities as deleveraging candidates?

Thank you, Robert. Thanks for the question.

The last half, sure we're always looking at opportunities to look at our portfolio and to the extent that we can leverage and grow those assets, we would look at that but more broadly, right, more broadly, the deleveraging that we have done has been, I think, significant and it's put us in a position where we can use our dry powder on some of these other non-core assets. So that's where we'll be certainly as we did with our non-core transportation and storage assets will be opportunistic, but we are in, I think, an excellent position to fully fund our growth plans and to continue to create shareholder value.

So it hasn’t really changed, it's just put us in an even a better position going forward.

Great. Okay.

And so I wonder if you could comment on the outcome of the recent Maryland case, how you characterize I didn't come in, it looks like it was premature to the location. And so at the same time, you're still holding to your view of being able to achieve authorized returns, can you just square that up for us please?

Yes. Sure.

I mean, the order was -- it was ultimately a settlement on our behalf in terms of the return on equity and the capital structure were consistent to what we have previously been earning on. And so when we look at our business going forward, our strong rate base growth in earning our allowed return we're looking at our overall operational excellence model.

Blue and his team have done a tremendous job in terms of capital discipline, judicious cost management and improving the customer value proposition. So yes, we're very bullish and we continue to remain on target to allowed return.

Okay. Last question for me.

I know it's quite early, but has the change in the carbon tax, or the expectation of CCUS tax credit open up any opportunities for AltaGas?

We know it's early, right? And there's a lot to unpack in a variety of these Biden's proposals around infrastructure and area, but really I think overall in some of this will be looking at really benefiting in the utility and our existing relationship infrastructure that connects our 1.7 million customers.

So as we look forward on projects, such as hydrogen that appears to have some options that can leverage our asset and customer base and provide significant environmental benefits. We'll be looking at those opportunities in particular, it's early there's hydrogen production tax credits in some of the other proposals.

So we'll be looking at that, but again it's really early that's going to be months in the road.

Yes. Okay.

Thank you.

Thank you. Good morning.

Maybe the first question to starts with Randy, and it really revolves around your hedging program and I would appreciate the details that we have on a quarterly basis. And you could maybe just talk about just the philosophy of the hedging program on the midstream side of your business.

How you're approaching this? What's changed in the current market environment or what's remained the same?

Hey, Andrew, thank you. Nice to talk to you.

This is change -- we have approximately 60% of the volumes locked in this year. Really, when we look at it, we're managing in terms of our cash flow and earnings, but we leave a certain amount of those positions on because it provides us the flexibility for opportunistic pricing and supply movements.

So we tend to go into the year with a target around those levels, and then we charge the commercial team to optimize that going forward, and then we'll be continuing to look forward into 2022. In addition to that we have -- we calculate our forecast on ultimate totaling volumes as well, and incorporate that into our hedging strategy.

So that hasn't changed, and we continue to be focused on increasing tolling percentages as well.

I appreciate that commentary. And then maybe just looking to part of the house lends, and obviously dollar Canada has moved a lot.

How do you think about just the FX hedging approach or lack thereof, from a philosophical standpoint for the organization?

Well, Jim’s done a great job and I'm going to let him address it. I'll address it.

At a high level we have two aspects that go here, right. We have a US denominated debt.

So as that changes as opposed to some of the cash flows and EBITDA that come back, so there's a inherent hedge there. But Jim over to you, address it more specifically.

Yeah. Andrew, I mean we've said in the past that we don't undertake translational hedging.

So we do look at transactional hedging to try to lock-in margins on some of our exports, but on the translational side we don't, and even though there is a reduction to EBITDA, I mean when you drop down to ratios like EPS and our debt metrics, but just given the fact that we've got US dollar denominated debt in -- and US dollar EBITDA, there's no real material impact to our earnings per share debt ratios as a result.

Appreciate, and then one final one if I may. I know it's still early days.

Do you foresee any impacts, just from the commentary that come out of the Canadian budget in relation to interest deductibility.

Yeah. I mean, we've looked at this on a premiere.

We don't anticipate any issues with the debt that we've got at ALA and the profits that we're generating within our Canadian business units. I don't think we're going to be captured by those rules at this point.

And we continue to reduce leverage, so I think we're in good shape there.

That’s good. Thank you very much.

Thank you.

Thank you. Some of my questions have already been answered.

But I'm wondering maybe you can just give us a bit more context around hitting your run rate of operational efficiencies and synergies with Petrogas in Ferndale. How would you characterize in terms of the extent to which you think you've realized what's possible versus how much more there is, in the first quarter, versus how you might continue to ramp that up, and when you might hit your full run rate of efficiencies and synergies.

Good morning, Linda. Actually thank you for the question.

Look, we're in the early days of the integration, so I'm -- I think that we are just beginning to scratch the surface of what we can do them as we align these two businesses going forward. I told you broadly it gives us the ability to load more ships.

We have more far more tools in our toolbox around logistics and optimization. And so -- again, I think that we'll be working through this year to continue to optimize them.

I think the two teams have come together very well. So we'll continue to look at -- our rail cars are -- a lot of the logistics.

I've said before, we're an energy export and logistics company and the team continues to drive value. So, we got the early stages of what we ultimately can achieve in my judgment.

And clearly the outlook for the whole industry has improved in Western Canada. I'm wondering if you can give us a sense of how we might think of the volumes continuing to ramp up in your midstream business and what sort of incremental commercial agreements or commitments that you might realize from producers over the next nine months, I guess as you continue in the year.

Well, clearly, we don't want to get into some of our specific negotiations, but I think the trend has been, a friendly mobility around the world is continuing to pick up and energy demand is following suit. And that's good for the upstream producers.

We are fortunate in the extent that the investments that we've made and our assets have available capacity, particularly in -- at Townsend and North Pine. And so we continue to see ramp up there.

It over the longer term, continued to provide what I believe to be the best market in Canada for LPGs, and you'll see it's continuing to increase volumes there and make longer term commitments with producers going forward. So we're in a really good position as volumes continue.

Now, producers have said, they're going to be disciplined and -- but we’ll continue to improve our efficiencies and cost structures, and I expect that we’ll continue to have volume growth trends ramping up over the next year.

Thank you. And just a final follow up.

In the past AltaGas has expressed a willingness to consider petrochemical investment opportunities in Western Canada with your expanded NGL capabilities and optionality. Would you consider any sort of petrochemical investments, whether it's a partial interest in the joint venture or other initiatives?

So, Linda, we think -- look, I mean, I say this, that we're primarily focused on our integration and optimization of our assets, in that we continue to see opportunistically ability to deploy capital there organically. But as we look forward, similar to what we did with Petrogas, to continue to leverage in our distinctive capability around our export capacities, we would really be looking more on organic growth, but overall, I think we're unique in providing both access to domestic markets as well as our export volume.

So, again, I don't see us, at this point, moving in that direction. But, clearly, I think, our focus and we believe to be the best market is in Asia.

Thank you. I’ll jump back in the queue.

Hi. Good morning.

It's Dariusz Lozny on for Julian here, just wanted to briefly, have you walk through some of the moving parts of your higher EBITDA guidance for 2021. Obviously, it seems like it's higher due to the strong performance in the U.S.

midstream segment that you discuss, but maybe talk through some of the other moving pieces, if you could. Such as potentially synergies from Petrogas, FX outlook, and I assume the range is narrower, because you're -- you have a better sense of your hedging program.

But if you can talk to some of those moving pieces, please, that’d be great.

Good point. And I'm going to let James get into some.

I'll just make a broad comment that, we feel that we could be, again, above the mid point at the Cal 2021 stays strong and moves beyond that. But there's a variety of give and takes in that.

And I’ll let James walk you through some of those particulars. James?

Yeah. So when -- obviously, when we look back to where some of some of the factors were that we put into our guidance in December of 2020, some of the tailwinds that we're seeing right now that contributed to us moving up, is obviously the contribution from the U.S.

storage and midstream business, but we've also seen stronger frac spreads and we've been able to lock in the majority of those. We’re 95% hedged on frac spreads.

We've seen higher volumes at our extraction facilities as well, than what we had factored in and obviously higher export volumes in our global export facilities. And Randy touched on it stronger NGL pricing on C4 is something that we've factored into some of our upside as well.

And then on the headwind side -- you touched on the one that's the most material that's FX. You know, if you look at a full year impact FX is about $45 million.

Just given where the FX rate is right now, relative to where it was when we set that guidance. So those are some of the factors that puts and takes that went into us tightening the range and moving the midpoint up by $50 million.

Okay. Excellent.

Thank you. One more if I could?

On the sale of the US transport and storage assets, can you maybe just talk about was that a segment or a business that you have been actively marketing or did you just realize that the time was right for a sale given the conditions during Q1?

You know, we identify that as a non-core asset and we've been working toward that. As I said in the past that there's a -- we continue to look at it the leveraging.

We made a business decision to hold the assets through the winter heating season because of the nature of these assets and then we went forward to monetize it. So we've been -- that's been in the works.

Okay. Thank you very much and congratulations on a great quarter.

Thank you.

Thanks. Appreciate it.

Yes. Good morning, everyone.

Just two follow-up questions for me. First off on the guidance, just want to get a sense was the cancellation of AC/DC on MVP, also contemplated there?

And then, I guess, when I take a look at kind of the moving parts there, the FX headwind will be offset below the EBITDA line and AC/DC is non-cash there as well. So fair to say that – on cash impact basis -- you're still quite ahead of plan?

Yes, absolutely. You could say, James I don’t know -- if you want to comment on that.

No. I think, I don't have any data that.

Originally, it was, yes, but obviously, as we got to year end reporting and some of the impairments that took place in the consortium partners decided not to recognize any more AC/DC that became a headwind EBITDA.

Okay. And then just another follow-up to Andrews question previously.

So you commented on the interest deductibility, what about any cost cross border structures, any potential thought that you'd have to alter anything there? Any potential impact from the federal government and structures used across the border?

Sorry, I didn't follow your question, Robert. Can you repeat that?

The federal budget also talked about the potential to change any cross border structures on the tax basis. So I'm just wondering if any -- if you repatriating and your US income into Canada could be impacted by a change in the..

No.

In the budget. Okay.

No, no, it wouldn't be impacted by, sorry that's -- that's what I wanted to confirm. So, the Canadian budget changes would not impact our ability to repatriate funds from the U.S.

All right. Thank you.

That’s it.

Thanks a lot.

Hi. Good morning.

I like to come back to asset monetization. And while a key goal today has the benefit of deleveraging.

You know, coming back to your answer earlier around the utilities does today's LDC transaction cause you to think more about the benefit of sell into drive value between, what you think you can hold an asset at versus what's embedded in your share price, what is deleveraging still the main focus and really what would drive assets?

Yeah. I think more of, you know, on the deleveraging is how we're really focusing, we look to continue to drive down those metrics and provide ourselves dry powder for opportunities going forward to fund the significant growth we see in both our midstream business and our utilities going forward.

My comment on the utility is that we want to continue and we will continue to invest and grow those assets, but as we look at what the right mix there is we'll always be looking at every asset that we own to drive value for our shareholders.

I guess, that’s the difference between what you can sell it for versus hold value is not really something that would surprise you in and of itself to transact?

Well, I look at these assets to the extent that we can add value that we can continue to improve it, leverage the asset and continue to grow our earnings per share, and that we bring a competitive advantage that's what we'll do with these assets, and to the extent that we're not able to do that in an encore then we will look toward monetizing them at fair value but we're not in a position where we have to do any transactions, as we were maybe two years ago.

Understood. If I can just finish with the growth that you're seeing in Western Canadian midstream business.

You see more of that being driven by the optimization of your asset footprint with Petrogas, so do you still see it being fairly capital intensive, with respect to building new infrastructure under contracts for producers?

I think long-term, there'll be additional investments in assets and on our integrated platforms and such, but right at this point we are fortunate to have our network that provides producers access to very valuable markets and I've learned in this business, connecting producers to valuable markets and increasing your net back will attract more volumes to your platform and that's what's happening here. And certainly we expect with low prices and prices increasing that there will be reaction in terms of volumes and that's what we're seeing and that will only be more helpful after filling up our facilities.

And just over that long-term, if you look at some of those more capital intensive projects, what are the top two or three opportunities that you see to add to your footprint?

Well, look, I think, as we look organically, first of all we're looking at our logistics platform right, and that we can aggregate rail and put together more efficiency, around our construction, real strength over the long-term, expanding in the fractionation side of the business in our Northeast, Montney footprint, and continuing to build out infrastructure there and doing it in A - to the best extent possible in a modular way, where the paybacks are faster, and that there's not a lot of lag is a model that we would look for, so to be able to take our assets are continuing to expand and leverage that footprint in a cost effective and efficient manner is something that we would see capital into the future. And I think we'll see many opportunities over the long-term.

Great, thank you very much.

Randy, good morning. How are you?

Hi there, Jeremy, I'm doing well, thank you.

Good, good. Just a few questions for me, if I could throw it out here.

Just wondering, any thoughts you might be able to share with the Biden infrastructure bill and there could be opportunities for infrastructure build out, but I guess I'm more curious on the tax side, with taxes moving up, how you think that impact would -- could impact consumers what could that do to build headroom. Just wondering, any thoughts you might have on taxes there?

Yeah. Great question, Jeremy.

Thank you for that. I'd tell you on the utility side and you know this business quite.

Well I mean, to the extent that the Biden tax bill ultimately becomes law, and there'll be some time here, right. There's probably, in terms of the utility net positive in terms of cash flows right and EPS neutral going forward and in terms of -- and so those costs would be passed on there to the consumer from that standpoint.

And given the most of our operations in the US are utility based. The impact would be small.

But clearly in terms of Petrogas in the US other unregulated operations, so there are some given takes there, there's opportunities for other projects within the infrastructure bill that I alluded to that we're working on in terms of other opportunities with consortiums, possibly, again around renewable natural gas and hydrogen and some things as well in terms of carbon capture that we'll be looking at. So there's some puts and takes throughout the bill and I think we've got a long way to go to see exactly how that plays out.

Got it. Thanks for that.

Just wondering separately, I guess, carbon capture is been kind of gaining a bit more attention with regard to the 45 Qs there. And even carbon tax, in Canada, is kind of I think raising the profile of TCS as well.

Just wondering, any thoughts you might have as far as this technology, whether there could be some role for Alta to -- use this utilize this at some point in the future?

Yeah. Great question.

I think we're looking at that. We're looking at all aspects of this.

And we've got a very good strong long history of being a leader in social purpose, delivering strong environmental stewardship. So as we go through this long and I believe to be a long transition in the energy ecosystem, look one of the things that's really I think helpful, is what we're doing with RIPET and Ferndale, deliver lower carbon intensive fuels to Asia and displacing some of the higher carbon footprints and that's of real value in the long run.

In terms of the technologies and investments, carbon capture I think if you look at where we are with Ferndale refineries, you need scale right, you need scale and more parties that are necessary to increase scale. So once we have that I think that that's long-term that's viable and we'll look to participate, where we can bring an advantage in terms of building pipes around hydrogen or long term carbon capture.

So again, long-term transition, our company will focus on what we have core capabilities to do and where we will participate in leveraging our skills going forward Jeremy. Appreciate the broad question.

Thank you.

Got it. Just the last one if I could, with regards to RNG, do you see any opportunities across your footprint there just any thoughts in general?

Yeah. Again, it's different in each one of our different jurisdictions.

I think that we see a couple of things around our territory. I know Blue is on the call, Blue do you want to add any comment in that respect.

I think from a macro perspective Randy you're spot on. So it varies across our jurisdictions.

We of course -- when we think about RNG, we're looking much more broadly than perhaps just the traditional dairy farms or chicken farms, based on where we operate. So we are active in dialogues and discussions and you should expect to see some activity from us in that space, as we move forward.

Got it. I'll leave it there.

Thanks so much. A - Blue Jenkins Thank you, Jeremy.

Thanks, Valerie. And thank you everyone once again for joining our call today and for your interest in AltaGas.

As a reminder, we will be available after the call for any follow-up questions that you might have. That concludes our call this morning.

I hope you enjoy the rest of your day. And you may now disconnect your phone lines.

Thank you.