Tammi Price - Vice President, IR Stew Hanlon - President and CEO Don Fowlis - Chief Financial Officer Cam Deller - Manager, IR

David Noseworthy - CIBC Michelle Zuliani - RBC Capital Markets

Thank you, Nicolas and thanks everyone for joining us this morning. Joining me on the call today are Stew Hanlon, President and CEO and Don Fowlis, Chief Financial Officer.

The format for the call will be that Stew will provide an overview of our results and Don will highlight a few items regarding our financial position and capital spending. This will be followed by a question-and-answer period.

Cam Deller, our Manager of Investor Relations and I will be available after the call to answer analysts’ modeling questions. With that, I’ll turn it over to Stew.

Thanks Tammi and good morning everyone. I am pleased to have this opportunity to discuss our first quarter results highlighted by the delivery of pro forma adjusted LTM EBITDA of $434 million.

This level of profitability illustrates the benefits of providing an integrated network of solutions that offer balance and diversification of cash flow. While our pro forma adjusted LTM EBITDA performance is down 2% over the same period in 2014, I'm pleased with the results given the recent oil price environment and considering that the prior period included an unusually large and opportunistic contribution from our marketing segment.

Obviously our first quarter results in certain business segments have been impacted by the decline in oil field activity that was brought on by the 50% oil price decline, witnessed at the end of 2014 and into 2015. We have been actively managing our business through this timeframe being sensitive to the industry dynamics that are unfolded including large scale capital spending and operating cost reductions; a 55% drop in oil directed drill rig count; a greater than 50% increase in uncompleted oil well inventory and modest shut-in activity of less economic fields.

Conventional oil production in North America is just now starting to moderate and the demand response is well underway, offering us the outlook for a slow recovery in oil prices as we move toward 2016. Capital and operating cost efficiencies are being realized amongst our customer base.

And looking forward, we expect to see healthier and more disciplined energy industry in North America emerge. I’d like to highlight our point of view that the sequence I just described is largely how we expected events to unfold this year.

History has proven time and time again that ours is a cyclical industry and so often, it needs recalibrate. As I’ve said, as illustrated by recent announcements of new storage tanks, the demand for Gibsons’ solution remains in place as North American oil and liquids production continues to require midstream investment in support of market access fundamentals.

Industry conditions in the first quarter of 2015 resulted in some weakness in some of those businesses, more exposed to cyclical influences, including our environmental services, truck transportation and Processing and Wellsite Fluids businesses. Offsetting this were strong results in Terminals and Pipelines, which increased 21% over the same period last year and our Propane business which increased 11% over the same period last year.

The gains in both of these segments reflect recent growth capital investments and an inherent stability of cash flow generation. I will now discuss the individual segments in more detail.

We delivered segment profit of $32.4 million in our Terminals and Pipelines business which as I noted earlier, represents a 21% increase over the same period in 2104. A key operational highlight of the first quarter was that despite processing slightly lower volumes through our Terminals on a quarter-over-quarter basis as a result of reduced unit train volumes, we achieved record Hardisty Terminal throughput in March at over 600,000 barrels per day.

Another notable accomplishment in the quarter was a successful commissioning of another two tanks totaling 900,000 barrels at Hardisty East, bringing our total operation of storage capacity at the Terminal to 6 million barrels. Additionally we completed our project to enhance the connectivity of the recently twinned Cold Lake pipeline system at Hardisty.

This newly contracted storage and Pipeline infrastructure is underpinned by long-term take or pay contracts and will begin to contribute full EBITDA benefits in the second quarter. So putting our medium to long term growth profile subsequent to the quarter-end, we announced two successful crude oil storage tank contract negotiations with customers that will result in the construction of a further 1.8 barrels of capacity at Hardisty coupled with 1.1 barrels of capacity currently under development.

These latest initiatives will bring total Hardisty storage capacity to $8.9 million barrels by the scheduled 2017 or mid 2017 completion date. The other projects under development in this segment consisting of a 3,000 barrel storage tank for Statoil at Edmonton and a connectivity enhancement project related to the twinning of the Athabasca pipeline system at Hardisty are progressing according to plans.

When we consider all of these growth developments underway as well as the underlined stability of our cash flow in this business segment, we continue to see strong segment profit growth in our terminals and pipelines business in 2015and well into 2017. Furthermore, all of these growth projects will result in an increase in the percentage of our business that is derived from take or pay segment profit.

Our Environmental Services business achieved segment profit of $16.6 million in the first quarter of 2015. These results represented 25% year-over-year decrease in segment profit with weakness centered in our production services category, which experienced a 33% decline in revenue.

This service line has a higher proportion of earnings levered to completion activity and accordingly, offers some of the higher margin opportunities, the loss of which impacted overall profits disproportionately in the first quarter of 2015. The more stable production related fluid handling business only experienced a 3% decline in revenue, as expected given that overall crude oil production levels remain relatively stable in the quarter.

While volumes processed at our facilities in the quarter remained healthy as compared with the same period last year, gross margins were compressed due to rate reductions and the impact of lower oil pricing environment on our oil recovery activities. In response to these challenging market conditions and with an expectation that they may persist for the remainder of 2015, we began to adjust our operations in the first quarter including staff and payroll cost reductions which contributed to a reduction in our cost of sales as well as a 17% decline in operating expenses across this segment.

We remain committed to our strategy of growing our Environmental Services business or shifting the revenue profile toward a more stable production related activity base, through investing in processing, recovering and disposal or PRD facilities, in this regard. We have four projects currently underway related to the expansion or upgrade of existing PRD facilities in Canada.

Additionally, we have approximately $30 million of capital allocated in 2015for similar facilities at new locations in the United States. And given the uncertainty with the timing of potential basin specific oil production declines in the U.S., we believe that this capital remains flexible.

We will continue to evaluate these projects as the year progresses and may look to offset this organic capital if comparable acquisition opportunities arise. We have frequently noted the highly fragmented nature of this business in the United States and believe that the current market may be particularly attractive to execute smaller tuck-in acquisitions within the segment.

Truck transportation attributed segment profit of $16.5 million in the first quarter of 2015, down approximately 17% from the same period in 2014. Contributing to this year-over-year decline was a 13% drop in volumes, predominantly resulting from the lower internal industrial propane volumes.

Some shut in activities at certain less economic oil fields, congestion at third party terminals and lower completion fluids and logistic expense. [Ph] Despite these headwinds, the higher degree of variable costs in this business enabled us to maintain gross margins at a level consistent with prior years.

Operating expenses increased modestly due to the acquisition in the quarter of Littlehawk, causing a slight weakening in overall segment profit as a percentage of revenue. With production declines just now beginning to take hold as a result of lower drilling and completion activity, we continue to expect a modest reduction in segment profit for this business throughout 2015.

Our Processing and Wellsite Fluids business generated segment profit of $7.8 million in the first quarter, representing a 54% decrease over the same period in 2014. First quarter results for the segment were negatively impacted by a substantial decline in the demand for drilling and completion fluids in our key markets.

This environment prompted our decision to reduce plant throughput at the Moose Jaw facility, resulting in a 22% decline in sales volumes. A weakening demand for certain end products caused margin pressures in this business, resulting in a 40% reduction in segment profit per processed barrel.

While benefitting from a 32% year-over-year decline in the cost of heavy oil feedstock, our opportunity to sell higher margin frac fluids and distillate products were severely diminished. As these volumes were instead directed by necessity to latter end top's product category which offered challenging margins in the quarter due to tight heavy to light crude oil price differentials.

Upon conclusion of this facility’s annual maintenance program this spring, we will be focusing on the seasonal road asphalt market which appears to be offering attractive margin opportunities according to initial indications. Furthermore to capitalize on the flexible nature of the processing facility and to diversify the risk profile, we're exploring new end market opportunities for later-end products.

Expansion of rail loading capacity at the facility’s progressing on time and on budget and we expect to begin to realize improved transportation costs by June of 2015. We continue to evaluate the planned expansion of this processing facility and that was originally scheduled for later in 2015and we expect to update the market on this project when we provide our updated capital spending plans in August.

Segment profit in our propane and NGL marketing and distribution segment was $38.3 million in the first quarter, representing an approximately 11% increase over the same period in 2014. Supported by the contributions from our 2014 acquisitions of Cal-Gas and Stittco, our industrial propane division delivered a 60% year-over-year increase in volumes.

This performance gain is notable given the unseasonably warm weather in West Canada and despite a number of rate concession requests from our oil and gas customer base. Gross margins in our Industrial Propane business remained healthy and at levels consistent with historical averages.

Benefitting our wholesale propane and NGL business in the first quarter was the decision we made to nearly double our leased fleet of pressurized real price to over 1,100 units as compared to the first quarter of 2014. This increased physical infrastructure capacity enabled a robust 33% increase in wholesale and NGL volumes and a generation of related margin opportunity.

With the warmer low demand season approaching, we look forward to cooler winter months to fully deliver on the expanded operating and logistical footprint, in both our industrial and wholesale businesses. Our marketing segment contributed to $11.1 million in the first quarter which while in line with expectations and performance levels over the past several quarters is down 57% from the same period of last year.

And as I mentioned earlier, it's important to note that this year-over-year comparison is somewhat misleading considering the unusual market conditions in the previous period including a WTI to WCS pricing differential close to $40 per barrel and pricing across all of the market grades of crude illustrating high volatility measures. Today's operating environment reflects a much tighter industry conditions but do not offer the same outstanding margin and blending opportunities.

We expect these conditions to persist for the remainder of 2015 and we will therefore remain focused on marketing activities that maximize companywide asset utilization by sourcing and directing incremental crude oil and condensate volumes for the benefit of other business segments. Now, I would like to focus on Gibsons capital expenditures for the first quarter.

We spent $79 million on growth capital and $12 million on maintenance capital in the first quarter. Our first quarter growth capital expenditures were primarily directed towards the following key initiatives.

The Edmonton Statoil tank and the expansion of related infrastructure including a 22 spot dedicated load rack from the CN rail main line, the Edmonton terminal storage optimization project, the storage tank expansion project on the east side of the Hardisty terminal, the Cold Lake and Athabasca pipeline connectivity enhancements projects at Hardisty and the addition of new and the expansion of existing PRD facilities in both Canada and the United States. Despite the currently challenging commodity price environment, Gibson has never been more active in the execution and development of gross initiatives.

Our near-term focus is to deliver important crude oil logistics and market excess solutions for our key customers and to maintain capital discipline as we evaluate the many acquisition opportunities on horizon. Over the mid-term to longer-term, we expect to continue to capitalize on the backlog of energy infrastructure investment requirements in North America, which we expect will remain in a secular growth trend.

In summary, this first quarter of 2015 was a challenging and exciting time for Gibsons presenting both obstacles and opportunities. Despite the headwinds we’re experiencing in those areas of our business that are impacted by activity levels related to the current oil price environment, we remain well-positioned.

Our entire organization is enthusiastic and we will work to capitalize on opportunities, execute on our 2015 business plan and continue to solve logistics and midstream problems for our customers. Now I will pass it over Don who will discuss our financial position.

Mr. Fowlis.

I am pleased to report Gibsons hold a significant amount of cash on the balance sheet and our leverage is relatively low. At quarter-end, we had a $173 million of cash and $462 million available under our $500 million revolving credit facility.

This facility carries an August 2019 renewal date. Our debt-to-debt plus capital ratio was 43%, our leverage ratio was 2.5 times, and our interest coverage ratio was 5.7 times.

We remain committed to maintaining a solid balance sheet where we have sufficient liquidity to execute our currently sanctioned growth program; we would likely access additional external sources of financing should incremental organic growth projects or larger strategic acquisition opportunities become available during the cyclical downturn. The company declared dividend of $152 million in the 12 months ended March 31, 2015, while distributable cash flow for the same period was $246 million, resulting in a gross dividend payout ratio of 62%.

On a net cash basis after considering DRIP participation, the net dividend payout ratio was 47%. Our next quarterly dividend of $0.32 per common shares is scheduled to be paid July 17, 2015.

With regard to planned capital expenditures for the remainder of 2015 and 2016, we continue to increase our spending visibility with the signing of incremental storage tank contracts at Hardisty. A large portion of our growth capital spending for 2015 and 2016 is already underway or committed under long-term contracts.

Specifically of the $435 million in growth spending planned for 2015, approximately 75% is underway or committed. About 25% of the 2016 capital plan is related to projects that are under construction or committed under long-term contracts.

We will continue to review and assess the remaining uncommitted capital projects as we progress further into 2015. And we will provide a more detailed update of our capital guidance concurrent with the release of our second quarter results.

That concludes my comments; I will turn it back to Stew.

Thanks very much Don. In closing, no doubt 2015 will be a year of challenge and opportunity for Gibsons.

We’re excited about the storage capacity expansions we've recently announced at our Hardisty Terminal and how this type of infrastructure contributes an increasing amount of stability to Gibsons’ cash flow profile. Additionally, we are excited about the breadth and magnitude of new growth opportunities that team continues to unearth in conversations with key customers and through the acquisition market.

That concludes our prepared comments. Operator, at this time, we'd like to open the call for questions.

Maybe just a bit of a different question here in terms of opportunities coming down the line, FENOC announced back in the March that they were slowing down their next energy oil trading operation which included a pretty attractive contract with Alberta government. Is there something that Gibson has the capability to do and how is Gibson positioned relative to its competition to win a contract if it is capable?

The contract with the Alberta government comes up for renewal and bid on occasion. We have done portions of that.

I think the way I'd answered that question David is related more to the overall book of business that Nexen is walking away from in. Of course that includes a fair bid of lease acquisition activity.

That's more of the business that we would be interested in and certainly we’re talking with a number of customers that were utilizing Nexen’s physical marketing capability at the lease site. We’ve picked up a fair bit of that business within our marketing group.

Are we seeing that come through already or is that something yet to come?

That would be yet to come. That would be additive to the volumes that we would be marketing as we move through the second and into the third and fourth quarters.

So, a little bit of positive there. And then, just a question on your Propane & NGL marketing, you mentioned in your prepared remarks that you did see a fairly strong performance there.

Can you give us an idea of how -- why was that segment so strong given the fact that you did have the warm weather and can you give us an idea of upside we could have seen, how we had more normal weather?

If we had seen -- I think we were particularly well positioned to take advantage of the market place if we'd had a normal weather pattern throughout Western Canada. We did execute on two very successful and fairly large acquisitions in 2014 with the acquisitions of both Cal-Gas and Stittco.

So volumetrically -- although volumetrically our volumes were down on the industrial division over what we had expected, they are up on a year-over-year basis based on the strength of those two acquisitions. We are also quite successful with fairly aggressive integration of those two companies and accordingly we’re able to work on the cost side of the business and maintain margins in a period of pretty aggressive price concessions, discounting talks with our major customers.

We also as I mentioned, had a very strong performance within the wholesale and NGL and LPG distribution businesses as well. I’d mention, we virtually doubled the fleet of railcars that we utilize in that business.

And so on a volumetric and margin basis, that portion of the business contributed nicely as well. Had we had a normal weather pattern and normal sort of activity levels within the oil patch and industrial markets that we do service in Western Canada, I think we're particularly well positioned to have an extraordinary quarter.

I'm pleased with the quarter we did have but it certainly wasn't what we were expecting.

So much stronger but no number?

That’s not in our nature. So, you know that.

Maybe one last question. I was wondering if you could discuss the potential impact of the mew Alberta NDP government on Gibson and Gibsons’ customers given its stated platform regarding corporate taxes on realities.

It is early days and certainly I'm not an expert and so any kind of speculation I would have would be simply that. Obviously higher corporate taxes, the threat of royalty review and the impending uncertainty that that will cause given what happened during the last royalty review and the capital fight that we did see away from Alberta and into Saskatchewan, none of those things are positive for the industry and/or for Gibson, specifically.

I would say that we are somewhat insulated from that and that we have a fair bit of our business outside of Alberta as well and a fairly big footprint across the continental United States. And so with no specific basin concentration risk, we're well situated to take advantage of opportunities where they occur.

I guess further I would say that a lot of the growth that we do see in Western Canada is in support of long-term investments, which are ongoing already and we fully expect to see those oil sands investments to -- that they will continue, notwithstanding the nature of the government in Alberta.

I was just wondering if you could comment on the impact of lower oil prices on the business and maybe specifically if you could provide us a refresher on your views on the environmental services, the truck transportation and processing segments relative to what you conveyed back in Q4 ‘14 conference call.

I don't think that your view point has really changed. As I said in my prepared remarks, this hasn't unfolded largely the way we thought it would.

The environmental services business, about 40% of that business is tied to the drilling and completion activities within the oil patch. So, we've seen a more -- greater than 50% decline in rig activity across North America and accordingly that business, as I mentioned is down about 20% to 25% on a quarter-over-quarter basis or year-over-year basis.

Our trucking business, we had indicated that if we see a full year of $45 to $55 crude oil, we probably expect to see that business down in the 10% range and we're down somewhat more than that in the first quarter but that was exacerbated by lower propane volumes and lower drilling and completion fluids volumes that we had as well. Our viewpoint in terms of that kind of guidance hasn’t been changed.

The Processing and Wellsite Fluids business obviously was impacted by the lower sales of drilling and completion fluids and the margin compression that we saw within those fluids, that would be offset somewhat in the second and third quarters by what we hope and expect would be a stronger road asphalt season as well as continued spot sales of roofing flux into the United States markets. And as we see hopefully crude oil pricing firm up into the back half of 2016, there's a tremendous amount of -- tremendous number of wells that are already drilled but not completed.

Those completion activities are particularly attractive to us because they provide us the full back volumes into our environmental services businesses. We have the opportunity then to sell completion fluids and deal with the resultant increases in production as well.

So, we expect that we'll start to see strengthening into the back half of 2016.

Maybe just a follow on; could you just provide some color on the nature of discussions you're having with customers just in terms of -- have any of the discussions related to discounting and bundling, and if so, has the frequency of these discussions increased?

Well, I would say that the frequency of discussions with respect to the rate concessions et cetera has abated. That was sort of the nature of fourth quarter and first quarter.

As I had mentioned, we have squeezed across sort of our operations. And I think you'll find as you go through first quarter results from a lot of our operating production customers, they will have squeezed across sort of their environment as well.

The industry is well along the road to recalibration. And now I think people are just positioned [indiscernible] for what should be an inevitable recovery.

Hi. I'm actually Jojo [ph] here for Rob.

Just a question regarding acquisitions; wanted to ask if -- are we starting to move into an environment where you guys think it makes more sense to buy versus build? And to follow on that there is a comment on, there are many acquisition opportunities on the horizon, so kind of wanted to ask, where are you seeing the best opportunities right now?

I think it's, as we've previously stated we've been particularly successful as a consolidator of smaller companies in the propane truck transportation in the environmental services spaces. And in particular the U.S.

based environmental services space we think will provide us with some attractive opportunities. We're starting to see sort of that inflection point where it does make a lot of sense to look at pointing some of our capital towards some of those smaller scale acquisitions.

And we have a number of those types of opportunities that are on our way as we normally would.

And just another question for capital guidance for 2015, is it still largely intact or is it likely that we see some of the projects delayed?

I will give a specific update in August when we release our second quarter. I would say this, I think Don talked about 75% of the 435 being contracted and committed, so that's largely intact.

I had talked about maybe $30 million of the environmental services CapEx being somewhat flexible and we had also stated that, we'll be thinking about whether or not we progress with the expansion of the Moose Jaw facility, which will be another $20 million or $25 million worth of capital. So, of $435 million, I would say maybe $50 million could be deferred into 2016 but the rest of it is intact.

If I missed this in the MD&A, I apologize. But can you quantify the savings that you are expecting to get from the staff and payroll reductions and is there any idea of what the one-time impact will be from that as well, obviously that comes through in Q2?

Really the staff and payroll reductions that we have talked about are -- we’re just matching mostly our hourly workforce in the environmental services trucking and propanes basis to activity levels. The propane business, it's a seasonal thing; we always ramp up in the winter and then ramp back down in the summer time.

On the truck transportation business, as I mentioned on our call, a lot of cost there we have is variable anyway because the vast majority of the power of units that we do utilize are contract owner operators. So that’s really normal courses of business.

We are down maybe in the 15% range in terms of our hourly workforce in the environmental services space, particularly in the United States. But again that’s really cost to go with revenues.

And so I wouldn't expect that there is any kind of one-time effect there. We haven't laid-off 20% of our workforce and accordingly we haven't -- you wouldn't expect to see a sort of a step change in terms of our operating costs.

We have productive work for everyone that’s at Gibsons today.

Thanks again for your interest in Gibson Energy. As mentioned earlier, Cam and I are available after the call if there are more questions.

Have a good day, everyone.