Tammi Price - Vice President of Investor Relations and Corporate Development Stewart Hanlon - President and Chief Executive Officer Sean Brown - Chief Financial Officer

Linda Ezergailis - TD Securities Andrew Burd - JP Morgan Robert Cancelli - CIBC World Markets Andrew Kuske - Credit Suisse Ben Pham - BMO Capital Markets Patrick Kenny - National Bank Financial Robert Quan - RBC Capital Markets

Thank you, [Marie], and thanks everyone for joining us this morning. During today's call, forward-looking statements may be made.

These statements relate to future events or the Company's future performance and will use words such as expect, should, estimate, forecast, believe, or similar terms. Forward-looking statements speak only as of today's date and undue reliance should not be placed on them as they are subject to risks and uncertainties, which could cause actual results to differ materially from those described in such statements.

The Company assumes no obligation to update any forward-looking statements made in today's call. Any reference during today's call to non-GAAP financial measures such as EBITDA, adjusted EBITDA, pro forma adjusted EBITDA, distributable cash flow or payout ratio is a reference to financial measures, excluding the effect of certain items that would impact comparability.

For further information on forward-looking statements or non-GAAP financial measures used by Gibson, please refer to the 2016 first quarter Management's Discussion and Analysis issued yesterday by the Company, and in particular the sections entitled Forward-Looking Statements and Non-GAAP Financial Measures. All financial amounts mentioned in today's call are in Canadian dollars unless otherwise stated.

Participating on today’s call are Stew Hanlon, President and CEO; and Sean Brown, Chief Financial Officer. The format for the call will be that Stew will provide an overview of our results and Sean will highlight a few items regarding our financial position and capital spending.

This will be followed by a question-and-answer session. Cam Deller, our Manager, Investor Relations and I will be available after the call to answer analyst modeling questions.

With that, I'll turn it over to Stew.

Thank you, Tammi, and good morning everyone. Before we get into my prepared remarks I just wanted to give a quick update with respect to the situation in Fort McMurray this morning.

Obviously all of our thoughts and prayers are going out to the residents of that community and wishing that and hoping that everyone will remain safe. I can confirm that at this point all of our personnel have been moved to a safe place and at this point as well, we have not suffered any loss of assets or physical infrastructure within Fort McMurray.

That being said the situation is dynamic and I can assure you that our first and foremost priority will be the safety of all of our employees and we are doing everything that is necessary to endeavor to make sure that remains so. So again our thoughts and prayers go out to the residents and people in the Fort McMurray - in Fort McMurray and the surrounding area.

Now to the prepared script, our financial results for the first quarter of 2016 reflect the diversity of our business with strong and stable results in our Infrastructure segment and to a large extent our Industrial Propane segment. That we’re offset by further and in some cases significant declines in certain of our other business segments.

We experienced a rapid deceleration of business fundamentals within our Logistics and Wholesale segments causing our first quarter 2016 to be approximately 28% lower than the fourth quarter 2015 results on a segment profit basis. As we enter 2016 we're already 18 months into the one of the deepest and most painful oil market corrections that our industry has experienced.

Then midway through the first quarter of 2016 our industry slipped rapidly into uncharted territory. With oil prices plunging to levels not seen for over 12 years, coupled with the onset of an early spring break up condition in Canada and in parts of North Dakota.

Industry activity levels slowed materially as the quarter progressed. Ending with only 11 active oil directed rigs in Canada and less than 350 active oil directed rigs in the U.S.

These activity levels represent historic lows and subsequently had a negative impact on our Logistics segment and also reduced sales of Wellsite Fluids within our Wholesale segment. Additionally, the first quarter was characterized by narrow and stable oil price differentials and a typically warm weather which negatively impacted our Wholesale and Industrial Propane segments respectively.

This dramatic deterioration of business fundamentals was not predicted, nor predictable and we were certainly not immune to this impact. Although I'm not pleased with our overall first quarter results, I am confident that we have been effectively managing our business given the difficult environment.

Recall that on April 19, we announced a new internal management structure that is designed to support three key objectives. First, to enhance customer interface and service levels; secondly to enhance internal operating efficiencies; and thirdly to streamline our overall cost structure.

We believe we've put the pieces in place to achieve these objectives. Since the beginning of 2016, we have structurally reduced our overall headcount, which includes a reduction in our executive headcount by 20%.

Coupled with the savings from the consolidation of certain physical locations across our operation and the cost alignment efforts we undertook in 2015, we’ve identified total cost savings approaching CAD40 million on a normalized annual run rate basis from these recent initiatives. As a result of this new management structure, we reorganized our reporting under four key segments Infrastructure, Logistics, Wholesale and Industrial Propane.

I will now discuss the individual segments in more detail. Starting with Infrastructure, the segment profit of CAD48 million in our Infrastructure segment increased 11% over the same period in 2015 with quarterly highlights including performance gains associated with completion of storage optimization project at our Edmonton Terminal and the completion of construction of our Athabasca pipeline connectivity project at our Hardisty Terminal, while these projects will contribute to future volume growth through the terminals I am particularly proud of the new quarterly record achieved at our Hardisty Terminal with first quarter volumes averaging over 610,000 barrels a day and March volumes nearing 700,000 barrel per day mark.

Over the past year, we have seen Canadian oil sands volume growth of approximately 200,000 barrels per day, which has been a key driver of throughput growth at our Hardisty Terminal. Now looking over to 2020 and based on a review of publicly announced projects, we expect an incremental 800,000 to 900,000 barrels per day of oil sands production growth.

We expect these volumes to continue to drive demand for increased storage capacity and terminal services at both Edmonton and Hardisty. I am pleased to note that our key development projects underway at Hardisty and Edmonton remain on time and on or at least on or below budget.

We look forward to commissioning the 300,000 barrel storage tank plus rail loading facility for Statoil at Edmonton towards the end of Q3, which will be followed by the commissioning of an 800,000 barrel tranche of new storage capacity at Hardisty. All of this infrastructure is underpinned by long-term fixed fee contracts with strong credit worthy counterparties.

Contributions from the Moose Jaw facility were stable in the first quarter as the underlying fixed fee contract with Wholesale segment is designed to generate stable revenue regardless of business conditions. Our wholesale group as a counterparty is motivated to optimize both feedstock costs and margin generation on the sale of refined products.

Already, we have seen the benefits of this arrangement as our wholesale group has been working to optimize market access and sales for product slate that includes products ranging from asphalt to ethane. Reflecting on the financial stability as well as the strength of associated production profile for the counterparties of Backstop Infrastructure segment cash flow, we have a high degree of confidence in the growth outlook for this segment.

Overall, we see mid-20s growth for the Infrastructure segment in 2016 based on the development projects that we have in hand. We also see an acceleration of growth in 2017 with line of state to mid-year commissioning of a further 1.8 million barrels of storage capacity.

These projects satisfy our customer’s infrastructure demands for the 2016 and 2017 timeframe and given the status of negotiations currently underway, we are confident that we will secure incremental agreements for the 2017 and 2018 timeframe and probably beyond. The strong and visible growth outlook associated with focused gross capital expenditures should result in the percentage contribution of this segment continuing to grow beyond the approximate 50% of total trailing 12-month segment profit that was exhibited in our first quarter results.

Turning now to the Logistics segment, the segment profit in our Logistics segment was down sharply as I had mentioned over the fourth quarter of 2015. As mentioned earlier, first quarter 2016 activity levels reached steps not seems since our industry began tracking these statistics in 1947.

In our view, these levels go beyond a cyclical low and are highly unsustainable over the medium term to satisfy demand projections. As a result of the extended duration of this low price environment, oil directed drilling and completion activity dropped precipitously in the quarter and North American production volumes began to decline at a more material rate.

The impact of this on our Logistics segment included decline in both crude oil and produced water hauling volumes. Compounding this was renewed rate pressures as many of our customers experienced cash flow challenges that reached near crisis levels.

In similar fashion to our hauling activities, our ancillary wellsite products and services revenue declined throughout the quarter as many customers deferred production maintenance work that was deemed discretionary in nature in the near-term. This effect was particularly severe in the last six weeks of the quarter as I had mentioned with the early spring breakup commencing.

Despite all these headwinds, I am pleased with the efforts we undertook to preserve profitability in this business segment. The team was able to sustain gross margins as a percentage of sales at 27%.

I think this reflects the relative resiliency of our business model and the initial success from our cost cutting initiatives, the full effect of which will not be realized until the future quarters. Notwithstanding the reason to oil price increase, we do not expect the overall business environment to improve until the latter part of 2016 at the earliest.

While our customers have added to their crude oil hedge positions in the current price environment actions that would normally indicate potentially higher activity levels. We do not believe a rapid rebound in drilling is imminent.

Well there are certainly pockets of relative strength such as the Viking here in Western Canada, the Permian in Texas, the SCOOP and STACK plays in Oklahoma. Generally speaking, we expect our customers to initially reduce debt levels before bringing incremental drilling rigs into service.

If crude prices continue to stabilize at these levels, we do expect customers to begin with their most efficient capital spending such as restarting curtail production and reducing their backlog of drilled, but uncompleted wells. Both of these activities are supportive of improving conditions for logistics with a very short time lag.

Also on a positive note, we are slowly beginning to see a reduction in competition levels industry-wide as we granted these cut capacity, consolidate into a smaller footprint and or outright fail. This will provide stronger companies such as Gibson, the opportunity to grow without the need for significant additional capital investment.

So looking further into 2017, we expect the industry conditions to normalize and despite the dramatic cost reduction initiatives we've undertaken over the past 18 months, we believe we have struck the right balance between cost alignment and the maintenance of capacity in our key basins. Given the scale of our operations and our strong track record of solving customer problems, we should be extremely well-positioned to capitalize on the rebound and activity levels when it does occur.

Talking about our Wholesale segment now, segment profit in our Wholesale segment was down materially over prior periods with overall results being impacted by reduced volumes and severely diminished margin opportunities in crude oil and refined product transactions. While business conditions have not supported the capture of attractive margin opportunities was for the last several quarters.

The first quarter of 2016 was particularly difficult as WTI dropped below CAD30 and certain grades of heavy Canadian crude dropped to below CAD16 per barrel. Importantly, this compression in benchmark crude prices occurred while price differentials between the non-market grades remain tight and stable.

This business environment reduced our opportunity to capture quality arbitrage gains to practically zero. As a result, our first quarter sales volume of crude oil and diluent decreased by 12% over the same period of 2015 as the team focused on sourcing barrels, largely aimed at maintaining volumes for our infrastructure and logistics assets.

Additionally, sales volumes of refined products that we processed at Moose Jaw plant decreased to 10% in the first quarter of 2016 over the fourth quarter of 2015. While we saw strength in roofing flux volumes, a 40% sequential decrease in Wellsite Fluid sales did hinder our profitability.

Finally, on a more positive note, sales volumes of propane and other NGLs increased by 30% sequentially as we delivered greater propane volumes to a certain customer in the Northeast U.S. and captured other select opportunities due to the larger fleet of pressurized rail cars in our operation.

So despite the diminished ability to deliver normalized margin opportunities in the first quarter of 2016 I am nonetheless pleased with the performance of our wholesale team as they continue to successfully maximize asset utilization in our other business segments. Our outlook for this segment incorporates continued weak business conditions in the second quarter, although slowly being benefited by an expectation for strong household demand through the summer months and stronger crude and NGL price dynamics towards the end of the year.

Industrial Propane, segment profit of CAD16.5 in our Industrial Propane segment was down approximately 15% as a result of a 24% decrease in sales volume over the same period last year. The dramatic fall off in volumes is partially owing to an approximate 10% decline in heating degree days in our key operating areas in Western Canada, and the strong El Nino weather pattern and as it played its course.

This negative weather impact was compound by reduced oilfield activity levels and declining construction activity due to the cooling economic conditions in Western Canada. Despite these challenges, the profitability levels of this business were a bright spot in the quarter as gross margins on a per unit basis remain stable.

This is the strength of the underlying business model as we employ our rack plus pricing methodology which takes very little risk related the underlying commodity and offers our customer's market leading size and scale. As we enter the warm spring and summer months, we expect similar year-over-year performance comparisons to 2015.

And looking further into the fourth quarter, our year-over-year outlook improves with an expectation that weather patterns will reverse potentially bringing extreme cold weather with [indiscernible] system forecasted and a concurrent slow recovery of oilfield activity levels. So in summary, the Company's first quarter financial performance was not what I’ve been expecting as we enter 2016, but I am confident that we are on the right track to manage this continually challenging environment.

We have made material cost adjustments that are structural in nature and we have streamlined our operations without a significant loss of capacity. There is a strong and stable Infrastructure segment that carries a fulsome secured growth pipeline which we expect to add to in 2016.

Our stabled Industrial Propane segment has performed admirably given the environment and although we are not pleased with our Logistics and Wholesale segment performance. We feel there is tremendous torque for improvement as industry conditions begin to show signs of improvement.

In the interim we remain laser focused on the execution of our growth projects underway, underpinned by long-term contracts. And in addition to actions taken to adjust to the current environment we will take advantage of the inevitable recovery and a more conducive acquisition and divestiture market to continue or transition away from our more activity sensitive businesses while we continue to grow our Infrastructure segment.

I’ll now pass it over to Sean who will discuss our capital expenditures and financial position. Sean?

Thanks, Stew. Initially I'd like to highlight Gibson's capital expenditures in the first quarter of CAD61 million, CAD56 million of which was spent on growth capital and CAD5 million of which was spent in upgrade and replacement capital.

Our growth capital expenditures were primarily directed toward advancing the following key initiatives. The Statoil tank and expansion of related infrastructure at Edmonton and the storage tank expansion projects in the east and west side of the Hardisty Terminal.

As Stew noted earlier we're making good progress in the construction projects within our Infrastructure segment. These projects represent the majority of the low end of our 2016 growth capital expenditure guidance of CAD200 million.

I would highlight there is a potential to under spend this modestly given some of the cost and efficiency gains we've been able to achieve in the current economic environment. And we will provide a more fulsome update with the release of our second quarter results in August.

Our outlook for growth capital spending in 2017 remains intact for similar expenditure levels at 2016. Reflecting the multi-year nature of our expenditure profile.

We already have approximately CAD70 million of 2017 spending secured and underway. We fully anticipate adding to the secured project backlog with incremental contracted infrastructure project announcements as the year unfolds.

In the interim Gibson’s is well covered with a solid leverage and liquidity profile to execute our business plans. In this regard at the end of first quarter of 2016 our debt to debt plus capital ratio is 45%, our leverage ratio total net debt to trailing 12-month pro forma adjusted EBITDA was 3.8 times and our interest coverage ratio is 4 times.

At the end of the first quarter we had CAD39 million of cash and CAD410 million available under our CAD500 million revolving credit facility. This facility does not mature until August 2020.

Additionally, our long-term debt carries a staggered maturity profile with the first tranche not maturing until July 2020. This provides sufficient flexibility as we manage through the current down cycle industry conditions.

The Company declared dividends of CAD163 million in the 12 months ended March 31, 2016. While distributable cash flow for the same period was a CAD181 million that dividend declared represented 91% of distributable cash flow generated or 84% on a net cash basis after considering our drip in STP programs that were in place for three months of the past 12.

While these payout ratios are above our full cycle target level. We are comfortable in our outlook for improving cash flows as we commission our large contractually backstopped infrastructure projects in 2016 and into 2017.

This secured growth outlook when coupled with the base level of stability we enjoy within our Infrastructure and Industrial Propane segment provides us the comfort to stay temporarily from our long-term target of payout range. While there are strong indications that oil market fundamentals are rebalancing.

And industry conditions are exhibiting a bottom if not already bottomed. We remain cautious and will constantly review our leverage and liquidity outlook to ensure Gibson’s ample financial flexibility to execute its business plan and take advantage of opportunities that may present itself in this somewhat disrupted market.

That concludes my comments. So I'll turn it back to Stew.

Thanks very much Sean. Well this has been a particularly difficult downturn.

Certainly the worse we've seen in some decades. Gibson's Management team has the experience - our company has the fundamental strength to manage through the cycle.

We've taken a material slice out of our cost structure without imperiling our capacity to serve customer demand both in the current environment and for when business conditions improve. What was comforting to see the Greenshoots associated with recent stability in oil prices we as an industry are certainly not of the woods.

Oil prices are very likely to fluctuate and even if they continue to rise throughout the year activity levels are likely to lag given the debt levels of many producers. So that being said, make no mistake this industry will recover.

And I am confident that Gibson is well positioned to capitalize vigorously as we have existing capacity to participate in the upside in many of our businesses. Meanwhile, while we endeavor to steadily grow our fixed fee cash flow streams with contractual build out of infrastructure are the key Edmonton, Hardisty terminals.

We are well positioned to succeed and to continue the transformation of our Company already begun as we move into a more conducive environment. That concludes our prepared comments.

Operator at this time, we would like to open the call for questions.

Thank you. I have a question about your CAD40 million of cost savings, is that all operating expense related or some of that capital expense and I'm just wondering kind of the next leg of that question would be off of what based off of 2015 actual and how might we think of that ramping up in 2016 or we seeing a significant benefit already in the first quarter?

I like to answer those questions first Linda. The CAD40 million we're talking about is operating - is OpEx savings not CapEx, Sean did allude to a potential under spend of our stated capital because of the capital efficiencies that we have been able to garner as we move through our growth projects, but that's over and above the stated CAD40 million.

The CAD40 million is really off of sort of a normalized run rate for 2015 and so while we have seen some modest benefit in the first quarter, we really anticipate the full sum benefit to come as we move through the balance of 2016 and then into 2017. There is some sort of overlap in terms of cost reduction initiatives that we did take in 2015, but yes certainly we can discuss that offline and give you a better sort of answer in terms of how to think about it.

But think in terms of the full CAD40 million of cost benefit being achieved on a run rate basis from the end of the first quarter and going forward?

That’s helpful. Thank you.

And you alluded to - just as a follow-up you alluded to M&A, but I focused on infrastructure. Can you talk about how you're thinking in terms of both your financial capacity to look at potential acquisitions and what size and maybe some comment on geographies and the nature of things that you might be looking at?

Sure. And I think we've been fairly consistent in saying that while we see a robust opportunity suite with respect to M&A for more service type businesses in this environment.

Certainly that is not our intention to move forward with any material acquisition activity within that space. We would be open to looking at infrastructure type investments consistent with my remarks - in our prepared remarks as we talk about continuing the transition of our Company away from the more activity sensitive parts of our business and into infrastructure with a more heavy bias towards production and contracted cash flows.

We are in a fortunate position of having assets and operations throughout North America and so we have all of the geographies within North America available to us as we search for potential M&A opportunities. Having said that, our first and foremost strategy and focus right now is ensuring that we do navigate through this difficult down cycle and we preserve balance sheet strength and liquidity, which will allow us to look at opportunities should they develop and - but those will allow us to navigate whatever headwinds the market continues to throw at us.

Anything material obviously would require some additional financing capacity, but we would address that situation on a case-by-case basis.

Thank you.

Hi, good morning. This is actually Andy for Jeremy.

A quick question in the Logistics business, it seems like volumes and revenues accelerated the sequential decline in the first quarter. How do you see that trajectory trending into the second quarter?

And also a follow-on of that I think did water hauling post a loss in the quarter and do you see a loss continuing with that business?

In terms of the first part of your question, the trajectory we think, we obviously did see a very rapid deceleration of activity and as I mentioned in my prepared remarks some pricing pressures within that segment in the first quarter. Our outlook for at least the second quarter of this year is relatively flat performance on a quarter-over-quarter basis when looking at Q1.

We did talk about the potential for a modest uptick in activity levels as we move through the back half of this year and obviously that would have a positive impact on all of the Logistics segment going to be that crude, water hauling and/or some of our ancillary services. With respect to a loss in water hauling in the quarter, the answer is no.

All of our businesses remain cash flow positive, but from a segment reporting perspective I’m not going to get into that level of granular detail, but I can tell you that all of our business segments were cash flow positive.

Okay, great. And then in the Logistics segment I guess looking at your competition, how are they holding in I mean are they holding in like you guys or they worse and really struggling and do you see them potentially exiting the market at all and potentially freeing up some availability for us as things get worse.

Yes, I think as I mentioned briefly in my prepared remarks, we are starting to see - as we continue to see this market meltdown the stronger will survive and the weaker players as some of them quite frankly won't. We are starting to see that in all aspects of our business both in terms of companies failing as well as in terms of our larger customers choosing to consolidate their reduced activities into one carrier and deselecting other carriers that sort of thing.

We expect that we will be able to take advantage of that as we move through this cycle. And when we do see a return to more normal activity levels, we are going to be in a tremendous position to participate on the upside.

There is a tremendous amount of torque that is built into our capacity, because we have a very robust capacity across North America and the capability to ride through the storm. So when it does turn, it's going to be good for us because we will see your reduced competition.

And so we will grow those businesses through attrition and as a follow-on to Linda's question not through acquisitions.

Great, thank you.

Hi, good morning. Maybe I'll start with a question for Sean.

Under what conditions might you consider reinstating the drip, is it driven more by the stock price, by your payout ratio or leverage ratios.

I think the answer to that is sort of all of the above, it's definitely something that we are monitoring and as we move through the year we'll continue to monitor, but I don't think you can single out any of the three. We had a view that the share price and we suspended the drip wasn't attract and we felt undervalued the Company and that was the rationale for it at a time.

I think that you would still hold now, but that being said as we move to the year we will constantly monitor our leverage and liquidity level and if we view reinstating the drip that’s being an optimal lever to utilize, we will certainly consider doing so.

Okay, now question for Stew. You mentioned in your comments in active A&D environment or there any others of your business that you might consider drilling?

I am sorry, are there any areas of our business that we might consider pruning.

Yes, any asset sales or anything…

I think I said this in response to that question over the past three quarters. As we work through a difficult market condition as we are today and certainly this ones almost unprecedented at least in my view.

You get a better sense as to the resiliency of certain parts of your portfolio you get a better sense as to what parts of your portfolio the market values and what it doesn't. And as I said, in my prepared remarks - of the view that you know of our long-term strategy to continue the evolution of our business away from having such a high degree of exposure to the activity sensitive parts of our business and towards more infrastructure.

I think to the extent that we've thought that was in a long-term best interests of our shareholders to exit a part of our business and we had an opportunity to do so, that's something that we wouldn't - that's a consideration we would not take off the table.

Right you answered the question sort of on a theoretical point of view. I guess to be more pointing about it.

Is there anything you're actively considering in terms of tuning?

I have no comment there - I can tell you that we have nothing on the table today.

Okay. And then the next question I just wanted to talk a little bit about the crude oil marketing in the blending.

As you pointed out this is a severe correction and I wondered if you could put this sort of these types of low margins into context versus other cycles and what you might expect might be different this time. In other words, typically when you've seen these margins get into the so-called blending dead zone they typically haven't stayed there very long.

So maybe you can give us some perspective as to which I think might happen here and how long the margin pressure might stay for the crude oil marketing.

Well I think the margin pressure will persist as long as we have depress to the commodity prices because typically when you have compression in the - in the commodity prices or little flat price for crude oil to be frank. You would then you get differentials that are going to be - are going to be narrower and more stable, absent kiosks in the marketplace which we'll whipsaw things in terms of supply disruptions or unexpected refinery disruptions that sort of thing.

So I would think that to the extent that we see continuation of CAD40 to CAD50 crude oil and CAD15 to CAD20 heavy to TI differentials that we would not predict a material uptick in our ability to capture wider margins. Having said that the margins we do capture are positive that the business like I said is cash flow positive, keeping in mind that the wholesale group also includes our refined products slate which includes, products that we used to report under our Moose Jaw segment.

And you know the higher margin of those - higher margins that we used to capture in that slate includes there are drilling and completion fluids as well as other materials. With a very, very severe decline in drilling and completion activities as I mentioned in our call or in my remarks, obviously volumes and margins for those products have been diminished as well.

So again, we have a significant torque to the upside should we start to see drilling and completion activities pickup but towards the back half of this year. And then I would also say that within the new Wholesale segment we have asphalt sales and so that will provide us with a more positive margin performance.

As we move through the back half of the second quarter into the third quarter and probably as well into the early part of the fourth quarter. So I would say that crude oil, NGL, LPG margins are going to be tight for the next quarter or two.

We will see improved asphalt margins as we move into the latter part of the second quarter and into the third quarter. And if we do see a return to more drilling and these potentially in the fourth quarter of this year, that will manifest itself in improved margins and volumes for our refined products sales.

That's helpful. And my only comment would be it looks like it's hard to break out some of the profitability for some of those components given the way it's now being reported.

So maybe that's something you could look to in the future date maybe you can provide a little bit more detail on the possibility per product line in that segment?

Yes. One of the reasons that we have managed our - changed the way we managed our business Robert is because it does provide a very cohesive team now within the wholesale group all of those you know that entire product slate from - as I said from asphalt to ethane and so in terms of utilizing, marketing and transportation schemes to move all of those inter-related products accurately segmenting profitability for any one of them becomes a little bit of art as well as the science.

And so I take your comment under consideration and we will endeavor to do what we can.

Right, I understand where it’s coming from. And just last thing for me I just want to make sure I understood the comments you said about potential incremental agreements for the 2017 and 2018 timeframe in the infrastructure group.

So you are talking about 2017 and 2018 those are in service states for the assets or when the contract announcements might come?

Typically, we - for any major infrastructure we require sort of up to two-year sort of lead time. So as we move through the back half of 2016 to the extent that we are successful in securing additional contracts that would manifest itself in CapEx spend in 2017 and in in-service date sometime in 2018.

Okay. I got it.

Thanks for taking my questions.

Thank you.

Thank you. Good morning.

I guess the question is for Stew to start off in the newly presented financials in the infrastructure group. I just want to maybe ask about on the PRD side, obviously there's a big roll off in activity and that caused a decline in a volumetric basis in that group.

So how do you think about the PRDs on a lifecycle basis and what that means to your overall financials?

Well, I think on a lifecycle basis PRDs are a combination of volumes that we received from production as well as volumes, waste stream volumes that we received from drilling and completion activities within the capture areas of those six facilities. So I would suggest that well those particular assets are challenged today because we have seen and are seeing a more material fall off in production levels and we have seen decimation I guess in terms of activity levels from a drilling and completion perspective.

To the extent that we do see a rebound towards the back half of this year than we would have - we would have increased volume capture and we would also probably see a diminishing of the pricing pressures that we've also been subject to. So I would say that from a lifecycle perspective those assets are probably at or near the bottom.

And we would expect that performance will improve from this point forward.

And then maybe just as an extension on that through the lifecycle say “more normal environment” given the way a lot of wells work with the drop off in production and really following the first couple of years and tendency to see an increase in water and waste handling. Would we see that dynamic show up also in the Logistics segment that your crude handling might have a bump in the beginning, but then your water handling might start to rise?

Yes. That's one of the reasons that we - one of the reasons we’d like having both of those capacities is that - you’re exactly right as producing wells and producing fields mature.

The total percentage of water and waste as a percentage of barrel of oil equivalent produced does go up. And so throughout the lifecycle of a producing field the environmental services capacity does benefit from that.

Okay. That’s helpful.

And then second question for Sean, just on counterparty risk. Are you doing any additional reassessments of counterparties you're dealing with?

I just note in the financials, the deposits - collateral increased, there is a 10 fold increase, but it's a small amount in the totality of your receivables. If you just give color around your counterparty exposure and how you're assessing it at the stage.

Yes, absolutely. Especially in this environment we are laser focused on our counterparty exposure.

And I think in our last investor deck, we have sort of outlined what that exposure is both from a credit rating and from a - and sort of industry perspective. You know what I would say is that we are comfortable with it, we actively manage it, we apply credit limits to all of our counterparties.

Those credit limits move as industry conditions change and their financial position changes and we do have other levers that are available to us as we move through the cycle. So I would say it is something that we are extremely focused on, but I think the team has done a very good job of managing that through the down cycle here and we really haven't seen any real degradation into the counterparty exposure or anything that would concern us even in this environment.

Okay. That's very helpful.

Thank you.

Okay, thanks. Good morning everybody.

I had a question about your staff level reductions and that certainly in response to the weakness you’ve seen in the last 18 or 24 months. Is that new staffing level or you have is that both for oil price environment and I guess what I’m trying to ask really is I mean how scalable is that as you see activity levels pickup potentially here and I mean can you scale up to take advantage of that commensurate with oil price increase?

Yes. I think Ben, what we did as we went into the down cycle in 2015 was we fairly rapidly and I think very efficiently reduced sort of our field level headcount and associated costs to right size the capacity within the businesses to the available business that we had.

One of the benefits we have with our business model on the trucking side as an example is the vast majority of tractors that we do employ our independent owner operators. And so that takes what otherwise would be a fairly high fixed cost and makes it almost purely variable cost.

Environmental services to the extent that we did have crews working on rigs, when the rig goes away the crew does go away and that sort of thing. So that really was more of a 2015 at least early day’s initiative.

So to answer the second part of your question and then I'll go back and talk about the first part again. We believe that is truly scalable.

We will be still with capacity in all of producing basins. When the turn does come we will be one of the companies that will be able to respond in real time to an uptick in demand and a return to more normal pricing.

Here the CAD40 million that I've talked about though is largely a structural change and somewhat to do with the reduction in commodity prices in the difficult environment. But also somewhat to do with respect to the way that we have reconstituted the way we're managing our business as well.

Having these four business segments now and reengineering the way, we do manage our business that has allowed us to flatten the organization as I had mentioned 20% reduction in executive headcount as a sort of an ancillary benefit of that. And so that is structural and you can expect that the majority of the CAD40 million cost savings that we're talking about will benefit us as we move through the balance of the down cycle, but it will also benefit us as we go into the up cycle without impairing our ability to respond rapidly to an increase in demand.

Okay, that’s helpful. And just one quick follow-up for me, when you commented about potential pick up in the later part as early as, are you referring to your business benefiting or is that more activity levels moving higher and then your business benefits maybe a quarter afterwards?

To the extent that we do see and I want to caution everyone I mean we are thinking about a modest uptick in the latter part of this year, certainly not a return to anything approaching normal activity levels, but to the extent that people go to work, the companies do go to work either bringing production back online i.e. servicing wells that they may have shut in or taking fields that are currently offline and bringing them back online or to the extent that that manifests itself in completion of the ducks of drilled and uncompleted wells.

That would have an immediate and positive impact on our Logistics segment in particular. So when we see any kind of an uptick in activity that will translate into an increase in profitability particularly for our Logistics segment.

Okay. Thanks, Stew, thanks everybody.

Thank you.

Good morning, guys. On the Wholesale segment clearly a perfect storm there in Q1 across all products.

And I guess nature of the business, the macro drivers remain outside your control. But just in terms of thinking about the goal posts for the segment going forward, CAD20 million annualized off Q1 results, I think 2014 segment posted CAD120 million would CAD20 to CAD120 be a fair range for the segment going forward or that you guys restructured the operations at all recently to help tighten up that band.

I think CAD20 to CAD120 is probably even I could score between those goalposts and so that's probably a little bit wide. I don't think you want to take Q1 and annualize that as I had mentioned we have a far more positive outlook for particularly Q3, Q4 as we get into some of the contracted asphalt sales and things that we have and we will have some torque as we if and as we see return to more normal commodity pricing.

We want to kind of I guess start to think in terms of as well you know getting the market to understand that that wholesale group does have some fixed charges that they do cover off before we predict - before we report their EBITDA you know the wholesale group pays a fixed fee to the Moose Jaw refinery complex. And our marketing group does pay fixed fees to underpin and these are some of the tankage additions that we put into Edmonton that sort of thing.

So the goalposts that we used to talk about in terms of crude oil marketing being 40 to 80 on a normal - in a normal market but I'd still be pretty comfortable with that. And so you can probably extrapolate to say that you are from a wholesale group.

CAD120 was a good year because the NGL and LPG trading business was quite robust and we had good margin performance there. I don't think we're going to replicate that in 2016.

But we would certainly expect that to be in performance as we go through the back half of this year is going to be higher than it has been through the first quarter.

Okay. Great thanks for that Stew and then just on maintenance capital CAD5 million or so in the quarter came in quite a bit lighter than last year.

Yet I think you're still guiding towards CAD50 million for the full-year, wondering if that correct number could come down here and whether or not you could provide a breakdown of the CAD50 million between Infrastructure, Logistics and Propane?

We can provide an update breakdown…

Yes. It’s Sean here.

The breakdown from the growth capital of CAD55 million, 95% of that was directed toward Infrastructure. So called it CAD52, CAD53 million we spend just under two on logistics and then the remainder sort of split between the other three, but of that CAD50 million call it CAD56 million you know roughly CAD53 million of it was in infrastructure.

I think Patrick was your question around more maintenance and repair or…

Yes, just - maintenance capital.

I don’t have a breakdown in front of me we were pretty light in the first quarter CAD5 million I don't think you want to take a run rate and go will be CAD20 million. But you know against a backdrop of diminished activity levels obviously we don't need to spend as much maintaining rolling stock that sort of thing so.

CAD50 million was a prediction coming into the year based on a significantly higher activity level outlook and significantly higher from a drilling and completions perspective et cetera. So it won’t CAD50 million it'll probably be in the CAD40 million to CAD50 million range would be my guess.

We will provide a formal update on the full CapEx program with second quarter results as we traditionally do.

Okay. Thanks Tammi.

And then finally just maybe a follow-up for Sean here on the question just wanted to confirm that you would look to turn the trip back on before potentially having to pursue extended covenant relief or would it be vice versa?

We as I said we're comfortable with our current leverage in liquidity position I think we're going to constantly monitor as we go through the year. The direct is one of the levers that we could use I don't know if necessarily would think of it as an order of operation.

But you know it is definitely a lever that we are aware is that you know sort of in a tool shed. So I don't know if I'd look at it from an order of operations perspective sort of the way you frame the question?

I think Pat to the extent that we become concerned about liquidity and leverage as the year goes on. We also are mindful that we want to maintain, appropriate leverage on the balance sheet and so additional covenant relief et cetera would be something we could talk about I guess but it certainly isn't on our radar screen at this time.

Okay. Thanks guys.

That’s it for me.

Thanks.

Good morning. If the environment and I guess maybe on the collaborating little bit on Pat's question.

If the environment gets worse. I'm just kind of wondering like you've taken the downturn taking the opportunity and reduce the OpEx and restructure the business.

Rationalize the growth capital I'm just wondering if it does get worse what's on the table as you think about things like the dividend asset sales and equity issuance whether that's the drip or just discrete equity?

I think all of the above are always on the table, as Sean said at this point in time and given our outlook we're comfortable with the dividend. We believe that we can manage our leverage and our liquidity.

Having said that, this is an unpredictable market and we will take those steps that are necessary when they are necessary to protect the balance sheet. So all of those things that you had talked about are certainly arrows that we can put in our quiver and we will make a determination if and when we need to pull an arrow out exactly what arrow that would be.

Okay. And I guess more specifically around the dividend, obviously based on the actions in the past, maintaining and growing the dividend has been a very high importance.

I guess as you think about it versus selling material assets or issuing equity like - is there any updated thoughts as to how we should be thinking about the dividend if the business gets worse?

I think we sent a pretty strong signal as we released our fourth quarter results with albeit modest to increase of the dividend. It is important to us.

It's certainly not a hill that we're going die on. But like I said I think we do have a number of leavers that we can contemplate pulling if and when the time is right.

We’re certainly not going to put the long-term health of the organization at risk for the maintenance of anything. Asset sales if they were non-core and if we thought that that was in the long-term best interest of the shareholders.

As I said previously, that's certainly something we would consider, particularly if it is beneficial to our longer term strategy to continue the evolution of our business away from activity sensitive businesses and towards infrastructure, but coming out of the first quarter and with our point of view for the balance of the year, we're certainly comfortable that we're in a position to support the dividend and to support our ongoing investment in long-term infrastructure, particularly because it is backstopped by long-term contract. I think we need to keep in mind, our point of view and our view forward includes pretty material growth in the Infrastructure segment, as we go into the back half 2016 and then material growth in the Infrastructure segment in 2017 as well.

As Sean said in his prepared remarks, we're comfortable being outside of the parameters in the short-term that we had previously set, because we have such a high degree of confidence in the growth in that business. As an example, I'm going to get this wrong, but I'm doing math in my head here.

If you took just the Infrastructure business and our Industrial Propane as an example exiting 2017 I believe that gets very, very close to covering off all of our fixed charges including the dividend, the maintenance CapEx at its current rate as well as our interest.

Okay. Understood.

And if I can finish with just a question about trying to get a sense as to how where your mindset is with respect to a bias towards protecting the downside versus say preserving upside optionality and this is around - and some of the potential for incremental storage deals. If you had a customer come to you and ask for a capacity that currently is being used by the marketing division.

Is your bias to - if that contract say it was a 10-year deal as you are bias to go and just spend the capital then, put money out the door to build that capacity or would you look at the significantly lower capital intensity option of just assigning the capacity that your marketing division is using to the new customer under that long-term contract?

Yes, if the need for the customer was immediate and they were willing to sign up for a term deal. We would - consistent with our conservative nature obviously take the term deal and look to providing additional capacity to our marketing group in another way.

We’ve done that in the past and we would certainly do that in the future.

But what if it was a customer maybe who needed the capacity in two years’ time so really you're faced with the decision of putting capital out the door versus marking divisions for using that capacity for the next two years and then handing that over which is a no capital option, but obviously on the upside.

Yes, that's a bit of a theoretical consideration, we typically when we're building infrastructure for a big customer. For a customer it’s in the nature of a 400,000, 500,000 barrel tank, the storage addition that we built at Edmonton which is in support of our marketing businesses a couple of 80’s and a couple of 20's kind of things.

So it's really smaller scale and more blending centric tankage. I don't anticipate that that's going to be along the needs of a major oil sands customer who will require working stock tankage at either Hardesty or Edmonton.

And so in that circumstance then was a two-year lead time. We certainly have the financial capacity to go ahead and build that tank for them.

Okay. That’s great.

Thank you.

Thank you.

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.