Tammi Price - Vice President of Finance and Corporate Affairs Stew Hanlon - President and Chief Executive Officer Sean Brown - Chief Financial Officer

David Noseworthy - Macquarie Ben Pham - BMO Rob Hope - Scotia Bank Robert Catellier - CIBC Capital Markets Andrew Kuske - Credit Suisse Patrick Kenny - National Bank Robert Kwan - RBC Capital Market

Thank you, Peter 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 measure 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 2017 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 capital spending and our financial position.

This will be followed by a question-and-answer session. 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. First quarter of 2016 saw the advancement of our strategy through continued progress on our Hardisty and Edmonton terminal transitions.

We see the funds from the industrial propane sale and completion of our debt refinancing while delivering a 34% improvement in combined segment profit after G&A as compared to the same quarter in 2016. The storage and connection infrastructure we commissioned in the latter part of 2016, delivered meaningful support for the quarter's results and constructive winter weather carried on into the first quarter, supporting wholesale NGL demand.

The logistic segment showed improvement over Q1 2016 in the majority of our service lines, with the exception being the truck transportation business in the US, which is still experiencing challenges as a result of market conditions in certain basins. Speaking to business conditions in the first quarter, cautious optimism continues persist supported by a coordinated agreement amongst OPEC and non-OPEC countries to reduce combined output, which contributed to a further 5% increase in crude prices over the fourth quarter.

This prompted further improvements in overall activity levels as the customers continued to increase their capital expenditure plans. The US onshore rig count increased by almost 170 rigs from the end of the fourth quarter to reach 837 active rigs by the end of the first quarter of 2017.

In Canada, we saw the active rig count hold flat from the period end to period end versus Q4 2016 as road bans started to come on towards the end of March. What remains to be seen is what happens when the six months' timeframe runs out with respect to the upper mentioned agreed upon production cuts.

Tension persists within the supply demand with the US activity and consequent production increases offsetting gains made from the OPEC supply cuts. Of late, the result has been a tampering of 2017 and 2018 WTI forecast by most pundits translating into WTI crude prices that persist in the $50 to $55 range for the near term.

On the oil sands side, consolidation announcements were abundant in the quarter with a number of announcements made regarding the sale of assets by foreign owners to Canadian oil sands producers. We expect this consolidation to be supportive of our growth at our Hardisty and Edmonton terminals, as the new owners put their synergies to work to improve cost competitive business of the resource and potentially take a more aggressive approach to growing production from these assets.

Being mindful of the many uncertainties that still lie ahead, we remain cautious as 2017 continues to unfold. As our first priority, we're focused on the efficient execution of our infrastructure growth projects currently under development and the successful contracting of additional projects.

In the meantime, we will continue to carefully monitor business conditions within our logistics and wholesale segments and will look to deploy spare capacity or to share excess and noncore assets as appropriate and to look for the potential to slowly recover market share and associated pricing as specific regional market conditions allow. An additional highlight this quarter was the early receipt on March 1 of adjusted cash proceeds of $435 million under our agreement with Superior for the sale of our industrial propane segment.

The proceeds were used in conjunction with the debt refinancing completed March 22, which strengthened our balance sheet and provided support for our ongoing infrastructure weighted organic growth initiatives. Later on the call, Sean will discuss in greater detail the outcomes and the benefits of the debt refinancing.

I'll now discuss the first quarter performance highlights of our individual segments in more detail. Our infrastructure segment posted record quarterly results with segment profit of $60 million, on average volumes of over 690,000 barrels per day, supported by storage capacity and related infrastructure we commissioned at Hardisty and Edmonton in the third and fourth quarters of 2016.

Considering this large tranche of tanks we recently placed in the service and the commissioning scheduled for the two 400,000 barrel tanks under our Edmonton terminal, we will continue to see growth within our infrastructure segment into the 2018 timeframe. As introduced last quarter, reflective of ongoing commercial discussions, we are progressing the frontend engineering and initial civil work to develop up to four new tanks on the east side of our Hardisty terminal.

These new tanks represent the next tranche of the continued expansion of our infrastructure foot print with targeted in service dates in early 2019. Similar to previous new tank construction projects, full development of these tanks will be supported by long-term fixed fee contracts.

Looking forward to the second quarter, we expect to benefit from the new run rate established at the terminals in Q1. While we will see some modest offering in infrastructure in its totality due to the reduced availability at our Moose Jaw facility as a result of the annual turnaround.

Segment profit in our logistics business decreased in the first quarter versus the fourth quarter to $8.6 million. Crude and other barrels hauled in Canada in the fourth quarter were relatively stable over the third quarter with volumes from increased activity tampered by the impact of the Syncrude fire on our sulphur hauling combined with road bans starting up in certain areas in March.

This was offset by declines in certain US geographies where drilling and completion activities and crude production levels continued to lag or our pricing conditions did not offer an appropriate return on capital. Additionally, in spite of the increased activity levels on both sides of the water, pricing and market share competition remained intense in most operating areas, particularly in the southern United States.

Given what we've seen thus far in 2017, we expect to see better business conditions for our logistics segment this year than 2016, but we remain cautious as we progress through the year. The Anadarko basin continues to be a bright spot in the US for the logistics business and we're anticipating a significant in activity levels particularly completions in the Barkan in the back half of this year, which should also be constructive.

Our wholesale business delivered a solid first quarter, with segment profit of $17.9 million as cold weather supported customer demand for NGLs, propane in particular, enabling us to achieve sales volumes consistent with the fourth quarter of 2016. Additionally, increased activity level from the WCSP in certain US markets translated into an increase in sales volumes of refined products of 18% over that same period in 2016, driven by strong demand for the oil based drilling fluids we manufacture at our Moose Jaw facility.

Our crude oil blending activities continue to be hampered by narrow heavy oil price differentials which stayed relatively consistent on average with those experienced in the fourth quarter. In spite of these headwinds, our wholesale crude team increased the volume of crude and diluents bought and sold in the first quarter b 14% and maintained their focus on the underlying strategy of moving volumes to other business segments, in order to maximize asset utilization and throughput rates.

On the cost side, we continue to progress our strategy of right sizing our least rail car fleet to match our market point of view. Our outlook for the wholesale segment is cautious, with respect to the second quarter as we monitor the impacts of the Syncrude fire on the markets and availability of supply of crude oil in the WCSP.

Differentials have moved into single digital territory recently and is not expected that the upgrade will be back to full run rates until later in the quarter. As we progress into the back half of 2017 however, the anticipation for normal seasonal weather patterns and the possibility of improved crude oil marketing opportunities, as growing oil sands supply and the tightening export pipeline capacity lends optimism to our outlook.

Additionally, we continue to expect improvements in the demand and pricing dynamics for our drilling fluids which would further provide cash flow gains within our refined product sales. Segment profit of $13.6 million in discontinued operations, essentially the industrial propane segment reflected the results of two months of operations in 2017 versus three months in 2016.

As of March 1, 2017 concurrent with the receipt of proceeds from Superior Plus on the sale of the option to acquire the business, this segment is derecognized. So to summarize, I'm encouraged by our first quarter results which are relatively consistent with those delivered in the fourth and which are growing increasingly more stable through the growth of our infrastructure segment profit.

I'm pleased with the progress that has been made on both the industrial propane sale as well as the advances we've made in our commercial development endowers. I'll pass it over to Sean, who will discuss our capital expenditures, financial position and the outcomes of our debt restructuring completed this quarter.

Sean?

Thanks, Stew. To start, I'd like to highlight Gibsons' capital expenditures in the first quarter of 30 million; 25 million of which was spent on growth capital and 5 million of which was spent on upgrade and replacing the capital.

97% of the first quarter growth capital was related to spending in our infrastructure segment in support of the ongoing expansions at the Edmonton and Hardisty terminals. We're currently on track with our announced growth capital expenditure guidance for 2017 in the range of 150 million to 250 million.

As a remainder, we've previously provided capital spending guidance in the same range for 2018 as well. As previously discussed, the low end of 2017 consist primarily of infrastructure projects, commercially secured and currently underway, including the 400,000 barrel tanks plus pipeline infrastructure we're constructing at our Edmonton terminal.

The high end of the capital expenditure guidance range contemplates an additional 100 million for projects that we're currently negotiating and include the certain amount of growth capital associated with the frontend engineering for the new Hardisty tanks that Stew discussed on our call last quarter. We currently have a backlog of growth projects that are approved and underway for 2017 and 2018 that totals approximately 250 million, which does not include any incremental capital for the new Hardisty tanks beyond the normal amount approved for the frontend engineering and civil work.

With the 435 million in adjusted cash proceeds we received on March 1 from the successful sale of our industrial propane division and the debt repayment refinancing initiative completed in the quarter, with cash on hand and availability under our revolving credit facility, we are fully financed for all of these currently approved and underway growth capital expenditures. We continue to be very diligent in respect of investing growth capital within our logistic segment given the amount of readily available spare capacity we have on hand and we will look to deploy this capacity, first to recapture lost market shares as market dynamics allow.

With this in mind, we also expect upgrade and replacement capital spending requirements remain muted in 2017. During the quarter the company completed a significant debt repayment, refinancing exercise which involved using a portion of proceeds from the sale our industrial propane business along with net proceeds from a new offering to repay certain indebtedness of the company and refinance certain long-term indebtedness.

This included a tender offer for our higher coupon Canadian dollar high yield notes and a portion of our higher coupon U.S. dollar note and the issuance of 350 million of new senior unsecured notes at 5.25% due July 15, 2024.

The net effect of the repayment, refinancing initiatives, is that they reduced overall term debt by 315 million, stagger and extend the company's debt maturity profile and provided for a significant annual run rate interest savings on a term debt of just under 30 million. In addition, we also amended our revolving credit facility too, amongst other things extended maturity by an additional two years.

I'm pleased with the enhancement we made to our balance sheet through the debt restructuring, the deployment of the industrial propane sale proceeds during the first quarter. We finished the quarter with 80 million of cash and the balance sheet remained undrawn on our 500 billion revolving credit facility.

We're confident that our improved leverage and liquidity profile will support our 2017 and 2018 capital expenditure and dividend plans. In this regard, our total debt leverage ratio 3.4 times at the end of the quarter.

The Company declared dividends of 187 million in the 12 months ending March 31, 2017. Although our payout ratio remained higher than we like on an LCM basis at the end of Q1, we're comfortable that the visible contracted growth within our infrastructure segment, coupled with the interest cost savings from the refinancing initiatives along with modest improvements we're seeing in our other segments will support the current level of our dividend and we expect sequential improvement in our dividend payout ratio through 2017 and certainly into 2018.

This will allow us to consider the pace of dividend growth in 2018, as our forecasted cash flow, that is commercially secured, continues to grow within our infrastructure segment. That concludes my comments, so I will turn it back to Stew.

Thanks, Sean. So to conclude, I'm encouraged by the improvement in the quarterly operating and financial performance in many of the aspects of our business, as well as by the anecdotal evidence we hear from the field with respect to reason of signs of improving activity.

As this tenures recovery progresses with the sale of the industrial propane significantly advancing our evolution towards becoming streamlined integrated mid-stream energy company and with the balance sheet on a solid footing, on serious reflection I have decided it's time to announce my intentions to retire from the company. As you saw in our press release, I informed the Board in mid 2016 that I intended to retire sometime in 2018.

This timing is appropriate for a number of reasons. It works extremely well for me personally and for my family as well I'm very, very comfortable with the company is on a firm footing and positioned to continue executing on our strategy, growing our infrastructure business and continuing to build shareholder value.

So based on all of this the board started a formal search in mid 2016, which is progressing. As you saw, I've agreed to stay on for an appropriate transition to ensure a smooth transition to my successor.

An announcement will follow on the successor as soon as we have additional details to share. I've been with Gibson's for nearly 27 years, eight of those have been as President and CEO for the company.

I've always been a strong advocate of the concept that CEO's have a best before date if you will and so I look forward to my intended retirement sometime in 2018, as I said, it's an appropriate time for me personally and professionally. Diane and I are certainly excited about starting the next chapter.

Gibson's is a remarkable story. I'm proud to be part of a company that has grown to become a major player in its industry, but Gibson's success is not based on the steel in the ground, but the people who work here.

I'm humbled and grateful to have been a small part of such a phenomenal team for the past nearly three decades. That concludes our prepared comments.

Operator, at this time we'll open up the call for questions.

Hi, good morning and congratulations on your pending retirement.

Thanks, David.

Maybe I could just start of just like that in terms of your decision to announce formerly now. Why now formerly now or instead of waiting until a successor has been in place?

I guess just because of the timing of these calls and wanting to make sure that the market understood that this is normal course succession, David. I wanted to sort of provide enough visibility that this something that's been ongoing for a while and will be ongoing for a while.

As I mentioned I'm prepared to stay on once the successor has been announced and he's joining the company to ensure a smooth transition. So we just wanted to make sure that this was telegraphed of as being something that had been in the works for a while and was absolutely normal course.

Thanks for the color. And then with regards to competition increasing in the Permian, did that impact - was it just a volume impact or sort of volume and margin impact?

It was basically volume, volumetric and having said that the ability to capture additional margin especially in the Permian is almost nonexistent in the lines of business that we have down there. I've said many times, the US service business is right sized for about 1,800 rigs as I had mentioned in my prepared remarks where it just tipped over 800 in this quarter.

And so there's still a tremendous amount of excess capacity and accordingly margin and availability of business remains very, very tight.

Perfect and then so one of the big stories has been just the growing volumes in the Permian. Do you expect, even if margins stay flat that we'll see a recovery in volumes in Permian or is it kind of pipelined competition just taking away that opportunity?

I would that expect that overtime as we continue to see a recovery in activity levels and continued drilling and completion that the Permian will continue to improve and we'll see additional opportunities there. But I think more than that as we see adjacent basins have started to recover, I mentioned in my prepared remarks the Anadarko, we're starting to see the D-J/Niobrara and if we see increased completion activity up in the Bakken et cetera, that will start to take away some of the capacity that has moved into the Permian looking for the only available bright spots really in the past couple of years.

And so I think it's going to be more of a recovery in the adjacent basins that drives ability for us to capture additional volumes and margin as we look through the back half of 2017. Now, that certainly is our expectation.

One last question, just with the industrial propane asset sale and the right sizing your business largely behind you, what is your focus going forward beyond building terminals in Edmonton and Hardisty?

We continue to look for infrastructure opportunities adjacent to Edmonton and Hardisty. Having said that, the opportunities we have within those two major facilities for us certainly provides us with a very visible growth opportunities well into 2019.

We're also looking at, like I said, throughout the WCSP for infrastructure opportunities where we can deploy our complimentary logistics and wholesale capabilities and we'll continue to look for those types of opportunities probably on a smaller scale on organic basis as we continue to build our business in the US as well.

Thank you very much. Those were my questions.

Thank you.

Okay, thanks. Good morning.

Just wanted to ask about - you had some commentary about consolidation within the producing community, but that's benefiting your growth prospects in a near medium term and I'm just curious when you developed that commentary, was that based on some recent discussions you had post some of the consolidation you've seen or is that just a natural read through in what you're seeing broadly?

Yeah, thanks Ben. It's more of an natural read through, I mean of course we know all of the major players in the oil sands extremely well, virtually all of them are big customers of us and so we think we understand them quite well.

So certainly wouldn't want to attribute anything to specific discussions that we've had. It's more just in terms of - these companies have made big bets within the WCSP and within the oil sands in particular and we expect that to be a pre cursor to continued focus and continued investment and that's going to obviously be very positive in terms of growth in oil sands production.

Oil sands production as you know, until we get TMX expansion approved and built, will come all through Edmonton to Hardisty or to down directly to Hardisty and that's going to drive the needed necessity in our mind for additional infrastructure both at Edmonton and at Hardisty and we should be well positioned to take advantage of that. So it's really just sort of thematic observation.

Okay and then may be if I may just a question for Sean. If you can provide maybe some numbers around your payout ratio you expect this year and next and also that EBITDA metrics because perhaps it's a little bit of difference between the two when you're looking at it.

Thanks, Ben. So as I said, given our current budgeting capital plan, we feel that we are fully financed for the next two years.

So we would expect to actually leverage to remain relatively flat through 2017 and 2018. As I said, we have 80 million of cash on hand and undrawn revolver, as we continue to deploy capital we will draw on the revolver through 2017 and 2018, but the view is that growth in EBITDA principally from our infrastructure segment will offset that and keep leverage relatively flat.

And it's similar in payout ratio on a trailing basis was 130%. We would expect to exit this year in around probably that 100% on a trialing basis and then calendar next year would be much lower than that.

As a remainder as we think about our payout ratio on a trailing basis, we pay our interest in January and July and so the full effects of the refinancing initiatives that we have completed, the first effects will really be felt in the July interest payment period and then the full effective it would felt after we pay our January interest.

Okay, thanks for the color. Sean thanks to you.

Good morning and Stew, all the best in retirement. I'm hoping you could just add some additional color on some of the commentary earlier in the call regarding shedding some noncore assets as well as deploying capital to gain market share.

Is it primarily focused in the US and then I guess the follow up there would be what basins do you think you could access and which basins do you think you should focus on?

Thanks, Rob. I think without getting specifics sort of around geography, I'll answer the first part of your question this way.

We have stated our strategy is to grow our infrastructure business with complimentary and supportive logistics i.e. transportation and wholesale i.e.

marketing activities and capabilities. Certainly we have a tremendous amount of capacity within our logistics segment to date and so we look forward to being able to grow that segment without the deployment of reasonably without the deployment of any capital as we go forward.

So we would look for strategic opportunities, much like we did with our propane sale, to look at assets that don't really fit into that strategy, in other words infrastructure or complimentary logistics/transportation of marketing assets and we would look to find more appropriate homes for those assets as we go forward. So it's really not a geographic thing, it's more of an alignment with the stated strategy.

With respect to your second question, obviously we are laser focused on efficiently deploying the capital within the WCSP and especially at Hardisty and Edmonton as we go forward because that's where the most visible growth will come for us on a normal security basis as we go through to '18 - go into '18 and then into '19 as well. Having said that, we do look forward to logistics improvements in the US as well as in Canada, I'd mentioned that the Permian remains very, very competitive but we're starting to see tremendous growth starting to sort of spread out in the Anadarko and I would expect that activity is going to continue north within through the D-J and into the Bakken and certainly we're well positioned with assets and capabilities in each of those basins.

Looking specifically as to where we would deploy our infrastructure capital dollars in basins outside of the WCSP, I think it's too early to say, but we would be obviously looking for opportunities like I said probably on a smaller scale and on an organic basis to develop infrastructure there would be supportable and supported by contractual commitments.

Alright, that's very helpful. All the best in retirement, thank you.

Thanks, Rob. I'm not dead yet.

Hey good morning. I just wanted to follow up on the questions on the logistics business here and specifically you've built the company or the company is sized right now for a much larger rig count and it sounds like you're waiting for a recovery.

But on what point do you consider right sizing or pruning and reducing the productive capacity of the company as it relates to logistics. And related to that do you see more room for cost reduction measures there?

Yeah, I think within our logistic segment as you understand there is a transport i.e. big our rolling stocks are our trucking assets as well as our US environmental services business is included in that logistic segment.

And so further to the comment I just made in terms of where we would look for opportunities around divestiture, I think we would look obviously at opportunities than to sort of right size I guess the business based on our focus on what parts of our logistics capability are truly focused on supporting the infrastructure business. There are parts perhaps of our environment services business that don't fit that criterion.

Having said that, it's early days in the recovery in the US, as Sean mentioned our balance sheet is in tremendous shape and we have done I think a pretty good job in terms of taking out the majority of the sort of permanent fixed cost reductions that are available to us. So we'll look for opportunities but in a very, very disciplined manner as we go through 2017 and into 2018 perhaps to right size the company or the logistic segment based on supporting our longer term strategy.

Okay and then, what are you doing to position the business for the potential TMX project?

Well, TMX expansion should go ahead and not where we hope it does. We're across the street from it essentially at Edmonton and so you'll see large availability of land that we've gotten.

With our connectivity that we have into another pipeline in LA, we're certainly extremely well positioned to take advantage of what we hope would be further growth opportunities brought on by the expansion of West Coast to take out of the Edmonton area. So we're very keenly supportive of the TMX expansion.

And account us gets customers, our current customers a lot of the companies that have made volumetric commitments to that pipe, accordingly I think we're very, very well positioned to take advantage of it.

Is there a little bit more specific than - it's a large major project in - let's cut all the related challenges, at what point do you think customers need to engage in discussions to have those supporting assets to support their businesses and the pipeline?

Well, I think as you just said, it's a large project with all of the attendant complications that come with that. We need about two years sort of a down as I notice to build a big tank and get it into our commission and commission it and get it into service.

So that would be sort of the timeframe where we would be in a position to announce specific projects. Having said that you in anticipation of TMX, in anticipation of KXL, in anticipation of Cambridge line 3, we're always talking with big customers about their potential infrastructure requirements and so we have a pretty good visibility as to if this happens and this should happen kind of a thing.

But to be specific, you could look forward to us basically being in a position to commission tankers, commence with the commissioning of the pipe and so that would be sort of two years from the end date of the pipe built.

Okay, thank you. Enjoy your retirement.

Thank you, good morning. May be just a bit of a longer term perspective on how you foresee the terminals business on a longer term period of time and then on a near term, it looks like there is some tightness which may give resurgence to rail again, how does that affect your overall business given your rail exposure and also some of the trucking exposure in the logistic segment?

Sure, I think longer term the terminal business will grow as volumetric - particularly the terminal business for us is obviously dominated by Hardisty and Edmonton and so that business will grow almost directly correlated with growth in volumes in the WCSP. And so over the longer term we believe that - especially given the consolidation we talked about in our view point in terms of how positive that will be for the oil sands region in particular.

We obviously have visible growth through '18 and into 2019. I can't see any reason why that growth can't continue for the medium and into the long term.

With respect to tightening up of capacity and as we see in our horizon as we see other big projects come on towards the end of the year. Expert pipe occupancy other than WCSP is going to become very, very tight and we expect that to manifest itself in resurgence in demand for crude by rail.

In the short term that probably is just a sort of a neutral thing for us because as you know our rail capacity is fully utilized our long-term take or pay contract contractual arrangement. In the medium term, call it two to three years that resurgence of demand for big vessels the WCSP probably lasts longer than - sorry I'm struggling here, pipes are going to get built in the next two year and we would expect that the demand for crude by rail will exist beyond that.

So in the medium term, we would expect that demand manifest itself in our ability to grow our crude by rail capability, again supported by long-term contract.

Okay, that's helpful. And then maybe a slightly different bent, if you just give us your thoughts on the consolidation transparency in western Canada where some companies have gotten bigger, others have really gone outside of western Canada to diversify just any general thoughts you have on the trends you've seen in the industry?

Yeah, I think like I said, it's very, very positive for the home team so to speak to be consolidating into some of the major projects and major opportunities within the WCSP. Yeah, I think you'd have to look almost specifically company by company to find the motivation for let's say a stead well to make the decision to Exit or Conoco et cetera.

Each company has different sort of areas where they want to focus and some of that is socio economic, some of that is political, some of that is just based on pure economics. I think our point of view is as these major companies in the oil sands become larger and are able to deploy capital and efficiencies that makes the basin ever more economic and we would that that's going to manifest itself in continued growth.

Great, thank you.

Good morning guys, just on the wholesale business here and thinking about some of the near term headwinds out there and all those differentials. I know you've done a good job in the offering up some near term guidance, so I just wondered if you could provide a few more comments on how Q2 is shaping up for wholesale contributions on a sequential basis here?

Yeah, obviously as we'd sort of indicated in the prepared remarks, we're seeing - keep in mind that our wholesale group is really [indiscernible] since crude oil and liquids marketing is on NGL and LPG marketing and it's also refined products marketing. On the crude side single digit differentials really manifest themselves in very, very tight margins and so we wouldn't expect Q1 to Q2 improvement with respect to our crude oil marketing business.

With respect to the NGL and LPG business, of course it's warmer in the second quarter than it is in the first quarter and so we sell less amount of molecules and so we'll see a reduction in profit contribution from our NGL and LPG business that will be offset somewhat by - as we come out of the spring break up and as we come out of the refinery turnaround at Moose Jaw, continued deployment of our semi refined products into drilling and completion will not throughout western Canada, but also throughout a lot of the basins in the US. And as we move into the summer road paving season, we'll still start to see some contribution from our sales growth asphalt into western Canada in the May and June timeframe.

So I think Q1 to Q2 from a wholesale perspective we will see a normal seasonal reduction in profitability, but from Q2 '16 to Q2 of '17 perspective you should be looking forward to sort of a more normal circumstance with respect to wholesale as a whole, so to speak.

Great, thanks for that. And then maybe over to terminals and back to the discussion on recent consolidation, although positive for your growth out there I guess one can argue a bit of a net negative for your counterparty US profile given the related credit ratings out there.

So just wondering if that uptick in counterparty risk will be quite modest, changes how you think about your rate on building new tanks or rolling over existing contracts?

I wouldn't attribute a tremendous amount of increased risk to sort of counterparty concentration and anybody's credit profile. We are in a position because of the very, very high quality service offerings that we have at both Edmonton and Hardisty to earn.

We have pretty attractive rates of return on the infrastructure build up that we have and so the short answer is I don't think that that small uptick in kind of counterparty credit risk would really change our view point in terms of our credit rates.

Got it and as it relates to locking down contracts for the four new tanks, navigating suite through some of the market dynamics out there, the upstream outages, the consolidation, I mean have these dynamics slowed the pace of these discussions at all or would you say they're increasing the sense of urgency here for customers to lock down new storage?

I think its normal course. These discussions in these contractual negotiations, each of them has its own dynamic and its own timing.

A lot of the dynamic and a lot of the timing is determined by things that happen outside of the specific negotiations between us and our counterparties and certainly we're seeing some of those dynamics coming to play here. I could mention refinery outages and we're also thinking in terms a counterparty that has built a big tank for them and at Hardisty also and to lock down pipeline actions into the Hardisty complex, they also need to look down their growth programs with respect to where the volumes are going to come from.

And so there are a number of sort of dynamics play every time we get into some of these negotiations. So I would say, what we're experiencing with respect to contracting the four potential tanks at Hardisty is absolutely normal for us and we're still very, very confident that we're going to be able to move forward on that new build.

That's good and lastly Stew, congrats on your retirement here, but wondering if you could put your director's head on and comment on why the external search versus promoting within just given the experience of say Mr. Wise or Mr.

Wilkins, I mean not only with the assets obviously, but also presenting the story to investors. I mean does the board see value in bringing someone in with a fresh look at the business?

I think the board is doing what the board and as I indicated I started the discussions in mid 2016 about my desire to move out of the organization sometime in 2018. That as I said in my remarks, looks well for me and my family and so I wanted to give the board sufficient time to look at all candidates both internal and external.

And so I think one shouldn't look at the fact that there is a - the search going on is precluding one set of candidates from another. I think it's just a very, very prudent sort of move by the sub-committee of the board that's been set up to look at all candidates available whether they be internal or external to make sure that the most appropriate person is named to take over.

Got it. Thank you very much.

Good morning. Stew, you talked about on the WCSP I guess starting or getting tighter over the next a little bit and while you're contractor on the rail facility, I'm just wondering if you can talk about the wholesale side of your business, the capacity, capability and outlook to take advantage of - if we start to see streams get go a little hay wire with the tightness?

I mean we have access to logistics and marketing capabilities, we are in a position to help sort of market chaos if you will. Differentials widening and becoming more dynamic I guess is typically a manifestation of our market chaos in some place, be that a refinery outage or tight line capacity and so as we see heavy oil production growing particularly in fairly large chunks throughout the second half of this year.

It's our expectation that that's going to lead to widening differentials and more volatility within those differentials. Certainly with our ability to truck barrels, to move barrels by rail and to move barrels around or between streams within our terminals as well, we're in a tremendous position to be able to help our producer customers and as we help those customers we'll obviously look forward to getting return on providing those services.

So as I'd sort alluded in our prepared remarks, I would expect that the second half provides us with more opportunities in the wholesale and logistics side just because of that tightness.

Okay, that's great. And then maybe just turning to the prospects for Keystone XL, it sounds like Trans Canada is making some headway on their commercial discussions and they've stated that they expect to get some new customers on the line.

So I'm just wondering have you noticed any change in either the pace of the nature of the discussions with you with respect to tank opportunities or do you think that a lot of what's going to be there will be just at the KXL tank.

Well, I think should KXL go ahead and that would be tremendously positive for us. We inject more barrels into the existing Keystones' pipeline than anybody else including Trans Canada and so we would expect that a similar profile would exist with KXL expansion.

Having said that, discussions that Trans Canada will be having with their potential customers on the pipeline; those discussions will be a pre cursor to eventual discussions that we would have with those same customers. The pipe is farther down the line in terms of being developed and commissioned than the timeframe that we would need to build tank in support of it.

So should KXL go ahead then we would expect it's going to be very, very positive for us, but the timing is too soon for us to be entering into specific discussions around it.

Okay, so stew to that kind follow, just historically what you would have seen where you've seen pipeline deals get in place and then you've seen the customers come to you versus some sort of concurrent discussion?

Yeah, I mean like I said, we need about two years or less build a big tank in support of our customers' need. I wouldn't pose that we're probably two years plus or more away from KXL being fully built out and commissioned.

And so we would expect that sort of two years from final commissioning date will be announcing growth projects specifically related to KXL.

Understand, thank you very much.

Two very quick questions if I may please, the four new tanks that you're looking at Hardisty, what would be the capacity of that?

It's early days to be very, very specific about that, but typically in the past we've built anything from 300,000 barrels to 500,000 barrels and so the tanks built out of Hardisty would be consistent with that.

Okay and the other question is, in the last quarter what was the kind of throughput for your crude by rail volumes?

We don't specifically give the crude by rail volumes out because that's proprietary customer information. What I can say is that consistent with all other crude by rail out of the WCSP, the utilization of available capacity has been very low.

Okay, thank you.

Thanks again for your interest in Gibsons. As mentioned earlier, I'm available after the call if there are more questions.

Have a good day everyone.