Steve Spaulding - President and Chief Executive Officer Sean Brown - Chief Financial Officer Mark Chyc-Cies - Vice President, Strategy Planning and Investor Relations

Thank you, operator. Good morning, and thank you for joining us on this conference call discussing our second quarter 2019 operational and financial results.

On the call this morning from Gibson Energy are Steve Spaulding, President and Chief Executive Officer; and Sean Brown, Chief Financial Officer. Listeners are reminded that today's call refers to non-GAAP measures and forward-looking information.

Descriptions and qualifications of such measures and information are set out in our continuous disclosure document available on CEDAR. Now I’d like to turn the call over to Steve.

Thanks, Mark. Good morning, everyone and thank you for joining us today.

We delivered another strong quarter, with adjusted EBITDA from operations up 13% and distributable cash flow increasing 40% versus the second quarter of last year. In terms of headline numbers, adjusted EBITDA was $112 million and distributable cash flow was $80 million.

I would note that EBITDA has been adjusted for a future environmental remediation provision recognized in the quarter. Looking more broadly, than the financial results we continue to execute our strategy.

In April, we entered into an agreement to sell our Canadian Truck Transportation business. At the beginning of July, we closed the transaction.

We have now finished our noncore disposition and completed our transformation into an oil-focused infrastructure company. Today, we have five storage tanks or 2.5 million barrels of tankage under construction at Hardisty, and we are negotiating to contract additional tankage this year.

We are working with our partner at the rail terminal USD to secure additional commercial support for our DRU project at Hardisty. With our existing infrastructure, connectivity and capacity to load more than three unit trains a day, we are uniquely positioned to provide a cost effective solution for Canadian bitumen production.

Our DRU would improve egress out of the basin for the producer and the neat bitumen has more value than the Dilbit to the sophisticated U.S. refineries.

An exciting opportunity, but we need to have the project fully underpinned by long-term contracts before we proceed. At the end of June, the Moose Jaw facility was expanded from 17,000 barrels a day to 22.

The project was completed ahead of schedule and below budget. Beyond increasing the capacity, we expect to realize higher margins on a per barrel basis.

The expansion included heat integration equipment that would require no additional heat for the additional throughput. Moose Jaw is a natural fit with the rest of our business.

It provides us a strategic hedge in the case of pipelines, that are not built and helps fund our infrastructure growth. In the U.S., we expect Pyote East in the connection into Wink will be placed in service in late September, early October.

This will be the first infrastructure asset Gibson Energy has ever built in the U.S. It’s a big win for us, and it comes far sooner than we expected when we laid out our plans at the Investor Day in 2018.

The U.S. team is currently pursuing several opportunities.

We’re in numerous discussions on gathering, crude oil gathering front, mostly bunts and singles that’s leveraging the assets we have in place. We are targeting that 5x to 7x EBITDA project, and there’s no need for us to reach.

At Wink, we continue to have the discussions with parties for tankage. It’s still early, but we certainly believe there is the potential for Gibson Energy to build its first tankage in the U.S.

within the next year or so. Returning to the topic of completing our transformation, becoming fully Investment Grade reflects the quality of our business today.

This is a major milestone for Gibson Energy and Sean will discuss the impact in further detail. This speaks to our very strong financial position.

Being Investment Grade will help reduce our funding cost, improve our access to capital, both these benefits improve our ability to grow distributable cash flow per share. Looking to the balance of 2019, we are well positioned to keep our momentum going.

All our capital projects under construction are proceeding quite well. They’re on budget, and most of them are ahead of schedule.

At the Top of the Hill, we have made strong progress on Phase III tankage, and we now expect four of the five tanks under construction will be placed in service before the end of the year. On the commercial front in Canada, we have sanctioned new projects at both Hardisty and the Edmonton terminals.

This has pushed up our sanctioned capital to the top of our range that Sean will speak to in his remarks. The commercial team remains focused on developing and executing additional oil infrastructure opportunities.

We see the possibility for infrastructure capital in 2019 to approach that $300 million target, and we are confident that we will sanction at least $200 million to $300 million of capital in 2020. Before we conclude our remarks, let me quickly return to the future environmental provision recognized during the quarter.

This is not something I would consider normal course, or just part of operating a terminal. We play a significant importance in our asset integrity and loss prevention at our facilities.

On this issue, the samples collected show the product in question is a product we’ve never had at our terminal. As a result, we have filed a statement of claim against an adjacent operator to recover past and future damages to our property.

We believe we have a strong legal position. From an accounting perspective, once we quantify the future costs and filing the statement of the claim, we were required to make the provision.

This provision will reverse upon settlement of our claim. The potential costs will be incurred over many years.

Gibson Energy is a top operator, and we pride ourselves with how we operate our terminals. The environment is very important to us, as are the communities that we operate in and around.

In summary, this was another strong quarter, from both an operational and financial perspective. We continued to execute.

We are very focused on the delivery of capital projects. Our commercial teams north and south of the border are developing additional business opportunities.

Our financial position is very strong. Leverage and pay out both remain well below target ranges.

We are Investment Grade, and we will remain fully funded. As I said on the last call, the objective is very clear.

We need to keep executing our strategy, keep doing what we said we would do. I will now pass the call over to Sean, who will walk us through the financial results in more detail.

Sean.

Thanks, Steve. As Steve mentioned, we had another strong quarter.

Results from our very consistent infrastructure business were very much in-line with our internal expectations, and we are pleasantly surprised by the performance from marketing. This has been a busy year so far.

I am very glad to have all the dispositions closed and I’m also very happy that the quality of our business and the strength of our balance sheet have now been recognized by both DBRS and S&P. Speaking to the financial results, adjusted EBITDA from combined operations of $112 million in the quarter, excluding the remediation provision was a $10 million or 10% increase from the second quarter of 2018.

On a more comparable basis, adjusted EBITDA from continuing operations, excluding the remediation provision of $109 million in the quarter, was a $12 million or 13% increase from the second quarter of 2018. Distributable cash flow from combined operations of $80 million was an increase of $23 million or 40% over the second quarter of 2018.

The main drivers of the increases over the second quarter of last year were as follows: Infrastructure segment profit, excluding remediation provision, was up $5 million as a result of new projects coming into service within Q1, such as the three tanks, or 1.1 million barrels of storage at Hardisty; the HURC Rail Facility expansion; and the Viking Pipeline. Marketing segment profit increased $10 million due to higher margins earned from the crude marketing business.

Offsetting this slightly, G&A was a bit higher. As you recall, we changed some of our allocations this year, but I would note that the salaries and benefits portion of G&A is down 18% in the first six months of this year relative to the same period last year.

On a distributable cash flow basis, in addition to the drivers I just discussed, we had a very small current tax recovery this quarter as a result of a cumulative benefit from the recognition of certain deductible items, resulting in a $9 million increase relative to the comparable quarter last year. On a sequential basis, we very much anticipated a decrease in marketing segment profit.

Differentials were much narrower, and there wasn’t the same level of volatility to drive opportunities for the crude oil business. That said we still outperformed our expectations, which really speaks to the strength of our marketing organization.

Contribution from infrastructure was down $2 million quarter-over-quarter after adjusting for the remediation provision, which was very much in line with our internal expectations and the commentary provided on our last call. Specifically, the first quarter benefited from two months of contribution from ES North, which had not qualified for discontinued operations treatment and, as such appeared in our continuing operations in the first quarter.

Also, we had the annual turnaround at Moose Jaw, which was a bit longer this year to accommodate the expansion work without having to shut down the facility for a second time, which was the main driver of a $5 million decrease in Moose Jaw’s contribution to infrastructure segment profit relative to the first quarter. This was only partially offset by billing for all three months at the Top of the Hill Phase I, versus only one month in the first quarter.

On a distributable cash flow basis, the second quarter was actually very close to the first quarter, decreasing by only $3 million despite the much larger step down in marketing contribution. This was a result of taxes, lease payments, G&A and replacement capital all being lower in the second quarter and in the first.

With another strong quarter, distributable cash flow from combined operations for the trailing 12 months increased to $331 million, pushing down the pay-out ratio to 58% and even further below our 70% to 80% target range. Debt to adjusted EBITDA increased slightly to 2.5x, but remains well below our 3x to 3.5x target and would have been in-line with the first quarter if the proceeds from the trucking sale had been received two days earlier.

As discussed earlier, one item I’m extremely excited to discuss is the Investment Grade rating we received from S&P on July 24. Not only does this highlight our quality of cash flows and further reinforce the transformation into a pure play crude oil infrastructure company, but it also has immediate benefits from a cost of capital perspective.

Right now, we have $900 million of term debt at 5.25% and 5.375%. With our second Investment Grade credit rating, we will look to refinance that debt, starting with our $300 million in notes due in 2022.

We believe we can extend term and bring down coupons substantially, potentially reducing our interest cost by as much as $15 million to $20 million per year once all the notes are refinanced. That would really improve our EBITDA conversion into distributable cash flow as to make it in line or better than our peers and would represent greater than a 5% increase in distributable cash flow alone or half of our annual per share growth target.

In terms of our outlook, let me speak first to marketing. With narrow differentials and the turnaround at Moose Jaw in the second quarter, we are very conservative with our expectations for this part of the business.

We are very glad we were able to exceed these expectations, but our bias will still be towards remaining conservative in our marketing outlook. For now, we will remain near our mid-cycle outlook at $15 million to $20 million with the expectation of at least $20 million to $30 million in adjusted EBITDA for marketing in the third quarter.

But there are certainly factors that could drive upside to that. Specifically, with the Moose Jaw expansion coming into service, we’ll realize greater profits within refined products, and it gives us further confidence that our mid-cycle number is a low-end, conservative range rather than a [inaudible].

One factor that keeps us fairly conservative on our marketing outlook in the near-term is how differentials have been slow to widen to levels we believe that are required to incentivize additional rail, likely around $18 to $20 per barrel range. For example, August looks to be less than $12 per barrel.

To the extent that differentials widen over the next few months, that would be upside to our outlook. Also, if similar to the second quarter, we realize some opportunities that we did not have visibility to when we held our call that would be another potential upside.

For the benefit of investors and analysts looking to model our cash flows, we have also refined our capital outlook for the year to be between $230 million and $280 million. Our outlook is based on sanctioned projects, and the increase is reflective of growth projects we have added from the start of the year.

The increase would include the Phase IV tankage we sanctioned in March, as well as several inside defense projects at our terminals. We have also decided to proceed on the foundations of the remaining two tank locations at the Top of the Hill.

While only a small portion of the total cost of a tank, this will allow us to take advantage of the ongoing work at the Top of the Hill and maintain the schedule for delivery, in the second half of 2020. We feel comfortable that our commercial team will be able to contract this tankage on a timely basis, which would underpin the remaining construction work.

In summary, the second quarter was above our internal expectations. Infrastructure is right where we thought it would be, and marketing was able to beat our outlook with a strong second half of the quarter.

Not something we count on, but that extra cash flow will help further charge the balance sheet and fund infrastructure growth capital. Importantly, we continue to check all the boxes in our governing financial principles.

We remain fully funded for all the sanctioned growth capital with payout and leverage well below target levels, and we are now fully Investment Grade, which was one of our major goals. We are in a strong financial position, and that strength will continue to build as we place additional infrastructure into service over the coming quarters.

At this point, I will turn the call over to the operator to open it up for questions.

Hi good morning. Just wanted to start off on the CapEx side of the question, lifting the budget there a little bit, I was just wondering if you could provide a bit more detail as far as, what were the drivers to accelerating.

What type of conversations you’re having with your customers, and what is there, I guess, drivers to sign-up for this incremental storage that gives you the confidence as far as, you know doing the prep work for the next round of expansion there?

I think there are two questions there. One is what expanded our capital?

Those were activities, both at Hardisty - those were small pipeline projects internally at both Hardisty and Edmonton. At Edmonton, we’re going to expand our rail additional 22 spots, and that’s backed by one of the large refiners in the area.

So they will be loading the refined products on to those facilities. And then at Hardisty, we have additional projects that are funded through throughput fees.

Now why did we move forward with the expansion or with the two rings, it was really a synergy opportunity. We’ve built out that, one tank that we announced earlier in the year, we had an opportunity that saved us considerable amount of money if we moved forward and built those two rings.

The one thing about those rings is they can sit there for 10 years. So, that investment is what we consider just a really sound investment, and we saved a considerable amount of money building the rings early.

As far as talks, you know we continue to have talks, and we do believe that we’ll be successful this year in contracting additional tankage. But until those documents are signed, you know it’s not a guaranteed.

That’s helpful, thanks. And maybe just pivoting to the U.S.

side, when you’re looking at the Wink opportunity, could you provide a bit more color there as far as how you feel that you’re tracking towards actually bringing, you know new storage into service? What capital have you deployed?

Or what customer conversations have you had so far to backstop new storage there?

You know the storage is, that’s something we’re working on there. We definitely have the land, we have the 160 acres, you know we have the pipe coming up from our Pyote East system, that’s being connected in and then we’re laying out dual 16 inches connected into the facilities nearby.

We continue to have discussions with parties there, but you know, if we contracted something, it would be later in the year or early next year. Those discussions have not proceeded as far as the discussions at Hardisty.

That’s helpful, thanks. And then last one, if I could.

Just with Moose Jaw, the expansion there, could you just frame for us, I guess the uplift that you could see in the marketing EBITDA versus what you were expecting before, now that you have this new incremental capacity?

Well, uplift in market, I mean, it’s just the 25% expansion. So, the marketing organization around Moose Jaw will have about 25% more profit.

Addition to that is they actually pay the fuel cost. So, they’ll see that savings in fuel, which is another one, probably $1 million to $2 million a year.

Yes, Jeremy. The only thing I’d add to that is, as you know there is an ITP that the marketing business does play into the infrastructure business for operation maintenance and, you know such at the facility.

You know that’s in the range of $25 million as you can see in our financials. You know commensurate with the increase in capacity, you will see an increase in that ITP.

So that will show up in the infrastructure side. Any further increases, so, you know assume that goes up by, call it 25%, any other increases that we would see would be reflected in that 20% to 30% range that we provided for Q3 marketing.

That’s helpful. That’s it from me.

Thanks.

Thank you.

Good morning everyone. First comments or first question is on Edmonton with Trans Mountain inching forward, and you’re available land there.

Have conversations on adding some storage in Edmonton to serve an expansion of Trans Mountain started yet, or will you need to see a little bit more progress there on the pipe?

You know we have our 30 inch mainline connection into Trans Mountain, and we’re well connected to all the incoming pipeline. But, you know the customers, I think it’s still a kind of a wait and see there, Rob.

Okay. And that’s fair.

And then just in terms of the preconstruction activities at Hardisty. Would those have occurred if you weren’t well down the path on tankage discussions there?

Are those indicative of kind of the confidence that you’re seeing, in your contracting discussions there, and could we see you pursue other preconstruction activities?

You know the first course was, it was significant cost savings. That’s the reason we moved forward with it.

You know we are confident that we will use these tank beds and contract these tank beds up within the next year, either this year or next year.

All right. Thank you.

Good morning guys. Just on the marketing performance.

Wondering if you can confirm for us whether you’ve locked in some cheaper butane supply for your blending operations, at least until, you know through next March, and if this might represent any upside to your previous marketing guidance of, you know $15 million to $20 million per quarter, even assuming mid-cycle differentials going forward?

Yes, as far as contracting butane. You know butane was pretty, has been pretty beat up, especially early in the year and we did contract some up early in the year at attractive pricing.

We’re still are in the spot market though on butane. You know we didn’t go long on our butane purchases.

And so we’re still in the spot market, but that has been part of the benefit of that $20 million to $30 million.

Okay.

Maybe I’ll add to the mid cycle, you know the question on the marketing performance specifically, as you heard on our call, you know our expectation for Q3 is $20 million to $30 million in performance. You know we certainly are not going to move off of having mid-cycle be our sort of expectation or what we would ask people to model in beyond that.

You know just to give a bit more clarity though, as we sit here today, if we were to provide guidance or you know an expectation to the fourth quarter, it probably would be closer to where we were in the third quarter, certainly just given some of the factors. You know so think of that being somewhere in the range of $10 million a month or probably that $20 million to $30 million.

We’re not in a position to provide that as we sit here today, but as we look through to the fourth quarter, we don’t see things changing materially off the third quarter, certainly.

Got it. Thanks for that.

And then just at the HURC facility, you know with activity ramping up towards the three unit trains per day and given continued delay in additional pipeline in the U.S. at Hardisty.

Do you get the sense that customers are finally getting more serious about building some DRU infrastructure? And if so, any color you could provide on potential size, cost, lead time would be helpful?

Thanks.

You know. Last year at this time, there was no real discussion with many parties on the DRU.

But we are in active discussions now with parties, both producers and refiners. We see that in a really long term benefit on the refining side, especially down in the states, where they can get that neat bitumen that didn’t have the 30% condensate injected in it.

The states are – you know they’re pretty long C5, values trading around 80% or less than 80% of WTI, and the U.S. production continues to grow in that C5 production, along with all of the really light crude that’s being produced in the U.S.

So the U.S. refineries are flushed with the lighter product, and that neat bitumen, that gives them the capacity to keep, you know their refineries running at full capacity.

As far as size, we think we have a competitive advantage capital wise, and we won’t really state that right now, but we do believe we have a competitive advantage in capital because of our storage tanks, because of the three unit trains, because of the pipeline property that we own. We think we have a considerable competitive advantage over most other players.

Thanks for that Steven. Just to confirm, would that infrastructure be 100% Gibson owned, or would it have to fall within the JV with USD?

Yes. I never said it’s going to be 100%.

I’ve always said, if we move forward with the DRU, it will be with our partner, USD.

Yeah. Okay, perfect.

Just on that one, I mean if you listen to USD’s call yesterday, they did provide some specifics. You know if anything, probably a bit more descriptive on their calls, but they did talk about, you know facility in a range of 100,000 barrels a day, and on their call, they said they expected it to take somewhere in the range of 28 months to build.

So, I’d encourage you to go look at their call as well. Given, Steve’s prepared remarks.

Great. And then last one here for yourself, Sean.

Just wondering if you could provide a bit more color around the timing of refinancing the notes? Just wondering if the math goes around right now for both the 2022s and 2024s, or do you need to wait a little bit for the callable terms to step down over the next couple of years?

Yes. No, thanks.

So the next call period or the last call period for both, or for the 2022s was July. Of this year, the first call period for the 2024s would be July of next year.

I mean, it’s fairly obvious that it’s economic to refi those 2022s, you know in the relative near term. So you could expect that would be our plan, given where the call price is there, given its nearer term to maturity.

So, it’s extremely NPV positive to do that today, especially with those notes being 5.375%, I mean, you’re seeing BBB low credits getting financed on a 10 year basis, you know in the last day or two even at, you know prices less than 3.5%. The 2024s, you know if we were to refi them today, it’s probably in around NPV neutral.

So you know that’s something we’ll continue to monitor, certainly. At a minimum, I would expect that we would refi those at the next call period, which is July 2020, where the cost of refi them goes down by about 0.5% and the NPV of that trade goes up significantly.

The other consideration for us as we think about it is just the pure capacity for us, as a first time issuer in the Investment Grade market. Now, I think doing a $900 million offering in one swoop as an inaugural offering would be a rather large ticket right now.

So, you know in short answer, expect the 2022s relatively soon. You know 2024s we’ll likely wait until July 2020, but we’ll continue to monitor what the market does.

Thank is excellent. Thanks guys.

You bet.

Thank you. Just a follow-up on your marketing: I don’t want to belabor it, but how are you thinking of layering on hedges opportunistically, and do you see any liquidity out there?

Or are you just focusing more on your short term opportunities there?

You know, if the opportunity does present itself, we do hedge some of the margin at Moose Jaw. We don’t have any significant, really any significant hedges on right now for the Moose Jaw itself, but if the opportunity would present itself, we would put on hedges.

Thank you. That’s helpful context, thank you.

And any activity in the U.S., you also mention that some of your volumes there went up, but I’m assuming them still relatively modest?

Yes. There’s nothing significant going on in the U.S.

right now. You know the size of the construction itself, which we’re very excited about.

On any marketing activity or anything like that, there’s nothing drastically different than what we’ve done in the past. We continue to, I think we’ve increased our lease purchases out there to 30,000 barrels a day, but that’s still relatively insignificant.

Okay that’s helpful context. Thank you.

And maybe you can comment on the Enbridge open season for their Mainline. How might Gibson be participating, either to secure capacity for your Moose Jaw Facility, or how your marketing operations might choose to participate in that, if at all?

Yes. We’re definitely reviewing that.

You know protecting the Moose Jaw is very important to us. You know downstream marketing on Enbridge is not - we’ve never been a real shipper on Enbridge.

So, that’s not a giant opportunity for us, but we’ll review that opportunity. But protecting Moose Jaw’s earnings is extremely important to us.

Thank you.

Hey good morning guys. I just have one question left.

I did notice some marketing volumes were pretty strong. I thought maybe that was related to the U.S., but judging by your answer to the last question, it’s probably coming from somewhere else.

Can you provide a little bit more color on that, particularly with respect to sustainability?

So I mean, if you look at marketing margins, they’re driven by Moose Jaw itself, which we’ll see that expansion coming on in third and fourth quarter. So, we’ll see the marketing margins from the refined products business move up.

Then, you know we did talk about the potential for blending butane, that’s still strong through the second and third quarter and fourth quarter. We see that butane market is still being depressed, other activities or just marketing activities in and around our terminal at Hardisty and Edmonton.

Yeah. What I’d say, I think the question was specific EBIT to volumes as well.

What I would say, Rob is you’ll notice that we did have a decent increase in volumes, and this goes to the structure of our business as well, you know where it’s not all that volumetric dependent. So, you would have seen a decent size, if you looked into the details behind the numbers, you would have seen a decent size jump in volumes, certainly at our terminals, where that was underpinned by take-or-pay contracts.

So, even the volume was somewhat lower last year, we are still getting paid for it. So, I would say, you know the increase in volume is not something that I would view as being sort of either a risk or necessarily an opportunity just given the contractual nature of our infrastructure assets.

Okay. Thank you, that was the color I was looking for.

Thanks.

Hi thanks good morning. I wanted to check, your target of two to four tanks sanctioned.

I think that’s more kind of a high level way as you think about your growth. You know I guess, you’ve always suggested Top of the Hill is the next potential growth target.

So, just reading through, thinking about your comments, are you thinking more maybe you won’t get the two tanks this year, but you start to see a bit of a lumpy pickup in 2020?

You know we’ve contracted one already this year. And we’re pretty confident that we’ll contract another two this year.

Okay. So no change there.

Just wasn’t sure about your comment around Top of the Hill being maybe, into next year on sanctioning.

Yes, there are other places we can build tankage though.

Okay. All right, got it.

Okay, and then on some of the questions around, some pre-work that’s being done foundations. I mean, would you guys ever build storage on contracted first and front end pick up a higher toll and then you get some visibility on securing that ultimately, or you’d move ahead with merchant first?

We haven’t done that. That would be something that we would need to discuss with the Board before we would do anything like that.

That’s nothing, that we have actually discussed with the Board so…

Okay. All right, and then the second topic, I wanted to dig in this provision you made, and I wanted to clarify.

I mean, in no way does this impact your tank operations. Is this just as simply just cost removing these samples that you found?

All I can say is, is really what I said in my prepared remarks. From advice base from counsel, we’re not going to really talk more about, you know that issue.

But, thank you for the question.

Yes. It doesn’t impact the operation of the facility though, indirect answer to your question.

Okay all right. All right, thanks so much.

Thank you. Good morning.

I think the question is for Sean. And I appreciate the color on your expectations on where you could place debt into the market with the Investment Grade.

I guess the question really is, clearly there’s a financial benefit from lower interest rate costs. But are there other benefits that you get just from a counterparty standpoint as far as some of your operating agreements?

And just the contracts you have, has become easier to negotiate with people now that you’ve got the Investment Grade versus where you were before?

You know it’s really a commercial question. But absolutely, we would have viewed ourselves as being; you know at least a pseudo Investment Grade credit profile previously.

But, you know for things such as posting LCs and credit that people will provide us or open credit, you know clearly is as an Investment Grade entity that improves relatively materially, because similar to bond pricing, it’s sort of a formula thing where there’s a step change as you move from sub-Investment Grade to Investment Grade. So, absolutely, there are benefits on the commercial side as well with respect to open credit we get and requirements to post LCs.

Okay. That’s helpful.

And then, you know if we just think about this a little bit different way, and if you thought about having the Investment Grade and then maybe sourcing alternative capital, whether it is private equity to accelerate expansions? Is that something you anticipate being easier, should you go that route?

You know, I think a big, you know we didn’t talk about it in our prepared remarks, but, you know another big benefit of getting Investment Grade is not just access to a much lower coupon in longer tenor, but another is accesses to hybrid sources of capital. I mean, to be abundantly clear here, part of our strategy is to be fully funded with the distributable cash flow or internally generated cash flow we have and our current capital plans, including the increase we spoke to today, we remain fully funded.

So, what that means is we don’t need any other external sources of capital, you know to the extent that we had a customer come to us and say they want an additional 10 tanks, and it took us above that fully funded status. One of the real benefits to Investment Grade is access to wither the hybrid or preferred market; you know which are two non-dilutive, leverage-neutral sources of capital.

So, I would think of that as being the real benefit as opposed to being some step change with respect to private equity sourcing, helping us source some of our capital. I mean, at the end of the day, I would expect that anything private equity would provide would be much more expensive than what we could do in either the term debt or the hybrid debt markets.

That’s great. Thank you.

Hey good morning. I think you’re generally in prior comments leaning this way, but you used the word today for Moose Jaw, natural fit and the hedge or the physical hedge it provides you.

So, in terms of kind of looking at your business and stabilizing it, is Moose Jaw you know very much core to the business going forward?

You know, we’ve discussed that with the Board, and we believe Moose Jaw is core to us on a go-forward basis.

Okay. Got it.

Moving to the DRU. I’m just wondering, what are the plans, in which that it’s on the drawing board right now to get the condensate back into the third-party systems?

State that again.

Sorry, just on the DRU, what’s the plan to get the condensate back into the third-party systems to be recycled?

It really depends on the size, right? I mean, the current size, we don’t really need to get it into third-party systems.

We can kind of use it. We can use it there at Hardisty with our additional customers.

We don’t need to get it into the pipeline. If we expand it further, then we’ll need to connect into condensate pipelines headed to [inaudible].

Got it. So, I think it was 100,000 barrels a day of Dilbit and 70,000 out, so you could use the 30,000 then of conde just to blend in to your activities in Hardisty?

That can be used in Hardisty.

Got it. Okay.

And maybe just last then, coming back to marketing. Are you able to be a little bit more specific about what happened in June?

You know what is things that because, it didn’t look like there was a lot evolved in the month ahead market. So, like what types of things kind of happened in June to drive the big quarter?

It really wasn’t a June thing, Robert. It was pretty consistent about all three months.

So, I didn’t see a big jump in June that caused the earnings stream. It was pretty consistent across all three months.

Okay. But by the time you held your call; didn’t you have two months in the bag, given the month ahead nature?

Yes. We didn’t have quite two months in the bag, and what I would have said, we had the, you know and its similar to the visibility we have right now.

We had the first month in the bag, we had what we thought was relatively good visibility in the second month, and we had less visibility in the third month. You know, that you know second half or that second month materialized stronger than we expected and June materialized stronger than we expected both.

You know really, the outperformance there was primarily in the crude marketing business, and it wasn’t specific to one specific optimization strategy or one specific thing they do is just, in general, stronger, almost across the board within that crude marketing business. I mean, as you know, Moose Jaw was down in the second quarter.

So that really, if anything, Moose Jaw would have been slightly below budget as we thought about it vis-à-vis sort of what we talked about. We expected that in the quarter, but if you look at our budget at the beginning of the year, but it really was in the crude marketing business.

Got it. Was it less than about kind of locked in activities where you were seeing things in that month ahead, and maybe where there are just more kind of spot opportunities where you were seeing dislocations?

Spot opportunities, the majority.

Yes.

Okay. That’s great.

Thanks very much.

Good morning. I’ve got a couple of questions.

First one is related to CapEx for 2020. I believe, I heard you were talking about $200 million to $300 million for CapEx?

Or did I mishear that?

No. That’s correct.

In Steve’s prepared remarks, he said, you would expect that our CapEx will be somewhere in the range of $200 million to $300 million. We haven’t formally come out with that.

That’s just based on sort of what we see from commercial discussions today and what we sanctioned today.

Okay. Is there any color that you can add on to that?

And I appreciate, if you can’t. It’s just a little higher than I would have expected at this point.

No. I don’t think we’re in a position to provide color above that right now.

Again, Steve talked about in his remarks, we remain confident in two to four tanks a year. You know he mentioned it’s a possibility of something like a DRU and also mentioned that on the U.S.

side, commercial discussions were advancing well. So, we’ll come out with formal guidance at the tail end of the year as we do every year, and we’ll provide more granularity at that time.

But, you know the comment on the $200 million to $300 million is not formal guidance. It’s just based on what we’re seeing today.

That would be our expectation.

Okay. Great.

The last thing is maintenance capital. That was a little lower than I would have expected.

Would that be sort of a below average run rate, or could you add some color on to what that might be like and the reason I’m focusing on that is distributable cash flow?

So, you know our estimates on maintenance capital were $25 million to $30 million in the year. Maintenance capital is a lumpy thing, it doesn’t happen, you know perfectly through the year.

So we still expect to spend that $25 million to $30 million in a year.

Okay. That’s it from me.

I’ll turn it back, thank you very much.

Thank you. And thank you, everyone for joining us for our 2019 second quarter conference call.

Again, I would like to note that we have made available certain supplementary information on our website, www.gibsonenergy.com. Also, if you have any further questions, please reach out to us at [email protected].

Thank you, and have a great day.