Thank you, operator. Good morning and thank you for joining us on this conference call to discussing our fourth quarter and full year 2020 operational and financial results.

On this 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 as such measures and information are set out in our continuous disclosure documents available on SEDAR. Now, I'd like to turn the call over to Steve.

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

In a very challenging year for our industry, I believe our strategy which has built around our core terminals and high quality cash flows and maintaining a very strong balance sheet prove resilient. As you can see from our 2020 financial results, Infrastructure segment profit $374 million was in the upper half for the outlook range we gave in 2019, that was pre-COVID, which speaks to the stability and visibility we have in our business.

In the Infrastructure segment profit was a $60 million increase from 2019 on a comparable basis, 20% growth year-on-year, with the tanks replacement service at the end of 2020 and the DRU expected to enter service on budget and on schedule mid-year. We have visibility to further grow this year.

It's the strength of our infrastructure business that makes our dividends so solid. Our payout of 66% was below our target range of 70% to 80%.

Perhaps more importantly, our infrastructure only payout was 75%. The board and management see the value of modest stable dividend growth in a year where many North American mid streamers cut or pause dividend growth.

We were very pleased to, again, increase our dividend by 1% -- $0.01 per share per quarter, or about 3%. On the marketing side of the business, we were in the middle of our $80 million to $120 million run rate.

That said, it was a tale of two halves. In the first half of the year, we saw significant volatility.

Our marketing organization was able to move decisively and lock-in very meaningful gains in the second half with a very challenging environment and it looks like 2021 is shaping up to be the inverse. The challenging environment has persisted, but very few opportunities available today.

I can tell you -- I can't tell you when or where market is going to shift. But looking back over just the last few years, we can see how quickly it can change.

Some marketing outperformance tends to be quite lumpy of a small number of events, driving a good portion of the year's P&L. And in that context, we expect marketing performance to improve at some point through the year.

But as we always say, delivering our strategy is not dependent on marketing earnings. One area where we've seen noticeable improvement coming into 2021 is our commercial discussions.

On the tankage front, we are numerous conversations with customers for tankage at both Hardisty and Edmonton. One of the drivers for tankage at Edmonton is TMX.

Discussions on the DRU have also moved forward. Clarity on KXL has helped.

We're currently talking to multiple producers and multiple refiners. That said, it's a complicated set of agreements and will take time.

Shifting gears to another area where we've made significant progress in 2020, advancing our sustainability and ESG initiatives. ESG is very important to Gibson.

We want to ensure that we embed ESG into all areas of our business and position ourselves as stability -- as a sustainability and ESG leader. It's about the right thing to do and the smart thing to do.

While the core values of ESG have always been a part of Gibson. We started our formal ESG journey in 2020 with the release of our inaugural sustainability report.

We also made our first submission to CDP climate change questionnaire, and we were very pleased received an A minus score. We are one of seven oil and gas companies in North America to receive this distinction and also ranked in the top 10 globally.

For any initiative to be successful, you need to have the right governance in place to ingrain it into your existing business practices. Our board established a dedicated sustainability and ESG committee is chaired by Judy Cotte, an expert on ESG and responsible investment.

And we have benefited greatly from our experience on our ESG journey thus far. We've also ingrained sustainability in ESG in our strategy process and evaluating all of our commercial projects.

And we've made ourselves accountable with a meaningful proportion of our short-term incentives tied to ESG related metrics. On the environmental side, clearly a major focus is on emissions.

We believe our carbon footprint is already best-in-class in the North American midstream space. This is both on an emissions per dollar revenue basis and a per barrel throughput basis.

We continue to advance opportunities to reduce our emissions footprint. For example, at Moose Jaw in 2019, we've expanded the facility by 30% by utilizing new heat exchangers.

We reduced emission intensity by about 25%, and we've identified additional projects that could reduce our emissions. Within the social pillar, our efforts to date have been concentrated on community giving and diversity and inclusion.

In 2020, Gibson made a real commitment to cost, I personally feel very strongly about, with a five-year partnership with Trellis and the donation of $1 million. We are very much making a difference in the mental health of youth in our communities.

This is the largest financial donation in Gibson's history and Gibson employees have committed to dedicate a significant number of volunteer hours. On diversity and inclusion, women currently comprised 37% of the workforce and 30% of employees at the vice president level and higher.

Our board is one-third women. We took positive steps in 2020.

This would include the addition of two women to our board and putting programs in place to attract and retain women to Gibson and to ensure equal representation through the recruitment process. In 2021 expect to see us continue our ESG journey.

Our near term focus will be set on sustainability and ESG targets, which we are in the latter stages, the format. We will also continue to expand our disclosure and we'll publish a TCFD aligned report during the year.

Sustainability and ESG continues to evolve very rapidly, and we will very much seek to maintain our existing leadership position. Let me conclude by returning where we see the business today.

I would stress that our strategy was designed to succeed in any environment. That strategy has not changed and its effectiveness has proven again in 2020.

Our infrastructure business demonstrated its resilience. Despite the impact of COVID, infrastructure grew 20% in 2020 and will -- and it will grow again this year and into the future.

Discussions for tankage at the DRU have advanced. We feel very comfortable in our ability to deploy $150 million to $200 million per year without sacrificing returns.

And our balance sheet is very strong. We are fully funded and our dividend remains very well underpinned by our stable long-term infrastructure cash flows.

We will remain conservative in our approach to our business. I will now pass the call over to Sean who will walk us through our financial results in more detail.

Sean?

Thanks, Steve. As Steve mentioned, our business had a strong year.

Notwithstanding COVID, we were still above our budget for the year on both an adjusted EBITDA and distributable cash flow basis. One of the main drivers was our Infrastructure segment, which was in the top half of our outlook range.

Segment profit for the year was $374 million, including $93 million in the fourth quarter. I would note that the annual figure is a $60 million or nearly 20% increase on a comparable basis.

This was largely driven by a full year contribution for the four tanks or 2 million barrels we brought into service in late 2019 at the top of the hill, but also by our ability to add some incremental revenues at Hardisty through the year. And this is despite weakness from the relatively small variable component of our Infrastructure segment, our conventional pipelines and small terminals in Canada and the U.S.

These businesses were certainly impacted by COVID and have yet to recover, remaining roughly 40% below where we initially thought they would be. Comparing the fourth quarter to the third quarter of 2020, we are very much in line.

The three tanks or 1.5 million barrels we brought into service in the fourth quarter provided only a partial contribution and we'll see their full benefit in the first quarter of 2021. As a result, we still very much expect to be right at or around the $100 million per quarter run rate for infrastructure we'd previously discussed coming into 2021.

Marketing adjusted EBITDA of $104 million and segment profit of $95 million for the full year put us in the middle of our long-term run rate. As Steve mentioned, that was driven by strong start and then a very challenging environment towards the end of the year.

In the fourth quarter, adjusted EBITDA was negative $4 million and segment profit was negative $9 million. The strong start to the year was in part due to the volatility we saw during the onset of COVID, with one of the largest factors being the availability of time based opportunities given this steep contango in the futures curve, whereas opportunities in the crude marketing business were very limited in the back half of the year.

On the refined products side, road asphalt had a fairly strong year, in line with 2019. The other key products such as roofing flux and distillates had positive margin, but were down year-over-year.

In response to the current environment where drilling fluid demand remains fairly weak and asphalt demand is seasonally lower, we are also looking to capture seasonal opportunities on certain refined products. In any year, within our refined products business, seasonal optimization opportunities may exist, and we at times participate in these by storing some of our products in the winter months and selling into the summer months.

This year will be no different. And the impact of this is to push it some revenues from the fourth quarter of 2020 and the first quarter of 2021 into the second and perhaps third quarters of 2021, albeit for higher margins.

In characterizing our fourth quarter results, I think it's also very important to note that to the extent that marketing is not performing at levels that it has historically, it's reflective of the fact that the opportunities that they were able to find were not sufficient to fully offset the IPP commitments they have in place, rather than because we made the wrong market calls or took on high risk positions that went sideways. These IPPs are generally flat through the year where earnings can be lumpy or seasonal.

We also very much recognize the noise created by having both a segment profit and adjusted EBITDA measure. We've been looking at reporting a single measure to be accountable to, that we think it makes the most sense to start reporting that with the first quarter, rather than making the adjustment in the fourth quarter.

And reviewing peer disclosures and thinking about what is most appropriate for our business, we are leaning to something akin to adjusted EBITDA is that removes the noise created by unrealized hedging gains and losses and focuses on the economic value generated in the period. I would caution that it's something we're still working through with a formal decision to be made in conjunction with our Q1, 2021 results.

Shifting to our outlook for marketing. As Steve said, it remains a very challenging environment.

And absent a change in that environment, it will be a fairly challenging quarter for the crude marketing business, given the very limited opportunities. Combine that with our outlook for refined products, where we continue to see reduced product demand due to the pandemic, our outlook on an adjusted EBITDA basis for the quarter is around breakeven.

That being said, we do expect to see a recovery throughout the year, especially on refined products side as end use normalizes with a more fulsome economic recovery, given the role of the vaccine, though differentials are likely to stay narrow on a historical basis. And as has always been our approach, if we are setting reasonable expectations, then we need to consider that absent a meaningful change in the environment relatively soon, there's certainly the potential to be at the low-end or potentially even below our $80 million to $120 million run rate in 2021.

As Steve said, marketing is lumpy. We could certainly see a couple events that get us comfortably back into that range quite quickly, and that's certainly what history has shown us.

But at this time, we can't say we have clear line of sight to that. And to speak to what weakness in our marketing business could mean for our strategy, I said it on the last call, but I think it is very much worth repeating.

I could not be more clear than to say that we do not rely on our marketing business to fund our capital, fund our dividend or support our leverage. We are very deliberate in designing a framework that anticipated eventual volatility and the variable part of our business.

For that reason, in addition to our overall leverage target being conservative relative to peers, despite the cash flows from our infrastructure business being amongst the highest quality, our financial governing principles include measures for maintaining infrastructure only leverage at or below four times, as well as not paying out more than 100% of our infrastructure only cash flows. We currently are and very much see ourselves continuing to remain within both measures, with quite a bit of headroom on our infrastructure only payout.

Obviously, corporate level measures matter, but it's really the infrastructure only measures that we fundamentally run our business around, given the variability and the marketing business is not within our control. As a result and very much by design, even with the moderation and contribution from our marketing business, we remain in a very strong financial position, including being fully funded for all of our anticipated capital.

Given the strategy we have in place and our conservative financial governing principles, we are comfortable living at the lower end or even below our long-term marketing run rate and in no way will change our marketing strategy or risk tolerance to chase earnings. Finishing up the discussion of the results, let me quickly work down to distributable cash flow.

G&A of $33 million in 2020 was below our normalized run rate, largely due to COVID-related items, with the fourth quarter very much in line with the third quarter. Lower interest costs were one of the key wins in 2020 with a decrease of $10 million from 2019.

Refinancing our debt over the past 18 months has been a major focus, reducing our run rate interest costs by over $20 million per year. For context, that represents that 7% additional cash flow and our weighted average coupon on our notes would be by far the lowest within our Canadian mid-sized peer group at just over 3%, while at the same time, having the second longest weighted average center.

Replacement capital of $23 million in 2020 was slightly below 2019 as a result of deferring certain discretionary work to this year, given the impact of COVID and a focus on costs. Taxes in 2020 were comparable to 2019 with a recovery in the current quarter related to an adjustment book for the Alberta job creation tax cut.

Lease payments were slightly lower in 2020 than 2019. We've been very much looking to reduce our lease costs and would expect that in 2021, these lease costs could discrete -- could decrease further.

These factors resulted in distributed cash flow in 2020 being fairly comparable to 2019. The largest dynamic here is the growth in infrastructure, largely offset the decrease in marketing and the interest savings and lower lease costs also help to close the gap.

The fourth quarter was $11 million lower than the third quarter of 2020 due to the decrease in marketing contribution. And on a trailing 12-month basis, rolling off a stronger quarter with the fourth quarter of 2019 having been $22 million higher than the fourth quarter of 2020 due to the weaker contribution from marketing in the current quarter, our parent ratio increased modestly to 66%, but it's still well below our 70% to 80% target range.

Similarly, our debt to adjusted EBITDA was relatively flat at 2.8 times, which remains below or three to three and a half times target. Speaking to our financial position, our approach will continue to be in favor of remaining conservative, including maintaining a fully funded position for all our capital and being proactive and having significant available committed liquidity.

At the end of the year, we're only $60 million drawn on our $750 million credit facility, with about $54 million of cash in the balance sheet or effectively undrawn on a net basis. We also have $115 million of unutilized capacity on our $150 million bilateral demand facilities, so very significant liquidity, with years of running room, given our 66% payout ratio and $200 million capital program.

In terms of being proactive in 2020, we completed our transition to a fully investment grade capital structure with the issuance of a $250 million hybrid to fund the redemption of our $100 million convertible debentures. We are very pleased to be able to replace a potentially diluted convert with a non-dilutive longer tenor hybrid while maintaining the same 5.25% coupon.

Also we're able to ensure that the redemption was non-dilutive to the limited use of our NCIB in December. With these actions, we came into 2021 with significant available liquidity.

And as our upsizing our credit facility in February 2020 showed, you can never be too proactive in maintaining liquidity. It's when you need it, that the price goes up and availability goes down as many issuers saw during the onset of COVID.

In summary, the business had a good year in a very challenging environment. Our Infrastructure segment had a very strong year and marketing was within our long-term run rate expectation.

The current environment for marketing is challenging. While that will change in time, the more important point is that we simply don't rely on it in order to execute on our strategy.

We very much believe that our business offers a strong total return proposition to investors, with visibility to continued high quality investment opportunities in our Infrastructure segment, resulting in attractive distributable cash flow per share growth, which supports a meaningful growing dividend all while maintaining a very strong balance sheet and financial position. At this point, I will turn the call over to the operator to open it up for questions.

Hi. Good morning.

Good morning, Jeremy.

Just wanted to start off with regards to marketing outlook and how that impacts, I guess, capital allocation philosophy as you guys see it right now. There's a softer marketing outlook right now kind of impact, how you think about buybacks, the pace of buybacks, or is that really kind of more tied to growth CapEx in general and just the level of money you're spending with the balance of it would be put towards buybacks?

Just wondering the whole capital allocation philosophy between buybacks, growth CapEx and dividend growth, works out right now.

Sean, can you take that?

Yeah. Absolutely.

Thanks, Jeremy. So, I mean, our capital allocation philosophy really hasn't changed.

And as a refresher for everyone on the call, bias towards funding growth capital to the extent that we're deploying it at that five to seven build multiple under long-term contracts with investment grade counterparties, that will absolutely remain our priority. Also remaining fully funded and within our financial governing principles to the extent that there's excess cash flow, and you would have seen it in conjunction with the results here and that's primarily from infrastructure then we certainly have a bias towards modest annual dividend increases over time, with Infrastructure segment profit going up 20% on year-over-year basis.

Again, you saw that with the modest dividend increase that we announced this year, notwithstanding, challenging environment because of COVID. We have been clear that to the extent that we have excess cash flow and it's primarily from marketing, then we would very much buy a share buybacks.

And so, Jeremy, you're absolutely right. The marketing outlook does impact our ability or our desire to do share buybacks in the first half of the year, certainly.

We would like to see some measure of recovery in that marketing business before we look at that a more fulsomely, as we think about the back half of the year. And the other part is, all the factors you mentioned aren't necessarily mutually exclusive.

If you think about the capital spend we have, it is more front end loaded this year. So, again, we'd like to get through the bulk of that capital spend in the first half of the year as well, and see some measure of recovery in the marketing business.

And then I think you would see us look at a buyback program or reinstituting a buyback program more fully, probably closer to the back half of the year.

Got it. Understood.

That's helpful. Thanks.

And pivoting over to the DRU here, the potential for expansion, just wondering, granted it's a very complicated contract structure there that you'll can assign. But any thoughts you can provide on when this might kind of come to fruition, potential expansion.

So, is this kind of this year or next year event or later data, just trying to get more feeling on when you think that could come together?

Yeah. Thank you, Jeremy.

We're very excited about our phase one with Conoco. That first 50,000 is underpinned by a 10-year take or pay.

So, this is our first -- really the first DRU, commercial DRU in, in Canada. And we think it's a real opportunity.

I think clarity around KXL has certainly helped and discussions have picked up with -- as we continue to talk to multiple producers and refiners. So you have the U.S.

pool. And now that KXL is kind of cleared up, the feedstocks in Mexico -- coming from Venezuela and Mexico continue to decline.

So those U.S. refiners need that heavy crude oil produced by Canada.

And likewise, the Canadian producers want that U.S. market.

And so we think that this is a real opportunity for them, and discussions continue to heat up. But I would say it would be later in the year, probably a -- I would say a fourth quarter, third -- late third or fourth quarter, if we're able to do it this year, Jeremy.

Got it. That's helpful.

And then just one last one, if I could. I think at points in the past you discussed, two to four tanks is something that you guys would target in the long-term.

And just wondering, how you think about that right now, given everything we've gone through with COVID and the cycle, do you see that rates still achievable or just any updated thoughts there would be helpful?

Well, I wouldn't say COVID kind of put a pause on things. But as the year started this year, commercial negotiations have really heated up, both at Edmonton and at Hardisty.

In fact, at Hardisty, we did sign a short-term agreement with one of the oil sands producers. And we were going to actually move the marking tank that we -- our first marketing tank that we leased to marketing, we're going to lease that to that producer.

And we see several other opportunities. We have probably four different customers that are wanting tanks at Hardisty.

And then at Edmonton, we're getting very close to signing a -- construct some -- signing agreement to start doing initial engineering work on building tanks there. So, those discussions are really starting to pick up and they're associated with TMX and other opportunities at Edmond, Jeremy.

So, I would say that two to four tanks a year is still very viable. And we see pretty good line of sight over that over the next three or four -- three to four years.

Hi. Thanks.

Good morning. I wanted to follow-up on the Edmonton opportunity in particular.

And you mentioned TMX is a driver, mentioned other opportunities. Can you expand on these that are opportunities?

And then on Trans Mountain, it's expectation that in the past you've seen producers wanting to storage ahead of time, and you lease on a spot basis before the pipeline is actually in service?

So yeah. So, on tanks at Edmonton, obviously TMX is driving that.

We have a mainline connection into Trans Mountain. And there are several customers there.

The other driver is really what producers are saying as synergies between those two markets, Edmonton and Hardisty, and the ability for them to swap barrels back and forth and optimize their netbacks is really driving some of the other talks, Ben. And as far as, early -- I don’t know that we need to build anything early.

I think, kind of timing wise is -- to have tanks ready, we'll need to contract them later this year to have tanks ready on the current timeline for TMX.

Okay. So, we should think about in service of potential tanks more volumes that late 2022 service and in the past that feedstock revenues, that's sounds like it was more just -- you completed tanks early than expected?

Correct. Correct.

Yeah. I know you're only talking about one or two months, generally, Ben, when we do that.

Okay. And maybe switching to marketing side of things and can appreciate the language around, not relying on it, and there's opportunity to buyback stock in this second half to potentially see a recovery.

But what are your thoughts about -- just looking at overall exposure, strategically moving at lower -- about 20% EBITDA today. Is there any -- are you open to moving into the 10%, whether it's less fixed commitments?

So, on Moose Jaw I know your kind of get a great price in that today. You haven't been against selling assets at part-time EBITDA in the past.

So any sort of context on where you want marketing to be long-term if that's any thought, any changes there?

I think when we came out in our strategy in 2018, at that time we came out with a 60 to 80 kind of run rate on a long-term run rate. And there was quite a bit of volatility in the market over the last couple of years.

And we moved that, I think, the 80 to 120. And last year we came right in the mid range.

If things continue to tighten up on the differential between WCS and WTI on a long-term basis, that will put -- that does increase our feedstock at Moose Jaw and reduce our crack spread. So, we may in the term have to move that down some, but we're always going to make -- maybe 60 to 100 on long-term, but we don't know yet.

Right now, we're still at that 80 to 120 and we feel comfortable over the next couple of years in that 80 to 120, Ben.

And Ben, the only thing I'd add to that too, is that if you structurally move down your ability to generate margin out of that business, that not only impact in more challenging times, like right now, but that would also impact our ability to achieve outsized results in both 2018 and 2019. And so, I think that's something to remember that if you structurally change the business in the periods when the market presents opportunities, like we certainly have seen up until recently, then you've permanently probably impair your ability to get those outsized results that leads to the same quantum.

So that's also the offset to a strategic decision as you would note there.

Okay. All right.

Thanks very much.

Good morning, everyone. Two questions.

The first one is just on the 2021 outlook for infrastructure. So, good to see that you reiterated that $100 million a quarter until the DRU shows up.

But can we delve a little bit further to what that assumes on the other infrastructure side, does that consume that the U.S. pipes kind of stay where they were at in Q4?

Does that kind of assume a pickup back to more kind of budgets levels?

Sean?

Yeah. Thanks, Rob.

I mean, it would assume a very, very modest pickup. I mean, I think it's important to highlight that really the core of our infrastructure business is truly our tankage business.

So that's going to drive the vast majority of that, and that's what's driving our competence in reiterating the $100 million. It really is having a full quarter contribution from the three tanks or 1.5 million barrels that we have in service.

It does assume a very, very modest improvement over Q4 levels at both the U.S. and in Canada.

But again, very modest and overall, I wouldn't say that's a significant swing factor.

All right. Thanks for that.

And then, can we maybe discuss a little bit further that -- the commentary on the short-term tankage contract that you have with you oil sands customer in Hardisty? How long of a contract is that right now?

And then, could you also see -- just you leasing out that marketing tag to the customer on a longer term basis, and then build another marketing tank?

We never really go on the exact details of contracts. But it's -- but we feel comfortable that that will become a long-term tank to that customer.

And we actually feel that customer will probably -- we'll build several tanks for that customer over the next couple of years, with their plans as they've discussed. So we're feeling pretty comfortable at Hardisty to continue to build tankage going out into the future.

Thank you.

Yeah. Good morning, guys.

Just as we think about refinery utilization levels continue to recover throughout the year. I guess on the one hand, it might increase throughput terminals, but on the other hand, it might keep demand for Canadian crude and differentials quite there.

So just wondering if you could help triangulate a net headwind or net tailwind for your overall business as refinery runs continue to normalize.

One of the things that refinery runs do continue to normalize that will increase just with pricing and that -- and as U.S. drilling starts to pick up, now that we're over $60 right at or $60 crude, we do think the U.S.

will start drilling. So with that higher distillate price and higher cracks spread across the distillate, we think our drilling fluid market will pick up across the year.

As far as -- I mean, that's probably the biggest driver. The other thing is, what's going to happen with dapple, what's going to happen with Line 5.

Those could have impacts on the differentials between WCS and WTI and does have an impact on our feedstock price into the facility.

Okay. Thanks for that, Steve.

And then my next question, just to on the broader theme of industry consolidation, both on the upstream front, and also more recently in the midstream space, I guess as a way to crystallize value here in a low growth environment. Does this flattish production trend change the way you think at all about delivering total return to shareholders in the form of steady organic growth, as opposed to pursuing more strategic partnerships with other midstream owners or perhaps even looking more at M&A, even if it's on a financially neutral basis, but just increase the overall size of the company.

Well, I mean, this year we've announced that we're going to spend another up to $200 million in capital, which will allow us to continue to deploy and get -- continue to grow our infrastructure earnings. Last year we had a 20% growth in infrastructure earnings.

We put -- we're going to put on three tanks in -- and we put on three tanks in November that DURs coming on. We were feeling comfortable continuing just the growth in the business and that status quo is a good strategy.

Obviously, we'll look for opportunities and our -- to improve the total return to our shareholders because at the end of the day, that's the most important thing is that total return to our shareholders. Sean, you want to come in anymore on that?

No. No.

I think you hit it, Steve. I think, Pat, as Steve said we still have very much have conviction in our strategy.

We have visibility to growth. We feel confident with our financial position.

And so, as we've always said, something like M&A is -- something we're not necessarily averse to, but I mean, the bar is so incredibly high given the visibility that we have. There's just nothing that is cleared that hurdle.

So, we certainly don't see a need for M&A. As Steve said, we've got confidence in our strategy and the visibility we have around it.

Okay. That's great.

Thanks guys.

Hi. Good morning and thank you for your comments this morning.

I'll just start by saying that, I would be supportive of your change to reporting adjusted EBITDA. Never to remove the hedging noise.

At this point, most of my questions have been answered, but maybe just one on the carbon tax front. So, if a carbon taxes are in fact raised as envisioned, how would you account for this item in project economics?

Because it does have a big controversy and could be subject to change. So -- and with that, does it make any projects more or less likely to reach up by the -- in your opinion?

So, we're certainly putting it in our project economics, Robert. But what is the height of that, we don't really know.

But we're definitely putting that carbon tax in our economics. Most of our business, as you know, is a tankage business where we really don't have any carbon.

So, one of the things -- when we release our CDP report is -- our company is by far best-in-class when it comes to CO2 emissions on a per barrel basis or even on a per revenue basis. And that's because of the -- just the tankage business itself.

So the one place that we do have -- the two places we do have carbon tax, one is at Moose Jaw and that would certainly increase our expenses at Moose Jaw, and then the other is at -- on the DRU itself. And that would certainly impact the economics of a DRU to our customers.

But at Moose Jaw, we have a -- we're excited about a project there that we think will reduce our carbon emissions by about 25% there. And that has a very positive rate of return.

And we're looking to move forward to that project very soon.

Okay. That's helpful.

And then, there's one often an opportunity, if you have any updates to volunteer on what the Cenovus/Husky merger might mean for the artistic position in contract renewal? Thanks.

Cenovus are very important customer of ours. We think this is a great opportunity for them in synergies.

We think we can provide a lot of that synergy. We have best-in-class connectivity, far better than any of the other terminals.

And we have the ability to really provide them blending opportunities to capture some of those synergies that they have out there, Robert. We're not really -- right now, Hardisty -- Husky -- the Husky terminal it's full.

Economics to probably build new tankage and take from us would be very challenging.

Okay. Thanks guys.

Apologies. Recognizing that -- so weather sometimes even more challenging to predict on the capital markets, I'm wondering if you can just give us a sense of what you think the potential implications for the unfortunate cold snap is in the Southern U.S.

Is there any effect on your business? How might that change?

How you approach that business prospectively, either capturing more connectivity opportunities, adding resilience to your business for your customers, or might that create some challenges that might make you rethink the opportunities there long-term?

So yeah, the cold snap in the U.S., obviously in the Permian basin, it almost shut in all that production for about five days. And I was talking to my U.S.

Ops person yesterday and all that production back online. But it was a five-day event, kind of for the U.S.

production. So, I don't know that it has any real long-term impact to our strategy in the U.S., which is a very small piece for our business.

And right now, there's very little drilling activity, but talking to our producers, that's about to start pick up, as the year goes on. Right now on the U.S., I would say we've pulled back on what we're going to spend in the U.S.

until things really kind of fundamentally changed in the Delaware basin there.

Okay. And maybe just as a follow-up.

In terms of capital allocation, again, a strategic question on some of the consolidation we're seeing with maybe just a bit more thought if we can get from you on -- as producers consolidate and mid streamers consolidate, how important do you think as scale is and bundling -- bundled services as well in your offerings to your customers? Might producers want to seek more bundled services from mid streamers, and how might that influence your competitive positioning versus some of the more discrete services that you provide currently.

As far as bundled services, probably that's one of those opportunities that we're talking about there at Edmonton. As far as building a tank is really starting to bundle the service in between Hardisty and Edmonton and those two major hubs in Canada.

And how do we use the two facilities to really help enhance our producer netback? Especially as they consolidate and they get new streams, how do we work together to help them maximize their netbacks on their crude oil?

I'll let Sean talk about just pure size and then the other question. Sean?

Yeah. Thanks, Steve.

Yeah. I think we've been always very clear.

I understand the benefits of being larger pre us getting investment grade that probably would have been at least from a capital markets perspective, one of the more important, because size is certainly criteria for the rating agencies. With our current size, from a capital markets perspective, as we've always said, what we're very focused on is delivering a total return to our shareholders, so think of that as being growth for us yield over time.

The challenge is as you get larger and larger, it's more difficult to achieve that growth. I think Steve spoke about our confidence in being able to deliver on the growth, certainly over the next three to five years here, consistent with what we have historically, but to the extent that, we were to get larger just for the sake of getting larger, that would make that more difficult.

So, given our focus on delivering total return to shareholders and certainly on a per share basis, again, getting bigger just for the sake of being bigger is not necessarily a focus for us. Now, if there's something strategic, or -- we got bigger through something directly on strategy, such as building additional tanks or phases of DRU, that's absolutely something that we would be interested in.

But again, just getting bigger for the sake of getting bigger, it's not a real focus for us.

Thank you.

Hey, good morning. I'd like to come back to some comments you made earlier on the call around capital allocation and specifically things improved.

You look at share buybacks in the second half. But you also talked about what sounds like a pretty significant ramp up in commercial discussions around new growth that may come together later this year.

So, when you think about your funding and your funding slide shows, I think the ability to self fund in $300 million to $350 million range per year, did you see that then as being kind of the optimistic case for capital spending for 2022, if you're thinking about putting money out the door in the second half around buybacks?

I can start on the buyback one and then maybe Steve you can touch upon to the growth outlook for next year. That buyback comment I made, Robert, was in the context of our current capital plan for this year and assuming a consistent capital plan for next year.

Obviously -- and as -- I think the start of the question I gave, mentioned that our focus from a capital allocation will always be on growth capital to the extent that growth capital is being deployed for towards projects that have characteristics like we typically deploy to the extent that our capital gets flexed up through the back half of this year. And we have visibility to having higher capital through next year, then absolutely that would be the focus from a capital allocation perspective above share buybacks, just given the return we see that and the long-term value we see that delivering to our shareholders.

And Steve, do you want to touch on the sort of growth aspect of that?

Yeah. And then on the capital side, obviously -- since we haven't signed any agreements, we're not going to -- we kind of know our funding plan for the next six -- through the mid-year.

And if we are able to sign agreements that would be back half later the new capital. But I would say, right now, we're kind of in that $150 million to $200 million range.

And then if we get a DRU -- if we sign a DRU, it pushes us up into that right at $300 million range, if we're able to assign a DRU, Robert. And so we can -- we could definitely see that kind of purse -- we see that progressing over the next three to five years.

Makes sense. Just to break down the CapEx, you noted that roughly half, if I'm reading it right this year's CapEx, you're putting the bucket of beneficial to ESG.

Are you considering the DRUs in that? Can you just talk about that or if it’s not just can you talk and elaborate on what the nature of some of the other projects are?

Yeah. So, I will talk a little bit about that.

First, the DRU, we've done quite extensive research on just how is this negative or positive? And one of the things is, the DRU is the separating the condensate from the crude oil.

That exact thing will happen on the U.S. Gulf Coast is that refined out.

So with that you got to think that's kind of net neutral, the actual CO2 there. And then, with removing that 30% to 35% condensate, you're not having to transport that on five down and you're not having to transport that going down to the States, but you're also saving that barrel coming back up.

And so we see that as -- actually the savings is twice the -- about 150% more than the actual CO2 footprint of the DRU itself. So on a North American basis, we see that not in phase one and phase two, emissions, probably about 150% savings on a North American basis.

So, it does have a significant. Now the other one is that at Moose Jaw, and I kind of talked about that project.

And then there's others that we're looking at -- at Edmonton, we're looking at a pretty significant spin that's really in that renewable space.

Got it. Okay.

And if I can just finish. Question of your tanks and contract, you've got a lot of newer tanks, but have you had any recontracts expire?

And can you talk about what recontracting pricing trends have been not you, but others had expressed that given some of those tanks were built in the past, and you think about it from avoided cost pricing, there actually was upward pressure on rates. Is that something you're seeing, or expecting with future tank contract rollovers?

We've only had one contract expire really over the last year and a half, and that contract just rolled into evergreen kind of kind of contract. We've got a couple of contracts coming up in the latter part of this year.

And we're currently in contract negotiations there. And right now, it appears that the recontracts be right at, or maybe a little bit above the existing rates with those tanks, Robert.

I'm just wondering, because when there's -- like, if you're talking about signing additional commercial agreements, or maybe is this just how you're dealing with existing customers, and trying to favor them. But if you've got others who want new tanks who are willing to pay returns based on today's capital costs, you can provide reasonable uplift then the pricing?

We've gotten more and more capital efficient, right, at building tanks. And I think some of that -- some of the labor costs have went down for tankage.

So, I would say -- I don't think steel costs is went up, but so I would say still in that -- as these expiring, we're seeing some of the rates go up, but some of these were five-year agreement, Robert. In those five-year agreements, there hadn't been any significant change across there.

Obviously, when the 10-year agreements start to expire, we will -- there will be a potential to raise some rates. But all of our tanks have an escalator on them.

So, that's one of the reasons why you're not seeing the rates go up any kind of significant amount because they all have annual escalators on them.

Got it. Okay.

Thank you very much.

Thanks. Good morning.

I guess, as a broader question as it relates to the market environment and when we see Trans Mountain done, then one, three gets done. Does that play right into your wheelhouse with tank positioning?

And I asked the question part is, do you see the market environment becoming a bit more dynamic with additional egress?

I don't know about dynamic. I think that we see a lot more interplay between our Edmonton and our Hardisty assets.

And the dynamics between those -- as you get a greater market pool to the Pacific, where everything else in the past had been just drawn into the U.S. Gulf Coast and Midwest.

I think, that creates potentially some excess capacity which really generally reduces volatility in the market. As far as -- yeah, go ahead.

No. Sorry.

Sorry. Continue.

No. No.

I'm good.

I guess, just a different question. When you think about just the DRU economics right now, with ecosystem [ph] is looking to be ending, what's the tone of conversations?

And ask the question in part, because there's clearly the benefit of higher commodity prices, but then there's also the detriment of higher commodity prices, as it relates to DRU costs?

With the DRU, I mean, one of the big -- the U.S. refiners are still a little leery because that crack spread still pretty tight in this state.

And their economics have been pretty challenged over a year. So they're pretty leery in the U.S.

to enter any really long-term contracts right now. And then with the producers, I think there's a couple of things going on there.

One is, they want to see it run. So they want to see the DRU run.

They want to see improve it out, but it doesn’t work. And then the other piece there is, their balance sheets have been weakened by COVID.

They're strengthening now, but their balance sheets were weakened by COVID. So, I think it's just an overall strengthening of the -- of our customers will help with it.

And I think, proving out the actual operation will help. As far as condensate pricing, as long as we're still importing from the States, they're still going to be a pretty good size differential between Canadian condensate pricing and condensate on the U.S.

Gulf Coast. So that diff is going to remain wide.

Yeah. Just a quick one for me here.

It's on the gathering pipes, it looks like revenue and volumes chopped quarter-over-quarter. I was just wondering if there's any competitive pressures you're seeing there, or I would have expected it to be slowly trending up.

So any color that would be helpful.

Yeah. I don't think there was any competitive pressure there.

I think that was just total -- people aren't drilling. And for crude oil right now, the drill rigs had stopped.

So you're just seeing decline, just kind of natural decline month-on-month. So, as the producers do start to deploy those drilling rigs again, we'll see that reverse.

Great. That helps.

That's helpful. Thanks, Steve.

That's it for me.

Hi, guys. Good morning.

Thanks for taking the call. Most of my questions have been asked by this point.

But I guess maybe just one quick one, if I could. Sort of retrospectively I appreciate the comments around your buyback philosophy, particularly as it relates to performance in the marketing business.

But if I could just look at the fourth quarter of 2020, you guys did close to about $20 million in buybacks. And that was obviously not the strongest quarter there for marketing.

So, I'm just trying to kind of marry the decision-making process last quarter with sort of what you're anticipating moving forward? If you could help us sort of sort that out.

Yeah. Thanks, Chris.

I mean, the buyback in December was very much in conjunction with the early redemption of our convertible debentures. So, as a reminder, we had those convertible debentures for an extended period of time.

Those are trading well into the money. Given our absolute focus on per share metrics here, we'd investigated different options where we could try and mitigate the dilution from those convertible debentures.

With some of the pressure we saw at the end of the year, the -- our shares to be in -- to trade in around that conversion price. We opportunistically called those debentures for early redemption in an effort to try given our liquidity and in an effort to try and mitigate the dilution.

As -- at the 30-day call period, during that period, the share sort of vacillated in around the conversion price. And so what that NCIB -- really, we executed on there, but to try to the extent that those shares actually did convert into equity as opposed to being cash settled, we want to try and mitigate some of the dilution there because over time we would have wanted to have bought back those shares.

What actually ended up playing out is of our -- just under $100 million of notional amount, about 95% of it cash settled. So, call it, four-ish million actually equity settled.

The buyback at that time was in anticipation of potentially a bit more of that than that actually being equity settled. So, really the buyback activities there were more in relation to our the early redemption of our converter debentures, as opposed to a longer term call on our capital allocation vis-à-vis marketing performance.

Okay. Yeah.

That's helpful. And I appreciate the color then.

So then, basically something more, not technical, I guess, but certainly not something that you would think -- would repeat this year.

No. Nope.

That's absolutely right. I mean, as I spoke to in my prepared remarks, thankfully we now have a very much -- a much more simple capital structure, fully investment grade.

So, opportunities like that and the refinancing of our notes that we've done over the past 18 months, have largely been done. So, no, I wouldn't expect that.

I would expect, as I said earlier that to the extent that we utilize the NCIB, that will be in conjunction with an improvement in our outlook for marketing and somewhat dependent on our outlook for growth capital. Again, if that fluxes up, that could impact our ability to utilize it as I indicated on -- in one of the answers previously.

Okay. That’s it for me.

Thanks.

Thanks, operator. And let me take this opportunity to thank everybody for joining us for our 2020 fourth quarter and full year conference call.

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

Thanks for joining us. Thanks for your support at Gibson and have a great day.

Thanks. Bye.