David Smith - President and CEO Steven Kroeker - SVP and CFO Brad Lock - SVP, Gathering and Processing Business Unit Dean Setoguchi - SVP, Liquids Business Unit Lavonne Zdunich - Director, IR

Linda Ezergailis - TD Securities Rob Hope - Scotiabank Ben Pham - BMO Capital Markets Robert Kwan - RBC Capital Markets Andrew Kuske - Credit Suisse Robert Catellier - CIBC Capital Markets Patrick Kenny - National Bank Financial Ian Gillies - GMP

Thank you and good morning, everyone. It's my pleasure to welcome you to Keyera's second quarter conference call.

With me are David Smith, President and CEO; Steven Kroeker, Senior Vice President and CFO; Brad Lock, Senior Vice President of the Gathering and Processing Business Unit; and Dean Setoguchi, Senior Vice President of the Liquids Business Unit. In a moment, David will provide an overview of the quarter followed by an operational update from Brad and Dean.

And then Steven will provide additional information about our financial results. We will open the call to questions once we have completed our prepared remarks.

Before we begin, I would like to remind listeners that some of the comments and answers that we will be providing today speak to future events. These forward-looking statements are given as of today's date and reflect events or outcomes that management currently expects to occur based on their belief about the relevant material factors, as well as our understanding of the business and the environment in which we operate.

Because forward-looking statements address future events and outcomes, they necessarily involve risks and uncertainties that could cause actual results to differ materially. Some of these risks and uncertainties include; general economic market and business conditions, fluctuations in supply/demand, inventory levels and pricing of natural gas, NGLs, iso-octane and crude oil, the activities of producers and other industry players, including our joint venture partners and customers, our operating and other costs, the availability and cost of materials, equipment, labor, and other services essential for our capital projects, contractor performance, counterparty risk, governmental and regulatory actions or delays, competition for, among other things, business opportunities and capital and other risks as are more fully set out in our publicly filed disclosure documents available on our Web site and SEDAR.

We encourage you to review the MD&A which can be found in our 2018 second quarter report published yesterday and it is available on our Web site and SEDAR. With that, I’ll turn it over to David Smith, our President and CEO.

Thank you, Lavonne, and good morning, everyone. Keyera continued to record healthy financial results in the second quarter of 2018 with all of our key financial metrics increasing over the prior year.

Adjusted EBITDA was $210 million, an increase of 58% over the second quarter of 2017. Distributable cash flow was $0.75 per share which represents a 32% increase over the same period last year.

And net earnings were $0.52 per share or 44% higher than the prior year. Our quarterly financial performance was driven by solid results from our fee-for-service businesses, complemented by our marketing services.

Our growth capital program continues to generate incremental revenue from projects such as the Norlite pipeline that became operational in mid-2017 and the Base Line Terminal where we started up six tanks in the first half of this year. We continue to expand and enhance our integrated network of assets.

During the quarter, we announced a number of capital investments that advanced both our liquids-rich Montney and Duvernay focus and our U.S. strategy focused on major liquids hubs.

In 2018, we expect to invest between $1 billion and $1.1 billion in growth capital and we are well positioned to fund this capital program. With a disciplined strategy, strategically located assets and a strong balance sheet, Keyera continues to build long-term shareholder value.

With that, Brad Lock will now review our Gathering and Processing Business Unit.

Thanks, David. The Gathering and Processing Business Unit delivered an operating margin of $64 million in the second quarter of 2018.

During the quarter, we completed turnarounds at our Strachan, Nevis and Brazeau North gas plants for a combined cost of $16 million. In conjunction with the turnaround at Strachan, we shut down the facility’s sour gas processing equipment to reduce the operating costs for our customers.

We also purchased a new pipeline that connects our Strachan to our Ricinus gas plant. This pipeline not only brings Ricinus into the Keyera network of interconnected gas plants but also provides area producers who are actively drilling liquids-rich Glauconite geological zone with added flexibility and a low-cost processing solution.

Overall, our quarterly gross processing throughput volumes were 1.53 Bcf per day, 6% higher than the same period last year. Volume growth at both the Simonette and Alder Flats gas plants more than offset the impacts of plant turnarounds and we natural gas prices in the second quarter that caused some producers to shut-in production.

With improving prices for natural gas liquids over the past year, producers are continuing to focus on growing production from the liquids-rich areas of the Western Canada Sedimentary Basin, most notably in the Montney geological zone in Northwest Alberta. During the quarter, Keyera continued to increase its presence in the Montney announcing a new Pipestone plant, the second phase of the Wapiti plant and an expansion at our Simonette plant.

Once completed, these three gas plants will provide 950 million cubic feet per day of sour gas processing capacity and 90,000 barrels per day of condensate handling capacity in one of the most attractive geological developments in the Western Canada Sedimentary Basin. Our long-term plan will be to interconnect these three gas plants providing producers with increased flexibility and reliability.

In addition, to meet the needs of our producers in the area, we have finalized a water disposal solution at our Wapiti gas plant capable of disposing up to 30,000 barrels per day of produced water. The water disposal system will generate incremental EBITDA and it is expected to be operational with the startup of phase one of the Wapiti gas plant in mid-2019.

Our recent announcements related to our Pipestone, Wapiti and Simonette plants align with our strategy in the liquids-rich Montney and Duvernay regions where we are focused on growing our infrastructure and services. I will now turn it over to Dean to discuss the Liquids Business Unit.

Thanks, Brad. We’re very pleased with the performance of the Liquids Business Unit in the second quarter of 2018 with solid results from our Infrastructure segment and outstanding results from our Marketing segment.

Operating margin in the Liquids Infrastructure segment was 77 million, up 14% over the same quarter last year primarily due to contributions from the Norlite pipeline and the first six tanks of the Base Line Terminal. The seventh tank was recently placed into service this week and the remaining five tanks are expected to be completed by the end of October.

This storage facility is fully contracted with take-or-pay agreements up to 10 years in length. Turning to our Marketing segment, we generated an impressive realized margin of $90 million in the second quarter compared to $23 million in the same period last year, largely due to iso-octane.

During the quarter, our iso-octane business benefitted from higher sales volumes as AEF operated above name plate capacity compared to a utilization rate of 82% in the same period last year when we had an unplanned outage. In addition, our iso-octane margins were exceptional primarily due to high octane premiums from strong short-term demand.

Looking to the third quarter, our outlook remains positive but iso-octane margins are expected to return to more typical levels as we will continue to be affected by the seasonality of propane sales as we build inventory during the second and third quarters to sell in the high demand winter months. During the quarter, we announced two investments in the U.S.

where we are selectively extending our Liquids Infrastructure into key U.S. liquids hubs.

Cushing, Oklahoma is the largest crude oil storage and trading hub in North America. Here, we will develop the Wildhorse Terminal, a crude oil facility focused on providing storage and blending services.

The terminal is backed by fee-for-service, take-or-pay storage agreements and will generate additional margin from blending services. The terminal will have 4.5 million barrels of working storage capacity and is expected to be in service by mid-2020.

In June, we acquired the Oklahoma Liquids Terminal that is situated approximately 50 miles from the Wildhorse Terminal. This terminal receives blends and delivers diluent by pipeline from Mont Belvieu to the Chicago area and ultimately into the Alberta market, which we know well.

Again, we plan on leveraging our operational logistics and commercial expertise at this terminal to provide significant opportunities to capture marketing margins. As part of this transaction, we’ll also gain exclusive access to our rail facility in the area.

The acquisition closed in mid-June and the terminal has been generating incremental cash flow since then. Our Hull Terminal is now pipeline connected to Mont Belvieu allowing Keyera to transport NGLs in and out of North America’s largest NGL hub providing commercial opportunities for our marketing business.

In the second quarter, we began delivering Western Canadian propane to Hull enabling us to access the high value markets at Mont Belvieu. These three assets provide a foundation for Keyera’s strategy, expand our U.S.

business in the U.S., leveraging our expertise and focusing on niche opportunities with future growth potential. With that, I’ll turn it over to Steven to discuss the financial results in more detail.

Thanks, Dean. As mentioned earlier, we had a successful quarter with all three business segments delivering solid results compared to the same period last year.

The Gathering and Processing business segment delivered operating margin of 64 million, slightly down from the 67 million reported in the same period last year. While the Simonette gas plant achieved record processing throughput during the quarter, the financial effect of this was offset by lower throughput volumes and operating margin at certain other facilities largely due to plant turnarounds and shut-in gas production, both of which are temporary in nature.

During the quarter, production increases from the completion of phase two of Alder Flats in May at minimal incremental margin due to take-or-pay contractual arrangements already in effect. The Liquids Infrastructure business segment posted a strong quarter compared to the second quarter of 2017, due to the startup of Norlite and Base Line Terminal, as Dean mentioned, plus the overall growth in demand for Keyera’s condensate network including transportation and storage services.

The Marketing segment realized margin, which excludes unrealized gains and losses from hedging contracts, was an impressive $90 million, $68 million higher than the second quarter of 2017. This large increase was a result of record quarterly iso-octane margins and strong contributions from the liquids blending and condensate businesses.

The strength in the Marketing segment can also be seen in the fact that these strong results are after including realized hedging losses of 18 million during the quarter. As a result of all areas of our business performing well, adjusted EBITDA for the last 12 months ended June 30, 2018 was 735 million.

Similarly, distributable cash flow for the last 12 months ended June 30, 2018 was 593 million. And the dividend payout ratio for the same 12 months was 56%.

Cash taxes for 2018 are now expected to be approximately 35 million, down from an expected range of 40 million to 45 million. Maintenance capital for the second quarter was 23 million compared to 10 million for the same period last year.

This was due to plant turnarounds conducted in the second quarter and the total maintenance capital for 2018 is still expected to be in the range of 40 million to 50 million. From a capital perspective, we have invested $493 million in growth capital in the first half of the year, well along the path to the 1 billion to 1.1 billion estimate for 2018, as David mentioned earlier.

In addition, 222 million has been invested in acquisitions during the first half of the year. Our current growth capital program of over 2.8 billion, net to Keyera and as described in our quarterly report has us focused on several projects that have or will come into service at varying times over 2018 to 2021.

Given the capital spent so far in the program and assuming the capital guidance we’ve given for 2018, over 1.1 billion is expected to be invested over 2019 to 2021 to complete these projects with the vast majority expected to be spent in 2019 and 2020. We are well positioned to fund this ongoing capital program given our strong balance sheet, reflected by our net debt EBITDA multiple of 2.5x, our low payout ratio and our access to capital, as seen by our recent $400 million 10-year inaugural public note offering.

In addition, our financial flexibility is expected to be supported by EBITDA resulting from the capital program. For example, in 2019, we expect to have full year cash flow contributions from several projects, including the Base Line Terminal, the Simonette liquids handling expansion project, the Oklahoma Liquids Terminal, the Keylink NGL gathering system, Encana Pipestone liquids hub and the South Grand Rapids diluent pipeline.

In 2019, we also expect to start seeing cash flow contributions from phase one of the Wapiti plant and from the North Wapiti pipeline system. That concludes my remarks.

David?

Thank you, Steven. As our second quarter results demonstrate, demand for Keyera’s products and services continues to be strong.

We continue to focus on maximizing cash flow from our existing asset portfolio, building a strong footprint in the liquids-rich Montney and Duvernay developments in Northwestern Alberta and pursuing opportunities to expand and integrate our value chain both in the Western Canada Sedimentary Basin and in the U.S. Given the strength of the business, we are increasing our monthly dividend by 7% to $0.15 per share or $1.80 per share annually beginning with our dividend payable on September 17, 2018.

This extends Keyera’s track record of consistent dividend increases since going public in 2003 and shows our commitment to providing shareholders with stable long-term dividend growth. On behalf of Keyera’s directors and management team, I would like to thank our employees, customers, shareholders, and other stakeholders for their continued support.

With that, I’ll turn it back over to the operator. Please go ahead with questions.

Thank you. Good morning and congratulations on a strong quarter.

I’m wondering how you can maybe give us an update on Alberta EnviroFuels so far, how it’s running in Q3. I realize that margins are returning to more normal levels, but have you been able to continue running it above name plate capacity?

Hi, Linda. It’s Dean.

I would say that AEF continues to run very strong so far in the third quarter. Again, very strong operating capacity but I would mention that with the hot temperatures, sometimes that affects the run rates relative to maybe the second quarter.

So we may be off a little bit but still above name plate capacity.

That’s helpful context. Thank you.

And it appears there’s a lot of demand for iso-octane, so maybe you can just walk us through your thoughts on at what point you might choose to expand Alberta EnviroFuels, what sort of factors inform that decision and do you look at beyond demand, just have a view on long-term pricing outlook and confidence on that front? And maybe as you grow bigger, the risk of taking on a project like that becomes smaller as well.

That’s a lot of questions. We’ve certainly looked at a lot of different opportunities to expand capacity at the facility and probably what would be most economic would be an expansion as opposed to a pure twin of AEF.

And we’ve done a fair bit of work on that. Part of the consideration is timing and also trying to hit a turnaround window if we decide to do that.

2020 is coming very fast at us and that’s probably a likely timeframe if we were to decide to do that. Overall, our view on octane demand in the future still remains very strong.

EPA requirements are continuing to increase which is resulting in more turbocharged high compression engines which also require higher octane fuel. But I think that’s all positive for future demand for octane.

But again, as of this time, we evaluate the opportunity but we – there’s nothing that we’ve decided on so far.

That’s helpful context. And maybe just beyond banding Alberta EnviroFuels, can you give us an update on the new project opportunities you’re seeing, where are they generally falling in the value chain?

And I assume that they would be more focused on your existing footprint. But are you seeing some interesting opportunities in certain geographies over others?

Linda, it’s Dave Smith here. I’ll take this one.

I think we have quite a list of potential investment opportunities, both acquisitions and organic investments. I think our focus is to build upon the capabilities and synergies within the existing asset portfolio.

To be more specific than that at this point I think is something that we’re just – a lot of this is just too preliminary.

Okay, thank you. I’ll jump back in the queue.

Yes. Good morning, everyone.

I was hoping you could add some additional color on your outlook for the U.S. In your prepared remarks, you did mention that Hull, Wildhorse and Cushing were three key liquids hub that would provide a foundation to build off of.

I guess the question is, are you looking for additional liquids hubs to build out, how you view your competitive positioning in the U.S.? And I guess longer term, how much capital or how big of a business do you think you could have in the U.S.?

Rob, it’s Dave again. I think I’ll put some context around it just to say that I wouldn’t expect that you’re going to see us make a major – like a major sizable investment in a short period of time in the U.S.

I think our approach will continue to be gradual and incremental. We’ve looked at lots of different opportunities over the years in the U.S.

What we find is in a lot of places, it’s always very competitive and you’ve got some very well established, fairly aggressive competitors. And so our focus is really to try and find the niches where we have capabilities and expertise that we think we can leverage into strong returns.

And I think that’s why we have focused on the liquids hubs, generally speaking, places like Mont Belvieu and Cushing. We will continue to look for other opportunities.

But I think in the short term, our focus will be on executing well on the things that we have on our plate now.

All right. I appreciate that color.

And then maybe as a follow-up on Linda’s question. And the commentary regarding Marketing moving back to or iso-octane moving back to more normalized levels, just going back historically looking at Q3, we have seen significant variability in terms of your Marketing margins.

I just kind of want to get some – maybe some goalposts on what normalized levels would be.

I think we’re going to duck that one, Rob. There is no question that we see variability in the margins associated with iso-octane and that’s one of the reasons why we resist the temptation to try and provide any kind of quantitative outlook.

I think what I would say is that our outlook for 2018 is still pretty strong given the margins that we’re seeing on the iso-octane business. As long as the plant continues to perform well, we expect that the margins will be better than we’ve seen in 2018 over the – relative to the last couple of years.

Sorry, go ahead.

Rob, it’s Dean. I think there are some market indicators though that you can follow that will give you some insight as to how profitable our iso-octane business will be.

And part of that is the butane to WTI spread. And obviously with the higher WTI prices this year, that benefits us and we’re still seeing a fairly high WTI price today.

So that’s positive. You can look at the RBOB cracks, which obviously trade – you can track what those trade at and those are still relatively strong.

The driving season ends typically at the – into September, so it starts to soften a little bit in the third quarter but overall they’re still relatively strong. And the Canadian, U.S.

exchange rates, obviously the weaker the Canadian dollar, that also helps those U.S. sales as well.

All right. Thank you.

I’ll hop back in the queue.

Hi, thanks. I wanted to continue on the last question, and I want to clarify the Q3 iso-octane soft guidance there.

Is that more your overall view on the iso-octane facility production RBOB margins in iso-octane, or is it simply looking at the spread over RBOB that you’re referring to that’s gone back to normal levels?

The spread over RBOB is what we’re specifically referring to.

Okay.

And again, that’s just short-term demand that we’re able to capture a higher than normal premiums in the second quarter. But again, if you look at the butane to WTI spread, that still looks fairly positive.

The facility is running very well, so that’s positive above name plate capacity. And again, the Canadian dollar is relatively weak, so again that benefits us because the sales are denominated in U.S.

dollars.

Okay. So you’re not really making a call on RBOB, really?

There’s – to the extent that moves even higher than here, there’s some upside or vice versa? It’s more just – I know it’s the same question, but just more clarifying it, it’s more to margin looking at Q2 and just taking that out and going towards a more normalized level?

That’s right.

This is Steven here. As Dean mentioned before, you just got to remember that September, that one month in the quarter is typically past the driving season.

So that’s by definition is a little bit weaker quarter compared to Q2.

Okay, all right. That’s good color.

And then you talked about the debt deal that you did and the rates you got seem pretty attractive. Has that made you change your thinking in any way on debt-to-EBITDA levels, capital structure, how you stacked up financing, or is it – or has nothing really changed as you went through that process?

Yes, I think the simple answer is nothing has really changed. We have always benefitted from strong I think cost of financing on the private note side.

We were able to now see it on the public debt side. As we’ve said before, we tend to operate in that 2x to 3x net debt-to-EBITDA range.

And so again, nothing has really changed. We were happy to see the strong demand for the public debt deal.

Okay. All right, thanks everybody.

Good morning. If I can come back to AEF and just on the directional on Q3, when you’re talking typical, I’m just wondering, are you – is typical to you more 2015 levels or is it more the 2016, '17 type margins?

Robert, we can’t be any more specific I don’t think than what we’ve been. What I would say is I think we all understand some of the challenges that we had in 2016 and 2017 both with the outages as well as with the margins.

I think 2018 is looking stronger certainly than '16 and '17.

Okay. Maybe if I can just describe it to make sure I’ve got it captured and correct me if I’m wrong.

So it sounds to me like what you’re trying to say is there was an exceptional second quarter around kind of a flare-up and call it spot demand, and that Q3 is expected to be lower than Q2, but Dean you referenced the number, the underlining markers, which are still quite strong. So still quite strong in the underlying business, but don’t carry Q2 over.

Is that kind of the key message here?

I think that’s a reasonable summary, yes.

Okay.

Steven here. The only other thing I would add is we did try and highlight that the marketing results did benefit from two other contributors as well, which was the liquids blending and the condensate.

And so those were strong contributors as well. So you have to keep that in mind as you’re – how much you’re attributing to iso-octane, et cetera.

We can’t go into a lot of details, but just help you realize there’s three different business lines that we’re doing quite well.

Understood. On the propane side of things, now that you’ve got Hull access and with that Belvieu access, with the new NGL years, are the contracts directionally still the same, i.e.

you’re buying based on a Conway index, but now you’ve got this great access into Belvieu to capture that incremental spread?

I think what we see setting up for 2018 is similar to what we saw in 2017, Robert. I think we now have the additional tool of being able to use Hull as an outlet for some of the propane volume.

And right now, the spread in propane prices between Belvieu and Conway is quite positive and so that’s helping. I wouldn’t want to suggest that that’s going to be a material impact on the results, but it is certainly a positive.

Got it. And maybe if I can just finish – sorry, go ahead.

And maybe just to elaborate a little bit further, I think when we look at our marketing performance in general and as Steven commented, it’s largely attributed to iso-octane but there’s other parts of our marketing business that we’re strong as well. And I think you have to just remember that we have the assets that enable us to generate strong marketing margins when the right market conditions exist.

And that’s because we have a lot of access to NGLs through our integrated system but also we have access to high value markets. And part of that is because we have a lot of really good rail logistics expertise.

So when you see weak market conditions in Conway like we’re seeing now, we can really take advantage of that and take those barrels to higher value markets that capture our margin.

Got it. And maybe if I just finish here with funding.

Marketing’s doing well. You’re getting some of this extra cash flow.

You’ve got the DRIP. With credit rating, you’ve got hybrid equity.

And Steven, you mentioned just kind of broadly access to capital. So I’m just wondering, when you look at your base capital plan and you referenced 1.1 billion of CapEx from 2019 through 2021.

With your retained cash flow, DRIP, access to debt and hybrids, I guess very specifically, does your base plan have any need for a discrete common equity issuance?

Yes, we’re always cautious on how we talk about that. But for now, we do believe we’re well positioned and for the most part we don’t believe we need discrete common equity.

If you look at the 1.1 billion over 2019 to 2021, that’s a pretty manageable number to manage, especially as EBITDA is growing or we expect that to grow over time as capital come – capital products come into play.

That’s great. Thank you.

Thank you. Good morning.

If I could maybe start with a pretty narrow specific question just on the water disposal system in the Wapiti. That seems like an interesting business especially given some of the trends of the wells in Western Canada.

Is that just going to be specific to Keyera’s existing asset base or is this a business you could prospectively scale beyond your assets?

Andrew, this is Brad. I think certainly initially the focus of our water disposal business is going to be to support the Wapiti gas plant.

So it’s a service offering that we provide to our producers not only gas processing and condensate stabilization, but also water handling for the significant amounts of produced water that come out of their production. So that’s going to be the initial focus.

Is there an option? There’s certainly an option but that’s certainly not something that we’re focusing on today.

Okay. Thank you.

And then just a broader question. How do you think about just the public and private market values of assets given we’ve seen a few transactions in the market and really both sides of the border?

And then more specific to Western Canada just with Brookfield stepping in on the Enbridge portfolio, how do you think about your own valuation and just the relative comparisons of the assets that are traded versus the assets you have and the ones you’re building?

Andrew, it’s Dave here. It’s a great question.

I think the way we’ve looked at the Brookfield acquisition of the Enbridge portfolio is we saw that as a very positive read-through for the value of Keyera’s interconnected well located Gathering and Processing business. I think we’ve worked hard to be focused in the right locations and have an interconnected network of facilities.

And when we saw the – if you like, the private market valuation that was put on the Enbridge portfolio, I think that certainly reflects well on the value of Gathering and Processing portfolio that Keyera owns.

And then how do you think about just U.S. values given we’ve seen a few trades in the U.S.

also?

Yes, in the U.S. gathering and processing business, we’ve looked at some opportunities from time to time in the U.S.

and we consistently find that it’s pretty competitive. The prices that are paid especially in the really strong resource development areas like the Permian and the Eagle Ford and the Marcellus, the price of entrance is pretty high.

And that’s why we’ve tended to focus more on the liquids opportunities that you’ve seen us pursue rather than jumping into the Gathering and Processing business.

Okay, thank you.

Hi. Good morning, everyone.

I was just curious on your outlook on rail capacity. Do you have enough capacity to meet your needs given the expanded presence you have in the U.S.

and similarly the growing north-south flow?

We have a lot of interconnected rail facilities particularly in the Edmonton area and also up to our Josephburg Terminal in Fort Saskatchewan. So we do have a lot of capacity by rail.

We have a very large fleet, the largest that we’ve ever had. We have over 3,000 cars in our fleet today.

So that and a lot of it is dependent on service to rail service obviously and how fast they can, and efficiently they can provide that service. So that’s always a little bit of a wild card, but I’m told that the rail lines have both staffed up and added more locomotives to provide better service this year relative to last year.

So hopefully all those things come together and we’ll have very efficient rail movements this year.

I was more curious, Dean, on the actual terminal capacity that you have understanding that the rest of it is a little bit out of your control. But it sounds like there is enough capacity for you here.

Yes.

Rob, I would say – this is Dave. I would say that as far as our Canadian terminals are concerned, we have the capacity we need for the business that we anticipate.

We may move some things around just to try and improve the logistics – smooth out the logistics a little bit. The one place where quite honestly we wouldn’t mind having a few more loading spots is at Hull right now given the business that we’re doing there.

But it’s early days and we may look – we’ve got lots of room there to expand the facility if the longer-term outlook indicates that that’s an appropriate thing to do. So that’s something we may look at.

Okay, that’s helpful. And then you mentioned a couple times you’re very targeted in your approach in the U.S., understandably so, but there’s probably a larger suite of services you can offer that would be helpful.

So I’m wondering if there’s an opportunity to partner in there. What’s your updated thoughts on partnering given the level of competition and difficulty of going it alone against well established competitors?

It’s certainly something that we have looked at. And we have lots of very positive relationships in the U.S.

Our partner on the connection to Mont Belvieu is Targa. We don’t – it’s not a joint venture per se, but we have access to Targa’s facility for transportation, for storage and for fractionation.

And so as we build on those relationships, there may be some opportunities like that. And as you know, partnering is something that where it makes sense, where the parties bring compatible capabilities to the table I think it’s something that we’re certainly willing to look at.

So that is a possibility. But there’s nothing that’s sort of imminent right now.

I think what’s also important, Rob, is that we’re already in the U.S. markets already and we buy and sell a lot of NGLs in the U.S.

So it’s a market that we’re very familiar with already. And right now we’re obviously acquired or sanctioned some assets that will support our business down there.

So we’re very cautious of what kind of opportunities we’ll pursue. We obviously want to generate a strong return from our investments down there.

So we’re looking at niche opportunities that have an opportunity to grow from there. So we’ll continue to try to expand on the footprints that we have already.

Sure, that makes sense. And just finally for Brad.

I think the BC Oil and Gas Commission put out new measures agreements in the Blueberry River First Nation territory. I’m wondering if you’re expecting those to have any impact on business development.

Well, we don’t have any production in BC, so there’s no direct effect. I think we continue to be proactive on our First Nation’s negotiations and we do have those interactions in the Simonette, Wapiti, Pipestone area.

And I think we’re pleased with how those are progressing and the relationships that we’ve been able to build.

Okay, that’s for me, guys. Thanks.

Good morning, guys. Just given your fractionation capacity is full once again this year and I know there’s still some white space at other plants, but just wondering if you have an update on when you might have to start thinking about another expansion of the Fort Saskatchewan, especially in the context of adding quite a bit of processing capacity up in the Montney for the last couple of years.

Do you try to cash those incremental barrels or do you just allow frac fees to normalize?

Pat, it’s Dave here. I think obviously we monitor the growth in NGL volumes throughout the basin.

You’re quite right. As we sit today, they industry has more frac capacity than we need.

But we would expect that as NGL volumes grow that there will be a need for more capacity at some point in the future. I don’t see that as imminent.

I think as we complete the Gathering and Processing investments in the liquids-rich area of Montney and Duvernay, I think that will certainly position us well to be able to be part of the provision of additional liquids fractionation capacity. But it’s a little difficult today to predict when or how much or how that unfolds.

Okay. And then just over to Rimbey here and on the reduced ethane sales, is that all demand related or was that some sort of gas composition issue in the first half of the year?

And then maybe just an overall comment on your outlook for Rimbey volumes given Keylink and some of the drilling activity you’re seeing in the Duvernay?

So I think first on the ethane side, I think it’s certainly not a plant performance issue from our side. The issue is really from the ethane take side.

There is limited markets for ethane and any operational upsets by any of the takers of ethane causes a ripple effect through the business. And I think that’s a little bit what we saw from Rimbey in Q2.

I think going forward, we’re certainly encouraged by some of the Duvernay drilling around Rimbey. There is certainly going to be some volume opportunity to come with that to recognize.

The targets there are predominately oil. And the GORs associated with that are not huge, so there’s certainly some gas opportunity but the gas opportunity will be modest.

The nice thing about it is the gas there that is produced is very liquids-rich. So the opportunities for those producers to land volumes at Rimbey would be attractive due to the high levels of liquid recovery that we get there versus standalone gas plants.

Your question also mentioned – Pat, you also mentioned Keylink in your question and we’re quite pleased with how Keylink has increased the utilization of the fractionation facility at Rimbey. The volumes on that are meeting our expectations.

So the liquids side of the Rimbey plant has been well utilized. The gas processing side of Rimbey has not yet recovered from the decline in drilling activity that we’ve seen over the last couple of years.

All right, that’s great. Thanks, guys.

Good morning, everyone. It would appear that some of the E&P cash flows are probably going to be a bit better than some would have thought in the back half of the year.

And with that in mind, would you expect some recoveries in the volumes in the GMP business, apps and obviously some turnarounds that happened in 2Q that will lead to volumes coming back?

I think we’re certainly hopeful. Gas prices are looking to strengthen as people get into the back half of the year.

And we’re hopeful that that’s going to drive a certain amount of activity. The stronger cash flows is with producers focusing on living within their cash flow.

If they have an opportunity to generate incremental cash flow through stronger liquids prices, they will in all likelihood look to reinvest some of those dollars back into the drill bit which would also be positive in terms of future volumes.

Okay, thanks. That’s helpful.

And with respect to the new gas plants or the expansions happening in the Montney and now handling, call it, 90,000 barrels a day of condensate, are you able to maybe talk about some additional opportunities that may come forward because of I guess that outcome?

Well, I think certainly the production of condensate in that area has continued to grow. I think producers continue to be impressive and their results are being exceeded by their gas condensate ratios.

So consequently what they’re finding is some of those condensate ratios are higher than they may have originally anticipated. So that’s certainly positive for future developments as they build out their drilling programs that we can already be supporting with our existing gas processing infrastructure and potentially looking at further expansions of our liquids handling infrastructure.

Okay. Thank you very much.

I’ll turn the call back over.

Thank you. This completes our second quarter conference call.

If you have any other questions, please call either Calvin or myself, and our contact information is in yesterday’s release. Thank you for listening and have a good day.