Luc Desjardins - President and CEO Beth Summers - SVP and CFO Darren Hribar - SVP and Chief Legal Officer

Nelson Ng - RBC Capital Markets Fahad Tariq - BMO Capital Markets Patrick Kenny - National Bank Financial Daniel Chew - Raymond James Benoit Laprade - Scotia Capital Raveel Afzaal - Canaccord Genuity Dirk M. Lever - Alta Corp Capital

Thank you, [Lisa] [ph]. Good morning, everyone, and welcome to Superior Plus conference call and Webcast to review our 2016 fourth quarter results and discuss the acquisition of Gibson Energy industrial propane business.

I am Luc Desjardins, present CEO. Joining me today is Beth Summers, Senior Vice President and Chief Financial Officer; Darren Hribar, Senior Vice President and Chief Legal Officer; and John Engelen, VP, Mergers and Acquisitions.

For this morning's call, Beth will start by providing a high level review of our financial results as well as a quick update on our outlook for 2017, and then we will move into discussing the industrial propane acquisition, and then open it up for Q&A. I would like also to remind our listeners that a presentation is available on our Web-site to accompany this call and that many times we'll refer to slides.

So if you have that in front of you, it will help. This is an exciting time for Superior as we look to enhance our energy distribution platform in Canada with the Canwest acquisition.

Before we discuss the results, I would like to personally thank the directors, management, advisors of Superior Plus for all the hard work on this transaction. Now let me turn the call over to Beth.

Thank you, Luc, and good morning everyone. Before I begin, I would like to remind you that some of the comments made today may be forward-looking in nature and are based on Superior's current expectations, estimates, judgments, projections and risks.

Further, some of the information provided refers to non-GAAP measures. Please refer to the disclaimer on Slide 1 of the presentation for further details on forward-looking information and Slide 21 for non-GAAP measures.

I would also like to encourage listeners to review the Management's Discussion and Analysis posted on SEDAR and our Web-site yesterday which includes financial information for our fourth quarter, as we won't go over each financial metric on today's call. This will allow us to move more quickly into acquisition discussion and question-and-answer period.

Starting with the presentation on Slide 3, overall we're pleased with the fourth quarter results. Consolidated adjusted operating cash flow or AOCF per share before transition and other costs was C$0.54 per share, which was modestly higher than the prior year quarter due to a decrease in realized foreign currency hedging losses, partially offset by a decrease in adjusted EBITDA from operations.

For the full year, AOCF per share was C$1.50, which is in line with the midpoint of our previously disclosed guidance range of C$1.40 to C$1.60 per share, and lower than the prior year due primarily to an increase in weighted average shares outstanding related to the equity issuance in Q4 2015 and the shares issued through the DRIP in 2016. For the 2017 financial outlook, we are confirming our AOCF per share guidance of C$1.45 to C$1.75, released following Q3 2016.

Please note that 2017 financial outlook excludes the impact of the Gibson industrial propane acquisition, which we'll refer to as Canwest. On the debt management side, at December 31, 2016, the total debt-to-adjusted EBITDA leverage ratio was 2.1x, which is in line with our 2016 targeted range of 2x to 2.4x.

For December 31, 2017, we anticipate debt-to-adjusted EBITDA to be in the range of 1.8x to 2.2x, which excludes the impact of Canwest. We anticipate updating our 2017 financial outlook and debt guidance when we pay for the option to acquire Canwest.

Turning now to the individual business results from Slide 4 of the presentation; Energy Distribution adjusted EBITDA from operations for the fourth quarter was C$59.8 million, compared to C$51.9 million in the prior year quarter, an increase of C$7.9 million. This is due to improved gross profit and lower operating expenses.

Gross profit increased C$4 million, driven primarily by an increase in volumes in Canadian propane distribution and higher average unit margins at USRF on improved sales mix. Cash operating and administrative costs were C$80.7 million in the fourth quarter, a decrease of C$3.9 million compared to the prior year quarter.

Operating expenses in the fourth quarter were lower primarily due to a decrease in salaries and wages from reduced headcount in the Canadian propane and U.S. refined fuels businesses.

Consistent with our disclosure in Q3 2016, Superior Energy Distribution adjusted EBITDA from operations for 2017 is anticipated to be consistent to modestly higher than 2016, excluding the impact of the Canwest acquisition. Turning now to Specialty Chemicals on Slide 5, Specialty Chemicals EBITDA from operations for the fourth quarter was C$34.2 million, an increase of C$1.7 million compared to the prior year quarter.

Sodium chlorate gross profit modestly increased compared to prior year, due to lower than expected power costs, partially offset by lower sales volume. Sodium chlorate sales volumes were lower due primarily to a decrease in volumes associated with the Tronox agreement.

Excluding Tronox, sales volumes were consistent with the prior year quarter. Chlor-alkali gross profits were lower than the prior year quarter, primarily due to a decline in insurance settlement proceeds, decreased demand for caustic potash and decreased hydrochloric acid demand on reduced oilfield activity.

The lower chlor-alkali gross profit was however partially offset by improved caustic soda and chlorine pricing and increased chlorine sales volumes. Operating expenses of C$36.3 million were C$4.6 million lower than prior year quarter, due primarily to a decrease in Tronox-related expenses and operational cost reductions.

As we look to 2017, Specialty Chemicals adjusted EBITDA from operations is anticipated to be consistent to modestly lower than 2016. Lastly, to corporate results on Slide 6, realized losses on foreign currency hedging contracts were lower than the prior year quarter as our lower average rate hedges were settled and reset during the third quarter.

Interest expense was lower than the prior year quarter on reduced indebtedness as CPD proceeds were used to repay the credit facility and redeem the C$150 million convertible debentures due in 2018. With that, I will turn the call over to Luc to discuss the Canwest acquisition.

Thank you, Beth. Now turning to our news this week regarding Canwest acquisition, which we're very excited about, starting, for people following on the slides, it's Slide 8, we have a high-level summary of the major points and the connects of the deal.

Superior has entered into an agreement pursuant to which it will acquire all of the outstanding shares and units of the entities that carry on the industrial propane business of Canwest Propane from Gibson Energy Inc. representing a total transaction value of C$412 million.

We anticipate final closing in the second half of 2017. The transaction is expected to generate at least C$20 million of run rate synergies and is anticipated to provide double-digit accretion to adjusted operating cash flow per share.

Our pro forma leverage is anticipated to be above our stated target of 3x, but we anticipate quickly deleveraging to get to the 3x within 12 months of the exercise of the option. We are able to finance the acquisition through a combination of available capacity on our credit facility and the additional commitment from two of our key lenders.

Depending on market circumstances, we may consider additional long-term financing alternatives to reduce the draw on our credit facilities. Turning to Slide 9, we'd like to cover the key highlights associated with the transaction.

This transaction is aligned with our core strategy of investing in businesses that generate strong free cash flow. The acquisition is highly complementary and strategic because of the strong strategic fit between the operations, the culture and the employees, which provides an opportunity to optimize collective capabilities.

Canwest also provides us with a great opportunity in Western Canada where we have fewer oilfield customers as a business and is well-positioned for the oilfield recovery and improved demand from that sector. From a balance sheet perspective, we anticipate being well-positioned with our strong pro forma balance sheet and ample liquidity for additional tuck-in acquisitions.

On Slide 10, we have highlighted some additional details as it relates to the option agreement. The purchase price of the option is C$412 million and Superior expects to pay this no later than April 3.

Gibson will continue to operate the business in ordinary course while we work together to obtain the required regulatory approvals. It is however important to note that the earnings of the Canwest business are attributable to Superior from the date we pay the option price.

Once we receive regulatory approval, we are required to pay a nominal amount to complete the acquisition of Canwest. Turning now to Slide 11, on our estimate of the Energy Distribution business on a pro forma basis, based on the trailing 12-month segment profit of Canwest at Q3 2016, the pro forma Energy Distribution business would generate adjusted EBITDA from operations of C$203 million on a pro forma basis, excluding synergies.

Adding the anticipated synergy modest improvement to Canwest EBITDA related to a pickup in oilfield activity and normalized weather further demonstrates the attractiveness of this acquisition for Superior. On Slide 12, we highlight the benefits to customer from the transaction.

There are numerous benefits to customers, including an improvement in customer service, utilizing our industry-leading technology and capability, cost reduction and enhanced operational expertise. Example of the benefits to customer is rolling out our SUPERIOR.ca, which is a digitalization of our industry, and existing also a Superior way of operational effectiveness for the Canwest customer, it is anticipated to improve service and delivery efficiently.

Turning into the synergy on Slide 13, we anticipate pre-tax run rate synergy of at least C$20 million. That includes labor efficiencies, property and facility rationalization, fleet reduction, and elimination of redundant shared service such as IT over a period of time.

We have estimated that it will take approximately two to three years after closing to achieve run rate synergy level. For clarity, we anticipate achieving the synergy within 24 months, but the full run rate synergy will be during year three.

Given the nature of these synergies, our expertise in this industry and the overlap of the two businesses, we feel the synergies are easily attainable and can be realized in a relatively short period of time. Turning now to Slide 15, I will provide some further detail on the Canwest operations.

Canwest is a great enterprise with great leaders and a good business that's been built over the years. It's a leading propane supply and distribution franchise in Western Canada serving a diverse customer base in oil and gas, commercial, industrial and residential customers.

Canwest operates under the Canwest and Stittco brand names with 37 main branch locations and 30 satellite locations across Western Canada. Many of Canwest customers are large sophisticated customers, which include international, national and large regional companies.

Canwest has been able to maintain strong long-term relationship with its key customers through excellent service, building a great enterprise over the years. On the following slides, you can see some additional information regarding the operations and the customer segments.

Canwest had average annual propane sales volume of 470 million litres per year over the past two years. Approximately half of the Canwest volume is in the oil and gas sector.

Turning to Slide 17, we have outlined key assumptions related to the anticipated recovery in the oilfield activity in Western Canada. While there has been a downturn in the oil and gas sector, and Superior has experienced personally and effect of this, we firmly believe this sector has hit the bottom and times of improvement are beginning to show.

The improvement in oil price experienced since November 2016 and continued expectation for further recovery is driving renewed capital spending in the oil and gas sector, which should lead to an increase in the rig count activity and improved demand fundamentals. We continue to believe that this deal is quite compelling and Canwest EBITDA is anticipated to return to prior years' level over a period of time.

To wrap up the presentation on slides 19 and 20, I would just like to highlight how the transaction aligned to our Evolution 2020 mandate we presented at Investor Day in November. This transaction is aligned with our strategy and highly complementary to our existing energy distribution platform.

The business is well-positioned for oil activity recovery and improved demand. We anticipate a strong pro forma balance sheet and credit profile with ample liquidity and an attractive deleveraging profile within 12 months.

The acquisition is anticipated to generate double-digit accretion within 24 months of closing. As I explained at our Investor Day in November, through the sale of CPD and significant reduction in debt, we were in a position to evaluate many opportunities for growth, in Canada and U.S.

This acquisition was a unique opportunity to acquire a business offering significant potential for growth and synergies, leading to double-digit accretion. This deal is an example of how we are already progressing to our Evolution 2020 mandate to achieve C$50 million to C$150 million in the Energy segment alone in EBITDA growth while delivering attractive level of accretion.

With that, I would now like to conclude the presentation, and turn the call to question-and-answer.

So a few questions on the Canwest transaction. So it looks like about half of Canwest business services the oil and gas sector.

I guess from your perspective, is rig activity the main driver or how do you look at things, is it like rig activity, is it production, if you can comment on that?

The way we looked at the deal, we didn't anticipate big, big growth. So, if we look at accretion being doubled, we are talking about base case in 2017 including our synergy and having some normal very lower growth than any bankers and any industry in the oilfield has anticipated.

So, our base case is solid. And with the present volume, including their base case 2017 EBITDA, the synergies will come over the 24 months period and just minimal growth after that.

We are in good shape and all the accretion double will be accomplished. Now, we think with what we read and what we see from every forecast that it looks like the growth in oilfield will be better than that, and we are waiting to see some proof of that before continuing to improve our EBITDA bottom line with this acquisition.

Okay. And then on the synergy side, what do you think are the key risks in achieving those synergies?

I think one obvious one would be like potential asset divestments if it's required by the regulator. But from your perspective, what are the other kind of key risks?

We've done a ton of that. I think I'm up to 25 integrations in my career and we have such a great management team we've built over the years here.

Canwest people are really quality people with great culture. So, from our case, we are really in a good position to feel very strong with the C$20 million synergy.

It's hard to take less than that when you look line by line of all the dimensions. It's something on the small scale we've done with the current acquisition here.

We've done a few small ones in the States entirely in the energy. It's really I cannot say anything that will not be achieved in the C$20 million.

I might ask if Beth or Darren has additional point on that regard. Maybe, Beth, can you think of anything?

I think the one thing that I would flag is something that could influence the timing or the pattern of when we achieve the synergies, could be in the end when the deal ultimately closes. If it closes – obviously it's harder to implement synergies and make changes in the winter months versus the summer months.

So there could be some influence over the pattern, although we would still anticipate within the 24 months of achieving them.

Okay, thanks. And then one last question on the transaction.

Is there an end date or is there a date when the purchase option expires?

I'll move to Darren.

Sure. So the initial transaction, the outside date for the purchase of the option is May 2017.

But the more important factor is the date on being able to exercise the option and acquire the shares and units of Canwest. The outside date there is December 2017 and it's extendable, can be extended to September 2018, I think it's September 30, 2018.

Okay. So like if the regulatory approvals take longer than expected, then it's likely that you will just kind of extend it down to September 2018?

Yes, I mean we certainly don't anticipate it taking that long. I think we would suggest that the process is likely to go in the ordinary course and take four to six months to complete, and we're hopeful we would complete that at the Bureau.

But yes, I mean it gives us the ability to deal with it in the event that it didn't. So yes, we can extend till September 2018.

Okay, thanks. Those were all my questions for now.

I'll get back in the queue. Thank you.

This is Fahad on for Joel. Just had a quick question, not unrelated to the acquisition, in the Chemicals business, saw a big increase in gross margin this quarter and you cited the lower power cost.

Is it a sustainable kind of gross margin going forward? How should we be thinking about margins in the Chemicals business?

I think if you're looking at the fourth quarter, there were some improvements around chlorine, roughly in the C$0.5 million range, some improvement in the chlorate business sort of in rough size the same, and also some improvements from our Chile operations. But obviously, I mean as you are noting, there was a large improvement as a result of power costs, and this is primarily being driven by the Alberta market and us paying market pricing versus our power purchase arrangement which has been terminated.

If you want to think about the margins going forward, it's best to look at the margins for 2016 as a whole as opposed to just in the fourth quarter, because of the timing of the recognition of the lower power costs, are heavily weighted in Q4. So thinking about 2017, I think if you look at the overall year, 2016 margins, that that's probably a better way to think about margins in 2017, which is consistent with our guidance of the results being sort of similar to modestly lower.

So, from that perspective, some strengthening in pricing next year, but overall some increases from 2016 to 2017 in the base power prices.

Okay, great. That's very helpful.

And just a quick follow-up, staying on the topic of margins, in the Energy Distribution business, I noticed that margins came down a bit for the retail propane per litre, per litre margins, I think they came down about C$0.02 a litre. Is this kind of the expected margin in 2017 or should we start seeing – or could the margins fall a bit further kind of back to what they were early 2016 before they started really picking up in mid-2016?

Generally speaking, there hasn't been an erosion on margins. Our mix of margin has improved because in the oilfield we do sell less in the last year, and the mix makes our overall mix better on margin.

So, Beth, if there's anything that…?

I think the way to think about the margins is, they have normalized and we've always indicated that they would normalize. The wholesale cost of propane is increased.

So from that perspective, seeing that normalization and thinking about the margins to be consistent as you look out to next year is probably the best way to think about it.

Okay, great. The last question I had was, we're hearing that pulp prices are moving up and are you seeing that they've recently been moving up, are you seeing that strength in chlorate, do you see a strength in chlorate prices in 2017, or are the 2017 contracts kind of locked in, or is that really not going to be a factor?

No, they are locked in, and we are pretty well sold out for the year. Overall, in a great position and similar margin in 2017 and 2016, very similar.

Great, thank you.

So, Patrick, you are back?

Back, yes. First question just with respect to the C$20 million of synergies, and I know you guys are locked in on the five-year deal here with Gibson on the wholesale and transportation, but wondered how you see those synergies moving above C$20 million in year six and beyond once you can reduce your transportation costs and use your own SGL group?

So on the transportation, the answer is, no, because the type of transportation we are talking about that comes from Canwest, or Gibson I should say, we would buy that from another source of transportation. So for us to have that five-year with Canwest, they are a great supplier, they are a great company with great people, we pay the same price as we would pay from another transportation company, so year six we continue with them and maybe even increase our business with them, certainly very possible.

That does not change anything for us. On the wholesale side though, you have a good point.

We have guarantee of volume, just we didn't buy their wholesale propane business. And the present Canwest EBITDA in 2017, that does not include the additional profit that we can make on the wholesaling ourselves.

So, for five years there is 200 million litre that we're going to apply and acquire – buy propane from them. The volume is more than that somewhat.

And yes, for year six, you are right, we take that on and we make additional EBITDA by supplying our own propane in year six.

Okay, got it. And then on the regulatory side, were you able to have any discussions at all with the Competition Bureau, private discussions obviously, but given it was a public sale process, just to get any sort of comfort level from the Bureau before you announced the deal?

To Darren.

Sure. No, we did not have any discussions with the Bureau, and that's ordinary course.

It would be just the way that these things progress. So, I think we have reached out to them in the ordinary course now and we'll commence with our initial filing probably by the end of the month.

But no, there were no discussions, but that's to be expected.

And what about preliminary legal advice on that front?

Sorry, preliminary legal advice on the…?

On the competition.

Obviously we spent considerable amount of time analyzing the transaction before entering into the agreements and believe that we have evaluated that and I think we have a good case. Obviously not going to talk about that publicly, but the two things I guess I would say is, it's a strong competitive marketplace, and as we pointed out in the presentation, there are significant efficiencies and cost savings that the Bureau would consider when making our application.

Okay, great. Just to clean up here, maybe a question for Beth on the maintenance capital for 2016, I think came in at C$70 million.

I believe just in your January presentation you still had guidance of C$55 million. So just maybe an update on what happened in Q4 and the outlook for 2017?

I think if you want to think about maintenance CapEx from a go forward perspective, consistent with what we talked about at Investor Day, we would expect in 2017 for it to be C$45 million and C$50 million. And if you want to think about that, Specialty Chemicals would be roughly half, Canadian propane in and around the C$20 million range, and the remainder being USRF.

In addition to that, you will recall we do have our capital lease obligations, and you could consider those maintenance as they are investments to replace the fleet, we would expect those in 2017 to be in the range from C$18 million to C$20 million. Then going forward, that C$50 million is a good run rate, I mean absent the Canwest acquisition, but that's a good run rate looking at our current business.

Okay. And again, sorry, for Q4 what was the driver behind the higher number?

Primarily in Q4 we had some incremental systems and it's some of the timing around fleet purchases.

Okay. So maybe one last question if I could and I'll jump back in the queue, but just given the strong accretion from the deal and your conviction here on obtaining the synergies, just wondering why you weren't able to commit to a dividend bump here upon closing the transaction.

I think those are certainly questions and debate that we have at our Board regularly. Going over – remember we always said, we want to be at the 3x level of the debt-to-equity.

So going over that with this acquisition within 12 months after it comes back to 3x, so having passed that threshold of 3x, which we rather be at for a period of 12 months after this acquisition, we rather not think of dividend at this stage. But every year it will come back to the table and discussion as we deleverage and we'll also need cash for add-on acquisition, tuck-in, as we will do some in the year to come, expect maybe not the size of Canwest, we expect more acquisition to come our way in the States and Canada.

We're organized now, took us a while, but we are there.

Okay, great. Thank you very much.

It's actually Dan Chew proxying for Steve today. Just a quick question on the timing of the whole transaction, just if you could maybe elaborate on what's going to happen between now and sort of the April 3 date?

It sounds like you haven't made the initial application yet, but is there a chance that you guys can make the first application to the Competition Bureau and maybe get some feedback before sort of 1st April for your date?

Darren?

Sure, I can answer that. So in terms of the timing, we do expect to file by the end of the month, that initial.

At that point, you've got 30 days during which you can't close the transaction. And you would expect that at the end of that, the ordinary course would be you may get a request for additional information.

During that 30 day time period, obviously we will work cooperatively with the Bureau. I can't really say what we expect to learn before then in terms of thinking about closing.

In terms of option purchase, the expectation would be, I think the outside date for that is May 1, but I think it could be as early as March 1. And probably the most likely scenario is, we would pay for the option on April 3 and close that part of the transaction at that stage.

Got it. Okay, helpful, thank you.

And then maybe just switching back to the overall sort of tuck-in strategy, I mean you guys are obviously working on closing this Canwest deal, but maybe can you give an update on where the pipeline is at for your other tuck-in initiatives as well as are those potentially sort of the third year sort of tuck-in initiatives or can we expect some activity this year as well?

I think at our Investor Day we presented that we would do and are confident we would do two to four a year, and that includes U.S. and Canada, tuck-in acquisitions.

So, if you all recall, before the sale of CPD, we weren't focused on acquisition much on propane, we didn't like our leverage. Since then we got organized, big scale, Canada, U.S., we're moving along as a list of all the potential propane companies that could come for sale in time when the owner entrepreneur are ready.

We have touch-point with just about anybody in the industry that there is a propane company, and we will be at the table as they come around. I've also said that most of them are small, C$1 million to C$3 million, C$4 million, C$5 million EBITDA, so nothing – in Canada anyway, nothing of this scale.

But we will not stop that. We are marching on, we have acquired talented people and we are organized now and disciplined to make out an acquisition.

Of course we do have synergies when we do it and we will take our position in Canada and in the States, Northeast USA to start, to be a larger propane energy company in North America.

That's helpful again. Maybe just one last one for me, I think in your opening remarks you guys talked about headcount reduction within Energy Services.

I was just wondering if it's maybe potentially the start of a trend in Energy Services and we can expect maybe more of these headcount reductions, or if it was just kind of a one-time thing?

No, I think there's a little bit less in ERCO chemical where they have done rightsizing. And we improve efficiency, continuous improvement is part of our DNA, it's in every business.

Those people focus on continuous improvement. We look at supply, we look at all the process and all the steps that you have to do in the business, and we know that year to year there is always a few million that are always available to improve.

So you see a little bit more this year, and that's good, and I think we'll continue in numbers of millions that can come from ERCO and from the Energy Group, Canada and U.S., by being more efficient. Looking at one example, if you start with the market where costs are, we do by segment, by market, by client, if we get to a point where it finally becomes negative, we address it through hopefully increasing price and maintaining the business, but we're also not afraid to walk away from a business that becomes a drain on our profitability, and where we lose money we don't stick around.

And I think – I was going to say, just sort of specifically to talk about Specialty Chemicals as well as Energy Distribution on the restructuring side, I mean if you look at it, It was roughly sort of an impact of half and half. And if you think about Energy Distribution, part of it was just looking at the various volumes and the changes that occurred in Western Canada, and as a result of that making a change to reflect it going forward.

But we wouldn't, other than, as Luc is saying, for the ongoing efficiencies that we're always looking for, we would view it as a one-time item.

Got it. Thanks, guys.

Two questions, first one to get some more color on the USRF. In your press release you mentioned that Northeast U.S.

in terms of degree days was 20% colder than the prior year. Yet we see lower volumes in USRF year-over-year.

How should we think of that, what is the dynamic there, is that an anomaly that we should expect you to track weather patterns going forward or is there some structural issues there that we should be aware of?

That's a good point. I'll start and I'll ask Beth to do a few more line by line.

Big picture, the wholesale business where you make a penny if you're lucky is certainly a volume business, not a lot of profit in it. So, we have the decline in the wholesale business, which I don't view as a bad thing.

Then from the 20% colder, I think that was just December. So I'll pass to Beth for that.

Yes, it was December was the month where it was colder. And it is reflected from a retail perspective, there were higher volumes from a retail perspective.

It was offset by the wholesale, as Luc is saying. So we do continue to see competitive pressures in that market, but we were happy with what we saw on the retail side.

So it's really a wholesale issue?

Yes, it is.

Correct.

And just wanted to revisit the Chemicals, if I understood correctly, what you're saying is that Q4 margins probably benefited from adjustments that in an ideal world would have been spread over the four quarters. Is that the right way to think about it?

Yes.

Yes.

Okay, great.

We were very prudent to wait and now we have our running rate on Energy. So we applied that in quarter four.

Great, thank you.

Just a quick question regarding the restructuring costs and headcount reduction, so most of the costs were realized in Western Canada, right?

In what? I missed the last part.

In terms of like headcount reduction was mostly in Western Canada.

Yes.

So like does that imply that you are kind of bracing yourself for a slow recovery in the oil and gas sector or are you just somewhat less bullish on volumes I guess picking back up?

So Western Canada, the oilfield has been declining and we always adapt and adjust our labor force and our trucking payings to the market. So we didn't have any reason not to do that.

We can always drop up. So we did adjust on the way down to less volume in that segment.

Of course, now with Canwest giving us another possibility of looking at volume for the next two years and having the right headcount assets to service the market, so we always keep adapting. And it's an industry you know that by our bench we are not to the roof and you can be flexible quite quickly as a distributor to adapt how many trucks, how many tanks, how many people to service a specific market, and you can – if you are proactive, you can adapt your team and your people very quickly to the market volume.

And just to clarify, Nelson, it isn't primarily Western Canada. If you look at the entire restructuring, the restructuring charges were roughly C$7.1 million, and think of it as half was tied to the Specialty Chemicals business and then half was Energy Distribution.

It was driven by Western Canada but not solely driven by Western Canada.

Okay, got it. But like on the Chemical side, you mentioned that that's more in the chloralkali side as well, which also services or gets a lot of revenues from the oil and gas sector, right?

Yes.

Okay. And then just one last question, in terms of the Specialty Chemicals 2017 outlook, I think in Q3 you mentioned that you expected it to be consistent to modestly higher.

And then I guess your latest outlook is consistent to modestly lower. I'm just wondering like what has changed.

It's a small change but I'm just wondering whether there is a specific factor that changed it from going from positive to negative?

Nelson, the best way to think about that is how strong Q4 was. So when we were talking and when we provided our guidance in Q3, we had anticipated results weren't as positive.

So when we're looking at it on a year-over-year basis, that's why we are expecting it consistent to modestly lower now. It would be strength of the Q4.

And a big driver in the strength of Q4 was lower than expected power prices in Alberta, is that correct?

Correct, and if you look at it from a year-to-year basis, so if you look at that smooth through 2016, so if you look at total 2016 power to total 2017, we do see some potential pressure on power prices in 2017 where we see some improvement in pricing, but we also see some pressure around power costs in 2017 which is where we have the consistent on a year-over-year to potentially modestly lower.

Got it. Okay, thanks Beth.

Thank you very much for hosting the call. First, on the synergies with industrial propane, I'm wondering is it possible to start working on the synergies now at least on your end, maybe closing some of your facilities in anticipation of the close of this transaction, or will you have to wait until the Competition Bureau has approved this transaction before you can start working on the synergies?

So we have to wait absolutely when it comes to the Canwest. We cannot touch that at all.

On the other side, the other question before, we are confirming that we have adapted to a lower volume and that of course – and certainly for our own production and people, we can. So, not much there compared to C$20 million synergy, but that's one reason why we have some lower costs in Western Canada with some restructuring that took place.

So we can tweak it from internally a bit, not much room left, but we can, yes, to your point. After that, it's all about waiting.

Okay. Secondly, moving on just sticking with the Energy Distribution division, I know you have a cost-plus model, but I mean commodity changes can have some modest impact on the margins that you realize.

Can you tell us like in a rising propane price environment, how has that historically impacted your wholesale business and the retail business? I know it's going to be a modest impact, but short term and then long-term?

So big picture, it's a pass-through. So whatever, if you think of macro picture, you think mid long term, whatever we pay for propane, we add to that our added value margin to service every segment of the industry and customers.

So for us, big picture, not a factor, but you do have some push-pull that comes with that. There is arbitrage between West and East, at some time you get a little bit more margin, sometimes you get a bit less, absolutely.

And move along to – we've put a system in place where daily if propane price goes up, we go up the next day. So, all of the internal system and pricing strategy has been very intelligently developed to minimize any impact that propane goes up or down, what does it mean for us, and we should be maintaining by segment, by market.

Then there's arbitrage. Sometime from West to East, you make couple of cents more, couple of cents less, that we cannot guarantee the control of that.

That's our wholesale business. But on all the distribution, pretty solid, up or down, does not depend on propane price.

All right, thank you. And then earlier to the point that Beth was making with respect to the gross margin per litre for the Canadian propane business, we should be looking at the Q4 margins to project out 2017 margins, not the overall margins realized for the full-year 2016 for the gross margin per litre?

I'll ask Beth.

Yes, I think from our perspective the best way to look at it is to take the overall full-year number and then use that from a forecasting perspective into 2017.

Right, because I mean in Q1, the margins were higher, and then during the year they trended lower, which is why I was asking this question.

I think to look at it as normalized basis in the longer term throughout the whole year is a better number to think about going forward.

Okay. Thank you very much.

That's all for me.

I wanted to follow on with one of Patrick's question. Maybe what we could do is look at your business from a market share perspective in the West, and prior to the acquisition, what would be your residential market share and what would be your commercial market share in Western Canada?

I'll refer to Darren on this one.

Sure. I guess on market share, we would say a couple of things.

It's not really readily available data for particular regions. I think what we've got on our public filings is a management estimate of 30% to 35% for Canada.

What I guess we would say is, A, the market is very competitive with hundreds of local and regional competitors, low barriers to entry. And if you're thinking about this I guess in a regulatory context, the key would be to focus on – even the agency's own guidelines indicate that they are not going to decide anything based on market share alone.

The analysis that they look at is fairly sophisticated considering a wide range of factors, which I'm sure they are aware, efficiencies from a transaction, industry-specific trends, abilities of customers to switch suppliers, barriers to entry, all of those things. So, I think to boil it down to market share is probably just oversimplifying it a bit.

Okay. The next question I have is, so you talked about the expiry of the option, I'm confused on one thing, if you pay C$412 million, I would just keep on extending the option perpetually to try and get the business, especially since you say you're going to get the earnings from the date of the payment.

So, what happens if you hit the option expiry period, like you just keep on extending, wouldn't you?

So to answer that, no, there is an option expiry. The expiry would be September 30.

But in terms of – September 30, 2018 when extended – but the reality is, you're going to have some indication long before that period of time. So, that date has been built in there to give sufficient room to do any of a number of things.

We anticipate being able to complete the regulatory process in four to six months, to give some context. But you build all these things in for the absolute worst-case scenario.

So September 18 was designed with that in mind, and it would give you enough flexibility to let's say the regulatory didn't go as planned, it gives you that length of time to use the option and sell the option to a third party, complete that process, and should be sufficient time to do that as well.

Okay, understood. Okay.

Next question I've got, how should we be thinking about the cash taxes for the Canwest acquisition? So when we're looking at the incremental cash flow from that, how should we be thinking about cash taxes?

So from a cash tax perspective, you're right, there's going to be some incremental earnings, particularly in Canada. So if you want to think about it, it will make it earlier when we'll be ultimately taxable.

So, assuming that we have, when you see our 8-Ks, we'd probably be looking at something like 2020 to 2021 to be taxable in Canada.

Excellent, thanks. That's all I've got.

Thank you everyone and we're always available for being as clear and as frank as we can, and all of you know Rob, the Treasurer. We're very excited about 2017 and we look forward to speaking to you again in May at AGM and first quarter conference call.

If there's no further question, good weekend everyone and see you next quarter.