Earnings call transcript: Keyera Q1 2025 earnings beat expectations

Keyera Corp. (KEY), a $17.98 billion market cap energy infrastructure company, reported its financial results for the first quarter of 2025, surpassing analysts’ expectations with earnings per share (EPS) of $0.57, compared to a forecast of $0.5398. The company also reported revenue of $1.73 billion, exceeding the expected $1.58 billion. Despite these positive results, the stock experienced a decline of 1.04% in pre-market trading, closing at $44.29, reflecting investor concerns over specific operational challenges. According to InvestingPro analysis, Keyera generally trades with low price volatility and has maintained dividend payments for 23 consecutive years, currently offering a 4.94% dividend yield.

Key Takeaways

• Keyera’s EPS and revenue exceeded market forecasts for Q1 2025.
• The stock price fell 1.04% in pre-market trading, despite earnings beat.
• Net earnings increased significantly to $130 million from $71 million the previous year.
• The company’s fee-for-service segments saw a 9% margin increase year-over-year.
• Keyera reaffirmed its financial guidance for 2025.

Company Performance

Keyera demonstrated strong financial performance in Q1 2025, with net earnings rising to $130 million, a substantial increase from $71 million in the same quarter last year. The company’s fee-for-service segments reported a 9% increase in margins year-over-year, highlighting operational efficiency. Keyera’s strong balance sheet, with a net debt to EBITDA ratio of 2x, underscores its financial stability.

Financial Highlights

• Revenue: $1.73 billion, up from the forecasted $1.58 billion.
• Earnings per share: $0.57, surpassing the expected $0.5398.
• Adjusted EBITDA: $298 million, compared to $314 million in Q1 last year.
• Distributable Cash Flow: $190 million or $0.83 per share.
• Net Earnings: $130 million, up from $71 million year-over-year.

Earnings vs. Forecast

Keyera’s Q1 2025 EPS of $0.57 exceeded the forecast of $0.5398, representing a positive surprise of approximately 5.6%. Revenue also surpassed expectations by $150 million, indicating robust operational performance. This earnings beat is significant compared to previous quarters, reflecting the company’s strategic initiatives and market resilience.

Market Reaction

Despite beating earnings expectations, Keyera’s stock price fell by 1.04% in pre-market trading. The decline may be attributed to investor concerns over operational challenges, such as the extended maintenance outage at the AEF facility. The stock’s performance remains within its 52-week range, with a high of $47.9 and a low of $35.33, suggesting relative stability amidst broader market fluctuations.

Outlook & Guidance

Keyera reaffirmed its key financial figures for 2025, projecting marketing segment realized margins between $310 million and $350 million. The company anticipates growth capital expenditures of $300 million to $330 million and maintenance capital expenditures of $70 million to $90 million. Keyera targets a 7-8% annual growth in fee-based adjusted EBITDA from 2024 to 2027.

Executive Commentary

CEO Dean Setaguchi emphasized the company’s strategic direction, stating, "We are executing a clear strategy and delivering capital efficient growth." He highlighted the potential for basin growth tied to LNG exports, underscoring the company’s long-term vision. Setaguchi also noted the need for policy improvements regarding emissions caps.

Risks and Challenges

• Extended maintenance outages may impact operational efficiency.
• Commodity price volatility poses a risk to financial performance.
• Regulatory changes, particularly in emissions policies, could affect operations.
• Market saturation in key segments may limit growth opportunities.
• Dependence on the Western Canadian Sedimentary Basin for resources.

Q&A

During the earnings call, analysts inquired about the progress of the CAPS Zone 4 project and the company’s risk management strategy amid commodity price fluctuations. Keyera’s management reiterated their commitment to disciplined capital allocation and emphasized the potential for long-term growth within the basin.

Full transcript - Keyera Corp. (KEY) Q1 2025:

Joelle, Conference Operator: Good morning. My name is Joelle, and I will be your conference operator today. At this time, I would like to welcome everyone to Keyera’s twenty twenty five First Quarter Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session.

Thank you. I would now like to turn the call over to Dan Kupperton, General Manager of Investor Relations. You may begin.

Dan Kupperton, General Manager of Investor Relations, Keyera: Thanks, and good morning. Joining me today will be Dean Setaguchi, President and CEO Eileen Maricar, Senior Vice President and CFO Jamie Urquhart, Senior Vice President and Chief Commercial Officer and Jared Bastillney, Senior Vice President, Operations and Engineering. We will begin with some prepared remarks from Dean and Eileen, after which we will open the call to questions. I’d like to remind listeners that some of the comments and answers that we will give today relate to future events. These forward looking statements are given as of today’s date and reflect events or outcomes that management currently expects.

In addition, we will refer to some non GAAP financial measures. For additional information on non GAAP measures and forward looking statements, please refer to Keyera’s public filings available on SEDAR and on our website. With that, I’ll turn the call over to Dean.

Dean Setaguchi, President and CEO, Keyera: Thanks, Dan, and good morning, everyone. GEAR had a solid first quarter, reflecting disciplined execution of our strategy and the strength of our integrated value chain. Back in December, we outlined a clear plan to grow our fee based adjusted EBITDA by 7% to 8% annually from 2024 to 2027. ’5 months later, we’re progressing well against that plan, advancing growth projects, filling available capacity and securing new long term integrated contracts across our value chain. This morning, we announced the sanctioning of KFS Frac III, a major expansion of our core frac complex in Fort Saskatchewan.

When combined with the Frac II debottleneck, these projects will increase our total frac capacity by about 60%. These investments are backed by long term customer commitments with a high degree of take or pay and are essential to meeting the growing needs of the basin. They also enhance the competitiveness of our integrated value chain and support our strategy of attracting and retaining volumes across the system. Both frac expansion projects are expected to deliver standalone returns within our targeted range of 10% to 15%. A large majority of frac capacity at KFS, including expansions, is now contracted for an average duration of eight years.

We’re also advancing CAPP Zone 4 with commercial discussions nearing completion. We continue to see commercial momentum across the business. The Wapiti gas plant is now expected to reach effective capacity in 2026, a year earlier than anticipated. Several optimization projects are underway to support further growth at the plant. Volumes continue to ramp up at Simonette and our condensates business continues to grow.

Our Fort Saskatchewan condensate system is nearing contractual capacity, and we’re evaluating debottlenecking opportunities that can increase capacity to accommodate growing customer demand. From a macro perspective, we remain confident in the long term growth outlook for volumes out of Western Canada. Despite recent commodity market volatility, our basin remains resilient due to its quality of resource and low cost structure. Importantly, we’re seeing meaningful improvements in egress capacity across multiple products, whether it’s crude on the Trans Mountain pipeline expansion, gas LNG Canada, or increasing propane and butane export options. At the same time, intra basin demand is rising.

Oil sands producers are investing in expansions and debottlenecking. And over time, natural gas could play a larger role in meeting emerging demand from sectors like data centres. Our assets are well positioned to enable this growth and we’ll continue to invest where we see long term sustainable growth, always with a focus on disciplined capital allocation. With that said, for Canada to realize its full potential, more is needed. We need a competitive policy environment that attracts capital, enables responsible growth and expands market access for the benefit of all Canadians.

With that, I’ll turn it over to Eileen to walk through our financial results and guidance.

Eileen Maricar, Senior Vice President and CFO, Keyera: Thank you, Dean. Cara delivered solid financial results in the first quarter. Adjusted EBITDA was $298,000,000 compared to $314,000,000 in Q1 last year. Distributable cash flow was $190,000,000 or $0.83 per share. Net earnings were $130,000,000 up from $71,000,000 in the same period last year.

These results were supported by continued strong margin contributions from our fee for service segments, which were up 9% over the same period last year. Gathering and processing delivered $109,000,000 in realized margin with a new throughput record at WAPD and continued momentum at Simonette. Liquid infrastructure delivered a near record $152,000,000 in realized margin. This was supported by high utilization of our fractionation and condensate systems and the continued ramp up of volumes on CAPS. In the Marketing segment, realized margin was $78,000,000 primarily driven by isooctane and propane sales.

The AEF facility has completed its start up following a maintenance outage that began in late March. The facility is now back to full operations. However, the work took longer than originally anticipated, extending to approximately seven weeks rather than six. As a result, the expected impact to annual marketing segment realized margin has increased to approximately $50,000,000 compared to the previous estimate of $40,000,000 We ended the quarter with a strong balance sheet and net debt to EBITDA of two times, below our targeted range. Over the last two years, our net debt has been reduced by over $500,000,000 Our strong financial position gives us the flexibility to self fund organic growth and return capital to shareholders.

Turning to our 2025 guidance. We are reaffirming all key figures. We continue to expect Marketing segment realized margin to be between $310,000,000 and $350,000,000 This includes the estimated $50,000,000 impact from the AEF outage and reflects the benefits of our disciplined risk management program. Growth capital expenditures are expected to range between $300,000,000 and $330,000,000 supporting investments in FRAC two, FRAC three, CAHPS Zone four, and other opportunities. Maintenance capital expenditures are expected to range between 70,000,000 and $90,000,000 And finally, cash taxes are expected to range between $100,000,000 and $110,000,000 Thank you, and I’ll now turn it back to Dean for closing remarks.

Dean Setaguchi, President and CEO, Keyera: Thanks Aileen. We remain confident in the basin’s continued volume growth. Canada has one of the world’s largest oil and gas resource bases, developed under some of the most stringent environmental and social standards anywhere. Now is the time to foster an environment that attracts investment and supports responsible growth. Our customers are in strong financial positions and continue to grow and adapt to changing conditions, and Keyera helps enable this growth.

We are executing a clear strategy and delivering capital efficient growth, and we’re doing so while remaining disciplined with a long term view of the Western Canadian Sedimentary Basin. On behalf of Keyera’s Board of Directors and Management Team, I want to thank our stakeholders for their continued support. With that, I’ll turn it back to the operator for Q and A.

Joelle, Conference Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Your first question comes from Robert Hope with Scotiabank. Your line is now open.

Jess Hoyle, Analyst, Scotiabank: Thanks. Good morning. This is Jess Hoyle on for Rob Hope. I just wanted to start on the growth front. So regarding Capstone four, what are the remaining hurdles for sanctioning?

And, are you now comfortable on it on the engineering side and also with construction costs for that project?

Dean Setaguchi, President and CEO, Keyera: Hi. Good morning, Jess. It’s Dean Sadiguchi speaking, and thank you very much for the question. We’re very excited about our Zone 4 project working with North River Midstream. We certainly see a lot of demand and growth in the Montney and therefore certainly a service like ours which would provide a competitive alternative for NGL transportation.

So contracting is going very, very well, but we want to remain disciplined to make sure that we have all those contracts buttoned up that will support this size of investment. And as I said before, that’s progressing very well. On the engineering front, we have a class three estimate already complete. We’ve done all of our stakeholder engagements and we feel pretty good about our execution of this project. I was thinking back about cap zone one to three and we’ve said this before, but the train on zones one to three are much more difficult to build pipe and build a pipeline.

Zone 4 is much smaller in size, its distance, it’s only about 85 kilometers versus about five eighty on Zones 1 to three and the topography is a lot flatter and the right of way is visible pretty much the whole distance from a paved road. So much, much different conditions. And also say that, remember in Capstone 1 to three, built that through COVID and we also had two very large pipeline projects being built at the same time being Trans Mountain and Coastal GasLink. So just because of availability of contractors and also the smaller projects and better topography, we feel pretty good about it. But Jared, is there anything else you want to add to that?

Jared Bastillney, Senior Vice President, Operations and Engineering, Keyera: Yeah, I think you covered it well. The only couple things I’d add would be that we have all our regulatory approvals in hand already. And we’ve secured the pipe and are in the final stages of securing our construction contractors. And there’ll be some continuity there from zones one to three. So both from our own team and external folks that we use, there’s lots of familiarity there from the prior project.

Jess Hoyle, Analyst, Scotiabank: Thanks for that. And moving over to to marketing, so commodity prices have have been very volatile. So just how do you think about downside protection or does volatility give upside potential to the guidance range?

Dean Setaguchi, President and CEO, Keyera: Yeah, well, maybe I’ll start off with this response. Certainly we’ve seen a lot of volatility as you said and a lot of it’s tied to what President Trump says on any given day across the border. But I just want to remind our investors that we have a very, very disciplined risk management program. And so that’s in place to protect ourselves when we see a downturn in commodity prices like we’ve seen recently. So that’s working very, very well for us as it did back in 2020 and 2021.

But maybe I’ll just throw that over to Jamie and maybe he can comment further.

Jamie Urquhart, Senior Vice President and Chief Commercial Officer, Keyera: Yeah, Dean, you’ve covered it really well. It’s just as you pointed out in the last part of your question is that that volatility some does sometimes does create opportunities for us to be opportunistic when we do, layer in our risk management program and and the team as they have in the past has done a very very good job of setting us up for ’25 and into 2026.

Eileen Maricar, Senior Vice President and CFO, Keyera: Appreciate the detail. Thank you.

Dean Setaguchi, President and CEO, Keyera: Thank you. Thanks for the question.

Joelle, Conference Operator: Your next question comes from Robert Cafely with CIBC Capital Markets. Your line is now open.

Robert Cafely, Analyst, CIBC Capital Markets: Hi, good morning. I think I’ll start with KFS3. Congratulations on the sanctioning. I just wanted to understand the CapEx guidance that you previously gave for twenty four to ’20 ’7 obviously includes something for KFS3, but it looks like the scope of the project might be a bit bigger with some additional egress. So is the entirety of the 500,000,000 accounted for in that prior guidance of three fifty to four fifty for ’26 and ’27?

Dean Setaguchi, President and CEO, Keyera: Yeah, you know what, I’ll just turn that question over to Eileen right away Rob, but I’m glad to see that you’re still on the phone after the lease loss last night and hopefully they cross back next game. But anyway, I’ll turn that over to Eileen.

Eileen Maricar, Senior Vice President and CFO, Keyera: Hi, Robert. Thanks for the question. And yes, absolutely that, you know, the 500,000,000 for FRAC three was part of that guidance that we provided for 2024 through to 2027. It would include both the FRAC two to bottleneck, FRAC three Zone four, as well as other projects. As you can imagine, it takes several years to develop projects to get them to in service date and really to be able to push out that growth well beyond 2027, so there is some capital for other projects as well.

Robert Cafely, Analyst, CIBC Capital Markets: Okay, and then what is the addition you’re doing on the egress side with K plus three, is there anything notable there, is it just connectivity to storage and things like that?

Dean Setaguchi, President and CEO, Keyera: Gerald, I’ll turn that over

Jared Bastillney, Senior Vice President, Operations and Engineering, Keyera: to Jared. Morning, Robert, it’s Jared. Yeah, I think it’s pretty minor in nature. It’s, know, when you build a brownfield project, and there’s work you need to do to integrate it with the existing fracs. And it’s really just positioning some of the pumping and infrastructure on how we move products around the site to position us to move it to move those products off-site.

There’s nothing significant around storage included in that because it’s not required.

Robert Cafely, Analyst, CIBC Capital Markets: Yeah, it’s a part of our overall course optimization, right?

Jared Bastillney, Senior Vice President, Operations and Engineering, Keyera: You bet. Yeah, it’s just how do we most efficiently integrate factory with the existing facilities that we have there?

Dean Setaguchi, President and CEO, Keyera: All the best service for our customers so that we have maximum flexibility between our fracs.

Robert Cafely, Analyst, CIBC Capital Markets: Okay. Great. And then I’m just curious possible when you look at the portfolio of optimization options, have to expand Montney processing capacity. And specifically, how do you see asset M and A fitting in terms of your menu of options to deal with those capacity constraints?

Dean Setaguchi, President and CEO, Keyera: Thanks for the question, Rob. And I think that we have various options, whether they’re brownfield or greenfield options to add additional capacity in addition to filling up our existing capacity. I want to make sure we’re clear about that. We do see a significant amount of demand to fill up both Wapiti and Simonette. So we’re working on debottlenecking opportunities there to fully utilize that capacity.

And I’ll let Jamie talk about just potential opportunities in area for capacity, but certainly we have the financial wherewithal to also acquire assets that would be a fit into our integrated system where again, we could provide a more competitive services if we add those assets to our business and also integrate it to our downstream value chain, including caps in our frac business. So those are the opportunities we’re looking for. We have the financial wherewithal to transact if we find something that fits. But we’ll be incredibly disciplined if we do acquire something along the Fairway. Anything you want to add, James?

Jamie Urquhart, Senior Vice President and Chief Commercial Officer, Keyera: No, I think the only thing I’d add is that we have established a dedicated team to Dean’s point to pursue those opportunities.

Robert Cafely, Analyst, CIBC Capital Markets: Okay, thank you. I’ll jump back in queue.

Dean Setaguchi, President and CEO, Keyera: Thanks, Rob.

Joelle, Conference Operator: Your next question comes from Patrick Kenny with National Bank Financial. Your line is now open.

Patrick Kenny, Analyst, National Bank Financial: Thank you. Good morning, everyone. Maybe just back on the Frac III expansion from a cost. Just confirm if any of the $500,000,000 budget is locked in with any fixed price contracts or perhaps through procurement of steel or other materials. And maybe just a comment too on you know, whether or not the recent delay by GAL might have a positive indirect impact on, you know, your access to labor in the region.

Dean Setaguchi, President and CEO, Keyera: Yeah. Good morning, Patrick and I’ll just maybe make a couple of comments and I’ll toss it over to Jared. I think very good observation about Dow. I mean, they have to run a business and so I totally understand their decision to defer their cracker expansion, but I do believe it’ll be built at some point in the future. But you’re right, I do think that this is a good opportunity for us to have a build window because as you know, our KFS site where Frac three will be built is right across the road from Dow.

So we’d be competing for similar contractors and obviously we want the best contractors to be working on our project to give us the best shot at executing it well. But with that, I’ll turn it over to Jarrod.

Jared Bastillney, Senior Vice President, Operations and Engineering, Keyera: Good morning Pat. I think the first thing I noticed that Frac three is essentially a twin of the bottleneck Frac two, so we’re not reinventing the wheel. Frac two was a great project for us. And we’re leveraging that into frac three. And so that in itself just gives us comfort from the nature of the work.

In terms of what’s locked in, it’s still early days, you know, right now we’re in the midst of securing all the long lead equipment. And so a significant portion of that equipment will actually get ordered later this month or early June, that’ll help give us certainty on those costs. And we’re also getting closer on advancing construction contracts, which will give us some certainty there. So early days to have a sense for how much is really locked in, but we’re getting quite close to de risking a significant portion of the project. And there’s some other strategies as well that we’re employing around, you know, how we’ll manage contractor activity and provide oversight that we think will help mitigate cost schedule, quality risks and all those types of things as well.

Patrick Kenny, Analyst, National Bank Financial: And I assume a good time to be looking at the Fort Saskatchewan condensate system expansion as well. So, but maybe you can just confirm what the potential scope and timing might look like for that expansion?

Jamie Urquhart, Senior Vice President and Chief Commercial Officer, Keyera: Yeah, I can step in there, Pat. Like, I mean, it’s really about just debottlenecking a little bit of pipe, looking to take advantage of using drag reducing agents that

Dean Setaguchi, President and CEO, Keyera: are very

Jamie Urquhart, Senior Vice President and Chief Commercial Officer, Keyera: effective for that type of service in condensate. Bottom

Dean Setaguchi, President and CEO, Keyera: line though, the demand for that service has been very strong. So it’s been great to see.

Patrick Kenny, Analyst, National Bank Financial: Okay, and then last one for me. Dean, you had a comment in the release just on the the need to improve Canada’s competitiveness through policy reform. Can you just expand on what you think industry needs to see in order for the energy sector to reach its full potential?

Dean Setaguchi, President and CEO, Keyera: Yeah, well, first of all, I’m optimistic that we’re going to see some change, cautiously optimistic maybe I should say with the new leadership in place. And in Canada, we have a problem with affordability and we need to improve our GDP. We are a resource based country. And so where do we have the best opportunity to improve our GDP? It’s our energy sector.

So I’m very hopeful that our Prime Minister understands the balance between the need to be environmentally responsible, which I think that we’re tops on that front in our industry, but also balancing that with the need to be competitive if we want to grow and export our responsibly produced products around the world. And what that means to me is we need to see improvements in policy and reevaluate the emissions cap, clean energy policies. We have to really have policies and permitting and regulations in place so that we can build more capacity to the West Coast, build more LNG so that we have more customers to sell our products to versus being so captive to The United States. And we have to also break down interprovincial trade barriers, is unbelievable that that’s something that’s self created by ourselves. So if you can address some of those issues, our industry will perform very well.

We have a very low cost production based in Alberta and BC and a very big abundance of resource. So we just have to have better policies to get it to market.

Ben Pham, Analyst, BMO Capital Markets: All right,

Patrick Kenny, Analyst, National Bank Financial: thanks for that. I’ll turn it back.

Dean Setaguchi, President and CEO, Keyera: Thanks Patrick. Nice win too by the Oilers last night. Think you’re Oilers fan.

Joelle, Conference Operator: Your next question comes from Ben Pham with BMO Capital Markets. Your line is now open.

Ben Pham, Analyst, BMO Capital Markets: Thanks. Morning, everybody. Maybe just start off a couple of questions on the frac capacity and market. Can you talk about how the frac capacity market is going to shake out the next couple of years? You sanctioned Phase three, the deep bottleneck, your competition is adding capacity, do anticipate by 2028 that the market’s going be more of an oversupplied situation?

Or do think it’s more of a run rate even beyond that?

Dean Setaguchi, President and CEO, Keyera: Good morning, Ben. And that’s a really great question. And certainly when we look forward, like when we look at the long term market fundamentals, our basin is going to grow. And again, a lot of that’s just tied to what we see in growth tied to LNG exports, mainly from LNG Canada. And we’re hearing that there’s more momentum around the sanction on phase two, but bottom line, there’s going to be more natural gas growth in our basin, which is also going to drive growth in NGLs as well.

And so right now we’re fully maxed out on our capacity utilization, not just us, but our competitors as well in terms of frac utilization at Fort Saskatchewan. So there’s certainly a lot of demand for new capacity. For a shorter time, could it get overbuilt? It’s quite possible, but the great thing is for us is that there’s been a lot of demand for our service. And with that, we’ve contracted up about 85% of our whole frac complex.

And that would include, you know, frac one, frac two and the debottleneck and frac three. So it’s highly, highly contracted already. So we’ve mitigated that risk and we think that we’re going have more opportunities to fill the last 15%.

Ben Pham, Analyst, BMO Capital Markets: Okay, got it. Thanks for that. And staying on the frac side, can you remind me just how the contracts, I mean, you mentioned 85%, but was there some that you were recontracting April 1? And if so, just the overall commentary on the trend.

Dean Setaguchi, President and CEO, Keyera: Well, I can turn this over to Jamie, but generally, I mean, we’ve been recontracting at KFS for the last couple of years. If you remember last year we announced, I think it was about 33,000 barrels a day of long term frac capacity contracts that were signed that were over ten years in duration. And I can tell you over the past year, we signed a lot more contracts of similar nature. So we’ve done a really good job and again, it’s just something that we’ve been doing ongoing. The other thing I’d mentioned is that a lot of the frac contracts, in fact, almost all of them are integrated deals.

They’re tied to other services, whether it’s upstream with our G and P business caps and also our downstream marketing business and logistics business. So it’s been very good for our company and you can see it in our results.

Jamie Urquhart, Senior Vice President and Chief Commercial Officer, Keyera: So I think the thing that I would add to that Ben, it’s a great question is that, as Dean said, as we’ve been re contracting and for duration, but we’ve also been proactive in blending and extending contracts that were due to be re contracted, so that we do stay out of that phenomena. As you pointed out that we may find that our province a little bit overbuilt in the twenty eighth timeframe. And the key was to make sure that we had as little amount of contracts renewing in that time period as possible. We do that, as Dean said, really, we believe KFS is the best connected frac to market. And obviously the AltaGas deal that we announced last quarter is part of that, but we have the best connectivity to butane in the province and we have now a comparable if not preferred access for propane as well.

Ben Pham, Analyst, BMO Capital Markets: So it sounds like it’s a legacy comment that 50% of your capacity is re contracted April 1, that’s more of an old way of thinking about it.

Jamie Urquhart, Senior Vice President and Chief Commercial Officer, Keyera: Yeah, I would think about it from the perspective of that. We’ve got some opportunities over the next short period of time to have that fully contracted. That’s our goal is to have that facility fully contracted probably within the next twelve months.

Dean Setaguchi, President and CEO, Keyera: Ben, maybe some of your comments are tied to, like, would say if we went back five plus years ago, there was a lot more contracts that renewed on an annual basis every April. And what Jamie and his team have done is that they’ve really lengthened those contracts and put a lot of term to it. So that’s why the average duration of our contracts now are like an eight year range and again, a significant amount of them, ten plus years.

Ben Pham, Analyst, BMO Capital Markets: Yeah, okay. That’s great. Thank you.

Jess Hoyle, Analyst, Scotiabank: Thank you.

Joelle, Conference Operator: Your next question comes from Spiro Dounis with Citi. Your line is now open.

Dan Kupperton, General Manager of Investor Relations, Keyera0: Thanks, operator. Good morning, team. I wanted to start with CAPS, if we could, more specifically around Zones 1 Through 3, actually. So Dean, I think you’d sort of talked about in the past growing into that 10% to 15% return range for that segment of the pipeline. And obviously, some growth announced today between Wapiti sort of filling up sooner than expected, KFS3 now getting FID ed at least a little bit sooner than we had expected.

So I’m curious, maybe just to level set on the impact to that Capstone 103 and how you’re tracking to that 10% to 15% range now?

Dean Setaguchi, President and CEO, Keyera: Yeah, good morning and thank you for the question on CAPS zone three and believe me, there’s going to be a lot of growth, continued growth in zones one to three that we’re very excited about. And as you would have saw in our results, our LI liquids infrastructure performance was very strong this quarter and some of that obviously is driven by growth that we’re seeing on CAPS zones one to three. What we’ve been saying and we stand behind our guidance is that our 7% to 8% fee for service EBITDA growth target out to 2027, a lot of that is going to be from existing assets, including volume and margin growth on CAPS and we continue to see strong demand. We fully expect CAPS to continue to ramp up beyond 2027. So it’s going to contribute to our fee for service growth out to 02/1930 and beyond.

Again, it’s really helping us lock up integrated deals across our value chain, including FRAC three, which is what we announced today.

Dan Kupperton, General Manager of Investor Relations, Keyera0: Got it. So it’s great to hear. Second one maybe for you, Eileen. Just with respect to capital allocation here and really focusing on the share repurchase program, I think it’s safe to say that equities have been a little bit more volatile than normal this year. And so I guess I’m just curious, is this the type of market that your opportunistic program was built for?

Have buybacks moved up in the capital stack lately? Are you still finding more growth opportunities or more attractive at this point?

Eileen Maricar, Senior Vice President and CFO, Keyera: Hi, Spiro, thank you for the question. Yeah, I think it really remains the same where we’re really excited that we have the buyback option as tool that we can continue to use opportunistically, and it is something that we will continue to weigh as an option. But as we said before, the preference is to grow our business with infrastructure that will be around for decades. And with all the commentary you heard from Dean earlier as well, where we see the basin growing, there are opportunities well beyond what we’ve talked about today, frac expansions and Zone 4. So again, our preference is to allocate capital to continue to grow the business.

So, again, it remains unchanged. We will allocate capital to that highest value option, whether it’s organic, inorganic growth, or buybacks.

Dan Kupperton, General Manager of Investor Relations, Keyera0: All right. I’ll leave it there. Thanks, everyone.

Dean Setaguchi, President and CEO, Keyera: Thank you. Have a good day.

Joelle, Conference Operator: Your next question comes from Maurice Chao with RBC Capital Markets. Your line is now open.

Dan Kupperton, General Manager of Investor Relations, Keyera1: Thank you, and good morning, everyone. Just wanted to come back to the marketing guidance. You mentioned that this guidance obviously reflects the $50,000,000 impact from the outage, but also highlighted the risk management program that mitigates the impact of commodity price volatility. So wonder if you could give us some examples of what you’ve done here. For example, were these positions that were in or out of the money but you chose to close them a little bit early given the uncertain commodity price environment or is there something else?

Dean Setaguchi, President and CEO, Keyera: Yeah, thank you for the question. And first of all, before I turn it over to Jamie, I just say that we are not making speculative decisions where the market goes up or down and we unwind everything and then reset our booking, hoping the market goes back up. We’re really just trying to just make sure that we preserve margin. So but anyway, with that, I’ll turn it over to Jamie and he can elaborate.

Jamie Urquhart, Senior Vice President and Chief Commercial Officer, Keyera: Yeah, well, think you made the point I was about to make because yeah, I would anybody to take away from my previous comments that we’re in and out of the market based on volatility. That is not how we run our book at all. It’s just that it’s it’s it’s being patient and not panicking when prices go down certain levels and also ultimately understanding the market well enough to know when it’s appropriate to layer in positions. And we’ve done that very, very well over the years and we continue to do that very, very well. So and it’s in it’s it’s set our ability to deliver on the the results that we’ve and the guidance that we’ve given and and created the confidence that we will deliver to that guidance.

Dean Setaguchi, President and CEO, Keyera: Yeah, maybe just to one of the points that Jamie made earlier though, which is unrelated to hedging is that when you have a lot of volatility in markets, sometimes markets dislocate and we have assets and we have logistics and marketing expertise to take advantage of market dislocation. And so we can move products from one market to another market and make a margin off it. And sometimes those opportunities present themselves in environments like we see today. So we’ll see how 2026 plays out. And again, we can potentially enhance our book with some of those types of opportunities.

Jamie Urquhart, Senior Vice President and Chief Commercial Officer, Keyera: Yeah, and to layer on to that is, and it’s a great point that Dean makes is that, you know, we have been able to take more advantage of those type of dislocations and or opportunities as a result of the additional storage that we bought a couple of years ago at the KFS Complex from from our previous partner at that facility. So you will have seen the benefit of that additional storage over the last couple of years in our results, and you’ll continue to see that benefit based on the fact that when there’s volatility, that creates massive opportunities to take advantage of physical storage.

Dan Kupperton, General Manager of Investor Relations, Keyera1: Maybe just double clicking on that comment about dislocation, the volatility. I think in your prepared remarks, you you highlighted a number of favorable long term trends about the basin’s growth, and I wonder if you could give us a little bit more of a shorter term view. You’ve highlighted that you made some progress on filling the available capacity, but just your outlook about basin over the coming months or quarters.

Dean Setaguchi, President and CEO, Keyera: Sorry. I just want to make sure I understand your question, Maurice. It’s just are you talking about just the General Basin and General Basin. On growth or are talking about specifically to our marketing business?

Dan Kupperton, General Manager of Investor Relations, Keyera1: No. General Basin, not the marketing specific. More about the base business.

Dean Setaguchi, President and CEO, Keyera: Yeah. You know what? Our base business has been very stable and we’re seeing still continued demand. Know what I find with the consolidation that we’ve seen and I also watch what happens on north, sorry, South of the border. I get my directions mixed up here.

But with more and more consolidation, like I looked down in The US, a lot of the majors now control a lot of the shale plays and they’ve taken out a lot of the private guys and the smaller players that are drilling no matter what just to grow and increase their valuation for sale. So, I think that all those players and that’s happening obviously in Canada as well and you saw Tourmaline and ARC and another unknown producer buy some assets off of Strathcona. I just believe that those larger players have a longer term view. They’re more strategic. They have very strong balance sheets.

So, and they also understand that infrastructure cannot be built overnight. I mean, just think about our Frac three, it won’t be in service for three years. So that’s why they’re making continued commitments across our value chain because they anticipate what’s happening with more egress being built volume growth in Western Canada. And they realize that we need critical infrastructure to enable the growth, which is what Keyera has and what Keyera will continue to build in the future.

Jess Hoyle, Analyst, Scotiabank: Understood. Thank you. Thank you. Thanks for the questions.

Joelle, Conference Operator: There are no further questions at this time. I will now turn the call over to Dan for closing remarks.

Dan Kupperton, General Manager of Investor Relations, Keyera: Thanks all once again for joining us today. Feel free to reach out to our Investor Relations team if you have any additional questions. Everyone enjoy the rest of the day.

Jess Hoyle, Analyst, Scotiabank: Thank you. Thank you.

Joelle, Conference Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

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