Good morning, ladies and gentlemen. Thank you for standing by, and welcome to AltaGas 4th Quarter 2020 Financial Results Conference Call. My name is Megan, and I will be your operator for today's 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.
As a reminder, this conference call is being broadcast live on the Internet and recorded. I'd now like to turn the conference call over to Adam McKnight, Director of Investor Relations. Please go ahead, Mr. McKnight.
Thanks, Megan. Good morning, everyone. Thank you for joining us today for AltaGas' 4th Quarter and Full Year 2020 Financial Results Conference Call. Speaking on the call this morning will be Randy Crawford, President and Chief Executive Officer and James Harbilas, Executive Vice President and Chief Financial Officer. We're also joined here this morning by Randy Toon, Executive Vice President and President of our Midstream Business Blue Jenkins, Executive Vice President and President of our Utilities Business and John Morrison, Senior Vice President, Investor Relations and Corporate Development.
In addition to the Q4 press release, financial statements and MD and A that were released earlier today, we've also published a Q4 earnings summary presentation that we may refer to at select points during our prepared remarks. The presentation, which walks through the quarter and highlights some of the key variances One time items that we would assume would be helpful for the market is available on our website under Events and Presentations. As always, today's prepared remarks will be followed by a question and answer period. And I'll remind everyone that we will be available After the call for any follow-up or detailed modeling questions. We'll proceed on the basis that everyone has taken the opportunity to review the press release and our Q4 results.
Before we begin, We also remind everyone that we will refer to forward looking information on today's call. This information is subject to certain risks And uncertainties as outlined in the forward looking information disclosure on Slide 2 of our investor presentation, which cannot be found on our website And we're fully within our public disclosure filings on both SEDAR and EDGAR. For the structure of the call, we'll start with Randy Crawford providing some comments on our 2020 financial performance, the Petro Gas integration and what you can expect on the road ahead for AltaGas. Followed by James Harbilas, providing a more detailed walk through of the financial results and our near term outlook. And then we'll leave plenty of time at the end for the Q and A session.
With that, I'll now turn the call over to Randy Crawford.
Good morning, everyone. The past year was one like we have not seen and included great disruption across every part of the globe. Despite these challenges, AltaGas persevered and delivered robust financial and operational results that yielded positive outcomes for all our stakeholders. We delivered 14% earnings per share growth while building AltaGas organizational capacity and advancing our corporate strategy. We executed one of the largest capital programs in our history with more than $900,000,000 of organic CapEx deployed.
We also invested another $750,000,000 to advance our global export strategy through taking operational responsibility of Petrogas And now controlling both operational LPG export terminals on the North American West Coast. And through it all, we positioned AltaGas to excel in an evolving The energy transition that is upon us. We have built a culture that is geared to deliver outstanding results for our stakeholders. It's focused on performance, it's fueled by accountability and it's underpinned by collaboration and pushing the envelope. For 2 years running, we have delivered normalized EPS growth that has materially eclipsed all of our U.
S. Gas utility and Canadian midstream peers. Our stock performance was also at the top of our peer group for the 2nd year running. Amid this performance, we have continued to improve our balance sheet and our credit position. We have de risked the platform in numerous ways and we have built a more sustainable business.
We have taken over the past 2 years to create an enduring business that is focused on creating long term value for all of our stakeholders. We also take great pride in being able to play a part in lending a helping hand to the communities where we serve during this time of need. There are 4 key areas I wanted to touch on today before turning the call over to James. This includes our 2020 financial performance, Petro Gas Integration, our role in evolving energy market and what you can expect on the road ahead for AltaGas. In terms of 2020 performance, our utilities business demonstrated the strong and resilient performance that we work hard to achieve, Delivering 21% year over year normalized EPS growth.
This provides us with high confidence that we will capture the full value of our industry leading 8% rate base CAGR through 2025. We continue to realize the benefits of our acute capital discipline to distance management of our cost, Reduction of incoming leaks, which were down more than 15% year over year and our regulatory cases that are designed to deliver better customer outcomes and keep our rates in line with our current operating and planned cost structure. We successfully closed the ROE gap by approximately 150 basis in 2020 in line with our target. This keeps us on track to close the remaining 150 bps gap and achieve our allowed return over 2021. The DC and Maryland rate cases we filed in 2020 are expected to have an impact at the start of the Q2 of 2021.
In December 2020, we reached a settlement agreement with the DCP Public Service Commission that included a revenue increase of US19.5 million dollars DC currently has the largest gap between our earned and allowed returns and this rate case is the first since 2016. So we'll go a long way towards closing the ROE gap at WGL. The updated DC rates have been approved to become effective April 1. Within our Midstream business, we made significant progress in advancing our global export strategy, including a full year of operations at RIPET and acquiring Petro Gas in the Ferndale export terminal. We also completed the North Pine and Townsend 2B expansions, We've significantly increased our processing and fractionation capacity within the Montney region.
AltaGas core throughput volumes in the region increased by 16% year over year in Q4 2020 as customers continue to grow into contractual agreements at Townsend and North Pine. Recent upstream consolidation has provided us significantly improved counterparty credit risk. Upstream consolidation transactions build scale, Create financially stronger companies, which support the longer term growth plans in the region and align with our thesis to build an industry leading footprint in Northeast BC. In 2020, we made significant progress on our operational logistics capabilities at Revit. After a rocky start to the Q4 due to logistics difficulties.
We achieved our 50,000 barrels a day exit rate target by exporting approximately 50,600 barrels a day in December 2020 January 2021. In 2020, we exported 27 VLGCs, which contained approximately 1,200,000 metric tons or 15,000,000 barrels of Western Canadian propane to Asia, providing tangible benefits We took advantage of the strengthening in the forward FEI curve for propane in Asia by locking in hedges at healthy spreads late in Q4 and early Q1. Currently, we have just approximately 70% of RIPET's expected exports hedged for 2021, which includes 35% underpinned by tolling agreements and the balance coming from financial hedges at approximately $10.25 a barrel FEI to Mount Bellevue throughout the year. From a timing standpoint, we're approximately 90% hedged in the Q1 and 65% hedged for the remainder of the year. In terms of Petrogas integration, although we are in the early days, Petrogas employees have already been a great cultural fit within AltaGas We remain highly confident of being able to realize the $30,000,000 in run rate cost savings and logistics optimization opportunities that we originally identified for 2021.
Petro Gas Calgary employees will move into AltaGas offices in the coming weeks and we are taking purposeful steps for accelerated integration and ensuring that the best ideas With the ability to expand to an excess of 130,000 barrels a day in the coming years with minimal capital investment, The Petro Gas assets also provide us with greater access to NGL supply and storage in Fort Saskatchewan, which further advances our energy export value proposition and supports further volume growth. The integration The commercial and operational knowledge and experience of Petrogas employees along with the AltaGas people and the platform will yield large dividends to our stakeholders. We exited 2020 and began 2021 on a very strong footing, shipping 5 cargoes in December, Four cargoes in January and we are on track to ship 5 cargoes in February. As we continue to move towards a more decarbonized that enables us to deliver low carbon natural gas today and provides a foundation for delivery of carbon free solutions in the years ahead, including Renewable Natural Gas and Hydrogen. It is for this reason that we place a strong emphasis on our accelerated pipeline replacement program spending within WGL as it replaces aging infrastructure and reduces methane emissions through leak remediation.
To keep society moving forward while preserving optionality for delivery of carbon free fuels in the future. We have a demonstrated track record of delivering on this initiative through other parts of AltaGas, including our SEMCO operations in Michigan, where we have reduced emissions by 50% since 2010 and we continue to advance these environmental stewardship initiatives across the AltaGas platform. In addition, our ability to deliver lower carbon emitting fuels to Asia through our midstream platform creates potential for us to help lower global carbon emissions. Our combined LPG export capacity at RIPET and Ferndale has the potential to reduce the equivalent of 500,000 average Asian citizens' total carbon footprints per year when compared to using more carbon intensive fuels like thermal coal. We are also undergoing engineering work on various emission reduction opportunities across our midstream network with a focus on Steadily reducing AltaGas emissions intensity over time.
AltaGas has a long history of operating with social purpose and delivering strong environmental stewardship. You can expect that same from us in the years ahead. Looking ahead, we are steadfast in our goal to reduce leverage below 5x net debt to EBITDA over the medium term as our credit ratings and de risking plans remain a top priority. We will continue to execute our strategy and take advantage of our distinctive utilities and midstream businesses that are well positioned to deliver strong and highly visible growth. In the year ahead, we remain acutely focused on 1, optimizing returns to previously deployed capital as there is simply no greater way To create value for our stakeholders, then improving the returns on the capital that's already been deployed.
2, growing our midstream segment To the investments we have made in Northeast BC and our global export platform, where we have deployed more than $2,000,000,000 of capital in the past 4 years. And 3, making disciplined investments in our utilities platform and provide steady returns and having a positive environmental impact. It is with this approach that we are building a diversified low risk, high growth utilities and midstream business that is delivering resilient and durable value for our stakeholders that should compound in the years ahead. And with that, I will turn the call over to James.
Thank you, Randy, and good morning, everyone. Despite the immense challenges that were brought by COVID-nineteen and the economic and social Societal disruptions that came as a result, we're pleased that our diversified platform delivered another solid quarter to conclude a successful year. 2020 normalized EBITDA of $1,310,000,000 landed in the upper end of the guidance range that we set at the start of the year, while 2020 normalized EPS of $1.42 eclipsed the top end of our guidance range. These results continue to highlight the strong underlying resilience of the platform and the purposeful actions that we've taken over the past 2 years to refocus the company. As we have said in the past, we are acutely focused on creating durable value for our stakeholders and providing steady and compounding returns over time.
Our Utilities business, which represents approximately 60% of EBITDA, continues to provide stable and reliable earnings We experienced only moderate challenges in 2020 associated with usage, bad debt expense and other factors underpinned by COVID-nineteen. Our midstream business, where approximately 65 percent of EBITDA is underpinned by take or pay or fee for service arrangements, has less direct commodity exposure and continues to provide stable and predictable results. We also continue to take steps to de risk the platform in areas where we do have commodity price exposure And that can be seen through the active hedging program we undertook in recent months in relation to both our merchant exposure at RIPET and the frac exposed output in 2021. Despite the challenging environment, we achieved normalized EPS So $0.53 in the 4th quarter and $1.42 for the full year with the latter representing a 14% year over year increase and was well above our 2020 guidance range of $1.20 to $1.30 per share. Normalized EBITDA for the quarter was 392,000,000 and $1,310,000,000 for the full year landing in the upper half of our guidance range of $1,275,000,000 to 1,325,000,000 Similar to last quarter, I want to highlight a couple of large one time items in 2019 that were not present in 2020 and are important in understanding our business performance.
This includes $117,000,000 of lost EBITDA from asset sales and a $21,000,000 tailwind associated with the contract settlement in Q4 2019 at Petrogas, which was not repeated this quarter. Excluding these items, our full year adjusted run rate EBITDA was up approximately 12% year over year within our core business. These one time impacts and major year over year variances are laid out in our Q4 2020 earnings presentation, which is available on our website and intended to provide additional color to better understand our operating performance in an open and transparent manner. The year over year growth within our core businesses was underpinned by strong execution within the Utilities segment and resilient performance within the Midstream segment despite a very challenging commodity price environment. Our full year normalized 2020 utilities EBITDA was up 13 Specific to the Q4, our Utilities segment reported normalized EBITDA of $259,000,000 compared to $260,000,000 in Q4 2019.
If we adjust for loss contribution due to asset sales and the one time impact of Virginia Hearing Examiner's report on Q4 2019, The utility segment run rate EBITDA increased by 4%. WGL's normalized EBITDA was $170,000,000 in the 4th quarter, down $12,000,000 year over year. Excluding the one time $5,000,000 impact associated with the Virginia Hearing Examiners Report, WGL results We're down approximately $7,000,000 year over year. Factors impacting results included higher revenue from ongoing ARP spending that was more than offset by unseasonably warm weather within DC and COVID-nineteen associated costs. We made significant progress towards earning our allowed returns at WGL through our ongoing capital, regulatory and cost discipline.
We had a stated goal of closing the ROE GAAP at WGL by 150 basis points in 2020 and we met that target. We have another 150 basis points targeted in 2021 to be in a position of fully earning our allowed return in 2022 and beyond. In Michigan, SEMCO had another strong quarter contributing $41,000,000 to normalized EBITDA, up $6,000,000 year over year. The increase is a result of higher rates associated with 2019 rate case that came into effect in January 2020 and higher transport and gas services revenue, which was In Alaska, Enstar and Cinqsa benefited from colder weather and contributed $25,000,000 of normalized EBITDA Finally, normalized EBITDA from the retail energy marketing business was up $7,000,000 year over year to $23,000,000 in the 4th quarter on higher gas margins Moving over to the Midstream segment, we continue to see stability in the core business, Absent some of the earlier headwinds that we experienced due to 3rd party logistical issues around RIPET. Q4 normalized EBITDA of $128,000,000 compared to $179,000,000 in the same quarter of 2019.
Excluding the previously mentioned one time items in Q4 2019 consisting of a $21,000,000 tailwind from Petrogas contract settlement and lost EBITDA from asset sales, Midstream 4th quarter normalized EBITDA declined modestly year over year. The largest contributing factors were result of Lower hedging gains in the company's U. S. Storage business, lower realized margins at RIPET due to higher tolling volumes and lower margins on merchant exports and higher logistical costs due to disruptions along the supply chain that were present in the early part of the quarter. These factors were partially offset by 2 weeks of Petro Gas consolidation and strong volume growth at our Northeastern BC facilities.
RIPET and Petrogas contributed $38,000,000 of normalized EBITDA in Q4 2020, including Petrogas realizing equity earnings Further more than 80% of the quarter and AltaGas only consolidating its earnings following the close of the acquisition on December 15. As noted earlier, RIPET's volumes in the 1st 6 weeks of the quarter were impacted by 3rd party logistical issues that carried over from the previously disclosed Q3 challenges. Positively, these issues were resolved in mid November and strong execution in the back half of the quarter, we achieved our 50,000 Barrels Per Day Exit Rate Target. As we have highlighted in the past, continuing to de risk the midstream platform remains a We took advantage of this strengthening in the forward FEI curve for propane in Asia by locking in hedges at healthy spreads in late Q4 and early Q1. Currently, we have 70% of RIPET's expected exports hedged for 2021, which includes 35% underpinned by tolling agreements and the balance coming At Ferndale, we have tolling agreements in place with local refiners for a portion of the capacity, which is weighted to spring summer months.
As we continue to integrate the assets and optimize logistics between the two terminals, We expect to take a similar approach to de risking at Ferndale as we have taken it RIPET over the long term. This includes increasing our tolling arrangements and hedging a greater amount of merchant volumes going forward. Our Northeastern BC footprint continued to deliver steady increases as customers Maintenance work at Younger, our Northeastern BC throughput volumes were up 16% in Q4. We had approximately 10,000 Barrels of frac exposed output in the quarter that was hedged and realized at an average frac spread of $13.95 a barrel. Interest expense was down $9,000,000 year over year to $68,000,000 in the 4th quarter due to lower average interest rates Compared to 2019, as 2020 maturities were refinanced at lower rates and aligned with our ongoing focus to continue to stagger, extend and derisk AltaGas' capital structure.
Our capital focus in 2021 remains heavily weighted towards organic growth within our low risk utilities platform that will deliver stable and transparent rate base growth through accelerated replacement programs and system betterment that ensures a timely recovery of capital and strong risk adjusted returns. Approximately 80% of our $910,000,000 growth capital program will be directed towards our rate regulated utilities, where approximately 46% will be directed to accelerated pipeline replacement programs. We continue to prioritize maximizing returns on previously deployed capital and we are maintaining a capitalized program within our midstream business in 2021. This follows more than $2,000,000,000 of capital we have deployed in the past 4 years in Northeastern BC and within our global exports platform, including the $715,000,000 we deployed on Petro Gas in December. We are maintaining a disciplined approach to capital allocation Within a self funding model that will continue to strengthen our balance sheet and increase financial flexibility over the medium to longer term.
We are steadfast in our goal to reduce our debt to EBITDA ratio to below 5 times in the medium term by prudently growing into our current debt levels and realizing the tailwinds of our strong rate base growth within our Utility segment and increasing utilization and volume growth within our midstream and energy export facilities. We will also look to take advantage of any incremental deleveraging opportunities where possible, including potential non core asset sales that accelerate our deleveraging strategy. We are reiterating our original 2021 guidance that was released in December where we expect to achieve annual consolidated normalized EBITDA of $1,400,000,000 to $1,500,000,000 and normalized earnings per share of 1.45 to 155. And with that, I would now like to open the call to Q and A.
Thank you. Ladies and gentlemen, we will now conduct the analyst question and answer session. Our first Question is from Patrick Kenny with National Bank Financial. Your line is open.
Yes, good morning guys. Just given the volatility in the Far East Index spread this winter, does that help or hinder your ability to lock in new Tolling agreements with customers and perhaps you could just remind us what your target contracting level is by say year end as a percentage of exports?
Hi, Patrick. Thank you for the question. Clearly, with the acquisition of Petro Gas, the ability to load more ships and we have far more tools in our toolbox running logistics and supply optimization and the balancing because of storage. In regard to in 2021, we're coming out of the COVID into where commodity prices have recovered And we've seen some consolidation in the upstream sector, creating stronger entities, more capability of making long term commitments such as tolling. And so while FEI demand and prices remain strong and they continue, we're optimistic about derisking that platform and we're exploring alternative structures that would derisk it and provide more incentives on tolling.
So Our target is to over the past year, we've gotten to 35% at RIPET tolling and our target is to exit the year end at 50%.
And the spike in the spread this winter, did that result in an increased level of inbound from potential customers?
Sure. I mean, really, we've said over time, Patrick, that this is the best market for the LPGs that we provide for our customers to show there's lots of interest. My point is that things are working in terms of the consolidation in the upstream sector that make our producers stronger And put them even in a better position to make longer term commitments such as tolling.
Got it. Okay. And Now with both hands on the steering wheel at Petrogas, Randy, what are you seeing in terms of other opportunities outside of Ferndale? I know there's a decent storage footprint at Fort Saskatchewan, some other terminals scattered around North America. Just curious if you see some hidden value outside of the core propane export business and what you could potentially realize over the next couple of years?
It's a great question and I'll let Randy answer some of that in a bit more detail. But as a broader Kind of perspective, right? Our LPG storage assets in Fort Saskatchewan as well as our larger domestic presence that Petro Gas brings in the Gulf Coast as well. It's really something that we think we can leverage in terms of our future growth around our customers. Randy, I'll go ahead and let you talk about some of those specific opportunities.
Sure. So with Petro Gas, they do have a more of a marketing presence for NGLs, so both North American and exports for both propane and butane. And so we feel that we can provide our customers More of a better netback on those products and that will add value to our processing business and hopefully lead to future growth in those businesses as well.
Patrick, I'll just chime in. When you think about our market optimization, supply chain, efficiencies and really the Strategic positioning around long term contracting and access to the refineries and expansion of logistics or improved logistics all are playing a role To dramatically increase the amount of product that we can move domestically as well as to Asia in our export strategy.
Okay, great. And last one for me, maybe for James. Sorry if I missed it, but just given your exposure to the U. S. Dollar and The recent move here towards $0.80 can you just update us on your FX hedging policy and I guess at least until the balance sheet is below 5 times?
Yes. So Patrick, we don't hedge our translational exposures with respect to the balance sheet. So we do have a sensitivity in our Financials were a $0.05 move would impact EBITDA by about $35,000,000 But when you go to Debt ratios because we have some U. S. Dollar denominated debt, we would get a benefit in both the denominator and the numerator.
So it doesn't really Move the needle in a negative way or a positive way in terms of those ratios, but our FX hedging does not deal with translational hedges. It does Focus more on transactional hedges where we want to lock in margin on certain U. S. Dollar denominated revenues.
Okay. Thanks for that. I'll leave there guys.
Thanks.
Your next question is from Rob Hope with Scotiabank. Your line is open.
Good morning, everyone. A follow-up on Patrick's question. As you take a look at 2021 guidance, the environment, at least on the NGL side, has significantly improved, but we've seen kind of FX headwinds. So as you look at kind of the tailwinds and headwinds that you're seeing so far, were you able to capture Strong marketing margins in Q1, which hopefully offsets the Strengthening FX, so just want to get a sense of how you're thinking about 2020 1 guidance?
Yes. Good morning, Rob. Thanks for the question. I guess the answer is yes. As you know, with the acquisition of Petro Gas, we have our Canadian LPG storage assets in the Fort And the Gulf Coast as well as our midstream business has natural gas storage assets in the Mid Continent.
And that does provide us opportunity and allows us The opportunity to inject product as you know when prices are low and to withdraw when prices are high. So, as well as really balancing our Supply for our export business. So with this, it's enhanced our ability to take advantage of these swings and the team has done a really good job.
All right. And then just a question on capital allocation. Two things in the MD and A I thought were interesting. 1, the 40 megawatt standalone energy storage project at Are you looking to do more on the energy side and reinvigorate kind of your energy business as well as a comment on Potential asset sales in 2021, are you still focused on some nearer term stuff or is it still or I'll leave it there?
Yes, I mean, look, we're focused strategically, as you know, that on positioning our long term strategy of diversified Utilities and Midstream Business, and so on the power side, it's not particularly the area of focus. But in terms of your asset sale, we're committed to getting below and under the 5 times and there's certainly scenarios where we could achieve that, exceed guidance in the non core assets, but I'd point out that we have ample liquidity and that we're You're not committed to selling those assets and only committed to selling at the right price. So I think we're in excellent position from that But we'll continue to increase profitability and look at opportunities that can accelerate that deleveraging.
Thank you.
Thanks.
Your next question is from Jeremy Tonet with JPMorgan. Your line is open.
Hi, this is Joe on for Jeremy. Maybe if I can just build off the last question a little bit. I know I think If you could kind of go into the asset sales and what assets specifically, I know you've talked about Blythe in the past And maybe kind of, I don't know, MVP looks like anything there could be later dated, but is there anything else you're kind of Looking at that could be sold and where discussions are ongoing?
Well, we're always looking at opportunities And good morning, Joe. Thanks for the question. Blight, I'll address that first. That's as you know, it's contracted with Southern California Through December of 'twenty three and really with the recent rolling blackouts in California and the value of the grid that's just been reinforced. It's really in a strong position.
So in terms of whether we were to have a potential There would have to be credit accretive and otherwise we'd be happy to continue to collect our regular annual contracting cash flow. And well, we're confident with MVP's completion over time. Clearly, we're looking to that to be derisked Before we would monetize that. And so that's pretty much the 2. We're looking at other Opportunities with some marketing assets and such, but generally speaking, those are our key non core assets.
Okay, great. Thank you. And then also wanted to ask kind of on the propane export side, Just there's the competing terminal coming into service soon and they're also kind of talking about doing An expansion there, does that impact any of your plans to expand Prince Rupert or kind of thoughts there? And just, I guess kind of generally like how do those 2 terminals compete with each other?
Sure. Again, our strategy is to continue to leverage our unique advantage and it really comes down for us in terms of scale, Efficiency, storage and optimization. And so we believe that from a competitive position, our assets are at least cost and provide excellent markets for our customers. So we continue to look there and we believe that overall our Canadian Market is going to continue to be oversupplied. There's been a variety of different projects that have been canceled.
So over the long term, we continue to be Bullish on our ability to grow and expand our exports. We're pretty much laser focused in on the logistics And to continue to optimize our real cost and efficiencies. And overall, Petro Gas brings a significant Scale and opportunity, and so we're I think very well positioned to continue to grow.
Great. Thank you for taking my question. Your
next question is from Linda Ezergailis with TD Securities. Your line is open.
Thank you. Recognizing that some of the commodity price Strengths starting in 2021 has been a nice tailwind more than offsetting Any sort of FX headwind, can you give us a sense of when we look at your guidance range, it isn't that wide recognizing that you've got a substantial proportion of your cash flows and EBITDA Fairly secured, but I'm wondering what are the bookends of like what factors might we want to look at That might cause you to exceed that guidance range, it looks like at this point, but also what Could slip in the year in terms of extremely mild summer potentially in the utilities or something that might cause you to fall below the lower End of your range.
Good morning, Linda. Thanks for the question. We're off to a good start, Right. We're off a good start with our export business and our utility. And in the utility particularly, we have tailwinds associated with settling 2 rate cases.
So key drivers, right, we're on target to meet our goals on cargoes and the tailwinds that we have in the rate case that And our continued efficiency. So I think that there's opportunities to continue to exceed our targets cargoes as well And to exceed some of our cost savings initiatives going forward. But we reiterate our guidance. We're confident in where we're headed Going forward, James, did you want to add anything to that?
Yes. I think you touched on The impacts of some of the colder weather around some of our marketing businesses in the U. S. As an area. And just in terms of volumes, we're off to a strong start In terms of export volumes for 2021.
Okay. So maybe I can ask this a different way as well. At what point, might management and the Board look at guidance again and have the confidence to potentially modify the range Potentially upwards, is that mid year to December? Yes. No,
look, it's a good question. We're still about 7 weeks away from reporting Q1 and as that starts to come into a clear picture, we would update our guidance range at that point once we've got a clear picture of what volumes will look like In terms of our export facilities and where our marketing business is and especially in some of the areas where we saw Strong pricing as a result of the polar vortex. Once we start to crystallize our views there, then I would say that Q1 is where we would revisit guidance.
Great. That's helpful. And recognizing that, you've only gotten the keys to Petro Gas very recently, And I appreciate that. I'm just wondering how you might evolve your understanding and timeline for achieving synergies on that front over this year as well. I would assume that Q1 would be a bit too soon for that, but maybe you can comment on any sort of processes underway to discover What's possible there and achieve that?
Great question, Linda. And I'm excited about Randy and what his team are doing and the Petro Gas team, as I said in my opening comments and giving us the ability to load more ships, Far more tools in our toolbox, logistics and optimizations. And so we've really focused on getting that team integrated in the best practices. So we're Very confident in meeting our targeted synergies. But Randy, do you want to add to that?
Yes. Hi, Linda. Yes, we've already realized some of the synergies that you can imagine, like Office costs and some certain G and A costs are almost immediate, but we've also been able to rationalize our rail fleet. We do see some other savings in rail and also like Randy says, we do have more tools to play with and it's helped us
Our next question is from Robert Gitallier with CIBC Capital Markets. Your line is open.
Hey, good morning, everyone. You've touched on this a bit already, but I'd like to know what you're doing to mitigate the 3rd party logistic issues you're having and How does that risk change with the acquisition and integration of Petro Gas?
Yes. Good questions. I'm going to let Randy You'll go into some of the details, but clearly logistics, supply optimization and having more storage for balancing and access to supply at the Fort has been Significant and it's not a coincidence that we're hitting on all cylinders and we're moving in excess of 50,000 barrels a day at RIPET and the ships that we're moving. So,
Randy? Yes, I think what Randy said It's accurate. We continue to work with our 3rd parties. Their performance has improved and we see that continuing through the rest of the year.
So maybe Randy, you can just comment on how much you think is under
Sorry. Go ahead, Randy.
Sorry, Robert, what was that question?
Yes. Maybe if you could just attribute how much you think is Logistics issues are really under your control and can be mitigated through optimization as opposed to some how much is really The results of 3rd parties?
Well, 3rd party service providers are They're not in our control, but what we do is we get strong contracts in place. We communicate a lot and we're actually investing a lot in real time data. So we always know where our cars are and we can make decisions quicker. So it's just Continue to work with our 3rd party providers to provide their service, but that's what we can do.
Yes. And I think, look, we make investments in aggregation, unit frames That will help those logistics that are in our control, right, that we can build out and leverage the position that Petro Gas has at the port, Increase our efficiencies, improve logistics. So there's steps that we can do to help our third parties as well to increase Productivity and efficiencies by putting these rails together, these aggregation yards and shipping more effectively and timely with the unit trains and the teams all over that.
Right. So it's a little
bit more symbiotic then, okay.
I'm just wondering, we're seeing Obviously, stronger netbacks for the producers and it looks like there's more egress options on the way here. So what are you expecting in terms of when you might see an increase in a meaningful increase in drilling activity or Do you really expect your customers to be circumspect with their capital throughout the entire year?
Well, again, I think we've seen some serious improvement in pricing. I think the consolidation that is occurring in the Stream business is creating stronger entities and most of the guidance is that they're going to keep production at the 2020 levels in some cases, but We're seeing behind Northeast BC ramp ups that are ongoing. So I think that our upstream community will be prudent, but I think the price signals are
And my final question This has to do with Mountain Valley Pipeline. So, do you have an updated view as to what a sensible in service date might be?
Well, I think, look, I remain confident the pipeline is going to get built. It's 92% complete. They've been waiting on the nationwide permit, while they went ahead and filed with the FERC to outline individual And so we'll stick with the operators and our partners who are targeting and maintaining the 2021 in service target As we go forward and there were a couple of positive events in terms of the DC Circuit ruling that they could continue construction activity Going forward and the extension of the certificate. So I think they're continuing to make solid progress. So
Your final question is from Robert Kwan with RBC Capital Markets. Your line is open.
Good morning. If I can start with the midstream business and you talked about operational logistics tolling at RIPET in terms of derisking And then you also talked about the Petro Gas integration, but I'm just wondering what other things do you envision for that segment Before you feel comfortable that you've got the footprint you need and that it's a mature business. And I guess mapping back To the comments you made on the Q3 conference call about the potential down the road to split the business up.
Sure. I mean, look, we've as I've said, Rob, we're focused on our corporate strategy of a diversified utility midstream business. And so we continue to believe that our unique and diversified strategies is the right one. And so I don't think we should expect any news in that regard in terms of anything but executing on our plan to continue to de risk the asset, increase the volumes and go through the integration of that. So that's our focus right now.
We're in the early days executing that strategy that we laid out last year and that's where I want and where our focus is and at the task at hand because it's a tremendous opportunity for us. So That's where we're going to be focused this year.
And is there anything that you feel you need, whether that's M and A wise or major project wise Just to fill in the footprint to reach that vision?
Well, look, we just did the M and A when we Acquired them, which is increasing, you can see it in the results, increasing our efficiencies, driving down cost, improving margins. So look, we're always on the lookout for opportunities that will strengthen, That will enhance the core business, right, and our opportunistically deploy capital. But it's only like I said, the transaction is only a couple of weeks behind us. In the near term, that's our focus, integration and optimization, but they'll always evaluate any opportunities that throughout our business. But We don't necessarily believe that we are on the cusp of any major M and A in the Canadian midstream market at this point.
Got it. If I can just finish the Small question just on your retail business. Based on what you've seen to date in the Q1, can you just give some color on performance just given weather events Cannot swing these businesses, the results.
Fair question, Rob. No, we're fine. If you look at the weather, we're on Most of us is in the Washington, Maryland area and most of this weather event clearly was in majority This is in the Mid Continent, so our retail business and our risk management has been is in good shape.
You were prepared for Even just the cold snap that happened on the East Coast?
Yes. We've been I mean, look, you know there's full requirement schedules, but we have storage and No, we did an excellent job and good change.
That's great. Thank you.
This concludes the Q and A portion of today's call. I'll now turn the call back to Mr. McKnight for closing remarks.
Thanks, Megan. And thank you everyone once again for joining our call today and for your interest in AltaGas. As a reminder, we will be available after the call for any follow-up questions that you might have. That concludes our call this morning. And I hope you all enjoy the rest of your day.
You may now disconnect your phone lines.