Good morning. My name is Dan, I will be your conference operator today. At this time, I would like to welcome everyone to the AltaGas Ltd. first quarter results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question at that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, you may press the pound key. Thank you. I would now like to turn the call over to Jess Nieukerk, Senior Director of Investor Relations. Please go ahead.
Thank you, Dan. Good morning, everyone. Welcome to AltaGas's first quarter 2018 conference call. Speaking today are David Harris, President and Chief Executive Officer, and Tim Watson, Executive Vice President and Chief Financial Officer. After some formal comments this morning, we will have a question and answer session. Before we begin, I'd like to remind you that certain information presented today may include forward-looking statements. Such statements reflect the corporation's current expectations, estimates, projections, and assumptions. These forward-looking statements are not guarantees of future performance, and they are subject to certain risks, which could cause actual performance and financial results to vary materially from those contemplated in the forward-looking statements. For additional information on these risks, please take a look at our annual information form under the heading Risk Factors. I'll now turn the call over to David Harris.
Good morning, everyone. We are off to a strong start in 2018. Our base business continues to perform extremely well. On the financial side, we achieved normalized EBITDA of CAD 223 million, compared to CAD 228 million in Q1 2017, and we achieved normalized FFO of CAD 169 million, compared to CAD 170 million in Q1 2017. Unfavorable foreign exchange rates and the impact of U.S. tax reform impacted normalized EBITDA and FFO quarter-over-quarter by approximately CAD 9 million. Results in our gas segment increased compared to the first quarter of 2017. We achieved normalized EBITDA of CAD 71 million compared to CAD 67 million in the first quarter of 2017. Normalized EBITDA in our utility segment was CAD 112 million compared to CAD 115 million in Q1 2017.
Strong results were offset by FX and U.S. tax reform, and results in our power segment were lower at CAD 41 million compared to CAD 50 million in Q1 2017, primarily due to planned outages at the Blythe and Craven facilities, and again impacted by foreign exchange. Our Q1 results kickstart what we expect to be yet another strong year, both financially and operationally. Our new agreement with Birchcliff underpins Gordondale for the next 15 years while setting the stage for growth by being able to attract third-party volumes and create opportunities to expand the facility. Our new assets, Townsend 2A and North Pine, are performing well, and construction at our Ridley Island Propane Export Terminal remains on track for Q1 2019. We are very excited about our future in Northeast B.C. with our energy exports and our unique offerings to producers.
Producers are starting to see the benefits of having access to new premium markets for their propane. RIPET supply contracting efforts have been successful so far in 2018, and we now have close to 75% of the supply we need for COD. A portion of this is under tolling arrangements, and we ultimately expect approximately 40% of RIPET's annual expected capacity under tolling arrangements with producers and other suppliers. While Q1 was successful, clearly all eyes are on the second quarter with the anticipated closing of the WGL acquisition just around the corner and our asset sales processes soon to unfold. With respect to WGL, the approval from the Maryland Public Service Commission on April 4th was a big step forward in the acquisition and a great vote of confidence as to the benefits AltaGas brings to customers and the region.
With Maryland's approval, we have just the Public Service Commission of the District of Columbia approval remaining. The D.C. Commission has completed extensive public hearings and has before it a full record of the benefits to be delivered through the acquisition. We remain confident the acquisition will be successful for the companies and stakeholders in all of the Washington Gas Light Company service territory. We understand the D.C. Commission will issue a decision in May, and our expectation continues to be for a successful mid-year close. In conjunction with the regulatory process, we are now well down the path of certain asset sales, including active discussions on the sale of a minority interest in our Northwest BC Hydro Electric Facilities. While Tim will talk a bit more about our financial plans, I would like to convey that we continue to have significant breadth and depth in terms of our options for financing the WGL acquisition.
Ultimately, our plans from both an acquisition and financing standpoint is designed to do several things. Ensure we optimize value and returns for our shareholders, maintain our conservative business risk profile with minimal overall commodity exposure, strengthen our balance sheet, and maintain our key credit metrics, ensure we maintain strong dividend coverage and the ability to continue to grow our dividend, and ensure we have a significant and diversified platform of high-quality, long-lived, low-risk energy infrastructure assets in each of our business segments, gas, power, and utilities, with a clear path for profitable growth in each well into the future. There is a lot to look forward to over the next few months. We are very focused on continuing to deliver strong results for our shareholders from our base business, closing the WGL acquisition successfully, and finalizing asset sales that will deliver strong financial returns for our shareholders.
Let me now turn the call over to Tim.
Thanks, Dave, and good morning, everyone. We have started off 2018 with a good first quarter, highlighting the full benefits of our diversified business platform. Q1 normalized EBITDA was CAD 223 million, compared to CAD 228 million in the first quarter of 2017. This was despite the uncontrollable factors that Dave mentioned within the first quarter, including both the unfavorable FX rates
year-over-year and U.S. tax reform, which together impacted EBITDA by CAD 9 million. Normalized funds from operation, otherwise described as FFO, were CAD 169 million or CAD 0.96 per share, flat to last year's CAD 170 million or CAD 1.01 per share. Just to quickly review the Q1 2018 performance for each of the three business segments. First, the gas segment showed good growth this quarter with EBITDA increasing by 6% to CAD 71 million. That represented 32% of total normalized Q1 2018 EBITDA. We saw frac exposed volumes increase by 5% and realized frac spreads moved from CAD 10.56 per barrel in Q1 2017 to CAD 19.01 per barrel in Q1 2018, an increase of approximately 80%. Gas processing volumes across our plants increased to 26% in Q1, in large part due to volumes at the newly constructed Townsend 2A facility, as well as higher incentive volumes at the Gordondale facility.
The North Pine facility, which commenced operations in the fourth quarter of last year, also contributed to Q1. Note that the sale in March 2017 of the EDS and JFP pipelines decreased gas EBITDA by about CAD 3 million in the first quarter of this year versus Q1 2017. Equity earnings from Petrogas decreased slightly to CAD 10 million versus CAD 11 million in the first quarter of 2017 due to a planned turnaround at the Ferndale terminal this past quarter. Turning to power, this segment saw EBITDA of CAD 41 million in the first quarter of 2018. This represents about 18% of total normalized Q1 2018 EBITDA. Blythe generated increased volumes despite a planned maintenance outage due to greater operational and fuel flexibility, which caused it to be dispatched by its customer, Southern California Edison, for a greater number of hours in the Q1 of last year.
Despite the increased dispatch, the planned maintenance outage at Blythe impacted EBITDA by approximately CAD 3 million in the quarter. The San Joaquin facilities also experienced increased run rates in Q1 due to higher dispatch rates under their PPAs. Renewable volumes were down in the quarter due to lower wind conditions at Bear Mountain and lower river flows at the Northwest hydro facilities. There was also a planned outage at the Craven biomass facility, a planned outage that was held in Q2, not Q1 last year. A stronger Canadian dollar in Q1 2018 reduced power EBITDA by about CAD 2 million versus Q1 2017. Finally, the utility segment achieved EBITDA of CAD 112 million in the first quarter of 2018, which represented 50% of total normalized Q1 2018 EBITDA. U.S. tax reform at SEMCO negatively impacted EBITDA by approximately CAD 3 million in the quarter.
Colder weather in Michigan and Alberta was partially offset by warmer weather in Alaska and Nova Scotia. Continued customer growth and rate base expansion were positives in the quarter. A stronger Canadian dollar in Q1 2018 reduced utilities EBITDA by about CAD 4 million versus Q1 2017. Turning to normalized funds from operation, that remained relatively flat in the first quarter of 2018 at CAD 169 million. On a per-share normalized FFO basis, it was down CAD 0.05 at CAD 0.96 compared to the same quarter last year. In the first quarter of 2018, we received CAD 3 million in preferred share dividends and CAD 1 million in common share dividends from Petrogas, which were both unchanged from the same quarter last year. For the first quarter of 2018, income tax expense was CAD 18 million compared to CAD 21 million in the same quarter of the previous year.
Income tax decreased mainly due to the reduction in the U.S. federal tax rate from 35% to 21% under U.S. tax reform. Normalized net income in the first quarter of 2018 increased slightly to CAD 70 million or CAD 0.40 per share versus CAD 65 million or CAD 0.39 per share in Q1 2017. Key drivers were lower interest expense and income tax, partially offset by the decrease in normalized EBITDA, higher preferred share dividends, and higher depreciation and amortization. There were several normalizing adjustments for the quarter, as you typically see, and you can find those in the disclosure that we released this morning. On a U.S. GAAP basis, net income applicable to common shares for the first quarter of 2018 was CAD 49 million or CAD 0.28 per share, up from CAD 32 million or CAD 0.19 per share for Q1 2017.
The increase was mainly due to the factors just discussed, along with lower WGL transaction costs. Invested capital net of dispositions in the first quarter of 2018 was CAD 73 million, up from CAD 18 million in the first quarter of 2017. Last year, as you may recall, the proceeds from the EDS and JFP asset sale resulted in lower net invested capital. Almost 75% of the total capital invested in the quarter was in the gas business, relating to the continued construction of RIPET. Maintenance capital in the quarter was CAD 5 million as expected, split between the gas and power segments. AltaGas's balance sheet is in a strong position, and we are well-funded for 2018. At the end of the quarter, debt to total capital was 43%, down from 44% at year-end 2017. This remains well below our bank and term note covenant levels of approximately 65%-70%.
We have CAD 1.8 billion available on existing bank credit facilities and continue to have very strong access to multiple sources of funding. Now I will turn to 2018 for a quick look there. We anticipate closing the WGL transaction by mid-year, which remains consistent with our original guidance from January 2017, when the transaction was announced. As a combined entity, we expect normalized EBITDA to increase approximately 25%-30%, and normalized funds from operations to increase approximately 15%-20%. The addition of WGL is expected to drive growth in all three business segments. The utility segment is expected to be approximately 40%-45% of total EBITDA in the first full year, followed closely by the gas and power segments. This just shows how well-balanced AltaGas will be across all of its key North American energy infrastructure business lines.
Gas EBITDA in 2018 will benefit from WGL's growing pipeline investments in the Marcellus and Utica region, as well as the first full year of contributions from the Townsend 2A and North Pine facilities, and from higher frac-exposed volumes and pricing. Extraction volumes exposed to frac spreads prior to hedging have increased to approximately 10,500 barrels per day for 2018, with hedges in place for approximately 7,500 barrels per day at a very attractive level of CAD 33 per barrel, excluding basis differentials. Pro forma for WGL, approximately 65% of 2018 gas EBITDA is expected to be generated or underpinned by take-or-pay and cost-of-service contracts with no direct volume or price exposure. This percentage should actually increase in 2019. As noted previously, planned turnarounds at the Harmattan and JFP facilities in the second quarter of this year will impact EBITDA by approximately CAD 6 million.
2018 EBITDA from power will benefit from higher expected earnings from the Northwest Hydro facilities due to both price increases as well as efficiency improvements, and WGL's growing distributed generation assets across 20 U.S. states. While the PPA for Ripon expires in Q2 this year, it will be partially offset with the two new resource adequacy contracts that it has been awarded. 2018 EBITDA from utilities will be driven by rate base and customer growth, as well as the addition of WGL's growing utility business. 2018 expectations assume a moderately weaker U.S. dollar relative to 2017. Approximately 65% of total expected 2018 EBITDA from AltaGas will come from the U.S. I'll just give you at least one quick FX sensitivities. Pro forma for WGL, for every CAD 0.05 change in the Canada-U.S. exchange rate, the annual impact to 2018 EBITDA is approximately CAD 28 million.
As you can see, the currency exposure is not overly material. Going forward, we will continue to monitor this and consider hedging if necessary. However, as we noted in the past and continue to note, there are a number of natural hedges in place in terms of U.S. dollar funding, as well as capital investment opportunities that we have in the U.S. U.S. tax reform is expected to be immaterially negative to normalized EBITDA and funds from operation for AltaGas' U.S. businesses, while on a net income basis, the impact of U.S. tax reform is expected to be immaterially positive. In other words, the impact is not material. Looking at AltaGas on a standalone basis, excluding WGL for 2018, we expect a moderate increase to both normalized EBITDA and FFO as compared to 2017, driven primarily by the factors previously noted.
Now turning to 2018 capital expenditures, we expect to spend on a standalone basis, CAD 500 million-CAD 600 million. Gas will account for 50%-55% of that total, while utilities will account for 30%-35%, and power will be the remainder. Gas and power maintenance capital is expected to be approximately CAD 25 million-CAD 35 million this year. The majority of capital this year will be allocated towards continued construction of RIPET, as well as growth capital associated with the tie-in of incremental third-party volumes in the gas segment. Capital will also be allocated to maintaining and growing the utility's rate base, as well as for pre-construction design, engineering, and right of way procurement for the Marquette Connector pipeline. The 2018 capital program is expected to be funded through internally-generated cash flow and the Dividend Reinvestment Plan.
On a combined basis, with the mid-year closing of the WGL transaction, we expect capital expenditures in the range of CAD 1.0 billion-CAD 1.3 billion. Similar to AltaGas' standalone spending, close to half of this total will be allocated to gas, with the majority of the remaining expected capital directed to utilities, followed by power. All of the financing required to close the WGL acquisition is in place currently. We continue to evaluate and advance an asset monetization strategy in a prudent and timely fashion, in step with the regulatory process and consistent with AltaGas' long-term strategic vision. We are conscious of the need to deliver a strong financial outcome for AltaGas. At the same time, we will target the right asset mix for the company on a go-forward basis and ensure a meaningful financial return for our shareholders.
We are confident in our ability to monetize assets in a manner that achieves those results. Discussions are active on several fronts, including the potential sale of appropriate minority interests in the Northwest B.C. Hydro facilities. We are confident and fully expect to achieve just over CAD 2 billion in proceeds from the sale processes. Offerings of hybrid securities and senior debt also continue to be planned for 2018. Following the close of the transaction and the various financing steps, we expect to have a stronger balance sheet set of metrics starting in the first full year of 2019. We anticipate FFO to debt, calculated based on S&P's definition, to move towards the mid-teens level and net debt to EBITDA to trend down towards near 5x. Through all of our funding decisions, we remain committed to maintaining strong access to capital and to our investment-grade credit ratings.
The WGL transaction remains a very strong strategic fit for AltaGas. It brings significant opportunities for continued growth in all three business segments, gas, power, and utilities. It also adds to our financial strength when we complete this, resulting in a combined asset base of over CAD 20 billion. On a combined basis, approximately 85% of total EBITDA will be underpinned by contracts or regulated assets with no direct commodity or price or volume exposure. The WGL transaction remains highly accretive to both FFO per share and earnings per share, beginning in the first full year of 2019. This will support visible dividend growth through 2021, while allowing AltaGas to maintain a sustainable payout ratio of normalized funds from operations. Finally, as a reminder, we have posted sensitivities for frac spreads, FX rates, and natural gas volumes in our current investor presentation located on our website.
With that, I'll turn it back to Jess.
Thanks, Tim. Operator, we'll now open the call for questions from the investment community.
At this time, if you'd like to ask a question, please press star followed by the number 1 on your telephone keypad. Your first question today comes from the line of Robert Hope with Scotiabank. Please go ahead.
Good morning, everyone. I was hoping you could provide some additional color on the asset sale process. The Q4 MD&A spoke of asset sales in the gas, power, and utility businesses. The commentary in the Q1 appears more focused on the Northwest Hydro assets. Does this imply that you have price discovery for your hydro assets and that that could represent the majority of the CAD 2 billion bogey you're looking for?
I'm happy to start. I'm sure Dave can chip in as well here, for any of these questions. I think, Robert, you're right, we did signal out, really, I think in response to questions we've had throughout the piece here, Northwest Hydro in the form of a minority interest. I think that plus other active processes that we have underway are getting us to a point where we're getting clarity and better price visibility. We expect that we'll have more to say in Q2 on that. At this point, as we sit here on April 26, that's our position.
Okay, that's great. Then just to follow up there, because you did mention that you expect some additional information in Q2. Is the assumption that assuming WGL does proceed, that you could get asset sale announcements in a relatively short order?
Yes, that is correct. Our expectation is WGL is still trending towards that midpoint of the year. Again, no change on that communication. In conjunction with that, in Q2, which we're in right now, we would expect to see developments on the asset monetization fronts as well.
All right. That's great. Thank you. I'll hop back in the queue.
Your next question comes from the line of Patrick Kenny with National Bank Financial. Please go ahead.
Good morning. On the dividend growth guidance, I noticed the 8%-10% range was taken out of the press release today. I believe it's still in your corporate presentation, just wondering if anything has changed on your outlook for dividend growth on a combined basis.
Yeah, this is David Harris. I'll start, and Tim can certainly chime in. Nothing really has changed. I wouldn't read anything into that whatsoever. It's just as the strength of this deal and the strength of the combined companies is still very compelling and certainly supports a strong dividend if we so desire. We've certainly been listening and picking up with respect to our investing community, is that always necessarily just a prudent thing, that you hold some of that powder back in reserve and use that on a more capital basis, because we also have a very strong growth and capital program that comes with the combined companies. Nothing has changed with the expectations of the value of the deal and the amount of value it brings to us to turn around and if we want to hit that accelerator on the dividend side.
It's just more of an issue of what is the appropriate thing to do once we get the deal closed and get into the deal of what's the best way to just create value for the shareholders. Don't read anything into that whatsoever. If there's any concern whatsoever there's a fall off and be able to support dividend, that's not the issue.
Got it. Then David, maybe perhaps you could provide an update just on any discussions you might be having with stakeholders in D.C. with respect to a potential settlement, prior to the commission making a decision here in May, I guess similar to how things played out in Maryland.
Sure. Be glad to. Matter of fact, myself and John O'Brien are making this call. I'm actually sitting in Washington, D.C., right now. We are into settlement discussions with the stakeholders. We're certainly very mindful of the clock and pacing accordingly. I'd just like to have everybody reflect back. The settlement discussions we had in Maryland were pacing about at the same timeframe that we're doing here in D.C. We're into those settlement discussions. I really don't want to say too much further on that, we're certainly mindful of the clock and sequencing. We're pretty much on the same path where we were in Maryland.
Okay, great. Last question, if I could, just with the buzz around West Coast LNG coming back recently. Wondering if you guys have dusted off some of the work you've already done on your floating LNG project at Kitimat and if you might be pursuing commercial offtake contracts at some point again here soon. Perhaps what that might mean for keeping the PNG pipeline out of your disposition program to fund the acquisition.
Sure. We certainly are always very focused with respect to what's going on in the LNG market, not only just because of the recent activity. I think LNG Canada just announced who their EPC firm's going to be. They're certainly tracking strong to probably an FID towards the end of the year. We, for some time, always keep an eye on this. We have our joint venture relationship with Itochu, gives us a great conduit into what's going on in Asia and what the needs are there, not only just within kind of the Pacific in general from an LNG perspective. We are staying right on top of that. We're viewing the market as starting to turn to be more optimistic with respect to LNG and egress off of western Canada, and we're poised with timing to take advantage of it.
I'd just like to point out is when we kind of halted our project, we certainly, when we go to revitalize it, can turn around and move relatively quickly on it because of the nimbleness and the simplicity of that design. We'll certainly be there as one of the first movers as we have the opportunity to land contracts and the LNG market turns.
All right. That's great. Thank you very much.
Your next question comes from the line of Ben Pham from BMO. Please go ahead.
Okay, thanks. Good morning. I had a question on the Northwest Hydro assets, and I'm more curious how you came to the decision of potentially selling minority interest versus the full 100%.
Happy to start. I think the fundamental premise for that asset is, it's an asset we're very proud of as a company. We built it from scratch, as you know, Ben. It's a core part of the company. It's also a very unique asset, which arguably doesn't get full market recognition for us. Notwithstanding that, it's a core part of our portfolio. Really, you start with the fundamental premise of how we view the asset and how we view it as a fit within our overall company. Then you work from that point. While a minority interest could potentially make sense should it surface the value that we expect it will, we will continue to operate the asset, and it will continue to be a meaningful part of AltaGas.
There's still a possibility of you offloading all of it, though. Is that still on the cards?
No.
I'll jump in. Sorry, Tim, I may have overwatched you, yeah, it's not in the cards for us to unload the entire asset or majority interest.
Okay. All right. Thanks for clarifying that. Beyond the CAD 2 billion asset sales, can you refresh us on what's left on the pref and debt side of things? Maybe just general commentary on the hybrid markets in general.
I'll start, I guess, on that one. There's been no change in terms of our expectations. This goes right back to January 2017. In rough terms, we'd be looking at, I think there is a chart that we've shown in our investor slides over the past year that would indicate hybrid proceeds could be logically in the, I'll just use a round number, just to say $700. Could be plus or minus, something in that range that's consistent with what we have said. That's probably the right size and fit as we structure our balance sheet on a pro forma basis. We do like that product. We, in effect, use that product in the Canadian market, as you know, right now through our strong access to Canadian dollar preferred shares.
We would like to ultimately continue to diversify our funding sources, and I think U.S. dollar hybrids is a very viable market. It remains a viable market. Notwithstanding a move in interest rates, that market is still wide open. That's the view of any number of banks that we speak to. That would be part of our plans through Q2 and Q3 here.
Okay. All right. That's very helpful. Thanks, everybody.
Your next question comes from the line of Robert Catellier with CIBC Capital Markets. Please go ahead.
Hi, good morning, everyone. I just wanted to follow up on that last question. I know there was some currency hedging done at the time of the WGL transaction, none of the hybrid or fixed income requirements to fund and repay the bridge loan have been hedged, have they?
The hybrids would be our primary target is the U.S. dollar hybrids market. To define that better, it's not preferred shares we would be looking at. It would be long-term, 60-year type subordinated money, which is usually recognized about 50% equity, 50% debt on a balance sheet. That's what we would be talking about, U.S. dollar funding for that component.
Right. There's no rate hedge. I know there was some FX hedging. There was no interest rate hedge, was there?
There's none at this time. We historically haven't felt a strong need to do that. There's different views in the market in terms of whether rate hedges make sense or whether they're basically priced into the market, Robert. Certainly, we continue to watch the market. That's certainly an option for us as we go through this quarter. At this moment in time, there's no rate hedges.
Okay. Just a couple of questions here on RIPET. It looks like you've taken up the propane supply to about 75%, so an increase from previous disclosures. I'm wondering how much of that comes from Birchcliff as a result of the Gordondale recontracting, or if there are other customers involved there. Then I'll have a follow-up.
Yeah. Rob.
Yeah. Rob, sorry, it's Jess here. I'm just going to cut in. We can't actually provide any specifics around the customers on RIPET right now.
Okay. Finally, how do you view hedging of frac spread post-commissioning of RIPET? Would you have an appetite to take on more frac spread knowing you have that overseas outlet, or is your philosophy there going to be the same?
I'll turn around.
Sure.
Robert, certainly there'll be a look at because of the outlet we have and the added flexibility it creates, so there could be. I'll just Randy, I think Randy, you're in the room if you want to turn around and jump in and finish up the question.
Hey, Rob. We will continue to look at our hedging strategy. When RIPET comes on, it definitely opens up the doors to different types of hedging strategy, even Far East index hedging. We're still evaluating that and, like Dave said, it just opens up more doors for us.
That's all my questions. Thanks.
Again, if you would like to ask a question today, please press star followed by the number 1 on your telephone keypad. Your next question comes from the line of Robert Kwan with RBC Capital Markets. Please go ahead.
Good morning. I'll just start on the dividend and the earlier question or your earlier answer, Dave, just to make sure it is crystal clear. Sounds like you are very confident in the underlying fundamentals and what WGL does and the ability to support that 8%-10%. It also sounds like you are contemplating what to actually do with the dividend and, like you said, talking to shareholders. Are you contemplating how to play around with the growth rate? I guess what is on the table? Are you playing around the growth rate? Is it potentially leaving it flat? I only ask this because it was strategically done with the company in the past with board members that are still there. Would you actually contemplate a strategic cut of the dividend?
No, there is not a contemplation, to be crystal clear, a strategic cut in the dividend at all. Going back, just to clarify and to pick up on your comment is, certainly the fundamentals are very strong. There is no issue with the cash stream coming in with respect to the deal and the combined companies to support the dividend. It really just comes down to at the strength of the deal and the cash that comes on in is what is the appropriate way to dispense that, whether it is through pushing the dividend or holding some of that back in reserve and using it more for the capital program, that is a healthy amount of that. CAD 4.5 billion-CAD 5 billion of that roughly is in the queue with another, I think, CAD 2.5 billion on top of that, pacing relatively well to be certain.
It just comes down to where do you want to place the chips on the table that creates the overall maximum value for the shareholder. That is really what it comes down to, Robert, just what we decide to do with the power of the cash flows that come off the combined companies.
Understood. Coming back to the hydro asset sales in B.C., sounds like you are pretty far down the road. I am just wondering, there was kind of some wording around the use of appropriate minority interest. I am just wondering if you can elaborate on what that meant. Are you also just looking at a straightforward minority interest sale, i.e., X% sale for X% of the cash flow? Or are you looking at something a little more complicated in structuring?
Tim, you want to start or?
Sure. I think I wouldn't read too much into the word appropriate. It's just at the end of the day, we want to do the appropriate deal. It would be a minority interest or interests. There's different scenarios that could fall out of that. I wouldn't parse it too carefully on that particular word, I guess, Robert. The key point is what I've indicated in terms of the economic intent here. Sorry, what was the second part of the question?
Just are you contemplating a straightforward minority interest sale, or is there potentially some more complicated structuring? Straightforward just being sell X% to get X% of the cash flow.
Yeah, no, that's right. It's simple as that. As you know, we don't have debt on the asset at this moment. It's just an asset that speaks for itself. Straight up minority disposition at the right price.
That sounds good. If I can just finish on asset sales as well. You've got the over CAD 2 billion target tied to WGL. I'm just wondering, is there an amount that you are thinking about going forward with on asset sales absent of WGL?
I think it's an interesting interplay which you've seen over the past several quarters here as we both advanced WGL to the finish line, and we're obviously getting close to there, and prep ourselves for transaction-specific financing steps. I would say that some of the steps that we have underway are steps that we could quite comfortably proceed with irrespective or independently of what's happening with WGL. In other words, that they can make sense on their own. Having said that, I think we are geared generally to fund the transaction in a timely way upon closure of it, so that we're coming out of the gate with a strong balance sheet. That's again how I think about it. At the end of the day, we want to be in three business lines and grow three business lines.
We don't favor one over the other, as we said continuously here. We've got good balance today as well as coming out of the gate with WGL. That'll be the case as things unfold.
Okay. That's great. Thank you very much.
We have no further questions in the queue at this time. I would now like to turn the call back to the presenters.
We would like to thank everyone for joining our Q1 2018 conference call. Ashley and I are available for any follow-up questions you may have.
Thank you to everyone for attending today. This will conclude today's call, and you may now disconnect