Earnings Call: Q2 2020

Aug 5, 2020

Morning, ladies and gentlemen. Welcome to Gibson Energy's Second Quarter 2020 Conference Call. Please be advised that this call is being recorded. I would now like to turn the meeting over to Mr. Mark Hitzcheff, Vice President, Strategy, Planning and Investor Relations. Mr. Hitzcheff, please go ahead. Thank you, operator. Good morning, and thank you for joining us on this conference call discussing our Q2 2020 operational and financial results. On the call this morning from Gibson Energy are Steve Spalding, President and Chief Executive Officer and Sean Brown, Chief Financial Officer. Listeners are reminded that today's call refers to non GAAP measures and forward looking information. Descriptions and qualifications of such measures and information are set out in our continuous disclosure documents available on SEDAR. Now, I'd like to turn the call over to Steve. Thanks, Mark. Good morning, everyone, and thank you for joining us today. Given the uncertain environment, when we hosted our last call at the start of May, I'm pleased that how our organization responded and the results we were able to achieve. On our last earnings call, crude oil prices recovered faster than we expected from just over $20 to $40 per barrel in June. This increased opportunities available to the crude oil marketing business and improved margins at our Moose Jaw facility. The response in crude oil price resulted in higher volumes than we anticipated for the quarter at Hardisty. And we also saw the results of our cost reduction efforts across the organization. Our infrastructure segment profit of $90,000,000 really demonstrates its resilience. Taking out the efforts, the FX of our Moose Jaw turnaround It was a very modest decrease from a record Q1 in our infrastructure segment. Volumes at Hardisty recovered to pre COVID numbers in June and our Evanston terminal was impacted. Marketing also had a great quarter with a segment profit of $44,000,000 As mentioned above, crude oil prices moved up $20 in the quarter. Utilizing our tankage at Moose Jaw and Hardisty, we were able to capture higher contango opportunities than we expected at the last earnings call. With both business segments doing well, adjusted EBITDA came in at 143,000,000 dollars and distributable cash flow at $94,000,000 These are both new high watermarks for Gibson. Again, I'm proud of how the organization responded in controlling cost and commercially. One area that we actually saw an impact from COVID was in our commercial discussions. With the swift drop in commodity prices, discussion paused. Most of these discussions have resumed, but it has set back many of our negotiations. However, we do not see this lost time impacting our $200,000,000 to $300,000,000 capital spend next year. We continue to expect to sanction 2 to 4 tanks a year. However, due to COVID and the pause in negotiations I mentioned, this year a tank or 2 could slip into next year. With the continued progress of TMX towards the Q1 2023 in service date, We expect customers will need to secure their corresponding tankage at Edmonton sometime next year. We have room for about 2,000,000 barrels at the Edmonton terminal, and we feel we're very well positioned to compete with the other terminals in the area for that needed tankage for TMX. We've also resumed discussions for additional phases at the DRU. Interest is coming in from both the producers in Canada and the refiners down in the States. With the pause in discussions and given the complexity of the agreements required with this DRU, put together the whole value chain in place, we expect the sanction of another phase will be sometime next year. As I mentioned earlier, oil sands volumes through hardest year back to normal. It's on the conventional side of our business where we've seen a more persistent impact and a slower recovery. As a result, we expect the capital outside defense in Canada will remain limited. In the U. S, we're finishing out our existing capital program and are well positioned to continue to grow when Permian drilling restarts. For 2020, we have reaffirmed capital growth at around 300,000,000 dollars Given we're already in August, any capital approved through the balance of the year would largely be filling out next year's program. Remaining spend this year is mostly at the DRU and the 3 tanks at top of the hill there in Hardisty. These two projects are progressing well. We expect one of the tanks will be placed in service in October and the other 2 sometime in December. The DRU continues to progress forward and we remain on track for that mid-twenty 21 startup. There are 2 other achievements in the quarter I'd like to briefly touch on. 1st, in May, we released our inaugural sustainability report. We see this as a major step in our journey, in our ESG journey. We're currently working on our first mission to CDP this summer. We continue to embed ESG principles into our daily decision making, our strategic planning and our capital allocation processes. 2nd, the refinancing of our notes was a major win. Interest savings will be around $16,000,000 per year. With the savings from the refinancing last year, we have exceeded our target when we became investment grade of realizing $15,000,000 to $20,000,000 in interest savings. In summary, we had a great second quarter. We continue to execute and we remain well positioned. The Q2 demonstrates the resilience of our terminals business and the capability of our marketing organization to find opportunities in nearly any market. We have resumed commercial discussions and we see further growth our infrastructure business. We continue to expect to sanction 2 to 4 tanks on an annual basis and deploy $200,000,000 to $300,000,000 or more per year. And our financial position is very strong. We are fully focused on leverage and payout well below our target ranges. I'll now pass the call over to Sean, who'll walk us through our Q2 results in more detail. Sean? Thanks, Steve. I would very much agree with Steve that we are pleased with how resilient our infrastructure business was in delivering total segment profit of $90,000,000 in the quarter. Clearly, oil prices and volumes recovered much quicker than our outlook on our call in early May train loading in that quarter. Some of the upside volume fees and spot train loading in that quarter. Contribution from our Canadian small terminals and pipelines was down about 40%, which was still slightly above our expectations. In the U. S, volumes increased slightly through the quarter as we completed several tie ins into our Fios system with shut ins not being a driver, resulting in an increase in contribution to segment profit over the Q1. At Moose Jaw, the turnaround was completed on schedule and slightly below expected cost. As a result, we experienced less than half of that $5,000,000 quarter over quarter decrease in segment profit we initially expected due to the turnaround. We expect that segment profit from infrastructure will continue to increase through the remainder of the year, which would also imply that we will likely come in towards the upper end of original range of $360,000,000 to $380,000,000 in infrastructure segment profit for the year. With the 3 tanks coming into service at the top of the hill in the 4th quarter, we remain confident in achieving the quarterly run rate of approximately $100,000,000 exiting 2020 or $400,000,000 on an annual basis that we've previously guided towards. The rapid recovery in crude oil prices was also very beneficial for marketing, which was able to deliver $44,000,000 in segment As we talked about on our last call, with a steep contango in the forward curve and access to storage at Moose Jaw as well as at our terminals, we are able to participate in that opportunity. The quarter saw limited contribution from refined products given the extended turnaround. But as the market normalized towards the end of the quarter, we saw improving demand for the heavier ends, though distillate remains fairly weak. In terms of our outlook for the Q3, we'd expect segment profit to be around the midpoint of our long term run rate range of $20,000,000 to $30,000,000 Our current forecast would also anticipate that marketing adjusted EBITDA will be fairly close to segment profit in the 3rd quarter, though that gap could widen to the extent that we see another larger move up or down in crude oil prices and if we wait crystallizing our existing divisions for the 4th quarter. With marketing segment profit of approximately $80,000,000 through the first half of the year and the 3rd quarter guidance of $20,000,000 to $30,000,000 we clearly now expect to be well above the full year guidance of approximately $100,000,000 we provided on our Q1 conference call. We are not going to update that number at this time, though simple math would point to full year results above the high end of our long term run rate guidance of 120,000,000 Returning to the 2nd quarter results, with both Infrastructure and Marketing delivering strong segment profit contributions and adjusting out a $20,000,000 non cash unrealized loss in financial instruments within the marketing segment, adjusted EBITDA of $143,000,000 represents an all time high for a single quarter. For context, that's a $14,000,000 or 11% increase over the Q1 of this year and a $34,000,000 or 32% increase over the G and A in the quarter was $8,000,000 which is slightly below the $10,000,000 a quarter runway we budgeted at the start of the year. Though we remain focused on minimizing costs in this environment, it's likely too early to assume a permanent lower rate going forward as while there are clearly savings on items like travel, there are additional costs in the COVID environment to facilitate working from home, though that's definitely the outcome we're driving towards. Quickly working down to distributable cash flow on a sequential basis, the 2nd quarter figure of $94,000,000 was $8,000,000 above the Q1 of 2020, and as Steve mentioned, also a record for a single quarter. Replacement capital of $8,000,000 in the 2nd quarter was $2,000,000 higher with a portion of the spend during the quarter, a result of an unplanned remediation project identified during a regular inspection. Even with the unplanned remediation work, we still very much expect to be in or around the $25,000,000 number we budgeted at the start of the year. The remainder of the cash outflows during the quarter, such as interest, taxes and lease payments were all consistent with the Q1. Given our distributable cash flow this quarter was $14,000,000 above the Q2 of last year, The payout ratio decreased to 60%, which is well below our 70% to 80% target range. As well, our debt to adjusted EBITDA decreased to 2.4x, well below our 3x to 3.5x target. While we have seen a partial recovery in the business environment, our bias will continue to be towards maintaining a conservative financial position. Consistent with that, we believe it is important to maintain access to significant liquidity. At the end of the quarter, we are only $80,000,000 drawn on our credit facility with a similar amount of cash on the balance sheet. Effectively, we have access to the full $750,000,000 credit facility as well as to over $100,000,000 in unutilized capacity on our $150,000,000 bilateral demand facilities. We also remain fully funded for all our sanctioned capital expenditures. And with the continued outperformance of our business in the Q2, we continue to build some cushion on that position. Given our outlook for capital in 2020 of about $300,000,000 we will almost certainly carry out some funding capacity into 2021. Subsequent to the quarter, we are able to further improve our financial position by both extending the term of our maturities and reducing our interest costs. By refinancing our 5.25 percent 2024 notes with 2 tranches bearing an average coupon of 2.65%, we are cutting our annual interest cost in that $600,000,000,000 amount almost in half, while also extending the average maturity by 2 years. Through this refinancing, as well as the one completed in September of last year, the weighted average coupon on our notes would be by far the lowest within our Canadian midsize peer group at just over 3%, while at the same time having the 2nd longest weighted average tenure. Also, in late July, S and P confirmed our investment grade rating and stable outlook. With that, we've now had both credit rating agencies reaffirm their ratings and outlooks following the COVID outbreak. In summary, the business had a very strong second quarter. To the extent that we see bumps in the economic recovery over the remainder of the year, we remain well positioned with a resilient business as was evidenced in our results this quarter. We have market leading quality of cash flows, a strong balance sheet and are more than fully funded. At this point, I will turn the call over to the operator to open up for questions. Thank you. Our first question comes from the line of Jeremy Tonet with JPMorgan. Your line is open. Hi, good morning. Good morning, Jeremy. I just want to start off with the marketing segment here. When you back out kind of the mark to market noise, it seems like you guys actually hit $64,000,000 per segment profit in the quarter. And so just wondering off that a few questions. In the quarter that was thought to be pretty difficult among the worst quarters there, you hit 64%. Why do you think 80% to 120% is the right kind of guidance run rate for the for that segment? What drove it that high? I mean, wondering if you could provide some incremental color or I guess what's not going to happen in 3Q where you think you're only going to hit 20 to 30 in 3Q when you posted such a strong mark in 2Q? Well, I mean, our segment profit was 44% and our adjusted EBITDA was around that 66% number. And then we've kind of guided to that 20% to 30%, kind of that midpoint of that 20% to 30% on the segment next quarter and within that range on adjusted EBITDA in the 3rd quarter. At the last call, we said that there was a large contango opportunity developing and that we had significant storage at our Moose Jaw facility and some storage at our Hardisty facility. And to the extent that we'd be able to take advantage of that arbitrage opportunity, we would. And after the call, crude oil continued to drop significantly. And so we were able to capture our larger arbitrage than we expected at the last earnings call. In the second quarter, we're as far as a marketing and trading organization, we're well through over half of the quarter and the quarter has been very much range bound around that $40 a barrel. Differentials have been very much range bound. So volatility always helps in the marketing organization. But we did carry over segment profit and have captured profit in the 2nd quarter already. And that's why we're confident in that 20% to 30% range. The Q3, we didn't give any real guidance there other than we just continue we believe we'll continue to find opportunities in any market, either through our Moose Jaw facility or through our Hardisty or Edmonton assets or even down in state around our Wink Terminal, which will start up really start to start up in September as far as connectivity to downstream pipelines. Got it. Thanks for that. And then maybe just kind of building off of the opportunities that could present themselves here. I mean, if the marketing has done better than expected for some time here, that's really improved the strength of the balance sheet. The leverage is quite a low place right now. And it seems like you guys have some balance sheet capacity maybe to be a little bit on the offense here, whereas maybe you guys have the opportunity for some bolt on acquisitions that could be small in nature and helpful to you. And on the other side of the coin, other midstreamers, particularly in the U. S. Are kind of in more difficult shape right now and might need to kind of divest some smaller assets to help out there. Just wondering how you think about that dynamic and that opportunity set right now? I mean, it's really nice to have the balance sheet that we have in this current environment. As far as opportunities, we've always been pretty leery of doing M and A, because the one thing we do want is that sustainable cash flow that we have today. And so any kind of M and A, we'd be really looking forward to sustainability of cash flow on a long term basis and additional growth platforms. But right now, we haven't seen any really kind of develop that fit our strategy today, Jeremy. Got it. So if M and A or capital deployment opportunities don't materialize, I guess, would repurchases kind of make sense that the next place to put that capital? Yes. I mean, that certainly is an opportunity, but we feel pretty confident on our capital growth program. We said that $200,000,000 to $300,000,000 next year. And we feel like we can continue to deploy that $200,000,000 to $300,000,000 as we go out just on our existing platform. But we're going to take a harder look at our strategy throughout the remainder of the year and work with the Board and see if there are opportunities to adjust that strategy in the future. But right now, we're very confident in what we do and how we've executed on our strategy. Great. Thank you for taking my question. Thank you. Our next question comes from the line of Ben Pham with BMO. Your line is open. Okay. Thanks. Good morning. I was wondering, you guys mentioned a couple of high level impacts from COVID-nineteen Moose Jaw, all this being not as bad as impacted conventional seeing a bit of pressure. As you look at the last 3 months, are you able to quantify or you look at quantifying the impact from COVID-nineteen in terms of EBITDA? And then to that is here, do you think there's some sort of situation or where marketing was some sort of a hedge for you guys here where infrastructure got hit a bit, but then marketing was stronger than expected that we ended up marketing acting as sort of a hedge to COVID-nineteen? Hessam, why don't you take that Yes, absolutely. Thanks, Ben. I mean, as you heard in our prepared remarks, if you think about the impact of COVID-nineteen, I mean, certainly, there was some impact in our infrastructure segment. To go through the prepared remarks, volumes actually recovered a bit quicker than we expected at our terminals. So those ended up effectively in line with the Q1 after adjusting for some of the items that happened in the Q1. I certainly felt an impact from Canadian small terminals, which was down roughly 40% in the quarter. As we discussed, U. S. Volumes actually increased slightly through the quarter, so no real impact there. And at Moose Jaw, we did have an extended turnaround, though that came in below expected cost. So the impact is less than what we would have expected on the Q1 call. It's tough to really say for the marketing business given it's more of an opportunity driven business and around the COVID impact, but we absolutely had a strong quarter. I don't know if I'd necessarily say that our marketing business acted as a hedge for our business. I think we have a strategy to focus on crude oil infrastructure and to optimize in and around that assets and have assets that complement it, optimize it or help it grow. I think this quarter, you really saw that. We had a somewhat muted impact from COVID-nineteen. We thought we actually had a relatively strong infrastructure quarter and we had a very strong marketing quarter. So I don't know if I'd necessarily characterize marketing as being a hedge rather than just taking advantage of opportunities that were in the market because of our infrastructure assets. Okay. That makes sense. And can I ask you then, you always talked about and done a good job of providing us the blue sky scenario on your storage opportunity, your access to land and just the size of that being decades in the running there? What's your commentary on the Blue Sky for DRU? Like when you think about the rail capacity and ability to expand your land, the size of the land position? You mentioned Phase 2 maybe next year, but like how what type of running room do you have beyond that? So Ben, so you look at the facility, the facility is going to be set up to build 550,000 barrel a day DRUs. So that's the initial design. So all the infrastructure into and out of the facility is designed to meet that kind of 250,000 barrel a day feed rate. And the ConocoPhillips agreement was that first 50. Now we have significant land near position us and USDA have significant land position up there by the HERC unit train facility. So the 250 limit was designed because that's kind of the capacity of that little over 3 unit trains a day. Now we can build another unit train track and continue to add on DRUs. There's really not a lot of limit in our capacity to develop that other than the need in the market. Thank you. Our next question comes from the line of Matt Taylor with Tudor, Pickering, Holt. Your line is open. Yes. Thanks for taking my questions here guys. On new tankage, Steve, you mentioned 1 or 2 tanks may slip into 2021. So can you just give us some updated thoughts on that 2 to 4 tank range? Is it fair to say that you're expecting to be sort of in the bottom end of the range? And then is there any reason why you think that would change, maybe extended COVID-nineteen patients or lockdowns? Any commentary on that would be helpful. So Matt, if you look at us last year, we contracted kind of the contracted 2 tanks late, like in mid December. So it was pretty close last year. And this year, as far as negotiations go, we feel really comfortable. It's really about how comfortable our customers in entering obligations right now. They see the need for the tankage and there's a timing, it's just timing issues. So the 2 to 4 tanks is really a nominal, but it's something nominal that we throw out there. And over time, we believe that we'll build those 2 to 4 tanks at Hardisty. So we're still pretty comfortable. We're just things took a pause for about 2 to 2 little over 2 months in commercial negotiation. And so with that, we're just trying to be conservative in what we say, to make sure we do what we say we're going to do. We're very excited really what's happening at Edmonton, because TMX continues to progress forward. We have numerous customers of ours, existing customers at Hardisty that we're definitely that we are discussing additional tankage at Edmonton and support them on their long haul contracts on TMX. So we can build 200,000,000 barrels of tanks there at Edmonton to support that. And I would say we're talking to 5 or different potential customers currently on building out the rest of our footprint there at Edmonton. Great. Thanks for that Steve. That's helpful. Just a follow-up to that. What proportion of this growth or these tankage adds are you expecting to contract internally? And as you're thinking on that shifted your thinking on that shifted a little bit as production is recovering? And what I mean by that is would you be willing to do maybe some additional tankage internally that maybe you would otherwise have reserved for 3rd party or just sort of the mix commentary on the mix would be helpful? We contracted our 1st internal tankage last year, and that'll come on this that'll come on when these tanks come on in the Q4. We're very comfortable with that tankage. I don't see us contracting any more internal tankage at Hardisty or Edmonton. We're comfortable with our position in tankage right now, Matt. So as a mix, I would say, majority of all those contracts at Hardisty are all with 3rd parties, the big oil sands players and the downstream refiners. And so you look at our contract life there and it's just under 10 years on our contract life remaining on all those contracts. And so we really like the length of the contract. We really like the credit worthiness of all of our customers. And that's what's providing that really stable infrastructure income that you see quarter after quarter, Matt. Great. Thanks. That's it for me. Thanks for taking my questions, Steve. Thank you. Our next question comes from the line of Linda Ezergailis with TD Securities. Your line is open. Thank you. Just wanted to build on this notion of defense versus offense, given your relative strength in the industry. And recognizing that the Board has a lot of things to consider, how might they consider timing a dividend increase before the historical cadence? And conversely, what might cause them to pause growing the dividend, if they see, outsized opportunities potentially or other considerations? Sean, I'll let you handle that. Thank you for the question. Yes, you bet. Thanks for that Linda. With respect to your that with respect to annual increases that we're going to look at it once a year at the beginning of the year as we did earlier this year. Really no changing in thinking has happened in around that. So I don't expect that we'll review it again until early next year. With respect to what could cause an annual increase to pause, when we increased our dividend earlier this year, we did make it quite clear that we see real benefit in annual increase. The quantum of that increase will be considered with the Board in conjunction with what we see as our capital opportunities at that time. And we've been very clear that we're going to grow our dividend or our plan is to grow our dividend with our infrastructure cash flows. We're adding 3 tanks at the end of the year, so the infrastructure cash flows will be growing. As we look forward though to the extent that something were to pause future dividend increases, it would really be a pause in that infrastructure segment profit growth. That's helpful context. Now one of the other tenets of your financial strength as well has been essentially a self funding model, which at some point might constrain your opportunities if tuck in acquisitions do present themselves. I'm wondering what might prompt a deviation of a self funding model And how might joint venture partnerships with financial investors instead of or on top of public capital market accessing comprised part of your funding strategy at some point? Sean? Yes, you bet. Thanks, Steve. Yes, no, the self funding model, Linda, is still very, very much a tenant of our overall capital allocation philosophy. That's absolutely important to us. We have in our deck that if you look at the updated deck, the sort of cash flow allocation slides that with where we sit right now, we view that our self funding capability to be well in excess of the $300,000,000 we expect to spend this year. So we actually expect to carry out funding capacity again into next year. For us not to be self funded, it would really have to be something inorganic that would drive that, given our guidance of $300,000,000 of capital this year, $200,000,000 to $300,000,000 of next year. If anything, we're going to have excess capacity as we would currently model it. To the extent that there was an opportunity, something opportunistic, as you noted, that was absolutely on strategy for us. I think Steve answered that earlier with respect to whether or not that's been a focus for us. But to the extent that something like that did materialize, absolutely, we would look for any measure that would maximize returns to our shareholders to help finance that. But right now, we're really focused on organic growth. As we look at spending $300,000,000 this year, dollars 200,000,000 to 300,000,000 next year, we remain absolutely self funded with anything excess funding capacity. Thank you. And maybe just a bigger picture question perhaps for Steve. Your focused strategy has served you well the last number of years, but these are unprecedented times, not just for the industry, but arguably society. And I'm just wondering how you're starting to think about potentially adjusting the long term strategy as it might relate to the types of energy that you might dabble in, let's say, or geographies or parts of the value chain from an infrastructure perspective? So, annually, we kick off our strategy review and take a look at our strategy. And we just started that review 2 weeks ago. And so really it's much more on a macro basis right now is what are the opportunities out there. And we've talked to the Board and the Board has been supportive in looking at a broad they want us to look broadly across the opportunities. But again, just like when I was talking to Jeremy, that stability of cash flow is what got us here. Those conservative guideposts in our financial principles is what got us here. So and we like the position we're in. We've continued to deploy that $200,000,000 to $300,000,000 a year over the last 3 years and we're confident to continue to deploy that $200,000,000 $300,000,000 on high rates of return projects. These are the 5 to 7 times EBITDA type projects. So and our credit worth of AMS of our customers continues to shine through even in these very trying times. So we will look for other opportunities along the way and see how we can expand that strategy. But right now, we're in the very early stages of that, Linda. Thank you for the context. Thank you. Our next question comes from the line of Ian Gillis with Stifel. Your line is open. Good morning, everyone. I wanted to go back to some of comments around the opportunities at Edmonton. I was just curious if you think the opportunities around CIMEX could potentially tie up all 2,000,000 barrels of a potential storage that could be built at your site there? Yes, we believe it could, right? And that's a good thing for us, right? Because you're talking really long term contracts. You're talking about the opportunity to these investment grade counterparties. And so we would love the opportunity to deploy, let's say, dollars 150,000,000 into our Edmonton asset or maybe or more, right? So and with that, we also still continue to expand the rail capacity out of that. That is the facility has over 120 rail loading spots, all manifest, really that helps support the local refiners and exporting their refined products into the market. So and we continue to develop additional projects there. We did several last year and we have several that we believe will contract this year and move forward with. So and at the end, there are opportunities to buy land adjacent to us potentially and to continue to expand our terminal. Because of our connectivity, it would be more of a brownfield opportunity on the expansion. Thanks. That's helpful. And you hit on the next question I was going to ask with respect to adjacent land. The other thing I wanted to ask is you've obviously started to dabble in the Midwest U. S. Through an equity investment. I'm just curious around what you see with respect to business development opportunities in that at this current time that spread is pretty tight. And so really that's a rail arbitrage opportunity between our Edmonton and our Hardisty assets and our Moose Jaw facility. But we kind of like that where the facility sits and how it sits. It really supports Canadian oil sands. And so we'll continue to work with our partner there who is the commercial lead on that to see if we can generate more opportunities at that facility. Our next question comes from the line of Matthew McKeyla with RBC Capital Markets. Your line is open. Thanks very much and good morning. This is Matthew on for Robert Kwan. At Moose Jaw, can you please just give us an update on your outlook for some of the key products there? I think you said the heavy end of the barrel, you'd see demand kind of tick upwards. But if you'd sort of run through your outlook by key products, including asphalt, roofing flux, drilling fluid, etcetera? Well, I would say roofing flux is really kind of unchanged in its margin. And then asphalt is a pretty typical year in its margin. On the drilling fluids market, I would definitely agree. I mean that has been challenged. And then the lighter end product, the margins on that have been challenged. But you kind of look at our 2nd quarter earnings at Moose Jaw and you look at what our Q3 earnings at Moose Jaw are going to be. And the reality is that they're going to be higher than the Q1 earnings. So and that's just due to the marketing organization and doing opportunity buying a crude oil and utilizing the tankage both on the refined product side and on the crude oil side to really help generate revenue across Moose Jaw even in these extremely trying times. We do believe that the markets will continue to open up in the 3rd Q4, especially on the asphalt and the roofing plant side. Great. Thanks. And then maybe as a follow-up, just in the Permian, could you please give an outlook on, I guess, on what you're seeing right now in your existing assets? And then talk about maybe your plans for capital deployment as it stands today versus maybe how you're thinking about things pre COVID? So Q1 to Q2, actually our volumes increased across the 2 quarters. So we're now moving more volume than we've ever moved through our asset and that's because we've connected up additional wells in the quarter and we connected up additional producer in the quarter. We have another producer that will connect up in September and another and 2 connections there in Wink that will complete in the Q3. And then I would say probably for the rest of the year, we'll probably be idle on capital. But I still we've said that $25,000,000 to $50,000,000 CAD and I believe we'll be able to spend that next year. And just kind of the short expansions of the gathering system, 2 new producers there or existing connections or tankage there at Wink. So we're atypical to we're not a typical crude oil gathering system. We don't have wellhead connects. We do CDPs. And so with that what that means is that we'll go in and get an area dedication, say we get an 80,000 acre area dedication with a drilling commitment on it. We'll put 1 or 2 CDPs on that and then the producer lays into us because they have the land rights to do that much more than we do. And then that also allows us not to deploy capital just to stay in the same place. Great. That's all for me. Thanks very much. Thank you. Thank you. I'm not showing any further questions in the queue. I would now like to turn the call back over to Mark Hitesh for closing remarks. Well, thank you everyone for joining us on our 2022 quarter conference call. Again, I'd like to note that we have made certain supplementary information available on our website, gibsonenergy.com. Lastly, if you have any further questions, please reach out to us at investorrelationsgibsonenergy.com. Thank you, and have a great day. This will conclude our call. Ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may now disconnect.