Gibson Energy Inc. (TSX:GEI)

Investor Day 2019

← View all transcripts

Apr 2, 2019

All right. Well, good morning, everyone, and welcome to the 2019 Gibson Energy Investor Day. For those of you in the room, welcome, and thank you for joining us. We are also webcasting our presentation today, so thanks to those joining us over the webcast. My name is Mark Hescheff, and I'm the Vice President, Strategy, Planning and Investor Relations at Gibson Energy. To introduce the speakers up here today, we have Steve Spaulding, President and Chief Executive Officer Sean Brown, Senior Vice President and Chief Financial Officer Mike Lindsay, Senior Vice President, Operations and Engineering Doug Atkins, Vice President, Terminals and Orin Atkins, Vice President, Business Development. Let us take a moment as we would in the field to open this meeting by considering our safety. In the case of an emergency or alarm, I would ask that you exit through the doors on your right, proceed to the left and then quickly to the right through the elevator banks. On both sides, you can access stairs behind those elevators. I would let you know that there are no tests scheduled for today. Bathrooms are again outside the doors to your left down the hall about halfway down on the left. So we have a lot of exciting things to talk about today. Shortly, I will turn the podium over to Steve, who will speak about the significant progress we have made since our last Investor Day and what our future opportunities look like. After Steve and responding to some of the questions we get while we're on the road about our Hardisty and Edmonton terminals, Doug will discuss why these terminals are such a critical piece of infrastructure in Western Canada, Gibson Energy's competitive advantages at those terminals, as well as an outlook for that part of the business. Following the commercial perspective from Doug, Mike is going to speak to our operational capabilities, including a virtual tour of Hardisty with the help of a drone video we recorded a couple of weeks ago. I hope you particularly enjoy that part of the presentation. After that, we'll have a 15 minute break. And following that break, Oren will speak to our U. S. Position in terms of where we are in the U. S. And where we're headed. The last section will see Sean discuss our financial position and outlook. We had some very good news on that front recently with DBRS initiating an investment grade credit rating of BBB low yesterday with a stable trend on Gibson Energy. At the end of the session, we will have a formal Q and A, so I would ask that you keep all your questions to the end. And lastly, before handing it over to Steve, I would very quickly remind you that some of the statements we are making today are forward looking or refer to non GAAP measures. So I would invite you to review the advisory at the end of the presentation at your leisure. So with that, let me turn it over to Steve Spaulding. Thank you, Mark. Good morning, everyone. Thank you for joining us. We're really excited about the future of Gibson Energy. On my left here today, speaking again is Mike, Sean and myself, but you have a special treat today and that you have our U. S. Lead and our Canadian lead in commercial and business development. They say they're not related, but I call them the Atkins cousins anyway. So they'll be speaking later. They're a real treat because these are the guys that get it done. So these are the guys that are developing the opportunities. They're negotiating the them and their teams are negotiating the contracts and driving across the finish line to really drive that infrastructure development for Gibson Energy. Also in the crowd, we have our Chairman, Mr. Jim Estee, and we also have our extended leadership team. Most of them are in the back. But at the break, make sure you take some time to meet with them or even after the presentation or stay for lunch and get to talk to our extended leadership team. Thank you. So really before we really get started, what I wanted to do what I want to do is just ground you on what Gibson Energy is. And this is the Gibson Energy businesses. So right dead center is the Hardisty terminal. The Hardisty terminal is 10,000,000 barrels of storage. We have over 2,500,000 barrels under construction and over 1,000,000 barrels a day flow through Gibson. So more than about 1 in every 4 barrels flows that is produced in Canada flows through our Hardisty terminal. If you look at our Edmonton terminal and our Hardisty terminal, they make up 3 quarters of our long term cash flows. Complementing that is our Moose Jaw facility, a growing U. S. Platform and our marketing organization that really optimizes around all these assets. So our strategy for 2019 remains consistent with last year. There are significant opportunities to continue to grow our Canadian terminals and we expect to sanction 1,000,000 to 2,000,000 barrels of tankage or 2 to 4 tanks a year on a run rate basis. Additionally, we actively grow in a U. S. Platform and with the expansion of the Piodes system and the connection into Wink. Last year, we invested $300,000,000 This year, we already have $250,000,000 sanctioned and we believe we'll sanction more throughout the year. Perhaps more importantly than how much we sanction are the risk adjusted returns of these projects. Gibson Energy is interested in value creation. We expect our projects to realize multiples of 5 to 7 times. These projects will provide high quality cash flows over a long period of time. These high return capital investments are going to drive per share growth. That's really what it's about. It's creating value on a per share basis. Gibson will continue to be selective in any M and A. It's easier to create value at a smaller company with a focused strategy and quality assets. Our focus will be organic growth with attractive returns. The other part of driving that per share growth is making sure we maintain a strong balance sheet. We're in a great position with our current projects, being fully funded with a cushion and no need for external equity or adding leverage above our target range. Given our focus on balance sheet and the quality and stability of our cash flows, we were pleased to receive our 1st investment grade rating. Sean will provide more detail on becoming investment grade. We believe it is another important milestone and further reinforces that dramatic transformation of Gibson Energy. Stability is important. As we think about underpinning and growing our dividend, we will endeavor to cover our dividend with infrastructure cash flows. At last year's Investor Day, we had a much smaller room. If you all remember, it was very cramped in here, right? But at last year's Investment Day, we outlined a series of steps to execute our strategy. Our strategy was to sanction 1 to 2 tanks per year. In 2018, we exceeded our target and executed 4 tank contracts. This year, we've already contracted another tank. Last year's success, we shifted our outlook. We went to 2 to 4 per year on a run rate basis and proved the hardest it can grow even in the toughest of business With the extension of the PIO gathering system into Wing, we have sanctioned nearly $100,000,000 in the U. S. To build gathering pipelines, gathering and pipeline assets in the Permian Basin. These are the first real infrastructure Gibson has ever built in the United States. Moose Shell had a great year last year with a large crack spread driven by that WCS to Brent diff. Additionally, we're expanding the facility from 18,000 barrels a day to 22 and expect to place that expansion into service in late June or early July. We focused our business on divesting our non core assets. It takes time to sell these businesses. With the expected sale of Canadian Truck Transportation, we will have completed the divestitures with the proceeds right down the middle of our target range. Last year, our leverage was 4 times and our payout was around 100%. Today, we're at 2.3 times with the 67% payout ratio, both below our long term targets. We cleaned up our balance sheet and fully funded an accelerated capital program of $500,000,000 to $550,000,000 over 2018 2019, all with attractive returns. We accomplished this by delivering on our asset sales, continue to grow our storage and pipeline cash flows, improving our Moose Jaw earnings and an outside earnings from our marketing segment. As you can see by all the check marks, we executed on our strategy and exceeded our targets and we're confident we will continue to grow oil infrastructure both inside and outside the terminal. So Gibson today is a very different company. We're a company focused on our terminals and pipelines and positioned for long term growth and believe the market is starting to take notice. Since our last since last year's Investor Day, we've been the top performing company in our peer group. We appreciate all the different ways to evaluate a company, but the most important to shareholders is returns. To better align ourselves with our shareholders, we're building a share ownership culture in Gibson Energy. We changed our compensation programs to drive ownership. We've increased the company's match on ESOP and increased the amount of stock that our vice presidents and hires are required to own on an outright basis. We have a young and hungry leadership team and Jim and I are always encouraging them to buy stock and to put their skin in the game. When someone joins management or directors, we encourage them to buy stock. And last year, really everybody up here on this stage, we bought stock and we all had pretty good returns on it. So we're going to keep executing because to think like an owner, you need to be an owner. For Gibson Energy to continue to drive those top tier returns for all our owners, we need to keep growing our stable terminals and pipeline cash flows, remain fully funded, maintain a strong balance sheet and execute. So looking forward, let's talk about how each of these assets fit in our strategy. Terminals are the core of Gibson Energy. Hardisty is our crown jewel and I believe the top energy infrastructure asset in North America. The cash flows from our existing tankage is incredibly stable. They're from the take or pay fee based contracts with predominantly investment grade customers. The weighted average contract life remaining is nearly 10 years, meaning we have full visibility of what our cash flows will be over a long term. Doug's up next and he'll provide you more detail on our competitive position at Hardisty and a visibility of continued growth. I believe the cash flows from the terminal business are best in class in the midstream sector. Terminals represent the best risk adjusted rate of return in our portfolio and our primary focus is continue to grow our terminal business. These storage projects have attractive returns, again, 5 to 7 times build multiples. We remain confident in our ability to deploy capital in these terminals. Gibson plans to add more tankage at Edmonton over the next 5 years. We can expand the tankage 2,000,000 barrels, which is double what the existing tankage is. Given the location near the 2 refineries in Edmonton, tankage can be built to support refineries in either crude oil supply or refined products takeaway. As a result, growth at Edmonton is not predicated around new oil sands growth or the Trans Mountain pipeline expansion. Outside the fence of the Canadian terminals, we have the Moose Jaw facility. As you recall, last year's earnings at Moose Jaw, we outperformed. We've been very successful in several initiatives to increase the long term profitability of the facility. Through a focus on operational excellence, we've been able to improve run times and cut operating and maintenance capital cost. We executed tolling agreements, which changed our product pricing from a WCS benchmark to a Brent price. This contracting strategy has improved our long term margin projections at the facility. We are also in the process of expanding the facility, as I said earlier. Depending on the differentials, we expect that to realize 1 to 3 times EBITDA multiples on that project. Moose Jaw remains a meaningful part of our cash flows and we understand its long term value. We like the asset in our portfolio and we're comfortable with some variability in our earnings. Turning to the Canadian pipelines. Gibson Energy has about 500 kilometers of gathering pipelines around Hardisty. The Viking pipeline was an expansion of this gathering system. Volumes on Viking have been above our projections and as producers expand their production, we have low cost, high return alternatives to expand its capacity to meet their demands. We will continue to pursue other pipelines outside other pipelines in Canada. We still like that emerging East Duvernay play and continue to look for opportunities to provide producers infrastructure to maximize their returns. Last year's announcement on the expansion of the pilot gathering system in connection into the emerging Wink Hub demonstrated Gibson's ability to build oil pipeline, oil gathering and pipeline assets in the Permian Basin. We've executed on our core the core agreement to build a platform for continued growth. Our engineering and construction team are focused on executing on time and on budget. I have experienced building midstream businesses in the basin and I believe we have the people in place to be very successful in the Permian. And I have absolute confidence in Oren and his team, and they're chasing several opportunities that we hope to announce over the next few months. The pilot expansion into week is a great platform for continued growth in the basin. The system is very expandable and there is an abundance of additional gathering opportunities as most of the producers in the basin in this area are undedicated. The team is currently negotiating with numerous customers and potential partners to expand the Pios system both east and west that could triple the volumes on the current system. Additionally, there's 3,500,000 barrels of new egress pipelines being built to export crude from Wink to the Gulf Coast. We purchased 160 acres in a strategic location in Wink near the origin point of these pipelines and are currently negotiating with counterparties to build our 1st tankage in the U. S. We think with our experience at Hardisty, the team we have in place in the U. S. And the growing volumes on our Pyote system, we will be successful in building terminal in Wing. With the gathering of terminalling opportunities available to us, we now believe Gibson will deploy CAD50 1,000,000 to CAD100 1,000,000 a year in oil pipelines and terminal assets in the Wink area. At this level of investment, our position in and around Wink has become a platform of sustainable growth. You may have noticed I used the word marketing versus wholesale today. Going forward, we will refer to our wholesale segment as the marketing segment. The term marketing better reflects the team's activities. At Moose Jaw, the Refined Products team's responsibility is to acquire the most advantageous crude oil for the facility and to maximize the netback on the sales of the refined products. They pay the facility a fixed lease fee and own the profit loss across the terminal or facility. Even in the weakest of crack spreads, the team has posted a profit and last year that was a record profit. The producer service team both north and south of the border purchases production at the lease from small producers, this provides them market access. They drive that production towards our terminals through our gathering systems and our injection stations. They are key to maximizing system throughputs and establishing relationships with producers to expand our gathering systems. The asset optimization team drives liquidity across our assets, providing markets for producers and supply for our refiners. This team works with producer services, providing our customers the highest netback price. At the terminals, they are utilizing their downstream relationships to develop markets to our customers and to drive the development of additional tankage. The marketing team generated over $200,000,000 last year, of which the refined products team was the largest contributor. We believe the combined marketing team will provide $60,000,000 to $80,000,000 a year on a mid cycle basis. We're happy with the outlook of each of our businesses. We believe the future continues to be bright for Gibson Energy. With the sanctioned capital we have, we're on track to deliver annualized per share distributive cash flow growth of 10% plus on our infrastructure business through 2020. With earnings from our marketing business returning to more modest mid cycle numbers, future oil storage and pipeline projects will drive that growth. Our projects will drive a steady increase in retained earnings. We've already sanctioned $250,000,000 in capital for 2019. We believe we will believe we'll sanction more projects throughout the year. On a mid cycle target, it is $200,000,000 and we continue to be selective in sanctioning projects. The midstream business is opportunity driven and in the lean times, we believe we'll still be able to deliver at least $100,000,000 in capital. As we continue to deploy capital in oil pipeline, oil terminals and pipeline projects, we'll continue to create incremental value for our Gibson shareholders. It's important to remain fully funded. To the extent we have surplus cash flows after funding capital, we'll pay down debt. Paying down debt effectively just parks that cash until projects until it's needed on a project. With our strong balance sheet and stable cash flows, today's dividend is rock solid. For Gibson Energy to consider raising the dividend, the increase will need to be underpinned solely by infrastructure earnings. If Gibson has outside earnings from variable marketing business and we have no identified capital in our commercial pipeline, We would favor a share buyback over a dividend increase to return capital to our shareholders. In summary, Gibson Energy is well positioned. Our strategy for 2019 remains consistent with last year. We've been able to execute on all facets of our strategy. We've created a company focused on oil infrastructure, a business built around our Hardisty terminal. Gibson Energy has a foundation of high quality cash flows for the long term. Approximately 80% of our future cash flows will be from long term take or pay, stable fee based contracts with investment grade counterparties. We're also growing our oil terminals and pipeline cash flows. We will spend more than $500,000,000 in capital in 2018 2019 combined with attractive returns. We are confident in our platform and organizational capability to continue to grow. We will continue to remain in a strong financial position. The investment grade rating we just received is reflective of discipline, quality of earnings, strong and a strong balance sheet. Both our payout and leverage are below our targets and all sanctioned growth is fully funded. I'm very excited about the future of Gibson Energy. We've got a great team up here that will walk you through the key parts of our business today. Now let me turn it over to Doug who will speak to the Canadian terminals. Doug? Thanks a lot, Steve. As Steve mentioned, I'm Doug Atkins, Vice President of Terminals. I'm responsible for leading all the commercial aspects of our Terminals business, including Edmonton and Hardisty, with a focus on scheduling, optimization and mostly business development activities. With terminals being the core to Gibson today, I'm going to provide you with some additional color on the terminals landscape in Western Canada and share some reasons why we are confident we will continue to sanction 2 to 4 tanks per year on a run rate basis. Let's start with understanding the flows of Canadian crude and how that relates to tankage. Today, total production in Western Canada is approximately 4,000,000 barrels per day. About that of that, about 3 quarters is from the oil sands. With total refining capacity in the basin of approximately 700,000 barrels per day, Western Canada relies heavily on export crude from the basin. Most of the production today is exported to the U. S, where there's high demand for heavy crude to feed complex refineries. Hardisty and Edmonton play critical roles in exporting this crude oil. The Edmonton Hub gathers light oil, condensate, heavy crude and refined products for eventual delivery to 1 of 4 local refineries, Trans Mountain Pipeline, the Mainline or rail to reach end markets. The Mainline is the largest Edmonton originating pipeline, but this also flows through Hardisty as well. In contrast to Edmonton, Hardisty is largely a heavy oil crude hub. Multiple feeders and other trunk lines gather crude grades into Hardisty where terminal operators aggregate crude streams before injection into one of the export pipelines or onto railcars. A fundamental difference with tankage at Hardisty versus Edmonton is the lower proportion of breakout tankage provided by those export pipelines compared to tankage controlled by producers, refiners or others. These storage assets also inject directly into these export pipelines without hitting operator tankage. In addition, Hardisty has much greater optionality access to end markets through the mainline Keystone Express as well as rail, making Hardisty the place you want to be to export crude. Tankage can be used for a number of different reasons, and the main uses include operational, insurance and revenue generating. On the operational side, 60 crude grades in Western Canada seems extreme, but for some reason, every producer feels their crude grade is special and Gibson is happy to segregate that crude in multiple tanks for those producers. To maintain quality from production site to end market, pipelines bash 1 grade of crude oil at a time, driving the need for segregated storage to receive and deliver. With multiple pipelines in and out of Hardisty, all running at different batch schedules and at different rates, aggregation storage is required before batching into export pipes. The next is insurance. This could include upstream or downstream pipeline offsets as well as constrained egress from a hub. Luckily for Canadian crude buyers and sellers, pipelines are easy to build and egress is almost never an issue. Let's just say there was an egress shortage or a downstream pipeline upset, Tankard allows for a parking location for crude that can't get to market. We call this concept residence time, and some producers refer to this concept as insurance. If you think about a producer with 40,000 barrels per day of production and an appetite for 10 days of residence time, this likely means they would look at securing a 500,000 barrel tank with approximately 400,000 barrels of usable space. This means they have 10 days of production of production time to figure out alternate transportation solutions, decide whether selling incremental production at the hub makes sense, likely at a steep discount or plan for a turndown or worst case, a shut in in production. At access to our terminals, we see customers take a view of approximately 10 days of residence time. The last we'll touch on is revenue. Having tankage allows users to make market calls on current and future pricing environments and look at generating market structure revenues. This type of use could be in conjunction with operational uses. However, you're trading off insurance for short term revenue. So where do tankage customers create value with their insurance? Take a producer looking to sell 800,000 barrels in a given month and pipeline apportionment at 50%. That means the space in the pipeline allocated to that producer is approximately 400,000 barrels. Assuming that producer has a 500,000 barrel tank with Gibson, they would have the option to direct those barrels into tankage instead of selling at a hub at likely a discounted price. If we assume that discount is US5 dollars per barrel, that producer would save approximately $2,000,000 in that given month by having the tankage. In addition to the market pricing upside, there's also substantial upside from the producer's ability to maintain production rates absent enough takeaway capacity at Hub. When you look at the cost of tankage compared with the total cost to get a barrel to market, it's clearly good value for the insurance that it provides. Additionally, having residence time helps mitigate potential production shut ins that far outweigh the cost of having tankage, especially for a SEGD producer. If you look at all the tankage, in Alberta, you'd likely get to around 65,000,000 barrels of storage. We view this as approximately 30% to 50% of this tankage being used to support pipeline operations. This tankage is operated by major pipelines to facilitate their operation and is not used as residence time. When compared to Hardisty, Edmonton has a much greater proportion of operational tankage to merchant tankage. The remainder of the storage market can be broken into 3 customer buckets: marketers or traders, the upstream producers and downstream refiners. This distinction is important because each customer views contracting tankage very differently and they also their needs differ as well. From the pure marketers or traders, they typically look for the lowest cost tankage, the most flexibility and are typically reluctant to enter long term contracts. This is a tough bill for Gibson to fill. At the Gibson terminals, our typical customers are the upstream producers or the downstream refiners, use tankage to support their assets on a very long term basis. This supports the long term contracts we need to underpin new tankage builds and also provides good line of sight to recontracting. In particular, the oil sands customers we're talking about have decades of production without the typical declines we see in conventional drilling. They need tankage for a very long time. Our extensive connectivity allows us to offer each customer unique service offering and allows us to fit their specific business needs, making a long term partnership with Gibson valuable from both sides. For those at the Investor Day last year, you'll recognize this slide. We've updated it for the last year or so, but the conclusion has not changed. We've built a very strong track record at Hardisty, and we're working hard to keep that going. In the last 10 years, we've basically built all the merchant tankage at Hardisty. And while not shown on this slide, we've also managed to break into the Edmonton market as well. Most notably, the tankage we've sanctioned at Edmonton and Hardisty over the last 3 years has been under long term contract in extremely challenging environments. This really speaks to the strength of our assets and our relationships with our customers. Recall we talked about flexibility creating value. Well, it's the connectivity to inbound and outbound pipelines that creates this flexibility. Our inbound connectivity allows us to access almost any crude grade in Western Canada, and our outbound customer. Ultimately, connections and the resulting flexibility provide for Hub with great liquidity to buy and sell crude driving the best pricing potential for exporting crude. The connectivity we offer at our terminal has been built over decades. We believe this position for a new competitor to come in and replicate is extremely difficult, and we refer to this as our moat. There's really two reasons. 1st, getting the commercial agreements into place to connect to many of these pipelines can be challenging. In order to build our existing position, we worked closely with our customers over many, many years to develop this connectivity. When it comes to connectivity, it's a valuable asset and can be extremely challenging to build connectivity to or from a competitor's facility who's actively in the merchant tank business as well. The second reason is these connections are expensive. The cost of a single connection can be as much as 1 or 2 tanks. As a result, you need to sanction a large number of tanks to get a project off the ground or spend substantial risk capital upfront without certainty of future backstopping. If you go to Hardisty, you'll see there's a lot of land around to build tankage. Many of our large competitors have held or currently do hold land in the area, and they failed to get into the Hardisty merchant tank market. Some of the other advantages we provide at Hardisty. Our joint venture with USD provides Gibson the only access to the only unit train facility in Hardisty. This has recently been expanded to do 3 unit trains per day and offers customers at our Hardisty terminal another option for egress. This also provides the ability to contract for rail loading capacity and tankage with customers not connected to major egress pipelines. A few of the tanks we're building at top of the hill today relate to the rail unit train facility, as well as other optionality. Another advantage we have is we're terminals and tankage focused, and that really makes us aligned with our customers. We don't have a preference what pipeline crude comes in or goes out on. And if you're operating a major egress pipeline, that's likely going to be a bigger focus than the terminalling to get it into that pipeline. Another advantage we provide and the last we'll touch on, a lot of merchant terminals don't have this advantage, is our ability to offer marketing services to producers who can't necessarily take on assets by themselves. An example of this is our Bow River stream we manage at Hardisty, which is comprised of a number of smaller producers and other aggregators, which our marketing group manages on their behalf. The Gibson marketing team manages this stream to provide the best pricing possible for those producers. Talking about expansion. When you look at the map of Hardisty, it's no surprise that Gibson's facility is right in the heart of it. As of today, 34 tanks in service with 10,000,000 barrels of storage support different segments with the terminals, the Top of the Hill terminal being the latest development and furthest to the east on that map. All the tankage being built at the Top of the Hill is under long term contract, take or pay agreements with high quality counterparties, and we believe that each of these customers will realize great value from this lease tankage. In total, the 4th phase is sanctioned to date will add 3,600,000 barrels across 8 tanks. We have room for 2 more 500,000 barrel tanks at the top of the hill, bringing the total build to 10 tanks and 4,600,000 barrels. We expect to sanction the final two tanks at the top of the hill over the next year. The top of the hill area will be the largest aggregate storage project Gifsud has completed to date, which is impressive when you consider the market dynamics over the last 3 years. In terms of returns, as Steve mentioned, all this tankage is being built at 5 to 7 times EBITDA multiples. When we look for other areas for expansion, we have additional undeveloped land adjacent to the south of the top of the hill, which will provide decades of running room. We also have the ability to sanction 2 more tanks at the Hardisty West facility, which is a joint venture with a senior oil sands producer. As we near critical decision dates on Keystone XL, producers and refiners will need to adjust their market access solutions based on whatever that decision turns out to be. We believe the market needs certainty around this project, and that would enable Gibson to offer long term egress solutions to customers, including new tankage, whether it's to feed new pipeline space or rail commitments. Turning to Edmonton. It's obviously a much smaller footprint, but still a very attractive infrastructure asset. The Edmonton terminal is adjacent to 2 of the legacy refineries in Edmonton, located by the Mainline, Trans Mountain pipeline and also has access to CP and CN Rail. These factors allow us to build our terminal out around crude oil or refined products. And like Hardisty, our focus at Edmonton is built around long term take or pray contracts with high quality counterparties. Real estate in Edmonton is extremely valuable and limited. Our remaining footprint allows us to add 2,000,000 barrels of tankage, And Trans Mountain proceeding would likely allow us to fill out that position, but we do believe there are other opportunities in the medium term to fill this out. We'll see what comes first. So why will Gibson continue to grow its terminals position? Look what's happening in the North American and crude oil global crude supply and demand picture. The simple takeaway is there's significant demand for Canadian heavy crude. 1 of the largest drivers in this shift in crude grades available globally is the very for the very complex refineries on the Gulf Coast. As declines in production and political instability have decreased the availability of Iranian, Venezuelan and Mexican heavy crude grades, refiners on the Gulf Coast are looking to Canada to fill that heavy crude demand. Western Canada has the 3rd largest proven reserves in the world, and there's no shortage of oil sands projects that could be sanctioned at current global prices. With exporting heavy crude in necessity, we need incremental pipelines to be built in order for oil production to grow longer term. While we're very disappointed that the Line 3 replacement was delayed, we also don't think that Line 3 replacement alone solves the egress constraints and drives a new way of oil sands projects. With curtailment by the Alberta government, a sizable existing call on rail, the volumes to fill Line 3 replacement are already on stream. While there's still no certainty, we do expect Keystone XL will be put into service in the early part of the next decade. And we believe once there's new visit once there's certain visibility to that pipeline being built, we would see that next wave of oil sands projects sanctioned. Based on our internal work, there are more than enough high quality projects with well capitalized owners to advance them, and these would more than fill Keystone XL. If you think about what that means in terms of tankage, assuming 10 days of residence time, that would be a need for approximately 8,000,000 barrels of storage, likely all at Hardisty and likely required by existing customers of Gibson. We also believe that Canada needs the Trans Mountain pipeline expansion, and especially if for whatever reason Keystone XL does not get built. While it's very hard to guess the timing of Trans Mountain, there is a scenario where timing works quite well for Western Canada to handle production beyond Keystone XL and Line 3 being full. If Trans Mountain were to go ahead, we would expect, given our location next to the origin of that pipe, that we would finish building out our Edmonton footprint if we hadn't done so already. In the interim, based on customer conversations, we do see additional demand for tankage for a number of different reasons. Flexibility tankage provides in the current environment is extremely valuable. As resolution to these egress constraints continues to be pushed further and further into the future, our existing customers are looking at adding residence time to their business today. Order to find egress out of the basin, many companies are placing more emphasis on their rail strategy. To effectively access the Unitrain facility at Hardisty, customers would require a tank at our terminal as well. We've also seen downstream players interested in extending their integration further upstream to better access crude, particularly given volatile pricing and tight export constraints. And perhaps a bit surprisingly, there are companies in the basin that have a much longer planning horizon and are looking at adding tankage now for future projects. We do need egress to allow new oil sands projects to be built. Longer term, what's best for Gibson is that egress pipelines do get built, and we believe that they will. Further delays probably mean an increasing reliance in the near to medium term on rail, which also requires tankage. So as a result of our conversations with customers and our understanding of their future tankage needs, we're very comfortable in our ability to sanction 2 to 4 tanks per year on a run rate basis over the medium term. To the extent egress projects keep being delayed, we might be at the lower end of that range, but there's still a need for tankage even in this environment. As evidence of that, we placed 3 tanks into service. We have 5 under construction and expect to sanction more through the balance of this year based on these commercial discussions. To summarize, perhaps the overarching point is that Hardisty and Edmonton terminals are critical infrastructure for the movement of crude out of Western Canada. We have a very attractive offering at our Hardisty terminal and believe this flexibility is best in class. It's taken decades to build this position, and it's likely cost prohibitive and very difficult for a new competitor to replicate. Our business model remains focused around long term customers, resulting in very stable cash flows from these assets. Lastly, we remain confident with the current and future market fundamentals, we will be able to sanction 2 to 4 tanks per year on a run rate basis. That's a view based on our discussions with existing and future customers and their willingness to work with Gibson and provide terminaling solutions now and in the future. With that, I'll turn it over to Mike, who will walk through our operational capabilities and a virtual tour of Hardisty. Thanks a lot, Doug. So again, I'm Mike Lindsay, Senior President of Operations and Engineering. I'm responsible for Gibson Energy's Canadian operations, our capital project and development and execution as well as our environment, health and safety teams. I've been with Gibson for about 4 years, and my background has been on the projects and operations side of oil and gas, most recently at a senior oil sands producer that's also one of Gibson Energy's key customers. For the majority of my time up here, we're going to go through a quick virtual tour of Hardisty without the need to travel to a fairly rural part of Alberta. It may not be exactly like the real thing, but it's amazing what you can do with technology. I'll also cover 3 specific areas that allow us to turn what Doug talked about into reality each and every day. These are Gibson Energy's focus on environment, health and safety, on our operations and on our project execution. It's sometimes taken for granted, but for Gibson to deliver safe, reliable operations day in, day out for our customers, our people and really all of our stakeholders. A significant amount of operational management and technical capability is required. Now as important as what you do is how you do it. I mean in terms of protecting people, the environment and investing in the communities that we operate in. In 2018, our total recordable incident frequency or TRIF came in at 1.14, now following a steady improvement over the last few years. These results were comparable to other liquids terminal operators that we benchmark ourselves Additionally, since Trip includes our trucking and environmental services businesses in Canada, businesses that simply have higher exposure hours, being in line with the terminals benchmark is really quite the achievement. As we complete the exit of our non core businesses, we would expect our TRIF and other safety metrics to improve further. This will be helpful as we've set a very ambitious goal for ourselves to achieve top quartile performance on our safety stats over the next 3 years, which means in terms of TRIF that we would be defining that as between 0.4.6. That means we need to cut our incident frequency in half. I believe that's a very achievable goal given the focus management team and Board have in this area. Changes to our safety targets are also part of a broader renewed focus on operational management. Our operational management system or OMS will not only benefit our safety outcomes, it will further enhance our operational excellence and our business performance across the organization. Our operational and safety performance is not only important to us, it's important to our customers. The commercial group might want to take all the credit for our growth, but for Gibson Energy, our reputation as a good, safe operator plays a key role in customer deliberations. We believe this is a key differentiator for us in the market and we continue to strive to get better. In addition to being a responsible, reliable operator, we've become very capable in terms of our capital project management and execution, and we continue to put projects in service on or ahead of schedule or on or below budget. It's important to remember that most of our contracts, there's no pass through of cost to the customers. So if we're over budget, it impacts our economics. But being under budget because we've been too conservative in our cost estimate is not helpful either. If we overestimate our costs, it raises the hurdle for the commercial team, and over time, we would lose out on good opportunities. So for that reason, we've worked very hard to develop the competency in this space and strive to give a commercial team the most effective and competitive project scopes and cost estimates that we can deliver. Once in execution, we focus on taking a disciplined approach and making sure that we manage risks. This is another area that we've worked hard to develop and I'm really proud of the work that the team has achieved. As you can see, our track record has been very strong. Most recently, we placed Phase 1 of the Top of the Hill project into service about 3 months early. We also placed the Viking project into service about 3 months early. Both of these projects were delivered on budget, which is exactly where we want them to be. The projects we have in progress are also tracking very well. Both Phase 2 and Phase 3 at the top of the hill are ahead of schedule, and we've also been able to accelerate our outlook for the Moose Jaw expansion to be in service at the end of Q2. In the U. S, our build out of the Piodes system and building that into the Wink Hub are also tracking very well. Final timing of that will be dependent on pipelines out of the Wink area and when they're put into place, but I'll let Oren go into that in a little bit more detail. As you can see, our ability to operate is very important to us. In the past, we've not talked about it very much, but I want investors and analysts to know Gibson is a company that can build and operate. This is one of the reasons that we've been so successful in securing virtually all of the tankage builds in Hardisty over the last 10 years. It's a very important part of our business and energy infrastructure and it's a priority to this management team. Now in a second, we're going to go on this virtual tour of Hardisty. But before we do that, I want to highlight something that I personally want to leave you with as I strongly believe that distinguishes us from our competition. Every day my focus and that of my team is on the efficient and safe operation of our assets, including Hardisty. And it's our technical and operational ability and attention to detail and customer service that sets us apart from our competition. While the scale of the infrastructure, the tanks, the pipes, the valves are all very impressive, it's the way we operate that distinguishes us as a service provider in the eyes of our customers. For example, oil coming in from the oil sands doesn't necessarily have a place to go when it lands in Hardisty. This is where Gibson can be a true service provider, leveraging our relationships, physical connections, the flexibility of the terminal to maximize the value of crude for our customers, minimize the disruption to upstream operations and optimize the efficiency of Canada's pipeline network. So with that, let's go on a virtual tour. Welcome to the Gibson Hardisty Terminal, which for over 60 years has been a key piece of energy infrastructure in Western Canada. Let's take a few minutes to explore the terminal and take a closer look at what goes into building and operating energy infrastructure of this scale. We are currently located above the Top of the Hill build out, looking west. As we continue to rise, we can see the Gibson Hardisty East Terminal right in front and the Gibson Hardisty Terminal just behind that. Beyond, we can see tanks related to the largest egress pipeline out of Hardisty. Panning to the right to look north, we can see the origin of the 2nd largest egress pipeline, with the 3rd largest egress pipeline starting southwest of our current position. We are now looking at a bird's eye view of the Gibson Hardisty East Terminal. From a height of just over 100 meters, we can start to get an appreciation for the scale of these tanks. As we hover beside 1 of Gibson's 500,000 barrel tanks, what is really striking is the size of each one of these tanks and the overall size of the Hardisty facility. We can really get a sense of the scale of this infrastructure relative to one of Gibson's employees walking in the foreground. Another important factor to note is all the piping within the footprint as that is the key to the level of service Gibson offers to customers at the terminal With best in class connectivity to 11 inbound and 8 outbound pipelines, the Gibson Hardisty terminal can access any crude grade in Western Canada and all major pipelines in Hardisty. As crude oil comes into Hardisty on one of the many inbound pipelines, it would then pass through the connection to that pipe and is rounded through a series of valve matrices such as this one until it ultimately reaches the intended tank. When it's time for a batch of crude to head to market, it's this backbone that will deliver the crude into the right part of Hardisty. It's also the connectivity that allows Gibson to blend crude oil or NGLs on behalf of customers. Another distinguishing factor that sets Gibson apart from its competition is the company's technical and operational ability. While it might seem that anyone can build and operate a tank, when we see the size, scale and complexity involved in offering customers the flexibility to transport their product through a variety of methods and the planning and execution required to manage throughput of over 1,000,000 barrels per day in a safe, efficient and environmentally responsible manner, the expertise required is clearly evident. So what does 10,000,000 barrels of storage in Hardisty look like? Gibson has a total of 34 tanks at 4 separate terminals. Most of the tanks would be between 300,500,000 barrels with this tank being at the large end of that scale. Each 500,000 barrel tank is approximately 75 meters in diameter and about 30 meters tall, equivalent to a 6 story building and covering the area of 3 professional hockey ice surfaces. We are now looking down at the Gibson Hardisty East Terminal comprised of 9 tanks with a total capacity of 3,700,000 barrels of storage as well as 8 kilometers of piping. Going back to the storage analogy, that would contain a professional hockey arena about 4 times. Now, looking to the east, we can see the top of the hill. We're going to fly over it in a second, but what is important to notice is the change in elevation. It is hard to see from a map, but it really is at the top of a hill 9 stories high and it's something that Gibson needed to consider as it engineered the build out. Given the large increase in elevation from the center of the Hardisty operations, the crude requires pumping in order to be delivered up the hill. We are now above the top of the hill with a really good view of the various phases of tank construction. On the right, we can see Phase 1, which was placed into service earlier this year. Above and to the left of Phase 1, we can see the Phase 2 tanks where the walls are being built and both a floating roof and fixed roof will be placed on top. Just left of those tanks are 2 Phase 3 tanks where civil earthwork has been completed, the foundation has been poured, and the construction of the tanks has begun. You might be wondering why it takes 15 to 18 months to build a tank. A large part of that is winter. When the ground is hard, civil work cannot be completed and it is challenging to pour foundations. To the right of the foundations for the Phase 3 tanks is where the Phase 4 tank will be built with room available for 2 more tanks which will fill out the Top of the Hill footprint. Once Top of the Hill is complete, it will be the largest area of development for Gibson to date at 4,600,000 barrels and 10 tanks. With top of the hill nearly built out, where will future tanks be built? As we look south, we can see 80 acres of unused land just south of top of the hill, which connects to an additional 160 acres further south of that. To put it simply, Gibson could more than double its current tankage footprint. Looking to the east from the top of the hill, you can see the HURC rail facility 2 miles in the distance. Through an exclusive partnership with USD Group, Gibson's terminal is the only one at Hardisty that offers customers the ability to move Western Canada crude out by unit train. The facility was recently expanded to accommodate an additional train per day, increasing capacity to 3 unit trains or about 180,000 barrels a day. As we conclude our tour, we have one last look across the landscape at Hardisty with Gibson right at the center of it. As we have seen, the scale of this infrastructure is very impressive and requires significant technical expertise and operational ability to operate safely and efficiently. Touching about 1 in 4 barrels exported from Western Canada, Gibson's Hardisty terminal really is a key part of Canada's crude oil infrastructure. All right. Again, just amazing what you can do with technology today. I always really enjoy visiting our operations, so I'm really glad we could take you there. Hopefully, the tour has also helped convey some of the things that Doug and I have talked about on our position in Hardisty. Gibson really is at the heart of Hardisty. While we did not touch on all the intricacies of the facilities, we did get to see the valve matrices that drive our best in class connectivity. And that's key to our customers. Doug talked about how challenging it would be today to secure the agreements Gibson has in place. But from a capital investment point of view, it would cost 100 of 1,000,000 of dollars for the piping and support infrastructure required and take years to complete that sort of build. Also, both Doug and I touched on it, but customer focus is very important. Whether it's from a commercial or operational perspective, we are focused on our customers. Over many decades, we believe we've built a strong track record with our customers and that's allowed us to build strong relationships, collaborate and develop effective offerings that are integral to their businesses. So with that, thank you. I'll turn it back to Mark. All right. Well, thanks a lot, Mike. I hope everyone enjoyed the video. If not, I guess we could just have more slides next year for you. But we're going to take a quick 15 minute break. When we return, we have 2 sections remaining. That would be for the U. S. And then our financial outlook. So that would then let us take to Q and A. So we'll take a quick 15 minute break. All right. We're going to get started shortly. So if everybody can importantly find their coffee and then their seat will get rolling again here. Excellent. All right. Let's start back up again. So I can tell you we're closer to the end than we to the beginning with 2 sections and then Q and A. So with that, I would like to turn it over to Oren to speak on our strategy in the U. S. Oren Akats? Thank you, Mark. I am pleased to be here today to talk about the very exciting things that we are doing in the United States around our Wink and Piote area. As a brief introduction, my name is Oren Atkins. I'm the Vice President of Business Development. And as Steve indicated, I'm responsible for all our commercial activities in the United States. Prior to this role, I had worked at a large public U. S. Infrastructure company in a commercial role focused on the development of oil gathering infrastructure in the Permian Basin. Before that, I held various business development and marketing roles developing infrastructure in the Barnett Shale and other U. S. Onshore plays. I joined Gibson just about a year ago. Actually, it was right around the last Investor Day. As an American, I really didn't know too much about Gibson Energy before I started talking to Steve. But now I'm happy to say with the presence that we are building around Piod and Wink, I can tell you that all the producers in the area know who Gibson Energy is and that Gibson Energy is a part of all the discussions on opportunities in those areas. While Steve talked about our broader strategy in the United States and how that fits into Gibson as a whole, to understand the details of where we are going in the U. S, it's probably best to start by understanding where we came from. When I joined Gibson, we really didn't have much of a U. S. Presence and we weren't in the U. S. Infrastructure space. We had a trucking platform in most of the basins in the United States that were coupled with injection stations and also a small gathering system in the Permian. Right before I joined, Gibson had decided to divest its U. S. Business with the exception of the injection stations in the Permian and the SCOOPSTACK and a small trucking fleet to complement them, which would serve as a platform of tools to build out our infrastructure business. In order to do that, as Steve said, the first step was hiring a team of experienced professionals in the U. S. I can tell you that to be successful in the Permian Basin and likely any basin in the world, you need to have a local team with local relationships and an understanding of the local way of doing business. I'm very happy when Steve speaks to the confidence that he has in the U. S. Team because we really have made a number of changes to upgrade our human capital. We've rebuilt our U. S. Business development organization and have hired also hired an individual with extensive marketing and trading experience in the United States to run our marketing organization. We've also brought on a great operations and engineering lead who has years of experience constructing and operating oil gathering systems across the U. S, but most recently in the Permian Basin. George Grau is hanging out in the back. If you haven't met him yet, please do so. Today, we are confident we can confidently say that we have a top tier U. S. Team to execute on both the commercial and operational aspects of our strategy. We also needed to improve on our first purchasing and producer relationships. This capability is critical in growing an infrastructure business, particularly in the gathering space. By its nature, the gathering and the trucking businesses are closely tied to producers' production and the ability to provide pricing and liquidity to those producers is critical to those businesses. Marketing and trucking essentially can help you get your foot in the door and from there you can start to build out your relationship. Over time, that relationship can offer the potential to learn about a producer's future needs. And when you're drilling wells that come on at 1,000 barrels per day, those needs quickly shift from needing a truck to being on a pipeline. We are working today with producers around our pie oat systems and our injection stations in the region and we are in discussions to continue to expand those relationships and add new ones. All of these activities make us very comfortable that we are delivering on the goals from the last Investor Day. With the infrastructure we are building at the Paiute East and Wink Hub, we are confident that we will reach the US20 $1,000,000 in EBITDA or more by 2020. Our goal is obviously not to stop there as we feel these activities have begun to build a platform in the United States where we can continue to deploy capital to grow our infrastructure business and continue to increase the streams of long term stable cash flows that these type of investments provide. So let's go into a little bit more detail on how we're going to drive this growth, starting with our existing assets and sanctioned projects. For those of you that are not familiar with this part of the world, our Paiute East system is located on the western edge of the Central Basin platform with the Midland Basin to the east and the Delaware Basin to the west. I'm sure you probably heard of those basins as they have outperformed their initial expectations and are likely some of the most prolific plays in the world. The Central Basin platform offers similar multi zone potential and we are seeing horizontal development and drilling heat up in that basin as well. So there's still a lot of opportunity in the infrastructure space around both of our pilot systems. There's a lot of acreage in this area that has not been dedicated and the cost of getting into these opportunities is not the same as the multiples we've seen in other parts of the Permian, which are now in full development mode and very crowded. This is very important because we simply aren't willing to pay as much and take on the risk that some other players choose to take on. We are very excited about the development in the area and our position and with about 3,500,000 barrels a day of new takeaway capacity being built into Wink and expected to come online in the next 6 to 18 months, we expect the drilling in the area will continue to help fill up these new pipelines. To put that into the context of Canadian oil and gas, total pipe egress at Hardisty today is about 3,500,000 barrels. So effectively, Wink is a new Hardisty. Right now in the Piote area, our Right now in the Piote area, our focus is to continue to execute on the development of Piote East as we announced last August. As you can see on the map, we have over 65,000 acres dedicated acreage, which is currently producing about 12,000 barrels per day and with 3 rigs currently running on that acreage is very much on track to meet or exceed the 2020 expectation of reaching 20,000 barrels per day. To give a little bit more color on what an opportunity like this looks like, when we entered into the agreement, there was an existing pipeline that was not in service and the producer was trucking all their volumes. As of the start of November, Gibson took on trucking all the volumes on the dedicated acreage and we will continue to do so until volumes can get on pipe. Even then, there will still need to be some trucking as new pads come online before they are tied into the system. However, our focus here to be clear is infrastructure and more specifically bringing that existing pipeline system back into service and connecting it up into the Wink Hub. With our pilot expansion opportunity, our intention is to build a 12 inches pipeline into the Wink Hub with the ability to connect into several of these egress pipelines, providing our customers with optionality and a market egress solution. Today, our acquisition of right away is nearly complete and we don't foresee any issues as the State of Texas is still a jurisdiction that allows and welcomes pipelines. Those are unfortunately becoming fewer and farther between. Construction will commence next month with our target being to bring the system into service just as egress out of the Wink area becomes available as there's really no benefit in being there early. That's the growth we have sanctioned in this area today. But as Steve talked about, our intention is to create an infrastructure growth platform around our position in the Piote and Wink area. For those of you that understand pipeline hydraulics and capacities, when I mentioned that we're building a 12 inches pipe into Wink, you might have thought, man, they're expecting a lot of production from that acreage. In reality, our strategy behind building a pipe that can carry 100,000 barrels per day is that the incremental cost to upsize that pipeline is small, but it allows you to have significant upside opportunities in the future. With the relationships we are building, both through our first purchaser capability, our trucks, as well as our business development efforts, our goal is to start driving volumes onto our system, not just through direct well connects through our gathering systems, but also through connections to 3rd party gathering systems neighboring our own. This can take on several different forms. For instance, if there's an offsetting producer that has existing production going to another market, we may be able to win that business by offering them a better market at Wink given the connectivity we're going to have there. If that producer is looking to grow, we could align ourselves with them and start building out a system on their behalf that connects into our trunk line into Wink. Even if that acreage is already dedicated to another player, it might make sense for us to work together on a joint tariff for them to use our pipeline and connectivity for a fee. Over time, the idea is to spiderweb the system out and be able to access more and more production, but in such a way that we have a clear line of sight of how we will make our returns when we invest our capital. The other part of our strategy around our pie out assets and our aggregation of Cruden area is to be a part of the longer term build out of the Wink Hub. As we build our pipeline into Wink, we have also been diligent in trying to secure as many connection agreements as possible to each of the pipelines that will take that 3,500,000 barrels a day of crude out of Wink. While some companies are more commercial than others, right now, most of the pipeline operators want as much crude coming their way as possible so they can fill up their new downstream pipelines. As these pipes start to fill up over time, I would expect that their enthusiasm on new connectivity to wane. So similar to the discussion that Doug provided on how we built our flexibility at Hardisty, now is the time to secure those connections at Wink. Right now, the Wink Hub really doesn't exist. Unlike the images that Mike showed you, there aren't tanks as far as the eye can see. It's really just empty space adjacent to a small West Texas town of Wink and some small legacy terminals. This is not a very densely populated part of the world. In fact, we recently purchased our 160 acres of land at what is a fairly nominal cost. Our intention over time is to build a Gibson Wink Terminal. Of course, as Steve outlined in our strategy, our business is about long term stable cash flows. And so to build a wing terminal, we are going to need to secure the contracts to underpin those builds. But we do believe that we are very well positioned. We are working to secure those connection agreements to provide us an advantage down the road and we believe there is a 1st mover advantage to build out at Wink. Similar to Hardisty, we're independent and that creates a competitive advantage and that we are aligned with the needs of our customers. So let's take a look at a map of our target area in the Permian Basin and get a bit more specific about those opportunities in that area. The important point I would make at the outset is that we are in active discussions across this map sheet for infrastructure investment opportunities. On the west side of the map, you see the future Wink Hub in Winkler County. We just talked about our intention to be part of the build out of a terminal there. To help us do that, we want to access more barrels and build up our customer base as scale is important. Southeast of Wink is our which will be connected into Wink by the end of the year. To the east of the Pilot East System, there is a significant undedicated acreage from producers in the Central Basin platform. Our intention is to expand our gathering footprint to get some of those producers onto our pipeline into Wink. Southwest of Wink is the PiYo West system. There has been some consolidation in that area recently, which has changed the landscape a bit, but our intention remains to bring volumes in that area into our Pilot West system. Where previously we might have worked with the producer, we would now also look to partner with midstreamers who have dedications in that area. This would then allow us to underpin the connection of the Piote West system to our Piote East system and into Wink. Throughout the area, you can also see our injection stations, which are located on several different egress pipelines. We are using these stations in conjunctions with our trucking and marketing business to build relationships throughout the Permian. For example, we currently have an injection station in Andrews County and have an active trucking and marketing activity in the area. Our goal would be to transition the producers' volumes from truck delivery onto a new gathering system. With 5 rigs currently running in that area, we know that there will be a need for gathering in the near future. Similar to our strategy at Paiute, if we were able to secure a relationship with 1 of the producers, that would underpin the construction of a backbone of a system with the intention of bringing adjacent producers on in the future. Longer term, there could also be the potential to consider tying these volumes back into Wink if there's producer support to do so. Interestingly enough, between Andrews County and Wink, there is also a large amount of undedicated acreage that is seeing increased producer interest. So there are definitely a lot of opportunities in the area and Gibson is a part of all of those conversations. So I've spent most of my time talking about what we are doing, but I wanted to finish today with a question that I understand the company gets from a lot of investors and analysts, which is how does Gibson win in the Permian given all the competition in the area? Well, the most important thing is likely the people. Without local people with local relationships, it's very difficult, if not impossible, to succeed in the Permian. I understand that Gibson has had a presence in the U. S. For a long time, but if you're going to do business in Texas, you're going to have you need to do it the way it's done in Texas. Steve, myself and the new U. S. Team, we know how to do business in this part of the world, how to open doors. And I think the steps we've taken in the last year or so are evidence of this fact. We're also looking to operate in a bit of a niche space. A lot of U. S. Infrastructure energy companies like the one I used to work at have grown too large to focus on gathering. For them to move the needle, they need to build long haul pipes out of the basin and deploy 1,000,000,000 of dollars on one project. For Gibson, if we get only a small piece of the gathering pie that will get that 3,500,000 barrels to Wink, that will be very meaningful for this company even if it's over a few years. There's also a lot of PE backed players in the space. Often, these companies don't have any assets in service, have very limited or perhaps no operational capability in place and they often don't offer a full service package like we can with the integration between our infrastructure, our trucks and our marketing and first purchaser capability. Also, if you talk to producers, they see value in a partner that's in it for the long haul rather than in it until they can flip the company. It shows up in how you service the customer. It shows up in the relationship and the partnership that you build and it also shows up in how you build and maintain the infrastructure. This is very important because Gibson needs to bring more than just a checkbook to these opportunities if we're going to be able to find one that fits our risk adjusted return expectations. We simply can't and won't pay the kind of multiples we've seen from other players, but we are happy to build at our multiple and sell it theirs. In summary, the last year or so was certainly a very busy and productive year for the U. S. Team and we are happy with the progress we've made to execute on the strategy. We are very excited about the future of Gibson's U. S. Platform and I look forward to speaking to a larger footprint at an Investor Day in the future. Thanks so much. I will now pass it on to Sean Brown, who will talk about the financial forecast and our strong balance sheet that funds all this growth. Sean? Thanks, Oren. As you've heard today, we're extremely satisfied with all the progress that we've made since Investor Day, but we're even more excited about the future of Gibson and all the high quality growth opportunities in our portfolio as a whole. That being said, it's not only important to an attractive suite of projects at superior risk adjusted rates of return, but also be in a financial position to fully fund that growth without the need to access additional equity. Throughout the discussion today, we've talked about the drivers of growth within each of our business segments, but let's take a look at that on a corporate level. First, let's discuss segment profit, which as a reminder is really EBITDA coming out of our businesses before corporate G and A. In 2018, segment profit from combined operations was $500,000,000 inclusive of approximately $35,000,000 from divested businesses. Roughly 60% or $300,000,000 was from our infrastructure businesses with terminals and pipelines representing about 90% of that. The other 40% came from the marketing segment, which had a fantastic year in 2018, delivering over $200,000,000 in segment profit. Looking to the future, we expect that the infrastructure segment will continue to grow at an attractive rate with clear line of sight in the near term from our projects currently sanctioned and under construction. In 2019, we anticipate infrastructure segment profit to be between $300,000,000 $320,000,000 That would be more than a 10% increase if you normalize 2018 results for some of the non recurring items we saw last year. And we would expect that contribution to further increase another 20% to $360,000,000 to $380,000,000 in 2020, again largely from sanctioned projects plus any contribution from projects we expect to sanction the balance of this year. On the chart, we've also shown we've also included each of the years since IPO in order to really demonstrate a couple of the dynamics driving the transformation of Gibson Energy. The first thing I draw your attention to is the steady growth in infrastructure. In 2011, at IPO, the infrastructure contribution was less than $100,000,000 where by the end of 2020, the run rate will be approaching $400,000,000 That's a compound annual growth rate of nearly 20%, which is very impressive, especially in an infrastructure context with it all being organically driven. The second thing I would point out is just how big of a part of Gibson the divested businesses were, especially if you look at 2013 2014. In 2013 2014, Gibson's divested businesses such as Environmental Services and Canadian Truck Transportation represented close to 55% of segment profit with Commodity Sensitive Businesses representing close to 80%. This is a clear visual depiction of how radical the transformation the business has really been. Where in 2013 infrastructure would have been about a quarter of the business, in 2020 it's about 85%. I'll speak to this later in section, but this transformation has been extremely purposeful to shift the company to much higher quality and valued cash flows. Perhaps the third thing to point out here is marketing's recent performance in the context of the variability of that business. You can see that the performance we realized in 2018 was the strongest seen in any year to date. Even in 2019, we expect marketing to be around $60,000,000 in the Q1 and have shown mid cycle levels thereafter, it will still be one of the better years marketing has had. An important point though is that with that marketing outperformance, though its contribution on a consolidated basis appears somewhat outsized at 40% for 2018, this 40% has been an important source of funding for our highest quality and highest valued infrastructure projects. At Investor Day in January of last year, we forecast $150,000,000 to $200,000,000 in growth capital spend with that being funded almost exclusively through asset disposition proceeds. In fact, we spent close to $300,000,000 in 2018, but we're able to remain fully funded because of the outperformance seen from marketing. To put all of this into context, that $300,000,000 will generate between $40,000,000 $60,000,000 in high quality infrastructure EBITDA on a run rate basis. With regards to marketing, it's our goal to provide the market with as much visibility as we can. But our most accurate estimates do not extend more than a month or 2 out given the nature of the business. Hence, our approach of trying to provide an update on each of our earnings calls. When we budget internally, we assume a contribution of $60,000,000 to $80,000,000 over the long term and we believe this is The Street should use as well. If we exceed that range, that's fantastic and it will only serve as an additional source of capital to fund the high quality infrastructure growth projects as I detailed for 2018. But long term, we are focused on our infrastructure business. And if marketing outperforms, that's upside to our plan, but it's not something we build our budgets around, no reliant for servicing either our dividend or leverage. Now looking at our performance on a distributable cash flow basis, you can see that the growth we're seeing in EBITDA is driving distributable cash flow per share growth, which is our real focus. When we laid out our goal of DCF per share growth last Investor Day, we are really basing it off of 2017 as that was the year we had just completed at the time. Today, with the projects we have under construction, we have strong visibility in 2020, such we can say that we will realize a bit of 10% per year growth rate in DCF per share between 2017 2020. Given we are assuming mid cycle marketing for 2020, the clear driver of all this growth is through our high quality infrastructure cash flows. Between 2017 2020, distributable cash flow from infrastructure after covering all corporate obligations such as G and A, interest and maintenance capital will have roughly doubled. Importantly, in 2019, those infrastructure cash flows will also roughly cover our dividend, which is an important gauge for us. I'll discuss our growth projects in more detail later, but we remain confident beyond 2020 that we will continue to grow our infrastructure cash flows at an attractive rate into the future. You can also see in the chart how applying the lease costs and considering the impact of taxes diminishes a relative contribution from marketing. If we're at $60,000,000 to $80,000,000 in EBITDA, about half of that is lease costs and after also applying taxes of 27%, marketing on a cash basis is much closer to 15% of the business on a mid cycle basis. As a result of the non core dispositions and the very strong financial performance in both infrastructure and marketing in 2018, we've been able to meaningfully improve our financial position. Where our net debt to adjusted EBITDA was 4x at the end of 2017, we finished 2018 at 2.3x. In terms of payout ratio, we are just over 100% in 2017 and 67% in 2018. With both of these metrics currently below our long term targets, we are in a much better position than we forecast last Investor Day, where our outlook was to be within our target ranges by 2020. So that's been a big win for us. That said, we are very cognizant that with marketing outperforming, both these metrics will move towards their target ranges as earnings from that part of our business moves towards mid cycle levels. Another way we look at leverage is to consider our total leverage on just our infrastructure business. On that basis, we'd be under 4 times levered, which to put into context would be below most of our peers' corporate levels, which would include some commodity sensitive cash flows as well. Going forward, we will continue to target an infrastructure only leverage ratio of 4 times or less. And while these metrics will come back into our target ranges as marketing returns to mid cycle levels, as I discussed earlier, there are permanent benefits from that marketing outperformance in terms of our funding position. Recall that our funding strategy at Investor Day last year was to be fully funded for 2018 2019, but the plan at that time was that growth capital would be entirely funded through divestitures and distributable cash flow would approximately equal our dividends. The intention being that once that capital was in service in 2020, we would be self funding. As mentioned earlier and announced this morning, we are successful in executing the divestitures, but our commercial teams also did a great job such that instead of $300,000,000 to $400,000,000 in infrastructure growth opportunities, we are over $500,000,000 for 2018 2019. Fortunately, with the outperformance marketing realized in 2018, we remain fully funded for all our existing sanctioned capital. And if we're around $60,000,000 in EBITDA for the Q1 of 2019, like we talked about on our earnings call, then we would also have some cushion even if one assumes mid cycle marketing performance for the rest of the year. To put all this into hard numbers, one can see on the right hand of slide, our total outflows for 2018 2019 are expected to be approximately $875,000,000 to $925,000,000 with roughly $300,000,000 of that $380,000,000 of that being dividends and the remainder growth capital. To fund this, we have approximately $325,000,000 in asset divestitures and expect $500,000,000 to $550,000,000 in distributable cash flow. With these two items alone being $850,000,000 to $875,000,000 we are almost fully funded as is without any incremental leverage. Given the excess cash generation though, there is an ability to add incremental leverage at our target ranges, which I'll discuss in the next slide. At a high level though, as the retained distributable cash flow is unlevered, we would want to pair that with a debt component to maintain our target capital structure. Whether you look at it on a 50% to 60% leverage basis or 3x to 3.5x future EBITDA, it means we can apply $1 to $1.5 of leverage for each dollar of equity from retained distributable cash flow. When one adds this incremental leverage available on a retained or excess cash flow available, we exit the year with a funding cushion of approximately $150,000,000 As outlined previously, a key part of our core governing financial principles is to make sure that we have appropriate leverage in our business. Too low and returns to shareholders will be diminished, but if it's too high, we'll take on too much financial risk and there's also negative share price implications. Our target is to be in that 3x to 3.5x debt range. As discussed earlier, if you think about our infrastructure assets being able to support 4x the debt, while marketing should not have any leverage, then at some of the parts basis, we ought to be in that 3x to 3.5x. To remain within that target range, we need to have the same capital structure on our new infrastructure growth. You could come at it from 2 different sides, but it's really saying the same thing. If you have 3 to 3.5 turns of debt on a project that's built at 5 to 7 times, then you're looking at something in the 50% to 60% debt range. Alternatively, 50% to 60% of 5 to 7 times is 3 to 3.5 times. Either approach gets to the same spot. What this means for Gibson is that if we're deploying $200,000,000 in capital, we're going to need about $80,000,000 to $100,000,000 of equity to support that. At $300,000,000 in capital, which would drive well above the 10% DCF per share growth, we'd look to have a $120,000,000 to $150,000,000 equity component. When we say a fully funded model, what we mean is the equity component is sourced from a retained distributable cash flow. Now infrastructure is going to be uneven with respect to when it comes in service, so we might put a bit of excess retained distributable cash flow on the balance sheet 1 year by paying down debt and then use it the next year. You will see in some of this dynamic as we think about the utilization of 2018 marketing outperformance, which realized which resulted in a year end leverage number well below target at 2.3x to help fund 2019 capital, which is currently expected to be $250,000,000 or greater. Over the long term though, a self funding or fully funded model is one that maintains our target leverage without the need for external equity, whether discrete issuance or a continuous program like a DRIP or an ACM. This also ties back to our target payout ratio of 70% to 80%. Although, with the current pace of our capital spend, our bias would be very much at the low end of that range. For example, in 2018, our retained distributable cash flow was just under 100,000,000 dollars which would have funded alone internally funded alone in excess of the $150,000,000 to $200,000,000 in capital we talked about at Investor Day last year to grow at around 10%. Tying some of these concepts together, we're likely to exit 2019 with some extra equity on our balance sheet. But with the Capa projects we expect to sanction, we see it being utilized in 2020. With all the projects we are bringing on, retained distributable cash flow in 2020 with marketing at mid cycle levels should be sufficient to cover the equity component of approximately $150,000,000 to $200,000,000 of growth. To the extent that we sanctioned closer to $200,000,000 or more in 2020, then that cushion from 2020 will come in handy sorry, from 2019 will come in handy. And as we continue to grow the infrastructure business beyond 2020, we see our funding capability at our target leverage is likely closer to $200,000,000 to $250,000,000 per year in total capital. If we get any upside from marketing over that time, that also improves our position, but our budgeting would not include that. The other part of the equation is really how much in capital opportunities we expect to see over the next few years. Starting out with our terminals, where we realize our best risk adjusted returns, if we're at that 2 to 4 tanks per year, then that's likely $100,000,000 to $200,000,000 in capital. We've generally pointed to about $100 per shell barrel, including all the connectivity, but that's more likely more of a greenfield number. On brownfield opportunities like phases 2, 3 and 4 at the top of the hill, we'd be less than that. But when you add in the $20,000,000 to $30,000,000 of inside the fence opportunities we see each year, as Doug discussed in his section, we remain confident in that dollars to 200,000,000 in total capital range for terminals. In the U. S, we've really been able to build out that platform. At Investor Day last year, we talked about targeting $25,000,000 to $50,000,000 in capital per year. But as Stephen Oren discussed, with the success we're having, it's now likely in the $50,000,000 to $100,000,000 per year range. Outside the fence, as Steve discussed, we continue to target opportunities, but realize it's likely going to be somewhat uneven on a year over year basis. We do think it will average up to $50,000,000 per year in opportunities, but this will likely be 0 in some years and then possibly well over $50,000,000 in others. Overall, we think this will add up to between $200,000,000 per year in capital over the medium term. At the lower end of that range, we're growing our infrastructure cash flows at or above 10% per year in the next few years, but we will need to move up to that range as time goes on. On a longer term basis, assuming egress pipelines are built in Canada, we remain confident in this number. To the extent that pipelines are not built, we struggle to see significant incremental investment in the oil sands and would expect to see much more modest growth within our core terminals business. Another key factor that will determine both the growth we see and the value we create will be the returns we see on that investment. Even if you look at the bookends of our target build multiple range of 5 to 7 times EBITDA, there's a big difference in returns between the two points. One of the comments we sometimes get on the road is if we are truly investing at 5 to 7 times EBITDA, how come that isn't coming through in your corporate metrics? Admittedly, that's fair. As our corporate level return metrics, whether you look in the last 5 years or since IPO, aren't where we'd like them to be. However, when you dig into the numbers, a lot of that was being driven by the divested businesses. Within our core terminals business, we have in fact been realizing attractive rates of return, very much in line with what you would expect of a 5 to 7 times investment multiple. That return is all the more attractive when you consider the quality of cash flows in terms of take or pay, high quality counterparties and term. What this also demonstrates is the need to be disciplined with our capital. For example, when we are considering gathering pipeline projects in the U. We are looking for a higher rate of return than with our terminals because we aren't generally able to get take or pay contracts. The terminals will still be a better investment on a risk adjusted basis, but we're still creating value if we find projects outside of our terminals if returns are above our risk adjusted hurdle rate. We would expect that as we continue to grow our terminals business and having shed the non core businesses, our corporate return metrics will improve in the future. Shifting gears a little bit to the quality of cash flows and credit size of our business, I believe it's important to take a moment and consider the dramatic transformation the company has undergone. For that reason, this is one of my favorite slides, so I'll quickly walk through it. Looking at the business in 2014, 2017 and where we'll be in 2020, you can really see that transformation. In 2014, we're 25 percent terminals and pipelines and about 1 third infrastructure. By 2020, we'll be about 3 quarters terminals and pipelines and fully 85 percent infrastructure. That shift is also driving a change in our cash flow quality. In 2014, we are 15% take or pay and 30% take or pay and total stable fee based. In 2020, we'll be about 60% take or pay and about 80% take or pay and stable fee based. While we made a lot of progress in our cash flow quality and balance sheet, we also appreciate that most people are going to compare us to our peers. On a quality of cash flow basis, it's often hard to compare because everybody looks at it a bit differently. But in terms of proportion of take or pay and fee for service, Gibson would be in the middle of the peer group, which I would note for the purpose of this slide includes both Enbridge and TransCanada on the far left hand side of the graph. When you look up what makes up that bar for Gibson, it's mostly take or pay with the remainder being the volumetric fee based component related primarily to the oil sands volumes at our terminals, which is extremely ratable. Compare this to some of our peers, which would also include fee for service for much shorter term contracts often related to conventional oil and gas production in Western Canada. Given this, we feel when considered versus our peers on a quality of cash flow basis, we compare extremely well. In addition to this, on a leverage basis, Gibson is the lowest within the peer group. We talked about our leverage being lower due to our marketing outperformance and that we expected it will increase as earnings from that segment moves towards mid cycle levels, but we would note our peers would have experienced the same outperformance from their marketing segments, so the relative comparison is still valid and that many of our peers are over 4 times leveraged for their entire business, whereas that would be our target for just our infrastructure segment. Given this, we would expect we will remain at the low end of the peer group, regardless of marketing performance into the future. Similar to Steve speaking to the equity markets taking notice, the improvement in Gibson's credit profile has also been recognized by the rating agencies. We are very pleased with being rated investment grade by DBRS as this is one of the goals we laid out as part of the strategy last year. We believe that obtaining an investment grade rating will be very beneficial to the company for several reasons. Front of mind to most would be access to the investment grade credit markets, which will reduce borrowing costs and provide access to longer tenure than we could in the high yield markets. An investment grade credit rating is also required to really access Canadian preferred and or hybrid market, which can be a great source of capital when funding infrastructure investments. And for that reason, it's no surprise that we see it being a part of the capital structure of all of our peers. In addition, as a result of the movement towards full investment grade status and the current amendment and extension to our credit facility we expect to close tomorrow, we have moved to ratings based grid with much more attractive pricing and have negotiated Toggle into a full investment grade credit facility, which will contain much more company friendly features and that Toggle triggered with a second investment grade credit rating. There are also benefits to our equity story, such as a lower overall cost of capital and interest cost savings, which helps our funding profile. More broadly though, we believe that it's yet another sign that Gibson has truly become an energy infrastructure company and that the equity markets typically reward long term stable cash flows with a premium valuation, especially when there's visible growth. Now you may recall last year, we talked about our governing principles as a framework to ensure Gibson maintains a very strong financial position. So as a summary of what I about today, let me quickly walk through these governing principles as a scorecard of exactly how we are doing. In terms of our quality of cash flows, through completing the dispositions and continuing to invest in infrastructure, our quality of cash flows continues to improve. We have clear line of sight to 80% of segment profit being from high quality structures. And although that metric was below target in 2018, in part because of the outperformance in marketing, in reality, outperformance in marketing has allowed us to realize most of our 2020 goals in 2018. With the meaningful improvement to our balance sheet, leverage today is 2.3x relative to target of 3x to 3.5x. Our payout ratio is at 67% relative to the target of 70% to 80%. Additionally, we are fully funded for all sanctioned capital and have positioned the company to be self funding for the long term. So today, Gibson is in a very good financial position with a strong balance sheet. That's an important part of the overall strategy. With that, I'll pass it back over to Steve. Thanks a lot, Sean. The team has provided detail and color on the business. I really want to bring it back to a couple of key points. 1st, you've seen a lot of checks on the slides. Every person up here who showed you checks on the slides. We've executed on all facets of our strategy. We've created a focused oil infrastructure business. This is a business built around our Canadian terminals. We continue to grow our infrastructure cash flows. We spent over we will spend over $500,000,000 in 2018 2019 combined. We've trued up our balance sheet. We've received our 1st investment grade rating and we're fully funded on our capital program. We are doing what we said we were going to do. We're just doing it early. 2nd, our strategy remains consistent. We see significant growth opportunities in and around our terminals and in the U. S. And we believe we will sanction $200,000,000 to $300,000,000 in infrastructure per year. We continue to expect to sanction 2 to 4 tanks per year and we now see U. S. As a platform where we can deploy up to CAD100 1,000,000 per year. We remain focused on driving our per share growth. That's how we really define creating value. We will continue to be very disciplined in the projects we sanction. Our dividend is very secure. We will maintain a very strong balance sheet and remain fully funded. As I hope you see today, we have the team in place to execute our strategy. We are all very excited about the future of Gibson Energy, and I hope you share in our excitement and what this company will do in the future. I'll now take it over to Mark. Mark? Thanks, Steve. Well, that concludes the formal presentation. So we're now going to move to Q and A. We will take the questions from the audience. And so that everyone in the room and also those on the webcast can hear, we would ask that you wait for Riley or Lei to come on over with a microphone for you. So if we could have our first question, I think Rob Catelli will provide. Thank you. Good morning. Rob Catellier from CIBC. I did want to follow-up on the U. S. Strategy a little bit here. Sean, you alluded to the lower returns, the potentially lower returns sorry, the higher returns compensate for the lower risk. I'm wondering if you could provide a little bit more color there in terms of what we can expect, just sort of degrees of what might change. In particular, if you can outline some of the risks you'd be willing to take in developing that position. Maybe given that question is due with our U. S. Strategy, it'd be better for Steve and Sean can add in if there's anything else. So if you look at our 65,000 acre, that has about 10,000 barrels per day, which is on which is a water flow. And it seems very little to no decline rate. So even if there was no drilling rigs, that would still we would still receive about an 8% to 9% rate of return on that project. There's currently 3 rigs drilling on that. They can move more than 3 rigs onto this property. We've been very modest on our projections on volumes coming off this contract. So I believe that with the drilling commitment on that property, that's a great opportunity. So you've got existing production with a drilling commitment and a large acreage. On and the main producer in the area that's on that 65,000 acres He's very excited about the acreage and currently buying up significant acreage in the area because they like that play. Yes. Just Dale, I'll have one quick follow-up there, and then one more question. So with the volume commitments you have today, do you have enough volumes on your system to be able to support a tank in the Wink Hub or somehow associated with your system? Or do you need other third party volumes to be able to support tankage? Yes. This is good rate of return projects. This is kind of a 5x type project. We could build a tank, but we want to any tank that we build on that 160 acres, we want it funded by a producer. And we're kind of targeting that 5 year range. The contracts around any tankage at Hardisty versus tankage in Midland are going to be very similar except for the timeframe. We're probably 5 years in the Wink area and we're 10 years or plus in the Hardist area. Yes. The question was more whether you had enough volumes you have to do is, We believe with what we're chasing, yes. So when you look at what on the western or you look on the eastern flank, we're chasing 2 different customers right there that we hope to sign up relatively soon. And then when you look on the western flank, which is the eastern hub, you've got 2 super majors right there in that area. And then there's a large PE firm. The PE firm, we were actively talking to that PE firm to do a joint pipeline into Wink Hub. With all those volumes, yes, we do believe. We're also talking to several midstreamers and marketers to build Page at ethylenecone and contracted them. And then my last question for Sean. You've mentioned a couple of times both in this context and previously about wanting to match the dividend and have that covered with the fee for service business. And I believe that's a target that you have for 2020. So I wondered if you can finish the thought there. It seems to sort of imply that there wouldn't be any different growth expected in your current funding plan for 2019. So do you have to have that cash flow in service or merely a line of sight to be able to address the dividend? Thanks, Rob. So I mean, obviously, dividend decisions are at the Board discretion to the Board. But as I talked about in my prepared remarks, as we see 2019, infrastructure cash flow is roughly covered in dividends. Another big focus for my discussion would be fully funded. So just simply covering the dividend is not tough, otherwise we rely on marketing performance for this year. So our visibility right now is that any dividend increase is more likely something that we start considering in 2020 as opposed to 2019. The second part of your question really how do I think about it? Is it a trailing infrastructure cash flow perspective one? It'd be very much one. Because any dividend increase is going to be serviced by those cash flows that will come on in the future. So they said that we've mentioned a tank and that cash flow coming on, that's what I've used in the equation as I considered whether or not it's the appropriate time to recommend an increase. If we can go to Jeremy back there with the mic. Jeremy Tonet, JPMorgan. Just want to follow-up on the Permian infrastructure opportunity there. And is the focus for Gibson solely on crude oil logistics, be it gathering and terminaling? Is there any desire to go into other hydrocarbons or anything else or really kind of sticking to your core focus there? Maybe, Loren, do you want to speak about what you're currently doing? And then, Steve, you could speak to our appetite for other opportunities? Sure. Good question. Initially, we are just focusing on crude oil infrastructure and logistics. So natural gas and water and other hydrocarbons are not our primary focus. That said, if there was an opportunity with us to complement accrual infrastructure opportunity, we would consider. That kind of came a little bit. I mean, we're a accrual infrastructure company. That's our main focus. And when you say that condensate in the basin is one of the things we consider crude oil. So condensate crude oil, one of the things about the Central platform is just the heavy crude oil not compared to Canadian standards. So in the U. S, their light sweet, we consider heavy. So in the U. S, light sweet in Canada would be considered heavy in Canada. So 36 gravity stuff, but there's a lot of 52 gravity plus opportunities there. So one of the things that tankage brings plenty of opportunities on a go forward basis. Great. Thanks. And just want to pivot to Slide 46 here. And looking at the terminals and pipes between 2011, 2018, it seems like you've captured some very nice unlevered rates of return here. I was just wondering if you could just maybe expand upon such strong returns, seems like competitors would want to enter this business, but it doesn't seem like people have been able to compete. Just wondering if you could talk about how you've been able to do that historically and how you see that going prospectively? Thanks, Jeremy. This is really what we thought would be an important part of the discussion today. So Doug spent a fair bit of time talking about our competitive advantage there. He discussed the fact that some of our competitors have historically are currently doable land positions and have not been able to build the tank. It really goes to what we would call our mode for competitive advantage. That's connectivity, customer relationships. There are a long history in RC would be the main factors. They're not being able to continually build them. I think the slide that Doug showed, which was all the new tanks in 2011 is really quite harmful. These rate of returns are here, you're absolutely right. We've been fairly focused that our build multiples are 5 to 7 times, which is extremely attractive when you consider the tender contracts and the quality of PNR parties. And we still have been really the exclusive builder of all tankage in HRSD. We'll go to Pat for the next question. Thanks, Mark. Pat Kenny, National Bank. Just at Edmonton, wondering if you could provide a bit more color on those other opportunities outside of TMX And just how you're thinking internally around waiting for TMX versus is it more of a 1st comp, 1st year basis? Doug, maybe you can speak to our Edmonton terminal. Sure. Yes, I think we're chasing in the customers for any tankage or any product at any point in time. And Edmonton, the unique difference between that and RSP is you do have local area refineries. So there is some appetite for refined products business. You do some of that refined products business today with the terminal position we have there with Northwest coming on with substantial hedging through creating more diesel output in the Alberta market is something that we consider and we continue to change opportunities around those refined products. No different than RSD. A lot of customers are looking at increased residence time. With Yes. I'll just finish up. When you look at that facility today, that 1,800,000 barrels of tankers that we have there, 3 quarters of that really serves the refineries on a refined product side. The other quarter serves the refineries on supply. So on a go forward basis, we have 100 manifest rail loading spots there. So we load out a lot of diesel and other refined products. That facility, we can continue to expand on the refined product side, especially with the changes in IMO 2020. Got it. And Steve, when you came on board, big focus was on cost reductions. But where we're at in terms of reducing costs across the organization and if there's any key metrics that we can keep an eye on going forward. Well, we did cut costs really in the field at all the different facilities and G and A at the main office. We say we cut $20,000,000 on a run rate basis. That's kind of our target. We're going to have internal audits to make sure that we do continue that $20,000,000 on a run rate basis. We will move to Linda for the next question. I have a question with respect to the long term aspirations in the U. S. We have seen an acceleration of the cadence of your opportunities there. And I would think based on the skills of the team that that could accelerate further. Has Gibson put thought to what sort of an appropriate business mix geographically you could see long term in terms of the minmax? And I guess my follow on question is, given the presence of super majors and other potential partners down in the Wink Hub, I'm wondering also if the company has put thought to an appropriate kind of cap or concentration of customers to ensure that there's not too much reliance on certain types of customers? Can you comment on that? Well, I'll comment. So if we spend $100,000,000 a year, which is kind of the upper end of what we're saying, we spend that over the next 5 years. And then you look at what Gibson looks like at the end, that means our U. S. Business is still 15% to around 15% of our total business. Our total and our main focus is going to be the hardest term on a go forward basis. The U. S. Just gives us another platform to deploy capital. We're going to be very disciplined in how we deploy capital in that basin. Obviously, you would like to have the super majors. But the one thing with the super majors is they grind you, which means that a lot of times you don't you win the opportunity, but did you really win? And we're going to win. And just as a follow-up in terms of customer Customers, we're going to look at all different types of customers. We're going to look at midstream customers. We're going to look at the smaller producers in the gathering system. We're going to look at marketing organizations. We're going to look at the super majors. Excellent. Andrew, the next oh, no, sorry, we've got Elias back there with the mic, sorry. Yes. Elias Boscolas with Industrial Alliance Securities. Question I have back here on Moose Jaw. It was quickly mentioned though that seems to be not the greatest amount of capital, but the highest return projects you have. Is there a pyramid of more capital that you can put behind that facility. So new projects and we've shot opportunity in the future, Steve? We're not actively looking to do more projects there, but we are looking at those 2 towers or 40,000 barrels a day towers. So there are there is the ability to continue to expand that opportunity. And when you look at risk adjusted returns, it is a processing facility that's driven by a crack spread. This really requires higher risk rate of returns. All right. We'll move to Andrew or just waiting for the mic. Andrew Kuske, Credit Suisse. So the first question is just on the U. S. And that $50,000,000 to $100,000,000 dollars of capital allocation per year. Is that just really you wanted to walk before you can run and that's really being conservative and hitting the return threshold that you desire versus the opportunity that exists? I think it's us being conservative. At the end of the day, we want to do what we said we're going to do. We think we have the team in place to execute that 50 to 100. We really like our 160 acres. We like that we built a 12 inches backbone into the facility, which allows us we're only using 15,000 to 20,000 barrels a day to get the economics on that pipeline. So the 100,000 barrels a day allows us to really ramp up at very high rate of return. We're going to connect to all the different pipelines, which is the EPYC Pipeline, the Gray Oak Pipeline. We're looking to connect to Energy Transfer, Enterprise, ExxonMobil. We're looking to really connect to all of those people. The backbone we're building there is a 16 inches which gives us mainline transfer ring in the terminal itself. And then just as a follow-up, when you look at deals like the Oryx deal that was announced this morning with Concho, does that provide an interesting opportunity for you where you got private equity coming into the basin? They don't necessarily have the expertise that you do and the pedigree that you do not being patronizing about it. But does that give you another sort of outlet for capital allocation with somebody else? We definitely look for partner opportunities. Concho is one of the best produce biggest producer in the basin. And Work has done a marvelous job of developing that oil infrastructure to support Concho. So that is one of our strategies. We've kind of want to be the Switzerland where you come to us and you can build that tankage on our property and really get connectivity to all the downstream pipelines. We'll move to Ian. Ian Gillies, GMP. With respect to the Canadian outside the fence growth opportunities, how is Gibson going about differentiating themselves in that space given it is getting more competitive? That's a tougher one. And when we say 0 to 50, it's because of the competition. And we really don't know what the environmental landscape is in Canada. So we feel with our Hardisty asset, we do add some competitive advantage with our Hardisty asset and the connectivity at Hardisty. When we look, that's how we were able to do the Viking play. And that's we're looking at how do we use Hardisty in the East Duvernay play to provide that liquidity and to provide that extra market outlet for those producers. That's helpful. And switching to West Texas, is that is there any marketing EBITDA built into that 60 to 80 run rate moving forward with respect to that business at this point in time? Maybe that has to do with guidance, I'll throw it over to Sean. No, no, not really. The 60 to 80 is really predominantly the Canadian business. So that would be from our refined products business, which is the Moose Jaw product sales and then our Canadian crude marketing. There would be a nominal contribution there. But again, if you think the 60 to 80 is being almost more of a holistic number, something that we budget for and would consider something conservative, it would be predominantly Canada. Thanks very much. All right. We'll move to the other side of the room, Robert, Okay. Thanks. Maybe just to start, a couple of macro or political factors and an industry potential change. Just get your thoughts on what it means to your business. You got a couple of elections coming up. In addition, just your thoughts on potential change on the Enbridge mainline to a contracting structure, what that may or may not mean for 3rd party terminals as well as your Moose Jaw facility? Steve, did you want to open up with the comments on the political outlook? Yes. I consider my I'm not Canadian, so I'm kind of apolitical when it comes to politics in Canada. So obviously, with Knightley, we saw the curtailment and the curtailment obviously had an impact on all oil production in Canada. We believe that that curtailment at times was 5 100,000 barrels a day even though she only targeted around 325,000 to 375,000. That had a dramatic impact in the marketplace and it really started to shut down rail traffic. We believe the market was actually I'm a free enterprise person, so the market was actually starting to correct itself prior to the introduction of the curtailments. We believe no matter what who wins, we need to reduce those curtailments because we need to get that $18 to $22 spread, WCS, really to the Gulf Coast price. And that allows us to start moving out and utilizing the rail terminals in Canada to enable us to get our production back over $400,000,000 a day. And maybe did you want to speak to the corporate impact or how we would think about the change with the Enbridge mainline? So Enbridge mainline, we're not a big shipper on the Enbridge mainline. The main thing that's important to us is that we're able to deliver to our Moose Jaw refinery and that any changes does not impact our facility in Saskatchewan. It's a difficult thing to go away from a kind of a 12 month kind of your change in allocation is extremely difficult. And no matter how hard they try, there'll be somebody on the other side of the fence that'll be arguing the other point. So it's going to be a difficult thing to change any kind of allocation process on an existing pipeline. I can finish just on the composition of your cash flows. You talked about take or pay, I think being 60% of 2020. I'm just wondering with the inter corporate, is that net of the 20% or is your 3rd party take or pay actually 40%? It'd be close to the 40 That'd be in that number. And I guess where do you want that number to be going forward, particularly as you think about the capital that's going out the door and how much that might be going into the U. S. That is more likely to be area of dedication? I think Steve talked about it. We have we obviously want the highest quality cash flows. We've talked about our best risk adjusted returns being from our Hardisty terminal. That's where we're dedicated majority of our capital. That 60% take or pay, 80%, 85% stable fee base, that is the target and that's what we're looking for. And again, with respect to the comments on the U. S, Steve, I thought did a good job of answering. You have to put it in context, even if we spend the upside of that $100,000,000 a year for the next 5 years, the U. S. Maxes out at sort of 15% of the total portfolio. So as you think about Hardisty continuing to grow at, call it, dollars 100,000,000 to $200,000,000 as we talked about, the contribution of the U. S. Still won't really offset those target ranges from a quality of cash flow perspective. That's right. Thank you. Do we have any more questions? We've got a question from Stuart. Stuart Rhodes, M&G. Mine's more really a comment rather than a question. I'd just like to on behalf of all the shareholders, M and G, because I'm not the only one, but on record our considerable the efforts that have gone into turning this company around over the last couple of years. I doubt there's a shareholder in this room or listening today that isn't pleased with what we have today versus quite frankly the mess we were in 3 years ago. So we don't want to be that shareholder that just carries a stick the whole time, and we want to be able to issue praise when it's really much deserved. And we're really, really pleased and think it's a great example of positive engagement. There's been significant engagement with us and you over the last couple of years, and you've brought a significant contribution to that. And we just want to put on record our thanks for the efforts and keep it up. Thanks. Thanks. Really appreciate it. Yes, if we could bring a mic to Ben here. It's Ben Pham, BMO Capital Markets. Question around Wink Storage. I understand the gathering niche strategy around there. And I'm curious, you have 3,500,000 barrels a day coming on in that market. How do you think about the opportunity on storage? How big can it get? And you mentioned first, we were at Advantage. Is there ability to create sort of a mold like structure that you have in Hardisty? That's probably in line with your background, Steve. Yes. I was at Wink 2 weeks ago. It's the first time I've been at Wink. And really, I'm surprised at the activity there. The terminals that are being built to originate the 3,500,000 barrels, saw some really big tanks there. So some probably 800 to 1,000,000 barrel tanks being built and under construction. Right now, it's not a hub yet. I've been involved in hub businesses. The Henry Hub reported to me, Arsty, Mont Belvieu. So I've been involved in many hubs. I think that when you look at Cushing, Cushing is kind of a trading hub. This is really much more like harvesting. So this is going to be operational storage, really to pull those barrels before they launch down into the Gulf Coast. So we have 160 acres there. We can build out significant storage if the opportunity comes. We are building some of the core infrastructure with the East Wink opportunity. We're building some of the core infrastructure to really start a hub opportunity there. How big it can be? I don't know. We're going to take a pretty measured approach when we develop this out. Okay. And the second question, the 10% DCF per share targets, it sounds like you're sitting here 2017, 2018, 2019 you've solidified that 10%. And so your deal now as your company gets bigger, it's harder to grow at 10. So is it correct to think that you're sending your 2020, you need to hit $300,000,000 CapEx to get the 10% growth. Sean, maybe you speak to that? No, I wouldn't. I think in my remarks, I mentioned that for in around that $200,000,000 range for capital in these near to medium term, that gets us to that 10% growth in infrastructure cash flows. And then as we move beyond that and the company starts to grow, that's where we need to move sort of further up in that range. But no, definitely not $300,000,000 as we did in 2020 to achieve 10%. Do we have any more questions? All right. I guess investor. Relationsgibsonenergy.com anytime, please. And for those of you attending in person, we do have the buffet lunch available. And as Steve mentioned, in addition to the presenters, we've got a large portion of our leadership team here today. So please take advantage and meet with them. Again, we would just like to thank you for your continued support of Gibson Energy and thanks for joining us today. Thank you very much.

• Slides
• Press Release