Good morning. My name is Joelle and I will be your conference operator today. At this time I would like to welcome everyone to Keyera's 2024 third quarter conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, please press star followed by the two. Thank you. I would now like to turn the call over to Dan Cuthbertson, General Manager of Investor Relations. You may begin.
Thanks and good morning. Joining me today will be Dean Setoguchi, President and CEO; Eileen Marikar, Senior Vice President and CFO; Jamie Urquhart, Senior Vice President and Chief Commercial Officer; and Jarrod Beztilny, Senior Vice President, Operations and Engineering. We'll begin with some prepared remarks from Dean and Eileen, after which we will open the call to questions. I'd like to remind listeners that some of the comments and answers we will be giving today relate to future events. These forward-looking statements are given as of today's date and reflect events or outcomes that management currently expects. In addition, we will refer to some non-GAAP financial measures. For additional information on non-GAAP measures and forward-looking statements, please refer to Keyera's public filings available on SEDAR and our website. With that, I'll turn the call over to Dean.
Thanks, Dan, and good morning, everyone. We are pleased to deliver another solid quarter driven by strong performance from all three business segments. We remain well on track to reach the upper end of our 6%–7% EBITDA growth target. In our Gathering and Processing segment we delivered CAD 99 million in realized margin. This result was supported by near record quarterly throughput from our north region up 15% year-over-year. This included the partial impact of our turnaround at the Wapiti Gas Plant. Our Liquids Infrastructure segment delivered its second highest quarter ever with CAD 135 million in realized margin. Driving this performance was a continued ramp up of KAPS and growing demand for our fractionation, storage and condensate businesses. Our Marketing segment continued to perform well generating CAD 135 million in realized margin.
The increase relative to last year was due to higher propane condensate and iso-octane sales volumes and margins. Our marketing segment is a distinct competitive advantage. Strong cash flow from this fiscal business has enabled us to consistently deliver above average after tax corporate returns. This cash flow is then reinvested into long life infrastructure projects in turn driving growth and high quality fee-for-service cash flow. We continue to advance capital efficiency growth opportunities at KFS. We have ordered long lead items for an 8,000 barrel per day debottleneck of Frac 2. We expect to officially sanction the project in the early part of 2025 to achieve an in-service date late in 2026. We continue to advance customer contracting and engineering on KFS Frac 3. This project would add about 47,000 barrels per day of additional capacity.
Together these two projects will increase our overall net fractionation capacity by about 60%, further strengthening our integrated value chain and our ability to service customers. We finished the quarter in a very strong financial position. This gives us tremendous flexibility to deploy capital in a manner that is most value creative for shareholders. Today we announced that we'll be seeking approval for share buybacks. This will be used opportunistically and weighed carefully against other options for deploying capital. As we said before, based on the opportunities we see, our preference is to invest in continuing to grow our integrated platform in Western Canada. I'll now turn it over to Eileen who will provide an overview of our financial performance for the quarter and speak to her guidance for 2024.
Eileen, thanks, Dean. Net earnings were CAD 185 million compared to CAD 78 million for the same period last year. Adjusted EBITDA for the quarter was CAD 322 million compared to CAD 288 million for the same period last year. Distributable cash flow was CAD 195 million or CAD 0.85 per share compared to CAD 186 million or CAD 0.81 per share for the same period in 2023. These results were mostly driven by higher year-over-year contributions from all three business segments. We continue to maintain a strong financial position exiting the quarter with net debt to adjusted EBITDA at 1.9 times below our targeted range of 2.5-3x . This positions us well to pursue opportunities that will continue to enhance shareholder value. Moving on to our guidance for 2024, we are reaffirming our marketing segment realized margin range at CAD 450 million–CAD 480 million.
Growth capital for 2024 is expected to come in at the high end of the previously guided range of $80 million–$100 million. This includes capital for the Frac expansions and additional tie-ins for new customer volumes. At the Wapiti Gas Plant, maintenance capital remains unchanged at between $120 million and $140 million. Lastly, cash taxes are to remain in the range of $90 million–$100 million. I'll now turn it back over to Dean.
Thanks, Eileen. Basin volume growth is materializing. This is evidenced by our growing fee-for-service cash flow. We're also seeing strong future demand for our services, allowing us to move forward with capital efficient growth projects. This continued growth is supported by key developments including TMX, LNG Canada, a growing petrochemical industry, increasing LPG exports off the west coast of Canada. As an essential infrastructure service provider, Keyera will continue to play an important role in enabling basin growth. On behalf of Keyera's Board of Directors and management team, I want to thank our employees, customers, shareholders, indigenous rights holders and other stakeholders for the continued support. With that, I'll turn it back to the operator for Q and A.
Thank you ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press star followed by the one. On your touch tone phone you will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. First question comes from Rob Hope with Scotiabank. Your line is now open.
Good morning everyone. My first question's on KFS3. Can you give maybe a little bit of color on, you know, how contracting discussions are there? Previously you did speak to the potential that this could be sanctioned early 2025 and then also have you started to order any equipment related to this project as well?
Yeah. Good morning Rob, and thanks for the question. You know frac demand in Western Canada is extremely tight and so you know, right now our fractionator is very full. You know, as we've been talking about, we certainly see a lot of growth in the basin with LNG Canada. Certainly a lot of demand for condensate with growing volumes on TMX.
With that, we just see a lot more natural gas development and that natural gas development. It's going to be weighted to liquids rich areas which is going to drive more fractionation demand. The point I'm getting to is that we see a lot of demand not only for existing frac, but for future frac capacity. We continue to advance that project and sign contracts. I'll turn it over to Jamie and let him add any other comments on top of that.
Yeah, thanks Dean and thanks for the question Rob. I think the only thing that I can add from a Frac 3 perspective is that we've completed pre-FEED that was completed in the quarter and we've proceeded immediately into FEED and as Dean alluded to and I can just reaffirm that we're very pleased with the progress that we've made on commercial contracting. And as such, we're gaining more confidence that we'll be able to move ahead with both those projects in 2025.
I might also add, Rob, what we feel good about is that we're basically cloning our Frac 2 in a lot of ways. It makes the just less unknowns with respect to engineering and construction. We feel very comfortable the way that side of the project is advancing.
All right, good.
Maybe just turning over to the optimization. It looks like you're moving forward with a number of small projects.
At Brazeau and Wapiti.
You know, as you've progressed through 2024, have you seen, you know, the amount and magnitude of these smaller high return capital projects increase? And is that, you know, is that really the reason why the CapEx is moving up towards the upper end of the band?
Yeah. First of all, I mean, you know, as we grow, we have to be very disciplined about optimizing our portfolio so that we can focus our attention and our capital to projects that are strategic to our long term vision. And for some of the smaller plants, they still require a lot of resources that a big plant would. So it's better in other people's hands. So we're pleased that we're able to I guess, consolidate and high grade our portfolio. But we do see a lot of great opportunities both in our north portfolio and also in our south.
I don't know if Jamie, you have anything else you want to add?
Yeah, the only thing I'd add to that is as you keyed in on Rob, is that we have specific hurdle rates that we need to meet for those smaller projects. And all of the projects that we're working on right now that are frankly driven by customer demand and increased utilization opportunities, our facilities, they all hit or exceed those hurdle rates.
Thank you.
Your next question comes from Maurice Choy with RBC Capital Markets. Your line is now open.
Thanks and good morning everyone. Maybe I could just stick with hurdle rates and also moving forward, the frac projects. You previously highlighted the importance of underpinning projects with long-term contracts where the take-or-pay volumes support a 10%–15% pre-tax target ROC with upside after that from spot volumes full-on contracts or marketing activities. Would that still be the case for these two projects as well as any future projects that you do?
Yeah. Good morning, Maurice, and thank you for the question. You know, first of all, yes, that's generally true for our infrastructure projects and our frac projects would be no different. You know, we issued an update at the beginning of the year in terms of the contracting that we did there on our frac, but our whole integrated system, and you know, I'm pleased with just the forward progress we've made on additional contracting since then. So, you know, we feel pretty good about where we stand today and our path to sanctioning this project next year. You know, when we think about our whole system, we have an integrated system, and right now the biggest bottleneck is at our frac.
So it makes a lot of sense that we're focusing a lot of time and attention and there's a lot of demand for that part of our service. So, again, everything continues to advance both on the debottleneck and the Frac 3, and we think both projects will generate strong returns for us on an individual basis and on an integrated basis.
Understood. And if I could finish off with a question about volumes and your outlook for both G&P and LI. Obviously on the G&P front, in the north, record volumes are near record volumes, but lower in the south. And thoughts on the volumes on this part of the business, given the low gas prices and on the LI side, anything outside of the frac volumes that you could comment on on what you see in volumes?
Yeah, well, generally, I mean, you know, as I said before, I mean, we're very optimistic about the growth for natural gas in our basin. You know, we see out to the end of the decade, you know, getting to that 5 or 6 BCF a day of growth, which is very significant. And we think a lot of it's going to happen along the Montney Fairway, where we have a very good footprint up there. But at the same time, I really believe that setting aside where natural gas is today and where it's been in the summertime, I think with all this additional demand, it's going to compress differentials and we will see more drilling in ourselves. Keep in mind that our south portfolio, these are very mature assets that really are almost fully depreciated.
So we think that we can attract value down there and be very competitive with our service. So I think over time, over the next five or six years, we're going to see growth in both areas. But Jamie.
Yeah, so, you know, the only thing I'd add there is that, you know, we had previously announced in previous quarters that one of our customers had decided to shut in some gas behind.
The Brazeau River gas plant.
That gas has been brought back. And so, you know, our expectation in Q4 is that we're going to see an uptick in utilization primarily at the Brazeau River facility, a little bit at Nordegg River as well. But the other point I'd like to make is that we still continue to be extremely encouraged by the development in the Duvernay around Rimbey and you know, some significant land sales in the last couple weeks that point to, you know, some of the existing producers or new entrants don't know because it was behind a broker. They similarly view and are very excited about the Duvernay. And so we, you know, we're starting to see some additional volumes behind our Rimbey gas plant in particular, which is very well suited based on its ethane and C3 plus extraction capabilities.
So that's an area in the south that we continue to be extremely excited.
About in the future.
Just as a quick follow up, if.
You could just parse out this potential recovery in itself. Are we talking about it in a matter of like a couple of quarters or is it more about waiting until the LNG Canada fully ramps up before we see recovery in the South?
Yeah, well, I guess it'll depend on how quickly gas prices bounce back. But also just the fundamentals of this is still relatively liquids rich natural gas and our facilities in the south for the most part have high liquids recoveries. So I think the worst is behind us with respect to any reduction in utilization we've seen in the south. And you know, the utilization impact is not that significant, frankly.
I think to Jamie's point, I mean, we think it's pretty positive that the Duvernay is looking to be a pretty commercial development. And so it's still in the very early stages. And as that continues to get developed, I mean it's going to be just another play behind our facilities that is more oil weighted, so just like the Montney. So I think you'll see less sensitivity to natural gas prices as a Duvernay gets developed. And just a reminder, I mean our Rimbey gas plant is a turbo expander gas plant with 200 million a day of unutilized capacity. So that's just like a full train of capacity that we have available down there to provide that service.
Thank you very much.
Thank you.
Your next question comes from Spiro Dounis with Citi. Your line is now open.
Thanks operator.
Morning, team. Wanted to start with the buyback really quickly if we could. Dean, you've made it pretty clear that the preference on capital allocation is for growth, and certainly you've got several projects in the hopper here in front of you, but I imagine this isn't an either or situation between those two choices, and there will be some opportunities to weave in buybacks opportunistically from here, so just really want to get a better understanding of maybe some of the conditions you'll be looking for to lead you to execute on that buyback.
Good morning, Spiro, and thanks for the question. You know what? Overall, I'll say what we're here to do is to add value for our shareholders. You know, the great thing is that we're in an enviable position with our balance sheet. And so we have a lot of opportunities to do that. But you know, we see a lot of growth potential with what we see from just the growth that's going to happen in the basin and the discussions we have with our customers. So you know, we see some pretty good opportunities there. But I'll just turn over to Eileen for her comments.
Thanks, Spiro, and thanks, Dean. Yeah, not too much to add to that. I mean, it's nice now that we have the tool available to us so that this is something that we will constantly be weighing against other capital allocation opportunities, and you know, back to where, where Dean was talking about, we are in an enviable position. Our balance sheet strength is a competitive advantage, and when you combine both the balance sheet with the growth we see in the basin, there's just so much opportunity to deliver high returns for shareholders, but at the end of the day, our goal is unchanged. It's to allocate capital to that highest value option, whether that be organic, inorganic growth, and now we have the ability to do buybacks when they make sense.
Got it. Great. Eileen, you just touched on my second question, which is around inorganic growth. We've seen some M&A activity over the last quarter with one of your peers. So just curious, maybe just to get your updated thoughts on the M&A landscape for you and maybe some types of assets you'd have an appetite for right now.
Yeah, thank you for the question, Spiro. And you know, with our integrated platform, we see opportunities across, you know, that, that asset base where we can enhance it and create a more valuable service for our customers, more competitive service as well. So, you know, we, we can't talk specifically about anything that we, we may be interested in, but I can say that, you know, we think that there might be some opportunities that come forward, but we'll always be extremely disciplined, too. We need to make sure we're creating value with anything we do. And the great thing is, as Eileen just said, is that we have the optionality with our strong balance sheet that if we see something we really like at the right price, we can transact on it and add value.
Great.
I'll leave it there for today. Thanks, team.
Thanks. Have a good day.
Your next question comes from Robert Catellier with CIBC Capital Markets. Your line is now open.
That's a first.
I just want to just ask you about Zone 4. In light of this strong frac outlook, do you view the frac 3 or even the frac 2 debottleneck contingent on Zone 4 moving forward or the opposite? Do you see Zone 4 contingent on the frac expansions?
Yeah. Good morning, Rob, and that's a great question. You know, Jamie's team's been very active in adding contracts for our frac service. So, you know, I would say independent, and that's obviously independent of Zone 4 because we haven't sanctioned it yet. You know, so I'll let Jamie maybe speak to that. But overall, again we really like just the momentum that we have in the basin with the growth that we see, the growth outlook we see and including for Zone four. And if Zone 4 happens, that would help feed more volumes to the frac as well. But Jamie, do you want to add to that?
Yeah, not much to add, frankly. I mean, I think as Dean said, as we view Frac 3, certainly it's not contingent on Zone 4 proceeding, but we certainly see the frac as a differentiator in order to attract customers. That would be on KAPS, zones one through three or zones four as well.
Okay, that makes sense. And then just going back to the big picture, the macro outlook on volumes here, how does your view of the basin growth change if LNG Canada doesn't make an FID on phase two for a few years?
Yeah, that's a good question. You know, I think that overall, if it's two years off, I mean, you know, we just look at the longer term macro and if something's off by a year or two, I mean, does that really change anything, the big picture? I don't think so. I just look at the logic of utilizing our basin, our industry, filling the full capacity of Coastal GasLink. It just makes a lot of sense with all advantages that we have to export LNG off the west coast of Canada. And again, this is some of the lowest carbon LNG that's going to ever hit the market on the waterborne market. So I think it's a very attractive source of energy and the advantages are obviously there's less shipping time to get it across to Asia.
So just seems to be a tremendous amount of logic for us to be maxing out the capabilities of at least the Coastal GasLink pipeline and hopefully there'll be more pipelines built beyond that.
Yeah, cheap cost, competitive resource, quick time to market, low carbon. Seems like, seems like it should move forward then to the, over to the NCIB. It's, you know, I understand the opportunistic nature of the, of the plan and why that makes sense for you. I'm just curious about what the implications are for dividend growth now that you have these two tools available to you, not just dividend growth, but also the option to allocate towards share repurchases. Can we still expect dividend growth to follow fee for service EBITDA growth pretty closely over time, or is every dividend decision or dividend growth decision going to.
Be.
Pretty strictly weighed against the NCIB?
Thanks, Rob, for the question. 100%, we are a dividend growth company that is first and foremost true and fundamental to who we are. So nothing changes in terms of our, you know, the dividend growing in line with growing our fee for service cash flow and underpinned, you know, by a low payout ratio. So absolutely nothing changes there. It's just that now we have the option for, you know, again, weighing it between organic, inorganic and buybacks.
Okay, that's what I thought, and congratulations on the momentum, and I'll turn it back.
Thanks, Rob.
Your next question comes from AJ O'Donnell with TPH. Your line is now open.
I was wondering if I could maybe just start on some volumes in the north. Seems like you're seeing some pretty strong growth there. I was just curious about operational leverage that you have to continue some volume growth there. I know, you know, some, maybe some of your plants are running closer to full, but could we expect any, you know, additional small projects for optimization there or do you have the ability to move volumes around between those four plants up there?
So thanks for the question, AJ. Yeah, we've seen some growth. Pipestone, with our expansion that we executed late last year, is pretty much full. You know, I think we've talked about this in the past. We've got some ability at Wapiti based on the fact that we do actually pull some volumes currently north of the Wapiti River up by Grande Prairie, where we do see some potential in the future around, you know, how we might want to optimize producer activity and ultimately how we provide our service. But, you know, we did share with the market this quarter that we've put in some smaller capital, highly accretive opportunities to increase the utilization at Wapiti. I can share with you. This week we've hit record volumes at the Wapiti Gas Plant.
Ultimately, as we think about Simonette, you know, the gathering systems that we have into Simonette reach into the same areas that feed the Wapiti Gas Plant. So there's no physical interconnection that we have right now similar to our southern assets. But certainly that's something that we've seen value in the past, that model in the south, and we certainly would look in the right opportunity to replicate that in the North. Finally at Simonette, we have identified in 2024 some opportunities to be able to unlock some opportunities at the Simonette Gas Plant that based on some activity by multiple producers down in that area, we expect that we'll probably have some meaningful, positive things to share with the market in 2025.
Great. Thanks for that.
I got one more just on marketing. I know you guys left the marketing guidance unchanged at 450-480 for the year, which kind of implies somewhat of a step down for Q4 relative to last year and Q3.
So I was just wondering maybe if.
You could provide some additional color there on how you're thinking about the business heading into Q4 and maybe where some potential headwinds are coming from? Thank you.
Yeah, so I'm talking a lot on this call, but thanks again for the question, AJ, and really, frankly, great question. Expected it. So just as a reminder, step back. Our marketing segment really utilizes our physical assets, our relationship across North America coupled with a really strong focus on risk management. Right. So that's the foundation of our marketing business. You know, a couple thoughts on our iso-octane business, which really makes up roughly half of our marketing business. You know, long-term fundamentals remain very strong. Gasoline demand has increased slightly year-over-year. But more importantly, demand for higher octane gasolines used in newer industrial internal combustion engines is growing. So, you know that in the long term, we're very positive on the fundamentals of that part of our business. But in the short term, you know, we expect, and we're seeing
RBOB cracks in octane premiums to return to more historical levels versus the elevated pricing that we benefited from over the past couple years. You know, and there's multiple reasons for that, but really it's about getting more balanced in North America around supply demand of the octane market. So, you know, and we expect that to happen as well, you know, going forward. Still strong pricing, but not as strong as we would have seen over the last couple of years. So the final point I guess I'd make is we do remain very focused though on continuing growing our sales volumes into higher value markets. And those are higher priced markets that continue to grow due to some increasing compliance requirements. But also high value markets might be lower delivery costs as well.
And we've been very successful in the last couple years in growing our sales into those markets. But you know, like, I mean, all told, we remain confident in our 2024 guidance, but also achieving our long term base guidance that we've provided previously.
Great, thanks for all the detail.
The next question comes from Ben Pham with BMO Capital Markets. Your line is now open.
Hi, good morning. A couple of follow up questions on the two frac projects. What are you expecting in terms of level of contracts before you sanction and are you expecting to achieve those levels before sanction or are you willing to move forward and as long as you get those contracts in by the end of 2026?
Good morning, Ben, and thank you for the question. You know, what I'd say is that the demand for our frac services are very strong. And so, you know, we've been adding a lot of long term contracts for that service. And you know, I just say that it's commercially sensitive. So, you know, we're not prepared to divulge sort of where we are on contracting. But I would say that, you know, our expectation is that we'll be able to deliver a strong return for those investments should they be sanctioned next year?
Okay, got it. And can you remind us that those facilities and the land base you have, beyond these two potential projects, is there more ability to debottleneck or expand potential fourth expansion, some future point of time?
That's a great question, Ben.
It's Jarrod here.
We do have capacity at the existing KFS facility to continue to build out, so if a Frac 4 happened, we'd certainly have the potential to do that. Beyond that, we do have a very large land base just east of the KFS facility where we have 1300 acres of undeveloped land in heavy industrial zoning. We have most of the salt rights, some excellent connectivity, so very well suited for continued growth in the region as well, beyond what we could do at the existing KFS footprint.
Okay, got it, and maybe this question's for Eileen and can you remind me in terms of the self-funded messaging, what level of CapEx can you fund without needing to tap the external capital markets?
Yeah, I think the projects that we've talked about already, the Frac debottleneck, the Frac 3 expansion and Zone 4, assuming that those are sanctioned, we can absolutely self-fund that very easily.
Just lastly on the pref hybrid side of things.
Is there any room?
To access that now, especially with some of the credit rating positive actions you've seen?
Yeah. At this time, you know, given where our balance sheet is, there is no need for us to add more hybrids. We certainly have them in our structure and they served a purpose, but at this point we don't see a need to add any more.
Okay, got it. Thank you.
Ladies and gentlemen, as a reminder, should you have a question, please press star one. Your next question comes from Patrick Kenny, National Bank Financial. Your line is now open.
Thank you.
Good morning everyone. I know it just hit the wire this morning, but just on this big divestiture by Paramount, including the Wapiti region , I guess I could dovetail this in with just a broader question around consolidation, but you know, wondering if you had any thoughts on new customers taking over as your anchor counterparties for your processing agreements in the area, how this might change your outlook, if at all, for being able to accelerate throughput facilities as well as on the commercial side, you know, being able to lock down those downstream commitments on both KAPS and KFS.
Yeah. Good morning, Pat, and thanks for the question. I was wondering if anyone asked about that. You know, first of all, we were not privy to any of this information and so we read it this morning, and so, you know, what I can say is that we have a very good relationship with Ovintiv as we work with them very closely at our Pipestone facility and they have most of the volumes flowing through that facility and it's working out very well. You know, our overall objective is to provide the best service and add value for our customers, and certainly it would be no different for Ovintiv. I think what we see here is the potential because we have three gas plants that are right embedded within their existing lands and the lands that they're acquiring, and that's with our Pipestone, Wapiti and Simonette facilities.
So with a footprint like that, I think that we'll have the potential to offer them a lot of optionality in terms of how they develop those lands over time. So again, we think that could be a value add as a service for Ovintiv. So we'll work very closely with Brendan and his team again to make sure that this acquisition is a success for them. We, but you know, at this point we haven't had any discussions with them. At the same time, you know, we've worked with Paramount in the region for a number of years now and we'll certainly work very closely with Jim and his team as well to make sure the transition goes very smoothly.
Okay, thanks for that, and maybe as a related question too. I know the turnarounds are largely flow through, but just given the Strachan and Wapiti turnarounds took about a week longer than expected. I think you touched on it last call, but if you could just remind us if these delays were more supply chain related, maybe labor productivity issues or just how you're thinking about resetting expectations for timing around your planned turnarounds into 2025 and beyond.
That's a great question, Pat. It's Jarrod here and you're right. Both turnarounds took longer than expected and we know that extended downtime has an impact on our customers. They count on us to be running when we say we will. In the case of Strachan, it was really around some found work, which is always a risk of a turnaround. We did find some additional repairs that required that was really the bulk of the extra time at Wapiti. It was our first full turnaround there and we completed a number of projects to increased reliability and utilization there and we had some found work as well and also some challenges with some of the initial equipment preparation and productivity throughout that really led to that extension.
You know, I think a key part for us of our whole turnaround program is learning, and all of our turnarounds get a comprehensive look back similar to what you might do on a capital project, and really to understand what went well that we want to repeat and where we can improve.
Okay, thanks for that Jarrod. Maybe last one, just a quick follow up for Jamie on your marketing comments there. Appreciate the color into Q4, but just wondering, you know, as you think about coming out with the guidance for 2025 in early December and you gave a good rundown of how you're thinking about the iso-octane business, could you just bolt on a few comments? You know, whether or not you're seeing macro tailwinds or headwinds at this point for the propane business as well as the crude and condensate as well, and whether or not some of the volume tailwinds that you're seeing across your asset base might also support an upward bias going forward relative to that long term normalized rate.
Yeah, thanks for the question, Pat. So spoke to iso-octane, as Dean alluded to, is that you know, like, I mean globally we just see a pull from the Western Canadian basin with respect to all our hydrocarbon molecules and we have a fantastic, I would say, you know, best in class, you know, connectivity for C5 and C4. You know, I think C3 has been a focus for us with respect to being able to ensure that our customers have access to the highest value market. And that doesn't mean just one market though because the dynamics will change. There is like any commodity cycle and any basis there will be times where certain markets are higher value than others. And so our model has always been to have the ability to touch all markets.
We've worked really hard in 2024 to set ourselves up to be able to create that offering for our and, with that, we'll be able to touch more molecules to your point and ultimately be able to continue to make the historic margins off of those volumes that we touch.
Yeah, just maybe if I can expand on Jamie's comments. Pat is, you know, again when I look back at the macro, we see a lot of growth in the basin and with our integrated system, you know, a lot of that is going to end up back at Fort Saskatchewan. A lot of those NGLs that we see that are going to get extracted from future growth, and so with our two additional frac projects, we're going to end up with more spec products in Edmonton, Fort Saskatchewan. And so we're a supply based basin. So most of that product, incremental product is going to have to clear to a different market and we have the assets that can get that product to the highest value markets.
And so I think about our marketing business, a lot of it, it's really a logistics business and we're just trying to find, take that product that's oversupplied in Western Canada and we're taking it to a higher value market. So we're going to have opportunities obviously to generate a margin, a physical margin off of that. Generally we make more money in a higher price environment than a lower price environment. But I'd say as it's crude to soften a little bit, the FX, the Canadian US FX has widened. So you know, there's an offset to that as well. So overall, you know, I think the market isn't too bad. Maybe not as high as what we've seen the last couple years, but generally, you know, I think the conditions are relatively positive.
Okay, that's great. I appreciate all the color.
I'll leave it there. Thank you.
There are no further questions at this time. I will now turn the call over to Dan Cuthbertson for closing remarks.
Thanks all once again for joining us today.
Please feel free to reach out to.
Our investor relations team with any additional questions. Hope everyone has a great day.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.