Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the Pembina Pipeline Corporation 2018 first quarter results conference call. All lines have been placed on mute to prevent any background noise. After your presenters' remarks, there will be a question and answer session. If you'd like to ask a question during that time, simply press star, then the number 1 on your telephone keypad. If you would like to withdraw your question, you may press the pound key. Thank you. Mr. Scott Burrows, Senior Vice President and Chief Financial Officer, you may begin your conference.
Thank you, Rob. Good morning, everyone, and welcome to Pembina's conference call and webcast to review highlights from the first quarter 2018 results. I'm Scott Burrows, Pembina's Senior Vice President and Chief Financial Officer. On the call with me today are Mick Dilger, Pembina's President and Chief Executive Officer; Jason Boone, Senior Vice President and Chief Operating Officer; Jaret Sprott, Senior Vice President, Chief Operating Officer, Facilities; and Stuart Taylor, Senior Vice President, Marketing, New Ventures, and Corporate Development Officer. Before passing the call over to Mick, I'd like to remind you that some of the comments made today may be forward-looking in nature and are based on Pembina's current expectations, estimates, judgments, and projections. Forward-looking statements we may express or imply today are subject to risks and uncertainties, which could cause actual results to differ materially from expectations. Further, some of the information provided refers to non-GAAP measures.
To learn more about these forward-looking statements and non-GAAP measures, please see the company's various financial reports, which are available at pembina.com and on both SEDAR and EDGAR. Over to you, Mick.
Good morning, everyone. We had fantastic first quarter results. In fact, a record, once again. The first quarter has seen the continuation of strong financial and operating results we experienced last year following the completion of our multi-year growth program and the largest acquisition in our history. On a quarterly basis, we set new financial records for net revenue, operating margin, adjusted EBITDA, adjusted cash flow from operations, and adjusted cash flow from operations per share. We've also set new revenue volume records, all while continuing to operate both safely and reliably.
With the ongoing strength of our business, we are also pleased to announce that the board of directors approved the CAD 0.01 per month or 5.6% increase to the monthly common share dividend, resulting in a monthly dividend of CAD 0.19 per share, which will commence with our May dividend that will be paid on June 15th, 2018. This marks the seventh consecutive year that we have increased our dividends. Before we get into the highlights, I wanted to briefly touch on the new organizational structure that went into effect on January 1st, 2018. Given the enhanced scale and scope of our business, we opted to restructure our company to three operating divisions, Pipelines, Facilities, and Marketing and New Ventures.
This structure allows us to place similar assets together, creating centers of excellence, which will increase both the reliability and cost efficiency and will provide better insight into our operations moving forward. Accordingly, we have changed our financial reporting structure to align with these new operating segments. Excuse me. Lastly, I would like to mention that our longest-standing member of our board, Lorne Gordon, will not be standing for election this year. Lorne served more than 20 years as a director, including 17 years as chairman, and was the President and CEO of Pembina Resources Limited. Pembina has greatly benefited from Lorne's experience, wisdom, and counsel throughout our history as a public company. We wish him all the best in his retirement from Pembina. Scott will now discuss a few financial highlights from our first quarter 2018 results.
As Mick mentioned, Pembina achieved operational and financial records in the first quarter of 2018. Adjusted EBITDA was CAD 688 million for the first quarter, a 92% increase compared to the same period last year and an all-time quarterly high, driven by two factors. First, a larger asset base, both from the Veresen acquisition and new assets placed into service following a large-scale capital program, generating higher revenue volumes in the Pipelines and Facilities division. Second, improvements in crude oil and NGL market pricing in the Marketing and New Ventures division. First quarter revenue was partially offset by higher operating expenses and also impacted by deferred revenues resulting from the adoption of IFRS 15. For the first quarter of 2018, approximately CAD 30 million of revenue has been deferred. We would expect to recognize this later in the year.
Earnings were CAD 330 million during the first quarter of 2018, compared to CAD 210 million in the same period of 2017. In addition to the factors previously discussed, which contributed to higher gross profit, earnings were partially offset by higher tax expense and net finance costs during the quarter. We achieved a new quarterly revenue record in our volume record in our Pipelines division, averaging approximately 2.4 million BOE per day, a 45% increase compared to the same period last year. Higher revenue volumes are realized due to system expansions on Pembina's Peace Pipeline system, in addition to the acquisition of AEGS, Alliance, and Ruby, which together accounted for 71% of the revenue volume increase during the first quarter. Operating margin in our Pipelines division was CAD 416 million for the first quarter of 2018, an increase of 152% compared to the first quarter of 2017.
This increase was a result of higher revenue due to increased revenue volumes from new assets being placed into service, as well as the inclusion of revenue generated by acquired assets, partially offset by higher operating costs and CAD 27 million of revenue deferred as a result of IFRS 15. In our facilities division, combined revenue volumes were 842,000 BOE per day in the first quarter of 2018, 20% higher than the comparable period in 2017. The increased revenue volumes were due to the startup of the Duvernay I gas plant and the acquisition of Veresen Midstream in the fourth quarter of 2017, as well as higher realized volumes at Empress, Kakwa River, and Resthaven, partially offset by decreased volumes at Younger and the Cutbank Complex.
Increased revenue volumes across our facilities divisions translate into an operating margin of CAD 225 million for the first quarter, 61% higher than the comparable quarter last year. Operating margin for our marketing division was CAD 118 million for the first quarter, which was 18% higher than the same period last year. The increase was primarily driven by increased propane, butane, condensate, and crude oil market prices as compared to the first quarter of 2017, as well as the acquisition of Oxbow during the fourth quarter of 2017. During the quarter, we closed an offering of CAD 700 million of senior unsecured medium-term notes, in addition to closing our CAD 1 billion non-revolving term loan and extended our CAD 2.5 billion revolving credit facility, which now matures May 31, 2023. Pembina remains well-positioned with one of the strongest balance sheets in the sector.
Based on our 2018 forecast and guidance range, Pembina's proportionally consolidated debt to adjusted EBITDA ratio by the end of the year will be approximately 3.7 to 4 times. Lastly, subsequent to the end of the quarter, Veresen Midstream successfully amended and extended its senior secured credit facilities. In addition to the reduction in pricing on outstanding debt that was negotiated in the fourth quarter of 2017, Veresen Midstream further reduced pricing on outstanding debt and reduced debt amortization. As a result of the refinancing, Veresen Midstream has increased its ability to distribute cash by approximately CAD 75 million net to Pembina in 2018. I will now pass the call over to Jason, who will provide an update on growth projects within our pipelines division.
Thanks, Scott. Good morning, everyone. We are pleased to announce yesterday that we are proceeding with our Peace Phase VI expansion, which will include upgrades at Gordondale, a 16-inch pipeline and associated pump station upgrades from La Glace to Wapiti, and a 20-inch pipeline from Kakwa to Lator. The approximately CAD 280 million expansion is expected to be in service in early 2020 and will be backed up with incremental long-term take-or-pay contracts. We continue to progress with Phase IV and V expansions, which will support growth in the prolific Montney, Deep Basin, and Duvernay plays. Both Phase IV and V are expected to be placed into service in late 2018.
As previously announced, Alliance Pipeline has commenced a binding two-month open season for 400 million cubic feet per day of firm service capacity, which can be added to the pipeline through the addition of 13 compressor stations. During the open-season process, Alliance will also be pursuing the recontracting of the existing capacity. Pending the results of the open season, the expansion is expected to be placed into service in the fourth quarter of 2021 for a gross capital cost of approximately CAD 2 billion, [CAD 1 million] or CAD 1 billion net to Pembina, and will be backed up by long-term take-or-pay contracts. In addition to the expansion, Alliance announced plans to convert the operation and administration of Alliance into an owner-operated model. The new operating model is expected to be in place by mid-2018 and will have a number of strategic benefits.
I will now pass the call on to Jaret to provide an update on growth projects within the facilities division.
Thanks, Jason. Morning, everyone. We are continuing to progress the construction of our Duvernay II facility. These facilities are underpinned by a 20-year take-or-pay contract with a combination of fee-for-service and fixed return arrangements. The Duvernay II facility is tracking on budget and ahead of schedule, with the majority of long-lead items having already been purchased. Pending regulatory and environmental approvals, which we expect to receive this month, the project will be placed into service in mid to late 2019. Our 25,000-barrel-per-day LPG export terminal at Prince Rupert is continuing to progress. We're currently consulting with key stakeholders for the proposed Prince Rupert terminal and are working to complete the design and engineering requirements and obtain regulatory and environmental approvals. We expect to place this project into service mid-2020, subject to required approvals. As previously announced, we're planning to construct new fractionation and terminaling facilities at our Empress Extraction plant.
The Empress expansion includes adding approximately 30,000 barrels per day of propane plus fractionation capacity, as well as the addition of propane rail loading and butane truck terminaling services to the site. These facilities will provide the company with additional NGL volumes and market optionality, as well as enhanced propane supply, which could further support our Prince Rupert terminal and proposed PDH/PP facilities. The expansion is expected to cost CAD 120 million, and detailed engineering work began in April, with expected in-service date of late 2020. Construction is advancing for our Burstall Ethane storage facility, which will have 1 million barrels of storage capacity. The facility is underpinned by a 20-year agreement and is expected to be placed into service in late 2018.
Lastly, we're continuing to progress the development of the North Central Liquids Hub, which will provide separation and stabilization of condensate volumes to support the operations of the Cutbank Ridge partnership within the Montney formation. We expect to place this project into service in late 2018, with the project currently trending ahead of schedule and under budget. I'll now pass the call to Stu to provide an update on growth projects within the new ventures division.
I'll take that section. In our new ventures division, we continue to progress engineering for the Jordan Cove project as well as the PDH/PP project. Everything is developing as planned, and we hope to provide some additional announcements on those projects in the latter part of June.
A couple of comments in closing then. We are very pleased with our strong financial and operating results over the first quarter, which position us to deliver our 2018 adjusted EBITDA guidance range of CAD 2.55 billion-CAD 2.75 billion. Looking ahead, we are focused on completing our secured growth projects on time and on budget, and converting our unsecured opportunities into secured projects, all while continuing to grow our dividend and create value for our shareholders. We are proud of what we've accomplished and are excited to continue realizing the benefits of our hard work. Before we wrap things up, I'd like to remind everyone about our annual general meeting, which will be held today at 2:00 P.M. Mountain Time, 4:00 P.M. Eastern Time. The AGM will be webcast, and details of the webcast can be found on our website.
Lastly, I want to take this opportunity to remind listeners that Pembina is hosting its 2018 Investor Day on Tuesday, May 29th at the Fairmont Royal York Hotel in Toronto. With that, we'll wrap things up. Operator, please go ahead and open up the line.
At this time, I would like to remind everyone, in order to ask a question, please press star, then the number one on your telephone keypad. We will pause for just one moment to compile a Q&A roster. Your first question comes from the line of Jeremy Tonet from J.P. Morgan. Your line is open.
Good morning. Just want to touch on Veresen here and see how things are progressing. Would you say that at this point, things are reaching kind of your base case? Or is anything better? I think you touched on it a bit, but could you expand more on how you think things are progressing there?
I'd say we're ahead of the base case in a number of areas. We anticipated the Alliance expansion and restructuring, obviously, in our acquisition. I would say that expansion is slightly larger, and we're in the open season earlier than we expected. As well as the restructuring, I think, is happening earlier than we expected. Obviously, the Aux Sable results are fantastic, and that was unforeseen, but I always do say it's half skill and half luck. Veresen Midstream, we announced the North Central Liquids Hub. That was expected, but it is coming nicely. The whole Veresen Midstream geology, the amount of liquids that are coming at us there, it's all working out well. Of course, Jordan Cove, we didn't attribute a lot of value to Jordan Cove.
It certainly has its challenges, with the run-up in prices in Tokyo and now I think there's pretty broad consensus that we'll be short LNG capacity in the 2023 to 2025 timeframe, that's really shone a light on that project. We're pleased with the way that's working out. Staff has firmly arrived, I think contributing very strongly to our business right now. They're teaching us the North American gas business, which is awesome, our transmission business unit is gaining operating capability and really emerging powerfully. We're, across the board, very pleased with how things are going. Scott, you want to add anything to that?
I would just say, when we think about the base business, it's definitely tracking ahead of our acquisition model. Mick pointed out many of the operational synergies that we've been able to achieve or close to achieve. I would just add on, when we think about some of the synergies we had below the operating margin line around refinancing and lowering the cost to capital within those assets, I think we've achieved that as well with some refinancing at Veresen Midstream as well as Ruby. Things are tracking, as Mick said, better than our base case.
That's great to hear. Just following up with Alliance here, two points. I was wondering if you might be able to quantify a bit or expand a bit more as far as what type of savings or synergies you could realize from the owner-operated model there. Then also with regards to the expansion, I think the CapEx was a little bit higher than maybe we were expecting. Just wondering if you could talk us through that and the type of economics you see on this project.
Sure. I'll just take the first part of that question, Jeremy. Just in terms of the synergies, I think some of that was contemplated in our overall synergy guidance. If you remember, we were about CAD 75 million-CAD 100 million average for the first four years. That's about all we're going to say on that. We're not going to get specific on Alliance on an individual basis, but it is part of that overall bucket of synergy that we provided early on.
Yeah, we'll be able to talk more about Alliance synergies, I think, by the end of the year. It's still a work in progress. We know there's synergy from the owner-operator model. I mean, it just stands to reason. We're still working with Enbridge on who's doing what exactly and what the synergies will be. It's just a little too early to provide guidance.
I think, Rob, or Jeremy, pardon me. On the capital cost estimate, we're still refining that capital cost estimate as we go forward. We're expecting to later in the year, come down to a Class 3 cost estimate, which would be the point in time when we make a decision on proceeding with the expansion. I think we're still refining those costs as we go along, hoping to find some opportunities for savings there.
Great. Thanks. Maybe I'll just finish up real quick here on the expansion here that you just announced. I think you talked about commitments of 830,000 barrels a day by 2019, but capacity is notably above that. When you think about your project economics here, is it hinged on just those commitments? Or what type of upside improvement economics could you see if you get fuller utilization there?
The economics are lumpy. Sometimes we pre-build a phase. Then the next little bit in isolation looks wildly economic because you spent money previously. What we can say is these increments are very economic to us, but at some point, we're going to need to put another big long piece of pipe in the ground. The economics of that step might not be quite as accretive. I think what you're observing and what you've observed will continue. We keep rolling out the Duvernay complexes and the Peace expansions. I would be surprised if we don't keep investing CAD 500 million-CAD 750 million between the Duvernay plant and the Peace expansions over the next number of years. Those are typical Pembina projects in aggregate that you're familiar with, Jeremy. Some are more accretive, and some are less accretive, just depending on which phase of development.
In fact, we're almost confusing ourselves with which volumes go with which phase at this point. Then look at it more in aggregate. The accretion is solid, for sure.
That's very helpful. I'll pause there. Thanks for taking my question.
Thanks.
Your next question comes from the line of Robert Hope from Scotiabank. Your line is open.
Good morning, everyone. Maybe just to follow up on that prior question. It looks like Phase 6 is really just increasing capacity upstream of Phase 5 and Phase 4. With the contracts that you have in hand now, where do you think the next bottleneck will be? Or I guess, to put it another way, where is Phase 7? I guess as a follow-up, when do you expect to put another large pipe from Fox Creek down?
Really, when we built Phase 3, we built it with the ability to really power up a lot more downstream of Fox Creek. I think you'll see in our announcement, I think the number that we quoted was 1.3 million barrels a day at capacity. Between what we have under contract and what we have available downstream of Fox Creek, there's still a lot of running room there. With respect to the next phases of expansion, really, it is about de-bottlenecking the pipeline to the west of Fox Creek and really just accessing the capacity where it needs to be as producers develop plays in the Montney Duvernay. Really, it's more west of Kakwa, I guess, is where most of the expansion will continue.
Yeah. Between Kakwa and Wapiti might be the next place. If you think about it, we've laid pipe all the way from Fox all the way up to La Glace, the next step after that would probably be pumps on there and so on and so forth. You've seen the pattern. It's hard to predict. I wish we could predict exactly where our next growth spurt will come from, but new liquids hubs pop up, and they're 20,000 to 40,000 barrels a day, and it's a lot of volume, and it can come at you really quickly. The drilling can come at us much quicker than we're able to respond. Having those power-ups obviously is very strategic to be able to respond.
We are going to spend some time with looking at a strategic build-out of the system and trying to get back ahead. We came into the close of the year thinking we had a couple of years of running room on capacity, 6 months later, we're expanding again. It can come at you very quickly. With these more favorable condensate and crude prices, there's a lot of activity, particularly in the Montney and the Duvernay that we need to, once again, get ahead of.
All right. I appreciate the color there. Maybe just a clarification on Scott's comments on Veresen Midstream. The CAD 75 million of incremental distribution capabilities post the debt refinancing. I just want to get a better sense of how you're thinking about distributions from Veresen Midstream. Is that CAD 75 million off of a 2017 number and including growth, or would that be also in addition to that?
It was really a function of the financing that was put in place, both the existing expansion facility and the Term Loan B had some pretty punitive amortization that would kick in in the middle of this year on a go-forward basis. Really, it's comparing to what our budget was, say, for 2018, where at the time we acquired Veresen, they had those restrictive amortization restrictions within their agreements, which we've now gotten rid of a lot of them.
All right. I appreciate the color. Thank you.
Your next question comes from the line of Ben Pham from BMO. Your line is open.
Okay. Thanks. Good morning. I wanted to get your thoughts on the prospects of BC LNG and how you guys are thinking about that in terms of asset positioning. If you think you're well-positioned to benefit from that, or do you think you potentially need to make some strategic additions to not lose out on the opportunity?
Ben, it's Stu. Again, I think the BC LNG opportunity is, again, early days. We're hopeful and I think along with many others, Canadian producers and Canadian infrastructure, that an LNG facility on the West Coast of Canada does get announced. We're optimistic that we're positioned well from an infrastructure perspective to participate in the growth of the production that will utilize that asset and are excited to see that go forward. We think it opens up numerous opportunities for a variety of people, but we think we're well-positioned.
Remember, recall, we built a pretty big pipe right through the Montney, North Montney, and we have a bunch of capacity that we built for Progress, among others. That was all built with LNG success in mind. There's no question with this commodity price deck that the product being sought is condensate crude and NGL, and the associated gas will hopefully find its way to LNG. It's going to kick off a lot of liquids, and so as Stu said, we're optimistic and excited about that and very well-positioned, I think, to provide needed services for gas and liquids that would be associated with a successful LNG announcement. We're cheering them on, along with every other export project that's out there.
Okay. That's great to hear. On Jordan Cove then, does the Shell potentially impede the potential for that project? I know it's not in your numbers and outlook and whatnot, but there's a ton of gas that wants to get out of the system, that is. Do you really see two LNG projects potentially being made on the West Coast?
We don't see it as a hindrance at all. In fact, we think they're pointing to the right direction from West Coast of the continent being an LNG supplier. We think there's some synergies there. We believe, as you've already stated, that the resource to support the LNG facilities that are being contemplated is plenty. In fact, they just need a sign of the projects going forward, and we think that resource could easily be developed quite quickly and the infrastructure be provided in the time frames that these projects are being contemplated in.
The Montney itself could fill a number of LNG projects. It could fill Shell's, it could fill Shell's expansion, it could fill Jordan Cove, it could fill Jordan Cove's expansion, it could fill other LNG. The resource is absolutely massive with 100 years plus of reserve life out there. With Petronas' project not moving forward, I mean, they alone had enough gas to fill their project. We have a lot of stranded gas, and it's putting downward pressure on AECO pricing. We could easily meet the needs of many, many projects. I think, and my hope is that Shell and Jordan Cove both go, but I think that's the first of hopefully a number of additional projects.
Okay. That's fabulous. Thanks everybody.
Your next question comes from the line of Patrick Kenny from National Bank Financial. Your line is open.
Yeah, good morning. Just back to the Alliance Pipeline expansion and as it relates to funding your CAD 1 billion of the project. Is the plan to raise secured debt down at Alliance Pipeline, or do you expect to make an equity injection? If so, can you talk about roughly how much we should be expecting at this point?
Yeah, Pat, I think the plan would be to raise debt down at the Alliance Pipeline level. If you think about the cap on that structure right now, it's about 70% debt. Really we're talking about CAD 300 million of equity, really between 2019 to the first quarter of 2021, CAD 150 a year. Pretty de minimis and easily falls within our thesis of being able to fund our organic capital program with internally generated cash flow.
All right. That's great. I thought the original plan was to first try to extend the existing contracts beyond 2020, or at least in conjunction with the bottleneck here. Maybe you could just speak to where those discussions are at with shippers in terms of pushing out the existing 1.3 Bcf a day of take-or-pay contracts beyond 2020.
Yeah. As part of the open season process, we also solicited interest in expansion of those base contracts with all the customers and
We're about 30 days into a 60-day process. The first 30 days was really information gathering and sharing between the customers and Alliance. Now we're sort of getting into the bidding process, we're still fairly early days there. The intention is to extend enough of that base capacity under contract to secure the incremental expansion capital that we're going to be spending.
Yeah. They have to go hand in hand.
Okay, great. Stu, maybe shifting gears here. Could you remind us when you expect to have all the regulatory and environmental approvals in place out at Prince Rupert?
I think they're working to have everything completed. It's near year-end. It might push into 2019 for all of the environmental permits. There's not a lot outstanding at this point in time. I think that is the final timeframe.
Okay, great. Just lastly from me here, guys, more of a comment, I guess, than a question. When you declare record results by referencing adjusted EBITDA, I guess I wouldn't be shy about also pointing out your cash flow per share metric, because I believe the CAD 1.05 per share also reached a record level, if I'm not mistaken. Of course, that's what creates value for shareholders.
What are you doing later during the AGM? You might want to help me with No. Appreciate that. You know what? We see, there's a lot of headwinds on the sector. Let's just talk about that for a minute. We're powering along. We don't see a lot of obstacles. We see more opportunities, more favorable commodity prices. Yes, interest rates are going up slightly. We're so hedged out on our debt obligations. We are very comfortable that our future is bright and we think we can just keep doing what we've been doing for a lot of years.
That's great. Thanks again, guys.
Your next question comes from the line of Linda Ezergailis from TD Securities. Your line is open.
Thank you. Just to follow up on your comment, Mick, around you've got lots of tailwinds versus some industry headwinds. As you can appreciate, some of your peers have had some goalposts shifted on them on the credit rating. I'm just wondering if maybe Scott can comment on when you last spoke with the debt rating agencies. I'm sure you're in regular contact given your acquisition of Veresen. Any sense that the goalposts might move on you and any sort of comments on how that might affect your capital allocation thoughts, if at all, going forward?
Linda, we've met with them within the last 30 days for our yearly review, what I'm prepared to share is that the feedback was nothing but positive. If the DBRS yearly report hasn't been published, it should be out any day now. At the end of the day, both agencies, from my perspective, are very comfortable with where we're at. If you recall, I think S&P's last report when we acquired Veresen said upgrade threshold's roughly 20% FFO to debt, and right now we're currently tracking kind of 18, 19, 20% for 2018. We feel very, very comfortable at this stage. If you remember one of our guardrails being strong BBB, and part of that rationale is being in the high BBB category such that if those goalposts do move, that we have ample room to absorb that.
We're not trying to track to the lowest metric. If the goalposts move, we're below those thresholds. We give ourselves quite a bit of buffer. I have zero concerns at this stage.
Okay. That's a helpful context. Then maybe also just to follow on Mick's comment around seeing opportunities, and you mentioned it in your write-up as well, that there's other customer-driven development opportunities that you're evaluating. Can you comment on, beyond the doing more of what you do well in the Duvernay and the Montney, which segments, which geographies, which commodities are kind of percolating in your hopper of opportunities?
I think it's pretty broad. We're seeing great activity in all the business units. We've got our oil marketing business. We're back on track. We had that weird year last year where none of the ARBs worked and that's working. We've got really strong propane prices, good butane prices, crude's up. The commodities that we wish were higher but aren't, like obviously the WCS is down and gas is down. Long term, we certainly want those commodities to improve, but in the short term, that's a tailwind for us because natural gas is a feedstock cost for us and having a good ARB against WCS is a positive for us. Our outlook is good, I would say, across every business unit. Even in oil sands, there's some stuff that's awakening there.
Very positive, and that's kind of the piece that works well when commodities are good, and the piece of our business that we're developing that works well when commodities are bad are our export initiatives. There's a huge ARB between AECO and Tokyo, like what, CAD 10 today? It's massive with AECO being so low. Really people want to step into that ARB, and the polypropylene propane spread is positive. Across our existing business, but also our value chain opportunities are numerous, really. We're really optimistic about what Pembina can do. It's very frustrating for us. I did a little bit of research just to give you an example. In Q1 of 2015, our share price was between CAD 40 and CAD 42, and we've doubled our EBITDA per share since then. Our share price is between CAD 40 and CAD 42. It's absurd.
We have just as good of an outlook today as we did back then. We think the market will, as they do, the pendulum tends to swing and drag every sector player along with it. We think that the market is sophisticated enough it'll dissect the good from the not so good. Even our customers, I think their health is improving. We've seen our customers' share prices disconnect from the price of crude oil, which makes no sense. We just think the whole sector has opportunity for a positive correction, and we believe a catalyst event like Shell being announced or one of the pipes finally getting a real nod to go ahead. We think those can be catalyst events to create the kind of confidence we need in the basin. The underlying results, I think, are self-evident.
That's helpful. Just one maybe final operational question. There's some good commentary around your pipelines and some ramp-up in volumes there. In your facilities division, can you talk a bit about what sort of white space is there in terms of same-store sales volume, filling up possibilities, in addition to the new capacity that you're putting on?
You bet, Linda, it's Jaret here. Actually, at our board meeting yesterday, I talked about this with our board members with respect to our white spaces filling up extremely positively. You can see that with the associated liquids coming onto the pipe. We don't have a whole bunch of white space in our areas, but as Mick mentioned, you're seeing really positive propane prices, butane prices, and even that little bit of condensate that you get in your C3+ stream by going through our Musreau deep cuts, our Saturn facilities, et cetera. That's a really positive uptick considering how low the price of gas is for our customers. The alternative to sell it as gas or extract it, they're definitely moving to wanting to fill up those facilities a lot quicker. Extremely positive in that direction.
Our fractionators are filling. I remember a year ago, maybe we were 65% full in the complex and they're filling up. It took a little longer, but we went through such a tough time. The fracs are filling up. As Jaret said, a whole section for our board on if we could fill all our white space, what that meant. It's obviously fantastic because you're not spending any capital. That's our mission.
You're not going to quantify it for us?
Not today.
Okay. Thank you.
Thanks, Linda.
Your next question comes from the line of Robert Catellier from CIBC Capital Markets. Your line is open.
Hey, good morning, everybody. I just wanted to follow up on Ben's line of questioning. Now that you have Younger in your control, obviously it shares a fence line with McMahon. I'm wondering if you see any strategic or operational benefits to having those assets under common ownership, or more broadly, any strategic benefits to have a broader Northeast B.C. footprint?
I think we got that, Rob, when we combined with Veresen. I think we got the best set of midstream assets in the Montney, completely capable large plants and we think there's lots of opportunity to exploit. We want to keep growing our Montney presence and Younger obviously a very strong asset. When we look at that whole McMahon complex, it's not a high liquids complex. It's, I don't know, maybe 10 or 20 barrels a million. Great gas assets, not so great liquids assets. We're going to continue to look to expand in the Montney, both in our pipelines and in processing it. It's one of the two areas that just have such tremendous potential, and we realized, pre-Veresen, we needed to be there, and that was one of the big catalysts.
In terms of the McMahon complex, yeah, they share a fence line and they are complementary assets, but we don't feel like we necessarily need to own McMahon to make sure Younger is a success. They're complementary. I don't know that they're synergistic.
Okay. You had comments in your strategic summary about securing global markets. What are the implications of that comment with respect to future investment? Are you really just referring to continuing to execute Jordan Cove, Prince Rupert, PDH, and things like that? Or is there a signal in there about an appetite for a broader spectrum of investments, maybe international or on the U.S. side?
I think it's just a reflection that we're waking up to the fact that we're spending time in Tokyo and we're heading to Kuwait next week, our customers are worldwide now. You think about the new ventures stuff that Stu's running, propane exports, polypropylene, some of that market will be Canadian, some will be non-Canadian, the Jordan Cove customers. It's a realization that we're moving that way, it's a realization that we have a role in the basin to get hydrocarbons that aren't fetching appropriate pricing to better markets. We're developing that line of thinking, you'll hear more about it at Investor Day. We're not straying at all from our core values or our strategy or our guardrails. Anything we do has to fit into the guardrails. The guardrails aren't going to fit the businesses. The businesses have to fit the guardrails.
You know how we operate. We're pretty careful, everything's going to fit our risk profile. It's just realization that our customers are beyond Canada and even North America now.
Okay, just to take that a little bit further, there's been a number of assets available in the U.S. market for some time, now there's been some more recent upsets with some FERC actions which may have created more opportunities. How significant an objective is it for you to expand the U.S. presence? To the extent that it is, what parts of the value chain are most strategic?
Well, we like to own connected assets. We've just come off a monster acquisition. We've got some monster opportunities in front of us. What I'm pleased to say is we don't have to do anything. We think we can keep chugging out CAD 1 billion-CAD 2 billion a year of new projects and talking acquisitions. We don't have to be in a hurry anywhere. If you follow the way our strategy is, we usually hunt in areas where we have connected assets. For us, that might be the Bakken if it were U.S., maybe the Rockies. It's early days there. We're not actively shopping. We've talked to a lot of analysts and investors. They're encouraging us to start looking further afield.
That's something we'll probably pick up on in the latter part of the year to start at least to look at different basins.
Okay. Thanks for those answers. Congratulations on the great results.
Thanks.
Your next question comes from the line of Robert Kwan from RBC Capital Markets. Your line is open.
Morning. Mick, I just wanted to ask about some statements you made earlier around the potential pipeline system. It sounds like the priority here is just smaller debottlenecking projects with pretty high returns and then using pumping expansion from Fox Creek in. You also talked about at some point needing to put in some major pipe from the Fox Creek area in. Can you just talk about reconciling those two and especially just around maintaining the competitive advantage you have of that existing capacity?
Yeah. I don't even know when the date is yet. We're going to have a strategic review so we can speak more intelligently about that. I think what you're going to see in the next number of years is, as Jason said, exploiting that, call it 400,000 barrels a day of capacity we have from Fox in. That's a lot of volume still to come, but we still have to spend a lot of capital to get all that volume to Fox Creek. What might you see is rather than us doing what I consider pretty modest expansions to something a little bolder if commodity prices, particularly liquids prices, stay higher, we may front-run a phase just in anticipation of filling it faster.
We are finding that the phased expansion, the producers can move quicker than we can. We can offer them a tremendous level of service, but we just can't offer it to them in a timeframe that we'd like to. Still much faster, obviously, than a greenfield with pumps and power up. We're in a 2 to two-and-a-half-year cycle when producers are on a 1-year cycle. They drill a bunch of wells, and they say, "Well, we need the service." We don't want to be in a position all the time where we're saying, "Well, you got to wait 30 months." We're going to look harder at getting ahead of that to exploit the existing very accretive opportunity we have from Fox in.
Understood. Had a good quarter. I'm just wondering, you left your guidance unchanged. I know it's early in the year, but can you just comment on what you're seeing at this point, headwinds and tailwinds, as it relates to your guidance frame
Scott won't let me talk about that until Investor Day.
Okay, we'll wait till then.
You can see things are working out really good for us. We'll be prepared to say something about 2018 at least. Possibly 2019, or we may wait with 2019 till later in the year. With our fee-for-service cash flows in the high 80s to the 90% range, maybe it's a little lower now because we've had success on the commodity side. It does afford us the luxury of providing some guidance. We're thinking about what and how far out to go for Investor Day. Scott wants to get another month behind us, and I think that makes sense.
Fair enough. If I can just finish with coming back to Alliance. Previously, you commented, and I think you kind of alluded to it today, that to proceed with the expansion, you need to secure base pipe volumes via long-term extensions. Just to confirm, that is still the strategy? Put differently, what if you get a wildly oversubscribed expansion open season, but you get minimal base volumes extended? Does that pretty much kill the expansion project?
No. You can't expand on top of interruptible or short-term capacity. It's just not sensible for the partners to spend CAD 2 billion on top of two- or three-year terms. We have to secure the base to do the expansion. I think that stands to reason. It would be, I think, irresponsible to spend that kind of money without extending the base. We're incentivizing the base to extend. We're going to see what the open season brings. We have significant interest in expansion as well as expansion right now. We'll see what the open season brings. Jason, anything to add?
I would just say, it's CAD 1.5 billion today of access to a premium market, and I think people are definitely interested in maintaining that market access. I think, I'd say we're cautiously optimistic that we wouldn't end up in a situation that you described.
Okay. Are you getting early feedback that that's the case? I know you've given existing shippers quite a leg up on the expansion capacity, I'm just wondering what their thoughts in terms of taking that extension versus just using their renewal rights to roll year-to-year.
There's not that many extension shippers, we can't really comment. I would just say that the overall response to the open season has been positive. We're not going to need to wait that long, I think, end of the month.
Yeah, end of May.
End of May. It is a binding process. We may have more to say about it in as early as June.
Okay. That's great. Thank you very much.
Again, that's star one if you would like to ask a question. Your next question comes from the line of Chris Cox from Raymond James. Your line is open.
Hi, guys. Most of my questions have been asked already, but there's a couple cleanups I have. The first is maybe just if you could kind of contextualize for us the opportunity for the East Shale Basin for you guys and the Drayton Valley system or anything else that might be involved. I realize it's really early days, but it certainly seems like there's a good level of enthusiasm from producers. Maybe just anything you can comment on that first.
Yeah, the Drayton Valley system is starting to see some activity around it. We're seeing volumes ramp up. If you think back to 2008, we expanded that system quite a bit and volumes sort of went into decline during the down cycle. We actually have a lot of running room on capacity on the Drayton Valley system, and we're seeing those volumes start to come up. If you think more to the east there, we have the Bonny Glen system, which is a 16-inch pipeline that's currently sitting idle. We're definitely looking at opportunities out there and trying to see what's possible. We're currently assessing that system and doing some work on it to make sure it's ready if those volumes materialize.
That's the one part of Alberta where smaller companies can, without raising CAD 1 billion, which it seems what it takes to become a player in the Montney, drilling a six-well pad and all the stabilization and processing you need alongside that just to make money in this market. It's the one area smaller guys can play and be successful in. With these higher prices, we're breaking through the threshold commodity price we need to really activate that area. The trend is positive, and if we can see a forward curve that's CAD 60 or higher, we're going to see that area really pick up.
I just wanted to clean up my comment on the Bonny Glen system is a joint venture with Keyera. Keyera and Pembina are active and engaged on discussions there.
All right. Great, the new Viking from the sounds of it. Maybe onto Peace Pipeline system, the first one I have there is, of the 1.1 million barrels a day you have into the Edmonton market, maybe just how much of that would be related to condensate volumes?
That's always a moving target, depending on which commodity is hot. That's really the beauty of our system. From Fox Creek, we've got four different pipes with each having a separate stream, C2+, C3+, crude, condensate. Those pipes are interchangeable. If we get a surge in one commodity and less of another, we can change the service of any of those pipes. It's a tremendous service for our customers, because they don't always know what they're going to drill because they don't know necessarily where commodity prices are going. That flexibility that we have there is really tremendous. You do have to think about it as 1.1 million barrels a day and not constrain your thinking by what commodity has to be flowing right now.
No question, if you do the work on our larger customers, the majority of the sizzle is around condensate right now.
Yeah, for sure. There was just a comment around peak commitments on the pipeline in 2019. Maybe you could just talk around the cadence of contract rollover on the P system and whether you're having any discussions around extending those existing contracts.
Yeah, I think most of the contracts extend out about 10 years. The peak is just the absolute peak. The decline on volumes post 2019 is not very steep.
Yep. Okay. That's great. That's it for me. Thanks, guys.
There are no further questions. This concludes today's conference call. You may now disconnect.
Joining the call. We'll hope to see you at either the Investor Day or the AGM later today. Thank you.