Earnings Call: Q1 2020

May 14, 2020

Earnings release

Ladies and gentlemen, thank you for standing by, and welcome to the Tidewater Midstream and Infrastructure Limited First Quarter Results Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer I I would now like to hand the conference over to your speaker today, Joe Vohra. Thank you. Please go ahead, sir. Thank you. Good morning or good afternoon on the East Coast and thank you everybody for joining our conference call today on the call as usual. With me today is Joel McLeod, Tidewater's President and CEO. Before passing the call over to Joel for a review of the quarterly highlights, I'd like to remind you that some of the comments made today are forward looking in nature and based on Tidewater's current expectations, estimates, judgments and projections. Forward looking statements may differ and are subject to risk and uncertainties, which can cause actual results to differ from expectations. For more information on our assumptions and estimates and non GAAP measures, please refer to our various financial reports, which are available on tidewatermidstream.com and on SEDAR. With that, I'll pass it over to Joel McLeod for a review of the quarterly highlights for the Q1 2020. Thanks, Joel. Good morning, everyone, and thank you for joining our Q1 2020 conference call. Since our last conference call just over 2 months ago, a lot has changed. Due to COVID, unprecedented shock to the global economy, capital markets, credit markets and our oil and gas industry. Our entire team has done a phenomenal job in being nimble and dynamic to respond to the crisis and more importantly keep all our staff, employees and partners safe and I wish to thank our entire team for all their efforts over the past 2 months as it has been a challenging time for all. Our business although not untouched has remained resilient and to only see a 10% to 20% impact to our business has been an impressive accomplishment. To see our largest shareholder in Birch Hill who is known as some of the smartest mid market capital in Canada and some would argue across North America add to their holdings through the toughest of times is a huge vote of confidence for Tidewater and our shareholders. It is important to also note that we will be one of the companies that is a leader on the recovery and we have seen Prince George rack prices on diesel and gasoline increase dramatically in the past 30 days and have seen a material increase in demand at Prince George in the last few weeks. The backbone of our resiliency is the contracted nature of our business with over 70% of our EBITDA coming from long term agreements and approximately 50% of our EBITDA from investment grade counterparties. Our focus remains deleveraging and getting back to 3x to 3.5x debt to EBITDA into the end of the year where the sale of the Pioneer pipeline for $38,000,000 remains on track to close before year end and we expect to execute the definitive agreement by the end of May. Our credit syndicate remains very supportive and although we do not have a need to rely on government support, we have applied for various government programs including the Canada Emergency Wage Subsidy. We are in regular conversations with EDC and BDC as we do business with both of them today. And there is potential that we will qualify for the large employer emergency financing facility program should this be something we want to pursue. We are also in various discussions with various government agencies on some meaningful projects that could potentially become material to Tidewater over the coming years. We are likely to continue to see significant government stimulus and intensive infrastructure capital deployment period over the coming 12 to 24 months and Tidewater is positioned very well to take advantage of this. This includes some of the largest capital projects in Canada and even North America in and around Prince George including Site C Dam, Coastal GasLink, LNG Canada and the Trans Mountain Pipeline, all of which are multibillion dollar projects. We continue to forecast an increase in adjusted EBITDA of approximately 80% from 2019 to 2020 and are one of only a very few companies that have 80% of per share EBITDA growth from 2019 into 2020. Counterparty risk continues to be a focus of the market and want to reiterate that 50% of our EBITDA is from investment grade counterparties with Husky being our largest customer on the 5 year off take at Prince George. Husky has been an incredible partner and we continue to work with them on their force majeure notice where we have notified them that we feel the notice is invalid. We have 2 investment grade counterparties at Pipestone. We have over 5 investment grade counterparties in our growing gas storage business. We have 2 investment grade customers at BRC and an investment grade customer at Ram River. Our NGL crude oil and ethane counterparties are mostly all investment grade. We currently are not aware of any material customers being at risk of going into receivership. Back to our Q1 results. Our Q1 was previously revised downward due to COVID and then the result roughly came in line with market expectations where we delivered 41,500,000 adjusted EBITDA and over 85% increase to Q1 of 2020 from Q1 of 2019. We do expect to see continued EBITDA per share growth through 2020 with the ramp up of Pipestone into Q2 and the recovery of refined product demand and are now guiding $175,000,000 to $185,000,000 of adjusted EBITDA in 2020 with debt to EBITDA assuming the Pioneer sale to be 3x to 3.5x at year end. Prince George continues to perform well where Q1 was impacted by the falling refined product prices at the end of the quarter while we continued to process January February crude and reduced demand in late March as a result of COVID. The first half of Q2 will also be impacted by reduced demand and falling refined product prices. Over the past week or so, we have seen a significant improvement in Prince George RAC, diesel and gasoline prices and also a pickup in demand. When we acquired Prince George, we emphasized that this would be a key defensive asset in a crude collapse. And although not completely immune, we have seen Prince George crack spreads hold at $44 a barrel or greater. And what has been likely the largest oil price shock that we will see in our couriers. While deleveraging remains our focus, we continue to see several downstream related projects that are under 24 month payouts. Capital expenditures are currently planned to be minimal in 2020 as we focus on deleveraging, but do want our shareholders to be aware that we have a significant inventory of 50% plus rate of return projects. In Q1, our Pipestone gas plant continued to be restricted due to delays in third party infrastructure and minor operational issues where we averaged over $60,000,000 a day of throughput. This impacted our Q1 results by approximately 5% to 10%. As of early April, all our third party infrastructure Pipestone was online and we have seen our best run times and throughput levels at Pipestone with peak rates at full capacity and averaging in the 80,000,000 cubic feet a day range. Great to have our Pipestone plant now running at or better than expectations and it remains fully contract. Throughput on the Pioneer pipeline continued to be strong and is supported by a 15 year take or pay contract with TransAlta. The sale of Pioneer pipeline continues to proceed where we believe the definitive agreement will be signed around the end of the month and we do expect closing of the transaction to occur in the Q4. We continue to be committed to our ESG performance by investing in infrastructure to increase energy and natural resource efficiency, reduce emissions and enhance environmental performance. Our employees and contractors have embraced this commitment. Our ESG committee continues to meet weekly and is in the process of developing a website interface for the investment community to view as part of its transparency to communicate key environmental performance metrics. We are also seeing significant interest from various government agencies for funding for some of our initiatives. To reiterate, although not untouched and we will likely be impacted by the previous really disclosed 10% to 20% in Q2 2020, it does appear the worst is now behind us. We are seeing gasoline and diesel demand increase over the past week or 2 and we are well positioned for what is likely to be one of the largest economic stimulus and infrastructure build periods in our lifetime. Our business remains resilient through what is likely to be one of the worst possible crisis for the oil and gas industry and it is a function of the contracted nature of our infrastructure assets accompanied with strong defensive assets. We are confident in our ability to deliver $175,000,000 to $185,000,000 of adjusted EBITDA in 2020 with debt to EBITDA assuming the closing of the Pioneer sale to be 3x to 3.5x at year end. I do want to thank our staff, board, shareholders, credit syndicate partners and all stakeholders for all your support through these challenging times. I'll now pass it over to Mr. Bora and he can walk you through some of the details around the financial side of our Q1. Thanks Joel. I'll start with top line revenue. Revenue came in at about $252,000,000 in line with the prior quarter within 5% of the prior quarter and about 100% increase for the same period in 2019 mainly as a result of the 2019 capital program, those projects coming online as well as the big driver would be Prince George Refinery. Gross operating margin adjusted for realized gains on the hedging program was $45,000,000 in line with the prior quarter and approximately 80% increase for the same period in the prior year. Operating margin percentage was about 17%, which is consistent with prior periods and likely what we'll experience going forward even with the addition of the refinery. EBITDA margin, adjusted EBITDA for Q1 was approximately $42,000,000 which as Joel noted was impacted by a slower than expected ramp up of the Pipestone plant related to liquids and C5 connections to third party infrastructure as well as decreased refined product pricing toward the end of the Q1 and a slowdown in demand toward the end of the Q1. The increase in EBITDA from the same period in the prior year was obviously the result of contributions from the Pipestone Gas Plant, Pioneer Pipeline, French Short Refinery, Pipestone Gas Storage, mainly obviously the 2019 capital program as well as the addition of PGR. As Joel noted, the refinery was impacted by approximately 25% compared to our expectations as a result of the slowdown in demand and decrease in refined product pricing. Pipestone Gas Plant, although now connected to all third party infrastructure and averaging north of 80,000,000 cubic feet a day. And I think the last update we had saw us north of 99% runtime in the last 30 days or so, which is good news, but was impacted in the first quarter by approximately 30% due to some of the delays in connections to pipelines and then some operational issues as far as moving up to capacity. But today, plant continues to run at or near capacity. Gas storage business generally softer in the winter, but as we move into the summer injection season continues to be one of those natural hedges to low price environments as far as gas prices are concerned. So moving into the summer injection gas storage season should be positive for the business. Again, gathering and processing business largely not impacted to date, but obviously watching prices and counterparties and customers and doing all we can to help our customers continue to flow volumes. But today, plants continue to run well on the G and P side extraction and the frac and throttle plant business. Tough winter for that business with frac spread at multiyear lows, but expected with propane differentials and some movements in pricing and contango in the curve to continue to help and act as a natural hedge again in the summer months and into Q4. So expect that business to perform well here in the latter half of the year. And as far as payout ratio and distributable cash flow, distributable cash flow was approximately $12,500,000 for the quarter with a payout ratio of about 27%, a bit of a reduction from the prior quarter mainly as a result of a full quarter of borrowing costs related to the acquisition of the PG Refinery and also additional leases as a result of that refinery mainly the feedstock pipeline into the refinery as well as about $2,700,000 of decommissioning costs that were budgeted for the quarter, which won't be recurring quarter over quarter. So that was a bit of a one time in Q1 that was budgeted. We do expect payout ratio to remain under 25% for the year and under 20% exiting the year. So feel good about the dividend and maintaining a low payout ratio and applying the excess distributable cash flow to reducing debt on top of the vehicle lever which would be the Pioneer Pipeline sale. With that, I think I'll open it up to the floor for questions. Your first question comes from the line of Patrick Kenny of National Bank Financial. Please go ahead. Your line is open. Thank you. Hey, guys. Maybe just to start with a bit more color on why you view the force majeure as being invalid and what the next steps are here in terms of legal proceedings or perhaps looking to settle with Husky by renegotiating some of the terms of the agreement? And then how should we think about recovering some of the near term cash flow impact here from the force majeure? Just curious what how you expect to mitigate some of this impact through railing to other markets? Yes, no problem. Joel here. So overall, I would say daily Husky has been continues to be great to work with. And as we speak today, we don't see any reason why there's legal action or any other components that are required as right now they're forecasting to meet their full commitment and take or pay. I think when we issued that press release, it was near kind of the worst possible times around COVID, coronavirus and awful tough. But even in the past 2 weeks, Pat, we've seen a big pickup. BC, I think most of you are aware as far as COVID cases are single digit type of numbers here. Yesterday and last few days are Interyear BC has been relatively unimpacted and we've got some of the largest capital projects in all of Canada around Prince George. So we don't want to get ahead of ourselves, but it definitely feels a lot better. We see the daily pulls from the refinery and I would say things are looking like we're on track and no legal action will be required. Sorry, just to clarify, Husky is back to pulling their full offtake obligation today? Yes. Or within 5% would be my message as of today. So we're happy with what we're seeing and they've been a great partner. And at this point, there's no need for any legal action. Okay, great. And then just looking at Q1, you guys hit your EBITDA guidance again, but net debt went up another $30,000,000 or so from year end levels. Looks like it was all working capital related. So we're not quite seeing yet free cash flow starting to kick off the deleveraging process. Would you expect net debt to begin trending down here starting in Q2? Or are there some other working capital items that still need to be smoothed out before net debt starts to actually come down? Yes. It's something Pat that we look at every day, obviously. Cash flow and related net debt. I'd say most of that increases as you noted working capital related, some of that is timing, some of that is the decline in refined product pricing toward the end of Q1 that maybe impacted production a little bit. But I'd say Q1 to Q2, we wouldn't expect a material move down yet. So I would say flat or maybe a little bit lower. But into Q3 and Q4 and then obviously with the sale of the Pioneer pipeline and there's some other smaller non core pieces we don't need to get into. But once we get into Q3, Q4, I think we start to see the material move down to Q1 to Q2, especially given sort of revised guidance. We expect somewhere flat to a little down, but we see the big move in the second half and especially Q4 2020. The keypad tool will be these last 45 days refined product pricing as well. And the Q1 prices dropped like a rock and probably the biggest drop that we've ever seen. But Q2 today, to Joel's point, we think as far as debt reduction relatively flat, maybe a small decrease. But should you see a move up material move up and continuing with refined products and you can see us chip away at that debt into Q2. But to his point Q3, Q4 as well where you start to see some material headway in us reducing our debt and that's our focus today. Understood. I guess that leads to the question of near term liquidity and I see only $20,000,000 or so left on the $600,000,000 bank line at the end of the quarter. Are you looking to move up the credit capacity to the full $650,000,000 And maybe you can just confirm if you're in compliance with all the conditions to do so? Yes. We're definitely in compliance, Pat, and no covenant issues either and we've stress tested obviously as I think everybody has all of our peers we've stress tested forecast, don't foresee any covenant issues. Agree, we are close to the top of that credit line. We do have the accordion feature of $50,000,000 available to us and we would be able to meet those sort of thresholds, although it's not something that we think we're going to need to access, but we have had discussions with the syndicate and it's there should we decide to go down that path. But today, we haven't seen the need to go that route, but it is there. And then there's also multiple other capital providers, which again would be something that we likely would not go down that route. But, yes, tight today, but not seeing issues. And we do have some tools in the toolbox to access should we need to. And that accordion feature of $50,000,000 is one of them. And then again there's multiple other I wouldn't say that a plan A would be any type of guarantee program that the government has rolled out, but I'm just trying to give you a a sense of some of the other tools in the toolbox. So there's definitely some liquidity available to us should we need it. And Pat, I think the other message would just be it's not also even on our other contracted assets. Again, it's not something we're also even on our other contracted assets. Again, it's not something we're going to do today. Our credit syndicate though is aware that we've got some very big levers. If we got a situation to have to use those even on non op interest, but that is highly unlikely and that is plan Z as we look at options, but do want the market and the shareholders to be aware that we've got lots of options if we have had to go down the path. Okay, great. And then just last one for me guys. Looks like you disposed of your propane industry at the end of the I know it's not overly material to the EBITDA guidance, but if you could just remind us what the annual EBITDA contribution was from that business? And then also just maybe a quick comment on if there's any other asset sale opportunities that you could pursue if you needed to shore up the liquidity situation? Yes. I think good question, Pat. And that I think like I've said that deal was a little bittersweet. That brings us back to early days at Tidewater, but it was about $2,000,000 of EBITDA. It was a nice business early on looking for premiums in NGL prices for producers to be able to access a retail market like that. But as we grow, we want to be focused on the larger assets. So you're right, we did sell the retail propane business. It was a good business for us about $2,000,000 of EBITDA annually, so not quite material to us anymore, but definitely a good business and a little bittersweet for that sale. And then as far as but a good deal overall. And then as far as other opportunities, I'd say outside of the larger contracted core assets, there are some non core pieces that we're exploring. Would it move the needle from a deleveraging or capital perspective? Not so much. And the same goes for from the EBITDA perspective. So not necessarily material to us anymore, but we do continue to move multiple sort of non core initiatives forward, but it's not something that would significantly move the needle today outside our larger contracted assets. But Joel, anything to add? No, I think, well, for contracted assets. But Joel, anything to add? No, I think well put, Joel, we did recognize a nice gain on that sale, which is helpful and continue to look to focus our efforts on larger contracted assets and there continues to be capital out there. I think it's going to take a couple of months here for credit markets to settle before we have meaningful bids. We're not running any formal processes, but I think our shareholders have told us where we can deleverage and focus and realize a gain or a reasonable return, we should consider it and more than happy to. All right. I'll leave it there. Thanks guys. Thanks, Bob. Your next question comes from the line of Rob Hope of Scotiabank. Please go ahead. Your line is open. Good morning, everyone. First question is on PGR. Just taking a look at the May presentation, it shows kind of the updated guidance for that asset of $75,000,000 a quarter. Just want to get a sense of how much of the move down in guidance was volume versus pricing? And then secondly, how much EBITDA did it spin off in Q1? Yes. I'd say it was a bit of both, Rob, and some of that is sort of temporary pain where we move through that extent of crude. But so I'd say it's a bit of both. And is it maybe it's tough to say like Joe said that the lifts have increased here recently. And if you would ask that question 2 weeks ago, maybe the answer might have been a little different. But today, we feel on the volume side, especially with Leah's forecast that the contracted volume is sort of forecasted to be lifted. So we wouldn't see a big deviation there, although it has impacted Q1 and Q2. So I'd say the price piece and the volume maybe you could call it fifty-fifty for now the impact, but we do expect to get through that pricing issue as we move through the expensive crude and then the volume side has picked up going forward. When we announced the Prince George, I think most of your questions there are Prince George $75,000,000 of EBITDA, I would say, Rob, that holds. We did see, I would say, January, February potential to be in that $100,000,000 range of EBITDA off the refinery and now we would be guiding more back towards that $75,000,000 range for now. But things are moving daily and weekly and right now things are feeling a lot better than they were 2 weeks ago. And what was the EBITDA for Q1 for PGR? It was around I think it was $16,000,000 to $18,000,000 I think that's I think it's in our financials. All right. And then just one volume question. Just in terms of the increased demand over the last little while, can you split it up between gasoline and diesel, which one has kind of been lagging, which one's been doing better? I'd say gasoline a little better than diesel, but both products have seen increases. All right. Thanks. Your next question comes from the line of Robert Coupley of CIBC Capital Markets. Please go ahead. Your line is open. Yes. Thank you, everybody. Just some follow-up questions here on PGR. In your revised guidance, I'm curious what sort of full year crack spread you're looking at or I don't know how you want to skin the cat on this, but what's your thinking in terms of utilization or some other figures you can give us to sort of get to your range? Yes. No problem, Rob. So we did bring the refinery down to 7,500 to 8,000 barrels a day over a 2 to 3 week period in April, which was messaged. And then we do expect to run in our as we speak today back up to near full capacity or after full capacity. So conservatively, Lee, we'd say 11 to 11.5 for the remainder of the year. So if you said for full 2020, I would expect we'll still hit that 11,000 ish barrel a day range should we continue to see barrel a day range. Should we continue to see demand where it's at today? And if it increases, we definitely will be pushing to run at higher rates and even push what those could be. But if you said it hasn't been a revision, I'd say overall, no, there hasn't been a revision to the on the throughput side. I think the other point to your question is just on the crack spread. Crack spread, when we bought the asset, we said CAD44 a barrel Canadian or higher. And I would say today, we would be reiterating that. I would say January, February, we were seeing CAD50 even CAD60 $60 plus stracs on certain days. So there we're getting a sense that we may significantly outperform and today I think we just want to be conservative and we'd reiterate back to when we bought the asset which is $75,000,000 of EBITDA, 44 dollars cracks and throughput $11 to $11 a day for calendar 2020. Okay. That's quite helpful. So the strategy then is even though you're not getting lifted at the full rates, still produce as much as you can and use some storage wherever needed? Yes. And hopeful, I mean hopeful, we don't want to get ahead of ourselves that we can crank up the refinery to 12% and even potentially a touch above 12%. Should we see this increase continuing into summer and with Site C Dam, LNG Canada, Coastal GasLink, Trans Mountain kicking into full gear. But again, we may be a little ahead of ourselves there. So let's just plan for 11% to 11.5% for the year for now. Okay. And then can you talk about the relative match on the hedging between the feedstock and the refined product? Are those relatively well matched in terms of both timing and volumes? Yes. In general, relatively matched, although when we did bottom out there at the end of March and into April, part of the realized gain is we were unwinding a portion of the refined product piece. So is the book balanced at this point or is it are you open on the product costs? With prices coming back up, we have come back into balance here. But we'll admit at times we are out of balance by 5% to 10%. Part of that is you cannot hedge direct to a PG crack on an efficient basis. So you must hedge ULSD or ARBO versus going direct to a PG crack. If we wanted to hedge direct to a PG crack, we would take a $15 to $20 a barrel haircut on that $44 a barrel crack. And we're only hedging 20 ish percent of our refinery production today just given there is no way to hedge a clean Prince George crack. So it sounds to me like that implies actually a little bit of leverage to your margins, doesn't it? I fear pretty much hedged on the if you're more hedged on the feedstock? I think there's some inherent if your question Rob is inherent in the asset, I'd say yes with cheap crude feedstock, yes, there's I think there's some inherent upside in the margins on the asset side of things. Okay. So just in the gathering and processing, is there enough of a ramp in Pipestone availability to offset some declines you might see in the second quarter? It sounds like you haven't really seen much yet, but what's the interplay there or what we might expect sequentially in the gathering and processing? Yes. I'd say in the gathering and processing side of things, we haven't seen big moves. Our 2 largest plants on the GMP side, RamRev outside of pipe stone, Ram River and Brazo. We've seen Brazil volumes move up a little bit. Ram has held steady. Gas price has remained pretty unvolatile and strong up until probably the last couple of week period where maybe we've seen a little bit of volatility. I know liquids pricing has impacted a bit, but we haven't seen and we don't expect based on producer discussions, material shut ins on that side of the business. But to your question, can pipes don't offset the rest? I would say we don't expect a material decline on the GMP side and Pipestone now is running around capacity on a take or pay basis and 99 plus percent run time. So yes, I'd say I don't know if I've answered your question, Rob, but we don't expect big declines on one side and now Pipestone is running fairly consistent. Yes. Okay. That's kind of what I was going to add. Just final question, I did want to follow-up on the liquidity position that Pat raised earlier. Your answers were helpful. I just want to make sure I understand. It seems like you're pretty close to needing the accordion. And so but your comments made it sound like you don't really necessarily need it. And I'm wondering if you could just give a little more clarity on there. Is that because of the just your view on the cash flow from the operations? Or is it does it assume some sort of access to another type of financing? You mentioned some of the government programs. But just walk me through the thoughts. Are you just getting there organically through the operations? Or is there something else at play? Yes, I think more so organically through the operations and we do when you look at the balance sheet and you see inventory levels there, we do have a big working capital piece. So it's almost a point in time when you look at availability on the credit facility that will fluctuate $20,000,000 to 30,000,000 dollars in a month. So, there's from a working capital perspective, there's a little more liquidity there than maybe a snapshot in time or how it was. And as far as the accordion on the credit facility, maybe I don't want to get too far ahead of ourselves on whether we go down that path or not understanding we haven't gone through the full process with our syndicate, but we would need all the conditions, to be able to exercise that piece. But I think just in general, in general, Rob, between the working capital piece and some other short term levers and based on our positive cash flow, low payout ratio and how the assets are performing today, we don't necessarily see a need for it this second. But is there I suppose it's one of the levers that we could pull on, but without going too far, I wouldn't want to commit to one way or another or one path or another without having something definitive with our syndicate, but our banks continue to remain supportive. And like I said, we've stress tested models and cash flow and covenants and we remain within all those pieces. So, I'm not concerned. Okay. That's helpful. I understand. Thank you. Your next question comes from the line of Robert Crane of RBC Capital Markets. Please go ahead. Your line is open. Great. Good morning. If I can just start on the Husky force majeure, a couple of things. What have you kind of quantified what the impact to EBITDA was before Husky started pulling volumes close to the take or pay? Yes. So happy to handle. Joel, you can jump in as well. I would say, Rob, when the force majeure notice came across, we were there was risk of kind of 20% to 25% impact. But what we've seen in the last 2 weeks in our conversations, they've been a great partner. Pulse demand has have increased, and we do expect them to meet their full year forecast. Okay. So effectively whatever you've lost here in the Q1 you think they'll make that in remainder of the year? Yes. And then the comments about using rail, if they're is that largely just to work off the inventory build? Or is there some other channel? As far as Husky is doing, they're doing a great job of increasing the poles. And as a result, they are sending cars in at times and then we also do utilize our railcar fleet at time when we see there's opportunities and we do want to continue to open up new markets and we have from Eastern Canada, the Pacific Northwest even with gasoline inventories coming down across North America. Over the last few weeks, we have had some inbounds on both diesel and gasoline into some markets that are potentially a little short here with refinery run times moving down again. We don't want to get ahead of ourselves, but there's definite dislocations, and we want to use a railcar fleet to take advantage of those dislocations. Got it. Maybe just turning to the NGL year. Do you have any kind of general comments on the dynamics that played out in the base? And you mentioned the BRC volumes are pretty much full. Specifically to that though, can you also talk about the frac fees? Yes. I think I'd have to confirm where I think our frac fees are somewhat in line with prior year. Maybe a touch maybe 5% to 10% out, Rob, but roughly in line with previous years. And as far as capacity, again, all things considered successful NGL year on as far as contracting those pieces around the frac and as far as NGL volumes and we do have a couple of 2, 3 year contracts there. But overall as far as capacity at the frac, we're pleased. I suppose the one piece that would be impacted would be around NGL volumes related to straddle operations or extraction at Brazo or the straddle plants and with frac spreads where they are, yes, that was tough in Q4, Q1, definitely on the lower end of what we've seen historically when you see where frac spreads are today. But as far as contracted volumes, consistent with prior years and the frac today remains on any given day 80% plus full, if not full. Yes. And public data, so public data will show our throughput at our BRAS frac and it is a 10,000 barrel at AC 2 plus frac and we would be running 80% to 90% capacity today, which is great to see in one of our better performing assets for sure. If I can just finish with the Pipestone PGR integration, Can you run any kind of any volumes out of Pipes John into PGR yet? Yes. We've tracked not a material amount of volume Rob it hasn't made a ton of sense but we definitely have moved volumes by truck and that's gone well especially today you'll see Prince George rack prices gasoline is ahead of diesel. So for us on a condensate to get a little more gasoline off of a condensate it's definitely something we continue to evaluate and want to be ready to move with the strength in suite versus condensate. It's also we've got our pipe connection at Valhalla and then we also have a refinery. So we've got some great tools in our toolbox to manage suite versus C5. In May, we saw very wide differentials on suite and locked in most of our volumes at that minus 14 monthly index price at Prince George. Got it. And I guess just obviously hopefully we can get some better market. But is part of the strategy to try to run a little bit more Condi through and maybe just kind of prove to the customers there, prove the concept to the customers, show them what the margins could be as a way to incent them down the road to get into the take or pay? Absolutely. The more we could show customers optionality and even through I think the downturn and the recovery to know the potential that they could look at price exposure to diesel or gasoline versus just a crude oil. Crude oil price is something customers evaluating. I'd say obviously today it's tough as everyone's so beat up. But as we get through and somewhat back to normal, I think some of our customers will are and will definitely entertain having a price linked to a diesel or gasoline price to Rob where your point where hopefully we can contract out some of Prince George on a take or pay fee for service basis rather than us taking that risk on the crack spread trying to lock that in with producers. But again don't want to get ahead of ourselves or over promise but it's something we definitely want to continue to push forward. Thanks very much. Thank you, Rob. There are no further questions at this time. I turn the call back over to the presenters. Thanks everyone. We really appreciate your time today. Stay safe. And Joel anything else you want to add? No, I think just thanks for everybody's support and thank you for joining the call. Obviously, for what's been a tough feels like a tough couple of years or more for the industry, it continues to see some headwinds. But at the same time, to look on the positive side and see how the assets and the business react to significant stress on commodity prices. We've seen negative gas prices in the prior 2 years. We've now seen negative crude oil. I feel like we've seen I thought we had seen almost every scenario. Now it feels like we've seen every scenario. So to see how the business reacts, I suppose, on the positive side is encouraging. So just want to thank everybody for their support. And again, stay safe and hopefully things will be back to normal here in some time. So thank you again. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now