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Operator: Good morning. My name is Danny, and I will be your conference operator today. At this time, I would like to welcome everyone to Keyera's 2025 Fourth Quarter and Year-End Conference Call. [Operator Instructions] I would now like to turn the call over to Dan Cuthbertson, General Manager of Investor Relations. You may begin.
Dan Cuthbertson: 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, Liquids Business Unit; and Brad Slessor, Senior Vice President, G&P and NGL Pipelines Business Unit. We will 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 that we will give 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 more information on non-GAAP measures and forward-looking statements, please refer to Keyera's public filings available on SEDAR and on our website. With that, I'll turn the call over to Dean.
C. Setoguchi: Thanks, Dan, and good morning, everyone. 2025 was a transformational year for Keyera. We continue to demonstrate the strength of our fee-for-service business, delivering record results in both Liquids Infrastructure and Gathering and Processing. These results were driven by higher utilization across our integrated system, which supports continued dividend growth. Keyera's marketing business finished the year at the top end of our revised guidance. While results were below our long-term base expectations, we continue to view our marketing segment as a strategic differentiator that provides strong cash flow and in stronger market environments can deliver outsized contributions. This cash can be used to strengthen our balance sheet and accelerate growth by reinvesting in our fee-for-service business. During the year, we continued to advance our strategy of strengthening and extending our integrated value chain. We sanctioned 3 highly strategic and capital-efficient growth projects, including 2 frac expansions at KFS in addition to KAPS Zone 4. These projects are highly contracted and will continue to support growth and high-quality fee-based cash flow. These contracts demonstrate the competitiveness of our services. In June, we announced the transformational acquisition of the Plains' Canadian NGL business. Once this highly strategic transaction closes, it will expand our national platform, strengthen our integrated value chain and enhance our ability to better serve customers and partners across Canada. For Keyera, it will support further growth and long-term shareholder value. We continue to demonstrate disciplined portfolio management, completing 2 additional transactions, the addition of the additional gas plant capacity in the Simonette area and the divestiture of our noncore WildHorse asset. Together, these transactions reflect our continued focus on optimizing our asset base and recycling capital into higher return on-strategy opportunities. I'll now briefly discuss the AEF outage. In mid-January, we announced an unplanned outage following the identification of an issue with a vessel on site. The safety of our employees, contractors and the integrity of the facility remain top priorities while the restart work continues. Repairs are underway, and we expect the facility to be back to full production in May. Lastly, I want to touch on our recent organization changes. In preparation for the closing of the Plains transaction, we have reorganized our leadership reporting structure to better position the business for its next phase of growth and to drive competitiveness. Under the new structure, we'll operate with 2 business units supported by our existing enablement teams, and Brad Slessor now leads the G&P and NGL Pipelines business unit and Jamie Urquhart leads the Liquids business unit, which includes our liquids infrastructure assets and marketing business. These changes do not affect how we'll report our segment and financial results. Overall, 2025 was a year of strong execution. We have continued to build a more efficient and competitive platform that creates meaningful value for our customers and shareholders while positioning Keyera for long-term growth. With that, I'll turn the call over to Eileen to review our financial results and outlook.
Eileen Marikar: Thanks, Dean, and good morning, everyone. Keyera's fourth quarter and year-end results reflected stable performance and continued strength in our fee-for-service business. Not including deal and integration costs associated with the Plains acquisition, annual adjusted EBITDA was $1.16 billion. Distributable cash flow was $767 million or $3.35 per share for the year, and annual net earnings were $432 million. As Dean mentioned, we continue to see strong year-over-year growth in our fee-for-service segment, delivering record results driven by higher utilization across the value chain. In Gathering and Processing, we have record annual realized margin, delivering $439 million, up from $413 million last year. The increase reflects higher throughput and growing contributions from our Wapiti and Simonette gas plants as contracted volumes continue to grow. In Liquids Infrastructure, realized margin was a record $593 million for the year, up from $558 million in 2024. This growth was supported by higher storage contracting and utilization of our condensate system as well as the steady ramp-up of KAPS volumes. Now turning to the Marketing segment. Realized margin was $300 million for the year compared to $485 million last year. The lower results mostly reflect lower premiums and volumes for iso-octane sales. Now I'll touch on our 2026 guidance. Growth capital is still expected to range between $400 million and $475 million. Maintenance capital is expected to be $140 million to $160 million. Cash taxes are expected to range between $60 million and $70 million. Consistent with prior years, Marketing segment realized margin guidance will be provided with first quarter results in mid-May, following the conclusion of the NGL contracting season. As previously disclosed, this will reflect the approximate $110 million impact associated with the unplanned AEF outage and turnaround. Following the closing of the Plains acquisition, we'll provide pro forma guidance and a comprehensive business outlook for the combined platform, reflecting our enhanced scale and long-term growth profile. With that, I'll turn it back to Dean for closing remarks.
C. Setoguchi: Thanks, Eileen. 2025 was a transformative year for Keyera. We executed on our strategy, strengthened our value chain and continue to build a competitive and efficient platform that creates value for our customers and shareholders. On behalf of our Board and management team, I want to thank our employees, customers, shareholders, indigenous rights holders and other stakeholders for their continued support. With that, we'll open the line for questions. Operator, please go ahead.
Operator: [Operator Instructions] Your first question comes from Aaron MacNeil of TD Cowen.
Aaron MacNeil: As you can imagine, we're getting a lot of inbounds on the Simonette gas plant acquisition this morning. Just wondering if there's any more details that you could provide in terms of the transaction multiple or potential financial contributions? Whether or not the assets are connected to KAPS? And if not, what the time line might be for connectivity there or any other details?
C. Setoguchi: Aaron, it's Dean, and thank you very much for the questions regarding the Simonette area gas plant capacity acquisitions that we made. What I'd say is that we like the area. And as you know, we have our own Simonette gas plant. So this really fortifies and strengthens our G&P footprint in that area. We're working with a private oil and gas company, and we do have confidentiality provisions. And it's important for our customer not to disclose details of that contract. So we are not able to do that. But I'd just say that there are some downstream services that are included as part of this transaction. And as we've always said about our infrastructure investments is that this one included is solidly between our -- meets our 10% to 15% return on capital threshold.
Aaron MacNeil: That's helpful. And maybe just a bit of an oddball question, and I can appreciate that you won't speak to specific customers or contracts. But ARC recently removed the second phase of Attachie from its 5-year outlook, which was expected to be a meaningful contributor to overall basin condensate growth. I guess just broadly speaking, would you sort of reiterate your stand-alone Keyera growth outlook despite that removal of the project?
C. Setoguchi: Yes, absolutely. I mean, first of all, I'm not going to make specific comments on ARC and their plans other than to say that I think that they're a very good operating company, and they are going to continue to find ways and deliver growth for their stakeholders. When you step back from a macro perspective, the Western Canadian Sedimentary Basin is a very competitive place to drill and grow your production base. And as we see -- confidently see more product egress out of our basin, that just gives us optimism that we're going to see continued growth in the future. And I'm talking about, again, just filling up the original 2 phases or the 2 trains of LNG Canada. We're hearing there's a lot more momentum around the next phase being sanctioned sometime in the next year or so. So that will be positive. Data centers on both sides of the border are, I think, a real thing, and that's going to drive more gas -- nat gas demand. And then obviously, the expansions on Trans Mountain and also in Enbridge's system are very good for condensate demand. So when you take that macro overlay and where we're positioned on the liquids-rich Montney fairway, we're in the sweet spot and which is why we expand our footprint in the Simonette -- the Simonette acquisition. And we see it as an area that we see a lot of demand for more services, and we're going to compete for that. So overall, our business outlook is still very strong. And I do want to reiterate the contracts that we announced last year and we continue to sign the very high take-or-pay. So we have a high level of confidence in the delivery of our cash flow growth, which we again reiterate our 7% to 8% fee-for-service EBITDA growth out to 2027. And as you know, projects like KAPS Zone 4 and specifically our Frac III will continue to drive our growth outlook for our fee-for-service business beyond 2027 as well. So overall, again, we think that the basin is going to be strong, and we're certainly going to capture our fair share of that growth and deliver meaningful results.
Operator: Your next question comes from Robert Hope of Scotiabank.
Robert Hope: I want to go back to the Simonette acquisition. The MD&A has some commentary that the transaction also unlocks potential follow-on growth opportunities in the area. Can you maybe add a little bit of color to this? And then maybe just would this include a KAPS connection? Or are those assets currently connected to KAPS?
C. Setoguchi: Yes. You know what, like I say, I'm not going to speak to the specific services that are attached to this contract because, again, we're just respecting the wishes and the confidentiality provisions in agreement. But what I'd say is that we generally see very good demand in that area. I mean the Simonette area really borders the Montney and the Duvernay developments, and we like it. We do have extra capacity in our Simonette gas plant. We are working on opportunities to potentially expand our Simonette gas plant. So when you look at these two other gas plant working interest that we acquired, it ties in very nicely with that G&P footprint in the Simonette area. So again, when we look at that footprint, we see ways that we can continue to offer a broader service to the customers in that area.
Robert Hope: Maybe a more broad question. Looking at 2025, the dividend payout ratio was kind of in the midrange of that 50% to 70% target range. As you add the Plains assets, which will be quite accretive, how are you thinking about allocation of capital? Because that will put you kind of towards the lower end, if not below your targeted payout range.
C. Setoguchi: Yes. Maybe I'll just make a general comment and remind everyone that Keyera originated back in 2023 when we became public, it was as a trust. And I know that there are a lot of investors that still love that dividend. And so that's something that's very important to us, but also very important to our shareholders and something that we continue to want to grow just like we have in the past. So if I didn't, my parents probably wouldn't talk to me anymore. But anyway, with that, I'll turn it over to Eileen for further comments.
Eileen Marikar: Sure. Rob. Yes, just again, our philosophy overall on the dividend growth really won't change even as we bring Plains on. We want to make sure it's sustainable through all the various business cycles. And so we do that by maintaining, as you noted, a conservative payout ratio and by continuing to grow our fee-based cash flow. And so with Plains and our recent sanctioning of growth projects, that fee-for-service cash flow is going to continue to grow. So beyond the dividend, really, our capital allocation priorities are to fund our sanctioned growth capital program and repay debt so that we bring our balance sheet back to the low end of our target range. Maintaining that low leverage has been a competitive advantage for us and really has allowed us to pursue opportunities when they arise, and we want to always be in that position.
Operator: Your next question comes from Ben Pham of BMO.
Benjamin Pham: I just want to stay on the topic of acquisitions. I would love to hear your thoughts around just the pace of potential acquisitions that's crossing your desk there? And do you think this could be maybe a repeatable strategy for you in Western Canada?
C. Setoguchi: Ben, thank you for the question. Overall, we just think that there's a great opportunity to continue to grow. I really love the -- starting from the macro, I mean, I love the Prime Minister's vision to -- for Canada to be an energy superpower, and we should be. And so as we see more LNG and pipeline expansions to the West Coast and also more capacity built in the United States, there's going to be a lot of growth in this basin. We have a very competitive basin. And with that, there's going to be core infrastructure requirements and capacity that's going to be required to enable that growth. And some of that is going to be greenfield, brownfield and tuck-in acquisitions like what we just announced. So we see opportunities on the horizon for all 3. At the same time, though, our primary focus today is to deliver on the 3 projects that we have sanctioned, the 2 Frac expansions and Zone 4. And also closing our Plains acquisition and getting that fully integrated and capturing synergies. So we just don't want to get ahead of ourselves, and we want to make sure that we don't bite off more than we can chew. Those are our big priorities in the near term. But certainly, medium to long term, we see a lot of great opportunities.
Benjamin Pham: Got you. And then on the Plains transaction, you mentioned the end of Q1 '26 and sense on all the conversation you're having. But are you -- is Keyera in a position now where you have a good sense of what you need to do or not do to close the deal? And is there anything in particular that's driving that target on the timing?
C. Setoguchi: Yes. You know what, I can't speak to specifics on details of our discussions with the bureau. But like I say, we feel very confident that we'll be able to close this transaction somewhere around the end of the quarter. But again, we're dealing with a federal agency and not all the timing is within our control, but we are where we thought we'd be at this point in time.
Operator: Your next question comes from Maurice Choy of RBC Capital Markets.
Maurice Choy: Maybe just sticking with the Plains discussion, notwithstanding that the deal hasn't closed. But if I could just look beyond the closing, have you seen your customers already wanting to initiate contract discussions to look at the combined portfolio and service offerings? And do you see these being executed relatively soon after the deal closes?
C. Setoguchi: Maurice, thank you for the question. I think the first comment I'd say is that we still have to operate 100% as separate entities until this transaction closes. So there are no discussions going on that involve combined services between the 2 platforms today. And we want to make sure that, that's very clear. But certainly, I want to reiterate that we see a lot of opportunities to provide our customers a more competitive service than they receive today. We think with the combined assets, they're going to have a more reliable service and also a competitive service as well with our logistics capabilities or market capabilities and cross-country reach to access markets. So this is going to be a great benefit for our customers. But again, we -- it will have to wait. Those discussions will have to wait until after we close.
Maurice Choy: Makes sense. Maybe I could just switch over to the Simonette transaction. I'm not necessarily looking for color on the assets specifically, but just more philosophically. Are you seeing further opportunities for these sorts of partnerships where you own a partial ownership of a gas plant that can benefit fully downstream? And what would some of the gating items be for you to form these types of partnerships?
C. Setoguchi: Yes. That's a great question. I mean we're a midstream infrastructure company, and we're a service company. So we're there to provide solutions that help our customers be successful. And there are opportunities sometimes where it makes more sense for us to own infrastructure and again, provide them other needed services to help enhance their netbacks and their success. And this is just one example of that. And we see more opportunities in the future. But again, we just don't want to get ahead of our skis, and we just want to -- we want to focus on the Plains acquisition. And again, the 3 projects we have underway. But longer term, medium and long term, for sure, we see more opportunities like that.
Operator: Your next question comes from Robert Catellier of CIBC Capital.
Robert Catellier: I think I might try another Plains question here. Under Keyera's ownership, we'd expect the cash flow from the Plains assets to be reinvested in Canada, whereas the cash flow was largely being repatriated under Plains' ownership. So how big a consideration do you think that is in terms of the various approvals you're seeking?
C. Setoguchi: Rob, that's a great question. But I can't comment on, again, the competition process and -- but what I can say is that there's never been a greater time where it's important for Canadian companies to own Canadian assets. And especially one like ours where this transaction helps us provide a more competitive service for our customers that helps them -- enables them to grow and our basin to grow and for us to fulfill that vision of being the energy superpower. And you just look at what's happening with our partners or our neighbors in the United States and what's happening in the world, the Middle East, it's just never been a more important time for us also to have control of our own resources and energy security. And you're right, with that as a Canadian company, we are going to reinvest in Canada. This is where we -- our headquarters are right here in Calgary. And with that, we're going to create a lot of jobs. We do a lot of great work with the communities that we invest in. And so -- and we have great indigenous partnerships in terms of all the services that we award or contracts we award to them as well. So it's a win-win for everybody. And so anyway, yes, I agree with you 100%. Right now, it's got to be -- Canadian ownership is super important.
Robert Catellier: I know it's a tough question to answer under the circumstances. My second question has to do with -- I wanted your views -- updated views on the investment conditions required for a potential condensate splitter?
C. Setoguchi: Yes. Well, you know what, it would have to meet our investment hurdles just like any other investment. So we generally have a guideline public that we've shared publicly the 10% to 15% return on capital on a stand-alone basis for infrastructure. And generally, we wanted to be -- have integrated benefits as well, which will enhance those returns. We wanted to have contracting behind it, so we mitigate our commodity exposure on an investment like that. And obviously, we want to make sure we can build infrastructure like that at a cost that, again, helps us generate those kind of returns. Anything else you want to add, Jamie?
Robert Catellier: Okay. Then maybe my last question in the marketing, you talked about the lower crude prices and the effect on blending margins. I wonder if there's -- understanding your guidance for market will come out later. I'm wondering if there's any way you can quantify what impact you see that having on the lower crude prices having on blending margins?
K. Urquhart: Yes. So Robert, it's Jamie. Thanks for the question. Yes, there's no doubt that lower crude prices have an impact on lots of components of our business, including our blending business. I think the thing that I would say is that in order for us to hit our guidance, there's just a few core assumptions that we've shared with the market for many years now with respect to commodity pricing, but also the ability for our assets to operate the way we expect them to operate, AEF and our Frac capacity being the primary drivers of that. So all I can share is that even in today's current commodity environment with those assets operating the way we fully expect them to do in the future, we're confident with respect to meeting and being within the guidance that we've provided to the market.
C. Setoguchi: Also say, too, I mean, if you look where crude is trading, I mean, I think everyone thought it was going to trade down to 50s, we're in the mid-60s, and that's a pretty good value.
Operator: The next question comes from Theresa Chen of Barclays.
Theresa Chen: With diluent flows altering across North America, given the need for the U.S. to send incremental barrels to Venezuela, how does this inform your view of condensate supply and demand balances in Western Canada and Keyera's role within this outlook?
C. Setoguchi: Yes, thank you for the question. I mean before I turn it over to Jamie, I'd just say generally that we have an industry-leading condensate system. So irrespective of where it comes from, whether it comes from the field or whether it comes from the pipeline from the U.S. We provide storage services. We aggregate those volumes, and we also deliver it up to the oil sands. The other thing I'd point out is that we have the ability also to rail it in and when needed. So again, we have a very, very strong system for condensate, which is used for deal with. But Jamie, do you want to add some comments?
K. Urquhart: Yes. No, I think the only thing I'd add is that -- and it comes back to Dean's earlier comment with respect to our belief in the basin is that we believe that condensate growth within the Western Canadian Sedimentary Basin will be a big part of continuing to be the primary supply of condensate needs for oil sands and the growth that we expect to see in the oil sands industry. So not to say that Venezuela won't perhaps have at some point in the future, but that will be requiring tens of billions of dollars of investment and some significant time in our view, there might be a little bit of a pull for condensate out of North America. We fully expect that, that won't have a significant impact on the condensate supply in Western Canada.
Theresa Chen: And in terms of the unplanned outage at AEF, can you provide more details on the nature of the outage and how you're addressing the operational ratability of this asset on a go-forward basis?
K. Urquhart: Yes. So that's a great question, and I'm surprised we've taken that long in our call to get to this, but happy to -- all I can share is that we've got an investigation underway and really are looking to determine the root cause of the event. At this time, the repair work is underway, and we fully expect to be back up and running at full rates in the May time frame. But I think really to the last part of your question is while the facility is offline, we're taking the opportunity to look at that unit holistically. We're taking a very proactive approach by inspecting all the major accessible components during that outage to ensure the long-term integrity of the asset.
Operator: Next question comes from A.J. O'Donnell of TPH.
Andrew John O'Donnell: Just wondering if I could go back to condensate. Just thinking about kind of the robust supply and demand signals that we're going to be seeing over the coming years and in light of the couple of egress expansions that we've had between mainline and also a DRA optimization on TMX. Just curious where you guys sit right now with -- as far as evaluating growth capital projects on your condensate system? Like what innings do you think we're in right now? And at what point do you think we could start to see some projects get across the finish line?
C. Setoguchi: A.J., I'm going to turn that question over to Jamie.
K. Urquhart: Okay. Well, I mean, you alluded to that, yes, we see obviously some really positive tailwinds with respect to the ability for oil sands growth within our basin. And with that comes condensate growth. And our condensate system, as Dean alluded to earlier, handles approximately 70% of all the condensate that ultimately is used within the oil sands. And so we've identified different opportunities within our system, obviously, to be able to serve that growing need. And there was a reference earlier to the condensate splitter. But it's storage for condensate. It's lots of different components of the business model that we've created for the condensate system. All I can share with you is that, as condensate demand grows within the basin, we expect to be -- continue to get more than our lion's share of the opportunity within that growth of the condensate requirements in our basin.
C. Setoguchi: Yes. And just to add to what Jamie said is that we've evaluated our system. And as the basin continues to grow, we have evaluated opportunities to debottleneck it if we need to. So we're being proactive about it. And again, we certainly believe we're going to be able to provide those services as the demand continues to grow.
Andrew John O'Donnell: Okay. I appreciate the detail there. Maybe going back to -- on the G&P segment broadly. Just looking at volumes, Q4 versus Q3 down a little bit. But just curious, as we sit here roughly halfway through Q1, can you give us an update on kind of how producer activity is overall trending in your system?
C. Setoguchi: Yes, that's a great question. And I'm going to turn that over to our new Senior Vice President, Brad Slessor. Go ahead, Brad.
Bradley Slessor: Thanks for the question. Yes, you noted in Q4 volumes were down a little bit. We had a planned curtailment in one of our bigger plants in the north. So that would be the result of some of that. That outage went very well safely. We got all the work done and the team has done a great job getting that facility back up and running back to full rates. We're seeing a lot of great wells being drilled around our facilities. We're seeing both Simonette, Wapiti and a lot of our plants in the South continue to add volumes kind of month-over-month. So we're very optimistic about how that business is trending right now.
C. Setoguchi: I think sometimes though you see some blips in our production -- sorry, our throughputs. And sometimes that's just related to well pads and just normal declines and then the next well pad, the timing of that being tied in and things like that. But overall, we feel very, very good about the demand behind our facilities, especially in our North portfolio.
Operator: Your next question comes from Patrick Kenny of National Bank Capital Markets.
Patrick Kenny: Just on the disposition of the WildHorse terminal, I know the contracting demand wasn't panning out as you had hoped. But just given post Venezuela and all storage assets perhaps gaining some option value at least, curious your thoughts around the decision to sell now at this price. And then also, maybe you can confirm your thoughts around your Canadian crude oil storage assets still being core to the business going forward.
C. Setoguchi: Yes. Yes, you know what, listen, we have a very disciplined strategy, and we want to make sure that we're staying focused on what matters most to our business and our customers. And we're not -- as you know, we're not a big crude product handler and service provider and especially down in the U.S. We do not have big competitive advantages down in the U.S. So you know what, we thought it's best to sell this asset. And you know what, Plains is going to be able to take it and make it a much better and more profitable part of their organization because they have a very big footprint in Cushing. So it's a win for them. For us, again, we're able to redirect funds into other core activities like the Simonette acquisition. And I also want to point out, I mean, this is just part of a trend of, again, our disciplined strategy. We sold off 3 gas plants last year, our North Pembina gas plant, Caribou and also Edson. And so we want to always clean up our portfolio of noncore assets because they take a lot of extra time and effort -- a disproportionate amount of time and effort amongst our people and we want to direct that to what is core to our business, which is our integrated NGL value chain in Canada.
Patrick Kenny: Got it. Okay. And then I guess just on the leadership changes. So first off, congrats to Brad on the well-deserved promotion there. But it looks like the bench might be shortened here a little bit with Jarrod's departure. So I'm just wondering if you might be looking to refill more of a dedicated operations or COO role going forward, especially with the integration of the Plains assets right around the corner? Or is this the team in place capable of handling the pro forma portfolio?
C. Setoguchi: Yes, that's a great question. You know, first of all, I want to acknowledge Jarrod's departure because we've all worked with him for a long time. I mean the guy started as a summer student and worked his way all the way up in the organization. So it tells you what a strong performer he's always been. And he's had a really great career here, and he's had a lot of value. And -- but we also respect his own personal decisions. Having said that, when we look at our organization, we made a significant investment in our leadership. And when I look across at our Vice President Group, both on the operations and engineering side, these are very, very strong leaders. And when I look at the leadership stack below them as well, very, very strong leaders in place. So when we think about the long-term future of Keyera, we want to make sure that any one of us around the table when it's our time to retire or leave, it's very seamless for this organization, and we can continue on and continue to grow and be more successful. So that's always part of our succession plans in our company, and so it brings opportunities for others. And you know what, I have a very strong confidence that they will step up. I think from an organizational perspective, we're always evaluating what the best structure is for Keyera. And if it involves hiring a senior ops engineering leader at some point in the future, we'll absolutely do it. But again, I just want to reiterate that we have very, very strong bench strength in our leadership across the company. Hopefully, you're going to get a chance to watch the game. So go Canada.
Operator: There are no further questions at this time. I will now turn the call back over to Dan Cuthbertson, please continue.
Dan Cuthbertson: Thanks all, again, for joining us today. Please feel free to reach out to our Investor Relations team with any additional questions. Enjoy the rest of the day, and have a good weekend, everybody.
Operator: Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.