Pembina Pipeline Corporation (NYSE:PBA) Q3 2023 Earnings Call Transcript

Robert Kwan: And then I know you’re going to give your 2024 outlook at the end of the year. But just as we think about the guidance that you set for this year; you’ve talked about optimism for volume growth into next year. Let’s hope we don’t have the wildfires or the Northern outage that impacted this year. So that’s all arguing for upward pressure. But as you pointed out, you’ve got the wildcard on the marketing side. Is there anything else we need to be thinking about? And just, I guess, as it relates to marketing, can you just talk about where the current environment sits today versus, say, where we were sitting a year ago and as you were thinking about what 2023 might have looked like?

Chris Scherman: Sure. It’s Chris Scherman. I’ll take that on. I think as we sit here today and like you were sort of framing it, trying to look at ’24 compared to what we might have been looking at a year ago, I think it’s a real mixed bag. I think we’re fairly optimistic on most of the crude markets. We don’t think the back radiation will hold in. But there’s some potential headwinds, in particular, on propane. Propane inventories are much higher looking into ’24 than they were looking into ’23. And I think that’s something that’s definitely on our radar. But other than that, I would say, it’s relatively similar to a year ago.

Cameron Goldade: And maybe I’ll just add to that. I think historically, we’ve talked about marketing business as a range of $200 million to $400 million, and that was really sort of informed post-resegmentation and also looking back. And I think, obviously, what we’ve observed, and we’re all sort of dealing with the new realities of sort of post-COVID and how obviously energy is changing and so forth. And so if you sort of look back historically at what that business has been, say, over the last 5 years, ignoring this year because we’re only partially the way through, you obviously had 3 years where that business has kind of generated right around $400 million of EBITDA. And then you’ve got 1 year of COVID, where it sort of hit the bottom of that range, and then 1 year in 2022 for a bunch of different reasons where obviously it went well through that and generated in excess of $700 million of EBITDA.

So I think as we sit there and think about the long-term range for this business in the new realities, I think we probably need a few more data points. But certainly, it feels like relative to that historical range, things have been reset a little bit, and it’s probably moved upward as opposed to kind of staying constant with that range.

Robert Kwan: If I can just finish with one on what you’re seeing around just the nature of the discussions you’re having with the customers contracting trends. You had a couple of contract announcements now. I think you alluded to additional negotiations and things are just getting tight. Do you think we’re starting to get into a bit more of a cycle here where we can see additional announcements around contracting new capacity, extending term for anything that’s coming up soon, and then additional contracts just to underpin various expansions in the system?

Jaret Sprott: Jaret here. Short answer is yes. The demand, I think, that we’ve talked about is — it’s extremely high. Revenue volumes, for example, on the conventional system back half to back half, ’23 to ’22 is up 6%. So we’re continuing to see that. So customers, they like our service offering, extended reach on the conventional system, for example, low operating cost, high reliability, access to multiple CRW, CDH, all the fracs in Fort Saskatchewan. It’s a very compelling offer. And I’ve mentioned previously, the demand for the PGI assets is extremely high. We have opportunities to continue to expand there and increase utilization. Alliance, egress is obviously — gas egress is obviously king right now. So that asset is in high demand. Cam mentioned Cochin’s demand with respect to spreads are fairly strong right now. So a lot of tailwinds. So with the tailwinds, obviously, brings customer security. So lots of conversations ongoing.

Operator: Your next question comes from Rob Hope from Scotiabank.