Linda Ezergailis: Thank you and maybe just as a bigger picture follow-up. Realizing that you’ve got a lot of priorities, I’m just wondering if you could also give us a regulatory update in terms of how you’re thinking about any sort of significant natural gas pipeline filings, any sort of settlements, and with the backdrop of the Chevron doctrine being challenged as well, maybe influencing how you approach your regulatory relationships. I mean, it’s been pretty foundational for the agencies being able to interpret any ambiguous statutes in the US and that the courts would defer to that. If that gets discarded or clawed back, just any sort of early thoughts on how that might shift your approach to managing your regulatory relationships and strategies?
Francois Poirier: Linda, I’ll start and pass it over to Stan for a bit more detail. Just sort of a bigger picture pulling up to 40,000 feet, we’ve had very good success getting permits for our projects. As a matter of fact, we recently received FERC approval for 1 of our projects in Virginia about four months early. So it’s going to allow us to actually accelerate a little bit of our capital spend, which will generate incremental EBITDA earlier than we had expected, and that’s going to improve the IRR of the project. As a general matter, as you know, we’re spending more capital on maintenance because the utilization of our assets is so high. So we are, as a strategy, in order to minimize regulatory lag in the United States, going to be continuing to file rate cases more frequently wherever we are allowed to do that.
And of course, we are going to be proceeding in that regard on Columbia in 2025. With respect to the Chevron doctrine and some of the other details, I’ll kick it over to Stan.
Stan Chapman: Yeah, Linda, I would maybe preface my remarks by saying that, given that we are making as an industry and a company long-term large-dollar capital investments in critically needed energy infrastructure, predictability and stability in the regulatory, judicial, and legislative process is really critical for us. I really don’t see, absent there being something unforeseen, any drastic changes in terms of how we file and prosecute rate cases, for example, due to the Chevron doctrine, in that you may recall that in the US, most of our rate cases tend to be settled with our customers rather than litigated, nor do I see there being any significant changes with respect to how we operate the pipe. Given that, this could lead to more of the tedious outcomes, we may have to build in longer lead times for originating and constructing our projects.
But at the end of the day, we need to wait and see what, if anything, comes out of the Supreme Court decision, and then we’ll respond to those changes accordingly.
Linda Ezergailis: Thank you.
Operator: The next question comes from Ben Pham of BMO. Please go ahead.
Ben Pham: Hi, thanks. Hi, good morning. Maybe to go back on the asset sale program, you mentioned more positive backdrop year-to-date versus last year. I’m wondering, what’s your willingness then to maybe perhaps execute on more than $3 billion this year and just push the leverage down even more?
Joel Hunter: Ben, we have an openness to that, but it’s going to be on the basis of compelling valuations in our various processes. Given that we want to make sure that we achieve our $3 billion target for 2024, we’ve got many conversations going on. Not only is there competition within processes, but there’s competition between processes. So to the extent we could see some compelling valuations, we would be open to considering exceeding the $3 billion target.
Ben Pham: Okay. Got it. And then maybe a question on liquids performance this year and going forward just given the better result I guess for ’23 [$100 million] (ph) or so, doesn’t that warrant or just more directionally maybe a bit more upside tied to your middle decade EBITDA guidance for the liquid segment?
Bevin Wirzba: So, Ben, this is Bevin. Thanks for the question. As I mentioned earlier, we did — we were able to accelerate a little bit of the growth that we were anticipating in ‘24 back into ‘23. I do want to temper our outlook for Q1 of this year. As you know, we have a marketing affiliate that optimizes the utilization of our Gulf Coast system primarily, and we have some basically accounting differences between physical and financial trades that we think will have a bit of a headwind here in Q1. So I just temper our results here in the near term. We want to reaffirm our outlook of that 2% to 3% long-term growth. That is — we believe we’ll be able to underwrite that growth consistently and that’s what we want to be as a very predictable deliverable — deliverer of EBITDA growth for our shareholders.
Ben Pham: Okay, great. Thanks for tying that together. Thank you.
Operator: The next question comes from Brian Reynolds of UBS. Please go ahead.
Brian Reynolds: Hi, good morning everyone. Maybe to follow up on some of the [software] (ph) questions as it relates to the future debt issuance used to repay TC. Just given some of the outperformance we’ve seen, since the span from TC but also liquids and now you have the $200 million CGL payment, which it sounds like that wasn’t originally in the guide because you had [amazing] (ph) performance metrics. Just kind of curious if we could see any evolution, whether it’s a couple hundred million here or anything more material as it relates to that ultimate debt issuance to TC from South Bow. Thanks.
Bevin Wirzba: Yeah. So, Brian, this is Bevin again. So first off, we are going to come out with an investment grade rating. Post the successful shareholder vote, we’ll be going out to the market, which fortunately we’ve seen some improvement in the debt capital markets here over since the announcement of the spin back in July. We’ll look to set up that capital structure that allows us to underwrite the future performance. And if we are able to have — we have to balance the needs of both TC and South Bow as we divide the dividend and the debt going forward and we’ll optimize that for our shareholders. But right now I would say it’s more constructive than what we would have thought last July, so that’s a good thing for the outlook of both entities.
Joel Hunter: Brian, it’s Joel here. I’d just add to that too. What we showed you at Investor Day back in November is that just given the current rate environment, the proceeds that we will receive from South Bow, whether it’s around $8 billion that we have the ability to buy back some of our debt at a discount. So we expect to take out more than what the proceeds are from South Bow, given that our debt would be trading at a discount.
Brian Reynolds: Great, super helpful. Sounds like more to come. On northern border, switching to the gas side, nat gas constraints seem to get into a pretty tough level at this point with expansion really needed soon. So, kind of just curious if you can give us an update on Bison XPress and ultimately how does that flow through its potential cost implications as it relates to your $6 billion to $7 billion outlook? You guys are very committed to that. How does the basic need for expansion intertwine with your commitment to that $6 billion to $7 billion outlook? Thanks.
Francois Poirier: Yeah, I would just say that our Bison XPress project is progressing as planned. We have every expectation of bringing that in service on time on budget. As you pointed out, there is a need for additional egress capacity out of the basin. These dollars are included in our $6 billion capital plan going forward and we have every expectation on executing on that accordingly.
Brian Reynolds: Great. Fair enough. I’ll leave it there. Enjoy the rest of your morning.
Operator: The next question comes from Robert Kwan of RBC Capital Markets. Please go ahead.
Robert Kwan: Thank you. Good morning. On the back of the sanctioning of Heartland and as it relates to the placeholder CapEx in your plan through 2026, can you just talk about what segments and what types of projects would be the largest contributors, especially the 2026 bucket and with that comment just specifically building on Stan’s answer, if the pause on the non-FTA export permits is made more permanent, how much of that gray bucket is at risk?
Francois Poirier: It’s Francois. I’ll take that one, Robert. When you think about our capital stack, not just in 2026, but as a general matter, think of about $2 billion a year of recoverable maintenance capital across our three pipeline systems would be one contributor. Secondly, $800 million or $900 million a year on average of Bruce Power capital for the major component replacement program, as well as the Project 2030 efficiencies on the non-reactor side of the plant. And then predominantly growth capital across our three natural gas footprints. When you look at our projects and the impact of the pause on the capital stack, as Dan mentioned, one of our projects, Gillis, could be impacted by any meaningful delays in its sanctioning.
But these are small dollars, low hundreds of millions. And so as we mentioned at our Investor Day in November, our capital is pretty much spoken for through ‘26 and now with the Heartland project ‘27. We haven’t increased the aggregate limits. In November, we included some of the unsanctioned capital in our disclosures. Both the MCR 4 at Bruce and Heartland were in November in the unsanctioned or as yet to be sanctioned growth, and we remain steadfast in our focus on maintaining our capital spend, not just within the $6 billion to $7 billion, but frankly to the lower end of that range. From a value creation standpoint, the prize there is if we execute on plan for roughly $6 billion a year, and it might be plus or minus $100 million or $200 million in any given year, then we have excess capital to either accelerate deleveraging or to ultimately proceed with share buybacks.
We’re building in that optionality on an annual basis, which is something that we have not done in the past. So from my perspective, if for some reason a project — an individual project, is deferred and we end up at $5.5 billion instead of $6 billion for example, we still have good uses for that capital in accelerating our deleveraging and ultimately doing share buybacks because those are value accretive to our shareholders.
Robert Kwan: Got it. Thank you. And if I can just finish with the interplay between the 4.75 times target and the comments on executing the asset sale program in a manner that is positive to shareholder value or put differently that you’re not going to fire sale assets. If the markets work against you, how are you thinking about that target, particularly as well into 2025, which is kind of just a bridge year set path, roughly, of Southeast Gateway and really the goal being 2026. So how do you, like I said, think about that target in 2025 as well?
Francois Poirier: Yeah, so good question, Robert. Based on conversations we’re having and how our processes are going to date, we’re very confident on achieving the $3 billion number in 2024 and we are steadfast in achieving that amount of deleveraging. It’s a high priority for us to get to below a 4.75 upper limit by the end of 2024. With respect to 2025, we would need either incremental divestitures or incremental EBITDA above $400 million of incremental EBITDA in order to stay below that 4.75 level. And to the extent as was asked previously, we have an opportunity to perhaps upsize the program in’24, we’ll consider that. We also feel that we can get to the $3 billion number without transacting in Mexico in 2024. But as we said, we’re focused on reducing our exposure in Mexico over the next two or three years to get to that 10% to 12% of consolidated EBITDA levels.
So you could look to us pulling on some of those levers, including how successful our efficiency program is around revenue increases and cost reductions to fill any gaps that we see in 2025 and beyond.
Robert Kwan: Okay, that’s great. Thank you.
Francois Poirier: You’re welcome.
Operator: The next question comes from Robert Catellier of CIBC Capital Markets. Please go ahead.
Robert Catellier: Hey, good morning and congratulations on all the accomplishments in 2023. I had a quick follow-up on the liquid side. I wondered if you could give an update on where you are with Keystone in returning that asset to its previous level of pressure?
Bevin Wirzba: Robert, this is Bevin. So we’ve had, as I mentioned earlier, outstanding performance operationally here year-over-year. We continue to increase our system operating factor. We achieved record levels here at the end of the year and early this year. That is only as a result of our prime focus on operating our system very safely, and that included doing all the integrity work last year. We’ve done full inline inspections on over 80% of our system to date. That will be all complete prior to any spin transaction. In doing those in-line inspections as well as all of the physical digs, over 60 digs this past year to do confirmation of anything that we do see in areas of potential concern, we have found no potential incident or issues with the integrity of our system.
So our confidence has increased significantly here since undertaking that work. We’re working very closely with both our regulators, both PHMSA in the United States, as well as the CER. We’ve managed to address all the issues so far that they have raised, but their determination is up to them as to returning the system to its original operating pressure. That said, because of our operational performance, we were able to deliver all of our contract capacity and we’ve been able to move spot batches as well. So our operational excellence is allowing us to continue to deliver strong performance.
Robert Catellier: Okay, thanks for that detailed answer, Bevin. I just wanted to move on to the asset development and the regulatory side, specifically on cost sharing on development costs before projects are permitted, I wondered if you’ve — what your approach there is to cost sharing might be in light of the high utilization of assets across the industry and just the tough permitting environment? And maybe specifically you can address what type of progress you’re making with government funding for pre-development on key projects in Ontario, such as the Ontario pump storage?
