Edited Transcript of ALA.TO earnings conference call or presentation 30-Apr-20 2:00pm GMT

Thank you, Adam; and good morning everyone. I want to take a moment to extend our deepest sympathies to all of those who have been personally affected by the COVID-19 pandemic. The world is facing a challenge unlike any modern history, grappling with the tragic global pandemic, and we remain focused on doing our part by continuing to provide our essential services to our customers. Our team is laser-focused on ensuring delivery of vital clean energy so our businesses and customers can continue to move forward with their daily lives to the greatest extent possible during these challenging times. The foundation of AltaGas’ core values is built on an unwavering commitment to doing what is right. During the state of emergency, we have suspended disconnections and waived late fees to ensure our 1.6 million customers have access to natural gas regardless of their economic circumstances. We fully recognize the strain on the front-line healthcare workers and the most vulnerable in our community, and we have committed to provide more than $1 million in donations to help support their efforts. Our hope is that these steps will help our communities through these unsettled times and return from this pandemic stronger than ever. It is during these difficult time that our core values focused on leadership, innovation, adaptivity, resilience, and excellence to shine through. I take a great deal of pride being part of this organization. At AltaGas, our employees understand the mission and have come together to exhibit these characteristics over the past several weeks. I’d like to take a moment to thank all AltaGas employees for their continued focus, hard work, and execution during these challenging times. They are this company’s greatest asset and why I’m confident in our ability to deliver on all of our expectations to our customers, shareholders, and other stakeholders. As we focus on execution, the safety of our employees and the community is always our number one priority. To ensure that our critical operations continue to operate safely and remain available to serve our customers,we implemented several safety measures to protect the health and safety of our people. Thanks for the excellent response of our leadership team in the planning and coordination of our teams across the organization. We were able to mobilize our workforce and protect our people with limited disruptions to our daily business. Over the past several months, AltaGas had continued to execute across the board. Our distribution and Midstream systems continue to perform in line with our excellent safety and reliability standards. The capital investments we made to build a stronger pipeline and technology, infrastructure has allowed us to leverage automation and manage the work remotely, minimizing our in-person interaction. One of the most important core values is our commitment to operational excellence in all that we do. Our operations and construction teams continue to perform exceptionally, keeping our construction program on schedule and on budget. AltaGas’ financial performance for the first quarter reflects this strong operating performance across all our businesses.

Let me turn to our strategic focus, which remains unchanged. The stable and predictable cash flows of our Utility business combined with our higher-growth Midstream assets provides a unique investment proposition. The quality and diversification of our assets positions us to deliver sustainable attractive risk-adjusted returns over the long run. At our utilities, our focus has been and will continue to be on delivering an excellent value proposition through safe and reliable systems and excellent customer service. The importance of the capital investment that we have made over the past several years have resulted in significant value during these difficult times. These investments including the utilization of accelerated pipeline replacement program has made our infrastructure stronger and has improved our ability to efficiently deliver affordable, reliable, clean energy to our customers, but we continue to monitor the COVID-19 situation. Our capital investment program remains on track. The investments that we are making today are expected to provide meaningful customer benefits over the coming years. The flexibility provided by our Randall pipeline replacement program mechanism, combined with our operational cost effective has helped position our Utility to meet its financial commitments and continue to make long-term investments during this uncertain time. Our commitment to delivering on the objectives that we had previously outlined to date has resulted in a $6 million reduction in operating cost year-over-year and a 19% reduction in the incoming leak rates. We attribute this success to our collaborative and forward-thinking relationships with our stakeholders and our Regulatory Commission. The collaboration and forward thinking of our state commissions has enabled us to improve our delivery system and better prepare us for these unprecedented times. We continue to expect to generate significant customer and shareholder value over the coming years. Our Utility strategy is centered on safety and reliability, capital discipline, growing the rate base through accelerated programs and reducing cost. We continue to drive towards a performance-based culture to further enhance our capital efficiency and returns, while maintaining affordable rates for our customers. In 2020, we expect over 10% earnings growth in our Utility segment, underpinned by approximately 8% to 10% rate base growth, higher achieve returns through rate case settlements in 2019, increased utilization of accelerated replacement program, lower leak remediation and operating costs, and improving our customer experience.

Similar to Utility, our strategic vision at Midstream remains unchanged and we believe the market opportunity for exports has never been greater. In times when producers and consumers are dealing with the challenges of economic uncertainty and lower energy prices, we expect to help ease these impacts on customers by providing a much needed market through our RIPET facility. Our priority for 2020 continues to be about execution in our core businesses. Our Midstream team had another terrific quarter, achieving record rail car offloading and vessel loading rates at Ripon. Despite real blockades in the global health crisis, we loaded six ships in this quarter, keeping us on track to achieve our export goals of 50,000 barrels per day by year-end. We continue to see strong and stable demand in Asia for Canadian propane exports with 50,000 barrels per day of supply secured as of April 1 and approximately 33% under long-term tolling agreements, demonstrating that our unique value proposition to deliver on our global export strategy is resilient and sustainable. We further expanded our integrated strategy in the first quarter with the completion of North Pine and Townsend to the expansion. Both expansions started flowing gas in April and will continue to contribute to earnings in the second quarter and we added additional capacity for rail terminal at North Pine to handle the additional volumes. We firmly believe our strategy in the long-term fundamentals of the Montney basin. Strong economics in the Montney are positioned to continue to attract capital once the supply and demand stabilize. In our market diversity, an access to higher value Asian markets will remain critical to Western Canadian producers. With the significant recent growth in our supply commitments and tolling volumes and with our partnership in Petrogas, we continue to build a business focused on exporting and enhancing our complementary in Northeast BC strategy. Our RIPET terminal and our future ownership in Ferndale has the capability to provide 120,000 barrels of LPG export capacity of cleaner energy to Asia. We continue to believe in the long-term fundamentals of our structural shipping advantage, which provides us great confidence that our facilities remain highly utilized to connect North American production to the demand in Asia.

The recent demand destruction we have witnessed in North America highlights the need for access to global markets. Our ability to provide producer market alternatives including significant access to global markets further distinguishes AltaGas in the Canadian Midstream space. While the COVID-19 pandemic has created significant uncertainty throughout the economy and resulted in a significant decline in energy prices, our Midstream businesses are well positioned to continue to deliver on its objectives and its commitments. We do not currently expect any material, financial or operational impacts as a result of the pandemic. Additionally, as a result of the actions that we took last year, our RIPET output is 85% hedged including firm commitments for 16 cargoes and we continue to see strong demand for the remaining spot cargoes.

Our Midstream business is fully funded and we see a capital-light program going forward that will position us to harvest additional cash flows into the future going forward. Despite the current economic challenges, the strength and diversity of AltaGas’ underlying business positions us to deliver on our forecasted financial results and guidance, while at the same time maintaining our investment grade ratings and most importantly continuing reliable delivery service for our customers.

In summary, AltaGas remains well positioned to continue to execute both the near- and long-term horizon. Over the past year, we have focused on building a business that is resilient and able to deliver operational and financial stability for our customers and shareholders. We remain laser focused on extending that track record today and everyday. Even throughout these unprecedented times, AltaGas maintains ongoing access to capital, which reflects the strength of our balance sheet as well as the overall resilience of our underlying business. We are a strong, diversified energy infrastructure company with strategic assets and ample investment opportunities in our Utility and Midstream businesses. We offer tremendous value to our customers, communities, and shareholders and I am confident that we will turn this current challenge on solid footing.

With that, I will turn the call over to James to review our financial results.

——————————————————————————–

D. James Harbilas, AltaGas Ltd. – Executive VP & CFO [4]

——————————————————————————–

Thanks, Randy; and good morning everyone.

During the first quarter of 2020, AltaGas revised this reportable segments to better align with our core focus areas in Utilities and Midstream. Our WGL retail marketing business now rolls up on the utilities, and all remaining power assets are included in the Corporate Other segment. Prior period segment information has been restated to conform to the current reportable segments. As you can see from our financials, we saw strong first quarter results from both the Utilities and Midstream segments with the Utility segment accounting for approximately 75% of normalized EBITDA and so the normalized EBITDA came in at $499 million, approximately 4% higher than Q1 2019, which is right in line with our expectations and gives us a solid start to 2020.

Excluding a $34 million reduction in normalized EBITDA associated with the $2.2 billion in non-core asset sales that we executed in 2019 to strengthen the balance sheet, our first-quarter normalized EBITDA would have increased by over 11% compared to 2019. First-quarter growth was driven by strong operations at RIPET, inclusive of a one-time realized hedging loss of $6 million related to supply volumes, which were not sold until April, and growth in the Utility segment of $34 million from all the rate case work that was completed in 2019 as well as increased revenue from accelerated pipe replacement programs.

Normalized net income was $229 million or $0.79 per share, up approximately 3% over Q1 2019. This increase is due to the previously referenced EBITDA growth along with lower amortization and depreciation as a result of our 2019 asset sales and a $23 million reduction in quarterly interest expense. These were partially offset by higher income tax expense during the quarter.

Strong operating performance in the Utilities and Midstream business also flowed through normalized funds from operation, which was up approximately 12% year-over-year to $420 million. First-quarter FFO also benefited from lower interest expense, driven by both lower average debt balances due to repayment of debt and lower average interest rates.

On March 31, 2020 we completed the sale of our 37% interest in ACI for cash proceeds of approximately $369 million. This marks an another significant milestone for AltaGas as the proceeds provide us greater flexibility in our ability to de-lever the company Our self-funded 2020 capital program remains intact, after a strong first quarter. We are well positioned to fund our estimated $900 million capital plan through internally generated cash flow and normal course borrowings and we maintain strong liquidity with approximately $4.1 billion available to us at the end of the quarter.

Now, diving into the segmented results and drivers, starting with our Utility segment. Normalized EBITDA at our Utilities was $369 million for the quarter, approximately 10% higher than the same quarter last year. The largest driver of growth year-over-year was at Washington Gas, which was positively impacted by the Maryland and Virginia rate cases, higher revenues associated with ERP spending; lower operating expenses of $6 million that Randy mentioned earlier and a stronger US dollars. These positive factors were partially offset by warmer weather in DC. Recall, we have low decoupling in Maryland and Virginia, so the results in those jurisdictions will not be impacted by the warmer weather. SEMCO also contributed to higher normalized EBITDA driven by new rate cases that came into effect at the start of this year, partially offset by warmer weather in Michigan.

Shifting to our Midstream segment, normalized EBITDA was $120 million for the quarter. Factoring in the last EBITDA of approximately $14 million associated with the 2019 sale of Stonewall in Central Penn, our core Midstream business grew at approximately 5%, with RIPET being the largest contributor. Results in our base Midstream business remained strong and we continue to see healthy volumes at our plants and new volumes from the Nig Creek facility. Favorable butane spreads provide a strong uplift to our NGL marketing business along with higher AFUDC related to Mountain Valley Pipeline.

These positive factors were partially offset by lower storage spreads and transportation margins from WGL Midstream assets and lower equity earnings from Petrogas. In the first quarter, we exported 35,141 barrels per day to markets in Asia through RIPET, averaging 2 ships per month despite the impact of rail blockades, which impacted deliveries into RIPET as scheduled. RIPET’s reported EBITDA was negatively impacted by $6 million realized hedge loss on supply volumes that are exported in April. Excluding the timing impacts of the hedge loss, first-quarter EBITDA would have been above $33 million or approximately $10 per barrel.

With that said, the realized hedge loss will have a positive impact on second-quarter margins through lower inventory costs. As Randy mentioned earlier, we are achieving record rail car offloading and vessel loading rates and remain on track to hit our 50,000 barrel per day export target during 2020. We have secured the full 50,000 barrels of supply as on April 1 with approximately 33% now on the long-term tolling agreements.

Turning to our capital program and funding plan, the work we did last year to re-position the company to de-lever the balance sheet is paying off. We are well positioned to navigate through the coming quarters, investing primarily in our low-risk Utility’s business using our self-funding model while maintaining a strong balance sheet and an investment grade credit rating. $900 million capital program for 2020 is largely invested in our utilities with approximately 75% to 80% allocated to the segment. We expect to earn immediate returns on roughly 80% of our utility capital through increased utilization of accelerated replacement programs and managing maintenance spending to align with depreciation. The majority of Midstream capital was focused on the Townsend and North Pine expansions, which were recently put into service. Volumes from these projects will be ramping up over the next few months and we expect to see earnings contributions in the second quarter.

As I mentioned, we maintained significant liquidity that further minimizes our funding and capital market risk well beyond 2020. At the end of the quarter, we had approximately $4.1 billion of liquidity available to us with $3.8 billion in available capacity on our credit facilities and $335 million of cash on hand. We have debt maturities of approximately $980 million in 2020 and we’re able to refinance approximately $780 million in debt maturities year-to-date. Maintaining an investment grade credit rating is fundamental to our strategy as it provides us with greater financial flexibility at times like this. We have been proactive in communicating with the rating agencies and have a constructive relationship with them. Our credit ratings remain unchanged. On April 3, (inaudible) affirmed their BBB stable rating for AltaGas, and on April 27, S&P affirmed their A minus stable rating for WGL, citing no material-persistent impact from the COVID-19 pandemic.

Despite this challenging environment, our priorities have not changed and we continue to focus on maintaining a strong balance sheet funding organic growth and returning capital to shareholders. Our outlook for 2020 remains unchanged with anticipated normalized EBITDA in the range of $1.275 to 1.325 billion and normalized EPS of $1.20 to $1.30 per share, underpinned by increasing contributions from our core businesses and lower interest expense due to lower leverage and interest rates. As a diversified low-risk, high-growth Utility and Midstream company, we have positioned ourselves to deliver stable and reliable results through 2020. We expect the Utility segment to contribute approximately 60% of 2020 estimated normalized EBITDA. Our rate-regulated utilities provide stability and growth through their steady and growing residential customer base, protected revenues, and limited sensitivity to weather. Approximately 70% of our utilities revenue comes from residential customers and having effectively delivered safe and reliable service through our strongest demand quarter. We feel comfortable entering the spring and summer months, which typically represent only 20% of annual demand. Approximately 70% of our utility revenue is protected through fixed billing charges, decoupling, and other tracking mechanisms, which help minimize the impact of load variability associated with weather and other demand-related pressures, such as COVID-19.

AltaGas currently has the coupling or demand trackers in Maryland and Virginia and has applied for them in the District of Columbia under the current rate case. As Randy noted, we have been actively working with regulators and DC, Maryland, Alaska, Michigan, and Virginia have all issued orders that will allow us to track and recover any incremental COVID costs, including bad debts through the establishment of regulatory assets. In Midstream, our unique export strategy is underpinned by strong long-term fundamentals. The demand for clean propane in Asia is growing. The long-term supply-demand imbalance supports the need for Canadian exports and the Montney continues to have some of those breakeven prices in North America. We have limited direct commodity price exposure in our Midstream business. About a third of RIPET’s 2020 estimated volumes are contracted under long-term take-or-pay agreements with an average remaining term of about 7 years. We have also hedged approximately 80% of RIPET’s 2020 volumes at prices similar to 2019. Including contracted tolling arrangements, approximately 86% of RIPET’s propane export volumes are hedged for 2020. At our other Midstream facilities, we have hedges in place for approximately 93% of our 10,000 barrels per day of frac exposed NGL volumes.

In summary, we are confident in our 2020 outlook, with 60% of 2020 estimated normalized EBITDA coming from the Utility segment and 80% from utilities and investment grade counterparties. We also expect some tailwinds with the stronger average Canadian-US dollar exchange rate with approximately 70% of EBITDA being supported by low-risk regulated US assets. Our strategy was designed to result in reliable, attractive long-term earnings and the work we have done to-date provides us with financial flexibility. I believe that the combination of our strategy and strong financial stability provides us with the resilience to work through these unprecedented times.

With that, I will turn the call over to the operator to facilitate the Q&A session. Operator.

================================================================================

Questions and Answers

——————————————————————————–

Operator [1]

——————————————————————————–

Thank you. Ladies and gentlemen, we will now conduct the analyst question-and-answer session. If you’d like to ask a question, press star, then number one on your telephone keypad. If you’d like to withdraw your question, please press the pound key. There will be a brief pause while we compile the Q&A roster. Your first question comes from Rob Hope from Scotiabank.

——————————————————————————–

Robert Hope, Scotiabank Global Banking and Markets, Research Division – Analyst [2]

——————————————————————————–

Good morning, everyone.

All right, 2 questions; the first one is just on the the visibility in the progress that you’ve made so far in reducing cost of WGL, which then will allow you to improve your ROE, the $6 million reduction in leak remediation costs that you saw in Q1; can you just give a sense of how you see the rest of the year playing out and within the $6 million the significant portion of the cost improvement that you’re expecting in 2020.

——————————————————————————–

Randy W. Toone, AltaGas Ltd. – Executive VP & President of Midstream [3]

——————————————————————————–

Look, I think we’re making excellent progress in our operational excellence model and we’re just at the beginning. I think the investments that we’re making in our accelerated pipeline replacement program is reducing expenses and it is reducing leaks much more than historically and is clearly a correlation between this pipeline investment as shown in this quarter that reduced our operating cost. So, we remain on plan for our target this year. In fact, we’re ahead of it, and again, as you pointed out, it’s a combination of our operational excellence model as well as updating our rates in our jurisdictions that are going to get us to allowed returns. So, a bit ahead of schedule, but we were consistent with the guidance in the plan that we put forward and we’ll continue to update as we move forward through the year.

——————————————————————————–

Robert Hope, Scotiabank Global Banking and Markets, Research Division – Analyst [4]

——————————————————————————–

Alright, that’s helpful; and then just pivoting over to RIPET, just want to get a sense of how many ships you did in April as well as you had 50,000-barrels-a-day supply available to you in April, but you do talk to a 50,000-barrel-a-day, kind of, exit rate in terms of RIPET, so does it imply in the year you could be hitting 50 sooner rather than later.

——————————————————————————–

D. James Harbilas, AltaGas Ltd. – Executive VP & CFO [5]

——————————————————————————–

Yeah, I’ll let Randy too comment here, but I will tell you where we are and we have experienced increasing Canadian demand access with unique capability and we’ve got a lot of strong interest from suppliers and clearly strong demand in Asia for the premium prices; the limitation really is on the rail challenges, but the team is working every day to maximize and improve the logistics to reach the maximum capacity. I’ll let Randy comment on the ships in April.

——————————————————————————–

Randy W. Toone, AltaGas Ltd. – Executive VP & President of Midstream [6]

——————————————————————————–

Hey, Rob, it’s Randy Toone. We did 2 ships in April, which is consistent with the plan and our plan is to do 3 ships in May. As far as 50,000 barrels, though, we have contracted 50,000 barrels that doesn’t show up all at once, so we were roughly did about 45,000 barrels through April and our target is still to do 50,000 barrels the rest of the year.

——————————————————————————–

Robert Hope, Scotiabank Global Banking and Markets, Research Division – Analyst [7]

——————————————————————————–

All right, thank you.

——————————————————————————–

Operator [8]

——————————————————————————–

Your next question comes from Ben Pham from BMO. Your line is open.

——————————————————————————–

Benjamin Pham, BMO Capital Markets Equity Research – Analyst [9]

——————————————————————————–

Okay, thanks, Good Morning; also wanted to follow up on RIPET and try and dig into this realized loss you (inaudible) basically bring higher cost inventory forward in the quarter and you took off some hedges and see a benefit in Q2, is that what was going on there?

——————————————————————————–

D. James Harbilas, AltaGas Ltd. – Executive VP & CFO [10]

——————————————————————————–

Hey Bill. It’s James. Yeah, that’s exactly right. I mean obviously we settle those hedges, and when you settle the financial derivative, you basically have to realize a gain or loss associated with it. The physical delivery of that inventory, though, was in April, so the cost of that inventory that was sitting in the tank at RIPET was lower as a result of that hedge loss being realized in Q1. So, the margins in Q2 should be better as a result of that lower inventory.

——————————————————————————–

Benjamin Pham, BMO Capital Markets Equity Research – Analyst [11]

——————————————————————————–

Okay, and I would assume that’s mostly on the non-pulling portion, which I would assume to tolling propane cost as a pass-through, Is that correct?

——————————————————————————–

D. James Harbilas, AltaGas Ltd. – Executive VP & CFO [12]

——————————————————————————–

Yeah.

——————————————————————————–

Benjamin Pham, BMO Capital Markets Equity Research – Analyst [13]

——————————————————————————–

Okay, and then this inventory and it is something that persist in the second half as well, or still to be determined?

——————————————————————————–

D. James Harbilas, AltaGas Ltd. – Executive VP & CFO [14]

——————————————————————————–

No, this is a timing issue just related, like I said, to the settlement of the financial contract relative to the physical delivery. If the contract had been rolled, if the financial derivative had been rolled, then this would have matched into Q2 deliveries. So it’s a one-time timing issue.

——————————————————————————–

Benjamin Pham, BMO Capital Markets Equity Research – Analyst [15]

——————————————————————————–

Okay, all right. Can you maybe switch over to the dividend and then maybe talk about dividend sustainability and can you talk about the strength and resiliency of your business, maybe may stick to the dividend payout ratio target and how do you think about those payout ratios and how you see through COVID-19 impacts?

——————————————————————————–

Randy W. Toone, AltaGas Ltd. – Executive VP & President of Midstream [16]

——————————————————————————–

Yeah, I’ll let James give attention on that, but as you know, about a year and a half ago, we had substantial cut in our dividend and from that point we’ve been executing consistent to the plan in terms of our looking forward in our business plan, and it’s a key part of our business strategy. I’ll let James go ahead and talk about the specifics.

——————————————————————————–

D. James Harbilas, AltaGas Ltd. – Executive VP & CFO [17]

——————————————————————————–

Yeah, I think Randy touched on one of the most salient points. I mean the tough decision to cut the dividend was taken in 2018, and it was cut to a level that we consider it to be sustainable. If you look at the FFO growth that we’ve generated year-over-year and we are reaffirming our guidance with respect to EPS growth at the current level of $0.96, it’s about 70% to 75% payout ratio. So, we consider it sustainable from a FFO standpoint, considered sustainable from an EPS payout standpoint, and it is underpinned by continued strong growth in the cash flows of our utilities. Utility but no generation will continue to represent the majority of our business going forward and we feel that that’s a strong underpinning and supports.

——————————————————————————–

Benjamin Pham, BMO Capital Markets Equity Research – Analyst [18]

——————————————————————————–

All right. That’s great, maybe one last one to me, any sort of timing update on the put option, Petrogas, is there (inaudible) you have to respond back?

——————————————————————————–

D. James Harbilas, AltaGas Ltd. – Executive VP & CFO [19]

——————————————————————————–

Yeah, well, as stated before, we are in the evaluation process period and I’m not really able to fully discuss our strategy, but I can tell you that in taking control of interest in Petrogas will allow us to consolidate the EBITDA, provide monthly cashflows versus our equity distribution, put processes and (inaudible) process, and at this point, I would want to speculate or provide details until we have more certainty into the timeline; we’re working through the process.

——————————————————————————–

Benjamin Pham, BMO Capital Markets Equity Research – Analyst [20]

——————————————————————————–

Okay, that’s great; thanks everybody.

——————————————————————————–

Operator [21]

——————————————————————————–

Your next [Abrupt content]

——————————————————————————–

Unidentified Company Representative [22]

——————————————————————————–

Might that happen just before you take ownership or what are the puts and takes on that front?

——————————————————————————–

Randy W. Toone, AltaGas Ltd. – Executive VP & President of Midstream [23]

——————————————————————————–

James, I’ll let you go ahead and take that.

——————————————————————————–

D. James Harbilas, AltaGas Ltd. – Executive VP & CFO [24]

——————————————————————————–

Yeah. We do have the ability and the right under our agreements to exercise our press and convert them into common. We haven’t crystallized our thinking but right now the most desirable approach for us is to most likely do that conversion before we close the deal.

——————————————————————————–

Unidentified Analyst [25]

——————————————————————————–

Okay, thank you; and what were the drivers for the 12 million year-over-year decline in Petrogas, was that your crude oil marketing or something else?

——————————————————————————–

D. James Harbilas, AltaGas Ltd. – Executive VP & CFO [26]

——————————————————————————–

Yeah, it was predominantly crude oil marketing side of the business and some realized hedge losses at Petrogas in Q1 relative to Q1 of 2019.

——————————————————————————–

Unidentified Analyst [27]

——————————————————————————–

Okay, thank you; and maybe just bigger picture, your discussions with the rating agencies look stable, clearly your business is very resilient, but I’m just wondering if you could give us a sense of, if you’re still on track to achieve 5.5 times debt to EBITDA by the end of 2020 and and then keep it and how much further based on your plans might you’ll be able to deleverage in 2021 and is that still an appropriate target or might there be some moving goalposts, where you further shift that?

——————————————————————————–

D. James Harbilas, AltaGas Ltd. – Executive VP & CFO [28]

——————————————————————————–

Yeah, I mean if we look at our current outlook for the year that we are reaffirming here today, we feel that we can get to the 5.5 times target by the end of this year, just given the stability in the Utility business and obviously the fact that we’ve hedged a big portion of our Midstream cash flow. So, we do feel comfortable that 5.5 times is possible. Looking beyond 2020, obviously we continue to have at our disposal non-core assets that we’d like to continue to monetize and that’s going to help us to further strengthen the balance sheet moving forward beyond 2020. So, we still feel that those are achievable, and with a better macro backdrop, can move forward with some of those asset monetizations that we still have our at our disposal on the power side.

——————————————————————————–

Unidentified Analyst [29]

——————————————————————————–

That’s helpful context and I realize that you’re busy with ensuring everyone is safe and your continued operations during the pandemic, but as you look beyond that, I’m just wondering from a strategic perspective if you can comment on what factors might need to be in place to consider potentially deepening your relationship with ERAMET in your joint venture. In the past there has been musings about further petrochemical investments, clearly there is a valuation disconnect between propane that you’re leveraging through RIPET, and I’m just wondering if there might be any sort of possibility of further investments down the road and what attributes would need to be in place for those to be compelling to AltaGas?

——————————————————————————–

Randy W. Toone, AltaGas Ltd. – Executive VP & President of Midstream [30]

——————————————————————————–

More than (inaudible) excellent partner and we’re very fortunate to have them as an excellent partner. Right now, we’re staying in course. We are looking always at being opportunistic, in my view, more macro on partnerships, that if you can get one, it is one plus one equals three, then you’ve got some real value in what you’re doing. So we’ll continue to look at ways into the future to expand, but right now, as you said, we’ve got our laser focused on executing the plans that we’ve put in place, maximizing the utilization of RIPET and ultimately integrating Petrogas. So, your points are well taken and we will be opportunistic, but at this point, we’re pretty well focused on the task at hand.

——————————————————————————–

Unidentified Analyst [31]

——————————————————————————–

Okay, I’ll jump in the queue in a moment, just another, kind of, strategic updated thought from you on what sort of synergies do you still see between your Midstream and Utility businesses and at what point might there be more benefit in focused separate operations of those 2 platforms?

——————————————————————————–

Randy W. Toone, AltaGas Ltd. – Executive VP & President of Midstream [32]

——————————————————————————–

I have discussed this before, Linda;. and overall, we have 2 excellent businesses, and we are leveraging synergies with round operational excellent gas control. Utility does an excellent job of managing its product each and every day and in the logistics associated with moving our people and our product every day, and they are operationally excellent in what they do, similar to our Midstream business, and we’re building a world-class Midstream business and leveraging a lot of those capabilities and infrastructures that go across both businesses, the combined two businesses running under excellence around engineering and construction, but as we continue to add scale and grow those businesses, we’ll look into the future on whether it makes sense for those businesses that are large enough to be separate, but at this point, that’s way down the road and we see true value right now in these 2 businesses combined at AltaGas.

——————————————————————————–

Unidentified Analyst [33]

——————————————————————————–

Great, thank you. I’ll jump back in the queue.

——————————————————————————–

Operator [34]

——————————————————————————–

Your next question comes from Robert Catellier from CIBC. Your line is open.

——————————————————————————–

Robert Catellier, CIBC Capital Markets, Research Division – Executive Director of Institutional Equity Research [35]

——————————————————————————–

Hi, you’ve answered most of my questions, but I do want to go back to Petrogas for a minute. Given the extreme volatility in the energy market, it seems quite possible that there’s going to be a divergence of opinion on valuation, so I’m wondering in that context, what options do either of the parties have to defer a potential transaction?

——————————————————————————–

Randy W. Toone, AltaGas Ltd. – Executive VP & President of Midstream [36]

——————————————————————————–

Well, with respect to your latter point, our agreements are pretty clear as we go through a variety of independent valuations on those stages, but, as I said, I’m not going to get into the details of that, but I’m confident that that there would be an accretive transaction for AltaGas and obviously only strategic in terms of our Q2 around doing our export capabilities. So, the process will go forward. We will be operating down the road, but it’s a significant amount of time and process that goes through with independent expert valuations more to come.

——————————————————————————–

Robert Catellier, CIBC Capital Markets, Research Division – Executive Director of Institutional Equity Research [37]

——————————————————————————–

Okay, thank you. That’s helpful. And maybe one question for Randy. I’m just curious on the the trends you’re seeing on the customer behavior and the gathering and processing business and what type of impacts it might have on deeper service volume?

——————————————————————————–

D. James Harbilas, AltaGas Ltd. – Executive VP & CFO [38]

——————————————————————————–

Luckily, like Randy said, we have a capital-light program, so we built over our processing capacity through 2017 to 2019 and a little bit in 2020 and that process in capacity is very valuable to deliver our integrated Midstream offering, and so we do see volumes coming into our facilities and we do have take-or-pays behind that, but there’s no doubt that there is going to be a pullback given what’s going on in the commodity environment, but long term, Montney is one of the best resources in the world and it will be developed and we think we have great assets in the right spots of the Montney, so.

——————————————————————————–

Robert Catellier, CIBC Capital Markets, Research Division – Executive Director of Institutional Equity Research [39]

——————————————————————————–

Okay, thank you.

——————————————————————————–

Operator [40]

——————————————————————————–

Your next question comes from Robert Kwan from RBC Capital Markets. Your line is open.

——————————————————————————–

Robert Michael Kwan, RBC Capital Markets, Research Division – MD & Energy Infrastructure Analyst [41]

——————————————————————————–

Good morning. If I can just dig in a little bit to the outlook or the guidance that you’ve got in last quarter, you cited weather as well as WGL Midstream is being dragged on COVID-19, you’ve got the regulatory protection and seasonality helps,so I think the Utilities should probably be okay, unless you have other comments, but a couple of other factors, can you comment about the unregulated retail business in what customer demand on that might look like as well as for Randy, your comments about Midstream volumes, but it sounded a little bit more longer-term, can you talk a real-time what you’re seeing in volumes versus Q1 and if there is any expectation of volumes from the remainder of the year?

——————————————————————————–

Randy W. Toone, AltaGas Ltd. – Executive VP & President of Midstream [42]

——————————————————————————–

Yeah, well, I’ll take your first point on the retail business, it’s a very small part of our overall businesses around our Utility and and we obviously stress test all of those related to the volume. So, from the gas side of the business, we’ve just come out of the largest (inaudible) seasonal businesses there. So, less volumes in the second and third quarter, a little bit of power exposure, but overall we expect those to be down, but not a material impact overall to our guidance going forward.

Your second question was with respect to the volume growth and our persistence.

——————————————————————————–

D. James Harbilas, AltaGas Ltd. – Executive VP & CFO [43]

——————————————————————————–

So, as we disclosed, we just started up our Townsend expansion, so we’ve added the deep-cut capability to Townsend and those volumes are going to wrap up over the next few months. Our customers are, they have drilled those wells and there is volume behind pipe and they plan on bringing those wells on, they do see the value of the gas price right now. Some of our customers have shut in their oil wells that have little very little gas or associated gas behind them. So, we do still feel confident that even near-term, the volumes will be there. We have seen some shut-ins, we are under our Mountain Gas plant, but it’s not material to the overall Midstream business, and I can say long term, we think the Montney is going to be developed.

——————————————————————————–

Randy W. Toone, AltaGas Ltd. – Executive VP & President of Midstream [44]

——————————————————————————–

Yeah, we fully believe that the export is the future for North America, propane, the butane and well positioned for that, and in that area of our business, just continues to grow, and we’ve experienced an increase in demand for that unique capability and and while our integrated approach will continue to grow as Randy said and it may moderate, but we’re in an excellent position as we’ve not been (inaudible) money into these businesses and we feel that the growth in RIPET, which is generating significant cash, and we feel good about the Asian demand in the margins in this business. So, that structural advantage in the access to global markets is where we’re going to continue to grow and we’ve got a lot of interest from large aggregator. So, again, you’ve not everything will come through our facilities, but we’ll continue to see demand coming from across the basin.

——————————————————————————–

Robert Catellier, CIBC Capital Markets, Research Division – Executive Director of Institutional Equity Research [45]

——————————————————————————–

Maybe if I can just to summarize, I think about where you were standing in December, when you set the guidance, whether the first quarter was a headwind, which also made both Utility and Midstream and then a little bit on the unregulated retail, it doesn’t sound like there’s a lot happening in Midstream volumes and then the tailwind being a caller, are there any other changes that you can envision in December, pushing the numbers within guidance?

——————————————————————————–

Unidentified Company Representative [46]

——————————————————————————–

(inaudible) is obviously a tailwind as well right now.

——————————————————————————–

D. James Harbilas, AltaGas Ltd. – Executive VP & CFO [47]

——————————————————————————–

Yeah, that is a material factor, i mean if you look at the sensitivities in our MD&A, 5 cent change is about a $35 million upside from an EBITDA standpoint. So the tailwinds there are significant, Robert; but I want to go back to your comments on the retail side of the business, that is an extremely small piece of the overall business or, and I’m throwing this out there as an example, even if we had a 20% pullback in demand there, I don’t think that really moves the needle. It represents about 3% of our consolidated EBITDA.

——————————————————————————–

Robert Catellier, CIBC Capital Markets, Research Division – Executive Director of Institutional Equity Research [48]

——————————————————————————–

That makes sense. Turning to debt leverage, you’ve got the 5.5 times target. I’m just wondering what are you seeing right now on incremental bad expense and any temporary payment deferrals, so even though you’ve got the regulatory asset treatment, I’m just wondering is it material enough to impact your ability.

——————————————————————————–

D. James Harbilas, AltaGas Ltd. – Executive VP & CFO [49]

——————————————————————————–

Yeah, it’s a good question. We have not seen at this point any material spike or slow down in collections. I mean if I, we saw obviously in Q1, we had a working capital unwind, that’s continued into the entire month of April. So, we haven’t seen anything material there. If we go back to the global financial crisis, I think back 2008-2009, I think, time frame, we saw about a $10 million spike in bad debt. So, I don’t think that that puts pressure on. I think from a coverage ratio standpoint, the regulatory asset accounts are going to provide some assistance for us and not take any of that P&L hit on those ratios, but obviously working capital would have to obviously grow a little bit and then we’ll have to take on a little more leverage, but that’s all been discussed with the rating agencies when we reached out. We’re proactive and we continue to feel comfortable with the most salient metrics, but they track, especially S&P, and that’s our FFO to debt metric.

——————————————————————————–

Unidentified Company Representative [50]

——————————————————————————–

I just wanted to add, Randy, as I mentioned we’re entering the lower usage months at the utility, right; we have six months to weather the storm before there’s really any impact, and so I think we’re in an excellent position and this gets under control and we get back to some sense of normal in the fourth quarter.

——————————————————————————–

Robert Catellier, CIBC Capital Markets, Research Division – Executive Director of Institutional Equity Research [51]

——————————————————————————–

That makes sense, and just last, still on the leverage, what do you think is an appropriate level for your company, longer term, just given the 5.5 times metric and that’s kind of your calculation, I think it’s closer to 6 in the rating agencies in the past, but you don’t see a lot of utilities up at that level and certainly Midstream companies up at that level. So, where would you like to be longer term?

——————————————————————————–

D. James Harbilas, AltaGas Ltd. – Executive VP & CFO [52]

——————————————————————————–

Well, you know, we’ve said consistently and both Randy and I have said it since joining that we’d like to be under under 5 times. I mean, if you exclude the press that’s probably somewhere a little higher than if you include the press, that is somewhere a little higher than five, but if you look at some of the Canadian utilities, they’ve got leverage that is in the high-fives from a debt-to-EBITDA standpoint, but I’ll go back to what we said last year and we continue to manage because we’ve got enough in the way of non-core assets still available to us to monetize as things get better and we get a better macro backdrop that allow us to get under five times that EBITDA in the medium to long-term rates.

——————————————————————————–

Randy W. Toone, AltaGas Ltd. – Executive VP & President of Midstream [53]

——————————————————————————–

I think we’ve been clear about that and we want to be down below and we will be. The environment is a bit clearly with asset sales, but we’re not desperate to sell, and in the long run, we have some excellent remaining non-core assets and will work in the long term throughout this year to continue to monetize those and and be able to meet those metrics going forward.

——————————————————————————–

Robert Catellier, CIBC Capital Markets, Research Division – Executive Director of Institutional Equity Research [54]

——————————————————————————–

All right. Thank you very much.

——————————————————————————–

Operator [55]

——————————————————————————–

Your next question comes from Julian Dumoulin-Smith, Bank of America. Your line is open.

——————————————————————————–

Julien Patrick Dumoulin-Smith, BofA Merrill Lynch, Research Division – Director and Head of the US Power, Utilities & Alternative Energy Equity Research [56]

——————————————————————————–

Hey, good morning team, thank you so much; so perhaps, following up on the last round of questions on the utilities, can you have a little bit, I mean obviously you continue to articulate the cost savings target and obviously you have entered in the low season of utilization with respect to gas facilities, but with that being said, are you still on track, do you think about the sales impacts in aggregate through the cumulative course of the year, do you see any pressure relative to your ability or your plan to achieve your earned ROEs you’ve already articulated. I just want to make sure that you still good, (a) against the sales and (b) in which necessary to raise those cost targets to mitigate those with that.

——————————————————————————–

Randy W. Toone, AltaGas Ltd. – Executive VP & President of Midstream [57]

——————————————————————————–

Yeah. We look confident we’re going to hit those targets. I’m going to let Blue Jenkins give you a bit more detail because he and the management team that is in place is doing an excellent job and is on track. so Blue I’ll let you comment on.

——————————————————————————–

Donald Blue Jenkins, [58]

——————————————————————————–

Yeah. Thanks Randy. Julian good question. Now, as you recall, and you can see it in the presentation, so the ROE process will continue improvement on the return, will continue this year and into 2021. So, we don’t see anything both near term as a result of COVID or anything else that would impact that process as you saw in Q1. We are able to drive our cost down a bit better than budget. We have a plan to continue to do that through the course of the year. So, I think the actions we’re taking, I think, given the revenue conversation that we’ve had earlier in terms of the rate cases and some of the protections that exist, I think we will get there by the end of 21′ and it still feels pretty good from where we sit today.

——————————————————————————–

Julien Patrick Dumoulin-Smith, BofA Merrill Lynch, Research Division – Director and Head of the US Power, Utilities & Alternative Energy Equity Research [59]

——————————————————————————–

Excellent. Welcome. If I can have a followup here. Going back to the Midstream side of the business and you talked about the confidence, we have (inaudible) this year around RIPET (inaudible) probably, you talk about the actions you’re taking now to de-risk the business perspective beyond the current year to firm up the outlook and especially looking at RIPET more specifically, your confidence level of sustaining cash flow and more importantly probably scaling the volumes still given the backdrop.

——————————————————————————–

Randy W. Toone, AltaGas Ltd. – Executive VP & President of Midstream [60]

——————————————————————————–

Yeah, Julian, the simple answer is I feel pretty good about it, because we are consistently being approached by large aggregators who want access to our unique capability from a volume perspective and from a tolling perspective on our targets and de-risking of these assets. So, I feel very good about that. In that, we’re in a strong position to continue to meet those objectives. It’s a very unique capability when you’re in a point, as I said, in my prepared remarks and when there’s reduction in North American demand, access to global markets are absolutely essential and we’re seeing strong demand on the supply side and strong demand on the Asian markets. So that gives me a great deal of confidence.

——————————————————————————–

Julien Patrick Dumoulin-Smith, BofA Merrill Lynch, Research Division – Director and Head of the US Power, Utilities & Alternative Energy Equity Research [61]

——————————————————————————–

Got it. Your commentary is multi-year there, right?

——————————————————————————–

Randy W. Toone, AltaGas Ltd. – Executive VP & President of Midstream [62]

——————————————————————————–

I’m sorry.

——————————————————————————–

Julien Patrick Dumoulin-Smith, BofA Merrill Lynch, Research Division – Director and Head of the US Power, Utilities & Alternative Energy Equity Research [63]

——————————————————————————–

Your commentary applies to beyond 21 time scale.

——————————————————————————–

Randy W. Toone, AltaGas Ltd. – Executive VP & President of Midstream [64]

——————————————————————————–

Yes, it does. My comment is related to 2020 and beyond.

——————————————————————————–

Julien Patrick Dumoulin-Smith, BofA Merrill Lynch, Research Division – Director and Head of the US Power, Utilities & Alternative Energy Equity Research [65]

——————————————————————————–

Yeah okay. I’ll leave it there. Thank you, guys.

——————————————————————————–

Operator [66]

——————————————————————————–

Your next question comes from Patrick Kenny from National Bank Financial. Your line is open.

——————————————————————————–

Patrick Kenny, National Bank Financial, Inc., Research Division – MD [67]

——————————————————————————–

Hey guys, thanks for all the updates this morning. Yeah, just sticking with the Midstream business here, I guess outside of lower fee for service volumes, curious if you’ve had or expect to have any further discussions with your non-investment grade customers with respect to restructuring any of the take-or-pay commitments across the portfolio, or perhaps any other form of support for your customers netbacks just until commodity prices recover or do you believe that the recent government support that was announced through the EDC loans will be enough to to see them through to the other side of this?

——————————————————————————–

Randy W. Toone, AltaGas Ltd. – Executive VP & President of Midstream [68]

——————————————————————————–

Yeah, I think it’s certainly a challenging time for many, but our decision to create the ability to export propane in Asia through RIPET and that unique value proposition is really helping our customers and that’s the role that we’re playing the benefits of creating a new demand for Canadian producers, helping them get better netbacks and help them position better to recover from the storm that they’re encountering, so we will continue to work with them, we don’t see any material restructure, but we’re talking to all of our customers, but as I said, we continue to expand our supply mix and customers and increasing with larger and diversified high-quality aggregators.

——————————————————————————–

Patrick Kenny, National Bank Financial, Inc., Research Division – MD [69]

——————————————————————————–

Okay. Just switching gears. You guys touched on (inaudible) just to clarify, as it relates to pursuing a potential sale of that asset at some point, now that the new tolling agreement was approved in the quarter, or is that process simply just not feasible in this environment?

——————————————————————————–

Randy W. Toone, AltaGas Ltd. – Executive VP & President of Midstream [70]

——————————————————————————–

I think, I would not say it’s not feasible. We’ve got processes, and we are looking towards that, but as I mentioned that we are not going to sell assets for less than the markets in the value, and we are in a strong position we don’t have to do that. So, you can imagine this environment that transactions around asset sales are a bit challenged, but that’s a short run, I think in the medium- to long-term, we will be able to execute and get fair value going forward.

——————————————————————————–

Patrick Kenny, National Bank Financial, Inc., Research Division – MD [71]

——————————————————————————–

Okay, fair enough, and then last one here, maybe for James, you touched on the credit rating, just wanted to confirm that your corporate IG rating and stable outlook has been recently reaffirmed by the rating agencies or was that just for WGL and also you mentioned the funding that’s been executed year-to-date, also wanted to confirm that, do you see the need to be in the debt markets over the remainder of 2020, I believe it is a small $200 million note that’s due in June or is the plan to wait until the economy reopens?

——————————————————————————–

D. James Harbilas, AltaGas Ltd. – Executive VP & CFO [72]

——————————————————————————–

Yeah, no, just on the first part of your question. Pat, on the rating agencies, Fitch came out and affirmed the rating of AltaGas in the entire group of companies that they rate, so that was inclusive of the utilities and WGL Holdings as well. S&P put out a specific report on WGL and had no issues with ALA. So, they left a rating where it is for ALA, so BBB minus stable outlook and in our conversations with DBRS, they didn’t take any rating actions either, so they left the ratings as they were when they all came out in December as part of our annual review. On the the refinancing in the $980 million in maturity, $780 million of that was at the WGL Holdings and SEMCO level, and those deals were closed at the end of April. The $200 million maturity that we have coming up at ALA, we have enough capacity on the line to be able to repay that on maturity, and if we see credit spreads tighten and we see a window in the market, then we will access at favorable pricing. We have seen people access the markets, especially Utilities and Infrastructure companies with stable cash flows and we feel that we’ve got those characteristics, so we’re just going to monitor things and decide when the right time is to do that, refinancing longer term.

——————————————————————————–

Patrick Kenny, National Bank Financial, Inc., Research Division – MD [73]

——————————————————————————–

Got it, okay. Thanks again, guys.

——————————————————————————–

D. James Harbilas, AltaGas Ltd. – Executive VP & CFO [74]

——————————————————————————–

Thank you.

——————————————————————————–

Operator [75]

——————————————————————————–

Your next question comes from Andrew Kuske from Credit Suisse. Your line is open.

——————————————————————————–

Andrew M. Kuske, Crédit Suisse AG, Research Division – MD, Head of Canadian Equity Research, and Global Co-ordinator for Infrastructure Research [76]

——————————————————————————–

Thanks, good morning; obviously, it was a volatile quarter, but could you maybe give us some context on just how you’re risk management systems performed amidst the volatility and then any tweaks you made to your systems in light of what happened.

——————————————————————————–

D. James Harbilas, AltaGas Ltd. – Executive VP & CFO [77]

——————————————————————————–

Randy you want me to take that. Yeah, look, I mean, before I talk about some of the specific risk management practices and I just want to take the chance to reiterate that when you look at our trailing 12-month revenue, we’re at 70% to 75% investment grade at the Midstream business, right, and if you layer in the utilities, we were well north of 80%, but in terms of risk management practices and things we do short term with some of the counterparties that we have that are below investment grade, I mean, we’ve always been marketing NGLs and gas for some of these entities, and as a result, we sell our tools first, and if there is any AR balances remaining at a month end or quarter end, we typically have letters of credit that backstop those exposures to our customers and obviously from a medium- to longer-term standpoint, we still feel confident that the assets that we have are positioned in a very prolific basin, and and as a result of that, it’s a desirable basin when consolidation happens and some of the stronger producers look to consolidate those positions. We feel that we’re well positioned for those volumes to flow to our plants. So, we’ve always been very active on the risk management front, and those are some of the examples of things that we do through this through this period.

——————————————————————————–

Andrew M. Kuske, Crédit Suisse AG, Research Division – MD, Head of Canadian Equity Research, and Global Co-ordinator for Infrastructure Research [78]

——————————————————————————–

And then any substantial changes to the policies are really steady as she goes and everything held up really well with the volatility that we saw.

——————————————————————————–

D. James Harbilas, AltaGas Ltd. – Executive VP & CFO [79]

——————————————————————————–

I think we’ve always had appropriate policies to deal with a credit risk assessment of our customers. So, I mean, if your question is, have we become more aggressive on LCs, I think we’ve always been aggressive when it comes to dealing with sub-investment grade counterparties based on market demands for them to boast sales fees, I mean even on cargos that we ship to Asia if there is some investment grade, then we demand LCs to the backstop those exposures to us.

——————————————————————————–

Randy W. Toone, AltaGas Ltd. – Executive VP & President of Midstream [80]

——————————————————————————–

We have a very robust process from the mid to front office in the backlog. We have our Risk Committee and policies, and this is a low-risk, higher-growth Utility and Midstream company, so it’s a key part and we manage this business every day. So, this is just a testament to stress the system as it would for many companies and how well we’ve held up in the quality of our risk management tool.

——————————————————————————–

Andrew M. Kuske, Crédit Suisse AG, Research Division – MD, Head of Canadian Equity Research, and Global Co-ordinator for Infrastructure Research [81]

——————————————————————————–

Yeah, I guess it’s the gist of it as you had a 6-Sigma event and everything held up really well.

——————————————————————————–

Randy W. Toone, AltaGas Ltd. – Executive VP & President of Midstream [82]

——————————————————————————–

Yo got it, exactly, thank you for that question.

——————————————————————————–

Andrew M. Kuske, Crédit Suisse AG, Research Division – MD, Head of Canadian Equity Research, and Global Co-ordinator for Infrastructure Research [83]

——————————————————————————–

Okay, that’s great. Thank you.

——————————————————————————–

Operator [84]

——————————————————————————–

Your last question comes from Elias Foscolos from Industrial Alliance Securities. Your line is open.

——————————————————————————–

Elias A. Foscolos, Industrial Alliance Securities Inc., Research Division – Equity Research Analyst [85]

——————————————————————————–

Good morning. Just one quick question, probably directed to one or two of the Randies; I believe,Randy, in your opening remark you said 120,000 barrels a day of combined propane and butane export capability off the West Coast and I guess I recall RIPET having a maximum capacity of 80 and the Ferndale facility of 30. So, is there some optimization that you can see?

——————————————————————————–

Randall L. Crawford, AltaGas Ltd. – President, CEO & Non-Independent Director [86]

——————————————————————————–

Yeah, I know, look the optimization really is around the logistics, right, in the rail and the optimization these facilities can do, that capability, but the limiting factor is really logistics around getting the number of ships out and being able to get the supply there. So, what I was referencing was underlying capability in the amount of ships that could be there, but the key driver is going to be around the rail and the logistics to get the product to maximize, and as I said, the team is working on that each and every day to work towards the logistics of maximizing supply and export volumes.

——————————————————————————–

Randy W. Toone, AltaGas Ltd. – Executive VP & President of Midstream [87]

——————————————————————————–

RIPET is capable of 80,000 barrels a day and Ferndale is actually capable of 40,000 barrels a day, not 30. So, that’s where we get the 120.

——————————————————————————–

Elias A. Foscolos, Industrial Alliance Securities Inc., Research Division – Equity Research Analyst [88]

——————————————————————————–

Okay then. Thanks for that clarification. That’s it.

——————————————————————————–

Operator [89]

——————————————————————————–

This concludes the Q&A portion of today’s call. I will now turn the call back to Mr McKnight.

——————————————————————————–

Adam McKnight, AltaGas Ltd. – Director of IR [90]

——————————————————————————–

Thanks. Julianne, and thank you everyone once again for joining our call this morning and for your interest in AltaGas. Just as a reminder, the Investor Relations team will be available after the call, if you’ve got any followup questions, and that concludes our call this morning. I hope you enjoy the rest of your day; and you may now disconnect your phone lines.