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Edited Transcript of IPL.TO earnings conference call or presentation 9-Aug-19 3:00pm GMT

Q2 2019 Inter Pipeline Ltd Earnings Call

Calgary Sep 2, 2019 (Thomson StreetEvents) -- Edited Transcript of Inter Pipeline Ltd earnings conference call or presentation Friday, August 9, 2019 at 3:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Brent C. Heagy

Inter Pipeline Ltd. - CFO

* Christian P. Bayle

Inter Pipeline Ltd. - President, CEO & Director

* Jeremy Allan Roberge

Inter Pipeline Ltd. - VP of Finance and IR

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Conference Call Participants

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* Benjamin Pham

BMO Capital Markets Equity Research - Analyst

* Jeremy Bryan Tonet

JP Morgan Chase & Co, Research Division - Senior Analyst

* Linda Ezergailis

TD Securities Equity Research - Research Analyst

* Patrick Kenny

National Bank Financial, Inc., Research Division - MD

* Robert Catellier

CIBC Capital Markets, Research Division - Executive Director of Institutional Equity Research

* Robert Hope

Scotiabank Global Banking and Markets, Research Division - Analyst

* Robert Michael Kwan

RBC Capital Markets, LLC, Research Division - Analyst

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Presentation

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Operator [1]

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Good morning, ladies and gentlemen. Welcome to Inter Pipeline's Second Quarter 2019 Conference Call and Webcast.

I would now like to turn the meeting over to Mr. Jeremy Roberge, Vice President, Finance and Investor Relations. Please go ahead, Mr. Roberge.

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Jeremy Allan Roberge, Inter Pipeline Ltd. - VP of Finance and IR [2]

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Thank you, Chris, and good morning, everyone. On the call with me today are Chris Bayle, Inter Pipeline's President and Chief Executive Officer; Brent Heagy, Chief Financial Officer; Jeff Marchant, Senior Vice President, Transportation; and Jim Madro, Senior Vice President, NGL Processing. For today's call, Chris will be focusing on key business development as well as quarterly highlights, and Brent will conclude with a discussion on our financial performance.

To start, I would like to remind you that certain information in this conference call may contain forward-looking information that involves risks, uncertainties and assumptions. Such information, although considered reasonable by Inter Pipeline at this time, may later prove incorrect and actual results may differ materially from those stated or implied by our comments today. Undue reliance should not be placed on such information. A discussion of the related risk factors, uncertainties and assumptions is available in our MD&A, which you can find on our website, or at sedar.com.

Please go ahead, Chris.

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Christian P. Bayle, Inter Pipeline Ltd. - President, CEO & Director [3]

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Thanks, Jeremy, and good morning, everybody. I'm pleased to report that in the second quarter of 2019, Inter Pipeline delivered strong financial and operating results. We also achieved a number of milestones related to construction activities at the Heartland Petrochemical Complex, which remains on schedule and on budget.

We announced the completion of a new oil sands connection and sanctioned a $100 million project within our conventional oil-gathering business. We also announced that we're exploring the potential sale of our European bulk liquid storage business, which I will discuss in greater detail shortly.

Specifically during the quarter, we invested $287 million on the Heartland Petrochemical Complex, bringing our total capital spend to approximately $1.6 billion. All heavy-lift vessels for the propane dehydrogenation facility are now in place, but we substantially advanced concrete foundation and piling work for the polypropylene facility.

Through the successful execution of lump sum contracts, firm purchase orders and substantially completed time and materials worth, we have derisked approximately 55% of the $3.5 billion project cost. We also remain on track to derisk approximately 60% of estimated costs by the end of the year.

Moving to our conventional oil business. We continue to execute on our multi-phased expansion of the Central Alberta pipeline system. During the quarter, work continued to progress to complete Phase I, which involves the expansion of the Stettler Crude Oil Terminal with construction of 2 130,000-barrel storage tanks and related truck unloading infrastructure. It is scheduled to enter commercial service in phases beginning in the fall of 2019.

We also recently announced the second phase of the Central Alberta pipeline expansion, which includes the construction of 75 kilometers of new pipeline that will link our Throne Station on the Bow River pipeline system to the Central Alberta pipeline system. The new pipeline called the Viking Connector and associated facility work represents $100 million investment.

We expect throughput volume on the Viking Connector to average between 10,000 to 15,000 barrels per day when it enters commercial service in the first half of 2020, which approximately 1/3 of forecast shipments currently secured for 10-year term. Once operational, this connection will provide improved market access and flexible transportation service solutions for customers.

Within our oil sands transportation business, we placed into service $110 million diluent and bitumen blend connection to the Canadian Natural Kirby North project on our Cold Lake and Polaris pipeline systems. This connection is underpinned by long-term take-or-pay arrangement, which is not dependent on commodity prices or volume shipped and was completed underbudget and approximately 6 months ahead of schedule.

We also announced yesterday that we are exploring the potential sale of our European bulk liquid storage business. Inter Terminals is one of the largest independent storage businesses in Europe, and it has approximately 37 million barrels of storage capacity across 23 terminals in the U.K., Denmark, Sweden, Germany, Netherlands and Ireland.

I'm proud of our European storage business, its growth and the terrific people that are managed and operated our facilities since we first entered this business in 2015. The decision to explore the sale of Inter Terminals is consistent with our pragmatic approach to long-term portfolio management, particularly in light of our large capital expenditure program. Of course, there is no assurance that a sale will be completed and a definitive time line for this process has not been set.

Finally, I'm pleased to announce that in the second quarter of 2019, we reached a major operational safety milestone of 5 million hours worked without a lost time accident. This is in a credible achievement and our performance is directly attributable to the personal commitment of our employees and the strong safety culture throughout the organization.

I will now turn things over to Brent to provide additional details on our results.

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Brent C. Heagy, Inter Pipeline Ltd. - CFO [4]

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Thank you, Chris, and good morning, everyone. During the quarter, Inter Pipeline generated funds from operations of $240 million that was underpinned by strong and stable contributions from our oil sands transportation and conventional oil pipeline businesses. Our oil sands business produced $150 million, while our conventional oil pipeline business earned $50 million of funds from operations in the quarter.

Results on the conventional business were driven by strong contribution from midstream marketing, primarily due to attractive butane pricing and increased blending activities as a result of higher volume from sweet crude batching operations on the Central Alberta pipeline system. We expect our midstream business will generate approximately $40 million to $45 million of EBITDA in 2019, depending on pricing differentials and volume.

Reduced conventional operating expenses also favorably impacted financial results by decreasing $10 million compared to the same quarter in 2018. The decrease was largely attributable to elevated repair, remediation and integrity-related costs in Q2 2018. On an annual basis, aggregate operational expenses should be comparable with those incurred in 2018.

Our NGL processing business generated funds from operation of $72 million during the quarter compared to $101 million in the second quarter of 2018. The $29 million decrease was primarily driven from of weaker frac spread prices on volumes sold at our Cochrane and Redwater facilities compared to the same period in 2018.

Inter Pipeline has a scheduled maintenance activities at the Redwater olefinic fractionator as well as Pioneer 1 and 2 offgas facilities during the third quarter of 2019. These coincide with planned turnarounds at producer upgrading facilities, and our operations are expected to be off-line for approximately 3 weeks. As a result, offgas sales volumes during the third quarter will be lower.

Our bulk liquid storage business generated solid results during the quarter with funds from operations of $27 million. This represents an increase of approximately $10 million compared to the same period in 2018 and reflects the additional cash flow contribution from our recently-acquired storage business in the U.K. and Netherlands.

Utilization rates has steadily increased since the beginning of the year and averaged 83% during the quarter as a demand for storage continues to improve. For the month of July, we have seen at the average utilization rate across our European business increase to 90%.

Inter Pipeline remains committed to operating in a financially prudent and flexible manner. As of June 30, 2019, our consolidated net debt to total capitalization ratio was 45% compared to 51.8% as of December 31, 2018.

As Chris previously mentioned, we are exploring the potential sale of Inter Terminals. Should the process results in a sale, proceeds will be used to reduce debt and finance our capital expenditure program. In addition, we would be in a position to suspend our DRIP plan and internally finance our current capital program, including the construction of the Heartland Petrochemical Complex.

It is important to note that we are expecting NGL processing third quarter financial results to be weaker than historical averages. This is due to the impact of lower sales volume and higher cost resulting from the scheduled turnaround at our offgas facilities as well as our expectation for depressed frac-spread pricing during the quarter. Results in our other 3 business segments are expected to remain stable.

Now I'm sure many of you are aware of the recent media speculation regarding unsolicited proposal to acquire Inter Pipeline. As a matter of policy, we do not comment on market rumors or speculation, so we will have nothing further to say on this matter today.

So this concludes the formal portion of the conference call. And I would now like to turn the meeting back to the operator, Chris, to open the floor for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question is from Patrick Kenny with National Bank Financial.

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Patrick Kenny, National Bank Financial, Inc., Research Division - MD [2]

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I guess I got to ask the question. Chris, you're obviously a Director of the company, so can you please confirm if the Board has received an offer to acquire the company? And if so, if the review is still ongoing? Or if is it's been rejected? And if so, why?

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Christian P. Bayle, Inter Pipeline Ltd. - President, CEO & Director [3]

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Sure. Pat. As Brent just mentioned at the start of the call here, our focus today is on the financial results and recent announcements, and we don't intend to comment any further on those matters today.

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Patrick Kenny, National Bank Financial, Inc., Research Division - MD [4]

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Okay. And I'll move over to the potential sale of Inter Terminals here. Just wanted to touch on the payout policy, 77% payout ratio year-to-date. Obviously, that would move somewhere north of 80% if you are successful in selling the business, at least until Heartland comes online. So I just wanted to confirm that you would be comfortable utilizing some of your commodity-based cash flows to cover the dividend for, say, a couple of years until some additional contracted cash flows came from Heartland?

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Brent C. Heagy, Inter Pipeline Ltd. - CFO [5]

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Pat, this is Brent. I will confirm that in the near term some level of commodity-based cash flow may be used to support the dividend, and we will be comfortable with that. As you pointed out, once the Heartland Petrochemical Complex enters commercial service in late 2021, the incremental $450 million to $500 million of expected annual EBITDA will support the current dividend and will anchor future dividend growth. But ultimately, that would be a Board decision.

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Patrick Kenny, National Bank Financial, Inc., Research Division - MD [6]

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Okay. Great. And lastly, and then I'll jump back in the queue here. But again on the sale, potential sale, have you had any discussions with the rating agencies just to make sure that they would view the sale as credit accretive, not only from a metric standpoint but also business risk and overall cash flow quality profile?

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Brent C. Heagy, Inter Pipeline Ltd. - CFO [7]

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Well, we -- we're -- and this is Brent, again, we are in continual discussion with the rating agencies. So our view is I don't think that it would actually change our credit rating at all. But definitely, when you look -- if we actually go through with the sale and we apply the proceeds to the financing requirements for our current capital program, it's definitely credit positive and the metrics would improve. And so we would certainly anticipate the rating agencies to view it positively.

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Operator [8]

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Your next question is from Linda Ezergailis with TD Securities.

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Linda Ezergailis, TD Securities Equity Research - Research Analyst [9]

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Just following up on some funding scenarios and credit implications. Clearly, the outlook for NGL pricing is dynamic and arguably, it's not as strong as it was a year ago. But I'm wondering if you could help us think about what the funding outlook might be in the event that you chose not to proceed with the sale of your European bulk liquid storage business? And I'm wondering if perhaps the DRIP would not be turned off or how -- what the plan B would be?

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Brent C. Heagy, Inter Pipeline Ltd. - CFO [10]

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Sure. It's Brent again, Linda. So I'll take that question. So let me just kind of maybe walk through our thoughts in this and where we're currently at. So if we receive an attractive price, the utilization of proceeds from the potential sale of bulk liquid storage business, it is a very attractive option for financing. And as I mentioned, we could very well meet our financial requirements for our current capital program, including HPC, and it would allow us to suspend the DRIP.

I just want to make a comment really about the sales process itself. We believe that the sales process is going to attract significant buyer interest. It's a large attractive platform for a buyer, it comes with a strong management team. So our current planned course of action regarding financing is really looking at the potential sale of bulk liquid storage business, and we would keep the P-DRIP on until the sale is concluded.

Now as you pointed out, we acknowledge the base business has not performed as strongly as in the past and the PDRIP may have to stay on longer than December 2019 if we do not conclude the sale. But what I will say, if we don't do as sale, we will update everyone on what our plans are. We do have options since we still have strong access to capital markets, lots of room to do hybrid issuance and our balance sheet is still strong with an FFO to debt at around 20% and a consolidated net debt to total capitalization ratio of around 45%.

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Linda Ezergailis, TD Securities Equity Research - Research Analyst [11]

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That's helpful. And then just as another question on various possibilities. Beyond just financing considerations, would you consider selling other parts of the business, whether it may be less core or fully core, including potentially a partial sale of your PDH project to potentially not just the surface value but maybe derisked as well?

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Christian P. Bayle, Inter Pipeline Ltd. - President, CEO & Director [12]

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I'll take that one, Linda, it's Chris. I would say those options are far down on the list from where we're at today. Just to maybe emphasize some of Brent's comments. We've always had in the back of our minds that some sort of portfolio management process would be attractive in terms of funding our large capital growth program, ever since we announced HPC. It's simply a matter of we're constantly updating where we think the most attractive sources of capital could come from.

Initially, it was through the public markets and -- but we're always looking our storage business and trying to optimize the timing of when a sale might make sense for us and we've been working on this for quite some time. And we think the reason why now is a particularly interesting time is kind of maybe 3 factors here. First, the NuStar acquisition. Some may be surprised that we brought NuStar and now we're looking to sell our Terminals business, quite the opposite. That was a great opportunistic opportunity for us to buy a good business at good value that has a strong synergy potential with our U.K. assets. So we're not simply buying NuStar and selling NuStar, we bought NuStar and now we're selling a platform.

Now the business has also improved significantly from, let's say, late last year, like we mentioned in our news release that we're upwards of 90% utilized across the business today. Integration of NuStar has gone well and there's, as Brent mentioned, strong interest in that sector from particularly financial investors. And we've got a clear use of proceeds here. But at the end of the day, consider it as an opportunistic sale. If we don't get a price we like, we're going to -- we have the other options that Brent mentioned and we'll exercise those options.

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Linda Ezergailis, TD Securities Equity Research - Research Analyst [13]

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Yes. You're not the only one that's noticed a disconnect between some private market valuations and public market valuations.

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Operator [14]

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Your next question is from Robert Catellier from CIBC Capital Markets.

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Robert Catellier, CIBC Capital Markets, Research Division - Executive Director of Institutional Equity Research [15]

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Well, you've effectively answered my questions, but I'm curious just to -- on the press release on the potential sale of bulk liquid business, pretty noncommittal. So is there anything other than valuation? And what type of valuation would it take to get that asset sold? And can you just confirm, Brent, that you would turn off the DRIP, all other things being equal, immediately upon conclusion of a sale?

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Christian P. Bayle, Inter Pipeline Ltd. - President, CEO & Director [16]

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Yes. Maybe I'll take the first part of that. I'll be pretty bad at my job if threw out on the phone. What we think a good sales price is given we're soliciting interests from potential acquirers right now but -- so we'll keep very quiet on what we think a good price for that business is. And why don't you take the second half there, Brent?

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Brent C. Heagy, Inter Pipeline Ltd. - CFO [17]

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Well, sure. When it comes back to -- obviously, turning off the PDRIP, it's all about receiving an attractive price. And so based on when we do our modeling, we have built in what we believe is an attractive price. And as Chris mentioned, we're not going to mention what that is on the phone. But if we do receive the price, yes, we believe that we can turn off the DRIP.

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Operator [18]

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Your next question is from Jeremy Tonet with JPMorgan.

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Jeremy Bryan Tonet, JP Morgan Chase & Co, Research Division - Senior Analyst [19]

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Just wanted to start off with a couple of questions on the storage here. Just wondering if you can help me walk through -- it looked like the utilization ticked up slightly there or ticked up a bit there but revenue ticked down slightly. Just wondering the dynamics in play to that. And maybe just following up on the possible divestiture of the storage business. Was there anything in particular that you saw in the marketplace that kind of led to the shift here? I mean the NuStar acquisition being not too far at the rearview at this point. Could you speak more to kind of the strategic outlook as far as expanding the business and now turning around and looking to go the other way?

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Christian P. Bayle, Inter Pipeline Ltd. - President, CEO & Director [20]

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I'll answer the back half of that question. The -- so I think my earlier comments largely address that. We -- I don't see any disconnect between buying NuStar last fall and selling the complete -- or looking to sell the complete platform right now. For the reasons I mentioned, NuStar is a great business, it fits very well with our existing U.K. assets and we got it at a good price. The -- we've made a lot of progress in the business over the last -- I'd say the last year in terms of building up the utilization of the -- across the business as well as integrating NuStar. And again, sector interest in the bulk liquid storage sector particularly from financial investors remain strong. So we think now is an opportunistic time to explore a sale.

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Brent C. Heagy, Inter Pipeline Ltd. - CFO [21]

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So Jeremy, could you please repeat the first part of your question?

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Jeremy Bryan Tonet, JP Morgan Chase & Co, Research Division - Senior Analyst [22]

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Just that it looked like utilization moved up a bit this quarter when I look at the prior calendar quarter, and the revenue ticked down slightly there.

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Brent C. Heagy, Inter Pipeline Ltd. - CFO [23]

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Oh, I think part of the reason for that is -- would be mainly around exchange rates and weakening of exchange rates.

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Jeremy Bryan Tonet, JP Morgan Chase & Co, Research Division - Senior Analyst [24]

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Okay. That's helpful. And then just wanted to do kind of housekeeping item on the modeling HPC. You guys have hired people for the staffing here ahead of it coming online, are those costs -- are they in OpEx or are they corporate or are they capitalized at this point? Or how should we be looking to model that?

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Brent C. Heagy, Inter Pipeline Ltd. - CFO [25]

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Well, we can probably give you some further help from our IR guys, but I will make a general comment. From an accounting point of view, we are currently reviewing as we're heading into incurring some costs as we get ready for commissioning of the facility. We're putting all of our business processes into place, our IT systems. So there's currently quite an extensive review occurring in our accounting group to understand where those costs are going to end up.

So I can't tell you today exactly what those amounts look like. But as we get more clarity around that, we will start giving some information to the market to give you guys a bit of an understanding of any of those HPC costs and start ending up, let's say, either in operating costs, general and administrative costs, sustaining capital and growth capital. So we'll make sure that that's very clear.

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Jeremy Bryan Tonet, JP Morgan Chase & Co, Research Division - Senior Analyst [26]

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That's helpful. And just a last one if I could. And I realize that you don't want to talk about the media article here, appreciate that. I don't want to belabor the point. But just procedurally, if there was a $30 cash bid that was credible that came in, would the Board have to disclose that? Just procedurally, how would that work?

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Christian P. Bayle, Inter Pipeline Ltd. - President, CEO & Director [27]

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Well, if we're speaking in hypotheticals here, the Board understands very clearly what its fiduciary duties are. And the Board would carefully consider any credible offer and determine if it's in the best interest of shareholders. And regarding whether they need to disclose something or not, that would be depend on the circumstances, Jeremy. And the Board, in consultation with legal and financial advisers, would decide whether disclosure is appropriate.

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Operator [28]

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Your next question is from Ben Pham from BMO.

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Benjamin Pham, BMO Capital Markets Equity Research - Analyst [29]

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I mean I can understand you guys are looking at asset sales versus other sources of capital, [once] achieved this, you have a source of capital. But I'm wondering what's the thought process around, just generally, your asset sales philosophy in the overall portfolio. Like how do you look at storage versus conventional and some other pieces of your business, the geography? Just maybe just some more color on just the qualitative aspects about how you got to the storage decision.

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Christian P. Bayle, Inter Pipeline Ltd. - President, CEO & Director [30]

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Sure. No, that's a fair question, Ben. I'd say what's very central to our thinking when we look at our portfolio is are all the different divisions all they all meaningful to the overall story of the company. And for many years, when we look at storage, we were able to opportunistically grow that business largely through acquisition. And we did a handful of acquisitions over 14 years, and that business was generally kind of between 10% to 15% of our consolidated EBITDA as a result, which was, call it, at the whole end of meaningful but still meaningful.

Now when we look at our storage business compared to our -- in Europe, compared to our Canadian business is going, particularly in HPC coming online in the next few years, it would shrink to quite a small amount of our consolidated EBITDA and we would be in a position where we would have to acquire high-quality storage businesses, remain disciplined and buy them at good valuations at a pace far faster than we've been able to achieve in the past. And the management team and the Board has to consider whether or not that's really realistic.

And given where we are today and all of the things I described about the current climate in Europe related to these sorts of investments and what our -- be pragmatic about what our financing needs are here, we needed to make a decision about whether this is a long-term hope for us in light of our ability to keep growing at a meaningful pace, and that's why we made the decision. But at the end of the day, if we don't -- if we decide not to sell, it'll be business as usual and we'll continue to be disciplined and look for attractive opportunities in Europe and try to grow that business at a reasonable pace.

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Benjamin Pham, BMO Capital Markets Equity Research - Analyst [31]

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Yes. That makes a lot of sense. And can you -- maybe just 2 quick touchups. Maybe remind us your hybrid capacity on your balance sheet. And then also on the PDH, when do you start locking more some of that CapEx, is that late this year?

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Brent C. Heagy, Inter Pipeline Ltd. - CFO [32]

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Sure. I'll take the first part of the question on our hybrid capacity. So currently, right now -- so our total capacity is $1.3 billion, and we've -- with our -- and we've done an issuance of $750 million against that. And when you look at sort of the S&P metric, how they calculate what our capacity is as we're continuing to spend capital particularly on HPC, that number will grow into 2022. We anticipate now about $1.5 billion of total capacity that we would have. And again, we've drawn $750 million of that.

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Christian P. Bayle, Inter Pipeline Ltd. - President, CEO & Director [33]

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And Ben, what was the second half of your question again?

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Benjamin Pham, BMO Capital Markets Equity Research - Analyst [34]

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Yes, sure. The Heartland, I know you locked -- I think you actually locked in 55% of that CapEx. There is -- I think there's another next round of locking it in. Just wondering on the timing of that.

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Christian P. Bayle, Inter Pipeline Ltd. - President, CEO & Director [35]

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What we believe we'll be around, on total basis, of 60% secured by the end of the year, and that's really just with the further completion of procurement and some construction activity at site. And obviously, the pace of that will accelerate in 2020 and 2021.

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Operator [36]

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Your next question is from Robert Kwan with RBC Capital Markets.

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Robert Michael Kwan, RBC Capital Markets, LLC, Research Division - Analyst [37]

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I guess coming back to Europe, there's been a lot of talk on the call about DRIP and PDRIP, so I just wanted to be clear. Brent, I think you said that if -- when you -- if you complete the sale and upon closing you turn off the DRIP. Are you talking about the premium component or the DRIP completely?

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Brent C. Heagy, Inter Pipeline Ltd. - CFO [38]

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Well, it means the whole thing. But when you look at the components of the DRIP, it is largely the PDRIP. But Robert, we'd shut down the whole thing.

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Robert Michael Kwan, RBC Capital Markets, LLC, Research Division - Analyst [39]

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You'd shut the whole thing. Okay. Would you consider a partial sale of the European business? Or is it really an all or none proposition?

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Christian P. Bayle, Inter Pipeline Ltd. - President, CEO & Director [40]

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I'll take that one, Robert. I wouldn't want to signal anything publicly with regards to what we may or may not do there. So I'll just -- we'll just keep those cards close to our chest right now.

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Robert Michael Kwan, RBC Capital Markets, LLC, Research Division - Analyst [41]

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Fair enough. And then I know you said that there's no -- nothing definitive at this point on the time line. I'm just wondering though what stage of the process you in. Are the information memorandums out? Or is there first round kind of due date at this point?

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Christian P. Bayle, Inter Pipeline Ltd. - President, CEO & Director [42]

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Yes. I totally appreciate the question, Robert, but I would just decline to answer any sort of process questions around that sale at this point.

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Robert Michael Kwan, RBC Capital Markets, LLC, Research Division - Analyst [43]

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Okay. Can you confirm roughly when you hired an adviser?

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Christian P. Bayle, Inter Pipeline Ltd. - President, CEO & Director [44]

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No. Can't confirm that either.

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Robert Michael Kwan, RBC Capital Markets, LLC, Research Division - Analyst [45]

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Okay. Maybe I'll just finish out with the Redwater turnaround. So you've got the 3-week downtime. I'm just wondering, is there an additional kind of a ramp down and then ramp-up time we also need to take into account here?

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Christian P. Bayle, Inter Pipeline Ltd. - President, CEO & Director [46]

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Robert, it's (inaudible) calling here -- on the call here. No, it's going to be fairly shut down and ramp up. So it usually takes a day or 2 to do both of those, so -- and that's included in the 3 weeks.

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Robert Michael Kwan, RBC Capital Markets, LLC, Research Division - Analyst [47]

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Okay. That's great.

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Christian P. Bayle, Inter Pipeline Ltd. - President, CEO & Director [48]

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Robert, just to be crystal clear on something though. I don't want to leave the impression that this possible sale of state of the storage business is something we invented yesterday. We have clearly been working on this for some time and we have -- certainly have a process in place around that deal.

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Operator [49]

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And our last question comes from Rob Hope with Scotiabank.

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Robert Hope, Scotiabank Global Banking and Markets, Research Division - Analyst [50]

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Another question just on the storage sale. When you're looking at your suite of assets and which ones to monetize, I just want to get a better sense of why storage versus a partial sale of Heartland. Are you looking to derisk that project to fully maximize the value there versus selling what we'll call a mature storage business?

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Christian P. Bayle, Inter Pipeline Ltd. - President, CEO & Director [51]

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Well, I think -- I'd go back in my earlier comments on the -- our view on the long-term fit of our European storage business with our overall Canadian portfolio. And again, it comes back to whether or not we believe that we can continue to keep -- grow that business in a disciplined way and keep it meaningful on a consolidated EBITDA basis with our -- within our overall corporate profile.

And that's really why this -- when we took a look at our own complete portfolio, it stood out as a business that was attractive to monetize. And then you later on the fact that there is, what we believe, considerable interest in the sector from investors, the fact that it's truly a turnkey entity. It's got its own management team, highly capable. It's something that's easy to disconnect from the overall Inter Pipeline portfolio. So it has a lot of positive attributes that make it the right thing for us to put in the market today.

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Robert Hope, Scotiabank Global Banking and Markets, Research Division - Analyst [52]

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All right. And then one follow-up on that. When you look at your financing so far plus the hybrids and then potential asset sales for the storage, you have a relatively good chunk of change there. Are you seeing growth beyond your secured projects? For instance, kind of Phase IV and III of conventional and knock-on investments beyond Heartland?

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Christian P. Bayle, Inter Pipeline Ltd. - President, CEO & Director [53]

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Yes. We -- personally, I think we have a really interesting suite of potential projects in front of us today that we're working hard on. We're certainly not just all HPC, all day every day. There's -- our transportation team is actively working on Phases III and IV of our Central Alberta expansion program. Very pleased that we've got I or II done exactly as we have laid out, I guess, in our minds going back to about 18 months. And we are looking at other derivative investments in and around the petrochemical sector, but it will take some time to develop but we're actively working on that. And believe it or not, there are other olefins-related opportunities out there that we're actively pursuing. So I would say, I think the future is pretty good.

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Operator [54]

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And this concludes the Q&A period. I'll now turn it back to Mr. Jeremy Roberge for any closing remarks.

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Jeremy Allan Roberge, Inter Pipeline Ltd. - VP of Finance and IR [55]

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Great. Well, thank you, everyone, for participating in our conference call today, and we look forward to discussing our third quarter 2019 results with you on November 8. Thank you.

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Operator [56]

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This concludes today's call. You may now disconnect.