Keyera Corp

TSX:KEY

Q1-2025 Earnings Call

[Operator]

Good morning. My name is Joelle, and I will be your conference operator today. At this time, I would like to welcome everyone to Keyera's 2025 First Quarter Conference Call.

[Operator Instructions] Thank you. I would now like to turn the call over to Dan Cuthbertson, General Manager of Investor Relations. You may begin.

[Dan Cuthbertson, executive]

Thanks, and good morning. Joining me today will be Dean Setoguchi, President and CEO; Eileen Marikar, Senior Vice President and CFO; Jamie Urquhart, Senior Vice President and Chief Commercial Officer; and Jarrod Beztilny, Senior Vice President, Operations and Engineering. We will begin with some prepared remarks from Dean and Eileen, after which we will open the call to questions.

I'd like to remind listeners that some of the comments and answers that we will give today relate to future events. These forward-looking statements are given as of today's date and reflect events or outcomes that management currently expects. In addition, we will refer to some non-GAAP financial measures. For additional information on non-GAAP measures and forward-looking statements, please refer to Keyera's public filings available on SEDAR and on our website.

With that, I'll turn the call over to Dean.

[Dean Setoguchi, executive]

Thanks, Dan, and good morning, everyone. Keyera had a solid first quarter, reflecting disciplined execution of our strategy and the strength of our integrated value chain. Back in December, we outlined a clear plan to grow our fee-based adjusted EBITDA by 7% to 8% annually from 2024 to 2027; 5 months later, we're progressing well against that plan, advancing growth projects, filling available capacity and securing new long-term integrated contracts across our value chain.

This morning, we announced the sanctioning of KFS Frac III, a major expansion of our core frac complex in Fort Saskatchewan. When combined with the Frac II Debottleneck, these projects will increase our total frac capacity by about 60%. These investments are backed by long-term customer commitments with a high degree of take-or-pay and are essential to meeting the growing needs of the basin. They also enhance the competitiveness of our integrated value chain and support our strategy of attracting and retaining volumes across the system. Both frac expansion projects are expected to deliver stand-alone returns within our targeted range of 10% to 15%. A large majority of frac capacity at KFS, including expansions, is now contracted for an average duration of 8 years.

We're also advancing KAPS Zone 4 with commercial discussions nearing completion. We continue to see commercial momentum across the business. The Wapiti gas plant is now expected to reach effective capacity in 2026, a year earlier than anticipated. Several optimization projects are underway to support further growth at the plant.

Volumes continue to ramp up at Simonette, and our condensate business continues to grow. Our Fort Saskatchewan condensate system is nearing contractual capacity, and we're evaluating debottlenecking opportunities that can increase capacity to accommodate growing customer demand. From a macro perspective, we remain confident in the long-term growth outlook for volumes out of Western Canada. Despite recent commodity market volatility, our basin remains resilient due to its quality of resource and low-cost structure. Importantly, we're seeing meaningful improvements in egress capacity across multiple products, whether it's crude on the Trans Mountain pipeline expansion, gas and LNG Canada or increasing propane and butane export options. At the same time, intra-basin demand is rising. Oil sands producers are investing in expansions and debottlenecking. And over time, natural gas could play a larger role in meeting emerging demand from sectors like data centers.

Our assets are well positioned to enable this growth, and we'll continue to invest where we see long-term sustainable growth, always with a focus on disciplined capital allocation. With that said, for Canada to realize its full potential, more is needed. We need a competitive policy environment that attracts capital, enables responsible growth and expands market access for the benefit of all Canadians.

With that, I'll turn it over to Eileen to walk through our financial results and guidance.

[Eileen Marikar, executive]

Thank you, Dean. Keyera delivered solid financial results in the first quarter. Adjusted EBITDA was $298 million compared to $314 million in Q1 last year. Distributable cash flow was $190 million or $0.83 per share. Net earnings were $130 million, up from $71 million in the same period last year. These results were supported by continued strong margin contributions from our fee-for-service segments, which were up 9% over the same period last year.

Gathering and Processing delivered $109 million in realized margin with a new throughput record at Wapiti and continued momentum at Simonette. Liquids Infrastructure delivered a near-record $152 million in realized margin. This was supported by high utilization of our fractionation and condensate systems and the continued ramp-up of volumes on KAPS.

In the Marketing segment, realized margin was $78 million, primarily driven by iso-octane and propane sales. The AEF facility has completed its start-up following a maintenance outage that began in late March. The facility is now back to full operations. However, the work took longer than originally anticipated, extending to approximately 7 weeks rather than 6. As a result, the expected impact to annual marketing segment realized margin has increased to approximately $50 million compared to the previous estimate of $40 million.

We ended the quarter with a strong balance sheet and net debt-to-EBITDA of 2x, below our targeted range. Over the last 2 years, our net debt has been reduced by over $500 million. Our strong financial position gives us the flexibility to self-fund organic growth and return capital to shareholders.

Turning to our 2025 guidance. We are reaffirming all key figures. We continue to expect Marketing segment realized margin to be between $310 million and $350 million. This includes the estimated $50 million impact from the AEF outage and reflects the benefits of our disciplined risk management program.

Growth capital expenditures are expected to range between $300 million and $330 million, supporting investments in Frac II, Frac III, KAPS Zone 4 and other opportunities. Maintenance capital expenditures are expected to range between $70 million and $90 million. And finally, cash taxes are expected to range between $100 million and $110 million.

Thank you, and I'll now turn it back to Dean for closing remarks.

[Dean Setoguchi, executive]

Thanks, Eileen. We remain confident in the basin's continued volume growth. Canada has one of the world's largest oil and gas resource bases, developed under some of the most stringent environmental and social standards anywhere.

Now is the time to foster an environment that attracts investment and supports responsible growth. Our customers are in strong financial positions and continue to grow and adapt to changing conditions, and Keyera helps enable this growth. We are executing a clear strategy and delivering capital-efficient growth. And we're doing so while remaining disciplined with a long-term view of the Western Canadian Sedimentary Basin.

On behalf of Keyera's Board of Directors and management team, I want to thank our stakeholders for their continued support.

With that, I'll turn it back to the operator for Q&A.

[Operator]

[Operator Instructions] Your first question comes from Robert Hope with Scotiabank.

[Jessica Hoyle, analyst]

This is Jess Hoyle on for Rob Hope. I just wanted to start on the growth front. So regarding KAPS Zone 4, what are the remaining hurdles for sanctioning? And are you now comfortable on the engineering side and also with construction costs for that project?

[Dean Setoguchi, executive]

Jess, it's Dean Setoguchi speaking, and thank you very much for the question. We're very excited about our Zone 4 project, working with North River Midstream. We certainly see a lot of demand and growth in the Montney and therefore, certainly a service like ours, which would provide a competitive alternative for NGL transportation. So contracting is going very, very well. But we want to remain disciplined to make sure that we have all of those contracts buttoned up that will support this size of investment. And as I said before, that's progressing very well.

On the engineering front, we have a Class III estimate already complete. We've done all of our stakeholder engagements, and we feel pretty good about our execution of this project. I was thinking back about KAPS Zone 1 to 3, and we've said this before, but the terrain on Zones 1 to 3 are much more difficult to build pipe and build a pipeline. Zone 4 is much smaller in size. It's distance. It's only about 85 kilometers versus about 580 on zones 1 to 3. And the topography is a lot flatter and the right of way is visible pretty much the whole distance from a paved road. So much, much different conditions.

And also say that remember, in KAPS Zone 1 to 3, we built that through COVID. And we also had 2 very large pipeline projects being built at the same time being Trans Mountain and Coastal GasLink. So just because of availability of contractors and also the smaller projects and better topography, we feel pretty good about it. But Jarrod, is there anything else you want to add to that?

[Jarrod Beztilny, executive]

No, I think you covered it well, Dean. The only couple of things I'd add would be that we have all our regulatory approvals in hand already. And we've secured the pipe and are in the final stages of securing our construction contractors. And there'll be some continuity there from Zones 1 to 3. So both from our own team and the external folks that we use, there's lots of familiarity there from the prior project.

[Jessica Hoyle, analyst]

And moving over to marketing. So commodity prices have been very volatile. So just how do you think about downside protection? Or does volatility give upside potential to the guidance range?

[Dean Setoguchi, executive]

Yes. Well, maybe I'll start off with this response. Certainly, we've seen a lot of volatility, as you said, and a lot of it is tied to what President Trump says on any given day across the border. But I just want to remind our investors that we have a very, very disciplined risk management program. And so that's in place to protect ourselves when we see a downturn in commodity prices like we've seen recently. So that's working very, very well for us as it did back in 2020 and 2021. But maybe I'll just throw that over to Jamie and maybe he can comment further.

[K. Urquhart, executive]

Yes. Dean, you've covered it really well. It's just -- as you pointed out in the last part of your question is that, that volatility sometimes does create opportunities for us to be opportunistic when we do layer in our risk management program. And the team, as they have in the past, has done a very, very good job of setting us up for '25 and into 2026.

[Operator]

Your next question comes from Robert Catellier with CIBC Capital Markets.

[Robert Catellier, analyst]

I think I'll start with KFS III. Congratulations on the sanctioning. I just wanted to understand the CapEx guidance that you previously gave for '24 to '27, obviously includes something for KFS III. But it looks like the scope of the project might be a bit bigger with some additional egress. So is the entirety of the $500 million accounted for in that prior guidance of $350 million to $450 million for '26 and '27?

[Dean Setoguchi, executive]

Yes. You know what, I'll turn that question over to Eileen right away, Rob. But I'm glad to see that you're still on the phone after the Leafs loss last night, and hopefully bounce back next game. But anyway, I'll turn that over to Eileen.

[Eileen Marikar, executive]

Robert, thanks for the question. And yes, absolutely, that the $500 million for Frac III was part of that guidance that we provided for 2024 through to 2027. It would include both the Frac II Debottleneck Frac III Zone 4 as well as other projects. As you can imagine, it takes several years to develop projects to get them to in-service date and really to be able to push out that growth well beyond 2027. So there is some capital for other projects as well.

[Robert Catellier, analyst]

And then what is the addition you're doing on the egress side with KFS III. Is there anything notable there? Is it just connectivity to storage and things like that?

[Dean Setoguchi, executive]

Sure. I'll turn that over to Jarrod.

[Jarrod Beztilny, executive]

Robert, it's Jarrod. Yes, I think it's pretty minor in nature. It's -- when you build a brownfield project, and there's work you need to do to integrate it with the existing fracs. And it's really just positioning some of the pumping and infrastructure on how we move products around the site to position us to move it -- to move those products off site. There's nothing significant around storage included in that because it's not required.

[Robert Catellier, analyst]

Yes. So it's all internal core optimization, right?

[Dean Setoguchi, executive]

You bet. Yes, it's just how do we most efficiently integrate Frac III with the existing facilities that we have there.

[Jarrod Beztilny, executive]

Yes. It's always an intention to the best service for our customers so that we have maximum flexibility between our fracs.

[Robert Catellier, analyst]

Okay. Great. And then I'm just curious what you think is possible when you look at the portfolio of optimization options you have to expand that Montney processing capacity? And specifically, how do you see asset M&A fitting in terms of your menu of options to deal with those capacity constraints?

[Dean Setoguchi, executive]

Thanks for the question, Rob. And I think that we have various options, whether they're brownfield or greenfield options to add additional capacity in addition to filling up our existing capacity. I want to make sure we're clear about that. And we do see a significant amount of demand to fill up both Wapiti and Simonette. So we're working on debottlenecking opportunities there to fully utilize that capacity.

But -- and I'll let Jamie talk about just potential opportunities in the area for capacity. But certainly, we have the financial wherewithal to also acquire assets that would be a fit into our integrated system, where, again, we can provide more competitive services if we add those assets to our business and also integrate it to our downstream value chain, including KAPS in our frac business. So those are the opportunities we're looking for. We have the financial wherewithal to transact if we find something that fits. And -- but we'll be incredibly disciplined if we do acquire something along that fairway. Anything you want to add, Jamie?

[K. Urquhart, executive]

No. I think the only thing I'd add is that we have established a dedicated team to Dean's point, to pursue those opportunities.

[Operator]

Your next question comes from Patrick Kenny with National Bank Financial.

[Patrick Kenny, analyst]

Maybe just back on the Frac III expansion from a cost. Can you just confirm if any of the $500 million budget is locked in with any fixed price contracts or perhaps through procurement of steel or other materials? And maybe just a comment to on whether or not the recent delay by Dow might have a positive indirect impact on your access to labor in the region.

[Dean Setoguchi, executive]

Patrick, I'll just maybe make a couple of comments, and I'll pass it over to Jarrod. And I think very good observation about Dow. I mean, they have to run a business. And so I totally understand the decision to defer their cracker expansion, but I do believe it will be built at some point in the future. But you're right, I do think that this is a good opportunity for us to have a build window because, as you know, our KFS site where Frac III will be built is right across the road from Dow. So we'd be competing for similar contractors. And obviously, we want the best contractors to be working on our project to give us the best shot at executing it well. But with that, I'll turn it over to Jarrod.

[Jarrod Beztilny, executive]

Pat, I think the first thing I'd note is that Frac III is essentially a twin of the bottleneck Frac II. So we're not reinventing the wheel. It's Frac II is a great project for us, and we're leveraging that into Frac III. And so that in itself just gives us comfort from the nature of the work.

In terms of what's locked in, it's still early days. Right now, we're in the midst of securing all the long lead equipment. And so a significant portion of that equipment will actually get ordered later this month or early June. That will help give us certainty on those costs. And we're also getting closer on advancing construction contracts, which will give us some certainty there. So early days to have a sense for how much is really locked in, but we're getting quite close to derisking a significant portion of the project.

And there's some other strategies as well that we're employing around how we'll manage contractor activity and provide oversight that we think will help mitigate cost schedule, quality risks and all those types of things as well.

[Patrick Kenny, analyst]

And I assume a good time to be looking at the Fort Saskatchewan condensate system expansion as well. So -- but maybe you can just confirm what the potential scope and timing might look like for that expansion?

[Dean Setoguchi, executive]

Yes, I can step in there, Pat. Like I mean, it's really about just debottlenecking a little bit of pipe, looking to take advantage of using drag-reducing agents that are very effective for that type of service in condensate.

[Jarrod Beztilny, executive]

Yes. Bottom line, though, the demand for that service has been very strong. So it's been great to see.

[Patrick Kenny, analyst]

Okay. And then last one for me. Dean, you had a comment in the release just on the need to improve Canada's competitiveness through, I guess, policy reform. Can you just expand on what you think industry needs to see in order for the energy sector to reach its full potential?

[Dean Setoguchi, executive]

Yes. Well, first of all, I'm optimistic that we're going to see some change, cautiously optimistic, maybe I should say, with the new leadership in place. And in Canada, we have a problem with affordability, and we need to improve our GDP. And we are a resource-based country. And so where do we have the best opportunity to improve our GDP? It's our energy sector.

So I am very hopeful that our Prime Minister understands the balance between the need to be environmentally responsible, which I think that we're tops on that front in our industry, but also balancing that with the need to be competitive if we want to grow and export our responsibly produced products around the world. And so what that means to me is we need to see improvements in policy and reevaluate the emissions cap, the clean energy policies.

We have to really have policies and permitting and regulations in place so that we can build more capacity to the West Coast, build more LNG so that we have more customers to sell our products to versus being so captive to the United States. And we have to also break down interprovincial trade barriers, which is unbelievable that that's something that's self-created by ourselves.

So if you can address some of those issues, our industry will perform very well. We have a very low-cost production based in Alberta and BC and a very big abundance of resource. So we just have to have better policies to get it to market.

[Jarrod Beztilny, executive]

Thanks, Patrick.

[Dean Setoguchi, executive]

Thanks, YouTube. I had the Oilers last night. I think you're an Oilers fan.

[Operator]

Your next question comes from Ben Pham with BMO Capital Markets.

[Benjamin Pham, analyst]

Maybe start off a couple of questions on the frac capacity end market. Can you talk about how the frac capacity market is going to shake out in the next couple of years? You mentioned the Phase 3, the debottleneck, your competition is adding capacity. Do you anticipate by 2028 that the market is going to be more of an oversupply situation? Or do you think it's more of a runway even beyond that?

[Dean Setoguchi, executive]

That's a really great question. And certainly, when we look forward, like when we look at the long-term market fundamentals, our basin is going to grow. And again, a lot of that's just tied to what we see in growth tied to LNG exports, mainly from LNG Canada. And we're hearing that there's more momentum around the sanction on Phase 2. But bottom line, there's going to be more natural gas growth in our basin, which is also going to drive growth in NGLs as well.

So right now, we're fully maxed out on our capacity utilization, not just us, but our competitors as well in terms of frac utilization at Fort Saskatchewan. So there's certainly a lot of demand for new capacity. For a short period of time, could it get overbuilt? It's quite possible. But the great thing is for us is that there's a lot of -- there's been a lot of demand for our service and with that, we've contracted up about 85% of our whole frac complex. And that would include Frac I, Frac II and the debottleneck and Frac III. So it's highly, highly contracted already. So we've mitigated that risk, and we think that we're going to have more opportunities to fill the last 15%.

[Benjamin Pham, analyst]

And just staying on the frac side, can you remind me just how the contracts, you mentioned 85%, but was there some that you were recontracting April 1st? And if it's so, just the overall commentary on the trend.

[Dean Setoguchi, executive]

Well, I can turn this over to Jamie. But generally, I mean, we've been recontracting at KFS for the last couple of years. If you remember last year, we announced, I think it's about 30,000 -- 33,000 barrels a day of long-term frac capacity contracts that were signed that were over 10 years in duration. And I can tell you, over the past year, we signed a lot more contracts of similar nature. So we've done a really good job. And again, it's just something that we've been doing ongoing.

The other thing I'd mention is that a lot of the frac contracts, in fact, almost all of them are integrated deals that are tied to other services, whether it's upstream with our G&P business, KAPS and also our downstream marketing business and logistics business. So it's been very good for our company, and you can see it in our results.

[K. Urquhart, executive]

So I think the thing that I would add to that, Ben, and it's a great question is that, as Dean said, is we've been recontracting and for duration, but we've also been proactive in blending and extending contracts that were due to be recontracted so that we do stay out of that phenomena, as you pointed out, that we may find our province a little bit overbuilt in the '28 time frame. And the key was to make sure that we had as little amount of contracts renewing in that time period as possible.

And we do that, as Dean said, really, we believe KFS is the best connected frac to market. And obviously, the AltaGas deal that we announced last quarter is part of that, but we have the best connectivity to butane in the province, and we have now a comparable, if not preferred access for propane as well.

[Benjamin Pham, analyst]

Okay. So it sounds like it's a legacy comment that 50% of your capacity is recontracted April 1st. That's more of an old way of thinking about it.

[K. Urquhart, executive]

Yes. I would think about it from the perspective of that we've got some opportunities over the next short period of time to have that fully contracted. That's our goal, is to have that facility fully contracted probably within the next 12 months.

[Dean Setoguchi, executive]

And maybe some of your comments are tied to -- like I would say if we went back 5-plus years ago, there was a lot more contracts that renewed on an annual basis every April. And what Jamie and his team have done is that they've really lengthened those contracts and put a lot of term to it. So that's why the average duration of our contracts now are like in the 8-year range. And again, a significant amount of them 10-plus years.

[Operator]

Your next question comes from Spiro Dounis with Citi.

[Spiro Dounis, analyst]

I wanted to start with KAPS, if we could, more specifically around Zones 1 to 3 actually. So Dean, I think you sort of talked about in the past growing into that 10% to 15% return range for that segment of the pipeline. And obviously, some growth announced today between Wapiti sort of filling up sooner than expected, KFS III now getting FID-ed at least a little bit sooner than we had expected. So I'm curious maybe just to level set on the impact to that KAPS Zone 1 to 3 and how you're tracking to that 10% to 15% range now?

[Dean Setoguchi, executive]

Yes. And thank you for the question on KAPS 1 to 3. And believe me, there's going to be a lot of growth, continued growth in Zones 1 to 3 that we're very excited about. And as you would have saw in our results, our LI liquids infrastructure performance was very strong this quarter. And some of that obviously is driven by growth that we're seeing on KAPS, Zones 1 to 3.

What we've been saying and we stand behind our guidance is that our 7% to 8% fee-for-service EBITDA growth target out to 2027, a lot of that is going to be from existing assets, including volume and margin growth on KAPS. And we continue to see strong demand. We fully expect KAPS to continue to ramp up beyond 2027. So it's going to contribute to our fee-for-service growth out to 2030 and beyond. And again, it's really helping us lock up integrated deals across our value chain, including Frac III, which is what we announced today.

[Spiro Dounis, analyst]

Got it. That's great to hear. Second one maybe for you, Eileen. Just with respect to capital allocation here and really focusing on the share repurchase program. I think it's safe to say that equities have been a little bit more volatile than normal this year. And so I guess I'm just curious, is this the type of market that your opportunistic program was built for? Have buybacks moved up in the capital stack lately? Are you still finding more growth opportunities or more attractive at this point?

[Eileen Marikar, executive]

Spiro, thank you for the question. Yes, I think it really remains the same where we're really excited that we have the buyback option as a tool that we can continue to use opportunistically. But it really -- and it is something that we will continue to weigh as an option. But as we've said before, the preference is to grow our business with infrastructure that will be around for decades. And with all the commentary you heard from Dean earlier as well where we see the basin growing, there are opportunities well beyond what we've talked about today in frac expansions and Zone 4. So we -- again, our preference is to allocate capital to continue to grow the business. So again, it remains unchanged. We will allocate capital to that highest value option, whether it's organic, inorganic growth or buybacks.

[Operator]

[Operator Instructions] Your next question comes from Maurice Choy with RBC Capital Markets.

[Maurice Choy, analyst]

Just wanted to come back to the marketing guidance. You mentioned that this guidance obviously reflects the $50 million impact from the outage, but also highlighted the risk management program that mitigates the impact of commodity price volatility. So I wonder if you could give us some examples of what you've done here. For example, were these positions that were in or out of the money, but you chose to close them a little bit early given the uncertain commodity price environment? Or is this something else?

[Dean Setoguchi, executive]

Yes. Thank you for the question. And first of all, before I turn it over to Jamie, I'd just say that we are not making speculative decisions where the market goes up or down and we unwind everything and then reset our book, hoping the market goes back up. We're really just trying to just make sure that we preserve margin. So -- but anyway, with that, I'll turn it over to Jamie, and he can elaborate.

[K. Urquhart, executive]

Yes. Well, I think you made the point I was about to make because, yes, I would not want to -- not anybody to take away from my previous comments that we're in and out of the market based on volatility. That is not how we run our book at all, right? It's just that it's being patient and not panicking when prices go down certain levels and ultimately understanding the market well enough to know when it's appropriate to layer in positions. And we've done that very, very well over the years, and we continue to do that very, very well. So -- and it's set our ability to deliver on the results that we've -- and the guidance that we've given and created the confidence that we will deliver to that guidance.

[Dean Setoguchi, executive]

Yes. Maybe just to one of the points that Jamie made earlier, though, which is unrelated to hedging is that when you have a lot of volatility in markets, sometimes markets dislocate. And we have assets and we have logistics and marketing expertise to take advantage of market dislocation. And so we can move products from one market to another market and make a margin off it. And sometimes those opportunities present themselves in environments like we see today. So we'll see how 2026 plays out. And again, we can potentially enhance our book with some of those types of opportunities.

[K. Urquhart, executive]

Yes. And to layer on to that, and it's a great point that Dean makes is that we have been able to take more advantage of that -- those type of dislocations and/or opportunities as a result of the additional storage that we bought a couple of years ago at the KFS complex from our previous partner at that facility. So you will have seen the benefit of that additional storage over the last couple of years in our results, and you'll continue to see that benefit based on the fact that when there's volatility, that creates massive opportunities to take advantage of physical storage.

[Maurice Choy, analyst]

Maybe just double clicking on that comment about dislocation and volatility. I think in your prepared remarks, you highlighted a number of favorable long-term trends about the basin's growth. And I wonder if you could give us a little bit more of a shorter-term view. You've highlighted that you made some progress on filling the available capacity, but just your outlook about basin over the coming months or quarters.

[Dean Setoguchi, executive]

Sorry, I just want to make sure I understand your question, Maurice. It's just -- are you talking about just the general basin or you --

[Maurice Choy, analyst]

General basin.

[Dean Setoguchi, executive]

And -- on growth, or you're talking specifically to our marketing business?

[Maurice Choy, analyst]

No, general basin, not the marketing specific, more about the base business.

[Dean Setoguchi, executive]

Yes. You know what, our base business has been very, very stable, and we're seeing still continued demand. What I find with the consolidation that we've seen, and I also watch what happens north -- sorry, south of the border, I get my directions mixed up here. But with more and more consolidation, like I look down in the U.S., a lot of the majors now control a lot of the shale plays, and they've taken out a lot of the private guys and the smaller players that are drilling no matter what, just to grow and increase their valuation for sale.

So I think that all those players, and that's happening, obviously, in Canada as well, and you saw Tourmaline and ARC and another unknown producer buy some assets off of Strathcona. I just believe that those larger players have a longer-term view. They're more strategic. They have very strong balance sheets. And so -- and they also understand that infrastructure cannot be built overnight. I mean just think about our Frac III, it won't be in service for 3 years. So that's why they're making continued commitments across our value chain because they anticipate what's happening with more egress being built and volume growth in Western Canada. And they realize that we need critical infrastructure to enable the growth, which is what Keyera has and what Keyera will continue to build in the future.

[Operator]

There are no further questions at this time. I will now turn the call over to Dan for closing remarks.

[Dan Cuthbertson, executive]

Thanks all once again for joining us today. Feel free to reach out to our Investor Relations team if you have any additional questions. Everyone, enjoy the rest of the day. Thank you.

[Dean Setoguchi, executive]

Thank you.

[Operator]

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.