Keyera Corp

TSX:KEY

Q3-2025 Earnings Call

[Operator]

Good morning. My name is Eena, and I will be your conference operator today. At this time, I would like to welcome everyone to Keyera's 2025 Third Quarter Conference Call. [Operator Instructions] Thank you.

I would now like to turn the call over to Mr. Dan Cuthbertson, General Manager of Investor Relations. You may begin.

[Dan Cuthbertson, executive]

Thank you, and good morning. Joining me today will be Dean Setoguchi, President and CEO; and 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 name, 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 the Dean.

[C. Setoguchi, executive]

Thanks, Dan, and good morning, everyone. This quarter again demonstrated the strength of our fee-for-service business, where realized margin grew by more than 10% year-over-year. This continued increase in stable cash flow reflects higher utilization across our integrated system and support ongoing dividend growth.

2025 has been a defining year for Keyera, built on several years of disciplined execution of our strategy to extend and strengthen our value chain. We built a highly competitive integrated platform that continues to attract customer volumes and support long-term growth. This year alone, we secured more than 100,000 barrels per day of new contracting on caps and our existing implant fractionation capacity is now substantially contracted.

Those wins demonstrate the value customers place on our services. We're also making solid progress on our major growth projects. The KFS frac 2 debottleneck, frac 3 expansion and Capstone 4 are each advancing on time and on budget. Together, they will further strengthen our integrated system and provide stable long-term fee-for-service cash flow supported with a significant portion of take-or-pay contracts.

Pending acquisition of Plains Canadian NGL business will build on that foundation. It adds meaningful scale, expands our reach to key demand hubs in the East and allows us to offer customers more flexibility and connectivity across the value chain. The transaction remains on track, and we expect to close in the first quarter of 2026.

Turning to the Marketing segment. While the quarterly results and full year outlook came in below expectations, the segment remains strategically important to our business. It provides strong cash flow and, in some years, delivers exceptional contributions. That cash has helped us strengthen the balance sheet and accelerate growth in our fee-for-service business, further compounding value for shareholders.

I want to briefly touch on our sustainability progress. We met our 2025 GHG intensity reduction target of 25%, a full year ahead of schedule. This has been accomplished through economic investments that improve efficiency and meet our return threshold.

More importantly, our sustainability program focuses on managing long-term risks and positioning the company for lasting value creation. We published our 2024 sustainability performance summary on our website.

Overall, 2025 has been a year of strong execution. We continue to build a more efficient and competitive platform that creates meaningful value for our customers and shareholders while positioning Keyera for long-term growth.

With that, I'll turn the call over to Eileen to review our financial results and outlook.

[Eileen Marikar, executive]

Thanks, Dean, and good morning, everyone. Keyera's third quarter results reflected stable performance and continued strength in our fee-for-service businesses. Not including deal and integration costs associated with the Plains acquisition, adjusted EBITDA was $286 million.

Distributable cash flow was $186 million or $0.81 per share, and net earnings were $85 million. As Dean mentioned, we continue to see strong year-over-year growth in our fee-for-service segment, driven by higher utilization across the value chain.

In gathering and processing, realized margin was $112 million, up from $99 million last year. The increase reflects higher throughput and growing contributions from our Wapiti and Simonette plants, as contracted volumes continue to grow.

In liquid infrastructure, realized margin was $147 million compared to $135 million last year, supported by higher storage and utilization of our condensate system as well as the steady ramp-up of CAPs volumes.

Now turning to the Marketing segment. Realized margin was $73 million for the quarter compared to $135 million last year. The lower results reflect reduced condensate import volumes as domestic production displaced UM imports. While this shift benefits our fee-for-service business, it reduced marketing opportunities. Liquids blending activity and iso-octane premiums were also lower.

For the full year, we now expect marketing realized margin to range between $280 million and $300 million. Results would have been within our long-term base guidance range without the approximate $50 million impact from the unplanned AEF outage earlier in the year. We are reaffirming our long-term annual base marketing guidance of $310 million to $350 million. This is based on certain commodity price assumptions and AEF operating at nameplate capacity.

During the quarter, we issued $2.3 billion of senior notes and $500 million of hybrid notes, which completed the financing requirements for the Plains acquisition.

Now I'll touch on our capital outlook and guidance update. For 2025, we've made a few adjustments. Growth capital is now expected to range between $220 million and $240 million, down from our previous estimate of $275 million to $300 million. The change reflects the deferral of some spending to 2026. This does not impact the expected in-service dates of our major projects.

Maintenance capital is now expected to be $60 million to $70 million, slightly lower than before, again, reflecting some timing shifts. And cash taxes are expected to come in between $90 million and $100 million primarily due to lower marketing contributions.

Looking ahead to 2026, we're providing stand-alone guidance until the Plains transaction closes. We remain on track to deliver our 7% to 8% compound annual growth rate in fee-based adjusted EBITDA from 2024 through 2027. Growth capital for 2026 is expected to range between $400 million and $475 million, mainly directed toward our sanctioned growth projects.

Maintenance capital for 2026 is expected to range between $130 million and $150 million, which includes about $60 million for the planned 6-week turnaround at AEF starting in September. Following closing of the Plains acquisition, we'll provide pro forma guidance and a comprehensive business outlook for the combined platform, reflecting enhanced scale and long-term growing profile.

With that, I'll turn it back to Dean for closing remarks.

[C. Setoguchi, executive]

Thanks, Eileen. 2025 has been a transformative year for Keyera. We've executed on our strategy, strengthened our value chain and continue to build a competitive and efficient platform that creates value for customers and shareholders. With a fully financed plan and self-funded growth ahead, we're well positioned to support the continued growth of the basin and deliver strong fee-for-service margin growth for years to come.

On behalf of our Board and management team, I want to thank our employees, customers, shareholders, indigenous rights holders and other stakeholders for their continued support.

With that, we'll turn -- we'll open the line for questions. Operator, please go ahead.

[Operator]

[Operator Instructions] And your first question comes from the line of Robert Hope from Scotiabank.

[Robert Hope, analyst]

So good to see the continued growth in gathering and processing cash flows, even with the weakness in AECO. As you look at your northern footprint and the increasing volumes there, how are you thinking about further optimizations or expansions?

[C. Setoguchi, executive]

Yes, thank you very much for the question. We see our Northern footprint as being really in the most economic fairway of the Montney -- the liquids-rich fairway of the Montney. So we do see continued growth in demand for our services in that area, and that's exactly why you're seeing continued volume growth even with weak natural gas prices because, again, the values in the liquids, we think that we're going to have opportunities to continue to not only fill the remaining capacity that we have up there, but also to expand and build new capacity.

So it's something that we're extremely excited about. And again, a lot of that development is going to continue with the continued announcements of new LNG capacity off the West Coast of Canada. But I'll also turn it over to Jamie to add any other comments.

[K. Urquhart, executive]

Yes, Dean, thanks for the opportunity. Robert, I think the one thing I'd point out is that we have really strong gathering interconnectivity between the 3 facilities that we have in the North. So as we look at the opportunity to debottleneck and expand specifically Wapiti and Simonette, what we're finding is the demand by the customers in that area for both short-term and long-term processing solutions, and we think we're going to be able to do some capital-efficient debottlenecks at those facilities to enable them both to continue to grow in the short term and then potentially have line of sight to be able to pursue a new facility in that area as well.

[Robert Hope, analyst]

All right. That's helpful. Maybe more broadly on the liquids contracting strategy. You were quite active securing contracts, we'll call it, in the first half of the year, less so with this update. Has the pending acquisition of Plains added some complexity to the contracting strategy, just given you're going to have more optionality?

And I guess another question there would be, how would the addition of Plains impact the contracting strategy moving forward?

[C. Setoguchi, executive]

Yes. No, that's a great question. I mean, first of all, the Plains acquisition is proceeding and we certainly believe that we'll be closing some time in Q1. But right now, we're operating Keyera as a totally separate entity. And as you would have seen in our -- look, we don't provide every quarter an update on what we've contracted.

But I can tell you that there's continued momentum to the contracting on our asset base beyond what we've announced previously this year. So again, it just tells you how competitive our services are and the demand there is very strong. So we're going to continue to do that.

I think with the combination of Keyera -- sorry with Plains, we're going to be able to provide an even more diversified service in terms of market access, but also with the size and the scale and the synergies between our asset bases, we're going to be able to provide a more competitive service for our customers, and that's going to obviously lead to more contracting on the combined platform.

Jamie, anything else you want to add?

[K. Urquhart, executive]

No, I think you hit it perfectly, dean. .

[Operator]

And your next question comes from the line of Aaron MacNeil from TD Cowen.

[Aaron MacNeil, analyst]

I fully appreciate that this may be front-running some of the disclosures you plan to provide post Plains. But as we think about a refreshed 3-year guide with 2025 as the base year, should we think about 2028 as a consequential year for growth for Keyera on a stand-alone basis, just given the timing of contracts associated with CAP zone 4 and KFS 3? And can you give us a sense of the potential magnitude, all other things being equal?

[C. Setoguchi, executive]

Yes, you are front-running us. But I think it's a very good question. I mean we've guided out to 2027, and that's the 7% to 8% fee-for-service base growth. And again, a lot of that is investments that we've already made, and we're just filling that capacity.

I'd say on top of that, obviously, as we've announced the CAP zone 4 and our 2 frac projects are highly contracted with high take-or-pays, so you're going to see a lot of cash flow growth in 2027 and beyond as those projects come into service and volumes ramp up. So yes, that's going to be very good for our fee-for-service business.

We haven't provided guidance on that yet, but that will come in the future. And then on the Plains side, we've announced that our plan is to deliver, I'll say, at least $100 million of synergies. And we have a clear line of sight to that. Based on where we are, and we've put some positions -- we have an arrangement in place where we have very good certainty on the frac spread for the first year of acquisition when we close the Plains.

So we're very confident on our mid-teens DCF accretion. And beyond that, like I say, we see a lot of opportunity to create further synergies beyond the $100 million. So when you add all that up, what it boils down to is that I think it's going to be very exciting for Keyera with our -- both our internally internal projects, but also the combination of Plains and creating a more efficient platform that's going to translate to better service and more profitability for our shareholders.

So I'm not trying to dodge your question. I think at the end of the day, we will be providing more guidance in the future. We have to get, obviously, the closing with Plains first before we can disclose mentioned.

[Aaron MacNeil, analyst]

Okay. Fair enough. I had to try. You you reiterated the long-term base marketing guide. How does the planned turnaround at AEF fit into that next year?

[Eileen Marikar, executive]

Thanks, Aaron, it's Eileen here. Thanks for the question. Just maybe stepping back, looking at this year. Historically, our isooctane margins have made up more than 50% of the marketing. And based on fundamentals that we see for isooctane, we expect it to remain strong. And if not for the 7-week unplanned outage of AEF, the impact of $50 million, we would have been well within our base guide, if not near the top end of it.

So all that to say, we feel very confident in that long-term base guidance. So you're right, based when we look at the assumptions that underpin the, one of the key assumptions is that AEF operates near capacity and certain other commodity price type of assumptions, especially around WTI.

So next year, you're absolutely right that there is a 6-week planned turnaround that would certainly play into that guidance. And so we -- again, next year, we will provide guidance as we normally would, as we close out our supply season.

[C. Setoguchi, executive]

Yes. I'd just maybe add to that. I mean when you look at the big picture, we feel pretty good about our marketing business. And again, it's a physical business. So when you think about our frac expansions, what it means is that we're going to be catching and marketing more barrels and making margin off those incremental barrels.

So I think that's a bit of a tailwind. When you think about our isooctane business, we think that's pretty strong. And again, the demand for premium grades of gasoline are increasing. And certainly, with some of the policy changes in the United States, the demand for gasoline and the demand for our internal combustion engine vehicles is much higher than what anyone would have expected even a couple of years ago. So I think that bodes pretty well there.

And thirdly, I think with the Plains acquisition, we're going to really enhance our market access and especially out to the East, which is really going to complement the markets that we can serve already in the West and also locally, especially with our condensate system, our isooctane business. Our propane access is going to be much stronger with the Plains business. So again, that's going to be another positive tailwind for our marketing business.

[Operator]

And your next question comes from the line of Robert Catellier from CIBC.

[Robert Catellier, analyst]

I wanted to follow up on Rob Hope's first question and just the practical implication of the timing on the Plains transaction. So my question is, what is the likelihood that the transaction closes in time for Keyera to go to market for the '26 contracting year on a more integrated basis?

[C. Setoguchi, executive]

Well, that's a good question. At the end of the day, we are certainly -- the bureau process is that review is proceeding as we would have expected. This is a large acquisition. So with any large acquisition, it takes time and that timing isn't always certain. So we believe that we're still on track to get through that process in the first quarter and close. It would be nice if we could have a close before contracting season, but that still remains to be seen. This is, obviously, not 100% within our control.

[Robert Catellier, analyst]

Yes, it would be great for the customers as well. .

[C. Setoguchi, executive]

Absolutely.

[Robert Catellier, analyst]

And just bigger picture here, just looking at CAPs, and we don't know the ultimate size of the pipeline, but my question is, given your view of basin growth, which is similar to ours and pretty strong, what is possible in terms of an expansion of caps in terms of the time line? And is that possible without a material gathering and processing expansion by Keyera?

[C. Setoguchi, executive]

I love the question. It wasn't like 2 quarters ago when you guys were asking us how we're going to fill CAPs, there you asking us to expand it. But I mean, hey, with the contracts that we've signed, yes, I mean, CAPs by the end of the decade is going to get start to get pretty full, which is very exciting and tells how competitive our system is and the demand for that service. But maybe I'll turn that question over to Jarrod.

[Jarrod Beztilny, executive]

Yes. Robert, I think that's really was part of the plan is to add particularly pump station capacity as the volumes warranted. And that's really what we're doing. So there's some of that coming along with zone 4, and we expect that will continue out through the end of the decade. So we still have some runway there to do some very capital-efficient expansions through additional pumping before we'd have a step change in capital beyond that.

[Robert Catellier, analyst]

Okay. And last one for me, just on the bigger picture, Dean. What are you seeing in terms of how the basin is changing? We've had some more producer consolidation recently, but we're also seeing maybe a different approach towards LNG with the major projects office, putting another project on there. So just when you look at those things together, how was the customer interaction and maybe the growth outlook changing?

[C. Setoguchi, executive]

Yes. I mean it's -- I feel a lot more optimistic today than I have in a long, long time. And it's encouraging to hear some positive comments come from our Prime Minister and some actions in the right direction. I think it's great for Canada if we can continue to develop more LNG off the West Coast. .

And certainly, hey, we'll benefit from that because we have critical infrastructure that helps enable that basin growth. I think there still needs to be some -- still some progress on key policies that would, again, just give everyone a lot of confidence that we can do this in a competitive manner.

When you think about -- so I think the basin is going to grow. And I should also mention, too, it's exciting that Enbridge is finding ways to add more capacity on their system. We know that TMX, Trans Mountain has ability to also debottleneck to you. So I think this bodes well for our industry and for Canada, which is great and help us boost our economy.

We think about consolidation. The way I think about it is that as an industry, we should be working together to create the most competitive low-cost and environmentally friendly energy to serve the world. And some of the consolidations that we're seeing, I think it's good because it creates more size and scale and efficiency to help accomplish that.

And for Keyera as a midstream service provider, we're doing the same thing. And that's what Plains is all about. We're consolidating, and we're going to be more efficient, we're going to provide a more competitive service, and that's going to make our basin more competitive, and that should help us export more products with additional market access that we're going to be getting in the future. So I think it's a good thing overall.

[Operator]

And your next question comes from the line of Theresa Chen from Barclays.

[Theresa Chen, analyst]

Just a quick follow-up one from me on the marketing segment. Octane premiums seem to be improving so far in fourth quarter 2025 despite what should be a seasonally soft period. What are some of the factors contributing to this dynamic in your view? Is it octane demand-related alluding to some of the long-term trends you mentioned earlier or have there been supply disruptions in octane observed in the market?

[C. Setoguchi, executive]

You're very astute to be about watching that market. But I'll turn that over to Jamie to provide more color on.

[K. Urquhart, executive]

Yes. So as being said, yes, you're bang on. Q4 premiums are actually trading above historical levels. Our view is that it's really attributed to both the supply and the demand side. On the supply side, we're seeing some significant refinery outages, also some closures of refineries, specifically on the West Coast, which is an area where a lot of our products in the Western U.S. is sold.

So -- but also demand has been strong. Certainly, as well have really had some tailwinds over the last period of time. And it's interesting with respect to gasoline pricing and octanes are not necessarily always limited to North America and what's going on in North America. But long term, we have a really strong view that both cracks and isooctane premiums, octane premiums are going to be robust.

They're going to continue to be above historic levels. Not to the levels that we would have seen in 2022 or through '24 based on some very unique geopolitical events on the planet. But we expect the strength in isooctane premiums will persist into 2026.

[Operator]

And your next question comes from the line of AJ O'Donnell from TPH.

[Andrew John O'Donnell, analyst]

I was hoping to maybe just start on the macro and just kind of what's going on right now in Q4. Wondering if you could talk to maybe some of the activity levels you're seeing across the North and South in light of LNG Canada starting to ramp up that second train and AECO prices starting to improve?

[C. Setoguchi, executive]

Yes, thanks for the question. I think from a big picture standpoint, I mean, most of the growth in the basin has been and will continue to happen up in the Montney. And a lot of value is derived from the liquids. So even though -- so they're up in that area is not really that sensitive to natural gas prices, it's probably more sensitive to crude oil prices.

And even at $60 WTI for condensate, roughly, you multiply that by the FX rate, in Canadian dollar terms is still a pretty good price, which is still a good price incentive for producers to continue to drill and grow. I think up in that area, too, that there's not as much infrastructure capacity and that's from gas plants and all the way through that value chain.

And so whenever you have scarcity of supply, the producers want to make sure they have -- they secure that in order to fill their growth plans in the future. So what we can say is that demand has been very high for the remaining capacity that we have. So we expect to continue to add volumes and grow, even in the price environment that we're in and obviously, adding the second train at LNG Canada it's going to help.

But we're going to look beyond that, and we think that there's going to be more LNG developed off the West Coast, which is going to, again, create further demand for more processing capacity and CAP service in our downstream business. So overall, we think that demand will remain strong in the South.

I think that's where it's a little bit more sensitive to natural gas prices. Our volumes have been relatively steady, especially when you consider what AECO prices have been. And I think that if we catch a little bit of a period with stronger gas prices, I'm sure the producers down there are probably hedging forward too with some of the curves that you can see. And there's a lot of gas still in place down in the South. And over time, we expect that to get drilled up and see some more volume growth there as well.

Anything you want to add, Jamie?

[K. Urquhart, executive]

Yes. So the only thing I'd add is everything -- I agree with everything being said on the North. In the South, I think we're seeing some really positive tailwinds there. As a result, there was a bunch of consolidation 2, 3 years ago, and it takes the company a period of time to understand the resource that they're inheriting and ultimately putting drilling programs together.

And what we've seen is those companies then really starting to get after what they purchased 2, 3 years ago and seen some very, very good results as a result of applying their technology, their competency, frankly, one of the reasons why they would have bought those assets because they believe they could do bigger things with the land base and the prospectivity of those assets. So we are seeing some really positive results in the South as well.

[Andrew John O'Donnell, analyst]

Okay. Great. Then maybe just one more kind of on the medium or longer term. We've seen a handful of refined products pipelines being announced in the U.S. pulling from pad 2 and then going into some of those refinery closure markets that you talked about into pad 5.

I'm just curious, as you kind of kind of think about your isooctane business, how you anticipate either 1 or multiple of these projects impacting those margins or having an impact on that business?

[C. Setoguchi, executive]

Yes, that's a good question. Jamie?

[K. Urquhart, executive]

Yes. So I love the fact that you guys are on top of our business because, yes, there's 2 pipelines that are being proposed, refined pipelines that are being proposed to serve the sort of the Nevada, Arizona, but primarily the California market and the California market has seen some refinery closures happening.

And that's really drawing -- creating a pull for those refined products out of -- likely out of Texas and and even further to the East. So those 2 projects, we think, have a lot of merit. And we currently serve a bunch of the refineries that would have connectivity, and we would expect to supply into the markets that they're being built into. So we have relationships. Net-net, we see that as a very positive development for our business on the isooctane front.

[C. Setoguchi, executive]

We like the markets that are served, the continental markets that aren't served off the water because we're advantaged. We're moving our railcars down south. And so we can certainly save on the transportation cost, if we don't have to take it all the way to the U.S. Gulf Coast and we can hit one of those inland refiners or places where they blend gasoline.

So we like the developments of what's happening with the closures in California of refiners. And also the gasoline demand growth that we're seeing, as Jamie discussed, in Arizona and Nevada, Salt Lake City, that area and also in the Denver area as well.

[Operator]

[Operator Instructions] And your next question comes from the line of Maurice Choy from RBC Capital Markets.

[Maurice Choy, analyst]

Just wanted to think about the world beyond the Plains transaction and then more big picture about how you view partnerships. Can you talk to what's worked well, what you'll be looking for when establishing a new partnership? Or alternatively, maybe you don't see that many new partnerships being formed over the coming years.

[C. Setoguchi, executive]

Yes. That's a really good question. And I think one thing that we have replication for is that we're a good partner. We work well with others. We understand the need for a win-win if we want to have a successful partnership that's sustainable. When we look at our business in the long term, I think that we really believe in the value of partnering with indigenous groups and recognizing that they have unique needs and investment criteria. .

But when I think about future partnerships and if there's an opportunity that, again, would work for us and work for them, it's something that I think that we should definitely be exploring.

[Maurice Choy, analyst]

Understood. And if I could just finish off on the marketing side of the business. I think you touched on the AEF turnaround, you touched on the strengthening cracks as well as premiums. Anything in terms of the market dynamics that you highlighted today for marketing that you think will continue negatively into the new year or do you think most of that will unwind?

[Bradley Kirchmayer, executive]

Yes. I'll turn that over to Jamie.

[K. Urquhart, executive]

Yes. So sorry, Maurice, I understand your question, is there any negative market dynamics that we expect to persist...

[Bradley Kirchmayer, executive]

Like to carry on, yes.

[K. Urquhart, executive]

So we did highlight the fact that we've seen a reduction in condensate imports and into Western Camden. And that's something that we think is likely short-lived based on the oil sands growth and the demand for diluent. But other than that, we're very bullish with respect to the demand for spec, propane in particular and excited on both the export deals that we put in place with AltaGas, and as Dean said, getting the assets from Plains to access to markets in Eastern Canada and the U.S. So yes, no, I -- we don't see any major headwinds on the commodities that we touch for our marketing business going forward.

[C. Setoguchi, executive]

Yes. I'd just say, though, that I think everything is all relative. And if you compare it to 2023 and 2024, those were outsized years. I mean we delivered $480 million, $485 million in those years. And we certainly don't want anyone to think that, that's the norm. But I think we have a business that there will be years where we have outsized performance.

And I just want to make sure that everyone understands that we have the discipline when we have those outsized years, we take those extra marketing dollars and we pay down our debt. And that afforded us that and our free cash flow affords us ability to sanction or CAP zone 4 or 2 frac projects. And also pursue Plains, the Plains' Canadian NGL business, which really is a big game-changer for our company.

So I think we have to think about marketing in our business in a more holistic macro manner and what it does for our overall business. And it's been a very successful model from day 1, and I think it will be in the future as well.

[Operator]

And your next question comes from the line of Patrick Kenny from National Bank Capital Markets.

[Patrick Kenny, analyst]

Maybe just on the CapEx budget here through '26 and looking at the balance sheet still in really good shape heading into the Plains acquisition. But just given the slippage in commodity prices and some near-term marketing contributions, any thoughts on how much you'd be willing to flex your growth capital program over the near term, if new opportunities arise? Or on the flip side, any thoughts around building any further cushion over the near term just until commodity prices normalize?

[C. Setoguchi, executive]

Thanks for the question. I'll turn that over to Eileen.

[Eileen Marikar, executive]

Sure. Thanks, Pat. Just as a general comment, I'd say, kind of reiterating what Dean said earlier, is like the strength of our balance sheet and the low leverage has been a competitive advantage for us. And we intend to maintain that advantage. So it's because of this philosophy that we were able to pursue Plains this year, which, again, being touched on.

And when we planned our future capital allocation, whether it's growth capital or dividends, et cetera, we always assume a more normalized marketing. We never plan for exceptional results. So the lower contribution this year or a more muted contribution would not impact what we put out in terms of our leverage, which is still once we close Plains within the first 12 months, to be still within our target range, that 2.5x to 3x, albeit at the higher end.

And the only other thing maybe I'd add is that when we did the funding plan for Plains, it contemplated that we remain within those bands and then we quickly deleverage really by once we're through this growth capital so that we are keeping our options open for other opportunities, especially with the basin growth that we see, we absolutely are able to still continue to grow and leverage those options that as they come along -- opportunity.

[C. Setoguchi, executive]

And Pat, just to add to that. I mean, certainly, the frac projects and CAP zone 4, I mean that's already built into our central forecast, and we still remain within our guidance range or our goalpost of 2.5x to 3x debt to EBITDA.

And so -- and I also point out that the 2.5x to 3x where we like to be is more conservative than sort of the infrastructure peers. So if we get to the higher end of that range, I don't think that's the end of the world because we're still in a very good range relative to our peers. But again, we always like the ability to pay it back down, restore flexibility and enables us to be more opportunistic.

[Patrick Kenny, analyst]

Okay. I appreciate that. And -- but Dean, maybe just back on the 3.5 Bcf a day of LNG projects being of national interest. Would you be able to help us just to still what opportunities, say, over and above filling your existing assets you might be looking at from a brownfield or even a greenfield perspective, just to take advantage of this long overdue window in political support?

[C. Setoguchi, executive]

Yes. No, I think it's tremendously exciting. And first of all, a lot of it is, is that there's not enough gas gathering processing capacity to process that gas. And when you think about where the bulk of that growth is going to come from, it's that Montney fairway in the most economic parts of the fairway where we're located is going to get developed disproportionately.

And so we see an opportunity to provide that integrated service right from the gas plants. So we're going to look at debottlenecks, we're going to look at potential greenfield expansions up there or we also consider like a tuck-in acquisition that could also support our network up in the North, and again, provide that full integrated service to our customers to offer them the best economic netback for the product.

[Patrick Kenny, analyst]

Okay. And last one for me, just a housekeeping item. You touched on your confidence in the normalized marketing guidance range. And Eileen, you mentioned this is based on, I guess, a return to a more normalized commodity price environment of looks like $65 to $75 per barrel.

Just wondering, as we look at the strip, having a hard time breaking through a $60 a year or at least for the next couple of years, [indiscernible] or walk us through what other positive margin tailwinds you could point to, whether it's butane feedstock costs or perhaps other products that you market that might help offset some of these existing headwinds for now and firm up that confidence in the $3.10 to $3.50 range for at least '26 and '27?

[K. Urquhart, executive]

Pat, it's Jamie. Well, you hit on one of the big ones is butane as an input into isooctane and also in a complement to our blending business. We do look at butane being in an oversupplied. Our market in Western Canada is oversupplied in butane and it's forecast to be. So as we've talked about as there's more development in our basin, it's good to know that all those developments have are fairly rich in natural gas liquids and ultimately, with all the frac expansions that are happy with ourselves and some of our peers, we expect that there's going to be additional butane that we'll continue to have -- see that market oversupplied.

So we expect that butane prices will be relatively soft relative to historic levels, and that will be a positive for our business. We touched on it, I think based on fundamentals worldwide with respect to the pull for -- sorry, for propane and ultimately, with the assets that we're inheriting with the Plains acquisition, we see some opportunities to create value for our customer and also our shareholders on the propane side. So those would be the 2 big ones. Other than what we talked about, which is the strength in our view around our cracks and isooctane premiums.

[Bradley Kirchmayer, executive]

Yes. And ultimately, we'll provide an update like we usually do in the second quarter of next year.

[Operator]

There are no further questions at this time. I will now hand the call back to Mr. Dan Cuthbertson for any closing remarks.

[Dan Cuthbertson, executive]

Thank you all again for joining us today. And please feel free to reach out to our Investor Relations team if you have any additional questions. Have a good weekend, everybody.

[Operator]

And this concludes today's call. Thank you for participating. You may all disconnect.