Keyera Corp Annual Shareholders Meeting
May 09, 2017 AM EDT
KEY.TO - Keyera Corp
Keyera Corp Annual Shareholders Meeting
May 09, 2017 / 08:00PM GMT
==============================
Corporate Participants
==============================
* Bradley Kirchmayer
* Craig Crooks
* David G. Smith
Keyera Corp. - CEO, President and Non Independent Director
* Dominic Puglia
* James V. Bertram
Keyera Corp. - Non-Executive Chairman
* Jennifer Lamb
* Michael Reid
* Monica Santander
* Rob Scott
* Spencer Ellis
* Suzanne G. Hathaway
Keyera Corp. - VP, General Counsel and Corporate Secretary
==============================
Presentation
------------------------------
James V. Bertram, Keyera Corp. - Non-Executive Chairman [1]
------------------------------
Good afternoon. A few empty seats here, so I'd ask the female employees first that are standing back there to have a seat. There's at least enough seats to have half a dozen or a dozen of you sit down, so -- come on, [Kelly], don't be shy.
Good afternoon, everyone. On behalf of the Board of Directors and the Management of Keyera Corp., it's my pleasure to welcome you to our 2017 Annual General Meeting. It's terrific to see so many faces here in the audience at Calgary. It's also -- I'd like to welcome those that are joining us on the webcast.
My name is Jim Bertram, Chair of the Board of Keyera, and joining me today at the podium is David Smith, Director and our President and Chief Executive Officer; and next to him, Suzanne Hathaway, our Vice President, General Counsel and Corporate Secretary.
As it is now just after 2:00, I will call the meeting to order. I will be acting as Chair for the meeting, and Suzanne will act as our Secretary.
As you know, we have a number of matters to consider during the formal part of our meeting today. Once we have concluded these matters, we will end the formal meeting and invite Dave up for a brief presentation followed by a question-and-answer period. And for those of you in Calgary, you're welcome to join us in an after-session of light and heavy and sugary refreshments out in the foyer.
At this time, I'd like to take the opportunity to introduce the rest of your Board of Directors with whom David and I have had the privilege of serving and to thank each and every one of them for their contribution over the past year. If I could ask each director to stand to be recognized as I call your name. Starting off, Doug Haughey, our Independent Lead Director; Nancy Laird; Don Nelson; Michael Norris; Tom O'Connor; Bill Stedman and Janet Woodruff.
It is also my pleasure to introduce [Jana Manus], who will be nominated this year to join our Keyera Board as a new Director. [Jana], welcome.
Also joining us today are our talented members of Keyera's leadership team. This team's discipline and approach executing Keyera's strategy has served us and the shareholders very well, delivering a track record of strong financial results, dividend growth and long-term shareholder value. If I could ask each of you to please stand up as I call your name: Steven Kroeker, Senior Vice President and Chief Financial Officer; Brad Lock, Senior Vice President, Gathering and Processing Business Unit; Dean Setoguchi, Dean, Senior Vice President, Liquids Business Unit; Graham Balzun, Vice President, Corporate Responsibility; Mike Freeman, Vice President, Commercial; Brian Martin, Vice President, Business Development, NGL facilities; Dion Kostiuk, Vice President, Human Resources and Corporate Services, little stiff, he just got off running a marathon on Sunday, so just glad he made it here; Eileen Marikar, Vice President and Controller; Rick Koshman, Vice President, Engineering; Jarrod Beztilny, Vice President, Operations, Liquid Business Unit; and finally, Jamie Urquhart, Vice President, Operations, Gathering and Processing. And of course, David and Suzanne, who I've already introduced.
Keyera's achievements and our passion to continue delivering on our vision of being a North American leader in midstream energy solutions would not be possible without our dedicated employees. We are very proud of their commitment providing safe, reliable, cost-effective services and making sure we are doing our part to contribute to the overall competitiveness of the Western Canada Sedimentary Basin. I know there are a number of employees here today and I'd like to ask all of you to please stand, those that aren't standing, and be recognized.
Thank you for your service.
With those introductory remarks, we now turn to the formal business of the meeting. Donald Santini and Fallone Omatoko of Computershare Trust Company of Canada, Keyera's register and transfer agent, are in attendance today, and I appoint them to act as scrutineers for the meeting.
Suzanne, can you please provide an overview of the business of the meeting?
------------------------------
Suzanne G. Hathaway, Keyera Corp. - VP, General Counsel and Corporate Secretary [2]
------------------------------
Thanks, Jim. This meeting has been called as an Annual Meeting of the Shareholders of Keyera Corp. to deal with the items of business that were specified in our Notice of Meeting that was mailed on April 5, 2017, to all shareholders of record on March 22, 2017. A copy of the notice is filed on SEDAR, and all of the documents concerning the calling of the meeting will be filed with our corporate records following the meeting.
Based on the preliminary scrutineer's report, on attendance, both in person and represented by proxy, I can confirm that there is a quorum present.
Our agenda for this afternoon will include the following items: receiving the financial statements for the fiscal period ended December 31, 2016, along with the accompanying report of the auditors, all of which were filed on SEDAR and which were also delivered to those shareholders who requested them. There are copies also available here at the meeting, and if you'd like to pick one up, they're located at the side. There's no motion required on that matter.
We'll also be appointing Deloitte LLP as the auditors of Keyera Corp. for the ensuing year. That motion will require a simple majority. We will also be electing the directors of Keyera Corp., and the directors are elected individually by ballot in accordance with our majority voting policy. We'll also be confirming and approving the shareholder rights plan. That vote will be conducted by ballot as well and requires a simple majority. And finally, we're considering a nonbinding, advisory resolution with Keyera -- with respect to Keyera's approach to executive compensation. That motion is being conducted by ballot, and while it's nonbinding, it will be considered by the Board in the future when making executive compensation decisions.
All of the items of business are described in more detail in the information circular dated March 23, 2017, that was also filed with our Notice of Meeting on SEDAR.
As we move through the items of business, I will invite you to refer to the information circular for the full text of each resolution. For those attending in person, we'll also show the resolutions at the front of the room on the screen. There are extra copies here. If you would like one, please raise your hand and we can provide one to you.
In order to move the business along in a timely manner, we have a number of Keyera employees who are also proxy holders who have volunteered to move and second the items of business today.
With that, I will turn it back to you, Jim.
------------------------------
James V. Bertram, Keyera Corp. - Non-Executive Chairman [3]
------------------------------
Thank you, Suzanne. I declare this meeting to be properly constituted for the transaction of business. Any shareholder or proxy holder with a question on a specific item of business is welcome to ask it when that item of business is considered. However, if you wish to make a general comment or ask a question not directly related to the matter under discussion, please raise it during the general question-and-answer session after the management presentation made by Dave.
Finally, when asking a question or when making a seconded motion, please state your full name and use the microphones that were provided so that the meeting and the webcast can hear the question or the motion.
Unless there's any objection, we will dispense with the reading of the minutes of last year's Annual Meeting.
We can now turn to the first item of business, which is to receive the financial statements and the auditor's report for the year ended December 31, 2016. The Board of Directors, on advice from the Audit Committee, has approved the financial statements. Are there any questions about the financial statements?
Since no motion is required and seeing that there are no questions, we will move to the next item of business, which is the appointment of the auditors.
Deloitte LLP have been Keyera's auditors since inception, and the Board of Directors, on advice from the Audit Committee, recommends their reappointment. May I have a motion that Deloitte LLP be appointed auditors of Keyera Corp. to hold office until the close of the next Annual Meeting of Shareholders or until their successors are appointed?
------------------------------
Monica Santander, [4]
------------------------------
My name is Monica Santander. I am a proxy holder, and I so move.
------------------------------
James V. Bertram, Keyera Corp. - Non-Executive Chairman [5]
------------------------------
Thank you.
------------------------------
Spencer Ellis, [6]
------------------------------
My name is Spencer Ellis. I'm a proxy holder, and I second the motion.
------------------------------
James V. Bertram, Keyera Corp. - Non-Executive Chairman [7]
------------------------------
Thank you. You heard the motion which has been seconded. Is there any discussion on the motion?
If there's no discussion, will those in favor please indicate their approval by raising their hand?
(Voting)
------------------------------
James V. Bertram, Keyera Corp. - Non-Executive Chairman [8]
------------------------------
Contrary?
(Voting)
------------------------------
James V. Bertram, Keyera Corp. - Non-Executive Chairman [9]
------------------------------
Thank you. I confirm the motion is carried. Deloitte LLP has been appointed as the auditors of Keyera Corp.
At this time, I'd like to introduce Jason Novakovski, Mandeep Singh and [Chriselle Cartwright] of Deloitte, and ask them to stand. Thank you.
The next order of business is the election of directors of Keyera Corp. The number of directors to be elected at the meeting today has been set at 10. I now open the meeting to nominations.
------------------------------
Dominic Puglia, [10]
------------------------------
My name is Dominic Puglia. I'm a proxy holder, and I nominate the following individuals to hold office until Keyera's next Annual Meeting or until their successors are elected or appointed: Jim Bertram, Douglas Haughey, Nancy Laird, Gianna Manes, Donald Nelson, Michael Norris, Tom O'Connor, David Smith, William Stedman and Janet Woodruff.
------------------------------
James V. Bertram, Keyera Corp. - Non-Executive Chairman [11]
------------------------------
Thank you. Are there any further nominations? There being no further nominations, I declare the nominations closed. As the number of nominees is the same as the number of directors to be elected, may I have a motion in respect of the individual election of each of the nominees?
------------------------------
Craig Crooks, [12]
------------------------------
My name is Craig Crooks. I'm a proxy holder, and I so move.
------------------------------
James V. Bertram, Keyera Corp. - Non-Executive Chairman [13]
------------------------------
Thank you.
------------------------------
Michael Reid, [14]
------------------------------
My name is Michael Reid. I'm a proxy holder, and I second the motion.
------------------------------
James V. Bertram, Keyera Corp. - Non-Executive Chairman [15]
------------------------------
Thank you. You've heard the motion which has been seconded. Is there any discussion on this motion?
As Suzanne has indicated, shareholders are entitled to vote individually for each director in accordance with Keyera's majority voting policy. The voting is by ballot, and so if there any proxy holder who has not yet submitted a ballot and wishes to do so now, please raise your hand for the scrutineer.
(Voting)
------------------------------
James V. Bertram, Keyera Corp. - Non-Executive Chairman [16]
------------------------------
Thank you. While those votes are being tabulated, we will turn to the next item of business on our agenda, which is the resolution to confirm and approve the shareholder rights plan. The summary of the plan was included in schedule B of the information circular and the full text of that resolution can be found on Page 7 of the circular.
May I have a motion that the shareholder rights plan resolution, as more particularly described in the information circular, be confirmed and approved?
------------------------------
Rob Scott, [17]
------------------------------
My name is Rob Scott. I'm a proxy holder, and I so move.
------------------------------
James V. Bertram, Keyera Corp. - Non-Executive Chairman [18]
------------------------------
Thank you.
------------------------------
Bradley Kirchmayer, [19]
------------------------------
My name is Brad Kirchmayer. I'm a proxy holder, and I second the motion.
------------------------------
James V. Bertram, Keyera Corp. - Non-Executive Chairman [20]
------------------------------
Thank you. You've heard the motion which has been seconded. Is there any discussion on this motion?
There being no discussion, the voting is being completed by ballot, and so if there are any proxy holders who have not yet submitted a ballot and wishes to do so, please raise your hand for the scrutineer.
(Voting)
------------------------------
James V. Bertram, Keyera Corp. - Non-Executive Chairman [21]
------------------------------
While the scrutineers tabulate the voting results, we will proceed with the next item of business, which is the advisory resolution with respect to Keyera's approach to executive compensation.
May I have a motion that the advisory resolution on Keyera's approach to executive compensation, as more particularly described in the information circular, be accepted?
------------------------------
Unidentified Participant, [22]
------------------------------
My name is [Anna Gruber]. I am a proxy holder, and I so move.
------------------------------
James V. Bertram, Keyera Corp. - Non-Executive Chairman [23]
------------------------------
Thank you.
------------------------------
Jennifer Lamb, [24]
------------------------------
My name is Jennifer Lamb. I am a proxy holder, and I second the motion.
------------------------------
James V. Bertram, Keyera Corp. - Non-Executive Chairman [25]
------------------------------
Thank you. You've heard the motion which has been seconded. Is there any further discussion on the motion?
This vote will also be conducted by ballot. If you are a proxy holder and did not submit your ballot on this motion when you entered the meeting and wish to do so now, please raise your hand and the scrutineers will collect your ballot.
(Voting)
------------------------------
James V. Bertram, Keyera Corp. - Non-Executive Chairman [26]
------------------------------
Conclusion of voting results. Well, that was the final item on our agenda today. I'm advised that the voting results have been tabulated by the scrutineers. I am pleased to announce the results.
With respect to the election of directors, all the director nominees have been elected with a majority of the votes cast. Could all the directors please stand? Ladies and gentlemen, please welcome your new directors.
Thank you very much, and congratulations, and I look forward to working with each and every one of you over the next year.
With respect to the 2 other items of business, I am pleased to report that the shareholders' rights plan has been confirmed and approved, and accordingly, I declare this motion carried.
I'm also pleased to report that the advisory resolution on executive compensation was approved, that this motion is therefore also carried.
For those interested in additional details with respect to the number of votes cast, Keyera will be filing its report on voting results on SEDAR. Alternatively, you may request particulars from Suzanne after the meeting.
That concludes the scheduled business of the meeting, and on behalf of Keyera, I would like I think all of you for attending the AGM. As there's no other further business, I would hereby declare the meeting terminated.
I'd now like to invite the keynote speaker here, David, to the podium for the management presentation and question-and-answer session, and I look forward to having all of you join us after in the foyer for refreshments. Thank you very much.
------------------------------
David G. Smith, Keyera Corp. - CEO, President and Non Independent Director [27]
------------------------------
Thanks, Jim. Thank you, everybody, and welcome. It's great to see such a great turnout, and we're very happy about the results that we've had in 2016 and the first quarter of 2017, and I'd like to provide a little bit of an update with respect to where are we at and how we see our future.
Before we begin, I'd like to remind you that some of the contents of this presentation speaks to future events and therefore, contains forward-looking information. I promise it's all true, but you have to read this anyway.
2016 was another successful year for Keyera, and the fundamentals of what have made our business successful remain unchanged. Keyera's integrated network of assets is the cornerstone of our success. We offer Gathering and Processing services and solutions for oil and gas producers in Western Canada. We provide fractionation, storage transportation and terminal services for natural gas liquids like propane, butane and condensate. And our talented marketing team finds ways to move those products to high-value markets across North America.
Keyera's Gathering and Processing assets includes 17 natural gas processing plants with 2.9 billion cubic feet per day of gross processing capacity, plus over 5,000 kilometers of gathering pipelines. These assets gather and process raw natural gas from producers and generate fee-for-service income for our shareholders.
Our gas plants, shown here in green, are strategically located in the western part of the Western Canada Sedimentary Basin, which is one of the richest basins in North America with diverse and attractive geological zones. Our strategy continues to focus on building and acquiring assets in this region and connecting them to our existing infrastructure to strengthen our network. In 2016, we increased our ownership in the Alder Flats gas plant, which is currently being expanded to support growing production from the Spirit River development in that region.
Our Liquids Infrastructure assets, which are shown in blue on the map, provide fractionation, storage and transportation services to move natural gas liquids to market. This is an area of our business that has experienced a great deal of expansion over the past few years. In 2016, we doubled our fractionation capacity at our Keyera-Fort Saskatchewan facility to 65,000 barrels per day. The fractionation process takes natural gas liquids mix and breaks it down into segregated products such as ethane, propane, butane and condensate. The project was a $156 million investment for Keyera and was completed in June of 2016.
The same Fort Saskatchewan site offers underground storage capacity, which is another area we continue to expand due to increasing demand from customers. We recently placed our 14th cavern into service, which increases our underground storage capacity to approximately 13 million barrels, and we are currently in the process of washing 2 additional caverns to further increase that capacity.
Our rail and truck terminals provide the transportation infrastructure to move those products to market. These facilities handle propane, butane, condensate, iso-octane, bitumen and crude oil and provide access to markets across North America.
In addition to having the midstream infrastructure to support natural gas producers in Western Canada, we also have an industry-leading condensate network which provides access, storage and transportation of condensate for our oil sands customers. Over the past several years, demand for these diluent-handling services has grown, and we continue to expand our network to provide more capacity, reliability and flexibility for our customers. I'll provide more details about some of these projects in just a few moments.
Finally, our experienced team of marketing professionals brings their industry knowledge and experience, along with our storage and transportation assets, to achieve the best sales prices for our products moving through our infrastructure. Our team provides marketing services for propane, butane, condensate and iso-octane.
Iso-octane's a premium gasoline additive that is produced at our Alberta EnviroFuels facility. In 2016, we completed a significant turnaround at Alberta EnviroFuels that required over 250,000 man hours of effort. It was our largest turnaround at the site and was completed safely and without a lost time incident.
Let me now talk about some of the exciting capital investment opportunities that we have currently underway. As mentioned earlier, with demand for oil sands services continuing to grow, we continue to expand our condensate network. The Norlite diluent pipeline, a joint venture with Enbridge, is fully constructed and we will begin filling the pipeline with condensate later this month. The Norlite pipeline project is backed by long-term take-or-pay agreements with the owners of the Fort Hills oil sands project, and we are talking with new customers for the additional capacity in the pipe.
The South Grand Rapids diluent pipeline project between Edmonton and Fort Saskatchewan is progressing well and is expected to be completed late this year. The project is a joint venture with TransCanada and Brion Energy and will provide Keyera with additional diluent transportation capacity to meet our commitments under existing long-term diluent transportation agreements.
Also adding to our near-term growth in 2016 and 2017 is the Base Line Terminal project, a joint venture with Kinder Morgan. This aboveground crude oil storage facility is being constructed on our undeveloped land just south of Alberta EnviroFuels, and will provide connectivity to a number of other terminals and pipelines in the area. The 12 tanks are fully contracted with take-or-pay commitments. We expect the first set of tanks to be ready in early 2018 and we have room to construct more tanks as demand warrants.
We continue to see expansion opportunities in the Fort Saskatchewan area as well in Alberta's industrial heartland. In anticipation of this growth, we recently purchased approximately 1,300 acres of undeveloped land adjacent to our Josephburg Rail Terminal, creating a number of future opportunities for growth.
As another growth opportunity for Keyera, to enhance our integrated service offering, we are developing the Keylink NGL gathering pipeline system. Keylink will connect 8 of our gas plants and provide customers with a safe, reliable and cost-effective NGL transportation alternative. This system will comprise over 240 kilometers of newly constructed and existing pipelines and will transport NGL mix to the Rimbey gas plant where we can provide on-site fractionation into specification products. The project is targeted for completion in mid-2018 based on the current schedule.
In Northwest Alberta, we are expanding our liquids handling capacity at the Simonette gas plant which will support drilling activity for Montney and Duvernay producers in the area. The project is intended to maximize producer netbacks by increasing liquids recoveries at the facility. Assuming construction proceeds as planned, we expect the expansion to be operational by mid-2018.
In the same region, we continue to advance our work on the proposed Wapiti gas plant and the associated gas gathering system. This proposed facility would include up to 300 million cubic feet per day of sour gas processing capacity and additional condensate handling. To date, the site has been cleared and major equipment packages have been ordered. Assuming final sanctioning in the near term, the project is expected to have an in-service date of mid-2019.
So these are just a few examples of the portfolio of growth opportunities that we continue to pursue at Keyera.
With our integrated set of assets and our continued investment activity, Keyera has an excellent track record of delivering financial results. Since going public in 2003, we have delivered compound annual growth rates of 12% in distributable cash flow per share and 8% in dividends per share. Our success is driven by our integrated asset portfolio, our disciplined approach to the business and our innovative people.
Just a few moments ago, we released our first quarter results for 2017. Even with an unscheduled outage at our Alberta EnviroFuels facility, we delivered strong financial results for the first quarter. Our adjusted earnings before interest, taxes, depreciation and amortization, our net earnings and our distributable cash flow all exceeded our results from the same quarter last year.
With confidence in our business and with the new projects that we have coming onstream, we have increased our monthly dividend 6%, effective with the May dividend which will be paid in June.
At Keyera, we continue to invest for the future. In 2017, we expect to invest approximately $600 million to $700 million in growth capital projects, including our 3 major joint venture projects, the Keylink pipeline and the expansion at Simonette that I have just described. This growth capital range does not include the proposed Wapiti project. Stay tuned.
We have a strong balance sheet. We have a low a payout ratio. With our conservative financial strategy and disciplined investment approach, we are well-positioned to fund our growth capital program as we look forward and continue to take advantage of new investment opportunities.
While I may be biased in believing that Keyera is a great place to work, we continue to be recognized as such externally. For the sixth consecutive year, Keyera was recognized as a top employer in Alberta in 2017. I attribute this to every one of our employees who live our values every day. I'm proud to say that our employees not only put in a terrific effort at work on behalf of our shareholders, but also in our communities. Keyera provides employees with 2 paid days a year to volunteer in the communities where we operate, and last year, Keyera employees spent more than 7,500 hours in the communities volunteering their time for groups and agencies that are meaningful to each one of them.
As our board Chair, Jim Bertram, has always said, you're only as good as your last shift. We believe there is always room for improvement. And for us, part of that improvement means consistent, safe operating practices across our company. In 2016, we initiated a new approach called Operational Excellence. It's about developing operating practices to ensure we are doing the right thing, the right way every time. Our team has put a great deal of effort into this plan and I would like to thank them for their commitment and dedication in the ongoing implementation.
To wrap up, I would like to say, along with the officer team at Keyera, that I continue to be very optimistic about the opportunities that lie ahead for our company. We are committed to creating long-term shareholder value growth while conducting our business ethically, safely and in an environmentally responsible manner. Thank you to all of our employees for their hard work and dedication over the past year. At Keyera, I firmly believe we have the best team.
With that, I would be glad to take any questions from the audience at this time. Should anyone have questions following the presentation, I encourage you to contact Lavonne or Nick in our Investor Relations department. If you have a question, please wait for a microphone so those in our webcast can also hear the question.
==============================
Questions and Answers
------------------------------
David G. Smith, Keyera Corp. - CEO, President and Non Independent Director [1]
------------------------------
Right here.
------------------------------
Unidentified Participant, [2]
------------------------------
Yes, David, as you know, I've been a shareholders since Jim took over the reigns there. But -- and I think you guys are doing a great job. My question is this. I mean, Keyera keeps a -- from a broader perspective, talking about Canada-wide, a pretty low profile, which maybe is a really good thing, I don't know -- but my concern is that I still see the narrative, even though the economic narrative in North America is moving back toward understanding a bit, that's fine, but I still see the narrative publicly going in the wrong direction. And I'm just wondering, is Keyera involved? Or maybe the question goes to Mike Norris over there. He's the only Bay Street guy on your Board. What's happening down east to change the narrative? I still see universities, foundations, for example, bringing in fossil-free expectations for their investments and stuff, and that sort of thing can ultimately hurt Keyera even though Keyera's an extremely strong company. I just wonder, isn't there -- what's going down east that's going to change the narrative?
------------------------------
David G. Smith, Keyera Corp. - CEO, President and Non Independent Director [3]
------------------------------
Well, that's a tough question to address in just a couple of minutes here. First of all, when you say from down east, I'm from down east, so maybe I have a little bit of a license to be able to talk about the perspective, the national perspective on the resource sector, on the oil and gas sector in particular. I think first of all, I would say that the team at Keyera, including all of our employees, are very much focused on trying to do the right thing for the environment. I think we recognize that there are things that we can do to help the performance of the country and of our industry to be better every day with respect to improving the environment, improving our impact, reducing our footprint. But at the same time, I think we also recognize that we're an important part of the long-term solution to clean, secure, low-cost energy for the country. And I think that may be what you're referring to a little bit in terms of some of the rhetoric in other parts of the country that forget about the importance of clean, low-cost energy for Canada's economy. And so I think we are trying to be part of that. Maybe a little bit more quietly than other companies, but we are trying to be part of that dialogue and trying to find ways that we can help to support the economy in Canada as well as being -- as well as improving the environment. And that's ultimately our goal. We need to make sure that we have a competitive economy, both in Alberta and across the country, so that we can continue to enjoy the benefits of that as Canadians, but at the same time, trying to do a our part globally to improve the environment. It's a big question and we can talk a lot more about it later. Other questions?
------------------------------
Unidentified Participant, [4]
------------------------------
Thank you, David. I'm [Greg Wood]. I'm a shareholder and have been for probably for 15 years. I wanted to know if you could give us your estimate of the impact of the new carbon tax on Keyera's financial growth going forward?
------------------------------
David G. Smith, Keyera Corp. - CEO, President and Non Independent Director [5]
------------------------------
Sure. So the question was, what will the impact be of the new carbon tax? I think there's 2 elements to that for us or perhaps 3 elements to that for us. One is just what the -- what is the effect of the carbon tax on the industry and the economy in general? And I think what I mentioned earlier is that we need to make sure that we are competitive within the global context of the products that the industry produces. And so that's something that I think is an important consideration, but that's not a direct impact on Keyera. It's more of an indirect impact because we're a part of the industry. The second part of the answer is really the broad-based carbon tax. I'm of the view that if you -- if it makes sense to implement a carbon tax, to put a price on carbon, a broad-based carbon tax is probably the most sensible way because it provides the right incentive for all participants in the economy to try and reduce their greenhouse gas emission, and put the incentives in the right place. The third element, which is much more specific to Keyera, some of you will be aware that we have some facilities that are in the category of large final emitters, and we were paying a carbon levy under the previous program within Alberta. In fact, we've been subject to that program for 10 years now. The new program that is being proposed for Alberta, the details haven't been released as yet, so on that particular part of it, the answer is that we don't know yet what the final impact would be. I think with the steps that we've taken and with the performance that we've had through our facilities, we've actually been -- we've actually had a very good track record with respect to minimizing the financial impact of that under the previous regime. But as I said, we're not sure yet what the impact will be under the new regime. Another question over here.
------------------------------
Unidentified Participant, [6]
------------------------------
Okay, well, I have not been a shareholder for 15 years, because 15 years ago, I was 15, but I am an employee, and my question is for David, maybe Steven. As Steven mentioned, our strictest covenant is the net-debt-to-EBITDA of 4x. It looks like this quarter, we trended a little closer to 3x with the dividend increase. So I was just wondering if we were more comfortable running closer to 3x or if it's just getting out ahead of some of those capital projects that will be coming on the line here?
------------------------------
David G. Smith, Keyera Corp. - CEO, President and Non Independent Director [7]
------------------------------
Yes, thank you for that question. The question really is -- it revolves around our financial approach and our target for debt levels on our balance sheet. Really, since we started as a public company in 2003, our approach has been consistent. Our focus is the debt-to-EBITDA ratio and our target range for the debt-to-EBITDA ratio is 2.5x to 3x. As was mentioned, we have the flexibility to go up to 4x in all of the debt covenants, but our target range, our comfort zone, if you like, on a long-term basis would be 2.5x to 3x. That's a long-term perspective. There have been times when we've been below that. Right now, we're sort of at the low end of that range, and our plan would be to continue to monitor our investment program as well as our cash flow expectations and to keep that ratio within that range. Are there any other questions?
Well, with that, I'll turn the meeting back over to our Chairman.
------------------------------
James V. Bertram, Keyera Corp. - Non-Executive Chairman [8]
------------------------------
This part's unscripted, so I think I'm supposed to sit here and say thank you all for coming to our 2017 AGM. It's a pleasure to see all the faces. I hope those people on the phones or on wires heard all of the questions and answers. We're going to stick around and have refreshments, so I would love to answer some more questions and I'm sure Dave and other officers would as well. So once again, thank you for all for coming, and see you next year.
------------------------------
Definitions
------------------------------
PRELIMINARY TRANSCRIPT: "Preliminary Transcript" indicates that the
Transcript has been published in near real-time by an experienced
professional transcriber. While the Preliminary Transcript is highly
accurate, it has not been edited to ensure the entire transcription
represents a verbatim report of the call.
EDITED TRANSCRIPT: "Edited Transcript" indicates that a team of professional
editors have listened to the event a second time to confirm that the
content of the call has been transcribed accurately and in full.
------------------------------
Disclaimer
------------------------------
Thomson Reuters reserves the right to make changes to documents, content, or other
information on this web site without obligation to notify any person of
such changes.
In the conference calls upon which Event Transcripts are based, companies
may make projections or other forward-looking statements regarding a variety
of items. Such forward-looking statements are based upon current
expectations and involve risks and uncertainties. Actual results may differ
materially from those stated in any forward-looking statement based on a
number of important factors and risks, which are more specifically
identified in the companies' most recent SEC filings. Although the companies
may indicate and believe that the assumptions underlying the forward-looking
statements are reasonable, any of the assumptions could prove inaccurate or
incorrect and, therefore, there can be no assurance that the results
contemplated in the forward-looking statements will be realized.
THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION
OF THE APPLICABLE COMPANY'S CONFERENCE CALL AND WHILE EFFORTS ARE MADE TO
PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS,
OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE CONFERENCE CALLS.
IN NO WAY DOES THOMSON REUTERS OR THE APPLICABLE COMPANY ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER
DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN
ANY EVENT TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S
CONFERENCE CALL ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE
MAKING ANY INVESTMENT OR OTHER DECISIONS.
------------------------------
Copyright 2018 Thomson Reuters. All Rights Reserved.
------------------------------