Q2 2024 Gibson Energy Inc Earnings Call Transcript
Key Points
- Gibson Energy Inc (GBNXF) announced the extension of a long-term contract at their Gateway Terminal, underpinned by a high-quality investment-grade counterparty.
- The company sanctioned the Cactus II connection, expected to be in service by Q3 2025, providing access to approximately 700,000 barrels a day of incremental Permian supply.
- Construction of two tanks at the Edmonton terminal is progressing as planned, with completion expected in late 2024, supported by 15-year take-or-pay agreements.
- Gibson Energy Inc (GBNXF) released their 2023 sustainability report, highlighting progress towards their sustainability goals and recognition as one of Alberta's top 80 employers and Canada's best diversity employers for the third year in a row.
- The company reported a strong financial performance with adjusted EBITDA of $159 million and distributable cash flow of $101 million for Q2 2024, driven by the addition of the Gateway Terminal.
- The marketing segment's adjusted EBITDA of approximately $20 million was a $15 million decrease relative to Q2 2023 and a $14 million decrease relative to Q1 2024, driven by fewer storage-based opportunities and tighter heavy differentials.
- The company's leverage of 3.5 times is within the target range but still on the higher end, indicating a need for careful financial management.
- The payout ratio of 63% is below the target range of 70% to 80%, which may indicate a conservative approach but also limits immediate returns to shareholders.
- The timing of the second renegotiation for the Gateway Terminal contract remains uncertain and is dependent on customer decisions.
- Higher finance costs partially offset the benefits of higher infrastructure EBITDA, impacting overall distributable cash flow.
Good day and thank you for standing by. Welcome to the 2024 second quarter Gibson Energy earnings call. (Operator Instructions) Please be advised that today's conference is being recorded.
And I now hand the conference over to your first speaker today, Beth Pollock, Vice President of Capital Markets & Risk. Please go ahead.
Thank you, Marvin. Good morning and thank you for joining us to discuss our second quarter 2024 operational and financial results. Joining me on the call this morning from Gibson Energy are Steve Spaulding, President and Chief Executive Officer; and Sean Brown, Senior Vice President and Chief Financial Officer.
We also have the rest of the senior management team in the room to help with questions and answers as required. Listeners are reminded that today's call refers to non-GAAP measures forward looking and pro forma financial information, which is derived in part from historical financial information of South Texas Gateway Terminal LLC and
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