Core Insights - Canada is rapidly advancing its LPG export infrastructure, particularly to Asia, to overcome its historical lag behind the U.S. in this sector [1][2] - The U.S. LPG market is becoming saturated, making it crucial for Canada to maximize the value of its LPG products through Asian exports [1] - Canadian LPG exports from Ridley Island are yielding approximately $5 more per barrel compared to exports to the U.S. [1] Infrastructure Development - AltaGas and Wapahak are collaborating on the Ridley Island Energy Export Facility (REEF) project, with an initial investment of $970 million and a design capacity of 55,000 barrels per day, expected to be operational by the end of 2026 [2] - An "Optimization Phase One" plan is set to increase the terminal's capacity by an additional 25,000 barrels per day by mid-2027, while a "Phase Two Optimization" project is in the design and approval stage, aiming for a further increase of 60,000 barrels per day [2] - The Tri-Pacific Terminal Company is working with the Prince Rupert Port Authority on a project with an annual capacity of 2.5 million tons to further enhance the West Coast export capabilities [2] Export Trends - AltaGas is a major LPG exporter on Canada's West Coast, achieving an average daily export of 133,000 barrels through 23 Very Large Gas Carriers (VLGCs), primarily to Japan and South Korea [3] - The demand for propane from China's PDH facilities is shifting Canada's export focus towards China, with projected increases in daily exports of propane from 230,000 barrels in 2025 to 244,000 barrels in 2026, and butane from 78,000 barrels to 83,000 barrels [3] - The production bottleneck in Canada's core NGLs region, the Montney Basin, is being alleviated, with daily production expected to rise from 1.4 million barrels in 2019 to 1.6 million barrels by 2025 [3] Competitive Landscape - Canadian LPG exports face challenges, including pricing competition with U.S. Gulf Coast and Middle Eastern counterparts, as well as increased NGLs resource availability from the U.S. Permian Basin [4] - Overall, the industry anticipates that once all planned export facilities are completed, Canada will rank among the largest global LPG suppliers, leveraging its pricing, logistics, and capacity advantages to secure a significant position in the Asian LPG market [4]

Core Insights - Canada is rapidly advancing its LPG export infrastructure, particularly to Asia, to overcome its historical lag behind the U.S. in this sector [1] - The U.S. LPG market is becoming saturated, making it crucial for Canada to maximize the value of its LPG products through Asian exports [1] - Canadian LPG exports from Ridley Island are yielding approximately $5 more per barrel compared to exports to the U.S. [1] Group 1: Infrastructure Development - The construction of export facilities in British Columbia is set to position Canada as a long-term LPG supplier in North America [1] - AltaGas and Wapahak are collaborating on the Ridley Island Energy Export Facility (REEF) project, with an initial investment of $970 million and a processing capacity of 55,000 barrels per day, expected to be operational by the end of 2026 [2] - Additional projects are underway to further enhance processing capacities, including a planned increase of 25,000 barrels per day by mid-2027 [2] Group 2: Export Dynamics - AltaGas exported an average of 133,000 barrels per day in Q3 2025, primarily to Japan and South Korea, with a growing focus on China due to increased demand for propane [3] - The daily export volume of propane from Canada is projected to rise from 230,000 barrels in 2025 to 244,000 barrels in 2026, while butane exports are expected to increase from 78,000 barrels to 83,000 barrels [3] - The production of natural gas liquids (NGLs) in the Montney Basin is expected to grow from 1.4 million barrels per day in 2019 to 1.6 million barrels per day by 2025, driven by new projects [3] Group 3: Competitive Landscape - Canadian LPG exports face challenges from pricing competition with U.S. Gulf Coast and Middle Eastern competitors [4] - Increased drilling activity in the U.S. Permian Basin is expected to intensify competition in the North American liquid energy market [4] - Overall, Canada is anticipated to become one of the largest global LPG suppliers, leveraging its pricing, logistics, and production advantages to secure a significant position in the Asian LPG market [4]

Financial Data and Key Metrics Changes - The company generated net income attributable to limited partners of $332 million and adjusted EBITDA of $634 million in Q3 2025, with adjusted gross margin remaining relatively flat compared to the previous quarter [17][20] - Operating and maintenance expenses decreased by 5%, or $12 million quarter-over-quarter, due to reduced asset maintenance and repair expenses [17][18] - Cash flow from operating activities totaled $570 million, generating free cash flow of $397 million [19] Business Line Data and Key Metrics Changes - Natural gas throughput increased by 2% sequentially, driven by higher throughput from the Chipeta plant in Utah and increased volumes in South Texas [7] - Crude oil and NGLs throughput decreased by 4% sequentially, primarily due to decreased throughput from the Delaware Basin [8] - Produced water throughput remained flat sequentially, with expectations for a 40% year-over-year increase in Q4 2025 due to the Aris acquisition [10][19] Market Data and Key Metrics Changes - The Delaware Basin throughput was in line with expectations, with low double-digit year-over-year growth anticipated for natural gas and low to mid-single digits for crude oil and NGLs [10][12] - The DJ Basin is expected to see flat year-over-year throughput growth for natural gas and low to mid-single digits for crude oil and NGLs [12] - The Powder River Basin is projected to have flat throughput growth for both natural gas and crude oil and NGLs [12] Company Strategy and Development Direction - The acquisition of Aris Water Solutions positions the company as a leader in produced water midstream solutions in the Delaware Basin, enhancing its commercial capabilities [4][24] - The company aims to capture $40 million in annual run rate synergies from the Aris acquisition and is focused on organic growth alongside potential inorganic opportunities [4][15][67] - The company is maintaining a disciplined capital allocation framework while planning for significant capital expenditures in 2026 [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to address produced water challenges in the Delaware Basin and highlighted the importance of regulatory engagement [4][24] - The company anticipates continued throughput growth in the Delaware Basin, driven by the Aris acquisition and ongoing projects [10][15] - Management acknowledged potential commodity price weakness impacting certain basins but remains optimistic about overall growth prospects [12][58] Other Important Information - The company expects to be at the high end of its previously announced 2025 adjusted EBITDA guidance range of $2.35 billion to $2.55 billion, including contributions from Aris [20] - The company declared a quarterly distribution of $0.91 per unit, consistent with the prior quarter [19] Q&A Session Summary Question: Discussion on O&M expense sustainability - Management confirmed that the reduction in O&M expenses is sustainable and ongoing cost management initiatives are expected to yield further improvements [30][34] Question: Potential for distribution step-ups with major projects - Management indicated that distribution step-ups are possible with major projects or acquisitions, but will be balanced against market conditions and yield considerations [35][37] Question: Update on the Pathfinder project and pore space agreement - Management noted that the pore space agreement enhances project efficiency and flexibility, with positive implications for returns [40][41] Question: Plans for expanding gas and oil infrastructure in New Mexico - Management plans to pursue both organic and inorganic growth opportunities in New Mexico, leveraging the Aris footprint [45][46] Question: Outlook for 2026 and potential portfolio gaps - Management expects overall product growth across all three product lines in 2026, with a focus on the Delaware Basin and cost-cutting initiatives [56][58] Question: Synergies from the Aris acquisition - Management is confident in achieving the $40 million in synergies and anticipates additional operational synergies to emerge in the near term [64][67]

Financial Data and Key Metrics Changes - The company reported an average production of 81,000 BOE per day, with a revenue of $253 million, where oil contributed 49%, gas 33%, and NGLs 18% [27][28] - The net debt to EBITDA ratio improved from 1.0 times at the end of 2024 to 0.7 times at the end of Q1 2025 [7][25] - The company generated over $94 million in cash available for distribution, resulting in a distribution of $0.79 per unit, yielding 20% [18][29] Business Line Data and Key Metrics Changes - The production mix for the quarter was 24% oil, 53% natural gas, and 23% NGLs, with lease operating expenses at $6.69 per BOE [27][22] - The company plans to shift its drilling focus from oil to natural gas, particularly in the Deep Anadarko Basin, which is expected to grow natural gas production significantly in 2026 [9][10] Market Data and Key Metrics Changes - The current market environment is challenging, with oil prices dipping into the $50s, while the company is well-positioned with a production mix of 54% natural gas, 23% NGLs, and 23% oil projected for 2025 [9][19] - The company has hedged volumes at an average price of $69.31 for oil and $3.77 for gas over the next twelve months [18] Company Strategy and Development Direction - The company focuses on four strategic pillars: maintaining financial strength, disciplined execution, disciplined reinvestment rate, and maximizing cash distributions [4][5] - The company aims to keep its reinvestment rate below 50% of operating cash flow to optimize distributions to unitholders [5][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to weather market volatility and emphasized the importance of maintaining a strong balance sheet [25][26] - The company anticipates a significant increase in natural gas production in 2026, driven by additional drilling in the Deep Anadarko Basin [9][10] Other Important Information - The company completed a $60 million acquisition that doubled its acreage position, primarily in the Greater Anadarko Basin, which is expected to enhance production and lower operating costs [19][38] - The company has made 21 acquisitions since early 2018, totaling over $2 billion, focusing on cash-flowing properties at discounted prices [20][21] Q&A Session Summary Question: Can you elaborate on the recent acquisition and its impact? - Management confirmed the acquisition added significant acreage in the Greater Anadarko Basin, with potential for increased production and lower lease operating expenses [38][39] Question: What is the strategy regarding the reinvestment rate and rig deployment? - Management clarified that they will adjust rig deployment based on maintaining a reinvestment rate below 50%, with plans to add rigs as cash flow allows [41][43] Question: How does the company view the oil to gas ratio moving forward? - Management indicated that the shift in development activity is driven by the current oil to gas price ratio, favoring natural gas drilling due to higher returns [50][51] Question: What are the expectations for natural gas prices and production in the coming year? - Management expressed a balanced outlook for natural gas prices, with expectations for significant growth in gas production in 2026 [84][85]