Keyera Q3 2026 Earnings Results & Report

Keyera EPS Results

• Actual EPS: -C$0.23
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A
• EPS Beat Rate: 5 of last 8 quarters

Keyera Revenue Results

• Actual Revenue: C$2.44 billion
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Keyera (TSE:KEY) (TSX:KEY) operates an integrated Canadian-based energy infrastructure business with extensive interconnected assets and depth of expertise in delivering energy solutions. Its predominantly fee-for-service based business consists of natural gas gathering and processing; natural gas liquids processing, transportation, storage and marketing; iso-octane production and sales; and an industry-leading condensate system in the Edmonton/Fort Saskatchewan area of Alberta. Keyera strives to provide high quality, value-added services to its customers across North America and is committed to conducting its business ethically, safely and in an environmentally and financially responsible manner.

Keyera Q3 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Plains assets are performing ahead of expectations, with CAD 115 million in run-rate synergies delivered by September against a CAD 120 million–CAD 140 million target for the first 12 months after closing. Management also cited further potential from operating improvements and capital-efficient investments.
• Positive Sentiment: Fee-based businesses remained strong: gathering and processing realized margin was CAD 125 million, while liquids infrastructure posted a record CAD 272 million, supported by acquired assets and strong throughput. A contracted Fort Saskatchewan condensate-system debottleneck is expected to add about 15% capacity early next year.
• Positive Sentiment: Keyera raised its 2026 marketing realized-margin guidance to CAD 400 million–CAD 430 million, citing stronger isooctane and butane contributions and about CAD 50 million of benefits from acquired-inventory and hedge revaluations.
• Negative Sentiment: AEF reliability remains a significant concern. Keyera expects an approximately four-week outage in early January for interim repairs, followed by permanent heat-exchanger replacement in May 2027; full production is expected by the end of that month.
• Neutral Sentiment: Net debt to adjusted EBITDA ended the quarter at about 3.6 times, above Keyera’s long-term target range; management expects to return to the range in 2028 as major project spending winds down. The company said major growth projects remain on schedule and at or below budget, and reiterated its targeted fee-based EBITDA-per-share growth through 2029.

Presentation

[Operator]

Good morning. My name is Mel, and I will be your conference operator for today. At this time, I would like to welcome everyone to Keyera's 2026 third quarter conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, please press the pound key. Thank you. I would now like to turn the call over to Dan Cuthbertson, General Manager of Investor Relations. You may begin.

[Dan Cuthbertson, General Manager of Investor Relations at Keyera]

Thank you, 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, Liquids Business Unit, and Brad Slessor, Senior Vice President, G&P and NGL Pipelines Business Unit. 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, President and CEO at Keyera]

Thanks, Dan, and good morning, everyone. We delivered a strong quarter across our expanded platform, with the acquired Plains assets continuing to perform ahead of our expectations. We're on track to achieve our near-term synergy targets, and as we integrate these businesses, we're identifying additional opportunities to create value beyond our initial expectations. In addition, all our major growth projects remain on schedule and are tracking on or below budget. This progress reinforces our confidence in the strategy we've been executing and the opportunities ahead of us. We believe Canada has a generational opportunity to strengthen its position as a global energy supplier.

[Dean Setoguchi, President and CEO at Keyera]

Growing demand for secure and reliable energy, combined with greater alignment amongst governments and industry, is creating a more constructive environment for investment and growth. Our strategy has been to build the infrastructure and connectivity needed to help Canadian producers grow and efficiently access higher value markets.

[Dean Setoguchi, President and CEO at Keyera]

With our expanded platform, we're better positioned than ever to support that growth while creating significant opportunities for Keyera and our shareholders. Turning now to our operating performance. We delivered strong results across both fee-based segments. In gathering and processing, strong customer demand drove continued growth in our north region, with both Wapiti and Simonette approaching full operating capacity. In liquids infrastructure, we delivered another record quarter of realized margin, primarily driven by the first full quarter contributions from the acquired Plains assets and our additional 50% interest in KAPS, together with strong throughput across our asset base.

[Dean Setoguchi, President and CEO at Keyera]

Turning to the outlook for condensate demand. Planned pipeline projects are expected to support further oil sands production growth, driving increased demand for condensate. We're positioning for our business to support this growth, including a capital-efficient debottleneck of our Fort Saskatchewan condensate system that will increase capacity by approximately 15%.

[Dean Setoguchi, President and CEO at Keyera]

This additional capacity is expected to be in service early next year. Now turning to AEF. Reliability at AEF has fallen short of our expectations. The repaired heat exchanger performance has deteriorated more quickly than anticipated, and we now expect to undertake an interim outage of approximately four weeks in early January to complete repairs. Installation of the permanent replacement equipment is planned for May 2027, with a return to full production expected by the end of that month.

[Dean Setoguchi, President and CEO at Keyera]

We have undertaken a comprehensive review of the facility and are making changes to our operating and maintenance approach. Our priority is to restore sustained, reliable performance, and we are committed to getting this right. We continue to believe in the strong underlying fundamentals of our isooctane business and its long-term contribution to Keyera. Looking ahead, we are encouraged by the opportunities across our expanded platform.

[Dean Setoguchi, President and CEO at Keyera]

Customer demand remains strong, and we are focused on executing our strategy and delivering on our growth commitments. With that, I will turn the call over to Eileen to walk through our financial results and outlook.

[Eileen Marikar, SVP and CFO at Keyera]

Thanks, Dean, and good morning, everyone. Excluding transaction and integration costs related to the Plains acquisition, adjusted EBITDA was CAD 466 million, and DCF was CAD 247 million, or CAD 0.84 per share. We reported a net loss for the quarter of CAD 68 million. In our fee-based segments, we delivered another strong quarter of financial performance. Gathering and processing realized margin was CAD 125 million.

[Eileen Marikar, SVP and CFO at Keyera]

In liquids infrastructure, we delivered record realized margin of CAD 272 million, reflecting strong performance of our legacy asset base and full quarter contributions from the Plains and KAPS acquisitions. Turning to the marketing segment. Marketing realized margin was CAD 95 million for the quarter. Results were impacted by the previously disclosed disruption to Enbridge's Line 5 system, as well as lower utilization at AEF during the quarter. These impacts were partially offset by stronger isooctane pricing and sales of butane. Now, turning to our financial position.

[Eileen Marikar, SVP and CFO at Keyera]

We ended the quarter with net debt to adjusted EBITDA of approximately 3.6x. While leverage remains above our long-term target range, we remain focused on deleveraging and expect to return to our target range in 2028. This morning, we updated our 2026 guidance. We are increasing our 2026 marketing realized margin guidance range to between CAD 400 million and CAD 430 million.

[Eileen Marikar, SVP and CFO at Keyera]

The revised outlook reflects stronger-than-anticipated isooctane and butane margin contributions, and approximately CAD 50 million of incremental benefits from the revaluation of inventory and related hedges associated with the Plains acquisition. Growth capital guidance remains unchanged. Maintenance capital expenditures are expected to increase by CAD 20 million and are now expected to range between CAD 260 million and CAD 280 million. Cash taxes are expected to range between CAD 55 million and CAD 75 million. Turning to our 2027 guidance.

[Eileen Marikar, SVP and CFO at Keyera]

We remain on track to achieve our targeted fee-based adjusted EBITDA per share CAGR of 16%-18% from 2025 through 2027, and 7%-8% between 2027 and 2029. As usual, marketing segment realized margin guidance will be provided in May, in conjunction with the release of our first quarter financial results. Growth capital is expected to range between CAD 630 million and CAD 670 million, primarily consisting of projects that are already underway. Maintenance capital expenditures are expected to range between CAD 250 million and CAD 280 million, including approximately CAD 20 million for planned equipment replacement and associated work at AEF, and CAD 20 million for one-time IT integration-related projects across the acquired facilities. Cash taxes are expected to range between CAD 130 million and CAD 150 million. With that, I'll turn it back to Dean for closing remarks.

[Dean Setoguchi, President and CEO at Keyera]

Thanks, Eileen. Keyera is executing on a clear strategy to strengthen and extend our integrated value chain while positioning the business to benefit from what we think will be a generational opportunity in the Canadian energy sector. As we look ahead, our focus remains on disciplined integration, operational reliability, advancing growth projects, and delivering long-term value for our customers and shareholders. 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 open the line for questions. Operator, please go ahead.

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. If you have a question, please press star followed by the number one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline the calling process, please press the star followed by the number two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. We have the line of Rob Hope of Scotiabank. Your line is now open. You may ask your question.

[Rob Hope, Analyst at Scotiabank]

Good morning, everyone. At AEF, can you add some incremental detail on what you expect to achieve in the January outage, how you will run the facility from now until May, as well as, is there any flexibility to work with suppliers to accelerate equipment availability so you could potentially accelerate that May outage?

[Dean Setoguchi, President and CEO at Keyera]

Hey, Rob. Good morning. All very good questions, and I'm going to turn it over to Jamie to provide more color on AEF.

[Jamie Urquhart, SVP of Liquids Business Unit at Keyera]

Yeah, Rob. Thanks for the question. What we intend to do in January is something very similar to what we did, frankly, when we had the initial failure in January of 2026. We have a really good sense of what the primary cause of failure was that occurred back in January. When we did the repair that ultimately got us up back towards the end of May of 2026, we recognized that that was only going to be a temporary solution. We took the existing design, which was actually a redesigned heat exchanger that was installed in 2022, and that heat exchanger did not perform the way that we expected and ultimately resulted in that failure that we experienced in January. We have a really good understanding in our minds what's happening within that exchanger.

[Jamie Urquhart, SVP of Liquids Business Unit at Keyera]

What we're going to do is go in and exact some repairs to the exchanger tubes and ultimately get that facility, that exchanger back up and running. When we do that, we expect to get close to, if not at, full capacity of the facility. But then we experience that we're going to see the same phenomena that we've been seeing over the last four or five months, which has been a slow deterioration of the effectiveness of that. We're going to solve the problem permanently with the permanent exchanger that we're going to install in May. To your last question is, yes, we've been working with all the different providers in the value, in that manufacturer. It's sourcing materials, actually manufacturing components, and then ultimately assembling those components. Then there's ultimately the delivery of that piece of equipment to our site.

[Jamie Urquhart, SVP of Liquids Business Unit at Keyera]

There's four different streams that we're working with. The team understands the urgency of that, and we feel confident that May is the outside date. We feel very confident. We'll probably do a little bit better, but that's a matter of weeks better, not months better.

[Rob Hope, Analyst at Scotiabank]

All right. Appreciate that color. Then maybe pivoting over to the Plains transaction. In the prepared remarks, once again, you highlight that it is tracking ahead of expectations. Can you add a little bit of incremental color here where you're seeing the outperformance, whether in terms of qualitative or quantitative, as well as what you think the next leg of opportunities from the Plains assets could be?

[Dean Setoguchi, President and CEO at Keyera]

Yeah. Thanks for the question, Rob. I just want to reiterate that we are very pleased with the acquisition, and we've obviously put out guidance on our synergy target for the first 12 months post-close, so that would take us to May of 2027, and that guidance range is CAD 120 million-CAD 140 million. I'm going to get Brad to speak to that in more detail, but when I think about the transaction as a whole, I look at it as to how much value do we see above the deal thesis, what we went to our board with and they sanctioned. There's a few different buckets associated with that. One is that the business is generally performing better than what we modeled. So volumes are higher, liquid yields at Empress are higher, Bonanza Empress are also higher.

[Dean Setoguchi, President and CEO at Keyera]

The base business is performing better than expectations, which is great to see. We've also seen opportunities where they're more one-time where we've avoided capital. Again, that adds up to dollars in savings, which is great for us to see. Now that we've had several months operating these assets, these new assets, we've identified a number of new capital opportunities that are very capital-efficient opportunities that we'll continue to evaluate and likely make investments in the coming years. So, that's another opportunity where we see that we can add value from this business that, again, wasn't included in our deal thesis, and it's not classified as a synergy. The fourth bucket is the synergies, and with that, I'll turn it over to Brad. Brad is our Senior Vice President that oversees our integration and synergy management team. Brad, maybe just add more color on the synergies.

[Brad Slessor, SVP of G&P and NGL Pipelines Business Unit at Keyera]

Yeah. Thank you, Dean, and Rob, thank you for the question. As Dean mentioned, at the end of September, we've already delivered CAD 115 million of run rate synergies. That's aligned against our CAD 120 million-CAD 140 million target that we're going to deliver within 12 months, so we obviously feel very good about what we've delivered so far. The other thing I really want to point out is this, everything we're doing with the new assets, it's making us a better service provider for our customers as well. It's giving them, like with this expanded platform across the country, it's giving our customers greater flexibility, better market access, and more options to manage through operational disruption. So we feel very good about the services we're able to provide to our customers.

[Brad Slessor, SVP of G&P and NGL Pipelines Business Unit at Keyera]

And then beyond that, we continue to see meaningful opportunities as we integrate our new teammates, get their thoughts, understand what we could work on together, and we integrate systems and optimize our operations. We continue to see many opportunities in front of us that we will be excited to talk about in the coming quarters.

[Dean Setoguchi, President and CEO at Keyera]

Thank you.

[Operator]

Thank you. Next question comes on the line of Aaron MacNeil with TD Cowen. Your line is now open. You may ask your question.

[Aaron MacNeil, Analyst at TD Cowen]

Hey, morning all. Thanks for taking my questions. Can you provide a bit more detail on the 2027 capital program? I guess I am just wondering, has any timing around spending changed at all? Is there anything new or different in terms of scope? Based on the projects you have in hand today, what does the sort of trajectory of capital look like beyond 2027?

[Dean Setoguchi, President and CEO at Keyera]

Yeah. Good morning, Aaron, and thanks for the question. Generally, I just want to make sure that we convey the message that we're very pleased with how we're executing our capital projects, and they're all advancing on or ahead of schedule and on budget or below budget. With that, I'll just turn it over to Eileen, and she can provide more color.

[Eileen Marikar, SVP and CFO at Keyera]

Sure. Thanks, Aaron, and thanks, Dean. I just want to reiterate the same message that our projects, everything that's well underway is on time and trending at or below budget, so we're really pleased with that. Some of the spends that you're seeing in 2027 is likely around the ACE terminal, where the spend is mostly going to occur in 2027 versus 2028. So that might be the difference there. When we look forward, most of our capital spend will be completed for these major projects that we've announced by the end of 2027. Then as we get into 2028, that really does come off, and that's what really helps to deleverage the balance sheet, and we start to get the EBITDA from all of these projects. So that's how we see the balance sheet come back into line.

[Aaron MacNeil, Analyst at TD Cowen]

Makes sense. Then maybe switching gears a bit on the condensate system debottleneck and the 15% more capacity. How much of that customer demand is sort of already there or you expect will be there by the time it's in place? How much further can you sort of push that system before you need a more capital-intensive expansion?

[Dean Setoguchi, President and CEO at Keyera]

Yeah, that's a great question. Obviously, we have a very strong condensate system. We provide a valuable service to the oil sands producers. Certainly, we're very excited about the potential of adding 1 million-2 million barrels of more oil egress capacity. With that, there'll be a lot more condensate demand. Even with Trans Mountain coming into service over the last several years, we've seen a lot of demand for our services, and that's what's also helped to drive our record liquids infrastructure margins. With that, I'll just turn it over to Jamie, and perhaps he can talk a little bit more about our condensate system.

[Jamie Urquhart, SVP of Liquids Business Unit at Keyera]

Yeah. Thanks for the question, Aaron. To answer your question specifically around the debottleneck that we announced yesterday, that essentially is contracted. That capital investment is in response to contracting that we've been able to secure over the last three to six months. I can share we're in additional conversations with the major oil sands players to look at the next phase of expansion on our system. As Dean says, we're very excited about our role in supporting that growth within the basin.

[Dean Setoguchi, President and CEO at Keyera]

Yeah, and I just want to point out too that when you look at our condensate system, we do have more capacity available on our KAPS condensate line, which now we own 100% of course. Jamie Urquhart spoke about our system in Edmonton, Fort Saskatchewan, where we also have condensate storage services as well. We also own 30% of the Norlite pipeline, which also has a couple hundred thousand barrels of capacity with Enbridge. Again, we have the right infrastructure to help support growth for the oil sands players.

[Aaron MacNeil, Analyst at TD Cowen]

Understood. Thanks, everybody. I'll turn it back.

[Dean Setoguchi, President and CEO at Keyera]

Thank you.

[Operator]

Thank you. Next question comes from the line of Maurice Choy of RBC Capital. Your line is now open. You may ask your question.

[Maurice Choy, Analyst at RBC Capital]

Thanks, and good morning, everyone. Maybe just sticking with the theme of contracting. As Jamie mentioned, the debottleneck project is essentially contracted, similar to the existing capacity. But if I could just zoom it out a little and just talk about this philosophically. Liquids infrastructure project sanctionings and securing contracting from customers have traditionally tended to be in lockstep, and I wonder if you see that to remain true today based on your competitive landscape that you see today as well as the next few years.

[Dean Setoguchi, President and CEO at Keyera]

I never fully understood the question, Jamie, did you?

[Jamie Urquhart, SVP of Liquids Business Unit at Keyera]

No. Yeah, Maurice, maybe you could expand a little on what you mean by contracting in lockstep.

[Maurice Choy, Analyst at RBC Capital]

Traditionally, I suppose if you were to move forward with a liquids infrastructure project, on the day itself, the contracts are already secured. We can debate a little bit about the pace of which the contracts come into force, but you would have those contracts in place when you sanction. Would that be true as you move forward with future sanctionings?

[Jamie Urquhart, SVP of Liquids Business Unit at Keyera]

Yeah. So, yeah, that's always been our philosophy with respect to ensuring that we've got contracts in place to justify and give us comfort that we're going to make smart investments that are going to get us our desired rate of return. One of the beautiful things about having an existing system, though, is that you can build off of that system in increments that are very capital efficient and ultimately in a timely manner that allows you to meet customer needs as their growth materializes as well.

[Dean Setoguchi, President and CEO at Keyera]

Yeah, and I'd just like to add, Maurice, that wouldn't be just unique to our liquids infrastructure business. Certainly on our G&P side, the same investment philosophy applies as well. We will look for contracts to back our capital investments.

[Maurice Choy, Analyst at RBC Capital]

Understood. If I could just finish off with a question on AEF. You've had multiple comprehensive reviews of the facility over the last two years, and you've had multiple resets on expectations, including outages, utilization rates, and margin impact. Given all this, what steps have you taken to gain even more certainty that the solution you plan to install in May 2027 will actually solve the problems you're experiencing today?

[Dean Setoguchi, President and CEO at Keyera]

You know what? That's a very good question. First of all, we take this very seriously because our reliability is within our control. I know our team's going to get it right, and Jamie will just speak to that in a minute. I do want to emphasize that our isooctane business is the fundamentals of that business are still very strong, and it will be a very strong contributor to our business once we get these heat exchangers fully up and running. We certainly believe in the long-term fundamentals of the business. With that, I'll turn it over to Jamie.

[Jamie Urquhart, SVP of Liquids Business Unit at Keyera]

Yeah. Maurice, thanks for the question. Just to build off of my answer to Rob, which was really more short-term in nature, let's step back, as you suggested, and just really look at the long-term fix for our current issue, but also the things that we've been doing to give us comfort that the facility will run long-term reliably beyond just our immediate issue, right? I referenced when I answered Rob's question is that really what's happening right now is we're operating with a repair of a heat exchanger that was installed in 2022. That redesign that we made did not perform the way that we expected, and ultimately resulted in the failure that we experienced in January. We did a root cause analysis and determined exactly what caused that failure.

[Jamie Urquhart, SVP of Liquids Business Unit at Keyera]

What the decision that we've made is we're basically going to replace it with a design that we had put in the facility previously, and that it had very successfully and reliably provided that service for over 25 years. We're going back to the original design, but we also needed to take the time back in the earlier part of this year to establish which design we should pursue. That's the reason why we pursued the repair of the exchanger in place. That was always identified as a temporary solution. The other thing, though, that we've done, as you noted, over the last 12 months in particular, is really challenge how we operate the facility across the facility. Following that review, we've shifted from maximizing short-term production to operating within very well-defined reliability parameters supported by more frequent planned maintenance.

[Jamie Urquhart, SVP of Liquids Business Unit at Keyera]

We believe that once you couple those things together, we're going to applying those learnings. We're confident that once the permanent exchangers are back in place in May, AEF will operate reliably going forward.

[Dean Setoguchi, President and CEO at Keyera]

Yeah. Jamie, the maintenance you are talking about, the more frequent maintenance would be sort of a four-year cycle with a two-year sort of pit stops?

[Jamie Urquhart, SVP of Liquids Business Unit at Keyera]

Yeah. In the past, we have been striving to a four-year turnaround, which would be more traditional in other parts of our business, and just a recognition of the uniqueness of AEF. We are going to plan to actually have a much shorter outage. It will not be a full turnaround every two years. What we are doing on the outage in May is we are going to basically pull forward what we were proposing to do in 2028 and do that work in 2027 to allow us then to be able to avoid another outage in 2028.

[Maurice Choy, Analyst at RBC Capital]

I suppose maybe as a quick follow-up, and I will finish with this. If the new heat exchanger only comes into full production by the end of May, how would you approach giving us sufficiently robust marketing guidance for 2027 at your Q1 results, which is in early May?

[Jamie Urquhart, SVP of Liquids Business Unit at Keyera]

I will maybe turn that over to Eileen, but all I can reinforce with you is the level of confidence that we have on the schedule of that piece of equipment and the fact that it is a design that we are very confident that has been put in place. We have a high degree of confidence of our ability to run at full production post that outage. In answering Rob's question, we have a high degree of understanding what the existing heat exchanger is going to be able to provide us once we exact the repairs that we have identified in January.

[Eileen Marikar, SVP and CFO at Keyera]

Yeah. I think just building off of what Jamie said, we feel very confident that we can give guidance for 2027 in May, given that we will be well into the heat exchanger repair and our supply season will be behind us. It is always based on assumptions behind that guidance, and certainly that main assumption is that AEF will continue to run as we expect for the remainder of the year.

[Maurice Choy, Analyst at RBC Capital]

Understood. Thank you very much.

[Operator]

Thank you. Next question comes from the line of Robert Catellier of CIBC Capital Markets. Your line is now open. You may ask your question.

[Robert Catellier, Analyst at CIBC Capital Markets]

Hey, good morning. I just wanted to go back to the synergies for the Plains acquisition. Where would you say I mean, it does sound like it is going really well. Where would you say the surprises are coming from? Is it something commercial or is it on the capital or the OpEx side?

[Dean Setoguchi, President and CEO at Keyera]

Yeah, thanks for the question, Rob, and good morning. You know what? We definitely see a lot of opportunities. Again, we really didn't get a chance to get under the covers until we closed on May 12th. Generally, what we've seen is that these assets haven't been They've been underinvested. Again, it's because Plains is more of a crude oil company, and they're based in the U.S. So, we just see a lot of low-hanging fruit and opportunities based on what we've seen so far. I think it's also important that we've been prioritizing, so we can't get everything all at once. Brad's done a good job prioritizing, but Brad, I'll turn it over to you, and maybe you can speak to the buckets of what you see.

[Brad Slessor, SVP of G&P and NGL Pipelines Business Unit at Keyera]

Yeah. Thanks, Dean, and thanks, Robert. As Dean said, we've literally identified hundreds of opportunities where we can increase margin by cutting costs or doing other things, and we've racked and stacked those by things that we can execute quickly and that are the most impactful to us. So, we're kind of working through that list on a very diligent basis and knocking those off one by one. You can see that with the CAD 115 million of synergies we've already delivered. Like I said before, as that list expands and we continue to prioritize and execute on the opportunities that, frankly, the team that we've inherited, most of them they already knew about. They just weren't able to get after them, as Dean said.

[Brad Slessor, SVP of G&P and NGL Pipelines Business Unit at Keyera]

Now we're giving them the ability to get after that, and so we remain very confident in delivering the target and far beyond that.

[Robert Catellier, Analyst at CIBC Capital Markets]

Okay, thank you for that. Then, just same sort of question on the capital project side. Looks like zone four is now CAD 40 million under your original budget, and the ACE terminal is also tracking well. So I wonder if there's something systemic there. It could just be you had enough contingencies and then you're coming in under that, but is there something systemic like productivity or you're leveraging procurement now that you have more scale? Is there any trend that you've identified in the performance on your capital projects?

[Dean Setoguchi, President and CEO at Keyera]

Yeah, Rob, that's a great question about our capital projects. As an infrastructure company, it's very important to demonstrate that we can execute on projects very well. I do want to reiterate that I'm very pleased with how our projects have been progressing, both from a cost and a schedule perspective. I'll turn this over to Jamie to give you more color, but I'd say, I mean, we built a number of larger projects, not all that went super well. I think what's most important is we applied our learnings. We put the foundation in place for us to be able to execute better and more consistently. We're seeing the fruits of those efforts now. With that, Jamie, maybe you can add more color on that.

[Jamie Urquhart, SVP of Liquids Business Unit at Keyera]

Yeah. So thanks, Dean, and thanks for the question, Rob. To layer on to what Dean said is certainly we learned a lot, specifically on zones one through three, but we also established relationships and partnerships with service providers. That has really paid off as we developed our strategy of who we were going to do to get the work and how we were going to work together. Certainly zone four, we took the best of the service providers that we worked with in zones one through three and allowed them to work on those projects, and we're reaping the benefits, I think, of that. Also, we're in an environment, those projects were sanctioned at a time where we've been able to get the best crews from those service providers as well. The market is changing going forward.

[Jamie Urquhart, SVP of Liquids Business Unit at Keyera]

It's getting busier in our basin, but we believe that with those partnerships, we'll be able to retain those partnerships, and hopefully that will be a differentiator for our ability to perform and execute projects going forward.

[Robert Catellier, Analyst at CIBC Capital Markets]

Okay. Last one for me then is just on the northern region. What are the gating factors and timing in terms of your ability to add capacity there? Thank you.

[Brad Slessor, SVP of G&P and NGL Pipelines Business Unit at Keyera]

Yeah. Thanks, Robert. It's Brad here. When we think about the northern G&P region, we continue to see very robust gas flows through Pipestone Gas Plant, the Wapiti Gas Plant, Simonette, and [audio distortion] frankly, across the business, as we talked about before, is to always work hard on contracting before we look to expand capacity. Across that kind of network, we're getting close to being at capacity. As we've talked about in prior quarters, we are looking at de-bottlenecking both the Wapiti Gas Plant and the Simonette Gas Plant. We're working on those projects are coming together very well, and we're working hard with customers to get there, and we expect to be able to talk a little bit more about that next year. In general, though, we continue to see excellent wells being drilled all around our facilities.

[Brad Slessor, SVP of G&P and NGL Pipelines Business Unit at Keyera]

We see record wells being drilled, and they're coming with, frankly, a little bit more gas than maybe we were expecting, and that's driving the demand for more gas processing, even as these producers are targeting very liquids-rich formations.

[Dean Setoguchi, President and CEO at Keyera]

Yeah, I'd just like to add on to Brad's comments, Rob, is that when you think about the amount of incremental natural gas supply that's going to be required to feed LNG Canada phase II, and potentially other LNG projects, it's going to require more gas gathering and processing capacity. And we're situated in really the sweet spot of the Montney, where there's very high liquids yields, including condensate. So we expect to see a lot more activity in our core area up in the north.

[Robert Catellier, Analyst at CIBC Capital Markets]

Okay. Thanks, everyone.

[Operator]

Thank you. Next question comes from the line of Sam Burwell of Jefferies. Your line is now open. You may ask your question.

[Sam Burwell, Analyst at Jefferies]

Hey, guys. Good morning. Curious to get your latest confidence in Norlite being expanded reasonably soon. I mean, it seems like based on your prepared remarks, the demand is there and certainly coming, but are there any hurdles around either your balance sheet or your partner's appetite on that project?

[Dean Setoguchi, President and CEO at Keyera]

Good morning, Sam, and that's a great question. The great thing about Norlite is that when we sanctioned this project with Enbridge, we actually upsized the size of the pipe. Brad, you did the original deal. We upsized it. It's a 24-inch pipe?

[Brad Slessor, SVP of G&P and NGL Pipelines Business Unit at Keyera]

24-inch pipe.

[Dean Setoguchi, President and CEO at Keyera]

24-inch pipe. We have a couple hundred thousand barrels of capacity that we can still access on the existing pipe. That is a huge opportunity for us and our whole condensate system. Jamie, anything else you want to add?

[Jamie Urquhart, SVP of Liquids Business Unit at Keyera]

Yeah, I think the only thing I would add to your question around our partner is we are very much aligned with our partner. As Dean said, Brad and his team had the foresight to put a larger piece of pipe in. That enables us to expand capacity in a capital-efficient way by putting pump stations in along the way. We have talked about this before, the lead time to be able to do that versus building new pipe is very preferential when we are talking to negotiate with producers that it goes lockstep with the timing of their plants as well. Very, very well positioned on the pipe, but also with our partner.

[Sam Burwell, Analyst at Jefferies]

Okay, awesome. Then maybe a question on the 2026 growth CapEx guidance. Same range, but at the higher end. Notice that you said that the major projects are all trending at or under budget. Is the high end reflective of the modest amount of CapEx for the FSCS debottleneck or any other odds and ends that are going to hit the budget in 2026?

[Eileen Marikar, SVP and CFO at Keyera]

Thanks, Sam, for the question. I think most of it is, there might be some small capital even associated with some of the new assets, but the majority of this would be, again, timing of spend. Back to the key message is that all the projects are going really well, but a lot of it is just timing. We will be through most of our major capital spend by the end of next year, and then 2028 really, really comes off.

[Sam Burwell, Analyst at Jefferies]

All right, great. Thank you.

[Jamie Urquhart, SVP of Liquids Business Unit at Keyera]

Thank you.

[Operator]

Thank you. Thank you. Next question comes from the line of Ben Pham of BMO Capital. Your line is now open. You may ask your question.

[Ben Pham, Analyst at BMO Capital]

Hi. Thanks. Good morning. I wanted to go back to AEF for 2027. If you put the $85 million headwind aside that you've newly disclosed, how would you characterize the marketing setup in 2027? I mean, I'm just thinking in particular about some of your comments around maybe tailwinds on the frac spread side of things. You've hedged 75%. Propane market's been quite strong as well. You have additional flexibility from Plains assets, and you've also been opportunistically selling butane as well.

[Dean Setoguchi, President and CEO at Keyera]

Hey, good morning, Ben. Thanks for the question. Very good question. Maybe I'll turn it over to Jamie to speak more to our marketing business. Again, want to reiterate, because Eileen's kicking me here, that we'll be providing guidance until May of next year, but maybe some general color Jamie can provide.

[Jamie Urquhart, SVP of Liquids Business Unit at Keyera]

I think that was a reminder for me too as well, Ben, as I answer your question. Ben, you hit all the high points, right? We've talked about our realities at AEF and the plan that we've got that we're really confident in of getting back to reliable operations. But the underlying fundamentals for our basin, but also our marketing business, are extremely strong. We touched on isooctane fundamentals. A reminder to everybody, isooctane is priced off of crude and RBOB crack, and then ultimately an octane premium. As we've seen strong commodity pricing for both crude and RBOB cracks, we've taken the opportunity to be able to apply, as we have in the past, our risk management policy to lock in favorable prices into 2027, and starting to do that into 2028 as well. You've touched on propane. We're very bullish on propane.

[Jamie Urquhart, SVP of Liquids Business Unit at Keyera]

Brad alluded to is that as we understand our Plains assets more and the value proposition of sending propane down to the eastern markets, we're extremely excited about that. So, that's one of the tailwinds that we think about from that Plains acquisition. Similarly on the butane side, we've been very successful in being able to sell on a spot basis the butane that we haven't consumed at AEF at very favorable prices and taking advantage of the current market that really, frankly, is driven off of what's going on internationally. But we also see the eastern markets for butane as being very attractive as well, and our ability to be able to get those barrels down to the east, whether that's via rail and/or through Line 1, Line 5, that ultimately is available to us to transport mix that ultimately gets fracked in Sarnia.

[Jamie Urquhart, SVP of Liquids Business Unit at Keyera]

All the things that you asked in your question are positives for our business. Once again, though, I'll also reiterate is that based on the pricing that we've seen and the forward pricing that's been at above historic levels, we've taken that opportunity to be able to lock in those values for 2027.

[Dean Setoguchi, President and CEO at Keyera]

Yeah. Ben, in addition to Jamie's comments, I just want to reiterate that our combined business, the Plains assets and business and Keyera's legacy business, is performing very well. When you think about our third quarter results that we just released, you have to remember that we just came through three turnarounds. We did one at Brazeau River. We converted the facility from sour to sweet, which will make us more competitive on a cost basis. We're very happy about that. Also some large turnarounds also at KFS North and also at Empress 6, where we also have not only the straddle plant there, the large straddle plant, but also a fractionator. During that outage, we also had to deal with the Line 5 disruption, which was another CAD 35 million hit to our quarter.

[Dean Setoguchi, President and CEO at Keyera]

Despite all that noise, our business performed very well. As we move forward to more normal quarters, we're still dealing with the AEF reliability issues, which we've talked a lot about this morning. We're starting to get back to normal operations, and Brad talked about a lot of our synergies. We're going to be continuing to add value from those synergies. When you add all that up, we're very optimistic about our future in 2027 and beyond.

[Ben Pham, Analyst at BMO Capital]

Okay, got it. I mean, it sounds like the AEF situation is trending lower than your expectations, but there's a lot of other levers that could offset some of that potentially. Can you, maybe just a net debt adjusted EBITDA, I can appreciate just some of the near-term headwinds impacting the leverage here too. Still expecting 2028 to be the target timeline. Can you talk about perhaps the cadence of deleveraging from here, and is this a peak of your leverage you expect, and is there some flexibility for more CapEx in that, what you've initiated for 2027?

[Eileen Marikar, SVP and CFO at Keyera]

Thanks, Ben. Yes, as it relates to the balance sheet, you're right, it'll really peak end of the year, and we expected this. This is what was contemplated. We knew that our balance sheet would be, given that we just took on the two acquisitions, and it will come back in line into our range by 2028. There is the potential to deleverage quicker as we see some of the things we just talked about within the marketing business, as well as the base business, which again, is performing extraordinarily well. So, there is that opportunity to deleverage faster than that. But, really stepping back, our leverage targets, even though we're a much bigger entity now, we never changed those targets, and they're still conservative. We feel like it still gives us the flexibility when we see opportunities, and that's the key.

[Eileen Marikar, SVP and CFO at Keyera]

That as we move through our major projects next year and obviously get through AEF, that we really do bring that balance sheet back in line, and there's so much opportunities to be had given the macro environment that supports it.

[Ben Pham, Analyst at BMO Capital]

Okay, got it. That's helpful. Thank you.

[Operator]

Thank you. [crosstalk] Next question comes from the line of Patrick Kenny of National Bank Capital Markets. Your line is now open. You may ask your question.

[Patrick Kenny, Analyst at National Bank Capital Markets]

Yeah. Good morning, everyone. Just back on the marketing guidance, I know you've been quite active on the frac spread hedging front, but just wanted to confirm if the low end of that range, the CAD 400 million for 2026, would reflect sort of a worst-case scenario for propane demand this winter, just in light of the El Niño trends here. Also, maybe you can comment on how you might be protected or potentially exposed to weather and physical propane sales volumes through Q1.

[Dean Setoguchi, President and CEO at Keyera]

Yeah, maybe Jamie can just speak to the propane markets, and then Eileen can maybe speak to our guidance range. Go ahead, Jamie.

[Jamie Urquhart, SVP of Liquids Business Unit at Keyera]

Yeah. So, great question, Pat. Yeah. So, one of the things that we identified when we did the Plains acquisition is the fact that we were getting access to more market, right? It's really a fundamental part of our strategy is to have as much flexibility around egress for our customers and for our marketing group. The way that we conduct our business specifically around the Plains barrels that go east is we basically back-to-back them. So, the barrels that are being produced and are ultimately spoken for and basically are committed to be taken for the winter. As we think about the barrels in Western Canada, we similarly lock in spreads, and ultimately, we have so many different options with respect to where those barrels go that we're confident that our propane business will perform well over the winter.

[Eileen Marikar, SVP and CFO at Keyera]

The only thing I would add on the guidance range itself, on the low end in particular, is that, as always, we build in some conservatism into that low end. And of course, it assumes that AEF operates as we've planned. But otherwise, we feel very confident in that range.

[Patrick Kenny, Analyst at National Bank Capital Markets]

Okay, great. Thanks for that. And then maybe on the rail side of the business, there's been some buzz recently with wider heavy diffs and pipes filling up just around crude by rail coming back into the market, at least temporarily, until some of the larger egress projects come online. But as well, certain oil sands proponents looking to utilize rail out to the West Coast. Just curious how your rail assets might be positioned to take advantage of both the shorter-term opportunities as well as any longer-term projects that might come to the West Coast.

[Dean Setoguchi, President and CEO at Keyera]

Yeah, that's a great question, Pat. We do have some very amazing rail assets that have a lot of flexibility to them. Rail is still a very effective means of especially taking advantage of arbs, and we are able to do that a lot with our infrastructure. Specifically with respect to crude, Jamie, maybe just speak to some of that right now.

[Jamie Urquhart, SVP of Liquids Business Unit at Keyera]

Yeah. It's a great question, Patrick. We have actually, just to go back in time, our ADT facility actually used to be ACT and ADT, for ACT standing for Alberta Crude Terminal. We have the ability to actually facilitate crude movement out of ADT. We are going to keep it, just calling it ADT and not confuse people, go for it. I can share with you, we actually have recently done a deal and are facilitating crude movement out of that terminal as we speak.

[Jamie Urquhart, SVP of Liquids Business Unit at Keyera]

I think the other part of your question is really pertinent as well, is that, as you think about ACE and how we build out that, how we have our existing KFS facility that we are actually in the throes of creating flexibility to actually be able to move both butane and propane out of that facility, as we have got a very robust rail facility at KFS North and rail facilities throughout the network, west to east in Plains' business. We see the ability, especially around ACE, to be able to grow that facility in response to the pull for hydrocarbons, spec hydrocarbons out of Western Canada. Rail is, as was alluded to earlier, is a really core part of our strategy.

[Jamie Urquhart, SVP of Liquids Business Unit at Keyera]

As we think about it, certainly is a core part of our strategy and hopefully being able to contract enough to ultimately then perhaps step out into a bigger opportunity like pipe.

[Dean Setoguchi, President and CEO at Keyera]

Yeah, and the other thing to Jamie's comment is that our terminals, especially the ACE terminal as well, that piece of land is very well connected. There's lots of pipe that run right through the 1,300-acre parcel of land that we have there. So, if we do move other products other than propane and butane, the lines are right there to connect with very short tie-ins.

[Patrick Kenny, Analyst at National Bank Capital Markets]

Okay, that's great, color. Thanks, everybody.

[Dean Setoguchi, President and CEO at Keyera]

Yeah, thanks, Pat.

[Operator]

Thank you.

[Dean Setoguchi, President and CEO at Keyera]

Have a good day.

[Operator]

Thank you. There are no further questions at this time. I will now turn the conference over to Dan Cuthbertson, General Manager of Investor Relations. Sir?

[Dan Cuthbertson, General Manager of Investor Relations at Keyera]

Thank you all once again for joining us today. Please feel free to reach out to our investor relations team with any additional questions. Have a great day, everybody.

[Operator]

Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for your participation. You may now disconnect.

Participants

Executives

• Dan Cuthbertson, General Manager of Investor Relations
• Dean Setoguchi, President and CEO
• Eileen Marikar, SVP and CFO
• Jamie Urquhart, SVP of Liquids Business Unit
• Brad Slessor, SVP of G&P and NGL Pipelines Business Unit

Analysts

• Rob Hope, Analyst at Scotiabank
• Aaron MacNeil, Analyst at TD Cowen
• Maurice Choy, Analyst at RBC Capital
• Robert Catellier, Analyst at CIBC Capital Markets
• Sam Burwell, Analyst at Jefferies
• Ben Pham, Analyst at BMO Capital
• Patrick Kenny, Analyst at National Bank Capital Markets