Pembina Pipeline Corp (PBA) 2008 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Pembina Pipeline Income Fund 2008 year end results conference call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions (Operator Instructions). I would like to remind everyone that this conference call is being recorded on Friday, March 6th, 2009 at 12 p.m. mountain time.

I will now turn the conference over to Bob Michaleski, President and Chief Executive Officer. Please go ahead.

Thank you, John and good afternoon, everyone. Welcome to Pembina's teleconference webcast on our fourth quarter and full year 2008 financial and operating results. Joining me today are Peter Robertson, Pembina's Vice President of Finance and CFO, and Glenys Hermanutz, Pembina's Vice President of Corporate Affairs. In addition to discussing the past year and fourth quarter, I'll also provide an outlook for 2009 and plans and priorities for the year. Then I'll open up the line for questions to respond to any inquiries that you may have.

Before we go further, I would like to remind you that many of my comments today may be forward-looking in nature and as such, Pembina's legal counsel has asked me to advise you of the following. The actual results could differ materially from the conclusions, forecast, or projections of forward-looking information. Certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection, as reflected in the forward-looking information. Additional information about the material factors that could cause actual results to differ materially from the conclusion, forecast or projection in the forward-looking information and the material factors or assumptions that were applied in drawing the conclusion or making a forecast or projection is reflected in the forward-looking information as contained in our annual report which is available online both at Pembina's website at Pembina.com and at the SEDAR website at SEDAR.com.

Now that we've dispensed with formalities, I want to start by saying how pleased I am with the results we generated, and all that was accomplished at Pembina during 2008. All three of Pembina's businesses performed well during the year. Our results reflect the strength of our business strategy and despite weak economic conditions, Pembina remains well positioned for the future.

Let's take a quick look at the fourth quarter. Pembina generated CAD149 million in revenues during the last three months of 2008, an 11% increase over the fourth quarter of 2007. This increase was largely attributable to growth in our midstream and marketing business, and the contribution from the horizon pipeline which began earning its full revenue requirement November 1st of 2008. Increased revenues translated into higher net operating income and net earnings which were up 9% and 30% respectively during the fourth quarter, as compared to the third quarter of 2007. System throughputs were down just over 3% quarter-over-quarter. During the fourth quarter of 2008, we transported an average of 434,000 barrels per day as compared to 450,000 barrels per day in the fourth quarter of 2007. This decrease is primarily due to a combination of one time operational issues and natural declines. Cash distributions for the quarter were approximately CAD52 million as compared to CAD48 million in the fourth quarter of 2007. This reflects the distribution increase of 8% announced last July.

2008 was a year of significant accomplishment at Pembina and I would like now to share some of the milestones that we achieved. The July 2008 completion of the fully contracted Horizon pipeline was a highlight. Horizon, which provides exclusive service to Canadian Natural Resources oilsands operation near Port [Laperie], Alberta, is expected to contribute at least CAD45 million per year to our net operating income over the 25 year life of the contract. Additionally, there is potential for upside should the pipeline be expanded beyond its current operating capacity. 2009 will be the first full year of revenue contribution from the Horizon pipeline and I would like to congratulate the team at Pembina who worked on this project on the successful execution of this project. Another major accomplishment in 2008 was the signing in August of transportation agreements with CNRL in Canada to proceed with the construction of the Nipisi and Mitsue pipelines. I will provide more details on these projects later in the call. But I would like to note here that a recent success with Horizon pipeline project gives us high degree of confidence in our ability to bring this significant new service on stream by the targeted mid-2011 in-service date.

In 2008, throughputs on Pembina's conventional systems averaged 439,000 barrels per day, down 2% compared to 2007. Net operating income contribution from the conventional pipelines totaled CAD129 million for the year, a 6% decrease year-over-year, the decrease is in large measure due to a two month long service interruption of Pembina's Cremona system and to a CAD16 million increase in operating expenses related to general property taxes and to one time costs related to unexpected environmental reclamation activities on the Drayton Valley system. We expect costs to normalize in 2009.

Our oilsands and heavy oil infrastructure business segment contributed CAD59 million in net operating income during 2008, a 49% year-over-year increase. With inclusion of fully contracted returns on the Horizon pipeline beginning in November. We expect the contribution of this business unit to grow in coming years with the anticipated mid-2011 contribution from the Nipisi and Mitsue pipelines, possible future expansion of our existing oilsands transportation service capacity, and other opportunities that we are presently exploring. Strong results were generated by our midstream and marketing business during 2008. Net operating income contribution from this unit of CAD96 million was a 37% increase over 2007. The majority of the increase reflects the benefits generated from a full year of operations on projects commenced last year and on a further expansion of our service offering under this business unit. The combined results of these three businesses generated net earnings of CAD161.8 million, a 14% increase over 2007. Over the five year period ending December 31st, 2008, net earnings have grown 103% on a per unit basis. This growth in earnings was reflected in Pembina's cash distributions to unit holders which increased by 42% during the past five years.

Now, I'd like to discuss new initiatives under development at Pembina and provide an update on our plans and priorities for 2009. Now, our number one focus, responsible growth. In August 2008 we signed long-term contracts with CNRL Canada to proceed with the construction of Nipisi and Mitsue pipelines at an estimated cost of CAD400 million. This will be our priority growth project for 2009 and public consultation is already well under way. The project, aimed at providing heavy oil producers in Northwestern Alberta with 122,000 barrels per day of combined diluted heavy oil transportation is expected to contribute CAD45 million per year in net operating income. Subject to regulatory approval construction is scheduled to begin in late 2009 with both pipelines expected to be in service by mid-2011 as previously mentioned.

Operational excellence that results in reliable, safe and cost effective service is always a priority. During 2009, we'll continue to pursue opportunities and efficiency that add value to customers and unit holders through the upgrading of facilities, the construction of new connections to existing facilities, and will maintain our operating cost discipline. In our midstream and marketing segment, we will continue to look to add new services as opportunities arise. This business has been the fastest growing segment of Pembina's operations over the past few years, and is uniquely positioned to generate more value as we move forward into 2008 and beyond. We will carefully identify and evaluate new opportunities with the goal of maximizing the value of our extensive infrastructure.

As you are all aware, the commodity market has experienced significant volatility over the past year. While lower energy pricing does have the potential to impact our conventional business, should this environment persist for an extended period of time, our expectation for the near term is that existing production will continue to want to find its way to market. From the perspective of our midstream business, changes in benchmark prices such as WTI have the potential for a more direct impact. Our preliminary forecast indicates that for every CAD10 per barrel change in WTI we can expect to see an estimated CAD4 million change in midstream revenues. Of course, change in crude prices is only one factor amongst many that affect revenues and opportunities in this segment. Certain have the potential to offset the impact of fluctuations in WTI pricing, most notably, foreign exchange rates, and related liquids product pricing. Pembina transacts in Canadian dollars and the fluctuation in the Canadian dollar offsets moves in WTI. That being said, for 2009, we reiterate our guidance for the midstream segment at CAD100 million in net operating income inclusive of our ethylene storage interest.

Like most companies, Pembina's taking a measured and prudent approach to financial management during these volatile times. For 2009, Pembina has identified CAD230 million of potential capital projects. This includes approximately CAD150 million related to Nipisi and Mitsue pipelines, with the balance directed to the completion of development projects started in 2008, and two other discretionary projects and upgrades. As always, Pembina will allocate capital to new projects and initiatives that make sense strategically and generate an attractive return on capital. Note that the details on the 2009 spending program and 2008 actuals are posted on the Pembina website for your reference.

Unit holder response to our DRIP, which is was reinstated in October of last year has been excellent . With participation in the most recent month totaling 83 million units or approximately CAD11 million. We anticipate this trend to continue throughout the balance of 2009. With regard to our CAD75 million notes maturing in June, we presently have several financing options available to us which we are presently evaluating which include refinancing with existing lenders, utilizing existing undrawn bank facilities, using cash flow from operations, proceeds from our DRIP or additional financing facilities. Through 2008 Pembina, its management and its Board of Directors evaluated options available to the fund in light of the pending taxation of income trust commencing January 1st of 2011. In response to this material change, our Board has determined conversion from an income trust to a corporate entity prior to the new taxation law coming to effect is the most likely outcome. Although the date of conversion will be dependent on market conditions, it will likely occur during the latter half of 2010.

Based on the current assumptions, expectations, estimates and projections, Pembina expects to maintain our current level of cash distributions, CAD1.56 per unit per year, to equity holders over the next five years. Solid, sustainable results generated by all three of Pembina's business units, coupled with an anticipated increase in cash flow from capital projects currently under way lend confidence in Pembina's ability to maintain its distribution rate through corporate conversion and the onset of taxable status. I would again like to direct participants' attention to the forward-looking statements and information contained on page 41 of Pembina's MD&A for a discussion of the assumptions and risks associated with the plans I've outlined.

Overall, our 2008 results are very positive and indicative of the strength of our Company. Like any year, this past year has had its challenges and triumphs. Our proven business strategy, Strong fundamentals, healthy balance sheet and conservative capital structure has supported our position of strength during these times of market volatility. As we look forward to the rest of 2009, I'm confident Pembina has the right business plan and financial flexibility to ensure our continuing success. We have a clear, definable growth platform with projects such as Nipisi and Mitsue expected to come on stream in 2011 and we have access to capital to allow us to execute our plans.

I would like to thank you all for participating in the call this morning. I'll now turn the call back to the operator for questions.

Thank you. Ladies and gentlemen, we will now conduct the question-and-answer session. (Operator Instructions). One moment, please, for your first question. Your first question comes from Fai Lee from RBC Capital Markets. Please go ahead.

Thanks. Bob, I just was wondering about the CCA pools and the loss of, wonder if you're going to update that.

Peter, do you want to comment?

Generally, we wouldn't update that information until we complete our tax returns, which don't have to be filed until the end of June, 2009. So at this stage, we won't be updating that information.

Okay. Do you have a rough idea how much your CCA pools might have increased?

They would have increased by our capital additions really since I think the information is as of the end of January 2008, so any CapEx we incurred since then, our pools would increase by that amount.

Okay.

I think we're still estimating tax losses available for carry-forward of about CAD300 million by the end of 2010.

Yeah, I would agree with that.

Okay. All right. And I just was asking because I think at some point you were debating whether you wanted to convert some of the UCC to tax losses?

There's no real advantage. UCC pools can be carried forward indefinitely whereas tax losses have a 20 year expiry line.

I thought that was something under consideration at that point. The other question I had was with respect to the midstream guidance of the CAD10 change in WTI, about CAD4 million in midstream revenues. I just wanted to make sure I'm looking at this correctly. In Q4, maybe WTI is around CAD60 on average and now you're talking about maybe 45, let's call it.

Right.

Is that sort of the way to look at the change in revenues going forward?

Yeah, I think that's a good proxy. So if we -- what we did for 2009, we budgeted it at 60, we're running at about 45 right now, so if we stayed at 45 you'd be able to factor in that change. We're saying that when we ran say, January plus strip pricing to the end of the year that we would end up with say, roughly a CAD9 million reduction in budgeted midstream cash flow for 2009. That also you have to figure that the decline in price is also partially offset by the change in foreign exchange, but I think as a proxy, the use of the CAD4 million on CAD10, that would be -- keep you in the ballpark.

Okay. Just to clarify, when you mentioned you budgeted CAD60, this was assuming this was not currently, this was budgeted --

This was budgeted last fall.

That was last fall.

Yeah.

Now you're CAD9 million off of that mark but because you're adding truck terminals and the Canadian dollar, you're still comfortable with the guidance for '09.

Yes. The guidance we're providing will be the same. We do have new activity that's coming on stream in 2009 which will partially offset the effect of the lower commodity prices. The guidance we're providing for 2009 is similar to what we provided tore 2008, is in the range of CAD100 million. In 2008 we did come in -- I think we said CAD96 million so we were pretty close to what we had planned for 2008 and I would expect we'll be close to what we planned for 2009.

And -- but the CAD100 million for '09 you already adjusted down to -- what assumption are you using, 45?

Yeah, that would be roughly the number we would use.

Thank you.

You're welcome.

Your next question comes from Tony Courtright from Scotia Capital. Please go ahead.

Thank you very much. I think some of them have been answered in the previous discussion on midstream marketing, but could you give any color in terms of the volume that you've been experiencing in the midstream and marketing business?

I'm not sure exactly how to answer that question, Tony, because the midstream and marketing volume related activity is tied to our Drayton Valley, Swan Hills and Cremona systems. Round numbers we're moving about like 100,000 barrels a day on Pembina system, some of which is condensate. Just one sec. I maybe have something that's a little better to talk to. So the Pembina system, we're looking at roughly -- well, just round numbers, 100,000 barrels a day. The Swan Hills system we're looking at about 58,000 barrels per day and Cremona, about 13,000 or 14,000 barrels per day. Those are the types of volumes that would have been tied to the midstream business . We'll have some volume on our truck terminals on the Peace Pipeline system which I don't have available to me at this stage, Tony, so I can't speak about those. But the lion's share of the midstream related volume items are the ones that I already addressed.

So you don't necessarily anticipate material reductions through natural decline in these systems and therefore you're more driven by price rather than volume in your midstream and marketing?

That's right, Tony. We're still expecting that Drayton's going to be able to hold its own for 2009. There's still our new connections on the Drayton Valley systems and this key play is still performing, probably now about where we expected so that's good news. Swan Hills has held pretty steady. Cremona is off a bit but Cremona is not very significant, Tony so I think the two key pipelines are the Swan Hills system and the Drayton system. So we're projecting those volumes to stay pretty constant in 2009.

In terms of the lower commodity price for oil, how are your customers reacting to constant sort of toll increases? Are you getting some pushback there? I mean, I know you have your own issues with operating costs, but it's taking a bigger bite out of their netbacks.

Sort of put that in perspective. I think our average toll is somewhere in the range of CAD1.50 a barrel. Toll increases have generally been in the range of 3 to 5% which is typical of the decline rates we experience. We also -- we do have some fairly large repair programs in our system as we respond to repairs required as a result of new technology especially the corrosion tools. We typically then will have to adjust our tolls also to take into consideration some of that but I think it's fair to say our toll increases in 2009 have been modest. Peter, can you comment on where -- ?

I would say our toll increases were not -- we're not making constant changes to our tolls. We generally do that at the beginning of each year and we've already gone through that process for 2009.

In the absence of something really unforeseen, Tony, we would leave our tolls where they are at least for the balance of the year. As a part of our budgeting process we review our operating income contribution from our conventional pipelines for the following year, for 2010, we'll do that late in 2009. And make appropriate adjustments at that time. We have not had any objection to managing our business model that way.

Okay. Appreciate it. Thank you.

You're welcome.

Your next question comes from [Robert Cataline from Claris Securities]. Please go ahead.

Just again on the midstream and marketing. Thanks for providing that sensitivity number. I believe you spoke to revenue sensitivity, Bob, because the -- there's such a direct correlation to the cash flow number, it's really a cash flow sensitivity, is it not?

Really it is, that's right.

Can you just quantify if there were any Q4 related cleanup activities for the prior periods?

I think the cleanup costs, I don't have them. Peter might. I know we did have a number of environmental costs that came through in the fourth quarter related to our Drayton Valley operations. I'm going to say that I would say --

I would suggest CAD2 million to CAD3 million in the fourth quarter would have been incurred in those historical.

Doesn't sound like it was an unusual item, just a normal operating cost for that type of business.

Well, you know, it surprised us though, Bob. The amount of the cleanup. We had a spill that occurred, we've had an historic spill, not historic in an historic sense, we had an old spill that occurred and we were surprised at the cost to remediate that for the land owner and we did have an actual slow leak that probably occurred for a number of months during 2008 and it was in an area that was quite gravelly and sandy so the contaminated soil was much more extensive than we had anticipated. That spill went from what we thought would be somewhere around CAD1 million to somewhere in excess of CAD3 million so that was a bit of a surprise to us.

In the overall scheme of things not too serious.

No.

There's also mention in the MD&A about incentives negotiated with customers in the Western system to retain deliveries to Cam loops. I'm assuming that doesn't have a big impact to operating income because of the recovery of operating costs, nature of that business.

That's exactly right, Bob. There's really no impact of any significance there.

Okay. And just two last questions, then. Presumably there have been no changes to your covenants negotiated at the time of the extension in July of '07 of your credit facilities.

That's correct. Two years ago we entered into a five year agreement with our syndicate of banks so that runs until roughly 2012 and obviously there have been no changes in the covenant packages during the term of that agreement.

And then the new wording on the distribution policy, it's more from the never, but I notice you used a five year period there. Is that simply because that's the extent of your planning period?

Well, Rob, in a way that's the case. I think what we did say at the end of the third quarter was that we would be able to maintain our distributions at the current level even after we become taxable in 2013. That still would be our statement but we're finding some people, they wanted more clarity. So we're saying for the foreseeable future, being five years, we're saying we can maintain our distributions at this level and our projections beyond five years, one would suggest that we could sustain them beyond five years, but we're thinking five years is long enough in this environment to be able to give some certainty to the market so that's why we sort of changed the wording, Rob.

Understood. And just you'll have exhausted your tax loss carry-forwards by then, would you not?

That's correct.

So sustainable on a fully taxed basis by that point then, there's no reason why you count sustain it beyond five years, you've just chosen five years for the sake of putting some context to it.

That's exactly right. We did find there was some confusion with the statement we made last time around and we would say that any Company's planning horizon, five years is a long time and that's exactly what we're saying here. We're planning for what we know today, which will include the Nipisi and Mitsue pipelines and sort of the case they're at today but we'll have other things that we're working on that we'll be able to we think add to cash flow and sustainability beyond the time frame that we're talking about. Because that's what we're here to do.

Understood. Thanks for that.

Okay, Rob.

Your next question comes from Linda Ezergailis from TD Newcrest. Please go ahead.

Thank you. I have a question about your credit facility. You've got CAD390 million drawn on CAD530 million available, plus a CAD75 million note maturing this summer. When do you plan to refinance the credit facilities and what preference or what would be kind of your hierarchy right now of plan A, plan B, of what -- of how you achieve that?

I think I'll let Peter speak to that as certainly it's topical and something we've been looking at.

Linda, as Bob mentioned, we have a number of options available to us with respect to refinancing that maturity in June and we're looking at all of these options and it will come down to what is the best option at the best price for us. Certainly, our advisors, we've talked to plus our banking syndicate, certainly there are no issues with our capability of raising those sort of funds and for -- and even a lot more if we are required to do so.

And what do you think you could issue debt at? At what rate? Like a longer term debt?

We're told today that five year money is around the high 5, low 6%. Ten year money, 7%.

Okay. And in terms of when you convert to a corporation, will the covenants on your credit facility be reopened or is that not any sort of an event that would trigger anything on your credit facility?

Well, the credit facility is with Pembina Pipeline Corporation, it's not with the fund. If the fund disappears then that won't have any impact on our credit facility and as I mentioned, the facility is -- it has a term through mid-2012.

Okay. That's helpful. Now, just as a follow-up, note three of your financial statements mentions the CAD18.5 million deferred payment in March of 2009. I'm assuming that will flow through to your cash flows from operations.

That was accounted for in 2008. You're right. That will be set as a liability in the end of 2008 and come through as cash flow from operations in 2009.

Okay. And then can you clarify by what was meant by the term after giving consideration to the estimated impacts of SIFT tax and market conditions as to how the level was set?

Yes. There was a -- we had a clause, I'm not sure if the purchase and sale agreement was ever -- I think it was posted on our website, SEDAR filed. There was a provision within our agreement, Linda, that said that if there was a change of circumstance after we entered into the agreement that results in a material reduction in the value of the notional units that were issued under that agreement that the Board had the discretion to adjust the final payment based on what the quantification of what that impact might be. So the Board we're convinced that the SIFT tax was not contemplated and we had legal opinion that would suggest that that was captured under the change of circumstance clause following obviously not anticipated time we entered into that transaction so there would have been an adjustment made for an estimate of what the impact might be. And I can't recall off the top of my head. I think it might have been an adjustment that might have been in the range of 11 to 12% that was based on a review of the decline in market value of Pembina units in the period following the introduction of the SIFT tax. So that was the major adjustment that was made to the original purchase price. When I say major, it wasn't significant in terms of the total but it was still an adjustment that was felt appropriate by the Board and by the former members of Pembina management.

And then the second adjustment was made based on market conditions?

Yeah.

What percentage adjustment was that.

That would have been a very minor adjustment. I think in total, Linda, the market adjustment would have been somewhere around CAD800,000 of the --

For both of those? Oh, just the market adjustment.

Just the market adjustment, that's right.

That's helpful. And I think those were my main questions. Oh, and finally, on the DRIP run rate, I just want to make sure I understand the guidance that you gave. The participation rate in the most recent month, CAD11 million of distributable cash was paid out in units; is that correct?

I think that's the way to look at it.

Yeah, in total, Linda, our DRIP program comprises both the regular group and premium group, so there will be a portion certainly paid out in extra distributions, other units for those and the regular DRIP was obviously additional units.

So the way to look at that on an annual basis right now, Linda, we feel that program is going to effectively raise CAD130 million a year for us based on the current run rate.

CAD130 million a year for 2009 and 2010?

Yes. At this stage we're keeping the DRIP -- we think we'll keep the DRIP open although we don't necessarily like where the units are trading these days. We think maintaining our balance sheet and the flexibility is important in this environment and the DRIP is a -- it's a pretty cost effective way to raise funds and so we're looking ahead at keeping the DRIP open at least for 2010, possibly beyond, depending on how we want to fund some of these initiatives.

Okay. Thank you.

You're welcome.

Your next question comes from Steven Paget from First Energy. Please go ahead.

Good afternoon. My question is on the financing cost exposure for the Horizon pipeline. First, is there an interest rate cost through provision to Canadian Natural? And could Pembina possibly issue non recourse debt against the Horizon pipeline or a combination of the Horizon and Syncrete pipelines?

We'll answer that question, interest cost is not a flow-through to the Horizon contract. We get a fixed return on that contract and a flow-through of operating cost so it's not tied to any particular capital structure, anything of that nature. So what we would look at doing, Steven, is if we're -- and Peter kind of alluded to this because of financing options here. We've got some financing options here. The Horizon pipeline has been fully financed to date. What I think we would like to do going forward though is put in place some long-term financing to displace some of the shorter term financing that we've used for that transaction, so we can displace some of our existing capacity available to us under our credit facilities and put in place longer term financing that's more applicable to an assets of the nature of the Horizon pipeline.

So could that long-term financing be non recourse?

It could be, but I don't see any need for doing that.

In the ordinary course, that's not something that we've really looked at doing, Steven.

You may do a non recourse facility for -- during a construction period on a large project but not for a project that's already built and is already essentially financed.

Okay. Okay. My second question on the Nipisi and Mitsue line, the Nipisi line is almost fully contracted while the Mitsue line is partially, 50 to 55% contracted?

That's right.

Could the Mitsue line be down sized to meet contracted demand or you're going with it about 22,000 barrels a day?

We're going to go with it at about 22,000 barrels a day, I know things have changed out there but the reality of the people that we've contracted with, that's what their requirements were for condensate based on the volumes they saw. We certainly want to maintain the capacity because we think once we've got condensate as diluent coming up into that area that's its going to be very attractive to bring volumes up into the pipeline. So no, we're not intending to down size that condensate line at all. In fact we'll be possibly looking at other opportunities to bring more condensate up to that region possibly from the Fort Saskatchewan area because we do have a pipeline that has capacity to move additional volumes so the real possibility is that we would actually look at increasing the capacity of that line.

Okay. Thank you. Those are my questions.

Thank you.

(Operator Instructions). Your next question comes from Steven Paget from First Energy. Please go ahead.

Just jumping back in the queue. Question on midstream. Truck terminal, I believe you've got one more coming on line in 2009. Is there more opportunities to build these terminals in the Western side of the province or in BC?

We've identified the areas that seem to make the most sense for us right now. There's a possibility there may be more development to the north which could necessitate the construction of another truck terminal, when I say to the north, I can tell you that we've been in discussions with customers there for some time and I think we've actually talked about the project in the past. It hasn't come to fruition because there's been constant change in ownership out there but it is a possibility that there could be another truck terminal up there. I think we've got two that are coming on in 2009, one is at Valley View, one at Gordondale. So those ones are clearly they're going to be completed -- I think Valley View we're going to be complete by the middle of May and Gordondale should be complete very soon. I don't see beyond at this stage, I don't see any other real significant possibilities at this stage, Steven.

Great. Thank you. Question more broader picture. Is it possible to use the Western line or other BC infrastructure to move oilsands crude towards the West Coast?

Really, not a lot of capacity I think, Steven. And I guess one thing you should be aware, and we've talked about this in the past is that actually we have on the back burner still is the condensate initiative that we spoke about a number of years ago. So actually would see imported condensate coming in to use the Western line and to move condensate into the Edmonton area so that's a project that has some interest to us. I don't think we would use that line to move oilsands production to the West Coast because I just don't think there's -- it's -- you can get a meaningful volume to go through that line.

Thank you. And one more, if I might. On conventional oil, is CAD35 million in net operating income per quarter a good run rate going forward?

Just one sec, Steven. We'll try to give you an answer to that. I think that's maybe a little bit -- let's see. Net operating income. If you bear with us for a moment. I think we're looking at somewhere around CAD39 million a quarter.

39. Okay. All right. Thank you.

You're welcome.

Mr. Michaleski, there are no further questions at this time. Please continue.

All right. Well, thanks again for participating in the call today. As I said, you know, the year itself turned out to be a good year for Pembina. It was a record year for a number of the metrics that we've talked about already. 2009 and beyond I think we're still pretty confident despite the current turmoil in the marketplace. Still a feeling, I think Peter is feeling good about the access to raise capital and so we'll certainly keep our flexibility that we have available to do that and look forward to talking to you again at the first quarter conference call. Thank you.

Ladies and gentlemen, this concludes the conference call for today. Thank you for participating. Please disconnect your lines.