Tidewater Midstream and Infrastructure Ltd. (TWM) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the Tidewater Year-end 2021 Financial Results Conference Call. [Operator Instructions] This call is being recorded on March 10, 2022. I would now like to turn the conference call over to Mr. Doug Beamer. Please go ahead.

Thank you. Welcome, everyone, to Tidewater Midstream's year-end results conference call. My name is Doug Beamer. I'm the Vice President of Corporate Finance. On the call with me today is Joel MacLeod, Tidewater's Chairman and CEO. Before passing the call over to Joel for a review of the operating highlights, I'd like to remind everyone that some of the comments made today may be forward-looking in nature and are based on Tidewater's current expectations, estimates, judgments and projections. Forward-looking statements we may express or imply today are subject to risks and uncertainties, which can cause actual results to differ from expectations. Further, some of the information provided refers to non-GAAP measures. To know more about these forward-looking statements and non-GAAP measures, please see the company's various financial reports, which are available at tidewatermidstream.com, our website, or on SEDAR. With that, I'll pass it off to Joel MacLeod to discuss highlights from our year-end results.

Thank you, Doug. Good morning, and thank you for joining our Q4 2021 conference call. We are proud to have now delivered 11 consecutive quarters of record per share adjusted EBITDA growth and delivered $54 million of adjusted EBITDA in Q4 2021. This represents a 10% increase in per share adjusted EBITDA growth year-over-year. More importantly, total adjusted EBITDA for 2021 of $210 million was a 17% increase from 2020 at $180 million, with net debt being reduced by 21% to $678 million. So EBITDA increasing 17%, net debt decreasing by 21% and continuing to deliver record quarters. Net income was also a record at $71.5 million in 2021 and distributable cash flow per share also grew by approximately 40% versus 2020. Overall, a record year on all fronts, including debt reduction and want to thank our staff, our Board shareholders for all their support. And we look forward into 2022, where we're off to one heck of a start and expect to deliver a 12th consecutive record quarter in Q1 of 2022. Further, with our 70% owned subsidiary Tidewater Renewables on track to bring online the renewable diesel project in approximately 12 months. We do anticipate being able to deliver over $300 million of annualized adjusted EBITDA on a consolidated basis in approximately 14 months, which translates into an increase of approximately 35% of consolidated adjusted EBITDA and approximately 14 months while maintaining our leverage target of 3 to 3.5x debt to adjusted EBITDA. We definitely did not expect to see CAD 150 per barrel WTI prices again, and this has been a huge tailwind for Tidewater and our customers. We are seeing material increases in activity, volumes and margins at both our midstream and downstream facilities, including our refinery and expect this to result in another consecutive record year for Tidewater. It was also great to see transactions by our peers over the past 30 days, validating what we are building for our shareholders. To see Pembina and KKR announced their partnership, which values their Montney gas processing assets at around a 12x EBITDA multiple, and as most of you are aware, our Pipestone Gas Plant would be right in the heart or the sweet spot of this JV, and as a deep cut plant, has acid gas injection and carbon capture and is one of the only gas processing facilities connected to gas storage. Further, we also saw Chevron acquire Renewable Energy Group for approximately USD 3 billion in the past 30 days, where Renewable Energy Group is a producer of biodiesel and renewable diesel, and the transaction was at around a 6 to 8x multiple, depending on what year of EBITDA you evaluate it. So again, further validation of what we are building with large, well-capitalized entities, deploying large amounts of capital into our backyard and/or into common assets. Back to our assets, just to summarize the performance of some of our assets in the quarter. We'll start with Prince George. During the fourth quarter of 2021, total throughput was approximately 12,200 barrels a day, consistent with previous quarter and fourth quarter of 2020. In August 2021, Tidewater Renewables commissioned the canola co-processing project at Prince George and began processing canola feedstock which yields both renewable gasoline and renewable diesel. Prince George crack spreads remained very strong in Q4, averaging just over $60 a barrel during the quarter, consistent with the previous 3 quarters of 2021. During the fourth quarter, the corporation realized decreased diesel and gasoline demand as compared to the previous quarter due to the normal seasonal demand fluctuation with the end of driving season and reduced industrial activity at the end of December due to the holiday slowdown. Additionally, the flooding NBC created some temporary logistical constraints for the refined product customers demand due to rail and highway washouts. That said, we were very helpful in the floods, and we're more than happy to help the province. Demand for both gasoline and diesel has picked up and increased into Q1 2022, and the crack spread or margin has also increased. So great to see Prince George continuing to outperform. Tidewater Midstream does continue. We do continue to pursue numerous low capital, high rate of return, debottleneck and optimization opportunities within our refinery and downstream business unit. Again, in Q1, record crack spreads and Prince George continues to heavily outperform expectations since acquiring the asset in late 2019. We'll jump over to Pipestone. So Pipestone Montney sour deep cut plant on the Alberta side of the border. The Pipestone gas plant processed our highest average volume of 99 MMcf/day in the fourth quarter of 2021, a 38% increase from the fourth quarter of 2020, and an increase of 3% from the third quarter of 2021. Facility availability for the fourth quarter of 2021 averaged 96%, an increase of 25% from the fourth quarter of 2020. The Montney area continues to remain extremely active, including the Charlie Lake as well, and the plant remains fully contracted with over 85% committed capacity on take-or-pay arrangements. Big thank you to our team as I would never dream we'd see an asset run at 99 million cubic feet a day with $100 million to $110 million in capacity. We continue to see strong customer support supported by long-term take-or-pay agreements for a potential Pipestone expansion and continue to evaluate. Over to Brazeau River. The Brazeau River facility will serve with the frac. Our Brazeau River fractionation facility performed well during the fourth quarter of 2021. We were able to maintain stable operations while providing egress optionality to our producers who are constrained by third-party force measures at the beginning of the quarter. The frac at Brazeau utilization averaged 92%, an increase of 850 barrels per day relative to the third quarter. The frac continues to serve as a key asset for Tidewater Midstream's NGL marketing business. Throughput at the BRC gas processing facility for the fourth quarter of 2021 did decrease by 5% compared to the third quarter of 2021 due to producer equipment maintenance and outages during the quarter, fairly minor. Tidewater Midstream continues to look for opportunities to increase third-party plant throughput by working diligently with producers to improve netbacks by increasing the utilization of Brazeau's facilities. We have completed a new gathering line at Brazeau, which has recently come online and again, bringing in more volumes to the facility and excited to get those volumes online and ramped up. A quick update on our 70% owned subsidiary in Tidewater Renewables. Just briefly, given we own 70%, Tidewater Renewables did deliver a strong quarter with $10.6 million of EBITDA and the majority of their cash flow are backstopped by 10- to 15-year agreements. Tidewater Renewables remain on time and on budget to bring online the renewable diesel plant in approximately 12 months and remains confident adjusted EBITDA will grow 300% within the next 14 to 18 months, with the renewable diesel project coming online. Tidewater Renewables base business is performing well, and they expect to see 20% growth over the next 8 to 9 months, where Tidewater Renewables continues to make material progress on the long-term feedstock strategy. Great to see our subsidiary performing well. I also want to announce that Mr. Brian Newmarch has been appointed our new CFO. We're really excited to have Brian on board, he brings over 20 years of experience. Most recently with Seven Gen, strategic planning, financial management, corporate development, sustainability and capital markets. And again, we're all excited to have Brian on board. Again, we'd like to reiterate our record quarter for shareholders where we saw 17% adjusted EBITDA growth while delivering a 21% reduction in net debt. Further, we delivered 11 consecutive quarters and expect a 12th in Q1 2022. With the renewable diesel project coming online in approx 1 year, we expect to see further growth of an incremental 35% in our consolidated adjusted EBITDA while maintaining debt in the 3 to 3.5x range. Just want to thank our staff, again, our Board, shareholders, credit syndicate, partners and all stakeholders for all your support. We look forward to delivering strong results for our shareholders in 2022. I'll pass it over to Mr. Beamer, and he will walk you through the financial highlights of our Q4.

Thank you, Joel. As Joel mentioned, 2021 was a year of solid execution for Tidewater Midstream. The corporation delivered annual consolidated adjusted EBITDA of $210 million, a 17% increase from 2020 of approximately $180 million. We also had another successful fourth quarter, reporting approximately $54 million of consolidated EBITDA, up slightly from the previous quarter. The consolidated EBITDA being just purely Tidewater Midstream was approximately $43 million for the quarter, slightly down from the previous quarter, which is just reflecting the full 3 months of the spin-out of Tidewater Renewables. Distributable cash flow for the quarter, which excludes the noncontrolling interest portion of Tidewater Renewables, was $14 million for the quarter compared to approximately $16 million from the previous quarter. Again, the decrease is a reflection of the full 3 months of the spin-out of Tidewater Renewables. Our consolidated revenue for the quarter was $535 million, representing a 23% increase from the prior quarter, in large part, strengthening of commodity prices and continued strong demand at PGR and throughput at Pipestone. Consolidated gross operating margin, which includes realized gains on hedges, was approximately $61 million in the fourth quarter, representing a 10% increase from the prior quarter and a 15% increase from the -- in the same period in 2020. During the quarter, Tidewater Midstream extended its pipeline lease with Pembina being the Western tailored pipeline, which supplies feedstock to the Prince George Refinery. There was no impact to adjusted EBITDA or distributable cash flow, but one will see an increase in the lease liabilities on our balance sheet as a result of IFRS 16 measurements. Consolidated net debt was $678 million versus $643 million in the previous quarter. Overall, the consolidated increase in net debt is due to the HDRD construction costs on a consolidated basis. Deconsolidated net debt was $619 million versus $609 million from the previous -- prior quarter, Q3. Tidewater Midstream has been able to successfully deleverage within 3 to 3.5x debt-to-EBITDA range, and we continue to monitor that range as well on a go-forward basis. The corporation remains focused on improving its financial position, including refinancing its second-lien term loan, the notes payable and enhancing go-forward liquidity. As part of this process, the corporation is currently evaluating several refinancing options and expects to make a decision in the near term. With that, I'll pass it back to the operator and open it up to questions.

[Operator Instructions] Your first question comes from Robert Hope with Scotiabank.

Maybe the first question is just, Joel, on your prepared remarks. If I understood correctly, you're looking for EBITDA growth once again to -- or EBITDA to grow once again in 2022 versus 2021. As you take a look at the business, where are the largest sources of growth there? And then how are you thinking about kind of refinery margins in 2022 versus 2021, given that was off to a relatively good start?

Rob, good question. I would say, continuing to debottleneck the refinery. Obviously, margins have improved. I would say, we're trying to not get ahead of ourselves, but where margins are today versus where our budget is definitely ahead. So where is the growth coming from? I'd say, it's increased throughput at Prince George, slightly higher margins. And then in general, just more volume at our facilities. And even the Pipestone asset, as we mentioned in the opening remarks, the exact percentage was kind of 30% increase Q4 versus Q4. So as we started off early 2021, we're going to start off at 99, 100-ish million cubic feet a day. So we're just going to start off the year better, which is going to result in even from Pipestone for the full year more related cash flow as well. And then we are seeing more volumes at our other facilities, and then we are planning to deploy today roughly $30 million of capital at, I'd say, 3-ish year payouts or less. So all those pieces, I would say, our goal would be to have 10-ish percent growth in the year on adjusted EBITDA. And then the big project that I'm sure we'll get a question -- we do have daily, is on the Pipestone expansion, more work to do, but that would be the one bogey over the next couple of weeks to a couple of months as to determining capital costs, confirming customer support and potentially moving forward with a full financing plan.

Yes. Just to follow up on Pipestone, it does look like volumes are moving up nicely in the area. How have conversations with customers gone there? So is the gating factor there, just kind of the structure of financing there and whether or not you bring a partner in?

Yes, I'd say, Rob, and you're well aware, 6 or 8 months ago, I think our message was around 50% probability. That's definitely moved up, and today, with the activity, commodity prices, I'd say we're fairly confident. We have customer support. Now to your point, it's capital cost with gathering lines, do we need to build to connect our customers? We are seeing, like everyone, inflationary pressure. So we need to nail the capital cost. And then to your point, determine the optimal way to finance. The good news is there's lots of capital flowing into the Montney with the recent transaction and other private equity groups. So step one is nailing our capital and step two will be nailing a financing plan, but trying to move through that process here over the next few weeks and a few months.

Your next question comes from Robert Catellier with CIBC.

Just to follow up on that comment you made about Pipestone and the timing, what has to be done to make that a success. Is that in any way tied to you -- is the refinancing of the second lien and the notes payable tied to that at all? In other words, are you trying to do a comprehensive financing package that addresses both the Pipestone need as well as the refinancing of those 2 items?

Potentially, Rob, yes. Absolutely, the refinancing of our notes are important. The Pipestone expansion is equally important. So absolutely working through both those pieces concurrently. It's great to have a pile of options. I think we just need to determine and can we commit to them both happening at the same time in the market we live in. I would hate to overcommit. I know that those are both a real focus for us to get wrapped up here in the coming months.

Okay. And then when you look at what's happening the commodity price markets and the impact it could have on refining margins, what are you doing to protect yourself from that volatility and the possibility of acquiring expensive feedstock going to see the refined product prices drop in a short period of time?

Yes. We've been actively and continue. There's -- as you know, Rob, there's no way to perfectly hedge a Prince George crack. Light sweet crude for the most part through to a Prince George rack diesel and gasoline price. But even the ULSD crack has been around USD 30 and north of USD 30, which is the first time since we've acquired the refinery. So we are definitely looking at ways and have been selling our diesel position and our gasoline and also securing our feedstock in Edmonton Light. We don't hedge more than 50% as there can be dislocations with COVID, but are definitely working to even secure the inventory values as we did not anticipate to see CAD 150 diesel prices. So I would say, various ways to lock in related gains and manage our risk, but at the same time, we need to be careful as there's no perfect way to hedge a Prince George rack price.

You touched on my next question, which was, how much do you think you'll have to invest in working capital given the run-up in commodity prices? So even if throughput and volumes didn't change, they're more expensive, so that requires working capital investment. So assuming prices stay close to where we are right now, what's the additional working capital requirement?

We're very fortunate with our Cenovus Husky offtake where weekly, we are paid for our sales. So we're essentially provided the refined product cash before we have to pay for the crude on the 25th the following day. So the impact is not as material as you would anticipate. And I would say, there's an impact, but to me, it's nominal. Doug, you can jump in. I think there could be a minor impact, but we also have had our credit syndicate and others offering ways to manage. And it hasn't been an issue with the big run-up. I do want to be clear, but Doug, feel free to jump in if you think I missed anything. The offtake agreement is extremely helpful to manage our working capital.

No, that's a fair statement, Joel, that it's definitely top of mind looking at working capital. But because of that weekly Cenovus offtake payment, it does mitigate that risk of a run-up.

Thanks, Doug.

Okay. Last question from me. I wondered if you could comment on G&A trends given the bump up in the quarter and whether that's inflationary? Or just how would you look at that? Part of it could be from Tidewater Renewables, but just in terms of the Tidewater deconsolidated G&A, what trends are you seeing there?

Yes. I would say, it's growth. Definitely renewables and midstream. And in general, with oil at CAD 140, we're going to need to compensate our staff, Rob. So individuals like myself, there will be no salary increase, but I think everyone else, you'll definitely see a bump, and we want to retain. We have incredible people, but Doug can speak to the numbers better than I. And I would say, expect a move up. Inflation, retaining people and then the growth are renewable. So on a consolidated basis, absolutely, you're going to see G&A move up, but Doug can probably quantify it a little better than I can, Rob.

Yes, that's -- it's a good question, Rob. I think Joel summed it up quite well. There is the growth aspect of it, and then on a deconsolidated basis, we do have shared services between Tidewater Midstream and Tidewater Renewables on that, but there is definitely on the just general labor and inflation, et cetera. It's something that we do monitor, but we do expect a slight increase probably in G&A in 2022.

Yes. And obviously considered in your -- the guidance you gave about EBITDA growth for the year?

Correct.

Next question comes from Andrew Kuske with Crédit Suisse.

Joel, you talked a little bit about this in your opening comments and this is the private equity influence in the basin. I mean maybe if you could just give a bit more color and context on do you see private equity or alternative capital as being more of a friend in the future or a bit more of a foe?

Well, that's a good question, Andrew. I would say, today, as a small player, I would say, we have strong relationships with a lot of the major players, and we need to, as I think everyone knows. Even with KKR being involved in the P system in Pembina and then we're excited to also support Caps and Keyera with their system. And obviously, they'll be looking for a new partner to step into that ownership position. So our goal is to help industry as a whole, work with Pembina and work with Keyera and work with private equity groups. And as I think most would understand the financial capital, the private equity also needs management team. So I think it's an opportunity, but to your point, Andrew, there is a negative there where competition increases, and it gets tougher to compete. We're very fortunate to have one of the first Montney sour deep cut plants connected to gas storage and definitely in the heart of the action. So that's helpful to have an initial footprint, but for me to say it's all positive, I think the negative side is, if we do see more private equity capital flow in, competition will go up. So getting our hands on volumes or saving a Pipestone Phase 3 or a Phase 4, it's going to get more and more competitive. So I think there's gives and takes and are really excited about the next 6, 12 months. But it also, for our shareholders, I think, results in our true value examples in the market that our shareholders can say, okay, now I can look at that Pipestone asset and it's worth 10 to 12x. That's been validated in the market, which I think really helps some of our shareholders that have been with us for 5-plus years.

That's helpful. And if you think about the validation of the mark with the transaction in the market, and then maybe looking at it through a friendly lens, do you see an opportunity to really accelerate the growth in a more capital-efficient fashion for yourselves? And then what could that look like?

Yes, definitely open to those discussions and had them in the past and expect to continue to have them. I think, too, it's interest rates, global macro pieces, Andrew, that you know way better than I. When is the right time, and when is the cost of capital ideal, we won't be picky or trying to pick the perfect time. It's more when do those private equity groups want to deploy capital. And I do think the Pembina, KKR marker has been helpful for the area and the activity and oil price is definitely higher than I thought we'd ever see them. So we're definitely open to those discussions or having a few of those. And the timing feels pretty darn good to be having those conversations when oil commodities are where they are, and there's a transaction in the market with a marker.

Great. If I could sneak in one more, and it really is looking back on PGR. And then maybe looking ahead, if you were to think about anything in the refinery space in the future from an opportunity set, what were the lessons learned from PGR? And how could something in the future maybe look?

Yes. Lesson learned with PGR. So that's a good question. Obviously, the assets outperformed, which is great. But if there was some lessons learned, I would say, we always value our people. And I think even in the meetings, I say, our greatest asset is our field team and what they do, and I would just emphasize that as well to see the refinery run as well as it has the value our team brings and even the relationship with the BC government to provide $100 million of grant support is critical. But I would say as far as learnings, just maybe to the number of low capital, high rate of return opportunities and even the future within BC of potentially working to continue to expand that footprint with the BC Montney. I think the market reaction was one we weren't ready for as we took a lot of negative feedback when we announced the deal and definitely the most negative feedback I've received in my life. So if we did look at something similar, I think we'll be a little more hesitant. At the same time, the asset has outperformed, and we hope at one point, the market will recognize how well the assets perform for us. There's a lot of rambling there, Andrew. I just wanted to try and give you an honest answer.

Your next question comes from Robert Kwan with RBC.

If I can kind of carry on a little bit with that discussion, Joel. And if you just think about your share price, you're talking about hoping the market will realize the value and what you've done. How much do you see it -- or how important is it for you to take moves or make moves to try to improve the share price just given where the low multiple is? And if you can maybe tie it together with your statements on Pipestone and the value you see there, would you look at selling an interest, not to finance an expansion, but really for the purposes of getting that leverage into that, say, 2.5 to 3x range sooner than later and possibly buying back stock?

Yes. I'd say, all of those discussions are -- it's a great time to have them and definitely, at the Board level. As you know, our cost of capital is probably our biggest struggle as well. So a lot of discussions at the board level. What can we do to improve that cost of capital, and I think all that know us, including yourself, we're open to ideas, partnerships. At the same time, selling down a portion of an asset does make it potentially reduce value longer term to monetize. So I think we're open to discussions, but we're not going to just enter into a JV or sell down an interest to sell down an interest. I think it's got to be the right option, and today, it's nice to have multiple options. But leverage is definitely a piece that you know well -- everyone knows well from 2020 to 2021, our leverage, bringing our leverage down was such a focus. Now we've accomplished it. And are we willing to take our leverage somewhere between 3.5 and 4x, if we had 10-year take-or-pay. Lots of discussions. The good news is, we're going to have lots of options in front of us. It's just -- I think getting feedback from the market yourself, Robert, is all helpful.

I guess, is there -- because, look, these are discussions that have happened over the course of the past year, and obviously, you've had different things unfold, including with renewables. Is there a bit of a thought of -- of course, you'd like to have a higher share price and a lower cost of capital, but if you're not issuing equity that it's really just not a priority to take steps that maybe feel are outside of your strategy, at least operationally.

Yes. Today, it would be unlikely we'd issue equity depending on the opportunity. So to your point, we need to be careful. I think as you know, our biggest fault or criticism is, we chase too many squirrels. I think the largest squirrel we chased in the Prince George Refinery has turned out to be the best acquisition I've ever done in my career, but I don't think we're ready to or want to step out again. So we need to focus on our assets, focus on Pipestone, that opportunity. Focus on debottlenecking Prince George, but yes, we're -- we'll be a little more hesitant to step outside the box and try and focus in on those core assets, especially if we can build a Pipestone at a 5, 6x multiple and the market is going to value that asset at 10 to 12x. I think our shareholders would say, focus on that core area. You guys are known today as a lead operator in the area and focus. I think the question to your point is, how are we going to finance that opportunity? The good news is, we're going to have lots of options. I think the question will be, what is the best option.

And I might just finish with -- and maybe it is just around the focus, but the 2022 capital program, I think you mentioned $30 million of CapEx at one point. Can you just break down though the 2022 capital program between how much is growth, how much is maintenance? And then if you can just be clear, the figures you're giving, whether it's consolidated or deconsolidated?

Great. So let's start with deconsolidated. Deconsolidated Tidewater Midstream, today, we will plan to deploy $30 million of growth capital and deliver roughly a 3-year payout or sub-3-year payout. Examples are a onetime at Brazeau. Some of that was deployed in Q4, but rolls into Q1. And then our propylene splitter project, which does have a 5-year investment grade offtake, taking our existing LPG mix, which has propylene and being able to split off to a propylene product that we can increase value on. Those would be kind of the biggest chunks. That's close to $20 million of the $30 million, and then we have some other debottlenecking projects through our assets. Our maintenance CapEx, I'll probably pass over to Doug. We do have turnarounds at Brazeau, Ram River and Pipestone. And then our deconsolidated number on that is in the $30 million to $35 million range, but Doug will jump in, in the event I'm off by $5 million or so there.

No, that's a good summary, Joel. This 2022, and obviously, in 2023, our turnaround years, we -- 2023 is the PGR turnaround, but given supply chain issues, inflation, we will lock in some of those costs earlier that will be incurred in 2022. But roughly in that $30 million, #35 million turnarounds for 2022.

Perfect. And then just on the consolidated side, I think on the prior call, it was, what, $90 million, $95 million on growth and $5 million to $10 million of maintenance?

Yes. I think you're -- I think we're $12 million of maintenance in renewables, so that versus $5 million to $10 million. And then within the CapEx, Robert, you have at $90 million to $95 million, just realize the timing of those credits and when they're received and monetized, you may end up with a timing difference of, I don't know, $10 million to $15 million on either end of that. So just the timing of when those credits are received. We have been monetizing them, as you know, at a much higher price, but would know that there's probably a wider range on that growth CapEx number in renewables, just mainly due to timing of when the credits are received and monetized.

[Operator Instructions] Your next question comes from Patrick Kenny with National Bank Financial.

Just on your sustainability report, I guess, related to comments around stepping outside the box. So you highlighted the potential integrated project at BRC that might include blue hydrogen, CCS, cogen and whatnot. Can you just remind us where this project would sit within the corporate structure, the timing of any regulatory milestones or potential FID? And also where this project might rank relative to, say, a Pipestone expansion or other competing decarbonization opportunities?

Good question, Pat. You went digging for that question. Good job. So I would say, definitely lower on the priority scale. The Alberta government has awarded Tidewater Midstream a grant related to that project, but the economics of the project, we're still working through. And with Brazeau, it would sit within Tidewater Midstream, depending on how large that project got. I think Tidewater Renewables could potentially participate, but for now, it's a Tidewater Midstream project. That midstream is evaluating. And to your point, it potentially includes carbon capture, hydrogen and even potential involvement with some end users and some larger midstreamer. So definitely more work to do. We don't have the economics. So I would just notch that one down into the low priority and even sub-50% probability for now.

Okay. Perfect. And then maybe just a cleanup question on PGR. Just -- I know there were some headwinds late in the year, but you did mention the facility outperformed. I assume that the base $75 million adjusted EBITDA guidance. So maybe you can just quantify the outperformance there. And also looking forward, based on your current hedge book, I'm just trying to get a sense as to how much of your spreads are locked in going forward relative to, say, the $75-plus crack spreads that we're seeing today?

Yes, Pat, I'd say high level -- I'm going to give you ranges or high level. If you said, in 2021, how did Prince George perform, the start of the year was COVID, so our margins weren't into the 60 range, but definitely, we delivered in that $100 million of EBITDA range even if we said a $90 million to $105 million. I know that's a wide range, but it was great to see the asset outperform in Q4 was definitely helpful. Then your next part of your question was, how much are we hedged on our crack. We definitely have -- I would say, we would be 20% to 30% hedged on our cracks. But just know, again, there's no way to perfectly hedge a Prince George rack price, so we would -- the majority of our related margin does ride with the market. Definitely on light sweet dips, when those are wide, we do step in and lock that in. And then when we do see opportunities on the diesel market, we will also sell the diesel side or the RBOB gasoline, but there's essentially no way to perfectly lock in a Prince George rack price on diesel or gasoline. So the majority of our margin at Prince George will continue to run with the market. I think the message, I think, most of our shareholders, and you definitely know. If you look at a chart on the margin at Prince George, it's way more solid than anyone, I think, would anticipate in a COVID year. We maintained our $40 to $50 crack. Now with wars breaking out and just global macro uncertainty on refined product, we're definitely seeing material moves up. We're not planning for those, but we are doing our best to try and lock in portions of that value.

There are no further questions at this time. Please proceed.

Thank you. Well, thank you, everyone. Thanks for your time. Thanks, Doug, and I appreciate everyone's time and look forward to a strong 2022.

Thank you, everyone.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a great day.

Thank you.

Thank you.