Royal Bank Take on AltagasContinued strong execution of its business plan Deleveraging progress continues with asset sale AltaGas announced the sale and closing of certain U.S. Transportation and Storage assets for cash proceeds of US$275 million (C$344 million) on April 23, 2021, with the company noting that it expects to further reduce leverage through reduced working capital requirements related to the divested assets. In total, the company expects to delever on a net debt/normalized EBITDA basis by approximately 0.5x over the course of 2021, compared to a 5.6x run-rate (i.e., incorporating the consolidation of Petrogas) exiting 2020. Management noted that it remains committed to delevering to its target of sub-5.0x, and that it would see the potential sale of its stake in the Mountain Valley Pipeline (MVP) once the project is derisked (i.e., once it is complete or nearly completed) as bringing leverage to below 5.0x. On the topic of prospective asset sales, management stated that it continues to see non-core dispositions as primarily being motivated by delevering, although with significant progress on delevering over the past two years coupled with a higher share price, we sense a reduced sense of urgency. AltaGas also stated that it sees assets that it cannot strategically leverage or operationally improve as being potentially non-core, and that attractive sector transaction multiples are not necessarily enough alone to motivate a sale. Montney activity driving increased processing and fractionation volumes AltaGas noted that it is seeing increased throughput at its Townsend and North Pine facilities, as well as at its non-Montney facilities, with processing and fractionation volumes up 10% year-over-year in Q1/21. Management sees relatively active drilling programs and ramping production from Montney producers, which should help support Midstream results going forward. Longer-term, management noted that it sees opportunities for additional capital investment in its Western Canadian Midstream footprint, including a potential expansion of fractionation capacity, preferably on a modular basis. Midstream hedging update: adding tolling agreements remains a focus AltaGas’ Midstream business is reasonably well-hedged for the balance of 2021, with the company's expectation of roughly 60% of forecast LPG export volumes being tolled or hedged, and roughly 92% of its expected 9,500 b/d of frac exposed NGL volumes hedged. Management’s negotiations with producers to increase its share of LPG export volumes that are under tolling arrangements continue, with recent producer consolidation providing a modest tailwind for these efforts. The company stated that it continues to feel confident about its competitive position despite a new propane export terminal on Canada’s west coast starting operations in H1/21, noting that it continues to see an oversupplied propane market in Canada, and that it has the flexibility to export butane in addition to propane.