Gibson Energy Stock

Gibson Energy Inc. provides movement, storage, blending, processing, marketing, and distribution of crude oil, condensate, natural gas liquids (NGLs), water, oilfield waste, and refined products in Canada and the United States.

The company transports energy products by using its network of terminals, pipelines, storage tanks and trucks located throughout Western Canada and through its significant truck transportation and injection station network in the U.S. It also provides emulsion treating, water disposal and oilfield waste management services through its transportation fleet and network of PRDs in Canada and the United States. The company’s integrated operations allow it to participate across the full midstream energy value chain, from the hydrocarbon producing regions in Canada and the U.S., through its strategically located terminals in Hardisty, Alberta and Edmonton, Alberta, and injection stations and small terminals in the U.S., to the end user or refineries of North America. The company utilizes its network of integrated oil and gas midstream assets to provide essential services to its customers.

Segments

The company operates through four segments: Infrastructure, Logistics, Wholesale, and Other.

Infrastructure

Infrastructure includes a network of midstream infrastructure assets that includes oil terminals, rail loading and unloading facilities, injection stations, gathering pipelines and processing facilities that collect, store, and process oil and other liquid hydrocarbon production and by-products before eventual distribution to end-use markets. The primary facilities within this segment include the Edmonton Terminal and the Hardisty Terminal, which are the principal hubs for aggregating and exporting oil and refined products out of the WCSB; gathering pipelines, which are connected to the Hardisty Terminal; injection stations, which are located in the United States; a crude oil processing facility in Moose Jaw, Saskatchewan, and PRDs located throughout Western Canada and the Northern United States.

The Hardisty Terminal comprises approximately 8.9 million barrels of storage which averaged 580,000 barrels per day of throughput in 2016, 400 kilometers of crude oil pipeline with a combined capacity of approximately 90,000 barrels per day, access to the Hardisty Unit Train Facility (and connection thereto) and a fractionation plant that processes NGL mix and splits it into its components of condensate, butane, propane and ethane. The Edmonton Terminal comprises approximately 0.9 million barrels of storage which averaged 46,000 barrels per day of throughput in 2016. Both terminals are well connected to major pipelines within their respective areas.

The company also owns approximately 65 pipeline injection stations located in key hydrocarbon producing regions throughout the U.S. Together, these injection stations averaged approximately 89,000 barrels per day of throughput in 2016.

The Infrastructure segment also includes a crude oil processing facility located in Moose Jaw, Saskatchewan that processed an average of approximately 16,800 barrels per day of heavy crude oil into an average of approximately 7,300 barrels per day of asphaltic products and approximately 9,500 barrels per day of wellsite fluids and tops. The facility has approximately 1.0 million barrels of storage capacity, and access to approximately 1,000 leased rail cars. The company also has a mud mixing plant, located in Sexsmith, Alberta, where it utilizes its wellsite fluid products in the provision of custom mud blending services.

The segment also includes approximately 15 PRDs and oil terminals, approximately 30 disposal wells and 2 landfills which are located in close proximity to major high-growth basins and provide convenient access to customer operations.

Services

The Hardisty Terminal has receipt and delivery connections to most major pipelines in the area and to the Hardisty Unit Train Facility and also receives product from Gibsons’ Bellshill and Provost pipelines. The Edmonton Terminal has receipt and delivery connections to major pipelines in the area, including pipeline receipts from Suncor’sEdmonton and Fort McMurray refineries. In addition to pipeline receipts, crude oil and condensate are trucked into all terminals, including the injection stations in the United States. In 2016, the company commissioned 3,360,000 barrels of total storage at the Edmonton Terminal and the Hardisty Terminal collectively. In addition, the company announced it had received committed customer support for the construction of 800,000 barrels of storage capacity and related pipeline infrastructure at the Edmonton Terminal.

The Moose Jaw facility processes heavy crude oil into asphaltic and lighter distillate products to be sold into specialized markets. The company’s refined products are shipped by truck, rail and pipeline from Saskatchewan to high demand markets in the U.S. and Canada.

The PRD Terminals provide waste management services that process, recover and dispose of industrial waste streams, including produced water and completion water, workover fluids, frac fluids, drilling fluids, drilling muds and wastes from spills; oil treatment and recovery services such as: waste oil recovery, custom treating (oil emulsions), facility services, crude oil terminalling and marketing and shipping. A combination of processing technology, heat, time and pressure is used to separate these waste streams into three components: water, solids and oil. Water is clarified and filtered before deep well disposal. Solids are dried, analyzed against acceptance criteria and then transported to an oil and gas waste landfill for disposal. Oil is treated to meet standard crude specifications and delivered to a pipeline; processing and disposal of drilling and production waste such as fluids and cuttings; and, water treatment and recovery services.

Customers and Contracts

The company provides fee-based storage and terminal services and tariff-based pipeline services to independent and integrated oil companies and petroleum marketing companies. End users for the company’s Infrastructure segment services are primarily major exploration and production companies, marketers and refiners, with product reaching the end markets via major export pipelines and rail infrastructure to which it is connected. The company also contracts certain of its Infrastructure assets with its Wholesale segment.

Logistics

Logistics includes a suite of logistical services that enable oil and liquids production to access fixed midstream infrastructure. This segment provides transportation and related services that allow the company to service its customers’ needs various times between the wellhead and the end market, and includes providing hauling services for crude, condensate, propane, butane, asphalt, methanol, sulfur, petroleum coke, gypsum, emulsion, waste water and drilling fluids for many of North America’s leading oil and gas producers. Additionally, the company also provides various ancillary services at the wellsite for production companies.

The company’s logistics segment includes a suite of logistical services that enable oil and liquids production to access fixed midstream infrastructure, including crude and other product hauling, water hauling and disposal and other products and services. With its fleet of approximately 2,825 trailers and approximately 1,300 tractors, the company operates truck haulers of crude, condensate, propane, butane, asphalt, methanol, sulfur, petroleum coke, gypsum, and drilling fluids in North America, transporting approximately 80 million barrels of oil equivalent throughout Canada and the U.S. in 2016. The Company also owns and operates approximately 30 sales and logistics hubs located in the Permian, Bakken, Granite Wash, Eagle Ford, Tuscaloosa Marine, Mississippi Lime and Gulf of Mexico regions that offer specialized and complementary drilling and production services to its exploration and production customers.

Services

The crude and other product hauling business line provides transportation services to its customers throughout North America. This business line connects crude, condensate, propane, butane asphalt, methanol, sulfur, petroleum coke, gypsum, emulsion, and drilling fluids to either the ompany’s existing Infrastructure assets or to third party terminals for further processing or long haul transportation to end markets. Trucking services are heavily relied upon by the company’s customers to connect remote sources of production to end markets and to provide critical transportation services when pipeline disruptions occur.

This business line provides transportation and disposal services of industrial waste water streams, which include both produced and completion water, to its customers across North America.The other products and services business line provides exploration and production companies with critical services that facilitate uptime and operation of producing wells. The company also offers a comprehensive fluids service package which includes drilling support packages as well as cleaning packages. The production services the company provides are natural extensions of its environmental fluid transport services and PRDs, which target both drilling and production related activities.

Customers and Contracts

The company’s customers in the crude and other product hauling business line include oil and gas exploration and production companies, refiners, oilfield drilling contractors, road construction companies and LPG and refined product marketing companies. The crude and other product hauling business line conducts its business using acombination of long-term contracts, master service agreements, tenders that range between one and two year periods and short-term evergreen contracts with a cancellation notice period, typically 30 days. The company has an agreement with Shell Trading (US) Company (Shell) providing it with the opportunity to act as Shell’s transportation provider within agreed areas in the U.S. and requiring the company to operate certain of its injection stations exclusively for Shell. The company’s customers in the water hauling and disposal and other products and services business lines include many major exploration and production companies.

Wholesale

Wholesale involves the purchasing, selling, storing and blending of hydrocarbon products, including crude oil, NGL’s, road asphalt, roofing flux, frac oils, light and heavy straight run distillates, CVGO, and an oil based mud product. This segment earns margins by providing aggregation services to producers and by capturing quality, locational or time-based arbitrage opportunities.

The company’s Wholesale segment provides marketing services to its customers and also focuses on increasing volumes through its Infrastructure and Logistics segments. The Wholesale segment includes the purchasing, selling, storing and blending of hydrocarbon products, including crude oil, NGL’s, road asphalt, roofing flux, frac oils, light and heavy straight run distillates, CVGO, and an oil based mud product.

Customers and Contracts

The company’s Wholesale segment buys and sells crude oil, NGLs and refined products. The major component of its revenues is the sale of crude oil. In the crude oil business, the Company’s customer base is diversified and includes major integrated oil companies, producers, refineries and an electronic trading platform. The company also provides wholesale propane distribution to customers in Canada and the U.S. The customer base for the NGL marketing business is diversified and includes refining customers, independent retailers and other end users. The refined product customer base includes road construction companies, governments, roofing shingle manufacturers, oilfield drilling contractors, refiners and oil and gas exploration and production companies.

Other

Other segment offers a range of complementary business solutions to support its exploration and production customers located throughout key basins in the United States.

The Other segment offers a multitude of services that include a range of exploration support services including permitting, surveying and exploratory drilling services in logistically difficult and environmentally sensitive onshore terrain; cold-weather, skid-mounted accommodations packaged with supporting equipment and services in the Williston Basin; and a line of rental forklifts and lift trucks strategically located throughout Louisiana and Texas.

Customers and Contracts

The company’s customers in the Other segment include many major exploration and production and geophysical companies. Services provided by the Other segment are typically required on a non-deferrable basis with a frequency of service mandated by regulatory and operational requirements.

Strategy

The key elements of the company’s strategy is to invest in midstream infrastructure with a focus on fee-based commercial structures that are responsive to customer’s needs and generate predictable, sustainable, long-term cash flow and earnings; eExpand the business by improving and enhancing services at existing facilities; and pursue focused, complementary ‘bolt-on’ growth, within its existing footprint, that directly supports its infrastructure assets.

History

The company was founded in 1950. It was formerly known as Gibson Energy Holdings ULC and changed its name to Gibson Energy Inc. in 2011.