AltaGas (TSE:ALA) executives used the company’s fourth-quarter 2025 earnings call to highlight year-end momentum in both Midstream and Utilities, provide updates on major growth projects, and reaffirm 2026 financial guidance. President and CEO Vern Yu also introduced Sean Brown, who joined the company in January as Executive Vice President and Chief Financial Officer.
2025 performance and strategic priorities
Management said 2025 results were driven by strong performance across the Midstream and Utilities businesses. Yu reported normalized EBITDA “close to the top” of the company’s guidance range, exceeding CAD 1.86 billion for the year, while earnings per share came in at CAD 2.23, in the “upper half” of guidance.
Yu said 2025 results supported a 29% total shareholder return during the year and a five-year TSR CAGR of 22%, which he said meaningfully outperformed peers.
Project updates: Pipestone 2, REEF, and additional growth backlog
Yu said Pipestone 2 entered service in December and is operating close to full capacity, adding that the project was delivered on time and on budget.
On REEF, management said Phase I is 70% complete and remains on plan. Yu said all LPG accumulators and bullets are on site and that the project’s trestle construction has accelerated, with eight of 13 spans installed and the remaining sections expected to be put in place later in the spring. Work has also begun on the loading platform, and Phase I of the rail and utility corridors has been finished, including the full rail yard and rail offloading modules.
Yu said the company reached a positive final investment decision (FID) on REEF Optimization One, which is expected to be in service by mid-2027. He added that Optimization One is now expected to add 30,000 barrels per day of propane export capacity, higher than original expectations. In the Q&A, Midstream President Randy Toone attributed the increase from 25,000 barrels per day to 30,000 to detailed engineering optimizations.
Additional projects discussed included the Ripon methanol removal project and expansions at Dimsdale gas storage, which Yu said remain on time and on budget and are expected to contribute to the company’s 2027 growth outlook.
Management also highlighted a broader Midstream “hopper” of potential projects, including:
- A Townsend depropanizer (management said it could see an FID within about 12 months, driven by customer volumes)
- A Northeast B.C. liquids expansion focused on improving long-term rail logistics
- Additional phases of REEF, including potential ethane exports (Yu cited strong demand from China)
- A North Pine fractionation expansion and more gas processing associated with “Pipestone 3”
Utilities modernization and data center connection work
Yu said AltaGas is set to start construction of the QNR Connector pipeline in the spring, noting that long-lead items have been ordered and the right of way has been secured. He also said the company has CAD 1.7 billion of modernization programs across four utility jurisdictions.
On data centers, Yu said multiple feed studies have been completed and construction has begun on natural gas connections to supply Phase I of a 24-megawatt facility in Maryland, expected to be completed by year-end.
Yu used the call to emphasize the role of natural gas in customer affordability, stating that electricity for home heating is “more than three times more expensive than natural gas” across AltaGas’ jurisdictions and that recent electric bill increases have been “over 10% per year.” He argued public policy should prioritize cost-effective outcomes and avoid “unnecessary electrification” that increases bills and reduces reliability.
Midstream exports, hedging, and market conditions
CFO Sean Brown reported a strong fourth quarter, with normalized EBITDA of CAD 564 million, up 8% year-over-year, and normalized EPS of CAD 0.77, consistent with the prior-year period.
Brown said AltaGas exported more than 124,000 barrels per day of LPGs in Q4, including more than 85,000 barrels per day from RIPET, which he called a quarterly record despite a 28-day labor disruption. He said AltaGas signed a new five-year union agreement in late December that is expected to support increased vessel loading and higher throughput.
Across the broader Midstream platform, Brown said throughput was up an average of 4% year-over-year across gas processing, fractionation, and extraction assets. Midstream normalized EBITDA was CAD 202 million, up 11% from Q4 2024, supported by exports and performance in the Montney-focused assets, where gas processing volumes increased 6% and fractionation volumes increased 14%. Brown added that Pipestone throughput increased 11%, while North Pine operated near its 25,000 barrel per day capacity.
Brown said strengthening demand for open-access export terminals, supported by long-term tolling agreements with investment-grade counterparties, enabled AltaGas to hit its 60% tolling target. He also detailed the company’s commodity risk management, stating that approximately 80% of expected 2026 global export volumes are either tolled or financially hedged, and that substantially all 2026 Baltic freight exposure is hedged through time charters, financial instruments, and tolling arrangements. He said the company increased its frac spread hedge position to roughly 70% through 2026 following a “meaningful uplift” since the start of the year.
Yu also described shifting export destinations in 2025, saying 45% of volume landed in China and AltaGas’ market share increased to about 6% of China’s imported propane. He said AltaGas represented about 5% of Canada’s total national trade into Japan, South Korea, and China—amounting to about CAD 2.5 billion in 2025—which he expects to double by 2030 with the startup of REEF and Optimization One and continued debottlenecking at existing facilities.
Regulatory outcomes, balance sheet actions, and 2026 outlook
Brown said Utilities normalized EBITDA in Q4 was CAD 383 million, up 14% year-over-year, driven by rate base growth from modernization investments, asset optimization initiatives, and an 18% increase in usage tied to colder weather and customer growth. He said results also benefited from a partial settlement of Washington Gas’ pension plan, while lower retail energy contributions and higher O&M costs partially offset performance.
Brown highlighted several regulatory developments during the quarter, including:
- Approval of new rates in D.C. at 61% of the company’s request
- A $25 million extension of the PROJECTpipes 2 ARP program in D.C. through June 2026
- Approval of a $700 million ARP amendment in Virginia extending through 2028
- A new rate case filing in Maryland late in the year
- A $61 million rate case filing in Michigan after year-end
- Approval “this week” for the D.C. SAFE ARP program to spend $150 million from mid-2026 to mid-2029
On leverage, Brown said that after deciding to retain AltaGas’ stake in the Mountain Valley Pipeline, the company issued CAD 460 million of equity, producing a deleveraging impact equivalent to divesting the working interest while retaining upside. He said the year-end leverage ratio of 4.7x was slightly below the midpoint of the company’s 4.5x–5x target range, and that S&P and Fitch provided positive credit revisions. Brown also said the MVP Boost project, expected to enter service by mid-2028, would add 0.6 Bcf/d of capacity through compression and is supported by investment-grade utilities.
AltaGas reaffirmed 2026 guidance for normalized EBITDA of CAD 1.925 billion to CAD 2.025 billion and normalized EPS of CAD 2.20 to CAD 2.45. Brown said tailwinds include new utility rates in Virginia, Maryland, and D.C., incremental contributions from PROJECTpipes 2 and the Dimsdale Phase 1 expansion, and continued growth in global exports supported by increased dock capacity at Ripon. These are expected to be partially offset by lower merchant volumes and more moderate retail energy performance.
The company’s 2026 capital budget remains CAD 1.6 billion, with 69% allocated to Utilities and 27% to Midstream. Brown said the CAD 1.1 billion Utilities capital program is 71% allocated to modernization and system betterment, expected to drive approximately 10% rate base growth in 2026.
During Q&A, Yu addressed questions about a public disagreement involving the Metlakatla First Nation and Trigon’s interest in building a competing LPG export facility on Ridley Island, saying AltaGas wants to maintain dialogue while also defending its commercial rights and exclusivity arrangements. Yu said AltaGas has worked with Metlakatla since 2017 on Ripon and REEF and noted indigenous business participation in REEF construction, including about CAD 350 million of the project’s total capital cost.
About AltaGas (TSE:ALA)
AltaGas Ltd owns and operates a diversified basket of energy infrastructure businesses. Business is conducted through four segments: Midstream, power, utilities and corporate. Utility business owns and operates rate-regulated natural gas distribution assets across North America. Midstream business subsequent to the sale of non-core midstream assets in Canada and also engaged in the natural gas liquid processing and extraction, transportation, and storage. Natural gas is sold and purchased for both commercial and industrial users.
