CALGARY, Alberta, April 9, 2018 /PRNewswire/ -- Pembina
Pipeline Corporation ("Pembina" or "the Company") (TSX: PPL; NYSE:
PBA) announced today changes to the Company's reporting
segments.
As previously announced, given the enhanced scale and scope of
Pembina's business following the closing of the Veresen Inc.
("Veresen") acquisition in 2017, and considering the future needs
of both the Company and the North American energy industry,
Pembina's management structure is evolving to position it for
continued success. Effective January 1,
2018, Pembina's operations management structure is organized
by three divisions: Pipelines, Facilities and Marketing & New
Ventures.
Accordingly, the Company's financial reporting format is
changing to better align with the new structure. The new
organizational structure and reporting format provides a number of
benefits including consistency between how Pembina's business is
managed and how results are reported; the placement of like assets
together within the same reporting segment; the creation of centres
of excellence, which will increase reliability and cost
efficiencies; and the establishment of a separate reporting segment
for Pembina's commodity marketing activities and the development of
larger-scale, value-chain extension projects.
Pembina's financial results will be reported as follows:
Pipelines Division
The Pipelines Division has over 18,000 kilometers of pipelines
with a total capacity of approximately 3 million barrels of oil
equivalent per day serving various markets and basins across
North America. The Pipelines
Division is comprised of Pembina's conventional, transmission and
oil sands pipeline assets. The primary objectives of the division
are to provide safe, responsible, reliable and cost-effective
transportation services for customers, pursue opportunities for
increased throughput, and maintain and/or grow sustainable
operating margin on invested capital by capturing incremental
volumes, expanding the Company's pipeline networks, grow revenue
and follow a disciplined approach to operating expenses.
Pembina's conventional pipeline assets comprise a strategically
located network of approximately 9,000 kilometers of pipelines and
related infrastructure including various hubs and terminals. This
network transports crude oil, condensate and natural gas liquids
("NGL") across much of Alberta and
parts of British Columbia. The
contracts for conventional pipelines are fee-for-service in nature,
but vary in their structure, and include both firm and non-firm
contracts and varying levels of take-or-pay commitments.
Pembina's oil sands assets include approximately 2,400
kilometers of pipelines and related infrastructure. Service is
provided predominantly under long-term, extendible contracts, which
provide for the flow-through of eligible operating expenses to
customers. As a result, operating margin from these assets is
primarily driven by the amount of capital invested and is
predominantly not sensitive to fluctuations in certain operating
expenses, actual throughput or commodity prices.
Pembina's transmission pipeline assets have developed through
the strategic acquisition of key natural gas and specification
ethane transportation infrastructure assets, positioned in some of
the most prolific gas producing regions in western Canada and the
United States. Currently, Pembina has interests in
approximately 7,000 kilometers of transmission pipelines providing
customers with access to premium markets primarily on a
fee-for-service basis under long-term contracts.
As part of the reorganization, the following assets have been
reclassified:
- Vantage Pipeline has been reclassified from a conventional
asset to a transmission asset within the Pipelines Division;
- the Swan Hills System has been reclassified from a conventional
asset to an oil sands asset within the Pipelines Division;
- the Canadian Diluent Hub and the Edmonton North Terminal have
been reclassified from the former Midstream operating segment to
conventional assets within the Pipelines Division; and
- the Alberta Ethane Gathering System, Ruby Pipeline and Alliance
Pipeline, all formerly reported under the Veresen operating
segment, are now transmission assets included in the Pipelines
Division.
Facilities Division
The Facilities Division includes processing and fractionation
facilities and related infrastructure that provide Pembina's
customers with natural gas and NGL services.
Pembina's operations include natural gas gathering and
processing assets, which are strategically positioned in an active
condensate and NGL-rich area of western Canada, and are integrated with the Company's
other businesses. Pembina provides sweet and sour gas gathering,
compression, condensate stabilization, and both shallow cut and
deep cut processing services for its customers, primarily on a
fee-for-service basis under long-term contracts. The majority of
condensate and NGL extracted through these facilities are
transported by assets in Pembina's Pipelines division. A portion of
the volumes are further processed at Pembina's fractionation
facilities. In total, Pembina has 19 gas processing
facilities(1) and approximately 6 billion cubic feet per
day of net gas processing capacity(1).
Additionally, the Facilities division includes NGL
fractionation, cavern storage, and terminalling (loading and
off-loading services) facilities. These facilities are fully
integrated with the Company's Pipeline Division and other assets,
providing customers across the Western Canada Sedimentary Basin
("WCSB") and North America with
the ability to contract for more than one service with Pembina and
access a comprehensive suite of services to enhance the value of
their hydrocarbons. In total, Pembina has 5 fractionation
facilities(1) and 286 thousand barrels per day of net
fractionation capacity(1).
As part of the reorganization, the following assets have been
reclassified:
- the Empress NGL Extraction Facility and the Younger NGL
Extraction Facility have been reclassified from the former
Midstream operating segment to gas services assets within the
Facilities Division; and
- Veresen Midstream Limited Partnership, which was previously
reported under the Veresen operating segment, is now classified as
a gas services asset included in the Facilities Division.
1) Includes Aux Sable,
as further described below, which for reporting purposes is
included in the Marketing Division; excludes projects Under
Development
Marketing and New Ventures Division
The Marketing & New Ventures Division strives to maximize
the value of hydrocarbon liquids and natural gas originating in the
WCSB and other basins where the Company operates.
Pembina seeks to create new markets, and further enhance
existing markets, to support both the Company's and its customers'
overall business interests. In particular, Pembina seeks to
identify opportunities to connect hydrocarbon production to new
demand locations through the development of infrastructure. Pembina
strives to increase producer netbacks and product demand to improve
the overall competitiveness of the WCSB and other basins where the
Company operates.
Pembina undertakes value-added commodity marketing activities
including buying and selling products (natural gas, ethane,
propane, butane, condensate and crude oil) and capitalizing on
storage opportunities. By contracting capacity on Pembina's and
various third-party pipelines and utilizing the Company's rail
fleet and rail logistics capabilities, the Marketing business is
able to add incremental value to the commodities. Marketing
activities also include identifying commercial opportunities to
further develop other Pembina assets. Examples of such assets
include Pembina's integrated rail fleet and terminalling and
storage assets, that were specifically developed to support getting
marketed volumes to high value markets across North
America.
The Marketing business enters into contracts for capacity on
both Pembina's and third-party infrastructure, handles proprietary
and customer volumes and aggregates third-party production for
onward sale. Operating margins are subject to commodity price
fluctuations, product differentials, location basis differentials
and total volumes.
Pembina's Marketing business also includes results from
Aux Sable, an NGL extraction
facility near Chicago, Illinois
and other natural gas and NGL processing facilities, logistics and
distribution assets in the United
States and Canada.
Pembina's new ventures currently include the proposed propylene
and polypropylene facility ("PDH/PP Facility") and the proposed
Jordan Cove LNG project.
As part of the reorganization, the following assets have been
reclassified:
- the proposed PDH/PP Facility, previously included in the former
Midstream operating segment, is now included in the Marketing &
New Ventures Division; and
- Aux Sable and the proposed
Jordan Cove LNG Project, which were both previously reported under
the Veresen operating segment, are now included in the Marketing
& New Ventures Division.
In addition, Pembina's commodity marketing activities, which
were previously reported in the former Midstream operating segment,
are now included in the Marketing & New Ventures Division.
Further details on the new divisions and the associated
financial reporting changes, including certain 2017 financial
information recast under the new format are outlined in a
presentation available on Pembina's website at
www.pembina.com/investor-centre/presentations-and-events/.
The presentation also provides additional information on the
non-GAAP disclosure of Pembina's proportionately consolidated
interest in the Investments in Equity Accounted Investees, and
Pembina's adoption, effective January 1,
2018, of IFRS 15 Revenue from Contracts with Customers.
About Pembina
Calgary-based Pembina Pipeline
Corporation is a leading transportation and midstream service
provider that has been serving North
America's energy industry for over 60 years. Pembina owns an
integrated system of pipelines that transport various hydrocarbon
liquids and natural gas products produced primarily in western
Canada. The Company also owns gas
gathering and processing facilities and an oil and natural gas
liquids infrastructure and logistics business. Pembina's integrated
assets and commercial operations along the majority of the
hydrocarbon value chain allow it to offer a full spectrum of
midstream and marketing services to the energy sector.
Pembina is committed to identifying additional opportunities to
connect hydrocarbon production to new demand locations through the
development of infrastructure that would extend Pembina's service
offering even further along the hydrocarbon value chain.
Pembina also is committed to working with its community and
aboriginal neighbours, while providing value for investors in a
safe, environmentally-responsible manner. This balanced approach to
operating ensures the trust Pembina builds among all of its
stakeholders is sustainable over the long term.
Pembina's common shares trade on the Toronto and New
York stock exchanges under PPL and PBA, respectively. For
more information, visit www.pembina.com.
Forward-Looking Statements & Information
This news release contains certain forward-looking statements
and information (collectively, "forward-looking statements") that
are based on Pembina's current expectations, estimates, projections
and assumptions in light of its experience and its perception of
historical trends. In some cases, forward-looking statements can be
identified by terminology such as "continue", "anticipate",
"schedule", "will", "should", "expects", "estimate", "potential",
"planned", "future" and similar expressions suggesting future
events or future performance.
In particular, this news release contains forward-looking
statements relating to Pembina's corporate strategy, changes to the
reporting of Pembina's financial results and the anticipated impact
and benefits thereof.
The forward-looking statements are based on certain
assumptions that Pembina has made in respect thereof as at the date
of this news release regarding, among other things: oil and gas
industry exploration and development activity levels and the
geographic region of such activity; the success of Pembina's
operations and growth projects and the integration of acquisitions;
prevailing commodity prices, margins, volumes and exchange rates;
the availability of capital to fund future capital requirements
relating to existing assets and projects; future operating costs;
geotechnical and integrity costs; that any third-party projects
relating to Pembina's growth projects will be sanctioned and
completed as expected; that any required commercial agreements can
be reached; that all required regulatory and environmental
approvals can be obtained on the necessary terms in a timely
manner; that counterparties will comply with contracts in a timely
manner; that there are no unforeseen events preventing the
performance of contracts or the completion of the relevant
facilities; that there are no unforeseen material costs relating to
the facilities which are not recoverable from customers; prevailing
interest and tax rates; prevailing regulatory, tax and
environmental laws and regulations; maintenance of operating
margins; the amount of future liabilities relating to lawsuits and
environmental incidents; and the availability of coverage under
Pembina's insurance policies (including in respect of Pembina's
business interruption insurance policy).
Although Pembina believes the expectations and material
factors and assumptions reflected in these forward-looking
statements are reasonable as of the date hereof, there can be no
assurance that these expectations, factors and assumptions will
prove to be correct. These forward-looking statements are not
guarantees of future performance and are subject to a number of
known and unknown risks and uncertainties including, but not
limited to: the regulatory environment and decisions; the impact of
competitive entities and pricing; labour and material shortages;
reliance on key relationships and agreements; the strength and
operations of the oil and natural gas production industry and
related commodity prices; non-performance or default by
counterparties to agreements which Pembina or one or more of its
affiliates has entered into in respect of its business; actions by
governmental or regulatory authorities including changes in tax
laws and treatment, changes in royalty rates or increased
environmental regulation; the failure to realize the anticipated
benefits or synergies of acquisitions due to the factors set out
herein, integration issues or otherwise, fluctuations in operating
results; adverse general economic and market conditions in
Canada, North America and worldwide, including
changes, or prolonged weaknesses, as applicable, in interest rates,
foreign currency exchange rates, commodity prices, supply/demand
trends and overall industry activity levels; ability to access
various sources of debt and equity capital; changes in credit
ratings; counterparty credit risk; technology and cyber security
risks; and certain other risks detailed from time to time in
Pembina's public disclosure documents available at
www.sedar.com, www.sec.gov and through
Pembina's website at www.pembina.com.
This list of risk factors should not be construed as
exhaustive. Readers are cautioned that events or circumstances
could cause results to differ materially from those predicted,
forecasted or projected. The forward-looking statements contained
in this document speak only as of the date of this document.
Pembina does not undertake any obligation to publicly update or
revise any forward-looking statements or information contained
herein, except as required by applicable laws. Readers are
cautioned that management of Pembina approved the financial outlook
contained herein as of the date of this news release.
Investor Relations, Scott Arnold,
(403) 231-3156, 1-855-880-7404, e-mail:
investor-relations@pembina.com, www.pembina.com