CALGARY, Alberta, Sept. 24, 2018 /PRNewswire/ -- Pembina Pipeline
Corporation ("Pembina" or the "Company") (TSX: PPL; NYSE: PBA) is
pleased to announce an increase to its 2018 Adjusted EBITDA
guidance range to $2.75 to
$2.85 billion. The Company is also
pleased to announce that in conjunction with incremental volume
commitments from customers on the Peace pipeline, Pembina will be
developing additional pipeline and terminalling infrastructure in
the Wapiti region near Grande Prairie,
Alberta and in northeast B.C. The new infrastructure will
have a combined aggregate capital cost of approximately
$120 million and will be underpinned
by long-term, take-or-pay commitments.
2018 Guidance
Pembina announced today that based on strong year-to-date
results and the outlook for the remainder of the year, the Company
has updated its 2018 Adjusted EBITDA guidance range to $2.75 to $2.85
billion, up from $2.65 to
$2.75 billion. "Pembina's base
business is performing well. We are seeing increased throughput on
our conventional pipelines and fractionators, strong results from
the assets acquired previously from Veresen and higher marketing
revenues due to widening frac spreads," said Scott Burrows, Senior Vice President and Chief
Financial Officer.
Pipelines Division Update
Pembina continues to experience strong demand for transportation
services across the liquids-rich areas of the Western Canada
Sedimentary Basin. Since sanctioning the Phase VI expansion ("Phase
VI") earlier this year, Pembina has continued to add long-term firm
service commitments on the Peace and Northern Pipeline systems.
Since Phase VI was originally announced in May 2018, Pembina has secured a total of 50,000
barrels per day ("bpd") of additional firm service commitments. As
a result, peak firm volume commitments will reach approximately
885,000 bpd in 2019.
"Our strategic position in the liquids-rich areas of the
Alberta and BC Montney continues to provide opportunities for
us to expand," stated John de la
Mare, Vice President, Conventional Pipelines. "Pembina's
staged approach to the expansion of the Peace pipeline provides
timely and reliable transportation service to meet our customers'
specific needs. As a result, we have continued to increase
long-term volumes under commitment since the Phase III expansion of
Peace went into service last year," added Mr. de la Mare.
Wapiti Condensate Lateral
The Wapiti Condensate Lateral represents a new 12-inch, 30
kilometre pipeline which will connect growing condensate volumes
from a third-party owned facility in the Pipestone Montney region
into Pembina's Peace pipeline. The project is underpinned by a 15
year take-or-pay agreement with an anchor customer and includes
firm transportation service on the Peace pipeline. Installation of
the 12-inch line will enable Pembina to capture additional
condensate volumes, as it is strategically located to service other
area customers. The Company is currently progressing negotiations
with various customers for incremental volumes. The Wapiti
Condensate Lateral will be constructed in tandem with Pembina's
Phase VI expansion, affording considerable efficiencies and
minimizing incremental land disturbance. Subject to regulatory and
environmental approvals, the project is expected to be in-service
in the second half of 2019, aligning with the in-service timing of
Phase VI.
NEBC Montney Infrastructure
Pembina's northeast B.C. pipeline (the "NEBC Expansion") was
placed into service in October 2017
and serves to connect liquids volumes from the northeast B.C.
Montney for transportation into
the Edmonton area via Pembina's
downstream systems (namely Plateau, Pouce
Coupe and Peace pipelines). The NEBC Expansion has a
capacity of 75,000 bpd and operates under a long-term
cost-of-service arrangement. To support additional volumes on the
NEBC Expansion and ultimately Pembina's downstream pipelines,
Pembina has entered into agreements with an anchor customer to
construct new infrastructure (the "NEBC Montney Infrastructure")
at, and in proximity to, Pembina's Birch Terminal. The new
infrastructure will include an area production connection to
Pembina's Birch Terminal as well as upgrades to the terminal
including additional storage and pumps, along with minor site
modifications.
The NEBC Montney Infrastructure is supported by long-term
fee-for-service and cost-of-service arrangements. In conjunction
with the NEBC Montney Infrastructure, the same customer has also
entered into long-term, firm service agreements containing
take-or-pay commitments, on downstream pipelines.
Peace Pipeline Expansions
The Montney infrastructure
projects described above follow a series of growth projects within
Pembina's conventional pipeline system, including:
- The Phase III expansion, previously placed into service in
July 2017, expanded capacity between
Fox Creek and Namao, Alberta, the Company's corridor that
transports crude oil, condensate and natural gas liquids into the
Edmonton area market;
- The Phase IV expansion ("Phase IV"), currently underway, is
adding capacity between Fox Creek
and Namao, and its Phase V
expansion ("Phase V"), also currently in construction, is
debottlenecking upstream of Fox
Creek. Both projects are nearing completion and are
anticipated to be placed into service in late 2018; and
- The recently announced Phase VI expansion which includes
upgrades at Gordondale, Alberta; a
16-inch pipeline from LaGlace to Wapiti, Alberta and associated
pump station upgrades; and a 20-inch pipeline from Kakwa to Lator,
Alberta. Phase VI is anticipated
to be in service in the second half of 2019, subject to
environmental and regulatory approval.
Ongoing customer demand, as evidenced by new projects and new
volumes, highlights the need for even further development of the
Peace pipeline system.
"The utility of the Phase III expansion has allowed Pembina to
systematically increase capacity quickly and efficiently as
evidenced by the Phase IV, V and VI expansions. While these
expansions will provide additional capacity, the Company is engaged
in ongoing discussions with its customers regarding how Pembina can
best support the need for more capacity through additional pipeline
infrastructure. We see great potential for a near term expansion
beyond these phases and it is something we are working actively
towards in light of strong customer demand. Ultimately, Pembina
expects to have at least four segregated product pipelines in the
corridors between Gordondale, Alberta and the Edmonton area, which will significantly
improve operating efficiencies and capital requirements. Pembina's
staged expansion strategy is significantly less complex and time
consuming than building an entirely new pipeline system," stated
Mr. Wiun.
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. These new
developments will contribute to ensuring that hydrocarbons produced
in the Western Canada Sedimentary Basin and the other basins where
Pembina operates can reach the highest value markets throughout the
world.
Pembina strives to provide sustainable, industry-leading total
returns for our investors; reliable and value-added services for
our customers; a net positive impact to communities; and a safe,
respectful, collaborative and fair work culture for our
employees.
Pembina's strategy is to:
- Preserve value by providing safe, environmentally
conscious, cost-effective and reliable services;
- Diversify by providing integrated solutions which
enhance profitability and customer service;
- Implement Growth by pursuing projects or assets that are
expected to generate cash flow per share accretion and capture
long-life, economic hydrocarbon reserves; and
- Secure Global Markets by understanding what the world
needs, where they need it, and delivering it.
Pembina is structured into three Divisions: Pipelines Division,
Facilities Division and Marketing & New Ventures Division.
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 Information and Statements
This news release contains certain forward-looking
information and statements (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 this news release, such
forward-looking information and statements can be identified by
terminology such as "plans", "will", "expects", "continue",
"anticipate", "potential", "may", and similar expressions.
In particular, this news release contains forward-looking
statements, including certain financial outlooks, pertaining to,
without limitation, the following: planning, construction, capital
expenditure estimates, schedules, incremental volumes, in-service
dates, rights, activities and operations with respect to planned
new construction of, or expansions in relation to Pembina's
pipeline and infrastructure expansions; expectations around
continuing producer activity and development; the ongoing
utilization and expansions of and additions to Pembina's business
and asset base, growth and growth potential; expectations regarding
future demand for transportation services; anticipated future
adjusted EBITDA; and expectations regarding synergies and
integration of growth and development projects with Pembina's
existing business and asset base. These forward-looking
statements are being made by Pembina based on certain assumptions
that Pembina has made in respect thereof as at the date of this
news release, regarding, among other things: the ability of
Pembina and any required third parties to effectively engage with
stakeholders; oil and gas industry exploration and
development activity levels; the success of Pembina's operations
and growth projects; prevailing commodity prices, margins, volumes
and exchange rates; that Pembina's future results of operations
will be consistent with past performance and management
expectations in relation thereto; the continued availability of
capital at attractive prices to fund future capital requirements
relating to existing assets and projects, including but not limited
to future capital expenditures relating to expansion, upgrades and
maintenance shutdowns; 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 to material agreements will continue to perform in a
timely manner; that there are no unforeseen events preventing the
performance of contracts; that there are no unforeseen material
construction, integrity or other costs related to current growth
projects or current operations; and prevailing interest and tax
rates.
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. Readers are cautioned that events or
circumstances could cause results to differ materially from those
predicted, forecasted or projected. By their nature,
forward-looking statements involve numerous assumptions, known and
unknown risks and uncertainties that contribute to the possibility
that the predictions, forecasts, projections and other
forward-looking statements will not occur, which may cause actual
performance and financial results in future periods to differ
materially from any projections of future performance or results
expressed or implied by such forward-looking statements and
information. These known and unknown risks and uncertainties,
include, but are not limited to: the regulatory environment
and decisions; the ability of Pembina to raise sufficient
capital (or to raise sufficient capital on favourable terms) to
fund future expansions and growth projects and satisfy future
commitments; failure to negotiate and conclude any required
commercial agreements or failure to obtain project sanctioning;
increased construction costs, or construction delays, on Pembina's
expansion and growth projects; labour and material shortages;
non-performance of agreements in accordance with their terms;
the impact of competitive entities and pricing; reliance on key
industry partners, alliances and agreements; the strength and
operations of the oil and natural gas production industry and
related commodity prices; the continuation or completion of
third-party projects; actions by governmental or regulatory
authorities including changes in tax laws and treatment, changes in
royalty rates or increased environmental regulation; adverse
general economic and market conditions in Canada, North
America and elsewhere; construction delays; labour and
material shortages; and certain other risks detailed from time to
time in Pembina's public disclosure documents including, among
other things, those detailed under the heading "Risk Factors" in
Pembina's management's discussion and analysis and annual
information form for the year ended December
31, 2017, which can be found at www.sedar.com.
The forward-looking statements are expressly qualified by the
above statements and 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. The forward-looking
statements contained in this document are expressly qualified by
this cautionary statement. Readers are cautioned that management of
Pembina approved the financial outlook contained herein as of the
date of this press release. The purpose of the financial outlook
contained herein is to give the reader an indication of the value
to Pembina of planned capital projects and ongoing operations.
Readers should be aware that the information contained in the
financial outlook contained herein may not be appropriate for other
purposes.
Non-GAAP Measures
In this news release, Pembina has used the term adjusted
earnings before interest, taxes, depreciation and amortization
(Adjusted EBITDA), which does not have any standardized meaning
under IFRS ("Non-GAAP Measures"). Since Non-GAAP Measures do not
have a standardized meaning prescribed by GAAP and are therefore
unlikely to be comparable to similar measures presented by other
companies, securities regulations require that Non-GAAP Measures
are clearly defined, qualified and reconciled to their nearest GAAP
measure. These Non-GAAP Measures are calculated and disclosed on a
consistent basis from period to period. Specific adjusting items
may only be relevant in certain periods. The intent of Non-GAAP
Measures is to provide additional useful information respecting
Pembina's financial and operational performance to investors and
analysts and the measures do not have any standardized meaning
under IFRS. The measures should not, therefore, be considered in
isolation or used in substitute for measures of performance
prepared in accordance with IFRS.
Non-GAAP Proportionate Consolidation of Investments in Equity
Accounted Investees Results
In accordance with IFRS, Pembina's jointly controlled
investments are accounted for using equity accounting. Under equity
accounting, the assets and liabilities of the investment are net
into a single line item on the Consolidated Statement of Financial
Position, Investments in Equity Accounted Investees. Net earnings
from Investments in Equity Accounted Investees are recognized in a
single line item in the Consolidated Statement of Earnings and
Comprehensive Earnings, Share of Profit of Investments in Equity
Accounted Investees. Cash contributions and distributions from
Investments in Equity Accounted Investees represent Pembina's
proportionate share paid and received in the period to and from the
equity accounted investment. To assist the readers' understanding
and evaluation of the performance of these investments, Pembina is
supplementing the IFRS disclosure with Non-GAAP disclosure of
Pembina's proportionately consolidated interest in the Investments
in Equity Accounted Investees. Pembina's proportionate interest in
Investments in Equity Accounted Investees has been included in
Adjusted EBITDA and other reconciling line items to IFRS. A
reconciliation of operating margin and Adjusted EBITDA to Share of
profit of investments in equity accounted investees can be found
under the heading "Proportionately Consolidated Results by
Investments in Equity Accounted Investees". Other issuers may
calculate these Non-GAAP measures differently. Investors should be
cautioned that these measures should not be construed as
alternatives to revenue, earnings, cash flow from operating
activities, gross profit or other measures of financial results
determined in accordance with GAAP as an indicator of Pembina's
performance. For additional information regarding Non-GAAP
measures, including reconciliations to measures recognized by GAAP,
please refer to Pembina's management's discussion and analysis for
the period ended June 30, 2018, which
is available online at www.sedar.com, www.sec.gov and through
Pembina's website at www.pembina.com.
Investor Relations, Scott Arnold,
(403) 231-3156, 1-855-880-7404, e-mail:
investor-relations@pembina.com, www.pembina.com