Pembina's record annual
earnings, cash flow and adjusted EBITDA were driven by new assets
recently placed into service
All financial figures are in Canadian dollars unless noted
otherwise.
CALGARY, Feb. 27, 2020 /CNW/ - Pembina Pipeline
Corporation ("Pembina" or the "Company") (TSX: PPL; NYSE: PBA)
announced today its financial and operating results for the fourth
quarter and full-year 2019.
Financial and Operational Overview
|
3 Months Ended
December 31
|
|
12 Months
Ended
December 31
|
($ millions,
except where noted) (unaudited)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenue
|
1,754
|
|
1,726
|
|
7,230
|
|
7,351
|
Net
revenue(1)
|
837
|
|
706
|
|
3,120
|
|
2,836
|
Gross
profit
|
603
|
|
663
|
|
2,433
|
|
2,327
|
Earnings
|
145
|
|
368
|
|
1,492
|
|
1,278
|
Earnings per common
share – basic (dollars)
|
0.21
|
|
0.66
|
|
2.66
|
|
2.28
|
Earnings per common
share – diluted (dollars)
|
0.21
|
|
0.66
|
|
2.65
|
|
2.28
|
Cash flow from
operating activities
|
728
|
|
674
|
|
2,532
|
|
2,256
|
Cash flow from
operating activities per common share – basic
(dollars)(1)
|
1.41
|
|
1.33
|
|
4.94
|
|
4.47
|
Adjusted cash flow
from operating activities(1)
|
576
|
|
543
|
|
2,234
|
|
2,154
|
Adjusted cash flow
from operating activities per common share – basic
(dollars)(1)
|
1.11
|
|
1.07
|
|
4.36
|
|
4.27
|
Common share
dividends declared
|
314
|
|
289
|
|
1,213
|
|
1,131
|
Dividends per common
share (dollars)
|
0.60
|
|
0.57
|
|
2.36
|
|
2.24
|
Capital
expenditures
|
429
|
|
356
|
|
1,645
|
|
1,226
|
Total volume
(mboe/d)(2)
|
3,577
|
|
3,453
|
|
3,451
|
|
3,398
|
Adjusted
EBITDA(1)
|
787
|
|
715
|
|
3,061
|
|
2,835
|
|
|
|
|
|
|
|
|
(1)
|
Refer to "Non-GAAP
Measures".
|
(2)
|
Total revenue
volumes. Revenue volumes are physical volumes plus volumes
recognized from take-or-pay
commitments. Volumes are stated in thousand barrels of oil
equivalent per day ("mboe/d"), with natural gas
volumes converted to mboe/d from millions of cubic feet per day
("MMcf/d") at a 6:1 ratio.
|
Financial and Operational Overview by Division
|
3 Months Ended
December 31
|
12 Months Ended
December 31
|
|
2019
|
2018
|
2019
|
2018
|
($ millions,
except where
noted)
|
Volumes(1)
|
Gross
Profit
|
Adjusted
EBITDA(2)
|
Volumes(1)
|
Gross
Profit
|
Adjusted
EBITDA(2)
|
Volumes(1)
|
Gross
Profit
|
Adjusted
EBITDA(2)
|
Volumes(1)
|
Gross
Profit
|
Adjusted
EBITDA(2)
|
Pipelines
|
2,667
|
345
|
467
|
2,529
|
301
|
417
|
2,566
|
1,376
|
1,854
|
2,521
|
1,255
|
1,703
|
Facilities
|
910
|
169
|
254
|
924
|
155
|
233
|
885
|
655
|
955
|
877
|
574
|
880
|
Marketing &
New
Ventures (3)
|
—
|
93
|
120
|
—
|
203
|
109
|
—
|
406
|
423
|
—
|
484
|
409
|
Corporate
|
—
|
(4)
|
(54)
|
—
|
4
|
(44)
|
—
|
(4)
|
(171)
|
—
|
14
|
(157)
|
Total
|
3,577
|
603
|
787
|
3,453
|
663
|
715
|
3,451
|
2,433
|
3,061
|
3,398
|
2,327
|
2,835
|
|
|
(1)
|
Pipelines and
Facilities Divisions are revenue volumes, which are physical
volumes plus volumes recognized from take-or-pay commitments.
Volumes are
stated in mboe/d, with natural gas volumes converted to mboe/d from
MMcf/d at a 6:1 ratio.
|
(2)
|
Refer to "Non-GAAP
Measures".
|
(3)
|
Marketed natural gas
liquids ("NGL") volumes are excluded from Volumes to avoid double
counting. Refer to "Marketing & New Ventures
Division" in Pembina's Management's Discussion and Analysis for the
period ended December 31, 2019 ("MD&A") for further
information.
|
Financial & Operational Highlights
- Fourth quarter earnings of $145
million and record full-year earnings of $1.5 billion, a 61 percent decrease and 17
percent increase, respectively, over the same periods in the prior
year.
Fourth quarter and full-year earnings were impacted positively by
higher gross profit in both Pipelines and Facilities from new
assets placed into service and negatively by an impairment charge
of $300 million ($220 million net of tax) on Pembina's convertible preferred interest in
Ruby Pipeline. The impairment charge was the result of an
assessment triggered by upcoming contract expirations in a business
environment in the Rockies Basin that remains challenged.
Fourth quarter earnings also were positively impacted by the
contribution from new assets included in the acquisition of
Kinder Morgan Canada and the U.S.
portion of the Cochin Pipeline system (the "Kinder Acquisition"),
higher margins in the crude marketing business and the impact of
IFRS 16 - Leases ("IFRS 16"). Quarterly earnings were negatively
impacted by unrealized losses on commodity-related derivatives due
to contracts maturing in the period and increasing forward prices
for crude and NGL compared to contract positions. As well, a
decrease in deferred tax expense was partially offset by an
increase in current tax expense.
Earnings for the full year also were positively impacted by an
increase in Facilities gross profit as a result of higher propane
and butane terminalling revenue, as well as a deferred tax recovery
primarily due to the reduction in the Alberta income tax rate, offset by higher
current tax expense. Marketing & New Ventures gross profit
decreased largely due to lower share of profit in Aux Sable
following a decrease in propane pricing and higher depreciation
expense following the adoption of IFRS 16.
- Fourth quarter adjusted EBITDA of $787
million and full-year record adjusted EBITDA of $3.1 billion, a 10 and eight percent increase,
respectively, over the same periods in 2018.
Fourth quarter and annual adjusted EBITDA increases were due to new
assets placed into service in Pipelines and Facilities, the
adoption of IFRS 16 and the contribution from new assets acquired
in the Kinder Acquisition.
The fourth quarter also was positively impacted by higher margins
on crude in Marketing & New Ventures, partially offset by lower
propane margins decreasing the contribution from Aux Sable and the
narrower Chicago-AECO natural gas differential impacting Alliance
Pipeline.
Full-year adjusted EBITDA was also positively impacted by a
realized gain on commodity-related derivatives, the recognition of
variable revenues related to capital recoveries and increased
terminalling and storage revenues, partially offset by decreased
NGL and crude market prices in Marketing & New Ventures.
- Cash flow from operating activities of $728 million for the fourth quarter and a record
$2.5 billion for the full year, an
increase of eight percent and 12 percent, respectively, over the
same periods in 2018. The increase in both periods was primarily
due to increased operating results due to largely the same factors
impacting adjusted EBITDA, after adjusting for non-cash items,
change in non-cash working capital and the impact from the adoption
of IFRS 16, partially offset by a decrease in distributions from
equity accounted investees and an increase in taxes paid. On a per
share (basic) basis, cash flow from operating activities for the
fourth quarter and full-year 2019 increased by six percent and 11
percent, respectively, compared to the same periods in the prior
year.
- Adjusted cash flow from operating activities of $576 million in the fourth quarter and a record
$2.2 billion for the full year, an
increase of six percent and four percent, respectively, over the
same periods in 2018. The increase in both periods was largely due
to the same factors impacting cash flow from operating activities,
net of the change in non-cash working capital and the increase in
current tax expense. On a per share (basic) basis, adjusted cash
flow from operating activities for the fourth quarter and full-year
2019 increased by four percent and two percent, respectively,
compared to the same periods in the prior year.
- Total volumes of 3,577 mboe/d for the fourth quarter of 2019
and 3,451 mboe/d in 2019, a four percent and two percent increase,
respectively, over the same periods in the prior year.
Divisional Highlights
- Pipelines reported adjusted EBITDA for the fourth quarter of
$467 million and $1,854 million for the full year, which
represents 12 percent and nine percent increases, respectively,
compared to the same periods of 2018. The quarter was positively
impacted by higher revenue from new assets placed into service,
contribution from the Kinder Acquisition assets, higher tolls on
AEGS, timing difference in the recognition of deferred revenue and
the end of the third-party force majeure outage impacting Vantage
Pipeline, partially offset by a lower contribution from Alliance
Pipeline, higher operating expenses and higher general and
administrative expense. The full year increase was largely due to
the same items impacting the fourth quarter, combined with an
increase due to the recognition of variable revenue and prior year
recoveries in the oil sands and heavy oil assets.
Pipelines volumes of 2,667 mboe/d in the fourth quarter and 2,566
mboe/d for the full year, represent a five percent and two percent
increase, respectively, compared to the same periods of 2018.
Volumes were impacted by new assets placed into service and higher
interruptible volumes on Ruby Pipeline. Fourth quarter volumes were
partially offset by lower volumes on Alliance Pipeline due to a
narrower Chicago-AECO natural gas differential, which reduced
interruptible volumes.
- Facilities reported fourth quarter adjusted EBITDA of
$254 million and full year of
$955 million, which represent a nine
percent increase in both periods compared to the prior year. The
fourth quarter was positively impacted by new assets placed into
service, higher take-or-pay revenues at Kakwa River and lower
operating expense, partially offset by lower revenues from Veresen
Midstream. The full year was positively impacted by assets placed
into service, increased demand at the Saturn Complex and Cutbank
Complex and higher terminalling revenue, partially offset by higher
operating expenses.
Facilities volumes of 910 mboe/d in the fourth quarter and 885
mboe/d for the full year, represent a two percent decrease and a
one percent increase, respectively, compared to the same periods in
2018. Volumes during the fourth quarter were impacted by lower
supply volumes at the Redwater Complex, combined with decreased
volumes at Veresen Midstream, partially offset by additional
volumes associated with Duvernay II being placed into service.
Volumes during the year were positively impacted by additional
volumes due to assets being placed into service, higher volumes at
the Saturn Complex and Cutbank Complex, partially offset by lower
volumes at the Younger facility, due to third-party outages, and
lower volumes at the Redwater Complex.
- Marketing & New Ventures reported fourth quarter adjusted
EBITDA of $120 million and
$423 million for the full year, which
represent a 10 percent and three percent increase, respectively,
compared to the same periods in the prior year. The fourth quarter
was positively impacted by higher margins on crude oil marketing,
combined with the impact of the adoption of IFRS 16, partially
offset by lower contribution from Aux Sable and higher general and
administrative expense. For the full year, adjusted EBITDA was
positively impacted by higher realized gains on commodity-related
derivatives, lower general and administrative expense and the
impact of the adoption of IFRS 16, offset by lower margins.
NGL sales volumes of 190 mboe/d in the fourth quarter and 189
mboe/d for the full year, represent a five percent decrease and
eight percent increase, respectively, compared to the same periods
in 2018. Volumes for the fourth quarter were negatively impacted by
lower supply volumes at Redwater,
combined with higher butane sales made in the fourth quarter of
2018, partially offset by increased volumes at Aux Sable. Volumes
for the full year were positively impacted by increased NGL sales
volumes primarily driven by higher butane volumes, partially offset
by lower ethane volumes at Aux Sable.
Executive Overview
This past year, Pembina marked
its 65th anniversary and we have much to celebrate with this
milestone. From rather humble beginnings as a single pipeline in
Alberta with 31 people and an
enterprise value of $20 million,
Pembina has grown into one of
Canada's largest companies. Today, we are nearly 3,000 people
strong with an enterprise value in excess of $40 billion.
As proud as we are about the past, our stakeholders are more
interested in the future. The keys to our success to date -
our unwavering commitment to long-term value creation, rather than
chasing trends or fads, combined with solid core values and
consideration of all stakeholders - will continue to propel us to
new successes. Furthermore, we have put forth a number of
financial rules, or 'guardrails', which are our commitment to
continue to grow both the depth and breadth of our value chain in a
disciplined way. This approach results in greater synergy,
value-added service and diversification. This is the
Pembina way and it will not
change.
From a financial perspective, a number of new records were set
in 2019. Earnings in 2019 of $1.5
billion were 17 percent higher than the previous year.
Record adjusted EBITDA of $3.1
billion, exceeded the high end of our guidance range and our
2019 adjusted cash flow per share of $4.36 was another all-time high.
In 2019, we placed in excess of $600
million of projects safely and successfully into service,
including Duvernay II, Burstall Ethane Storage as well as other
infrastructure at our Redwater Complex. Furthermore, we are excited
about the $1.2 billion of additional
fee based projects which are expected to enter service in
2020. With these new projects coming online, in conjunction
with the contribution from the Kinder Acquisition assets, we
anticipate generating 2020 adjusted EBITDA of between $3.25 and $3.55
billion.
The most significant single event this year was the $4.25 billion Kinder Acquisition. At our
2019 Investor Day, we talked about our focus on getting better, not
just bigger and this acquisition clearly make us better. The
majority of the assets we acquired are already directly connected
to our system. The Edmonton Terminals connect our pipeline
systems with the major trunkline third-party export
pipelines. Based on their location and connectivity, these
assets sit at the nexus of the Canadian oil market and are
essentially impossible to replicate. By owning these assets,
Pembina gains another premium
franchise, thereby enhancing the longevity and stability of our
earnings stream. In addition, in the current political and
regulatory environment, 'pipe in the ground' and particularly
cross-border pipelines, possess considerable scarcity value.
The Cochin Pipeline, which transports premium condensate from the
U.S. Midwest to Fort Saskatchewan,
Alberta, offers access to another condensate supply basin,
is connected to Pembina's Canadian
Diluent Hub and strengthens our existing condensate
franchise. Finally, the assets we acquired have considerable
upside by overlaying Pembina's
exiting commercial models.
In addition to the strategic benefits, the acquisition also has
a positive financial impact, enhancing the diversification in our
business and providing opportunities for future growth. These
assets are predominantly supported by long-term fee-for-service,
take-or-pay contracts, which are underpinned by strong investment
grade counterparties, enhancing Pembina's financial guardrails. We have
identified meaningful financial upside available from a portfolio
of small capital projects and the integration of the acquired
assets within Pembina's existing
businesses. Over the next five years, we expect to realize
additional annual adjusted EBITDA of $100
million, a roughly 30 percent increase, with only modest
capital spending.
As we look to the future, we are excited about our continued
progress in accessing global markets. In early 2019, we took a
major step forward with the approval of the integrated propane
dehydrogenation ("PDH") plant and polypropylene ("PP") upgrading
facility ("PDH/PP Facility") through our 50 percent owned
joint-venture entity, Canada Kuwait Petrochemical Limited
Partnership ("CKPC"). This project is true to our strategy of
trying to 'do more with the hydrocarbon molecules we touch' and
leverages our position as the largest supplier of propane in
western Canada. More recently, we were pleased to announce that we
have executed a lump sum engineering, procurement and construction
("EPC") contract relating to the construction of the PDH plant.
With this contract, we have locked in approximately 60 percent of
the cost of the PDH/PP Facility thus far, reflecting our
disciplined and prudent approach to spending.
In addition to advancing our petrochemical facility, we also are
very excited about our Prince Rupert Terminal. This project is
important as it represents our first export facility. Demand for
propane export capacity was significant and we were pleased to
approve an expansion of this export terminal, increasing capacity
to approximately 40 mbpd.
We are entering a new decade with significant momentum and
abundant growth opportunities. In fact, some of the hardest
decisions we must make are what projects are we not going to
pursue. Our continued focus on being better and not just bigger, in
addition to our financial guardrails and strategic investment
criteria based on long-term thinking, will remain our guiding
principles for future growth, ensuring we continue to create
long-term sustainable value.
Projects and New Developments(1)
Pipelines and Facilities have $3.1
billion of capital projects underway, which in aggregate are
trending on budget.
Pipelines:
- Pembina continues to progress
its Phase VI Peace Pipeline Expansion, which includes upgrades at
Gordondale; a 16-inch pipeline in the La
Glace to Wapiti corridor and associated pump station and
terminal upgrades; and a 20-inch pipeline in the Kakwa to Lator
corridor. Commissioning of the first stage of the expansion is
underway and construction of the second stage is ongoing. The
project has a capital budget of $280
million and is anticipated to be placed into service in
stages starting in the first quarter of 2020 through mid-2020.
- Pembina continues to advance
the Phase VII Peace Pipeline Expansion, which includes a 20-inch,
approximately 220-kilometer pipeline in the La Glace-Valleyview-Fox
Creek corridor, as well as six new pump stations or terminal
upgrades, between La Glace and
Edmonton, Alberta. This expansion
is expected to add approximately 240 mbpd of incremental capacity
upstream of Fox Creek, accessing
capacity available on the pipelines downstream of Fox Creek. Pipeline construction commenced in
January 2020. This project has a
capital budget of $950 million and is
anticipated to be in-service in the first half of 2021.
- Development continues on the Phase VIII Peace Pipeline
Expansion, which includes 10-inch and 16-inch pipelines in the
Gordondale to La Glace corridor,
as well as six new pump stations or terminal upgrades located
between Gordondale and Fox Creek.
Engineering work is progressing as planned to support a
construction start date in the second half of 2020. This project
has a capital budget of $500 million
and is anticipated to be placed into service in stages starting in
2020 through the first half of 2022, subject to regulatory and
environmental approvals.
- As previously announced, during the quarter, Pembina approved the first stage of an
additional expansion of the Peace Pipeline system ("Phase IX"). The
expansion will include 6-inch and 16-inch pipelines debottlenecking
the corridor north of Gordondale as well as upgrades at one pump
station. In addition, this expansion will see existing pipelines,
which are currently batching, converted to single product
lines.
Once this expansion is completed, Pembina will have achieved segregated liquids
transportation service for ethane-plus, propane-plus, crude and
condensate across multiple pipeline systems between Gordondale and
the Edmonton, Alberta area. This
expansion has an estimated cost of approximately $100 million and is anticipated to be placed into
service in the fourth quarter of 2021, subject to regulatory and
environmental approvals. Engineering work is progressing as
planned.
Pembina continues to evaluate the
need for additional pump stations in the Fox Creek to Namao corridor to achieve Pembina's fully powered-up market delivery
capacity of 1.3 mmbpd across the Peace and Northern systems.
Engineering is currently underway and based on further commercial
support, the scope of Phase IX may be revised in the future to
include these projects. In addition, the elimination of batching
and other hydraulic optimization initiatives, which Pembina refers to as Phase X, could create up
to an incremental 100 mbpd of capacity with minimal capital
spending.
- The NEBC Montney Infrastructure project includes producer
tie-in connections to Pembina's
Birch Terminal as well as upgrades to the terminal including
additional storage and pumps, along with minor site modifications.
The project is complete and awaiting a third-party downstream
connection.
- The Company is progressing the Wapiti Condensate Lateral, a
12-inch lateral, which will connect growing condensate volumes from
a third-party owned facility in the Pipestone Montney region into
Pembina's Peace Pipeline system.
Construction is complete and commissioning is underway.
(1)
|
For further details
on the Company's significant assets, including definitions, refer
to Pembina's AIF filed at www.sedar.com (filed with the U.S.
Securities and Exchange Commission at www.sec.gov under Form 40-F)
and on Pembina's website at www.pembina.com.
|
Facilities:
- Pembina's Duvernay II facility
was placed into service in November
2019, on time and under budget.
- Pembina continues to progress
Duvernay III, which includes a 100 MMcf/d sweet gas, shallow cut
processing train; 20 mbpd of inlet condensate stabilization; and
other associated infrastructure. Detailed design is complete,
long-lead equipment fabrication is nearing completion and piling
has been completed onsite. Based on the customers' request for
additional infrastructure the capital cost of this project was
increased to $200 million from the
original cost of $175 million. The
project has an expected in-service date in mid-to late 2020.
- The sour gas treating facilities at the Duvernay Complex will
include a 150 MMcf/d sour gas sweetening system with 300 MMcf/d of
amine regeneration capability and up to one tonne of sulphur per
day of acid gas incineration. These facilities have a capital
budget of $65 million with an
anticipated in-service date in the first quarter of 2020.
Construction was completed in mid-February and commissioning is
currently progressing.
- Pembina continues with the
construction of new fractionation and terminalling facilities at
the Company's Empress NGL Extraction Facility for a total capital
budget of $120 million. Mechanical
construction is progressing on the fractionation and rail sites,
and electrical construction has commenced on both sites. Pipeline
construction began in February and rail track construction is
expected to commence in May 2020.
These facilities are expected to add approximately 30 mbpd of
propane-plus fractionation capacity to the facility and have an
anticipated in-service date of late 2020.
- As previously announced, Pembina approved the development of a
$120 million co-generation facility
at the Empress NGL Extraction facility (the "Empress Co-generation
Facility"). The Empress Co-generation Facility will enable
Pembina to be more efficient with
its production, reduce greenhouse gas emissions, utilize heat
recovery and provide a second source of power. The project is
expected to be placed in-service in mid-2022, subject to regulatory
and environmental approval. Front End Engineering Design ("FEED")
work was completed in the the fourth quarter of 2019 and detailed
engineering started in January
2020.
- Construction continues at Pembina's Prince Rupert Terminal located on
Watson Island, British Columbia.
The 25 mbpd project will primarily source propane from the
Company's Redwater Complex. Facility mechanical construction
continues with modules setting, equipment install and piping work
well underway. On site sphere assembly is nearly complete and
marine retrofit work on the wharf is progressing. The project has
an anticipated in-service date in the second half of 2020, subject
to regulatory and environmental approvals. The project has a
capital budget of $250 million.
- As previously announced, the anticipated startup of the Prince
Rupert Terminal has generated significant interest from our
customers and offtakers, and Pembina has decided to move forward with an
expansion of the terminal (the "Prince Rupert Terminal Expansion"),
which will increase propane export capacity to approximately 40
mbpd. FEED work has started. The Prince Rupert Terminal Expansion
is expected to cost approximately $175
million and has an anticipated in-service date in the first
half of 2023, subject to regulatory and environmental
approvals.
- Pembina continues to progress
the Hythe Developments project whereby Pembina and its 45 percent owned joint
venture, Veresen Midstream, will construct natural gas gathering
and processing infrastructure in the Pipestone Montney region. All
long-lead equipment has been ordered and construction has
commenced.
As previously announced, under the contract with NuVista Energy
("NuVista"), NuVista retained an option to have Veresen Midstream
own and fund the Pipestone North compressor station in exchange for
an annual capital fee. NuVista has elected to exercise their
option. As planned, NuVista will build and operate the facility.
Upon completion, the compressor station will be transfered at cost
to Pembina. As a result of
NuVista's election, the capital budget for the Hythe Developments
project has increased from $185
million to $240 million, net
to Pembina. The anticipated
in-service date of late 2020 remains unchanged.
Marketing & New Ventures:
- Pembina continues to progress
the PDH/PP Facility, which will be located adjacent to Pembina's Redwater fractionation complex and will
convert approximately 23 mbpd of locally supplied propane into
polypropylene, a high value recyclable polymer.
As previously announced, subsequent to the quarter
CKPC executed a lump sum EPC contract related to the
construction of the PDH plant. With this contract, CKPC has fixed
approximately 60 percent of the cost of the PDH/PP Facility thus
far. In conjunction with the execution of the lump sum contract,
Pembina also revised its
proportionate share of the capital cost of the PDH/PP Facility from
$2.5 billion to $2.7 billion. Pembina now expects the PDH/PP Facility to be
placed into commercial service in the second half of 2023.
Subsequent to the quarter, CKPC entered into a reimbursable
engineering and procurement services contract with TR Canada
E&C Inc. ("TR") for the PP production plant. TR and its parent
company, Técnicas Reunidas S.A., are well experienced in the design
and engineering of PP and other petrochemical facilities. All major
engineering and procurement contracts have now been awarded for the
PDH/PP Facility.
- Regulatory processes for the proposed Jordan Cove LNG Project
are ongoing. The U.S. Federal Energy Regulatory Commission delayed
a decision originally expected on February
13, 2020. Pembina looks
forward to obtaining a final decision. Pembina is focused on getting all the
remaining permits required to proceed with this project. These
permits are a critical component of the regulatory process and are
necessary to enable the commercial viability of the project and
allow this investment to move forward. The timing and ultimate
approval of this project is uncertain and dependent upon receipt of
these remaining approvals.
Kinder Acquisition
- On December 16, 2019,
Pembina completed the acquisition
of Kinder Morgan Canada Limited by way of a plan of arrangement
pursuant to Section 193 of the Business Corporations Act
(Alberta) and the U.S. portion of
the Cochin Pipeline system from Kinder
Morgan, Inc. The total consideration paid was $4.25 billion including $2.0 billion in cash, net of cash received,
$1.71 billion of common shares and
$536 million of Class A preferred
shares.
Financing
- On December 16, 2019,
Pembina closed a $500 million non-revolving term loan with certain
existing lenders. The term loan has an initial term of three years
and is pre-payable at Pembina's
option. The other terms and conditions of the term loan, including
financial covenants, are substantially similar to Pembina's $2.5
billion revolving credit facility.
- As previously announced, subsequent to year-end, on
January 10, 2020, Pembina closed an offering of $1.0 billion of senior unsecured medium-term
notes. The offering was conducted in three tranches, consisting of
$250 million issued through a
re-opening of Pembina's senior
unsecured medium-term notes, series 10, having a fixed coupon of
4.02 percent per annum, paid semi-annually and maturing on
March 27, 2028; $500 million issued through a re-opening of
Pembina's senior unsecured
medium-term notes, series 11, having a fixed coupon of 4.75 percent
per annum, paid semi-annually and maturing on March 26, 2048; and $250
million issued through a re-opening of Pembina's senior unsecured medium-term notes,
series 12, having a fixed coupon of 3.62 percent per annum, paid
semi-annually and maturing on April 3,
2029.
- Subsequent to year-end, on February 27,
2020, Canada Kuwait Petrochemical Limited Partnership closed
a syndicated senior secured credit agreement consisting of a
US$1.7 billion amortizing term
facility and a US$150 million
revolving facility, which have been guaranteed equally by the
owners through the completion of construction on a several basis.
The final maturity date of the term facility and revolving facility
is February 27, 2027.
Dividends
- Declared and paid dividends of $0.20 per common share in October, November and
December 2019 for the applicable
record dates.
- On January 7, 2020, Pembina's Board declared a five percent
increase to its monthly common share dividend rate (from
$0.20 per common share to
$0.21 per common share), commencing
with the dividend paid on February 14,
2020. As previously announced, Pembina's Board of Directors approved the
increase subject to closing of the Kinder Acquisition, which
occurred on December 16, 2019.
- Declared and paid quarterly dividends per preferred share of:
Series 1: $0.306625; Series 3:
$0.279875; Series 5: $0.285813; Series 7: $0.28125; Series 9: $0.296875; Series 11: $0.359375; Series 13: $0.359375; and Series 21: $0.30625 to shareholders of record as of
November 1, 2019. Declared and paid
quarterly dividends per preferred share of: Series 15: $0.279; Series 17: $0.301313; and Series 19: $0.3125 to shareholders of record on December 16, 2019.
- On November 1, 2019, Pembina announced that it did not intend to
exercise its right to redeem the 10 million Cumulative Redeemable
Rate Reset Class A Preferred Shares, Series 7 ("Series 7 Shares")
shares outstanding on December 2,
2019. The annual dividend rate for the Series 7 Shares for
the five-year period from and including December 1, 2019 to, but excluding, December 1, 2024 is 4.38 percent.
- On December 16, 2019, in
connection with the Kinder Acquisition, the outstanding preferred
shares of Kinder Morgan Canada were
exchanged for Pembina Series 23 and 25 Class A Preferred Shares
with similar terms and conditions as the shares previously issued
by Kinder Morgan Canada.
Fourth Quarter 2019 Conference Call & Webcast
Pembina will host a conference
call on Friday, February 28, 2020 at
8:00 a.m. MT (10:00 a.m. ET) for interested investors,
analysts, brokers and media representatives to discuss details
related to the fourth quarter 2019 results. The conference call
dial-in numbers for Canada and the U.S. are 647-427-7450 or
888-231-8191. A recording of the conference call will be available
for replay until March 6, 2020 at
11:59 p.m. ET. To access the replay,
please dial either 416-849-0833 or 855-859-2056 and enter the
password 9883147.
A live webcast of the conference call can be accessed on
Pembina's website at pembina.com
under Investor Centre/ Presentation & Events, or by
entering:
https://event.on24.com/wcc/r/2069094/71FE24986EF4AA2586DFEB2F80A50DCA in
your web browser. Shortly after the call, an audio archive will be
posted on the website for a minimum of 90 days.
About Pembina
Pembina is a leading
transportation and midstream service provider that has been serving
North America's energy industry
for 65 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; an oil and natural gas liquids infrastructure and
logistics business; is growing an export terminals business; and is
currently constructing a petrochemical facility to convert propane
into polypropylene. 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 WCSB and the other basins where Pembina operates can reach the highest value
markets throughout the world.
Purpose of Pembina:
To be the leader in delivering integrated infrastructure
solutions connecting global markets;
- Customers choose us first for reliable and
value-added services;
- Investors receive sustainable industry-leading
total returns;
- Employees say we are the 'employer of choice'
and value our safe, respectful, collaborative and fair work
culture; and
- Communities welcome us and recognize the net
positive impact of our social and environmental
commitment.
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 Statements and Information
This document contains certain forward-looking statements and
forward looking information (collectively, "forward-looking
statements"), including forward-looking statements within the
meaning of the "safe harbor" provisions of applicable securities
legislation, 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", "expects", "estimate",
"potential", "planned", "future" and similar expressions suggesting
future events or future performance.
In particular, this document contains forward-looking
statements, including certain financial outlook, pertaining to,
without limitation, the following: Pembina's corporate strategy; expectations
about industry activities and development opportunities;
expectations about future growth opportunities and demand for our
service; expectations regarding new corporate developments and
impact on access to markets; planning, construction, capital
expenditure estimates, schedules, locations, regulatory and
environmental applications and approvals, expected capacity,
incremental volumes, in-service dates, rights, activities and
operations with respect to planned new construction of, or
expansions on, existing pipelines, gas services facilities,
fractionation facilities, terminalling, storage and hub facilities,
facility and system operations and throughput levels; anticipated
synergies between assets under development, assets being acquired
and existing assets of the Company; the future level and
sustainability of cash dividends that Pembina intends to pay its shareholders, and
including the expected future cash flows and the sufficiency
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; prevailing commodity prices and
exchange rates and the ability of Pembina to maintain current credit ratings;
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, climate change initiatives or
policies or increased environmental regulation; the failure to
realize the anticipated benefits or synergies of acquisitions
(including the Kinder Acquisition) 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 press release. The
forward-looking statements contained in this document are expressly
qualified by this cautionary statement.
Non-GAAP Measures
In this news release, Pembina has used the terms net revenue,
adjusted earnings before interest, taxes, depreciation and
amortization (adjusted EBITDA), cash flow from operating activities
per common share, adjusted cash flow from operating activities,
adjusted cash flow from operating activities per common share,
which do not have any standardized meaning under IFRS. Since these
non-GAAP financial 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 financial measures be 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 in 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 from 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.
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, the most directly
comparable measures recognized by GAAP, please refer to
Pembina's management's discussion
and analysis for the year ended December 31, 2019, which is
available online at www.sedar.com, www.sec.gov and through
Pembina's website at
www.pembina.com.
View original
content:http://www.prnewswire.com/news-releases/pembina-pipeline-corporation-reports-record-annual-results-in-2019-301013082.html
SOURCE Pembina Pipeline Corporation