First quarter results reflect the resilience of Pembina's
diversified and integrated business
All financial figures are in Canadian dollars unless noted
otherwise.
CALGARY, May 7, 2020 /CNW/ - Pembina Pipeline
Corporation ("Pembina" or the "Company") (TSX: PPL; NYSE: PBA)
announced today its financial and operating results for the first
quarter of 2020.
Financial and Operational Overview
|
3 Months Ended March
31
|
($ millions,
except where noted)(unaudited)
|
2020
|
2019
|
Revenue
|
1,671
|
1,968
|
Net
revenue(1)
|
865
|
774
|
Gross
profit
|
728
|
588
|
Earnings
|
314
|
313
|
Earnings per common
share – basic (dollars)
|
0.50
|
0.55
|
Earnings per common
share – diluted (dollars)
|
0.50
|
0.55
|
Cash flow from
operating activities
|
410
|
608
|
Cash flow from
operating activities per common share – basic
(dollars)(1)
|
0.75
|
1.20
|
Adjusted cash flow
from operating activities(1)
|
576
|
578
|
Adjusted cash flow
from operating activities per common share – basic
(dollars)(1)
|
1.05
|
1.14
|
Common share
dividends declared
|
346
|
290
|
Dividends per common
share (dollars)
|
0.63
|
0.57
|
Capital
expenditures
|
483
|
361
|
Total volume
(mboe/d)(2)
|
3,508
|
3,403
|
Adjusted
EBITDA(1)
|
830
|
773
|
|
|
|
|
|
|
(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
March 31
|
|
2020
|
2019
|
($ millions,
except where noted)
|
Volumes(1)
|
Gross
Profit
|
Adjusted
EBITDA(2)
|
Volumes(1)
|
Gross
Profit
|
Adjusted
EBITDA(2)
|
Pipelines
|
2,629
|
396
|
550
|
2,507
|
340
|
457
|
Facilities
|
879
|
174
|
256
|
896
|
158
|
232
|
Marketing & New
Ventures(3)
|
—
|
157
|
55
|
—
|
93
|
121
|
Corporate
|
—
|
1
|
(31)
|
—
|
(3)
|
(37)
|
Total
|
3,508
|
728
|
830
|
3,403
|
588
|
773
|
|
|
(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
March 31, 2020 ("MD&A") for further information.
|
Financial & Operational Highlights
- First quarter earnings of $314
million are in line with the same period in the prior year.
Earnings in the first quarter were positively impacted by higher
gross profit in both Pipelines and Facilities from additional
assets following the acquisition of Kinder
Morgan Canada and the U.S. portion of the Cochin Pipeline
(the "Kinder Acquisition"), combined with consistent performance
from Pembina's other assets. Marketing & New Ventures was
negatively impacted by lower margins on crude oil and NGL sales
during the quarter, offset by higher unrealized gains on
commodity-related derivatives due to decreasing forward prices for
crude oil and NGL compared to contract positions. Net finance costs
increased during the quarter, however the increase was primarily
attributable to unrealized foreign exchange losses on U.S. dollar
denominated debt and non-commodity related derivative financial
instruments following the decrease in value of the Canadian dollar
relative to the U.S. dollar.
- Record first quarter adjusted EBITDA of $830 million represents a seven percent increase
over the same period in the prior year. The first quarter was
positively impacted by the contribution from new assets following
the Kinder Acquisition, combined with increased volumes on the
Peace Pipeline system, partially offset by lower margins on crude
oil and NGL sales in the marketing business as a result of the
sharp decline in commodity prices during the first quarter of 2020
and a lower contribution from Alliance Pipeline due to the narrower
AECO-Chicago natural gas price differential.
- Cash flow from operating activities of $410 million for the first quarter was a decrease
of 33 percent over the same period in the prior year. The decrease
was primarily driven by an increase in taxes paid as the final
payment of 2019 taxes was made, the change in non-cash working
capital and a decrease in distributions from equity accounted
investees, partially offset by an increase in operating results
after adjusting for non-cash items. On a per share (basic) basis,
cash flow from operating activities for the first quarter decreased
by 38 percent, compared to the same period in the prior year, due
to the same factors, as well as additional common shares issued
pursuant to the Kinder Acquisition.
- Adjusted cash flow from operating activities of $576 million in the first quarter was consistent
with the same period in the prior year. Year-over-year results were
consistent largely due to the same factors impacting cash flow from
operating activities, net of the increase in taxes paid, change in
non-cash working capital, combined with the decrease in accrued
share-based payment expense as a result of Pembina's lower share
price reducing long-term incentives. On a per share (basic) basis,
adjusted cash flow from operating activities for the first quarter
decreased by eight percent compared to the same period in the prior
year, due to the same factors, as well as additional common shares
issued pursuant to the Kinder Acquisition.
- Total volumes of 3,508 mboe/d for the first quarter represented
a three percent increase over the same period in the prior
year.
Divisional Highlights
- Pipelines reported adjusted EBITDA for the first quarter of
$550 million, which represents a 20
percent increase compared to the same period in the prior year. The
quarter was positively impacted by higher revenue associated with
the Cochin Pipeline and Edmonton Terminals following the Kinder
Acquisition, combined with increased volumes on the Peace Pipeline
system, partially offset by increased operating expenses associated
with the larger asset base and a lower contribution from Alliance
Pipeline due to the lower AECO-Chicago natural gas price
differential.
Pipelines volumes of 2,629 mboe/d in the first quarter represents a
five percent increase compared to the same period in the prior
year. Volumes were positively impacted by the contribution
from the Cochin Pipeline following the Kinder Acquisition, combined
with increased volumes on the Peace Pipeline system, partially
offset by lower volumes on the Alliance Pipeline due to a narrower
AECO-Chicago natural gas price differential. Pipeline revenue, and
consequently revenue volumes, in the first quarter of both 2020 and
2019 reflected the deferral of certain take-or-pay revenue under
IFRS 15. In the first quarter of 2020, $14
million of revenue in excess of the amount recognized was
deferred.
- Facilities reported first quarter adjusted EBITDA of
$256 million, which represents a 10
percent increase compared to the same period in the prior year. The
first quarter was positively impacted by additional revenue from
Duvernay II, Vancouver Wharves and the Redwater Co-generation
Facility, combined with lower power costs in the gas services
business, partially offset by lower revenues at the Cutbank Complex
and higher operating expenses related to Vancouver Wharves.
Facilities volumes of 879 mboe/d in the first quarter represents a
two percent decrease compared to the same period in the prior year.
Volumes during the first quarter were impacted by lower supply
volumes at the Redwater Complex due to current market conditions,
combined with decreased volumes at the Cutbank Complex, partially
offset by additional volumes associated with Duvernay II being
placed into service.
- Marketing & New Ventures reported fourth quarter adjusted
EBITDA of $55 million, which
represents a 55 percent decrease compared to the same period in the
prior year. The first quarter decrease was largely due to lower
margins on crude oil and NGL sales as a result of the sharp decline
in commodity prices during the first quarter of 2020, combined with
a lower contribution from Aux Sable due to the narrower
AECO-Chicago natural gas price differential and NGL prices.
NGL sales volumes of 195 mboe/d in the first quarter represents a
10 percent decrease compared to the same period in the prior year.
Volumes for the first quarter were negatively impacted by lower
supply volumes at the Redwater Complex, partially offset by
increased volumes at Aux Sable.
Executive Overview(1)
During this challenging and unprecedented period, everyone at
Pembina hopes the Company's stakeholders - its employees,
communities, customers and investors - are safe, healthy and
finding a way to manage through these uniquely difficult
circumstances. Pembina remains focused on the business and
meeting the needs of customers while acknowledging the human impact
and the immense toll the COVID-19 pandemic is having on
everyone.
The current pandemic has far reaching implications for both
human health and the health of the global economy. The concurrent
decline in global energy prices further magnifies this crisis for
energy-related businesses and the people and communities that are
dependent upon them.
Today, while Pembina reported strong quarterly financial and
operational results, the impact of these crises will begin to
materialize more fully in subsequent quarters and this has informed
Pembina's outlook for the remainder of the year, including our 2020
guidance, as discussed further below. In response to the health
pandemic and the resulting significant decline in global energy
prices, Pembina previously announced a decisive action plan to
protect all its stakeholders.
- The Company has taken the necessary steps to protect human
health and support government and community efforts to slow down
the spread of the COVID-19 virus. In line with recommendations from
health authorities, Pembina restricted business travel, cancelled
large group meetings and is requiring non-essential employees and
contractors who can work from home to do so.
- Pembina has determined the essential staff and critical
infrastructure required to ensure uninterrupted service to
customers while maintaining the safety of its assets, employees and
other stakeholders. The Company has not experienced any operational
disruptions to its assets as a result of COVID-19.
- The Company also announced the deferral of some expansion
projects to reflect current market realities and uncertainty over
the duration of this downturn. Further, additional discretionary
capital investment has been removed from Pembina's 2020 capital
budget. The result is a $900 million
to $1.1 billion reduction to the
Company's 2020 capital investment plans. These reductions will be
directed towards reducing Pembina's leverage and enhancing its
financial position. Importantly, these measures will have no impact
on Pembina's existing base business or its ability to continue to
operate safely and reliably. In the event that the energy price
downturn extends beyond 2020 and projects remain deferred, capital
investment in 2021 is expected to be substantially lower than in
2020. This would result in Pembina generating significant excess
cash flow from operating activities, after the payment of
dividends, to fund capital expenditures and additional debt
repayment.
$1.3
billion of new projects are expected to come into service
throughout 2020 and early 2021. The decision to continue
spending on these projects was informed by the fact that they are
all well advanced, or nearing completion, and are therefore
expected to contribute incremental adjusted EBITDA in the near
future. By contrast, the deferred projects were in the early stages
of planning or construction.
Planning, engineering and
regulatory work done to date on the deferred projects will allow
Pembina to quickly resume these projects to meet customers' needs
when global energy prices and the broader economic environment
support such action.
(1)
|
Notwithstanding the
steps taken by Pembina to mitigate the impact of the COVID-19
pandemic and the low commodity price environment on its business,
these events and circumstances create and heighten certain risks
and uncertainties that may impact its results of operations and
financial conditions in future periods. These risks and
uncertainties are outlined in more detail in Pembina's management's
discussion and analysis for the first quarter of 2020 (the "Q1
MD&A") and readers are urged to carefully review this
disclosure, including under section 11 "Risk Factors" of the Q1
MD&A.
|
Pembina recognizes that the prevailing energy prices and
temporary demand disruptions have forced the Company's producing
customers to take actions to preserve liquidity and strengthen
their balance sheets. Capital budgets are being drastically
reduced, which will result in moderation of growth or production
declines. At the same time, producers continue to require safe and
reliable midstream services to ensure their products continue to
reach demand markets to maximize cash generation in this
environment and ensure North American energy needs continue to be
met.
Pembina has evaluated the impact producer spending decisions are
expected to have on its business. While some volume declines across
our system are anticipated, much of Pembina's business is protected
by strong contracts. Pembina expects its marketing business will be
more negatively impacted by the rapid and significant decline in
energy prices. However, declining volumes and a lower marketing
contribution will be somewhat offset by approximately $100 million of operating and administrative cost
savings and efficiencies, which have been implemented throughout
the business.
Overall, Pembina continues to expect 2020 adjusted EBITDA to
remain within the previously disclosed guidance range, albeit the
Company expects to be near the lower end of that range based on
current estimates. While factoring in reduced volumes and lower
commodity prices as noted above, the duration of the current
situation and large-scale shut-ins could cause Pembina to fall
below the low end of the guidance range.
Pembina's business is resilient in the face of current
challenges. An unwavering commitment to the Company's financial
guardrails has been a guiding principle for many years and, as a
result, Pembina is well positioned.
- Pembina is benefiting from the diversification efforts of the
past several years. Various initiatives, including the acquisition
of high-quality assets such as the Alliance and Cochin pipelines and the Edmonton Terminals
storage assets, combined with ongoing development of highly
contracted assets such as the Peace Pipeline system and the
Duvernay Complex, have expanded Pembina's diversification across
commodities, credit-worthy counterparties, producing basins and
currencies. Pembina's business is comprised approximately 40
percent by the crude oil and condensate value chain, approximately
30 percent by the natural gas liquids value chain and approximately
30 percent by the natural gas value chain.
- The underlying business remains highly contracted, with between
90 and 95 percent of 2020 adjusted EBITDA, based on Pembina's 2020
guidance, supported by long-term, fee-based contracts, including
approximately 68 to 72 percent coming from cost-of-service or
take-or-pay contracts with no volume or price risk.
- Direct commodity exposure in Pembina's business is limited to
the Marketing & New Ventures Division. Approximately 50 percent
of Pembina's frac spread exposure has been hedged in 2020 and 35
percent in 2021, excluding Aux Sable.
- Approximately 80 percent of the Company's credit exposure is
with investment grade and split-rated counterparties or with
counterparties secured by letters of credit. Non-investment
grade and split-rated counterparty exposure is well diversified
across various industries.
- The balance sheet is strong. Pembina is rated BBB with a Stable
outlook by Standard & Poor's and BBB with a Stable trend by
DBRS Limited and the Company is fully committed to protecting its
BBB rating. Both agencies have publicly affirmed these ratings in
the past two weeks.
- Further, as at May 7, 2020, the
Company has ample liquidity, with $2.5
billion of available cash and borrowing capacity including a
new $800 million revolving credit
facility Pembina previously announced and a US$250 million non-revolving term loan announced
today.
- Pembina's common share dividend of $0.21 per share per month is more than covered by
fee-based cash flows, meaning the Company is not reliant on the
portion of its business with direct commodity price exposure to pay
the current dividend. In 2019, Pembina's common share dividend
represented only 73 percent of fee-based distributable cash flow,
or an all-in dividend payout ratio of 54 percent, providing ample
room between the current dividend and the cash flow being
generated. Pembina understands the dividend is important to
investors and the Company is committed to continue paying the
current dividend despite a challenging near-term business
outlook.
The current situation is unparalleled and brings with it some
unique challenges. However, Pembina has faced adversity before and
always emerged strong. The Company weathered the 2008-09
financial crisis and the 2015- 16 energy price collapse.
Pembina remained resilient throughout these cycles, growing both
organically and through acquisition, which allowed it to deliver
annual increases in adjusted EBITDA and dividends per common share.
Further, the Company maintained an investment grade credit rating
throughout. Today, a long-term commitment to the Company's
financial guardrails and decisive action to defer capital spending
ensures Pembina has the balance sheet strength and liquidity to
weather the current storm and ensure that upon a return to more
normal economic conditions and higher energy prices, Pembina will
be ready and able to continue its long track record of delivering
value to all stakeholders.
Projects and New Developments(2)
Pipelines and Facilities have $1.1
billion of capital projects underway, which in aggregate are
trending on budget.
Pipelines:
- Pembina's NEBC Montney Infrastructure and Wapiti Condensate
Lateral were both placed into service during the quarter.
- 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. The La Glace to Wapiti segment was placed into
service during the quarter. The Kakwa to Lator segment is under
construction and will be placed into service in the second quarter
of 2020. The project has a capital budget of $280 million.
As previously announced, in
response to the COVID-19 pandemic, the resulting virtual shutdown
of the global economy and the recent significant decline in global
energy prices, Pembina made the decision to defer some projects
within Pipelines:
- 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;
- 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; and
- The Phase IX Peace Pipeline Expansion, which 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.
(2)
|
For further details
on the Company's significant assets, including definitions, refer
to Pembina's Annual Information Form 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 Sour Treatment Facilities were placed into
service during the quarter.
- 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. A majority of the packaged equipment and pipe racks
have been fabricated and set in place. The mechanical contractor
has mobilized and has commenced fabrication of interconnecting
pipe. The capital budget is $200
million and the project has an expected in-service date in
the fourth quarter 2020.
- Pembina continues with the construction of new fractionation
and terminalling facilities at the Company's Empress NGL Extraction
Facility. These facilities are expected to add approximately 30
mbpd of propane-plus fractionation capacity to the facility.
Pipeline construction is complete, mechanical and electrical
construction is progressing on the fractionation and rail sites and
the rail track construction is expected to commence in May 2020. The project has a total capital budget
of $120 million and an anticipated
in-service date of late 2020.
- Development 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 piping work, on
site sphere assembly and marine retrofit work continued until early
March. As a result of COVID- 19, Pembina had to shut down all
site construction activities at that time. Pembina is currently
working on a remobilization plan, with the sphere constructor
currently scheduled to be back on site in May. The plans for
remobilization of other contractors are currently being developed.
As a result of the shut down, the project in-service date has been
delayed to the first quarter of 2021, subject to regulatory and
environmental approvals. The project has a capital budget of
$250 million.
- 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. Construction is
underway. The capital budget for the Hythe Developments project is
$240 million, net to Pembina, with an
anticipated in-service date of late 2020.
As previously announced, in response to the COVID-19 pandemic, the
resulting virtual shutdown of the global economy and the recent
significant decline in global energy prices, Pembina made the
decision to defer some projects within Facilities:
- The Prince Rupert Terminal Expansion, which will increase
propane export capacity to approximately 40 mbpd; and
- Pembina's Empress Co-generation Facilities, which will enable
Pembina to be more efficient with its production, reduce greenhouse
gas emissions, utilize heat recovery and provide a second source of
power.
Marketing & New Ventures:
- Regulatory processes for the proposed Jordan Cove LNG Project
are ongoing. During the quarter, Pembina announced the
receipt of a certificate of approval from the U.S. Federal Energy
Regulatory Commission ("FERC") for Pembina's proposed Jordan Cove liquefied natural gas terminal and
Pacific Connector Gas Pipeline. Jordan
Cove is the first ever U.S. West Coast natural gas export
facility to be approved by FERC. This federal approval is a
significant milestone for the project and for Pembina. The Company
remains focused on completing the regulatory process, receiving the
remaining permits required to proceed and enabling the commercial
viability of the project. The timing and ultimate approval of
this project is uncertain and dependent upon receipt of these
remaining approvals.
- As previously announced, in response to the execution risks and
unknown capital cost impacts associated with the COVID-19 pandemic,
the resulting virtual shutdown of the global economy and the recent
significant decline in global energy prices, Pembina made the
decision to defer investment in its integrated PDH/PP project being
developed through its joint venture entity CKPC. The PDH/PP
Facility will be located adjacent to Pembina's Redwater Complex and
will convert approximately 23 mbpd of locally supplied propane into
polypropylene, a high value recyclable polymer.
Financing
- As previously announced 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.
- As previously announced 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. $37
million (US$26 million) was
drawn on this facility at March 31,
2020.
- As previously announced on April 6,
2020, Pembina entered into a new $800
million unsecured revolving credit facility (the "Facility")
with certain existing key lenders. The Facility is available for
general corporate purposes, thereby providing additional liquidity
and flexibility should it be required. The Facility has an initial
term of two years. The other terms and conditions of the Facility,
including financial covenants, are substantially similar to
Pembina's existing $2.5 billion
revolving credit facility.
- On May 7, 2020, Pembina entered
into an unsecured US$250 million
non-revolving term loan with a global bank, which provides
additional liquidity and flexibility in Pembina's capital structure
in the current market conditions. The term loan has an initial term
of five years. The other terms and conditions of the credit
facility, including financial covenants, are substantially similar
to Pembina's unsecured $2.5 billion
revolving credit facility.
Dividends
- Declared and paid dividends of $0.21 per common share in January, February and
March 2020 for the applicable record
dates.
- Declared and paid quarterly dividends per preferred share of:
Series 1: $0.306625; Series 3:
$0.279875; Series 5: $0.285813; Series 7: $0.27375; Series 9: $0.296875; Series 11: $0.359375; Series 13: $0.359375; and Series 21: $0.30625 to shareholders of record as of
February 3, 2020. 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 March 16, 2020. Declared and paid quarterly
dividends per preferred share of Series 23: $0.328125; and Series 25: $0.3250 to shareholders of record on January 31, 2020.
First Quarter 2020 Conference Call & Webcast
Pembina will host a conference call on Friday, May 8, 2020 at 8:00 a.m. MT (10:00 a.m.
ET) for interested investors, analysts, brokers and media
representatives to discuss results for the first quarter of 2020.
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 May 15,
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 3298148.
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://produceredition.webcasts.com/starthere.jsp?ei=1290098&tp_key=0acdce5bbf in
your web browser. Shortly after the call, an audio archive will be
posted on the website for a minimum of 90 days.
Annual Meeting of Common Shareholders
The Company will hold its Annual Meeting of common shareholders
("AGM") on Friday, May 8, 2020 at
2:00 p.m. MT (4:00 p.m. ET). The AGM will be held as a
virtual-only meeting, which will be conducted via live audio
webcast at https://web.lumiagm.com/m#/119921742. Participants are
recommended to register for the virtual webcast at least 10 minutes
before the presentation start time. A copy of the AGM presentation
will be accessible on Pembina's website at www.pembina.com under
Investor Centre, Presentation & Events.
For further information on Pembina's virtual AGM, kindly visit
the Shareholder Information page under the Investor Centre tab at
www.pembina.com.
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 developing 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 and
the development and expected timing of new business initiatives and
growth opportunities and the expected timing thereof; 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 impact of the current
commodity price environment on Pembina; and the future level and
sustainability of cash dividends that Pembina intends to pay its
shareholders, 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,
interest rates 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 and the outcome of
stakeholder engagement; 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; risks relating to the current and
potential adverse impacts of the COVID-19 pandemic and continued
depressed commodity prices; 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 (basic), adjusted cash flow from operating
activities, adjusted cash flow from operating activities per common
share (basic) and fee-based distributable cash flow, 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
March 31, 2020, which is available online at www.sedar.com,
www.sec.gov and through Pembina's website at
www.pembina.com.
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SOURCE Pembina Pipeline Corporation