2020 full year guidance reiterated; strength of Pembina's
fee-based business continues to drive resilience
All financial figures
are in Canadian dollars unless otherwise noted. This news release
refers to certain financial measures that are not defined by
Generally Accepted Accounting Principles ("GAAP"), including 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 and adjusted cash flow from operating activities per
common share. For more information see "Non-GAAP Measures"
herein.
|
CALGARY, AB, Aug. 6, 2020 /PRNewswire/ - Pembina Pipeline
Corporation ("Pembina" or the "Company") (TSX: PPL) (NYSE: PBA)
announced today its financial and operating results for the second
quarter of 2020.
Pembina continues to demonstrate its resilience even during the
challenging environment created by the COVID-19 pandemic and
concurrent decline in global energy prices.
- Pembina's assets have continued to operate safely and reliably
throughout the pandemic, ensuring uninterrupted service to our
customers, which is a testament to the Company's dedicated
staff;
- Based on management's evaluation of current market conditions
and the COVID-19 dynamic, Pembina continues to expect 2020 adjusted
EBITDA to remain within the previously disclosed guidance range of
$3.25 billion to $3.55 billion, albeit near the lower end of the
range, based on current estimates. This outlook includes an
expectation that the 2020 adjusted EBITDA contribution from the
Marketing & New Ventures segment will be approximately
$125 million lower than was assumed
in the mid-point of the original guidance range. The impact of
lower interruptible revenue in the Pipelines and Facilities
segments is expected to be largely offset by operating and
administrative cost savings and efficiencies, which have been
implemented throughout the business, the majority of which
management believes are sustainable into 2021;
- During the second quarter, the impact of low crude oil and NGL
prices was seen through lower producer activity and a temporary
decline in physical volumes in certain of Pembina's businesses.
Yet, the impact to Pembina's financial results has not been as
significant, as a highly contracted commercial framework, paired
with broad diversification of customers and commodities, ensured a
resilient business foundation even during these difficult
times;
- The Company's counterparties have managed well through the
pandemic. Pembina's accounts receivables remain 97 percent current,
meaning they are paid within 30 days, and Pembina's counterparty
portfolio is approximately 75 percent investment grade, secured or
split-rated; and
- Pembina's longstanding commitment to its financial guardrails
and the steps taken recently to preserve its balance sheet and
enhance its liquidity are expected to allow the Company to exit
2020 in a strong financial position, ensuring its ability to
restart various capital projects when it is deemed prudent to do so
and providing confidence in the Company's ability to fund a stable
and growing dividend.
Financial and Operational Overview
|
3 Months Ended June
30
|
6 Months Ended June
30
|
($ millions,
except where noted) (unaudited)
|
2020
|
2019
|
2020
|
2019
|
Revenue
|
1,268
|
1,808
|
2,939
|
3,776
|
Net
revenue(1)
|
776
|
758
|
1,641
|
1,532
|
Gross
profit
|
455
|
629
|
1,183
|
1,217
|
Earnings
|
253
|
664
|
567
|
977
|
Earnings per common
share – basic (dollars)
|
0.39
|
1.23
|
0.89
|
1.79
|
Earnings per common
share – diluted (dollars)
|
0.39
|
1.23
|
0.89
|
1.78
|
Cash flow from
operating activities
|
642
|
661
|
1,052
|
1,269
|
Cash flow from
operating activities per common share – basic
(dollars)(1)
|
1.17
|
1.29
|
1.91
|
2.49
|
Adjusted cash flow
from operating activities(1)
|
586
|
550
|
1,162
|
1,128
|
Adjusted cash flow
from operating activities per common share – basic
(dollars)(1)
|
1.07
|
1.08
|
2.11
|
2.21
|
Common share
dividends declared
|
347
|
302
|
693
|
592
|
Dividends per common
share (dollars)
|
0.63
|
0.59
|
1.26
|
1.16
|
Capital
expenditures
|
211
|
434
|
694
|
795
|
Total volume
(mboe/d) (2)
|
3,427
|
3,384
|
3,468
|
3,395
|
Adjusted
EBITDA(1)
|
789
|
765
|
1,619
|
1,538
|
(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
June 30
|
6 Months Ended
June 30
|
|
2020
|
2019
|
2020
|
2019
|
($ millions,
except
where noted)
(unaudited)
|
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
|
2,555
|
376
|
540
|
2,518
|
360
|
472
|
2,592
|
772
|
1,090
|
2,514
|
700
|
929
|
Facilities
|
872
|
163
|
250
|
866
|
167
|
236
|
876
|
337
|
506
|
881
|
325
|
468
|
Marketing & New
Ventures (3)
|
—
|
(85)
|
29
|
—
|
100
|
97
|
—
|
72
|
84
|
—
|
193
|
218
|
Corporate
|
—
|
1
|
(30)
|
—
|
2
|
(40)
|
—
|
2
|
(61)
|
—
|
(1)
|
(77)
|
Total
|
3,427
|
455
|
789
|
3,384
|
629
|
765
|
3,468
|
1,183
|
1,619
|
3,395
|
1,217
|
1,538
|
(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
June 30, 2020 ("MD&A") for further information.
|
Financial & Operational Highlights
- Earnings in the second quarter of $253
million represent a 62 percent decrease over the same period
in the prior year. Earnings were positively impacted by higher
gross profit in Pipelines and consistent gross profit in
Facilities, as the contribution from additional assets following
the acquisition of Kinder Morgan
Canada and the U.S. portion of the Cochin Pipeline (the
"Kinder Acquisition") offset weaker global energy demand resulting
from the ongoing COVID-19 pandemic. Marketing & New Ventures
was impacted by lower margins on crude oil and NGL sales during the
quarter as a result of reduced crude oil activities due to market
conditions in addition to lower frac spreads, which impacted NGL
margins. Additionally, Marketing & New Ventures recognized
higher unrealized losses on commodity-related derivatives, due to
contracts maturing and increasing forward prices for crude oil and
NGL compared to contract positions, and a lower contribution from
Aux Sable as a result of lower NGL margins and a narrower
AECO-Chicago natural gas price differential. Deferred taxes
increased as the enactment of Alberta's Bill 3, which reduced the
Alberta corporate income tax rate
from 12 percent to eight percent, resulted in a large deferred tax
recovery during the second quarter of 2019. General &
administrative and other expense decreased due to the recognition
of other income associated with the Canadian Emergency Wage
Subsidy, combined with lower incentive costs.
- Second quarter adjusted EBITDA of $789
million represents a three percent increase over the same
period in the prior year. The second quarter was positively
impacted largely by the contribution from new assets following the
Kinder Acquisition, combined with a realized gain on
commodity-related derivatives. This was partially offset by lower
margins on crude oil and NGL sales in the marketing business as a
result of lower commodity prices and frac spreads during the second
quarter of 2020, and a lower contribution from Alliance due to
lower interruptible volumes and from Aux Sable due largely to lower
NGL margins.
- Cash flow from operating activities of $642 million for the second quarter was a
decrease of three percent over the same period in the prior year.
The decrease was primarily driven by a change in non-cash working
capital, a decrease in distributions from equity accounted
investees and an increase in net interest paid, partially offset by
the increase in operating results after adjusting for non-cash
items, an increase in payments that were received and deferred and
a decrease in taxes paid. On a per share (basic) basis, cash flow
from operating activities for the second quarter decreased by nine
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 $586 million in the second quarter was a seven
percent increase over the same period in the prior year. The
increase was largely due to the same factors impacting cash flow
from operating activities, net of the change in non-cash working
capital and higher current tax expense. On a per share (basic)
basis, adjusted cash flow from operating activities for the second
quarter decreased by one percent compared to the same period in the
prior year, due to the same factors, offset by additional common
shares issued pursuant to the Kinder Acquisition.
- Total volumes of 3,427 mboe/d for the second quarter
represented a one percent increase over the same period in the
prior year.
Divisional Highlights
- Pipelines reported adjusted EBITDA for the second quarter of
$540 million, which represents a 14
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, partially offset by lower conventional revenue,
increased operating expenses associated with the larger asset base
and a lower contribution from Alliance due to lower interruptible
volumes driven by the narrower AECO-Chicago natural gas price
differential.
- Pipelines volumes of 2,555 mboe/d in the second quarter
represent a one 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 higher temporary interruptible volumes on Ruby, partially
offset by lower interruptible volumes on the Peace Pipeline system
and Drayton Valley Pipeline as a result of the ongoing COVID-19
pandemic.
- Facilities reported second quarter adjusted EBITDA of
$250 million, which represents a six
percent increase compared to the same period in the prior year. The
second quarter was positively impacted by additional revenue from
Vancouver Wharves and Duvernay II, combined with lower long-term
incentive costs, partially offset by higher operating expenses
related to Vancouver Wharves and the Duvernay Complex.
Facilities volumes of 872 mboe/d in the second quarter, represent a
one percent increase compared to the same period in the prior year.
Volumes during the second quarter were impacted by higher supply
volumes at the Redwater Complex and revenue volumes associated with
Duvernay II, partially offset by the temporary shut-in of the
Saskatchewan Ethane Extraction Plant due to low commodity prices,
combined with lower volumes at the Younger Facility due to
increased competition as a result of a competitor pipeline that was
placed into service.
- Marketing & New Ventures reported second quarter adjusted
EBITDA of $29 million, which
represents a 70 percent decrease compared to the same period in the
prior year. The second quarter decrease was largely due to lower
margins on crude oil and NGL sales, as a result of the lower crude
oil and NGL prices and frac spreads during the second quarter of
2020, combined with a lower contribution from Aux Sable due to
lower NGL margins and the narrower AECO-Chicago natural gas price
differential, partially offset by the increased realized gain on
commodity-related derivative financial instruments.
NGL sales volumes of 156 mboe/d in the second quarter, represent an
11 percent decrease compared to the same period in the prior year.
Volumes for the second quarter were negatively impacted by
increased storage positions for NGL with the intention to monetize
them during the upcoming winter season of 2020-2021, partially
offset by increased volumes at Aux Sable.
Executive Overview
Management believes that Pembina's second quarter financial and
operational results reflect the full impact of the ongoing COVID-19
pandemic and the concurrent decline in global energy prices. While
much uncertainty remains, based on management's evaluation of
current market conditions and the COVID-19 dynamic, the expectation
is that the second quarter will be the quarter most impacted by
these events in 2020. The outlook for the remainder of the year is
more positive as economies around the world have entered various
stages of re-opening and global energy prices have rebounded
significantly from the lowest levels seen during this crisis.
Despite the challenging environment there are notable
positives:
- Pembina's assets have continued to operate safely and reliably
throughout the pandemic, ensuring uninterrupted service to our
customers, which is a testament to the Company's dedicated
staff;
- Pembina continues to expect 2020 adjusted EBITDA to remain
within the previously disclosed guidance range of $3.25 billion to $3.55
billion, albeit near the lower end of the range, based on
current estimates. This outlook includes an expectation that the
2020 adjusted EBITDA contribution from the Marketing & New
Ventures segment will be approximately $125
million lower than was assumed in the mid-point of the
original guidance range. The impact of lower interruptible revenue
in the Pipelines and Facilities segments is expected to be largely
offset by operating and administrative cost savings and
efficiencies, which have been implemented throughout the business,
the majority of which management believes are sustainable into
2021. Approximately 70 percent of the forecasted 2020 adjusted
EBITDA is derived from cost-of-service or take-or-pay contracts
with no volume or price risk;
- During the second quarter, the impact of low crude oil and NGL
prices was seen through lower producer activity and a temporary
decline in physical volumes in certain of Pembina's businesses.
Yet, the impact to Pembina's financial results has not been as
significant, as a highly contracted commercial framework, paired
with broad diversification of customers and commodities, ensured a
resilient business foundation even during these difficult
times;
- The Company's counterparties have managed well through the
pandemic. Pembina's accounts receivables remain 97 percent current,
meaning they are paid within 30 days, and Pembina's counterparty
portfolio is approximately 75 percent investment grade, secured or
split-rated; and
- Pembina's longstanding commitment to its financial guardrails
and the steps taken recently to preserve its balance sheet and
enhance its liquidity are expected to allow the Company to exit
2020 in a strong financial position, ensuring its ability to
restart various capital projects when it is deemed prudent to do so
and providing confidence in the Company's ability to fund a stable
and growing dividend.
In Pembina's conventional pipeline business, the second quarter
saw an approximately nine percent decrease in physical volumes
compared to an average of the prior two quarters. Systems such as
Peace, which are underpinned by a high degree of take-or-pay
contracts, were slightly less impacted and systems without those
contractual underpinnings, such as Drayton Valley, were slightly more impacted.
Overall, physical volumes reached their lows in early May, at
levels approximately 16 percent below the average levels from the
prior two quarters. This represents a decrease of approximately
135,000 barrels per day ("bpd"), resulting from a combination of
producer shut-ins and advancement of turnarounds and maintenance
work. For Pembina, this low point was relatively short-lived
and since early May, physical volumes in the conventional pipeline
business have been steadily improving, albeit still approximately
seven percent below first quarter levels. With stronger commodity
prices driving higher interruptible volumes, and the placement into
service of the Phase VI Peace Pipeline Expansion, physical volumes
in the second half of the year are expected to continue to
improve.
The marketing business endured one of the toughest periods in
its history during the second quarter. The crude oil component of
the business has been negatively impacted by reduced crude oil
activities due to lower prices and tighter price differentials.
Similarly, the NGL component of the business has seen relatively
strong natural gas prices combined with weaker NGL prices,
resulting in narrower frac spreads. With weaker NGL prices during
the quarter, Pembina took the proactive approach to store
additional NGL volumes, with the intent to monetize those volumes
during the upcoming winter of 2020-2021. Fortunately, the recovery
in both crude oil and NGL forward prices from second quarter lows
continues to look more favourable.
Pembina has hedged 50 percent of its NGL frac spread exposure
for 2020, excluding Aux Sable, and these hedges were entered into
systematically throughout 2019 at prices higher than those
experienced to date in 2020. This has resulted in significant
realized hedging gains in the year-to-date results and provides
ongoing protection for the remainder of the year. To date, Pembina
has hedged approximately 40 percent of its 2021 frac spread
exposure, excluding Aux Sable. The 2021 hedges have been entered
into throughout 2019 and 2020 and therefore reflect a combination
of higher and lower frac spread environments but overall, provide
protection against further narrowing of 2021 frac spreads. Pembina
intends to continue to execute on its 2021 derivative program
through the third quarter of 2020 with an intent to hedge
approximately 50 percent of its 2021 frac spread exposure,
excluding Aux Sable.
During the first quarter, the Company took the unprecedented,
but prudent, step to defer $4.5
billion of capital projects, reducing its 2020 capital
investment plans by between $900
million and $1.1 billion. At
the midpoint of 2020, Pembina is on track to realize a reduction in
its capital investment plan of approximately $1.1 billion. Challenging weather conditions and
COVID-19 related precautions and delays resulted in capital cost
overruns in 2020 of approximately $100
million. Additionally, during the second quarter Pembina
added approximately $90 million of
additional growth capital investment into 2020. These investments
are accretive, commercially-supported projects in key focus areas.
Pembina's 2020 capital program is now expected to total
approximately $1.5 billion.
Looking beyond 2020, Pembina remains focused on growing the
business and meeting its customers' needs. Pembina continues to
evaluate its portfolio of both new and deferred projects for
conditions under which they can commence.
The Phase VII, VIII and IX Peace Pipeline Expansions will
continue to be evaluated based on customer needs and an assessment
of future transportation requirements in the Western Canadian
Sedimentary Basin, including greater stability in volumes and
prices and a clearer forecast of basin activity. In the interim,
Pembina is well positioned to handle all customers' volumes, with
approximately 250,000 bpd of currently available physical capacity
on the Peace and Northern systems and the option to provide
additional low-cost solutions such as targeted minor capital
projects to meet specific producers' needs.
Regarding Canada Kuwait Petrochemical Limited Partnership's
("CKPC") PDH/PP Facility, the project team has substantially
completed the activities to safely and cost-effectively defer the
project. The fabrication of critical long-lead items has continued,
and key talent and knowledge have been retained, all to preserve
project value for an efficient potential re-start. Pembina and its
joint-venture partner continue to evaluate a number of factors
related to the project. First, a necessary condition is that the
safety of all personnel can be assured. Second, while the immediate
incremental costs associated with COVID-19 were contained by the
decision to defer the project, the future and ongoing risks need to
be understood and priced into the project cost estimate. Third, the
full impact of COVID-19 on the global economy and future demand for
polypropylene remains uncertain and needs to be carefully
evaluated. Fourth, with both Federal and Provincial governments, as
well as our project financing syndicate, indicating extensions
have, or will be, granted, we remain confident that the original
investment parameters can be re-confirmed. Finally, the project
restart is subject to CKPC Management Committee approval and each
partners' board approval.
The Prince Rupert Terminal Expansion and the Empress
Co-generation Facility are progressing to be in a position for a
potential re-start and we are adding other projects to this list,
which could expand or extend Pembina's existing value chain and
customer service offering.
The capital project deferrals discussed above ensure Pembina
will maintain liquidity and leverage levels to preserve its strong
financial position even in the event of a prolonged downturn.
Pembina further enhanced its liquidity position during the second
quarter by terming out approximately $850
million of debt drawn on the Company's credit facility and
establishing a new $800 million
revolving credit facility. Following the early redemption in July
of $200 million of senior notes
originally due in 2021, Pembina's liquidity position currently
stands at $2.8 billion. With no debt
maturities for the balance of 2020 and $600
million of maturities distributed throughout 2021, Pembina's
liquidity position is ample.
The recent debt issuances, at a weighted average term to
maturity of 17 years and a rate of approximately 3.2 percent,
provided a strong endorsement from a broad cross section of the
debt capital markets. Combined with the recent affirmation of
Pembina's BBB credit rating by both Standard & Poor's and DBRS
Limited, this validates the Company's strong financial
position. The previously announced initiatives on non-core
asset sales in the range of $200 to
$500 million is progressing as
planned. Pembina expects to be able to provide more details with
the release of the Company's third quarter results in the fall.
The first half of 2020 has seen Pembina rise to an unprecedented
challenge, reacting quickly and effectively in service of its
stakeholders. Pembina's growth and diversification over recent
years, combined with an unwavering commitment to its financial
guardrails, ensured the Company was well positioned for a black
swan event such as COVID-19. As a result of the decisive
intervention taken early in the pandemic, Pembina expects to
deliver financial results within its original guidance range and
exit 2020 in a strong financial position. This will allow the
Company to resume its deferred capital projects and continue its
long track record of growth and providing its customers with
exceptional value through its unmatched integrated value chain. As
our employees begin a prudent transition back to our offices, we
expect things to continue to normalize and we feel fortunate, all
things considered.
Projects and New Developments1
Pipelines:
- Pembina's Phase VI Peace Pipeline Expansion was placed into
service during the quarter.
- Pacific Gas and Electric Company ("PG&E"), the largest
shipper on Ruby, emerged from bankruptcy in early July after filing
for Chapter 11 protection in late January
2019. PG&E's contracts on Ruby have been affirmed with
certain mutually beneficial amendments.
____________________
|
1 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 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. All equipment and pipe racks have been installed
onsite. Mechanical construction was substantially complete at the
end of July, electrical work is underway and the commissioning team
mobilized in July to commence final walk-downs and dry
commissioning. The capital budget is $200
million and the project is trending under budget with an
expected in-service date in the fourth quarter of 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,
enabling Pembina to optimize propane marketing from that facility
between eastern and western markets. Pipeline and rail track
construction is complete, mechanical and electrical construction is
progressing on the fractionation and rail sites and
pre-commissioning work has commenced. 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 the COVID-19 pandemic, Pembina temporarily
halted all site construction activities, resulting in a delay to
the in-service date, which is now expected to be in the first
quarter of 2021, subject to regulatory and environmental approvals.
A reduced construction workforce was re-mobilized to site in
mid-May and continued with facility piping work, and on site sphere
assembly. Electrical, substation, marine rehabilitation and rail
contractors have also re-mobilized to site. The project has a
capital budget of $250 million and is
trending over budget.
- 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.
Marketing & New Ventures:
- Regulatory processes for the proposed Jordan Cove LNG Project
("Jordan Cove") are ongoing. During the quarter, the United States
Department of Energy announced an issuance order authorizing
Jordan Cove to export liquefied
natural gas from the proposed export terminal in Coos Bay, Oregon. The issuance order marks
another important step forward for this project. Jordan Cove represents a significant opportunity
to bring tremendous economic benefits to the State of Oregon and Western Colorado and make a substantial
contribution to global climate change, displacing coal usage in
Asia. 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.
Financing
- 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.
- As previously announced, on May 7,
2020, Pembina entered into an unsecured U.S. $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.
- As previously announced, Pembina closed a $500 million issuance of senior unsecured
medium-term notes (the "Offering") on May
28, 2020. The Offering was conducted in two tranches
consisting of $400 million in senior
unsecured medium-term notes, series 16 having a fixed coupon of
4.67 percent per annum, payable semi-annually, and maturing on
May 28, 2050; and $100 million principal amount issued through a
re-opening of the Company's 3.71 percent medium-term notes, series
7, payable semi-annually, and maturing on August 11, 2026. The net proceeds were used to
repay indebtedness of the Company under its unsecured $2.5 billion revolving credit facility due
May 2024 incurred in connection with
the acquisition of the U.S. portion of the Cochin Pipeline system,
as well as to fund Pembina's capital program and for general
corporate purposes.
- On June 1, 2020, Pembina
announced that it did not intend to exercise its right to redeem
the 8,000,000 Cumulative Redeemable Rate Reset Class A Preferred
Shares, Series 19 shares ("Series 19 Shares") outstanding on
June 30, 2020. The annual dividend
rate for the Series 19 Shares for the five-year period from and
including June 30, 2020 to, but
excluding, June 30, 2025 will be
4.684 percent.
- On July 10, 2020, Pembina's
$200 million senior unsecured notes,
series C, were fully repaid through an early redemption. The series
C notes were originally set to mature in September 2021.
Dividends
- Declared and paid dividends of $0.21 per common share in April, May and
June 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
May 1, 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 June 15, 2020. Declared and paid quarterly
dividends per preferred share of Series 23: $0.328125; and Series 25: $0.3250 to shareholders of record on April 30, 2020.
Second Quarter 2020 Conference Call & Webcast
Pembina will host a conference call on Friday, August 7, 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 second 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 August
14, 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 8295027.
A live webcast of the conference call can be accessed on
Pembina's website at www.pembina.com under Investor Centre/
Presentation & Events, or by entering:
https://produceredition.webcasts.com/starthere.jsp?ei=1290104&tp_key=f940364325 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
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 Western Canadian
Sedimentary Basin 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.
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 outlooks, 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, completion and in-service dates, rights,
activities and operations with respect to planned new construction
of, or expansions on, existing pipelines, systems gas services
facilities, processing and fractionation facilities, terminalling,
storage and hub facilities, facility and system operations and
throughput levels; the impact of current market conditions 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; 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;
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 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
June 30, 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