First quarter results reflect strong marketing
contribution and support revised full year outlook amidst growing
sector activity
All financial figures
are in Canadian dollars unless otherwise noted. This news release
refers to certain financial measures and ratios that are not
specified, defined or determined in accordance with Generally
Accepted Accounting Principles ("GAAP"), including net revenue;
adjusted earnings before interest, taxes, depreciation and
amortization ("adjusted EBITDA"); adjusted cash flow from operating
activities; and adjusted cash flow from operating activities per
common share. For more information see "Non-GAAP and Other
Financial Measures" herein.
|
CALGARY, AB, May 5, 2022 /PRNewswire/ -- Pembina Pipeline
Corporation ("Pembina" or the "Company") (TSX: PPL) (NYSE: PBA)
announced today its financial and operating results for the first
quarter 2022.
Highlights
- Record Quarterly Results – delivered first quarter
earnings of $481 million and record
quarterly adjusted EBITDA of $1
billion, reflecting higher natural gas liquids and crude oil
prices and margins, and rising volumes on key systems.
- Guidance Raised – 2022 adjusted EBITDA guidance range
has been revised to $3.45 to
$3.6 billion (previously $3.35 to $3.55
billion).
- Peace Pipeline Expansion Updates – the Phase VIII
expansion has been reactivated and the Phase VII expansion is
undergoing final commissioning and is expected to enter commercial
service on June 1, 2022 ahead of
schedule and under budget.
- New NEBC Producer Commitment – Pembina has entered into
a 20-year midstream services agreement, for the transportation and
fractionation of liquids, with a premier northeast British Columbia
Montney producer.
- New Gas Processing Joint Venture – as previously
disclosed, Pembina has entered into definitive agreements with
affiliates of KKR & Co., Inc. (collectively, "KKR") to combine
their respective western Canadian natural gas processing assets
into a single, new joint venture entity. Closing of the transaction
is expected in the third quarter.
- Alberta Carbon Grid – during the first quarter, the
Government of Alberta announced
that the Alberta Carbon Grid has been successfully chosen to move
to next stage of the Province's carbon capture, utilization and
storage process in the industrial heartland.
Financial and Operational Overview
|
3 Months Ended March
31
|
($ millions, except
where noted)
|
2022
|
2021
|
Revenue
|
3,038
|
2,016
|
Net
revenue(1)
|
1,154
|
999
|
Gross profit
|
858
|
630
|
Earnings
|
481
|
320
|
Earnings per common
share – basic and diluted (dollars)
|
0.81
|
0.51
|
Cash flow from
operating activities
|
655
|
456
|
Cash flow from
operating activities per common share – basic
(dollars)
|
1.19
|
0.83
|
Adjusted cash flow from
operating activities(1)
|
700
|
582
|
Adjusted cash flow from
operating activities per common share – basic
(dollars)(1)
|
1.27
|
1.06
|
Common share dividends
declared
|
347
|
346
|
Dividends per common
share (dollars)
|
0.63
|
0.63
|
Capital
expenditures
|
179
|
127
|
Total volume
(mboe/d)(2)
|
3,369
|
3,482
|
Adjusted
EBITDA(1)
|
1,006
|
835
|
(1)
|
Refer to "Non-GAAP and
Other Financial 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
|
|
2022
|
2021
|
($ millions, except
where noted)
|
Volumes(1)
|
Reportable
Segment
Earnings
(Loss) Before
|
Adjusted
EBITDA(2)
|
Volumes(1)
|
Reportable
Segment
Earnings
(Loss) Before
|
Adjusted
EBITDA(2)
|
Pipelines
|
2,493
|
361
|
521
|
2,587
|
333
|
529
|
Facilities
|
876
|
246
|
281
|
895
|
187
|
269
|
Marketing & New
Ventures(3)
|
—
|
221
|
268
|
—
|
67
|
90
|
Corporate
|
—
|
(195)
|
(64)
|
—
|
(164)
|
(53)
|
Total
|
3,369
|
633
|
1,006
|
3,482
|
423
|
835
|
(1)
|
Volumes for 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 and
Other Financial 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 dated May 5, 2022
for the three months ended March 31, 2022 for further
information.
|
For further details on
the Company's significant assets, including definitions for
capitalized terms used herein that are not otherwise defined, refer
to Pembina's Annual Information Form for the year ended December
31, 2021 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.
|
Financial & Operational Highlights
Adjusted EBITDA
Change in First Quarter Adjusted EBITDA ($
millions)(1)
(1)
|
Refer to "Non-GAAP and
Other Financial Measures".
|
In the first quarter, Pembina reported record quarterly adjusted
EBITDA of $1 billion, representing a
20 percent increase over the same period in the prior year. The
first quarter was positively impacted by stronger marketing results
due to higher margins on NGL and crude oil sales and lower realized
losses on commodity-related derivatives, combined with a higher
share of profit from Aux Sable.
Adjusted EBITDA also benefited from higher volumes in combination
with higher tolls on the Peace Pipeline system; higher recoverable
costs on the Horizon Pipeline related to extensive slope
mitigation; contributions from the Prince Rupert Terminal coming
into service in March 2021; and a
higher share of profit from Veresen Midstream, due to the
Hythe Developments entering service in March
2021 and higher volumes at the Dawson Assets. These positive
factors were partially offset by lower contracted volumes on the
Nipisi and Mitsue pipeline systems, due to the expiration of
contracts; a lower contribution from Ruby Pipeline; and higher
general and administrative costs, due to higher long-term
incentives driven by an increase in Pembina's share price compared
to the prior period and Pembina's performance relative to
peers.
Earnings
Change in First Quarter Earnings ($
millions)(1)(2)
(1)
|
Facilities results ex.
commodity-related derivatives and Marketing & New Ventures
results ex. commodity-related derivatives include gross profit less
realized and unrealized losses on commodity-related derivative
financial instruments.
|
(2)
|
Other includes other
expenses and corporate.
|
In the first quarter, Pembina recorded earnings of $481 million, which represents a 50 percent
increase relative to the same period in the prior year. In addition
to the factors impacting adjusted EBITDA, as noted above, earnings
were positively impacted by lower impairments and a higher
unrealized gain on commodity-related derivatives for certain gas
processing fees tied to AECO prices. First quarter earnings were
negatively impacted by higher income tax expense and a lower share
of profit from Ruby Pipeline.
Cash Flow From Operating Activities
Cash flow from operating activities of $655 million for the first quarter represents an
increase of 44 percent over the same period in the prior year. The
increase was primarily driven by an increase in operating results
after adjusting for non-cash items, higher distributions from
equity accounted investees, and a change in non-cash working
capital, partially offset by increases in taxes paid, share-based
compensation payments, and net interest paid. On a per share
(basic) basis, cash flow from operating activities increased by 43
percent due to the same factors.
Adjusted Cash Flow From Operating Activities
Adjusted cash flow from operating activities of $700 million represents a 20 percent increase
over the same period in the prior year. The increase was due to the
factors impacting cash flow from operating activities, discussed
above, net of the change in non-cash working capital, taxes paid,
and share-based compensation payments, partially offset by higher
current tax expense and an increase in accrued share-based
payments. On a per share (basic) basis, adjusted cash flow from
operating activities increased by 20 percent due to the same
factors.
Volumes
Total volumes of 3,369 mboe/d for the first quarter represent a
decrease of approximately three percent over the same period in the
prior year. The decrease was the result of lower volumes in both
the Pipelines and Facilities divisions due to contract expirations,
offset by higher volumes on certain systems and new assets placed
into service, as well as other factors as discussed in further
detail below.
Divisional Highlights
- Pipelines had reportable segment earnings before tax in the
first quarter of $361 million,
representing an eight percent increase over the same period in the
prior year. The increase was largely due to higher volumes on the
Peace Pipeline system, as higher crude oil and NGL market prices
resulted in increased upstream activities, in combination with
higher tolls, largely due to inflation; higher recoverable costs
from Horizon Pipeline System, due to extensive slope mitigation;
and lower impairment charges. These factors were partially offset
by a lower share of profit from Ruby, and the expiration of
contracts on the Nipisi and Mitsue pipeline systems.
Pipelines reported adjusted EBITDA for the first quarter of
$521 million, representing a two
percent decrease compared to the same period in the prior year. The
decrease was due to the same items impacting reportable segment
earnings before tax, discussed above, net of the decrease in
impairments, as well as a lower contribution from Ruby due to
contract expirations that occurred in mid-2021.
Pipelines volumes of 2,493 mboe/d in the first quarter represent a
four percent decrease compared to the same period in the prior
year. The decrease largely was driven by lower contracted volumes
on the Nipisi and Mitsue pipeline systems and on the Ruby Pipeline,
combined with lower volumes on the Alberta Ethane Gathering System
due to third party outages, partially offset by higher volumes on
the Peace Pipeline and the Drayton Valley Pipeline.
- Facilities had reportable segment earnings before tax in the
first quarter of $246 million, which
represents a 32 percent increase over the same period in the prior
year. Certain gas processing fees that are tied to AECO prices were
positively impacted by the increase in the AECO price, resulting in
an increase in the realized and unrealized gain on
commodity-related derivatives compared to the prior period. The
first quarter of 2022 was also positively impacted by a full
quarter contribution from the Prince Rupert Terminal, which was
placed into service in March 2021, as
well as a higher share of profit from Veresen Midstream due to the
Hythe Developments going into service in March 2021 and higher volumes at the Dawson
Assets. These positive factors were partially offset by higher
non-recoverable operating expenses.
Facilities reported adjusted EBITDA of $281
million for the first quarter, representing a four percent
increase over the same period in the prior year. The increase was
primarily due to the same items impacting reportable segment
earnings before tax, discussed above, net of the unrealized gains
on commodity-related derivatives.
Facilities volumes of 876 mboe/d in the first quarter represent a
two percent decrease compared to the same period in the prior year.
The quarterly decrease is largely due to lower volumes from NGL
services, partially offset by higher volumes at Veresen Midstream
at the Dawson Assets and from the Hythe Developments going into
service in March 2021.
- Marketing & New Ventures had first quarter reportable
segment earnings before tax of $221
million, representing a 230 percent increase over the same
period in the prior year. Improvements in commodity market prices,
including NGL, crude oil and condensate, contributed to a
significant quarter-over-quarter increase in results for the
marketing business. Contributions were made by NGL marketing where
higher margins resulted when seasonable inventories built up during
the second and third quarters of 2021 were sold during the first
quarter of 2022 in a higher price environment. In addition, crude
oil marketing realized strong blending margins due to the rapidly
rising crude oil price environment.
Reportable segment earnings before tax benefited from higher
margins due to higher NGL and crude oil market prices; a lower
realized loss on commodity-related derivatives compared to the same
period in the prior year; and a higher share of profit from
Aux Sable as a result of higher NGL
margins, partially offset by the impact of a narrower AECO-Chicago
price differential. First quarter reportable segment earnings
before tax were negatively impacted by a higher unrealized loss on
commodity-related derivatives.
Marketing & New Ventures reported first quarter adjusted EBITDA
of $268 million, which represents a
198 percent increase compared to the first quarter of 2021. The
increase was due to the same items impacting reportable segment
earnings before tax, discussed above, net of the unrealized loss on
commodity-related derivatives.
Marketed NGL volumes of 206 mboe/d in the first quarter represent a
seven percent decrease compared to the same period in the prior
year. Marketed NGL volumes decreased largely due to lower propane
sales during the first quarter of 2022 compared to the first
quarter of 2021 when Pembina monetized storage positions that were
built up during the second and third quarters of 2020, combined
with lower ethane sales caused by third-party outages.
Executive Overview
The first quarter of 2022 delivered a tremendous start to the
year. Financial and operating results, including record quarterly
adjusted EBITDA, reflect a strong contribution from Pembina's
marketing business, growing volumes on many key systems and new
assets recently placed into service. Our growing optimism over the
future of the Western Canadian Sedimentary Basin ("WCSB") remains
intact and the positive discussions we have been having with
customers over the past year are translating into contracting
success and long-term commitments for future volumes to support
higher utilization of Pembina's existing asset base as well as
accretive and capital efficient new growth projects.
Physical volumes on Pembina's conventional pipeline systems
continue to grow and serve as a good proxy for Pembina's broader
business and the WCSB in general. Physical volumes in the first
quarter of 2022 increased nearly five percent compared to the first
quarter of 2021 and that trend has continued into April, with
physical volumes reaching an all-time monthly high.
Pembina is continuing to realize the financial benefits of
growing volumes, however incremental volumes are also leading to
constraints on certain segments of the Peace Pipeline. Therefore,
we are pleased with the upcoming placement into service of the
Phase VII Peace Pipeline Expansion ("Phase VII"), the reactivation
of the Phase VIII Peace Pipeline Expansion ("Phase VIII") and
continued construction progress on the Phase IX Peace Pipeline
Expansion ("Phase IX"), each of which is discussed in more detail
below and collectively will allow Pembina to continue to provide
industry-leading transportation service to our producing customers
in a highly capital efficient manner.
The first quarter was also highlighted by the announcement that
Pembina and KKR will combine their respective western Canadian
natural gas processing assets into a single, new joint venture
entity. We also were pleased to announce our intention to increase
Pembina's common share dividend $0.0075 per share per month, or 3.6 percent upon
closing of this transaction, which we expect in the third quarter
of 2022.
Guidance Update
Pembina has raised its 2022 adjusted EBITDA guidance range to
$3.45 to $3.6
billion (previously $3.35 to
$3.55 billion). Relative to Pembina's
initial guidance, the revised outlook for 2022 primarily reflects
stronger marketing results, as a result of higher expected NGL and
crude oil prices, partially offset by higher realized hedging
losses. In addition, the revised outlook reflects the removal of
Ruby Pipeline adjusted EBITDA from April
1 through the remainder of 2022 pending resolution of the
Chapter 11 process, as well as the impact of a higher long-term
share-based incentive expense given the increase in Pembina's share
price. Current guidance does not include the impact of the Newco
transaction.
Cash flow from operating activities is expected to exceed
dividends and the capital investment program in 2022. As previously
disclosed, Pembina expects to allocate a portion of the excess
towards common share repurchases, with the balance available for
incremental capital investment, debt repayment, or additional
distribution to shareholders. As of the current date and including
shares repurchased in December 2021,
Pembina has completed $58 million
towards its 2022 target.
Business Update
Northeast British Columbia
("NEBC") Producer Commitments
Pembina has entered into a 20-year midstream services agreement
for the transportation and fractionation of liquids from
ConocoPhillips Canada's ("CPC") Montney development in NEBC. Under the
arrangement, which was preceded by the previously announced
exclusivity agreement, and subject to certain exclusions, CPC has
dedicated liquids production from the majority of its acreage
within the liquids-rich NEBC region of the Montney resource play. Any new firm
transportation and fractionation services provided by Pembina in
respect of liquids production will be supported by long-term,
take-or-pay agreements at competitive market rates.
"ConocoPhillips Canada continues to pursue innovative solutions
to improve netbacks and overall returns," said ConocoPhillips
Canada president Bij Agarwal. "We value our established mutually
beneficial working relationship with Pembina and look forward to
working together to realize the full potential of our significant
Montney asset."
Pembina is in the process of building out its network of
pipeline capacity with its phased Peace Pipeline expansions, which
will provide CPC and NEBC region producers with liquids egress when
required. Under the dedication, further infrastructure development
remains contingent upon CPC requesting service, as well as any
environmental and regulatory approvals that may be required. Beyond
the Phase VII, Phase VIII and Phase IX expansions, no significant
additional capital expenditures are expected to initially be
required to transport incremental volumes. Longer-term capital
requirements will be aligned with the scope and timing of CPC's
development.
In addition, as previously disclosed, Pembina recently executed
a new agreement with a second Montney producer, which commits to Pembina
volumes from a multiphase development of the producer's NEBC
Montney acreage, on a take-or-pay basis, upon the acreage being
developed. The agreement provides the producer with certainty of
transportation egress from this key area for their future
development and access to the remainder of Pembina's integrated
value chain.
Finally, Pembina has finalized commercial terms with a third
leading Montney producer regarding
significant long-term NEBC volume commitments and expects
commercial agreements to be signed by mid-2022.
"These agreements are exciting opportunities to further
strengthen Pembina's relationship with premier NEBC producers in a
strategically important region. They highlight Pembina's advantages
in the face of increasing competition for Montney volumes and demonstrate the value our
customers continue to place on our already in-place assets, strong
track record of safety and reliability, competitive fees and
integrated service offering," said Pembina's Jaret Sprott, Senior Vice President & Chief
Operating Officer.
Pembina is poised to benefit from a promising outlook for NEBC
development. As a result of these long-term commitments and the
agreements that have been executed, or are anticipated to be
executed later this year, Pembina expects to have secured the
transportation rights to a significant portion of forecasted future
growth in the NEBC Montney, which collectively will support
improved utilization of its existing assets as well as capital
efficient expansion projects into the future.
Peace Pipeline Expansions
Phase VIII Peace Pipeline Expansion
As a result of the commitments secured and ongoing conversations
with other customers, Pembina is pleased to be reactivating the
previously deferred Phase VIII, which will enable segregated
pipeline service for ethane-plus and propane-plus NGL mix from the
central Montney area at
Gordondale, Alberta, into the
Edmonton, Alberta area for market
delivery. Based on the significant long-term commitments from
leading NEBC producers discussed above, we have clear visibility to
the demand for incremental capacity in this region and as a result
we are confident in the decision to reactivate Phase VIII at this
time.
The scope of Phase VIII has been optimized to align with current
system constraints and forecasted future demand and redeploys
certain infrastructure from the original Phase VII project scope.
Phase VIII will include new 10 and 16-inch pipelines, totaling
approximately 150 kilometers, in the Gordondale to La Glace corridor of Alberta, as well as additional new mid-point
pump stations and terminal upgrades located throughout the Peace
Pipeline system. This project will add approximately 235,000
barrels per day ("bpd") of incremental capacity between Gordondale,
Alberta and La Glace, Alberta, as well as approximately
65,000 bpd of capacity between La Glace,
Alberta and the Namao hub
near Edmonton, Alberta.
The project has an estimated cost of approximately $530 million, which relative to the original
$500 million cost estimate, reflects
the optimized scope and the net effect of cost increases due to
market factors and cost savings arising from value engineering.
Phase VIII is anticipated to be placed into service in the first
half of 2024. Approximately $75
million had been spent on this project at the end of 2021,
with an incremental $100 million
expected to be spent in 2022.
Completion of the Phase VIII and Phase IX expansions will enable
full segregation of LVP and HVP products along the Peace Pipeline
system, thereby enabling further system optimization opportunities
due to the reduction of batching and need for quality management.
This optimization, along with other continuous improvement
activities, could create material incremental capacity with minimal
capital spending.
Phase VII Peace Pipeline Expansion
Construction and line fill of Phase VII are complete and final
commissioning is underway. Phase VII is expected to be
approximately $150 million under
budget and is expected to enter commercial service on June 1, 2022. Phase VII was constructed to
provide transportation for the growing condensate supply in the
WCSB and will divert condensate off of the existing
LaGlace-Kakwa-Fox Creek corridor, creating additional firm capacity
for Pembina's customers.
Pembina continues to have the ability to add approximately
200,000 bpd of capacity to its market delivery pipelines from
Fox Creek, Alberta to Namao, Alberta through the relatively low-cost
addition of pump stations on these mainlines, bringing the total
capacity of the Peace and Northern pipelines to 1.3 million
bpd.
Alliance Pipeline Open Season
Recent contracting success continues to highlight the value of
Alliance's reliable and highly competitive access to mid-western
U.S. gas markets, and as a conduit to the Gulf Coast and its robust
liquefied natural gas market.
During the first quarter of 2022, Alliance offered six open
seasons to the market. One of the open seasons was for Canadian
long-term firm service which resulted in an incremental 75 MMcf/d
of long-term firm service, with service commencing in November 2022, for a volume averaged weighted
term of 7.6 years. The remaining open seasons were for Canadian
short-term firm service (terms of 364 days or less), which secured
contracts at a volume weighted average toll of approximately 120
percent of long-term firm Alliance tolls in Canada for November
2022 onward.
Recent open seasons have resulted in Alliance being contracted
over 90 percent for the current gas year and 75 percent for the
next gas year.
Projects and New Developments
Pipelines
- As discussed above, the Phase VII Peace Pipeline Expansion is
expected to enter commercial service on June
1, 2022 ahead of schedule and under budget and Pembina has
reactivated the Phase VIII Peace Pipeline Expansion.
- The Phase IX Peace Pipeline Expansion includes new 6-inch and
16-inch pipelines debottlenecking the corridor north of Gordondale,
Alberta, 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. Phase IX also includes a pump station in the
Wapiti-to-Kakwa corridor. Clearing activities are complete and
mainline pipe delivery and construction are expected to commence in
June. The Phase IX Peace Pipeline Expansion remains on-time and
on-budget with an estimated cost of approximately $120 million and an expected in-service date in
the fourth quarter of 2022.
- As described further below, on March 31,
2022, Ruby Pipeline, LLC voluntarily filed for relief under
Chapter 11 of the U.S. Bankruptcy Code.
Facilities
- On March 1, 2022, Pembina
announced that it has entered into definitive agreements with KKR
to combine their respective western Canadian natural gas processing
assets into a single, new joint venture entity ("Newco"). Pembina
will hold a 60 percent interest in Newco and serve as its operator
and manager, while KKR's global infrastructure funds will hold the
remaining 40 percent interest in Newco.
Pembina will contribute to Newco its field-based gas processing
assets, which include the Cutbank Complex, the Saturn Complex, the
Resthaven Facility, the Duvernay Complex and the Saskatchewan
Ethane Extraction Plant, as well as its 45 percent interest in
Veresen Midstream. Pembina's Empress, Younger and Burstall assets will be excluded from the
transaction and Pembina will retain its current ownership position
in respect of such assets.
KKR will contribute its 55 percent interest in Veresen Midstream to
Newco, as well as the 49 percent interest in Energy Transfer Canada
ULC ("ETC") that it currently owns. Newco has also agreed to
acquire the remaining 51 percent interest in ETC from an affiliate
of Energy Transfer LP, aligning ownership of those assets and
driving additional efficiencies within Newco. The contribution of
Pembina's and KKR's assets to Newco, and Newco's acquisition of the
remaining 51 percent interest in ETC, are cross-conditional upon
each other and will occur concurrently. As part of the transaction,
Pembina and KKR intend to dispose of Newco's non-operated interest
in the Key Access Pipeline System following closing of the
transaction, subject to receiving acceptable purchase terms through
the sale process. Closing is expected to occur in the third quarter
of 2022.
- Construction of the Empress Cogeneration Facility is
progressing and the project remains ahead of schedule and on-budget
with an estimated cost of approximately $120
million and an expected in-service date in the fourth
quarter of 2022.
- Subsequent to quarter end, after careful consideration Pembina
made the decision to not proceed with the previously deferred
expansion of Prince Rupert Terminal at this time. This decision was
informed by a refreshed evaluation of market dynamics that included
customer demand, shipping costs, and North American and
international pricing. Given the outlook for strong domestic
propane prices and new propane demand sources under development
within the WCSB, Pembina believes it can provide customers with a
more capital efficient offering that still achieves high netbacks.
Pembina's advantaged unit train capabilities along with its current
Prince Rupert Terminal provide customers a diversified portfolio of
markets, without the additional international egress from an
expansion. Pembina will continue to evaluate and enhance its
portfolio of propane sales options and will consider future
expansion opportunities as market conditions evolve.
Marketing & New Ventures
- Pembina and TC Energy intend to jointly develop the Alberta
Carbon Grid, a world-scale carbon transportation and sequestration
system, which will enable Alberta-based industries to effectively manage
their greenhouse gas emissions, contribute positively to
Alberta's lower-carbon economy and
create sustainable long-term value for Pembina and TC Energy
stakeholders. During the first quarter, the Government of
Alberta announced that the Alberta
Carbon Grid has been successfully chosen to move to next stage of
the Province's carbon capture, utilization and storage ("CCUS")
process in the industrial heartland. As an open-access system, the
Alberta Carbon Grid will be a significant component of Alberta's emerging CCUS industry, connecting
key sequestration locations and delivery points across the province
to serve multiple industries. When fully constructed, the system is
designed with the potential capability of transporting and
sequestering more than 20 million tonnes of CO2
annually, which would be equivalent to removing 7.5 million cars
off the road each year. The project is part of Pembina's ongoing
commitment to energy diversification and will support federal
emissions targets to reduce CO2 and other greenhouse gas
emissions by at least 40 percent compared to 2005 levels by
2030.
- Pembina has entered into a partnership agreement with the
Haisla First Nation to develop the proposed Cedar LNG Project, a
floating LNG facility strategically positioned to leverage
Canada's abundant natural gas
supply and British Columbia's
growing LNG infrastructure to produce industry-leading low–carbon,
low-cost Canadian LNG for overseas markets. Cedar LNG's application
for an Environmental Assessment Certificate was recently submitted
to the British Columbia Environmental Assessment Office, moving the
project into the 180-day application review phase. Cedar LNG has
also entered into agreement for the front-end engineering and
design of the Cedar LNG's proposed floating liquefaction, storage
and offloading unit, and begun commercial discussions.
Financing Activity
- On March 8, 2022, the Toronto
Stock Exchange ("TSX") accepted the renewal of Pembina's normal
course issuer bid (the "NCIB") that allows the Company to
repurchase, at its discretion, up to approximately 27.5 million
common shares through the facilities of the TSX, the New York Stock
Exchange and/or alternative Canadian trading systems or as
otherwise permitted by applicable securities law, subject to
certain restrictions on the number of common shares that may be
purchased on a single day. Common shares purchased by the Company
will be cancelled. The NCIB commenced on March 10, 2022 and will terminate on March 9, 2023 or on such earlier date as the
Company has purchased the maximum number of common shares permitted
pursuant to the notice of intention under the normal course issuer
bid or at such time Pembina determines to no longer make purchases
thereunder. During the quarter 600,000 common shares were
repurchased for cancellation at an average price of $46.43 per share and a total cost of $28 million. As previously disclosed, Pembina
repurchased $17 million of common
shares in 2021. An additional $13
million of common shares were repurchased subsequent to the
quarter, in April.
- On March 14, 2022, Pembina's
$50 million senior unsecured medium
term notes, Series 3A, matured and were fully repaid.
- Ruby Pipeline, L.L.C. ("Ruby Pipeline"), a wholly-owned
subsidiary of Ruby, had U.S. $475
million principal amount of unsecured notes that matured on
April 1, 2022 (the "2022 Notes").
Although Ruby Pipeline has sufficient liquidity to operate its
business, it lacked sufficient liquidity to satisfy its obligations
under the 2022 Notes on the maturity date of April 1, 2022. Accordingly, on March 31, 2022, Ruby Pipeline filed a voluntary
petition for relief under Chapter 11 of the United States
Bankruptcy Code in the United
States Bankruptcy Court for the District of Delaware. The risks and uncertainties
surrounding the Chapter 11 proceedings raise substantial doubt as
to Ruby Pipeline's ability to continue as a going concern.
Pembina does not have any financial commitments or obligations in
respect of the debts or obligations of Ruby Pipeline, including in
respect of the 2022 Notes, nor is Pembina contractually obligated
to provide any further contributions or funding to Ruby.
Dividends
- Pembina declared and paid dividends of $0.21 per common share in January, February and
March 2022 for the applicable record
dates.
- In connection with the Newco transaction with KKR, upon
closing, and subject to approval and declaration by its Board of
Directors, Pembina also intends to increase its common share
dividend by $0.0075 per share per
month, or 3.6 percent. The increase, if implemented, would reflect
the expected immediate cash flow accretion from creation of the
joint venture.
- Pembina declared and paid quarterly dividends per Class A
Preferred Share of: Series 1: $0.306625; Series 3: $0.279875; Series 5: $0.285813; Series 7: $0.27375; Series 9: $0.268875; and Series 21: $0.30625 to shareholders of record as of
February 1, 2022. Pembina also
declared and paid quarterly dividends per Class A Preferred Share
of: Series 15: $0.279; Series 17:
$0.301313; and Series 19:
$0.29275 to shareholders of record on
March 15, 2022. Pembina also declared
and paid quarterly dividends per Class A Preferred Share of Series
23: $0.328125; and Series 25:
$0.325 to shareholders of record on
January 32, 2022.
First Quarter 2022 Conference Call & Webcast
Pembina will host a conference call on Friday, May 6, 2022 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 2022.
The conference call dial-in numbers for Canada and the U.S. are 647-792-1240 or
800-437-2398. A recording of the conference call will be available
for replay until May 13, 2022 at
11:59 p.m. ET. To access the replay,
please dial either 647-436-0148 or 888- 203-1112 and enter the
password 1397681.
A live webcast of the conference call can be accessed on
Pembina's website at www.pembina.com under Investors / Presentation
& Events, or by entering:
https://produceredition.webcasts.com/starthere.jsp?ei=1501650&tp_key=057312b160 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 6, 2022 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 webcast
at
https://web.lumiagm.com/#/431537915. Participants are recommended
to register for the virtual webcast at least 10 minutes before the
presentation start time. For further information on Pembina's
virtual AGM, kindly visit www.pembina.com.
About Pembina
Pembina Pipeline Corporation is a leading energy transportation
and midstream service provider that has served North America's energy industry for more than
65 years. Pembina owns an integrated network of hydrocarbon liquids
and natural gas pipelines, gas gathering and processing facilities,
oil and natural gas liquids infrastructure and logistics services,
and a growing export terminals business. Through our integrated
value chain, we seek to provide safe and reliable infrastructure
solutions which connect producers and consumers of energy across
the world, support a more sustainable future and benefit our
customers, investors, employees and communities. For more
information, please visit www.pembina.com.
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 inclusive 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", "outlook",
"strategy", "protect", "trend", "commit", "maintain", "focus",
"ongoing", "believe" 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 of new business initiatives and growth
opportunities, including the anticipated benefits therefrom and the
expected timing thereof; expectations about industry activities and
development opportunities, including our operating segment outlooks
and general market conditions for 2022 and thereafter; expectations
about future demand for Pembina's infrastructure and services;
expectations relating to new infrastructure projects, including the
benefits therefrom and timing thereof; Pembina's sustainability,
climate change and environmental, social and governance plans,
initiatives and strategies, including expectations relating to
Pembina's greenhouse gas emissions reduction target; Pembina's
revised 2022 annual guidance, including the Company's expectations
regarding its adjusted EBITDA; expectations relating to the joint
venture transaction between Pembina and KKR, including the terms
thereof, including the assets to be contributed by Pembina and KKR,
the expected closing date and the anticipated benefits thereof to
Pembina; the post-closing business and assets of Newco, including
Pembina's role as manager and operator of Newco; the post-closing
ownership of Newco; the acquisition by Newco of the remaining 51%
interest in ETC, including the terms and expected timing thereof;
the proposed disposition by Newco of the KAPS project, including
the expected timing thereof; Pembina's future common share
dividends, including Pembina's intention to increase the amount
thereof following closing of the joint venture transaction with
KKR; planning, construction and capital expenditure estimates,
schedules, locations; expected capacity, incremental volumes,
completion and in-service dates; rights, activities and operations
with respect to the construction of, or expansions on, existing
pipelines systems, gas services facilities, processing and
fractionation facilities, terminalling, storage and hub facilities
and other facilities or energy infrastructure, as well as the
impact of Pembina's growth projects on its future financial
performance and stakeholders; expectations regarding Pembina's
commercial agreements, including the expected timing and benefit
thereof; statements regarding the Company's intention to repurchase
common shares, including the timing and magnitude thereof;
expectations, decisions and activities related to the Company's
projects and new developments; the impact of current and expected
market conditions on Pembina; and statements regarding the
Company's capital allocation strategy, including the 2022 capital
expenditure program and expected future cash flows.
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; prevailing commodity prices, interest rates, carbon
prices, tax rates and exchange rates; 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; the ability of
Pembina and KKR to satisfy the conditions to closing of the joint
venture transaction in a timely manner and substantially on the
terms described herein; the ability of Newco to satisfy the
conditions to closing of the acquisition of the remaining 51%
interest in ETC in a timely manner and substantially on the terms
described herein; that any required commercial agreements can be
reached; that all required regulatory and environmental approvals
can be obtained on the necessary terms and 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 projects; 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 and Indigenous
and landowner consultation requirements; the impact of competitive
entities and pricing; reliance on third parties to successfully
operate and maintain certain assets; 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; the ability of the Pembina and KKR to
receive, in a timely manner, the necessary regulatory and other
third-party approvals in connection with closing of the joint
venture transaction; the ability of Pembina and KKR to satisfy, in
a timely manner, the other conditions to the closing of the joint
venture transaction; the ability of Newco to satisfy, in a timely
manner, the conditions to closing of the acquisition of the
remaining 51% interest in ETC; the failure to realize the
anticipated benefits and/or synergies of the joint venture
transaction following closing due to integration issues or
otherwise; expectations and assumptions concerning, among other
things: customer demand for Newco's assets and services;
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; adverse actions by governmental or
regulatory authorities, including changes in tax laws and
treatment, changes in project assessment regulations, royalty
rates, climate change initiatives or policies or increased
environmental regulation; the ability of Pembina to acquire or
develop the necessary infrastructure in respect of future
development projects; fluctuations in operating results; adverse
general economic and market conditions in Canada, North
America and Internationally, 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 related to the current and
potential adverse impacts of the COVID-19 pandemic; constraints on
the, or the unavailability of, adequate infrastructure; the
political environment in North American and elsewhere, and public
opinion; the ability to access various sources of debt and equity
capital, and on acceptable terms; adverse changes in credit
ratings; counterparty credit risk; technology and cyber security
risks; natural catastrophes; the conflict between Ukraine and Russia and its potential impact on, among
other things, global market conditions and supply and demand,
energy and commodity prices; interest rates, supply chains and the
global economy generally; and certain other risks detailed in
Pembina's Annual Information Form and Management's Discussion and
Analysis, each dated February 24,
2022 for the year ended December 31,
2021 and 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. In addition, the closing of
the joint venture transaction may not be completed or may be
delayed if Pembina's and KKR's respective conditions to the closing
are not satisfied on the anticipated timelines or at all.
Accordingly, there is a risk that the joint venture transaction
will not be completed within the anticipated timeline, on the terms
currently proposed and disclosed in this news release or at
all.
In respect of the forward-looking statements concerning the
anticipated increase in Pembina's common dividend following
completion of the joint venture transaction with KKR, Pembina has
made such forward-looking statements in reliance on certain
assumptions that it believes are reasonable at this time, including
assumptions in respect of: prevailing commodity prices, interest
rates, margins and exchange rates; that future results of
operations will be consistent with past performance, as applicable,
and management expectations in relation thereto, including in
respect of Newco's future results of operations; the continued
availability of capital at attractive prices to fund future capital
requirements relating to existing assets and projects, including,
but not limited to, future capital expenditures relating to
expansion, upgrades and maintenance shutdowns; future cash flows
and operating costs; that counterparties to material agreements
will continue to perform in a timely manner; that there are no
unforeseen events preventing the performance of contracts; that
there are no unforeseen material construction or other costs
related to current growth projects or current operations; and that
there are no unforeseen material construction or other costs
related to current growth projects or current operations. Pembina
will also be subject to requirements under applicable corporate
laws in respect of declaring dividends at such time.
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 by forward-looking statements contained
herein. 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. Management approved the revised
2022 adjusted EBITDA guidance contained herein as of the date of
this news release. The purpose of our revised 2022 adjusted EBITDA
guidance is to assist readers in understanding our expected and
targeted financial results, and this information may not be
appropriate for other purposes. The forward-looking statements
contained in this document are expressly qualified by this
cautionary statement.
Non-GAAP and Other Financial Measures
Throughout this news release, Pembina has disclosed certain
financial measures and ratios that are not defined in accordance
with GAAP and which are not disclosed in Pembina's financial
statements. Non-GAAP financial measures either exclude an amount
that is included in, or include an amount that is excluded from,
the composition of the most directly comparable financial measure
determined in accordance with GAAP. Non-GAAP ratios are financial
measures that are in the form of a ratio, fraction, percentage or
similar representation that has a non-GAAP financial measure as one
or more of its components. These non-GAAP financial measures and
ratios are used by management to evaluate the performance and cash
flows of Pembina and its businesses and to provide additional
useful information respecting Pembina's financial performance and
cash flows to investors and analysts.
In this news release, Pembina has disclosed the following
non-GAAP financial measures and non-GAAP ratios: net revenue,
adjusted earnings before interest, taxes, depreciation and
amortization ("adjusted EBITDA"), adjusted cash flow from operating
activities, and adjusted cash flow from operating activities per
common share. These non-GAAP financial measures and ratios
disclosed in this news release do not have any standardized meaning
under International Financial Reporting Standards ("IFRS") and may
not be comparable to similar financial measures or ratios disclosed
by other issuers. The measures and ratios should not, therefore, be
considered in isolation or as a substitute for, or superior to,
measures of Pembina's financial performance, or cash flows
specified, defined or determined in accordance with IFRS, including
revenue, earnings, cash flow from operating activities and cash
flow from operating activities per share.
Except as otherwise described herein, these non-GAAP
financial measures and non-GAAP ratios are calculated on a
consistent basis from period to period. Specific reconciling items
may only be relevant in certain periods.
Below is a description of each non-GAAP financial measure and
non-GAAP ratio disclosed in this news release, together with, as
applicable, disclosure of the most directly comparable financial
measure that is determined in accordance with GAAP to which each
non-GAAP financial measure relates and a quantitative
reconciliation of each non-GAAP financial measure to such directly
comparable GAAP financial measure. Additional information relating
to such non-GAAP financial measures, including disclosure of the
composition of each non-GAAP financial measure, an explanation of
how each non-GAAP financial measure provides useful information to
investors and the additional purposes, if any, for which management
uses each non-GAAP financial measure; an explanation of the reason
for any change in the label or composition of each non-GAAP
financial measure from what was previously disclosed; and a
description of any significant difference between forward-looking
non-GAAP financial measures and the equivalent historical non-GAAP
financial measures, is contained in the "Non-GAAP & Other
Financial Measures" section of the management's discussion and
analysis of Pembina dated May 5, 2022
for the three months ended March 31,
2022 (the "MD&A"), which information is incorporated by
reference in this news release. The MD&A is available on SEDAR
at www.sedar.com, EDGAR at www.sec.gov and
Pembina's website at www.pembina.com.
Net Revenue
Net revenue is a non-GAAP financial measure which is defined
as total revenue less cost of goods sold including product
purchases. The most directly comparable financial measure to net
revenue that is determined in accordance with GAAP and disclosed in
Pembina's financial statements is revenue.
3 Months Ended March
31
|
Pipelines
|
Facilities
|
Marketing
&
New
Ventures
|
Corporate
&
Inter-segment
Eliminations
|
Total
|
($
millions)
|
|
2022
|
2021
|
2022
|
2021
|
2022
|
2021(1)
|
2022
|
2021
|
2022
|
2021(1)
|
Revenue
|
573
|
553
|
357
|
339
|
2,271
|
1,271
|
(163)
|
(147)
|
3,038
|
2,016
|
Cost of goods sold,
including product purchases
|
—
|
—
|
—
|
4
|
1,967
|
1,097
|
(83)
|
(84)
|
1,884
|
1,017
|
Net revenue
|
573
|
553
|
357
|
335
|
304
|
174
|
(80)
|
(63)
|
1,154
|
999
|
(1)
|
Comparative 2021 period
has been restated. See "Accounting Policies & Estimates -
Restatement of revenue and cost of goods sold" section in Pembina's
MD&A and Note 14 to Pembina's Interim Financial Statements for
further details.
|
Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization
Adjusted EBITDA is a non-GAAP financial measure and is
calculated as earnings before net finance costs, income taxes,
depreciation and amortization (included in operations and general
and administrative expense) and unrealized gains or losses on
commodity-related derivative financial instruments. The exclusion
of unrealized gains or losses on commodity-related derivative
financial instruments eliminates the non-cash impact of such gains
or losses.
Adjusted EBITDA also includes adjustments to earnings for
losses (gains) on disposal of assets, transaction costs incurred in
respect of acquisitions, dispositions and restructuring, impairment
charges or reversals in respect of goodwill, intangible assets,
investments in equity accounted investees and property, plant and
equipment, certain non-cash provisions and other amounts not
reflective of ongoing operations. In addition, Pembina's
proportionate share of results from investments in equity accounted
investees with a preferred interest is presented in adjusted EBITDA
as a 50 percent common interest. These additional adjustments are
made to exclude various non-cash and other items that are not
reflective of ongoing operations.
Adjusted EBITDA per common share is a non-GAAP ratio which is
calculated by dividing adjusted EBITDA by the weighted average
number of common shares outstanding.
3 Months Ended March
31
|
Pipelines
|
Facilities
|
Marketing
&
New
Ventures
|
Corporate
&
Inter-segment
Eliminations
|
Total
|
($ millions, except
per share amounts)
|
|
2022
|
2021
|
2022
|
2021
|
2021
|
2021
|
2022
|
2021
|
2022
|
2021
|
Earnings before income
tax
|
361
|
333
|
246
|
187
|
221
|
67
|
(195)
|
(164)
|
633
|
423
|
Adjustments to share of
profit from equity accounted investees and other
|
53
|
76
|
34
|
31
|
6
|
6
|
—
|
—
|
93
|
113
|
Net finance
costs
|
7
|
13
|
6
|
6
|
(6)
|
(4)
|
102
|
89
|
109
|
104
|
Depreciation and
amortization
|
99
|
104
|
55
|
46
|
11
|
13
|
12
|
12
|
177
|
175
|
Unrealized (gain) loss
on commodity-related derivative financial instruments
|
—
|
—
|
(60)
|
(1)
|
35
|
6
|
—
|
—
|
(25)
|
5
|
Transformation and
restructuring costs
|
—
|
—
|
—
|
—
|
—
|
—
|
5
|
11
|
5
|
11
|
Transaction costs
incurred in respect of acquisitions
|
—
|
—
|
—
|
—
|
—
|
—
|
12
|
1
|
12
|
1
|
Impairment charges and
non-cash provisions
|
1
|
3
|
—
|
—
|
1
|
2
|
—
|
(2)
|
2
|
3
|
Adjusted
EBITDA
|
521
|
529
|
281
|
269
|
268
|
90
|
(64)
|
(53)
|
1,006
|
835
|
Adjusted EBITDA per
common share – basic (dollars)
|
|
|
|
|
|
|
|
|
1.83
|
1.52
|
2022 Adjusted EBITDA Guidance
The equivalent historical non-GAAP measure to 2022 adjusted
EBITDA guidance is adjusted EBITDA for the year ended December 31, 2021.
12 Months Ended
December 31, 2021
|
Pipelines
|
Facilities
|
Marketing
&
New
Ventures
|
Corporate
&
Inter-segment
Eliminations
|
Total
|
($ millions, except
per share amounts)
|
Earnings (loss) before
income tax
|
917
|
715
|
391
|
(358)
|
1,665
|
Adjustments to share of
profit from equity accounted investees and other
|
286
|
135
|
23
|
—
|
444
|
Net finance costs
(income)
|
29
|
35
|
(8)
|
394
|
450
|
Depreciation and
amortization
|
413
|
214
|
50
|
46
|
723
|
Unrealized gain on
commodity-related derivative financial instruments
|
—
|
(38)
|
(35)
|
—
|
(73)
|
Canadian Emergency Wage
Subsidy
|
—
|
—
|
—
|
3
|
3
|
Transformation and
restructuring costs
|
—
|
—
|
—
|
47
|
47
|
Transaction costs
incurred in respect of acquisitions
|
—
|
—
|
—
|
31
|
31
|
Arrangement Termination
Payment
|
—
|
—
|
—
|
(350)
|
(350)
|
Impairment charges and
non-cash provisions
|
457
|
36
|
(1)
|
1
|
493
|
Adjusted
EBITDA
|
2,102
|
1,097
|
420
|
(186)
|
3,433
|
Adjusted EBITDA per
common share – basic (dollars)
|
|
|
|
|
6.24
|
Adjusted EBITDA from Equity Accounted Investees
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
presented net in 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 Income "Share of Profit from Equity
Accounted Investees". The adjustments made to earnings, in adjusted
EBITDA above, are also made to share of profit from investments in
equity accounted investees. Cash contributions and distributions
from investments in equity accounted investees represent Pembina's
share paid and received in the period to and from the investments
in equity accounted investees.
To assist in understanding and evaluating the performance of
these investments, Pembina is supplementing the IFRS disclosure
with non-GAAP proportionate consolidation of Pembina's interest in
the investments in equity accounted investees. Pembina's
proportionate interest in equity accounted investees has been
included in adjusted EBITDA.
3 Months Ended March
31
|
Pipelines
|
Facilities
|
Marketing
&
New
Ventures
|
Total
|
($
millions)
|
|
2022
|
2021
|
2022
|
2021
|
2021
|
2021
|
2022
|
2021
|
Share of profit from
equity accounted investees
|
40
|
47
|
24
|
18
|
22
|
6
|
86
|
71
|
Adjustments to share of
profit from equity accounted investees:
|
|
|
|
|
|
|
|
|
Net finance
costs
|
11
|
17
|
8
|
8
|
—
|
—
|
19
|
25
|
Depreciation and
amortization
|
40
|
54
|
26
|
23
|
6
|
6
|
72
|
83
|
Share of earnings in
excess of equity interest(1)
|
2
|
5
|
—
|
—
|
—
|
—
|
2
|
5
|
Total adjustments to
share of profit from equity accounted investees
|
53
|
76
|
34
|
31
|
6
|
6
|
93
|
113
|
Impairment charges and
non-cash provisions
|
—
|
|
—
|
—
|
—
|
—
|
—
|
—
|
Adjusted EBITDA from
equity accounted investees
|
93
|
123
|
58
|
49
|
28
|
12
|
179
|
184
|
(1)
|
Pembina's proportionate
share of results from investments in equity accounted investees
with a preferred interest is presented in adjusted EBITDA as a 50
percent common interest.
|
Adjusted Cash Flow from Operating Activities and Adjusted
Cash Flow from Operating Activities per Common Share
Adjusted cash flow from operating activities is a non-GAAP
measure which is defined as cash flow from operating activities
adjusting for the change in non-cash operating working capital,
adjusting for current tax and share-based compensation payment, and
deducting preferred share dividends paid. Adjusted cash flow from
operating activities deducts preferred share dividends paid because
they are not attributable to common shareholders. The calculation
has been modified to include current tax and share-based
compensation payment as it allows management to better assess the
obligations discussed below. Adjusted cash flow from operating
activities per common share is a non-GAAP financial ratio which is
calculated by dividing adjusted cash flow from operating activities
by the weighted average number of common shares
outstanding.
|
3 Months Ended March
31
|
($ millions, except
per share amounts)
|
2022
|
2021
|
Cash flow from
operating activities
|
655
|
456
|
Cash flow from
operating activities per common share – basic (dollars)
|
1.19
|
0.83
|
Add
(deduct):
|
|
|
Change in non-cash
operating working capital
|
39
|
79
|
Current tax
expense
|
(121)
|
(58)
|
Taxes paid, net of
foreign exchange
|
152
|
128
|
Accrued share-based
payment expense
|
(39)
|
(18)
|
Share-based
compensation payment
|
45
|
32
|
Preferred share
dividends paid
|
(31)
|
(37)
|
Adjusted cash flow from
operating activities
|
700
|
582
|
Adjusted cash flow from
operating activities per common share – basic (dollars)
|
1.27
|
1.06
|
Investor Relations: Scott Arnold,
(403) 231-3156, 1-855-880-7404, e-mail:
investor-relations@pembina.com, www.pembina.com