Pembina secures additional
projects and expansions, executes on growth plans and finalizes
Bakken pipeline acquisition
All financial figures are in Canadian dollars unless noted
otherwise. This news release contains forward-looking statements
and information that are based on Pembina Pipeline Corporation's
("Pembina" or the "Company") current expectations, estimates,
projections and assumptions in light of its experience and its
perception of historic trends. Actual results may differ materially
from those expressed or implied by these forward-looking
statements. Please see "Forward-Looking Statements &
Information" herein and in the Company's Management's Discussion
& Analysis for the period ended September 30, 2014 ("MD&A") for more details.
This news release also refers to net revenue, operating margin,
earnings before interest, taxes, depreciation and amortization
("EBITDA") and adjusted cash flow from operating activities (and
adjusted cash flow from operating activities per common share)
which are financial measures that are not defined by Generally
Accepted Accounting Principles ("GAAP"). Pembina's methods of calculating these
financial measures may not be directly comparable to that of other
companies. Pembina considers these
non-GAAP financial measures to provide useful information to both
management and investors in measuring Pembina's financial performance and financial
condition. For more information about the measures which are not
defined by GAAP see "Non-GAAP and Additional GAAP Measures" herein
and in the MD&A, which is available on SEDAR at
www.sedar.com.
CALGARY,
Nov. 4, 2014 /PRNewswire/ - Pembina
Pipeline Corporation ("Pembina" or the "Company") (TSX: PPL; NYSE:
PBA) announced today its third quarter 2014 financial and operating
results.
Financial Overview |
|
|
|
|
($ millions, except where
noted) |
3
Months Ended
September 30 |
|
9
Months Ended
September 30 |
|
2014 |
2013 |
|
2014 |
2013 |
Revenue |
1,445 |
1,300 |
|
4,810 |
3,724 |
Net revenue(1) |
358 |
317 |
|
1,165 |
927 |
Operating
margin(1) |
264 |
226 |
|
883 |
674 |
Gross profit |
216 |
177 |
|
732 |
558 |
Earnings(2) |
75 |
72 |
|
299 |
256 |
Earnings per common share - basic
and diluted (dollars) |
0.20 |
0.22 |
|
0.85 |
0.83 |
EBITDA(1) |
199 |
201 |
|
750 |
597 |
Cash flow from operating
activities |
188 |
94 |
|
604 |
477 |
Cash flow from operating
activities per common share - basic
(dollars)(1) |
0.57 |
0.30 |
|
1.87 |
1.56 |
Adjusted cash flow from operating
activities(1) |
158 |
188 |
|
613 |
540 |
Adjusted cash flow from operating
activities per common share - basic
(dollars)(1) |
0.48 |
0.61 |
|
1.90 |
1.77 |
Common share dividends
declared |
143 |
129 |
|
417 |
375 |
Preferred share dividends
declared |
8 |
|
|
21 |
|
Dividends per common share
(dollars) |
0.44 |
0.42 |
|
1.29 |
1.23 |
Capital expenditures |
344 |
245 |
|
929 |
605 |
(1) |
Refer to "Non-GAAP and Additional GAAP Measures." |
(2) |
Share of loss from equity accounted investees,
which impacted earnings in the third quarter and first nine months
of
2014, includes accelerated depreciation of $25 million for certain
out-of-service assets at the Fort Saskatchewan
ethylene storage facility. |
"Pembina continues to achieve
strong operational performance in all of its businesses, as
evidenced by year-over-year improvements in operating margin, gross
profit, earnings and cash flow from operating activities," said
Mick Dilger, Pembina's President and Chief Executive
Officer. "Providing safe, reliable and responsible operations while
executing on our growth platform is of utmost importance to the
Company as we continue working towards adding shareholder value for
the long-term."
Revenue increased 11 percent in the third quarter of 2014 to
$1.4 billion from $1.3 billion in the same period of the prior year
and 29 percent to $4.8 billion
year-to-date compared to $3.7 billion
in the first nine months of 2013. Net revenue increased 13 percent
to $358 million during the third
quarter of 2014 from $317 million
during the same period of 2013. The third quarter increases in
revenue and net revenue were primarily driven by the Company's
Conventional Pipelines business, which generated an increase of
approximately 24 percent in revenue in the third quarter of 2014
compared to the same period of 2013 due to contributions from the
Phase I crude oil, condensate and natural gas liquids pipeline
capacity expansions which were completed in December 2013 (the "Phase I Expansions").
Further, Pembina's Saturn I
Facility contributed to the strong performance in the Company's Gas
Services business, which saw an increase of approximately 19
percent in net revenue in the third quarter of 2014 compared to the
same period of 2013. Year-to-date, net revenue in 2014 was nearly
$1.2 billion compared to $927 million during the same period of 2013. The
increase relative to the prior period was largely due to the
Company's Midstream business, which generated an increase of almost
32 percent in net revenue during the first nine months of 2014
compared to the same period of the prior year. This was driven by
higher volumes, favourable pricing, market fundamentals and
enhanced service offerings since the prior period in crude oil
midstream, as well as a stronger year-over-year market for propane
which benefited Pembina's natural
gas midstream activities. The Company's Conventional Pipelines
business also contributed to higher net revenue due to the Phase I
Expansions noted above.
Operating expenses were $98
million during the third quarter of 2014 compared to
$87 million in the third quarter of
2013. For the nine months ended September
30, 2014, operating expenses were $284 million compared to $255 million in the same period of 2013. The
increase in operating expenses for the third quarter and first nine
months of 2014 was primarily the result of new in-service assets,
particularly the Phase I Expansions in the Company's Conventional
Pipelines business and the Saturn I Facility in the Company's Gas
Services business. These higher operating expenses were offset by a
reduction in operating expenses in the Company's Midstream business
resulting from Pembina's sale of
its non-core trucking-related assets recognized in the second
quarter of 2014.
Operating margin totalled $264
million during the third quarter of 2014, up 17 percent from
the same period last year when operating margin totalled
$226 million. For the nine months
ended September 30, 2014, operating
margin was $883 million compared to
$674 million for the same period of
2013. Both the third quarter and year-to-date increases were
primarily driven by strong performance in the Midstream and
Conventional Pipelines businesses, as discussed above.
Depreciation and amortization included in operations rose to
$51 million during the third quarter
of 2014 compared to $47 million
during the same period in 2013. This increase was primarily a
result of the growth in Pembina's
asset base since the prior period and a reduction in depreciation
in 2013 resulting from a re-measurement of the decommissioning
provision in excess of the carrying amount of the related asset.
For the nine months ended September 30,
2014, depreciation and amortization included in operations
was $154 million compared to
$121 million in the same period of
2013 for the same reasons noted above, along with the $13 million impairment of non-core
trucking-related assets which occurred in the second quarter of
2014.
Increased revenue and operating margin contributed to gross
profit of $216 million during the
third quarter and $732 million during
the first nine months of 2014 compared to $177 million and $558
million during the relative periods of the prior year. This
represents a 22 percent and 31 percent increase, respectively.
For the three and nine month periods ending September 30, 2014, Pembina incurred general and administrative
expenses (excluding corporate depreciation and amortization) of
$53 million and $121 million compared to $28 million and $83
million during the same periods of 2013. These increases
were primarily due to the addition of new employees and consultants
resulting from Pembina's growth
since the third quarter and first nine months of 2013 as well as
increased short-term and share-based incentive expenses resulting
from a 26 percent ($9.76 per share)
increase in the Company's share price since December 31, 2013 compared to a 20 percent
($5.26 per share) increase from
December 31, 2012 to September 30, 2013. Every $1 change in share price is expected to change
Pembina's annual share-based
incentive expense by approximately $1
million.
Net finance costs in the third quarter of 2014 were $30 million compared to $35 million in the third quarter of 2013. Lower
net finance costs were primarily due to a reduced unrealized loss
on revaluation of the conversion feature of the convertible
debentures as well as lower interest expense on the convertible
debentures as a result of conversions. For the first nine months of
2014, net finance costs were $139
million compared to $111
million in the same period of the prior year. Higher net
finance costs year-to-date in 2014 compared to the same period in
2013 were mainly due to the net increased share price in 2014
compared to the prior year, resulting in an increase in the
unrealized loss relating to the revaluation of the conversion
feature of the Company's convertible debentures offset by lower
interest expense on the convertible debentures.
Income tax expense was $21 million
for the third quarter of 2014, including current tax of
$26 million and deferred tax recovery
of $5 million, compared to
$40 million, including current tax of
$6 million and deferred tax of
$34 million in the same periods of
2013. Income tax expense was $128
million for the nine months ended September 30, 2014, including current tax of
$75 million and deferred tax of
$53 million, compared to income tax
expense of $102 million, including
current tax of $19 million and
deferred tax of $83 million in the
same period of 2013. Deferred income tax expense arises from the
difference between the accounting and tax basis of assets and
liabilities. The current tax rose year-to-date primarily as a
result of taxable income exceeding losses and deductions available
for carry over in certain of Pembina subsidiary corporations.
Pembina generated EBITDA of
$199 million during the third quarter
of 2014, consistent with $201 million
during the third quarter of 2013. Increased gross profit since the
same period last year was offset by increased general and
administrative and other expenses. On a year-to-date basis in 2014,
Pembina generated EBITDA of
$750 million compared to $597 million during the first nine months of
2013. EBITDA was higher in 2014 compared to 2013 due to increased
results from Pembina's businesses,
primarily stemming from higher operating margin in the Company's
Midstream business, as well as returns on new assets, expansions
and services, offset by increased general and administrative
expenses.
The Company's earnings increased to $75
million ($0.20 per common
share) during the third quarter of 2014 compared to $72 million ($0.22
per common share) during the third quarter of 2013. This increase
was due to higher gross profit, which was offset by increased
general and administrative expenses due to higher share-based
compensation and other expenses, with an offset to per common share
metrics from increased shares outstanding. Earnings were
$299 million ($0.85 per common share) during the first nine
months of 2014 compared to $256
million ($0.83 per common
share) during the same period of the prior year. The year-to-date
increase was mostly due to higher gross profit, partially offset by
increased general and administrative expenses and income taxes.
Also offsetting the increase in earnings in the third quarter and
first nine months of 2014 was share of loss from equity accounted
investees, which includes accelerated depreciation of $25 million for certain out-of-service assets at
the Company's Fort Saskatchewan
ethylene storage facility.
Cash flow from operating activities was $188 million ($0.57
per common share) during the third quarter of 2014 compared to
$94 million ($0.30 per common share) for the same period last
year. The increase was primarily due to higher earnings and a
larger decrease in non-cash working capital in 2013 compared to
2014. For the nine months ended September
30, 2014, cash flow from operating activities was
$604 million ($1.87 per common share) compared to $477 million ($1.56
per common share) during the same period last year. The
year-to-date increase was primarily due to higher earnings as well
as a decreased change in non-cash working capital in 2014 compared
to 2013.
Adjusted cash flow from operating activities was $158 million ($0.48
per common share) during the third quarter of 2014 compared to
$188 million ($0.61 per common share) during the third quarter
of 2013. Despite an increase in operating margin, the
quarter-over-quarter decrease in adjusted cash flow from operating
activities is primarily a result of increased current taxes,
share-based payment expenses and preferred share dividends
declared. For the nine months ended September 30, 2014, adjusted cash flow from
operating activities was $613 million
($1.90 per common share) compared to
$540 million ($1.77 per common share) during the same period
last year. The year-to-date increase was also primarily due to
higher operating margin offset by increased current taxes,
share-based payment expenses and preferred share dividends
declared. For both the third quarter and year-to-date in 2014, per
common share metrics were impacted by increased shares
outstanding.
Operating Results |
|
|
|
|
|
3 Months
Ended
September 30 |
|
9 Months
Ended
September 30 |
(mbpd, except where
noted)(1) |
2014 |
2013 |
|
2014 |
2013 |
Conventional Pipelines
throughput |
564 |
489 |
|
563 |
489 |
Oil Sands & Heavy Oil
contracted capacity |
880 |
880 |
|
880 |
880 |
Gas Services average volume
processed (mboe/d) net to Pembina(2) |
71 |
48 |
|
82 |
49 |
Midstream NGL sales volume |
107 |
99 |
|
115 |
105 |
Total volume |
1,622 |
1,516 |
|
1,640 |
1,523 |
(1) |
mbpd is thousands of barrels per
day. |
(2) |
Gas Services average volume processed
converted to mboe/d (thousands of barrels of oil equivalent
per day) from million cubic feet per day ("MMcf/d") at 6:1
ratio.
|
|
|
|
|
|
|
|
3 Months Ended
September 30 |
9 Months Ended
September 30 |
|
2014 |
2013 |
2014 |
2013 |
($ millions) |
Net
Revenue(1) |
Operating
Margin(1) |
Net
Revenue(1) |
Operating
Margin(1) |
Net
Revenue(1) |
Operating
Margin(1) |
Net
Revenue(1) |
Operating
Margin(1) |
Conventional Pipelines |
128 |
74 |
103 |
66 |
367 |
228 |
300 |
192 |
Oil Sands & Heavy Oil |
52 |
35 |
48 |
33 |
152 |
102 |
142 |
97 |
Gas Services |
38 |
23 |
32 |
21 |
119 |
78 |
88 |
57 |
Midstream |
139 |
131 |
135 |
105 |
526 |
471 |
397 |
325 |
Corporate |
1 |
1 |
(1) |
1 |
1 |
4 |
|
3 |
Total |
358 |
264 |
317 |
226 |
1,165 |
883 |
927 |
674 |
(1) |
Refer to "Non-GAAP and Additional GAAP Measures." |
- For the three and nine months ended September 30, 2014, financial and operating
results in the Conventional Pipelines business were higher than the
comparable periods of 2013 primarily because of the Phase I
Expansions being placed into service in December 2013, which allowed for increased
volumes on the Company's Peace and Northern pipeline systems.
- In the Oil Sands & Heavy Oil business, the increases in net
revenue and operating margin during the third quarter and first
nine months of 2014 compared to the same periods of 2013 were
primarily related to higher interruptible volumes on the Nipisi
Pipeline. Additional flow-through operating expenses on the Horizon
Pipeline further increased net revenue in this business during the
2014 periods compared to the three and nine months ended
September 30, 2013.
- Gas Services' 2014 financial and operating results were higher
in the third quarter and year-to-date compared to the same periods
of 2013 primarily due to the 200 MMcf/d Saturn I Facility, which
was placed into service in October
2013.
- In Midstream, improved 2014 third quarter and first nine
months' results were largely due to higher throughput, more
favourable pricing, a stronger year-over-year market for propane
(particularly in the first quarter of 2014 at Empress East), as
well as increased fee-for-service storage cavern revenue at
Redwater West.
Acquisition of Vantage Pipeline
On October 24, 2014, Pembina closed its previously announced
acquisition of the Vantage pipeline system ("Vantage") and Mistral
Midstream Inc.'s ("Mistral") interest in the Saskatchewan Ethane
Extraction Plant ("SEEP") for total consideration of approximately
US$650 million (the "Transaction").
To enact the purchase, Pembina
acquired all of the issued and outstanding equity interests of
Vantage Pipeline Canada ULC, Vantage Pipeline US LP and Mistral in
exchange for US$413 million,
including repayment of Vantage's bank indebtedness of
approximately US$224 million at
closing and approximately 5.61 million common shares (with an
approximate value as at October 24,
2014 of US$237 million).
Included in the consideration above was approximately $23 million for SEEP construction costs that were
inccured between the effective date of the Transaction of
August 1, 2014 and October 24, 2014.
Vantage is a recently constructed high vapour pressure pipeline
that is approximately 700 kilometres ("km") long with a capacity of
approximately 40,000 barrels per day ("bpd"). This line originates
in Tioga, North Dakota and
terminates near Empress, Alberta.
Vantage provides long-term, fee-for-service cash flow and strategic
access to the prolific and growing North Dakota Bakken play for
future natural gas liquids ("NGL") opportunities.
As part of the Transaction, Pembina also acquired pipeline infrastructure
from Mistral and Mistral's interest in SEEP, an under construction,
60 MMcf/d deep cut gas processing facility that is centrally
located to service the southeast Saskatchewan Bakken region. SEEP,
which is underpinned by both a long-term ethane sales agreement and
a long-term, fee-for-service processing agreement, is expected to
produce approximately 4,500 bpd of ethane and will connect into
Vantage through a pipeline lateral that is also currently under
construction. Pembina expects SEEP
and the associated pipeline lateral to be in-service in
mid-2015.
Pembina also acquired the
remaining 10 percent interest in SEEP after the Transaction closed.
The Company now owns 100 percent of the 60 MMcf/d deep cut
processing facility.
Growth Project Update
Conventional Pipelines Updates
On September 10, 2014,
Pembina announced that due to
strong customer demand, it plans to expand its previously announced
Phase III pipeline expansions (the "Phase III Expansion") by
constructing a new 16" diameter pipeline from Fox Creek, Alberta into Namao, Alberta and a new 12" diameter pipeline
from Wapiti, Alberta into Kakwa,
Alberta (the "Wapiti to Kakwa
Pipeline").
The 16" diameter pipeline will span approximately 270 km in
length and be built in the same right-of-way as the proposed 24"
diameter pipeline from Fox Creek
to Namao. Pembina expects the two pipelines to initially
have a combined capacity of 420,000 bpd and an ultimate capacity of
over 680,000 bpd with the addition of midpoint pump stations.
The proposed Wapiti to Kakwa Pipeline is intended to
debottleneck a portion of Pembina's existing pipeline system. It will be
approximately 70 km in length and is expected to have an initial
capacity of approximately 95,000 bpd. This debottleneck will
ultimately allow product to be delivered into the Company's core
segment of the Phase III Expansion between Fox Creek and Namao. As part of this project, Pembina also plans to build two new pump
stations. Subject to regulatory and environmental approvals,
Pembina expects the Wapiti to
Kakwa Pipeline to be in-service in late-2016 to mid-2017.
Combined, Pembina expects to
incur incremental capital expenditures for the additional 16"
diameter pipeline and the Wapiti to Kakwa Pipeline of approximately
$435 million, bringing total
estimated capital for the Phase III Expansion to $2.44 billion.
Subject to regulatory and environmental approvals, Pembina expects the 16" and 24" diameter
pipelines to be in-service between late-2016 and mid-2017.
Pembina submitted its regulatory
application for both pipelines from Fox
Creek to Namao on
September 2, 2014. Once in service,
the Company will have four pipelines in the corridor between
Fox Creek and Namao which will allow for operational
efficiencies and improved quality management of product on the
system through the reduction of batching operations and larger
batch sizes.
In connection with the Phase III Expansion, Pembina was also successful in re-contracting
with its customers and securing the majority of the existing crude
oil and condensate volumes transported on the Company's pipelines
under long-term, firm-service contracts. Pembina now has secured approximately 650,000
bpd of crude oil, condensate and NGL through its re-contracting
efforts, and through its Phase I, II and III conventional pipeline
expansions. As a result, once the Phase III Expansion is brought
into service, virtually all of the throughput on Pembina's Peace and Northern systems will be
under long-term, take-or-pay contracts.
In the third quarter, work continued on the Phase II crude oil,
condensate and NGL expansions. With respect to the crude oil and
condensate portion, Pembina
expects the project to be mechanically complete in early 2015 and
commissioned in the first quarter of 2015. Subject to regulatory
and environmental approvals approval, Pembina expects the NGL component of the
project to be in-service in the third quarter of 2015.
The Company is also progressing its previously announced plans
to expand its presence in the Edson and Willesden Green areas of
Alberta. Subject to regulatory and
environmental approvals, Pembina
expects its additional pipeline laterals in the Edson area to be in-service in mid-2016 and
its additional Willesden Green pipelines to be in-service in
late-2016.
Gas Services Update
Pembina has completed
commissioning of its recently constructed 200 MMcf/d (134 MMcf/d
net) Resthaven Facility, which was placed into service on
October 6, 2014 and is now delivering
NGL into Pembina's Peace
Pipeline.
On October 10, 2014, Pembina announced that it entered into
commercial agreements to proceed with a $170
million expansion of the Resthaven Facility and to build,
own and operate a new gas gathering pipeline that will deliver gas
into the plant (collectively, the "Resthaven Expansion").
The Resthaven Expansion is underpinned by a long-term,
fee-for-service contract. The gas processing expansion component of
the Resthaven Expansion is expected to cost approximately
$105 million (gross) and increase
capacity of the existing Resthaven Facility by an additional 100
MMcf/d (gross), bringing total capacity to 300 MMcf/d (gross). To
support this expansion, Pembina
plans to build a $65 million, 28 km
12" gas gathering pipeline that will connect the customer's
condensate recovery plant into the Resthaven Facility. Should all
the partners in the existing Resthaven Facility participate in the
expansion, Pembina's capital for
the plant will decrease to $75
million and its incremental expansion capacity will be 69
MMcf/d (net to Pembina). The
additional NGL that will be extracted from the processed gas will
be transported on the recently constructed Resthaven lateral and
onto Pembina's Peace Pipeline
System.
Subject to regulatory and environmental approvals, the gathering
system portion of the Resthaven Expansion is expected to be
in-service by the second quarter of 2015, followed by the gas
processing expansion in mid-2016.
With the additional volumes anticipated at the Resthaven
Facility, Pembina has also signed
a long-term contract for Phase III pipeline capacity and
fractionation capacity at the Company's Redwater fractionation and storage
facility.
The Company also continues to progress the construction of
Musreau II, a 100 MMcf/d shallow cut gas plant. Pembina expects it will complete this facility
under budget and ahead of its previously anticipated in-service
date of the first quarter 2015, with a new in-service date of
December 2014.
Pembina's Saturn II Facility (a
200 MMcf/d 'twin' of the Saturn I Facility) is on schedule and
within budget and is expected to be in-service by late-2015.
To-date, the Company has completed approximately 25 percent of site
construction.
Once the facilities listed above come on-stream, Pembina expects Gas Services' processing
capacity to reach approximately 1.3 billion cubic feet per day (net
to Pembina), including ethane-plus
extraction capacity of approximately 870 MMcf/d (net to
Pembina). The volumes from
Pembina's existing assets and
those under development (as discussed above) will be processed
largely on a contracted, fee-for-service basis and could result in
approximately 69,000 bpd of NGL, subject to gas compositions, that
would be transported for toll revenue on Pembina's Conventional Pipelines once the
projects are complete.
Potential West Coast Propane Terminal
On September 2, 2014, Pembina announced that it selected the site
for the Company's planned West Coast propane export terminal
project (the "West Coast Terminal" or the "Project"). Pembina entered into an agreement (the
"Terminal Agreement") with the Port of Portland, Oregon (the "Port") on August 28, 2014, that sets forth the terminal
site, which includes an existing marine berth, located within the
city of Portland for the
development of the Project. The Terminal Agreement also outlines
the material commercial lease terms for the West Coast Terminal and
enables Pembina to begin initial
engineering design investigation and consultation processes with
the Port and local regulators.
Under the Terminal Agreement, Pembina continues to progress preliminary
engineering design work, extensive environmental and regulatory
reviews and assessments, local consultation efforts and, together
with the Port, is beginning the process of obtaining the required
permits and approvals to develop the West Coast Terminal. The
Project is subject to Pembina and
the Port entering into definitive agreements, and the receipt of
all environmental and regulatory permits and approvals necessary
for the development of the Project.
Pembina intends to initially
develop a 37,000 bpd propane export facility for an expected
capital investment of approximately US$500
million and with an anticipated in-service date of
early-2018. The Company expects that the West Coast Terminal will
provide the growing western Canadian propane supply with access to
large, international markets while complementing Pembina's expanding integrated service
offering for NGL. The Port, which is located along the Columbia and
Willamette rivers and has deep water access to the Pacific Ocean,
has lands available for the installation of storage, piping and
rail facilities and marine infrastructure associated with the
Project.
Canadian Diluent Hub
On October 8, 2014, Pembina announced plans to proceed with
construction of the Canadian Diluent Hub ("CDH"), a large-scale
condensate and diluent terminal at its Heartland Terminal site near
Fort Saskatchewan, Alberta.
The initial phase of CDH development is estimated to cost
$350 million and will include 600,000
barrels of above ground storage, multiple inbound and outbound
pipeline connections, plus associated pumping and metering
facilities.
The CDH is designed to augment Pembina's existing diluent handling facilities
in the Fort Saskatchewan area
which includes approximately 20,000 bpd of rail import capacity,
500,000 barrels of underground diluent storage and approximately
180,000 bpd of existing delivery capacity to third-party diluent
delivery pipelines. The proposed facilities are designed to
accommodate contracted diluent supply volumes from the Company's
previously announced field gas plant, pipeline and NGL fractionator
expansions.
Site preparation began in late-2013 and is on-going. Subject to
further regulatory and environmental approvals, Pembina anticipates phasing in incremental
pipeline connections to regional condensate delivery systems in
2016 with a view to achieving full connectivity of and service
offerings at CDH in the second quarter of 2017.
Update on Construction at Redwater
Pembina continues to progress
with facility construction on its $415
million, second 73,000 bpd ethane-plus fractionator at the
Company's Redwater site ("RFS
II"). All towers have been erected at the site and the foundations
for the compressor building are nearing completion. The project is
on schedule and anticipated to be on-stream late in the fourth
quarter of 2015.
With the addition of the previously announced RFS III,
Pembina's third fractionator at
its Redwater site, fractionation
capacity will total 210,000 bpd, making the Company's Redwater complex the largest fractionation
facility in Canada. Subject to
regulatory and environmental approval, Pembina expects RFS III to be in-service in
the third quarter of 2017.
Financing Activity
On September 11, 2014,
Pembina closed its offering of
10,000,000 cumulative redeemable rate reset class A preferred
shares, series 7 (the "Series 7 Preferred Shares") for aggregate
gross proceeds of $250 million (the
"Offering"). The proceeds from the Offering were used to help fund
a portion of Pembina's purchase of
Vantage and SEEP as well as to fund a portion of the remainder of
the Company's 2014 capital expenditure program and for general
corporate purposes.
The Series 7 Preferred Shares began trading on the Toronto Stock
Exchange on September 11, 2014 under
the symbol PPL.PR.G.
Dividends on the Series 7 Preferred Shares are expected to be
$0.2813 quarterly, or $1.125 per share on an annualized basis, payable
on the 1st day of March, June, September and December, as and when
declared by the Board of Directors of Pembina, for the initial fixed rate period to
but excluding December 1, 2019.
Third Quarter 2014 Conference Call & Webcast
Pembina will host a conference
call on Wednesday, November 5, 2014
at 8:00 a.m. MT (10:00 a.m. ET) for interested investors,
analysts, brokers and media representatives to discuss details
related to the third quarter of 2014. 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 November 11, 2014 at 11:59
p.m. ET. To access the replay, please dial either
416-849-0833 or 855-859-2056 and enter the password 41655527.
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://event.on24.com/eventRegistration/EventLobbyServlet?target=registration.jsp&eventid=742992&sessionid=1&key=7719A8D82D61576FC50967AB90F91D22&sourcepage=register
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
Calgary-based Pembina Pipeline
Corporation is a leading transportation and midstream service
provider that has been serving North
America's energy industry for 60 years. Pembina owns and operates pipelines that
transport various hydrocarbon liquids including conventional and
synthetic crude oil, heavy oil and oil sands products, condensate
(diluent) and natural gas liquids produced in western Canada. The Company also owns and operates gas
gathering and processing facilities and an oil and natural gas
liquids infrastructure and logistics business. With facilities
strategically located in western Canada and in natural gas liquids markets in
eastern Canada and the U.S.,
Pembina also offers a full
spectrum of midstream and marketing services that spans across its
operations. Pembina's integrated
assets and commercial operations enable it to offer services needed
by the energy sector along the hydrocarbon value chain.
Forward-Looking Statements &
Information
This document contains certain forward-looking statements and
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
"schedule", "will", "expects", "plans", "anticipates", "intends",
"should", "anticipates", "estimates" and similar expressions
suggesting future events or future performance.
In particular, this document contains forward-looking
statements pertaining to, without limitation, the following:
Pembina's corporate strategy;
future dividends which may be declared on Pembina's common shares; planning,
construction, capital expenditure estimates, schedules, expected
capacity, incremental volumes, in-service dates, rights, activities
and operations with respect to planned new construction of, or
expansions on existing, pipelines, gas services facilities,
terminalling, storage and hub facilities; the anticipated impact of
acquisitions on the Company's future cash flows, financial position
and commercial opportunities; anticipated synergies between
newly acquired assets, assets under development and existing assets
of the Company; and, the impact of share price on annual
share-based incentive expense.
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; the success of Pembina's operations and growth projects;
prevailing commodity prices and exchange rates and the ability of
Pembina to maintain current credit
ratings; the availability of capital to fund future capital
requirements relating to existing assets and projects; expectations
regarding participation in Pembina's dividend reinvestment plan; 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; interest
and tax rates; prevailing regulatory, tax and environmental laws
and regulations; maintenance of operating margins; the amount of
future liabilities relating to 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 or increased environmental regulation;
fluctuations in operating results; adverse general economic and
market conditions in Canada,
North America and elsewhere,
including changes in interest rates, foreign currency exchange
rates and commodity prices; and certain other risks detailed from
time to time in Pembina's public
disclosure documents available at www.sedar.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. The forward-looking statements contained in this document are
expressly qualified by this cautionary statement.
Non-GAAP and Additional GAAP
Measures
In this news release, Pembina has used the terms net revenue,
operating margin, earnings before interest, taxes, depreciation and
amortization (EBITDA), adjusted cash flow from operating
activities, and adjusted cash flow from operating activities per
share. Since Non-GAAP and Additional 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 and
Additional GAAP financial measures are clearly defined, qualified
and reconciled to their nearest GAAP measure. Except as otherwise
indicated, these Non-GAAP and Additional 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 and Additional GAAP measures is to
provide additional useful information 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. Other issuers may calculate the Non-GAAP and Additional
GAAP measures differently. Investors should be cautioned that these
measures should not be construed as alternatives to net earnings,
cash flow from operating activities or other measures of financial
results determined in accordance with GAAP as an indicator of
Pembina's performance. For
additional information regarding non-GAAP and additional GAAP
measures, including reconciliations to measures recognized by
GAAP, please refer to the MD&A, which is available on
SEDAR at www.sedar.com.
SOURCE Pembina Pipeline Corporation