Continuing to progress growth projects; secured
$380 million of new fee-for-service
projects during the second quarter
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 ("MD&A") for more details. This news release
also refers to net revenue, operating margin, earnings before
interest, taxes, depreciation and amortization ("EBITDA"), adjusted
cash flow from operating activities (and cash flow from operating
activities per common share and adjusted cash flow from operating
activities per common share), and total enterprise value, 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, including a reconciliation to the most directly
comparable GAAP measure, see "Non-GAAP and Additional GAAP
Measures" herein and in the MD&A, which is available at
Pembina's website at
www.pembina.com and on SEDAR at www.sedar.com. Pembina's entire quarterly report for the
period ended June 30, 2015 is also
available at Pembina's website and
on SEDAR.
CALGARY, Aug. 6, 2015 /CNW/ - Pembina Pipeline
Corporation ("Pembina" or the "Company") (TSX: PPL; NYSE: PBA)
announced today its financial and operating results for the second
quarter of 2015.
Financial Overview
|
|
|
($ millions,
except where noted)
|
3 Months
Ended June
30
(unaudited)
|
6 Months
Ended June
30 (unaudited)
|
|
2015
|
2014
|
2015
|
2014
|
Revenue
|
1,213
|
1,606
|
2,367
|
3,365
|
Net
revenue(1)
|
351
|
360
|
726
|
807
|
Operating
margin(1)
|
259
|
269
|
543
|
619
|
Gross
profit
|
200
|
214
|
428
|
516
|
Earnings
|
43
|
77
|
163
|
224
|
Earnings per common
share – basic and diluted (dollars)
|
0.09
|
0.21
|
0.41
|
0.65
|
EBITDA(1)
|
226
|
235
|
466
|
551
|
Cash flow from
operating activities
|
209
|
155
|
329
|
416
|
Cash flow from
operating activities per common share – basic
(dollars)(1)
|
0.62
|
0.48
|
0.97
|
1.30
|
Adjusted cash flow
from operating activities(1)
|
176
|
191
|
389
|
455
|
Adjusted cash flow
from operating activities per common share – basic
(dollars)(1)
|
0.51
|
0.59
|
1.14
|
1.42
|
Common share
dividends declared
|
154
|
140
|
302
|
274
|
Preferred share
dividends declared
|
11
|
7
|
21
|
13
|
Dividends per common
share (dollars)
|
0.45
|
0.43
|
0.89
|
0.85
|
Capital
expenditures
|
387
|
298
|
885
|
585
|
(1)
|
Refer to "Non-GAAP
and Additional GAAP Measures."
|
Q2 2015 Highlights
"Pembina continued to deliver
solid operational results and demonstrate financial resilience over
the second quarter in 2015," said Scott
Burrows, Pembina's Vice
President, Finance and Chief Financial Officer. "We saw operating
margin increase across all of our businesses, with the exception of
our Midstream business, during the second quarter and first six
months of the year compared to the same periods last year."
"The low commodity price environment that we've been
experiencing this year has been challenging; however, with
Pembina's fee-for-service business
model, strong balance sheet and high quality, diversified asset
base, we are well positioned to endure these bumps in the road. We
remain confident in the long-term sustainability and growth of our
cash flows, and are committed to increasing shareholder value. For
these reasons, the Board approved a common share dividend increase
of 5.2 percent during the second quarter, as previously
announced."
Also during the second quarter, Pembina commissioned its Phase II crude oil
and condensate pipeline expansion and placed a new storage cavern
into service. Additionally, Pembina continued to progress its secured
growth projects, including obtaining regulatory approval for the
Company's third Redwater
fractionator announcing new projects such as the Horizon Pipeline
Expansion and a new pipeline lateral, as well as releasing details
on providing terminalling and natural gas liquids ("NGL")
fractionation services for a customer's planned refinery.
Mick Dilger, Pembina's President and Chief Executive
Officer commented: "2015 is an exciting year for us given that we
are bringing multiple, large capital projects into service that
will add incremental cash flows to our business. Over the next two
years, we will be placing major assets into service almost every
quarter which means 2015 is just the beginning of the
transformational expansions we have ahead of us. The value of
growing our fee-for-service revenue streams is becoming
increasingly visible and will be realized by our shareholders in
the near term."
The second quarter of 2015 marks
Pembina's sixth consecutive
quarter with no employee lost-time injuries. "This is a remarkable
achievement especially given that employees worked 20 percent more
hours in the second quarter of 2015 compared to the same period
last year and over 3.7 million hours in total since the beginning
of 2014. Operating and constructing projects safely is a core focus
at Pembina and these outstanding
results are a testament to our "safety first" company culture,"
said Mr. Dilger.
Mr. Dilger continued: "We are on track to deliver our over
$6 billion of secured growth projects
which, depending on utilization rates, are expected to add
$700 million to $1 billion of
incremental EBITDA in 2018. Pembina is well positioned with our assets
situated on some of the best geological plays in the world that
have very long resource life potential. I am confident in
Pembina's ability to continue
generating long-term shareholder value for years to come."
Q2 2015 Financial Review
Revenue in the second quarter of 2015 was $1.2 billion compared to $1.6 billion for the second quarter of 2014.
Year-to-date revenue was $2.4 billion for 2015 compared to
$3.4 billion for the same period in
2014. Net revenue (revenue less cost of goods sold including
product purchases) was $351 million
for the second quarter of 2015, compared to $360 million in 2014 and $726 million year-to-date in 2015 as compared to
$807 million for the same period in
2014. The Company's Conventional Pipelines and Gas Services
businesses had increases in revenue of 25 percent and 26 percent in
the second quarter (28 percent and 27 percent year-to-date),
respectively, over the same periods in 2014. This strong
performance, combined with steady results in the Company's Oil
Sands and Heavy Oil business, helped to offset decreased
performance in the Company's Midstream business. The decreased
performance in the Midstream business was due to lower commodity
prices, with the greatest impact from propane, where the average
year-to-date market price in 2015 declined by almost 60 percent
compared to the same period in 2014, which overall resulted in
lower consolidated revenue for the second quarter and first half of
2015 compared to the same periods in 2014.
Operating expenses were $96
million for the second quarter of 2015 compared to
$91 million during the same period of
2014. For the six months ended June 30,
2015, operating expenses were $205
million compared to $186
million in the same period of 2014. These increases in
operating expenses were primarily related to increased integrity
spending on the Company's pipelines and new assets in-service,
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.
During the second quarter of 2015, operating margin was
$259 million compared to $269 million in the second quarter of 2014.
Stronger performance in the Conventional Pipelines and Gas Services
businesses largely resulted from new assets being placed into
service and realized gains on commodity-related derivative
financial instruments which were offset by the decrease in the
Company's Midstream business, primarily due to the impact of lower
commodity prices. For the first six months of 2015, operating
margin was $543 million compared to
$619 million for the same period of
2014. The decrease was primarily due to the same factors mentioned
above.
Depreciation and amortization included in operations during the
second quarter of 2015 was $55
million compared to $51
million for the same period in 2014. This increase was
primarily due to the year-over-year growth in Pembina's asset base in the Conventional
Pipelines business associated with the Company's pipeline expansion
projects, as well as the Vantage pipeline acquisition and the Gas
Services business, offset by the reduction from disposition of its
non-core trucking-related assets that was recognized in the second
quarter of 2014. For the six months ended June 30, 2015, depreciation and amortization
included in operations was $109
million compared to $103
million in the first half of 2014 for the same reasons noted
above.
Gross profit for the second quarter of 2015 was $200 million compared to $214 million during the second quarter of 2014.
This seven percent quarter-over-quarter decrease was related to
lower operating margin, as previously discussed, and was coupled
with increased depreciation and amortization included in operations
and an unrealized loss on commodity-related derivative financial
instruments. For the six months ended June
30, 2015, gross profit was $428
million compared to $516
million in the first half of 2014 for the same reasons
discussed above.
For the three and six month periods ending June 30, 2015, Pembina incurred general and administrative
expenses (excluding corporate depreciation and amortization) of
$34 million and $80 million compared to $33 million and $68
million during the same periods of 2014. These increases
were primarily due to increased salary, benefits, and short-term
share-based incentive expenses (related to the addition of new
employees to support Pembina's
growth) and increased rent, largely offset by decreased long-term
share-based incentive expenses and reduced consulting expenses.
Every $1 change in share price is
expected to change Pembina's
annual share-based incentive expense by approximately $1 million.
Pembina generated EBITDA of
$226 million and $466 million for the second quarter and first
half of 2015, compared to $235
million and $551 million for
the respective periods of 2014. The decreases were predominantly
due to lower operating margin combined with higher general and
administrative expenses in the first half of 2015.
Net finance costs incurred during the second quarter of 2015
were $26 million compared to
$48 million for the second quarter of
2014. This decrease was primarily due to fluctuations in the fair
value of the conversion feature on the series E and F convertible
debentures ("Conversion Feature") associated with a reduction in
the number of instruments outstanding as well as changes in share
price. In the second quarter of 2015, Pembina recognized a loss on revaluation of
the Conversion Feature of $1 million,
compared to a loss of $21 million
recognized for the same period of 2014. Also contributing to lower
net finance costs was a $4 million
decrease in interest expense on loans and borrowings, partially
offset by $2 million in foreign
exchange losses realized in the second quarter of 2015. For the
first six months of 2015, net finance costs were $39 million compared to $109 million for the first half of 2014. This
decrease is largely attributable to the revaluation of the
Conversion Feature identified above. In the first half of 2015,
Pembina recognized a gain on
revaluation of $10 million, compared
to a loss on revaluation of $55
million in the first half of 2014. In addition, interest
expense on loans and borrowings and convertible debentures
decreased from $51 million in the
first half of 2014 to $44 million in
the first half of 2015.
Income tax expense for the second quarter of 2015 totaled
$93 million, including current tax of
$23 million and deferred tax of
$70 million, compared to income tax
expense of $51 million in 2014,
including current tax of $15 million
and deferred tax of $36 million.
Current tax expense for 2015 was higher in the comparable period in
2014 predominantly due to higher taxable income previously
deferred. The increase in deferred tax expense in the current
quarter is attributable to an increase in the income tax rate. On
June 18, 2015, Alberta's Finance Minister introduced Bill 2 –
An Act to Restore Fairness to Public Revenue, Alberta Corporate
Tax Rate Change to increase the general corporate tax rate from
10 percent to 12 percent, effective July 1,
2015 (substantively enacted June 18,
2015). Income tax expense was $138
million for the six months ended June
30, 2015, including current taxes of $45 million and deferred taxes of $93 million, compared to income tax expense of
$107 million in 2014, including
current taxes of $49 million and
deferred taxes of $58 million in the
same period of 2014. The decrease in current taxes is attributable
to a decrease in income subject to tax in the first half of 2015 as
compared to the prior year. The increase in deferred taxes is
mainly attributable to the increase in the provincial income tax
rate, as noted above.
The Company's earnings were $43
million ($0.09 per common
share) during the second quarter of 2015 compared to $77 million ($0.21
per common share) in the same period of 2014. Higher gross profit
in the Conventional Pipelines and Gas Services businesses and lower
net finance costs were more than offset by lower gross profit in
the Midstream business, and increased deferred tax expense, as
explained above. Earnings were $163
million ($0.41 per common
share) during the first half of 2015 compared to $224 million ($0.65
per common share) during the same period of the prior year. The
year-to-date decrease was due to the same factors noted above. On a
year-to-date basis, earnings attributable to common shareholders
net of dividends attributable to preferred shareholders are
$139 million (2014: $209 million).
Cash flow from operating activities for the second quarter of
2015 was $209 million ($0.62 per common share – basic and diluted)
compared to $155 million
($0.48 per common share – basic and
diluted) during the second quarter of 2014. Decreased interest paid
and increased change in non-cash working capital in the 2015 period
compared to the respective period in 2014 were offset by higher
taxes paid and decreased operating margin. For the six months ended
June 30, 2015, cash flow from
operating activities was $329 million
($0.97 per common share - basic)
compared to $416 million
($1.30 per common share - basic)
during the same period last year, largely as a result of decreased
operating margin and increased taxes paid in 2015, offset by a
decreased change in non-cash working capital.
Adjusted cash flow from operating activities for the second
quarter of 2015 was $176 million
($0.51 per common share – basic)
compared to $191 million
($0.59 per common share – basic)
during the second quarter of 2014. For the six months ended
June 30, 2015, adjusted cash flow
from operating activities was $389
million ($1.14 per common
share - basic) compared to $455
million ($1.42 per common
share - basic) during the same period last year. The decreases for
the three and six month periods were primarily due to lower
operating margin, increased tax expenses and preferred share
dividends.
Second quarter and year-to-date 2015 per share numbers were
impacted by increased common shares outstanding due to the Dividend
Reinvestment Plan, debenture conversions and share-based payment
transactions.
Operating Results
|
|
|
|
3 Months
Ended
June
30
|
6 Months
Ended
June
30
|
(mbpd, except
where noted)(1)
|
2015
|
2014
|
2015
|
2014
|
Conventional
Pipelines revenue volumes(2)
|
603
|
573
|
618
|
563
|
Oil Sands & Heavy
Oil contracted capacity
|
880
|
880
|
880
|
880
|
Gas Services average
revenue volumes (mboe/d) net to
Pembina(2)(3)
|
108
|
87
|
111
|
88
|
Midstream NGL sales
volume(4)
|
104
|
105
|
117
|
119
|
Total
volume
|
1,695
|
1,645
|
1,726
|
1,650
|
(1)
|
mbpd is thousands of
barrels per day.
|
(2)
|
Revenue volumes are
equal to contracted and interruptible volumes.
|
(3)
|
Gas Services average
revenue volumes converted to mboe/d (thousands of barrels of oil
equivalent per day) from million cubic feet per day ("MMcf/d") at
6:1 ratio.
|
(4)
|
NGL is natural gas
liquids.
|
|
|
|
|
3 Months
Ended
June
30
(unaudited)
|
6 Months
Ended
June
30
(unaudited)
|
|
2015
|
2014
|
2015
|
2014
|
($
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
|
152
|
102
|
122
|
77
|
306
|
200
|
239
|
154
|
Oil Sands & Heavy
Oil
|
50
|
35
|
48
|
33
|
105
|
70
|
100
|
67
|
Gas
Services
|
49
|
35
|
39
|
26
|
103
|
72
|
81
|
55
|
Midstream
|
99
|
86
|
151
|
131
|
212
|
199
|
387
|
340
|
Corporate
|
1
|
1
|
|
2
|
|
2
|
|
3
|
Total
|
351
|
259
|
360
|
269
|
726
|
543
|
807
|
619
|
(1)
|
Refer to "Non-GAAP
and Additional GAAP Measures."
|
- Second quarter and first half of 2015 financial and operating
results in Conventional Pipelines were higher than the comparable
periods of 2014 primarily due to the Phase I Expansions and the
associated contracted volumes, which were placed into service in
December 2013. The additional volumes
increased over time as new connections were placed into service
during 2014, as well as higher capacity utilization being realized
in the first six months of 2015. Also contributing to improved
results was placing the Phase II crude oil and condensate expansion
into service in April 2015, which
allowed for the receipt of higher volumes at existing connections
and truck terminals, as well as additional volumes from the
acquired Vantage pipeline beginning in late-2014. New storage
facilities and portions of pipeline associated with other expansion
programs, which were commissioned during the first half of 2015,
also resulted in increased mainline throughput.
- In the Oil Sands & Heavy Oil business, the increases in net
revenue and operating margin during the first half of 2015 compared
to the same period of 2014 were primarily related to higher
interruptible volumes and additional flow-through operating
expenses in this business during the first six months of 2015
compared to the six months ended June 30,
2014.
- In the Gas Services business, financial and operating results
increased in the second quarter and first half of 2015 compared to
the same period of 2014 primarily due to the addition of the
Resthaven Facility, which was placed into service in October 2014, and the Musreau II Facility, which
was placed into service in December
2014.
- In the Midstream business, second quarter 2015 net revenue and
operating margin were $99 million and
$86 million, respectively, compared
to $151 million and $131 million during the same period in 2014. For
the first half of 2015, net revenue and operating margin were
$212 million and $199 million, respectively, compared to
$387 million and $340 million in the first half of 2014. Net
revenue and operating margin were reduced in 2015 due to lower
commodity prices (particularly the weaker period-over-period
propane prices, where market prices declined by almost 60 percent)
and tighter price differentials across all commodities.
New Developments in 2015 and Growth Projects Update
Conventional Pipelines
Pembina continued to make
substantial progress on its Phase II crude oil, condensate and NGL
expansions ("Phase II Expansions"). On April
24, 2015, Pembina placed
its Phase II crude oil and condensate expansion ("Phase II LVP")
into service, which added an incremental 55 thousand barrels per
day ("mbpd") on the Company's Peace pipeline system and brought
total capacity on this line to 250 mbpd.
For the high vapour pressure ("HVP"), or NGL, portion of the
Phase II Expansions ("Phase II HVP"), construction is 80 percent
complete and 90 percent of the project-related costs have been
secured. The Phase II HVP project is continuing to track on budget
with initial commissioning anticipated in the third quarter of 2015
and the expectation of being fully operational in the fourth
quarter of this year. Once complete, the Phase II HVP expansion
will add 53 mbpd to the Company's Peace and Northern NGL pipeline
systems and bring total NGL capacity on these lines to 220
mbpd.
Earlier this year, Pembina
brought into service a 35 kilometre ("km") 16-inch pipeline segment
from Lator to Simonette, as part of the Phase III pipeline
expansion ("Phase III Expansion"). In late April, Pembina also placed in-service a 35 km 16-inch
pipeline segment from Kakwa to Lator. To date, the Company has
completed over 15 percent of the overall Phase III Expansion
program.
The Phase III Expansion also includes two pipelines between
Fox Creek and Namao, Alberta (one 16-inch diameter and one
24-inch diameter) which would provide an initial combined capacity
of 420 mbpd and an ultimate capacity of over 680 mbpd with the
addition of midpoint pump stations. The Alberta Energy Regulator
("AER") has changed the hearing date relating to the
Fox Creek to Namao portion of the Phase III Expansion from
July 2015 to October 2015. According to AER guidelines,
Pembina expects to receive a
decision from the AER within 90 days after the hearing is
concluded. Subject to regulatory and environmental approvals, the
Company anticipates an in-service date between late-2016 and
mid-2017 for these two pipelines.
As part of the Company's plans to expand its gathering presence
in Alberta and British Columbia, Pembina announced in May 2015 that it plans to construct a new
pipeline lateral in the Karr area of Alberta (the "Karr Lateral") to service
production from the Montney
resource play which will access the Company's Phase III Expansion.
The Karr Lateral is expected to cost $55
million with a design capacity of 30 mbpd and is underpinned
by long-term, fee-for-service agreements, which include substantial
take-or-pay commitments. A portion of the volume under contract
will be incremental to Pembina's
previously disclosed committed volumes. Subject to regulatory
and environmental approvals, the Karr Lateral is expected to be
in-service early-2016.
Pembina also completed and
commissioned its lateral in the Willesden Green area of
Alberta at the end of May 2015, further supporting the Company's other
pipeline expansion initiatives.
Pembina is continuing work on
the $220 million expansion to its
pipeline infrastructure in northeast British Columbia (the "NEBC Expansion"). The
NEBC Expansion, which is underpinned by a long-term,
cost-of-service agreement with an anchor tenant, will transport
condensate and NGL for various producers in the liquids-rich
Montney resource play. Currently,
60 percent of engineering design is completed and, subject to
regulatory and environmental approvals, Pembina anticipates bringing the NEBC
Expansion on-stream in late-2017.
As announced in February 2015,
Pembina plans to expand the
Vantage pipeline system for an estimated capital cost of
$85 million (the "Vantage
Expansion"). Supported by a long-term, fee-for-service agreement
with a take-or-pay component, the Vantage Expansion will increase
the mainline capacity from 40 mbpd to 68 mbpd through the addition
of mainline pump stations and the construction of a gathering
lateral. To-date, all long lead materials have been ordered and the
project is tracking on schedule and on budget. Subject to
regulatory and environmental approvals, the Vantage Expansion is
expected to be in-service in early-2016.
Pembina has been successful in
its commercial efforts to secure the majority of its existing crude
oil and condensate volumes under long-term, firm-service contracts.
In aggregate and including contracted volumes on the Vantage
pipeline, Pembina has now secured
767 mbpd of crude oil, condensate and NGL across its
Conventional Pipelines business.
Pembina's projects and existing
pipeline networks continue to have expansion capacity available to
meet the needs of future developments currently under evaluation by
its customers. Capacity increases to meet the Company's customers'
existing and future demands can be achieved through simple
upgrades, such as adding new pump stations that can be installed
within 12 to 18 months. Adding pump stations to the Phase III
Expansion could increase capacity from 420 mbpd to approximately
680 mbpd for an aggregate capacity on the Peace and Northern
systems of approximately 1,200 mbpd.
Gas Services
During the second quarter of 2015, Pembina continued to advance its growth
projects within the Gas Services business.
Plant site construction is over 90 percent complete at the
Company's Saskatchewan Ethane Extraction Plant ("SEEP"). The
project is currently under budget and on schedule and is expected
to be in-service by the end of August
2015.
Construction of Pembina's
Saturn II Facility, a 200 million cubic feet per day ("MMcf/d")
'twin' of the Company's Saturn I Facility ("Saturn II"), is
expected to be commissioned and placed into service on schedule by
the end of August 2015 and is
anticipated to be completed under budget. To-date, the Company has
completed approximately 90 percent of site construction.
Pembina has ordered all major
equipment for the 100 MMcf/d expansion of its Resthaven Facility
(the "Resthaven Expansion") and plant construction has now
commenced. The gathering pipeline associated with the Resthaven
Expansion is over 70 percent installed with all major river
crossings completed. Pembina
expects the gathering pipeline, which is underpinned by a
cost-of-service agreement, to be in-service in September 2015 and the expansion of the Resthaven
facility, which is underpinned by a fee-for-service agreement with
a substantial take-or-pay component, to be in-service in
mid-2016.
The Company's 100 MMcf/d shallow cut facility, being built
adjacent to Pembina's existing
Musreau I and Musreau II facilities (the "Musreau III Facility"),
has received regulatory and environmental approvals. All major
equipment has been ordered, 75 percent of project engineering is
complete and plant site construction is now over 10 percent
complete. Pembina anticipates
bringing the Musreau III Facility, which is underpinned by
long-term, take-or-pay agreements, on-stream in mid-2016.
Once the facilities under development described above are
in-service, Pembina expects Gas
Services' processing capacity to reach 1.5 billion cubic feet per
day ("bcf/d") (net to Pembina),
including ethane-plus extraction capacity of 870 MMcf/d (net to
Pembina). The volumes from
Pembina's existing assets and
those under development will be processed largely on a contracted,
fee-for-service basis and could result in 70 mbpd of NGL, subject
to gas compositions, and could be transported for additional toll
revenue on Pembina's Conventional
Pipelines. Volumes from these projects support Pembina's pipeline expansion plans as
discussed under "Conventional Pipelines."
Midstream
Pembina continues to progress
construction of its second 73 mbpd ethane-plus fractionator ("RFS
II") at the Company's Redwater
site. All major equipment has been set on site, module fabrication
is finished and site construction is currently 80 percent complete.
Pembina anticipates RFS II will be
on-stream in the first quarter of 2016.
Pembina is also advancing its
third fractionator at Redwater
("RFS III"), which will have propane-plus capacity of 55 mbpd. RFS
III has now received regulatory and environmental approval and over
75 percent of long lead items have been ordered. Pembina expects RFS III to be in-service in
the third quarter of 2017 and, once complete, Pembina's Redwater site will be the largest
fractionation facility in Canada
with a total of 210 mbpd of fractionation capacity.
On May 21, 2015, Pembina announced plans to provide
terminalling services for the North West Redwater Partnership
("North West") with respect to North West's planned refinery (the
"Sturgeon Refinery") for an expected capital cost of $180 million. Underpinned by a 30-year fixed
return agreement and a 10-year NGL mix purchase and sale agreement
related to the Company's third Redwater fractionator, the terminalling
services include truck and rail loading, storage, as well as
handling and processing equipment for a variety of products
delivered from North West. Subject to regulatory and environmental
approvals, the facilities are expected to be in-service
mid-2017.
Site preparation at the Company's proposed Canadian Diluent Hub
("CDH") is on-going. Subject to further regulatory and
environmental approvals, Pembina
anticipates phasing in additional connections to various condensate
delivery systems with a view to achieving full connectivity and
service offerings at CDH in mid-2017.
At its Edmonton North Terminal ("ENT"), Pembina continues to advance construction of
three new above ground storage tanks with a total working capacity
of 550 mbbls. Hydrotesting of the tanks is now complete and
internal and external coating work has begun. The project is on
schedule to be in-service in mid-2016.
At its storage and terminalling facilities in Corunna, Ontario, Pembina is progressing a number of initiatives
including the installation of a new brine pond, upgrades to its
rail rack and construction of a new propane truck rack to meet
increased demand for services. Detailed engineering and procurement
of long-lead items are almost complete and ground work is now
finished on the brine pond. The overall project is expected to be
completed in early-2016.
During the second quarter, Pembina signed a long-term agreement with a
third party for one of its in-development underground hydrocarbon
storage caverns expected to be in service in early-2016.
Pembina continues to progress
its proposed 37 mbpd west coast propane export terminal under an
agreement to complete due diligence work at the Terminal 6 site of
the Port of Portland, Oregon.
Since the original project announcement in September 2014, Pembina's project team has conducted
consultation with community, regulatory and special interest
groups; completed three public hearings; and significantly
progressed detailed engineering design work to support a number of
permit applications the Company expects to submit throughout
late-2015 and early-2016. Pembina
received an affirmative vote from the Portland Planning and
Sustainability Commission to move the approval process to the
Portland City Council. Pembina has
been given no specific timeframe when the approval process will be
considered by the Portland City Council.
Oil Sands and Heavy Oil
On June 4, 2015, Pembina announced that it will expand its
existing Horizon Pipeline System (the "Horizon Expansion"),
underpinned by a fixed return long-term agreement with Canadian
Natural Resources Limited, for an estimated capital cost of
$125 million. The Horizon Expansion
will increase the pipeline's capacity up to 250 mbpd, which will be
achieved by upgrading mainline pump stations and other facility
modifications, as required. Subject to regulatory and environmental
approvals, the Horizon Expansion is expected to be in service
mid-2016.
Financing Activity
On April 10, 2015, Pembina closed a $225
million offering of 9 million cumulative redeemable rate
reset class A preferred shares, Series 9 (the "Series 9 Preferred
Shares") at a price of $25.00 per
share. The Series 9 Preferred Shares began trading on the Toronto
Stock Exchange on April 10, 2015
under the symbol PPL.PR.I.
On April 16, 2015, Pembina received commitments from its bank
syndicate to increase the Company's unsecured revolving credit
facility (the "Facility") to $2
billion and retained the accordion feature for an additional
$750 million at Pembina's option. The Facility maturity date
was also extended to May 31,
2020.
On June 16, 2015, Pembina closed an offering of $600 million of senior unsecured medium-term
notes. The offering was conducted in two tranches: gross proceeds
of $500 million in senior unsecured
medium-term notes, Series 6, having a fixed coupon of 4.24 percent
per annum, paid semi-annually, and which mature on June 15, 2027 and gross proceeds of $100 million through the re-opening of
Pembina's Series 3, 4.75 percent
medium-term notes, which mature April 30,
2043.
Second Quarter 2015 Conference Call & Webcast
Pembina will host a conference
call on Friday, August 7, 2015 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 second quarter of 2015. The conference call dial-in
numbers for Canada and the U.S.
are 647-427-7450 or 888-231-8191. A recording of the conference
call will be available for replay until August 14, 2015 at 11:59
p.m. ET. To access the replay, please dial either
416-849-0833 or 855-859-2056 and enter the password 45394754.
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:
http://event.on24.com/r.htm?e=908220&s=1&k=F8FA38CC83BBCBF2047A6E53490F41EE
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 over 60 years. Pembina owns and operates an integrated system
of pipelines that transport various hydrocarbon liquids including
conventional and synthetic crude oil, heavy oil and oil sands
products, condensate (diluent) and NGL produced in western
Canada and ethane produced in
North Dakota. The Company also
owns and operates gas gathering and processing facilities and an
oil and NGL infrastructure and logistics business. With facilities
strategically located in western Canada and in NGL 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") 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", "could" 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; future dividends
which may be declared on Pembina's
common shares and the dividend payment date; 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,
fractionation facilities, terminalling, storage and hub facilities;
pipeline, processing, fractionation and storage facility and system
operations and throughput levels; Pembina's strategy and the development and
expected timing of new business initiatives and growth
opportunities and the impact thereof; anticipated synergies between
newly acquired assets, assets under development and existing assets
of the Company; processing, transportation, fractionation, storage
and services commitments and contracts; the impact of share price
on annual share-based incentive expense; the impact of the current
commodity price environment on Pembina; and, the anticipated use of proceeds
from financing.
The forward-looking statements are based on certain
assumptions that Pembina has made
in respect thereof as at the date of this news release regarding,
among other things: oil and gas industry exploration and
development activity levels and the geographic region of such
activity; the success of Pembina's
operations and growth projects; prevailing commodity prices and
exchange rates and the ability of Pembina to maintain current credit ratings;
the availability of capital to fund future capital requirements
relating to existing assets and projects; 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. The
purpose of the financial outlook contained herein is to give the
reader an indication of the expected impact of current growth
projects on Pembina's future
financial performance. Readers should be aware that the financial
outlook contained herein may not be appropriate for other
purposes.
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, cash flow from operating activities per common share
and adjusted cash flow from operating activities per common 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