CALGARY, Alberta, Nov. 5, 2015 /PRNewswire/ --
Key financial metrics increased quarter over
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" to be included 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 September 30, 2015 is also available online
at www.sedar.comand www.sec.govand on
Pembina's website at
www.pembina.com.
Pembina Pipeline Corporation ("Pembina" or the "Company") (TSX: PPL; NYSE:
PBA) announced today its financial and operating results for the
third quarter of 2015.
Financial
Overview
|
|
|
($ millions,
except where noted)
|
3 Months Ended
September 30 (unaudited)
|
9 Months Ended
September 30 (unaudited)
|
|
2015
|
2014
|
2015
|
2014
|
Revenue
|
1,026
|
1,445
|
3,393
|
4,810
|
Net
revenue(1)
|
374
|
358
|
1,100
|
1,165
|
Operating
margin(1)
|
271
|
264
|
814
|
883
|
Gross
profit
|
201
|
216
|
629
|
732
|
Earnings
|
113
|
75
|
276
|
299
|
Earnings per common
share – basic and diluted (dollars)
|
0.29
|
0.20
|
0.70
|
0.85
|
EBITDA(1)
|
229
|
199
|
695
|
750
|
Cash flow from
operating activities
|
187
|
188
|
516
|
604
|
Cash flow from
operating activities per common share – basic
(dollars)(1)
|
0.54
|
0.57
|
1.51
|
1.87
|
Adjusted cash flow
from operating activities(1)
|
209
|
158
|
598
|
613
|
Adjusted cash flow
from operating activities per common share – basic
(dollars)(1)
|
0.60
|
0.48
|
1.75
|
1.90
|
Common share
dividends declared
|
158
|
143
|
460
|
417
|
Preferred share
dividends declared
|
14
|
8
|
35
|
21
|
Dividends per common
share (dollars)
|
0.46
|
0.44
|
1.34
|
1.29
|
Capital
expenditures
|
478
|
344
|
1,363
|
929
|
(1)
|
Refer to "Non-GAAP
and Additional GAAP Measures."
|
|
|
|
|
Q3 2015 Highlights
"Pembina delivered strong
operational results which included increases to our operating
margin, EBITDA, adjusted cash flow from operating activities, and
earnings in the third quarter of 2015 compared to the same period
last year," said Scott Burrows,
Pembina's Vice President, Finance
and Chief Financial Officer.
During the third quarter, Pembina also successfully placed two new gas
plants, a gathering pipeline and the natural gas liquids portion of
the Company's Peace and Northern Phase II pipeline expansion into
service. "Bringing growth projects into service adds incremental,
fee-for-service cash flows to our business and ultimately benefits
our shareholders," said Mr. Burrows. "As previously mentioned, we
will be bringing new assets into service almost every quarter for
the next two years – all of which will help drive shareholder
value. By the end of the first quarter in 2016, we expect to place
into service our second Redwater
fractionator, a new contracted cavern, multiple pipeline laterals
and our truck and rail expansion at Corunna."
Mick Dilger, Pembina's President and Chief Executive
Officer commented: "The third quarter of 2015 was a busy quarter
for us, having placed multiple, large capital projects into
service. I am proud to say that not only did we bring the majority
of these projects into service on time and under budget, but we
also accomplished this with an exemplary safety record. I want to
congratulate our teams for achieving such successes."
"Further on our safety record, Pembina has now achieved seven consecutive
quarters with no employee lost-time injuries," continued Mr.
Dilger. "I am pleased to report that our employees continue to work
safely despite having worked 16 percent more hours in the third
quarter of 2015 compared to the same period last year and over 4.4
million hours in total since the beginning of 2014. Our goal is for
everyone to return home safely at the end of the day and so these
outstanding results are a testament to our commitment to that
goal."
Mr. Dilger added: "With only a few months left to finish the
year, we remain diligently focused on continuing to do the
important things right which includes operating our business safely
and reliably, constructing our growth projects safely, on time and
working to achieve capital cost savings. So far, we have made great
strides to achieve our cost savings goal of reducing capital
expenditures by approximately $225
million and have realized aggregate cost savings in excess
of half this amount."
Pembina remains on track to
deliver its over $6.4 billion of
secured growth projects, including projects brought into service
this year, which, depending on utilization rates, is expected to
add $700 million to $1 billion of
incremental annual EBITDA in 2018. "I am confident in Pembina's ability to manage the current market
headwinds given that we are well positioned with our assets ideally
situated on world class, long-life geology. We are committed to
generating long-term shareholder value well into the future," said
Mr. Dilger.
Q3 2015 Financial Review
Revenue in the third quarter of 2015 was $1.0 billion compared to $1.4 billion for the third quarter of 2014.
Year-to-date revenue was $3.4 billion
for 2015 compared to $4.8 billion for
the same period in 2014. The reduction in revenue is largely a
result of the reduced commodity prices impacting the Company's
Midstream business in the current year. Net revenue (revenue less
cost of goods sold including product purchases) was $374 million for the third quarter of 2015,
compared to $358 million in 2014 and
$1.1 billion year-to-date in 2015 as
compared to $1.2 billion for the same
period in 2014. The Company's Conventional Pipelines and Gas
Services businesses had an increase in revenue of 24 percent and 42
percent in the third quarter, respectively, and 27 percent and 32
percent year-to-date, respectively, over the same periods in 2014.
This strong performance, resulting from higher volumes and new
assets being placed in service, 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
decline in the Midstream business was largely due to lower
commodity prices, and, to a lesser extent, tighter price
differentials across all commodities.
Operating expenses were $111
million for the third quarter of 2015 compared to
$98 million during the same period of
2014, primarily due to the addition of assets and recognition of
reclamation costs in the Company's Conventional Pipelines business.
For the nine months ended September 30,
2015, operating expenses were $316
million compared to $284
million in the same period of 2014. The year-to-date
increases in operating expenses were primarily related to the
addition of assets in the Company's Conventional Pipelines business
and Gas Services business, offset by decreases in the Midstream
business, stemming from the sale of the Company's non-core trucking
subsidiary.
During the third quarter of 2015, operating margin was
$271 million compared to $264 million in the third quarter of 2014.
Stronger performance in the Company's Conventional Pipelines and
Gas Services businesses, from new assets being placed in service
and increased volumes, were offset by the decrease in the Company's
Midstream business as described above. For the first nine months of
2015, operating margin was $814
million compared to $883
million for the same period of 2014 primarily due to
decreases in the Midstream business which included a $28 million increase in realized gains on
commodity related derivatives in 2015 as compared to 2014, that
were partially offset by increases in the Company's Conventional
Pipelines business and the Gas Services business. The Oil Sands and
Heavy Oil business remained stable, as expected, for both the third
quarter and nine months ending 2015 as compared to the same periods
in 2014.
Depreciation and amortization included in operations during the
third quarter of 2015 was $67 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 associated with the Company's pipeline expansions,
including the Vantage pipeline assets acquired in the fourth
quarter of 2014, new in-service gas processing plants and certain
useful life adjustments. For the nine months ended September 30, 2015, depreciation and amortization
included in operations was $176
million compared to $154
million in the first nine months of 2014 primarily due to
the same reason noted above offset by decreased amortization in the
Midstream business associated with intangibles that were fully
depreciated in the prior year. Also included in 2014 was the
impairment of non-core trucking related assets.
Gross profit for the third quarter of 2015 was $201 million compared to $216 million during the third quarter of 2014.
This seven percent quarter-over-quarter decrease was a result of
increased depreciation and amortization included in operations and
a $6 million decrease in unrealized
mark-to-market positions of commodity-related derivative financial
instruments partially offset by higher operating margin, as
previously discussed. For the nine months ended September 30, 2015, gross profit was $629 million compared to $732 million in the first nine months of 2014 due
to increased depreciation and amortization included in operations,
decreased operating margin and an unrealized loss of $9 million on commodity-related derivative
financial instruments as compared to a gain in the previous
year.
For the three and nine month periods ending September 30, 2015, Pembina incurred general and administrative
expenses (excluding corporate depreciation and amortization) of
$27 million and $107 million compared to $53 million and $121
million during the same periods of 2014. These decreases
were primarily due to lower long-term incentive expenses due to a
lower share price, lower short-term incentive expenses, partially
offset by increased rent. 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
$229 million for the third quarter of
2015, compared to $199 million for
the same period in 2014. This increase was due to higher operating
margin coupled with lower general and administrative expenses
(excluding corporate depreciation and amortization). Year-to-date,
in 2015 Pembina generated EBITDA of $695
million compared to $750
million in 2014. The decrease was due to lower operating
margin partially offset by decreased general and administrative
expenses (excluding corporate depreciation and amortization).
Net finance costs incurred during the third quarter of 2015 were
$10 million compared to $30 million for the third 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
third quarter of 2015, Pembina
recognized a gain on revaluation of the Conversion Feature of
$30 million, compared to a loss of
$8 million for the same period of
2014, partially offset by a $20
million increase in interest expense on loans and borrowings
and convertible debentures in the third quarter of 2015. For the
first nine months of 2015, net finance costs were $49 million compared to $139 million for the first nine months of 2014.
This decrease is largely attributable to the revaluation of the
Conversion Feature identified above. In the first nine months of
2015, Pembina recognized a gain on
revaluation of $40 million, compared
to a loss on revaluation of $63
million in the first nine months of 2014. In addition,
interest expense on loans and borrowings and convertible debentures
increased from $70 million in the
first nine months of 2014 to $83
million in the first nine months of 2015.
Income tax expense for the third quarter of 2015 totaled
$30 million, including current and
deferred tax of $15 million,
respectively, compared to income tax expense of $21 million in 2014, including current tax of
$26 million and a deferred tax
recovery of $5 million. Current tax
expense for 2015 was lower than the comparable period in 2014
predominantly due to lower taxable income. The increase in deferred
tax expense in the current quarter is mainly 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 $168 million for the nine
months ended September 30, 2015,
including current taxes of $60
million and deferred taxes of $108
million, compared to income tax expense of $128 million in 2014, including current taxes of
$75 million and deferred taxes of
$53 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 nine months of 2015 as
compared to the prior year. The increase in deferred taxes was due
to the increase in the income tax rate previously noted.
For the three and nine month periods ending September 30, 2015, Pembina incurred other expenses of
$17 million and $14 million compared to $14 million and $16
million during the same periods of 2014. Other expenses
incurred in 2015 include $8 million
of derecognized project development costs and a $5 million loss on disposal of assets.
The Company's earnings were $113
million ($0.29 per common
share) during the third quarter of 2015 compared to $75 million ($0.20
per common share) in the same period of 2014. This was driven by
lower gross profit and higher deferred tax expense more than offset
by lower general and administrative expenses, lower net finance
costs and decreased share of loss from equity accounted investees.
Earnings were $276 million
($0.70 per common share) during the
first nine months of 2015 compared to $299
million ($0.85 per common
share) during the same period of the prior year. The year-to-date
decrease was due to lower gross profit and reduced deferred tax
expense partially offset by lower net finance costs and general and
administrative expenses. On a year-to-date basis, earnings
attributable to common shareholders net of dividends attributable
to preferred shareholders are $238
million (2014: $275
million).
Cash flow from operating activities for the third quarter of
2015 was $187 million ($0.54 per common share – basic), relatively
consistent with the third quarter of 2014 of $188 million ($0.57
per common share – basic). Increased change in non-cash working
capital in the 2015 period compared to the respective period in
2014 was offset by higher taxes paid, higher interest paid and
decreased operating margin. For the nine months ended September 30, 2015, cash flow from operating
activities was $516 million
($1.51 per common share - basic)
compared to $604 million
($1.87 per common share - basic)
during the same period last year, largely as a result of decreased
operating margin and increased taxes paid in 2015, partially offset
by a decreased change in non-cash working capital.
Adjusted cash flow from operating activities for the third
quarter of 2015 was $209 million
($0.60 per common share – basic)
compared to $158 million
($0.48 per common share – basic)
during the third quarter of 2014. The increase is largely due to
higher operating margin, lower tax expense and lower share-based
compensation expense. For the nine months ended September 30, 2015, adjusted cash flow from
operating activities was $598 million
($1.75 per common share - basic)
compared to $613 million
($1.90 per common share - basic)
during the same period last year. The decrease was primarily due to
lower operating margin partially offset by lower tax expense and
lower share-based compensation expense.
Third quarter and year-to-date 2015 per share numbers were
impacted by increased common shares outstanding due to the Premium
Dividend™ and Dividend Reinvestment Plan, debenture conversions and
share-based payment transactions that were issued to help fund
Pembina's capital expenditure
program.
Operating
Results
|
|
|
|
3 Months Ended
September 30
|
9 Months
Ended
September 30
|
(mbpd, except
where noted)(1)
|
2015
|
2014
|
2015
|
2014
|
Conventional
Pipelines revenue volumes(2)
|
600
|
564
|
612
|
563
|
Oil Sands & Heavy
Oil contracted capacity
|
880
|
880
|
880
|
880
|
Gas Services average
revenue volumes (mboe/d) net to
Pembina(2)(3)
|
115
|
71
|
112
|
82
|
Midstream NGL sales
volumes(4)
|
109
|
107
|
114
|
115
|
Total
volume
|
1,704
|
1,622
|
1,718
|
1,640
|
(1)
|
mbpd is thousands of barrels per
day.
|
(2)
|
Revenue volumes are equal to contracted and
interruptible volumes.
|
(3)
|
Gas Services average revenue volumes converted to
mboe/d (thousands of barrels of oil equivalent per day)
from million cubic feet per day ("MMcf/d") at 6:1
ratio.
|
(4)
|
NGL is natural gas liquids.
|
|
|
|
|
3 Months Ended
September 30 (unaudited)
|
9 Months Ended
September 30 (unaudited)
|
|
2015
|
2014
|
2015
|
2014
|
($
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
|
159
|
92
|
128
|
74
|
465
|
292
|
367
|
228
|
Oil Sands & Heavy
Oil
|
52
|
33
|
52
|
35
|
157
|
103
|
152
|
102
|
Gas
Services
|
54
|
39
|
38
|
23
|
157
|
111
|
119
|
78
|
Midstream
|
109
|
105
|
139
|
131
|
321
|
304
|
526
|
471
|
Corporate
|
|
2
|
1
|
1
|
|
4
|
1
|
4
|
Total
|
374
|
271
|
358
|
264
|
1,100
|
814
|
1,165
|
883
|
(1)
|
Refer to
"Non-GAAP and Additional GAAP Measures."
|
|
|
|
|
|
|
- Third quarter and the first nine months 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. Also contributing to improved
results was the completion of Pembina's Peace and Northern Phase II
expansion (the "Phase II Expansions") which includes the crude oil
and condensate expansion or the low vapour pressure ("LVP")
expansion ("Phase II LVP"), which was placed into service in
April 2015, and the natural gas
liquids ("NGL") or the high vapour pressure ("HVP") expansion
("Phase II HVP"), which was placed into service in September 2015 and is expected to be fully
commissioned by the end of 2015. These expansions allowed for
increased volumes at Pembina's
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
nine months of 2015, also resulted in increased mainline
throughput.
- In the Oil Sands & Heavy Oil business, net revenue was
consistent and operating margin was slightly lower in the third
quarter compared to the same period in 2014 due to slightly higher
flow-through operating expenses, which are eligible to be recovered
under Pembina's contractual
arrangements with its customers, offset by a reduction of
interruptible volumes. For the first nine months of 2015 compared
to the same period of 2014, net revenue and operating margin were
higher due to increased flow-through operating expenses.
- In the Gas Services business, financial and operating results
increased in the third quarter and the first nine months 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, net revenue and operating margin for
the third quarter and first nine months of 2015 decreased compared
to the same periods in 2014. These decreases were due to lower
commodity prices, particularly the weaker period-over-period
propane and butane prices and tighter price differentials across
all commodities.
New Developments in 2015 and Growth Projects Update
Conventional Pipelines
In early September, Pembina
announced the start up of the Phase II HVP expansion. The Company
expects to have the pipeline fully commissioned by the end of 2015.
In conjunction with the Phase II LVP portion of the expansion that
was placed into service in April of this year ("Phase II LVP"), the
Phase II Expansion is now in service. The Phase II Expansion and
all associated laterals will represent approximately $670 million of total capital investment, once
fully commissioned. In aggregate, the Phase II Expansion is
expected to increase the Peace and Northern systems' capacity by
108 thousand barrels per day ("mbpd") and is underpinned by five to
ten-year contracts with substantial take-or-pay commitments from
approximately 40 customers.
Pembina continues work on its
Phase III pipeline expansions ("Phase III Expansion"), which
includes bringing into service earlier this year a 70 km 16-inch
pipeline segment from Kakwa to Simonette. To date, the Company has
completed 20 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. The Alberta Energy Regulator ("AER") hearing for the
project commenced on October 26, 2015
and Pembina expects to receive an
AER written decision in the first quarter of 2016. Subject to
regulatory and environmental approvals, the Company anticipates an
in service date of mid-2017.
As part of the Company's plans to expand its gathering presence
in Alberta and British Columbia ("B.C."), Pembina is continuing work on its pipeline
lateral in the Karr area of Alberta (the "Karr Lateral") which will
service production from the Montney resource play and will access the
Company's Phase III Expansion. All approvals have been received and
construction has now commenced with the project tracking on budget
and on schedule for an expected in-service date of early 2016.
Pembina is continuing to
progress its pipeline infrastructure in northeast B.C. (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. The NEBC Expansion is expected to be in service in late 2017,
subject to regulatory and environmental approvals.
Pembina continues to progress
its expansion of the Vantage pipeline system (the "Vantage
Expansion") for an estimated capital cost of $85 million. 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. The pipeline portion of the
project has now received all regulatory and environmental
approvals, with remaining approvals for the pump stations expected
to be received by the end of the year. To date, the project is
tracking on schedule and on budget with all long lead materials
ordered and construction of the pipeline underway with 40 percent
of the overall project complete. Pembina expects the Vantage Expansion to be
complete in early 2016; however, due to a third-party delay, will
not be placed into service until the third quarter of 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 added
incremental volumes and has now secured 772 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. For example, adding pump stations to the
Phase III Expansion could increase capacity from 420 mbpd to 680
mbpd in the Fox Creek to
Edmonton corridor for an aggregate
capacity on the Peace and Northern systems of 1,200 mbpd.
Gas Services
During the third quarter of 2015, Pembina continued to advance its growth
projects as well as place new assets into service within the Gas
Services business.
In late August, Pembina
commissioned its Saturn II facility ("Saturn II") and its
Saskatchewan Ethane Extraction Plant ("SEEP"). Saturn II was placed
into service ahead of schedule and under budget and SEEP was placed
into service on-time and also under budget. With the Saturn II and
SEEP facilities in service, Pembina's Gas Services' capacity has increased
26 percent from 1,007 millions of cubic feet per day ("MMcf/d") to
1,267 MMcf/d.
Plant construction of Pembina's
100 MMcf/d (gross) expansion of its Resthaven Facility (the
"Resthaven Expansion") is ongoing and is approximately 40 percent
complete. In September, Pembina
placed the cost-of-service, gathering pipeline associated with the
Resthaven Expansion into service. In advance of the Resthaven
Expansion being placed into service, the newly commissioned
pipeline is able to provide additional gas volumes for the
Company's existing Resthaven facility. Pembina expects 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 continues to advance its 100 MMcf/d shallow cut
facility (the "Musreau III Facility"), which is being built
adjacent to Pembina's existing
Musreau I and Musreau II facilities. Regulatory and environmental
approvals have been received, all major equipment is onsite and
plant construction is approximately 65 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 billions of cubic feet
per day (net to Pembina),
including deep cut extraction capacity of 900 MMcf/d (net to
Pembina assuming no partner
participation). 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 Redwater fractionator, a 73 mbpd ethane-plus
fractionator at the Company's Redwater site ("RFS II"). All major equipment
has been set on site, module fabrication is finished and site
construction is currently over 90 percent complete. Pembina anticipates RFS II will be
substantially complete by the end of 2015 and commissioned 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 received regulatory and environmental approval and all long
lead items have been ordered and construction of piling and
foundations is approximately 40 percent complete. 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.
Pembina is progressing work to
provide terminalling services for the North West Redwater
Partnership ("North West") with respect to North West's planned
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 RFS III, 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. Engineering
and procurement is underway with substantially all long lead items
ordered. 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 ongoing. 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 the Edmonton North Terminal ("ENT"), Pembina has now completed construction of
three above ground storage tanks, which have a total working
capacity of 550 thousands of barrels, and is currently progressing
electrical and integration work. The project is tracking on
schedule to be in service in mid-2016.
At its NGL 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, procurement of
long lead items and ground work on the brine pond are now complete
with construction underway for the propane truck and rail racks.
The propane truck rack is expected to be in service in late 2015
while the remainder of the project is expected to be in service in
early 2016.
Pembina remains committed to
providing market access solutions for its customers by developing a
North American west coast propane export terminal. Pembina has a team in place and is currently
evaluating multiple potential sites, including Pembina's previously announced location at
Portland, Oregon.
Oil Sands & Heavy Oil
In June 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. Front-end engineering and design work
is now complete and all long lead equipment has been ordered.
Subject to regulatory and environmental approvals, the Horizon
Expansion is expected to be in service mid-2016.
Financing Activity
On February 2, 2015, Pembina closed an offering of $600 million of senior unsecured medium-term
notes. The offering was conducted in two tranches: gross proceeds
of $450 million in senior unsecured
medium-term notes, Series 5, having a fixed coupon of 3.54 percent
per annum, paid semi-annually, and which mature on February 3, 2025 and gross proceeds of
$150 million through the re-opening
of Pembina's Series 3, 4.75
percent medium-term notes, which mature April 30, 2043.
On April 10, 2015, Pembina closed a $225
million offering of nine 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 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.
Third Quarter 2015 Conference Call & Webcast
Pembina will host a conference
call on Friday, November 6, 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 third 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 November 13, 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 45410768.
A live webcast of the conference call can be accessed on
Pembina's website at pembina.com
under Investor Centre, Presentation & Events, or by entering:
http://event.on24.com/r.htm?e=908222&s=1&k=085744920B4E57CB536BBE07D54C931A
in your web browser. Shortly after the call, an audio archive will
be posted on the website for a minimum of 90 days.
2016 Investor Day
Pembina will hold an Investor
Day on Monday, April 11, 2016 at the
One King West Hotel in Toronto,
Ontario.
For parties interested in attending the event, please email
investor-relations@pembina.com to request an invitation.
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", "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; 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
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; and the impact of the current
commodity price environment on Pembina.
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; 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.
For further information: Investor Relations, Scott Burrows, Vice President, Finance &
Chief Financial Officer, (403) 231-3156, 1-855-880-7404, e-mail:
investor-relations@pembina.com, www.pembina.com