$1.5 billion of new assets
into service so far this year, including recently completed
strategic acquisition; record first half results
All financial figures are in Canadian dollars unless noted
otherwise.
CALGARY, Aug. 4, 2016 /CNW/ - Pembina Pipeline
Corporation ("Pembina" or the "Company") (TSX: PPL; NYSE: PBA)
announced today its financial and operating results for the second
quarter of 2016.
Financial Overview
|
|
|
|
3 Months Ended
|
6 Months Ended
|
|
June 30
|
June 30
|
($ millions, except where
noted)
|
(unaudited)
|
(unaudited)
|
|
2016
|
2015
|
2016
|
2015
|
Conventional Pipelines revenue volumes
(mbpd)(1)(2)
|
648
|
603
|
659
|
618
|
Oil Sands & Heavy Oil contracted capacity
(mbpd)(1)
|
880
|
880
|
880
|
880
|
Gas Services average revenue volumes (mboe/d)
net to Pembina(2)(3)
|
133
|
108
|
123
|
111
|
Midstream Natural Gas Liquids ("NGL") sales volumes
(mbpd)(1)
|
132
|
104
|
136
|
117
|
Total volume
(mboe/d)
|
1,793
|
1,695
|
1,798
|
1,726
|
Revenue
|
1,027
|
1,213
|
2,044
|
2,367
|
Net
revenue(4)
|
429
|
351
|
823
|
726
|
Operating
margin(4)
|
327
|
259
|
642
|
543
|
Gross profit
|
248
|
200
|
485
|
428
|
Earnings
|
113
|
43
|
215
|
163
|
Earnings per common share – basic and diluted
(dollars)
|
0.25
|
0.09
|
0.48
|
0.41
|
Adjusted
EBITDA(4)
|
291
|
228
|
560
|
469
|
Cash flow from operating
activities
|
273
|
209
|
544
|
329
|
Cash flow from operating activities per common share
– basic
(dollars)(4)
|
0.70
|
0.62
|
1.42
|
0.97
|
Adjusted cash flow from operating
activities(4)
|
235
|
176
|
444
|
389
|
Adjusted cash flow from operating activities per
common share – basic
(dollars)(4)
|
0.60
|
0.51
|
1.16
|
1.14
|
Common share dividends
declared
|
187
|
154
|
359
|
302
|
Preferred share dividends
declared
|
16
|
11
|
30
|
21
|
Dividends per common share
(dollars)
|
0.48
|
0.45
|
0.94
|
0.89
|
Capital expenditures
|
380
|
387
|
755
|
885
|
Acquisition
|
566
|
|
566
|
|
|
|
|
|
3 Months Ended
|
6 Months Ended
|
|
June 30
|
June 30
|
|
(unaudited)
|
(unaudited)
|
|
2016
|
2015
|
2016
|
2015
|
|
|
Operating
|
|
Operating
|
|
Operating
|
|
Operating
|
($ millions)
|
Revenue
|
Margin(4)
|
Revenue
|
Margin(4)
|
Revenue
|
Margin(4)
|
Revenue
|
Margin(4)
|
Conventional
Pipelines
|
177
|
127
|
152
|
102
|
352
|
255
|
306
|
200
|
Oil Sands & Heavy
Oil
|
47
|
34
|
50
|
35
|
99
|
67
|
105
|
70
|
Gas Services
|
64
|
46
|
49
|
35
|
117
|
83
|
103
|
72
|
Midstream(5)
|
142
|
118
|
99
|
86
|
256
|
232
|
212
|
199
|
Corporate
|
(1)
|
2
|
1
|
1
|
(1)
|
5
|
|
2
|
Total
|
429
|
327
|
351
|
259
|
823
|
642
|
726
|
543
|
(1)
|
mbpd is thousands of
barrels per day.
|
(2)
|
Revenue volumes are equal
to contracted plus interruptible volumes.
|
(3)
|
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)
|
Refer to "Non-GAAP
Measures."
|
(5)
|
Net revenue (revenue less
cost of goods sold including product purchases). Refer to "Non-GAAP
Measures".
|
Highlights
- Placed over $1 billion in new
assets into service during the first six months of the year,
including RFS II, Musreau III and the Resthaven Expansion (as
defined below);
- Closed a $566 million (including
closing adjustments) acquisition of the Kakwa River Facility, a 250
MMcf/d gas processing plant and associated midstream infrastructure
(see below);
- Gas Services achieved record quarterly and year-to-date revenue
volumes with an average of 795 MMcf/d and 735 MMcf/d, a 23 percent
and 11 percent increase, respectively, over the comparable periods
in 2015, driven by newly in-service assets;
- Generated second quarter and year-to-date earnings of
$113 million and $215 million, a 163 percent and 32 percent
increase, respectively, over the same periods of the prior
year;
- Realized Adjusted EBITDA of $291
million in the second quarter and $560 million year-to-date, 28 percent and 19
percent higher than the second quarter and first half of 2015;
- Cash flow from operating activities increased by 31 percent and
65 percent to $273 million and
$544 million while adjusted cash flow
from operating activities increased by 33 percent and 14 percent to
$235 million and $444 million compared to the second quarter and
first half of 2015;
- On a per share (basic) basis during the three and six months
ended June 30, 2016, cash flow from
operating activities increased 13 percent and 46 percent
respectively and adjusted cash flow from operating activities
increased 18 percent and 2 percent respectively compared to the
same periods of the prior year;
- Received approval from the Alberta Energy Regulator in
April 2016 and began construction on
two 270 kilometre, 24 and 16 inch pipelines between Fox Creek and Namao,
Alberta, as part of a series of projects that form the
Company's Phase III Pipeline Expansion; and
- Raised $250 million of gross
proceeds through the issuance of Series 13 preferred shares.
"During the first half of the year, we continued our strong
momentum of executing our growth plans, bringing just over
$1 billion of assets into service,
excluding our recent acquisition, while adding new assets and
projects to our portfolio," said Mick
Dilger, Pembina's President and Chief Executive Officer.
"Not only did we complete an acquisition of new gas services
infrastructure, we strengthened our foothold in a core area,
reached a key regulatory milestone on our largest project, operated
safely and reliably, and set the stage for growth beyond 2018. With
our committed growth projects, we are on track to deliver
significant cash flow per share growth through 2018 and have made
meaningful strides to advance longer-term development
opportunities."
New Developments in 2016 and Growth Projects Update
- Entered into agreements to construct infrastructure relating to
the Company's previously announced 100 MMcf/d (gross) shallow cut
gas plant, Duvernay I, which is now fully contracted. The
infrastructure includes condensate, gas and water field handling, a
gas gathering trunk line and a fuel line and is expected to cost
$130 million;
- Increased total processing capacity under Pembina's Gas
Services business to over 1.7 billion cubic feet per day, making
Pembina one of the largest third-party gas processors serving the
Western Canadian Sedimentary Basin through the acquisition of the
Kakwa River sour natural gas processing complex (the "Kakwa River
Facility"), which includes gas gathering pipelines, a sales gas
pipeline and future disposal wells, as well as preliminary
engineering studies, licenses and surface rights for the future
construction of a sour natural gas processing facility. The
operating assets added 200 MMcf/d of sour gas processing and 50
MMcf/d of sweet gas processing capacity in one of Pembina's core
areas;
- Entered into a joint feasibility study with the Petrochemical
Industries Company K.S.C., a subsidiary of the Kuwait Petroleum
Corporation, for the evaluation of a world-scale combined propane
dehydrogenation and polypropylene upgrading facility in
Alberta (the "PDH and PP
Facility"). The proposed PDH and PP Facility represents an
opportunity to develop new markets for propane. The parties have
advanced a detailed technical, financial and commercial study to
confirm whether the development of the PDH and PP Facility aligns
with each party's respective investment criteria;
- Commissioned the second ethane-plus fractionator at Pembina's
Redwater site ("RFS II") on
April 1, 2016. With RFS II in
service, Pembina's Redwater
fractionation capacity has more than doubled to over 146 mbpd;
- Completed and placed into service the 100 MMcf/d (gross)
expansion of Pembina's Resthaven facility (the "Resthaven
Expansion") in April 2016 on time and
under budget;
- Completed and placed into service the 100 MMcf/d shallow cut
Musreau III facility ("Musreau III") in April 2016, ahead of schedule and under
budget;
- Entered into agreements for downstream connections to multiple
third-party diluent pipelines at its planned Canadian Diluent Hub
("CDH") for an initial aggregate diluent take-away capacity in
excess of 400 mbpd, and received regulatory and environmental
approvals for CDH;
- Entered into a cost-of-service agreement to build a new
pipeline lateral in the Altares area of British Columbia ("B.C.") (the "Altares
Lateral") that will transport production from the liquids-rich
Montney resource play and will
connect into Pembina's pipeline expansion in North East B.C. for an
expected capital cost of $70 million.
Subject to environmental and regulatory approvals, the Altares
Lateral is expected to have initial capacity of 17 mbpd and an
in-service date of late 2017, slightly later than originally
announced due to a modified regulatory schedule;
- Completed 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 at its NGL storage and terminalling
facilities in Corunna,
Ontario;
- Received regulatory and environmental approval for its
terminalling services project for the North West Redwater
Partnership ("North West") with respect to North West's planned
refinery;
- Placed its pipeline lateral in the Karr area of Alberta into service in May, 2016;
- Placed one new storage cavern into service at its Redwater facility as part of the Company's
ongoing cavern development program; and
- Subsequent to quarter end, Pembina received Board approval to
proceed with the development of a co-generation facility to be
integrated with its second and third fractionators at Redwater for an estimated capital cost of
$120 million and an in-service date
of the fourth quarter of 2018, subject to regulatory and
environmental approval.
Dividends
- Declared and paid dividends of $0.16 per qualifying common share for the
applicable record dates in April, May and June 2016; and
- Declared and paid quarterly dividends per qualifying preferred
shares of: Series 1: $0.265625;
Series 3: $0.29375; Series 5:
$0.3125; Series 7: $0.28125; Series 9: $0.296875; and Series 11: $0.359375 to shareholders on record as of
April 29, 2016.
Second Quarter 2016 Conference Call & Webcast
Pembina will host a conference call on Friday, August 5, 2016 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
2016. 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 12, 2016 at
11:59 p.m. ET. To access the replay,
please dial either 416-849-0833 or 855-859-2056 and enter the
password 92807889.
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=1102323&s=1&k=86B5BF77743D6BB8EF8F433AEBA485ED
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 products derived from natural gas and hydrocarbon liquids
produced primarily 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. Pembina's integrated
assets and commercial operations along the entire hydrocarbon value
chain allow it to offer a full spectrum of midstream and marketing
services to the energy sector. Pembina is committed to working with
its community and aboriginal neighbours, while providing value for
investors in a safe, environmentally responsible manner. This
balanced approach to operating ensures the trust Pembina builds
among all of its stakeholders is sustainable over the long term.
Pembina's common shares trade on the Toronto and New
York stock exchanges under PPL and PBA, respectively. For
more information, visit www.pembina.com.
Forward-Looking Statements and Information
This document contains certain forward-looking statements and
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",
"future" 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; 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, facility and system
operations and throughput levels; and anticipated synergies between
acquired assets, assets under development and existing assets of
the Company.
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 worldwide, including changes, or prolonged
weaknesses, as applicable, in interest rates, foreign currency
exchange rates, commodity prices, supply/demand trends and overall
industry activity levels; ability to access various sources of debt
and equity capital; changes in credit ratings; counterparty credit
risk; technology and security risks; and certain other risks
detailed from time to time in Pembina's public disclosure documents
available at www.sedar.com, www.sec.gov
and through Pembina's website at
www.pembina.com.
This list of risk factors should not be construed as
exhaustive. Readers are cautioned that events or circumstances
could cause results to differ materially from those predicted,
forecasted or projected. The forward-looking statements contained
in this document speak only as of the date of this document.
Pembina does not undertake any obligation to publicly update or
revise any forward-looking statements or information contained
herein, except as required by applicable laws. The forward-looking
statements contained in this document are expressly qualified by
this cautionary statement.
Non-GAAP Measures
In this news release, Pembina has used the terms net revenue,
operating margin, adjusted earnings before interest, taxes,
depreciation and amortization (adjusted EBITDA), adjusted cash flow
from operating activities, cash flow from operating activities per
common share, adjusted cash flow from operating activities per
common share (also known as "cash flow per share") and total
enterprise value. Since Non-GAAP financial measures do not have a
standardized meaning prescribed by GAAP and are therefore unlikely
to be comparable to similar measures presented by other companies,
securities regulations require that Non-GAAP financial measures are
clearly defined, qualified and reconciled to their nearest GAAP
measure. Except as otherwise indicated, these Non-GAAP measures are
calculated and disclosed on a consistent basis from period to
period. Specific adjusting items may only be relevant in certain
periods. The intent of Non-GAAP measures is to provide additional
useful information respecting Pembina's financial and operational
performance to investors and analysts and the measures do not have
any standardized meaning under IFRS. The measures should not,
therefore, be considered in isolation or used in substitute for
measures of performance prepared in accordance with IFRS.
Other issuers may calculate the Non-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
measures, including reconciliations to measures recognized by GAAP,
please refer to Pembina's management's discussion and analysis for
the period ended June 30, 2016, which
is available online at www.sedar.com,
www.sec.gov and through Pembina's website at
www.pembina.com.
SOURCE Pembina Pipeline Corporation