(All financial figures are approximate and in Canadian
dollars unless otherwise noted. This news release refers to
adjusted earnings before interest, taxes, depreciation and
amortization ("adjusted EBITDA") which is a financial measure that
is not defined by Generally Accepted Accounting Principles
("GAAP"). For more information about adjusted EBITDA, see "Non-GAAP
Measures" herein.)
CALGARY, April 4, 2017 /PRNewswire/ -- Pembina
Pipeline Corporation ("Pembina" or the "Company") (TSX: PPL; NYSE:
PBA) announced today that its Board of Directors approved a 6.25
percent increase in its monthly common share dividend rate (from
$0.16 per common share to
$0.17 per common share), the
Company's sixth consecutive annual increase. Pembina also announced
a $325 million expansion of its
pipeline infrastructure between Lator, Alberta and Namao,
Alberta, related to its Phase III Expansion project and
provided an updated outlook for 2018 adjusted EBITDA and cost
savings on capital projects.
"We are very excited about the dividend increase and these new
pipeline expansion projects, and share our updated outlook for
2018," said Mick Dilger, Pembina's
President and Chief Executive Officer. "These developments build on
our already strong start to 2017. We are encouraged by the level of
volumes and business development activity we've seen in the early
months of the year and our confidence in the outlook for Pembina
continues to grow with the near-term completion of large-scale
capital projects."
Phase IV & V Peace Pipeline Expansion
Pembina's 420,000 barrels per day ("bpd") Phase III Expansion is
nearing completion and continues to trend slightly under budget,
with an expected on-time in-service date of July, 2017. Given
ongoing customer demand for capacity, Pembina is proceeding with
two projects for a total estimated capital cost of $325 million: (i) the Fox Creek and Namao Pump
Stations ("Phase IV Expansion"), which is comprised of two pump
stations on the newly installed 24" pipeline from Fox Creek to Namao,
Alberta and (ii) the Lator to Fox Creek Expansion ("Phase V
Expansion"), which is a new, approximately 95 kilometre, 20"
pipeline from Lator to Fox Creek,
Alberta. Both of these projects are underpinned by
long-term, take-or-pay contracts.
- The Phase IV Expansion is expected to increase capacity between
Fox Creek and Namao by approximately 180,000 bpd. The
estimated capital costs for the two pump stations is approximately
$75 million. Subject to regulatory
and environmental approvals, Pembina expects to place this
expansion into service in late 2018. Pembina has the ability to
further expand capacity between Fox
Creek and Namao by adding
additional pump stations.
- The Phase V Expansion is aimed at addressing the current
capacity constraints between Lator and Fox Creek and supporting future growth in the
prolific Montney and Deep Basin
resource plays. This $250 million
project is expected to provide approximately 260,000 bpd of
additional capacity in this corridor and access to Pembina's
downstream capacity at Fox Creek.
Pembina has received regulatory and environmental approvals for the
Phase V Expansion and clearing of the right-of-way is approximately
50 percent complete. The Company expects to bring this pipeline
into service in late 2018.
Updated Outlook
In late 2015, Pembina's secured capital program was comprised of
$5.3 billion of new assets which were
scheduled to come into service through 2016 and 2017. Based on this
capital program, the Company provided EBITDA guidance indicating
that, once in-service, these projects could generate an incremental
run-rate annual EBITDA ranging from $600
million to $950 million in 2018, with the upper end of the
range depending on utilization above take-or-pay levels and
commodity prices. At the time of these disclosures, the outlook for
commodity prices remained uncertain, as did levels of activity in
the Western Canadian Sedimentary Basin. Despite this uncertainty,
Pembina also discussed its goal of achieving capital cost savings,
which it estimated at the end of 2015 to be approximately
$225 million on the overall capital
program. With the majority of the remaining projects substantially
complete and nearing on-time in-service by mid-year, Pembina is
revising its estimated capital cost savings and scope optimizations
to approximately $275 million.
Based on the current commodity price environment and volume
estimates, Pembina expects 2018 adjusted EBITDA to range from
$1.8 billion to $1.9 billion. This
range is consistent with Pembina's prior commitment of delivering
$600 million to $950 million of
incremental fee-for-service EBITDA from the secured capital
projects which enter service in 2016 and 2017, in addition to the
Kakwa River acquisition in 2016 and higher volumes/pricing across
the base business. Based on the above, Pembina expects to deliver
on its projection of nearly doubling 2015 adjusted EBITDA by
2018.
"By mid-year, we expect to bring into service the remaining
projects that made up the largest capital program in Pembina's
history," said Mr. Dilger. "Overall, we have successfully brought
these assets into service on-time, on-budget, and most importantly,
safely and I believe these remaining projects will be no different.
I'm very proud of what our organization has been able to achieve
over the past several years and am pleased to share our outlook for
2018 and our expected consolidated capital cost savings."
Dividend Increase & Declaration
With the dividend increase announced today, on April 3, 2017, Pembina's Board of Directors has
declared a monthly dividend of $0.17
payable, subject to applicable law, on May
15, 2017 to shareholders of record on April 25th, 2017. For shareholders receiving
their common share dividends in U.S. funds, the April 2017 cash dividend is expected to be
approximately U.S. $0.1278 per share
(before deduction of any applicable Canadian withholding tax) based
on a currency exchange rate of 0.7519. The actual U.S. dollar
dividend will depend on the Canadian/U.S. dollar exchange rate on
the payment date and will be subject to applicable withholding
taxes.
"With anticipated cash flows from the $4
billion of major projects we expect to bring into service in
mid-2017, along with growing activity in the basin as evidenced by
the pipeline expansions we also announced today and the numerous
additional growth opportunities under development, we are confident
in our solid foundation for longer-term dividend growth potential
and our ability to grow shareholder value over the coming years,"
said Scott Burrows, Pembina's Vice
President Finance and Chief Financial Officer.
This dividend is designated an "eligible dividend" for Canadian
income tax purposes. For non-resident shareholders, Pembina's
common share dividends should be considered "qualified dividends"
and are subject to Canadian withholding tax.
Pembina's Board of Directors also declared quarterly dividends
for the Company's preferred shares, Series 1, 3, 5, 7, 9, 11 and
13. All preferred share dividends are payable on June 1, 2017 to shareholders of record on
April 28, 2017.
Series
|
Dividend
Amount
|
Preferred Shares,
Series 1 (PPL.PR.A)
|
$0.265625
|
Preferred Shares,
Series 3 (PPL.PR.C)
|
$0.29375
|
Preferred Shares,
Series 5 (PPL.PR.E)
|
$0.3125
|
Preferred Shares,
Series 7 (PPL.PR.G)
|
$0.28125
|
Preferred Shares,
Series 9 (PPL.PR.I)
|
$0.296875
|
Preferred Shares,
Series 11 (PPL.PR.K)
|
$0.359375
|
Preferred Shares,
Series 13 (PPL.PR.M)
|
$0.359375
|
These dividends are designated "eligible dividends" for Canadian
income tax purposes. For non-resident shareholders, Pembina's
common share dividends should be considered "qualified dividends"
and may be subject to Canadian withholding tax.
Confirmation of Record and Payment Date Policy
Pembina pays cash dividends on its common shares in Canadian
dollars on a monthly basis to shareholders of record on the 25th
calendar day of each month (except for the December record date,
which is December 31st), if, as and
when determined by the Board of Directors. Should the record date
fall on a weekend or a statutory holiday, the effective record date
will be the previous business day. The dividend payment date is the
15th of the month following the record date. Should the payment
date fall on a weekend or on a holiday the business day prior to
the weekend or holiday becomes the payment date. Dividends on the
preferred shares are payable on the 1st day of March, June,
September and December in each year, if, as and when declared by
the Board of Directors. Should the record date or payment date fall
on a weekend or holiday, the business day prior to the weekend or
holiday becomes the record or payment date, as applicable.
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 majority of the
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. Pembina's preferred shares also trade on the
Toronto stock exchange. For more
information, visit www.pembina.com.
Forward-Looking Information and Statements
This news release contains certain forward-looking
information and statements (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 this news release, such
forward-looking information and statements can be identified by
terminology such as "to be", "expects", "potential", and similar
expressions.
In particular, this news release contains forward-looking
statements, including certain financial outlook, relating to:
future dividends which may be declared on Pembina's common shares,
the dividend payment and the tax treatment thereof; anticipated
adjusted EBITDA, capital cost savings and financial performance
resulting from Pembina's capital expenditures; 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 in relation to Pembina's 2016 capital spending plan for
each of its business units; the impact of recent acquisitions;
expectations around continuing producer activity and
development; the ongoing utilization and expansions of and
additions to Pembina's business and asset base, growth and growth
potential; expectations regarding future demand for transportation
services; expectations regarding synergies and integration of
growth and development projects with Pembina's existing business
and asset base; expectations regarding domestic and international
supply and demand factors and pricing for oil, natural gas and
NGLs . These forward-looking statements are being made by
Pembina based on certain assumptions that Pembina has made in
respect thereof as at the date of this news release, regarding,
among other things: the ability of Pembina and any required
third parties to effectively engage with stakeholders; oil
and gas industry exploration and development activity levels; the
success of Pembina's operations and growth projects; prevailing
commodity prices, margins, volumes and exchange rates; that
Pembina's future results of operations will be consistent with past
performance and management expectations in relation thereto; the
continued availability of capital at attractive prices to fund
future capital requirements relating to existing assets and
projects, including but not limited to future capital expenditures
relating to expansion, upgrades and maintenance shutdowns; the
success of growth projects; future operating 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 to material agreements will
continue to perform in a timely manner; that there are no
unforeseen events preventing the performance of contracts; and that
there are no unforeseen material construction, integrity or other
costs related to current growth projects or current
operations.
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. Readers are cautioned that events or
circumstances could cause results to differ materially from those
predicted, forecasted or projected. By their nature,
forward-looking statements involve numerous assumptions, known and
unknown risks and uncertainties that contribute to the possibility
that the predictions, forecasts, projections and other
forward-looking statements will not occur, which may cause actual
performance and financial results in future periods to differ
materially from any projections of future performance or results
expressed or implied by such forward-looking statements and
information. These known and unknown risks and uncertainties,
include, but are not limited to: the regulatory environment
and decisions; the ability of Pembina to raise sufficient
capital (or to raise sufficient capital on favourable terms) to
fund future expansions and growth projects and satisfy future
commitments; the failure to realize anticipated benefits of growth
projects and acquisitions following completion due to integration
issues or otherwise; failure to negotiate and conclude any required
commercial agreements or failure to obtain project sanctioning;
increased construction costs, or construction delays, on Pembina's
expansion and growth projects; labour and material shortages;
non-performance of agreements in accordance with their terms;
the impact of competitive entities and pricing; reliance on key
industry partners, alliances and agreements; the strength and
operations of the oil and natural gas production industry and
related commodity prices; the continuation or completion of
third-party projects; actions by governmental or regulatory
authorities including changes in tax laws and treatment, changes in
royalty rates or increased environmental regulation; adverse
general economic and market conditions in Canada, North
America and elsewhere; fluctuations in operating results;
construction delays; labour and material shortages; and certain
other risks detailed from time to time in Pembina's public
disclosure documents including, among other things, those detailed
under the heading "Risk Factors" in Pembina's management's
discussion and analysis and annual information form for the year
ended December 31, 2016, which can be
found at www.sedar.com.
The forward-looking statements are expressly qualified by the
above statements, and 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. Readers are
cautioned that management of Pembina approved the financial
outlooks contained herein as of the date of this press
release. The purpose of the financial outlook contained
herein is to give the reader an indication of the value to Pembina
of the planned capital projects. Readers should be aware that
the information contained in the financial outlook contained herein
may not be appropriate for other purposes.
Non-GAAP Measures In this news release, Pembina
has used the term adjusted earnings before interest, taxes,
depreciation and amortization ("adjusted EBITDA"). Adjusted EBITDA
is a non-GAAP measure and is calculated as earnings for the year
plus share of profit (loss) from equity accounted investees (before
tax, depreciation and amortization) plus net finance costs, income
taxes, depreciation and amortization (included in operations and
general and administrative expense) and unrealized gains or losses
on commodity-related derivative financial instruments. The
exclusion of unrealized gains or losses on commodity-related
derivative financial instruments eliminates the non-cash impact of
such gains or losses. Adjusted EBITDA also includes adjustments for
loss (gain) on disposal of assets, transaction costs incurred in
respect of acquisitions, impairment charges or reversals and
write-downs in respect of goodwill, intangible assets and property
plant and equipment, and non-cash provisions. These additional
adjustments are made to exclude various non-cash and other items
that are not reflective of ongoing operations. Management believes
that adjusted EBITDA provides useful information to investors as it
is an important indicator of the issuer's ability to generate
liquidity through cash flow from operating activities, and is also
used by investors and analysts for assessing financial performance
and for the purpose of valuing an issuer, including calculating
financial and leverage ratios. Adjusted EBITDA does not have any
standardized meaning under International Financial Reporting
Standards ("IFRS") and is therefore unlikely to be comparable to
similar measures presented by other companies. Adjusted EBITDA
should not, therefore, be considered in isolation or used in
substitute for measures of performance such as revenue, earnings,
cash flow from operating activities or other measures prepared in
accordance with IFRS. Other issuers may calculate this non-GAAP
measure differently. For additional information regarding non-GAAP
measures, including reconciliations to measures recognized by GAAP,
please refer to Pembina's financial reports, which are available on
SEDAR at www.sedar.com and at
www.pembina.com.
For further information, Investor Relations, Hayley McKenzie / Chelsy
Hoy, (403) 231-3156, 1-855-880-7404, e-mail:
investor-relations@pembina.com, www.pembina.com