(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 Alberta, Nov. 30, 2017 /PRNewswire/ -- Pembina Pipeline
Corporation ("Pembina" or the "Company") (TSX: PPL; NYSE: PBA)
announced that its Board of Directors has approved approximately
$400 million of new capital projects, as well as a capital
program of approximately $1.3 billion
for 2018.
"2017 has been a transitional year in Pembina's history," said
Mick Dilger, Pembina's President and
Chief Executive Officer. "Since the beginning of 2015, we have
placed approximately $8 billion of predominately contracted
assets into service, marking the culmination of an unprecedented
growth strategy implemented in 2013. In addition, we also completed
the largest corporate acquisition of our company's history during
the year. We expect to continue this positive momentum into 2018,
as we remain focused on completing the remaining growth portfolio
and advancing our strategy of creating new market access for our
customers. With increased size and scale, greater diversification
and a broader service offering, the future is bright for Pembina.
We are also excited to continue pursuing the expanded growth
opportunities available to us in support of value creation for our
shareholders."
New Capital Projects
Prince Rupert LPG Export Terminal
Pembina is pleased to announce that its Board of Directors has
approved the development of the Company's previously proposed
liquefied petroleum gas ("LPG") export terminal (the "Prince Rupert
Terminal" or the "Project").
The Prince Rupert Terminal will be located on Watson Island,
British Columbia on lands leased
from a wholly-owned subsidiary of the City of Prince Rupert (the "City"). Through
site assessments and engagement with key stakeholders, the Company
has confirmed Watson Island as the ideal location for the Project
to be developed and has executed definitive commercial agreements
with the City.
"Since our initial announcement of potentially developing the
Prince Rupert Terminal, we've worked diligently with municipal and
other stakeholders and are now able to move forward with our final
investment decision," said Stuart
Taylor, Pembina's Senior Vice President, NGL & Natural
Gas Facilities.
The Prince Rupert Terminal is expected to have a permitted
capacity of approximately 25,000 barrels per day of LPG and is
expected to be in service mid-2020, subject to Pembina receiving
necessary regulatory and environmental approvals.
"We are very excited to progress the Prince Rupert Terminal and
continue working with the local communities, stakeholders, First
Nations and governments in the area," continued Mr. Taylor. "This
Project will provide significant economic benefits to the
Prince Rupert area including 150
to 200 construction positions and, once operational, it will create
between 20 to 30 full-time positions in addition to generating
annual property tax revenue and lease payments."
"We are thrilled to work with Pembina to finally get Watson
Island back in business," commented Lee
Brain, the Mayor of Prince
Rupert. "What was once the story of economic downfall and
hardship is now the story of prosperity and renewal. Getting Watson
Island back on the tax roll has been the key priority of this
council, and receiving this final investment decision from Pembina
will provide us with additional lease and tax revenues to support
community services and infrastructure."
Pembina has completed a class three estimate for the Project and
due to minor scope changes, dock maintenance and additional site
preparation the expected capital cost has been adjusted to
$250 to $270 million. LPG supply for
the Prince Rupert Terminal will primarily be sourced from Pembina's
Redwater fractionation complex.
"Advancing the Prince Rupert Terminal, alongside continuing to
progress our proposed integrated propylene and polypropylene
production facility, is a meaningful step towards our strategy of
providing new market solutions for our customers – helping to add
incremental value to western Canadian hydrocarbons and ultimately
increasing producer netbacks," concluded Mr. Taylor.
North Central Liquids Hub
In addition to the Prince Rupert Terminal, the Board of
Directors have sanctioned the development of the North Central
Liquids Hub ("North Central Liquids Hub"), which supports
operations for the Cutbank Ridge Partnership ("CRP") within the
world class Montney formation.
This project is being advanced through Pembina's midstream limited
partnership with Kohlberg Kravis Roberts & Co. L.P. ("Midstream
Partnership"), in which the Company owns approximately a 46 percent
interest. The estimated capital cost for this project is
$320 million ($150 million net to Pembina) and is expected to
be placed into service in late 2018. The North Central Liquids Hub
will provide separation and stabilization of increased condensate
volumes from CRP to support the recently in-service Sunrise and
Saturn gas plants. The North Central Liquids Hub can also be
further expanded to serve the future requirements of the CRP as
well as other potential third-party producers. Additionally, the
North Centrals Liquids Hub will be connected into Pembina's
pipeline systems.
2018 Capital Expenditures
The Company expects to fund the approximately $1.3 billion 2018 capital program through
internally generated cash flow and debt financing. Pembina's
2018 capital spending plan is expected to be allocated as
follows:
|
|
|
($
millions)
|
|
2018
Budget
|
Conventional
Pipelines
|
|
$540
|
Midstream
|
|
$260
|
Gas
Services
|
|
$175
|
Joint Venture Working
Interest Capital
|
|
$170
|
Oil Sands & Heavy
Oil
|
|
$20
|
Proposed Value Chain
Extension Projects(1)
|
|
$170
|
Other
|
|
$10
|
Total Capital
Expenditures
|
|
$1,345
|
Less: Joint
Venture Working Interest Capital
|
|
($170)
|
Add: Equity
Contributions to Joint Venture Partnerships
|
|
$145
|
Total Capital
Expenditures and Equity Contributions
|
|
$1,320
|
(1)
|
Capital budget
shown in Canadian dollars based on an forecasted average U.S.
foreign exchange rate of 0.78.
|
Conventional Pipelines
Pembina plans to spend approximately $540
million in its Conventional Pipelines business next year, 40
percent of its overall 2018 capital spending plan.
Pembina will allocate the majority of capital spending within
its Conventional Pipelines business to completing the Phase IV and
Phase V expansions of the Company's Peace and Northern pipeline
systems. The Company expects to bring both projects into service in
late 2018.
The 2018 capital budget for the Conventional Pipelines segment
includes funds allocated to the right-of-way cleanup costs
associated with Pembina's Phase III Expansion, which was placed
into service at the end of the second quarter of 2017, as well as
the Company's northeast British
Columbia pipeline expansion and its Altares lateral, both of
which were placed into service in October
2017. The associated cleanup costs that are budgeted to be
spent in 2018 for the respective projects have been included in the
previously announced final in-service capital costs.
Additional capital will be spent in the Conventional Pipelines
segment on various improvements and upgrades to the communications,
pipeline system monitoring and electrical and integrity programs
designed to continue to support the safe and reliable operations of
the growing business.
Midstream
In 2018, Pembina expects to spend $260
million, or 19 percent of the overall budget, in its
Midstream business.
In Pembina's NGL Midstream business, the Company expects to
spend $235 million in 2018, of which
the largest single component will be approximately $80 million related to the initial development
and construction of the Prince Rupert Terminal as well as
approximately $30 million directed to
the completion of the Burstall Storage Cavern. Additional spending
within NGL Midstream will be directed towards progressing the
Redwater cogeneration facility,
completion of the Redwater rail
yard expansion and liquids handling facilities, and other minor
projects across the Redwater West and Empress East facilities.
In Pembina's Crude Oil Midstream business, Pembina expects to
spend approximately $25 million in
2018, primarily focused on adding additional connectivity at
Pembina's Edmonton Terminal and Canadian Diluent Hub.
Gas Services
Pembina plans to allocate approximately $175 million, or 13 percent, of its 2018 capital
budget to new facilities within the Gas Services business. This
includes the development and construction of a 100 million cubic
feet per day ("MMcf/d") Duvernay II gas plant and additional
infrastructure located at the Company's Duvernay Complex. Pembina
anticipates bringing Duvernay II and the additional infrastructure
into service mid to late 2019, subject to regulatory and
environmental approval.
Oil Sands and Heavy Oil
Pembina expects to spend approximately $20 million, or approximately 2 percent, of its
2018 capital budget to the Oil Sands and Heavy Oil business, with
all capital being directed towards system enhancements which will
be added into the rate base of the associated pipeline system.
Joint Venture Working Interest Capital
Pembina plans to allocate approximately $170 million (net
to Pembina), or approximately 13 percent of its 2018
capital budget to new facilities within the Company's joint venture
partnerships. The majority of the spending will be directed to
capital projects within the Midstream Partnership, including the
completion of the second 200 MMcf/d gas processing train at Saturn,
which is expected to be placed into service in the first half of
2018 and the construction of the North Central Liquids Hub. Of the
$170 million expected capital, Pembina plans to contribute
$145 million to the joint venture
partnerships while the remaining capital will be funded by
liquidity available within the joint venture entities.
Proposed value chain extension projects
Pembina is expecting to allocate $35
million (net to Pembina) to complete the front end
engineering design ("FEED") for a proposed combined propane
dehydrogenation ("PDH") and polypropylene ("PP") production
facility (the "PDH/PP Facility"). Pembina and Kuwait's Petrochemical Industries Company
K.S.C. are 50/50 joint venture partners of Canada Kuwait
Petrochemical Company ("CKPC"). CKPC expects to complete the FEED
process by late 2018.
The Company plans to spend approximately $135 million towards progressing its proposed
Jordan Cove LNG project ("Jordan
Cove"). Jordan Cove
officially filed its application with the Federal Energy Regulatory
Commission in September 2017 with the
Company expecting an outcome during the second half of 2018.
Pembina continues to focus on securing binding agreements for the
long-term sale of natural gas liquefaction capacity at the export
terminal, as well as securing the regulatory and environmental
permits for both the terminal and the associated pipeline.
Commercial Update
On November 1, 2017, Pembina
re-contracted approximately 220 MMcf/d at its Cutbank Complex with
an existing anchor tenant under a new long-term, take-or-pay
processing agreement. The new contract provides the Company with
long-term revenue certainty and utilizes a large portion of the
existing shallow and deep cut contract capacities which were due to
expire. The agreement also demonstrates Pembina's commitment of
working with its customers to provide low cost, safe and reliable
services.
Closing Remarks
"We expect our 2018 results to benefit from the diligent work of
our teams – which safely completed a robust capital program during
the year – as well as the further integration of the acquired
Veresen assets," said Mr. Scott
Burrows, Pembina's Senior Vice President and Chief Financial
Officer. "2018 will be an active year for us, as we focus on
realizing the expected Veresen acquisition synergies, completing
the remaining assets under construction as well as progressing our
newly announced capital projects. Combined, these efforts are
expected to deliver our target 2018 adjusted EBITDA of $2.55 to $2.75 billion of which greater than 85
percent is expected to be generated from fee-based assets. As a
leading North American infrastructure company, we are better
positioned to pursue large-scale growth opportunities and are
excited to continue delivering top tier performance and realizing
our expected transformational results," concluded Mr. Burrows.
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
natural gas and 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 Statements & Information
This document contains certain forward-looking statements and
information (collectively, "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
"plans", "expects", "would", "proposed", "estimate", "future",
"will", "anticipates", "develop", "continue", and similar
expressions suggesting future events or future performance.
In particular, this document contains forward-looking
statements, including certain financial outlook, 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 in relation to Pembina's 2018 capital spending
plan for each of its business units; anticipated adjusted EBITDA
and financial performance resulting from Pembina's capital
expenditures; 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; expectation around the receipt and timing of
regulatory approvals; and expectations regarding domestic and
international supply and demand factors and pricing for oil,
natural gas and NGLs. These forward-looking statements and
information are being made by Pembina based on certain assumptions
that Pembina has made in respect thereof as at the date of this
document including those discussed below.
With respect to forward-looking statements contained in this
document, Pembina has made assumptions 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, and domestic and
international supply and demand levels; the success of Pembina's
operations; the ability of Pembina to successfully integrate the
acquired business and assets; 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; in respect of
current developments, expansions, planned capital expenditures,
completion dates and capacity expectations: that third parties will
provide any necessary support, 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, and 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. 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
continuation of completion of third-party projects; 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; unforeseen
events preventing the completion of growth projects or rendering
them uneconomical to Pembina; reduced amounts of cash available for
dividends to shareholders; increased construction costs, or
construction delays, on Pembina's expansion and growth projects;
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. Readers are
cautioned that this list of risk factors should not be construed as
exhaustive.
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. Readers are cautioned that management of
Pembina approved the financial outlook 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"), which is a non-GAAP measure. 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 investor 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 should not, therefore, be
considered in isolation or used in substitute for measures of
performance prepared in accordance with IFRS. Other issuers may
calculate this non-GAAP measure differently. Investors should be
cautioned that this measure 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 financial reports,
which are available on SEDAR at www.sedar.com and at
www.pembina.com.
For further information: Investor Relations, Cameron Goldade, (403) 231-3156, 1-855-880-7404,
e-mail: investor-relations@pembina.com, www.pembina.com