Transformational year with strategic acquisition of
Veresen and $4.8 billion of projects
placed into service
All financial figures are in Canadian dollars unless noted
otherwise.
CALGARY, Feb. 22, 2018 /CNW/ - Pembina Pipeline
Corporation ("Pembina" or the "Company") (TSX: PPL; NYSE: PBA)
announced today its financial and operating results for the fourth
quarter and full year 2017.
Operational and Financial Overview
|
|
($ millions,
except where noted)
|
3 Months Ended
December 31 (unaudited)
|
12 Months
Ended
December 31
|
|
2017
|
2016
|
2017
|
2016
|
Revenue
|
1,716
|
1,251
|
5,408
|
4,265
|
Net
revenue(1)
|
709
|
514
|
2,246
|
1,764
|
Share of profit of
investments in equity accounted investees(3)
|
116
|
|
116
|
1
|
Gross
profit
|
555
|
270
|
1,482
|
1,002
|
Earnings
|
445
|
131
|
891
|
466
|
Earnings per common
share – basic (dollars)
|
0.83
|
0.29
|
1.89
|
1.02
|
Earnings per common
share – diluted (dollars)
|
0.83
|
0.28
|
1.88
|
1.01
|
Cash flow from
operating activities
|
523
|
286
|
1,513
|
1,077
|
Cash flow from
operating activities per common share – basic
(dollars)(1)
|
1.04
|
0.73
|
3.55
|
2.78
|
Adjusted cash flow
from operating activities(1)
|
499
|
292
|
1,396
|
986
|
Adjusted cash flow
from operating activities per common share – basic
(dollars)(1)
|
0.99
|
0.74
|
3.27
|
2.54
|
Common share
dividends declared
|
272
|
190
|
873
|
737
|
Preferred share
dividends declared
|
26
|
19
|
83
|
69
|
Dividends per common
share (dollars)
|
0.54
|
0.48
|
2.04
|
1.90
|
Capital
expenditures
|
314
|
453
|
1,839
|
1,745
|
Acquisitions
|
6,400
|
|
6,400
|
566
|
Proportionately
Consolidated Financial Overview
|
Total volume
(mboe/d)(2)
|
2,917
|
1,941
|
2,300
|
1,907
|
Operating
margin(1)
|
749
|
382
|
1,930
|
1,357
|
Adjusted
EBITDA(1)
|
674
|
342
|
1,705
|
1,189
|
(1)
|
Refer to
"Non-GAAP Measures."
|
(2)
|
Natural gas
volumes converted to thousands of barrels of oil equivalent per day
("mboe/d") from millions of cubic feet per day ("MMcf/d") at a 6:1
ratio.
|
(3)
|
Includes
Investments in Equity Accounted Investees in Alliance, Aux Sable,
Ruby, Veresen Midstream, CKPC, and Fort Corp. See "Unaudited
Supplementary Information for Investments in Equity Accounted
Investees" for definitions of equity accounted
investees.
|
Proportionately Consolidated Operating Margin and
Volumes
|
|
|
|
3 Months Ended
December 31 (unaudited)
|
12 Months
Ended
December 31
|
|
2017
|
2016
|
2017
|
2016
|
($
millions)
|
Volumes(3)
|
Operating
Margin(1)
|
Volumes(3)
|
Operating
Margin(1)
|
Volumes(3)
|
Operating
Margin(1)
|
Volumes(3)
|
Operating
Margin(1)
|
Conventional
Pipelines
|
862
|
201
|
639
|
118
|
757
|
656
|
650
|
494
|
Oil Sands & Heavy
Oil
|
1,060
|
36
|
975
|
37
|
1,060
|
144
|
975
|
140
|
Gas
Services
|
190
|
74
|
163
|
60
|
176
|
276
|
139
|
195
|
Midstream
|
162
|
221
|
164
|
164
|
145
|
631
|
143
|
518
|
Veresen(2)
|
643
|
214
|
|
|
162
|
214
|
|
|
Corporate
|
3
|
|
3
|
|
9
|
|
10
|
Total
|
2,917
|
749
|
1,941
|
382
|
2,300
|
1,930
|
1,907
|
1,357
|
(1)
|
Refer to "Non-GAAP
Measures."
|
(2)
|
The Veresen
acquisition (the "Veresen Acquisition") was completed on October 2,
2017. As a result, operating and financial results of the Veresen
Acquisition are included in Pembina's operational and financial
results for the 91-day period from October 2, 2017 to December 31,
2017.
|
(3)
|
Volumes are stated in
mboe/d, with natural gas volumes converted to mboe/d from MMcf/d at
a 6:1 ratio.
|
Financial Highlights
- Generated fourth quarter and full-year earnings in 2017 of
$445 million and $891 million, a 240 percent and 91 percent
increase, respectively, over the same periods of the prior
year;
- On October 2, 2017, Pembina
closed the previously announced acquisition of Veresen Inc.
("Veresen") which contributed $214
million in operating margin in the fourth quarter;
- Generated record fourth quarter and full-year operating margin
of $749 million and $1,930 million, a 96 percent and 42 percent
increase over the same periods in 2016. Record operating margin was
driven by a combination of the Veresen Acquisition, higher volumes
and revenue in Conventional Pipelines and Gas Services, as well as
higher commodity margins in Midstream. Beginning in the fourth
quarter of 2017, Pembina has amended its definition of operating
margin to include its proportionate interest in operating margin
from jointly controlled investments which are accounted for using
equity accounting;
- Achieved record fourth quarter and full-year Adjusted EBITDA of
$674 million and $1,705 million, representing a 97 percent and 43
percent increase over similar periods in 2016. Adjusted EBITDA
includes Pembina's proportionate interest in Adjusted EBITDA from
jointly controlled investments;
- Cash flow from operating activities was $523 million and $1,513
million for the three and twelve months ended
December 31, 2017 compared to $286
million and $1,077 million for
the same periods in 2016, an increase of 83 percent and 40 percent,
respectively. Adjusted cash flow from operating activities
increased by 71 percent and 42 percent to $499 million and $1,396
million in the fourth quarter and full-year of 2017 compared
to the respective periods in 2016;
- On a per share (basic) basis during the three and twelve months
ended December 31, 2017, cash flow from operating activities
increased 42 percent and 28 percent, respectively, compared to the
same periods of the prior year;
- Recognized a $70 million deferred
tax recovery in the fourth quarter of 2017, largely due to the
enactment of the Tax Cuts and Jobs Act ("US Tax Reform") in
the United States. Based on our
initial review and interpretation of the legislation, Pembina
expects the impacts of a lower U.S. tax rate will be in excess of
any incremental taxes payable;
- Midstream's operating margin for the full-year of 2017 was
$631 million, an increase of
approximately 22 percent compared to the same period last year,
which was primarily due to improved commodity margins; and
- Announced a 6.25 percent common share dividend increase on
April 3, 2017 and an additional 5.88
percent increase on October 2,
2017.
Operational Highlights
- $4.8 billion of new capital
projects were placed into service in 2017. This included Pembina
having placed $3.7 billion of capital
projects into service combined with an additional $1.1 billion of projects (net to Pembina) assumed
through the Veresen Acquisition;
- Pembina completed the Veresen Acquisition which collectively
drove a significant increase in total revenue volumes;
- Achieved record total revenue volumes on a quarterly and
full-year basis of 2,917 mboe/d and 2,300 mboe/d,
respectively;
- Realized record Conventional Pipelines' revenue volumes during
the fourth quarter of 862 thousands of barrels per day ("mbpd"),
representing an 11 percent increase compared to 780 mbpd in the
third quarter of 2017 and a 35 percent increase compared to 639
mbpd in the fourth quarter of 2016. Pembina placed its northeast
British Columbia pipeline and its
Altares lateral pipeline into service at the end of October 2017;
- Gas Services generated solid quarterly revenue volumes of 1,141
MMcf/d in the fourth quarter of 2017, an increase of 165 MMcf/d or
17 percent compared to the fourth quarter of 2016 and an increase
of 117 MMcf/d or 11 percent compared to the third quarter of 2017
when revenue volumes were 976 MMcf/d and 1,024 MMcf/d,
respectively. Pembina placed its Duvernay complex into service in November 2017, ahead of schedule and under
budget; and
- Revenue volumes generated in the Veresen segment totaled 643
mboe/d (net) for the period from October 2,
2017 to December 31, 2017.
Alliance revenue volumes totaled 1,724 MMcf/d gross (862 MMcf/d
net) during the period, driven by strong base firm volumes and the
Chicago and AECO gas price basis
supporting strong interruptible service volumes. Revenue volumes at
Veresen Midstream during the period were 1,276 MMcf/d gross (591
MMcf/d net), benefitting from a full quarter of service at the
Sunrise and Tower facilities, as well as one month contribution
from the first train at the Saturn facility.
Executive Overview
2017 was a transformative year for Pembina. Most notably, the
Company completed the largest acquisition in our history,
establishing us as a leading North American energy infrastructure
company. The acquisition of Veresen supports the continued
execution of Pembina's long-term strategy by increasing our
positioning to long-life economic hydrocarbon reserves, further
integrating and enhancing our service offering including adding an
entire natural gas value chain, extending our reach into the U.S.,
while also increasing our portfolio of secured and unsecured growth
projects. In short, Pembina is larger and more diversified.
Throughout the year, $4.8 billion
of new projects were placed into service. These assets include our
Phase III expansion, third fractionator at Redwater, Canadian Diluent Hub, four major gas
processing facilities (including Veresen Midstream), additional
pipeline expansions as well as several other value-added capital
projects.
Thanks to the new in-service assets and the acquisition of
Veresen, we set financial and operational records in both the
fourth quarter and full-year 2017. This included achieving new
revenue volume highs in our Conventional Pipelines and Gas Services
businesses, which contributed to setting records for all of our key
financial metrics including Adjusted EBITDA, Adjusted EBITDA per
share, adjusted cash flow and adjusted cash flow per share.
In 2017, we also secured approximately $1.2 billion in new growth projects which will
further strengthen our competitive position and support market
access solutions for our customers.
"When I look back over the year, I am incredibly proud of all
that we have accomplished through the disciplined execution of a
consistent strategy, combined with the hard work and determination
of our employees who make our success possible," said Mick Dilger, Pembina's President and Chief
Executive Officer.
Safety continues to be an important priority that transcends
everything we do. Over the past four years, Pembina employees
worked over 11.5 million hours. Employees had worked 14 consecutive
quarters without any lost time incidents; however, in the third
quarter of 2017, Pembina experienced one employee lost time
incident. Moving forward, our staff remain committed to the mantra
that no project or job is important enough to compromise or
jeopardize safety. "While we still have a commendable industry
leading safety performance, we will work towards continuous
improvement and remain diligently focused and committed to the
'zero by choice' safety culture that is integral to the Pembina
way," said Mr. Dilger.
Looking ahead, Pembina's business prospects are positive with
supportive market fundamentals. Hydrocarbon liquids prices have
improved, enhancing development economics and supporting increased
drilling by our producing customers. At the same time, favourable
frac spreads continue to drive strong results in our marketing
business. The Chicago and AECO gas
price differentials are driving strong volumes on the Alliance
pipeline into the premium Chicago
market. With these strong fundamentals, we remain on track to
achieve our 2018 Adjusted EBITDA guidance of $2.55 to $2.75
billion.
"Complementing our strong business performance is our solid
financial position," added Scott
Burrows, Pembina's Senior Vice President and Chief Financial
Officer. "We continue to maintain a conservative balance sheet, a
low payout ratio and a disciplined financing strategy."
Pembina announced two dividend increases totaling 12 percent in
2017 and consistent with our 'guard rails' the dividend is
supported entirely by our fee-based business. Going forward, we
anticipate being able to fund a growing dividend and
$1 to $2
billion of capital projects per year without accessing the
equity market.
Finally, with all the success that 2017 brought and the positive
momentum we have seen so far in 2018, we are well positioned for
what should be another exciting and active year ahead. Our ongoing
efforts will continue to focus around building out our value-chain
to provide our customers with premium market access for energy
products derived from western Canadian hydrocarbons.
"Since embarking on our transformational journey a few years
ago, I am profoundly humbled by what Pembina has accomplished in
becoming a leading North American energy infrastructure company. I
want to thank our customers, shareholders, communities and
employees for their support during such an extraordinary time for
Pembina and I look forward to a prosperous future together,"
concluded Mr. Dilger.
New Developments and Growth Projects Update
- Pembina's Board of Directors has approved the construction of
fractionation and terminalling facilities at the Company's
Empress, Alberta extraction plant.
The new facilities will add approximately 30,000 barrels per day of
propane-plus fractionation capacity to the Company's Empress East
NGL system. The total expected capital cost for this project is
approximately $120 million and is
anticipated to be placed into service in late 2020, subject to
environmental and regulatory approval. These facilities will
provide the Company with increased NGL volumes and market
optionality, as well as enhanced propane supply access which could
further support the Company's Prince
Rupert export terminal and proposed propane dehydrogenation
and polypropylene facility;
- On November 6, 2017, Pembina
announced that it had executed further agreements under its
previously announced 20-year infrastructure development and service
agreement to construct various Duvernay infrastructure. The total capital
cost for this project is approximately $290
million with an expected in-service date of mid-to-late
2019, subject to environmental and regulatory approvals;
- Pembina announced Board of Director approval to develop the
Prince Rupert liquefied petroleum
gas export terminal located on Watson Island, British Columbia. The expected capital cost is
$250 million with an anticipated
in-service date of mid-2020, subject to regulatory and
environmental approvals;
- Pembina's Board of Directors' approved Pembina's investment in
Veresen Midstream's development of the North Central Liquids Hub,
which supports existing operations in the Montney formation. The estimated capital cost
for this project is $320 million
($150 million net) and is currently
tracking under budget and ahead of schedule;
- On January 23, 2018, Veresen
Midstream placed its second 200 MMcf/d (gross) Saturn gas
processing plant into service ahead of schedule and under budget.
In November 2017, Veresen Midstream
had also placed its first 200 MMcf/d (gross) Saturn gas processing
plant into service;
- Pembina is continuing to progress its Phase IV and Phase V
expansions of its Peace pipeline infrastructure. Regulatory and
environmental approvals have now been received for Phase IV and
clearing work is now complete with construction underway for Phase
V;
- In February 2018, Pembina placed
a fifth third-party condensate connection into service at the
Company's Canadian Diluent Hub, where condensate volume deliveries
continue to ramp up;
- As of December 31, 2017, Pembina
placed into service its infrastructure which supports the North
West Redwater Partnership's refinery for a total capital cost of
approximately $180 million;
- Pembina completed work at its Edmonton North Terminal and its
Edmonton Delivery System which improves service offerings and
accommodates increased volumes from Pembina's Peace Pipeline;
- Pembina continues to progress construction of its one million
barrel ethane storage facility in Burstall, Saskatchewan and expects to place it
into service in late 2018;
- Canada Kuwait Petrochemical Corporation, Pembina's joint
venture entity with its partner, Petrochemical Industries Company
K.S.C., continues to progress front end engineering design ("FEED")
for the proposed propane dehydrogenation and polypropylene
facility. It is expected that FEED activities will be completed by
late 2018, followed by a final investment decision;
- Pembina continues to progress its proposed Jordan Cove liquefied natural gas export
terminal and related natural gas pipeline project (combined,
"Jordan Cove"). Pembina has committed a 2018 capital budget of
$135 million to progress Jordan Cove to a final investment decision,
pending the receipt of the necessary regulatory approvals and other
requirements;
- Pembina has entered into hedge contracts to de-risk operating
margin derived from the spread between the value of natural gas
liquids and natural gas. Currently, Pembina has hedged
approximately 65 percent of the Company's frac spread
throughput for 2018 (excluding its interest in Aux Sable); and
- Pembina's Board of Directors approved a $1 billion non-revolving term loan ("Term Loan")
with certain existing lenders. The Term Loan will be used to
partially repay existing amounts drawn under Pembina's $2.5 billion revolving credit facility, thereby
providing additional liquidity, flexibility and interest cost
savings. The Term Loan will have an initial term of three years and
is pre-payable at the Company's option. The other terms and
conditions of the Term Loan, including financial covenants, are
substantially similar to Pembina's $2.5
billion revolving credit facility.
Dividends
- Declared and paid dividends of $0.18 per qualifying common share for the
applicable record dates in October, November and December; 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; Series 11: $0.359375; and Series 13: $0.359375 to shareholders of record on
December 1, 2017. Declared and paid
quarterly dividends per qualifying preferred shares of: Series 15:
$0.279000; Series 17: $0.312500; and Series 19: $0.312500 to shareholders of record on
December 29, 2017.
Annual and Fourth Quarter 2017 Conference Call &
Webcast
Pembina will host a conference call on Friday, February 23,
2018 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 full year and fourth quarter 2017 results. 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 March 2, 2018 at
11:59 p.m. ET. To access the replay,
please dial either 416-849-0833 or 855-859-2056 and enter the
password 4183359.
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=1586733&s=1&k=3CE57B902D3F2F30B65C86B7191430C0
in your web browser. Shortly after the call, an audio archive will
be posted on the website for a minimum of 90 days.
2018 Investor Day
Pembina will host an Investor Day on Tuesday, May 29, 2018 at the Fairmont Royal York
Hotel in Toronto, Ontario. For
parties interested in attending the event, please email
investor-relations@pembina.com to request an invitation.
UNAUDITED SUPPLEMENTARY INFORMATION FOR
INVESTMENTS IN EQUITY ACCOUNTED
INVESTEES
Three and twelve months ending December 31, 2017
In accordance with IFRS, Pembina's jointly controlled
investments are accounted for using equity accounting. Under equity
accounting, the assets and liabilities of the investment are netted
into a single line item on the Consolidated Statement of Financial
Position, Investments in Equity Accounted Investees. Net
earnings from Investments in Equity Accounted Investees are
recognized in a single line item in the Consolidated Statement of
Earnings and Comprehensive Earnings, Share of Profit of
Investments in Equity Accounted Investees ("Share of Profit").
Cash contributions and distributions from Investments in Equity
Accounted Investees represent Pembina's proportionate share paid
and received in the period to and from the Investments in Equity
Accounted Investees.
To assist the readers' understanding and evaluation of the
performance of these investments, Pembina is supplementing the IFRS
disclosure with non-GAAP disclosure of Pembina's proportionately
consolidated interest in the Investments in Equity Accounted
Investees. Pembina's proportionate interest in equity accounted
investees has been included in operating margin, Adjusted EBITDA
and other reconciling line items to IFRS in this Unaudited
Supplementary Information for Investments in Equity Accounted
Investees. A reconciliation of operating margin and Adjusted EBITDA
to Share of Profit can be found under the heading
"Proportionately Consolidated Results by Investments in Equity
Accounted Investees". For comparison purposes, volumes have also
been disclosed on a proportionately consolidated basis.
Additional information can be found in Note 10 of the Company's
Audited Financial Statements for the year ended December 31, 2017.
Investments in Equity Accounted Investees include:
- 50 percent interest in the Alliance Pipeline ("Alliance") with
capacity of 1,600 MMcf/d gross (800 MMcf/d net);
- 50 percent convertible preferred interest in the Ruby Pipeline
("Ruby") with capacity of 1,500 MMcf/d gross (750 MMcf/d net) which
entitles Pembina to a US$91 million
distribution per year;
- 46.3 percent interest (as of December
31, 2017) in Veresen Midstream ("Veresen Midstream"), which
owns assets in western Canada serving the Montney geological play in northwestern
Alberta and northeastern B.C.
including gas processing plants with capacity of 1,516 MMcf/d gross
(702 MMcf/d net), as well as gas gathering pipelines and
compression;
- An ownership interest in Aux
Sable (approximately 42.7 percent in Aux Sable U.S. and 50
percent in Aux Sable Canada)
(combined, "Aux Sable"), which includes a 131 mbpd gross (56 mbpd
net) NGL fractionation facility and gas processing capacity of 2.1
bcf/d gross (0.897 bcf/d net) near Chicago, Illinois and other natural gas and
NGL processing facilities, logistics and distribution assets in the
U.S. and Canada, as well as transportation contracts on Alliance;
and
- Other, includes: 50 percent interest in Canadian Kuwait
Petrochemical Corporation ("CKPC"), 50 percent interest in Fort
Saskatchewan Ethylene Storage Limited Partnership and Fort
Saskatchewan Ethylene Corporation ("Fort Corp") and 75 percent
jointly controlled interest in Grand
Valley 1 Limited Partnership ("Grand Valley").
Share of Profit and Proportionately Consolidated Operating
Margin and Adjusted EBITDA
|
|
|
3 Months Ended
December 31, 2017(3)
|
12 Months
Ended
December 31, 2017(3)
|
(unaudited)
($
millions)
|
Share of
Profit
|
Operating
Margin(1)(2)
|
Adjusted
EBITDA(1)(2)
|
Share of
Profit
|
Operating
Margin(1)(2)
|
Adjusted
EBITDA(1)(2)
|
Alliance
|
40
|
91
|
82
|
40
|
91
|
82
|
Ruby
|
29
|
49
|
48
|
29
|
49
|
48
|
Veresen
Midstream
|
22
|
30
|
29
|
22
|
30
|
29
|
Aux Sable
|
22
|
34
|
29
|
22
|
34
|
29
|
Other(4)
|
3
|
8
|
5
|
3
|
24
|
17
|
Total
|
116
|
212
|
193
|
116
|
228
|
205
|
(1)
|
See Proportionately
Consolidated Results by Equity Accounted Investees for a
reconciliation to Share of Profit.
|
(2)
|
Refer to "Non-GAAP
Measures."
|
(3)
|
Operating and
financial results of the Veresen Acquisition are included in
Pembina's operational and financial results for the 91 day period
from October 2, 2017 to December 31, 2017.
|
(4)
|
Includes interest in
Fort Corp, Grand Valley and CKPC.
|
Distributions by Investments in Equity Accounted Investees to
Pembina
|
|
($
millions)
|
3 and 12 Months
Ended
December 31, 2017 (1)
|
Alliance
|
67
|
Ruby
|
29
|
Veresen
Midstream
|
17
|
Aux Sable
|
31
|
Other(2)
|
13
|
Total Distributions
from Investments in Equity Accounted Investees (per Pembina's
Consolidated
Statement of Cash Flows)
|
157
|
(1)
|
Operating and
financial results of the Veresen Acquisition are included in
Pembina's operational and financial results for the 91-day period
from October 2,2017 to December 31, 2017.
|
(2)
|
Distributions from
Fort Corp.
|
Loans and Borrowings Amortization Schedule of Investments in
Equity Accounted Investees
|
|
|
|
|
|
|
(unaudited)
($
millions)(1)(2)
|
2018
|
2019
|
2020
|
2021
|
2022+
|
Total
|
|
|
|
|
|
|
|
Fixed
Maturity
|
|
|
|
|
|
|
Alliance
|
64
|
|
125
|
|
65
|
|
64
|
|
261
|
|
579
|
Ruby
|
182
|
|
55
|
|
55
|
|
27
|
|
298
|
|
617
|
Veresen
Midstream
|
4
|
|
4
|
|
4
|
|
4
|
|
394
|
|
410
|
Aux Sable
|
2
|
|
|
|
|
|
|
|
|
|
2
|
Other
|
2
|
|
2
|
|
2
|
|
2
|
|
26
|
|
34
|
|
254
|
|
186
|
|
126
|
|
97
|
|
979
|
|
1,642
|
Revolving
|
|
|
|
|
|
|
Alliance
|
|
|
|
|
77
|
|
|
|
|
77
|
Veresen
Midstream
|
46
|
|
62
|
|
544
|
|
|
|
|
652
|
|
46
|
|
62
|
|
621
|
|
|
|
|
|
729
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
300
|
|
248
|
|
747
|
|
97
|
|
979
|
|
2,371
|
(1)
|
Balances presented at
face value.
|
(2)
|
Balances reflect
Pembina's ownership percentage of the reported balance, translated
at CAD$1.2545:US$1.00.
|
Proportionately Consolidated Results by Investments in Equity
Accounted Investees
Alliance
|
|
(unaudited)
($ millions,
except where noted)
|
3 and 12 Months
Ended
December 31, 2017 (3)
|
Revenue Volumes
(MMcf/d)
|
862
|
Revenue Volumes
(mboe/d)(2)
|
144
|
Revenue
|
112
|
Operating
Expense
|
21
|
Operating
Margin(1)
|
91
|
General and
administrative
|
9
|
Adjusted
EBITDA(1)
|
82
|
Finance costs and
other
|
10
|
Depreciation and
amortization
|
32
|
Share of profit of
investments in equity accounted investees
|
40
|
(1)
|
Refer to "Non-GAAP
Measures."
|
(2)
|
Revenue volumes are
equal to contracted and interruptible volumes. Natural gas revenue
volumes are converted to mboe/d from MMcf/d at a 6:1
ratio.
|
(3)
|
Operating and
financial results of the Veresen Acquisition are included in
Pembina's operational and financial results for the 91 day period
from October 2, 2017 to December 31, 2017.
|
Ruby
|
|
(unaudited)
($ millions,
except where noted)
|
3 and 12 Months
Ended
December 31, 2017 (3)
|
Revenue Volumes
(MMcf/d)
|
534
|
Revenue Volumes
(mboe/d)(2)
|
89
|
Revenue
|
54
|
Operating
Expense
|
5
|
Operating
Margin(1)
|
49
|
General and
administrative
|
1
|
Adjusted
EBITDA(1)
|
48
|
Finance costs and
other
|
17
|
Depreciation and
amortization
|
11
|
Share of earnings in
excess of equity interest
|
(9)
|
Share of profit of
investments in equity accounted investees
(4)
|
29
|
(1)
|
Includes Pembina's
proportionate share of results from Ruby based on an assumed 50
percent common interest. Refer to "Non-GAAP Measures."
|
(2)
|
Revenue volumes are
equal to contracted and interruptible volumes. Natural gas revenue
volumes converted to mboe/d from MMcf/d at a 6:1 ratio.
|
(3)
|
Operating and
financial results of the Veresen Acquisition are included in
Pembina's operational and financial results for the 91 day period
from October 2, 2017 to December 31, 2017.
|
(4)
|
Share of profit of
investment in equity accounted investees for Ruby is equal to
preferred interest distribution.
|
Veresen Midstream
|
|
(unaudited)
($ millions, except where noted)
|
3 and 12 Months
Ended
December 31, 2017 (3)
|
Revenue Volumes
(MMcf/d)
|
591
|
Revenue Volumes
(mboe/d)(2)
|
99
|
Revenue
|
47
|
Operating
Expense
|
17
|
Operating
Margin(1)
|
30
|
General and
administrative
|
1
|
Adjusted
EBITDA(1)
|
29
|
Finance costs and
other
|
(12)
|
Depreciation and
amortization
|
19
|
Share of profit of
investments in equity accounted investees
|
22
|
(1)
|
Refer to "Non-GAAP
Measures."
|
(2)
|
Revenue volumes are
equal to contracted and interruptible volumes. Natural gas revenue
volumes are converted to mboe/d from MMcf/d at a 6:1
ratio.
|
(3)
|
Operating and
financial results of the Veresen Acquisition are included in
Pembina's operational and financial results for the 91 day period
from October 2, 2017 to December 31, 2017.
|
Aux Sable
|
|
(unaudited)
($ millions, except where noted)
|
3 and 12 Months
Ended
December 31, 2017 (3)
|
Sales volumes
(mboe/d)(2)
|
50
|
Operating
Margin(1)
|
34
|
General and
administrative
|
5
|
Adjusted
EBITDA(1)
|
29
|
Finance costs and
other
|
2
|
Depreciation and
amortization
|
5
|
Share of profit of
investments in equity accounted investees
|
22
|
(1)
|
Refer to "Non-GAAP
Measures."
|
(2)
|
Natural gas sales
volumes converted to mboe/d from MMcf/d at a 6:1 ratio.
|
(3)
|
Operating and
financial results of the Veresen Acquisition are included in
Pembina's operational and financial results for the 91 day period
from October 2, 2017 to December 31, 2017.
|
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 an
integrated system of pipelines that transport various hydrocarbon
liquids and natural gas products produced primarily in western
Canada. The Company also owns 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 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 "continue", "anticipate",
"schedule", "will", "expects", "estimate", "potential", "planned",
"future" 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;
expectations about commodity pricing and industry activities,
anticipated dividend growth and access to capital; anticipated
Adjusted EBITDA projections for 2018 and financial performance
expectations resulting from Pembina's capital expenditures;
completion of, and the potential future benefits and impacts of the
Acquisition including the timing thereof; 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; anticipated
synergies between assets under development, assets being acquired
and existing assets of the Company; the future level and
sustainability of cash dividends that Pembina intends to pay its
shareholders, including the expected future cash flows and the
sufficiency thereof.
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; prevailing
interest and tax rates; prevailing regulatory, tax and
environmental laws and regulations; maintenance of operating
margins; the amount of future liabilities relating to lawsuits and
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; the failure to realize the anticipated
benefits or synergies of acquisitions due to the factors set out
herein, integration issues or otherwise, 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 cyber 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. 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 2018 Adjusted EBITDA projection is to provide investors with
an indication of the value to Pembina of capital projects that have
been and will be brought into service in 2018, and the closing of
the acquisition of Veresen on 2018 full-year financial results.
Readers should be aware that the information contained in the
financial outlook contained herein may not be appropriate for other
purposes. 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), which do not have
any standardized meaning under IFRS ("Non-GAAP Measures"). 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.
With the exception of operating margin and Adjusted EBITDA which
definitions were modified to capture proportionate interest in
equity accounted investees due to the Acquisition, these Non-GAAP
measures are calculated and disclosed on a consistent basis from
period to period. Comparative figures have been restated for the
adjustments made to the definitions. 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.
Non-GAAP Proportionate Consolidation of Investments in Equity
Accounted Investees Results
In accordance with IFRS, Pembina's jointly controlled
investments are accounted for using equity accounting. Under
equity accounting, the assets and liabilities of the investment are
net into a single line item on the Consolidated Statement of
Financial Position, Investments in Equity Accounted Investees. Net
earnings from Investments in Equity Accounted Investees are
recognized in a single line item in the Consolidated Statement of
Earnings and Comprehensive Earnings, Share of Profit of Investments
in Equity Accounted Investees. Cash contributions and distributions
from Investments in Equity Accounted Investees represent Pembina's
proportionate share paid and received in the period to and from the
equity accounted investment.
To assist the readers' understanding and evaluation of the
performance of these investments, Pembina is supplementing the IFRS
disclosure with Non-GAAP disclosure of Pembina's proportionately
consolidated interest in the Investments in Equity Accounted
Investees. Pembina's proportionate interest in Investments in
Equity Accounted Investees has been included in operating margin,
Adjusted EBITDA and other reconciling line items to IFRS. A
reconciliation of operating margin and Adjusted EBITDA to Share of
profit of investments in equity accounted investees can be found
under the heading "Proportionately Consolidated Results by
Investments in Equity Accounted Investees".
Other issuers may calculate these Non-GAAP measures
differently. Investors should be cautioned that these measures
should not be construed as alternatives to revenue, earnings, cash
flow from operating activities, gross profit 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 December 31,
2017, which is available online at www.sedar.com,
www.sec.gov and through Pembina's website at
www.pembina.com.
SOURCE Pembina Pipeline Corporation