Pembina updates 2019
guidance based on year-to-date results and announces Phase IX Peace
Pipeline Expansion
All financial figures are in Canadian dollars unless noted
otherwise.
CALGARY, Nov. 1, 2019 /PRNewswire/ - Pembina Pipeline
Corporation ("Pembina" or the "Company") (TSX: PPL; NYSE: PBA)
announced today its financial and operating results for the third
quarter of 2019.
Financial and Operational Overview
|
3 Months Ended
September 30
|
9 Months Ended
September 30
|
($ millions,
except where noted) (unaudited)
|
2019
|
|
2018
|
2019
|
|
2018
|
Revenue
|
1,700
|
|
2,045
|
5,476
|
|
5,625
|
Net
revenue(1)
|
751
|
|
742
|
2,283
|
|
2,130
|
Gross
profit
|
613
|
|
585
|
1,830
|
|
1,664
|
Earnings
|
370
|
|
334
|
1,347
|
|
910
|
Earnings per common
share – basic (dollars)
|
0.66
|
|
0.60
|
2.45
|
|
1.62
|
Earnings per common
share – diluted (dollars)
|
0.66
|
|
0.60
|
2.44
|
|
1.61
|
Cash flow from
operating activities
|
535
|
|
481
|
1,804
|
|
1,582
|
Cash flow from
operating activities per common share – basic
(dollars)(1)
|
1.05
|
|
0.95
|
3.53
|
|
3.14
|
Adjusted cash flow
from operating activities(1)
|
530
|
|
523
|
1,658
|
|
1,611
|
Adjusted cash flow
from operating activities per common share – basic
(dollars)(1)
|
1.04
|
|
1.03
|
3.25
|
|
3.20
|
Common share
dividends declared
|
307
|
|
288
|
899
|
|
842
|
Dividends per common
share (dollars)
|
0.60
|
|
0.57
|
1.76
|
|
1.67
|
Capital
expenditures
|
421
|
|
291
|
1,216
|
|
870
|
Total volume
(mboe/d)(2)
|
3,436
|
|
3,465
|
3,408
|
|
3,378
|
Adjusted
EBITDA(1)
|
736
|
|
732
|
2,274
|
|
2,120
|
|
|
(1)
|
Refer to "Non-GAAP
Measures".
|
(2)
|
Total revenue
volumes. Revenue volumes are physical volumes plus volumes
recognized from take-or-pay commitments. Volumes are stated in
thousand barrels of oil equivalent per day ("mboe/d"), with natural
gas volumes converted to mboe/d from millions of cubic feet per day
("MMcf/d") at a 6:1 ratio.
|
Financial and Operational Overview by Division
|
3 Months Ended
September 30
|
9 Months Ended
September 30
|
|
2019
|
2018
|
2019
|
2018
|
($ millions,
except
where noted)
(unaudited)
|
Volumes(1)
|
Gross
Profit
|
Adjusted
EBITDA(2)
|
Volumes(1)
|
Gross
Profit
|
Adjusted
EBITDA(2)
|
Volumes(1)
|
Gross
Profit
|
Adjusted
EBITDA(2)
|
Volumes(1)
|
Gross
Profit
|
Adjusted
EBITDA(2)
|
Pipelines
|
2,570
|
331
|
458
|
2,593
|
338
|
448
|
2,532
|
1,031
|
1,387
|
2,517
|
954
|
1,285
|
Facilities
|
866
|
161
|
233
|
872
|
149
|
216
|
876
|
486
|
701
|
861
|
419
|
645
|
Marketing & New
Ventures (3)
|
—
|
120
|
83
|
—
|
91
|
98
|
—
|
313
|
301
|
—
|
281
|
300
|
Corporate
|
—
|
1
|
(38)
|
—
|
7
|
(29)
|
—
|
—
|
(115)
|
—
|
10
|
(109)
|
Total
|
3,436
|
613
|
736
|
3,465
|
585
|
732
|
3,408
|
1,830
|
2,274
|
3,378
|
1,664
|
2,120
|
|
|
(1)
|
Pipelines and
Facilities are revenue volumes which are physical volumes plus
volumes recognized from take-or-pay commitments. Volumes are stated
in mboe/d, with natural gas volumes converted to mboe/d from MMcf/d
at a 6:1 ratio.
|
(2)
|
Refer to "Non-GAAP
Measures".
|
(3)
|
Marketed natural gas
liquids ("NGL") volumes are excluded from volumes to avoid double
counting. Refer to "Marketing & New Ventures Division" in
Pembina's Management's Discussion and Analysis for the period ended
September 30, 2019 ("MD&A") for further
information.''
|
Financial & Operational Highlights
- Third quarter earnings of $370
million, an 11 percent increase over the same period of the
prior year, were positively impacted by higher gross profit in both
Facilities and Marketing & New Ventures due to higher
terminalling revenue, combined with realized and unrealized gains
from commodity-related derivative contracts, respectively,
partially offset by lower Pipelines gross profit as a result of
higher deferred revenue recognized during the third quarter of 2018
compared to the third quarter of 2019. Higher net finance
costs were largely offset by a reduction in general &
administrative and other expense. A decrease in deferred tax
expense was partially offset by an increase in current tax due to
growth in partnership earnings in the prior year, as a result of
expansions, that are recognized in taxable income in the current
year;
- Cash flow from operating activities of $535 million for the third quarter, an 11 percent
increase over the same period in 2018, was primarily due to
increased operating results after adjusting for non-cash items,
change in non-cash working capital and the impact from the adoption
of IFRS 16 Leases ("IFRS 16"), partially offset by a decrease in
distributions from equity accounted investees and an increase in
taxes paid. On a per share (basic) basis, cash flow from
operating activities for the third quarter increased by 11 percent
compared to the same period in the prior year;
- Adjusted cash flow from operating activities of $530 million in the third quarter of 2019 was
consistent with the same period in 2018 and was attributable to the
factors discussed above impacting cash flow from operating
activities, net of change in non-cash working capital, an increase
in current tax expense and an increase in preferred share dividends
paid. On a per share (basic) basis, adjusted cash flow from
operating activities for the third quarter was consistent with the
same period of the prior year;
- Total volumes of 3,436 mboe/d for the third quarter of 2019
were consistent with the same period in the prior year; and
- Third quarter adjusted EBITDA of $736
million, was consistent with the same period in 2018, as the
contribution from new assets placed into service in Pipelines and
Facilities combined with the impact from the adoption of IFRS 16
was largely offset by decreased NGL and crude margins in Marketing
& New Ventures.
Divisional Highlights
- Pipelines reported third quarter adjusted EBITDA of
$458 million, representing a two
percent increase, and volumes of 2,570 mboe/d, representing a one
percent decrease, compared to the same period of 2018. The higher
adjusted EBITDA was driven primarily by decreased general and
administrative expenses as a result of lower incentives combined
with increased revenues, partially offset by increased operating
expenses. Volumes were impacted by higher take-or-pay volumes
recognized in the third quarter of 2018, partially offset by higher
volumes on the Alberta Ethane Gathering System and Vantage
system;
- Facilities reported third quarter adjusted EBITDA of
$233 million, representing an eight
percent increase, and volumes of 866 mboe/d, representing a
decrease of one percent, compared to the same period of 2018. The
increase in adjusted EBITDA was primarily due to higher net
revenue, partially offset by increased operating expenses and a
one-time adjustment related to Veresen Midstream's Dawson
facilities. Volumes were impacted by lower supply volumes at
the Redwater Complex, combined with a third party outage affecting
the Younger NGL Extraction Facility and a scheduled turnaround at
the Kakwa River processing facility, partially offset by additional
volumes at the Saturn Complex and Duvernay processing facilities; and
- Marketing & New Ventures reported third quarter adjusted
EBITDA of $83 million, 15 percent
lower than the same period in 2018, and NGL sales volumes of 176
mboe/d, representing a 10 percent increase over the prior
period. Adjusted EBITDA was impacted by lower margins on
propane and butane which were partially offset by the realized gain
on commodity-related derivatives combined with the adoption of IFRS
16. NGL sales volumes remained strong despite lower pricing,
partially offset by lower ethane volumes at Aux Sable as it was
more economic for ethane to remain in the gas stream.
Executive Overview
The highlight of the quarter was the announcement of the
approximately $4.35 billion
acquisition of Kinder Morgan Canada and the U.S. portion of the
Cochin Pipeline. This acquisition is highly strategic for
Pembina, providing enhanced
integration with our existing franchise, extension of our value
chain and clear visibility to creating long-term value for our
shareholders. It represents an ideal opportunity to continue
building on our low-risk, long-term, fee-for-service business model
while extending our reach into the U.S. through a highly desirable
cross-border pipeline. Further, it will enhance our
diversification, as well as Pembina's customer service offering as a
leading provider of integrated services to hydrocarbon producers in
Western Canada.
This transaction strengthens the quality of Pembina's adjusted EBITDA, is accretive to
adjusted cash flow per share and fits squarely within Pembina's financial guardrails.
Combined, these factors give us confidence to increase our monthly
dividend by $0.01 per share upon
close of the transaction. We are making progress on
satisfying the closing conditions and look forward to the
December 10, 2019 Kinder Morgan
Canada shareholder vote. Our teams are busy preparing for
closing which we currently expect will occur in the first quarter
of 2020.
As discussed below under Projects and New Developments,
Pembina has approved the first
stage of the Phase IX Peace Pipeline Expansion. Since our
Phase VIII announcement earlier this year we have continued to
secure additional long-term contracts with producers operating in
the northeast BC Montney. With the addition of Phase IX to
our portfolio we now have approximately $1.8
billion of Peace Pipeline expansions underway. Phase
IX largely completes our vision of full product segregation across
the Peace Pipeline System, which will drive operational and capital
efficiencies, strengthen Pembina's
competitive advantage and ultimately benefit our
customers.
Projects and New Developments
Pipelines and Facilities are constructing $3.2 billion of capital projects, which in
aggregate are trending on budget.
Pipelines:
- Pembina has approved the first
stage of an additional expansion of the Peace Pipeline system
("Phase IX"), which will add additional capacity in the northwest
Alberta to Gordondale,
Alberta corridor to accommodate
increased activity in the Montney
and, in conjunction with previously announced expansions, largely
completes product segregation across the system. This expansion has
an estimated cost of approximately $100
million and is supported by 10-year contracts with
predominantly investment grade counterparties under significant
take-or-pay provisions. Phase IX is anticipated to be placed into
service in the fourth quarter of 2021, subject to regulatory and
environmental approvals.
The first stage of Phase IX will include new 6-inch and 16-inch
pipelines debottlenecking the corridor north of Gordondale,
Alberta as well as upgrades at one
pump station. In addition, this expansion will see existing
pipelines, which are currently batching, converted to single
product lines. Once this expansion is completed, Pembina will have largely completed its
objective to achieve segregated liquids transportation service for
ethane-plus, propane-plus, crude and condensate across multiple
pipeline systems between Gordondale, Alberta and the Edmonton, Alberta area. This portion of the
Phase IX expansion allows Pembina
to fully utilize approximately 100 mbbls/d of latent capacity that
will be created on Peace Pipeline east of La Glace, Alberta, as a result of the Phase
VII and VIII expansions.
Pembina continues to evaluate the
need for additional pump stations between Fox Creek and Namao,
Alberta to achieve Pembina's fully powered-up market delivery
capacity of 1.3 million barrels per day across the Peace and
Northern pipelines. Engineering is currently underway and
based on further commercial support, the scope of Phase IX may be
revised in the future to include these projects;
- Pembina continues to progress
its Phase VI Peace Pipeline Expansion, which includes upgrades at
Gordondale, Alberta; a new 16-inch
pipeline from La Glace to Wapiti,
Alberta and associated pump station and terminal upgrades; and a
20-inch pipeline from Kakwa to Lator, Alberta. Construction in one section of this
expansion is on-going and construction preparation activities are
expected to begin in the fourth quarter of 2019 on the other
section. The project is anticipated to be placed into service in
stages starting in late 2019 through mid-2020. The project is
trending over the $280 million
capital budget and remains on schedule;
- Pembina continues to advance
the Phase VII Peace Pipeline Expansion, which includes a new
20-inch, approximately 220-kilometer pipeline in the La Glace-Valleyview-Fox
Creek corridor, as well as six new pump stations or terminal
upgrades, between La Glace and
Edmonton, Alberta. Early
works construction is expected to begin in November 2019.
This project has a capital budget of $950
million and is currently trending under budget. Phase
VII is anticipated to be in service in the first half of 2021;
- The Phase VIII Peace Pipeline Expansion will include new
10-inch and 16-inch pipelines in the Gordondale to La Glace corridor as well as six new pump
stations or terminal upgrades located between Gordondale and
Fox Creek, Alberta. FEED work is
progressing as planned and is expected to be completed in the
fourth quarter of 2019. This project has a capital budget of
$500 million and is anticipated to be
placed into service in stages starting in 2020 through the first
half of 2022, subject to regulatory and environmental
approvals;
- The Company is progressing the Wapiti Condensate Lateral, a
12-inch lateral, which will connect growing condensate volumes from
a third-party owned facility in the Pipestone Montney region into
Pembina's Peace Pipeline.
All early works construction has been completed. This lateral is
expected to be in service in the fourth quarter of 2019; and
- Construction of the NEBC Montney Infrastructure project, which
includes new facilities and an associated lateral in proximity to
the Company's Birch Terminal, is complete and awaiting a
third-party downstream connection.
Facilities:
- Pembina continues to progress
construction of Duvernay II, which includes 300 MMcf/d of raw gas
separation, water handling and high pressure water disposal
infrastructure; a 100 MMcf/d sweet gas, shallow cut processing
facility; 30,000 bpd of condensate stabilization; and other
associated infrastructure. Mechanical and electrical
construction is complete and commissioning is well underway with an
expected fourth quarter 2019 in-service date. The capital
budget for Duvernay II is $320
million and the project is trending under budget;
- Pembina continues to progress
Duvernay III, which includes a 100 MMcf/d sweet gas, shallow cut
processing train; 20,000 bpd of inlet condensate stabilization; and
other associated infrastructure. Detailed design is nearing
completion, long-lead equipment is being fabricated and site
construction early works has commenced. The capital budget
for Duvernay III is $175 million and
the project continues to track on budget and on schedule with an
expected in-service date in mid to late 2020;
- The sour gas treating facilities at the Duvernay Complex (the
"Duvernay Sour Treatment Facilities") will include a 150 MMcf/d
sour gas sweetening system with 300 MMcf/d of amine regeneration
capability and up to one tonne of sulphur per day of acid gas
incineration. Engineering for the project is progressing, long-lead
equipment fabrication is predominantly complete and onsite
construction is underway. These facilities have a capital
budget of $65 million with an
anticipated in-service date in the first quarter of 2020 and
continue to track on time and on budget;
- Pembina continues with the
construction of new fractionation and terminalling facilities at
the Company's Empress NGL Extraction Facility for a total capital
budget of $120 million. Major
equipment has arrived at site, engineering, early works and piling
is complete and the main mechanical construction is underway. These
facilities are expected to add approximately 30,000 bpd of
propane-plus fractionation capacity to the facility and have an
anticipated in-service date of late 2020;
- Construction continues at Pembina's Prince Rupert LPG export terminal
located on Watson Island, British
Columbia. The 25,000 bpd project will primarily source LPG
from the Company's Redwater Complex. Field construction is
progressing with spheres, deep undergrounds and foundations well
underway. In addition, setting of equipment skids as well as
pipe rack module install and wharf/trestle rehabilitation has
started. The project has an anticipated in-service date in
the second half of 2020, subject to regulatory and environmental
approvals. The project has a capital budget of $250 million and is currently trending over
budget;
- Pembina continues to progress
the Hythe Developments project whereby Pembina and its 45 percent owned joint
venture, Veresen Midstream, will construct natural gas gathering
and processing infrastructure in the Pipestone Montney
region. All long-lead equipment has been ordered and
construction has commenced. Collectively, the Hythe
Developments have a capital budget of $380
million ($185 million net to
Pembina) and an anticipated
in-service date of late 2020; and
- Subsequent to quarter end, Pembina received Board approval to proceed
with the development of a $120
million co-generation facility at the Empress NGL Extraction
Facility ("Empress Co-generation Facility"). The Empress
Co-generation Facility will reduce overall operating costs by
providing power and heat to the extraction and fractionation
facilities and has an expected in-service date in mid-2022, subject
to regulatory and environmental approval.
Marketing & New Ventures:
- Pembina continues to progress
the propane dehydrogenation ("PDH") plant and polypropylene ("PP")
upgrading facility ("PDH/PP Facility"), which will be located
adjacent to Pembina's Redwater
Fractionation Complex and will convert approximately 23,000 bpd of
locally supplied propane into polypropylene, a high value
recyclable polymer used in a wide range of finished products,
including automobiles, medical devices, food packaging and home
electronic appliances, among others. Engineering, procurement and
construction bids have been received and are currently being
reviewed. Early works site preparation is expected to
continue through the fourth quarter of 2019. Pembina's net investment in this project is
expected to be $2.5 billion with an
expected in-service date in mid-2023;
- Regulatory processes for the Jordan Cove LNG Project are
ongoing. Subsequent to the quarter, FERC revised the schedule
for issuance of the final Environmental Impact Statement, which is
now expected February 13, 2020.
Engagement with the Oregon State
regulatory authority continues. State permits are a critical
component of the regulatory process and enable the commercial
viability and critical investment to move forward. Due to
state permitting considerations, the timing and ultimate approval
of Jordan Cove is uncertain. The
carrying value of the project at September
30, 2019 is $324 million,
including capitalized borrowing costs of $7
million; and
- During the quarter, effective July 15,
2019, Pembina assumed
responsibility for operating the assets of Aux Sable.
Strategic Acquisition Announcement
On August 21, 2019, Pembina announced that it had entered into
agreements to acquire Kinder Morgan Canada Limited ("Kinder Morgan
Canada") (the "Corporate Acquisition") and the U.S. portion of the
Cochin Pipeline system ("Cochin US") from Kinder Morgan, Inc. for a total purchase price
of approximately $4.35 billion (the
"Kinder Acquisition"). The transaction values Kinder Morgan Canada
at approximately $2.3 billion
(including the assumption of Kinder Morgan Canada's outstanding
preferred shares and outstanding debt) and Cochin US at
approximately $2.05 billion. On
September 10, 2019, Pembina and Kinder Morgan Canada announced
they had agreed to amend and restate the previously announced
arrangement agreement in respect of the Corporate Acquisition to
provide for the exchange of the preferred shares of Kinder Morgan
Canada for preferred shares of Pembina with substantially the same
terms, subject to approval by the preferred shareholders of Kinder
Morgan Canada. Completion of the Kinder Acquisition is subject to
the approval of common shareholders of Kinder Morgan Canada and
clearance under the Competition Act (Canada). The Kinder Acquisition is not subject
to the approval of the Kinder Morgan Canada preferred shareholders.
Pembina has received early
termination from the U.S. Federal Trade Commission pursuant to the
Hart-Scott-Rodino Act and clearance under the Canada Transportation
Act. Pembina currently expects the
Kinder Acquisition will close in the first quarter of 2020, subject
to receipt of the remaining approvals. Upon closing of the Kinder
Acquisition, Pembina intends to
increase its monthly dividend by $0.01 per common share.
2019 Guidance
Based on year-to-date results and the outlook for the remainder
of the year, Pembina has revised
its adjusted EBITDA guidance range to $2.95 - $3.05
billion. Further, current income tax expense in 2019
is now anticipated to be $250 to
$270 million, with the increase over
prior guidance related to higher taxable income in the current year
and adjustments to prior period tax deductions.
Financing
As previously announced, on September 12,
2019, Pembina closed an
offering of $1.5 billion of senior
unsecured medium-term notes. The offering was conducted in three
tranches consisting of $600 million in senior unsecured
medium-term notes, series 14, having a fixed coupon of 2.56 percent
per annum, paid semi-annually, and maturing on June 1, 2023;
$600 million in senior unsecured
medium-term notes, series 15, having a fixed coupon of 3.31 percent
per annum, paid semi-annually, and maturing on February 1,
2030; and $300 million issued through
a re-opening of the Company's senior unsecured medium-term notes,
series 13, having a fixed coupon of 4.54 percent per annum,
paid semi-annually, and maturing on April 3, 2049.
Dividends
- Declared and paid dividends of $0.20 per common share in July, August and
September 2019 for the applicable
record dates;
- Declared and paid quarterly dividends per preferred share of:
Series 1: $.306625; Series 3:
$0.279875; Series 5: $0.285813; Series 7: $0.28125; Series 9: $0.296875; Series 11: $0.359375; Series 13: $0.359375; and Series 21: $0.30625 to shareholders of record as of
August 1, 2019. Declared and paid
quarterly dividends per preferred share of: Series 15: $0.279; Series 17: $0.301313; and Series 19: $0.3125 to shareholders of record on September 16, 2019; and
- Upon closing of the Kinder Acquisition, Pembina intends to increase its monthly
dividend by $0.01 per common
share.
Third Quarter 2019 Conference Call & Webcast
Pembina will host a conference
call on Friday, November 1, 2019 at
8:00 a.m. MT (10:00 a.m. ET) for interested investors,
analysts, brokers and media representatives to discuss details
related to the third quarter 2019 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 November 8, 2019 at 11:59
p.m. ET. To access the replay, please dial either
416-849-0833 or 855-859-2056 and enter the password 9883147.
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:
https://event.on24.com/wcc/r/1880629/78775B9D629B9E21ED15FAE6CEBCA656 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 65 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; an oil and natural gas liquids
infrastructure and logistics business; is growing an export
terminals business; and is currently constructing a petrochemical
facility to convert propane into polypropylene. 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 identifying additional opportunities to connect
hydrocarbon production to new demand locations through the
development of infrastructure that would extend Pembina's service offering even further along
the hydrocarbon value chain. These new developments will contribute
to ensuring that hydrocarbons produced in the Western Canadian
Sedimentary Basin and the other basins where Pembina operates can reach the highest value
markets throughout the world.
Purpose of Pembina:
To be the leader in delivering integrated infrastructure
solutions connecting global markets;
- Customers choose us first for reliable
and value-added services;
- Investors receive sustainable
industry-leading total returns;
- Employees say we are the 'employer of
choice' and value our safe, respectful, collaborative and fair work
culture; and
- Communities welcome us and recognize the
net positive impact of our social and environmental
commitment.
Pembina is structured into
three Divisions: Pipelines Division, Facilities Division and
Marketing & New Ventures Division.
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
"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 industry activities and development opportunities; the Kinder
Acquisition, including the expected closing date, the strategic
rationale and the anticipated benefits thereof; expectations about
future growth opportunities and demand for our service;
expectations regarding new corporate developments and impact on
access to markets; anticipated adjusted EBITDA projections for
2019 and financial performance expectations resulting from
Pembina's capital expenditures;
planning, construction, capital expenditure estimates, schedules,
locations, regulatory and environmental applications and approvals,
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 following completion of the Kinder Acquisition, and
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: the ability of the parties to satisfy the
conditions to closing of the Kinder Acquisition in a timely manner;
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, climate change initiatives or policies 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; the ability of the parties to satisfy the
conditions to closing the Kinder Acquisition in a timely manner;
the failure to realize the anticipated benefits and synergies of
the Kinder Acquisition following closing; 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 2019 adjusted EBITDA projection is to provide
investors with an indication of the value to Pembina of capital projects that have been and
are expected to be brought into service in 2019. 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,
adjusted earnings before interest, taxes, depreciation and
amortization (Adjusted EBITDA), cash flow from operating activities
per common share, adjusted cash flow from operating activities,
adjusted cash flow from operating activities per common share,
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. 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.
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 in 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 from 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
Adjusted EBITDA.
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
September 30, 2019, which is available online at
www.sedar.com, www.sec.gov and through Pembina's website at www.pembina.com.
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SOURCE Pembina Pipeline Corporation