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 see "Non-GAAP Measures" herein.
CALGARY, Jan. 7, 2020 /CNW/ - Pembina Pipeline Corporation
("Pembina" or the "Company") (TSX: PPL; NYSE: PBA) along with
Petrochemical Industries Company K.S.C. ("PIC") of Kuwait, is pleased to announce that Canada
Kuwait Petrochemical Corporation ("CKPC") has executed a lump sum
engineering, procurement and construction ("EPC") contract related
to the construction of the propane dehydrogenation ("PDH") facility
within its integrated PDH and polypropylene ("PP") upgrading
facility ("PDH/PP Facility"). With this contract, CKPC has fixed
approximately 60 percent of the cost of the PDH/PP Facility thus
far. In conjunction with execution of the lump sum contract, the
Company also announces an update to its share of the capital cost
for the PDH/PP Facility and project timing.
Following execution of the lump sum EPC contract and with cost
certainty for approximately 60 percent of the project cost, Pembina
has revised its proportionate share of the capital cost of the
PDH/PP Facility, including the 100 percent directly-owned
supporting facilities, to $2.7
billion. The increase over the prior estimate is associated
with the PDH facility, which is now fixed under the lump sum EPC
contract. The revised capital cost estimate will not affect
Pembina's previously announced 2020 capital budget. CKPC now
expects the PDH/PP Facility to be placed into commercial service in
the second half of 2023.
"When faced with the proposition of trading returns for risk,
Pembina has consistently chosen certainty and downside protection,
particularly in new platforms or new businesses. Our relentless
pursuit of a lump sum contract for the PDH facility reflects our
disciplined and prudent approach to capital allocation," said
Mick Dilger, Pembina's President and
Chief Executive Officer. Mr. Dilger added, "This project is highly
strategic for Pembina and our producer customers in the Western
Canadian Sedimentary Basin. It offers a new demand source for
domestically produced propane and supports ongoing development of
Canada's world-class hydrocarbon
resources."
CKPC has selected Heartland Canada Partners, a 50/50 partnership
between Fluor Canada Ltd. ("Fluor") and Kiewit Construction
Services ULC ("Kiewit") as the EPC contractor for the PDH facility.
Both companies bring extensive EPC track records for safety,
quality and delivery in the petrochemical space in Canada. The contractor selection process for
the PP facility is ongoing.
Since initially announcing its intention to pursue the PDH/PP
Facility, Pembina has been steadfast in its approach to de-risking
the project, including: obtaining a 50 percent partner that is a
world leader in petrochemicals; lump sum EPC contracting to
mitigate capital cost risk; and securing at least 50 percent of its
adjusted EBITDA from the project under fee-based arrangements. To
date, Pembina has secured more than 40 percent of its adjusted
EBITDA under fee-based arrangements and is in ongoing discussions
with potential customers to increase the percentage above 50
percent.
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 Information and Statements
This news release contains certain forward-looking
information and statements (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 this news release, such
forward-looking information and statements can be identified by
terminology such as "plans", "will", "would", "could", "expects",
"continue", "anticipate", "potential", "may", and similar
expressions.
In particular, this news release contains forward-looking
statements pertaining to, without limitation, the
following: planning, construction, capital expenditure
estimates, schedules, in-service dates, contractual and fee
arrangements with respect to Pembina's and its affiliates'
infrastructure expansions; expectations around continuing
producer activity and development and growth of product supply; 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 and processing services;
Pembina's and its affiliates' corporate strategy; anticipated
portion of future adjusted EBITDA from fee-based arrangements;
ongoing negotiations and discussions with customers for additional
services; and expectations regarding synergies, operational
efficiencies, and integration of growth and development projects
with Pembina's existing business and asset base;
Pembina's corporate strategy expectations about future growth
opportunities and demand for our service; and expectations
regarding new corporate developments and impact on access to
markets.
These forward-looking statements are being made by Pembina
based on certain assumptions that Pembina has made in respect
thereof as at the date of this news release, regarding, among other
things: the ability of Pembina to successfully negotiate and
complete final commercial agreements; that counterparties to
material agreements will continue to perform in a timely manner;
that Pembina's joint venture partners will continue to provide
support for joint venture projects; the ability of Pembina and any
required third parties to effectively engage with
stakeholders; oil and gas industry exploration and development
activity levels; the success of Pembina's operations and growth
projects; prevailing commodity prices, margins, volumes and
exchange rates; that Pembina's future results of operations will be
consistent with past performance and management expectations in
relation thereto; the continued availability of capital at
attractive prices to fund future capital requirements relating to
existing assets and projects, including but not limited to future
capital expenditures relating to expansion, upgrades and
maintenance shutdowns; 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 there are
no unforeseen events preventing the performance of contracts; that
there are no unforeseen material construction, integrity or other
costs related to current growth projects or current operations; and
prevailing interest and tax rates.
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 or its joint venture
partners or customers to raise sufficient capital (or to raise
sufficient capital on favourable terms) to fund future expansions
and growth projects and satisfy future commitments; failure to
negotiate and conclude any required commercial agreements or
failure to obtain project sanctioning; increased construction
costs, or construction delays, on Pembina's expansion and growth
projects; labour and material shortages; non-performance of
agreements in accordance with their terms; the impact of
competitive entities and pricing; reliance on key industry
partners, alliances and agreements; the strength and operations of
the oil and natural gas production industry and related commodity
prices; the continuation or completion of third-party projects;
actions by governmental or regulatory authorities including changes
in tax laws and treatment, changes in royalty rates or increased
environmental regulation; adverse general economic and market
conditions in Canada, North America and elsewhere;
construction delays; labour and material shortages; and certain
other risks detailed from time to time in Pembina's public
disclosure documents including, among other things, those detailed
under the heading "Risk Factors" in Pembina's management's
discussion and analysis and annual information form for the year
ended December 31, 2018, which can be found
at www.sedar.com.
The forward-looking statements are expressly qualified by the
above statements and speak only as of the date of this document.
Pembina does not undertake any obligation to publicly update or
revise any forward-looking statements or information contained
herein, except as required by applicable laws. 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 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 Pembina's ability to generate
liquidity through cash flow from operating activities and is also
used by investors and analysts for assessing financial performance
and for the purpose of valuing the Company, 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. 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. 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.
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SOURCE Pembina Pipeline Corporation