Business fundamentals returning to pre-pandemic levels;
important ESG and global market access milestones
achieved
All financial figures
are in Canadian dollars unless otherwise noted. This news release
refers to certain financial measures that are not defined by
Generally Accepted Accounting Principles ("GAAP"), including 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; and adjusted cash flow from operating activities per
common share. For more information see "Non-GAAP Measures"
herein.
|
CALGARY, AB, May 6, 2021 /CNW/ - Pembina Pipeline Corporation
("Pembina" or the "Company") (TSX: PPL) (NYSE: PBA) announced today
its financial and operating results for the first quarter of
2021.
Highlights
- Strong start to the year - First quarter earnings
of $320 million and adjusted EBITDA
of $835 million, both being
consistent with the same period in the prior year, yet reflecting
an improving business environment relative to most of 2020.
Excluding the impact of hedging in the quarter, adjusted EBITDA
reached new record levels. Notably, the first quarter benefited
from higher natural gas liquids ("NGL") and crude oil prices and
margins, which drove improved results in Pembina's marketing
business and steady increases in volumes on many of Pembina's
systems compared to the average levels in 2020. These positive
contributions were offset by certain hedging losses.
- Global market access - Prince Rupert Terminal
("PRT") entered service at the end of the quarter and as of
April 22, two vessels had departed
PRT, destined for international markets. In addition, Pembina has
entered into a one-year agreement with a subsidiary of Mitsui &
Co., Ltd. ("Mitsui") for the purchase of substantially all of the
post-commissioning cargos shipped from the terminal.
- Emissions reductions - Signed a long-term, 100
megawatt ("MW") power purchase agreement ("PPA") that supports
development of the 130 MW Garden Plain Wind Project ("Garden
Plain") in Alberta. The PPA
provides cost-competitive renewable energy and will generate
approximately 135,000 tonnes of carbon dioxide equivalent emission
("CO2e") offsets annually, or an estimated total of 1.8 million
tonnes of CO2e emission offsets. The emissions reductions
collectively available from the PPA and the Empress cogeneration
facility represent approximately seven percent of Pembina's 2019
reported greenhouse gas emissions.
- Executive transitions - Retirement of two of
Pembina's long-standing executive officers, Paul Murphy, Senior Vice President &
Corporate Services Officer, and Jason
Wiun, Senior Vice President & Chief Operating Officer,
Pipelines. As a result of these retirements, Janet Loduca has been promoted to Senior Vice
President, External Affairs and Chief Legal and Sustainability
Officer, and Harry Andersen has been
appointed Senior Vice President & Chief Operating Officer,
Pipelines.
- New assets in service - Pembina, through its
joint venture Veresen Midstream, safely completed the start-up of
the Hythe Developments project at the existing Hythe Gas
Plant.
- Credit rating upgrade - On April 28, 2021, DBRS Limited upgraded its ratings
to 'BBB (high)' in respect of Pembina's senior unsecured
medium-term notes.
Financial and Operational Overview
|
3 Months Ended March
31
|
($ millions,
except where noted)(unaudited)
|
2021
|
2020(3)
|
Infrastructure and
other services revenue
|
745
|
748
|
Product sales
revenue
|
1,300
|
923
|
Total
revenue
|
2,045
|
1,671
|
Net
revenue(1)
|
999
|
865
|
Earnings
|
320
|
319
|
Earnings per common
share – basic & diluted (dollars)
|
0.51
|
0.51
|
Cash flow from
operating activities
|
456
|
410
|
Cash flow from
operating activities per common share – basic
(dollars)(1)
|
0.83
|
0.75
|
Adjusted cash flow
from operating activities(1)
|
582
|
576
|
Adjusted cash flow
from operating activities per common share – basic
(dollars)(1)
|
1.06
|
1.05
|
Common share
dividends declared
|
346
|
346
|
Dividends per common
share (dollars)
|
0.63
|
0.63
|
Capital
expenditures
|
127
|
483
|
Total volume
(mboe/d)(2)
|
3,482
|
3,508
|
Adjusted
EBITDA(1)
|
835
|
830
|
|
|
|
(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.
|
(3)
|
Comparative 2020
period has been restated. See "Voluntary Change in Accounting
Policy" in Pembina's management's discussion and analysis for the
three months ended March 31, 2021 ("MD&A") and Note 2 to
Pembina's unaudited condensed consolidated interim financial
statements for the three months ended March 31, 2021 ("Interim
Financial Statements").
|
Financial and Operational Overview by Division
|
|
|
3 Months Ended
March 31
|
|
|
2021
|
|
|
2020
|
|
($ millions,
except where noted)
|
Volumes(1)
|
Gross
Profit
|
Adjusted
EBITDA(2)
|
Volumes(1)
|
Gross
Profit(4)
|
Adjusted
EBITDA(2)
|
Pipelines
|
2,587
|
359
|
529
|
2,629
|
399
|
550
|
Facilities
|
895
|
197
|
269
|
879
|
176
|
256
|
Marketing & New
Ventures(3)
|
—
|
73
|
90
|
—
|
157
|
55
|
Corporate
|
—
|
1
|
(53)
|
—
|
1
|
(31)
|
Total
|
3,482
|
630
|
835
|
3,508
|
733
|
830
|
|
|
(1)
|
Volumes for Pipelines
and Facilities divisions 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 NGL volumes
are excluded from Volumes to avoid double counting. Refer to
"Marketing & New Ventures Division" in Pembina's MD&A for
further information.
|
(4)
|
Comparative 2020
period has been restated. See "Voluntary Change in Accounting
Policy" in Pembina's MD&A and Note 2 to the Interim Financial
Statements.
|
Financial & Operational Highlights
Adjusted EBITDA
Change in First Quarter Adjusted EBITDA ($ millions)
(1)
Pembina reported record first quarter adjusted EBITDA of
$835 million, consistent with the
same period in the prior year. The first quarter of 2021 was
positively impacted by increased marketed NGL volumes and higher
margins on NGL and crude oil sales, combined with new assets placed
into service in Facilities and higher supply volumes at the
Redwater Complex. These factors were largely offset by lower
interruptible volumes on certain systems in Pipelines, an increase
in realized losses on commodity-related derivatives, and higher
general & administrative and other expenses largely driven by
increased long-term incentives, offset by lower salaries and wages
and lower acquisition related costs. The increase in long-term
incentives was driven by an increasing share price in the first
quarter of 2021 compared to a decreasing share price in the first
quarter of 2020.
(1)
|
Comparative 2020
period has been restated. See "Voluntary Change in Accounting
Policy" in Pembina's MD&A and Note 2 to the Interim Financial
Statements.
|
Earnings
Change in First Quarter Earnings ($
millions)(1)(2)'
(1)
|
Comparative 2020
period has been restated. See "Voluntary Change in Accounting
Policy" in Pembina's MD&A and Note 2 to the Interim Financial
Statements.
|
(2)
|
Marketing & New
Ventures results ex. hedging activities includes gross profit for
Marketing & New Ventures less realized and unrealized losses on
commodity-related derivative financial instruments.
|
Pembina reported earnings in the first quarter of $320 million, consistent with the same period in
the prior year. In addition to the factors positively impacting
adjusted EBITDA, as noted above, earnings were positively impacted
by a decrease in net finance costs due to lower foreign exchange
losses as a result of hedge accounting adopted in the second
quarter of 2020 and an increase in the value of the Canadian dollar
relative to the U.S. dollar. Earnings were also positively impacted
by a decrease in current tax expense as a result of lower taxable
income and a reduction in the Alberta corporate tax rate. Earnings
were negatively impacted by an unrealized loss on commodity-related
derivative financial instruments in the first quarter of the
current year, compared to a significant gain in the first quarter
of the prior year, and a lower share of profit from Ruby.
Cash Flow From Operating Activities
Cash flow from operating activities of $456 million for the first quarter was an
increase of 11 percent over the same period in the prior year. The
increase was driven primarily by a decrease in taxes paid, due to
lower taxable income related to 2020, combined with the increase in
operating results after adjusting for non-cash items, partially
offset by a change in non-cash working capital. A lower
distribution from Ruby was partially offset by higher distributions
from other equity accounted investees. On a per share (basic)
basis, cash flow from operating activities for the first quarter
increased by 11 percent compared to the same period in the prior
year due to the same factors.
Adjusted Cash Flow From Operating Activities
Adjusted cash flow from operating activities of $582 million was one percent higher compared to
the same period in the prior year. The same factors impacting cash
flow from operating activities, discussed above, net of the
decrease in taxes paid and change in non-cash working capital,
largely offset an increase in accrued share-based payment expense,
driven by Pembina's increasing share price in the first
quarter of 2021 compared to a decreasing share price in the first
quarter of 2020. On a per share (basic) basis, adjusted cash flow
from operating activities for the first quarter also increased by
one percent due to the same factors.
Volumes
Total volume of 3,482 mboe/d for the first quarter represents an
approximately one percent decrease over the same period in the
prior year. As discussed in further detail below, the decrease is
the result of lower interruptible volumes in Pipelines due to
reduced upstream activity in 2020, partially offset by higher
supply volumes at the Redwater Complex, higher seasonal volumes on
Alliance Pipeline and higher interruptible volumes on Ruby
Pipeline.
Divisional Highlights
- Pipelines reported adjusted EBITDA for the first quarter of
$529 million, representing a four
percent decrease compared to the same period in the prior year. The
first quarter was negatively impacted by lower revenue due to lower
interruptible volumes on the Drayton
Valley, Peace and Vantage pipelines as well as lower foreign
exchange rates. The first quarter also was negatively impacted by
higher operating expense due to higher power costs and integrity
spending, partially offset by higher cost recoveries.
Pipelines volumes of 2,587 mboe/d in the first quarter represent a
two percent decrease compared to the same period in the prior year.
The decrease largely was driven by lower interruptible volumes on
the Drayton Valley, Peace and
Vantage pipelines, partially offset by higher seasonal volumes on
Alliance Pipeline and higher interruptible volumes on Ruby
Pipeline.
- Facilities reported adjusted EBITDA of $269 million for the first quarter, which
represents a five percent increase over the same period in the
prior year. The increase was primarily due to the contribution from
new fractionation facilities at Empress, and Duvernay III being
placed into service during the fourth quarter of 2020, combined
with higher revenue at the Redwater Complex, partially offset by
higher operating expenses due to higher power costs.
Facilities volumes of 895 mboe/d in the first quarter represents a
two percent increase compared to the same period in the prior year.
The quarterly increase was due to higher supply volumes at the
Redwater Complex and incremental revenue volumes associated with
Duvernay III being placed into service in November 2020.
- Marketing & New Ventures reported first quarter adjusted
EBITDA of $90 million, which
represents a 64 percent increase compared to the same period in the
prior year. The period was positively impacted by a $134 million increase in net revenue as a result
of higher propane and crude oil prices during the first quarter of
2021, combined with higher marketed NGL volumes, partially offset
by a $105 million increase to the
realized loss on commodity-related derivatives.
NGL marketed volumes of 221 mboe/d in the first quarter represents
a 13 percent increase compared to the same period in the prior
year. Marketed NGL volumes increased as Pembina continued to
monetize storage positions that were built up during the second and
third quarters of 2020, when commodity prices were lower, combined
with increased supply volumes at the Redwater Complex.
Executive Overview
In the first quarter of 2021, Pembina delivered strong financial
and operational results, reflecting increased commodity prices and
rising volumes on many of its systems. Over the past few quarters,
across both the Pipelines and Facilities divisions, we have seen
steady increases in physical volumes, which reached pre-pandemic
peak levels in April 2021. With many
systems operating near take-or-pay levels throughout the second
half of 2020, Pembina is beginning to realize the anticipated
benefits of its operational leverage or 'torque' with incremental
volumes providing higher margins.
Higher prices and margins on crude oil and NGL as well as higher
NGL sales volumes in the quarter also led to strong results in our
marketing business. Excluding realized gains and losses on
commodity-related derivatives, first quarter adjusted EBITDA in
Marketing & New Ventures improved $140
million, or 368 percent, relative to the first quarter of
2020 and $97 million, or 120 percent,
compared to fourth quarter of 2020. The underlying marketing
business has improved significantly, however our frac spread hedges
and other commodity-related derivatives offset some of the
increases.
The Company has hedged approximately 50 percent of its 2021 frac
spread exposure, excluding Aux
Sable. These systematic hedges were entered into throughout
2019 and 2020. Additional discretionary winter NGL storage-related
hedges were also entered into in 2020 to secure seasonal
opportunities during an uncertain time. There remain no further
such discretionary hedges beyond the first quarter of 2021. With
the start-up of PRT and new fractionation facilities at Empress,
Pembina is reviewing its revised exposure profile as well as the
current pricing environment. The Company intends to hedge 50
percent of its 2022 frac spread exposure, excluding Aux Sable, prior to 2022.
Given the improvement in commodity prices, and the expectation
of a post-pandemic economic recovery, we continue to have a
constructive view of Western Canadian Sedimentary Basin ("WCSB")
activity levels. In particular, our business development activities
are being informed by a promising outlook for volume growth in the
northeast British Columbia Montney and Alberta Duvernay areas, both of which Pembina
serves today. Stronger commodity prices are allowing our producing
customers on average to generate greater than expected
discretionary cash flow. While the priority to date amongst this
group broadly has been debt reduction and shareholder returns, we
see growing evidence that these producers will increasingly begin
to allocate capital to new drilling, resulting in WCSB volume
growth later this year and into 2022. Furthermore, new
infrastructure including the Trans Mountain pipeline expansion, LNG
Canada, Enbridge's Line 3 Replacement, and Pembina's and
third-party NGL export terminals, are expected to collectively
improve relative pricing for Canadian hydrocarbons and support
future growth in the WCSB. As well, the Government of Alberta's
continued and increasing support and commitments related to the
petrochemical industry, including various incentive programs, are
expected to drive higher petrochemical feedstock (including ethane,
propane and butane) demand in western Canada. We have named these factors
collectively 'Advantage Canada' and we expect them to generate
ample new opportunities for Pembina in the future. These
opportunities include the potential re-activation of the currently
deferred Peace Pipeline expansions and the expansion of the Prince
Rupert Terminal, as well as our $4
billion portfolio of unsecured brownfield and greenfield
projects.
Pembina is reiterating it previously disclosed 2021 adjusted
EBITDA guidance range of $3.2 -
$3.4 billion. Pembina's 2021 capital
program is fully funded by cash flow after dividends and towards
the middle and upper end of the guidance range, excess cash flow
will be available for debt reduction, dividend increases, or
opportunistic common share repurchases. During the first quarter of
2021, the timing of certain cash payments and receipts resulted in
a draw on working capital and consequently no excess discretionary
cash flow was available. As the year progresses, Pembina will
continue to assess the optimal allocation of excess discretionary
cash flow based on the outlook for new capital investments beyond
2021 and the prevailing price of Pembina's common shares.
Business Update
Prince Rupert Terminal
Pembina recently celebrated the official start-up of its first
propane marine export facility, PRT, on Watson Island, British Columbia. Pembina completed dry
commissioning of PRT on March 19,
2021 and began loading propane onto vessels on April 9, 2021. As of April
22, two vessels had departed PRT, destined for international
markets. The start-up of PRT is a major step in providing new
market solutions and helping add incremental value to western
Canadian hydrocarbons. In conjunction with Pembina's unit train
capabilities, PRT will link the rest of the Company's natural gas
liquids infrastructure in western Canada with growing demand markets throughout
the world, with the majority of the increased value flowing to
those customers in Pembina's marketing pool.
Pembina is also pleased to announce that it has entered into a
one-year agreement with a subsidiary of Mitsui whereby Mitsui will
purchase substantially all of the post-commissioning cargos shipped
from PRT. Propane shipped from PRT will be primarily destined for
northeast Asia. Mitsui's global
reach and market knowledge ensures that propane shipped through PRT
will reach the highest value markets in the world.
Working together with the community, governments, and First
Nations, Pembina was able to transform and re-purpose a
contaminated site on Watson Island into a key connection point in
moving liquefied petroleum gas from rail cars to vessels off the
West Coast. Pembina invested approximately $12 million in remediation activities and
together with the City of Prince
Rupert removed a toxic and abandoned pulp mill, replacing it
with a key income generating asset, which will have lasting
benefits for all stakeholders.
The construction of PRT provided significant economic benefits
to the Prince Rupert area
including approximately 200 construction positions and, now in
operation, about 25 permanent full-time positions. Approximately 35
percent of the project spend was allocated towards local and
Indigenous contractors. As well, a training program was established
to provide local and Indigenous job candidates with an opportunity
to obtain specialized training. Since the beginning of the PRT
project, Pembina has also proudly invested over $350,000 into local community and emergency
response programs that promote safety; improve access to education;
protect or preserve the environment; create community spaces; and
encourage a healthy lifestyle.
Pembina is grateful for the support it has received from
multiple levels of government in the development of this
project:
"With our partners at Pembina, we've been able to move forward
together," said Mayor Lee Brain,
City of Prince Rupert. "Working
closely together over six years, we've been able to bring Watson
Island back into operation."
"Pembina's propane export terminal in the Prince Rupert area is a welcome investment in
our province" said The Honourable Bruce Ralston, Minister of
Energy, Mines and Low Carbon Innovation, British Columbia. Minister Ralston added, "I am glad to see companies
like Pembina finding ways to repurpose land to deliver sustainable
development solutions. The project is creating local jobs and
enhancing partnerships in the North Coast that will benefit local
and Indigenous communities for decades to come."
The Honourable Seamus O'Regan Jr., Minister of Natural Resources
commented: "Diversifying export markets for Canadian natural
resources creates jobs for our proud energy workers. The
Prince Rupert propane export
terminal will increase the competitiveness of Western Canada's propane producers and
strengthen Canada's position as a
reliable supplier of low-cost energy to the world."
Renewable Power Purchase Agreement
Pembina is taking concrete steps towards delivering on the
Company's Carbon Stand and continues to demonstrate its commitment
to providing responsible energy transportation and midstream
services that deliver much needed oil and gas products to market.
While proudly providing these services, Pembina is also taking
steps to reduce its environmental footprint through the reduction
of emissions and other impacts to the environment caused by its
business activities.
Pembina views power purchase agreements as an effective tool to
support development of renewable energy infrastructure, lower
emissions and support the transition to a lower carbon energy
system. Pembina is pleased to announce that it has signed a
long-term, 100 MW, PPA with a subsidiary of TransAlta Corporation
("TransAlta"), that supports development of the 130 MW Garden Plain
Wind Project in Alberta, with an
expected start-up in the second half of 2022.
The PPA provides significant benefits to Pembina including
securing cost-competitive renewable energy and fixing the price for
a portion of the power Pembina consumes. The 100 MW of capacity
from the PPA should provide an estimated 335,000 MWh annually of
renewable energy to Alberta's power grid, or enough to power over
45,000 homes for a year. This PPA represents approximately 15
percent of Pembina's equity share of total 2019 electrical power
consumption.
Further, the PPA is expected to generate on average
approximately 135,000 tonnes of CO2e emission offsets annually, or
an estimated total of 1.8 million tonnes of CO2e emission offsets.
Initially, Pembina will use the offsets to reduce its own emissions
with the option to sell or bank future offsets for other
uses.
The emissions reductions available from the PPA and the
cogeneration facility currently being constructed at Empress
represent approximately seven percent of Pembina's 2019 reported
greenhouse gas emissions. Pembina has committed to reducing the
carbon intensity of each business it operates and by the end of
2021 will have taken concrete action in this area and published
5-year emission targets, of which these two projects will form a
component thereof.
Executive Retirements and Appointments
Two of Pembina's long-standing officers, Paul Murphy, Senior Vice President &
Corporate Services Officer, and Jason
Wiun, Senior Vice President & Chief Operating Officer,
Pipelines, retired at the end of March. Mr. Murphy's tenure at
Pembina provided leadership and experience on several critical
expansions and acquisitions. In his 23 years with Pembina, Mr. Wiun
was instrumental in the growth of the Peace Pipeline system and the
successful integration of Alliance Pipeline, Alberta Ethane
Gathering System, Vantage Pipeline, and the recently acquired
Cochin Pipeline and Edmonton Terminals. On behalf of Pembina, we
congratulate Mr. Murphy and Mr. Wiun on their retirements and thank
them for their contributions to Pembina's success.
Pembina is pleased to announce the promotion of Janet Loduca, currently General Counsel &
Vice President, Legal & Sustainability, to Senior Vice
President, External Affairs and Chief Legal and Sustainability
Officer. That role was previously held by Harry Andersen, who has been appointed Senior
Vice President & Chief Operating Officer, Pipelines. Ms. Loduca
and Mr. Andersen both assumed their new roles at the beginning of
April. Further information on both Ms. Loduca and Mr. Andersen is
available on the Company's website at
www.pembina.com/about/officer-team/. Pembina is currently
recruiting for the position of Senior Vice President, Corporate
Services Division. Welcoming a candidate with deep experience to
this role will be key to helping the Company successfully execute
its strategy.
Pembina recognizes the value that different viewpoints bring to
our business and is taking important steps to ensure we have an
inclusive and diverse workforce. Currently, over 20 percent of
Pembina's executive team, which includes Senior Vice Presidents and
Vice Presidents, identify as female. Pembina's leadership team has
committed to increasing diversity at the executive level by 2025,
which we are confident will enable us to attract a broader talent
pool at all levels of the organization.
Projects and New Developments(1)
Pipelines:
- Pembina continues to progress its Phase VII Expansion ("Phase
VII"), which includes a new 20-inch, approximately 220 km pipeline
and two new pump stations or terminal upgrades. Phase VII will add
approximately 160 mbpd of incremental capacity upstream of
Fox Creek, accessing capacity
available on the mainlines downstream of Fox Creek. Right-of-way clearing and
procurement activities are in progress and construction is expected
to commence in mid-June. The project has a capital budget of
$775 million and has an expected
in-service date in the first half of 2023.
- The Phase VIII Expansion and Phase IX Expansion remain
deferred, however the initial contracts supporting the projects are
still in place and there remain strong indications of interest for
incremental capacity. Value engineering work is ongoing and Pembina
expects to make a decision in the second half of 2021 whether to
re-activate these projects.
Facilities:
- During the quarter, Pembina and its 45 percent owned joint
venture, Veresen Midstream, safely completed the start-up of Hythe
Developments. The project includes an expansion of 125 MMcf/d (56
MMcf/d net to Pembina) of sour gas processing at Veresen
Midstream's existing Hythe Gas Plant, approximately 60 km of
12-inch sour gas pipeline, a compressor station and various
Pembina-owned laterals.
- At the end of the first quarter, Pembina completed and placed
into service the Prince Rupert Terminal, a propane export terminal
located on Watson Island, British
Columbia with permitted capacity of 25,000 barrels per
day.
- Pembina continues to progress the Empress Cogeneration
Facility. The Facility will use natural gas to generate up to 45
megawatts of electrical power, thereby reducing overall operating
costs by providing power and heat to the existing Empress NGL
Extraction Facility. All the power will be consumed on site,
thereby supplying approximately 90 percent of the site's power
requirements. Further, this project will contribute to annual
greenhouse gas emission reductions at the Empress NGL Extraction
Facility through the utilization of cogeneration waste heat and
low-emission power generated. This project has received all
regulatory permits to commence activities at the site and
construction is scheduled to commence in May
2021. The project has a capital budget of $120 million with an expected in-service date in
the fourth quarter of 2022.
- The Prince Rupert Terminal Expansion remains deferred.
Engineering of the expansion is well advanced and Pembina expects
to make a final investment decision in the second half of
2021.
(1)
|
For further details
on the Company's significant assets, including definitions for
capitalized terms used herein that are not otherwise defined, refer
to Pembina's Annual Information Form for the year ended December
31, 2020 filed at www.sedar.com (filed with the U.S. Securities and
Exchange Commission at www.sec.gov under Form 40-F) and on
Pembina's website at www.pembina.com.
|
Marketing & New Ventures:
- Pembina's New Ventures group continues to advance business
opportunities in petrochemicals, liquified natural gas, and
low-carbon energy. The group is focused on developing opportunities
that integrate into Pembina's core businesses, while progressing
projects that will extend Pembina's value-chain and benefit
stakeholders. One example of this work includes the 100 MW
renewable wind power agreement discussed above.
Financing
- On January 25, 2021, Pembina
closed a $600 million offering of
Fixed-to-Fixed Rate Subordinated Hybrid Notes (the "Series 1
Subordinated Notes"). The Series 1 Subordinated Notes have a fixed
4.80 percent interest rate, payable semi-annually, which resets on
January 25, 2031, and on every fifth
anniversary thereafter, based on the five-year Government of Canada
Yield plus: 4.17 percent for the period from, and including,
January 25, 2031 to, but excluding
January 25, 2051; and 4.92 percent
for the period from, and including, January
25, 2051 to, but excluding January
25, 2081. Pembina used the net proceeds of the offering of
the Series 1 Subordinated Notes to fund the redemption of its
outstanding Cumulative Redeemable Minimum Rate Reset Class A
Preferred Shares, Series 11, its outstanding Cumulative Redeemable
Minimum Rate Reset Class A Preferred Shares, Series 13, to repay
outstanding debt, as well as for general corporate purposes.
- On February 25, 2021, the Toronto
Stock Exchange ("TSX") accepted the Company's notice of intention
to commence a normal course issuer bid that allows the Company to
repurchase, at its discretion, up to approximately 27.5 million
common shares through the facilities of the TSX, the New York Stock
Exchange and/or alternative Canadian trading systems, or as
otherwise permitted by applicable securities laws, subject to
certain restrictions on the number of common shares that may be
purchased on a single day. Common shares purchased by the Company
will be cancelled. The program commenced March 2, 2021 and will terminate on March 1, 2022 or on such earlier date as the
Company completes its purchases pursuant to the notice of
intention. No common shares were purchased by Pembina during the
first quarter of 2021.
- On March 1, 2021, Pembina
redeemed all of the 6.8 million issued and outstanding Cumulative
Redeemable Minimum Rate Reset Class A Preferred Shares, Series 11
(the "Series 11 Class A Preferred Shares") for a redemption price
equal to $25.00 per Series 11 Class A
Preferred Share, less taxes required to be deducted or withheld by
the Company.
- On March 25, 2021, Pembina
cancelled its $800 million revolving
credit facility. No balance was outstanding on the cancellation
date.
- On March 29, 2021, Ruby amended
the maturity date of its term loan to April
30, 2021. Ruby Pipeline LLC repaid the term loan in full on
April 19, 2021.
- Subsequent to quarter end, on April 6,
2021, Pembina announced its intention to redeem all of the
10 million issued and outstanding Cumulative Redeemable Minimum
Rate Reset Class A Preferred Shares, Series 13 (the "Series 13
Class A Preferred Shares") on June 1,
2021 for a redemption price equal to $25.00 per Series 13 Class A Preferred Shares,
less taxes required to be deducted or withheld by the Company.
- On April 28, 2021, DBRS Limited
upgraded its ratings to 'BBB (high)' in respect of Pembina's senior
unsecured medium-term notes, 'BBB (low)' to the Series 1
Subordinated Notes and 'Pfd-3 (high)' to each issued series of
Pembina's Class A Preferred Shares, other than the Class A
Preferred Shares, Series 2021-A, which are deliverable to the
holders of the Series 1 Subordinated Notes following the occurrence
of certain bankruptcy or insolvency events in respect of
Pembina.
- Subsequent to quarter end, Pembina extended its revolving and
operating credit facilities to June
2026 and May 2022,
respectively.
Dividends
- Pembina declared and paid dividends of $0.21 per common share in January, February and
March 2021 for the applicable record
dates.
- Pembina declared and paid quarterly dividends per Class A
Preferred Share of: Series 1: $0.306625; Series 3: $0.279875; Series 5: $0.285813; Series 7: $0.27375; Series 9: $0.268875; Series 11: $0.359375; Series 13: $0.359375; and Series 21: $0.30625 to shareholders of record as of
February 1, 2021. Pembina also
declared and paid quarterly dividends per Class A Preferred Share
of: Series 15: $0.279; Series 17:
$0.301313; and Series 19:
$0.29275 to shareholders of record on
March 15, 2021. Pembina also declared
and paid quarterly dividends per Class A Preferred Share of Series
23: $0.328125; and Series 25:
$0.3250 to shareholders of record on
February 1, 2021.
First Quarter 2021 Conference Call & Webcast
Pembina will host a conference call on Friday, May 7, 2021 at 8:00 a.m. MT (10:00 a.m.
ET) for interested investors, analysts, brokers and media
representatives to discuss results for the first quarter of 2021.
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 May 14, 2021 at
11:59 p.m. ET. To access the replay,
please dial either 416-849-0833 or 855-859-2056 and enter the
password 9083723.
A live webcast of the conference call can be accessed on
Pembina's website at www.pembina.com under Investor Centre/
Presentation & Events, or by entering:
https://produceredition.webcasts.com/starthere.jsp?ei=1354254&tp_key=7450e25cf7 in
your web browser. Shortly after the call, an audio archive will be
posted on the website for a minimum of 90 days.
Annual Meeting of Common Shareholders
The Company will hold its Annual Meeting of Common Shareholders
("AGM") on Friday, May 7, 2021 at
2:00 p.m. MT (4:00 p.m. ET). The AGM will he held as a
virtual-only meeting, which will be conducted via live video
webcast at https://web.lumiagm.com/?fromUrl=475399186. Participants
are recommended to register for the virtual webcast at least 10
minutes before the presentation start time.
For further information on Pembina's virtual AGM, kindly visit
www.pembina.com.
About Pembina
Pembina is a leading transportation and midstream service
provider that has been serving North
America's energy industry for more than 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; and is growing
an export terminals 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 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
forward looking 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", "outlook",
"strategy", "protect", "trend", "commit", "maintain", "focus",
"ongoing", "believe" and similar expressions suggesting future
events or future performance.
In particular, this document contains forward-looking
statements, including certain financial outlooks, pertaining to,
without limitation, the following: Pembina's corporate strategy and
the development of new business initiatives and growth
opportunities, the anticipated benefits therefrom and the expected
timing thereof; expectations about industry activities and
development opportunities, including outlooks related thereto;
expectations about future demand for Pembina's infrastructure and
services; expectations relating to new infrastructure projects,
including the benefits therefrom and timing thereof; expectations
regarding government programs and initiatives and the anticipated
benefits therefrom; Pembina's sustainability, climate change and
environmental, social and governance plans, initiatives and
strategies, including expectations relating to Pembina's Carbon
Stand, carbon intensity and diversity commitments, and emissions
targets; planning, construction, capital expenditure estimates,
schedules, locations, expected capacity, incremental volumes,
completion and in-service dates, rights, activities and operations
with respect to the construction of, or expansions on, existing
pipelines systems, gas services facilities, processing and
fractionation facilities, terminalling, storage and hub facilities
and other facilities or energy infrastructure, as well as the
impact of Pembina's projects on its future financial performance
and stakeholders; expectations relating to PPAs, including the
anticipated environmental benefits therefrom; pipeline, processing,
fractionation and storage facility and system operations and
throughput levels; the expected benefits from Pembina's agreements;
decisions and activities related to deferred projects; budget
trends; the impact of current and expected market conditions on
Pembina; expectations regarding adjusted EBITDA; expected sources
of liquidity; expected cost savings and Pembina's ability to
maintain such cost savings into the future; expectations regarding
Pembina's NGL storage positions and its intentions with respect
thereto; expected volumes across Pembina's conventional pipelines
business; levels and types of contracted volumes; Pembina's options
for allocating capital; plans and expectations relating to hedging;
expectations regarding the repurchase and redemption of shares and
the timing thereof; and expected future cash flows and the
sufficiency thereof to fund Pembina's capital program.
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; prevailing commodity prices, interest rates, carbon
prices, tax rates and exchange rates; 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
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 and Indigenous
and landowner consultation requirements; the impact of competitive
entities and pricing; reliance on third parties to successfully
operate and maintain certain assets; 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;
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; risks
relating to the current and potential adverse impacts of the
COVID-19 pandemic; constraints on the, or the unavailability of,
adequate infrastructure; the political environment in North
American and elsewhere, and public opinion; ability to access
various sources of debt and equity capital; changes in credit
ratings; counterparty credit risk; technology and cyber security
risks; natural catastrophes; 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
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, and
adjusted cash flow from operating activities per common share,
which do not have any standardized meaning under International
Financial Reporting Standards ("IFRS"). Since these 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 be clearly defined,
qualified and reconciled to their most directly comparable 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.
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, other than as described herein,
including reconciliations to, the most directly comparable measures
recognized by GAAP, please refer to Pembina's MD&A for the
three months ended March 31, 2021,
which is available online at www.sedar.com, www.sec.gov and through
Pembina's website at www.pembina.com.
View original content to download
multimedia:http://www.prnewswire.com/news-releases/pembina-pipeline-corporation-reports-results-for-the-first-quarter-2021-and-provides-business-update-301286233.html
SOURCE Pembina Pipeline Corporation