Pembina reports first
quarter results and announces a five percent dividend
increase
All financial figures are in Canadian dollars unless noted
otherwise.
CALGARY, May 2, 2019 /CNW/ - Pembina Pipeline Corporation
("Pembina" or the "Company") (TSX: PPL; NYSE: PBA) announced today
its financial and operating results for the first quarter of
2019.
Financial and Operational Overview
|
3 Months Ended March
31
|
($ millions,
except where noted) (unaudited)
|
2019
|
2018
|
Revenue
|
1,968
|
1,837
|
Net
revenue(1)
|
774
|
719
|
Gross
profit
|
588
|
568
|
Earnings
|
313
|
330
|
Earnings per common
share – basic and diluted (dollars)
|
0.55
|
0.59
|
Cash flow from
operating activities
|
608
|
498
|
Cash flow from
operating activities per common share – basic
(dollars)(1)
|
1.20
|
0.99
|
Adjusted cash flow
from operating activities(1)
|
578
|
530
|
Adjusted cash flow
from operating activities per common share – basic
(dollars)(1)
|
1.14
|
1.05
|
Common share
dividends declared
|
290
|
272
|
Dividends per common
share (dollars)
|
0.57
|
0.54
|
Capital
expenditures
|
361
|
324
|
Total volume
(mboe/d)(2)
|
3,403
|
3,266
|
Adjusted
EBITDA(1)
|
773
|
688
|
|
|
(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
March 31
|
|
2019
|
2018
|
($ millions,
unless otherwise noted)
(unaudited)
|
Volumes(1)
|
Gross
Profit
|
Adjusted
EBITDA(2)
|
Volumes(1)
|
Gross
Profit
|
Adjusted
EBITDA(2)
|
Pipelines
Division
|
2,507
|
340
|
457
|
2,424
|
294
|
402
|
Facilities
Division
|
896
|
158
|
232
|
842
|
143
|
218
|
Marketing & New
Ventures Division(3)
|
—
|
93
|
121
|
—
|
133
|
104
|
Corporate
|
—
|
(3)
|
(37)
|
—
|
(2)
|
(36)
|
Total
|
3,403
|
588
|
773
|
3,266
|
568
|
688
|
|
|
(1)
|
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 the MD&A for further
information.
|
Financial & Operational Highlights
- Record first quarter adjusted EBITDA of $773 million, representing a 12 percent increase
over the same period in 2018 was driven primarily by increased
gross profit from both the Pipeline and Facilities divisions from
new assets that were placed into service in late 2018 and
additional commitments on existing assets; the adoption of IFRS 16;
a realized gain compared to a realized loss on commodity related
derivatives in the Marketing & New Ventures Division; and was
partially offset by higher general and administrative costs;
- First quarter earnings of $313
million, a five percent decrease over the same period of the
prior year, was primarily due to, with the exception of the
adoption of IFRS 16, the factors affecting adjusted EBITDA as well
as an unrealized loss on commodity related derivatives compared to
an unrealized gain in the previous period and higher net finance
costs, as net finance costs in the prior period included a gain
related to the Company's convertible debentures. First quarter
earnings was also positively impacted by a $33 million settlement from an ongoing contract
dispute that was resolved during the quarter.
- Cash flow from operating activities of $608 million for the first quarter, a 22 percent
increase over the same period in 2018, was primarily due to
increased operating results, increased distributions from equity
accounted investees, and changes in non-cash working capital,
offset by higher taxes paid. On a per share (basic) basis, cash
flow from operating activities for the first quarter increased by
21 percent, compared to the same period in the prior year;
- Adjusted cash flow from operating activities increased by nine
percent to $578 million in the first
quarter of 2019, compared to the same period in 2018, mainly
attributable to an increase in operating results, higher
distributions from equity accounted investees, partially offset by
an increase in current tax expense and interest paid. On a per
share (basic) basis, adjusted cash flow from operating activities
for the first quarter increased nine percent compared to the same
period of the prior year; and
- Total volumes of 3,403 mboe/d for the first quarter of 2019, a
four percent increase over the prior year.
Divisional Highlights
- Pipelines Division reported first quarter adjusted EBITDA of
$457 million, representing a 14
percent increase, and volumes of 2,507 mboe/d, representing a three
percent increase, compared to the same period of 2018. Higher
volumes were predominately the result of the Phase IV and Phase V
Peace Pipeline expansions, which were placed into service in
December 2018, marginally offset by a
force majeure impacting the Vantage system;
- Facilities Division reported first quarter adjusted EBITDA of
$232 million, representing a six
percent increase, and volumes of 896 mboe/d, representing an
increase of six percent, compared to the same period of 2018. These
increases were caused primarily by higher volumes at Veresen
Midstream, due in part to the North Central Liquids Hub being
placed into service in June 2018,
combined with higher volumes at the Redwater complex; and
- Marketing & New Ventures Division reported first quarter
adjusted EBITDA of $121 million,
representing a 16% increase, and NGL sales volumes of 216 mboe/d,
representing a 14 percent increase, compared to the same period in
2018. Higher NGL sales volumes was driven by higher volumes at the
Redwater complex. The increase in
adjusted EBITDA was primarily due to the higher NGL sales volumes,
increased contribution from Aux
Sable as a result of lower operating expenses, the adoption
of IFRS 16 and a realized gain on commodity-related derivatives in
the first quarter compared to a realized loss in the same period in
2018.
Executive Overview
In the first quarter of 2019, Pembina has once again delivered strong
financial and operational results, including record quarterly
results for adjusted EBITDA and adjusted cash flow from operating
activities, while continuing to announce new major projects
supporting ongoing growth of our business.
Quarterly results were driven by strong year-over-year increases
in operating results in the Pipelines and Facilities divisions as a
result of new assets placed into service and higher utilization of
existing assets, as well as higher NGL sales volumes and a realized
gain on commodity related derivatives in the marketing
business.
The most notable achievement during the quarter was our
announcement that Pembina along
with Petrochemical Industries Company K.S.C. of Kuwait
("PIC"), reached a positive final investment decision to construct
a 550,000 tonne per annum integrated propane dehydrogenation
("PDH") plant and polypropylene ("PP") upgrading facility ("PDH/PP
Facility") through their equally-owned joint venture entity, Canada
Kuwait Petrochemical Corporation. The announcement was the
culmination of many years of hard work with PIC to develop a
project that is well positioned to capitalize on Alberta's
abundant supply of propane and undertake value-added processing
that benefits all of Pembina's
stakeholders, the Province of Alberta and indeed all of
Canada. Sanctioning of the PDH/PP Facility is the
largest step taken to date by Pembina in executing its strategy to secure
global market prices for customers' hydrocarbons produced in
western Canada and provides another exciting platform for
future growth.
We also were pleased to announce another expansion of the Peace
Pipeline system, Phase VIII, which will accommodate incremental
customer demand in the Montney area by debottlenecking
constraints, accessing downstream capacity and further enhancing
product segregation on the system. Phase VIII is yet another
example of the advantages that our strategic footprint provides,
namely the opportunity to complete staged expansions that deliver
timely and reliable transportation service solutions for our
customers.
With the approval of our PDH/PP Facility and Phase VIII we
currently have $5.5 billion of
secured projects that will diversify and strengthen our business,
extend our value chain and ultimately enhance our service
offering.
With the continued strength in the business, we are pleased once
again to announce today a five percent dividend increase. This is
the eighth consecutive year of increasing the dividend and we are
extremely proud of the value we have been able to return to
shareholders, reinforcing our commitment to provide our investors
with sustainable cash flow and dividend per share growth.
Projects and New Developments
Pipelines Division
- 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. Detailed engineering is nearing
completion and construction has begun in some areas. The estimated
$280 million project is trending over
budget and on schedule, with an anticipated in-service date in the
second half of 2019, subject to environmental and regulatory
approvals;
- Aligning with the Phase VI expansion, 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. Early works
construction is underway for this lateral. Subject to regulatory
and environmental approvals, this lateral is expected to be in
service in the second half of 2019;
- Pembina continues to progress
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. The expansion
is currently in Front End Engineering Design ("FEED") with the
engineering schedule issued and on track. This project has an
estimated capital cost of $950
million and is anticipated to be in service in the first
half of 2021, subject to environmental and regulatory
approvals;
- As previously announced during the quarter Pembina is proceeding with the Phase VIII
Peace Pipeline expansion, which includes new 10 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. Pre-FEED work is underway
for this expansion. This project has an estimated capital cost 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;
and
- Development continues on the previously announced NEBC Montney
Infrastructure in proximity to the Company's Birch Terminal.
Construction is underway for this project. This new infrastructure
is anticipated to be in service in third quarter of 2019.
Facilities Division
- The Company's one million-barrel Burstall Ethane Storage
facility located near Burstall,
Saskatchewan was placed into service in January 2019;
- The Company's 45 MW co-generation facility at the Redwater complex was placed into service at
the end of March;
- Subsequent to the quarter, Pembina executed further agreements with
Chevron Canada to construct sour gas treating facilities at the
Duvernay complex (the "Duvernay
Sour Treatment Facilities"). These facilities will include a 150
mmcf/d sour gas sweetening system with the potential for 300 mmcf/d
of amine regeneration capability and one tonne of sulphur per day
of acid gas incineration. These facilities have an expected capital
cost of approximately $65 million and
an anticipated in-service date in the first quarter of 2020,
subject to environmental and regulatory approvals. Engineering for
the project is progressing and long lead equipment has been
ordered. The Duvernay Sour Treating Facilities will have a 20-year
contractual life and be back-stopped by fixed-return arrangements.
Further, with the addition of sour treating infrastructure,
Pembina is positioned to handle
future third-party sour gas volumes at the Duvernay complex;
- Pembina continues to progress
construction of Duvernay II, which includes 300 mmcf/d of raw gas
separation and water removal infrastructure; a 100 MMcf/d sweet
gas, shallow cut processing facility; 30,000 bpd of condensate
stabilization; and other associated infrastructure. In conjunction
with the Duvernay Sour Treating Facilities, the capital cost of
Duvernay II has been revised to $320
million reflecting the modifications required to meet sour
specifications. Engineering is substantially complete and long lead
equipment has begun to arrive onsite. The project continues to
track on budget and schedule with an expected in-service date in
the fourth quarter of 2019, subject to regulatory and environmental
approvals;
- Pembina is progressing the
previously announced Duvernay III, which includes a 100 MMcf/d
sweet gas, shallow cut processing facility; 20,000 bpd of
condensate stabilization; and other associated infrastructure. In
conjunction with the Duvernay Sour Treating Facilities, the capital
cost of Duvernay III has been revised to $175 million reflecting the modifications
required to meet sour specifications. Detailed design is
progressing and long lead equipment is currently in the process of
being ordered. The project continues to track on budget and
schedule with an expected in-service date in mid-to-late 2020,
subject to regulatory and environmental approvals;
- Pembina continues with the
construction of new fractionation and terminalling facilities at
the Company's Empress, Alberta
extraction plant for a total expected capital cost of approximately
$120 million. Engineering for the
project is nearing completion with early works construction
underway. These facilities are expected to add approximately 30,000
bpd of propane-plus capacity to Pembina's Empress NGL Extraction 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. Grading and drainage of the main facilities area
has been completed and material deliveries have started. The 25,000
bpd project will source LPG from the Company's Redwater complex is anticipated to have a
total capital cost of $250 million
with an anticipated in-service date in mid-2020, subject to
regulatory and environmental approvals;
- 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. Long
lead equipment for both the facility and the pipeline has been
ordered. Collectively, the Hythe Developments have an estimated
total capital cost of approximately $380
million ($185 million net to
Pembina) and an anticipated
in-service date of late 2020, subject to regulatory and
environmental approvals; and
- On April 4, 2019, Pembina elected to cause all of the Veresen
Midstream Class B Units held by its joint venture partner to be
converted to Class A Units. This election will eliminate further
dilution of Pembina's ownership in
Veresen Midstream. Pembina's
interest in Veresen Midstream for the three months ended
March 31, 2019, and subsequent to the
conversion of Class B Units is approximately 45 percent.
Marketing & New Ventures Division
- During the quarter, Pembina
along with PIC, announced a positive final investment decision to
construct a 550,000 tonne per annum integrated PDH/PP Facility
through their equally-owned joint venture entity, Canada Kuwait
Petrochemical Corporation. The PDH/PP Facility 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. The project
is now transitioning into the execution phase including obtaining
engineering, procurement and construction bids, site clearing
activities and the placement of long-lead equipment orders.
Pembina's net investment in this
project is expected to be $2.5
billion with an expected in-service date in mid-2023,
subject to environmental and regulatory approvals; and
- A key component of Pembina's
strategy involves securing access to global markets for hydrocarbon
resources in the basins where Pembina operates. The Company is committed to
the Jordan Cove LNG project as a means of delivering long-lived,
highly economic North American natural gas resources to global
demand markets.
Regulatory processes for Jordan Cove are progressing. On
March 29, 2019 the FERC issued a
Draft Environmental Impact Statement, which provides a constructive
framework for the approval of Jordan Cove essentially as proposed,
with reasonable conditions that work with the project development
process and with only minor suggested changes. A final FERC
decision is expected by January
2020.
Oregon State permit approvals including
those under the Coastal Zone Management Act and the Oregon
Department of Environmental Quality 401 are also progressing with
decisions on both approvals expected by the end of 2019. Each
of the permits are a critical component of the regulatory process
and enable the commercial viability and critical investment in
Oregon to move forward.
Pembina continues to see Jordan
Cove as a viable project, however the Company has decided to limit
pre-FID capital investment on non-permitting related activities.
Pembina has approved incremental
funding of approximately $50 million
for 2019 in support of the remaining critical regulatory and
permitting work streams.
The Company will conclude Federal and Oregon regulatory processes allowing it to
catch up with certain other project work streams. Given the
anticipated regulatory timeline, we expect these activities to
resume in early 2020, subject to receipt of the requisite FERC and
State of Oregon approvals.
Suspending non-permitting related activities will affect the
construction schedule of the project and first gas is expected to
be delayed up to one year from the previously anticipated date in
2024.
Commercialization efforts have continued and as previously
disclosed the Company has executed non-binding off-take agreements
with customers in excess of the planned design capacity of 7.5
Mtpa. Commercial discussions with prospective customers are
continuing as regulatory permitting is progressed and under the new
timeline the Company will work to conclude binding off-take
agreements by early 2020.
Pembina previously disclosed that
given the size of this project, the Company intends to seek
partners for both the pipeline and liquification facility thereby
reducing its 100 percent ownership interest to a net ownership
interest of between 40 and 60 percent with the intention to reduce
the capital, operating and other project risks. This process to
find partners is expected to commence upon securing binding
off-take agreements, and under the new timeline is expected to
occur in early 2020.
Financial Impact of Adoption of IFRS 16
- The nature of expenses related to identified lessee
arrangements changed as IFRS 16 replaced straight-line operating
lease expense with depreciation of right of use assets and interest
expense relating to lease liabilities. The change resulted in a
$1 million increase to earnings and a
$15 million increase to adjusted
EBITDA for the three months ended March 31,
2019. In addition, cash flow from operating activities and
adjusted cash flow from operating activities increased $15 million and cash flow from financing
activities decreased by the same amount, as lease obligation
repayments are now reported as financing activities on the
Condensed Consolidated Interim Statement of Cash Flows. There was
no net impact on cash flows.
Guidance
- Based on the expected full year impact of IFRS 16, Pembina is revising both the low and the high
end of its 2019 Adjusted EBITDA guidance range by $50 million, to $2.85 to $3.05
billion.
Financing
- Subsequent to quarter end, Pembina closed an $800
million issuance of senior unsecured medium-term notes (the
"Offering") on April 3, 2019. The
Offering was conducted in two tranches consisting of $400 million in senior unsecured medium-term
notes, series 12, having a fixed coupon of 3.62 percent per annum,
paid semi-annually, and maturing on April 3,
2029 and $400 million in
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. The net proceeds
will be used to repay short-term indebtedness of the Company under
its credit facilities, as well as to fund Pembina's capital program and for general
corporate purposes.
Dividends
- Declared and paid dividends of $0.19 per qualifying common share for the
applicable record dates in January, February and March 2019;
- On May 2, 2019, Pembina's Board of Directors approved a five
percent increase in its monthly common share dividend rate (from
$0.19 per common share to
$0.20 per common share), commencing
with the dividend to be paid on June 14,
2019;
- Declared and paid quarterly dividends per qualifying preferred
shares of: Series 1: $0.306625;
Series 3: $0.29375; Series 5:
$0.3125; 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
February 1, 2019. Declared and paid
quarterly dividends per qualifying preferred shares of: Series 15:
$0.279; Series 17: $0.3125; and Series 19: $0.3125 to shareholders of record on March 15, 2019;
- On January 30, 2019, Pembina announced that it did not intend to
exercise its right to redeem the currently outstanding 6,000,000
Cumulative Redeemable Rate Reset Class A Preferred Shares, Series 3
("Series 3 Shares") on March 1, 2019.
The annual dividend rate for the Series 3 Shares for the five-year
period from and including March 1,
2019 to, but excluding, March 1,
2024 will be 4.478%. For more information on the terms of,
and risks associated with an investment in, the Series 3 Shares
please see the prospectus supplement dated September 25, 2013 filed on SEDAR at
www.sedar.com and available at www.pembina.com and the news release
dated January 30, 2019;
- On March 1, 2019, Pembina announced that it did not intend to
exercise its right to redeem the currently outstanding 6,000,000
Cumulative Redeemable Rate Reset Class A Preferred Shares, Series
17 ("Series 17 Shares") on March 31,
2019. The annual dividend rate for the Series 17 Shares for
the five-year period from and including March 31, 2019 to, but excluding, March 31, 2024 will be 4.821%. For more
information on the terms of, and risks associated with an
investment in, the Series 17 Shares please see the prospectus
supplement dated October 11, 2013
filed on SEDAR at www.sedar.com and available at www.pembina.com
and the news release dated March 1,
2019; and
- Subsequent to quarter end, on May 2,
2019, Pembina announced
that it did not intend to exercise its right to redeem the
currently outstanding 10,000,000 Cumulative Redeemable Rate Reset
Class A Preferred Shares, Series 5 ("Series 5 Shares") on
June 3, 2019 (the "Conversion Date").
As a result, and subject to certain terms of the Series 5 Shares,
the holders of the Series 5 Shares will have the right to elect to
convert all or any of their Series 5 Shares into Cumulative
Redeemable Floating Rate Class A Preferred Shares, Series 6 of
Pembina ("Series 6 Shares") on the
basis of one Series 6 Share for each Series 5 Share on the
Conversion Date. The deadline to provide notice of exercise of the
right to convert Series 5 Shares into Series 6 Shares is
3:00 p.m. (MST) / 5:00 p.m. (EST) on May 17,
2019. For more information on the terms of, and risks
associated with an investment in, the Series 5 Shares and the
Series 6 Shares, please see Pembina's prospectus supplement dated
January 9, 2014 which can be found on
SEDAR at www.sedar.com and available at www.pembina.com and the
news release dated May 2, 2019.
First Quarter 2019 Conference Call & Webcast
Pembina will host a conference
call on Friday, May 3, 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 first 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 May 10, 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 4976398.
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/1880618/81FD9B5DBEEB0D2BF7D38CA19EDC43B7 in
your browser. Shortly after the call, an audio archive will be
posted on the website for a minimum of 90 days.
Annual and Special Meeting of Common Shareholders and Special
Meeting of Preferred Shareholders
The Company will hold its Annual and Special Meeting of common
shareholders ("AGM") on Friday, May 3,
2019 at 2:00 p.m. MT
(4:00 p.m. ET) in the Ballroom at the
Metropolitan Conference Centre, 333 - 4th Avenue S.W.,
Calgary, Alberta, Canada.
The Company will hold its Special Meeting of Class A preferred
shareholders on Friday, May 3, 2019
at 1:00 p.m. MT (3:00 p.m. ET) in the Grand Lecture Theatre at the
Metropolitan Conference Centre, 333 - 4th Avenue S.W.,
Calgary, Alberta, Canada.
A live webcast of Pembina's AGM
presentation can be accessed on Pembina's website at www.pembina.com under
Investor Centre, Presentation & Events, or by entering:
https://event.on24.com/wcc/r/1937359/0069DA07C36B92C7D7AC740E7FE09605 in
your web browser. Participants are recommended to register for the
webcast at least 10 minutes before the presentation start time.
2019 Investor Day
Pembina will hold an Investor
Day on Tuesday, May 14, 2019 at The
Omni King Edward Hotel in Toronto,
Ontario. For parties interested in attending the event,
please email investor-relations@pembina.com to request an
invitation.
About Pembina
Calgary-based Pembina
Pipeline Corporation is a leading transportation and midstream
service provider that has been serving North America's energy industry for over 60
years. Pembina owns an integrated
system of pipelines that transport various hydrocarbon liquids and
natural gas products produced primarily in western Canada. The Company also owns gas gathering
and processing facilities and an oil and natural gas liquids
infrastructure and logistics business. Pembina's integrated assets and commercial
operations along the majority of the hydrocarbon value chain allow
it to offer a full spectrum of midstream and marketing services to
the energy sector. Pembina is
committed to 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.
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;
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; expectations regarding the involvement of
partners on the Jordan Cove project; dilution of Pembina's ownership in certain joint ventures;
anticipated synergies between assets under development, assets
being acquired and existing assets of the Company; the future level
and sustainability of cash dividends that Pembina intends to pay its shareholders,
including the expected future cash flows and the sufficiency
thereof.
The forward-looking statements are based on certain
assumptions that Pembina has made
in respect thereof as at the date of this news release regarding,
among other things: oil and gas industry exploration and
development activity levels and the geographic region of such
activity; the success of Pembina's
operations and growth projects; prevailing commodity prices and
exchange rates and the ability of Pembina to maintain current credit ratings;
the availability of capital to fund future capital requirements
relating to existing assets and projects; future operating costs;
geotechnical and integrity costs; that any third-party projects
relating to Pembina's growth
projects will be sanctioned and completed as expected; that any
required commercial agreements can be reached; that all required
regulatory and environmental approvals can be obtained on the
necessary terms in a timely manner; that counterparties will comply
with contracts in a timely manner; that there are no unforeseen
events preventing the performance of contracts or the completion of
the relevant facilities; that there are no unforeseen material
costs relating to the facilities which are not recoverable from
customers; prevailing interest and tax rates; prevailing
regulatory, tax and environmental laws and regulations; maintenance
of operating margins; the amount of future liabilities relating to
lawsuits and environmental incidents; and the availability of
coverage under Pembina's insurance
policies (including in respect of Pembina's business interruption insurance
policy).
Although Pembina believes
the expectations and material factors and assumptions reflected in
these forward-looking statements are reasonable as of the date
hereof, there can be no assurance that these expectations, factors
and assumptions will prove to be correct. These forward-looking
statements are not guarantees of future performance and are subject
to a number of known and unknown risks and uncertainties including,
but not limited to: the regulatory environment and decisions; the
impact of competitive entities and pricing; labour and material
shortages; reliance on key relationships and agreements; the
strength and operations of the oil and natural gas production
industry and related commodity prices; non-performance or default
by counterparties to agreements which Pembina or one or more of its affiliates has
entered into in respect of its business; actions by governmental or
regulatory authorities including changes in tax laws and treatment,
changes in royalty rates, 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; 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
will 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), Adjusted EBITDA per common share,
cash flow from operating activities per common share, 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
March 31, 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