All financial figures are in Canadian dollars unless otherwise
noted. This news release refers to certain financial measures and
ratios that are not specified, defined or determined in accordance
with Generally Accepted Accounting Principles ("GAAP"), including
net revenue; adjusted earnings before interest, taxes, depreciation
and amortization ("adjusted EBITDA"); adjusted cash flow from
operating activities; adjusted cash flow from operating activities
per common share; and proportionately consolidated debt-to-adjusted
EBITDA. For more information see "Non-GAAP and Other Financial
Measures" herein.
Pembina Pipeline Corporation ("Pembina" or the "Company") (TSX:
PPL; NYSE: PBA) announced today its financial and operating results
for the third quarter of 2024.
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the full release here:
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Highlights
- Quarterly Results - reported quarterly earnings of $385
million, quarterly adjusted EBITDA of $1,019 million, and quarterly
adjusted cash flow from operating activities of $724 million.
- Guidance - 2024 adjusted EBITDA guidance range has been
narrowed to $4.225 billion to $4.325 billion (previously $4.2
billion to $4.35 billion).
- Recent Business Updates - developments during and
following the third quarter included:
- Effective August 1, 2024, Pembina acquired a 14.6 percent
interest in Aux Sable's U.S. operations thereby fully consolidating
ownership of all Aux Sable assets.
- Pembina Gas Infrastructure Inc. ("PGI") announced a $420
million (gross) transaction (the "Whitecap Transaction") with
Whitecap Resources Inc. ("Whitecap"), including the acquisition of
a 50 percent interest in Whitecap's Kaybob Complex and an
obligation to fund future infrastructure development. PGI also
entered into agreements with Veren Inc. and certain affiliates
thereof ("Veren") that include the $400 million (gross) acquisition
of Veren’s Gold Creek and Karr area oil batteries and support for
future infrastructure development. Further to the agreement with
Veren, PGI and Veren are progressing a new battery facility and
associated pipelines in the Gold Creek area.
- Common Share Dividend Declared - the board of directors
declared a common share cash dividend for the fourth quarter of
2024 of $0.69 per share to be paid, subject to applicable law, on
December 31, 2024, to shareholders of record on December 16,
2024.
- Strong Balance Sheet - at September 30, 2024, the ratio
of proportionately consolidated debt-to-adjusted EBITDA on a
trailing twelve-month basis was 3.6 times, at the low end of the
Company's targeted range and reflecting only two quarters of
contribution from the Alliance/Aux Sable Acquisition.
Financial and Operational Overview
3 Months Ended September
30
9 Months Ended September
30
($ millions, except where noted)
2024
2023
2024
2023
Revenue(1)
1,844
1,455
5,239
4,495
Net revenue(1)(2)
1,259
989
3,393
2,831
Gross profit
747
659
2,292
1,990
Adjusted EBITDA(2)
1,019
1,021
3,154
2,791
Earnings
385
346
1,302
1,078
Earnings per common share – basic
(dollars)
0.60
0.58
2.08
1.79
Earnings per common share – diluted
(dollars)
0.60
0.57
2.08
1.78
Cash flow from operating activities
922
644
2,312
1,755
Cash flow from operating activities per
common share – basic (dollars)
1.59
1.17
4.06
3.19
Adjusted cash flow from operating
activities(2)
724
659
2,343
1,899
Adjusted cash flow from operating
activities per common share – basic (dollars)(2)
1.25
1.20
4.11
3.45
Capital expenditures
262
169
713
429
(1)
Comparative 2023 period has been
adjusted. See "Accounting Policies & Estimates - Change in
Accounting Policies" in Pembina's Management's Discussion and
Analysis dated November 5, 2024 for the three and nine months ended
September 30, 2024 and Note 2 to the Interim Financial Statements
for the three and nine months ended September 30, 2024.
(2)
Refer to "Non-GAAP and Other
Financial Measures".
Financial and Operational Overview by Division
3 Months Ended September
30
9 Months Ended September
30
2024
2023
2024
2023
($ millions, except where noted)
Volumes(1)
Earnings (Loss)
Adjusted EBITDA(2)
Volumes(1)
Earnings (Loss)
Adjusted EBITDA(2)
Volumes(1)
Earnings (Loss)
Adjusted EBITDA(2)
Volumes(1)
Earnings (Loss)
Adjusted EBITDA(2)
Pipelines
2,738
433
593
2,595
437
591
2,684
1,373
1,847
2,500
1,163
1,617
Facilities
810
131
324
803
179
319
823
489
974
757
467
889
Marketing & New Ventures
344
125
159
255
(4)
159
319
324
490
261
231
424
Corporate
—
(215)
(57)
—
(170)
(48)
—
(1,210)
(157)
—
(487)
(139)
Income tax expense/recovery
—
(89)
—
—
(96)
—
—
326
—
—
(296)
—
Total
385
1,019
346
1,021
1,302
3,154
1,078
2,791
(1)
Volumes for the 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. Volumes for Marketing & New
Ventures are marketed crude and NGL volumes.
(2)
Refer to "Non-GAAP and Other
Financial Measures".
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, 2023, and Pembina's Management's
Discussion and Analysis dated November 5, 2024 for the three and
nine months ended September 30, 2024, filed at www.sedarplus.ca
(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.
Financial & Operational Highlights
Adjusted EBITDA
Pembina reported third quarter adjusted EBITDA of $1,019
million, consistent with the same period in the prior year. As
discussed further below, the positive impacts of increased
ownership of Alliance and Aux Sable combined with growing volumes
on certain systems, and higher natural gas liquids ("NGL") margins,
were offset predominantly by the impacts of lower recontracted
tolls and lower volumes on Cochin Pipeline ($44 million), the
earlier recognition of deferred take-or-pay revenue in the first
half of 2024 compared to the prior period ($15 million), lower
realized gains on derivatives ($21 million) and certain other
one-time items, including an unplanned outage at Aux Sable in the
current period ($13 million), and a gain on the recognition of a
finance lease in the prior period ($16 million).
Pipelines reported adjusted EBITDA of $593 million for the third
quarter, consistent with the same period in the prior year,
reflecting the net impact of the following factors:
- higher contribution from Alliance due to increased ownership
following the Alliance/Aux Sable Acquisition;
- higher contribution from Alliance due to higher demand on
seasonal contracts;
- the reactivation of the Nipisi Pipeline in late 2023;
- lower contribution from Cochin Pipeline due to lower tolls on
new long-term contracts, which replaced contracts that expired in
mid-July 2024 ($21 million); lower volumes resulting from a
contracting gap from mid-July to August 1 associated with the
return of linefill to certain customers; lower interruptible demand
resulting from a narrower condensate price differential between
western Canada and the U.S. Gulf Coast; and higher integrity
spending; and
- lower net revenue on the Peace Pipeline system due to the
earlier recognition of take-or-pay deferred revenue in the first
half of 2024 compared to 2023, which more than offset higher
contracted volumes.
Facilities reported adjusted EBITDA of $324 million for the
third quarter, representing a $5 million or two percent increase
over the same period in the prior year, reflecting the net impact
of the following factors:
- the inclusion within Facilities of adjusted EBITDA from Aux
Sable following the Alliance/Aux Sable Acquisition; and
- a gain on the recognition of a finance lease in the third
quarter of 2023.
Marketing & New Ventures reported adjusted EBITDA of $159
million for the third quarter, consistent with the same period in
the prior year, reflecting the net impact of the following
factors:
- higher net revenue from contracts with customers due to
increased ownership interest in Aux Sable following the
Alliance/Aux Sable Acquisition;
- higher NGL margins;
- the impact of a nine-day unplanned outage at Aux Sable;
and
- lower realized gains on commodity-related derivatives.
Corporate reported adjusted EBITDA of negative $57 million for
the third quarter, representing a $9 million or 19 percent decrease
compared to the same period in the prior year, primarily reflecting
higher long-term incentive costs driven by Pembina's share price
performance, partially offset by lower consulting fees.
Earnings
Pembina reported third quarter earnings of $385 million,
representing a $39 million or eleven percent increase over the same
period in the prior year.
Pipelines had earnings in the third quarter of $433 million,
representing a $4 million or one percent decrease over the prior
period. The decrease was primarily due to the same factors
impacting adjusted EBITDA, as noted above, as well as higher
depreciation and amortization expense largely due to the
Alliance/Aux Sable Acquisition.
Facilities had earnings in the third quarter of $131 million,
representing a $48 million or 27 percent decrease over the prior
period. In addition to the factors impacting adjusted EBITDA, as
noted above, the decrease was due to unrealized losses recognized
by PGI on interest rate derivative financial instruments compared
to gains in the third quarter of 2023, and higher depreciation and
amortization expense largely due to the Alliance/Aux Sable
Acquisition.
Marketing & New Ventures had earnings in the third quarter
of $125 million, representing a $129 million increase over the
prior period. In addition to the factors impacting adjusted EBITDA,
as noted above, the increase was due to unrealized gains on
NGL-based derivatives and crude-oil based derivatives compared to
losses in the third quarter of 2023, larger unrealized losses on
power purchase agreements, unrealized losses on interest rate
derivative financial instruments recognized by Cedar LNG Partners
LP ("Cedar LNG") and a cost recovery related to a storage insurance
settlement.
In addition to the factors impacting adjusted EBITDA in the
Corporate segment, as noted above, the change in third quarter
earnings compared to the prior period was primarily due to higher
net finance costs, primarily as a result of additional debt
associated with the Alliance/Aux Sable Acquisition.
Cash Flow From Operating Activities
Cash flow from operating activities of $922 million for the
third quarter represents a 43 percent increase over the same period
in the prior year. The increase was primarily driven by higher
operating results, as discussed above, the change in non-cash
working capital, an increase in payments collected through contract
liabilities, and lower taxes paid, partially offset by lower
distributions from equity accounted investees and higher net
interest paid.
On a per share (basic) basis, cash flow from operating
activities was $1.59 per share for the third quarter, representing
an increase of 36 percent compared to the same period in the prior
year, due to the same factors, as well as additional common shares
issued in connection with the Alliance/Aux Sable Acquisition
financing.
Adjusted Cash Flow From Operating Activities
Adjusted cash flow from operating activities of $724 million for
the third quarter represents a ten percent increase over the same
period in the prior year. The increase was primarily driven by the
same items impacting cash flow from operating activities, discussed
above, excluding the change in non-cash working capital and taxes
paid, as well as lower current income tax expense, partially offset
by higher accrued share-based payment expense.
On a per share (basic) basis, adjusted cash flow from operating
activities was $1.25 per share for the third quarter representing a
four percent increase over the same period in the prior year, due
to the same factors, as well as additional common shares issued in
connection with the Alliance/Aux Sable Acquisition financing.
Volumes
Pipelines volumes of 2,738 mboe/d in the third quarter represent
a six percent increase compared to the same period in the prior
year. The increase was primarily due to the increased ownership
interest in Alliance and the reactivation of the Nipisi Pipeline.
These factors were partially offset by lower volumes on the Peace
Pipeline system, Cochin Pipeline, and the Drayton Valley Pipeline.
Lower volumes on the Peace Pipeline system were a result of the
earlier recognition of take-or-pay deferred revenue in the first
half of 2024, compared to the first half of 2023, which more than
offset higher contracted volumes. Lower volumes on the Cochin
Pipeline were largely due to a contracting gap from mid-July to
August 1 associated with the return of linefill to certain
customers, and lower interruptible demand during the quarter
resulting from a narrower condensate price differential between
western Canada and the U.S. Gulf Coast.
Facilities volumes of 810 mboe/d in the third quarter represent
a one percent increase compared to the same period in the prior
year. The increase was primarily due to the recognition of Aux
Sable volumes following the Alliance/Aux Sable Acquisition; lower
volumes at the Redwater Complex and at Younger due to planned
outages and a rail strike impacting the Redwater Complex resulting
in volume curtailments; and lower volumes on certain PGI assets due
to the earlier recognition of take-or-pay deferred revenue in the
first half of 2024, which more than offset higher PGI interruptible
volumes.
In Marketing & New Ventures, crude oil sales volumes of 117
mboe/d in the third quarter represent a 31 percent increase
compared to the same period in the prior year, primarily due to
higher blending opportunities due to favourable price
differentials. NGL sales volumes of 227 mboe/d in the third quarter
represent a 37 percent increase compared to the same period in the
prior year, primarily due to higher ethane, propane, and butane
sales as a result of the increased ownership interest in Aux
Sable.
Executive Overview
Following solid third quarter results, and based on the outlook
for the remainder of 2024, Pembina is poised to deliver a record
financial year reflecting the positive impact of recent
acquisitions, growing volumes in the Western Canadian Sedimentary
Basin ("WCSB"), and a strong contribution from the marketing
business.
Pembina has narrowed its 2024 adjusted EBITDA guidance range to
$4.225 billion to $4.325 billion (previously $4.2 billion to $4.35
billion). Pembina is currently trending towards the mid-point of
the guidance range based on prevailing forward commodity prices and
the outlook for fourth quarter volumes.
Year-to-date, conventional pipeline volumes have been modestly
impacted by various Pembina and third-party outages and lower than
expected interruptible volumes on certain systems, leading to
slightly lower volume growth in 2024 than originally anticipated.
However, the broader outlook for growth in the WCSB, and Pembina's
business, remains strong and the revised guidance is based on an
expectation for the fourth quarter of higher interruptible volumes
on certain systems and the impact of new contracts.
At September 30, 2024, the ratio of proportionately consolidated
debt-to-adjusted EBITDA on a trailing twelve-month basis was 3.6
times, at the low end of the Company's targeted range, and
reflecting only two quarters of contribution from the Alliance/Aux
Sable Acquisition. Pembina expects to exit the year with a ratio of
3.4 to 3.6 times.
Other highlights during, and subsequent to, the third quarter
included:
Aux Sable Transaction
As previously announced, effective August 1, 2024, Pembina
acquired a 14.6 percent interest in Aux Sable's U.S. operations
from certain subsidiaries of The Williams Companies, Inc. The
Company is pleased to have fully consolidated ownership of all Aux
Sable assets, thereby further simplifying corporate reporting and
enhancing its ability to pursue long-term synergies.
PGI Transactions
As previously announced, during the quarter, PGI, jointly owned
by Pembina and KKR, entered into two exciting transactions with
growth-focused companies operating in the Montney and Duvernay.
The first was the $420 million (gross) Whitecap Transaction that
included the acquisition of a 50 percent interest in Whitecap's
Kaybob Complex and an obligation to fund future Lator area
infrastructure development. Closing of the Whitecap Transaction is
pending final regulatory approval.
In the second transaction, PGI entered into agreements with
Veren that include the $400 million (gross) acquisition of Veren’s
Gold Creek and Karr area oil batteries and support for future
infrastructure development. We are pleased to have closed this
transaction, effective October 9, 2024, and look forward to growing
alongside Veren in the years to come. Subsequent to the third
quarter, further to the agreement with Veren, and PGI's commitment
to fund up to $300 million of future infrastructure, PGI and Veren
are progressing a new battery and associated pipelines,
representing more than half of the funding commitment.
Through these two transactions, we are realizing the vision set
forth with the creation of PGI in 2022. PGI and Pembina have a
compelling service offering and ability to provide tailored and
value-added solutions to support the specific needs of our
customers. PGI and Pembina have further aligned themselves with two
strong growth companies, creating opportunities with attractive
economics that are expected to enhance asset utilization, capture
future volumes, and benefit Pembina’s full value chain.
Cedar LNG
Following the positive final investment decision last quarter
with respect to the Cedar LNG Project, we reached an exciting early
milestone with the start of the on-shore construction activities,
including site clearing and other civil works. Detailed engineering
is underway on the floating liquefied natural gas ("FLNG")
facility, with the EPC contractor reporting that progress on that
workstream is on track. We are looking forward to the start of
construction of the FLNG facility in mid-2025.
The process to assign Pembina's capacity in Cedar LNG to a third
party is ongoing. This represents the only capacity currently
available for contracting from a sanctioned west coast LNG project,
and as such, there is broad interest in the capacity. As a function
of the interest from multiple counterparties, Pembina expects this
process to extend into 2025.
Pembina occupies a strong and unique position within the
Canadian energy industry. The Company's extensive asset base and
integrated value chain allow it to provide a full suite of
transportation and midstream services across multiple hydrocarbons
– natural gas, crude oil, condensate, and NGL. In combination with
a strong financial position and fully funded business model,
Pembina is positioned to benefit from a robust, multi-year growth
outlook for the WCSB. This growth is being driven by
transformational developments that include the recent completion of
the Trans Mountain Pipeline expansion, new West Coast liquefied
natural gas ("LNG") and NGL export capacity, and the development of
new petrochemical facilities creating significant demand for ethane
and propane. Throughout the remainder of 2024 and into 2025,
Pembina is focused on capitalizing on the opportunities arising
from this growth and delivering long-term and sustainable value to
our shareholders.
Projects and New Developments
Pipelines
- The ongoing NEBC MPS Expansion includes a new mid-point pump
station, terminal upgrades, and additional storage, which will
support approximately 40,000 bpd of incremental capacity on the
NEBC Pipeline system. This expansion will fulfill customer demand
in light of growing production volumes from northeastern British
Columbia ("NEBC") and previously announced long-term midstream
service agreements with three premier NEBC Montney producers.
Terminal upgrades and additional storage were completed in October
and the mid-point pump station is expected to be completed by the
end of 2024. The NEBC MPS Expansion is trending on time and under
the $90 million budget, adding to Pembina's record of strong
project execution.
- On April 23, 2024, Pembina filed its project application for
the Taylor to Gordondale Project (an expansion of the Pouce Coupe
system) with the Canada Energy Regulator ("CER"). The CER has
determined the application is complete and can proceed to the
assessment phase of the regulatory process.
- Pembina continues to advance further expansions to support
volume growth in NEBC, including new pipelines and terminal
upgrades.
Facilities
- Pembina is constructing a new 55,000 bpd propane-plus
fractionator ("RFS IV") at its existing Redwater Complex. RFS IV
will leverage the design, engineering and operating best practices
of the existing facilities at the Redwater Complex. The project
includes additional rail loading capacity at the Redwater Complex.
With the addition of RFS IV, the fractionation capacity at the
Redwater Complex will total 256,000 bpd. As previously announced,
the estimated project cost has been revised to $525 million
(previously $460 million), reflecting project scope changes as well
as higher equipment, material and labour costs in light of Alberta
construction activity. Pembina has entered into a lump-sum
engineering, procurement and construction agreement for more than
70 percent of the project cost. Site clearing activities have been
completed, engineering and procurement activities and site
construction continued in the third quarter of 2024. RFS IV is
expected to be in-service in the first half of 2026, subject to
regulatory and environmental approvals.
- PGI is developing an expansion (the "Wapiti Expansion") that
will increase natural gas processing capacity at the Wapiti Plant
by 115 mmcf/d (gross to PGI). The Wapiti Plant is fully integrated
into Pembina’s value chain and the liquids processed at the plant
are transported on the Peace Pipeline system. The Wapiti Expansion
is being driven by strong customer demand supported by growing
Montney production and is fully underpinned by long-term,
take-or-pay contracts. The Wapiti Expansion, which includes a new
sales gas pipeline and other related infrastructure, is expected to
cost $230 million ($140 million net to Pembina) with an estimated
in-service date in the first half of 2026, subject to regulatory
and environmental approval. All permits necessary to begin
construction have been received.
- PGI is developing a 28 MW cogeneration facility at its K3 Plant
(the "K3 Cogeneration Facility"), which is expected to cost $115
million ($70 million net to Pembina). The K3 Cogeneration Facility
is expected to reduce overall operating costs by providing power
and heat to the gas processing facility, while reducing customers’
exposure to power prices. The K3 Cogeneration Facility is expected
to fully supply the K3 Plant's power requirements, with excess
power sold to the grid at market rates. Further, through the
utilization of the cogeneration waste heat and the low-emission
power generated, the K3 Cogeneration Facility is expected to
contribute to a reduction in annual emissions compliance costs at
the K3 Plant. The K3 Cogeneration Facility is expected to be
in-service in the first half of 2026, subject to regulatory and
environmental approvals. The project is trending on time and on
budget.
Marketing & New Ventures
- Pembina and its partner, the Haisla Nation, in June 2024
announced a positive final investment decision in respect of the
Cedar LNG Project, a 3.3 million tonne per annum ("mtpa") floating
LNG facility in Kitimat, British Columbia, within the traditional
territory of the Haisla Nation. The Cedar LNG Project will provide
a valuable outlet for WCSB natural gas to access global markets and
is expected to achieve higher prices for Canadian producers and
enhance global energy security. Given it will be a floating LNG
facility, manufactured in the controlled conditions of a shipyard,
it is expected that the Cedar LNG Project will have lower
construction and execution risk. Further, powered by BC Hydro, the
Cedar LNG Project is expected to be one of the lowest emissions LNG
facilities in the world. Cedar LNG has secured a 20-year
take-or-pay, fixed toll contract with ARC Resources Ltd. for 1.5
mtpa of LNG. As part of the agreement, ARC Resources Ltd. will
supply Cedar LNG approximately 200 million cubic feet per day of
natural gas via the Coastal GasLink pipeline from its production
base in the Montney. Pembina has also entered into an identical
bridging agreement with Cedar LNG for 1.5 mtpa of capacity. The
process to assign Pembina's capacity in Cedar LNG to a third party
is ongoing and expected to extend into 2025. The Cedar LNG Project
has an estimated cost of approximately US$3.4 billion (gross),
including US$2.3 billion (gross), or approximately 70 percent, for
the floating LNG production unit, which is being constructed under
a fixed-price, lump-sum agreement with Samsung Heavy Industries and
Black & Veatch, and US$1.1 billion (gross) related to onshore
infrastructure, owner’s costs, commissioning and start-up costs,
financial assurances during construction, and other costs. The
total Cedar LNG Project cost, including US$0.6 billion (gross) of
interest during construction and transaction costs, is expected to
be approximately US$4.0 billion (gross). The anticipated in-service
date of the Cedar LNG Project is in late 2028. Site clearing and
civil works on the marine terminal site commenced in the third
quarter of 2024 and construction of the floating LNG vessel is
expected to begin in mid-2025.
Third Quarter 2024 Conference Call & Webcast
Pembina will host a conference call on Wednesday, November 6,
2024, at 8:00 a.m. MT (10:00 a.m. ET) for interested investors,
analysts, brokers and media representatives to discuss results for
the third quarter of 2024. The conference call dial-in numbers for
Canada and the U.S. are 1-289-819-1520 or 1-800-549-8228. A
recording of the conference call will be available for replay until
Wednesday, November 13, 2024, at 11:59 p.m. ET. To access the
replay, please dial either 1-289-819-1325 or 1-888-660-6264 and
enter the password 33188 #.
A live webcast of the conference call can be accessed on
Pembina's website at www.pembina.com under Investor
Centre/Presentations & Events, or by entering:
https://events.q4inc.com/attendee/912654252 in your web browser.
Shortly after the call, an audio archive will be posted on the
website for a minimum of 90 days.
Quarterly Common Share Dividend
Pembina's board of directors has declared a common share cash
dividend for the fourth quarter of 2024 of $0.69 per share to be
paid, subject to applicable law, on December 31, 2024, to
shareholders of record on December 16, 2024. The common share
dividends are designated as "eligible dividends" for Canadian
income tax purposes. For non-resident shareholders, Pembina's
common share dividends should be considered "qualified dividends"
and may be subject to Canadian withholding tax.
For shareholders receiving their common share dividends in U.S.
funds, the cash dividend is expected to be approximately US$0.4966
per share (before deduction of any applicable Canadian withholding
tax) based on a currency exchange rate of 0.7197. The actual U.S.
dollar dividend will depend on the Canadian/U.S. dollar exchange
rate on the payment date and will be subject to applicable
withholding taxes.
Quarterly dividend payments are expected to be made on the last
business day of March, June, September and December to shareholders
of record on the 15th day of the corresponding month, if, as and
when declared by the board of directors. Should the record date
fall on a weekend or on a statutory holiday, the record date will
be the next succeeding business day following the weekend or
statutory holiday.
About Pembina
Pembina Pipeline Corporation is a leading energy transportation
and midstream service provider that has served North America's
energy industry for 70 years. Pembina owns an integrated network of
hydrocarbon liquids and natural gas pipelines, gas gathering and
processing facilities, oil and natural gas liquids infrastructure
and logistics services, and an export terminals business. Through
our integrated value chain, we seek to provide safe and reliable
energy solutions that connect producers and consumers across the
world, support a more sustainable future and benefit our customers,
investors, employees and communities. For more information, please
visit www.pembina.com.
Purpose of Pembina: We deliver extraordinary energy solutions so
the world can thrive.
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 news release 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", "will", "expects", "estimate",
"potential", "planned", "future", "outlook", "strategy", "project",
"plan", "commit", "maintain", "focus", "ongoing", "believe" and
similar expressions suggesting future events or future
performance.
In particular, this news release contains forward-looking
statements, including certain financial outlooks, pertaining to,
without limitation, the following: future pipeline, processing,
fractionation and storage facility and system operations and
throughput levels; Pembina's strategy and the development of new
business initiatives and growth opportunities, including the
anticipated benefits therefrom and the expected timing thereof;
expectations about current and future market conditions, industry
activities and development opportunities, as well as the
anticipated benefits thereof, including general market conditions
outlooks and industry developments; expectations regarding future
credit ratings; expectations about future demand for Pembina's
infrastructure and services, including expectations in respect of
customer contracts, future volume growth in the WCSB, increased
utilization and future tolls and volumes; expectations relating to
the development of Pembina's new projects and developments,
including the Cedar LNG Project, RFS IV, the NEBC MPS Expansion,
the Wapiti Expansion and the K3 Cogeneration Facility, including
the timing and anticipated benefits thereof; expectations relating
to the Whitecap Transaction and the impacts of the Company's
acquisition of the remaining interests in Aux Sable and PGI's
transaction with Veren, including expected funding and future
opportunities related thereto and the anticipated benefits thereof;
Pembina's updated 2024 guidance, including with respect to its
updated 2024 adjusted EBITDA guidance range, and expected
proportionally consolidated debt to adjusted EBITDA; statements
regarding commercial discussions regarding the assignment of
Pembina's contracted capacity for Cedar LNG, including the timing
and outcome thereof; Pembina's future common share dividends,
including the timing, amount and expected tax treatment thereof;
planning, construction, locations, capital expenditure estimates,
schedules, regulatory and environmental applications and
anticipated approvals, expected capacity, incremental volumes,
contractual arrangements, completion and in-service dates, rights,
sources of product, activities, benefits and operations with
respect to new 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 new projects on its future financial
performance; and expectations regarding commercial agreements,
including the expected timing and benefit thereof.
The forward-looking statements are based on certain factors and
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, exchange rates and inflation rates; the ability
of Pembina to maintain current credit ratings; the availability and
cost of capital to fund future capital requirements relating to
existing assets, projects and the repayment or refinancing of
existing debt as it becomes due; 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; conditions to closing of the Whitecap
Transaction in a timely manner, including receipt of all necessary
approvals, that the Whitecap Transaction will be completed on terms
consistent with management's current expectations; assumptions with
respect to our intention to complete share repurchases, including
the funding thereof, existing and future market conditions,
including with respect to Pembina's common share trading price, and
compliance with respect to applicable securities laws and
regulations and stock exchange policies; that any required
commercial agreements can be reached in the manner and on the terms
expected by Pembina; that all required regulatory and environmental
approvals can be obtained on the necessary terms and 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
projects; 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; reliance on key relationships, joint
venture partners and agreements; labour and material shortages; the
strength and operations of the oil and natural gas production
industry and related commodity prices; non-performance or default
by contractual counterparties ; actions by governmental or
regulatory authorities, including changes in tax laws and
treatment, changes in royalty rates, changes in regulatory
processes or increased environmental regulation; the ability of
Pembina to acquire or develop the necessary infrastructure in
respect of future development projects; the ability of Pembina and
Whitecap to receive all necessary approvals and satisfy all other
conditions to the Whitecap Transaction on a timely basis or at all;
Pembina's ability to realize the anticipated benefits of the
Whitecap Transaction, its acquisition of the remaining interests in
Aux Sable and PGI's transaction with Veren; fluctuations in
operating results; adverse general economic and market conditions,
including potential recessions in Canada, North America and
worldwide resulting in changes, or prolonged weaknesses, as
applicable, in interest rates, foreign currency exchange rates,
inflation, commodity prices, supply/demand trends and overall
industry activity levels; constraints on the, or the unavailability
of, adequate supplies, infrastructure or labour; the political
environment in North American and elsewhere, and public opinion;
the ability to access various sources of debt and equity capital;
adverse changes in credit ratings; counterparty credit risk;
technology and cyber security risks; natural catastrophes; and
certain other risks detailed in Pembina's Annual Information Form
and Management's Discussion and Analysis, each dated February 22,
2024 for the year ended December 31, 2023 and from time to time in
Pembina's public disclosure documents available at
www.sedarplus.ca, 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 by forward-looking statements contained herein. The
forward-looking statements contained in this news release speak
only as of the date of this news release. 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. Management approved the updated
2024 guidance contained herein on November 5, 2024. The purpose of
the updated 2024 guidance is to assist readers in understanding
Pembina's expected and targeted financial results, and this
information may not be appropriate for other purposes. The
forward-looking statements contained in this news release are
expressly qualified by this cautionary statement.
Non-GAAP and Other Financial Measures
Throughout this news release, Pembina has disclosed certain
financial measures and ratios that are not specified, defined or
determined in accordance with GAAP and which are not disclosed in
Pembina's financial statements. Non-GAAP financial measures either
exclude an amount that is included in, or include an amount that is
excluded from, the composition of the most directly comparable
financial measure specified, defined and determined in accordance
with GAAP. Non-GAAP ratios are financial measures that are in the
form of a ratio, fraction, percentage or similar representation
that has a non-GAAP financial measure as one or more of its
components. These non-GAAP financial measures and non-GAAP ratios,
together with financial measures and ratios specified, defined and
determined in accordance with GAAP, are used by management to
evaluate the performance and cash flows of Pembina and its
businesses and to provide additional useful information respecting
Pembina's financial performance and cash flows to investors and
analysts.
In this news release, Pembina has disclosed the following
non-GAAP financial measures and non-GAAP ratios: net revenue,
adjusted EBITDA, adjusted EBITDA from equity accounted investees,
adjusted cash flow from operating activities, adjusted cash flow
from operating activities per common share, and proportionately
consolidated debt-to-adjusted EBITDA. The non-GAAP financial
measures and non-GAAP ratios disclosed in this news release do not
have any standardized meaning under International Financial
Reporting Standards ("IFRS") and may not be comparable to similar
financial measures or ratios disclosed by other issuers. Such
financial measures and ratios should not, therefore, be considered
in isolation or as a substitute for, or superior to, measures and
ratios of Pembina's financial performance, or cash flows specified,
defined or determined in accordance with IFRS, including revenue,
earnings, cash flow from operating activities and cash flow from
operating activities per share.
Except as otherwise described herein, these non-GAAP financial
measures and non-GAAP ratios are calculated on a consistent basis
from period to period. Specific reconciling items may only be
relevant in certain periods.
Below is a description of each non-GAAP financial measure and
non-GAAP ratio disclosed in this news release, together with, as
applicable, disclosure of the most directly comparable financial
measure that is determined in accordance with GAAP to which each
non-GAAP financial measure relates and a quantitative
reconciliation of each non-GAAP financial measure to such directly
comparable GAAP financial measure. Additional information relating
to such non-GAAP financial measures and non-GAAP ratios, including
disclosure of the composition of each non-GAAP financial measure
and non-GAAP ratio, an explanation of how each non-GAAP financial
measure and non-GAAP ratio provides useful information to investors
and the additional purposes, if any, for which management uses each
non-GAAP financial measure and non-GAAP ratio; an explanation of
the reason for any change in the label or composition of each
non-GAAP financial measure and non-GAAP ratio from what was
previously disclosed; and a description of any significant
difference between forward-looking non-GAAP financial measures and
the equivalent historical non-GAAP financial measures, is contained
in the "Non-GAAP & Other Financial Measures" section of the
management's discussion and analysis of Pembina dated February 22,
2024 for the year ended December 31, 2023 (the "MD&A"), which
information is incorporated by reference in this news release. The
MD&A is available on SEDAR+ at www.sedarplus.ca, EDGAR at
www.sec.gov and Pembina's website at www.pembina.com.
Net Revenue
Net revenue is a non-GAAP financial measure which is defined as
total revenue less cost of goods. The most directly comparable
financial measure to net revenue that is determined in accordance
with GAAP and disclosed in Pembina's financial statements is
revenue.
3 Months Ended September 30
Pipelines
Facilities
Marketing & New
Ventures(1)
Corporate &
Inter-segment
Eliminations
Total(1)
($ millions)
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
Revenue
860
734
282
233
938
675
(236)
(187)
1,844
1,455
Cost of goods sold
9
6
—
—
732
594
(156)
(134)
585
466
Net revenue
851
728
282
233
206
81
(80)
(53)
1,259
989
(1)
Comparative 2023 period has been
adjusted. See "Accounting Policies & Estimates - Change in
Accounting Policies" in Pembina's Management's Discussion and
Analysis dated November 5, 2024 for the three and nine months ended
September 30, 2024 and Note 2 to the Interim Financial Statements
for the three and nine months ended September 30, 2024.
9 Months Ended September 30
Pipelines
Facilities
Marketing & New
Ventures(1)
Corporate &
Inter-segment
Eliminations
Total(1)
($ millions)
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
Revenue
2,438
1,970
807
661
2,663
2,263
(669)
(399)
5,239
4,495
Cost of goods sold
35
6
—
—
2,279
1,915
(468)
(257)
1,846
1,664
Net revenue
2,403
1,964
807
661
384
348
(201)
(142)
3,393
2,831
(1)
Comparative 2023 period has been
adjusted. See "Accounting Policies & Estimates - Change in
Accounting Policies" in Pembina's Management's Discussion and
Analysis dated November 5, 2024 for the three and nine months ended
September 30, 2024 and Note 2 to the Interim Financial Statements
for the three and nine months ended September 30, 2024.
Adjusted Earnings Before Interest, Taxes,
Depreciation and Amortization
Adjusted EBITDA is a non-GAAP financial measure and is
calculated as earnings before net finance costs, income taxes,
depreciation and amortization (included in operations and general
and administrative expense), and unrealized gains or losses from
derivative instruments. The exclusion of unrealized gains or losses
from derivative instruments eliminates the non-cash impact of such
gains or losses.
Adjusted EBITDA also includes adjustments to earnings for
non-controlling interest, losses (gains) on disposal of assets,
transaction costs incurred in respect of acquisitions, dispositions
and restructuring, impairment charges or reversals in respect of
goodwill, intangible assets, investments in equity accounted
investees and property, plant and equipment, certain non-cash
provisions and other amounts not reflective of ongoing operations.
These additional adjustments are made to exclude various non-cash
and other items that are not reflective of ongoing operations.
Following completion of the Alliance/Aux Sable Acquisition,
Pembina revised the definition of adjusted EBITDA to deduct
earnings for the 14.6 percent non-controlling interest in the Aux
Sable U.S. operations. Pembina's subsequent acquisition of the
remaining interest in Aux Sable's U.S. operations in the third
quarter of 2024 resulted in all of Aux Sable's results being
included in the adjusted EBITDA calculation beginning on August 1,
2024.
3 Months Ended September 30
Pipelines
Facilities
Marketing & New
Ventures
Corporate &
Inter-segment
Eliminations
Total
($ millions, except per share amounts)
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
Earnings (loss)
433
437
131
179
125
(4)
(215)
(170)
385
346
Income tax expense
—
—
—
—
—
—
—
—
89
96
Adjustments to share of profit from equity
accounted investees and other
2
42
139
100
49
65
—
—
190
207
Net finance cost
6
7
3
2
1
11
139
110
149
130
Depreciation and amortization
153
104
50
38
15
11
13
11
231
164
Unrealized loss (gain) from derivative
instruments
—
—
—
—
(18)
78
—
—
(18)
78
Non-controlling interest(1)
—
—
—
—
(2)
—
—
—
(2)
—
Transaction and integration costs in
respect of acquisitions
—
—
—
—
—
—
4
—
4
—
Gain on disposal of assets, other non-cash
provisions, and other
(1)
1
1
—
(11)
(2)
2
1
(9)
—
Adjusted EBITDA
593
591
324
319
159
159
(57)
(48)
1,019
1,021
(1)
Presented net of adjusting
items.
9 Months Ended September 30
Pipelines
Facilities
Marketing & New
Ventures
Corporate &
Inter-segment
Eliminations
Total
($ millions, except per share amounts)
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
Earnings (loss)
1,373
1,163
489
467
324
231
(1,210)
(487)
1,302
1,078
Income tax (recovery) expense
—
—
—
—
—
—
—
—
(326)
296
Adjustments to share of profit from equity
accounted investees and other
46
127
350
303
58
78
—
—
454
508
Net finance costs
19
22
8
6
4
8
367
314
398
350
Depreciation and amortization
412
305
128
113
47
34
40
33
627
485
Unrealized loss from derivative
instruments
—
—
—
—
129
78
—
—
129
78
Non-controlling interest(1)
—
—
—
—
(12)
—
—
—
(12)
—
Loss on Alliance/Aux Sable Acquisition
—
—
—
—
—
—
616
—
616
—
Derecognition of insurance contract
provision
—
—
—
—
(34)
—
—
—
(34)
—
Transaction and integration costs in
respect of acquisition
—
—
—
—
—
—
18
—
18
—
Gain on disposal of assets, other non-cash
provisions, and other
(3)
—
(1)
—
(26)
(5)
12
1
(18)
(4)
Adjusted EBITDA
1,847
1,617
974
889
490
424
(157)
(139)
3,154
2,791
(1)
Presented net of adjusting
items.
2024 Adjusted EBITDA Guidance
The equivalent historical non-GAAP financial measure to 2024
adjusted EBITDA guidance is adjusted EBITDA for the year ended
December 31, 2023.
12 Months Ended December 31,
2023
Pipelines
Facilities
Marketing & New
Ventures
Corporate &
Inter-segment
Eliminations
Total
($ millions, except per share amounts)
Earnings (loss)
1,840
610
435
(696)
1,776
Income tax expense
—
—
—
—
413
Adjustments to share of profit from equity
accounted investees and other
172
438
84
—
694
Net finance costs
28
9
4
425
466
Depreciation and amortization
414
159
46
44
663
Unrealized loss from derivative
instruments
—
—
32
—
32
Impairment reversal
(231)
—
—
—
(231)
Transaction costs incurred in respect of
acquisitions, gain on disposal of assets and non-cash
provisions
11
(3)
(4)
7
11
Adjusted EBITDA
2,234
1,213
597
(220)
3,824
Adjusted EBITDA from Equity Accounted
Investees
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
presented net in 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 Income "Share of Profit from Equity
Accounted Investees". The adjustments made to earnings, in adjusted
EBITDA above, are also made to share of profit from investments in
equity accounted investees. Cash contributions and distributions
from investments in equity accounted investees represent Pembina's
share paid and received in the period to and from the investments
in equity accounted investees.
To assist in understanding and evaluating the performance of
these investments, Pembina is supplementing the IFRS disclosure
with non-GAAP proportionate consolidation of Pembina's interest in
the investments in equity accounted investees. Pembina's
proportionate interest in equity accounted investees has been
included in adjusted EBITDA.
3 Months Ended September 30
Pipelines
Facilities
Marketing & New
Ventures
Total
($ millions)
2024
2023
2024
2023
2024
2023
2024
2023
Share of (loss) profit from equity
accounted investees
(1)
23
34
68
(50)
(48)
(17)
43
Adjustments to share of profit from equity
accounted investees:
Net finance costs
1
5
69
22
49
1
119
28
Income tax (recovery) expense
—
(1)
9
20
—
—
9
19
Depreciation and amortization
1
38
53
51
—
6
54
95
Unrealized loss on commodity-related
derivative financial instruments
—
—
8
—
—
—
8
—
Transaction costs incurred in respect of
acquisitions and non-cash provisions
—
—
—
7
—
58
—
65
Total adjustments to share of profit from
equity accounted investees
2
42
139
100
49
65
190
207
Adjusted EBITDA from equity accounted
investees
1
65
173
168
(1)
17
173
250
9 Months Ended September 30
Pipelines
Facilities
Marketing & New
Ventures
Total
($ millions)
2024
2023
2024
2023
2024
2023
2024
2023
Share of profit (loss) from equity
accounted investees
42
78
172
185
(19)
(41)
195
222
Adjustments to share of profit from equity
accounted investees:
Net finance costs
7
15
138
76
51
1
196
92
Income tax expense
—
—
50
54
—
—
50
54
Depreciation and amortization
39
112
155
147
7
19
201
278
Unrealized loss on commodity-related
derivative financial instruments
—
—
5
9
—
—
5
9
Transaction costs incurred in respect of
acquisitions and non-cash provisions
—
—
2
17
—
58
2
75
Total adjustments to share of profit from
equity accounted investees
46
127
350
303
58
78
454
508
Adjusted EBITDA from equity accounted
investees
88
205
522
488
39
37
649
730
Adjusted Cash Flow from Operating
Activities and Adjusted Cash Flow from Operating Activities per
Common Share
Adjusted cash flow from operating activities is a non-GAAP
financial measure which is defined as cash flow from operating
activities adjusting for the change in non-cash operating working
capital, adjusting for current tax and share-based compensation
payment, and deducting distributions to non-controlling interest
and preferred share dividends paid. Adjusted cash flow from
operating activities deducts distributions to non-controlling
interest and preferred share dividends paid because they are not
attributable to common shareholders. The calculation has been
modified to include current tax and share-based compensation
payment as it allows management to better assess the obligations
discussed below.
Following completion of the Alliance/Aux Sable Acquisition,
Pembina revised the definition of adjusted cash flow from operating
activities to deduct distributions related to non-controlling
interest in the Aux Sable U.S. operations. On August 1, 2024,
Pembina acquired the remaining interest in Aux Sable's U.S.
operations.
Management believes that adjusted cash flow from operating
activities provides comparable information to investors for
assessing financial performance during each reporting period.
Management utilizes adjusted cash flow from operating activities to
set objectives and as a key performance indicator of the Company's
ability to meet interest obligations, dividend payments and other
commitments.
Adjusted cash flow from operating activities per common share is
a non-GAAP ratio which is calculated by dividing adjusted cash flow
from operating activities by the weighted average number of common
shares outstanding.
3 Months Ended September
30
9 Months Ended September
30
($ millions, except per share amounts)
2024
2023
2024
2023
Cash flow from operating activities
922
644
2,312
1,755
Cash flow from operating activities per
common share – basic (dollars)
1.59
1.17
4.06
3.19
Add (deduct):
Change in non-cash operating working
capital
(136)
76
(30)
264
Current tax expense
(48)
(94)
(188)
(271)
Taxes paid, net of foreign exchange
62
74
352
187
Accrued share-based payment expense
(40)
(10)
(79)
(23)
Share-based compensation payment
—
—
86
77
Preferred share dividends paid
(34)
(31)
(98)
(90)
Distributions to non-controlling
interest
(2)
—
(12)
—
Adjusted cash flow from operating
activities
724
659
2,343
1,899
Adjusted cash flow from operating
activities per common share – basic (dollars)
1.25
1.20
4.11
3.45
Proportionately Consolidated
Debt-to-Adjusted EBITDA
Proportionately Consolidated Debt-to-Adjusted EBITDA is a
non-GAAP ratio that management believes is useful to investors and
other users of Pembina’s financial information in the evaluation of
the Company’s debt levels and creditworthiness.
12 Months Ended
($ millions, except as noted)
September 30, 2024
December 31, 2023
Loans and borrowings (current)
946
650
Loans and borrowings (non-current)
11,182
9,253
Loans and borrowings of equity accounted
investees
2,770
2,805
Proportionately consolidated debt
14,898
12,708
Adjusted EBITDA
4,187
3,824
Proportionately consolidated
debt-to-adjusted EBITDA (times)
3.6
3.3
($ millions)
12 Months Ended September 30,
2024
9 Months Ended September 30,
2024
12 Months Ended December 31,
2023
9 Months Ended September 30,
2023
Earnings before income tax
1,791
976
2,189
1,374
Adjustments to share of profit from equity
accounted investees and other
640
454
694
508
Net finance costs
514
398
466
350
Depreciation and amortization
805
627
663
485
Unrealized loss on derivative
instruments
83
129
32
78
Non-controlling interest(1)
(12)
(12)
—
—
Loss on Alliance/Aux Sable Acquisition
616
616
—
—
Derecognition of insurance contract
provision
(34)
(34)
—
—
Transaction and integration costs in
respect of acquisitions
20
18
2
—
Gain on disposal of assets, other non-cash
provisions, and other
(5)
(18)
9
(4)
Impairment reversal
(231)
—
(231)
—
Adjusted EBITDA
4,187
3,154
3,824
2,791
=A+B-C
A
B
C
(1)
Presented net of adjusting
items.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241105833864/en/
For further information: Investor Relations (403) 231-3156
1-855-880-7404 e-mail: investor-relations@pembina.com
www.pembina.com
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