Le Lézard
Classified in: Oil industry, Business
Subject: ERN

Pembina Pipeline Corporation Reports Second Quarter Results


Pembina's integrated and diverse business model continues to deliver strong results

All financial figures are in Canadian dollars unless noted otherwise.

CALGARY, Alberta, Aug. 1, 2019 /CNW/ - Pembina Pipeline Corporation ("Pembina" or the "Company") (TSX: PPL; NYSE: PBA) announced today its financial and operating results for the second quarter of 2019.

Financial and Operational Overview



3 Months Ended June 30

6 Months Ended June 30

($ millions, except where noted) (unaudited)

2019

2018

2019

2018

Revenue

1,808

1,743

3,776

3,580

Net revenue(1)

758

669

1,532

1,388

Gross profit

629

511

1,217

1,079

Earnings

664

246

977

576

Earnings per common share ? basic (dollars)

1.23

0.43

1.79

1.02

Earnings per common share ? diluted (dollars)

1.23

0.42

1.78

1.02

Cash flow from operating activities

661

603

1,269

1,101

Cash flow from operating activities per common share ? basic (dollars)(1)

1.29

1.20

2.49

2.19

Adjusted cash flow from operating activities(1)

550

558

1,128

1,088

Adjusted cash flow from operating activities per common share ? basic (dollars)(1)

1.08

1.11

2.21

2.16

Common share dividends declared

302

282

592

554

Dividends per common share (dollars)

0.59

0.56

1.16

1.10

Capital expenditures

434

255

795

579

Total volume (mboe/d)(2)

3,384

3,385

3,394

3,333

Adjusted EBITDA(1)

765

700

1,538

1,388



(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 June 30

6 Months Ended June 30


2019

2018

2019

2018

($ millions, except

where noted)
(unaudited)

Volumes(1)

Gross
Profit

Adjusted
EBITDA(2)

Volumes(1)

Gross
Profit

Adjusted
EBITDA(2)

Volumes(1)

Gross
Profit

Adjusted 
EBITDA(2)

Volumes(1)

Gross
Profit

Adjusted 
EBITDA(2)

Pipelines Division

2,518

360

472

2,536

322

435

2,513

700

929

2,479

616

837

Facilities Division

866

167

236

849

127

212

881

325

468

854

270

429

Marketing & New
Ventures Division(3)

?

100

97

?

57

97

?

193

218

?

190

202

Corporate

?

2

(40)

?

5

(44)

?

(1)

(77)

?

3

(80)

Total

3,384

629

765

3,385

511

700

3,394

1,217

1,538

3,385

1,079

1,388



(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 natural gas liquids ("NGL") volumes are excluded from Volumes to avoid double counting. Refer to "Marketing & New Ventures Division" in Pembina's
Management's Discussion and Analysis for the period ended June 30, 2019 ("MD&A") for further information

 

Financial & Operational Highlights

Divisional Highlights

Executive Overview

Next month, Pembina will mark another major milestone by celebrating 65 years as a company.  When Pembina was founded in 1954 we had 31 people and a single pipeline while today we have approximately 2,300 employees and $28 billion of total assets.  It has been a journey of significant growth across a wide range of commodity and economic environments. We have grown to become a leading North American transportation and midstream service provider with a strong and resilient base business and significant growth opportunities ahead.

Through the mid-point of 2019 we have performed well, delivering strong year-to-date results.  Compared to the prior year, the second quarter benefited from higher utilization of existing assets and contributions from new assets including those placed into service in late 2018 and early 2019 such as the Phase IV and V Peace Pipeline Expansions, the Redwater Co-generation Plant and the Burstall Ethane Storage Facility.  In the marketing business, lower year-over-year prices for butane and propane were offset by higher NGL volumes, the positive impact of lower natural gas prices on frac spreads and the fact that Pembina has hedged approximately 25 percent of its frac spread business, excluding Aux Sable.  As well, the crude oil marketing business continues to deliver steady results.  Overall, the integrated and diversified nature of Pembina's business continues to be a strength.

Based on our year-to-date results and our outlook for the balance of the year, we remain on track to meet our adjusted EBITDA guidance range of $2,850 to $3,050 million.

Pembina continues to experience strong customer demand for incremental services and recently executed agreements for term extension and increased volume obligations at Pembina's Saturn deep-cut processing facility.  These agreements include gas processing, NGL transportation and fractionation and marketing services.  We see this development as further evidence that customers value our complete service offering and ability to respond quickly and cost-effectively to meet their needs.  Our teams continue to see a steady flow of new business development opportunities and we are confident that Pembina is best positioned to meet customer demand for integrated services and higher realized prices for their products.

Projects and New Developments

The Pipelines and Facilities Divisions are constructing $3.0 billion of capital projects, which in aggregate are trending on budget.

Pipelines Division

Facilities Division

Marketing & New Ventures Division

Financial Impact of Adoption of IFRS 16

Financing

Dividends

Second Quarter 2019 Conference Call & Webcast

Pembina will host a conference call on Thursday, August 1, 2019 at 4:00 p.m. MT (6:00 p.m. ET) for interested investors, analysts, brokers and media representatives to discuss details related to the second 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 August 8, 2019 at 11:59 p.m. ET. To access the replay, please dial either 416-849-0833 or 855-859-2056 and enter the password 1089647.

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/1880626/9990356A578BD8CD2CE456D745C409E1 in your web browser. Shortly after the call, an audio archive will be posted on the website for a minimum of 90 days.

About Pembina

Calgary-based Pembina Pipeline Corporation is a leading transportation and midstream service provider that has been serving North America's energy industry for 65 years. Pembina owns an integrated system of pipelines that transport various hydrocarbon liquids and natural gas products produced primarily in western Canada. The Company also owns gas gathering and processing facilities; an oil and natural gas liquids infrastructure and logistics business; is growing an export terminals business; and is currently constructing a petrochemical facility to convert propane into polypropylene. Pembina's integrated assets and commercial operations along the majority of the hydrocarbon value chain allow it to offer a full spectrum of midstream and marketing services to the energy sector. Pembina is committed to identifying additional opportunities to connect hydrocarbon production to new demand locations through the development of infrastructure that would extend Pembina's service offering even further along the hydrocarbon value chain. These new developments will contribute to ensuring that hydrocarbons produced in the Western Canadian Sedimentary Basin and the other basins where Pembina operates can reach the highest value markets throughout the world.

Purpose of Pembina:

To be the leader in delivering integrated infrastructure solutions connecting global markets;

Pembina is structured into three Divisions: Pipelines Division, Facilities Division and Marketing & New Ventures Division.

Pembina's common shares trade on the Toronto and New York stock exchanges under PPL and PBA, respectively. For more information, visit www.pembina.com.

Forward-Looking Statements and Information

This document contains certain forward-looking statements and information (collectively, "forward-looking statements"), including forward-looking statements within the meaning of the "safe harbor" provisions of applicable securities legislation, that are based on Pembina's current expectations, estimates, projections and assumptions in light of its experience and its perception of historical trends. In some cases, forward-looking statements can be identified by terminology such as "continue", "anticipate", "schedule", "will", "expects", "estimate", "potential", "planned", "future" and similar expressions suggesting future events or future performance.

In particular, this document contains forward-looking statements, including certain financial outlook, pertaining to, without limitation, the following: Pembina's corporate strategy; expectations about industry activities and development opportunities; expectations about future growth opportunities and demand for our service; expectations regarding new corporate developments and impact on access to markets; anticipated adjusted EBITDA projections for 2019 and financial performance expectations resulting from Pembina's capital expenditures; planning, construction, capital expenditure estimates, schedules, locations, regulatory and environmental applications and approvals, expected capacity, incremental volumes, in-service dates, rights, activities and operations with respect to planned new construction of, or expansions on existing pipelines, gas services facilities, fractionation facilities, terminalling, storage and hub facilities, facility and system operations and throughput levels; anticipated synergies between assets under development, assets being acquired and existing assets of the Company; the future level and sustainability of cash dividends that Pembina intends to pay its shareholders, including 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 are expected to be brought into service in 2019. Readers should be aware that the information contained in the financial outlook contained herein may not be appropriate for other purposes. The forward-looking statements contained in this document are expressly qualified by this cautionary statement.

Non-GAAP Measures

In this news release, Pembina has used the terms net revenue, adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA), 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 June 30, 2019, which is available online at www.sedar.com, www.sec.gov and through Pembina's website at www.pembina.com.

Investor Relations, Cameron Goldade, Vice President Capital Markets, (403) 231-3156, 1-855-880-7404, E-mail: [email protected], www.pembina.com


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