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; and adjusted cash flow from operating
activities per common share. 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 fourth quarter and full year 2022.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20230223005925/en/
Adjusted EBITDA (Graphic: Business
Wire)
Highlights
- Record Results - reported record 2022 full year earnings
of $2,971 million and record full year adjusted EBITDA of $3,746
million, exceeding the high end of the Company's revised guidance
range. Reported fourth quarter earnings of $243 million and fourth
quarter adjusted EBITDA of $925 million.
- Redwater Expansion - sanctioned a $460 million expansion
at its Redwater Complex to service growing customer demand and high
utilization rates across the industry.
- Strategy - Pembina outlines a renewed long-term strategy
that continues to build upon its core business while capitalizing
on opportunities arising from the transition to a lower-carbon
economy.
- Board of Directors Appointment - Mr. Andy Mah has been
selected by the board of directors to join the board effective
February 24, 2023.
- Quarterly Common Share Dividend - the board of directors
has declared a common share cash dividend for the first quarter of
2023 of $0.6525 per share to be paid, subject to applicable law, on
March 31, 2023, to shareholders of record on March 15, 2023.
Financial and Operational Overview
3 Months Ended December
31
12 Months Ended December
31
($ millions, except where noted)
2022
2021
2022
2021
Revenue
2,699
2,560
11,611
8,627
Net revenue(1)
1,043
1,084
4,247
3,938
Gross profit
681
785
3,123
2,647
Earnings
243
80
2,971
1,242
Earnings per common share – basic
(dollars)
0.39
0.08
5.14
2.00
Earnings per common share – diluted
(dollars)
0.39
0.08
5.12
1.99
Cash flow from operating activities
947
697
2,929
2,650
Cash flow from operating activities per
common share – basic (dollars)
1.72
1.27
5.30
4.82
Adjusted cash flow from operating
activities(1)
690
734
2,661
2,640
Adjusted cash flow from operating
activities per common share – basic (dollars)(1)
1.25
1.33
4.82
4.80
Common share dividends declared
359
346
1,409
1,386
Dividends per common share (dollars)
0.65
0.63
2.55
2.52
Capital expenditures
143
176
605
658
Total volumes (mboe/d)(2)
3,392
3,437
3,383
3,456
Adjusted EBITDA(1)
925
970
3,746
3,433
(1)
Refer to "Non-GAAP and Other Financial
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 December
31
12 Months Ended December
31
2022
2021
2022
2021
($ millions, except where noted)
Volumes(1)
Reportable Segment Earnings
(Loss) Before Tax
Adjusted EBITDA(2)
Volumes(1)
Reportable Segment Earnings
(Loss) Before Tax
Adjusted EBITDA(2)
Volumes(1)
Reportable Segment Earnings
(Loss) Before Tax
Adjusted EBITDA(2)
Volumes(1)
Reportable Segment Earnings
(Loss) Before Tax
Adjusted EBITDA(2)
Pipelines
2,593
295
548
2,571
(70)
548
2,524
1,415
2,127
2,586
917
2,102
Facilities
799
145
288
866
164
285
859
1,804
1,137
870
732
1,097
Marketing & New Ventures(3)
—
96
171
—
220
183
—
708
721
—
374
420
Corporate
—
(206)
(82)
—
(181)
(46)
—
(708)
(239)
—
(358)
(186)
Total
3,392
330
925
3,437
133
970
3,383
3,219
3,746
3,456
1,665
3,433
(1)
Volumes for Pipelines and Facilities
divisions are revenue volumes, which are physical volumes plus
volumes recognized from take-or-pay commitments. Volumes are stated
in mboe/d, with natural gas volumes converted to mboe/d from MMcf/d
at a 6:1 ratio.
(2)
Refer to "Non-GAAP and Other Financial
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 dated February 23, 2023 for
the year ended December 31, 2022 for further information.
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, 2022 filed at www.sedar.com (filed
with the U.S. Securities and Exchange Commission at www.sec.gov
under Form 40-F) and on Pembina's website at www.pembina.com.
Financial & Operational Highlights
Adjusted EBITDA
Pembina reported fourth quarter adjusted EBITDA of $925 million
and record full year adjusted EBITDA of $3,746 million. This
represents a $45 million or five percent decrease, and a $313
million or nine percent increase, respectively, over the same
periods in the prior year.
For both the fourth quarter and full year, adjusted EBITDA was
positively impacted by higher volumes on the Peace Pipeline system
and Cochin Pipeline; higher tolls due to inflation; the joint
venture transaction to create Pembina Gas Infrastructure Inc.
("PGI") (the "PGI Transaction"); and stronger performance from
certain gas processing assets, including the Hythe Gas Plant, the
Dawson Assets, the Cutbank Complex, and the Resthaven Facility.
Both periods were negatively impacted by a lower contribution from
Ruby and higher integrity costs.
Fourth quarter adjusted EBITDA was also negatively impacted by
lower margins on NGL sales, partially offset by higher margins on
crude oil sales; a lower contribution from Aux Sable; lower revenue
related to recoverable costs on the Horizon Pipeline system; and
higher general and administrative expense, largely due to higher
long-term incentive costs driven by the change in Pembina's share
price and its share price performance relative to a peer group,
combined with higher consulting fees. The fourth quarter was
positively impacted by a realized gain on commodity-related
derivatives, compared to a loss in the fourth quarter of 2021, and
the impact of a higher U.S. dollar exchange rate.
Full year adjusted EBITDA was also positively impacted by higher
margins on crude oil and natural gas sales, partially offset by
lower margins on NGL sales; lower realized losses on
commodity-related derivatives; and higher contributions from
Alliance and Aux Sable. The full year was negatively impacted by
higher general and administrative expense, largely due to higher
long-term incentive costs as described above, as well as higher
consulting fees, salaries and wages, and legal fees. The full year
was also negatively impacted by lower contracted volumes on the
Nipisi and Mitsue Pipeline systems.
Earnings
Pembina reported fourth quarter earnings of $243 million and
full year earnings of $2,971 million. This represents a $163
million or 204 percent increase, and a $1,729 million or 139
percent increase, respectively, over the same periods in the prior
year.
In the fourth quarter, in addition to the factors impacting
adjusted EBITDA, as noted above, earnings were positively impacted
by lower impairment expense, lower restructuring costs, and a
higher unrealized gain on commodity-related derivatives. These
factors were partially offset by a Ruby Pipeline settlement
provision.
For the full year, in addition to the factors impacting adjusted
EBITDA, as noted above, earnings were positively impacted by the
recognized $1.1 billion gain on the PGI Transaction compared to the
receipt of the $350 million termination fee associated with
Pembina’s proposed acquisition of Inter Pipeline Ltd. in 2021, net
of related tax and associated expenses; a higher unrealized gain on
commodity-related derivatives; lower impairment expense; and lower
income tax expense, primarily as a result of the PGI Transaction,
net of a deferred tax recovery related to prior year impairments.
These factors were partially offset by increased finance costs due
to foreign exchange losses compared to gains in 2021, higher
interest on long-term debt, and lower interest income.
Cash Flow From Operating Activities
Cash flow from operating activities of $947 million for the
fourth quarter and $2,929 million for the full year represent an
increase of 36 percent and 11 percent, respectively, over the same
periods in the prior year.
The increase in the fourth quarter was primarily driven by an
increase in the change in non-cash working capital, higher
distributions from equity accounted investees, and a decrease in
taxes paid, partially offset by lower operating results and an
increase in net interest paid.
The full year increase was primarily driven by an increase in
the change in non-cash working capital, higher distributions from
equity accounted investees, higher operating results net of the
$350 million Arrangement Termination Payment received in the third
quarter of 2021, and a decrease in taxes paid, partially offset by
an increase in net interest paid and share-based compensation
payments.
On a per share (basic) basis, cash flow from operating
activities was $1.72 per share for the fourth quarter and $5.30 per
share for the full year. This represents increases of 35 percent
and 10 percent, respectively, compared to the same periods in the
prior year.
Adjusted Cash Flow From Operating Activities
Fourth quarter and full year adjusted cash flow from operating
activities of $690 million and $2,661 million, represent a six
percent decrease and one percent increase, respectively, over the
same periods in the prior year.
The fourth quarter decrease was largely due to lower operating
results and an increase in accrued share-based payments, partially
offset by higher distributions from equity accounted investees and
lower current tax expense.
The full year increase was primarily due to the same items
impacting cash flow from operating activities, discussed above, net
of the change in non-cash working capital, taxes paid, and
share-based compensation payments, combined with lower current tax
expense and preferred share dividends paid, largely offset by an
increase in accrued share-based payments.
On a per share (basic) basis, adjusted cash flow from operating
activities was $1.25 per share for the fourth quarter and $4.82 per
share for the full year. This represents a decrease of six percent
and an increase of less than one percent, respectively, compared to
the same periods in the prior year.
Volumes
Total volumes of 3,392 mboe/d for the fourth quarter and 3,383
mboe/d for the full year represent decreases of approximately one
percent and two percent, respectively, over the same periods in the
prior year. In both periods, volume decreases were attributable to
both the Pipelines and Facilities divisions, including most notably
the Nipisi and Mitsue pipeline system, the Ruby Pipeline, and the
disposition of the E1 and E6 assets, as described below. Divisional
volumes are discussed in further detail below.
Excluding the volume impact of the Nipisi and Mitsue pipelines,
the disposition of the E1 and E6 assets, and the Ruby Pipeline
fourth quarter and full year volumes would have increased
approximately four percent and three percent, respectively, over
the same periods in the prior year.
Divisional Highlights
- Pipelines reported adjusted EBITDA of $548 million for the
fourth quarter, and $2,127 million for the full year 2022, which
represent no change and a one percent increase, respectively,
compared to the same periods in the prior year. Both periods were
positively impacted by higher volumes on the Peace Pipeline and the
Cochin Pipeline, higher tolls due to inflation, and the impact of
the higher U.S. dollar exchange rate. Both periods were negatively
impacted by a lower contribution from Ruby, higher general and
administrative expense due to long-term incentives, and higher
integrity costs. In addition, the fourth quarter was negatively
impacted by lower revenue related to recoverable costs on the
Horizon Pipeline system. The full year was also positively impacted
by higher contributions from Alliance and negatively impacted by
the expiration of contracts on the Nipisi and Mitsue Pipeline
systems. Pipelines had fourth quarter reportable segment earnings
before tax of $295 million compared to a loss of $70 million in the
same period in the prior year. For the full year, Pipelines had
reportable segment earnings before tax of $1,415 compared to $917
million in the same period in the prior year. In addition to the
factors impacting adjusted EBITDA, as noted above, excluding the
lower contribution from Ruby, the increase in both periods was
largely due to a $437 million impairment recognized in the fourth
quarter of 2021 associated with certain oil sands assets, partially
offset by the Ruby settlement provision recognized in the fourth
quarter of 2022. In addition, the full year was impacted by lower
depreciation expense and higher legal costs. Pipelines volumes of
2,593 mboe/d in the fourth quarter and 2,524 mboe/d for the full
year, represent a one percent increase and a two percent decrease,
respectively, compared to the same periods in the prior year.
Volumes for both the fourth quarter and full year were impacted by
higher volumes on the Peace Pipeline system and Cochin Pipeline,
partially offset by lower volumes on the Ruby Pipeline. In
addition, the fourth quarter was positively impacted by higher
recognition of deferred take-or-pay revenue volumes in the fourth
quarter of 2022 compared to the prior period and higher volumes on
AEGS due to third-party outages and planned turnarounds in the
fourth quarter of 2021. The full year was also impacted by contract
expirations on the Nipisi and Mitsue Pipeline systems, and higher
volumes on the Drayton Valley Pipeline. Excluding the volume impact
of the Nipisi and Mitsue pipeline systems and Ruby Pipeline, fourth
quarter and full year Pipelines volumes would have increased
approximately four percent and three percent, respectively, over
the same periods in the prior year.
- Facilities reported adjusted EBITDA of $288 million for the
fourth quarter and $1,137 million for the full year, which
represent a one percent and four percent increase, respectively,
over the same periods in the prior year. Both periods were
positively impacted by the PGI Transaction and stronger performance
from certain gas processing assets, including the Hythe Gas Plant,
the Dawson Assets, the Cutbank Complex and the Resthaven Facility.
In addition, full year adjusted EBITDA benefited from higher
realized gains on commodity-related derivatives, partially offset
by higher integrity costs. Facilities had reportable segment
earnings before tax of $145 million for the fourth quarter and
$1,804 million for the full year, representing a decrease of 12
percent and an increase of 146 percent, respectively, over the same
periods in the prior year. In addition to the factors impacting
adjusted EBITDA, as noted above, both periods were positively
impacted by higher unrealized gains on commodity-related
derivatives. In addition, in the fourth quarter, the positive
impacts captured in the adjusted EBITDA from PGI were offset by
interest expense on long-term debt, income tax expense, and
depreciation resulting from the PGI assets recorded at fair value,
and an unrealized loss on commodity-related derivatives, which are
all included in share of profit from PGI following the PGI
Transaction. Full year segment earnings before tax were positively
impacted by the $1.1 billion gain recognized on the PGI Transaction
in the third quarter of 2022, and lower impairments recognized in
2022 compared to the prior year. Facilities volumes of 799 mboe/d
in the fourth quarter and 859 mboe/d for the full year, represent
decreases of eight percent and one percent, respectively, compared
to the same periods in the prior year. The quarterly and full year
decreases were primarily due to the disposition of Pembina’s
interest in the E1 and E6 assets at Empress, as described further
below, partially offset by the impact of the PGI Transaction,
higher volumes at the Hythe Gas Plant and Dawson Assets, and higher
volumes at the Younger facility. The fourth quarter was also
impacted by higher volumes at the Redwater Complex due to a
third-party outage in the fourth quarter of 2021. Excluding the
impact of the disposition of Pembina’s interest in the E1 and E6
assets, fourth quarter and full year Facilities volumes would have
increased by five percent and two percent, respectively, compared
to the same periods in the prior year.
- Marketing & New Ventures reported adjusted EBITDA of $171
million for the fourth quarter and $721 million for the full year,
which represent a seven percent decrease and a 72 percent increase,
respectively, compared to the same periods in the prior year. The
fourth quarter was negatively impacted by a lower contribution from
Aux Sable; lower margins on NGL sales, partially offset by higher
margins on crude oil sales; and a realized gain on
commodity-related derivatives, compared to a loss in the prior
period. The full year was positively impacted by higher margins on
crude oil and natural gas sales and a higher contribution from Aux
Sable, partially offset by lower margins on NGL sales and lower
realized losses on commodity-related derivatives. Marketing &
New Ventures had reportable segment earnings before tax of $96
million for the fourth quarter and $708 million for the full year,
representing a decrease of 56 percent and an increase of 89
percent, respectively, over the same periods in the prior year. In
addition to the factors impacting adjusted EBITDA, as noted above,
the fourth quarter was impacted by an unrealized loss on
commodity-related derivatives compared to a gain in the prior
period. The full year was impacted by a higher unrealized gain on
commodity-related derivatives and higher net finance costs related
to foreign exchange losses in the period compared to gains in 2021.
Marketed NGL volumes of 193 mboe/d in the fourth quarter and 190
mboe/d for the full year, represent no change compared to the same
periods in the prior year.
Quarterly Common Share Dividend
Pembina's board of directors has declared a common share cash
dividend for the first quarter of 2023 of $0.6525 per share to be
paid, subject to applicable law, on March 31, 2023, to shareholders
of record on March 15, 2023. 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 U.S.
$0.4818 per share (before deduction of any applicable Canadian
withholding tax) based on a currency exchange rate of 0.7384. 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.
Board of Directors Appointment
Pembina is pleased to announce that Mr. Andy Mah has been
selected by the board of directors to join the board effective
February 24, 2023.
Mr. Mah has over 40 years of experience in the oil and gas
industry and was the Chief Executive Officer of Advantage Energy
Ltd. ("Advantage") from January 2009 until his retirement on
December 31, 2021. Mr. Mah has developed and transformed
corporations, led large successful capital investment programs and
has completed numerous corporate and asset level mergers,
acquisitions and divestments. He also energized excellence in
operational, financial, safety and environmental performance
throughout his career in multinational, intermediate and junior oil
and gas companies. Prior to his career at Advantage, he held
leadership positions at Ketch Resources Trust, Unocal Corporation,
Northrock Resources Ltd., and BP Canada. Mr. Mah also serves on the
board of Advantage.
"I am thrilled to welcome Andy to the board of directors and
look forward to working with him. Given his extensive and relevant
experience, he will make a meaningful contribution to the board and
support Pembina's continued success," said Henry Sykes, Chair of
the Board.
Executive Overview and Business Update
Strong 2022 Results
2022 was a record financial year with Pembina generating
adjusted EBITDA of $3.746 billion, a nine percent increase over
2021, driven by growing volumes on key systems and a strong
performance from the marketing business.
Benefiting from a post-COVID recovery and strong commodity
prices, volumes on Pembina's conventional pipeline systems, which
generally serve as a good proxy for Pembina's broader business and
activity in the Western Canadian Sedimentary Basin ("WCSB"), were
approximately six percent higher in 2022 than in 2021. As well,
volumes on the Cochin Pipeline increased approximately nine percent
over the prior year and the Alliance Pipeline was highly utilized
given prevailing global energy supply/demand dynamics and the
Chicago-AECO natural gas price differential.
Within the gas processing business, excluding the impact of
changing ownership interests resulting from the PGI Transaction,
Pembina benefited from stronger underlying performance throughout
2022 from a number of gas processing assets, including the Hythe
Gas Plant, Dawson Assets, the Cutbank Complex, and the Resthaven
Facility.
In the marketing business, Pembina benefited from a favorable
crude oil price environment and certain price differentials,
including a wider Chicago-AECO gas price differential and a wider
condensate price differential between western Canada and the U.S.
Gulf Coast.
Strong financial results allowed Pembina to generate substantial
free cash flow, which was allocated to strengthening the balance
sheet and returning capital to shareholders. In 2022, Pembina
raised the common share dividend by 3.6 percent, reached its target
to repurchase $350 million of common shares, redeemed $300 million
of preferred shares, and reduced leverage to the low end of the
target range.
Pembina Gas Infrastructure
A milestone achievement in 2022 was the creation of PGI. PGI
brought together three complementary platforms to create a premier,
highly competitive western Canadian gas processing entity with the
ability to serve customers from north central Alberta to northeast
British Columbia ("NEBC") and to pursue future growth opportunities
in a capital efficient manner.
Since closing the PGI transaction, integration activities have
progressed well and operations have performed as expected, with no
major interruptions to service. Commercially, we have successfully
secured incremental volumes through fee-for-service, firm contracts
with a number of existing customers at both the K3 and Wapiti
facilities. The optionality and flexibility that comes with PGI's
gas gathering and processing footprint is attractive to producers
throughout the Montney and we continue to be in conversations with
a number of key customers regarding debottlenecking expansions of a
number of facilities.
Commercial Successes Reflect an Industry
Poised for Growth
Amidst an expectation of continued growth, Pembina had
incredible success in 2022 and into 2023 signing new long-term
agreements and contracts.
- Entered into long-term midstream services agreements with three
premier NEBC Montney producers for the transportation and
fractionation of liquids. As a result of the long-term commitments
under the three agreements, Pembina expects to have secured the
transportation, fractionation, and marketing rights to a
significant portion of forecasted future growth in the NEBC
Montney, which collectively will support improved utilization of
its existing assets as well as capital efficient expansion projects
into the future.
- Renewed contracts and secured incremental volumes on the
Company's conventional pipelines and its fractionation facilities,
the latter reflective of the broader trend of increased utilization
and tightening of capacity across the industry. We also extended a
key contract on the Tioga portion of the Vantage Pipeline,
maintaining existing take-or-pay volume commitments while providing
incremental flexibility to increase contracted volumes with other
shippers.
- The contracting of Alliance Pipeline progressed exceptionally
well, highlighting the strong AECO-Chicago natural gas price
differential and the value of Alliance's reliable and highly
competitive access to mid-western U.S. gas markets, and as a
conduit to the Gulf Coast and its robust LNG market. Following
numerous open seasons, Alliance is now fully contracted for the
next two years and has greatly enhanced its longer-term contractual
profile.
- As previously announced, Pembina expects to reactivate the
Nipisi Pipeline in the third quarter of 2023 to serve customers in
the rapidly growing Clearwater oil play. During the fourth quarter
of 2022, Pembina executed agreements for a significant long-term
commitment with an anchor customer, which includes the construction
of a newly connected truck-in facility approximately 40 kilometers
north of Slave Lake, Alberta. Discussions continue with several
Clearwater area producers regarding potential additional long-term
contractual commitments.
- Subsequent to year end, Pembina closed an open season for
capacity on the Cochin Pipeline, securing various commitments
totaling 9,000 bpd for terms of 12-17 months. The successful
offering crystallizes capacity, which was previously accessed on an
interruptible basis.
- Subsequent to year end, Pembina extended a contract to supply
ethane on a long-term basis to a key customer. Petrochemical
consumption of ethane is an integral part of supporting the WCSB
NGL value chain and Pembina is an important participant in
Alberta's supply of ethane feedstock.
Progressing Growth Projects
Throughout 2022, we continued to progress our portfolio of
growth projects, notably by completing the Phase VII and Phase IX
Peace Pipeline expansions and the Empress Cogeneration project and
successfully delivering these projects collectively under budget.
Pembina also reactivated construction of the previously deferred
Phase VIII Peace Pipeline expansion and we look forward to placing
that project, which remains on time and on budget, into service in
the first half of 2024.
Further, as discussed below in Projects & New Developments,
Pembina is pleased to announce that it is proceeding with
construction of a new 55,000 barrel per day ("bpd") propane-plus
fractionator ("RFS IV") at its existing Redwater fractionation and
storage complex (the "Redwater Complex"). The Redwater Complex is
underpinned by long-term take-or-pay contracts and in recent
quarters, Pembina has successfully extended existing contracts and
signed incremental new contracts. The existing facility is highly
utilized and RFS IV is needed to meet customer demand. In addition
to recent contracting success, the previously announced commercial
agreements with three leading NEBC producers are expected to
provide significant volumetric support to the new facility. The
decision to proceed with the RFS IV expansion project ensures
Pembina's customers will benefit from a timely solution to growing
volumes and constraints arising out of high utilization rates
across the industry. Existing infrastructure at the Redwater
Complex, including storage caverns and extensive unit train capable
rail facilities, provide Pembina an ability to offer incremental
fractionation capacity at a competitive cost.
In an increasingly competitive environment, Pembina continues to
demonstrate that customers value the certainty and dependability of
our infrastructure; the ability to execute projects safely, on
time, and on budget; our competitive fees; and the Company's
overall integrated service offering.
Pembina's Strategy
Following a recent period of succession and re-organization,
Pembina’s executive and board viewed 2022 as an opportune time to
review the Company's strategy to ensure it remains resilient into
the future. In December, the board approved a strategy that will
allow Pembina to build on its strengths by continuing to invest in
and grow the core businesses that provide critical transportation
and midstream services to help ensure reliable and secure energy
supply. At the same time, Pembina will capitalize on exciting
opportunities to leverage its assets and expertise into new service
offerings that proactively respond to the transition to a
lower-carbon economy. In continuing to meet global energy demand
and its customers' needs, while ensuring Pembina's long-term
success and resilience, the Company has established four strategic
priorities:
- To be resilient, we will sustain, decarbonize, and enhance
our businesses. This priority is focused on strengthening and
growing our existing franchise and demonstrating environmental
leadership.
- To thrive, we will invest in the energy transition to
improve the basins in which we operate. We will expand our
portfolio to include new businesses associated with lower-carbon
commodities.
- To meet global demand, we will transform and export our
products. We will continue our focus on supporting the
transformation of Western Canadian Sedimentary Basin commodities
into higher margin products and enabling more coastal egress.
- To set ourselves apart, we will create a differentiated
experience for our stakeholders. We remain committed to
delivering excellence for our four key stakeholder groups meaning
that:
- Employees say we are the ‘employer of choice’ and value our
safe, respectful, collaborative, and inclusive work culture.
- Communities welcome us and recognize the net positive impact of
our social and environmental commitment.
- Customers choose us first for reliable and value-added
services.
- Investors receive sustainable industry-leading total
returns.
In executing our strategy, we remain committed to our financial
guardrails and delivering industry-leading returns through prudent
capital allocation and a focus on return on invested capital.
Looking Ahead to 2023
Over the next 12-24 months, a key area of focus will be growing
cash flow by enhancing utilization at our existing assets – gas
plants, pipelines, and fractionation facilities – to serve our
customers' growing volumes. This is highly accretive growth given
the modest capital spending required.
Our outlook for continued growth in the WCSB was bolstered by
the recent announcement on January 18, 2023, by the Province of
British Columbia and the Blueberry River First Nation, regarding
the finalization of an agreement allowing oil and gas activity to
proceed within certain parts of NEBC. While future development is
subject to certain provisions, Pembina is optimistic that the
agreement will provide the needed clarity for producers to allocate
capital to NEBC drilling programs and support larger development
plans leading to growing volumes in the area. Pembina has a long
history as an NEBC service provider. Through our existing NEBC
Pipeline, which has significant expansion potential and is
connected to the rest of our fully integrated value chain, we are
well positioned with a readily available solution to meet new
customer demand.
In 2023, we will continue to progress new projects, including
the Phase VIII Peace Pipeline expansion, and RFS IV to add
additional capacity to Pembina's integrated value chain. Aligning
with our corporate strategy we will also continue to advance
development of two transformational projects, Cedar LNG and the
Alberta Carbon Grid, along with other development opportunities
that support the transition to a lower-carbon economy.
We are reiterating our recently announced 2023 adjusted EBITDA
guidance range of $3.5 billion to $3.8 billion. The midpoint of the
guidance range reflects an approximately five percent increase in
adjusted EBITDA contribution from Pembina’s fee-based business,
reflecting higher tolls, growing volumes, and increasing
utilization across its assets in the WCSB. While Pembina expects
another strong contribution from its Marketing & New Ventures
segment, results are expected to moderate relative to 2022.
The reiterated guidance includes the impact of a January 18,
2023 release of natural gas liquids on the Northern Pipeline
system. In response to the incident, Pembina's emergency response
procedures were activated and the pipeline was quickly isolated.
The cause of the incident remains under investigation. The outage
impacted a substantial portion of the volumes on the Northern and
NEBC pipeline systems however, Pembina and its customers were able
to mitigate a portion of the impact using truck terminals and
directing volumes to the Peace Pipeline system. With a primary
focus on the safety of our workers, the communities and the
environment, resumption of service on the Northern Pipeline, at a
reduced operating pressure, is currently underway following repair
work, comprehensive testing, and approval by the Alberta Energy
Regulator ("AER"). The Northern pipeline will continue to safely
operate in a reduced pressure environment until root cause failure
analysis and potential mitigations are completed and we have
received AER approval to restore to full operating capacity. The
overall impact to Pembina's adjusted EBITDA for the first quarter
of 2023 is estimated to be approximately $30 million, including
lost revenue and costs to return to service.
In December, we announced our 2023 capital program, which
included investments related to the construction of the Phase VIII
Peace Pipeline expansion, reactivation of the Nipisi Pipeline,
pre-FID development activities for Cedar LNG, engineering
activities for the Alberta Carbon Grid, sustainment of our
operating assets, and advancing Pembina's portfolio of unsecured
development opportunities. Pembina has revised its outlook for 2023
and now estimates a 2023 capital program of approximately $800
million, which relative to the original guidance of $730 million
reflects primarily incremental spending related to several new
minor infrastructure projects in the conventional pipelines
business and the sanctioning of RFS IV.
2023 cash flow from operating activities is expected to exceed
dividend payments and the capital expenditure program. Additional
incremental cash flow generated in 2023 is expected to be used to
pay down additional debt, further strengthening our balance sheet
and preparing the Company to fund future capital projects, if
sanctioned. Based on the current guidance for 2023, Pembina expects
to remain firmly within its financial guardrails with ample
liquidity and our leverage metrics are expected to remain well
within the ranges for a strong 'BBB' credit rating.
While we celebrate the past 68 years and Pembina's track-record
of reliably serving its stakeholders, our entire organization is
focused on how we can remain resilient and thrive well into the
future. Pembina is positioned at the nexus of the industry in
Canada today and has an enormous opportunity to be part of a bright
future, one where we continue to invest in our legacy businesses to
ensure secure and reliable supplies of hydrocarbon-based energy to
support the global economy, while at the same time taking concrete
steps to support the ongoing energy transition. As we enter 2023,
we remain optimistic about the state of the Canadian energy market
and believe we are poised to deliver another strong year.
Projects and New Developments
Pipelines
- The Phase IX Peace Pipeline expansion was completed on-budget
and was placed into service in December 2022. Phase IX was
constructed to debottleneck the corridor north of Gordondale,
Alberta, upgrade a pump station, convert existing batching
pipelines into single product lines, and add a new Wapiti-to-Kakwa
pump station.
- The Phase VIII Peace Pipeline expansion will enable segregated
pipeline service for ethane-plus and propane-plus NGL mix from
Gordondale, Alberta, which is centrally located within the Montney
trend, into the Edmonton area for market delivery. The project
includes new 10-inch and 16-inch pipelines, totaling approximately
150 kilometres, in the Gordondale to La Glace corridor of Alberta,
as well as new mid-point pump stations and terminal upgrades
located throughout the Peace Pipeline system. Phase VIII will add
approximately 235,000 bpd of incremental capacity between
Gordondale, Alberta and La Glace, Alberta, as well as approximately
65,000 bpd of capacity between La Glace, Alberta and the Namao hub
near Edmonton, Alberta. Most procurement activities are complete or
nearing completion with expected costs consistent with the
announced project budget. Pipe manufacturing is underway, and
construction commenced at several locations in the fourth quarter
of 2022. The project has an estimated cost of approximately $530
million and is trending on-time and on-budget, with an expected
in-service date in the first half of 2024.
- Subsequent to the fourth quarter of 2022, the United States
Bankruptcy Court for the District of Delaware approved Ruby
Pipeline L.L.C.’s (the “Ruby Subsidiary”) Chapter 11 plan of
reorganization (the "the Ruby Subsidiary Plan") and an agreement
between Pembina and certain of its subsidiaries with the Ruby
Subsidiary that provides for the release of Pembina and such
subsidiaries from any causes of action arising in connection with,
among other things, the prepetition distributions and the Ruby
Subsidiary bankruptcy in exchange for a U.S. $102 million payment
by Pembina to the Ruby Subsidiary. The Ruby Subsidiary Plan
provides for the sale of the Ruby Subsidiary's reorganized equity
to a third-party, which sale was completed on January 13, 2023, and
the distribution of the sales proceeds and cash on hand of the Ruby
Subsidiary to the creditors of the Ruby Subsidiary, including
approximately U.S. $14 million to an affiliate of Pembina in
respect of the subordinated notes issued by the Ruby Subsidiary to
that Pembina affiliate. Following the completion of the sale of the
Ruby Subsidiary's reorganized equity, Pembina ceased to have any
ownership interest in the Ruby Pipeline.
Facilities
- During the fourth quarter, Pembina closed the previously
announced transaction with Plains Midstream Canada ULC ("Plains")
to sell Pembina's minority interests in certain assets currently
part of the Empress NGL Extraction Facility, namely, the Empress I
Plant, Empress I Expansion Plant, and the Empress VI Plant
(collectively "E1 and E6") in consideration for a long-term
processing agreement that provides Pembina the right to first
priority for 750 MMcf/d of extraction capacity at all
Plains-operated assets at Empress. In future periods, the financial
impact associated with the processing agreement will be reported
within the Marketing & New Ventures segment.
- During the fourth quarter, the Empress Cogeneration Facility
was brought into service on-time and on-budget. The facility uses
natural gas to generate up to 45 megawatts of electrical power,
thereby reducing overall operating costs by providing electricity
and heat to the existing Empress NGL Extraction Facility. All the
power is consumed on site, thereby supplying up to 90 percent of
the site's electrical requirements. Further, this project
contributes to annual greenhouse gas emission reductions at the
Empress NGL Extraction Facility through the utilization of the
cogeneration waste heat and the low-emission power generated.
- Subsequent to the fourth quarter, Pembina approved construction
of a new 55,000 bpd propane-plus fractionator ("RFS IV") at its
existing Redwater fractionation and storage complex (the "Redwater
Complex"). RFS IV is expected to cost approximately $460 million
and will leverage the design, engineering and operating best
practices of its existing facilities. The project includes
additional rail loading capacity at the Redwater Complex. Subject
to regulatory and environmental approvals, RFS IV is expected to be
in-service in the first half of 2026. With the addition of RFS IV,
the fractionation capacity at the Redwater Complex will total
256,000 bpd.
- Pursuant to an agreement with the Competition Bureau, and
consistent with Pembina's and KKR's intention to divest upon
announcing their joint venture, on December 11, 2022 a subsidiary
of PGI entered into an agreement to sell its 50 percent
non-operated interest in the Key Access Pipeline System ("KAPS")
which was contributed to PGI as part of the transaction. Closing is
now expected to occur in the second quarter of 2023.
Marketing & New Ventures
- Pembina has formed a partnership with the Haisla First Nation
to develop the proposed Cedar LNG Project, a three million tonne
per annum floating LNG facility strategically positioned to
leverage Canada's abundant natural gas supply and British
Columbia's growing LNG infrastructure to produce industry-leading
low-carbon, cost-competitive Canadian LNG for overseas markets.
Cedar LNG will provide a valuable outlet for WCSB natural gas to
access global markets, achieving higher prices for Canadian
producers, contributing to lower overall emissions, and enhancing
global energy security. Given Cedar LNG will be a floating
facility, manufactured in the controlled conditions of a shipyard,
it is expected that the project will have lower construction and
execution risk. Further, powered by BC Hydro, Cedar LNG is expected
to be one of the greenest LNG facilities in the world. The
Environmental Assessment ("EA") was referred to the B.C. Ministers
of Environment and Energy and Mines on November 16, 2022, and the
decisions of the B.C. Ministers as well as the federal Minister of
Environment and Climate Change are expected to be received in the
first quarter of 2023. As with most of Pembina's assets, Cedar LNG
is expected to be structured as a tolling business providing a low
risk, long-term cash flow stream, and strengthening Pembina's
financial guardrails. Cedar LNG is in active commercial discussions
with potential counterparties, all of which are investment grade,
for long-term commitments, and is working towards the signing of
definitive agreements prior to a final investment decision. Work
with EPC contractors in the development of the floating LNG
Facility continues. The four current work streams – engineering,
regulatory, commercial discussions, and financing – are expected to
converge for a final investment decision to be made by the third
quarter of 2023.
- Pembina and TC Energy Corporation ("TC Energy") continue to
develop the Alberta Carbon Grid ("ACG"), a carbon transportation
and sequestration platform that will enable Alberta-based
industries to effectively manage their greenhouse gas emissions,
contribute positively to Alberta's lower-carbon economy, and create
sustainable long-term value for Pembina and TC Energy stakeholders.
In 2022, the Government of Alberta announced that ACG was
successfully chosen to move to the next stage of the province's
carbon capture utilization and storage process in the Industrial
Heartland. Throughout the year, Pembina and TC Energy progressed
surface and sub-surface engineering and planning, continued with
ongoing engagement with customers and stakeholders, and recently
signed an evaluation agreement with the Government of Alberta. The
first phase of the system is the Industrial Heartland project,
which will have the potential of transporting and storing up to 10
million tonnes of carbon dioxide ("CO2") annually. Pembina and TC
Energy are also exploring options to create several hubs throughout
Alberta. The long-term vision is to annually transport and store up
to 20 million tonnes of CO2 through several hubs across
Alberta.
Financing Activity
- During the fourth quarter, 1.8 million common shares were
repurchased for cancellation under Pembina’s normal course issuer
bid (“NCIB”) at a weighted average price of $45.91 per share and a
total cost of approximately $84 million. Since late 2021, Pembina
has repurchased 7.6 million common shares at a weighted average
price of $46.03 per share and a total cost of $350 million. Subject
to approval of the Toronto Stock Exchange, it is Pembina's
intention to renew the NCIB following its expiration on March 9,
2023.
- On October 24, 2022, Pembina’s $450 million Senior Unsecured
Medium-Term Notes Series 2, matured and were fully repaid.
- On November 15, 2022, Pembina redeemed all of the 12 million
issued and outstanding Cumulative Redeemable Minimum Rate Reset
Class A Preferred Shares, Series 23 for a redemption price equal to
$25.00 per Series 23 Class A Preferred Share for a total redemption
price of $300 million.
- Subsequent to the quarter, on January 16, 2023, Pembina
announced that it did not intend to exercise its right to redeem
the ten million Cumulative Redeemable Minimum Rate Reset Class A
Preferred Shares, Series 25 (the "Series 25 Shares") outstanding on
February 15, 2023. The annual dividend rate for the Series 25
Shares for the five-year period from and including February 15,
2023 to, but excluding, February 15, 2028 is 6.481 percent.
- Subsequent to the quarter, on January 30, 2023, Pembina
announced that it did not intend to exercise its right to redeem
the 16 million Cumulative Redeemable Minimum Rate Reset Class A
Preferred Shares, Series 21 (the "Series 21 Shares") outstanding on
March 1, 2023. The annual dividend rate for the Series 21 Shares
for the five-year period from and including March 1, 2023 to, but
excluding, March 1, 2028 is 6.302 percent.
- Subsequent to the quarter, on February 14, 2023, holders of an
aggregate of 1,028,130 of the 16,000,000 issued and outstanding
Series 21 Shares elected to convert, on a one-for-one basis, their
Series 21 Shares into Cumulative Redeemable Floating Rate Class A
Preferred Shares, Series 22 of Pembina ("Series 22 Shares"). As a
result of the exercise of such conversion rights, on March 1, 2023,
Pembina will have 14,971,870 Series 21 Shares and 1,028,130 Series
22 Shares issued and outstanding. The annual dividend rate
applicable to the Series 22 Shares for the three-month floating
rate period from and including March 1, 2023, to, but excluding,
June 1, 2023, will be 7.706 percent.
Dividends
- In connection with the closing of the PGI Transaction on August
15, 2022, Pembina’s board of directors approved a $0.0075 per
common share increase to its monthly common share dividend rate,
commencing with the dividend paid on October 14, 2022.
- Pembina paid a dividend of $0.2175 per common share in October,
November, and December 2022. These dividends were declared in
September, October, and November 2022, respectively, for the
applicable record dates. In addition, as part of the transition to
a quarterly dividend starting in 2023, Pembina declared and paid a
dividend of $0.2175 per common share on December 30, 2022 to
holders of record on December 15, 2022.
- As noted above, subsequent to the quarter, Pembina's board of
directors declared a common share cash dividend for the first
quarter of 2023 of $0.6525 per share to be paid, subject to
applicable law, on March 31, 2023, to shareholders of record on
March 15, 2023.
- Pembina declared and paid quarterly dividends per Class A
Preferred Share of: Series 1: $0.306625; Series 3: $0.279875;
Series 5: $0.285813; Series 7: $0.27375; Series 9: $0.268875; and
Series 21: $0.30625 to shareholders of record on November 1, 2022.
Pembina also declared and paid quarterly dividends per Class A
Preferred Share of: Series 15: $0.38525; Series 17: $0.301313; and
Series 19: $0.29275 to shareholders of record on December 15, 2022.
Pembina also declared and paid quarterly dividends per Class A
Preferred Share of Series 23: $0.328125; and Series 25: $0.3250 to
shareholders of record on October 31, 2022.
Fourth Quarter 2022 Conference Call & Webcast
Pembina will host a conference call on Friday, February 24, 2023
at 8:00 a.m. MT (10:00 a.m. ET) for interested investors, analysts,
brokers and media representatives to discuss results for the fourth
quarter of 2022. The conference call dial-in numbers for Canada and
the U.S. are 416-764-8646 or 888-396-8049. A recording of the
conference call will be available for replay until Friday, March 3,
2023 at 11:59 p.m. ET. To access the replay, please dial either
416-764-8692 or 877-674-7070 and enter the password 023183#.
A live webcast of the conference call can be accessed on
Pembina's website at www.pembina.com under Investor Centre/
Presentation & Events, or by entering:
https://events.q4inc.com/attendee/612289257 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
Pembina Pipeline Corporation is a leading energy transportation
and midstream service provider that has served North America's
energy industry for more than 65 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 document contains certain forward-looking statements and
forward-looking information (collectively, "forward-looking
statements"), including forward-looking statements within the
meaning of the "safe harbor" provisions of applicable securities
legislation, that are based on Pembina's current expectations,
estimates, projections and assumptions in light of its experience
and its perception of historical trends. In some cases,
forward-looking statements can be identified by terminology such as
"continue", "anticipate", "schedule", "will", "expects",
"estimate", "potential", "planned", "future", "outlook",
"strategy", "protect", "trend", "commit", "maintain", "focus",
"ongoing", "believe" and similar expressions suggesting future
events or future performance.
In particular, this document contains forward-looking
statements, including certain financial outlooks, pertaining to,
without limitation, the following: Pembina's corporate strategy and
the development of new business initiatives and growth
opportunities, including the anticipated benefits therefrom and the
expected timing thereof; expectations about industry activities and
development opportunities, including operating segment outlooks and
general market conditions for 2023 and thereafter; outlooks for
commodity prices and the effect thereof on the business of the
Company; expectations about future demand for Pembina's
infrastructure and services; expectations relating to new
infrastructure projects, including the benefits therefrom and
timing thereof; Pembina's 2023 annual guidance, including the
Company's expectations regarding its adjusted EBITDA; the Company's
anticipated use of free cash flow generated in 2023; Pembina's
future common share dividends, including the timing, amount and
expected tax treatment thereof; planning, construction and capital
expenditure estimates, schedules and locations; expected capacity,
incremental volumes, completion and in-service dates; rights,
activities and operations with respect to the construction of, or
expansions on, existing pipelines systems, gas services facilities,
processing and fractionation facilities, terminalling, storage and
hub facilities and other facilities or energy infrastructure, as
well as the impact of Pembina's growth projects on its future
financial performance and stakeholders; the sale by PGI's
subsidiary of its 50 percent non-operated interest in KAPS,
including timing thereof; expectations regarding Pembina's
financial strength and condition; expectations regarding Pembina's
commercial agreements, including the expected timing and benefit
thereof; expectations regarding the renewal of Pembina's normal
course issuer bid, including the timing and terms thereof;
expectations, decisions and activities related to the Company's
projects and new developments; statements and expectations related
to Pembina's commitment to, and the effectiveness and impact of,
its sustainability goals and targets; the impact of current and
expected market conditions on Pembina; statements regarding the
Northern Pipeline outage, including the operational impact thereof,
Pembina's response thereto and the expected impact on Pembina's
financial results; expectations regarding the Company’s ability to
return capital to shareholders; statements regarding the Company's
capital allocation strategy, including its revised 2023 capital
expenditure program and expected future cash flows and the
sufficiency thereof; and statements regarding the conversion of a
portion of the issued and outstanding Series 21 Class A Preferred
Shares into Series 22 Class A Preferred Shares.
The forward-looking statements are based on certain assumptions
that Pembina has made in respect thereof as at the date of this
news release regarding, among other things: oil and gas industry
exploration and development activity levels and the geographic
region of such activity; the success of Pembina's operations;
prevailing commodity prices, interest rates, carbon prices, tax
rates, 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; that the anticipated benefits of the PGI Transaction can
be achieved in the manner expected by Pembina; 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 and
agreements; labour and material shortages; the strength and
operations of the oil and natural gas production industry and
related commodity prices; the failure to realize the anticipated
benefits and/or synergies of the PGI Transaction; assumptions with
respect to the estimated financial impact of the Northern Pipeline
outage; expectations and assumptions concerning, among other
things: customer demand for PGI's assets and services;
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, 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; 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 rates, commodity prices,
supply/demand trends and overall industry activity levels; risks
related to the potential impacts of the COVID-19 pandemic;
constraints on the, or the unavailability of, adequate
infrastructure; the political environment in North American and
elsewhere, and public opinion; 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 23, 2023 for the year ended December
31, 2022 and 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 by forward-looking statements contained herein. 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. Management approved the 2023 adjusted EBITDA
guidance contained herein as of the date of this news release. The
purpose of the 2023 adjusted EBITDA 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 document 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 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 EBITDA per common share, adjusted cash flow from operating
activities, and adjusted cash flow from operating activities per
common share. These non-GAAP financial measures and 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.
The 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 GAAP, 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 23,
2023 for the year ended December 31, 2022 (the "MD&A"), which
information is incorporated by reference in this news release. The
MD&A is available on SEDAR at www.sedar.com, 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 sold including product purchases.
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 December 31
Pipelines
Facilities
Marketing & New
Ventures
Corporate &
Inter-segment Eliminations
Total
($ millions)
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
Revenue
686
606
237
349
1,921
1,750
(145)
(145)
2,699
2,560
Cost of goods sold, including product
purchases
—
—
—
(1)
1,734
1,554
(78)
(77)
1,656
1,476
Net revenue
686
606
237
350
187
196
(67)
(68)
1,043
1,084
12 Months Ended December 31
Pipelines
Facilities
Marketing & New
Ventures
Corporate &
Inter-segment Eliminations
Total
($ millions)
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
Revenue
2,508
2,279
1,268
1,363
8,471
5,577
(636)
(592)
11,611
8,627
Cost of goods sold, including product
purchases
—
—
6
6
7,682
5,017
(324)
(334)
7,364
4,689
Net revenue
2,508
2,279
1,262
1,357
789
560
(312)
(258)
4,247
3,938
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 on
commodity-related derivative financial instruments. The exclusion
of unrealized gains or losses on commodity-related derivative
financial instruments eliminates the non-cash impact of such gains
or losses.
Adjusted EBITDA also includes adjustments to earnings for 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. In addition, Pembina's
proportionate share of results from investments in equity accounted
investees with a preferred interest is presented in adjusted EBITDA
as a 50 percent common interest. These additional adjustments are
made to exclude various non-cash and other items that are not
reflective of ongoing operations.
Adjusted EBITDA per common share is a non-GAAP ratio which is
calculated by dividing adjusted EBITDA by the weighted average
number of common shares outstanding.
3 Months Ended December 31
Pipelines
Facilities
Marketing & New
Ventures
Corporate &
Inter-segment Eliminations
Total
($ millions, except per share amounts)
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
Earnings (loss) before income tax
295
(70)
145
164
96
220
(206)
(181)
330
133
Adjustments to share of profit from equity
accounted investees and other
41
65
107
36
—
5
—
—
148
106
Net finance costs (income)
6
6
(8)
1
6
3
109
97
113
107
Depreciation and amortization
104
101
34
56
10
12
14
11
162
180
Unrealized (gain) loss on
commodity-related derivative financial instruments
—
—
(2)
24
61
(54)
—
—
59
(30)
Transaction costs incurred in respect of
acquisitions
—
—
—
—
—
—
—
5
—
5
Impairment charges, transformation and
restructuring costs, (gain) loss on disposal of assets and non-cash
provisions
102
446
12
4
(2)
(3)
1
22
113
469
Adjusted EBITDA
548
548
288
285
171
183
(82)
(46)
925
970
Adjusted EBITDA per common share – basic
(dollars)
1.68
1.76
12 Months Ended December 31
Pipelines
Facilities
Marketing & New
Ventures
Corporate &
Inter-segment Eliminations
Total
($ millions, except per share amounts)
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
Earnings before income tax
1,415
917
1,804
732
708
374
(708)
(358)
3,219
1,665
Adjustments to share of profit from equity
accounted investees and other
172
286
271
135
25
23
—
—
468
444
Net finance costs
28
29
13
18
27
9
418
394
486
450
Depreciation and amortization
396
413
196
214
44
50
47
46
683
723
Unrealized gain on commodity-related
derivative financial instruments
—
—
(50)
(38)
(83)
(35)
—
—
(133)
(73)
Arrangement Termination Payment
—
—
—
—
—
—
—
(350)
—
(350)
Gain on PGI Transaction
—
—
(1,110)
—
—
—
—
—
(1,110)
—
Transaction costs incurred in respect of
acquisitions
—
—
(1)
—
—
—
—
31
(1)
31
Impairment charges, transformation and
restructuring costs, contract dispute settlement, (gain) loss on
disposal of assets and non-cash provisions
116
457
14
36
—
(1)
4
51
134
543
Adjusted EBITDA
2,127
2,102
1,137
1,097
721
420
(239)
(186)
3,746
3,433
Adjusted EBITDA per common share – basic
(dollars)
6.78
6.24
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 December 31
Pipelines
Facilities
Marketing & New
Ventures
Total
($ millions)
2022
2021
2022
2021
2022
2021
2022
2021
Share of profit from equity accounted
investees
44
29
49
21
(14)
33
79
83
Adjustments to share of profit from equity
accounted investees:
Net finance costs (income)
5
26
37
7
(1)
(1)
41
32
Income tax expense
—
—
13
—
—
—
13
—
Depreciation and amortization
36
(4)
39
29
7
6
82
31
Unrealized loss (gain) on
commodity-related derivative financial instruments
—
—
11
—
(6)
—
5
—
Transaction costs incurred in respect of
acquisitions
—
—
7
—
—
—
7
—
Share of earnings in excess of equity
interest(1)
—
43
—
—
—
—
—
43
Total adjustments to share of profit from
equity accounted investees
41
65
107
36
—
5
148
106
Adjusted EBITDA from equity accounted
investees
85
94
156
57
(14)
38
227
189
(1)
Pembina's proportionate share of results
from investments in equity accounted investees with a preferred
interest is presented in adjusted EBITDA as a 50 percent common
interest.
12 Months Ended December 31
Pipelines
Facilities
Marketing & New
Ventures
Total
($ millions)
2022
2021
2022
2021
2022
2021
2022
2021
Share of profit from equity accounted
investees
171
124
108
80
82
77
361
281
Adjustments to share of profit from equity
accounted investees:
Net finance costs
21
72
79
31
—
1
100
104
Income tax expense
—
—
14
—
—
—
14
—
Depreciation and amortization
149
156
138
104
25
22
312
282
Unrealized loss on commodity-related
derivative financial instruments
—
—
27
—
—
—
27
—
Transaction costs incurred in respect of
acquisitions
—
—
13
—
—
—
13
—
Share of earnings in excess of equity
interest(1)
2
58
—
—
—
—
2
58
Total adjustments to share of profit from
equity accounted investees
172
286
271
135
25
23
468
444
Adjusted EBITDA from equity accounted
investees
343
410
379
215
107
100
829
725
(1)
Pembina's proportionate share of results
from investments in equity accounted investees with a preferred
interest is presented in adjusted EBITDA as a 50 percent common
interest.
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 preferred share dividends paid. Adjusted
cash flow from operating activities deducts 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.
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 December
31
12 Months Ended December
31
($ millions, except per share amounts)
2022
2021
2022
2021
Cash flow from operating activities
947
697
2,929
2,650
Cash flow from operating activities per
common share – basic (dollars)
1.72
1.27
5.30
4.82
Add (deduct):
Change in non-cash operating working
capital
(220)
30
(177)
100
Current tax expense
18
(31)
(227)
(286)
Taxes paid, net of foreign exchange
28
90
334
355
Accrued share-based payment expense
(51)
(20)
(117)
(76)
Share-based compensation payment
—
—
45
32
Preferred share dividends paid
(32)
(32)
(126)
(135)
Adjusted cash flow from operating
activities
690
734
2,661
2,640
Adjusted cash flow from operating
activities per common share – basic (dollars)
1.25
1.33
4.82
4.80
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230223005925/en/
Investor Relations (403) 231-3156 1-855-880-7404
e-mail: investor-relations@pembina.com www.pembina.com
PPL (NYSE:PPL)
Historical Stock Chart
Von Mai 2023 bis Mai 2023
PPL (NYSE:PPL)
Historical Stock Chart
Von Mai 2022 bis Mai 2023
