Summary

• Pembina Pipeline is a leading energy transportation and midstream service provider in North America.
• Pembina owns and operates a well-maintained and strategically located pipeline network that serves various markets and basins across North America.
• The company has pipeline transportation capacity of 3.1 mmboe/d and terminalling capacity of approximately 145 mboe/d.

Pembina Pipeline Corporation (NYSE: PBA, TSX: PPL) 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 export terminals business.

Recent developments

Closing of Transaction and Creation of Pembina Gas Infrastructure¹

August 15, 2022; Pembina Pipeline Corporation has completed its previously announced joint venture transaction with KKR to combine their respective western Canadian natural gas processing assets into a single, new joint venture entity, Pembina Gas Infrastructure Inc. ("PGI").

"Pembina Pipeline is excited to officially announce the creation of PGI, a premier gas processing entity in Western Canada that will provide incredible value for Pembina, its partner KKR, and its customers. Pembina has enjoyed a strong relationship with KKR at Veresen Midstream over the past four years and the creation of PGI is a natural next step that will unlock growth and provide increased service offerings to customers throughout the Montney and Duverney formations, from central Alberta to northeast British Columbia," said Scott Burrows, Pembina's President, and Chief Executive Officer.

Financial Highlights

Second Quarter 2022 Results

August 4, 2022; Pembina Pipeline announced its financial and operating results for the second quarter 2022.²

Strong Quarterly Results – delivered earnings of $418 million and adjusted EBITDA of $849 million, the latter representing a record for a second quarter, reflecting higher natural gas liquids ("NGL") and crude oil prices and margins, and rising volumes on key systems.

Guidance Raised – 2022 adjusted EBITDA guidance range has been increased to $3.575 to $3.675 billion (previously $3.45 to $3.6 billion).

NEBC Producer Commitment – Pembina has executed the previously referenced long-term agreements with a third leading Northeast British Columbia ("NEBC") Montney producer, which include the commitment of significant volumes from another multi-phase NEBC Montney development.

Alliance Recontracting – open seasons conducted during the second quarter further strengthened Alliance's contracting profile and continue to highlight the strong AECO-Chicago 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 liquified natural gas ("LNG") market.

ESG – Pembina continues to advance execution of its environmental, social, and governance ("ESG") strategy with a $1 billion sustainability-linked revolving credit facility, a second renewable power purchase agreement ("PPA"), and meaningful progress on its equity, diversity, and inclusion ("EDI") targets.

In the second quarter, Pembina reported adjusted EBITDA of $849 million, representing a $71 million, or nine percent, increase over the same period in the prior year. Relative to the prior period, the second quarter was positively impacted by stronger marketing results due to higher margins on crude oil and NGL sales, a combination of higher volumes on the Peace Pipeline system and higher tolls due to inflation, and higher contributions from Aux Sable and Alliance. These positive factors were partially offset by a lower contribution from Ruby, due to Ruby Pipeline L.L.C. ("Ruby Pipeline") filing for bankruptcy protection on March 31, 2022; higher realized losses on commodity-related derivatives; lower contracted volumes on the Nipisi and Mitsue pipeline systems, due to the expiration of contracts; and higher general and administrative costs, primarily due to higher long-term incentive costs driven by Pembina's relative share price performance.

Pembina recorded second quarter earnings of $418 million, representing a $164 million, or 65 percent, increase relative to the same period in the prior year. Relative to the prior period, in addition to the factors impacting adjusted EBITDA, as noted above, earnings in the second quarter were positively impacted by lower other expense and impairments and a higher unrealized gain on commodity-related derivatives. Second quarter earnings were negatively impacted by higher income tax expense, and higher net finance costs due to foreign exchange losses compared to gains in the second quarter of 2021.

Cash flow from operating activities of $604 million for the second quarter represents an increase of $20 million, or three percent, over the same period in the prior year. Adjusted cash flow from operating activities of $683 million represents a $145 million, or 27 percent, increase over the same period in the prior year. The increase was due to the factors impacting cash flow from operating activities, discussed above, excluding the impact of the change in non-cash working capital and taxes paid. On a per share (basic) basis, adjusted cash flow from operating activities increased by 26 percent due to the same factors.

Business Segments

The company has three reporting segments.³

The Pipelines Division provides customers with pipeline transportation, terminalling, storage and rail services in key market hubs in Canada and the United States for crude oil, condensate, natural gas liquids and natural gas. The division manages pipeline transportation capacity of 3.1 mmboe/d, above ground storage of 11 mmbls and rail terminalling capacity of approximately 105 mboe/d within its conventional, oil sands and heavy oil, and transmission assets. The conventional assets include strategically located pipelines and terminalling hubs that gather and transport light and medium crude oils, condensate and natural gas liquids from western Alberta and northeast British Columbia to the Edmonton, Alberta area for further processing or transportation on downstream pipelines. The oil sands and heavy oil assets transport heavy and synthetic crude oil produced within Alberta to the Edmonton, Alberta area and offer associated storage, terminalling and rail services. The transmission assets transport natural gas, ethane and condensate throughout Canada and the United States on long haul pipelines linking various key market hubs. In addition, the Pipelines Division assets provide linkages between Pembina's upstream and downstream assets across North America, enabling integrated customer service offerings. Together, these assets supply products from hydrocarbon producing regions to refineries, fractionators and market hubs in Alberta, British Columbia, Illinois and California, as well as other regions throughout North America.

The Facilities Division includes infrastructure that provides Pembina's customers with natural gas, condensate and NGL services. Pembina's natural gas gathering and processing assets are strategically positioned in active, liquids-rich areas of the WCSB and Williston Basin and are integrated with the Company's other businesses. Pembina provides sweet and sour gas gathering, compression, condensate stabilization, and both shallow cut and deep cut gas processing services with a total capacity of approximately 6.1 bcf/d for its customers. Condensate and NGL extracted at virtually all Canadian-based facilities have access to transportation on Pembina's pipelines. In addition, all NGL transported along the Alliance Pipeline are extracted through the Pembina operated Channahon Facility at the terminus. The Facilities Division includes approximately 354 mbpd of NGL fractionation capacity, 21 mmbbls of cavern storage capacity and associated pipeline and rail terminalling facilities and a liquefied propane export facility on Canada's West Coast. These facilities are fully integrated with the Company's other divisions, providing customers with the ability to access a comprehensive suite of services to enhance the value of their hydrocarbons. In addition, Pembina owns a bulk marine import/export terminal in Vancouver, British Columbia.

The Marketing & New Ventures Division strives to maximize the value of hydrocarbon liquids and natural gas originating in the basins where the Company operates. Pembina pursues this goal through the creation of new markets, and further enhances existing markets, to support both the Company's and its customers' overall business interests. In particular, Pembina seeks to identify opportunities to connect hydrocarbon production to new demand locations through the development of infrastructure. Pembina strives to increase producer netbacks and product demand to improve the overall competitiveness of the basins where the Company operates. Within the Marketing & New Ventures Division, Pembina undertakes value-added commodity marketing activities including buying and selling products (natural gas, ethane, propane, butane, condensate, crude oil and electricity), commodity arbitrage, and optimizing storage opportunities. The marketing business enters into contracts for capacity on both Pembina's and third-party infrastructure, handles proprietary and customer volumes and aggregates production for onward sale.

Business Overview

Pembina Pipeline Corporation is a dynamic energy transportation and midstream provider, serving customers for more than 65 years.

The company own pipelines that transport hydrocarbon liquids and natural gas products produced primarily in Western Canada. The company also own gas gathering and processing facilities and an oil and natural gas liquids infrastructure and logistics business.

Operations

Pembina strives to be the leader in delivering integrated infrastructure solutions connecting global markets. Pembina owns an integrated system of pipelines that transport various hydrocarbon liquids and natural gas products produced primarily in Western Canada. The Company also owns gas gathering and processing facilities; an oil and natural gas liquids infrastructure and logistics business; and is growing an export terminals business. Pembina's integrated assets and commercial operations along the majority of the hydrocarbon value chain allow it to offer a full spectrum of midstream and marketing services to the energy sector.⁴

Pipelines

Pembina owns and operates a well-maintained and strategically located pipeline network that serves various markets and basins across North America.

The Pipelines Division provides customers with pipeline transportation, terminalling, storage and rail services in key market hubs in Canada and the United States for crude oil, condensate, natural gas liquids and natural gas. The division manages pipeline transportation capacity of 3.1 mmboe/d, above ground storage of 11 mmbls and rail terminalling capacity of approximately 145 mboe/d within its conventional, oil sands and heavy oil, and transmission assets.

Facilities

The Facilities Division manages Pembina’s natural gas processing and NGL fractionation facilities and related infrastructure.

Pembina's natural gas gathering and processing assets are strategically positioned in active, liquids-rich areas of the WCSB and Williston Basin and are integrated with the Company's other businesses.

The Facilities Division includes approximately 354 mbpd of NGL fractionation, 21 mmbbls of cavern storage and associated pipeline and rail terminalling facilities and the Company recently completed the construction of a liquefied propane export facility on Canada's West Coast.

I in addition, Pembina owns a 125-acre bulk marine export terminal in Vancouver, British Columbia. The facility consists of four vessel berths with rail infrastructure serviced by three Class 1 railways that receive and unload unit trains, conveyance systems, significant dry bulk and liquid storage capacity.

Partnerships

Alberta Carbon Grid (Proposed)

The Alberta Carbon Grid (ACG) is a proposed carbon transportation and sequestration system which, when fully constructed, will be capable of transporting up to 20 million tonnes of CO2 annually. Designed to be an open-access system, the ACG will serve as the backbone of Alberta's emerging carbon capture utilization and storage industry.

Cedar LNG (Proposed)

The Cedar LNG Project is a proposed floating LNG facility in Kitimat, British Columbia, within the traditional territory of the Haisla Nation. Cedar LNG is strategically positioned to leverage Canada’s abundant natural gas supply and BC’s growing LNG infrastructure to produce industry-leading low‑carbon, low-cost Canadian LNG for new overseas markets.

Chinook Pathways

Chinook Pathways is an Indigenous-led partnership formed to pursue equity ownership in the Trans Mountain Pipeline following completion of construction of the Trans Mountain Expansion. Chinook Pathways was formed by Western Indigenous Pipeline Group (WIPG) with its selected industry partner, Pembina Pipeline Corporation, to establish a collaborative ownership framework for Indigenous communities in Trans Mountain.

Company History

Pembina Pipeline Ltd. was incorporated in the Province of Alberta as the operator of an oil transporting pipeline system within the Pembina field.⁵

References

1. ^ https://www.pembina.com/media-centre/news/details/135546/
2. ^ https://www.pembina.com/media-centre/news/details/135544/
3. ^ https://www.pembina.com/getattachment/63a4fe9d-589b-4faa-82ce-2a0c64c17597/q4-2021-annual-report.pdf
4. ^ https://www.pembina.com/operations/
5. ^ https://www.pembina.com/about/history/