(All financial figures are approximate and in Canadian
dollars unless otherwise noted. This news release refers to
earnings before interest, taxes, depreciation and amortization
("EBITDA") which is a financial measure that is not defined by
Generally Accepted Accounting Principles ("GAAP"). For more
information about EBITDA, see "Non-GAAP Measures" herein.)
CALGARY, Nov. 30, 2015 /CNW/ - Pembina Pipeline
Corporation ("Pembina" or the "Company") (TSX: PPL; NYSE: PBA)
announced that its Board of Directors has approved a capital
program of approximately $2.1 billion
in 2016, which represents another record capital budget plan for
the Company.
2015 Accomplishments and Update
During 2015, Pembina
successfully commissioned numerous large-scale, fee-for-service
assets in its Conventional Pipelines and Gas Services businesses,
which include its Phase II low and high vapor pressure pipeline
expansions, the Saturn II gas plant and the Saskatchewan Ethane
Extraction Plant, as well as the Resthaven gas gathering pipeline
and two storage caverns. These projects, once fully commissioned,
represent approximately $1.1 billion
of capital investment and were largely completed on time and, on
average, under budget.
Depending on utilization, these assets are expected to generate
between $100 million to $150 million
of EBITDA, and are all supported by long-term, fee-for-service
contracts.
In addition, approximately $600
million of new capital projects have been announced so far
in 2015, demonstrating the ongoing value and competitive advantage
of Pembina's integrated service
offering.
2016 Capital Program Highlights
"Our 2016 capital program is primarily directed towards
progressing our various multi-year execution projects, which are
largely underpinned by long-term, fee-for-service contracts," said
Mick Dilger, Pembina's President and Chief Executive
Officer. "We are excited to be commissioning a significant portion
of our secured projects in 2016 – which includes our second
Redwater fractionator, two
large-scale gas plants, the expansion of the Horizon pipeline
system and the expansion of the Vantage pipeline system, as well as
other smaller scale projects across each of our business units.
These projects will serve to further enhance Pembina's EBITDA which is estimated to be 80
percent secured by fee-for-service arrangements of which three
quarters are take-or-pay or cost-of-service. "
"Including 2016 and looking forward, Pembina will have approximately $5.3 billion of secured growth projects remaining
to be brought into service," continued Mr. Dilger. "Incremental to
the projects that went into service in 2015, these projects have
the potential to generate between $600
million to $950 million of incremental EBITDA in 2018,
depending on utilization rates and commodity prices."
"During 2016, we will remain focused on the safe and successful
completion of our growth projects, while continuing to operate our
business in a safe and reliable manner," said Mr. Dilger. "We will
also strive to reach our goal of $225
million of capital cost savings. So far, we have secured
savings of over half of this amount. It's also exciting to realize
that Pembina will bring virtually
all of the remaining identified projects into service within the
next 18 months."
Pembina's 2016 capital spending
plan is expected to be allocated as follows:
|
|
($
millions)
|
2016
Budget
|
Conventional
Pipelines
|
$1,375
|
Midstream
|
$485
|
Gas
Services
|
$115
|
Oil Sands and Heavy
Oil
|
$115
|
Other
|
$35
|
Total
|
$2,125
|
Conventional Pipelines
Pembina plans to spend
approximately $1,375 million in its
Conventional Pipelines business, 65 percent of its overall 2016
capital spending plan.
The majority of capital spending will be allocated to the Phase
III expansion of the Company's Peace and Northern Pipeline systems
("Phase III Expansion"). In 2016, the Phase III Expansion
construction will be focused on building the new 24-inch and
16-inch pipelines in the Fox Creek
to Namao corridor, subject to
regulatory and environmental approval. To support the Phase III
Expansion, Pembina will advance
the development of numerous pipeline laterals and associated
infrastructure. Additionally, Pembina will continue to progress a
large-scale pipeline expansion in northeast British Columbia, which will connect the
growing Montney resource play into
the Phase III Expansion, with an expected in service date of late
2017, subject to environmental and regulatory approval.
Pembina also expects to
complete the Vantage pipeline expansion in early 2016 and place it
into service by the third quarter of 2016.
Additional capital in Conventional Pipelines will be spent on
various upgrades and other business development activities.
Midstream
Pembina continues to allocate
its capital spending in Midstream on initiatives that are supported
by long-term, fee-for-service contracts. For 2016, capital of
$485 million, or 23 percent of the
overall budget, is projected to be spent in Midstream.
In Pembina's natural gas
liquids ("NGL") Midstream business, the Company expects to spend
$440 million in 2016, which will
largely be directed towards a number of initiatives at its
Redwater site.
Pembina will commission its
second 73,000 barrel per day ("bpd") Redwater fractionator in the first quarter of
2016. Development continues on Pembina's third fractionator at Redwater which will have a capacity of 55,000
bpd, which is expected to be in service by late 2017. Pembina will also invest in both unit train
transportation of propane out of Redwater, as well as the production of
international export-grade propane. Further at Redwater, the development of terminalling
infrastructure for the North West Redwater Partnership continues
and is expected to be in service by mid-2017, subject to regulatory
and environmental approval.
Additionally, capital will be spent in the NGL Midstream segment
on various upgrades across the Redwater West and Empress East
systems.
In Crude Oil Midstream, Pembina
expects to spend $45 million to
expand its current service offerings and enhance the
interconnectivity of its infrastructure including plans to advance
the Canadian Diluent Hub, which will provide extensive connectivity
for the growing diluent supply and various other initiatives,
including the completion of an additional 550,000 barrels of
storage capacity at Pembina's
Edmonton North Terminal.
Gas Services
Pembina plans to allocate
approximately $115 million, or 5
percent, of its 2016 capital budget to several new facilities and
expansions within Gas Services. This includes the expansion of the
existing Resthaven Facility and the third gas plant expansion at
the Musreau complex, both of which will be commissioned in the
first half of 2016 and represent a combined 200 million cubic feet
per day ("MMcf/d") of gross gas processing capacity.
Pembina will also advance the
recently announced 100 MMcf/d Duvernay I gas plant, which is
expected to be in-service in the second half of 2017, subject to
regulatory and environmental approval.
Additional capital in Gas Services will be spent on other
upgrades and business development activities.
Oil Sands and Heavy Oil
Pembina plans to allocate
approximately $115 million, or 5
percent, of its 2016 capital budget to Oil Sands and Heavy Oil. The
majority of the capital expenditure will be allocated to advancing
the expansion of the Horizon pipeline system, which will increase
the system to its ultimate capacity of 250,000 bpd and is expected
to be online by mid-2016.
Additional capital in Oil Sands and Heavy Oil will be spent on
the Cheecham Expansion, as well as other smaller capital
projects.
Conclusion
"2015 has been a very positive year for Pembina, marked by strong operational,
financial and safety performance, successful project execution, and
by securing excellent business development opportunities," added
Mr. Dilger. "We are excited to be heading into another record
capital program, from a position of strength. We are building on an
exemplary record of on time and on budget project delivery, with a
solid financial position, and have a $5.3
billion portfolio of secured fee-for-service growth projects
going forward. The first half of 2016 will be very exciting for
Pembina, as we will be bringing
several large-scale projects online across our business and will
bring approximately $1.1
billion of projects, and their significant associated
cash flow, into service by mid-2016. Despite weak energy prices, we
view 2016 to be full of opportunities for Pembina. As always, we'll strive to achieve
strong operational and financial results, all while operating in a
safe and responsible manner."
2016 Investor Day Information
Pembina plans to host its 2016
investor and analyst day in Toronto,
Ontario on April 11, 2016. For
parties interested in attending the event, please email
investor-relations@pembina.com to request an invitation.
About Pembina
Calgary-based Pembina Pipeline
Corporation is a leading transportation and midstream service
provider that has been serving North
America's energy industry for over 60 years. Pembina owns and operates an integrated system
of pipelines that transport various products derived from natural
gas and hydrocarbon liquids produced in western Canada and North
Dakota. The Company also owns and operates gas gathering and
processing facilities and an oil and natural gas liquids
infrastructure and logistics business. Pembina's integrated assets and commercial
operations along the entire hydrocarbon value chain allow it to
offer a full spectrum of midstream and marketing services to the
energy sector. Pembina is
committed to working with its community and aboriginal neighbours,
while providing value for investors in a safe, environmentally
responsible manner. This balanced approach to operating ensures the
trust Pembina builds among all its
stakeholders is sustainable over the long-term. 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 & Information
This document contains certain forward-looking statements and
information (collectively, "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 "plans",
"expects", "proposed", "will", "anticipates", "develop",
"continue", 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; planning,
construction, capital expenditure estimates, schedules, expected
capacity, incremental volumes, in-service dates, rights, activities
and operations with respect to planned new construction of, or
expansions in relation to Pembina's 2016 capital spending plan for each
of its business units; anticipated EBITDA and financial performance
resulting from Pembina's capital
expenditures; expectations around continuing producer activity and
development; the ongoing utilization and expansions of and
additions to Pembina's business
and asset base, growth and growth potential; expectations regarding
future demand for transportation services; expectations regarding
synergies and integration of growth and development projects with
Pembina's existing business and
asset base; and expectations regarding domestic and international
supply and demand factors and pricing for oil, natural gas and
NGLs. These forward-looking statements and information are being
made by Pembina based on certain
assumptions that Pembina has made
in respect thereof as at the date of this document including those
discussed below.
With respect to forward-looking statements contained in this
document, Pembina has made
assumptions regarding, among other things: the ability of
Pembina and any required third
parties to effectively engage with stakeholders; oil and gas
industry exploration and development activity levels, and domestic
and international supply and demand levels; the success of
Pembina's operations; 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; in respect of current
developments, expansions, planned capital expenditures, completion
dates and capacity expectations: that third parties will provide
any necessary support, 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, and that there are no unforeseen material costs
relating to the facilities which are not recoverable from
customers; interest and tax rates; prevailing regulatory, tax and
environmental laws and regulations; maintenance of operating
margins; the amount of future liabilities relating to 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. Readers are cautioned
that events or circumstances could cause results to differ
materially from those predicted, forecasted or projected. By their
nature, forward-looking statements involve numerous assumptions,
known and unknown risks and uncertainties that contribute to the
possibility that the predictions, forecasts, projections and other
forward-looking statements will not occur, which may cause actual
performance and financial results in future periods to differ
materially from any projections of future performance or results
expressed or implied by such forward-looking statements and
information. These known and unknown risks and uncertainties,
include, but are not limited to: the regulatory environment and
decisions; the ability of Pembina
to raise sufficient capital (or to raise sufficient capital on
favourable terms) to fund future expansions and growth projects and
satisfy future commitments; the continuation of completion of
third-party projects; the failure to realize anticipated benefits
of growth projects and acquisitions following completion due to
integration issues or otherwise; failure to negotiate and conclude
any required commercial agreements or failure to obtain project
sanctioning; unforeseen events preventing the completion of growth
projects or rendering them uneconomical to Pembina; reduced amounts of cash available for
dividends to shareholders; increased construction costs, or
construction delays, on Pembina's
expansion and growth projects; 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 or increased
environmental regulation; fluctuations in operating results;
adverse general economic and market conditions in Canada, North
America and elsewhere, including changes in interest rates,
foreign currency exchange rates and commodity prices; and certain
other risks detailed from time to time in Pembina's public disclosure documents
available at www.sedar.com. Readers are cautioned that this list of
risk factors should not be construed as exhaustive.
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. The forward-looking statements contained in this document are
expressly qualified by this cautionary statement. 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 financial outlook contained herein is to give the reader an
indication of the value to Pembina
of the planned capital projects. Readers should be aware that the
information contained in the financial outlook contained herein may
not be appropriate for other purposes.
Non-GAAP Measures
In this news release, Pembina has used the term earnings before
interest, taxes, depreciation and amortization ("EBITDA"), which is
a non-GAAP measure. Management believes that EBITDA provides useful
information to investors as it is an important indicator of the
issuer's ability to generate liquidity through cash flow from
operating activities, and is also used by investor and analysts for
assessing financial performance and for the purpose of valuing an
issuer, including calculating financial and leverage ratios. EBITDA
does not have any standardized meaning under International
Financial Reporting Standards ("IFRS") and should not, therefore,
be considered in isolation or used in substitute for measures of
performance prepared in accordance with IFRS. Other issuers may
calculate this non-GAAP measure differently. Investors should be
cautioned that this measure should not be construed as alternatives
to net earnings, cash flow from operating activities 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
financial reports, which are available on SEDAR at
www.sedar.com and at www.pembina.com.
SOURCE Pembina Pipeline Corporation