Energia
Pembina Pipeline Corporation Reports Results for the Fourth Quarter and Full Year 2021
CALGARY, AB , Feb. 25, 2022 /PRNewswire/ -- 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 2021.
Change in Full Year Adjusted EBITDA
Pembina reported record quarterly adjusted EBITDA of $970 million and record full year adjusted EBITDA of $3,433 million , representing a twelve percent and five percent increase, respectively, over the same periods in the prior year. Full year adjusted EBITDA exceeded the high end of the Company's guidance range.
Fourth quarter adjusted EBITDA was positively impacted by higher margins on NGL and crude oil sales combined with a higher contribution from Aux Sable ; higher contributions from Prince Rupert Terminal and Duvernay III coming into service in March 2021 and November 2020 , respectively; and higher share of profit from Veresen Midstream, due to the Hythe Developments project entering service in March 2021 and higher volumes at the Dawson Assets.
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, 2021 available 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.
In addition, relative to the prior period, the fourth quarter of 2021 was negatively impacted by higher realized losses on commodity-related derivative financial instruments; expiration of contracts on the Nipisi and Mitsue pipeline systems; and a lower contribution from Ruby Pipeline.
Full year adjusted EBITDA was also impacted by the same factors affecting the fourth quarter, as described above. In addition, full year adjusted EBITDA was positively impacted by higher volumes on the Peace Pipeline system, the placement into service of Empress Infrastructure in October 2020 , the impact of the lower U.S. dollar exchange rate, and higher marketed NGL volumes. General & administrative expense for the full year was higher largely due to higher incentive costs, primarily driven by the change in Pembina's share price, and an increase in optimization project costs, partially offset by a reduction in salaries due to a lower headcount.
Change in Full Year Earnings
Pembina recorded earnings in the fourth quarter of $80 million and earnings for the full year of $1,242 million compared to a loss of $1,216 million and a loss of $316 million , respectively, in the same periods in the prior year.
In addition to the factors impacting adjusted EBITDA, as noted above, earnings in both periods were positively impacted by lower non-cash after-tax impairments. Pembina recognized $335 million , net of tax, in impairments in 2021 largely related to the Nipisi and Mitsue pipeline systems as well as Edmonton South Rail Terminal, compared to $1.6 billion , net of tax, in impairments in 2020.
Both periods also were positively impacted by unrealized gains on commodity-related derivatives compared to unrealized losses in the prior year. Both periods were negatively impacted by higher income tax expense due to the deferred tax recovery on impairments in the prior year; higher other expense, which increased due to higher transformation and restructuring costs and project write-downs; and a lower share of profit from Ruby Pipeline.
Fourth quarter earnings were also negatively impacted by unrealized losses on commodity-related derivatives for certain gas processing fees tied to AECO prices, and higher net finance costs due to lower foreign exchange gains.
Full year earnings also were positively impacted by unrealized gains on commodity-related derivatives for certain gas processing fees tied to AECO prices and higher other income due to the receipt of the termination fee associated with Pembina's proposed acquisition of Inter Pipeline Ltd. ("Arrangement Termination Payment"), net of the related tax and associated expenses. These positive factors were offset by lower other income associated with the Canadian Emergency Wage Subsidy received in 2020.
Cash flow from operating activities of $697 million for the fourth quarter and $2,650 million for the full year represent a decrease of nine percent and an increase of 18 percent, respectively, over the same periods in the prior year.
The decrease in the fourth quarter was primarily driven by a change in non-cash working capital and an increase in taxes paid, primarily related to the Arrangement Termination Payment, partially offset by an increase in operating results after adjusting for non-cash items, an increase in revenue collected and deferred, and an increase in distributions from equity accounted investees.
The full year increase was due primarily to an increase in operating results after adjusting for non-cash items, and receipt of the Arrangement Termination Payment, partially offset by an increase in taxes paid and an increase in net interest paid.
On a per share (basic) basis, cash flow from operating activities for the fourth quarter and full year decreased by nine percent and increased by 18 percent, respectively, compared to the same periods in the prior year, due to the same factors.
Quarterly and record full year adjusted cash flow from operating activities of $734 million and $2,640 million , respectively, represent 22 percent and 15 percent increases, respectively, over the same periods in the prior year. The increases were due to the factors impacting cash flow from operating activities, discussed above, net of the change in non-cash working capital, taxes paid, and lower current tax expense. On a per share (basic) basis, adjusted cash flow from operating activities for the fourth quarter and full year increased by 21 percent and 15 percent, respectively, compared to the same periods in the prior year, due to the same factors.
Total volumes of 3,437 mboe/d for the fourth quarter and 3,456 mboe/d for the full year represent decreases of approximately five percent and one percent, respectively, over the same periods in the prior year. In both periods, volume decreases were largely attributable to the Pipelines Division, most notably on certain oil sands pipelines systems and Ruby Pipeline. Divisional volumes are discussed in further detail below.
One year ago, we reflected on the significant impact the global health pandemic had on our business, noting that in 2020, Pembina effectively hit the 'pause' button but that in 2021 there was renewed optimism building and a sense of being able to hit 'play' once again. Despite the ongoing pandemic, Pembina did in fact hit 'play', most notably by restarting construction on several previously deferred capital projects and by exceeding the high end of our adjusted EBITDA guidance range. Amidst the backdrop of a recovering economy and strengthening commodity prices, Pembina delivered strong financial and operational results, progressed new initiatives, advanced our environmental, social and governance ("ESG") strategy and positioned ourselves for continued growth and tremendous future success.
Strong 2021 Results
Pembina delivered earnings of $1.2 billion and record adjusted EBITDA of $3.43 billion dollars in 2021, which in the case of adjusted EBITDA, exceeded the top end of our annual guidance range and represents a five percent increase over 2020. Strong financial results reflected much improved commodity prices across all products within Pembina's value chain – crude oil, natural gas and natural gas liquids. Volumes on many of Pembina's systems improved throughout 2021 and higher prices and margins on crude oil and NGL, as well as higher NGL sales volumes in the year, also led to strong annual results in our marketing business.
Strong financial performance allowed Pembina to exit 2021 in an even better financial position with a stronger balance sheet, improved liquidity and having maintained or strengthened the Company's financial guardrails. Our commitment to these guardrails has been demonstrated consistently and is unwavering.
Given an improvement in commodity prices, and the expectation of a post-pandemic economic recovery, we continue to have a constructive view of activity in the Western Canadian Sedimentary Basin. Throughout 2021 and now into 2022, we have observed a number of important developments, including strong underlying customers, new third-party infrastructure, and continued petrochemical support and investment, which we have framed collectively as 'Advantage Canada'.
Progressing Pembina's ESG Strategy
Pembina has never been one to shy away from a challenge and as the world around us continues to evolve, Pembina is embracing the opportunity to adapt, respond and contribute to a more sustainable future.
Our strong commitment to ESG is being demonstrated by the ambitious new projects, partnerships and targets we announced this past year.
Looking Ahead
As we previously announced during the quarter, Pembina expects to deliver 2022 adjusted EBITDA of $3.35 to $3.55 billion . In 2022, cash flow from operating activities is expected to exceed dividend payments and the capital expenditure program. Pembina recently announced it expects to allocate up to the first $200 million of the excess cash flow to common share repurchases by mid-2022, representing approximately one percent of the Company's common shares. During the fourth quarter, Pembina made progress towards this goal with the repurchase of $17 million of common shares.
Based on the current guidance for 2022, Pembina expects to remain firmly within its financial guardrails with ample liquidity. Leverage metrics are expected to remain within the ranges for a strong 'BBB' credit rating.
With all these considerations, Pembina's value proposition remains compelling. We have a diversified business, integrated asset base and a growing ability to reach higher value markets for our customers' products. We look forward to continuing to build upon Pembina's base business and develop our multi-billion dollar portfolio of growth opportunities, while being a leading participant in the energy industry's evolution to a more sustainable future.
Pipelines:
Facilities:
Marketing & New Ventures:
On December 10, 2021 , Pembina closed an offering of $1 .0 billion of senior unsecured medium-term notes. The offering was conducted in two tranches, consisting of the issuance of $500 million in senior unsecured medium-term notes, series 17, having a fixed coupon of 3.53 percent per annum, payable semi-annually and maturing on December 10, 2031 ; and $500 million in senior unsecured medium-term notes, series 18, having a fixed coupon of 4.49 percent per annum, payable semi-annually and maturing on December 10, 2051 .
Pembina currently has in place a normal course issuer bid ("NCIB") to purchase up to five percent of its outstanding common shares. The current NCIB expires on March 1, 2022 and Pembina expects to file a notice of intention with the Toronto Stock Exchange ("TSX") to renew the NCIB to purchase up to five percent of its outstanding common shares, subject to approval of the TSX.
Pembina will host a conference call on Friday, February 25, 2022 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 2021. The conference call dial-in numbers for Canada and the U.S. are 647-792-1240 or 800-437-2398. A recording of the conference call will be available for replay until March 4, 2022 at 11:59 p.m. ET . To access the replay, please dial either 647-436-0148 or 888-203-1112 and enter the password 8107708.
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://produceredition.webcasts.com/starthere.jsp?ei=1501576&tp_key=bab2a068be in your web browser. Shortly after the call, an audio archive will be posted on the website for a minimum of 90 days.
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 a growing export terminals business. Through our integrated value chain, we seek to provide safe and reliable infrastructure solutions which connect producers and consumers of energy across the world, support a more sustainable future and benefit our customers, investors, employees and communities. For more information, please visit pembina.com.
Purpose of Pembina:
To be the leader in delivering integrated infrastructure solutions connecting global markets:
Pembina is structured into three Divisions: Pipelines Division, Facilities Division and Marketing & New Ventures Division.
Pembina's common shares trade on the Toronto and New York stock exchanges under PPL and PBA, respectively. For more information, visit www.pembina.com.
Investor Relations, Scott Arnold , Manager Investor Relations, (403) 231-3156, 1-855-880-7404, E-mail: investor-relations@pembina.com, www.pembina.com