Energia
Pembina Pipeline Corporation Reports Strong Results for the Third Quarter 2021
CALGARY, AB , Nov. 4, 2021 /PRNewswire/ -- Pembina Pipeline Corporation (" Pembina " or the "Company") (TSX: PPL) (NYSE: PBA) announced today its financial and operating results for the third quarter of 2021.
Change in Third Quarter Adjusted EBITDA
Pembina reported strong adjusted EBITDA of $850 million for the third quarter, seven percent higher than the same period in the prior year. Higher margins on NGL and crude oil sales and the positive impact of higher marketed NGL volumes were partially offset by a realized loss on commodity-related derivatives compared to a realized gain in the prior period. In addition, the year-over-year increase was due to contributions from assets placed into service in Facilities including Prince Rupert Terminal, Empress Infrastructure, Duvernay III and Hythe Developments, as well as higher volumes at Veresen Midstream's Dawson Assets and higher volumes on the Peace Pipeline system. These positive factors were partially offset by the impact of a lower U.S. dollar exchange rate, a lower contribution from Ruby Pipeline due to lower contracted volumes, lower revenue from Cochin Pipeline due to the impact of a timing difference in the recognition of deferred revenue, and higher general and administrative expense due to higher long-term incentive expenses as a result of changes in Pembina's share price.
Change in Third Quarter Earnings
Pembina reported earnings of $588 million for the third quarter, 82 percent higher than the same period in the prior year. In addition to the factors impacting adjusted EBITDA, as noted above, earnings were positively impacted by the receipt of the $350 million payment associated with Pembina's termination of its proposed acquisition of Inter Pipeline, net of the related tax impact, a higher unrealized gain related to certain gas processing fees tied to AECO natural gas prices, and an unrealized gain on commodity-related derivatives compared to a loss in the prior period. These positive factors were offset by higher net finance costs due to a foreign exchange loss, compared to a gain in the prior period, and lower share of profit from Ruby Pipeline.
Cash flow from operating activities of $913 million for the third quarter was an increase of 110 percent over the same period in the prior year. The increase was driven primarily by receipt of the payment associated with Pembina's termination of the proposed acquisition of Inter Pipeline; an increase in operating results, as discussed above, after adjusting for non-cash items; a change in non-cash working capital; and a decrease in taxes paid. These positive factors were partially offset by an increase in net interest paid. On a per share (basic) basis, cash flow from operating activities for the third quarter increased due to the same factors.
Adjusted cash flow from operating activities of $786 million was 50 percent higher compared to the same period in the prior year. The increase is due to the same factors impacting cash flow from operating activities, discussed above, net of the change in non-cash working capital and decrease in taxes paid, partially offset by higher current tax expense and an increase in accrued share-based payments. On a per share (basic) basis, adjusted cash flow from operating activities for the third quarter increased due to the same factors.
Total volumes of 3,411 mboe/d for the third quarter represent an approximately one percent decrease over the same period in the prior year.
Pipelines volumes of 2,563 mboe/d in the third quarter represent a one percent decrease compared to the same period in the prior year. The decrease was driven by lower contracted volumes on Ruby Pipeline due to contract expirations, lower interruptible volumes on AEGS due to third party outages, and lower volumes on Vantage Pipeline. These decreases were partially offset by higher volumes on Peace Pipeline and Alliance Pipeline.
Facilities volumes of 848 mboe/d in the third quarter were three percent lower than the same period in the prior year. The decrease was largely due to take-or-pay relief provided to Redwater Complex customers following third-party outages during the quarter, lower volumes at Saturn Complex due to higher deferred revenue volumes recognized in the same period in the prior year, and lower supply volumes on the East NGL System as volumes are now being processed at Empress NGL Extraction Facility. These factors were partially offset by higher volumes at Younger due to a turnaround in the prior year, higher volumes at Veresen Midstream's Dawson Assets and higher volumes associated with Duvernay III being placed into service in the fourth quarter of 2020.
Marketed NGL volumes of 177 mboe/d in the third quarter represent a five percent increase compared to the same period in the prior year. Marketed NGL volumes increased as sales have returned to pre-pandemic levels compared to the third quarter of 2020 when Pembina built up storage positions due to lower commodity prices.
We are very pleased to report strong third quarter results reflecting continued robust pricing across all commodities in Pembina's value chain – crude, condensate, natural gas and NGL. The current commodity price environment is supportive of our outlook for 2021 and 2022, as well as the longer-term prospects for Pembina's business, including a robust backlog of currently deferred and potential new growth projects totaling more than $5 billion .
As the Company continues to advance its ESG strategy, we were pleased recently to announce our target to reduce Pembina's greenhouse gas ("GHG") emissions intensity by 30 percent by 2030, relative to baseline 2019 emissions. The GHG reduction target will help guide business decisions and improve overall emissions intensity performance while increasing Pembina's long-term value and ensuring Canadian energy is developed and delivered responsibly. To meet the target, Pembina will focus initially on operational opportunities, greater use of renewable and lower emission energy sources, and investments in a lower carbon economy. In addition to the GHG target, Pembina expects to make further ESG progress with the announcement of Equity, Inclusion and Diversity targets by the end of 2021.
Looking ahead, a number of fundamental developments within our business and across the broader industry make us increasingly optimistic about the prospects for Pembina and, by extension, each of our stakeholders:
With strong pricing providing a steady tailwind for our business, we remain optimistic about the future. We will continue to advance our ESG strategy and progress development of future growth opportunities. Finally, we remain on track to deliver full year 2021 adjusted EBITDA within our guidance range of $3.3 - $3.4 billion and look forward to providing our outlook for 2022 with the release of our guidance and capital budget update in early December.
Pipelines:
Facilities:
Marketing & New Ventures:
During the third quarter, management identified certain crude contracts within Pembina's Marketing and New Ventures Division that were recorded incorrectly as it relates to gross versus net revenue. There is no impact to Pembina's balance sheet or any of the following: net revenue, gross profit, earnings, cash flow from operating activities, adjusted cash flow from operating activities or adjusted EBITDA. As a result, Pembina intends to refile its consolidated financial statements for the year ended December 31, 2020 and the management discussion and analysis with respect thereto to reflect the restated revenue and cost of goods sold figures for the years ended December 31, 2020 and 2019. The estimated adjustments are as follows:
Pembina will host a conference call on Friday, November 5, 2021 at 8:00 a.m. MT ( 10:00 a.m. ET ) for interested investors, analysts, brokers and media representatives to discuss results for the third 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 November 12, 2021 at 11:59 p.m. ET . To access the replay, please dial either 647-436-0148 or 888-203-1112 and enter the password 9073529.
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=1354435&tp_key=4504814289 in your web browser. Shortly after the call, an audio archive will be posted on the website for a minimum of 90 days.
Pembina is a leading transportation and midstream service provider that has been serving North America's energy industry for more than 65 years. Pembina owns an integrated system of pipelines that transport various hydrocarbon liquids and natural gas products produced primarily in western Canada. The Company also owns gas gathering and processing facilities; an oil and natural gas liquids infrastructure and logistics business; 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. Pembina is committed to identifying additional opportunities to connect hydrocarbon production to new demand locations through the development of infrastructure that would extend Pembina's service offering even further along the hydrocarbon value chain. These new developments will contribute to ensuring that hydrocarbons produced in the Western Canadian Sedimentary Basin and the other basins where Pembina operates can reach the highest value markets throughout the world.
Purpose of Pembina :
To be the leader in delivering integrated infrastructure solutions connecting global markets:
Pembina is structured into three Divisions: Pipelines Division, Facilities Division and Marketing & New Ventures Division.
Pembina's common shares trade on the Toronto and New York stock exchanges under PPL and PBA, respectively. For more information, visit www.pembina.com.
Investor Relations, Scott Arnold , Manager Investor Relations, (403) 231-3156, 1-855-880-7404, E-mail: investor-relations@pembina.com, www.pembina.com