TD Waterhouse first comments
Pembina Pipeline Corp.
(PPL-T, PBA-N) C$46.87 | US$36.40
First Glance; Q2/22 Results: 2022 Guidance Increased
Event
Pembina Pipeline Corp. (PPL) reported Q2/22 AFFO/share of $1.23, above our estimate of $1.05, recent consensus of $1.02, and Q2/21 AFFO/share of $0.98.
Impact: SLIGHTLY POSITIVE
Q2/22 Results Exceeded Expectations: Marketing contribution were stronger than we had modeled with higher NGL and crude oil prices which bolstered margins. While slightly below our forecasts, results from the Facilities Division benefited from higher contracted volumes at the Cutbank Complex and a realized gain on commodity-related derivatives for certain gas processing fees tied to AECO prices. This was partially offset by lower Pipeline Division contributions from a combination of factors including declines in Ruby Pipeline and contract expirations at the Nipisi and Mitsue pipelines.
2022 Guidance Raised: PPL raised its 2022E Adjusted EBITDA guidance range from $3.45-3.60bn to $3.58-3.68bn, reflecting stronger marketing performance, higher contributions from Alliance, Cochin, and certain gas service business assets, and contributions from assets acquired from the Newco transaction.
Adding NEBC Producer Commitments: In addition to the two previously announced NEBC Montney service agreements, PPL has now executed long[1]term agreements with a third leading NEBC Montney producer, Tourmaline Oil Corp., which is expected to provide the producer with access to firm transportation and fractionation services on a take-or-pay basis as development of the NEBC Montney progresses. The three service agreements provide producers with certainty of transportation capacity from the NEBC Montney to PPL's integrated value chain, including fractionation and marketing services.
Potential Growth Opportunities: PPL included in its release of quarterly results potential growth opportunities which include developing NEBC infrastructure solutions, NGL extraction facilities, cogeneration facilities, and expansions of various pipeline systems and facilities. With increasing customer liquid commitments in NEBC, PPL is currently engineering and evaluating up to an incremental 55,000 bpd of propane-plus fractionation capacity at its Redwater Complex.
Sustainability Linked Financing: In July 2022, PPL established a sustainability[1]linked-loan where pricing adjustments reflect the company's progress towards its target to reduce GHG emissions by 30 percent relative to 2019 levels.
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