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First Glance; Q1/22 Results: 2022 Adj. EBTIDA Guidance Raised
Event
Pembina Pipeline Corp. (PPL) reported Q1/22 AFFO/share of $1.27, above our
estimate of $1.16, recent consensus of $1.13, and Q1/21 AFFO/share of $1.06.
Impact: SLIGHTLY POSITIVE
Strong Start to the Year: First quarter results exceeded our expectations largely
due to a strong Marketing contribution with higher NGL and crude oil prices which
bolstered margins. The Facilities Division also benefited from new facilities, higher
volumes, 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 The guidance
range for 2022 Adjusted EBITDA has increased from $3.35-3.55bn to $3.45-
$3.60bn driven primarily by strong marketing performance.
Peace Pipeline Expansion (PPE): Phase VIII of the PPE project has
been reactivated as a result of secured commitments and ongoing customer
discussions. The project has an expected ISD in H1/24 and the estimated cost of
the expansion has increased from $500mm to $530mm, reflecting an optimized
project scope and cost increases, partially offset by cost savings from value
engineering. Phase VII of expansion project is progressing ahead of schedule and
budget, with an ISD on June 1, 2022.
Adding NEBC Producer Commitments: Following a recent agreement with a
NEBC Montney producer, PPL signed a 20-year midstream services agreement
for the transportation and fractionation of liquids from ConocoPhillips Canada's
(CPC) Montney development in NEBC. This arrangement allows PPL to benefit
from CPC's footprint in the liquids-rich NEBC region and new firm liquid
transportation and fractionation services provided by PPL will be underpinned
by long-term, take-or-pay agreements at competitive market rates. PPL also
announced that they expect to sign commercial agreements with a third leading
producer in the Montney for long-term NEBC volume commitments by mid-2022.
Prince Rupert Terminal: After re-evaluating current market dynamics including
customer demand, shipping costs, and propane pricing, PPL decided not to
proceed with the previously deferred expansion of the Prince Rupert Terminal.
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