Pembina Pipeline Corp T.PPL.PR.G

TPH - Pembina Pipeline Maintains Buy Rating - Target $43

[Ariahp]

Pembina Pipeline Maintains Buy Rating at TPH Following Weak Second-Quarter Results

 

06 Aug 202109:49 ET

 

09:49 AM EDT, 08/06/2021 (MT Newswires) -- Tudor, Pickering & Holt on Friday reiterated its buy rating on the shares of Pembina Pipeline (PPL.TO) with a C$43.00 target price even after the oil and gas infrastructure and processing company reported weaker than expected second-quarter results.

"Negative. Pembina printed a Q2 Adj. EBITDA miss of C$778mm, 8% below TPH with a narrower variance to the Street (-7%) driven by lower segment margins in Pipelines, realized Marketing losses, and higher non-cash G&A from an improved share price," the investment bank said in a note. "The low-end of 2021 EBITDA guidance was raised by C$0.1B and the company now expects a range of C$3.3-3.4B (TPHe C$3.4B) due to improving fundamentals while an upper-end bump was not done due to a weaker US dollar, higher operating costs, and increased G&A.

Frac spread exposure for 2021 remains hedged at 50% (excluding Aux Sable) while 2022 will be at 50% by the end of Q3.

Sanctioning for the Phase 8 Peace Pipeline expansion is expected in Q4'21 (consistent with previous guidance of H2'21) while a Prince Rupert LPG expansion decision has been delayed until Q1'22 (from H2'21) ...

We suspect the equity will underperform today as messaged "torque" in the business appears delayed until 2022 while a silver lining is the C$350mm break fee received from IPL CN bolsters an already strong free cash flow profile through 2023 providing financial flexibility to de-lever, self-fund growth, or increase returns to shareholders."

[Albatross]

I would be happy enough for them to self-fund growth and de-lever. The dividend was attractive for me to buy in as it well cover the interest on my investment loan and then some, about 8x over. But the next 30 years are going to be huge for oil companies transitioning.. I don't want to see them high-centre on debt or dividend obligations.  Just my opinion.