Strong start to 2013; $1.3 billion of recently secured projects to drive
continued growth
All financial figures are in Canadian dollars unless noted otherwise.
This report contains forward-looking statements and information that
are based on Pembina Pipeline Corporation's ("Pembina" or the
"Company") current expectations, estimates, projections and assumptions
in light of its experience and its perception of historic trends.
Actual results may differ materially from those expressed or implied by
these forward-looking statements. Please see "Forward-Looking
Statements & Information" in the accompanying Management's Discussion &
Analysis ("MD&A") for more details. This report also refers to
financial measures that are not defined by Generally Accepted
Accounting Principles ("GAAP"). For more information about the measures
which are not defined by GAAP, see "Non-GAAP Measures" of the
accompanying MD&A.
CALGARY, May 9, 2013 /PRNewswire/ - On April 2, 2012 Pembina completed its
acquisition of Provident Energy Ltd. ("Provident") (the "Acquisition").
The amounts disclosed herein for the three month period ending March
31, 2012 reflect results of legacy Pembina excluding Provident ("Legacy
Pembina"). For further information with respect to the Acquisition,
please refer to Note 4 of the Condensed Consolidated Interim Financial
Statements for the period ended March 31, 2013.
Financial & Operating Overview
|
|
|
|
|
|
|
|
|
|
($ millions, except where noted)
|
|
|
|
|
|
3 Months Ended
March 31
|
|
|
|
|
|
|
2013
|
|
|
2012
|
Revenue
|
|
|
|
|
|
1,285.7
|
|
|
475.5
|
Operating margin(1)
|
|
|
|
|
|
239.8
|
|
|
127.7
|
Gross profit
|
|
|
|
|
|
203.8
|
|
|
102.5
|
Earnings for the period
|
|
|
|
|
|
90.5
|
|
|
32.6
|
Earnings per share - basic and diluted (dollars)
|
|
|
|
|
|
0.30
|
|
|
0.19
|
Adjusted EBITDA(1)
|
|
|
|
|
|
210.2
|
|
|
111.4
|
Cash flow from operating activities
|
|
|
|
|
|
229.0
|
|
|
65.3
|
Adjusted cash flow from operating activities(1)
|
|
|
|
|
|
207.4
|
|
|
98.8
|
Adjusted cash flow from operating activities per share(1)
|
|
|
|
|
|
0.70
|
|
|
0.59
|
Dividends declared
|
|
|
|
|
|
121.0
|
|
|
65.7
|
Dividends per common share (dollars)
|
|
|
|
|
|
0.41
|
|
|
0.39
|
|
|
|
|
(1)
|
|
Refer to "Non-GAAP Measures."
|
First Quarter Highlights
-
During the first quarter, Pembina announced that it had secured an
additional $1.3 billion in growth projects.
-
Consolidated operating margin during the first quarter of 2013 increased
88 percent to $239.8 million compared to $127.7 million during the same
period of the prior year. Operating margin is a non-GAAP measure; see
"Non-GAAP Measures."
-
Pembina generated $60.5 million in operating margin from its
Conventional Pipelines business, $31.5 million from Oil Sands & Heavy
Oil and $18.6 million from Gas Services. Operating margin was
positively impacted by increased volumes on Pembina's Conventional
Pipelines, as discussed below, and an increase in gas processed through
and fees generated by Pembina's Gas Services assets. The Company's
Midstream business also saw a significant increase in operating margin
to $128.5 million, which includes results generated by the assets
acquired through the Acquisition.
-
Operationally, Pembina experienced one of the strongest quarters in its
history. Conventional Pipelines transported an average of 493.7
thousand barrels per day ("mbpd") in the first quarter of 2013, six
percent more than the same period of 2012 when average volumes were
466.9 mbpd. Gas Services also saw an increase in volumes of 13 percent,
with the Cutbank Complex processing an average of 299.3 million cubic
feet per day ("MMcf/d") during the first quarter of 2013 compared to
264.9 MMcf/d in the same period of the previous year.
-
The Company's earnings were $90.5 million ($0.30 per share) for the
first quarter of 2013 compared to $32.6 million ($0.19 per share) for
the first quarter of 2012. This increase was the result of the
Acquisition as well as improved performance in each of Legacy Pembina's
businesses. Per share metrics were also impacted by the Acquisition.
-
Pembina generated adjusted EBITDA of $210.2 million during the first
quarter of 2013 compared to $111.4 million during the first quarter of
2012 (adjusted EBITDA is a non-GAAP measure; see "Non-GAAP Measures").
The quarter-over-quarter increase in adjusted EBITDA was due to strong
results from each of Pembina's legacy businesses, new assets and
services having been brought on-stream, and the completion of the
Acquisition.
-
Cash flow from operating activities was $229 million ($0.77 per share)
for the first quarter of 2013 compared to $65.3 million ($0.39 per
share) for the same period in 2012. This increase was primarily due to
higher adjusted EBITDA, combined with changes in working capital, lower
acquisition-related costs in the period and lower interest paid due to
timing of payments.
-
Adjusted cash flow from operating activities was $207.4 million ($0.70
per share) for the first quarter of 2013 compared to $98.8 million
($0.59 per share) for the same period of 2012 (adjusted cash flow from
operating activities is a Non-GAAP measure; see "Non-GAAP Measures").
Growth and Operational Update
During the first quarter of 2013, Pembina made substantial progress on
its growth plans, securing approximately $1.3 billion in additional
capital projects which the Company expects will provide long-term,
sustainable returns once complete. With these new projects, Pembina's
estimated capital spending plan for the year has increased from $965
million to approximately $1.04 billion.
NGL Infrastructure Expansion
The most significant of Pembina's planned investments is the $1 billion
expansion of its NGL-related infrastructure, which was announced on
March 5, 2013 and comprises the following three integrated components
along the NGL value chain:
-
Twinning of the 200 MMcf/d Saturn deep cut facility ("Saturn II") which
will extract valuable NGL from raw gas streams in the Berland area of
Alberta at an estimated capital cost of $170 million;
-
Twinning of its 73,000 bpd ethane-plus fractionator ("RFS II") at its
Redwater site, near Fort Saskatchewan, Alberta at an estimated capital
cost of $415 million; and,
-
The Phase II NGL pipeline capacity expansion of its Peace/Northern NGL
System which will accommodate increased NGL volumes at an estimated
capital cost of $415 million.
For its Saturn II project, Pembina has entered into a firm-service
contract for 130 MMcf/d (approximately 65 percent of the facility's
total capacity) for a term of 10 years with a third-party producer.
Based on 100 percent capacity utilization, Saturn II is expected to
extract approximately 13,000 barrels per day ("bpd") of NGL which will
be transported on the same pipeline lateral Pembina is currently
constructing for Saturn I, and then on Pembina's Peace Pipeline, which
will carry the product into the Edmonton, Alberta area. Because Saturn
II will leverage existing site engineering work completed for the
original Saturn facility, Pembina expects the project could be
in-service by late 2015, subject to regulatory and environmental
approvals.
For RFS II, Pembina has entered into contracts for 97 percent of the
facility's operating capacity with producers which will provide Pembina
committed take-or-pay operating margin for an initial 10-year term from
the in-service date. Ethane produced at RFS II will be sold under a
long-term arrangement with NOVA Chemicals Corporation. Because RFS II
will leverage engineering work completed for Pembina's original
Redwater fractionator, the Company expects the project to be in-service
late in the fourth quarter of 2015, subject to regulatory and
environmental approvals.
To accommodate increasing NGL volumes on its systems and to address
constrained capacity throughout the Province of Alberta, Pembina is
proceeding with its proposed Phase II NGL pipeline capacity expansion
on its Peace/Northern NGL System. The Company is currently completing
its Phase I expansion, which will increase NGL capacity on the
Peace/Northern NGL System by 45 percent to 167,000 bpd. In April,
Pembina completed three pump stations which will provide 17,000 bpd of
additional NGL capacity. The Company expects to commission and bring
the pump stations into service in June of this year. The remaining pump
stations, which are expected to be in-service in October, 2013, will
add an additional 35,000 bpd of capacity. The Phase II NGL Expansion
will increase capacity from 167,000 bpd to 220,000 bpd. In total,
Pembina expects the Phase I and II expansions to increase NGL
transportation capacity by 90 percent. Subject to regulatory and
environmental approvals, Pembina expects the Phase II NGL Expansion
will cost approximately $415 million (including mainline and tie-in
capital) and will be complete in early to mid-2015.
Pembina also plans to construct a new NGL lateral approximately 30
kilometres in length into the Ferrier region to tie a third-party's
facility into Pembina's Brazeau Pipeline System, subject to regulatory
and environmental approvals.
Crude Oil and Condensate Pipeline Capacity Expansion
On February 13, Pembina also announced that the Company reached its
contractual threshold to proceed with its previously announced $250
million crude oil and condensate throughput capacity expansion on its
Peace Pipeline (the "Phase II LVP Expansion") to accommodate increased
producer crude oil and condensate volumes arising from strong drilling
results in the Dawson Creek, Grande Prairie and Kaybob/Fox Creek areas
of Alberta. Once complete, this expansion will increase capacity on the
Peace Pipeline by 55,000 bpd to 250,000 bpd. The combination of
Pembina's Phase I and Phase II LVP Expansions will increase capacity by
61 percent from current levels. Subject to obtaining regulatory and
environmental approvals, Pembina anticipates being able to bring the
Phase II LVP Expansion into service by late-2014.
Pembina's previously announced northwest Alberta pipeline expansion
non-binding open season closed on April 30, 2013. Nominations were
sufficient such that Pembina plans to proceed to the next stage of the
open season.
Other Growth Project Updates
-
Pembina brought two long-term fee-for-service hydrocarbon storage
caverns into service at its Redwater site in April, 2013. Pembina
expects to bring a third cavern into service late in the second quarter
of this year.
-
On the Nipisi Pipeline, Pembina has commissioned a new pump station
which increased capacity to 105,000 bpd.
-
Pembina is also continuing to investigate offshore propane export
opportunities that would allow it to leverage its existing assets and
provide a potential solution for Canadian producers impacted by weak
North American pricing.
Financing Activity
On March 21, 2013, Pembina announced that it had closed its bought deal
offering of 11,206,750 common shares at a price of $30.80 per share
through a syndicate of underwriters, which includes 1,461,750 common
shares issued at the same price on the exercise in full of the
over-allotment option granted to the underwriters. The aggregate gross
proceeds from the offering was approximately $345 million. The net
proceeds from the offering were used to reduce the Company's debt,
which it used to fund its capital program and for other general
corporate purposes.
On April 30, 2013, Pembina closed the offering of $200 million, 30-year
senior unsecured, medium-term notes ("Notes"). The Notes have a fixed
interest rate of 4.75 percent per annum paid semi-annually, and will
mature on April 30, 2043. The net proceeds from the offering of Notes
were used to pay down Pembina's existing credit facility.
Summary
"The first quarter of 2013 was a very exciting one at Pembina," said Bob
Michaleski, Pembina's Chief Executive Officer. "First, we had another
quarter of solid operational and financial results from our existing
businesses. And on the growth front, we are beginning to see the
tangible benefits of the Provident acquisition and our resulting
fully-integrated platform by securing projects across the hydrocarbon
value chain and increasing our 2013 capital spending plan to just over
$1 billion. With the closing of our bought deal equity financing and
30-year term debt issuance, we're more confident than ever in our
ability to execute our business plan and generate long-term,
sustainable returns for our investors."
First Quarter 2013 Conference Call & Webcast
Pembina will host a conference call on May 10, 2013 at 8 a.m. MT (10
a.m. ET) to discuss details related to the first quarter. The
conference call dial-in numbers for Canada and the U.S. are
647-427-7450 or 888-231-8191. A recording of the conference call will
be available for replay until May 17, 2013 at 11:59 p.m. ET. To access
the replay, please dial either 416-849-0833 or 855-859-2056 and enter
the password 21796840.
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: http://event.on24.com/r.htm?e=595645&s=1&k=DA9E32B7267860A93271D1CC68237A63 in your web browser. Shortly after the call, an audio archive will be
posted on the website for a minimum of 90 days.
Annual and Special Meeting Information
The Company will hold its Annual and Special Meeting of Shareholders
("AGM") on Friday, May 10, 2013 at 2:00 p.m. MT (4:00 p.m. ET) at the
Metropolitan Conference Centre, 333 - 4th Avenue S.W., Calgary,
Alberta, Canada.
A live webcast of Pembina's AGM presentation can be accessed on
Pembina's website at www.pembina.com under Investor Centre, Presentation & Events, or by entering: http://event.on24.com/r.htm?e=595658&s=1&k=FE7334F74D0AD428C124C57DA0269B27. Participants are recommended to register for the webcast at least 10
minutes before the presentation start time.
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following management's discussion and analysis ("MD&A") of the
financial and operating results of Pembina Pipeline Corporation
("Pembina" or the "Company") is dated May 9, 2013 and is supplementary
to, and should be read in conjunction with, Pembina's unaudited
condensed consolidated interim financial statements for the period
ended March 31, 2013 ("Interim Financial Statements") as well as
Pembina's consolidated audited annual financial statements and MD&A for
the year ending December 31, 2012 (the "Consolidated Financial
Statements"). All dollar amounts contained in this MD&A are expressed
in Canadian dollars unless otherwise noted.
Management is responsible for preparing the MD&A. This MD&A has been
reviewed and recommended by the Audit Committee of Pembina's Board of
Directors and approved by its Board of Directors.
This MD&A contains forward-looking statements (see "Forward-Looking
Statements & Information") and refers to financial measures that are
not defined by Generally Accepted Accounting Principles ("GAAP"). For
more information about the measures which are not defined by GAAP, see
"Non-GAAP Measures."
On April 2, 2012, Pembina completed its acquisition of Provident Energy
Ltd. ("Provident") (the "Acquisition"). The amounts disclosed herein
for the three months ending March 31, 2012 reflect results of legacy
Pembina excluding Provident ("Legacy Pembina"). The results of the
business acquired through the Acquisition are reported as part of the
Company's Midstream business. For further information with respect to
the Acquisition, please refer to Note 4 of the Interim Financial
Statements.
About Pembina
Calgary-based Pembina Pipeline Corporation is a leading transportation
and midstream service provider that has been serving North America's
energy industry for nearly 60 years. Pembina owns and operates:
pipelines that transport conventional and synthetic crude oil and
natural gas liquids produced in western Canada; oil sands, heavy oil
and diluent pipelines; gas gathering and processing facilities; and, an
oil and natural gas liquids infrastructure and logistics business. With
facilities strategically located in western Canada and in natural gas
liquids markets in eastern Canada and the U.S., Pembina also offers a
full spectrum of midstream and marketing services that spans across its
operations. Pembina's integrated assets and commercial operations
enable it to offer services needed by the energy sector along the
hydrocarbon value chain.
Pembina is a trusted member of the communities in which it operates and
is committed to generating value for its investors by running its
businesses in a safe, environmentally responsible manner that is
respectful of community stakeholders.
Strategy
Pembina's goal is to provide highly competitive and reliable returns to
investors through monthly dividends while enhancing the long-term value
of its shares. To achieve this, Pembina's strategy is to:
-
Preserve value by providing safe, responsible, cost-effective and
reliable services;
-
Diversify Pembina's asset base along the hydrocarbon value chain by
providing integrated service offerings which enhance profitability;
-
Pursue projects or assets that are expected to generate increased cash
flow per share and capture long-life, economic hydrocarbon reserves;
and,
-
Maintain a strong balance sheet through the application of prudent
financial management to all business decisions.
Pembina is structured into four businesses: Conventional Pipelines, Oil
Sands & Heavy Oil, Gas Services and Midstream, which are described in
their respective sections of this MD&A.
Common Abbreviations
The following is a list of abbreviations that may be used in this MD&A:
Measurement
|
|
|
|
Other
|
mmbbls
|
|
|
|
millions of barrels
|
|
|
|
AECO
|
|
|
|
Alberta gas trading price
|
bpd
|
|
|
|
barrels per day
|
|
|
|
AESO
|
|
|
|
Alberta Electric Systems Operator
|
mbpd
|
|
|
|
thousands of barrels per day
|
|
|
|
B.C.
|
|
|
|
British Columbia
|
mboe/d
|
|
|
|
thousands of barrels of oil equivalent per day
|
|
|
|
DRIP
|
|
|
|
Premium Dividend™ and Dividend Reinvestment Plan
|
MMcf/d
|
|
|
|
millions of cubic feet per day
|
|
|
|
Frac
|
|
|
|
Fractionation
|
bcf/d
|
|
|
|
billions of cubic feet per day
|
|
|
|
IFRS
|
|
|
|
International Financial Reporting Standards
|
MW/h
|
|
|
|
megawatts per hour
|
|
|
|
NGL
|
|
|
|
Natural gas liquids
|
GJ
|
|
|
|
gigajoule
|
|
|
|
NYSE
|
|
|
|
New York Stock Exchange
|
km
|
|
|
|
kilometre
|
|
|
|
TSX
|
|
|
|
Toronto Stock Exchange
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
United States
|
|
|
|
|
|
|
|
|
WCSB
|
|
|
|
Western Canadian Sedimentary Basin
|
|
|
|
|
|
|
|
|
WTI
|
|
|
|
West Texas Intermediate (crude oil benchmark price)
|
Financial & Operating Overview
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 Months Ended
March 31
|
($ millions, except where noted)
|
|
|
|
|
|
2013
|
|
|
|
2012
|
Conventional Pipelines throughput (mbpd)
|
|
|
|
|
|
493.7
|
|
|
|
466.9
|
Oil Sands & Heavy Oil contracted capacity (mbpd)
|
|
|
|
|
|
870.0
|
|
|
|
870.0
|
Gas Services average processed volume (mboe/d) net to Pembina(1)
|
|
|
|
|
|
49.9
|
|
|
|
44.1
|
NGL sales volume (mbpd)
|
|
|
|
|
|
122.9
|
|
|
|
|
Total volume (mbpd)
|
|
|
|
|
|
1,536.5
|
|
|
|
1,381.0
|
Revenue
|
|
|
|
|
|
1,285.7
|
|
|
|
475.5
|
Operations
|
|
|
|
|
|
77.2
|
|
|
|
48.4
|
Cost of goods sold, including product purchases
|
|
|
|
|
|
970.8
|
|
|
|
299.1
|
Realized gain (loss) on commodity-related derivative financial
instruments
|
|
|
|
|
|
2.1
|
|
|
|
(0.3)
|
Operating margin(2)
|
|
|
|
|
|
239.8
|
|
|
|
127.7
|
Depreciation and amortization included in operations
|
|
|
|
|
|
41.8
|
|
|
|
21.7
|
Unrealized gain (loss) on commodity-related derivative financial
instruments
|
|
|
|
|
|
5.8
|
|
|
|
(3.5)
|
Gross profit
|
|
|
|
|
|
203.8
|
|
|
|
102.5
|
Deduct/(add)
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
|
|
|
32.6
|
|
|
|
17.6
|
|
Acquisition-related and other expense (income)
|
|
|
|
|
|
(0.6)
|
|
|
|
22.1
|
|
Net finance costs
|
|
|
|
|
|
50.8
|
|
|
|
19.5
|
|
Share of loss (profit) of investments in equity accounted investee, net
of tax
|
|
|
|
|
|
0.3
|
|
|
|
(0.2)
|
Income tax expense
|
|
|
|
|
|
30.2
|
|
|
|
10.9
|
Earnings for the period
|
|
|
|
|
|
90.5
|
|
|
|
32.6
|
Earnings per share - basic and diluted (dollars)
|
|
|
|
|
|
0.30
|
|
|
|
0.19
|
Adjusted EBITDA(2)
|
|
|
|
|
|
210.2
|
|
|
|
111.4
|
Cash flow from operating activities
|
|
|
|
|
|
229.0
|
|
|
|
65.3
|
Cash flow from operating activities per share
|
|
|
|
|
|
0.77
|
|
|
|
0.39
|
Adjusted cash flow from operating activities(2)
|
|
|
|
|
|
207.4
|
|
|
|
98.8
|
Adjusted cash flow from operating activities per share(2)
|
|
|
|
|
|
0.70
|
|
|
|
0.59
|
Dividends declared
|
|
|
|
|
|
121.0
|
|
|
|
65.7
|
Dividends per common share (dollars)
|
|
|
|
|
|
0.41
|
|
|
|
0.39
|
Capital expenditures
|
|
|
|
|
|
137.1
|
|
|
|
54.9
|
Total enterprise value ($ billions) (2)
|
|
|
|
|
|
12.2
|
|
|
|
6.5
|
Total assets ($ billions)
|
|
|
|
|
|
8.4
|
|
|
|
3.4
|
|
|
(1)
|
Gas Services processing volumes converted to mboe/d from MMcf/d at 6:1
ratio.
|
(2)
|
Refer to "Non-GAAP Measures."
|
Revenue, net of cost of goods sold, increased 79 percent to $314.9
million during the first quarter of 2013 compared to $176.4 million
during the same period of 2012. This increase was primarily due to the
addition of results generated by the assets acquired through the
Acquisition, which are reported in the Company's Midstream business, as
well as improved performance in each of Pembina's legacy businesses, as
discussed in further detail below.
Operating expenses were $77.2 million during the first quarter of 2013
compared to $48.4 million in the same period in 2012. The increase was
largely due to additional costs associated with the growth in Pembina's
asset base primarily resulting from the Acquisition and higher variable
costs in each of the Company's legacy businesses because of increased
volumes and activity.
Operating margin totalled $239.8 million during the first quarter of
2013, up 88 percent from the same period last year when operating
margin totalled $127.7 million (operating margin is a Non-GAAP measure;
see "Non-GAAP Measures"), primarily due to higher revenue as discussed
above.
Realized and unrealized gains/losses on commodity-related derivative
financial instruments resulting from Pembina's market risk management
program are primarily related to frac spread, product margin and power
derivative financial instruments (see "Market Risk Management Program"
and Note 11 to the Interim Financial Statements). The unrealized gain
on commodity-related derivative financial instruments was $5.8 million
for the three months ended March 31, 2013, reflecting changes in the
future NGL, natural gas and power price indices between December 31,
2012 and March 31, 2013.
Depreciation and amortization (operational) increased to $41.8 million
during the first quarter of 2013 compared to $21.7 million during the
same period in 2012 which reflects depreciation on new capital
additions including those assets acquired through the Acquisition.
The increases in revenue and operating margin contributed to gross
profit of $203.8 million during the first quarter of 2013 compared to
$102.5 million for the same period of 2012.
General and administrative expenses ("G&A") of $32.6 million were
incurred during the first quarter of 2013 compared to $17.6 million
during the first quarter of 2012. The increase for the period was
mainly due to the addition of employees who joined Pembina through the
Acquisition and new employees who joined the Company, as well as an
increase in salaries and benefits for existing employees, including
increased share-based payment accruals. In addition, every $1 change in
share price is expected to change Pembina's annual share-based
incentive expense by approximately $1 million.
Pembina generated adjusted EBITDA of $210.2 million during the first
quarter of 2013 compared to $111.4 million during the first quarter of
2012 (adjusted EBITDA is a Non-GAAP measure; see "Non-GAAP Measures").
The increase in adjusted EBITDA was due to strong results from each of
Pembina's legacy businesses, new assets and services having been
brought on-stream, and the growth of Pembina's operations since
completion of the Acquisition.
The Company's earnings were $90.5 million ($0.30 per share) during the
first quarter of 2013 compared to $32.6 million ($0.19 per share)
during the first quarter of 2012. This increase was the result of the
Acquisition as well as improved performance in each of the Company's
legacy businesses. Per share metrics were also impacted by the
Acquisition.
Cash flow from operating activities was $229 million ($0.77 per share)
during the first quarter of 2013 compared to $65.3 million ($0.39 per
share) for the comparative period of 2012. The increase in cash flow
from operating activities was primarily due to an increase in adjusted
EBITDA, combined with changes in working capital, lower
acquisition-related costs in the period and lower interest paid due to
timing of payments.
Adjusted cash flow from operating activities was $207.4 million ($0.70
per share) during the first quarter of 2013, an increase of 110
percent, compared to $98.8 million ($0.59 per share) during the first
quarter of 2012 (adjusted cash flow from operating activities is a
Non-GAAP measure; see "Non-GAAP Measures").
Operating Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 Months Ended March 31
|
|
|
|
|
|
|
2013
|
|
|
2012
|
($ millions)
|
|
|
|
|
|
Net
Revenue
|
(1)
|
|
Operating
Margin
|
(2)
|
|
Net
Revenue
|
(1)
|
|
Operating
Margin
|
(2)
|
Conventional Pipelines
|
|
|
|
|
|
95.8
|
|
|
60.5
|
|
|
82.2
|
|
|
54.4
|
|
Oil Sands & Heavy Oil
|
|
|
|
|
|
43.4
|
|
|
31.5
|
|
|
43.1
|
|
|
30.1
|
|
Gas Services
|
|
|
|
|
|
27.5
|
|
|
18.6
|
|
|
19.1
|
|
|
13.0
|
|
Midstream
|
|
|
|
|
|
148.2
|
|
|
128.5
|
|
|
32.0
|
|
|
29.6
|
|
Corporate
|
|
|
|
|
|
|
|
|
0.7
|
|
|
|
|
|
0.6
|
|
Total
|
|
|
|
|
|
314.9
|
|
|
239.8
|
|
|
176.4
|
|
|
127.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Midstream revenue is net of $983.9 million in cost of goods sold,
including product
purchases, for the quarter ended March 31, 2013 (quarter ended March 31,
2012:
$299.1 million).
|
(2)
|
Refer to "Non-GAAP Measures."
|
|
|
Conventional Pipelines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 Months Ended March 31
|
($ millions, except where noted)
|
|
|
|
|
|
2013
|
2012
|
Average throughput (mbpd)
|
|
|
|
|
|
493.7
|
466.9
|
Revenue
|
|
|
|
|
|
95.8
|
82.2
|
Operations
|
|
|
|
|
|
35.3
|
27.5
|
Realized gain (loss) on commodity-related derivative financial
instruments
|
|
|
|
|
|
|
(0.3)
|
Operating margin(1)
|
|
|
|
|
|
60.5
|
54.4
|
Depreciation and amortization included in operations
|
|
|
|
|
|
1.6
|
11.9
|
Unrealized gain (loss) on commodity-related derivative financial
instruments
|
|
|
|
|
|
0.9
|
(3.0)
|
Gross profit
|
|
|
|
|
|
59.8
|
39.5
|
Capital expenditures
|
|
|
|
|
|
61.4
|
11.1
|
|
|
(1)
|
Refer to "Non-GAAP Measures."
|
Business Overview
Pembina's Conventional Pipelines business comprises a well-maintained
and strategically located 7,850 km pipeline network that extends across
much of Alberta and B.C. It transports approximately half of Alberta's
conventional crude oil production, about thirty percent of the NGL
produced in western Canada, and virtually all of the conventional oil
and condensate produced in B.C. This business' primary objective is to
generate sustainable operating margin while pursuing opportunities for
increased throughput and revenue. Conventional Pipelines endeavours to
maintain and/or improve operating margin by capturing incremental
volumes, expanding its pipeline systems, managing revenue and following
a disciplined approach to its operating expenses.
Operational Performance: Throughput
During the first quarter of 2013, Conventional Pipelines' throughput
averaged 493.7 mbpd, consisting of an average of 363.7 mbpd of crude
oil and condensate and 130 mbpd of NGL. This represents an increase of
approximately 6 percent compared to the same period of 2012, when
average throughput was 466.9 mbpd.
Financial Performance
During the first quarter of 2013, Conventional Pipelines generated
revenue of $95.8 million compared to $82.2 million in the same quarter
of the previous year. The 17 percent increase during the period was
primarily due to strong volumes generated by newly connected facilities
on Pembina's Conventional Pipelines systems, as well as producer
enhanced recovery techniques resulting in increased deliveries from
existing connected locations. In addition, as of the first quarter of
2013, results from certain pipeline assets purchased through the
Acquisition and previously included in the Midstream business are now
included in Conventional Pipelines, which also helped drive increased
revenue. However, this had no impact on the volumes mentioned above as
the assets are interconnected to existing Conventional Pipelines
systems.
Quarterly operating expenses increased to $35.3 million compared to
$27.5 million in the first quarter of 2012 due to several factors,
including costs associated with ensuring safe and reliable operations
at higher throughput levels and higher costs associated with
geotechnical work which can only be completed during winter months.
As a result of higher revenue, which was partially offset by an increase
in operating expenses, operating margin for the first quarter of 2013
was $60.5 million compared to $54.4 million during the same period of
2012.
Depreciation and amortization included in operations was $1.6 million
during the first quarter of 2013 compared to $11.9 million during the
first quarter of 2012. This decrease is primarily due to a reduction in
depreciation because of a re-measurement of the decommissioning
provision in excess of the carrying amount of the related asset.
For the three months ended March 31, 2013, gross profit was $59.8
million due to higher revenue generated during the quarter, for the
reasons discussed above, compared to $39.5 million during the same
period in 2012.
Capital expenditures for the first quarter of 2013 totalled $61.4
million compared to $11.1 million during the first quarter of 2012. The
majority of this spending relates to the expansion of certain pipeline
assets as described below.
New Developments
Pembina is pursuing several crude oil, condensate and NGL expansions on
its Conventional Pipelines systems to accommodate increased customer
demand and address constrained pipeline capacity in several areas of
the WCSB.
NGL Pipeline Capacity Expansions
Pembina is progressing its Phase I NGL Expansion, which is expected to
add 52,000 bpd of additional NGL capacity to the Peace and Northern
Pipelines (the "Peace/Northern NGL System"). In April, Pembina
completed three pump stations which will provide 17,000 bpd of
additional NGL capacity at a cost $30 million. The Company expects to
commission and bring the pump stations into service in June, 2013. On
its Peace Pipeline, the Company expects to commission three new pump
stations by August 2013 and upgrade four existing stations by October
2013 to provide an additional 35,000 bpd of NGL capacity at an
estimated cost of $70 million. Once complete, the Phase I NGL Expansion
will increase NGL capacity on the Peace/Northern NGL System by 45
percent to 167,000 bpd.
As part of the Company's approximately $1 billion expansion of its
existing NGL infrastructure, Pembina is also proceeding with its
proposed Phase II NGL Expansion of its Peace/Northern NGL System which
will increase capacity from 167,000 bpd to 220,000 bpd. In total, the
Phase I and II expansions are expected to increase NGL transportation
capacity by 90 percent. Subject to obtaining regulatory and
environmental approvals, Pembina expects the Phase II NGL Expansion to
cost approximately $415 million (including mainline and tie-in capital)
and to be complete in early to mid-2015.
Pembina also plans to construct a new 30 kilometre NGL lateral into the
Ferrier region of Alberta to tie a third-party's facility into the
Company's Brazeau Pipeline System, subject to regulatory and
environmental approvals.
Crude Oil and Condensate Pipeline Capacity Expansions
The Phase I Peace low vapour pressure ("LVP") expansion requires three
upgraded pump stations and associated pipeline work between Fox Creek
and Edmonton, Alberta, and will provide an additional 40,000 bpd of
crude oil and condensate capacity on this segment. Pembina expects to
commission one of the three pump stations by June 2013, and the
remaining two stations by October 2013 at an estimated cost of $30
million.
On February 13, 2013, Pembina announced that it had reached its
contractual threshold to proceed with its previously announced plans to
significantly expand its crude oil and condensate throughput capacity
on its Peace Pipeline system by 55,000 bpd ("Phase II LVP Expansion").
Pembina expects the total cost of the Phase II LVP Expansion to be
approximately $250 million (including the mainline expansion and
tie-ins). Subject to regulatory and environmental approvals, Pembina
anticipates being able to bring the expansion into service by late
2014. Once complete, this expansion will increase LVP capacity on
Pembina's Peace Pipeline to 250,000 bpd. The Phase II LVP Expansion is
underpinned by long-term fee-for-service agreements with area
producers. The combined LVP expansions will increase capacity by 61
percent from current levels.
Open Season Update
Pembina's previously announced northwest Alberta pipeline expansion
non-binding open season closed on April 30, 2013. Nominations were
sufficient such that Pembina plans to proceed to the next stage of the
open season.
Supporting Gas Services
Conventional Pipelines is also constructing the pipeline components of
the Company's Saturn I, Saturn II and Resthaven gas plant projects.
These pipeline projects will gather NGL from the gas plants for
delivery to Pembina's Peace Pipeline system. Both Saturn I and Saturn
II will use the same pipeline lateral. Pembina has received the
required environmental and regulatory approvals for the pipelines and
is continuing with construction on both projects.
Oil Sands & Heavy Oil
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 Months Ended March 31
|
($ millions, except where noted)
|
|
|
|
|
|
2013
|
2012
|
Contracted capacity (mbpd)
|
|
|
|
|
|
870.0
|
870.0
|
Revenue
|
|
|
|
|
|
43.4
|
43.1
|
Operations
|
|
|
|
|
|
11.9
|
13.0
|
Operating margin(1)
|
|
|
|
|
|
31.5
|
30.1
|
Depreciation and amortization included in operations
|
|
|
|
|
|
4.9
|
4.9
|
Gross profit
|
|
|
|
|
|
26.6
|
25.2
|
Capital expenditures
|
|
|
|
|
|
12.1
|
5.8
|
|
|
(1)
|
Refer to "Non-GAAP Measures."
|
Business Overview
Pembina plays an important role in supporting Alberta's oil sands and
heavy oil industry. Pembina is the sole transporter of crude oil for
Syncrude Canada Ltd. (via the Syncrude Pipeline) and Canadian Natural
Resources Ltd.'s Horizon Oil Sands operation (via the Horizon Pipeline)
to delivery points near Edmonton, Alberta. Pembina also owns and
operates the Nipisi and Mitsue Pipelines, which provide transportation
for producers operating in the Pelican Lake and Peace River heavy oil
regions of Alberta, and the Cheecham Lateral which transports synthetic
crude to oil sands producers operating southeast of Fort McMurray,
Alberta. The Oil Sands & Heavy Oil business operates approximately
1,650 km of pipeline and has 870 mbpd of capacity under long-term,
extendible contracts which provide for the flow-through of operating
expenses to customers. As a result, operating margin from this business
is proportionate to the amount of capital invested and is predominantly
not sensitive to fluctuations in operating expenses or actual
throughput.
Financial Performance
The Oil Sands & Heavy Oil business realized revenue of $43.4 million in
the first quarter of 2013, virtually unchanged from $43.1 million in
the first quarter of 2012 due to the contracted nature of this
business.
Operating expenses were $11.9 million during the first quarter of 2013,
slightly lower than $13 million during the first quarter of 2012 and
due to lower maintenance and power costs during the period.
For the three months ended March 31, 2013, operating margin increased to
$31.5 million compared to $30.1 million during the same period in 2012.
Additional throughput above contracted volumes on the Nipisi and Mitsue
pipelines contributed to the slight increase in operating margin during
the first quarter of 2013.
Depreciation and amortization included in operations for the first
quarter of 2013 totalled $4.9 million, unchanged from the same period
of the prior year.
During the quarter ended March 31, 2013, gross profit was $26.6 million
compared to $25.2 million during the same period of 2012.
In the first quarter of 2013, capital expenditures within the Oil Sands
& Heavy Oil business totalled $12.1 million and were primarily related
to the construction of additional pump stations on the Nipisi and
Mitsue pipelines. This compares to $5.8 million spent during the same
period in 2012, the majority of which related to completing the two
projects.
New Developments
On the Nipisi Pipeline, Pembina commissioned a new pump station in April
2013 which increased its capacity to 105,000 bpd. Work is continuing on
the corresponding pump station for the Mitsue condensate pipeline. With
this additional pump station, which is anticipated to be in-service in
the third quarter of 2013, Mitsue's capacity will increase from 18,000
bpd to 22,000 bpd.
Pembina continues to actively work with customers on oil sands and heavy
oil related solutions. With the Acquisition, the Company has increased
its access to diluent supply and can offer customers condensate and
butane products from various sources including Pembina's conventional
pipeline systems, the Redwater fractionator, rail imports and truck
racks.
Gas Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 Months Ended March 31
|
($ millions, except where noted)
|
|
|
|
|
|
2013
|
2012
|
Average processed volume (MMcf/d) net to Pembina
|
|
|
|
|
|
299.3
|
264.9
|
Average processed volume (mboe/d) (1) net to Pembina
|
|
|
|
|
|
49.9
|
44.1
|
Revenue
|
|
|
|
|
|
27.5
|
19.1
|
Operations
|
|
|
|
|
|
8.9
|
6.1
|
Operating margin(2)
|
|
|
|
|
|
18.6
|
13.0
|
Depreciation and amortization included in operations
|
|
|
|
|
|
3.6
|
3.2
|
Gross profit
|
|
|
|
|
|
15.0
|
9.8
|
Capital expenditures
|
|
|
|
|
|
38.5
|
34.0
|
|
|
(1)
|
Average processing volume converted to mboe/d from MMcf/d at a 6:1
ratio.
|
(2)
|
Refer to "Non-GAAP Measures."
|
Business Overview
Pembina's operations include a growing natural gas gathering and
processing business. Located approximately 100 km south of Grande
Prairie, Alberta, Pembina's key revenue-generating Gas Services assets
form the Cutbank Complex which comprises three sweet gas processing
plants with 425 MMcf/d of processing capacity (368 MMcf/d net to
Pembina), a 205 MMcf/d ethane plus extraction facility, as well as
approximately 350 km of gathering pipelines. The Cutbank Complex is
connected to Pembina's Peace Pipeline system and serves an active
exploration and production area in the WCSB. Pembina has initiated
construction on and development of numerous projects in its Gas
Services business to meet the growing needs of producers in west
central Alberta.
Financial Performance
Gas Services recorded an increase in revenue of 44 percent during the
first quarter of 2013, contributing $27.5 million compared to $19.1
million in the first quarter of 2012. This increase primarily reflects
higher processing volumes at Pembina's Cutbank Complex and increased
fees for additional capital invested. Average processing volumes, net
to Pembina, were 299.3 MMcf/d during the first quarter of 2013,
approximately 13 percent higher than the 264.9 MMcf/d processed during
the first quarter of the previous year. The increase in volumes
reflects producer's sustained interest in the areas surrounding
Pembina's Gas Services assets and their focus on liquids-rich natural
gas which continues to attract higher commodity pricing relative to dry
gas.
During the first quarter of 2013, operating expenses were $8.9 million
compared to $6.1 million incurred in the first quarter of 2012. The
quarterly increase was mainly due to variable costs incurred to process
higher volumes at the Cutbank Complex as well as additional costs
associated with running the Musreau shallow cut expansion and deep cut
facility.
As a result of processing higher volumes at the Cutbank Complex, an
increase in fees for capital invested and additional processing
associated with the Musreau deep cut facility, Gas Services realized
operating margin of $18.6 million in the first quarter compared to $13
million during the same period of the prior year.
Depreciation and amortization included in operations during the first
quarter of 2013 totalled $3.6 million, up from $3.2 million during the
same period of the prior year, primarily due to higher in-service
capital balances from additions to the Cutbank Complex (including the
Musreau deep cut facility and shallow cut expansion).
For the three months ended March 31, 2013, gross profit was $15 million
compared to $9.8 million in the same period of 2012. This increase
reflects higher operating margin during the period which was partially
offset by increased depreciation and amortization included in
operations as discussed above.
In the first quarter of 2013, capital expenditures within Gas Services
totalled $38.5 million compared to $34 million during the same period
of 2012. This increase was because of spending to progress the Saturn
and Resthaven enhanced NGL extraction facilities.
New Developments
Pembina's Gas Services business is constructing three new facilities and
associated infrastructure:
-
Saturn I facility - a 200 MMcf/d enhanced NGL extraction facility in the
Berland area of west central Alberta, which is expected to cost $165
million;
-
Resthaven facility - a 200 MMcf/d (130 MMcf/d net to Pembina) combined
shallow cut and deep cut NGL extraction facility in the Resthaven,
Alberta area, which is expected to cost $210 million; and,
-
Saturn II facility - a 200 MMcf/d 'twin' of the Saturn I facility, which
is expected to cost $170 million (as announced on March 5, 2013).
Pembina expects Saturn I and associated pipelines to be in-service in
the third quarter of 2013, one quarter ahead of schedule. The Company
has ordered all of the major equipment and construction of the facility
is 55 percent complete. Once operational, Pembina expects Saturn I will
have the capacity to extract up to 13.5 mbpd of NGL.
For Resthaven, Pembina expects the facility and associated pipelines to
be in-service in the third quarter of 2014. Once operational, Pembina
expects the Resthaven facility will have the capacity to extract up to
13 mbpd of NGL. Pembina has ordered all of the major equipment for the
plant and is progressing site construction.
In the second quarter, Pembina plans to take over operatorship of the
existing 100 MMcf/d shallow cut plant at the Resthaven site from Encana
in order to streamline operation of the plant while the Resthaven
facility is under construction. When Pembina becomes the 'operator of
record' at Resthaven, the Company will manage the facility on behalf of
the owners.
Saturn II will leverage the engineering work completed for the Saturn I
facility and is underpinned by a firm-service contract with a
third-party for 130 MMcf/d (approximately 65 percent of the facility's
total capacity) for a term of 10 years. Pembina expects the project
could be in-service by late 2015, subject to regulatory and
environmental approvals. Based on 100 percent capacity, Saturn II is
expected to extract approximately 13.5 mbpd of NGL which will be
transported on the same pipeline lateral Pembina is currently
constructing for Saturn I.
Pembina expects the expansions detailed above to bring the Company's Gas
Services processing capacity to 1,093 MMcf/d (net). This includes
enhanced NGL extraction capacity of approximately 735 MMcf/d (net). The
volumes from Pembina's existing assets and those under development
would be processed largely on a contracted, fee-for-service basis and
are expected to result in approximately 55 mbpd of NGL to be
transported for additional toll revenue on Pembina's Conventional
Pipelines by the end of 2015.
Midstream
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 Months Ended March 31(1)
|
($ millions, except where noted)
|
|
|
|
|
|
2013
|
2012
|
Revenue
|
|
|
|
|
|
1,132.1
|
331.1
|
Operations
|
|
|
|
|
|
21.8
|
2.4
|
Cost of goods sold, including product purchases
|
|
|
|
|
|
983.9
|
299.1
|
Realized gain (loss) on commodity-related derivative financial
instruments
|
|
|
|
|
|
2.1
|
|
Operating margin(2)
|
|
|
|
|
|
128.5
|
29.6
|
Depreciation and amortization included in operations
|
|
|
|
|
|
31.7
|
1.7
|
Unrealized gain (loss) on commodity-related derivative financial
instruments
|
|
|
|
|
|
4.9
|
(0.5)
|
Gross profit
|
|
|
|
|
|
101.7
|
27.4
|
Capital expenditures
|
|
|
|
|
|
23.9
|
2.3
|
|
|
(1)
|
Share of profit from equity accounted investees not included in these
results.
|
(2)
|
Refer to "Non-GAAP Measures."
|
Business Overview
Pembina offers customers a comprehensive suite of midstream products and
services through its Midstream business as follows:
-
Crude oil midstream targets oil and diluent-related opportunities from
key sites across Pembina's network, which comprise 15 truck terminals
(including one capable of emulsion treating and water disposal),
terminalling at downstream hub locations, storage, and the Pembina
Nexus Terminal ("PNT"). PNT includes: 21 inbound pipelines connections;
13 outbound pipelines connections; in excess of 1.2 million bpd of
crude oil and condensate connected to the terminal; and, 310,000
barrels of surface storage in and around the Edmonton, Alberta area.
-
NGL midstream, which includes two NGL operating systems - Redwater West
and Empress East - is affected by the seasonal demand for propane;
inventory generally builds over the second and third quarters of the
year and is sold in the fourth quarter and the first quarter of the
following year during the winter heating season.
-
The Redwater West NGL system includes the Younger extraction and
fractionation facility in B.C.; the recently expanded 73 mbpd Redwater
NGL fractionator; 7.8 mmbbls of cavern storage and terminalling facilities at Redwater, Alberta; and,
third-party fractionation capacity in Fort Saskatchewan, Alberta.
Redwater West purchases NGL mix from various natural gas and NGL
producers and fractionates it into finished products at fractionation
facilities near Fort Saskatchewan, Alberta. Redwater West also includes
NGL production from the Younger NGL extraction and fractionation plant
(Taylor, B.C.) that provides specification NGL to B.C. markets. Also
located at the Redwater facility is Pembina's industry-leading
rail-based terminal which services Pembina's proprietary and customer
needs.
-
The Empress East NGL system includes a 2.1 bcf/d interest in the
straddle plants at Empress, Alberta; 20 mbpd of fractionation capacity
as well as 1.1 mmbbls of cavern storage in Sarnia, Ontario; and,
approximately 5 mmbbls of hydrocarbon storage at Corunna, Ontario.
Empress East extracts NGL mix from natural gas at the Empress straddle
plants and purchases NGL mix from other producers/suppliers. Ethane and
condensate are generally fractionated out of the NGL mix at Empress and
sold into Alberta markets. The remaining NGL mix is transported by
pipelines to Sarnia, Ontario for fractionation and storage of
specification products. Propane and butane are sold into central
Canadian and eastern U.S. markets.
Financial Performance
In the Midstream business, revenue, net of cost of goods sold, grew to
$148.2 million during the first quarter of 2013 from $32 million during
the first quarter of 2012. This increase was primarily due to the
addition of the NGL assets acquired through the Acquisition and
increased terminalling activity on Pembina's pipeline systems.
Operating expenses during the first quarter of 2013 were $21.8 million
compared to $2.4 million in the first quarter of 2012. Operating
expenses for the quarter were higher primarily due to the increase in
Midstream's asset base since the Acquisition.
Operating margin was $128.5 million during the first quarter of 2013
compared to $29.6 million during the first quarter of 2012 with the
increase due primarily to increased revenue, as discussed above,
partially offset by higher operating expenses.
The Company's crude oil midstream operating margin increased to $42.7
million compared to $29.6 million during the first quarter of 2012. The
strong results were primarily due to higher volumes and increased
activity on Pembina's pipeline systems, wider margins, as well as
increased throughput at the crude oil midstream truck terminals, which
increased by nearly 20 percent compared to the average during 2012 to
exit the first quarter of 2013 at 80,000 bpd.
Operating margin for Pembina's NGL midstream activities was $85.8
million for the first quarter, including a $3.7 million year-to-date
realized gain on commodity-related derivative financial instruments
(see "Market Risk Management Program"). NGL sales volumes during the
first quarter of 2013 were 122.9 mbpd. Operating margin from Redwater
West during the first quarter of 2013, excluding realized losses from
commodity-related derivative financial instruments, was $55.9 million.
First quarter results in Redwater West were supported by strong demand
for propane and low AECO natural gas prices. Overall, Redwater West NGL
sales volumes averaged 70.3 mbpd in the first quarter of 2013.
Operating margin from Empress East during the first quarter of 2013,
excluding realized losses from commodity-related derivative financial
instruments, was $26.1 million. First quarter results in Empress East
were positively impacted by strong propane prices in eastern Canada.
Overall, Empress East NGL sales volumes averaged 52.6 mbpd in the first
quarter of 2013.
Depreciation and amortization included in operations during the first
quarter of 2013 totalled $31.7 million compared to $1.7 million during
the same period of the prior year. This increase reflects the
additional Midstream assets in this business since the closing of the
Acquisition.
In the first quarter of 2013, unrealized gains on commodity-related
derivative financial instruments were $4.9 million compared to a $0.5
million loss for the three months ended March 31, 2012. This amount
reflects fluctuations in the future NGL and natural gas price indices
during the period (see "Market Risk Management Program" and Note 11 to
the Interim Financial Statements).
For the three months ended March 31, 2013, gross profit in this business
increased to $101.7 million from $27.4 million during the same period
in 2012. This is due to the addition of assets acquired through the
Acquisition and higher operating margin generated by Pembina's legacy
midstream operations.
During the quarter ended March 31, 2013, capital expenditures within the
Midstream business totalled $23.9 million and were primarily related to
cavern development and associated infrastructure. Capital expenditures
were $2.3 million for the comparative period of 2012.
New Developments
Future prospects related to Midstream span across the crude oil and NGL
value chains. The capital being deployed in the Midstream business is
primarily directed towards fee-for-service projects which are expected
to continue to increase this businesses' stability and predictability.
The most substantial project in this business unit is the twinning of
Pembina's existing Redwater fractionator in Redwater, Alberta ("RFS
II"), which was announced on March 5, 2013 and is part of the Company's
$1 billion NGL infrastructure expansion. Subject to regulatory and
environmental approvals, Pembina expects RFS II to be in-service late
in the fourth quarter of 2015.
Under the agreements signed with producers, Pembina will receive
committed take-or-pay operating margin for an initial 10-year term from
the in-service date. Contracts for 97 percent of the facility's
operating capacity have been secured. Ethane produced at RFS II will be
sold under a long-term arrangement to NOVA Chemicals Corporation.
During the first quarter of 2013, Pembina also completed and
commissioned a third-party tie-in to its Younger facility.
Pembina also continues to advance numerous other projects in this
business unit as follows:
-
Pembina brought two fee-for-service hydrocarbon storage caverns into
service at its Redwater site in April, 2013. Pembina expects to bring a
third cavern into service in the second quarter of 2013.
-
Pembina expects to bring two new full-service terminal ("FST")
facilities into service in 2013. This includes a joint venture FST in
the Judy Creek area of Alberta to serve the production from Beaverhill
Lake and Swan Hills, which should be on-stream by the end of the first
half of 2013, and a second FST that serves producers in the Cynthia
area west of Drayton Valley, which is expected to be in-service by
year-end.
-
During 2013, Pembina plans to enhance the connectivity of PNT, both to
third-party infrastructure and to the Company's own facilities between
Edmonton and Fort Saskatchewan. In addition, Pembina anticipates adding
the ability to load crude oil by rail during 2013.
-
Pembina is also continuing to investigate offshore propane export
opportunities that would allow it to leverage its existing assets and
provide a potential solution for Canadian producers impacted by weak
North American pricing.
Market Risk Management Program
Pembina is exposed to frac spread risk, which is the difference between
the selling price for propane-plus liquids and the input cost of
natural gas required to produce respective NGL products. Pembina has a
risk management program and uses derivative financial instruments to
mitigate frac spread risk, when possible, to safeguard a base level of
operating cash flow that covers the input cost of natural gas. Pembina
has entered into derivative financial swap contracts to protect the
frac spread and product margin, and to manage exposure to power costs,
interest rates and foreign exchange rates.
Pembina's credit policy mitigates risk of non-performance by
counterparties of its derivative financial instruments. Activities
undertaken to reduce risk include: regularly monitoring counterparty
exposure to approved credit limits; financial reviews of all active
counterparties; entering into International Swap Dealers Association
agreements; and, obtaining financial assurances where warranted. In
addition, Pembina has a diversified base of available counterparties.
Management continues to actively monitor commodity price risk and
mitigate its impact through financial risk management activities. For
more information on financial instruments and financial risk
management, see Note 11 to the Interim Financial Statements.
Non-Operating Expenses
G&A
Pembina incurred G&A (including corporate depreciation and amortization)
of $32.6 million during the first quarter of 2013 compared to $17.6
million during the first quarter of 2012. The increase for the period
was mainly due to the addition of employees who joined Pembina through
the Acquisition and new employees who joined the Company, as well as an
increase in salaries and benefits for existing employees, including
increased share-based payment accruals. In addition, every $1 change in
share price is expected to change Pembina's annual share-based
incentive expense by approximately $1 million.
Depreciation & Amortization (operational)
Operational depreciation and amortization increased to $41.8 million
during the first quarter of 2013 compared to $21.7 million during the
same period in 2012 which reflects depreciation on new property, plant
and equipment and depreciable intangibles including those assets
acquired through the Acquisition.
Net Finance Costs
Net finance costs in the first quarter of 2013 were $50.8 million
compared to $19.5 million in the first quarter of 2012. The increase
primarily relates to a $22.4 million loss on revaluation of the
conversion feature on convertible debentures as a result of an increase
in the market price of Pembina shares and an increase in interest on
convertible debentures totalling $6 million due to the debentures
assumed on closing of the Acquisition (see Note 9 to the Interim
Financial Statements). In 2012, the change in fair value of
commodity-related derivative financial instruments was reclassified
from net finance costs to gain/loss on commodity-related derivative
financial instruments and is included in operational results.
Income Tax Expense
Income tax expense for the first quarter of 2013 includes current taxes
of $4.2 million and deferred taxes of $26 million compared to deferred
taxes of $10.9 million in the same period of 2012. The current taxes
arose during the quarter primarily as a result of certain Pembina
subsidiary corporation's taxable income exceeding their losses
available for carry-over. Deferred income tax expense arises from the
difference between the accounting and tax basis of assets and
liabilities.
Liquidity & Capital Resources
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
|
|
|
|
|
March 31, 2013
|
|
|
|
December 31, 2012
|
Working capital
|
|
|
|
|
|
42.8
|
|
|
|
62.8
|
Variable rate debt(1)(2)
|
|
|
|
|
|
|
|
|
|
|
|
Bank debt
|
|
|
|
|
|
200.0
|
|
|
|
525.0
|
Total variable rate debt outstanding (average rate of 2.80%)(2)
|
|
|
|
|
|
200.0
|
|
|
|
525.0
|
Fixed rate debt(1)
|
|
|
|
|
|
|
|
|
|
|
|
Senior unsecured notes
|
|
|
|
|
|
642.0
|
|
|
|
642.0
|
|
Senior unsecured term debt
|
|
|
|
|
|
75.0
|
|
|
|
75.0
|
|
Senior unsecured medium-term note 1
|
|
|
|
|
|
250.0
|
|
|
|
250.0
|
|
Senior unsecured medium-term note 2
|
|
|
|
|
|
450.0
|
|
|
|
450.0
|
|
Subsidiary debt
|
|
|
|
|
|
9.7
|
|
|
|
9.3
|
Total fixed rate debt outstanding (average of 5.03%)(2)
|
|
|
|
|
|
1,426.7
|
|
|
|
1,426.3
|
Convertible debentures(1)
|
|
|
|
|
|
644.0
|
|
|
|
644.3
|
Finance lease liability
|
|
|
|
|
|
5.7
|
|
|
|
5.8
|
Total debt and debentures outstanding
|
|
|
|
|
|
2,276.4
|
|
|
|
2,601.4
|
Cash and unutilized debt facilities
|
|
|
|
|
|
1,376.4
|
|
|
|
1,032.3
|
|
|
(1)
|
Face value.
|
(2)
|
Pembina maintains derivative financial instruments to manage exposure to
variable interest rates.
See Market Risk Management Program.
|
Pembina anticipates cash flow from operating activities will be more
than sufficient to meet its short-term operating obligations and fund
its targeted dividend level. In the short-term, Pembina expects to
source funds required for capital projects from cash and cash
equivalents and unutilized debt facilities totalling $1,376.4 million
as at March 31, 2013. In addition, based on its successful access to
financing in the debt and equity markets during the past several years,
Pembina believes it would likely continue to have access to funds at
attractive rates. Management remains satisfied that the leverage
employed in Pembina's capital structure is sufficient and appropriate
given the characteristics and operations of the underlying asset base.
Management may make adjustments to Pembina's capital structure as a
result of changes in economic conditions or the risk characteristics of
the underlying assets. To maintain or modify Pembina's capital
structure in the future, Pembina may renegotiate new debt terms, repay
existing debt, seek new borrowing and/or issue equity.
Pembina's credit facilities at March 31, 2013 consisted of an unsecured
$1.5 billion revolving credit facility due March 2018 and an operating
facility of $30 million due July 2014. During the quarter, Pembina's
revolving credit facility was extended by one year from March 2017 to
March 2018 and the operating facility was also extended by one year
from July 2013 to July 2014. Borrowings on the revolving credit
facility and the operating facility bear interest at prime lending
rates plus nil percent to 1.25 percent or Bankers' Acceptances rates
plus 1.00 percent to 2.25 percent. Margins on the credit facilities are
based on the credit rating of Pembina's senior unsecured debt. There
are no repayments due over the term of these facilities. As at March
31, 2013, Pembina had $200 million drawn on bank debt, $0.1 million in
letters of credit and $46.4 million in cash, leaving $1,376.4 million
of unutilized debt facilities on the $1,530 million of established bank
facilities. Pembina also had an additional $18.1 million in letters of
credit issued in a separate demand letter of credit facility. At March
31, 2013, Pembina had loans and borrowing (excluding amortization,
letters of credit and finance lease liabilities) of $1,626.7 million.
Pembina's senior debt to total capital at March 31, 2013 was 23
percent.
Bought Deal Financing
On March 21, 2013, Pembina closed its offering of 11,206,750 common
shares at a price of $30.80 per share through a syndicate of
underwriters, which included 1,461,750 common shares issued at the same
price on the exercise in full of the over-allotment option granted to
the underwriters for aggregate gross proceeds of $345.2 million.
Pembina used the net proceeds from the offering to reduce the Company's
revolving credit facility which was used to fund the Company's capital
program and for other general corporate purposes.
The common shares were offered pursuant to a prospectus supplement under
the short form base shelf prospectus filed by the Company on February
22, 2013 in each of the provinces of Canada and in the U.S. pursuant to
applicable registration exemptions.
Debt Issue
On April 30, 2012, Pembina closed the offering of $200 million of senior
unsecured, medium-term notes ("Notes"). The Notes have a fixed interest
rate of 4.75 percent per annum paid semi-annually, and will mature on
April 30, 2043. The net proceeds from the offering of Notes were used
to pay down Pembina's existing credit facility.
Credit Ratings
The following information with respect to Pembina's credit ratings is
provided as it relates to Pembina's financing costs and liquidity.
Specifically, credit ratings affect Pembina's ability to obtain
short-term and long-term financing and the cost of such financing. A
reduction in the current ratings on Pembina's debt by its rating
agencies, particularly a downgrade below investment grade ratings,
could adversely affect Pembina's cost of financing and its access to
sources of liquidity and capital. In addition, changes in credit
ratings may affect Pembina's ability to, and the associated costs of,
entering into normal course derivative or hedging transactions. Credit
ratings are intended to provide investors with an independent measure
of credit quality of any issues of securities. The credit ratings
assigned by the rating agencies are not recommendations to purchase,
hold or sell the securities nor do the ratings comment on market price
or suitability for a particular investor. Any rating may not remain in
effect for a given period of time or may be revised or withdrawn
entirely by a rating agency in the future if in its judgement
circumstances so warrant.
DBRS rates Pembina's senior unsecured notes 'BBB'. S&P's long-term
corporate credit rating on Pembina is 'BBB'.
Capital Expenditures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 Months Ended
March 31
|
($ millions)
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
|
2012
|
Development capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conventional Pipelines
|
|
|
|
|
|
|
|
|
|
|
61.4
|
|
|
|
11.1
|
|
Oil Sands & Heavy Oil
|
|
|
|
|
|
|
|
|
|
|
12.1
|
|
|
|
5.8
|
|
Gas Services
|
|
|
|
|
|
|
|
|
|
|
38.5
|
|
|
|
34.0
|
|
Midstream
|
|
|
|
|
|
|
|
|
|
|
23.9
|
|
|
|
2.3
|
Corporate/other projects
|
|
|
|
|
|
|
|
|
|
|
1.2
|
|
|
|
1.7
|
Total development capital
|
|
|
|
|
|
|
|
|
|
|
137.1
|
|
|
|
54.9
|
During the first quarter of 2013, capital expenditures were $137.1
million compared to $54.9 million during the same three month period of
2012.
The majority of the capital expenditures in the first quarter of 2013
were in Pembina's Conventional Pipelines, Gas Services and Midstream
businesses. Conventional Pipelines' capital was incurred to progress
its phase I and phase II crude oil, condensate and NGL expansions and
on various new connections. Gas Services' capital was deployed to
progress the Saturn I and Resthaven enhanced NGL extraction facilities.
Midstream's capital expenditures were primarily directed towards cavern
development and related infrastructure.
Contractual Obligations at March 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
|
|
|
|
|
Payments Due By Period
|
Contractual Obligations
|
|
|
|
|
|
Total
|
|
|
|
Less than
1 year
|
|
|
|
1 - 3 years
|
|
|
|
3 - 5 years
|
|
|
|
After
5 years
|
Operating and finance leases
|
|
|
|
|
|
294.6
|
|
|
|
10.0
|
|
|
|
57.9
|
|
|
|
62.9
|
|
|
|
163.8
|
Loans and borrowings(1)
|
|
|
|
|
|
2,104.2
|
|
|
|
80.9
|
|
|
|
365.1
|
|
|
|
312.2
|
|
|
|
1,346.0
|
Convertible debentures(1)
|
|
|
|
|
|
893.3
|
|
|
|
39.2
|
|
|
|
78.9
|
|
|
|
248.7
|
|
|
|
526.5
|
Construction commitments
|
|
|
|
|
|
872.1
|
|
|
|
474.8
|
|
|
|
397.3
|
|
|
|
|
|
|
|
|
Provisions(2)
|
|
|
|
|
|
344.2
|
|
|
|
0.3
|
|
|
|
5.7
|
|
|
|
25.8
|
|
|
|
312.4
|
Total contractual obligations(3)
|
|
|
|
|
|
4,508.4
|
|
|
|
605.2
|
|
|
|
904.9
|
|
|
|
649.6
|
|
|
|
2,348.7
|
|
|
(1)
|
Excluding deferred financing costs.
|
(2)
|
Includes discounted constructive and legal obligations included in the
decommissioning provision.
|
(3)
|
Excluding expansion rights and obligations associated with existing
contracts and which have not yet been triggered.
|
Pembina is, subject to certain conditions, contractually committed to
the construction and operation of the Saturn and Resthaven facilities,
as well as RFS II. See "Forward-Looking Statements & Information."
Changes in Accounting Principles and Practices
The following new standards, interpretations, amendments and
improvements to existing standards issued by the International
Accounting Standard Board ("IASB") or International Financial Reporting
Interpretations Committee ("IFRIC") were adopted as of January 1, 2013
without any material impact to Pembina's Financial Statements: IFRS 7 Financial Instruments: Disclosures, IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 12 Disclosure of Interests in Other Entities, IFRS 13 Fair Value Measurement, and IAS 19 Employee Future Benefits.
Controls and Procedures
Changes in internal control over financial reporting
During the first quarter of 2013, there have been no changes to the
Company's internal control over financial reporting that have
materially affected, or are reasonably likely to materially affect, the
Company's Internal Control over Financial Reporting ("ICFR"), except as
noted below.
In accordance with the provisions of NI 52-109, management, including
the CEO and CFO, have limited the scope of their design of the
Company's disclosure controls and procedures ("DC&P") and ICFR to
exclude controls, policies and procedures of Provident. Pembina
acquired the assets of Provident and its subsidiaries on April 2, 2012.
Provident's contribution to the Company's Interim Financial Statements
for the quarter ended March 31, 2013 was approximately 39 percent of
consolidated net revenue and approximately 33 percent of consolidated
gross profit.
Additionally, as at March 31, 2013, Provident's current assets and
current liabilities were approximately 56 percent and 43 percent of
consolidated current assets and current liabilities, respectively, and
its non-current assets and non-current liabilities were approximately
57 percent and 34 percent of consolidated non-current assets and
non-current liabilities, respectively.
The scope limitation is primarily based on the time required to assess
Provident's DC&P and ICFR in a manner consistent with the Company's
other operations.
Further details related to the Acquisition are disclosed in Note 4 in
the Notes to the Company's Interim Financial Statements for the first
quarter of 2013.
Trading Activity and Total Enterprise Value(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at and for the 3
months ended
|
($ millions, except where noted)
|
|
|
|
|
|
May 7, 2013
|
(2)
|
|
March 31, 2013
|
|
|
March 31, 2012
|
|
Trading volume and value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total volume (shares)
|
|
|
|
|
|
12,532,999
|
|
|
42,378,701
|
|
|
59,689,803
|
|
|
Average daily volume (shares)
|
|
|
|
|
|
464,185
|
|
|
694,733
|
|
|
947,601
|
|
|
Value traded
|
|
|
|
|
|
401.6
|
|
|
1,270.0
|
|
|
1,648.0
|
|
Shares outstanding (shares)
|
|
|
|
|
|
307,832,800
|
|
|
306,992,777
|
|
|
169,029,860
|
|
Closing share price (dollars)
|
|
|
|
|
|
32.67
|
|
|
32.10
|
|
|
28.18
|
|
Market value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
|
|
|
10,056.9
|
|
|
9,854.5
|
|
|
4,763.3
|
|
|
5.75% convertible debentures (PPL.DB.C)
|
|
|
|
|
|
357.9
|
(3)
|
|
353.6
|
(4)
|
|
326.7
|
(5)
|
|
5.75% convertible debentures (PPL.DB.E)
|
|
|
|
|
|
226.9
|
(6)
|
|
221.9
|
(7)
|
|
|
|
|
5.75% convertible debentures (PPL.DB.F)
|
|
|
|
|
|
202.6
|
(8)
|
|
201.7
|
(9)
|
|
|
|
Market capitalization
|
|
|
|
|
|
10,844.3
|
|
|
10,631.7
|
|
|
5,090.0
|
|
Senior debt
|
|
|
|
|
|
1,672.0
|
|
|
1,617.0
|
|
|
1,402.9
|
|
Total enterprise value(10)
|
|
|
|
|
|
12,516.3
|
|
|
12,248.7
|
|
|
6,492.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Trading information in this table reflects the activity of Pembina
securities on the TSX only.
|
(2)
|
Based on 27 trading days from April 1, 2013 to May 7, 2013, inclusive.
|
(3)
|
$299.5 million principal amount outstanding at a market price of $119.49
at May 7, 2013 and with a conversion price of $28.55.
|
(4)
|
$299.7 million principal amount outstanding at a market price of $118.00
at March 31, 2013 and with a conversion price of $28.55.
|
(5)
|
$299.8 million principal amount outstanding at a market price of $109.00
at March 31, 2012 and with a conversion price of $28.55.
|
(6)
|
$171.9 million principal amount outstanding at a market price of $132.00
at May 7, 2013 and with a conversion price of $24.94.
|
(7)
|
$172.0 million principal amount outstanding at a market price of $129.02
at March 31, 2012 and with a conversion price of $24.94.
|
(8)
|
$172.3 million principal amount outstanding at a market price of $117.57
at May 7, 2013 and with a conversion price of $29.53.
|
(9)
|
$172.4 million principal amount outstanding at a market price of $117.00
at March 31, 2013 and with a conversion price of $29.53.
|
(10)
|
Refer to "Non-GAAP Measures."
|
As indicated in the previous table, Pembina's total enterprise value was
$12.2 billion at March 31, 2013, and the Company's issued and
outstanding shares rose to 307 million by the end of the first quarter
2013, compared to 169 million in the same period of 2012 primarily due
to shares issued pursuant to the Acquisition and on the closing of the
bought deal financing as discussed under "Liquidity & Capital
Resources."
Dividends
Pembina pays monthly dividends at a rate of $0.135 per share per month
(or $1.62 annualized). Pembina is committed to providing increased
shareholder returns over time by providing stable dividends and, where
appropriate, further increases in Pembina's dividend, subject to
compliance with applicable laws and the approval of Pembina's Board of
Directors. Pembina has a history of delivering dividend increases once
supportable over the long-term by the underlying fundamentals of
Pembina's businesses as a result of, among other things, accretive
growth projects or acquisitions (see "Forward-Looking Statements &
Information").
Dividends are payable if, as, and when declared by Pembina's Board of
Directors. The amount and frequency of dividends declared and payable
is at the discretion of the Board of Directors which will consider
earnings, capital requirements, the financial condition of Pembina and
other relevant factors.
Eligible Canadian investors may benefit from an enhanced dividend tax
credit afforded to the receipt of dividends, depending on individual
circumstances. Dividends paid to eligible U.S. investors should qualify
for the reduced rate of tax applicable to long-term capital gains but
investors are encouraged to seek independent tax advice in this regard.
DRIP
Eligible Pembina shareholders have the opportunity to receive, by
reinvesting the cash dividends declared payable by Pembina on their
shares, either (i) additional common shares at a discounted
subscription price equal to 95 percent of the Average Market Price (as
defined in the DRIP), pursuant to the "Dividend Reinvestment Component"
of the DRIP, or (ii) a premium cash payment (the "Premium Dividend™")
equal to 102 percent of the amount of reinvested dividends, pursuant to
the "Premium Dividend™ Component" of the DRIP. Additional information
about the terms and conditions of the DRIP can be found at www.pembina.com.
Participation in the DRIP for the first quarter of 2013 was
approximately 56 percent of common shares outstanding for proceeds of
approximately $67 million.
As of the April 25, 2013 record date, Pembina has made its DRIP
available to its U.S. shareholders. U.S. shareholders are only
permitted to participate in the dividend reinvestment component of
Pembina's Premium Dividend™ and Dividend Reinvestment Plan. Only
Canadian resident shareholders are currently permitted to participate
in the Premium Dividend™ component of the plan. Shareholders who elect
to enroll in the full Dividend Reinvestment component are notified that
the sale of the common shares issued on reinvestment is being made
pursuant to a registration statement on Form F-3 filed by Pembina with
the U.S. Securities and Exchange Commission ("SEC").
Risk Factors
Management has identified the primary risk factors that could
potentially have a material impact on the financial results and
operations of Pembina. Such risk factors are presented in Pembina's
MD&A for the year ended December 31, 2012 and in Pembina's Annual
Information Form ("AIF") for the year ended December 31, 2012.
Pembina's MD&A and AIF are available at www.pembina.com, in Canada under Pembina's company profile on www.sedar.com and in the U.S. under the Company's profile at www.sec.gov.
Selected Quarterly Operating Information
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
|
Q1
|
|
|
|
Q4
|
|
|
|
Q3
|
|
|
|
Q2
|
|
|
|
Q1
|
|
|
|
Q4
|
|
|
|
Q3
|
|
|
|
Q2
|
|
|
|
Q1
|
Average volume
(mbpd unless stated otherwise)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conventional Pipelines throughput
|
|
|
|
493.7
|
|
|
|
480.2
|
|
|
|
443.9
|
|
|
|
433.9
|
|
|
|
466.9
|
|
|
|
422.8
|
|
|
|
430.4
|
|
|
|
411.4
|
|
|
|
390.3
|
Oil Sands & Heavy Oil(1)
|
|
|
|
870.0
|
|
|
|
870.0
|
|
|
|
870.0
|
|
|
|
870.0
|
|
|
|
870.0
|
|
|
|
870.0
|
|
|
|
775.0
|
|
|
|
775.0
|
|
|
|
775.0
|
Gas Services processing (mboe/d)(2)
|
|
|
|
49.9
|
|
|
|
46.0
|
|
|
|
45.8
|
|
|
|
47.5
|
|
|
|
44.1
|
|
|
|
45.3
|
|
|
|
43.6
|
|
|
|
40.9
|
|
|
|
39.4
|
NGL sales volume (mboe/d)
|
|
|
|
122.9
|
|
|
|
115.8
|
|
|
|
86.7
|
|
|
|
90.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Oil Sands & Heavy Oil throughput refers to contracted capacity.
|
(2)
|
Net to Pembina. Converted to mboe/d from MMcf/d at a 6:1 ratio.
|
Selected Quarterly Financial Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
2012
|
|
|
|
2011
|
($ millions, except where noted)
|
|
|
|
Q1
|
|
|
Q4
|
|
|
|
Q3
|
|
|
|
Q2
|
|
|
|
Q1
|
|
|
|
Q4
|
|
|
|
Q3
|
|
|
|
Q2
|
|
|
|
Q1
|
Revenue
|
|
|
|
1,285.7
|
|
|
1,265.7
|
|
|
|
815.3
|
|
|
|
870.9
|
|
|
|
475.5
|
|
|
|
468.1
|
|
|
|
300.6
|
|
|
|
512.4
|
|
|
|
394.9
|
Operations
|
|
|
|
77.2
|
|
|
86.0
|
|
|
|
69.5
|
|
|
|
67.7
|
|
|
|
48.4
|
|
|
|
55.1
|
|
|
|
54.4
|
|
|
|
37.6
|
|
|
|
44.8
|
Cost of goods sold, including
product purchases
|
|
|
|
970.8
|
|
|
968.6
|
|
|
|
565.5
|
|
|
|
641.9
|
|
|
|
299.1
|
|
|
|
308.0
|
|
|
|
145.8
|
|
|
|
364.3
|
|
|
|
254.2
|
Realized gain (loss) on commodity-
related derivative financial
instruments
|
|
|
|
2.1
|
|
|
11.0
|
|
|
|
(2.8)
|
|
|
|
(12.4)
|
|
|
|
(0.3)
|
|
|
|
0.9
|
|
|
|
3.2
|
|
|
|
(0.2)
|
|
|
|
1.4
|
Operating margin(1)
|
|
|
|
239.8
|
|
|
222.1
|
|
|
|
177.5
|
|
|
|
148.9
|
|
|
|
127.7
|
|
|
|
105.9
|
|
|
|
103.6
|
|
|
|
110.3
|
|
|
|
97.3
|
Depreciation and amortization
included in operations
|
|
|
|
41.8
|
|
|
47.8
|
|
|
|
51.6
|
|
|
|
52.5
|
|
|
|
21.7
|
|
|
|
19.6
|
|
|
|
17.8
|
|
|
|
15.8
|
|
|
|
14.8
|
Unrealized gain (loss) on
commodity-related derivative
financial instruments
|
|
|
|
5.8
|
|
|
(2.2)
|
|
|
|
(23.0)
|
|
|
|
64.8
|
|
|
|
(3.5)
|
|
|
|
0.9
|
|
|
|
0.7
|
|
|
|
3.3
|
|
|
|
0.3
|
Gross profit
|
|
|
|
203.8
|
|
|
172.1
|
|
|
|
102.9
|
|
|
|
161.2
|
|
|
|
102.5
|
|
|
|
87.2
|
|
|
|
86.5
|
|
|
|
97.8
|
|
|
|
82.8
|
Adjusted EBITDA(1)
|
|
|
|
210.2
|
|
|
199.0
|
|
|
|
153.8
|
|
|
|
125.9
|
|
|
|
111.4
|
|
|
|
88.2
|
|
|
|
89.9
|
|
|
|
103.3
|
|
|
|
87.2
|
Cash flow from operating activities
|
|
|
|
229.0
|
|
|
139.5
|
|
|
|
130.9
|
|
|
|
24.1
|
|
|
|
65.3
|
|
|
|
73.8
|
|
|
|
87.7
|
|
|
|
49.5
|
|
|
|
74.5
|
Cash flow from operating activities
per common share ($ per share)
|
|
|
|
0.77
|
|
|
0.48
|
|
|
|
0.45
|
|
|
|
0.08
|
|
|
|
0.39
|
|
|
|
0.44
|
|
|
|
0.52
|
|
|
|
0.30
|
|
|
|
0.45
|
Adjusted cash flow from operating
activities(1)
|
|
|
|
207.4
|
|
|
172.3
|
|
|
|
133.2
|
|
|
|
89.5
|
|
|
|
98.8
|
|
|
|
66.0
|
|
|
|
82.0
|
|
|
|
81.8
|
|
|
|
76.0
|
Adjusted cash flow from operating
activities per common share(1)
($ per share)
|
|
|
|
0.70
|
|
|
0.59
|
|
|
|
0.46
|
|
|
|
0.31
|
|
|
|
0.59
|
|
|
|
0.39
|
|
|
|
0.49
|
|
|
|
0.49
|
|
|
|
0.45
|
Earnings for the period
|
|
|
|
90.5
|
|
|
81.3
|
|
|
|
30.7
|
|
|
|
80.4
|
|
|
|
32.6
|
|
|
|
45.0
|
|
|
|
30.1
|
|
|
|
48.0
|
|
|
|
42.5
|
Earnings per common share
($ per share)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
|
0.30
|
|
|
0.28
|
|
|
|
0.11
|
|
|
|
0.28
|
|
|
|
0.19
|
|
|
|
0.27
|
|
|
|
0.18
|
|
|
|
0.29
|
|
|
|
0.25
|
Common shares outstanding
(millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average (basic)
|
|
|
|
295.9
|
|
|
291.9
|
|
|
|
289.2
|
|
|
|
285.3
|
|
|
|
168.3
|
|
|
|
167.4
|
|
|
|
167.6
|
|
|
|
167.3
|
|
|
|
167.0
|
|
Weighted average (diluted)
|
|
|
|
296.7
|
|
|
292.5
|
|
|
|
289.7
|
|
|
|
286.0
|
|
|
|
168.9
|
|
|
|
168.2
|
|
|
|
168.2
|
|
|
|
168.0
|
|
|
|
167.6
|
|
End of period
|
|
|
|
307.0
|
|
|
293.2
|
|
|
|
290.5
|
|
|
|
287.8
|
|
|
|
169.0
|
|
|
|
167.9
|
|
|
|
167.7
|
|
|
|
167.5
|
|
|
|
167.1
|
Dividends declared
|
|
|
|
121.0
|
|
|
118.4
|
|
|
|
117.3
|
|
|
|
116.2
|
|
|
|
65.7
|
|
|
|
65.4
|
|
|
|
65.4
|
|
|
|
65.3
|
|
|
|
65.1
|
Dividends per common share
($ per share)
|
|
|
|
0.405
|
|
|
0.405
|
|
|
|
0.405
|
|
|
|
0.405
|
|
|
|
0.390
|
|
|
|
0.390
|
|
|
|
0.390
|
|
|
|
0.390
|
|
|
|
0.390
|
|
|
(1)
|
Refer to "Non-GAAP measures."
|
During the above periods, Pembina's results were influenced by the
following factors and trends:
-
Increased oil production from customers operating in the Cardium and
Deep Basin Cretaceous formations of west central Alberta, which has
resulted in increased service offerings in these areas, as well as new
connections and capacity expansions;
-
Increased liquids-rich natural gas production from producers in the WCBS
(Deep Basin, Montney and emerging Duvernay Shale plays), which has
resulted in increased gas gathering and processing at the Company's Gas
Services assets and additional associated NGL transported on its
pipelines;
-
The Acquisition, which closed on April 2, 2012 (see Note 4 of the
Interim Financial Statements).
-
Increased shares outstanding due to: the Acquisition; the DRIP; and, the
bought deal equity financing in the first quarter of 2013.
Additional Information
Additional information about Pembina and legacy Provident filed with
Canadian securities commissions and the SEC, including quarterly and
annual reports, AIFs (filed with the SEC under Form 40-F), Management
Information Circulars and financial statements can be found online at www.sedar.com, www.sec.gov and Pembina's website at www.pembina.com.
Non-GAAP Measures
Throughout this MD&A, Pembina has used the following terms that are not
defined by GAAP but are used by Management to evaluate performance of
Pembina and its business. Since certain Non-GAAP financial measures may
not have a standardized meaning, securities regulations require that
Non-GAAP financial measures are clearly defined, qualified and
reconciled to their nearest GAAP measure. Except as otherwise
indicated, these Non-GAAP measures are calculated and disclosed on a
consistent basis from period to period. Specific adjusting items may
only be relevant in certain periods.
Earnings before interest, taxes, depreciation and amortization
("EBITDA")
EBITDA is commonly used by Management, investors and creditors in the
calculation of ratios for assessing leverage and financial performance
and is calculated as results from operating activities plus share of
profit from equity accounted investees (before tax) plus depreciation
and amortization (included in operations and general and administrative
expense) and unrealized gains or losses on commodity-related derivative
financial instruments.
Adjusted EBITDA is EBITDA excluding acquisition-related expenses in
connection with the Acquisition.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 Months Ended
March 31
|
($ millions, except per share amounts)
|
|
|
|
|
|
2013
|
|
|
|
2012
|
Results from operating activities
|
|
|
|
|
|
171.8
|
|
|
|
62.8
|
Share of profit from equity accounted investees (before tax,
depreciation and amortization)
|
|
|
|
|
|
1.8
|
|
|
|
1.5
|
Depreciation and amortization
|
|
|
|
|
|
43.1
|
|
|
|
22.5
|
Unrealized (gain) loss on commodity-related derivative financial
instruments
|
|
|
|
|
|
(5.8)
|
|
|
|
3.5
|
EBITDA
|
|
|
|
|
|
210.9
|
|
|
|
90.3
|
Add:
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related expenses
|
|
|
|
|
|
(0.7)
|
|
|
|
21.1
|
Adjusted EBITDA
|
|
|
|
|
|
210.2
|
|
|
|
111.4
|
EBITDA per common share - basic (dollars)
|
|
|
|
|
|
0.71
|
|
|
|
0.54
|
Adjusted EBITDA per common share - basic (dollars)
|
|
|
|
|
|
0.71
|
|
|
|
0.66
|
Adjusted cash flow from operating activities
Adjusted cash flow from operating activities is commonly used by
Management for assessing financial performance each reporting period
and is calculated as cash flow from operating activities plus the
change in non-cash working capital and excluding acquisition-related
expenses.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 Months Ended March 31
|
($ millions, except per share amounts)
|
|
|
|
|
|
2013
|
2012
|
Cash flow from operating activities
|
|
|
|
|
|
229.0
|
65.3
|
Add (deduct):
|
|
|
|
|
|
|
|
Change in non-cash working capital
|
|
|
|
|
|
(20.9)
|
12.4
|
Acquisition-related expenses
|
|
|
|
|
|
(0.7)
|
21.1
|
Adjusted cash flow from operating activities
|
|
|
|
|
|
207.4
|
98.8
|
Adjusted cash flow from operating activities per common share - basic (dollars)
|
|
|
|
|
|
0.70
|
0.59
|
Operating margin
Operating margin is commonly used by Management for assessing financial
performance and is calculated as gross profit before depreciation and
amortization included in operations and unrealized gain/loss on
commodity-related derivative financial instruments.
Reconciliation of operating margin to gross profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 Months Ended March 31
|
($ millions)
|
|
|
|
|
|
2013
|
2012
|
Revenue
|
|
|
|
|
|
1,285.7
|
475.5
|
Cost of sales:
|
|
|
|
|
|
|
|
|
Operations
|
|
|
|
|
|
77.2
|
48.4
|
|
Cost of goods sold, including product purchases
|
|
|
|
|
|
970.8
|
299.1
|
|
Realized gain (loss) on commodity-related derivative financial
instruments
|
|
|
|
|
|
2.1
|
(0.3)
|
Operating margin
|
|
|
|
|
|
239.8
|
127.7
|
Depreciation and amortization included in operations
|
|
|
|
|
|
41.8
|
21.7
|
Unrealized gain (loss) on commodity-related derivative financial
instruments
|
|
|
|
|
|
5.8
|
(3.5)
|
Gross profit
|
|
|
|
|
|
203.8
|
102.5
|
Total enterprise value
Total enterprise value, in combination with other measures, is used by
Management and the investment community to assess the overall market
value of the business. Total enterprise value is calculated based on
the market value of common shares and convertible debentures at a
specific date plus senior debt.
Management believes these supplemental Non-GAAP measures facilitate the
understanding of Pembina's results from operations, leverage, liquidity
and financial positions. Investors should be cautioned that EBITDA,
adjusted EBITDA, adjusted cash flow from operating activities,
operating margin and total enterprise value should not be construed as
alternatives to net earnings, cash flow from operating activities or
other measures of financial results determined in accordance with GAAP
as an indicator of Pembina's performance. Furthermore, these Non-GAAP
measures may not be comparable to similar measures presented by other
issuers.
Forward-Looking Statements & Information
In the interest of providing our securityholders and potential investors
with information regarding Pembina, including Management's assessment
of our future plans and operations, certain statements contained in
this MD&A constitute forward-looking statements or information
(collectively, "forward-looking statements") within the meaning of the
"safe harbour" provisions of applicable securities legislation.
Forward-looking statements are typically identified by words such as
"anticipate", "continue", "estimate", "expect", "may", "will",
"project", "should", "could", "believe", "plan", "intend", "design",
"target", "undertake", "view", "indicate", "maintain", "explore",
"entail", "schedule", "objective", "strategy", "likely", "potential",
"envision", "aim", "outlook", "propose", "goal", "would", and similar
expressions suggesting future events or future performance.
By their nature, such forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause actual
results or events to differ materially from those anticipated in such
forward-looking statements. Pembina believes the expectations reflected
in those forward-looking statements are reasonable but no assurance can
be given that these expectations will prove to be correct and such
forward-looking statements included in this MD&A should not be unduly
relied upon. These statements speak only as of the date of the MD&A.
In particular, this MD&A contains forward-looking statements, including
certain financial outlook, pertaining to the following:
-
the future levels of cash dividends that Pembina intends to pay to its
shareholders;
-
capital expenditure-estimates, plans, schedules, rights and activities
and the planning, development, construction, operations and costs of
pipelines, gas service facilities, terminalling, storage and hub
facilities and other facilities or energy infrastructure, including,
but not limited to, the Peace/Northern NGL System, the LVP expansion
between Fox Creek and Edmonton, Alberta, the Phase II LVP Expansion,
the Phase II NGL Expansion, the joint venture full-service terminal in
the Judy Creek area of Alberta area, the development program in the
Cynthia area west of Drayton Valley, offshore export opportunities for
propane, the Nipisi and Mitsue pipelines expansions, the Saturn I and
II facilities and associated pipelines, the Resthaven facility and
associated pipelines, the Pembina Nexus Terminal expansion, and the
Redwater fractionator (RFS II) expansion;
-
future expansion of Pembina's pipelines and other infrastructure;
-
pipeline, processing and storage facility and system operations and
throughput levels;
-
oil and gas industry exploration and development activity levels;
-
Pembina's strategy and the development of new business initiatives;
-
growth opportunities;
-
expectations regarding Pembina's ability to raise capital and to carry
out acquisition, expansion and growth plans;
-
treatment under government regulatory regimes including environmental
regulations and related abandonment and reclamation obligations;
-
future G&A expenses at Pembina
-
increased throughput potential due to increased activity and new
connections and other initiatives on Pembina's pipelines;
-
future cash flows, potential revenue and cash flow enhancements across
Pembina's businesses and the maintenance of operating margins;
-
tolls and tariffs and transportation, storage and services commitments
and contracts;
-
cash dividends and the tax treatment thereof;
-
operating risks (including the amount of future liabilities related to
pipeline spills and other environmental incidents) and related
insurance coverage and inspection and integrity programs;
-
the expected capacity, incremental volumes and in-services dates, as
applicable, of proposed expansions and new developments, including the
Northern NGL System, the LVP expansion between Fox Creek and Edmonton,
Alberta, the Phase II LVP Expansion, the Phase II NGL Expansion, the
Nipisi and Mitsue pipeline expansions, the Saturn I and II facilities,
the Resthaven facility, the Pembina Nexus Terminal expansion and the
Redwater fractionator (RFS II) expansion;
-
the possibility of offshore export opportunities for propane;
-
the possibility of renegotiating debt terms, repayment of existing debt,
seeking new borrowing and/or issuing equity;
-
expectations regarding participation in Pembina's DRIP;
-
the expected impact of changes in share price on annual share-based
incentive expense;
-
inventory and pricing levels in the North American liquids market;
-
Pembina's discretion to hedge natural gas and NGL volumes and power; and
-
competitive conditions.
Various factors or assumptions are typically applied by Pembina in
drawing conclusions or making the forecasts, projections, predictions
or estimations set out in forward-looking statements based on
information currently available to Pembina. These factors and
assumptions include, but are not limited to:
-
the success of Pembina's operations;
-
prevailing commodity prices and exchange rates and the ability of
Pembina to maintain current credit ratings;
-
the availability of capital to fund future capital requirements relating
to existing assets and projects, including but not limited to future
capital expenditures relating to expansion, upgrades and maintenance
shutdowns;
-
future operating costs;
-
geotechnical and integrity costs;
-
in respect of the proposed Saturn I and II facilities and the Resthaven
facility and their estimated in-service dates; that all required
regulatory and environmental approvals can be obtained on the necessary
terms in a timely manner, that counterparties will comply with
contracts in a timely manner; that there are no unforeseen events
preventing the performance of contracts or the completion of such
facilities; that such facilities will be fully supported by long-term
firm service agreements accounting for the entire designed throughput
at such facilities at the time of such facilities' completion; that
there are no unforeseen construction costs related to the facilities;
and that there are no unforeseen material costs relating to the
facilities which are not recoverable from customers;
-
in respect of the expansion of NGL throughput capacity on the
Peace/Northern NGL System and the crude throughput capacity on the
Peace crude system (in respect of the Phase I and II NGL and LVP
expansions) and the estimated in-service dates with respect to the
same; that Pembina will receive regulatory approval; that
counterparties will comply with contracts in a timely manner; that
there are no unforeseen events preventing the performance of contracts
by Pembina; that there are no unforeseen construction costs related to
the expansion; and that there are no unforeseen material costs relating
to the pipelines that are not recoverable from customers;
-
in respect of the proposed expansion of the Redwater fractionator (RFS
II); that Pembina will receive regulatory approval; that Pembina will
reach satisfactory long-term arrangements with customers; that
counterparties will comply with such contracts in a timely manner; that
there are no unforeseen events preventing the performance of contracts
by Pembina; that there are no unforeseen construction costs; and that
there are no unforeseen material costs relating to the proposed
fractionators that are not recoverable from customers;
-
in respect of other developments, expansions and capital expenditures
planned, including the proposed expansion of a number of existing truck
terminals and construction of new full-service terminals, the
expectation of additional NGL and crude volumes being transported on
the conventional pipelines, the installation of the remaining pump
station on the Mitsue pipeline, the development of
seven-fee-for-service storage facilities at Redwater that
counterparties will comply with contracts in a timely manner; that
there are no unforeseen events preventing the performance of contracts
by Pembina; that there are no unforeseen construction costs; and that
there are no unforeseen material costs relating to the developments,
expansions and capital expenditures which are not recoverable from
customers;
-
the future exploration for and production of oil, NGL and natural gas in
the capture area around Pembina's conventional and midstream assets,
the demand for gathering and processing of hydrocarbons, and the
corresponding utilization of Pembina's assets;
-
in respect of the stability of Pembina's dividend; prevailing commodity
prices, margins and exchange rates; that Pembina's future results of
operations will be consistent with past performance and management
expectations in relation thereto; the continued availability of capital
at attractive prices to fund future capital requirements relating to
existing assets and projects, including but not limited to future
capital expenditures relating to expansion, upgrades and maintenance
shutdowns; the success of growth projects; future operating costs; that
counterparties to material agreements will continue to perform in a
timely manner; that there are no unforeseen events preventing the
performance of contracts; and that there are no unforeseen material
construction or other costs related to current growth projects or
current operations; and
-
prevailing regulatory, tax and environmental laws and regulations.
The actual results of Pembina could differ materially from those
anticipated in these forward-looking statements as a result of the
material risk factors set forth below:
-
the regulatory environment and decisions;
-
the impact of competitive entities and pricing;
-
labour and material shortages;
-
reliance on key relationships and agreements;
-
the strength and operations of the oil and natural gas production
industry and related commodity prices;
-
non-performance or default by counterparties to agreements which Pembina
or one or more of its affiliates has entered into in respect of its
business;
-
actions by governmental or regulatory authorities including changes in
tax laws and treatment, changes in royalty rates or increased
environmental regulation;
-
fluctuations in operating results;
-
adverse general economic and market conditions in Canada, North America
and elsewhere, including changes in interest rates, foreign currency
exchange rates and commodity prices;
-
the failure to realize the anticipated benefits of the Acquisition;
-
the failure to complete remaining integration of the businesses of
Pembina and Provident; and
-
the other factors discussed under "Risk Factors" in Pembina's AIF for
the year ended December 31, 2012. Pembina's MD&A and AIF are available
at www.pembina.com and in Canada under Pembina's company profile on www.sedar.com and in the U.S. on the Company's profile at www.sec.gov.
These factors should not be construed as exhaustive. Unless required by
law, Pembina does not undertake any obligation to publicly update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise. Any forward-looking statements
contained herein are expressly qualified by this cautionary statement.
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
|
|
|
|
|
Note
|
|
|
|
|
March 31
2013
|
|
|
|
December 31
2012
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
46.4
|
|
|
|
27.3
|
|
Trade receivables and other
|
|
|
|
|
|
|
|
|
|
|
368.4
|
|
|
|
331.7
|
|
Derivative financial instruments
|
|
|
|
|
|
11
|
|
|
|
|
1.5
|
|
|
|
7.6
|
|
Inventory
|
|
|
|
|
|
|
|
|
|
|
95.2
|
|
|
|
108.1
|
|
|
|
|
|
|
|
|
|
|
|
511.5
|
|
|
|
474.7
|
Non-current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
|
|
|
5
|
|
|
|
|
5,109.8
|
|
|
|
5,014.5
|
|
Intangible assets and goodwill
|
|
|
|
|
|
|
|
|
|
|
2,606.5
|
|
|
|
2,622.7
|
|
Investments in equity accounted investees
|
|
|
|
|
|
|
|
|
|
|
163.6
|
|
|
|
161.2
|
|
Derivative financial instruments
|
|
|
|
|
|
11
|
|
|
|
|
0.2
|
|
|
|
0.3
|
|
Other receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
|
|
|
|
|
|
|
|
|
|
7,880.1
|
|
|
|
7,801.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
|
|
|
|
|
|
|
|
|
8,391.6
|
|
|
|
8,276.5
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables and accrued liabilities
|
|
|
|
|
|
|
|
|
|
|
407.9
|
|
|
|
344.7
|
|
Dividends payable
|
|
|
|
|
|
|
|
|
|
|
41.4
|
|
|
|
39.6
|
|
Loans and borrowings
|
|
|
|
|
|
6
|
|
|
|
|
12.1
|
|
|
|
11.7
|
|
Derivative financial instruments
|
|
|
|
|
|
11
|
|
|
|
|
7.3
|
|
|
|
15.9
|
|
|
|
|
|
|
|
|
|
|
|
468.7
|
|
|
|
411.9
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and borrowings
|
|
|
|
|
|
6
|
|
|
|
|
1,607.2
|
|
|
|
1,932.8
|
|
Convertible debentures
|
|
|
|
|
|
|
|
|
|
|
611.1
|
|
|
|
610.0
|
|
Derivative financial instruments
|
|
|
|
|
|
11
|
|
|
|
|
70.2
|
|
|
|
51.8
|
|
Employee benefits
|
|
|
|
|
|
|
|
|
|
|
28.4
|
|
|
|
28.6
|
|
Share-based payments
|
|
|
|
|
|
|
|
|
|
|
7.1
|
|
|
|
17.2
|
|
Deferred revenue
|
|
|
|
|
|
|
|
|
|
|
4.1
|
|
|
|
3.1
|
|
Provisions
|
|
|
|
|
|
7
|
|
|
|
|
343.9
|
|
|
|
361.2
|
|
Deferred tax liabilities
|
|
|
|
|
|
|
|
|
|
|
606.8
|
|
|
|
584.5
|
|
|
|
|
|
|
|
|
|
|
|
3,278.8
|
|
|
|
3,589.2
|
Total Liabilities
|
|
|
|
|
|
|
|
|
|
|
3,747.5
|
|
|
|
4,001.1
|
Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity attributable to shareholders of the Company:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share capital
|
|
|
|
|
|
8
|
|
|
|
|
5,723.2
|
|
|
|
5,324.0
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
(1,058.4)
|
|
|
|
(1,027.7)
|
|
Accumulated other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
(26.1)
|
|
|
|
(26.1)
|
|
|
|
|
|
|
|
|
|
|
|
4,638.7
|
|
|
|
4,270.2
|
Non-controlling interest
|
|
|
|
|
|
|
|
|
|
|
5.4
|
|
|
|
5.2
|
Total Equity
|
|
|
|
|
|
|
|
|
|
|
4,644.1
|
|
|
|
4,275.4
|
Total Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
|
8,391.6
|
|
|
|
8,276.5
|
See accompanying notes to the condensed consolidated interim financial
statements
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 Months Ended March 31
($ millions, except per share amounts)
|
|
|
|
|
Note
|
|
|
|
|
2013
|
|
|
|
|
2012
|
Revenue
|
|
|
|
|
|
|
|
|
|
1,285.7
|
|
|
|
|
475.5
|
Cost of sales
|
|
|
|
|
|
|
|
|
|
1,089.8
|
|
|
|
|
369.2
|
Gain (loss) on commodity-related derivative financial instruments
|
|
|
|
|
11
|
|
|
|
|
7.9
|
|
|
|
|
(3.8)
|
Gross profit
|
|
|
|
|
|
|
|
|
|
203.8
|
|
|
|
|
102.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
|
|
|
|
|
|
|
32.6
|
|
|
|
|
17.6
|
|
Acquisition-related and other expense (income)
|
|
|
|
|
|
|
|
|
|
(0.6)
|
|
|
|
|
22.1
|
|
|
|
|
|
|
|
|
|
|
32.0
|
|
|
|
|
39.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results from operating activities
|
|
|
|
|
|
|
|
|
|
171.8
|
|
|
|
|
62.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance income
|
|
|
|
|
|
|
|
|
|
(1.6)
|
|
|
|
|
(3.1)
|
|
Finance costs
|
|
|
|
|
|
|
|
|
|
52.4
|
|
|
|
|
22.6
|
|
Net finance costs
|
|
|
|
|
9
|
|
|
|
|
50.8
|
|
|
|
|
19.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before income tax and equity accounted investees
|
|
|
|
|
|
|
|
|
|
121.0
|
|
|
|
|
43.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share of loss (profit) of investments in equity accounted investees, net
of tax
|
|
|
|
|
|
|
|
|
|
0.3
|
|
|
|
|
(0.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current tax expense
|
|
|
|
|
|
|
|
|
|
4.2
|
|
|
|
|
|
|
Deferred tax expense
|
|
|
|
|
|
|
|
|
|
26.0
|
|
|
|
|
10.9
|
|
Income tax expense
|
|
|
|
|
|
|
|
|
|
30.2
|
|
|
|
|
10.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings and total comprehensive income for the period
|
|
|
|
|
|
|
|
|
|
90.5
|
|
|
|
|
32.6
|
Earnings and total comprehensive income attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders of the Company
|
|
|
|
|
|
|
|
|
|
90.3
|
|
|
|
|
32.6
|
|
Non-controlling interest
|
|
|
|
|
|
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90.5
|
|
|
|
|
32.6
|
Earnings per share attributable to shareholders of the Company:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per share (dollars)
|
|
|
|
|
|
|
|
|
|
0.30
|
|
|
|
|
0.19
|
See accompanying notes to the condensed consolidated interim financial
statements
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to Shareholders of the Company
|
|
|
|
|
|
|
|
($ millions)
|
|
|
|
Note
|
|
|
|
Share
Capital
|
|
|
|
Deficit
|
|
|
Accumulated
Other
Comprehensive
Income
|
|
|
|
Total
|
|
|
Non-controlling
Interest
|
|
|
|
Total
Equity
|
December 31, 2012
|
|
|
|
|
|
|
|
5,324.0
|
|
|
|
(1,027.7)
|
|
|
(26.1)
|
|
|
|
4,270.2
|
|
|
5.2
|
|
|
|
4,275.4
|
Earnings and total comprehensive income for period
|
|
|
|
|
|
|
|
|
|
|
|
90.3
|
|
|
|
|
|
|
90.3
|
|
|
0.2
|
|
|
|
90.5
|
Transactions with shareholders of the Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based payment transactions
|
|
|
|
8
|
|
|
|
3.2
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
|
|
|
|
|
3.2
|
|
Dividends declared
|
|
|
|
8
|
|
|
|
|
|
|
|
(121.0)
|
|
|
|
|
|
|
(121.0)
|
|
|
|
|
|
|
(121.0)
|
|
Common shares issued, net of issue costs
|
|
|
|
8
|
|
|
|
334.9
|
|
|
|
|
|
|
|
|
|
|
334.9
|
|
|
|
|
|
|
334.9
|
|
Dividend reinvestment plan
|
|
|
|
8
|
|
|
|
67.0
|
|
|
|
|
|
|
|
|
|
|
67.0
|
|
|
|
|
|
|
67.0
|
|
Debenture conversions and other
|
|
|
|
8
|
|
|
|
(5.9)
|
|
|
|
|
|
|
|
|
|
|
(5.9)
|
|
|
|
|
|
|
(5.9)
|
Total transactions with shareholders of the Company
|
|
|
|
|
|
|
|
399.2
|
|
|
|
(121.0)
|
|
|
|
|
|
|
278.2
|
|
|
|
|
|
|
278.2
|
March 31, 2013
|
|
|
|
|
|
|
|
5,723.2
|
|
|
|
(1,058.4)
|
|
|
(26.1)
|
|
|
|
4,638.7
|
|
|
5.4
|
|
|
|
4,644.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
1,811.7
|
|
|
|
(834.9)
|
|
|
(15.2)
|
|
|
|
961.6
|
|
|
|
|
|
|
961.6
|
Earnings and total comprehensive income for period
|
|
|
|
|
|
|
|
|
|
|
|
32.6
|
|
|
|
|
|
|
32.6
|
|
|
|
|
|
|
32.6
|
Transactions with shareholders of the Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based payment transactions
|
|
|
|
|
|
|
|
1.5
|
|
|
|
|
|
|
|
|
|
|
1.5
|
|
|
|
|
|
|
1.5
|
|
Dividends declared
|
|
|
|
|
|
|
|
|
|
|
|
(65.7)
|
|
|
|
|
|
|
(65.7)
|
|
|
|
|
|
|
(65.7)
|
|
Dividend reinvestment plan
|
|
|
|
|
|
|
|
28.0
|
|
|
|
|
|
|
|
|
|
|
28.0
|
|
|
|
|
|
|
28.0
|
Total transactions with shareholders of the Company
|
|
|
|
|
|
|
|
29.5
|
|
|
|
(65.7)
|
|
|
|
|
|
|
(36.2)
|
|
|
|
|
|
|
(36.2)
|
March 31, 2012
|
|
|
|
|
|
|
|
1,841.2
|
|
|
|
(868.0)
|
|
|
(15.2)
|
|
|
|
958.0
|
|
|
|
|
|
|
958.0
|
See accompanying notes to the condensed consolidated interim financial
statements
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 Months Ended March 31 ($ millions)
|
|
|
|
|
Note
|
|
|
|
|
2013
|
|
|
|
|
2012
|
Cash provided by (used in):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings for the period
|
|
|
|
|
|
|
|
|
|
90.5
|
|
|
|
|
32.6
|
Adjustments for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
43.1
|
|
|
|
|
22.5
|
|
Unrealized (gain) loss on commodity-related derivative financial
instruments
|
|
|
|
|
11
|
|
|
|
|
(5.8)
|
|
|
|
|
3.5
|
|
Net finance costs
|
|
|
|
|
9
|
|
|
|
|
50.8
|
|
|
|
|
19.5
|
|
Share of loss (profit) of investments in equity accounted investees, net
of tax
|
|
|
|
|
|
|
|
|
|
0.3
|
|
|
|
|
(0.2)
|
|
Deferred income tax expense
|
|
|
|
|
|
|
|
|
|
26.0
|
|
|
|
|
10.9
|
|
Share-based payments expense
|
|
|
|
|
|
|
|
|
|
9.1
|
|
|
|
|
3.6
|
|
Employee future benefits expense
|
|
|
|
|
|
|
|
|
|
2.7
|
|
|
|
|
1.4
|
|
Other
|
|
|
|
|
|
|
|
|
|
0.4
|
|
|
|
|
0.6
|
|
Changes in non-cash working capital
|
|
|
|
|
|
|
|
|
|
20.9
|
|
|
|
|
(12.4)
|
|
Payments from equity accounted investees
|
|
|
|
|
|
|
|
|
|
4.8
|
|
|
|
|
4.1
|
|
Decommissioning liability expenditures
|
|
|
|
|
|
|
|
|
|
(0.3)
|
|
|
|
|
(1.1)
|
|
Employer future benefit contributions
|
|
|
|
|
|
|
|
|
|
(3.2)
|
|
|
|
|
(2.5)
|
|
Net interest paid
|
|
|
|
|
|
|
|
|
|
(10.3)
|
|
|
|
|
(17.2)
|
Cash flow from operating activities
|
|
|
|
|
|
|
|
|
|
229.0
|
|
|
|
|
65.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank borrowings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66.9
|
|
Repayment of loans and borrowings
|
|
|
|
|
|
|
|
|
|
(325.3)
|
|
|
|
|
(2.7)
|
|
Issuance of equity
|
|
|
|
|
|
|
|
|
|
345.2
|
|
|
|
|
|
|
Share issue costs
|
|
|
|
|
|
|
|
|
|
(13.8)
|
|
|
|
|
|
|
Financing fees
|
|
|
|
|
|
|
|
|
|
(1.0)
|
|
|
|
|
(2.8)
|
|
Exercise of stock options
|
|
|
|
|
|
|
|
|
|
2.6
|
|
|
|
|
1.0
|
|
Dividends paid (net of shares issued under the Dividend Reinvestment
Plan)
|
|
|
|
|
|
|
|
|
|
(52.1)
|
|
|
|
|
(37.6)
|
Cash flow from financing activities
|
|
|
|
|
|
|
|
|
|
(44.4)
|
|
|
|
|
24.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
|
|
|
|
|
|
(137.1)
|
|
|
|
|
(54.9)
|
|
Changes in non-cash investing working capital and other
|
|
|
|
|
|
|
|
|
|
(23.6)
|
|
|
|
|
(32.3)
|
|
Contributions to equity accounted investees
|
|
|
|
|
|
|
|
|
|
(4.8)
|
|
|
|
|
|
Cash flow used in investing activities
|
|
|
|
|
|
|
|
|
|
(165.5)
|
|
|
|
|
(87.2)
|
Change in cash
|
|
|
|
|
|
|
|
|
|
19.1
|
|
|
|
|
2.9
|
Cash (bank indebtedness), beginning of period
|
|
|
|
|
|
|
|
|
|
27.3
|
|
|
|
|
(0.7)
|
Cash and cash equivalents, end of period
|
|
|
|
|
|
|
|
|
|
46.4
|
|
|
|
|
2.2
|
See accompanying notes to the condensed consolidated interim financial
statements
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. REPORTING ENTITY
Pembina Pipeline Corporation ("Pembina" or the "Company") is an energy
transportation and service provider domiciled in Canada. The condensed
consolidated unaudited interim financial statements ("Interim Financial
Statements") include the accounts of the Company, its subsidiary
companies, partnerships and any interests in associates and jointly
controlled entities as at and for the three months ended March 31,
2013. These Interim Financial Statements and the notes thereto have
been prepared in accordance with IAS 34 - Interim Financial Reporting.
They do not include all of the information required for full annual
financial statements and should be read in conjunction with the
consolidated financial statements of the Company as at and for the year
ended December 31, 2012. The interim financial statements were
authorized for issue by the Board of Directors on May 9, 2013.
Pembina owns or has interests in pipelines that transport conventional
crude oil and natural gas liquids ("NGL"), oil sands and heavy oil
pipelines, gas gathering and processing facilities, and an NGL
infrastructure and logistics business. Facilities are located in Canada
and in the U.S. Pembina also offers midstream services that span across
its operations.
2. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies are set out in the December 31, 2012 financial
statements. Those policies have been applied consistently to all
periods presented in these Interim Financial Statements.
New standards
The following new standards, interpretations, amendments and
improvements to existing standards issued by the IASB or International
Financial Reporting Interpretations Committee ("IFRIC") were adopted as
of January 1, 2013 without any material impact to Pembina's Financial
Statements: IFRS 7 Financial Instruments: Disclosures, IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 12 Disclosure of interests in Other Entities, IFRS 13 Fair Value Measurement, and IAS 19 Employee Future Benefits.
3. DETERMINATION OF FAIR VALUES
A number of the Company's accounting policies and disclosures require
the determination of fair value, for both financial and non-financial
assets and liabilities. Fair values have been determined for
measurement and/or disclosure purposes based on the following methods.
When applicable, further information about the assumptions made in
determining fair values is disclosed in the notes specific to that
asset or liability.
i) Property, plant and equipment
The fair value of property, plant and equipment recognized as a result
of a business combination is based on market values when available and
depreciated replacement cost when appropriate. Depreciated replacement
cost reflects adjustments for physical deterioration as well as
functional and economic obsolescence.
ii) Intangible assets
The fair value of intangible assets acquired in a business combination
is determined using the multi-period excess earnings method, whereby
the subject asset is valued after deducting a fair return on all other
assets that are part of creating the related cash flows.
The fair value of other intangible assets is based on the discounted
cash flows expected to be derived from the use and eventual sale of the
assets.
iii) Derivatives
Fair value of derivatives, with the exception of the redemption
liability which is related to the acquisition of the Company's
subsidiary, are estimated by reference to independent monthly forward
settlement prices, interest rate yield curves, currency rates, quoted
market prices per share and volatility rates at the period ends.
The redemption liability related to one of the Company's subsidiaries
represents a put option, held by the non-controlling interest, to sell
the remaining one-third of the business to the Company after the third
anniversary of the acquisition date (October 3, 2014). The put price to
be paid by the Company for the residual interest upon exercise is based
on a multiple of the subsidiary's earnings during the three year period
prior to exercise, adjusted for associated capital expenditures and
debt based on management estimates (see Note 11 "Financial Instruments
and Financial Risk Management").
Fair values reflect the credit risk of the instrument and include
adjustments to take account of the credit risk of the Company entity
and counterparty when appropriate.
iv) Non-derivative financial assets and liabilities
Fair value, which is determined for disclosure purposes, is calculated
based on the present value of future principal and interest cash flows,
discounted at the market rate of interest at the reporting date. In
respect of the convertible debentures, the fair value is determined by
the market price of the convertible debenture on the reporting date.
For finance leases the market rate of interest is determined by
reference to similar lease agreements. For disclosure purposes,
carrying value is a reasonable approximation for fair value for cash
and cash equivalents, trade receivables and other, trade payables and
accrued liabilities, finance lease liabilities and dividends payable.
v) Share-based payment transactions
The fair value of the employee share options is measured using the
Black-Scholes formula. Measurement inputs include share price on
measurement date, exercise price of the instrument, expected volatility
(based on weighted average historic volatility adjusted for changes
expected due to publicly available information), weighted average
expected life of the instruments (based on historical experience and
general option holder behaviour), expected dividends, expected
forfeitures and the risk-free interest rate (based on government
bonds). Service and non-market performance conditions attached to the
transactions are not taken into account in determining fair value.
The fair value of the long-term share unit award incentive plan and
associated distribution units are measured based on the reporting date
market price of the Company's shares. Expected dividends are not taken
into account in determining fair value as they are issued as additional
distribution share units.
4. ACQUISITION
On April 2, 2012, Pembina acquired all of the outstanding Provident
Energy Ltd. ("Provident") common shares (the "Provident Shares") in
exchange for 116,535,750 Pembina common shares valued at approximately
$3.3 billion (the "Acquisition").
The purchase price equation, subject to finalization, is based on
assessed fair values and is estimated as follows:
|
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
9
|
Trade receivables and other
|
|
|
|
|
|
|
|
|
|
|
195
|
Inventory
|
|
|
|
|
|
|
|
|
|
|
87
|
Property, plant and equipment
|
|
|
|
|
|
|
|
|
|
|
1,988
|
Intangible assets and goodwill (including $1,747 goodwill)
|
|
|
|
|
|
|
|
|
|
|
2,408
|
Trade payables and accrued liabilities
|
|
|
|
|
|
|
|
|
|
|
(249)
|
Derivative financial instruments - current
|
|
|
|
|
|
|
|
|
|
|
(53)
|
Derivative financial instruments - non-current
|
|
|
|
|
|
|
|
|
|
|
(36)
|
Loans and borrowings
|
|
|
|
|
|
|
|
|
|
|
(215)
|
Convertible debentures
|
|
|
|
|
|
|
|
|
|
|
(317)
|
Provisions and other
|
|
|
|
|
|
|
|
|
|
|
(128)
|
Deferred tax liabilities
|
|
|
|
|
|
|
|
|
|
|
(406)
|
Other equity
|
|
|
|
|
|
|
|
|
|
|
6
|
Non-controlling interest
|
|
|
|
|
|
|
|
|
|
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
3,284
|
Revenue generated by the Provident business for the quarter ending March
31, 2013, before intersegment eliminations was $506.3 million. Gross
profit, before intersegment eliminations, for the same period was $68.1
million.
For more information, please see Note 5 of the Consolidated Financial
Statements for the year ended December 31, 2012.
5. PROPERTY, PLANT AND EQUIPMENT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
|
|
|
|
Land and
Land
Rights
|
|
|
Pipelines
|
|
|
Facilities
and
Equipment
|
|
|
|
Linefill
and
Other
|
|
|
Assets
Under
Construction
|
|
|
|
Total
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2012
|
|
|
|
|
88.0
|
|
|
2,593.7
|
|
|
2,072.2
|
|
|
|
506.6
|
|
|
751.8
|
|
|
|
6,012.3
|
Additions
|
|
|
|
|
|
|
|
0.2
|
|
|
3.1
|
|
|
|
4.1
|
|
|
129.7
|
|
|
|
137.1
|
Change in decommissioning provision
|
|
|
|
|
|
|
|
(5.7)
|
|
|
(7.0)
|
|
|
|
|
|
|
|
|
|
|
(12.7)
|
Capitalized interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7.4
|
|
|
|
7.4
|
Transfers
|
|
|
|
|
|
|
|
2.9
|
|
|
2.3
|
|
|
|
(0.5)
|
|
|
(4.7)
|
|
|
|
|
Disposals and other
|
|
|
|
|
|
|
|
(0.1)
|
|
|
(0.1)
|
|
|
|
0.9
|
|
|
|
|
|
|
0.7
|
Balance at March 31, 2013
|
|
|
|
|
88.0
|
|
|
2,591.0
|
|
|
2,070.5
|
|
|
|
511.1
|
|
|
884.2
|
|
|
|
6,144.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2012
|
|
|
|
|
4.4
|
|
|
776.7
|
|
|
171.9
|
|
|
|
44.8
|
|
|
|
|
|
|
997.8
|
Depreciation
|
|
|
|
|
|
|
|
14.1
|
|
|
16.1
|
|
|
|
6.6
|
|
|
|
|
|
|
36.8
|
Disposals
|
|
|
|
|
|
|
|
0.1
|
|
|
(0.1)
|
|
|
|
0.4
|
|
|
|
|
|
|
0.4
|
Balance at March 31, 2013
|
|
|
|
|
4.4
|
|
|
790.9
|
|
|
187.9
|
|
|
|
51.8
|
|
|
|
|
|
|
1,035.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
|
|
83.6
|
|
|
1,817.0
|
|
|
1,900.3
|
|
|
|
461.8
|
|
|
751.8
|
|
|
|
5,014.5
|
March 31, 2013
|
|
|
|
|
83.6
|
|
|
1,800.1
|
|
|
1,882.6
|
|
|
|
459.3
|
|
|
884.2
|
|
|
|
5,109.8
|
Commitments
At March 31, 2013, the Company has contractual commitments for the
acquisition and or construction of property, plant and equipment of
$872.1 million (December 31, 2012: $362.8 million).
6. LOANS AND BORROWINGS
This note provides information about the contractual terms of the
Company's interest-bearing loans and borrowings, which are measured at
amortized cost.
Carrying value terms and debt repayment schedule
Terms and conditions of outstanding loans were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amount(3)
|
|
|
|
|
|
Available
facilities at
March 31,
2013
|
|
|
|
Nominal
interest rate
|
|
|
|
Year of
maturity
|
|
|
|
March 31,
2013
|
|
|
December 31,
2012
|
Operating facility(1)
|
|
|
|
|
30.0
|
|
|
|
prime + 0.45
or BA(2) + 1.45
|
|
|
|
2014
|
|
|
|
|
|
|
|
Revolving unsecured credit facility
|
|
|
|
|
1,500.0
|
|
|
|
prime + 0.45
or BA(2) + 1.45
|
|
|
|
2018
|
|
|
|
195.0
|
|
|
520.7
|
Senior unsecured notes - Series A
|
|
|
|
|
175.0
|
|
|
|
5.99
|
|
|
|
2014
|
|
|
|
174.7
|
|
|
174.7
|
Senior unsecured notes - Series C
|
|
|
|
|
200.0
|
|
|
|
5.58
|
|
|
|
2021
|
|
|
|
197.1
|
|
|
197.0
|
Senior unsecured notes - Series D
|
|
|
|
|
267.0
|
|
|
|
5.91
|
|
|
|
2019
|
|
|
|
265.7
|
|
|
265.6
|
Senior unsecured term facility
|
|
|
|
|
75.0
|
|
|
|
6.16
|
|
|
|
2014
|
|
|
|
74.8
|
|
|
74.8
|
Senior unsecured medium-term notes 1
|
|
|
|
|
250.0
|
|
|
|
4.89
|
|
|
|
2021
|
|
|
|
248.8
|
|
|
248.7
|
Senior unsecured medium-term notes 2
|
|
|
|
|
450.0
|
|
|
|
3.77
|
|
|
|
2022
|
|
|
|
447.8
|
|
|
447.9
|
Subsidiary debt
|
|
|
|
|
9.7
|
|
|
|
5.02
|
|
|
|
2014
|
|
|
|
9.7
|
|
|
9.3
|
Finance lease liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5.7
|
|
|
5.8
|
Total interest bearing liabilities
|
|
|
|
|
2,956.7
|
|
|
|
|
|
|
|
|
|
|
|
1,619.3
|
|
|
1,944.5
|
Less current portion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12.1)
|
|
|
(11.7)
|
Total non-current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,607.2
|
|
|
1,932.8
|
|
|
(1)
|
Operating facility expected to be renewed on an annual basis.
|
(2)
|
Bankers' Acceptance.
|
(3)
|
Deferred financing fees are all classified as non-current. Non-current
carrying amount of facilities are net of deferred financing fees.
|
Pembina's $1.5 billion revolving credit facility was extended by one
year from March 2017 to March 2018 and the $30 million operating
facility was also extended by one year from July 2013 to July 2014.
7. PROVISIONS
|
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
|
|
|
|
|
|
|
|
|
|
Total
|
Balance at December 31, 2012(1)
|
|
|
|
|
|
|
|
|
|
|
361.7
|
Unwinding of discount rate
|
|
|
|
|
|
|
|
|
|
|
2.1
|
Decommissioning liabilities settled during the period
|
|
|
|
|
|
|
|
|
|
|
(0.3)
|
Change in estimates and other
|
|
|
|
|
|
|
|
|
|
|
(19.3)
|
Total
|
|
|
|
|
|
|
|
|
|
|
344.2
|
Less current portion (included in accrued liabilities)
|
|
|
|
|
|
|
|
|
|
|
(0.3)
|
Balance at March 31, 2013
|
|
|
|
|
|
|
|
|
|
|
343.9
|
|
|
(1)
|
Includes current portion of $0.5 million (included in accrued
liabilities).
|
The Company applied a 2 percent inflation rate per annum (December 31,
2012: 2 percent) and a risk free rate of 2.5 percent (December 31,
2012: 2.36 percent) to calculate the present value of the
decommissioning provision. The remeasured decommissioning provision
decreased property, plant and equipment and decommissioning provision
liability. Of the re-measurement reduction of the decommissioning
provision, $6.8 million was in excess of the carrying amount of the
related asset and is recognized as a credit to depreciation expense.
8. SHARE CAPITAL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ millions, except share amounts)
|
|
|
|
|
|
|
|
|
|
|
Number of
Common Shares
|
|
|
|
|
Share Capital
|
Balance December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
293,226,473
|
|
|
|
|
5,324.0
|
Common shares issued, net of issue costs
|
|
|
|
|
|
|
|
|
|
|
11,206,750
|
|
|
|
|
334.9
|
Share-based payment transactions
|
|
|
|
|
|
|
|
|
|
|
154,447
|
|
|
|
|
3.2
|
Dividend reinvestment plan
|
|
|
|
|
|
|
|
|
|
|
2,394,852
|
|
|
|
|
67.0
|
Debenture conversions and other
|
|
|
|
|
|
|
|
|
|
|
10,255
|
|
|
|
|
(5.9)
|
Balance March 31, 2013
|
|
|
|
|
|
|
|
|
|
|
306,992,777(1)
|
|
|
|
|
5,723.2
|
|
|
(1)
|
Weighted average number of common shares outstanding for the three
months ended
March 31, 2013 is 295.9 million (2012: 168.3 million). On a fully
diluted basis, the weighted
average number of common shares outstanding for the three months ended
March 31,
2013 is 296.7 million (2012: 168.9 million).
|
On March 21, 2013, Pembina closed a bought deal offering of 11,206,750
shares at a price of $30.80 per share for aggregate gross proceeds of
$345.2 million ($334.9 million, net of issue costs).
Dividends
The following dividends were declared by the Company:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 Months Ended March 31 ($ millions)
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
|
|
|
2012
|
$0.405 per qualifying common share (2012: $0.39)
|
|
|
|
|
|
|
|
|
|
|
121.0
|
|
|
|
|
|
65.7
|
On April 5, 2013 Pembina announced that the Board of Directors declared
a dividend for April of $0.135 per qualifying common share ($1.62
annualized) in the total amount of $41.6 million.
9. NET FINANCE COSTS
|
|
|
|
|
|
|
|
|
|
|
|
|
3 Months Ended March 31 ($ millions)
|
|
|
|
|
|
2013
|
|
|
|
|
|
2012
|
Interest income from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Related parties
|
|
|
|
|
|
|
|
|
|
|
|
(0.3)
|
|
Bank deposits
|
|
|
|
|
|
(0.6)
|
|
|
|
|
|
|
Interest expense on financial liabilities measured at amortized cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and borrowings
|
|
|
|
|
|
17.0
|
|
|
|
|
|
15.4
|
|
Convertible debentures
|
|
|
|
|
|
10.6
|
|
|
|
|
|
4.6
|
|
Finance leases
|
|
|
|
|
|
0.3
|
|
|
|
|
|
0.1
|
|
Unwinding of discount
|
|
|
|
|
|
2.1
|
|
|
|
|
|
2.5
|
(Gain) loss in fair value of non-commodity-related derivative financial
instruments
|
|
|
|
|
|
(0.7)
|
|
|
|
|
|
(2.8)
|
Loss on revaluation of conversion feature on convertible debentures
|
|
|
|
|
|
22.4
|
|
|
|
|
|
|
Foreign exchange (gains) loss
|
|
|
|
|
|
(0.3)
|
|
|
|
|
|
|
Net finance costs
|
|
|
|
|
|
50.8
|
|
|
|
|
|
19.5
|
10. OPERATING SEGMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 Months Ended March 31, 2013 ($ millions)
|
|
|
|
Conventional
Pipelines(1)
|
|
|
Oil Sands &
Heavy Oil
|
|
|
|
Gas
Services
|
|
|
Midstream(2)
|
|
|
Corporate &
Intersegment
Eliminations
|
|
|
|
Total
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pipeline transportation
|
|
|
|
95.8
|
|
|
43.4
|
|
|
|
|
|
|
|
|
|
(13.1)
|
|
|
|
126.1
|
|
Midstream services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,132.1
|
|
|
|
|
|
|
1,132.1
|
|
Gas Services
|
|
|
|
|
|
|
|
|
|
|
27.5
|
|
|
|
|
|
|
|
|
|
27.5
|
Total revenue
|
|
|
|
95.8
|
|
|
43.4
|
|
|
|
27.5
|
|
|
1,132.1
|
|
|
(13.1)
|
|
|
|
1,285.7
|
|
Operations
|
|
|
|
35.3
|
|
|
11.9
|
|
|
|
8.9
|
|
|
21.8
|
|
|
(0.7)
|
|
|
|
77.2
|
|
Cost of goods sold(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
983.9
|
|
|
(13.1)
|
|
|
|
970.8
|
|
Realized gain (loss) on commodity-related
derivative financial instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.1
|
|
|
|
|
|
|
2.1
|
Operating margin
|
|
|
|
60.5
|
|
|
31.5
|
|
|
|
18.6
|
|
|
128.5
|
|
|
0.7
|
|
|
|
239.8
|
|
Depreciation and amortization (operational)
|
|
|
|
1.6
|
|
|
4.9
|
|
|
|
3.6
|
|
|
31.7
|
|
|
|
|
|
|
41.8
|
|
Unrealized gain (loss) on commodity-related
derivative financial instruments
|
|
|
|
0.9
|
|
|
|
|
|
|
|
|
|
4.9
|
|
|
|
|
|
|
5.8
|
Gross profit
|
|
|
|
59.8
|
|
|
26.6
|
|
|
|
15.0
|
|
|
101.7
|
|
|
0.7
|
|
|
|
203.8
|
|
Depreciation included in general and
administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.3
|
|
|
|
1.3
|
|
Other general and administrative
|
|
|
|
2.5
|
|
|
1.0
|
|
|
|
1.3
|
|
|
6.4
|
|
|
20.1
|
|
|
|
31.3
|
|
Acquisition-related and other expenses (income)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1
|
|
|
(0.7)
|
|
|
|
(0.6)
|
Reportable segment results from operating
activities
|
|
|
|
57.3
|
|
|
25.6
|
|
|
|
13.7
|
|
|
95.2
|
|
|
(20.0)
|
|
|
|
171.8
|
Net finance costs
|
|
|
|
1.0
|
|
|
0.3
|
|
|
|
0.1
|
|
|
0.1
|
|
|
49.3
|
|
|
|
50.8
|
Reportable segment earnings (loss) before tax
and income from equity accounted investees
|
|
|
|
56.3
|
|
|
25.3
|
|
|
|
13.6
|
|
|
95.1
|
|
|
(69.3)
|
|
|
|
121.0
|
Share of loss (profit) of investments in equity
accounted investees, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.3
|
|
|
|
|
|
|
0.3
|
Capital expenditures
|
|
|
|
61.4
|
|
|
12.1
|
|
|
|
38.5
|
|
|
23.9
|
|
|
1.2
|
|
|
|
137.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 Months Ended March 31, 2012 ($ millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pipeline transportation
|
|
|
|
82.2
|
|
|
43.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125.3
|
|
Midstream services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
331.1
|
|
|
|
|
|
|
331.1
|
|
Gas Services
|
|
|
|
|
|
|
|
|
|
|
19.1
|
|
|
|
|
|
|
|
|
|
19.1
|
Total revenue
|
|
|
|
82.2
|
|
|
43.1
|
|
|
|
19.1
|
|
|
331.1
|
|
|
|
|
|
|
475.5
|
|
Operations
|
|
|
|
27.5
|
|
|
13.0
|
|
|
|
6.1
|
|
|
2.4
|
|
|
(0.6)
|
|
|
|
48.4
|
|
Cost of goods sold(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
299.1
|
|
|
|
|
|
|
299.1
|
|
Realized gain (loss) on commodity-related derivative
financial instruments
|
|
|
|
(0.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.3)
|
Operating margin
|
|
|
|
54.4
|
|
|
30.1
|
|
|
|
13.0
|
|
|
29.6
|
|
|
0.6
|
|
|
|
127.7
|
|
Depreciation and amortization (operational)
|
|
|
|
11.9
|
|
|
4.9
|
|
|
|
3.2
|
|
|
1.7
|
|
|
|
|
|
|
21.7
|
|
Unrealized loss on commodity-related derivative
financial instruments
|
|
|
|
(3.0)
|
|
|
|
|
|
|
|
|
|
(0.5)
|
|
|
|
|
|
|
(3.5)
|
Gross profit
|
|
|
|
39.5
|
|
|
25.2
|
|
|
|
9.8
|
|
|
27.4
|
|
|
0.6
|
|
|
|
102.5
|
|
Depreciation included in general and administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.8
|
|
|
|
0.8
|
|
Other general and administrative
|
|
|
|
0.9
|
|
|
1.0
|
|
|
|
0.5
|
|
|
1.3
|
|
|
13.1
|
|
|
|
16.8
|
|
Acquisition-related and other expenses (income)
|
|
|
|
1.2
|
|
|
(0.1)
|
|
|
|
|
|
|
|
|
|
21.0
|
|
|
|
22.1
|
Reportable segment results from operating
activities
|
|
|
|
37.4
|
|
|
24.3
|
|
|
|
9.3
|
|
|
26.1
|
|
|
(34.3)
|
|
|
|
62.8
|
Net finance costs
|
|
|
|
1.6
|
|
|
0.5
|
|
|
|
0.1
|
|
|
|
|
|
17.3
|
|
|
|
19.5
|
Reportable segment earnings (loss) before tax
and income from equity accounted investees
|
|
|
|
35.8
|
|
|
23.8
|
|
|
|
9.2
|
|
|
26.1
|
|
|
(51.6)
|
|
|
|
43.3
|
Share of loss (profit) of investments in equity
accounted investees, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.2)
|
|
|
|
|
|
|
(0.2)
|
Capital expenditures
|
|
|
|
11.1
|
|
|
5.8
|
|
|
|
34.0
|
|
|
2.3
|
|
|
1.7
|
|
|
|
54.9
|
|
|
(1)
|
5.6 percent of Conventional Pipelines revenue is under regulated tolling
arrangements (4.5 percent for quarter ending March 31, 2012).
|
(2)
|
Midstream services revenue includes $50.5 million associated with U.S.
midstream sales (nil for quarter ending
March 31, 2012).
|
(3)
|
Including product purchases.
|
11. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
Fair values
The fair values of financial assets and liabilities, together with the
carrying amounts shown in the statement of financial position, are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2013
|
|
|
|
|
December 31, 2012
|
($ millions)
|
|
|
|
|
|
Carrying
Amount
|
|
|
|
|
Fair
Value
|
|
|
|
|
Carrying
Amount
|
|
|
|
|
Fair
Value
|
Financial assets carried at fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments
|
|
|
|
|
|
1.7
|
|
|
|
|
1.7
|
|
|
|
|
7.9
|
|
|
|
|
7.9
|
Financial liabilities carried at fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments
|
|
|
|
|
|
77.5
|
|
|
|
|
77.5
|
|
|
|
|
67.7
|
|
|
|
|
67.7
|
Financial liabilities carried at amortized cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and borrowings
|
|
|
|
|
|
1,619.3
|
|
|
|
|
1,780.8
|
|
|
|
|
1,944.5
|
|
|
|
|
2,089.7
|
Convertible debentures
|
|
|
|
|
|
611.1
|
(1)
|
|
|
|
777.2
|
|
|
|
|
610.0
|
(1)
|
|
|
|
725.0
|
|
|
|
|
|
|
2,230.4
|
|
|
|
|
2,558.0
|
|
|
|
|
2,554.5
|
|
|
|
|
2,814.7
|
|
|
(1)
|
Carrying amount excludes conversion feature of convertible debentures.
|
The basis for determining fair values is disclosed in Note 3.
Fair value hierarchy
The fair value of financial instruments carried at fair value is
classified according to the following hierarchy based on the amount of
observable inputs used to value the instruments.
Level 1: Unadjusted quoted prices are available in active markets for
identical assets or liabilities as the reporting date. Pembina uses
Level 1 inputs for the disclosed fair value measurements of the
convertible debentures.
Level 2: Inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices). Level 2 valuations
are based on inputs, including quoted forward prices for commodities,
time value and volatility factors, which can be substantially observed
or corroborated in the marketplace. Instruments in this category
include non-exchange traded derivatives such as over-the-counter
physical forwards and options, including those that have prices similar
to quoted market prices. Pembina obtains quoted market prices for
commodities, future power contracts, interest rates and foreign
exchange rates from information sources including banks, Bloomberg
Terminals and Natural Gas Exchange (NGX). With the exception of one
item described under Level 3, all of Pembina's financial instruments
carried at fair value are valued using Level 2 inputs.
Level 3: Valuations in this level require the most significant judgments
and consist primarily of unobservable or non-market based inputs. Level
3 inputs include longer-term transactions, transactions in less active
markets or transactions at locations for which pricing information is
not available. In these instances, internally developed methodologies
are used to determine fair value. The redemption liability related to
acquisition of subsidiary is classified as a Level 3 instrument, as the
fair value is determined by using inputs that are not based on
observable market data. The liability represents a put option, held by
the non-controlling interest of Three Star Trucking Ltd. ("Three
Star"), to sell the remaining one-third of the business to Pembina
after the third anniversary of the original acquisition date (October
3, 2014). The put price to be paid by the Company for the residual
interest upon exercise is based on a multiple of Three Star's earnings
during the three year period prior to exercise, adjusted for associated
capital expenditures and debt based on management estimates. These
estimates are subject to measurement uncertainty and the effect on the
financial statements of future periods could be material.
Financial instruments classified as Level 3
|
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
|
|
|
|
|
|
|
|
|
|
2013
|
Redemption liability, January 1, 2013
|
|
|
|
|
|
|
|
|
|
|
5.3
|
Gain on revaluation
|
|
|
|
|
|
|
|
|
|
|
(1.0)
|
Redemption liability, March 31, 2013
|
|
|
|
|
|
|
|
|
|
|
4.3
|
The following table is a summary of the net derivative financial
instrument liability:
|
|
|
|
|
|
|
|
|
|
|
($ millions)
|
|
|
|
|
|
March 31
2013
|
|
|
|
December 31
2012
|
Frac spread related
|
|
|
|
|
|
(0.6)
|
|
|
|
(3.1)
|
Product margin
|
|
|
|
|
|
0.7
|
|
|
|
(1.1)
|
Corporate
|
|
|
|
|
|
|
|
|
|
|
|
Power
|
|
|
|
|
|
(5.7)
|
|
|
|
(7.1)
|
|
Interest rate
|
|
|
|
|
|
(13.1)
|
|
|
|
(14.3)
|
|
Foreign exchange
|
|
|
|
|
|
(0.8)
|
|
|
|
0.7
|
Other derivative financial instruments
|
|
|
|
|
|
|
|
|
|
|
|
Conversion feature of convertible debentures
|
|
|
|
|
|
(52.0)
|
|
|
|
(29.6)
|
|
Redemption liability related to acquisition of subsidiary
|
|
|
|
|
|
(4.3)
|
|
|
|
(5.3)
|
Net derivative financial instruments liability
|
|
|
|
|
|
(75.8)
|
|
|
|
(59.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity-Related Derivative Financial Instruments
|
|
|
|
|
|
3 Months Ended
March 31
|
($ millions)
|
|
|
|
|
|
2013
|
|
|
|
|
2012
|
Realized gain (loss) on commodity-related derivative financial
instruments
|
|
|
|
|
|
|
|
|
|
|
|
Frac spread related
|
|
|
|
|
|
0.6
|
|
|
|
|
|
Product margin
|
|
|
|
|
|
1.5
|
|
|
|
|
|
Power
|
|
|
|
|
|
|
|
|
|
|
(0.3)
|
Realized gain (loss) on commodity-related derivative financial
instruments
|
|
|
|
|
|
2.1
|
|
|
|
|
(0.3)
|
Unrealized gain (loss) on commodity-related derivative financial
instruments
|
|
|
|
|
|
5.8
|
|
|
|
|
(3.5)
|
Gain (loss) on commodity-related derivative financial instruments
|
|
|
|
|
|
7.9
|
|
|
|
|
(3.8)
|
For non-commodity-related derivative financial instruments see Note 9,
Net Finance Costs.
Sensitivity analysis
The following table shows the impact on earnings if the underlying risk
variables of the derivative financial instruments changed by a
specified amount, with other variables held constant.
|
|
|
|
|
|
|
|
|
|
|
|
|
As at March 31, 2013 ($ millions)
|
|
|
|
|
|
|
|
+ Change
|
|
|
|
- Change
|
Frac spread related
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas
|
|
|
|
(AECO +/- $1.00 per GJ)
|
|
|
|
4.6
|
|
|
|
(4.6)
|
|
NGL (includes propane, butane)
|
|
|
|
(Belvieu +/- U.S. $0.10 per gal)
|
|
|
|
(2.5)
|
|
|
|
2.5
|
|
Foreign exchange (U.S.$ vs. Cdn$)
|
|
|
|
(FX rate +/- $0.05)
|
|
|
|
(1.8)
|
|
|
|
1.8
|
Product margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil
|
|
|
|
(WTI +/- $5.00 per bbl)
|
|
|
|
(5.1)
|
|
|
|
5.1
|
|
NGL (includes propane, butane and condensate)
|
|
|
|
(Belvieu +/- U.S. $0.10 per gal)
|
|
|
|
3.1
|
|
|
|
(3.1)
|
Corporate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate
|
|
|
|
(Rate +/- 50 basis points)
|
|
|
|
3.4
|
|
|
|
(3.4)
|
|
Power
|
|
|
|
(AESO +/- $5.00 per MW/h)
|
|
|
|
3.4
|
|
|
|
(3.4)
|
Conversion feature of convertible debentures
|
|
|
|
(Pembina share price +/- $0.50 per share)
|
|
|
|
(2.9)
|
|
|
|
2.8
|
12. SUBSEQUENT EVENTS
On April 8, 2013, Pembina announced the availability of its Dividend
Reinvestment Plan ("DRIP") to U.S. shareholders effective immediately.
The new common shares purchased with reinvested dividends will be
issued from Pembina's treasury at a 5% discount to the average market
price (calculated under the DRIP).
On April 30, 2013, Pembina closed the offering of $200 million of senior
unsecured, medium-term notes ("Notes"). The Notes have a fixed interest
rate of 4.75 percent per annum paid semi-annually, and will mature on
April 30, 2043. The net proceeds from the offering of Notes were used
to pay down Pembina's existing credit facility.
CORPORATE INFORMATION
HEAD OFFICE
Pembina Pipeline Corporation
Suite 3800, 525 - 8th Avenue S.W.
Calgary, Alberta T2P 1G1
AUDITORS
KPMG LLP
Chartered Accountants
Calgary, Alberta
TRUSTEE, REGISTRAR & TRANSFER AGENT
Computershare Trust Company of Canada
Suite 600, 530 - 8th Avenue SW
Calgary, Alberta T2P 3S8
1-800-564-6253
STOCK EXCHANGE
Pembina Pipeline Corporation
TSX listing symbols for:
Common shares: PPL
Convertible debentures: PPL.DB.C, PPL.DB.E, PPL.DB.F
NYSE listing symbol for:
Common shares: PBA
INVESTOR INQUIRIES
Phone: (403) 231-3156
Fax: (403) 237-0254
Toll Free: 1-855-880-7404
Email: investor-relations@pembina.com
Website: www.pembina.com
SOURCE Pembina Pipeline Corporation