Pembina Pipeline Corp. Q1 FY2024 earnings call

• Record adjusted EBITDA of CAD 1.044 billion in Q1 2024.
• Completed acquisition of Alliance and Aux Sable on April 1, 2024, updating 2024 adjusted EBITDA guidance to CAD 4.05 billion to CAD 4.30 billion.
• Entered long-term agreement with Dow Chemical to supply ethane for a new ethylene cracker facility.
• Significant milestones in Cedar LNG project, including securing long-term agreements and notice to proceed to contractors.
• Major projects: Phase VIII Peace Pipeline expansion in commissioning stage, RFS IV expansion and Northeast B.C. mid-point pump station expansion proceeding as planned, Wapiti Gas Plant expansion approved.
• Raised quarterly common share dividend by CAD 0.0225 per share, or 3.4%.
• Celebrated first oil shipment on Trans Mountain pipeline expansion.

Pembina Pipeline Corporation's first quarter 2024 saw a record adjusted EBITDA of CAD 1.044 billion. In the Pipelines segment, higher revenues and volumes on the Peace Pipeline system, along with the reactivation of the Nipisi Pipeline, contributed to performance. The Facilities segment had a 12% increase in volumes compared to Q1 2023, primarily due to higher volumes at the Redwater Complex and Younger. The Marketing & New Ventures segment reflected the net impact of wider frac spreads and a new third-party marketing arrangement. Pipeline volumes were 2.6 million barrels per day, a 5% increase year-over-year, and Facilities volumes were 0.8 million barrels per day, a 12% increase year-over-year. Revenue contributions were driven by these segment performances.

• Pembina updated 2024 adjusted EBITDA guidance range to CAD 4.05 billion to CAD 4.30 billion, midpoint representing a CAD 300 million increase over previous range.
• Revised outlook primarily reflects incremental contribution from increased ownership of Alliance and Aux Sable, and stronger outlook in marketing business due to wider frac spreads.

• Wildfire risk: Monitoring wildfire activity 24/7, but no active threats near assets so far.
• TMX toll uncertainty: Ongoing toll resolution process with uncertainty on where TMX volumes will be destined.

Q: Dive in on fundamentals, producer customer conversations, and growth trajectory.

A: Continued strong results, producers above expectations, conversations with producers great, momentum in business.

Q: On Alliance and Aux Sable, progress on commercial synergies.

A: Brought over 161 employees, short-term synergies going well, midterm to longer-term synergies being worked on.

Q: Low water levels and wildfires impact on marketing and operations.

A: Customers have retained required water, monitoring wildfires 24/7, no preemptive shutdowns planned.

Q: Commercial evolution of customers in terms of full-path solutions.

A: Most discussions are integrated services, well-positioned with sanctioned RFS IV.

Q: Cedar LNG equity stake and capacity assignment.

A: No plans for equity structure change, ongoing commercial conversations with parties.

Q: CapEx for projects and funding sources.

A: If Cedar FID, capital levels close to cash flow after dividends; if not, more free cash flow for other options.

Q: Facilities segment operating expense pressure and producer curtailment.

A: No curtailment seen, operating expenses normal supply chain and inflation pressures.

Q: Pipeline between Taylor and Gordondale and LPG exports.

A: No material incremental pipelining needed, continue to look at Prince Rupert LPG export options.

Q: TMX asset fitting with strategy.

A: Global exports critical, but TMX toll uncertainty remains.

Q: Take-or-pay deferrals and Cedar CapEx.

A: Higher certainty in recognizing volumes early due to statistical data, Cedar looked at as equity contribution.

Q: TMX volumes destination and opportunities.

A: Difficult to opine on volumes destination, but see tailwind for tankage and blending operations.

Q: Hydrogen ammonia project status and carbon sequestration economics.

A: Wrapping up pre-FEED work on ammonia project, challenging to balance sequestration costs with government policies.