Pembina Pipeline Corporation Q3 FY2024 earnings call

Acquisitions

• Acquired remaining 14.6% interest in Aux Sable's U.S. operations, fully consolidating ownership.
• PGI, joint venture with KKR, entered transactions with White Cap and Veren, including acquiring interests and funding infrastructure development.

Major Projects

• Northeast BC midpoint pump station expansion portions completed, trending under $90M budget.
• Taylor to Gordondale expansion application complete, proceeding to assessment phase.
• RFS IV expansion site clearing done, engineering/procurement and site construction ongoing.
• Cedar LNG started onshore construction, detailed engineering on floating facility underway.

Financial Results

• Record third quarter adjusted EBITDA of $1.019 billion, adjusted cash flow from operating activities of $724 million or $1.25 per share.

In pipelines, factors included higher contribution from Alliance due to increased ownership and reactivation of Nipisi pipeline, offset by lower contribution from Cochin pipeline. In facilities, adjusted EBITDA from Aux Sable was included post-acquisition, offset by a prior year gain. In Marketing and New Ventures, higher net revenue from contracts and NGL margins were offset by an unplanned outage at Aux Sable and lower realized gains on derivatives. Pipeline volumes were up ~2% when normalized, facilities volumes had a 1% increase year-over-year.

Adjusted EBITDA Guidance

• Narrowed 2024 adjusted EBITDA guidance range to $4.225 billion to $4.325 billion.
• Revised guidance based on expectation of higher interruptible volumes in Q4 and new contracts, trending towards midpoint of the range.
• Trailing 12-month proportionally consolidated debt to adjusted EBITDA ratio was 3.6x, normalized to 3.4x.

• Legal Challenge: Cedar LNG faces patent infringement litigation, but no anticipated impact on construction schedule.
• Work Stoppages: West Coast ports work stoppage is immaterial to Q4 results.

Q: Jeremy Tonet asked about conventional segment growth and Line asset outlook.

A: Scott Burrows and Cam Goldade discussed 2% normalized growth, with 4% exit-to-exit expected by year-end, and Jaret Sprott spoke on Line asset integration and demand.

Q: Praneeth Satish inquired about Cedar LNG offtake contracts.

A: Scott Burrows mentioned increased interest in Cedar LNG, expecting it to garner a premium due to increased project visibility.

Q: Rob Hope asked about ethane opportunities and Duvernay development.

A: Jaret Sprott talked about evaluating ethane supply opportunities, with progress in engineering pre-feed work, and positive outlook on Duvernay with new acquirer Canadian National Resources.