Pembina Pipeline Corporation Q1 FY2025 earnings call

• First quarter adjusted EBITDA was $1.167 billion, a strong start to the year.
• Announced a $0.02 per share or 3% increase in the quarterly common share dividend, beginning in June.
• Entered commercial agreements with a leading Montney producer covering the full value chain.
• Advancing in-flight construction projects to capitalize on growing WCSB volumes.
• Dow delayed construction of its project, but no impact on Pembina's ethane supply agreement.
• Alliance Pipeline is working with stakeholders, expecting lower future tolls on the Canadian portion.

Pembina reported first quarter adjusted EBITDA of $1.167 billion, a 12% increase from the prior year. In the Pipelines segment, factors included higher contribution from Alliance due to increased ownership, favorable U.S. foreign exchange, higher tolls, and contracted volumes. The Facilities segment saw inclusion of Aux Sable and higher contribution from PGI offset by lower interruptible volumes. The Marketing and New Ventures segment had net revenue from contracts, but was impacted by lower commodity prices. The Corporate segment had higher incentive costs. Total volumes in Pipelines and Facilities divisions were 3.7 million barrels of oil equivalent per day, a 9% increase from the prior year.

• 2025 adjusted EBITDA guidance range is $4.2 billion to $4.5 billion, currently trending towards the midpoint.
• Seasonality impacts Q2 and Q3, with stronger first and fourth quarters in NGL marketing due to seasonality.
• Marketing and new ventures division full year adjusted EBITDA outlook of $550 million remains unchanged.
• Leverage ratio at March 31, 2025 was 3.4x, expected to exit 2025 at 3.4x to 3.7x.

• Market conditions and economic uncertainty could impact capital allocation.
• Regulatory reviews, like the Alliance Pipeline process, introduce uncertainty.
• Commodity price volatility can affect marketing and new ventures segment results.

Q: Jeremy Tonet with JPMorgan asked about producer customer conversations, drilling activity, and impact of WTI below 60 on Montney production.

A: Scott Burrows said no material changes to drilling plans yet, some producers moving completions to Q3/Q4 but no major CapEx reductions.

Q: Jeremy Tonet with JPMorgan asked about Alliance Pipeline outcomes and U.S. side color.

A: Jaret Sprott said customers value Alliance's reliability and risk-sharing, limited to say more on Canadian negotiations but customers appreciate Pembina's operating risk taking.

Q: Spiro Dounis with Citi asked about DS Tower development with Dow, capital redeployment.

A: Jaret Sprott said evaluating most cost-effective supply approach, minimal capital spent in 2025, still believe DS Tower makes sense.

Q: Theresa Chan with Barclays asked about risk sharing in Alliance and when volumes/revenue EBITDA bifurcation true up.

A: Jaret Sprott said risk sharing dynamic, Cameron Goldade said gap between revenue and physical volumes due to new contracts leading, will continue to see gap.

Q: Aaron MacNeil with TD Cowen asked about Montney contract details, Alliance expansion.

A: Jaret Sprott said material volume, Alliance has demand for incremental gas egress, evaluating expansions.

Q: Praneeth Satish with Wells Fargo asked about Alliance tolls timing and impact on guidance.

A: Scott Burrows said tolls timing still in negotiation, can't comment on guidance impact.

Q: Praneeth Satish with Wells Fargo asked about Greenlight data center project.

A: Chris Scherman said projects progressing, actively engaged with equipment suppliers, on track.

Q: Rob Hope with Scotiabank asked about Yellowhead straddle and Dow delay.

A: Scott Burrows said no change to Yellowhead project timeline, Cameron Goldade said no material capital spent in 2025 on it.

Q: Patrick Kenny with National Bank Financial asked about NGL market diversification.

A: Chris Scherman said focusing on West Coast, optimizing Prince Rupert, watching butane, putting effort into various markets.

Q: Maurice Choy with RBC Capital Markets asked about long-term WCSB outlook, Alliance tolls.

A: Jaret Sprott said supportive of both projects, Cameron Goldade said debt to EBITDA exit assumptions due to timing of cash flow.

Q: Robert Catellier with CIBC Capital Markets asked about Dow project resumption and tariffs.

A: Scott Burrows said better to ask Dow, Chris Scherman said tariffs driving volatility, West Coast well positioned.

Q: Unidentified Analyst with UBS asked about capital allocation and guidance.

A: Cameron Goldade said considering share buybacks, market condition dependent, market price variability biggest driver.

Q: Ben Pham with BMO Capital Markets asked about marketing hedging, Alliance synergies.

A: Chris Scherman said 50% hedged on frac spread, Cameron Goldade said tracking well to Alliance synergy plans.