Pembina Pipeline Corporation Q2 FY2025 earnings call

• Quarterly adjusted EBITDA was $1.013 billion. Full year adjusted EBITDA guidance updated to $4.225 billion to $4.425 billion.
• Cedar LNG Project on track, with steel cutting for floating LNG vessel, expected in-service late 2028. RFS IV project trending 5% under cost estimate, revised total cost ~$500 million.
• Strengthened propane export capabilities with 50,000 bpd export capacity and optimization of Prince Rupert Terminal to use Medium Gas Carrier Vessels.
• PGI's activities: acquired remaining interest in gas plants, entered into take-or-pay commitments, and advanced projects in Wapiti region.
• Pipeline expansions: Taylor-to-Gordondale Project and Fox Creek-to-Namao Expansion, with final investment decisions expected by end of 2025 and first quarter of 2026 respectively.
• Evaluating ethane options and advancing Project Greenlight with Kineticor.

Pembina Pipeline Corporation's second quarter results showed adjusted EBITDA of $1.013 billion. In Pipelines, factors included lower firm tolls on Cochin Pipeline, lower revenue at Edmonton Terminals, but higher volumes on Peace Pipeline and Nipisi Pipeline. Facilities had lower volumes due to planned outages and third-party egress restrictions but higher contribution from PGI. Marketing & New Ventures saw lower net revenue due to NGL margin decrease, lower volumes, and higher input gas prices. Corporate had higher earnings due to lower incentive costs. Total volumes in Pipeline and Facilities divisions were 3.6 million barrels of oil equivalent per day, a 1% increase over the prior year.

• Adjusted EBITDA guidance for 2025 updated to $4.225 billion to $4.425 billion.
• Capital investment program revised to $1.3 billion, a $200 million increase, reflecting progress on core projects and acquisitions.
• Third quarter results expected to be consistent with second quarter, with stronger fourth quarter expected due to seasonality and project contributions.

• Competitive dynamics in the midstream space, including traditional players and customers taking midstream activities in-house.
• Market volatility affecting commodity prices and revenue.
• Execution risks on capital projects, particularly the long-term Cedar LNG Project.

Q: How to respond to criticism about incumbency being challenged?

A: Scott Burrows stated fundamentals are strong, with visible catalysts in the WCSB, and Pembina is involved in all key catalysts, having an unparalleled franchise.

Q: Thoughts on capital allocation?

A: Capital increase due to bolt-on acquisitions and project advancement, offset by cost savings in projects.

Q: Translating WCSB fundamentals to long-term EBITDA growth?

A: Mid to high single-digit volume growth expected, with focus on volumetric and margin growth.

Q: Progress on Cedar LNG remarketing?

A: Engaged with multiple counterparties, refining discussions, expecting to finalize agreements by end of 2025.

Q: AltaGas agreement and LPG export strategy?

A: Happy with current agreements, focusing on optimizing Prince Rupert Terminal and MGCs, with optionality for future optimizations and partnerships.

Q: Greenlight Electricity Centre progress?

A: Advanced through Phase 1 of AEO allocation, in discussions with offtaker, expecting progress in 2025.

Q: Competitive dynamics and fee comparison?

A: Pembina's capital execution is a strategic advantage, with fees competitive on a dollar per unit basis compared to alternatives.