Pembina Pipeline sees FY24 adjusted EBITDA C$3.73B-C$4.03B

Pembina Pipeline announced its 2024 financial guidance and provided a business update. The company said, “The predictability and resilience of Pembina’s business is being demonstrated once again in 2023 with the expectation of another record setting financial year. Strong results reflect growing volumes and rising capacity utilization across many key systems. In Pembina’s conventional pipelines business, which is a proxy for the broader WCSB, second half 2023 volumes are expected to be five percent higher than the same period in 2022. The investments Pembina has made in recent years, including various expansions of the Peace Pipeline system and the transaction to form PGI have created the capacity to accommodate rising throughput, leading to highly accretive growth in Pembina’s business. In addition, Pembina’s growing platform and favourable commodity prices and price spreads have allowed its marketing business to outperform the historical average. Momentum within the WCSB is expected to continue into 2024 and beyond and Pembina is well positioned to benefit from what it expects to be a transformational period in the Canadian energy industry. Over the next several years, Pembina sees the potential for mid-single digit annual volume growth across the WCSB, driven by near term catalysts, including up to approximately 2.8 billion cubic feet per day of new natural gas export capacity from new West Coast LNG projects, 590,000 bpd of new crude oil export capacity from the expected completion of the Trans Mountain Pipeline expansion, as well as potential new developments in the Alberta petrochemical industry, including Pembina’s expectation of more than 100,000 bpd of incremental ethane demand associated with Dow Inc.’s recent decision to build a new 1.8 million metric tonne per annum integrated ethylene cracker and derivatives facility in Fort Saskatchewan. Given the scope and reach of its assets, highly economic expansion opportunities, existing long-term contracts, and agreements with three premier NEBC producers, Pembina is uniquely positioned to capture new volumes and benefit from the growth in the WCSB. Pembina will continue to invest in infrastructure to serve customers and enhance its integrated value chain, while also pursuing opportunities in the new ventures portfolio that align with the Company’s strategy to enhance access to global markets and better align its future with the transition to a lower-carbon economy. Specific highlights include: PGI is proceeding with the development of a 28 MW cogeneration facility at its K3 Plant (the “K3 Cogeneration Facility”), which is expected to reduce overall operating costs by providing power and heat to the gas processing facility, while reducing customers’ exposure to power prices. The K3 Cogeneration Facility is expected to fully supply the K3 Plant’s power requirements, with excess power sold to the grid at market rates. Further, this project is expected to contribute to a reduction in annual emissions compliance costs at the K3 Plant through the utilization of the cogeneration waste heat and the low-emission power generated. These attributes are expected to enhance the K3 Plant’s competitiveness and potential to attract further incremental volumes in the area. The project is expected to cost approximately $70 million (net to Pembina) with an estimated in-service date in the first half of 2026, subject to receipt of regulatory and environmental approvals. This is Pembina’s third co-generation project following the successful development of cogeneration facilities at the Redwater Complex and Empress NGL Extraction Facility. Construction of the previously announced expansion of the NEBC Pipeline system (the “NEBC MPS Expansion”) continues to progress as expected. The NEBC MPS Expansion includes a new mid-point pump station, terminal upgrades, and additional storage, which will support approximately 40,000 bpd of incremental capacity on the NEBC Pipeline system. This capacity will fulfill customer demand in light of growing production volumes from NEBC and previously announced long-term midstream service agreements with three premier NEBC Montney producers. The project is expected to cost approximately $90 million with an estimated in-service date in the fourth quarter of 2024. Additionally, Pembina continues to evaluate further expansions to support NEBC volume growth, including new pipelines and terminal upgrades within the NEBC Pipeline system and downstream systems between Taylor, British Columbia and Gordondale, Alberta. Pembina recently filed its project notification with the Canadian Energy Regulator in respect of the interprovincial portion of these expansions. These expansions would accommodate increased customer demand anticipated from growing production volumes within the NEBC Montney in the second half of the decade, drive higher utilization on the Peace Pipeline system, and allow Pembina’s NEBC customers to access premium markets.”