Pembina Pipeline Corporation Reports Record First Quarter Results in 2018

2018-05-04 02:56:21

(MENAFNEditorial) iCrowdNewswire - May 4, 2018

CALGARY- Pembina Pipeline Corporation ("Pembina" or the "Company") (TSX: PPL; NYSE:PBA) announced today its financial and operating results for the first quarter of 2018.

Operational and Financial Overview

($ millions, except where noted)

3 Months Ended
March 31
(unaudited)

2018

2017

Revenue

1,837

1,480

Net revenue(1)

719

549

Share of profit of investments in equity accounted investees(3)

Gross profit

568

376

Earnings

330

210

Earnings per common share basic and diluted(dollars)

0.59

0.48

Cash flow from operating activities

498

326

Cash flow from operating activities per common share basic(dollars)(1)

0.99

0.82

Adjusted cash flow from operating activities(1)

530

308

Adjusted cash flow from operating activities per common share basic(dollars)(1)

1.05

0.77

Common share dividends declared

272

191

Preferred share dividends declared

Dividends per common share(dollars)

0.54

0.48

Capital expenditures

324

709

Proportionately Consolidated Financial Overview(1)(4)

Total volume(mboe/d)(2)

3,266

2,371

Operating margin(1)

757

407

Adjusted EBITDA(1)

688

358

(1)

Refer to "Non-GAAP Measures".

(2)

Total sales and revenue volumes. Revenue volumes are physical plus volumes recognized from take-or-pay commitments. Volumes are stated in thousands of barrels of oil equivalent per day ("mboe/d"), with natural gas volumes converted to mboe/d from millions of cubic feet per day ("MMcf/d") at a 6:1 ratio. Volumes have been restated to reflect the Corporate Reorganization.

(3)

Includes Investments in Equity Accounted Investees in Alliance, Aux Sable, Ruby, Veresen Midstream, CKPC, Grand Valley and Fort Corp. See "Unaudited Supplementary Information" for definitions of equity accounted investees.

(4)

See "Unaudited Supplementary Information".

Financial and Operational Overview by Division

3 Months Ended March 31
(unaudited)

2018

2017(3)

($ millions)

Total
Volumes(2)

Gross Profit

Operating
Margin(1)

Total
Volumes(2)

Gross Profit

Operating
Margin(1)

Pipelines Division

2,424

294

416

1,667

126

165

Facilities Division

842

143

225

704

102

140

Marketing & New Ventures Division

133

118

146

100

Corporate

(2)

Total

3,266

568

757

2,371

376

407

(1)

Refer to "Non-GAAP Measures".

(2)

Pipelines and Facilities Division are revenue volumes which are physical plus volumes recognized from take-or-pay commitments. Volumes are stated in mboe/d, with natural gas volumes converted to mboe/d from MMcf/d at a 6:1 ratio.

(3)

Financial results reported for all periods commencing on or after January 1, 2017 have been restated to reflect the Corporate Reorganization and adoption of IFRS 15.

Financial Highlights

Record first quarter financial results were largely driven by a larger asset base, due to the acquisition of Veresen Inc. ("Veresen Acquisition") and new assets placed into service following a large-scale capital program, which has resulted in generating higher revenue volumes and revenue in the Pipelines and Facilities Divisions;

Generated first quarter earnings of$330 million, a 57 percent increase over the same period of the prior year, due to increased net revenue and share of profit from equity accounted investees;

Generated record first quarter operating margin of$757 million, an 86 percent increase over the same period in 2017. Operating margin includesPembina'sproportionate share of operating margin from jointly controlled investments which are accounted for using equity accounting;

Achieved first quarter Adjusted EBITDA of$688 millionrepresenting a 92 percent increase over the same period in 2017;

Cash flow from operating activities was$498 millionfor the first quarter, an increase of 53 percent over the same period in 2017. Adjusted cash flow from operating activities increased by 72 percent to$530 millionin the first quarter of 2018 compared to the same period in 2017;

On a per share (basic) basis, cash flow from operating activities for the first quarter increased 21 percent compared to the same period of the prior year. On a per share (basic) basis, adjusted cash flow from operating activities for the first quarter increased 36 percent compared to the same period of the prior year; and

OnMay 3, 2018,Pembina'sBoard of Directors approved a 5.6 percent increase in its monthly common share dividend rate (from$0.18per common share to$0.19per common share), commencing with the dividend to be paid onJune 15, 2018.

Operational Highlights

Achieved record total volumes on a quarterly basis of 3,266 mboe/d, a 38 percent increase over the prior year;

Realized record Pipeline Division revenue volumes during the first quarter of 2,424 mboe/d, representing a 45 percent increase compared to 1,667 mboe/d in the first quarter of 2017. Higher revenue volumes were the result of the Veresen Acquisition and system expansions onPembina'sPeace and northeast B.C. pipeline systems, namely the Phase III pipeline expansion as well as the northeast B.C. pipeline expansion, which were placed into service in the second and fourth quarters of 2017, respectively; and

Facilities Division generated solid revenue volumes of 842 mboe/d in the first quarter of 2018, an increase of 20 percent compared to the first quarter of 2017. Gas processing revenue volumes increased due to the startup of the Duvernay I gas plant and acquisition of Veresen Midstream in the fourth quarter of 2017, as well as higher realized revenue volumes atEmpress, Kakwa River and Resthaven. These increases were partially offset by decreased volumes at Younger and the Cutbank Complex. NGL services revenue volumes increased largely as a result of increased volumes from RFS III which was placed into service onJune 30, 2017.

Executive Overview

The first quarter of 2018 saw the continuation of the strong financial and operating results we experienced last year following the completion of a multi-year growth program and the Veresen Acquisition. 2018 will be the first full yearPembinabenefits from these transformational changes to the Company.

The first quarter generated record results inrevenuevolumes, net revenue, adjusted cash flow from operating activities, operating margin and Adjusted EBITDA. Based on a strong start to the year,Pembinamaintains its outlook for 2018 Adjusted EBITDA of$2.55to$2.75 billion.

The previously announced open season for the Alliance Pipeline Ltd. ("Alliance") expansion and the announcement today of our Phase VI pipeline expansion are two exciting new additions toPembina'sportfolio of growth projects. This portfolio already includes our Phase IV and V Peace Pipeline expansions, a west coast propane export facility, the proposed Jordan Cove LNG Project, the proposed polypropylene production facility, Veresen Midstream's North Central Liquids Hub and theDuvernayinfrastructure development. As well, we continue to evaluate a steady stream of customer-driven development opportunities to grow the business even further.

"We've seen another great start to a new year withPembinaonce again setting record quarterly results," said Mr. Dilger,Pembina'sPresident and Chief Executive Officer. "Amidst a backdrop of political and economic uncertainty within Canada and abroad,Pembinaremains focused on delivering exceptional financial and operational results, growing the business and building out our value-chain to provide our customers with enhanced market access."

"With the ongoing strength we are seeing in the business, we were also pleased to have announced a 5.6 percent dividend increase, which marks our seventh consecutive year of increasing the dividend," addedScott Burrows,Pembina'sSenior Vice President and Chief Financial Officer.

Finally, this quarter saw the implementation of a new organizational structure that reflects the fact thatPembinais an increasingly larger and more diverse company. Accordingly, the Company's financial reporting format has also changed to better align with the new structure. Mr. Dilger commented, "When we considered the future needs of both the Company and the energy industry, it was clear to us that this evolution would best position us for continued success."

New Developments and Growth Projects Update

Pipelines Division

Due to continued strong customer demand for its transportation services,Pembinaannounced today that it is proceeding with its Phase VI Peace Pipeline expansion ("Phase VI") which will include: upgrades at Gordondale,Alberta; a 16-inch pipeline from LaGlace to Wapiti, Alberta and associated pump station upgrades; and a 20-inch pipeline from Kakwa to Lator,Alberta. The approximately$280 millionPhase VI expansion is anticipated to be in service in early 2020, subject to environmental and regulatory approvals;

OnMarch 28,Pembinaannounced that Alliance, in which it owns a 50 percent interest, has commenced a two-month open season for an incremental 400 MMcf/d of firm service capacity commitments through the addition of compression and other facilities. Subject to regulatory and environmental approvals and the results of the open season, the project is expected to be placed into service in the fourth quarter of 2021 for a total capital cost of approximately$2 billion($1 billionnet) and would be backstopped by long-term, take-or-pay contracts;

Pembina, together with Enbridge Income Fund, the other 50 percent owner of Alliance, have announced plans to convert the operation and administration of Alliance into an owner-operator model. The new operating model is expected to be in place by mid-2018 and will have a number of benefits, including creating strategic alignment that will result in improved efficiencies by being part of a larger organization; and

Pembinais continuing to progress its Phase IV and Phase V expansions of its Peace Pipeline system. Both of these projects are tracking on budget and on schedule with an expected in-service date of late 2018.

Facilities Division

As previously announced,Pembinawill construct new fractionation and terminalling facilities at the Company'sEmpress, Albertaextraction plant (the "Empress Expansion") for a total expected capital cost of approximately$120 million. The Empress Expansion includes adding approximately 30,000 barrels per day ("bpd") of propane-plus fractionation capacity as well as the addition of propane rail loading and butane truck terminalling services to the site. Detailed engineering commenced in April with an anticipated in-service date of late 2020, subject to environmental and regulatory approvals. These facilities will provide the Company with increased NGL volumes and market optionality, as well as enhanced propane supply access which could further support the Company'sPrince Rupertexport terminal and proposed propane dehydrogenation and polypropylene production facility;

The Company continues to advance the construction of a 1 million barrel ethane storage facility ("Burstall Ethane Storage") located nearBurstall, Saskatchewanfor a total expected capital cost of approximately$189 million. The Burstall Ethane Storage is underpinned by a 20-year agreement and is tracking on schedule with the expected in-service date of late 2018;

As previously disclosed, onApril 1, 2018,Pembinabecame the operator of the Company's Younger facility, which was operated by its joint interest partner;

Pembinais continuing the development of its liquefied petroleum gas ("LPG") export terminal (the "Prince Rupert Terminal"). The Prince Rupert Terminal is located on Watson Island,British Columbiaand is expected to have a permitted capacity of approximately 25,000 bpd of LPG. The LPG supply will primarily be sourced from the Company'sRedwaterfractionation complex.Pembinacontinues to progress stakeholder consultation, permitting and detailed engineering work. The Prince Rupert Terminal is anticipated to be in service mid-2020, subject to regulatory and environmental approvals;

Veresen Midstream L.P. ("Veresen Midstream"), in whichPembinaowns a 46.2 percent interest, is continuing to progress the development of its North Central liquids hub ("North Central Liquids Hub") which will provide separation and stabilization of condensate volumes to support operations of the Cutbank Ridge Partnership (a third-party exploration and production joint venture) within theMontneyformation. The North Central Liquids Hub is expected to be placed into service in late 2018 and is currently trending under budget and ahead of schedule;

Pembinacontinues to progress construction of its 100 MMcf/d sweet gas shallow cut processing facility, 30,000 bpd condensate stabilization facility and other associated infrastructure located at the Company's Duvernay Complex ("Duvernay II"). The facilities are under 20-year term contracts with a combination of fee-for-service and fixed-return arrangements. The majority of long lead items have been purchased and the project is tracking on budget and on schedule. Subject to regulatory and environmental approvals, which are expected inMay 2018, this project has an expected in-service date of mid-to-late 2019; and

As previously announced, inJanuary 2018, Veresen Midstream, placed its second 200 MMcf/d gross (93 MMcf/d net) Saturn gas processing facility into service ahead of schedule and under budget. In support of the liquids-richMontneyresource play development, Veresen Midstream has placed one billion of cubic feet per day (gross) of gas processing capacity into service over late 2017 and early 2018.

Marketing & New Ventures Division

Canada Kuwait Petrochemical Company ("CKPC") continues to progress front end engineering design ("FEED") for a combined propane dehydrogenation and polypropylene production facility. It is expected that FEED activities will be completed by late 2018, followed by a final investment decision.PembinaandKuwait'sPetrochemical Industries Company K.S.C. ("PIC") are each 50 percent joint venture partners of CKPC; and

Pembinacontinues to progress its proposed liquefied natural gas export terminal inCoos Bay, Oregon, and the related Pacific Connector Gas Pipeline (collectively "Jordan Cove") that will transport natural gas from the Malin Hub in southernOregonto the export terminal.

Corporate

OnMarch 9, 2018,Pembinaclosed its$1 billionnon-revolving term loan ("Term Loan") with certain existing lenders. The Term Loan has been used to partially repay existing amounts drawn underPembina's$2.5 billionrevolving credit facility, thereby providing additional liquidity, flexibility and interest cost savings. The Term Loan has an initial term of three years and is pre-payable at the Company's option. The other terms and conditions of the Term Loan, including financial covenants, are substantially similar toPembina's$2.5 billionrevolving credit facility. Concurrently,Pembinaalso completed an extension of its$2.5 billionrevolving credit facility, which now maturesMay 31, 2023.

OnMarch 26, 2018,Pembinaclosed an offering of$400 millionof senior unsecured Series 10 medium-term notes (the "Series 10 Notes"). The Series 10 Notes have a fixed coupon of 4.02 percent per annum, paid semi-annually, and mature onMarch 27, 2028. Simultaneously,Pembinaclosed an offering of$300 millionof senior unsecured Series 11 medium-term notes (the "Series 11 Notes"). The Series 11 Notes have a fixed coupon of 4.75 percent per annum, paid semi-annually, and mature onMarch 26, 2048. The net proceeds will be used to repay short-term indebtedness of the Company under its credit facilities, as well as to fundPembina'scapital program and for general corporate purposes;

OnMarch 29, 2018, Ruby Pipeline, L.L.C., in whichPembinaowns a 50 percent preferred interest, amended the maturity date of itsUS$203 million364-Day Term Loan, originally maturingMarch 30, 2018, by one year toMarch 29, 2019. The Term Loan will continue to amortize atUS$15.6 millionper quarter (US$7.8 millionper quarter net), beginningMarch 30, 2018, until a final bullet payment ofUS$141 million(US$71 millionnet) is payable on the amended maturity date; and

Subsequent to quarter end onApril 20, 2018Veresen Midstream successfully amended and extended its Senior Secured Credit Facilities that were originally scheduled to mature onMarch 31, 2020. Under the term of the amendment and extension reached with a syndicate of lenders, Veresen Midstream increased its borrowing capacity to$200 millionunder the Revolving Credit Facility and to$2,550 millionof availability under the Term Loan A and used the proceeds to repay an existingUS$705 millionTerm Loan B onApril 30, 2018. Other terms and conditions in the facilities were modified to reflect the operating nature of the business including modifying the covenant package and increasing the permitted distributions out of Veresen Midstream. The maturity date of the two debt facilities was extended toApril 20, 2022.

Changes in Reporting

Given the enhanced scale and scope ofPembina'sbusiness and considering the future needs of both the Company and the energy industry,Pembina'smanagement structure was reorganized, effectiveJanuary 1, 2018, into three Divisions: Pipelines, Facilities and Marketing & New Ventures ("Corporate Reorganization"). Accordingly, the Company's financial reporting format has changed to better align with the new structure.

Pembinaalso adopted IFRS 15 Revenue from Contracts with Customers retrospectively, effectiveJanuary 1, 2018. While this change is not currently expected to have a material impact on annual revenue recognition, it is expected to result in a change in timing for quarterly revenue recognition with lower revenue in the first and second quarters and higher revenue in the third and fourth quarters. For the quarter endingMarch 31, 2018,$30 millionof revenue which would have been recognized in the quarter under previous accounting principles has been deferred as a result of the adoption of the new standard and$1 millionwas recognized in 2018 that under previous accounting policies would have been recognized in 2017.

Financial results reported for all periods commencing on or afterJanuary 1, 2017have been restated to reflect the Corporate Reorganization and adoption of IFRS 15.

Dividends

Declared and paid dividends of$0.18per qualifying common share in January, February andMarch 2018for the applicable record dates;

Declared and paid quarterly dividends per qualifying preferred shares of: Series 1:$0.265625; Series 3:$0.29375; Series 5:$0.3125; Series 7:$0.28125; Series 9:$0.296875; Series 11:$0.359375; Series 13:$0.359375; and Series 21:$0.2819to shareholders of record as ofFebruary 1, 2018. Declared and paid quarterly dividends per qualifying preferred shares of: Series 15:$0.279; Series 17:$0.3125; and Series 19:$0.3125to shareholders of record onMarch 15, 2018; and

First Quarter 2018 Conference Call & Webcast

Pembinawill host a conference call on Friday, May4, 2018 at8:00 a.m. MT(10:00 a.m. ET) for interested investors, analysts, brokers and media representatives to discuss details related to the first quarter 2018 results. The conference call dial-in numbers for Canada and the U.S. are 647-427-7450 or 888-231-8191. A recording of the conference call will be available for replay until May11, 2018 at11:59 p.m. ET. To access the replay, please dial either 416-849-0833 or 855-859-2056 and enter the password 9280599.

A live webcast of the conference call can be accessed onPembina'swebsite at pembina.com under Investor Centre, Presentation & Events, or by entering:

http://event.on24.com/r.htm?e=1586740 & s=1 & k=47B62FC50195DAE9E9D4355E0648F355in your web browser. Shortly after the call, an audio archive will be posted on the website for a minimum of 90 days.

Annual General Meeting of Shareholders

The Company will hold its annual general meeting of shareholders ("AGM") onFriday, May 4, 2018at2:00 p.m. MT(4:00 p.m. ET) at the Telus Convention Centre.

A live webcast ofPembina'sAGM presentation can be accessed onPembina'swebsite atwww.pembina.comunder Investor Centre, Presentation & Events, or by entering:

https://event.on24.com/wcc/r/1586872/3974AF1920923BF05B61AB4F622A26B8in your web browser.

Participants are recommended to register for the webcast at least 10 minutes before the presentation start time.

2018 Investor Day

Pembinawill host an Investor Day onTuesday, May 29, 2018at the Fairmont Royal York Hotel inToronto, Ontario. For parties interested in attending the event, please email [email protected] to request an invitation.

UNAUDITED SUPPLEMENTARY INFORMATION

Three months endingMarch 31, 2018

Financial results reported for all periods commencing on or afterJanuary 1, 2017have been restated to reflect the Corporate Reorganization and adoption of IFRS 15.

Pipelines Division

3 Months Ending March 31

(unaudited)

Conventional
Pipelines

Transmission
Pipelines

Oil Sands

Pipelines

Total

($ millions, except where noted)

2018

2017

2018

2017

2018

2017

2018

2017

Financial Overview

Revenue(3)

257

169

353

244

Operating expenses(3)

Share of profit from equity accounted investees

Realized loss on commodity-related derivative financial instruments

Depreciation and amortization included in operations

Gross profit

168

294

126

Proportionately Consolidated Financial Overview(1)

Revenue Volume(mboe/d)(2)

766

617

584

1,074

1,015

2,424

1,667

Operating Margin(1)(3)

202

115

176

416

165

(1)

Refer to "Non-GAAP Measures".

(2)

Revenue volumes which are physical plus volumes recognized from take-or-pay commitments.

(3)

Includes Inter-Divisional transactions. See note 12 to the Interim Financial Statements.

Facilities Division

3 Months Ending March 31

(unaudited)

Gas Services

NGL Services

Total

($ millions, except where noted)

2018

2017

2018

2017

2018

2017

Financial Overview

Revenue(3)

141

113

188

118

329

231

Net revenue(1)

138

107

110

248

188

Operating expenses(3)

Share of (loss) profit from equity accounted investees

(6)

(5)

Depreciation and amortization included in operations

Gross profit

143

102

Proportionately Consolidated Financial Overview(1)

Revenue Volume(mboe/d)(2)

636

545

206

159

842

704

Operating Margin(1)(3)

130

225

140

(1)

Refer to "Non-GAAP Measures".

(2)

Revenue volumes are physical plus volumes recognized from take-or-pay commitments. Volumes are stated in mboe/d, with natural gas volumes converted to mboe/d from MMcf/d at a 6:1 ratio.

(3)

Includes Inter-Divisional transactions. See note 12 to the Interim Financial Statements.

Marketing & New Ventures Division

3 Months Ending March 31

(unaudited)

Marketing

New Ventures

Total

($ millions, except where noted)

2018

2017(3)

2018

2017(3)

2018

2017(3)

Financial Overview

Revenue

1,254

1,067

1,254

1,067

Cost of goods sold(2)

1,134

928

1,134

928

Net revenue(1)

120

139

120

139

Operating expenses

Share of profit from equity accounted investees

Realized loss on commodity-related derivative financial instruments

Unrealized gain on commodity-related derivative financial instruments

(30)

(53)

(30)

(53)

Depreciation and amortization included in operations

Gross profit

133

146

133

146

Proportionately Consolidated Financial Overview(1)

Total Marketed NGL Volumes(mboe/d)

189

155

189

155

Operating Margin(1)(3)

118

100

118

100

(1)

Refer to "Non-GAAP Measures".

(2)

Includes Inter-Divisional transactions. See note 12 to the Interim Financial Statements.

(3)

Financial results reported for all periods commending on or after January 1, 2017 have been restated to reflect the Corporate Reorganization and adoption of IFRS 15.

INVESTMENTS IN EQUITY ACCOUNTED INVESTEES

Investments in Equity Accounted Investees include:

Pipelines Division

50 percent interest in the Alliance Pipeline ("Alliance");

50 percent convertible preferred interest in the Ruby Pipeline ("Ruby") which entitlesPembinato aUS$91 milliondistribution per year; and

75 percent jointly controlled interest inGrand Valley1 Limited Partnership ("Grand Valley").

Facilities Division

46.2 percent interest (as ofMarch 31, 2018) in Veresen Midstream ("Veresen Midstream"), which owns assets in western Canada serving theMontneygeological play in northwesternAlbertaand northeastern B.C. including gas processing plants and gas gathering pipelines and compression; and

50 percent interest in Fort Saskatchewan Ethylene Storage Limited Partnership and Fort Saskatchewan Ethylene Corporation ("Fort Corp").

Marketing & New Ventures Division

An ownership interest inAux Sable(approximately 42.7 percent in Aux Sable U.S. and 50 percent inAux Sable Canada) (combined, "Aux Sable"), which includes an NGL fractionation facility and gas processing capacity nearChicago, Illinoisand other natural gas and NGL processing facilities, logistics and distribution assets in the U.S. and Canada, as well as transportation contracts on Alliance; and

50 percent interest in Canadian Kuwait Petrochemical Corporation ("CKPC").

Share of Profit and Proportionately Consolidated Operating Margin and Adjusted EBITDA

3 Months Ended March 31, 2018

($ millions)

(unaudited)

Pipelines Division

Facilities
Division

Marketing & New
Ventures Division

Alliance

Ruby

Veresen
Midstream

Aux Sable

Other(2)

Total

Total Volumes, net (mboe/d)(3)

148

349

Operating Margin(1)

206

General and administrative

Adjusted EBITDA(1)

191

Finance costs and other

Depreciation and amortization

Share of earnings in excess of equity interest

(10)

Share of profit (loss) of investments in equity accounted investees

(6)

(1)

Refer to "Non-GAAP Measures".

(2)

Includes interest in Fort Corp, Grand Valley and CKPC.

(3)

Total revenue volumes. Revenue volumes are physical plus volumes recognized from take-or-pay commitments. Volumes are stated in mboe/d, with natural gas volumes converted to mboe/d from MMcf/d at a 6:1 ratio.

Distributions by Investments in Equity Accounted Investees toPembina

(unaudited)

($ millions)

3 Months Ended
March 31, 2018

Alliance

Ruby

Veresen Midstream

Aux Sable

Other(1)

Total Distributions from Investments in Equity Accounted Investees (per Pembina's Consolidated Statement of Cash Flows)

126

(1) Distributions from Fort Corp.

Loans and Borrowings Amortization Schedule of Investments in Equity Accounted Investees

(unaudited)

($ millions)(1)

3 Months
Ended March
31, 2018(2)

Balance of
2018(3)

2019(3)

2020(3)

2021(3)

2022+(3)

Total(3)

Fixed Maturity

Alliance

125

264

584

Ruby(4)

147

306

625

Veresen Midstream

1,048

1,177

Aux Sable

Other

173

333

161

132

1,644

2,443

Revolving

Alliance

106

Veresen Midstream(4)

106

Total

173

333

267

132

1,644

2,549

(1)

Balances reflect Pembina's ownership percentage of the reported balance, translated at CAD$1.2894:US$1.00.

(2)

Balances reflect payments that occurred during the three-month period ended March 31, 2018.

(3)

Balances presented at face value remaining at March 31, 2018.

(4)

Reflects recent changes as described further under "Financing Activity" in the March 31, 2018 MD & A.

AboutPembina

Calgary-based Pembina Pipeline Corporation is a leading transportation and midstream service provider that has been servingNorth America'senergy industry for over 60 years.Pembinaowns an integrated system of pipelines that transport various hydrocarbon liquids and natural gas products produced primarily in western Canada. The Company also owns gas gathering and processing facilities and an oil and natural gas liquids infrastructure and logistics business.Pembina'sintegrated assets and commercial operations along the majority of the hydrocarbon value chain allow it to offer a full spectrum of midstream and marketing services to the energy sector.Pembinais committed to identifying additional opportunities to connect hydrocarbon production to new demand locations through the development of infrastructure that would extendPembina'sservice offering even further along the hydrocarbon value chain. These new developments will contribute to ensuring that hydrocarbons produced in the Western Canada Sedimentary Basin and the other basins wherePembinaoperates can reach the highest value markets throughout the world.

Pembinastrives to provide sustainable, industry-leading total returns for our investors; reliable and value-added services for our customers; a net positive impact to communities; and a safe, respectful, collaborative and fair work culture for our employees.

Pembina'sstrategy is to:

Preserve valueby providing safe, environmentally conscious, cost-effective and reliable services;

Diversifyby providing integrated solutions which enhance profitability and customer service;

Implement Growthby pursuing projects or assets that are expected to generate cash flow per share accretion and capture long-life, economic hydrocarbon reserves; and

Secure Global Marketsby understanding what the world needs, where they need it, and delivering it.

Pembinais structured into three Divisions: Pipelines Division, Facilities Division and Marketing & New Ventures Division.

Pembina'scommon shares trade on theTorontoandNew Yorkstock exchanges under PPL and PBA, respectively. For more information, visitwww.pembina.com.

Forward-Looking Statements and Information

This document contains certain forward-looking statements and information (collectively, "forward-looking statements"), including forward-looking statements within the meaning of the "safe harbor" provisions of applicable securities legislation, that are based onPembina'scurrent expectations, estimates, projections and assumptions in light of its experience and its perception of historical trends. In some cases, forward-looking statements can be identified by terminology such as "continue", "anticipate", "schedule", "will", "expects", "estimate", "potential", "planned", "future" and similar expressions suggesting future events or future performance.

In particular, this document contains forward-looking statements, including certain financial outlook, pertaining to, without limitation, the following:Pembina'scorporate strategy; expectations about commodity pricing and industry activities; dividend increases, further anticipated dividend growth and access to capital; anticipated adjusted EBITDA projections for 2018 and financial performance expectations resulting fromPembina'scapital expenditures; the potential future benefits and impacts of the Veresen Acquisition; planning, construction, capital expenditure estimates, schedules, expected capacity, incremental volumes, in-service dates, rights, activities and operations with respect to planned new construction of, or expansions on existing pipelines, gas services facilities, fractionation facilities, terminalling, storage and hub facilities, facility and system operations and throughput levels; anticipated synergies between assets under development, assets being acquired and existing assets of the Company; the future level and sustainability of cash dividends thatPembinaintends to pay its shareholders, including the expected future cash flows and the sufficiency thereof.

The forward-looking statements are based on certain assumptions thatPembinahas made in respect thereof as at the date of this news release regarding, among other things: oil and gas industry exploration and development activity levels and the geographic region of such activity; the success ofPembina'soperations and growth projects; prevailing commodity prices and exchange rates and the ability ofPembinato maintain current credit ratings; the availability of capital to fund future capital requirements relating to existing assets and projects; future operating costs; geotechnical and integrity costs; that any third-party projects relating toPembina'sgrowth projects will be sanctioned and completed as expected; that any required commercial agreements can be reached; that all required regulatory and environmental approvals can be obtained on the necessary terms in a timely manner; that counterparties will comply with contracts in a timely manner; that there are no unforeseen events preventing the performance of contracts or the completion of the relevant facilities; that there are no unforeseen material costs relating to the facilities which are not recoverable from customers; prevailing interest and tax rates; prevailing regulatory, tax and environmental laws and regulations; maintenance of operating margins; the amount of future liabilities relating to lawsuits and environmental incidents; and the availability of coverage underPembina'sinsurance policies (including in respect ofPembina'sbusiness interruption insurance policy).

AlthoughPembinabelieves the expectations and material factors and assumptions reflected in these forward-looking statements are reasonable as of the date hereof, there can be no assurance that these expectations, factors and assumptions will prove to be correct. These forward-looking statements are not guarantees of future performance and are subject to a number of known and unknown risks and uncertainties including, but not limited to: the regulatory environment and decisions; the impact of competitive entities and pricing; labour and material shortages; reliance on key relationships and agreements; the strength and operations of the oil and natural gas production industry and related commodity prices; non-performance or default by counterparties to agreements whichPembinaor one or more of its affiliates has entered into in respect of its business; actions by governmental or regulatory authorities including changes in tax laws and treatment, changes in royalty rates, climate change initiatives or policies or increased environmental regulation; the failure to realize the anticipated benefits or synergies of acquisitions due to the factors set out herein, integration issues or otherwise; fluctuations in operating results; adverse general economic and market conditions inCanada,North Americaand worldwide, including changes, or prolonged weaknesses, as applicable, in interest rates, foreign currency exchange rates, commodity prices, supply/demand trends and overall industry activity levels; ability to access various sources of debt and equity capital; changes in credit ratings; counterparty credit risk; technology and cyber security risks; and certain other risks detailed from time to time inPembina'spublic disclosure documents available atwww.sedar.com,www.sec.govand throughPembina'swebsite atwww.pembina.com.

This list of risk factors should not be construed as exhaustive. Readers are cautioned that events or circumstances could cause results to differ materially from those predicted, forecasted or projected. The forward-looking statements contained in this document speak only as of the date of this document.Pembinadoes not undertake any obligation to publicly update or revise any forward-looking statements or information contained herein, except as required by applicable laws. Readers are cautioned that management ofPembinaapproved the financial outlook contained herein as of the date of this press release. The purpose of the 2018 Adjusted EBITDA projection is to provide investors with an indication of the value toPembinaof capital projects that have been and will be brought into service in 2018, and the closing of the acquisition of Veresen on 2018 full-year financial results. Readers should be aware that the information contained in the financial outlook contained herein may not be appropriate for other purposes. The forward-looking statements contained in this document are expressly qualified by this cautionary statement.

Non-GAAP Measures

In this news release,Pembinahas used the terms net revenue, operating margin, adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA), cash flow from operating activities per common share, adjusted cash flow from operating activities per common share, which do not have any standardized meaning under IFRS ("Non-GAAP Measures"). Since Non-GAAP financial measures do not have a standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other companies, securities regulations require that Non-GAAP financial measures are clearly defined, qualified and reconciled to their nearest GAAP measure. These Non-GAAP measures are calculated and disclosed on a consistent basis from period to period. Specific adjusting items may only be relevant in certain periods. The intent of Non-GAAP measures is to provide additional useful information respectingPembina'sfinancial and operational performance to investors and analysts and the measures do not have any standardized meaning under IFRS. The measures should not, therefore, be considered in isolation or used in substitute for measures of performance prepared in accordance with IFRS.

Non-GAAP Proportionate Consolidation of Investments in Equity Accounted Investees Results

In accordance with IFRS,Pembina'sjointly controlled investments are accounted for using equity accounting.Under equity accounting, the assets and liabilities of the investment are net into a single line item on the Consolidated Statement of Financial Position, Investments in Equity Accounted Investees. Net earnings from Investments in Equity Accounted Investees are recognized in a single line item in the Consolidated Statement of Earnings and Comprehensive Earnings, Share of Profit of Investments in Equity Accounted Investees. Cash contributions and distributions from Investments in Equity Accounted Investees representPembina'sproportionate share paid and received in the period to and from the equity accounted investment.

To assist the readers' understanding and evaluation of the performance of these investments,Pembinais supplementing the IFRS disclosure with Non-GAAP disclosure ofPembina'sproportionately consolidated interest in the Investments in Equity Accounted Investees.Pembina'sproportionate interest in Investments in Equity Accounted Investees has been included in operating margin, Adjusted EBITDA and other reconciling line items to IFRS. A reconciliation of operating margin and Adjusted EBITDA to Share of profit of investments in equity accounted investees can be found under the heading "Proportionately Consolidated Results by Investments in Equity Accounted Investees".

Other issuers may calculate these Non-GAAP measures differently. Investors should be cautioned that these measures should not be construed as alternatives to revenue, earnings, cash flow from operating activities, gross profit or other measures of financial results determined in accordance with GAAP as an indicator ofPembina'sperformance. For additional information regarding Non-GAAP measures, including reconciliations to measures recognized by GAAP, please refer toPembina'smanagement's discussion and analysis for the period ended March31, 2018, which is available online atwww.sedar.com,www.sec.govand throughPembina'swebsite atwww.pembina.com.

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