ANNOUNCES $500 MM PUBLIC NOTE OFFERING
09 Aug 16
On August 8, 2016, Pembina announced it has agreed to issue $500 mm of 10-year senior unsecured mediumterm notes, which have a fixed coupon of 3.71% per annum, paid semi-annually, and mature on August 11, 2026. Pembina had previously stated that it planned to raise ~$950 mm in term debt in 2016/17, and this is its first major note issue of 2016. Management expects the offering to close on August 11, 2016
2Q16 EPS $0.25 (FCCe: $0.31, consensus: $0.29)
08 Aug 16
Pembina’s 2Q16 performance was marginally below estimates as low commodity prices continue to be the area of weakness for Pembina, though the Company is committed to employing long-term, fee-for-service contracts on its current and future assets to limit exposure. Year-to-date, Pembina has placed over $1 bn of new assets into service, including the RFS II fractionator, the Musreau III gas plant, and the Resthaven gas plant expansion. We have elected to maintain our Market Perform ranking and 12-MTP of $40.00/ share.
2Q16 EPS $0.25 (FCCE: $0.31, CONSENSUS: $0.29)
05 Aug 16
Impact: Neutral to slightly negative. Pembina's 2Q16 performance was marginally below most estimates but down y/y, despite improved volumes. The low commodity prices continue to be the area of weakness for Pembina, though the Company is committed to employing long-term, fee-for-service contracts on its current and future assets to limit exposure. Year to date, the company has placed over $1 bn of new assets into service, including the RFS II fractionator, the Musreau III gas plant and the Resthaven gas plant expansion.
Downgrading Pembina On Price Appreciation, Financial Outlook, Positive View of Strategy Unchanged
31 May 16
We are downgrading Pembina Pipeline after the most recent price appreciation (+28% YTD) as our estimated 12-month total return is now under 10%. Our outlook for Pembina’s financials and capex is unchanged, and we still expect its Montney/Duvernay region focus will prove to be the correct strategy in the next decade. The Company is moving to a fee-for-service business model that should see >100% of all distributions coming from fee-for-service businesses, leaving no dividend risk attached to commodity-exposed cash flows. Valuation: we use a dividend discount model (DDM, r=7%, no terminal growth rate post 2021) for our $40/share valuation.
DOUBLES DOWN ON THE DUVERNAY WITH NEW $130 MM INVESTMENT
31 May 16
On May 31, 2016, Pembina announced that it had contracted with an investment grade multinational company to build pipeline and field condensate handling systems for its previously-announced Duvernay I gas plant, which is still under construction. In addition, Pembina also signed a gas processing agreement that will fill the Duvernay I plant's gas handling capacity. In order to attract future potential gas processing customers in the region, Pembina has begun preliminary engineering on a possible Duvernay II gas plant.
PEMBINA PIPELINE CORPORATION (PPL): 1Q16 EPS $0.23 (FCCE: $0.29, CONSENSUS: $0.30), EBITDA $269 MM (FCCE/CONSENSUS: $272 MM)
05 May 16
Impact of the 1Q16 results: Neutral. Pembina's 1Q16 performance was in line with most estimates but up y/y due to record volumes. The low commodity prices continue to be the area of weakness for the midstreamer, though the Company is committed to employing long-term, fee-for-service contracts on its current and future assets to limit exposure. Year to date, the company has commissioned $760 mm of its capital growth, including its RFS II fractionator.
Announces Farm-in Agreements with Ecopetrol and Neutral 1Q16 Operational Update
28 Apr 16
Pembina has successfully closed its offering of 10,000,000 cumulative redeemable minimum rate reset Class A preferred shares, Series 13, for gross proceeds of $250mm. The Company received regulatory approval from the Alberta Energy Regulator for a significant portion of the overall $2.4 billion Phase III Expansion program. Pembina has closed the acquisition of the Kakwa sour natural gas processing plant and other assets from Paramount Resources for $556 mm in an all-cash deal plus various future commitments. Due to the immaterial impact of the recent announcements on our model, we maintain a 12-month target p
Hosts 2016 Investor Day and Proposes Polypropylene Facility in Alberta
12 Apr 16
At Pembina’s 2016 Investor Day, Management reiterated its commitment to employing long-term, fee-for-service contracts on its current and future assets, while vertically integrating assets to improve the value chain. We believe this is an appropriate model and will bode well for Pembina in the coming years. Pembina outlined its investment criteria; we believe the Company focuses most on mitigating risk, ensuring technical feasibility and ensuring customer profitability and longevity. The Company has interconnected infrastructure between conventional oil, heavy oil, NGL pipelines, storage and downstream markets, and plans to further expand its complementing infrastructure. We maintain our 12-month target price of $40.00/share and Outperform ranking.
PEMBINA PIPELINE CORPORATION (PPL) AND KUWAIT'S PIC EVALUATE INTEGRATED POLYPROPYLENE FACILITY IN ALBERTA
11 Apr 16
Impact: Positive. Pembina has access to the largest supply of propane in the WCSB and is logistically situated with current infrastructure to support the facility. Pembina is creating a market for locally sourced propane and expects to benefit from its vertically integrated propane position with over 200,000 barrels per day of fractionation capacity. The facility will provide Pembina with optionality with its propane to either export it or use it as feedstock for the production of polypropylene. Pembina should also benefit from PIC's experience as a polypropylene producer in Kuwait.
Midstream Acquisition Announcement; Closure of equity Financing; dividend Raise
29 Mar 16
Pembina agreed to acquire the Kakwa sour natural gas processing plant and other assets from Paramount Resources Ltd. (POU) for $556 mm in an all-cash deal plus various future commitments. To help fund the acquisition, the Company’s $345 mm bought deal equity financing closed on March 29, 2016, including a fully exercised over-allotment option. Pembina is increasing its monthly dividend by 4.9% to $0.16 per common share as a result of the accretive transaction. We have maintained our 12-month target price of $40.00/share and our Outperform ranking.
ANNOUNCES REGULATORY UPDATE FOR PHASE III PIPELINE EXPANSION
17 Mar 16
Impact: Negative. Though the Company is confident that the Court will come to the same conclusion as the regulating body, the application could delay the project timeline and create some minor uncertainty of the project being granted full approval. We believe Pembina is at little risk of denial for the project as it has jumped through the hoops to gain approval and adhered to the project stakeholder's concerns by providing routing alternatives. If the Court rules in the Alexander First Nation's favour, Pembina will have to pursue alternate routes, delaying the project and incurring the expenses that coincide with changing Phase III's plan. According to Pembina's most recent disclosure, they still believe that the project should be in service by mid-2017.
EPS $0.32 (FCCe $0.39, consensus $0.32), EBITDA $260 mm (FCCe $296 mm, consensus $269 mm)
29 Feb 16
Pembina’s operating margin in the quarter was $304 mm (FCCe $315 mm), up 56% y/y as a result of increased contributions from the conventional pipelines and midstream business. Pembina will be commissioning a large portion of its secured projects in its 2016 capital program of $2.1 billion. The Company also plans to move toward bringing $5.3 billion of growth projects into service by the end of 2017, which should add $600 mm to $950 mm of incremental run-rate EBITDA. Pembina’s largest growth project, the Phase 3 crude oil pipeline expansion, has progressed on time and on budget and is expected to come online in 2017. Management commented on the conference call that its $2 billion credit facility is completely undrawn and the Company has a $37 mm cash balance, implying sufficient coverage and flexibility to fund the capital program.
Pembina Issues $170 mm in Preferred Shares; Sets Up for $3.1 billion Capital Outlay
18 Jan 16
Our 12-month target price is based on our dividend discount model (DDM) which uses a 7% discount rate. We maintain our $40.00 12-month target price and our Outperform ranking. If our dividend outlook is correct, the market is using a 10% dividend discount on Pembina; this matches what we are seeing the market apply to other yield companies such as Brookfield Renewable (which has no oil price exposure).
Announces 2016 Capital Program of $2.1 Billion
01 Dec 15
Pembina announced that its Board of Directors has approved a record capital budget plan for 2016 of $2.1 billion, in line with our $2.2 billion estimate. The budget will be deployed on various multi-year projects, which are largely underpinned by long-term, fee-for-service contracts; 65% of the budget will be directed towards its Conventional Pipeline division. We expect the capital program will be fully financed by Pembina’s recent $460 mm share issue plus cash flows and debt capacity.
ANNOUNCES 2016 CAPITAL PROGRAM OF $2.1 BILLION
30 Nov 15
Pembina announced that its Board of Directors has approved a record capital budget plan for 2016 of $2.1 billion, in line with our $2.2 billion estimate. The budget will be deployed on various multi-year projects, which are largely underpinned by long-term, fee-for-service contracts; 65% of the budget will be directed towards its Conventional Pipeline division. We expect the capital program will be fully financed by Pembina's recent $460 mm share issue plus cash flows and debt capacity.
PLACES $650 MILLION OF NEW ASSETS INTO SERVICE AND PROVIDES PROJECT UPDATES
02 Sep 15
On September 2, after market close, Pembina announced that it had commissioned $650 million of new assets within its Gas Services and Conventional Pipeline businesses. Pembina also included an update on growth projects that are on-going across the Company.
Frac Spread Forecast Update - NGL Price Environment and New Price Forecast
31 Aug 15
The cut to our crude oil price estimates has also caused us to revise our NGL price forecasts. However, these revisions do not have a material impact on our corporate cash flow estimates for our Energy Infrastructure coverage list.
PEMBINA PIPELINE CORPORATION (PPL) ANNOUNCES REDEMPTION OF SERIES C AND E CONVERTIBLE DEBENTURES
27 Aug 15
On Thursday, August 27, before market open, Pembina announced that it has issued notices of redemption to holders of its Series C 5.75% convertible unsecured subordinated debentures and its Series E 5.75% convertible unsecured subordinated debentures by redeeming the entire outstanding principal, $251,521,000, on October 13, 2015. Pembina intends to redeem the debentures by issuing common shares, shoring up the balance sheet by converting debt into equity.
2Q15 FFO $186 mm (FCCe $179 mm, Consensus $170 mm)
12 Aug 15
After second quarter reporting, we have maintained our 12-month target price of $47.00/share and Outperform ranking on Pembina Pipeline. Our target price is based on our dividend discount model (DDM) and a required return of 6%. We expect that Pembina will next raise its dividend by 4.5% with the July 2016 dividend, and note our DPS estimates for FY2017 and FY2018 are both within 2% of consensus.
PEMBINA PIPELINE CORPORATION (PPL) INCREASING HORIZON OIL SANDS PIPELINE CAPACITY TO 250 MBBL/D FOR $125 MM
04 Jun 15
Pembina announced that it will be expanding the capacity of its Horizon Pipeline (which serves the Canadian Natural Resources Horizon Oil Sands Project) to 250,000 bbl/d of total capacity. Pembina expects to have the expansion on by mid-2016 for a cost of $125 mm; the project involves adding pumping capacity and no new pipeline.
1Q15 EPS $0.32 (FCC $0.24/Consensus $0.26)
12 May 15
Impact: Positive. Pembina’s results were ahead of FirstEnergy/consensus expectations. However, its flagship Redwater fractionator project has been delayed by one quarter. We maintain our $47.00/share target price and our Outperform ranking on Pembina.