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News Releases

Pembina Generates Stable Second Quarter Results and Closes Cutbank Complex Acquisition

    CALGARY, July 29 /CNW/ - Pembina Pipeline Income Fund ("Pembina" or the
"Fund"), (TSX: PIF.UN, PIF.DB.B), announced today its financial and operating
results for the three and six month periods ended June 30, 2009.

    Highlights

    -   The Fund distributed $0.39 per Trust Unit during the second quarter
        of 2009 for total cash distributions of $57.5 million, a 20 percent
        increase over the same period of 2008. Since the Fund's inception,
        Pembina has distributed a total of $1.3 billion to Unitholders, or
        $13.06 per Trust Unit, on a $10.00 per Trust Unit original issue
        price.

    -   Pembina generated net earnings of $36.2 million during the quarter
        and $64.5 million year-to-date, compared to $42.1 million and
        $74.7 million over the comparable periods of 2008. Excluding the
        after tax gain on sale of linefill of $14.7 million included in the
        six months ended June 30, 2008, net earnings increased 7.5 percent
        during the six months ended June 30, 2009.

    -   Pembina's Conventional Pipelines business unit contributed
        $38.5 million in net operating income during the second quarter of
        2009 and $72.2 million year-to-date, as compared to $37.7 million and
        $77.6 million, respectively, for the same periods of 2008.

    -   The Oil Sands & Heavy Oil Infrastructure unit generated $20.9 million
        and $41.8 million in net operating income during the second quarter
        and first half of 2009, compared to $8.9 million and $18.5 million
        during the same periods of 2008.

    -   Midstream & Marketing contributed $23.1 million in net operating
        income (excluding contribution from Pembina's recently acquired gas
        gathering and processing facilities) during the second quarter of
        2009, compared to $25.4 million during the same quarter of 2008.
        Year-to-date operating income of $40.4 million compares to
        $47.1 million for the first six months of 2008.

    -   Pembina announced on June 2, 2009 that Pembina Gas Services Limited
        Partnership, a newly formed subsidiary of Pembina, had successfully
        closed the acquisition of the Cutbank Complex gas gathering and
        processing facilities in the amount of $296.3 million. See "New
        Developments and Outlook" for further information.


    Results from Operations

    -------------------------------------------------------------------------
    HIGHLIGHTS(1)      3 Months  3 Months         6 Months  6 Months
    (in millions of       Ended     Ended            Ended     Ended
     dollars, except    June 30,  June 30,    %    June 30,  June 30,    %
     where noted)          2009      2008  Change     2009      2008  Change
    -------------------------------------------------------------------------
    Average throughput
     - conventional
     (mbbls/d)            406.8     433.4    (6.1)   414.3     446.2    (7.1)
    Contracted capacity
     - oil sands
     (mbbls/d)            775.0     525.0    47.6    775.0     525.0    47.6
    Total throughput
     and contracted
     volumes (mbbls/d)  1,181.8     958.4    23.3  1,189.3     971.2    22.5
    Capital
     expenditures         308.2      88.1   249.8    341.1     183.3    86.1
    Revenue               185.5     181.5     2.2    343.5     324.2     6.0
    Product purchases      64.4      76.2   (15.5)   106.3     112.6    (5.6)
    Operating expenses     35.8      33.3     7.5     79.9      68.4    16.8
    Net operating
     income(2)             85.3      72.0    18.5    157.3     143.2     9.8
    General &
     administrative
     expense               12.4       9.7    27.8     23.3      19.1    22.0
    Interest expense
     on long-term debt     11.5       8.3    38.6     21.8      16.5    32.1
    Net earnings           36.2      42.1   (14.0)    64.5      74.7   (13.7)
    Cash flow
     from operations       49.2      68.2   (27.9)    90.4     127.3   (29.0)
    EBITDA(2)              70.2      77.1    (8.9)   130.0     136.0    (4.4)
    Cash distributions
     to Unitholders        57.5      47.9    20.0    110.7      95.7    15.7
      $ Per Trust Unit    $0.39     $0.36     8.3    $0.78     $0.72     8.3
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) The second quarter 2009 Interim Report to Unitholders reports
        unaudited results of the Fund for the three and six months ended
        June 30, 2009 and comparative to unaudited results for the three and
        six months ended June 30, 2008.

    (2) Refer to "Non-GAAP Measures" below.

    Conventional Pipelines

    Pembina's extensive network of pipelines in Alberta and BC provides safe,
dependable, and cost effective transportation service to customers in Western
Canada. The conventional pipeline business unit represents Pembina's
traditional core business. These strategically located pipeline assets are
expected to generate stable and predictable cash flows.
    During the three months ended June 30, 2009, Pembina's conventional
pipelines collectively transported an average of 406,800 bbls/d, a reduction
of 6 percent from the comparable period in 2008.
    Pembina's conventional systems generated revenue of $63.7 million and
$129.8 million during the second quarter and first six months of 2009,
respectively, compared to $63.0 million and $130.1 million in the same periods
of 2008. The Alberta systems generated revenue of $56.2 million during the
quarter and $112.8 million for the first half of the year consistent with the
same periods of 2008.
    The Alberta pipelines transported an average of 387,700 bbls/d during the
second quarter, 6 percent lower than volumes transported during the second
quarter of 2008. Higher volumes on the Peace and Swan Hills systems were
offset by lower throughputs on the Drayton Valley system, resulting from
reduced Nisku production. Pembina expects that as crude oil prices stabilize,
resumption of drilling activity in the Nisku area may improve, assisting the
normalization of throughputs on the Drayton Valley system. Pembina will
continue to focus on the management of operating costs to maintain margins on
its conventional systems.
    Average revenue per barrel on the Alberta systems of $1.56 during the
second quarter was up 10 cents per barrel from the average for the same period
of 2008. Average revenue per barrel on the BC systems increased by 4 cents per
barrel from the same period of 2008 to $1.95 per barrel.
    The conventional systems contributed $38.5 million in net operating
income during the second quarter 2009 compared to $37.7 million for the same
quarter of the prior year. Net operating income totaled $72.2 million for the
first six months of 2009 and $77.6 million for the comparable period in 2008,
a 7 percent decline, primarily due to increased operating costs.
    Pembina continues to invest capital in its assets to help ensure safety
and reliability. During the second quarter of 2009, Pembina invested capital
of approximately $13.1 million, which was focused on new connections and
upgrades on the conventional systems. Pembina expects that these new
connections, when fully commissioned, will provide incremental volumes and
revenue to Pembina's conventional systems, consistent with historical metrics.

    Oil Sands & Heavy Oil Infrastructure

    Pembina has 775,000 barrels per day of fully contracted crude oil
transportation capacity in three distinct pipelines serving customers in the
Athabasca oil sands region. Pembina's oil sands assets, the Syncrude Pipeline,
Cheecham Lateral, and Horizon Pipeline, operate under long-term, extendible
contracts that provide for the flow through of Pembina's operating costs to
shippers. Operating income generated by these assets is related to invested
capital and is not sensitive to fluctuations in costs or capacity utilization.
    The Syncrude Pipeline, Cheecham Pipeline, and Horizon Pipeline continue
to produce consistent results, generating net operating income of $8.4
million, $0.8 million, and $11.6 million, respectively, during the second
quarter.

    Midstream & Marketing Business

    Pembina's Midstream & Marketing business segment is comprised of its 50
percent non-operated interest in the Fort Saskatchewan Ethylene Storage
Facility, the Cutbank Complex gas gathering and processing facilities, and its
wholly-owned terminalling, storage and hub services operated on several of its
conventional pipeline systems.
    The Midstream & Marketing business recorded revenue of $25.5 million
during the second quarter of 2009, net of product purchases and excluding $4.4
million in revenue contributed by the Cutbank Complex. This compares to $27.6
million in revenue for the same period of 2008. Factors influencing the
results of this business include market conditions and the volume of product
receipts on single shipper assets. During the second quarter of 2009, the
impact of a decline in throughputs on the pipeline systems on which midstream
activities are conducted offset incremental revenue contributed by expanded
service offerings at two truck terminals on the Peace system.
    Pembina expects that its 50 percent interest in the fully contracted Fort
Saskatchewan Ethylene Storage Facility will generate stable, long-term returns
that are independent of capacity utilization and operating expenses.
    Operating expenses for the Midstream & Marketing business for the second
quarter of 2009 of $4.0 million have increased from the prior year as the
result of the ongoing expansion of this business unit and the inclusion of
$1.6 million for Cutbank Complex expense.
    Capital expenditures during the second quarter of $15.8 million were
primarily related to the expansion of the Peace and Drayton Valley truck
terminal facilities and the development of the Namao terminal. An additional
$274.0 million in capital was expended on the acquisition of the Cutbank
Complex.
    Pembina entered into the gas services business in May, 2009, with the
strategic acquisition of the Cutbank Complex. The Cutbank Complex is comprised
of three gas plants (the Cutbank, Musreau and Kakwa gas plants), and related
assets. The Cutbank gas plant and the Musreau gas plant are 100 percent and 86
percent owned, respectively, and operated by Pembina, and the Kakwa gas plant,
in which Pembina has a 50 percent interest, is operated by a third party.
    Pembina expects results generated by the Cutbank Complex to contribute
additional fee-for-service revenue to the Midstream & Marketing business unit,
and to assist in further diversifying the sources of revenues and stabilizing
revenues on a go-forward basis. See "Risk Factors" and "Forward-Looking
Statements and Information" in the Management's Discussion and Analysis (the
"MD&A") and "Forward-Looking Statements and Information" below.

    Cash Distributions

    During the second quarter of 2009, the Fund declared distributions of
$0.39 per Trust Unit, or $57.5 million in aggregate, compared to $0.36 per
Trust Unit, or $47.9 million in aggregate, paid in the second quarter of 2008.
Under Canadian tax laws, a component of the Fund's cash distributions are
taxable in the hands of the Unitholder, with the remaining portion a return of
capital, unless held in a tax-deferred account. Pembina estimates that 75
percent of the distributions declared in 2009 will be taxable and 25 percent
will be a return of capital for Canadian tax purposes. For purposes of
calculating the capital gains upon disposition of the Trust Units, the amount
considered a return of capital will reduce the Unitholders' adjusted cost base
of each Trust Unit for Canadian tax purposes. Pembina's distributions are
subject to current domestic tax laws which require a withholding tax from
distribution income to non-residents of Canada.
    Pembina generated $0.4124 per Trust Unit in distributable cash during the
second quarter of 2009.
    Pembina believes that it is well positioned to maintain its current level
of cash distributions to Unitholders through 2013, despite becoming a taxable
entity in 2011. Attractive fundamentals within each of Pembina's three
business units combined with a strong inventory of organic growth
opportunities continue to support this positive outlook.

    Liquidity and Capital Resources

    The Fund's credit facilities at June 30, 2009 consisted of an unsecured
$500 million revolving credit facility due July, 2012. During the second
quarter, Pembina also obtained an unsecured $150 million non-revolving credit
facility due December, 2010, which was used to partially fund the Cutbank
Complex transaction. In addition, Pembina recently increased its operating
facility to $50 million from $30 million, which matures July, 2010. There are
no repayments due over the term of either facility. At June 30, 2009, Pembina
had $571.2 million drawn leaving $128.8 million of undrawn capacity on the
$700 million of established bank facilities. Borrowings bear interest at
either prime lending rates or bankers' acceptances, plus applicable margins.
The margins are based on the credit rating of the senior unsecured debt of
Pembina Pipeline Corporation and range from zero percent to 2.75 percent.
Other debt includes $76.9 million in fixed rate Senior Secured Notes due 2017,
$175 million in fixed rate Senior Unsecured Notes due 2014, and $200 million
in fixed rate Senior Unsecured Notes due 2021. In the second quarter, the Fund
negotiated a 5 year unsecured non-revolving credit facility from a Canadian
chartered bank in the aggregate amount of $75 million at a fixed rate of 6.16
percent. On May 20, 2009 Pembina borrowed $75 million under the new facility
and on June 22, 2009 used such funds to repay in full the outstanding
principal of its Floating Rate Senior Notes, which were due in June, 2009. At
June 30, 2009, Pembina had long-term debt (excluding deferred financing fees)
of $1,081.3 million. This long-term debt, together with $39.7 million of
outstanding convertible debentures, resulted in a ratio of total debt to total
enterprise value of 33.4 percent compared to a ratio of 32.1 percent at
December 31, 2008. See "Non-GAAP Measures" below.
    During the second quarter, $9.7 million in net debt financing costs were
recorded.
    Pembina's acquisition financing to fund the Cutbank Complex transaction
also consisted of, in part, a $150 million equity bridge facility, which was
subsequently cancelled upon the closing of the bought deal financing on May
20, 2009, for net proceeds of $156.8 million.

    Conference Call & Webcast

    Pembina will host a conference call and webcast today, Wednesday, July
29, at 2:00 pm MT (4:00 pm ET), for interested investors, analysts, brokers
and media representatives to discuss the second quarter financial and
operating results.
    The conference call dial-in number is 416-644-3427 or 800-595-8550. A
recording of the conference call will be available for replay until Wednesday,
August 5, 2009 at 11:59 PM ET. To access the replay, please dial either
416-640-1917 or 877-289-8525 and enter the passcode 21310775 followed by the
pound key.
    A live webcast of the conference call can be accessed on Pembina's
website at www.pembina.com under "Investors", "Calendar of Events."
Immediately following the call, an audio archive will be posted on the website
for 90 days.

    MD&A, Financial Statements & Notes

    The Fund's management's discussion and analysis, consolidated financial
statements and notes for the period ended June 30, 2009, provide a detailed
explanation of Pembina's operating results for the three and six month periods
ended June 30, 2009 as compared to the three and six month periods ended June
30, 2008. These documents are posted at www.pembina.com and at www.sedar.com.

    Forward-Looking Information and Statements

    This news release contains certain forward-looking information and
statements ("forward looking statements") that are based on the Fund's and
Pembina's current expectations, estimates, projections and assumptions in
light of its experience and its perception of historical trends. In this news
release, such forward-looking information and statements can be identified by
terminology such as "will", "expects", "planned", "believe", "estimate",
"ensure", "projects", "expansion", and similar expressions.
    In particular, this news release contains forward-looking statements,
including certain financial outlook, regarding the possible conversion of
Pembina to a corporate form in the latter half of 2010 and the ability of
Pembina to maintain its current level of cash distributions to its equity
holders both prior to and for the foreseeable future after conversion, the
performance of the Cutbank Complex, the continued normalization of Pembina's
results from operations (including in relation to the Midstream & Marketing
Business), ongoing utilization and expansions of and additions to Pembina's
asset base, growth and growth potential in Pembina's conventional pipelines,
oil sands & heavy oil infrastructure and midstream & marketing and gas
services operations, potential revenue and cash flow enhancement, future cash
flows, maintenance of operating margins, and additional throughput potential
on additional connections and other initiatives on the conventional system.
These forward-looking statements are being made by Pembina based on certain
assumptions that Pembina has made in respect thereof as at the date of this
document including those discussed under the section entitled "Forward-Looking
Statements and Information" in the MD&A.
    None of the forward-looking statements described above are guarantees of
future performance and they are all subject to a number of known and unknown
risks and uncertainties, including but not limited to: the impact of
competitive entities and pricing, approvals by industry partners, reliance on
key alliances and agreements, activities of and decisions made by third
parties, non-performance of the transportation agreements in accordance with
their terms, the strength and operations of the oil and natural gas production
industry and related commodity prices, the regulatory environment and
decisions and the inability to obtain required regulatory approvals on
satisfactory terms or at all, tax laws and treatment, fluctuations in
operating results, the ability of Pembina to raise sufficient capital (or to
raise capital on favourable terms) to complete future projects and satisfy
future commitments, construction delays and labour and material shortages, and
certain other risks detailed from time to time in the Fund's public disclosure
documents including, among other things, those detailed under the heading
"Risk Factors" in the Fund's annual information form for the year ended
December 31, 2008 and the Fund's management's discussion and analysis for the
year ended December 31, 2008, each of which can be found under the Fund's
SEDAR profile at www.sedar.com.
    Accordingly, readers are cautioned that events or circumstances could
cause results to differ materially from those predicted, forecasted or
projected. Such forward-looking statements are expressly qualified by the
above statements. The Fund does not undertake any obligation to publicly
update or revise any forward-looking statements contained herein, except as
required by applicable laws. Management of the Fund approved the financial
outlook contained herein as of the date of this news release. The purpose of
the financial outlook contained herein is to give the reader an indication of
the potential effects to Unitholders of a possible conversion of Pembina to
corporate form. Readers should be aware that the information contained in the
financial outlook contained herein may not be appropriate for other purposes.
    All dollar values are expressed in Canadian dollars unless otherwise
noted.

    Non-GAAP Financial Measures

    Throughout this news release and the MD&A, the Fund and Pembina use the
term "distributable cash" to refer to the amount of cash that is to be
available for distribution to the Fund's Unitholders. Distributable cash is
used as a financial measure as it adjusts cash flow from operations for timing
differences in non-cash working capital and for non-cash items charged to
earnings that the Fund considers to be unavailable for distribution.
"Distributable cash" is not a measure recognized by Canadian generally
accepted accounting principles (GAAP). Therefore, distributable cash of the
Fund may not be comparable to similar measures presented by other issuers, and
investors are cautioned that distributable cash should not be construed as an
alternative to net earnings, cash flow from operations or other measures of
financial performance calculated in accordance with GAAP as an indicator of
the Fund's performance.
    Further, the use of terms "distributed cash" (the amount of cash that has
been or is to be available for distribution to Unitholders),"EBITDA" (earnings
before interest, taxes, depreciation and amortization), "net operating income"
(revenues less operating expenses and product purchases), "payout ratio" (the
Fund's cash distributions to Unitholders divided by its distributable cash)
and "enterprise value" (the Fund's market capitalization plus long-term debt)
are not recognized under Canadian GAAP. Management believes that, in addition
to earnings, distributed cash EBITDA, net operating income, payout ratio and
enterprise value are useful measures. They provide an indication of the
results generated by the Fund's business activities prior to consideration of
how activities were financed, how the results are taxed and measured and, in
the case of enterprise value, the aggregate value of the Fund. Investors
should be cautioned, however, that distributed cash EBITDA, net operating
income, payout ratio and enterprise value should not be construed as an
alternative to net earnings, cash flows from operating activities or other
measures of financial performance determined in accordance with GAAP as an
indicator of the Fund's performance. Furthermore, these measures may not be
comparable to similar measures presented by other issuers.

For further information: Glenys Hermanutz, Vice President, Corporate
Affairs, Pembina Pipeline Corporation, (403) 231-7500, 1-888-428-3222, e-mail:
investor-relations@pembina.com