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News Releases

Pembina Pipeline Income Fund generates record financial and operational results during 2008

    The following news release is supplementary to, and should be read in
    conjunction with, Pembina's audited consolidated financial statements for
    the years ended December 31, 2008 and 2007, and the accompanying
    management's discussion and analysis. These documents are available at
    www.sedar.com and at Pembina's website at www.pembina.com. All amounts
    are stated in Canadian dollars unless otherwise specified.

    CALGARY, March 4 /CNW/ - Pembina Pipeline Income Fund ("Pembina" or the
"Fund") released its 2008 financial results today. Strong operational
performance across its businesses generated year-over-year increases in
revenue, cash flow, earnings and cash distributions.
    Cash flow from operations totaled $219.9 million during 2008 ($1.64 per
Trust Unit), a 16 per cent increase over 2007 when Pembina generated $189.5
million ($1.45 per Trust Unit). Pembina generated $453.9 million in revenue, a
16 percent increase compared to $389.7 million in 2007.
    Pembina achieved record net operating income of $303.0 million during
2008, up from $260.1 million in 2007. Net earnings totaled $161.8 million
during the year, a 14 percent increase over 2007.
    Distributed cash rose by $19.9 million or 11 percent, to $198.8 million
in 2007, or $1.49 per Trust Unit in 2008 compared to $178.9 million or $1.37
per Trust Unit in 2007.
    "Pembina's record financial results in 2008 attest to the successful
execution of our business plan and are indicative of the strength of our
company. Our proven business strategy, strong fundamentals, healthy balance
sheet and conservative capital structure have enabled us to maintain our
position of strength during these times of market volatility. We posted record
financial results for the year while progressing our growth plans by
completing the Horizon Pipeline and signing agreements to proceed with the
Nipisi and Mitsue Pipelines," said Bob Michaleski, Pembina's President and
Chief Executive Officer.
    Pembina completed construction of the $400 million Horizon Pipeline
project on schedule July 1, 2008. The Horizon Pipeline is operated under the
terms of a 25-year extendible transportation agreement providing Pembina a
fixed return on invested capital and full recovery of operating costs. Based
on certain assumptions, Pembina expects the Horizon Pipeline, which provides
exclusive service to Canadian Natural Resources Ltd.'s ("CNRL") oil sands
operation near Fort McMurray, Alberta, to contribute a minimum of $45 million
per annum in net operating income over the life of the agreement. Should the
pipeline be expanded beyond its current operating capacity, Pembina
anticipates that additional fully contracted returns will be generated on any
required incremental investment (see "Forward-Looking Statements and
Information" below).
    In August 2008, Pembina signed long-term agreements with CNRL and EnCana
Corporation to proceed with the construction of the Nipisi and Mitsue
Pipelines, subject to certain conditions, at an approximate cost of $400
million. This will be Pembina's priority growth project for 2009 and public
consultation is well underway. Based on internal projections and certain
assumptions, Pembina expects that the projects, aimed at providing heavy oil
producers in northwestern Alberta with 122,000 bpd of combined diluent and
diluted heavy oil transportation, will contribute approximately $45 million
per year to net operating income, once completed. Subject to regulatory
approval, Pembina has currently scheduled construction to begin in late 2009
and Pembina anticipates both pipelines to be in service by mid-2011 (see
"Forward-Looking Statements and Information" below).
    Strong business results were somewhat offset by an increase in operating
expenses, which totaled $150.9 million for 2008, compared to $129.6 million in
2007. Investments to improve operational reliability along with integrity and
regional cost inflation contributed to the increase. In 2008, general and
administrative expenses were $38.6 million, compared to $30.6 million in 2007,
primarily the result of increased staff in response to Pembina's growth and an
increase in business development costs, however, the percent of general and
administrative expenses compared to net operating income remained consistent
year-over-year.
    Development capital expenditures totaled $223.0 million in 2008: $131.6
million in spending was related to oil sands infrastructure, $49.4 million was
expended on the conventional pipelines and $42.0 million was related to the
midstream business. Relative to 2007 this represents a decrease of $77.3
million, primarily due to the completion of the Horizon Pipeline.
    Pembina maintains a strong balance sheet with a total aggregate debt to
enterprise value of 32.1 percent at the end of 2008.
    For 2009, Pembina has identified $230 million in potential capital
projects. This includes approximately $150 million related to the Nipisi and
Mitsue Pipelines with the balance directed to the completion of development
projects started in 2008, and to other discretionary projects and upgrades.
Pembina expects to finance its capital spending program from a combination of
undrawn bank facilities, cash flow from operations, Pembina's Premium
Distribution, Distribution Reinvestment and Optional Cash Purchase Plan and
from additional financing.
    Pembina's Board of Directors, following a strategic review in response to
the enactment of legislation introducing the taxation of specified investment
flow-through entities, such as income trusts, has approved plans to convert
from trust to corporate form at some time prior to the January 1, 2011
effective date of trust tax. Further, based on internal projections and
certain assumptions, Pembina expects that it will be able to sustain its
current distribution objective of $1.56 per Trust Unit annually over the next
five years (in the form of a dividend after corporate conversion). Pembina's
proven business strategy and premium assets, together with well developed
growth initiatives, are expected to produce the solid, sustainable results
that Pembina projects will support this commitment (see "Forward-Looking
Statements and Information" below).

    Fourth Quarter Results

    Pembina generated $149.4 million in revenue during the quarter, compared
to $134.0 million over the same period of 2007.
    Net operating income for the quarter was $83 million, compared to the
fourth quarter in 2007 when Pembina generated $65.3 million.
    Net earnings for the fourth quarter of 2008 were $39 million compared to
$35 million in the prior year.
    Cash distributions to Unitholders totaled $52.3 million ($0.39 per Trust
Unit) during the quarter, a 9.7 percent increase over the same quarter of
2007.

    Operating Results Highlights

    Conventional Pipelines
    -------------------------------------------------------------------------
                                             2008                2007
    -------------------------------------------------------------------------
    (in millions of dollars,
     except where noted)               Alberta     BC(1)   Alberta     BC(1)
    -------------------------------------------------------------------------
    Average throughput (mbbls/day)       416.6      22.6     422.7      24.4
    Revenue                           $  224.3  $   39.1  $  216.4  $   32.7
    Operating expenses                    95.5      17.7      79.7      17.6
    Net operating income(2)              128.8      21.4     136.7      15.1
    Capital expenditures                  43.7       5.6      72.1       5.0
    Operating expenses ($/bbl)            0.63      0.99      0.52      0.89
    Average revenue ($/bbl)           $   1.47  $   2.17  $   1.40  $   1.66
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Represents volume transported on the Western system only. BC volume
        transported east is included in Alberta pipelines total. Revenue,
        operating expenses and net operating income include both Western and
        BC gathering system results.
    (2) Refer to "Non-GAAP Measures" below.

    Throughput on the Alberta conventional pipelines averaged 416,600 bpd in
2008, a decrease compared to the 2007 average throughput of 422,700 bpd. The
Alberta pipelines generated revenue of $224.3 million in 2008, up from $216.4
million in 2007. This increase in revenue is partially attributable to
increased receipts on the Drayton Valley and Swan Hills systems. However, net
operating income on the Alberta conventional pipelines was impacted by one
time costs of approximately $5 million associated with activities related to
environmental reclamation on the Drayton Valley system, and by a two month
service interruption on Pembina's Cremona system. Volumes transported on the
BC pipelines in 2008 averaged 22,600 bpd. Revenue generated on the BC
pipelines of $39.1 million in 2008 was a 19.6 percent increase over 2007 as a
result of a higher revenue requirement on the provincially regulated BC
systems. Pembina maintains a conservative but positive outlook for its
conventional pipeline systems in 2009. Pembina believes that a number of new
connections and facility upgrades currently in development, together with
incremental volume capture and system expansion, revenue management and
operating cost discipline, will sustain results in 2009.

    Oil Sands & Heavy Oil Infrastructure
    -------------------------------------------------------------------------
    (in millions of dollars, except where noted)              2008      2007
    -------------------------------------------------------------------------
    Contracted capacity (mbbls/day)(1)                       775.0     525.0
    Revenue                                               $   85.4  $   61.7
    Operating expenses                                        28.7      23.7
    Net operating income(2)                                   56.7      38.0
    Capital expenditures                                     131.6     212.7
    Operating expenses ($/bbl)(3)                             0.27      0.21
    Average revenue ($/bbl)(3)                            $   0.79  $   0.54
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Oil sands revenue is contract-based and independent of utilization
        rates, therefore oil sands volumes reported are contracted capacity.
        Actual average throughput was 294.8 mbbls/day in 2008 and
        310.8 mbbls/day in 2007.
    (2) Refer to "Non-GAAP Measures" below.
    (3) Calculation uses actual average throughput.

    During 2008, the fully contracted Syncrude Pipeline generated revenue of
$64.6 million, with the Cheecham Lateral contributing $5.7 million in revenue.
    The fully contracted Horizon Pipeline began generating its full revenue
requirement on November 1, 2008. To year-end 2008, this pipeline contributed
$15.1 million in revenue and $11.9 million in net operating income. Based on
certain assumptions, Pembina projects the Horizon Pipeline will contribute
incremental net operating income of a minimum of $45 million per year over the
25 year life of the contract; with the possibility of greater contributions
should the pipeline be expanded beyond its current operating capacity. In
2009, Pembina expects to benefit from the first full calendar year of revenue
contribution from the Horizon Pipeline (see "Forward-Looking Statements and
Information" below).

    Midstream & Marketing Business
    -------------------------------------------------------------------------
    (in millions of dollars, except where noted)              2008      2007
    -------------------------------------------------------------------------
    Revenue(1)                                            $  105.1  $   78.9
    Operating expenses                                         9.0       8.6
    Net operating income(2)                                   96.1      70.3
    Capital expenditures                                      41.4      10.5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Net of $220.9 million in product purchase expense for 2008
        (2007: $115.1 million)
    (2) Refer to "Non-GAAP Measures" below.

    Total net operating income generated by the midstream business in 2008
was $96.1 million, a 37 percent increase over the prior year. The majority of
the increase resulted from increased activity related to terminals, storage
and hub services which are currently offered on the Swan Hills, Cremona,
Drayton Valley, and Peace pipeline systems, and a full year of operations for
facilities added in 2007. Revenue contributed by the Fort Saskatchewan
Ethylene Storage Facility in 2008 was consistent with the prior year.

    2008 Highlights and Selected Information(1)(2)
    -------------------------------------------------------------------------
    Years ended December 31 (in millions
     of dollars, except per Trust Unit
     amounts where noted)                           2008      2007      2006
    -------------------------------------------------------------------------
    Revenue(3)                                  $  453.9  $  389.7  $  335.8
    Operating expenses                             150.9     129.6     120.6
    -------------------------------------------------------------------------
    Net operating income(2)                        303.0     260.1     215.2
    Interest on long-term debt                      39.4      29.5      24.9
    Interest on convertible debentures               3.4       4.8       7.7
    Net earnings before taxes                      172.9     119.8      64.6
    Net earnings                                   161.8     142.3      88.9
    Net earnings per Trust Unit - basic             1.21      1.09      0.73
    Net earnings per Trust Unit - diluted           1.19      1.06      0.73
    EBITDA(2)                                      287.9     220.5     184.2
    Cash flow from operations                      219.9     189.5     143.9
    Distributable cash(2)                          207.2     188.9     148.2
    Distributed cash(2)                            198.8     178.9     142.3
    Distributed cash per Trust Unit(2)              1.49      1.37      1.17
    Trust Units outstanding (weighted average,
     thousands of Units)                         133,380   130,513   122,094
    Trust Units outstanding (end of year,
     thousands of Units)                         134,703   132,542   126,218
    Total enterprise value(2)                    3,021.4   3,179.2   2,655.1
    Capital expenditures                           223.0     300.3     168.9
    Total assets                                 2,118.2   1,966.8   1,676.2
    Total long-term financial liabilities        1,069.7     976.3     752.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Pembina Pipeline Income Fund distributes cash generated by the
        pipeline operations of Pembina Pipeline Corporation and other
        operating subsidiaries.
    (2) Refer to "Non-GAAP measures" below.
    (3) Net of product purchases of $220.9 million in 2008; $115.1 million in
        2007; $5.1 million in 2006.

    Non-GAAP Measures

    Throughout this press release 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 for timing differences in non-cash working
capital and for non-cash items charged to earnings that the Fund considers
being 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 from operating activities or other measures of financial performance
calculated in accordance with GAAP as an indicator of the Fund's performance.
Further, the use of terms "EBITDA" (earnings before interest, taxes,
depreciation and amortization), "net operating income" (revenues less
operating expenses), and "total enterprise value" (the Fund's market
capitalization plus long-term debt) are not recognized under Canadian GAAP.
Management believes that in addition to earnings, EBITDA, net operating
income, and total 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 total enterprise value, the aggregate value of
the Fund. Investors should be cautioned, however, that EBITDA, net operating
income, and total 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 more information in respect
of non-GAAP measures, see the section entitled "Non-GAAP Measures" in
Pembina's management's discussion and analysis for the year ending December
31, 2008, which has been filed on Pembina's SEDAR profile at www.sedar.com and
posted on Pembina's website at www.pembina.com.

    Abbreviations

      bpd:      barrels per day
      mbbls/d:  thousands of barrels per day
      $/bbl:    dollars per barrel of pipeline throughput

    Conference Call and Webcast

    There will be a live internet broadcast of the conference call discussing
Pembina's 2008 results, which is scheduled for March 6, 2009 at 12:00 p.m.
Calgary (2:00 p.m. Eastern, 11:00 a.m. Pacific). Those wishing to access the
webcast are invited to visit www.pembina.com or www.newswire.ca/webcast. An
archive of the call will be available on-line for 90 days following the
broadcast date.

    2008 Tax Information and 2009 Tax Estimates

    A component of the Fund's cash distributions is taxable in the hands of
the Unitholder, with the remaining portion a return of capital, unless held in
a tax-deferred account.
    Pembina's 2008 tax information for Canadian and US investors is available
at www.pembina.com under the heading "Investors" and at www.cds.ca.
    Pembina estimates 75 percent of the 2009 distributions will be taxable
and 25 percent will be a return of capital for Canadian tax purposes.
Pembina's distributions are subject to current domestic tax laws which require
a withholding tax from distribution income to nonresidents of Canada.

    Annual Report

    Copies of the audited consolidated financial statements and accompanying
management's discussion and analysis, which provide a detailed explanation of
Pembina's results for the year ended December 31, 2008, have been filed on
Pembina's SEDAR profile at www.sedar.com and are posted on the Pembina's
website at www.pembina.com.

    About Pembina

    Pembina Pipeline Income Fund (TSX: PIF.UN, PIF.DB.B) is among the leading
issuers in the Canadian energy infrastructure trust sector. Pembina's
extensive network of conventional liquids feeder pipelines, and growing
presence in the oil sands and midstream sectors, provide an integral service
to the Western Canadian energy industry. This balanced portfolio of premium,
long-life energy infrastructure assets supports the stability and
sustainability of the Fund. Information on the Pembina Pipeline Income Fund is
available at www.pembina.com.

    Forward-Looking Statements and Information

    The information contained in this press release contains certain
forward-looking statements and information ("forward-looking statements") that
are based on the Fund's current 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 "may", "will", "should", "expects", "projects", "plans",
"anticipates", "targets", "believes", "strives", "aims", "intends",
"estimates", "continue", "designed", "objective", "maintain", "schedule",
"endeavor", "possibility", and similar expressions.
    In particular, this press release contains forward-looking statements,
including certain financial outlooks, regarding (i) the possible conversion of
Pembina to a corporate form prior to January 1, 2011 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 (in the
form of dividends after conversion); (ii) the future net operating income of
Pembina in relation to the Horizon Pipeline and the Nipisi and Mitsue
Pipelines; and (iii) the proposed construction of the Mitsue and Nipisi
Pipelines. 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. These assumptions include, in respect of the possible corporate
conversion of Pembina and future cash distributions or dividends to equity
holders, that Pembina's internal cash flow and tax projections are correct;
that Pembina can obtain all necessary approvals in respect of the corporate
conversion; that favourable growth parameters continue to exist in respect of
current and future projects of Pembina (including in respect of the ability to
finance such projects on favourable terms); that there will be no changes to
current tax laws governing the taxation of specified investment flow-through
("SIFT") entities and the treatment of distributions from such entities; that
the draft legislation related to the conversion of SIFT entities into
corporations, as introduced on July 14, 2008, will be enacted in the form
proposed; and the continued sustainable results of all three of Pembina's
business segments. In respect of the forward-looking statements made in
relation to the future net operating income of the Horizon Pipeline and the
Nipisi and Mitsue Pipelines, Pembina has assumed that future tolls are
consistent with internal projections, that counterparties fulfill their
contract obligations in a timely manner, that there are no unforeseen events
preventing performance of contracts by Pembina, and that there are no
unforeseen material costs relating to the pipeline system which are not
recoverable from shippers. In respect of the forward-looking statements made
in relation to the proposed Mitsue and Nipisi Pipelines, Pembina has assumed
that the in-service date for the Mitsue and Nipisi Pipelines will be in
mid-2011; that future tolls in respect of the proposed Mitsue and Nipisi
Pipelines will be consistent with internal projections; that counterparties
will comply with contracts in a timely manner; that there are no unforeseen
events preventing the performance of contracts by Pembina; that Pembina is
able to obtain financing on favourable terms in respect of the costs
associated with the Mitsue and Nipisi Pipelines; that there are no unforeseen
construction costs related to the Mitsue and Nipisi Pipelines; and that there
are no unforeseen material costs relating to the pipeline systems which are
not recoverable from shippers.
    Further, this press release contains forward-looking statements with
respect to: future stability and sustainability of cash distributions to
Unitholders; ongoing utilization and expansions of and additions to Pembina's
asset base; future acquisitions, growth and growth potential in Pembina's
conventional pipelines, oil sands & heavy oil infrastructure and midstream &
marketing operations; potential revenue and cash flow enhancement; future cash
flows; maintenance of operating margins; continued high levels of oil and gas
activity and increased oil and gas production in proximity to Pembina's
pipelines and other assets (which could be affected by, among other things,
possible changes to applicable royalty and tax regimes); additional throughput
potential on additional connections and other initiatives on the conventional
system; expected project start-up and construction dates; future
distributions, payout ratios and taxation of distributions; future financing
capability and sources; the expansion of midstream services; and the future
tax treatment of the Fund and income trusts.
    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, default by counterparties to agreements which
Pembina has entered into in respect of its business, 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 (including in respect of the Mitsue
and Nipisi pipelines), 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 (including in respect of the proposed construction of the Mitsue
and Nipisi pipelines and related facilities and the repayment of debt as it
becomes due), construction costs of the Mitsue and Nipisi Pipelines,
construction delays and labour and material shortages, continued adverse
general economic and market conditions and further changes thereto in Canada,
North America and elsewhere, including changes in interest rates or foreign
currency exchange rates, and certain other risks detailed from time to time in
the Fund's public disclosure documents. The Fund believes the expectations
reflected in these forward-looking statements are reasonable as of the date
hereof but no assurance can be given that these expectations will prove to be
correct. Undue reliance should not be placed on these forward-looking
statements as both known and unknown risks and uncertainties, including those
business risks stated above, may cause actual performance and financial
results in future periods to differ materially from any projections of future
performance or results expressed or implied by such forward-looking
statements. Accordingly, readers are cautioned that events or circumstances
could cause results to differ materially from those predicted. 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 press release. The purpose of the financial outlook
contained herein is to give the reader an indication of the value to Pembina
of its future business opportunities, growth projects as well as the potential
effects to Unitholders of a possible conversion of Pembina to a corporate
form. Readers should be aware that the information contained in the financial
outlook contained herein may not be appropriate for other purposes.

    %SEDAR: 00008906E

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