text

News Releases

Pembina Pipeline Corporation Reports Record 2010 Results

The following information is supplementary to and should be read in conjunction with Pembina's audited consolidated financial statements for the years ended December 31, 2010 and 2009, and the accompanying management's discussion and analysis ("MD&A"). These documents are available at www.sedar.com and at www.pembina.com. Certain financial measures referred to in this document are not prescribed by Canadian generally accepted accounting principles ("GAAP"). For a description of these measures, see "Non-GAAP Measures" below. All amounts are stated in Canadian dollars unless otherwise specified. Effective October 1, 2010, the Pembina Pipeline Income Fund (the "Fund") and Pembina Pipeline Corporation completed a plan of arrangement pursuant to which the outstanding trust units of the Fund were converted into common shares of Pembina Pipeline Corporation. This resulted in the conversion of the Fund to a corporate entity, being Pembina Pipeline Corporation, which has continued as a successor issuer to the Fund (the "Conversion"). In this news release, any references to "Pembina" or the "Corporation" when used in a historical context prior to October 1, 2010 refer to the Fund and its consolidated subsidiaries, and when used in the present tense or prospectively, refer to Pembina Pipeline Corporation and its consolidated subsidiaries. Similarly, any references to "shares" when used in a historical context prior to October 1, 2010 refer to trust units of the Fund, and when used in the present tense or prospectively, refer to the common shares of Pembina Pipeline Corporation.

CALGARY, March 9 /CNW/ - Pembina Pipeline Corporation (TSX: PPL) (PPL.DB.C) ("Pembina") today released its 2010 financial and operating results reporting year-over-year increases in revenue, net operating income, net earnings and cash flow from operating activities. Pembina also provided an update on the significant progress it made during the year to advance its growth plans.

"In 2010, Pembina focused on strong operating performance in our existing businesses and responsibly pursuing and implementing new opportunities for growth. This enabled us to once again achieve a record-breaking year while setting the stage for success in 2011 and beyond" said Bob Michaleski, President and Chief Executive Officer. "Our positive 2010 results are a testament to the high quality of our people and assets, and demonstrate Pembina's commitment to generating value for our investors."

Revenue, net of product purchases, for 2010 was $519.9 million compared to $497.4 million in 2009 and net operating income for 2010 was $359.8 million compared to $338.2 million in 2009. These increases were largely due to a full year of revenue contribution from Pembina's Gas Services business in 2010 compared to seven months of operations in 2009 (the Gas Services business was established in June 2009 when Pembina acquired the Cutbank Complex) which were offset by tighter margins in Pembina's Midstream & Marketing business. Both the Conventional Pipelines and Gas Services businesses realized improved revenues despite being challenged by the impact of weather on Pembina's customers' production levels and pipeline apportionments that restricted transportation volumes.

Operating expenses in 2010 were $160.1 million compared to $159.2 million in 2009. Holding fairly steady year-over-year, Pembina's costs associated with establishing the Gas Services business as well as higher power costs in our Oil Sands & Heavy Oil business were offset by diligent cost control, allowing Pembina to reduce maintenance and labour costs in the Conventional Pipelines business.

Net earnings were $186.7 million in 2010 ($1.14 per share) compared to $162.1 million ($1.09 per share) in 2009, while cash flow from operating activities was $255.1 million in 2010 ($1.56 per share) compared to $224.6 million 2009 ($1.51 per share).

In 2010, Pembina invested over $200 million in new capital, primarily to support its growth plans. The majority of this investment, approximately $109 million, was spent to progress the Nipisi and Mitsue Pipeline projects which, when complete, will transport heavy oil and condensate for producers operating in the Pelican Lake and Peace River regions of Alberta. As of the end of February 2011, significant progress has been made for both pipeline and pump station construction. Pembina anticipates all pipeline construction will be completed by mid-April. The project also includes the construction of seven pump stations (two for the Mitsue Pipeline and five for the Nipisi Pipeline). Civil construction is complete for all sites; mechanical construction is approximately 80 percent complete; and, electrical work has begun. Pembina anticipates that all pump station construction will be complete by early May, with an on-stream date of mid-2011 for both pipelines. When complete, the Nipisi and Mitsue Pipelines are expected to generate, according to internal management estimates, approximately $45 million of net operating income per year. (See "Forward-looking Statements & Information" and "Risk Factors" in Pembina's 2010 Annual Report for more information on the Nipisi and Mitsue Pipeline projects).

Other 2010 capital spending focused on increasing capacity and improving operating performance on Pembina's Drayton Valley and Peace Pipeline systems to accommodate new Cardium area volumes, and progressing the enhanced natural gas liquids extraction facility at Pembina's Cutbank Complex.

"Our growth plan is well on track and is expected to generate long-term value for our investors," said Michaleski. "During the latter half of 2011, we expect to commission many of our growth projects that will begin generating returns." Pembina's plans include maintaining its annual dividend at $1.56 per share through 2013 (see "Forward-Looking Statements & Information").

Other developments in 2010 included the conversion of the Pembina Pipeline Income Fund to Pembina Pipeline Corporation. The conversion, which was completed on October 1, 2010, is expected to provide Pembina with greater access to capital markets and enhanced liquidity, which will provide more flexibility to pursue growth and expansion.

Fourth Quarter Results

Revenue, net of product purchases, was $134.8 million in the fourth quarter of 2010 compared to $129.2 million in the fourth quarter of 2009. The increase was primarily the result of gains generated by the Conventional Pipelines and Gas Services businesses, which realized improvements in revenue due to higher volumes associated with increased activity in their respective regions. Despite apportionment issues on third-party pipelines, the Conventional Pipelines business' throughputs were fairly consistent quarter-over-quarter. December 2010 exit volumes on the Drayton Valley and Peace Pipeline systems were over 100,000 barrels per day ("bpd") and 170,000 bpd, respectively, compared to 80,000 bpd and 150,000 bpd, respectively, in 2009. The increase in volumes on these systems is primarily attributable to increased industry activity associated with the Cardium formation. Gas Services also saw more volumes processed at the Cutbank Complex (227.8 million cubic feet per day ("mmcf/d") in the fourth quarter of 2010 compared to 206.1 mmcf/d in the fourth quarter of 2009) reflecting increased production in the area. These gains were offset by decreased revenue generated by the Midstream & Marketing business that were challenged by tighter margins as well as apportionment issues on third-party pipelines which impacted commodity prices and restricted transportation volumes during the fourth quarter of 2010 on certain of Pembina's systems.

Operating expenses were $44.1 million during the fourth quarter of 2010 compared to $39.7 million in the fourth quarter of 2009. The increase was primarily due to several integrity initiatives undertaken in the Conventional Pipelines business during the fourth quarter and higher expenses associated with handling more volumes in the Gas Services business.

Net operating income was $90.7 million in the fourth quarter of 2010 compared to $89.5 million in 2009.

The increase was primarily the result of the same factors that positively impacted revenues.

Net earnings for the fourth quarter of 2010 were $51.5 million compared with $52.9 million in 2009. The decrease is primarily related to higher depreciation and amortization, accretion, overall interest expense, and income taxes. This was offset by a decrease in general and administrative expenses and higher net operating income.

    <<
    2010 Consolidated Financial Overview & Comparison to 2009
    (years ended Dec. 31)

    Fourth Quarter 2010 & Comparison to Fourth Quarter 2009
    (three months ended Dec. 31)
    -------------------------------------------------------------------------
    ($ millions, except where noted)   Q4 2010   Q4 2009      2010      2009
    -------------------------------------------------------------------------
    Revenue                              296.5     256.4   1,255.1     811.8
      Less: product purchases            161.7     127.2     735.2     314.4
    -------------------------------------------------------------------------
    Net revenue(1)                       134.8     129.2     519.9     497.4
    Operating expenses                    44.1      39.7     160.1     159.2
    -------------------------------------------------------------------------
    Net operating income(1)               90.7      89.5     359.8     338.2
    EBITDA(1)                             79.8      72.5     315.8     286.6
    Net earnings                          51.5      52.9     186.7     162.1
    Net earnings per share - basic ($)    0.31      0.34      1.14      1.09
    Cash flow from operating activities   54.0      72.0     255.1     224.6
    Cash flow from operating activities
     per share ($)                        0.32      0.46      1.56      1.51
    Dividends                             64.6      61.4     255.2     232.3
    Dividends per share ($)               0.39      0.39      1.56      1.56
    Capital expenditures                 128.6      59.5     201.9     423.7
    -------------------------------------------------------------------------
    (1) Refer to "Non-GAAP Measures" below.



    Results from Operations

    -------------------------------------------------------------------------
                                              2010                2009
                                                   Net                 Net
    ($ millions)                                Operating           Operating
                                      Revenues  Income(1) Revenues  Income(1)
    -------------------------------------------------------------------------
    Conventional Pipelines               261.6     169.7     255.0     150.4
    Oil Sands & Heavy Oil                118.4      78.2     115.6      81.6
    Midstream & Marketing(2)              78.4      68.1      93.8      83.2
    Gas Services(3)                       61.5      43.8      33.0      23.0
    ------------------------------------------------------------------------
    Total                                519.9     359.8     497.4     338.2
    -------------------------------------------------------------------------
    (1) Refer to "Non-GAAP Measures" below.
    (2) Midstream & Marketing revenue is net of $735.2 million in product
        purchase expense for 2010 (2009: $314.4 million).
    (3) Operating assets for Gas Services were acquired on June 2, 2009.
    >>

For more information, see Pembina's 2010 annual report which is available at www.sedar.com and www.pembina.com. The report includes audited consolidated financial statements and the MD&A, which provide a detailed explanation of Pembina's results for the year ended December 31, 2010.

Pembina Pipeline Corporation transports crude oil and natural gas liquids produced in Western Canada, owns and operates oil sands pipelines and has a growing presence in midstream & marketing and gas services sectors. Pembina's common shares and convertible debentures are traded on the TSX under the symbols PPL and PPL.DB.C respectively.

Non-GAAP Measures

Throughout this press release Pembina use the terms "EBITDA" (earnings before interest, taxes, depreciation and amortization), "net operating income" (revenues less operating expenses), and "net revenue" (revenue net of product purchases) which are not recognized under Canadian GAAP. Management believes that in addition to earnings, EBITDA, net operating income, and net revenue are useful measures to provide an indication of the results generated by Pembina's business activities prior to consideration of how activities were financed, how the results are taxed and measured. Investors should be cautioned, however, that EBITDA, net operating income, and net revenue should not be construed as an alternative to net earnings, cash flow from operating activities or other measures of financial performance determined in accordance with GAAP as an indicator of Pembina's performance. Furthermore, these measures may not be comparable to similar measures presented by other issuers. For more information in respect to non-GAAP measures, see the section entitled "Non-GAAP Measures" in Pembina's MD&A for the year ending December 31, 2010, which has been filed on Pembina's SEDAR profile at www.sedar.com and posted on Pembina's website at www.pembina.com.

Forward-Looking Statements & Information

The information contained in this press release contains certain forward-looking statements and information ("forward-looking statements") that are based on Pembina'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", "believes", "aims", "estimates", "maintain", and similar expressions.

In particular, this press release contains forward-looking statements, including certain financial outlooks, regarding (i) the ability of Pembina to maintain its current level of dividend to its equity holders through 2013; (ii) the future net operating income of Pembina in relation to the Nipisi and Mitsue Pipelines; (iii) the completion of construction of the Nipisi and Mitsue Pipelines, and (iv) the completion of construction of the enhanced NGL extraction facility at the Cutbank Complex.

With respect to forward-looking statements and information contained in this document, Pembina has made assumptions regarding, among other things: ongoing utilization and future expansion, development, growth and performance of Pembina's business and asset base; future demand for oil sands transportation services; future levels of oil and natural gas development 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); the amount of future liabilities related to environmental incidents; the availability of coverage under Pembina's insurance policies (including in respect of Pembina's business interruption insurance policy); capital expenditure estimates, plans, schedules, rights and activities and the planning, development, construction, operations and costs of pipelines, including in relation to the Nipisi and Mitsue Pipeline projects, the NGL extraction facility at the Cutbank complex, the proposed expansion plans to strengthen Pembina's transportation service options that it provides to producers developing the Cardium oil formation located in Central Alberta and other facilities and other energy infrastructure; expected project start-up and construction dates; the future levels of cash dividends that Pembina intends to pay to its shareholders, including the ability of Pembina to maintain its current level of cash dividends to equity holders through 2013; future financing capability and sources; negative credit rating adjustments; and the expansion of Midstream & Marketing business.

Although Pembina believes the expectations and material factors and assumptions reflected in these forward-looking statements and information are reasonable as of the date hereof, there can be no assurance that these expectations, factors and assumptions will prove to be correct. Readers are cautioned that events or circumstances could cause results to differ materially from those predicted, forecasted or projected. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur, which 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 and information.

None of the forward-looking statements described above are guarantees of future performance and are subject to a number of known and unknown risks and uncertainties, including, but not limited to: the impact of competitive entities and pricing; reliance on key industry partners, alliances and agreements; the strength and operations of the oil and natural gas production industry and related commodity prices; the continuation or completion of third party projects; regulatory environment and inability to obtain required regulatory approvals (including in respect to the Nipisi and Mitsue Pipelines and related facilities); tax laws and treatment; fluctuations in operating results; lower than anticipated results of operations and accretion from Pembina's business initiatives; reduced amounts of cash available for distributions to shareholders; the ability of Pembina to raise sufficient capital (or to raise capital on favourable terms) to complete future projects and satisfy future commitments, including the construction of the Nipisi and Mitsue Pipelines and related facilities, and the enhanced NGL extraction facility at the Cutbank Complex; construction costs of the Nipisi and Mitsue Pipelines and related facilities, and the enhanced NGL extraction facility at the Cutbank Complex, construction delays; labour and material shortages; and certain other risks detailed from time to time in Pembina's public disclosure documents available at www.sedar.com. Readers are cautioned that this list of risk factors should not be construed as exhaustive.

The forward-looking statements and information contained in this document speak only as of the date of this document. Pembina does not undertake any obligation to publicly update or revise any forward-looking statements or information contained herein, except as required by applicable laws. The forward-looking statements and information contained in this document are expressly qualified by this cautionary statement.

Management of Pembina 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.

    <<
    Conference Call and Webcast
    ---------------------------
    >>

There will be a live internet broadcast of the conference call discussing Pembina's 2010 results, which is scheduled for March 10, 2011 at 11 a.m. MST (1 p.m. EST, 10 a.m. PST). Those wishing to access the webcast are invited to visit www.pembina.com or www.newswire.ca/webcast.

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