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News Releases

Pembina Pipeline Corporation Plans $550 Million Capital Spend in 2012

(All financial figures are approximate and in Canadian dollars unless otherwise noted.)

CALGARY, Dec. 1, 2011 /CNW/ - Pembina Pipeline Corporation (TSX: PPL, PPL.DB.C) ("Pembina" or the "Company") announced that its Board of Directors has approved a capital spending plan for 2012 of approximately $550 million, with the majority of the expenditures targeted at projects in the Company's Conventional Pipelines and Gas Services businesses. Pembina's 2012 capital spending plan is approximately 10 percent higher than its 2011 capital budget and represents the largest in the Company's history.

"Pembina's 2012 capital spending plan is directly aligned with our goal of continuing to provide long-term value to our shareholders," said Bob Michaleski, President and Chief Executive Officer. "Pembina has demonstrated its ability to secure and execute growth projects that are expected to provide long-term, stable returns in the past, and our 2012 plans are no exception. Our focus in 2012 will be to progress our current suite of projects and bring in the next phase of growth opportunities while maintaining a strong balance sheet."

During 2012, Pembina will allocate approximately $245 million of its capital budget, or about 44 percent, towards the construction of the Company's previously announced Saturn and Resthaven enhanced liquids extraction facilities along with the associated pipelines.

With respect to the previously announced expansion of Pembina's Peace natural gas liquids (NGL) pipeline system, the Company expects to spend $55 million to increase capacity by 20,000 barrels per day ("bpd") in 2012, and $45 million in 2013 to increase capacity by an additional 35,000 bpd. Pembina also plans to spend $30 million to expand its crude and condensate capacity on the Peace Pipeline system by 40,000 bpd, which, subject to regulatory approval, could be in-service by mid-2013. These expansion projects are necessary so that Pembina can continue to meet the growing needs of producers resulting from new technology and increased activity in plays such as the Montney oil pools.

The Company plans to finance its 2012 capital expenditures through undrawn and potentially expanded credit facilities, public or private debt, the reinstatement of its Premium Dividend™ and Dividend Reinvestment Plan (see below), and cash flow from operating activities.

Pembina's 2012 capital spending plan reflects strong growth opportunities that expand on existing operations in each of its four businesses and is expected to continue to drive shareholder value in the coming years.

2012 Capital Spending Highlights

Pembina's 2012 capital spending plan is expected to be allocated as follows:

The Conventional Pipelines business expects to invest approximately $210 million in 2012, with the majority allocated to Alberta-based pipeline systems as follows:

  • $55 million is projected to be spent to expand the NGL capacity on its Peace Pipeline and Northern NGL systems which is expected to increase capacity on these systems by 20,000 bpd from 115,000 bpd to 135,000 bpd in 2012;
  • $30 million is projected to be spent to upgrade two existing pump stations which is expected to increase crude and condensate capacity by 40,000 bpd from 155,000 bpd to 195,000 bpd on its Peace Pipeline;
  • $45 million is projected to be spent to tie in the Resthaven and Saturn facilities to Pembina's existing infrastructure;
  • $25 million is projected to be spent to expand its Drayton Valley system which serves Cardium producers;
  • $20 million is projected to be spent to expand Pembina's Swan Hills System; and
  • the remaining capital will be directed to increase Pembina's capture area, tie in new producers and ensure there is sufficient capacity to accommodate increased production from existing and new customers.

Pembina's Gas Services business plans to spend approximately $235 million in capital in 2012 with $200 million being directed towards the Saturn and Resthaven enhanced liquids extraction facilities. Both facilities are expected to be in-service by late 2013 and are expected to add a combined 330 million cubic feet per day ("mmcf/d") of enhanced liquids extraction capacity and extract up to 26,500 bpd of liquids which will be transported to market using new and existing Pembina assets. The majority of the remaining capital is expected to be spent to expand Pembina's Cutbank Complex processing capacity by 50 mmcf/d which is anticipated to be in-service in mid-2012.

The Midstream & Marketing business intends to invest $70 million in 2012 with $35 million being directed towards expanding Pembina's presence in the full-service truck terminal business. Pembina is developing plans to convert two of its existing truck terminals to full-service terminals and construct a new greenfield terminal. The Company also plans to invest approximately $15 million to develop caverns at its Fort Saskatchewan Ethlyene Storage Facility, one of which is expected to be in-service by the end of 2012. The remainder of the capital spend planned by this business unit is expected to be allocated to increasing the connectivity of Pembina's Midstream & Marketing assets, including the Pembina Nexus Terminal, as well as implementing a connection to the Southern Lights condensate pipeline.

The Oil Sands & Heavy Oil business' capital spending plan for 2012 is approximately $30 million which includes $17 million of capital to finalize the Nipisi and Mitsue Pipelines (this capital is included in the $400 million estimated total project cost, but has not yet been spent). The remaining capital will be directed to various pipeline improvements and for business development studies.

The remainder of Pembina's 2012 capital budget will be used to complete a variety of corporate-wide projects, primarily allowing for system and technology upgrades.

Reinstatement of Premium Dividend™ and Dividend Reinvestment Plan

Pembina intends to reinstate the Premium Dividend™ and Dividend Reinvestment Plan ("DRIP") effective as of the January 25, 2012 record date and the corresponding dividend payable on February 15, 2012.

If you are an eligible shareholder of Pembina, as described in the DRIP documents available at www.pembina.com, the DRIP provides an opportunity for you to receive, by reinvesting the cash dividends declared payable by Pembina on your shares, either

(i)     additional common shares at a discounted subscription price equal to 95 percent of the Average Market Price (as defined in the DRIP), pursuant to the "Dividend Reinvestment Component" of the DRIP, or

(ii)     a premium cash payment (the "Premium Dividend™") equal to 102 percent of the amount of your reinvested dividends, pursuant to the "Premium Dividend™ Component" of the DRIP,

in either case upon and subject to the terms and conditions of the DRIP.

Shareholders must contact the broker, investment dealer, financial institution or other nominee through whom their Pembina common shares are held to enroll in the DRIP.

Further details and enrollment forms for the DRIP are available on Pembina's website under Investor Centre.

DRIP proceeds will be directed toward Pembina's ongoing 2012 capital program and the reduction of outstanding bank debt.

Conference Call & Webcast Presentation

A conference call and webcast presentation to discuss the 2012 capital budget and recent developments at the Company has been scheduled for today, December 1, 2011, at 3:00 p.m. MT (5:00 p.m. ET) for interested investors, analysts, brokers and media representatives.

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 December 12, 2011 at 11:59 p.m. ET. To access the replay, please dial either 416-849-0833 or 855-859-2056 and enter the password 31102888.

A live webcast of the conference call can be accessed on the Company's website at www.pembina.com under Investor Centre, Presentation & Events, or by entering http://event.on24.com/r.htm?e=383294&s=1&k=1777E6D2C45FE24A21599718932A7F9D in your web browser. Shortly after the call, an audio archive will be posted on the website for 90 days.

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 the midstream and 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.

Forward-Looking Statements & Information

This document contains certain forward-looking statements and information 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 and information can be identified by terminology such as "plans", "targets", "expects", "projects", "will", "estimates", "intends", "anticipates", "develop", "could", "potential" and similar expressions suggesting future events or future performance.

In particular, this document contains forward-looking statements and information, including certain financial outlook, pertaining to, without limitation, the following: Pembina's corporate strategy; the ability of Pembina to maintain its current level of dividends to shareholders through 2013; the construction schedule and commissioning of the Nipisi and Mitsue pipelines, the proposed Resthaven and Saturn facilities, the Cutbank Complex enhanced NGL extraction facility, the proposed Peace Pipeline NGL and crude expansion, the proposed Drayton Valley and Swan Hills expansions, the proposed caverns at the Fort Saskatchewan Ethylene Storage Facility, and the proposed full-service truck terminals; the ongoing utilization and expansions of and additions to Pembina's business and asset base, growth and growth potential; expectations regarding future demand for oil sands transportation services; expectations regarding supply and demand factors and pricing for oil and natural gas; potential revenue and cash flow enhancement; and future cash flows, maintenance and operating margins. These forward-looking statements and information 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 below.

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); future acquisitions, growth and growth potential in Pembina's Conventional Pipelines, Oil Sands & Heavy Oil, Midstream & Marketing and Gas Services' operations; potential revenue and cash flow enhancement; future cash flows; maintenance of operating margins; additional throughput potential on additional connections and other initiatives on the Conventional Pipelines systems; expected project start-up and construction dates; future dividends and taxation of dividends; future financing capability and sources; and negative credit rating adjustments.

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; 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 dividends 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 and commissioning of the Nipisi and Mitsue Pipelines and related facilities, the proposed Resthaven and Saturn facilities, the Cutbank Complex enhanced NGL extraction facility, the proposed Peace Pipeline NGL and crude expansion, the proposed Drayton Valley and Swan Hills expansions, the proposed caverns at the Fort Saskatchewan Ethylene Storage Facility, and the proposed full service truck terminals; construction costs on these projects; 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.

For further information:

Investor Inquiries:
Scott Burrows
Manager, Corporate Development
(403) 231-7500
1-888-428-3222
e-mail:  investor-relations@pembina.com

or

Media Inquiries:
Shawn Davis
Manager, Communications & Public Affairs
(403) 231-7500