Pembina Pipeline Corporation · TSX:PPL
Pembina Pipeline — Investor Day (May 2017)
127 slides from Pembina Pipeline's investor day presentation, May 16, 2017
Slide 1: Investor Day May 16, 2017
I n v e s t o r D a y | M a y 1 6 , 2017 | TSX: PPL; NYSE: PBA
Slide 2: Forward-looking statements and information
Forward-looking statements and information This presentation contains certain forward-looking statements and Veresen and management expectations in relation thereto, the availability public filings available in Canada at www.sedar.com and in the United information that are based on Pembina's expecta
Slide 3: Our team presenting today and agenda
Our team presenting today and agenda Agenda and Presentation Outline Presenter Introduction and Pembina Overview Mick Dilger Mick Dilger Scott Burrows The 'Purpose' of Pembina Mick Dilger President & Vice President Chief Executive Officer Finance & Strategy: Increasing value/decreasing risk Mick Dil
Slide 4: Introduction and Pembina Overview
Introduction and Pembina Overview Mick Dilger
Slide 5: Update since last Investor Day
Update since last Investor Day • ~8.9 million hours worked safely by employees since 2014 (3rd consecutive year of no employee lost-time injuries)(1) • Record 2016 adjusted EBITDA of ~$1.2 BB and ACFPS of $2.54 • Record Gas Services volumes of 836 MMcf/d and Conventional Pipelines volumes of 650 mbp
Slide 6: Veresen combination highlights
Veresen combination highlights Near-term secured growth increases from One of Canada's ~$4 BB Low risk business to largest energy infrastructure platform: 5.8 Bcf/d companies: ~$6 BB 85%+ of combined gas processing by $33 BB fee-for-service cash flows mid-2018 total enterprise (pro forma average (ne
Slide 7: Pembina represents a unique investment opportunity
Pembina represents a unique investment opportunity Pembina Veresen Combined Common shares outstanding(1) 401 million 314 million 501 million TSX common share trading price (1) $43.25 $18.45 $43.25 TSX 52-week trading range (1) $36.36 - $44.50 $8.51 - $18.45 $36.36 - $44.50 Market capitalization(1) $
Slide 8: Combined Pembina and Veresen Asset Base
MONTNEY (Resource Life – 140 years) OIL SANDS Combined Pembina and (Resource Life – 145 years) Veresen Asset Base DEEP BASIN FORT McMURRAY (Resource Life – 40 years) TAYLOR Pembina Gas Processing Plant Veresen Gas Processing Plant SWAN HILLS Pembina Fractionator Pembina Storage Facility Veresen Stor
Slide 9: Combined Pembina and Veresen Asset Base
MONTNEY (Resource Life – 140 years) OIL SANDS (Resource Life – 145 years) Combined Pembina and DEEP BASIN FORT McMURRAY (Resource Life – 40 years) Veresen Asset Base SWAN HILLS Pembina Gas Processing Plant Veresen Gas Processing Plant PRINCE GEORGE Pembina Fractionator CARDIUM Veresen Fractionator (
Slide 10: Integrated, customer-focused value chain
Integrated, customer-focused value chain Empress, Sarnia and Corunna Value chain extension opportunities (Mainline Extraction, Fractionation, Distribution) Gas & NGL Propane Via NGTL exports NGL Storage Fractionation Distribution Value Chain Conventional Pipelines NGL Midstream ("HVP") Production Co
Slide 11: Key strategic rationale diversification
Key strategic rationale diversification Pembina Veresen Pro Forma 3% Pipelines 25% 27% Processing Operating Segment 34% 53% 58% (2018 EBITDA)(1) 13% 70% 17% Midstream (NGL & Crude) 6% 13% Crude Oil 35% 33% Hydrocarbon Mix 45% 94% NGL 41% (2018 EBITDA)(1) Gas 32% US 21% WCSB WCSB US WCSB US 2
Slide 12: Holistic approach to creating value: The 'purpose' of Pembina
Holistic approach to creating value: The 'purpose' of Pembina Mick Dilger
Slide 13: The 'Purpose' of Pembina
The 'Purpose' of Pembina "For our stakeholders to view us as being the leader in the Canadian energy infrastructure sector", namely: We ensure no harm to people or the environment; We are the 'first choice' by customers to cost-effectively and reliably connect them to markets; We provide sustainable
Slide 14: Ensure no harm to people or the environment
Ensure no harm to people or the environment Employee recordable injury rates per 200,000 hours worked in 2016 Employee lost-time injury rates per 200,000 hours worked in 2016 1.00 0.5 0.50 0.4 0.1 0.1 - 0 0.0 CEPA CEPA Pembina's 1,300+ employees have worked 13 consecutive quarters, totaling over ~8.
Slide 15: We are our customers' 'first choice'
We are our customers' 'first choice' Multi-product service offering Potential discounts for multiple service commitments Volume discounts Ability to align commitments across the value chain (i.e. outage coordination) Linked step-up rights across infrastructure Strategically- located assets
Slide 16: We provide sustainable industry-leading returns (10 years)
We provide sustainable industry-leading returns to our shareholders (10 years) Total return: Pembina vs S&P/TSX Energy Infrastructure 700 ~440% Relative Total Return (100 = January 1, 2007) 600 500 400 300 200 100 ~210% - 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (1) S&P/TSX Energy Infr
Slide 17: We provide sustainable industry-leading returns to our shareholders
We provide sustainable industry-leading returns to our shareholders .00 Possible 2018 EBITDA/share range 2006 2016 Increase (Combined) .50 ($MM) ($MM) (%) $5.10 - $5.50(1) .00 Consolidated Operating Margin $215 $1,335 ~520% Conventional Pipelines $133 $494 ~270% .50 Crude Oil Midstream $45 $162 ~260
Slide 18: We have a trustworthy, respectful, collaborative and fair work culture
We have a trustworthy, respectful, collaborative and fair work culture making us the 'employer of choice' Employee summary Recognized for being a top employer An employee culture that gives back Employee engagement and turnover One of Pembina's most valuable assets are its dedicated people that come
Slide 19: We set the standard for harmonious relationships
We set the standard for harmonious relationships with all of our stakeholders Historical Community Investment 2016 Community Investment Aboriginal Relations $4.0 $3.8 • Supported/invested in: • $36 MM in procurement to Aboriginal − 31 volunteer fire departments businesses in 2016 $3.5 • Aboriginal E
Slide 20: Staying true to our strategy of increasing value and decreasing risk
Staying true to our strategy of increasing value and decreasing risk Mick Dilger
Slide 21: We remain confident in our strategy
We remain confident in our strategy Pembina's strategy Veresen's alignment Preserve value Both companies have a proven record of supporting safe, reliable and by providing safe, cost-effective, reliable services cost-effective midstream services for their customers (1) Diversify our asset base Exten
Slide 22: A proven track record of value chain investment and extension
A proven track record of value chain investment and extension Initial Extension Follow on Integrated Value Chain Highlights Investment Investment Pembina system constructed to • Largest NGL feeder system in bring product from Drayton WCSB 1954 - Valley to Edmonton $3 BB+ • Largest crude oil feeder p
Slide 23: The evolution of Pembina's value chain
The evolution of Pembina's value chain Pembina's operating margin ($MM) Gas services creation value chain extension 1 (attract liquids to conventional pipelines) 0 Provident acquisition value chain extension 0 2 (downstream services for conventional volumes) 4 0 Vantage acquisition geographic
Slide 24: Pembina and our largest Canadian peers
Pembina and our largest Canadian peers WCSB Liquids Gathering Capacity(1) and Estimated Throughput(2) WCSB Above and Below Ground Hydrocarbon Storage Capacity(1) 3,000 Phase III and IV (Mid -2017 – Capacity Contracted Throughput 12 Veresen Underground Above Ground Late 208) 2,500 Veresen 2,000 8 mmb
Slide 25: Large-scale combined growth capex program
Large-scale combined growth capex program 0 (Unsecured Growth) Pembina 0 Veresen ~$20 BB 0 • Alliance Expansion • Incremental 0 Veresen Midstream (Secured Growth) • PDH/PP Facility 0 • Peace Expansion • Export Terminal ~$6 BB • Duvernay 0 $2.4 BB $2.5 BB • Phases III – V Development • RFS III $1.9 B
Slide 26: Pembina is on very strong growth trajectory
Pembina is on very strong growth trajectory Historical Adjusted EBITDA and 2018 Outlook ~$2.55 BB to ~$2.75 BB ~$1.8 BB to ~$1.9 BB $1,189 MM $983 MM $920 MM Contribution from growth projects Commodity prices (1) 2014 2015 2016 2018 2018 (2) (Combined) Pembina is delivering on its promise and creati
Slide 27: Dividend growth supported by growing cash flow
Dividend growth supported by growing cash flow $3.00 $2.50 $2.00 $/Share $1.50 $1.00 $0.50 - 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E Dividend per share Adjusted cash flow from operating activities per share Strong history of growing Pembina's dividend and adjusted cash flow per
Slide 28: Proven M&A track record
Proven M&A track record EV/operating margin multiple at acquisition Current EV/operating margin multiple 12.1x (2018E) 11.8x 12.0x 11.6x 11.6x 12.0x 10.0x 10.0x ~10x 10.0x 10.0x 9.2x 8.7x 8.9x 8.9x 8.0x 8.0x 7.5x 6.0x 6.0x 4.0x 4.0x 2.0x 2.0x 0.0x 0.0x Cutbank Edmonton Provident Vantage Paramount Ve
Slide 29: Investing for tomorrow
Investing for tomorrow Historical integrity and support infrastructure spending(1) Pipeline and facility integrity $300 Volumetric management systems $200 Project development and governance frameworks $MM Accounting systems $100 Inventory management system - Risk management and security 2006 2007 20
Slide 30: Stabilizing macro environment supporting our resilient customer base
Stabilizing macro environment supporting our resilient customer base Stu Taylor
Slide 31: Modest recovery to stability in commodity prices
Modest recovery to stability in commodity prices Crude oil pricing Natural gas pricing Indicative fractionation spread(1) $120 $6.00 $60 $100 $5.00 $50 $80 $4.00 $40 $US / Bbl $US / Bbl $C / Gj $60 $3.00 $30 $40 $2.00 $20 $20 $1.00 $10 - - - 2010 2011 2012 2013 2014 2015 2016 2017 2010 2011 2012 201
Slide 32: Market conditions are supporting increased activity
Market conditions are supporting increased activity WCSB rig count WCSB rig utilization 700 60% 51% 600 500 39% 40% 37% 400 30% 26% 26% 300 23% 23% 20% 200 20% 13% 12% 100 8% - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec - 1Q 2Q 3Q 4Q 5-year range 5-year avg 2016 2017 2015 2016 2017E Commodity p
Slide 33: Propane markets have continued to improve
Propane markets have continued to improve Propane inventories US propane production US propane exports vs. capacity 1,600 120 US 1,400 100 1,400 80 mmbbls 1,200 60 1,200 40 1,000 20 - 1,000 800 mbpd Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec mbpd 5 Yr. Range 2016 2017 800 600 20 600 400 CA 15 2
Slide 34: WCSB resource plays and top producers
WCSB resource plays and top 10 producers Montney(1) Duvernay(1) 7.0 400 ~4,050 producing wells CAGR ~23% ~405 producing wells CAGR ~245% 6.0 (~70% of total) (~95% of total) Total Production (MMcfe/d) Total Production (Bcfe/d) 300 5.0 TOU TET MUR CNQ HSE APA VII TET 4.0 MUR 200 REP ECA BIR 3.0 Ve
Slide 35: 2016 was a year of repositioning for customers
2016 was a year of repositioning for customers Producers have seen share prices recover… They completed strategic transactions… 180 $1.4 BB $1.9 BB 170 160 $700 MM $625 MM Relative Performance (Base = 100) 150 148 $556 MM $538 MM 140 …And raised equity to ensure financial strength 130 132 120 $1.5 B
Slide 36: Attractive netbacks in key WCSB resource plays
Attractive netbacks in key WCSB resource plays Illustrative resource play analysis (Q4 2016) (C$/Boe)(1) Deep Montney Montney Swan Cardium Basin (Gas) DuvernayMontney (Oil) (Oil) Hills Oil Oil Estimated cash netback Deep Basin Montney (Gas) Duvernay Swan HillsCardium $45 $45 Revenue Royalties Transp
Slide 37: Our customers focus on long-life economic reserves
Our customers focus on long-life economic reserves North American Gas resource play break even(1) North American Oil resource play break even(1) $3.50 Denotes plays which Pembina serves Denotes plays which Pembina serves $60 $3.00 2017 Average NYMEX Price -->$3.25/Mcf 2017 Average WTI Price -->$49/B
Slide 38: Building something extraordinary
Building something extraordinary: commissioning ~$4 billion of new capital projects and positioning for long-term growth Paul Murphy
Slide 39: Hydrocarbon pipeline transportation capacity
Hydrocarbon pipeline transportation capacity 3,500 Hydrocarbon Liquids Natural Gas ~3.2 MMboed 125 In-service 3,000 138 Project under development 330 Uncommitted Project 250 2,500 180 2,000 420 Mboed 230 1,500 389 1,000 250 263 106 205 Mboed 500 628 ~2.9 Converted at 6:1 ratio MMbpd - Pre Expansion
Slide 40: Summary of major projects completed in 2016
Summary of major projects completed in 2016 (LVP) • Horizon Expansion − Expansion of the existing system to 250 mbpd − Included upgrading of mainline pump stations and other facility modifications − Completed on time and under budget − Commissioned July 1, 2016 • Karr Lateral − ~35 km lateral in the
Slide 41: Project execution highlights LVP Value Chain
Project execution highlights LVP Value Chain Safety metric(1) Capital Cost LTI Project In-service date Completed on-time? Completed on-budget? Man Hours Travel (km) ($MM) Frequency Heavy Oil & Oil Sands Horizon Expansion $130 July 2016 On time Under budget 244,000+ 1,580,000+ 0 Mitsue: ahead of sc
Slide 42: LVP Value Chain Growth
Pembina Crude Oil Pipelines 3 Pembina NGL Pipelines Railway TAYLOR FORT McMURRAY GIBBONS 4 FORT SASKATCHEWAN NAMAO JOSEPHBURG 2 Pembina Gas Processing Plant Veresen Gas Processing Plant 1 4 Pembina Fractionator EDMONTON 5 FORT Cloverbar Hub 5 Pembina Conventional Pipelines SASKATCHEWAN EDMONTON SHER
Slide 43: Phase III
1 Phase III Conventional Pipelines Project overview Construction update • Largest expansion project in Pembina's history Expected Key accomplishments in 2016 capital investment of $2.44 billion • Received AER approval in April 2016 • 880 km total of new pipeline with four distinct lines from Fox •
Slide 44: Phase III Construction Photos
1 Phase III Construction Photos Conventional Pipelines 44
Slide 45: Phase IV and Phase V
2 Phase IV and Phase V Conventional Pipelines Project overview Construction update • Ongoing customer demand additional pipeline Key activities and accomplishments in 2017 expansions • Phase IV: • Phase IV: $75 million in capital − Move engineering from FEED to detailed design − Two pump stations
Slide 46: NEBC Montney Expansion
3 NEBC Montney Expansion Conventional Pipelines Project overview Construction update • Large-scale pipeline expansion Expected capital Key accomplishments in 2016 investment of $235 million • Completed detailed engineering design • Underpinned by long-term, cost-of-service agreement with • Conduct
Slide 47: NEBC Montney Expansion Construction Photos
3 NEBC Montney Expansion Construction Photos Conventional Pipelines 47
Slide 48: Canadian Diluent Hub
4 Canadian Diluent Hub Crude Oil Midstream Project overview Construction update • Large-scale diluent terminal designed to accommodate diluent Key accomplishments in 2016 supply from Pembina's integrated value chain Expected • Started construction of terminal in May 2016 capital investment of ~$21
Slide 49: CDH Overview
4 CDH Overview Crude Oil Midstream CDH will be cost competitive with alternative routing to CDH offers storage to third parties in either cavern or above connected delivery pipelines ground tanks Cavern Storage at RFS • Currently in service " 12 ris 0" • Ability to store up to 500,000 barrels of con
Slide 50: Canadian Diluent Hub Construction Photos
4 Canadian Diluent Hub Construction Photos Crude Oil Midstream 50
Slide 51: Edmonton North Terminal
5 Edmonton North Terminal ("ENT") Crude Oil Midstream Project overview Construction update • Original storage on site ~300 mbbls Key accomplishments in 2016 • Provides strategically-located storage upstream of pipeline alley • Completed Swan Hills to ENT HDD • Storage of various grades (sour, swee
Slide 52: Edmonton North Terminal Construction Photos
5 Edmonton North Terminal Construction Photos Crude Oil Midstream 52
Slide 53: Potential Alliance Pipeline Expansion
6 Potential Alliance Pipeline Expansion Expansion considerations Illustrative Alliance map • In response to shipper demand to access the premium Chicago Septimus Gas Plant market, Alliance is evaluating a potential expansion to increase MONTNEY system capacity by ~30% (~500 MMcf/d) Ft. St. John Sept
Slide 54: Drone footage
Drone footage Aerial footage of Pembina's LVP growth projects 54
Slide 55: Building something extraordinary
Building something extraordinary: commissioning ~$4 billion of new capital projects and positioning for long-term growth Stuart Taylor
Slide 56: Summary of major projects completed in 2016
Summary of major projects completed in 2016 (HVP) • Musreau III − 100 MMcf/d shallow cut facility with liquids capacity of ~3,000 bpd − Completed on time and under budget in April 2016 − Leverages engineering and design work from our existing Musreau and Musreau II facilities and uses the same pipel
Slide 57: Project execution highlights HVP Value Chain
Project execution highlights HVP Value Chain Safety metric(1) Capital Cost LTI Project Date in-service Completed on-time? Completed on-budget? Man Hours Travel (km) ($MM) Frequency Gas Services Musreau III $85 April 2016 Ahead of schedule Under budget 134,000+ 500,000+ 0 Resthaven Expansion $70 Ap
Slide 58: Creating the WCSB's largest third-party gas processor
Creating the WCSB's largest third-party gas processor 7,000 In-service ~5.8 Project under development + Duvernay Potential Bcf/d 6,000 470 5,000 ~4.2 897 60 100 Bcf/d 243 4,000 MMcf/d 3,000 2,088 2,000 325 234 400 1,000 250 (2009) 455 318 - Cutbank - Initial Cutbank - Kakwa River Saturn Complex Rest
Slide 59: Fractionation capacity across three NGL market hubs
Fractionation capacity across three NGL market hubs 350 ~300 Edmonton Sarnia, Ontario US Midcontinent mbpd 300 ~250 56 250 mbpd 20 18 200 Mbpd 55 150 73 100 (2012) 9 8 50 65 - RFS I RFS RFS C3+ RFS II RFS III RFS III De- Sarnia Pembina Aux Sable (Net) Total Debottleneck Debottleneck (Q1 2016) (Q3 20
Slide 60: Significant growth in hydrocarbon storage capacity
Significant growth in hydrocarbon storage capacity Hydrocarbon storage capacity (underground and above ground) 6.0 Underground Storage Capacity (Redwater and Veresen) Above Ground Storage Capacity 14.2 In-Service Project Under Development MMbbls 4.0 0.5 0.3 0.6 1.0 2.0 1.6 0.0 1.5 8.0 6.5 0.6 1.7 MM
Slide 61: HVP Value Chain Growth
HVP Value Chain Growth Pembina Gas Processing Plant Veresen Gas Processing Plant 4 2 III RFS Pembina Fractionator TAYLOR Pembina Conventional Pipelines RFS II Pembina Oil Sands Pipelines Pembina Gas Gathering Pipelines 6 Alliance Pipeline AEGS Pipeline RFS I 2 PRINCE GEORGE 3 1 EDMONTON FORT SASKATC
Slide 62: Duvernay I
1 Duvernay I Gas Services Project overview Construction update • Development of a new 100 MMcf/d shallow cut gas plant Key accomplishments in 2016 Expected capital investment of $125 million (gross) • Completed design engineering • NGL extraction capacity of ~5,500(1) bpd • Completed procurement a
Slide 63: Duvernay I Construction Photos
1 Duvernay I Construction Photos Gas Services X 63
Slide 64: Duvernay Field Hub
2 Duvernay Field Hub Gas Services Project overview Construction update • Developing an infrastructure network that extends the Key accomplishments in 2016 reach of Pembina's Duvernay I facility Expected capital • Completed 1.2 km access road and earthworks at the Field investment of ~$145 million
Slide 65: Duvernay Field Hub Construction Photos
2 Duvernay Field Hub Construction Photos Gas Services 65
Slide 66: Duvernay infrastructure development opportunity
3 Duvernay infrastructure development opportunity Illustrative Duvernay development map(1) Overview • Infrastructure development and service agreement with Chevron Canada Limited ("Chevron") • 20-year agreement with a significant area of dedication across Chevron's Duvernay land base • Proposed infr
Slide 67: RFS III
4 RFS III NGL Midstream Project overview Construction update • New 55 mbpd C3+ fractionator at Pembina's Redwater site Key accomplishments in 2016 Expected capital investment of ~$415 million • Delivery and installation of all equipment including the • Underpinned by long-term, approximately 100%
Slide 68: RFS III Construction Photos
4 RFS III Construction Photos NGL Midstream 68
Slide 69: Terminalling Services for NWR Sturgeon Refinery
5 Terminalling Services for NWR Sturgeon Refinery NGL Midstream Project overview Construction update • Provide terminalling services for Sturgeon Refinery (North Key accomplishments in 2016 West Redwater Partnership) under a 30-year fixed return • Received approvals/permits agreement and a 10-year f
Slide 70: Terminalling Services for NWR Sturgeon Refinery Photos
5 Terminalling Services for NWR Sturgeon Refinery Photos NGL Midstream 70
Slide 71: Gas Processing Facilities
6 Gas Processing Facilities Veresen Midstream Construction Photos Project overview (gross capacities) Construction update • 400 MMcf/d sweet gas processing plant • Estimated cost: ~$860 MM (gross) • 5,700 bpd NGL (C3+) recovery • Overall progress: ~75% complete Sunrise • 2,750 bpd condensate handlin
Slide 72: Burstall Ethane Storage Cavern
7 Burstall Ethane Storage Cavern Veresen growth project Construction Photos Project overview Construction update • Salt cavern ethane storage facility with a Key accomplishments in 2016 capacity of ~1 million barrels • Completed site construction for wash processes • Expected in-service date of Q4 2
Slide 73: Drone footage
Drone footage Aerial footage of Pembina's HVP growth projects 73
Slide 74: The future: doing more with molecules we already handle
The future doing more with molecules we already handle Challenge the WCSB is oversupplied Opportunity economically advantaged feedstock with numerous hydrocarbons supports value-add infrastructure development Product Value-add opportunity End use/value-added product Natural Gas • Jordan Cove L
Slide 75: Illustrative WCSB propane supply and demand
Illustrative WCSB propane supply/demand considerations 250 200 Propane Volume (Mbpd) 150 100 50 - 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Alberta Demand Eastern Canadian Demand CKPC PDH (550 kTa) Inter Pipeline PDH (525 kTa) Kinder Morgan Cochin Deliveries Excess Propane Sup
Slide 76: LPG export terminal
LPG export terminal LPG export terminal opportunity Illustrative shipping considerations • Global opportunity − Growing North American production and robust international market demand • Decrease of traditional markets − Eastern Canada and US expected to be supplied by growing US production • Canadi
Slide 77: Assessing LPG West Coast Export Terminal Opportunity
Assessing LPG West Coast Export Terminal Opportunity Watson Island potential site highlights • Signed a non-binding letter of intent with the City of Prince Rupert • Site features sheltered berth, adequate existing dock infrastructure, and well- established rail connections between Redwater, AB an
Slide 78: Proposed PDH/PP Facility Overview
Proposed PDH/PP Facility Overview Proposed PDH/PP Facility Different grades of PP have different characteristics • Automotive • Pembina and PIC are progressing a proposed world-scale integrated • Housewares PDH/PP production facility to be located in Alberta's Industrial • Dairy containers • Housewa
Slide 79: PDH/PP Uses/Supply/Demand
PDH/PP Uses/Supply/Demand World Plastic Demand by Polymer(1) Canadian PP Demand(1) Polyethylene 700 PP 250 mmta derivatives account 600 for a combined 92 Volume ('000 MT) Other 26% 500 36% mmta (38%) with 400 PP having the 2nd 300 largest share at 63 200 PE mmta (26%) 100 38% worldwide - 2011 2012 2
Slide 80: Project update: key developments since announcement
Project update key developments since announcement • Completed detailed feasibility study reviewed target markets, preliminary engineering, logistics and cost-competitiveness • Executed 50/50 Joint Venture ("JV") agreements, including: − Formed Canada Kuwait Petrochemical Corporation ("CKPC") −
Slide 81: Jordan Cove LNG overview
Jordan Cove LNG overview Project Considerations Illustrative Site Layout Why Jordan Cove? Jordan Cove LNG Terminal Price competitive with USGC brownfield • 7.8 MMTPA(1) (~1.3 Bcf/d) greenfield on a delivered into Tokyo basis liquefied natural gas export facility Pacific Connector Pipeline 9 days shi
Slide 82: Committed to maintaining our financial 'Guard Rails'
Committed to maintaining our financial 'Guard Rails' Scott Burrows
Slide 83: Financial 'Guard Rail' considerations
Financial 'Guard Rail' considerations Pembina Pembina Combined (2015A) (pre-transaction) Maintain target of 80% fee-for-service ~84% ~87% 1 ~77% (2018 – 2022) (2018 – 2022) contribution to EBITDA ~16% >20% >20% 2 Maintain 'strong' BBB credit rating FFO/Debt(1) FFO/Debt(1) FFO/Debt(1) Target 75% cred
Slide 84: Maintain target of 80% fee-for-service contribution to EBITDA
Maintain target of 80% fee-for-service 1 contribution to EBITDA Contribution by contract type ($MM) Fee-based = Fee-based = Fee-based = Fee-based = Fee-based = 77% 77% 80% 83% 86% $3 ~4% $3 ~10% ~4% ~16% $2 ~5% ~13% $2 ~15% ~18% ~4% ~1% ~19% ~19% $1 ~22% ~70% ~13% ~33% ~65% $1 ~61% ~64% ~44% - 2015A
Slide 85: Commitment to a strong 'BBB' credit rating
2 Commitment to a strong 'BBB' credit rating (Managing toward target credit metrics) Considerations Debt/Adjusted EBITDA (2018 Forecast)(1) • Unwavering long-term financial strategy: 4.5x − Financing growth 50% debt/50% equity 4.0x 3.75x - 4.25x − Maintain 'strong' BBB rating 3.5x − Ensure ample liq
Slide 86: Target 75% credit exposure from investment grade and secured counterparties
Target 75% credit exposure from investment grade 3 and secured counterparties 60-day credit exposure(1,3) Credit considerations AA- to AA+ Non Investment Grade 20% • Pembina assesses all counterparties during on-boarding 20% process and actively monitors credit limits and exposures across the busine
Slide 87: Target <100% payout of fee-for-service distributable cash flow by 2018
Target <100% payout of fee-for-service 4 distributable cash flow by 2018 ALBERTA SASKATCHEWAN 015A 2016A 2017E Illustrative fee-for-service distributable cash flow analysis(1) 2018E (Combined) Considerations FFS Payout • Target = dividend and all corporate ~80% costs underpinned 100% by fee- for-ser
Slide 88: Pembina is on a very strong growth trajectory
5 Pembina is on a very strong growth trajectory Historical Adjusted EBITDA and 2018 Outlook ~$2.55 BB to ~$2.75 BB ~$1.8 BB to ~$1.9 BB $1,189 MM $983 MM $920 MM Contribution from growth projects Commodity prices (1) 2014 2015 2016 2018 2018 (2) (Combined) Pembina is delivering on its promise and cr
Slide 89: Continuing financial strength and ability to access markets to fund growth
Continuing financial strength and ability to access markets to fund growth Scott Burrows
Slide 90: Larger and stronger together
Larger and stronger together Total enterprise value ($BB)(1) Relative positioning (EV $BB)(1,2) $35 Veresen Pembina $33 Market Capitalization Net Debt $30 $106 $106 Pro Forma $23 $25 $20 ~45% $15 Increase $10 $5 - Current Combined 2018 Adjusted EBITDA ($BB) $3.0 Veresen Pembina $2.55 - $2.75 $40 $2.
Slide 91: Commodity price considerations
Commodity price considerations Sustained financial performance Long-term record of dividend growth Growing dividends and funding growth $1,600 $160 $2.00 $160 $1,200 $1,400 $140 $140 $1,000 $1.60 $1,200 $120 $120 $800 $1,000 $100 $100 $1.20 $US / Bbl $ / Share $US / Bbl $MM $MM $800 $80 $80 $600 $0.
Slide 92: Capital expenditure and financing objectives
Capital expenditure and financing objectives 20142015 2017 2016 Capital expenditure and funding 2017 (Standalone) 2018 (Combined) (Combined) Financing objectives $3.0 2017/2018 Capital ~$3.5 BB • Finance growth ~50/50 debt/equity over the long term • Maintain 'strong' BBB rating with conservative
Slide 93: Pembina's access to capital remains strong
Pembina's access to capital remains strong Financing considerations Total capital raised ~$7.6 billion (2013 – 2017 YTD) • ~$7.6 billion raised since 2013 (inclusive of DRIP(1) $3.5 proceeds) $3.1 • ~$3.1 billion of debt raised since 2013 $3.0 $3.0 − ~4.2% average coupon − Tenor of ~19 years $2.5
Slide 94: Leverage comparison across industry
Leverage comparison across industry Select Canadian and US energy infrastructure peer comparison 7.0x 6.0x 5.0x Debt / EBITDA (2018E) (Combined) 4.0x 3.0x 2.0x 1.0x - BBB A- A- BBB+ A BBB+ BBB+ BBB BBB BBB+ Ba2 NR Pembina continues to employ less leverage than its peers Source: CIBC World Markets, B
Slide 95: Historical balance sheet review
Historical balance sheet review Historical debt/trailing twelve month ("TTM") Adjusted EBITDA and capital expenditures 4.5x $800 4.0x $700 3.5x $600 3.0x Debt / TTM EBITDA (x) $500 2.5x $MM $400 2.0x $300 1.5x $200 1.0x 0.5x $100 - - Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1
Slide 96: Long-dated debt maturity profile
Long-dated debt maturity profile • Pembina's debt portfolio is more conservative Pembina's current debt maturity profile(1) $600 than its peer group: Senior Debt Convertible Debentures − Weighted average maturity of ~13 years $400 vs. peer group average of ~8 years $MM − Weighted average coupon of ~
Slide 97: Conclusion
Conclusion Mick Dilger
Slide 98: We continue driving shareholder value
We continue driving shareholder value (past 10 years) 5% Dividend growth rate(1) 8 - 10% 440% Total shareholder Target adjusted return(2) cash flow per share growth 18% $5.1 BB Average compound annual return(2) in dividends paid since inception(3) Proven long-term track record of shareholder value c
Slide 99: Key deliverables for the next 12 months
Key deliverables for the next 12 months Maintain exemplary safety and reliability record Deliver ~$6 billion of growth capital projects on time and on budget Successfully close and integrate the Veresen acquisition Deliver promised combined company synergies of $75-$100 MM annually File Jordon Cove
Slide 100: Closing thoughts
Closing thoughts Proven history of safe and reliable operations while developing enduring relationships with local communities Our long-term strategy remains unchanged and continues to create significant shareholder value The transaction significantly increases Pembina's size, diversification, and e
Slide 101: Pembina Pipeline Corporation
Contact Us: Pembina Pipeline Corporation Suite 4000, 585 8th Avenue S.W. Calgary, AB T2P 1G1 www.pembina.com investor-relations@pembina.com Toll Free: 1-855-880-7404 Phone: (403) 231-3156
Slide 102: Appendix: Business segment review and update
Appendix: Business segment review and update
Slide 103: Conventional Pipelines
Conventional Pipelines 350 field receipt 10K points kilometres of pipelines(1) 12 99% 2016 system unique reliability delivery points (1) Inclusive of expansion projects that are under construction. See "Forward-looking statements and information." 103
Slide 104: Conventional Pipelines
Conventional Pipelines • Pipeline operational excellence: 99% reliable (2016) ALBERTA • Proximal to prolific geology FORT • Q1 2017 revenue volumes: 691 mbpd (~3% increase from Q1 2016) MCMURRAY DUNVEGAN TAYLOR • 2016 revenue volumes: 650 mbpd (~6% increase from 2015) FORT ST JOHN • Connected to ref
Slide 105: Conventional Pipelines update (2015 – 2017)
Conventional Pipelines update (2015 – 2017) Operating and financial overview 2016 highlights and 2017 outlook Revenue volumes (mbpd) 2016 Highlights 660 Y-o-Y increase → 6% 650 • Record annual revenue volumes (650 mbpd) 640 97% of 620 614 2016 • Record operating margin ($494 MM) Budget 600 • Another
Slide 106: Oil Sands & Heavy Oil
Oil Sands & Heavy Oil 6 field receipt points 1.6K kilometres of pipelines 13 99% unique 2016 system delivery reliability points 106
Slide 107: Oil Sands & Heavy Oil
Oil Sands & Heavy Oil Syncrude Pipeline • Operational excellence Horizon Pipeline Cheecham Lateral − ~99% reliable (2016) Nipisi Pipeline Mitsue Pipeline Peace Pipeline • Diverse connectivity to various industry hubs for crude oil and condensate • Contracts are long-life with high credit worthy coun
Slide 108: Oil Sands & Heavy Oil update (2015 – 2017)
Oil Sands & Heavy Oil update (2015 – 2017) Operating and financial overview 2016 highlights + 2017 outlook Contracted capacity (mbpd) 2016 Highlights 1,000 975 • Contracted capacity increased to 975 mbpd in 2016 950 900 880 • Operating margin ($140 MM) remains steady 850 • Another year of safe and >
Slide 109: Crude Oil Midstream
Crude Oil Midstream 21 inbound pipeline 1.2 connections MMbpd pipeline 13 connectivity 1.3 MMbbls total outbound storage pipeline connections capacity(1) (1) Inclusive of expansion projects that are under construction. See "Forward-looking statements and information." 109
Slide 110: Crude Oil Midstream
Crude Oil Midstream • Develop and provide terminal, hub and storage ALBERTA services to support the energy industry FORT • ~900 mbbls of above ground crude oil and MCMURRAY TAYLOR condensate storage capacity • Access to approximately 1.2 MMbpd of crude oil and condensate supply through connected pip
Slide 111: Crude Oil Midstream update (2015 – 2017)
Crude Oil Midstream update (2015 – 2017) Operating and financial overview 2016 highlights + 2017 outlook Operating margin ($MM) 2016 Highlights $60 101% of 2015 Budget $125 • Operating margin ($162 MM) remains relatively strong despite tighter price $100 differentials $US / Bbl $40 $C MM $75 $50 • A
Slide 112: Gas Services
Gas Services 1.8 Bcf/d capacity(1) 500+ Kilometres gathering 4 capacity 92% operating 2016 complexes reliability (1) Inclusive of expansion projects that are under construction. See "Forward-looking statements and information." 112
Slide 113: Gas Services
Gas Services • Positioned in active and emerging NGL-rich plays ALBERTA • Provide gas gathering, compression and shallow/deep cut processing services • 618 MMcf/d shallow cut and 1,099 MMcf/d deep cut gas processing Fort McMurray capacity • Q1 2017 average revenue volumes: ‒ 1,024 MMcf/d (52% increa
Slide 114: Gas Services update (2015 – 2017)
Gas Services update (2015 – 2017) Operating and financial overview 2016 highlights + 2017 outlook Revenue volumes (MMcf/d) 2016 Highlights 1,000 Y-o-Y increase → 27% 836 • Record annual revenue volumes (836 MMcf/d) + operating margin ($195 MM) + 800 656 102% of 600 another year of safe operations ac
Slide 115: Saturn Complex
Saturn Complex Asset Highlights • 400 MMcf/d (net) of deep cut processing capacity with liquids production of ~26 mbpd − 2x 200 MMcf/d processing facilities • Saturn I was completed in 2013, with Saturn II completed in 2015 • Ortloff proprietary process achieves high ethane recoveries while managing
Slide 116: Resthaven Complex
Resthaven Complex Asset Highlights • 300 MMcf/d (gross) of deep cut processing capacity with liquids production of ~25 mbpd (C2+/C5+) − Pembina has ~71% ownership in the facility • Facility was completed in 2014 • Raw inlet gas to deep cut facility • Expansion in 2015/2016 extended the reach of the
Slide 117: Cutbank Complex
Cutbank Complex Asset Highlights • 773 MMcf/d (net) of shallow and deep cut processing capacity with liquids production of ~23 mbpd − 6 shallow cut trains (568 MMcf/d) − 1 deep cut train (205 MMcf/d) • Key members of Pembina's management team have a long history with the complex • Interconnections w
Slide 118: NGL Midstream
NGL Midstream 200 mbpd + RFS fractionation(1) 2.1 Bcf/d Empress 8.3 capacity 3k MMbbls finished rail cars(1) product storage (1) Inclusive of expansion projects that are under construction. See "Forward-looking statements and information." 118
Slide 119: NGL Midstream
NGL Midstream Gas Processing Plant Fractionator Redwater West: Midstream Storage Facility Truck Terminal • 155 mbpd of NGL fractionation capacity and 8.3 MMbbls of Rail Terminal Pembina Pipelines finished product cavern storage Third Party Pipelines • Industry-leading rail-based terminal (largest NG
Slide 120: NGL Midstream update (2015 – 2017)
NGL Midstream update (2015 – 2017) Operating and financial overview 2016 highlights + 2017 outlook NGL sales volumes (mbpd) 2016 Highlights 150 143 • Another year of safe, reliable operations across all facilities 140 97% of Y-o-Y 130 2016 116 change • Announced proposed PDH/PP Facility in Alberta's
Slide 121: Redwater is Canada's premier fractionation complex
Redwater is Canada's premier fractionation complex Rail Loading RFS I RFS II RFS III Operating & Under Construction Operating In service Under Construction Expanding facility to handle 250+ cars per 73,000 bpd C2+ fractionator ~73,000 bpd C2+ fractionator 55,000 bpd C3+ fractionator day. Ability to
Slide 122: Empress Complex
Empress Complex Asset Highlights • Pembina owns ~2.1 Bcf/d of extraction capacity across the Empress Complex − Pembina Facility (77% ownership of 1.2 Bcf/d) − Plains Facility (33% ownership of 2.7 Bcf/d) − Spectra Facility (12% ownership of 2.4 Bcf/d) • Well connected to major pipelines includi
Slide 123: Corunna Facility
Corunna Facility Asset Highlights • Pembina owned and operated storage and terminalling facility • 5.3 MMbbls of existing cavern storage and product drying facilities • 20 mbpd of local fractionation capacity through partial ownership of Plains' fractionation facility • LPG truck and rail terminalli
Slide 124: Younger Facility
Younger Facility Asset Highlights • 750 MMcf/day (gross) high efficiency NGL extraction straddle plant − 43% Pembina ownership − Large captive gathering footprint − Well connected to local gas production • 18 mbpd NGL Fractionation facility (Joint Venture) • Interconnected to Pembina's conventional
Slide 125: Commodity sensitivities
Commodity sensitivities
Slide 126: Sensitivities (2017 EBITDA C$MM)
Sensitivities (2017 EBITDA C$MM) (pre-combination) Conventional Pipelines Key variable Uncontracted volumes Volume ± 10,000 bpd ±$10 Gas Services Key variable Uncontracted volumes Volume ± 10 mmcf/d ±$2 NGL Midstream (1,2) Key variable AECO ± $0.25 CAD/gj ±$10 Propane ± $0.10 US/usg ±$40 Butane ± $0
Slide 127: Non-GAAP measures
Non-GAAP measures This presentation uses certain terms that are not defined by GAAP but are used by management of Pembina to evaluate Pembina's performance. Non-GAAP and additional GAAP financial measures do not have a standardized meaning prescribed by GAAP and are therefore unlikely to be comparab