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Pembina unveils C$325M Alberta pipe expansion, boosts dividend


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Pembina unveils C$325M Alberta pipe expansion, boosts dividend

Pembina Pipeline Corp. announced C$325 million worth of pipeline infrastructure projects on its Peace liquids pipeline system. The company also updated its 2018 outlook and increased its monthly dividend.

The phase 4 and 5 expansion projects would add incremental capacity between Lator and Namao, Alberta, in the path of the 420,000-barrel-per-day phase 3 expansion, which is almost complete and expected to begin service in July, Pembina said in an April 4 news release. It would carry crude oil, condensate, propane-plus and ethane-plus. The two new projects are supported by long-term take-or-pay contracts.

Phase 4, estimated to cost C$75 million, would add two pump stations on the new 24-inch pipeline running from Fox Creek to Namao, which is part of phase 3. The Fox Creek and Namao pump stations are expected to increase capacity in that section by about 180,000 bbl/d. The in-service date is scheduled for late 2018.

Phase 5 involves construction of a 95-kilometer, 20-inch pipeline from Lator to Fox Creek, aiming to ease capacity constraints by adding about 260,000 bbl/d of capacity. The new pipeline would also support projected growth in the Montney and Deep Basin resource plays, as well as provide access to Pembina's downstream capacity at Fox Creek, the company said.

The project, for which Pembina has budgeted C$250 million, has garnered regulatory and environmental approvals, with clearing of right of way about 50% complete. It is expected to begin service by late 2018.

Updated outlook for 2018

Pembina's adjusted EBITDA for 2018 is expected to be C$1.8 billion to C$1.9 billion, or almost twice the company's 2015 adjusted EBITDA.

About C$5.3 billion of new assets are expected to begin service by the end of 2017, which would contribute an incremental run-rate annual EBITDA of C$600 million to C$950 million in 2018, as projected in late 2015.

"By mid-year, we expect to bring into service the remaining projects that made up the largest capital program in Pembina's history," said Mick Dilger, president and CEO of Pembina.

Dividend increase

Pembina increased its monthly common share dividend rate by 6.25%, to 17 Canadian cents per share. The dividend is payable May 15 to shareholders of record April 25.

"With anticipated cash flows from the $4 billion of major projects we expect to bring into service in mid-2017, along with growing activity in the basin as evidenced by the pipeline expansions we also announced today and the numerous additional growth opportunities under development, we are confident in our solid foundation for longer-term dividend growth potential and our ability to grow shareholder value over the coming years," said Scott Burrows, vice president for finance and CFO.