CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION(unaudited) |
($ mil ions) | September 30, 2022 | December 31, 2021 |
Assets |
Current assets |
Cash and cash equivalents | | | 294 | 43 |
Trade receivables and other | | | 892 | 812 |
Inventory | | | 276 | 376 |
Derivative financial instruments (Note 14) | | | 99 | 14 |
Assets held for sale (Note 3) | | | 86 | — |
| | | 1,647 | 1,245 |
Non-current assets |
Property, plant and equipment (Note 3) | | | 15,521 | 18,193 |
Intangible assets and goodwil (Note 4) | | | 6,064 | 6,238 |
Investments in equity accounted investees (Note 6) | | | 7,498 | 4,622 |
Right-of-use assets | | | 507 | 581 |
Finance lease receivable | | | 218 | 211 |
Deferred tax assets | | | 233 | 257 |
Derivative financial instruments (Note 14) | | | 63 | 81 |
Other assets | | | 49 | 28 |
| | | 30,153 | 30,211 |
Total assets | | | 31,800 | 31,456 |
Liabilities and equity |
Current liabilities |
Trade payables and other | | | 1,022 | 1,063 |
Loans and borrowings (Note 7) | | | 1,050 | 1,000 |
Dividends payable | | | 120 | 115 |
Lease liabilities | | | 77 | 88 |
Contract liabilities (Note 10) | | | 70 | 71 |
Derivative financial instruments (Note 14) | | | 49 | 53 |
| | | 2,388 | 2,390 |
Non-current liabilities |
Loans and borrowings (Note 7) | | | 8,976 | 9,645 |
Subordinated hybrid notes (Note 7) | | | 595 | 594 |
Lease liabilities | | | 591 | 635 |
Decommissioning provision (Note 8) | | | 235 | 412 |
Contract liabilities (Note 10) | | | 142 | 220 |
Deferred tax liabilities | | | 2,366 | 3,011 |
Other liabilities | | | 164 | 186 |
| | | 13,069 | 14,703 |
Total liabilities | | | 15,457 | 17,093 |
Equity |
Attributable to shareholders | | | 16,283 | 14,303 |
Attributable to non-control ing interest | | | 60 | 60 |
Total equity | | | 16,343 | 14,363 |
Total liabilities and equity | | | 31,800 | 31,456 |
See accompanying notes to the condensed consolidated interim financial statements |
| | | | | Pembina Pipeline Corporation Third Quarter 2022 45 |
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME(unaudited) |
| 3 Months Ended September 30 | 9 Months Ended September 30 |
($ mil ions, except per share amounts) | | | 2022 | 2021 | 2022 | 2021 |
Revenue (Note 10) | | | 2,779 | 2,149 | 8,912 | 6,067 |
Cost of sales (Note 12) | | | 2,111 | 1,546 | 6,829 | 4,282 |
(Gain) Loss on commodity-related derivative financial |
instruments (Note 14) | | | (83) | (4) | (77) | 121 |
Share of profit from equity accounted investees (Note 6) | | | 123 | 75 | 282 | 198 |
Gross profit | | | 874 | 682 | 2,442 | 1,862 |
General and administrative | | | 76 | 68 | 273 | 234 |
Other expense (income) | | | 27 | (311) | 17 | (282) |
Gain on Pembina Gas Infrastructure Transaction (Note 5) | | | (1,110) | — | (1,110) | — |
Impairment expense | | | — | — | — | 35 |
Results from operating activities | | | 1,881 | 925 | 3,262 | 1,875 |
Net finance costs (Note 11) | | | 140 | 144 | 373 | 343 |
Earnings before income tax | | | 1,741 | 781 | 2,889 | 1,532 |
Current tax expense | | | 70 | 141 | 245 | 255 |
Deferred tax (recovery) expense | | | (158) | 52 | (84) | 115 |
Income tax (recovery) expense | | | (88) | 193 | 161 | 370 |
Earnings | | | 1,829 | 588 | 2,728 | 1,162 |
Other comprehensive income (loss), net of tax (Note 13 & 14) |
Exchange gain on translation of foreign operations | | | 271 | 126 | 341 | 4 |
Impact of hedging activities | | | (13) | 4 | (5) | 4 |
Total comprehensive income attributable to shareholders | | | 2,087 | 718 | 3,064 | 1,170 |
Earnings attributable to common shareholders, net of |
preferred share dividends | | | 1,795 | 554 | 2,628 | 1,054 |
Earnings per common share – basic (dol ars) | | | 3.24 | 1.01 | 4.75 | 1.92 |
Earnings per common share – diluted (dol ars) | | | 3.23 | 1.01 | 4.73 | 1.91 |
Weighted average number of common shares (mil ions) |
Basic | | | 554 | 550 | 553 | 550 |
Diluted | | | 556 | 551 | 555 | 551 |
See accompanying notes to the condensed consolidated interim financial statements |
46 | Pembina Pipeline Corporation Third Quarter 2022 |
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY(unaudited) |
| Attributable to Shareholders of the Company |
| | | Common | Preferred | | | | | | | Non- |
| | Total | Share | | | Share | | | | | Control ing |
| | Equity | ($ mil ions) | Capital | | | Capital | Deficit | AOCI(1) | Total | Interest |
December 31, 2021 | | | | 15,678 | | | 2,517 | (3,920) | 28 | 14,303 | 60 | 14,363 |
Total comprehensive income |
Earnings | | | | — | | | — | 2,728 | — | 2,728 | — | 2,728 |
Other comprehensive income (Note 13) | | | | — | | | — | — | 336 | 336 | — | 336 |
Total comprehensive income | | | | — | | | — | 2,728 | 336 | 3,064 | — | 3,064 |
Transactions with shareholders of the Company (Note 9) |
Part VI.1 tax on preferred shares | | | | — | | | (7) | — | — | (7) | — | (7) |
Repurchase of common shares | | | | (152) | | | — | (97) | — | (249) | — | (249) |
Share-based payment transactions | | | | 316 | | | — | — | — | 316 | — | 316 |
Dividends declared – common | | | | — | | | — | (1,050) | — | (1,050) | — | (1,050) |
Dividends declared – preferred | | | | — | | | — | (94) | — | (94) | — | (94) |
Total transactions with shareholders of the Company | | | | 164 | | | (7) | (1,241) | — | (1,084) | — | (1,084) |
September 30, 2022 | | | | 15,842 | | | 2,510 | (2,433) | 364 | 16,283 | 60 | 16,343 |
December 31, 2020 | | | | 15,644 | | | 2,946 | (3,637) | 2 | 14,955 | 60 | 15,015 |
Total comprehensive income |
Earnings | | | | — | | | — | 1,162 | — | 1,162 | — | 1,162 |
Other comprehensive income (Note 13) | | | | — | | | — | — | 8 | 8 | — | 8 |
Total comprehensive income | | | | — | | | — | 1,162 | 8 | 1,170 | — | 1,170 |
Transactions with shareholders of the Company (Note 9) |
Part VI.1 tax on preferred shares | | | | — | | | (7) | — | — | (7) | — | (7) |
Preferred shares redemption | | | | — | | | (420) | — | — | (420) | — | (420) |
Share-based payment transactions | | | | 26 | | | — | — | — | 26 | — | 26 |
Dividends declared – common | | | | — | | | — | (1,040) | — | (1,040) | — | (1,040) |
Dividends declared – preferred | | | | — | | | — | (102) | — | (102) | — | (102) |
Total transactions with shareholders of the Company | | | | 26 | | | (427) | (1,142) | — | (1,543) | — | (1,543) |
September 30, 2021 | | | | 15,670 | | | 2,519 | (3,617) | 10 | 14,582 | 60 | 14,642 |
(1) | Accumulated Other Comprehensive Income (loss) ("AOCI"). |
See accompanying notes to the condensed consolidated interim financial statements |
| | | | | Pembina Pipeline Corporation Third Quarter 2022 47 |
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS(unaudited) |
| 3 Months Ended September 30 | 9 Months Ended September 30 |
($ mil ions) | | | 2022 | 2021 | 2022 | 2021 |
Cash provided by (used in)Operating activitiesEarnings |
| | | 1,829 | 588 | 2,728 | 1,162 |
Adjustments for: |
Share of profit from equity accounted investees | | | (123) | (75) | (282) | (198) |
Distributions from equity accounted investees | | | 138 | 106 | 438 | 333 |
Depreciation and amortization | | | 146 | 180 | 521 | 543 |
Impairment expense | | | — | — | — | 35 |
Gain on Pembina Gas Infrastructure Transaction (Note 5) | | | (1,110) | — | (1,110) | — |
Unrealized gain on commodity-related derivative financial |
instruments | | | (102) | (47) | (192) | (43) |
Net finance costs (Note 11) | | | 140 | 144 | 373 | 343 |
Net interest paid | | | (122) | (136) | (341) | (333) |
Income tax (recovery) expense | | | (88) | 193 | 161 | 370 |
Taxes paid | | | (68) | (69) | (306) | (265) |
Share-based compensation expense | | | 5 | 20 | 77 | 77 |
Share-based compensation payment | | | — | — | (45) | (32) |
Net change in contract liabilities | | | (19) | (9) | 21 | 10 |
Other | | | (16) | 11 | (32) | 21 |
Change in non-cash operating working capital | | | 157 | 7 | 15 | (70) |
Cash flow from operating activities | | | 767 | 913 | 2,026 | 1,953 |
Financing activities |
Net decrease in bank borrowings | | | (115) | (278) | (94) | (92) |
Proceeds from issuance of long-term debt, net of issue costs | | | — | — | — | 593 |
Repayment of long-term debt | | | (425) | — | (550) | (250) |
Repayment of lease liability | | | (20) | (23) | (65) | (64) |
Exercise of stock options | | | 7 | 3 | 309 | 6 |
Repurchase of common shares | | | (155) | — | (249) | — |
Redemption of preferred shares | | | — | — | — | (420) |
Common share dividends paid | | | (349) | (346) | (1,045) | (1,039) |
Preferred share dividends paid | | | (31) | (31) | (94) | (103) |
Cash flow used in financing activities | | | (1,088) | (675) | (1,788) | (1,369) |
Investing activities |
Capital expenditures | | | (131) | (209) | (462) | (482) |
Contributions to equity accounted investees | | | (17) | (18) | (42) | (30) |
Cedar acquisition | | | — | (4) | — | (41) |
Proceeds from disposition (Note 5) | | | 609 | — | 609 | — |
Proceeds from sale of assets | | | 1 | — | 26 | 12 |
Receipt of finance lease payments | | | 6 | 2 | 12 | 8 |
Interest paid during construction | | | (3) | (5) | (18) | (19) |
Advances to related parties | | | — | 1 | — | (9) |
Changes in non-cash investing working capital and other | | | (76) | 47 | (124) | (1) |
Cash flow used in investing activities | | | 389 | (186) | 1 | (562) |
Change in cash and cash equivalents | | | 68 | 52 | 239 | 22 |
Effect of movement in exchange rates on cash held | | | 8 | 3 | 12 | 9 |
Cash and cash equivalents, beginning of period | | | 218 | 57 | 43 | 81 |
Cash and cash equivalents, end of period | | | 294 | 112 | 294 | 112 |
See accompanying notes to the condensed consolidated interim financial statements |
48 | Pembina Pipeline Corporation Third Quarter 2022 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
1. REPORTING ENTITY |
Pembina Pipeline Corporation ("Pembina" or the "Company") is a Calgary-based, leading energy transportation and midstream service provider that has served North America's energy industry for more than 65 years. These condensed consolidated unaudited interim financial statements ("Interim Financial Statements") include the accounts of the Company, its subsidiary companies, partnerships and any investments in associates and joint arrangements as at and for the three and nine months ended September 30, 2022. |
Pembina owns an integrated network of hydrocarbon liquids and natural gas pipelines, gas gathering and processing facilities, oil and natural gas liquids infrastructure and logistics services, and a growing export terminals business. Pembina's integrated assets and commercial operations along the majority of the hydrocarbon value chain al ow it to offer a ful spectrum of midstream and marketing services to the energy sector. |
These Interim Financial Statements and the notes hereto have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, as issued by the International Accounting Standards Board. The accounting policies applied are in accordance with International Financial Reporting Standards ("IFRS"), are consistent with the audited annual consolidated financial statements of the Company as at and for the year ended December 31, 2021 ("Consolidated Financial Statements"), except as noted below, and should be read in conjunction with those Consolidated Financial Statements. The Interim Financial Statements were authorized for issue by Pembina's Board of Directors on November 3, 2022. |
Assets Held for Sale |
Non-current assets, or disposal groups comprising of assets and liabilities, are classified as held-for-sale if it is highly probable that they wil be recovered primarily through sale rather than through continued use. |
Such assets, or disposal groups, are general y measured at the lower of their carrying amount and fair value less costs to sel . Any impairment loss on a disposal group is al ocated first to goodwil , and then to the remaining assets and liabilities on a pro rata basis, except that no loss is al ocated to inventories, financial assets, deferred tax assets, or employee benefit assets, which continue to be measured in accordance with the Company's other accounting policies. Impairment losses on initial classification as held-for-sale and subsequent gains and losses on remeasurement are recognized in earnings. |
Once classified as held-for-sale, intangible assets and property, plant and equipment are no longer amortized or depreciated. |
Basis of Consolidation - Loss of Control |
When there is a loss of control of a subsidiary in a transaction with a joint venture, the Company derecognizes the assets and liabilities of the subsidiary and other components of equity. However, there is an accounting policy choice to recognize the entirety of any resulting gain or loss in earnings on loss of control or to recognize the gain or loss only to the extent of the unrelated investor's interest in the joint venture. Pembina has elected to recognize the ful gain in its entirety. As a result, any interest retained in the former subsidiary is measured at fair value when control is lost. |
| Pembina Pipeline Corporation Third Quarter 2022 49 |
Use of Estimates and Judgments |
Management is required to make estimates and assumptions and use judgment in the application of accounting policies that could have a significant impact on the amounts recognized in the Interim Financial Statements. Actual results may differ from estimates and those differences may be material. By their nature, judgments and estimates may change in light of new facts and circumstances in the internal and external environment. There have been no material changes to Pembina's critical accounting estimates and judgments during the three and nine months ended September 30, 2022 except as noted below related to the disposition discussed in Note 5 and the PGI Transaction discussed in Note 6. |
Acquisition of an interest in a Joint Venture |
Acquisitions of interests in joint ventures that meet the definition of a business in-substance involve application of the acquisition method of accounting in order to apply the equity method post-acquisition. The determination of fair value often requires management to make judgments about future possible events. The assumptions with respect to the fair value of consideration exchanged and intangible assets require the most judgment. Estimates of future cash flows, forecast revenue, contract renewal rates, and discount rates are made in determining the fair values of the businesses contributed to the joint venture and Pembina's share of the fair value of assets acquired and liabilities assumed. Changes in these assumptions or estimates used in determining the fair values of the businesses contributed or Pembina's share of acquired assets and liabilities could impact the amounts assigned to the investment in PGI, the gain on the disposition, as wel as the assets, liabilities, intangible assets, goodwil and deferred taxes in the in-substance purchase price equation for the investment in PGI. Future earnings can be affected as a result of changes in Pembina's share of the joint venture's equity accounted profits or losses due to differences in future depreciation and amortization, asset or goodwil impairment. |
2. DETERMINATION OF FAIR VALUES |
A number of the Company's accounting policies and disclosures require the determination of fair value for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the methods set out in the Consolidated Financial Statements. These methods have been applied consistently to al periods presented in these Interim Financial Statements. |
Impacts of Geopolitical Events in Eastern Europe and the Ongoing COVID-19 Pandemic |
Measuring fair values using significant unobservable inputs has become more chal enging in the current environment, where the geopolitical events in Eastern Europe and continuing events and conditions related to the COVID-19 pandemic are driving significant volatility in commodity prices and currencies, disruption of business operations and a significant increase in economic uncertainty and inflation. Management applied its judgment in determining the impact of the significant uncertainties created by these events and conditions on the assessed fair values of assets and liabilities in the Interim Financial Statements. |
50 | Pembina Pipeline Corporation Third Quarter 2022 |
3. PROPERTY, PLANT AND EQUIPMENT |
| | | | Cavern |
| Land and | | Facilities and | Storage and | Assets Under |
($ mil ions) | Land Rights | Pipelines | Equipment | Other | Construction | Total |
CostBalance at December 31, 2021 |
| | 456 | 9,279 | | | | | 9,384 | 2,084 | | | | 915 | 22,118 |
Additions and transfers | | | | | | | | | 21 | 620 | | | | | 142 | 52 | | | | (391) | 444 |
Disposition (Note 5) | | | | | | | | | (1) | (475) | | | | | (2,440) | (104) | | | | (20) | (3,040) |
Change in decommissioning provision | | | | | | | | | — | (20) | | | | | (100) | (21) | | | | — | (141) |
Other | | | | | | | | | (1) | (55) | | | | | (81) | (9) | | | | (14) | (160) |
Foreign exchange | | | | | | | | | 6 | 71 | | | | 30 | — | | | | — | 107 |
Transfers to assets held for sale | | | | | | | | | — | — | | | | (112) | (1) | | | | (1) | (114) |
Balance at September 30, 2022 | | 481 | 9,420 | | | | | 6,823 | 2,001 | | | | 489 | 19,214 |
DepreciationBalance at December 31, 2021 |
| | | | | | | | | 26 | 2,015 | | | | | 1,421 | 463 | | | | — | 3,925 |
Depreciation | | | | | | | | | 4 | 145 | | | | | 167 | 59 | | | | — | 375 |
Disposition (Note 5) | | | | | | | | | — | (85) | | | | | (384) | (38) | | | | — | (507) |
Other | | | | | | | | | — | (36) | | | | | (32) | (4) | | | | — | (72) |
Transfers to assets held for sale | | | | | | | | | — | — | | | | (28) | — | | | | — | (28) |
Balance at September 30, 2022 | | | | | | | | | 30 | 2,039 | | | | | 1,144 | 480 | | | | — | 3,693 |
Carrying amountsBalance at December 31, 2021 |
| | 430 | 7,264 | | | | | 7,963 | 1,621 | | | | 915 | 18,193 |
Balance at September 30, 2022 | | 451 | 7,381 | | | | | 5,679 | 1,521 | | | | 489 | 15,521 |
On July 8, 2022, Pembina entered into a purchase and sale agreement with Plains Midstream Canada ULC ("Plains") to sel its interest in the assets comprising the Empress I Plant, Empress I Expansion Plant (col ectively, "the E1 assets"), and the Empress VI Plant ("E6 assets") in exchange for a processing agreement that provides Pembina the right to first priority for gas processing at al Plains-operated assets at Empress. As a result, the E1 and E6 assets are presented as a disposal group held for sale as at September 30, 2022. Closing of the transaction occurred on October 1, 2022. |
4. INTANGIBLE ASSETS AND GOODWILL |
| | | | | | | Intangible Assets |
| | Purchase and |
| | | Sale | | | | | Total Goodwil |
| | Contracts and | | | | | | | | Customer | & Intangible |
($ mil ions) | | | | | | | | | Goodwil | Other | | | | Relationships(1) | Total | Assets |
CostBalance at December 31, 2021 |
| | | | | | | | | 4,693 | 288 | 1,861 | 2,149 | 6,842 |
Additions | | — | 38 | — | | | | 38 | 38 |
Disposition (Note 5) | | (153) | (23) | (66) | | | | (89) | (242) |
Foreign exchange adjustments | | 20 | 1 | 56 | | | | 57 | 77 |
Balance at September 30, 2022 | | | | | | | | | 4,560 | 304 | 1,851 | 2,155 | 6,715 |
AmortizationBalance at December 31, 2021 |
| | — | 189 | 415 | 604 | 604 |
Amortization | | — | 6 | 62 | | | | 68 | 68 |
Disposition (Note 5) | | — | (8) | (22) | | | | (30) | (30) |
Foreign exchange adjustments | | — | 1 | 8 | | | | 9 | 9 |
Balance at September 30, 2022 | | — | 188 | 463 | 651 | 651 |
Carrying amountsBalance at December 31, 2021 |
| | | | | | | | | 4,693 | 99 | 1,446 | 1,545 | 6,238 |
Balance at September 30, 2022 | | | | | | | | | 4,560 | 116 | 1,388 | 1,504 | 6,064 |
| | | Pembina Pipeline Corporation Third Quarter 2022 51 |
5. DISPOSITION |
On August 15, 2022, Pembina and affiliates of KKR & Co., Inc. (col ectively, "KKR") created a new jointly control ed corporation, Pembina Gas Infrastructure Inc. ("PGI"), a western Canadian gas processing entity, incorporated in Alberta (the "PGI Transaction"). Pembina obtained a 60 percent equity interest in the joint venture and wil serve as PGI's operator and manager, while KKR obtained the remaining 40 percent equity interest in PGI. |
Pembina contributed to PGI a portion of its field-based gas processing assets, which include the Cutbank Complex, the Saturn Complex, the Resthaven Facility, the Duvernay Complex and the Saskatchewan Ethane Extraction Plant (col ectively, the "Disposal Group"), as wel as its 45 percent equity interest in Veresen Midstream, which were previously included in Pembina's Facilities operating segment. KKR contributed to PGI its 55 percent equity interest in Veresen Midstream to PGI, as wel as its 49 percent common share equity interest and its preferred share interest in PGI Processing ULC (formerly named Energy Transfer Canada ULC) ("ETC"). Concurrently with the closing of the transaction, PGI also acquired the remaining 51 percent common share equity interest in ETC from an affiliate of Energy Transfer LP, aligning ownership of those assets and driving additional efficiencies within PGI. |
Pursuant to an agreement with the Competition Bureau, and consistent with Pembina's and KKR's intention to divest upon announcing their joint venture, PGI wil divest the 50 percent, non-operated interest in the Key Access Pipeline System ("KAPS") which was contributed to PGI as part of the transaction. |
As a result of the disposition of the Disposal Group and acquisition of PGI, management reevaluated Pembina's operating segments and determined there were no changes as a result. |
Pembina's contribution of its field-based gas processing assets was accounted for as a disposition given that Pembina changed from control of the assets to joint control through PGI. The contribution of Pembina's interest in Veresen Midstream resulted in Pembina retaining joint control through the newly formed PGI and therefore was not considered a disposition. |
The assets and liabilities of the Disposal Group were derecognized at their carrying values as at August 15, 2022 as fol ows: |
($ mil ions) | August 15, 2022 |
Cash and cash equivalents | | 167 |
Trade receivables and other | | 145 |
Inventory | | 18 |
Property, plant and equipment (Note 3) | | 2,533 |
Intangible assets and goodwil (Note 4) | | 212 |
Derivative financial instruments (Note 14) | | 113 |
Total assets | | 3,188 |
Trade payables and other | | 72 |
Decommissioning provision (Note 8) | | 20 |
Contract liabilities (Note 10) | | 92 |
Deferred tax liabilities | | 514 |
Total liabilities | | 698 |
In exchange for the contribution of the field-based gas processing assets contributed to PGI ("Gas Processing Business"), Pembina received $776 mil ion cash, a $12 mil ion contingent related party receivable, and shares of PGI. The $2.8 bil ion fair value of the shares of PGI was determined by reference to the $3.6 bil ion fair value of the Gas Processing Business, adjusted for cash and the contingent receivable. The resulting gain on disposition recognized by Pembina is $1.1 bil ion. |
Pembina engaged an independent valuator to assist with determining the preliminary fair value of the Gas Processing Business and the preliminary fair value of PGI using a discounted cash flow model based on significant assumptions including forecasted revenue and the discount rate. Given the complexity of the PGI Transaction, the valuation of the Gas Processing Business and associated PGI purchase price al ocation is not final as Pembina is continuing to obtain and verify information required to determine the fair value of certain assets and liabilities and the amount of deferred taxes arising on their recognition, including: property, plant and equipment, intangibles and taxes. |
52 | Pembina Pipeline Corporation Third Quarter 2022 |
Effective Tax Rate |
The decrease in the effective tax rate from 23.45 percent to 5.5 percent is primarily due to the gain on the PGI Transaction which is not subject to tax and the transfer of the Veresen Midstream tax liability to PGI which is an equity accounted for investment. |
6. INVESTMENTS IN EQUITY ACCOUNTED INVESTEES |
| | Share of Profit from Equity Accounted |
| | | Investees |
| | | | Investments in Equity Accounted |
| Ownership Interest (percent) | | | | Investees | 9 Months Ended September 30 |
($ mil ions) | | | | | | September 30, 2022 December 31, 2021 | 2022 | | | | 2021 September 30, 2022 December 31, 2021 |
Al iance | | | | | | | | 50 | 50 | 125 | | | | 81 | 2,673 | | | | 2,686 |
Aux Sable | 42.7 - 50 | | | | | | | | | 42.7 - 50 | 103 | | | | 44 | 405 | | | | 377 |
Ruby(1) | | | | | | | | — | — | — | | | | 13 | — | | | | — |
Veresen Midstream(2) | | | | | | | | — | 45 | 51 | | | | 57 | — | | | | 1,349 |
PGI(3) | | | | | | | | 60 | — | 2 | | | | — | 4,186 | | | | — |
Cedar LNG | | | | | | | | 49.9 | | 49.9 | — | | | | — | 146 | | | | 130 |
Other(4) | | | | | | | | 50 - 75 | | 50 - 75 | 1 | | | | 3 | 88 | | | | 80 |
| | | 282 | | | | 198 | 7,498 | | | | 4,622 |
(1) | Pembina owns a 50 percent convertible preferred interest in Ruby. |
(2) | Pembina owned a 45 percent interest in Veresen Midstream up to the closing of the PGI Transaction on August 15, 2022. As part of the transaction, Pembina contributed its |
45 percent interest in Veresen Midstream to PGI. |
(3) | Refer to Note 5 and to the "PGI Acquisition" section of this note for further information on the acquisition of Pembina's interest in PGI. |
(4) | Other includes Pembina's interest in CKPC, Grand Val ey and Fort Corp. |
At September 30, 2022, Pembina had U.S. $1.3 bil ion in investments in equity accounted investees held by entities whose functional currency is the U.S. dol ar. The resulting foreign exchange gains and losses are included in other comprehensive income. For the three and nine months ended September 30, 2022, Pembina recognized a gain of $110 mil ion and a gain of $139 mil ion (2021: $48 mil ion gain and $5 mil ion gain), respectively. |
PGI Acquisition |
On August 15, 2022, as part of the PGI Transaction, Pembina acquired a 60 percent equity interest in PGI, a newly formed joint venture that is jointly control ed by Pembina and KKR. Pembina wil serve as PGI's operator and manager. |
Pembina's investment in PGI of $4.2 bil ion at August 15, 2022, includes $2.8 bil ion for the value of PGI shares received as consideration for its contribution of the Gas Processing Business (refer to Note 5) and $1.3 bil ion for the value of PGI shares received for the contribution of Pembina's 45 percent equity interest in Veresen Midstream, which was recorded at its carrying value at the acquisition date. Pembina's recognized cost of the PGI investment also includes $9 mil ion in costs directly attributable to the acquisition of the investment. |
The cost of Pembina's 60 percent interest in PGI was al ocated to PGI's identifiable net assets on the acquisition date as fol ows: |
($ mil ions) | | | | | As at August 15, 2022 |
Current assets | | | | | | | | | 853 |
Non-current assets | | | | | | | | | 6,648 |
Current liabilities | | | | | | | | | 1,163 |
Non-current liabilities | | | | | | | | | 2,483 |
Al ocated to PGI assets and liabilities | | | | | | | | | 3,855 |
Goodwil | | | | | | | | | 328 |
Pembina's cost of investment in PGI | | | | | | | | | 4,183 |
| | | Pembina Pipeline Corporation Third Quarter 2022 53 |
Pembina engaged an independent valuator to assist with determining the preliminary fair value of certain tangible and intangible assets and assumed liabilities of PGI for purposes of the above al ocation. Tangible assets were valued primarily using a cost approach. Intangible assets were valued at the acquisition date of the fair value of customer relationships, which was determined using a discounted cash flow model based on significant assumptions including contract renewal rates and the discount rate. Preliminary values for right-of-use assets, deferred tax liabilities, and lease liabilities were measured in accordance with Pembina's accounting policies. Given the complexity of the PGI Transaction, the valuation of the Gas Processing Business and associated PGI purchase price al ocation is not final as Pembina is continuing to obtain and verify information required to determine the fair value of certain assets and liabilities and the amount of deferred taxes arising on their recognition, including: property, plant and equipment, intangibles and taxes. |
The primary drivers that generated goodwil were synergies and business opportunities from the integration of the three separate gas services businesses into PGI. |
Pembina enters into transactions with PGI in the normal course of business and on terms equivalent to those that prevail in arm's length transactions. Pembina contracts capacity and provides services on a cost recovery basis to PGI. At September 30, 2022, trade receivables and other included $45 mil ion receivable from PGI and trade payables and other included $14 mil ion payable to PGI. Pembina recognized a deferred tax recovery of $195 mil ion during the third quarter of 2022 as a result of its contribution of its partnership interest in Veresen Midstream for shares of PGI. |
Financing Activities for Equity Accounted Investees |
Ruby |
Ruby Pipeline, L.L.C. ("Ruby Pipeline"), a whol y-owned subsidiary of Ruby, had U.S. $475 mil ion principal amount of unsecured notes that matured on April 1, 2022 (the "2022 Notes"). Although Ruby Pipeline has sufficient liquidity to operate its business, it lacked sufficient liquidity to satisfy its obligations under the 2022 Notes on the maturity date of April 1, 2022. Accordingly, on March 31, 2022, Ruby Pipeline filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. Refer to Note 15 for further details. |
PGI |
On August 15, 2022, PGI closed $4.75 bil ion of syndicated credit facilities consisting of a $3.9 bil ion unsecured non-revolving term loan facility which matures August 2027, a $250 mil ion unsecured revolving credit facility, which includes a $300 mil ion accordion feature and matures August 2025, a $50 mil ion unsecured operating credit facility which matures August 2024, and a $550 mil ion unsecured revolving credit facility which matures August 2024 to fund the construction of the KAPS project (col ectively, the "PGI Credit Facilities"). There are no mandatory principal repayments due over the term of the PGI Credit Facilities, with the exception of the prepayment of the $550 mil ion unsecured revolving credit facility in connection with certain specified dispositions. Proceeds of the credit facilities were primarily used to fund a portion of the PGI Transaction including the repayment of credit facilities within Veresen Midstream and ETC. |
Between August 30, 2022, and September 28, 2022, PGI entered into floating-to-fixed interest rate swaps with a notional value of $1.2 bil ion. The floating debt is priced at CAD-BA-CDOR. The interest rate swaps mature July 2027. |
Subsequent to the end of the third quarter, between October 4, 2022 and October 28, 2022, PGI entered into additional floating-to-fixed interest rate swaps of notional value $740 mil ion. The floating debt is priced at CAD-BA-CDOR. The interest rate swaps mature July 2027. The weighted average hedge rate for the total notional amount is 3.66 percent. |
Veresen Midstream |
On August 15, 2022, Veresen Midstream repaid $2.6 bil ion of outstanding debt on its syndicated credit facilities. The credit facilities were cancel ed upon repayment as part of the PGI Transaction. |
54 | Pembina Pipeline Corporation Third Quarter 2022 |
CKPC |
Pembina, along with its joint venture partner, Petrochemical Industries Company K.S.C. have col ectively decided to cancel the proposed integrated propane dehydrogenation plant and polypropylene upgrading facility that was to be located in Sturgeon County, Alberta. The project has been in a state of indefinite suspension since late 2020. |
7. LONG-TERM DEBT |
This note provides information about the contractual terms of Pembina's interest-bearing long-term debt, which are measured at amortized cost. |
Carrying Value, Terms and Conditions, and Debt Maturity Schedule |
| | | | | | Carrying Value |
| Authorized at | | Nominal | Year of |
($ mil ions) | | September 30, 2022 | Interest Rate | Maturity September 30, 2022 December 31, 2021 |
Loans and borrowingsSenior unsecured credit facilities(1)(3)(4) |
| | | | | 2,862 | 4.32(2) | Various(1) | | 339 | 907 |
Senior unsecured medium-term notes series 2 | | | | | 450 | 3.77 | 2022 | | 450 | 450 |
Senior unsecured medium-term notes series 3 | | | | | 450 | 4.75 | 2043 | | 447 | 447 |
Senior unsecured medium-term notes series 4 | | | | | 600 | 4.81 | 2044 | | 597 | 597 |
Senior unsecured medium-term notes series 5 | | | | | 450 | 3.54 | 2025 | | 449 | 449 |
Senior unsecured medium-term notes series 6 | | | | | 500 | 4.24 | 2027 | | 499 | 499 |
Senior unsecured medium-term notes series 7 | | | | | 600 | 3.71 | 2026 | | 602 | 602 |
Senior unsecured medium-term notes series 8 | | | | | 650 | 2.99 | 2024 | | 649 | 648 |
Senior unsecured medium-term notes series 9 | | | | | 550 | 4.74 | 2047 | | 542 | 542 |
Senior unsecured medium-term notes series 10 | | | | | 650 | 4.02 | 2028 | | 658 | 660 |
Senior unsecured medium-term notes series 11 | | | | | 800 | 4.75 | 2048 | | 840 | 841 |
Senior unsecured medium-term notes series 12 | | | | | 650 | 3.62 | 2029 | | 653 | 654 |
Senior unsecured medium-term notes series 13 | | | | | 700 | 4.54 | 2049 | | 712 | 712 |
Senior unsecured medium-term notes series 14 | | | | | 600 | 2.56 | 2023 | | 600 | 599 |
Senior unsecured medium-term notes series 15 | | | | | 600 | 3.31 | 2030 | | 598 | 597 |
Senior unsecured medium-term notes series 16 | | | | | 400 | 4.67 | 2050 | | 397 | 397 |
Senior unsecured medium-term notes series 17 | | | | | 500 | 3.53 | 2031 | | 497 | 497 |
Senior unsecured medium-term notes series 18 | | | | | 500 | 4.49 | 2051 | | 497 | 497 |
Senior unsecured medium-term notes series 3A | | | | | — | 5.05 | 2022 | | — | 50 |
Total loans and borrowings | | | | | | | | | 10,026 | 10,645 |
Less current portion loans and borrowings | | | | | | | | | (1,050) | (1,000) |
Total non-current loans and borrowings | | | | | | | | | 8,976 | 9,645 |
Subordinated hybrid notesSubordinated notes, series 1 |
| | | | | 600 | 4.80 | 2081 | | 595 | 594 |
(1) | Pembina's unsecured credit facilities include a $1.5 bil ion revolving facility that matures in June 2027, a $1.0 bil ion sustainability linked revolving facility that matures in June |
2026, a U.S. $250 mil ion non-revolving term loan that matures in May 2025 and a $20 mil ion operating facility that matures in May 2023, which is typical y renewed on an |
annual basis. |
(2) | The nominal interest rate is the weighted average of al drawn credit facilities based on Pembina's credit rating at September 30, 2022. Borrowings under the credit facilities |
bear interest at prime, Bankers' Acceptance, or LIBOR rates, plus applicable margins. |
(3) | Includes U.S. $250 mil ion variable rate debt outstanding at September 30, 2022 (December 31, 2021: U.S. $250 mil ion) and ful y hedged at 1.45 percent. |
(4) | The U.S. dol ar denominated non-revolving term loan is designated as a hedge of the Company’s net investment in selected foreign operations with a U.S. dol ar functional |
currency. Refer to Note 14 for foreign exchange risk management. |
| | | Pembina Pipeline Corporation Third Quarter 2022 55 |
On March 14, 2022, Pembina's $50 mil ion senior unsecured medium term notes, series 3A, matured and were ful y repaid. |
On July 27, 2022, Pembina replaced its $2.5 bil ion revolving credit facility with two credit facilities: an unsecured $1.0 bil ion sustainability linked revolving credit facility (the "SLL Credit Facility") that has a term of four years, maturing June 2026 and an amendment and restatement of the revolving facility into an unsecured $1.5 bil ion revolving credit facility, which includes a $750 mil ion accordion feature and matures in June 2027 (the "Revolving Facility"). The SLL Credit Facility contains pricing adjustments that reduce or increase borrowing costs based on Pembina's performance relative to a greenhouse gas ("GHG") emissions intensity reduction performance target. Previously, Pembina announced its commitment to reduce its GHG emissions intensity by 30 percent by 2030, relative to baseline 2019 levels. The specific terms of the SLL Credit Facility include annual intermediate targets that align with Pembina's trajectory towards its 2030 target. |
With the exception of the sustainability linked adjustments to borrowing costs, the terms and conditions of the SLL Credit Facility and the Revolving Facility, including financial covenants, are substantial y similar to each other. |
On August 15, 2022, Pembina ful y repaid and cancel ed its non-revolving term loan for a total repayment of $425 mil ion in the third quarter. |
Subsequent to the quarter, on October 24, 2022, Pembina's $450 mil ion senior unsecured medium term notes, series 2, matured and were ful y repaid. |
8. DECOMMISSIONING PROVISION |
($ mil ions) | 2022 |
Balance at January 1 | | | 412 |
Unwinding of discount rate | | | 12 |
Change in rates | | | (185) |
Disposition (Note 5) | | | (20) |
Change in cost estimates and other | | | 16 |
Balance at September 30 | | | 235 |
Pembina's decommissioning provision decreased by $177 mil ion for the nine months ended September 30, 2022 primarily due to an increase in the credit-adjusted risk-free rates of 5.8 percent to 6.8 percent (December 31, 2021: 3.3 percent to 4.7 percent) and a change to inflation of 2.0 percent (December 31, 2021: 1.8 percent). |
56 | Pembina Pipeline Corporation Third Quarter 2022 |
9. SHARE CAPITAL |
Common Share Capital |
| Number of |
| Common Shares | Common |
($ mil ions, except as noted) | (mil ions) | Share Capital |
Balance at December 31, 2021 | | | | 550 | 15,678 |
Share-based payment transactions | | | | 7 | 316 |
Repurchased | | | | (5) | (152) |
Balance at September 30, 2022 | | | | 552 | 15,842 |
Share Repurchase ProgramOn March 8, 2022, the Toronto Stock Exchange ("TSX") accepted the renewal of Pembina's normal course issuer bid (the "NCIB") that al ows the Company to repurchase, at its discretion, up to five percent of the Company's outstanding common shares (representing approximately 27.5 mil ion common shares) through the facilities of the TSX, the New York Stock Exchange and/or alternative Canadian trading systems or as otherwise permitted by applicable securities law, subject to certain restrictions on the number of common shares that may be purchased on a single day. Common shares purchased by the Company under the NCIB wil be cancel ed. The NCIB commenced on March 10, 2022 and wil terminate on March 9, 2023 or on such earlier date as the Company has purchased the maximum number of common shares permitted pursuant to the NCIB or at such time Pembina determines to no longer make purchases thereunder. |
The fol owing table summarizes Pembina's share repurchases under its NCIB: |
(mil ions, except as noted) | | | September 30, 2022 | | December 31, 2021 |
Number of common shares repurchased for cancel ation (thousands) | | | | 5,320 | 450 |
Average price per share | $46.76 | $37.77 |
Total cost(1) | | | | 249 | | 17 |
(1) | Total cost includes $152 mil ion (2021: $13 mil ion) charged to share capital and $97 mil ion (2021: $4 mil ion) charged to deficit. |
Preferred Share Capital |
| | | Number of Preferred |
| Shares | Preferred |
($ mil ions, except as noted) | (mil ions) | Share Capital |
Balance at December 31, 2021 | | | | 105 | 2,517 |
Part VI.1 tax | | | | — | | (7) |
Balance at September 30, 2022 | | | | 105 | 2,510 |
Subsequent to the end of the third quarter, on October 14, 2022, Pembina announced its intention to redeem al of the 12 mil ion issued and outstanding Cumulative Redeemable Minimum Rate Reset Class A Preferred Shares, Series 23 (the "Series 23 Class A Preferred Shares") on November 15, 2022 for a redemption price equal to $25.00 per Series 23 Class A Preferred Shares. The total redemption price for the Series 23 Class A Preferred Shares wil be $300 mil ion. |
| | | | | | | Pembina Pipeline Corporation Third Quarter 2022 57 |
Dividends |
The fol owing dividends were declared by Pembina: |
9 Months Ended September 30($ mil ions) |
| 2022 | 2021 |
Common shares |
$1.90 per common share (2021: $1.89) | 1,050 | 1,040 |
Class A preferred shares |
$0.92 per Series 1 Class A Preferred Share (2021: $0.92) | 9 | 9 |
$0.84 per Series 3 Class A Preferred Share (2021: $0.84) | 5 | 5 |
$0.85 per Series 5 Class A Preferred Share (2021: $0.85) | 9 | 9 |
$0.82 per Series 7 Class A Preferred Share (2021: $0.82) | 8 | 8 |
$0.80 per Series 9 Class A Preferred Share (2021: $0.80) | 7 | 7 |
nil per Series 11 Class A Preferred Share (2021: $0.24) | | | | — | 2 |
nil per Series 13 Class A Preferred Share (2021: $0.59) | | | | — | 6 |
$0.84 per Series 15 Class A Preferred Share (2021: $0.84) | | | | 7 | 7 |
$0.90 per Series 17 Class A Preferred Share (2021: $0.90) | | | | 5 | 5 |
$0.88 per Series 19 Class A Preferred Share (2021: $0.88) | | | | 7 | 7 |
$0.91 per Series 21 Class A Preferred Share (2021: $0.91) | | | | 15 | 15 |
$0.98 per Series 23 Class A Preferred Share (2021: $0.98) | | | | 12 | 12 |
$0.98 per Series 25 Class A Preferred Share (2021: $0.98) | | | | 10 | 10 |
| 94 | 102 |
In connection with the closing of the PGI Transaction on August 15, 2022, Pembina's Board of Directors approved a $0.0075 per common share increase to its monthly common share dividend rate from $0.21 to $0.2175 per common share per month, commencing with the dividend paid on October 14, 2022. |
On August 31, 2022, Pembina announced that it did not intend to exercise its right to redeem the eight mil ion Cumulative Redeemable Rate Reset Class A Preferred Shares, Series 15 shares outstanding on September 30, 2022. |
On October 6, 2022, Pembina announced that its Board of Directors had declared a dividend of $0.2175 per common share in the total amount of $120 mil ion, payable on November 15, 2022 to shareholders of record on October 25, 2022. |
Pembina's Board of Directors also declared quarterly dividends for Pembina's Class A preferred shares on October 6, 2022 as outlined in the fol owing table: |
| | | | | | | Dividend Amount |
Series | | | | Record Date | Payable Date | Per Share Amount | | ($ mil ions) |
Series 1 | | | | | | | | | November 1, 2022 | December 1, 2022 | $0.306625 | 3 |
Series 3 | | | | | | | | | November 1, 2022 | December 1, 2022 | $0.279875 | 2 |
Series 5 | | | | | | | | | November 1, 2022 | December 1, 2022 | $0.285813 | 3 |
Series 7 | | | | | | | | | November 1, 2022 | December 1, 2022 | $0.273750 | 3 |
Series 9 | | | | | | | | | November 1, 2022 | December 1, 2022 | $0.268875 | 2 |
Series 15 | | | | | | | | | December 15, 2022 | January 3, 2023 | $0.385250 | 3 |
Series 17 | | | | | | | | | December 15, 2022 | January 3, 2023 | $0.301313 | 2 |
Series 19 | | | | | | | | | December 15, 2022 | January 3, 2023 | $0.292750 | 2 |
Series 21 | | | | | | | | | November 1, 2022 | December 1, 2022 | $0.306250 | 5 |
Series 23 | | | | October 31, 2022 | | | | | | November 15, 2022 | $0.328125 | 4 |
Series 25 | | | | October 31, 2022 | | | | | | November 15, 2022 | $0.325000 | 3 |
58 | Pembina Pipeline Corporation Third Quarter 2022 |
10. REVENUE |
Revenue has been disaggregated into categories to reflect how the nature, timing and uncertainty of revenue and cash flows are affected by economic factors. |
a. Revenue Disaggregation |
| 2022 | 2021 |
| Marketing | Marketing |
3 Months Ended September 30 |
| | | | | & New | | | & New |
| | | Pipelines | Facilities | Ventures | | | | | Total Pipelines | Facilities | Ventures | | | | | | | Total | ($ mil ions)Take-or-pay(1) |
| | | | 457 | 147 | | | | — | 604 | | | | 419 | 183 | | | | | | — | 602 |
Fee-for-service(1) | | | | 114 | 36 | | | | — | 150 | | | | 76 | 36 | | | | | | — | 112 |
Product sales(2) | | | | | | | | | | | — | — | | | | 1,979 | 1,979 | | | | — | — | | | | | | 1,393 | 1,393 |
Revenue from contracts with customers | | | | 571 | 183 | | | | 1,979 | 2,733 | | | | 495 | 219 | | | | | | 1,393 | 2,107 |
Operational finance lease income | | | | 7 | 1 | | | | — | 8 | 5 | 1 | | | | | | — | 6 |
Fixed operating lease income | | | | | | | | | | | 30 | 8 | | | | — | 38 | | | | 27 | 9 | | | | | | — | 36 |
Total external revenue | | | | 608 | 192 | | | | 1,979 | 2,779 | | | | 527 | 229 | | | | | | 1,393 | 2,149 |
(1) | Revenue recognized over time. |
(2) | Revenue recognized at a point in time. |
| 2022 | 2021 |
| Marketing | Marketing |
9 Months Ended September 30 |
| | | | | & New | | | & New |
| | | Pipelines | Facilities | Ventures | | | | | Total Pipelines | Facilities | Ventures | | | | | | | Total | ($ mil ions)Take-or-pay(1) |
| | | | 1,258 | 537 | | | | — | 1,795 | | | | 1,207 | 547 | | | | | | — | 1,754 |
Fee-for-service(1) | | | | 330 | 101 | | | | — | 431 | | | | 248 | 112 | | | | | | — | 360 |
Product sales(2) | | | | | | | | | | | — | — | | | | 6,550 | 6,550 | | | | — | — | | | | | | 3,827 | 3,827 |
Revenue from contracts with customers | | | | 1,588 | 638 | | | | 6,550 | 8,776 | | | | 1,455 | 659 | | | | | | 3,827 | 5,941 |
Operational finance lease income | | | | | | | | | | | 20 | 2 | | | | — | 22 | | | | 13 | 1 | | | | | | — | 14 |
Fixed operating lease income | | | | | | | | | | | 88 | 26 | | | | — | 114 | | | | 85 | 27 | | | | | | — | 112 |
Total external revenue | | | | 1,696 | 666 | | | | 6,550 | 8,912 | | | | 1,553 | 687 | | | | | | 3,827 | 6,067 |
(1) | Revenue recognized over time. |
(2) | Revenue recognized at a point in time. |
b. Contract Liabilities |
Significant changes in the contract liabilities balances during the period are as fol ows: |
| | | 9 Months Ended September 30, 2022 | | | | | | | 12 Months Ended December 31, 2021 |
| Other | | | | | Total | Other | | | | | | | Total |
| Contract | | | | | Contract | Contract | | | | | | | Contract |
($ mil ions) | | | Take-or-Pay | Liabilities | | | | | Liabilities | | | | Take-or-Pay | Liabilities | | | | | | | Liabilities |
Opening balance | | | | 3 | 288 | 291 | 3 | 289 | 292 |
Additions (net in the period) | | | | 14 | 60 | 74 | — | 64 | 64 |
Disposition (Note 5) | | | | (2) | (90) | (92) | — | — | — |
Revenue recognized from contract liabilities(1) | | | | — | (61) | (61) | — | (65) | (65) |
Closing balance | | | | 15 | 197 | 212 | 3 | 288 | 291 |
Less current portion(2) | | | | (15) | (55) | (70) | (3) | (68) | (71) |
Ending balance | | | | — | 142 | 142 | — | 220 | 220 |
(1) | Recognition of revenue related to performance obligations satisfied in the current period that were included in the opening balance of contract liabilities. |
(2) | As at September 30, 2022, the balance includes $15 mil ion of cash col ected under take-or-pay contracts which wil be recognized within one year as the customer chooses to |
ship, process, or otherwise forego the associated service. |
| | | | | Pembina Pipeline Corporation Third Quarter 2022 59 |
Contract liabilities depict Pembina's obligation to perform services in the future for cash and non-cash consideration which have been received from customers. Contract liabilities include up-front payments or non-cash consideration received from customers for future transportation, processing and storage services. Contract liabilities also include consideration received from customers for take-or-pay commitments where the customer has a make-up right to ship or process future volumes under a firm contract. These amounts are non-refundable should the customer not use its make-up rights. |
In al instances where goods or services have been transferred to a customer in advance of the receipt of customer consideration, Pembina's right to consideration is unconditional and has therefore been presented as a receivable. |
c. Revenue Al ocated to Remaining Performance Obligations |
Pembina expects to recognize revenue in future periods that includes current unsatisfied remaining performance obligations. As a result of the disposition of Pembina's field-based gas processing assets on August 15, 2022 (see Note 5 for further details), Pembina's unsatisfied remaining performance obligations and expected revenue recognition from these obligations as at September 30, 2022 decreased by $2.6 bil ion compared to December 31, 2021. |
11. NET FINANCE COSTS |
| 3 Months Ended September 30 | 9 Months Ended September 30 |
($ mil ions) | | | 2022 | 2021 | 2022 | 2021 |
Interest expense on financial liabilities measured at amortized cost: |
Loans and borrowings | | | 98 | 90 | | | 287 | 272 |
Subordinated hybrid notes | | | 7 | 7 | | | 22 | 20 |
Leases | | | 8 | 9 | | | 24 | 27 |
Unwinding of discount rate | | | 4 | 4 | | | 12 | 12 |
Loss in fair value of non-commodity-related derivative financial |
instruments | | | 21 | 8 | | | 24 | 16 |
Foreign exchange losses (gains) and other | | | 2 | 26 | | | 4 | (4) |
Net finance costs | | | 140 | 144 | 373 | 343 |
60 | Pembina Pipeline Corporation Third Quarter 2022 |
12. OPERATING SEGMENTS |
Pembina's operating segments are organized by three divisions: Pipelines, Facilities and Marketing & New Ventures. |
| | | | Corporate & |
3 Months Ended September 30, 2022 |
| | | Marketing & | Inter-segment |
| Pipelines(1) | Facilities | New Ventures(2) | Eliminations | Total | ($ mil ions) |
Revenue from external customers | | | | | | 608 | 192 | | | | | 1,979 | — | 2,779 |
Inter-segment revenue | | | | | | 37 | 122 | | | | | — | (159) | — |
Total revenue(3) | | | | | | 645 | 314 | | | | | 1,979 | (159) | 2,779 |
Operating expenses | | | | | | 175 | 132 | | | | | — | (82) | 225 |
Cost of goods sold, including product purchases | | | | | | — | | | 4 | 1,824 | (79) | 1,749 |
Depreciation and amortization included in operations | | | | | | 97 | | | 27 | 12 | 1 | 137 |
Cost of sales | | | | | | 272 | 163 | | | | | 1,836 | (160) | 2,111 |
Realized (gain) loss on commodity-related derivative |
financial instruments | | | | | | — | | | (3) | 22 | — | 19 |
Share of profit from equity accounted investees | | | | | | 39 | | | 15 | 69 | — | 123 |
Unrealized loss (gain) on commodity-related |
derivative financial instruments | | | | | | — | | | 3 | (105) | — | (102) |
Gross profit | | | | | | 412 | 166 | | | | | 295 | 1 | 874 |
Depreciation included in general and administrative | | | | | | — | | | — | — | 9 | 9 |
Other general and administrative | | | | | | 15 | | | 1 | 9 | 42 | 67 |
Other expense (income) | | | | | | 13 | | | 1 | 14 | (1) | 27 |
Gain on Pembina Gas Infrastructure Transaction |
(Note 5) | | | | | | — | (1,110) | | | | | — | — | (1,110) |
Reportable segment results from operating activities | | | | | | 384 | 1,274 | | | | | 272 | (49) | 1,881 |
Net finance costs | | | | | | 7 | | | 4 | 20 | 109 | 140 |
Reportable segment earnings (loss) before tax | | | | | | 377 | 1,270 | | | | | 252 | (158) | 1,741 |
Capital expenditures | | | | | | 75 | | | 36 | 7 | 13 | 131 |
Contributions to equity accounted investees | | | | | | — | | | 17 | 7 | — | 24 |
| | | | Corporate & |
3 Months Ended September 30, 2021 |
| | | Marketing & | Inter-segment |
| Pipelines(1) | Facilities | New Ventures(2) | Eliminations | Total | ($ mil ions) |
Revenue from external customers | | | | | | 527 | 229 | | | | | 1,393 | — | 2,149 |
Inter-segment revenue | | | | | | 39 | 112 | | | | | — | (151) | — |
Total revenue(3) | | | | | | 566 | 341 | | | | | 1,393 | (151) | 2,149 |
Operating expenses | | | | | | 140 | 121 | | | | | — | (74) | 187 |
Cost of goods sold, including product purchases | | | | | | — | | | 1 | 1,268 | (81) | 1,188 |
Depreciation and amortization included in operations | | | | | | 100 | | | 56 | 13 | 2 | 171 |
Cost of sales | | | | | | 240 | 178 | | | | | 1,281 | (153) | 1,546 |
Realized (gain) loss on commodity-related derivative |
financial instruments | | | | | | — | | | (2) | 45 | — | 43 |
Share of profit from equity accounted investees | | | | | | 21 | | | 23 | 31 | — | 75 |
Unrealized gain on commodity-related derivative |
financial instruments | | | | | | — | (45) | | | | | (2) | — | (47) |
Gross profit | | | | | | 347 | 233 | | | | | 100 | 2 | 682 |
Depreciation included in general and administrative | | | | | | — | | | — | — | 9 | 9 |
Other general and administrative | | | | | | 9 | | | 4 | 7 | 39 | 59 |
Other expense (income) | | | | | | 1 | | | 10 | — | (322) | (311) |
Reportable segment results from operating activities | | | | | | 337 | 219 | | | | | 93 | 276 | 925 |
Net finance costs | | | | | | 8 | | | 12 | 2 | 122 | 144 |
Reportable segment earnings before tax | | | | | | 329 | 207 | | | | | 91 | 154 | 781 |
Capital expenditures | | | | | | 174 | | | 26 | 3 | 6 | 209 |
Contributions to equity accounted investees | | | | | | — | | | 18 | — | — | 18 |
(1) | Pipelines transportation revenue includes $69 mil ion (2021: $48 mil ion) associated with U.S. pipeline revenue. |
(2) | Marketing & New Ventures includes revenue of $112 mil ion (2021: $57 mil ion) associated with U.S. midstream sales. |
(3) | During the three months ended September 30, 2022 and 2021, no one customer accounted for 10 percent or more of total revenues reported throughout al segments. |
| | Pembina Pipeline Corporation Third Quarter 2022 61 |
| | | | Corporate & |
9 Months Ended September 30, 2022 |
| | | Marketing & | Inter-segment |
| Pipelines(1) | Facilities | New Ventures(2) | Eliminations | Total | ($ mil ions) |
Revenue from external customers | | 1,696 | 666 | | | | 6,550 | — | 8,912 |
Inter-segment revenue | | | | | | | | 126 | 365 | | | | — | (491) | — |
Total revenue(3) | | 1,822 | 1,031 | | | | 6,550 | (491) | 8,912 |
Operating expenses | | | | | | | | 472 | 407 | | | | — | (250) | 629 |
Cost of goods sold, including product purchases | | | | | | | | — | 6 | 5,948 | (246) | 5,708 |
Depreciation and amortization included in operations | | | | | | | | 292 | 162 | | | | 34 | 4 | 492 |
Cost of sales | | | | | | | | 764 | 575 | | | | 5,982 | (492) | 6,829 |
Realized (gain) loss on commodity-related derivative |
financial instruments | | | | | | | | — | (20) | | | | 135 | — | 115 |
Unrealized gain on commodity-related derivative |
financial instruments | | | | | | | | — | (48) | | | | (144) | — | (192) |
Share of profit from equity accounted investees | | | | | | | | 127 | 59 | 96 | — | 282 |
Gross profit | | 1,185 | 583 | | | | 673 | 1 | 2,442 |
Depreciation included in general and administrative | | | | | | | | — | — | — | 29 | 29 |
Other general and administrative | | | | | | | | 39 | 13 | 29 | 163 | 244 |
Other expense | | | | | | | | 4 | — | 11 | 2 | 17 |
Gain on Pembina Gas Infrastructure Transaction |
(Note 5) | | | | | | | | — | (1,110) | | | | — | — | (1,110) |
Reportable segment results from operating activities | | 1,142 | 1,680 | | | | 633 | (193) | 3,262 |
Net finance costs | | | | | | | | 22 | 21 | 21 | 309 | 373 |
Reportable segment earnings (loss) before tax | | 1,120 | 1,659 | | | | 612 | (502) | 2,889 |
Capital expenditures | | | | | | | | 264 | 114 | | | | 53 | 31 | 462 |
Contributions to equity accounted investees | | | | | | | | — | 30 | 19 | — | 49 |
| | | | Corporate & |
9 Months Ended September 30, 2021 |
| | | Marketing & | Inter-segment |
| Pipelines(1) | Facilities | New Ventures(2) | Eliminations | Total | ($ mil ions) |
Revenue from external customers | | 1,553 | 687 | | | | 3,827 | — | 6,067 |
Inter-segment revenue | | | | | | | | 120 | 327 | | | | — | (447) | — |
Total revenue(3) | | 1,673 | 1,014 | | | | 3,827 | (447) | 6,067 |
Operating expenses | | | | | | | | 409 | 344 | | | | — | (198) | 555 |
Cost of goods sold, including product purchases | | | | | | | | — | 7 | 3,463 | (257) | 3,213 |
Depreciation and amortization included in operations | | | | | | | | 312 | 158 | | | | 38 | 6 | 514 |
Cost of sales | | | | | | | | 721 | 509 | | | | 3,501 | (449) | 4,282 |
Realized (gain) loss on commodity-related derivative |
financial instruments | | | | | | | | — | (2) | 166 | — | 164 |
Unrealized (gain) loss on commodity-related derivative |
financial instruments | | | | | | | | — | (62) | | | | 19 | — | (43) |
Share of profit from equity accounted investees | | | | | | | | 95 | 59 | 44 | — | 198 |
Gross profit | | 1,047 | 628 | | | | 185 | 2 | 1,862 |
Depreciation included in general and administrative | | | | | | | | — | — | — | 29 | 29 |
Other general and administrative | | | | | | | | 25 | 11 | 22 | 147 | 205 |
Other expense (income) | | | | | | | | 2 | 10 | — | (294) | (282) |
Impairment expense | | | | | | | | 10 | 22 | 3 | — | 35 |
Reportable segment results from operating activities | | 1,010 | 585 | | | | 160 | 120 | 1,875 |
Net finance costs (income) | | | | | | | | 23 | 30 | (7) | 297 | 343 |
Reportable segment earnings (loss) before tax | | | | | | | | 987 | 555 | | | | 167 | (177) | 1,532 |
Capital expenditures | | | | | | | | 352 | 102 | | | | 15 | 13 | 482 |
Contributions to equity accounted investees | | | | | | | | — | 29 | 1 | — | 30 |
(1) | Pipelines transportation revenue includes $175 mil ion (2021: $154 mil ion) associated with U.S. pipeline revenue. |
(2) | Marketing & New Ventures includes revenue of $290 mil ion (2021: $181 mil ion) associated with U.S. midstream sales. |
(3) | During the nine months ended September 30, 2022 and 2021, no one customer accounted for 10 percent or more of total revenues reported throughout al segments. |
62 | Pembina Pipeline Corporation Third Quarter 2022 |
13. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) |
| | | Pension and |
| | | other Post- |
| Currency | Cash Flow | Retirement |
| Translation | Hedge | Benefit Plan |
($ mil ions) | Reserve | Reserve | Adjustments(2) | Total |
Balance at December 31, 2020 | | | | | | 48 | — | (46) | 2 |
Other comprehensive gain before hedging activities | | | | | | 4 | — | — | 4 |
Other comprehensive gain (loss) resulting from hedging activities(1) | | | | | | (1) | 5 | — | 4 |
Balance at September 30, 2021 | | | | | | 51 | 5 | (46) | 10 |
Balance at December 31, 2021 | | | | | | 32 | 8 | (12) | 28 |
Other comprehensive gain before hedging activities | | | | | | 341 | | | | | | — | — | 341 |
Other comprehensive gain (loss) resulting from hedging activities(1) | | | | | | (23) | | | | | | 18 | — | (5) |
Balance at September 30, 2022 | | | | | | 350 | | | | | | 26 | (12) | 364 |
(1) | Amounts relate to hedges of the Company's net investment in foreign operations (reported in Currency Translation Reserve) and interest rate derivatives designated as cash |
flow hedges (reported in Cash Flow Hedge Reserve) (Note 14). |
(2) | Pension and other Post-Retirement Benefit Plan Adjustments wil not be reclassified into earnings. |
14. FINANCIAL INSTRUMENTS & RISK MANAGEMENT |
Risk Management |
Pembina's risk management strategies, policies and limits, ensure risks and exposures are aligned to its business strategy and risk tolerance. Pembina's Board of Directors is responsible for providing risk management oversight at Pembina and oversees how management monitors compliance with Pembina's risk management policies and procedures and reviews the adequacy of this risk framework in relation to the risks faced by Pembina. |
Pembina has exposure to counterparty credit risk, liquidity risk and market risk. Pembina utilizes derivative instruments to stabilize the results of its marketing business and, as at September 30, 2022, the Company has entered into certain financial derivative contracts in order to manage commodity price, foreign exchange and interest rate risk. These instruments are not used for trading or speculative purposes. Pembina has also entered into power purchase agreements to secure cost-competitive renewable energy, fix the price for a portion of the power Pembina consumes, and reduce its emissions. |
Pembina's Canadian dol ar drawings on its Credit Facilities have variable rate components that reference the Canadian Dol ar Offered Rate ("CDOR"). CDOR rates wil cease to be published at the end of June 2024. CDOR is expected to be replaced by the Canadian Overnight Repo Rate Average ("CORRA"). Pembina wil continue to monitor developments and the potential impact on the business. |
Fair Values |
The fair values of financial assets and liabilities, together with the carrying amounts shown in the condensed consolidated interim statements of financial position, are shown in the table below. Certain non-derivative financial instruments measured at amortized cost including cash and cash equivalents, trade receivables and other, finance lease receivables, advances to related parties, trade payables and other, and other liabilities have been excluded because they have carrying amounts that approximate their fair value due to the nature of the item or the short time to maturity. These instruments would be classified in Level 2 of the fair value hierarchy. |
| Pembina Pipeline Corporation Third Quarter 2022 63 |
September 30, 2022 | December 31, 2021 |
| | | Fair Value(1) | | Fair Value(1) |
| | Carrying | | Carrying |
| | Value | | Value | | ($ mil ions) | Level 1 | | | Level 2 | | | | Level 3 | Level 1 | | | | Level 2 | | | Level 3 |
| | | | | | Financial assets carried at fair valueDerivative financial instruments(3) |
| | | 162 | | | — | | | | | | 115 | 47 | 95 | | | | — | | | | | 84 | 11 |
| | | | | | Financial liabilities carried at fair valueDerivative financial instruments(3) |
| | | 52 | | | — | | | | | | 52 | — | 59 | | | | — | | | | | 59 | — |
| | | | | | Contingent consideration(4) | | 59 | | | — | | | | | | 21 | 38 | 70 | | | | — | | | | | 35 | 35 |
| | | | | | Financial liabilities carried at amortized costLong-term debt(2) |
| | 10,621 | — | 9,481 | — 11,239 | — 11,814 | | | — |
| | | | | | (1) | The basis for determining fair value is disclosed in Note 2. |
| | | | | | (2) | Carrying value of current and non-current balances. Includes loans and borrowings and subordinated hybrid notes. |
| | | | | | (3) | At September 30, 2022 al derivative financial instruments are carried at fair value through earnings, except for $26 mil ion in interest rate derivative financial assets that have |
| | | | | | been designated as cash flow hedges. |
| | | | | | (4) | Included in trade payables and other and other liabilities. Under the terms of the agreements on Pembina’s investment in the Cedar LNG Project, Pembina has commitments |
| | | | | | to make additional payments on a positive final investment decision as wel as contributions to fund development costs and annual operating budgets. |
| | | | | | Level 2 |
| | | | | | Pembina's Level 2 financial instruments carried at fair value are valued using inputs that include quoted forward prices for commodities, time value and volatility factors, which can be substantial y observed or corroborated in the marketplace. Instruments in this category include non-exchange traded derivatives such as over-the-counter physical forwards and options, including those that have prices similar to quoted market prices. Pembina obtains quoted market prices for its inputs from information sources including banks, Bloomberg Terminals, EDC Associates Ltd., and Natural Gas Exchange. |
| | | | | | Level 3 |
| | | | | | Changes in fair value of the derivative assets classified as Level 3 in the fair value hierarchy were as fol ows: |
| | | | | | ($ mil ions) | | 2022 |
| | | | | | Level 3 derivative asset at January 1 | | | | 11 |
| | | | | | Total gain:Included in earnings |
| | | | | | | | 36 |
| | | | | | Level 3 derivative asset at September 30 | | | | 47 |
| | | | | | There were no transfers into or out of Level 3 during the nine months ended September 30, 2022.Derivative instruments |
| | | | | | Pembina enters into derivative instruments to hedge future cash flows associated with interest rate, commodity, and foreign exchange exposures. Derivatives are considered effective hedges to the extent that they offset the changes in value of the hedged item or transaction resulting from a specified risk factor. In some cases, even though the derivatives are considered to be effective economic hedges, they do not meet the specific criteria for hedge accounting treatment and are classified as held at fair value through profit or loss ("FVTPL"). |
| | | | | | The fol owing table is a summary of the net derivative financial instruments: |
| | | | | | | | | | | September 30, 2022 | December 31, 2021 |
| | | | | | | | | | | Non- | Non- | | | | Non- | Non- |
| | | | | | | | | | | | Current | Current | Current | Current | | | | | | | Current | Current | Current | | | | Current |
| | | | | | ($ mil ions) | | | | | | Asset(1) | Asset | Liability(1) | Liability | | | Total | | | | Asset(1) | Asset | Liability(1) | | | | Liability | | | Total |
| | | | | | Commodity financial |
| | | | | | instruments | | | | | | | 87 | 49 | (22) | (2) | | | 112 | | | | 13 | 73 | (48) | | | | | | | | | (6) | 32 |
| | | | | | Interest rate | | | | | | | 12 | 14 | — | — | | | 26 | | | | 1 | 8 | — | | | | | | | | | — | 9 |
| | | | | | Foreign exchange | | | | | | | — | — | (27) | (1) | | | (28) | | | | — | — | (5) | | | | | | | | | — | (5) |
| | | | | | Net derivative financial |
| | | | | | instruments | | | | | | | 99 | 63 | (49) | (3) | | | 110 | | | | 14 | 81 | (53) | | | | | | | | | (6) | 36 |
| | | | | | (1) | At September 30, 2022 the derivative financial instruments were offset by $7 mil ion (2021: $11 mil ion) when determining the net amounts presented on the condensed |
| | | | | | consolidated interim statement of financial position. |
| | | | | | 64 | Pembina Pipeline Corporation Third Quarter 2022 |
Notional and Maturity Summary |
The maturity and notional amount or quantity outstanding related to Pembina's derivative instruments are as fol ows: |
| Liquids | Natural Gas | | Power | Foreign | Interest |
($ mil ions) | (bpd) | | (GJ/d) | (GWh) | Exchange | Rate |
As at September 30, 2022Purchases(1) |
| | 639 | 71,017 | | 11,303 | — | — |
Sales(1) | | 19,022 | | — | — | — | — |
Mil ions of U.S. dol ars | | — | | — | — | 382 | 250 |
Maturity dates | 2023 | | 2023 | 2040 | 2023 | 2025 |
As at December 31, 2021Purchases(1) |
| | — | 62,615 | | 6,166 | — | — |
Sales(1) | | 16,550 | | — | — | — | — |
Mil ions of U.S. dol ars | | — | | — | — | 272 | 250 |
Maturity dates | 2022 | | 2022 | 2040 | 2022 | 2025 |
(1) | Barrels per day ("bpd"), gigajoules per day ("GJ/d") and gigawatt hours ("GWh"). |
Gains and Losses on Derivative Instruments |
Realized and unrealized losses (gains) on derivative instruments are as fol ows: |
| 3 Months Ended September 30 | | | 9 Months Ended September 30 |
($ mil ions) | | 2022 | | 2021 | 2022 | 2021 |
Derivative instruments held at FVTPL(1)Realized (gain) loss |
Commodity-related | | 19 | | 43 | 115 | 164 |
Foreign exchange | | 4 | | (2) | 7 | (10) |
Unrealized (gain) loss |
Commodity-related | | (102) | | (47) | (192) | (43) |
Foreign exchange | | 21 | | 8 | 24 | 16 |
Derivative instruments in hedging relationships(2)Unrealized gain |
Interest rate | | (4) | | (1) | (18) | (5) |
(1) | Realized and unrealized losses (gains) on commodity derivative instruments held at FVTPL are included in loss (gain) on commodity-related derivative financial instruments in |
the Interim Financial Statements. Realized and unrealized losses (gains) on foreign exchange derivative instruments held at FVTPL are included in net finance costs in the |
Interim Financial Statements. |
(2) | Unrealized gains on derivatives in designated cash flow hedging relationships are recognized in the cash flow hedge reserve in accumulated other comprehensive income, |
with realized (gains) losses being reclassified to net finance costs. Refer to Note 13 for amounts reclassified. No (gains) losses have been recognized in net income relating to |
discontinued cash flow hedges. |
Non-Derivative Instruments Designated as Net Investment Hedges |
Pembina has designated certain U.S. dol ar denominated debt as a hedge of the Company's net investment in U.S. dol ar denominated subsidiaries and investments in equity accounted investees. The designated debt has been assessed as having no ineffectiveness as the U.S. dol ar debt has an equal and opposite exposure to U.S. dol ar fluctuations. As a result, al foreign exchange gains or losses on the debt are reported directly in other comprehensive income. |
The fol owing balances of U.S. dol ar debt had been designated as hedges: |
($ mil ions) | | | September 30, 2022 | | December 31, 2021 |
Notional amount of U.S. debt designated (in U.S. dol ars) | | | | | 250 | 250 |
Carrying value of U.S. debt designated | | | | | 342 | 316 |
Maturity date | | | | | | | 2025 | 2025 |
| Pembina Pipeline Corporation Third Quarter 2022 65 |
15. COMMITMENTS AND CONTINGENCIES |
Commitments |
Pembina had the fol owing contractual obligations outstanding as at September 30, 2022: |
Contractual Obligations(1) | Payments Due by Period |
($ mil ions) | | Total | Less than 1 Year | 1 – 3 Years | 3 – 5 Years | After 5 Years |
Leases(2) | | | | | | | | 903 | 101 | | | | | | | 174 | 142 | 486 |
Long-term debt(3) | | | | | | | | 16,471 | 1,541 | | | 2,163 | 1,762 | | | | | 11,005 |
Construction commitments(4)(5) | | | | | | | | 727 | 399 | | | | | | | 102 | 14 | 212 |
Other | | | | | | | | 617 | 75 | | | | | | | 140 | 92 | 310 |
Total contractual obligations | | | | | | | | 18,718 | 2,116 | | | 2,579 | 2,010 | | | | | 12,013 |
(1) | Pembina enters into product purchase agreements and power purchase agreements to secure supply for future operations. Purchase prices of both NGL and power are |
dependent on current market prices. Volumes and prices for NGL and power contracts cannot be reasonably determined, and therefore, an amount has not been included in |
the contractual obligations schedule. Product purchase agreements range from one to 9 years and involve the purchase of NGL products from producers. Assuming product |
is available, Pembina has secured between 45 and 193 mbpd of NGL each year up to and including 2030. Power purchase agreements range from one to 24 years and involve |
the purchase of power from electrical service providers. Pembina has secured up to 77 megawatts per day each year up to and including 2046. |
(2) | Includes terminals, rail, office space, land and vehicle leases. |
(3) | Includes loans and borrowings, subordinated hybrid notes and interest payments on Pembina's senior unsecured medium-term notes and subordinated hybrid notes. |
Excludes deferred financing costs. |
(4) | Includes required maintenance and/or turnarounds and excludes significant projects that are awaiting regulatory approval, projects which Pembina is not committed to |
construct, and projects that are executed by equity accounted investees. |
(5) | Includes construction commitments related to assets held for sale of $28 mil ion as at September 30, 2022; $3 mil ion related to payments due in less than 1 year, and $25 |
mil ion after 5 years. |
As a result of the disposition of Pembina's field-based gas processing assets on August 15, 2022 (see Note 5 for further details), Pembina's construction commitments were reduced by $264 mil ion. |
Commitments to Equity Accounted Investees | | | | | | | |
Pembina has commitments to provide contributions to certain equity accounted investees based on annual budgets approved by the joint venture partners and contractual agreements. |
Contingencies |
Pembina, including its subsidiaries and its investments in equity accounted investees, are subject to various legal and regulatory and tax proceedings, actions and audits arising in the normal course of business. We represent our interests vigorously in al proceedings in which we are involved. Legal and administrative proceedings involving possible losses are inherently complex, and we apply significant judgment in estimating probable outcomes. Of significance is a claim filed against Aux Sable by a counterparty to an NGL supply agreement. Aux Sable has filed Statements of Defense responding to the claim. While the final outcome of such actions and proceedings cannot be predicted with certainty, at this time management believes that the resolutions of such actions and proceedings wil not have a material impact on Pembina's financial position or results of operations. While a claim has not been filed, management believes that under certain circumstances claims could be advanced in respect of Ruby Pipeline as a result of the voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code. The final outcome of such claims, if made, is not known or measurable at this time. |
Letters of Credit |
Pembina has provided letters of credit to various third parties in the normal course of conducting business. The letters of credit include financial guarantees to counterparties for product purchases and sales, transportation services, utilities, engineering and construction services. The letters of credit have not had and are not expected to have a material impact on Pembina's financial position, earnings, liquidity or capital resources. As at September 30, 2022, Pembina had $199 mil ion (December 31, 2021: $135 mil ion) in letters of credit issued. |
66 | Pembina Pipeline Corporation Third Quarter 2022 |
| HEAD OFFICEPembina Pipeline CorporationSuite 4000, 585 – 8th Avenue SWCalgary, Alberta T2P 1G1 |
| AUDITORSKPMG LLPChartered AccountantsCalgary, Alberta |
| TRUSTEE, REGISTRAR & TRANSFER AGENTComputershare Trust Company of CanadaSuite 600, 530 – 8th Avenue SWCalgary, Alberta T2P 3S81.800.564.6253 |
| STOCK EXCHANGEPembina Pipeline Corporation |
| Toronto Stock Exchange listing symbols for:COMMON SHARES PPLPREFERRED SHARES PPL.PR.A, PPL.PR.C, PPL.PR.E, PPL.PR.G, PPL.PR.I, PPL.PR.O, PPL.PR.Q, PPL.PR.S, PPL.PF.A, PPL.PF.C and PPL.PF.E |
| New York Stock Exchange listing symbol for:COMMON SHARES PBA |
| INVESTOR INQUIRIESPhone 403.231.3156Fax 403.237.0254Toll Free 1.855.880.7404Email investor-relations@pembina.comWebsite www.pembina.com |
www.pembina.com |