Enhanced Investments - Financial Portal

Published: 2021-05-06

Financial Statements & Notes

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION(unaudited)
($ mil ions)	March 31, 2021	December 31, 2020
Assets
Current assets
Cash and cash equivalents			45	81
Trade receivables and other			773	662
Inventory			184	221
Derivative financial instruments (Note 12)			20	25
			1,022	989
Non-current assets
Property, plant and equipment (Note 4)			18,534	18,549
Intangible assets and goodwil			6,307	6,340
Investments in equity accounted investees (Note 5)			4,323	4,377
Right-of-use assets			634	651
Finance lease receivable			136	138
Deferred tax assets			313	322
Advances to related parties and other assets			55	50
			30,302	30,427
Total assets			31,324	31,416
Liabilities and equity
Current liabilities
Trade payables and other			762	780
Loans and borrowings (Note 6)			400	600
Dividends payable			115	115
Lease liabilities			97	99
Contract liabilities (Note 8)			69	62
Taxes payable			—	56
Derivative financial instruments (Note 12)			78	69
			1,521	1,781
Non-current liabilities
Loans and borrowings (Note 6)			10,120	10,276
Subordinated hybrid notes (Note 6)			594	—
Lease liabilities			642	675
Decommissioning provision			361	348
Contract liabilities (Note 8)			226	230
Deferred tax liabilities			2,964	2,925
Other liabilities			163	166
			15,070	14,620
Total liabilities			16,591	16,401
Equity
Attributable to shareholders			14,673	14,955
Attributable to non-control ing interest			60	60
Total equity			14,733	15,015
Total liabilities and equity			31,324	31,416
See accompanying notes to the condensed consolidated interim financial statements
					Pembina Pipeline Corporation First Quarter 2021 31

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME(unaudited)
	3 Months Ended March 31
			2020
($ mil ions, except per share amounts)		2021		(Restated Note 2)
Revenue (Note 8)					2,045	1,671
Cost of sales (Note 10)					1,393	1,148
Loss (gain) on commodity-related derivative financial instruments (Note 12)					93	(126)
Share of profit from equity accounted investees (Note 5)					71	84
Gross profit					630	733
General and administrative					87	61
Other expense					4	17
Impairment expense (Note 5)					12	—
Results from operating activities					527	655
Net finance costs (Note 9)					104	208
Earnings before income tax					423	447
Current tax expense					58	76
Deferred tax expense					45	52
Income tax expense					103	128
Earnings					320	319
Other comprehensive income (loss), net of tax (Note 11 & 12)
Exchange (loss) gain on translation of foreign operations					(63)	465
Impact of hedging activities					8	—
Re-measurement of defined benefit liability					—	14
Total comprehensive income attributable to shareholders					265	798
Earnings attributable to common shareholders, net of preferred share dividends					281	280
Earnings per common share – basic and diluted (dol ars)					0.51	0.51
Weighted average number of common shares (mil ions)
Basic and Diluted					550	549
See accompanying notes to the condensed consolidated interim financial statements
32 Pembina Pipeline Corporation First Quarter 2021

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY(unaudited)
	Attributable to Shareholders of the Company
		Total
		Equity	Common	Preferred				Deficit		Total	Non-
		(Restated	Share			Share	(Restated		(Restated		Control ing
		Note 2)	($ mil ions)	Capital			Capital	Note 2)	AOCI(1)	Note 2)	Interest
December 31, 2020				15,644			2,946	(3,637)	2	14,955	60	15,015
Total comprehensive income (loss)
Earnings				—			—	320	—	320	—	320
Other comprehensive loss (Note 11)				—			—	—	(55)	(55)	—	(55)
Total comprehensive income (loss)				—			—	320	(55)	265	—	265
Transactions with shareholders of the Company
Part VI.1 tax on preferred shares (Note 7)				—			(3)	—	—	(3)	—	(3)
Preferred shares redemption (Note 7)				—			(170)	—	—	(170)	—	(170)
Share-based payment transactions (Note 7)				8			—	—	—	8	—	8
Dividends declared – common (Note 7)				—			—	(346)	—	(346)	—	(346)
Dividends declared – preferred (Note 7)				—			—	(36)	—	(36)	—	(36)
Total transactions with shareholders of the Company				8			(173)	(382)	—	(547)	—	(547)
March 31, 2021				15,652			2,773	(3,699)	(53)	14,673	60	14,733
Opening value January 1, 2020				15,539			2,956	(1,785)	98	16,808	60	16,868
Total comprehensive income (loss)
Earnings				—			—	319	—	319	—	319
Other comprehensive income
Exchange gain on translation of foreign operations				—			—	—	465	465	—	465
Remeasurements of defined benefit liability, net of
tax				—			—	—	14	14	—	14
Total comprehensive income				—			—	319	479	798	—	798
Transactions with shareholders of the Company
Part VI.1 tax on preferred shares				—			(2)	—	—	(2)	—	(2)
Share-based payment transactions				87			—	—	—	87	—	87
Dividends declared – common				—			—	(346)	—	(346)	—	(346)
Dividends declared – preferred				—			—	(38)	—	(38)	—	(38)
Total transactions with shareholders of the Company				87			(2)	(384)	—	(299)	—	(299)
March 31, 2020				15,626			2,954	(1,850)	577	17,307	60	17,367
(1)	Accumulated Other Comprehensive Income (loss) ("AOCI").
See accompanying notes to the condensed consolidated interim financial statements
					Pembina Pipeline Corporation First Quarter 2021 33

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS(unaudited)
	3 Months Ended March 31
			2020
($ mil ions)		2021		(Restated Note 2)
Cash provided by (used in)Operating activitiesEarnings
					320	319
Adjustments for:
Share of profit from equity accounted investees					(71)	(84)
Distributions from equity accounted investees					115	123
Depreciation and amortization					175	173
Impairment expense					12	—
Unrealized loss (gain) on commodity-related derivative financial instruments					5	(109)
Net finance costs (Note 9)					104	208
Net interest paid					(109)	(99)
Income tax expense					103	128
Taxes paid					(127)	(186)
Share-based compensation expense (recovery)					28	(5)
Share-based compensation payment					(32)	(44)
Net change in contract liabilities					5	17
Other					7	10
Change in non-cash operating working capital					(79)	(41)
Cash flow from operating activities					456	410
Financing activities
Net decrease in bank borrowings					(103)	(605)
Proceeds from issuance of long-term debt, net of issue costs					593	1,069
Repayment of long-term debt					(250)	—
Repayment of lease liability					(24)	(26)
Exercise of stock options					1	82
Redemption of preferred shares					(170)	—
Dividends paid					(383)	(378)
Cash flow (used in) provided by financing activities					(336)	142
Investing activities
Capital expenditures					(127)	(483)
Contributions to equity accounted investees					(12)	(172)
Receipt of finance lease payments					3	14
Interest paid during construction					(9)	(14)
Advances to related parties					(10)	(11)
Changes in non-cash investing working capital and other					(2)	110
Cash flow used in investing activities					(157)	(556)
Change in cash and cash equivalents					(37)	(4)
Effect of movement in exchange rates on cash held					1	7
Cash and cash equivalents, beginning of period					81	129
Cash and cash equivalents, end of period					45	132
See accompanying notes to the condensed consolidated interim financial statements
34 Pembina Pipeline Corporation First Quarter 2021

NOTES TO THE CONDENSED CONSOLIDATED UNAUDITED INTERIM FINANCIAL STATEMENTS
1. REPORTING ENTITY
Pembina Pipeline Corporation ("Pembina" or the "Company") is a Calgary-based, leading transportation and midstream service provider serving North America's energy industry. Pembina owns an integrated system of pipelines that transport various hydrocarbon liquids and natural gas products produced primarily in western Canada. Pembina also owns gas gathering and processing facilities and an oil and natural gas liquids infrastructure, storage and logistics business; and is growing an 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 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 months ended March 31, 2021. These Interim Financial Statements and the notes hereto have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting ("IAS 34"), as issued by the International Accounting Standards Board ("IASB"). The accounting policies applied are in accordance with International Financial Reporting Standards (“IFRS”) and are consistent with the audited annual consolidated financial statements of the Company as at and for the year ended December 31, 2020 ("Consolidated Financial Statements"), 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 May 6, 2021.
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 months ended March 31, 2021, including to ongoing impact of significant uncertainties created by the coronavirus ("COVID-19") pandemic, as discussed below.
Ongoing Impact of the COVID-19 Pandemic
Fol owing the World Health Organization declaring the COVID-19 outbreak to be a pandemic, many governments have imposed restrictions on individuals and businesses, resulting in a significant slowdown of the global economy. While there have been positive signals into the first quarter of 2021 in commodity prices, demand recovery remains affected by COVID-19. Although restrictions have been relaxed in certain jurisdictions and vaccination programs are underway, there remains significant uncertainty as to the global economic outlook and there remains the potential for volatility in the global economy as a result of the COVID-19 pandemic. Management considered these uncertainties when applying judgment to estimates and assumptions in the Interim Financial Statements.
	Pembina Pipeline Corporation First Quarter 2021 35

2. CHANGES IN ACCOUNTING POLICIES
Voluntary change in accounting policy
As detailed in Note 3 of the Consolidated Financial Statements, as at December 31, 2020, Pembina voluntarily changed its accounting policy for the measurement of decommissioning liabilities to utilize a credit-adjusted risk-free interest rate instead of a risk-free interest rate to determine the present value of the liability at each statement of financial position date. This accounting policy change was applied retrospectively, including the restatement of certain comparative amounts in the Interim Financial Statements, as summarized below.
i.	Reconciliation of the Condensed Consolidated Interim Statements of Earnings and Comprehensive Income
	3 Months Ended March 31, 2020
	Previously
($ mil ions)	reported	Adjustments	Restated
Cost of sales				1,152		(4)	1,148
Share of profit from equity accounted investees				83		1	84
Gross profit				728		5	733
Net finance costs				209		(1)	208
Earnings before income tax				441		6	447
Deferred tax expense				51		1	52
Earnings attributable to shareholders				314		5	319
Total comprehensive income attributable to shareholders				793		5	798
Earnings attributable to common shareholders, net of preferred share dividends				275		5	280
Earnings per common share - basic and diluted	0.50			0.01	0.51
i . Reconciliation of the Condensed Consolidated Interim Statement of Cash Flows
	3 Months Ended March 31, 2020
	Previously
($ mil ions)	reported	Adjustments	Restated
Earnings				314		5	319
Share of profit from equity accounted investees				(83)		(1)	(84)
Adjustments for depreciation and amortization				177		(4)	173
Adjustments for net finance costs				209		(1)	208
Adjustments for income tax expense				127		1	128
Cash flow from operating activities				410		—	410
3. 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 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.
Ongoing Impact of the COVID-19 Pandemic
Measuring fair values using significant unobservable inputs has become more chal enging in the current environment, where events and conditions related to the COVID-19 pandemic are driving significant disruption of business operations and a significant increase in economic uncertainty. 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.
36 Pembina Pipeline Corporation First Quarter 2021

4. PROPERTY, PLANT AND EQUIPMENT
				Cavern
	Land and		Facilities and	Storage and	Assets Under
($ mil ions)	Land Rights	Pipelines	Equipment	Other	Construction(1)	Total
CostBalance at December 31, 2020
		429	9,206				8,907	1,993				1,109	21,644
Additions and transfers								10	30				299	101			(305)	135
Change in decommissioning provision								—	(1)				(4)	1			—	(4)
Disposals and other								(1)	(10)					(1)	—			—	(12)
Foreign exchange								(1)	(11)					—	—			—	(12)
Balance at March 31, 2021		437	9,214				9,201	2,095				804	21,751
DepreciationBalance at December 31, 2020
								21	1,547					1,118	409			—	3,095
Depreciation								1	49				56	20			—	126
Disposals and other								—	(3)				(3)	2			—	(4)
Balance at March 31, 2021								22	1,593					1,171	431			—	3,217
Carrying amountsBalance at December 31, 2020
		408	7,659				7,789	1,584				1,109	18,549
Balance at March 31, 2021		415	7,621				8,030	1,664				804	18,534
(1)	Includes capitalized borrowing costs.
5. INVESTMENTS IN EQUITY ACCOUNTED INVESTEES
		Share of Profit from Equity
		Accounted Investees
									Ownership Interest (percent)	Investments in Equity Accounted Investees	3 Months Ended March 31
($ mil ions)									March 31, 2021	December 31, 2020		2021							2020	March 31, 2021				December 31, 2020
Al iance											50	50	34							29	2,462	2,498
Aux Sable									42.7 - 50	42.7 - 50	6	4	383	401
Ruby(1)													—	—	13							31	—	—
Veresen Midstream											45	45	17							13	1,374	1,374
CKPC											50	50	—	5	—	—
Other											50 - 75	50 - 75	1	2	104	104
			71							84	4,323	4,377
(1)	Pembina owns a 50 percent convertible preferred interest in Ruby.
At March 31, 2021, 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 loss for the three months ended March 31, 2021, of $20 mil ion (2020: $248 mil ion gain) has been included in other comprehensive income.
Impairment of Ruby Advance
During the three months ended March 31, 2021, Pembina recognized an impairment associated with an advance made to Ruby during the first quarter of 2021.
Financing Activities for Equity Accounted Investees
On March 29, 2021, Ruby amended the maturity date of its term loan to April 30, 2021. At March 31, 2021, U.S. $16 mil ion (U.S. $8 mil ion net to Pembina) remained outstanding and was subsequently repaid by Ruby April 19, 2021.
			Pembina Pipeline Corporation First Quarter 2021 37

6. 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 March		Nominal	Year of
($ mil ions)		31, 2021	Interest Rate	Maturity	March 31, 2021	December 31, 2020
Loans and borrowingsSenior unsecured credit facilities(1)(3)(4)
		3,334	1.43(2)	Various(1)			1,424	1,530
Senior unsecured medium-term notes series 1									—	4.89	2021		—	250
Senior unsecured medium-term notes series 2		450	3.77	2022			450	449
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			498	498
Senior unsecured medium-term notes series 7		600	3.71	2026			603	603
Senior unsecured medium-term notes series 8		650	2.99	2024			647	647
Senior unsecured medium-term notes series 9		550	4.74	2047			542	542
Senior unsecured medium-term notes series 10		650	4.02	2028			661	661
Senior unsecured medium-term notes series 11		800	4.75	2048			842	842
Senior unsecured medium-term notes series 12		650	3.62	2029			654	654
Senior unsecured medium-term notes series 13		700	4.54	2049			713	713
Senior unsecured medium-term notes series 14		600	2.56	2023			599	599
Senior unsecured medium-term notes series 15		600	3.31	2030			597	597
Senior unsecured medium-term notes series 16		400	4.67	2050			397	397
Senior unsecured medium-term notes series 3A									50	5.05	2022		50	51
Senior unsecured medium-term notes series 5A		350	3.43	2021			350	350
Total loans and borrowings											10,520	10,876
Less current portion loans and borrowings											(400)	(600)
Total non-current loans and borrowings											10,120	10,276
Subordinated hybrid notesSubordinated notes, series 1
		600	4.80	2081			594	—
(1)	Pembina's unsecured credit facilities include a $2.5 bil ion revolving facility that matures in May 2024, a $500 mil ion non-revolving term loan that matures in August 2022, 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 2021, 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 March 31, 2021. 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 March 31, 2021 (December 31, 2020: U.S. $250 mil ion).
(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 12 for foreign exchange risk management.
On January 25, 2021, Pembina closed a $600 mil ion offering of Fixed-to-Fixed Rate Subordinated Hybrid Notes (the "Series 1 Subordinated Notes"). The Series 1 Subordinated Notes have a fixed 4.80 percent interest rate, payable semi-annual y, which resets on January 25, 2031, and on every fifth anniversary thereafter, based on the five-year Government of Canada Yield plus: 4.17 percent for the period from, and including, January 25, 2031 to, but excluding January 25, 2051; and 4.92 percent for the period from, and including, January 25, 2051 to, but excluding January 25, 2081. The Series 1 Subordinated Notes are subject to optional redemption by Pembina from October 25, 2030 to January 25, 2031 and on any interest payment date or any interest reset date, as applicable. Pembina may also redeem the Series 1 Subordinated Notes in certain other limited circumstances. Fol owing the occurrence of certain bankruptcy or insolvency events in respect of Pembina, subject to certain exceptions, the Series 2021-A Class A Preferred Shares (as defined below) wil be delivered to the holders of the Series 1 Subordinated Notes to satisfy Pembina's obligations under the indenture governing the Series 1 Subordinated Notes. Upon delivery of the Series 2021-A Class A Preferred Shares, the Series 1 Subordinated Notes wil be immediately and automatical y surrendered and cancel ed and al rights of any holders of the Series 1 Subordinated Notes wil automatical y cease. The fair value of the automatic delivery feature was assessed as nominal at inception.
38 Pembina Pipeline Corporation First Quarter 2021

On March 25, 2021, Pembina cancel ed its $800 mil ion revolving credit facility. No balance was outstanding on the cancel ation date.
Subsequent to the end of the first quarter, on April 30, 2021, Pembina extended the maturity dates of its revolving and operating credit facilities to June 2026 and May 2022, respectively.
7. SHARE CAPITAL
Common Share Capital
	Number of
	Common Shares	Common
($ mil ions, except as noted)	(mil ions)	Share Capital
Balance at December 31, 2020				550	15,644
Share-based payment transactions				—	8
Balance at March 31, 2021				550	15,652
On February 25, 2021, the Toronto Stock Exchange ("TSX") accepted the Company's notice of intention to commence a normal course issuer bid ("NCIB") that al ows the company to repurchase, at its discretion, up to 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 wil be cancel ed. The program commenced March 2, 2021 and wil terminate on March 1, 2022 or on such earlier date as the Company completes its purchases pursuant to the notice of intention. No common shares were purchased by Pembina during the three months ended March 31, 2021.
Preferred Share Capital
			Number of Preferred
	Shares	Preferred
($ mil ions, except as noted)	(mil ions)	Share Capital
Balance at December 31, 2020				122	2,946
Class A, Series 11 Preferred shares redeemed, net of issue costs				(7)	(170)
Part VI.1 tax				—	(3)
Balance at March 31, 2021				115	2,773
On January 25, 2021 in conjunction with the offering of the Series 1 Subordinated Notes, Pembina issued 600,000 Class A Preferred Shares, Series 2021-A, to Computershare Trust Company of Canada, to be held in trust as treasury shares to satisfy Pembina's obligations under the indenture governing the Series 1 Subordinated Notes.
On March 1, 2021, Pembina redeemed al of the 6.8 mil ion issued and outstanding Cumulative Redeemable Minimum Rate Reset Class A Preferred Shares, Series 11 (the "Series 11 Class A Preferred Shares") for a redemption price equal to $25.00 per Series 11 Class A Preferred Share.
Subsequent to the end of the first quarter, on April 6, 2021, Pembina announced its intention to redeem al of the 10 mil ion issued and outstanding Cumulative Redeemable Minimum Rate Reset Class A Preferred Shares, Series 13 (the "Series 13 Class A Preferred Shares") on June 1, 2021 for a redemption price equal to $25.00 per Series 13 Class A Preferred Shares.
						Pembina Pipeline Corporation First Quarter 2021 39

Dividends
The fol owing dividends were declared by Pembina:
3 Months Ended March 31($ mil ions)
	2021	2020
Common shares
$0.63 per common share (2020: $0.63)	346	346
Preferred shares
$0.31 per Series 1 preferred share (2020: $0.31)	3	3
$0.28 per Series 3 preferred share (2020: $0.28)	2	2
$0.28 per Series 5 preferred share (2020: $0.28)	3	3
$0.27 per Series 7 preferred share (2020: $0.27)	3	3
$0.27 per Series 9 preferred share (2020: $0.30)	2	2
$0.24 per Series 11 preferred share (2020: $0.36)	1	2
$0.36 per Series 13 preferred share (2020: $0.36)	4	4
$0.28 per Series 15 preferred share (2020: $0.28)			2	2
$0.30 per Series 17 preferred share (2020: $0.30)			2	2
$0.29 per Series 19 preferred share (2020: $0.31)			2	3
$0.31 per Series 21 preferred share (2020: $0.31)			5	5
$0.33 per Series 23 preferred share (2020: $0.33)			4	4
$0.33 per Series 25 preferred share (2020: $0.33)			3	3
	36	38
On April 6, 2021, Pembina announced that its Board of Directors had declared a monthly dividend of $0.21 per common share in the total amount of $115 mil ion, payable on May 14, 2021 to shareholders of record on April 23, 2021. Pembina's Board of Directors also declared quarterly dividends for Pembina's preferred shares as outlined in the fol owing table:
						Dividend Amount
Series			Record Date	Payable Date	Per Share Amount		($ mil ions)
Series 1			May 3, 2021	June 1, 2021	$0.306625	3
Series 3			May 3, 2021	June 1, 2021	$0.279875	2
Series 5			May 3, 2021	June 1, 2021	$0.285813	3
Series 7			May 3, 2021	June 1, 2021	$0.273750	3
Series 9			May 3, 2021	June 1, 2021	$0.268875	2
Series 13			May 3, 2021	June 1, 2021	$0.359375	4
Series 15			June 15, 2021	June 30, 2021	$0.279000	2
Series 17			June 15, 2021	June 30, 2021	$0.301313	2
Series 19			June 15, 2021	June 30, 2021	$0.292750	2
Series 21			May 3, 2021	June 1, 2021	$0.306250	5
Series 23			April 30, 2021	May 17, 2021	$0.328125	4
Series 25			April 30, 2021	May 17, 2021	$0.325000	3
40 Pembina Pipeline Corporation First Quarter 2021

8. 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.
	2021	2020
	Marketing	Marketing
3 Months Ended March 31
					& New			& New
			Pipelines	Facilities	Ventures					Total Pipelines	Facilities	Ventures							Total	($ mil ions)Take-or-pay(1)
				399	184				—	583				388	182						—	570
Fee-for-service(1)											79	40				—	119				99	30	—	129
Product sales(2)											—	—				1,300	1,300				—	—	923	923
Revenue from contracts with customers				478	224				1,300	2,002				487	212						923	1,622
Operational finance lease income				4	—				—	4	4	—						—	4
Fixed operating lease income											30	9				—	39				37	8	—	45
Total external revenue				512	233				1,300	2,045				528	220						923	1,671
(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:
				3 Months Ended March 31, 2021						12 Months Ended December 31, 2020
	Other					Total	Other							Total
	Contract					Contract	Contract							Contract
($ mil ions)			Take-or-Pay	Liabilities					Liabilities				Take-or-Pay	Liabilities							Liabilities
Opening balance				3	289	292	8	223	231
Additions (net in the period)				20	19	39	3	117	120
Revenue recognized from contract liabilities(1)				—	(36)	(36)	(8)	(51)	(59)
Closing balance				23	272	295	3	289	292
Less current portion(2)				(23)	(46)	(69)	(3)	(59)	(62)
Ending balance				—	226	226	—	230	230
(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 March 31, 2021, the balance includes $23 mil ion of cash col ected under take-or-pay contracts which wil be recognized within one year as the customer chooses to
ship, process, or otherwise forego the associated service.
Contract liabilities depict Pembina's obligation to perform services in the future for cash and non-cash consideration which has been received from customers. Contract liabilities include up-front payments or non-cash consideration received from customers for future transportation, processing and storage services. Contract liabilities also include consideration received from customers for take-or-pay commitments where the customer has a make-up right to ship or process future volumes under a firm contract. These amounts are non-refundable should the customer not use its make-up rights.
Pembina does not have any contract assets. In al instances where goods or services have been transferred to a customer in advance of the receipt of customer consideration, Pembina's right to consideration is unconditional and has therefore been presented as a receivable.
9. NET FINANCE COSTS
							3 Months Ended March 31
									2020
($ mil ions)		2021						(Restated Note 2)
Interest expense on financial liabilities measured at amortized cost:
Long-term debt											96							87
Leases											9							10
Unwinding of discount rate											4							4
Loss in fair value of non-commodity-related derivative financial instruments											4							46
Foreign exchange (gains) losses and other											(9)							61
Net finance costs											104							208
					Pembina Pipeline Corporation First Quarter 2021 41

10. OPERATING SEGMENTS
Pembina's operating segments are organized by three divisions: Pipelines, Facilities and Marketing & New Ventures.
				Corporate &
3 Months Ended March 31, 2021
			Marketing &	Inter-segment
	Pipelines(1)	Facilities	New Ventures(2)	Eliminations	Total	($ mil ions)
Revenue from external customers						512	233				1,300	—	2,045
Inter-segment revenue						41	106				—	(147)	—
Total revenue(3)						553	339				1,300	(147)	2,045
Operating expenses						137	111				—	(66)	182
Cost of goods sold, including product purchases						—		4	1,126	(84)	1,046
Depreciation and amortization included in operations						104		46	13	2	165
Cost of sales						241	161				1,139	(148)	1,393
Realized loss on commodity-related derivative financial
instruments						—		—	88	—	88
Share of profit from equity accounted investees						47		18	6	—	71
Unrealized (gain) loss on commodity-related derivative
financial instruments						—		(1)	6	—	5
Gross profit						359	197				73	1	630
Depreciation included in general and administrative						—		—	—	10	10
Other general and administrative						9		5	7	56	77
Other (income) expense						(6)		(1)	1	10	4
Impairment expense						10		—	2	—	12
Reportable segment results from operating activities						346	193				63	(75)	527
Net finance costs (income)						13		6	(4)	89	104
Reportable segment earnings (loss) before tax						333	187				67	(164)	423
Capital expenditures						83		40	2	2	127
Contributions to equity accounted investees						—		11	1	—	12
3 Months Ended March 31, 2020
				Corporate &
(Restated Note 2)($ mil ions)
			Marketing &	Inter-segment
	Pipelines(1)	Facilities	New Ventures(2)	Eliminations	Total
Revenue from external customers						528	220				923	—	1,671
Inter-segment revenue						35		84	—	(119)	—
Total revenue(3)						563	304				923	(119)	1,671
Operating expenses						126		96	—	(43)	179
Cost of goods sold, including product purchases						—		2	883	(79)	806
Depreciation and amortization included in operations						97		51	13	2	163
Cost of sales						223	149				896	(120)	1,148
Realized gain on commodity-related derivative
financial instruments						—		—	(17)	—	(17)
Share of profit from equity accounted investees						59		16	9	—	84
Unrealized gain on commodity-related derivative
financial instruments						—		(5)	(104)	—	(109)
Gross profit						399	176				157	1	733
Depreciation included in general and administrative						—		—	—	10	10
Other general and administrative						9		1	8	33	51
Other expense						—		—	12	5	17
Reportable segment results from operating activities						390	175				137	(47)	655
Net finance costs						7		6	21	174	208
Reportable segment earnings (loss) before tax						383	169				116	(221)	447
Capital expenditures						328	136				15	4	483
Contributions to equity accounted investees						—		41	153	—	194
(1)	Pipelines transportation revenue includes $52 mil ion (2020: $59 mil ion) associated with U.S. pipeline revenue.
(2)	Marketing & New Ventures includes revenue of $83 mil ion (2020: $50 mil ion) associated with U.S. midstream sales.
(3)	During the first quarter of 2021 and 2020, no one customer accounted for 10 percent or more of total revenues reported throughout al segments.
42 Pembina Pipeline Corporation First Quarter 2021

11. 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, 2019						134					—	(36)	98
Other comprehensive gain before hedging activities						465					—	14	479
Balance at March 31, 2020						599					—	(22)	577
Balance at December 31, 2020								48	—	(46)	2
Other comprehensive loss before hedging activities						(63)					—	—	(63)
Other comprehensive gain resulting from hedging activities(1)								3	5	—	8
Balance at March 31, 2021						(12)					5	(46)	(53)
(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 12).
(2)	Pension and other Post-Retirement Benefit Plan Adjustments wil not be reclassified into earnings.
12. 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's financial risks are consistent with those discussed in note 27 of the Consolidated Financial Statements. Pembina has exposure to counterparty credit risk, liquidity risk and market risk. As at March 31, 2021, 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.
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 and trade payables and other 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.
					March 31, 2021	December 31, 2020
	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)
										54	—					54	—	53		—	53	—
Financial liabilities carried at fair valueDerivative financial instruments(3)
										84	—					84	—	69		—	69	—
Financial liabilities carried at amortized costLong-term debt(2)
									11,114	— 11,648	— 10,876			— 11,902	—
(1)	The basis for determining fair value is disclosed in Note 3.
(2)	Carrying value of current and non-current balances. Includes loans and borrowings and subordinated hybrid notes.
(3)	At March 31, 2021 al derivative financial instruments are carried at fair value through earnings, except for $5 mil ion in interest rate derivative financial assets that have been
designated as cash flow hedges.
	Pembina Pipeline Corporation First Quarter 2021 43

Pembina's financial instruments carried at fair value are valued using Level 2 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 and Natural Gas Exchange.
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, which is consistent with the gross balances:
	March 31, 2021	December 31, 2020
	Non-				Non-	Non-
			Current	Current	Current			Current		Current	Current						Current
($ mil ions)			Asset	Asset	Liability			Liability	Total	Asset	Asset						Liability	Total
Commodity, power, storage and rail
financial instruments				10	28								(78)	(6)	(46)	11								27	(68)	(30)
Interest rate				—	6								—	—	6	—					1	(1)	—
Foreign exchange				10	—								—	—	10	14								—	—	14
Net derivative financial instruments				20	34								(78)	(6)	(30)	25								28	(69)	(16)
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)	(MWh)					Exchange	Rate
As at March 31, 2021Purchases(1)
										1,578	49,789	3						—	—
Sales(1)										14,857		—	—						—	—
Mil ions of U.S. dol ars										—		—	—						148	250
Maturity dates					2021	2021	2021					2021	2025
As at December 31, 2020Purchases(1)
										1,756	73,557	6						—	—
Sales(1)										25,284		—	—						—	—
Mil ions of U.S. dol ars										—		—	—						260	250
Maturity dates					2021	2021	2021					2021	2025
(1)	Barrels per day ("bpd"), gigajoules per day ("GJ/d") and megawatt hours ("MWh").
44 Pembina Pipeline Corporation First Quarter 2021

Gains and Losses on Derivative Instruments
Realized and unrealized losses (gains) on derivative instruments are as fol ows:
	3 Months Ended March 31
($ mil ions)		2021	2020
Derivative instruments held at FVTPL(1)Realized loss (gain)
Commodity-related				88	(17)
Foreign exchange				(5)	—
Unrealized loss (gain)
Commodity-related				5	(109)
Foreign exchange				4	—
Derivative instruments in hedging relationships(2)Unrealized (gain) loss
Interest rate				(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 losses (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 11 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)	March 31, 2021			December 31, 2020
Notional amount of U.S. debt designated (in U.S. dol ars)				250	250
Carrying value of U.S. debt designated				314	317
Maturity date		2025	2025
					Pembina Pipeline Corporation First Quarter 2021 45

13. COMMITMENTS AND CONTINGENCIES
Commitments
Pembina had the fol owing contractual obligations outstanding at March 31, 2021:
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)							1,019	128			204	166	521
Long-term debt(3)							16,701	874	2,908	2,003			10,916
Construction commitments(4)							1,160	572			46	54	488
Other							535	101			136	72	226
Total contractual obligations							19,415	1,675	3,294	2,295			12,151
(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 12 and 138 mbpd of NGL each year up to and including 2029. Power purchase agreements range from one to 23 years and involve
the purchase of power from electrical service providers. Pembina has secured up to 80 megawatts per day each year up to and including 2044.
(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 notes and subordinated hybrid notes. Excludes deferred
financing costs.
(4)	Excluding significant projects that are awaiting regulatory approval, projects which Pembina is not committed to construct, and projects that are executed by equity
accounted investees.
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.
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 most 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.
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 March 31, 2021, Pembina had $114 mil ion (December 31, 2020: $91 mil ion) in letters of credit issued.
46 Pembina Pipeline Corporation First Quarter 2021

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.M, 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