Pembina Pipeline Corp. Q2-2017 Earnings & Price Target Update
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Pembina Pipeline Corporation(PPL-TSX, PBA-NYSE) is leading Canadian company providing transportation and midstream services to the western Canadian petroleum sector for over 60 years. Pembina owns and operates: pipelines that transport conventional and synthetic crude oil and natural gas liquids produced in western Canada; oil sands, heavy oil and diluent pipelines; gas gathering and processing facilities; and, an oil and natural gas liquids midstream facilities, and logistics business. With facilities strategically located in western Canada and in natural gas liquids markets in eastern Canada and the U.S., Pembina offers a wide range of midstream and marketing services.
During the 1H-2017 $2.8B of capital projects that were started in the past 2 years were placed into service and a further $2.5B were initiated in 2017. The acquisitions of Versen's natural gas liquids business is in the final closing stages and expected to be complete in early 2018. This will add another approximately $5.7B in assets for total forecast assets of $22B by Dec-31-2018.
Pembina Pipeline Corp. is in the process of acquiring Veresen Inc. (VSN) in a cash and share deal anticipated to close by 2017 year end or early 2018. On closing Pembina's dividend is forecast to $2.16. Increase to both companies operate in the oil and natural gas midstream sectors with a major focus on pipelines. Pembina is a major shipper from the Alberta oil sands as well as conventional pipelines. Veresen owns a 50% interest along with the Enbridge group in the transcontinental Alliance natural gas pipeline. While they both operate with the oil and natural sector the assets are in different industry segments. The combined companies will provide increased product, customer and geographic diversification. Veresen is in the process of selling $1.1B of power generation assets and is refocusing on building a major midstream natural gas processing presence in north east BC including the Montney region. They also have a large NGL facility on the Oregon coast that is stalled in pre-approval.
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