Pembina Pipeline Corp. Q1-2020 Earnings & Price Target Update
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Pembina Pipeline Corp. (PPL-TSX, PPL.PF.A, PPL.PR.A,E,G, I, K, M, O, Q, S) owns or has interests in conventional crude oil, condensate, natural gas and natural gas liquids pipelines, oil sands and heavy oil pipelines, gas gathering and processing facilities, NGL infrastructure and logistics, and midstream services. Pembina transports approximately 50% of Alberta's conventional crude oil, and natural gas liquids produced in western Canada; oil sands, heavy oil and diluent pipelines; gas gathering and processing facilities. Pembina provides 30% of the natural gas liquids produced in western Canada, and five oil sands pipelines provide 30% of take away capacity from the Athabasca oil sands region. The pipelines transport conventional and synthetic crude oil and natural liquids. Operations are primarily located in Western Canada. The Pipelines Segment contributes 56% of operating profits, Facilities – 28% and Marketing – 14%. Total assets as of Mar-31-2020 were $34.1B compared to $15B at Dec-31-2016. The growth resulted from the acquisition of Veresen Inc. in Oct-2017 adding $9B, and Kinder Morgan for $4.4B with the balance from ongoing capital development projects. The acquisition of Kinder Morgan Canada(KML-TSX) and the US portion of the Cochin Pipeline from Kinder Morgan Inc.(KMI-NYSE) on Dec-19-2019 adding $4.4B in assets in Q4-2019. During 2019, $600M of projects was placed into service, including Duvernay II, Burstall Ethane Storage as well as other infrastructure at the Redwater Complex. For 2020, $1.6B of additional fee based projects is expected to enter service, and $1.3B for 2021. An additional $8B is in the planning and approval phases.
The longer term strategy is to build infrastructure to connect western Canada petroleum products to global markets to benefit from higher prices. This included a facility located in Alberta to convert propane in polypropylene for plastics, a Prince Rupert LPG Export Terminal, currently under construction, and the Jordan Cove LNG project on the coast of Oregon budgeted at $6.5B. The Alberta polypropylene project is on hold until at least the after the COVID crisis eases. The Jordan Cove project has received US Federal approval, state and regional approvals are progressing.
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