Pembina Pipeline Corp (PBA) Q4 2024 Earnings Call Highlights: Record EBITDA and Strategic ...

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Sat, Mar 1, 2025, 12:09 AM 4 min read

Quarterly Earnings: $572 million.
Record Quarterly Adjusted EBITDA: $1.254 billion.
Record Quarterly Adjusted Cash Flow from Operating Activities: $922 million or $1.59 per share.
Full Year Earnings: $1.874 billion.
Record Annual Adjusted EBITDA: $4.408 billion.
Record Full Year Adjusted Cash Flow from Operating Activities: $3.265 billion or $5.70 per share.
Total Volumes for Q4: 3.67 million barrels per day, a 6% increase over the prior year.
Debt-to-Adjusted EBITDA Ratio: 3.5x based on trailing 12 months.
Common Share Dividend Increase: 3.4%.

Warning! GuruFocus has detected 6 Warning Signs with PBA.

Release Date: February 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Pembina Pipeline Corp (NYSE:PBA) reported record quarterly adjusted EBITDA of $1.254 billion, reflecting a 21% increase over the same period in the prior year.
The company achieved record annual adjusted EBITDA of $4.408 billion and record full-year adjusted cash flow from operating activities of $3.265 billion.
Pembina Pipeline Corp (NYSE:PBA) successfully executed several strategic initiatives, including the consolidation of ownership of Alliance and Aux Sable, and reaching a positive FID on the Cedar LNG project.
The company announced a 3.4% increase in the common share dividend, demonstrating a commitment to returning capital to shareholders.
Pembina Pipeline Corp (NYSE:PBA) is actively developing additional expansion opportunities, including the Peace Pipeline system expansion and the Greenlight Electricity Center project, which aligns with Alberta's data center investment goals.

Negative Points

Earnings in the fourth quarter were $572 million, representing an 18% decrease over the same period in the prior year.
The company faced lower net revenue on the Cochin pipeline due to lower front holds and lower interruptible volumes during the period.
There were unrealized losses on commodity-related derivatives compared to unrealized gains in the prior period, impacting financial results.
Higher interest expense and higher income tax expense contributed to the decrease in earnings for the fourth quarter.
The company is facing ongoing discussions with shippers regarding the Alliance pipeline rate case, which could impact future financial outcomes.

Q & A Highlights

Q: Can you discuss the commercial and growth opportunities from the Yellowhead Mainline project, particularly regarding additional frac capacity or export capacity? A: Jaret Sprott, COO, explained that Pembina was awarded exclusive extraction rights on the Yellowhead Mainline, which is expected to be operational in the latter half of 2027. They estimate building around 500 million cubic feet per day of extraction capacity, resulting in approximately 25,000 barrels of NGL extraction. Pembina is evaluating how this fits into their supply portfolio, particularly in supporting Dow's net-zero cracker. The extracted C3+ could be integrated into existing frac capacity and marketed domestically or internationally.

Q: Regarding the Greenlight project, what is the potential size of the gas requirement, and how might this translate to additional capacity on Alliance? A: Stuart Taylor, SVP of Marketing, New Ventures, and Corporate Development, stated that each phase of the Greenlight project will consume approximately 80 million cubic feet per day of gas. There is significant demand for expansion opportunities from the shipper group on the Alliance pipeline, and Pembina is evaluating both short-haul and long-haul expansion options.

Q: Can you provide details on the capital requirements for the Yellowhead Mainline's straddle facility and its contribution to the ethane supply agreement? A: Jaret Sprott, COO, estimated the cost of the straddle facility to be between $400 million and $500 million. Approximately 50% of the 25,000 barrels per day extracted would be ethane, which could supplement the 50,000 barrel per day supply agreement with Dow. Pembina is evaluating how these barrels fit into their existing supply portfolio and future expansions.

Q: How does the Greenlight project's return profile compare to traditional midstream investments, and will the economics be secured by long-term contracts? A: Cameron Goldade, CFO, indicated that the base returns for the Greenlight project are expected to be consistent with midstream infrastructure returns. The project is intended to be underpinned by long-term contracts, minimizing merchant exposure.

Q: With the geopolitical developments in Europe and policy movements in the U.S., how is Pembina progressing in contracting capacity for Cedar LNG? A: Stuart Taylor, SVP of Marketing, New Ventures, and Corporate Development, reported strong interest from a broad range of customers, including Canadian producers and international oil companies. Pembina has received term sheets exceeding the available capacity and is moving towards detailed negotiations.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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