Given the increased capital spend and growth opportunities, is the narrative shifting towards a growth orientation, and what is the latest thinking on capital allocation?

Scott Burrows clarified that the increased capital is primarily due to bolt-on acquisitions and advancing existing projects, offset by cost savings elsewhere. Cameron Goldade added that Pembina has been consistent on buybacks, looking at risk-adjusted economics. He noted a modest free cash flow in 2025 and a likely slight deficit in 2026 due to Cedar spend, but a multi-year neutral to slightly positive FCF profile. Scott emphasized that capital is dedicated to projects that enhance the franchise, while buybacks are an economic outcome but don't necessarily enhance service offerings. “But buying back stock versus growth capital is always a constant debate amongst our team here and with our Board. But right now, as we've talked about capital is dedicated to projects and the projects we are considering generally enhance our franchise.”

How does the strong WCSB fundamentals and confidence in market share translate into a long-term EBITDA growth rate, and what is the outlook for margins?

Scott Burrows stated that Pembina's formal guidance extends to 2026, with a refresh planned later. He reiterated mid- to high single-digit volume growth in the basin. Cameron Goldade added that historical growth came from both volume and margin, and he expects constructive volume growth in the next five years, potentially stronger than the last five. He believes Pembina can maintain and grow margins through operational excellence and competitive offerings, citing the Prince Rupert optimization as an example. “I think we actually see really constructive volume growth as we look out over the next 5 years, perhaps even stronger than we've seen in the last 5, depending on product and obviously, egress restrictions. And obviously, we're continuing to do the hard work internally to continue to make our service offering more competitive, more accretive and obviously continue to be able to generate value through margin as well.”

What are Pembina's long-term plans for ethane, specifically regarding potential waterborne exports?

Scott Burrows acknowledged the significant amount of ethane produced and reinjected in the WCSB, which could lead to various options including petrochemical investments. However, he stated that the challenge lies in the location of ethane production relative to the West Coast, and currently, there isn't a scalable amount in northeast BC to support a pipeline for waterborne exports. He believes the economics are not yet there, but it could be an opportunity in the future. “So we do not believe, as of right now, there's a scalable amount of ethane, call it, in northeast BC to support a pipeline because this would need to be pipelined to the West Coast and the economics just aren't there yet. So we do believe that it's an opportunity in the future. But right now, the economics of it look challenged.”

PBA

Pembina Pipeline (PBA) Q2 FY25 earnings call: guidance and Q&A

Earnings call· Jun 2025 (Q2 FY25)· Energy· Aug 8, 2025

Source: earnings call transcript

Executive summary

Pembina Pipeline Corporation Q2 FY25 — Adjusted EBITDA of $1.013 Billion and Updated Full-Year Guidance

Pembina Pipeline reported solid second-quarter results, with adjusted EBITDA exceeding $1 billion, and updated its full-year guidance range. The company continues to advance key growth projects like Cedar LNG and RFS IV, while also expanding its propane export capabilities and pipeline systems. Management remains confident in its integrated value chain and ability to capture growth in the WCSB, despite increasing competition and commodity price volatility.

Highlights

Achieved quarterly adjusted EBITDA of $1.013 billion.
Cedar LNG Project remains on budget and on time for a late 2028 in-service date, with steel cutting commenced.
RFS IV project is trending approximately 5% under its previous cost estimate, with a revised total cost of approximately $500 million.
Total volumes in the Pipeline and Facilities divisions increased by 1% year-over-year to 3.6 million barrels of oil equivalent per day.
Weighted average contract life on 1 million barrels of firm contracted volumes on Peace and Northern pipelines increased slightly to 7.5 years.

Concerns

Adjusted EBITDA decreased by 7% over the same period in the prior year.
Earnings decreased by 13% year-over-year to $417 million.
Lower net revenue in Marketing & New Ventures due to decreased NGL margins from lower butane and propane prices, coupled with lower volumes.
Lower realized gains on crude oil-based derivatives impacted Marketing & New Ventures results.
Full-year 2025 capital investment program increased by $200 million to $1.3 billion.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year 2025 Adjusted EBITDA	$4.225 billion to $4.425 billion high materiality	FY25	High
Cedar LNG Project in-service date	Late 2028 high materiality	Late 2028 · FY28	High
Cedar LNG capacity remarketing finalization	By the end of 2025 medium materiality	Q4 · FY25	High
RFS IV project in-service date	First half of 2026 medium materiality	H1 2026 · FY26	High
RFS IV project total cost	Approximately $500 million medium materiality	Project completion	High
WCSB annual volume growth	Low to mid-single-digit high materiality	Through end of the decade · FY29	Medium
Fox Creek-to-Namao Expansion FID	By the end of 2025 medium materiality	Q4 · FY25	Medium
Taylor-to-Gordondale Project FID	First quarter of 2026 medium materiality	Q1 · FY26	Medium
RFS III de-ethanization tower FID	By the end of 2025 medium materiality	Q4 · FY25	Medium
Greenlight Electricity Centre in-service date	2029 medium materiality	FY29	Medium
Q3 2025 results	Largely consistent with second quarter results low materiality	Q3 · FY25	High
Q4 2025 results	Stronger results expected low materiality	Q4 · FY25	High
PGI contribution in H2 2025	Higher contribution low materiality	H2 2025 · FY25	High
NGL marketing business Q4 2025 contribution	Stronger contribution low materiality	Q4 · FY25	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Pipelines Factors impacting the Pipelines segment included lower tolls and revenue on some assets, offset by higher volumes and revenue on others, particularly Peace, Alliance, and Nipisi. Lower firm tolls on Cochin Pipeline: due to recontracting in July 2024Lower revenue at Edmonton Terminals: related to decommissioning of Edmonton South Rail Terminal in Q2 2024Lower interruptible volumes and lower tolls: on Vantage PipelineHigher volumes on Peace Pipeline system: due to higher contracted volumes and fewer outagesHigher revenue on Peace Pipeline systems: due to increased tolls from contractual inflation adjustmentsHigher demand on seasonal contracts: on AllianceHigher contracted volumes: on Nipisi Pipeline	—	—	—	—
Facilities The Facilities segment experienced lower volumes due to outages and restrictions, but saw higher contribution from PGI due to recent transactions. Lower volumes: due to planned outages at certain PGI assets and ongoing third-party egress restrictions impacting Dawson assetsHigher contribution from PGI: primarily related to recent transactions with Whitecap	—	—	—	—
Marketing & New Ventures Marketing & New Ventures results reflected lower NGL margins and volumes, higher input gas prices, and lower crude derivative gains, partially offset by lower NGL derivative losses. Lower net revenue: due to decrease in NGL margins from lower butane and propane pricesLower volumes: resulting from third-party restrictions at Channahon Facility and planned outages at Channahon and Redwater ComplexHigher input natural gas prices: at Aux SableLower realized gains: on crude oil-based derivativesLower realized losses: on NGL-based derivatives (partially offsetting)	—	—	—	—
Corporate Corporate segment results were higher due to lower incentive costs. Lower incentive costs: driven by change in Pembina's share price compared to Q2 2024	—	—	—	—

PBA operating KPIs by quarter

PBA operating KPIs stated on its earnings calls, by fiscal quarter
KPI	This call Jun 2025 Q2 FY25	Sep 2025 Q3 FY25	Change vs prior quarter
Total volume Pipeline and Facilities	3.6M boe/d Total volumes in the Pipeline and Facilities divisions were 3.6 million barrels of oil equivalent per day in the second quarter. Source: earnings call transcript	3.6M boe/d Total volumes in the Pipelines and Facilities divisions were 3.6 million barrels of oil equivalent per day in the third quarter. Source: earnings call transcript	0%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Cedar LNG Project capacity remarketing 1.5 million tonnes per annum Q2 FY25

Expected to finalize efforts by the end of 2025. Open to selling the entire capacity.

Propane export capacity 50,000 barrels per day Q2 FY25

Access through Prince Rupert Terminal and commercial agreement with AltaGas.

Ethane supply agreement capacity (Dow Chemicals Canada) 50,000 barrels per day Q2 FY25

Mutually binding agreement for ethane supply.

Greenlight Electricity Centre capacity Up to 1,800 megawatts Q2 FY25

Gas-fired combined cycle power generation facility.

Deals & partnerships

AltaGas Commercial agreement for LPG export capacity

Agreement for 30,000 barrels per day of LPG export capacity at current RIPET and future REEF facilities.

Whitecap Acquisition of remaining interest in gas plants and pipeline

PGI acquired the remaining 8.3% interest in 3 gas plants and the sales gas pipeline from PGI's Duvernay Complex. Concurrently, Whitecap entered into a long-term take-or-pay commitment for firm service at the Duvernay Complex and extended long-term take-or-pay agreements at PGI's KA plant.

Montney producer Agreement to fund and acquire under-construction battery and infrastructure Long-term

PGI entered into an agreement to fund and acquire an under-construction battery and additional infrastructure in the Wapiti/North Gold Creek Montney area. The project enhances PGI's footprint and is highly contracted under a long-term take-or-pay agreement.

Dow Chemicals Canada Ethane supply agreement

Mutually binding 50,000 barrel per day ethane supply agreement.

Kineticor Joint venture for Greenlight Electricity Centre

Partnership developing an up to 1,800-megawatt gas-fired combined cycle power generation facility, in active discussions with a data centre customer.

Capital programs

Cedar LNG Project underway

Benefit:1.5 million tonnes per annum

Project remains on budget and on time. Steel cutting for topside facilities and vessel hull commenced. Onshore activities continuing.

RFS IV project underway Approximately $500 million

Benefit:Expansion capacity 15% to 20% lower cost per barrel than competing projects

Project trending approximately 5% under previous cost estimate.

Prince Rupert Terminal optimization approved

Benefit:Expand access to additional global markets with higher realized propane prices, significantly reducing shipping cost per unit

Optimization through increased storage capacity to allow use of Medium Gas Carrier Vessels.

Taylor-to-Gordondale Project pending FID

Benefit:New pipeline connecting mostly condensate volumes from Taylor, British Columbia to Gordondale area

Final investment decision expected first quarter of 2026.

Fox Creek-to-Namao Expansion pending FID

Benefit:Add approximately 70,000 barrels per day of propane plus capacity to market delivery points from Fox Creek, Alberta to Namao, Alberta

Proposed expansion of Peace Pipeline system through addition of new pump stations. Final investment decision expected by end of 2025.

RFS III de-ethanization tower pending FID

Benefit:Meet commitment under 50,000 barrel per day ethane supply agreement with Dow Chemicals Canada

Engineering and commercial discussions ongoing. Final investment decision anticipated by end of 2025.

Greenlight Electricity Centre underway

Benefit:Up to 1,800-megawatt gas-fired combined cycle power generation facility

Partnership with Kineticor. Successfully advanced through Phase 1 of Alberta Electric System Operator allocation process and secured sufficient megawatt allocation. Active discussions with a data centre customer.

Risks & headwinds

Lower firm tolls on Cochin Pipeline Q2 FY25

Lower

Mitigation:Recontracting in July 2024

Lower revenue at Edmonton Terminals Q2 FY25

Lower

Mitigation:Decommissioning of Edmonton South Rail Terminal in Q2 2024

Lower interruptible volumes and tolls on Vantage Pipeline Q2 FY25

Lower

Lower volumes due to planned outages at PGI assets Q2 FY25

Lower volumes

Ongoing third-party egress restrictions impacting Dawson assets Q2 FY25

Lower volumes

Mitigation:Expected higher contribution from PGI in H2 2025 as restrictions ease and LNG Canada starts up

Decrease in NGL margins Q2 FY25

Lower net revenue

Mitigation:Lower realized losses on NGL-based derivatives partially offset impact

Lower volumes in Marketing & New Ventures Q2 FY25

Lower net revenue

Mitigation:Due to third-party restrictions at Channahon Facility and planned outages at Channahon and Redwater Complex

Higher input natural gas prices at Aux Sable Q2 FY25

Higher costs

Lower realized gains on crude oil-based derivatives Q2 FY25

Lower net revenue

Costs associated with asset retirement at Redwater Complex Q2 FY25

Impacted earnings

Higher depreciation expense at PGI Q2 FY25

Lower share of profit

Mitigation:Due to larger asset base following recent transaction with Whitecap

Lower other income Q2 FY25

Lower

Mitigation:No similar gain to that recognized in Q2 2024 related to financial assurances assumed by Cedar LNG

Increased competition in midstream sector Ongoing

Qualitative

Mitigation:Leveraging integrated value chain, competitive service offering, and unparalleled track record

Impact of Alliance settlement agreement with shippers Q4 FY25

Offset positive seasonality

Integrity and geotechnical costs on pipeline assets Q3 and Q4 FY25

Significant portion

Commodity price volatility Ongoing

Qualitative

Mitigation:Resilience of producer customers, diversified portfolio

Regulatory and political environment for greenfield projects Long-term

Qualitative

Mitigation:Positive engagement with government, but complexity and time required to work through system

Emissions cap and tanker ban for oil pipelines Long-term

Huge impediment

Mitigation:Needs to be worked through for new oil pipeline development

What to watch in Q3 FY25

Cedar LNG capacity remarketing

By year-end 2025

Current Progressing, exchanging agreements

Target Finalize definitive agreements

Why it matters

Securing long-term contracts for Cedar LNG capacity is crucial for project economics and future revenue stability.

Pembina continues to progress remarketing of its 1.5 million tonnes per annum of Cedar LNG Project capacity to third parties and expects to finalize these efforts by the end of 2025.

Find out whether PBA delivers this. Inve re-checks your case every morning.

Q&A highlights

How does Pembina respond to the narrative that its incumbency in the Canadian NGL value chain is being challenged, and what is its unique value proposition?

Scott Burrows dismissed the 'death by a thousand cuts' narrative as temporary noise, emphasizing the rock-solid fundamentals of Pembina's business driven by customer demand and WCSB growth. He highlighted Pembina's integrated franchise, involvement in all basin catalysts (LNG, LPG exports, condensate, gas egress, petrochemicals), and unparalleled track record in NGL midstream. He stated that Pembina benefits from visible catalysts like LNG exports, new demand from data centers, and a more supportive policy environment.

“To me, there's a difference between fundamentals and temporary noise. And when you have kind of the extensive franchise that we have in maybe midstream space, I'd say the bar is very high, and there's always going to be something to pick at.”

asked by Aaron MacNeil · answered by J. Burrows

3 min read 7 chapters

Detailed narrative

Project Execution and Capital Efficiency

Pembina continues to demonstrate strong project execution, with the Cedar LNG Project progressing on budget and on time for a late 2028 in-service date, marked by recent steel cutting. The RFS IV project is also advancing ahead of schedule, trending approximately 5% under its previous cost estimate, with a revised total cost of approximately $500 million.

This efficiency allows Pembina to deliver expansion capacity at 15% to 20% lower cost per barrel than competing projects.

WCSB Growth and Integrated Value Chain

The company maintains a positive outlook for low to mid-single-digit annual volume growth in the WCSB through the end of the decade, supported by strong Montney economics, oil sands operations, and new egress projects. Pembina highlights its differentiated position as the only Canadian energy infrastructure company with an integrated value chain across all commodities, providing a full suite of midstream and transportation services.

This unique positioning allows it to capture incremental volumes and unlock new growth avenues.

Propane Export and Prince Rupert Terminal Optimization

Pembina is strengthening its propane export capabilities, gaining access to 50,000 barrels per day of competitive export capacity through its Prince Rupert Terminal and a new commercial agreement with AltaGas. An optimization of the Prince Rupert Terminal, including increased storage capacity, will enable the use of Medium Gas Carrier Vessels, expanding access to global markets and improving netbacks by reducing shipping costs per unit.

PGI Strategic Acquisitions and Take-or-Pay Commitments

PGI, Pembina's joint venture, continues to strengthen relationships with WCSB producers through mutually beneficial solutions. PGI recently acquired the remaining 8.3% interest in three gas plants and a sales gas pipeline from Whitecap, securing long-term take-or-pay commitments. Additionally, PGI is funding and acquiring new infrastructure in the Wapiti/North Gold Creek Montney area, underpinned by a long-term take-or-pay agreement, enhancing its footprint in the region.

Conventional Pipeline Expansions and Contract Stability

Pembina is advancing over $1 billion in conventional NGL and condensate pipeline expansions, including the Taylor-to-Gordondale Project and the Fox Creek-to-Namao Expansion, to meet rising transportation demand. These projects are secured by long-term take-or-pay contracts and areas of dedication. The weighted average contract life on approximately 1 million barrels of firm contracted volumes on Peace and Northern pipelines has remained consistent at 7.5 years, reflecting successful contract extensions and new agreements.

Greenlight Electricity Centre and Data Center Opportunity

Pembina is advancing opportunities to support an emerging Alberta-based data center through its Greenlight Electricity Centre partnership with Kineticor. The project, an up to 1,800-megawatt gas-fired power generation facility, has secured sufficient megawatt allocation and is in active discussions with a data center customer.

This initiative leverages Pembina's existing value chain, including potential Alliance Pipeline expansion for natural gas supply, to support long-term contracted power infrastructure.

Capital Allocation Philosophy

Management reiterated its consistent approach to capital allocation, balancing growth capital with shareholder returns. While the capital program for 2025 and 2026 is largely committed to advancing FID projects and pipeline expansions, the company continuously evaluates buybacks against growth opportunities.

The focus remains on projects that enhance the franchise and service offerings, with a strong financial position and target leverage of 3.5x to 4x net debt-to-EBITDA.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.