Pembina Pipeline (PBA) Q3 FY25 earnings call: guidance and Q&A

What are producers saying about pricing and volumes for late 2025 and 2026, given current commodity prices?

Management is meeting with customers to understand their needs for transportation services. Current WTI prices are around $60. Propane prices are lower than last year, and a strengthening AECO price puts pressure on frac spreads, leading to some weakness in the Q4 frac spread outlook.

“Right now, we're just really in listening mode and going to really try to meet our customers' needs. ... we are seeing a little weakness compared to, say, last year in our outlook for frac spreads for Q4, just given those dynamics.”

asked by Theresa Chen · answered by Jaret Sprott

Clarify the Greenlight in-service date, as there seems to be market confusion regarding 2027 vs. 2029/2030.

The customer's innovation center (with grid connections) is pushing for an early 2027 start, with 2030 being an outside date. Pembina's related project, the 1,800 MW gas-fired power generation facility, has its first 900 MW phase planned for 2030, and this remains on track.

“Our customer is progressing their innovation center, and that's really where the grid connections rest and the associated DTS arrangements. ... The first phase of 900 megawatts is, as you referenced, planned for 2030, and all of that remains on track.”

asked by Jeremy Tonet · answered by Chris Scherman

What are the specific drivers behind the slightly lower midpoint of the tightened 2025 adjusted EBITDA guidance range?

The tightening reflects less optionality in the commodity business, particularly in the marketing segment, for the second half of the year. The core business, outside of marketing, continues to trend strong, with October volumes at or exceeding plan. The company remains within its original guidance range.

“We probably expected a little bit more than we've now expected we've seen. So on the margin, we've tightened that guidance range a little bit, obviously, to just to give the market a bit of direction in terms of what we're seeing.”

asked by Jeremy Tonet · answered by Cameron Goldade

How is Pembina maintaining pricing and margins on conventional pipe recontracting, given competitive alternatives?

The recent 50,000 bbl/d recontracting on Peace Pipeline maintained current contracted tolls, even for volumes in competitive areas. EBITDA per barrel in the conventional business has increased since the alternative pipeline's inception, driven by cost structure focus, higher tolls for western volumes, CPI inflators, and strong project execution.

“Essentially, all of the volumes, I can tell you, maintained current contracted toll. ... since the inception of the alternative pipeline, the EBITDA per barrel of our conventional business actually has been increasing.”

asked by Aaron MacNeil · answered by Jaret Sprott

How do recent developments (Alliance CER, Peace recontracting, M&A, commodity headwinds) impact the original 2024 Investor Day fee-based EBITDA guidance for 2026?

The company remains confident in achieving the original 2026 guidance range, reflecting its own and market expectations. Despite headwinds like the Alliance CER settlement, Pembina has focused on operating efficiencies and accretive M&A. The diversity and resilience of the business, with exposure to multiple commodities and the WCSB, support this confidence.

“I would say we maintain a lot of confidence in obviously achieving that range and achieving a range or a spot in that range, which would reflect something consistent with our own expectations and the market's expectations.”

asked by Spiro Dounis · answered by Cameron Goldade

Explain the mechanics of the synthetic liquefaction agreement with PETRONAS and how it generates incremental value.

The contract is effectively synthetic tolling, passing on Cedar's obligations to PETRONAS. Pembina also gains participation in market upside, capturing value when the arbitrage between Canadian AECO gas and the Far East is attractive.

“As far as contract structure, it's effectively synthetic tolling. I mean we are taking the obligations we have with Cedar and almost entirely pass those on to our customer. And then in addition to passing the terms on, we've been able to capture some participation in the upside of the market.”

asked by Robert Catellier · answered by Chris Scherman

Characterize conventional volume trends (2-3% vs. 6-7% previously) and the outlook for 2026.

Q3 conventional physical volumes were up 4% sequentially. Longer-term, single-digit growth is expected, supported by oil sands demand, infrastructure debottlenecks, and incremental gas/condensate/NGL opportunities. Near-term growth can be producer-specific or timing-related as producers optimize returns over pure volume growth. Recent M&A (Ovintiv/NuVista, CNRL/Chevron) is seen as positive for accelerating production.

“If I stand back for a second and look at what our conventional volumes did in Q3 versus Q2 sequentially, those physical volumes would have been up about 4% quarter-over-quarter. ... longer term, we are very, very confident in the continued growth in that -- at least in that single-digit level.”

asked by Ben Pham · answered by Cameron Goldade