PEMBINA PIPELINE CORP PBA

Pembina signed a 20-year agreement with PETRONAS for 1 million tonnes per annum (MTPA) of Cedar LNG liquefaction capacity, expanding its export business. This follows a prior 1.5 MTPA agreement to support FID. The company expects to finalize agreements for the remaining 0.5 MTPA by year-end 2025. The project remains on time and on budget, with construction of the floating LNG vessel on schedule and onshore work, including pipeline construction, ahead of schedule. The facility's permitted capacity was increased from 3 MTPA to 3.3 MTPA for minor dollars, with potential for incremental throughput up to 500 MMscf/d.

Pembina and Kineticor are progressing the Greenlight Electricity Center, a proposed up to 1.8 gigawatt natural gas-fired power generation project. Key achievements include securing a 907-megawatt power grid allocation, which was assigned to a potential customer for innovation infrastructure development as early as 2027. An agreement with an equipment manufacturer provides certainty for two turbines to support the approximately 900-megawatt first phase. The partners aim for a final investment decision in the first half of 2026, with the first phase planned for 2030.

The company achieved significant recontracting successes, strengthening its core business. In conventional pipelines, substantially all volumes available for renewal in 2025 and 2026 have been recontracted. This includes new transportation agreements on the Peace Pipeline system for 50,000 barrels per day, with a weighted average term of approximately 10 years, maintaining current contracted tolls despite competitive alternatives. Alliance Pipeline also strengthened its long-term contractual profile, with shippers taking an average 10-year toll option on 96% of its 1.325 Bcf per day firm capacity.

Pembina and Pembina Gas Infrastructure (PGI) are nearing completion on approximately $850 million of projects, all trending on or under budget. RFS IV (Redwater Complex fractionator) is 75% complete and under budget, with an in-service date narrowed to Q2 2026. PGI's Wapiti Expansion and K3 cogeneration facility are on budget and under budget, respectively, with in-service dates narrowed to Q1 2026. The company is also developing approximately $1 billion in new conventional pipeline projects to support WCSB growth, including expansions on the Peace Pipeline system and the Northeast BC System, and evaluating increased egress capacity for Nipisi Pipeline.

Pembina sees significant brownfield opportunities in the sour gas space, driven by growing condensate demand from oil sands production and debottlenecked oil egress pipelines. Much of this condensate comes from the Montney, associated with sour gas. PGI's extensive network of sour gas processing, sulfur recovery, and acid gas injection facilities, combined with Pembina's project execution capabilities, positions the company to meet customer needs and support sour gas production growth.

The company's balance sheet leverage (proportionately consolidated net debt to EBITDA) is expected to be in the mid-3s range exiting 2025. While 2026 is anticipated to be the peak investment year for Cedar LNG, potentially leading to free cash flow negativity, Pembina expects leverage to moderate back down to its comfortable range of 3.5x to 4x thereafter. The company maintains a philosophy of setting up its balance sheet to handle capital-intensive projects while aiming for long-term free cash flow positivity.