Pembina Pipeline Q2 Earnings Call Highlights

Key Points

• Strong second-quarter results: Adjusted EBITDA rose 5% year over year to C$1.064 billion, while net earnings increased 23% to C$512 million. Higher pipeline and facilities performance, new assets and stronger marketing results offset lower contributions from Alliance Pipeline.
• 2026 guidance reaffirmed: Pembina maintained its adjusted EBITDA outlook of C$4.35 billion to C$4.55 billion and is trending toward the midpoint, although third-quarter results are expected to decline seasonally before improving in the fourth quarter.
• Growth pipeline expanding: Key initiatives include the Heartland Extraction Plant, the 932-megawatt Greenlight power center serving Meta’s Alberta data center, Cedar LNG—targeting first exports in late 2028—and participation in a proposed West Coast oil pipeline.

Pembina Pipeline NYSE: PBA reported second-quarter adjusted EBITDA of C$1.064 billion, up C$51 million, or 5%, from the same period a year earlier, as solid pipeline and facilities operations and stronger marketing results offset the impact of a revised Alliance Pipeline toll structure and revenue-sharing mechanism.

President and Chief Executive Officer Scott Burrows said the quarter reflected “a constructive industry environment” alongside operational performance and new assets entering service. The company reaffirmed its 2026 adjusted EBITDA guidance range of C$4.35 billion to C$4.55 billion and said it was trending toward the midpoint.

Net earnings for the quarter were C$512 million, a 23% increase from the prior-year period. Adjusted earnings rose 10% to C$415 million. Total volumes across Pembina’s pipelines and facilities businesses increased 3% year over year to 3.7 million barrels of oil equivalent per day.

Operations and new assets support results

Chief Financial Officer Cameron Goldade said the pipelines segment benefited from higher contracted volumes on the Nipisi Pipeline, which serves the Clearwater formation, and higher Cochin Pipeline revenue related to prior-period tariff adjustments. Those factors were partly offset by a lower Alliance Pipeline contribution under its negotiated settlement with shippers.

The facilities business benefited from the late-May startup of the RFS IV fractionator at the Redwater Complex and the Wapiti Expansion in Pembina Gas Infrastructure, or PGI, which entered service at the end of March. Both projects were completed on time and at or below budget, according to management.

RFS IV added 55,000 barrels per day of propane-plus fractionation capacity at Redwater. Pembina also cited improved performance at Dawson-area assets, fewer unplanned outages and higher recoveries from an asset upgrade as contributors to facilities results.

Marketing and new ventures results were supported by wider Western Canadian Sedimentary Basin and U.S. natural gas liquids fractionation spreads, higher NGL prices, higher crude oil prices and higher sales volumes. Goldade said Pembina also benefited from its exposure to premium propane markets through West Coast exports, though realized NGL derivative losses were higher and realized crude-oil derivative gains were lower.

Guidance outlook includes seasonal second-half effects

While maintaining its annual outlook, Pembina expects third-quarter adjusted EBITDA to be lower than the second quarter before a stronger seasonal fourth-quarter contribution. Goldade said the third quarter historically has represented 23% to 27% of annual adjusted EBITDA, with the company’s current outlook placing this year’s third-quarter contribution at the low end of that range.

Factors expected to affect the second half include seasonal weakness in WCSB NGL fractionation spreads during the third quarter, higher integrity and maintenance spending, lower Cochin Pipeline contributions compared with the first half, and seasonal Alliance Pipeline volumes. Pembina has hedged approximately 90% of its NGL fractionation-spread exposure for the third quarter and 40% for the fourth quarter.

The company said its marketing business remains sensitive to commodity prices, while annual results are also influenced by interruptible volumes, the U.S.-Canadian dollar exchange rate and share-price-driven incentive compensation costs.

Growth projects span NGLs, LNG and power demand

Burrows highlighted projects across Pembina’s “3Cs” strategy of capturing basin volumes, connecting them to markets and catalyzing additional hydrocarbon demand.

Beyond RFS IV, Pembina sanctioned the Heartland Extraction Plant, which will use existing infrastructure and monetize extraction rights on the Yellowhead Pipeline. The project was accompanied by an expansion of Pembina’s commercial relationship with Dow that increases contracted ethane supply volumes by 15%.

The company also reached a positive final investment decision on the 932-megawatt Greenlight Electricity Center, a gas-fired power facility intended to provide dedicated power to a new Alberta data center being developed by Meta. Burrows described Greenlight as a new growth platform that is expected to generate long-term cash flows while creating incremental demand for Western Canadian natural gas.

Chief Marketing and Strategy Officer Chris Scherman said Pembina intends to pursue future gas-to-power developments using a structure similar to Greenlight: long-term, fixed-fee and low-risk arrangements. He said the company is not pursuing a merchant-power model or a broader independent power producer strategy. Pembina has acquired additional land near the Greenlight site and Redwater Complex and is advancing discussions with potential customers for future phases.

Construction on Cedar LNG is also advancing toward expected first exports in late 2028. During the quarter, Pembina completed the pipeline that will supply the facility and moved the floating LNG vessel hull from dry dock to wet dock in South Korea. Burrows said the remaining major uncertainty is the vessel hookup and commissioning process, while other workstreams are tracking well.

Management sees broader Western Canadian growth opportunity

Pembina also announced participation in the proposed West Coast oil pipeline, where it expects to contribute development and execution capabilities. Management said the project’s path to a final investment decision will require regulatory approvals, a competitive cost estimate and sufficient contracted volumes.

Burrows said incremental oil-sands production and new crude export capacity could require substantial additional condensate supply, much of which Pembina expects to come from the WCSB’s Montney and Duvernay regions. That growth could also increase demand for natural gas processing, NGL fractionation and exports.

Goldade said Pembina’s 2026-to-2030 outlook incorporated more historically based liquids-volume growth assumptions of roughly 2% to 3%. Faster basin growth could provide an additional, capital-efficient upside, he said, although it could eventually require more fractionation capacity and potentially further infrastructure investments.

The company continues to target 5% to 7% compound annual growth in fee-based adjusted EBITDA per share through 2030. Burrows said potential future Greenlight phases, the proposed West Coast oil pipeline and condensate-related opportunities could support growth into the following decade.

About Pembina Pipeline (NYSE:PBA)

Pembina Pipeline Corporation NYSE: PBA is a North American energy infrastructure company that develops, owns and operates midstream assets that transport, store and process hydrocarbons. Its core business focuses on the transportation of crude oil, natural gas liquids (NGLs) and condensate, along with gas processing, fractionation, storage and related marketing services. Pembina serves producers, refiners and other energy companies by providing pipeline capacity, terminal services and midstream solutions that link upstream production to downstream markets and export facilities.

The company's asset base is concentrated in Western Canada, including major operations in Alberta and British Columbia, and it also has operations and commercial activities that extend into the United States.

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