Total oil & gas industry M&A deals in July 2019 worth $9.89bn were announced in the US, according to GlobalData, a leading data and analytics company.
Acquisition of assets continues to pay off for Pembina
A 2017 acquisition continues to drive improvements in year-over-year assets for Pembina Pipeline Corporation, which reported significant increases in second quarter earnings through June, 2018.
Pembina generated record second quarter results in revenue volumes, adjusted cash flow from operating activities, operating margin and Adjusted EBITDA, largely driven by a $10 billion increase in assets year-over-year from the acquisition of Veresen in 2017, and new assets placed into service following a large-scale capital program.Other highlights included:
- Generated second quarter and year-to-date earnings of $246 million and $576 million, a 110 percent and 76 percent increase, respectively, over the same periods of the prior year, due to increased net revenue and share of profit from equity accounted investees;
- Realized record second quarter and year-to-date operating margin of $787 million and $1.5 billion, 123 percent and 103 percent higher, respectively, than the second quarter and first half of 2017.
- Achieved record second quarter and year-to-date Adjusted EBITDA of $700 million and $1.4 billion, representing 136 percent and 112 percent increases, respectively, over the same periods in 2017;
- Cash flow from operating activities was $603 million for the second quarter and $1.1 billion year-to-date in 2018, increases of 67 percent and 60 percent, respectively, over the same periods in 2017. Adjusted cash flow from operating activities increased by 103 percent and 87 percent to $558 million and $1.1 billion in the second quarter and first half of 2018, respectively, compared to the same period in 2017; and
- On a per share (basic) basis, cash flow from operating activities for the second quarter and year-to-date in 2018 increased 33 percent and 27 percent, respectively, compared to the same periods in the prior year. On a per share (basic) basis, adjusted cash flow from operating activities for the second quarter increased 63 percent and 48 percent year-to-date compared to the same periods of the prior year.
- Achieved record total volumes on a quarterly basis of 3,385 mboe/d and 3,333 mboe/d year-to-date, 48 percent and 43 percent increases, respectively, over the prior year;
- Realized record Pipeline Division revenue volumes during the second quarter of 2,536 mboe/d and year-to-date of 2,479 mboe/d, representing 52 percent and 49 percent increases, respectively, compared to the same periods of 2017. Higher revenue volumes were the result of system expansions on Pembina's Peace and northeast B.C. pipeline systems, in addition to the fourth quarter 2017 Veresen Acquisition which included Alberta Ethane Gathering System ("AEGS"), Alliance and Ruby. The acquired assets accounted for an increase of 518 mboe/d revenue volumes (net to Pembina) in the second quarter of 2018 and 530 mboe/d on a year-to-date basis;
- Facilities Division generated record revenue volumes of 849 mboe/d in the second quarter and 854 mboe/d year-to-date in 2018, increases of 37 percent and 29 percent, respectively, compared to the same periods of 2017. Increased revenue volumes were a result of the Redwater Fractionation Site III ("RFS III") being placed into service on June 30, 2017. Revenue volumes were also driven by the startup of the Duvernay I gas plant, the acquisition of Veresen Midstream in the fourth quarter of 2017, and increased take-or-pay commitments and additional volumes; and
- Marketing & New Ventures Division realized strong second quarter performance, increasing marketed NGL volumes by 38 percent to 155 mboe/d over the comparable period in 2017 and generating quarterly operating margin of $118 million, a 146 percent increase over the comparable period in 2017. Strong results in the marketing business were driven by increased product prices and margins resulting in greater market opportunities, as well as Aux Sable, which contributed 37 mboe/d and $39 million in the second quarter and 41 mboe/d and $55 million year-to-date. Aux Sable was acquired in the fourth quarter of 2017, and has benefiting Pembina in 2018 from with access to US markets which offer relatively strong propane plus margins and a wide Chicago-AECO differential.
Pembina continues to generate record results driven by new assets acquired or placed into service over the past 18 months, according to company executives.
"We are seeing strong customer demand for our services, leading to higher volumes and increased utilization in the Pipelines and Facilities Divisions, combined with rising commodity prices which drive solid performance in our Marketing business," said Mick Dilger, Pembina's President and Chief Executive Officer. "As well, the recent strengthening of crude oil and condensate prices is a welcome development for our customers," added Mr. Dilger.
At Pembina's 2018 Investor Day held on May 29, the company announced the next evolution in Pembina's corporate strategy, being the move towards accessing global markets. Pembina is committed to identifying additional opportunities to connect hydrocarbon production to new demand locations through the development of infrastructure that would extend our service offering further along the hydrocarbon value chain. These new developments will contribute to ensuring that hydrocarbons produced in the Western Canada Sedimentary Basin and the other basins where Pembina operates can reach the highest value markets throughout the world. Our proposed Jordan Cove LNG project, the proposed PDH/PP facility, and the Prince Rupert LPG Export Terminal are examples of such developments.
Based on strong year-to-date results and the outlook for the remainder of the year, we reiterate our 2018 Adjusted EBITDA guidance range of $2,650 to $2,750 million.
"Our strong second quarter results have once again demonstrated the strength of the underlying business, our unwavering commitment to our financial guardrails and our strategic approach to growth," concluded Scott Burrows, Pembina's Senior Vice President and Chief Financial Officer.
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