2016 was a very successful year for Pembina. We continued to deliver stable and growing financial and operational performance, setting several new records for volumes and key financial performance metrics. We also set in motion plans to secure our next phase of growth, operated safely and reliably and further enhanced our already strong relationships with the communities where we live, work and play.

We invite you to learn more by exploring this page and downloading our annual documents.

Download Annual Report

File Size (2.4 MB)

2016 Highlights

Messages to Shareholders

Read what Randy Findlay, Pembina's Chairman of the Board and Mick Dilger, Pembina's President & CEO have to say about our 2016 results and the future of our Company.  

Read the Letters Now

(File Size 2.4 MB)

2016 Financial Highlights


The table below summarizes the financial performance of Pembina during 2016 compared to 2015. For a detailed description and analysis of Pembina's financial and operating results, please see the PDF files posted at the bottom of this page.

 
($ millions, except where noted) 2016 2015
Revenue 4,265 4,635
Net revenue(1) 1,764 1,507
Operating margin(1) 1,335 1,118
Gross profit 1,001 866
Earnings 466 406
Adjusted EBITDA(1) 1,189 983
Cash flow from operating activities 1,077 801
Adjusted cash flow from operating activities(1) 986 878
Common share dividends declared 737 628
Preferred share dividends declared 69 48
Capital expenditures 1,745 1,811
Acquisition 566  
 

Per share metrics
 
  2016 2015
Earnings per common share – basic (dollars) 1.02 1.02
Cash flow from operating activities per common share – basic (dollars)(1) 2.78 2.31
Adjusted cash flow from operating activities per common share – basic (dollars)(1) 2.54 2.53
Dividends per common share (dollars) 1.90 1.80
(1)  Refer to "Non-GAAP Measures."
 
(1)  On October 1, 2010, Pembina completed its conversion from an income trust to a corporation pursuant to a plan of arrangement under the Business Corporations Act (Alberta).
(2)  Refer to "Non-GAAP Measures" in the PDF of Pembina's 2016 Annual Report.
(3)  2006 -2009 Information reported as per Canadian GAAP; 2010 - 2016 Information reported as per IFRS.
(1)  Refer to “Non-GAAP Measures” in the PDF of Pembina’s 2016 Annual Report.
(2)  2012, 2013, 2015 and 2016 are Adjusted EBITDA.
(1)  On October 1, 2010 Pembina completed its conversion from an income trust to a corporation pursuant to a plan of arrangement under the Business Corporations Act (Alberta).

Business Overview

12 Months Ended
December 31
  2016 2015
Conventional Pipelines revenue volumes (mbpd)(1) 650 614
Oil Sands & Heavy Oil contracted capacity (mbpd) 975 880
Gas Services revenue volumes net to Pembina (mboe/d) (1)(2) 139 110
Midstream NGL sales volumes (mbpd) 143 116
Total volume (mboe/d) 1,907 1,720

12 Months Ended
December 31
  2016   2015  
($ millions, except where noted) Revenue(4) Operating Margin(3) Revenue (4) Operating Margin (3)
Conventional Pipelines 719 494 628 401
Oil Sands & Heavy Oil 202 140 213 139
Gas Services(4) 271 195 208 144
Midstream(4) 572 496 458 427
Corporate 10 7
Total 1,764 1,335 1,507 1,118
 
(1)  Revenue volumes are equal to contracted and interruptible volumes.
(2)  Gas Services revenue volumes converted to mboe/d from MMcf/d at 6:1 ratio.
(3)  Refer to "Non-GAAP Measures."
(4)  The amounts presented for Midstream and Gas Services consist of net revenue (revenue less cost of goods sold including product purchases). Refer to "Non-GAAP Measures."

Conventional Pipelines

Pembina's Conventional Pipelines business comprises a strategically located pipeline network of approximately 10,000 kilometers, inclusive of expansion projects discussed below that are currently under development. This network transports hydrocarbon liquids and extends across much of Alberta and parts of B.C., Saskatchewan and North Dakota. The primary objectives of this business are to provide safe, responsible, reliable and cost-effective transportation services for customers, pursue opportunities for increased throughput, and maintain and/or grow sustainable operating margin on invested capital by capturing incremental volumes, expanding the Company's pipeline systems, managing revenue and following a disciplined approach to operating expenses.
12 Months Ended
December 31
($ millions, except where noted) 2016 2015
Revenue volumes (mbpd)(1) 650 614
Revenue 719 628
Operating expenses 222 224
Realized loss on commodity-related derivative financial instruments 3 3
Operating Margin(2) 494 401
Depreciation and amortization included in operations 103 88
Unrealized gain on commodity-related derivative financial instruments (2) (1)
Gross profit 393 314
Capital Expenditures 957 932
(1)  Revenue volumes are equal to contracted and interruptible volumes
(2)  
Refer to "Non-GAAP Measures."
Highlights

2016 revenue volumes averaged 650 mbpd compared to 614 mbpd in 2015. Higher volumes resulted from the completion of capacity expansions on Pembina's Peace and Northern pipelines which were placed into service in 2015 and allowed for the receipt of higher revenue volumes at our existing connections and truck terminals. Additional volumes from other connections that were commissioned throughout 2015 and 2016 as well as higher revenue volumes on the Vantage pipeline also contributed to the increase.

On a full-year basis for 2016, operating margin was $494 million, $93 million higher than the $401 million recorded in 2015. This increase was a result of higher revenues, driven by higher volumes, combined with lower operating expenses.

Capital expenditures for 2016 were $957 million in our Conventional Pipelines business compared to $932 million in 2015.

New Developments

As of February 2017, we have completed over 60 percent of the overall Phase III Expansion program and construction continues on the Fox Creek to Namao portion of the project. Once complete, the Phase III Expansion is expected to provide a combined initial capacity of approximately 420 mbpd between Fox Creek and Namao. The overall project continues to track under budget from the initial total capital cost of $2.4 billion and the Company expects an in-service date in mid-2017.

We are continuing the development of the NEBC Expansion, a large-scale pipeline infrastructure in northeast B.C. at an expected capital cost of $235 million. Engineering is complete and construction has been initiated. Pembina expects to bring the pipeline, which will support the growing liquids-rich Montney resource play, into service in late 2017.

Pembina is also advancing a $70 million pipeline lateral in the Altares area of B.C. which will connect into the Company's NEBC Expansion. Subject to environmental and regulatory approvals, this lateral is expected to have an in-service date of late 2017.

As with all Pembina construction projects, the safety of our communities, contractors, employees and the environment is our top priority. We’re committed to ensuring our pipelines and facilities are designed, constructed and operated in a safe and environmentally responsible manner.

Oil Sands & Heavy Oil

Pembina plays an important role in supporting Alberta's oil sands and heavy oil industry. This business operates approximately 1,650 km of pipelines and has approximately 975 mbpd of contracted capacity, under long-term, extendible contracts, which provide for the flow-through of eligible operating expenses to customers. 
 
12 Months Ended
December 31
($ millions, except where noted) 2016 2015
Contracted capacity (mbpd) 975 880
Revenue 202 213
Operating expenses 62 74
Operating margin(1) 140 139
Depreciation and amortization included in operations 17 17
Gross profit 123 122
Capital expenditures 124 28
(1)  Refer to "Non-GAAP Measures."
Highlights

Operating margin was $140 million for the full year in Oil Sands & Heavy Oil, consistent with $139 million for 2015 largely due to the contracted nature of this business.

Capital expenditures during the year were $124 million, which related to the expansion of the Horizon Pipeline as well as an expansion of the Cheecham Lateral.

New Developments

In 2016, we completed two expansion projects within our Oil Sands and Heavy Oil business: the Horizon expansion in July, which increased the system capacity to 250 thousand barrels per day, and later in the year, a modest expansion of the Cheecham lateral. 
 

Gas Services

Pembina's operations include a natural gas gathering and processing business, which is strategically positioned in an active condensate and NGL-rich area of western Canada and is integrated with Pembina's other businesses. Gas Services provides gas gathering, compression, condensate stabilization shallow cut processing and both sweet and sour deep cut processing services for its customers, primarily on a fee-for-service basis under long-term contracts. The condensate and NGL extracted through the facilities in this business are transported by Pembina's Conventional Pipelines business on its Peace and Vantage pipeline systems. A portion of the volumes are further processed at Pembina's fractionation facilities. 


12 Months Ended
December 31
($ millions, except where noted) 2016 2015
Revenue volumes (MMcf/d) net to Pembina(1)(2) 836 656
Revenue volumes (mboe/d)(3) net to Pembina(1) 139 110
Net Revenue(4) 271 208
Operating expenses 76 64
Operating margin(4) 195 144
Depreciation and amortization included in operations 52 33
Gross profit 143 111
Capital expenditures 146 242
Acquisition 566
(1)  Revenue volumes are equal to contracted and interruptible volumes.
(2)  Volumes at the Musreau Gas Plant exclude deep cut processing as those volumes are counted when they are processed through the shallow cut portion of the plant.
(3)  Revenue volumes converted to mboe/d from MMcf/d at a 6:1 ratio.
(4)  Refer to "Non-GAAP Measures."
Highlights

In 2016, Gas Services' revenue volumes, net to Pembina, increased 27 percent to 836 MMcf/d compared to 656 MMcf/d in 2015. This increase was due to the acquisition of the Kakwa River Facility in the second quarter of 2016, the completion of Musreau III and the Resthaven Expansion which came into service in April 2016, as well as the addition of the SEEP facility in August of 2015 and new assets that went into service in the third quarter of 2015 at the Saturn Complex.

As a result of new assets driving higher volumes, Gas Services generated operating margin of $195 million for the full year of 2016 compared to $144 million during the prior year.

Capital expenditures in 2016 (not including the acquisition of the Kakwa River Facility) were $146 million compared to $242 million for 2015.

New Developments

We are continuing development of our 100 MMcf/d (gross) (75 MMcf/d net) shallow cut gas plant ("Duvernay I") for an expected capital cost of $125 million ($97 million net to Pembina). Engineering is 85 percent complete, all major equipment has been ordered and site grading and piling is finished. We anticipate bringing Duvernay I into service late in the fourth quarter of 2017. We are also working on supporting infrastructure associated with this plant and expect to bring the Field Hub into service to align with the in-service date of Duvernay I.

We announced on February 16, 2017 that Pembina entered into a 20-year infrastructure development and service agreement with Chevron Canada Limited ("Chevron"). The agreement includes an area of dedication by Chevron, in excess of 10 gross operated townships (over 230,000 acres), concentrated in the prolific, liquids-rich Kaybob region of the Duvernay resource play near Fox Creek, Alberta. Under the agreement and subject to Chevron sanctioning development in the region, Chevron has the right to require Pembina to construct, own and operate gas gathering pipelines and processing facilities, liquids stabilization facilities and other supporting infrastructure for the area of dedication, together with Pembina providing long-term service for Chevron on its pipelines and fractionation facilities. In aggregate, and subject to internal Chevron and regulatory approvals, the infrastructure developed over the term of this agreement has the potential to represent a multi-billion dollar investment by Pembina. While this agreement and respective obligations of the parties are binding, infrastructure development remains contingent upon Chevron sanctioning, as well as necessary environmental and regulatory approvals.

Midstream

Pembina offers customers a comprehensive suite of midstream products and services through its Midstream business, which includes both Crude Oil Midstream and NGL Midstream. Crude Oil Midstream assets include truck terminals, above ground storage and pipeline-connected terminals/hubs. NGL Midstream includes two vertically integrated NGL operating systems – Redwater West and Empress East – which feature extraction and fractionation facilities, finished product cavern storage as well as rail connectivity.

12 Months Ended(1)
December 31
($ millions, except where noted) 2016 2015
NGL sales volumes (mbpd) 143 116
Revenue 3,183 3,690
Cost of goods sold 2,611 3,232
Net revenue(2) 572 458
Operating expenses 69 71
Realized loss (gain) on commodity-related derivative financial instruments 7 (40)
Operating margin(2) 496 427
Unrealized loss on commodity-related derivative financial instruments 63 4
Gross profit 332 316
Capital expenditures 504 566
(1)  Share of profit or loss of investment in equity accounted investees not included in these results.
(2)  Refer to "Non-GAAP Measures."
Highlights

Operating margin was $496 million during 2016 compared to $427 million in 2015. This increase was primarily due to the start-up of Pembina's second 73,000 barrel per day fractionator at its Redwater complex, increased storage revenue and a stable-to-improving commodity price environment within the current year.

Capital expenditures for the full twelve months of 2016 totaled $504 million compared to $566 million for 2015. Capital spending in this business in 2016 was primarily directed towards the ongoing construction of RFS III, the Company's third fractionator at its Redwater complex, and further development of the projects outlined below.

New Developments

As previously announced, Pembina has been evaluating a combined propane dehydrogenation and polypropylene production facility (the "PDH/PP Facility") in Alberta's Industrial Heartland. The feasibility study, which was completed late in 2016, yielded encouraging results and the project was conditionally awarded $300 million in royalty credits from the Alberta Government's Petrochemicals Diversification Program. Subject to conclusion of commercial negotiations with Pembina's partner, and other required approvals, a final investment decision with respect to the PDH/PP Facility is expected to be made in the second quarter of 2018.

We have substantially advanced construction of RFS III. Overall construction progress is at 90 percent and is expected to be effectively complete by early in the second quarter of 2017, which will be followed by commissioning activities and an expected in-service date of early in the third quarter of 2017.

Pembina continues to advance construction on infrastructure in support of North West Redwater Partnership's planned refinery. Overall, the project is now 70 percent complete, engineering and procurement activities are over 90 percent finished, and nearly all materials and equipment are on site. By late 2017, all phases of the project are expected to be placed into service.

We are also progressing construction of the Canadian Diluent Hub, or CDH, with civil work in support of above ground storage construction over 90 percent complete and engineering over 95 percent complete. Pipeline connectivity between our Conventional Pipelines' infrastructure and existing third-party diluent pipeline connectivity at our Redwater site is now complete and volumes are flowing to third-party delivery connections. The full project has a targeted in-service date of mid-2017 to align with the in-service date of the Phase III Expansion.
 

2016 Safety Performance

Another zero employee lost-time injury year was achieved in 2016, which is the third consecutive year of zero employee lost-time injuries. Pembina employees worked 2.9 million hours in 2016 and 8.1 million hours over the last three years. 

This remarkable achievement is a testament to our employees' commitment to their individual safety and that of their co-workers. We have empowered our employees to speak up when they see something unsafe and they know that no job is so important it needs to be rushed or done unsafely. Safety is at the core of our business and ensuring everyone returns home each day is everyone’s responsibility.

 

Documents

The PDF documents linked below provide a detailed analysis of Pembina's results during 2016 compared to prior years and other relevant information..

Disclaimer

Forward-Looking Statements & Information
 
This online annual review contains certain forward-looking statements and information that are based on Pembina's expectations, estimates, projections and assumptions in light of its experience and its perception of historical trends as well as current market conditions and perceived business opportunities.
 
In some cases, forward-looking information can be identified by terminology such as "estimates", "expects", "anticipates", "plans", "forecast", "potential", "will", "could", "continue", "subject to", "contingent" and similar expressions suggesting future events or future performance. In particular, this online annual review contains forward-looking statements pertaining to corporate strategy, capital expenditures, schedules, expected capacity, regulatory and environmental approvals and contracting expectations with respect to current and potential projects, expansion and diversification opportunities, and expectations regarding future supply and demand. Undue reliance should not be placed on these forward-looking statements and information as they are based on assumptions made by Pembina regarding, among other things: industry conditions; the availability and sources of capital; operating costs; the ability to reach required commercial agreements; and the ability to obtain required regulatory and environmental approvals.
 
While Pembina believes the expectations and assumptions reflected in these forward-looking statements are reasonable as of the date hereof, there can be no assurance that they will prove to be correct. Forward-looking statements are subject to known and unknown risks and uncertainties which may cause actual performance and financial results to differ materially from the results expressed or implied, including but not limited to: the impact of competitive entities and pricing; reliance on key relationships and agreements and the outcome of stakeholder engagement; the strength and operations of the oil and natural gas industry and related commodity prices; changes to existing legislation and the regulatory environment; fluctuations in operating results; the availability and cost of labour and other materials; the ability to access various sources of debt, equity and capital; and tax laws and tax treatment.
 
Additional information on these factors as well as other factors that could impact Pembina's operational and financial results are contained in Pembina's Annual Information Form and Management's Discussion and Analysis, and described in our public filings available in Canada at www.sedar.com and in the United States at www.sec.gov. Readers are cautioned that this list of risk factors should not be construed as exhaustive.
 
This online annual review was prepared as of February 23, 2017 and the forward-looking statements and information contained herein speak only as of that date. Except as expressly required by applicable securities laws, Pembina and its subsidiaries assume no obligation to update forward-looking statements and information should circumstances or management's expectations, estimates, projections or assumptions change. The forward-looking statements contained in this document are expressly qualified by this cautionary statement.