Pembina Pipeline Q1 Earnings Call Highlights
Pembina Pipeline (NYSE:PBA) reported a strong start to 2026, with management raising its full-year adjusted EBITDA outlook after first-quarter results benefited from solid volumes across key systems and an improved marketing outlook.
President and Chief Executive Officer Scott Burrows said the company generated first-quarter adjusted EBITDA of CAD 1.131 billion, describing the period as “a strong start to 2026 operationally, commercially, and financially.” He said Pembina’s fee-based business is tracking to plan, while overall results are outperforming budget because of a spike in key commodity markets that began in March.
Pembina revised its 2026 adjusted EBITDA guidance range to CAD 4.35 billion to CAD 4.55 billion. At the midpoint, Burrows said the updated outlook represents a CAD 175 million, or 4.1%, increase from the prior forecast. The company also announced a CAD 0.025 per-share, or 3.5%, increase to its quarterly common share dividend beginning with the dividend payable in June.
Volumes Support Results, While Alliance Toll Changes Weigh
Chief Financial Officer Cameron Goldade said adjusted EBITDA declined CAD 36 million, or 3%, from the first quarter of 2025. He said strong operational performance and volume growth in the pipelines and facilities divisions were offset by the impact of a new toll structure and revenue-sharing mechanism on the Alliance Pipeline, as well as a lower contribution from the marketing business due to narrower NGL frac spreads.
Goldade said first-quarter earnings were CAD 498 million, down 1% from the prior-year period. Adjusted earnings were CAD 505 million, up 6% year over year.
Total volumes across the pipelines and facilities divisions were 3.7 million barrels of oil equivalent per day in the first quarter, a 1% increase from a year earlier. Goldade said higher pipeline volumes were driven primarily by higher interruptible and contracted volumes on certain systems, supported by favorable condensate pricing and higher demand from colder weather in the U.S. Higher facilities volumes reflected stronger contributions from certain PGI assets, including the Dawson assets and the Duvernay complex, partly offset by lower volumes at the Cutbank complex and reduced Aux Sable volumes due to lower ethane extraction.
Goldade said the updated guidance primarily reflects a stronger outlook for the marketing business, including a better contribution from crude oil marketing and wider Canadian and U.S. frac spreads. He added that Pembina and its customers are benefiting from exposure to premium propane prices in Asian markets through the company’s 20,000-barrel-per-day Prince Rupert terminal and 20,000 barrels per day of long-term contracted capacity at third-party facilities that became effective April 1, 2026.
Pembina has hedged approximately 65% of its 2026 frac spread exposure. Goldade said that includes roughly 90% hedged in the second and third quarters and 40% in the fourth quarter.
Projects Advance Across LNG, Fractionation and Power
Burrows said Pembina continues to execute its project portfolio, noting that the Wapiti expansion and the K3 cogeneration facility were placed into service on time and on budget.
Construction of RFS IV, a 55,000-barrel-per-day propane-plus fractionator at the existing Redwater complex, is nearing completion. Burrows said the associated rail facility entered service in February, commissioning of the fractionator is underway, and the project is trending under budget. The fractionator is expected to enter service by the end of May.
Cedar LNG also remains on time and on budget, Burrows said. Construction of the floating LNG vessel is now more than 50% complete, and onshore construction teams have resumed work after winter, with management focused on the 2026 construction season.
Burrows also highlighted the Greenlight Electricity Centre, a proposed multi-phase natural gas-fired combined cycle power generation facility being advanced with Kineticor. He said work continues on the approximately 900-megawatt first phase, including finalizing a lump-sum EPC agreement, a commercial agreement with the customer and project financing. A final investment decision is expected by the end of the second quarter of 2026.
Commercial Activity Focuses on Western Canadian Growth
Pembina has renewed existing contracts and signed new contracts totaling approximately 110,000 barrels per day of transportation capacity on the Peace Pipeline so far in 2026, Burrows said.
The company also recently closed an open season for a proposed short-haul, point-to-point transportation service on the Canadian segment of the Alliance Pipeline system. The proposed expansion would deliver natural gas to a new meter station in Fort Saskatchewan and has an anticipated in-service date in the fourth quarter of 2029. Burrows said successful proponents were awarded capacity conditional on the project being sanctioned, with regulatory and engineering work continuing.
In response to analyst questions, Chief Operating Officer Jaret Sprott said Pembina sees expansion opportunities tied to liquids production and condensate movements, including current work on the Fox to Namao pump station increase and the Taylor-to-Gordondale asset. Sprott said the Cochin Pipeline has been successfully expanded from about 90,000 barrels per day under its previous owner to routine operations of about 120,000 barrels per day, with further work focused on smaller optimizations.
Sprott also said Pembina expects to continue growing its processing footprint, particularly in sour gas processing, citing the company’s capabilities at assets such as the Fifth and K3 facilities. He said the recently completed Wapiti expansion was accepting about 60% of nameplate capacity within a couple of days of entering service.
Management Addresses Policy, LPG Markets and Cost Inflation
Asked about potential permitting changes for natural resource projects in Canada, Burrows said Pembina has not yet seen a material change in the permitting process. He cited the Taylor-to-Gordondale project as a recent example that took the full expected timeline to permit. However, he said the company is optimistic that changes are coming and would view them positively, particularly for LNG development on the West Coast and proposed crude oil pipelines.
On LPG markets, Chief Marketing and Strategy Officer Chris Scherman said Pembina’s export positions through Prince Rupert and third-party facilities are performing well amid strong Far East pricing relative to Edmonton and North America. He said Pembina has freight certainty for some time and is not exposed to certain recent freight price increases.
Analysts also asked about construction cost inflation. Sprott said the company is seeing pressure on consumables such as diesel, though much of that is recoverable under contracts. He said Pembina is focused on long-lead items such as electrical equipment, materials and steel. For projects including Latour, Birch to Taylor and Taylor to Gordondale, he said most materials have been procured and construction services negotiated. Cedar LNG, he added, was structured with 70% lump-sum exposure.
Goldade said Pembina now expects its 2026 year-end proportionally consolidated debt-to-adjusted EBITDA ratio to be approximately 3.5 times to 3.7 times. Excluding debt related to construction of the Cedar LNG facility, which is expected to enter service in late 2028, the ratio would be approximately 3.3 times to 3.5 times.
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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