Pembina Pipeline Corp Q4 FY2025 Earnings Call

Hello, everyone. Thank you for joining us, and welcome to the Pembina Pipeline Corporation Q4 2025 Results Digital Conference Call. I will now hand the call over to Dan Tucunel, Vice President of Capital Markets. Please go ahead.

Thank you, Jade. Good morning, everyone. Welcome to Pembina's conference call and webcast to review highlights from the fourth quarter of 2025. On the call today, we have Scott Burrows, President and CEO; and Cameron Goldade, Chief Financial Officer, along with other members of Pembina's leadership team. I would like to remind you that some of the comments made today may be forward-looking in nature and are based on Pembina's current expectations, estimates, judgments and projections. Forward-looking statements we may express or imply today are subject to risks and uncertainties, which could cause actual results to differ materially from expectations. Further, some of the information provided refers to non-GAAP measures. To learn more about these forward-looking statements and non-GAAP measures, please see the company's management discussion and analysis dated February 26, 2026, for the period ended December 31, 2025, as well as the press release Pembina issued yesterday, which are all available online at pembina.com and on both SEDAR+ and EDGAR. I will now turn things over to Scott.

Thanks, Dan. Yesterday, we reported our fourth quarter results, which included earnings of $489 million, adjusted EBITDA of approximately $1.075 billion and adjusted cash flow from operating activities of $731 million or $1.26 per share. For the full year, we delivered earnings of $1.694 billion and adjusted EBITDA of $4.289 billion. We achieved record annual volumes across our Pipelines and Facilities divisions, which represented a 3% increase over 2024. Each year, I'm always proud to look back and reflect on our team's many accomplishments. 2025 was no exception. In addition to solid financial and operating results, we also advanced strategic projects and strengthened our long-term competitive positioning. I'm particularly proud that Pembina continues to deliver on its promises, including providing safe and reliable operations, meeting its financial targets, constructing major projects on time and on budget, and continuing to execute its strategy with an improved risk profile. Several notable achievements in 2025 and early 2026 stand out. Safety is a core value and the foundation of Pembina's operations and culture. While the journey never ends, I am pleased with our strong safety and environmental performance that exceeded our internal 2025 targets, highlighted by improved performance across key indicators relative to our 3-year averages. We advanced construction of several growth projects, including the RFS IV propane-plus fractionator at the Redwater Complex, the Wapiti natural gas processing expansion, and the K3 cogeneration facility. All three projects are trending on time and on or under budget. The Wapiti expansion and K3 cogen are currently in the commissioning phase and are expected to be in service in the next few weeks, and we look forward to the RFS IV expansion coming online during the second quarter. Additionally, under previously announced funding agreements, PGI, in collaboration with certain producer customers, expects to place approximately $725 million of new infrastructure into service throughout 2026, all supported by long-term take-or-pay agreements. We supported our long-term resilience through extensive recontracting across the business. These contracting successes support continued utilization of our assets, help ensure our stable cash flow stream, and create the foundation for future opportunities. In 2025, we renewed existing contracts and executed incremental new contracts totaling over 200,000 barrels per day of conventional pipeline transportation capacity. This includes successfully recontracting substantially all available for renewal on the Peace Pipeline system under contracts expiring in 2025 and 2026. We look forward to providing further contracting updates throughout 2026. As part of the toll review at Alliance Pipeline, we significantly extended Alliance's long-term contractual profile as shippers elected a new 10-year toll option on approximately 96% of available capacity. And we contracted the remaining capacity available on the 100,000 barrels per day Nipisi pipeline, which was reactivated in 2023 to serve the growing Clearwater heavy oil play. Having fully contracted Nipisi, we are now focused on opportunities to increase egress capacity to respond to strong customer demand for incremental services. In response to growing demand for condensate and NGL transportation, we progressed development of conventional pipeline expansions to reliably and cost-effectively meet rising transportation demands from growing production in the Western Canadian Sedimentary Basin. In late 2025, Pembina announced that it is proceeding with its Fox Creek-to-Namao Expansion of the Peace Pipeline system, which will add approximately 70,000 barrels per day of market delivery capacity to the Peace Pipeline system. And yesterday, we announced two additional expansions of our Northeast BC pipelines, the Birch-to-Taylor Expansion and the Taylor-to-Gordondale Expansion. In total, these three expansions represent $625 million of investment to ensure Pembina's continued ability to service growing volumes in Northeast British Columbia and Alberta. We took steps to significantly enhance our propane export capabilities through a new 30,000 barrel per day LPG export agreement with AltaGas at its West Coast terminals and the sanctioning of the Prince Rupert terminal optimization project. Through these two initiatives, Pembina ensured access to 50,000 barrels per day of highly competitive propane export capacity to premium priced markets, including Asia for Pembina and our customers' propane. On the Cedar LNG project, we advanced construction of a floating LNG vessel to over 35% complete and significantly progressed the onshore construction activities. Further, Pembina met its commitment to investors by completing the remarketing of our 1.5 million tons of annual Cedar LNG capacity by signing long-term agreements with PETRONAS, a global LNG industry leader, and Ovintiv, one of the largest liquids-rich natural gas producers in Canada. In addition to increasing Pembina's expected financial contribution from the project, these agreements further validate the Cedar LNG project and highlight the strong demand for global export capacity given the clear advantages of Canadian West Coast LNG, including competitively priced feedstock and advantaged shipping distance to Asian markets. Finally, Pembina and its partner, Kineticor, made significant progress on the development of the Greenlight Electricity Center, securing the required power grid allocation for the proposed third-party innovation center, which was subsequently assigned to a potential customer of Greenlight and completed a land sale agreement with the customer. We also ensured the availability and delivery timing of two turbines to support the approximately 700 to 900-megawatt first phase of Greenlight. Greenlight represents an extension of Pembina's existing value chain and an opportunity to enhance growth by investing in long-term contracted infrastructure with an investment-grade counterparty while diversifying its customer base and would create incremental demand for natural gas and associated liquids production within Western Canada. Pembina and Kineticor continue to progress various work streams, including finalizing a commercial agreement with the customer, engineering, procurement, and regulatory activities and expect to make a final investment decision in the first half of 2026. It was a busy and productive year for the Pembina team, and I look forward to building upon our momentum from 2025 as we strive for even greater success in 2026. We are planning to hold a webcast and conference call on April 7, where Pembina's officer team will provide a general business update and long-term outlook. Additional details will be communicated in the coming weeks. I will now turn things over to Cam to discuss in more detail the financial highlights for the fourth quarter and full year.

Thanks, Scott. As Scott noted, Pembina reported fourth quarter adjusted EBITDA of $1.075 billion. This was a $179 million or 14% decrease over the same period in the prior year, which primarily reflects a $118 million lower contribution from marketing and new ventures, the impact of a new toll structure, and revenue sharing mechanism on the Alliance Pipeline, and a $37 million period-specific capital recovery that impacted 2024 with no similar impact in 2025. These factors were partially offset by volume growth and solid performance across the Pipelines and Facilities divisions. Looking at quarter-over-quarter results by division, the major factors impacting the quarter in Pipelines included higher volumes on the Peace Pipeline system, lower operating expense on the Cochin pipeline, lower revenue on the Canadian portion of the Alliance Pipeline as a result of reduced long-term firm tolls and impacts from the new revenue sharing mechanism under previously announced settlement, offset by higher demand on seasonal contracts, lower revenue on certain pipeline assets due to period-specific impacts of capital recoveries recognized in the fourth quarter of 2024, and lower interruptible volumes on the Cochin pipeline due to narrower condensate price differentials. In Facilities, factors impacting the fourth quarter included lower revenue related to period-specific impacts of capital recoveries recognized in the fourth quarter of 2024 on certain PGI assets and higher operating expenses as well as higher contribution for PGI assets, primarily due to higher volumes and the impact of the acquisition of a 50% working interest in Whitecap's Kaybob Complex during the fourth quarter of 2024. In Marketing and New Ventures, fourth quarter results reflected the net impact of narrower NGL frac spreads, partially offset by realized gains on NGL-based derivatives and lower realized gains on crude oil-based derivatives due to lower volumes and narrower price spreads. Finally, in the Corporate segment, fourth quarter results were lower than prior period due to higher long-term incentive costs, partially offset by lower non-compensation-related expenses. Earnings in the fourth quarter were $489 million. This represents a 15% decrease over the same period in the prior year. In addition to the factors impacting adjusted EBITDA, the decrease in earnings in the fourth quarter was primarily due to the net impact of higher depreciation and amortization expense in pipelines, lower other expenses recognized in the share of profit from PGI as 2024 included costs related to asset disposals, a higher share of profit from Greenlight due to a gain on sale of land to a third-party potential customer and various unrealized gains and losses on derivatives, a gain recognized by Pembina on a sale of land to a third-party potential customer of Greenlight, combined with lower net finance costs and lower acquisition and integration costs, offset by higher restructuring costs, and finally, lower income tax expense. Total volumes in the Pipelines and Facilities divisions were 3.7 million barrels of oil equivalent per day in the fourth quarter. This represents an increase of 1% over the same period in the prior year. Higher fourth quarter Pipelines volumes were driven primarily by higher interruptible and contracted volumes on the Peace Pipeline system, an increase in volumes on AEGS as the fourth quarter in 2024 was impacted by third-party outages, an increase in contracted volumes on the Nipisi pipeline, lower interruptible volumes on the Cochin pipeline due to narrower condensate price differentials and the sale of the North segment of the Western Pipeline in the third quarter of 2025. Higher fourth quarter Facilities volumes were driven primarily by the acquisition of Whitecap's Kaybob complex in the fourth quarter of 2024, higher volumes at the Dawson assets due to higher natural gas prices, higher volumes at the Duvernay Complex, and a decrease in Aux Sable volumes due to lower ethane extraction. The fourth quarter contributed to solid full year results that included earnings of $1.694 billion, adjusted EBITDA of $4.289 billion, cash flow from operating activities of $3.301 billion or $5.68 per share and adjusted cash flow from operating activities of $2.854 billion or $4.91 per share. During the fourth quarter, Pembina announced a 2026 adjusted EBITDA guidance range of $4.125 billion to $4.425 billion. The midpoint of the 2026 guidance range represents 2023 to 2026 fee-based adjusted EBITDA per share compound annual growth of approximately 5%, positioning Pembina to deliver on the target we originally provided at our 2024 Investor Day. Based on Pembina's existing strong financial position, the 2026 year-end proportionately consolidated debt to adjusted EBITDA ratio is expected to be approximately 3.7 to 4.0x. Excluding debt related to the construction of the Cedar LNG facility, which is expected to enter service in late 2028, this ratio would be approximately 3.4 to 3.7x. With 2026 serving as the peak investment year for Cedar LNG, 2026 is also expected to represent the peak year for Pembina's proportionately consolidated debt to adjusted EBITDA ratio. With incremental cash flow from projects entering service and a significant ramp down in Cedar LNG spending post 2026, Pembina's leverage is expected to return to the lower end of its target range of 3.5 to 4.25x. I'll now turn things back to Scott.

Thanks, Cam. Doing what we said we would do is core to Pembina's leadership team, and I believe our 2025 accomplishments and our longer track record as a company speak to that. We continue to focus on providing safe, reliable, responsible, and cost-effective energy infrastructure solutions. I believe we are uniquely positioned to capture incremental new volumes in the growing Western Canadian Sedimentary Basin and connect our customers to high-value global markets while unlocking new opportunities beyond our strong legacy business. Our entire organization is focused on ensuring the long-term resilience of our business and providing investors with visibility to attractive growth throughout the end of the decade and beyond. Thank you for joining us this morning. Please go ahead and open up the line for questions.

Your first question comes from Aaron MacNeil of TD Cowen.

I'm hoping you can sort of give a bit more detail on the decision not to pursue the full Taylor-to-Gordondale Expansion. And I realize this could very well be my own misinterpretation, but my impression was that this would likely go ahead once the permits were in place. So either way, I guess I'm just wondering, has anything in terms of your outlook changed? Are you opting for maybe a lower risk approach? Has ARC's decision to remove the second phase of Attachie sort of caused you to pause this a bit? Or is it the commodity outlook? Or maybe I'm just overthinking it, and this was always the strategy. So just any insights there would be helpful.

Aaron, it's Jaret. Thanks for your question; it's an important one. As mentioned in our press release, we currently have three projects in the pipeline: Fox Creek-to-Namao, Birch-to-Taylor, and Taylor-to-Gordondale, which we consider Phase 1. All this capital investment is fully driven by Canada working to alleviate our egress constraints. This is particularly significant as the easing of oil constraints is increasing demand for condensate, but our import pipelines are reaching capacity. As a result, we expect considerable domestic growth in condensate. Additionally, with that growth, natural gas demand will also rise due to various projects like LNG Canada ramping up and others coming online. This increasing need for condensate and NGLs is primarily stemming from the Montney region, especially north of Taylor, BC, up towards the Fort St. John and Fort Nelson areas, which plays a critical role in the Birch-to-Taylor project. I want to highlight the success we've had in collaborating with industry partners, indigenous communities, the BC government, and regulators, which has been instrumental in overcoming various challenges associated with that project. This initiative will enhance our condensate and natural gas liquids, specifically C3+ capacity, to meet the anticipated demand growth I mentioned earlier. Moreover, moving forward with this project and aiming for completion around the end of 2027 into 2028 showcases our commitment to effective project execution. We take pride in our safety standards and our collaborative efforts with local communities and contractors, ensuring that we prioritize cost and safety rather than just speed. Our clients can indeed drill faster than we can construct our extensive assets, which makes this approach important. Now, concerning your question, we received our federal permit for the Taylor-to-Gordondale project on February 10. I view this project as crucial for growth in the Montney region, especially in the Dawson Creek area where we are seeing significant activity. We're also witnessing growth in the Montney area of Alberta, particularly around Gordondale and the western edge of the Alberta border. The permit acquisition was a substantial achievement, and while we had specific commercial objectives, our team showcased perseverance. We will inevitably need this project due to increasing demand for condensate and C3+ in the near future. However, Pembina is not just about completing projects on schedule and on budget; we also offer flexibility through our infrastructure and workforce. Our team cooperated with operations and engineering to devise a more capital-efficient solution, which allows us to prudently deploy our capital while still meeting customer demands. As our clients grow, we can respond by building as needed. This positions us well compared to others in the region, ensuring that we can adapt to market demands as they evolve.

That's a lot more detail than I was expecting. Maybe for my second question, I understand that marketing fundamentals have been challenging this year, but we've noticed Canadian gas prices have declined recently. Liquids pricing has generally increased since you provided the guidance, which should improve the frac spread and other marketing strategies. So I'm curious if you would describe your previously shared marketing outlook as possibly a bit better now than you initially thought as we approach the annual recontracting window.

Yes. Aaron, thanks. It's Chris Scherman. I think we've all seen significant volatility to start the year. Obviously, we're only 60 days in. And you just referenced it, we're happy to see the price outlook for the remainder of the year improve, especially sort of over the last week. And I think all in all, things are actually looking positive for us for the remainder of the year. I'd highlight the first 45 days of the year. We definitely saw some headwinds on U.S. frac spread, primarily as a result of U.S. weather, which drove up Chicago gas prices. But given those U.S. frac spread headwinds to start the year, combined with the improved outlook for the remainder of the year, right now, we're still looking to be slightly ahead of the midpoint on our marketing guidance for the full year. I'd highlight there's still a lot of year left to go. I'd also highlight that given those headwinds earlier in the year, we can probably expect a little bit of a reshaping of the profile through the full year, but we're optimistic and sort of remain on plan for the full year.

Aaron, it’s Jaret here. On the other hand, with the high gas prices in Chicago, we're facing some challenges in our frac spread business. However, the AECO to Chicago spread is generating fee-based business that helps mitigate some of those issues. Additionally, Cam may address this, but we've observed significant fluctuations in foreign exchange in the past 60 days.

Your next question comes from Jeremy Tonet from JPMorgan Securities.

I would like to ask about the Tourmaline contract extension. Can you provide insights into how the economics compare to previous agreements? With the current market developments, does it look similar on a same-store basis, or how are things changing?

Jeremy, it's Jaret. I'm really pleased to extend our partnership with Tourmaline, one of our largest customers and a major producer in Western Canada. It's encouraging to see the Cutbank Complex, which was Pembina's original acquisition in gas processing back in 2009, maintaining and even growing production in that area. Regarding tolls, I won’t go into specifics, but pipe and frac tolls will remain consistent with our overall business and are not unique to this customer or area. On the PGI side, the gas economics and overall netbacks in this region are strong, largely due to the liquids production that enhances netbacks for our customers. Therefore, minimal toll erosion is necessary to meet customer needs for processing. While we're excited about extending this partnership, I want to remind you that in Q3, we recorded a minor write-down related to a processing contract that didn't get renewed in a different part of the Deep Basin. However, since that press release and the discussion about the contract's expiry, our teams, who are focused on optimizing our assets daily, have effectively recovered 60% of that value and will continue to fill that segment of the business. Additionally, this has been incorporated into our recontracting efforts and our Q3 announcement, which is accounted for in our 2026 guidance and overall long-range plan.

Okay. Great. Great to hear on that recovery there. I was just wondering if we could step back a little bit, take a higher view of the basin, kind of picking up with the current commodity price outlook and how that, I guess, impacts the driller activity expectations for your customers. We've seen volatility out there. Just wondering what's the latest conversations you're having with customers, ARC and others and how you expect, I guess, activity to change over time?

Yes, Jeremy, it's Scott here. I would just caution that, like Chris said, it's the increase in commodity price has happened pretty rapidly here. And let's break that down. I mean it's really been on the crude oil price. I mean, we still have seen a ton of volatility in AECO and AECO and Station 2 today are kind of where we started the year, if not slightly below. Propane has kind of remained flattish. So it's very commodity specific, and the crude oil run-up here has just happened very shortly. So I would say this short-term run-up, I don't know that it's been sustained enough to say that producers have changed their activity from the start of the year. There's also been a fair bit of M&A to end last year. And I think as people work through closing those transactions, hopefully, over the next couple of weeks or months here, we'll see kind of revised drilling plans. This comment is not specific to the recent M&A because, obviously, you can't talk about that. But historically, what I would say over the last two years, as we've seen some of the consolidation happen, we've actually seen an acceleration of volumes most people don't buy another company to keep production flat or decline it. Typically, we've seen growth. So we're excited to see what could come out of some of the consolidation, but I can't speak specifically to that just yet.

When I break it down into the different geological formations, starting with the traditional Drayton Valley area, we are observing a significant level of drilling even at $60. The South Duvernay area also demonstrates strong volume in our system. Moving to the Peace River Arch area, there's increasing interest in Charlie Lake oil, which is expanding, with Pembina holding oil assets that can capture these volumes for the Edmonton market. Further north in the Clearwater area, the Nipisi pipeline, supported by our existing connections and pumps, has upstream customers discussing improving recovery factors and economic drilling results. Nipisi is positioned to capture more volumes as we continue optimizing our Taylor-to-Gordondale operations with efficient expansions for Clearwater customers on the Nipisi pipeline. Regarding the Montney, our customers have extensive land across various geographical regions, and our system covers a broad area. If our customers face challenges or capacity constraints in one region, they can reallocate investments. The oil sands require condensate, and as import pipelines are nearing capacity, this condensate needs a source, and Alberta innovation, as well as Western Canadian Energy innovation, will facilitate this. Our system is well-equipped to benefit from these opportunities, so overall, things are looking positive.

Your next call comes from Theresa Chen from Barclays.

Now that Dow has provided a revised timeline for Path2Zero with Phase 1 expected by year-end '29 and Phase 2 by year-end '30. Could you provide an update on the different options you're evaluating at this point and infrastructure investment necessary to supply the 50,000 barrels per day of ethane for your commitment?

Thanks for the question. It's Chris. So obviously, we're very pleased to see the project moving ahead in line with really our expectations. As we've touched on Dow before and you're referencing, the minor delay in the project has allowed us to reevaluate how best to serve the customer here, what the most efficient capital-efficient infrastructure options are to serve the customers' needs. We will be out this year clarifying that. That work continues. We keep pointing down that path. So we look forward to making FID on these additional infrastructure this year, but we can't provide any more detail today on the call. Obviously, Dow, a valued partner to us, congratulate them on the progress they made on the project, and we look forward to getting more details out to the market and progressing.

Understood. And turning to Greenlight, given the progress there, the grid allocation, land sale, and turbine availability, what are the key next steps and decision points from here? What is the expected timeline for contracting FID and in-service thereafter?

You bet. So Chris again. Obviously, we've made significant progress since forming that JV. You referenced it, right, in 2025. We secured the 907 megawatts of AESO allocation, which we subsequently assigned to our potential customer, entered into agreements on turbines, locked those up, got where we needed to be in the queue for those, closed our land sale to set our customer up for success, both on the base project as well as a bunch of growth. So as we're looking forward now, we're targeting an FID in Q2. We're positive on that timeline and really focused on three work streams between now and then. Number one, commercial. So we continue to work through negotiations with our potential customer. We're in the middle of those negotiations. So obviously, limited details on that at this point. But I'd say they're going as expected. Time lines are going as expected, and we have confidence we're going to reach a midstream-like long-term contract to underpin this commercially. Secondly, regulatory, we're making great progress. We don't view this as a high-risk work stream for the project, and we're not part of the discussions between the customer and the government, but we understand those are going really well. There's more information that's come out on the levy and the rest of it, which is, I think, positive and in line with expectations. And then finally, third work stream engineering. So we're working through our FEED. We've got top-tier global engineering partners in that. That's progressing well, all pointed towards Q2 FID targets. So Scott spoke about it in his opening remarks, but I think things are going as we hoped on this. We think the project remains a tremendous on-strategy extension of our business, and we're excited to get it across the line here in Q2.

Your next question comes from Sam Burwell from Jefferies.

I wanted to see if you could give an update on the Alliance short-haul expansion project. I think back in 3Q, you talked about running an open season during the first quarter of this year. So curious if there's any update on the progress you're making there?

Jaret here. So we continue to see strong demand in the Alberta Industrial Heartland area for natural gas to progress other industries. There's still a few days left in the quarter, and you should expect to see an announcement fairly shortly.

Okay. Great. And I guess just like one quick clarification on the Tourmaline deal. Was all of that renewals of existing business effectively? Or is there anything incremental on the transport side or the frac side?

No, it was essentially all renewal with the same volumes.

Your next question comes from Robert Hope from Scotiabank.

Just want to maybe dive a little bit deeper into the timing of the April 7 presentation. Is there anything specific driving that? Do you think you'll have some incremental clarity on some of the projects that you're progressing? Or is it April 7 just to kind of make it a standalone event rather than giving we'll call it, longer-term guidance today?

Robert, it's Cam here. Yes, really, I mean, honestly, a couple of factors. One, we recognize there's a window here for market participants that works better or worse. And so as we get into March, we start to interfere with potentially other commitments. But I think probably more presently, things are moving fast, obviously, with certain of our key growth opportunities. And so our objective when we release the long-term guidance is to give you and our investors as much granularity and as much concreteness to that buildup as possible. And so I think our objective this time around, whereas in 2024, we generally gave a growth outlook and some pieces, which would support that, we're really trying to provide the market with a really robust buildup to that. And so we'd love to be in a position to have obviously the most certainty possible around that buildup. And that's the biggest factor that aligns with the sort of post Q1 timing.

I appreciate that. And then you've touched on most of the kind of, we'll call it, the $4 billion bucket of potential projects, but PGI infrastructure was one that was highlighted as an opportunity set that you're advancing. Can you maybe expand a little bit further what opportunities you could see as the next phase of growth for PGI?

Rob, Jaret here. Yes, you know what, PGI is going to continue to grow their business. We obviously step one with respect to that business is filling white space. So some of the announcements we made with the infrastructure build-out we're doing with Whitecap in and around the Lator area, that's really all designed to, one, is fill existing white space at some plants in and around that area, but also then to grow the liquids volumes onto Pembina's Peace Pipeline system and the NGLs into Fort Saskatchewan and Pembina's Redwater facilities. After that, we're looking at continuing to build out organically. There are opportunities out there that we're evaluating. So probably more to come on that. And then lastly, there's always the inorganic stuff. I think PGI out of any one of the gas processing businesses in Western Canada has been ahead of its time with respect to creativity. And being on the board with KKR, we continue to encourage and press the team on to come back to us with more and more of those creative ideas. So that's kind of how we see the business there.

Your next question comes from Spiro Dounis from Citi.

First, let me congratulate you all on your silver medal in hockey, hard fought. Sorry if that's too soon. Going to the questions, I'll keep them above the belt here. Maybe just going to contract renewals. Scott, you mentioned over 200,000 barrels a day contracted last year and more to come in 2026. So maybe could you provide a broader commercial update on what you're expecting this year? Is it similar to 2025? And any reason we can expect different outcomes, either positive or negative?

Yes. Thanks for the question, and I'll ignore the comment. Maybe next quarter, we can talk about it. But yes, I think we did try to highlight it, obviously, a very, very successful 2025. We feel like we started off the year strong, as Jaret mentioned, both with the Tourmaline recontracting, but as well as the success on Alliance and Nipisi. And so in terms of specifically to 2026, again, we're not going to get into specific contract profiles. It's obviously a competitive dynamic. But what I will say is that we would expect to have a little more granularity on this on our April 7 update and talk a little bit about more where we're at year-to-date and what our expectations are. So good question, but I don't want to front run our April 7 update.

Yes. I totally respect that. Second question, maybe just going back to Taylor-to-Gordondale. Just curious how you're thinking about the cadence and the timing for the remaining expansion phases, how you think you're going to break it up? And I ask because it looks like the CapEx guidance is unchanged here. And so do the remaining phases FID in '26? It sounds like it could be after that.

Yes, that's a great question. I appreciate your comments as I respond. Regarding the short-haul Alliance Phase 1, it is fully incorporated into our 2026 capital guidance. As for the final investment decision timing, it will be announced soon, with more details likely available on April 7. We now have some flexibility to concentrate on executing this project, and Phase 2 will follow as we progress on these next phases. It’s like we have the ability to grow in response to our customers’ needs. Additionally, we have ordered our materials, including pipes and aboveground equipment like pumps, which are all part of the overall plan for the complete build-out. We'll deploy the capital as needed.

Your next question comes from Praneeth Satish from Wells Fargo.

Maybe just turning to Greenlight. So I understand the commercial details, they're still being finalized. But can you provide any high-level guardrails on maybe the minimum IRR that you'd look to achieve here? And also whether this would be a take-or-pay or cost of service-like contract? And then as a follow-up, I guess, if you were to FID greenlight, considering it's got an in-service date pushing into the next decade, would this influence your long-term EBITDA CAGR guidance that you plan to give in April? And I guess, how far out do you think you could reasonably guide if you get this project?

It's Chris. I'll take the first part on greenlight and then maybe turn it over to Cam to talk about guidance. As I mentioned, we're in the middle of negotiations. So unfortunately, I can provide limited guidance. But what I can say is it's a long-term contract. It's a long-term contract with midstream-like attributes. It looks a lot like our core business, and we're really pleased with the fact that we've been able to do that. I think when it comes down to it, if you think about it on a build multiple basis, it's going to look a lot like other Pembina greenfield projects that we've been doing under long-term contracts with ancillary benefits down the road as we think about integrating gas supply and the other components into it, looking to drive that down over time, consistent with how we've pursued other projects in our core business.

Yes. I'd just add a little bit of color. Obviously, we have a partner on the file and therefore, a private equity partner and therefore, would need to project finance the project, which when you stack those two things up, you can assume that there would be a low-risk EBITDA profile in order to support a project finance.

And Praneeth, it's Cam. I'll just pick up on one thing that Chris said around the structure. And that is want to reiterate and make sure everyone understands that while the project in its own right is a really interesting project. One of the things that really sells it for us or really gets us excited about it is the integration with the rest of our business. And so you've heard us talk about it, and I think we'll be in a position to talk more about it or more succinctly about it as we get to our April 7 presentation. But in summary, I mean, there's a ton of integration potential around the Alberta Industrial Heartland. And I think the so what of that is it really starts to take a greenfield-like return profile and really turn it into a brownfield-like return profile ultimately for Pembina. And so that's what gets us really excited about that, and you couple that with a low-risk contract structure. Growth outlook, obviously, as we've said before, once these types of opportunities get built, and certainly has been the precedent on the southern side of the border, they tend to cluster. And I think as we walked our Board through yesterday, we have a ton of advantage in terms of our Alberta industrial Heartland position, everything that comes along with that. And so getting the first one in the ground gives us a huge advantage in terms of building a business out of this.

Got you. That's very helpful. Can you explain the next phases of potential expansion for the Nipisi pipeline now that it's running at full capacity? It sounds like you're planning to increase capacity by adding additional pump stations at a low capital expenditure cost. How much more capacity can you achieve this way? Additionally, how should we view the commercial structure of these expansions? Will it be fee-based or cost of service?

Thanks. So as Jaret touched on, and he can provide a little bit more color, we are going through some debottlenecks, which can add, as you pointed out, some very reasonable both from a return and from a time-to-market debottlenecks. I think the bigger picture here longer term is we have an opportunity to expand portions of that pipe to add significant capacity. And so we're right now doing the engineering and continuing to advance the engineering on what that might look like and are having commercial discussions. So we kind of have a two-phased approach. We have the early debottlenecks, and then we have a larger potential winning of the pipe. Jaret or Chris, anything there you guys want to add?

I want to add that currently we are fully contracted for the base asset, but a third party will be making a connection in the coming months that will enable us to reach full physical capacity. Additionally, the debottleneck projects I mentioned will provide us with an incremental increase of about 20% to 30% on that asset. This improvement will be achieved through the drag-reducing agent we utilize daily on our Cochin pipeline. We are well-versed in its application and plan to incorporate it along with some minor horsepower upgrades to enhance our capacity.

Cameron?

It's Cam. I just want to add one more point here. I think it's important to highlight the history of this asset, which we are quite proud of and reflects our business and overall commercial perspective. Previously, this asset served a different customer and was supported by a long-term contract before 2021. We decided to shift the service because we believed it was the best decision given the available options. As we look ahead, the EBITDA generated by this pipeline in 2026 is significantly higher than what it was under the previous service agreements, approximately 50% more. Additionally, we see substantial growth potential beyond that. We are very satisfied with our strategy in this regard, which demonstrates the diversity and flexibility of our business.

Your next question comes from Maurice Choy from RBC Capital Markets.

Just wanted to start with your capacity to do these projects. You sanctioned a few more projects today. It sounds like you've got at least to Dow and Greenlight projects to come later this year. How would you characterize your remaining investment capacity for the remainder of, say, this decade that you can actually self-fund before your debt-to-EBITDA perhaps moves meaningfully closer to your limit?

Yes. Great question, Maurice. It's Cam here. So I'd say I'd go back to some things we said in the past, which is our track record and our intention has been that we obviously seek to fund capital with cash flow after dividends. And at our level that we're at today, we can think about that as roughly plus or minus about $1.5 billion a year in any given year for round numbers. And I would say, obviously, this year, we've talked about how it's the peak year for Cedar. We are running a slight free cash flow deficit in 2026. But as we look forward to 2027 and beyond, we begin to generate meaningful free cash flow, again based on our currently sanctioned project opportunity profile. As we think about larger opportunities and if you want to think about what might come on top of it, like let's dream for a moment around Greenlight and that becoming a reality and multiple opportunities on top of that. I think that's where we start to like the structure that we have today, which is obviously a partner, and we have that in other parts of our business. We like the opportunities within our business and honestly, look at various financing opportunities, which will enable us. But when you do the really simple math around deploying $1.5 billion at historical return multiples that Pembina has done, you can pretty clearly get to a mid-single-digit growth number for Pembina into a very long term. And so we like that. We have that investment capacity. And not only just the financial capacity, I think we have the execution capacity. Clearly, we have a really solid track record of executing projects on time and on budget, and we're applying that to projects in our core business as well as some of these ones which are on the face of it new for us maybe, but realistically very similar to what we've done in the past in many other ways and taking a similar strategy. So we're managing the risk from that perspective.

Understood. And if I could just finish up by following up on the three streams you discussed on the Greenlight project. I accept that these things are complex, does involve a lot of work. But is there anything material here that is out of your control or your counterparty's control that you see may derail this FID or even the timing of it?

Okay. I'll chime in, and Chris, feel free to add anything. But I think to answer that question, I mean, we are obviously in control of our project and the negotiations with our customer, but we don't control our customers' ultimate decision to FID their innovation center. So there's two pieces to this to the puzzle. And I think that's potentially what you're getting at. So there's obviously our piece and then there's the innovation center piece, and that's not obviously within our control.

Your next question comes from Robert Catellier from CIBC Capital Markets.

Just a quick one here on the new pipeline. I'm just curious on the commercial impetus to use a cost of service agreement on the Birch-to-Taylor Expansion.

That's just the legacy of that pipeline. That's how that pipeline has been underpinned for 10 years as soon as since we put it into service. So that's just been the initial contracting, and that's how that pipeline is structured.

I wanted to ask about LNG and some longer-term considerations. There have been media reports suggesting that the owners of LNG Canada might sell some of their stakes in Phase 1, either fully or partially, to finance Phase 2. Given Pembina's experience in developing export options, I’m interested in your thoughts on participating in an existing LNG facility that is already operational, aside from the one you are currently building. Additionally, regarding the potential of a Cedar LNG Phase 2, do you believe there is sufficient pipeline capacity for Coastal GasLink as it is, or will it need to expand to support Cedar LNG Phase 2 in the future?

Yes. I think on your first question, our understanding from media reports is that it's simply a financing to help fund Phase 2. So that's not something that we're currently participating in. We don't want to be a passive investor in something. So nothing to see from a Pembina perspective on the rumors of a sell-down. And then on the second part of the question, I mean, we have positioned Cedar to potentially take incremental gas, whether it's the Cedar Link pipeline or a few of the other onshore facilities. And so we would love to do a Cedar 2. But as you pointed out, it's solely dependent on gas supply. And what I would say is right now, our partners at LNG Canada, I think, are pretty focused on getting Phase 1 up and running and engineering Phase 2. So I think until they're through some of those decisions, we won't have a line of sight to that. But we stand ready, willing, and able if that's a possibility.

Your next question comes from Benjamin Pham from BMO.

Just on the topic of the value chain extensions and opportunities. I mean Pembina has been pretty good at that part of it. You added gas and LNG and then now power. My question specifically on the power side, is that from your advantage now, is that more getting your feet wet through the DC Greenlight opportunity to do a couple of cogens? Or is there a much more broader potentially per scaled growth allocation that Pembina is looking at?

It's Chris. Well, here's what I'd say. I'd say we definitely see the potential for significant growth in the gas-to-power space, in particular, to power data centers. We think that the Alberta market and the Alberta is ripe for growth in that space, and we think we're really well positioned with our current project with our partners. And so for us, it is one of the growth pathways that we're pursuing, frankly, and see an opportunity to grow into. We're not looking to grow into the merchant power space. That's not a space we're going to go to. You mentioned cogens, I mean, cogens, integrated cogens associated with existing infrastructure and deals are certainly in play. But as far as the meaningful growth pathway, it's really that behind the meter gas to power to support innovation center growth, which we see a lot of potential.

I'll add to that, Ben. Earlier in the call, I mentioned that gas egress is one of the main limitations for Canadians in producing condensate and transporting it to the oil sands. A full build-out of Greenlight would consume about 75% of the gas that Cedar would require. Therefore, facilitating this for our customers and enabling them to enhance our value chain in other areas is crucial for Pembina.

Your next question comes from Praneeth Satish from Wells Fargo.

Maybe just turning to the Yellowhead extraction opportunity, assuming that the pipeline starts construction here in a few months. Curious what the timing could look like for your extraction opportunity. And then you talked about how tight the condensate market is, but I guess with Redwater 4 coming online so I just wanted to get an update on how you're thinking about a Redwater 5 based on C3+ fundamentals.

Pat, it's Chris. I'll take the Yellowhead question and then turn over to Jaret. So continue to progress Yellowhead, remain excited about that project. Expect something this year, frankly, as far as an announcement if we can keep everything on track and get to where we want to get it.

And Pat, regarding RFS V, I want to note that while RFS IV is not yet operational, it will ultimately depend on the additional frac capacity, whether regional or specifically in the Fort Saskatchewan area. We believe Pembina has an excellent offering for our customers at this time. We possess unit train capacity, sufficient storage, and high reliability and availability. RFS IV is progressing on a cost-per-barrel basis, significantly more favorable than any other frac expansions currently in Western Canada. Furthermore, NGL frac capacity is set to increase with new gas egress. As we see projects like LNG Canada Phase 2 come to fruition, it will drive gas demand that needs to be accommodated, leading to the extraction of NGLs. I view frac capacity as continuously growing as gas stress constraints are alleviated. We are in a strong position to proceed with RFS V.

At this time, there are no further questions. I will now turn the call back to Scott Burrows, CEO, for closing remarks.

Thank you for all the questions today and the interest in Pembina. I'd be remiss after talking about all the accomplishments in 2025, if I didn't thank all of our hard-working staff and contractors and communities that we work with. So thank you, everyone. And I think you heard on the call today, we're pretty excited and optimistic about 2026 and beyond. Have a good rest of your day.

This concludes today's call. Thank you for attending. You may now disconnect.