Pembina Pipeline Corp 6-K, filed Aug 7, 2025
Pembina Pipeline Corp (PBA)
6-K
2025-08-07
For: 2025-06-30
View Original
Added on
April 09, 2026
About this 6-K
Pembina Pipeline Corp filed this 6-K on August 7, 2025.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of August, 2025
Commission File Number: 001-35563
PEMBINA PIPELINE CORPORATION
(Name of registrant)
(Room #39-095) 4000, 585 8th Avenue S.W.
Calgary, Alberta T2P 1G1
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
o Form 20-F | x Form 40-F | ||||||||||
INCORPORATION BY REFERENCE
Exhibit 99.1 to this Report on Form 6-K is hereby incorporated by reference as an exhibit to the Registration Statement on Form F-10 (File No. 333-276023) of Pembina Pipeline Corporation.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| PEMBINA PIPELINE CORPORATION | |||||||||||
| Date: | August 7, 2025 | By: | /s/ Cameron J. Goldade | ||||||||
| Name: Cameron J. Goldade | |||||||||||
| Title: Senior Vice President & Chief Financial Officer | |||||||||||
Form 6-K Exhibit Index
| Exhibit Number | Document Description | |||||||
| 99.1 | ||||||||
| 99.2 | ||||||||
| 99.3 | ||||||||
REPORT TO SHAREHOLDERS |  | ||||||||||
| Second Quarter 2025 | |||||||||||
| MANAGEMENT'S DISCUSSION AND ANALYSIS | |||||||||||
| Table of Contents | |||||||||||
6. Capital Expenditures | |||||||||||
Basis of Presentation
The following Management's Discussion and Analysis ("MD&A") of the financial and operating results of Pembina Pipeline Corporation ("Pembina" or the "Company") is dated August 7, 2025, and is supplementary to, and should be read in conjunction with, Pembina's unaudited condensed consolidated interim financial statements for the three and six months ended June 30, 2025 ("Interim Financial Statements") as well as Pembina's audited consolidated annual financial statements ("Consolidated Financial Statements") and MD&A for the year ended December 31, 2024. All financial information provided in this MD&A has been prepared in accordance with International Accounting Standard ("IAS") 34 Interim Financial Reporting and is expressed in Canadian dollars, unless otherwise noted. A description of Pembina's operating segments and additional information about Pembina is filed with Canadian and U.S. securities commissions, including quarterly and annual reports, annual information forms (which are filed with the U.S. Securities and Exchange Commission under Form 40-F) and management information circulars, which can be found online at www.sedarplus.ca, www.sec.gov and through Pembina's website at www.pembina.com. Information contained in or otherwise accessible through Pembina's website does not form part of this MD&A and is not incorporated into this document by reference.
Abbreviations
For a list of abbreviations that may be used in this MD&A, refer to the "Abbreviations" section of this MD&A.
Non-GAAP and Other Financial Measures
Pembina has disclosed certain financial measures and ratios within this MD&A that management believes provide meaningful information in assessing Pembina's underlying performance, but which are not specified, defined or determined in accordance with the Canadian generally accepted accounting principles ("GAAP") and which are not disclosed in Pembina's Interim Financial Statements or Consolidated Financial Statements. Such non-GAAP financial measures and non-GAAP ratios do not have any standardized meaning prescribed by IFRS and may not be comparable to similar financial measures or ratios disclosed by other issuers. Refer to the "Non-GAAP & Other Financial Measures" section of this MD&A for additional information regarding these non-GAAP financial measures and non-GAAP ratios.
Risk Factors and Forward-Looking Information
Management has identified the primary risk factors that could have a material impact on the financial results and operations of Pembina. Such risk factors are presented in the "Risk Factors" sections of Pembina's MD&A and Annual Information Form ("AIF"), each for the year ended December 31, 2024. The Company's financial and operational performance is potentially affected by a number of factors, including, but not limited to, the factors described within the "Forward-Looking Statements & Information" section of this MD&A. This MD&A contains forward-looking statements based on Pembina's current expectations, estimates, projections and assumptions. This information is provided to assist readers in understanding the Company's future plans and expectations and may not be appropriate for other purposes.
Pembina Pipeline Corporation Second Quarter 2025 1
1. ABOUT PEMBINA
Pembina Pipeline Corporation is a leading energy transportation and midstream service provider that has served North America's energy industry for more than 70 years. Pembina owns an extensive network of strategically-located assets, including hydrocarbon liquids and natural gas pipelines, gas gathering and processing facilities, oil and natural gas liquids infrastructure and logistics services, and an export terminals business. Through our integrated value chain, we seek to provide safe and reliable energy solutions that connect producers and consumers across the world, support a more sustainable future and benefit our customers, investors, employees and communities. For more information, please visit www.pembina.com.
Pembina's Purpose and Strategy
We deliver extraordinary energy solutions so the world can thrive.
Pembina will build on its strengths by continuing to invest in and grow the core businesses that provide critical transportation and midstream services to help ensure reliable and secure energy supply. Pembina will capitalize on exciting opportunities to leverage its assets and expertise into new service offerings that enable the transition to a lower-carbon economy. In continuing to meet global energy demand and its customers' needs, while ensuring Pembina's long-term success and resilience, the Company has established four strategic priorities:
1.To be resilient, we will sustain, decarbonize, and enhance our businesses. This priority is focused on strengthening and growing our existing franchise and demonstrating environmental leadership.
2.To thrive, we will invest in the energy transition to improve the basins in which we operate. We will prioritize lighter commodities as we continue to invest in new infrastructure and expand our portfolio to include new businesses associated with lower-carbon commodities.
3.To meet global demand, we will transform and export our products. We will continue our focus on supporting the transformation of Western Canadian Sedimentary Basin commodities into higher margin products and enabling more coastal egress.
4.To set ourselves apart, we will create a differentiated experience for our stakeholders. We remain committed to delivering excellence for our four key stakeholder groups meaning that:
a.Employees say we are the 'employer of choice' and value our safe, respectful, collaborative, and inclusive work culture.
b.Communities welcome us and recognize the net positive impact of our social and environmental commitment.
c.Customers choose us first for reliable and value-added services.
d.Investors receive sustainable industry-leading total returns.
2 Pembina Pipeline Corporation Second Quarter 2025
2. FINANCIAL & OPERATING OVERVIEW
Consolidated Financial Overview for the Three Months Ended June 30
Results of Operations
| ($ millions, except where noted) | 2025 | 2024 | Change | |||||||||||
| Revenue | 1,792 | 1,855 | (63) | |||||||||||
Net revenue(1) | 1,184 | 1,222 | (38) | |||||||||||
| Operating expenses | 235 | 240 | (5) | |||||||||||
Gross profit | 780 | 815 | (35) | |||||||||||
Adjusted EBITDA(1) | 1,013 | 1,091 | (78) | |||||||||||
Earnings | 417 | 479 | (62) | |||||||||||
Earnings per common share – basic and diluted (dollars) | 0.65 | 0.75 | (0.10) | |||||||||||
| Cash flow from operating activities | 790 | 954 | (164) | |||||||||||
Cash flow from operating activities per common share – basic (dollars) | 1.36 | 1.64 | (0.28) | |||||||||||
Adjusted cash flow from operating activities(1) | 698 | 837 | (139) | |||||||||||
Adjusted cash flow from operating activities per common share – basic (dollars)(1) | 1.20 | 1.44 | (0.24) | |||||||||||
| Capital expenditures | 197 | 265 | (68) | |||||||||||
Change in Earnings ($ millions)
Results Overview
Earnings in the second quarter of 2025 decreased by $62 million compared to the prior period. Significant factors impacting the quarter by segment include:
•Pipelines: Decrease largely due to lower tolls on new contracts on the Cochin Pipeline and lower revenue at the Edmonton Terminals, partially offset by higher demand on seasonal contracts on the Alliance Pipeline, as well as higher revenue on the Peace Pipeline system due to increased volumes and higher tolls mainly related to contractual inflation adjustments.
•Facilities: Decrease largely due to lower share of profit from PGI and a planned outage during the period for an asset upgrade, which resulted in higher costs driven by the associated retirement at the Redwater Complex.
•Marketing & New Ventures: Lower net revenue due to a decrease in NGL margins and volumes, combined with lower other income due to no similar gain to that recognized in the second quarter of 2024 related to Pembina's financial assurances assumed by Cedar LNG upon positive final investment decision. This was partially offset by higher revenue from risk management and physical derivatives, as well as an increase in share of profit from Cedar LNG.
•Corporate and Income Tax: Higher primarily due to lower acquisition and integration costs, combined with lower general and administrative expense. This was partially offset by no similar net gain on acquisition to that recognized in the second quarter of 2024.
Further details and additional factors impacting the segments are discussed in the table below and in the "Segment Results" section of this MD&A.
Pembina Pipeline Corporation Second Quarter 2025 3
Changes in Results for the Three Months Ended June 30 | ||||||||
Net revenue(1) | $38 million decrease, lower net revenue in the Marketing & New Ventures Division due to lower gains on crude oil-based derivatives, as well as lower NGL margins as a result of lower butane and propane prices, combined with lower volumes because of a planned outage in the Facilities Division related to an asset upgrade, as well as higher input natural gas prices at Aux Sable. Additionally, lower net revenue on the Cochin Pipeline ($33 million) primarily due to lower tolls on new contracts, which replaced long-term contracts that expired in mid-July 2024, and lower revenue at the Edmonton Terminals largely related to the decommissioning of the Edmonton South Rail Terminal in the second quarter of 2024. These results were partially offset by lower losses on renewable power purchase agreements, gains on NGL-based derivatives in the second quarter of 2025 compared to losses in the second quarter of 2024, and higher demand on seasonal contracts on the Alliance Pipeline. Additionally, higher net revenue on the Peace Pipeline system from fewer outages in the second quarter of 2025 compared to the same period in 2024 which was impacted by planned outages for the Phase VIII Peace Pipeline Expansion, higher contracted volumes, and higher tolls primarily due to contractual inflation adjustments, contributed to the offsetting decrease in net revenue. | |||||||
| Operating expenses | Consistent with prior period. Minor decreases in operating expenses were offset by higher integrity spending. | |||||||
| Cash flow from operating activities | $164 million decrease, primarily driven by a decrease in earnings adjusted for items not involving cash, change in non-cash working capital, and higher net interest paid. This was partially offset by lower taxes paid and higher distributions from equity accounted investees primarily from PGI. | |||||||
Adjusted cash flow from operating activities(1) | $139 million decrease, largely due to the same items impact cash flow from operating activities, discussed above, combined with higher current income tax expense, partially offset by lower accrued share-based payment expense. | |||||||
Adjusted cash flow from operating activities per common share – basic (dollars)(1) | $0.24 decrease, primarily due to the factors impacting adjusted cash flow from operating activities, discussed above, while outstanding common shares remained consistent with prior period. | |||||||
Adjusted EBITDA(1) | $78 million decrease, largely due to lower NGL margins as a result of lower butane and propane prices, combined with lower volumes because of a planned outage in the Facilities Division related to an asset upgrade, as well as higher input natural gas prices at Aux Sable. In addition, lower realized gains on crude oil-based derivatives, lower tolls on new contracts on the Cochin Pipeline, and lower revenue at the Edmonton Terminals contributed to the decrease in adjusted EBITDA. These results were partially offset by lower realized losses on NGL-based derivatives, combined with higher net revenue on the Alliance Pipeline and Peace Pipeline system. | |||||||
(1) Refer to the "Non-GAAP & Other Financial Measures" section of this MD&A.
4 Pembina Pipeline Corporation Second Quarter 2025
Consolidated Financial Overview for the Six Months Ended June 30
Results of Operations
| ($ millions, except where noted) | 2025 | 2024 | Change | |||||||||||
| Revenue | 4,074 | 3,395 | 679 | |||||||||||
Net revenue(1) | 2,527 | 2,134 | 393 | |||||||||||
| Operating expenses | 461 | 429 | 32 | |||||||||||
Gross profit | 1,708 | 1,545 | 163 | |||||||||||
Adjusted EBITDA(1) | 2,180 | 2,135 | 45 | |||||||||||
Earnings | 919 | 917 | 2 | |||||||||||
Earnings per common share – basic (dollars) | 1.45 | 1.49 | (0.04) | |||||||||||
Earnings per common share – diluted (dollars) | 1.45 | 1.48 | (0.03) | |||||||||||
| Cash flow from operating activities | 1,630 | 1,390 | 240 | |||||||||||
Cash flow from operating activities per common share – basic (dollars) | 2.81 | 2.46 | 0.35 | |||||||||||
Adjusted cash flow from operating activities(1) | 1,475 | 1,619 | (144) | |||||||||||
Adjusted cash flow from operating activities per common share – basic (dollars)(1) | 2.54 | 2.87 | (0.33) | |||||||||||
| Capital expenditures | 371 | 451 | (80) | |||||||||||
Change in Earnings ($ millions)
Results Overview
Earnings during the first six months of 2025 increased by $2 million compared to the prior period. Significant factors impacting the period by segment include:
•Pipelines: Positive impacts from Pembina acquiring a controlling ownership interest in Alliance on April 1, 2024, combined with higher seasonal revenue on the Alliance Pipeline. Additionally, higher revenue on the Peace Pipeline system due to increased volumes and higher tolls mainly related to contractual inflation adjustments, as well as higher contracted volumes on the Nipisi Pipeline. These impacts were partially offset by lower tolls on new contracts on the Cochin Pipeline and lower revenue at the Edmonton Terminals.
•Facilities: Decrease largely due to lower share of profit from PGI, partially offset by the positive impacts of Pembina acquiring a controlling ownership interest in Aux Sable on April 1, 2024.
•Marketing & New Ventures: Positive impacts from Pembina acquiring a controlling ownership interest in Aux Sable on April 1, 2024, combined with higher revenue from risk management and physical derivative contracts, as well as higher WCSB NGL margins resulting from higher marketed NGL volumes. This was partially offset by a share of loss from Cedar LNG, lower NGL margins from Aux Sable, and lower other income.
•Corporate and Income Tax: Lower largely due to higher net finance costs, higher income tax expense, and no similar net gain on acquisition to that recognized in the second quarter of 2024. This was partially offset by lower acquisition and integration costs.
Further details and additional factors impacting the segments are discussed in the table below and in the "Segment Results" section of this MD&A.
Pembina Pipeline Corporation Second Quarter 2025 5
Changes in Results for the Six Months Ended June 30 | ||||||||
Net revenue(1) | $393 million increase, largely due to Pembina acquiring a controlling ownership interest in Alliance and Aux Sable on April 1, 2024. The Marketing & New Ventures Division had increased net revenue largely due to higher WCSB NGL margins resulting from higher marketed NGL volumes, lower unrealized losses on renewable power purchase agreements and crude oil-based derivatives, and unrealized gains on NGL-based derivatives in the 2025 period compared to losses in the 2024 period. Additionally, higher demand on seasonal contracts on the Alliance Pipeline, higher net revenue on the Peace Pipeline system due to fewer outages in the 2025 period compared to the same period in 2024 which was impacted by planned outages for the Phase VIII Peace Pipeline Expansion, and increased contracted volumes on the Peace Pipeline system and Nipisi Pipeline, along with higher tolls on the Peace Pipeline system primarily due to contractual inflation adjustments, contributed to the higher net revenue. These results were partially offset by lower net revenue on the Cochin Pipeline primarily due to lower tolls on new contracts, which replaced long-term contracts that expired in mid-July 2024. Also contributing to a decrease in net revenue were lower realized gains on crude oil-based derivatives, lower NGL margins from Aux Sable due to higher input natural gas prices, lower revenue at the Edmonton Terminals largely related to the decommissioning of the Edmonton South Rail Terminal in the second quarter of 2024, and lower recoverable power costs. | |||||||
| Operating expenses | $32 million increase, primarily due to operating expenses from Alliance and Aux Sable now being fully consolidated as of April 1, 2024, as well as higher environmental costs in the current period, as the 2024 period included a recovery related to the Northern Pipeline system outage. These increases were partially offset by lower recoverable power costs resulting from the lower power pool price during the 2025 period. | |||||||
| Cash flow from operating activities | $240 million increase, primarily driven by an increase in earnings adjusted for items not involving cash, lower taxes paid, and the change in non-cash working capital. This was partially offset by lower distributions from equity accounted investees and higher net interest paid, both largely the result of Pembina acquiring a controlling ownership interest in Alliance and Aux Sable on April 1, 2024, as well as a decrease in payments collected through contract liabilities. | |||||||
Adjusted cash flow from operating activities(1) | $144 million decrease, primarily due to the same items impacting cash flow from operating activities, discussed above, excluding the change in non-cash working capital and taxes paid, which leads to a decrease when adjusted, combined with higher current income tax expense. | |||||||
Adjusted cash flow from operating activities per common share – basic (dollars)(1) | $0.33 decrease, primarily due to the factors impacting adjusted cash flow from operating activities, discussed above, as well as an increase in outstanding common shares following the conversion of subscription receipts into common shares, concurrent with the closing of Pembina's acquisition of a controlling ownership interest in Alliance and Aux Sable on April 1, 2024. | |||||||
Adjusted EBITDA(1) | $45 million increase, largely due to Pembina acquiring a controlling ownership interest in Alliance and Aux Sable on April 1, 2024, and higher revenue on the Alliance Pipeline due to higher demand on seasonal contracts. Higher WSCB NGL margins resulting from higher marketed NGL volumes, combined with higher revenue on the Peace Pipeline system and Nipisi Pipeline, further contributed to the increase in adjusted EBITDA. These results were partially offset by lower tolls on new contracts on the Cochin Pipeline, lower realized gains on commodity-related derivatives, lower NGL margins from Aux Sable due to higher input natural gas prices, and lower revenue at the Edmonton Terminals. | |||||||
(1) Refer to the "Non-GAAP & Other Financial Measures" section of this MD&A.
6 Pembina Pipeline Corporation Second Quarter 2025
3. SEGMENT RESULTS
Business Overview
The Pipelines Division provides customers with pipeline transportation, terminalling, and storage in key market hubs in Canada and the United States for crude oil, condensate, natural gas liquids and natural gas. The Pipelines Division manages pipeline transportation capacity of 3.0 mmboe/d(1) and above ground storage capacity of approximately 10 mmbbls(1) within its conventional, oil sands and heavy oil, and transmission assets. The conventional assets include strategically located pipelines and terminalling hubs that gather and transport light and medium crude oil, condensate and natural gas liquids from western Alberta and northeast British Columbia to downstream pipelines and processing facilities in the Edmonton, Alberta area. The oil sands and heavy oil assets transport heavy and synthetic crude oil produced within Alberta to the Edmonton, Alberta area and offer associated storage and terminalling. The transmission assets transport natural gas, ethane and condensate throughout Canada and the United States on long haul pipelines linking various key market hubs. In addition, the Pipelines Division assets provide linkages to Pembina's Facilities Division assets across North America, enhancing flexibility and optionality in our customer service offerings. Together, these assets supply products from hydrocarbon producing regions to refineries, fractionators and market hubs in Alberta, British Columbia, and Illinois, as well as other regions throughout North America.
The Facilities Division includes infrastructure that provides Pembina's customers with natural gas, condensate and NGL services. Through its wholly-owned assets and its interest in PGI, Pembina's natural gas gathering and processing facilities are strategically positioned in active, liquids-rich areas of the WCSB and Williston Basin and may be serviced by the Company's other businesses. Pembina provides sweet and sour gas gathering, compression, condensate stabilization, and both shallow cut and deep cut gas processing services with a total capacity of approximately 6.7 bcf/d(1) for its customers. Condensate and NGL extracted at virtually all Canadian-based facilities have access to transportation on Pembina's pipelines. In addition, all NGL transported along the Alliance Pipeline are extracted through the Channahon Facility at the terminus. The Facilities Division includes approximately 430 mbpd(1) of NGL fractionation capacity, 21 mmbbls(1) of cavern storage capacity, various oil batteries, associated pipeline and rail terminalling facilities and a liquefied propane export facility on Canada's West Coast. These facilities are accessible to Pembina's other strategically-located assets and pipeline systems, providing customers with flexibility and optionality to access a comprehensive suite of services to enhance the value of their hydrocarbons. In addition, Pembina owns a bulk marine import/export terminal in Vancouver, British Columbia.
The Marketing & New Ventures Division leverages Pembina's integrated value chain and existing network of pipelines, facilities, and energy infrastructure assets to maximize the value of hydrocarbon liquids and natural gas originating in the basins where the Company operates. Pembina pursues the creation of new markets, and further enhances existing markets, to support both the Company's and its customers' business interests. In particular, Pembina seeks to identify opportunities to connect hydrocarbon production to new demand locations through the development of infrastructure.
Within the Marketing & New Ventures Division, Pembina undertakes value-added commodity marketing activities, including buying and selling products (natural gas, ethane, propane, butane, condensate, crude oil, electricity, and carbon credits), commodity arbitrage, and optimizing storage opportunities. The marketing business enters into contracts for capacity on both Pembina's and third-party infrastructure, handles proprietary and customer volumes and aggregates production for onward sale. Through this infrastructure capacity, including Pembina's Prince Rupert Terminal, as well as utilizing the Company's expansive rail fleet and logistics capabilities, Pembina's marketing business adds incremental value to the commodities by accessing high value markets across North America and globally.
The Marketing & New Ventures Division is also responsible for the development of new large-scale, or value chain extending projects, including those that seek to provide enhanced access to global markets and to support a transition to a lower-carbon economy. The Marketing & New Ventures Division includes Pembina's interest in the Cedar LNG project, a liquified natural gas ("LNG") export facility currently under construction (the "Cedar LNG Project"). Additionally, Pembina is pursuing opportunities associated with low-carbon commodities and large-scale greenhouse gas ("GHG") emissions reductions.
(1)Net capacity.
Pembina Pipeline Corporation Second Quarter 2025 7
Financial and Operational Overview by Division
| 3 Months Ended June 30 | ||||||||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||||||||
($ millions, except where noted) | Volumes(1) | Earnings (Loss) | Adjusted EBITDA(2) | Volumes(1) | Earnings (Loss) | Adjusted EBITDA(2) | ||||||||||||||||||||||||||
| Pipelines | 2,768 | 473 | 646 | 2,716 | 485 | 655 | ||||||||||||||||||||||||||
| Facilities | 826 | 142 | 331 | 855 | 181 | 340 | ||||||||||||||||||||||||||
Marketing & New Ventures | 302 | 114 | 74 | 319 | 135 | 143 | ||||||||||||||||||||||||||
| Corporate | — | (196) | (38) | — | (828) | (47) | ||||||||||||||||||||||||||
| Income tax (recovery) expense | — | (116) | — | — | 506 | — | ||||||||||||||||||||||||||
| Total | 417 | 1,013 | 479 | 1,091 | ||||||||||||||||||||||||||||
| 6 Months Ended June 30 | ||||||||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||||||||
($ millions, except where noted) | Volumes(1) | Earnings (Loss) | Adjusted EBITDA(2) | Volumes(1) | Earnings (Loss) | Adjusted EBITDA(2) | ||||||||||||||||||||||||||
| Pipelines | 2,789 | 991 | 1,323 | 2,657 | 940 | 1,254 | ||||||||||||||||||||||||||
| Facilities | 861 | 326 | 676 | 830 | 358 | 650 | ||||||||||||||||||||||||||
Marketing & New Ventures | 335 | 274 | 284 | 307 | 199 | 331 | ||||||||||||||||||||||||||
| Corporate | — | (419) | (103) | — | (995) | (100) | ||||||||||||||||||||||||||
| Income tax (recovery) expense | — | (253) | — | — | 415 | — | ||||||||||||||||||||||||||
| Total | 919 | 2,180 | 917 | 2,135 | ||||||||||||||||||||||||||||
(1) Volumes in mboe/d. See the "Abbreviations" section of this MD&A for definition. Volumes for Pipelines and Facilities divisions are revenue volumes, which are physical volumes plus volumes recognized from take-or-pay commitments. Volumes for Marketing & New Ventures are marketed crude oil and NGL volumes.
(2) Refer to the "Non-GAAP & Other Financial Measures" section of this MD&A.
8 Pembina Pipeline Corporation Second Quarter 2025
Equity Accounted Investees Overview by Division
| 3 Months Ended June 30 | ||||||||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||||||||
| ($ millions, except where noted) | Share of profit | Adjusted EBITDA(4) | Contributions | Distributions | Volumes(5) | Share of profit (loss) | Adjusted EBITDA(4) | Contributions | Distributions | Volumes(5) | ||||||||||||||||||||||
Pipelines(1) | — | 1 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
Facilities(2) | 46 | 173 | 82 | 136 | 344 | 63 | 174 | — | 123 | 354 | ||||||||||||||||||||||
Marketing & New Ventures(3) | 28 | — | 44 | — | — | (2) | — | 144 | — | — | ||||||||||||||||||||||
| Total | 74 | 174 | 126 | 136 | 344 | 61 | 174 | 144 | 123 | 354 | ||||||||||||||||||||||
| 6 Months Ended June 30 | ||||||||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||||||||
| ($ millions, except where noted) | Share of profit (loss) | Adjusted EBITDA(4) | Contributions | Distributions | Volumes(5) | Share of profit | Adjusted EBITDA(4) | Contributions | Distributions | Volumes(5) | ||||||||||||||||||||||
Pipelines(1) | 1 | 3 | — | — | — | 43 | 87 | 5 | 80 | 74 | ||||||||||||||||||||||
Facilities(2) | 111 | 350 | 124 | 268 | 355 | 138 | 349 | — | 251 | 357 | ||||||||||||||||||||||
Marketing & New Ventures(3) | (8) | (2) | 52 | — | — | 31 | 40 | 242 | 31 | 18 | ||||||||||||||||||||||
| Total | 104 | 351 | 176 | 268 | 355 | 212 | 476 | 247 | 362 | 449 | ||||||||||||||||||||||
(1) Pipelines includes Grand Valley in both the three and six month periods ended June 30, 2025 and 2024. In addition, Alliance is included in the three month results for 2024, reflecting its contribution during the period. Pembina owned a 50 percent interest in Alliance up to the closing of the acquisition on April 1, 2024. The results of Alliance following closing of the acquisition are fully consolidated and incorporated into Pembina's financial results. See Note 3 to the Interim Financial Statements.
(2) Facilities includes PGI and Fort Corp.
(3) Marketing and New Ventures includes Greenlight in 2025, Cedar LNG and ACG in both the three and six month periods ended June 30, 2025 and 2024, and Aux Sable in the three month results for 2024, reflecting its contribution during the period. Pembina owned approximately a 42.7 percent interest in Aux Sable's U.S operations and a 50 percent interest in Aux Sable's Canadian operations up to the closing of the acquisition on April 1, 2024. The results of Aux Sable following closing of the acquisition are fully consolidated and incorporated into Pembina's financial results. See Note 3 to the Interim Financial Statements.
(4) Refer to the "Non-GAAP & Other Financial Measures" section of this MD&A.
(5) Volumes in mboe/d. See the "Abbreviations" section of this MD&A for definition.
Refer to the "Segment Results – Changes in Results" sections of this MD&A under each of the divisions for additional information.
For the three and six months ended June 30, 2025, contributions in the Facilities Division were made to PGI to partially fund growth capital projects. Contributions in Marketing & New Ventures in both 2025 and 2024 were made to Cedar LNG to fund the Cedar LNG Project. Refer to the "Segment Results – Marketing & New Ventures Division – Projects & New Developments" sections of this MD&A for additional information.
Pembina Pipeline Corporation Second Quarter 2025 9
Pipelines
Financial Overview for the Three Months Ended June 30
Results of Operations
| ($ millions, except where noted) | 2025 | 2024 | Change | |||||||||||
Pipelines revenue(1) | 874 | 890 | (16) | |||||||||||
Cost of goods sold(1) | 14 | 15 | (1) | |||||||||||
Net revenue(1)(2) | 860 | 875 | (15) | |||||||||||
Operating expenses(1) | 198 | 203 | (5) | |||||||||||
| Depreciation and amortization included in gross profit | 165 | 164 | 1 | |||||||||||
| Gross profit | 497 | 508 | (11) | |||||||||||
| Earnings | 473 | 485 | (12) | |||||||||||
Adjusted EBITDA(2) | 646 | 655 | (9) | |||||||||||
Volumes(3) | 2,768 | 2,716 | 52 | |||||||||||
| Change in Results | ||||||||
Net revenue(1)(2) | Decrease largely due to lower tolls on new contracts on the Cochin Pipeline, which replaced long-term contracts that expired in mid-July 2024 ($33 million), lower revenue at the Edmonton Terminals largely related to the decommissioning of the Edmonton South Rail Terminal in the second quarter of 2024, as well as lower volumes and tolls on the Vantage Pipeline. These decreases were partially offset by higher demand on seasonal contracts on the Alliance Pipeline, combined with higher revenue on the Peace Pipeline system due to fewer outages in the second quarter of 2025 compared to the same period in 2024 which was impacted by planned outages for the Phase VIII Peace Pipeline Expansion, as well as higher contracted volumes. Additionally, higher contracted volumes on the Nipisi Pipeline, and increased tolls on the Peace Pipeline system primarily due to contractual inflation adjustments, contributed to higher net revenue. | |||||||
| Earnings | Decrease largely due to lower net revenue impacted by the same factors discussed above. | |||||||
Adjusted EBITDA(2) | Decrease largely due to lower net revenue impacted by the same factors discussed above. | |||||||
Volumes(3) | Higher largely due to increased contracted volumes on the Peace Pipeline system and Nipisi Pipeline, fewer outages on the Peace Pipeline system in the second quarter of 2025 compared to the same period in 2024 which was impacted by planned outages for the Phase VIII Peace Pipeline Expansion, combined with higher demand on seasonal contracts on the Alliance Pipeline, which was partially offset by third-party restrictions and planned outages at the Channahon Facility. Additionally, lower volumes on AEGS due to restrictions from third-party outages in the second quarter of 2025, and lower interruptible volumes on the Vantage Pipeline contributed to a decrease in total Pipeline volumes. | |||||||
Change in Adjusted EBITDA ($ millions)(1)(2)
(1) Includes inter-segment transactions. See Note 4 to the Interim Financial Statements.
(2) Refer to the "Non-GAAP & Other Financial Measures" section of this MD&A.
(3) Revenue volumes in mboe/d. See the "Abbreviations" section of this MD&A for definition.
10 Pembina Pipeline Corporation Second Quarter 2025
Financial Overview for the Six Months Ended June 30
Results of Operations
| ($ millions, except where noted) | 2025 | 2024 | Change | |||||||||||
Pipelines revenue(1) | 1,768 | 1,578 | 190 | |||||||||||
Cost of goods sold(1) | 27 | 26 | 1 | |||||||||||
Net revenue(1)(2) | 1,741 | 1,552 | 189 | |||||||||||
Operating expenses(1) | 383 | 357 | 26 | |||||||||||
| Depreciation and amortization included in gross profit | 316 | 259 | 57 | |||||||||||
| Share of profit from equity accounted investees | 1 | 43 | (42) | |||||||||||
| Gross profit | 1,043 | 979 | 64 | |||||||||||
| Earnings | 991 | 940 | 51 | |||||||||||
Adjusted EBITDA(2) | 1,323 | 1,254 | 69 | |||||||||||
Volumes(3) | 2,789 | 2,657 | 132 | |||||||||||
| Change in Results | ||||||||
Net revenue(1)(2) | Higher largely due to Pembina acquiring a controlling ownership interest in Alliance on April 1, 2024, and higher demand on seasonal contracts on the Alliance Pipeline. Also contributing to the increase were higher volumes on the Peace Pipeline system due to fewer outages in the 2025 period compared to the 2024 period which was impacted by planned outages for the Phase VIII Peace Pipeline Expansion, higher contracted volumes on the Peace Pipeline system and Nipisi Pipeline, higher tolls on the Peace Pipeline system mainly related to contractual inflation adjustments, and favourable U.S. dollar foreign exchange rate impacts on certain assets. These increases were partially offset by lower net revenue on the Cochin Pipeline ($70 million) due to lower tolls on new contracts, which replaced long-term contracts that expired in mid-July 2024. In addition, lower volumes and tolls on the Vantage Pipeline, lower revenue at the Edmonton Terminals largely related to the decommissioning of the Edmonton South Rail Terminal in the second quarter of 2024, and lower recoverable power costs, contributed to the offsetting decrease to net revenue. | |||||||
Operating expenses(1) | Increase largely due to Pembina acquiring a controlling ownership interest in Alliance on April 1, 2024, as well as higher environmental costs in the current period, as the 2024 period included a recovery related to the Northern Pipeline system outage. These increases were partially offset by lower recoverable power costs resulting from a lower power pool price during the 2025 period. | |||||||
Depreciation and amortization included in gross profit | Higher largely due to Pembina acquiring a controlling ownership interest in Alliance on April 1, 2024, combined with new assets placed into service in the second and fourth quarters of 2024. | |||||||
Share of profit from equity accounted investees | Following Pembina acquiring a controlling ownership interest in Alliance on April 1, 2024, the results from Alliance are no longer accounted for in share of profit and are fully consolidated. | |||||||
| Earnings | Higher largely due to the net impacts of Pembina acquiring a controlling ownership interest in Alliance on April 1, 2024 and higher seasonal revenue on the Alliance Pipeline, combined with higher revenue on the Peace Pipeline system and Nipisi Pipeline, and favourable foreign exchange rate impacts on certain assets. These factors were partially offset by lower tolls on new contracts on the Cochin Pipeline, and lower revenue on the Vantage Pipeline and at the Edmonton South Terminal. | |||||||
Adjusted EBITDA(2) | Increase largely due to the same factors impacting earnings, discussed above. | |||||||
Volumes(3) | Higher largely due to Pembina acquiring a controlling ownership interest in Alliance on April 1, 2024, and higher demand on seasonal contracts on the Alliance Pipeline, which was partially offset by third-party restrictions and planned outages at the Channahon Facility. Additionally, higher contracted volumes on the Peace Pipeline system and the Nipisi Pipeline, and fewer outages on the Peace Pipeline system in the second quarter of 2025 compared to the same period in 2024 which was impacted by planned outages for the Phase VIII Peace Pipeline Expansion, contributed to the increase in volumes. | |||||||
Change in Adjusted EBITDA ($ millions)(1)(2)
(1) Includes inter-segment transactions. See Note 4 to the Interim Financial Statements.
(2) Refer to the "Non-GAAP & Other Financial Measures" section of this MD&A.
(3) Revenue volumes in mboe/d. See the "Abbreviations" section of this MD&A for definition.
Pembina Pipeline Corporation Second Quarter 2025 11
Financial and Operational Overview
| 3 Months Ended June 30 | 6 Months Ended June 30 | |||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||||||||
| ($ millions, except where noted) | Volumes(1) | Earnings | Adjusted EBITDA(2) | Volumes(1) | Earnings | Adjusted EBITDA(2) | Volumes(1) | Earnings | Adjusted EBITDA(2) | Volumes(1) | Earnings | Adjusted EBITDA(2) | ||||||||||||||||||||||||||
Pipelines(3) | ||||||||||||||||||||||||||||||||||||||
| Conventional | 1,006 | 298 | 358 | 969 | 269 | 338 | 1,020 | 598 | 709 | 988 | 564 | 679 | ||||||||||||||||||||||||||
| Transmission | 722 | 143 | 223 | 726 | 177 | 244 | 731 | 326 | 484 | 657 | 296 | 433 | ||||||||||||||||||||||||||
| Oil Sands & Heavy Oil | 1,040 | 32 | 65 | 1,021 | 39 | 73 | 1,038 | 67 | 130 | 1,012 | 80 | 142 | ||||||||||||||||||||||||||
| Total | 2,768 | 473 | 646 | 2,716 | 485 | 655 | 2,789 | 991 | 1,323 | 2,657 | 940 | 1,254 | ||||||||||||||||||||||||||
(1) Revenue volumes in mboe/d. See the "Abbreviations" section of this MD&A for definition.
(2) Refer to the "Non-GAAP & Other Financial Measures" section of this MD&A.
(3) Includes values attributed to Pembina's conventional, transmission and oil sands and heavy oil assets within the Pipelines Division. Refer to Pembina's AIF for the year ended December 31, 2024.
Projects & New Developments(1)
The following outlines the projects and new developments that have recently come into service within Pipelines:
| Significant Projects | In-service Date | ||||
Phase VIII Peace Pipeline Expansion | May 2024 | ||||
| NEBC MPS Expansion | November 2024 | ||||
(1) For further details on Pembina's significant assets, including definitions for capitalized terms used herein that are not otherwise defined, refer to Pembina's AIF for the year ended December 31, 2024 filed at www.sedarplus.ca (filed with the U.S. Securities and Exchange Commission at www.sec.gov under Form 40-F) and on Pembina's website at www.pembina.com.
Pembina is advancing more than $1.0 billion of conventional NGL and condensate pipeline expansions to reliably and cost-effectively meet rising transportation demand from growing production in the WCSB. Pembina's outlook for volume growth is secured by long-term contracts underpinned by take-or-pay agreements, areas of dedication across the Montney and Duvernay formations, and other long-term agreements that ensure a strong base of committed volumes. The potential expansions under development include:
•Taylor-to-Gordondale Project - a new approximately 89 kilometer, 16-inch pipeline proposed by Pouce Coupé Pipe Line Ltd. (a subsidiary of Pembina) connecting mostly condensate volumes from Taylor, British Columbia to the Gordondale, Alberta area. Engineering activities are continuing and subject to regulatory and board approval, Pembina expects to move forward with this expansion. A final investment decision is anticipated in the first quarter of 2026.
•Fox Creek-to-Namao Expansion - an expansion of the Peace Pipeline system that, through the addition of new pump stations, would add approximately 70,000 bpd of propane-plus capacity to the market delivery pipelines from Fox Creek, Alberta to Namao, Alberta. Engineering and regulatory activities are progressing and subject to regulatory and board approval, Pembina expects to move forward with this expansion. A final investment decision is expected by the end of 2025.
•Pembina is also evaluating and engineering further expansions to support volume growth in northeast British Columbia, including new pipelines and terminal upgrades.
12 Pembina Pipeline Corporation Second Quarter 2025
Facilities
Financial Overview for the Three Months Ended June 30
Results of Operations
| ($ millions, except where noted) | 2025 | 2024 | Change | |||||||||||
Facilities revenue(1) | 295 | 294 | 1 | |||||||||||
Operating expenses(1) | 133 | 123 | 10 | |||||||||||
Depreciation and amortization included in gross profit | 59 | 45 | 14 | |||||||||||
Share of profit from equity accounted investees | 46 | 63 | (17) | |||||||||||
| Gross profit | 149 | 189 | (40) | |||||||||||
| Earnings | 142 | 181 | (39) | |||||||||||
Adjusted EBITDA(2) | 331 | 340 | (9) | |||||||||||
Volumes(3) | 826 | 855 | (29) | |||||||||||
| Changes in Results | ||||||||
Revenue(1) | Consistent with prior period. The Redwater Complex had higher operating recoveries at the fractionation facilities in the second quarter of 2025, which were largely offset by the impact of a planned outage related to an asset upgrade. | |||||||
Operating expenses(1) | Increase largely due to higher integrity spending at the Redwater Complex. | |||||||
| Depreciation and amortization included in gross profit | Increase primarily due to an asset upgrade and associated retirement at the Redwater Complex in the second quarter of 2025, resulting in a planned outage during the same period. | |||||||
Share of profit from equity accounted investees | Decrease due to lower earnings from PGI as a result of higher depreciation expense resulting from a larger asset base following the recent transactions with Whitecap Resources Inc. ("Whitecap") combined with asset upgrades and associated retirements, unrealized losses on commodity-related derivatives compared to gains in the second quarter in 2024, and lower volumes due to planned outages at certain PGI assets in the second quarter of 2025 and on-going third-party restrictions impacting the Dawson Assets. These factors were partially offset by gains recognized by PGI on interest rate derivative financial instruments compared to losses in the second quarter of 2024, and higher revenue from PGI assets related to the transactions with Whitecap. | |||||||
| Earnings | Decrease largely due to lower share of profit from PGI and an asset upgrade and associated retirement at the Redwater Complex. | |||||||
Adjusted EBITDA(2) | Consistent with prior period. Lower volumes due to planned outages at certain PGI assets in the second quarter of 2025 and on-going third-party restrictions impacting the Dawson Assets, were largely offset by higher revenue from PGI assets related to the transactions discussed above. Included in adjusted EBITDA is $171 million (2024: $172 million) related to PGI. | |||||||
Volumes(3) | Decrease is primarily attributed to third-party restrictions and planned outages at the Channahon Facility, planned outages at certain PGI assets, combined with higher outage days at the Redwater Complex compared to the second quarter of 2024 due to an asset upgrade, and third-party restrictions impacting the Dawson Assets. Volumes include 344 mboe/d (2024: 354 mboe/d) related to PGI. | |||||||
Change in Adjusted EBITDA ($ millions)(1)(2)
(1) Includes inter-segment transactions. See Note 4 to the Interim Financial Statements.
(2) Refer to the "Non-GAAP & Other Financial Measures" section of this MD&A.
(3) Revenue volumes in mboe/d. See the "Abbreviations" section of this MD&A for definition.
Pembina Pipeline Corporation Second Quarter 2025 13
Financial Overview for the Six Months Ended June 30
Results of Operations
($ millions, except where noted) | 2025 | 2024 | Change | |||||||||||
Facilities revenue(1) | 602 | 525 | 77 | |||||||||||
Operating expenses(1) | 266 | 213 | 53 | |||||||||||
Depreciation and amortization included in gross profit | 104 | 78 | 26 | |||||||||||
Share of profit from equity accounted investees | 111 | 138 | (27) | |||||||||||
| Gross profit | 343 | 372 | (29) | |||||||||||
| Earnings | 326 | 358 | (32) | |||||||||||
Adjusted EBITDA(2) | 676 | 650 | 26 | |||||||||||
Volumes(3) | 861 | 830 | 31 | |||||||||||
| Changes in Results | ||||||||
Revenue(1) | Increase largely due to Pembina acquiring a controlling ownership interest in Aux Sable on April 1, 2024, combined with higher operating recoveries at the fractionation facilities within the Redwater Complex in the 2025 period, partially offset by the impact of a planned outage at the Redwater Complex related to an asset upgrade. | |||||||
Operating expenses(1) | Increase largely due to Pembina acquiring a controlling ownership interest in Aux Sable on April 1, 2024, combined with higher integrity spending at the Redwater Complex. | |||||||
| Depreciation and amortization included in gross profit | Higher largely due to Pembina acquiring a controlling ownership interest in Aux Sable on April 1, 2024, combined with an asset upgrade and associated retirement at the Redwater Complex in the second quarter of 2025, resulting in a planned outage during the same period. | |||||||
Share of profit from equity accounted investees | Decrease due to lower earnings from PGI as a result of higher depreciation expense resulting from a larger asset asset base following the transactions with Whitecap combined with asset upgrades and associated retirements, unrealized losses on interest rate derivative financial instruments recognized in the 2025 period compared to gains in the 2024 period, as well as lower volumes as a result of planned outages at certain PGI assets in the second quarter of 2025 and on-going third-party restrictions impacting the Dawson Assets. These factors were partially offset by higher contributions from PGI assets related to the transactions with Whitecap. | |||||||
| Earnings | Decrease primarily due to lower share of profit from PGI, higher depreciation expense, and lower revenue at the Redwater Complex due to a planned outage, discussed above. This was partially offset by the net impacts of Pembina acquiring a controlling ownership interest in Aux Sable on April 1, 2024. | |||||||
Adjusted EBITDA(2) | Increase primarily due to the net impacts of Pembina acquiring a controlling ownership interest in Aux Sable on April 1, 2024, partially offset by lower revenue at the Redwater Complex due to a planned outage, discussed above. Included in adjusted EBITDA is $346 million (2024: $346 million) related to PGI with higher contributions as a result of the transactions with Whitecap, largely offset by planned outages at certain PGI assets in the second quarter of 2025 and on-going third-party restrictions impacting the Dawson Assets. | |||||||
Volumes(3) | Higher largely due to Pembina acquiring a controlling ownership interest in Aux Sable on April 1, 2024. This is partially offset by third-party restrictions and planned outages at the Channahon Facility, planned outages at certain PGI assets, higher outage days at the Redwater Complex compared to 2024 due to an asset upgrade, and on-going third-party restrictions impacting the Dawson Assets. Volumes include 355 mboe/d (2024: 357 mboe/d) related to PGI. | |||||||
Change in Adjusted EBITDA ($ millions)(1)(2)
(1) Includes inter-segment transactions. See Note 4 to the Interim Financial Statements.
(2) Refer to the "Non-GAAP & Other Financial Measures" section of this MD&A.
(3) Revenue volumes in mboe/d. See the "Abbreviations" section of this MD&A for definition.
14 Pembina Pipeline Corporation Second Quarter 2025
Financial and Operational Overview
| 3 Months Ended June 30 | 6 Months Ended June 30 | |||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||||||||
| ($ millions, except where noted) | Volumes(1) | Earnings | Adjusted EBITDA(2) | Volumes(1) | Earnings | Adjusted EBITDA(2) | Volumes(1) | Earnings | Adjusted EBITDA(2) | Volumes(1) | Earnings | Adjusted EBITDA(2) | ||||||||||||||||||||||||||
Facilities(3) | ||||||||||||||||||||||||||||||||||||||
| Gas Services | 590 | 67 | 201 | 599 | 83 | 200 | 604 | 151 | 404 | 606 | 175 | 401 | ||||||||||||||||||||||||||
| NGL Services | 236 | 75 | 130 | 256 | 98 | 140 | 257 | 175 | 272 | 224 | 183 | 249 | ||||||||||||||||||||||||||
| Total | 826 | 142 | 331 | 855 | 181 | 340 | 861 | 326 | 676 | 830 | 358 | 650 | ||||||||||||||||||||||||||
(1) Revenue volumes in mboe/d. See the "Abbreviations" section of this MD&A for definition.
(2) Refer to the "Non-GAAP & Other Financial Measures" section of this MD&A.
(3) Includes values attributed to Pembina's gas services and NGL services assets within the Facilities operating segment. For a description of Pembina's gas and NGL assets, refer to Pembina's AIF for the year ended December 31, 2024.
Projects & New Developments(1)
Facilities continues to grow its natural gas and NGL processing and fractionation assets to service customer demand. The following outlines the projects and new developments within Facilities:
| RFS IV | ||||||||
Capital Budget: $525 million | ||||||||
Revised Capital Cost: $500 million | In-service Date(2): First half of 2026 | Status: On time, trending under budget | ||||||
RFS IV is a 55,000 bpd propane-plus fractionator at the existing Redwater fractionation and storage complex (the "Redwater Complex"). The project includes additional rail loading capacity and will leverage the design, engineering, and operating best practices of the existing facilities at the Redwater Complex. With the addition of RFS IV, the fractionation capacity at the Redwater Complex will total 256,000 bpd. Pembina has entered into a lump-sum engineering, procurement and construction agreement in respect of the project, for more than 70 percent of the project cost. Engineering, procurement, and fabrication is substantially complete, while field construction has progressed to approximately 50 percent complete. | ||||||||
| Wapiti Expansion | ||||||||
Capital Budget: $140 million (net to Pembina) | In-service Date(2): First half of 2026 | Status: On time, on budget | ||||||
PGI is developing an expansion that will increase natural gas processing capacity at the Wapiti Plant by 115 mmcf/d (gross to PGI). The expansion opportunity is driven by strong customer demand supported by growing Montney production and is fully underpinned by long-term, take-or-pay contracts. The project includes a new sales gas pipeline and other related infrastructure. During the second quarter of 2025, construction activities, including tie-ins, progressed. | ||||||||
| K3 Cogeneration Facility | ||||||||
Capital Budget: $70 million (net to Pembina) | In-service Date(2): First half of 2026 | Status: On time, on budget | ||||||
PGI is developing a 28 MW cogeneration facility at its K3 Plant, which is expected to reduce overall operating costs by providing power and heat to the gas processing facility, while reducing customers' exposure to power prices. The K3 Cogeneration Facility is expected to fully supply the K3 Plant's power requirements, with excess power sold to the grid at market rates. Further, through the utilization of the cogeneration waste heat and the low-emission power generated, the project is expected to contribute to a reduction in annual emissions compliance costs at the K3 Plant. During the second quarter of 2025, engineering work was completed and construction activities progressed. | ||||||||
(1) For further details on Pembina's significant assets, including definitions for capitalized terms used herein that are not otherwise defined, refer to Pembina's AIF for the year ended December 31, 2024 filed at www.sedarplus.ca (filed with the U.S. Securities and Exchange Commission at www.sec.gov under Form 40-F) and on Pembina's website at www.pembina.com.
(2) Subject to environmental and regulatory approvals. See the "Forward-Looking Statements & Information" section of this MD&A.
Pembina Pipeline Corporation Second Quarter 2025 15
Pursuant to an agreement with Whitecap, PGI has committed to support infrastructure development in the Lator area, including a new battery and gathering laterals (the "Lator Infrastructure"), which PGI will own. PGI anticipates funding up to $400 million ($240 million net to Pembina) for the battery and gathering laterals within the first phase of the Lator Infrastructure development, with all gas volumes flowing to PGI's Musreau facility upon startup, which is expected in late 2026/early 2027, supporting long-term plant utilization. During the first half of 2025, detailed engineering advanced and long-lead equipment was ordered.
Pursuant to an agreement with Whitecap, PGI has committed to fund capital up to $300 million ($180 million net to Pembina) for battery and gathering infrastructure in the Gold Creek and Karr areas. During the first half of 2025, construction for the pipeline progressed, detailed engineering advanced and long-lead equipment was ordered related to the battery.
PGI has entered into an agreement with a Montney producer to fund and acquire an under-construction battery and additional infrastructure (the "North Gold Creek Battery") in the Wapiti/North Gold Creek Montney area for a capital commitment up to $150 million ($90 million net to Pembina). The North Gold Creek Battery will be operated by the producer and highly contracted under a long-term, take-or-pay agreement. The expected in-service date of the North Gold Creek Battery is the second quarter of 2026.
16 Pembina Pipeline Corporation Second Quarter 2025
Marketing & New Ventures
Financial Overview for the Three Months Ended June 30
Results of Operations
| ($ millions, except where noted) | 2025 | 2024 | Change | |||||||||||
Marketing revenue(1) | 883 | 925 | (42) | |||||||||||
Cost of goods sold(1) | 761 | 796 | (35) | |||||||||||
Net revenue(1)(2) | 122 | 129 | (7) | |||||||||||
Operating expenses(1) | 9 | 4 | 5 | |||||||||||
| Depreciation and amortization included in gross profit | 17 | 17 | — | |||||||||||
| Share of profit (loss) from equity accounted investees | 28 | (2) | 30 | |||||||||||
| Gross profit | 124 | 106 | 18 | |||||||||||
| Earnings | 114 | 135 | (21) | |||||||||||
Adjusted EBITDA(2) | 74 | 143 | (69) | |||||||||||
Crude oil sales volumes(3) | 95 | 100 | (5) | |||||||||||
NGL sales volumes(3) | 207 | 219 | (12) | |||||||||||
| Change in Results | ||||||||
Net revenue(1)(2) | Lower net revenue from contracts with customers was largely due to a decrease in NGL margins as a result of lower butane and propane prices, coupled with lower volumes resulting from third-party restrictions and planned outages, as discussed below, as well as higher input natural gas prices at Aux Sable. Higher revenue from risk management and physical derivative contracts, resulting from lower unrealized losses on renewable power purchase agreements, unrealized gains on NGL-based derivatives compared to losses in the second quarter of 2024, and lower realized losses on NGL-based derivatives. These results were partially offset by lower unrealized and realized gains on crude oil-based derivatives. The second quarter of 2025 includes unrealized gains on commodity-related derivatives of $31 million (2024: $45 million loss) and realized gains on commodity-related derivatives of $38 million (2024: $74 million gain). | |||||||
| Share of profit (loss) from equity accounted investees | The share of profit in the second quarter of 2025 primarily relates to unrealized foreign exchange gains recognized by Cedar LNG on U.S. dollar denominated debt. | |||||||
| Earnings | Decrease primarily due to lower NGL margins and volumes, as well as no similar gain to that recognized in the second quarter of 2024 associated with the derecognition of the provision related to financial assurances provided by Pembina which were assumed by Cedar LNG following the positive final investment decision in June 2024. These decreases were partially offset by higher revenue from risk management and physical derivative contracts as well as higher share of profit from Cedar LNG, discussed above. | |||||||
Adjusted EBITDA(2) | Decrease largely due to lower NGL margins and volumes, lower realized gains on crude-oil based derivatives, partially offset by lower realized losses on NGL-based derivatives. | |||||||
NGL sales volumes(3) | Decrease primarily driven by lower supply volumes from the Channahon Facility and Redwater Complex, resulting from third-party restrictions at the Channahon Facility and outages at both facilities detailed in the "Segment Results - Facilities - Changes in Results" section of this MD&A. | |||||||
Change in Adjusted EBITDA ($ millions)(1)(2)
(1) Includes inter-segment transactions. See Note 4 to the Interim Financial Statements.
(2) Refer to the "Non-GAAP & Other Financial Measures" section of this MD&A.
(3) Marketed crude oil and NGL volumes in mboe/d. See the "Abbreviations" section of this MD&A for definition.
Pembina Pipeline Corporation Second Quarter 2025 17
Financial Overview for the Six Months Ended June 30
Results of Operations
| ($ millions, except where noted) | 2025 | 2024 | Change | |||||||||||
Marketing revenue(1) | 2,219 | 1,725 | 494 | |||||||||||
Cost of goods sold(1) | 1,858 | 1,547 | 311 | |||||||||||
Net revenue(1)(2) | 361 | 178 | 183 | |||||||||||
Operating expenses(1) | 17 | 8 | 9 | |||||||||||
| Depreciation and amortization included in gross profit | 37 | 32 | 5 | |||||||||||
| Share of (loss) profit from equity accounted investees | (8) | 31 | (39) | |||||||||||
| Gross profit | 299 | 169 | 130 | |||||||||||
| Earnings | 274 | 199 | 75 | |||||||||||
Adjusted EBITDA(2) | 284 | 331 | (47) | |||||||||||
Crude oil sales volumes(3) | 91 | 90 | 1 | |||||||||||
NGL sales volumes(3) | 244 | 217 | 27 | |||||||||||
| Change in Results | ||||||||
Net revenue(1)(2) | Higher net revenue from contracts with customers was largely due to Pembina acquiring a controlling ownership interest in Aux Sable on April 1, 2024, combined with higher WCSB NGL margins resulting from higher marketed NGL volumes. This is partially offset by a decrease in NGL margins from Aux Sable primarily due to higher input natural gas prices and lower volumes resulting from third-party restrictions and planned outages, as discussed below. Higher revenue from risk management and physical derivative contracts was primarily due to lower unrealized losses on renewable power purchase agreements largely due to improved forward power prices, unrealized gains on NGL-based derivative compared to losses in 2024, and lower unrealized losses on crude oil-based derivatives. These increases were partially offset by lower realized gains on crude oil-based derivatives. The 2025 period includes unrealized gains on commodity-related derivatives of $40 million (2024: $147 million loss) and realized gains on commodity-related derivatives of $59 million (2024: $119 million gain). | |||||||
| Share of (loss) profit from equity accounted investees | The share of loss in the 2025 period primarily relates to unrealized losses on interest rate derivative financial instruments recognized by Cedar LNG in the current period, which were entered into in the third quarter of 2024, largely offset by unrealized foreign exchange gains on U.S. dollar denominated debt. The share of profit in the 2024 period relates to the results from Aux Sable. Following Pembina acquiring a controlling ownership interest in Aux Sable on April 1, 2024, the results from Aux Sable are no longer accounted for in share of profit and are now being fully consolidated. | |||||||
| Earnings | Increase largely due to the net impacts of Pembina acquiring a controlling ownership interest in Aux Sable on April 1, 2024, higher revenue from risk management and physical derivative contracts, as well as higher WCSB NGL margins and NGL volumes. These increases were partially offset by a share of loss from Cedar LNG, lower NGL margins from Aux Sable, and no similar gain to that recognized in the 2024 period associated with the derecognition of the provision related to financial assurances provided by Pembina which were assumed by Cedar LNG following the positive final investment decision in June 2024. | |||||||
Adjusted EBITDA(2) | Decrease primarily due to lower realized gains on commodity-related derivatives and lower NGL margins from Aux Sable, partially offset by the net impacts of Pembina acquiring a controlling ownership interest in Aux Sable on April 1, 2024, as well as higher WCSB NGL margins and NGL volumes. | |||||||
NGL sales volumes(3) | Increase primarily due to higher ethane, propane, and butane sales largely due to the increase in Pembina's ownership interest in Aux Sable, partially offset by third-party restrictions at the Channahon Facility and outages at both the Channahon Facility and Redwater Complex detailed in the the "Segment Results - Facilities - Changes in Results" section of this MD&A. | |||||||
Change in Adjusted EBITDA ($ millions)(1)(2)(3)
(1) Includes inter-segment transactions. See Note 4 to the Interim Financial Statements.
(2) Refer to the "Non-GAAP & Other Financial Measures" section of this MD&A.
(3) Marketed crude oil and NGL volumes in mboe/d. See the "Abbreviations" section of this MD&A for definition.
18 Pembina Pipeline Corporation Second Quarter 2025
Financial and Operational Overview
| 3 Months Ended June 30 | 6 Months Ended June 30 | |||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||||||||
| ($ millions, except where noted) | Volumes(1) | Earnings | Adjusted EBITDA(2) | Volumes(1) | Earnings | Adjusted EBITDA(2) | Volumes(1) | Earnings (loss) | Adjusted EBITDA(2) | Volumes(1) | Earnings | Adjusted EBITDA(2) | ||||||||||||||||||||||||||
Marketing & New Ventures(3) | ||||||||||||||||||||||||||||||||||||||
| Marketing | 302 | 89 | 77 | 319 | 101 | 150 | 335 | 293 | 293 | 307 | 158 | 331 | ||||||||||||||||||||||||||
New Ventures(4) | — | 25 | (3) | — | 34 | (7) | — | (19) | (9) | — | 41 | — | ||||||||||||||||||||||||||
| Total | 302 | 114 | 74 | 319 | 135 | 143 | 335 | 274 | 284 | 307 | 199 | 331 | ||||||||||||||||||||||||||
(1) Marketed crude oil and NGL volumes in mboe/d. See the "Abbreviations" section of this MD&A for definition.
(2) Refer to the "Non-GAAP & Other Financial Measures" section of this MD&A.
(3) Includes values attributed to Pembina's marketing activities and new ventures projects within the Marketing & New Ventures operating segment. For further details on Pembina's marketing activities and projects, refer to Pembina's AIF for the year ended December 31, 2024.
(4) All New Ventures projects have not yet commenced operations and therefore have no volumes.
Projects & New Developments(1)
The New Ventures group is responsible for the development of new large-scale, or value chain extending projects, including those that provide enhanced access to global markets and support a transition to a lower-carbon economy.
| Cedar LNG | ||||||||
Capital Budget: U.S. $2 billion (net) | In-service Date: Late-2028 | Status: On time, on budget | ||||||
The Haisla Nation and Pembina are partners in Cedar LNG Partners LP ("Cedar LNG"), which is constructing the Cedar LNG Project, a floating liquefied natural gas ("LNG") facility with a nameplate capacity of 3.3 million tonnes per annum ("mtpa"), located in the traditional territory of the Haisla Nation, on Canada’s West Coast. The project is strategically positioned to leverage Canada's abundant natural gas supply and deliver a lower-carbon energy option to global markets. The facility will be powered by renewable electricity from BC Hydro, making it one of the lowest emitting LNG facilities in the world. During the second quarter, the project reached a major milestone as construction of the floating LNG vessel began with steel cutting on both the top side facilities and the vessel hull. Onshore activities are continuing. Marine terminal clearing, drainage, and erosion and sediment control work have been completed. Additionally, pipeline right of way clearing and road upgrades have been completed, and pipeline access and grading construction is progressing as planned. | ||||||||
| Cedar LNG has secured a 20-year take-or-pay, fixed toll contract with ARC Resources Ltd. ("ARC") for 1.5 mtpa of LNG. Pembina has also entered into an agreement with Cedar LNG for 1.5 mtpa of capacity on the same terms as ARC. Pembina continues to progress remarketing of its 1.5 mtpa of capacity to third parties and is advancing definitive agreement negotiations with an expectation to finalize these efforts by the end of 2025. | ||||||||
(1) For further details on Pembina's significant assets, including definitions for capitalized terms used herein that are not otherwise defined, refer to Pembina's AIF for the year ended December 31, 2024 filed at www.sedarplus.ca (filed with the U.S. Securities and Exchange Commission at www.sec.gov under Form 40-F) and on Pembina's website at www.pembina.com.
Pembina Pipeline Corporation Second Quarter 2025 19
Corporate and Income Tax
Financial Overview for the Three Months Ended June 30
Results of Operations
| ($ millions) | 2025 | 2024 | Change | |||||||||||
Revenue(1)(2) | 10 | 11 | (1) | |||||||||||
| General and administrative | 67 | 74 | (7) | |||||||||||
| Other (income) expense | (1) | 20 | (21) | |||||||||||
| Loss on acquisition | — | 616 | (616) | |||||||||||
| Net finance costs | 140 | 130 | 10 | |||||||||||
| Earnings (loss) | (196) | (828) | 632 | |||||||||||
Adjusted EBITDA(3) | (38) | (47) | 9 | |||||||||||
| Income tax expense (recovery) | 116 | (506) | 622 | |||||||||||
| Change in Results | ||||||||
| General and administrative | Consistent with prior period. Lower long-term incentives costs, driven by the change in Pembina's share price in the second quarter of 2025 compared to the second quarter of 2024, with no significant offsetting factors. | |||||||
| Other (income) expense | Decrease primarily due to lower acquisition fees and integration costs compared to those incurred in the prior period following Pembina acquiring a controlling ownership interest in Alliance and Aux Sable on April 1, 2024. | |||||||
| Loss on acquisition | In the second quarter of 2024, Pembina recognized a $616 million loss from the disposition of Pembina's previous investments in the Alliance, Aux Sable, and NRGreen joint ventures following the acquisition, offset by a $626 million deferred tax recovery recognized from the acquisition, resulting in a net gain of $10 million. | |||||||
| Net finance costs | Increase due to lower interest income, partially offset by reduced interest expense on long-term debt. | |||||||
| Earnings (loss) | Increase largely due to the loss on acquisition recognized in the second quarter of 2024 following Pembina acquiring a controlling ownership interest in Alliance and Aux Sable on April 1, 2024, combined with lower acquisition fees and integration costs compared to those incurred in the prior period, discussed above. | |||||||
Adjusted EBITDA(3) | Consistent with prior period. Increase due to the lower long-term incentives costs, with no significant offsetting factors. | |||||||
| Income tax expense (recovery) | Income tax expense in the current quarter is due to no similar deferred tax recovery of $626 million to that recognized in the second quarter of 2024 following Pembina acquiring a controlling ownership interest in Alliance and Aux Sable on April 1, 2024. | |||||||
(1) Excludes inter-segment eliminations.
(2) Fixed fee income related to shared service agreements with PGI.
(3) Refer to the "Non-GAAP & Other Financial Measures" section of this MD&A.
20 Pembina Pipeline Corporation Second Quarter 2025
Financial Overview for the Six Months Ended June 30
Results of Operations
| ($ millions) | 2025 | 2024 | Change | |||||||||||
Revenue(1)(2) | 22 | 23 | (1) | |||||||||||
General and administrative | 163 | 154 | 9 | |||||||||||
| Other expense | — | 22 | (22) | |||||||||||
| Loss on acquisition | — | 616 | (616) | |||||||||||
| Net finance costs | 279 | 228 | 51 | |||||||||||
| Earnings (loss) | (419) | (995) | 576 | |||||||||||
Adjusted EBITDA(3) | (103) | (100) | (3) | |||||||||||
| Income tax expense (recovery) | 253 | (415) | 668 | |||||||||||
| Change in Results | ||||||||
| General and administrative | Consistent with prior period. Minor increases in other general and administrative expenses, were largely offset by lower long-term incentives costs, driven by the change in Pembina's share price in the period compared to the same period in 2024. | |||||||
| Other expense | Decrease primarily due to lower acquisition fees and integration costs compared to those incurred in the prior period following Pembina acquiring a controlling ownership interest in Alliance and Aux Sable on April 1, 2024. | |||||||
| Loss on acquisition | In the second quarter of 2024, Pembina recognized a $616 million loss from the disposition of Pembina's previous investments in the Alliance, Aux Sable, and NRGreen joint ventures following the acquisition, offset by a $626 million deferred tax recovery recognized from the acquisition, resulting in a net gain of $10 million. | |||||||
| Net finance costs | Increase largely due to higher interest expense on long-term debt, resulting from a combination of both additional borrowing following Pembina acquiring a controlling ownership interest in Alliance and Aux Sable on April 1, 2024 and higher interest rates, as well as lower interest income. | |||||||
| Earnings (loss) | Increase largely due to the loss recognized in the second quarter of 2024 following Pembina acquiring a controlling ownership interest in Alliance and Aux Sable on April 1, 2024, combined with lower acquisition fees and integration costs, discussed above. | |||||||
Adjusted EBITDA(3) | Consistent with prior period. Minor increases in other general and administrative expenses, were largely offset by lower long-term incentives costs. | |||||||
| Income tax expense (recovery) | Income tax expense in the current period is due to no similar items to that recognized in the 2024 period including the deferred tax recovery of $626 million and an adjustment in the tax basis of an investment in partnership, combined with higher taxable earnings, resulting in an effective tax rate of 22 percent compared to 83 percent effective tax recovery rate in the 2024 period. | |||||||
(1) Excludes inter-segment eliminations.
(2) Fixed fee income related to shared service agreements with PGI.
(3) Refer to the "Non-GAAP & Other Financial Measures" section of this MD&A.
Pembina Pipeline Corporation Second Quarter 2025 21
4. LIQUIDITY & CAPITAL RESOURCES
Available Sources of Liquidity
($ millions) | June 30, 2025 | December 31, 2024 | ||||||
Working capital(1) | (403) | (1,335) | ||||||
Variable rate debt | ||||||||
Senior unsecured credit facilities(2) | 1,579 | 1,148 | ||||||
| Interest rate swapped debt | — | (360) | ||||||
Total variable rate loans and borrowings outstanding (weighted average interest rate of 4.8% (2024: 5.2%)) | 1,579 | 788 | ||||||
Fixed rate debt | ||||||||
| Senior unsecured medium-term notes | 10,350 | 10,900 | ||||||
| Interest rate swapped debt | — | 360 | ||||||
Total fixed rate loans and borrowings outstanding (weighted average interest rate of 4.5% (2024: 4.4%)) | 10,350 | 11,260 | ||||||
| Total loans and borrowings outstanding | 11,929 | 12,048 | ||||||
| Cash and unutilized debt facilities | 2,118 | 2,518 | ||||||
Subordinated hybrid notes (weighted average interest rate of 5.1% (2024: 4.8%)) | 800 | 600 | ||||||
(1) Current assets of $1.4 billion (December 31, 2024: $1.6 billion) less current liabilities of $1.8 billion (December 31, 2024: $2.9 billion). As at June 30, 2025, working capital included $597 million (December 31, 2024: $1.5 billion) associated with the current portion of long-term debt and $210 million (December 31, 2024: $141 million) in cash.
(2) Includes U.S. $250 million variable rate debt outstanding at June 30, 2025 (December 31, 2024: U.S. $250 million).
Pembina currently anticipates that its cash flow from operating activities, the majority of which is derived from fee-based contracts, will be more than sufficient to meet its operating obligations, to fund its dividends and to fund its capital expenditures in the short term and long term. Pembina expects to source funds required for debt maturities from cash, its credit facilities and by accessing the capital markets, as required. Based on its successful access to financing in the capital markets over the past several years, Pembina expects to continue to have access to additional funds as required. Refer to "Risk Factors – General Risk Factors – Additional Financing and Capital Resources" in Pembina's MD&A for the year ended December 31, 2024 and Note 24 to the Consolidated Financial Statements for more information. Management continues to monitor Pembina's liquidity and remains satisfied that the leverage employed in Pembina's capital structure is sufficient and appropriate given the characteristics and operations of the underlying asset base.
Management may adjust Pembina's capital structure as a result of changes in economic conditions or the risk characteristics of the underlying assets. To maintain or modify Pembina's capital structure in the future, Pembina may renegotiate debt terms, repay existing debt, seek new borrowings, issue additional equity or hybrid securities and/or repurchase or redeem additional common or preferred shares.
As at June 30, 2025, Pembina's credit facilities (collectively, the "Credit Facilities") consisted of: an unsecured $1.5 billion (December 31, 2024: $1.5 billion) revolving credit facility, which includes a $750 million (December 31, 2024: $750 million) accordion feature, which provides Pembina with the ability to increase the credit facility subject to lender approval, and matures in June 2029 (the "Revolving Facility"); an unsecured $1.0 billion (December 31, 2024: $1.0 billion) sustainability linked revolving credit facility, which matures in June 2027 (the "SLL Credit Facility"); an unsecured U.S. $250 million (December 31, 2024: U.S. $250 million) non-revolving term loan, which matures in April 2030; and an operating facility of $50 million (December 31, 2024: $50 million), which matures in June 2025 and is typically renewed on an annual basis. Additionally, Pembina's Credit Facilities includes a $270 million (December 31, 2024: $270 million) term loan and a U.S. $240 million (December 31, 2024: $240 million) term loan assumed from Alliance, which both mature in December 2025.
There are no mandatory principal repayments due over the term of the Credit Facilities. Pembina is required to meet certain specific and customary affirmative and negative financial covenants under the indenture governing its medium-term notes and the agreements governing its Credit Facilities, including a requirement to maintain certain financial ratios. See "Liquidity & Capital Resources – Covenants" below for more information.
22 Pembina Pipeline Corporation Second Quarter 2025
The SLL Credit Facility contains pricing adjustments that reduce or increase borrowing costs based on Pembina's performance relative to a GHG emissions intensity reduction performance target. Previously, Pembina announced its commitment to reduce its GHG emissions intensity by 30 percent by 2030, relative to baseline 2019 levels, which were revised following Pembina acquiring a controlling ownership interest in Alliance and Aux Sable on April 1, 2024. The specific terms of the SLL Credit Facility include annual intermediate targets that align with Pembina's trajectory towards its 2030 target.
Pembina is also subject to customary restrictions on its operations and activities under the indenture governing its medium-term notes and the agreements governing its Credit Facilities, including restrictions on the granting of security, incurring indebtedness and the sale of its assets.
With the exception of the sustainability-linked adjustments to borrowing costs, the terms and conditions of the SLL Credit Facility and the Revolving Facility, including financial covenants, are substantially similar to each other.
Financing Activity
On April 2, 2025, Pembina completed an extension on its unsecured U.S. $250 million non-revolving term loan, which now matures in April 2030.
On June 6, 2025, Pembina closed $200 million offering of Fixed-To-Fixed Rate Subordinated Hybrid Notes, Series 2 (the "Series 2 Subordinated Notes") due June 6, 2055. The Series 2 Subordinated Notes have a fixed 5.95 percent interest rate, which will reset on June 6, 2035, and on every fifth anniversary thereafter, based on the five-year Government of Canada yield plus 2.71 percent for the period from, and including, June 6, 2035 to, but excluding June 6, 2055. The interest rate during any subsequent fixed rate period will not be less than 5.95 percent. Pembina's Series 2 Subordinated Notes are subject to optional redemption by Pembina from March 6, 2035 to June 6, 2035 and after the initial interest reset date, on any interest payment date or any interest reset date, as applicable. Pembina may also redeem the Series 2 Subordinated Notes in certain other limited circumstances. Pembina used the net proceeds of the offering of the Series 2 Subordinated Notes to fund the redemption of its outstanding Cumulative Redeemable Minimum Rate Reset Class A Preferred Shares, Series 19 ("Series 19 Class A Preferred Shares") on June 30, 2025.
On July 23, 2025, Pembina announced the approval of amendments (the "Amendments") to the indenture governing the Series 1 Subordinated Notes. The Amendments provided for, among other things, the exchange (the "Note Exchange") of all of the outstanding Series 1 Subordinated Notes for an equal principal amount of 4.80 percent Fixed-to-Fixed Rate Subordinated Notes, Series 3 of Pembina (the "Series 3 Subordinated Notes") due January 25, 2081. The Series 3 Subordinated Notes have the same economic terms as the Series 1 Subordinated Notes, including interest rate, interest payment dates, interest reset dates, maturity date and redemption provisions, but do not provide for an entitlement to delivery of preferred shares upon the occurrence of certain bankruptcy and related events. The Note Exchange was completed on July 25, 2025, following the execution of the supplemental indenture implementing the Amendments. The Series 3 Subordinated Notes rank equally in right of payment with the Series 2 Subordinated Notes. Pursuant to the mandatory redemption provisions attaching to the Class A Preferred Shares, Series 2021-A (the "Series 2021-A Class A Preferred Shares"), in connection with the Note Exchange, on July 28, 2025, Pembina redeemed all of the issued and outstanding Series 2021-A Class A Preferred Shares (refer to the "Share Capital - Preferred Shares" section of this MD&A for further information).
Pembina Pipeline Corporation Second Quarter 2025 23
Covenants
Pembina is subject to certain financial covenants under the indentures governing its medium-term notes and the agreements governing the credit facilities. As at June 30, 2025, Pembina was in compliance with those covenants (December 31, 2024: in compliance).
| Debt | Financial Covenant(1) | Ratio | Ratio as at June 30, 2025 | |||||||||||
| Senior unsecured medium-term notes | Funded Debt to Capitalization | Maximum 0.70(2) | 0.40 | |||||||||||
| Credit facilities | Debt to Capital | Maximum 0.70(3) | 0.40 | |||||||||||
(1) Terms as defined in relevant agreements.
(2) Covenant must be met at the reporting date and filed within 90 days after the end of each fiscal year and within 10 business days after filing of the Consolidated Financial Statements.
(3) Covenant must be met at the reporting date and filed within 120 days after the end of each fiscal year and 60 days after each quarter.
Credit Risk
Pembina continues to actively monitor and reassess the creditworthiness of its counterparties. The majority of Pembina's credit exposure is to investment grade counterparties. Pembina assesses all high exposure counterparties during the on-boarding process and actively monitors credit limits and exposure across the business. Pembina may reduce or mitigate its exposure to certain counterparties where it is deemed warranted and permitted under contractual terms. Where warranted, financial assurances may be sought from counterparties to mitigate and reduce risk, and such assurances may include guarantees, letters of credit and cash collateral. Letters of credit totaling $256 million (December 31, 2024: $276 million) were held by Pembina as at June 30, 2025, primarily in respect of customer trade receivables.
Credit Ratings
The following information with respect to Pembina's credit ratings is provided as such information relates to Pembina's financing costs and liquidity. Specifically, credit ratings affect Pembina's ability to obtain short-term and long-term financing and the cost of such financing. A reduction in the current ratings of Pembina's debt by its rating agencies, particularly a downgrade below investment-grade ratings, could adversely affect Pembina's cost of financing and its access to sources of liquidity and capital. In addition, changes in credit ratings and the associated costs may affect Pembina's ability to enter into normal course derivative or hedging transactions. Credit ratings are intended to provide investors with an independent measure of the credit quality of any issues of securities. The credit ratings assigned by the rating agencies are not recommendations to purchase, hold or sell the securities, nor do the credit rating agencies comment on the market price or suitability for a particular investor. Any credit rating may not remain in effect for a given period of time or may be revised or withdrawn entirely by a rating agency in the future if, in its judgment, circumstances so warrant.
DBRS Limited ("DBRS") rates Pembina's senior unsecured medium-term notes 'BBB (high)'. DBRS has also assigned a debt rating of 'BBB (low)' to Pembina's Fixed-To-Fixed Rate Subordinated Notes and a rating of 'Pfd-3 (high)' for each issued series of Pembina's Class A Preferred Shares.
The long-term corporate credit rating assigned by S&P Global Ratings ("S&P") on Pembina is 'BBB'. S&P has also assigned a debt rating of 'BBB' to Pembina's senior unsecured medium-term notes, a debt rating of 'BB+' to Pembina's Fixed-To-Fixed Rate Subordinated Notes, and a rating of 'P-3 (High)' to each issued series of Pembina's Class A Preferred Shares.
Refer to "Description of the Capital Structure of Pembina – Credit Ratings" in the AIF for the year ended December 31, 2024 for further information.
24 Pembina Pipeline Corporation Second Quarter 2025
Commitments and Off-Balance Sheet Arrangements
Commitments
Pembina had the following contractual obligations outstanding as at June 30, 2025:
Contractual Obligations(1) | Payments Due By Period | ||||||||||||||||
| ($ millions) | Total | Less than 1 year | 1 – 3 years | 3 – 5 years | After 5 years | ||||||||||||
Long-term debt(2) | 19,747 | 1,245 | 2,791 | 3,064 | 12,647 | ||||||||||||
Transportation and processing(3) | 10,787 | 39 | 32 | 807 | 9,909 | ||||||||||||
Leases(4) | 835 | 112 | 206 | 155 | 362 | ||||||||||||
Construction commitments(5) | 375 | 375 | — | — | — | ||||||||||||
Other commitments related to lease contracts(6) | 468 | 46 | 92 | 88 | 242 | ||||||||||||
| Funding commitments, software, and other | 63 | 21 | 41 | 1 | — | ||||||||||||
Total contractual obligations | 32,275 | 1,838 | 3,162 | 4,115 | 23,160 | ||||||||||||
(1)Pembina enters into product purchase agreements and power purchase agreements to secure supply for future operations. Purchase prices of both NGL and power are dependent on current market prices. Volumes and prices for NGL and power contracts cannot be reasonably determined, and therefore, an amount has not been included in the contractual obligations schedule. Product purchase agreements range from one to 16 years and involve the purchase of NGL products from producers. Assuming product is available, Pembina has secured between 26 and 202 mbpd of NGL each year up to and including 2040. Power purchase agreements range from one to 24 years and involve the purchase of power from electrical service providers. Pembina has secured up to 76 megawatts per day each year up to and including 2048.
(2)Includes loans and borrowings, subordinated hybrid notes and interest payments on Pembina's senior unsecured medium-term notes and subordinated hybrid notes. Excludes deferred financing costs.
(3)Pembina signed two transportation and processing related agreements relating to the Cedar LNG Project: (a) Liquefaction Tolling Services Agreement ("LTSA"); and, (b) Gas Supply Agreement ("GSA"). The LTSA is a 20-year take-or-pay fixed toll contract for 1.5 million tonnes per annum, while the GSA will allow for transport on the Coastal GasLink Pipeline of approximately 200 million cubic feet per day of Canadian natural gas to Cedar LNG. These commercial agreements account for approximately 50 percent of the operating capacity for the Cedar LNG Project and a total commitment of approximately $10.5 billion. These commitments are expected to commence upon the anticipated in-service date of the Cedar LNG Project in late 2028.
(4)Includes pipelines, facilities, terminals, rail, office space, land and vehicle leases.
(5)Excludes projects that are executed by equity accounted investees.
(6)Relates to expected variable lease payments excluded from the measurement of the lease liability, payments under lease contracts which have not yet commenced, and payments related to non-lease components in lessee lease contracts.
Contingencies
Pembina, including its subsidiaries and its investments in equity accounted investees, are subject to various legal and regulatory and tax proceedings, actions and audits arising in the normal course of business. Pembina represents its interests vigorously in all proceedings in which it is involved. Legal and administrative proceedings involving possible losses are inherently complex, and the Company applies significant judgment in estimating probable outcomes. As at June 30, 2025, there were no significant claims filed against Pembina for which management believes the resolution of any such actions or proceedings would have a material impact on Pembina's financial position or results of operations.
Alliance Settlement
On July 24, 2025, Pembina announced that Alliance Pipeline Limited Partnership ("Alliance") has reached a negotiated settlement (the "Settlement") with shippers and interested parties on the Canadian portion of the Alliance Pipeline. The Settlement includes a revised toll schedule, effective November 1, 2025, which reduces long-term firm tolls by an average of 14 percent on a volume weighted average basis and introduces a 10-year toll option. The agreement also includes a revenue-sharing mechanism for seasonal and interruptible transportation services and provides shippers with a one-time term extension option. Alliance has filed an application with the Canada Energy Regulator seeking approval of the Settlement, which is requested by September 15, 2025. Pembina anticipates the Settlement will result in an approximate $50 million annual reduction in long-term firm service revenue over the next 10 years, plus impacts from the new revenue-sharing provision, which will depend on future commodity prices.
Off-Balance Sheet Arrangements
As at June 30, 2025, Pembina did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on Pembina's financial condition, results of operations, liquidity or capital expenditures.
Pembina Pipeline Corporation Second Quarter 2025 25
Letters of Credit
Pembina has provided letters of credit to various third parties in the normal course of conducting business. The letters of credit include financial guarantees to counterparties for product purchases and sales, transportation services, utilities, engineering and construction services. The letters of credit have not had, and are not expected to have, a material impact on Pembina's financial position, earnings, liquidity or capital resources. As at June 30, 2025, Pembina had $210 million (December 31, 2024: $209 million) in letters of credit issued.
5. SHARE CAPITAL
Common Shares
On May 14, 2025, the Toronto Stock Exchange ("TSX") accepted the renewal of Pembina's normal course issuer bid (the "NCIB") that allows the Company to repurchase, at its discretion, up to five percent of the Company's outstanding common shares (representing approximately 29 million common shares) through the facilities of the TSX, the New York Stock Exchange and/or alternative Canadian trading systems or as otherwise permitted by applicable securities law, subject to certain restrictions on the number of common shares that may be purchased on a single day. The NCIB commenced on May 16, 2025 and will expire on the earlier of May 15, 2026, the date on which Pembina has acquired the maximum number of common shares allowable under the NCIB or the date on which Pembina otherwise decides not to make any further repurchases under the NCIB. No common shares were purchased by Pembina during the three and six months ended June 30, 2025.
Common Share Dividends
Common share dividends are payable if, as and when declared by Pembina's Board of Directors. The amount and frequency of dividends declared and payable is at the discretion of Pembina's Board of Directors, which considers earnings, cash flow, capital requirements, the financial condition of Pembina and other relevant factors when making its dividend determination.
Preferred Shares
On January 8, 2025, Pembina redeemed all of the approximately one million issued and outstanding Cumulative Redeemable Floating Rate Class A Preferred Shares, Series 22 ("Series 22 Class A Preferred Shares") at a redemption price of $25.50 per Series 22 Class A Preferred Share, plus all accrued and unpaid dividends thereon. Pembina had announced its intention to redeem the Series 22 Class A Preferred Shares during the fourth quarter of 2024 and, as a result, the equity was reclassified as a financial liability of approximately $26 million for the total redemption price in that same quarter.
On June 30, 2025, Pembina redeemed all of the eight million issued and outstanding Cumulative Redeemable Fixed Rate Class A Preferred Shares, Series 19 ("Series 19 Class A Preferred Shares") at a redemption price of $25.00 per Series 19 Class A Preferred Share. The total redemption price for the Series 19 Class A Preferred Shares was $200 million.
On July 28, 2025, in connection with the Note Exchange, Pembina redeemed all of the 600,000 issued and outstanding Series 2021-A Class A Preferred Shares, which were deliverable to holders of the Series 1 Subordinated Notes following the occurrence of certain bankruptcy and related events. The Series 2021-A Class A Preferred Shares were issued by Pembina to Computershare Trust Company of Canada to be held in trust to satisfy its obligations under the indenture governing the Series 1 Subordinated Notes.
26 Pembina Pipeline Corporation Second Quarter 2025
Preferred Share Dividends
The holders of Pembina's Class A Preferred Shares are entitled to receive fixed or floating cumulative dividends, as applicable. Dividends on the Series 1, 3, 5, 7, 9, and 21 Class A Preferred Shares are payable quarterly on the first day of March, June, September and December, if, as and when declared by the Board of Directors of Pembina. Dividends on the Series 15 and 17 Class A Preferred Shares are payable on the last day of March, June, September and December in each year, if, as and when declared by the Board of Directors of Pembina. Dividends on the Series 25 Class A Preferred Shares are payable on the 15th day of February, May, August and November in each year, if, as and when declared by the Board of Directors of Pembina.
Outstanding Share Data
Issued and outstanding (thousands) | August 5, 2025 | ||||
| Common shares | 580,932 | ||||
Stock options(1) | 3,050 | ||||
| Series 1 Class A Preferred Shares | 10,000 | ||||
| Series 3 Class A Preferred Shares | 6,000 | ||||
| Series 5 Class A Preferred Shares | 10,000 | ||||
| Series 7 Class A Preferred Shares | 10,000 | ||||
| Series 9 Class A Preferred Shares | 9,000 | ||||
| Series 15 Class A Preferred Shares | 8,000 | ||||
| Series 17 Class A Preferred Shares | 6,000 | ||||
| Series 21 Class A Preferred Shares | 14,972 | ||||
| Series 25 Class A Preferred Shares | 10,000 | ||||
(1) Balance includes 2.8 million exercisable stock options.
Pembina Pipeline Corporation Second Quarter 2025 27
6. CAPITAL EXPENDITURES
| 3 Months Ended June 30 | 6 Months Ended June 30 | |||||||||||||
| ($ millions) | 2025 | 2024 | 2025 | 2024 | ||||||||||
| Pipelines | 72 | 171 | 132 | 312 | ||||||||||
| Facilities | 107 | 76 | 210 | 108 | ||||||||||
| Marketing & New Ventures | 6 | 8 | 11 | 11 | ||||||||||
| Corporate and other projects | 12 | 10 | 18 | 20 | ||||||||||
Total capital expenditures(1) | 197 | 265 | 371 | 451 | ||||||||||
(1) Includes $46 million for the three months ended June 30, 2025 (2024: $32 million) and $71 million for the six months ended June 30, 2025 (2024: $47 million) related to non-recoverable sustainment activities.
In both the second quarter and first six months of 2025, Pipelines capital expenditures largely related to expansions to support volume growth in NEBC and investments in smaller growth projects, while during the same periods of 2024, these expenditures were associated with Pembina's Phase VIII Peace Pipeline expansion, which was placed into service in May 2024. Facilities capital expenditures during these periods in 2025 and 2024 primarily related to Redwater expansion projects. Marketing & New Ventures had no significant capital expenditures during these periods, while Corporate capital expenditures related mainly to information technology infrastructure and systems development.
In both the second quarter and first six months of 2025, the change in non-recoverable sustaining capital was primarily attributed to supporting safe and reliable operations.
Future capital expenditures for the remainder of 2025 are estimated to be approximately $500 million and are primarily related to the construction of RFS IV, expansions to support volume growth in NEBC, investments in smaller growth projects, including various laterals and terminals, and spending on projects previously placed into service. Of the total future capital expenditure, approximately $120 million is designated for non-recoverable sustaining capital, which will continue to support safe and reliable operations.
For contributions to equity accounted investees, refer to the "Segment Results – Equity Accounted Investees Overview by Division" section of this MD&A.
28 Pembina Pipeline Corporation Second Quarter 2025
7. SELECTED QUARTERLY INFORMATION
Selected Quarterly Operating Information
| (mboe/d) | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||
| Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | ||||||||||||||||||||||||||||
Volumes(1)(2) | |||||||||||||||||||||||||||||||||||
Pipelines – transportation volumes | |||||||||||||||||||||||||||||||||||
Conventional Pipelines | 1,006 | 1,033 | 1,034 | 992 | 969 | 1,007 | 1,054 | 1,034 | |||||||||||||||||||||||||||
| Transmission Pipelines | 722 | 740 | 720 | 713 | 726 | 588 | 590 | 582 | |||||||||||||||||||||||||||
| Oil Sands and Heavy Oil Pipelines | 1,040 | 1,035 | 1,036 | 1,033 | 1,021 | 1,003 | 1,008 | 979 | |||||||||||||||||||||||||||
Facilities – processing and fractionation volumes | |||||||||||||||||||||||||||||||||||
Gas Services | 590 | 619 | 597 | 584 | 599 | 612 | 602 | 605 | |||||||||||||||||||||||||||
| NGL Services | 236 | 277 | 280 | 226 | 256 | 193 | 199 | 198 | |||||||||||||||||||||||||||
| Total revenue volumes | 3,594 | 3,704 | 3,667 | 3,548 | 3,571 | 3,403 | 3,453 | 3,398 | |||||||||||||||||||||||||||
Marketing & New Ventures – sales volumes | |||||||||||||||||||||||||||||||||||
| Marketed crude oil | 95 | 88 | 96 | 117 | 100 | 80 | 82 | 89 | |||||||||||||||||||||||||||
| Marketed NGL | 207 | 281 | 252 | 227 | 219 | 215 | 217 | 166 | |||||||||||||||||||||||||||
(1) Volumes in mboe/d. See the "Abbreviations" section of this MD&A for definition. Volumes for Pipelines and Facilities divisions are revenue volumes, which are physical volumes plus volumes recognized from take-or-pay commitments. Volumes for Marketing & New Ventures are marketed crude oil and NGL volumes and are excluded from total volumes to avoid double counting.
(2) Includes Pembina's proportionate share of volumes from equity accounted investees.
Take-or-pay Contract Liabilities
| ($ millions) | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||
| Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | ||||||||||||||||||||||||||||||||||
Opening balance | 7 | 1 | 11 | 12 | 7 | 1 | 22 | 40 | |||||||||||||||||||||||||||||||||
Revenue deferred | 57 | 58 | 58 | 67 | 55 | 52 | 56 | 59 | |||||||||||||||||||||||||||||||||
| Revenue recognized | (55) | (52) | (68) | (68) | (50) | (46) | (77) | (77) | |||||||||||||||||||||||||||||||||
Ending take-or-pay contract liability balance | 9 | 7 | 1 | 11 | 12 | 7 | 1 | 22 | |||||||||||||||||||||||||||||||||
Selected Quarterly Market Pricing
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| ($ average) | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | ||||||||||||||||||||||||||||||
WTI (USD/bbl) | 63.74 | 71.42 | 70.27 | 75.10 | 80.57 | 76.96 | 78.32 | 82.26 | ||||||||||||||||||||||||||||||
FX (USD/CAD) | 1.38 | 1.43 | 1.40 | 1.36 | 1.37 | 1.35 | 1.36 | 1.34 | ||||||||||||||||||||||||||||||
AECO Natural Gas (CAD/GJ) | 1.96 | 1.92 | 1.38 | 0.77 | 1.36 | 1.94 | 2.52 | 2.26 | ||||||||||||||||||||||||||||||
Station 2 Natural Gas (CAD/GJ) | 0.43 | 1.22 | 0.85 | 0.47 | 0.72 | 2.45 | 1.95 | 2.08 | ||||||||||||||||||||||||||||||
| Chicago Citygate Natural Gas (USD/mmbtu) | 2.99 | 3.91 | 2.71 | 1.76 | 1.60 | 2.49 | 2.63 | 2.31 | ||||||||||||||||||||||||||||||
Mt Belvieu Propane (USD/gal) | 0.79 | 0.90 | 0.77 | 0.73 | 0.75 | 0.84 | 0.67 | 0.69 | ||||||||||||||||||||||||||||||
| Alberta Power Pool (CAD/MWh) | 40.48 | 40.30 | 51.72 | 55.23 | 45.28 | 98.89 | 81.74 | 151.18 | ||||||||||||||||||||||||||||||
Pembina 20-day volume-weighted average share price at quarter end | 51.30 | 55.90 | 54.05 | 55.19 | 50.22 | 47.54 | 45.13 | 41.43 | ||||||||||||||||||||||||||||||
Pembina Pipeline Corporation Second Quarter 2025 29
Quarterly Financial Information
($ millions, except where noted) | 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||||
| Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | |||||||||||||||||||||||||||||||
| Revenue | 1,792 | 2,282 | 2,145 | 1,844 | 1,855 | 1,540 | 1,836 | 1,455 | ||||||||||||||||||||||||||||||
Net revenue(1) | 1,184 | 1,343 | 1,383 | 1,259 | 1,222 | 912 | 1,142 | 989 | ||||||||||||||||||||||||||||||
| Operating expenses | 235 | 226 | 270 | 277 | 240 | 189 | 217 | 219 | ||||||||||||||||||||||||||||||
| Share of profit (loss) from equity accounted investees | 74 | 30 | 133 | (17) | 61 | 151 | 94 | 43 | ||||||||||||||||||||||||||||||
| Gross profit | 780 | 928 | 1,024 | 747 | 815 | 730 | 850 | 659 | ||||||||||||||||||||||||||||||
Adjusted EBITDA(1) | 1,013 | 1,167 | 1,254 | 1,019 | 1,091 | 1,044 | 1,033 | 1,021 | ||||||||||||||||||||||||||||||
| Earnings | 417 | 502 | 572 | 385 | 479 | 438 | 698 | 346 | ||||||||||||||||||||||||||||||
Earnings per common share – basic (dollars) | 0.65 | 0.80 | 0.92 | 0.60 | 0.75 | 0.74 | 1.21 | 0.58 | ||||||||||||||||||||||||||||||
Earnings per common share – diluted (dollars) | 0.65 | 0.80 | 0.92 | 0.60 | 0.75 | 0.73 | 1.21 | 0.57 | ||||||||||||||||||||||||||||||
| Cash flow from operating activities | 790 | 840 | 902 | 922 | 954 | 436 | 880 | 644 | ||||||||||||||||||||||||||||||
Cash flow from operating activities per common share – basic (dollars) | 1.36 | 1.45 | 1.55 | 1.59 | 1.64 | 0.79 | 1.60 | 1.17 | ||||||||||||||||||||||||||||||
Adjusted cash flow from operating activities(1) | 698 | 777 | 922 | 724 | 837 | 782 | 747 | 659 | ||||||||||||||||||||||||||||||
Adjusted cash flow from operating activities per common share – basic (dollars)(1) | 1.20 | 1.34 | 1.59 | 1.25 | 1.44 | 1.42 | 1.36 | 1.20 | ||||||||||||||||||||||||||||||
Common shares outstanding (millions): | ||||||||||||||||||||||||||||||||||||||
| Weighted average – basic | 581 | 581 | 581 | 580 | 580 | 549 | 549 | 549 | ||||||||||||||||||||||||||||||
| Weighted average – diluted | 582 | 582 | 582 | 581 | 581 | 550 | 550 | 550 | ||||||||||||||||||||||||||||||
| End of period | 581 | 581 | 581 | 580 | 580 | 549 | 549 | 549 | ||||||||||||||||||||||||||||||
| Common share dividends declared | 412 | 401 | 401 | 401 | 400 | 367 | 367 | 366 | ||||||||||||||||||||||||||||||
Dividends per common share | 0.71 | 0.69 | 0.69 | 0.69 | 0.69 | 0.67 | 0.67 | 0.67 | ||||||||||||||||||||||||||||||
| Preferred share dividends declared | 35 | 35 | 34 | 34 | 33 | 31 | 30 | 31 | ||||||||||||||||||||||||||||||
| Capital expenditures | 197 | 174 | 242 | 262 | 265 | 186 | 177 | 169 | ||||||||||||||||||||||||||||||
| Contributions to equity accounted investees | 126 | 50 | — | 124 | 144 | 103 | 202 | 20 | ||||||||||||||||||||||||||||||
| Distributions from equity accounted investees | 136 | 132 | 131 | 133 | 123 | 239 | 227 | 202 | ||||||||||||||||||||||||||||||
(1) Refer to the "Non-GAAP & Other Financial Measures" section of this MD&A.
During the periods highlighted in the table above, there were new large-scale growth projects across Pembina's business being placed into service. The Company's financial and operating results have also been impacted by the volatility of commodity market prices, fluctuations in foreign exchange rates, and inflation. In addition to these factors, several other notable elements have impacted Pembina's financial and operating results during the specified periods above, including:
•contributions made by Pembina to PGI of $124 million in the first six months of 2025, to partially fund growth capital projects;
•contributions made by Pembina to Cedar LNG of $241 million in 2024, to fund the Cedar LNG Project;
•the completion of the Alliance and Aux Sable acquisition in the second quarter of 2024;
•the closing of the offering of 29.9 million subscription receipts of the Company in December 2023 to fund a portion of the purchase price of the Alliance and Aux Sable acquisition and the conversion of 29.9 million subscription receipts into common shares of the Company, concurrent with the closing of the Alliance and Aux Sable Acquisition;
•the impairment reversal of $231 million recognized in the fourth quarter of 2023 in the Pipelines Division related to successful contract negotiations on the Nipisi Pipeline and the pipeline being put back into service in October 2023; and
•contributions made by Pembina of $145 million to Aux Sable in the fourth quarter of 2023, representing Pembina's proportionate share of a claim filed by a counterparty to an NGL supply agreement with Aux Sable which was settled and discontinued in the fourth quarter of 2023.
30 Pembina Pipeline Corporation Second Quarter 2025
8. SELECTED EQUITY ACCOUNTED INVESTEE INFORMATION
Loans and Borrowings of Equity Accounted Investees
Under equity accounting, the assets and liabilities of an investee are reported as a single line item in the Consolidated Statement of Financial Position, "Investments in Equity Accounted Investees". To assist readers' understanding and to evaluate the capitalization of Pembina's investments, loans and borrowings associated with investments in equity accounted investees are presented below based on Pembina's proportionate ownership in such investees, as at June 30, 2025. The loans and borrowings are presented and classified by the division in which the results for the investee are reported. Please refer to the "Abbreviations" section for a summary of Pembina's investments in equity accounted investees and the division in which their results are reported.
($ millions)(1) | June 30, 2025 | December 31, 2024 | ||||||
| Pipelines | 17 | 19 | ||||||
| Facilities | 3,042 | 2,941 | ||||||
Marketing & New Ventures(2) | 499 | 373 | ||||||
| Total | 3,558 | 3,333 | ||||||
(1) Balances reflect Pembina's ownership percentage of the outstanding balance face value.
(2) Relates to the U.S. $2.7 billion senior unsecured construction/term loan facility entered into by Cedar LNG.
Cash and Cash Equivalents of Equity Accounted Investees
As at June 30, 2025, Pembina's ownership percentage of the cash balance associated with Pembina's investments in equity accounted investees totaled $86 million (December 31, 2024: $43 million) of which $7 million (December 31, 2024: nil) related to PGI and $74 million (December 31, 2024: $39 million) for Cedar LNG.
Financing Activities for Equity Accounted Investees
PGI
On March 21, 2025, pursuant to an amended and restated credit agreement, PGI exercised the accordion feature under its existing revolving credit facility and opened a new $500 million revolving credit facility, maturing on March 21, 2027. Concurrently, PGI reestablished a $500 million accordion under the credit facility.
Commitments to Equity Accounted Investees
Pembina has commitments to provide contributions to certain equity accounted investees based on its ownership interest. These contributions are determined and approved by the joint venture partners to fund operating budgets, growth capital, and significant projects development costs, including the Cedar LNG Project.
Credit Risk for Equity Accounted Investees
As at June 30, 2025, Pembina's various equity accounted investees held letters of credit totaling $155 million (December 31, 2024: $164 million) primarily in respect of obligations for engineering, procurement and construction.
Pembina Pipeline Corporation Second Quarter 2025 31
9. RELATED PARTY TRANSACTIONS
Pembina enters into transactions with related parties in the normal course of business and all transactions are measured at their exchange amount, unless otherwise noted. Pembina provides management and operational oversight services, on a fixed fee and cost recovery basis, to certain equity accounted investees. Pembina also contracts for services and capacity from certain of its equity accounted investees, advances funds to support operations and provides letters of credit, including financial guarantees.
A summary of the significant related party transactions and balances are as follows:
| 3 Months Ended June 30 | 6 Months Ended June 30 | |||||||||||||
| ($ millions) | 2025 | 2024 | 2025 | 2024 | ||||||||||
| PGI | 58 | 59 | 121 | 132 | ||||||||||
Aux Sable(1) | — | — | — | 32 | ||||||||||
Alliance(1) | — | — | — | 4 | ||||||||||
| Cedar LNG | 5 | 3 | 9 | 6 | ||||||||||
Other(2) | — | 1 | — | 2 | ||||||||||
Total services provided(3) | 63 | 63 | 130 | 176 | ||||||||||
| PGI | 2 | 2 | 4 | 4 | ||||||||||
Alliance(1) | — | — | — | 3 | ||||||||||
| Total services received | 2 | 2 | 4 | 7 | ||||||||||
As at ($ millions) | June 30, 2025 | December 31, 2024 | ||||||||||||
Trade receivables and other(4) | 34 | 37 | ||||||||||||
(1) As of April 1, 2024, following the completion of Pembina's acquisition of a controlling interest in Alliance and Aux Sable, these entities became consolidated subsidiaries of Pembina and, as such, are no longer related parties.
(2) Other includes transactions with Grand Valley, ACG, and Greenlight.
(3) Services provided by Pembina include payments made by Pembina on behalf of related parties.
(4) As at June 30, 2025, trade receivables and other includes $27 million due from PGI (December 31, 2024: $34 million), and $6 million due from Cedar LNG (December 31, 2024: $2 million).
32 Pembina Pipeline Corporation Second Quarter 2025
10. ACCOUNTING POLICIES & ESTIMATES
Changes in Accounting Policies
The accounting policies used in preparing the Interim Financial Statements are described in Note 3 of Pembina's Consolidated Financial Statements. There were no new accounting standards or amendments to existing standards adopted in the six months ended June 30, 2025 that have a material impact on Pembina's financial statements.
New Standards and Interpretations Not Yet Adopted
IFRS 18 Presentation and Disclosure in Financial Statements ("IFRS 18")
IFRS 18 was issued in April 2024 and effective January 1, 2027, with early application permitted. The standard introduces key changes to the structure of the statement of earnings and comprehensive income, required disclosures for certain management-defined performance measures, and aggregation and disaggregation of line items in the financial statements. Pembina is currently reviewing the impact of this standard on its Consolidated Financial Statements.
Amendments to IFRS 9 and IFRS 7 - Contracts referencing Nature-dependent Electricity ("Contracts referencing NDE")
Contracts referencing NDE was issued in December 2024 and effective January 1, 2026, with early adoption permitted. The amendments provide relief as it relates to accounting for contracts to purchase or sell electricity from nature-dependent sources such as wind and solar power, including clarifying the application of own-use requirements, permitting hedge accounting if these contracts are used as hedging instruments, and adding new disclosure to enable investors to understand the effect of these contracts to Pembina. Pembina is currently reviewing the impact of this amendment as it relates to Pembina's wind-based power purchase agreements.
Critical Accounting Judgments & Estimates
Critical accounting judgments and estimates used in preparing the Interim Financial Statements are described in Note 2 of Pembina's Consolidated Financial Statements. The preparation of financial statements in conformity with IFRS requires management to make both judgments and estimates that could materially affect the amounts recognized in the financial statements. By their nature, judgments and estimates may change in light of new facts and circumstances in the internal and external environment. There have been no material changes to Pembina's critical accounting estimates and judgments during the three and six months ended June 30, 2025.
Pembina Pipeline Corporation Second Quarter 2025 33
11. NON-GAAP & OTHER FINANCIAL MEASURES
Throughout this MD&A, Pembina has disclosed certain financial measures and ratios that are not specified, defined or determined in accordance with GAAP and which are not disclosed in Pembina's financial statements. Non-GAAP financial measures either exclude an amount that is included in, or include an amount that is excluded from, the composition of the most directly comparable financial measure specified, defined and determined in accordance with GAAP. These non-GAAP financial measures and non-GAAP ratios, together with financial measures and ratios specified, defined and determined in accordance with GAAP, are used by management to evaluate the performance and cash flows of Pembina and its businesses and to provide additional useful information respecting Pembina's financial performance and cash flows to investors and analysts.
In this MD&A, Pembina has disclosed the following non-GAAP financial measures and non-GAAP ratios: net revenue, earnings before interest, taxes, depreciation, and amortization ("adjusted EBITDA"), adjusted EBITDA per common share, adjusted EBITDA from equity accounted investees, adjusted cash flow from operating activities and adjusted cash flow from operating activities per common share.
Non-GAAP financial measures and non-GAAP ratios disclosed in this MD&A do not have any standardized meaning under IFRS and may not be comparable to similar financial measures disclosed by other issuers. The financial measures and ratios should not, therefore, be considered in isolation or as a substitute for, or superior to, measures and ratios of Pembina's financial performance, or cash flows specified, defined or determined in accordance with IFRS, including revenue, earnings, share of profit from equity accounted investees and cash flow from operating activities.
Except as otherwise described herein, these non-GAAP financial measures and non-GAAP ratios are calculated on a consistent basis from period to period. Specific reconciling items may only be relevant in certain periods.
Below is a description of each non-GAAP financial measure and non-GAAP ratio disclosed in this MD&A, together with, as applicable, disclosure of: the most directly comparable financial measure that is specified, defined and determined in accordance with GAAP to which each non-GAAP financial measure relates; a quantitative reconciliation of each non-GAAP financial measure to such directly comparable GAAP financial measure; the composition of each non-GAAP financial measure and non-GAAP ratio; an explanation of how each non-GAAP financial measure and non-GAAP ratio provides useful information to investors and the additional purposes, if any, for which management uses each non-GAAP financial measure and non-GAAP ratio; and an explanation of the reason for any change in the label or composition of each non-GAAP financial measure and non-GAAP ratio from what was previously disclosed.
Net Revenue
Net revenue is a non-GAAP financial measure which is defined as total revenue less cost of goods sold. Management believes that net revenue provides investors with a single measure to indicate the margin on sales before non-product operating expenses that is comparable between periods. Management utilizes net revenue to compare consecutive results, to aggregate revenue generated by each of the Company's divisions and to set comparable objectives. The most directly comparable financial measure to net revenue that is specified, defined and determined in accordance with GAAP and disclosed in Pembina's financial statements is revenue.
| 3 Months Ended June 30 | Pipelines | Facilities | Marketing & New Ventures | Corporate & Inter-segment Eliminations | Total | |||||||||||||||||||||||||||
| ($ millions) | ||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| Revenue | 874 | 890 | 295 | 294 | 883 | 925 | (260) | (254) | 1,792 | 1,855 | ||||||||||||||||||||||
Cost of goods sold | 14 | 15 | — | — | 761 | 796 | (167) | (178) | 608 | 633 | ||||||||||||||||||||||
| Net revenue | 860 | 875 | 295 | 294 | 122 | 129 | (93) | (76) | 1,184 | 1,222 | ||||||||||||||||||||||
34 Pembina Pipeline Corporation Second Quarter 2025
| 6 Months Ended June 30 | Pipelines | Facilities | Marketing & New Ventures | Corporate & Inter-segment Eliminations | Total | |||||||||||||||||||||||||||
| ($ millions) | ||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| Revenue | 1,768 | 1,578 | 602 | 525 | 2,219 | 1,725 | (515) | (433) | 4,074 | 3,395 | ||||||||||||||||||||||
Cost of goods sold | 27 | 26 | — | — | 1,858 | 1,547 | (338) | (312) | 1,547 | 1,261 | ||||||||||||||||||||||
| Net revenue | 1,741 | 1,552 | 602 | 525 | 361 | 178 | (177) | (121) | 2,527 | 2,134 | ||||||||||||||||||||||
Adjusted EBITDA and Adjusted EBITDA per Common Share
Adjusted EBITDA is a non-GAAP financial measure and is calculated as earnings before net finance costs, income taxes, depreciation and amortization (included in gross profit and general and administrative expense), and unrealized gains or losses from derivative instruments. The exclusion of unrealized gains or losses from derivative instruments eliminates the non-cash impact of such gains or losses.
Adjusted EBITDA also includes adjustments to earnings for non-controlling interest, losses (gains) on disposal of assets, transaction costs incurred in respect of acquisitions, dispositions and restructuring, impairment charges or reversals in respect of goodwill, intangible assets, investments in equity accounted investees and property, plant and equipment, certain non-cash provisions and other amounts not reflective of ongoing operations. These additional adjustments are made to exclude various non-cash and other items that are not reflective of ongoing operations. Following completion of Pembina acquiring a controlling ownership interest in Alliance and Aux Sable on April 1, 2024, Pembina revised the definition of adjusted EBITDA to deduct earnings for the 14.6 percent non-controlling interest in the Aux Sable U.S. operations. Pembina's subsequent acquisition of the remaining interest in Aux Sable's U.S. operations in the third quarter of 2024 resulted in all of Aux Sable's results being included in the adjusted EBITDA calculation beginning on August 1, 2024.
Management believes that adjusted EBITDA provides useful information to investors as it is an important indicator of Pembina's ability to generate liquidity through cash flow from operating activities and equity accounted investees. Management also believes that adjusted EBITDA provides an indicator of operating income generated from capital expenditures, which includes operational finance income and gains from lessor lease arrangements. Adjusted EBITDA is also used by investors and analysts for assessing financial performance and for the purpose of valuing Pembina, including calculating financial and leverage ratios. Management utilizes adjusted EBITDA to set objectives and as a key performance indicator of the Company's success. Pembina presents adjusted EBITDA as management believes it is a measure frequently used by analysts, investors and other stakeholders in evaluating the Company's financial performance. The most directly comparable financial measure to adjusted EBITDA that is specified, defined and determined in accordance with GAAP and disclosed in Pembina's financial statements is earnings.
Adjusted EBITDA per common share is a non-GAAP ratio which is calculated by dividing adjusted EBITDA by the weighted average number of common shares outstanding.
Pembina Pipeline Corporation Second Quarter 2025 35
| 3 Months Ended June 30 | Pipelines | Facilities | Marketing & New Ventures | Corporate & Inter-segment Eliminations | Total | |||||||||||||||||||||||||||
| ($ millions, except per share amounts) | ||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
Earnings (loss) | 473 | 485 | 142 | 181 | 114 | 135 | (196) | (828) | 417 | 479 | ||||||||||||||||||||||
| Income tax expense (recovery) | — | — | — | — | — | — | — | — | 116 | (506) | ||||||||||||||||||||||
| Adjustments to share of profit (loss) from equity accounted investees | 1 | — | 127 | 111 | (28) | 2 | — | — | 100 | 113 | ||||||||||||||||||||||
Net finance costs | 6 | 7 | 3 | 3 | 2 | 1 | 140 | 130 | 151 | 141 | ||||||||||||||||||||||
Depreciation and amortization | 165 | 164 | 59 | 45 | 17 | 17 | 16 | 14 | 257 | 240 | ||||||||||||||||||||||
Unrealized (gain) loss from derivative instruments | — | — | — | — | (31) | 45 | — | — | (31) | 45 | ||||||||||||||||||||||
Non-controlling interest(1) | — | — | — | — | — | (10) | — | — | — | (10) | ||||||||||||||||||||||
| Loss on acquisition | — | — | — | — | — | — | — | 616 | — | 616 | ||||||||||||||||||||||
| Derecognition of insurance contract provision | — | — | — | — | — | (34) | — | — | — | (34) | ||||||||||||||||||||||
| Transaction and integration costs in respect of acquisitions | — | — | — | — | — | — | 2 | 14 | 2 | 14 | ||||||||||||||||||||||
| Loss (gain) on disposal of assets, other non-cash provisions, and other | 1 | (1) | — | — | — | (13) | — | 7 | 1 | (7) | ||||||||||||||||||||||
| Adjusted EBITDA | 646 | 655 | 331 | 340 | 74 | 143 | (38) | (47) | 1,013 | 1,091 | ||||||||||||||||||||||
Adjusted EBITDA per common share – basic (dollars) | 1.74 | 1.88 | ||||||||||||||||||||||||||||||
| 6 Months Ended June 30 | Pipelines | Facilities | Marketing & New Ventures | Corporate & Inter-segment Eliminations | Total | |||||||||||||||||||||||||||
| ($ millions, except per share amounts) | ||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| Earnings (loss) | 991 | 940 | 326 | 358 | 274 | 199 | (419) | (995) | 919 | 917 | ||||||||||||||||||||||
| Income tax (recovery) expense | — | — | — | — | — | — | — | — | 253 | (415) | ||||||||||||||||||||||
| Adjustments to share of profit from equity accounted investees | 2 | 44 | 239 | 211 | 6 | 9 | — | — | 247 | 264 | ||||||||||||||||||||||
| Net finance costs | 12 | 13 | 6 | 5 | 4 | 3 | 279 | 228 | 301 | 249 | ||||||||||||||||||||||
| Depreciation and amortization | 317 | 259 | 104 | 78 | 37 | 32 | 32 | 27 | 490 | 396 | ||||||||||||||||||||||
| Unrealized (gain) loss from derivative instruments | — | — | — | — | (40) | 147 | — | — | (40) | 147 | ||||||||||||||||||||||
Non-controlling interest(1) | — | — | — | — | — | (10) | — | — | — | (10) | ||||||||||||||||||||||
| Loss on acquisition | — | — | — | — | — | — | — | 616 | — | 616 | ||||||||||||||||||||||
| Derecognition of insurance contract provision | — | — | — | — | — | (34) | — | — | — | (34) | ||||||||||||||||||||||
| Transaction and integration costs in respect of acquisition | — | — | — | — | — | — | 4 | 14 | 4 | 14 | ||||||||||||||||||||||
| Loss (gain) on disposal of assets, other non-cash provisions, and other | 1 | (2) | 1 | (2) | 3 | (15) | 1 | 10 | 6 | (9) | ||||||||||||||||||||||
| Adjusted EBITDA | 1,323 | 1,254 | 676 | 650 | 284 | 331 | (103) | (100) | 2,180 | 2,135 | ||||||||||||||||||||||
Adjusted EBITDA per common share – basic (dollars) | 3.75 | 3.78 | ||||||||||||||||||||||||||||||
(1) Presented net of adjusting items.
36 Pembina Pipeline Corporation Second Quarter 2025
Adjusted EBITDA from Equity Accounted Investees
In accordance with IFRS, Pembina's joint ventures are accounted for using equity accounting. Under equity accounting, the assets and liabilities of the investment are presented net in a single line item in the Consolidated Statement of Financial Position, "Investments in Equity Accounted Investees". Earnings from investments in equity accounted investees are recognized in a single line item in the Consolidated Statement of Earnings and Comprehensive Income "Share of Profit from Equity Accounted Investees". The adjustments made to earnings, in adjusted EBITDA above, are also made to share of profit from investments in equity accounted investees. Cash contributions and distributions from investments in equity accounted investees represent Pembina's share paid and received in the period to and from the investments in equity accounted investees.
To assist in understanding and evaluating the performance of these investments, Pembina is supplementing the IFRS disclosure with non-GAAP proportionate consolidation of Pembina's interest in the investments in equity accounted investees. Pembina's proportionate interest in equity accounted investees has been included in adjusted EBITDA.
| 3 Months Ended June 30 | Pipelines | Facilities | Marketing & New Ventures | Total | ||||||||||||||||||||||||||||
| ($ millions) | ||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||
Share of profit (loss) from equity accounted investees | — | — | 46 | 63 | 28 | (2) | 74 | 61 | ||||||||||||||||||||||||
| Adjustments to share of profit (loss) from equity accounted investees: | ||||||||||||||||||||||||||||||||
Net finance costs (income) | 1 | — | 30 | 42 | (28) | 2 | 3 | 44 | ||||||||||||||||||||||||
| Income tax expense | — | — | 15 | 18 | — | — | 15 | 18 | ||||||||||||||||||||||||
Depreciation and amortization | — | — | 68 | 53 | — | — | 68 | 53 | ||||||||||||||||||||||||
| Unrealized loss (gain) on commodity-related derivative financial instruments | — | — | 14 | (3) | — | — | 14 | (3) | ||||||||||||||||||||||||
| Non-cash provisions | — | — | — | 1 | — | — | — | 1 | ||||||||||||||||||||||||
| Total adjustments to share of profit from equity accounted investees | 1 | — | 127 | 111 | (28) | 2 | 100 | 113 | ||||||||||||||||||||||||
| Adjusted EBITDA from equity accounted investees | 1 | — | 173 | 174 | — | — | 174 | 174 | ||||||||||||||||||||||||
| 6 Months Ended June 30 | Pipelines | Facilities | Marketing & New Ventures | Total | ||||||||||||||||||||||||||||
| ($ millions) | ||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||
Share of profit (loss) from equity accounted investees | 1 | 43 | 111 | 138 | (8) | 31 | 104 | 212 | ||||||||||||||||||||||||
| Adjustments to share of profit (loss) from equity accounted investees: | ||||||||||||||||||||||||||||||||
Net finance costs | 1 | 6 | 74 | 69 | 6 | 2 | 81 | 77 | ||||||||||||||||||||||||
| Income tax expense | — | — | 36 | 41 | — | — | 36 | 41 | ||||||||||||||||||||||||
Depreciation and amortization | 1 | 38 | 129 | 102 | — | 7 | 130 | 147 | ||||||||||||||||||||||||
| Unrealized loss (gain) on commodity-related derivative financial instruments | — | — | 1 | (3) | — | — | 1 | (3) | ||||||||||||||||||||||||
| Transaction costs incurred in respect of acquisitions and non-cash provisions | — | — | (1) | 2 | — | — | (1) | 2 | ||||||||||||||||||||||||
| Total adjustments to share of profit from equity accounted investees | 2 | 44 | 239 | 211 | 6 | 9 | 247 | 264 | ||||||||||||||||||||||||
| Adjusted EBITDA from equity accounted investees | 3 | 87 | 350 | 349 | (2) | 40 | 351 | 476 | ||||||||||||||||||||||||
Pembina Pipeline Corporation Second Quarter 2025 37
Adjusted Cash Flow from Operating Activities and Adjusted Cash Flow from Operating Activities per Common Share
Adjusted cash flow from operating activities is a non-GAAP measure which is defined as cash flow from operating activities adjusting for the change in non-cash operating working capital, adjusting for current tax and share-based compensation payments, and deducting distributions to non-controlling interests and preferred share dividends paid. Adjusted cash flow from operating activities deducts distributions to non-controlling interest and preferred share dividends paid because they are not attributable to common shareholders. The calculation has been modified to exclude current tax expense and accrued share-based payment expense, and to include the impact of cash paid for taxes and share-based compensation, as it allows management to better assess the obligations discussed below.
Management believes that adjusted cash flow from operating activities provides comparable information to investors for assessing financial performance during each reporting period. Management utilizes adjusted cash flow from operating activities to set objectives and as a key performance indicator of the Company's ability to meet interest obligations, dividend payments and other commitments. Adjusted cash flow from operating activities per common share is a non-GAAP financial ratio which is calculated by dividing adjusted cash flow from operating activities by the weighted average number of common shares outstanding.
Following completion of Pembina acquiring a controlling ownership interest in Alliance and Aux Sable on April 1, 2024, Pembina revised the definition of adjusted cash flow from operating activities to deduct distributions related to non-controlling interest in the Aux Sable U.S. operations. On August 1, 2024, Pembina acquired the remaining interest in Aux Sable's U.S. operations.
| 3 Months Ended June 30 | 6 Months Ended June 30 | |||||||||||||
| ($ millions, except per share amounts) | 2025 | 2024 | 2025 | 2024 | ||||||||||
| Cash flow from operating activities | 790 | 954 | 1,630 | 1,390 | ||||||||||
Cash flow from operating activities per common share – basic (dollars) | 1.36 | 1.64 | 2.81 | 2.46 | ||||||||||
| Add (deduct): | ||||||||||||||
| Change in non-cash operating working capital | (18) | (82) | (34) | 106 | ||||||||||
| Current tax expense | (103) | (64) | (236) | (140) | ||||||||||
| Taxes paid, net of foreign exchange | 65 | 91 | 127 | 290 | ||||||||||
| Accrued share-based payment expense | (1) | (19) | (28) | (39) | ||||||||||
| Share-based compensation payment | — | — | 86 | 86 | ||||||||||
| Preferred share dividends paid | (35) | (33) | (70) | (64) | ||||||||||
| Distributions to non-controlling interest | — | (10) | — | (10) | ||||||||||
| Adjusted cash flow from operating activities | 698 | 837 | 1,475 | 1,619 | ||||||||||
Adjusted cash flow from operating activities per common share – basic (dollars) | 1.20 | 1.44 | 2.54 | 2.87 | ||||||||||
38 Pembina Pipeline Corporation Second Quarter 2025
12. OTHER
Risk Management
Pembina's risk management strategies, policies and limits, ensure risks and exposures are aligned to its business strategy and risk tolerance. Pembina's Board of Directors is responsible for providing risk management oversight at Pembina and oversees how management monitors compliance with Pembina's risk management policies and procedures and reviews the adequacy of this risk framework in relation to the risks faced by Pembina.
Pembina has exposure to counterparty credit risk, liquidity risk and market risk. Pembina utilizes derivative instruments to stabilize the results of its business and, as at June 30, 2025, the Company has entered into certain financial derivative contracts in order to manage commodity price, cost of power, and foreign exchange risk. Pembina has also entered into power purchase agreements to secure cost-competitive renewable energy, fix the price for a portion of the power Pembina consumes, and reduce its emissions.
Financial Instruments
Fair Values
The fair value of financial instruments utilizes a variety of valuation inputs. When measuring fair value, Pembina uses observable market data to the greatest extent possible. Depending on the nature of these valuation inputs, financial instruments are categorized as follows:
a. Level 1
Level 1 fair values are based on inputs that are unadjusted observable quoted prices from active markets for identical assets or liabilities as at the measurement date.
b. Level 2
Level 2 fair values are based on inputs, other than quoted market prices included in Level 1, that are either directly or indirectly observable. Level 2 fair value inputs include quoted forward market prices, time value, and broker quotes that are observable for the duration of the financial instrument's contractual term. These inputs are often adjusted for factors specific to the asset or liability, such as, location differentials and credit risk.
Financial instruments that utilize Level 2 fair valuation inputs include derivatives arising from physical commodity forward contracts, commodity swaps and options, and forward interest rate and foreign-exchange swaps. In addition, Pembina's loans and borrowings utilize Level 2 fair valuation inputs, whereby the valuation technique is based on discounted future interest and principal payments using the current market interest rates of instruments with similar terms.
c. Level 3
Level 3 fair values utilize inputs that are not based on observable market data. Rather, various valuation techniques are used to develop inputs.
Financial instruments that utilize Level 3 fair valuation inputs include embedded derivative instruments arising from long-term power purchase agreements. The fair value of long-term power purchase agreements is measured using a pricing and cash flow model that accounts for forward power prices, renewable wind power pricing discounts and differentials, and inflationary metrics. The rate used to discount the respective estimated cash flows is a government risk-free interest rate that is adjusted for an appropriate credit spread. The fair valuation of the embedded derivative instruments is judged to be a significant management estimate. These assumptions and inputs are susceptible to change and may differ from actual future developments. This estimation uncertainty could materially impact the quantified fair value; and therefore, the gains and losses on commodity-related derivative financial instruments.
Pembina Pipeline Corporation Second Quarter 2025 39
Gains and Losses from Derivative Instruments
| 3 Months Ended June 30 | 6 Months Ended June 30 | |||||||||||||
| ($ millions) | 2025 | 2024 | 2025 | 2024 | ||||||||||
| Derivative instruments held at fair value through earnings | ||||||||||||||
| Realized gain | ||||||||||||||
Commodity-related gain recorded in revenue from risk management and physical derivative contracts | (38) | (74) | (59) | (119) | ||||||||||
| Unrealized (gain) loss | ||||||||||||||
Commodity-related (gain) loss recorded in revenue from risk management and physical derivative contracts | (31) | 45 | (40) | 147 | ||||||||||
| Foreign exchange gain recorded in net finance costs | — | (3) | — | — | ||||||||||
| Derivative instruments in hedging relationships | ||||||||||||||
Interest rate loss recorded in other comprehensive income(1) | — | 4 | 4 | 2 | ||||||||||
(1) Unrealized losses or gains for designated cash flow hedges are recognized in impact of hedging activities in the Consolidated Statements of Earnings and Comprehensive Income, with realized losses or gains being reclassified to net finance costs. The movement in other comprehensive income relates to realized losses or gains on interest rate forward swaps, which expired on March 31, 2025. A gain of $4 million was recognized during the first quarter of 2025, prior to the expiration date that was reclassified to net finance costs (three and six month ended June 30, 2024: $5 million and $9 million realized gain, respectively). No losses or gains have been recognized in net income relating to discontinued cash flow hedges.
Tax Regulations
The One Big Beautiful Bill was enacted in the United States on July 4, 2025. Pembina has assessed the impact of this legislation and does not anticipate any material impact to Pembina.
Disclosure Controls and Procedures ("DC&P") and Internal Control over Financial Reporting ("ICFR")
Management's Report on Internal Control over Financial Reporting
Pembina's management is responsible for establishing and maintaining disclosure controls and procedures and internal control over financial reporting, as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings. The objective of this instrument is to improve the quality, reliability and transparency of information that is filed or submitted under Canadian securities legislation.
The President and Chief Executive Officer and Senior Vice President and Chief Financial Officer have designed, with the assistance of management, DC&P and ICFR to provide reasonable assurance that material information relating to Pembina's business is made known to them, is reported on a timely basis, that financial reporting is reliable and that financial statements prepared for external purposes are in accordance with IFRS.
Changes in Internal Control Over Financial Reporting
Pembina previously excluded business processes associated with the acquisition of Enbridge Inc.'s interests in the Alliance, Aux Sable, and NRGreen joint ventures (the "Acquirees"), completed on April 1, 2024, from the Company's evaluation of DC&P and ICFR, as permitted under applicable securities laws in Canada and the United States. Effective April 1, 2025, the business processes of the Acquirees have been incorporated into Pembina's DC&P and ICFR evaluations. Other than the integration of the Acquirees, there were no changes in the second quarter of 2025 that had or are likely to have a material impact on Pembina’s ICFR.
40 Pembina Pipeline Corporation Second Quarter 2025
13. ABBREVIATIONS
The following is a list of abbreviations that may be used in this MD&A:
Other | |||||
| AECO | Alberta Energy Company benchmark price for natural gas | ||||
B.C. | British Columbia | ||||
GAAP | Canadian generally accepted accounting principles | ||||
IFRS | International Financial Reporting Standards | ||||
NGL | Natural gas liquids | ||||
| LNG | Liquefied natural gas | ||||
U.S. | United States | ||||
WCSB | Western Canadian Sedimentary Basin | ||||
Deep cut | Ethane-plus capacity extraction gas processing capabilities | ||||
Shallow cut | Sweet gas processing with propane and/or condensate-plus extraction capabilities | ||||
Volumes | Volumes for Pipelines and Facilities are revenue volumes, defined as physical volumes plus volumes from take-or-pay commitments. Volumes for Marketing & New Ventures are marketed crude oil and NGL volumes. Volumes are stated in mboe/d, with natural gas volumes converted to mboe/d from MMcf/d at a 6:1 ratio, and also include revenue volumes from Pembina's equity accounted investees. | ||||
Measurement | |||||||||||||||||
bpd | barrels per day | mmboe/d | millions of barrels of oil equivalent per day | ||||||||||||||
mbbls | thousands of barrels | mtpa | million tonnes per annum | ||||||||||||||
mbpd | thousands of barrels per day | MMcf/d | millions of cubic feet per day | ||||||||||||||
mmbpd | millions of barrels per day | bcf/d | billions of cubic feet per day | ||||||||||||||
mmbbls | millions of barrels | km | kilometer | ||||||||||||||
mboe/d | thousands of barrels of oil equivalent per day | ||||||||||||||||
Investments in Equity Accounted Investees | |||||
| Pipelines: | |||||
| Grand Valley | 75 percent interest in Grand Valley 1 Limited Partnership wind farm | ||||
| Alliance | Prior to the completion of Pembina acquiring a controlling ownership interest in Alliance on April 1, 2024, Pembina owned a 50 percent interest in Alliance Pipeline Limited Partnership, Alliance Pipeline L.P., and NRGreen Power Limited Partnership | ||||
| Facilities: | |||||
| PGI | 60 percent interest in Pembina Gas Infrastructure Inc., a premier gas processing entity in western Canada serving customers throughout the Montney and Duvernay trends from central Alberta to northeast British Columbia | ||||
| Fort Corp | 50 percent interest in Fort Saskatchewan Ethylene Storage Limited Partnership and Fort Saskatchewan Ethylene Storage Corporation | ||||
| Marketing & New Ventures: | |||||
| Cedar LNG | 49.9 percent interest in Cedar LNG Partners LP and the proposed floating LNG facility in Kitimat, British Columbia, Canada | ||||
| ACG | 50 percent interest in Alberta Carbon Grid Heartland Limited Partnership and the proposed Heartland carbon dioxide transportation and sequestration system. | ||||
| Greenlight | 50 percent interest in the Greenlight Electricity Centre Limited Partnership, which is developing a gas-fired combined cycle power generation facility to be located in Alberta’s Industrial Heartland. | ||||
| Aux Sable | Prior to the completion of Pembina acquiring a controlling ownership interest in Aux Sable on April 1, 2024, Pembina owned an ownership interest of approximately 42.7 percent in Aux Sable U.S. and 50 percent in Aux Sable Canada, which includes an NGL fractionation facility and gas processing capacity near Chicago, Illinois and other natural gas and NGL processing facilities, logistics and distribution assets in the U.S. and Canada, and transportation contracts on Alliance. | ||||
Readers are referred to the AIF for the year ended December 31, 2024 for additional descriptions, which is available at www.sedarplus.ca, www.sec.gov and through Pembina's website at www.pembina.com.
Pembina Pipeline Corporation Second Quarter 2025 41
14. FORWARD-LOOKING STATEMENTS & INFORMATION
In the interest of providing Pembina's security holders and potential investors with information regarding Pembina, including management's assessment of the Company's future plans and operations, certain statements contained in this MD&A constitute forward-looking statements or forward-looking information (collectively, "forward-looking statements"). Forward-looking statements are typically identified by words such as "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should", "could", "would", "believe", "plan", "intend", "design", "target", "undertake", "view", "indicate", "maintain", "explore", "entail", "schedule", "objective", "strategy", "likely", "potential", "outlook", "aim", "purpose", "goal" and similar expressions suggesting future events or future performance.
By their nature, such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Pembina believes the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this MD&A should not be unduly relied upon. These forward-looking statements speak only as of the date of this MD&A.
In particular, this MD&A contains forward-looking statements pertaining to the following:
•future levels and sustainability of cash dividends that Pembina intends to pay to its shareholders and anticipated dividend payment dates;
•planning, construction, locations, capital expenditure and funding estimates, schedules, regulatory and environmental applications and anticipated approvals, expected capacity, incremental volumes, contractual arrangements, in-service dates, sources of product, activities, benefits and operations with respect to new construction of, or expansions on existing, pipelines, systems, gas services facilities, processing and fractionation facilities, terminalling, storage and hub facilities and other facilities or energy infrastructure, as well as the impact of Pembina's new projects on its future financial performance;
•future pipeline, processing, fractionation, and storage facility and system operations;
•treatment under existing and proposed governmental laws, policies and regulations, including those relating to taxes, the environmental, tariffs and project assessments;
•Pembina's strategy and the development and expected timing of new business initiatives and growth opportunities and the impact thereof;
•increased processing capacity and fractionation capacity due to increased oil and gas industry activity and new connections and other initiatives on Pembina's pipelines and at Pembina's facilities;
•expected future cash flows and the sufficiency thereof, financial strength, sources of and access to funds, future contractual obligations, future financing options, availability of capital for capital expenditures, operating obligations, debt maturities, letters of credit and the use of proceeds from financings;
•Pembina's capital structure, including the sufficiency of the amount of leverage employed therein and future actions that may be taken with respect thereto, including expectations regarding the repurchase or redemption of common shares or other securities, repayments of existing debt, new borrowings, equity or hybrid securities issuances and the timing thereof;
•potential actions undertaken by Pembina to mitigate counterparty risk;
•tolls and tariffs, and processing, transportation, fractionation, storage and services commitments and contracts;
•the outcomes and effectiveness of Pembina's DC&P and ICFR;
•the expected demand for, and prices and inventory levels of, crude oil and other petroleum products, including NGL;
•the development and anticipated benefits of Pembina's new projects and developments, including RFS IV, the Wapiti Expansion, the K3 Cogeneration Facility, the Taylor-to-Gordondale Project, the Fox Creek-to-Namao Expansion and the Cedar LNG Project, including the timing thereof;
•expectations in respect of PGI's infrastructure development commitments, including the amounts and timing thereof;
•the expected term, conditions, costs, timing and impact of the Settlement; and
•the impact of current and future market conditions on Pembina.
Various factors or assumptions are typically applied by Pembina in drawing conclusions or making the forecasts, projections, predictions or estimations set out in forward-looking statements based on information currently available to Pembina. These factors and assumptions include, but are not limited to:
•oil and gas industry exploration and development activity levels and the geographic region of such activity;
•the success of Pembina's operations;
•prevailing commodity prices, interest rates, carbon prices, tax rates, exchange rates and inflation rates;
•the ability of Pembina to maintain current credit ratings;
•the availability and cost of capital to fund future capital requirements relating to existing assets, projects and the repayment or refinancing existing debt as it becomes due;
•future operating costs, including geotechnical and integrity costs being consistent with historical costs;
•oil and gas industry compensation levels remaining consistent with historical levels;
•in respect of current developments, expansions, planned capital expenditures, completion dates and capacity expectations: that third parties will provide any necessary support; that any third-party projects relating to Pembina's growth projects will be sanctioned and completed as expected; that any required commercial agreements can be reached; that all required regulatory and environmental approvals can be obtained on acceptable terms in a timely manner; that there are no supply chain disruptions impacting Pembina's ability to obtain required equipment, materials or labour; that counterparties will comply with contracts in a timely manner; that there are no unforeseen events preventing the performance of contracts or the completion of the relevant facilities, and that there are no unforeseen material costs relating to the facilities which are not recoverable from customers;
•in respect of the stability of Pembina's dividends: prevailing commodity prices, margins and exchange rates; that Pembina's future results of operations will be consistent with past performance and management expectations in relation thereto; the continued availability of capital at attractive prices to fund future capital requirements relating to existing assets and projects, including but not limited to future capital expenditures relating to expansion, upgrades and maintenance shutdowns; the success of growth projects; future operating costs; that counterparties to agreements will continue to perform their obligations in a timely manner; that there are no unforeseen events preventing the performance of contracts; and that there are no unforeseen material construction or other costs related to current growth projects; current operations or the repayment or refinancing of existing debt as it becomes due;
•the inputs used by Pembina's management in the fair valuation of embedded derivative instruments remaining consistent;
•prevailing regulatory, tax and environmental laws and regulations and tax pool utilization; and
•the amount of future liabilities relating to lawsuits and environmental incidents and the availability of coverage under Pembina's insurance policies (including in respect of Pembina's business interruption insurance policy).
The actual results of Pembina could differ materially from those anticipated in these forward-looking statements as a result of the material risk factors set forth below:
•the regulatory environment and decisions, including the outcome of regulatory hearings, and Indigenous and landowner consultation requirements;
•the impact of competitive entities and pricing;
•reliance on third parties to successfully operate and maintain certain assets;
•labour and material shortages;
•reliance on key relationships and agreements and the outcome of stakeholder engagement;
•the strength and operations of the oil and natural gas production industry and related commodity prices;
•non-performance or default by counterparties to agreements which Pembina or one or more of its subsidiaries has entered into in respect of its business;
•actions by joint venture partners or other partners which hold interests in certain of Pembina's assets;
•actions by governmental or regulatory authorities including changes in tax laws and treatment, the imposition of new tariffs or other changes in international trade policies or relations, changes in royalty rates, regulatory decisions, changes in regulatory processes or increased environmental regulation;
•fluctuations in operating results;
•adverse general economic and market conditions, including potential recessions in Canada, North America and worldwide, resulting in changes, or prolonged weaknesses, as applicable, in interest rates, foreign currency exchange rates, inflation rates, commodity prices, supply/demand trends and overall industry activity levels;
•constraints on, or the unavailability of adequate infrastructure;
•the political environment and public opinion in North America and elsewhere, including changes in trade relations between Canada and the U.S.;
•ability to access various sources of debt and equity capital on acceptable terms;
•adverse changes in credit ratings;
•counterparty credit risk;
•operating risks, including the amount of future liabilities related to pipelines spills and other environmental incidents;
•technology and security risks, including cyber-security risks;
•natural catastrophes; and
•the other factors discussed under "Risk Factors" in the MD&A for the year ended December 31, 2024 and in the AIF for the year ended December 31, 2024, which are available at www.sedarplus.ca, www.sec.gov and through Pembina's website at www.pembina.com.
These factors should not be construed as exhaustive. Unless required by law, Pembina does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Management approved the 2025 capital expenditure guidance contained herein as of the date of this MD&A. The purpose of the 2025 capital expenditure guidance is to assist readers in understanding Pembina's expected future capital expenditures, and this information may not be appropriate for other purposes. Any forward-looking statements contained herein are expressly qualified by this cautionary statement.
42 Pembina Pipeline Corporation Second Quarter 2025
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(unaudited)
($ millions) | June 30, 2025 | December 31, 2024 | ||||||||||||
| Assets Current assets | ||||||||||||||
| Cash and cash equivalents | 210 | 141 | ||||||||||||
| Trade receivables and other | 869 | 1,005 | ||||||||||||
| Income tax receivable | — | 113 | ||||||||||||
| Inventory | 275 | 301 | ||||||||||||
Derivative financial instruments (Note 14) | 22 | 13 | ||||||||||||
| 1,376 | 1,573 | |||||||||||||
| Non-current assets | ||||||||||||||
Property, plant and equipment (Note 5) | 22,476 | 22,738 | ||||||||||||
Intangible assets and goodwill (Note 6) | 6,398 | 6,528 | ||||||||||||
Investments in equity accounted investees (Note 7) | 4,279 | 4,267 | ||||||||||||
| Right-of-use assets | 536 | 530 | ||||||||||||
| Finance lease receivables | 243 | 223 | ||||||||||||
| Other assets | 116 | 108 | ||||||||||||
| 34,048 | 34,394 | |||||||||||||
| Total assets | 35,424 | 35,967 | ||||||||||||
| Liabilities and equity Current liabilities | ||||||||||||||
| Trade payables and other | 1,027 | 1,202 | ||||||||||||
Loans and borrowings (Note 8) | 597 | 1,525 | ||||||||||||
| Lease liabilities | 82 | 89 | ||||||||||||
Contract liabilities (Note 11) | 48 | 43 | ||||||||||||
Derivative financial instruments (Note 14) | 25 | 49 | ||||||||||||
| 1,779 | 2,908 | |||||||||||||
| Non-current liabilities | ||||||||||||||
Loans and borrowings (Note 8) | 11,345 | 10,535 | ||||||||||||
Subordinated hybrid notes (Note 8) | 795 | 596 | ||||||||||||
| Lease liabilities | 556 | 576 | ||||||||||||
Decommissioning provision (Note 9) | 514 | 426 | ||||||||||||
Contract liabilities (Note 11) | 251 | 255 | ||||||||||||
| Deferred tax liabilities | 2,883 | 2,868 | ||||||||||||
Derivative financial instruments (Note 14) | 107 | 110 | ||||||||||||
| Other liabilities | 155 | 183 | ||||||||||||
| 16,606 | 15,549 | |||||||||||||
| Total liabilities | 18,385 | 18,457 | ||||||||||||
| Total equity | 17,039 | 17,510 | ||||||||||||
| Total liabilities and equity | 35,424 | 35,967 | ||||||||||||
See accompanying notes to the condensed consolidated interim financial statements
Pembina Pipeline Corporation Second Quarter 2025 43
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
(unaudited)
| 3 Months Ended June 30 | 6 Months Ended June 30 | |||||||||||||
| ($ millions, except per share amounts) | 2025 | 2024 | 2025 | 2024 | ||||||||||
Revenue (Note 11) | 1,792 | 1,855 | 4,074 | 3,395 | ||||||||||
Cost of sales (Note 4) | 1,086 | 1,101 | 2,470 | 2,062 | ||||||||||
Share of profit from equity accounted investees (Note 7) | 74 | 61 | 104 | 212 | ||||||||||
| Gross profit | 780 | 815 | 1,708 | 1,545 | ||||||||||
| General and administrative | 97 | 112 | 231 | 220 | ||||||||||
| Other (income) expense | (1) | (27) | 4 | (42) | ||||||||||
Loss on acquisition (Note 3) | — | 616 | — | 616 | ||||||||||
| Results from operating activities | 684 | 114 | 1,473 | 751 | ||||||||||
Net finance costs (Note 12) | 151 | 141 | 301 | 249 | ||||||||||
| Earnings (loss) before income tax | 533 | (27) | 1,172 | 502 | ||||||||||
| Current tax expense | 103 | 64 | 236 | 140 | ||||||||||
| Deferred tax expense (recovery) | 13 | (570) | 17 | (555) | ||||||||||
| Income tax expense (recovery) | 116 | (506) | 253 | (415) | ||||||||||
| Earnings | 417 | 479 | 919 | 917 | ||||||||||
| Earnings attributable to: | ||||||||||||||
| Shareholders | 417 | 471 | 919 | 909 | ||||||||||
| Non-controlling interest | — | 8 | — | 8 | ||||||||||
Other comprehensive (loss) income, net of tax (Note 13) | ||||||||||||||
| Exchange (loss) gain on translation of foreign operations | (316) | 47 | (314) | 143 | ||||||||||
| Impact of hedging activities | 17 | (7) | 8 | (15) | ||||||||||
| Other comprehensive (loss) income, net of tax | (299) | 40 | (306) | 128 | ||||||||||
| Total comprehensive income attributable to shareholders | 118 | 519 | 613 | 1,045 | ||||||||||
| Comprehensive income attributable to: | ||||||||||||||
| Shareholders | 118 | 511 | 613 | 1,037 | ||||||||||
| Non-controlling interest | — | 8 | — | 8 | ||||||||||
Earnings attributable to common shareholders, net of preferred share dividends | 380 | 436 | 844 | 840 | ||||||||||
Earnings per common share – basic (dollars) | 0.65 | 0.75 | 1.45 | 1.49 | ||||||||||
Earnings per common share – diluted (dollars) | 0.65 | 0.75 | 1.45 | 1.48 | ||||||||||
Weighted average number of common shares (millions) | ||||||||||||||
| Basic | 581 | 580 | 581 | 565 | ||||||||||
| Diluted | 582 | 581 | 582 | 566 | ||||||||||
See accompanying notes to the condensed consolidated interim financial statements
44 Pembina Pipeline Corporation Second Quarter 2025
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY
(unaudited)
| Attributable to Shareholders of the Company | Total Equity | |||||||||||||||||||||||||
($ millions) | Common Share Capital | Preferred Share Capital | Deficit | AOCI(1) | Total | Non-Controlling Interest | ||||||||||||||||||||
| December 31, 2024 | 17,008 | 2,164 | (2,303) | 641 | 17,510 | — | 17,510 | |||||||||||||||||||
Total comprehensive income (loss) | ||||||||||||||||||||||||||
Earnings | — | — | 919 | — | 919 | — | 919 | |||||||||||||||||||
Other comprehensive loss (Note 13) | — | — | — | (306) | (306) | — | (306) | |||||||||||||||||||
Total comprehensive income (loss) | — | — | 919 | (306) | 613 | — | 613 | |||||||||||||||||||
Transactions with shareholders of the Company (Note 10) | ||||||||||||||||||||||||||
Part VI.1 tax on preferred shares | — | (5) | — | — | (5) | — | (5) | |||||||||||||||||||
Preferred shares redemption | — | (200) | — | — | (200) | — | (200) | |||||||||||||||||||
Share-based payment transactions | 4 | — | — | — | 4 | — | 4 | |||||||||||||||||||
Dividends declared – common | — | — | (813) | — | (813) | — | (813) | |||||||||||||||||||
Dividends declared – preferred | — | — | (70) | — | (70) | — | (70) | |||||||||||||||||||
| Total transactions with shareholders of the Company | 4 | (205) | (883) | — | (1,084) | — | (1,084) | |||||||||||||||||||
| June 30, 2025 | 17,012 | 1,959 | (2,267) | 335 | 17,039 | — | 17,039 | |||||||||||||||||||
| December 31, 2023 | 15,765 | 2,199 | (2,372) | 221 | 15,813 | — | 15,813 | |||||||||||||||||||
Total comprehensive income | ||||||||||||||||||||||||||
Earnings | — | — | 909 | — | 909 | 8 | 917 | |||||||||||||||||||
Other comprehensive income | — | — | — | 128 | 128 | — | 128 | |||||||||||||||||||
| Total comprehensive income | — | — | 909 | 128 | 1,037 | 8 | 1,045 | |||||||||||||||||||
| Transactions with shareholders of the Company | ||||||||||||||||||||||||||
Common shares issued, net of issue costs | 1,230 | — | — | — | 1,230 | — | 1,230 | |||||||||||||||||||
Part VI.1 tax on preferred shares | — | (5) | — | — | (5) | — | (5) | |||||||||||||||||||
Share-based payment transactions | 10 | — | — | — | 10 | — | 10 | |||||||||||||||||||
Dividends declared – common | — | — | (767) | — | (767) | — | (767) | |||||||||||||||||||
Dividends declared – preferred | — | — | (64) | — | (64) | — | (64) | |||||||||||||||||||
Dividend equivalent payment – subscription receipts | — | — | (20) | — | (20) | — | (20) | |||||||||||||||||||
| Distributions to non-controlling interests | — | — | — | — | — | (10) | (10) | |||||||||||||||||||
| Non-controlling interest recognized on acquisition | — | — | — | — | — | 148 | 148 | |||||||||||||||||||
| Total transactions with shareholders of the Company | 1,240 | (5) | (851) | — | 384 | 138 | 522 | |||||||||||||||||||
| June 30, 2024 | 17,005 | 2,194 | (2,314) | 349 | 17,234 | 146 | 17,380 | |||||||||||||||||||
(1) Accumulated Other Comprehensive Income ("AOCI").
See accompanying notes to the condensed consolidated interim financial statements
Pembina Pipeline Corporation Second Quarter 2025 45
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(unaudited)
| 3 Months Ended June 30 | 6 Months Ended June 30 | |||||||||||||
| ($ millions) | 2025 | 2024 | 2025 | 2024 | ||||||||||
| Cash provided by (used in) | ||||||||||||||
| Operating activities | ||||||||||||||
| Earnings | 417 | 479 | 919 | 917 | ||||||||||
| Adjustments for items not involving cash: | ||||||||||||||
Share of profit from equity accounted investees (Note 7) | (74) | (61) | (104) | (212) | ||||||||||
| Depreciation and amortization | 257 | 240 | 490 | 396 | ||||||||||
Loss on acquisition (Note 3) | — | 616 | — | 616 | ||||||||||
Unrealized (gain) loss from derivative instruments | (31) | 45 | (40) | 147 | ||||||||||
| Net finance costs | 151 | 141 | 301 | 249 | ||||||||||
| Share-based compensation expense | — | 20 | 29 | 40 | ||||||||||
| Income tax expense (recovery) | 116 | (506) | 253 | (415) | ||||||||||
| Gain on asset disposal | (2) | (13) | (4) | (20) | ||||||||||
| Derecognition of insurance contract provision | — | (34) | — | (34) | ||||||||||
| Cash items paid or received: | ||||||||||||||
| Distributions from equity accounted investees | 136 | 123 | 268 | 362 | ||||||||||
| Net interest paid | (115) | (99) | (292) | (211) | ||||||||||
| Share-based compensation payment | — | — | (86) | (86) | ||||||||||
| Taxes paid | (65) | (91) | (127) | (290) | ||||||||||
| Change in non-cash operating working capital | 18 | 82 | 34 | (106) | ||||||||||
| Net change in contract liabilities | (1) | 5 | 7 | 32 | ||||||||||
| Other | (17) | 7 | (18) | 5 | ||||||||||
Cash flow from operating activities | 790 | 954 | 1,630 | 1,390 | ||||||||||
| Financing activities | ||||||||||||||
| Net increase (decrease) in bank borrowings | 84 | — | 469 | (447) | ||||||||||
| Proceeds from issuance of long-term debt, net of issue costs | 197 | 946 | 197 | 2,735 | ||||||||||
| Proceeds from subscription receipts | — | — | — | 1,228 | ||||||||||
| Repayment of long-term debt | — | — | (550) | (650) | ||||||||||
| Repayment of lease liability | (20) | (20) | (41) | (38) | ||||||||||
| Issuance of common shares on exercise of options | — | 10 | 3 | 10 | ||||||||||
Redemption of preferred shares (Note 10) | (200) | — | (226) | — | ||||||||||
| Common share dividends paid | (412) | (400) | (813) | (767) | ||||||||||
| Preferred share dividends paid | (35) | (33) | (70) | (64) | ||||||||||
| Distributions to non-controlling interest | — | (10) | — | (10) | ||||||||||
| Cash flow (used in) from financing activities | (386) | 493 | (1,031) | 1,997 | ||||||||||
| Investing activities | ||||||||||||||
| Capital expenditures | (197) | (265) | (371) | (451) | ||||||||||
| Contributions to equity accounted investees | (126) | (144) | (175) | (247) | ||||||||||
Acquisition net of cash acquired (Note 3) | — | (2,621) | — | (2,621) | ||||||||||
| Proceeds from sale of assets | 2 | 20 | 4 | 23 | ||||||||||
| Interest paid during construction | (6) | (10) | (12) | (16) | ||||||||||
| Return of capital from equity accounted investees | — | 63 | — | 63 | ||||||||||
Loan receivable from equity investment partner (Note 7) | — | 89 | — | — | ||||||||||
| Changes in non-cash investing working capital and other | (14) | (45) | 31 | (40) | ||||||||||
| Cash flow used in investing activities | (341) | (2,913) | (523) | (3,289) | ||||||||||
| Change in cash and cash equivalents | 63 | (1,466) | 76 | 98 | ||||||||||
| Effect of movement in exchange rates on cash held | (8) | 4 | (7) | 7 | ||||||||||
| Cash and cash equivalents, beginning of period | 155 | 1,718 | 141 | 151 | ||||||||||
| Cash and cash equivalents, end of period | 210 | 256 | 210 | 256 | ||||||||||
See accompanying notes to the condensed consolidated interim financial statements
46 Pembina Pipeline Corporation Second Quarter 2025
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. REPORTING ENTITY
Pembina Pipeline Corporation ("Pembina" or the "Company") is a Calgary-based, leading transportation and midstream service provider serving North America's energy industry. These condensed consolidated unaudited interim financial statements ("Interim Financial Statements") include the accounts of the Company, its subsidiary companies, partnerships and any investments in associates and joint arrangements as at and for the three and six months ended June 30, 2025.
Pembina owns an extensive network of strategically located assets which include hydrocarbon liquids and natural gas pipelines, gas gathering and processing facilities, oil and natural gas liquids infrastructure and logistics services, and an export terminals business. Pembina's network of strategically located assets and commercial operations along the majority of the hydrocarbon value chain allow it to offer a full spectrum of midstream and marketing services to the energy sector.
These Interim Financial Statements and the notes hereto have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, as issued by the International Accounting Standards Board. The accounting policies applied are in accordance with International Financial Reporting Standards ("IFRS"), are consistent with the audited annual consolidated financial statements of the Company as at and for the year ended December 31, 2024 ("Consolidated Financial Statements"), and should be read in conjunction with those Consolidated Financial Statements. The Interim Financial Statements were authorized for issue by Pembina's Board of Directors on August 7, 2025.
Use of Estimates and Judgments
Management is required to make estimates and assumptions and use judgment in the application of accounting policies that could have a significant impact on the amounts recognized in the Interim Financial Statements. Actual results may differ from estimates and those differences may be material. By their nature, judgments and estimates may change in light of new facts and circumstances in the internal and external environment. There have been no material changes to Pembina's critical accounting estimates and judgments during the three and six months ended June 30, 2025.
2. CHANGES IN ACCOUNTING POLICIES
The accounting policies used in preparing the Interim Financial Statements are described in Note 3 of Pembina's Consolidated Financial Statements. There were no new accounting standards or amendments to existing standards adopted in the six months ended June 30, 2025 that have a material impact on Pembina's financial statements.
New Standards and Interpretations Not Yet Adopted
IFRS 18 Presentation and Disclosure in Financial Statements ("IFRS 18")
IFRS 18 was issued in April 2024 and effective January 1, 2027, with early application permitted. The standard introduces key changes to the structure of the statement of earnings and comprehensive income, required disclosures for certain management-defined performance measures, and aggregation and disaggregation of line items in the financial statements. Pembina is currently reviewing the impact of this standard on its Consolidated Financial Statements.
Amendments to IFRS 9 and IFRS 7 - Contracts referencing Nature-dependent Electricity ("Contracts referencing NDE")
Contracts referencing NDE was issued in December 2024 and effective January 1, 2026, with early adoption permitted. The amendments provide relief as it relates to accounting for contracts to purchase or sell electricity from nature-dependent sources such as wind and solar power, including clarifying the application of own-use requirements, permitting hedge accounting if these contracts are used as hedging instruments, and adding new disclosure to enable investors to understand the effect of these contracts to Pembina. Pembina is currently reviewing the impact of this amendment as it relates to Pembina's wind-based power purchase agreements.
Pembina Pipeline Corporation Second Quarter 2025 47
3. ACQUISITION
On April 1, 2024, Pembina completed the acquisition of Enbridge Inc.'s interests in the Alliance, Aux Sable, and NRGreen joint ventures (the "Acquirees") for an aggregate purchase price of $2.8 billion, net of $327 million of assumed debt, representing Enbridge's proportionate share of the indebtedness of Alliance (the "Alliance/Aux Sable Acquisition"). Pembina made no adjustments to the purchase price allocation during the first quarter of 2025 and finalized it as at March 31, 2025.
The final purchase price allocation is based on assessed fair values and is as follows:
| As at April 1, 2024 | Previously reported | Adjustments | Final | ||||||||||||||||||||||||||
| ($ millions) | in Q2 2024 | ||||||||||||||||||||||||||||
| Purchase Price Consideration | |||||||||||||||||||||||||||||
| Cash (net of cash acquired) | 2,620 | — | 2,620 | ||||||||||||||||||||||||||
| Equity investment in Acquirees | 2,562 | — | 2,562 | ||||||||||||||||||||||||||
| Other | 12 | — | 12 | ||||||||||||||||||||||||||
| 5,194 | — | 5,194 | |||||||||||||||||||||||||||
| Fair Value of Net Assets Acquired | |||||||||||||||||||||||||||||
| Current assets | 240 | — | 240 | ||||||||||||||||||||||||||
| Property, plant and equipment | 6,339 | 6 | 6,345 | ||||||||||||||||||||||||||
| Other long-term assets | 38 | 19 | 57 | ||||||||||||||||||||||||||
| Goodwill | 805 | (2) | 803 | ||||||||||||||||||||||||||
| Current liabilities | (219) | (17) | (236) | ||||||||||||||||||||||||||
| Long-term debt | (596) | — | (596) | ||||||||||||||||||||||||||
| Deferred tax liabilities | (937) | 1 | (936) | ||||||||||||||||||||||||||
| Provisions | (52) | — | (52) | ||||||||||||||||||||||||||
| Other long-term liabilities | (276) | (7) | (283) | ||||||||||||||||||||||||||
| Non-controlling interest in Aux Sable's U.S. operations | (148) | — | (148) | ||||||||||||||||||||||||||
| 5,194 | — | 5,194 | |||||||||||||||||||||||||||
48 Pembina Pipeline Corporation Second Quarter 2025
4. OPERATING SEGMENTS
Pembina's operating segments are organized by three divisions: Pipelines, Facilities and Marketing & New Ventures.
| 3 Months Ended June 30, 2025 | Pipelines(1) | Facilities | Marketing & New Ventures(2) | Corporate & Inter-segment Eliminations | Total | ||||||||||||
| ($ millions) | |||||||||||||||||
| Revenue from external customers | 823 | 82 | 877 | 10 | 1,792 | ||||||||||||
| Inter-segment revenue | 51 | 213 | 6 | (270) | — | ||||||||||||
Total revenue(3) | 874 | 295 | 883 | (260) | 1,792 | ||||||||||||
| Operating expenses | 198 | 133 | 9 | (105) | 235 | ||||||||||||
| Cost of goods sold | 14 | — | 761 | (167) | 608 | ||||||||||||
| Depreciation and amortization included in gross profit | 165 | 59 | 17 | 2 | 243 | ||||||||||||
| Cost of sales | 377 | 192 | 787 | (270) | 1,086 | ||||||||||||
| Share of profit from equity accounted investees | — | 46 | 28 | — | 74 | ||||||||||||
| Gross profit | 497 | 149 | 124 | 10 | 780 | ||||||||||||
| Depreciation included in general and administrative | — | — | — | 14 | 14 | ||||||||||||
| Other general and administrative | 18 | 4 | 8 | 53 | 83 | ||||||||||||
| Other income | — | — | — | (1) | (1) | ||||||||||||
Results from operating activities | 479 | 145 | 116 | (56) | 684 | ||||||||||||
| Net finance costs | 6 | 3 | 2 | 140 | 151 | ||||||||||||
Earnings (loss) before tax | 473 | 142 | 114 | (196) | 533 | ||||||||||||
| Income tax expense | — | — | — | — | 116 | ||||||||||||
Earnings (loss) | 473 | 142 | 114 | (196) | 417 | ||||||||||||
Capital expenditures | 72 | 107 | 6 | 12 | 197 | ||||||||||||
| Contributions to equity accounted investees | — | 82 | 44 | — | 126 | ||||||||||||
| 3 Months Ended June 30, 2024 | Pipelines(1) | Facilities | Marketing & New Ventures(2) | Corporate & Inter-segment Eliminations | Total | ||||||||||||
| ($ millions) | |||||||||||||||||
| Revenue from external customers | 838 | 82 | 924 | 11 | 1,855 | ||||||||||||
| Inter-segment revenue | 52 | 212 | 1 | (265) | — | ||||||||||||
Total revenue(3) | 890 | 294 | 925 | (254) | 1,855 | ||||||||||||
| Operating expenses | 203 | 123 | 4 | (90) | 240 | ||||||||||||
| Cost of goods sold | 15 | — | 796 | (178) | 633 | ||||||||||||
| Depreciation and amortization included in gross profit | 164 | 45 | 17 | 2 | 228 | ||||||||||||
| Cost of sales | 382 | 168 | 817 | (266) | 1,101 | ||||||||||||
| Share of profit (loss) from equity accounted investees | — | 63 | (2) | — | 61 | ||||||||||||
| Gross profit | 508 | 189 | 106 | 12 | 815 | ||||||||||||
| Depreciation included in general and administrative | — | — | — | 12 | 12 | ||||||||||||
| Other general and administrative | 17 | 5 | 16 | 62 | 100 | ||||||||||||
| Other (income) expense | (1) | — | (46) | 20 | (27) | ||||||||||||
| Loss on acquisition | — | — | — | 616 | 616 | ||||||||||||
Results from operating activities | 492 | 184 | 136 | (698) | 114 | ||||||||||||
| Net finance costs | 7 | 3 | 1 | 130 | 141 | ||||||||||||
| Earnings (loss) before tax | 485 | 181 | 135 | (828) | (27) | ||||||||||||
| Income tax recovery | — | — | — | — | (506) | ||||||||||||
Earnings (loss) | 485 | 181 | 135 | (828) | 479 | ||||||||||||
Capital expenditures | 171 | 76 | 8 | 10 | 265 | ||||||||||||
| Contributions to equity accounted investees | — | — | 144 | — | 144 | ||||||||||||
(1) Pipelines revenue includes $135 million (2024: $159 million) associated with U.S. pipeline revenue.
(2) Marketing & New Ventures includes revenue of $231 million (2024: $230 million) associated with U.S. midstream sales.
(3) During the three months ended June 30, 2025, one customer accounted for 10 percent or more of total revenues with $243 million reported throughout all segments. During the three months ended June 30, 2024, no customer accounted for 10 percent or more of total revenues reported throughout all segments.
Pembina Pipeline Corporation Second Quarter 2025 49
| 6 Months Ended June 30, 2025 | Pipelines(1) | Facilities | Marketing & New Ventures(2) | Corporate & Inter-segment Eliminations | Total | ||||||||||||
| ($ millions) | |||||||||||||||||
| Revenue from external customers | 1,667 | 172 | 2,213 | 22 | 4,074 | ||||||||||||
| Inter-segment revenue | 101 | 430 | 6 | (537) | — | ||||||||||||
Total revenue(3) | 1,768 | 602 | 2,219 | (515) | 4,074 | ||||||||||||
| Operating expenses | 383 | 266 | 17 | (205) | 461 | ||||||||||||
| Cost of goods sold | 27 | — | 1,858 | (338) | 1,547 | ||||||||||||
| Depreciation and amortization included in gross profit | 316 | 104 | 37 | 5 | 462 | ||||||||||||
| Cost of sales | 726 | 370 | 1,912 | (538) | 2,470 | ||||||||||||
| Share of profit (loss) from equity accounted investees | 1 | 111 | (8) | — | 104 | ||||||||||||
| Gross profit | 1,043 | 343 | 299 | 23 | 1,708 | ||||||||||||
| Depreciation included in general and administrative | 1 | — | — | 27 | 28 | ||||||||||||
| Other general and administrative | 38 | 10 | 19 | 136 | 203 | ||||||||||||
| Other expense | 1 | 1 | 2 | — | 4 | ||||||||||||
Results from operating activities | 1,003 | 332 | 278 | (140) | 1,473 | ||||||||||||
| Net finance costs | 12 | 6 | 4 | 279 | 301 | ||||||||||||
Earnings (loss) before tax | 991 | 326 | 274 | (419) | 1,172 | ||||||||||||
| Income tax expense | — | — | — | — | 253 | ||||||||||||
| Earnings (loss) | 991 | 326 | 274 | (419) | 919 | ||||||||||||
Capital expenditures | 132 | 210 | 11 | 18 | 371 | ||||||||||||
| Contributions to equity accounted investees | — | 124 | 52 | — | 176 | ||||||||||||
| 6 Months Ended June 30, 2024 | Pipelines(1) | Facilities | Marketing & New Ventures(2) | Corporate & Inter-segment Eliminations | Total | ||||||||||||
| ($ millions) | |||||||||||||||||
| Revenue from external customers | 1,475 | 173 | 1,724 | 23 | 3,395 | ||||||||||||
| Inter-segment revenue | 103 | 352 | 1 | (456) | — | ||||||||||||
Total revenue(3) | 1,578 | 525 | 1,725 | (433) | 3,395 | ||||||||||||
| Operating expenses | 357 | 213 | 8 | (149) | 429 | ||||||||||||
| Cost of goods sold | 26 | — | 1,547 | (312) | 1,261 | ||||||||||||
| Depreciation and amortization included in gross profit | 259 | 78 | 32 | 3 | 372 | ||||||||||||
| Cost of sales | 642 | 291 | 1,587 | (458) | 2,062 | ||||||||||||
| Share of profit from equity accounted investees | 43 | 138 | 31 | — | 212 | ||||||||||||
| Gross profit | 979 | 372 | 169 | 25 | 1,545 | ||||||||||||
| Depreciation included in general and administrative | — | — | — | 24 | 24 | ||||||||||||
| Other general and administrative | 28 | 11 | 27 | 130 | 196 | ||||||||||||
| Other (income) expense | (2) | (2) | (60) | 22 | (42) | ||||||||||||
| Loss on acquisition | — | — | — | 616 | 616 | ||||||||||||
| Results from operating activities | 953 | 363 | 202 | (767) | 751 | ||||||||||||
| Net finance costs | 13 | 5 | 3 | 228 | 249 | ||||||||||||
| Earnings (loss) before tax | 940 | 358 | 199 | (995) | 502 | ||||||||||||
| Income tax recovery | — | — | — | — | (415) | ||||||||||||
| Earnings (loss) | 940 | 358 | 199 | (995) | 917 | ||||||||||||
| Capital expenditures | 312 | 108 | 11 | 20 | 451 | ||||||||||||
| Contributions to equity accounted investees | 5 | — | 242 | — | 247 | ||||||||||||
(1) Pipelines revenue includes $269 million (2024: $230 million) associated with U.S. pipeline revenue.
(2) Marketing & New Ventures includes revenue of $619 million (2024: $301 million) associated with U.S. midstream sales.
(3) During the six months ended June 30, 2025, one customer accounted for 10 percent or more of total revenues with $586 million reported throughout all segments. During the six months ended June 30, 2024, no customer accounted for 10 percent or more of total gross profit reported throughout all segments.
50 Pembina Pipeline Corporation Second Quarter 2025
5. PROPERTY, PLANT AND EQUIPMENT
| ($ millions) | Land and Land Rights | Pipelines | Facilities and Equipment | Cavern Storage and Other | Assets Under Construction | Total | ||||||||||||||
| Cost | ||||||||||||||||||||
| Balance at December 31, 2024 | 694 | 14,789 | 9,095 | 2,121 | 565 | 27,264 | ||||||||||||||
| Additions and transfers | (1) | 40 | 120 | 28 | 177 | 364 | ||||||||||||||
| Change in decommissioning provision | — | 41 | 9 | 1 | — | 51 | ||||||||||||||
| Foreign exchange | (10) | (187) | (93) | (2) | (2) | (294) | ||||||||||||||
| Dispositions and other | — | (6) | (24) | (28) | (3) | (61) | ||||||||||||||
| Balance at June 30, 2025 | 683 | 14,677 | 9,107 | 2,120 | 737 | 27,324 | ||||||||||||||
| Depreciation | ||||||||||||||||||||
| Balance at December 31, 2024 | 47 | 2,335 | 1,594 | 550 | — | 4,526 | ||||||||||||||
| Depreciation | 4 | 155 | 151 | 41 | — | 351 | ||||||||||||||
| Transfers | (1) | 14 | 2 | (15) | — | — | ||||||||||||||
| Dispositions and other | — | (13) | (16) | — | — | (29) | ||||||||||||||
| Balance at June 30, 2025 | 50 | 2,491 | 1,731 | 576 | — | 4,848 | ||||||||||||||
| Carrying amounts | ||||||||||||||||||||
| Balance at December 31, 2024 | 647 | 12,454 | 7,501 | 1,571 | 565 | 22,738 | ||||||||||||||
| Balance at June 30, 2025 | 633 | 12,186 | 7,376 | 1,544 | 737 | 22,476 | ||||||||||||||
Impairment Assessment
As previously disclosed on December 12, 2024, Pembina announced that the Canada Energy Regulatory ("CER") had initiated a toll review of the Alliance Canada pipeline assets. Due to the toll review, in the first quarter of 2025, Pembina identified indicators of impairment for the Cash-Generating Unit ("CGU") that includes the Alliance Canada assets and performed an impairment test as of March 31, 2025. The test determined that the recoverable amount of the CGU exceeded the carrying value of $6.3 billion as of March 31, 2025 and as a result, no impairment was recognized.
The recoverable amount calculated in the first quarter of 2025, was determined using a fair value less costs of disposal approach by discounting the expected future cash flows, including probability-weighted settlement outcomes for the Alliance Canada assets. The recoverable amount is sensitive to changes in key assumptions, including the outcome of the CER toll review and related negotiations, and the after-tax discount rate. Pembina applied an after-tax discount rate of 7.9 percent to discount the future cash flows of the CGU. An increase of 1.1 percent in the discount rate would reduce the recoverable amount of the CGU to its carrying value. A change in key assumptions could result in an impairment of the CGU.
In the second quarter of 2025, Pembina did not perform an impairment test as there were no indicators or triggering events requiring an assessment during the quarter.
Alliance Settlement
On July 24, 2025, Pembina announced that Alliance Pipeline Limited Partnership ("Alliance") has reached a negotiated settlement (the "Settlement") with shippers and interested parties on the Canadian portion of the Alliance Pipeline. The Settlement includes a revised toll schedule, effective November 1, 2025, which reduces long-term firm tolls by an average of 14 percent on a volume weighted average basis and introduces a 10-year toll option. The agreement also includes a revenue-sharing mechanism for seasonal and interruptible transportation services and provides shippers with a one-time term extension option. Alliance has filed an application with the CER seeking approval of the Settlement, which is requested by September 15, 2025. Pembina anticipates the Settlement will result in an approximate $50 million annual reduction in long-term firm service revenue over the next 10 years, plus impacts from the new revenue-sharing provision, which will depend on future commodity prices.
Pembina Pipeline Corporation Second Quarter 2025 51
6. INTANGIBLE ASSETS AND GOODWILL
| Intangible Assets | ||||||||||||||||||||
| ($ millions) | Goodwill | Purchase and Sale Contracts and Other | Customer Relationships | Total | Total Goodwill & Intangible Assets | |||||||||||||||
| Cost | ||||||||||||||||||||
| Balance at December 31, 2024 | 5,024 | 324 | 1,877 | 2,201 | 7,225 | |||||||||||||||
| Additions | — | 16 | — | 16 | 16 | |||||||||||||||
| Foreign exchange adjustments | (43) | — | (41) | (41) | (84) | |||||||||||||||
| Balance at June 30, 2025 | 4,981 | 340 | 1,836 | 2,176 | 7,157 | |||||||||||||||
| Amortization | ||||||||||||||||||||
| Balance at December 31, 2024 | — | 65 | 632 | 697 | 697 | |||||||||||||||
| Amortization | — | 11 | 60 | 71 | 71 | |||||||||||||||
| Dispositions and other | — | — | (9) | (9) | (9) | |||||||||||||||
| Balance at June 30, 2025 | — | 76 | 683 | 759 | 759 | |||||||||||||||
| Carrying amounts | ||||||||||||||||||||
| Balance at December 31, 2024 | 5,024 | 259 | 1,245 | 1,504 | 6,528 | |||||||||||||||
| Balance at June 30, 2025 | 4,981 | 264 | 1,153 | 1,417 | 6,398 | |||||||||||||||
7. INVESTMENTS IN EQUITY ACCOUNTED INVESTEES
Ownership Interest (percent) | Share of Profit (Loss) from Equity Accounted Investees | Investments in Equity Accounted Investees | ||||||||||||||||||
| 6 Months Ended June 30 | ||||||||||||||||||||
| ($ millions) | June 30, 2025 | December 31, 2024 | 2025 | 2024 | June 30, 2025 | December 31, 2024 | ||||||||||||||
| PGI | 60 | 60 | 110 | 137 | 3,710 | 3,740 | ||||||||||||||
| Cedar LNG | 49.9 | 49.9 | (7) | (2) | 467 | 430 | ||||||||||||||
Alliance(1) | 100 | 100 | — | 42 | — | — | ||||||||||||||
Aux Sable(1) | 100 | 100 | — | 33 | — | — | ||||||||||||||
Other(2) | 50 - 75 | 50 - 75 | 1 | 2 | 102 | 97 | ||||||||||||||
| 104 | 212 | 4,279 | 4,267 | |||||||||||||||||
(1) On April 1, 2024, Pembina completed its acquisition of Enbridge's interests in the Alliance, Aux Sable, and NRGreen joint ventures. On August 1, 2024, Pembina acquired the remaining non-controlling interest in Aux Sable's U.S. operations. Refer to Note 3 for further information.
(2) Other includes Pembina's interest in Grand Valley, Fort Corp, ACG, and Greenlight.
Financing Activities for Equity Accounted Investees
PGI
On March 21, 2025, pursuant to an amended and restated credit agreement, PGI exercised the accordion feature under its existing revolving credit facility and opened a new $500 million revolving credit facility, maturing on March 21, 2027. Concurrently, PGI reestablished a $500 million accordion under the credit facility.
52 Pembina Pipeline Corporation Second Quarter 2025
8. LONG-TERM DEBT
This note provides information about the contractual terms of Pembina's interest-bearing long-term debt, which is measured at amortized cost.
Carrying Value, Terms and Conditions, and Debt Maturity Schedule
Carrying Value | |||||||||||||||||
($ millions) | Authorized at June 30, 2025 | Nominal Interest Rate | Year of Maturity | June 30, 2025 | December 31, 2024 | ||||||||||||
| Variable rate debt | |||||||||||||||||
Senior unsecured credit facilities(1)(2) | 3,487 | 4.79(3) | Various(1) | 1,579 | 1,148 | ||||||||||||
| Fixed rate debt | |||||||||||||||||
| Senior unsecured medium-term notes series 3 | 450 | 4.75 | 2043 | 450 | 450 | ||||||||||||
| Senior unsecured medium-term notes series 4 | 600 | 4.81 | 2044 | 600 | 600 | ||||||||||||
| Senior unsecured medium-term notes series 5 | — | 3.54 | 2025 | — | 550 | ||||||||||||
| Senior unsecured medium-term notes series 6 | 600 | 4.24 | 2027 | 600 | 600 | ||||||||||||
| Senior unsecured medium-term notes series 7 | 600 | 3.71 | 2026 | 600 | 600 | ||||||||||||
| Senior unsecured medium-term notes series 9 | 550 | 4.74 | 2047 | 550 | 550 | ||||||||||||
| Senior unsecured medium-term notes series 10 | 650 | 4.02 | 2028 | 650 | 650 | ||||||||||||
| Senior unsecured medium-term notes series 11 | 800 | 4.75 | 2048 | 800 | 800 | ||||||||||||
| Senior unsecured medium-term notes series 12 | 650 | 3.62 | 2029 | 650 | 650 | ||||||||||||
| Senior unsecured medium-term notes series 13 | 700 | 4.54 | 2049 | 700 | 700 | ||||||||||||
| Senior unsecured medium-term notes series 15 | 600 | 3.31 | 2030 | 600 | 600 | ||||||||||||
| Senior unsecured medium-term notes series 16 | 400 | 4.67 | 2050 | 400 | 400 | ||||||||||||
| Senior unsecured medium-term notes series 17 | 500 | 3.53 | 2031 | 500 | 500 | ||||||||||||
| Senior unsecured medium-term notes series 18 | 500 | 4.49 | 2051 | 500 | 500 | ||||||||||||
| Senior unsecured medium-term notes series 20 | 750 | 5.02 | 2032 | 750 | 750 | ||||||||||||
| Senior unsecured medium-term notes series 21 | 600 | 5.21 | 2034 | 600 | 600 | ||||||||||||
| Senior unsecured medium-term notes series 22 | 750 | 5.67 | 2054 | 750 | 750 | ||||||||||||
| Senior unsecured medium-term notes series 23 | 650 | 5.22 | 2033 | 650 | 650 | ||||||||||||
| Total fixed rate loans and borrowings outstanding | 10,350 | 10,900 | |||||||||||||||
| Deferred financing costs | 13 | 12 | |||||||||||||||
| Total loans and borrowings | 11,942 | 12,060 | |||||||||||||||
| Less current portion loans and borrowings | (597) | (1,525) | |||||||||||||||
| Total non-current loans and borrowings | 11,345 | 10,535 | |||||||||||||||
| Subordinated hybrid notes | |||||||||||||||||
| Subordinated notes, series 1 | 600 | 4.80 | 2081 | 600 | 600 | ||||||||||||
| Subordinated notes, series 2 | 200 | 5.95 | 2055 | 200 | — | ||||||||||||
| 800 | 600 | ||||||||||||||||
| Deferred financing costs | (5) | (4) | |||||||||||||||
| Total subordinated hybrid notes | 795 | 596 | |||||||||||||||
(1) Pembina's unsecured credit facilities include a $1.5 billion revolving facility that matures in June 2029, a $1.0 billion sustainability linked revolving facility that matures in June 2027, a U.S. $250 million non-revolving term loan that matures in April 2030, a $270 million term loan and a U.S. $240 million term loan, both of which mature in December 2025, and a $50 million operating facility that matures in June 2026, which is typically renewed on an annual basis.
(2) Includes U.S. $250 million variable rate debt outstanding at June 30, 2025 (2024: U.S. $250 million). The U.S. dollar denominated non-revolving term loan is designated as a hedge of the Company's net investment in selected foreign operations with a U.S. dollar functional currency.
(3) The nominal interest rate is the weighted average of all drawn credit facilities based on Pembina's credit rating at June 30, 2025. Borrowings under the credit facilities bear interest at prime rates, the Canadian Overnight Repo Rate Average ("CORRA"), or the USD Secured Overnight Financing Rate ("SOFR"), plus applicable margins.
Pembina Pipeline Corporation Second Quarter 2025 53
On April 2, 2025, Pembina completed an extension on its unsecured U.S. $250 million non-revolving term loan, which now matures in April 2030.
On June 6, 2025, Pembina closed $200 million offering of Fixed-To-Fixed Rate Subordinated Hybrid Notes, Series 2 (the "Series 2 Subordinated Notes") due June 6, 2055. The Series 2 Subordinated Notes have a fixed 5.95 percent interest rate, which will reset on June 6, 2035, and on every fifth anniversary thereafter, based on the five-year Government of Canada yield plus 2.71 percent for the period from, and including, June 6, 2035 to, but excluding June 6, 2055. The interest rate during any subsequent fixed rate period will not be less than 5.95 percent. Pembina's Series 2 Subordinated Notes are subject to optional redemption by Pembina from March 6, 2035 to June 6, 2035 and after the initial interest reset date, on any interest payment date or any interest reset date, as applicable. Pembina may also redeem the Series 2 Subordinated Notes in certain other limited circumstances. Pembina used the net proceeds of the offering of the Series 2 Subordinated Notes to fund the redemption of its outstanding Cumulative Redeemable Minimum Rate Reset Class A Preferred Shares, Series 19 ("Series 19 Class A Preferred Shares") on June 30, 2025.
On July 23, 2025, Pembina announced the approval of amendments (the "Amendments") to the indenture governing the Series 1 Subordinated Notes. The Amendments provided for, among other things, the exchange (the "Note Exchange") of all of the outstanding Series 1 Subordinated Notes for an equal principal amount of 4.80 percent Fixed-to-Fixed Rate Subordinated Notes, Series 3 of Pembina (the "Series 3 Subordinated Notes") due January 25, 2081. The Series 3 Subordinated Notes have the same economic terms as the Series 1 Subordinated Notes, including interest rate, interest payment dates, interest reset dates, maturity date and redemption provisions, but do not provide for an entitlement to delivery of preferred shares upon the occurrence of certain bankruptcy and related events. The Note Exchange was completed on July 25, 2025, following the execution of the supplemental indenture implementing the Amendments. The Series 3 Subordinated Notes rank equally in right of payment with the Series 2 Subordinated Notes. Pursuant to the mandatory redemption provisions attaching to the Class A Preferred Shares, Series 2021-A (the "Series 2021-A Class A Preferred Shares"), in connection with the Note Exchange, on July 28, 2025, Pembina redeemed all of the issued and outstanding Series 2021-A Class A Preferred Shares (refer to Note 10 for further information).
Covenants
Pembina is subject to certain financial covenants under its medium-term note indentures and credit facilities agreements and complies with all financial covenants as of June 30, 2025. Pembina's financial covenants under the indenture governing its medium-term notes and the agreements governing the credit facilities include the following:
| Debt | Financial Covenant(1) | Ratio | ||||||||||||
| Senior unsecured medium-term notes | Funded Debt to Capitalization | Maximum 0.70(2) | ||||||||||||
| Credit facilities | Debt to Capital | Maximum 0.70(3) | ||||||||||||
(1) Terms as defined in relevant agreements.
(2) Covenant must be met at the reporting date and filed within 90 days after the end of each fiscal year and within 10 business days after filing of the Consolidated Financial Statements.
(3) Covenant must be met at the reporting date and filed within 120 days after the end of each fiscal year and 60 days after each quarter.
54 Pembina Pipeline Corporation Second Quarter 2025
9. DECOMMISSIONING PROVISION
| ($ millions) | 2025 | ||||||||||
| Balance at January 1 | 432 | ||||||||||
| Unwinding of discount rate | 12 | ||||||||||
| Change in rates | (12) | ||||||||||
| Change in cost estimates and other | 84 | ||||||||||
| Total | 516 | ||||||||||
Current portion of provision(1) | 2 | ||||||||||
Balance at June 30 | 514 | ||||||||||
(1) Included in trade payables and other on the condensed consolidated interim financial statements.
10. SHARE CAPITAL
Common Share Capital
| ($ millions, except as noted) | Number of Common Shares (millions) | Common Share Capital | ||||||
| Balance at December 31, 2024 | 581 | 17,008 | ||||||
Share-based payment transactions(1) | — | 4 | ||||||
| Balance at June 30, 2025 | 581 | 17,012 | ||||||
(1) Exercised options are settled by issuing the net number of common shares equivalent to the gain upon exercise.
Share Repurchase Program
On May 14, 2025, the Toronto Stock Exchange ("TSX") accepted the renewal of Pembina's normal course issuer bid (the "NCIB") that allows the Company to repurchase, at its discretion, up to five percent of the Company's outstanding common shares (representing approximately 29 million common shares) through the facilities of the TSX, the New York Stock Exchange and/or alternative Canadian trading systems or as otherwise permitted by applicable securities law, subject to certain restrictions on the number of common shares that may be purchased on a single day. The NCIB commenced on May 16, 2025 and will expire on the earlier of May 15, 2026, the date on which Pembina has acquired the maximum number of common shares allowable under the NCIB or the date on which Pembina otherwise decides not to make any further repurchases under the NCIB. No common shares were purchased by Pembina during the three and six months ended June 30, 2025.
Preferred Share Capital
| ($ millions, except as noted) | Number of Preferred Shares (millions) | Preferred Share Capital | ||||||
| Balance at December 31, 2024 | 93 | 2,164 | ||||||
| Class A, Series 22 Preferred Shares redeemed | (1) | — | ||||||
| Class A, Series 19 Preferred Shares redeemed | (8) | (200) | ||||||
| Part VI.1 tax | — | (5) | ||||||
| Balance at June 30, 2025 | 84 | 1,959 | ||||||
On January 8, 2025, Pembina redeemed all of the approximately one million issued and outstanding Cumulative Redeemable Floating Rate Class A Preferred Shares, Series 22 ("Series 22 Class A Preferred Shares") at a redemption price of $25.50 per Series 22 Class A Preferred Share, plus all accrued and unpaid dividends thereon. Pembina had announced its intention to redeem the Series 22 Class A Preferred Shares during the fourth quarter of 2024 and, as a result, the equity was reclassified as a financial liability of approximately $26 million for the total redemption price in that same quarter.
Pembina Pipeline Corporation Second Quarter 2025 55
On June 30, 2025, Pembina redeemed all of the eight million issued and outstanding Cumulative Redeemable Fixed Rate Class A Preferred Shares, Series 19 ("Series 19 Class A Preferred Shares") at a redemption price of $25.00 per Series 19 Class A Preferred Share. The total redemption price for the Series 19 Class A Preferred Shares was $200 million.
On July 28, 2025, in connection with the Note Exchange, Pembina redeemed all of the 600,000 issued and outstanding Series 2021-A Class A Preferred Shares, which were deliverable to holders of the Series 1 Subordinated Notes following the occurrence of certain bankruptcy and related events. The Series 2021-A Class A Preferred Shares were issued by Pembina to Computershare Trust Company of Canada to be held in trust to satisfy its obligations under the indenture governing the Series 1 Subordinated Notes.
Dividends
The following dividends were declared and paid by Pembina:
| 6 Months Ended June 30 | ||||||||
| ($ millions) | 2025 | 2024 | ||||||
| Common shares | ||||||||
| Common share | 813 | 767 | ||||||
| Class A preferred shares | ||||||||
| Series 1 Class A Preferred Share | 8 | 8 | ||||||
| Series 3 Class A Preferred Share | 5 | 4 | ||||||
| Series 5 Class A Preferred Share | 9 | 6 | ||||||
| Series 7 Class A Preferred Share | 7 | 6 | ||||||
| Series 9 Class A Preferred Share | 5 | 5 | ||||||
| Series 15 Class A Preferred Share | 6 | 6 | ||||||
| Series 17 Class A Preferred Share | 5 | 4 | ||||||
| Series 19 Class A Preferred Share | 5 | 5 | ||||||
| Series 21 Class A Preferred Share | 12 | 11 | ||||||
| Series 22 Class A Preferred Share | — | 1 | ||||||
| Series 25 Class A Preferred Share | 8 | 8 | ||||||
| 70 | 64 | |||||||
On August 7, 2025, Pembina announced that its Board of Directors had declared a common share cash dividend for the third quarter of 2025 of $0.71 per share to be paid on September 29, 2025, to shareholders of record on September 15, 2025.
Pembina's Board of Directors also declared quarterly dividends for Pembina's Class A preferred shares on July 8, 2025 as outlined in the following table:
| Series | Record Date | Payable Date | Dividend Amount ($ millions) | ||||||||
| Series 1, 3, 5, 7, 9 and 21 | August 1, 2025 | September 2, 2025 | 23 | ||||||||
| Series 15 and 17 | September 15, 2025 | October 1, 2025 | 5 | ||||||||
| Series 25 | July 31, 2025 | August 15, 2025 | 4 | ||||||||
56 Pembina Pipeline Corporation Second Quarter 2025
11. REVENUE
Revenue has been disaggregated into categories to reflect how the nature, timing and uncertainty of revenue and cash flows are affected by economic factors.
a.Revenue Disaggregation
| 2025 | 2024 | |||||||||||||||||||||||||||||||
| 3 Months Ended June 30 | Pipelines | Facilities | Marketing & New Ventures | Corporate | Total | Pipelines | Facilities | Marketing & New Ventures | Corporate | Total | ||||||||||||||||||||||
| ($ millions) | ||||||||||||||||||||||||||||||||
Take-or-pay(1) | 630 | 50 | 5 | — | 685 | 636 | 56 | — | — | 692 | ||||||||||||||||||||||
Fee-for-service(1) | 136 | 16 | 30 | — | 182 | 138 | 11 | 30 | — | 179 | ||||||||||||||||||||||
Product sales(2) | 4 | — | 769 | — | 773 | — | — | 863 | — | 863 | ||||||||||||||||||||||
| Revenue from contracts with customers | 770 | 66 | 804 | — | 1,640 | 774 | 67 | 893 | — | 1,734 | ||||||||||||||||||||||
| Realized gain from derivative instruments | — | — | 38 | — | 38 | — | — | 74 | — | 74 | ||||||||||||||||||||||
| Unrealized gain (loss) from derivative instruments | — | — | 31 | — | 31 | — | — | (45) | — | (45) | ||||||||||||||||||||||
Revenue from risk management and physical derivative contracts | — | — | 69 | — | 69 | — | — | 29 | — | 29 | ||||||||||||||||||||||
| Lease income | 47 | 11 | 2 | — | 60 | 57 | 7 | — | — | 64 | ||||||||||||||||||||||
Shared service revenue(3) and other | 6 | 5 | 2 | 10 | 23 | 7 | 8 | 2 | 11 | 28 | ||||||||||||||||||||||
| Total external revenue | 823 | 82 | 877 | 10 | 1,792 | 838 | 82 | 924 | 11 | 1,855 | ||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||||||||||||||
| 6 Months Ended June 30 | Pipelines | Facilities | Marketing & New Ventures | Corporate | Total | Pipelines | Facilities | Marketing & New Ventures | Corporate | Total | ||||||||||||||||||||||||||||
($ millions) | ||||||||||||||||||||||||||||||||||||||
Take-or-pay(1) | 1,273 | 99 | 10 | — | 1,382 | 1,089 | 111 | — | — | 1,200 | ||||||||||||||||||||||||||||
Fee-for-service(1) | 277 | 40 | 69 | — | 386 | 261 | 35 | 57 | — | 353 | ||||||||||||||||||||||||||||
Product sales(2) | 5 | — | 2,026 | — | 2,031 | — | — | 1,693 | — | 1,693 | ||||||||||||||||||||||||||||
| Revenue from contracts with customers | 1,555 | 139 | 2,105 | — | 3,799 | 1,350 | 146 | 1,750 | — | 3,246 | ||||||||||||||||||||||||||||
| Realized gain from derivative instruments | — | — | 59 | — | 59 | — | — | 119 | — | 119 | ||||||||||||||||||||||||||||
| Unrealized loss (gain) from derivative instruments | — | — | 40 | — | 40 | — | — | (147) | — | (147) | ||||||||||||||||||||||||||||
Revenue from risk management and physical derivative contracts | — | — | 99 | — | 99 | — | — | (28) | — | (28) | ||||||||||||||||||||||||||||
| Lease income | 95 | 20 | 3 | — | 118 | 116 | 15 | — | — | 131 | ||||||||||||||||||||||||||||
Shared service revenue(3) and other | 17 | 13 | 6 | 22 | 58 | 9 | 12 | 2 | 23 | 46 | ||||||||||||||||||||||||||||
| Total external revenue | 1,667 | 172 | 2,213 | 22 | 4,074 | 1,475 | 173 | 1,724 | 23 | 3,395 | ||||||||||||||||||||||||||||
(1) Revenue recognized over time.
(2) Revenue recognized at a point in time.
(3) Includes $13 million for the three months ended June 30, 2025 (2024: $14 million) and $28 million for the six months ended June 30, 2025 (2024: $30 million) of fixed fee income related to shared service agreements with joint ventures.
Pembina Pipeline Corporation Second Quarter 2025 57
b.Contract Liabilities
Significant changes in the contract liabilities balances during the period are as follows:
| 6 Months Ended June 30, 2025 | 12 Months Ended December 31, 2024 | |||||||||||||||||||
($ millions) | Take-or-Pay | Other Contract Liabilities | Total Contract Liabilities | Take-or-Pay | Other Contract Liabilities | Total Contract Liabilities | ||||||||||||||
| Opening balance | 1 | 297 | 298 | 1 | 158 | 159 | ||||||||||||||
| Additions (net in the period) | 8 | 24 | 32 | — | 49 | 49 | ||||||||||||||
| Alliance/Aux Sable Acquisition | — | — | — | — | 144 | 144 | ||||||||||||||
Revenue recognized from contract liabilities(1) | — | (31) | (31) | — | (44) | (44) | ||||||||||||||
| Disposition | — | — | — | — | (10) | (10) | ||||||||||||||
Closing balance | 9 | 290 | 299 | 1 | 297 | 298 | ||||||||||||||
Less current portion(2) | (9) | (39) | (48) | (1) | (42) | (43) | ||||||||||||||
| Ending balance | — | 251 | 251 | — | 255 | 255 | ||||||||||||||
(1) Recognition of revenue related to performance obligations satisfied in the period that were included in the opening balance of contract liabilities.
(2) Represents cash collected under take-or-pay contracts which will be recognized within one year as the customer chooses to ship, process, or otherwise forego the associated service.
Contract liabilities depict Pembina's obligation to perform services in the future for cash and non-cash consideration which have been received from customers. Contract liabilities include up-front payments or non-cash consideration received from customers for future transportation, gas processing, terminalling, storage services, and construction. Contract liabilities also include consideration received from customers for take-or-pay commitments where the customer has a make-up right to ship or process future volumes under a firm contract. These amounts are non-refundable should the customer not use its make-up rights. In all instances where goods or services have been transferred to a customer in advance of the receipt of customer consideration, Pembina's right to consideration is unconditional and has therefore been presented as a receivable.
12. NET FINANCE COSTS
| 3 Months Ended June 30 | 6 Months Ended June 30 | |||||||||||||
($ millions) | 2025 | 2024 | 2025 | 2024 | ||||||||||
| Interest expense on financial liabilities measured at amortized cost: | ||||||||||||||
| Loans and borrowings | 130 | 133 | 260 | 244 | ||||||||||
| Subordinated hybrid notes | 8 | 8 | 15 | 15 | ||||||||||
| Leases | 8 | 8 | 16 | 16 | ||||||||||
| Interest income | (1) | (9) | (4) | (38) | ||||||||||
| Unwinding of discount rate | 6 | 5 | 12 | 10 | ||||||||||
| Foreign exchange (gains) losses and other | — | (4) | 2 | 2 | ||||||||||
| Net finance costs | 151 | 141 | 301 | 249 | ||||||||||
58 Pembina Pipeline Corporation Second Quarter 2025
13. ACCUMULATED OTHER COMPREHENSIVE INCOME
| ($ millions) | Currency Translation Reserve | Cash Flow Hedge Reserve | Pension and other Post-Retirement Benefit Plan Adjustments(2) | Total | ||||||||||
| Balance at December 31, 2024 | 620 | 8 | 13 | 641 | ||||||||||
| Other comprehensive loss before hedging activities | (314) | — | — | (314) | ||||||||||
Other comprehensive gain (loss) resulting from hedging activities, net of tax(1) | 16 | (8) | — | 8 | ||||||||||
| Balance at June 30, 2025 | 322 | — | 13 | 335 | ||||||||||
(1) Amounts relate to hedges of the Company's net investment in foreign operations (reported in Currency Translation Reserve) and interest rate forward swaps (reported in Cash Flow Hedge Reserve) (Note 14), which expired on March 31, 2025. At June 30, 2025, the other comprehensive loss resulting from hedging activities for interest rate forward swaps includes a realized loss of $4 million that was reclassified to net finance costs (2024: $9 million realized gain).
(2) Pension and other Post-Retirement Benefit Plan Adjustments will not be reclassified into earnings.
14. FINANCIAL INSTRUMENTS & RISK MANAGEMENT
Fair Values
The fair value of financial instruments utilizes a variety of valuation inputs. When measuring fair value, Pembina uses observable market data to the greatest extent possible. Depending on the nature of these valuation inputs, financial instruments are categorized as follows:
a. Level 1
Level 1 fair values are based on inputs that are unadjusted observable quoted prices from active markets for identical assets or liabilities as at the measurement date.
b. Level 2
Level 2 fair values are based on inputs, other than quoted market prices included in Level 1, that are either directly or indirectly observable. Level 2 fair value inputs include quoted forward market prices, time value, and broker quotes that are observable for the duration of the financial instrument's contractual term. These inputs are often adjusted for factors specific to the asset or liability, such as, location differentials and credit risk.
Financial instruments that utilize Level 2 fair valuation inputs include derivatives arising from physical commodity forward contracts, commodity swaps and options, and forward interest rate and foreign-exchange swaps. In addition, Pembina's loans and borrowings utilize Level 2 fair valuation inputs, whereby the valuation technique is based on discounted future interest and principal payments using the current market interest rates of instruments with similar terms.
c. Level 3
Level 3 fair values utilize inputs that are not based on observable market data. Rather, various valuation techniques are used to develop inputs.
Financial instruments that utilize Level 3 fair valuation inputs include embedded derivative instruments arising from long-term power purchase agreements. The fair value of long-term power purchase agreements is measured using a pricing and cash flow model that accounts for forward power prices, renewable wind power pricing discounts and differentials, and inflationary metrics. The rate used to discount the respective estimated cash flows is a government risk-free interest rate that is adjusted for an appropriate credit spread. The fair valuation of the embedded derivative instruments is judged to be a significant management estimate. These assumptions and inputs are susceptible to change and may differ from actual future developments. This estimation uncertainty could materially impact the quantified fair value; and therefore, the gains and losses on commodity-related derivative financial instruments.
Pembina Pipeline Corporation Second Quarter 2025 59
The carrying values of financial assets and liabilities in relation to their respective fair values, together with their appropriate fair value categorization are illustrated in the table below. Certain other non-derivative financial instruments measured at amortized cost, including cash and cash equivalents, trade receivables and other, trade payables and other, and other liabilities have been excluded since their carrying values are judged to approximate their fair values due to their nature and short maturity. These instruments would be categorized as Level 2 in the fair value hierarchy.
| June 30, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||
| Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||||||||
| ($ millions) | Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||
Financial assets carried at fair value | |||||||||||||||||||||||||||||
Derivative financial instruments(1) | 22 | — | 22 | — | 13 | — | 13 | — | |||||||||||||||||||||
Financial liabilities carried at fair value | |||||||||||||||||||||||||||||
Derivative financial instruments(1) | 132 | — | 13 | 119 | 159 | — | 42 | 117 | |||||||||||||||||||||
Financial liabilities carried at amortized cost | |||||||||||||||||||||||||||||
Long-term debt(2) | 12,737 | — | 12,656 | — | 12,656 | — | 12,649 | — | |||||||||||||||||||||
(1) At June 30, 2025, all derivative financial instruments are carried at fair value through earnings. At December 31, 2024, all derivative financial instruments are carried at fair value through earnings, except for $5 million in interest rate derivative financial assets that were designated as cash flow hedges and expired on March 31, 2025.
(2) Carrying value of current and non-current balances. Includes loans and borrowings and subordinated hybrid notes.
Changes in fair value of the derivative net liabilities classified as Level 3 in the fair value hierarchy were as follows:
| ($ millions) | 2025 | |||||||
| Level 3 derivative net liability at January 1 | (117) | |||||||
Loss included in revenue from risk management and physical derivative contracts | (2) | |||||||
Level 3 derivative liability at June 30 | (119) | |||||||
There were no transfers into or out of Level 3 during the six months ended June 30, 2025.
Gains and Losses from Derivative Instruments
| 3 Months Ended June 30 | 6 Months Ended June 30 | |||||||||||||
| ($ millions) | 2025 | 2024 | 2025 | 2024 | ||||||||||
| Derivative instruments held at fair value through earnings | ||||||||||||||
| Realized gain | ||||||||||||||
Commodity-related gain recorded in revenue from risk management and physical derivative contracts | (38) | (74) | (59) | (119) | ||||||||||
| Unrealized (gain) loss | ||||||||||||||
Commodity-related (gain) loss recorded in revenue from risk management and physical derivative contracts | (31) | 45 | (40) | 147 | ||||||||||
| Foreign exchange gain recorded in net finance costs | — | (3) | — | — | ||||||||||
| Derivative instruments in hedging relationships | ||||||||||||||
Interest rate loss recorded in other comprehensive income(1) | — | 4 | 4 | 2 | ||||||||||
(1) Unrealized losses or gains for designated cash flow hedges are recognized in impact of hedging activities in the Consolidated Statements of Earnings and Comprehensive Income, with realized losses or gains being reclassified to net finance costs. The movement in other comprehensive income relates to realized losses or gains on interest rate forward swaps, which expired on March 31, 2025. A gain of $4 million was recognized during the first quarter of 2025, prior to the expiration date that was reclassified to net finance costs (three and six month ended June 30, 2024: $5 million and $9 million realized gain, respectively). No losses or gains have been recognized in net income relating to discontinued cash flow hedges.
60 Pembina Pipeline Corporation Second Quarter 2025
15. RELATED PARTIES
Pembina enters into transactions with related parties in the normal course of business and all transactions are measured at their exchange amount, unless otherwise noted. Pembina provides management and operational oversight services, on a fixed fee and cost recovery basis, to certain equity accounted investees. Pembina also contracts for services and capacity from certain of its equity accounted investees, advances funds to support operations and provides letters of credit, including financial guarantees.
A summary of the significant related party transactions and balances are as follows:
3 Months Ended June 30 | 6 Months Ended June 30 | |||||||||||||
| ($ millions) | 2025 | 2024 | 2025 | 2024 | ||||||||||
| PGI | 58 | 59 | 121 | 132 | ||||||||||
Aux Sable(1) | — | — | — | 32 | ||||||||||
Alliance(1) | — | — | — | 4 | ||||||||||
| Cedar LNG | 5 | 3 | 9 | 6 | ||||||||||
Other(2) | — | 1 | — | 2 | ||||||||||
Total services provided(3) | 63 | 63 | 130 | 176 | ||||||||||
| PGI | 2 | 2 | 4 | 4 | ||||||||||
Alliance(1) | — | — | — | 3 | ||||||||||
| Total services received | 2 | 2 | 4 | 7 | ||||||||||
As at ($ millions) | June 30, 2025 | December 31, 2024 | ||||||||||||
Trade receivables and other(4) | 34 | 37 | ||||||||||||
(1) As of April 1, 2024, following the completion of Pembina's acquisition of a controlling interest in Alliance and Aux Sable, these entities became consolidated subsidiaries of Pembina and, as such, are no longer related parties.
(2) Other includes transactions with Grand Valley, ACG, and Greenlight.
(3) Services provided by Pembina include payments made by Pembina on behalf of related parties.
(4) As at June 30, 2025, trade receivables and other includes $27 million due from PGI (December 31, 2024: $34 million), and $6 million due from Cedar LNG (December 31, 2024: $2 million).
Pembina Pipeline Corporation Second Quarter 2025 61
16. COMMITMENTS AND CONTINGENCIES
Commitments
Pembina was committed for the following amounts under its contracts and arrangements as at June 30, 2025:
Contractual Obligations(1) | Payments Due by Period | ||||||||||||||||
| ($ millions) | Total | Less than 1 year | 1 – 3 years | 3 – 5 years | After 5 years | ||||||||||||
Transportation and processing(2) | 10,787 | 39 | 32 | 807 | 9,909 | ||||||||||||
Construction commitments(3) | 375 | 375 | — | — | — | ||||||||||||
Other commitments related to lease contracts(4) | 468 | 46 | 92 | 88 | 242 | ||||||||||||
Funding commitments, software, and other | 63 | 21 | 41 | 1 | — | ||||||||||||
Total contractual obligations | 11,693 | 481 | 165 | 896 | 10,151 | ||||||||||||
(1)Pembina enters into product purchase agreements and power purchase agreements to secure supply for future operations. Purchase prices of both NGL and power are dependent on current market prices. Volumes and prices for NGL and power contracts cannot be reasonably determined, and therefore, an amount has not been included in the contractual obligations schedule. Product purchase agreements range from one to 16 years and involve the purchase of NGL products from producers. Assuming product is available, Pembina has secured between 26 and 202 mbpd of NGL each year up to and including 2040. Power purchase agreements range from one to 24 years and involve the purchase of power from electrical service providers. Pembina has secured up to 76 megawatts per day each year up to and including 2048.
(2)Pembina signed two transportation and processing related agreements relating to the Cedar LNG Project: (a) Liquefaction Tolling Services Agreement ("LTSA"); and, (b) Gas Supply Agreement ("GSA"). The LTSA is a 20-year take-or-pay fixed toll contract for 1.5 million tonnes per annum, while the GSA will allow for transport on the Coastal GasLink Pipeline of approximately 200 million cubic feet per day of Canadian natural gas to Cedar LNG. These commercial agreements account for approximately 50 percent of the operating capacity for the Cedar LNG Project and a total commitment of approximately $10.5 billion. These commitments are expected to commence upon the anticipated in-service date of the Cedar LNG Project in late 2028.
(3)Excludes projects that are executed by equity accounted investees.
(4)Relates to expected variable lease payments excluded from the measurement of the lease liability, payments under lease contracts which have not yet commenced, and payments related to non-lease components in lessee lease contracts.
Commitments to Equity Accounted Investees
Pembina has commitments to provide contributions to certain equity accounted investees based on its ownership interest. These contributions are determined and approved by the joint venture partners to fund operating budgets, growth capital, and significant projects development costs, including the Cedar LNG Project.
Contingencies
Pembina, including its subsidiaries and its investments in equity accounted investees, are subject to various legal and regulatory and tax proceedings, actions and audits arising in the normal course of business. Pembina represents its interests vigorously in all proceedings in which it is involved. Legal and administrative proceedings involving possible losses are inherently complex, and the Company applies significant judgment in estimating probable outcomes. As at June 30, 2025, there were no significant claims filed against Pembina for which management believes the resolution of any such actions or proceedings would have a material impact on Pembina's financial position or results of operations.
Letters of Credit
Pembina has provided letters of credit to various third parties in the normal course of conducting business. The letters of credit include financial guarantees to counterparties for product purchases and sales, transportation services, utilities, engineering and construction services. The letters of credit have not had and are not expected to have a material impact on Pembina's financial position, earnings, liquidity or capital resources. As at June 30, 2025, Pembina had $210 million (December 31, 2024: $209 million) in letters of credit issued.
62 Pembina Pipeline Corporation Second Quarter 2025
HEAD OFFICE Pembina Pipeline Corporation Suite 4000, 585 - 8th Avenue SW Calgary, Alberta T2P 1G1 AUDITORS KPMG LLP Chartered Professional Accountants Calgary, Alberta TRUSTEE, REGISTRAR & TRANSFER AGENT Computershare Trust Company of Canada Suite 600, 530 - 8th Avenue SW Calgary, Alberta T2P 3S8 1.800.564.6253 STOCK EXCHANGE Pembina Pipeline Corporation Toronto Stock Exchange listing symbols for: COMMON SHARES PPL PREFERRED SHARES PPL.PR.A, PPL.PR.C, PPL.PR.E, PPL.PR.G, PPL.PR.I, PPL.PR.O, PPL.PR.Q, PPL.PF.A and PPL.PF.E New York Stock Exchange listing symbol for: COMMON SHARES PBA INVESTOR INQUIRIES PHONE 403.231.3156 FAX 403.237.0254 TOLL FREE 1.855.880.7404 EMAIL investor-relations@pembina.com WEBSITE www.pembina.com | |||||
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, J. Scott Burrows, President and Chief Executive Officer of Pembina Pipeline Corporation, certify the following:
1. Review: I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of Pembina Pipeline Corporation (the "issuer") for the interim period ended June 30, 2025.
2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
4. Responsibility: The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer.
5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer(s) and I have, as at the end of the period covered by the interim filings
(a)designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
(i)material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
(ii)information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
(b)designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.
5.1 Control framework: The control framework the issuer's other certifying officer(s) and I used to design the issuer's ICFR is Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
5.2 N/A
5.3 N/A
6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on April 1, 2025 and ended on June 30, 2025 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.
Date: August 7, 2025
(signed) "J. Scott Burrows"
J. Scott Burrows
President and Chief Executive Officer
of Pembina Pipeline Corporation
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, Cameron J. Goldade, Senior Vice President & Chief Financial Officer of Pembina Pipeline Corporation, certify the following:
1. Review: I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of Pembina Pipeline Corporation (the "issuer") for the interim period ended June 30, 2025.
2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
4. Responsibility: The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer.
5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer(s) and I have, as at the end of the period covered by the interim filings
(a)designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
(i)material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
(ii)information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
(b)designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.
5.1 Control framework: The control framework the issuer's other certifying officer(s) and I used to design the issuer's ICFR is Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
5.2 N/A
5.3 N/A
6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on April 1, 2025 and ended on June 30, 2025 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.
Date: August 7, 2025
(signed) "Cameron J. Goldade"
Cameron J. Goldade
Senior Vice President & Chief Financial Officer
of Pembina Pipeline Corporation