Pembina Pipeline Income Fund Finishes Strong in '09

Pembina Pipeline Income Fund released its 2009 financial results today reporting year-over-year increases in revenue, net operating income, net earnings and cash flow from operating activities. Also during 2009, Pembina established the highest level of cash distributions to Unitholders in the Fund's 12-year history - $1.56 per Trust Unit. Distributed cash was $232.3 million ($1.56 per Trust Unit) in 2009, a 17 percent increase over 2008 when distributed cash was $198.8 million ($1.49 per Trust Unit).

"Pembina achieved these accomplishments by focusing on operational excellence in our existing businesses and responsibly pursuing and implementing new opportunities for growth," said Bob Michaleski, President and Chief Executive Officer. "This enabled us to mitigate the challenges created by the economic downturn and positioned us well for success in 2010 and beyond. It is a testament to the high quality of our people and assets."

Revenue, net of product purchases, for 2009 was $497.4 million, compared to $453.9 million in 2008 while net operating income for 2009 was $338.2 million, as compared to $303 million in 2008.

Net earnings were $162.1 million in 2009 ($1.09 per Trust Unit), compared to $161.8 million ($1.21 per Trust Unit) in 2008 when Pembina realized a $29.9 million one-time after-tax gain on the sale of linefill. Excluding that after-tax gain, net earnings increased 23 percent in 2009 over 2008.

Cash flow from operating activities was $224.6 million in 2009, compared to $219.9 million 2008.

Operational accomplishments in 2009 that contributed to Pembina's strong financial performance included the commencement of full service of the Horizon Pipeline (Pembina completed construction of this oil sands pipeline, which transports synthetic crude oil for Canadian Natural Resources Ltd., in July 2008); the June acquisition of the Cutbank Complex natural gas gathering and processing facilities; and expansion of the company's Alberta-based midstream services.

In Pembina's Conventional Pipelines business, toll increases and reduced operating expenses helped offset declines in throughputs that occurred as a result of a year-over-year reduction in crude oil and natural gas liquids (NGL) production, which in turn was the result of lower drilling and production shut-ins resulting from a decrease in commodity prices in 2009 as compared to 2008. Conventional throughput averaged 393,300 barrels per day (bbls/d) in 2009, compared to 439,200 bbls/d in 2008.

Company-wide, operating expenses in 2009 were $159.2 million, compared to $150.9 million in 2008. Increased operating expenses primarily reflected costs associated with operating the Horizon Pipeline and the Cutbank Complex, offset by reduced spending in the Conventional Pipelines business.

In 2009, Pembina invested nearly $424 million in new capital, primarily to support its growth plan. This investment included spending to acquire the Cutbank Complex in June and work to progress the Nipisi and Mitsue Pipeline projects. In the seven months of 2009 in which Pembina owned the Cutbank Complex, this asset generated $23 million in net operating income. The Nipisi and Mitsue Pipelines, which are expected to be placed into service in mid-2011, should generate, according to internal management estimates, approximately $45 million of net operating income per year.

"Our growth plan is on track and the investments we made during the year are aimed at generating long-term value for our investors without compromising our near-term financial position," said Michaleski. Pembina's plans include maintaining its annual cash distribution at $1.56 per Trust Unit through 2013 in the form of a dividend following the planned conversion of the income trust to a corporation in the latter half of 2010.


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