Pembina Renews Buyback Program

Pembina Pipeline Corp. has received clearance from the Toronto Stock Exchange (TSX) for the renewal of its share repurchase program, allowing the Canadian midstream oil and gas company to reclaim up to five percent of its issued common stocks.

The approved normal course issuer bid (NCIB) provides for the buyback of nearly 29 million units, Pembina said in a press release Monday.  A prior NCIB saw Pembina redeem close to 1.2 million shares at a weighted average price of CAD 41.76 ($30.5) per share.

Pembina said the actual number of shares and their prices that the company would purchase under the new NCIB depend on “a number of factors, including Pembina's financial performance and flexibility in the context of its financial guardrails, the availability of discretionary cash flow in excess of dividend and capital funding requirements, and the risk-adjusted returns of repurchasing common shares compared to other uses of cash, including accretive capital investment opportunities and debt reduction”.

However, it specified, “Subject to exceptions for block purchases, Pembina will limit daily purchases of common shares on the TSX in connection with the NCIB to no more than 25 percent (664,745 common shares) of the six-month average daily trading volume of the common shares on the TSX from November 1, 2023 to April 30, 2024 (2,658,980 common shares) during any trading day”.

“Purchases under the NCIB will be made through open market purchases at the prevailing market price”, Pembina added.

Purchases can be made on the TSX, the New York Stock Exchange (NYSE) and other Canadian trading platforms from May 16, 2024, to May 15, 2025.

“Pembina believes that, from time to time, the market price of its common shares trade at prices that may not adequately reflect their underlying value and the repurchase of common shares for cancellation may represent an attractive use of the Company's financial resources”, it explained.

Pembina closed higher on TSX at CAD 50.39 ($36.84), as well as on the NYSE at $36.87.

Pembina’s board of directors earlier approved CAD 0.69 ($0.5) in dividend per common share for the second quarter of 2024, up 3.4 percent, according to the company’s quarterly financial report released last Thursday.

“The increase reflects the continued growth of Pembina's fee-based business, which is benefiting from rising volumes and increasing utilization across many of its assets in the Western Canadian Sedimentary Basin”, the report said.

Pembina logged earnings of CAD 438 million ($320.2 million), or CAD 0.74 ($0.54) per common share post-dilution, for the first quarter of 2024. Revenues totaled CAD 1.5 billion ($1.1 billion). Earnings before income tax, depreciation and amortization stood at CAD 1 billion ($731.1 million) after adjustment from extraordinary or nonrecurring items, with a CAD 40 million ($29.2 million) negative impact from an outage that hit the Northern Pipeline system.

Pembina pipelines transported 2.6 million barrels of oil equivalent per day in the first three months of the year.

To contact the author, email jov.onsat@rigzone.com