Pembina (PBA) stock shows slight change despite third quarter earnings

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Pembina Pipeline CompanyPBA’s stock has shown no substantial movement since the announcement of third quarter 2021 results on November 4. Weaker US dollar exchange rate, lower contribution from Ruby Pipeline due to lukewarm contract volumes, low revenues from Cochin Pipeline due to the impact of a lag in the recognition of deferred revenues and higher general expenses and administration displeased investors. In fact, the stock did not show an uptrend despite a well-maintained Adjusted EBITDA forecast for the current year.

Inside Pembina Pipeline Profits

PBA reported earnings per share of 80 cents in the third quarter of 2021, beating the Zacks consensus estimate of 47 cents and the previous year’s quarter profit by 38 cents. This outperformance is mainly due to increased margins on NGL and crude oil sales, the favorable impact of higher volumes of NGLs marketed and the receipt of a payment of $ 350 million related to the cancellation by Pembina Pipeline of its proposed acquisition of Inter Pipeline.

Revenue of $ 1.71 billion improved 45% year-over-year.

Cash flow from operations increased 110.4% to C $ 913 million. Adjusted EBITDA of C $ 850 million was C $ 54 million higher than in the third quarter of 2020.

In the third quarter of 2021, Pembina Pipeline recorded volumes of 3,411,000 barrels of oil equivalent per day (mboe / d), compared to unfavorably with the 3,451 mboe / d reported in the previous year’s quarter.

Segment information

Pipelines: Adjusted EBITDA of C $ 503 million was down 7.02% from the level in the prior year quarter. This decrease results from the lower contribution of Ruby Pipeline due to the reduction in contract volumes, the decrease in revenues of Cochin Pipeline due to a lag in the realization of deferred revenues and the impact of an exchange rate. of the weaker US dollar. Year-over-year volume declined slightly to 2,563 Mboe / d.

Installations: Adjusted EBITDA of C $ 273 million improved from C $ 251 million in the prior year quarter. The increase is attributable to the contribution of Empress Infrastructure, Duvernay III and the Prince Rupert terminal, coupled with the contribution of Veresen Midstream Hythe Developments. Volumes of 848 Mboe / d were down 2.7% year-on-year.

Marketing and new businesses: Adjusted EBITDA of C $ 109 million compares favorably to C $ 34 million in the third quarter of 2020. The increase is attributable to higher net sales resulting from higher prices for NGLs and crude oil in the third quarter of 2020. 2021 combined with the increase in the volumes of NGLs sold. The Marketing & New Ventures segment recorded volumes of 177 Mboe / d, an increase of 5% compared to the level of the same period of the previous year.

Capital expenditure and balance sheet

The Pembina Pipeline spent C $ 209 million on capital expenditures during the quarter under review, compared to C $ 174 million a year ago. As of September 30, 2021, PBA had cash and cash equivalents of $ 112 million and long-term debt of $ 8.12 billion. The debt-to-capitalization ratio was 43.2%.

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Project updates

PBA is still working on Phase VII of the Peace Pipeline expansion, which includes a new 20-inch pipeline approximately 220 kilometers in length and two new pumping stations or modifications to the terminal. Phase VII will add 160,000 barrels per day of additional capacity upstream of Fox Creek by harnessing the capacity of the mainline downstream of Fox Creek. Construction is underway and the project is on track to fit into budget ($ 775 million) and on time for its scheduled commissioning date in the first half of 2023.

The Pembina Pipeline restarted Phase IX of the Peace Pipeline expansion last quarter, which will increase capacity on the northwestern route from Alberta to Gordondale, Alta. To handle growing activity in the northeastern area of ​​British Columbia, Montney. With the inclusion of the Wapiti-to-Kakwa Corridor Pumping Station, the cost of the project is estimated at around $ 120 million. The commissioning date for Phase IX is estimated in the second half of next year.

The Pembina pipeline is still working on the Empress cogeneration facility. Natural gas will be used to generate up to 45 megawatts of electricity at the facility. Electricity will be fully utilized at the site, providing approximately 90% of the site’s energy needs.

According to PBA, the initiative will help reduce annual greenhouse gas emissions at the NGL Empress extraction facility. The project has a capital budget of $ 120 million and is expected to be completed in the fourth quarter of 2022. Based on current levels of energy consumption, Pembina Pipeline estimates a reduction of 90,000 tonnes of carbon dioxide equivalent. carbon per year.

Advice

Pipeline Pembina reiterates its projection of Adjusted EBITDA for 2021 in the range of $ 3.3 billion to $ 3.4 billion, based on year-to-date results and outlook for the remainder of the year. The annual expectation is based on a stronger than expected fundamental marketing performance due to significantly higher NGL prices and marketed volumes of NGLs.

Zacks rank and choice of keys

Pembina Pipeline currently has a Zacks Rank # 3 (Hold). Some higher ranked players in the energy space are EOG Resources EOG, Diamondback Energy FANG and ConocoPhillips COP, each currently displaying a Rank 1 of Zacks (strong buy). You can see The full list of today’s Zacks # 1 Rank stocks here.

EOG Resources reported adjusted earnings per share of $ 2.16 in the third quarter of 2021, beating Zacks’ consensus estimate of $ 2.01. The strong profits are attributable to increased production volumes and better realization of raw material prices.

EOG announced a quarterly dividend of 75 cents per share, indicating an increase of 82% from the previous level. The dividend will be paid on January 28, 2022 to its shareholders of record on January 14, 2022. EOG Resources also declared a special dividend of $ 2 per share. In addition, the board of directors increased its authorization to buy back shares to $ 5 billion.

Diamondback Energy reported adjusted third quarter 2021 earnings of $ 2.94 per share, beating Zacks’ consensus estimate of $ 2.81 and last year’s quarter profit by 62 cents. FANG’s bottom line was supported by better than expected production.

The board declared a dividend of 50 cents per share for the third quarter, which represents an 11.1% increase in Diamondback Energy’s quarterly payout from the previous level of 45 cents. The amount will be paid on November 18, 2021 to its shareholders of record on November 11. FANG also generated free cash flow of $ 740 million in the third quarter.

ConocoPhillips reported adjusted third quarter 2021 earnings per share of $ 1.77, comfortably beating Zacks’ consensus estimate of $ 1.53. This outperformance is due to the increase in production volumes due to the acquisition of Concho and to the increase in realized raw material prices.

Based in Houston, Texas, capital expenditures and investments for one of the world’s largest independent oil and gas producers totaled $ 1.3 billion, and dividend payments grossed $ 579 million . ConocoPhillips net cash from operating activities was recorded at $ 4.8 billion, up from $ 868 million a year ago. COP generated free cash flow of $ 2.8 billion in the third quarter.

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