Q3 2021 Interim Report
Transcript of Q3 2021 Interim Report
Q32021 InterimReport
Pembina Pipeline Corporation
REPORTTOSHAREHOLDERSThirdQuarter2021
MANAGEMENT'SDISCUSSIONANDANALYSIS
TableofContents
1.AboutPembina ....................................................................................................................................................................... 2
2.Financial&OperatingOverview ............................................................................................................................................ 3
3.SegmentResults ..................................................................................................................................................................... 7
4.Liquidity&CapitalResources ................................................................................................................................................. 18
5.ShareCapital .......................................................................................................................................................................... 22
6.CapitalInvestments ................................................................................................................................................................ 23
7.SelectedQuarterlyInformation ............................................................................................................................................. 24
8.SelectedEquityAccountedInvesteeInformation ................................................................................................................. 26
9.Other ...................................................................................................................................................................................... 27
10.AccountingPolicies&Estimates .......................................................................................................................................... 30
11.RiskFactors ........................................................................................................................................................................... 32
12.Non-GAAPMeasures ............................................................................................................................................................ 33
13.Abbreviations ....................................................................................................................................................................... 36
14.Forward-LookingStatements&Information ....................................................................................................................... 37
BasisofPresentationThefollowingManagement'sDiscussionandAnalysis("MD&A")ofthefinancialandoperatingresultsofPembinaPipelineCorporation("Pembina"orthe"Company")isdatedNovember4,2021,andissupplementaryto,andshouldbereadinconjunctionwith,Pembina'sunauditedcondensedconsolidatedinterimfinancialstatementsforthethreeandninemonthsendedSeptember30,2021("InterimFinancialStatements")aswellasPembina'sauditedconsolidatedannualfinancialstatements("ConsolidatedFinancialStatements")andMD&AfortheyearendedDecember31,2020.AllfinancialinformationhasbeenpreparedinaccordancewithIAS34InterimFinancialReportingandisexpressedinCanadiandollars,unlessotherwisenoted.AdescriptionofPembina'soperatingsegmentsandadditionalinformationaboutPembinaisfiledwithCanadianandU.S.securitiescommissions,includingquarterlyandannualreports,annualinformationforms(filedwiththeU.S.SecuritiesandExchangeCommissionunderForm40-F)andmanagementinformationcirculars,whichcanbefoundonlineatwww.sedar.com,www.sec.govandthroughPembina'swebsiteatwww.pembina.com.InformationcontainedinorotherwiseaccessiblethroughPembina'swebsitedoesnotformpartofthisMD&Aandisnotincorporatedintothisdocumentbyreference.
AbbreviationsForalistofabbreviationsthatmaybeusedinthisMD&A,refertothe"Abbreviations"sectionofthisMD&A.
Non-GAAPFinancialMeasuresPembinahasidentifiedcertainfinancialmeasuresthatmanagementbelievesprovidemeaningfulinformationinassessingPembina'sunderlyingperformance.ReadersarecautionedthatsuchfinancialmeasuresdonothaveastandardizedmeaningprescribedbyInternationalFinancialReportingStandards("IFRS")andthereforemaynotbecomparabletosimilarmeasurespresentedbyotherentities.Refertothe"Non-GAAPMeasures"sectionofthisMD&Aforalistanddescription,includingreconciliationstothemostdirectlycomparableGAAPmeasures,ofsuchnon-GAAPmeasures.
RiskFactorsandForward-LookingInformationManagementhasidentifiedtheprimaryriskfactorsthatcouldhaveamaterialimpactonthefinancialresultsandoperationsofPembina.SuchriskfactorsarepresentedinPembina'sMD&AandAnnualInformationForm("AIF")fortheyearendedDecember31,2020andhavebeenupdatedinthe"RiskFactors"sectionofthisMD&A,asnecessary.TheCompany'sfinancialandoperationalperformanceispotentiallyaffectedbyanumberoffactors,including,butnotlimitedto,thefactorsdescribedwithinthe"Forward-LookingStatements&Information"sectionofthisMD&A.ThisMD&Acontainsforward-lookingstatementsbasedonPembina'scurrentexpectations,estimates,projectionsandassumptions.ThisinformationisprovidedtoassistreadersinunderstandingtheCompany'sfutureplansandexpectationsandmaynotbeappropriateforotherpurposes.
PembinaPipelineCorporationThirdQuarter20211
1.ABOUTPEMBINAPembinaisaleadingtransportationandmidstreamserviceproviderthathasbeenservingNorthAmerica'senergyindustryfor
morethan65years.Pembinaownsanintegratedsystemofpipelinesthattransportvarioushydrocarbonliquidsandnatural
gasproductsproducedprimarilyinwesternCanada.TheCompanyalsoownsgasgatheringandprocessingfacilities;anoiland
naturalgasliquidsinfrastructureandlogisticsbusiness;andisgrowinganexportterminalsbusiness.Pembina'sintegrated
assetsandcommercialoperationsalongthemajorityofthehydrocarbonvaluechainallowittoofferafullspectrumof
midstreamandmarketingservicestotheenergysector.Pembinaiscommittedtoidentifyingadditionalopportunitiesto
connecthydrocarbonproductiontonewdemandlocationsthroughthedevelopmentofinfrastructurethatwouldextend
Pembina'sserviceofferingevenfurtheralongthehydrocarbonvaluechain.Thesenewdevelopmentswillcontributeto
ensuringthathydrocarbonsproducedintheWesternCanadianSedimentaryBasinandtheotherbasinswherePembina
operatescanreachthehighestvaluemarketsthroughouttheworld.
PurposeofPembina:
Tobetheleaderindeliveringintegratedinfrastructuresolutionsconnectingglobalmarkets;
• Customerschooseusfirstforreliableandvalue-addedservices;
• Investorsreceivesustainableindustry-leadingtotalreturns;
• Employeessaywearethe'employerofchoice'andvalueoursafe,respectful,collaborativeandfairworkculture;and
• Communitieswelcomeusandrecognizethenetpositiveimpactofoursocialandenvironmentalcommitment.
InterPipelineArrangement
OnJune1,2021,PembinaannouncedthatithadenteredintoanarrangementagreementwithInterPipelineLtd.("Inter
Pipeline"),pursuanttowhichPembinaproposedtoacquirealloftheissuedandoutstandingcommonsharesofInterPipeline
bywayofaplanofarrangementundertheBusinessCorporationsAct(Alberta)(the"InterPipelineArrangement").Pursuant
totheInterPipelineArrangement,holdersofInterPipelinecommonshares(otherthandissentingholdersofInterPipeline
commonshares)wouldhavereceived0.5ofacommonshareofPembinaforeachcommonshareofInterPipelinethatthey
owned.OnJuly25,2021,thearrangementagreementwasterminatedandPembinareceivedtheterminationfeeof$350
million("ArrangementTerminationPayment").
2PembinaPipelineCorporationThirdQuarter2021
2.FINANCIAL&OPERATINGOVERVIEWConsolidatedFinancialOverviewfortheThreeMonthsEndedSeptember30
ResultsofOperations
($millions,exceptwherenoted) 2021 2020(3) Change %Change
Infrastructureandotherservicesrevenue 756 744 12 2
Productsalesrevenue 1,393 752 641 85
Totalrevenue 2,149 1,496 653 44
Netrevenue(1) 961 849 112 13
Grossprofit 682 568 114 20
Earnings 588 323 265 82
Earningspercommonshare–basicanddiluted(dollars) 1.01 0.52 0.49 94
Cashflowfromoperatingactivities 913 434 479 110
Cashflowfromoperatingactivitiespercommonshare–basic(dollars)(1) 1.66 0.78 0.88 113
Adjustedcashflowfromoperatingactivities(1) 786 524 262 50
Adjustedcashflowfromoperatingactivitiespercommonshare–basic(dollars)(1) 1.43 0.95 0.48 51
Capitalinvestments 209 174 35 20
AdjustedEBITDA(1) 850 796 54 7
Totalvolumes(mboe/d)(2) 3,411 3,451 (40) (1)
ChangeinEarnings($millions)(3)(4)(5)
588
323
(34)
15
128 3
(12)
309
(62)(82)
EarningsQ32020
Pipelinesgrossprofit
Facilitiesresultsex.commodity-related
derivatives
Marketing&NewVenturesresultsex.commodity-related
derivatives
Commodity-related
derivatives
Generaland
administrative
Other Netfinancecosts
Incometaxexpense
EarningsQ32021
ResultsOverview
Resultsinthethirdquarterof2021werepositivelyimpactedbyhighergrossprofitinMarketing&NewVenturesdueto
highermarginsonNGLandcrudeoilsales,combinedwithhighermarketedNGLvolumesandhighershareofprofitfromAux
Sable,partiallyoffsetbyrealizedlossesoncommodity-relatedderivativefinancialinstrumentscomparedtorealizedgainsin
thethirdquarterof2020.FacilitiesgrossprofitincreasedduetoPrinceRupertTerminal,EmpressInfrastructureandDuvernay
IIIbeingplacedintoservice,combinedwithunrealizedgainsforcertaingasprocessingfeestiedtoAECOprices.Pipelines
grossprofitwasimpactedbyrevenuesassociatedwithhighervolumesonthePeacePipelinesystem,offsetbyalowershare
ofprofitfromRuby,combinedwiththeimpactofatimingdifferenceintherecognitionofdeferredrevenueassociatedwith
theCochinPipelineandtheimpactofthelowerU.S.dollarexchangerate.Otherincomeincreasedduetothereceiptofthe
ArrangementTerminationPayment.General&administrativeincreasedduetohigherlong-termincentivecostsasaresultof
thechangeinPembina'sshareprice.Netfinancecostsincreasedduringthethirdquarterof2021duetoforeignexchanges
lossescomparedtogains,ofwhichthemajoritywasrecognizedinthethirdquarterof2020,whilecurrenttaxexpense
increasedasaresultofhighercurrentyearearningsassociatedwiththeArrangementTerminationPayment.
PembinaPipelineCorporationThirdQuarter20213
ChangesinResultsfortheThreeMonthsEndedSeptember30Infrastructureandotherservicesrevenue
▲ $12millionincrease,duetohighervolumesinPipelines,assetsplacedintoserviceinFacilities,andincreasedoperatingexpenserecoveries,partiallyoffsetbyatimingdifferenceintherecognitionofdeferredrevenueassociatedwiththeCochinPipeline,discussedinthe"Pipelines"section.
Productsalesrevenue ▲ $641millionincrease($93millionincreasenetofcostofgoodssold),largelyduetohigherNGLandcrudeoilmarketprices,combinedwithhighermarketedNGLvolumes.
Costofgoodssold ▼ $541millionincrease,largelyduetohigherNGLandcrudeoilmarketprices,combinedwithhighermarketedNGLvolumes,discussedabove.
Operatingexpenses ▼ $9millionincrease,largelyduetoanincreaseinpowercosts,themajorityofwhicharerecoverable,asaresultofthehigherpowerpoolpriceduringthethirdquarterof2021.
Depreciationandamortizationincludedinoperations
● Consistentwiththepriorperiod.
Shareofprofitfromequityaccountedinvestees
▲ $13millionincrease,largelyduetohighershareofprofitfromAuxSableasaresultofhigherNGLmarginsandawiderAECO-ChicagonaturalgaspricedifferentialandhighershareofprofitfromVeresenMidstreamfromtheHytheDevelopmentsgoingintoserviceinMarch2021andhighervolumesattheDawsonAssets,partiallyoffsetbyalowercontributionfromRuby.
Realizedloss(gain)oncommodity-relatedderivatives
▼ $50millionnegativevariance,duetohigherNGLmarketpricesduringthethirdquarterof2021,whichalsodrovehighermarginsonNGLsales,resultinginarealizedlossonNGL-basedderivativeinstrumentsfortheperiod,comparedtorealizedgainsonNGL-basedderivativeinstrumentsrecognizedduringthethirdquarterof2020.Pembinautilizesderivativeinstrumentstostabilizetheresultsofitsmarketingbusiness.
Unrealized(gain)lossoncommodity-relatedderivatives
▲ $53millionpositivevariance,primarilyduetothesignificantincreaseinthetheAECOpriceduringtheperiodresultingingainsforcertaingasprocessingfeestiedtoAECOprices,combinedwithcontractsmaturingintheperiod,partiallyoffsetbytheincreaseintheforwardpricesforNGLandcrudeoilduringthethirdquarterof2021andnewlyaddedcontracts.
General&administrative ▼ $12millionincreaselargelyduetohigherlong-termincentivesasaresultofthechangeinPembina'sshareprice,combinedwithanincreaseinoptimizationprojectcosts,partiallyoffsetbyareductioninsalariesandwages.
Otherincome ▲ $307millionincreaseprimarilyduetothe$350millionArrangementTerminationPayment,partiallyoffsetbyhighertransformationandrestructuringcosts.
Netfinancecosts ▼ $62millionincrease,primarilydrivenbyforeignexchangelossesandhigherinterestexpenseassociatedwithtaxsettlements,combinedwithlossesonnon-commodity-relatedderivativefinancialinstrumentscomparedtogainsinthethirdquarterof2020.
Currenttaxexpense ▼ $89millionincrease,primarilyduetohighercurrentyearearningsassociatedwiththeArrangementTerminationPayment,discussedabove.
Deferredtaxexpense ● Consistentwiththepriorperiod.
Cashflowfromoperatingactivities
▲ $479millionincrease,primarilydrivenbythe$350millionArrangementTerminationPayment,discussedabove,anincreaseinoperatingresultsafteradjustingfornon-cashitems,combinedwitha$96millionchangeinnon-cashworkingcapitalanda$21milliondecreaseintaxespaid,partiallyoffsetbya$12millionincreaseinnetinterestpaid.
Adjustedcashflowfromoperatingactivities(1)
▲ $262millionincrease,largelyduetothesameitemsimpactingcashflowfromoperatingactivities,discussedabove,netofthechangeinnon-cashworkingcapitalanddecreaseintaxespaid,partiallyoffsetbythe$89millionhighercurrenttaxexpenseand$17millionincreaseinaccruedsharebasedpayments.
AdjustedEBITDA(1) ▲ $54millionincrease,largelyduetohighermarginsonNGLandcrudeoilsales,ahighercontributionfromAuxSable,combinedwiththecontributionsfromassetsplacedintoserviceinFacilities,andhighervolumesonthePeacePipelinesystem,partiallyoffsetbytherealizedlossoncommodity-relatedderivatives,lowercontributionfromRubyduetolowercontractedvolumes,theimpactofatimingdifferenceintherecognitionofdeferredrevenueassociatedwiththeCochinPipeline,andhighergeneralandadministrativeexpenses,discussedabove.IncludedinadjustedEBITDAis$178million(2020:$168million)relatedtoequityaccountedinvestees.
Totalvolumes(mboe/d)(2) ▼ 40mboe/ddecrease,largelydrivenbylowervolumesontheRubyPipeline,combinedwithlowervolumesattheRedwaterComplexandatAlbertaEthaneGatheringSystem("AEGS")followingthirdpartyoutages,andlowervolumesattheSaturnComplexduetohigherdeferredrevenuevolumesrecognizedinthethirdquarterof2020,partiallyoffsetbyhighervolumesonthePeacePipelinesystemduetoincreasedupstreamactivities,highervolumesatYoungerduetoaturnaroundinthethirdquarterof2020,andthecontributionsfromassetsplacedintoserviceinFacilities.Volumesinclude298mboe/d(2020:310mboe/d)relatedtoequityaccountedinvestees.
▲ Increase; ▼ Decrease;or ● Noimpact; toearnings,adjustedEBITDA,cashflowfromoperations,adjustedcashflowfromoperatingactivitiesortotalvolumes.
(1) Refertothe"Non-GAAPMeasures"section.(2) Totalrevenuevolumes.Seethe"Abbreviations"sectionfordefinition.MarketedNGLvolumesareexcludedfromvolumestoavoiddoublecounting.Refertothe"Marketing
&NewVentures"sectionforfurtherinformation.(3) Comparative2020periodhasbeenrestated.See"VoluntaryChangeinAccountingPolicy","RestatementofRevenueandCostofGoodsSold"andNote2totheInterim
FinancialStatements.(4) Facilitiesresultsex.commodity-relatedderivativesandMarketing&NewVenturesresultsex.commodity-relatedderivativesincludesgrossprofitlessrealizedandunrealized
lossesoncommodityrelatedderivativefinancialinstruments.(5) Otherincludesotherexpenses,impairmentsandcorporate.
4PembinaPipelineCorporationThirdQuarter2021
ConsolidatedFinancialOverviewfortheNineMonthsEndedSeptember30
ResultsofOperations
($millions,exceptwherenoted) 2021 2020(3) Change %Change
Infrastructureandotherservicesrevenue 2,240 2,199 41 2
Productsalesrevenue 3,827 2,074 1,753 85
Revenue 6,067 4,273 1,794 42
Netrevenue(1) 2,854 2,490 364 15
Grossprofit 1,862 1,761 101 6
Earnings 1,162 900 262 29
Earningspercommonshare–basic(dollars) 1.92 1.42 0.50 35
Earningspercommonshare–diluted(dollars) 1.91 1.42 0.49 35
Cashflowfromoperatingactivities 1,953 1,486 467 31
Cashflowfromoperatingactivitiespercommonshare–basic(dollars)(1) 3.55 2.70 0.85 31
Adjustedcashflowfromoperatingactivities(1) 1,906 1,686 220 13
Adjustedcashflowfromoperatingactivitiespercommonshare–basic(dollars)(1) 3.47 3.07 0.40 13
Capitalinvestments 482 868 (386) (44)
AdjustedEBITDA(1) 2,463 2,415 48 2
Totalvolumes(mboe/d)(2) 3,464 3,462 2 —
ChangeinEarnings($millions)(3)(4)(5)
1,162
900
(112)
55
341
(183) (58)
240 18
(39)
EarningsYTD2020
Pipelinesgrossprofit
Facilitiesresultsex.commodity-related
derivatives
Marketing&NewVenturesresultsex.commodity-related
derivatives
Commodity-related
derivatives
Generaland
administrative
Other Netfinancecosts
Incometaxexpense
EarningsYTD2021
ResultsOverview
ResultsfortheninemonthsendedSeptember30,2021werepositivelyimpactedbyhighergrossprofitinMarketing&New
VenturesduetohighermarginsonNGLandcrudeoilsales,combinedwithhighermarketedNGLvolumesandhighershareof
profitfromAuxSable,offsetbylossesoncommodity-relatedderivativefinancialinstruments.Facilitiesgrossprofitincreased
duetoPrinceRupertTerminal,EmpressInfrastructureandDuvernayIIIbeingplacedintoservice,combinedwithunrealized
gainsforcertaingasprocessingfeestiedtoAECOprices.InPipelines,highervolumeswereoffsetbylowershareofprofitfrom
Ruby,combinedwiththeimpactofthelowerU.S.dollarexchangerate.Otherincomeincreasedduetothereceiptofthe
ArrangementTerminationPayment,offsetbylowerincomereceivedfromtheCanadianEmergencyWageSubsidyandhigher
transformationandrestructuringrelatedcosts.General&administrativeincreasedduetohigherincentivecostsprimarily
drivenbythechangeinPembina'sshareprice.Incometaxexpenseincreasedsignificantlyasaresultofhighercurrentyear
earningsdrivenbytheArrangementTerminationPayment.
PembinaPipelineCorporationThirdQuarter20215
ChangesinResultsfortheNineMonthsEndedSeptember30Infrastructureandotherservicesrevenue
▲ $41millionincrease,duetoassetsplacedintoserviceinFacilitiesandhighervolumesinPipelines,combinedwithhigheroperatingexpenserecoveriesasaresultofhigherpowercosts,partiallyoffsetbylowerstorageandrailterminalrevenue,includingfullyrecoveredcapitalfeesattheEdmontonSouthRailTerminalandtheimpactoflowerU.S.dollarexchangerates.
Productsalesrevenue ▲ $1.8billionincrease($296millionincreasenetofcostofgoodssold),largelyduetohigherNGLandcrudeoilmarketprices,resultinginhighermargins,combinedwithhighermarketedNGLvolumesasPembinamonetizedaportionofitspreviouslybuiltupstoragepositions.
Costofgoodssold ▼ $1.4billionincrease,largelyduetohigherNGLandcrudeoilmarketprices,combinedwithhighermarketedNGLvolumes.
Operatingexpenses ▼ $44millionincrease,largelyduetoanincreaseinpowercosts,themajorityofwhicharerecoverable,asaresultofthehigherpowerpoolpriceduringthefirstninemonthsof2021,combinedwithhigheroperatingexpensesassociatedwiththeadditionalassetsbeingplacedintoserviceinFacilities.
Depreciationandamortizationincludedinoperations
▼ $22millionincrease,primarilyduetoadditionalassetsbeingplacedintoserviceduringthefirstninemonthsof2021.
Shareofprofitfromequityaccountedinvestees
▼ $14milliondecrease,largelyduetoalowercontributionfromRuby,combinedwiththeimpactoflowerU.S.dollarexchangerates,partiallyoffsetbyhigherNGLmarginsandawiderAECO-ChicagonaturalgaspricedifferentialatAuxSableandhighershareofprofitfromVeresenMidstreamduetothecontributionsfromtheHytheDevelopmentsgoingintoserviceinMarch2021andhighervolumesattheDawsonAssets.
Realizedloss(gain)oncommodity-relatedderivatives
▼ $224millionnegativevariance,duetohigherNGLandcrudeoilmarketpricesduringtheperiod,whichalsodrovehighermarginsonNGLandcrudesales,resultinginarealizedlossonNGLandcrudeoil-basedderivativeinstrumentsfortheperiod,comparedtorealizedgainsrecognizedduringthefirstninemonthsof2020.Pembinautilizesderivativeinstrumentstostabilizetheresultsofitsmarketingbusiness.
Unrealizedgainoncommodity-relatedderivatives
▲ $41millionpositivevariance,primarilyduetothesignificantincreaseinthetheAECOpriceduringtheperiodresultingingainsforcertaingasprocessingfeestiedtoAECOprices.
General&administrative ▼ $58millionincreaselargelyduetohigherincentivecostsprimarilydrivenbythechangeinPembina'sshareprice,combinedwithanincreaseinoptimizationprojectcosts,partiallyoffsetbyareductioninsalariesandwages.
Otherincome ▲ $275millionincreaseprimarilyduetothe$350million($250millionnetoftaxandassociatedexpenses)ArrangementTerminationPayment,partiallyoffsetbylowerincomeassociatedwithCanadianEmergencyWageSubsidyandhighertransformationandrestructuringcosts.
Netfinancecosts ▲ $18milliondecrease,primarilydrivenbyforeignexchangegainsintheperiodcomparedtoforeignexchangelossesinthefirstninemonthsof2020asaresultofhedgeaccountingadoptedinthesecondquarterof2020,partiallyoffsetbyhigherinterestexpenseassociatedwithhigheraveragedebtlevels.
Currenttaxexpense ▼ $60millionincrease,primarilyduetohighercurrentyearearningsassociatedwiththeArrangementTerminationPayment,discussedabove.
Deferredtaxexpense ▲ $21milliondecrease,largelyduetothereleaseoffinalU.S.taxregulationsin2020,combinedwiththerecoveryontheimpairmentexpense.
Cashflowfromoperatingactivities
▲ $467millionincrease,primarilydrivenbythe$350millionArrangementTerminationPaymentreceivedinthethirdquarterof2021,discussedabove,anincreaseinoperatingresultsafteradjustingfornon-cashitems,combinedwitha$98millionchangeinnon-cashworkingcapitalanda$25milliondecreaseintaxespaid,partiallyoffsetbya$36millionincreaseinnetinterestpaidanda$17milliondecreaseindistributionsfromequityaccountedinvestees.
Adjustedcashflowfromoperatingactivities(1)
▲ $220millionincrease,largelyduetothesameitemsimpactingcashflowfromoperatingactivities,discussedabove,netofthechangeinnon-cashworkingcapitalanddecreaseintaxespaid,partiallyoffsetbythe$62millionhigheraccruedshare-basedpaymentsand$60millionhighercurrenttaxexpense.
AdjustedEBITDA(1) ▲ $48millionincrease,primarilyduetohighermarginsonNGLandcrudeoilsales,combinedwithnewassetsplacedintoserviceinFacilities,highervolumesonthePeacePipelinesystem,andahighercontributionfromAuxSable,partiallyoffsetbytherealizedlossoncommodity-relatedderivatives,lowercontributionfromRubyduetolowercontractedvolumes,highergeneralandadministrativeexpensesandtheimpactofthelowerU.S.dollarexchangerate.IncludedinadjustedEBITDAis$536million(2020:$509million)relatedtoequityaccountedinvestees.
Totalvolumes(mboe/d)(2) ● Consistentwiththepriorperiod.HighervolumesinPipelinesduetoincreasedupstreamactivities,combinedwithhigherrevenuevolumesfromassetsplacedintoserviceinFacilitiesandhigherseasonalvolumesontheAlliancePipeline,werelargelyoffsetbylowervolumesatAEGSduetothird-partyoutagesinAugust2021,combinedwithlowercontractedvolumesontheRubyPipeline.Volumesinclude318mboe/d(2020:312mboe/d)relatedtoequityaccountedinvestees.
▲ Increase; ▼ Decrease;or ● Noimpact; toearnings,adjustedEBITDA,cashflowfromoperations,adjustedcashflowfromoperatingactivitiesortotalvolumes.
(1) Refertothe"Non-GAAPMeasures"section.(2) Totalrevenuevolumes.Seethe"Abbreviations"sectionfordefinition.MarketedNGLvolumesareexcludedfromvolumestoavoiddoublecounting.Refertothe"Marketing
&NewVentures"sectionforfurtherinformation.(3) Comparative2020periodhasbeenrestated.See"VoluntaryChangeinAccountingPolicy","RestatementofRevenueandCostofGoodsSold"andNote2totheInterim
FinancialStatements.(4) Facilitiesresultsex.commodity-relatedderivativesandMarketing&NewVenturesresultsex.commodity-relatedderivativesincludesgrossprofitlessrealizedandunrealized
lossesoncommodityrelatedderivativefinancialinstruments.(5) Otherincludesotherexpenses,impairmentsandcorporate.
6PembinaPipelineCorporationThirdQuarter2021
3.SEGMENTRESULTSBusinessOverview
ThePipelinesDivisionprovidescustomerswithpipelinetransportation,terminalling,storageandrailservicesinkeymarket
hubsinCanadaandtheUnitedStatesforcrudeoil,condensate,naturalgasliquidsandnaturalgas.Thedivisionincludes
pipelinetransportationcapacityofapproximately3.1mmboe/d(1)andabovegroundstoragecapacityofapproximately11
mmbbls(1)withinitsconventional,oilsandsandheavyoil,andtransmissionassets.Theconventionalassetsinclude
strategicallylocatedpipelinesandterminallinghubsthatgatherandtransportlightandmediumcrudeoils,condensateand
naturalgasliquidsfromwesternAlbertaandnortheastBritishColumbiatotheEdmonton,Albertaareaforfurtherprocessing
ortransportationondownstreampipelines.Theoilsandsandheavyoilassetstransportheavyandsyntheticcrudeoil
producedwithinAlbertatotheEdmontonareaandofferassociatedstorage,terminallingandrailservices.Thetransmission
assetstransportnaturalgas,ethaneandcondensatethroughoutCanadaandtheUnitedStatesonlonghaulpipelineslinking
variouskeymarkethubs.Inaddition,thePipelinesDivisionassetsprovidelinkagesbetweenPembina'supstreamand
downstreamassetsacrossNorthAmerica,enablingintegratedcustomerserviceofferings.Together,theseassetssupply
productfromhydrocarbonproducingregionstorefineries,fractionatorsandmarkethubsinAlberta,BritishColumbia,Illinois
andCalifornia,aswellasotherregionsthroughoutNorthAmerica.
TheFacilitiesDivisionincludesinfrastructurethatprovidesPembina'scustomerswithnaturalgas,condensateandNGL
services.Pembina'snaturalgasgatheringandprocessingassetsarestrategicallypositionedinactive,liquids-richareasofthe
WCSBandWillistonBasinandareintegratedwiththeCompany'sotherbusinesses.Pembinaprovidessweetandsourgas
gathering,compression,condensatestabilization,andbothshallowcutanddeepcutgasprocessingserviceswithatotal
capacityofapproximately6.1bcf/d(2)foritscustomers.CondensateandNGLextractedatvirtuallyallCanadian-basedfacilities
haveaccesstotransportationonPembina'spipelines.Inaddition,allNGLtransportedalongtheAlliancePipelineare
extractedthroughthePembina-operatedChannahonFacilityattheterminus.TheFacilitiesDivisionincludesapproximately
354mbpd(2)ofNGLfractionationcapacity,21mmbbls(1)ofcavernstoragecapacity,associatedpipelineandrailterminalling
facilities,andaliquefiedpropaneexportfacilityonCanada'sWestCoast.Thesefacilitiesarefullyintegratedwiththe
Company'sotherdivisions,providingcustomerswiththeabilitytoaccessacomprehensivesuiteofservicestoenhancethe
valueoftheirhydrocarbons.Inaddition,PembinaownsabulkmarineexportterminalinVancouver,BritishColumbia.
TheMarketing&NewVenturesDivisionstrivestomaximizethevalueofhydrocarbonliquidsandnaturalgasoriginatinginthe
basinswheretheCompanyoperates.Pembinaseekstofurtherenhanceexistingmarketsandcreatenewmarkets,tosupport
boththeCompany'sanditscustomers'overallbusinessinterests.Inparticular,Pembinaseekstoidentifyopportunitiesto
connecthydrocarbonproductiontonewdemandlocationsthroughthedevelopmentofinfrastructure.Pembinastrivesto
increaseproducernetbacksandproductdemandtoimprovetheoverallcompetitivenessofthebasinswheretheCompany
operates.WithintheMarketing&NewVenturesDivision,Pembinaundertakesvalue-addedcommoditymarketingactivities
includingbuyingandsellingproducts(naturalgas,ethane,propane,butane,condensateandcrudeoil),commodityarbitrage,
andoptimizingstorageopportunities.ThemarketingbusinessentersintocontractsforcapacityonbothPembina'sandthird-
partyinfrastructure,handlesproprietaryandcustomervolumesandaggregatesproductionforonwardsale.
(1) Netcapacity;excludesprojectsunderdevelopment.(2) Netcapacity.IncludesAuxSablecapacity.ThefinancialandoperationalresultsforAuxSableareincludedintheMarketing&NewVenturesDivision;excludesprojectsunder
development.
PembinaPipelineCorporationThirdQuarter20217
FinancialandOperationalOverviewbyDivision
3MonthsEndedSeptember30 9MonthsEndedSeptember30
2021 2020 2021 2020
($millions,exceptwherenoted) Volumes(1)
GrossProfit
AdjustedEBITDA(2) Volumes(1)
GrossProfit(4)
AdjustedEBITDA(2) Volumes(1)
GrossProfit
AdjustedEBITDA(2) Volumes(1)
GrossProfit(4)
AdjustedEBITDA(2)
Pipelines 2,563 347 503 2,580 381 541 2,592 1,047 1,554 2,588 1,159 1,631
Facilities 848 233 273 871 182 251 872 628 812 874 523 757
Marketing&NewVentures(3) — 100 109 — 5 34 — 185 237 — 77 118
Corporate — 2 (35) — — (30) — 2 (140) — 2 (91)
Total 3,411 682 850 3,451 568 796 3,464 1,862 2,463 3,462 1,761 2,415(1) VolumesforPipelinesandFacilitiesarerevenuevolumes,whicharephysicalvolumesplusvolumesrecognizedfromtake-or-paycommitments.Volumesarestatedin
mboe/d,withnaturalgasvolumesconvertedtomboe/dfromMMcf/data6:1ratio.(2) Refertothe"Non-GAAPMeasures"section.(3) MarketedNGLvolumesareexcludedfromvolumestoavoiddoublecounting.Refertothe"Marketing&NewVentures"sectionforfurtherinformation.(4) Comparative2020periodhasbeenrestated.See"VoluntaryChangeinAccountingPolicy"andNote2totheInterimFinancialStatements.
8PembinaPipelineCorporationThirdQuarter2021
Pipelines
FinancialOverviewfortheThreeMonthsEndedSeptember30ResultsofOperations
($millions,exceptwherenoted) 2021 2020(4) Change %Change
Conventionalrevenue(1) 360 323 37 11
Transmissionrevenue(1) 97 120 (23) (19)
OilSandsrevenue(1) 109 114 (5) (4)
Pipelinesrevenue(1) 566 557 9 2
Operatingexpenses(1) 140 129 11 9
Shareofprofitfromequityaccountedinvestees 21 56 (35) (63)
Depreciationandamortizationincludedinoperations 100 103 (3) (3)
Grossprofit 347 381 (34) (9)
AdjustedEBITDA(2) 503 541 (38) (7)
Volumes(mboe/d)(3) 2,563 2,580 (17) (1)
Distributionsfromequityaccountedinvestees 47 84 (37) (44)
ChangeinResults
Conventionalrevenue(1) ▲ IncreaselargelyduetohighervolumesonthePeacePipelinesystemashigherNGLandcrudemarketpriceshaveresultedinincreasedupstreamactivities,combinedwithhigherrecoverablecosts.
Transmissionrevenue(1) ▼ DecreaselargelyduetoatimingdifferenceintherecognitionofdeferredrevenueassociatedwiththeCochinPipeline,thirdpartyoutagesimpactingAEGS,combinedwithlowervolumesontheVantagePipelineasenduserssourcedtheirsupplyfromtheRedwaterComplexandthelowerU.S.dollarexchangerate.
OilSandsrevenue(1) ▼ Decreaselargelyduetolowerrevenuefromstorageandrailterminals.
Operatingexpenses(1) ▼ Increaselargelyduetoa$14millionincreaseinpowercosts,ofwhich$10millionwasrecoveredinrevenue,asaresultofthehigherpowerpoolpriceduringthethirdquarterof2021.
Shareofprofitfromequityaccountedinvestees
▼ DecreaselargelyduetolowercontributionfromRubyastheownersagreedtodeferdistributionsforthethirdquarterof2021,combinedwiththeimpactoflowerU.S.dollarexchangerates.
Distributionsfromequityaccountedinvestees
▼ $46million(2020:$53million)fromAllianceandnodistributions(2020:$31million)fromRuby.ThereductionindistributionsfromRubyareduetothesamefactorsimpactingshareofprofitfromequityaccountedinvesteesdiscussedabove.
Volumes(mboe/d)(3) ▼ DecreaselargelydrivenbylowercontractedvolumesontheRubyPipeline,combinedwithlowervolumesatAEGSduetothirdpartyoutagesinAugustandSeptemberof2021,partiallyoffsetbyhighervolumesonthePeacePipelinesystem,discussedabove,andhighervolumesontheAlliancePipeline.Volumesinclude139mboe/d(2020:126mboe/d)relatedtoAllianceand70mboe/d(2020:108mboe/d)relatedtoRuby.
AdjustedEBITDA(2) ▼ DecreaselargelyduetolowercontributionfromRubyandtheimpactofatimingdifferenceintherecognitionofdeferredrevenueassociatedwiththeCochinPipeline,discussedabove,combinedwiththeimpactofthelowerU.S.dollarexchangerateandlowercontributionfromstorageandrailterminals,partiallyoffsetbyhighervolumesonthePeacePipelinesystem.IncludedinadjustedEBITDAis$62million(2020:$66million)relatedtoAllianceand$24million(2020:$47million)relatedtoRuby.
ChangeinAdjustedEBITDA($millions)(2)
503
541
37
(23) (5)(11) (8)
(28)
AdjustedEBITDAQ32020
Conventionalrevenue
Transmissionrevenue
OilSandsrevenue
Operatingexpenses
G&Aandother
AdjustedEBITDAfromequityaccountedinvestees
AdjustedEBITDAQ32021
(1) Includesinter-segmenttransactions.SeeNote12oftheInterimFinancialStatements.(2) Refertothe"Non-GAAPMeasures"section.(3) Revenuevolumes.Seethe"Abbreviations"sectionfordefinition.(4) Comparative2020periodhasbeenrestated.See"VoluntaryChangeinAccountingPolicy"andNote2totheInterimFinancialStatements.
PembinaPipelineCorporationThirdQuarter20219
FinancialOverviewfortheNineMonthsEndedSeptember30ResultsofOperations
($millions,exceptwherenoted) 2021 2020(4) Change %Change
Conventionalrevenue(1) 1,031 951 80 8
Transmissionrevenue(1) 315 342 (27) (8)
OilSandsrevenue(1) 327 355 (28) (8)
Totalrevenue(1) 1,673 1,648 25 2
Operatingexpenses(1) 409 362 47 13
Shareofprofitfromequityaccountedinvestees 95 173 (78) (45)
Depreciationandamortizationincludedinoperations 312 300 12 4
Grossprofit 1,047 1,159 (112) (10)
AdjustedEBITDA(2) 1,554 1,631 (77) (5)
Volumes(mboe/d)(3) 2,592 2,588 4 —
Distributionsfromequityaccountedinvestees 175 259 (84) (32)
ChangeinResults
Conventionalrevenue(1) ▲ IncreaselargelyduetohighervolumesonthePeacePipelinesystemashigherNGLandcrudemarketpriceshaveresultedinincreasedupstreamactivities,combinedwithhigherrecoverablecosts.
Transmissionrevenue(1) ▼ DecreaselargelyduetolowervolumesontheVantagePipelineasenduserssourcedtheirsupplyfromtheRedwaterComplex,combinedwiththeimpactofthelowerU.S.dollarexchangerate.
OilSandsrevenue(1) ▼ Decreaselargelyduetolowerstorageandrailterminalrevenue,includingfullyrecoveredcapitalfeesattheEdmontonSouthRailTerminalinApril2020,andthesaleoftheAlbertaCrudeTerminaleffectiveJanuary2021,partiallyoffsetbyhigherrecoverablecostsontheSyncrudePipeline.
Operatingexpenses(1) ▼ Increaselargelyduetoa$33millionincreaseinpowercosts,ofwhich$24millionwasrecoveredinrevenue,asaresultofthehigherpowerpoolpriceduring2021,combinedwithincreasedintegrityspending.
Shareofprofitfromequityaccountedinvestees
▼ DecreaselargelyduetolowercontributionfromRubyastheownersagreedtodeferdistributionsforthesecondandthirdquarterof2021,combinedwiththeimpactofthelowerU.S.dollarexchangerate.
Distributionsfromequityaccountedinvestees
▼ $161million(2020:$166million)fromAllianceand$13million(2020:$93million)fromRuby.ThereductionindistributionsfromRubyisduetothesamefactorsimpactingshareofprofitfromequityaccountedinvesteesdiscussedabove.
Volumes(mboe/d)(3) ● Consistentwiththepriorperiod.HighervolumesonthePeacePipelinesystemandhigherseasonalvolumesontheAlliancePipeline,werelargelyoffsetbylowervolumesatAEGSduetothird-partyoutagesinAugustandSeptemberof2021,combinedwithlowercontractedvolumesontheRubyPipelineandlowervolumesontheVantagePipeline.Volumesinclude141mboe/d(2020:127mboe/d)relatedtoAllianceand91mboe/d(2020:104mboe/d)relatedtoRuby.
AdjustedEBITDA(2) ▼ DecreaseprimarilyduetolowercontributionfromRuby,theimpactofthelowerU.S.dollarexchangerate,lowerOilSandsrevenue,andlowervolumesontheVantagePipeline.Increasedoperatingexpensesduetohigherintegrityspendingandhigherpowercostsnotrecoverableinrevenue,combinedwithhigherlong-termincentives,alsocontributedtothedecreaseinadjustedEBITDA,partiallyoffsetbyhighervolumesonthePeacePipelinesystem.IncludedinadjustedEBITDAis$202million(2020:$207million)relatedtoAllianceand$111million(2020:$143million)relatedtoRuby.
ChangeinAdjustedEBITDA($millions)(2)
1,5541,631
80
(27) (28)(47) (18) (37)
AdjustedEBITDAYTD2020
Conventionalrevenue
Transmissionrevenue
OilSandsrevenue
Operatingexpenses
G&Aandother
AdjustedEBITDAfromequityaccountedinvestees
AdjustedEBITDAYTD2021
(1) Includesinter-segmenttransactions.SeeNote12oftheInterimFinancialStatements.(2) Refertothe"Non-GAAPMeasures"section.(3) Revenuevolumes.Seethe"Abbreviations"sectionfordefinition.(4) Comparative2020periodhasbeenrestated.See"VoluntaryChangeinAccountingPolicy"andNote2totheInterimFinancialStatements.
10PembinaPipelineCorporationThirdQuarter2021
FinancialandOperationalOverview
3MonthsEndedSeptember30 9MonthsEndedSeptember30
2021 2020 2021 2020
($millions,exceptwherenoted) Volumes(1)
GrossProfit
AdjustedEBITDA(2) Volumes(1)
GrossProfit(3)
AdjustedEBITDA(2) Volumes(1)
GrossProfit
AdjustedEBITDA(2) Volumes(1)
GrossProfit(3)
AdjustedEBITDA(2)
Pipelines
Conventional 918 244 281 863 212 253 891 677 802 866 638 760
Transmission 595 64 154 661 121 210 651 241 542 666 354 623
OilSands 1,050 39 68 1,056 48 78 1,050 129 210 1,056 167 248
Total 2,563 347 503 2,580 381 541 2,592 1,047 1,554 2,588 1,159 1,631(1) Revenuevolumesinmboe/d.Seethe"Abbreviations"sectionfordefinition.(2) Refertothe"Non-GAAPMeasures"section.(3) Comparative2020periodhasbeenrestated.See"VoluntaryChangeinAccountingPolicy"andNote2totheInterimFinancialStatements.
Projects&NewDevelopments(1)
Pipelinescontinuestofocusontheexecutionofvarioussystemexpansions.Theprojectsinthefollowingtablewererecently
placedintoservice.
SignificantProjects In-serviceDate
NEBCMontneyInfrastructure February2021
PhaseVIPeacePipelineExpansion June2020
WapitiCondensateLateral March2020
ThefollowingoutlinestheprojectsandnewdevelopmentswithinPipelines:
PhaseVIIPeacePipelineExpansion
CapitalBudget:$775million In-serviceDate:Firsthalfof2023Status:Aheadofscheduleandtrendingunderbudget
Thisexpansionincludesanew20-inch,approximately220kmpipelineandtwonewpumpstationsorterminalupgrades.PhaseVIIwilladdapproximately160mbpdofincrementalcapacityupstreamofFoxCreek,accessingcapacityavailableonthemainlinesdownstreamofFoxCreek.Constructionisunderwayandprogressingaccordingtoschedule.
PhaseIXPeacePipelineExpansion
CapitalBudget:$120million In-serviceDate:Secondhalfof2022 Status:Ontime,trendingonbudget
Thisexpansionwillincludenew6-inchand16-inchpipelinesdebottleneckingthecorridornorthofGordondale,Albertaaswellasupgradesatonepumpstation.Inaddition,thisexpansionwillseeexistingpipelines,whicharecurrentlybatching,convertedtosingleproductlines.PhaseIXalsoincludesapumpstationintheWapiti-to-KakwacorridorthatwaspreviouslypartofthePhaseVIIprojectscope.
ThepreviouslyannouncedPhaseVIIIPeacePipelineExpansionremainsdeferred.Initialcontractssupportingtheproject
remainintactandcustomerscontinuetosignalplanswhichwillnecessitatetheincrementalcapacity.Priortodeferral,Phase
VIIIhadanassociatedcapitalcostofapproximately$500millionbutPembinaexpectsthislevelofinvestmenttodecrease
givencostandscopeimprovements.ValueengineeringworkisongoingandPembinacontinuestoevaluatethisprojectin
discussionswithitsproducingcustomerswithareactivationdecisionexpectedinthefourthquarterof2021.
PhaseVIIIPeacePipelineExpansion Status:Deferred
Thisexpansionwillinclude10-inchand16-inchpipelinesintheGordondaletoLaGlacecorridoraswellassixnewpumpstationsorterminalupgradeslocatedbetweenGordondaleandFoxCreek.
(1) ForfurtherdetailsonPembina'ssignificantassets,includingdefinitionsforcapitalizedtermsusedhereinthatarenototherwisedefined,refertoPembina'sAIFfortheyearendedDecember31,2020filedatwww.sedar.com(filedwiththeU.S.SecuritiesandExchangeCommissionatwww.sec.govunderForm40-F)andonPembina'swebsiteatwww.pembina.com.
PembinaPipelineCorporationThirdQuarter202111
Facilities
FinancialOverviewfortheThreeMonthsEndedSeptember30ResultsofOperations
($millions,exceptwherenoted) 2021 2020(4) Change %Change
GasServicesnetrevenue(1)(2) 171 145 26 18
NGLServicesnetrevenue(1)(2) 169 163 6 4
Facilitiesnetrevenue(1)(2) 340 308 32 10
Operatingexpenses(1) 121 99 22 22
Shareofprofitfromequityaccountedinvestees 23 11 12 109
Realizedgainoncommodity-relatedderivativefinancialinstruments (2) — (2) 100
Unrealizedgainoncommodity-relatedderivativefinancialinstruments (45) (11) (34) 309
Depreciationandamortizationincludedinoperations 56 49 7 14
Grossprofit 233 182 51 28
AdjustedEBITDA(2) 273 251 22 9
Volumes(mboe/d)(3) 848 871 (23) (3)
Distributionsfromequityaccountedinvestees 32 25 7 28
ChangesinResults
GasServicesnetrevenue(1)(2) ▲ IncreaselargelyduetoEmpressInfrastructureandDuvernayIIIbeingplacedintoserviceinthefourthquarterof2020,highervolumesatYoungerduetoaturnaroundinSeptember2020,andincreasedoperatingexpenserecoveriesasaresultofhigherpowercosts,combinedwiththeBurstallEthaneStorageFacility("Burstall")beingtransferredfromNGLServicestoGasServicesinJanuary2021.
NGLServicesnetrevenue(1)(2) ● Consistentwithpriorperiod.HigherrevenuefromthePrinceRupertTerminalbeingplacedintoserviceinMarch2021,combinedwithhigheroperatingexpenserecoveriesattheRedwaterComplex,werelargelyoffsetbythetransferofBurstalltoGasServicesandlowervolumesattheRedwaterComplex.
Operatingexpenses(1) ▼ Increaselargelyduetooperatingexpensesassociatedwiththeadditionalassetsplacedintoservice,discussedabove,combinedwithhigherpowerpoolpricesduringthethirdquarterof2021.
Shareofprofitfromequityaccountedinvestees
▲ IncreasemainlyduetothecontributionsfromtheVeresenMidstreamHytheDevelopmentsgoingintoserviceinMarch2021,combinedwithhighervolumesonVeresenMidstream'sDawsonAssets.
Unrealizedgainoncommodity-relatedderivatives
▲ CertaingasprocessingfeesaretiedtoAECOpricesandthesignificantincreaseintheAECOpricehasresultedinhigherunrealizedgainsforthethirdquarterof2021.
Distributionsfromequityaccountedinvestees
● Consistentwiththepriorperiod.$31million(2020:$23million)fromVeresenMidstreamand$1million(2020:$2million)fromFortCorp.
Volumes(mboe/d)(3) ▼ DecreaselargelyduetotakeorpayreliefprovidedtoRedwaterComplexcustomersfollowingthirdpartyoutagesduringSeptember2021,lowervolumesattheSaturnComplexduetohigherdeferredrevenuevolumesrecognizedinthethirdquarterof2020,combinedwithlowersupplyvolumesontheEastNGLSystem,whicharenowbeingprocessedbytheEmpressInfrastructure,partiallyoffsetbyhighervolumesatYounger,discussedabove,highervolumesontheDawsonAssetsandhighervolumesassociatedwithDuvernayIIIbeingplacedintoserviceinthefourthquarterof2020.Volumesinclude89mboe/d(2020:76mboe/d)relatedtoVeresenMidstream.
AdjustedEBITDA(2) ▲ Increaseprimarilyduetothecontributionfromnewassetsplacedintoservice,discussedabove,combinedwithhigherrevenueatYounger.IncludedinadjustedEBITDAis$52million(2020:$41million)relatedtoVeresenMidstream.
ChangeinAdjustedEBITDA($millions)(2)
273
251
266
(22)
2
(1)
11
AdjustedEBITDAQ32020
GasServices
netrevenue
NGLServices
netrevenue
Operatingexpenses
Realizedcommodity-related
derivatives
G&Aandother
AdjustedEBITDAfromequityaccountedinvestees
AdjustedEBITDAQ32021
(1) Includesinter-segmenttransactions.SeeNote12oftheInterimFinancialStatements.(2) Refertothe"Non-GAAPMeasures"section.(3) Revenuevolumes.Seethe"Abbreviations"sectionfordefinition.(4) Comparative2020periodhasbeenrestated.See"VoluntaryChangeinAccountingPolicy"andNote2totheInterimFinancialStatements.
12PembinaPipelineCorporationThirdQuarter2021
FinancialOverviewfortheNineMonthsEndedSeptember30ResultsofOperations
($millions,exceptwherenoted) 2021 2020(4) Change %Change
GasServicesnetrevenue(1)(2) 496 424 72 17
NGLServicesnetrevenue(1)(2) 511 474 37 8
Facilitiesnetrevenue(1)(2) 1,007 898 109 12
Operatingexpenses(1) 344 281 63 22
Shareofprofitfromequityaccountedinvestees 59 41 18 44
Realizedgainoncommodity-relatedderivativefinancialinstruments (2) — (2) 100
Unrealizedgainoncommodity-relatedderivativefinancialinstruments (62) (14) (48) 343
Depreciationandamortizationincludedinoperations 158 149 9 6
Grossprofit 628 523 105 20
AdjustedEBITDA(2) 812 757 55 7
Volumes(mboe/d)(3) 872 874 (2) —
Distributionsfromequityaccountedinvestees 95 76 19 25
ChangesinResults
GasServicesnetrevenue(1)(2) ▲ IncreaselargelyduetoEmpressinfrastructureandDuvernayIIIbeingplacedintoserviceinthefourthquarterof2020,increasedoperatingexpenserecoveriesasaresultofhigherpowercosts,BurstallbeingtransferredfromNGLServicestoGasServicesinJanuary2021,combinedwithhighervolumesatYoungerduetoaturnaroundinSeptember2020.
NGLServicesnetrevenue(1)(2) ▲ IncreaseprimarilyduetothePrinceRupertTerminalbeingplacedintoserviceinMarch2021,combinedwithhigheroperatingexpenserecoveriesattheRedwaterComplex,partiallyoffsetbythetransferofBurstalltoGasServices.
Operatingexpenses(1) ▼ Increaselargelyduetooperatingexpensesassociatedwiththeadditionalassetsplacedintoservice,discussedabove,combinedwithhigherpowerpoolpricesduringthefirstninemonthsof2021.
Shareofprofitfromequityaccountedinvestees
▲ IncreasemainlyduetothecontributionsfromtheVeresenMidstreamHytheDevelopmentsgoingintoserviceinMarch2021,combinedwithhighervolumesonVeresenMidstream'sDawsonAssets.
Unrealizedgainoncommodity-relatedderivatives
▲ CertaingasprocessingfeesaretiedtoAECOpricesandthesignificantincreaseintheAECOpricehasresultedinhigherunrealizedgainsforthefirstninemonthsof2021.
Distributionsfromequityaccountedinvestees
▲ $92million(2020:$72million)fromVeresenMidstreamand$3million(2020:$4million)fromFortCorp.Theincreaseindistributionsisduetothesamereasonsimpactingshareofprofitabove.
Volumes(mboe/d)(3) ● Consistentwithpriorperiod.LowersupplyvolumesontheEastNGLSystem,whicharenowbeingprocessedbytheEmpressInfrastructure,werelargelyoffsetbyhigherrevenuevolumesassociatedwithDuvernayIIIbeingplacedintoserviceinthefourthquarterof2020andhighervolumesatYounger.Volumesinclude86mboe/d(2020:81mboe/d)relatedtoVeresenMidstream.
AdjustedEBITDA(2) ▲ IncreaseprimarilyduetothecontributionfromEmpressInfrastructure,DuvernayIIIandthePrinceRupertTerminal,beingplacedintoservice,discussedabove,combinedwithhigherrevenueattheRedwaterComplex,andthecontributionfromVeresenMidstream'sDawsonAssets,andtheVeresenMidstreamHytheDevelopmentsgoingintoserviceinMarchof2021,partiallyoffsetbyhigheroperatingexpensesandhigherlong-termincentivecostsdrivenbyPembina'sincreasingsharepriceduringthefirstninemonthsof2021.IncludedinadjustedEBITDAis$148million(2020:$132million)relatedtoVeresenMidstream.
ChangeinAdjustedEBITDA($millions)(2)
812757
7237
(63)
2
(7)
14
AdjustedEBITDAYTD2020
GasServices
netrevenue
NGLServices
netrevenue
Operatingexpenses
Realizedcommodity-related
derivatives
G&Aandother
AdjustedEBITDAfromequityaccountedinvestees
AdjustedEBITDAYTD2021
(1) Includesinter-segmenttransactions.SeeNote12oftheInterimFinancialStatements.(2) Refertothe"Non-GAAPMeasures"section.(3) Revenuevolumes.Seethe"Abbreviations"sectionfordefinition.(4) Comparative2020periodhasbeenrestated.See"VoluntaryChangeinAccountingPolicy"andNote2totheInterimFinancialStatements.
PembinaPipelineCorporationThirdQuarter202113
FinancialandOperationalOverview
3MonthsEndedSeptember30 9MonthsEndedSeptember30
2021 2020 2021 2020
($millions,exceptwherenoted) Volumes(1)
GrossProfit
AdjustedEBITDA(2) Volumes(1)
GrossProfit(3)
AdjustedEBITDA(2) Volumes(1)
GrossProfit
AdjustedEBITDA(2) Volumes(1)
GrossProfit(3)
AdjustedEBITDA(2)
Facilities
GasServices 660 150 160 657 95 138 666 363 468 664 270 420
NGLServices 188 83 113 214 87 113 206 265 344 210 253 337
Total 848 233 273 871 182 251 872 628 812 874 523 757(1) Revenuevolumesinmboe/d,withnaturalgasvolumesconvertedtomboe/dfromMMcf/data6:1ratio.Seethe"Abbreviations"sectionfordefinition.(2) Refertothe"Non-GAAPMeasures"section.(3) Comparative2020periodhasbeenrestated.See"VoluntaryChangeinAccountingPolicy"andNote2totheInterimFinancialStatements.
Projects&NewDevelopments(1)
Facilitiescontinuestobuild-outitsnaturalgasandNGLprocessingandfractionationassetstoservicecustomerdemand.The
projectsinthefollowingtablewererecentlyplacedintoservice.
SignificantProjects In-serviceDate
VancouverWharvesExpansion June2021
PrinceRupertTerminal March2021
DuvernayIII November2020
EmpressInfrastructure October2020
DuvernaySourTreatmentFacilities March2020
VeresenMidstream(2)
HytheDevelopments March2021
ThefollowingoutlinestheprojectsandnewdevelopmentswithinFacilities:
EmpressCo-generationFacility
CapitalBudget:$120million In-serviceDate:Fourthquarterof2022 Status:Aheadofschedule,onbudget
TheEmpressCo-generationFacilitywillusenaturalgastogenerateupto45megawattsofelectricalpower,therebyreducingoveralloperatingcostsbyprovidingpowerandheattotheexistingEmpressNGLExtractionFacility.Allthepowerwillbeconsumedonsite,therebysupplyingapproximately90percentofthesite'spowerrequirements.Further,thisprojectwillcontributetoannualgreenhousegasemissionreductionsattheEmpressNGLExtractionFacilitythroughtheutilizationoftheco-generationwasteheatandthelow-emissionpowergenerated.Pembinaanticipatesareductionofapproximately90,000tonnesofcarbondioxideequivalentperyearbasedonthecurrentenergydemandoftheEmpressNGLExtractionFacility.ConstructionisprogressingandthemechanicalcontractorisexpectedtomobilizetositeinNovember2021.
ThePrinceRupertTerminalExpansionremainsdeferred.EngineeringoftheexpansioniswelladvancedandPembinaexpects
tomakeafinalinvestmentdecisioninthefirstquarterof2022.
PrinceRupertTerminalExpansion Status:Deferred
ThePrinceRupertTerminalExpansionwillincreasetheexportcapacityofthePrinceRupertTerminal.(1) ForfurtherdetailsonPembina'ssignificantassets,includingdefinitionsforcapitalizedtermsusedhereinthatarenototherwisedefined,refertoPembina'sAIFfortheyear
endedDecember31,2020filedatwww.sedar.com(filedwiththeU.S.SecuritiesandExchangeCommissionatwww.sec.govunderForm40-F)andonPembina'swebsiteatwww.pembina.com.
(2) VeresenMidstreamisanequityaccountedinvestee,inwhichPembinahada45percentinterestinasofSeptember30,2021.ResultsfromVeresenMidstreamimpactshareofprofitfromequityaccountedinvesteesandproportionallyconsolidatedmetrics.SeeNote5totheInterimFinancialStatements.
14PembinaPipelineCorporationThirdQuarter2021
Marketing&NewVentures
FinancialOverviewfortheThreeMonthsEndedSeptember30ResultsofOperations
($millions,exceptwherenoted) 2021 2020(2) Change %Change
Marketingrevenue(1) 1,393 752 641 85
Costofgoodssold(1) 1,268 720 548 76
Netrevenue(1)(3) 125 32 93 291
Shareofprofit(loss)fromequityaccountedinvestees 31 (5) 36 (720)
Realizedloss(gain)oncommodity-relatedderivativefinancialinstruments 45 (7) 52 (743)
Unrealized(gain)lossoncommodity-relatedderivativefinancialinstruments (2) 17 (19) (112)
Depreciationandamortizationincludedinoperations 13 12 1 8
Grossprofit 100 5 95 1,900
AdjustedEBITDA(3) 109 34 75 221
Volumes(mboe/d)(4) 177 169 8 5
Distributionsfromequityaccountedinvestees 27 2 25 1,250
ChangeinResults
Netrevenue(1)(3) ▲ IncreaseduetohigherNGLandcrudeoilmarketprices,resultinginhighermargins,combinedwithhighermarketedNGLvolumes,discussedbelow,partiallyoffsetbyanincreaseincostofgoodssoldrelatedtoPrinceRupertTerminalandEmpressInfrastructurebeingplacedintoservice,andrailtransportationcoststore-positionpropanetoCorunnaforsaleinthefourthquarterof2021andfirstquarterof2022.
Shareofprofit(loss)fromequityaccountedinvestees
▲ IncreaselargelyduetohigherrevenuesatAuxSableasaresultofhigherNGLmarginsandawiderAECO-Chicagonaturalgaspricedifferential.
Realizedloss(gain)oncommodity-relatedderivatives
▼ RealizedlossduetohigherNGLmarketpricesduringthethirdquarterof2021,whichalsodrovehighermarginsonNGLsales,resultinginarealizedlossonNGL-basedderivativeinstrumentsfortheperiod,comparedtorealizedgainsonNGL-basedderivativeinstrumentsrecognizedduringthethirdquarterof2020.Pembinautilizesderivativeinstrumentstostabilizetheresultsofitsmarketingbusiness.
Unrealized(gain)lossoncommodity-relatedderivatives
▲ Unrealizedgainoncommodity-relatedderivativesprimarilyduetocontractsmaturingintheperiod,partiallyoffsetbytheincreaseintheforwardpricesforNGLandcrudeoilduringthethirdquarterof2021andnewlyaddedcontracts.
Distributionsfromequityaccountedinvestees
▲ $27million(2020:$2million)fromAuxSable.IncreaselargelyduetothehighermarginsatAuxSable,discussedabove.
Volumes(mboe/d)(4) ▲ MarketedNGLvolumesincreasedassalesreturnedtopre-pandemiclevelscomparedtothethirdquarterof2020whenPembinabuiltupstoragepositionsduetolowercommodityprices.Revenuevolumesincludes35mboe/d(2020:37mboe/d)relatedtoAuxSable.
AdjustedEBITDA(3) ▲ IncreaselargelyduetohighermarginsonNGLandcrudeoilsalesasaresultofthehigherNGLandcrudeoilpricesduringthethirdquarterof2021andhighermarketedNGLvolumes,combinedwithahighercontributionfromAuxSable,discussedabove,partiallyoffsetbytherealizedlossoncommodity-relatedderivatives.IncludedinadjustedEBITDAis$36million(2020:$1million)relatedtoAuxSable.
ChangeinAdjustedEBITDA($millions)(3)
109
34
93
(52)
2
32
AdjustedEBITDAQ32020
Netrevenue Realizedcommodity-related
derivatives
G&Aandother
AdjustedEBITDAfromequityaccounted
investees
AdjustedEBITDAQ32021
(1) Includesinter-segmenttransactions.SeeNote12oftheInterimFinancialStatements.(2) Comparative2020periodhasbeenrestated.See"RestatementofRevenueandCostofGoodsSold"andNote2totheInterimFinancialStatements.(3) Refertothe"Non-GAAPMeasures"section.(4) MarketedNGLvolumes.Seethe"Abbreviations"sectionfordefinition.
PembinaPipelineCorporationThirdQuarter202115
FinancialOverviewfortheNineMonthsEndedSeptember30ResultsofOperations
($millions,exceptwherenoted) 2021 2020(2) Change %Change
Marketingrevenue(1) 3,827 2,074 1,753 85
Costofgoodssold(1) 3,463 2,006 1,457 73
Netrevenue(1)(3) 364 68 296 435
Shareofprofit(loss)fromequityaccountedinvestees 44 (2) 46 (2,300)
Realizedloss(gain)oncommodity-relatedderivativefinancialinstruments 166 (60) 226 (377)
Unrealizedlossoncommodity-relatedderivativefinancialinstruments 19 12 7 58
Depreciationandamortizationincludedinoperations 38 37 1 3
Adjustedgrossprofit 185 77 108 140
AdjustedEBITDA(3) 237 118 119 101
Volumes(mboe/d)(4) 190 173 17 10
Distributionsfromequityaccountedinvestees 63 15 48 320
ChangeinResults
Netrevenue(1)(3) ▲ IncreaselargelyduetohighercrudeoilandNGLmarketprices,resultinginhighermargins,combinedwithhighermarketedNGLvolumes,discussedbelow,partiallyoffsetbyanincreaseincostofgoodssoldrelatedtoPrinceRupertTerminalandEmpressInfrastructurebeingplacedintoservice,andrailtransportationcoststore-positionpropanetoCorunnaforsaleinthefourthquarterof2021andfirstquarterof2022.
Shareofprofit(loss)fromequityaccountedinvestees
▲ IncreaselargelyduetohigherrevenuesatAuxSableasaresultofhigherNGLmarginsandawiderAECO-Chicagonaturalgaspricedifferential.
Realizedloss(gain)oncommodity-relatedderivatives
▼ RealizedlossduetohigherNGLandcrudeoilmarketpricesduringtheperiod,whichalsodrovehighermarginsonNGLandcrudesales,resultinginarealizedlossonNGL-andcrudeoil-basedderivativeinstrumentsfortheperiod,comparedtorealizedgainsrecognizedinthefirstninemonthsof2021.Pembinautilizesderivativeinstrumentstostabilizetheresultsofitsmarketingbusiness.
Unrealizedlossoncommodity-relatedderivatives
● Consistentwithpriorperiod.
Distributionsfromequityaccountedinvestees
▲ $63million(2020:$15million)fromAuxSable.IncreaselargelyduetothehighermarginsatAuxSable,discussedabove.
Volumes(mboe/d)(4) ▲ MarketedNGLvolumesincreasedasPembinamonetizedstoragepositionsduringthefirstquarterof2021,thatwerebuiltupduringthesecondandthirdquartersof2020,whencommoditypriceswerelower,whileincreasedNGLsupplyvolumescontributedtohighersalesvolumesinthesecondandthirdquarterof2021comparedtothesameperiodsin2020.Revenuevolumesincludes36mboe/d(2020:37mboe/d)relatedtoAuxSable.
AdjustedEBITDA(3) ▲ IncreaselargelyduetohighermarginsonNGLandcrudeoilsalesasaresultofthehigherNGLandcrudeoilpricesduringthefirstninemonthsof2021andhighermarketedNGLvolumes,combinedwithahighercontributionfromAuxSable,discussedabove,partiallyoffsetbytherealizedlossoncommodity-relatedderivativesduetohigherNGLmarketprices.IncludedinadjustedEBITDAis$62million(2020:$14million)relatedtoAuxSable.
ChangeinAdjustedEBITDA($millions)(3)
237
118
296
(226)
49
AdjustedEBITDAYTD2020
Netrevenue Realizedcommodity-relatedderivatives
AdjustedEBITDAfromequityaccounted
investees
AdjustedEBITDAYTD2021
(1) Includesinter-segmenttransactions.SeeNote12oftheInterimFinancialStatements.(2) Comparative2020periodhasbeenrestated.See"RestatementofRevenueandCostofGoodsSold"andNote2totheInterimFinancialStatements.(3) Refertothe"Non-GAAPMeasures"section.(4) MarketedNGLvolumes.Seethe"Abbreviations"sectionfordefinition.
16PembinaPipelineCorporationThirdQuarter2021
FinancialandOperationalOverview
3MonthsEndedSeptember30 9MonthsEndedSeptember30
2021 2020 2021 2020
($millions,exceptwherenoted) Volumes(1)
GrossProfit
AdjustedEBITDA(2) Volumes(1)
GrossProfit
AdjustedEBITDA(2) Volumes(1)
GrossProfit
AdjustedEBITDA(2) Volumes(1)
GrossProfit
AdjustedEBITDA(2)
Marketing&NewVentures
Marketing 177 100 111 169 3 36 190 185 246 173 74 127
NewVentures(3) — — (2) — 2 (2) — — (9) — 3 (9)
Total 177 100 109 169 5 34 190 185 237 173 77 118(1) MarketedNGLvolumesinmboe/d.Seethe"Abbreviations"sectionfordefinition.(2) Refertothe"Non-GAAPMeasures"section.(3) AllNewVenturesprojectshavenotyetcommencedoperationsandthereforehavenovolumes.
Projects&NewDevelopments(1)
Pembina'sNewVenturesgroupcontinuestoadvancebusinessopportunitiesinpetrochemicals,liquefiednaturalgas("LNG")
andlow-carbonenergy.NewVenturesisfocusedondevelopingopportunitiesthatintegrateintoPembina'scorebusinesses,
whileprogressingprojectsthatwillextendPembina'svalue-chainandbenefitstakeholders.Pembinahasformedastrategic
partnershipagreementwiththeHaislaFirstNationtodeveloptheproposedCedarLNGProject,afloatingLNGfacility
strategicallypositionedtoleverageCanada'sabundantnaturalgassupplyandBritishColumbia'sgrowingLNGinfrastructure
toproduceindustry-leadinglow‑carbon,low-costCanadianLNGforoverseasmarkets.TheCedarLNGProjectisexpectedto
bethelargestFirstNation-ownedinfrastructureprojectinCanadaandhaveoneofthecleanestenvironmentalprofilesinthe
world.Inaddition,PembinaandTCEnergyCorporationintendtojointlydeveloptheAlbertaCarbonGrid,aworld-scale
carbontransportationandsequestrationsystem,whichwillenableAlberta-basedindustriestoeffectivelymanagetheir
greenhousegasemissions,contributepositivelytoAlberta'slower-carboneconomyandcreatesustainablelong-termvalue
forPembinaandTCEnergystakeholders.
(1) ForfurtherdetailsonPembina'ssignificantassets,includingdefinitionsforcapitalizedtermsusedhereinthatarenototherwisedefined,refertoPembina'sAIFfortheyearendedDecember31,2020filedatwww.sedar.com(filedwiththeU.S.SecuritiesandExchangeCommissionatwww.sec.govunderForm40-F)andonPembina'swebsiteatwww.pembina.com.
PembinaPipelineCorporationThirdQuarter202117
4.LIQUIDITY&CAPITALRESOURCESAvailableSourcesofLiquidity
Workingcapital(1) (1,077) (792)
Variableratedebt(2)(3)
Bankdebt 1,443 1,534
Variableratedebtswappedtofixed (319) (318)
Totalvariablerateloansandborrowingsoutstanding(weightedaverageinterestrateof1.3%(2020:1.6%)) 1,124 1,216
Fixedratedebt(2)
Seniorunsecuredmedium-termnotes 9,050 9,300
Variableratedebtswappedtofixed 319 318
Totalfixedrateloansandborrowingsoutstanding(weightedaverageinterestrateof3.9%(2020:3.9%)) 9,369 9,618
Totalloansandborrowingsoutstanding 10,493 10,834
Cashandunutilizeddebtfacilities 2,008 2,685
Subordinatedhybridnotes(weightedaverageinterestrateof4.8%(2020:nil)) 600 —
($millions)September30,
2021December31,
2020
(1) AsatSeptember30,2021,workingcapitalincluded$900million(December31,2020:$600million)associatedwiththecurrentportionoflong-termdebt.(2) Facevalue.(3) IncludesU.S.$250millionvariableratedebtoutstandingatSeptember30,2021(December31,2020:U.S.$250million).
Pembinacurrentlyanticipatesthatitscashflowfromoperatingactivities,themajorityofwhichisderivedfromfee-based
contracts,willbemorethansufficienttomeetitsoperatingobligations,tofunditsdividendandtofunditscapital
investmentsintheshort-termandlong-term.Pembinaexpectstosourcefundsrequiredfordebtmaturitiesfromcash,its
creditfacilitiesandbyaccessingthecapitalmarkets,asrequired.Basedonitssuccessfulaccesstofinancinginthecapital
marketsoverthepastseveralyears,Pembinaexpectstocontinuetohaveaccesstoadditionalfundsasrequired.Referto
"RiskFactors–GeneralRiskFactors–AdditionalFinancingandCapitalResources"inPembina'sMD&Afortheyearended
December31,2020andNote27totheConsolidatedFinancialStatementsformoreinformation.Managementcontinuesto
monitorPembina'sliquiditysituationandremainssatisfiedthattheleverageemployedinPembina'scapitalstructureis
sufficientandappropriategiventhecharacteristicsandoperationsoftheunderlyingassetbase.
ManagementmayadjustPembina'scapitalstructureasaresultofchangesineconomicconditionsortheriskcharacteristics
oftheunderlyingassets.TomaintainormodifyPembina'scapitalstructureinthefuture,Pembinamayrenegotiatedebt
terms,repayexistingdebt,seeknewborrowings,issueadditionalequityorhybridsecuritiesand/orrepurchasecommonor
preferredshares.
AsatSeptember30,2021,Pembina'screditfacilitiesconsistedof:anunsecured$2.5billion(December31,2020:$2.5billion)
revolvingcreditfacility,whichincludesa$750million(December31,2020:$750million)accordionfeatureandmaturesin
June2026;anunsecured$500million(December31,2020:$500million)non-revolvingtermloan,whichmaturesinAugust
2022;anunsecuredU.S.$250million(December31,2020:U.S.$250million)non-revolvingtermloan,whichmaturesinMay
2025;andanoperatingfacilityof$20million(December31,2020:$20million),whichmaturesinMay2022andistypically
renewedonanannualbasis(collectively,the"CreditFacilities").Therearenomandatoryprincipalrepaymentsdueoverthe
termoftheCreditFacilities,withprincipalrepaymentnotdueuntilmaturity.OnMarch25,2021,Pembinacancelledits$800
millionrevolvingcreditfacility,whichwasenteredintoinApril2020toprovideadditionalliquidityandflexibilityinPembina’s
capitalstructuregivenmarketconditionsatthetime.Nobalancewasoutstandingonthecancellationdate.Pembinais
requiredtomeetcertainspecificandcustomaryaffirmativeandnegativefinancialcovenantsundertheindenturegoverning
itsmedium-termnotesandtheagreementsgoverningitsCreditFacilities,includingarequirementtomaintaincertain
financialratios.See"Liquidity&CapitalResources–Covenants"belowformoreinformation.Pembinaisalsosubjectto
customaryrestrictionsonitsoperationsandactivitiesundertheindenturegoverningitsmedium-termnotesandthe
agreementsgoverningitsCreditFacilities,includingrestrictionsonthegrantingofsecurity,incurringindebtednessandthe
saleofitsassets.
18PembinaPipelineCorporationThirdQuarter2021
FinancingActivity
OnJanuary25,2021,Pembinacloseda$600millionofferingofFixed-to-FixedRateSubordinatedHybridNotes(the"Series1
SubordinatedNotes").TheSeries1SubordinatedNoteshaveafixed4.80percentinterestrate,payablesemi-annually,which
resetsonJanuary25,2031,andoneveryfifthanniversarythereafter,basedonthefive-yearGovernmentofCanadayield
plus:(i)4.17percentfortheperiodfrom,andincluding,January25,2031to,butexcludingJanuary25,2051;and(ii)4.92
percentfortheperiodfrom,andincluding,January25,2051to,butexcludingJanuary25,2081.Pembinausedthenet
proceedsoftheofferingoftheSeries1SubordinatedNotestofundtheredemptionofitsoutstandingCumulative
RedeemableMinimumRateResetClassAPreferredShares,Series11,itsoutstandingCumulativeRedeemableMinimumRate
ResetClassAPreferredShares,Series13,torepayoutstandingdebt,aswellasforgeneralcorporatepurposes.
OnApril30,2021,Pembinacompletedanextensiononits$2.5billionrevolvingcreditfacility,whichnowmaturesonJune1,
2026.
Covenants
Pembina'sfinancialcovenantsundertheindenturegoverningitsmedium-termnotesandtheagreementsgoverningthe
CreditFacilitiesincludethefollowing:
DebtInstrument FinancialCovenant(1) Ratio RatioasatSeptember30,2021
Seniorunsecuredmedium-termnotes FundedDebttoCapitalization Maximum0.70 0.41
CreditFacilities DebttoCapital Maximum0.70 0.42(1) Termsasdefinedinrelevantagreements.
Pembinawasincompliancewithallcovenantsunderthenoteindenturegoverningitsmedium-termnotesandthe
agreementsgoverningitsCreditFacilitiesasatSeptember30,2021(December31,2020:incompliance).
CreditRisk
Pembinacontinuestoactivelymonitorandreassessthecreditworthinessofitscounterparties.Whiletheglobaleconomic
slowdownhaseased,theoutlookfortheglobaleconomicrecoveryremainsuncertainandthepotentialforvolatilityin
demandforcrudeoilandothercommoditiesasaresultoftheongoingCOVID-19pandemiccouldincreasePembina's
counterpartyrisk,asuncertaintyandthepotentialforvolatilityinthedemandforcrudeoilcouldnegativelyimpactthe
financialpositionofPembina'scustomersandrelatedpartiesandtheiraccesstocredit,capitalmarketsandothersourcesof
liquidity.ThemajorityofPembina'screditexposureistoinvestmentgradeorsplit-investmentgradecounterparties.Pembina
assessesallcounterpartiesduringtheon-boardingprocessandactivelymonitorscreditlimitsandexposureacrossthe
business.Financialassurancestomitigateandreduceriskmayincludeguarantees,lettersofcreditandcash.Lettersofcredit
totaling$96million(December31,2020:$130million)wereheldasatSeptember30,2021,primarilyinrespectofcustomer
tradereceivables.
PembinaPipelineCorporationThirdQuarter202119
CreditRatings
ThefollowinginformationwithrespecttoPembina'screditratingsisprovidedassuchinformationrelatestoPembina's
financingcostsandliquidity.Specifically,creditratingsaffectPembina'sabilitytoobtainshort-termandlong-termfinancing
andthecostofsuchfinancing.AreductioninthecurrentratingsofPembina'sdebtbyitsratingagencies,particularlya
downgradebelowinvestment-graderatings,couldadverselyaffectPembina'scostoffinancinganditsaccesstosourcesof
liquidityandcapital.Inaddition,changesincreditratingsandtheassociatedcostsmayaffectPembina'sabilitytoenterinto
normalcoursederivativeorhedgingtransactions.Creditratingsareintendedtoprovideinvestorswithanindependent
measureofthecreditqualityofanyissuesofsecurities.Thecreditratingsassignedbytheratingagenciesarenot
recommendationstopurchase,holdorsellthesecurities,nordothecreditratingscommentonthemarketpriceorsuitability
foraparticularinvestor.Anycreditratingmaynotremainineffectforagivenperiodoftimeormayberevisedorwithdrawn
entirelybyaratingagencyinthefutureif,initsjudgment,circumstancessowarrant.
OnApril28,2021,DBRSLimited("DBRS")upgradeditsratingsforPembina'sseniorunsecuredmedium-termnotesto'BBB
(high)',to'BBB(low)'fortheSeries1SubordinatedNotesandto'Pfd-3(high)'foreachissuedseriesofPembina'sClassA
PreferredShares,otherthantheClassAPreferredShares,Series2021-A(the"Series2021-AClassAPreferredShares"),which
aredeliverabletotheholdersoftheSeries1SubordinatedNotesfollowingtheoccurrenceofcertainbankruptcyorinsolvency
eventsinrespectofPembina.
Thelong-termcorporatecreditratingassignedbyS&PGlobalRatings("S&P")onPembinais'BBB'.S&Phasalsoassigneda
debtratingof'BBB'toPembina'sseniorunsecuredmedium-termnotes,adebtratingof'BB+'totheSeries1Subordinated
Notes,andaratingof'P-3(High)'toeachissuedseriesofPembina'sClassAPreferredShares,otherthantheSeries2021-A
ClassAPreferredShares.S&PaffirmedPembina'screditratingduringthesecondquarterof2021.
Referto"DescriptionoftheCapitalStructureofPembina–CreditRatings"intheAIFforfurtherinformation.
20PembinaPipelineCorporationThirdQuarter2021
ContractualObligationsandOff-BalanceSheetArrangements
ContractualObligations
PembinahadthefollowingcontractualobligationsoutstandingatSeptember30,2021:
ContractualObligations(1) PaymentsDueByPeriod
($millions) Total Lessthan1year 1–3years 3–5years After5years
Leases(2) 1,010 118 186 155 551
Long-termdebt(3) 16,523 1,366 2,382 2,609 10,166
Constructioncommitments(4) 892 335 48 29 480
Other 543 91 127 68 257
Totalcontractualobligations 18,968 1,910 2,743 2,861 11,454
(1) Pembinaentersintoproductpurchaseagreementsandpowerpurchaseagreementstosecuresupplyforfutureoperations.PurchasepricesofbothNGLandpoweraredependentoncurrentmarketprices.VolumesandpricesforNGLandpowercontractscannotbereasonablydetermined,andtherefore,anamounthasnotbeenincludedinthecontractualobligationsschedule.Productpurchaseagreementsrangefromoneto8yearsandinvolvethepurchaseofNGLproductsfromproducers.Assumingproductisavailable,Pembinahassecuredbetween12and138mbpdofNGLeachyearuptoandincluding2029.Powerpurchaseagreementsrangefromoneto24yearsandinvolvethepurchaseofpowerfromelectricalserviceproviders.Pembinahassecuredupto81megawattsperdayeachyearuptoandincluding2045.
(2) Includesterminals,rail,officespace,landandvehicleleases.(3) Includesloansandborrowings,subordinatedhybridnotesandinterestpaymentsonPembina'sseniorunsecuredmedium-termnotesandsubordinatedhybridnotes.
Excludesdeferredfinancingcosts.(4) Excludingsignificantprojectsthatareawaitingregulatoryapproval,projectswhichPembinaisnotcommittedtoconstruct,andprojectsthatareexecutedbyequity
accountedinvestees.
Off-BalanceSheetArrangements
AsatSeptember30,2021,Pembinadoesnothaveanyoff-balancesheetarrangementsthathave,orarereasonablylikelyto
have,acurrentorfutureeffectonPembina'sfinancialcondition,resultsofoperations,liquidityorcapitalinvestments.
LettersofCredit
Pembinahasprovidedlettersofcredittovariousthirdpartiesinthenormalcourseofconductingbusiness.Thelettersof
creditincludefinancialguaranteestocounterpartiesforproductpurchasesandsales,transportationservices,utilities,
engineeringandconstructionservices.Thelettersofcredithavenothadandarenotexpectedtohaveamaterialimpacton
Pembina'sfinancialposition,earnings,liquidityorcapitalresources.AsatSeptember30,2021,Pembinahad$166million
(December31,2020:$91million)inlettersofcreditissued.
PembinaPipelineCorporationThirdQuarter202121
5.SHARECAPITALCommonShares
OnFebruary25,2021,theTorontoStockExchange("TSX")acceptedtheCompany'snoticeofintentiontocommenceanormal
courseissuerbid("NCIB")thatallowstheCompanytorepurchase,atitsdiscretion,uptoapproximately27.5millioncommon
sharesthroughthefacilitiesoftheTSX,theNewYorkStockExchangeand/oralternativeCanadiantradingsystemsoras
otherwisepermittedbyapplicablesecuritieslaw,subjecttocertainrestrictionsonthenumberofcommonsharesthatmaybe
purchasedonasingleday.CommonsharespurchasedbytheCompanywillbecancelled.TheprogramcommencedMarch2,
2021andwillterminateonMarch1,2022oronsuchearlierdateastheCompanycompletesitspurchasespursuanttothe
noticeofintention.NocommonshareswerepurchasedbyPembinaduringthefirstninemonthsof2021.
CommonShareDividends
Commonsharedividendsarepayableif,asandwhendeclaredbyPembina'sBoardofDirectors.Theamountandfrequencyof
dividendsdeclaredandpayableisatthediscretionofPembina'sBoardofDirectors,whichconsidersearnings,cashflow,
capitalrequirements,thefinancialconditionofPembinaandotherrelevantfactorswhenmakingitsdividenddetermination.
PreferredShares
OnJanuary25,2021inconnectionwiththeofferingoftheSeries1SubordinatedNotes,Pembinaissued600,000Series2021-
AClassAPreferredShares,toComputershareTrustCompanyofCanada,tobeheldintrustastreasurysharestosatisfy
Pembina'sobligationsundertheindenturegoverningtheSeries1SubordinatedNotes.
OnMarch1,2021,Pembinaredeemedallofthe6.8millionissuedandoutstandingCumulativeRedeemableMinimumRate
ResetClassAPreferredShares,Series11(the"Series11ClassAPreferredShares")foraredemptionpriceequalto$25.00per
Series11ClassAPreferredShare,lesstaxesrequiredtobedeductedorwithheldbytheCompany.
OnJune1,2021,Pembinaredeemedallofthe10millionissuedandoutstandingCumulativeRedeemableMinimumRate
ResetClassAPreferredShares,Series13(the"Series13ClassAPreferredShares")foraredemptionpriceequalto$25.00per
Series13ClassAPreferredShares,lesstaxesrequiredtobedeductedorwithheldbytheCompany.
PreferredShareDividends
OtherthaninrespectoftheSeries2021-AClassAPreferredShares,theholdersofPembina'sClassAPreferredSharesare
entitledtoreceivefixedcumulativedividends.DividendsontheSeries1,3,5,7,9and21ClassAPreferredSharesarepayable
quarterlyonthefirstdayofMarch,June,SeptemberandDecember,if,asandwhendeclaredbytheBoardofDirectorsof
Pembina.DividendsontheSeries15,17and19ClassAPreferredSharesarepayableonthelastdayofMarch,June,
SeptemberandDecemberineachyear,if,asandwhendeclaredbytheBoardofDirectorsofPembina.Dividendsonthe
Series23and25ClassAPreferredSharesarepayableonthe15thdayofFebruary,May,AugustandNovemberineachyear,if,
asandwhendeclaredbytheBoardofDirectorsofPembina.
DividendsarenotpayableontheSeries2021-AClassAPreferredShares,norshallanydividendsaccumulateoraccrue,prior
todeliverytotheholdersoftheSeries1SubordinatedNotesfollowingtheoccurrenceofcertainbankruptcyorinsolvency
eventsinrespectofPembina.Thereafter,dividendsontheSeries2021-AClassAPreferredSharesarepayableonthe25thday
ofJanuaryandJulyineachyear,if,asandwhendeclaredbytheBoardofDirectors.
22PembinaPipelineCorporationThirdQuarter2021
OutstandingShareData
Issuedandoutstanding(thousands)(1) October29,2021
Commonshares 550,255
Stockoptions 21,345
Stockoptionsexercisable 12,049
Series1ClassAPreferredshares 10,000
Series3ClassAPreferredShares 6,000
Series5ClassAPreferredShares 10,000
Series7ClassAPreferredShares 10,000
Series9ClassAPreferredShares 9,000
Series15ClassAPreferredShares 8,000
Series17ClassAPreferredShares 6,000
Series19ClassAPreferredShares 8,000
Series21ClassAPreferredShares 16,000
Series23ClassAPreferredShares 12,000
Series25ClassAPreferredShares 10,000(1) Pembinaissued600,000Series2021-AClassAPreferredsharestotheComputershareTrustCompanyofCanada,tobeheldintrusttosatisfyitsobligationsunderthe
indenturegoverningtheSeries1SubordinatedNotes,inconnectionwiththeissuanceoftheSeries1SubordinatedNotes.
6.CAPITALINVESTMENTSCapitalInvested
3MonthsEndedSeptember30 9MonthsEndedSeptember30
($millions) 2021 2020 2021 2020
Pipelines 174 53 352 511
Facilities 26 98 102 296
Marketing&NewVentures 3 10 15 34
Corporateandotherprojects 6 13 13 27
Totalcapitalinvested(1)(2) 209 174 482 868(1) Includes$19millionforthethreemonthsendedSeptember30,2021(2020:$29million)relatedtonon-recoverablesustainmentactivities.(2) Includes$49millionfortheninemonthsendedSeptember30,2021(2020:$76million)relatedtonon-recoverablesustainmentactivities.
Inboth2021and2020,PipelinecapitalinvestmentscontinuedtobeprimarilyrelatedtoPembina'sPeacePipelinesystem
expansionprojectswithincreasedspendingontheNEBCTownTerminalProjectin2021.In2021,Facilitiescapitalinvestments
werelargelyrelatedtocontinuedexpansionatEmpress,thePrinceRupertTerminalandVancouverWharves.In2020,
FacilitiescapitalinvestmentsincludedconstructiononDuvernayIII,EmpressExpansionandthePrinceRupertTerminal.
Marketing&NewVentureshadcapitalinvestmentsprimarilyrelatedtooffshoreLNGprojectsin2021andtheJordanCove
LNGprojectin2020.
ContributionstoEquityAccountedInvestees
3MonthsEndedSeptember30 9MonthsEndedSeptember30
($millions) 2021 2020 2021 2020
AuxSable — — 1 3
VeresenMidstream 18 28 29 69
CKPC — — — 152
Total 18 28 30 224
ContributionsmadetoVeresenMidstreamduringboth2021and2020werelargelyrelatedtotheconstructionoftheHythe
Developments.
TherewerenocontributionsmadetoCKPCduring2021,followingtheindefinitesuspensionofthepropanedehydration
("PDH")plantandpolypropyleneupgradingfacility("PDH/PPFacility")announcedinthefourthquarterof2020.
PembinaPipelineCorporationThirdQuarter202123
7.SELECTEDQUARTERLYINFORMATIONSelectedQuarterlyOperatingInformation
(mboe/d) 2021 2020 2019
Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4
Volumes(1)(2)
Pipelines
ConventionalPipelines 918 892 862 993 863 834 902 958
TransmissionPipelines 595 685 674 684 661 668 668 646
OilSandsPipelines 1,050 1,050 1,051 1,053 1,056 1,053 1,059 1,063
Facilities
GasServices 660 662 677 673 657 658 678 690
NGLServices 188 211 218 211 214 214 201 220
Total 3,411 3,500 3,482 3,614 3,451 3,427 3,508 3,577(1) Revenuevolumes.Seethe"Abbreviations"sectionfordefinition.(2) IncludesPembina'sproportionateshareofvolumesfromequityaccountedinvestees.
DeferredTake-or-payRevenue
($millions) 2021 2020 2019
Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4
Pipelines
Openingbalance 32 22 3 42 45 22 8 17
Revenuedeferred 48 45 42 52 66 53 40 31
Revenuerecognized (59) (35) (23) (91) (69) (30) (26) (40)
Endingtake-or-paycontractliabilitybalance 21 32 22 3 42 45 22 8
Facilities
Openingbalance 3 1 — — 2 1 — —
Revenuedeferred — 2 1 — 1 1 1 —
Revenuerecognized (3) — — — (3) — — —
Endingtake-or-paycontractliabilitybalance — 3 1 — — 2 1 —
QuarterlySegmentedAdjustedEBITDA($millions)(1)
787 830789 796
866 835778
850
Pipeline Facilities Marketing&NewVentures
Q419 Q120 Q220 Q320 Q420 Q121 Q221 Q321
(1) Refertothe"Non-GAAPMeasures"section.
24PembinaPipelineCorporationThirdQuarter2021
QuarterlyFinancialInformation
Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4
Revenue 2,149 1,902 2,016 1,680 1,496 1,229 1,548 1,668
Netrevenue(1) 961 894 999 954 849 776 865 837
Operatingexpenses 187 186 182 201 178 154 179 177
Realizedloss(gain)oncommodity-relatedderivativefinancialinstruments 43 33 88 6 (7) (36) (17) (8)
Shareofprofit(loss)fromequityaccountedinvestees 75 52 71 (244) 62 66 84 89
Grossprofit 682 550 630 247 568 460 733 605
Earnings(loss) 588 254 320 (1,216) 323 258 319 150
Earnings(loss)percommonshare–basicanddiluted(dollars) 1.01 0.39 0.51 (2.28) 0.52 0.40 0.51 0.22
Cashflowfromoperatingactivities 913 584 456 766 434 642 410 728
Cashflowfromoperatingactivitiespercommonshare–basic(dollars)(1) 1.66 1.06 0.83 1.39 0.78 1.17 0.75 1.41
Adjustedcashflowfromoperatingactivities(1) 786 538 582 603 524 586 576 576
Adjustedcashflowfromoperatingactivitiespercommonshare–basic(dollars)(1) 1.43 0.98 1.06 1.10 0.95 1.07 1.05 1.11
Commonsharesoutstanding(millions):
Weightedaverage–basic 550 550 550 550 550 550 549 518
Weightedaverage–diluted 551 551 550 550 550 550 549 519
Endofperiod 550 550 550 550 550 550 550 548
Commonsharedividendsdeclared 347 347 346 346 346 347 346 314
Dividendspercommonshare 0.63 0.63 0.63 0.63 0.63 0.63 0.63 0.60
Preferredsharedividendsdeclared 31 35 36 38 38 37 38 34
Capitalinvestments 209 146 127 161 174 211 483 429
Contributionstoequityaccountedinvestees 18 — 12 — 28 2 194 120
Distributionsfromequityaccountedinvestees 106 112 115 109 111 116 123 123
AdjustedEBITDA(1) 850 778 835 866 796 789 830 787
($millions,exceptwherenoted) 2021(2) 2020(2) 2019(2)
(1) Refertothe"Non-GAAPMeasures"section.(2) Comparative2020periodhasbeenrestated.See"VoluntaryChangeinAccountingPolicy","RestatementofRevenueandCostofGoodsSold"andNote2totheInterim
FinancialStatements.Therestatementreducesrevenueandcostofgoodssoldforallquarterlycomparativeperiods,includingQ22021:$52million,Q12021:$29million,Q42020:$14million,Q32020:$73million,Q22020:$39million,Q12020:$123million,andQ42019:$86million.
Duringtheperiodsinthetableabove,Pembina'sfinancialandoperatingresultswereimpactedbythefollowingfactorsandtrends:• ImpairmentsrecognizedonPembina'sinterestsinRuby,CKPCandtheassetsassociatedwithJordanCoveinthefourth
quarterof2020andthepartialimpairmentofPembina'sinterestinRubyinthefourthquarterof2019;• TheKinderAcquisition,whichwascompletedonDecember16,2019;• TheCOVID-19pandemicandtheresultingdecreaseindemandforcommoditiesstartinginthesecondquarterof2020,
whichledtoasignificantdeclineinglobalenergypricesandareductionincapitalspendingbudgetsbyPembinaanditscustomersin2020,andthesubsequentrecoveryindemandforcommoditiesandglobalenergypricesin2021;
• VolatilityintheAECO-Chicagonaturalgaspricedifferential,powerpoolpricesandforeignexchangeratesimpactingoperatingresults;
• Newlarge-scalegrowthprojectsacrossPembina'sbusinessbeingplacedintoservice;• Volatilityincommoditymarketpricesimpactingmarginswithinthemarketingbusiness,partiallymitigatedthrough
Pembina'sriskmanagementprogram;• Highernetfinancecostsimpactingearningsassociatedwithdebtrelatedtofinancingacquisitions,growthprojects,
volatilityinforeignexchangeratesandvolatilityinPembina'ssharepriceimpactingincentivecosts;• IncreasedcommonandpreferredsharesoutstandingandcorrespondingdividendsduetotheKinderAcquisition;• Contractexpiriesoncertainassets;and
• ThereceiptoftheArrangementTerminationPayment.
PembinaPipelineCorporationThirdQuarter202125
8.SELECTEDEQUITYACCOUNTEDINVESTEEINFORMATIONLoansandBorrowingsofEquityAccountedInvestees
Underequityaccounting,theassetsandliabilitiesofaninvestmentarenetintoasinglelineitemintheConsolidated
StatementofFinancialPosition,"InvestmentsinEquityAccountedInvestees".Toassistreaders'understandingandto
evaluatethecapitalizationofPembina'sinvestments,loansandborrowingsassociatedwithinvestmentsinequityaccounted
investeesarepresentedbelowbasedonPembina'sproportionateownershipinsuchinvestments,asatSeptember30,2021.
Inaddition,certainoftheequityaccountedinvesteeshaveborrowingarrangementswithanamortizationstructure,thereby
necessitatingperiodicrepaymentsofprincipal.Theserepaymentsoccurpriortothedistributionofresidualcashflowto
Pembina.Theloansandborrowingsandamortizationschedulesarepresentedbelowandclassifiedbythedivisioninwhich
theresultsfortheinvestmentarereported.Pleaserefertothe"Abbreviations"sectionforasummaryofPembina's
investmentsinequityaccountedinvesteesandthedivisioninwhichtheirresultsarereported.
($millions)(1) September30,2021 December31,2020
Pipelines 877 926
Facilities 1,198 1,200
Total 2,075 2,126(1) BalancesreflectPembina'sownershippercentageoftheoutstandingbalancefacevalue.
AmortizationScheduleofLoansandBorrowingsofEquityAccountedInvestees
9MonthsEnded Remainderof
($millions)(1)September30,
2021 2021 2022 2023 2024 2025+
Pipelines 87 33 623 62 67 92
Facilities 2 12 36 36 1,114 —
Total 89 45 659 98 1,181 92(1) BalancesreflectPembina'sownershippercentageoftheoutstandingbalancefacevalue.
FinancingActivitiesforEquityAccountedInvestees
OnApril19,2021,Rubyfullyrepaidthe$16millionoutstandingonitstermloan.
CommitmentstoEquityAccountedInvestees
Pembinahascommitmentstoprovidecontributionstocertainequityaccountedinvesteesbasedonannualbudgetsapproved
bythejointventurepartnersandcontractualagreements.
CreditRiskforEquityAccountedInvestees
AtSeptember30,2021,Pembina'svariousequityaccountedinvesteesheldlettersofcredittotaling$73million(December31,
2020:$105million)primarilyinrespectofcustomertradereceivables.
CedarLNGAcquisition
OnJune4,2021,Pembinaacquireda49.9percentinterestinajointventurewiththeHaislaNationtodeveloptheCedarLNG
Project,aLNGfacilitylocatedonthecoastofBritishColumbiawithintheDouglasChannelonHaisla-ownedland.Pembina's
investmentof$129millionatSeptember30,2021included$76millionofaccruedcontingentconsiderationpayableon
achievementofcertainconditions.Underthetermsoftheagreement,Pembinahascommitmentstomakeadditional
paymentsonapositivefinalinvestmentdecisionaswellascontributionstofunddevelopmentcostsandannualoperating
budgets.
26PembinaPipelineCorporationThirdQuarter2021
9.OTHER
RelatedPartyTransactions
Pembinaentersintotransactionswithrelatedpartiesinthenormalcourseofbusinessandontermsequivalenttothosethat
prevailinarm'slengthtransactions,unlessotherwisenoted.PembinacontractscapacityfromAllianceandVeresen
Midstream,itsequityaccountedinvestees,andadvancesfundstosupportoperationsandprovidesservices,onacost
recoverybasis,toequityaccountedinvestees.
OnJanuary6,2021,PembinaadvancedU.S.$8milliontoRubyPipelineL.L.C.,whichwassubsequentlyimpaired.
ForthethreeandninemonthsendedSeptember30,2021,Pembinahadnoothertransactionswith"relatedparties"(as
definedinIAS24RelatedPartyDisclosures)exceptthosepertainingtocontributionstoPembina'sdefinedbenefitpension
planandremunerationofkeymanagementpersonnelandtheBoardofDirectorsofPembina,intheordinarycourseoftheir
employmentordirectorshipagreements,respectively.
RiskManagement
Pembina'sriskmanagementstrategies,policiesandlimits,ensurerisksandexposuresarealignedtoitsbusinessstrategyand
risktolerance.Pembina'sBoardofDirectorsisresponsibleforprovidingriskmanagementoversightatPembinaandoversees
howmanagementmonitorscompliancewithPembina'sriskmanagementpoliciesandproceduresandreviewstheadequacy
ofthisriskframeworkinrelationtotherisksfacedbyPembina.
Pembina'sfinancialrisksareconsistentwiththosediscussedinNote27oftheConsolidatedFinancialStatements.Pembina
hasexposuretocounterpartycreditrisk,liquidityriskandmarketrisk.AsatSeptember30,2021,theCompanyhasentered
intocertainfinancialderivativecontractsinordertomanagecommodityprice,foreignexchangeandinterestraterisk.These
instrumentsarenotusedfortradingorspeculativepurposes.FormoreinformationonPembina'sderivativeinstruments,
refertoNote14totheInterimFinancialStatements.
PembinaPipelineCorporationThirdQuarter202127
DisclosureControlsandProceduresandInternalControloverFinancialReporting
DisclosureControlsandProcedures
Pembinamaintainsdisclosurecontrolsandprocedures("DC&P")designedtoprovidereasonableassurancethatinformation
requiredtobedisclosedinPembina'sannualfilings,interimfilingsandotherreportsfiledorsubmittedbyitundersecurities
lawsisrecorded,processed,summarizedandreportedaccuratelyandinthetimeperiodsspecifiedundersuchsecuritieslaws,
andincludecontrolsandproceduresdesignedtoensuresuchinformationisaccumulatedandcommunicatedtoPembina's
management,includingitscertifyingofficers,asappropriatetoallowtimelydecisionsregardingrequireddisclosure.Asat
September30,2021,thePresidentandChiefExecutiveOfficer("CEO")andtheSeniorVicePresidentandChiefFinancial
Officer("CFO")haveconcludedthatPembina'sDC&Pwerenoteffectiveasatthatdateasaresultofthematerialweakness
describedbelow.
Management'sReportonInternalControlOverFinancialReporting
Pembinamaintainsinternalcontroloverfinancialreporting("ICFR")whichisdesignedtoprovidereasonableassurance
regardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordance
withIFRS,andincludepoliciesandproceduresthat:(a)pertaintothemaintenanceofrecordsthatinreasonabledetail
accuratelyandfairlyreflectthetransactionsanddispositionsoftheassetsofPembina;(b)aredesignedtoprovidereasonable
assurancethattransactionsarerecordedasnecessarytopermitpreparationoffinancialstatementsinaccordancewithIFRS,
andthatreceiptsandexpendituresofPembinaarebeingmadeonlyinaccordancewithauthorizationsofmanagementand
directorsofPembina;and(c)aredesignedtoprovidereasonableassuranceregardingpreventionortimelydetectionof
unauthorizedacquisition,useordispositionofPembina'sassetsthatcouldhaveamaterialeffectonPembina'sfinancial
statements.ManagementisresponsibleforestablishingandmaintainingDC&PandICFR,asdefinedinNationalInstrument
52-109CertificationofDisclosureinIssuers'AnnualandInterimFilingsandRule13a–15(e)and15(d)–15(e)underthe
UnitedStatesSecuritiesExchangeActof1934.
UnderthesupervisionandwiththeparticipationofourCEOandourCFO,managementhasdesignedinternalcontrolover
financialreportingbasedontheframeworksetforthinInternalControl–IntegratedFrameworkissuedin2013bythe
CommitteeofSponsoringOrganizationsoftheTreadwayCommission.Amaterialweaknessisadeficiency,oracombination
ofdeficiencies,inICFR,suchthatthereisareasonablepossibilitythatamaterialmisstatementoftheannualfinancial
statements,orinterimfinancialstatements,willnotbepreventedordetectedonatimelybasis.AsatSeptember30,2021,
theCompanyhasidentifieda"materialweakness"relatedtocontrolsovercontractassessmentinitsMarketingbusiness.
Specifically,wedidnothavecontrolstoidentifyallcontractswhereanaccountingassessmentwasrequiredandasaresult
lackedanalysisofallrelevantcontracttermsrequiredtomaketheassessmentintheMarketingbusiness.Becauseofthe
deficiency,theCompanypresentedrevenueandcostofgoodssoldforcertaincrudecontractsinMarketingandNew
Venturesonagrossbasisthatshouldhavebeenrecordedonanetbasis.Managementhasappropriatelyrecognizedrevenue
andcostofgoodssoldforthesetransactionsonanetbasisforthethreeandninemonthperiodsendedSeptember30,2021
andhasrestatedrevenueandcostofgoodssoldforthethreeandninemonthperiodsendedSeptember30,2020withno
impactonearnings,cashflowsorfinancialposition.Refertonote2oftheInterimFinancialStatementsfordetailsofthe
restatement.
28PembinaPipelineCorporationThirdQuarter2021
RemediationofMaterialWeakness
Thecontroldeficiencydescribedabovewasdetectedbymanagementduringthethirdquarterof2021priortothefilingof
Pembina'sInterimFinancialStatements.TheCompanyhasprioritizedtheremediationofthematerialweaknessdescribed
aboveandisworkingundertheoversightoftheAuditCommitteetoresolvetheissue.
Specificactionstoremediatethismaterialweaknessincludethefollowing:
i. Revisionoftheprocessofidentifyingcontractstoconsultwithinternalexpertstoassistintheevaluationoftechnical
accountingmatters;and
ii. Enhancecontractanalysis,includingrevisionoftheprocessusedtoassessaccountingimplicationsforcomplex
contracts.
AstheconclusionregardingthematerialweaknessinICFRwasreachedinlateOctober2021,Pembinahasnothadadequate
timetoimplementandevaluatethecontrolsandproceduresdescribedabove,aslimitedcomplexandmaterialtransactions
requiringanapplicationoftheforegoingremediationactionshaveoccurredinthisperiod.Pembinahas,therefore,nothad
adequatetimeoropportunitytoapplyitsproposedremediationactionstoevidencetheremediationofthematerial
weaknessdescribedaboveandthematerialweaknesswillcontinuetobeaddressedthroughouttheremainderof2021.
ChangesinInternalControlOverFinancialReporting
Otherthanthematerialweaknessdescribedabove,therewerenochangesinthethirdquarterof2021thathadorarelikely
tohaveamaterialimpactonPembina'sICFR.
PembinaPipelineCorporationThirdQuarter202129
10.ACCOUNTINGPOLICIES&ESTIMATESChangesinAccountingPolicies&Restatement
TheaccountingpoliciesusedinpreparingtheInterimFinancialStatementsaredescribedinNote5ofPembina'sConsolidated
FinancialStatements.Therewerenonewaccountingstandardsoramendmentstoexistingstandardsadoptedinthefirstnine
monthsof2021thatareexpectedtohaveamaterialimpactonPembina'sfinancialstatements.
Voluntarychangeinaccountingpolicy
AsdetailedinNote3oftheConsolidatedFinancialStatements,Pembinavoluntarilychangeditsaccountingpolicyforthe
measurementofdecommissioningliabilitiestoutilizeacredit-adjustedrisk-freeinterestrateinsteadofarisk-freeinterest
ratetodeterminethepresentvalueoftheliabilityateachstatementoffinancialpositiondate.Thisaccountingpolicychange
wasappliedretrospectively,includingtherestatementofcertaincomparativeamountsintheInterimFinancialStatements,as
summarizedbelow.
Restatementofrevenueandcostofgoodssold
DuringthethirdquarterPembinaidentifiedcertaincrudecontractsthatwererecordedincorrectlywithinMarketing&New
Ventures.Revenueandcostofgoodssoldassociatedwiththecontractswererecordedonagrossbasisbutshouldhavebeen
recordedonanetbasis.AsaresultPembinarestatedcomparativeperiodsdecreasingrevenueandcostofgoodssold,withno
impacttoearnings,cashflowsorfinancialposition.
i. ReconciliationoftheCondensedConsolidatedInterimStatementsofEarningsandComprehensiveIncome
($millions)
3MonthsEndedSeptember30,2020 9MonthsEndedSeptember30,2020
Previouslyreported
Policychange
Restatementadjustments Restated
Previouslyreported
Policychange
Restatementadjustments Restated
Revenue 1,569 — (73) 1,496 4,508 — (235) 4,273
Costofsales 1,068 (4) (73) 991 3,033 (12) (235) 2,786
Shareofprofitfromequityaccountedinvestees 61 1 — 62 209 3 — 212
Grossprofit 563 5 — 568 1,746 15 — 1,761
Netfinancecosts 83 (1) — 82 364 (3) — 361
Earningsbeforeincometax 428 6 — 434 1,213 18 — 1,231
Deferredtaxexpense 58 1 — 59 133 3 — 136
Earningsattributabletoshareholders 318 5 — 323 885 15 — 900
Totalcomprehensiveincomeattributabletoshareholders 214 5 — 219 1,057 15 — 1,072
Earningsattributabletocommonshareholders,netofpreferredsharedividends 279 5 — 284 768 15 — 783
Earningspercommonshare-basicanddiluted 0.51 0.01 — 0.52 1.39 0.03 — 1.42
ii. ReconciliationoftheCondensedConsolidatedInterimStatementofCashFlows
($millions)
3MonthsEndedSeptember30,2020 9MonthsEndedSeptember30,2020
Previouslyreported
Policychange Restated
Previouslyreported
Policychange Restated
Earnings 318 5 323 885 15 900
Shareofprofitfromequityaccountedinvestees (61) (1) (62) (209) (3) (212)
Adjustmentsfordepreciationandamortization 179 (4) 175 532 (12) 520
Adjustmentsfornetfinancecosts 83 (1) 82 364 (3) 361
Adjustmentsforincometaxexpense 110 1 111 328 3 331
Cashflowfromoperatingactivities 434 — 434 1,486 — 1,486
30PembinaPipelineCorporationThirdQuarter2021
CriticalAccountingJudgments&Estimates
CriticalaccountingjudgmentsandestimatesusedinpreparingtheInterimFinancialStatementsaredescribedinNote2of
Pembina'sConsolidatedFinancialStatements.ThepreparationofconsolidatedfinancialstatementsinconformitywithIFRS
requiresmanagementtomakebothjudgmentsandestimatesthatcouldmateriallyaffecttheamountsrecognizedinthe
financialstatements.Bytheirnature,judgmentsandestimatesmaychangeinlightofnewfactsandcircumstancesinthe
internalandexternalenvironment.TherehavebeennomaterialchangestoPembina'scriticalaccountingestimatesand
judgmentsduringthethreeandninemonthsendedSeptember30,2021,includingtotheongoingimpactofsignificant
uncertaintiescreatedbytheCOVID-19pandemic,asdiscussedbelow.
OngoingImpactoftheCOVID-19Pandemic
FollowingtheWorldHealthOrganizationdeclaringtheCOVID-19outbreaktobeapandemic,manygovernmentsimposed
restrictionsonindividualsandbusinesses,whichresultedinasignificantslowdownoftheglobaleconomy.Whiletherehave
beenpositivesignalsintothefirstninemonthsof2021incommodityprices,demandrecoveryremainsaffectedbytheon-
goingCOVID-19pandemic.Althoughrestrictionshavebeenrelaxedincertainjurisdictionsandvaccinationprogramsare
underway,thereremainssignificantuncertaintyastotheglobaleconomicoutlookandthereremainsthepotentialfor
volatilityintheglobaleconomyasaresultoftheCOVID-19pandemic.Managementconsideredtheseuncertaintieswhen
applyingjudgmenttoestimatesandassumptionsintheInterimFinancialStatements.
PembinaPipelineCorporationThirdQuarter202131
11.RISKFACTORSManagementhasidentifiedtheprimaryriskfactorsthatcouldpotentiallyhaveamaterialimpactonthefinancialresultsand
operationsofPembina.Withtheexceptionoftherisksnotedbelow,therehavebeennomaterialchangestotheriskfactors
presentedinPembina'sMD&AandAIFfortheyearendedDecember31,2020.Pembina'sMD&AandAIFareavailableat
www.sedar.com,www.sec.govandthroughPembina'swebsiteatwww.pembina.com.
OngoingImpactoftheCOVID-19Pandemic
COVID-19RelatedImpacts
Pembina'sbusinessandoperationshavebeenandmaycontinuetobemateriallyadverselyaffectedbytheCOVID-19
pandemic,includingongoinguncertaintywithrespecttotheextentanddurationofthepandemic.In2020,theCOVID-19
pandemicresultedin,amongotherthings,anoverallslowdownintheglobaleconomyandadecreaseinglobalenergy
demand.TheongoingCOVID-19pandemic,andactionsthathave,andmaybe,takenbygovernmentalauthoritiesinresponse
theretohasalsoresulted,andmaycontinuetoresultin,amongotherthings:increasedvolatilityinfinancialandcommodity
markets;disruptionstoglobalsupplychains;labourshortages;significantimpactstotheworkforce;includingasaresultof
theimplementationofvaccinemandatesandvaccinerecommendations;reductionsintradevolumes;temporaryoperational
restrictionsandrestrictionsongatheringsofindividuals,aswellasshelter-in-placedeclarationsandquarantineorders;
businessclosuresandtravelbans;politicalandeconomicinstability;andcivilunrest.TheongoingspreadoftheCOVID-19
virus,includingnewvariantsthereof,incertaingeographicareas,includingcertainareasinwhichPembinahasoperations,
andthepossibilitythataresurgenceoftheCOVID-19virusorthespreadofsuchneworpotentialfuturevariantsthereofmay
occurinotherareas,mayresultinthere-impositionofcertainoftheforegoingrestrictionsorfurtherrestrictionsby
governmentalauthoritiesincertainjurisdictions,includingcertainjurisdictionsinwhichPembinahasoperations.Thisfurther
increasestheriskanduncertaintyastotheextentanddurationoftheCOVID-19pandemicanditsultimateimpactonthe
globaleconomyandotheritemsnotedabove.
TheriskstoPembinaoftheongoingCOVID-19pandemicinclude,amongotherthings:riskstothehealthandsafetyof
Pembina'semployees;aslowdownortemporarysuspensionofoperationsincertaingeographiclocationsinwhichPembina
operates;delaysinthecompletion,oradditionaldeferrals,ofPembina'sgrowthandexpansionprojects;disruptionsin
Pembina'sworkforce,includingasaresultofvaccinemandates;andsupplychaindisruptions,alloranyofwhichcould
materiallyadverselyimpactPembina'sbusinessoperationsandfinancialresults.
ThefullextentandimpactoftheCOVID-19pandemiccontinuestobeunknownatthistimeandthedegreetowhichitmay
impactPembina'sbusinessoperationsandfinancialresultswilldependonfuturedevelopments,whichcannotbepredicted
withanydegreeofcertainty,including:theduration,severityandgeographicspreadoftheCOVID-19virusandvariants
thereof,includinginrespectoftheongoingspreadoftheCOVID-19virus,andnewvariantsthereof,incertaingeographic
areas,includingcertainareasinwhichPembinaoperates;furtheractionsthatmaybetakenbygovernmentalauthorities,
includinginrespectoftheimplementationofvaccinemandatesandongoingandfutureoperationalrestrictionsand
restrictionsontravel;theeffectivenessandtimingofactionstakentocontainandtreattheCOVID-19virusandvariants
thereof,includingthevaccinesdevelopedinresponsethereto;andhowquicklyandtowhatextentnormaleconomicand
operatingconditionswillresume.
ImpactonGeneralRisks
DependingontheextentanddurationoftheCOVID-19pandemic,itmayalsohavetheeffectofheighteningmanyofthe
otherrisksdescribedinPembina'sotherdisclosuredocuments,includingPembina'sMD&AandAIFfortheyearended
December31,2020,suchasrisksrelatingtoPembina'sexposuretocommodityprices;thesuccessfulcompletionofPembina's
growthandexpansionprojects,includingtheexpectedreturnoninvestmentthereof;Pembina'sabilitytomaintainitscredit
ratings;restrictedaccesstocapitalandincreasedborrowingcosts;Pembina'sabilitytopaydividendsandserviceobligations
underitsdebtsecuritiesandotherdebtobligations;andotherwisecomplyingwiththecovenantscontainedinthe
agreementsthatgovernPembina'sexistingindebtedness.
32PembinaPipelineCorporationThirdQuarter2021
12.NON-GAAPMEASURESThroughoutthisMD&A,PembinahasusedfinancialmeasuresthatarenotdefinedbyGAAPbutareusedbymanagementto
evaluatetheperformanceofPembinaanditsbusinesses.Sincenon-GAAPmeasuresdonothaveastandardizedmeaning
prescribedbyIFRSandarethereforeunlikelytobecomparabletosimilarmeasurespresentedbyothercompanies,non-GAAP
measuresmustbeclearlydefined,qualifiedandreconciledtothemostdirectlycomparableGAAPmeasure.Thesenon-GAAP
measuresarecalculatedanddisclosedonaconsistentbasisfromperiodtoperiod.
Theintentofthenon-GAAPmeasuresusedthroughoutthisMD&Aistoprovideadditionalusefulinformationwithrespectto
Pembina'sfinancialperformancetoinvestorsandanalysts,thoughthemeasuresdonothaveanystandardizedmeaning
underIFRS.Themeasuresshouldnot,therefore,beconsideredinisolationorusedinsubstituteformeasuresofperformance
preparedinaccordancewithIFRS.Otherissuersmaycalculatethesenon-GAAPmeasuresdifferentlyorusedifferentnon-
GAAPmeasures.
Investorsshouldbecautionedthatnetrevenue,adjustedEBITDA,adjustedEBITDApercommonshare,adjustedcashflow
fromoperatingactivities,cashflowfromoperatingactivitiespercommonshare,andadjustedcashflowfromoperating
activitiespercommonshareshouldnotbeconstruedasalternativestorevenue,earnings,cashflowfromoperatingactivities,
grossprofitorothermeasuresoffinancialresultsdeterminedinaccordancewithGAAPasindicatorsofPembina's
performance.
Non-GAAPProportionateConsolidationofInvestmentsinEquityAccountedInvesteesResults
InaccordancewithIFRS,Pembina'sjointlycontrolledinvestmentsareaccountedforusingequityaccounting.Underequity
accounting,theassetsandliabilitiesoftheinvestmentarepresentednetinasinglelineitemintheConsolidatedStatementof
FinancialPosition,"InvestmentsinEquityAccountedInvestees".Netearningsfrominvestmentsinequityaccountedinvestees
arerecognizedinasinglelineitemintheConsolidatedStatementofEarningsandComprehensiveIncome"ShareofProfit
fromEquityAccountedInvestees".Cashcontributionsanddistributionsfrominvestmentsinequityaccountedinvestees
representPembina'ssharepaidandreceivedintheperiodtoandfromtheinvestmentsinequityaccountedinvestees.
Toassistinunderstandingandevaluatingtheperformanceoftheseinvestments,PembinaissupplementingtheIFRS
disclosurewithnon-GAAPproportionateconsolidationofPembina'sinterestintheinvestmentsinequityaccounted
investees.Pembina'sproportionateinterestinequityaccountedinvesteeshasbeenincludedinadjustedEBITDA.
NetRevenue
Netrevenueisanon-GAAPfinancialmeasurewhichisdefinedastotalrevenuelesscostofgoodssoldincludingproduct
purchases.Managementbelievesthatnetrevenueprovidesinvestorswithasinglemeasuretoindicatethemarginonsales
beforenon-productoperatingexpensesthatiscomparablebetweenperiods.Managementutilizesnetrevenuetocompare
consecutiveresultsinMarketing&NewVenturesandFacilities,toaggregaterevenuegeneratedbyeachoftheCompany's
divisionsandtosetcomparableobjectives.
3MonthsEndedSeptember30
Pipelines FacilitiesMarketing&
NewVentures(1)
Corporate&Inter-segmentEliminations Total(1)($millions)
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
Revenue 566 557 341 311 1,393 752 (151) (124) 2,149 1,496
Costofgoodssold,includingproductpurchases — — 1 3 1,268 720 (81) (76) 1,188 647
Netrevenue 566 557 340 308 125 32 (70) (48) 961 849(1) Comparative2020periodhasbeenrestated.See"RestatementofRevenueandCostofGoodsSold"andNote2totheInterimFinancialStatements.
PembinaPipelineCorporationThirdQuarter202133
9MonthsEndedSeptember30
Pipelines FacilitiesMarketing&
NewVentures(1)
Corporate&Inter-segmentEliminations Total(1)($millions)
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
Revenue 1,673 1,648 1,014 905 3,827 2,074 (447) (354) 6,067 4,273
Costofgoodssold,includingproductpurchases — — 7 7 3,463 2,006 (257) (230) 3,213 1,783
Netrevenue 1,673 1,648 1,007 898 364 68 (190) (124) 2,854 2,490(1) Comparative2020periodhasbeenrestated.See"RestatementofRevenueandCostofGoodsSold"andNote2totheInterimFinancialStatements.
AdjustedEarningsBeforeInterest,Taxes,DepreciationandAmortization("adjustedEBITDA")
AdjustedEBITDAisanon-GAAPmeasureandiscalculatedasearningsbeforenetfinancecosts,incometaxes,depreciation
andamortization(includedinoperationsandgeneralandadministrativeexpense)andunrealizedgainsorlosseson
commodity-relatedderivativefinancialinstruments.Theexclusionofunrealizedgainsorlossesoncommodity-related
derivativefinancialinstrumentseliminatesthenon-cashimpactofsuchgainsorlosses.
AdjustedEBITDAalsoincludesadjustmentstoearningsforlosses(gains)ondisposalofassets,transactioncostsincurredin
respectofacquisitions,dispositionsandrestructuring,impairmentchargesorreversalsinrespectofgoodwill,intangible
assets,investmentsinequityaccountedinvesteesandproperty,plantandequipment,certainnon-cashprovisionsandother
amountsnotreflectiveofongoingoperations.Theadjustmentsmadetoearningsarealsomadetoshareofprofitfrom
investmentsinequityaccountedinvestees.Inaddition,Pembina'sproportionateshareofresultsfrominvestmentsinequity
accountedinvesteeswithapreferredinterestispresentedinadjustedEBITDAasa50percentcommoninterest.These
additionaladjustmentsaremadetoexcludevariousnon-cashandotheritemsthatarenotreflectiveofongoingoperations.
ManagementbelievesthatadjustedEBITDAprovidesusefulinformationtoinvestorsasitisanimportantindicatorofan
issuer'sabilitytogenerateliquiditythroughcashflowfromoperatingactivitiesandequityaccountedinvestees.Management
alsobelievesthatadjustedEBITDAprovidesanindicatorofoperatingincomegeneratedfromcapitalinvested,whichincludes
operationalfinanceincomefromlessorleasearrangements.AdjustedEBITDAisalsousedbyinvestorsandanalystsfor
assessingfinancialperformanceandforthepurposeofvaluinganissuer,includingcalculatingfinancialandleverageratios.
ManagementutilizesadjustedEBITDAtosetobjectivesandasakeyperformanceindicatoroftheCompany'ssuccess.
PembinapresentsadjustedEBITDAasmanagementbelievesitisameasurefrequentlyusedbyanalysts,investorsandother
stakeholdersinevaluatingtheCompany'sfinancialperformance.
3MonthsEndedSeptember30
Pipelines FacilitiesMarketing&NewVentures
Corporate&Inter-segmentEliminations Total($millions,exceptpershareamounts)
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
Earningsbeforeincometax(1) 329 371 207 175 91 2 154 (114) 781 434
Adjustmentstoshareofprofitfromequityaccountedinvesteesandother(1) 65 58 33 34 5 9 — — 103 101
Netfinancecosts(1) 8 8 12 5 2 (7) 122 76 144 82
Depreciationandamortization(1) 100 103 56 49 13 12 11 11 180 175
Unrealized(gain)lossoncommodity-relatedderivativefinancialinstruments — — (45) (11) (2) 17 — — (47) 6
CanadianEmergencyWageSubsidy — — — — — — 8 (9) 8 (9)
Transformationandrestructuringcosts — — — — — — 11 — 11 —
Transactioncostsincurredinrespectofacquisitions — — — — — — 8 6 8 6
ArrangementTerminationPayment — — — — — — (350) — (350) —
Impairmentchargesandnon-cashprovisions 1 1 10 (1) — 1 1 — 12 1
AdjustedEBITDA 503 541 273 251 109 34 (35) (30) 850 796
AdjustedEBITDApercommonshare–basic(dollars) 1.55 1.45(1) Comparative2020periodhasbeenrestated.See"VoluntaryChangeinAccountingPolicy"andNote2totheInterimFinancialStatements.
34PembinaPipelineCorporationThirdQuarter2021
9MonthsEndedSeptember30
Pipelines FacilitiesMarketing&NewVentures
Corporate&Inter-segmentEliminations Total($millions,exceptpershareamounts)
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
Earningsbeforeincometax(1) 987 1,120 555 499 167 38 (177) (426) 1,532 1,231
Adjustmentstoshareofprofitfromequityaccountedinvesteesandother(1) 221 180 99 103 18 15 — — 338 298
Netfinancecosts(1) 23 24 30 16 (7) 2 297 319 343 361
Depreciationandamortization(1) 312 300 158 149 38 37 35 34 543 520
Unrealized(gain)lossoncommodity-relatedderivativefinancialinstruments — — (62) (14) 19 12 — — (43) (2)
CanadianEmergencyWageSubsidy — — — — — — 3 (37) 3 (37)
Transformationandrestructuringcosts — 3 — 2 — 1 26 4 26 10
Transactioncostsincurredinrespectofacquisitions — — — — — — 26 16 26 16
ArrangementTerminationPayment — — — — — — (350) — (350) —
Impairmentchargesandnon-cashprovisions 11 4 32 2 2 13 — (1) 45 18
AdjustedEBITDA 1,554 1,631 812 757 237 118 (140) (91) 2,463 2,415
AdjustedEBITDApercommonshare–basic(dollars) 4.48 4.39(1) Comparative2020periodhasbeenrestated.See"VoluntaryChangeinAccountingPolicy"andNote2totheInterimFinancialStatements.
AdjustedCashFlowfromOperatingActivities,CashFlowfromOperatingActivitiesperCommonShare
andAdjustedCashFlowfromOperatingActivitiesperCommonShare
Adjustedcashflowfromoperatingactivitiesisanon-GAAPmeasurewhichisdefinedascashflowfromoperatingactivities
adjustingforthechangeinnon-cashoperatingworkingcapital,adjustingforcurrenttaxandshare-basedpaymentexpenses,
anddeductingpreferredsharedividendspaid.Adjustedcashflowfromoperatingactivitiesdeductspreferredsharedividends
paidbecausetheyarenotattributabletocommonshareholders.Thecalculationhasbeenmodifiedtoincludecurrenttaxand
share-basedpaymentexpenseasitallowsmanagementtobetterassesstheobligationsdiscussedbelow.Management
believesthatadjustedcashflowfromoperatingactivitiesprovidescomparableinformationtoinvestorsforassessingfinancial
performanceduringeachreportingperiod.Managementutilizesadjustedcashflowfromoperatingactivitiestosetobjectives
andasakeyperformanceindicatoroftheCompany'sabilitytomeetinterestobligations,dividendpaymentsandother
commitments.Percommonshareamountsarecalculatedbydividingcashflowfromoperatingactivities,oradjustedcash
flowfromoperatingactivities,asapplicable,bytheweightedaveragenumberofcommonsharesoutstanding.
3MonthsEndedSeptember30
9MonthsEndedSeptember30
($millions,exceptpershareamounts) 2021 2020 2021 2020
Cashflowfromoperatingactivities 913 434 1,953 1,486
Cashflowfromoperatingactivitiespercommonshare–basic(dollars) 1.66 0.78 3.55 2.70
Add(deduct):
Changeinnon-cashoperatingworkingcapital (7) 89 70 168
Currenttaxexpense (141) (52) (255) (195)
Taxespaid,netofforeignexchange 68 89 265 289
Accruedshare-basedpayments (16) 1 (56) 6
Share-basedpayments — 1 32 45
Preferredsharedividendspaid (31) (38) (103) (113)
Adjustedcashflowfromoperatingactivities 786 524 1,906 1,686
Adjustedcashflowfromoperatingactivitiespercommonshare–basic(dollars) 1.43 0.95 3.47 3.07
PembinaPipelineCorporationThirdQuarter202135
13.ABBREVIATIONSThefollowingisalistofabbreviationsthatmaybeusedinthisMD&A:
Other
AECO AlbertaEnergyCompanybenchmarkpricefornaturalgas
B.C. BritishColumbia
GAAP Canadiangenerallyacceptedaccountingprinciples
IFRS InternationalFinancialReportingStandards
NGL Naturalgasliquids
U.S. UnitedStates
WCSB WesternCanadianSedimentaryBasin
Deepcut Ethane-pluscapacityextractiongasprocessingcapabilities
Shallowcut Sweetgasprocessingwithpropaneand/orcondensate-plusextractioncapabilities
KinderAcquisition Pembina'sacquisitionofKinderMorganCanadaLimitedandtheU.S.portionoftheCochinPipelinesystemonDecember16,2019
Volumes VolumesforPipelinesandFacilitiesarerevenuevolumes,definedasphysicalvolumesplusvolumesrecognizedfromtake-or-paycommitments.VolumesforMarketing&NewVenturesaremarketedNGLvolumes.Volumesarestatedinmboe/d,withnaturalgasvolumesconvertedtomboe/dfromMMcf/data6:1ratio.
Measurement
bpd barrelsperday
mbbls thousandsofbarrels
mbpd thousandsofbarrelsperday
mmbpd millionsofbarrelsperday
mmbbls millionsofbarrels
mboe/d thousandsofbarrelsofoilequivalentperday
mmboe/d millionsofbarrelsofoilequivalentperday
MMcf/d millionsofcubicfeetperday
bcf/d billionsofcubicfeetperday
km kilometer
InvestmentsinEquityAccountedInvestees
Pipelines:
Alliance 50percentinterestinbothAlliancePipelineLimitedPartnershipandAlliancePipelineL.P.
Ruby 50percentconvertible,cumulativepreferredinterestintheRubyPipelineHoldingCompanyL.L.C.
GrandValley 75percentjointlycontrolledinterestinGrandValley1LimitedPartnershipwindfarm("GrandValley")
Facilities:
VeresenMidstream 45percentinterestinVeresenMidstreamLimitedPartnership,whichownsassetsinwesternCanadaservingtheMontneygeologicalplayinnorthwesternAlbertaandnortheasternB.C.includinggasprocessingplantsandgasgatheringpipelinesandcompression
FortCorp 50percentinterestinFortSaskatchewanEthyleneStorageLimitedPartnershipandFortSaskatchewanEthyleneCorporation
Marketing&NewVentures:
AuxSable AnownershipinterestinAuxSable(approximately42.7percentinAuxSableU.S.and50percentinAuxSableCanada),whichincludesanNGLfractionationfacilityandgasprocessingcapacitynearChicago,IllinoisandothernaturalgasandNGLprocessingfacilities,logisticsanddistributionassetsintheU.S.andCanada,aswellastransportationcontractsonAlliance
CKPC 50percentinterestinthePDH/PPFacility
CedarLNG 49.9percentinterestinthefloatingLNGfacilityinKitimat,BritishColumbia,Canada
ReadersarereferredtotheAIFdatedFebruary27,2020onwww.sedar.comforadditionaldescriptions.
36PembinaPipelineCorporationThirdQuarter2021
14.FORWARD-LOOKINGSTATEMENTS&INFORMATION
IntheinterestofprovidingPembina'ssecurityholdersandpotentialinvestorswithinformationregardingPembina,includingmanagement'sassessmentoftheCompany'sfutureplansandoperations,certainstatementscontainedinthisMD&Aconstituteforward-lookingstatementsorforward-lookinginformation(collectively,"forward-lookingstatements").Forward-lookingstatementsaretypicallyidentifiedbywordssuchas"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"andsimilarexpressionssuggestingfutureeventsorfutureperformance.
Bytheirnature,suchforward-lookingstatementsinvolveknownandunknownrisks,uncertaintiesandotherfactorsthatmaycauseactualresultsoreventstodiffermateriallyfromthoseanticipatedinsuchforward-lookingstatements.Pembinabelievestheexpectationsreflectedinthoseforward-lookingstatementsarereasonablebutnoassurancecanbegiventhattheseexpectationswillprovetobecorrectandsuchforward-lookingstatementsincludedinthisMD&Ashouldnotbeundulyreliedupon.Theseforward-lookingstatementsspeakonlyasofthedateoftheMD&A.
Inparticular,thisMD&Acontainsforward-lookingstatementspertainingtothefollowing:
• futurelevelsandsustainabilityofcashdividendsthatPembinaintendstopaytoitsshareholdersandthedividendpaymentdates;
• planning,construction,locations,capitalexpenditureestimates,schedules,regulatoryandenvironmentalapplicationsandanticipatedapprovals,expectedcapacity,incrementalvolumes,completionandin-servicedates,rights,sourcesofproduct,activities,benefitsandoperationswithrespecttonewconstructionof,orexpansionsonexisting,pipelines,systems,gasservicesfacilities,processingandfractionationfacilities,terminalling,storageandhubfacilitiesandotherfacilitiesorenergyinfrastructure,aswellastheimpactofPembina'snewprojectsonitsfuturefinancialperformance;
• pipeline,processing,fractionationandstoragefacilityandsystemoperationsandthroughputlevels;
• expectedreductionsincarbondioxidelevels;• treatmentundergovernmentalregulatoryregimesinCanadaandtheU.S.,including
taxesandtaxregimes,environmentalandgreenhousegasregulationsandrelatedabandonmentandreclamationobligations,andIndigenous,landownerandotherstakeholderconsultationrequirements;
• Pembina'sstrategyandthedevelopmentandexpectedtimingofnewbusinessinitiativesandgrowthopportunitiesandtheimpactthereof;
• increasedthroughputpotential,processingcapacityandfractionationcapacityduetoincreasedoilandgasindustryactivityandnewconnectionsandotherinitiativesonPembina'spipelinesandPembina'sfacilities;
• expectedfuturecashflowsandthesufficiencythereof,financialstrength,sourcesofandaccesstofundsatattractiverates,futurecontractualobligations,futurefinancingoptions,futurerenewalofcreditfacilities,availabilityofcapitalforcapitalprojectsandcontributionstoinvestmentsinequityaccountedinvestees,operatingobligationsanddividendsandtheuseofproceedsfromfinancings;
• Pembina'scapitalstructure,includingthesufficiencyoftheamountofleverageemployedthereinandfutureactionsthatmaybetakenwithrespectthereto,includingexpectationsregardingtherepurchaseorredemptionofcommonsharesandthetimingthereof;
• Pembina'sexpectationsregardingthecreditworthinessofitscounterparties;• currentratingstargetsonPembina'sdebtandthelikelihoodofadowngradebelow
investment-graderatings;• tollsandtariffsandprocessing,transportation,fractionation,storageandservices
commitmentsandcontracts;• operatingrisks(includingtheamountoffutureliabilitiesrelatedtopipelinesspills
andotherenvironmentalincidents)andrelatedinsurancecoverageandinspectionandintegrityprograms;
• theexpecteddemandfor,andpricesandinventorylevelsof,crudeoilandotherpetroleumproducts,includingNGL;
• thepotentialimpactsoftheCOVID-19pandemiconPembina,andPembina'sresponsethereto;and
• theimpactofcurrentmarketconditionsonPembina.
VariousfactorsorassumptionsaretypicallyappliedbyPembinaindrawingconclusionsormakingtheforecasts,projections,predictionsorestimationssetoutinforward-lookingstatementsbasedoninformationcurrentlyavailabletoPembina.Thesefactorsandassumptionsinclude,butarenotlimitedto:
• oilandgasindustryexplorationanddevelopmentactivitylevelsandthegeographicregionofsuchactivity;
• thesuccessofPembina'soperations;• prevailingcommodityprices,interestratesandexchangerates;• theabilityofPembinatomaintaincurrentcreditratings;• theavailabilityofcapitaltofundfuturecapitalrequirementsrelatingtoexisting
assetsandprojects;• expectationsregardingPembina'spensionplan;• futureoperatingcostsincludinggeotechnicalandintegritycostsbeingconsistent
withhistoricalcosts;• oilandgasindustrycompensationlevelsremainingconsistent;
• inrespectofcurrentdevelopments,expansions,plannedcapitalexpenditures,completiondatesandcapacityexpectations:thatthirdpartieswillprovideanynecessarysupport;thatanythird-partyprojectsrelatingtogrowthprojectswillbesanctionedandcompletedasexpected;thatanyrequiredcommercialagreementscanbereached;thatallrequiredregulatoryandenvironmentalapprovalscanbeobtainedonthenecessarytermsinatimelymanner;thatcounterpartieswillcomplywithcontractsinatimelymanner;thattherearenounforeseeneventspreventingtheperformanceofcontractsorthecompletionoftherelevantfacilities,andthattherearenounforeseenmaterialcostsrelatingtothefacilitieswhicharenotrecoverablefromcustomers;
• inrespectofthestabilityofPembina'sdividends:prevailingcommodityprices,marginsandexchangerates;thatPembina'sfutureresultsofoperationswillbeconsistentwithpastperformanceandmanagementexpectationsinrelationthereto;thecontinuedavailabilityofcapitalatattractivepricestofundfuturecapitalrequirementsrelatingtoexistingassetsandprojects,includingbutnotlimitedtofuturecapitalexpendituresrelatingtoexpansion,upgradesandmaintenanceshutdowns;thesuccessofgrowthprojects;futureoperatingcosts;thatcounterpartiestomaterialagreementswillcontinuetoperforminatimelymanner;thattherearenounforeseeneventspreventingtheperformanceofcontracts;andthattherearenounforeseenmaterialconstructionorothercostsrelatedtocurrentgrowthprojectsorcurrentoperations;
• prevailingregulatory,taxandenvironmentallawsandregulationsandtaxpoolutilization;and
• theamountoffutureliabilitiesrelatingtolawsuitsandenvironmentalincidentsandtheavailabilityofcoverageunderPembina'sinsurancepolicies(includinginrespectofPembina'sbusinessinterruptioninsurancepolicy).
TheactualresultsofPembinacoulddiffermateriallyfromthoseanticipatedintheseforward-lookingstatementsasaresultofthematerialriskfactorssetforthbelow:
• theregulatoryenvironmentanddecisionsandIndigenousandlandownerconsultationrequirements;
• theimpactofcompetitiveentitiesandpricing;• labourandmaterialshortages;• relianceonthirdpartiestosuccessfullyoperateandmaintaincertainassets;• relianceonkeyrelationships,jointventurepartners,andagreementsandthe
outcomeofstakeholderengagement;• thestrengthandoperationsoftheoilandnaturalgasproductionindustryand
relatedcommodityprices;• non-performanceordefaultbycounterpartiestoagreementswhichPembinaorone
ormoreofitssubsidiarieshasenteredintoinrespectofitsbusiness;• actionsbyjointventurepartnersorotherpartnerswhichholdinterestsincertainof
Pembina'sassets;• actionsbygovernmentalorregulatoryauthoritiesincludingchangesintaxlawsand
treatment,changesinroyaltyrates,climatechangeinitiativesorpoliciesorincreasedenvironmentalregulation;
• fluctuationsinoperatingresults;• adversegeneraleconomicandmarketconditionsinCanada,NorthAmericaand
elsewhere,includingchanges,orprolongedweakness,asapplicable,ininterestrates,foreigncurrencyexchangerates,commodityprices,supply/demandtrendsandoverallindustryactivitylevels;
• risksrelatingtothecurrentandpotentialadverseimpactsoftheCOVID-19pandemic;
• constraintson,ortheunavailabilityofadequateinfrastructure;• thepoliticalenvironment,inNorthAmericaandelsewhere,andpublicopinion;• abilitytoaccessvarioussourcesofdebtandequitycapital;• changesincreditratings;• technologyandsecurityrisks;• naturalcatastrophes;and• theotherfactorsdiscussedunder"RiskFactors"hereinandinPembina'sMD&Aand
AIFfortheyearendedDecember31,2020,whichareavailableatwww.sedar.com,www.sec.govandthroughPembina'swebsiteatwww.pembina.com.
Thesefactorsshouldnotbeconstruedasexhaustive.Unlessrequiredbylaw,Pembinadoesnotundertakeanyobligationtopubliclyupdateorreviseanyforward-lookingstatements,whetherasaresultofnewinformation,futureeventsorotherwise.Anyforward-lookingstatementscontainedhereinareexpresslyqualifiedbythiscautionarystatement.
PembinaPipelineCorporationThirdQuarter202137
CONDENSEDCONSOLIDATEDINTERIMSTATEMENTSOFFINANCIALPOSITION(unaudited)
($millions) September30,2021 December31,2020
AssetsCurrentassets
Cashandcashequivalents 112 81
Tradereceivablesandother 826 662
Inventory 310 221
Derivativefinancialinstruments(Note14) 30 25
1,278 989
Non-currentassets
Property,plantandequipment(Note4) 18,535 18,549
Intangibleassetsandgoodwill 6,284 6,340
Investmentsinequityaccountedinvestees(Note5) 4,379 4,377
Right-of-useassets(Note6) 630 651
Financeleasereceivable(Note6) 213 138
Deferredtaxassets 305 322
Advancestorelatedpartiesandotherassets 115 50
30,461 30,427
Totalassets 31,739 31,416
LiabilitiesandequityCurrentliabilities
Tradepayablesandother 1,008 780
Loansandborrowings(Note7) 900 600
Dividendspayable 116 115
Leaseliabilities 90 99
Contractliabilities(Note9) 78 62
Taxespayable 51 56
Derivativefinancialinstruments(Note14) 112 69
2,355 1,781
Non-currentliabilities
Loansandborrowings(Note7) 9,634 10,276
Subordinatedhybridnotes(Note7) 594 —
Leaseliabilities 655 675
Decommissioningprovision 388 348
Contractliabilities(Note9) 220 230
Deferredtaxliabilities 3,021 2,925
Otherliabilities 230 166
14,742 14,620
Totalliabilities 17,097 16,401
Equity
Attributabletoshareholders 14,582 14,955
Attributabletonon-controllinginterest 60 60
Totalequity 14,642 15,015
Totalliabilitiesandequity 31,739 31,416
Seeaccompanyingnotestothecondensedconsolidatedinterimfinancialstatements
38PembinaPipelineCorporationThirdQuarter2021
CONDENSEDCONSOLIDATEDINTERIMSTATEMENTSOFEARNINGSANDCOMPREHENSIVEINCOME(unaudited)
3MonthsEndedSeptember30 9MonthsEndedSeptember30
($millions,exceptpershareamounts) 20212020
(RestatedNote2) 20212020
(RestatedNote2)
Revenue(Note9) 2,149 1,496 6,067 4,273
Costofsales(Note12) 1,546 991 4,282 2,786
(Gain)lossoncommodity-relatedderivativefinancialinstruments(Note14) (4) (1) 121 (62)
Shareofprofitfromequityaccountedinvestees(Note5) 75 62 198 212
Grossprofit 682 568 1,862 1,761
Generalandadministrative 68 56 234 176
Otherincome(Note10) (311) (4) (282) (7)
Impairmentexpense(Note5) — — 35 —
Resultsfromoperatingactivities 925 516 1,875 1,592
Netfinancecosts(Note11) 144 82 343 361
Earningsbeforeincometax 781 434 1,532 1,231
Currenttaxexpense 141 52 255 195
Deferredtaxexpense 52 59 115 136
Incometaxexpense 193 111 370 331
Earnings 588 323 1,162 900
Othercomprehensiveincome(loss),netoftax(Note13&14)
Exchangegain(loss)ontranslationofforeignoperations 126 (110) 4 143
Impactofhedgingactivities 4 6 4 15
Re-measurementofdefinedbenefitliability — — — 14
Totalcomprehensiveincomeattributabletoshareholders 718 219 1,170 1,072
Earningsattributabletocommonshareholders,netofpreferredsharedividends 554 284 1,054 783
Earningspercommonshare–basic(dollars) 1.01 0.52 1.92 1.42
Earningspercommonshare–diluted(dollars) 1.01 0.52 1.91 1.42
Weightedaveragenumberofcommonshares(millions)
Basic 550 550 550 550
Diluted 551 550 551 550
Seeaccompanyingnotestothecondensedconsolidatedinterimfinancialstatements
PembinaPipelineCorporationThirdQuarter202139
CONDENSEDCONSOLIDATEDINTERIMSTATEMENTSOFCHANGESINEQUITY(unaudited)
AttributabletoShareholdersoftheCompany TotalEquity
(RestatedNote2)($millions)
CommonShareCapital
PreferredShareCapital
Deficit(RestatedNote2) AOCI(1)
Total(RestatedNote2)
Non-Controlling
Interest
December31,2020 15,644 2,946 (3,637) 2 14,955 60 15,015
Totalcomprehensiveincome
Earnings — — 1,162 — 1,162 — 1,162
Othercomprehensiveincome(Note13) — — — 8 8 — 8
Totalcomprehensiveincome — — 1,162 8 1,170 — 1,170
TransactionswithshareholdersoftheCompany
PartVI.1taxonpreferredshares(Note8) — (7) — — (7) — (7)
Preferredsharesredemption(Note8) — (420) — — (420) — (420)
Share-basedpaymenttransactions(Note8) 26 — — — 26 — 26
Dividendsdeclared–common(Note8) — — (1,040) — (1,040) — (1,040)
Dividendsdeclared–preferred(Note8) — — (102) — (102) — (102)
TotaltransactionswithshareholdersoftheCompany 26 (427) (1,142) — (1,543) — (1,543)
September30,2021 15,670 2,519 (3,617) 10 14,582 60 14,642
OpeningvalueJanuary1,2020 15,539 2,956 (1,785) 98 16,808 60 16,868
Totalcomprehensiveincome
Earnings — — 900 — 900 — 900
Othercomprehensiveincome
Exchangegainontranslationofforeignoperations — — — 158 158 — 158
Remeasurementsofdefinedbenefitliability,netoftax — — — 14 14 — 14
Totalcomprehensiveincome — — 900 172 1,072 — 1,072
TransactionswithshareholdersoftheCompany
PartVI.1taxonpreferredshares — (5) — — (5) — (5)
Share-basedpaymenttransactions 99 — — — 99 — 99
Dividendsdeclared–common — — (1,039) — (1,039) — (1,039)
Dividendsdeclared–preferred — — (113) — (113) — (113)
TotaltransactionswithshareholdersoftheCompany 99 (5) (1,152) — (1,058) — (1,058)
September30,2020 15,638 2,951 (2,037) 270 16,822 60 16,882(1) AccumulatedOtherComprehensiveIncome(loss)("AOCI").
Seeaccompanyingnotestothecondensedconsolidatedinterimfinancialstatements
40PembinaPipelineCorporationThirdQuarter2021
CONDENSEDCONSOLIDATEDINTERIMSTATEMENTSOFCASHFLOWS(unaudited)
3MonthsEndedSeptember30 9MonthsEndedSeptember30
($millions) 20212020
(RestatedNote2) 20212020
(RestatedNote2)
Cashprovidedby(usedin)
Operatingactivities
Earnings 588 323 1,162 900
Adjustmentsfor:
Shareofprofitfromequityaccountedinvestees (75) (62) (198) (212)
Distributionsfromequityaccountedinvestees 106 111 333 350
Depreciationandamortization 180 175 543 520
Impairmentexpense — — 35 —
Unrealized(gain)lossoncommodity-relatedderivativefinancialinstruments (47) 6 (43) (2)
Netfinancecosts(Note11) 144 82 343 361
Netinterestpaid (136) (124) (333) (297)
Incometaxexpense 193 111 370 331
Taxespaid (69) (90) (265) (290)
Share-basedcompensationexpense 20 4 77 8
Share-basedcompensationpayment — (1) (32) (45)
Netchangeincontractliabilities (9) (7) 10 35
Other 11 (5) 21 (5)
Changeinnon-cashoperatingworkingcapital 7 (89) (70) (168)
Cashflowfromoperatingactivities 913 434 1,953 1,486
Financingactivities
Net(decrease)increaseinbankborrowings (278) 432 (92) (472)
Proceedsfromissuanceoflong-termdebt,netofissuecosts — — 593 1,567
Repaymentoflong-termdebt — (200) (250) (273)
Repaymentofleaseliability (23) (26) (64) (69)
Exerciseofstockoptions 3 5 6 88
Redemptionofpreferredshares — — (420) —
Dividendspaid (377) (384) (1,142) (1,146)
Cashflowusedinfinancingactivities (675) (173) (1,369) (305)
Investingactivities
Capitalexpenditures (209) (174) (482) (868)
Contributionstoequityaccountedinvestees (18) (28) (30) (202)
Acquisitions(Note5) (4) — (41) —
Receiptoffinanceleasepayments 2 2 8 7
Interestpaidduringconstruction (5) (10) (19) (36)
Recoveryofassetsorproceedsfromsale — (1) 12 1
Advancestorelatedparties 1 (10) (9) (32)
Changesinnon-cashinvestingworkingcapitalandother 47 (81) (1) (140)
Cashflowusedininvestingactivities (186) (302) (562) (1,270)
Changeincashandcashequivalents 52 (41) 22 (89)
Effectofmovementinexchangeratesoncashheld 3 (1) 9 (9)
Cashandcashequivalents,beginningofperiod 57 73 81 129
Cashandcashequivalents,endofperiod 112 31 112 31
Seeaccompanyingnotestothecondensedconsolidatedinterimfinancialstatements
PembinaPipelineCorporationThirdQuarter202141
NOTESTOTHECONDENSEDCONSOLIDATEDUNAUDITEDINTERIMFINANCIALSTATEMENTS
1.REPORTINGENTITY
PembinaPipelineCorporation("Pembina"orthe"Company")isaCalgary-based,leadingtransportationandmidstream
serviceproviderservingNorthAmerica'senergyindustry.Pembinaownsanintegratedsystemofpipelinesthattransport
varioushydrocarbonliquidsandnaturalgasproductsproducedprimarilyinwesternCanada.Pembinaalsoownsgasgathering
andprocessingfacilitiesandanoilandnaturalgasliquidsinfrastructure,storageandlogisticsbusiness;andisgrowingan
exportterminalsbusiness.Pembina'sintegratedassetsandcommercialoperationsalongthemajorityofthehydrocarbon
valuechain,allowittoofferafullspectrumofmidstreamandmarketingservicestotheenergysector.
Thesecondensedconsolidatedunauditedinterimfinancialstatements("InterimFinancialStatements")includetheaccounts
oftheCompany,itssubsidiarycompanies,partnershipsandanyinvestmentsinassociatesandjointarrangementsasatand
forthethreeandninemonthsendedSeptember30,2021.TheseInterimFinancialStatementsandthenotesheretohave
beenpreparedinaccordancewithInternationalAccountingStandard34,InterimFinancialReporting("IAS34"),asissuedby
theInternationalAccountingStandardsBoard("IASB").TheaccountingpoliciesappliedareinaccordancewithInternational
FinancialReportingStandards("IFRS")andareconsistentwiththeauditedannualconsolidatedfinancialstatementsofthe
CompanyasatandfortheyearendedDecember31,2020("ConsolidatedFinancialStatements")andshouldbereadin
conjunctionwiththoseConsolidatedFinancialStatements.TheInterimFinancialStatementswereauthorizedforissueby
Pembina'sBoardofDirectorsonNovember4,2021.
Certaininsignificantcomparativeamountshavebeenreclassifiedtoconformtothepresentationadoptedinthecurrentyear.
UseofEstimatesandJudgments
Managementisrequiredtomakeestimatesandassumptionsandusejudgmentintheapplicationofaccountingpoliciesthat
couldhaveasignificantimpactontheamountsrecognizedintheInterimFinancialStatements.Actualresultsmaydifferfrom
estimatesandthosedifferencesmaybematerial.Bytheirnature,judgmentsandestimatesmaychangeinlightofnewfacts
andcircumstancesintheinternalandexternalenvironment.TherehavebeennomaterialchangestoPembina'scritical
accountingestimatesandjudgmentsduringthethreeandninemonthsendedSeptember30,2021,includingtotheongoing
impactofsignificantuncertaintiescreatedbythecoronavirus("COVID-19")pandemic,asdiscussedbelow.
OngoingImpactoftheCOVID-19Pandemic
FollowingtheWorldHealthOrganizationdeclaringtheCOVID-19outbreaktobeapandemic,manygovernmentsimposed
restrictionsonindividualsandbusinesses,whichresultedinasignificantslowdownoftheglobaleconomy.Whiletherehave
beenpositivesignalsintothefirstninemonthsof2021incommodityprices,demandrecoveryremainsaffectedbytheon-
goingCOVID-19pandemic.Althoughrestrictionshavebeenrelaxedincertainjurisdictionsandvaccinationprogramsare
underway,thereremainssignificantuncertaintyastotheglobaleconomicoutlookandthereremainsthepotentialfor
volatilityintheglobaleconomyasaresultoftheCOVID-19pandemic.Managementconsideredtheseuncertaintieswhen
applyingjudgmenttoestimatesandassumptionsintheInterimFinancialStatements.
42PembinaPipelineCorporationThirdQuarter2021
2.CHANGESINACCOUNTINGPOLICIES&RESTATEMENT
Voluntarychangeinaccountingpolicy
AsdetailedinNote3oftheConsolidatedFinancialStatements,Pembinavoluntarilychangeditsaccountingpolicyforthe
measurementofdecommissioningliabilitiestoutilizeacredit-adjustedrisk-freeinterestrateinsteadofarisk-freeinterest
ratetodeterminethepresentvalueoftheliabilityateachstatementoffinancialpositiondate.Thisaccountingpolicychange
wasappliedretrospectively,includingtherestatementofcertaincomparativeamountsintheInterimFinancialStatements,as
summarizedbelow.
Restatementofrevenueandcostofgoodssold
DuringthethirdquarterPembinaidentifiedcertaincrudecontractsthatwererecordedincorrectlywithinMarketing&New
Ventures.Revenueandcostofgoodssoldassociatedwiththecontractswererecordedonagrossbasisbutshouldhavebeen
recordedonanetbasis.AsaresultPembinarestatedcomparativeperiodsdecreasingrevenueandcostofgoodssold,withno
impacttoearnings,cashflowsorfinancialposition.
i. ReconciliationoftheCondensedConsolidatedInterimStatementsofEarningsandComprehensiveIncome
($millions)
3MonthsEndedSeptember30,2020 9MonthsEndedSeptember30,2020
Previouslyreported
Policychange
Restatementadjustments Restated
Previouslyreported
Policychange
Restatementadjustments Restated
Revenue 1,569 — (73) 1,496 4,508 — (235) 4,273
Costofsales 1,068 (4) (73) 991 3,033 (12) (235) 2,786
Shareofprofitfromequityaccountedinvestees 61 1 — 62 209 3 — 212
Grossprofit 563 5 — 568 1,746 15 — 1,761
Netfinancecosts 83 (1) — 82 364 (3) — 361
Earningsbeforeincometax 428 6 — 434 1,213 18 — 1,231
Deferredtaxexpense 58 1 — 59 133 3 — 136
Earningsattributabletoshareholders 318 5 — 323 885 15 — 900
Totalcomprehensiveincomeattributabletoshareholders 214 5 — 219 1,057 15 — 1,072
Earningsattributabletocommonshareholders,netofpreferredsharedividends 279 5 — 284 768 15 — 783
Earningspercommonshare-basicanddiluted 0.51 0.01 — 0.52 1.39 0.03 — 1.42
ii. ReconciliationoftheCondensedConsolidatedInterimStatementofCashFlows
($millions)
3MonthsEndedSeptember30,2020 9MonthsEndedSeptember30,2020
Previouslyreported
Policychange Restated
Previouslyreported
Policychange Restated
Earnings 318 5 323 885 15 900
Shareofprofitfromequityaccountedinvestees (61) (1) (62) (209) (3) (212)
Adjustmentsfordepreciationandamortization 179 (4) 175 532 (12) 520
Adjustmentsfornetfinancecosts 83 (1) 82 364 (3) 361
Adjustmentsforincometaxexpense 110 1 111 328 3 331
Cashflowfromoperatingactivities 434 — 434 1,486 — 1,486
PembinaPipelineCorporationThirdQuarter202143
3.DETERMINATIONOFFAIRVALUES
AnumberoftheCompany'saccountingpoliciesanddisclosuresrequirethedeterminationoffairvalueforbothfinancialand
non-financialassetsandliabilities.Fairvalueshavebeendeterminedformeasurementand/ordisclosurepurposesbasedon
themethodssetoutintheConsolidatedFinancialStatements.Thesemethodshavebeenappliedconsistentlytoallperiods
presentedintheseInterimFinancialStatements.
OngoingImpactoftheCOVID-19Pandemic
Measuringfairvaluesusingsignificantunobservableinputshasbecomemorechallenginginthecurrentenvironment,where
eventsandconditionsrelatedtotheCOVID-19pandemicaredrivingsignificantdisruptionofbusinessoperationsanda
significantincreaseineconomicuncertainty.Managementapplieditsjudgmentindeterminingtheimpactofthesignificant
uncertaintiescreatedbytheseeventsandconditionsontheassessedfairvaluesofassetsandliabilitiesintheInterim
FinancialStatements.
4.PROPERTY,PLANTANDEQUIPMENT
($millions)Landand
LandRights PipelinesFacilitiesandEquipment
CavernStorageand
OtherAssetsUnder
Construction(1)(2) Total
Cost
BalanceatDecember31,2020 429 9,206 8,907 1,993 1,109 21,644
Additionsandtransfers 12 98 445 128 (300) 383
Changeindecommissioningprovision — 4 6 5 — 15
Disposalsandother (1) (20) (14) (23) (9) (67)
Foreignexchange — 3 5 — — 8
BalanceatSeptember30,2021 440 9,291 9,349 2,103 800 21,983
Depreciation
BalanceatDecember31,2020 21 1,547 1,118 409 — 3,095
Depreciation 4 143 171 62 — 380
Disposalsandother — (7) (10) (10) — (27)
BalanceatSeptember30,2021 25 1,683 1,279 461 — 3,448
Carryingamounts
BalanceatDecember31,2020 408 7,659 7,789 1,584 1,109 18,549
BalanceatSeptember30,2021 415 7,608 8,070 1,642 800 18,535
Assetssubjecttooperatingleases
December31,2020 8 300 496 170 — 974
September30,2021 8 298 466 163 — 935(1) Includescapitalizedborrowingcosts.(2) AtSeptember30,2021,themovementinAssetsUnderConstructionincludes$89millioninassetstransferredtonetinvestmentlease.
44PembinaPipelineCorporationThirdQuarter2021
5.INVESTMENTSINEQUITYACCOUNTEDINVESTEES
OwnershipInterest(percent)
ShareofProfitfromEquityAccountedInvestees
InvestmentsinEquityAccountedInvestees9MonthsEndedSeptember30
($millions) September30,2021 December31,2020 20212020
(RestatedNote2) September30,2021 December31,2020
Alliance 50 50 81 82 2,421 2,498
AuxSable 42.7-50 42.7-50 44 (5) 381 401
Ruby(1) — — 13 93 — —
VeresenMidstream 45 45 57 37 1,368 1,374
CKPC 50 50 — 3 — —
CedarLNG 49.9 — — — 129 —
Other(2) 50-75 50-75 3 2 80 104
198 212 4,379 4,377(1) Pembinaownsa50percentconvertiblepreferredinterestinRuby.(2) OtherincludesPembina'sinterestinGrandValleyandFortCorp.
AtSeptember30,2021,PembinahadU.S.$1.3billionininvestmentsinequityaccountedinvesteesheldbyentitieswhose
functionalcurrencyistheU.S.dollar.Theresultingforeignexchangegainsandlossesareincludedinothercomprehensive
income.ForthethreeandninemonthsendedSeptember30,2021,Pembinarecognizedagainof$48millionandagainof$5
million(2020:$60millionlossand$78milliongain),respectively.
CedarLNGAcquisition
OnJune4,2021,Pembinaacquireda49.9percentinterestinajointventurewiththeHaislaNationtodeveloptheCedarLNG
Project,aLNGfacilitylocatedonthecoastofBritishColumbiawithintheDouglasChannelonHaisla-ownedland.Pembina's
investmentof$129millionatSeptember30,2021included$76millionofaccruedcontingentconsiderationpayableon
achievementofcertainconditions.Underthetermsoftheagreement,Pembinahascommitmentstomakeadditional
paymentsonapositivefinalinvestmentdecisionaswellascontributionstofunddevelopmentcostsandannualoperating
budgets.
ImpairmentofEquityAccountedInvestees
DuringtheninemonthsendedSeptember30,2021,PembinarecognizedU.S.$8millioninimpairmentassociatedwithan
advancemadetoRubyinJanuaryof2021andduringJune2021,Pembinarecognizedanimpairmentchargeof$22millionon
itsinterestinFortCorp.Theimpairmentchargewastheresultofanassessmenttriggeredbyareductioninthecontracted
capacitybyakeycustomeroncertainFortCorpassets.
FinancingActivitiesforEquityAccountedInvestees
OnApril19,2021,Rubyfullyrepaidthe$16millionoutstandingonitstermloan.
PembinaPipelineCorporationThirdQuarter202145
6.LEASES
LesseeLeases
Pembinaentersintoarrangementstosecureaccesstoassetsnecessaryforoperatingthebusiness.Leased(right-of-use)
assetsincludeterminals,rail,buildings,landandotherassets.Totalcashoutflowsrelatedtoleaseswere$31millionand$96
million,respectively,forthethreeandninemonthsendedSeptember30,2021(2020:$34millionand$98million).
Right-of-UseAssets
($millions) Terminals Rail Buildings Land&Other Total
BalanceatDecember31,2020 213 221 121 96 651
Additionsandadjustments 2 1 39 18 60
Disposalsandother — (3) — (8) (11)
Amortization (16) (31) (14) (9) (70)
BalanceatSeptember30,2021 199 188 146 97 630
LessorLeases
Pembinahasenteredintocontractsfortheuseofitsassetsthathaveresultedinleasetreatmentforaccountingpurposes.
Assetsunderoperatingleasesincludepipelines,terminalsandstorageassets.SeeNote4forcarryingvalueofproperty,plant
andequipmentunderoperatingleases.Assetsunderfinanceleasesincludepipelines,terminals,storageassetsandofficesub-
leases.
MaturityofLeaseReceivables
AsatSeptember30,2021
($millions) OperatingLeases FinanceLeases
Lessthanoneyear 145 32
Onetotwoyears 142 31
Twotothreeyears 125 31
Threetofouryears 110 31
Fourtofiveyears 108 31
Morethanfiveyears 752 327
Totalundiscountedleasereceipts 1,382 483
Unearnedfinanceincomeonleasereceipts (276)
Discountedunguaranteedresidualvalue 15
Financeleasereceivable 222
Lesscurrentportion(1) (9)
Totalnon-current 213(1) IncludedintradereceivablesandotherontheCondensedConsolidatedInterimStatementofFinancialPosition.
46PembinaPipelineCorporationThirdQuarter2021
7.LONG-TERMDEBT
ThisnoteprovidesinformationaboutthecontractualtermsofPembina'sinterest-bearinglong-termdebt,whichare
measuredatamortizedcost.
CarryingValue,TermsandConditions,andDebtMaturitySchedule
($millions)Authorizedat
September30,2021Nominal
InterestRateYearof
Maturity September30,2021 December31,2020
Loansandborrowings
Seniorunsecuredcreditfacilities(1)(3)(4) 3,339 1.26(2) Various(1) 1,440 1,530
Seniorunsecuredmedium-termnotesseries1 — 4.89 2021 — 250
Seniorunsecuredmedium-termnotesseries2 450 3.77 2022 450 449
Seniorunsecuredmedium-termnotesseries3 450 4.75 2043 447 447
Seniorunsecuredmedium-termnotesseries4 600 4.81 2044 597 597
Seniorunsecuredmedium-termnotesseries5 450 3.54 2025 449 449
Seniorunsecuredmedium-termnotesseries6 500 4.24 2027 499 498
Seniorunsecuredmedium-termnotesseries7 600 3.71 2026 602 603
Seniorunsecuredmedium-termnotesseries8 650 2.99 2024 648 647
Seniorunsecuredmedium-termnotesseries9 550 4.74 2047 542 542
Seniorunsecuredmedium-termnotesseries10 650 4.02 2028 660 661
Seniorunsecuredmedium-termnotesseries11 800 4.75 2048 841 842
Seniorunsecuredmedium-termnotesseries12 650 3.62 2029 654 654
Seniorunsecuredmedium-termnotesseries13 700 4.54 2049 712 713
Seniorunsecuredmedium-termnotesseries14 600 2.56 2023 599 599
Seniorunsecuredmedium-termnotesseries15 600 3.31 2030 597 597
Seniorunsecuredmedium-termnotesseries16 400 4.67 2050 397 397
Seniorunsecuredmedium-termnotesseries3A 50 5.05 2022 50 51
Seniorunsecuredmedium-termnotesseries5A 350 3.43 2021 350 350
Totalloansandborrowings 10,534 10,876
Lesscurrentportionloansandborrowings (900) (600)
Totalnon-currentloansandborrowings 9,634 10,276
Subordinatedhybridnotes
Subordinatednotes,series1 600 4.80 2081 594 —
CarryingValue
(1) Pembina'sunsecuredcreditfacilitiesincludea$2.5billionrevolvingfacilitythatmaturesinJune2026,a$500millionnon-revolvingtermloanthatmaturesinAugust2022,aU.S.$250millionnon-revolvingtermloanthatmaturesinMay2025anda$20millionoperatingfacilitythatmaturesinMay2022,whichistypicallyrenewedonanannualbasis.
(2) ThenominalinterestrateistheweightedaverageofalldrawncreditfacilitiesbasedonPembina'screditratingatSeptember30,2021.Borrowingsunderthecreditfacilitiesbearinterestatprime,Bankers'Acceptance,orLIBORrates,plusapplicablemargins.
(3) IncludesU.S.$250millionvariableratedebtoutstandingatSeptember30,2021(December31,2020:U.S.$250million).(4) TheU.S.dollardenominatednon-revolvingtermloanisdesignatedasahedgeoftheCompany’snetinvestmentinselectedforeignoperationswithaU.S.dollarfunctional
currency.RefertoNote14forforeignexchangeriskmanagement.
OnJanuary25,2021,Pembinacloseda$600millionofferingofFixed-to-FixedRateSubordinatedHybridNotes(the"Series1
SubordinatedNotes").TheSeries1SubordinatedNoteshaveafixed4.80percentinterestrate,payablesemi-annually,which
resetsonJanuary25,2031,andoneveryfifthanniversarythereafter,basedonthefive-yearGovernmentofCanadayield
plus:(i)4.17percentfortheperiodfrom,andincluding,January25,2031to,butexcludingJanuary25,2051;and(ii)4.92
percentfortheperiodfrom,andincluding,January25,2051to,butexcludingJanuary25,2081.TheSeries1Subordinated
NotesaresubjecttooptionalredemptionbyPembinafromOctober25,2030toJanuary25,2031andonanyinterest
paymentdateoranyinterestresetdate,asapplicable.PembinamayalsoredeemtheSeries1SubordinatedNotesincertain
otherlimitedcircumstances.FollowingtheoccurrenceofcertainbankruptcyorinsolvencyeventsinrespectofPembina,
subjecttocertainexceptions,theSeries2021-AClassAPreferredShares(asdefinedbelow)willbedeliveredtotheholdersof
theSeries1SubordinatedNotestosatisfyPembina'sobligationsundertheindenturegoverningtheSeries1Subordinated
Notes.UpondeliveryoftheSeries2021-AClassAPreferredShares,theSeries1SubordinatedNoteswillbeimmediatelyand
automaticallysurrenderedandcancelledandallrightsofanyholdersoftheSeries1SubordinatedNoteswillautomatically
cease.Thefairvalueoftheautomaticdeliveryfeaturewasassessedasnominalatinception.
PembinaPipelineCorporationThirdQuarter202147
OnApril30,2021,Pembinacompletedanextensiononits$2.5billionrevolvingcreditfacility,whichnowmaturesonJune1,
2026.
8.SHARECAPITAL
CommonShareCapital
($millions,exceptasnoted)
NumberofCommonShares
(millions)Common
ShareCapital
BalanceatDecember31,2020 550 15,644
Share-basedpaymenttransactions — 26
BalanceatSeptember30,2021 550 15,670
OnFebruary25,2021,theTorontoStockExchange("TSX")acceptedtheCompany'snoticeofintentiontocommenceanormal
courseissuerbid("NCIB")thatallowstheCompanytorepurchase,atitsdiscretion,uptoapproximately27.5millioncommon
sharesthroughthefacilitiesoftheTSX,theNewYorkStockExchangeand/oralternativeCanadiantradingsystemsoras
otherwisepermittedbyapplicablesecuritieslaw,subjecttocertainrestrictionsonthenumberofcommonsharesthatmaybe
purchasedonasingleday.CommonsharespurchasedbytheCompanywillbecancelled.TheprogramcommencedMarch2,
2021andwillterminateonMarch1,2022oronsuchearlierdateastheCompanycompletesitspurchasespursuanttothe
noticeofintention.NocommonshareswerepurchasedbyPembinaduringtheninemonthsendedSeptember30,2021.
PreferredShareCapital
($millions,exceptasnoted)
NumberofPreferredShares
(millions)Preferred
ShareCapital
BalanceatDecember31,2020 122 2,946
ClassA,Series11Preferredsharesredeemed,netofissuecosts (7) (170)
ClassA,Series13Preferredsharesredeemed,netofissuecosts (10) (250)
PartVI.1tax — (7)
BalanceatSeptember30,2021 105 2,519
OnJanuary25,2021inconnectionwiththeofferingoftheSeries1SubordinatedNotes,Pembinaissued600,000Series2021-
AClassAPreferredShares,toComputershareTrustCompanyofCanada,tobeheldintrustastreasurysharestosatisfy
Pembina'sobligationsundertheindenturegoverningtheSeries1SubordinatedNotes.
OnMarch1,2021,Pembinaredeemedallofthe6.8millionissuedandoutstandingCumulativeRedeemableMinimumRate
ResetClassAPreferredShares,Series11(the"Series11ClassAPreferredShares")foraredemptionpriceequalto$25.00per
Series11ClassAPreferredShare.
OnJune1,2021,Pembinaredeemedallofthe10millionissuedandoutstandingCumulativeRedeemableMinimumRate
ResetClassAPreferredShares,Series13(the"Series13ClassAPreferredShares")foraredemptionpriceequalto$25.00per
Series13ClassAPreferredShares.
48PembinaPipelineCorporationThirdQuarter2021
Dividends
ThefollowingdividendsweredeclaredbyPembina:
9MonthsEndedSeptember30
($millions) 2021 2020
Commonshares
$1.89percommonshare(2020:$1.89) 1,040 1,039
ClassApreferredshares
$0.92perSeries1ClassAPreferredShare(2020:$0.92) 9 9
$0.84perSeries3ClassAPreferredShare(2020:$0.84) 5 5
$0.85perSeries5ClassAPreferredShare(2020:$0.85) 9 9
$0.82perSeries7ClassAPreferredShare(2020:$0.82) 8 8
$0.80perSeries9ClassAPreferredShare(2020:$0.89) 7 8
$0.24perSeries11ClassAPreferredShare(2020:$1.07) 2 7
$0.59perSeries13ClassAPreferredShare(2020:$1.07) 6 11
$0.84perSeries15ClassAPreferredShare(2020:$0.84) 7 7
$0.90perSeries17ClassAPreferredShare(2020:$0.90) 5 5
$0.88perSeries19ClassAPreferredShare(2020:$0.92) 7 7
$0.91perSeries21ClassAPreferredShare(2020:$0.92) 15 15
$0.98perSeries23ClassAPreferredShare(2020:$0.98) 12 12
$0.98perSeries25ClassAPreferredShare(2020:$0.98) 10 10
102 113
OnOctober5,2021,PembinaannouncedthatitsBoardofDirectorshaddeclaredamonthlydividendof$0.21percommon
shareinthetotalamountof$116million,payableonNovember15,2021toshareholdersofrecordonOctober25,2021.
Pembina'sBoardofDirectorsalsodeclaredquarterlydividendsforPembina'sClassApreferredsharesasoutlinedinthe
followingtable:
Series RecordDate PayableDate PerShareAmountDividendAmount
($millions)
Series1 November1,2021 December1,2021 $0.306625 3
Series3 November1,2021 December1,2021 $0.279875 2
Series5 November1,2021 December1,2021 $0.285813 3
Series7 November1,2021 December1,2021 $0.273750 3
Series9 November1,2021 December1,2021 $0.268875 2
Series15 December15,2021 December31,2021 $0.279000 2
Series17 December15,2021 December31,2021 $0.301313 2
Series19 December15,2021 December31,2021 $0.292750 2
Series21 November1,2021 December1,2021 $0.306250 5
Series23 November1,2021 November15,2021 $0.328125 4
Series25 November1,2021 November15,2021 $0.325000 3
PembinaPipelineCorporationThirdQuarter202149
9.REVENUE
Revenuehasbeendisaggregatedintocategoriestoreflecthowthenature,timinganduncertaintyofrevenueandcashflows
areaffectedbyeconomicfactors.
a. RevenueDisaggregation
2021 2020
3MonthsEndedSeptember30
Pipelines Facilities
Marketing&New
Ventures Total Pipelines Facilities
Marketing&New
Ventures Total($millions)
Take-or-pay(1) 419 183 — 602 428 197 — 625
Fee-for-service(1) 76 36 — 112 55 22 — 77
Productsales(2)(3) — — 1,393 1,393 — — 752 752
Revenuefromcontractswithcustomers 495 219 1,393 2,107 483 219 752 1,454
Operationalfinanceleaseincome 5 1 — 6 3 — — 3
Fixedoperatingleaseincome 27 9 — 36 31 8 — 39
Totalexternalrevenue 527 229 1,393 2,149 517 227 752 1,496(1) Revenuerecognizedovertime.(2) Revenuerecognizedatapointintime.(3) Comparative2020periodhasbeenrestated.SeeNote2totheInterimFinancialStatements.
2021 2020
9MonthsEndedSeptember30
Pipelines Facilities
Marketing&New
Ventures Total Pipelines Facilities
Marketing&New
Ventures Total($millions)
Take-or-pay(1) 1,207 547 — 1,754 1,206 556 — 1,762
Fee-for-service(1) 248 112 — 360 220 80 — 300
Productsales(2)(3) — — 3,827 3,827 — — 2,074 2,074
Revenuefromcontractswithcustomers 1,455 659 3,827 5,941 1,426 636 2,074 4,136
Operationalfinanceleaseincome 13 1 — 14 11 — — 11
Fixedoperatingleaseincome 85 27 — 112 100 26 — 126
Totalexternalrevenue 1,553 687 3,827 6,067 1,537 662 2,074 4,273(1) Revenuerecognizedovertime.(2) Revenuerecognizedatapointintime.(3) Comparative2020periodhasbeenrestated.SeeNote2totheInterimFinancialStatements.
b. ContractLiabilities
Significantchangesinthecontractliabilitiesbalancesduringtheperiodareasfollows:
9MonthsEndedSeptember30,2021 12MonthsEndedDecember31,2020
($millions) Take-or-Pay
OtherContractLiabilities
TotalContractLiabilities Take-or-Pay
OtherContractLiabilities
TotalContractLiabilities
Openingbalance 3 289 292 8 223 231
Additions(netintheperiod) 18 45 63 3 117 120
Revenuerecognizedfromcontractliabilities(1) — (57) (57) (8) (51) (59)
Closingbalance 21 277 298 3 289 292
Lesscurrentportion(2) (21) (57) (78) (3) (59) (62)
Endingbalance — 220 220 — 230 230(1) Recognitionofrevenuerelatedtoperformanceobligationssatisfiedinthecurrentperiodthatwereincludedintheopeningbalanceofcontractliabilities.(2) AsatSeptember30,2021,thebalanceincludes$21millionofcashcollectedundertake-or-paycontractswhichwillberecognizedwithinoneyearasthecustomerchoosesto
ship,process,orotherwiseforegotheassociatedservice.
ContractliabilitiesdepictPembina'sobligationtoperformservicesinthefutureforcashandnon-cashconsiderationwhich
hasbeenreceivedfromcustomers.Contractliabilitiesincludeup-frontpaymentsornon-cashconsiderationreceivedfrom
customersforfuturetransportation,processingandstorageservices.Contractliabilitiesalsoincludeconsiderationreceived
fromcustomersfortake-or-paycommitmentswherethecustomerhasamake-uprighttoshiporprocessfuturevolumes
underafirmcontract.Theseamountsarenon-refundableshouldthecustomernotuseitsmake-uprights.
50PembinaPipelineCorporationThirdQuarter2021
Pembinadoesnothaveanycontractassets.Inallinstanceswheregoodsorserviceshavebeentransferredtoacustomerin
advanceofthereceiptofcustomerconsideration,Pembina'srighttoconsiderationisunconditionalandhasthereforebeen
presentedasareceivable.
10.OTHERINCOME
ForthethreeandninemonthsendedSeptember30,2021,otherincomeincludes$350millionassociatedwithPembina's
terminationofthearrangementagreementprovidingfortheproposedacquisitionbyPembinaofInterPipelineLtd.
11.NETFINANCECOSTS
3MonthsEndedSeptember30 9MonthsEndedSeptember30
($millions) 20212020(Restated
Note2) 2021
2020(RestatedNote
2)
Interestexpenseonfinancialliabilitiesmeasuredatamortizedcost:
Long-termdebt 97 91 292 269
Leases 9 9 27 29
Unwindingofdiscountrate 4 4 12 11
Loss(gain)infairvalueofnon-commodity-relatedderivativefinancialinstruments 8 (11) 16 11
Foreignexchangelosses(gains)andother 26 (11) (4) 41
Netfinancecosts 144 82 343 361
PembinaPipelineCorporationThirdQuarter202151
12.OPERATINGSEGMENTS
Pembina'soperatingsegmentsareorganizedbythreedivisions:Pipelines,FacilitiesandMarketing&NewVentures.
3MonthsEndedSeptember30,2021
Pipelines(1) FacilitiesMarketing&
NewVentures(2)
Corporate&Inter-segmentEliminations Total($millions)
Revenuefromexternalcustomers 527 229 1,393 — 2,149
Inter-segmentrevenue 39 112 — (151) —
Totalrevenue(3) 566 341 1,393 (151) 2,149
Operatingexpenses 140 121 — (74) 187
Costofgoodssold,includingproductpurchases — 1 1,268 (81) 1,188
Depreciationandamortizationincludedinoperations 100 56 13 2 171
Costofsales 240 178 1,281 (153) 1,546
Realized(gain)lossoncommodity-relatedderivativefinancialinstruments — (2) 45 — 43
Shareofprofitfromequityaccountedinvestees 21 23 31 — 75
Unrealizedgainoncommodity-relatedderivativefinancialinstruments — (45) (2) — (47)
Grossprofit 347 233 100 2 682
Depreciationincludedingeneralandadministrative — — — 9 9
Othergeneralandadministrative 9 4 7 39 59
Otherexpense(income) 1 10 — (322) (311)
Impairmentexpense — — — — —
Reportablesegmentresultsfromoperatingactivities 337 219 93 276 925
Netfinancecosts 8 12 2 122 144
Reportablesegmentearningsbeforetax 329 207 91 154 781
Capitalexpenditures 174 26 3 6 209
Contributionstoequityaccountedinvestees — 18 — — 18
3MonthsEndedSeptember30,2020
Pipelines(1) FacilitiesMarketing&
NewVentures(2)
Corporate&Inter-segmentEliminations Total
(RestatedNote2)
($millions)
Revenuefromexternalcustomers 517 227 752 — 1,496
Inter-segmentrevenue 40 84 — (124) —
Totalrevenue(3) 557 311 752 (124) 1,496
Operatingexpenses 129 99 — (50) 178
Costofgoodssold,includingproductpurchases — 3 720 (76) 647
Depreciationandamortizationincludedinoperations 103 49 12 2 166
Costofsales 232 151 732 (124) 991
Realizedgainoncommodity-relatedderivativefinancialinstruments — — (7) — (7)
Shareofprofit(loss)fromequityaccountedinvestees 56 11 (5) — 62
Unrealized(gain)lossoncommodity-relatedderivativefinancialinstruments — (11) 17 — 6
Grossprofit 381 182 5 — 568
Depreciationincludedingeneralandadministrative — — — 9 9
Othergeneralandadministrative 6 2 9 30 47
Other(income)expense (4) — 1 (1) (4)
Reportablesegmentresultsfromoperatingactivities 379 180 (5) (38) 516
Netfinancecosts(income) 8 5 (7) 76 82
Reportablesegmentearnings(loss)beforetax 371 175 2 (114) 434
Capitalexpenditures 53 98 10 13 174
Contributionstoequityaccountedinvestees — 28 — — 28(1) Pipelinestransportationrevenueincludes$48million(2020:$62million)associatedwithU.S.pipelinerevenue.(2) Marketing&NewVenturesincludesrevenueof$57million(2020:$33million)associatedwithU.S.midstreamsales.(3) DuringthethreemonthsendedSeptember30,2021and2020,noonecustomeraccountedfor10percentormoreoftotalrevenuesreportedthroughoutallsegments.
52PembinaPipelineCorporationThirdQuarter2021
9MonthsEndedSeptember30,2021
Pipelines(1) FacilitiesMarketing&
NewVentures(2)
Corporate&Inter-segmentEliminations Total($millions)
Revenuefromexternalcustomers 1,553 687 3,827 — 6,067
Inter-segmentrevenue 120 327 — (447) —
Totalrevenue(3) 1,673 1,014 3,827 (447) 6,067
Operatingexpenses 409 344 — (198) 555
Costofgoodssold,includingproductpurchases — 7 3,463 (257) 3,213
Depreciationandamortizationincludedinoperations 312 158 38 6 514
Costofsales 721 509 3,501 (449) 4,282
Realized(gain)lossoncommodity-relatedderivativefinancialinstruments — (2) 166 — 164
Shareofprofitfromequityaccountedinvestees 95 59 44 — 198
Unrealized(gain)lossoncommodity-relatedderivativefinancialinstruments — (62) 19 — (43)
Grossprofit 1,047 628 185 2 1,862
Depreciationincludedingeneralandadministrative — — — 29 29
Othergeneralandadministrative 25 11 22 147 205
Otherexpense(income) 2 10 — (294) (282)
Impairmentexpense 10 22 3 — 35
Reportablesegmentresultsfromoperatingactivities 1,010 585 160 120 1,875
Netfinancecosts(income) 23 30 (7) 297 343
Reportablesegmentearnings(loss)beforetax 987 555 167 (177) 1,532
Capitalexpenditures 352 102 15 13 482
Contributionstoequityaccountedinvestees — 29 1 — 30
9MonthsEndedSeptember30,2020
Pipelines(1) FacilitiesMarketing&
NewVentures(2)
Corporate&Inter-segmentEliminations Total
(RestatedNote2)
($millions)
Revenuefromexternalcustomers 1,537 662 2,074 — 4,273
Inter-segmentrevenue 111 243 — (354) —
Totalrevenue(3) 1,648 905 2,074 (354) 4,273
Operatingexpenses 362 281 — (132) 511
Costofgoodssold,includingproductpurchases — 7 2,006 (230) 1,783
Depreciationandamortizationincludedinoperations 300 149 37 6 492
Costofsales 662 437 2,043 (356) 2,786
Realizedgainoncommodity-relatedderivativefinancialinstruments — — (60) — (60)
Shareofprofit(loss)fromequityaccountedinvestees 173 41 (2) — 212
Unrealized(gain)lossoncommodity-relatedderivativefinancialinstruments — (14) 12 — (2)
Grossprofit 1,159 523 77 2 1,761
Depreciationincludedingeneralandadministrative — — — 28 28
Othergeneralandadministrative 16 7 24 101 148
Other(income)expense (1) 1 13 (20) (7)
Reportablesegmentresultsfromoperatingactivities 1,144 515 40 (107) 1,592
Netfinancecosts 24 16 2 319 361
Reportablesegmentearnings(loss)beforetax 1,120 499 38 (426) 1,231
Capitalexpenditures 511 296 34 27 868
Contributionstoequityaccountedinvestees — 69 155 — 224(1) Pipelinestransportationrevenueincludes$154million(2020:$170million)associatedwithU.S.pipelinerevenue.(2) Marketing&NewVenturesincludesrevenueof$181million(2020:$98million)associatedwithU.S.midstreamsales.(3) DuringtheninemonthsendedSeptember30,2021and2020,noonecustomeraccountedfor10percentormoreoftotalrevenuesreportedthroughoutallsegments.
PembinaPipelineCorporationThirdQuarter202153
13.ACCUMULATEDOTHERCOMPREHENSIVEINCOME(LOSS)
($millions)
CurrencyTranslation
Reserve
CashFlowHedge
Reserve
PensionandotherPost-RetirementBenefitPlan
Adjustments(2) Total
BalanceatDecember31,2019 134 — (36) 98
Othercomprehensivegainbeforehedgingactivities 143 — 14 157
Othercomprehensivegain(loss)resultingfromhedgingactivities(1) 17 (1) — 16
Taximpact (1) — — (1)
BalanceatSeptember30,2020 293 (1) (22) 270
BalanceatDecember31,2020 48 — (46) 2
Othercomprehensivegainbeforehedgingactivities 4 — — 4
Othercomprehensive(loss)gainresultingfromhedgingactivities(1) (1) 5 — 4
BalanceatSeptember30,2021 51 5 (46) 10(1) AmountsrelatetohedgesoftheCompany'snetinvestmentinforeignoperations(reportedinCurrencyTranslationReserve)andinterestratederivativesdesignatedascash
flowhedges(reportedinCashFlowHedgeReserve)(Note14).(2) PensionandotherPost-RetirementBenefitPlanAdjustmentswillnotbereclassifiedintoearnings.
14.FINANCIALINSTRUMENTS&RISKMANAGEMENT
RiskManagement
Pembina'sriskmanagementstrategies,policiesandlimits,ensurerisksandexposuresarealignedtoitsbusinessstrategyand
risktolerance.Pembina'sBoardofDirectorsisresponsibleforprovidingriskmanagementoversightatPembinaandoversees
howmanagementmonitorscompliancewithPembina'sriskmanagementpoliciesandproceduresandreviewstheadequacy
ofthisriskframeworkinrelationtotherisksfacedbyPembina.
Pembina'sfinancialrisksareconsistentwiththosediscussedinNote27oftheConsolidatedFinancialStatements.Pembina
hasexposuretocounterpartycreditrisk,liquidityriskandmarketrisk.AsatSeptember30,2021,theCompanyhasentered
intocertainfinancialderivativecontractsinordertomanagecommodityprice,foreignexchangeandinterestraterisk.These
instrumentsarenotusedfortradingorspeculativepurposes.
FairValues
Thefairvaluesoffinancialassetsandliabilities,togetherwiththecarryingamountsshowninthecondensedconsolidated
interimstatementsoffinancialposition,areshowninthetablebelow.Certainnon-derivativefinancialinstrumentsmeasured
atamortizedcostincludingcashandcashequivalents,tradereceivablesandother,financeleasereceivables,advancesto
relatedpartiesandtradepayablesandotherhavebeenexcludedbecausetheyhavecarryingamountsthatapproximatetheir
fairvalueduetothenatureoftheitemortheshorttimetomaturity.TheseinstrumentswouldbeclassifiedinLevel2ofthe
fairvaluehierarchy.
September30,2021 December31,2020
CarryingValue
FairValue(1) CarryingValue
FairValue(1)
($millions) Level1 Level2 Level3 Level1 Level2 Level3
Financialassetscarriedatfairvalue
Derivativefinancialinstruments(3) 129 — 129 — 53 — 53 —
Financialliabilitiescarriedatfairvalue
Derivativefinancialinstruments(3) 124 — 124 — 69 — 69 —
Financialliabilitiescarriedatamortizedcost
Long-termdebt(2) 11,128 — 11,688 — 10,876 — 11,902 —(1) ThebasisfordeterminingfairvalueisdisclosedinNote3.(2) Carryingvalueofcurrentandnon-currentbalances.Includesloansandborrowingsandsubordinatedhybridnotes.(3) AtSeptember30,2021allderivativefinancialinstrumentsarecarriedatfairvaluethroughearnings,exceptfor$5millionininterestratederivativefinancialassetsthathave
beendesignatedascashflowhedges.
54PembinaPipelineCorporationThirdQuarter2021
Pembina'sfinancialinstrumentsclassifiedinlevel2ofthefairvaluehierarchyarevaluedusinginputsthatincludequoted
forwardpricesforcommodities,timevalueandvolatilityfactors,whichcanbesubstantiallyobservedorcorroboratedinthe
marketplace.Instrumentsinthiscategoryincludenon-exchangetradedderivativessuchasover-the-counterphysical
forwardsandoptions,includingthosethathavepricessimilartoquotedmarketprices.Pembinaobtainsquotedmarketprices
foritsinputsfrominformationsourcesincludingbanks,BloombergTerminalsandNaturalGasExchange.
Derivativeinstruments
Pembinaentersintoderivativeinstrumentstohedgefuturecashflowsassociatedwithinterestrate,commodity,andforeign
exchangeexposures.Derivativesareconsideredeffectivehedgestotheextentthattheyoffsetthechangesinvalueofthe
hedgeditemortransactionresultingfromaspecifiedriskfactor.Insomecases,eventhoughthederivativesareconsideredto
beeffectiveeconomichedges,theydonotmeetthespecificcriteriaforhedgeaccountingtreatmentandareclassifiedasheld
atfairvaluethroughprofitorloss("FVTPL").
Thefollowingtableisasummaryofthenetderivativefinancialinstruments,whichisconsistentwiththegrossbalances:
September30,2021 December31,2020
($millions)CurrentAsset
Non-CurrentAsset
CurrentLiability
Non-CurrentLiability Total
CurrentAsset
Non-CurrentAsset
CurrentLiability Total
Commodity,power,storageandrailfinancialinstruments 28 94 (109) (11) 2 11 27 (68) (30)
Interestrate — 5 — — 5 — 1 (1) —
Foreignexchange 2 — (3) (1) (2) 14 — — 14
Netderivativefinancialinstruments 30 99 (112) (12) 5 25 28 (69) (16)
NotionalandMaturitySummary
ThematurityandnotionalamountorquantityoutstandingrelatedtoPembina'sderivativeinstrumentsareasfollows:
($millions)Liquids(bpd)
NaturalGas(GJ/d)
Power(GWh)
ForeignExchange
InterestRate
AsatSeptember30,2021
Purchases(1) — 45,918 6,184 — —
Sales(1) 10,113 — — — —
MillionsofU.S.dollars — — — 172 250
Maturitydates 2022 2022 2040 2022 2025
AsatDecember31,2020
Purchases(1)(2) 1,756 73,557 — — —
Sales(1) 25,284 — — — —
MillionsofU.S.dollars — — — 260 250
Maturitydates 2021 2021 2021 2021 2025(1) Barrelsperday("bpd"),gigajoulesperday("GJ/d")andgigawatthours("GWh").(2) AsatDecember31,2020Pembinahadoutstandingpowerpurchasederivativesrepresentingapproximately6megawatthours.
PembinaPipelineCorporationThirdQuarter202155
GainsandLossesonDerivativeInstruments
Realizedandunrealizedlosses(gains)onderivativeinstrumentsareasfollows:
3MonthsEndedSeptember30 9MonthsEndedSeptember30
($millions) 2021 2020 2021 2020
DerivativeinstrumentsheldatFVTPL(1)
Realizedloss(gain)
Commodity-related 43 (7) 164 (60)
Foreignexchange (2) — (10) 4
Unrealized(gain)loss
Commodity-related (47) 6 (43) (2)
Foreignexchange 8 (11) 16 11
Derivativeinstrumentsinhedgingrelationships(2)
Unrealized(gain)loss
Interestrate (1) — (5) 1(1) Realizedandunrealizedlosses(gains)oncommodityderivativeinstrumentsheldatFVTPLareincludedinloss(gain)oncommodity-relatedderivativefinancialinstrumentsin
theInterimFinancialStatements.Realizedandunrealizedlosses(gains)onforeignexchangederivativeinstrumentsheldatFVTPLareincludedinnetfinancecostsintheInterimFinancialStatements.
(2) Unrealizedlosses(gains)onderivativesindesignatedcashflowhedgingrelationshipsarerecognizedinthecashflowhedgereserveinaccumulatedothercomprehensiveincome,withrealized(gains)lossesbeingreclassifiedtonetfinancecosts.RefertoNote13foramountsreclassified.No(gains)losseshavebeenrecognizedinnetincomerelatingtodiscontinuedcashflowhedges.
Non-DerivativeInstrumentsDesignatedasNetInvestmentHedges
PembinahasdesignatedcertainU.S.dollardenominateddebtasahedgeoftheCompany'snetinvestmentinU.S.dollar
denominatedsubsidiariesandinvestmentsinequityaccountedinvestees.Thedesignateddebthasbeenassessedashaving
noineffectivenessastheU.S.dollardebthasanequalandoppositeexposuretoU.S.dollarfluctuations.Asaresult,allforeign
exchangegainsorlossesonthedebtarereporteddirectlyinothercomprehensiveincome.
ThefollowingbalancesofU.S.dollardebthadbeendesignatedashedges:
($millions) September30,2021 December31,2020
NotionalamountofU.S.debtdesignated(inU.S.dollars) 250 250
CarryingvalueofU.S.debtdesignated 318 317
Maturitydate 2025 2025
56PembinaPipelineCorporationThirdQuarter2021
15.COMMITMENTSANDCONTINGENCIES
Commitments
PembinahadthefollowingcontractualobligationsoutstandingatSeptember30,2021:
ContractualObligations(1) PaymentsDuebyPeriod
($millions) Total Lessthan1Year 1–3Years 3–5Years After5Years
Leases(2) 1,010 118 186 155 551
Long-termdebt(3) 16,523 1,366 2,382 2,609 10,166
Constructioncommitments(4) 892 335 48 29 480
Other 543 91 127 68 257
Totalcontractualobligations 18,968 1,910 2,743 2,861 11,454
(1) Pembinaentersintoproductpurchaseagreementsandpowerpurchaseagreementstosecuresupplyforfutureoperations.PurchasepricesofbothNGLandpoweraredependentoncurrentmarketprices.VolumesandpricesforNGLandpowercontractscannotbereasonablydetermined,andtherefore,anamounthasnotbeenincludedinthecontractualobligationsschedule.Productpurchaseagreementsrangefromoneto8yearsandinvolvethepurchaseofNGLproductsfromproducers.Assumingproductisavailable,Pembinahassecuredbetween12and138mbpdofNGLeachyearuptoandincluding2029.Powerpurchaseagreementsrangefromoneto24yearsandinvolvethepurchaseofpowerfromelectricalserviceproviders.Pembinahassecuredupto81megawattsperdayeachyearuptoandincluding2045.
(2) Includesterminals,rail,officespace,landandvehicleleases.(3) Includesloansandborrowings,subordinatedhybridnotesandinterestpaymentsonPembina'sseniorunsecuredmedium-termnotesandsubordinatedhybridnotes.
Excludesdeferredfinancingcosts.(4) Excludingsignificantprojectsthatareawaitingregulatoryapproval,projectswhichPembinaisnotcommittedtoconstruct,andprojectsthatareexecutedbyequity
accountedinvestees.
CommitmentstoEquityAccountedInvestees
Pembinahascommitmentstoprovidecontributionstocertainequityaccountedinvesteesbasedonannualbudgetsapproved
bythejointventurepartnersandcontractualagreements.
Contingencies
Pembina,includingitssubsidiariesanditsinvestmentsinequityaccountedinvestees,aresubjecttovariouslegaland
regulatoryandtaxproceedings,actionsandauditsarisinginthenormalcourseofbusiness.Werepresentourinterests
vigorouslyinallproceedingsinwhichweareinvolved.Legalandadministrativeproceedingsinvolvingpossiblelossesare
inherentlycomplex,andweapplysignificantjudgmentinestimatingprobableoutcomes.Ofmostsignificanceisaclaimfiled
againstAuxSablebyacounterpartytoanNGLsupplyagreement.AuxSablehasfiledStatementsofDefenserespondingto
theclaim.Whilethefinaloutcomeofsuchactionsandproceedingscannotbepredictedwithcertainty,atthistime
managementbelievesthattheresolutionsofsuchactionsandproceedingswillnothaveamaterialimpactonPembina's
financialpositionorresultsofoperations.
LettersofCredit
Pembinahasprovidedlettersofcredittovariousthirdpartiesinthenormalcourseofconductingbusiness.Thelettersof
creditincludefinancialguaranteestocounterpartiesforproductpurchasesandsales,transportationservices,utilities,
engineeringandconstructionservices.Thelettersofcredithavenothadandarenotexpectedtohaveamaterialimpacton
Pembina'sfinancialposition,earnings,liquidityorcapitalresources.AsatSeptember30,2021,Pembinahad$166million
(December31,2020:$91million)inlettersofcreditissued.
PembinaPipelineCorporationThirdQuarter202157
HEADOFFICEPembinaPipelineCorporation
Suite4000,585-8thAvenueSW
Calgary,AlbertaT2P1G1
AUDITORSKPMGLLP
CharteredProfessionalAccountants
Calgary,Alberta
TRUSTEE,REGISTRAR&TRANSFERAGENTComputershareTrustCompanyofCanada
Suite600,530-8thAvenueSW
Calgary,AlbertaT2P3S8
1.800.564.6253
STOCKEXCHANGEPembinaPipelineCorporation
TorontoStockExchangelistingsymbolsfor:COMMONSHARESPPL
PREFERREDSHARESPPL.PR.A,PPL.PR.C,PPL.PR.E,PPL.PR.G,PPL.PR.I,PPL.PR.O,PPL.PR.Q,PPL.PR.S,PPL.PF.A,PPL.PF.CandPPL.PF.E
NewYorkStockExchangelistingsymbolfor:COMMONSHARESPBA
INVESTORINQUIRIESPHONE403.231.3156
FAX403.237.0254
TOLLFREE1.855.880.7404EMAILinvestor-relations@pembina.comWEBSITEwww.pembina.com