Pembina Pipeline Corp (PBA) 2025 Q4 法說會逐字稿

Hello, everyone. Thank you for joining us, and welcome to the Pembina Pipeline Corporation Q4 2025 results digital conference call. (Operator Instructions) I will now hand the call over to Dan Tucunel, Vice President of Capital Markets. Please go ahead.

Thank you, Jade. Good morning, everyone. Welcome to Pembina's conference call and webcast to review highlights from the fourth quarter of 2025. On the call today, we have Scott Burrows, President and CEO; and Cameron Goldade, Chief Financial Officer, along with other members of Pembina's leadership team.

I would like to remind you that some of the comments made today may be forward-looking in nature and are based on Pembina's current expectations, estimates, judgments and projections. Forward-looking statements we may express or imply today are subject to risks and uncertainties, which could cause actual results to differ materially from expectations.

Further, some of the information provided refers to non-GAAP measures. To learn more about these forward-looking statements and non-GAAP measures, please see the company's management discussion and analysis dated February 26, 2026, for the period ended December 31, 2025, as well as the press release Pembina issued yesterday, which are all available online at pembina.com and on both SEDAR+ and EDGAR.

I will now turn things over to Scott.

Thanks, Dan. Yesterday, we reported our fourth quarter results, which included earnings of $489 million, adjusted EBITDA of approximately $1.075 billion and adjusted cash flow from operating activities of $731 million or $1.26 per share. For the full year, we delivered earnings of $1.694 billion and adjusted EBITDA of $4.289 billion. We achieved record annual volumes across our Pipelines and Facilities divisions, which represented a 3% increase over 2024. Full year results also included adjusted cash flow from operating activities of $2.854 billion or $4.91 per share.

Each year, I'm always proud to look back and reflect on our team's many accomplishments. 2025 was no exception. In addition to solid financial and operating results, we also advanced strategic projects and strengthened our long-term competitive positioning. I'm particularly proud that Pembina continues to deliver on its promises, including providing safe and reliable operations, meeting its financial targets, constructing major projects on time and on budget and continuing to execute its strategy with an improved risk profile. Several notable achievements in 2025 and early 2026 stand out.

Safety is a core value and the foundation of Pembina's operations and culture. While the journey never ends, I am pleased with our strong safety and environmental performance that exceeded our internal 2025 targets, highlighted by improved performance across key indicators relative to our three-year averages. We advanced construction of several growth projects, including the RFS IV propane-plus fractionator at the Redwater Complex, the Wapiti natural gas processing expansion and the K3 cogeneration facility. All three projects are trending on time and on or under budget. The Wapiti expansion and K3 cogen are currently in the commissioning phase and are expected to be in service in the next few weeks, and we look forward to the RFS IV expansion coming online during the second quarter.

Additionally, under previously announced funding agreements, PGI in collaboration with certain producer customers expects to place approximately $725 million of new infrastructure into service throughout 2026, all supported by long-term take-or-pay agreements. approximately $725 million of new infrastructure into service throughout 2026, all supported by long-term take-or-pay agreements. We supported our long-term resilience through extensive recontracting across the business. These contracting successes support continued utilization of our assets, help ensure our stable cash flow stream and create the foundation for future opportunities.

In 2025, we renewed existing contracts and executed incremental new contracts totaling over 200,000 barrels per day of conventional pipeline transportation capacity. This includes successfully recontracting substantially all available for renewal on the Peace Pipeline system under contracts expiring in 2025 and 2026. We look forward to providing further contracting updates throughout 2026.

As part of the toll review at Alliance Pipeline, we significantly extended Alliance's long-term contractual profile as shippers elected a new 10-year toll option on approximately 96% of available capacity. And we contracted the remaining capacity available on the 100,000 barrels per day Nipisi pipeline, which was reactivated in 2023 to serve the growing Clearwater heavy oil play. Having fully contracted Nipisi, we are now focused on opportunities to increase egress capacity to respond to strong customer demand for incremental services.

In response to growing demand for condensate and NGL transportation, we progressed development of conventional pipeline expansions to reliably and cost effectively meet rising transportation demands from growing production in the Western Canadian Sedimentary Basin. In late 2025, Pembina announced that it is proceeding with its Fox Creek-to-Namao Expansion of the Peace Pipeline system, which will add approximately 70,000 barrels per day of market delivery capacity to the Peace Pipeline system. And yesterday, we announced two additional expansions of our Northeast BC pipelines, the Birch-to-Taylor Expansion and the Taylor-to-Gordondale Expansion. In total, these three expansions represent $625 million of investment to ensure Pembina's continued ability to service growing volumes in Northeast British Columbia and Alberta.

We took steps to significantly enhance our propane export capabilities through a new 30,000 barrel per day LPG export agreement with AltaGas at its West Coast terminals and the sanctioning of the Prince Rupert terminal optimization project. Through these two initiatives, Pembina ensured access to 50,000 barrels per day of highly competitive propane export capacity to premium priced markets, including Asia for Pembina and our customers' propane.

On the Cedar LNG project, we advanced construction of a floating LNG vessel to over 35% complete and significantly progressed the onshore construction activities. Further, Pembina met its commitment to investors by completing the remarketing of our 1.5 million tons of annual Cedar LNG capacity by signing long-term agreements with PETRONAS, a global LNG industry leader and Ovintiv, one of the largest liquids-rich natural gas producers in Canada. In addition to increasing Pembina's expected financial contribution from the project, these agreements further validate the Cedar LNG project and highlight the strong demand for global export capacity given the clear advantages of Canadian West Coast LNG, including competitively priced feedstock and advantaged shipping distance to Asian markets.

Finally, Pembina and its partner, Kineticor made significant progress on the development of the Greenlight Electricity Center, securing the required power grid allocation for the proposed third-party innovation center, which was subsequently assigned to a potential customer of Greenlight and completed a land sale agreement with the customer. We also ensured the availability and delivery timing of two turbines to support the approximately 700 -- 900-megawatt first phase of Greenlight.

Greenlight represents an extension of Pembina's existing value chain and an opportunity to enhance growth by investing in long-term contracted infrastructure with an investment-grade counterparty while diversifying its customer base and would create incremental demand for natural gas and associated liquids production within Western Canada. Pembina and Kineticor continue to progress various work streams, including finalizing a commercial agreement with the customer, engineering, procurement and regulatory activities and expect to make a final investment decision in the first half of 2026.

It was a busy and productive year for the Pembina team, and I look forward to building upon our momentum from 2025 as we strive for even greater success in 2026. We are planning to hold a webcast and conference call on April 7, where Pembina's officer team will provide a general business update and long-term outlook. Additional details will be communicated in the coming weeks.

I will now turn things over to Cam to discuss in more detail the financial highlights for the fourth quarter and full year.

Thanks, Scott. As Scott noted, Pembina reported fourth quarter adjusted EBITDA of $1.075 billion. This was a $179 million or 14% decrease over the same period in the prior year, which primarily reflects a $118 million lower contribution from marketing and new ventures, the impact of a new toll structure and revenue sharing mechanism on the Alliance Pipeline and a $37 million period-specific capital recovery that impacted 2024 with no similar impact in 2025. These factors were partially offset by volume growth and solid performance across the Pipelines and Facilities divisions.

Looking at quarter-over-quarter results by division, the major factors impacting the quarter in Pipelines included higher volumes on the Peace Pipeline system, lower operating expense on the Cochin pipeline, lower revenue on the Canadian portion of the Alliance Pipeline as a result of reduced long-term firm tolls and impacts from the new revenue sharing mechanism under previously announced settlement, offset by higher demand on seasonal contracts, lower revenue on certain pipeline assets due to period-specific impacts of capital recoveries recognized in the fourth quarter of 2024 and lower interruptible volumes on the Cochin pipeline due to narrower condensate price differentials.

In Facilities, factors impacting the fourth quarter included lower revenue related to period-specific impacts of capital recoveries recognized in the fourth quarter of 2024 on certain PGI assets and higher operating expenses as well as higher contribution for PGI assets, primarily due to higher volumes and the impact of the acquisition of a 50% working interest in Whitecap's Kaybob Complex during the fourth quarter of 2024.

In Marketing and New Ventures, fourth quarter results reflected the net impact of narrower NGL frac spreads, partially offset by realized gains on NGL-based derivatives and lower realized gains on crude oil-based derivatives due to lower volumes and narrower price spreads.

Finally, in the Corporate segment, fourth quarter results were lower than prior period due to higher long-term incentive costs, partially offset by lower noncompensation-related expenses. Earnings in the fourth quarter were $489 million. This represents a 15% decrease over the same period in the prior year.

In addition to the factors impacting adjusted EBITDA, the decrease in earnings in the fourth quarter was primarily due to the net impact of higher depreciation and amortization expense in pipelines, lower other expenses recognized in the share of profit from PGI as 2024 included costs related to asset disposals, higher share of profit from Greenlight due to a gain on sale of land to a third-party potential customer and various unrealized gains and losses on derivatives, a gain recognized by Pembina on a sale of land to a third-party potential customer of Greenlight, combined with lower net finance costs and lower acquisition and integration costs, offset by higher restructuring costs, and finally, lower income tax expense.

Total volumes in the Pipelines and Facilities divisions were 3.7 million barrels of oil equivalent per day in the fourth quarter. This represents an increase of 1% over the same period in the prior year. Higher fourth quarter Pipelines volumes were driven primarily by higher interruptible and contracted volumes on the Peace Pipeline system, an increase in volumes on AEGS as the fourth quarter in 2024 was impacted by third-party outages, an increase in contracted volumes on the Nipisi pipeline, lower interruptible volumes on the Cochin pipeline due to narrower condensate price differentials and the sale of the North segment of the Western Pipeline in the third quarter of 2025.

Higher fourth quarter Facilities volumes were driven primarily by the acquisition of Whitecap's Kaybob complex in the fourth quarter of 2024, higher volumes at the Dawson assets due to higher natural gas prices, higher volumes at the Duvernay Complex and a decrease in Aux Sable volumes due to lower ethane extraction.

The fourth quarter contributed to solid full year results that included earnings of $1.694 billion, adjusted EBITDA of $4.289 billion, cash flow from operating activities of $3.301 billion or $5.68 per share and adjusted cash flow from operating activities of $2.854 billion or $4.91 per share.

During the fourth quarter, Pembina announced a 2026 adjusted EBITDA guidance range of $4.125 billion to $4.425 billion. The midpoint of the 2026 guidance range represents 2023 to 2026 fee-based adjusted EBITDA per share compound annual growth of approximately 5%, positioning Pembina to deliver on the target we originally provided at our 2024 Investor Day. Based on Pembina's existing strong financial position, the 2026 year-end proportionately consolidated debt to adjusted EBITDA ratio is expected to be approximately 3.7 to 4.0 times. Excluding debt related to the construction of the Cedar LNG facility, which is expected to enter service in late 2028, this ratio would be approximately 3.4 to 3.7 times.

With 2026 serving as the peak investment year for Cedar LNG, 2026 is also expected to represent the peak year for Pembina's proportionally consolidated debt to adjusted EBITDA ratio. With incremental cash flow from projects entering service and a significant ramp down in Cedar LNG spending post 2026, Pembina's leverage is expected to return to the lower end of its target range of 3.5 to 4.25 times.

I'll now turn things back to Scott.

Thanks, Cam. Doing what we said we would do is core to Pembina's leadership team, and I believe our 2025 accomplishments and our longer track record as a company speak to that. We continue to focus on providing safe, reliable, responsible and cost-effective energy infrastructure solutions. I believe we are uniquely positioned to capture incremental new volumes in the growing Western Canadian Sedimentary Basin and connect our customers to high-value global markets while unlocking new opportunities beyond our strong legacy business. Our entire organization is focused on ensuring the long-term resilience of our business and providing investors with visibility to attractive growth throughout the end of the decade and beyond.

Thank you for joining us this morning. Please go ahead and open up the line for questions.

(Operator Instructions)

Aaron MacNeil, TD Cowen.

I'm hoping you can sort of give a bit more detail on the decision not to pursue the full Taylor-to-Gordondale Expansion. And I realize this could very well be my own misinterpretation, but my impression was that this would likely go ahead once the permits were in place. So either way, I guess I'm just wondering, has anything in terms of your outlook changed?

Are you opting for maybe a lower risk approach? Has ARC's decision to remove the second phase of Attachie sort of caused you to pause this a bit? Or is it the commodity outlook? Or maybe I'm just overthinking it, and this was always the strategy. So just any insights there would be helpful.

Aaron, it's Jaret. Thanks for the question, and I think it's a really good one. So like we said in our press release, we've got three projects on the go on the pipeline -- conventional pipeline side, our Fox Creek-to-Namao, which we talked about there a few quarters ago, our Birch-to-Taylor and then our Taylor-to-Gordondale kind of like, we'll call it Phase 1. All of this capital, 100% is being driven by really Canada unlocking our egress constraints. We have our oil constraints being alleviated, which is driving more demand for condensate. Our condensate import pipelines are fairly tapped, ours and third party. So that's going to drive a lot of condensate domestic growth.

And then obviously, with that condensate comes natural gas and that egress constraint is also being lifted with LNG Canada being ramped up, Cedar coming online, other projects, et cetera. So that's really driving the need for condensate and NGLs. And I know you know that, but I think it's important to ground ourselves that a lot of that growth is coming from, obviously, the Montney, but specifically up in that neighborhood of, I'll call it, north of Taylor BC up into that north of Fort St. John, Fort Nelson geographic area, a lot of it is coming from there. That really drives to the Birch-to-Taylor project, if you think about it that way.

So first off, I want to say that, that project, the collaboration and the consolidation of the industry, the indigenous communities and our partners, the BC government and the BC regulator, that was a tremendous outcome for us getting all of our hurdles in place and behind us collectively. That project really is allowing us, number one, it's going to grow our condensate and natural gas liquids, specifically C3+ capacity. It's really to meet their needs, the growth demand that I talked about for all those other reasons.

I think also, Aaron, sanctioning that project now and bringing that online kind of the end of '27 into '28, it really -- it shows the -- we've been really good at project execution. We pride ourselves on our safety record. We pride ourselves on working with local communities and subcontractors, et cetera. And I think really getting focused on making this project a cost focus and a safety-focused project versus a schedule-driven project because we all know our customers can drill significantly faster than we can build long linear assets. So that's kind of Birch-to-Taylor.

Now I'll get into actually your question. So like you said, February 10, we did receive our federal permit for Taylor-to-Gordondale. And I really think about Taylor-to-Gordondale as growth in the Montney in two other specific regions geographically. I'm going to call it the Dawson Creek area. So southeast of Taylor, we're seeing a lot of growth in the Montney in that neighborhood.

And you're seeing -- it's the condensate and the C3+ once again. And then on the Alberta side of the border, you're seeing a lot of growth in the Montney in what some refer to as the Peace River Arch in and around that Gordondale and up to the western side of the Alberta border. Ultimately, that -- getting that permit was also a tremendous amount of work. We did have some, I would say, objectives, commercial objectives, but I think our team persevered and got that. We will need that project full stop one day. The condensate, and it's in the near future due to all the exact same demand. The condensate is growing in that area, the C3+ is growing in that area.

But what I will say is one of the things about Pembina is not only our ability to build projects on time and on budget. We also our flexibility of our infrastructure and our people. Our people really took a step back and work collaboratively with operations, our engineering hydraulics teams, and they came up with a little bit more of a capital-light solution. All of this capital we required for the full build-out, but a capital-light solution, which really is a prudent deployment of capital, which Cam gives me a high five for all the time. And it still allows us to meet our customer needs and meet their egress demand, almost like as they grow, it's almost on demand, we can go out and build this.

So hopefully, that provides you a little bit of color. We don't see this due to overall certain customers talking about production profiles and condensate is growing, natural gas is going to come with it. Pembina's ability to grow with our customers is, I think, better than anyone else in the basin.

That's a lot more detail than I was expecting. I can -- maybe second question. I can appreciate that marketing fundamentals have been challenging year-to-date, but we've seen Canadian gas prices decrease in the last few weeks. Liquids pricing is on balance up since you released the guidance, which should sort of improve the frac spread and other marketing strategies. So I guess I'm just wondering if you'd characterize your previously disclosed marketing outlook is maybe a bit better on the margin now than you previously thought as we get sort of closer to that annual recontracting window?

Yes. Aaron, thanks. It's Chris Scherman. I think we've all seen significant volatility to start the year. Obviously, we're only 60 days in. And you just referenced it, we're happy to see the price outlook for the remainder of the year improve, especially sort of over the last week. And I think all in all, things are actually looking positive for us for the remainder of the year. I'd highlight the first 45 days of the year.

We definitely saw some headwinds on US frac spread, primarily as a result of US weather, which drove up Chicago gas prices. But given those US frac spread headwinds to start the year, combined with the improved outlook for the remainder of the year, right now, we're still looking to be slightly ahead of the midpoint on our marketing guidance for the full year.

I'd highlight there's still a lot of year left to go. I'd also highlight that given those headwinds earlier in the year, we can probably expect a little bit of a reshaping of the profile through the full year, but we're optimistic and sort of remain on plan for the full year.

Aaron, I'll just -- maybe -- it's Jaret here. Just on the flip side of that, obviously, with really high Chicago gas prices, that puts pressure on our frac spread business. But it also -- the AECO to Chicago spread drives fee-based business to offset some of that noise. And then obviously, I think Cam might talk to it, but we're seeing some fairly strong fluctuations in FX just over the last 60 days, et cetera.

Jeremy Tonet, JPMorgan Securities.

Just wanted to go to the Tourmaline contract extension, if I could. And just wondering how that looks -- how that shakes out economics versus prior. Just wondering with the market right now, how it's developing, does it look similar on a same-store basis there? Or how are things evolving?

Jeremy, it's Jaret. So first off, really pleased to extend our partnership with Tourmaline. They're obviously one of our largest customers and one of the largest producers in Western Canada. And it always kind of -- it warms my heart to see that the Cutbank Complex, which is Pembina's original acquisition in the gas processing back in '09 that we're continuing to see flat production, growing production in and around that area.

So with respect to tolls, we won't get into the details on that. But obviously, I'll break it down into a couple. Pipe and frac tolls, you'll see those consistent with the rest of our business. It wouldn't be specific to this customer in this area. And then on the PGI side of our business, the gas economics and the overall netbacks in and around this area, they are strong because of the liquids production that comes out of it that supports the overall netback for our customers. So in this area, you don't have to see a lot of toll erosion in order to meet the customers' needs on the processing side.

With that said, although we're extremely excited to extend this partnership, you recall in Q3, we recorded a small write-down with respect to one of our processing contracts that didn't get extended in a different geographical area of the Deep Basin.

So -- but with that said, since that date of that press release and talking about that expiry, our teams who are focused on filling our assets every day have essentially recovered 60% of that value, and we'll continue to backfill that portion of the business. Also, Jeremy, that has been fully baked into our -- the recontracting and the Q3 announcement that has fully been baked into our 2026 guidance and our overall long-range plan.

Okay. Great. Great to hear on that recovery there. I was just wondering if we could step back a little bit, take a higher view of the basin, kind of picking up with the current commodity price outlook and how that, I guess, impacts the driller activity expectations for your customers. We've seen volatility out there. Just wondering what's the latest conversations you're having with customers, ARC and others and how you expect, I guess, activity to change over time?

Yes, Jeremy, it's Scott here. I would just caution that, like Chris said, it's the increase in commodity price has happened pretty rapidly here. And let's break that down. I mean it's really been on the crude oil price. I mean, we still have seen a ton of volatility in AECO and AECO and Station 2 today are kind of where we started the year, if not slightly below. Propane has kind of remained flattish. So it's very commodity specific, and the crude oil run-up here has just happened very shortly.

So I would say this short-term run-up, I don't know that it's been sustained enough to say that producers have changed their activity from the start of the year. There's also been a fair bit of M&A to end last year. And I think as people work through closing those transactions, hopefully, over the next couple of weeks or months here, we'll see kind of revised drilling plans. This comment is not specific to the recent M&A because, obviously, you can't talk about that.

But historically, what I would say over the last two years, as we've seen some of the consolidation happen, we've actually seen an acceleration of volumes most people don't buy another company to keep production flat or decline it. Typically, we've seen growth. So we're excited to see what could come out of some of the consolidation, but I can't speak specifically to that just yet.

Maybe just further to that, when I break it down into the different geological formations, I'll start with like in the old school Drayton Valley area, we're also seeing these prices even at $60, we're seeing a tremendous amount of drilling. And even as you talk about the South Duvernay, et cetera, our system out in that area, obviously, is seeing strong volumes. If you move up into kind of that Peace River Arch area again that I talked about, you are seeing a lot of companies talk about Charlie Lake oil. That's continuing to grow and Pembina has oil assets in the area to capture those volumes into the Edmonton market.

If you go kind of north, back up our Clearwater area, the Nipisi pipeline, based on all of the connections we have today and the pumps we have in place, you're seeing the upstream customers really talk about the recovery factors increasing the drilling results, how economic they are. You can continue to see Nipisi capture more and more of those volumes, and we're working on -- I talked about the optimization we did at Taylor-to-Gordondale. Our teams are driving some really cool cheap expansions on the Clearwater -- for the Clearwater customers on the Nipisi pipeline.

And then when you think about the Montney, I think I touched on it, but our customers, they have so much land across so many geographical areas and Pembina's system obviously expands a significant geographical area. Our customers, if they're having some challenges or they're maxed out on capacity in one area or constrained by natural gas egress in an area, they can always redeploy capital. Like I said, the oil sands needs condensate. The import pipelines are fairly full. It has to come from somewhere and our customers, the Alberta innovation or the Western Canadian Energy innovation, it will unlock this condensate. And I think our system is pretty primed to capture it. So things are in good shape.

Theresa Chen, Barclays.

Now that Dow has provided a revised time line for Path2Zero with Phase 1 expected by year-end '29 and Phase 2 by year-end '30. Could you provide an update on the different options you're evaluating at this point and infrastructure investment necessary to supply the 50,000 barrels per day of ethane for your commitment?

Thanks for the question. It's Chris. So obviously, we're very pleased to see the project moving ahead in line with really our expectations. As we've touched on Dow before and you're referencing, the minor delay in the project has allowed us to reevaluate how best to serve the customer here, what the most efficient capital-efficient infrastructure options are to serve the customers' needs. We will be out this year clarifying that. That work continues. We keep pointing down that path.

So we look forward to making FID on these additional infrastructure this year, but we can't provide any more detail today on the call. Obviously, Dow, a valued partner to us, congratulate them on the progress they made on the project, and we look forward to getting more details out to the market and progressing.

Understood. And turning to Greenlight, given the progress there, the grid allocation, land sale and turbine availability, what are the key next steps and decision points from here? What is the expected time line for contracting FID and in-service thereafter?

You bet. So Chris again. Obviously, we've made significant progress since forming that JV. You referenced it, right, in 2025. We secured the 907 megawatts of AESO allocation, which we subsequently assigned to our potential customer, entered into agreements on turbines, locked those up, got where we needed to be in the queue for those, closed our land sale to set our customer up for success both on the base project as well as a bunch of growth. So as we're looking forward now, we're targeting an FID in Q2. We're positive on that time line and really focused on three work streams between now and then.

Number one, commercial. So we continue to work through negotiations with our potential customer. We're in the middle of those negotiations. So obviously, limited details on that at this point. But I'd say they're going as expected. Time lines are going as expected, and we have confidence we're going to reach a midstream-like long-term contract to underpin this commercially.

Secondly, regulatory, we're making great progress. We don't view this as a high-risk work stream for the project, and we're not part of the discussions between the customer and the government, but we understand those are going really well. There's more information that's come out on the levy and the rest of it, which is, I think, positive and in line with expectations.

And then finally, third work stream engineering. So we're working through our FEED. We've got top-tier global engineering partners in that. That's progressing well, all pointed towards Q2 FID targets. So Scott spoke about it in his opening remarks, but I think things are going as we hoped on this. We think the project remains a tremendous on-strategy extension of our business, and we're excited to get it across the line here in Q2.

Sam Burwell, Jefferies.

I wanted to see if you could give an update on the Alliance short-haul expansion project. I think back in 3Q, you talked about running an open season during the first quarter of this year. So curious if there's any update on the progress you're making there?

Jaret here. So we continue to see strong demand in the Alberta Industrial Heartland area for natural gas to progress other industries. There's still a few days left in the quarter, and you should expect to see an announcement fairly shortly.

Okay. Great. And I guess just like one quick clarification on the Tourmaline deal. Was all of that renewals of existing business effectively? Or is there anything incremental on the transport side or the frac side?

No, it was all -- essentially all of it was renewal, same volumes.

Robert Hope, Scotiabank.

Just want to maybe dive a little bit deeper into the timing of the April 7 presentation. Is there anything specific driving that? Do you think you'll have some incremental clarity on some of the projects that you're progressing? Or is it April 7 just to kind of make it a stand-alone event rather than giving we'll call it, longer-term guidance today?

Robert, it's Cam here. Yes, really, I mean, honestly, a couple of factors. One, we recognize there's a window here for market participants that works better or worse. And so as we get into March, we start to interfere with potentially other commitments. But I think probably more presently, things are moving fast, obviously, with certain of our key growth opportunities. And so our objective when we release the long-term guidance is to give you and our investors as much granularity and as much concreteness to that buildup as possible.

And so I think our objective this time around, whereas in 2024, we generally gave a growth outlook and some pieces, which would support that. we're really trying to provide the market with a really robust buildup to that. And so we'd love to be in a position to have obviously the most certainty possible around that buildup. And that's the biggest factor that aligns with the sort of post Q1 timing.

I appreciate that. And then you've touched on most of the kind of, we'll call it, the $4 billion bucket of potential projects, but PGI infrastructure was one that was highlighted as an opportunity set that you're advancing. Can you maybe expand a little bit further what opportunities you could see as the next phase of growth for PGI?

Rob, Jaret here. Yes, you know what, PGI is going to continue to grow their business. We obviously step one with respect to that business is filling white space. So some of the announcements we made with the infrastructure build-out we're doing with Whitecap in and around the Lator area, that's really all designed to, one is fill existing white space at some plants in and around that area, but also then to grow the liquids volumes on to Pembina's Peace Pipeline system and the NGLs into Fort Saskatchewan and Pembina's Redwater facilities. After that, we're looking at continuing to build out organically. There are opportunities out there that we're evaluating. So probably more to come on that.

And then lastly, there's always the inorganic stuff. I think PGI out of any one of the gas processing businesses in Western Canada has been ahead of its time with respect to creativity. And being on the board with KKR, we continue to encourage and press the team on to come back to us with more and more of those creative ideas. So that's kind of how we see the business there.

Spiro Dounis, Citi.

First, let me congratulate you all on your silver medal in hockey, hard fought. Sorry if that's too soon. Going to the questions, I'll keep them above the belt here. Maybe just going to contract renewals. Scott, you mentioned over 200,000 barrels a day contracted last year and more to come in 2026. So maybe could you provide a broader commercial update on what you're expecting this year? Is it similar to 2025? And any reason we can expect different outcomes, either positive or negative?

Yes. Thanks for the question, and I'll ignore the comment. Maybe next quarter, we can talk about it. But yes, I think we did try to highlight it, obviously, a very, very successful 2025. We feel like we started off the year strong, as Jaret mentioned, both with the Tourmaline recontracting, but as well as the success on Alliance and Nipisi.

And so in terms of specifically to 2026, again, we're not going to get into specific contract profiles. It's obviously a competitive dynamic. But what I will say is that we would expect to have a little more granularity on this on our April 7 update and talk a little bit about more where we're at year-to-date and what our expectations are. So good question, but I don't want to front run our April 7 update.

Yes. I totally respect that. Second question, maybe just going back to Taylor-to-Gordondale. Just curious how you're thinking about the cadence and the timing for the remaining expansion phases, how you think you're going to break it up? And I ask because it looks like the CapEx guidance is unchanged here.

And so do the remaining phases FID in '26? It sounds like it could be after that.

Yes, great question. I also put your comments behind me while I answer your question. Yes, so the short haul or the Phase 1, pardon me, the short-hauls Alliance Phase 1, that's fully baked into our 2026 capital guidance right now. And with respect to FID timing, obviously, it will be shortly in the future. You'll probably hear a little bit more on April 7 with respect to that. But it's really -- we have some flexibility now to go and be very focused on project execution on this Phase 1 and Phase 2 will be coming really as we start to fill up these next phases.

And like I said earlier to my question to Aaron -- or answer to Aaron was really, it's almost like an on-demand ability for us to grow with our customers. And then also, we'll be we have ordered our pipe, and we have ordered obviously, some of the aboveground equipment like pumps and all that stuff. So that's all part of the process and for the full build-out. So we will just deploy that capital as required.

Praneeth Satish, Wells Fargo.

Maybe just turning to Greenlight. So I understand the commercial details, they're still being finalized. But can you provide any high-level guardrails on maybe the minimum IRR that you'd look to achieve here? And also whether this would be a take-or-pay or cost of service like contract? And then as a follow-up, I guess, if you were to FID greenlight, considering it's got an in-service date pushing into the next decade, would this influence your long-term EBITDA CAGR guidance that you plan to give in April? And I guess, how far out do you think you could reasonably guide if you get this project?

It's Chris. I'll take the first part on greenlight and then maybe turn it over to Cam to talk about guidance. As I mentioned, we're in the middle of negotiations. So unfortunately, Cam provide limited guidance. But what I can say is it's a long-term contract. It's a long-term contract with midstream-like attributes. It looks a lot like our core business, and we're really pleased with the fact that we've been able to do that.

I think when it comes down to it, if you think about it on a build multiple basis, it's going to look a lot like other Pembina greenfield projects that we've been doing under long-term contracts with ancillary benefits down the road as we think about integrating gas supply and the other components into it, looking to drive that down over time, consistent with how we've pursued other projects in our core business.

Yes. I'd just add a little bit of color. Obviously, we have a partner on the file and therefore, a private equity partner and therefore, would need to project finance the project, which when you stack those two things up, you can assume that there would be a low-risk EBITDA profile in order to support a project finance.

And Praneeth, it's Cam. I'll just pick up on one thing that Chris said around the structure. And that is want to reiterate and make sure everyone understands that while the project in its own right is a really interesting project. One of the things that really sells it for us or really gets us excited about it is the integration with the rest of our business. And so you've heard us talk about it, and I think we'll be in a position to talk more about it or more succinctly about it as we get to our April 7 presentation.

But in summary, I mean, there's a ton of integration potential around the Alberta Industrial Heartland. And I think the so what of that is it really starts to take a greenfield-like return profile and really turn it into a brownfield-like return profile ultimately for Pembina. And so that's what gets us really excited about that, and you couple that with a low-risk contract structure.

Growth outlook, obviously, as we've said before, once these types of opportunities get built and certainly has been the precedent on the southern side of the border, they tend to cluster. And I think as we walked our Board through yesterday, we have a ton of advantage in terms of our Alberta industrial Heartland position, everything that comes along with that. And so getting the first one in the ground gives us a huge advantage in terms of building a business out of this.

Got you. That's very helpful. And then you kind of touched on this, but I guess with the Nipisi pipeline, running full. Can you walk us through, I guess, some of the next phases of potential expansion, what that might look like? Is that -- it sounds like you're adding incremental capacity through additional pump stations, if I heard correctly, so at a low CapEx cost.

But I guess how much more of that can you do? And yes, and how should we think about the likely commercial structure here? Is this kind of fee-based or cost of service, some of the expansions that you're looking at?

Thanks. So as Jaret touched on, and he can provide a little bit more color, we are going through some debottlenecks, which can add, as you pointed out, some very reasonable both from a return and from a time-to-market debottlenecks. I think the bigger picture here longer term is we have an opportunity to expand portions of that pipe to add significant capacity.

And so we're right now doing the engineering and continuing to advance the engineering on what that might look like and are having commercial discussions. So we kind of have a two-phased approach. We have the early debottlenecks and then we have a larger potential winning of the pipe. Jaret or Chris, anything there you guys want to add?

I would just add that when we say right now that -- so commercially, we're contractually full for the base asset, but we do have a third party that's going to be making connection in the next few months that will get us to physically being full on a physical basis. And then the debottleneck projects I talked about will give us about 20% to 30% incremental torque on that asset. And that truly is through drag-reducing agent that we use every day on our Cochin pipeline. We're very familiar with how that works, and we'll try to work in installing that and then just some minor horsepower upgrades to get that capacity.

Cameron?

It's Cam. I just want to -- yes. I just want to chime in one more piece here. And I think it's worth noting that the history on this asset is something that we're quite proud of and I think speaks to our business and our commercial attitude overall, which is, obviously, this asset was in a different form of service with a different customer pre-2021, and it was underpinned by a long-term contract at this point. We obviously took out a service because we thought that was the right thing to do in light of the options.

And as we sit here today, the EBITDA that this pipe will generate in 2026 is materially above what it did in the former service under the foundational contracts like to the tune of 50%. So -- and we see significant growth opportunity on top of that. So we're really pleased with our approach to that. And I think it speaks to both the diversity and the optionality in our business.

Maurice Choy, RBC Capital Markets.

Just wanted to start with your capacity to do these projects. You sanctioned a few more projects today. It sounds like you've got at least to Dow and Greenlight projects to come later this year. How would you characterize your remaining investment capacity for the remainder of, say, this decade that you can actually self-fund before your debt-to-EBITDA perhaps moves meaningfully closer to your [$4.25 billion] limit?

Yes. Great question, Maurice. It's Cam here. So I'd say I'd go back to some things we said in the past, which is our track record and our intention has been that we obviously seek to fund capital with cash flow after dividends. And at our level that we're at today, we can think about that as roughly plus or minus about $1.5 billion a year in any given year for round numbers.

And I would say, obviously, this year, we've talked about how it's the peak year for Cedar. We are running a slight free cash flow deficit in 2026. But as we look forward to 2027 and beyond, we begin to generate meaningful free cash flow, again based on our currently sanctioned project opportunity profile.

As we think about larger opportunities and if you want to think about what might come on top of it, like let's dream for a moment around Greenlight and that becoming a reality and multiple opportunities on top of that. I think that's where we start to like the structure that we have today, which is obviously a partner, and we have that in other parts of our business. We like the opportunities within our business and honestly, look at various financing opportunities, which will enable us. But when you do the really simple math around deploying $1.5 billion at historical return multiples that Pembina has done, you can pretty clearly get to a mid-single-digit growth number for Pembina into a very long term.

And so we like that. We have that investment capacity. And not only just the financial capacity, I think we have the execution capacity. Clearly, we have a really solid track record of executing projects on time and on budget, and we're applying that to projects in our core business as well as some of these ones which are on the face of it new for us maybe, but realistically very similar to what we've done in the past in many other ways and taking a similar strategy. So we're managing the risk from that perspective.

Understood. And if I could just finish up by following up on the three streams you discussed on the Greenlight project. I accept that these things are complex, does involve a lot of work. But is there anything material here that is out of your control or your counterparty's control that you see may derail this FID or even the timing of it?

Okay. I'll chime in, and Chris, feel free to add anything. But I think to answer that question, I mean, we are obviously in control of our project and the negotiations with our customer, but we don't control our customers' ultimate decision to FID their innovation center. So there's two pieces to this to the puzzle. And I think that's potentially what you're getting at. So there's obviously our piece and then there's the innovation center piece, and that's not obviously within our control.

Robert Catellier, CIBC Capital Markets.

Just a quick one here on the new pipeline. I'm just curious on the commercial impetus to use a cost of service agreement on the Birch-to-Taylor Expansion.

That's just the legacy of that pipeline. That's how that pipeline has been underpinned for 10 years as soon as since we put it into service. So that's just been the initial contracting, and that's how that pipeline is structured.

Okay. And then I just wanted to turn to LNG and some maybe longer-dated questions here. As you're aware, there's been some media reports about the owners of LNG Canada potentially monetizing their stakes in Phase 1 to -- or partially monetizing in order to fund a Phase 2. And given Pembina had a history of developing export options, I'm just curious on your view or interest in participating in an existing operating LNG facility other than the one you're building.

The second part of that is, if you look ahead and the possibility of a Cedar LNG Phase 2, I'm wondering if there's enough pipeline capacity for Coastal GasLink as is or if it expands to be able to support a Cedar LNG Phase 2 down the road?

Yes. I think on your first question, our understanding from media reports is that it's simply a financing to help fund Phase 2. So that's not something that we're currently participating in. We don't want to be a passive investor in something. So nothing to see from a Pembina perspective on the rumors of a sell-down.

And then on the second part of the question, I mean, we have positioned Cedar to potentially take incremental gas, whether it's the Cedar Link pipeline or a few of the other onshore facilities. And so we would love to do a Cedar 2. But as you pointed out, it's solely dependent on gas supply. And what I would say is right now, our partners at LNG Canada, I think, are pretty focused on getting Phase 1 up and running and engineering Phase 2. So I think until they're through some of those decisions, we won't have a line of sight to that. But we stand ready, willing and able if that's a possibility.

Benjamin Pham, BMO.

Just on the topic of the value chain extensions and opportunities. I mean Pembina has been pretty good at that part of it. You added gas and LNG and then now power. My question specifically on the power side, is that from your advantage now, is that more getting your feet wet through the DC Greenlight opportunity to do a couple of cogens? Or is there a much more broader potentially per scaled growth allocation that Pembina is looking at?

It's Chris. Well, here's what I'd say. I'd say we definitely see the potential for significant growth in the gas-to-power space, in particular, to power data centers. We think that the Alberta market and the Alberta is ripe for growth in that space, and we think we're really well positioned with our current project with our partners. And so for us, it is one of the growth pathways that we're pursuing, frankly, and see an opportunity to grow into.

We're not looking to grow into the merchant power space. That's not a space we're going to go to. You mentioned cogens, I mean, cogens, integrated cogens associated with existing infrastructure and deals are certainly in play. But as far as the meaningful growth pathway, it's really that behind the meter gas to power to support innovation center growth, which we see a lot of potential.

And I'll just add to that, Ben. If you think about -- I mentioned earlier in the call that gas egress is obviously one of the biggest constraints for Canadians to produce condensate and get it up to the oil sands. A full build-out of Cedar is roughly -- pardon me, a full build-out of Greenlight is roughly 75% of the same gas consumption that Cedar would be. So obviously, driving that for our customers, allowing them to fill our value chain in other areas is pretty key for Pembina.

Okay. Got it. And then the value chain side of things, what's Pembina's current view on the oil side of things, whether it's organic or inorganic?

Well, I think from our perspective, we remain bullish on oil growth. As Jaret mentioned a few times in his comments, we're excited about all the potential debottlenecks on the Enbridge system and on TMX for a couple of reasons. That's obviously going to drive growth in the oil sands, which should have a pull on condensate, which should be good for our overall system.

In terms of Pembina's specific investments as it relates to oil, right now, our -- I'd say our two main focuses would be on the Nipisi pipeline, which we've talked to at length today. And then as Jaret also mentioned earlier, the Charlie Lake oil play on our conventional system. So that's really where we're focused from a direct oil exposure, but we are excited and bullish on oil growth in the oil sands and therefore, condensate.

Sumantra Banerjee, UBS.

Just a quick general one on capital allocation. I know you discussed your comments on leverage and the previous question on investment capacity before. But I just wanted to ask if you had any more color you could add on 2026 capital allocation priorities.

Yes, it's Cam here. I guess I'll just reiterate that for 2026, we're really focused on project execution. And so obviously, we are sustaining a free cash flow deficit in 2026. So barring a material change in our business performance, free cash flow is going to be directed towards capital execution in 2026. Outside of that, we expect to continue.

We've had a long track record of a growing dividend, and so anticipate to continue to deliver that in line with our historical trend in 2026 and beyond that. And outside of that, it continues to be just execution all around. Obviously, we continue to reassess things should market fundamentals change drastically. But as we see the world right now, it's sort of steady as she goes in the way we've laid it out in our guidance.

Patrick Kenny, NBCM.

I was just wondering if we can get an update on the Yellowhead extraction opportunity, assuming that the pipeline starts construction here in a few months. Curious what the timing could look like for your extraction opportunity. And then you talked about how tight the condensate market is, but I guess with Redwater 4 coming online so I just wanted to get an update on how you're thinking about a Redwater 5 based on C3+ fundamentals.

Pat, it's Chris. I'll take the Yellowhead question and then turn over to Jaret. So continue to progress Yellowhead, remain excited about that project. expect something this year, frankly, as far as an announcement if we can keep everything on track and get to where we want to get it.

And Pat, with respect to RFS V, I'll just point out, RFS IV is not on yet, but I'm just kidding. It really will come down to incremental frac capacity, either be it regional or in the Fort Saskatchewan area. Pembina, obviously, we believe we have a great product for our customers today. We have unit train capacity. We have ample storage. We have high reliability and availability. And we do -- RFS IV is being executed at a -- on a dollar per barrel basis, significantly better than any other frac expansions in Western Canada right now.

With all that said, NGL frac capacity is really going to grow with new gas egress. So as we get more and more light and see that LNG Canada Phase 2 or other projects becoming real and in service, that's really -- because that gas demand has to find a home, then the NGLs will get extracted. So I kind of always think of it as frac capacity will continue to grow with gas stress constraints getting unlocked. But we are in a tremendous position to be building V.

Okay. Great. And then maybe for Scott, just high level here as it relates to the grand bargain MOU. Obviously, we're waiting for clarity on carbon policy this spring. I was just curious your thoughts on what industry would need to see in order to support projects like Pathways or even your Alberta carbon grid. Just overall, what needs to happen to support that next major wave of oil sands growth?

Well, I think when we just highlighted a couple of times today, we have what I'll say is some very economic and fast-to-market expansions up to 700,000 barrels. I mean those numbers have been floating around slightly higher, slightly lower on TMX and Enbridge. And to me, that feels like the first wave that's going to be unlocked, and we're pretty excited about that. It's great to see the governments coming together and working in a more constructive manner. I think we're pretty optimistic about what could come out of that.

Specifically as it relates to carbon price, I think just as we've highlighted over the last several years, certainty and regulatory certainty will be a huge impact on whether some of these carbon activities go ahead or not. One of the things that we've talked a lot about -- we haven't talked about our ACG project for a while, but that's not because we haven't been working on it in the background and we continue to progress it. But it's hard to contract it when you don't know what the carbon price is.

And I think as we get more clarity on long-term carbon price, that will allow companies to make the decisions that they are going to make around capturing carbon or not. So I'm pleased to see that we're making some progress and optimistic as we move towards April that the governments are going to come together and come up with a plan that works for everybody.

At this time, there are no further questions. I will now turn the call back to Scott Burrows, CEO, for closing remarks.

Thank you for all the questions today and the interest in Pembina. I'd be remiss after talking about all the accomplishments in 2025, if I didn't thank all of our hard-working staff and contractors and communities that we work with. So thank you, everyone. And I think you heard on the call today, we're pretty excited and optimistic about 2026 and beyond. Have a good rest of your day.

This concludes today's call. Thank you for attending. You may now disconnect.