News Release

Pembina Pipeline Corporation 2011 first quarter results

    Growth plan reaches major milestones

    All financial figures are in Canadian dollars unless noted otherwise.
    This news release contains forward-looking statements and information
    that are based on Pembina Pipeline Corporation's current expectations,
    estimates, projections and assumptions in light of its experience and its
    perception of historical trends. Actual results may differ materially
    from those expressed or implied by these forward-looking statements.
    Please see page 5 for more information. All financial information,
    including comparative figures pertaining to Pembina's 2010 results, has
    been prepared in accordance with Canadian generally accepted accounting
    principles (GAAP), using accounting policies within the framework of
    International Financial Reporting Standards (IFRS). This news release
    also refers to financial measures that are not defined by GAAP. For more
    information about these non-GAAP measures please see page 4.

CALGARY, May 25 2011 /CNW/ - Pembina Pipeline Corporation ("Pembina" or "the Corporation") announced today that it achieved strong financial performance during the first quarter of 2011, realizing cash flow from operating activities of $74.5 million ($0.45 per share), compared to $66.5 million ($0.41 per share) during the same time period the year before. This increase was driven by solid operating results from each of its four business units. Adjusted earnings before tax for the period were $56.8 million ($0.34 per share) compared to $50.3 million ($0.31 per share) during the first quarter of 2010.

In addition, Pembina made significant progress on its growth plans during the first quarter of 2011, nearing completion on projects that are expected to boost earnings and cash flow from operating activities mid-year including the Corporation's new Nipisi heavy oil and Mitsue diluent pipelines.

"We continue to see strong financial and operational results from our existing businesses, and expect that with the completion of our growth projects, these results will continue to improve," said Bob Michaleski, President and Chief Executive Officer. "Pembina is well-positioned to capitalize on the tremendous growth opportunities we have in front of us as we offer additional capacity and enhanced services to our customers in key producing areas of Alberta."

Revenue, net of product purchases, during the first quarter of 2011 was $140.6 million, compared to $125.9 million during the same period in 2010. The increase in revenue was driven by strong performance in each of Pembina's four business units, particularly Midstream & Marketing, which realized a $7.2 million quarter-over-quarter gain in revenue, net of product purchases. Operating expenses were $43.2 million during the first quarter of 2011, compared to $36.3 million during the same period in 2010, primarily due to increased integrity and maintenance work in Conventional Pipelines and higher labour and power costs. Operating margin totaled $97.4 million during the first quarter of 2011, compared to $89.6 million during the first quarter of 2010.

Dividends were $65.1 million during the first quarter of 2011, representing a quarterly payment of $0.39 per share ($0.13 per share monthly), compared to $62.8 million in the first quarter of 2010 (no change in per share payments).

Growth Strategy Update

Nipisi & Mitsue Pipeline Projects

In the spring of 2008, Pembina embarked on two new complementary growth projects in northwestern Alberta: the Nipisi heavy oil and Mitsue diluent pipelines. Together, these two pipelines are expected to expand Pembina's operating system in the vicinity of Whitecourt, Swan Hills and Slave Lake and north to the existing Nipisi storage terminal.

The Mitsue Pipeline, which is essentially complete and on which Pembina began commissioning subsequent to the first quarter of 2011, is ahead of schedule. This new diluent delivery service has a design capacity of 22,000 barrels per day ("bpd") and consists of a combination of 135 kilometres ("km") of new and 120 km of existing infrastructure. When complete, this pipeline will transport condensate from Pembina's Peace Pipeline at Whitecourt in northwestern Alberta to heavy oil producers operating north of the Town of Slave Lake, Alberta. The condensate will be used by area customers to dilute heavy oil prior to transport.

The Nipisi Pipeline, which is expected to come into service on schedule in the third quarter of 2011 with a capacity of 100,000 bpd, is a 190 km heavy oil pipeline that will transport diluted heavy oil from north of Slave Lake to Pembina's existing pipeline south of Swan Hills and on to Edmonton, Alberta for further transport or processing. To date, the Nipisi Pipeline is approximately 90 percent complete with only minor work remaining at the pump stations.

Both projects are on track to meet Pembina's internal budget projections, which estimate the total cost of the Nipisi and Mitsue Pipeline projects to be approximately $440 million with associated estimated annual operating margin of approximately $45 million (see "Forward-Looking Statements & Information" on page 5).

The expected return contribution reflects the base case for both pipeline projects. The Nipisi Pipeline has the potential to be expanded to 200,000 bpd from its current design rate of 100,000 bpd and the Mitsue Pipeline could be expanded to 45,000 bpd from its current design rate of 22,000 bpd. Expansion plans would require regulatory approval, which Pembina will pursue once customer support has been solidified.

"The completion of our Nipisi and Mitsue Pipelines represents a major milestone in Pembina's growth strategy," said Mr. Michaleski. "We will bring much-needed transport capacity to our customers in a region that is undergoing considerable development. And, by using existing infrastructure wherever possible, we were able to achieve this milestone in a reasonable timeframe, with limited environmental impact, and at a lower capital cost."

Enhanced NGL Extraction

Pembina is well into the construction of a new 205 million cubic feet per day ("mmcf/d") ethane extraction facility and the related 10 km pipeline to deliver an ethane mix stream to Pembina's Peace Pipeline. The new plant is expected to cost $75 million and is on schedule for commissioning and start-up in October 2011. The plant is being built on Pembina's existing Musreau Gas Plant site and the pipeline is using existing pipeline corridors and infrastructure where possible, reducing the need to disturb additional land for the project. Pembina has contracted approximately 80 percent of the planned capacity at the facility and expects to contract the facility's remaining capacity under terms designed to provide Pembina with cash flow certainty. Once on stream, the ethane extraction facility is expected to provide Pembina with approximately $12 to $15 million of additional operating margin annually, as well as up to 14,000 bpd of liquids which Pembina will transport on its Conventional Pipelines and for which it will receive additional toll revenue.

"The low natural gas price environment has put a renewed spotlight on the value of NGL," said Mr. Michaleski. "Producers are benefitting from new technologies that are driving production costs down and recovery rates up, increasing the need for gas handling, processing and transportation capacity. With infrastructure in close proximity to these producing regions, our integrated business model means that Pembina is well positioned to take advantage of these opportunities."

Cardium Development

From March 2010 to March 2011, development in the Cardium formation has contributed to increased average daily throughput on the Drayton Valley Pipeline and Peace Pipeline by more than 20,000 bpd each. Subject to receiving regulatory approval, Pembina plans to spend approximately $40 million prior to mid-2012 on projects to strengthen the transportation service options it provides producers developing the Cardium oil formation located in west central Alberta. This includes an investment of approximately $23 million to increase the capacity of an existing 42 km section of pipeline that transports crude oil between Willesden Green and Buck Creek, Alberta and is expected to add an incremental 25,000 bpd to the current capacity of 12,000 bpd. In addition, Pembina plans to spend approximately $6 million to extend segments of its Drayton Valley trunk line and approximately $11 million to debottleneck existing pipeline systems and construct truck terminals in the region. To date this year, Pembina has spent approximately $15 million of the $40 million on the installation of 10 km of 10 inch pipeline in the west Drayton Valley area, the purchase and coating of 42 km of 8 inch pipe for the Willesden Green expansion project, pump station upgrades and producer facility connections.

Capacity additions, tie-ins, connections and most upgrades can be achieved with modest investments, enabling Pembina to cost-effectively transport new production to market for its customers. Pembina is actively marketing its competitive advantages and is working with producers to assess the transportation needs that are expected to arise from these opportunities.

Pembina has been operating in the area of the Cardium formation since the 1950s and its Drayton Valley Pipeline system, much of its Midstream & Marketing business, and segments of its Peace Pipeline System overlay this formation. The Corporation is named after the Pembina Oil Field. Discovered in 1953, the Pembina field is, according to various industry and government sources, estimated to contain up to 10 billion barrels of oil. New horizontal drilling and multi-stage fracturing technology has the potential to cost-effectively unlock a substantial amount of incremental oil production with third-party estimates ranging from 1.5 billion to 2.5 billion barrels.

"New technologies are changing the outlook for the conventional oil industry and creating new prospects for Pembina," said Mr. Michaleski. "We are investing in our strategically located assets to ensure we have adequate capacity on our pipelines and that they meet our integrity standards. Our first priority is safe, reliable, long-term operations."

Conference Call & Webcast

Pembina will host a conference call and webcast on Thursday, May 26, at 8:00 a.m. MT (10:00 a.m. ET) for interested investors, analysts, brokers and media representatives.

The conference call dial-in numbers for Canada and the U.S. are 647-427-7450 or 888-231-8191. A recording of the conference call will be available for replay until June 6, 2011 at 11:59 p.m. ET. To access the replay, please dial either 416-849-0833 or 800-642-1687 and enter the password 65706772.

A live webcast of the conference call can be accessed on Pembina's website at under Investor Centre, Presentation & Events, or by entering in your web browser. Shortly after the call, an audio archive will be posted on the website for 90 days.

MD&A, Financial Statements & Notes

Pembina's management's discussion and analysis, consolidated financial statements and notes for the period ended March 31, 2011 provide a detailed explanation of Pembina's operating results for the three month period ended March 31, 2011 as compared to the three month period ended March 31, 2010. These documents are available at and at

Non-GAAP Measures

Throughout this news release, Pembina has used the following terms that are not defined by GAAP but are used by management to evaluate performance of Pembina and its business. Since certain non-GAAP financial measures may not have a standardized meaning, securities regulations require that non-GAAP financial measures are clearly defined, qualified and reconciled to their nearest GAAP measure. For additional information, see the section entitled "Non-GAAP Measures" in Pembina's management's discussion and analysis for the period ended March 31, 2011, which can be found at and under Pembina's SEDAR profile at

Adjusted earnings

Adjusted earnings is commonly used by management for assessing and comparing financial performance for each reporting period and is calculated as earnings before tax less hedging activities plus share of profit from equity accounted investees (before tax).

Operating margin

Operating margin is commonly used by management for assessing financial performance and is calculated as gross profit less operating expense and product purchases.

Management believes these supplemental non-GAAP measures facilitate the understanding of Pembina's results from operations, leverage, liquidity and financial positions. Investors should be cautioned that adjusted earnings and operating margin should not be construed as alternatives to net earnings, cash flow from operating activities or other measures of financial results determined in accordance with GAAP as an indicator of Pembina's performance. Furthermore, these non-GAAP measures may not be comparable to similar measures presented by other issuers.

Forward-Looking Statements & Information

Certain statements contained in this news release constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forward-looking information" within the meaning of applicable Canadian securities legislation (collectively, "forward-looking statements").

All forward-looking statements are based on Pembina's current expectations, estimates, projections, beliefs and assumptions based on information available at the time the statement was made and in light of its experience and its perception of historical trends. The use of any of the words "estimate", "expect", "may", "will", "believe", "plan", "anticipate", "design", "maintain", "schedule", "potential" and similar expressions are intended to identify forward-looking statements.

By their nature, such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Pembina believes the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon. These statements speak only as of the date of this news release.

In particular, this news release contains forward-looking statements, including certain financial outlook, pertaining to the following:

    -   the estimated future net operating income contributions from the
        Nipisi and Mitsue Pipelines;
    -   capital expenditure estimates, plans, schedules, rights and
        activities and the planning, development, construction, operations
        and costs of pipelines, including in relation to the Pembina Nexus
        Terminal, the Nipisi and Mitsue Pipeline projects, the NGL extraction
        facility at the Musreau Gas Plant site, the proposed expansion plans
        to strengthen Pembina's transportation service options that it
        provides to producers developing the Cardium oil formation located in
        Central Alberta and other facilities and energy infrastructure;
    -   pipeline, processing and storage facility and system operations and
        throughput levels;
    -   oil and gas industry exploration and development activity levels;
    -   Pembina's strategy and the development of new business initiatives;
    -   Pembina's future dividend levels; and
    -   expectations regarding Pembina's ability to raise capital and to
        carry out acquisition, expansion and growth plans.

These forward-looking statements are being made by Pembina based on certain assumptions that Pembina has made in respect thereof as at the date of this document including those discussed under the section entitled "Forward-Looking Statements and Information" in Pembina's management's discussion and analysis for the period ended March 31, 2011 which can be found under Pembina's SEDAR profile at

None of the forward-looking statements described above are guarantees of future performance and they are all subject to a number of known and unknown risks and uncertainties, including but not limited to:

    -   the regulatory environment and decisions;
    -   the impact of competitive entities and pricing;
    -   labour and material shortages;
    -   reliance on key alliances and agreements;
    -   the strength and operations of the oil and natural gas production
        industry and related commodity prices;
    -   non-performance or default by counterparties to agreements which
        Pembina or one or more of its affiliates has entered into in respect
        of its business;
    -   actions by governmental or regulatory authorities including changes
        in tax laws and treatment, changes in royalty rates or increased
        environmental regulation;
    -   fluctuations in operating results;
    -   continued adverse general economic and market conditions and further
        changes thereto in Canada, North America and elsewhere, including
        changes in interest rates, foreign currency exchange rates and
        commodity prices; and
    -   other factors discussed under "Risk Factors" in Pembina's
        Management's Discussion and Analysis for the year ended December 31,
        2010 and in Pembina's current Annual Information Form available under
        Pembina's profile at

Accordingly, readers are cautioned that events or circumstances could cause results to differ materially from those predicted, forecasted or projected. Such forward-looking statements are expressly qualified by the above statement. Unless required by law, Pembina does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Management of Pembina approved the financial outlook contained herein as of the date of this document. The purpose of the financial outlook contained herein is to give the reader an indication of the potential effects that the proposed Nipisi and Mitsue pipelines may have on Pembina's operating results, once completed. Readers should be aware that the information contained in the financial outlook contained herein may not be appropriate for other purposes.

For additional detail and information, please see Pembina's public disclosure documents, including Pembina's annual information form for the year ended December 31, 2010 and Pembina's MD&A for the year ended December 31, 2010, each of which can be found under Pembina's SEDAR profile at