Q3 2025 Pembina Pipeline Corp Earnings Call

Speaker #1: One . Good morning , ladies and gentlemen , and welcome to the Pembina Pipeline Corporation . Q3 2020 results conference call . At this time , all lines are in listen only mode .

Speaker #1: Following the presentation , we will conduct a question and answer session . If at any time during this call , you require immediate assistance , please press star zero .

Speaker #1: For the operator . This call is being recorded on Friday , November 7th , 2025 . I would now like to turn the conference over to Dan Tucunel VP of Capital Markets .

Speaker #1: Please go ahead .

Speaker #2: Thank you . Danny . Good morning everyone . Welcome to Pembina conference call and webcast to review highlights from the third quarter of 2025 .

Speaker #2: On the call today, we have Scott Burrows, President and CEO, and Cameron Goldade, Senior Vice President and Chief Financial Officer, along with other members of Pembina's leadership team.

Speaker #2: I would like to remind you that some of the comments made today may be forward looking in nature and are based on current expectations , estimates , judgments and projections .

Speaker #2: Forward looking statements . We may express or implied today are subject to risks and uncertainties which could cause actual results to differ materially from expectations .

Speaker #2: 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's Discussion and Analysis , dated November 6th , 2025 , for the period ended September 30th , 2025 , as well as the press release issued yesterday .

Speaker #2: All materials are available online at Pembina and on both Cd4+ and Edgar . I will now turn things over to Scott .

Speaker #3: Thanks , Dan . Yesterday we reported our third quarter results , which were highlighted by quarterly adjusted EBITDA of $1.034 billion . We remain on track to deliver full year results within our original 2025 adjusted EBITDA guidance range , and as Campbell discussed in more detail and as we are three quarters of the way through 2025 , we have updated and narrowed our guidance range to 4.25 billion to $4.35 billion .

Speaker #3: As we highlighted in the release yesterday , Pembina continues to execute its strategy , through which we strive to do two things . One , ensure the long term resilience of our business and two , provide investors with visibility to attractive growth through the end of the decade and beyond .

Speaker #3: The execution of this strategy is highlighted by a number of recent developments . First , earlier this week , we were pleased to sign a 20 year agreement with Petronas for 1 million tonnes per annum of Pembina's liquefaction capacity at the LNG facility .

Speaker #3: Petronas is a global LNG industry leader and one of the largest gas producers in Canada . We are very excited to expand our relationship with them and see this as an important development in Pembina's ongoing expansion of its export business .

Speaker #3: Pena previously signed a 20 year take or pay liquefaction tolling service agreement for 1.5 million tonnes per annum of LNG to support the final investment decision on Cedar .

Speaker #3: In June of 2024 and ultimately maintain key project timing and economic parameters within the expectation of remarketing the capacity at a later stage .

Speaker #3: By remarketing our Cedar capacity . We are fulfilling Pembina's commitment to its financial guardrails and ensuring that the company's expansion into the LNG business is done within the risk profile of its existing business , characterized by its predominantly long term , highly contracted fee based cash flow stream .

Speaker #3: We expect to reach definitive agreements for the remaining 0.5 million tonnes of capacity by the end of 2025 . Meanwhile , the project itself remains on time and on budget .

Speaker #3: Construction of the floating LNG vessel , including the hull and topside facilities , remain on schedule and Cedar LNG has significantly advanced . The onshore construction work .

Speaker #3: Pipeline construction is ahead of schedule, including the completion of all horizontal directional drill crossings. This is a major achievement and derisks that portion of the project.

Speaker #3: Second , during the quarter , Pembina and its partner kinetochore had an exciting announcement on the advancement of the Greenlight Electricity Center , a proposed up to 1.8GW natural gas fired power generation project designed to advance Alberta's innovation economy .

Speaker #3: Recent achievements include securing a 907 megawatt power grid allocation , which was subsequently assigned to a potential customer greenlight to enable development of the customers innovation infrastructure development .

Speaker #3: As early as 2027 . Prior to the start up of greenlight in 2030 . In addition , a recently signed agreement with a reputable equipment manufacturer provides certainty of availability and delivery .

Speaker #3: Timing of two turbines to support the approximately 900 megawatt first phase of greenlight and Kinetochore continue to progress towards a final investment decision in the first half of 2026 .

Speaker #3: We see greenlight as an on strategy extension of existing value chain and an opportunity to enhance growth by investing in long term contracted infrastructure with investment grade counterparties .

Speaker #3: While diversifying our customer base . Greenlight would create incremental demand for natural gas and associated liquids production within Western Canada , and we believe Pembina is well positioned to leverage the assets and capabilities of our current core business to further support the project .

Speaker #3: And serve customer demand for gas egress and liquids handling and transportation , most notably , the proximity of Pembina's Alliance pipeline offers a potential accretive expansion opportunity to supply natural gas to greenlight .

Speaker #3: Third , we continue to realize contracting successes that are strengthening the core business in our conventional pipeline business . We now have Recontracted substantially all volumes available for renewal under contracts with expiry dates in 2025 and 2026 .

Speaker #3: In addition to the previous updates , we have provided around various Recontracting successes , we recently signed new transportation agreements on the peace Pipeline system for the renewal and addition of volumes totaling approximately 50,000 barrels per day , with a weighted average term of approximately ten years .

Speaker #3: Approximately 80% of the volumes are currently being serviced today , and 20% are new volumes taking effect in 2026 . Within our transmission business unit , recent shipper elections on Alliance Pipeline have significantly strengthened its long term contractual profile , with shippers taking an average of a ten year toll option on approximately 96% of the 1.325 BCF per day of firm capacity available .

Speaker #3: Fourth , we continue to deliver on our capital projects on time and on or under budget . In total , Pembina and Pembina gas infrastructure are nearing completion on approximately $850 million of projects that are expected to enter service throughout the first half of 2026 , for the new Fractionator within our Redwater complex has progressed to approximately 75% complete .

Speaker #3: It continues to trend under budget , and we have narrowed the expected in-service date to the second quarter of 2026 . Pgis Wapiti expansion , which will increase natural gas processing capacity at the Wapiti plant , is trending on budget and we have narrowed its in-service date to the first quarter of 2026 and Pgis Q3 cogeneration facility is now trading under budget , and we have narrowed its in-service date to the first quarter of 2026 .

Speaker #3: Finally , we are progressing numerous accretive investment opportunities to meet growing demand for pipeline and transportation services . Pamina is well advanced on the development of approximately $1 billion of conventional pipeline projects to enable Wcsb growth and position Pamina to win new liquid transportation opportunities .

Speaker #3: These investments would be supported by a combination of long term take or pay agreements , a cost of service structure , and the land and facility dedications .

Speaker #3: Engineering activities are ongoing and subject to regulatory and board approval. Pembina expects to move forward with a Fox Creek expansion of the pipeline system, a tailored Gardendale project, and a Birch to tailored northeast DC system expansion as well.

Speaker #3: We continue to observe continued growth from the Clearwater area and strong customer demand for incremental services on the pipeline . Following successfully recontracting Nipsey over the last few years , Pamina expects it to be highly utilized in 2026 and is currently evaluating opportunities to increase egress capacity .

Speaker #3: Alliance pipeline previously solicited , non-binding expressions of interest for a new short haul point to point transportation service on the Canadian segment of its system in northwest Alberta .

Speaker #3: The proposed expansion would provide natural gas delivery to a new meter station in Fort Saskatchewan for up to 350 million standard cubic feet per day of incremental capacity , with an anticipated in-service date in the fourth quarter of 2029 .

Speaker #3: Based on the results , Alliance Pipeline is planning to launch a binding open season in the first quarter of 2026 for all interested parties .

Speaker #3: Pembina continues to differentiate itself as the only Canadian energy infrastructure company with an integrated value chain that provides a full suite of midstream and transportation services across all commodities .

Speaker #3: Natural gas , NGL , condensate , and crude oil . Our scope , scale and access to premium North American and global markets uniquely positions us to capture incremental new volumes .

Speaker #3: While unlocking new avenues for growth . I will now turn things over to Cam to discuss in more detail the financial highlights of the third quarter .

Speaker #4: Thanks , Scott . Scott noted . Pembina reported third quarter adjusted EBITDA of $1.34 billion . This represents a 1% increase over the same period in the prior year .

Speaker #4: In pipelines . Major factors impacting the quarter included higher demand on seasonal contracts on Alliance Pipeline . Higher revenue on the Peace Pipeline system due to increased tolls , mainly related to contractual inflation adjustments , higher interruptible volumes on the peace pipeline system , higher contracted volumes on the pipeline , and lower firm tolls on the Ocean pipeline .

Speaker #4: Due to recontracting . In July 2024 and lower interruptible volumes due to narrower condensate price differentials , offset by higher contracted volumes in facilities .

Speaker #4: Factors impacting the quarter included higher contribution from PGE , primarily primarily related to transactions with Whitecap resources . Higher capital recoveries , and higher volumes at the DuVernay complex in marketing and new ventures .

Speaker #4: Third quarter results reflect the net impact of lower net revenue due to a decrease in NGL margins . As a result of lower NGL prices , coupled with higher input natural gas prices at Oxybol , higher NGL marketed volumes , including no similar impact of the nine day outage at Oxybol in 2024 and lower realized gains on crude oil based derivatives partially offset by lower realized losses on NGL based derivatives .

Speaker #4: Finally , in the corporate segment , third quarter results were higher than the prior period due to lower incentive costs driven by the change in share price in the period compared to the third quarter of 2024 .

Speaker #4: Earnings in the third quarter were $286 million. This represents a 26% decrease over the same period in the prior year. In addition to the factors impacting adjusted EBITDA, the decrease in earnings in the third quarter was primarily due to the net impact of the recognition of a gain on the sale of the North segment of the Western Pipeline.

Speaker #4: Higher depreciation and amortization due to a decrease in the estimated useful life of an intangible asset , a share of loss in PGE due to an impairment on certain PGE assets and higher depreciation expense , partially offset by the recognition of a gain in net finance costs and lower losses on the interest rate .

Speaker #4: Derivative financial instruments and commodity related derivatives . And finally , lower share of loss from LNG , primarily due to the impact of hedging activities on the credit facility .

Speaker #4: Total volumes in the pipelines and facilities divisions were 3.6 million barrels of oil equivalent per day . In the third quarter . This represents an increase of 2% over the same period in the prior year , primarily driven by higher contracted volumes on the pipeline and the peace Pipeline system .

Speaker #4: Higher volumes at Redwater and Oxanabol due to no similar outages which occurred in the third quarter last year . Now turning back to the full year .

Speaker #4: As Scott mentioned , we tightened our 2025 adjusted EBITDA guidance range to 4.25 to $4.35 billion , which reflects year to date results as well as the current commodity price outlook for the remainder of the year .

Speaker #4: I'll now turn things back to Scott .

Speaker #3: Thanks , cam . As we have summarized today , we have delivered solid quarterly and year to date results , both operationally and financially .

Speaker #3: We remain on track to deliver full year 2025 adjusted EBITDA within our original guidance range and look forward to providing our outlook for 2026 with the release of our guidance and capital budget update in mid-December .

Speaker #3: As we work successfully to close out 2025 and plan for 2026 . We cannot be more excited about what is ahead for permanent stakeholders .

Speaker #3: Developments within the Wcsb are providing tremendous opportunities to strengthen and grow our business . Thank you for joining us this morning . Please open up the line for questions .

Speaker #1: Thank you . Ladies and gentlemen , we will now begin the question and answer session . Should you have a question , please press the star key followed by the number one on your touchtone phone .

Speaker #1: You will hear a prompt that your hand has been raised . Should you wish to decline from the polling process , please press the star key followed by the number two .

Speaker #1: If you are using a speakerphone , please lift the handset before pressing any keys . One moment please . While we assemble the queue .

Speaker #1: Your first question comes from Theresa Chen of Barclays. Please go ahead.

Speaker #5: Good morning. Thank you for taking my questions. Given your updated guidance range and the mention of the current commodity outlook, can you share what you're seeing or hearing from your producer customers?

Speaker #5: As far as the read through to your pricing outlook , as well as your volumetric expectations , not just for the remainder of this year , but also 2026 .

Speaker #4: Good morning Theresa .

Speaker #6: Jared here . Yeah . Right now you know obviously commodity prices are a little lower . You know , hovering around that $60 WTI .

Speaker #6: So what we're really doing right now is just meeting with all of our customers , really listening to what they their short term .

Speaker #6: You know, in the latter half of the year, at the end of 2025, and what they need for transportation services going into 2026. So, we'll have a much more refined outlook with respect to 2026.

Speaker #6: When we do our our guidance and capital . Press release in December . But right now , we're just really enlisting mode and going to really try to meet our customers needs .

Speaker #3: And then maybe just adding on to that from a from a direct and exposure . Obviously , you know , as we look forward , we're seeing propane prices lower than we saw last year .

Speaker #3: There is some weakness in propane . If you look at where inventory levels are coupled with a strengthening aeco price , which is obviously the opposite of that is good for our customers .

Speaker #3: But a high price does put pressure on our frac spreads . So we are seeing , you know , a little weakness compared to , say , last year in our in our outlook for frac spreads for for Q4 , just given those dynamics .

Speaker #5: Thank you . And in relation to green lighting , your partnership with Kinetochore , what are the next steps from here ? And if Alliance were to be a source of supply for gas , what kind of uplift would you expect ?

Speaker #7: Hey , Theresa . Chris Sherman , thanks for the question . You know , as we as we shared in October , we're continuing towards a first half , 2026 FID schedule .

Speaker #7: We're really continuing our commercial discussions with our customer , continuing our feed work to get our engineering and line in hopes of of that first half next year .

Speaker #7: FID as far as uplift associated with the pipe , I mean , they really are two two separate projects , but we think each can stand alone on its own .

Speaker #7: On its own two feet . And really support solid economics .

Speaker #5: Thank you .

Speaker #1: Your next question comes from Jeremy Tonet of J.P. Morgan . Please go ahead .

Speaker #8: Hi . Good morning .

Speaker #3: Morning .

Speaker #9: Hi . Thanks for all the color today . I want to go to Project Greenlight a little bit more . I believe last quarter there was talk about potential for 2029 entering service in .

Speaker #9: Just want to see I guess latest thoughts on how you see this unfolding . You know with all the , you know , unfolding of the interconnection queue , seems like there might be some concern in the market .

Speaker #9: So just wondering if you could provide a little bit more color there .

Speaker #7: Sure . Again , it's it's Chris . So you know , I think there has been a maybe a little bit of confusion .

Speaker #7: That's the center of the market , right . And I think it's worth taking a second to maybe separate the two projects and clarify what's happening there .

Speaker #7: Our customer is progressing their innovation center , and that's really , you know , where the grid connections rest and the associated DTS arrangements .

Speaker #7: I know there have been some disclosure that that referenced 2030 . Our understanding is that's really an outside date . And they're still pushing towards as early as 2027 for that .

Speaker #7: That first phase , the Innovation Center and the associated grid connections are really our customers projects . And since we assigned or sold our land and secured those allocated those those megawatts to our customer , that's really between them and the Aso .

Speaker #7: But as far as our project , the related project , we're progressing our 1800 megawatts , you know , gas fired power generation facility , the first phase of of 900MW is , as you referenced , planned for 2030 and all that remains on track .

Speaker #9: Got it . That's very helpful . Thank you for that . And just want to touch on the guidance , tightening a little bit .

Speaker #9: Seems like the midpoint moved down just a little bit . There . I was wondering if you could dive in a little bit more on the drivers there .

Speaker #9: And just , you know , what trends you see coming out of 25 into 26 and how we should think about that .

Speaker #4: Hey , Jeremy , it's Kam here . No problem . The first thing I'll mention , and obviously to step back for a second is , I think one of the things we we anchor on is a very stable and resilient business .

Speaker #4: And I would say , you know , notwithstanding a ton of variability in the market over the course of 2025 , we remain squarely in the heart of our original guidance range from a year ago and continue to be anchored on that in a material sense for for the year when we when we looked at our our outlook back in August for the balance of the year , you know , I would say that , you know , based on where we were at that point , we we likely expected , you know , some option value to come in in the second half of the year and particularly the fourth quarter through through the marketing business .

Speaker #4: You know , we we probably expected a little bit more than we've now expected . We've seen . So , you know , on the margin we've we've tightened that guidance range a little bit , obviously to just to give the market a bit of direction in terms of what we're seeing , you know , at the same time , what I would say is that , you know , while it's early .

Speaker #4: The results in the core business outside of marketing are continuing to trend strong . I would say that , you know , from what we're seeing in terms of early results from our October volumes , you know , they continue to be at or exceeding plan .

Speaker #4: So we're seeing a lot of constructive signs outside of the marketing business . At the end of the day , you know , we saw a little bit off , a little less optionality in that commodity business .

Speaker #4: So we tighten it up a bit . But materially , you know , we don't see a lot changing in our business . .

Speaker #9: Very helpful . I'll leave it there . Thank you .

Speaker #1: Your next question comes from Samya Jain of UBS . Please go ahead .

Speaker #10: Hi. Good morning. Thanks for taking my questions. Could you provide more color on the brownfield opportunities you were looking at in the sour gas space?

Speaker #10: How is sour gas infrastructure currently positioned in the basin , and how would Pamina benefit from it ?

Speaker #6: Good morning Sonia Jarrett . Great question . So yeah , as you know , as the demand for condensate as , as oil sands production grows , as oil egress pipelines get bottlenecked out of Western Canada , more and more condensate is going to be required .

Speaker #6: And a lot of that condensate is coming from the montney , which does have associated sour gas with it . PGE through our facility , our K3 facility , River .

Speaker #6: I'm probably leaving a couple off the list , but we have an extensive network of sour gas processing , sulfur recovery and also acid gas injection .

Speaker #6: The Pembina has successfully we're the only entity who's actually built a sulfur recovery unit here in the last , you know , about 25 years .

Speaker #6: And we did that on time and on budget . So I think our project execution , our understanding of operations in that space and the the platform and the footprint that PGE offers , I think we're in a really good spot to enhance the customers needs .

Speaker #6: And continue to allow them to grow that sour gas production in face of condensate demand .

Speaker #10: Okay , great . Thank you . And then on the regulatory side , what progress are you seeing at the federal or provincial level ?

Speaker #10: And are there any policies or changes that will especially impact Tamina in the near term ?

Speaker #3: Yeah , I think overall we're definitely seeing a constructive tone from the federal government . You know , we like what we're seeing .

Speaker #3: We're seeing it . You know , I think on the ground in terms of our interactions as well , you know , I think it's a little too early to comment on what , you know , new projects may or may not come out of that , but certainly a constructive and supportive tone from the federal government .

Speaker #10: Okay , great . Thank you for the color .

Speaker #1: Your next question comes from Erin McNeil of TD Cowan . Please go ahead .

Speaker #11: Hey . Morning , all . Thanks for taking my questions . It's it's great to see Pembina continue to announce contract renewals on conventional pipe .

Speaker #11: The question we always get is on pricing . I can appreciate that you're not going to get into specifics here . But given the emergence of a competitive alternative , how should we think about renewal pricing and your ability to maintain current margins on a per barrel basis ?

Speaker #6: Erin . Yeah , thanks for the question . So our most recent announcement of the 50,000 barrels of recontracting is a tremendous outcome for Pembina .

Speaker #6: And why I want to say that is 100% of those volumes are within the competitive alternative transport area . 20% of those volumes flow to the alternative .

Speaker #6: Today . And upon reconnection , they will be once that project is complete , they'll be flowing on the system and essentially all of the volumes I can tell you maintained current , contracted toll .

Speaker #6: There's obviously a lot of things that go into a transportation agreement . A lot of different things are important to our customers . Tolls , obviously , one of them , but there are other factors that that go into that negotiation .

Speaker #6: And in this particular instance , we were able to maintain that . Obviously in some areas at certain points , we will discount our tolls .

Speaker #6: If it's if it's prudent to do so . But those are very calculated decisions that we make . I would point out that I know we don't externally show this information , but since the since the inception of the alternative pipeline , the EBITDA per barrel of our conventional business actually has been been increasing .

Speaker #6: And the factors that go into that , there's a few of them that I want to outline for you . The first one is we've been extremely focused on lowering our cost structure .

Speaker #6: You know , providing safe , reliable , cost efficient operations through our supply chain strategies and through our continuous improvement and our operational excellence journey that we've been on here internally at Pembina .

Speaker #6: Additionally , as we move west , a further away from Edmonton Market , obviously that garners a higher toll just due to the proximity and the distance into into the market .

Speaker #6: And then thirdly , the majority of all of our contracts on the pipe side have CPI inflators built into them . So . And then finally , what I would leave you with on how we maintain margin is our industry leading project execution and our ability .

Speaker #6: And I said it earlier , safe , reliable , cost efficient operations continue to be a competitive advantage . We basically can allow our commercial teams to go out there , maintain the internal expectations of teams , are bringing our projects on time and under budget , and that really allows them to to have some flexibility with the customers to meet their needs , but also maintain our margin and our internal financial expectations .

Speaker #6: Hopefully that answers your question .

Speaker #11: Yeah , there's more detail than I expected . So so thank you for that . For my follow up , I got to ask on on PGE , you know , you've previously talked about the benefits and the capital efficiency of owning 60% .

Speaker #11: But 100% would also likely have benefits such as perfect alignment on incremental capital . Just given that , you know , you'd have like KKR doesn't have the downstream benefits that you do .

Speaker #11: So again , just to sort of get you on the record one way or another , can you speak to your potential appetite to want to consolidate that remaining 40% ?

Speaker #3: Yeah , I think as a as a general concept , we generally don't comment on specific M&A situations , but what I can what I will say in this specific situation is the fact that we still like the partnership , we like how it was set up , and we believe it's delivering what it was originally intended to do .

Speaker #3: So we're happy with it .

Speaker #11: That's great . Thank you so much . Turn it back .

Speaker #1: Your next question comes from Spiro Dounis of Citigroup . Please go ahead .

Speaker #12: Thanks . Operator . Good morning , team . I wanted to go back to the outlook quickly . So you've got the alliance process out of the way .

Speaker #12: You've now got some Q3 contracting done . So addressed a lot of maybe the larger unknowns heading into 2026 . At the same time you got some tailwinds coming from M&A headwinds from commodity .

Speaker #12: Just curious in the context of that original fee based EBITDA , you provided back in 2024 for 2026 , how do you think a lot of these moving , moving items and factors play into that original range ?

Speaker #4: Thanks for the question . And it's a really good one because I think that's one of the things we're most proud about . You know , as we set out about a year and a half ago and put that guidance range out in our 2024 Investor Day , you know , we have had a lot of confidence in that range .

Speaker #4: And frankly , a lot of confidence in in being in the upper end of that range continue to execute along the same ways that Jared just talked about , you know , through the through the core base business , through the commercialization , as well as some really , really accretive and attractive , you know , sort of bolt on M&A opportunities across our business and obviously , you know , what we've seen is , is on one hand , a couple a couple headwinds , you know , primarily related to the revised Alliance CR settlement .

Speaker #4: But what we've also done , as Jared mentioned , is really taken a keen eye to our business . And looked for opportunities to operate differently , to operate more efficiently , to focus on work that is higher value add versus lower value add .

Speaker #4: And I would say that , you know , without sort of getting ahead of our 2026 guidance outlook , which will come in about a month's time , I would see .

Speaker #4: So we maintain a lot of confidence in obviously achieving that range and achieving a range or a spot in that range which would , you know , reflect something consistent with our own expectations and , and the market's expectations .

Speaker #4: So we feel really good about that . We're working really hard on that . And I think again , you know , we continue to tout the resilience of our business in many ways .

Speaker #4: And the the benefits of the diversity of it , the exposure to multiple commodities , the place that we play in the Western Canadian Sedimentary Basin .

Speaker #4: And we think that performance , you know , even in light of headwinds , which they come in business , demonstrates that .

Speaker #12: Got it a couple of color cam . Second one going back to green light as well . Could you just put a finer point on when we can expect to start to see cash flows from this project to Pembina ?

Speaker #12: And when it comes to the phases , I think this initial phase is about half that total capacity envision . But I know I think you guys have mentioned for potential phases in total , just maybe remind us again how you're thinking about the remaining phase scope .

Speaker #12: And then the timeline .

Speaker #3: So , so the original phase phasing was four phases of 450 . We are now talking about two phases of roughly 900 . So again , we've gone from kind of a first phase of 450 to a first phase of 900 .

Speaker #3: If that makes sense . We would expect , based on our current timeline and current estimations , that cash flow would occur in 2030 .

Speaker #12: Perfect . I'll leave it there . Thank you . Team .

Speaker #1: Your next question comes from AJ O'Donnell of TF . Please go ahead .

Speaker #4: Hey good morning everyone . Maybe if I could just sneak one more in about green light . You know , as the data Center innovation center conversations continue to pick up momentum .

Speaker #4: I'm curious , is there a way to bridge the gap further ? Have you guys explored potential like mobile or modular power solutions ?

Speaker #4: Is that is that something that you guys have looked at before ?

Speaker #7: AJ thanks . Thanks for the question . I mean , we've looked at a variety of of different modes and means to to facilitate this , this business .

Speaker #7: You know , I think from our perspective , what we have in place , the type of facilities and structure we have in place today is scalable and really , really effective for for what our customers are looking for .

Speaker #7: And so that's really what we stay focused on.

Speaker #4: AJ it's cam here . I would just add on top of that , I think our experience has been when we've looked at , you know , other developments as this occurs , you know , once you get the base , the core assets in place , they do tend to cluster .

Speaker #4: And obviously as we think about the advantages that that our solution has for this utilities , access to water , all of the embedded advantages , you know , we do see benefits and we do see that that being an advantage in our offering for the future .

Speaker #4: So we think there's opportunity beyond this . Okay . Great . Appreciate the detail there . And then maybe if I could just go to Cedar real quick , you know , there was a amendment filed for the increase of feed gas capacity from 400 to 500 MCF .

Speaker #4: Curious what the read thrus are there . If you could speak to some of the details and potentially , does that equate to , you know , more volumes or more marketing upside for Pembina ?

Speaker #4: AJ .

Speaker #13: It's Sue Taylor . I'll maybe try to provide some clarity . So when we originally were scoping out the project and looking at the size , we we did permit the project for three Mtpa 400,000,000 cubic feet per day .

Speaker #13: As we were going through engineering design , we've seen an opportunity to , for very minor dollars , increase that capacity from three Mtpa to 3.3 .

Speaker #13: And so we undertook that that spend and and our current we are currently designing and building to the 3.3 and our announced capital actually incorporates that size .

Speaker #13: We knew we would have to go back from an amendment to the permits . And so we did that . And again , there's no change to the scope of the project or any of the capital cost estimates .

Speaker #13: Again , as you go through these projects and you continue to work with engineering , we've seen again , engineers don't design rate to the exact capacity they do add fat in their facilities and infrastructure .

Speaker #13: And so we've looked at since we were going for the amendment , we believe the facility has the opportunity for on on , you know , on days , particularly cold weather days , there will be an opportunity for incremental throughput through the facility .

Speaker #13: And so as we were looking to do the amendment , we did increase that that size of the the amendment and increase it from 400 to 500 .

Speaker #13: Obviously , we need incremental gas supply . These are potential volumes as we go forward . We will be working on that on a go forward basis .

Speaker #13: And pardon me , these will be incremental cargoes . I'm sorry , beyond what we have contracted . We have only contracted the facility to the three Mtpa size .

Speaker #13: So, any incremental gas or incremental cargoes are upside for us.

Speaker #4: That's super clear . I appreciate the detail . Thank you .

Speaker #1: Your next question comes from Maurice Choi of RBC Capital Markets . Please go ahead .

Speaker #14: Thanks and good morning . If I could just start with a question about project execution . When I think about how globally resources are being directed toward supporting the AI sector , and this could obviously lead to inflationary pressures globally in the coming years .

Speaker #14: I know that you've highlighted your project execution track record and capabilities. So, I'm just wondering what you tend to do in these early years before those pressures arrive.

Speaker #14: What actions do you tend to take to get ahead of the curve?

Speaker #6: Morning , Maurice . Yeah . So I think the question was really about , you know , future pressures in , you know , certain areas .

Speaker #6: And , you know , one of the things that we're really focused on in our and we're really aligned with our board and they ask us about is is creating long lasting partnerships with , with tier one contractors and , and obviously indigenous communities .

Speaker #6: So I think that's that's part of our overall strategy is using , you know , not always going for the lowest dollar . But but committing ourselves to , you know , the safest , making sure that we have the A teams we're aligned from the top with respect to our safety messaging and our project execution and the services that will be providing .

Speaker #6: So I think we've we've made material ground with respect to that . I think internally here , I've talked about it before . I think we just have a culture of one team , one Pembina , when we're when we're approaching these projects .

Speaker #6: And I think it's it's something that we've been cultivating and , and we're really good at .

Speaker #14: Thank you . And if I could finish off the question on balance sheet in general again , just , just want to know philosophically what what is the comfortable or optimized cushion for you versus the 4.25 maximum debt to EBITDA ?

Speaker #14: And where do you see that being about a year end and peaking next year due to the LNG CapEx ?

Speaker #4: Hey , Maurice , it's Kam here . Yeah , I think good question . Because we've talked about that and obviously first thing worth reminding everyone is that is a proportionally consolidated number .

Speaker #4: So that reflects not only the debt that we carry at the Pembina level , but debt that that is included in the PGE credit stack .

Speaker #4: Notwithstanding the fact that it's recourse as well as at the moment , construction debt associated with Cedar LNG , which is obviously , again , non recourse .

Speaker #4: But carried at that level . So as we see exiting , exiting 2025 , obviously we see that in the in the sort of the mid threes range because of the timing and really remember that 2026 is the peak investment year for Cedar LNG .

Speaker #4: Obviously without any of the commensurate earnings along with it . So if we go back and remind ourselves of our message from our 2024 Investor Day , you know , we obviously talked about that three year outlook for capital being largely free cash flow neutral with , you know , some some shape to it throughout those three years .

Speaker #4: And this would be consistent . We obviously are expecting free cash flow positivity in 2025 . We saw free cash flow positivity in 2024 .

Speaker #4: And we would expect to see a , you know , some free cash flow negativity in 2026 . However , you know , on the on the long term , we feel obviously that we set our balance sheet up to be able to handle that .

Speaker #4: And obviously as we move through 2026 , we would expect that to moderate back down to the type of range that we've been comfortable with longer term .

Speaker #4: You know , ultimately , you know , that comfort zone is largely three and a half to four times , you know , could we could we go above that .

Speaker #4: You know , it's not where we would intend to go in the near term . So , you know , that's that's the way we think about the balance sheet at the moment .

Speaker #14: Great . Thank you .

Speaker #1: The next question comes from Robert Catellier from CIBC Capital Markets . Please go ahead .

Speaker #15: Rob Catellier from CIBC . A lot to talk about given all your contracting this quarter . Maybe I can start with the mechanics on the synthetic liquefaction agreement with Petronas .

Speaker #15: Maybe you can walk us through that and the circumstances you need to see to generate that incremental value enhancement .

Speaker #3: Yeah , I'll talk I'll talk about the contract in general , and then I'll turn it over to Chris to provide some further details .

Speaker #3: You know , I think as you can appreciate , we're still finalizing the other point 5 million tons . And so , you know , given the status of that , you know , we're going to stay away from specific details .

Speaker #3: But what I can tell you is that we were very pleased with with the outcome of of that negotiation . And maybe Chris , I'll turn it over to you to talk about the contract .

Speaker #7: And then as far as contract structure , it's effectively synthetic tolling . I mean , we are we are taking the obligations we have with Cedar and almost entirely passing those on to our customer .

Speaker #7: And then in addition to passing the terms on , we've been able to capture some participation in the upside of the market . So to the extent the the ARB is , is open and attractive between Canadian Gas and the Far East , we'll have an opportunity to capture some of that upside and participate in that .

Speaker #15: Okay . Just generally speaking , in terms of contracting the capacity at Cedar , have you been able to leverage that with to other business with Petronas or otherwise ?

Speaker #15: And I'm thinking , you know , downstream , you know , gathering liquids , fractionation , etc. .

Speaker #7: Yeah , I mean , I don't think we can get into into the , into that right now , but what we will say is we think we have a very strong relationship with Petronas that we're building on with this arrangement .

Speaker #7: And our hope is to continue to build on that and to do much more together.

Speaker #4: Hey , Robert , it's Kim here . I guess I would just add on top of that that I think obviously , you know , achieving a partnership with an entity of the prominence in the LNG space like Petronas is , is , I think , really important for us .

Speaker #4: And, essentially, really validates Cedar LNG, you know, on a global scale as an LNG project in terms of both the competitiveness of it and the reality of it.

Speaker #4: I think what we would see is , you know , we we already had a relationship with Petronas on the upstream side , you know , dating back to the middle of the last decade in terms of servicing them on on the northeast BC side .

Speaker #4: But we would certainly love to see this as a beachhead to continue to try and expand that. We have a ton of respect for them as an organization.

Speaker #4: You know , I would say likewise that as we as we think about the remaining balance of Cedar and future LNG ambitions , obviously we've had lots of interest from customers in in our core business looking to achieve diversity of market access for their volumes and we'll say that , you know , there is a view that Cedar is a scarce resource .

Speaker #4: And can continue to drive value both for them . But but for Pembina in win win type solutions . So I would say to answer your question pointedly , yes , we are seeing that type of value accretion through the rest of the core business .

Speaker #15: Okay . That's some good detail . And then just a couple of quick ones here . Just given the RFS for revised timeline , it looks like a second quarter in service date .

Speaker #15: I'm wondering how that interplays with the upcoming NGL contract here . And in other words , do you have any available capacity to market there ?

Speaker #15: And will you be able to market it into the upcoming contract year given the servant state seems to be tight with the start of that year .

Speaker #6: Rob Gerard here . Yeah , you nailed it . Like , you know , we're working really closely with with our execution team to bring that on as close as we can to the NGL season .

Speaker #6: Frac capacity is very tight in the fort right now , and so it does give our commercial teams a lot of flexibility to work with customers and bringing them in the closer we can get to April 1st .

Speaker #6: But yeah , you nailed it .

Speaker #15: Okay . And finally , I'm just curious on the Alliance Recontracting and the the one one time option for term extension . You know , I think 96% of your firm capacity is contracted .

Speaker #15: I wondered if there were any contracts there with the marketing affiliates.

Speaker #14: You know .

Speaker #15: Okay . Thanks everyone .

Speaker #1: Your next call comes from Ben Pham of BMO . Please go ahead .

Speaker #16: Thank you. I have a couple of questions on peace in the conventional business segment. I'm wondering if you can characterize or comment on the volume trends in convention this year. It looks to be more in that 2% to 3% context versus the 6% or 7% plus before you slide. A bit of a phased pickup in volumes.

Speaker #16: But could you, could you comment on that? And what's the thought process into 2026 with new contracts and the broader business environment?

Speaker #4: Yeah . Hey Ben , it's Kim , I'll start and then maybe pass it over to Jared . I think one thing I would mention is that obviously , you know , if you if you stand back for a moment and look at our volumes that we reported in our conventionals , those are obviously , as we said before , always the revenue volumes , which reflect our physical volumes , plus take or pay contracts that we have in excess of that .

Speaker #4: And and as you go through and try and look at the quarterly trend , you know , it is it is a bit it is it can be a bit misleading if you are trying to make make meaning out of that on a really narrow time frame , meaning quarter to quarter , you know , if I stand back for a second and look at what our conventional volumes did , you know in , in Q3 versus Q2 sequentially , you know , those volumes would have been up about 4% quarter over quarter .

Speaker #4: So we think if you sort of look at that relative to the industry , if you look at that , relative to other basins , you know that reflects very competitive and consistent growth .

Speaker #4: I think as we sit and look at 2026 , you know , it's it's it's kind of the I'll say the heart of of that budgeting season right now for everybody .

Speaker #4: And I think what we expect to see longer term is continued growth in that single digit range . And that's all supported by obviously continuing demand growth from the oil sands .

Speaker #4: I think we continue to see other infrastructure bottlenecks by by our peers . We continue to see the large operators talking about incremental bottlenecks on their on their projects to to drive incremental supply .

Speaker #4: And we also see incremental gas demand outlet and incremental supply opportunities in the natural gas side , which of course drives the condensate and NGL volumes .

Speaker #4: So longer term , we are very , very confident in the continued growth in that , you know , at least in that single digit level .

Speaker #4: I think in the near term , you know , we have to be mindful that , you know , in the new business environment that our producers operate in , where returns and value are paramount over a simply volume growth .

Speaker #4: You know , they are making decisions to optimize their longer term profiles and taking a longer term perspective . So , you know , in any given year , you know , the growth may be more producer specific versus broad based or it may be simply timing related .

Speaker #4: But but longer term , we continue to see that . And I think , you know , if you look around our major producers , you know , many are demonstrating growth in that same level .

Speaker #4: Some are choosing to defer some . But longer term , we continue to see growth in that single digit level . Yeah .

Speaker #6: And just .

Speaker #4: To .

Speaker #6: Add to that , Ben , you know , I think , you know , some of the recent announcements you would have seen the Ovintiv Nuvista transaction , you know , the Cnrl Chevron transaction , you know , although we talk about , you know , some customer consolidation sometimes puts some compression on our business .

Speaker #6: It's also results in an acceleration of of product being produced . So when Cam talks about specific producers accelerating or staying flat , we have a great relationship with Ovintiv and with Nuvista .

Speaker #6: They're both very large and dedicated customers to Pembina . And so , you know that transaction Ovintiv talked about accelerating , you know , production and drilling and those types of things on those lands because they have available capacity , you know , that's that stuff gets us excited .

Speaker #6: You know , seeing those consolidations , it's it's sad to see one of our great customers go , but it's also exciting to see them talk about filling the gas plants faster .

Speaker #6: With 600 million a day of incremental gas processing , or , sorry , of 600 million of contracted processing , PGI , for example , has approximately services , about 80% of that .

Speaker #6: So super excited to see those types of things . And really we got to listen to our customers and kind of go through this .

Speaker #6: But overall, the macro trend is that oil sands are growing. Condensate demand is growing as well. The import pipelines are essentially getting really full, so that condensate has to come domestically.

Speaker #6: And we're in a great position to support our customers to get it to Edmonton and up to the oil sands .

Speaker #1: There are no further questions at this time . I will now turn the call back over to Scott Burroughs , president and CEO .

Speaker #1: Please continue .

Speaker #3: Great . Thank you everyone for your time and we look forward to updating you in the middle of December with our 2026 outlook .