Pembina Pipeline considers offering subordinated notes

CALGARY - Pembina Pipeline Corporation (TSX:PPL; NYSE:PBA), a $23.75 billion market cap energy infrastructure company, announced on Monday that it is considering an offering of subordinated notes under its short form base shelf prospectus dated December 13, 2023. According to InvestingPro data, the company’s current ratio stands at 0.77, indicating that short-term obligations exceed liquid assets.

The Canadian energy transportation and midstream service provider stated that if a successful offering is completed, it intends to use the net proceeds to redeem its outstanding Cumulative Redeemable Rate Reset Class A Preferred Shares, Series 9 (TSX:PPL.PR.I) and for general corporate purposes. The company has maintained a strong dividend track record, having paid dividends consistently for 21 consecutive years, with a current yield of 5.01%.

The company emphasized that there is no certainty that it will ultimately complete the offering being considered, nor regarding the terms or timing of such a potential offering.

Pembina noted in its press release that the subordinated notes have not been approved or disapproved by any regulatory authority and have not been registered under the United States Securities Act of 1933. As such, the notes may not be offered or sold within the United States or to United States persons.

The Calgary-based company owns and operates an extensive network of assets including hydrocarbon liquids and natural gas pipelines, gas gathering and processing facilities, oil and natural gas liquids infrastructure, logistics services, and export terminals.

Pembina’s common shares trade on the Toronto and New York stock exchanges under PPL and PBA, respectively.

The announcement comes as part of Pembina’s ongoing financial management strategy, according to the press release statement.

In other recent news, Pembina Pipeline Corporation and its partner Kineticor have made significant progress on the Greenlight Electricity Centre, a gas-fired power generation facility in Sturgeon County, Alberta. The project has secured a 907-megawatt allocation through the Alberta Electric System Operator’s large load allocation process, with a Demand Transmission Service agreement ensuring grid connection as early as 2027. In another development, the Canada Energy Regulator approved a negotiated settlement between Alliance Pipeline Limited Partnership and shippers for the Canadian portion of the Alliance Pipeline. This settlement establishes a tolling structure for the next ten years, providing clarity for the delivery of 1.7 billion cubic feet per day of liquids-rich natural gas.

Additionally, Pembina announced a new tolling settlement for the Alliance Pipeline, effective November 1, 2025, through October 31, 2035. The settlement includes revised term-differentiated tolls, expected to reduce existing long-term firm tolls by an average of 14 percent on a volume-weighted average basis. In analyst updates, Raymond James raised its price target for Pembina Pipeline to C$64.00 from C$63.00, maintaining an Outperform rating. The firm cited concerns about Alliance Pipeline, the Dow project deferral, and competition from KEY as factors in Pembina’s recent underperformance.

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