January 06, 2025 [Pembina]- Pembina Pipeline Corporation (“Pembina” or the “Company”) (TSX: PPL; NYSE: PBA) is pleased to announce the closing of Pembina Gas Infrastructure Inc.’s (“PGI”) acquisition of a 50 percent working interest in Whitecap Resources Inc.’s (“Whitecap”) 15-07 Kaybob Complex (the “Kaybob Complex”), effective December 31, 2024. As part of the transaction, Whitecap has entered into a long-term take-or-pay agreement for PGI’s capacity in the Kaybob Complex and committed to an area-of-dedication to PGI for all volumes Whitecap produces out of the area. In addition, Pembina is also pleased to provide an update on infrastructure development in the Karr and Gold Creek areas, under PGI’s previously disclosed transaction with Veren Inc. (“Veren”).
Advancement of Development
As part of the Kaybob Complex acquisition, PGI and Whitecap entered into long-term, take-or-pay contracts at PGI’s nearby K3 facility to further support Whitecap’s liquids-rich developments. Based on Whitecap’s drilling results and updated forecasts, PGI now expects capacity at the Kaybob Complex to be fully utilized and has advanced developments to facilitate volumes at the K3 facility, which are expected to commence in the third quarter of 2025, or approximately one year earlier than originally contemplated.
Lator Infrastructure Update
Concurrent with the acquisition of working interests at the Kaybob Complex, PGI agreed to support future infrastructure development for Whitecap’s Lator area development, including a new battery and gathering laterals (the “Lator Infrastructure”), which PGI will own and is supported by long-term take-or-pay agreements with an area-of-dedication for all volumes produced by Whitecap out of the area. Since the announcement of the transaction, PGI’s outlook for Whitecap’s Lator area growth has continued to improve. PGI anticipates funding up to $400 million ($240 million net to Pembina) for the battery and gathering laterals within the first phase of the Lator Infrastructure, with all gas volumes flowing to PGI’s Musreau facility upon startup in late 2026/early 2027, supporting long-term plant utilization. In addition to the Musreau facility, PGI has two other deep-cut processing facilities in the vicinity that could provide incremental, timely and cost-effective processing solutions to Whitecap. All funding of the Lator Infrastructure is backstopped by long-term take-or-pay agreements based on the capital spent.
Full Pembina Value Chain
All natural gas liquids produced through the Kaybob Complex and Lator Infrastructure developments will flow through Pembina’s downstream infrastructure and are covered under a combination of new and extended long-term transportation, fractionation, and marketing services agreements, as well as an area-of-dedication for future growth. This will support higher utilization of Pembina’s Peace Pipeline and Redwater Complex, including the RFS IV expansion, currently under construction. Further, the arrangement for Whitecap’s Lator area development includes deep-cut processing and ethane-plus NGL transportation and fractionation, which supports Pembina’s ethane supply commitments in relation to Dow’s Path2Zero project.
Gold Creek and Karr Development Update
As part of the arrangement PGI entered into with Veren, PGI committed to fund capital up to $300 million ($180 million net to Pembina) for future battery and gathering infrastructure in the Gold Creek and Karr areas, with approximately $100 million ($60 million net to Pembina) of the amount committed at the time of the announcement. Subsequently, Veren has notified PGI with a request for additional battery infrastructure expected to enter service in 2025. Further scope definition of the initial battery, plus the additional battery infrastructure request brings the total funding commitment to approximately $200 million ($120 million net to Pembina), which will be supported by long-term take-or-pay commitments.
The closing date of the acquisition of the Kaybob Complex, as well as current expectations for funding infrastructure for both Whitecap and Veren, do not materially impact Pembina’s 2025 guidance or capital investment program, previously provided on December 12, 2024.
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