Midstream energy operator Pembina Pipeline Corporation (PBA) has announced its 2015 capital program. The $1.9 billion budget proposed for next year is the largest in the company’s history. This marks a 36% increase from this year’s capital spending plan of $1.4 billion.
Pembina stated that 58% of the budget – about $1,120 million – would be spent on ‘Conventional Pipelines’. The projects for which these funds would be used include – $25 million for the Phase II Low Vapour Pressure Expansion, $225 million for Phase II NGL Expansion on the Peace and Northern natural gas liquids Pipelines, $550 million for the Phase III Expansion, $240 million on pipeline laterals and the remaining for upgrades, and other business development programs.
For its ‘Midstream’ segment, the company has allocated about 26% of the budget – $510 million. For its ‘Gas Services’ segment, Pembina has allocated about 12% of the budget – $240 million.
Pembina currently has about $6 billion worth of projects under commitment which are expected to come online between this year-end and the middle of 2017.
Management at Pembina stated that a major portion of the capital budget would be allocated for the company’s growth projects, most of which have already secured long-term, fee-for-service commitments. The company further added that it intends to commence operations of fee-for-service assets worth $1.5 billion next year.
Pembina stated that its 2015 growth plans are backed by its strong financial position. The company has generated $900 million through preferred shares in 2013 and 2014, and a total of about $800 million through long-term notes in the same time frame. Further, Pembina has generated about $355 million through Premium Dividend and Dividend Reinvestment Plans, and has a credit facility worth $1.5 billion.
Pembina, based in Calgary, currently holds a Zacks Rank #4 (Sell).
Meanwhile, one may consider better-ranked players from the broader energy sector like Cheniere Energy Partners LP. (CQP), DCP Midstream Partners LP (DPM) and MPLX LP (MPLX). While Cheniere Energy Partners sports a Zacks Rank #1 (Strong Buy), DCP Midstream Partners and MPLX hold a Zacks Rank #2 (Buy).
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