On Nov 28, midstream service supplier and pipeline operator, Pembina Pipeline Corporation (PBA), revealed its plan to invest roughly C$1.5 billion capital in 2014. This target spending – the largest for the company to date – marks a 56% hike over this year’s budget.
Pembina expects to allocate C$670.0 million towards Conventional Pipelines operations in 2014. C$510.0 million is likely to be invested for midstream activities. While C$260.0 million will be entrusted to the Gas Services business, the remaining C$60.0 million will be allocated to the Oil Sands & Heavy Oil operation.
Of the amount due for Conventional Pipelines activities, C$240.0 million will be assigned to the previously announced second phase of the Peace and Northern natural gas liquids (NGL) Pipeline Systems project. The investment is meant to increase the capacity of the pipeline system by 53,000 barrels per day (bpd) by the middle of 2015. Pembina added that another C$215.0 million from the portion assigned is likely to be invested for the completion of the second phase of Low Vapour Pressure Expansion project, also declared earlier. This spending should boost Peace Pipeline’s crude oil and condensate capacity by 55,000 bpd in the latter part of 2014.
Pembina also plans to divide the capital budget planned for midstream business in 2014. While C$145.0 million will be spent for the improvement of infrastructure and service offerings of the company’s crude oil Midstream operations, the rest C$365.0 million is to be allocated for manufacturing the previously declared RFS (Redwater Fractionator and Storage) II.
The news was out in the press release of Pembina last Thursday. The stock opened at $32.12 per share the next day, reflecting a nominal change from the Nov 27 closing price of $32.16 per share.
Calgary-based Pembina presently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, some better-ranked players in the oil production and pipeline sector include Western Gas Partners LP (WES), EQT Midstream Partners LP (EQM) and Spectra Energy Corp. (SE). While Western Gas Partners sports a Zacks Rank #1 (Strong Buy), EQT Midstream Partners and Spectra Energy hold a Zacks Rank #2 (Buy).
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