Pipelines have been in the news. Canada’s largest pipeline company, TransCanada Corporation (symbol TRP on Toronto) has made headlines with its ongoing disagreement with the U.S. government over the completion of its Keystone XL pipeline to the Gulf Coast. The Obama administration blocked the Nebraska section of the project last November, citing environmental concerns. TransCanada has submitted a proposal for a re-routing of the pipeline and is awaiting a new environmental review. Pembina Pipelines had attracted much less attention until it came up with some interesting news of its own this year: the purchase of a firm with significant assets in natural gas liquids (NGL). PEMBINA PIPELINE (Toronto symbol PPL; www.pembina.com) owns pipeline systems with a total length of over 7,500 kilometres. These lines pump oil and gas from fields in B.C. and Alberta to refineries, or feed into major pipelines, such as the Enbridge Pipeline System. Pembina also owns the Syncrude, Horizon and Cheecham pipelines, which pump crude oil from the Alberta oil sands. In addition, the company holds a 50% stake in the Fort Saskatchewan Ethylene Storage Limited Partnership. It also owns the Cutbank Complex, a network of natural gas gathering and processing facilities. [ofie_ad]
Dividend stocks: Pembina pays $3.2 billion for natural gas liquids firm
In the three months ended December 31, 2011, Pembina’s cash flow rose 2.9%, to $66.8 million, or $0.40 a share, from $64.9 million, or $0.39 a share, a year earlier. In January 2012, Pembina bought rival Provident Energy, which extracts, transports and stores natural gas liquids (NGLs), for $3.2 billion. This purchase was the main reason for the higher cash flow. Thanks to the higher cash flow, Pembina raised its monthly dividend by 3.8%, to $0.135 from $0.13, with the April 2012 payment. The shares now yield 5.4%. In the latest issue of Canadian Wealth Advisor, we assess whether Provident Energy is a good fit with Pembina, and what the expansion into NGLs will mean for the company’s operations. We conclude with our clear buy-hold-sell advice on the stock. COMMENTS PLEASE Do you approve or disapprove of the Obama administration’s efforts at blocking the TransCanada’s Keystone XL pipeline? Do you think that TransCanada faces any reprisal risk from environmentalists in the Obama administration for fighting back? Let us know what you think in the comments section below. Click here.
