PEMBINA PIPELINE $26.86 (Toronto symbol PPL; Shares outstanding: 288.7 million; Market cap: $7.8 billion; TSI Network Rating: Average; Dividend yield: 6.0%; www.pembina.com) owns pipeline systems that transport half of Alberta’s conventional oil production, 30% of the natural gas liquids (NGLs) produced in Western Canada and virtually all of B.C.’s conventional oil output.
In the three months ended June 30, 2012, revenue rose 70.0%, to $870.9 million from $512.4 million a year earlier. In January 2012, it bought rival Provident Energy, which extracts, transports and stores NGLs, for $3.2 billion. Provident’s contribution was the main reason for the higher revenue.
Cash flow rose 9.4%, to $89.5 million from $81.8 million. However, cash flow per share fell 36.7%, to $0.31 from $0.49, because the company issued more shares to pay for Provident. Lower NGL prices held back Provident’s cash flow in the latest quarter. But over the longer term, the company should be a good fit with Pembina because it diversifies its business and provides additional growth prospects.
Pembina raised its monthly dividend by 3.8%, to $0.135 from $0.13, with the April 2012 payment. The shares now yield 6.0%.
Pembina Pipeline Corporation is still a buy.
