PEMBINA PIPELINE $28.71 (Toronto symbolPPL; Shares outstanding: 292.3 million; Market cap:$8.4 billion; TSINetwork Rating: Average; Dividendyield: 5.6%; www.pembina.com) owns pipelinesystems that transport half of Alberta’s conventionaloil production, 30% of the natural gas liquids(NGLs) produced in western Canada and virtually allof B.C.’s conventional oil output.
In the quarter ended September 30, 2012, Pembina’srevenue rose 171.2%, to $815.3 million from$300.6 million a year earlier. In April 2012, it boughtrival Provident Energy, which extracts, transports andstores NGLs, for $3.2 billion. Provident was themain reason for the higher revenue.
Cash flow rose 62.4%, to $133.2 million from$82.0 million. However, cash flow per share fell6.1%, to $0.46 from $0.49, because the companyissued more shares to pay for Provident.
Provident is a good fit with Pembina because itdiversifies its business and provides additionalgrowth prospects. In 2013, Pembina plans to spend$965 million to expand Provident’s extraction facilities,as well as its own pipelines.
Pembina trades at 15.5 times its forecast 2013cash flow of $1.85 a share. The stock yields 5.6%.
Pembina Pipeline Corporation is still a buy.
