PEMBINA PIPELINE $52.77 - Toronto symbol PPL

PEMBINA PIPELINE $52.77 (Toronto symbol PPL; Shares outstanding: 327.0 million; Market cap: $16.8 billion; TSINetwork Rating: Average; Dividend yield: 3.3%; www.pembina.com) owns pipelines that carry half of Alberta’s conventional oil, 30% of Western Canada’s natural gas liquids (NGLs) and almost all of B.C.’s conventional oil.

Pembina bought rival Provident Energy, which extracts, transports and stores NGLs, for $3.2 billion in 2012.

This acquisition is paying off: in the quarter ended June 30, 2014, Pembina’s cash flow rose 27.3%, to $191.0 million from $150.0 million a year earlier. Cash flow per share gained 20.4%, to $0.59 from $0.49, on more shares outstanding. Pipeline expansions and strong profit margins at Provident were the main reasons for the gains.

Pembina has just agreed to buy the recently built Vantage pipeline, which runs for 700 kilometres and ships NGLs from North Dakota’s Bakken area to Alberta for processing. The company will pay $650 million U.S. for Vantage, which can pump 40,000 barrels of NGLs a day.

The stock trades at 22.5 times Pembina’s forecast 2014 cash flow of $2.35 a share. The company raised its monthly dividend by 3.6% in May 2014, to $0.145 from $0.14. The stock yields 3.3%.

Pembina Pipeline Corporation is still a buy.

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