Analyst Note| Stephen Ellis |
Pembina’s 2022 guidance update looks reasonable, in our view. We do not expect any material changes to our forecast, so we will leave our fair value estimate and no-moat rating intact. Pembina’s 2022 EBITDA guidance is a midpoint of CAD 3.45 billion compared with our forecast CAD 3.5 billion and 2021’s expected CAD 3.35 billion. The main drivers of the improvement are a healthy outlook for the Montney and Duvernay areas, new projects placed into service, and higher petrochemicals feedstock demand. Capital spending is expected to be CAD 655 million, slightly lower than our estimates due to savings on the Peace system Phase VII of $110 million. With substantial scope to return cash to shareholders, Pembina outlined plans to purchase up to CAD 200 million of shares in the first half of 2022. With shares trading around our fair value estimate, we don’t think there will be a lot of value created by the buyback presently.