Mr. Scott Burrows reports

PEMBINA PIPELINE CORPORATION ANNOUNCES SIGNIFICANT MILESTONES ACHIEVED ON CEDAR LNG

Pembina Pipeline Corp. with its partner the Haisla Nation has made significant progress on the proposed Cedar liquefied natural gas project, including securing long-term commercial offtake support and issuing a notice to proceed to Samsung Heavy Industries and Black & Veatch. These critical milestones allow Cedar LNG to initiate the project financing process and the Haisla Nation to commence a process to support its equity contributions in advance of a final investment decision, expected by the middle of 2024.

Highlights:

• Commercial offtake secured: a 20-year take-or-pay liquefaction tolling service agreement with a fixed toll has been signed with ARC Resources Ltd. for 1.5 million tonnes per year; in addition, Pembina has executed an identical bridging agreement with Cedar LNG for 1.5 million tonnes per year; Pembina intends to assign its capacity to a third party following a positive FID, with commercial offtake discussions continuing with multiple other customers;
• Issued notice to proceed: to maintain schedule, an NTP has been issued to the engineering, procurement and construction contractors to continue the engineering, procurement and construction for the design, fabrication and delivery of the project's floating liquefied natural gas production unit;
• Capital costs: Cedar LNG has completed a detailed Class 3 level capital cost estimate of approximately $3.4-billion (U.S.) (gross), including $2.3-billion (U.S.) (gross), or approximately 70 per cent, which is under a fixed-price, lump sum agreement;
• Advancing Pembina's strategic priorities: subject to a positive FID, Cedar LNG is expected to generate annual run-rate adjusted earnings before interest, taxes, depreciation and amortization of $200-million (U.S.) to $260-million (U.S.), net to Pembina, derived from low-risk, long-term, take-or-pay cash flows, together with potential incremental cargos and marketing upside, while further extending Pembina's value chain to reach resilient markets and increasing its exposure to lighter hydrocarbons.

Cedar LNG overview

The project is a proposed floating LNG facility in Kitimat, B.C., within the traditional territory of the Haisla Nation. While the project was originally contemplated as a 3.0-million-tonne-per-year facility, its nameplate capacity of 3.3 million tonnes per year reflects engineering optimization and a capital-efficient option to enhance the project's economics. The project will provide a valuable outlet for Western Canadian sedimentary basin natural gas to reach global markets and is expected to achieve higher prices for Canadian producers, contribute to lower overall global emissions and enhance global energy security. Given the project will be a floating LNG facility, manufactured in the controlled conditions of a shipyard, it is expected that the project will have lower construction and execution risk. Further, powered by BC Hydro, the project is expected to be one of the lowest-emission LNG facilities in the world.

Pembina expects Asian markets to be the key growth driver of long-term global LNG demand, with North American projects well positioned to meet this growing demand. Cedar LNG is competitively advantaged to supply Asian markets due to a low-cost, abundant natural gas feedstock from the growing Montney play and a shorter shipping route, along with providing offtakers with geographic portfolio diversification and the avoidance of Panama Canal shipping delays.

Commercial structure

Cedar LNG has secured a 20-year take-or-pay, fixed-toll contract with ARC Resources for 1.5 million tonnes per year of LNG. As part of the agreement, ARC Resources will supply Cedar LNG approximately 200 million cubic feet per day of natural gas through Coastal GasLink from its production base in the Montney. ARC Resources is a global leader in providing reliable and responsibly produced energy to key consuming markets. To date, ARC Resources has announced long-term agreements with industry-leading LNG projects in Canada and the U.S. Gulf coast. Having ARC Resources participate in Cedar LNG is a testament to the value proposition the project has on a global scale.

"The Cedar LNG project will play a critical role in bringing low-cost, low-emissions Canadian natural gas to the world, while delivering economic benefits to communities and Canadians here at home," said Terry Anderson, president and chief executive officer of ARC Resources. "We are proud to partner with Cedar LNG, the Haisla Nation and Pembina Pipeline who share our commitment to responsible energy development."

Pembina has also entered into an identical bridging agreement with Cedar LNG for 1.5 million tonnes per year of capacity. Commercial offtake negotiations with multiple other customers continue to progress as Pembina plans to assign its capacity to a third party following a positive FID. Having the project fully contracted by investment-grade counterparties allows Cedar LNG and the Haisla Nation to initiate their respective financing processes, which reduce Pembina's exposure to future cash outlays and increase financial assurances, maintains the project's FID and in-service timing, preserves the validity of the EPC contract, and avoids incremental delay related cost escalation risk.

"We are extremely pleased to be working with ARC Resources to deliver Canadian LNG to world markets, given their expertise and track record as a responsible producer of natural gas and knowledge of global LNG dynamics," said Scott Burrows, Pembina's president and chief executive officer. "Working together, the Haisla Nation, ARC Resources and Pembina are committed to making an indigenous majority-owned LNG facility a reality while simultaneously being a leader in environmental stewardship and delivering low-carbon energy solutions."

Baker Botts LLP acted as legal counsel to Cedar LNG with respect to the commercial agreements.

EPC contract

Following the finalization of the commercial offtake agreements and to maintain schedule, Cedar LNG issued an NTP to the EPC contractors to continue the engineering, procurement and construction for the design, fabrication and delivery of the project's floating LNG production unit. Samsung Heavy Industries is a global leader with 50 years of experience in shipbuilding and delivering offshore EPC projects. Black & Veatch brings decades of proven leadership in FLNG performance with a safe, efficient and on-time execution record. The EPC contractors collectively bring extensive qualifications and deep experience to the project.

"Today's achievements mark an exciting time for our nation as we seek to make Cedar LNG -- the world's lowest carbon and first indigenous majority-owned LNG facility -- a reality in the coming months," said Crystal Smith, chief councillor, Haisla Nation. "I am incredibly grateful to our nation, all levels of government, Pembina and all our partners, who have supported our journey to advance a project that protects our environmental and cultural values, while delivering prosperity for decades to come."

King & Spalding LLP acted as legal counsel to Cedar LNG with respect to the EPC contract.

Delivering on Pembina's strategic priorities

In early 2023, Pembina outlined a strategy designed to ensure it remains resilient into the future. Cedar LNG advances each of Pembina's four strategic priorities:

• To be resilient, it will sustain, decarbonize and enhance its business. Consistent with Pembina's well-established commitment to its financial guardrails, Cedar LNG will enhance the commercial model, underpinning its business by expanding the contribution from low-risk, long-term, take-or-pay contracted cash flows from investment-grade counterparties. Additionally, Cedar LNG creates incremental egress for WCSB natural gas, enabling core business growth opportunities, including transportation and fractionation services for associated natural gas liquids volumes. Furthermore, Cedar LNG will afford integration opportunities within the business, including potential marketing opportunities.
• To thrive, it will invest in the energy transition to improve the basins in which it operates. Pembina is committed to developing new business platforms within the low-carbon space that are strategically aligned with, and benefit from, Pembina's core business. The project is expected to be one of the lowest-emission LNG facilities in the world and provide export service for Canadian natural gas, which is expected to contribute to global decarbonization and increase Pembina's exposure to lighter hydrocarbons. To meet global demand, Pembina will transform and export its products. Pembina is committed to identifying and pursuing opportunities to connect hydrocarbon production to new demand locations through the development of infrastructure that would extend Pembina's service offering even farther along the hydrocarbon value chain. Cedar LNG will contribute to ensuring that hydrocarbons produced in the WCSB can reach the highest-value markets throughout the world. This project provides valuable egress to resilient and growing international markets to meet global energy demand and diversifies its exposure to end-use markets.
• To set itself apart, it will create a differentiated experience for its stakeholders. Cedar LNG sets a new standard of responsible and sustainable energy development. The partnership between the Haisla Nation and Pembina is based on shared values and a commitment to meaningful indigenous equity ownership and equal participation. Once in service, it will contribute to the Haisla Nation's long-term economic prosperity.

Capital cost estimate and financing

Cedar LNG has obtained a detailed Class 3 level capital cost estimate of approximately $3.4-billion (U.S.) (gross), including $2.3-billion (U.S.) (gross), or approximately 70 per cent, for the FLNG production unit, which is under a fixed-price, lump sum agreement, and $1.1-billion (U.S.) (gross) related to onshore infrastructure, owner costs, commissioning and start-up costs, financial assurances during construction, and other costs.

The total project cost, including $600-million (U.S.) (gross) of interest during construction and transaction costs, is expected to be approximately $4.0-billion (U.S.) (gross).

Cedar LNG is pursuing asset-level debt financing for approximately 60 per cent of the project cost and has engaged MUFG Bank Ltd. to act as financial adviser on the project financing, with the remaining 40 per cent to be financed through equity contributions from both partners. Simultaneously, the Haisla Nation, along with its financial adviser CIBC, has initiated the financing process to raise capital to finance the Haisla Nation's 20-per-cent equity contribution to the project. Pembina continues to anticipate its equity contribution will be financed from cash flow from operating activities.

Pembina's net investment of approximately $2.0-billion (U.S.) represents a 50-per-cent interest in Cedar LNG, which will be financed through a combination of project debt and approximately $800-million (U.S.) of equity contributions. Pembina has invested approximately $150-million (U.S.) ($200-million) to the end of 2023 and expects incremental net contributions to be approximately $225-million (U.S.) ($300-million) through to the expected FID in the middle of 2024. Further, Pembina was required to provide financial assurances to advance upstream infrastructure projects, with a total of up to $200-million (U.S.) ($270-million) required in 2024. These financial assurances may become payable in the case of a negative FID or will be transferred to Cedar LNG in conjunction with a positive FID.

Once operational, Cedar LNG is expected to generate annual run-rate adjusted earnings before interest, taxes, depreciation and amortization of $200-million (U.S.) to $260-million (U.S.), net to Pembina. The low end of the adjusted EBITDA range represents the take-or-pay commitments whereas the high-end includes potential contribution from incremental cargos and marketing upside.

FID and in-service timelines remain on target

Throughout 2023, Cedar LNG received all material regulatory approvals for the project, including receiving an environmental assessment certificate from the B.C. government, a positive decision statement from the federal Minister of Environment and Climate Change, and a pipeline permit for the Cedar LNG pipeline connection to CGL, as well as an LNG facility permit from the B.C. Energy Regulator.

Cedar LNG will continue to work closely with the federal and provincial governments to advance a best-in-class LNG project that is expected to be one of the lowest carbon emission intensity facilities in the world and meaningfully contribute to the transition to a lower carbon economy. Significant milestones have been completed to date, and the project is continuing to progress toward an FID by the middle of 2024, with an anticipated in-service date in late 2028.

About Pembina Pipeline Corp.

Pembina is a leading energy transportation and mid-stream service provider that has served North America's energy industry for 70 years. Pembina owns an integrated network of hydrocarbon liquids and natural gas pipelines, gas gathering and processing facilities, oil and natural gas liquids infrastructure and logistics services, and an export terminal business. Through its integrated value chain, it seeks to provide safe and reliable energy solutions that connect producers and consumers across the world, support a more sustainable future, and benefit its customers, investors, employees and communities.

Purpose of Pembina: It delivers extraordinary energy solutions so the world can thrive.

Pembina is structured into three divisions: pipelines division, facilities division, and marketing and new ventures division.

Pembina's common shares trade on the Toronto and New York stock exchanges under PPL and PBA, respectively.

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