Pembina Earnings: New Projects and Dow Revival Confront Low-Commodity Spreads

Key Morningstar Metrics for Pembina Pipeline

• : C$56.00
• : ★★

• Morningstar Economic Moat Rating

  : None

• Morningstar Uncertainty Rating

  : Medium

What We Thought of Pembina Pipeline’s Earnings

Pembina Pipeline PPL reported full-year adjusted EBITDA of C$4.3 billion at the midpoint of revised guidance. The 2026 guidance suggests flat year-over-year growth as marketing contributions and the Alliance toll rates take effect. Dow has resumed development of its plant, targeting 2029-30 in-service dates.

Why it matters: Pembina has a few levers for growth as the Canadian market is buoyed by new egress options over the next few years. Drillers for oil to feed expanded pipelines will need condensates that are extracted from natural gas streams.

• Enbridge is moving forward with one Mainline expansion and considering two more. This will create the additional condensate demand. It will also drive higher natural gas liquid and gas production, creating wider spreads and fee opportunities.
• Pembina should be able to capture it in several ways. It can transport and process in its traditional infrastructure, or it can access export markets through Alliance and Cedar LNG, potentially expanding both. Finally, it can reap the rewards of serving in the basin demand growth via Dow or Greenlight.

The bottom line: We are increasing our fair value estimate to C$56/USD 41 from C$53/USD 39 after incorporating the recent results and revising our growth outlook. Our revised fair value estimate sees shares trading in 3-star territory.

• Dow is firming up its expansion and the commercialization of new pipelines and producer agreements, which boosted our fair value. Cedar LNG secured additional remarketed volumes, leaving some remaining capacity uncommitted.
• Our no-moat, Medium uncertainty, and Standard capital allocation ratings remain unchanged.