Pembina Pipeline Corporation Announces Renewal of Share Repurchase Program
Pembina Pipeline (TSX: PPL; NYSE: PBA) announced the renewal of its normal course issuer bid (NCIB) to repurchase up to five percent of its issued and outstanding common shares.
This renewal, approved by the Toronto Stock Exchange, allows Pembina to buy back up to 28,976,578 common shares between May 16, 2024, and May 15, 2025. As of May 8, 2024, Pembina had 579,531,577 common shares outstanding.
The repurchased shares will be cancelled. Pembina believes that its shares sometimes trade below their intrinsic value, making repurchases an efficient use of financial resources.
The number of shares repurchased will depend on financial performance, cash availability, and other investment opportunities. Pembina’s previous NCIB expired on March 9, 2024, under which it repurchased 1,197,432 shares at an average price of $41.76 per share.
- Renewal of NCIB allows repurchasing up to 28,976,578 common shares.
- Share repurchase program can potentially enhance shareholder value by reducing the number of outstanding shares.
- Pembina’s previous NCIB successfully repurchased 1,197,432 shares at an average price of $41.76.
- Repurchased shares will be cancelled, potentially increasing the value of remaining shares.
- The financial impact of share repurchase depends on market conditions and Pembina’s financial performance.
- High share repurchase volume may indicate that the company is not using its cash for other growth opportunities or debt reduction.
- Market price fluctuations may affect the repurchase timing and cost.
Insights
The renewal of Pembina Pipeline Corporation's share repurchase program is a noteworthy development for shareholders. This strategy signals that Pembina believes its shares are undervalued and that buybacks could be a prudent use of financial resources. In essence, a share buyback can enhance shareholder value by reducing the number of outstanding shares, thus potentially increasing earnings per share (EPS).
Short-term implications could see a positive reaction in the stock price as buybacks often provide a cushion against market volatility and signal management's confidence in the company's financial health. Moreover, it can be an indicator of robust cash flows and a strong balance sheet, which might appeal to investors looking for stability in their investments.
Long-term effects include improved financial ratios such as EPS and return on equity (ROE). However, it's also essential to consider alternative uses of cash. While buybacks can be beneficial, they might also suggest a lack of profitable reinvestment opportunities, which could be a red flag for growth-focused investors.
It's important to note the company's discretion in executing the buyback program based on financial performance and market conditions, which adds a layer of flexibility. This mitigates some risks, as repurchases can be paused or scaled back if the financial landscape changes or better investment opportunities arise.
In conclusion, the renewal of the share repurchase program by Pembina indicates a commitment to returning value to shareholders, albeit with the caveat of requiring careful execution and market conditions.
Pembina's decision to renew its normal course issuer bid (NCIB) reflects a nuanced approach to managing its stock price and overall market perception. NCIBs are often perceived positively as they convey management's belief that the company's shares are trading below their intrinsic value. This can boost investor confidence and create upward momentum in the stock price.
From a market dynamics perspective, the planned buyback of up to
However, the effect of the buyback program on the stock market should be contextualized within broader industry trends. The energy sector, where Pembina operates, faces volatility due to fluctuating commodity prices and regulatory changes. Investors should monitor these external factors as they can influence the effectiveness of the buyback program and its impact on the share price. Furthermore, comparing Pembina's strategy to its peers can provide insights into whether this move is aggressive or conservative in the context of industry norms.
Overall, the share repurchase initiative is a positive signal, yet it should be weighed against the backdrop of broader market conditions and sector-specific challenges.
Under the NCIB, purchases of common shares may be made through the facilities of the TSX, the New York Stock Exchange and/or alternative Canadian trading systems, commencing on May 16, 2024 and expiring on the earlier of May 15, 2025 and the date on which Pembina has acquired the maximum number of common shares allowable under the NCIB or the date on which Pembina otherwise decides not to make any further repurchases under the NCIB. As of May 8, 2024, Pembina had 579,531,577 common shares issued and outstanding and is therefore permitted to repurchase up to 28,976,578 common shares, being five percent of its issued and outstanding common shares, pursuant to the NCIB. Common shares purchased under the NCIB will be cancelled.
Pembina believes that, from time to time, the market price of its common shares trade at prices that may not adequately reflect their underlying value and the repurchase of common shares for cancellation may represent an attractive use of the Company's financial resources. The actual number of common shares that may be purchased, if any, the timing of any such purchases, and the price at which the common shares are acquired will be determined based on a number of factors, including Pembina's financial performance and flexibility in the context of its financial guardrails, the availability of discretionary cash flow in excess of dividend and capital funding requirements, and the risk-adjusted returns of repurchasing common shares compared to other uses of cash, including accretive capital investment opportunities and debt reduction.
The NCIB will be effected in accordance with the TSX's normal course issuer bid rules and/or Rule 10b-18 under the
Pembina has entered into an automatic purchase plan with a broker which will enable Pembina to provide standard instructions and purchase common shares on the open market during self-imposed blackout periods. Outside of these blackout periods, common shares may be purchased in accordance with management's discretion.
Pembina's prior NCIB for the purchase of up to 27,516,835 common shares expired on March 9, 2024. Under its prior NCIB, Pembina repurchased an aggregate of 1,197,432 common shares at a weighted-average price of
About Pembina
Pembina Pipeline Corporation is a leading energy transportation and midstream service provider that has served
Purpose of Pembina: We deliver extraordinary energy solutions so the world can thrive.
Pembina is structured into three Divisions: Pipelines Division, Facilities Division and Marketing & New Ventures Division.
Pembina's common shares trade on the
Forward-Looking Information and Statements
This news release contains certain forward-looking statements and forward-looking information (collectively, "forward-looking statements"), including forward-looking statements within the meaning of the "safe harbor" provisions of applicable securities legislation, that are based on Pembina's current expectations, estimates, projections and assumptions in light of its experience and its perception of historical trends. In some cases, forward-looking statements can be identified by terminology such as "continue", "anticipate", "will", "expects", "estimate", "potential", "planned", "future", "outlook", "strategy", "protect", "plan", "commit", "maintain", "focus", "ongoing", "believe" and similar expressions suggesting future events or future performance.
In particular, this news release contains forward-looking statements pertaining to, without limitation, Pembina's intention to commence the NCIB and the timing, methods and quantity of any purchases of common shares under the NCIB.
The forward-looking statements are based on certain assumptions that Pembina has made in respect thereof as at the date of this news release regarding, among other things: prevailing commodity prices, margins, volumes and exchange rates; that Pembina's businesses will continue to achieve sustainable financial results and that future results of operations will be consistent with past performance and management expectations in relation thereto; the availability and sources of capital; future operating costs; ongoing utilization and future expansions; the ability to reach required commercial agreements; and the ability to obtain required regulatory approvals.
Although Pembina believes the expectations and material factors and assumptions reflected in these forward-looking statements are reasonable as of the date hereof, there can be no assurance that these expectations, factors and assumptions will prove to be correct. These forward-looking statements are not guarantees of future performance and are subject to a number of known and unknown risks and uncertainties that could cause actual events or results to differ materially, including, but not limited to: the regulatory environment and decisions and Indigenous and landowner consultation requirements; the impact of competitive entities and pricing; reliance on third parties to successfully operate and maintain certain assets; reliance on key relationships, joint venture partners and agreements; labour and material shortages; the strength and operations of the oil and natural gas production industry and related commodity prices; non-performance or default by counterparties to agreements which Pembina or one or more of its affiliates has entered into in respect of its business; actions by governmental or regulatory authorities, including changes in tax laws and treatment, changes in royalty rates, changes in regulatory processes or increased environmental regulation; the ability of Pembina to acquire or develop the necessary infrastructure in respect of future development projects; fluctuations in operating results; adverse general economic and market conditions, including potential recessions in
This list of risk factors should not be construed as exhaustive. Readers are cautioned that events or circumstances could cause results to differ materially from those predicted, forecasted or projected by forward-looking statements contained herein. The forward-looking statements contained in this news release speak only as of the date of this news release. Pembina does not undertake any obligation to publicly update or revise any forward-looking statements or information contained herein, except as required by applicable laws. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.
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For further information:
Investor Relations
(403) 231-3156
1-855-880-7404
e-mail: investor-relations@pembina.com
www.pembina.com
Source: Pembina Pipeline Corporation
FAQ
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