Here's Why Still Holding Pembina Pipeline Stock Is Justified

Core Insights - Pembina Pipeline Corporation (PBA) is a leading energy transportation and midstream service provider in North America, focusing on the transportation, storage, and processing of oil, natural gas, and natural gas liquids [1][2] - The company plays a crucial role in the energy sector by providing essential infrastructure that ensures the timely delivery of energy resources, making it integral to the entire supply chain [2] - Pembina's consistent focus on innovation and operational excellence contributes significantly to Canada's energy security and drives economic growth [3] Financial Performance - PBA reported a solid fiscal third quarter with adjusted EBITDA of C$1,034 million, reflecting a 1% year-over-year increase, indicating resilience in core operations [7] - The company has narrowed its full-year 2025 adjusted EBITDA guidance to a range of C$4.25-C$4.35 billion, showcasing management's confidence in predictable cash flows despite market volatility [7] - The revenue model is predominantly fee-based and long-term contracted, providing reliable visibility for investors [7] Long-Term Contracting Success - PBA has secured long-term contracts on the Peace and Alliance pipelines, locking in extended take-or-pay revenues [8][9] - A recent agreement for 50,000 barrels per day on the Peace Pipeline system has a weighted average term of approximately 10 years, ensuring high utilization rates [9] - Approximately 96% of the firm capacity on the Alliance Pipeline has been contracted for 10-year tolls, further de-risking the base business [9] Strategic Growth Initiatives - Pembina has signed a pivotal 20-year agreement with PETRONAS for 1 million tons per annum of capacity at the Cedar LNG facility, validating its LNG export strategy [10] - The Cedar LNG project is on track for a late-2028 in-service date, with a synthetic tolling structure that allows for market upside [10] - The Greenlight project, a proposed 1.8-gigawatt natural gas-fired power generation facility, diversifies Pembina's customer base and creates incremental demand for its services [11] Market Performance and Risks - PBA has underperformed in the year-to-date period, with a growth of only 7.1%, lagging behind the Oil & Gas Production and Pipelines sub-industry, which grew by 11.9% [12][13] - The reduced midpoint of the full-year 2025 adjusted EBITDA guidance reflects expectations of "a little less optionality" in the marketing business [16] - Major growth projects like Cedar LNG and Greenlight involve long gestation periods and execution risks, which could limit near-term cash flow [18][19]