Good morning. My name is Steve and I will be your conference operator today. And I would like to welcome you to the Pembina Pipeline Corporation’s 2016 First Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be question-and-answer session [Operator Instructions] Thank you. Scott Burrows, Pembina’s Vice President of Finance and Chief Financial Officer. Please go ahead.

Thank you Steve and Good morning everyone and welcome to Pembina’s conference call and webcast to review our first quarter and 2016 results. Joining me today is Mick Dilger, Pembina’s President and Chief Executive Officer as well as Paul J. Murphy, Pembina’s Senior Vice President - Pipeline and Crude Oil Facilities and Stu Taylor Pembina’s Senior Vice President NGL and Natural Gas Facilities. I would like to remind you that some of the comments made today maybe forward-looking in nature and are based on Pembina’s current expectations, estimates, projections and risks and assumptions. Further, some of the information provided refers to non-GAAP measures. To learn more about these forward-looking statements, and non-GAAP measures, please see the Company’s various financial reports, which are available at pembina.com and on both SEDAR and EDGAR. Actual results could differ materially from the forward-looking statements we may express or imply today. I would also encourage listeners to review the news releases, MD&A and financials we issued yesterday, which provide our results for the first quarter 2016, as I won’t go over each metric on today’s call. Before I review our consolidated financial performance and operational results, I wanted touch briefly on a few year-to-date highlights. We achieved record revenue volumes on a corporate basis for the second quarter in a row. We placed approximately $340 million of new assets into service primarily within our Midstream and Gas services segments. We successfully closed $566 million acquisition of Paramount, 250 million cubic feet per day sour gas plant and supporting infrastructure. We announced a feasibility study for an integrated polypropylene facility which Mick will discuss later in the call. We completed three successful public offerings raising $365 million of equity to both common and preferred share sales. We expanded our credit facility by $500 million to $2.5…

Thanks Scott, good morning everyone. I’m going to provide a quick update on some of Pembina’s growth projects. Pembina continues to make great progress on a roughly $5 billion of secured growth projects. So far in 2016, we have placed approximately $740 million of asset into service. Noting none of which contributed to our first quarter results. Starting off with our conventional business, we are pleased to receive the AER approval for the Fox Creek to Namao portion of the Phase III expansion. This was the last major regulatory hurdle for the project and our teams will be out in the field shortly commencing clearing and construction activities. In aggregate, Phase III is now approximately 35% complete. In addition to beginning construction between Fox Creek Namao our focus this year will be on completing all expansion pump stations and the Wapiti to Kakwa Pipeline segments. Phase III continues to trend under budget and on-time for mid- 2017 in service date. Pembina is developing new gathered in laterals to extend the reach of our pipeline network. In aggregate, these investments are expected to require approximately $300 million of capital. The Karr lateral supporting Alberta and Montney was recently completed than is commissioning. The recently announced Altera’s lateral supporting the North East BC Montney is expected to be completed by mid-2017. Numerous other laterals are at various stages of development. Pembina has completed engineering and submitted regulatory environmental applications in support of the North East, BC crude expansion. Partially NGL expansion, Pembina will be constructing approximately 150 kilometers of 12-inch diameter pipeline. Initial capacity of the pipeline is estimated at 73,000 barrels a day and has expected cost of approximately $235 million. The project remains on track for late 2017 in service subject to receiving required regulatory and environmental approvals. The Vantage…

Thanks, Mick. Pembina continues to have access to the capital market. So far in 2016 Pembina raised 420 million preferred shares through two offering and 345 million in common equity to support the Paramount acquisition. To maintain a strong liquidity position, Pembina exercised $500 million of the accordion feature of our credit facility, increasing the funds available to $2.5 billion. As of May 3, our now $2.5 billion credit facility is approximately a $140 million drawn. The incremental cash flows from our assets that were recently placed into service and our substantial capital cost savings both realized and forecast will help to reduce or external capital requirements on a go-forward basis. Pembina continues to actively monitor our financing alternatives ensure an attractive cost-to-capital.

Closing now with clear visibility to near-term high quality cash flow growth, Pembina is well positioned in what has been a rapidly changing world. This positioning is enhanced by a strong balance sheet, tremendous liquidity and sustained access to capital markets. Overall, we are very pleased with the performance of our business so far in 2016 and would look forward to the exciting milestones ahead for our Company. Before I remind everyone in the AGM, just go off script for a second here to talk about the fire situation, it's clearly a huge concern to all Albertans and I guess most Canadians and very concerning to our Company. The situation is far from stable, I am though pleased to report that our people are all fine and out of harms way that our assets for the time being at least are roughly 15 kilometers away from harm. We're taking all necessary precautions that we've made $50,000 emergency donation to the Red Cross and I’m pretty sure, knowing what's happened in the past with Slave Lake that we will make more meaningful contribution once the smoke clears up there for a longer term rebuilding. So before we move on to Q&A with said, just a reminder our AGM is scheduled for Thursday, May 12 at 2 PM at The Met Center in the Calgary and we hope some of you can join us and with that, we'll turn it over for Q&A.

[Operator Instructions] And your first question comes from Linda Ezergailis with TD Securities. Your line is now open.

Thank you. Just wanted to get a bit more color on what the nature of the sand outage was at Resthaven, the financial impact of $5 million was helpful to know. But I’m wondering if there was a process hiccup or something upcoming that needed to be adjusted to ensure that it doesn't happen again at Resthaven or in any of your other facilities?

Linda, it's Stu Taylor. What transpired Resthaven is through our integrity work at the facility, we identified there was mercury presence in the inlet gas stream, it is pooled in tunnel and to protect the faculty we have downstream of the tower, we have braised aluminum heat exchangers which do not react well with the presence of mercury. We elected to shut the facility down at that point in time and have installed what is called mercury recovery bed, so that that mercury can never get through towards the aluminum. That is now in place and operational, at the same time we were doing our expansion. So part of that downtime was commissioning as well, expansion commissioning services. So we fixed that problem and are now in operation.

And with precautionary, there was no damage or anything, but mercury isn't in our spec for that plant and when we saw it was showing up, as a precautionary measure we shut the plant down and undertook the activities that Stu mentioned.

Oka and this wouldn't be an issue potentially in any of your other facilities?

No not at this time. We don't have in some cases the same gas or aluminum heat failures in some case.

Okay that’s helpful to know. And just moving onto your crude oil midstream business, I’m wondering how to think of how this unfortunate fire might affect either your volumes or differential/merchants in that business or is that kind of unknowable in terms of what we're seeing?

There is fire in BC that I didn’t mention and they are having so far knock on wood a minimal impact and then there is course the Fort McMurray situation. We do not market very much synthetic crude, or I don't think we really touched synthetic crude at all. Those streams are controlled and owned and marketed exclusively by Syncrude and Horizon. So it should not have any kind of measurable impact on our midstream business.

Thanks. I'll jump back into queue.

Your next question comes from Andrew Kuske with Credit Suisse. Your line is now open.

Thank you good morning. I guess just in the result season, we've seen pretty continual trend among a lot of the people in the Montney and Duvernay of just declining costs of drilling wells. If you could just give us maybe some color on what you've seen from your customer base and their activity levels and then also any impact you're seeing just on your outlook for costs going ahead on whether from a productivity standpoint outright labor costs. Just some color on that would be very helpful please.

It's Mick Dilger and I’m going to turn it over to Stu in a minute, but yes we've seen some press releases from players. I think Encana put one out that they are down at the half million for those Duvernay wells. And the wells keep getting better and the cost keep dropping and we've been at a minimum foreshadowing and I think we're saying that a lot of these large companies are going in the Duvernay from pilot production into full scale production. That’s our perception and try to preempt I’m sure a subsequent question. We think there is going to be a lot of growth in that area and in terms of the Montney a lot of activity there, if you look at what 7Gen is doing in the deep basin, they are continuing to ramp up their production. So I think our conventional volumes kind of tell the story there Stu.

Yes, I don’t have a lot more to add on the cost, we're continuing to see producers being very efficient driving costs across the board out of the drilling and completion equation. The wells are obviously being high graded, the wells are better than the tight curves that have been forecasted and so we're seeing continued improvements on that side. We are in conversations with many people in both the Duvernay and the Montney looking at incremental facilities in that 2018 through 2021 timeframe and so people are planning taking the results today and we're starting to have conversations about growth opportunity.

Okay that’s helpful and then a related question. Are you seeing any significant changes in product quality and composition coming out that gives us maybe some enhanced opportunities on extraction or processing?

I'll jump in a bit and then maybe Paul can answer. But we are seeing at this point, people are sticking to probably shallow cut processing or dupont processing and what that means is we're leaving a lot of liquids still in the gas stream and just viably so at this point at time. We are very aware of conversations and looking at some of the compositions that there is extraction opportunities into the future. The Duvernay gas as an example has a very high ethane content and lot's of propane and so in the future with the market to face that product again we believe there is deep cutting opportunities behind some of these shallow plants that are being built today.

Okay that’s very helpful. thank you.

Your next question comes from Robert Kwan with RBC Capital. Your line is now open.

Good morning. Maybe if I can just follow on the last answer. If we started to take more liquids out of the stream behind the dupont processing. Can you see as you think about the fractionation capacity in the Fort, do you think that's a logical home for the barrels at part of the conversations you're having or are you seeing interest from producers, whether that's the Montney deep-basin or Duvernay around field frac?

I would say, it depends Robert how far away you are from the Fort. If you are in the Kakwa area kind of from there on in or even up to the Grand Prairie region. I think the products naturally want to come to Edmonton particularly ethane and condensate, I think that's a no brainer. When you get quite far away, say up where Petronas is, it’s a long expensive pipeline right into Edmonton and I would say that some of those guys are less likely to deep cut their gas and probably more likely to leave more NGL in the gas stream and export it as LNG. So it's just economics in terms of where the best place is. But let's just go through the thinking, if there was a frac, well there is a frac at Taylor, but a larger scale frac at Taylor. by volumes any given NGL there was half ethane and the highest value product is condensate and the highest value market is Edmonton. So by volume already 60% no matter what are coming that direction, even if you are way out in further reaches, and then propane and butane are kind of a tossup. What we think the game changers to be there is, if we can build the polypropylene plant and that of course has much higher value we think we can tight more propane to come to Edmonton and so then when you are thinking or in the butane of course I think most of it should come to Edmonton. Then once you are by volume taking all the product to Edmonton, it just makes more economic sense to take it all there. But that's not to say there's not an opportunity to take some to the coast. We've looked at that in detail before we build RFS III we looked at in detail whether we thought a larger frac at Taylor would make sense at that point. We concluded no but with commodities you never know what the values are going to be and where they are going to be. So I wouldn't say it impossible, it hasn't made sense to us so far. Stu.

And the other factor Robert I think is the, as Mick said the cost so far reaches. I mean the Fort has a couple of things that we talk about always is that the Fort has the [indiscernible] storage from the cost perspective of storing the product. And secondly what people want is reliability of service and optionality and we're going to have three fracs running, which we can take product into storage and continue to run with upsets and turnarounds and back you have multiple fracs from the other frac owners, gives flexibility and opportunity to work together. If you are tied to a single field frac, when that frac has a turnaround or outage there isn't a lot choices for services at that point.

Right okay. And if I can just follow the last question here. You had a target on your capital, total capital program on saving about 5%, there were some moving pieces, probably the biggest being actually having Phase III full approval. So with that approval on hand I'm just wondering in your commentary that you're tracking into budget, just wondering overall how you are hitting or how you're looking versus that 5% target?

Yes, Robert, so the 5% target was in the $200 million to $225 million range I think the latest update is right about $160 million to $165 million of cost savings, so we're trending very well towards our goals.

Okay and is that inclusive to your refresh thoughts on Phase III following the full approval?

Yes.

Okay. That’s great. Thank you.

Your next question comes from Steven Paget with FirstEnergy. Your line is now open.

Good morning and thank you. There could be two very different futures for Western Canadian Gas, but as LNG projects may or may not ahead. What shifts if any would you make in your business plan if LNG goes ahead or is postponed to several years?

I kind of think that the way I look at it as the facilities we have now makes sense of LNG in a way it doesn't go ahead and I think it actually just gets better if it does. If we have one or two LNG plants that’s a lot more gas plants that's a lot more NGLs and a lot of more opportunities. So I would say that LNG deliberates additional LNG production and I would do it as more as upside Paul, what do you think?

I agree, I mean from our discussions with producers, our facilities are sort of designed for a non-LNG decision and of course ready to be expanded. Stu, what do think?

Yes, I mean Steven, I think what we'll see is you know the facilities we have today and the plants we have in place right now and the conversations we're having are kind of slow paced wait-and-see LNG kind of future. I think if LNG does any FIDs of LNG decisions we'll see the ramp up of those incremental facilities much sooner. I think it brings more lower economical alternatives, processing will come back to different locations within the province and North East BC to serve that so in the Horn River basins and in North East BC becomes more economic if LNGs, but those are areas where we're not seeing a lot of our focus. I just think it just ramps up sooner of the expansions that we have been considering.

Thanks you guys. Second, it looks like some rich gas maybe going from Northwest Alberta over the top to the oil sands and might not see full liquids extraction. Could Pembina build the liquids extraction facility near Fort Mac to extra the liquids from the gas before it's consumed?

I think a detail. That's been in place for years and I think we did look at that at one point. Did we Paul, I can't recall.

Yes, we did. And you know I mean, frankly hat could be built anywhere. It will just come down the economics of really again getting the products out of Fort McMurray, is there egress or use for them up there.

Yes, well keep in mind that the off gas in the Fort is already proceeded. So they are taking I think believe this Williams that’s taking NLG volumes out of Fort Mac already. So there is NLG egress. So that is certainly possible.

Could NLG be taken out of Fort Mac and then sent to Edmonton and then go back to Fort Mac, because of course they use a lot of propane up there. Would it make sense then to build some sort of propane extraction facilities to sort of keep the propane up there?

Maybe, yes, possibly like a micro frac just for local supply that could make sense.

That’s what Taylor has Steven and basically is on micro frac keep propane in North East BC if it makes sense and there is a market it could done.

Thank you and finally are you looking at any possibly going downstream to more wholesale industrial or residential propane sales in order to have a different market, you're looking at the petrochemical market what about propane use market?

We tend to focus our guardrails on hot high capital utilization low employee type assets where we're trying to maximize the amount invested per employee. So when we look at trucking companies and small terminals and retail distribution and things like that. They don’t really match our current investment criteria. So generally, with the amount of deal flow we're seeing kind of right in our target core businesses those kinds of opportunities don't currently need our investments criteria.

Alright. Thank you Mick and those are my questions.

Thanks Steven.

Your next question comes from Patrick Kenny with National Bank Financial. Your line is now open.

Good morning. First off all the best to guys and your team up north over the coming days and weeks.

Thank you.

Alright just on the crude oil midstream segment, you posted relatively strong quarter especially considering the tough pricing environment there in Q1. Can you just walk us through maybe how the business is able to deliver what appears to be all most utility like contributions under any conditions or should we expect more volatility going forward?

First of all to everyone on the phone. We didn’t plan to have question with that but we've been saying that for some time and no it's not a utility just to be clear, but Bob Jones and that group have built out a set of options that rely on volatility and if you have enough options, something is always going your way obviously something's aren't. and we have observed that if you go back and map our crude oil midstream results over the last number of years and I think we've some slides on that in our Investor Day. It has been a $150 million plus or minus, $10 million or $20 million and so we have mathematically stress tested that matrix of options and the probabilities of that being relatively stable are quite high. We're not going to say it's impossible that they drop and it's also not possible that they make an extraordinary amount of money from time-to-time, but the probability is that that set of options will deliver relatively stable returns.

I would just add Pat that in the lower commodity price environment we see lower differentials, so we also tend to see a contango crude oil market and lower pricing and so we're able to make upside off of storage revenue in that contango market.

Okay, great. Thanks for that color. Maybe less of a softball question here. but on the six of 18 site specifically, commodity prices let's say just remain relatively flat here, given activity levels that you're seeing in the area, do you still see an opportunity to build out that facility over the medium term?

Over the medium term Patrick I think we do. We're having lots of conversations with various Montney players in that Wapiti to Kakwa general area. People are developing the resource there, there is a need for addition processing, the six of 18 site is again with the location and the size we have. We do believe that we'll be progressing conversations and opportunities to build that out and start that process here in the near future.

Okay, great. And maybe just lastly on the PDH opportunity, it looks like you are targeting some clarity here through the end of 2016, will that include any royalty credits from the Alberta government as well. Should you have those - that clarity by the end of the year here?

We've filed our applications with the government. They are in the process, I can assure they are already reading applications and asking additional questions. It's going to be I think from the government perspective they are going to award various parties whatever that looks like and he who builds at the end of the day will beget the credit. And so it's going to be a bit of going through our feasibility study, making decisions post of that being completed to continue with the feed work. And we are excited and we continue to work with our partners and colleagues there to make sure that we are making the right decision and taking the right steps and want to be successful to drive this through. But we should be making a further decision in the September, October timeframe with the completion of feasibility and then pushing forward on our feed study, which would be in mid-2017.

Okay, great Stu. Thanks that’s all I had.

[Operator Instructions] Your next question comes from Ben Pham with BMO. Your line is now open.

Okay, thanks good morning. Wanted to follow on that question the PDH facility and the credits and more clarify, how important is that credit to the project with respect to that moving forward thinking - wanted to check on that.

Ben, let’s say that when we restarted our conversations with PIC, we asked that specifically of them, how important were these credits for them to make the decision and we were very pleased that - they weren't essential or critical. They are important I think more from our government perspective, international business is we are learning, there is an expectation of the jurisdiction of the areas to provide some incentive to attract international investors. So I actually turn it around and now that that’s been offered, I think it's more important to PIC that we do receive those credits to go forward as appose to when it wasn't, when it was just a consideration. So I think it's not essential to have it, but now that it’s there, it's definitely in the minds of everyone that we take a part of that.

I would just add that it's a royalty credit, so Pembina does not pay royalties, producers pay royalties and so you have to align yourself with a producer who gets that credit against royalties and so producers also will share in that benefit and in this market you all know what the prices of propane are. I think they do need support to produce that propane and so I would say that while it's somewhat important for Pembina, PIC joint venture I think it's really important to producers to get that kind of support to keep producing propane.

Okay and have you initiated conversations with potential customers yet? How do you expect that to shape out in terms of the customer bases, is it on [payroll] (Ph) base or looking at [indiscernible] looking at a sort of more concentrated, maybe a little bit more color on that?

We're just in the very being, kick off meetings have been held and that is one of the conversations that one of the activities that we will be ramping up here very, very quickly is to getting to the market, have conversations with the polypropylene customers, distributors as well. So that's very early days, but that is in the work plan.

And I would just add to that that Canada does not produce any polypropylene, it imports 100% of its use, which is significant. And so I think there is a pretty vast Canadian market available to this project.

Okay. And I wanted to touch base back the Fort Mac fires and I think you mentioned you had a facility, 15 kilometer or 50 kilometer away, so it's still far, but it's pretty close to home. I wanted to check in the infrastructure around that area and I know this is a fluid movement here and what is your insurance packages you guys got in place, are you fully protected there and also maybe some comments on business interruption?

If we have damage we have a property policy that will respond subject as deductibles and if we have BI we actually have - if there is interruptions we have two levels of protection. One level of protection is the contracts provide for the customer to continue to pay through a force measure. The second protects of course is our insurance. One of the things to keep in mind about pipelines is they are five feet underground and unless you are at the pump station, you can have a fire burn right over you right away and be un-impacted in even some situations continue to flow depending on the specific circumstances. So unlike surface facilities, pipelines are little bit unique that way. So I’m not really worried about financial loss at all. I’m worried about the safety of our people. I’m worried about residents of Fort McMurray and just encourage everybody who might be listening to make a donation to the Red Cross.

Okay. Thanks for taking my questions. Thanks everybody.

There are no further questions at this time. I will now turn the call back over to Mick Dilger, Pembina's President and CEO.

Well thanks everybody, as we said we're very pleased with our quarter, we're tracking very well longer term to our bolder search I think grow our EBITDA by the metrics we talked about the $650 million to $950 million towards the end of 2017 into 2018. There is nothing to have us believe we can't accomplish that goal, thanks to your support. So with that, we'll sign off and everyone have a safe and enjoyable weekend.

This concludes today's conference call. You may now disconnect.