Good morning. My name is Adam, and I will be your conference operator today. At this time, I would like to welcome everyone to the Pembina Pipeline Corporation 2012 First Quarter Results Conference Call. [Operator Instructions] Bob Michaleski, you may begin your conference.

Thanks, Adam. Good morning, everyone, and welcome to Pembina's conference call and webcast to review our first quarter 2012 results. I'm Bob Michaleski, Pembina's Chief Executive Officer. And joining on the call today are Peter Robertson, our Pembina's Vice President of Finance and Chief Financial Officer; Glenys Hermanutz, our Vice President of Corporate Affairs, Scott Burrows, our Senior Manager Corporate Development and Planning. Our agenda today follows our standard process. I'll review the first quarter 2012 results we released yesterday, spend a few minutes providing an update on recent developments, including our acquisition of Provident Energy, and then open up the line for questions. I'd like to remind you some of the comments made today may be forward-looking in nature, and are based on Pembina's current expectations, estimates, projections, risks and assumptions. I must also point out that some of the information I provide refers to non-GAAP measures. To learn more about these forward-looking statements and non-GAAP measures, please see Pembina's various financial reports available at pembina.com in both SEDAR and EDGAR. Actual results could differ materially from the forward-looking statements we express or imply today. I want to start off by saying that this was one of our strongest quarters in terms of both operating and financial performance. I am very pleased that we delivered these results while working to complete the acquisition of Provident, which closed on April 2, and while obtaining our listing on the New York Stock Exchange. While we've been a combined company for just over a month now, I should point out that because we closed the transaction subsequent to the end of the first quarter, my synopsis, of our first quarter results will refer to Pembina and Provident as standalone entities. Future quarters will include a consolidated view. I'll touch base on how…

[Operator Instructions] Your first question comes from the line of Linda Ezergailis.

I have some questions with respect to the conventional segment. I'm wondering what the nature of the operating efficiencies were in the quarter?

Well, I think it's fair to say that every quarter, every year, we look at ways of improving and streamlining our operations, but I'm saying, there's nothing really specific here, I mean, that's just the mindset for the company. I think what I can say for the quarter, compared to, say, the fourth quarter last year, operating costs were lower, and largely driven by the timing of our integrity-related expenditures. And so the guidance I would give will suggest for the balance of the year that we probably expect integrity-related costs in the second quarter probably, not to be much higher than the first quarter. But the third and fourth quarters, we'll be spending much more money on integrity. And so I think that's really, again, in line with our guidance in the past that suggests that, as we're starting to ramp up volumes on our pipelines, we feel it's necessary to accelerate the integrity, the work on those pipelines because they will be operating at pressures that in some cases, they've never seen. So we are front-ending those expenditures. I think the timing in Q1 and likely Q2 will be lower than we'll be experiencing in Q4, but I would expect -- I certainly would suggest that you would normalize the expenditures for the first quarter, and say, they would be the same for the balance of the year.

And just a follow-up on your Marketing business, an excellent quarter from that segment as well. I know on the last call, and well, you qualified your statement that it was too early in the year, but you suggested that perhaps, 2012 could be similar to 2011, and yet you enjoyed a 26%, year-over-year increase in your EBITDA. How might we think of the balance of the year, assuming the strip forward, future prices don't move around that much for your Liquids business?

You know what, I think we did experience -- there were some rather interesting pricing differentials taking place in the first quarter, which have extended into the second quarter, but not to the same extent. I think 2012 is still going to be a fairly strong year. Again, I would not simply extrapolate the results for the first quarter, but 2012, I think will look as 2011, possibly a bit better. Because I think the one factor that is obviously developing is we're seeing more volumes coming our way in 2012 than we did in 2011. So results, I would expect it to be a modest improvement. But we'll -- as we go through the year, Linda, we'll be able to give you better insight as to what's developing in the year at that area.

Great. And I appreciate your updated hedging disclosure on the legacy Provident asset. I'm wondering if you have put any thought to whether you will change your hedging strategy, or if at this point, you will -- it appears that you will continue to -- the legacy Provident hedging strategy?

Yes. Linda, I think it's fair -- I mean this is still early innings for us. I think that the Provident Management Board put in a hedging policy, and I think at this stage, it's fair to say that Pembina's going to carry on with that established policy. I don't see any reason for us to change it at this time.

The next question comes from the line of Juan Plessis.

With respect to the Musreau facility, when do you expect that to come back online?

Juan we -- right now we are in the process of lining up a replacement gearbox, and we actually ordered a new gearbox as well. That new gearbox won't be in for some time, but the replacing gearbox we'll have to test it and so on. But we think, probably, sort of earliest will be 4 weeks, but were saying 4 to 6 weeks, and it should hopefully be back in service.

Okay. And are there any more acquisition-related costs to be recognized outside of the $21 million that you expensed in the first quarter?

Well to be clear, we've got -- $8 million was related to the prepayment of our secured notes, so the balance is related to the Provident-related acquisition costs. I expect there'll be some modest cost that will come through the second and third quarters of the year, but they're not going to be significant, certainly, not anywhere near the magnitude. I think they're probably, looking let's say, $2 million to $3 million.

Your next question comes from the line of Carl Kirst.

Just a clarification on the Musreau outage with the replacement gearbox, in saying the 4 to 6 weeks, with no one sort of being, shut in, that's not expected to have any financial impact?

Well, Carl, we are being impacted by -- we're saying roughly, almost $1 million a month in Gas Services and probably close to the same in our Conventional business unit while that facility is down. So there's going to be a general financial impact, it's modest. We do have business interruption insurance in place, but it is subject to a 45-day deductible. So we won't, at this stage, if we get the gearbox in place and back operational, it's going to have a modest financial impact on us, but nothing of significance between the Gas Services business unit or the Conventional business unit.

Okay, and that's very helpful, I appreciate that. And then, Bob, correct me if I'm wrong, you stated in your comments that we might be in a position in the next several months to get more specific on some future growth activities, and not to perhaps put the cart in front of the horse, but can you give us the nature of that as far as -- is this, what we might say, further penetration in the identified unrisked backlog of the 2 companies? Or is this even new business that is outside of what was previously seen?

No. I think it's within the scope of the projects we've been working on, Carl. I think as each month passes, of course, you get closer to negotiations with your customers. And I think the projects we've talked about near term, the #1 project that we would have on our books now, now that we've acquired Provident, is to really to look at building a new fractionator at Redwater. And of course, so when I talk about getting closer, at this stage, we want to ensure that we've got customers in place to backstop the volumes that we'd been going through a new fractionator, so that's the type of conversation that we would have underway right now, Carl. So it would be entirely consistent with where we've been in the past, except that we're just progressing as time passes on each of these. And in particular, I think it's fair to say that we're feeling much more confident in our ability to be able to talk about our fractionator at an existing facility where there's existing infrastructure, as opposed to building a brand new fractionator ourself. So this is -- this just -- this kind of accelerates that whole process.

Perfect, and I appreciate the color. And then last question, if I could, and this just sort of is more, I guess, strategic as we look at over the next couple of years, and there continues to be momentum building for LNG export on the West Coast. Would Pembina look to participate in that solely from the increased activity on the gathering processing side, or would there even be thoughts of going after a big-inch gas line?

Carl, I think it's fair to say, we've got unrisked capital opportunities that are approaching $4 billion. And those are -- generally, those opportunities are within the areas that we already have our focus. And I'd like to think that we continue to probably maximize value by focusing in the areas that we currently have operations and expertise. So I'd like to think that, that will be our priority over the next 3 to 4 years, is developing out those, or proving out those unrisked development opportunities without looking at getting into LNG exports or other larger diameter pipelines.

The next question comes from the line of Matthew Akman.

A couple of questions on your development projects. First on Saturn, does the further development of it and ultimate construction depend on any more contracting of it? Is a contingent timeout at all? Or is it really just other kinds of environmental permits and so forth?

It's really regulatory environmental, Carl (sic) [Matthew]. I think we haven't place all the contracting that we need for that facility. To add some color to it, I think that there are process here that we found that there is significant demand for additional processing capacity in that area. So there is a chance that someday, we might be talking about an expansion in that facility, but that will be for the future.

Okay. And related to the terminals, there were some discussion about further development of the Pembina Nexus Terminal. Now that you've acquired Provident, I'm just wondering about the pace of development there versus say, utilizing the Provident Terminal assets in around Fort Saskatchewan, instead it's a major jumping off point for future growth in terminals in that area.

Yes. I should maybe clarify, Matthew, if it wasn't clear. When we talked about terminals, we're also talking about development of full-service terminals. I think we have 4 projects that are underway in our Midstream & Marketing group right now with respect to terminal development. We all are still looking at building out on PNT because it's really -- there we handle crude oil primarily, crude oil condensate. And whereas with the Provident Terminals and so on, they handle other natural gas liquids. So it's almost like, on the one hand, we're going to look at building out on the crude oil condensate opportunities that we see at PNT, and we'll continue to look at developments and movements of Redwater natural gas liquids. So I kind of see those as being a little bit like 2 different terminaling opportunities.

Okay, great. So you'll pursue growth at both?

Yes.

The next question comes from the line of Robert Kwan.

Maybe, if I can just build on the PNT and Redwater. It sounds like, maybe there has been a little bit of thought at least, as you integrated in the Provident assets, and you mentioned you've got the Southern Lights connection up to PNT. Do you see then the need to connect Southern Light right through the Redwater, or given it sounds like PNT is going to be kind of just crude oil condensate launching pad, is that something -- because it sounds, or it sounded like from Provident that, that was something that going to be a difficult connection, so is that something you still want to build?

Well, we'll take it one step at a time, Robert. I think right now, we're trying to build out from PNT and you have that as kind of a launching pad for condensate distribution to oil sands-related project, as well as the Nipisi project. So that's our initial focus. We'll look at other opportunities with respect to the combination of Provident to see what we can do there as well. Because in particular, if we get to build a new fractionator, there will be condensate coming off that fractionator, which again, will be used as a diluent source largely for the oil sands, we believe. And so we look at ways of interconnecting or combining our distribution capability out of either Redwater or PNT.

Okay. And then I guess, just on the funding plan and the work you guys did with the credit rating agencies to get them on side for just that one notch downgrade. Just wondering as part of those discussions with the rating agencies, what was contemplated with respect to how you expect to finance the funding plan to the remainder of this year and specifically, the equity needs??

I'll let Peter address that question, Robert.

Robert, I think, certainly, we indicated that on future projects, we would generally finance those on a 50-50 basis, i.e., almost ignoring the current state of the balance sheet, the go-forward projects would be 50-50 debt and equity. We'll have to see how much we spend in our current forecast, it's the $700 million in CapEx this year, and how strong the DRIP program is. If it continues that way it is, we'll be generating the $200 million in the DRIP for 2012 and likely '13. And so it remains to be seen if we require any additional equity in 2012 that will depend a lot on how much of our capital program we actually get done in 2012, some of it may well run into first and second quarters of 2013.

So is it fair to say -- it sounds like from what you're saying, Peter, that the potential equity plan is back to where it was prior to Provident, that depending on the spending, it was either going to be potential, meaning later this year. But if the spending was moved into 2013, it could be a first half of '13 thing? But you still saw the need for external equity?

In a way, yes. I mean, the Provident CapEx is fairly minor. It's about a -- estimating $150 million for 2012. So it's -- it doesn't have a big impact on our current plans for 2012.

Okay, that's great. And then just a last numbers question, I apologize if you gave this earlier in the call. I didn't see, was there an exit rate for the conventional pipeline volumes, I think you gave us a similar number in Q4.

You know what, we probably gave you that number in Q4 because we knew the number. But at this stage, Robert, we're continuing to see requests for new connections. We're seeing increased truck volumes coming our way. I think that right now, where we're at is a pretty solid position. [indiscernible] the second quarter typical experience road bans, so the second quarter like to be, will be a little soft. So it's hard to say where we'll be at the end of the year. But I think that there's a good chance that we'll be able to average at levels that will actually be slightly higher than the what we experienced in the first quarter, particularly as we put in excess capacity at some of our pipelines.

Okay. So kind of in the normal seasonal softness for Q2, but you're not seeing any abnormal trends on volumes?

No. I think that's still been very strong, Robert, in terms of requests for new connections and we're pretty enthused about what we're seeing.

Your next question comes from the line of Ken Kramer. Your next question comes from the line of Robert Catellier.

Most of my questions have been answered, but just on the full-service terminals, do you have a sense of how large that business can grow, either by the number of terminals, or how much capital might be put to work there?

I think roughly, Robert, I think we've identified something like 15 possible locations, about 3 a year. And so in terms of cost, I'd say, maybe $30 million per year for the next, say, 5 years, round numbers.

Okay. And then just finally following up on the question about the credit rating agencies and what you committed to, were there any commitments made on the payout ratio side?

No, not at all, Robert. We were -- I think we had pretty good start to the year, and we think our payout ratios will probably -- well, they'll probably move up a bit as we get into additional capital expenditures in the balance of the year. But again, that's going to be -- could be offset to a certain extent, by what we're seeing in terms of new activity too. So no, there's no sort of commitments, or expectations by the rating agencies with respect to payout ratios.

The next question comes from the line of Steven Paget.

Would it be possible for you to give a breakdown on the conventional loss throughput between the Alberta System and Western System, or?

I don't know if we've got that, Steve. I don't think it's much different than it has been until recently, and I don't know if we disclosed that in the past, Scott.

Yes. The throughput on the BC system was about 22,000 barrels. So 5% of the overall throughput.

Okay, Scott. Second question, are you offering any integrated services already, now that you have Provident's assets? And can you give us an example what that integrated services might look like?

Well, just generically, Steven, I think what we can say is that, we've got into gas processing. We are providing them gas processing, and then we went into deep cuts and we are providing deep cuts processing and then we were building, gathering and storage, to handle the liquid out off of a processing facility, and then we're transporting those liquids to market in say, the Edmonton region. So in terms of service offerings now, we can also talk about fractionation for our customers and storage and distribution. And I think about one element that still needs to be addressed is what you do with the ethane, so I think again, we have to look at making some arrangement with the ethane consumers in the province that will give our customers some comfort that they're also going to address their ethane requirements. So I think it is -- it's developing Steven, as a full-service offering for our customers. At the same time, we are consumers of some of those products that will come off of the fractionator. So it's time to get there very nicely, I think, in terms of the conversation that we can have with our producers and even look at utilizing some of those services ourselves.

Okay. You mean in a marketing way?

Yes.

Okay, okay. Could you please break down the $4 billion in unrisk development opportunities between your 4 divisions?

Well, I could say roughly, I'll give you some rough guidance. Oil sands would be $1 billion to $1.5 billion. Gas processing and fractionating would be roughly $1 billion; conventional, it kind of depends on the extent of the developments we go through in further expansions, but we could be looking at somewhere from $500 million to $700 million. And then Midstream & Marketing, it's generally pretty modest, but we will see the full service terminal development, as well as potentially, other storage development opportunities. And so it would make up kind of the balance, Steven.

Okay. Can you comment, please, on how much of the capital costs at Saturn have been locked down at this point?

You know what, I don't have any information, Steve. And I know we pre-ordered lead items, but I don't know what specifically what it details this stage.

[Operator Instructions] Your next question comes from the line of Ken Kramer.

Gentlemen, I don't know who to direct this question to, but whomever feels qualified, I'd welcome response. Currently, you have 8 security analysts following the stock in Canada, but none in the United States that I've been able to find. I'm wondering what your thoughts are on expanding your invested public relations in the United States?

Who wants to handle that question. Glenys?

Well I think now that we're listed on the New York Stock Exchange, we certainly will be spending more time visiting with our U.S. investors. And certainly, we'd look to acquire some interests from the firms in the U.S. to provide coverage for those investors.

Your next question comes from the line of Steven Paget.

Just sort of a follow-up question, if I may. I remember Provident having some locks, getting contracts to store synthetic crude, and with Pembina being a big pipeliner of synthetic crude from Horizon and Syncrude. Is there something that you could link up between the storage at Redwater and the pipelines?

I think that's definitely an opportunity for us. I think it will be dependent on our customers obviously that own the synthetic crude to develop and explore those opportunities. But certainly, that's the business that we're in. And I see our customers are looking at the pricing swings that can take place and they have taken place here. And I think they may view storage as an opportunity to try to take some of those market fluctuations out of the equation, so I think that would be a good opportunity for them and for us, as well, Steve.

And there are no further questions at this time. I'll turn the call back over to the presenters.

All right. Well, thanks for all those who participated in the call this morning. We had some excellent questions. And I guess if we haven't been able to answer them, Scott, Glenys, Peter and myself are available as to the extent that we haven't answered or addressed them. As I said, we're available to answer those questions. So thanks again for participating is the morning we look forward to talking to you either at our AGM, which is coming up or [indiscernible] second quarter. Thanks a lot.

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