Good morning, my name is Jeremy, and I will be your conference operator today. At this time I would like to welcome everyone to the Pembina Pipeline Corporation 2014 Second Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. (Operator Instructions). Thank you. I would now like to turn the call over to Senior Vice President and Chief Financial Officer, Mr. Peter Robertson. Please go ahead.

Thank you, Jeremy. Good morning, everyone, and welcome to Pembina’s conference call and webcast to review our second quarter 2014 results. I’m Peter Robertson, Senior Vice President and Chief Financial Officer. Joining me today on the call are Mick Dilger, our President and Chief Executive Officer and Scott Burrows, Vice President of Capital Markets. This morning I will start the call off by reviewing our second quarter results that we released on Friday after markets closed Mick will then provide an update on Pembina growth projects and strategy, including our [RFS II] fractionator that we announced in May. Following that I will discuss our financial position, then turn the call back to Mick once again for closing comments before finally opening up the line for questions. I’d like to remind you that some of our comments made today maybe 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 provided refers to non-GAAP and additional GAAP measures. To learn more about these forward-looking statements, non-GAAP and additional GAAP measures please see Pembina’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 am pleased to report that both our financial and operating performance during the second quarter and first-half of 2014 were very strong. Given our positive first and second quarters we are off to a great start to the year. In general higher propane prices which benefited our mid-stream business as well as growing customer activity in our operating areas combined with the completion of Saturn I Facility and Phase 1 expansions in October and December of last year drove our improved results. These…

Thank you Mick. We continue to remain focused on maintaining the financial strength and flexibility to execute on our robust growth plans that we have ahead of us. So far this year, we've had two successful financings. On January the 16, we closed our third preferred share offering for gross proceeds of $250 million and in April we issued $600 million in 50 year notes. At the end of the second quarter we had approximately $300 million in cash and our $1.5 billion credit facilities is completely undrawn. Combined with strong participation in our DRIP program Pembina remains well positioned to continue to fund our growth initiatives moving forward. Michael (Mick) Dilger: Thanks, Peter. In summary, 2014 is shaping out to be another successful year for Pembina. Our financial and operating performance for the second quarter and first six months of 2014 has been very positive. Given our solid cash flows produced from our expanding operating activities, combined with our attractive growth profile we are in a great position to continue generating attractive returns and providing long-term value for Pembina shareholders well into the future. With that we can start the Q&A. Operator, please go ahead and open up the line for questions.

(Operator Instructions). And your first question comes from the line of Robert [Katalia] from JMP Securities. Your line is open.

Good morning, guys. Thanks for taking my question. I was just curious on the Cornerstone pipeline. It seems like the wording is changed a little bit with respect to the in-service date. I think previously you had third quarter '17 and now you are discussing in conjunction with the in-service date for the upstream project. So does that, does that mean Pembina is willing to take some of the timing risk associated with the upstream project? Michael (Mick) Dilger: No, it simply refers to that the final investment decision timing we've been informed by Statoil will be in October. And so we're not going to issue the regulatory application until FID. It doesn't refer to anything in terms of assuming timing risk.

Okay, and then just on Phase III I want to make you sure I understand the commentary, you secured some additional commitment, but it sounds like any other commitments might cause you to need to upsize the pipe. So maybe can you give us a sense on the timing as to when you are going to do order that long lead time equipment and if you are still on track for regulatory apps to be filed in the third quarter? Michael (Mick) Dilger: So we are on track for regulatory applications. You may recall, we did in terms of our regulatory applications, we're running with two pipelines between Fox Creek and Edmonton area. We still expect some additional incremental volumes between now and the end of the year. Originally we expected to need to make our final pipeline sizing decision in the August, September timeframe and now with further due diligence we know we have the luxury to push that decision out till a little later in the year. Our hope remains that we get enough volume for two pipelines there. But keep in mind that our existing pipeline fully powered still had almost 200,000 barrels a day of incremental capacity. So it would have to be a significant step up between now and the end of the year to justify that second pipe but that remains our hope.

Okay, and then I just want to elaborate on Peter's comment on the shift of timing in that CapEx. As you probably are aware some of our peer group hasn't fared quite as well on the project execution side as Pembina has. So the risk of maybe reallocating some of the CapEx to 2015, is there any risk of slippage in some of the in service dates? Michael (Mick) Dilger: Currently, we believe we're trending on time and on budget and that the capital spend delay was simply weather-reduced and weather-induced and we will be catching up in terms of our activity. That being said our CapEx just between the time of commitment and the time of outflow is taking a little bit longer.

Okay. I mean weather-induced implies a little bit that there is an impact on schedule. So but at this point you are saying there is nothing notable that's of significance? Michael (Mick) Dilger: There is nothing at all, not even anything small that we see right now that would take us to trend away from being on time and on budget. So, nothing whatsoever could make us leave that.

Okay. Thank you.

Your next question comes from the line of David Noseworthy with CIBC. Your line is open.

Hi, thank you. Good morning and congratulations on the great quarter. Michael (Mick) Dilger: Thank you.

First I just wanted to talk a bit about your midstream and can you give us an idea of the operating margin that was shifted from NGL midstream to crude oil midstream as a result of the consolidation of the condensate-related services? Michael (Mick) Dilger: David I’m not going to break it down to that level of detail. But what I will tell you is that when you look at kind of the new services, whether it's crude by rail, storage or additional asset [inaudible] of the condensate business that equated to about 40% of the increase over the previous quarter.

Okay. That's helpful, thank you. That might have answered couple of my questions then. Yeah, actually that's helps a lot. Okay, then I guess the other question I had was with respect to your crude by rail activity what were you seeing then in the last, like you have had kind of three quarters now of that, have you hit a run rate where you feel comfortable with that and kind of where do you see those volumes and those cash flows going, looking forward? Michael (Mick) Dilger: All right, we couldn't hear the very -- front end of your question, could you please repeat it.

Sorry. So you talked about three quarters now of operation of your crude by rail unit train loading facility. And I was just wondering now that you have that under your belt kind of what are you seeing, have you hit a run rate or are you still kind of climbing or ramping up in terms of volumes and cash flows from activity and kind of what do you see going forward with a number of crude by rail facilities starting up? Michael (Mick) Dilger: Over the next year or so we think the run rate is sustainable. We don't have long-term contracts behind that business. So we have some work to do to continue to sustain it. Eventually David we're going to need all that loading infrastructure for the NGL business when RFS II starts up and our plan was to transition that over to Heartland. So there is going to be some changes required in any rate.

Your next question comes from the line of Robert Kwan with RBC Capital Markets. Your line is open.

Good morning. Just wondering when you're looking at the incremental discussions that you're having over and above what you've contracted for both the Phase III pipe and anything that's left on RFS III, just wondering if you -- I know you don’t want to talk about specific producers and I am wondering if just in aggregate if you can talk about where you're seeing the most demand, whether that's coming out of the Montney, the Duvernay or kind of other parts of the basin? Michael (Mick) Dilger: It's -- from there but also just your old cash registers; the Deep Basin, Cardium, it's across the board, along the whole pipeline; it's amazingly uniform.

Okay, and I guess just staying on Phase 3, Mick you mentioned the need, just you can power up Phase 3, but you talked about you would need to see a substantial commitment by the end of the year to consider a scope change, at least that's what I interpreted, so correct if I am wrong. But how do you think about balancing that against the value of upsizing the pipe any ways just to maintain a competitive advantage as you mentioned segregated lines, in addition to having sufficient excess capacity which would take very attractive return right now down to maybe something attractive until you can get more volumes on the system. Michael (Mick) Dilger: Fantastic question and something we're wrestling with all the time. I mean in our ideal state we've got four commodity types. We have four products flowing out of Fox Creek to Edmonton that helps us in a lot of ways. Number one, all the pipelines are flowing at much, much less than MLP. Number two, we're not batching anymore, so both our C3+ and C2+ fractionation facilities in the future will have ratable flow versus batch flows and interphase to deal with. So it's very good for industry. You're right we may have to take a little bit of a haircut in short-term IRR but, we remain very optimistic about what the Montney and Duvernay and the Deep Basin for that matter will become and it might be a risk that we're willing to take on our own behalf and on behalf of industry and then the economies of scale of course of building that fourth pipeline sooner are tremendous and so that does set us up for some very, very good returns if we were to proceed and the volumes were to evolve. So it's a very tough decision to make, but it will be driven by the amount of step up we see in terms of the nomination between now and the end of the year. So we're not going to upsize unless we do get a significant incremental volume.

Okay. That's great. And if I can just ask one last question, when you look at the Midstream and marketing segment, I’m wondering if -- are you able to provide a breakdown between how much of that segment now is fee-based versus commodity exposed and if you can within bond exposed how much is frac spread and how much is basis margin or quality spreads? Michael (Mick) Dilger: Robert, why don't we take that offline?

Okay. That's great. Thank you.

Your next question comes from the line of Rob [Hooke] with Macquarie. Your line is open.

Thank you. Congratulations on another good quarter. Michael (Mick) Dilger: Thank you.

Maybe just on the gas processing side, most of my questions have been answered but where are you seeing most of the opportunities to expand your footprint on the gas side, are you having conversations on that side right now? Michael (Mick) Dilger: We only focus on expanding our operations along our existing pipeline right away. So we're always looking down in the Brazeau, Drayton Valley area, we're always looking along the Peace Corridor. We have focused in the Duvernay, in the Montney, in the Deep Basin, more plants in the areas where we are at but also planned opportunities up in the Duvernay and the Montney would be the two other primary focus areas. We continue to, as I say to look down in the Brazeau area.

And are you having discussions with producers right now? Michael (Mick) Dilger: We are discussions with producers all along our pipeline right of way.

Okay, that’s great. And then maybe just a bit of a smaller question, just on the agreement at Southern non-core trucking assets, is that the entirety of your trucking assets or is that just a smaller portion? Michael (Mick) Dilger: Yes, it’s the entirety.

And then maybe just as a follow-up on that vein are there other asset businesses that you are looking to potentially view as non-core. Michael (Mick) Dilger: Not at this time.

All right, great. Thank you.

Your next question comes from the line of Linda Ezergailis with TD Securities. Your line is open.

Thank you, congratulations on a strong quarter. Michael (Mick) Dilger: Thanks Linda.

Just not to beat this up too much maybe you can talk about nature of your discussions with producers in terms of how much of the bundled service they want versus discrete parts of the value chain for your fractionators and pipeline and other services? Michael (Mick) Dilger: Sure, it really depends, I mean some producers who -- we’ll use Paramount as an example, they like to own their own plants and so you know we are obviously not spending too much talking to them about gas plants but other producers who have made the leap it is a service better outsourced we are talking to. It ranges in size from very small to super majors but it just is company specific. I think it depends how much control they feel they have in an area, how much land they have acquired in the area, whether they observe being able to build the plans more cost effectively then we can or not. It’s really does vary but it really is a whole cross section of industry. What I would say to you though is the majority of producers want a bundled service.

Okay, that’s helpful and I realize there is not anything hugely new on the LPG export side but the slower pace, is that on a number of fronts in terms of customer off-take agreements as well as siding considerations. My understanding is that the upstream side shouldn’t be as much work for you as the other parts, but maybe you can comment on that? Michael (Mick) Dilger: We have the unique ability in Western Canada, Pembina does to point a lot of supply at the terminal. So we observe ourselves to be the only company that has critical mass to build a world scale propane export facility. I would say we are -- we are running with multiple locations, we have favored and we are working really hard at that. In terms of offtakers we satisfied ourselves that there is a liquid and substantial offtake market and so if we are able to deliver product that there will be many buyers. So we are less focused on offtake and we think if we construct and we have product available there is a very large and transparent market that we can exploit for the benefit of our customers in terms of pricing.

Okay, that’s helpful and this is a question maybe for Peter. Can you just give us an update on your outlook for cash taxes this year and next?

I think in our last call we gave guidance, I think it was a range of $100 million to $120 million. So that projection is still valid. We made a number of adjustments to in the last quarter as a result of finalizing our tax returns at halfway through the year for 2013. 2015 is a little bit more difficult. A lot depends on the growth of the business, how profitable we are. So we’ll have to leave that until we get closer to the end of 2014. Michael (Mick) Dilger: And just Linda keep in mind we have Resthaven coming on line, we have two other gas plants in 2015 and a fractionator which are all high write off type assets. So you’ll have to keep that in mind as well.

Great, thank you.

Your next question comes from the line of Steven Paget with FirstEnergy Capital. Your line is open.

Good morning everyone. You've said in the past that Pembina had a $1 billion in uncommitted opportunities. Would this number still be applicable given what you discussed in the call? Michael (Mick) Dilger: Yeah, Steven, I think we're going to stick with that for now just based on how we define it. But we could see that number grow before the end of the year.

Excellent, so maybe more specifically, you are expanding the pipelines in Edmonton from the Northwest. Is there an opportunity for you to increase the size of the systems coming into Edmonton from the Southwest? Michael (Mick) Dilger: Yeah, I mean we certainly could, but we still have quite a bit of capacity. Last time I looked on trade and I think we were around 150,000 barrels a day and we could see that grow on the existing systems up to 180, possibly 200 depending on the type of commodity, the density, the commodity, that we're taking in. And on Brazeau we still have some spare capacity as well. So, a little bit of running room before we have to make that decision.

Thanks Mick. Could you comment on the impact of the shutdown of Cochin on Pembina and the new opportunities that might have generated? Michael (Mick) Dilger: Yeah. The impact has been that we've had to increase our rail fleet. So we can move all the product we need to move by rail without the propane export capacity of Cochin and in terms of bringing in condensate that's a pipeline we expect to connect to in the future for the benefit of our customers having multiple sources of diluent.

So you'll be connecting to the Cochin line? Michael (Mick) Dilger: I hope we will be, yes. I can't say that definitively, yes. But it would be our expectation that we will get a connection at some point.

And it seems that your railcars, you are not constrained by the amount of railcars you have? Michael (Mick) Dilger: No.

Excellent, thanks. Those are my questions.

Your next question comes from the line of Matthew Akman with Deutsche Bank. Your line is open.

Scotiabank, Deutsche Bank, whatever, good morning. A question on the midstream marketing business, we've been around this a little bit, but there is bunch of puts and takes, slower by rail, positive in some reallocation revenues. I'm just wondering how you guys saw the quarter and how you would characterize the quarter in oil marketing and oil midstream in particular relative to your expectations. Michael (Mick) Dilger: Overall it was the best ever second quarter we had, by I think quite a vast majority. We're not, I mean certainly, commodity prices were favorable but they weren't favorable by a large margin. So just slightly better than average. So it's really all of our businesses outperforming, oil sands, which they have performed, our conventional pipeline business, we had peak day volumes of during the year 600,000 barrels a day. We are running pretty much at name plate for our gas services business. We're at some locations over processing greater than name plate. So across the board all our businesses are doing well, not just marketing and that's really what's driving the quarter, because our midstream businesses have the ability to make a lot of money but only if they have a lot of volume. And so the job of oil sands and conventional and gas services is to get a lot of feed stock into our midstream businesses and that's really a big part of what's driving our favorable second quarter results.

Okay. Thanks for that. And separately a quick question on Empress, just your general outlook. For now that TransCanada has signed up a bunch more volumes on the mainline for the next couple years? Michael (Mick) Dilger: I think you are doing a good job of leading your question, we're feeling pretty good about border flows. We see good pricing there. We see liquids content trending up favorably and we see volumes trending up favorably and we have the lowest cost plant there and so we're continuing to run, I think north of I actually can't say what we're running out there but we are doing very well there.

Okay, thank you very much. Those were my questions.

And your last question comes from the line of David Noseworthy with CIBC. Your line is open.

Hi, and sorry about the early exit there earlier. Michael (Mick) Dilger: No worries.

Just and I apologize if these questions have already been asked. But just one on the Phase 3 expansion, so you mentioned incremental 20,000 barrels contracted subsequent to quarter, does that just add on to the 230,000 that you had announced previously, so we're looking at total now of contracted capacity of 250,000? Michael (Mick) Dilger: That's correct.

Okay, perfect. And then next one on the RFS III with that now largely contracted, what are your plans for RFS IV? Michael (Mick) Dilger: That will be driven by how people step up on Phase III. So if we do get a large volume of incremental nominations, some will be crude, some will be condensate but there is always NGL with -- in its own right and also associated NGL. So we will have to have a hard look at what the step up volumes are on Phase III and go from there. And it will also be, I think it was Linda who was asking us about the bundled service, it will depend a little bit on which of those customers want gas processing fractionation with their offering. Generally I mean -- I can't believe that we're getting questions on RFS IV but it's a good thing and we're pinching ourselves because two years ago we had RFS I 80% full and now we're talking about RFS IV. It is possible, it really is possible that becomes part of the dialogue by late this year or early next year.

That's fantastic. And perhaps just one last question. Any initial thoughts on the Kinder Morgan acquisition of its MLPs what it might mean for the M&A market in Canada? Michael (Mick) Dilger: David, I think that we will be assessing that today, so in these five minutes I don't think we don't we have an answer for you.

All right, well. And maybe just if you could follow-up with me as well on the midstream breakdown by fee-for-service and commodity breakdown, I'd appreciate that as well? Michael (Mick) Dilger: Yeah. I mean I am not going to be able to provide a lot of color there but we're pretty transparent with all of our fee-for-service projects and returns on those. So I can lead you to where to find the information to get a reasonable answer.

All right, thank you very much. Those were my questions.

And we have no further questions at this time. I would now like to turn the call back over to Mick Dilger. Michael (Mick) Dilger: Well thanks to everybody and thanks to all Pembina employees who pulled off another great quarter safely and reliably. And enjoy the rest of your summer and be safe. Bye.

And this concludes today’s conference call. You may now disconnect.