Pembina Pipeline Corporation - President and CEO, Mick Dilger
President and CEO, Mick Dilger
Source: Financial Post
  • Pembina Pipeline Corp (TSX:PPL) is cutting its 2020 spending by 50 per cent to around C$1 billion
  • The company hopes these reductions will mitigate the effects of COVID-19’s economic impact and the recent oil price crash
  • Pembina is also forestalling four expansion and development projects, including the $1.55 billion Peace Pipeline projects
  • To limit COVID-19’s spread, Pembina has reduced its work sites to essential personnel, with many employees now working from home
  • Pembina (PPL) is down 5.93 per cent, with shares trading for $21.26 and a market cap of $11.7 billion

Pembina Pipeline (TSX:PPL) is cutting 2020 spending by C$1 billion, to mitigate the impact of COVID-19 and the recent oil price crash.

The expenditure cut is part of an overall action plan, which Pembina outlined today in an announcement to shareholders.

The plan includes forestalling four expansion and development projects, including the Peace Pipeline project, which could have cost $1.55 billion. As a result, the company’s 2020 budget has been halved.

However, many of these project delays won’t take effect until 2021/2022, and therefore haven’t impacted the company’s 2020 forecast.

Like many companies lately, Pembina has restricted worksite personnel to essential employees only, with many now working from home.

In addition to the cuts, the company is pursuing asset sales in the range of $200-$500 million

Mick Dilger, Pembina’s President and CEO, believes these steps are necessary to meet the challenges facing the company.

“In these challenging times, Pembina’s priorities include protecting the health and safety of our staff and communities, ensuring critical infrastructure continues to operate safely and reliably, and maintaining our strong financial position.

We are confident we are taking the necessary steps to allow us to successfully achieve these objectives,” he said.

The last month has been particularly challenging for oil and gas companies. COVID-19’s general economic impact has been compounded by a trade war between OPEC+ countries and Russia.

After negotiations between OPEC+ and Russia broke down earlier this month, Saudi Arabia uncapped its oil production. This drove the oil price down drastically.

Consequently, common benchmarks like the Brent Crude and the West Texas Intermediate fell by around 25 per cent.

Due to these poor market conditions, the company’s share price has fallen by more than 50 per cent in the last month.

Mick Dilger went on to say that he is thankful for all his employees’ efforts in these difficult times. Pembina believes it will be able to weather the current market conditions and meet the expectations of its shareholders.

Pembina Pipeline Corporation (PPL) is down 5.93 per cent, with shares trading for $21.26 at 9:31am EST.

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