Breaking News

Tweet TWEET

Pembina Pipeline Corporation Announces 2013 First Quarter Results

      Pembina Pipeline Corporation Announces 2013 First Quarter Results

PR Newswire

CALGARY, May 9, 2013

Strong start to 2013; $1.3 billion of recently secured projects to drive
continued growth

All financial figures are in Canadian dollars unless noted otherwise. This
report contains forward-looking statements and information that are based on
Pembina Pipeline Corporation's ("Pembina" or the "Company") current
expectations, estimates, projections and assumptions in light of its
experience and its perception of historic trends. Actual results may differ
materially from those expressed or implied by these forward-looking
statements. Please see "Forward-Looking Statements & Information" in the
accompanying Management's Discussion & Analysis ("MD&A") for more details.
This report also refers to financial measures that are not defined by
Generally Accepted Accounting Principles ("GAAP"). For more information about
the measures which are not defined by GAAP, see "Non-GAAP Measures" of the
accompanying MD&A.

CALGARY, May 9, 2013 /PRNewswire/ - On April 2, 2012 Pembina completed its
acquisition of Provident Energy Ltd. ("Provident") (the "Acquisition"). The
amounts disclosed herein for the three month period ending March 31, 2012
reflect results of legacy Pembina excluding Provident ("Legacy Pembina"). For
further information with respect to the Acquisition, please refer to Note 4 of
the Condensed Consolidated Interim Financial Statements for the period ended
March 31, 2013.

Financial & Operating Overview

                                                                    
                                                     3 Months Ended
($ millions, except where noted)                             March 31
                                               2013   2012
Revenue                                            1,285.7        475.5
Operating margin^(1)                                 239.8        127.7
Gross profit                                         203.8        102.5
Earnings for the period                               90.5         32.6
Earnings per share - basic and diluted         
(dollars)                                                  0.30         0.19
Adjusted EBITDA^(1)                                  210.2        111.4
Cash flow from operating activities                  229.0         65.3
Adjusted cash flow from operating              
activities^(1)                                            207.4         98.8
Adjusted cash flow from operating              
activities per share^(1)                                   0.70         0.59
Dividends declared                                   121.0         65.7
Dividends per common share (dollars)                  0.41         0.39

                                   
^(1)  Refer to "Non-GAAP Measures."

First Quarter Highlights

  *During the first quarter, Pembina announced that it had secured an
    additional $1.3 billion in growth projects.

  *Consolidated operating margin during the first quarter of 2013 increased
    88 percent to $239.8 million compared to $127.7 million during the same
    period of the prior year. Operating margin is a non-GAAP measure; see
    "Non-GAAP Measures."

  *Pembina generated $60.5 million in operating margin from its Conventional
    Pipelines business, $31.5 million from Oil Sands & Heavy Oil and $18.6
    million from Gas Services. Operating margin was positively impacted by
    increased volumes on Pembina's Conventional Pipelines, as discussed below,
    and an increase in gas processed through and fees generated by Pembina's
    Gas Services assets. The Company's Midstream business also saw a
    significant increase in operating margin to $128.5 million, which includes
    results generated by the assets acquired through the Acquisition.

  *Operationally, Pembina experienced one of the strongest quarters in its
    history. Conventional Pipelines transported an average of 493.7 thousand
    barrels per day ("mbpd") in the first quarter of 2013, six percent more
    than the same period of 2012 when average volumes were 466.9 mbpd. Gas
    Services also saw an increase in volumes of 13 percent, with the Cutbank
    Complex processing an average of 299.3 million cubic feet per day
    ("MMcf/d") during the first quarter of 2013 compared to 264.9 MMcf/d in
    the same period of the previous year.

  *The Company's earnings were $90.5 million ($0.30 per share) for the first
    quarter of 2013 compared to $32.6 million ($0.19 per share) for the first
    quarter of 2012. This increase was the result of the Acquisition as well
    as improved performance in each of Legacy Pembina's businesses. Per share
    metrics were also impacted by the Acquisition.

  *Pembina generated adjusted EBITDA of $210.2 million during the first
    quarter of 2013 compared to $111.4 million during the first quarter of
    2012 (adjusted EBITDA is a non-GAAP measure; see "Non-GAAP Measures"). The
    quarter-over-quarter increase in adjusted EBITDA was due to strong results
    from each of Pembina's legacy businesses, new assets and services having
    been brought on-stream, and the completion of the Acquisition.

  *Cash flow from operating activities was $229 million ($0.77 per share) for
    the first quarter of 2013 compared to $65.3 million ($0.39 per share) for
    the same period in 2012. This increase was primarily due to higher
    adjusted EBITDA, combined with changes in working capital, lower
    acquisition-related costs in the period and lower interest paid due to
    timing of payments.

  *Adjusted cash flow from operating activities was $207.4 million ($0.70 per
    share) for the first quarter of 2013 compared to $98.8 million ($0.59 per
    share) for the same period of 2012 (adjusted cash flow from operating
    activities is a Non-GAAP measure; see "Non-GAAP Measures").

Growth and Operational Update

During the first quarter of 2013, Pembina made substantial progress on its
growth plans, securing approximately $1.3 billion in additional capital
projects which the Company expects will provide long-term, sustainable returns
once complete. With these new projects, Pembina's estimated capital spending
plan for the year has increased from $965 million to approximately $1.04
billion.

NGL Infrastructure Expansion

The most significant of Pembina's planned investments is the $1 billion
expansion of its NGL-related infrastructure, which was announced on March 5,
2013 and comprises the following three integrated components along the NGL
value chain:

1.Twinning of the 200 MMcf/d Saturn deep cut facility ("Saturn II") which
    will extract valuable NGL from raw gas streams in the Berland area of
    Alberta at an estimated capital cost of $170 million;
2.Twinning of its 73,000 bpd ethane-plus fractionator ("RFS II") at its
    Redwater site, near Fort Saskatchewan, Alberta at an estimated capital
    cost of $415 million; and,
3.The Phase II NGL pipeline capacity expansion of its Peace/Northern NGL
    System which will accommodate increased NGL volumes at an estimated
    capital cost of $415 million.

For its Saturn II project, Pembina has entered into a firm-service contract
for 130 MMcf/d (approximately 65 percent of the facility's total capacity) for
a term of 10 years with a third-party producer. Based on 100 percent capacity
utilization, Saturn II is expected to extract approximately 13,000 barrels per
day ("bpd") of NGL which will be transported on the same pipeline lateral
Pembina is currently constructing for Saturn I, and then on Pembina's Peace
Pipeline, which will carry the product into the Edmonton, Alberta area.
Because Saturn II will leverage existing site engineering work completed for
the original Saturn facility, Pembina expects the project could be in-service
by late 2015, subject to regulatory and environmental approvals.

For RFS II, Pembina has entered into contracts for 97 percent of the
facility's operating capacity with producers which will provide Pembina
committed take-or-pay operating margin for an initial 10-year term from the
in-service date. Ethane produced at RFS II will be sold under a long-term
arrangement with NOVA Chemicals Corporation. Because RFS II will leverage
engineering work completed for Pembina's original Redwater fractionator, the
Company expects the project to be in-service late in the fourth quarter of
2015, subject to regulatory and environmental approvals.

To accommodate increasing NGL volumes on its systems and to address
constrained capacity throughout the Province of Alberta, Pembina is proceeding
with its proposed Phase II NGL pipeline capacity expansion on its
Peace/Northern NGL System. The Company is currently completing its Phase I
expansion, which will increase NGL capacity on the Peace/Northern NGL System
by 45 percent to 167,000 bpd. In April, Pembina completed three pump stations
which will provide 17,000 bpd of additional NGL capacity. The Company expects
to commission and bring the pump stations into service in June of this year.
The remaining pump stations, which are expected to be in-service in October,
2013, will add an additional 35,000 bpd of capacity. The Phase II NGL
Expansion will increase capacity from 167,000 bpd to 220,000 bpd. In total,
Pembina expects the Phase I and II expansions to increase NGL transportation
capacity by 90 percent. Subject to regulatory and environmental approvals,
Pembina expects the Phase II NGL Expansion will cost approximately $415
million (including mainline and tie-in capital) and will be complete in early
to mid-2015.

Pembina also plans to construct a new NGL lateral approximately 30 kilometres
in length into the Ferrier region to tie a third-party's facility into
Pembina's Brazeau Pipeline System, subject to regulatory and environmental
approvals.

Crude Oil and Condensate Pipeline Capacity Expansion

On February 13, Pembina also announced that the Company reached its
contractual threshold to proceed with its previously announced $250 million
crude oil and condensate throughput capacity expansion on its Peace Pipeline
(the "Phase II LVP Expansion") to accommodate increased producer crude oil and
condensate volumes arising from strong drilling results in the Dawson Creek,
Grande Prairie and Kaybob/Fox Creek areas of Alberta. Once complete, this
expansion will increase capacity on the Peace Pipeline by 55,000 bpd to
250,000 bpd. The combination of Pembina's Phase I and Phase II LVP Expansions
will increase capacity by 61 percent from current levels. Subject to obtaining
regulatory and environmental approvals, Pembina anticipates being able to
bring the Phase II LVP Expansion into service by late-2014.

Pembina's previously announced northwest Alberta pipeline expansion
non-binding open season closed on April 30, 2013. Nominations were sufficient
such that Pembina plans to proceed to the next stage of the open season.

Other Growth Project Updates

  *Pembina brought two long-term fee-for-service hydrocarbon storage caverns
    into service at its Redwater site in April, 2013. Pembina expects to bring
    a third cavern into service late in the second quarter of this year.
  *On the Nipisi Pipeline, Pembina has commissioned a new pump station which
    increased capacity to 105,000 bpd.
  *Pembina is also continuing to investigate offshore propane export
    opportunities that would allow it to leverage its existing assets and
    provide a potential solution for Canadian producers impacted by weak North
    American pricing.

Financing Activity

On March 21, 2013, Pembina announced that it had closed its bought deal
offering of 11,206,750 common shares at a price of $30.80 per share through a
syndicate of underwriters, which includes 1,461,750 common shares issued at
the same price on the exercise in full of the over-allotment option granted to
the underwriters. The aggregate gross proceeds from the offering was
approximately $345 million. The net proceeds from the offering were used to
reduce the Company's debt, which it used to fund its capital program and for
other general corporate purposes.

On April 30, 2013, Pembina closed the offering of $200 million, 30-year senior
unsecured, medium-term notes ("Notes"). The Notes have a fixed interest rate
of 4.75 percent per annum paid semi-annually, and will mature on April 30,
2043. The net proceeds from the offering of Notes were used to pay down
Pembina's existing credit facility.

Summary

"The first quarter of 2013 was a very exciting one at Pembina," said Bob
Michaleski, Pembina's Chief Executive Officer. "First, we had another quarter
of solid operational and financial results from our existing businesses. And
on the growth front, we are beginning to see the tangible benefits of the
Provident acquisition and our resulting fully-integrated platform by securing
projects across the hydrocarbon value chain and increasing our 2013 capital
spending plan to just over $1 billion. With the closing of our bought deal
equity financing and 30-year term debt issuance, we're more confident than
ever in our ability to execute our business plan and generate long-term,
sustainable returns for our investors."

First Quarter 2013 Conference Call & Webcast

Pembina will host a conference call on May 10, 2013 at 8 a.m. MT (10 a.m. ET)
to discuss details related to the first quarter. The conference call dial-in
numbers for Canada and the U.S. are 647-427-7450 or 888-231-8191. A recording
of the conference call will be available for replay until May 17, 2013 at
11:59 p.m. ET. To access the replay, please dial either 416-849-0833 or
855-859-2056 and enter the password 21796840.

A live webcast of the conference call can be accessed on Pembina's website at
www.pembina.com under Investor Centre, Presentation & Events, or by entering:
http://event.on24.com/r.htm?e=595645&s=1&k=DA9E32B7267860A93271D1CC68237A63 in
your web browser. Shortly after the call, an audio archive will be posted on
the website for a minimum of 90 days.

Annual and Special Meeting Information

The Company will hold its Annual and Special Meeting of Shareholders ("AGM")
on Friday, May 10, 2013 at 2:00 p.m. MT (4:00 p.m. ET) at the Metropolitan
Conference Centre, 333 - 4th Avenue S.W., Calgary, Alberta, Canada.

A live webcast of Pembina's AGM presentation can be accessed on Pembina's
website at www.pembina.com under Investor Centre, Presentation & Events, or by
entering:
http://event.on24.com/r.htm?e=595658&s=1&k=FE7334F74D0AD428C124C57DA0269B27.
Participants are recommended to register for the webcast at least 10 minutes
before the presentation start time.

MANAGEMENT'S DISCUSSION AND ANALYSIS

The following management's discussion and analysis ("MD&A") of the financial
and operating results of Pembina Pipeline Corporation ("Pembina" or the
"Company") is dated May 9, 2013 and is supplementary to, and should be read in
conjunction with, Pembina's unaudited condensed consolidated interim financial
statements for the period ended March 31, 2013 ("Interim Financial
Statements") as well as Pembina's consolidated audited annual financial
statements and MD&A for the year ending December 31, 2012 (the "Consolidated
Financial Statements"). All dollar amounts contained in this MD&A are
expressed in Canadian dollars unless otherwise noted.

Management is responsible for preparing the MD&A. This MD&A has been reviewed
and recommended by the Audit Committee of Pembina's Board of Directors and
approved by its Board of Directors.

This MD&A contains forward-looking statements (see "Forward-Looking Statements
& Information") and refers to financial measures that are not defined by
Generally Accepted Accounting Principles ("GAAP"). For more information about
the measures which are not defined by GAAP, see "Non-GAAP Measures."

On April 2, 2012, Pembina completed its acquisition of Provident Energy Ltd.
("Provident") (the "Acquisition"). The amounts disclosed herein for the three
months ending March 31, 2012 reflect results of legacy Pembina excluding
Provident ("Legacy Pembina"). The results of the business acquired through the
Acquisition are reported as part of the Company's Midstream business. For
further information with respect to the Acquisition, please refer to Note 4 of
the Interim Financial Statements.

About Pembina

Calgary-based Pembina Pipeline Corporation is a leading transportation and
midstream service provider that has been serving North America's energy
industry for nearly 60 years. Pembina owns and operates: pipelines that
transport conventional and synthetic crude oil and natural gas liquids
produced in western Canada; oil sands, heavy oil and diluent pipelines; gas
gathering and processing facilities; and, an oil and natural gas liquids
infrastructure and logistics business. With facilities strategically located
in western Canada and in natural gas liquids markets in eastern Canada and the
U.S., Pembina also offers a full spectrum of midstream and marketing services
that spans across its operations. Pembina's integrated assets and commercial
operations enable it to offer services needed by the energy sector along the
hydrocarbon value chain.

Pembina is a trusted member of the communities in which it operates and is
committed to generating value for its investors by running its businesses in a
safe, environmentally responsible manner that is respectful of community
stakeholders.

Strategy

Pembina's goal is to provide highly competitive and reliable returns to
investors through monthly dividends while enhancing the long-term value of its
shares. To achieve this, Pembina's strategy is to:

  *Preserve value by providing safe, responsible, cost-effective and reliable
    services;

  *Diversify Pembina's asset base along the hydrocarbon value chain by
    providing integrated service offerings which enhance profitability;

  *Pursue projects or assets that are expected to generate increased cash
    flow per share and capture long-life, economic hydrocarbon reserves; and,

  *Maintain a strong balance sheet through the application of prudent
    financial management to all business decisions.

Pembina is structured into four businesses: Conventional Pipelines, Oil Sands
& Heavy Oil, Gas Services and Midstream, which are described in their
respective sections of this MD&A.

Common Abbreviations

The following is a list of abbreviations that may be used in this MD&A:

Measurement                            Other
mmbbls    millions of barrels      AECO    Alberta gas trading
                                                      price
bpd       barrels per day          AESO    Alberta Electric Systems
                                                      Operator
mbpd      thousands of barrels     B.C.    British Columbia
              per day
              thousands of barrels                    Premium Dividend™ and
mboe/d    of oil equivalent per    DRIP    Dividend Reinvestment
              day                                     Plan
MMcf/d    millions of cubic        Frac    Fractionation
              feet per day
bcf/d     billions of cubic        IFRS    International Financial
              feet per day                            Reporting Standards
MW/h      megawatts per hour       NGL     Natural gas liquids
GJ        gigajoule                NYSE    New York Stock Exchange
km        kilometre                TSX     Toronto Stock Exchange
                                  U.S.    United States
                                  WCSB    Western Canadian
                                                      Sedimentary Basin
                                                      West Texas Intermediate
                                  WTI     (crude oil benchmark
                                                      price)

Financial & Operating Overview

                                                             
                                                     3 Months Ended
                                                              March 31
($ millions, except where noted)                 2013       2012
Conventional Pipelines throughput (mbpd)              493.7      466.9
Oil Sands & Heavy Oil contracted capacity       
(mbpd)                                                     870.0      870.0
Gas Services average processed volume           
(mboe/d) net to Pembina^(1)                                 49.9       44.1
NGL sales volume (mbpd)                               122.9          
Total volume (mbpd)                                 1,536.5    1,381.0
Revenue                                             1,285.7      475.5
Operations                                             77.2       48.4
Cost of goods sold, including product           
purchases                                                  970.8      299.1
Realized gain (loss) on commodity-related       
derivative financial instruments                             2.1      (0.3)
Operating margin^(2)                                  239.8      127.7
Depreciation and amortization included in       
operations                                                  41.8       21.7
Unrealized gain (loss) on commodity-related     
derivative financial instruments                             5.8      (3.5)
Gross profit                                          203.8      102.5
Deduct/(add)                                                        
  General and administrative expenses                 32.6       17.6
  Acquisition-related and other expense        
   (income)                                                (0.6)       22.1
  Net finance costs                                   50.8       19.5
  Share of loss (profit) of investments in     
   equity accounted investee, net of tax                     0.3      (0.2)
Income tax expense                                     30.2       10.9
Earnings for the period                                90.5       32.6
Earnings per share - basic and diluted          
(dollars)                                                   0.30       0.19
Adjusted EBITDA^(2)                                   210.2      111.4
Cash flow from operating activities                   229.0       65.3
Cash flow from operating activities per         
share                                                       0.77       0.39
Adjusted cash flow from operating               
activities^(2)                                             207.4       98.8
Adjusted cash flow from operating               
activities per share^(2)                                    0.70       0.59
Dividends declared                                    121.0       65.7
Dividends per common share (dollars)                   0.41       0.39
Capital expenditures                                  137.1       54.9
Total enterprise value ($ billions) ^(2)               12.2        6.5
Total assets ($ billions)                               8.4        3.4

     
^(1) Gas Services processing volumes converted to mboe/d from MMcf/d at 6:1
      ratio.
^(2) Refer to "Non-GAAP Measures."

Revenue, net of cost of goods sold, increased 79 percent to $314.9 million
during the first quarter of 2013 compared to $176.4 million during the same
period of 2012. This increase was primarily due to the addition of results
generated by the assets acquired through the Acquisition, which are reported
in the Company's Midstream business, as well as improved performance in each
of Pembina's legacy businesses, as discussed in further detail below.

Operating expenses were $77.2 million during the first quarter of 2013
compared to $48.4 million in the same period in 2012. The increase was largely
due to additional costs associated with the growth in Pembina's asset base
primarily resulting from the Acquisition and higher variable costs in each of
the Company's legacy businesses because of increased volumes and activity.

Operating margin totalled $239.8 million during the first quarter of 2013, up
88 percent from the same period last year when operating margin totalled
$127.7 million (operating margin is a Non-GAAP measure; see "Non-GAAP
Measures"), primarily due to higher revenue as discussed above.

Realized and unrealized gains/losses on commodity-related derivative financial
instruments resulting from Pembina's market risk management program are
primarily related to frac spread, product margin and power derivative
financial instruments (see "Market Risk Management Program" and Note 11 to the
Interim Financial Statements). The unrealized gain on commodity-related
derivative financial instruments was $5.8 million for the three months ended
March 31, 2013, reflecting changes in the future NGL, natural gas and power
price indices between December 31, 2012 and March 31, 2013.

Depreciation and amortization (operational) increased to $41.8 million during
the first quarter of 2013 compared to $21.7 million during the same period in
2012 which reflects depreciation on new capital additions including those
assets acquired through the Acquisition.

The increases in revenue and operating margin contributed to gross profit of
$203.8 million during the first quarter of 2013 compared to $102.5 million for
the same period of 2012.

General and administrative expenses ("G&A") of $32.6 million were incurred
during the first quarter of 2013 compared to $17.6 million during the first
quarter of 2012. The increase for the period was mainly due to the addition of
employees who joined Pembina through the Acquisition and new employees who
joined the Company, as well as an increase in salaries and benefits for
existing employees, including increased share-based payment accruals. In
addition, every $1 change in share price is expected to change Pembina's
annual share-based incentive expense by approximately $1 million.

Pembina generated adjusted EBITDA of $210.2 million during the first quarter
of 2013 compared to $111.4 million during the first quarter of 2012 (adjusted
EBITDA is a Non-GAAP measure; see "Non-GAAP Measures"). The increase in
adjusted EBITDA was due to strong results from each of Pembina's legacy
businesses, new assets and services having been brought on-stream, and the
growth of Pembina's operations since completion of the Acquisition.

The Company's earnings were $90.5 million ($0.30 per share) during the first
quarter of 2013 compared to $32.6 million ($0.19 per share) during the first
quarter of 2012. This increase was the result of the Acquisition as well as
improved performance in each of the Company's legacy businesses. Per share
metrics were also impacted by the Acquisition.

Cash flow from operating activities was $229 million ($0.77 per share) during
the first quarter of 2013 compared to $65.3 million ($0.39 per share) for the
comparative period of 2012. The increase in cash flow from operating
activities was primarily due to an increase in adjusted EBITDA, combined with
changes in working capital, lower acquisition-related costs in the period and
lower interest paid due to timing of payments.

Adjusted cash flow from operating activities was $207.4 million ($0.70 per
share) during the first quarter of 2013, an increase of 110 percent, compared
to $98.8 million ($0.59 per share) during the first quarter of 2012 (adjusted
cash flow from operating activities is a Non-GAAP measure; see "Non-GAAP
Measures").

Operating Results

                                                                
                                    3 Months Ended March 31
                         2013                          2012
                           Net       Operating           Net       Operating
($ millions)      Revenue ^(1)      Margin ^(2)   Revenue ^(1)      Margin ^(2)
Conventional         95.8           60.5         82.2            54.4    
Pipelines                                                         
Oil Sands &          43.4           31.5         43.1            30.1    
Heavy Oil                                                         
Gas Services         27.5           18.6         19.1           13.0    
Midstream           148.2          128.5         32.0           29.6    
Corporate                           0.7                        0.6    
Total               314.9          239.8        176.4          127.7    
                                                       

^(1) Midstream revenue is net of $983.9 million in cost of goods sold,
      including product
      purchases, for the quarter ended March 31, 2013 (quarter ended March 31,
      2012:
      $299.1 million).
^(2) Refer to "Non-GAAP Measures."
     

Conventional Pipelines

                                                                      
                                                 3 Months Ended March 31
($ millions, except where noted)                         2013        2012
Average throughput (mbpd)                               493.7       466.9
Revenue                                                  95.8        82.2
Operations                                               35.3        27.5
Realized gain (loss) on commodity-related        
derivative financial instruments                                        (0.3)
Operating margin^(1)                                     60.5        54.4
Depreciation and amortization included in        
operations                                                     1.6        11.9
Unrealized gain (loss) on commodity-related
derivative financial instruments                          0.9       (3.0)
Gross profit                                             59.8        39.5
Capital expenditures                                     61.4        11.1

     
^(1) Refer to "Non-GAAP Measures."

Business Overview

Pembina's Conventional Pipelines business comprises a well-maintained and
strategically located 7,850 km pipeline network that extends across much of
Alberta and B.C. It transports approximately half of Alberta's conventional
crude oil production, about thirty percent of the NGL produced in western
Canada, and virtually all of the conventional oil and condensate produced in
B.C. This business' primary objective is to generate sustainable operating
margin while pursuing opportunities for increased throughput and revenue.
Conventional Pipelines endeavours to maintain and/or improve operating margin
by capturing incremental volumes, expanding its pipeline systems, managing
revenue and following a disciplined approach to its operating expenses.

Operational Performance: Throughput

During the first quarter of 2013, Conventional Pipelines' throughput averaged
493.7 mbpd, consisting of an average of 363.7 mbpd of crude oil and condensate
and 130 mbpd of NGL. This represents an increase of approximately 6 percent
compared to the same period of 2012, when average throughput was 466.9 mbpd.

Financial Performance

During the first quarter of 2013, Conventional Pipelines generated revenue of
$95.8 million compared to $82.2 million in the same quarter of the previous
year. The 17 percent increase during the period was primarily due to strong
volumes generated by newly connected facilities on Pembina's Conventional
Pipelines systems, as well as producer enhanced recovery techniques resulting
in increased deliveries from existing connected locations. In addition, as of
the first quarter of 2013, results from certain pipeline assets purchased
through the Acquisition and previously included in the Midstream business are
now included in Conventional Pipelines, which also helped drive increased
revenue. However, this had no impact on the volumes mentioned above as the
assets are interconnected to existing Conventional Pipelines systems.

Quarterly operating expenses increased to $35.3 million compared to $27.5
million in the first quarter of 2012 due to several factors, including costs
associated with ensuring safe and reliable operations at higher throughput
levels and higher costs associated with geotechnical work which can only be
completed during winter months.

As a result of higher revenue, which was partially offset by an increase in
operating expenses, operating margin for the first quarter of 2013 was $60.5
million compared to $54.4 million during the same period of 2012.

Depreciation and amortization included in operations was $1.6 million during
the first quarter of 2013 compared to $11.9 million during the first quarter
of 2012. This decrease is primarily due to a reduction in depreciation because
of a re-measurement of the decommissioning provision in excess of the carrying
amount of the related asset.

For the three months ended March 31, 2013, gross profit was $59.8 million due
to higher revenue generated during the quarter, for the reasons discussed
above, compared to $39.5 million during the same period in 2012.

Capital expenditures for the first quarter of 2013 totalled $61.4 million
compared to $11.1 million during the first quarter of 2012. The majority of
this spending relates to the expansion of certain pipeline assets as described
below.

New Developments

Pembina is pursuing several crude oil, condensate and NGL expansions on its
Conventional Pipelines systems to accommodate increased customer demand and
address constrained pipeline capacity in several areas of the WCSB.

NGL Pipeline Capacity Expansions

Pembina is progressing its Phase I NGL Expansion, which is expected to add
52,000 bpd of additional NGL capacity to the Peace and Northern Pipelines (the
"Peace/Northern NGL System"). In April, Pembina completed three pump stations
which will provide 17,000 bpd of additional NGL capacity at a cost $30
million. The Company expects to commission and bring the pump stations into
service in June, 2013. On its Peace Pipeline, the Company expects to
commission three new pump stations by August 2013 and upgrade four existing
stations by October 2013 to provide an additional 35,000 bpd of NGL capacity
at an estimated cost of $70 million. Once complete, the Phase I NGL Expansion
will increase NGL capacity on the Peace/Northern NGL System by 45 percent to
167,000 bpd.

As part of the Company's approximately $1 billion expansion of its existing
NGL infrastructure, Pembina is also proceeding with its proposed Phase II NGL
Expansion of its Peace/Northern NGL System which will increase capacity from
167,000 bpd to 220,000 bpd. In total, the Phase I and II expansions are
expected to increase NGL transportation capacity by 90 percent. Subject to
obtaining regulatory and environmental approvals, Pembina expects the Phase II
NGL Expansion to cost approximately $415 million (including mainline and
tie-in capital) and to be complete in early to mid-2015.

Pembina also plans to construct a new 30 kilometre NGL lateral into the
Ferrier region of Alberta to tie a third-party's facility into the Company's
Brazeau Pipeline System, subject to regulatory and environmental approvals.

Crude Oil and Condensate Pipeline Capacity Expansions

The Phase I Peace low vapour pressure ("LVP") expansion requires three
upgraded pump stations and associated pipeline work between Fox Creek and
Edmonton, Alberta, and will provide an additional 40,000 bpd of crude oil and
condensate capacity on this segment. Pembina expects to commission one of the
three pump stations by June 2013, and the remaining two stations by October
2013 at an estimated cost of $30 million.

On February 13, 2013, Pembina announced that it had reached its contractual
threshold to proceed with its previously announced plans to significantly
expand its crude oil and condensate throughput capacity on its Peace Pipeline
system by 55,000 bpd ("Phase II LVP Expansion"). Pembina expects the total
cost of the Phase II LVP Expansion to be approximately $250 million (including
the mainline expansion and tie-ins). Subject to regulatory and environmental
approvals, Pembina anticipates being able to bring the expansion into service
by late 2014. Once complete, this expansion will increase LVP capacity on
Pembina's Peace Pipeline to 250,000 bpd. The Phase II LVP Expansion is
underpinned by long-term fee-for-service agreements with area producers. The
combined LVP expansions will increase capacity by 61 percent from current
levels.

Open Season Update

Pembina's previously announced northwest Alberta pipeline expansion
non-binding open season closed on April 30, 2013. Nominations were sufficient
such that Pembina plans to proceed to the next stage of the open season.

Supporting Gas Services

Conventional Pipelines is also constructing the pipeline components of the
Company's Saturn I, Saturn II and Resthaven gas plant projects. These pipeline
projects will gather NGL from the gas plants for delivery to Pembina's Peace
Pipeline system. Both Saturn I and Saturn II will use the same pipeline
lateral. Pembina has received the required environmental and regulatory
approvals for the pipelines and is continuing with construction on both
projects.

Oil Sands & Heavy Oil

                                                            
                                                 3 Months Ended March 31
($ millions, except where noted)                         2013        2012
Contracted capacity (mbpd)                              870.0       870.0
Revenue                                                  43.4        43.1
Operations                                               11.9        13.0
Operating margin^(1)                                     31.5        30.1
Depreciation and amortization included in        
operations                                                     4.9         4.9
Gross profit                                             26.6        25.2
Capital expenditures                                     12.1         5.8

     
^(1) Refer to "Non-GAAP Measures."

Business Overview

Pembina plays an important role in supporting Alberta's oil sands and heavy
oil industry. Pembina is the sole transporter of crude oil for Syncrude Canada
Ltd. (via the Syncrude Pipeline) and Canadian Natural Resources Ltd.'s Horizon
Oil Sands operation (via the Horizon Pipeline) to delivery points near
Edmonton, Alberta. Pembina also owns and operates the Nipisi and Mitsue
Pipelines, which provide transportation for producers operating in the Pelican
Lake and Peace River heavy oil regions of Alberta, and the Cheecham Lateral
which transports synthetic crude to oil sands producers operating southeast of
Fort McMurray, Alberta. The Oil Sands & Heavy Oil business operates
approximately 1,650 km of pipeline and has 870 mbpd of capacity under
long-term, extendible contracts which provide for the flow-through of
operating expenses to customers. As a result, operating margin from this
business is proportionate to the amount of capital invested and is
predominantly not sensitive to fluctuations in operating expenses or actual
throughput.

Financial Performance

The Oil Sands & Heavy Oil business realized revenue of $43.4 million in the
first quarter of 2013, virtually unchanged from $43.1 million in the first
quarter of 2012 due to the contracted nature of this business.

Operating expenses were $11.9 million during the first quarter of 2013,
slightly lower than $13 million during the first quarter of 2012 and due to
lower maintenance and power costs during the period.

For the three months ended March 31, 2013, operating margin increased to $31.5
million compared to $30.1 million during the same period in 2012. Additional
throughput above contracted volumes on the Nipisi and Mitsue pipelines
contributed to the slight increase in operating margin during the first
quarter of 2013.

Depreciation and amortization included in operations for the first quarter of
2013 totalled $4.9 million, unchanged from the same period of the prior year.

During the quarter ended March 31, 2013, gross profit was $26.6 million
compared to $25.2 million during the same period of 2012.

In the first quarter of 2013, capital expenditures within the Oil Sands &
Heavy Oil business totalled $12.1 million and were primarily related to the
construction of additional pump stations on the Nipisi and Mitsue pipelines.
This compares to $5.8 million spent during the same period in 2012, the
majority of which related to completing the two projects.

New Developments

On the Nipisi Pipeline, Pembina commissioned a new pump station in April 2013
which increased its capacity to 105,000 bpd. Work is continuing on the
corresponding pump station for the Mitsue condensate pipeline. With this
additional pump station, which is anticipated to be in-service in the third
quarter of 2013, Mitsue's capacity will increase from 18,000 bpd to 22,000
bpd.

Pembina continues to actively work with customers on oil sands and heavy oil
related solutions. With the Acquisition, the Company has increased its access
to diluent supply and can offer customers condensate and butane products from
various sources including Pembina's conventional pipeline systems, the
Redwater fractionator, rail imports and truck racks.

Gas Services

                                                                      
                                                 3 Months Ended March 31
($ millions, except where noted)                         2013        2012
Average processed volume (MMcf/d) net to         
Pembina                                                      299.3       264.9
Average processed volume (mboe/d) ^(1) net       
to Pembina                                                    49.9        44.1
Revenue                                                  27.5        19.1
Operations                                                8.9         6.1
Operating margin^(2)                                     18.6        13.0
Depreciation and amortization included in        
operations                                                     3.6         3.2
Gross profit                                             15.0         9.8
Capital expenditures                                     38.5        34.0

     
^(1) Average processing volume converted to mboe/d from MMcf/d at a 6:1
      ratio.
^(2) Refer to "Non-GAAP Measures."

Business Overview

Pembina's operations include a growing natural gas gathering and processing
business. Located approximately 100 km south of Grande Prairie, Alberta,
Pembina's key revenue-generating Gas Services assets form the Cutbank Complex
which comprises three sweet gas processing plants with 425 MMcf/d of
processing capacity (368 MMcf/d net to Pembina), a 205 MMcf/d ethane plus
extraction facility, as well as approximately 350 km of gathering pipelines.
The Cutbank Complex is connected to Pembina's Peace Pipeline system and serves
an active exploration and production area in the WCSB. Pembina has initiated
construction on and development of numerous projects in its Gas Services
business to meet the growing needs of producers in west central Alberta.

Financial Performance

Gas Services recorded an increase in revenue of 44 percent during the first
quarter of 2013, contributing $27.5 million compared to $19.1 million in the
first quarter of 2012. This increase primarily reflects higher processing
volumes at Pembina's Cutbank Complex and increased fees for additional capital
invested. Average processing volumes, net to Pembina, were 299.3 MMcf/d during
the first quarter of 2013, approximately 13 percent higher than the 264.9
MMcf/d processed during the first quarter of the previous year. The increase
in volumes reflects producer's sustained interest in the areas surrounding
Pembina's Gas Services assets and their focus on liquids-rich natural gas
which continues to attract higher commodity pricing relative to dry gas.

During the first quarter of 2013, operating expenses were $8.9 million
compared to $6.1 million incurred in the first quarter of 2012. The quarterly
increase was mainly due to variable costs incurred to process higher volumes
at the Cutbank Complex as well as additional costs associated with running the
Musreau shallow cut expansion and deep cut facility.

As a result of processing higher volumes at the Cutbank Complex, an increase
in fees for capital invested and additional processing associated with the
Musreau deep cut facility, Gas Services realized operating margin of $18.6
million in the first quarter compared to $13 million during the same period of
the prior year.

Depreciation and amortization included in operations during the first quarter
of 2013 totalled $3.6 million, up from $3.2 million during the same period of
the prior year, primarily due to higher in-service capital balances from
additions to the Cutbank Complex (including the Musreau deep cut facility and
shallow cut expansion).

For the three months ended March 31, 2013, gross profit was $15 million
compared to $9.8 million in the same period of 2012. This increase reflects
higher operating margin during the period which was partially offset by
increased depreciation and amortization included in operations as discussed
above.

In the first quarter of 2013, capital expenditures within Gas Services
totalled $38.5 million compared to $34 million during the same period of 2012.
This increase was because of spending to progress the Saturn and Resthaven
enhanced NGL extraction facilities.

New Developments

Pembina's Gas Services business is constructing three new facilities and
associated infrastructure:

  *Saturn I facility - a 200 MMcf/d enhanced NGL extraction facility in the
    Berland area of west central Alberta, which is expected to cost $165
    million;
  *Resthaven facility - a 200 MMcf/d (130 MMcf/d net to Pembina) combined
    shallow cut and deep cut NGL extraction facility in the Resthaven, Alberta
    area, which is expected to cost $210 million; and,
  *Saturn II facility - a 200 MMcf/d 'twin' of the Saturn I facility, which
    is expected to cost $170 million (as announced on March 5, 2013).

Pembina expects Saturn I and associated pipelines to be in-service in the
third quarter of 2013, one quarter ahead of schedule. The Company has ordered
all of the major equipment and construction of the facility is 55 percent
complete. Once operational, Pembina expects Saturn I will have the capacity to
extract up to 13.5 mbpd of NGL.

For Resthaven, Pembina expects the facility and associated pipelines to be
in-service in the third quarter of 2014. Once operational, Pembina expects the
Resthaven facility will have the capacity to extract up to 13 mbpd of NGL.
Pembina has ordered all of the major equipment for the plant and is
progressing site construction.

In the second quarter, Pembina plans to take over operatorship of the existing
100 MMcf/d shallow cut plant at the Resthaven site from Encana in order to
streamline operation of the plant while the Resthaven facility is under
construction. When Pembina becomes the 'operator of record' at Resthaven, the
Company will manage the facility on behalf of the owners.

Saturn II will leverage the engineering work completed for the Saturn I
facility and is underpinned by a firm-service contract with a third-party for
130 MMcf/d (approximately 65 percent of the facility's total capacity) for a
term of 10 years. Pembina expects the project could be in-service by late
2015, subject to regulatory and environmental approvals. Based on 100 percent
capacity, Saturn II is expected to extract approximately 13.5 mbpd of NGL
which will be transported on the same pipeline lateral Pembina is currently
constructing for Saturn I.

Pembina expects the expansions detailed above to bring the Company's Gas
Services processing capacity to 1,093 MMcf/d (net). This includes enhanced NGL
extraction capacity of approximately 735 MMcf/d (net). The volumes from
Pembina's existing assets and those under development would be processed
largely on a contracted, fee-for-service basis and are expected to result in
approximately 55 mbpd of NGL to be transported for additional toll revenue on
Pembina's Conventional Pipelines by the end of 2015.

Midstream

                                                                      
                                             3 Months Ended March 31^(1)
($ millions, except where noted)                        2013         2012
Revenue                                              1,132.1        331.1
Operations                                              21.8          2.4
Cost of goods sold, including product        
purchases                                                   983.9        299.1
Realized gain (loss) on                      
commodity-related derivative financial
instruments                                                   2.1            
Operating margin^(2)                                   128.5         29.6
Depreciation and amortization included       
in operations                                                31.7          1.7
Unrealized gain (loss) on                    
commodity-related derivative financial
instruments                                                   4.9        (0.5)
Gross profit                                           101.7         27.4
Capital expenditures                                    23.9          2.3

     
^(1) Share of profit from equity accounted investees not included in these
      results.
^(2) Refer to "Non-GAAP Measures."

Business Overview

Pembina offers customers a comprehensive suite of midstream products and
services through its Midstream business as follows:

  *Crude oil midstream targets oil and diluent-related opportunities from key
    sites across Pembina's network, which comprise 15 truck terminals
    (including one capable of emulsion treating and water disposal),
    terminalling at downstream hub locations, storage, and the Pembina Nexus
    Terminal ("PNT"). PNT includes: 21 inbound pipelines connections; 13
    outbound pipelines connections; in excess of 1.2 million bpd of crude oil
    and condensate connected to the terminal; and, 310,000 barrels of surface
    storage in and around the Edmonton, Alberta area.

  *NGL midstream, which includes two NGL operating systems - Redwater West
    and Empress East - isaffected by the seasonal demand for propane;
    inventory generally builds over the second and third quarters of the year
    and is sold in the fourth quarter and the first quarter of the following
    year during the winter heating season.

       *The Redwater West NGL system includes the Younger extraction and
         fractionation facility in B.C.; the recently expanded 73 mbpd
         Redwater NGL fractionator; 7.8 mmbbls  of cavern storage and
         terminalling facilities at Redwater, Alberta; and, third-party
         fractionation capacity in Fort Saskatchewan, Alberta. Redwater West
         purchases NGL mix from various natural gas and NGL producers and
         fractionates it into finished products at fractionation facilities
         near Fort Saskatchewan, Alberta. Redwater West also includes NGL
         production from the Younger NGL extraction and fractionation plant
         (Taylor, B.C.) that provides specification NGL to B.C. markets. Also
         located at the Redwater facility is Pembina's industry-leading
         rail-based terminal which services Pembina's proprietary and customer
         needs.

       *The Empress East NGL system includes a 2.1 bcf/d interest in the
         straddle plants at Empress, Alberta; 20 mbpd of fractionation
         capacity as well as 1.1 mmbbls of cavern storage in Sarnia, Ontario;
         and, approximately 5 mmbbls of hydrocarbon storage at Corunna,
         Ontario. Empress East extracts NGL mix from natural gas at the
         Empress straddle plants and purchases NGL mix from other
         producers/suppliers. Ethane and condensate are generally fractionated
         out of the NGL mix at Empress and sold into Alberta markets. The
         remaining NGL mix is transported by pipelines to Sarnia, Ontario for
         fractionation and storage of specification products. Propane and
         butane are sold into central Canadian and eastern U.S. markets.

Financial Performance

In the Midstream business, revenue, net of cost of goods sold, grew to $148.2
million during the first quarter of 2013 from $32 million during the first
quarter of 2012. This increase was primarily due to the addition of the NGL
assets acquired through the Acquisition and increased  terminalling  activity
on Pembina's pipeline systems.

Operating expenses during the first quarter of 2013 were $21.8 million
compared to $2.4 million in the first quarter of 2012. Operating expenses for
the quarter were higher primarily due to the increase in Midstream's asset
base since the Acquisition.

Operating margin was $128.5 million during the first quarter of 2013 compared
to $29.6 million during the first quarter of 2012 with the increase due
primarily to increased revenue, as discussed above, partially offset by higher
operating expenses.

The Company's crude oil midstream operating margin increased to $42.7 million
compared to $29.6 million during the first quarter of 2012. The strong results
were primarily due to higher volumes and increased activity on Pembina's
pipeline systems, wider margins, as well as increased throughput at the crude
oil midstream truck terminals, which increased by nearly 20 percent compared
to the average during 2012 to exit the first quarter of 2013 at 80,000 bpd.

Operating margin for Pembina's NGL midstream activities was $85.8 million for
the first quarter, including a $3.7 million year-to-date realized gain on
commodity-related derivative financial instruments (see "Market Risk
Management Program"). NGL sales volumes during the first quarter of 2013 were
122.9 mbpd. Operating margin from Redwater West during the first quarter of
2013, excluding realized losses from commodity-related derivative financial
instruments, was $55.9 million. First quarter results in Redwater West were
supported by strong demand for propane and low AECO natural gas prices.
Overall, Redwater West NGL sales volumes averaged 70.3 mbpd in the first
quarter of 2013. Operating margin from Empress East during the first quarter
of 2013, excluding realized losses from commodity-related derivative financial
instruments, was $26.1 million. First quarter results in Empress East were
positively impacted by strong propane prices in eastern Canada. Overall,
Empress East NGL sales volumes averaged 52.6 mbpd in the first quarter of
2013.

Depreciation and amortization included in operations during the first quarter
of 2013 totalled $31.7 million compared to $1.7 million during the same period
of the prior year. This increase reflects the additional Midstream assets in
this business since the closing of the Acquisition.

In the first quarter of 2013, unrealized gains on commodity-related derivative
financial instruments were $4.9 million compared to a $0.5 million loss for
the three months ended March 31, 2012. This amount reflects fluctuations in
the future NGL and natural gas price indices during the period (see "Market
Risk Management Program" and Note 11 to the Interim Financial Statements).

For the three months ended March 31, 2013, gross profit in this business
increased to $101.7 million from $27.4 million during the same period in 2012.
This is due to the addition of assets acquired through the Acquisition and
higher operating margin generated by Pembina's legacy midstream operations.

During the quarter ended March 31, 2013, capital expenditures within the
Midstream business totalled $23.9 million and were primarily related to cavern
development and associated infrastructure. Capital expenditures were $2.3
million for the comparative period of 2012.

New Developments

Future prospects related to Midstream span across the crude oil and NGL value
chains. The capital being deployed in the Midstream business is primarily
directed towards fee-for-service projects which are expected to continue to
increase this businesses' stability and predictability.

The most substantial project in this business unit is the twinning of
Pembina's existing Redwater fractionator in Redwater, Alberta ("RFS II"),
which was announced on March 5, 2013 and is part of the Company's $1 billion
NGL infrastructure expansion. Subject to regulatory and environmental
approvals, Pembina expects RFS II to be in-service late in the fourth quarter
of 2015.

Under the agreements signed with producers, Pembina will receive committed
take-or-pay operating margin for an initial 10-year term from the in-service
date. Contracts for 97 percent of the facility's operating capacity have been
secured. Ethane produced at RFS II will be sold under a long-term arrangement
to NOVA Chemicals Corporation.

During the first quarter of 2013, Pembina also completed and commissioned a
third-party tie-in to its Younger facility.

Pembina also continues to advance numerous other projects in this business
unit as follows:

  *Pembina brought two fee-for-service hydrocarbon storage caverns into
    service at its Redwater site in April, 2013. Pembina expects to bring a
    third cavern into service in the second quarter of 2013.

  *Pembina expects to bring two new full-service terminal ("FST") facilities
    into service in 2013. This includes a joint venture FST in the Judy Creek
    area of Alberta to serve the production from Beaverhill Lake and Swan
    Hills, which should be on-stream by the end of the first half of 2013, and
    a second FST that serves producers in the Cynthia area west of Drayton
    Valley, which is expected to be in-service by year-end.

  *During 2013, Pembina plans to enhance the connectivity of PNT, both to
    third-party infrastructure and to the Company's own facilities between
    Edmonton and Fort Saskatchewan. In addition, Pembina anticipates adding
    the ability to load crude oil by rail during 2013.

  *Pembina is also continuing to investigate offshore propane export
    opportunities that would allow it to leverage its existing assets and
    provide a potential solution for Canadian producers impacted by weak North
    American pricing.

Market Risk Management Program

Pembina is exposed to frac spread risk, which is the difference between the
selling price for propane-plus liquids and the input cost of natural gas
required to produce respective NGL products. Pembina has a risk management
program and uses derivative financial instruments to mitigate frac spread
risk, when possible, to safeguard a base level of operating cash flow that
covers the input cost of natural gas. Pembina has entered into derivative
financial swap contracts to protect the frac spread and product margin, and to
manage exposure to power costs, interest rates and foreign exchange rates.

Pembina's credit policy mitigates risk of non-performance by counterparties of
its derivative financial instruments. Activities undertaken to reduce risk
include: regularly monitoring counterparty exposure to approved credit limits;
financial reviews of all active counterparties; entering into International
Swap Dealers Association agreements; and, obtaining financial assurances where
warranted. In addition, Pembina has a diversified base of available
counterparties.

Management continues to actively monitor commodity price risk and mitigate its
impact through financial risk management activities. For more information on
financial instruments and financial risk management, see Note 11 to the
Interim Financial Statements.

Non-Operating Expenses

G&A

Pembina incurred G&A (including corporate depreciation and amortization) of
$32.6 million during the first quarter of 2013 compared to $17.6 million
during the first quarter of 2012. The increase for the period was mainly due
to the addition of employees who joined Pembina through the Acquisition and
new employees who joined the Company, as well as an increase in salaries and
benefits for existing employees, including increased share-based payment
accruals. In addition, every $1 change in share price is expected to change
Pembina's annual share-based incentive expense by approximately $1 million.

Depreciation & Amortization (operational)

Operational depreciation and amortization increased to $41.8 million during
the first quarter of 2013 compared to $21.7 million during the same period in
2012 which reflects depreciation on new property, plant and equipment and
depreciable intangibles including those assets acquired through the
Acquisition.

Net Finance Costs

Net finance costs in the first quarter of 2013 were $50.8 million compared to
$19.5 million in the first quarter of 2012. The increase primarily relates to
a $22.4 million loss on revaluation of the conversion feature on convertible
debentures as a result of an increase in the market price of Pembina shares
and an increase in interest on convertible debentures totalling $6 million due
to the debentures assumed on closing of the Acquisition (see Note 9 to the
Interim Financial Statements). In 2012, the change in fair value of
commodity-related derivative financial instruments was reclassified from net
finance costs to gain/loss on commodity-related derivative financial
instruments and is included in operational results.

Income Tax Expense

Income tax expense for the first quarter of 2013 includes current taxes of
$4.2 million and deferred taxes of $26 million compared to deferred taxes of
$10.9 million in the same period of 2012. The current taxes arose during the
quarter primarily as a result of certain Pembina subsidiary corporation's
taxable income exceeding their losses available for carry-over. Deferred
income tax expense arises from the difference between the accounting and tax
basis of assets and liabilities.

Liquidity & Capital Resources

                                                        
($ millions)                                 March 31,       December 31,
                                                       2013            2012
Working capital                                   42.8      62.8
Variable rate debt^(1)(2)                                           
    Bank debt                                   200.0           525.0
Total variable rate debt outstanding        
(average rate of 2.80%)^(2)                           200.0           525.0
Fixed rate debt^(1)                                                 
    Senior unsecured notes                      642.0           642.0
    Senior unsecured term debt                   75.0            75.0
    Senior unsecured medium-term note      
     1                                                250.0           250.0
    Senior unsecured medium-term note      
     2                                                450.0           450.0
    Subsidiary debt                               9.7             9.3
Total fixed rate debt outstanding           
(average of 5.03%)^(2)                              1,426.7         1,426.3
Convertible debentures^(1)                       644.0           644.3
Finance lease liability                            5.7             5.8
Total debt and debentures outstanding          2,276.4         2,601.4
Cash and unutilized debt facilities            1,376.4         1,032.3

     
^(1) Face value.
^(2) Pembina maintains derivative financial instruments to manage exposure to
      variable interest rates.
      See Market Risk Management Program.

Pembina anticipates cash flow from operating activities will be more than
sufficient to meet its short-term operating obligations and fund its targeted
dividend level. In the short-term, Pembina expects to source funds required
for capital projects from cash and cash equivalents and unutilized debt
facilities totalling $1,376.4 million as at March 31, 2013. In addition, based
on its successful access to financing in the debt and equity markets during
the past several years, Pembina believes it would likely continue to have
access to funds at attractive rates. Management remains satisfied that the
leverage employed in Pembina's capital structure is sufficient and appropriate
given the characteristics and operations of the underlying asset base.

Management may make adjustments to Pembina's capital structure as a result of
changes in economic conditions or the risk characteristics of the underlying
assets. To maintain or modify Pembina's capital structure in the future,
Pembina may renegotiate new debt terms, repay existing debt, seek new
borrowing and/or issue equity.

Pembina's credit facilities at March 31, 2013 consisted of an unsecured $1.5
billion revolving credit facility due March 2018 and an operating facility of
$30 million due July 2014. During the quarter, Pembina's revolving credit
facility was extended by one year from March 2017 to March 2018 and the
operating facility was also extended by one year from July 2013 to July 2014.
Borrowings on the revolving credit facility and the operating facility bear
interest at prime lending rates plus nil percent to 1.25 percent or Bankers'
Acceptances rates plus 1.00 percent to 2.25 percent. Margins on the credit
facilities are based on the credit rating of Pembina's senior unsecured debt.
There are no repayments due over the term of these facilities. As at March 31,
2013, Pembina had $200 million drawn on bank debt, $0.1 million in letters of
credit and $46.4 million in cash, leaving $1,376.4 million of unutilized debt
facilities on the $1,530 million of established bank facilities. Pembina also
had an additional $18.1 million in letters of credit issued in a separate
demand letter of credit facility. At March 31, 2013, Pembina had loans and
borrowing (excluding amortization, letters of credit and finance lease
liabilities) of $1,626.7 million. Pembina's senior debt to total capital at
March 31, 2013 was 23 percent.

Bought Deal Financing

On March 21, 2013, Pembina closed its offering of 11,206,750 common shares at
a price of $30.80 per share through a syndicate of underwriters, which
included 1,461,750 common shares issued at the same price on the exercise in
full of the over-allotment option granted to the underwriters for aggregate
gross proceeds of $345.2 million.

Pembina used the net proceeds from the offering to reduce the Company's
revolving credit facility which was used to fund the Company's capital program
and for other general corporate purposes.

The common shares were offered pursuant to a prospectus supplement under the
short form base shelf prospectus filed by the Company on February 22, 2013 in
each of the provinces of Canada and in the U.S. pursuant to applicable
registration exemptions.

Debt Issue

On April 30, 2012, Pembina closed the offering of $200 million of senior
unsecured, medium-term notes ("Notes"). The Notes have a fixed interest rate
of 4.75 percent per annum paid semi-annually, and will mature on April 30,
2043. The net proceeds from the offering of Notes were used to pay down
Pembina's existing credit facility.

Credit Ratings

The following information with respect to Pembina's credit ratings is provided
as it relates to Pembina's financing costs and liquidity. Specifically, credit
ratings affect Pembina's ability to obtain short-term and long-term financing
and the cost of such financing. A reduction in the current ratings on
Pembina's debt by its rating agencies, particularly a downgrade below
investment grade ratings, could adversely affect Pembina's cost of financing
and its access to sources of liquidity and capital. In addition, changes in
credit ratings may affect Pembina's ability to, and the associated costs of,
entering into normal course derivative or hedging transactions. Credit ratings
are intended to provide investors with an independent measure of credit
quality of any issues of securities. The credit ratings assigned by the rating
agencies are not recommendations to purchase, hold or sell the securities nor
do the ratings comment on market price or suitability for a particular
investor. Any rating may not remain in effect for a given period of time or
may be revised or withdrawn entirely by a rating agency in the future if in
its judgement circumstances so warrant.

DBRS rates Pembina's senior unsecured notes 'BBB'. S&P's long-term corporate
credit rating on Pembina is 'BBB'.

Capital Expenditures

                                           
                                    3 Months Ended
                                                  March 31
($ millions)                         2013    2012
Development capital                            
  Conventional Pipelines            61.4    11.1
  Oil Sands & Heavy Oil             12.1     5.8
  Gas Services                      38.5    34.0
  Midstream                         23.9     2.3
Corporate/other projects              1.2     1.7
Total development capital           137.1    54.9

During the first quarter of 2013, capital expenditures were $137.1 million
compared to $54.9 million during the same three month period of 2012.

The majority of the capital expenditures in the first quarter of 2013 were in
Pembina's Conventional Pipelines, Gas Services and Midstream businesses.
Conventional Pipelines' capital was incurred to progress its phase I and phase
II crude oil, condensate and NGL expansions and on various new connections.
Gas Services' capital was deployed to progress the Saturn I and Resthaven
enhanced NGL extraction facilities. Midstream's capital expenditures were
primarily directed towards cavern development and related infrastructure.

Contractual Obligations at March 31, 2013

                                                      
($ millions)                          Payments Due By Period
                                    Less
                                         than
Contractual                                 1       1 - 3       3 - 5         After
Obligations                 Total     year    years    years    5 years
Operating and       
finance leases              294.6     10.0     57.9     62.9      163.8
Loans and           
borrowings^(1)            2,104.2     80.9    365.1    312.2    1,346.0
Convertible         
debentures^(1)              893.3     39.2     78.9    248.7      526.5
Construction        
commitments                 872.1    474.8    397.3                  
Provisions^(2)         344.2      0.3      5.7     25.8      312.4
Total               
contractual
obligations^(3)           4,508.4    605.2    904.9    649.6    2,348.7

     
^(1) Excluding deferred financing costs.
^(2) Includes discounted constructive and legal obligations included in the
      decommissioning provision.
^(3) Excluding expansion rights and obligations associated with existing
      contracts and which have not yet been triggered.

Pembina is, subject to certain conditions, contractually committed to the
construction and operation of the Saturn and Resthaven facilities, as well as
RFS II. See "Forward-Looking Statements & Information."

Changes in Accounting Principles and Practices

The following new standards, interpretations, amendments and improvements to
existing standards issued by the International Accounting Standard Board
("IASB") or International Financial Reporting Interpretations Committee
("IFRIC") were adopted as of January 1, 2013 without any material impact to
Pembina's Financial Statements: IFRS 7 Financial Instruments: Disclosures,
IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 12
Disclosure of Interests in Other Entities, IFRS 13 Fair Value Measurement, and
IAS 19 Employee Future Benefits.

Controls and Procedures

Changes in internal control over financial reporting

During the first quarter of 2013, there have been no changes to the Company's
internal control over financial reporting that have materially affected, or
are reasonably likely to materially affect, the Company's Internal Control
over Financial Reporting ("ICFR"), except as noted below.

In accordance with the provisions of NI 52-109, management, including the CEO
and CFO, have limited the scope of their design of the Company's disclosure
controls and procedures ("DC&P") and ICFR to exclude controls, policies and
procedures of Provident. Pembina acquired the assets of Provident and its
subsidiaries on April 2, 2012. Provident's contribution to the Company's
Interim Financial Statements for the quarter ended March 31, 2013 was
approximately 39 percent of consolidated net revenue and approximately 33
percent of consolidated gross profit.

Additionally, as at March 31, 2013, Provident's current assets and current
liabilities were approximately 56 percent and 43 percent of consolidated
current assets and current liabilities, respectively, and its non-current
assets and non-current liabilities were approximately 57 percent and 34
percent of consolidated non-current assets and non-current liabilities,
respectively.

The scope limitation is primarily based on the time required to assess
Provident's DC&P and ICFR in a manner consistent with the Company's other
operations.

Further details related to the Acquisition are disclosed in Note 4 in the
Notes to the Company's Interim Financial Statements for the first quarter of
2013.

Trading Activity and Total Enterprise Value^(1)

                                                                   
                                                    As at and for the 3
                                                   months ended
($ millions,                         ^(2)                                       
except where                                                          March 31,
noted)              May 7, 2013        March 31, 2013                 2012
Trading volume                                                                 
and value                                                              
   Total                                                                       
   volume
  (shares)          12,532,999            42,378,701           59,689,803
   Average                                                                     
   daily
   volume
  (shares)             464,185               694,733              947,601
   Value                                                                       
  traded                 401.6         1,270.0        1,648.0
Shares                                                                         
outstanding
(shares)            307,832,800           306,992,777          169,029,860
Closing share                                                                  
price
(dollars)           32.67           32.10          28.18
Market value                                                           
  Shares              10,056.9       9,854.5      4,763.3    
   5.75%                             ^(3)                 ^(4)                ^(5)
   convertible
   debentures
  (PPL.DB.C)       357.9             353.6          326.7
   5.75%                             ^(6)                 ^(7)                   
   convertible
   debentures
  (PPL.DB.E)       226.9                 221.9                    
   5.75%                             ^(8)                 ^(9)                   
   convertible
   debentures
  (PPL.DB.F)       202.6           201.7                    
Market                                                                         
capitalization         10,844.3        10,631.7        5,090.0
Senior debt             1,672.0       1,617.0      1,402.9    
Total                                                        
enterprise
value^(10)             12,516.3        12,248.7        6,492.9    
                                                    

^(1)  Trading information in this table reflects the activity of Pembina
       securities on the TSX only.
^(2)  Based on 27 trading days from April 1, 2013 to May 7, 2013, inclusive.
^(3)  $299.5 million principal amount outstanding at a market price of
       $119.49 at May 7, 2013 and with a conversion price of $28.55.
^(4)  $299.7 million principal amount outstanding at a market price of
       $118.00 at March 31, 2013 and with a conversion price of $28.55.
^(5)  $299.8 million principal amount outstanding at a market price of
       $109.00 at March 31, 2012 and with a conversion price of $28.55.
^(6)  $171.9 million principal amount outstanding at a market price of
       $132.00 at May 7, 2013 and with a conversion price of $24.94.
^(7)  $172.0 million principal amount outstanding at a market price of
       $129.02 at March 31, 2012 and with a conversion price of $24.94.
^(8)  $172.3 million principal amount outstanding at a market price of
       $117.57 at May 7, 2013 and with a conversion price of $29.53.
^(9)  $172.4 million principal amount outstanding at a market price of
       $117.00 at March 31, 2013 and with a conversion price of $29.53.
^(10) Refer to "Non-GAAP Measures."

As indicated in the previous table, Pembina's total enterprise value was $12.2
billion at March 31, 2013, and the Company's issued and outstanding shares
rose to 307 million by the end of the first quarter 2013, compared to 169
million in the same period of 2012 primarily due to shares issued pursuant to
the Acquisition and on the closing of the bought deal financing as discussed
under "Liquidity & Capital Resources."

Dividends

Pembina pays monthly dividends at a rate of $0.135 per share per month (or
$1.62 annualized). Pembina is committed to providing increased shareholder
returns over time by providing stable dividends and, where appropriate,
further increases in Pembina's dividend, subject to compliance with applicable
laws and the approval of Pembina's Board of Directors. Pembina has a history
of delivering dividend increases once supportable over the long-term by the
underlying fundamentals of Pembina's businesses as a result of, among other
things, accretive growth projects or acquisitions (see "Forward-Looking
Statements & Information").

Dividends are payable if, as, and when declared by Pembina's Board of
Directors. The amount and frequency of dividends declared and payable is at
the discretion of the Board of Directors which will consider earnings, capital
requirements, the financial condition of Pembina and other relevant factors.

Eligible Canadian investors may benefit from an enhanced dividend tax credit
afforded to the receipt of dividends, depending on individual circumstances.
Dividends paid to eligible U.S. investors should qualify for the reduced rate
of tax applicable to long-term capital gains but investors are encouraged to
seek independent tax advice in this regard.

DRIP

Eligible Pembina shareholders have the opportunity to receive, by reinvesting
the cash dividends declared payable by Pembina on their shares, either (i)
additional common shares at a discounted subscription price equal to 95
percent of the Average Market Price (as defined in the DRIP), pursuant to the
"Dividend Reinvestment Component" of the DRIP, or (ii) a premium cash payment
(the "Premium Dividend™") equal to 102 percent of the amount of reinvested
dividends, pursuant to the "Premium Dividend™ Component" of the DRIP.
Additional information about the terms and conditions of the DRIP can be found
at www.pembina.com.

Participation in the DRIP for the first quarter of 2013 was approximately 56
percent of common shares outstanding for proceeds of approximately $67
million.

As of the April 25, 2013 record date, Pembina has made its DRIP available to
its U.S. shareholders. U.S. shareholders are only permitted to participate in
the dividend reinvestment component of Pembina's Premium Dividend™ and
Dividend Reinvestment Plan. Only Canadian resident shareholders are currently
permitted to participate in the Premium Dividend™ component of the plan.
Shareholders who elect to enroll in the full Dividend Reinvestment component
are notified that the sale of the common shares issued on reinvestment is
being made pursuant to a registration statement on Form F-3 filed by Pembina
with the U.S. Securities and Exchange Commission ("SEC").

Risk Factors

Management has identified the primary risk factors that could potentially have
a material impact on the financial results and operations of Pembina. Such
risk factors are presented in Pembina's MD&A for the year ended December 31,
2012 and in Pembina's Annual Information Form ("AIF") for the year ended
December 31, 2012. Pembina's MD&A and AIF are available at www.pembina.com, in
Canada under Pembina's company profile on www.sedar.com and in the U.S. under
the Company's profile at www.sec.gov.

Selected Quarterly Operating Information

                                                                               
                2013                      2012                                         2011
                  Q1       Q4       Q3       Q2       Q1       Q4       Q3       Q2       Q1
Average        
volume
(mbpd unless
stated
otherwise)                                                                             
Conventional   
Pipelines
throughput         493.7    480.2    443.9    433.9    466.9    422.8    430.4    411.4    390.3
Oil Sands &    
Heavy
Oil^(1)            870.0    870.0    870.0    870.0    870.0    870.0    775.0    775.0    775.0
Gas Services   
processing
(mboe/d)^(2)        49.9     46.0     45.8     47.5     44.1     45.3     43.6     40.9     39.4
NGL sales      
volume
(mboe/d)           122.9    115.8     86.7     90.4                                        

     
^(1) Oil Sands & Heavy Oil throughput refers to contracted capacity.
^(2) Net to Pembina. Converted to mboe/d from MMcf/d at a 6:1 ratio.

Selected Quarterly Financial Information

                                                                                           
                         2013                       2012                                           2011
($ millions, except   
where noted)                   Q1        Q4        Q3        Q2       Q1       Q4       Q3       Q2       Q1
Revenue                1,285.7   1,265.7     815.3     870.9    475.5    468.1    300.6    512.4    394.9
Operations                77.2      86.0      69.5      67.7     48.4     55.1     54.4     37.6     44.8
Cost of goods sold,   
including
product purchases         970.8     968.6     565.5     641.9    299.1    308.0    145.8    364.3    254.2
Realized gain         
(loss) on
commodity-
related
derivative
financial
instruments                 2.1      11.0     (2.8)    (12.4)    (0.3)      0.9      3.2    (0.2)      1.4
Operating             
margin^(1)                  239.8     222.1     177.5     148.9    127.7    105.9    103.6    110.3     97.3
Depreciation and      
amortization
included in
operations                   41.8      47.8      51.6      52.5     21.7     19.6     17.8     15.8     14.8
Unrealized gain       
(loss) on
commodity-related
derivative
financial
instruments                   5.8     (2.2)    (23.0)      64.8    (3.5)      0.9      0.7      3.3      0.3
Gross profit             203.8     172.1     102.9     161.2    102.5     87.2     86.5     97.8     82.8
Adjusted EBITDA^(1)      210.2     199.0     153.8     125.9    111.4     88.2     89.9    103.3     87.2
Cash flow from        
operating
activities                  229.0     139.5     130.9      24.1     65.3     73.8     87.7     49.5     74.5
Cash flow from        
operating
activities
per common share
($ per share)                0.77      0.48      0.45      0.08     0.39     0.44     0.52     0.30     0.45
Adjusted cash flow    
from operating
activities^(1)            207.4     172.3     133.2      89.5     98.8     66.0     82.0     81.8     76.0
Adjusted cash flow    
from operating
activities per
common share^(1)
($ per share)              0.70      0.59      0.46      0.31     0.59     0.39     0.49     0.49     0.45
Earnings for the      
period                       90.5      81.3      30.7      80.4     32.6     45.0     30.1     48.0     42.5
Earnings per common   
share
($ per share)                                                                                    
    Basic and        
     diluted                 0.30      0.28      0.11      0.28     0.19     0.27     0.18     0.29     0.25
Common shares         
outstanding
(millions):                                                                                      
    Weighted         
     average
     (basic)                295.9     291.9     289.2     285.3    168.3    167.4    167.6    167.3    167.0
    Weighted         
     average
     (diluted)              296.7     292.5     289.7     286.0    168.9    168.2    168.2    168.0    167.6
    End of period       307.0     293.2     290.5     287.8    169.0    167.9    167.7    167.5    167.1
Dividends declared       121.0     118.4     117.3     116.2     65.7     65.4     65.4     65.3     65.1
Dividends per         
common share
($ per share)             0.405     0.405     0.405     0.405    0.390    0.390    0.390    0.390    0.390

     
^(1) Refer to "Non-GAAP measures."

During the above periods, Pembina's results were influenced by the following
factors and trends:

  *Increased oil production from customers operating in the Cardium and Deep
    Basin Cretaceous formations of west central Alberta, which has resulted in
    increased service offerings in these areas, as well as new connections and
    capacity expansions;
  *Increased liquids-rich natural gas production from producers in the WCBS
    (Deep Basin, Montney and emerging Duvernay Shale plays), which has
    resulted in increased gas gathering and processing at the Company's Gas
    Services assets and additional associated NGL transported on its
    pipelines;
  *The Acquisition, which closed on April 2, 2012 (see Note 4 of the Interim
    Financial Statements).
  *Increased shares outstanding due to: the Acquisition; the DRIP; and, the
    bought deal equity financing in the first quarter of 2013.

Additional Information

Additional information about Pembina and legacy Provident filed with Canadian
securities commissions and the SEC, including quarterly and annual reports,
AIFs (filed with the SEC under Form 40-F), Management Information Circulars
and financial statements can be found online at www.sedar.com, www.sec.gov and
Pembina's website at www.pembina.com.

Non-GAAP Measures

Throughout this MD&A, Pembina has used the following terms that are not
defined by GAAP but are used by Management to evaluate performance of Pembina
and its business. Since certain Non-GAAP financial measures may not have a
standardized meaning, securities regulations require that Non-GAAP financial
measures are clearly defined, qualified and reconciled to their nearest GAAP
measure. Except as otherwise indicated, these Non-GAAP measures are calculated
and disclosed on a consistent basis from period to period. Specific adjusting
items may only be relevant in certain periods.

Earnings before interest, taxes, depreciation and amortization ("EBITDA")

EBITDA is commonly used by Management, investors and creditors in the
calculation of ratios for assessing leverage and financial performance and is
calculated as results from operating activities plus share of profit from
equity accounted investees (before tax) plus depreciation and amortization
(included in operations and general and administrative expense) and unrealized
gains or losses on commodity-related derivative financial instruments.

Adjusted EBITDA is EBITDA excluding acquisition-related expenses in connection
with the Acquisition.

                                                               
                                                        3 Months Ended
                                                                 March 31
($ millions, except per share amounts)                   2013     2012
Results from operating activities                       171.8     62.8
Share of profit from equity accounted investees           1.8      1.5
(before tax, depreciation and amortization)
Depreciation and amortization                            43.1     22.5
Unrealized (gain) loss on commodity-related             (5.8)      3.5
derivative financial instruments
EBITDA                                                  210.9     90.3
Add:                                                                
Acquisition-related expenses                            (0.7)     21.1
Adjusted EBITDA                                         210.2    111.4
EBITDA per common share - basic (dollars)                0.71     0.54
Adjusted EBITDA per common share - basic (dollars)       0.71     0.66

Adjusted cash flow from operating activities

Adjusted cash flow from operating activities is commonly used by Management
for assessing financial performance each reporting period and is calculated as
cash flow from operating activities plus the change in non-cash working
capital and excluding acquisition-related expenses.

                                                             
                                                 3 Months Ended March 31
($ millions, except per share amounts)                    2013       2012
Cash flow from operating activities                      229.0       65.3
Add (deduct):                                                          
Change in non-cash working capital                      (20.9)       12.4
Acquisition-related expenses                             (0.7)       21.1
Adjusted cash flow from operating activities             207.4       98.8
Adjusted cash flow from operating activities              0.70       0.59
per common share - basic (dollars)

Operating margin

Operating margin is commonly used by Management for assessing financial
performance and is calculated as gross profit before depreciation and
amortization included in operations and unrealized gain/loss on
commodity-related derivative financial instruments.

Reconciliation of operating margin to gross profit:

                                                             
                                                 3 Months Ended March 31
($ millions)                                              2013       2012
Revenue                                                1,285.7      475.5
Cost of sales:                                                         
 Operations                                              77.2       48.4
 Cost of goods sold, including product                  970.8      299.1
  purchases
 Realized gain (loss) on commodity-related                2.1      (0.3)
  derivative financial instruments
Operating margin                                         239.8      127.7
Depreciation and amortization included in                 41.8       21.7
operations
Unrealized gain (loss) on commodity-related                5.8      (3.5)
derivative financial instruments
Gross profit                                             203.8      102.5

Total enterprise value

Total enterprise value, in combination with other measures, is used by
Management and the investment community to assess the overall market value of
the business. Total enterprise value is calculated based on the market value
of common shares and convertible debentures at a specific date plus senior
debt.

Management believes these supplemental Non-GAAP measures facilitate the
understanding of Pembina's results from operations, leverage, liquidity and
financial positions. Investors should be cautioned that EBITDA, adjusted
EBITDA, adjusted cash flow from operating activities, operating margin and
total enterprise value should not be construed as alternatives to net
earnings, cash flow from operating activities or other measures of financial
results determined in accordance with GAAP as an indicator of Pembina's
performance. Furthermore, these Non-GAAP measures may not be comparable to
similar measures presented by other issuers.

Forward-Looking Statements & Information

In the interest of providing our securityholders and potential investors with
information regarding Pembina, including Management's assessment of our future
plans and operations, certain statements contained in this MD&A constitute
forward-looking statements or information (collectively, "forward-looking
statements") within the meaning of the "safe harbour" provisions of applicable
securities legislation. Forward-looking statements are typically identified by
words such as "anticipate", "continue", "estimate", "expect", "may", "will",
"project", "should", "could", "believe", "plan", "intend", "design", "target",
"undertake", "view", "indicate", "maintain", "explore", "entail", "schedule",
"objective", "strategy", "likely", "potential", "envision", "aim", "outlook",
"propose", "goal", "would", and similar expressions suggesting future events
or future performance.

By their nature, such forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause actual results or events
to differ materially from those anticipated in such forward-looking
statements. Pembina believes the expectations reflected in those
forward-looking statements are reasonable but no assurance can be given that
these expectations will prove to be correct and such forward-looking
statements included in this MD&A should not be unduly relied upon. These
statements speak only as of the date of the MD&A.

In particular, this MD&A contains forward-looking statements, including
certain financial outlook, pertaining to the following:

  *the future levels of cash dividends that Pembina intends to pay to its
    shareholders;
  *capital expenditure-estimates, plans, schedules, rights and activities and
    the planning, development, construction, operations and costs of
    pipelines, gas service facilities, terminalling, storage and hub
    facilities and other facilities or energy infrastructure, including, but
    not limited to, the Peace/Northern NGL System, the LVP expansion between
    Fox Creek and Edmonton, Alberta, the Phase II LVP Expansion, the Phase II
    NGL Expansion, the joint venture full-service terminal in the Judy Creek
    area of Alberta area, the development program in the Cynthia area west of
    Drayton Valley, offshore export opportunities for propane, the Nipisi and
    Mitsue pipelines expansions, the Saturn I and II facilities and associated
    pipelines, the Resthaven facility and associated pipelines, the Pembina
    Nexus Terminal expansion, and the Redwater fractionator (RFS II)
    expansion;
  *future expansion of Pembina's pipelines and other infrastructure;
  *pipeline, processing and storage facility and system operations and
    throughput levels;
  *oil and gas industry exploration and development activity levels;
  *Pembina's strategy and the development of new business initiatives;
  *growth opportunities;
  *expectations regarding Pembina's ability to raise capital and to carry out
    acquisition, expansion and growth plans;
  *treatment under government regulatory regimes including environmental
    regulations and related abandonment and reclamation obligations;
  *future G&A expenses at Pembina
  *increased throughput potential due to increased activity and new
    connections and other initiatives on Pembina's pipelines;
  *future cash flows, potential revenue and cash flow enhancements across
    Pembina's businesses and the maintenance of operating margins;
  *tolls and tariffs and transportation, storage and services commitments and
    contracts;
  *cash dividends and the tax treatment thereof;
  *operating risks (including the amount of future liabilities related to
    pipeline spills and other environmental incidents) and related insurance
    coverage and inspection and integrity programs;
  *the expected capacity, incremental volumes and in-services dates, as
    applicable, of proposed expansions and new developments, including the
    Northern NGL System, the LVP expansion between Fox Creek and Edmonton,
    Alberta, the Phase II LVP Expansion, the Phase II NGL Expansion, the
    Nipisi and Mitsue pipeline expansions, the Saturn I and II facilities, the
    Resthaven facility, the Pembina Nexus Terminal expansion and the Redwater
    fractionator (RFS II) expansion;
  *the possibility of offshore export opportunities for propane;
  *the possibility of renegotiating debt terms, repayment of existing debt,
    seeking new borrowing and/or issuing equity;
  *expectations regarding participation in Pembina's DRIP;
  *the expected impact of changes in share price on annual share-based
    incentive expense;
  *inventory and pricing levels in the North American liquids market;
  *Pembina's discretion to hedge natural gas and NGL volumes and power; and
  *competitive conditions.

Various factors or assumptions are typically applied by Pembina in drawing
conclusions or making the forecasts, projections, predictions or estimations
set out in forward-looking statements based on information currently available
to Pembina. These factors and assumptions include, but are not limited to:

  *the success of Pembina's operations;
  *prevailing commodity prices and exchange rates and the ability of Pembina
    to maintain current credit ratings;
  *the availability of capital to fund future capital requirements relating
    to existing assets and projects, including but not limited to future
    capital expenditures relating to expansion, upgrades and maintenance
    shutdowns;
  *future operating costs;
  *geotechnical and integrity costs;
  *in respect of the proposed Saturn I and II facilities and the Resthaven
    facility and their estimated in-service dates; that all required
    regulatory and environmental approvals can be obtained on the necessary
    terms in a timely manner, that counterparties will comply with contracts
    in a timely manner; that there are no unforeseen events preventing the
    performance of contracts or the completion of such facilities; that such
    facilities will be fully supported by long-term firm service agreements
    accounting for the entire designed throughput at such facilities at the
    time of such facilities' completion; that there are no unforeseen
    construction costs related to the facilities; and that there are no
    unforeseen material costs relating to the facilities which are not
    recoverable from customers;
  *in respect of the expansion of NGL throughput capacity on the
    Peace/Northern NGL System and the crude throughput capacity on the Peace
    crude system (in respect of the Phase I and II NGL and LVP expansions) and
    the estimated in-service dates with respect to the same; that Pembina will
    receive regulatory approval; that counterparties will comply with
    contracts in a timely manner; that there are no unforeseen events
    preventing the performance of contracts by Pembina; that there are no
    unforeseen construction costs related to the expansion; and that there are
    no unforeseen material costs relating to the pipelines that are not
    recoverable from customers;
  *in respect of the proposed expansion of the Redwater fractionator (RFS
    II); that Pembina will receive regulatory approval; that Pembina will
    reach satisfactory long-term arrangements with customers; that
    counterparties will comply with such contracts in a timely manner; that
    there are no unforeseen events preventing the performance of contracts by
    Pembina; that there are no unforeseen construction costs; and that there
    are no unforeseen material costs relating to the proposed fractionators
    that are not recoverable from customers;
  *in respect of other developments, expansions and capital expenditures
    planned, including the proposed expansion of a number of existing truck
    terminals and construction of new full-service terminals, the expectation
    of additional NGL and crude volumes being transported on the conventional
    pipelines, the installation of the remaining pump station on the Mitsue
    pipeline, the development of seven-fee-for-service storage facilities at
    Redwater that counterparties will comply with contracts in a timely
    manner; that there are no unforeseen events preventing the performance of
    contracts by Pembina; that there are no unforeseen construction costs; and
    that there are no unforeseen material costs relating to the developments,
    expansions and capital expenditures which are not recoverable from
    customers;
  *the future exploration for and production of oil, NGL and natural gas in
    the capture area around Pembina's conventional and midstream assets, the
    demand for gathering and processing of hydrocarbons, and the corresponding
    utilization of Pembina's assets;
  *in respect of the stability of Pembina's dividend; prevailing commodity
    prices, margins and exchange rates; that Pembina's future results of
    operations will be consistent with past performance and management
    expectations in relation thereto; the continued availability of capital at
    attractive prices to fund future capital requirements relating to existing
    assets and projects, including but not limited to future capital
    expenditures relating to expansion, upgrades and maintenance shutdowns;
    the success of growth projects; future operating costs; that
    counterparties to material agreements will continue to perform in a timely
    manner; that there are no unforeseen events preventing the performance of
    contracts; and that there are no unforeseen material construction or other
    costs related to current growth projects or current operations; and
  *prevailing regulatory, tax and environmental laws and regulations.

The actual results of Pembina could differ materially from those anticipated
in these forward-looking statements as a result of the material risk factors
set forth below:

  *the regulatory environment and decisions;
  *the impact of competitive entities and pricing;
  *labour and material shortages;
  *reliance on key relationships and agreements;
  *the strength and operations of the oil and natural gas production industry
    and related commodity prices;
  *non-performance or default by counterparties to agreements which Pembina
    or one or more of its affiliates has entered into in respect of its
    business;
  *actions by governmental or regulatory authorities including changes in tax
    laws and treatment, changes in royalty rates or increased environmental
    regulation;
  *fluctuations in operating results;
  *adverse general economic and market conditions in Canada, North America
    and elsewhere, including changes in interest rates, foreign currency
    exchange rates and commodity prices;
  *the failure to realize the anticipated benefits of the Acquisition;
  *the failure to complete remaining integration of the businesses of Pembina
    and Provident; and
  *the other factors discussed under "Risk Factors" in Pembina's AIF for the
    year ended December 31, 2012. Pembina's MD&A and AIF are available at
    www.pembina.com and in Canada under Pembina's company profile on
    www.sedar.com and in the U.S. on the Company's profile at www.sec.gov.

These factors should not be construed as exhaustive. Unless required by law,
Pembina does not undertake any obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. Any forward-looking statements contained herein are
expressly qualified by this cautionary statement.

CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
(unaudited)

                                                    
                                                March 31    December 31
($ millions)                     Note              2013              2012
Assets                                                          
Current assets                                       
   Cash and cash                              46.4           27.3
    equivalents                        
   Trade receivables and                     368.4          331.7
    other                              
   Derivative financial                        1.5            7.6
    instruments                        11
   Inventory                                 95.2          108.1
                                            511.5          474.7
Non-current assets                                             
   Property, plant and                     5,109.8        5,014.5
    equipment                          5
   Intangible assets and                   2,606.5        2,622.7
    goodwill                           
   Investments in equity                     163.6          161.2
    accounted investees                
   Derivative financial                        0.2            0.3
    instruments                        11
   Other receivables                                        3.1
                                          7,880.1        7,801.8
                                                  
Total Assets                               8,391.6        8,276.5
Liabilities and                                                  
Shareholders' Equity                   
Current liabilities                                  
   Trade payables and                        407.9          344.7
    accrued liabilities                
   Dividends payable                         41.4           39.6
   Loans and borrowings          6            12.1           11.7
   Derivative financial                        7.3           15.9
    instruments                        11
                                            468.7          411.9
Non-current liabilities                                        
   Loans and borrowings          6         1,607.2        1,932.8
   Convertible debentures                   611.1          610.0
   Derivative financial                       70.2           51.8
    instruments                        11
   Employee benefits                         28.4           28.6
   Share-based payments                       7.1           17.2
   Deferred revenue                           4.1            3.1
   Provisions                    7           343.9          361.2
   Deferred tax                              606.8          584.5
    liabilities                        
                                          3,278.8        3,589.2
Total Liabilities                          3,747.5        4,001.1
Shareholders' Equity                                           
Equity attributable to                                             
shareholders of the
Company:                            
   Share capital                 8         5,723.2        5,324.0
   Deficit                              (1,058.4)      (1,027.7)
   Accumulated other                        (26.1)         (26.1)
    comprehensive income               
                                          4,638.7        4,270.2
Non-controlling interest                       5.4            5.2
Total Equity                               4,644.1        4,275.4
Total Liabilities and                       8,391.6        8,276.5
Shareholders' Equity                   

See accompanying notes to the condensed consolidated interim financial
statements

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME
(unaudited)

                                                        
3 Months Ended March 31              
($ millions, except per share
amounts)                                  Note        2013        2012
Revenue                                       1,285.7       475.5
Cost of sales                                 1,089.8       369.2
Gain (loss) on commodity-related     
derivative financial instruments           11          7.9       (3.8)
Gross profit                                    203.8       102.5
                                                              
 General and administrative                     32.6        17.6
 Acquisition-related and other      
  expense (income)                                  (0.6)        22.1
                                                32.0        39.7
                                                              
Results from operating activities               171.8        62.8
                                                              
 Finance income                                (1.6)       (3.1)
 Finance costs                                  52.4        22.6
 Net finance costs                    9          50.8        19.5
                                                              
Earnings before income tax and       
equity accounted investees                          121.0        43.3
                                                              
 Share of loss (profit) of
  investments in equity accounted
  investees, net of tax                           0.3       (0.2)
                                                              
 Current tax expense                             4.2           
 Deferred tax expense                           26.0        10.9
 Income tax expense                             30.2        10.9
                                                              
Earnings and total comprehensive     
income for the period                                90.5        32.6
Earnings and total comprehensive     
income attributable to:                                            
 Shareholders of the Company                    90.3        32.6
 Non-controlling interest                        0.2           
                                                90.5        32.6
Earnings per share attributable      
to shareholders of the Company:                                    
 Basic and diluted earnings per     
  share (dollars)                                    0.30     0.19

See accompanying notes to the condensed consolidated interim financial
statements

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
(unaudited)

                                                                                        
                              Attributable to Shareholders of the Company                           
                                                              Accumulated
                                                                    Other
                                  Share                     Comprehensive                   Non-controlling         Total
($ millions)      Note    Capital      Deficit          Income      Total          Interest     Equity
December 31,              5,324.0    (1,027.7)          (26.1)    4,270.2               5.2    4,275.4
2012                  
Earnings and                             90.3                      90.3               0.2       90.5
total
comprehensive
income for
period                
Transactions                                                                                    
with
shareholders
of the Company        
 Share-based                 3.2                                   3.2                         3.2
  payment
  transactions        8
 Dividends                           (121.0)                   (121.0)                     (121.0)
  declared            8
 Common                    334.9                                 334.9                       334.9
  shares
  issued, net
  of issue
  costs               8
 Dividend                   67.0                                  67.0                        67.0
  reinvestment
  plan                8
 Debenture                 (5.9)                                 (5.9)                       (5.9)
  conversions
  and other           8
Total                       399.2      (121.0)                     278.2                       278.2
transactions
with
shareholders
of the Company        
March 31, 2013           5,723.2    (1,058.4)          (26.1)    4,638.7               5.4    4,644.1
                                                                                              
December 31,              1,811.7      (834.9)          (15.2)      961.6                       961.6
2011                  
Earnings and                             32.6                      32.6                        32.6
total
comprehensive
income for
period                
Transactions                                                                                    
with
shareholders
of the Company        
 Share-based                 1.5                                   1.5                         1.5
  payment
  transactions        
 Dividends                            (65.7)                    (65.7)                      (65.7)
  declared            
 Dividend                   28.0                                  28.0                        28.0
  reinvestment
  plan                
Total                        29.5       (65.7)                    (36.2)                      (36.2)
transactions
with
shareholders
of the Company        
March 31, 2012           1,841.2      (868.0)          (15.2)      958.0                       958.0

See accompanying notes to the condensed consolidated interim financial
statements

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
(unaudited)

                                                         
3 Months Ended March 31 ($             Note        2013       2012
millions)
Cash provided by (used in):                                    
Operating activities:                                          
Earnings for the period                           90.5       32.6
Adjustments for:                                               
 Depreciation and amortization                   43.1       22.5
 Unrealized (gain) loss on             11        (5.8)        3.5
  commodity-related derivative
  financial instruments
 Net finance costs                     9          50.8       19.5
 Share of loss (profit) of                        0.3      (0.2)
  investments in equity accounted
  investees, net of tax
 Deferred income tax expense                     26.0       10.9
 Share-based payments expense                     9.1        3.6
 Employee future benefits expense                 2.7        1.4
 Other                                            0.4        0.6
 Changes in non-cash working                     20.9     (12.4)
  capital
 Payments from equity accounted                   4.8        4.1
  investees
 Decommissioning liability                      (0.3)      (1.1)
  expenditures
 Employer future benefit                        (3.2)      (2.5)
  contributions
 Net interest paid                             (10.3)     (17.2)
Cash flow from operating                         229.0       65.3
activities
                                                       
Financing activities:                                          
 Bank borrowings                                           66.9
 Repayment of loans and                       (325.3)      (2.7)
  borrowings
 Issuance of equity                             345.2          
 Share issue costs                             (13.8)          
 Financing fees                                 (1.0)      (2.8)
 Exercise of stock options                        2.6        1.0
 Dividends paid (net of shares                 (52.1)     (37.6)
  issued under the Dividend
  Reinvestment Plan)
Cash flow from financing                        (44.4)       24.8
activities
                                                       
Investing activities:                                          
 Capital expenditures                         (137.1)     (54.9)
 Changes in non-cash investing                 (23.6)     (32.3)
  working capital and other
 Contributions to equity                        (4.8)          
  accounted investees
Cash flow used in investing                    (165.5)     (87.2)
activities
Change in cash                                    19.1        2.9
Cash (bank indebtedness),                         27.3      (0.7)
beginning of period
Cash and cash equivalents, end of                 46.4        2.2
period

See accompanying notes to the condensed consolidated interim financial
statements

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1. REPORTING ENTITY

Pembina Pipeline Corporation ("Pembina" or the "Company") is an energy
transportation and service provider domiciled in Canada. The condensed
consolidated unaudited interim financial statements ("Interim Financial
Statements") include the accounts of the Company, its subsidiary companies,
partnerships and any interests in associates and jointly controlled entities
as at and for the three months ended March 31, 2013. These Interim Financial
Statements and the notes thereto have been prepared in accordance with IAS 34
- Interim Financial Reporting. They do not include all of the information
required for full annual financial statements and should be read in
conjunction with the consolidated financial statements of the Company as at
and for the year ended December 31, 2012. The interim financial statements
were authorized for issue by the Board of Directors on May 9, 2013.

Pembina owns or has interests in pipelines that transport conventional crude
oil and natural gas liquids ("NGL"), oil sands and heavy oil pipelines, gas
gathering and processing facilities, and an NGL infrastructure and logistics
business. Facilities are located in Canada and in the U.S. Pembina also offers
midstream services that span across its operations.

2. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies are set out in the December 31, 2012 financial
statements. Those policies have been applied consistently to all periods
presented in these Interim Financial Statements.

New standards

The following new standards, interpretations, amendments and improvements to
existing standards issued by the IASB or International Financial Reporting
Interpretations Committee ("IFRIC") were adopted as of January 1, 2013 without
any material impact to Pembina's Financial Statements: IFRS 7 Financial
Instruments: Disclosures, IFRS 10 Consolidated Financial Statements, IFRS 11
Joint Arrangements, IFRS 12 Disclosure of interests in Other Entities, IFRS 13
Fair Value Measurement, and IAS 19 Employee Future Benefits.

3. DETERMINATION OF FAIR VALUES

A number of the Company's accounting policies and disclosures require the
determination of fair value, for both financial and non-financial assets and
liabilities. Fair values have been determined for measurement and/or
disclosure purposes based on the following methods. When applicable, further
information about the assumptions made in determining fair values is disclosed
in the notes specific to that asset or liability.

i)Property, plant and equipment

The fair value of property, plant and equipment recognized as a result of a
business combination is based on market values when available and depreciated
replacement cost when appropriate. Depreciated replacement cost reflects
adjustments for physical deterioration as well as functional and economic
obsolescence.

ii)Intangible assets

The fair value of intangible assets acquired in a business combination is
determined using the multi-period excess earnings method, whereby the subject
asset is valued after deducting a fair return on all other assets that are
part of creating the related cash flows.

The fair value of other intangible assets is based on the discounted cash
flows expected to be derived from the use and eventual sale of the assets.

iii)Derivatives

Fair value of derivatives, with the exception of the redemption liability
which is related to the acquisition of the Company's subsidiary, are estimated
by reference to independent monthly forward settlement prices, interest rate
yield curves, currency rates, quoted market prices per share and volatility
rates at the period ends.

The redemption liability related to one of the Company's subsidiaries
represents a put option, held by the non-controlling interest, to sell the
remaining one-third of the business to the Company after the third anniversary
of the acquisition date (October 3, 2014). The put price to be paid by the
Company for the residual interest upon exercise is based on a multiple of the
subsidiary's earnings during the three year period prior to exercise, adjusted
for associated capital expenditures and debt based on management estimates
(see Note 11 "Financial Instruments and Financial Risk Management").

Fair values reflect the credit risk of the instrument and include adjustments
to take account of the credit risk of the Company entity and counterparty when
appropriate.

iv)Non-derivative financial assets and liabilities

Fair value, which is determined for disclosure purposes, is calculated based
on the present value of future principal and interest cash flows, discounted
at the market rate of interest at the reporting date. In respect of the
convertible debentures, the fair value is determined by the market price of
the convertible debenture on the reporting date. For finance leases the market
rate of interest is determined by reference to similar lease agreements. For
disclosure purposes, carrying value is a reasonable approximation for fair
value for cash and cash equivalents, trade receivables and other, trade
payables and accrued liabilities, finance lease liabilities and dividends
payable.

v)Share-based payment transactions

The fair value of the employee share options is measured using the
Black-Scholes formula. Measurement inputs include share price on measurement
date, exercise price of the instrument, expected volatility (based on weighted
average historic volatility adjusted for changes expected due to publicly
available information), weighted average expected life of the instruments
(based on historical experience and general option holder behaviour), expected
dividends, expected forfeitures and the risk-free interest rate (based on
government bonds). Service and non-market performance conditions attached to
the transactions are not taken into account in determining fair value.

The fair value of the long-term share unit award incentive plan and associated
distribution units are measured based on the reporting date market price of
the Company's shares. Expected dividends are not taken into account in
determining fair value as they are issued as additional distribution share
units.

4. ACQUISITION

On April 2, 2012, Pembina acquired all of the outstanding Provident Energy
Ltd. ("Provident") common shares (the "Provident Shares") in exchange for
116,535,750 Pembina common shares valued at approximately $3.3 billion (the
"Acquisition").

The purchase price equation, subject to finalization, is based on assessed
fair values and is estimated as follows:

                                                              
($ millions)                                                       
Cash                                                               9
Trade receivables and other                                      195
Inventory                                                         87
Property, plant and equipment                                  1,988
Intangible assets and goodwill (including $1,747               2,408
goodwill)
Trade payables and accrued liabilities                         (249)
Derivative financial instruments - current                      (53)
Derivative financial instruments - non-current                  (36)
Loans and borrowings                                           (215)
Convertible debentures                                         (317)
Provisions and other                                           (128)
Deferred tax liabilities                                       (406)
Other equity                                                       6
Non-controlling interest                                         (5)
                                                              3,284

Revenue generated by the Provident business for the quarter ending March 31,
2013, before intersegment eliminations was $506.3 million. Gross profit,
before intersegment eliminations, for the same period was $68.1 million.

For more information, please see Note 5 of the Consolidated Financial
Statements for the year ended December 31, 2012.

5. PROPERTY, PLANT AND EQUIPMENT

                                                                            
                          Land
                           and                   Facilities       Linefill           Assets
                          Land                          and            and            Under
($ millions)        Rights   Pipelines    Equipment       Other   Construction      Total
Cost                                                                               
Balance at            88.0     2,593.7      2,072.2       506.6          751.8    6,012.3
December 31,
2012
Additions                         0.2          3.1         4.1          129.7      137.1
Change in                       (5.7)        (7.0)                              (12.7)
decommissioning
provision
Capitalized                                                            7.4        7.4
interest
Transfers                         2.9          2.3       (0.5)          (4.7)          
Disposals and                   (0.1)        (0.1)         0.9                      0.7
other
Balance at            88.0     2,591.0      2,070.5       511.1          884.2    6,144.8
March 31, 2013
                                                                                  
Depreciation                                                                       
Balance at             4.4       776.7        171.9        44.8                    997.8
December 31,
2012
Depreciation                     14.1         16.1         6.6                     36.8
Disposals                         0.1        (0.1)         0.4                      0.4
Balance at             4.4       790.9        187.9        51.8                  1,035.0
March 31, 2013
                                                                                  
Carrying                                                                           
amounts
December 31,          83.6     1,817.0      1,900.3       461.8          751.8    5,014.5
2012
March 31, 2013        83.6     1,800.1      1,882.6       459.3          884.2    5,109.8

Commitments

At March 31, 2013, the Company has contractual commitments for the acquisition
and or construction of property, plant and equipment of $872.1 million
(December 31, 2012: $362.8 million).

6. LOANS AND BORROWINGS

This note provides information about the contractual terms of the Company's
interest-bearing loans and borrowings, which are measured at amortized cost.

Carrying value terms and debt repayment schedule

Terms and conditions of outstanding loans were as follows:

                                                                        
($ millions)                                             Carrying amount^(3)
                         Available
                     facilities at          Nominal                        March     December
                         March 31,         interest        Year of           31,          31,
                         2013          rate    maturity       2013       2012
                                            prime +
                                               0.45
Operating                                 or BA^(2)
facility^(1)        30.0        + 1.45        2014                    
Revolving                                   prime +
unsecured                                      0.45
credit                                    or BA^(2)
facility         1,500.0        + 1.45        2018      195.0      520.7
Senior
unsecured
notes -
Series A           175.0     5.99        2014      174.7      174.7
Senior
unsecured
notes -
Series C           200.0    5.58        2021      197.1      197.0
Senior
unsecured
notes -
Series D           267.0    5.91        2019      265.7      265.6
Senior
unsecured
term
facility            75.0    6.16        2014       74.8       74.8
Senior
unsecured
medium-term
notes 1            250.0    4.89        2021      248.8      248.7
Senior
unsecured
medium-term
notes 2            450.0    3.77        2022      447.8      447.9
Subsidiary
debt                       9.7    5.02        2014        9.7        9.3
Finance
lease
liabilities                                                  5.7        5.8
Total
interest
bearing
liabilities            2,956.7                      1,619.3    1,944.5
Less current
portion                                                   (12.1)     (11.7)
Total
non-current                                              1,607.2    1,932.8

     
^(1) Operating facility expected to be renewed on an annual basis.
^(2) Bankers' Acceptance.
^(3) Deferred financing fees are all classified as non-current. Non-current
      carrying amount of facilities are net of deferred financing fees.

Pembina's $1.5 billion revolving credit facility was extended by one year from
March 2017 to March 2018 and the $30 million operating facility was also
extended by one year from July 2013 to July 2014.

7. PROVISIONS

                                                                  
($ millions)                                                   Total
Balance at December 31, 2012^(1)                               361.7
Unwinding of discount rate                                       2.1
Decommissioning liabilities settled during the               
period                                                                   (0.3)
Change in estimates and other                                 (19.3)
Total                                                          344.2
Less current portion (included in accrued                    
liabilities)                                                             (0.3)
Balance at March 31, 2013                                      343.9

     
^(1) Includes current portion of $0.5 million (included in accrued
      liabilities).

The Company applied a 2 percent inflation rate per annum (December 31, 2012: 2
percent) and a risk free rate of 2.5 percent (December 31, 2012: 2.36 percent)
to calculate the present value of the decommissioning provision. The
remeasured decommissioning provision decreased property, plant and equipment
and decommissioning provision liability. Of the re-measurement reduction of
the decommissioning provision, $6.8 million was in excess of the carrying
amount of the related asset and is recognized as a credit to depreciation
expense.

8. SHARE CAPITAL

                                                             
($ millions, except share                           Number of        Share
amounts)                              Common Shares          Capital
Balance December 31, 2012               293,226,473      5,324.0
Common shares issued, net                          11,206,750    
of issue costs                                                 334.9
Share-based payment                                   154,447    
transactions                                                     3.2
Dividend reinvestment                               2,394,852    
plan                                                            67.0
Debenture conversions and                              10,255    
other                                                          (5.9)
Balance March 31, 2013              306,992,777^(1)      5,723.2

     
^(1) Weighted average number of common shares outstanding for the three
      months ended
      March 31, 2013 is 295.9 million (2012: 168.3 million). On a fully
      diluted basis, the weighted
      average number of common shares outstanding for the three months ended
      March 31,
      2013 is 296.7 million (2012: 168.9 million).

On March 21, 2013, Pembina closed a bought deal offering of 11,206,750 shares
at a price of $30.80 per share for aggregate gross proceeds of $345.2 million
($334.9 million, net of issue costs).

Dividends

The following dividends were declared by the Company:

                                                         
3 Months Ended March 31 ($ millions)             2013      2012
$0.405 per qualifying common share              121.0      65.7
(2012: $0.39)

On April 5, 2013 Pembina announced that the Board of Directors declared a
dividend for April of $0.135 per qualifying common share ($1.62 annualized) in
the total amount of $41.6 million.

9. NET FINANCE COSTS

                                                             
3 Months Ended March 31 ($ millions)                 2013       2012
Interest income from:                                             
            Related parties                                  (0.3)
            Bank deposits                          (0.6)          
Interest expense on financial liabilities                         
measured at amortized cost:
            Loans and borrowings                    17.0       15.4
            Convertible debentures                  10.6        4.6
            Finance leases                           0.3        0.1
            Unwinding of discount                    2.1        2.5
(Gain) loss in fair value of                        (0.7)      (2.8)
non-commodity-related derivative financial
instruments
Loss on revaluation of conversion feature on         22.4          
convertible debentures
Foreign exchange (gains) loss                       (0.3)          
Net finance costs                                    50.8       19.5

10. OPERATING SEGMENTS

                                                                                             
                                           Oil                                              
                                              Sands
                                                  &                                       Corporate &
3 Months Ended March         Conventional     Heavy            Gas                       Intersegment
31, 2013 ($ millions)       Pipelines^(1)       Oil       Services     Midstream^(2)     Eliminations         Total
Revenue:                                                                                      
 Pipeline                                                                                  
  transportation                     95.8      43.4                                          (13.1)         126.1
 Midstream services                                            1,132.1                  1,132.1
 Gas Services                                      27.5                                    27.5
Total revenue                     95.8    43.4        27.5         1,132.1         (13.1)    1,285.7
 Operations                      35.3    11.9         8.9            21.8          (0.7)       77.2
 Cost of goods                                                                             
  sold^(3)                                                                  983.9           (13.1)         970.8
 Realized gain                                                                             
  (loss) on
  commodity-related
  derivative
  financial
  instruments                                                                 2.1                           2.1
Operating margin                  60.5    31.5        18.6           128.5            0.7      239.8
 Depreciation and                                                                          
  amortization
  (operational)                       1.6       4.9            3.6              31.7                          41.8
 Unrealized gain                                                                           
  (loss) on
  commodity-related
  derivative
  financial
  instruments                         0.9                                      4.9                           5.8
Gross profit                      59.8    26.6        15.0           101.7            0.7      203.8
 Depreciation                                                                              
  included in general
  and
  administrative                                                                            1.3           1.3
 Other general and                                                                         
  administrative                      2.5       1.0            1.3               6.4             20.1          31.3
 Acquisition-related                                                                       
  and other expenses
  (income)                                                                    0.1            (0.7)         (0.6)
Reportable segment                                                                          
results from
operating
activities                         57.3      25.6           13.7              95.2           (20.0)         171.8
Net finance costs                  1.0     0.3         0.1             0.1           49.3       50.8
Reportable segment                                                                          
earnings (loss)
before tax
and income from
equity accounted
investees                            56.3      25.3           13.6              95.1           (69.3)         121.0
Share of loss                                                                               
(profit) of
investments in equity
accounted
investees, net of tax                                                         0.3                           0.3
Capital expenditures              61.4    12.1        38.5            23.9            1.2      137.1
                                                                                       
3 Months Ended March                                                                        
31, 2012 ($ millions)                                                                                        
Revenue:                                                                                      
 Pipeline                                                                                  
  transportation                     82.2      43.1                                                        125.3
 Midstream services                                              331.1                    331.1
 Gas Services                                      19.1                                    19.1
Total revenue                     82.2    43.1        19.1           331.1                    475.5
 Operations                      27.5    13.0         6.1             2.4          (0.6)       48.4
 Cost of goods                                                                             
  sold^(3)                                                                  299.1                         299.1
 Realized gain                                                                             
  (loss) on
  commodity-related
  derivative
  financial
  instruments                       (0.3)                                                                 (0.3)
Operating margin                  54.4    30.1        13.0            29.6            0.6      127.7
 Depreciation and                                                                          
  amortization
  (operational)                      11.9       4.9            3.2               1.7                          21.7
 Unrealized loss on                                                                        
  commodity-related
  derivative
  financial
  instruments                       (3.0)                                    (0.5)                         (3.5)
Gross profit                      39.5    25.2         9.8            27.4            0.6      102.5
 Depreciation                                                                              
  included in general
  and administrative                                                                          0.8           0.8
 Other general and                                                                         
  administrative                      0.9       1.0            0.5               1.3             13.1          16.8
 Acquisition-related                                                                       
  and other expenses
  (income)                            1.2     (0.1)                                            21.0          22.1
Reportable segment                                                                          
results from
operating
activities                         37.4      24.3            9.3              26.1           (34.3)          62.8
Net finance costs                  1.6     0.5         0.1                          17.3       19.5
Reportable segment                                                                          
earnings (loss)
before tax
and income from
equity accounted
investees                            35.8      23.8            9.2              26.1           (51.6)          43.3
Share of loss                                                                               
(profit) of
investments in equity
accounted
investees, net of tax                                                       (0.2)                         (0.2)
Capital expenditures              11.1     5.8        34.0             2.3            1.7       54.9

     
^(1) 5.6 percent of Conventional Pipelines revenue is under regulated tolling
      arrangements (4.5 percent for quarter ending March 31, 2012).
^(2) Midstream services revenue includes $50.5 million associated with U.S.
      midstream sales (nil for quarter ending
      March 31, 2012).
^(3) Including product purchases.

11. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

Fair values

The fair values of financial assets and liabilities, together with the
carrying amounts shown in the statement of financial position, are as follows:

                                                               
                      March 31, 2013                 December 31, 2012
($               Carrying           Fair     Carrying           Fair
millions)               Amount              Value           Amount              Value
Financial                                                   
assets
carried at
fair value                                                                       
Derivative                                                  
financial
instruments                1.7                1.7              7.9                7.9
Financial                                                   
liabilities
carried at
fair value                                                                       
Derivative                                                  
financial
instruments               77.5               77.5             67.7               67.7
Financial                                                   
liabilities
carried at
amortized
cost                                                                             
Loans and                                                   
borrowings             1,619.3            1,780.8          1,944.5            2,089.7
Convertible               ^(1)                         ^(1)   
debentures               611.1              777.2            610.0              725.0
                 2,230.4        2,558.0      2,554.5        2,814.7

     
^(1) Carrying amount excludes conversion feature of convertible debentures.

The basis for determining fair values is disclosed in Note 3.

Fair value hierarchy

The fair value of financial instruments carried at fair value is classified
according to the following hierarchy based on the amount of observable inputs
used to value the instruments.

Level 1: Unadjusted quoted prices are available in active markets for
identical assets or liabilities as the reporting date. Pembina uses Level 1
inputs for the disclosed fair value measurements of the convertible
debentures.

Level 2: Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices). Level 2 valuations are based on inputs,
including quoted forward prices for commodities, time value and volatility
factors, which can be substantially observed or corroborated in the
marketplace. Instruments in this category include non-exchange traded
derivatives such as over-the-counter physical forwards and options, including
those that have prices similar to quoted market prices. Pembina obtains quoted
market prices for commodities, future power contracts, interest rates and
foreign exchange rates from information sources including banks, Bloomberg
Terminals and Natural Gas Exchange (NGX). With the exception of one item
described under Level 3, all of Pembina's financial instruments carried at
fair value are valued using Level 2 inputs.

Level 3: Valuations in this level require the most significant judgments and
consist primarily of unobservable or non-market based inputs. Level 3 inputs
include longer-term transactions, transactions in less active markets or
transactions at locations for which pricing information is not available. In
these instances, internally developed methodologies are used to determine fair
value. The redemption liability related to acquisition of subsidiary is
classified as a Level 3 instrument, as the fair value is determined by using
inputs that are not based on observable market data. The liability represents
a put option, held by the non-controlling interest of Three Star Trucking Ltd.
("Three Star"), to sell the remaining one-third of the business to Pembina
after the third anniversary of the original acquisition date (October 3,
2014). The put price to be paid by the Company for the residual interest upon
exercise is based on a multiple of Three Star's earnings during the three year
period prior to exercise, adjusted for associated capital expenditures and
debt based on management estimates. These estimates are subject to measurement
uncertainty and the effect on the financial statements of future periods could
be material.

Financial instruments classified as Level 3

                                               
($ millions)                                     2013
Redemption liability, January 1, 2013             5.3
Gain on revaluation                             (1.0)
Redemption liability, March 31, 2013              4.3

The following table is a summary of the net derivative financial instrument
liability:

                                                         
                                                    March 31    December 31
($ millions)                                       2013              2012
Frac spread related                               (0.6)          (3.1)
Product margin                                      0.7          (1.1)
Corporate                                                           
  Power                                          (5.7)          (7.1)
  Interest rate                                 (13.1)         (14.3)
  Foreign exchange                               (0.8)            0.7
Other derivative financial instruments                              
  Conversion feature of convertible             (52.0)         (29.6)
   debentures
  Redemption liability related to                (4.3)          (5.3)
   acquisition of subsidiary
Net derivative financial instruments             (75.8)         (59.8)
liability

                                                              
Commodity-Related Derivative Financial                   3 Months Ended
Instruments                                                      March 31
($ millions)                                           2013      2012
Realized gain (loss) on commodity-related                          
derivative financial instruments
Frac spread related                                     0.6         
Product margin                                          1.5         
Power                                                          (0.3)
Realized gain (loss) on commodity-related               2.1     (0.3)
derivative financial instruments
Unrealized gain (loss) on commodity-related             5.8     (3.5)
derivative financial instruments
Gain (loss) on commodity-related derivative             7.9     (3.8)
financial instruments

For non-commodity-related derivative financial instruments see Note 9, Net
Finance Costs.

Sensitivity analysis

The following table shows the impact on earnings if the underlying risk
variables of the derivative financial instruments changed by a specified
amount, with other variables held constant.

                                                          
As at March 31, 2013 ($                         + Change    - Change
millions)
Frac spread related                                               
 Natural gas               (AECO +/- $1.00           4.6       (4.6)
                               per GJ)
 NGL (includes propane,    (Belvieu +/- U.S.       (2.5)         2.5
  butane)                      $0.10 per gal)
 Foreign exchange          (FX rate +/-            (1.8)         1.8
  (U.S.$ vs. Cdn$)             $0.05)
Product margin                                                    
 Crude oil                 (WTI +/- $5.00          (5.1)         5.1
                               per bbl)
 NGL (includes propane,    (Belvieu +/- U.S.         3.1       (3.1)
  butane and condensate)       $0.10 per gal)
Corporate                                                         
 Interest rate             (Rate +/- 50              3.4       (3.4)
                               basis points)
 Power                     (AESO +/- $5.00           3.4       (3.4)
                               per MW/h)
Conversion feature of       (Pembina share          (2.9)         2.8
convertible debentures         price +/- $0.50
                               per share)

12. SUBSEQUENT EVENTS

On April 8, 2013, Pembina announced the availability of its Dividend
Reinvestment Plan ("DRIP") to U.S. shareholders effective immediately. The new
common shares purchased with reinvested dividends will be issued from
Pembina's treasury at a 5% discount to the average market price (calculated
under the DRIP).

On April 30, 2013, Pembina closed the offering of $200 million of senior
unsecured, medium-term notes ("Notes"). The Notes have a fixed interest rate
of 4.75 percent per annum paid semi-annually, and will mature on April 30,
2043. The net proceeds from the offering of Notes were used to pay down
Pembina's existing credit facility.

CORPORATE INFORMATION

HEAD OFFICE

Pembina Pipeline Corporation
Suite 3800, 525 - 8th Avenue S.W.
Calgary, Alberta T2P 1G1

AUDITORS

KPMG LLP
Chartered Accountants
Calgary, Alberta

TRUSTEE, REGISTRAR & TRANSFER AGENT

Computershare Trust Company of Canada
Suite 600, 530 - 8th Avenue SW
Calgary, Alberta T2P 3S8
1-800-564-6253

STOCK EXCHANGE

Pembina Pipeline Corporation
TSX listing symbols for:
Common shares: PPL
Convertible debentures: PPL.DB.C, PPL.DB.E, PPL.DB.F

NYSE listing symbol for:
Common shares: PBA

INVESTOR INQUIRIES

Phone:(403) 231-3156
Fax:(403) 237-0254
Toll Free:1-855-880-7404
Email:investor-relations@pembina.com
Website:www.pembina.com







SOURCE Pembina Pipeline Corporation

Contact:

INVESTOR INQUIRIES

Phone:(403) 231-3156
Fax:(403) 237-0254
Toll Free:1-855-880-7404
Email:investor-relations@pembina.com
Website:www.pembina.com
 
Press spacebar to pause and continue. Press esc to stop.