Pembina Pipeline Corp. (PBA) fell for an eighth session, its longest losing streak in almost three years, reflecting the company’s increased exposure to oil prices and natural-gas fractionation after the takeover of Provident Energy Ltd.
The shares fell 1.1 percent to C$27.82 at the close in Toronto. The company last had an eight-day losing streak in July 2009.
Pembina bought Provident for C$3.2 billion ($3.1 billion) in April to add natural gas liquids assets to its pipeline operations. The transaction added Provident’s extraction, storage and transportation services to Calgary-based Pembina’s 7,500-kilometer (4,700-mile) pipeline network.
Provident exposes Pembina to price swings for processing gas, said Megan MacNeill, an analyst at Haywood Securities Inc. in Vancouver, who doesn’t own any shares and rates them outperform, advising investors to purchase the shares. “When the price of oil declines, those margins get squeezed,” she said.
Natural gas liquids including propane and butane can be refined into a variety of products.
Oil markets influence natural gas liquids prices because they compete in major markets, Canada’s Natural Energy Board said. Oil futures in New York capped the biggest monthly drop in more than three years on speculation that slowing U.S. economic growth and the European debt crisis would cut fuel demand.
DBRS downgraded its rating on Pembina’s C$2.14 billion in outstanding notes last month on an increased “business risk profile” following the Provident acquisition.
Ashley Nuell, a spokeswoman for Pembina, didn’t respond to a telephone message.
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