q4 2020 annual report restated

Pembina Pipeline Corporation

ANNUAL REPORT2020

REPORTTOSHAREHOLDERSYearendedDecember31,2020

MANAGEMENT'SDISCUSSIONANDANALYSIS

TableofContents

1.AboutPembina ....................................................................................................................................................................... 3

2.Financial&OperatingOverview ............................................................................................................................................ 4

3.SegmentResults ..................................................................................................................................................................... 8

4.Liquidity&CapitalResources ................................................................................................................................................. 22

5.CapitalInvestments ................................................................................................................................................................ 27

6.Dividends ................................................................................................................................................................................ 28

7.SelectedQuarterlyInformation ............................................................................................................................................. 29

8.SelectedEquityAccountedInvesteeInformation ................................................................................................................. 31

9.Other ...................................................................................................................................................................................... 32

10.AccountingPolicies&Estimates .......................................................................................................................................... 36

11.RiskFactors ........................................................................................................................................................................... 42

12.Non-GAAPMeasures ............................................................................................................................................................ 62

13.Abbreviations ....................................................................................................................................................................... 65

14.Forward-LookingStatements&Information ....................................................................................................................... 66

BasisofPresentation

ThefollowingrestatedManagement'sDiscussionandAnalysis("MD&A")ofthefinancialandoperatingresultsofPembina

PipelineCorporation("Pembina"orthe"Company")isdatedFebruary25,2021,andissupplementaryto,andshouldberead

inconjunctionwith,Pembina'srestatedauditedconsolidatedfinancialstatementsasatandfortheyearendedDecember31,

2020("ConsolidatedFinancialStatements"),whichwerefiledonSEDARonNovember18,2021.

ThisMD&AsupersedesandreplacestheoriginalManagement'sDiscussionandAnalysisofthefinancialandoperatingresults

ofPembinadatedFebruary25,2021fortheyearendedDecember31,2020,whichwasfiledonSEDARonFebruary25,2021

(the"OriginalMD&A").

TheCompanyhasrestatedcertainfinancialinformationoftheCompanyfortheyearsendedDecember31,2020,2019and

2018,toaddresstherestatementofrevenueandcostofgoodssoldforsuchperiodsinconnectionwiththeCompany's

accountingtreatmentofcertaincontractswithinitsmarketingbusinessand,inconnectiontherewith,theCompanyhas

restatedandrefiledonthedatehereoftheCompany'sConsolidatedFinancialStatements.Inconnectionwiththeforegoing,

thisMD&AreflectstherestatedrevenueandcostofgoodssoldfiguresfortheyearsendedDecember31,2020and2019with

noimpacttoearnings,cashflowsorfinancialposition.See"RestatementofRevenueandCostofGoodsSold"inthisMD&A

andNote3oftheConsolidatedFinancialStatementsformoredetail.

PembinaPipelineCorporation2020AnnualReport1

OtherthantherestatedrevenueandcostofgoodssoldfiguresfortheyearsendedDecember31,2020and2019andrelated

disclosuresinrespectoftherestatementofsuchfigures,thisMD&Adoesnot,anddoesnotpurportto,updateorrestatethe

informationintheOriginalMD&AorreflectanyeventsthatoccurredafterthedateoftheOriginalMD&A.

TheConsolidatedFinancialStatementshavebeenpreparedinaccordancewithInternationalFinancialReportingStandards

("IFRS")asissuedbytheInternationalAccountingStandardsBoard,usingtheaccountingpoliciesdescribedinNote5ofthe

ConsolidatedFinancialStatements.AlldollaramountscontainedinthisMD&AareexpressedinCanadiandollarsunless

otherwisenoted.ForfurtherdetailsonPembinaandPembina'ssignificantassets,includingdefinitionsforcapitalizedterms

usedhereinandnototherwisedefined,refertoPembina'srestatedannualinformationform("AIF")fortheyearended

December31,2020.AdditionalinformationaboutPembinafiledwithCanadianandU.S.securitiescommissions,including

quarterlyandannualreports,annualinformationforms(filedwiththeU.S.SecuritiesandExchangeCommission(the"SEC")

underForm40-F)andmanagementinformationcirculars,canbefoundonlineatwww.sedar.com,www.sec.govandthrough

Pembina'swebsiteatwww.pembina.com.

Abbreviations

ForalistofabbreviationsthatmaybeusedinthisMD&A,refertotheAbbreviationssectionofthisMD&A.

Non-GAAPFinancialMeasures

Pembinahasidentifiedcertainfinancialperformancemeasuresthatmanagementbelievesprovidemeaningfulinformationin

assessingPembina'sunderlyingperformance.Readersarecautionedthatthesemeasuresdonothaveastandardizedmeaning

prescribedbyIFRSandthereforemaynotbecomparabletosimilarmeasurespresentedbyotherentities.Refertothe"Non-

GAAPMeasures"sectionofthisMD&Aforalistanddescription,includingreconciliationstothemostdirectlycomparable

GAAPmeasures,ofsuchnon-GAAPmeasures.

RiskFactorsandForward-LookingInformation

Managementhasidentifiedtheprimaryriskfactorsthatcouldhaveamaterialimpactonthefinancialresultsandoperations

ofPembina.Suchriskfactorsaredescribedinthe"RiskFactors"sectionofthisMD&AandarealsoincludedinPembina'sAIF.

TheCompany'sfinancialandoperationalperformanceispotentiallyaffectedbyanumberoffactors,including,butnotlimited

to,thefactorsdescribedwithinthe"Forward-LookingStatements&Information"sectionofthisMD&A.ThisMD&Acontains

forward-lookingstatementsbasedonPembina'scurrentexpectations,estimates,projectionsandassumptions.This

informationisprovidedtoassistreadersinunderstandingtheCompany'sfutureplansandexpectationsandmaynotbe

appropriateforotherpurposes.

2PembinaPipelineCorporation2020AnnualReport

1.ABOUTPEMBINAPembinaisaleadingtransportationandmidstreamserviceproviderthathasbeenservingNorthAmerica'senergyindustryfor

morethan65years.Pembinaownsanintegratedsystemofpipelinesthattransportvarioushydrocarbonliquidsandnatural

gasproductsproducedprimarilyinwesternCanada.TheCompanyalsoownsgasgatheringandprocessingfacilities;anoiland

naturalgasliquidsinfrastructureandlogisticsbusiness;andisgrowinganexportterminalsbusiness.Pembina'sintegrated

assetsandcommercialoperationsalongthemajorityofthehydrocarbonvaluechainallowittoofferafullspectrumof

midstreamandmarketingservicestotheenergysector.Pembinaiscommittedtoidentifyingadditionalopportunitiesto

connecthydrocarbonproductiontonewdemandlocationsthroughthedevelopmentofinfrastructurethatwouldextend

Pembina'sserviceofferingevenfurtheralongthehydrocarbonvaluechain.Thesenewdevelopmentswillcontributeto

ensuringthathydrocarbonsproducedintheWesternCanadianSedimentaryBasinandtheotherbasinswherePembina

operatescanreachthehighestvaluemarketsthroughouttheworld.

PurposeofPembina:

Tobetheleaderindeliveringintegratedinfrastructuresolutionsconnectingglobalmarkets;

• Customerschooseusfirstforreliableandvalue-addedservices;

• Investorsreceivesustainableindustry-leadingtotalreturns;

• Employeessaywearethe'employerofchoice'andvalueoursafe,respectful,collaborativeandfairworkculture;and

• Communitieswelcomeusandrecognizethenetpositiveimpactofoursocialandenvironmentalcommitment.

OngoingImpactoftheCOVID-19Pandemic

InMarch2020,theWorldHealthOrganizationdeclaredtheglobaloutbreakofthenovelcoronavirus("COVID-19")a

pandemic.Inresponse,manygovernmentsimposedrestrictionsonindividualsandbusinesses,resultinginasignificant

slowdownoftheglobaleconomy.Whiletheserestrictionshavebeenrelaxedincertainjurisdictions,aresurgenceof

COVID-19cases(includingcasesresultingfromvariantsoftheCOVID-19virus)incertaingeographicareasandtheriskthat

thiscouldoccurinotherareashascausedgovernmentsincertainjurisdictionstosustainand,insomecases,re-impose

restrictions.Inaddition,whilevaccinesarebeginningtobedistributed,thereisongoinguncertaintyastothetiming,levelof

adoption,durationofefficacyandoveralleffectivenessofthevaccine,includingagainstvariantsoftheCOVID-19virus.Asa

result,thereremainssignificantuncertaintyastotheextentanddurationoftheglobaleconomicslowdown.Theglobal

economicslowdownhasled,andmaycontinuetolead,tosignificantoperationaldisruptionofbusinessesandtheir

workforces,asignificantincreaseineconomicuncertaintyandadecreaseindemandforcrudeoil,naturalgas,NGLandother

commodities.

Pembina'sgreatestassetsareitspeopleandtherelationshipswithitscustomers,investorsandthecommunitiesinwhichit

hasapresence.Pembinawillcontinuetokeepitsemployeesandstakeholderstopofmindandsupportedwhilenavigating

throughtheseevents.Pembinawilladjustitsresponseasneededandwillcontinuetobasedecisionsonrecommendations

frompublichealthexperts,ongoingevaluationofglobalenergypricesandtheimpactonPembinaanditscustomers'

businesses.

TheimpactsoftheCOVID-19pandemichavebeenassessedthroughouttheMD&Aand,wherematerial,additionaldisclosure

hasbeenprovidedtoindicatethepotentialimpactstheCOVID-19pandemicmayhaveonPembinaanditsresultsof

operations.


2.FINANCIAL&OPERATINGOVERVIEWConsolidatedFinancialOverviewfortheThreeMonthsEndedDecember31

ResultsofOperations

($millions,exceptwherenoted) 2020(3) 2019(3) Change %Change

Infrastructureandotherservicesrevenue 798 662 136 21

Productsalesrevenue 882 1,006 (124) (12)

TotalRevenue 1,680 1,668 12 1

Netrevenue(1) 954 837 117 14

Adjustedgrossprofit(5) 561 605 (44) (7)

Grossprofit 247 605 (358) (59)

Earnings(loss) (1,216) 150 (1,366) (911)

Earnings(loss)percommonshare–basicanddiluted(dollars) (2.28) 0.22 (2.50) (1,136)

Cashflowfromoperatingactivities 766 728 38 5

Cashflowfromoperatingactivitiespercommonshare–basic(dollars)(1) 1.39 1.41 (0.02) (1)

Adjustedcashflowfromoperatingactivities(1) 603 576 27 5

Adjustedcashflowfromoperatingactivitiespercommonshare–basic(dollars)(1) 1.10 1.11 (0.01) (1)

Capitalinvestments 161 429 (268) (62)

AdjustedEBITDA(1) 866 787 79 10

Totalvolume(mboe/d)(2) 3,614 3,577 37 1

ChangeinEarnings($millions)(3)(4)

(1,216)

150 73

(5)(113)

36

(1,790) (13)

446

EarningsQ42019

Pipelinesgrossprofit

Facilitiesgrossprofit

Marketing&NewVenturesadjusted

grossprofit

Corporate,G&Aandother

Impairments Currenttax

expense

Deferredtax

expense

Earnings(loss)

Q42020

ResultsOverview

Resultsinthefourthquarterof2020werepositivelyimpactedbyhighergrossprofitinPipelines,duetothecontributionfrom

theassetsacquiredintheKinderAcquisition,combinedwithimprovingvolumesandloweroperatingexpensesforthe

conventionalpipelineassets.Facilitiesgrossprofitremainedconsistentduringthefourthquarterof2020asDuvernayIIand

EmpressInfrastructurecameintoservice,inNovember2019andOctober2020respectively,offsetbylowercapitalfeesatthe

ResthavenfacilityandtheCutbankComplex.Marketing&NewVenturesresultsstartedtoshowsignsofimprovementand

PembinamonetizedaportionofNGLstoragepositionsbuiltupduringthesecondandthirdquartersof2020;however,this

wasoffsetbyunrealizedlossesoncommodity-relatedderivativesandlowercrudemargins.General&administrativeand

otherexpensesdecreasedduetolowerincentiveandacquisitionrelatedcosts.Pembinarecognized$2.1billion($1.6billion

netoftax)(2019:$300million)inimpairmentsduringthefourthquarterof2020,whichresultedina$1.2billionlossandan

associateddeferredtaxrecoveryforthefourthquarterof2020.Seethe"Impairments"sectionforfurtherdetails.Excluding

impairmentsandtheassociateddeferredtaxrecovery,earningsforthefourthquarterof2020wouldhavebeen$338million.


ChangesinResultsfortheThreeMonthsEndedDecember31Infrastructureandotherservicesrevenue

▲ $136millionincreaseinrevenueduetorevenuecontributedbytheCochinPipeline,EdmontonTerminalsandVancouverWharvesacquiredintheKinderAcquisitionandrevenueassociatedwithDuvernayIIandEmpressInfrastructurebeingplacedintoservice,inNovember2019andOctober2020respectively,combinedwithhigherdeferredrevenuerecognizedinPipelines,partiallyoffsetbylowercapitalfeesinFacilities.

Productsalesrevenue ▼ $124milliondecrease($30milliondecreasenetofcostofgoodssold),largelyduetotheimpactoftheCOVID-19pandemiconmarketconditionsresultinginlowercrudeoilpriceswhichalsocompressedmarginsanddecreasedcrudeactivities,partiallyoffsetbyhighermarketedNGLvolumesasPembinamonetizedaportionofpreviouslybuiltupstoragepositions.

Costofgoodssold ▲ $105milliondecrease,largelyduetolowercrudeoilpricesandcrudeoilactivities,partiallyoffsetbyhigherNGLmarketpricesandincreasedmarketedNGLvolumesasPembinamonetizedaportionofpreviouslybuiltupstoragepositions.

Operatingexpenses ▼ $24millionincrease,largelyduetohigherlabourcosts,repairsandmaintenancecostsandpropertytaxesdrivenbygrowthinPembina'sbusinessfollowingtheKinderAcquisition,partiallyoffsetbylowerreclamationcostsontheconventionalpipelineassets,combinedwithaloweraveragepowerpoolpricepartiallyoffsettinghigherconsumption.

Depreciationandamortizationincludedinoperations

▼ $41millionincrease,primarilyduetogrowthinPembina'sassetbasefollowingtheKinderAcquisitionandadditionalassetsbeingplacedintoservice.

Shareofprofit(loss)fromequityaccountedinvestees-operations

▼ $19milliondecreaselargelyduetoanarrowerAECO-ChicagonaturalgaspricedifferentialandlowerNGLmargins,alsoresultedinalowercontributionsfromAuxSableandAlliance.

Realizedloss(gain)oncommodity-relatedderivatives

▼ $14millionnegativevariance,duetohigherNGLmarketpricescreatingalossforNGL-basedderivativessettledduringtheperiod.

Unrealizedlossoncommodity-relatedderivatives

▼ $63millionnegativevariance,primarilyduetotherecoveryintheforwardpriceofpropane,butaneandcrudeoilduringthefourthquarterof2020,combinedwithadecreaseintheforwardpriceofnaturalgas.

General&administrativeandother

▲ $36milliondecrease,largelyduetolowerincentivecostsfollowingthedeclineinPembina'sshareprice,combinedwithloweracquisition-relatedcosts.

Impairments(4) ▼ Pembinarecognizedtotalimpairmentsof$2.1billion($1.6billionnetoftax)(2019:$300million),associatedwithitsinvestmentsinRuby,CKPCandtheassetsassociatedwithJordanCove.Seethe"Impairments"sectionforfurtherdetails.

Netfinancecosts ● Consistentwiththepriorperiod.Higherinterestexpenseassociatedwithhigheraveragedebtlevelsandinterestexpenseassociatedwithleaseslargelyoffsetgainsonnon-commodity-relatedderivativefinancialinstrumentsandforeignexchangegains.

Currenttaxexpense ▼ $13millionincrease,primarilyduetotaxableincomegeneratedfromtheassetsacquiredintheKinderAcquisition.

Deferredtaxrecovery ▲ $446millionincrease,largelyduetothedeferredtaxrecoveryontheimpairmentexpensediscussedabove.

Earnings(loss) ▼ $1.4billiondecrease,duetothefactorsdiscussedabove.

Cashflowfromoperatingactivities

▲ $38millionincrease,primarilydrivenbyanincreaseinoperatingresultsafteradjustingfornon-cashitems,largelyattributabletotheassetsacquiredintheKinderAcquisition,and$19milliondecreaseintaxespaid,partiallyoffsetbya$22millionincreaseinnetinterestpaid,$24millionchangeinnon-cashworkingcapitaland$14milliondecreaseindistributionsfromequityaccountedinvestees.

Adjustedcashflowfromoperatingactivities(1)

▲ $27millionincrease,largelyduetothesameitemsimpactingcashflowfromoperatingactivities,discussedabove,netofthe$24millionchangeinnon-cashworkingcapital,partiallyoffsetbyhighercurrenttaxexpense.

AdjustedEBITDA(1) ▲ $79millionincrease,largelyduetothe$93millioncontributionfromtheCochinPipeline,EdmontonTerminalsandVancouverWharvesacquiredintheKinderAcquisition,combinedwithhigherdeferredrevenuesrecognizedonthePeacePipelinesystemandthePhaseVIExpansioncomingintoservice,partiallyoffsetbylowermarginsoncrudeoilsalesinthemarketingbusinessasaresultofthelowercrudeoilpricesduringthefourthquarterof2020andlowercontributionfromAllianceduetoanarrowerAECO-Chicagonaturalgaspricedifferential,whichresultedinlowerrevenues.IncludedinadjustedEBITDAis$174million(2019:$196million)relatedtoequityaccountedinvestees.

Totalvolume(mboe/d)(2) ▲ 37mboe/dincrease,duetothecontributionsfromtheCochinPipelineacquiredintheKinderAcquisition,combinedwithhigherdeferredrevenuevolumesrecognizedonthePeacePipelinesystem,aswellasthePhaseVIExpansionandDuvernayIIcomingintoservice,partiallyoffsetbylowerinterruptiblevolumesontheDraytonValleyPipeline,PeacePipelinesystemandVeresenMidstream,duetomarketconditionsrelatedtotheCOVID-19pandemic,combinedwithlowervolumesattheYoungerfacilityfollowingastagedrestartafterregularlyscheduledmaintenanceinSeptember2020.Revenuevolumesinclude315mboe/d(2019:368mboe/d)relatedtoequityaccountedinvestees.

▲ Increase; ▼ Decrease;or ● Noimpact; toearnings,adjustedEBITDA,cashflowfromoperations,adjustedcashflowfromoperatingactivitiesortotalvolumes.

(1) Refertothe"Non-GAAPMeasures"section.(2) Totalrevenuevolumes.Seethe"Abbreviations"sectionfordefinition.MarketedNGLvolumesareexcludedfromvolumestoavoiddoublecounting.Refertothe"Marketing

&NewVentures"sectionforfurtherinformation.(3) 2020periodandcomparative2019periodhavebeenrestated.See"VoluntaryChangeinAccountingPolicy","RestatementofRevenueandCostofGoodsSold"andNote3to

theConsolidatedFinancialStatements.(4) Impairmentsincludeimpairmentexpenseof$1.8billionandimpairmentinshareofprofitfromequityaccountedinvesteesof$314million.(5) Adjustedgrossprofitrepresentsgrossprofitexcludingimpairmentinshareofprofitfromequityaccountedinvestees.SeeNote22totheConsolidatedFinancialStatements

forfurtherdetails.


ConsolidatedFinancialOverviewforthe12MonthsEndedDecember31

ResultsofOperations


Infrastructureandotherservicesrevenue 2,997 2,426 571 24

Productsalesrevenue 2,956 3,946 (990) (25)

Revenue 5,953 6,372 (419) (7)

Netrevenue(1) 3,444 3,120 324 10

Adjustedgrossprofit 2,322 2,442 (120) (5)

Grossprofit 2,008 2,442 (434) (18)

Earnings(loss) (316) 1,507 (1,823) (121)

Earnings(loss)percommonshare–basic(dollars) (0.86) 2.69 (3.55) (132)

Earnings(loss)percommonshare–diluted(dollars) (0.86) 2.68 (3.54) (132)

Cashflowfromoperatingactivities 2,252 2,532 (280) (11)

Cashflowfromoperatingactivitiespercommonshare–basic(dollars)(1) 4.10 4.94 (0.84) (17)

Adjustedcashflowfromoperatingactivities(1) 2,289 2,234 55 2

Adjustedcashflowfromoperatingactivitiespercommonshare–basic(dollars)(1) 4.16 4.36 (0.20) (5)

Capitalinvestments 1,029 1,645 (616) (37)

AdjustedEBITDA(1) 3,281 3,061 220 7

Totalvolume(mboe/d)(2) 3,500 3,451 49 1

ChangeinEarnings($millions)(3)

(316)

1,507

196 30

(349)

86

(1,790)(131) (30)

165

Earnings2019

Pipelinesgrossprofit

Facilitiesgrossprofit

Marketing&NewVenturesadjusted

grossprofit

Corporate,G&Aandother

Impairments Netfinancecosts

Currenttax

expense

Deferredtax

expense

Earnings(loss)2020

ResultsOverview

Resultsfor2020werepositivelyimpactedbyhighergrossprofitinbothPipelinesandFacilitiesprimarilyasaresultofthe

assetsacquiredintheKinderAcquisition,combinedwithloweroperatingexpensesinPipelines.Offsettingtheresultsfrom

PipelinesandFacilities,Marketing&NewVentureswasnegativelyimpactedbylowermarginsoncrudeoilandNGLsales,a

lowercontributionfromAuxSableasaresultoflowerNGLmarginsandanarrowerAECO-Chicagonaturalgasprice

differentialandhigherunrealizedlossesoncommodity-relatedderivatives.General&administrativeexpensesdecreasedin

2020,largelyduetolowerincentivecosts,whileotherexpensesdecreasedastheresultoftherecognitionofotherincome

associatedwiththeCanadianEmergencyWageSubsidy.Netfinancecostsincreasedduetohigherinterestexpense,drivenby

higheraveragedebtlevels,andforeignexchangelossesontherepaymentofU.S.dollardenominateddebt.Pembinaalso

recognized$2.1billion($1.6billionnetoftax)(2019:$300million)innon-cashimpairmentsduringthefourthquarterof2020,

whichresultedinanassociateddeferredtaxrecovery.Excludingimpairmentsandtheassociateddeferredtaxrecovery,

earningsfortheyearwouldhavebeen$1.2billion.


ChangesinResultsforthe12MonthsEndedDecember31Infrastructureandotherservicesrevenue

▲ $571millionincreaseinrevenueduetorevenuecontributedbytheCochinPipeline,EdmontonTerminalsandVancouverWharvesacquiredintheKinderAcquisition,partiallyoffsetbylowerinterruptiblevolumesinPipelinesandlowercapitalfeesinFacilities,largelyduetoreducedenergydemandasaresultoftheongoingCOVID-19pandemic.

Productsalesrevenue ▼ $990milliondecrease($246milliondecreasenetofcostofgoodssold),largelyduetoweakerglobalenergydemandthroughoutmostof2020,duetotheCOVID-19pandemic,andtheresultingdecreaseinpricesforcrudeoilandpropane.Additionally,theimpactoftheCOVID-19pandemiconmarketconditionscompressedmarginsanddecreasedcrudeactivities,whilelowerfracspreadsimpactedNGLmargins,combinedwitha$33millionarbitrationawardpaymentreceivedduringthefirstquarterof2019.

Costofgoodssold ▲ $743milliondecrease,duetolowercrudeoilpricesandlowercrudeactivitiesasaresultoftheCOVID-19pandemic.

Operatingexpenses ▼ $110millionincrease,largelyduetohigherlabourcosts,repairsandmaintenancecostsandpropertytax,asaresultofthelargerassetbasefollowingtheKinderAcquisition,partiallyoffsetbylowerreclamationcostsontheconventionalpipelineassetsandalowerpowerpoolpricethatpartiallyoffsetincreasedconsumptionduetothelargerassetbase.


▼ $191millionincrease,primarilyduetogrowthinPembina'sassetbasefollowingtheKinderAcquisitionandadditionalassetsbeingplacedintoservice.

Shareofprofit(loss)fromequityaccountedinvestees-operations

▼ $93milliondecreaselargelyduetolowerNGLmarginsandthenarrowerAECO-Chicagonaturalgaspricedifferential,resultinginalowercontributionsfromAuxSableandAlliance.

Realizedgainoncommodity-relatedderivatives

▲ $21millionincrease,duetolowermarketpricesintheperiodcreatingagainforcrudeandNGL-basedderivativessettledduring2020.


▼ $71millionnegativevariance,primarilyduetoadditionalcontractsaddedandmaturingduringtheyear,combinedwithanincreaseintheforwardpriceofpropane.

General&administrativeandother

▲ $83milliondecrease,largelyduetolowerincentivecosts,drivenbythedeclineinglobalequitymarketswhichimpactedPembina'sshareprice,combinedwith$39millioninotherincomeassociatedwiththeCanadianEmergencyWageSubsidy,whichwerepartiallyoffsetbyacquisition-relatedcosts.

Impairments(4) ▼ Pembinarecognizedtotalimpairmentsof$2.1billion($1.6billionnetoftax)(2019:$300million),associatedwithitsinvestmentsinRuby,CKPCandtheassetsassociatedwithJordanCove.Seethe"Impairments"sectionforfurtherdetails.

Netfinancecosts ▼ $131millionincrease,primarilydrivenbyadditionalinterestexpenseassociatedwithhigheraveragedebtlevels,combinedwithanincreaseinforeignexchangelossesontherepaymentofU.S.dollardenominateddebtandincreasedinterestexpenserelatedtoleases.

Currenttaxexpense ▼ $30millionincrease,astaxableincomegeneratedfromtheassetsacquiredintheKinderAcquisitionandthetaximpactoftheCanadianEmergencyWageSubsidywaspartiallyoffsetbydecreasedtaxableincomefromotherPembinaentities.

Deferredtaxrecovery ▲ $165millionincrease,largelyduetotherecoveryontheimpairmentexpensediscussedabove,partiallyoffsetbytheenactmentofAlberta'sBill3inJuneof2019,whichreducedtheAlbertacorporatetaxratefrom12to8percentandresultedinadeferredtaxrecoveryduring2019.

Earnings(loss) ▼ $1.8billiondecrease,duetothefactorsdiscussedabove.

Cashflowfromoperatingactivities

▼ $280milliondecrease,primarilydrivenbythe$199millionchangeinnon-cashworkingcapital,$154millionincreaseintaxespaid,asPembinamadethefinalpaymentof2019taxesand2020installments,$116milliondecreaseindistributionsfromequityaccountedinvesteesand$114millionincreaseinnetinterestpaid,partiallyoffsetbytheincreaseinoperatingresultsafteradjustingfornon-cashitems.

Adjustedcashflowfromoperatingactivities(1)

▲ $55millionincrease,largelyduetothesamefactorsimpactingcashflowfromoperatingactivities,discussedabove,netofthechangeinnon-cashworkingcapital,increaseintaxespaidand$43millionloweraccruedshare-basedpayments,partiallyoffsetbythe$27millionincreaseinpreferredsharedividendsfollowingtheKinderAcquisition.

AdjustedEBITDA(1) ▲ $220millionincrease,primarilyduetothe$405millioncontributionfromtheCochinPipeline,EdmontonTerminalsandVancouverWharvesacquiredintheKinderAcquisition,combinedwiththePhaseVIExpansioncomingintoserviceinJune2020,DuvernayIIcomingintoserviceinNovember2019,loweroperatingexpensesontheconventionalpipelineassets,lowergeneral&administrativeandotherexpensesandrealizedgainsoncommodityrelatedderivatives,discussedabove.Theseincreaseswerepartiallyoffsetbylowermarginsoncrudeoilandpropanesalesinthemarketingbusinessasaresultoflowerpricesforcrudeoilandlowerfracspreadsduring2020,asaresultoftheCOVID-19pandemic,andlowercontributionfromAuxSable,duetolowerNGLmargins,andAllianceduetothenarrowerAECO-Chicagonaturalgaspricedifferential.IncludedinadjustedEBITDAis$681million(2019:$802million)relatedtoequityaccountedinvestees.

Totalvolume(mboe/d)(2) ▲ 49mboe/dincrease,duetothecontributionsfromtheCochinPipelineacquiredintheKinderAcquisition,combinedDuvernayIIcomingintoservice,partiallyoffsetbylowerinterruptiblevolumesontheDraytonValleyPipelineandPeacePipelinesystem,duetomarketconditions,combinedwithlowervolumesattheYoungerfacilityfollowingastagedrestartafterregularlyscheduledmaintenanceinSeptember2020.Revenuevolumesinclude312mboe/d(2019:332mboe/d)relatedtoequityaccountedinvestees.

▲ Increase; ▼ Decrease;or ● Noimpact; toearnings,adjustedEBITDA,cashflowfromoperations,adjustedcashflowfromoperatingactivitiesortotalvolumes.

(1) Refertothe"Non-GAAPMeasures"section.(2) Totalrevenuevolumes.Seethe"Abbreviations"sectionfordefinition.MarketedNGLvolumesareexcludedfromvolumestoavoiddoublecounting.Refertothe"Marketing

&NewVentures"sectionforfurtherinformation.(3) 2020periodandcomparative2019periodhavebeenrestated.See"VoluntaryChangeinAccountingPolicy","RestatementofRevenueandCostofGoodsSold"andNote3to

theConsolidatedFinancialStatements.(4) Impairmentsincludeimpairmentexpenseof$1.8billionandimpairmentinshareofprofitfromequityaccountedinvesteesof$314million.


3.SEGMENTRESULTSBusinessOverview

ThePipelinesDivisionprovidescustomerswithpipelinetransportation,terminalling,storageandrailservicesinkeymarket

hubsinCanadaandtheUnitedStatesforcrudeoil,condensate,naturalgasliquidsandnaturalgas.Thedivisionincludes

pipelinetransportationcapacityofapproximately3.1mmboe/d(1)andabovegroundstorageofapproximately11mmbbls(1)

withinitsconventional,oilsandsandheavyoil,andtransmissionassets.Theconventionalassetsincludestrategicallylocated

pipelinesandterminallinghubsthatgatherandtransportlightandmediumcrudeoils,condensateandnaturalgasliquids

fromwesternAlbertaandnortheastBritishColumbiatotheEdmonton,Albertaareaforfurtherprocessingortransportation

ondownstreampipelines.TheoilsandsandheavyoilassetstransportheavyandsyntheticcrudeoilproducedwithinAlberta

totheEdmontonareaandofferassociatedstorage,terminallingandrailservices.Thetransmissionassetstransportnatural

gas,ethaneandcondensatethroughoutCanadaandtheUnitedStatesonlonghaulpipelineslinkingvariouskeymarkethubs.

Inaddition,thePipelinesDivisionassetsprovidelinkagesbetweenPembina'supstreamanddownstreamassetsacrossNorth

America,enablingintegratedcustomerserviceofferings.Together,theseassetssupplyproductfromhydrocarbonproducing

regionstorefineries,fractionatorsandmarkethubsinAlberta,BritishColumbia,IllinoisandCalifornia,aswellasotherregions

throughoutNorthAmerica.

TheFacilitiesDivisionincludesinfrastructurethatprovidesPembina'scustomerswithnaturalgas,condensateandNGL

services.Pembina'snaturalgasgatheringandprocessingassetsarestrategicallypositionedinactive,liquids-richareasofthe

WCSBandWillistonBasinandareintegratedwiththeCompany'sotherbusinesses.Pembinaprovidessweetandsourgas

gathering,compression,condensatestabilization,andbothshallowcutanddeepcutgasprocessingserviceswithatotal

capacityofapproximately6bcf/d(2)foritscustomers.CondensateandNGLextractedatvirtuallyallCanadian-basedfacilities

haveaccesstotransportationonPembina'spipelines.Inaddition,allNGLtransportedalongtheAlliancePipelineare

extractedthroughthePembinaoperatedChannahonFacilityattheterminus.TheFacilitiesDivisionincludesapproximately

354mbpd(2)ofNGLfractionation,21mmbbls(1)ofcavernstorageandassociatedpipelineandrailterminallingfacilitiesandthe

CompanyiscurrentlyconstructingaliquefiedpropaneexportfacilityonCanada'sWestCoast.Thesefacilitiesarefully

integratedwiththeCompany'sotherdivisions,providingcustomerswiththeabilitytoaccessacomprehensivesuiteof

servicestoenhancethevalueoftheirhydrocarbons.Inaddition,PembinaownsabulkmarineexportterminalinVancouver,

BritishColumbia.

TheMarketing&NewVenturesDivisionstrivestomaximizethevalueofhydrocarbonliquidsandnaturalgasoriginatinginthe

basinswheretheCompanyoperates.Pembinaseekstocreatenewmarkets,andfurtherenhanceexistingmarkets,tosupport

boththeCompany'sanditscustomers'overallbusinessinterests.Inparticular,Pembinaseekstoidentifyopportunitiesto

connecthydrocarbonproductiontonewdemandlocationsthroughthedevelopmentofinfrastructure.Pembinastrivesto

increaseproducernetbacksandproductdemandtoimprovetheoverallcompetitivenessofthebasinswheretheCompany

operates.WithintheMarketing&NewVenturesDivision,Pembinaundertakesvalue-addedcommoditymarketingactivities

includingbuyingandsellingproducts(naturalgas,ethane,propane,butane,condensateandcrudeoil),commodityarbitrage,

andoptimizingstorageopportunities.ThemarketingbusinessentersintocontractsforcapacityonbothPembina'sandthird-

partyinfrastructure,handlesproprietaryandcustomervolumesandaggregatesproductionforonwardsale.

(1) Netcapacity;excludesprojectsunderdevelopment.(2) Netcapacity.IncludesAuxSablecapacity.ThefinancialandoperationalresultsforAuxSableareincludedintheMarketing&NewVenturesDivision;excludesprojectsunder

development.


FinancialandOperationalOverviewbyDivision

3MonthsEndedDecember31

2020 2019

($millions,exceptwherenoted) Volumes(1)GrossProfit

(Loss)

AdjustedGrossProfit

AdjustedEBITDA(2) Volumes(1) GrossProfit(4)

AdjustedEBITDA(2)

Pipelines 2,730 419 419 577 2,667 346 467

Facilities 884 165 165 255 910 170 254

Marketing&NewVentures(3) — (334) (20) 75 — 93 120

Corporate — (3) (3) (41) — (4) (54)

Total 3,614 247 561 866 3,577 605 787


2020 2019

($millions,exceptwherenoted) Volumes(1)GrossProfit

(Loss)

AdjustedGrossProfit

AdjustedEBITDA(2) Volumes(1) GrossProfit(4)

AdjustedEBITDA(2)

Pipelines 2,623 1,578 1,578 2,208 2,566 1,382 1,854

Facilities 877 688 688 1,012 885 658 955

Marketing&NewVentures(3) — (257) 57 193 — 406 423

Corporate — (1) (1) (132) — (4) (171)

Total 3,500 2,008 2,322 3,281 3,451 2,442 3,061(1) VolumesforPipelinesandFacilitiesarerevenuevolumes,whicharephysicalvolumesplusvolumesrecognizedfromtake-or-paycommitments.Volumesarestatedinmboe/

d,withnaturalgasvolumesconvertedtomboe/dfromMMcf/data6:1ratio.(2) Refertothe"Non-GAAPMeasures"section.(3) MarketedNGLvolumesareexcludedfromvolumestoavoiddoublecounting.Refertothe"Marketing&NewVentures"sectionforfurtherinformation.(4) Comparative2019periodhasbeenrestated.See"VoluntaryChangeinAccountingPolicy"andNote3totheConsolidatedFinancialStatements.


Pipelines

FinancialOverviewfortheThreeMonthsEndedDecember31ResultsofOperations

($millions,exceptwherenoted) 2020 2019(4) Change %Change

Conventionalrevenue(1) 372 354 18 5

Transmissionrevenue(1) 119 60 59 98

OilSandsrevenue(1) 112 73 39 53

Pipelinesrevenue(1) 603 487 116 24

Operatingexpenses(1) 136 137 (1) (1)

Shareofprofitfromequityaccountedinvestees 54 62 (8) (13)

Depreciationandamortizationincludedinoperations 102 66 36 55

Grossprofit 419 346 73 21

AdjustedEBITDA(2) 577 467 110 24

Volumes(mboe/d)(3) 2,730 2,667 63 2

Distributionsfromequityaccountedinvestees 80 80 — —

ChangeinResults

Conventionalrevenue(1) ▲ Increaseprimarilyduetohigherdeferredrevenuerecognizedinthefourthquarterof2020onthePeacePipelinesystem,combinedwiththePhaseVIExpansioncomingintoserviceduringJune2020,partiallyoffsetbylowerinterruptiblevolumesonDraytonValleyPipelineandPeacePipelinesystem,duetocurrentmarketconditions.

Transmissionrevenue(1) ▲ IncreaselargelyduetothecontributionfromtheCochinPipelinefollowingtheKinderAcquisition.

OilSandsrevenue(1) ▲ IncreaseprimarilyduetothecontributionfromtheEdmontonTerminalsfollowingtheKinderAcquisition.

Operatingexpenses(1) ● Consistentwithpriorperiod.IncreaseduetohigheroperatingexpensesassociatedwiththeCochinPipelineandEdmontonTerminalsfollowingtheKinderAcquisition,whichwasoffsetbylowerreclamationcostsfortheconventionalpipelineassets.

Shareofprofitfromequityaccountedinvestees

▼ DecreaselargelyduetolowerinterruptiblerevenuesontheAlliancePipeline,drivenbyanarrowerAECO-Chicagonaturalgaspricedifferential.


▼ IncreaseindepreciationduetothelargerassetbaseasaresultoftheadditionoftheassetsacquiredintheKinderAcquisition.

Distributionsfromequityaccountedinvestees

● $51million(2019:$50million)fromAllianceand$29million(2019:$30million)fromRuby.

Volumes(mboe/d)(3) ▲ IncreaseprimarilyduetohigherrevenuevolumesontheCochinPipelineandthePeacePipelinesystem,bothdiscussedabove,partiallyoffsetbylowerinterruptiblevolumesontheRubyPipeline,DraytonValleyPipelineandPeacePipelinesystem,duetomarketconditions.Revenuevolumesinclude139mboe/d(2019:134mboe/d)relatedtoAllianceand101mboe/d(2019:146mboe/d)relatedtoRuby.

AdjustedEBITDA(2) ▲ IncreaseduetohigherrevenueassociatedwiththeCochinPipelineandEdmontonTerminalsfollowingtheKinderAcquisition,combinedwithhigherdeferredrevenuesrecognizedonthePeacePipelinesystemandthePhaseVIExpansioncomingintoservice,partiallyoffsetbyaslightlylowercontributionfromAllianceduetothenarrowerAECO-Chicagonaturalgaspricedifferential.IncludedinadjustedEBITDAis$70million(2019:$76million)relatedtoAllianceand$45million(2019:$52million)relatedtoRuby.

ChangeinAdjustedEBITDA($millions)(2)

577

46718

59

39 19

(16)

AdjustedEBITDAQ42019

Conventionalrevenue

Transmissionrevenue

OilSandsrevenue

Operatingexpenses

G&Aandother

AdjustedEBITDAfromequityaccountedinvestees


(1) Includesinter-segmenttransactions.SeeNote22oftheConsolidatedFinancialStatements.(2) Refertothe"Non-GAAPMeasures"section.(3) Revenuevolumes.Seethe"Abbreviations"sectionfordefinition.(4) Comparative2019periodhasbeenrestated.See"VoluntaryChangeinAccountingPolicy"andNote3totheConsolidatedFinancialStatements.


FinancialOverviewforthe12MonthsEndedDecember31ResultsofOperations


Conventionalrevenue(1) 1,323 1,314 9 1

Transmissionrevenue(1) 461 189 272 144

OilSandsrevenue(1) 467 284 183 64

Totalrevenue(1) 2,251 1,787 464 26

Operatingexpenses(1) 498 436 62 14

Shareofprofitfromequityaccountedinvestees 227 274 (47) (17)


Grossprofit 1,578 1,382 196 14

AdjustedEBITDA(2) 2,208 1,854 354 19

Volumes(mboe/d)(3) 2,623 2,566 57 2

Distributionsfromequityaccountedinvestees 339 390 (51) (13)

ChangeinResults

Conventionalrevenue(1) ● Consistentwithpriorperiod.Increasesindeferredrevenuerecognizedinthefourthquarterof2020onthePeacePipelinesystem,additionalrevenueontheNEBCPipelinesystemandthePhaseVIExpansioncomingintoserviceduringJune2020,werelargelyoffsetbylowerinterruptiblerevenuevolumesontheDraytonValleyPipelineandPeacePipelinesystem,duetomarketconditionsrelatedtotheCOVID-19pandemic.

Transmissionrevenue(1) ▲ IncreaselargelyduetothecontributionfromtheCochinPipelinefollowingtheKinderAcquisition.

OilSandsrevenue(1) ▲ IncreaseprimarilyduetocontributionfromtheEdmontonTerminalsfollowingtheKinderAcquisition,partiallyoffsetbytherecognitionof$22millionindeferredvariablerevenueinthesecondquarterof2019.

Operatingexpenses(1) ▼ IncreaseprimarilyduetotheadditionaloperatingexpensesassociatedwiththeCochinPipelineandEdmontonTerminalsfollowingtheKinderAcquisition,partiallyoffsetbylowerreclamationandpowercostsfortheconventionalpipelineassets.


▼ DecreaselargelyduetolowerinterruptiblevolumesandrevenuesontheAlliancePipeline,drivenbyanarrowerAECO-Chicagonaturalgaspricedifferential.


▼ Increaseindepreciationduetothelargerassetbase,primarilyasaresultoftheassetsacquiredintheKinderAcquisition.


▼ $217million(2019:$268million)fromAllianceand$122million(2019:$121million)fromRuby.ThedecreaseindistributionsfromAlliancewaslargelyduetothesamefactorsimpactingshareofprofitfromequityaccountedinvesteesdiscussedabove.

Volumes(mboe/d)(3) ▲ IncreaseprimarilyduetothecontributionfromtheCochinPipelinefollowingtheKinderAcquisition,partiallyoffsetbylowerinterruptiblevolumesontheDraytonValleyPipeline,PeacePipelinesystemandtheAlliancePipeline,discussedabove.Revenuevolumesinclude130mboe/d(2019:141mboe/d)relatedtoAllianceand103mboe/d(2019:103mboe/d)relatedtoRuby.

AdjustedEBITDA(2) ▲ IncreaseduetothecontributionfromtheCochinPipelineandEdmontonTerminalsfollowingtheKinderAcquisition,combinedwiththePhaseVIExpansioncomingintoserviceandloweroperatingexpensesontheconventionalpipelineassets,partiallyoffsetbyalowercontributionfromAlliance,duetothenarrowerAECO-Chicagonaturalgaspricedifferential.IncludedinadjustedEBITDAis$274million(2019:$328million)relatedtoAllianceand$188million(2019:$202million)relatedtoRuby.


2,208

1,854 9

272

183

(62)

20

(68)

AdjustedEBITDA2019

Conventionalrevenue

Transmissionrevenue

OilSandsrevenue

Operatingexpenses

G&Aandother


AdjustedEBITDA2020



FinancialandOperationalOverview

3MonthsEndedDecember31 12MonthsEndedDecember31

2020 2019 2020 2019

($millions,exceptwherenoted) Volumes(1)

GrossProfit

AdjustedEBITDA(2) Volumes(1)

GrossProfit(3)


GrossProfit


GrossProfit(3)

AdjustedEBITDA(2)

Pipelines

Conventional 993 254 295 958 216 253 898 892 1,055 910 850 993

Transmission 684 116 205 646 97 173 670 470 828 591 388 684

OilSands 1,053 49 77 1,063 33 41 1,055 216 325 1,065 144 177

Total 2,730 419 577 2,667 346 467 2,623 1,578 2,208 2,566 1,382 1,854(1) Revenuevolumesinmboe/d.Seethe"Abbreviations"sectionfordefinition.(2) Refertothe"Non-GAAPMeasures"section.(3) Comparative2019periodhasbeenrestated.See"VoluntaryChangeinAccountingPolicy"andNote3totheConsolidatedFinancialStatements.

Projects&NewDevelopments(1)

Pipelinescontinuestofocusontheexecutionofvarioussystemexpansions.Theprojectsinthefollowingtablewererecently

placedintoserviceandimpactPipelinesresults.

SignificantProjects In-serviceDate

PhaseVIExpansion June2020

WapitiCondensateLateral March2020

NEBCMontneyInfrastructure February2020

Aspreviouslyannouncedduringthequarter,Pembinare-activateditsPhaseVIIExpansionofthePeacePipeline("PhaseVII").

ThecapitalcostestimateforPhaseVIIhasbeenrevisedlower,byapproximately$175million,to$775million,reflectinga

reimaginingoftheprojecttooptimizethescopewithcustomers'currentdevelopmentplansandtransportation

requirements.TheinitialcapacityofPhaseVIIhasbeenreducedfromtheprevious240,000bpd,to160,000bpd,however,

theabilitytoquicklyandefficientlyreturntheprojecttoitsoriginalcapacityhasbeenretained.Thelowercapitalcostreflects

fewerpumpstations,aswellasadditionalsavingsachievedthroughvalueengineeringandanoptimizedconstructionand

procurementstrategy.

Duringthefourthquarter,PembinarecognizedanimpairmentonitsinvestmentinRuby.Theimpairmentwastheresultof

upcomingcontractexpirationsandprevailinginterruptibletariffrates,alongwithRockiesbasinfundamentals,andthe

ongoinguncertaintywithrespecttoJordanCove,whichwouldultimatelybeexpectedtoutilizecapacityontheRubyPipeline.

Whilethenear-termfundamentalsoftheassetpresentchallenges,Pembinacontinuestohaveaconstructivelonger-term

viewofRuby'svalue,giventhescarcityvalueoflargediameterpipelinesandRubyPipeline'sroleinprovidingreliableenergy

supplytotheCaliforniamarket.Furthermore,RubyPipelineisacarbon-neutralpipelineandresponsiblesourceofnaturalgas

supplytothePacificNorthwestregion.


ThefollowingoutlinestheprojectsandnewdevelopmentswithinPipelines:

PhaseVIIExpansion

CapitalBudget:$775million In-serviceDate:Firsthalfof2023 Status:Ontime,trendingonbudget

Thisexpansionisexpectedtoaddapproximately160mbpdofincrementalcapacityupstreamofFoxCreek,accessingcapacityavailableonthepipelinesdownstreamofFoxCreek.Includedintheexpansionisa20-inch,approximately220kmpipelineintheLaGlace-Valleyview-FoxCreekcorridor,andtwonewpumpstationsorterminalupgrades,betweenLaGlaceandEdmonton,Alberta.

Aspreviouslyannounced,inresponsetotheCOVID-19pandemic,theresultingeconomicslowdownanddecreaseddemand

forcrudeoilandNGL,Pembinamadethedecisiontodefersomeofitspreviouslyannouncedexpansionprojectsincludingthe

PhaseVIIIExpansionandthePhaseIXExpansion.Whilethesetwoprojectsremaindeferred,theinitialcontractssupporting

theprojectsarestillinplaceandthereremainstrongindicationsofinterestforincrementalcapacity.Valueengineeringwork

isongoingandgivenstrongcustomerinterest,Pembinaexpectstomakeadecisioninthesecondhalfof2021tore-activate

theseprojects.

PhaseVIIIExpansion Status:Deferred

Thisexpansionwillinclude10-inchand16-inchpipelinesintheGordondaletoLaGlacecorridoraswellassixnewpumpstationsorterminalupgradeslocatedbetweenGordondaleandFoxCreek.

ThecarryingvalueoftheprojectatDecember31,2020was$40million.

PhaseIXExpansion Status:Deferred

Thisexpansionwillinclude6-inchand16-inchpipelinesdebottleneckingthecorridornorthofGordondaleaswellasupgradesatonepumpstation.Inaddition,thisexpansionwillseeexistingpipelines,whicharecurrentlybatching,convertedtosingleproductlines.

ThecarryingvalueoftheprojectatDecember31,2020was$3million.(1) ForfurtherdetailsonPembina'ssignificantassets,includingdefinitionsforcapitalizedtermsusedhereinthatarenototherwisedefined,refertoPembina'sAIFfortheyear

endedDecember31,2020filedatwww.sedar.com(filedwiththeU.S.SecuritiesandExchangeCommissionatwww.sec.govunderForm40-F)andonPembina'swebsiteatwww.pembina.com.


Facilities



GasServicesnetrevenue(1)(2) 147 152 (5) (3)

NGLServicesnetrevenue(1)(2) 175 133 42 32

Facilitiesnetrevenue(1)(2) 322 285 37 13


Shareofprofitfromequityaccountedinvestees 14 14 — —

Unrealizedlossoncommodity-relatedderivativefinancialinstruments 10 — 10 100


Grossprofit 165 170 (5) (3)

AdjustedEBITDA(2) 255 254 1 —

Volumes(mboe/d)(3) 884 910 (26) (3)

Distributionsfromequityaccountedinvestees 25 21 4 19

ChangesinResults

GasServicesnetrevenue(1)(2) ● Consistentwiththepriorperiod.IncreasedrevenueassociatedwithDuvernayIIbeingplacedintoserviceinNovember2019,combinedwiththeEmpressinfrastructurebeingplacedintoserviceinOctober2020,offsetlowerrevenuesattheResthavenfacilityandtheCutbankComplexduetolowercapitalfees,andlowervolumesattheYoungerfacilityduetoastagedrestartfollowingregularlyscheduledmaintenanceinSeptember2020.

NGLServicesnetrevenue(1)(2) ▲ IncreaseprimarilyduetorevenuesfromtheVancouverWharvesfollowingtheKinderAcquisition,combinedwithhigheroperatingexpenserecoveriesattheRedwaterComplex.

Operatingexpenses(1) ▼ IncreaselargelyduetooperatingexpensesassociatedwithVancouverWharves,followingtheKinderAcquisition,combinedwithhigherpowerandfuelcostsattheRedwaterComplexthatarerecoveredaspartofrevenue.


● Consistentwiththepriorperiod.




● $25million(2019:$20million)fromVeresenMidstreamandnil(2019:$1million)fromFortCorp.

Volumes(mboe/d)(3) ▼ DecreaseprimarilyduetolowervolumesattheYoungerfacility,discussedabove,combinedwithlowervolumesatVeresenMidstreamduetomarketconditions,partiallyoffsetbyincrementalvolumesassociatedwithDuvernayIIbeingplacedintoserviceinNovember2019.Revenuevolumesinclude75mboe/d(2019:88mboe/d)relatedtoVeresenMidstream.

AdjustedEBITDA(2) ● Consistentwiththepriorperiod.TheincreasedcontributionfromVancouverWharvesfollowingtheKinderAcquisition,DuvernayIIandtheEmpressinfrastructurebeingplacedintoservice,werelargelyoffsetbylowerrevenueattheResthavenfacilityandCutbankComplexandlowervolumesattheYoungerfacility,discussedabove.IncludedinadjustedEBITDAis$42million(2019:$48million)relatedtoVeresenMidstream.


255254

(5)

42

(31) (5)


GasServices

netrevenue

NGLServices

netrevenue

Operatingexpenses

AdjustedEBITDAfromequityaccounted

investees






GasServicesnetrevenue(1)(2) 571 588 (17) (3)

NGLServicesnetrevenue(1)(2) 649 529 120 23

Facilitiesnetrevenue(1)(2) 1,220 1,117 103 9


Shareofprofitfromequityaccountedinvestees 55 51 4 8

Unrealizedgainoncommodity-relatedderivativefinancialinstruments (4) — (4) 100


Grossprofit 688 658 30 5

AdjustedEBITDA(2) 1,012 955 57 6

Volumes(mboe/d)(3) 877 885 (8) (1)

Distributionsfromequityaccountedinvestees 101 101 — —

ChangesinResults

GasServicesnetrevenue(1)(2) ▼ DecreaseduetolowercapitalfeesattheResthavenfacilityandtheCutbankComplex,combinedwithlowervolumesattheYoungerfacility,duetoregularlyscheduledmaintenanceduringSeptember2020andlowergasfeedstockavailability,partiallyoffsetbyDuvernayIIbeingplacedintoserviceinNovember2019andincreasedprocessingdaysatKakwaRiverduetoaturnaroundin2019.

NGLServicesnetrevenue(1)(2) ▲ IncreaseprimarilyduetoadditionalrevenuesfromtheVancouverWharvesfollowingtheKinderAcquisition,combinedwithhigheroperatingexpenserecoveriesattheRedwaterComplexandtheRedwaterCo-generationfacilitygoingintoserviceinMarch2019.

Operatingexpenses(1) ▼ IncreaselargelyduetotheadditionoftheVancouverWharvesfollowingtheKinderAcquisition,combinedwithDuvernayIIandtheDuvernaySourTreatmentFacilitiesgoingintoservice,partiallyoffsetbylowerpowercostsastheYoungerfacilitywasshutdownforregularlyscheduledmaintenanceduringthethirdquarterof2020.




▼ IncreaseindepreciationduetothelargerassetbaseasaresultoftheadditionoftheassetsacquiredintheKinderAcquisitionandDuvernayIIandtheDuvernaySourTreatmentFacilitiesgoingintoservice.


● $97million(2019:$96million)fromVeresenMidstreamand$4million(2019:$5million)fromFortCorp.

Volumes(mboe/d)(3) ● Consistentwiththepriorperiod.LowerrevenuevolumesattheYoungerfacilityduetoregularlyscheduledmaintenanceandlowergasfeedstockavailability,combinedwithlowerrevenuevolumesatVeresenMidstream,asaresultofdeferreddrillingandcompletionsbyakeycustomer,duetoCOVID-19restrictions,werelargelyoffsetbyrevenuevolumesassociatedwithDuvernayIIbeingplacedintoserviceinNovember2019.Revenuevolumesinclude79mboe/d(2019:88mboe/d)relatedtoVeresenMidstream.

AdjustedEBITDA(2) ▲ IncreaseprimarilyduetoadditionalcontributionfromDuvernayIIbeingplacedintoserviceinNovember2019,andtheRedwaterCo-generationfacilitybeingplacedintoserviceinMarch2019,combinedwithlowergeneral&administrativeexpense,asaresultoflowerlong-termincentivecosts.IncludedinadjustedEBITDAis$174million(2019:$182million)relatedtoVeresenMidstream.


1,012

955

(17)

120

(48)

8

(6)

AdjustedEBITDA2019

GasServices

netrevenue

NGLServices

netrevenue

Operatingexpenses

G&Aandother


AdjustedEBITDA2020





2020 2019 2020 2019


GrossProfit


GrossProfit(3)


GrossProfit


GrossProfit(3)

AdjustedEBITDA(2)

Facilities

GasServices 673 74 138 690 90 146 667 344 558 678 339 551

NGLServices 211 91 117 220 80 108 210 344 454 207 319 404

Total 884 165 255 910 170 254 877 688 1,012 885 658 955(1) Revenuevolumesinmboe/d,withnaturalgasvolumesconvertedtomboe/dfromMMcf/data6:1ratio.Seethe"Abbreviations"sectionfordefinition.(2) Refertothe"Non-GAAPMeasures"section.(3) Comparative2019periodhasbeenrestated.See"VoluntaryChangeinAccountingPolicy"andNote3totheConsolidatedFinancialStatements.


Facilitiescontinuestobuild-outitsnaturalgasandNGLprocessingandfractionationassetstoservicecustomerdemand.The

projectsinthefollowingtablewererecentlyplacedintoserviceandimpactFacilitiesresults.

SignificantProjects In-serviceDate

DuvernayIII November2020

EmpressInfrastructure October2020

DuvernaySourTreatmentFacilities March2020

DuvernayII November2019

RedwaterCo-generationFacility March2019

Duringthequarter,PembinacompletedthestartupofnewfractionationandterminallingfacilitiesattheEmpressfacility.

Thisprojectwasplacedintoserviceontimeandonbudget.Thesenewassetsaddapproximately30,000bpdofpropane-plus

fractionationcapacityandenablePembinatooptimizepropanemarketingfromthefacilitybetweeneasternandwestern

markets.

Duringthequarter,PembinacompletedthestartupofDuvernayIII,whichincludesa100MMcf/dsweetgas,shallowcut

processingtrain;20,000bpdofinletcondensatestabilization;andotherassociatedinfrastructure.Theprojectwasplaced

intoserviceontimeandunderbudget.

Aspreviouslyannouncedduringthequarter,Pembinare-activateditsEmpressCo-generationFacility.ThisistheCompany's

secondco-generationprojectfollowingtheverysuccessfuldevelopmentofaco-generationfacilityattheRedwaterComplex.

Aspreviouslyannouncedduringthequarter,Pembinahasacquiredanadditional11.25percentinterestinthePembina

EmpressExtractionPlant,ofwhichPembinacurrentlyisthemajorityownerandoperator.TheacquisitionprovidesPembina

with135MMcf/dofincrementalethane-plusextractioncapacityattheEmpressfacility.


ThefollowingoutlinestheprojectsandnewdevelopmentswithinFacilities:

PrinceRupertTerminal

CapitalBudget:$250million In-serviceDate:Firstquarterof2021 Status:Delayed,overbudget

ThePrinceRupertTerminalislocatedonWatsonIsland,BritishColumbiaandisexpectedtohaveapermittedcapacityofapproximately25mbpdofpropane.ThepropanesupplywillbesourcedprimarilyfromtheCompany'sRedwaterComplex.Marine,rail,sphere,andmechanicalconstructionisnearingcompletion,electricalconstructionandcommissioningactivitiesareinprogress.

HytheDevelopments

CapitalBudget(2):$240million In-serviceDate:Firstquarterof2021 Status:Ontime,onbudget

Pembinaandits45percentownedjointventure,VeresenMidstream,havecompletedconstructionofnaturalgasgatheringandprocessinginfrastructureinthePipestoneMontneyregionandareawaitingathird-partytie-in.Theinfrastructureconsistsofanexpansionofupto125MMcf/d(56MMcf/dnettoPembina)ofsourgasprocessingatVeresenMidstream'sexistingHytheFacilityandanew,approximately60km,12-inchsourgaspipeline,tobeownedbyVeresenMidstreamandconstructedbyPembina.Inaddition,VeresenMidstreamwillfundandownacompressorstation,builtandoperatedbyNuVistaEnergyLtd.Pembinawillownandconstructvariousotherlaterals.

EmpressCo-generationFacility

CapitalBudget:$120million In-serviceDate(3):Firstquarterof2023 Status:Ontime,onbudget

TheEmpressCo-generationFacilitywillusenaturalgastogenerateupto45megawattsofelectricalpower,therebyreducingoveralloperatingcostsbyprovidingpowerandheattotheexistingEmpressNGLExtractionFacility.Allthepowerwillbeconsumedonsite,therebysupplyingapproximately90percentofthesite'spowerrequirements.Further,thisprojectwillcontributetoannualgreenhousegasemissionreductionsattheEmpressNGLExtractionFacilitythroughtheutilizationoftheco-generationwasteheatandthelow-emissionpowergenerated.

Aspreviouslyannounced,inresponsetotheCOVID-19pandemic,theresultingeconomicslowdownanddecreaseddemand

forcrudeoilandNGL,Pembinamadethedecisiontodefersomeofitspreviouslyannouncedexpansionprojects,includingthe

PrinceRupertTerminalExpansion.

PrinceRupertTerminalExpansion Status:Deferred

ThePrinceRupertTerminalExpansionwillincreasetheexportcapacityoftheterminal.Engineeringoftheexpansioniswelladvanced,andPembinaexpectstomakeafinalinvestmentdecisioninthesecondhalfof2021.

ThecarryingvalueoftheprojectatDecember31,2020was$10million.(1) ForfurtherdetailsonPembina'ssignificantassets,includingdefinitionsforcapitalizedtermsusedhereinthatarenototherwisedefined,refertoPembina'sAIFfiledat

www.sedar.com(filedwiththeU.S.SecuritiesandExchangeCommissionatwww.sec.govunderForm40-F)andonPembina'swebsiteatwww.pembina.com.(2) NettoPembina.(3) Subjecttoenvironmentalandregulatoryapprovals.Seethe"Forward-LookingStatements&Information"section.


Marketing&NewVentures



Marketingrevenue(1) 882 1,006 (124) (12)

Costofgoodssold(1) 809 903 (94) (10)

Netrevenue(1)(2) 73 103 (30) (29)

Shareofprofitfromequityaccountedinvestees-operations 2 13 (11) (85)

Realizedloss(gain)oncommodity-relatedderivativefinancialinstruments 6 (8) (14) 175

Unrealizedlossoncommodity-relatedderivativefinancialinstruments 76 23 (53) (230)


Adjustedgrossprofit (20) 93 (113) (122)

AdjustedEBITDA(2) 75 120 (45) (38)

Volumes(mboe/d)(3) 207 190 17 9


ChangeinResults

Netrevenue(1)(2) ▼ DecreaselargelyduetotheimpactoftheCOVID-19pandemiconmarketconditionsresultinginlowercrudeoilprices,compressedmarginsanddecreasedcrudeactivities,partiallyoffsetbyhighermarketedNGLvolumesasPembinamonetizedaportionofstoragepositionsbuiltupduringthesecondandthirdquartersof2020.

Shareofprofitfromequityaccountedinvestees-operations

▼ DecreaselargelyduetolowerrevenuesatAuxSableasaresultoflowerNGLmarginsandanarrowerAECO-Chicagonaturalgaspricedifferential.

Realizedloss(gain)oncommodity-relatedderivatives

▼ RealizedlossduetohigherNGLmarketpricescreatingalossforNGL-basedderivativessettledduringtheperiod.


▼ Unrealizedlossoncommodity-relatedderivativesprimarilyduetotherecoveryintheforwardpriceofpropane,butaneandcrudeoilduringthefourthquarterof2020,combinedwithadecreaseintheforwardpriceofnaturalgas.




▼ DecreaseduetothelowerrevenuesatAuxSableasaresultoflowerNGLmarginsandanarrowerAECO-Chicagonaturalgaspricedifferential.

Volumes(mboe/d)(3) ▲ MarketedNGLvolumesincreasedasPembinamonetizedaportionofthestoragepositionsthatwerebuiltupduringthesecondandthirdquartersof2020whencommoditypriceswerelower,combinedwithincreasedvolumesatAuxSableduetohigherethanesales.Revenuevolumesincludes37mboe/d(2019:32mboe/d)relatedtoAuxSable.

AdjustedEBITDA(2) ▼ Decreaselargelyduetolowermarginsoncrudeoilsalesasaresultofthelowercrudeoilpricesduringthefourthquarterof2020duetotheimpactoftheCOVID-19pandemic,combinedwitharealizedlossoncommodity-relatedderivativesduetohigherNGLmarketprices.IncludedinadjustedEBITDAis$13million(2019:$18million)relatedtoAuxSable.


75

120

(30)

(14)

3

(4)


NetRevenue Realizedloss(gain)oncommodity-

relatedderivatives

G&Aandother


investees


(1) Includesinter-segmenttransactions.SeeNote22oftheConsolidatedFinancialStatements.(2) Refertothe"Non-GAAPMeasures"section.(3) MarketedNGLvolumes.Seethe"Abbreviations"sectionfordefinition.(4) 2020periodandcomparative2019periodhavebeenrestated.See"RestatementofRevenueandCostofGoodsSold"andNote3totheConsolidatedFinancialStatements.




Marketingrevenue(1) 2,956 3,946 (990) (25)

Costofgoodssold(1) 2,815 3,559 (744) (21)

Netrevenue(1)(2) 141 387 (246) (64)

Shareofprofitfromequityaccountedinvestees-operations — 50 (50) (100)

Realizedgainoncommodity-relatedderivativefinancialinstruments (54) (33) 21 (64)

Unrealizedlossoncommodity-relatedderivativefinancialinstruments 88 13 (75) (577)

Depreciationandamortizationincludedinoperations 50 51 (1) (2)

Adjustedgrossprofit 57 406 (349) (86)

AdjustedEBITDA(2) 193 423 (230) (54)

Volumes(mboe/d)(3) 182 189 (7) (4)


ChangeinResults

Netrevenue(1)(2) ▼ Decreaselargelyduetoloweraveragecrudeoilandpropanepricesduring2020,primarilyasaresultoftheCOVID-19pandemicandtheresultingdecreaseinglobalenergydemand.Marketconditionsalsocompressedmarginsanddecreasedcrudeactivities,whilelowerfracspreadsimpactedNGLmargins,combinedwitha$33millionarbitrationawardpaymentreceivedduringthefirstquarterof2019.

Shareofprofitfromequityaccountedinvestees-operations

▼ DecreaselargelyduetolowerrevenuesatAuxSableasaresultoflowerNGLmarginsandanarrowerAECO-Chicagonaturalgaspricedifferential,partiallyoffsetbyloweroperatingandgeneralandadministrativeexpenses.

Realizedgainoncommodity-relatedderivatives

▲ IncreaseduetoloweraveragemarketpricescreatingagainforcrudeandNGL-basedderivativessettledduringtheyear.


▼ Unrealizedlossprimarilyduetoadditionalcontractsaddedandmaturingduringtheyear,combinedwithanincreaseintheforwardpriceofpropane.




▼ DecreaselargelyduetothelowermarginsatAuxSable,discussedabove.

Volumes(mboe/d)(3) ● Consistentwiththepriorperiod.NGLstoragepositionsbuiltupduringthesecondandthirdquartersof2020whencommoditypriceswereatthelowestlevelswerelargelyoffsetbyhighermarketedNGLvolumesduringthefourthquarterandincreasedethanevolumesatAuxSable.Revenuevolumesincludes37mboe/d(2019:33mboe/d)relatedtoAuxSable.

AdjustedEBITDA(2) ▼ Decreaselargelyduetolowermarginsoncrudeoilandpropanesalesasaresultoflowercrudeoil,propanepricesandfracspreadsduring2020,combinedwithalowercontributionfromAuxSableduetolowerNGLmarginsandthenarrowerAECO-Chicagonaturalgaspricedifferential,partiallyoffsetbyhigherrealizedgainsoncommodity-relatedderivativesandlowerG&Aandotherduetocostsavinginitiatives.IncludedinadjustedEBITDAis$27million(2019:$74million)relatedtoAuxSable.

ChangeinAdjustedEBITDA($millions)(2)(4)

193

423

(213)

21 9

(47)

AdjustedEBITDA2019

NetRevenueincluding

adjustments

Realizedgainoncommodity-

relatedderivatives

G&Aandother


investees

AdjustedEBITDA2020

(1) Includesinter-segmenttransactions.SeeNote22oftheConsolidatedFinancialStatements.(2) Refertothe"Non-GAAPMeasures"section.(3) MarketedNGLvolumes.Seethe"Abbreviations"sectionfordefinition.(4) Netrevenueexcludesthepositivearbitrationawardpaymentof$33million.(5) 2020periodandcomparative2019periodhavebeenrestated.See"RestatementofRevenueandCostofGoodsSold"andNote3totheConsolidatedFinancialStatements.




2020 2019 2020 2019


GrossProfit(Loss)


GrossProfit(Loss)


GrossProfit(Loss)


GrossProfit(Loss)

AdjustedEBITDA(2)

Marketing&NewVentures

Marketing 207 (17) 78 190 96 127 182 57 205 189 407 440

NewVentures(3) — (317) (3) — (3) (7) — (314) (12) — (1) (17)

Total 207 (334) 75 190 93 120 182 (257) 193 189 406 423(1) MarketedNGLvolumesinmboe/d.Seethe"Abbreviations"sectionfordefinition.(2) Refertothe"Non-GAAPMeasures"section.(3) AllNewVenturesprojectshavenotyetcommencedoperationsandthereforehavenovolumes.


ThefollowingoutlinestheprojectsandnewdevelopmentswithinMarketing&NewVentures:

CKPC

Aspreviouslyannounced,Pembina,alongwithitsjointventurepartner,havesuspendedindefinitelytheexecutionofthe

integratedpropanedehydration("PDH")plantandpolypropyleneupgradingfacility("PDH/PPFacility").WhilePembina

continuestobelieveinthestrategicrationaleofthisproject,thisdecisionreflectsthesignificantrisksarisingfromtheongoing

COVID-19pandemic,mostnotablywithrespecttocostsunderthelumpsumcontractforconstructionofthePDHplant,which

remainsunderaforcemajeurecondition.CKPCisworkingthroughaprocesstomanage,deferorcancelexistingagreements

with,amongothers,thelump-sumconsortium,lenders,andtechnologylicensors,inordertominimizetheneedforadditional

capitalcontributions.CKPCwillcontinuetotakeactiontosafeguarditsexistinginvestmentassociatedwithlong-lead

equipmentandintellectualproperty.AsaresultoftheprojectsuspensionPembinarecognizedanimpairmentonits

investmentduringthefourthquarter.TheCompanyremainscommittedtoitsglobalmarketaccessstrategyandhelpingto

ensurethathydrocarbonsproducedintheWCSB,andtheotherbasinswheretheCompanyoperates,canreachthehighest

valuemarketsthroughouttheworld.Weremainequallycommittedtosupportingfurtherdevelopmentofthepetrochemical

industryinAlbertaandareideallypositionedtodosoastheleadingtransporterofethaneintheprovinceofAlberta.

JordanCove

Inlightofcurrentregulatoryandpoliticaluncertainty,PembinarecognizedanimpairmentonitsinvestmentinJordanCove

andisevaluatingthepathforward.TheCompanycontinuestobelieveinthestrategicrationaleofJordanCove,whichwould

bethefirstU.S.westcoastLNGfacilityandwouldbenefitfromadvantagedaccesstoAsianmarkets.Additionally,theproject

wouldbringsignificanteconomicbenefitstoOregonandcontributetoreducingglobalgreenhousegasemissionsbydisplacing

theuseofcoalglobally.

(1) ForfurtherdetailsonPembina'ssignificantassets,includingdefinitionsforcapitalizedtermsusedhereinthatarenototherwisedefined,refertoPembina'sAIFfortheyearendedDecember31,2020filedatwww.sedar.com(filedwiththeU.S.SecuritiesandExchangeCommissionatwww.sec.govunderForm40-F)andonPembina'swebsiteatwww.pembina.com.


Impairments

PembinarecognizedthefollowingimpairmentsfortheyearendedDecember31,2020:

($millions)Property,Plant&

EquipmentEquityAccounted

Investees OtherTotalImpairment

Expense

JordanCove 344 — 5 349

InvestmentinRuby — 1,257 139 1,396

InvestmentinCKPC — 323 (2) 321

Other 13 11 — 24

Totalimpairments 357 1,591 142 2,090

Recognizedthroughimpairmentinshareofprofitfromequityaccountedinvestees 314

Recognizedasimpairmentexpense 1,776

Total 2,090

Incometaximpact 535

Impairmentsnetoftax 1,555

JordanCove

InDecember2020,asaresultofincreasedregulatoryandpoliticaluncertainty,Pembinarecognizedanimpairmentonthe

assetsassociatedwithJordanCove.Theimpairmentchargeof$349million($258millionnetoftax)includesallpreviously

capitalizedamountsrelatedtoJordanCove,exceptforlandwitharecoverablecarryingamountof$21millionwhich

approximatesitsfairvalue.

Ruby

InDecember2020,Pembinarecognizedanimpairmentforthefullamountofitsconvertible,cumulativepreferredinterestin

Ruby($1.3billion)anditsassociatedrelatedpartyadvance($139million).Thetotalimpairmentchargeof$1.4billion

($1.0billionnetoftax)wastheresultofanassessmenttriggeredbyupcomingcontractexpirationsinmid-2021withexisting

tariffrateswellinexcessofprevailinginterruptibletariffrates,alongwithdecliningRockiesbasinfundamentalsandreduced

futurevolumesresultingfromtheuncertaintywithJordanCove.

CKPC

OnDecember14,2020,Pembinaannouncedthatit,alongwithitsjointventurepartnerinCKPC,wouldbeindefinitely

suspendingexecutionoftheintegratedPDH/PPFacilityproject.Thesuspensionistheresultofthesignificantrisksarising

fromtheongoingCOVID-19pandemic,mostnotablywithrespecttocostsunderthelumpsumcontractforconstructionof

thePDHplant,whichremainsunderaforcemajeurecondition.Asaresultofthesuspension,Pembinarecognizedan

impairmentforthefullamountofitsinvestmentinCKPC,resultinginatotalimpairmentchargeof$323million($252million

netoftax)whichincludesPembina'sshareofCKPC'slossresultingfromanimpairmentchargerecognizedinthejointventure

of$314millionplusanincrementalimpairmentoftheremaininginvestmentvalue.


4.LIQUIDITY&CAPITALRESOURCESAvailableSourcesofLiquidity

($millions) 2020 2019

Workingcapital(1)(4) (792) (460)

Variableratedebt(2)(3)

Bankdebt 1,534 2,100

Variableratedebtswappedtofixed (318) —

Totalvariableratedebtoutstanding(weightedaverageinterestrateof1.6%(2019:3.3%)) 1,216 2,100

Fixedratedebt(2)

Seniorunsecurednotes — 273

Seniorunsecuredmedium-termnotes 9,300 7,800

Variableratedebtswappedtofixed 318 —

Totalfixedratedebtoutstanding(weightedaverageinterestrateof3.9%(2019:4.0%)) 9,618 8,073

Totaldebtoutstanding 10,834 10,173

Cashandunutilizeddebtfacilities 2,685 1,040

AsatDecember31

(1) AsatDecember31,2020,workingcapitalincluded$600million(December31,2019:$74million)associatedwiththecurrentportionofloansandborrowings.(2) Facevalue.(3) IncludesU.S.$250millionvariableratedebtoutstandingatDecember31,2020(December31,2019:$454million).(4) Comparative2019periodhasbeenrestated.See"VoluntaryChangeinAccountingPolicy"andNotes3and4totheConsolidatedFinancialStatements.

Pembinacurrentlyanticipatesitscashflowfromoperatingactivities,themajorityofwhichisderivedfromfee-based

contracts,willbemorethansufficienttomeetitsoperatingobligations,tofunditsdividendandtofunditscapital

investment.Pembinaexpectstosourcefundsrequiredfordebtmaturitiesfromcash,itscreditfacilitiesandbyaccessingthe

capitalmarkets,asrequired.Basedonitssuccessfulaccesstofinancinginthecapitalmarketsoverthepastseveralyears,

Pembinaexpectstocontinuetohaveaccesstoadditionalfundsasrequired.However,dependingonthedurationandseverity

oftheCOVID-19pandemic,thecontinuedslowdownoftheglobaleconomyandthedecreaseindemandforcrudeoil,

Pembina'sabilitytoaccessfinancinginthecapitalmarketscouldbeadverselyimpacted.Referto"RiskFactors–Ongoing

ImpactoftheCOVID-19Pandemic"belowand"RiskFactors–GeneralRiskFactors–AdditionalFinancingandCapital

Resources"inPembina'sMD&AandNote27totheConsolidatedFinancialStatementsformoreinformation.Management

continuestomonitorthesituationandremainssatisfiedthattheleverageemployedinPembina'scapitalstructureis

sufficientandappropriategiventhecharacteristicsandoperationsoftheunderlyingassetbase.

ManagementmayadjustPembina'scapitalstructureasaresultofchangesineconomicconditionsortheriskcharacteristics

oftheunderlyingassets.TomaintainormodifyPembina'scapitalstructureinthefuture,Pembinamayrenegotiatedebt

terms,repayexistingdebt,seeknewborrowings,issueadditionalequityorhybridsecuritiesand/orrepurchaseshares.


AsatDecember31,2020,Pembina'screditfacilitiesconsistedof:anunsecured$2.5billion(December31,2019:$2.5billion)

revolvingcreditfacility,whichincludesa$750million(December31,2019:$750million)accordionfeatureandmaturesin

May2024;anunsecured$500million(December31,2019:$500million)non-revolvingtermloan,whichmaturesinAugust

2022;anunsecured$800million(December31,2019:nil)revolvingcreditfacility,whichmaturesinApril2022;anunsecured

U.S.$250million(December31,2019:nil)non-revolvingtermloan,whichmaturesinMay2025andanoperatingfacilityof

$20million(December31,2019:$20million)whichmaturesinMay2021andistypicallyrenewedonanannualbasis

(collectively,the"CreditFacilities").TherearenorepaymentsdueoverthetermoftheCreditFacilities.AsatDecember31,

2020,Pembinahad$2.7billion(December31,2019:$1.0billion)ofcashandunutilizeddebtfacilities.AsatDecember31,

2020,Pembinahadloansandborrowings(excludingdeferredfinancingcosts)of$10.8billion(December31,2019:$10.2

billion).Pembinaisrequiredtomeetcertainspecificandcustomaryaffirmativeandnegativefinancialcovenantsunderits

medium-termnotesandtheCreditFacilities,includingarequirementtomaintaincertainfinancialratios.See"Liquidity&

CapitalResources–Covenants"belowformoreinformation.Pembinaisalsosubjecttocustomaryrestrictionsonits

operationsandactivitiesunderitsmedium-termnotesandCreditFacilities,includingrestrictionsonthegrantingofsecurity,

incurringindebtednessandthesaleofitsassets.

FinancingActivity

OnJanuary10,2020,Pembinaclosedanofferingof$1.0billionofseniorunsecuredmedium-termnotes.Theofferingwas

conductedinthreetranches,consistingof$250millionissuedthroughare-openingofPembina'sseniorunsecuredmedium-

termnotes,series10,havingafixedcouponof4.02percentperannum,payablesemi-annuallyandmaturingonMarch27,

2028;$500millionissuedthroughare-openingofPembina'sseniorunsecuredmedium-termnotes,series11,havingafixed

couponof4.75percentperannum,payablesemi-annuallyandmaturingonMarch26,2048;and$250millionissuedthrough

are-openingofPembina'sseniorunsecuredmedium-termnotes,series12,havingafixedcouponof3.62percentperannum,

payablesemi-annuallyandmaturingonApril3,2029.

OnApril6,2020,Pembinaenteredintoanunsecured$800millionrevolvingcreditfacilitywithcertainexistinglenders,which

providedadditionalliquidityandflexibilityinPembina'scapitalstructureinlightofcurrentmarketconditions.Theunsecured

revolvingcreditfacilitymaturesApril3,2022.Theothertermsandconditionsofthecreditfacility,includingfinancial

covenants,aresubstantiallysimilartoPembina'sunsecured$2.5billionrevolvingcreditfacility.

OnMay7,2020,PembinaenteredintoanunsecuredU.S.$250millionnon-revolvingtermloanwithaglobalbank,which

providedadditionalliquidityandflexibilityinPembina'scapitalstructureinlightofcurrentmarketconditions.Thetermloan

maturesMay7,2025.Theothertermsandconditionsofthecreditfacility,includingfinancialcovenants,aresubstantially

similartoPembina'sunsecured$2.5billionrevolvingcreditfacility.

OnMay28,2020,Pembinaclosedanofferingof$500millionofseniorunsecuredmedium-termnotes.Theofferingwas

conductedintwotranches,consistingoftheissuanceof$400millioninseniorunsecuredmedium-termnotes,series16,

havingafixedcouponof4.76percentperannum,payablesemi-annually,andmaturingonMay28,2050and$100million

issuedthroughare-openingofPembina'sseniorunsecuredmedium-termnotes,series7,havingafixedcouponof3.71

percentperannum,payablesemi-annuallyandmaturingonAugust11,2026.

OnJuly10,2020,Pembina's$200millionseniorunsecurednotes,seriesC,werefullyrepaidthroughanearlyredemption,of

whichnoticewasprovidedtoholdersonJune5,2020.Theseniorunsecurednotes,seriesC,wereoriginallysettomaturein

September2021.

Subsequenttoyear-end,onJanuary25,2021,Pembinaclosedanofferingof$600millionoffixed-to-fixedratesubordinated

notes,series1(the"SubordinatedNotes,Series1").TheSubordinatedNotes,Series1haveafixedcouponof4.80percentper

annum,payablesemi-annually,andmatureonJanuary25,2081.Pembinaexpectstousethenetproceedsoftheofferingto

fundtheredemptionofitsoutstandingCumulativeRedeemableMinimumRateResetClassAPreferredShares,Series11and

Series13,torepayotheroutstandingindebtedness,aswellasforgeneralcorporatepurposes.


Covenants

Pembina'sfinancialcovenantsundernoteindenturegoverningitsmedium-termnotesandtheagreementsgoverningthe

CreditFacilitiesincludethefollowing:

DebtInstrument FinancialCovenant(1) Ratio RatioasatDecember31,2020

Seniorunsecuredmedium-termnotes FundedDebttoCapitalization Maximum0.70 0.42

CreditFacilitiesDebttoCapital Maximum0.65 0.42

EBITDAtoSeniorInterestCoverage Minimum2.5:1.0 7.4(1) Termsasdefinedinrelevantagreements.

PembinawasincompliancewithallcovenantsunderitsnoteindentureandagreementsgoverningitsCreditFacilitiesasat

December31,2020(December31,2019:incompliance).

CreditRisk

Pembinacontinuestoactivelymonitorandreassessthecreditworthinessofitscounterparties.Theslowdownoftheglobal

economyanddecreaseindemandforcrudeoilandothercommoditiesasaresultoftheongoingCOVID-19pandemic

increasesPembina'scounterpartyrisk,asithasthepotentialtonegativelyimpactthefinancialpositionofPembina's

customers'andrelatedparties'andtheiraccesstocredit,capitalmarketsandothersourcesofliquidity.Themajorityof

Pembina'screditexposureistoinvestmentgradeorsplit-investmentgradecounterparties.Pembinaassessesall

counterpartiesduringtheon-boardingprocessandactivelymonitorscreditlimitsandexposureacrossthebusiness.Financial

assurancestomitigateandreduceriskmayincludeguarantees,lettersofcreditandcash.Lettersofcredittotaling$130

million(December31,2019:$90million)wereheldasatDecember31,2020,primarilyinrespectofcustomertrade

receivables.

OutstandingShareData

Issuedandoutstanding(thousands)(1) February19,2021

Commonshares 549,951

Stockoptions 21,650

Stockoptionsexercisable 10,418

ClassA,Series1Preferredshares 10,000












ClassA,Series25Preferredshares 10,000(1) Pembinaissued600,000Series2021-AClassAPreferredsharestotheComputershareTrustCompanyofCanada,tobeheldintrusttosatisfyitsobligationunderthe

SubordinatedNoteIndenture,inconnectionwiththeissuanceoftheSubordinatedNotes,Series1.


CreditRatings

ThefollowinginformationwithrespecttoPembina'screditratingsisprovidedassuchinformationrelatestoPembina's

financingcostsandliquidity.Specifically,creditratingsaffectPembina'sabilitytoobtainshort-termandlong-termfinancing

andthecostofsuchfinancing.AreductioninthecurrentratingsonPembina'sdebtbyitsratingagencies,particularlya

downgradebelowinvestment-graderatings,couldadverselyaffectPembina'scostoffinancinganditsaccesstosourcesof

liquidityandcapital.Inaddition,changesincreditratingsandtheassociatedcostsmayaffectPembina'sabilitytoenterinto

normalcoursederivativeorhedgingtransactions.Creditratingsareintendedtoprovideinvestorswithanindependent

measureofcreditqualityofanyissuesofsecurities.Thecreditratingsassignedbytheratingagenciesarenot

recommendationstopurchase,holdorsellthesecurities,nordothecreditratingscommentonmarketpriceorsuitabilityfor

aparticularinvestor.Anycreditratingmaynotremainineffectforagivenperiodoftimeormayberevisedorwithdrawn

entirelybyaratingagencyinthefutureif,initsjudgment,circumstancessowarrant.

Pembinatargetsstrong'BBB'creditratings.DBRSLimited("DBRS")hasassignedadebtratingof'BBB'toPembina'ssenior

unsecurednotesandseniorunsecuredmedium-termnotes,adebtratingof'BB+'totheSubordinatedNotes,Series1,anda

ratingof'Pfd-3'toeachissuedseriesofPembina'sClassAPreferredShares,otherthantheClassAPreferredShares,Series

2021-A(the"Series2021-APreferredShares").

Thelong-termcorporatecreditratingassignedbyS&PGlobalRatings("S&P"),adivisionofTheMcGraw-HillCompanies,on

Pembinais'BBB'.S&Phasalsoassignedadebtratingof'BBB'toPembina'sseniorunsecurednotesandseniorunsecured

medium-termnotes,adebtratingof'BB'totheSubordinatedNotes,Series1,andaratingof'P-3(High)'toeachissuedseries

ofPembina'sClassAPreferredShares,otherthantheSeries2021-APreferredShares.DBRSandS&PaffirmedPembina's

creditratingsduringthesecondquarterof2020.


ContractualObligationsandOff-BalanceSheetArrangements

ContractualObligations

PembinahadthefollowingcontractualobligationsoutstandingatDecember31,2020:

ContractualObligations(1) PaymentsDueByPeriod

($millions) Total Lessthan1year 1–3years 3–5years After5years

Leases(2) 1,064 131 217 174 542

Loansandborrowings(3) 16,275 1,058 2,262 2,708 10,247

Constructioncommitments(4) 1,208 523 149 43 493

Other 569 112 145 75 237

Totalcontractualobligations 19,116 1,824 2,773 3,000 11,519(1) Pembinaentersintoproductpurchaseagreementsandpowerpurchaseagreementstosecuresupplyforfutureoperations.PurchasepricesofbothNGLandpowerare

dependentoncurrentmarketprices.VolumesandpricesforNGLandpowercontractscannotbereasonablydetermined,andtherefore,anamounthasnotbeenincludedinthecontractualobligationsschedule.Productpurchaseagreementsrangefromoneto9yearsandinvolvethepurchaseofNGLproductsfromproducers.Assumingproductisavailable,Pembinahassecuredbetween35and175mbpdofNGLeachyearuptoandincluding2029.Powerpurchaseagreementsrangefromoneto24yearsandinvolvethepurchaseofpowerfromelectricalserviceproviders.Pembinahassecuredupto80megawattsperdayeachyearuptoandincluding2044.

(2) Includesterminals,rail,officespace,landandvehicleleases.(3) Excludingdeferredfinancingcosts.IncludinginterestpaymentsonPembina'sseniorunsecurednotes.(4) Excludingsignificantprojectsthatareawaitingregulatoryapproval,projectswhichPembinaisnotcommittedtoconstruct,andprojectsthatareexecutedbyequity

accountedinvestees.

Off-BalanceSheetArrangements

Pembinadoesnothaveanyoff-balancesheetarrangementsthathave,orarereasonablylikelytohave,acurrentorfuture

effectonPembina'sfinancialcondition,resultsofoperations,liquidityorcapitalinvestments.

LettersofCredit

Pembinahasprovidedlettersofcredittovariousthirdpartiesinthenormalcourseofconductingbusiness.Thelettersof

creditincludefinancialguaranteestocounterpartiesforregulatoryrequirements,engineeringandconstructionservices,

utilitiesandproductpurchasesandsales.Thelettersofcredithavenothadandarenotexpectedtohaveamaterialimpacton

Pembina'sfinancialposition,earnings,liquidityorcapitalresources.AsatDecember31,2020,Pembinahad$91million

(December31,2019:$103million)inlettersofcreditissued.


5.CAPITALINVESTMENTSCapitalInvested


($millions) 2020 2019 2020 2019

Pipelines 76 254 587 892

Facilities 75 143 370 569

Marketing&NewVentures 4 22 38 157

Corporateandotherprojects 6 10 34 27

Totalcapitalinvested 161 429 1,029 1,645

In2020,capitalinvestmentsinPipelinescontinuedtobeprimarilyrelatedtoPembina'ssystemexpansionprojects.In2020,

capitalinvestmentsinFacilitieswerelargelyrelatedtocontinuedconstructiononDuvernay,EmpressExpansionandthe

PrinceRupertTerminal.CapitalinvestmentsinMarketing&NewVenturesinboth2020and2019wereprimarilyrelatedto

JordanCove.

ContributionstoEquityAccountedInvestees


($millions) 2020 2019 2020 2019

Alliance — 13 — 13

AuxSable — 1 3 4

VeresenMidstream — 23 69 73

CKPC — 83 152 173

Total — 120 224 263

ContributionsmadetoCKPCduring2020and2019wererelatedtothedevelopmentofthePDH/PPFacility,combinedwitha

parentalguaranteeonCKPC'srevolvingcreditfacilityprovidedbyPembinaduringthefirstquarterof2020,discussedfurther

inthe"FinancingActivitiesforEquityAccountedInvestees"sectionbelow.ContributionstoCKPCdecreasedduring2020,

comparedto2019,followingPembina'sannouncementinthefirstquarterof2020thatithaddeferredcapitalspendingon

thePDH/PPFacility.Inthefourthquarterof2020,Pembinaannouncedthatit,alongwithitsjointventurepartnerinCKPC,

wouldbesuspendingexecutionofthePDH/PPFacilityprojectindefinitely.

ContributionsmadetoVeresenMidstreamduringboth2020and2019werelargelyrelatedtoconstructionoftheHythe

Developments.Seethe"Projects&NewDevelopments"forFacilitiesforfurtherdetailsontheHytheDevelopments.


6.DIVIDENDSCommonShareDividends

Commonsharedividendsarepayableif,as,andwhendeclaredbyPembina'sBoardofDirectors.Theamountandfrequency

ofdividendsdeclaredandpayableisatthediscretionofPembina'sBoardofDirectors,whichconsidersearnings,cashflow,

capitalrequirements,thefinancialconditionofPembinaandotherrelevantfactorswhenmakingitsdividenddetermination.

PreferredShareDividends

OtherthaninrespectoftheSeries2021-APreferredShares,theholdersofPembina'sClassAPreferredSharesareentitledto

receivefixedcumulativedividends.DividendsontheSeries1,3,5,7,9,11,13and21ClassAPreferredSharesarepayable

quarterlyonthefirstdayofMarch,June,SeptemberandDecember,if,asandwhendeclaredbytheBoardofDirectorsof

Pembina.DividendsontheSeries15,17and19ClassAPreferredSharesarepayableonthelastdayofMarch,June,

SeptemberandDecemberineachyear,if,asandwhendeclaredbytheBoardofDirectorsofPembina.Dividendsonthe

Series23and25ClassAPreferredSharesarepayableonthe15thdayofFebruary,May,AugustandNovemberineachyear,if,

asandwhendeclaredbytheBoardofDirectorsofPembina.

DividendsarenotpayableontheSeries2021-AClassAPreferredShares,norshallanydividendsaccumulateoraccrue,prior

todeliverytotheholdersoftheSubordinatedNotes,Series1followingtheoccurrenceofcertainbankruptcyorinsolvency

eventsinrespectofPembina.Thereafter,dividendsontheSeries2021-AClassAPreferredSharesarepayableonthe25thday

ofJanuaryandJulyineachyear,if,asandwhendeclaredbytheBoardofDirectors.

OnJune1,2020,PembinaannouncedthatitdidnotintendtoexerciseitsrighttoredeemtheeightmillionCumulative

RedeemableRateResetClassAPreferredShares,Series19(the"Series19ClassAPreferredShares")outstandingonJune30,

2020.TheannualdividendratefortheSeries19ClassAPreferredSharesforthefive-yearperiodfromandincludingJune30,

2020to,butexcluding,June30,2025is4.684percent.

OnNovember2,2020,PembinaannouncedthatitdidnotintendtoexerciseitsrighttoredeemtheninemillionCumulative

RedeemableRateResetClassAPreferredShares,Series9(the"Series9ClassAPreferredShares")outstandingonDecember

1,2020.TheannualdividendratefortheSeries9ClassAPreferredforthefive-yearperiodfromandincludingDecember1,

2020to,butexcluding,December1,2025is4.302percent.

Subsequenttotheendoftheyear,onJanuary25,2021,Pembinaannounceditintendstoredeemallofthe6.8millionissued

andoutstandingCumulativeRedeemableMinimumRateResetClassAPreferredShares,Series11(the"Series11ClassA

PreferredShares")onMarch1,2021foraredemptionpriceequalto$25.00perSeries11ClassAPreferredShare,lessanytax

requiredtobedeductedorwithheldbytheCompany.


7.SELECTEDQUARTERLYINFORMATIONSelectedQuarterlyOperatingInformation

(mboe/d) 2020 2019

Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1

Volumes(1)(2)

Pipelines

ConventionalPipelines 993 863 834 902 958 908 895 880

TransmissionPipelines 684 661 668 668 646 594 558 563

OilSandsPipelines 1,053 1,056 1,053 1,059 1,063 1,068 1,065 1,064

Facilities

GasServices 673 657 658 678 690 672 668 682

NGLServices 211 214 214 201 220 194 198 214

Total 3,614 3,451 3,427 3,508 3,577 3,436 3,384 3,403(1) Revenuevolumes.Seethe"Abbreviations"sectionfordefinition.(2) IncludesPembina'sproportionateshareofvolumesfromequityaccountedinvestees.

DeferredTake-or-payRevenue

($millions) 2020 2019

Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1

Pipelines

Openingbalance 42 45 22 8 17 23 19 7

Revenuedeferred 52 66 53 40 31 27 27 36

Revenuerecognized (91) (69) (30) (26) (40) (33) (23) (24)

Endingtake-or-paycontractliabilitybalance 3 42 45 22 8 17 23 19

Facilities

Openingbalance — 2 1 — — — 1 2

Revenuedeferred — 1 1 1 — — 2 —

Revenuerecognized — (3) — — — — (3) (1)

Endingtake-or-paycontractliabilitybalance — — 2 1 — — — 1

QuarterlySegmentedAdjustedEBITDA($millions)(1)

773 765736

787 830789 796

866

Pipeline Facilities Marketing&NewVentures

Q119 Q219 Q319 Q419 Q120 Q220 Q320 Q420

(1)Refertothe"Non-GAAPMeasures"section.


QuarterlyFinancialInformation

Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1

Revenue 1,680 1,496 1,229 1,548 1,668 1,492 1,563 1,649

Netrevenue(1) 954 849 776 865 837 751 758 774

Operatingexpenses 201 178 154 179 177 151 134 140

Realizedloss(gain)oncommodity-relatedderivativefinancialinstruments 6 (7) (36) (17) (8) (5) (1) (19)

Shareofprofit(loss)fromequityaccountedinvestees (244) 62 66 84 89 90 98 97

Grossprofit 247 568 460 733 605 615 631 590

Earnings(loss) (1,216) 323 258 319 150 373 667 317

Earnings(loss)percommonshare–basicanddiluted(dollars) (2.28) 0.51 0.40 0.51 0.22 0.67 1.23 0.56

Cashflowfromoperatingactivities 766 434 642 410 728 535 661 608

Cashflowfromoperatingactivitiespercommonshare–basic(dollars)(1) 1.39 0.78 1.17 0.75 1.41 1.05 1.29 1.20

Adjustedcashflowfromoperatingactivities(1) 603 524 586 576 576 530 550 578

Adjustedcashflowfromoperatingactivitiespercommonshare–basic(dollars)(1) 1.10 0.95 1.07 1.05 1.11 1.04 1.08 1.14

Commonsharesoutstanding(millions):

Weightedaverage–basic 550 550 550 549 518 512 511 509

Weightedaverage–diluted 550 550 550 549 519 513 513 511

Endofperiod 550 550 550 550 548 512 511 510

Commonsharedividendsdeclared 346 346 347 346 314 307 302 290

Dividendspercommonshare 0.63 0.63 0.63 0.63 0.60 0.60 0.59 0.57

Preferredsharedividendsdeclared 38 38 37 38 34 31 30 31

Capitalinvestments 161 174 211 483 429 421 434 361

Contributionstoequityaccountedinvestees — 28 2 194 120 25 28 90

Distributionsfromequityaccountedinvestees 109 111 116 123 123 142 140 170

AdjustedEBITDA(1) 866 796 789 830 787 736 765 773

($millions,exceptwherenoted) 2020(2) 2019(2)

(1) Refertothe"Non-GAAPMeasures"section.(2) 2020periodandcomparative2019periodhavebeenrestated.See"VoluntaryChangeinAccountingPolicy","RestatementofRevenueandCostofGoodsSold"andNote3to

theConsolidatedFinancialStatements.Therestatementreducesrevenueandcostofgoodssoldforallquarterlycomparativeperiods,includingQ32020:$73million,Q22020:$39million,Q12020:$123million,Q42019:$86million,Q32019:$208million,Q22019:$245million,andQ12019:$319million.

Duringtheperiodsinthetableabove,Pembina'sfinancialandoperatingresultswereimpactedbythefollowingfactorsand

trends:

• ImpairmentsrecognizedonPembina'sinterestsinRuby,CKPCandtheassetsassociatedwithJordanCoveinthefourth

quarterof2020andthepartialimpairmentofPembina'sinterestinRubyinthefourthquarterof2019;

• TheKinderAcquisition,whichwascompletedonDecember16,2019;

• TheCOVID-19pandemicandtheresultingdecreaseindemandforcommodities,whichledtoasignificantdeclinein

globalenergyprices,resultinginareductionincapitalspendingbudgetsbyPembinaanditscustomers;

• ThenarrowingoftheAECO-Chicagonaturalgaspricedifferential;

• IncreasedproductioninkeyoperatingareasandresourceplayswithintheWCSB,includingtheDeepBasin,Montneyand

Duvernay,priortotheonsetoftheCOVID-19pandemic;

• Newlarge-scalegrowthprojectsacrossPembina'sbusinessbeingplacedintoservice;

• Volatilityincommoditymarketpricesimpactingmarginswithinthemarketingbusiness,partiallymitigatedthrough

Pembina'sriskmanagementprogram;

• AdecreaseintheAlbertacorporatetaxratefrom12to8percentfollowingtheenactmentofBill3inJune2019;

• Highernetfinancecostsimpactingearningsassociatedwithdebtrelatedtofinancingacquisitions,growthprojectsand

volatilityinforeignexchangerates;and

• IncreasedcommonandpreferredsharesoutstandingandcorrespondingdividendsduetotheKinderAcquisition.


8.SELECTEDEQUITYACCOUNTEDINVESTEEINFORMATIONLoansandBorrowingsofEquityAccountedInvestees

Underequityaccounting,theassetsandliabilitiesofaninvestmentarenetintoasinglelineitemintheconsolidated

statementoffinancialposition,"InvestmentsinEquityAccountedInvestees".Toassistreaders'understandingandtoevaluate

thecapitalizationofPembina'sinvestments,loansandborrowingsassociatedwithinvestmentsinequityaccountedinvestees

arepresentedbelowbasedonPembina'sproportionateownershipinsuchinvestments,asatDecember31,2020.Inaddition,

certainoftheequityaccountedinvesteeshaveborrowingarrangementswithanamortizationstructure,therebynecessitating

periodicrepaymentsofprincipal.TheserepaymentsoccurpriortothedistributionofresidualcashflowtoPembina.Theloans

andborrowingsandamortizationschedulesarepresentedbelowandclassifiedbythedivisioninwhichtheresultsforthe

investmentarereported.Pleaserefertothe"Abbreviations"sectionforasummaryofPembina'sinvestmentsinequity

accountedinvesteesandthedivisioninwhichtheirresultsarereported.

AsatDecember31

($millions)(1) 2020 2019

Pipelines 926 1,057

Facilities 1,200 1,150

Total 2,126 2,207(1) BalancesreflectPembina'sownershippercentageoftheoutstandingbalancefacevalue.

AmortizationScheduleofLoansandBorrowingsofEquityAccountedInvestees

12MonthsEnded

($millions)(1)December31,

2020 2021 2022 2023 2024 2025+

Pipelines 153 114 590 62 67 93

Facilities — 12 36 36 1,116 —

Total 153 126 626 98 1,183 93(1) BalancesreflectPembina'sownershippercentageoftheoutstandingbalancefacevalue.

FinancingActivitiesforEquityAccountedInvestees

OnDecember31,2020,CKPCprovidednoticetocancelitsU.S.$1.7billiontermfacilityanditsU.S.$150millionrevolving

creditfacility.Asaresult,Pembinaacceleratedtherecognitionofthepreviouslyrecordedfinancialguaranteeliability.

OnApril27,2020,Rubyfullyrepaidits364-daytermloan.Concurrenttorepayment,Rubyenteredintoanewamortizing

termloanthatmaturesonMarch31,2021.AtDecember31,2020,U.S.$32million(U.S.$16millionnettoPembina)

remainedoutstanding.

CommitmentstoEquityAccountedInvestees

Pembinahascommitmentstoprovidecontributionstocertainequityaccountedinvesteesbasedonannualbudgetsapproved

bythejointventurepartners.

CreditRiskforEquityAccountedInvestees

AtDecember31,2020,Pembina'svariousequityaccountedinvesteesheldlettersofcredittotaling$105million(December

31,2019:$84million)primarilyinrespectofcustomertradereceivables.


9.OTHER

SelectedAnnualFinancialInformation

($millions,exceptwherenoted) 2020(1) 2019(1) 2018(1)

Revenue 5,953 6,372 6,125

Earnings(loss) (316) 1,507 1,297

Percommonshare-basic(dollars) (0.86) 2.69 2.32

Percommonshare-diluted(dollars) (0.86) 2.68 2.32

Totalassets 31,416 32,755 26,811

Long-termfinancialliabilities(2) 11,695 11,493 7,949

Commonsharedividendsdeclared($pershare) 2.52 2.36 2.24

Preferredsharedividendsdeclared 151 126 122(1) 2020andcomparative2019and2018periodshavebeenrestated.See"VoluntaryChangeinAccountingPolicy","RestatementofRevenueandCostofGoodsSold"andNotes

3and4totheConsolidatedFinancialStatements.(2) Includeslong-termloansandborrowings,long-termconvertibledebentures,whichmaturedonDecember31,2018,long-termderivativefinancialinstruments,contract

liabilities,provisionsandemployeebenefits,share-basedpayments,taxespayableandotherliabilities.

Seethe"QuarterlyFinancialInformation"sectionforthefactorsimpactingyearsendedDecember31,2020and2019.

Increasesinrevenues,earningsandearningspercommonshare(basicanddiluted)between2018and2019werelargelydue

toasignificantdeferredtaxrecoveryfollowingthereductionintheAlbertacorporateincometaxratefrom12percentto

eightpercent,andresultsfromnewassetsgoingintoservice,offsetbyapartialimpairmentinPembina'sinvestmentinRuby.

Increasesintotalassetsandlong-termfinancialliabilitiesfrom2018to2019werelargelyduetoadditionalassetsandloans

andborrowingsassociatedwiththeKinderAcquisition.

RelatedPartyTransactions

Pembinaentersintotransactionswithrelatedpartiesinthenormalcourseofbusiness.Thesetransactionsprimarilyinclude

contractingcapacityfromandadvancingfundstoequityaccountedinvestees,andprovidingmanagement,administrative,

operationalandworkforcerelatedservicestovariousaffiliatesonacostrecoverybasis.Theseservicesareprovidedunder

separateconsultingservicesagreements.Formoreinformationonthesetransactions,refertoNote30totheConsolidated

FinancialStatements.

RiskManagement

HedgeofNetInvestmentinForeignOperations

OnMay7,2020,PembinadesignatedtheU.S.$250millionnon-revolvingtermloanitenteredintoasahedgeofthe

Company'snetinvestmentinU.S.functionalcurrencyforeignoperations.Foreignexchangegainsandlossesonthe

designateddebtarerecognizedinthecurrencytranslationreserveinaccumulatedothercomprehensiveincome.

InterestRateRisk-CashFlowHedge

OnMay8,2020,Pembinadesignatedfinancialderivativecontractsthatfixtheinterestrateon$250millionofvariablerate

debtascashflowhedginginstruments.Unrealizedgains(losses)onderivativesindesignatedcashflowhedgingrelationships

arerecognizedinthecashflowhedgereserveinaccumulatedothercomprehensiveincome,withrealizedgains(losses)being

reclassifiedtonetfinancecosts.

FormoreinformationonthesetransactionsandPembina'sderivativeinstruments,refertoNote27totheConsolidated



PensionLiability

Pembinamaintainsdefinedcontributionplansanddefinedbenefitpensionplansforemployeesandretirees.Thedefined

benefitplansincludeafundedregisteredplanforallqualifiedemployeesandanunfundedsupplementalretirementplanfor

thoseemployeesaffectedbytheCanadaRevenueAgencymaximumpensionlimits.Attheendof2020,thepensionplans

carriedanetobligationof$44million(2019:$35million).AtDecember31,2020,planobligationsamountedto$296million

(2019:$266million)comparedtoplanassetsof$252million(2019:$231million).In2020,thepensionplans'expensewas

$20million(2019:$15million).Pembina'scontributionstothepensionplanstotaled$23millionin2020(2019:$20million).

EffectiveJanuary1,2021,Pembinarevisedtheeligibilityrequirementsforthedefinedbenefitplan.Employeeswithanage

plusyearsofserviceof40atJanuary1,2021willremaineligibleforthedefinedbenefitplan,whentheirageplusyearsof

servicereaches50.Allotheremployeeswillremaininthedefinedcontributionplan.


DisclosureControlsandProceduresandInternalControloverFinancialReporting

DisclosureControlsandProcedures

Pembinamaintainsdisclosurecontrolsandprocedures("DC&P")designedtoprovidereasonableassurancethatinformation

requiredtobedisclosedinPembina'sannualfilings,interimfilingsandotherreportsfiledorsubmittedbyitundersecurities

lawsisrecorded,processed,summarizedandreportedaccuratelyandinthetimeperiodsspecifiedundersuchsecuritieslaws,

andincludecontrolsandproceduresdesignedtoensuresuchinformationisaccumulatedandcommunicatedtoPembina's

management,includingitscertifyingofficers,asappropriatetoallowtimelydecisionsregardingrequireddisclosure.Asat

December312020,anevaluationoftheeffectivenessofthedesignandoperationofPembina'sDC&P,asdefinedinNational

Instrument52-109CertificationofDisclosureinIssuer'sAnnualandInterimFilings("NI52-109")andRule13a–15(e)and

15(d)–15(e)undertheUnitedStatesSecuritiesExchangeActof1934,asamended(the"ExchangeAct"),wascarriedoutby

management,includingthePresidentandChiefExecutiveOfficer("CEO")andtheSeniorVicePresidentandChiefFinancial

Officer("CFO").Basedontheevaluation,theCEOandCFOhaveconcludedthatthedesignandoperationofPembina'sDC&P

werenoteffectiveasatthatdateasaresultofthematerialweaknessdescribedbelow.

Management'sAnnualReportonInternalControloverFinancialReporting

Pembinamaintainsinternalcontroloverfinancialreporting("ICFR")whichisdesignedtoprovidereasonableassurance

regardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordance

withIFRS,andincludepoliciesandproceduresthat:(a)pertaintothemaintenanceofrecordsthatinreasonabledetail

accuratelyandfairlyreflectthetransactionsanddispositionsoftheassetsofPembina;(b)aredesignedtoprovidereasonable

assurancethattransactionsarerecordedasnecessarytopermitpreparationoffinancialstatementsinaccordancewithIFRS,

andthatreceiptsandexpendituresofPembinaarebeingmadeonlyinaccordancewithauthorizationsofmanagementand

directorsofPembina;and(c)aredesignedtoprovidereasonableassuranceregardingpreventionortimelydetectionof

unauthorizedacquisition,useordispositionofPembina'sassetsthatcouldhaveamaterialeffectonPembina'sfinancial

statements.ManagementisresponsibleforestablishingandmaintainingDC&PandICFR,asdefinedinNI52-109andRule13a

–15(e)and15(d)–15(e)undertheExchangeAct.

UnderthesupervisionandwiththeparticipationofourCEOandourCFO,managementhasconductedanevaluationofthe

effectivenessofourICFR,asatDecember31,2020basedontheframeworksetforthinInternalControl–Integrated

Frameworkissuedin2013bytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission.Amaterialweakness

isadeficiency,oracombinationofdeficiencies,inICFR,suchthatthereisareasonablepossibilitythatamaterial

misstatementoftheannualfinancialstatements,orinterimfinancialstatements,willnotbepreventedordetectedona

timelybasis.Basedonitsevaluationunderthisframework,managementconcludedthat,asatDecember31,2020,the

Companyhasidentifieda"materialweakness"relatedtocontrolsovercontractassessmentinitsMarketingbusiness.

Specifically,wedidnothavecontrolstoidentifyallcontractswhereanaccountingassessmentwasrequiredandasaresult

lackedanalysisofallrelevantcontracttermsrequiredtomaketheassessmentintheMarketingbusiness.Becauseofthe

deficiency,theCompanypresentedrevenueandcostofgoodssoldforcertaincrudecontractsinMarketingandNew

Venturesonagrossbasisthatshouldhavebeenrecordedonanetbasis.Managementhasrestatedrevenueandcostof

goodssoldfortheyearsendedDecember31,2020andDecember31,2019withnoimpactonearnings,cashflowsor

financialposition.RefertoNote3totheConsolidatedFinancialStatementsfordetailsoftherestatement.


RemediationofMaterialWeakness

Thecontroldeficiencydescribedabovewasdetectedbymanagementduringthethirdquarterof2021priortothefilingof

Pembina'sinterimfinancialstatementsforthethreeandninemonthsendedSeptember30,2021.TheCompanyhas

prioritizedtheremediationofthematerialweaknessdescribedaboveandisworkingundertheoversightoftheAudit

Committeetoresolvetheissue.

Specificactionstoremediatethismaterialweaknessincludethefollowing:

i. Revisionoftheprocessofidentifyingcontractstoconsultwithinternalexpertstoassistintheevaluationoftechnical

accountingmatters;and

ii. Enhancecontractanalysis,includingrevisionoftheprocessusedtoassessaccountingimplicationsforcomplex

contracts.

AstheconclusionregardingthematerialweaknessinICFRwasreachedinlateOctober2021,Pembinahasnothadadequate

timetoimplementandevaluatethecontrolsandproceduresdescribedabove,aslimitedcomplexandmaterialtransactions

requiringanapplicationoftheforegoingremediationactionshaveoccurredinthisperiod.Pembinahas,therefore,nothad

adequatetimeoropportunitytoapplyitsproposedremediationactionstoevidencetheremediationofthematerial

weaknessdescribedaboveandthematerialweaknesswillcontinuetobeaddressedthroughouttheremainderof2021.

ChangesinInternalControloverFinancialReporting

PembinapreviouslyexcludedbusinessprocessesacquiredthroughtheKinderAcquisitiononDecember16,2019,fromthe

Company'sevaluationofinternalcontroloverfinancialreportingaspermittedbyapplicablesecuritieslawsinCanadaandthe

UnitedStates.EffectiveMay1,2020,PembinacompletedtheintegrationoftheKinderAcquisitionintoitsexistingenterprise

resourceplanning("ERP")system.AsaresultoftheERPsystemintegration,certainprocessessupportingPembina'sICFRfor

theKinderAcquisitionchangedinthesecondquarterof2020.TheCompanycompletedtheevaluationofICFRoftheKinder

Acquisitioninthefourthquarterof2020andtheoverallcontrolsandprocedureswefollowinestablishingICFRwerenot

significantlyimpacted.

OtherthantheKinderAcquisitionandthematerialweaknessdescribedabove,therehasbeennochangeinPembina'sICFR

thatoccurredduringtheyearendedDecember31,2020thathasmateriallyaffected,orarereasonablylikelytomaterially

affect,Pembina'sinternalcontroloverfinancialreporting.


10.ACCOUNTINGPOLICIES&ESTIMATESChangesinAccountingPolicies&Restatement

Voluntarychangeinaccountingpolicy

Pembinare-assesseditspolicyforthemeasurementofitsdecommissioningprovision.Previously,Pembina's

decommissioningprovisionwasmeasuredatthepresentvalueoftheexpectedcoststosettletheobligationsusingarisk-free

interestratebasedontheGovernmentofCanada'sbenchmarklong-termbondyield.EffectiveDecember31,2020,Pembina

electedtochangeitspolicyforthemeasurementofitsdecommissioningobligationstoutilizeacredit-adjustedrisk-free

interestrate.Asaresultofthischangeinpolicy,Pembina'sdecommissioningprovisionisnowmeasuredusingarisk-free

interestratebasedontheGovernmentofCanada'sbenchmarklong-termbondyield,adjustedforPembina'screditrisk.The

useofacredit-adjustedrisk-freerateresultsinreliableandmorerelevantinformationforthereadersoftheCompany's

ConsolidatedFinancialStatementsasthismethodologyresultsinamoreaccuraterepresentationofthevalueatwhichsuch

liabilitiescouldbetransferredtoathirdparty,providesabetterindicationoftheriskassociatedwithsuchobligations,and

increasesthecomparabilityofPembina'sfinancialstatementstothoseofitspeers.

Managementhasappliedthechangeinaccountingpolicyretrospectively.TheConsolidatedFinancialStatementshavebeen

restatedtoreflectadjustmentsmadeasaresultofthischangeinaccountingpolicy.Thefollowingtablespresenttheimpacts

ofthechangeinaccountingpolicyfordecommissioningprovisionstothestatementoffinancialposition,thestatementof

earnings(loss)andcomprehensiveincome(loss),andthestatementofcashflows,foreachofthelineitemsaffected.

i. ImpactsontheConsolidatedStatementsofFinancialPosition

Asat December31,2020 December31,2019 January1,2019

($millions) Policychange Policychange Policychange

Assets

Property,plantandequipment (546) (372) (304)

Investmentsinequityaccountedinvestees 24 20 15

Right-of-useassets (51) (39) —

Advancestorelatedpartiesandotherassets (7) (7) (7)

Totalassets (580) (398) (296)

Liabilities

Decommissioningprovision (734) (527) (411)

Deferredtaxliabilities 37 31 32

Totalliabilities (697) (496) (379)

Equity

Deficit 117 98 83

TotalequityattributabletoShareholders 117 98 83

AreconciliationforeachofthelineitemsaffectedintherestatedConsolidatedStatementsofFinancialPositionispresented

inNote4oftheConsolidatedFinancialStatements.


ii. ReconciliationoftheConsolidatedStatementsofEarnings(Loss)andComprehensiveIncome(Loss)

FortheyearsendedDecember31

($millions,exceptpershareamounts)

2020 2019

PolicychangePreviouslyreported Policychange Restated

Costofsales (18) 5,187 (4) 5,183


Grossprofit 22 2,433 9 2,442

Netfinancecosts (3) 294 (5) 289

Earnings(loss)beforeincometax 25 1,528 14 1,542

Deferredtax(recovery)expense 6 (174) (1) (175)

Earnings(loss)attributabletoshareholders 19 1,492 15 1,507

Totalcomprehensiveincome(loss)attributabletoshareholders 19 1,273 15 1,288

Earnings(loss)attributabletocommonshareholders,netofpreferredsharedividends 19 1,361 15 1,376

Earnings(loss)percommonshare-basic 0.04 2.66 0.03 2.69

Earnings(loss)percommonshare-diluted 0.04 2.65 0.03 2.68

iii. ReconciliationoftheConsolidatedStatementofCashFlows


($millions)

2020 2019


Earnings(loss) 19 1,492 15 1,507

Shareofprofitfromequityaccountedinvestees (4) (370) (5) (375)

Adjustmentsfordepreciationandamortization (18) 511 (4) 507

Adjustmentsfornetfinancecosts (3) 294 (5) 289

Adjustmentsforincometaxexpense 6 36 (1) 35

Cashflowfromoperatingactivities — 2,532 — 2,532

Restatementofrevenueandcostofgoodssold

Duringthethirdquarterof2021,PembinaidentifiedcertaincontracttypesthatwererecordedincorrectlywithinMarketing&

NewVentures.Revenueandcostofgoodssoldassociatedwiththecontractswererecordedonagrossbasisbutshouldhave

beenrecordedonanetbasis.Asaresult,Pembinarestatedits2020ConsolidatedStatementsofEarnings(Loss)and

ComprehensiveIncome(Loss)andtheassociatedcomparativeperiodsbydecreasingrevenueandcostofgoodssold,withno

impacttoearnings,cashflowsorfinancialposition.

i. ReconciliationoftheConsolidatedStatementsofEarnings(Loss)andComprehensiveIncome(Loss)



2020 2019

Previouslyreported

Restatementadjustment Restated

Previouslyreported


Revenue 6,202 (249) 5,953 7,230 (858) 6,372

Costofsales 4,132 (249) 3,883 5,183 (858) 4,325

Grossprofit 2,008 — 2,008 2,442 — 2,442

Earnings(loss)percommonshare-basic 0.86 — 0.86 2.69 — 2.69

Earnings(loss)percommonshare-diluted 0.86 — 0.86 2.68 — 2.68


NewStandardsandInterpretationsNotYetAdopted

TheInternationalAccountingStandardsBoardhaveissuedastandardandamendmentstoexistingstandardsthatare

effectiveforperiodsonorafterJanuary1,2021,withearlyapplicationpermitted.Assessmentoftheimpactsofthese

standardsisongoing,however,nomaterialimpactsonPembina'sConsolidatedFinancialStatementshavebeenidentified.

• InterbankOfferedRates("IBOR")Reform-Phase2(AmendmentstoIFRS9,IFRS7,andIFRS16);

• Property,PlantandEquipment:ProceedsbeforeIntendedUse(AmendmentstoIAS16);

• OnerousContracts-CostofFulfillingaContract(AmendmentstoIAS37);

• UpdatingaReferencetotheConceptualFramework(AmendmentstoIFRS3);

• AnnualImprovementstoIFRSStandards2018-2020;

• ClassificationofLiabilitiesasCurrentorNon-Current(AmendmentstoIAS1);and

• IFRS17:InsuranceContracts.

CriticalAccountingJudgmentsandEstimates

ThepreparationoftheConsolidatedFinancialStatementsinconformitywithIFRSrequiresmanagementtomakejudgments,

estimatesandassumptionsthatarebasedonthefactsandcircumstancesandestimatesatthedateoftheConsolidated

FinancialStatementsandaffecttheapplicationofaccountingpoliciesandthereportedamountsofassets,liabilities,income

andexpenses.Actualresultsmaydifferfromtheseestimates.

Judgments,estimatesandunderlyingassumptionsarereviewedonanongoingbasis.Revisionstoaccountingestimatesare

recognizedintheperiodinwhichtheestimatesarerevisedandinanyfutureperiodsaffected.


FollowingtheWorldHealthOrganizationdeclaringtheCOVID-19outbreaktobeapandemic,manygovernmentshave

imposedrestrictionsonindividualsandbusinesses,resultinginasignificantslowdownoftheglobaleconomy.Whilethese

restrictionshavebeenrelaxedincertainjurisdictions,aresurgenceofCOVID-19cases(includingcasesresultingfromvariants

oftheCOVID-19virus)incertaingeographicareasandtheriskthatthiscouldoccurinotherareashascausedgovernmentsin

certainjurisdictionstosustainand,insomecases,re-imposerestrictions.Inaddition,whilevaccinesarebeginningtobe

distributed,thereisongoinguncertaintyastothetiming,levelofadoption,durationofefficacyandoveralleffectivenessof

thevaccine,includingagainstvariantsoftheCOVID-19virus.Asaresult,thereremainssignificantuncertaintyastotheextent

anddurationoftheglobaleconomicslowdown.Thisuncertaintyhascreatedvolatilityinassetandcommodityprices,

currencyexchangeratesandamarkeddeclineinlong-terminterestrates.Inaddition,theresultingdecreaseindemandfor

crudeoilhasresultedinadeclineinglobalcrudeoilprices.Managementappliedjudgmentandwillcontinuetoassessthe

situationindeterminingtheimpactofthesignificantuncertaintiescreatedbytheseeventsandconditionsonthecarrying

amountsofassetsandliabilitiesintheConsolidatedFinancialStatements.


ThefollowingjudgmentandestimationuncertaintiesarethosemanagementconsidersmaterialtotheConsolidatedFinancial

Statements:

Judgments

(i)BusinessCombinations

Businesscombinationsareaccountedforusingtheacquisitionmethodofaccounting.Thedeterminationoffairvalueoften

requiresmanagementtomakejudgmentsaboutfuturepossibleevents.Theassumptionswithrespecttoleaseidentification,

classificationandmeasurement,thefairvalueofpropertyplantandequipment,intangibleassets,decommissioning

provisionsandcontractliabilitiesacquired,aswellasthedeterminationofdeferredtaxes,generallyrequirethemost

judgment.

(ii)DepreciationandAmortization

Depreciationandamortizationofproperty,plantandequipmentandintangibleassetsarebasedonmanagement'sjudgment

ofthemostappropriatemethodtoreflectthepatternofanasset'sfutureeconomicbenefitexpectedtobeconsumedby

Pembina.Amongotherfactors,thesejudgmentsarebasedonindustrystandardsandhistoricalexperience.

(iii)Impairment

Assessmentofimpairmentofnon-financialassetsisbasedonmanagement'sjudgmentofwhetherornoteventsorchangesin

circumstancesindicatethatthecarryingvalueofanasset,investment,cashgeneratingunit("CGU")orgroupofCGUsexceeds

itsrecoverableamount.ThedeterminationofaCGUisbasedonmanagement'sjudgmentandisanassessmentofthe

smallestgroupofassetsthatgeneratecashinflowsindependentlyofotherassets.Inaddition,managementappliesjudgment

toassigngoodwillacquiredaspartofabusinesscombinationtotheCGUorgroupofCGUsthatisexpectedtobenefitfrom

thesynergiesofthebusinesscombinationforpurposesofimpairmenttesting.Whenanimpairmenttestisperformed,the

carryingvalueofaCGUorgroupofCGUsiscomparedtoitsrecoverableamount,definedasthegreateroffairvaluelesscosts

ofdisposalandvalueinuse.Assuch,theassetcompositionofaCGUorgroupofCGUsdirectlyimpactsboththecarrying

valueandrecoverabilityoftheassetsincludedtherein.

(iv)AssessmentofJointControlOverJointArrangements

ThedeterminationofjointcontrolrequiresjudgmentabouttheinfluencePembinahasoverthefinancialandoperating

decisionsofanarrangementandtheextentofthebenefitsitobtainsbasedonthefactsandcircumstancesofthe

arrangementduringthereportingperiod.Jointcontrolexistswhendecisionsabouttherelevantactivitiesrequirethe

unanimousconsentofthepartiesthatcontrolthearrangementcollectively.Ownershippercentagealonemaynotbea

determinantofjointcontrol.

(v)PatternofRevenueRecognition

Thepatternofrevenuerecognitionisimpactedbymanagement'sjudgmentsastothenatureofPembina'sperformance

obligations,theamountofconsiderationallocatedtoperformanceobligationsthatarenotsoldonastand-alonebasis,the

valuationofmaterialrightsandthetimingofwhenthoseperformanceobligationshavebeensatisfied.


(vi)Leases

Managementappliesjudgmenttodeterminewhetheracontractis,orcontains,aleasefrombothalesseeandlessor

perspective.Thisassessmentisbasedonwhetherthecontractconveysarighttocontroltheuseofanidentifiedassetfora

periodoftimeinexchangeforconsideration.Keyjudgmentsincludewhetheracontractidentifiesanasset(orportionofan

asset),whetherthelesseeobtainssubstantiallyalltheeconomicbenefitsoftheassetoverthecontracttermandwhetherthe

lesseehastherighttodirecttheasset'suse.Judgmentisalsoappliedindeterminingtherateusedtodiscountthelease

payments.

Estimates


Estimatesoffuturecashflows,forecastprices,interestrates,discountrates,cost,marketvaluesandusefullivesaremadein

determiningthefairvalueofassetsacquiredandliabilitiesassumed.Changesinanyoftheassumptionsorestimatesusedin

determiningthefairvalueofacquiredassetsandliabilitiescouldimpacttheamountsassignedtoassets,liabilities,intangible

assets,goodwillanddeferredtaxesinthepurchasepriceequation.Futureearningscanbeaffectedasaresultofchangesin

futuredepreciationandamortization,assetorgoodwillimpairment.

(ii)ProvisionsandContingencies

Managementusesjudgmentindeterminingthelikelihoodofrealizationofcontingentassetsandliabilitiestodeterminethe

outcomeofcontingencies.Provisionsrecognizedarebasedonmanagement'sbestestimateofthetiming,scopeandamount

ofexpectedfuturecashoutflowstosettletheobligation.

Basedonthelong-termnatureofthedecommissioningprovision,themostsignificantuncertaintiesinestimatingthe

provisionarethedeterminationofwhetherapresentobligationexists,thediscountandinflationratesused,thecoststhat

willbeincurredandthetimingofwhenthesecostswilloccur.

(iii)DeferredTaxes

Thecalculationofthedeferredtaxassetorliabilityisbasedonassumptionsaboutthetimingofmanytaxableeventsandthe

enactedorsubstantivelyenactedratesanticipatedtobeapplicabletoincomeintheyearsinwhichtemporarydifferencesare

expectedtoberealizedorreversed.Deferredincometaxassetsarerecognizedtotheextentthatitisprobablethatthe

deductibletemporarydifferenceswillberecoverableinfutureperiods.Theassessmentoffuturerecoverabilityinvolves

significantestimatestobemadebymanagement.

(iv)DepreciationandAmortization

Estimatedusefullivesofproperty,plantandequipmentandintangibleassetsarebasedonmanagement'sassumptionsand

estimatesofthephysicalusefullivesoftheassets,theeconomiclives,whichmaybeassociatedwiththereservelivesand

commoditytypeoftheproductionarea,inadditiontotheestimatedresidualvalue.

(v)ImpairmentofNon-FinancialAssets

IndeterminingtherecoverableamountofaCGU,agroupofCGUsoranindividualasset,managementusesitsbestestimates

offuturecashflows,andassessesdiscountratestoreflectmanagement'sbestestimateofaratethatreflectsacurrent

marketassessmentofthetimevalueofmoneyandthespecificrisksassociatedwiththeunderlyingassetsandcashflows.


(vi)ImpairmentofFinancialAssets

Themeasurementoffinancialassetscarriedatamortizedcostincludesmanagement'sestimatesregardingtheexpected

creditlossesthatwillberealizedonthesefinancialassets.

(vii)RevenuefromContractswithCustomers

Inestimatingthecontractvalue,managementmakesassessmentsastowhethervariableconsiderationisconstrainedornot

reasonablyestimable,suchthatanamountorportionofanamountcannotbeincludedintheestimateofthecontractvalue.

Management'sestimatesofthelikelihoodofacustomer'sabilitytouseoutstandingmake-uprightsmayimpactthetimingof

revenuerecognition.Inaddition,indeterminingtheamountofconsiderationtobeallocatedtoperformanceobligationsthat

arenotsoldonastand-alonebasis,managementestimatesthestand-alonesellingpriceofeachperformanceobligation

underthecontract,takingintoconsiderationthelocationandvolumeofgoodsorservicesbeingprovided,themarket

environment,andcustomerspecificconsiderations.

(viii)FairValueofFinancialInstruments

ForLevel2valuedfinancialinstruments,managementmakesassumptionsandestimatesvaluebasedonobservableinputs

suchasquotedforwardprices,timevalueandvolatilityfactors.ForLevel3valuedfinancialinstruments,managementuses

estimatesoffinancialforecasts,expectedcashflowsandriskadjusteddiscountratestomeasurefairvalue.

(ix)EmployeeBenefitObligations

AnactuarialvaluationispreparedtomeasurePembina'snetemployeebenefitobligationsusingmanagement'sbest

estimateswithrespecttolongevity,discountandinflationrates,compensationincreases,marketreturnsonplanassets,

retirementandterminationrates.

(x)Leases

Inmeasuringitsleaseliabilities,managementmakesassessmentsofthestand-alonesellingpricesofeachleaseandnon-lease

componentforthepurposesofallocatingconsiderationtoeachcomponent.Managementappliesitsbestestimatewith

respecttothelikelihoodofrenewal,extensionandterminationoptionexerciseindeterminingtheleaseterm.


11.RISKFACTORS

Pembina'svaluepropositionisbasedonbalancingeconomicbenefitagainstrisk.Whereappropriate,Pembinawillseekto

reducerisk.Pembinacontinuallyworkstomitigatetheimpactofriskstoitsbusinessbyidentifyingallsignificantriskssothat

theycanbeappropriatelymanaged.Toassistwithidentifyingandmanagingrisk,Pembinahasimplementedacomprehensive

RiskManagementProgram.TherisksthatmayaffectthebusinessandoperationofPembinaanditsoperatingsubsidiariesare

describedatahighlevelwithinthisMD&AandmorefullywithinPembina'sAIF,anelectroniccopyofwhichisavailableat

www.pembina.comoronPembina'sSEDARprofileatwww.sedar.comandwhichisfiledunderForm40-FonPembina's

EDGARprofileatwww.sec.gov.Further,additionaldiscussionaboutcounterpartyrisk,marketrisk,liquidityriskandadditional

informationonfinancialriskmanagementcanbefoundinNote27oftheConsolidatedFinancialStatements.


COVID-19RelatedImpacts

Pembina'sbusinessandoperationshavebeenandmaycontinuetobemateriallyadverselyaffectedbytheCOVID-19

pandemic,includingongoinguncertaintywithrespecttotheextentanddurationofthepandemic.TheongoingCOVID-19

pandemicandactionsthathave,andmaybe,takenbygovernmentalauthoritiesinresponsetheretohasresulted,andmay

continuetoresultin,amongotherthings:anoverallslowdownintheglobaleconomy;adecreaseinglobalenergydemand;

increasedvolatilityinfinancialandcommoditymarkets;disruptionstoglobalsupplychains;labourshortages;significant

impactstotheworkforce;reductionsintradevolumes;temporaryoperationalrestrictionsandrestrictionsongatheringsof

individuals,aswellasshelter-in-placedeclarationsandquarantineorders;businessclosuresandtravelbans;politicaland

economicinstability;andcivilunrest.TherecentresurgenceoftheCOVID-19virusandtherecentspreadofnewvariants

thereofincertaingeographicareas,includingcertainareasinwhichPembinaoperates,andthepossibilitythataresurgence

oftheCOVID-19virusorthespreadofsuchneworothervariantsormutationsthereofmayoccurinotherareas,hasresulted

inthere-impositionofcertainoftheforegoingrestrictions,andmayresultinfurtherrestrictions,bygovernmentalauthorities

incertainjurisdictions,includingcertainjurisdictionsinwhichPembinaoperates.Thisfurtherincreasestheriskand

uncertaintyastotheextentanddurationoftheCOVID-19pandemicanditsultimateimpactoftheglobaleconomyandother

itemsnotedabove.

TheriskstoPembinaoftheongoingCOVID-19pandemicinclude,amongotherthings:riskstothehealthandsafetyof

Pembina'semployees;aslowdownortemporarysuspensionofoperationsincertaingeographiclocationsinwhichPembina

operates;delaysinthecompletion,ordeferral,ofPembina'sgrowthandexpansionprojects;andsupplychaindisruptions,all

oranyofwhichcouldmateriallyadverselyimpactPembina'sbusinessoperationsandfinancialresults.Pembinahasalready

deferredcertaingrowthprojectsasaresultoftheCOVID-19pandemicandtheassociateddeclineinglobalenergydemand

andtheresultingdecreaseincommoditypricesduring2020.

ThefullextentandimpactoftheCOVID-19pandemiccontinuestobeunknownatthistimeandthedegreetowhichitmay

impactPembina'sbusinessoperationsandfinancialresultswilldependonfuturedevelopments,whicharehighlyuncertain

andcannotbepredictedwithanydegreeofcertainty,including:theduration,severityandgeographicspreadoftheCOVID-19

virusandvariantsandmutationsthereof,includinginrespectoftherecentresurgenceofthevirusandtherecentspreadof

newvariantsthereofincertaingeographicareas,includingcertainareasinwhichPembinaoperates;furtheractionsthatmay

betakenbygovernmentalauthorities,includinginrespectoftravelrestrictionsandbusinessdisruptions;theeffectiveness

andtimingofactionstakentocontainandtreattheCOVID-19virusandvariantsandmutationsthereof,includingthevaccines

developedinresponsethereto;andhowquicklyandtowhatextentnormaleconomicandoperatingconditionscanresume.


ImpactonGeneralRisks

DependingontheextentanddurationoftheCOVID-19pandemic,itmayalsohavetheeffectofheighteningmanyofthe

otherrisksdescribedherein,includingtherisksrelatingtoPembina'sexposuretocommodityprices;thesuccessful

completionofPembina'sgrowthandexpansionprojects,includingtheexpectedreturnoninvestmentthereof;Pembina's

abilitytomaintainitscreditratings;restrictedaccesstocapitalandincreasedborrowingcosts;Pembina'sabilitytopay

dividendsandserviceobligationsunderitsdebtsecuritiesandotherdebtobligations;andotherwisecomplyingwiththe

covenantscontainedintheagreementsthatgovernPembina'sexistingindebtedness.

RisksInherentinPembina'sBusiness

CommodityPriceRisk

Pembina'sbusinessisexposedtocommoditypricevolatilityandasubstantialdeclineinthepricesofthesecommoditiescould

adverselyaffectitsfinancialresults.

CertainofthetransportationcontractsortollingarrangementswithrespecttoPembina'spipelineassetsdonotincludetake-

or-paycommitmentsfromcrudeoilandgasproducersand,asaresult,Pembinaisexposedtovolumeriskwithrespectto

thoseassets.AdecreaseinvolumestransportedcandirectlyandadverselyaffectPembina'srevenuesandearnings.The

demandfor,andutilizationof,Pembina'spipelineassetsmaybeimpactedbyfactorssuchaschangingmarketfundamentals,

capacitybottlenecks,operationalincidents,regulatoryrestrictions,systemmaintenance,weatherandincreasedcompetition.

Marketfundamentals,suchascommoditypricesandpricedifferentials,naturalgasandgasolineconsumption,alternative

energysourcesandglobalsupplydisruptionsoutsideofPembina’scontrolcanimpactboththesupplyofanddemandforthe

commoditiestransportedonPembina'spipelines.See"ReserveReplacement,ThroughputandProductDemand"below.

Pembina'sMarketingbusinessincludesactivitiesrelatedtoproductstorage,terminalling,andhubservices.Theseactivities

exposePembinatocertainrisksrelatingtofluctuationsincommoditypricesand,asaresult,Pembinamayexperience

volatilityinrevenueandimpairmentsrelatedtothebookvalueofstoredproductwithrespecttotheseactivities.Primarily,

Pembinaentersintocontractstopurchaseandsellcrudeoil,condensate,NGLandnaturalgasatfloatingmarketprices;asa

result,thepricesofproductsthataremarketedbyPembinaaresubjecttovolatilityasaresultoffactorssuchasseasonal

demandchanges,extremeweatherconditions(theseverityofwhichcouldincreaseduetoclimatechange),marketinventory

levels,generaleconomicconditions,changesincrudeoilmarketsandotherfactors.Pembinamanagesitsriskexposureby

balancingpurchasesandsalestosecurelessvolatilemargins.NotwithstandingPembina'smanagementofpriceandquality

risk,marketingmarginsforcommoditiescanvaryandhavevariedsignificantlyfromperiodtoperiodinthepast.This

variabilitycouldhaveanadverseeffectontheresultsofPembina'sMarketingbusinessanditsoverallresultsofoperations.To

assistinreducingthisinherentvariabilityinitsMarketingbusiness,Pembinahasinvested,andwillcontinuetoinvest,in

assetsthathaveafee-basedrevenuecomponent.

PembinaisalsoexposedtopotentialpricedeclinesanddecreasingfracspreadsbetweenthetimePembinapurchasesNGL

feedstockandsellsNGLproducts.FracspreadisthedifferencebetweentherevenuefromthesaleofNGLifremovedfroma

gasstreamandthevaluesuchNGLwouldhavehadifleftinthegasstreamandsoldatnaturalgasprices.Fracspreadscan

changesignificantlyfromperiodtoperioddependingontherelationshipbetweenNGLandnaturalgasprices(the"frac

spreadratio"),absolutecommodityprices,transportdifferentialsandchangesintheCanadiantoU.S.dollarexchangerate.In

additiontothefracspreadratiochanges,thereisalsoadifferentialbetweenNGLproductpricesandcrudeoilpriceswhich

canchangemarginsrealizedformidstreamproducts.Theamountofprofitorlossmadeontheextractionportionofthe

businesswillgenerallyincreaseordecreasewithfracspreads.Thisexposurecouldresultinvariabilityofcashflowgenerated

bytheMarketingbusiness,whichcouldaffectPembinaandthecashdividendsthatPembinaisabletodistribute.


TheCompanyutilizesfinancialderivativeinstrumentsaspartofitsoverallriskmanagementstrategytoassistinmanagingthe

exposuretocommodityprice,interestrate,costofpowerandforeignexchangerisks.Asanexampleofcommodityprice

mitigation,theCompanyactivelyfixesaportionofitsexposuretofractionationmarginsthroughtheuseofderivative

financialinstruments.Additionally,Pembina'sMarketingbusinessisalsoexposedtovariabilityinquality,timeandlocation

differentialsforvariousproducts,andfinancialinstrumentsmaybeusedtooffsettheCompany'sexposurestothese

differentials.TheCompanydoesnottradefinancialinstrumentsforspeculativepurposes.Commoditypricefluctuationsand

volatilitycanalsoimpactproduceractivityandthroughputinPembina'sinfrastructure,whichisdiscussedinmoredetail

below.

FormoreinformationwithrespecttoPembina'sfinancialinstrumentsandfinancialriskmanagementprogram,seeNote27to

Pembina'sConsolidatedFinancialStatements,whichnoteisincorporatedbyreferenceherein.

RegulationandLegislation

LegislationinAlbertaandBritishColumbiaexiststoensurethatproducershavefairandreasonableopportunitiestoproduce,

processandmarkettheirreserves.RegulatoryauthoritiesinAlbertaandBritishColumbiamaydeclaretheoperatorofa

pipelineacommoncarrierofcrudeoil,NGLornaturalgasand,assuch,mustnotdiscriminatebetweenproducerswhoseek

accesstothepipeline.Regulatoryauthoritiesmayalsoestablishconditionsunderwhichthecarriermustacceptandcarry

product,includingthetariffsthatmaybecharged.Producersandshippersmayalsoapplytotheappropriateregulatory

authoritiesforareviewoftariffs,andsuchtariffsmaythenberegulatedifitisproventhatthetariffsarenotjustand

reasonable.Thepotentialfordirectregulationoftariffs,whileconsideredremotebyPembina,couldresultintarifflevelsthat

arelessadvantageoustoPembinaandcouldimpairtheeconomicoperationofsuchregulatedpipelinesystems.

TheAERistheprimaryregulatorybodythatoverseesPembina'sAlberta-issuedenergypermits,withsomeminorexceptions.

CertainofPembina'ssubsidiariesownpipelinesinBritishColumbia,whichareregulatedbytheBCOGCandtheBCUC,and

pipelinesthatcrossprovincialorinternationalboundaries,whichareregulatedbytheCERand/ortheFERCandPHMSA.

CertainofPembina'soperationsandexpansionprojectsaresubjecttoadditionalregulations,andasPembina'soperations

expandthroughoutCanadaandNorthAmerica,Pembinamayberequiredtocomplywiththerequirementsofadditional

regulatorsandlegislativebodies,includingtheImpactAssessmentAgencyofCanada,theBCEAO,theOntarioMinistryof

NaturalResourcesandForestry,theSaskatchewanMinistryofEnergyandResourcesandThePetroleumBranchofManitoba

MineralResourcesunderManitobaAgricultureandResourceDevelopment.


IntheU.S.,FERCregulatesinterstatenaturalgaspipelinesandthetransportationofcrudeoil,NGLandrefinedproductsin

interstatecommerce.UndertheNGA,FERCregulatestheconstruction,extension,andabandonmentofinterstatenaturalgas

pipelinesandthetolls,termsandconditionsofserviceandotheraspectsofthebusinessofinterstatenaturalgaspipelines.

Interstatenaturalgaspipelinestolls,termsandconditionsofservicearefiledatFERCandpubliclyavailable.Underthe

InterstateCommerceAct,FERCregulatesthetolls,termsandconditionsofthetransportationininterstatecommerceofcrude

oil,NGLsandrefinedproducts.PipelinesafetyisregulatedbythePHMSA,whichsetsstandardsforthedesign,construction,

pressuretesting,operationandmaintenance,corrosioncontrol,trainingandqualificationofpersonnel,accidentreporting

andrecordkeeping.TheOfficeofPipelineSafety,withinthePHMSA,inspectsandenforcesthepipelinesafetyregulations

acrosstheU.S.Allregulationsandenvironmental,safetyandeconomiccomplianceobligationsaresubjecttochangeatthe

initiativeofFERC,PHMSAorotherUnitedStatesFederalagencieswithjurisdictionoveraspectsoftheoperationsofpipelines,

includingenvironmental,economicandsafetyregulations.ChangesbyFERCinitsregulationsorpoliciescouldadversely

impactPembina'snaturalgaspipelines,makingtheconstruction,extensionorexpansionofsuchpipelinesmorecostly,

causingdelayinthepermittingofsuchprojectsorimpactingthelikelihoodofsuccessofcompletionofsuchprojects.

Similarly,changesinFERC'sregulationsorpoliciescouldadverselyimpactthetollsthatPembina'sFERCregulatedpipelines

areabletochargeandhowsuchpipelinesdobusiness,whethersuchpipelinesareregaledbyFERCpursuanttotheNGAor

theICA.Pembinacontinuallymonitorsexistingandchangingregulationsinalljurisdictionsinwhichitcurrentlyoperates,or

intowhichitmayexpandinthefuture,andthepotentialimplicationstoitsoperations;however,Pembinacannotpredict

futureregulatorychanges,andanysuchcomplianceandregulatorychangesinanyoneormultiplejurisdictionscouldhavea

materialadverseimpactonPembina,itsfinancialresultsanditsShareholders.

In2019,thefederalgovernmentoverhauledtheenvironmentalassessmentandfederalenergyregulationregimeinCanada.

TheNationalEnergyBoard("NEB")andNEBActwerereplacedbytheCERandtheCanadianEnergyRegulatorAct("CERAct").

Similarly,theCanadianEnvironmentalAssessmentAct,2012(Canada)("CEAA")wasreplacedbytheImpactAssessmentAct

(Canada)("IAA")andtheCanadianEnvironmentalAssessmentAgencywasreplacedbythenewIAAastheauthority

responsibleforconductingallfederalimpactassessments(formerly"environmentalassessments")forcertaindesignated

projectsundertheIAA,unlessreferredtoareviewpanel.Thelistofdesignatedprojectswhicharesubjecttomandatory

assessmentundertheIAAissimilartothelistundertheCEAA;however,thelengthofnewpipelinesforwhichanimpact

assessmentisrequiredhasbeenincreasedfrom40kmto75km.TheproposedIAAalsocontainsabroaderproject

assessmentprocessthanundertheCEAAandprovidesforenhancedconsultationwithgroupsthatmaybeaffectedby

proposedprojects,whilealsoexpandingthescopeoffactorsandconsiderationsthatneedtobetakenintoaccountunderthe

projectassessmentprocess.TheCERcontinuestooverseeapprovedfederal,interprovincialandinternationalenergyprojects

inamannersimilartotheformerregimeundertheNEB,withnewprojectsbeingreferredtoareviewpanelundertheIAA.On

July16,2020,thefederalgovernmentpublishedtheStrategicAssessmentofClimateChange("SACC")undertheprovisions

forsuchassessmentsintheIAA.TheSACCimposesthenewrequirementsregardingGHGemissionsplanningonprojects

subjecttotheIAA.

Atthispoint,whilefewprojectshavebeensubjecttothenewfederalimpactassessmentregime,Pembinacontinuesto

activelymonitordevelopmentsinthisarea.Totheextentthesechangeslengthenthereviewtimelineforprojectsorexpand

thescopeofthematterstobeconsidered,thenewregimecouldmateriallyimpacttheamountoftimeandcapitalresources

requiredbyPembinatoseekandobtainapprovaltoconstructandoperateinternationalorinterprovincialpipelinesorother

projectsdesignatedpursuanttotheIAAprojectlistorministerialdesignationpowersundertheIAA.Thenewregimecould

thereforemateriallyanddirectlyimpactPembina'sbusinessandfinancialresults,andcouldindirectlyaffectPembina's

businessandfinancialresultsbyimpactingthefinancialconditionandgrowthprojectsofitscustomersand,ultimately,

productionlevelsandthroughputonPembina'spipelinesandinitsfacilities.

Pembina'sbusinessandfinancialconditionmayalsobeinfluencedbyfederalandforeignlegislationaffecting,inparticular,

foreigninvestment,throughlegislationsuchastheCompetitionAct(Canada),theInvestmentCanadaAct(Canada)and

equivalentlegislationinforeignjurisdictions.


Therecanbenoassurancethatchangestoincometaxlaws,regulatoryandenvironmentallawsorpoliciesandgovernment

incentiveprogramsrelatingtothepipelineorcrudeoilandnaturalgasindustrywillnotadverselyaffectPembinaorthevalue

ofitssecurities.

OperationalRisks

Operationalrisksinclude,butarenotlimitedto:pipelineleaks;thebreakdownorfailureofequipment,pipelinesandfacilities,

informationsystemsorprocesses;thecompromiseofinformationandcontrolsystems;theperformanceofequipmentat

levelsbelowthoseoriginallyintended(whetherduetomisuse,unexpecteddegradationordesign,constructionor

manufacturingdefects);releasesattruckterminalsandhubs;releasesassociatedwiththeloadingandunloadingof

potentiallyharmfulsubstancesontorailcarsandtrucks;adverseseaconditions(includingstormsandrisingsealevels)and

releasesorspillsfromshippingvesselsloadedatPembina'smarineterminal;failuretomaintainadequatesuppliesofspare

parts;operatorerror;labourdisputes;disputeswithinterconnectedfacilitiesandcarriers;operationaldisruptionsor

apportionmentonthird-partysystemsorrefineries,whichmaypreventthefullutilizationofPembina'sfacilitiesandpipelines;

andcatastrophicevents,including,butnotlimitedto,thoserelatedtoclimatechangeandextremeweatherevents,including

fires,floodsandothernaturaldisasters,explosions,trainderailments,earthquakes,widespreadepidemicsorpandemic

outbreaks,actsofcivilprotestordisobedience,terrorismorsabotage,andothersimilarevents,manyofwhicharebeyond

thecontrolofPembinaandallofwhichcouldresultinoperationaldisruptions,damagetoassets,relatedreleasesorother

environmentalissues,anddelaysinconstruction,labourandmaterials.Pembinamayalsobeexposedfromtimetotimeto

additionaloperationalrisksnotstatedintheimmediatelyprecedingsentence.Inaddition,theconsequencesofany

operationalincident(includingasaresultofadverseseaconditions)atVancouverWharvesorinvolvingavesselreceiving

productsfromVancouverWharves,maybeevenmoresignificantasaresultofthecomplexitiesinvolvedinaddressingleaks

andreleasesoccurringintheoceanoralongcoastlinesand/ortherepairofmarineterminals.Anyleaks,releasesorother

incidentsinvolvingsuchvessels,orothersimilaroperatorsalongtheWestCoast,couldresultinsignificantharmtothe

environment,curtailmentof,ordisruptionsofand/ordelaysin,offshoreshippingactivityintheaffectedareas,including

Pembina'sabilitytoeffectivelycarryonoperationsatVancouverWharves.Theoccurrenceorcontinuanceofanyofthe

foregoingeventscouldincreasethecostofoperatingPembina'sassetsorreducerevenue,therebyimpactingearnings.

Additionally,facilitiesandpipelinesarereliantonelectricalpowerfortheiroperations.Afailureordisruptionwithinthelocal

orregionalelectricalpowersupplyordistributionortransmissionsystemscouldsignificantlyaffectongoingoperations.

Further,asignificantincreaseinthecostofpowerorfuelcouldhaveamateriallynegativeeffectonthelevelofprofitrealized

incaseswheretherelevantcontractsdonotprovideforrecoveryofsuchcosts.Inthelong-term,constraintsonnatural

resourcedevelopmentcouldbeimpactedbyclimatechangeinitiativesorpolicies,resultinginadditionaloperationalcosts,

delaysorrestrictions.

Pembinaiscommittedtopreservingcustomerandshareholdervaluebyproactivelymanagingoperationalriskthroughsafe

andreliableoperations.Seniormanagersareresponsibleforthesupervisionofoperationalriskbyensuringappropriate

policies,proceduresandsystemsareinplacewithintheirbusinessunitsandinternalcontrolsareoperatingefficiently.

Pembinaalsohasanextensiveprogramtomanagepipelinesystemintegrity,whichincludesthedevelopmentanduseofin-

lineinspectiontoolsandvariousotherleakdetectiontechnologies.Pembina'smaintenance,excavationandrepairprograms

arefocusedonriskmitigationand,assuch,resourcesaredirectedtotheareasofgreatestbenefitandinfrastructureis

replacedorrepairedasrequired.Pembinacarriesinsurancecoveragewithrespecttosome,butnotall,casualtyoccurrences

inamountscustomaryforsimilarbusinessoperations,whichcoveragemaynotbesufficienttocompensateforallcasualty

occurrences.Inaddition,PembinahasacomprehensiveSecurityManagementProgramdesignedtoreducesecurity-related

risks.


CompletionandTimingofExpansionProjects

ThesuccessfulcompletionofPembina'sgrowthandexpansionprojectsisdependentonanumberoffactorsoutsideof

Pembina'scontrol,includingtheimpactofgeneraleconomic,businessandmarketconditions,availabilityofcapitalonterms

andratesacceptabletoPembina,receiptofregulatoryapprovals,reachinglong-termcommercialarrangementswith

customersinrespectofcertainportionsoftheexpansions,constructionschedules,commissioningdifficultiesordelaysand

coststhatmaychangedependingonsupply,demandand/orinflation,labour,materialsandequipmentavailability,

contractornon-performance,actsofcivilprotestordisobedience,terrorismorsabotage,weatherconditions,costof

engineeringservices,andchangeingovernmentsthatgrantedtherequisiteregulatoryapprovals.Thereisnocertainty,nor

canPembinaprovideanyassurance,thatnecessaryregulatoryapprovalswillbereceivedontermsthatmaintaintheexpected

returnoninvestmentassociatedwithaspecificproject,oratall,orthatsatisfactorycommercialarrangementswith

customerswillbeenteredintoonatimelybasis,oratall,orthatthirdpartieswillcomplywithcontractualobligationsina

timelymanner.Factorssuchasspecialinterestgroupopposition,Indigenous,landownerandotherstakeholderconsultation

requirements,civilprotestordisobedience,changesinshippersupport,andchangestothelegislativeorregulatory

frameworkcouldallhaveanimpactonmeetingcontractualandregulatorymilestones.Asaresult,thecostestimatesand

completiondatesforPembina'smajorprojectsmaychangeduringdifferentstagesoftheproject.Earlystageprojectsface

additionalchallenges,includingsecuringleases,easements,rights-of-way,permitsand/orlicensesfromlandownersor

governmentalauthoritiesallowingaccessforsuchpurposes,aswellasIndigenousconsultationrequirements.Accordingly,

actualcostsandconstructionschedulesmayvaryfrominitialestimatesandthesedifferencescanbesignificant,andcertain

projectsmaynotproceedasplanned,oratall.Further,thereisariskthatmaintenancewillberequiredmoreoftenthan

currentlyplannedorthatsignificantmaintenancecapitalprojectscouldarisethatwerenotpreviouslyanticipated.

UndermostofPembina'sconstructionandoperatingagreements,theCompanyisobligatedtoconstructthefacilitiesand

pipelinesregardlessofdelaysandcostincreasesandPembinabearstheriskforanycostoverruns.Futureagreements

enteredintowithcustomerswithrespecttoexpansionsmaycontainsimilarconditions.WhilePembinaisnotcurrentlyaware

ofanysignificantundisclosedcostoverrunswithrespecttoitscurrentprojectsatthedatehereof,anysuchcostoverrunsmay

adverselyaffecttheeconomicsofparticularprojects,aswellasPembina'sbusinessoperationsandfinancialresults,andcould

reducePembina'sexpectedreturnoninvestmentwhich,inturn,couldreducethelevelofcashavailablefordividendsandto

serviceobligationsunderPembina'sdebtsecuritiesandotherdebtobligations.

PossibleFailuretoRealizeAnticipatedBenefitsofCorporateStrategy

Pembinaevaluatesthevaluepropositionforexpansionprojects,newacquisitionsanddivestituresonanongoingbasis.

Planningandinvestmentanalysisishighlydependentonaccurateforecastingassumptionsand,totheextentthatthese

assumptionsdonotmaterialize,financialperformancemaybelowerormorevolatilethanexpected.Volatilityinthe

economy,changeincostestimates,failuretoobtainregulatoryapprovalsandpermits,projectscopingandriskassessment

couldresultinalossinprofitsforPembina.Aspartofitsongoingstrategy,Pembinamaycompleteacquisitionsofassetsor

otherentitiesinthefuture.Achievingthebenefitsofcompletedandfutureacquisitionsdepends,inpart,onsuccessfully

consolidatingfunctionsandintegratingoperations,proceduresandpersonnelinatimelyandefficientmanner,aswellas

Pembina'sabilitytorealizetheanticipatedgrowthopportunitiesandsynergiesfromcombiningtheacquiredbusinessesand

operationswiththoseofPembina.Inparticular,largescaleacquisitionsmayinvolvesignificantpricingandintegrationrisk.

Theintegrationofacquiredbusinessesandentitiesrequiresthededicationofsubstantialmanagementeffort,timeand

resources,whichmaydivertmanagement'sfocusandresourcesfromotherstrategicopportunitiesandfromoperational

mattersduringthisprocess.Theintegrationprocessmayalsoresultinthelossofkeyemployeesandthedisruptionof

ongoingbusiness,customerandemployeerelationships,whichmayadverselyaffectPembina'sabilitytoachievethe

anticipatedbenefitsofanyacquisitions.AcquisitionsmayalsoexposePembinatoadditionalrisks,includingrisksrelatingto

entryintomarketsorbusinessesinwhichPembinahaslittleornodirectpriorexperience,increasedcreditrisksthroughthe

assumptionofadditionaldebt,costsandcontingentliabilitiesandexposuretoliabilitiesoftheacquiredbusinessorassets.


Aspartitsvaluepropositionevaluation,Pembinamayalsodesiretodivestassetstooptimizeitsoperationsandfinancial

performance.Pembinamay,however,beunabletosellcertainassetsor,ifPembinaisabletosellcertainassets,itmaynot

receivetheoptimalordesiredamountofproceedsfromsuchassetsales.Additionally,thetimingtocloseanyassetsales

couldbesignificantlydifferentthanPembina'sexpectedtimeline.

See"GeneralRiskFactors–AdditionalFinancingandCapitalResources"below.

JointOwnershipandThird-PartyOperators

CertainofPembina'sassetsarejointlyownedandaregovernedbypartnershiporshareholderagreementsenteredintowith

third-parties.Asaresult,certaindecisionsrelatingtotheseassetsrequiretheapprovalofasimplemajorityoftheowners,

whileothersrequireunanimousapprovaloftheowners.Inaddition,certainoftheseassetsareoperatedbyunrelatedthird-

partyentities.Thesuccessoftheseassetsis,tosomeextent,dependentontheeffectivenessofthebusinessrelationshipand

decision-makingamongPembinaandtheotherjointowner(s)andtheexpertiseandabilityofanythird-partyoperatorsto

operateandmaintaintheassets.WhilePembinabelievesthatthereareprudentgovernanceandothercontractualrightsin

place,therecanbenoassurancethatPembinawillnotencounterdisputeswithjointownersorthatassetsoperatedbythird

partiesmaynotperformasexpected.Sucheventscouldimpactoperationsorcashflowsoftheseassetsorcausethemtonot

operateasPembinaexpectswhich,inturn,couldhaveanegativeimpactonPembina'sbusinessoperationsandfinancial

results,andcouldreducePembina'sexpectedreturnoninvestment,therebyreducingthelevelofcashavailablefordividends

andtoserviceobligationsunderPembina'sdebtsecuritiesandotherdebtobligations.

ReserveReplacement,ThroughputandProductDemand

Pembina'spipelinerevenueisbasedonavarietyoftollingarrangements,includingfee-for-service,cost-of-serviceagreements

andmarket‑basedtolls.Asaresult,certainpipelinerevenueisheavilydependentuponthroughputlevelsofcrudeoil,condensate,NGLandnaturalgas.Futurethroughputoncrudeoil,NGLandnaturalgaspipelinesandreplacementofoiland

gasreservesintheserviceareaswillbedependentupontheactivitiesofproducersoperatinginthoseareasastheyrelateto

exploitingtheirexistingreservebasesandexploringforanddevelopingadditionalreserves,andtechnologicalimprovements

leadingtoincreasedrecoveryrates.Similarly,thevolumesofnaturalgasprocessedthroughPembina'sgasprocessingassets

dependsontheproductionofnaturalgasintheareasservicedbythegasprocessingbusinessandassociatedpipelines.

Withoutreserveadditions,orexpansionoftheserviceareas,volumesonsuchpipelinesandinsuchfacilitieswoulddecline

overtimeasreservesaredepleted.Asoilandgasreservesaredepleted,productioncostsmayincreaserelativetothevalue

oftheremainingreservesinplace,causingproducerstoshut-inproductionorseekoutlowercostalternativesfor

transportation.If,asaresult,theleveloftollscollectedbyPembinadecreases,cashflowavailablefordividendsto

ShareholdersandtoserviceobligationsunderPembina'sdebtsecuritiesandPembina'sotherdebtobligationscouldbe

adverselyaffected.

Overthelong-term,theabilityandwillingnessofshipperstocontinueproductionwillalsodepend,inpart,onthelevelof

demandandpricesforcrudeoil,condensate,NGLandnaturalgasinthemarketsservedbythecrudeoil,NGLandnaturalgas

pipelinesandgasprocessingandgatheringinfrastructureinwhichPembinahasaninterest.Producersmayshut-inproduction

atlowerproductpricesorhigherproductioncosts.

Globaleconomiceventsmaycontinuetohaveasubstantialimpactonthepricesofcrudeoil,condensate,NGLandnatural

gas.Pembinacannotpredicttheimpactoffuturesupply/demandoreconomicconditions,fuelconservationmeasures,

alternativefuelrequirements,governmentalregulationortechnologicaladvancesinfuelefficiencyandenergygenerationin

theenergyandpetrochemicalindustriesorfuturedemandforandpricesofnaturalgas,crudeoil,condensateandNGL.A

lowercommoditypriceenvironmentwillgenerallyreducedrillingactivityand,asaresult,thedemandformidstream

infrastructurecoulddecline.ProducersintheareasservicedbyPembinamaynotbesuccessfulinexploringforand

developingadditionalreservesorachievingtechnologicalimprovementstoincreaserecoveryratesandlowerproduction

costsduringperiodsoflowercommodityprices,whichmayalsoreducedemandformidstreaminfrastructure.


Futurepricesofthesehydrocarbonsaredeterminedbysupplyanddemandfactors,includingweatherandgeneraleconomic

conditionsaswellaseconomic,politicalandotherconditionsinothercrudeoilandnaturalgasregions,allofwhichare

beyondPembina'scontrol.Therateandtimingofproductionfromprovennaturalgasreservestiedintogasplantsisatthe

discretionofproducersandissubjecttoregulatoryconstraints.Producershavenoobligationtoproducefromtheirnatural

gasreserves,whichmeansproductionvolumesareatthediscretionofproducers.Lowerproductionvolumesmayincrease

thecompetitionfornaturalgassupplyatgasprocessingplants,whichcouldresultinhighershrinkagepremiumsbeingpaidto

naturalgasproducers.Inaddition,lowerproductionvolumesmayleadtolessdemandforpipelinesandprocessingcapacity

andcouldadverselyimpactPembina'sabilitytore-contractonfavourabletermswithshippersascurrentagreementsexpire.

Pembina'sgasprocessingassetsareconnectedtovariousthird-partytrunklinesystems.Operationaldisruptionsor

apportionmentonthosethird-partysystemsmaypreventthefullutilizationofPembina'sgasprocessingassets,whichmay

haveanadverseeffectonPembina'sbusiness.

Competition

Pembinacompeteswithotherpipeline,midstream,marketingandgasprocessing,fractionationandhandling/storageservice

providersinitsserviceareasaswellasothertransportersofcrudeoil,NGLandnaturalgas.Theintroductionofcompeting

transportationalternativesintoPembina'sserviceareascouldlimitPembina'sabilitytoadjusttollsasitmaydeemnecessary

andcouldresultinthereductionofthroughputinPembina'spipelines.Additionally,potentialpricingdifferentialsonthe

componentsofNGLmayresultinthesecomponentsbeingtransportedbycompetinggaspipelines.Pembinaisdeterminedto

meet,andbelievesthatitispreparedfor,theseexistingandpotentialcompetitivepressures,includingthroughagreements

whichprovideforareasofdedicationoverthegeographicareasinwhichPembina'spipelineinfrastructureislocated.

Pembinaalsocompeteswithotherbusinessesforgrowthandbusinessopportunities,includingcompetitionrelatedto

potentialgreenfielddevelopmentopportunities,whichcouldimpactitsabilitytogrowthroughacquisitionsand

developmentsandcouldimpactearningsandcashflowavailabletopaydividendsandtoserviceobligationsunderPembina's

debtsecuritiesandotherdebtobligations.

RelianceonPrincipalCustomers

Pembinasellsservicesandproductstolargecustomerswithinitsareaofoperationsandreliesonseveralsignificant

customerstopurchaseproductfortheMarketingbusiness.Ifforanyreasonthesepartiesareunabletoperformtheir

obligationsunderthevariousagreementswithPembina,therevenueanddividendsoftheCompanyandtheoperationsof

Pembinacouldbenegativelyimpacted.See"GeneralRiskFactors–CounterpartyCreditRisk"below.

CustomerContracts

ThroughputonPembina'spipelinesisgovernedbytransportationcontractsortollingarrangementswithvariouscrudeoiland

naturalgasproducers.Pembinaispartytonumerouscontractsofvaryingdurationsinrespectofitsgasgathering,processing

andfractionationfacilitiesaswellasitsterminallingandstorageservices.Anydefaultbycounterpartiesundersuchcontracts

oranyexpirationorearlyterminationofsuchcontractsortollingarrangementswithoutrenewalorreplacement,provided

thatsuchcontractsarematerialtoPembina'sbusinessandoperations,mayhaveanadverseeffectonPembina'sbusinessand

resultsfromoperationsandthereisnoguaranteethatanyofthecontractsthatPembinacurrentlyhasinplacewillbe

renewedattheendoftheirterm,includingontermsfavourabletoPembina,orreplacedwithothercontractsintheeventof

earlytermination.Further,somecontractsassociatedwiththeservicesdescribedabovearecomprisedofamixtureoffirm

andnon-firmcommitments.TherevenuethatPembinaearnsonnon-firmorfirmcommitmentswithouttake-or-payserviceis

dependentonthevolumeofcrudeoil,condensate,NGLandnaturalgasproducedbyproducersintherelevantgeographic

areas.Accordingly,lowerproductionvolumesintheseareas,includingforreasonssuchaslowcommodityprices,mayhave

anadverseeffectonPembina'srevenue.


RisksRelatingtoLeasesandRightsofWayAccess

CertainPembinafacilitiesandassociatedinfrastructurearelocatedonlandsleasedorlicensedfromthirdpartiesthatmustbe

renewedfromtimetotime.FailuretorenewtheleasesorlicensesontermsacceptabletoPembinacouldsignificantlyreduce

theoperationsofsuchfacilitiesandcouldresultinrelateddecommissioningcostsforPembina,pursuanttothetermsofsuch

leasesorlicenses.Successfuldevelopmentofnewpipelinesorextensionstoexistingpipelinesdependsinpartonsecuring

leases,easements,rights-of-way,permitsand/orlicensesfromlandownersorgovernmentalauthoritiesallowingaccessfor

suchpurposes.Theprocessofsecuringrights-of-wayorsimilaraccessisbecomingmorecomplex,particularlyinmoredensely

populated,environmentallysensitiveandotherareas.Theinabilitytosecuresuchrights-of-wayorsimilaraccesscouldhave

anadverseeffectonPembina'soperationsandfinancialresults.

Reputation

Reputationalriskisthepotentialriskthatmarket-orcompany-specificevents,orotherfactors,couldresultinthe

deteriorationofPembina'sreputationwithkeystakeholders.Pembina'sbusinessandoperations,projectsandgrowth

opportunitiesrequireustohavestrongrelationshipswithkeystakeholders,includinglocalcommunities,Indigenous

communitiesandothergroupsdirectlyimpactedbytheCompany'sactivities,aswellasgovernmentsandgovernment

agencies.

ThepotentialfordeteriorationofPembina'sreputationexistsinmanybusinessdecisions,whichmaynegativelyimpact

Pembina'sbusinessandthevalueofitssecurities.Reputationalriskcannotbemanagedinisolationfromotherformsofrisk.

Credit,market,operational,insurance,liquidity,regulatoryandlegal,andtechnologyrisks,amongothers,mustallbe

managedeffectivelytosafeguardPembina'sreputation.Pembina'sreputationcouldalsobeimpactedbytheactionsand

activitiesofothercompaniesoperatingintheenergyindustry,particularlyotherenergyinfrastructureproviders,overwhich

Pembinahasnocontrol.Inparticular,Pembina'sreputationcouldbeimpactedbynegativepublicityrelatedtopipeline

incidents,expansionplansornewprojectsorduetooppositionfromciviliansororganizationsopposedtoenergy,oilsands

andpipelinedevelopmentand,particularly,withshipmentofproductionfromoilsandsregions.Further,Pembina's

reputationcouldbenegativelyimpactedbychangingpublicattitudestowardsclimatechangeandtheperceivedcauses

thereof,overwhichtheCompanyhasnocontrol.Negativeimpactsresultingfromacompromisedreputation,whethercaused

byPembina’sactionsorotherwise,couldincluderevenueloss,reductionincustomerbase,delaysinobtainingregulatory

approvalswithrespecttogrowthprojects,reducedaccesstocapitalordecreasedvalueofPembina'ssecuritiesandreduced

insurancecapacityandcoverage.

EnvironmentalCostsandLiabilities

Pembina'soperations,facilitiesandpetroleumproductshipmentsaresubjecttoextensivenational,regionalandlocal

environmental,healthandsafetylawsandregulationsgoverning,amongotherthings,dischargestoair,landandwater,the

handlingandstorageofpetroleumproductsandhazardousmaterials,wastedisposal,theprotectionofemployeehealth,

safetyandtheenvironment,andtheinvestigationandremediationofcontamination.Pembina'sfacilitiesmayexperience

incidents,malfunctionsorotherunplannedeventsthatmayresultinspillsoremissionsand/orresultinpersonalinjury,fines,

penalties,othersanctionsorpropertydamage.Pembinamayalsoincurliabilityforenvironmentalcontaminationassociated

withpastandpresentactivitiesandproperties.


Pembina'sfacilitiesandpipelinesmustmaintainanumberofenvironmentalandotherpermitsfromvariousgovernmental

authoritiesinordertooperate,andthesefacilitiesaresubjecttoinspectionfromtimetotime.Failuretomaintaincompliance

withtheserequirementscouldresultinoperationalinterruptions,finesorpenalties,ortheneedtoinstalladditionalpollution

controltechnology.Licensesandpermitsmustberenewedfromtimetotimeandthereisnoguaranteethatalicenseor

permitwillberenewedonthesameorsimilarconditionsasitwasinitiallygranted.TherecanbenoassurancethatPembina

willbeabletoobtainalllicenses,permits,registrations,approvalsandauthorizationsthatmayberequiredtoconduct

operationsthatitmaywishtoundertake.Further,ifatanytimeregulatoryauthoritiesdeemanyofPembina'spipelinesor

facilitiesunsafeornotincompliancewithapplicablelaws,theymayordersuchfacilitiestobeshutdown.Certainsignificant

environmentallegislativeinitiativesthatmaymateriallyimpactPembina'sbusinessandfinancialresultsandconditionsare

outlinedbelow.

OnDecember11,2020,thefederalgovernmentannounced"AHealthyEnvironmentandaHealthyEconomy"("NewFederal

ClimatePlan"),whichaimstoexceedthefederalgovernment'sprevious2030targetfornationalGHGemissionsreductions

andtosetCanadaonatracktonet-zeroGHGemissionsby2050.Theupstreamoilandgasindustryisexpectedtocontribute

asignificantamountofthereductionneededtoachievethesegoals.TheNewFederalClimatePlanimplementsanumberof

specificmeasuresdescribedbelow,butisalsoexpectedtoaffectthedecision-makingofallfederalgovernmentbodies,

includingfederalregulators,consistentwith,forinstance,theapplicationoftheSACCtoprojectssubjecttotheIAA,as

describedabove.

Thefederalgovernmentmandatedapan-Canadiancarbonpricebeginningat$20pertonnein2019,risingby$10pertonne

peryearto$50pertonnein2022.PursuanttotheNewFederalClimatePlan,past2022thepriceoncarbonwillriseby$15a

yearto$170in2030.TheGreenhouseGasPollutionPricingAct("GGPPA")introducesacarbonpricingregimeonthose

provincesthatfailtoimposeadequateprovincialcarbonpricingmeasures.TheNewFederalClimatePlanindicatesthefederal

governmentwillreviewthestandardforadequacyofprovincialcarbonpricingmeasuresundertheGGPPA.Thismayresultin

theGGPPAapplyingmorebroadlytotheprovincesandterritories.In2020,theAlbertaCourtofAppealfoundtheGGPPA

unconstitutional,adecisionwhichfollowedtwounsuccessfulconstitutionalchallengesoftheGGPPAbySaskatchewanand

Ontarioin2019.TheAlberta,Saskatchewan,andOntarioconstitutionalchallengeswereappealedtotheSupremeCourtof

Canada,whichheardthecasein2020buthas,atthistime,yettoreleaseadecision.Manitobahasalsoinitiatedachallenge

totheGGPPAinFederalCourt.TheresultsofthechallengestotheGGPPAcouldsignificantlyimpacthowGHGemissionsare

regulatedthroughoutCanadaincludingintheprovincesdiscussedbelow.

ThefederalRegulationsRespectingReductionintheReleaseofMethaneandCertainVolatileOrganicCompounds(Upstream

OilandGasSector)("FederalMethaneRegulations"),whichrequirereductionoffugitiveandventedgasemissionsfromthe

upstreamoilandgassector,cameintoforceonJanuary1,2020.AccordingtotheNewFederalClimatePlan,thefederal

governmentwillreportontheeffectivenessoftheFederalMethaneRegulationsin2021andthestringencyoftheFederal

MethaneRegulationsisexpectedtobeincreasedin2025,ifnotsooner.TheFederalMethaneRegulationsmayimpose

additionalcostsontheoperationsofPembinaandPembina'scustomers.

ThefederalgovernmentisalsodevelopingaCleanFuelStandardthatwillrequireallproducersandimportersofliquidfossil

fuelsinCanadatoreduceoroffsetthecarbonintensityofthefuelstheyproduceorimport.Thefinalversionofthe

regulationsimplementingtheCleanFuelStandardisexpectedinlate2021.Pembinawillcontinuetomonitorthe

developmentofregulationsonliquidfossilfuels.ThepotentialcostsandbenefitsoftheCleanFuelStandardtoPembinaand

itscustomersarecontinuingtobeassessed.

Albertaonlypartiallysatisfiesfederalrequirementswithrespecttocarbonpricingandissubjecttothefederalfuelcharge

pursuanttotheGGPPAasofJanuary1,2020.Thefuelchargewas$20pertonneonJanuary1,2020androseto$30per

tonneonApril1,2020.


TheTechnologyInnovationandEmissionsReduction("TIER")RegulationreplacedtheCarbonCompetitivenessIncentive

Regulation("CCIR")asAlberta'soutput-basedemissionallocationsforlargefacilityemittersonJanuary1,2020.TheTIER

continuestofacilitateemissionsreductionsrelativetofacilitiesthatemitted100,000tonnesofGHGsormorein2016orany

subsequentyear.ForfacilitieswhicharesubjecttotheTIER,itreplacesthefederaloutput-basedcarbonpriceincludedinthe

GGPPA.PembinahasthreenaturalgasprocessingfacilitiessubjecttotheTIER.Atpresent,theoperationalandfinancial

impactsareminimalandareanticipatedtonotchangesubstantiallyoverthenextfewyears.Asmorefacilitiesexpandand

increaseproduction,itisanticipatedthatadditionalfacilitieswillbecomesubjecttotheTIER.Thepotentialcostsandbenefits

toPembinaofthosefacilitiesundertheTIERarecontinuingtobeassessed.

Byanequivalencyagreementwiththefederalgovernment,whichcameintoforceOctober26,2020,theFederalMethane

RegulationsdonotcurrentlyapplyinAlberta.TheapplicationoftheFederalMethaneRegulationsinAlbertamaychangein

2023orearlierasthefederalgovernmentworkstomeetitsdesiredgasemissionsreductiontargets.TheMethaneEmission

ReductionRegulationcameintoforceinAlbertaonJanuary1,2020,and,alongwithcertainAERDirectives,imposeslargely

thesameconstraintsastheFederalMethaneRegulations.

TheGovernmentofAlberta,initsclimatechangelegislationandguidelines,haslegislatedanoverallcaponoilsandsGHG

emissions.Thelegislatedemissionscaponoilsandsoperationshasbeensettoamaximumof100megatonnesinanyyear.

Oilsandsoperationscurrentlyemitapproximately70megatonnesperyear.Thislegislatedcapmaylimitoilsandsproduction

growthinthefuture.

SimilarpolicyreviewsonclimatechangeareongoinginBritishColumbia,Saskatchewan,ManitobaandOntario.Subjecttothe

outcomeofthechallengestotheGGPPAnotedabove,thecarbonpricingregimeintheGGPPAcurrentlyappliestodifferent

degreesinSaskatchewan,ManitobaandOntario.BritishColumbiahasaseparatecarbonpricingregimeinplacewithacarbon

pricelevellargelyequivalenttothatintheGGPPA.TheFederalMethaneRegulationsapplyinOntarioandManitobabutnot

currently,byequivalencyagreementssimilartothatineffectinAlberta,inBritishColumbiaorSaskatchewan.Ontarioalso

madesubstantialamendmentstotheOntarioEnvironmentalAssessmentActonJuly21,2020.Theimpactofthese

amendmentshasyettobedetermined.

Throughactiveparticipationwithindustryassociationsanddirectengagementwithregulatorybodies,Pembinawillcontinue

tomonitorandassessformaterialimpactstoPembina'sbusinessasregulationsandpoliciescontinuetobedeveloped.

WhilePembinabelievesitscurrentoperationsareincompliancewithallapplicableenvironmental,healthandsafetylaws,

therecanbenoassurancethatsubstantialcostsorliabilitieswillnotbeincurredasaresultofnon-compliancewithsuchlaws.

Moreover,itispossiblethatotherdevelopments,suchaschangesinenvironmental,healthandsafetylaws,regulationsand

enforcementpoliciesthereunder,includingwithrespecttoclimatechange,claimsfordamagestopersonsorproperty

resultingfromPembina'soperations,andthediscoveryofpre-existingenvironmentalliabilitiesinrelationtoPembina's

existingorfuturepropertiesoroperations,couldresultinsignificantcostsandliabilitiestoPembina.IfPembinaisnotableto

recovertheresultingcostsorincreasedcoststhroughinsuranceorincreasedtolls,cashflowavailabletopaydividendsto

ShareholdersandtoserviceobligationsunderPembina'sdebtsecuritiesandPembina'sotherdebtobligationscouldbe

adverselyaffected.

Changesinenvironmental,healthandsafetyregulationsandlegislation,includingwithrespecttoclimatechange,mayalso

impactPembina'scustomersandcouldresultincrudeoilandnaturalgasdevelopmentandproductionbecoming

uneconomical,whichwouldimpactthroughputandrevenueonPembina'ssystemsandinitsfacilities.

See"ReserveReplacement,ThroughputandProductDemand"above.


WhilePembinamaintainsinsurancefordamagecausedbyseepageorpollutionfromitspipelinesorfacilitiesinanamountit

considersprudentandinaccordancewithindustrystandards,certainprovisionsofsuchinsurancemaylimittheavailability

thereofinrespectofcertainoccurrencesunlesstheyarediscoveredwithinfixedtimeperiods,whichtypicallyrangefrom

72hoursto30days.AlthoughPembinabelievesithasadequatepipelinemonitoringsystemsinplacetomonitorfora

significantspillofproduct,ifPembinaisunawareofaproblemorisunabletolocatetheproblemwithintherelevanttime

period,insurancecoveragemaylapseandmaynotbeavailable.

AbandonmentCosts

Pembinaisresponsibleforcompliancewithallapplicablelawsandregulationsregardingthedismantling,decommissioning,

environmental,reclamationandremediationactivitiesonabandonmentofitspipelinesystemsandotherassetsattheendof

theireconomiclife,andtheseabandonmentcostsmaybesubstantial.Anaccountingprovisionismadefortheestimatedcost

ofsiterestorationandiscapitalizedintherelevantassetcategory.Aprovisionisrecognizedif,asaresultofapastevent,

Pembinahasapresentlegalorconstructiveobligationthatcanbeestimatedreliably,anditisprobablethatanoutflowof

economicbenefitswillberequiredtosettletheobligation.Pembina'sestimatesofthecostsofsuchabandonmentor

decommissioningcouldbemateriallydifferentthantheactualcostsincurred.FormoreinformationwithrespecttoPembina's

estimatednetpresentvalueofdecommissioningobligations,seeNote18totheConsolidatedFinancialStatements,which

noteisincorporatedbyreferenceherein.

Theproceedsfromthedispositionofcertainassets,includinginrespectofcertainpipelinesystemsandlinefill,maybe

availabletooffsetabandonmentcosts.Pembinamay,inthefuture,determineitprudentorberequiredbyapplicablelawsor

regulationstoestablishandfundadditionalreclamationfundstoprovideforpaymentoffutureabandonmentcosts.Such

reservescoulddecreasecashflowavailabletopayfordividendstoShareholdersandtoserviceobligationsunderPembina's

debtsecuritiesandPembina'sotherdebtobligations.

Tothebestofitsknowledge,PembinahascompliedwithCERrequirementsonitswholly-ownedCER-regulatedpipelinesfor

abandonmentfundingandhascompletedthecompliance-basedfilingsthatarerequiredundertheapplicableCERrulesand

regulationsregardingtheabandonmentofitspipelinesystemsandassets.PembinaalsohasownershipinCER-regulated

pipelinesincludinginrespectoftheAlliancePipeline,theTupperpipelinesandtheKerrobertpipeline,whichareoperatedby

orwithitsjointventurepartners.Pembinaandthejointventurepartnerineachcaseareresponsiblefortheabandonment

fundingandthesubmissionoftheCER-compliancebasedfilingsforthoseCER-regulatedpipelines.Pembinawillcontinueto

monitoranyregulatorychangespriortothenextfive-yearreviewandwillcompletetheannualreportingasrequiredbythe

CER.

OperatingandCapitalCosts

TheoperatingandcapitalcostsofPembina'sassetsmayvaryconsiderablyfromcurrentandforecastedvaluesandratesand

representsignificantcomponentsofthecostofprovidingservice.Ingeneral,asequipmentages,costsassociatedwithsuch

equipmentmayincreaseovertime.Inaddition,operatingandcapitalcostsmayincreaseasaresultofanumberoffactors

beyondPembina'scontrol,includinggeneraleconomic,businessandmarketconditionsandsupply,demandand/orinflation

inrespectofrequiredgoodsand/orservices.Dividendsmaybereducedifsignificantincreasesinoperatingorcapitalcostsare

incurredandthismayalsoimpacttheabilityofPembinatoserviceobligationsunderitsdebtsecuritiesandotherdebt

obligations.

Althoughcertainoperatingcostsarerecapturedthroughthetollschargedonnaturalgasvolumesprocessedandcrudeoiland

NGLtransported,respectively,totheextentsuchtollsescalate,producersmayseeklowercostalternativesorstop

productionoftheircrudeoiland/ornaturalgas.


RisksRelatingtoNGLbyRail

Pembina'soperationsincluderailloading,offloadingandterminallingfacilities.Pembinareliesonrailroadsandtrucksto

distributeitsproductsforcustomersandtotransportrawmaterialstoitsprocessingfacilities.Costsforenvironmental

damage,damagetopropertyand/orpersonalinjuryintheeventofarailwayincidentinvolvinghydrocarbonshavethe

potentialtobesignificant.Atthistime,theRailwaySafetyAct(Canada),whichgovernstheoperationofrailwayequipment,

doesnotcontemplateregulatoryenforcementproceedingsagainstshippers,butconsignorsandshippersmaybesubjectto

regulatoryproceedingsundertheTransportationofDangerousGoodsAct(Canada),whichspecifiestheobligationsof

shipperstoidentifyandclassifydangerousgoods,selectappropriateequipmentandprepareshippingdocumentation.While

theCanadaTransportationActwasamendedin2015toprecluderailwaycompaniesfromshiftingliabilityforthird-party

claimstoshippersbytariffpublicationalone,majorCanadianrailwayshaveadoptedstandardcontractprovisionsdesignedto

implementsuchashift.UndervariousenvironmentalstatutesinbothCanadaandtheU.S.,Pembinacouldbeheld

responsibleforenvironmentaldamagecausedbyhydrocarbonsloadedatitsfacilitiesorbeingcarriedonitsleasedrailcars.

Pembinapartiallymitigatesthisriskbysecuringinsurancecoverage,butsuchinsurancecoveragemaynotbeadequateinthe

eventofanincident.

RailwayincidentsinCanadaandtheU.S.havepromptedregulatorybodiestoinitiatereviewsoftransportationrulesand

publishvariousdirectives.RegulatorsinCanadaandtheU.S.havebeguntophase-inmorestringentengineeringstandardsfor

tankcarsusedtomovehydrocarbonproducts,whichrequireallNorthAmericantankcarscarryingcrudeoilorethanoltobe

retrofittedandalltankcarscarryingflammableliquidstobecompliantinaccordancewiththerequiredregulatorytimelines.

Inaddition,in2020,theGovernmentofCanadadirectedindustrytoreviewandupdatetherulesregardingthetransportation

ofcrudeoilandliquefiedpetroleumgas.Whilemostlegislativeandregulatorychangesapplydirectlytorailwaycompanies,

costsassociatedwithretrofittinglocomotivesandrailcars,implementingsafetysystems,increasedinspectionandreporting

requirementsmaybeindirectlypassedontoPembinathroughincreasedfreightratesandcarleasingcosts.Inaddition,

regulatorsinCanadaandtheU.S.haveimplementedchangesthatimposeobligationsdirectlyonconsignorsandshippers,

suchasPembina,relatingtothecertificationofproduct,equipmentproceduresandemergencyresponseprocedures.

IntheeventthatPembinaisultimatelyheldliableforanydamagesresultingfromitsactivitiesrelatingtotransportingNGLby

rail,forwhichinsuranceisnotavailable,orincreasedcostsorobligationsareimposedonPembinaasaresultofnew

regulations,thiscouldhaveanimpactonPembina'sbusiness,operationsandprospectsandcouldimpactearningsandcash

flowavailabletopaydividendsandtoserviceobligationsunderPembina'sdebtsecuritiesandotherdebtobligations.

RiskFactorsRelatingtotheSecuritiesofPembina

DilutionofShareholders

Pembinaisauthorizedtoissue,amongotherclassesofshares,anunlimitednumberofCommonSharesforconsiderationon

termsandconditionsasestablishedbytheBoardofDirectorswithouttheapprovalofShareholdersincertaininstances.

ExistingShareholdershavenopre-emptiverightsinconnectionwithsuchfurtherissuances.AnyissuanceofCommonShares

mayhaveadilutiveeffectonexistingShareholders.


RiskFactorsRelatingtotheActivitiesofPembinaandtheOwnershipofSecurities

ThefollowingisalistofcertainriskfactorsrelatingtotheactivitiesofPembinaandtheownershipofitssecurities:

• thelevelofPembina'sindebtednessfromtimetotimecouldimpairPembina'sabilitytoobtainadditionalfinancing

onatimelybasistotakeadvantageofbusinessopportunitiesthatmayarise,whichmayhaveanadverseeffecton

thevalueofPembina'ssecurities;

• theuncertaintyoffuturedividendpaymentsbyPembinaandthelevelthereof,asPembina'sdividendpolicyandthe

fundsavailableforthepaymentofdividendsfromtimetotimewillbedependentupon,amongotherthings,

operatingcashflowgeneratedbyPembinaanditssubsidiaries,financialrequirementsforPembina'soperations,the

executionofitsgrowthstrategyandthesatisfactionofsolvencytestsimposedbytheABCAforthedeclarationand

paymentofdividends;

• Pembinamaymakefutureacquisitionsormayenterintofinancingsorothertransactionsinvolvingtheissuanceof

securitiesofPembinawhichmaybedilutivetotheholdersofPembina'ssecurities;

• theinabilityofPembinatomanagegrowtheffectively,andrealizetheanticipatedgrowthopportunitiesfrom

acquisitionsandnewprojects,couldhaveanadverseimpactonPembina'sbusiness,operationsandprospects,which

mayalsohaveanadverseeffectonthevalueofPembina'ssecurities;and

• themarketvalueoftheCommonSharesmaydeterioratemateriallyifPembinaisunabletomeetitscashdividend

targetsormakecashdividendsinthefuture.

MarketValueofCommonSharesandOtherSecurities

PembinacannotpredictatwhatpricetheCommonShares,ClassAPreferredSharesorothersecuritiesissuedbyPembinawill

tradeinthefuture.CommonShares,ClassAPreferredSharesandothersecuritiesofPembinawillnotnecessarilytradeat

valuesdeterminedsolelybyreferencetotheunderlyingvalueofPembina'sassets.Oneofthefactorsthatmayinfluencethe

marketpriceoftheCommonSharesandtheClassAPreferredSharesistheannualdividendyieldofsuchsecurities.An

increaseininterestratesmayleadholdersand/orpurchasersofCommonSharesorClassAPreferredSharestodemanda

higherannualdividendyield,whichcouldadverselyaffectthemarketpriceoftheCommonSharesorClassAPreferred

Shares.Inaddition,themarketpriceforCommonSharesandtheClassAPreferredSharesmaybeaffectedbyannouncements

ofnewdevelopments,changesinPembina'soperatingresults,failuretomeetanalysts'expectations,changesincredit

ratings,changesingeneralmarketconditions,fluctuationsinthemarketforequityordebtsecuritiesandotherfactors

beyondthecontrolofPembina.

Shareholdersareencouragedtoobtainindependentlegal,taxandinvestmentadvicewithrespecttotheholdingof

CommonSharesorClassAPreferredSharesandothersecuritiesissuedbyPembina.

GeneralRiskFactors

HealthandSafety

TheoperationofPembina'sbusinessissubjecttohazardsofgathering,processing,transporting,fractionating,storingand

marketinghydrocarbonproducts.Suchhazardsinclude,butarenotlimitedto:blowouts;fires;explosions;gaseousleaks,

includingsournaturalgas;migrationofharmfulsubstances;oilspills;corrosion;andactsofvandalismandterrorism.These

hazardsmayinterruptoperations,impactPembina'sreputation,causelossoflifeorpersonalinjurytotheCompany'sworkers

orcontractors,resultinlossofordamagetoequipment,property,informationtechnologysystems,relateddataandcontrol

systemsorcauseenvironmentaldamagethatmayincludepollutingwater,landorair.Further,severaloftheCompany's

pipelinesystemsandrelatedassetsareoperatedincloseproximitytopopulatedareasandamajorincidentcouldresultin

injuryorlossoflifetomembersofthepublic.Apublicsafetyincidentcouldalsoresultinreputationaldamagetothe

Company,materialrepaircostsorincreasedcostsofoperatingandinsuringPembina'sassets.


AdditionalFinancingandCapitalResources

ThetimingandamountofPembina'scapitalexpendituresandcontributionstoequityaccountedinvestees,andtheabilityof

Pembinatorepayorrefinanceexistingdebtasitbecomesdue,directlyaffectstheamountofcashavailableforPembinato

paydividends.Futureacquisitions,expansionsofPembina'sassets,othercapitalexpendituresandtherepaymentor

refinancingofexistingdebtasitbecomesduemaybefinancedfromsourcessuchascashgeneratedfromoperations,the

issuanceofadditionalCommonShares,ClassAPreferredSharesorothersecurities(includingdebtsecurities)ofPembinaand

borrowings.Dividendsmaybereduced,oreveneliminated,attimeswhensignificantcapitalorotherexpendituresaremade.

TherecanbenoassurancethatsufficientcapitalwillbeavailableontermsacceptabletoPembina,oratall,tomake

additionalinvestments,fundfutureexpansionsormakeotherrequiredcapitalexpenditures.Duringperiodsofweaknessin

theglobaleconomy,andinparticularthecommodity-relatedindustrysectors,Pembinamayexperiencerestrictedaccessto

capitalandincreasedborrowingcosts.TheabilityofPembinatoraisecapitaldependson,amongotherfactors,theoverall

stateofcapitalmarkets,Pembina'screditrating,investordemandforinvestmentsintheenergyindustryanddemandfor

Pembina'ssecurities.Totheextentthatexternalsourcesofcapital,includingtheissuanceofadditionalCommonShares,Class

APreferredSharesorothersecuritiesortheavailabilityofadditionalcreditfacilities,becomelimitedorunavailableon

acceptableterms,oratall,duetocreditmarketconditionsorotherwise,theabilityofPembinatomakethenecessarycapital

investmentstomaintainorexpanditsoperations,torepayoutstandingdebtortoinvestinassets,asthecasemaybe,maybe

impaired.TotheextentPembinaisrequiredtouseoperatingcashflowtofinancecapitalexpendituresoracquisitionsorto

repayexistingdebtasitbecomesdue,thelevelofdividendspayablemaybereduced.

CounterpartyCreditRisk

CounterpartycreditriskrepresentsthefinanciallossPembinamayexperienceifacounterpartytoafinancialinstrumentor

commercialagreementfailstomeetitscontractualobligationstoPembinainaccordancewiththetermsandconditionsof

suchinstrumentsoragreementswithPembina.CounterpartycreditriskarisesprimarilyfromPembina'sshort-term

investments,tradeandotherreceivables,advancestorelatedpartiesandfromcounterpartiestoitsderivativefinancial

instruments.

Pembinacontinuestocloselymonitorandreassessthecreditworthinessofitscounterparties,includingfinancialinstitutions.

Pembinamayreduceormitigateitsexposuretocertaincounterpartieswhereitisdeemedwarrantedandpermittedunder

contractualterms.Pembinamanagescounterpartycreditriskthroughestablishedcreditmanagementtechniques,including

conductingcomprehensivefinancialandotherassessmentsonallnewcounterpartiesandregularreviewsofexisting

counterpartiestoestablishandmonitorcounterparties'creditworthiness,setexposurelimits,monitorexposuretothese

limitsandseektoobtainfinancialassuranceswherewarrantedandpermittedundercontractualterms.Pembinautilizes

varioussourcesoffinancial,creditandbusinessinformationinassessingthecreditworthinessofacounterparty,including

externalcreditratings,whereavailable,and,inothercases,detailedfinancialstatementanalysisinordertogeneratean

internalcreditratingbasedonquantitativeandqualitativefactors.Theestablishmentofcounterpartyexposurelimitsis

governedbyaBoard-designatedcounterpartyexposurelimitmatrixwhichrepresentsthemaximumdollaramountsof

counterpartyexposurebydebtratingthatcanbeapprovedforaparticularcounterparty.

Financialassurancesfromcounterpartiesmayincludeguarantees,lettersofcreditandcash.AsatDecember31,2020,letters

ofcredittotalingapproximately$130million(December31,2019:$90million)wereheldprimarilyinrespectofcustomer

tradereceivables.

Pembinahastypicallycollecteditsreceivablesinfull.AtDecember31,2020,approximately94percent(December31,2019:

95percent)ofreceivableswerecurrent.Pembinahasagenerallienandacontinuingandfirstprioritysecurityinterestin,and

asecuredchargeon,allofashipper'spetroleumproductsinitscustody.Theriskofnon-collectionisconsideredtobelowand

nomaterialimpairmentoftradeandotherreceivableshasbeenmadeasofthedatehereof.


Pembinamonitorsandmanagesitsconcentrationofcounterpartycreditriskonanongoingbasis.Pembinaalsoevaluates

counterpartyriskfromtheperspectiveoffutureexposurewithexistingornewcounterpartiesthatsupportfuturecapital

expansionprojects.Pembinabelievesthesemeasuresareprudentandallowforeffectivemanagementofitscounterparty

creditriskbutthereisnocertaintythattheywillprotectPembinaagainstallmateriallosses.Aspartofitsongoingoperations,

Pembinamustbalanceitsmarketandcounterpartycreditriskswhenmakingbusinessdecisions.

DebtService

AsatDecember31,2020,Pembinahadexposuretofloatinginterestratesonapproximately$1.2billion(2019:$2.1billion)in

debt.Certainborrowingswhichoccurunderfloatingrateshavebeenswappedtofixedratesusingderivativefinancial

instruments.

Variationsininterestratesandscheduledprincipalrepayments,ifrequiredunderthetermsofPembina'sbankingagreements

couldresultinsignificantchangesintheamountsrequiredtobeappliedtodebtservicebeforepaymentofanydividends.

CertaincovenantsintheCompany'sagreementswithitslendersmayalsolimitcertainpaymentsanddividendspaidby

Pembina.

Pembinaanditssubsidiariesarepermittedtoborrowfundstofinancethepurchaseofpipelinesandotherenergy

infrastructureassets,tofundcapitalexpendituresorotherfinancialobligationsorexpendituresinrespectofsuchassetsand

forworkingcapitalpurposes.Amountspaidinrespectofinterestandprincipalondebtincurredinrespectofthoseassets

reducetheamountofcashflowavailablefordividendsonCommonShares.Pembinaisalsorequiredtomeetcertainfinancial

covenantsundertheCreditFacilitiesandissubjecttocustomaryrestrictionsonitsoperationsandactivities,including

restrictionsonthegrantingofsecurity,incurringindebtednessandthesaleofitsassets.

ThelendersunderPembina'sCreditFacilitieshavebeenprovidedwithguaranteesandsubordinationagreements.IfPembina

becomesunabletopayitsdebtservicechargesorotherwisecommitsaneventofdefault,paymentstothelendersunderits

CreditFacilitieswillrankinprioritytodividends.

AlthoughPembinabelievesitsexistingCreditFacilitiesaresufficientforitsimmediateliquidityrequirements,therecanbeno

assurancethattheamountavailablethereunderwillbeadequateforthefuturefinancialobligationsofPembinaorthat

additionalfundswillbeabletobeobtainedontermsacceptabletoPembina,oratall.

CreditRatings

RatingagenciesregularlyevaluatePembinaandbasetheirratingsofPembina'slong-termandshort-termdebtandClassA

PreferredSharesonanumberoffactors.ThesefactorsincludePembina'sfinancialstrengthaswellasfactorsnotentirely

withinPembina'scontrol,includingconditionsaffectingtheindustryinwhichPembinaoperatesgenerallyandthewiderstate

oftheeconomy.TherecanbenoassurancethatoneormoreofPembina'screditratingswillnotbedowngraded.Acredit

ratingdowngradecouldalsolimitPembina’saccesstodebtandpreferredsharemarkets.

Pembina'sborrowingcostsandabilitytoraisefundsaredirectlyimpactedbyitscreditratings.Creditratingsmaybe

importanttosuppliersorcounterpartieswhentheyseektoengageincertaintransactionswithPembina.Acreditrating

downgrademayimpairPembina'sabilitytoenterintoarrangementswithsuppliersorcounterparties,engageincertain

transactions,limitPembina'saccesstoprivateandpubliccreditmarketsorincreasethecostsofborrowingunderitsexisting

CreditFacilities.AcreditratingdowngradecouldalsolimitPembina'saccesstodebtandpreferredsharemarkets.


RelianceonManagement,KeyIndividualsandaSkilledWorkforce

PembinaisdependentonseniormanagementanddirectorsoftheCompanyinrespectofthegovernance,administrationand

managementofallmattersrelatingtoPembinaanditsoperationsandadministration.Thelossoftheservicesofkey

individualscouldhaveadetrimentaleffectonPembina.Inaddition,Pembina'soperationsrequiretheretentionand

recruitmentofaskilledworkforce,includingengineers,technicalpersonnelandotherprofessionals.Pembinacompeteswith

othercompaniesintheenergyindustryforthisskilledworkforce.IftheCompanyisunabletoretaincurrentemployeesand/

orrecruitnewemployeesorcomparableskill,knowledgeandexperience,Pembina'sbusinessandoperationscouldbe

negativelyimpacted.Thecostsassociatedwithretainingandrecruitingkeyindividualsandaskilledworkforcecouldadversely

affectPembina'sbusinessopportunitiesandfinancialresultsandthereisnoassurancethatPembinawillcontinuetoattract

andretainallpersonnelnecessaryforthedevelopmentandoperationofitsbusiness.

IndigenousLandClaimsandConsultationObligations

IndigenouspeoplehaveclaimedtitleandrightstoaconsiderableportionofthelandsinwesternCanada.Thesuccessful

assertionofIndigenoustitleorotherIndigenousrightsclaimsmayhaveanadverseeffectonwesternCanadiancrudeoiland

naturalgasproductionoroilsandsdevelopmentandmayresultinreduceddemandforPembina'sassetsandinfrastructure

thatservicethoseareas,whichcouldhaveamaterialadverseeffectonPembina'sbusinessandoperations.

InCanada,thefederalandprovincialgovernments(the"Crown")haveadutytoconsultand,whenappropriate,

accommodateIndigenouspeoplewhentheinterestsoftheIndigenouspeoplesmaybeaffectedbyaCrownactionor

decision.CrownactionsincludethedecisiontoissuearegulatoryapprovalrelatingtoactivitiesthatmayimpactIndigenous

rights,interestsorlands.TheCrownmayrelyonstepsundertakenbyaregulatoryagencytofulfillitsdutytoconsultand

accommodateinwholeorinpart.Therefore,theprocessesestablishedbyregulatorybodies,suchastheAER,theBCOGC,the

BCEAOandtheCER,oftenincludeanassessmentofIndigenousrightsclaimsandconsultationobligations.WhiletheCrown

holdsultimateresponsibilityforensuringconsultationisadequate,thisissueisoftenamajoraspectofregulatorypermitting

processes.Ifaregulatorybody,ortheCrownitself,determinesthatthedutytoconsulthasnotbeenappropriatelydischarged

relativetotheissuanceofregulatoryapprovalsrequiredbyPembina,theissuanceofsuchapprovalsmaybedelayedor

denied,therebyimpactingPembina'sCanadianoperations.

Asdescribedin"RegulationandLegislation"above,theCERAct,IAA,andassociatedamendmentstotheFisheriesAct

(Canada)andtheCanadianNavigableWatersAct(Canada)replacedpreviousapplicableregimesin2019.Anumberofthe

federalregulatoryprocessamendmentspertaintotheparticipationofIndigenousgroupsandtheprotectionofIndigenous

andtreatyrights.Thenewlegislationgenerallycodifiesexistinglawandpracticewithrespecttothesematters.Forexample,

decisionmakersarenowexpresslyrequiredtoconsidertheeffects(positiveornegative)ofaproposedprojecton

constitutionally-protectedIndigenousrights,aswellasIndigenouspeoplesthemselves,andensurethatconsultationis

undertakenduringtheplanningphaseofimpactassessmentprocesses.Thenewlegislationalsocreatesalargerrolefor

Indigenousgoverningbodiesintheimpactassessmentprocess(enablingthedelegationofcertainaspectsoftheimpact

assessmentprocesstosuchgroups)andrequiresdecisionmakerstoconsiderIndigenoustraditionalknowledgeincertain

cases.

ThefederalgovernmentisadvancingchangestotherecognitionofIndigenousrightsacrossCanada.Aspartoftheseefforts,

onDecember3,2020,thefederalgovernmentintroduced2020BillC-15,theUnitedNationsDeclarationontheRightsof

IndigenousPeoples("UNDRIP")Act.ThepurposeofthelegislationistoaffirmtheapplicationoftheUNDRIPinCanadianlaw,

butthepracticaleffectsofthelegislationareyettobedeterminedasitwillonlyrequirethegovernmenttoprepareand

implementanactionplanforthisapplication,andannuallyreportonitsprogress.Pembinawillcontinuetomonitorand

assesstheimpactsBillC-15andotherfederalgovernmentinitiativesonIndigenousrightsmayhaveonitsbusinessas

legislationand/orpoliciescontinuetobedeveloped.


In2018,theBritishColumbiagovernmentenactedthe2018EnvironmentalAssessmentAct(the"EAAct")aspartofits

commitmenttorevitalizeenvironmentalassessmentintheprovinceandfacilitateitscommitmenttoimplementingthe

UNDRIP.TheEAActcameintoforceinlate2019.TheEAActisdesignedasa"consent-based"environmentalassessment

modelandisintendedtosupportreconciliationwithIndigenouspeoplesandtheimplementationoftheUNDRIP.The

legislationrequirestheBCEAOtoseekparticipatingIndigenousgroups'consentwithrespectto,amongotherthings,the

decisiontoissueanenvironmentalassessmentcertificatetoagivenproject.WhiletheEAActdoesnotstrictlyrequire

consentinmostcases,thelegislationcreatessignificantnewparticipationopportunitiesforparticipatingIndigenousgroups

duringthecourseofenvironmentalassessments,whichmayincreasethetimerequiredtoobtainregulatoryapprovalsand

therebyimpactPembina'soperationsinBritishColumbia.In2019,BritishColumbiaenacteditsownlegislation,the

DeclarationontheRightsofIndigenousPeoplesAct("DRIPA")toimplementUNDRIP,whichisstructurallysimilartothe

federalBillC-15.TheDRIPAfurtherprovidestheBritishColumbiagovernmentwiththeabilitytoenterintojointdecision-

makingagreementswithIndigenousgovernments.Pembinacontinuestoactivelymonitorthedevelopmentoftheregulations

requiredtofacilitatetheimplementationoftheEAActandtheDRIPA.

PotentialConflictsofInterest

ShareholdersandothersecurityholdersofPembinaaredependentonseniormanagementandthedirectorsofPembinafor

thegovernance,administrationandmanagementofPembina.CertaindirectorsandofficersofPembinamaybedirectorsor

officersofentitiesincompetitiontoPembinaormaybedirectorsorofficersofcertainentitiesinwhichPembinaholdsan

equityinvestmentin.Assuch,certaindirectorsorofficersofPembinamayencounterconflictsofinterestinthe

administrationoftheirdutieswithrespecttoPembina.Pembinamitigatesthisriskbyrequiringdirectorsandofficersto

disclosetheexistenceofpotentialconflictsinaccordancewithPembina'sCodeofEthicsandinaccordancewiththeABCA.

Litigation

Inthecourseoftheirbusiness,Pembinaanditsvarioussubsidiariesandaffiliatesmaybesubjecttolawsuitsandotherclaims,

includingwithrespecttoPembina'sgrowthorexpansionprojects.Defenceandsettlementcostsassociatedwithsuchlawsuits

andclaimsmaybesubstantial,evenwithrespecttolawsuitsandclaimsthathavenomerit.Duetotheinherentuncertaintyof

thelitigationprocess,theresolutionofanyparticularlegalorotherproceedingmayhaveamaterialadverseeffectonthe

financialpositionoroperatingresultsofPembina.

ChangesinTaxLegislation

TaxlegislationthatPembinaissubjecttomaybeamended(ortheinterpretationofsuchlegislationmaychange),

retroactivelyorprospectively,resultingintaxconsequencesthatmateriallydifferfromthosecontemplatedbyPembinainthe

jurisdictionsinwhichPembinahasoperations,whichmaycreateariskofnon-complianceandre-assessment.WhilePembina

believesthatitstaxfilingpositionsareappropriateandsupportable,itispossiblethatgoverningtaxauthoritiesmay:(i)

amendtaxlegislation(oritsinterpretationofsuchlegislationmaychange),or(ii)successfullychallengePembina's

interpretationoftaxlegislation,eitherofwhichcouldexposePembinatoadditionaltaxliabilitiesandmayaffectPembina's

estimateofcurrentandfutureincometaxesandcouldhaveanadverseeffectonthefinancialconditionandprospectsof

PembinaandthedistributablecashflowavailabletopaydividendsandtoserviceobligationsunderPembina'sdebtsecurities

andotherdebtobligations.

ForeignExchangeRisk

Pembina'scashflows,namelyaportionofitscommodity-relatedcashflows,certaincashflowsfromU.S.-basedinfrastructure

assets,anddistributionsfromU.S.-basedinvestmentsinequityaccountedinvestees,aresubjecttocurrencyrisk,arisingfrom

thedenominationofspecificcashflowsinU.S.dollars.Additionally,aportionofPembina'scapitalexpenditures,and

contributionsorloanstoPembina'sU.S.-basedinvestmentsinequityaccountedinvestees,maybedenominatedinU.S.

dollars.Pembinamonitors,assesses,andrespondstotheseforeigncurrencyrisksusinganactiveriskmanagementprogram,

whichmayincludetheexchangeofforeigncurrencyfordomesticcurrencyatafixedrate.


CyberSecurity

Pembina'sinfrastructure,technologiesanddataarebecomingincreasinglyintegrated.Suchintegrationcreatesariskthatthe

failureofonesystemcouldleadtofailureofothersystemswhichmayalsohaveanimpactontheCompany'sphysicalassets

anditsabilitytosafelyoperatesuchassets.Furthermore,Pembinaanditsthird-partyvendorscollectandstoresensitivedata

intheordinarycourseofbusiness,includingpersonalidentificationinformationofemployeesaswellasproprietarybusiness

informationandthatoftheCompany'scustomers,suppliers,investorsandotherstakeholders.Thereisanincreasingriskofa

cyber-attacktargetingtheindustryandanybreachinthesecurityorfailureofPembina'sinformationtechnologycouldresult

inoperationaloutages,delays,damagetoassetsortheenvironment,reputationalharm,lostprofits,lostdataandother

adverseoutcomesforwhichPembinacouldbeheldliable,allofwhichcouldadverselyaffectPembina'sreputation,business,

operationsorfinancialresults.Asaresultofacyber-attackorsecuritybreach,Pembinacouldalsobeliableunderlawsthat

protecttheprivacyofpersonalinformationorsubjecttoregulatorypenalties.

PoliticalUncertainty

RecentpoliticalandsocialeventsanddecisionsmadeinCanada,theU.S.andelsewhere,includingchangestofederal,

provincial,stateormunicipalgovernmentsinCanadaandtheU.S.,have,andcancontinuetocreatefutureuncertaintyon

globalfinancialandeconomicmarkets.ThisuncertaintymayimpacttheenergyindustryinCanadaandmayhaveanadverse

effectonPembina'sbusinessandfinancialresults.

RisksRelatingtoBreachofConfidentiality

Pembinaregularlyentersintoconfidentialityagreementswiththirdpartiespriortothedisclosureofanyconfidential

informationwhendiscussingpotentialbusinessrelationshipsorothertransactions.Breachesofconfidentialitycouldput

Pembinaatcompetitiveriskandmaycausesignificantdamagetoitsbusiness.Thereisnoassurancethat,intheeventofa

breachofconfidentiality,Pembinawillbeabletoobtainequitableremediesfromacourtofcompetentjurisdictioninatimely

manner,ifatall,inordertopreventormitigateanydamagetoitsbusinessthatsuchabreachofconfidentialitymaycause.

ConcentrationofAssetsintheWesternCanadianSedimentaryBasin

ThemajorityofPembina'sassetsareconcentratedintheWCSB,whichleavesthecompanyexposedtotheeconomic

conditionsofthatarea.Pembinamitigatesthisriskthroughadiversityofbusinessactivitieswithintheareaandbyowning

andoperatingassetsintheU.S.

RisksRelatedtoClimateChange

RisksRelatingtoChangingInvestorSentimentintheOilandGasIndustry

Anumberoffactors,includingtheconcernsoftheeffectsoftheuseoffossilfuelsonclimatechange,concernsoftheimpact

ofoilandgasoperationsontheenvironment,concernsofenvironmentaldamagerelatingtospillsofpetroleumproducts

duringtransportationandconcernsofIndigenousrights,haveaffectedcertaininvestors'sentimentstowardsinvestinginthe

oilandgasindustry.Asaresultoftheseconcerns,someinstitutional,retailandpublicinvestorshaveannouncedthattheyare

nolongerwillingtofundorinvestinoilandgaspropertiesorcompaniesand/orarereducingtheamountofsuchinvestments

overtime.Inaddition,certaininstitutionalinvestorsarerequestingthatissuersdevelopandimplementmorerobustsocial,

environmentalandgovernancepoliciesandpractices.Developingandimplementingsuchpoliciesandpracticescaninvolve

significantcostsandrequireasignificanttimecommitmentfromPembina'sBoardofDirectors,managementandemployees.

Failuretoimplementthepoliciesandpracticesasrequestedbyinstitutionalinvestorsmayresultinsuchinvestorsreducing

theirinvestmentinPembinaornotinvestinginPembinaatall.Anyreductionintheinvestorbaseinterestedorwillingto

investintheoilandgasindustryand,morespecifically,PembinamayresultinlimitsonPembina'sabilitytoaccesscapital,

increasestothecostofcapital,adowngradeinPembina'screditratingsandoutlooks,andadecreaseinthepriceandliquidity

ofPembina'ssecuritiesevenifPembina'soperatingresults,underlyingassetvaluesorprospectshavenotchanged.

Additionally,thesefactors,aswellasotherrelatedfactors,maycauseadecreaseinthevalueofanassetwhichmayresultin

animpairmentcharge.


EnergyMarketTransition

Changingconsumerpreferences,newtechnologies,governmentregulationorotherexternalfactorsmayresultinarapid

transitionfromfossil-basedsourcesofenergy,includingenergyderivedfromcrudeoilandnaturalgas,torenewableand

otheralternativesourcesofenergy.Thismayleadtolowerglobaldemandforcrudeoilandnaturalgasandrelated

commoditiesand,inturn,mayleadtolowerpricesforcrudeoil,naturalgasandNGLandrelatedcommodities.Thiscould

negativelyimpacttheCompany'sproducingcustomersandleadtolessdemandforPembina'sservices,whichcould

negativelyimpacttherevenuetheCompanyreceivesfrom,andthevalueof,itspipeline,facilitiesandotherinfrastructure

assets.

Inaddition,Pembinamayinvestinopportunitiesrelatedtoanenergytransition,whichmayinvolveinvestmentsin

businesses,operationsorassetsrelatingtorenewableorotheralternativeformsofenergy.Suchinvestmentsmayinvolve

certainrisksanduncertaintiesinadditiontothoseidentifiedhereininrespectofPembina'sexistingbusinesses,operations

andassets,includingtheobligationtocomplywithadditionalregulatoryandotherlegalrequirementsassociatedwithsuch

businesses,operationsorassetsandthepotentialrequirementforadditionalsourcesofcapitaltomake,developand/or

maintainsuchinvestmentsandPembina'sabilitytoaccesssuchsourcesofcapital.IntheeventPembinaweretocomplete

suchinvestments,therecanbenoguaranteethatPembinawillrealizeareturnonthoseinvestmentsorbusinesses,

operationsorassetsthatissimilartothereturnsitreceivesinrespectofitsexistingbusiness,operationsandassetsorthat

wouldoffsetanylossinrevenuefrom,orthevalueof,theCompany'sexistingpipeline,facilitiesandotherinfrastructure

assetsresultingfromtheimpactofthepotentialenergytransition.Asaresult,anysuchinvestmentcouldreducethelevelof

cashavailablefordividendsandtoserviceobligationsunderPembina'sdebtsecuritiesandotherdebtobligationsandmay

alsonegativelyimpactthetradingpriceofPembina'ssecurities.

RisksRelatingtoWeatherConditions

Weatherconditions(includingthoseassociatedwithclimatechange)canaffectthedemandforandpriceofnaturalgasand

NGL.Asaresult,changesinweatherpatternsmayaffectPembina'sgasprocessingbusiness.Forexample,colderwinter

temperaturesgenerallyincreasedemandfornaturalgasandNGLusedforheatingwhichtendstoresultinincreased

throughputvolumeontheAlliancePipelineandattheCompany'sgasprocessingfacilitiesandhigherpricesintheprocessing

andstoragebusinesses.Pembinahascapacitytohandleanysuchincreasedvolumeofthroughputandstorageatitsfacilities

tomeetchangesinseasonaldemand;however,atanygiventime,processingandstoragecapacityisfinite.

Weatherconditions(includingthoseassociatedwithclimatechange)mayimpactPembina'sabilitytocompletecapital

projects,repairsorfacilityturnaroundsontime,potentiallyresultingindelaysandincreasedcosts.Weathermayalsoaffect

accesstoPembina'sfacilities,andtheoperationsandprojectsofPembina'scustomersorshippers,whichmayimpactthe

supplyand/ordemandforPembina'sservices.Withrespecttoconstructionactivities,inareaswhereconstructioncanbe

conductedinnon-wintermonths,Pembinaattemptstoscheduleitsconstructiontimetablessoastominimizepotentialdelays

duetocoldwinterweather.

Changesand/orextremevariabilityinweatherpatterns,aswellasincreasesinthefrequencyofextremeweatherevents,

suchasfloods,cyclones,hurricanes,droughtsandforestfires,increasesthepotentialriskforPembina'sassets,including

operationaldisruptions,transportationdifficulties,supplychaindisruptions,employeesafetyincidents,anddamagetoassets,

whichmayresultinlowerrevenues,highercostsorprojectdelays.


12.NON-GAAPMEASURESThroughoutthisMD&A,PembinahasusedthefollowingtermsthatarenotdefinedbyGAAPbutareusedbymanagementto

evaluatetheperformanceofPembinaanditsbusinesses.Sincenon-GAAPmeasuresdonothaveastandardizedmeaning

prescribedbyIFRSandarethereforeunlikelytobecomparabletosimilarmeasurespresentedbyothercompanies,applicable

securitiesregulationsrequirethatnon-GAAPmeasuresbeclearlydefined,qualifiedandreconciledtothemostdirectly

comparableGAAPmeasure.Thesenon-GAAPmeasuresarecalculatedanddisclosedonaconsistentbasisfromperiodto

period.

Theintentofnon-GAAPmeasuresistoprovideadditionalusefulinformationwithrespecttoPembina'soperationaland

financialperformancetoinvestorsandanalysts,thoughthemeasuresdonothaveanystandardizedmeaningunderIFRS.The

measuresshouldnot,therefore,beconsideredinisolationorusedinsubstituteformeasuresofperformancepreparedin

accordancewithIFRS.Otherissuersmaycalculatethesenon-GAAPmeasuresdifferentlyorusedifferentnon-GAAPmeasures.

Investorsshouldbecautionedthatnetrevenue,adjustedEBITDA,adjustedEBITDApercommonshare,adjustedcashflow

fromoperatingactivities,cashflowfromoperatingactivitiespercommonshare,andadjustedcashflowfromoperating

activitiespercommonshareshouldnotbeconstruedasalternativestorevenue,earnings,cashflowfromoperatingactivities,

grossprofitorothermeasuresoffinancialresultsdeterminedinaccordancewithGAAPasindicatorsofPembina's

performance.

Non-GAAPProportionateConsolidationofInvestmentsinEquityAccountedInvesteesResults

InaccordancewithIFRS,Pembina'sjointlycontrolledinvestmentsareaccountedforusingequityaccounting.Underequity

accounting,theassetsandliabilitiesoftheinvestmentarepresentednetinasinglelineitemintheConsolidatedStatementof

FinancialPosition,"InvestmentsinEquityAccountedInvestees".Netearningsfrominvestmentsinequityaccountedinvestees

arerecognizedinasinglelineitemintheConsolidatedStatementofEarningsandComprehensiveIncome"ShareofProfit

fromEquityAccountedInvestees".Cashcontributionsanddistributionsfrominvestmentsinequityaccountedinvestees

representPembina'ssharepaidandreceivedintheperiodtoandfromtheinvestmentsinequityaccountedinvestees.

Toassistinunderstandingandevaluatingtheperformanceoftheseinvestments,PembinaissupplementingtheIFRS

disclosurewithnon-GAAPproportionateconsolidationofPembina'sinterestintheinvestmentsinequityaccounted

investees.Pembina'sproportionateinterestinequityaccountedinvesteeshasbeenincludedinadjustedEBITDA.

NetRevenue

Netrevenueisanon-GAAPfinancialmeasurewhichisdefinedastotalrevenuelesscostofgoodssoldincludingproduct

purchases.Managementbelievesthatnetrevenueprovidesinvestorswithasinglemeasuretoindicatethemarginonsales

beforenon-productoperatingexpensesthatiscomparablebetweenperiods.Managementutilizesnetrevenuetocompare

consecutiveresults,inMarketing&NewVenturesandFacilities,toaggregaterevenuegeneratedbyeachoftheCompany's

divisionsandtosetcomparableobjectives.


Pipelines FacilitiesMarketing&

NewVentures(1)

Corporate&Inter-segmentEliminations Total(1)($millions)

2020 2019 2020 2019 2020 2019 2020 2019 2020 2019

Revenue 603 487 326 287 882 1,006 (131) (112) 1,680 1,668

Costofgoodssold,includingproductpurchases — — 4 2 809 903 (87) (74) 726 831

Netrevenue 603 487 322 285 73 103 (44) (38) 954 837(1) 2020periodandcomparative2019periodhavebeenrestated.See"RestatementofRevenueandCostofGoodsSold"andNote3totheConsolidatedFinancialStatements.



Pipelines FacilitiesMarketing&

NewVentures(1)

Corporate&Inter-segmentEliminations Total(1)($millions)

2020 2019 2020 2019 2020 2019 2020 2019 2020 2019

Revenue 2,251 1,787 1,231 1,121 2,956 3,946 (485) (482) 5,953 6,372

Costofgoodssold,includingproductpurchases — — 11 4 2,815 3,559 (317) (311) 2,509 3,252

Netrevenue 2,251 1,787 1,220 1,117 141 387 (168) (171) 3,444 3,120(1) 2020periodandcomparative2019periodhavebeenrestated.See"RestatementofRevenueandCostofGoodsSold"andNote3totheConsolidatedFinancialStatements.

AdjustedEarningsBeforeInterest,Taxes,DepreciationandAmortization("AdjustedEBITDA")

AdjustedEBITDAisanon-GAAPmeasureandiscalculatedasearningsfortheyearbeforenetfinancecosts,incometaxes,

depreciationandamortization(includedinoperationsandgeneralandadministrativeexpense)andunrealizedgainsorlosses

oncommodity-relatedderivativefinancialinstruments.Theexclusionofunrealizedgainsorlossesoncommodity-related

derivativefinancialinstrumentseliminatesthenon-cashimpactofsuchgainsorlosses.

AdjustedEBITDAalsoincludesadjustmentstoearningsforlosses(gains)ondisposalofassets,transactioncostsincurredin

respectofacquisitions,impairmentchargesorreversalsinrespectofgoodwill,intangibleassets,investmentsinequity

accountedinvesteesandproperty,plantandequipment,certainnon-cashprovisionsandotheramountsnotreflectiveof

ongoingoperations.Theadjustmentsmadetoearningsarealsomadetoshareofprofitfrominvestmentsinequityaccounted

investees.Inaddition,Pembina'sproportionateshareofresultsfrominvestmentsinequityaccountedinvesteeswitha

preferredinterestispresentedinAdjustedEBITDAasa50percentcommoninterest.Theseadditionaladjustmentsaremade

toexcludevariousnon-cashandotheritemsthatarenotreflectiveofongoingoperations.

ManagementbelievesthatAdjustedEBITDAprovidesusefulinformationtoinvestorsasitisanimportantindicatorofan

issuer'sabilitytogenerateliquiditythroughcashflowfromoperatingactivitiesandequityaccountedinvestees.Management

alsobelievesthatAdjustedEBITDAprovidesanindicatorofoperatingincomegeneratedfromcapitalinvested,whichincludes

operationalfinanceincomefromlessorleasearrangements.AdjustedEBITDAisalsousedbyinvestorsandanalystsfor

assessingfinancialperformanceandforthepurposeofvaluinganissuer,includingcalculatingfinancialandleverageratios.

ManagementutilizesAdjustedEBITDAtosetobjectivesandasakeyperformanceindicatoroftheCompany'ssuccess.

PembinapresentsAdjustedEBITDAasmanagementbelievesitisameasurefrequentlyusedbyanalysts,investorsandother

stakeholdersinevaluatingtheCompany'sfinancialperformance.


Pipelines FacilitiesMarketing&NewVentures

Corporate&Inter-segmentEliminations Total($millions,exceptpershareamounts)

2020 2019 2020 2019 2020 2019 2020 2019 2020 2019

Earnings(loss)beforeincometax(1) (992) 31 143 163 (684) 94 (114) (136) (1,647) 152

Adjustmentstoshareofprofitfromequityaccountedinvesteesandother(1) 60 68 32 37 28 2 — — 120 107

Netfinancecosts(1) 7 1 8 5 (15) (8) 59 60 59 58

Depreciationandamortization(1) 102 66 50 49 13 8 15 15 180 138

Unrealizedlossoncommodity-relatedderivativefinancialinstruments — — 10 — 76 23 — — 86 23

CanadianEmergencyWageSubsidy — — — — — — (2) — (2) —

(Gain)lossondisposalofassets (1) 1 — — 1 — (1) (2) (1) (1)

Transactioncostsincurredinrespectofacquisitions — — — — — — 2 10 2 10

Impairmentchargesandnon-cashprovisions 1,401 300 12 — 656 1 — (1) 2,069 300

AdjustedEBITDA 577 467 255 254 75 120 (41) (54) 866 787

AdjustedEBITDApercommonshare–basic(dollars) 1.57 1.52(1) Comparative2019periodhasbeenrestated.See"VoluntaryChangeinAccountingPolicy"andNote3totheConsolidatedFinancialStatements.



Pipelines FacilitiesMarketing&NewVentures

Corporate&Inter-segmentEliminations Total($millions,exceptpershareamounts)

2020 2019 2020 2019 2020 2019 2020 2019 2020 2019

Earnings(loss)beforeincometax(1) 128 1,043 642 623 (646) 376 (540) (500) (416) 1,542

Adjustmentstoshareofprofitfromequityaccountedinvesteesandother(1) 240 261 135 145 43 21 — — 418 427

Netfinancecosts(1) 31 6 24 21 (13) (8) 378 270 420 289

Depreciationandamortization(1) 402 243 199 166 50 51 49 47 700 507

Unrealized(gain)lossoncommodity-relatedderivativefinancialinstruments — — (4) — 88 13 — — 84 13

Arbitrationawardpayment — — — — — (33) — — — (33)

CanadianEmergencyWageSubsidy — — — — — — (39) — (39) —

COVID-19restructuring 3 — 2 — 1 — 4 — 10 —

Loss(gain)ondisposalofassets — 1 1 — 1 — (2) — — 1

Transactioncostsincurredinrespectofacquisitions — — — — — — 18 12 18 12

Impairmentchargesandnon-cashprovisions 1,404 300 13 — 669 3 — — 2,086 303

AdjustedEBITDA 2,208 1,854 1,012 955 193 423 (132) (171) 3,281 3,061

AdjustedEBITDApercommonshare–basic(dollars) 5.97 5.97(1) Comparative2019periodhasbeenrestated.See"VoluntaryChangeinAccountingPolicy"andNote3totheConsolidatedFinancialStatements.

AdjustedCashFlowfromOperatingActivities,CashFlowfromOperatingActivitiesperCommonShare

andAdjustedCashFlowfromOperatingActivitiesperCommonShare

Adjustedcashflowfromoperatingactivitiesisanon-GAAPmeasurewhichisdefinedascashflowfromoperatingactivities

adjustingforthechangeinnon-cashoperatingworkingcapital,adjustingforcurrenttaxandshare-basedpaymentexpenses,

anddeductingpreferredsharedividendspaid.Adjustedcashflowfromoperatingactivitiesdeductspreferredsharedividends

paidbecausetheyarenotattributabletocommonshareholders.Thecalculationhasbeenmodifiedtoincludecurrenttaxand

share-basedpaymentexpenseasitallowsmanagementtobetterassesstheobligationsdiscussedbelow.Management

believesthatadjustedcashflowfromoperatingactivitiesprovidescomparableinformationtoinvestorsforassessingfinancial

performanceduringeachreportingperiod.Managementutilizesadjustedcashflowfromoperatingactivitiestosetobjectives

andasakeyperformanceindicatoroftheCompany'sabilitytomeetinterestobligations,dividendpaymentsandother

commitments.Percommonshareamountsarecalculatedbydividingcashflowfromoperatingactivities,oradjustedcash

flowfromoperatingactivities,asapplicable,bytheweightedaveragenumberofcommonsharesoutstanding.



($millions,exceptpershareamounts) 2020 2019 2020 2019

Cashflowfromoperatingactivities 766 728 2,252 2,532

Cashflowfromoperatingactivitiespercommonshare–basic(dollars) 1.39 1.41 4.10 4.94

Add(deduct):

Changeinnon-cashoperatingworkingcapital (75) (99) 93 (106)

Currenttaxexpense (45) (32) (240) (210)

Taxespaid,netofforeignexchange 7 23 296 141

Accruedshare-basedpayments (13) (13) (7) (50)

Share-basedpayments — — 45 50

Preferredsharedividendspaid (37) (31) (150) (123)

Adjustedcashflowfromoperatingactivities 603 576 2,289 2,234

Adjustedcashflowfromoperatingactivitiespercommonshare–basic(dollars) 1.10 1.11 4.16 4.36


13.ABBREVIATIONSThefollowingisalistofabbreviationsthatmaybeusedinthisMD&A:

Other

AECO AlbertaEnergyCompanybenchmarkpricefornaturalgas

B.C. BritishColumbia

GAAP Canadiangenerallyacceptedaccountingprinciples

IFRS InternationalFinancialReportingStandards

LNG Liquefiednaturalgas

LPG Liquefiedpetroleumgas

NGL Naturalgasliquids

U.S. UnitedStates

WCSB WesternCanadianSedimentaryBasin

Deepcut Ethane-pluscapacityextractiongasprocessingcapabilities

Shallowcut Sweetgasprocessingwithpropaneand/orcondensate-plusextractioncapabilities

KinderAcquisition Pembina'sacquisitionofKinderMorganCanadaLimitedandtheU.S.portionoftheCochinPipelinesystemonDecember16,2019

Volumes VolumesforPipelinesandFacilitiesarerevenuevolumes,definedasphysicalvolumesplusvolumesrecognizedfromtake-or-paycommitments.VolumesforMarketing&NewVenturesaremarketedNGLvolumes.Volumesarestatedinmboe/d,withnaturalgasvolumesconvertedtomboe/dfromMMcf/data6:1ratio.

Measurement Regulators&Acts

bpd barrelsperday ABCA BusinessCorporationsAct(Alberta)

mbbls thousandsofbarrels AER AlbertaEnergyRegulator

mbpd thousandsofbarrelsperday BCEAO BritishColumbiaEnvironmentalAssessmentOffice

mmbpd millionsofbarrelsperday BCOGC BritishColumbiaOilandGasCommission

mmbbls millionsofbarrels BCUC BritishColumbiaUtilitiesCommission

mboe/d thousandsofbarrelsofoilequivalentperday CER CanadianEnergyRegulator

mmboe/d millionsofbarrelsofoilequivalentperday FERC UnitedStatesFederalEnergyRegulatoryCommission

MMcf/d millionsofcubicfeetperday ICA InterstateCommerceActof1887(UnitedStates)

bcf/d billionsofcubicfeetperday NEB NationalEnergyBoard

km kilometer NGA NaturalGasActof1938(UnitedStates)

PHMSA PipelineandHazardousMaterialSafetyAdministration

InvestmentsinEquityAccountedInvestees

Pipelines:

Alliance 50percentinterestinbothAlliancePipelineLimitedPartnershipandAlliancePipelineL.P.

Ruby 50percentconvertible,cumulativepreferredinterestintheRubyPipelineHoldingCompanyL.L.C.

Facilities:

VeresenMidstream 45percentinterestinVeresenMidstreamLimitedPartnership,whichownsassetsinwesternCanadaservingtheMontneygeologicalplayinnorthwesternAlbertaandnortheasternB.C.includinggasprocessingplantsandgasgatheringpipelinesandcompression

FortCorp 50percentinterestinFortSaskatchewanEthyleneStorageLimitedPartnershipandFortSaskatchewanEthyleneCorporation

Marketing&NewVentures:

AuxSable AnownershipinterestinAuxSable(approximately42.7percentinAuxSableU.S.and50percentinAuxSableCanada),whichincludesanNGLfractionationfacilityandgasprocessingcapacitynearChicago,IllinoisandothernaturalgasandNGLprocessingfacilities,logisticsanddistributionassetsintheU.S.andCanada,aswellastransportationcontractsonAlliance

CKPC 50percentinterestinthePDH/PPFacility

ReadersarereferredtotheAIFdatedFebruary25,2021onwww.sedar.comforadditionaldescriptions.


14.FORWARD-LOOKINGSTATEMENTS&INFORMATION

IntheinterestofprovidingPembina'ssecurityholdersandpotentialinvestorswithinformationregardingPembina,includingmanagement'sassessmentoftheCompany'sfutureplansandoperations,certainstatementscontainedinthisMD&Aconstituteforward-lookingstatementsorforward-lookinginformation(collectively,"forward-lookingstatements").Forward-lookingstatementsaretypicallyidentifiedbywordssuchas"anticipate","continue","estimate","expect","may","will","project","should","could","would","believe","plan","intend","design","target","undertake","view","indicate","maintain","explore","entail","schedule","objective","strategy","likely","potential","outlook","aim","purpose","goal"andsimilarexpressionssuggestingfutureeventsorfutureperformance.

Bytheirnature,suchforward-lookingstatementsinvolveknownandunknownrisks,uncertaintiesandotherfactorsthatmaycauseactualresultsoreventstodiffermateriallyfromthoseanticipatedinsuchforward-lookingstatements.Pembinabelievestheexpectationsreflectedinthoseforward-lookingstatementsarereasonablebutnoassurancecanbegiventhattheseexpectationswillprovetobecorrectandsuchforward-lookingstatementsincludedinthisMD&Ashouldnotbeundulyreliedupon.Theseforward-lookingstatementsspeakonlyasofthedateoftheMD&A.

Inparticular,thisMD&Acontainsforward-lookingstatementspertainingtothefollowing:

• thepotentialimpactsoftheCOVID-19pandemiconPembina,andPembina'sresponsethereto;

• futurelevelsandsustainabilityofcashdividendsthatPembinaintendstopaytoitsshareholders,thedividendpaymentdate;

• planning,construction,locations,capitalexpenditureestimates,schedules,regulatoryandenvironmentalapplicationsandanticipatedapprovals,expectedcapacity,incrementalvolumes,completionandin-servicedates,rights,sourcesofproduct,activities,benefitsandoperationswithrespecttonewconstructionof,orexpansionsonexisting,pipelines,systems,gasservicesfacilities,processingandfractionationfacilities,terminalling,storageandhubfacilitiesandotherfacilitiesorenergyinfrastructure,aswellastheimpactofPembina'snewprojectsonitsfuturefinancialperformance;

• pipeline,processing,fractionationandstoragefacilityandsystemoperationsandthroughputlevels;

• treatmentundergovernmentalregulatoryregimesinCanadaandtheU.S.,includingtaxesandtaxregimes,environmentalandgreenhousegasregulationsandrelatedabandonmentandreclamationobligations,andIndigenous,landownerandotherstakeholderconsultationrequirements;

• Pembina'sstrategyandthedevelopmentandexpectedtimingofnewbusinessinitiativesandgrowthopportunitiesandtheimpactthereof;

• increasedthroughputpotential,processingcapacityandfractionationcapacityduetoincreasedoilandgasindustryactivityandnewconnectionsandotherinitiativesonPembina'spipelinesandPembina'sfacilities;

• expectedfuturecashflowsandthesufficiencythereof,financialstrength,sourcesofandaccesstofundsatattractiverates,futurecontractualobligations,futurefinancingoptions,futurerenewalofcreditfacilities,availabilityofcapitalforcapitalprojectsandcontributionstoinvestmentsinequityaccountedinvestees,operatingobligationsanddividendsandtheuseofproceedsfromfinancings;

• Pembina'scapitalstructure,includingthesufficiencyoftheamountofleverageemployedthereinandfutureactionsthatmaybetakenwithrespectthereto;

• Pembina'sexpectationsregardingthecreditworthinessofitscounterparties;• Pembina'sexpectationsregardinginvolvementofpartnersonJordanCove;• currentratingstargetsonPembina'sdebtandthelikelihoodofadowngradebelow

investment-graderatings;• tollsandtariffsandprocessing,transportation,fractionation,storageandservices

commitmentsandcontracts;• operatingrisks(includingtheamountoffutureliabilitiesrelatedtopipelinesspills

andotherenvironmentalincidents)andrelatedinsurancecoverageandinspectionandintegrityprograms;

• expectationsregardingPembina'sNGLstoragepositionsanditsintentionswithrespectthereto;

• theexpecteddemandfor,andpricesandinventorylevelsof,crudeoilandotherpetroleumproducts,includingNGL;and

• theimpactofcurrentmarketconditionsonPembina.

VariousfactorsorassumptionsaretypicallyappliedbyPembinaindrawingconclusionsormakingtheforecasts,projections,predictionsorestimationssetoutinforward-lookingstatementsbasedoninformationcurrentlyavailabletoPembina.Thesefactorsandassumptionsinclude,butarenotlimitedto:

• oilandgasindustryexplorationanddevelopmentactivitylevelsandthegeographicregionofsuchactivity;

• thesuccessofPembina'soperations;• prevailingcommodityprices,interestratesandexchangerates;• theabilityofPembinatomaintaincurrentcreditratings;• theavailabilityofcapitaltofundfuturecapitalrequirementsrelatingtoexisting

assetsandprojects;• expectationsregardingPembina'spensionplan;• futureoperatingcostsincludinggeotechnicalandintegritycostsbeingconsistent

withhistoricalcosts;• oilandgasindustrycompensationlevelsremainingconsistent;

• inrespectofcurrentdevelopments,expansions,plannedcapitalexpenditures,completiondatesandcapacityexpectations:thatthirdpartieswillprovideanynecessarysupport;thatanythird-partyprojectsrelatingtogrowthprojectswillbesanctionedandcompletedasexpected;thatanyrequiredcommercialagreementscanbereached;thatallrequiredregulatoryandenvironmentalapprovalscanbeobtainedonthenecessarytermsinatimelymanner;thatcounterpartieswillcomplywithcontractsinatimelymanner;thattherearenounforeseeneventspreventingtheperformanceofcontractsorthecompletionoftherelevantfacilities,andthattherearenounforeseenmaterialcostsrelatingtothefacilitieswhicharenotrecoverablefromcustomers;

• inrespectofthestabilityofPembina'sdividends:prevailingcommodityprices,marginsandexchangerates;thatPembina'sfutureresultsofoperationswillbeconsistentwithpastperformanceandmanagementexpectationsinrelationthereto;thecontinuedavailabilityofcapitalatattractivepricestofundfuturecapitalrequirementsrelatingtoexistingassetsandprojects,includingbutnotlimitedtofuturecapitalexpendituresrelatingtoexpansion,upgradesandmaintenanceshutdowns;thesuccessofgrowthprojects;futureoperatingcosts;thatcounterpartiestomaterialagreementswillcontinuetoperforminatimelymanner;thattherearenounforeseeneventspreventingtheperformanceofcontracts;andthattherearenounforeseenmaterialconstructionorothercostsrelatedtocurrentgrowthprojectsorcurrentoperations;

• prevailingregulatory,taxandenvironmentallawsandregulationsandtaxpoolutilization;and

• theamountoffutureliabilitiesrelatingtolawsuitsandenvironmentalincidentsandtheavailabilityofcoverageunderPembina'sinsurancepolicies(includinginrespectofPembina'sbusinessinterruptioninsurancepolicy).

TheactualresultsofPembinacoulddiffermateriallyfromthoseanticipatedintheseforward-lookingstatementsasaresultofthematerialriskfactorssetforthbelow:

• theregulatoryenvironmentanddecisionsandIndigenousandlandownerconsultationrequirements;

• theimpactofcompetitiveentitiesandpricing;• labourandmaterialshortages;• relianceonthirdpartiestosuccessfullyoperateandmaintaincertainassets;• relianceonkeyrelationships,jointventurepartners,andagreementsandthe

outcomeofstakeholderengagement;• thestrengthandoperationsoftheoilandnaturalgasproductionindustryand

relatedcommodityprices;• non-performanceordefaultbycounterpartiestoagreementswhichPembinaorone

ormoreofitssubsidiarieshasenteredintoinrespectofitsbusiness;• actionsbyjointventurepartnersorotherpartnerswhichholdinterestsincertainof

Pembina'sassets;• actionsbygovernmentalorregulatoryauthoritiesincludingchangesintaxlawsand

treatment,changesinroyaltyrates,climatechangeinitiativesorpoliciesorincreasedenvironmentalregulation;

• fluctuationsinoperatingresults;• adversegeneraleconomicandmarketconditionsinCanada,NorthAmericaand

elsewhere,includingchanges,orprolongedweakness,asapplicable,ininterestrates,foreigncurrencyexchangerates,commodityprices,supply/demandtrendsandoverallindustryactivitylevels;

• risksrelatingtothecurrentandpotentialadverseimpactsoftheCOVID-19pandemic;

• constraintson,ortheunavailabilityofadequateinfrastructure;• thepoliticalenvironment,inNorthAmericaandelsewhere,andpublicopinion;• abilitytoaccessvarioussourcesofdebtandequitycapital;• changesincreditratings;• technologyandsecurityrisks;• naturalcatastrophes;and• theotherfactorsdiscussedunder"RiskFactors"hereinandinPembina'sMD&Aand

AIFfortheyearendedDecember31,2020,whichareavailableatwww.sedar.com,www.sec.govandthroughPembina'swebsiteatwww.pembina.com.

Thesefactorsshouldnotbeconstruedasexhaustive.Unlessrequiredbylaw,Pembinadoesnotundertakeanyobligationtopubliclyupdateorreviseanyforward-lookingstatements,whetherasaresultofnewinformation,futureeventsorotherwise.Anyforward-lookingstatementscontainedhereinareexpresslyqualifiedbythiscautionarystatement.


MANAGEMENT'SREPORT

TheauditedconsolidatedfinancialstatementsofPembinaPipelineCorporation(the"Company"or"Pembina")arethe

responsibilityofPembina'smanagement.ThefinancialstatementshavebeenpreparedinaccordancewithInternational

FinancialReportingStandardsasissuedbytheInternationalAccountingStandardsBoard,usingmanagement'sbestestimates

andjudgments,whereappropriate.

Managementisresponsibleforthereliabilityandintegrityofthefinancialstatements,thenotestothefinancialstatements

andotherfinancialinformationcontainedinthisreport.Inthepreparationofthesefinancialstatements,estimatesare

sometimesnecessarybecauseaprecisedeterminationofcertainassetsandliabilitiesisdependentonfutureevents.

Managementbelievessuchestimateshavebeenbasedoncarefuljudgmentsandhavebeenproperlyreflectedinthe

accompanyingfinancialstatements.

Management'sAssessmentofInternalControloverFinancialReporting

Pembinamaintainsinternalcontroloverfinancialreporting("ICFR")whichisdesignedtoprovidereasonableassurance

regardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordance

withIFRS,andincludepoliciesandproceduresthat:(a)pertaintothemaintenanceofrecordsthatinreasonabledetail

accuratelyandfairlyreflectthetransactionsanddispositionsoftheassetsofPembina;(b)aredesignedtoprovidereasonable

assurancethattransactionsarerecordedasnecessarytopermitpreparationoffinancialstatementsinaccordancewithIFRS,

andthatreceiptsandexpendituresofPembinaarebeingmadeonlyinaccordancewithauthorizationsofmanagementand

directorsofPembina;and(c)aredesignedtoprovidereasonableassuranceregardingpreventionortimelydetectionof

unauthorizedacquisition,useordispositionofPembina'sassetsthatcouldhaveamaterialeffectonPembina'sfinancial

statements.Managementisresponsibleforestablishingandmaintainingdisclosurecontrolsandprocedures("DC&P")and

ICFR,asdefinedinNationalInstrument52-109CertificationofDisclosureinIssuers'AnnualandInterimFilingsandRule13a–

15(e)and15(d)–15(e)undertheUnitedStatesSecuritiesExchangeActof1934.

UnderthesupervisionandwiththeparticipationoftheChiefExecutiveOfficer("CEO")andtheChiefFinancialOfficer("CFO"),

managementhasdesignedinternalcontroloverfinancialreportingbasedontheframeworksetforthinInternalControl–

IntegratedFrameworkissuedin2013bytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission.Amaterial

weaknessisadeficiency,oracombinationofdeficiencies,inICFR,suchthatthereisareasonablepossibilitythatamaterial

misstatementoftheannualfinancialstatements,orinterimfinancialstatements,willnotbepreventedordetectedona

timelybasis.

Duetoitsinherentlimitations,internalcontroloverfinancialreportingisnotintendedtoprovideabsoluteassurancethata

misstatementofPembina'sfinancialstatementswouldbepreventedordetected.Further,theevaluationoftheeffectiveness

ofinternalcontroloverfinancialreportingwasmadeasataspecificdate,andcontinuedeffectivenessinfutureperiodsis

subjecttotherisksthatcontrolsmaybecomeinadequate.

TheBoardofDirectorsofPembina(the"Board")isresponsibleforensuringmanagementfulfillsitsresponsibilitiesfor

financialreportingandinternalcontrol.TheBoardisassistedinexercisingitsresponsibilitiesthroughtheAuditCommittee,

whichconsistsoffivenon-managementdirectors.TheAuditCommitteemeetsperiodicallywithmanagementandtheinternal

andexternalauditorstosatisfyitselfthatmanagement'sresponsibilitiesareproperlydischarged,toreviewthefinancial

statementsandtorecommendapprovalofthefinancialstatementstotheBoard.

KPMGLLP,theindependentauditors,haveauditedPembina'sconsolidatedfinancialstatementsandtheeffectivenessof

internalcontroloverfinancialreportingasofDecember31,2020inaccordancewiththestandardsofthePublicCompany

AccountingOversightBoard(UnitedStates).TheindependentauditorshavefullandunrestrictedaccesstotheAudit

Committeetodiscusstheirauditandtheirrelatedfindings.


AsatDecember31,2020,theCompanyhasidentifieda"materialweakness"relatedtocontrolsovercontractassessmentin

itsMarketingbusiness.Specifically,theCompanydidnothavecontrolstoidentifyallcontractswhereanaccounting

assessmentwasrequiredandasaresultlackedanalysisofallrelevantcontracttermsrequiredtomaketheassessmentinthe

Marketingbusiness.Becauseofthedeficiency,theCompanypresentedrevenueandcostofgoodssoldforcertaincrude

contractsintheMarketingandNewVenturesDivisiononagrossbasisthatshouldhavebeenrecordedonanetbasis.

ManagementhasrestatedrevenueandcostofgoodssoldfortheyearsendedDecember31,2020andDecember31,2019

withnoimpactonearnings,cashflowsorfinancialposition.RefertoNote3intheseconsolidatedfinancialstatementsfor

detailsoftherestatement.

RemediationofMaterialWeakness

Thecontroldeficiencydescribedabovewasdetectedbymanagementduringthethirdquarterof2021priortothefilingof

Pembina'sinterimfinancialstatementsforthethreeandninemonthsendedSeptember30,2021.TheCompanyhas

prioritizedtheremediationofthematerialweaknessdescribedaboveandisworkingundertheoversightoftheAudit

Committeetoresolvetheissue.

Specificactionstoremediatethismaterialweaknessincludethefollowing:

i. Revisionoftheprocessofidentifyingcontractstoconsultwithinternalexpertstoassistintheevaluationoftechnical

accountingmatters;and

ii. Enhancecontractanalysis,includingrevisionoftheprocessusedtoassessaccountingimplicationsforcomplex

contracts.

AstheconclusionregardingthematerialweaknessinICFRwasreachedinlateOctober2021,Pembinahasnothadadequate

timetoimplementandevaluatethecontrolsandproceduresdescribedabove,aslimitedcomplexandmaterialtransactions

requiringanapplicationoftheforegoingremediationactionshaveoccurredinthisperiod.Pembinahas,therefore,nothad

adequatetimeoropportunitytoapplyitsproposedremediationactionstoevidencetheremediationofthematerial

weaknessdescribedaboveandthematerialweaknesswillcontinuetobeaddressedthroughouttheremainderof2021.

ChangesinInternalControloverFinancialReporting

PembinapreviouslyexcludedbusinessprocessesacquiredthroughtheKinderAcquisitiononDecember16,2019,fromthe

Company'sevaluationofinternalcontroloverfinancialreportingaspermittedbyapplicablesecuritieslawsinCanadaandthe

UnitedStates.EffectiveMay1,2020,PembinacompletedtheintegrationoftheKinderAcquisitionintoitsexistingenterprise

resourceplanning("ERP")system.AsaresultoftheERPsystemintegration,certainprocessessupportingPembina'sICFRfor

theKinderAcquisitionchangedinthesecondquarterof2020.TheCompanycompletedtheevaluationofICFRoftheKinder

Acquisitioninthefourthquarterof2020andtheoverallcontrolsandprocedureswefollowinestablishingICFRwerenot

significantlyimpacted.

OtherthantheKinderAcquisitionandthematerialweaknessdescribedabove,therehasbeennochangeinPembina'sICFR

thatoccurredduringtheyearendedDecember31,2020thathasmateriallyaffected,orarereasonablylikelytomaterially

affect,Pembina'sinternalcontroloverfinancialreporting.

"M.H.Dilger"M.H.DilgerPresidentandChiefExecutiveOfficer

"J.ScottBurrows"J.ScottBurrowsSeniorVicePresidentandChiefFinancialOfficer

November18,2021


REPORTOFINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRM

TotheShareholdersandBoardofDirectorsofPembinaPipelineCorporation

OpinionontheConsolidatedFinancialStatements

WehaveauditedtheaccompanyingconsolidatedstatementsoffinancialpositionofPembinaPipelineCorporationand

subsidiaries(the"Company")asofDecember31,2020and2019,therelatedconsolidatedstatementsofearnings(loss)and

comprehensiveincome(loss),changesinequity,andcashflowsforeachoftheyearsthenended,andtherelatednotes

(collectively,theconsolidatedfinancialstatements).Inouropinion,theconsolidatedfinancialstatementspresentfairly,inall

materialrespects,thefinancialpositionoftheCompanyasofDecember31,2020and2019,anditsfinancialperformanceand

itscashflowsfortheyearsthenended,inconformitywithInternationalFinancialReportingStandardsasissuedbythe

InternationalAccountingStandardsBoard.

Wealsohaveaudited,inaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates)

(PCAOB),theCompany'sinternalcontroloverfinancialreportingasofDecember31,2020,basedoncriteriaestablishedin

InternalControl–IntegratedFramework(2013)issuedbytheCommitteeofSponsoringOrganizationsoftheTreadway

Commission,andourreportdatedNovember18,2021expressedanadverseopinionontheeffectivenessoftheCompany's

internalcontroloverfinancialreporting.

ChangeinAccountingPrinciple

AsdiscussedinNote3totheconsolidatedfinancialstatements,theCompanyhaselectedtochangeitsmethodofaccounting

fordecommissioningobligationsasatDecember31,2020andincludedthepresentationofthestatementoffinancialposition

asofJanuary1,2019.

CorrectionofaMisstatement

AsdiscussedinNote3totheconsolidatedfinancialstatements,the2020and2019financialstatementshavebeenrestatedto

correctamisstatement.

BasisforOpinion

TheseconsolidatedfinancialstatementsaretheresponsibilityoftheCompany'smanagement.Ourresponsibilityistoexpress

anopinionontheseconsolidatedfinancialstatementsbasedonouraudits.Weareapublicaccountingfirmregisteredwith

thePCAOBandarerequiredtobeindependentwithrespecttotheCompanyinaccordancewiththeU.S.federalsecurities

lawsandtheapplicablerulesandregulationsoftheSecuritiesandExchangeCommissionandthePCAOB.

WeconductedourauditsinaccordancewiththestandardsofthePCAOB.Thosestandardsrequirethatweplanandperform

theaudittoobtainreasonableassuranceaboutwhethertheconsolidatedfinancialstatementsarefreeofmaterial

misstatement,whetherduetoerrororfraud.Ourauditsincludedperformingprocedurestoassesstherisksofmaterial

misstatementoftheconsolidatedfinancialstatements,whetherduetoerrororfraud,andperformingproceduresthat

respondtothoserisks.Suchproceduresincludedexamining,onatestbasis,evidenceregardingtheamountsanddisclosures

intheconsolidatedfinancialstatements.Ourauditsalsoincludedevaluatingtheaccountingprinciplesusedandsignificant

estimatesmadebymanagement,aswellasevaluatingtheoverallpresentationoftheconsolidatedfinancialstatements.We

believethatourauditsprovideareasonablebasisforouropinion.


CriticalAuditMatter

Thecriticalauditmattercommunicatedbelowisamatterarisingfromthecurrentperiodauditoftheconsolidatedfinancial

statementsthatwascommunicatedorrequiredtobecommunicatedtotheauditcommitteeandthat:(1)relatestoaccounts

ordisclosuresthatarematerialtotheconsolidatedfinancialstatementsand(2)involvedourespeciallychallenging,

subjective,orcomplexjudgments.Thecommunicationofacriticalauditmatterdoesnotalterinanywayouropiniononthe

consolidatedfinancialstatements,takenasawhole,andwearenot,bycommunicatingthecriticalauditmatterbelow,

providingaseparateopiniononthecriticalauditmatterorontheaccountsordisclosurestowhichitrelates.

Goodwillimpairment

AsdiscussedinNote11totheconsolidatedfinancialstatements,thegoodwillbalanceasofDecember31,2020was$4,694

million.Forthepurposeoftheimpairmenttest,goodwillhasbeenallocatedtotheCompany'soperatingsegmentswhich

representsthelowestlevelwithintheCompanyatwhichthegoodwillismonitoredformanagementpurposes.Asdiscussedin

Note5totheconsolidatedfinancialstatements,theCompanyperformsgoodwillimpairmenttestingonanannualbasisand

whenevereventsorchangesincircumstancesindicatethatthecarryingvalueofanoperatingsegmentexceedsits

recoverableamount.Therecoverableamountsweredeterminedusingafairvaluelesscostsofdisposalapproachwhichis

basedonadiscountedcashflowmodel.

Weidentifiedtheassessmentofthegoodwillimpairmentasacriticalauditmatter.Ahighdegreeofsubjectiveauditor

judgmentwasrequiredtoevaluatethesignificantrevenueassumptionssuchascontractedvolumesandrates,projected

commodityvolumesandpricing,andgrowthrates("forecastedcashflowassumptions")anddiscountratesusedinthe

discountedcashflowmodel.ChangestothoseassumptionscouldhavehadasignificantimpactontheCompany'sassessment

oftherecoverableamountoftheoperatingsegments.

Thefollowingaretheprimaryproceduresweperformedtoaddressthiscriticalauditmatter.Weevaluatedthedesignand

testedtheoperatingeffectivenessofcertaininternalcontrolsrelatedtothecriticalauditmatter,includingcontrolsrelatedto

forecastedcashflowassumptionsandthediscountratesusedinthedeterminationoftherecoverableamounts.Weevaluated

theCompany'sprojectedcommoditypricingassumptionsbycomparingtopubliclyavailableforwardpricecurves.We

comparedtheCompany'shistoricalforecastedresults,includingcontractedvolumesandrates,andprojectedcommodity

volumes,toactualresultstoassesstheCompany'sabilitytoaccuratelyforecastandtoassessthelong-termgrowthrates.We

evaluatedtheCompany'sforecastedcashflowassumptionsbycomparingthemtoactualresults.Inaddition,weinvolveda

valuationprofessionalwithspecializedskillsandknowledge,whoassistedin:

• testingtherecoverableamountforeachoperatingsegmentusingtheoperatingsegment'sforecastedcashflow

assumptionsanddiscountrate,andcomparingtheresulttotheCompany'scalculatedrecoverableamounts

• evaluatingthediscountratesusedinthevaluationforeachoperatingsegmentbycomparingtheinputsagainstpublicly

availablemarketdataforcomparableentitiesandassessingtheresultingdiscountrates

• evaluatingthehistoricalandforecastedcashflowmultiplesimpliedinthevaluationforeachoperatingsegmentby

comparingthemagainstpubliclyavailablehistoricalandforecastedcashflowmultiplesforcomparableentities.

CharteredProfessionalAccountants

WehaveservedastheCompany'sauditorsince1997.

Calgary,CanadaNovember18,2021


REPORTOFINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRM

TotheShareholdersandBoardofDirectorsofPembinaPipelineCorporation

OpiniononInternalControlOverFinancialReporting

WehaveauditedPembinaPipelineCorporation’s(andsubsidiaries')(the"Company")internalcontroloverfinancialreporting

asofDecember31,2020,basedoncriteriaestablishedinInternalControl-IntegratedFramework(2013)issuedbythe

CommitteeofSponsoringOrganizationsoftheTreadwayCommission.Inouropinion,becauseoftheeffectofthematerial

weakness,describedbelow,ontheachievementoftheobjectivesofthecontrolcriteria,theCompanyhasnotmaintained

effectiveinternalcontroloverfinancialreportingasofDecember31,2020,basedoncriteriaestablishedinInternalControl-

IntegratedFramework(2013)issuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission.

Wealsohaveaudited,inaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates)

(PCAOB),theconsolidatedstatementsoffinancialpositionoftheCompanyasofDecember31,2020and2019,therelated

consolidatedstatementsofearnings(loss)andcomprehensiveincome(loss),changesinequity,andcashflowsfortheyears

thenended,andtherelatednotes(collectively,theconsolidatedfinancialstatements),andourreportdatedNovember18,

2021expressedanunqualifiedopiniononthoseconsolidatedfinancialstatements.

Amaterialweaknessisadeficiency,oracombinationofdeficiencies,ininternalcontroloverfinancialreporting,suchthat

thereisareasonablepossibilitythatamaterialmisstatementofthecompany’sannualorinterimfinancialstatementswillnot

bepreventedordetectedonatimelybasis.Amaterialweaknessrelatedtocontrolsovercontractassessmentinthe

Marketingbusinesshasbeenidentifiedandincludedinmanagement'sassessment.Specifically,theCompanydidnothave

controlstoidentifyallcontractswhereanaccountingassessmentwasrequiredandasaresultlackedanalysisofallrelevant

contracttermsrequiredtomaketheassessmentintheMarketingbusiness.Thematerialweaknesswasconsideredin

determiningthenature,timing,andextentofaudittestsappliedinourauditofthe2020consolidatedfinancialstatements,

andthisreportdoesnotaffectourreportonthoseconsolidatedfinancialstatements.

BasisforOpinion

TheCompany'smanagementisresponsibleformaintainingeffectiveinternalcontroloverfinancialreportingandforits

assessmentoftheeffectivenessofinternalcontroloverfinancialreporting,includedintheaccompanyingManagement's

AnnualReportonInternalControloverFinancialReportingincludedinManagement'sDiscussionandAnalysis.Our

responsibilityistoexpressanopinionontheCompany'sinternalcontroloverfinancialreportingbasedonouraudit.Wearea

publicaccountingfirmregisteredwiththePCAOBandarerequiredtobeindependentwithrespecttotheCompanyin

accordancewiththeU.S.federalsecuritieslawsandtheapplicablerulesandregulationsoftheSecuritiesandExchange

CommissionandthePCAOB.

WeconductedourauditinaccordancewiththestandardsofthePCAOB.Thosestandardsrequirethatweplanandperform

theaudittoobtainreasonableassuranceaboutwhethereffectiveinternalcontroloverfinancialreportingwasmaintainedin

allmaterialrespects.Ourauditofinternalcontroloverfinancialreportingincludedobtaininganunderstandingofinternal

controloverfinancialreporting,assessingtheriskthatamaterialweaknessexists,andtestingandevaluatingthedesignand

operatingeffectivenessofinternalcontrolbasedontheassessedrisk.Ourauditalsoincludedperformingsuchother

proceduresasweconsiderednecessaryinthecircumstances.Webelievethatourauditprovidesareasonablebasisforour

opinion.


DefinitionandLimitationsofInternalControlOverFinancialReporting

Acompany'sinternalcontroloverfinancialreportingisaprocessdesignedtoprovidereasonableassuranceregardingthe

reliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerally

acceptedaccountingprinciples.Acompany'sinternalcontroloverfinancialreportingincludesthosepoliciesandprocedures

that(1)pertaintothemaintenanceofrecordsthat,inreasonabledetail,accuratelyandfairlyreflectthetransactionsand

dispositionsoftheassetsofthecompany;(2)providereasonableassurancethattransactionsarerecordedasnecessaryto

permitpreparationoffinancialstatementsinaccordancewithgenerallyacceptedaccountingprinciples,andthatreceiptsand

expendituresofthecompanyarebeingmadeonlyinaccordancewithauthorizationsofmanagementanddirectorsofthe

company;and(3)providereasonableassuranceregardingpreventionortimelydetectionofunauthorizedacquisition,use,or

dispositionofthecompany'sassetsthatcouldhaveamaterialeffectonthefinancialstatements.

Becauseofitsinherentlimitations,internalcontroloverfinancialreportingmaynotpreventordetectmisstatements.Also,

projectionsofanyevaluationofeffectivenesstofutureperiodsaresubjecttotheriskthatcontrolsmaybecomeinadequate

becauseofchangesinconditions,orthatthedegreeofcompliancewiththepoliciesorproceduresmaydeteriorate.

CharteredProfessionalAccountants

Calgary,CanadaNovember18,2021


CONSOLIDATEDSTATEMENTSOFFINANCIALPOSITION

December31, January1,

Asat December31, 2019 2019

($millions) 2020 (RestatedNote4) (RestatedNote4)

AssetsCurrentassets

Cashandcashequivalents 81 129 157

Tradereceivablesandother(Note8) 662 694 605

Inventory(Note9) 221 126 198

Derivativefinancialinstruments(Note27) 25 40 54

989 989 1,014

Non-currentassets

Property,plantandequipment(Note10) 18,549 18,362 14,408

Intangibleassetsandgoodwill(Note11) 6,340 6,444 4,409

Investmentsinequityaccountedinvestees(Note12) 4,377 5,974 6,383

Right-of-useassets(Note16) 651 691 427

Financeleasereceivable(Note16) 138 145 —

Deferredtaxassets(Note14) 322 — —

Advancestorelatedpartiesandotherassets(Note30) 50 150 170

30,427 31,766 25,797

Totalassets 31,416 32,755 26,811

LiabilitiesandequityCurrentliabilities

Tradepayablesandother(Note15) 780 1,005 796

Loansandborrowings(Note17) 600 74 472

Dividendspayable 115 110 97

Leaseliabilities 99 112 64

Contractliabilities(Note20) 62 39 37

Taxespayable 56 103 67

Derivativefinancialinstruments(Note27) 69 6 6

1,781 1,449 1,539

Non-currentliabilities

Loansandborrowings(Note17) 10,276 10,078 7,046

Leaseliabilities 675 707 416

Decommissioningprovision(Note18) 348 337 158

Contractliabilities(Note20) 230 192 131

Deferredtaxliabilities(Note14) 2,925 2,945 2,814

Otherliabilities 166 179 198

14,620 14,438 10,763

Totalliabilities 16,401 15,887 12,302

Equity

Attributabletoshareholders 14,955 16,808 14,449

Attributabletonon-controllinginterest 60 60 60

Totalequity 15,015 16,868 14,509

Totalliabilitiesandequity 31,416 32,755 26,811

Seeaccompanyingnotestotheconsolidatedfinancialstatements

ApprovedonbehalfoftheBoardofDirectors:

"GordonJ.Kerr"GordonJ.KerrDirector

"RandallJ.Findlay"RandallJ.FindlayDirector


CONSOLIDATEDSTATEMENTSOFEARNINGS(LOSS)ANDCOMPREHENSIVEINCOME(LOSS)

FortheyearsendedDecember31 2020 2019

($millions,exceptpershareamounts) (RestatedNote3) (RestatedNote3)Revenue(Note20) 5,953 6,372

Costofsales(Note22) 3,883 4,325

Loss(gain)oncommodity-relatedderivativefinancialinstruments(Note27) 30 (20)

Shareofprofitfromequityaccountedinvestees-operations(Note12) 282 375

Impairmentinshareofprofitfromequityaccountedinvestees(Note12) (314) —

Grossprofit 2,008 2,442

Generalandadministrative 246 296

Other(income)expense (18) 15

Impairmentexpense(Note13) 1,776 300

Resultsfromoperatingactivities 4 1,831

Netfinancecosts(Note21) 420 289

Earnings(loss)beforeincometax (416) 1,542

Currenttaxexpense(Note14) 240 210

Deferredtaxrecovery(Note14) (340) (175)

Incometax(recovery)expense(Note14) (100) 35

Earnings(loss) (316) 1,507

Othercomprehensiveincome(loss),netoftax(Note26&27)

Exchangelossontranslationofforeignoperations (117) (213)

Impactofhedgingactivities 31 —

Re-measurementofdefinedbenefitliability(Note24) (10) (6)

Totalcomprehensiveincome(loss)attributabletoshareholders (412) 1,288

Earnings(loss)attributabletocommonshareholders,netofpreferredsharedividends(Note23) (476) 1,376

Earnings(loss)percommonshare–basic(dollars)(Note23) (0.86) 2.69

Earnings(loss)percommonshare–diluted(dollars)(Note23) (0.86) 2.68

Weightedaveragenumberofcommonshares(millions)

Basic(Note23) 550 512

Diluted(Note23) 550 514



CONSOLIDATEDSTATEMENTSOFCHANGESINEQUITY

AttributabletoShareholdersoftheCompany TotalEquity

(RestatedNote4)($millions)

CommonShareCapital

PreferredShareCapital

Deficit(RestatedNote4) AOCI(1)

Total(RestatedNote4)

Non-Controlling

Interest

December31,2019 15,539 2,956 (1,785) 98 16,808 60 16,868

Totalcomprehensive(loss)income

Loss — — (316) — (316) — (316)

Othercomprehensiveloss(Note26) — — — (96) (96) — (96)

Totalcomprehensiveloss — — (316) (96) (412) — (412)

TransactionswithshareholdersoftheCompany

PartVI.1taxonpreferredshares(Note19) — (10) — — (10) — (10)

Share-basedpaymenttransactions(Note19) 105 — — — 105 — 105

Dividendsdeclared–common(Note19) — — (1,385) — (1,385) — (1,385)

Dividendsdeclared–preferred(Note19) — — (151) — (151) — (151)

TotaltransactionswithshareholdersoftheCompany 105 (10) (1,536) — (1,441) — (1,441)

December31,2020 15,644 2,946 (3,637) 2 14,955 60 15,015

OpeningvalueJanuary1,2019 13,662 2,423 (1,953) 317 14,449 60 14,509

Totalcomprehensiveincome

Earnings — — 1,507 — 1,507 — 1,507

Othercomprehensiveincome

Exchangelossontranslationofforeignoperations — — — (213) (213) — (213)

Remeasurementsofdefinedbenefitliability,netoftax(Note24) — — — (6) (6) — (6)

Totalcomprehensiveincome — — 1,507 (219) 1,288 — 1,288

TransactionswithshareholdersoftheCompany

Commonsharesissued,netofissuecosts(Note19) 1,710 — — — 1,710 — 1,710

Preferredsharesissued,netofissuecosts(Note19) — 533 — — 533 — 533

Share-basedpaymenttransactions(Note19) 167 — — — 167 — 167

Dividendsdeclared–common(Note19) — — (1,213) — (1,213) — (1,213)

Dividendsdeclared–preferred(Note19) — — (126) — (126) — (126)

TotaltransactionswithshareholdersoftheCompany 1,877 533 (1,339) — 1,071 — 1,071

December31,2019 15,539 2,956 (1,785) 98 16,808 60 16,868(1) AccumulatedOtherComprehensiveIncome("AOCI").



CONSOLIDATEDSTATEMENTSOFCASHFLOWS

FortheyearsendedDecember31 2019

($millions) 2020 (RestatedNote3)

Cashprovidedby(usedin)

Operatingactivities


Adjustmentsfor:

Shareofprofitfromequityaccountedinvestees-operations(Note12) (282) (375)

Impairmentinshareofprofitfromequityaccountedinvestees(Note12) 314 —

Distributionsfromequityaccountedinvestees(Note12) 459 575

Depreciationandamortization 700 507

Impairmentexpense(Note13) 1,776 300

Unrealizedlossoncommodity-relatedderivativefinancialinstruments(Note27) 84 13

Netfinancecosts(Note21) 420 289

Netinterestpaid(Note21) (383) (269)

Incometax(recovery)expense(Note14) (100) 35

Taxespaid (295) (141)

Share-basedcompensationexpense(Note25) 28 66

Share-basedcompensationpayment (45) (50)

Netchangeincontractliabilities (1) (30)

Other (14) (1)

Changeinnon-cashoperatingworkingcapital (93) 106

Cashflowfromoperatingactivities 2,252 2,532

Financingactivities

Bankborrowingsandissuanceofdebt(Note17) 1,581 2,153

Repaymentofloansandborrowings (2,421) (1,866)

Repaymentofleaseliability (94) (68)

Issuanceofmedium-termnotes(Note17) 1,578 2,318

Issuecostsandfinancingfees (11) (14)

Exerciseofstockoptions 88 151

Dividendspaid (1,530) (1,323)

Cashflow(usedin)providedbyfinancingactivities (809) 1,351

Investingactivities

Capitalexpenditures (1,029) (1,645)

Contributionstoequityaccountedinvestees(Note12) (202) (206)

Acquisitions(Note7) — (2,009)

Receiptoffinanceleasepayments 9 —

Interestpaidduringconstruction(Note21) (46) (42)

Advancestorelatedparties (32) (63)

Changesinnon-cashinvestingworkingcapitalandother (183) 55

Cashflowusedininvestingactivities (1,483) (3,910)

Changeincashandcashequivalents (40) (27)

Effectofmovementinexchangeratesoncashheld (8) (1)

Cashandcashequivalents,beginningofperiod 129 157

Cashandcashequivalents,endofperiod 81 129



NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTS

1.REPORTINGENTITY

PembinaPipelineCorporation("Pembina"orthe"Company")isaCalgary-based,leadingtransportationandmidstream

serviceproviderservingNorthAmerica'senergyindustry.Theconsolidatedfinancialstatementsincludetheaccountsof

Pembina,itssubsidiarycompanies,partnershipsandanyinvestmentsinassociatesandjointarrangementsasatandforthe

yearendedDecember31,2020.

Pembinaownsanintegratedsystemofpipelinesthattransportvarioushydrocarbonliquidsandnaturalgasproducts

producedprimarilyinwesternCanada.Pembinaalsoownsgasgatheringandprocessingfacilitiesandanoilandnaturalgas

liquidsinfrastructure,storageandlogisticsbusiness;andisgrowinganexportterminalsbusiness.Pembina'sintegratedassets

andcommercialoperationsalongthemajorityofthehydrocarbonvaluechainallowittoofferafullspectrumofmidstream

andmarketingservicestotheenergysector.

2.BASISOFPREPARATION

a.BasisofMeasurementandStatementofCompliance

Theconsolidatedfinancialstatementshavebeenpreparedonahistoricalcostbasiswithsomeexceptions,asdetailedinthe

accountingpoliciessetoutbelowinaccordancewithInternationalFinancialReportingStandards("IFRS"),asissuedbythe

InternationalAccountingStandardsBoard("IASB").ExceptforthechangesdescribedinNote3,theseaccountingpolicieshave

beenappliedconsistentlyforallperiodspresentedintheseconsolidatedfinancialstatements.

Certaininsignificantcomparativeamountshavebeenreclassifiedtoconformtothepresentationadoptedinthecurrentyear.

TheseconsolidatedfinancialstatementswereauthorizedforissuebyPembina'sBoardofDirectorsonNovember18,2021.

b.FunctionalandPresentationCurrency

TheconsolidatedfinancialstatementsarepresentedinCanadiandollars.AllfinancialinformationpresentedinCanadian

dollarshasbeendisclosedinmillions,exceptwherenoted.Theassetsandliabilitiesofsubsidiaries,andinvestmentsinequity

accountedinvestees,whosefunctionalcurrenciesareotherthanCanadiandollarsaretranslatedintoCanadiandollarsatthe

foreignexchangerateatthebalancesheetdate,whilerevenuesandexpensesofsuchsubsidiariesaretranslatedusing

averagemonthlyforeignexchangerates,whichapproximatetheforeignexchangeratesonthedatesofthetransactions.

Foreignexchangedifferencesarisingontranslationofsubsidiariesandinvestmentsinequityaccountedinvesteeswitha

functionalcurrencyotherthantheCanadiandollarareincludedinothercomprehensiveincome.

c.UseofEstimatesandJudgments

ThepreparationoftheConsolidatedFinancialStatementsinconformitywithIFRSrequiresmanagementtomakejudgments,

estimatesandassumptionsthatarebasedonthefactsandcircumstancesandestimatesatthedateoftheConsolidated

FinancialStatementsandaffecttheapplicationofaccountingpoliciesandthereportedamountsofassets,liabilities,income

andexpenses.Actualresultsmaydifferfromtheseestimates.

Judgments,estimatesandunderlyingassumptionsarereviewedonanongoingbasis.Revisionstoaccountingestimatesare

recognizedintheperiodinwhichtheestimatesarerevisedandinanyfutureperiodsaffected.



FollowingtheWorldHealthOrganizationdeclaringtheCOVID-19outbreaktobeapandemic,manygovernmentshave

imposedrestrictionsonindividualsandbusinesses,resultinginasignificantslowdownoftheglobaleconomy.Whilethese

restrictionshavebeenrelaxedincertainjurisdictions,aresurgenceofCOVID-19cases(includingcasesresultingfromvariants

oftheCOVID-19virus)incertaingeographicareasandtheriskthatthiscouldoccurinotherareashascausedgovernmentsin

certainjurisdictionstosustainand,insomecases,re-imposerestrictions.Inaddition,whilevaccinesarebeginningtobe

distributed,thereisongoinguncertaintyastothetiming,levelofadoption,durationofefficacyandoveralleffectivenessof

thevaccine,includingagainstvariantsoftheCOVID-19virus.Asaresult,thereremainssignificantuncertaintyastotheextent

anddurationoftheglobaleconomicslowdown.Thisuncertaintyhascreatedvolatilityinassetandcommodityprices,

currencyexchangeratesandamarkeddeclineinlong-terminterestrates.Inaddition,theresultingdecreaseindemandfor

crudeoilhasresultedinadeclineinglobalcrudeoilprices.Managementappliedjudgmentandwillcontinuetoassessthe

situationindeterminingtheimpactofthesignificantuncertaintiescreatedbytheseeventsandconditionsonthecarrying

amountsofassetsandliabilitiesintheConsolidatedFinancialStatements.

ThefollowingjudgmentandestimationuncertaintiesarethosemanagementconsidersmaterialtotheConsolidatedFinancial

Statements:

Judgments


Businesscombinationsareaccountedforusingtheacquisitionmethodofaccounting.Thedeterminationoffairvalueoften

requiresmanagementtomakejudgmentsaboutfuturepossibleevents.Theassumptionswithrespecttoleaseidentification,

classificationandmeasurement,thefairvalueofpropertyplantandequipment,intangibleassets,decommissioning

provisionsandcontractliabilitiesacquired,aswellasthedeterminationofdeferredtaxes,generallyrequirethemost

judgment.

(ii)DepreciationandAmortization

Depreciationandamortizationofproperty,plantandequipmentandintangibleassetsarebasedonmanagement'sjudgment

ofthemostappropriatemethodtoreflectthepatternofanasset'sfutureeconomicbenefitexpectedtobeconsumedby

Pembina.Amongotherfactors,thesejudgmentsarebasedonindustrystandardsandhistoricalexperience.

(iii)Impairment

Assessmentofimpairmentofnon-financialassetsisbasedonmanagement'sjudgmentofwhetherornoteventsorchangesin

circumstancesindicatethatthecarryingvalueofanasset,investment,cashgeneratingunit("CGU")orgroupofCGUsexceeds

itsrecoverableamount.ThedeterminationofaCGUisbasedonmanagement'sjudgmentandisanassessmentofthe

smallestgroupofassetsthatgeneratecashinflowsindependentlyofotherassets.Inaddition,managementappliesjudgment

toassigngoodwillacquiredaspartofabusinesscombinationtotheCGUorgroupofCGUsthatisexpectedtobenefitfrom

thesynergiesofthebusinesscombinationforpurposesofimpairmenttesting.Whenanimpairmenttestisperformed,the

carryingvalueofaCGUorgroupofCGUsiscomparedtoitsrecoverableamount,definedasthegreateroffairvaluelesscosts

ofdisposalandvalueinuse.Assuch,theassetcompositionofaCGUorgroupofCGUsdirectlyimpactsboththecarrying

valueandrecoverabilityoftheassetsincludedtherein.

(iv)AssessmentofJointControlOverJointArrangements

ThedeterminationofjointcontrolrequiresjudgmentabouttheinfluencePembinahasoverthefinancialandoperating

decisionsofanarrangementandtheextentofthebenefitsitobtainsbasedonthefactsandcircumstancesofthe

arrangementduringthereportingperiod.Jointcontrolexistswhendecisionsabouttherelevantactivitiesrequirethe

unanimousconsentofthepartiesthatcontrolthearrangementcollectively.Ownershippercentagealonemaynotbea

determinantofjointcontrol.


(v)PatternofRevenueRecognition

Thepatternofrevenuerecognitionisimpactedbymanagement'sjudgmentsastothenatureofPembina'sperformance

obligations,theamountofconsiderationallocatedtoperformanceobligationsthatarenotsoldonastand-alonebasis,the

valuationofmaterialrightsandthetimingofwhenthoseperformanceobligationshavebeensatisfied.

(vi)Leases

Managementappliesjudgmenttodeterminewhetheracontractis,orcontains,aleasefrombothalesseeandlessor

perspective.Thisassessmentisbasedonwhetherthecontractconveysarighttocontroltheuseofanidentifiedassetfora

periodoftimeinexchangeforconsideration.Keyjudgmentsincludewhetheracontractidentifiesanasset(orportionofan

asset),whetherthelesseeobtainssubstantiallyalltheeconomicbenefitsoftheassetoverthecontracttermandwhetherthe

lesseehastherighttodirecttheasset'suse.Judgmentisalsoappliedindeterminingtherateusedtodiscountthelease

payments.

Estimates


Estimatesoffuturecashflows,forecastprices,interestrates,discountrates,cost,marketvaluesandusefullivesaremadein

determiningthefairvalueofassetsacquiredandliabilitiesassumed.Changesinanyoftheassumptionsorestimatesusedin

determiningthefairvalueofacquiredassetsandliabilitiescouldimpacttheamountsassignedtoassets,liabilities,intangible

assets,goodwillanddeferredtaxesinthepurchasepriceequation.Futureearningscanbeaffectedasaresultofchangesin

futuredepreciationandamortization,assetorgoodwillimpairment.

(ii)ProvisionsandContingencies

Managementusesjudgmentindeterminingthelikelihoodofrealizationofcontingentassetsandliabilitiestodeterminethe

outcomeofcontingencies.Provisionsrecognizedarebasedonmanagement'sbestestimateofthetiming,scopeandamount

ofexpectedfuturecashoutflowstosettletheobligation.

Basedonthelong-termnatureofthedecommissioningprovision,themostsignificantuncertaintiesinestimatingthe

provisionarethedeterminationofwhetherapresentobligationexists,thediscountandinflationratesused,thecoststhat

willbeincurredandthetimingofwhenthesecostswilloccur.

(iii)DeferredTaxes

Thecalculationofthedeferredtaxassetorliabilityisbasedonassumptionsaboutthetimingofmanytaxableeventsandthe

enactedorsubstantivelyenactedratesanticipatedtobeapplicabletoincomeintheyearsinwhichtemporarydifferencesare

expectedtoberealizedorreversed.Deferredincometaxassetsarerecognizedtotheextentthatitisprobablethatthe

deductibletemporarydifferenceswillberecoverableinfutureperiods.Theassessmentoffuturerecoverabilityinvolves

significantestimatestobemadebymanagement.

(iv)DepreciationandAmortization

Estimatedusefullivesofproperty,plantandequipmentandintangibleassetsarebasedonmanagement'sassumptionsand

estimatesofthephysicalusefullivesoftheassets,theeconomiclives,whichmaybeassociatedwiththereservelivesand

commoditytypeoftheproductionarea,inadditiontotheestimatedresidualvalue.

(v)ImpairmentofNon-FinancialAssets

IndeterminingtherecoverableamountofaCGU,agroupofCGUsoranindividualasset,managementusesitsbestestimates

offuturecashflows,andassessesdiscountratestoreflectmanagement'sbestestimateofaratethatreflectsacurrent

marketassessmentofthetimevalueofmoneyandthespecificrisksassociatedwiththeunderlyingassetsandcashflows.


(vi)ImpairmentofFinancialAssets

Themeasurementoffinancialassetscarriedatamortizedcostincludesmanagement'sestimatesregardingtheexpected

creditlossesthatwillberealizedonthesefinancialassets.

(vii)RevenuefromContractswithCustomers

Inestimatingthecontractvalue,managementmakesassessmentsastowhethervariableconsiderationisconstrainedornot

reasonablyestimable,suchthatanamountorportionofanamountcannotbeincludedintheestimateofthecontractvalue.

Management'sestimatesofthelikelihoodofacustomer'sabilitytouseoutstandingmake-uprightsmayimpactthetimingof

revenuerecognition.Inaddition,indeterminingtheamountofconsiderationtobeallocatedtoperformanceobligationsthat

arenotsoldonastand-alonebasis,managementestimatesthestand-alonesellingpriceofeachperformanceobligation

underthecontract,takingintoconsiderationthelocationandvolumeofgoodsorservicesbeingprovided,themarket

environment,andcustomerspecificconsiderations.

(viii)FairValueofFinancialInstruments

ForLevel2valuedfinancialinstruments,managementmakesassumptionsandestimatesvaluebasedonobservableinputs

suchasquotedforwardprices,timevalueandvolatilityfactors.ForLevel3valuedfinancialinstruments,managementuses

estimatesoffinancialforecasts,expectedcashflowsandriskadjusteddiscountratestomeasurefairvalue.

(ix)EmployeeBenefitObligations

AnactuarialvaluationispreparedtomeasurePembina'snetemployeebenefitobligationsusingmanagement'sbest

estimateswithrespecttolongevity,discountandinflationrates,compensationincreases,marketreturnsonplanassets,

retirementandterminationrates.

(x)Leases

Inmeasuringitsleaseliabilities,managementmakesassessmentsofthestand-alonesellingpricesofeachleaseandnon-lease

componentforthepurposesofallocatingconsiderationtoeachcomponent.Managementappliesitsbestestimatewith

respecttothelikelihoodofrenewal,extensionandterminationoptionexerciseindeterminingtheleaseterm.

3.CHANGESINACCOUNTINGPOLICIES&RESTATEMENT

Voluntarychangeinaccountingpolicy

Pembinare-assesseditspolicyforthemeasurementofitsdecommissioningprovision.Previously,Pembina's

decommissioningprovisionwasmeasuredatthepresentvalueoftheexpectedcoststosettletheobligationsusingarisk-free

interestratebasedontheGovernmentofCanada'sbenchmarklong-termbondyield.EffectiveDecember31,2020,Pembina

electedtochangeitspolicyforthemeasurementofitsdecommissioningobligationstoutilizeacredit-adjustedrisk-free

interestrate.Asaresultofthischangeinpolicy,Pembina'sdecommissioningprovisionisnowmeasuredusingarisk-free

interestratebasedontheGovernmentofCanada'sbenchmarklong-termbondyield,adjustedforPembina'screditrisk.The

useofacredit-adjustedrisk-freerateresultsinreliableandmorerelevantinformationforthereadersoftheCompany's

ConsolidatedFinancialStatementsasthismethodologyresultsinamoreaccuraterepresentationofthevalueatwhichsuch

liabilitiescouldbetransferredtoathirdparty,providesabetterindicationoftheriskassociatedwithsuchobligations,and

increasesthecomparabilityofPembina'sfinancialstatementstothoseofitspeers.

Managementhasappliedthechangeinaccountingpolicyretrospectively.TheConsolidatedFinancialStatementshavebeen

restatedtoreflectadjustmentsmadeasaresultofthischangeinaccountingpolicy.Thefollowingtablespresenttheimpacts

ofthechangeinaccountingpolicyfordecommissioningprovisionstothestatementoffinancialposition,thestatementof

earnings(loss)andcomprehensiveincome(loss),andthestatementofcashflows,foreachofthelineitemsaffected.


i. ImpactsontheConsolidatedStatementsofFinancialPosition

Asat December31,2020 December31,2019 January1,2019

($millions) Policychange Policychange Policychange

Assets

Property,plantandequipment (546) (372) (304)

Investmentsinequityaccountedinvestees 24 20 15

Right-of-useassets (51) (39) —

Advancestorelatedpartiesandotherassets (7) (7) (7)

Totalassets (580) (398) (296)

Liabilities

Decommissioningprovision (734) (527) (411)

Deferredtaxliabilities 37 31 32

Totalliabilities (697) (496) (379)

Equity

Deficit 117 98 83

TotalequityattributabletoShareholders 117 98 83

AreconciliationforeachofthelineitemsaffectedintherestatedConsolidatedStatementsofFinancialPositionispresented

inNote4.

ii. ReconciliationoftheConsolidatedStatementsofEarnings(Loss)andComprehensiveIncome(Loss)



2020 2019


Costofsales (18) 5,187 (4) 5,183


Grossprofit 22 2,433 9 2,442

Netfinancecosts (3) 294 (5) 289

Earnings(loss)beforeincometax 25 1,528 14 1,542

Deferredtax(recovery)expense 6 (174) (1) (175)

Earnings(loss)attributabletoshareholders 19 1,492 15 1,507

Totalcomprehensiveincome(loss)attributabletoshareholders 19 1,273 15 1,288

Earnings(loss)attributabletocommonshareholders,netofpreferredsharedividends 19 1,361 15 1,376

Earnings(loss)percommonshare-basic 0.04 2.66 0.03 2.69

Earnings(loss)percommonshare-diluted 0.04 2.65 0.03 2.68

iii. ReconciliationoftheConsolidatedStatementofCashFlows


($millions)

2020 2019


Earnings(loss) 19 1,492 15 1,507

Shareofprofitfromequityaccountedinvestees (4) (370) (5) (375)

Adjustmentsfordepreciationandamortization (18) 511 (4) 507

Adjustmentsfornetfinancecosts (3) 294 (5) 289

Adjustmentsforincometaxexpense 6 36 (1) 35

Cashflowfromoperatingactivities — 2,532 — 2,532


Restatementofrevenueandcostofgoodssold

Duringthethirdquarterof2021,PembinaidentifiedcertaincontracttypesthatwererecordedincorrectlywithinMarketing&

NewVentures.Revenueandcostofgoodssoldassociatedwiththecontractswererecordedonagrossbasisbutshouldhave

beenrecordedonanetbasis.Asaresult,Pembinarestatedits2020ConsolidatedStatementsofEarnings(Loss)and

ComprehensiveIncome(Loss)andtheassociatedcomparativeperiodsbydecreasingrevenueandcostofgoodssold,withno

impacttoearnings,cashflowsorfinancialposition.

i. ReconciliationoftheConsolidatedStatementsofEarnings(Loss)andComprehensiveIncome(Loss)



2020 2019

Previouslyreported


Previouslyreported


Revenue 6,202 (249) 5,953 7,230 (858) 6,372

Costofsales 4,132 (249) 3,883 5,183 (858) 4,325

Grossprofit 2,008 — 2,008 2,442 — 2,442

Earnings(loss)percommonshare-basic 0.86 — 0.86 2.69 — 2.69

Earnings(loss)percommonshare-diluted 0.86 — 0.86 2.68 — 2.68

4.CONSOLIDATEDRESTATEMENTOFCOMPARATIVEPERIODSTATEMENTOFFINANCIALPOSITION

ThefollowingtablepresentsthecombinedimpactontheCompany'sConsolidatedStatementofFinancialPositionofthe

changeinaccountingpolicyfordecommissioningprovisionspresentedinNote3,andtheacquisitionadjustmentsrelatedto

thefinalizationofthepurchasepriceallocationpresentedinNote7.

December31,2019 January1,2019

Accounting Accounting

policychange Acquisition policychange

Asat Previously adjustments adjustments Previously adjustments

($millions) reported (Note3) (Note7) Restated reported (Note3) Restated

Assets

Tradereceivablesandother 692 — 2 694 605 — 605

Property,plantandequipment 18,775 (372) (41) 18,362 14,712 (304) 14,408

Intangibleassetsandgoodwill 6,429 — 15 6,444 4,409 — 4,409

Investmentsinequityaccountedinvestees 5,954 20 — 5,974 6,368 15 6,383

Right-of-useassets 822 (39) (92) 691 427 — 427

Financeleasereceivable 29 — 116 145 — — —

Advancestorelatedpartiesandotherassets 157 (7) — 150 177 (7) 170

Totalassets 33,153 (398) — 32,755 27,107 (296) 26,811

Liabilities

Tradepayablesandother 1,013 — (8) 1,005 796 — 796

Decommissioningprovision 864 (527) — 337 569 (411) 158

Deferredtaxliabilities 2,906 31 8 2,945 2,782 32 2,814

Totalliabilities 16,383 (496) — 15,887 12,681 (379) 12,302

Equity

Deficit (1,883) 98 — (1,785) (2,036) 83 (1,953)

Totalequity 16,770 98 — 16,868 14,426 83 14,509


5.SIGNIFICANTACCOUNTINGPOLICIES

TheaccountingpoliciesassetoutbelowhavebeenappliedconsistentlytoallperiodspresentedintheseConsolidated


a.BasisofConsolidation

i)BusinessCombinations

Pembinameasuresgoodwillasthefairvalueoftheconsiderationtransferredincludingtherecognizedamountofanynon-

controllinginterestintheacquiree,lessthefairvalueoftheidentifiableassetsacquiredandliabilitiesassumed,allmeasured

asoftheacquisitiondate.Whentheexcessisnegative,abargainpurchasegainisrecognizedimmediatelyinearnings.

Non-controllinginterestsrepresentexistingoutsideownedequityinterestsinanacquiredsubsidiary.Thenon-controlling

interestswererecognizedatfairvalueontheacquisitiondateandarepresentedasaseparatecomponentofequity.The

equityinterestsbearconditionalnon-discretionarydistributionsandwillcontinuetobeheldasanon-controllinginterestin

equityattheiracquisitiondatefairvalueuntilderecognition,eitherwhentheconditionsaremetforreclassificationfrom

equitytofinancialliabilities,orwhentheequityinterestsarecancelledoronalossofcontroloftherelevantsubsidiary.

Transactioncosts,otherthanthoseassociatedwiththeissueofdebtorequitysecurities,thatPembinaincursinconnection

withabusinesscombinationareexpensedasincurred.

ii)Subsidiaries

Subsidiariesareentities,includingunincorporatedentitiessuchaspartnerships,controlledbyPembina.Thefinancialresults

ofsubsidiariesareincludedintheconsolidatedfinancialstatementsfromthedatethatcontrolcommencesuntilthedatethat

controlceases.TheaccountingpoliciesofsubsidiariesarealignedwiththepoliciesadoptedbyPembina.

ChangesinPembina'sownershipinterestinsubsidiariesthatdonotresultinalossofcontrolareaccountedforasequity

transactions.Noadjustmentsaremadetogoodwillandnogainorlossisrecognizedinearnings.

iii)JointArrangements

JointarrangementsrepresentactivitieswherePembinahasjointcontrolestablishedbyacontractualagreement.Jointcontrol

requiresunanimousconsentfortherelevantfinancialandoperationaldecisions.Ajointarrangementiseitherajoint

operation,wherebythepartieshaverightstotheassetsandobligationsfortheliabilities,orajointventure,wherebythe

partieshaverightstothenetassets.

Forajointoperation,theconsolidatedfinancialstatementsincludePembina'sproportionateshareoftheassets,liabilities,

revenues,expensesandcashflowsofthearrangementwithitemsofasimilarnatureonaline-by-linebasis,fromthedate

thatjointcontrolcommencesuntilthedatethatjointcontrolceases.

Jointventuresareaccountedforusingtheequitymethodofaccountingandareinitiallyrecognizedatcost,orfairvalueif

acquiredaspartofabusinesscombination.Jointventuresareadjustedthereafterforthepost-acquisitionchangeinthe

Company'sshareoftheequityaccountedinvestment'snetassets.Pembina'sconsolidatedfinancialstatementsincludeits

shareoftheequityaccountedinvestment'sprofitorlossandothercomprehensiveincome,orincomeequaltopreferred

distributionsforcertainpreferredshareinterestsinequityaccountedinvestees,untilthedatethatjointcontrolceases.When

Pembina'sshareoflossesexceedsitsinterestinanequityaccountedinvestee,thecarryingamountofthatinterest,including

anylong-terminvestments,isreducedtonil,andtherecognitionoffurtherlossesisdiscontinuedexcepttotheextentthat

Pembinahasanobligationorhasmadepaymentsonbehalfoftheinvestee.Distributionsfromandcontributionsto

investmentsinequityaccountedinvesteesarerecognizedwhenreceivedorpaid.

AcquisitionofanincrementalownershipinajointarrangementwherePembinamaintainsjointcontrolisrecordedatcostor

fairvalueifacquiredaspartofabusinesscombination.WherePembinahasapartialdisposal,includingadeemeddisposal,of

ajointarrangementandmaintainsjointcontrol,theresultinggainsorlossesarerecordedinearningsatthetimeofdisposal.


iv)TransactionsEliminatedonConsolidation

Balancesandtransactions,andanyrevenueandexpensesarisingfromtransactionwithorbetweensubsidiariesare

eliminatedinpreparingtheconsolidatedfinancialstatements.Gainsarisingfromtransactionswithinvestmentsinequity

accountedinvesteesareeliminatedagainsttheinvestmenttotheextentofPembina'sinterestintheinvestee.Lossesare

eliminatedinthesamewayasunrealizedgains,butonlytotheextentthatthereisnoevidenceofimpairment.

v)ForeignCurrency

TransactionsinforeigncurrenciesaretranslatedtoPembina'sfunctionalcurrencyatexchangeratesatthedatesofthe

transactions.Monetaryassetsandliabilitiesdenominatedinforeigncurrenciesatthereportingdateareretranslatedto

Pembina'sfunctionalcurrencyattheexchangerateatthatdate,withexchangedifferencesrecognizedinearnings.

Non-monetaryassetsandliabilitiesdenominatedinforeigncurrenciesthataremeasuredatfairvalueareretranslatedtothe

functionalcurrencyattheexchangerateatthedatethatthefairvaluewasdetermined.Non-monetaryitemsthatare

measuredathistoricalcostinaforeigncurrencyaretranslatedusingtheexchangerateatthedateofthetransaction.

Theassetsandliabilitiesofsubsidiaries,andinvestmentsinequityaccountedinvestees,whosefunctionalcurrenciesareother

thanCanadiandollarsaretranslatedintoCanadiandollarsattheforeignexchangerateatthebalancesheetdate,while

revenuesandexpensesofsuchsubsidiariesaretranslatedusingaveragemonthlyforeignexchangerates,whichapproximate

theforeignexchangeratesonthedatesofthetransactions.Foreignexchangedifferencesarisingontranslationofsubsidiaries

andinvestmentsinequityaccountedinvesteeswithafunctionalcurrencyotherthantheCanadiandollarareincludedinother

comprehensiveincome.

b.CashandCashEquivalents

Cashandcashequivalentscomprisecashbalances,calldepositsandshort-terminvestmentswithoriginalmaturitiesofninety

daysorless,andareusedbyPembinainthemanagementofitsshort-termcommitments.

c.Inventories

Inventoriesaremeasuredatthelowerofcostandnetrealizablevalueandconsistprimarilyofcrudeoil,naturalgasliquids

("NGL")andspareparts.Thecostofinventoriesisdeterminedusingtheweightedaveragecostingmethodandincludesdirect

purchasecostsandwhenapplicable,costsofproduction,extraction,fractionation,andtransportation.Netrealizablevalueis

theestimatedsellingpriceintheordinarycourseofbusinesslesstheestimatedsellingcosts.Allchangesinthevalueof

inventoriesarereflectedinearnings.

d.FinancialInstruments

Financialassetsandliabilitiesareoffsetandthenetamountpresentedintheconsolidatedstatementoffinancialposition

when,andonlywhen,Pembinahasalegalrighttooffsettheamountsandintendseithertosettleonanetbasisortorealize

theassetandsettletheliabilitysimultaneously.

i)Non-DerivativeFinancialAssets

Pembinainitiallyrecognizesloans,receivables,advancestorelatedpartiesanddepositsonthedatethattheyareoriginated.

AllotherfinancialassetsarerecognizedonthetradedateatwhichPembinabecomesapartytothecontractualprovisionsof

theinstrument.

Pembinaderecognizesafinancialassetwhenthecontractualrightstothecashflowsfromtheassetexpire,orittransfersthe

rightstoreceivethecontractualcashflowsonthefinancialassetinatransactioninwhichsubstantiallyalltherisksand

rewardsofownershipofthefinancialassetaretransferred.Anyinterestintransferredfinancialassetsthatiscreatedor

retainedbyPembinaisrecognizedasaseparateassetorliability.Onderecognition,thedifferencebetweenthecarrying

amountofthefinancialassetandtheconsiderationreceivedisrecognizedinearnings.


Pembinaclassifiesnon-derivativefinancialassetsintothefollowingcategories:

FinancialAssetsatAmortizedCost

Afinancialassetisclassifiedinthiscategoryiftheassetisheldwithinabusinessmodelwhoseobjectiveistocollect

contractualcashflowsonspecifieddatesthataresolelypaymentsofprincipalandinterest.Atinitialrecognition,financial

assetsatamortizedcostarerecognizedatfairvalueplusdirectlyattributabletransactioncosts.Subsequenttoinitial

recognition,thesefinancialassetsarerecordedatamortizedcostusingtheeffectiveinterestmethodlessanyimpairmentloss

allowances.

FinancialAssetsatFairValueThroughOtherComprehensiveIncome

Afinancialassetisclassifiedinthiscategoryiftheassetisheldwithinabusinessmodelwhoseobjectiveismetbyboth

collectingcontractualcashflowsandsellingfinancialassets.Pembinadidnothaveanyfinancialassetsclassifiedasfairvalue

throughothercomprehensiveincomeduringtheyearscoveredinthesefinancialstatements.

FinancialAssetsatFairValueThroughEarnings

Afinancialassetisclassifiedinthiscategoryifitisnotclassifiedasafinancialassetatamortizedcostorafinancialassetatfair

valuethroughothercomprehensiveincome,oritisanequityinstrumentdesignatedassuchoninitialrecognition.Atinitial

recognition,andsubsequently,thesefinancialassetsarerecognizedatfairvalue.

ii)Non-DerivativeFinancialLiabilities

PembinainitiallyrecognizesfinancialliabilitiesonthetradedateatwhichPembinabecomesapartytothecontractual

provisionsoftheinstrument.

Non-derivativefinancialliabilitiesarerecognizedinitiallyatfairvalueplusanydirectlyattributabletransactioncosts.

Subsequenttoinitialrecognitionthesefinancialliabilitiesaremeasuredatamortizedcostusingtheeffectiveinterestmethod.

Pembinaderecognizesafinancialliabilitywhenitscontractualobligationsaredischarged,cancelledorexpire.On

derecognition,thedifferencebetweenthecarryingvalueoftheliabilityandtheconsiderationpaid,includinganynon-cash

assetstransferredorliabilitiesassumed,isrecognizedinearnings.

Pembinarecordsamodificationorexchangeofanexistingliabilityasaderecognitionofthefinancialliabilityifthetermsare

substantiallydifferent,resultinginadifferenceofmorethan10percentwhencomparingthepresentvalueoftheremaining

cashflowsoftheexistingliabilitytothepresentvalueofthediscountedcashflowsunderthenewtermsusingtheoriginal

effectiveinterestrate.

Ifamodificationtoanexistingliabilitycausesarevisiontotheestimatedpaymentsoftheliabilitybutisnottreatedasa

derecognition,Pembinaadjuststhegrosscarryingamountoftheliabilitytothepresentvalueoftheestimatedcontractual

cashflowsusingtheinstrument’soriginaleffectiveinterestrate,withthedifferencerecordedinearnings.

Pembina'snon-derivativefinancialliabilitiesarecomprisedofthefollowing:bankoverdrafts,tradepayablesandaccrued

liabilities,taxespayable,dividendspayable,loansandborrowings,leaseliabilitiesandotherliabilities.

BankoverdraftsthatarerepayableondemandandformanintegralpartofPembina'scashmanagementareincludedasa

componentofcashandcashequivalentsforthepurposeoftheconsolidatedstatementsofcashflows.

iii)CommonShareCapital

Commonsharesareclassifiedasequity.Incrementalcostsdirectlyattributabletotheissueofcommonsharesandshare

optionsarerecognizedasadeductionfromequity,netofanytaxeffects.


iv)PreferredShareCapital

Preferredsharesareclassifiedasequitybecausetheybeardiscretionarydividendsanddonotcontainanyobligationsto

delivercashorotherfinancialassets.DiscretionarydividendsarerecognizedasequitydistributionsonapprovalbyPembina's

BoardofDirectors.Incrementalcostsdirectlyattributabletotheissueofpreferredsharesarerecognizedasadeductionfrom

equity,netofanytaxeffects.

v)DerivativeFinancialInstrumentsandHedgeAccounting

Pembinaholdsderivativefinancialinstrumentstomanageitsinterestrate,commodity,powercostsandforeignexchangerisk

exposures.Derivativesarerecognizedinitiallyatfairvalue.Subsequenttoinitialrecognition,derivativesaremeasuredatfair

valuewithchangesrecognizedimmediatelyinearnings,unlesshedgeaccountingisapplied.

Pembinaapplieshedgeaccountingtocertainfinancialinstrumentsthatqualifyforandaredesignatedforhedgeaccounting

treatment.Atinceptionofadesignatedhedgingrelationship,formaldocumentationispreparedandincludestherisk

managementobjectiveandstrategyforundertakingthehedge,identificationofthehedgeditemandthehedginginstrument,

thenatureoftheriskbeinghedgedandhowPembinawillassessthehedginginstrument'seffectivenessinoffsettingthe

exposuretochangesinthehedgeditem.

Forderivativesthataredesignatedandqualifiedcashflowhedges,theeffectiveportionofchangesinfairvalueis

accumulatedinothercomprehensiveincome.Theamountaccumulatedisreclassifiedtoearningsinthesameperiodor

periodsduringwhichthehedgedexpectedfuturecashflowsoccur.Anyineffectiveportionofchangesinfairvalueofhedges

arerecordedinearnings.

Fornon-derivativefinancialliabilitiesdesignatedashedginginstrumentsinahedgeofthenetinvestmentinforeign

operations,theeffectiveportionofforeignexchangegainsandlossesarisingontranslationofthefinancialliabilityis

recognizedinothercomprehensiveincome.Anyineffectiveportionoftheforeignexchangegainsandlossesarisingfromthe

translationofthefinancialliabilityisrecognizedimmediatelyinearnings.Theamountaccumulatedinothercomprehensive

incomeisreclassifiedtoearningsondisposaloftheforeignoperation.

Hedgeaccountingisdiscontinuedprospectivelywhenthehedgingrelationshipnolongerqualifiesforhedgeaccountingorthe

hedginginstrumentissoldorterminated.

e.Property,PlantandEquipment

i)RecognitionandMeasurement

Itemsofproperty,plantandequipmentaremeasuredinitiallyatcost,unlesstheyareacquiredaspartofabusiness

combinationinwhichcasetheyareinitiallymeasuredatfairvalue.Thereafter,property,plantandequipmentarerecorded

netofaccumulateddepreciationandaccumulatedimpairmentlosses.

Costincludesexpendituresthataredirectlyattributabletotheacquisitionoftheasset.Thecostofself-constructedassets

includesthecostofmaterialsanddirectlabour,anyothercostsdirectlyattributabletobringingtheassetstoaworking

conditionfortheirintendeduse,estimateddecommissioningprovisionsandborrowingcostsonqualifyingassets.

Costmayalsoincludeanygainorlossrealizedonforeigncurrencytransactionsdirectlyattributabletothepurchaseor

constructionofproperty,plantandequipment.Purchasedsoftwarethatisintegraltothefunctionalityoftherelated

equipmentiscapitalizedaspartofthatequipment.

Whenpartsofanitemofproperty,plantandequipmenthavedifferentusefullives,theyareaccountedforasseparate

componentsofproperty,plantandequipment.

Thegainorlossondisposalofanitemofproperty,plantandequipmentisdeterminedbycomparingtheproceedsfrom

disposalwiththecarryingamountofproperty,plantandequipment,andisrecognizedinearnings.


ii)SubsequentCosts

Thecostofreplacingapartofanitemofproperty,plantandequipmentisrecognizedinthecarryingamountoftheitemifit

isprobablethatthefutureeconomicbenefitsembodiedwithinthepartwillflowtoPembina,anditscostcanbemeasured

reliably.Thecarryingamountofthereplacedpartisderecognizedandrecordedasdepreciationexpense.Thecostof

maintenanceandrepairexpensesoftheproperty,plantandequipmentarerecognizedinearningsasincurred.

iii)Depreciation

Depreciationisbasedonthecostofanassetlessitsresidualvalue.Significantcomponentsofindividualassetsareassessed

andifacomponenthasausefullifethatisdifferentfromtheremainderoftheasset,thatcomponentisdepreciated

separately.Landandlinefillarenotdepreciated.

Depreciationisrecognizedinearningsoveranasset'susefullifeonastraightlineordecliningbalancebasis,whichmost

closelyreflectstheexpectedpatternofconsumptionofthefutureeconomicbenefitsembodiedintheasset.Anasset'suseful

lifeisdeterminedasthelowerofitsphysicallifeandeconomiclife.Depreciationcommencesonceanassetisavailablefor

use.

Depreciationmethods,usefullivesandresidualvaluesarereviewedannuallyandadjustedifappropriate.

f.IntangibleAssets

i)Goodwill

Goodwillthatarisesuponacquisitionsisincludedinintangibleassetsandgoodwill.SeeNote5(a)(i)forthepolicyon

measurementofgoodwillatinitialrecognition.

SubsequentMeasurement

Goodwillismeasuredatcostlessaccumulatedimpairmentlosses.

Inrespectofinvestmentsinequityaccountedinvestees,goodwillisincludedinthecarryingamountoftheinvestment,andan

impairmentlossonsuchaninvestmentisallocatedtotheinvestmentandnottoanyasset,includinggoodwill,thatformsthe

carryingamountoftheinvestmentinequityaccountedinvestee.

ii)OtherIntangibleAssets

OtherintangibleassetsacquiredindividuallybyPembinaareinitiallyrecognizedandmeasuredatcost,unlesstheyare

acquiredaspartofabusinesscombinationinwhichcasetheyareinitiallymeasuredatfairvalue.Thereafter,intangibleassets

withfiniteusefullivesarerecordednetofaccumulatedamortizationandaccumulatedimpairmentlosses.

iii)SubsequentExpenditures

Subsequentexpendituresarecapitalizedonlywhentheyincreasethefutureeconomicbenefitsembodiedinthespecificasset

towhichtheyrelate.Allotherexpendituresarerecognizedinearningsasincurred.

iv)Amortization

Amortizationisbasedonthecostofanassetlessitsresidualvalue.

Amortizationisrecognizedinearningsovertheestimatedusefullivesofintangibleassets,otherthangoodwill,fromthedate

thattheyareavailableforuse.Amortizationisincludedincostofsalesandgeneralandadministrativeexpense.

Amortizationmethods,usefullivesandresidualvaluesarereviewedannuallyandadjustedifappropriate.


g.Leases

Aspecificassetisthesubjectofaleaseifthecontractconveystherighttocontroltheuseofthatidentifiedassetforaperiod

oftimeinexchangeforconsideration.Thisdeterminationismadeatinceptionofacontract,andisreassessedwhenthe

termsandconditionsofthecontractareamended.

Atinceptionoronreassessmentofacontractthatcontainsaleasecomponent,Pembinaallocatescontractconsiderationto

theleaseandnon-leasecomponentsonthebasisoftheirrelativestand-aloneprices.Theconsiderationallocatedtothelease

componentsisrecognizedinaccordancewiththepoliciesforlesseeandlessorleases,asdescribedbelow.Theconsideration

allocatedtonon-leasecomponentsisrecognizedinaccordancewithitsnature.

i)Lessee

Leasedassetsarerecognizedasright-of-useassets,withcorrespondingleaseliabilitiesrecognizedonthestatementof

financialpositionattheleasecommencementdate.

Right-of-useassetsareinitiallyrecognizedatcost,whichcomprisestheinitialamountoftheleaseliabilityadjustedforany

leasepaymentsmadeatorbeforethecommencementdate,plusanyinitialdirectcostsincurredandanestimateofcoststo

dismantleandremovetheunderlyingassetandrestorethesiteofanunderlyingassettotheconditionrequiredbytheterms

ofthelease,lessanyleaseincentivesreceived.Right-of-useassetsrecognizedasaresultofbusinesscombinationareinitially

measuredinthesamemanner,plusanadjustmenttoreflectfavourableorunfavourableleasetermscomparedtomarket

terms.Right-of-useassetsaresubsequentlymeasuredatcostlessanyaccumulateddepreciationandaccumulated

impairmentlosses,adjustedforremeasurementsoftheleaseliability.Theright-of-useassetisdepreciatedoverthelesserof

theasset'susefullifeandtheleasetermonastraight-linebasis.

Theleaseliabilityisinitiallymeasuredatthepresentvalueoftheleasepayments,discountedusingtheinterestrateimplicitin

theleaseifreadilydeterminable,orataratePembinawouldberequiredtopaytoborrowoverasimilartermwithasimilar

securitytoobtainanassetofasimilarvaluetotheright-of-useasset.Leasepaymentsinanoptionalrenewalperiodare

includedintheleaseliabilityifPembinaisreasonablycertaintoexercisesuchoption.Theleaseliabilityissubsequently

increasedbyinterestexpenseontheleaseliabilityanddecreasedbyleasepaymentsmade.Interestexpenseisrecordedin

earningsatanamountthatrepresentsaconstantperiodicrateofinterestontheremainingbalanceoftheleaseliability.

Theleaseliabilityisremeasuredwhenthereisachangeinfutureleasepaymentsarisingfromachangeinanindexorrate,a

changeintheestimatedguaranteedresidualvaluetobepaid,orachangeintheassessmentofwhetherapurchaseoption,

extensionoptionorterminationoptionisreasonablycertaintobeexercised.Acorrespondingadjustmentismadetotheright

ofuseassetwhenaliabilityisremeasured,ortheadjustmentisrecordedinearningsiftherightofuseassethasbeen

reducedtozero.

Pembinahaselectedtoapplytherecognitionexemptionsforshort-termandlowvalueleases.Pembinarecognizeslease

paymentsassociatedwiththeseleasesasanexpenseonastraight-linebasisovertheleaseterm.


ii)Lessor

Lessorleasesareclassifiedaseitheroperatingleasesorfinanceleasesaccordingtothesubstanceofthecontract.Leases

transferringsubstantiallyalloftherisksincidentaltoassetownershipareclassifiedasfinanceleases,whileallotherleasesare

classifiedasoperatingleases.Subleasesareclassifiedaseitheroperatingorfinanceleasesinreferencetotheright-of-use

assetarisingfromtheheadlease.

Assetsunderfinanceleasearerecognizedinfinanceleasereceivablesatthevalueofthenetinvestmentinthelease.Thenet

investmentintheleaseismeasuredatthenetpresentvalueofthefutureleasepaymentsandtheunguaranteedresidual

valuesoftheunderlyingassets,discountedusingtheinterestrateimplicitinthelease.Financeincomeisrecognizedoverthe

leaseterminapatternreflectingaconsistentrateofreturnonthefinanceleasereceivable.Financeleaseincomegenerated

fromphysicalassetsinthenormalcourseofoperationsisrecordedasacomponentofrevenue.Allotherfinanceleaseincome

isrecordedinnetfinancecosts.

Leasepaymentsfromoperatingleasesarerecognizedinrevenueoneitherastraight-linebasisorasystematicbasis

representativeofthepatternofeconomicbenefittransfer.

h.Impairment

i)Non-DerivativeFinancialAssets

Impairmentoffinancialassetscarriedatamortizedcostisassessedusingthelifetimeexpectedcreditlossofthefinancial

assetatinitialrecognitionandthroughoutthelifeofthefinancialasset,exceptwherecreditriskhasnotincreased

significantlysinceinitialrecognition,inwhichcaseimpairmentisassessedatthe12monthexpectedcreditlossofthe

financialassetatthereportingdate.

Impairmentlossesarerecognizedinearningsandreflectedasareductionintherelatedfinancialasset.

ii)Non-FinancialAssets

ThecarryingamountsofPembina'snon-financialassets,otherthan:inventory,assetsarisingfromemployeebenefitsand

deferredtaxassets,arereviewedateachreportingdatetodeterminewhetherthereisanyindicationofimpairment.Ifany

suchindicationexists,theasset'srecoverableamountisestimated.

Forgoodwillandintangibleassetsthathaveindefiniteusefullivesorthatarenotyetavailableforuse,therecoverable

amountisestimatedannuallyinconnectionwiththeannualgoodwillimpairmenttest.

Forthepurposeofimpairmenttesting,assetsthatcannotbetestedindividuallyaregroupedtogetherintoCGUs,thesmallest

groupofassetsthatgeneratescashinflowsfromcontinuingusethatarelargelyindependentofthecashinflowsofother

assets.CGUsmayincorporateintegratedassetsfrommultipleoperatingsegments.Forthepurposeofgoodwillimpairment

testing,CGUsareaggregatedtotheoperatingsegmentlevel,whichreflectsthelowestlevelatwhichgoodwillismonitored

formanagementpurposes.GoodwillacquiredinabusinesscombinationisallocatedtoCGUsorgroupsofCGUsthatare

expectedtobenefitfromthesynergiesofthecombination.

Animpairmentlossisrecognizedifthecarryingamountofanasset,CGUorgroupofCGUsexceedsitsestimatedrecoverable

amount.

Therecoverableamountofanasset,CGUorgroupofCGUsisthegreaterofitsvalueinuseanditsfairvaluelesscostsof

disposal.Inassessingtherecoverableamount,theestimatedfuturecashflowsarediscountedtotheirpresentvalueusinga

discountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheasset,CGUor

groupofCGUs.


Pembina'scorporateassetsdonotgenerateseparatecashinflowsandareutilizedbymorethanoneCGU.Corporateassets

areallocatedtoCGUsonareasonableandconsistentbasisandtestedforimpairmentaspartofthetestingoftheCGUto

whichthecorporateassetisallocated.Ifthereisanindicationthatacorporateassetmaybeimpaired,thentherecoverable

amountisdeterminedfortheCGUtowhichthecorporateassethasbeenallocated.

Impairmentlossesarerecognizedinearnings.ImpairmentlossesrecognizedinrespectofaCGU(groupofCGUs)areallocated

firsttoreducethecarryingamountofanygoodwillallocatedtotheCGU(groupofCGUs),andthentoreducethecarrying

amountsoftheotherassetsintheCGU(groupofCGUs)onaproratabasis.

Animpairmentlossinrespectofgoodwillisnotreversed.Inrespectofotherassets,impairmentlossesrecognizedinprior

periodsareassessedateachreportingdateforanyindicationsthatthelosshasdecreasedornolongerexists.Animpairment

lossisreversediftherehasbeenachangeintheestimatesusedtodeterminetherecoverableamount.Animpairmentlossis

reversedonlytotheextentthattheasset'scarryingamountdoesnotexceedthecarryingamountthatwouldhavebeen

determined,netofdepreciationoramortization,ifnoimpairmentlosshadbeenrecognized.

Goodwillthatformspartofthecarryingamountofaninvestmentinanequityaccountedinvesteeisnotrecognized

separately,andthereforeisnottestedforimpairmentseparately.Instead,theentireamountoftheinvestmentistestedfor

impairmentasasingleassetwhenthereisobjectiveevidencethattheequityaccountedinvesteemaybeimpaired,unlessthe

equityaccountedinvesteedoesnotgeneratecashflowsthatarelargelyindependentofthosefromotherassetsoftheentity

inwhichcaseitiscombinedinaCGUwiththerelatedassets.

i.EmployeeBenefits

i)DefinedContributionPlans

Adefinedcontributionplanisapost-employmentbenefitplanunderwhichanentitypaysfixedcontributionsintoaseparate

entityandwillhavenolegalorconstructiveobligationtopayfurtheramounts.Obligationsforcontributionstodefined

contributionpensionplansarerecognizedasanemployeebenefitexpenseinearningsintheperiodsduringwhichservices

arerenderedbyemployees.Prepaidcontributionsarerecognizedasanassettotheextentthatacashrefundorareduction

infuturepaymentsisavailable.

ii)DefinedBenefitPensionPlans

Adefinedbenefitpensionplanisapost-employmentbenefitplanotherthanadefinedcontributionplan.Pembina'snet

obligationinrespectofdefinedbenefitpensionplansiscalculatedseparatelyforeachplanbyestimatingtheamountof

futurebenefitthatemployeeshaveearnedinreturnfortheirserviceinthecurrentandpriorperiods,discountedto

determineitspresentvalue,lessthefairvalueofanyplanassets.Thediscountrateusedtodeterminethepresentvalueis

establishedbyreferencingmarketyieldsonhigh-qualitycorporatebondsonthemeasurementdatewithcashflowsthat

matchthetimingandamountofexpectedbenefits.

Thecalculationisperformed,ataminimum,everythreeyearsbyaqualifiedactuaryusingtheactuarialcostmethod.When

thecalculationresultsinabenefittoPembina,therecognizedassetislimitedtothepresentvalueofeconomicbenefits

availableintheformoffutureexpensespayablefromtheplan,anyfuturerefundsfromtheplanorreductionsinfuture

contributionstotheplan.Tocalculatethepresentvalueofeconomicbenefits,considerationisgiventoanyminimumfunding

requirementsthatapplytoanyplaninPembina.AneconomicbenefitisavailabletoPembinaifitisrealizableduringthelife

oftheplanoronsettlementoftheplanliabilities.

Whenthebenefitsofaplanareimproved,theportionoftheincreasedbenefitrelatingtopastservicebyemployeesis

recognizedinearningsimmediately.

Pembinarecognizesallactuarialgainsandlossesarisingfromdefinedbenefitplansinothercomprehensiveincomeand

expensesrelatedtodefinedbenefitplansinearnings.


Pembinarecognizesgainsorlossesontheterminationorsettlementofadefinedbenefitplanwhentheterminationor

settlementoccurs.Thegainorlossonterminationcomprisesanyresultingchangeinthefairvalueofplanassets,changein

thepresentvalueofdefinedbenefitobligationandanyrelatedactuarialgainsorlossesandpastservicecostthathadnot

previouslybeenrecognized.

iii)Short-TermEmployeeBenefits

Short-termemployeebenefitobligationsaremeasuredonanundiscountedbasisandareexpensedastherelatedserviceis

provided.

AliabilityisrecognizedfortheamountexpectedtobepaidifPembinahasapresentlegalorconstructiveobligationtopay

thisamountasaresultofpastserviceprovidedbytheemployee,andtheobligationcanbeestimatedreliably.

iv)Share-BasedPaymentTransactions

Forequitysettledshare-basedpaymentplans,thefairvalueoftheshare-basedpaymentatgrantdateisrecognizedasan

expense,withacorrespondingincreaseinequity,overtheperiodthattheemployeesunconditionallybecomeentitledtothe

awards.Theamountrecognizedasanexpenseisadjustedtoreflectthenumberofawardsforwhichtherelatedserviceand

non-marketvestingconditionsareexpectedtobemet,suchthattheamountultimatelyrecognizedasanexpenseisbasedon

thenumberofawardsthatmeettherelatedserviceconditionsatthevestingdate.

Forcashsettledshare-basedpaymentplans,thefairvalueoftheamountpayabletoemployeesisrecognizedasanexpense

withacorrespondingincreaseinliabilities,overtheperiodthattheemployeesunconditionallybecomeentitledtopayment.

Theliabilityisremeasuredateachreportingdateandatsettlementdate.Anychangesinthefairvalueoftheliabilityare

recognizedasanexpenseinearnings.

j.Provisions

Aprovisionisrecognizedif,asaresultofapastevent,Pembinahasapresentlegalorconstructiveobligationthatcanbe

estimatedreliably,anditisprobablethatanoutflowofeconomicresourceswillberequiredtosettletheobligation.

Provisionsaremeasuredateachreportingdatebasedonthebestestimateofthesettlementamount.Wheretheeffectofthe

timevalueofmoneyismaterial,provisionsarediscountedatapre-taxratethatreflectscurrentmarketassessmentsofthe

timevalueofmoneyandtherisksspecifictotheliability.Theunwindingofthediscountrateisrecognizedasaccretionin

financecosts.

i)DecommissioningProvision

Pembina'sactivitiesgiverisetocertaindismantling,decommissioning,environmentalreclamationandremediation

obligationsattheendofanasset'seconomiclife.Aprovisionismadefortheestimatedcostofsiterestorationandcapitalized

aspartofthecostoftheunderlyingassettowhichtheprovisionrelates.

Decommissioningobligationsaremeasuredatthepresentvalue,basedonacredit-adjustedrisk-freerate,ofmanagement's

bestestimateofwhatisreasonablyexpectedtobeincurredtosettletheobligationattheendofanasset'seconomiclife.

Subsequenttotheinitialmeasurement,theobligationisadjustedattheendofeachperiodtoreflectthepassageoftime,

changesinthecredit-adjustedrisk-freerateandchangesintheestimatedfuturecashflowsunderlyingtheobligation.The

increaseintheprovisionduetothepassageoftimeisrecognizedasaccretioninfinancecostswhereasincreasesordecreases

duetochangesintheestimatedfuturecashflowsorcreditadjustedrisk-freerateareaddedtoordeductedfromthecostof

therelatedasset.

Decommissioningobligationsassumedinabusinesscombinationareinitiallyrecordedatfairvalueandremeasuredusinga

credit-adjustedrisk-freeratesubsequenttoacquisition.Thisremeasurementisaddedtoordeductedfromthecostofthe

relatedasset.


k.Revenue

i)Take-or-Pay

Pembinaprovidestransportation,gasprocessing,fractionation,terminalling,andstorageservicesundertake-or-pay

contracts.Inatake-or-paycontract,Pembinaisentitledtoaminimumfeeforthefirmservicepromisedtoacustomerover

thecontractperiod,regardlessofactualvolumestransported,processed,terminalled,orstored.Thisminimumfeecanbe

representedasasetfeeforanannualminimumvolume,oranannualminimumrevenuerequirement.Inaddition,these

contractsmayincludevariableconsiderationforoperatingcoststhatareflowthroughtothecustomer.

Pembinasatisfiesitsperformanceobligationsandrecognizesrevenueforservicesundertake-or-paycommitmentswhen

volumesaretransported,processed,terminalled,orstored.Make-uprightsmayarisewhenacustomerdoesnotfulfilltheir

minimumvolumecommitmentinacertainperiod,butisallowedtousethedeliveryofpastorfuturevolumestomeetthis

commitment.Thesemake-uprightsaresubjecttoexpiryandhavevaryingconditionsassociatedwiththem.Whencontract

termsallowacustomertoexercisetheirmake-uprightsusingfirmvolumecommitments,revenueisnotrecognizeduntil

thesemake-uprightsareused,expire,ormanagementdeterminesthatitisremotethattheywillbeutilized.IfPembinabillsa

customerforunusedserviceinanearlierperiodandthecustomerutilizesavailablemake-uprights,Pembinarecordsarefund

liabilityfortheamounttobereturnedtothecustomerthroughanannualadjustmentprocess.Forcontractswherenomake-

uprightsexist,revenueisrecognizedtotake-or-paylevelsoncePembinahasanenforceablerighttopaymentforthetake-or-

payvolumes.Make-uprightsgenerallyexpirewithinacontractyear,andamajorityoftherelatedcontractyearsfollowthe

calendaryear.

Whencustomersaretransporting,processing,terminalling,orstoringvolumesbelowtheirtake-or-paycommitmentsearlyin

acontractyear,andthecustomerhastherighttoexercisemakeuprightsagainstfuturefirmvolumecommitments,the

timingofrevenuerecognitionmaynotbeeventhroughouttheyear.WherePembinahasarighttoinvoicetotake-or-pay

levelsthroughoutthecontractyear,revenueisdeferredandacontractliabilityisrecordedforthevolumesinvoicedthatwere

notutilizedbythecustomer.Oncethecustomerhasuseditsmake-uprightsoritisdeterminedtoberemotethatacustomer

willusethem,thepreviouslydeferredrevenueisrecognized.Intheseinstances,therewillbeadeferralofrevenueinearly

quartersoftheyear,withsubsequentrecognitionoccurringinlaterquartersalthoughthereisnoimpactoncashflows.

Forcertainarrangementswherethecustomerdoesnothavemake-uprights,wherethemake-uprightshavebeen

determinedtobeinsignificant,andforcostofserviceagreements,revenueisrecognizedusingthepracticalexpedientto

recognizerevenueinanamountequaltoPembina'srighttoinvoice.Forthesearrangements,theconsiderationPembinais

entitledtoinvoiceineachperiodisrepresentativeofthevalueprovidedtothecustomer.

Whenup-frontpaymentsornon-cashconsiderationisreceivedinexchangeforfutureservicestobeperformed,revenueis

deferredasacontractliabilityandrecognizedovertheperiodtheperformanceobligationisexpectedtobesatisfied.Non-

cashconsiderationismeasuredatthefairvalueofthenon-cashconsiderationreceived.

ii)Fee-for-Service

Fee-for-servicerevenueincludesfirmcontractedrevenuethatisnotsubjecttotake-or-paycommitmentsandinterruptible

revenue.Pembinasatisfiesitsperformanceobligationsfortransportation,gasprocessing,fractionation,terminalling,and

storageasvolumesofproductaretransported,processed,orstored.Revenueisbasedonacontractedfeeandconsideration

isvariablewithrespecttovolumes.PaymentisdueinthemonthfollowingPembina'sprovisionofservice.

iii)ProductSales

Pembinasatisfiesitsperformanceobligationonproductsalesatthetimelegaltitletotheproductistransferredtothe

customer.Certaincommoditybuy/sellarrangementswherecontroloftheproducthasnottransferredtoPembinaare

recognizedonanetbasis.


Forproductsales,revenueisrecognizedusingthepracticalexpedienttorecognizerevenueinanamountequaltoPembina's

righttoinvoiceastheconsiderationPembinaisentitledtoinvoiceineachperiodisrepresentativeofthevalueprovidedto

thecustomer.

l.GovernmentGrants

GovernmentgrantsarerecognizedinearningsasotherincomeonasystematicbasisovertheperiodsinwhichPembina

recognizesexpensesfortherelatedcostsforwhichthegrantisintendedtocompensate.Governmentgrantsarerecognized

onlywhenthereisreasonableassurancethatPembinawillcomplywiththeconditionsattachedtothegrant,andthegrant

willbereceived.Governmentgrantsreceivedduring2020associatedwiththeCanadianEmergencyWageSubsidy("CEWS")

wererecognizedinotherincome.

m.FinanceIncomeandFinanceCosts

Financeincomecomprisesinterestincomeonfundsdepositedandinvested,financeleasereceivables,advancestorelated

parties,gainsonnon-commodity-relatedderivativesmeasuredatfairvaluethroughearningsandforeignexchangegains.

Interestincomeisrecognizedasitaccruesinearnings,usingtheeffectiveinterestratemethod.

Financecostscompriseinterestexpenseonloansandborrowingsandleaseliabilities,accretiononprovisions,losseson

disposalofavailableforsalefinancialassets,lossesonnon-commodity-relatedderivativesandforeignexchangelosses.

Borrowingcoststhatarenotdirectlyattributabletotheacquisitionorconstructionofaqualifyingassetarerecognizedin

earningsusingtheeffectiveinterestratemethod.

n.IncomeTax

Incometaxexpensecomprisescurrentanddeferredtax.Currentanddeferredtaxesarerecognizedinearningsexcepttothe

extentthattheyrelatetoabusinesscombination,oritemsarerecognizeddirectlyinequityorinothercomprehensive

income.

Currenttaxistheexpectedtaxpayableorreceivableonthetaxableincomeorlossfortheperiod,usingtaxratesenactedor

substantivelyenactedatthereportingdate,andanyadjustmenttotaxpayableinrespectofpreviousyears.

Deferredtaxisrecognizedinrespectoftemporarydifferencesbetweenthecarryingamountsofassetsandliabilitiesfor

financialreportingpurposesandtheamountsusedfortaxationpurposes.Deferredtaxisnotrecognizedfor:

• temporarydifferencesontheinitialrecognitionofassetsorliabilitiesinatransactionthatisnotabusinesscombination

andthataffectsneitheraccountingnortaxableearnings;

• temporarydifferencesrelatingtoinvestmentsinsubsidiariesandjointarrangementstotheextentthatitisprobablethat

theywillnotreverseintheforeseeablefuture;and

• taxabletemporarydifferencesarisingontheinitialrecognitionofgoodwill.

ThemeasurementofdeferredtaxreflectsthetaxconsequencesthatwouldfollowthemannerinwhichPembinaexpects,at

theendofthereportingperiod,torecoverorsettlethecarryingamountofitsassetsandliabilities.

Deferredtaxismeasuredatthetaxratesthatareexpectedtobeappliedtotemporarydifferenceswhentheyreverse,based

onthelawsthathavebeenenactedorsubstantivelyenactedbythereportingdate.

Deferredtaxassetsandliabilitiesareoffsetonlyifthereisalegallyenforceablerighttooffset,andtheyrelatetoincometaxes

leviedbythesametaxationauthorityoneither:i)thesametaxableentity;orii)differenttaxentitieswheretheintentisto

settlecurrenttaxliabilitiesandassetsonanetbasis,orwheretaxliabilitiesandassetswillberealizedsimultaneouslyineach

futureperiod.


Adeferredtaxassetisrecognizedforunusedtaxlosses,taxcreditsanddeductibletemporarydifferences,totheextentthatit

isprobablethatfuturetaxableprofitswillbeavailableagainstwhichtheycanbeutilized.Deferredtaxassetsarereviewedat

eachreportingdateandarereducedtotheextentthatitisnolongerprobablethattherelatedtaxbenefitwillberealized.

Indeterminingtheamountofcurrentanddeferredtax,Pembinatakesintoaccountincometaxexposuresandwhether

additionaltaxesandinterestmaybedue.Thisassessmentreliesonestimatesandassumptionsandmayinvolveaseriesof

judgmentsaboutfutureevents.NewinformationmaybecomeavailablethatcausesPembinatochangeitsjudgment

regardingtheadequacyofexistingtaxliabilities,suchchangestotaxliabilitieswillimpacttaxexpenseintheperiodthatsuch

adeterminationismade.

o.EarningsPerCommonShare

Pembinapresentsbasicanddilutedearningspercommonshare("EPS")dataforitscommonshares.BasicEPSiscalculatedby

dividingtheearningsattributabletocommonshareholdersofPembinabytheweightedaveragenumberofcommonshares

outstandingduringtheperiod.Tocalculateearningsattributabletocommonshareholders,earningsareadjustedfor

accumulatedpreferreddividends.DilutedEPSisdeterminedbyadjustingtheearningsattributabletocommonshareholders

andtheweightedaveragenumberofcommonsharesoutstanding,fortheeffectsofallpotentiallydilutivecommonshares,

whichcompriseshareoptionsgrantedtoemployees.Onlyoutstandingshareoptionsthatwillhaveadilutiveeffectare

includedinfullydilutedcalculations.

Thedilutiveeffectofshareoptionsisdeterminedwherebyoutstandingshareoptionsattheendoftheperiodareassumedto

havebeenconvertedatthebeginningoftheperiodoratthetimeissuedifissuedduringtheyear.Amountschargedto

earningsrelatingtotheoutstandingshareoptionsareaddedbacktoearningsforthedilutedcalculations.Thesharesissued

uponconversionareincludedinthedenominatorofpersharebasiccalculationsforthedateofissue.

p.SegmentReporting

AnoperatingsegmentisacomponentofPembinathatengagesinbusinessactivitiesfromwhichitmayearnrevenuesand

incurexpenses,includingrevenuesandexpensesthatrelatetotransactionswithanyoftheCompany'sothercomponents.All

operatingsegments'operatingresultsarereviewedregularlybyPembina'sChiefExecutiveOfficer("CEO"),ChiefFinancial

Officer("CFO")andotherSeniorVicePresidents("SVPs")tomakedecisionsaboutresourcestobeallocatedtothesegment

andassessitsperformance,andforwhichdiscretefinancialinformationisavailable.

SegmentresultsthatarereportedtotheCEO,CFOandotherSVPsincludeitemsdirectlyattributabletoasegmentaswellas

thosethatcanbeallocatedonareasonablebasis.

q.NewStandardsandInterpretationsNotYetAdopted

TheInternationalAccountingStandardsBoardhaveissuedastandardandamendmentstoexistingstandardsthatare

effectiveforperiodsonorafterJanuary1,2021,withearlyapplicationpermitted.Assessmentoftheimpactsofthese

standardsisongoing,however,nomaterialimpactsonPembina'sConsolidatedFinancialStatementshavebeenidentified.

• InterbankOfferedRates("IBOR")Reform-Phase2(AmendmentstoIFRS9,IFRS7,andIFRS16);

• Property,PlantandEquipment:ProceedsbeforeIntendedUse(AmendmentstoIAS16);

• OnerousContracts-CostofFulfillingaContract(AmendmentstoIAS37);

• UpdatingaReferencetotheConceptualFramework(AmendmentstoIFRS3);

• AnnualImprovementstoIFRSStandards2018-2020;

• ClassificationofLiabilitiesasCurrentorNon-Current(AmendmentstoIAS1);and

• IFRS17:InsuranceContracts.


6.DETERMINATIONOFFAIRVALUES

AnumberofPembina'saccountingpoliciesanddisclosuresrequirethedeterminationoffairvalue,forbothfinancialandnon-

financialassetsandliabilities.Whenmeasuringfairvalue,Pembinausesobservablemarketdatatotheextentpossible.Fair

valuemeasurementsarecategorizedintolevelsinafairvaluehierarchybasedonthedegreetowhichinputsareobservable

andsignificant.

Level1:Unadjustedquotedpricesareavailableinactivemarketsforidenticalassetsorliabilitiesasthereportingdate.

Level2:InputsotherthanquotedpricesincludedwithinLevel1thatareobservablefortheassetorliability,eitherdirectly

(i.e.asprices)orindirectly(i.e.derivedfromprices).

Level3:Inputsfortheassetorliabilitythatarenotbasedonobservablemarketdata(unobservableinputs).Level3valuations

useunobservableinputs,suchasafinancialforecastdevelopedusingtheentity'sowndataforexpectedcashflowsandrisk

adjusteddiscountrates,tomeasurefairvaluetotheextentthatrelevantobservableinputsarenotavailable.The

unobservableinputsreflecttheassumptionsthatmarketparticipantswouldusewhenpricingtheassetorliability,including

assumptionsaboutrisk.Indevelopingunobservableinputs,theentity'sowndataisusedandadjustedforreasonably

availableinformationthatwouldbeusedbyothermarketparticipants.


Measuringfairvaluesusingsignificantunobservableinputshasbecomemorechallenginginthecurrentenvironment,where

eventsandconditionsrelatedtotheCOVID-19pandemicaredrivingsignificantdisruptionofbusinessoperationsanda

significantincreaseineconomicuncertainty.Managementapplieditsjudgmentindeterminingtheimpactofthesignificant

uncertaintiescreatedbytheseeventsandconditionsontheassessedfairvaluesofassetsandliabilitiesintheseconsolidated

financialstatements.

Fairvalueshavebeendeterminedformeasurementand/ordisclosurepurposesbasedonthefollowingmethods.When

applicable,furtherinformationabouttheassumptionsmadeindeterminingfairvaluesisdisclosedinthenotesspecifictothat

assetorliability.

i)Property,PlantandEquipment

Thefairvalueofproperty,plantandequipmentrecognizedasaresultofabusinesscombinationortransferredfroma

customerisbasedonmarketvalueswhenavailable,incomeapproachanddepreciatedreplacementcostwhenappropriate.

Depreciatedreplacementcostreflectsadjustmentsforphysicaldeteriorationaswellasfunctionalandeconomic

obsolescence.

Whentherecoverablevalueofanitemofproperty,plantandequipmentisestimatedforimpairmentpurposes,fairvalueis

determinedusingcomparablemarkettransactionsifavailable,orusingacombinationofinternalandexternalestimatesof

thevaluethattheassetscouldbesoldforinanorderlymanner.

ii)EquityInvestments

WhentherecoverablevalueoftheCompany'sequityinvestmentsisestimatedforimpairmentpurposes,fairvalueis

determinedusingcomparablemarkettransactionsifavailable,orusingestimatesofthediscountedcashflowsamarket

participantwouldexpecttoderivefromtheuseandeventualsaleoftheinvestments.

iii)IntangibleAssets

Thefairvalueofintangibleassetsacquiredinabusinesscombinationisdeterminedbyanactivemarketvalueorusingthe

multi-periodexcessearningsmethod,wherebythesubjectassetisvaluedafterdeductingafairreturnonallotherassetsthat

arepartofcreatingtherelatedcashflows.


iv)Derivatives

Fairvalueofderivativesareestimatedbyreferencetoindependentmonthlyforwardprices,interestrateyieldcurves,and

currencyratesatthereportingdates.

Fairvaluesreflectthecreditriskoftheinstrumentandincludeadjustmentstotakeaccountofthecreditriskofthecompany,

entityandcounterpartywhenappropriate.

v)Non-DerivativeFinancialAssetsandLiabilities

Thefairvalueofnon-derivativefinancialassetsandliabilitiesisdeterminedoninitialrecognition,onarecurringbasis,orfor

disclosurepurposes.Fairvaluesoffinancialassetsatamortizedcostarecalculatedbasedonthepresentvalueofestimated

futureprincipalandinterestcashflows,discountedatthemarketrateofinterestatthereportingdate.Fairvaluesoffinancial

assetsheldatfairvaluearecalculatedusingaprobability-weightedincomeapproachbasedoncurrentmarketexpectations

forfuturecashflows.Forotherfinancialliabilitieswheremarketratesarenotreadilyavailable,ariskadjustedmarketrateis

usedwhichincorporatesthenatureoftheinstrumentaswellastheriskassociatedwiththeunderlyingcashpayments.

vi)DecommissioningProvision

Thefairvalueofdecommissioningobligationsassumedaspartofabusinesscombinationaremeasuredasthepresentvalue

ofmanagement'sbestestimateofwhatisreasonablyexpectedtobeincurredtosettletheobligationattheendofanasset's

economiclife.Theobligationisdiscountedusingariskadjustedratecorrespondingtotheunderlyingassetstowhichthe

obligationrelates.

vii)Share-BasedCompensationTransactions

ThefairvalueofemployeeshareoptionsismeasuredusingtheBlack-Scholesformulaongrantdate.Measurementinputs

includesharepriceonmeasurementdate,exercisepriceoftheinstrument,expectedvolatility(basedonweightedaverage

historicvolatilityadjustedforchangesexpectedduetopubliclyavailableinformation),weightedaverageexpectedlifeofthe

instruments(basedonhistoricalexperienceandgeneraloptionholderbehaviour),expecteddividends,expectedforfeitures

andtherisk-freeinterestrate(basedongovernmentbonds).Serviceandnon-marketperformanceconditionsattachedtothe

transactionsarenottakenintoaccountindeterminingfairvalue.

Thefairvalueofthelong-termshareunitawardincentiveplanandassociateddistributionunitsaremeasuredbasedonthe

volume-weightedaveragepricefor20daysendingatthereportingdateofPembina'sshares.


7.ACQUISITION

OnDecember16,2019,PembinaacquiredalloftheissuedandoutstandingsharesofKinderMorganCanadaLimited("Kinder

MorganCanada")bywayofaplanofarrangementandtheU.S.portionoftheCochinPipelinesystem(collectively,the

"KinderAcquisition")fortotalconsiderationof$4.3billion.

DuringtheyearendedDecember31,2020,Pembinacontinuedtoobtainandverifyinformationrequiredtodeterminethe

fairvalueofcertainassetsandliabilitiesandtheamountofdeferredincometaxesarisingontheirrecognition.Pembina

adjustedthepurchasepriceallocationtoreflectupdatedassumptionsfortheidentificationandclassificationofleasesandthe

verificationofinformationsupportingthevaluationofcertainassets,provisionsandliabilities.

Thepurchasepriceallocationisbasedonassessedfairvalues,includingadjustmentsdeterminedduringtheyearended

December31,2020isasfollows:

AsatDecember16,2019

($millions) PreviouslyReported Adjustments Restated

Purchasepriceconsideration

Commonshares 1,710 — 1,710

Cash(netofcashacquired) 2,009 — 2,009

Preferredshares 536 — 536

4,255 — 4,255

Currentassets 68 2 70

Property,plantandequipment 2,660 (41) 2,619

Intangibleassets 1,254 — 1,254

Right-of-useassets 348 (92) 256

Financeleasereceivable — 116 116

Goodwill 809 15 824

Otherassets 9 — 9

Currentliabilities (124) 8 (116)

Deferredtaxliabilities (281) (8) (289)

Decommissioningprovision (74) — (74)

Leaseliability (348) — (348)

Otherliabilities (66) — (66)

4,255 — 4,255

8.TRADERECEIVABLESANDOTHER

AsatDecember31 2019


Tradereceivablesfromcustomers 578 575

Otherreceivables 60 94

Prepayments 24 25

Totaltradereceivablesandother 662 694

9.INVENTORY

AsatDecember31

($millions) 2020 2019

CrudeoilandNGL 127 42

Materials,suppliesandother 94 84

Totalinventory 221 126


10.PROPERTY,PLANTANDEQUIPMENT

($millions)Landand

LandRights PipelinesFacilitiesandEquipment

CavernStorageand

OtherAssetsUnder

Construction(1) Total

Cost

BalanceatDecember31,2018(RestatedNote4) 340 7,174 6,807 1,478 939 16,738

ReclassificationonadoptionofIFRS16 — — — (44) — (44)

Additionsandtransfers 32 215 691 203 534 1,675

Acquisition(Note7) 70 1,434 772 315 28 2,619

Changeindecommissioningprovision — (13) 98 (3) — 82

Foreignexchangeadjustments (2) (17) (4) — (11) (34)

Disposalsandother — (3) (31) (12) 3 (43)

BalanceatDecember31,2019(RestatedNote4) 440 8,790 8,333 1,937 1,493 20,993

Additionsandtransfers 8 454 622 57 (40) 1,101

Impairment(Note13) (17) — — — (340) (357)

Changeindecommissioningprovision — (10) (17) 16 — (11)

Foreignexchangeadjustments (2) (18) (9) (1) (7) (37)

Disposalsandother — (10) (22) (16) 3 (45)

BalanceatDecember31,2020 429 9,206 8,907 1,993 1,109 21,644

Depreciation

BalanceatDecember31,2018(RestatedNote4) 12 1,223 827 250 — 2,312

ReclassificationonadoptionofIFRS16 — — — (26) — (26)

Depreciation 4 155 174 59 — 392

Disposalsandother — (13) (34) — — (47)

BalanceatDecember31,2019(RestatedNote4) 16 1,365 967 283 — 2,631

Depreciation 5 187 156 135 — 483

Disposalsandother — (5) (5) (9) — (19)

BalanceatDecember31,2020 21 1,547 1,118 409 — 3,095

Carryingamounts

BalanceatDecember31,2019(RestatedNote4) 424 7,425 7,366 1,654 1,493 18,362

BalanceatDecember31,2020 408 7,659 7,789 1,584 1,109 18,549

Assetssubjecttooperatingleases

BalanceatDecember31,2019(RestatedNote4) 9 295 542 191 — 1,037

BalanceatDecember31,2020 8 301 537 185 — 1,031(1) Includescapitalizedborrowingcosts.

Property,PlantandEquipmentUnderConstruction

FortheyearendedDecember31,2020,includedinadditionsandtransfersarecapitalizedborrowingcostsrelatedtothe

constructionofnewpipelinesorfacilitiesamountingto$46million(2019:$42million),withcapitalizationratesrangingfrom

3.63percentto3.91percent(2019:3.91percentto4.05percent).

Depreciation

Pipelineassetsaredepreciatedusingthestraight-linemethodoverthreeto75yearswiththemajorityofassetsdepreciated

over40years.Facilitiesandequipmentaredepreciatedusingthestraight-linemethodoverthreeto75yearswiththe

majorityofassetsdepreciatedover40years.Cavernstorageandotherassetsaredepreciatedusingthestraight-linemethod

overthreeto40yearswiththemajorityofassetsdepreciatedover40years.Theseratesareestablishedtodepreciate

remainingnetbookvalueovertheshorteroftheirusefullivesoreconomiclives.


11.INTANGIBLEASSETSANDGOODWILL

IntangibleAssets

($millions) Goodwill

PurchaseandSale

ContractsandOther

CustomerRelationships Total

TotalGoodwill&Intangible

Assets

Cost

BalanceatDecember31,2018 3,878 227 639 866 4,744

Additionsandother — 13 — 13 13

Acquisition(Note7) 824 — 1,254 1,254 2,078

Foreignexchangeadjustments (3) — (12) (12) (15)

BalanceatDecember31,2019(RestatedNote4) 4,699 240 1,881 2,121 6,820

Additionsandother — 22 — 22 22

Foreignexchangeadjustments (5) (1) (12) (13) (18)

BalanceatDecember31,2020 4,694 261 1,869 2,130 6,824

Amortization

BalanceatDecember31,2018 — 164 171 335 335

Amortization — 10 31 41 41


Amortization — 6 102 108 108


Carryingamounts

BalanceatDecember31,2019(RestatedNote4) 4,699 66 1,679 1,745 6,444

BalanceatDecember31,2020 4,694 81 1,565 1,646 6,340

Intangibleassetshaveafiniteusefullifeandareamortizedusingthestraight-linemethodover7to40years.

Theaggregatecarryingamountofgoodwillallocatedtoeachoperatingsegmentisasfollows:

AsatDecember31

20202019

(RestatedNote4)($millions)

Pipelines 2,713 2,718

Facilities 541 541

Marketing&NewVentures 1,440 1,440

Totalgoodwill 4,694 4,699


GoodwillImpairmentTesting

Forthepurposeofimpairmenttesting,goodwillisallocatedtoPembina'soperatingsegmentswhichrepresentthelowest

levelwithinPembinaatwhichgoodwillismonitoredformanagementpurposes.Consistentwithprioryear,impairment

testingforgoodwillisperformedinthefourthquarter.

Therecoverableamountwasdeterminedusingafairvaluelesscostsofdisposalapproachbydiscountingeachoperating

segment'sexpectedfuturecashflows(Level3).Thekeyassumptionsthatinfluencethecalculationoftherecoverable

amountsinclude:

• Cashflowsforthefirstfiveyearsareprojectedbasedonpastexperience,actualoperatingresultsandthebusinessplan

approvedbymanagement.CashflowsforPipelinesandFacilitiesincorporateassumptionsregardingcontractedvolumes

andrates,whicharebasedonmarketexpectations.Inaddition,revenueandcostofproductprojectionsforMarketing&

NewVenturesincorporateassumptionsregardingcommodityvolumesandpricing,whicharesensitivetochangesinthe

commoditypriceenvironment.

• Cashflowsfortheremainingyearsoftheusefullivesoftheassetswithineachoperatingsegmentareextrapolatedfor

periodsupto75years(2019:75years)usingalong-termgrowthrate,exceptwherecontracted,long-termcashflows

indicatethatnogrowthrateshouldbeappliedoraspecificreductionincashflowswasmoreappropriate.

• After-taxdiscountrateswereappliedindeterminingtherecoverableamountofoperatingsegments.Discountrateswere

estimatedbasedonpastexperience,theriskfreerateandaveragecostofdebt,targeteddebttoequityratio,inadditionto

estimatesofthespecificoperatingsegment'sequityriskpremium,sizepremium,projectionriskandbetas.

Foreachoperatingsegment,keyassumptionsanddiscountratesensitivityarepresentedbelow:

OperatingSegments

2020

Pipelines FacilitiesMarketing&New

Ventures(Percent)

Keyassumptionsused

After-taxdiscountrate 5.9 5.9 10.1

Long-termgrowthrate 0.6 0.8 1.8

Incrementalchangeinratesthatwouldresultincarryingvalueequaltorecoverableamount

Increaseinafter-taxdiscountrate 2.7 3.2 1.6


12.INVESTMENTSINEQUITYACCOUNTEDINVESTEES

OwnershipInterestatDecember31(percent)

ShareofProfit(Loss)fromEquityInvestments

InvestmentinEquityAccountedInvesteesatDecember3112MonthsEndedDecember31

($millions) 2020 2019 20202019

(RestatedNote3) 20202019

(RestatedNote4)

Alliance 50 50 105 153 2,498 2,638

AuxSable 42.7-50 42.7-50 — 51 401 426

Ruby(1) — — 122 120 — 1,273

VeresenMidstream 45 45.3 50 49 1,374 1,350

CKPC(2) 50 50 (314) (1) — 171

Other 50-75 50-75 5 3 104 116

(32) 375 4,377 5,974(1) Pembinaownsa50percentconvertible,cumulativepreferredinterestinRuby.(2) Includes$314million(2019:nil)ofimpairmentinshareofprofitfromequityaccountedinvestees.

Investmentsinequityaccountedinvesteesincludetheunamortizedexcessofthepurchasepriceovertheunderlyingnetbook

valueoftheinvestee'sassetsandliabilitiesatthepurchasedate,whichiscomprisedof$98million(2019:$98million)

Goodwill,$2.8billion(2019:$2.9billion)inproperty,plantandequipmentandintangiblesand$33millioninlong-termdebt

(2019:$42million).

PembinahasU.S.$1.3billioninInvestmentsinEquityAccountedInvesteesthatisheldbyentitieswhosefunctionalcurrency

istheU.S.dollar.TheresultingforeignexchangelossfortheyearendedDecember31,2020of$51million(2019:$169million

loss)hasbeenincludedinOtherComprehensiveIncome.

InDecember2020,Pembinarecognizedimpairmentonits50percentconvertible,cumulativepreferredinterestinRubyand

withinitsinvestmentinCKPC.RefertoNote13forfurtherinformationonimpairments.

DistributionsandContributions

ThefollowingtablesummarizesdistributionsfromandcontributionstoPembina'sinvestmentsinequityaccountedinvestees:

FortheyearsendedDecember31 Distributions Contributions

($millions) 2020 2019 2020 2019

Alliance 217 268 — 13

AuxSable 19 84 3 4

Ruby 122 121 — —

VeresenMidstream 97 96 69 73

CKPC — — 152 173

Other 4 6 — —

Total 459 575 224 263

DistributionsreceivedfromequityinvestmentsareincludedinoperatingactivitiesintheConsolidatedStatementofCash

Flows.DistributionsfromAllianceandVeresenMidstreamaresubjecttosatisfyingcertainfinancingconditionsincludinga

minimumdebtservicecoverageratiorequirement.

ContributionsmadetoinvestmentsinequityaccountedinvesteesareincludedininvestingactivitiesintheConsolidated

StatementofCashFlows.Contributionsfor2020includea$22millionnon-cashfinancialguaranteeliabilityassociatedwith

CKPC'screditfacilityand2019contributionsincludetheconversionof$57millioninrelatedpartyadvancestoCKPCinto

equitycontributions.


FinancingActivities

OnDecember31,2020,CKPCprovidednoticetocancelitsU.S.$1.7billiontermfacilityanditsU.S.$150millionrevolving

creditfacility.Asaresult,Pembinaacceleratedtherecognitionofthepreviouslyrecordedfinancialguaranteeliability.

OnApril27,2020,Rubyfullyrepaidits364-daytermloan.Concurrenttorepayment,Rubyenteredintoanewamortizing

termloanthatmaturesonMarch31,2021.AtDecember31,2020,U.S.$32million(U.S.$16millionnettoPembina)

remainedoutstanding.

SummarizedFinancialInformation

FinancialinformationforPembina'sequityaccountedinvestees(presentedat100percent)ispresentedinthefollowing

tablesandispreparedunderthefinancialreportingframeworkadoptedbyeachequityaccountedinvestee(U.S.GAAPexcept

forCKPC).Differencesbetweentheequityaccountedinvestee'searning(loss)andearnings(loss)attributabletoPembina

relatetothedifferentaccountingstandardsappliedandamortizationoftheexcessofthepurchasepriceovertheunderlying

netbookvalueoftheinvestee'sassetsandliabilitiesatthepurchasedate,withtheexceptionofRubywhichPembinaownsa

50percentconvertible,cumulativepreferredinterestandrecognizesitsshareofearningsbasedonitsdistribution.

Alliance


($millions) 2020 2019

EarningsandComprehensiveIncome

Revenue 840 965

Expenses (296) (262)

Depreciationandamortization (141) (108)

Financecostsandother(1)(2) (61) (58)

Earnings 342 537

EarningsattributabletoPembina 105 153(1) Includesinterestincomeof$2million(2019:$4million).(2) Includesinterestexpenseof$66million(2019:$81million).

AsatDecember31

($millions) 2020 2019

StatementsofFinancialPosition

Currentassets(1) 122 132

Non-currentassets 1,816 1,944

Currentliabilities(2) 206 21

Non-currentliabilities(3) 1,121 1,147(1) Includescashandcashequivalentsof$25million(2019:$29million).(2) Includestrade,otherpayablesandprovisionsof$71million(2019:$77million).(3) Includestrade,otherpayablesandprovisionsof$128million(2019:$106million).


AuxSable


($millions) 2020 2019


Revenue 1,059 1,028

Expenses (1,019) (868)


Earnings(loss) (9) 105

EarningsattributabletoPembina — 51

AsatDecember31

($millions) 2020 2019



Non-currentassets 757 816


Non-currentliabilities(3) 155 148(1) Includescashandcashequivalentsof$50million(2019:$20million).(2) Includestrade,otherpayablesandprovisionsof$103million(2019:$98million).(3) Includestrade,otherpayablesandprovisionsof$5million(2019:$5million).

Ruby


($millions) 2020 2019


Revenue 432 453

Expenses (29) (19)


Impairment (2,953) —

Financecostsandother(1) (130) (117)

Earnings(loss) (2,823) 175

EarningsattributabletoPembina 122 120(1) Includesinterestexpenseof$104million(2019:$90million).

AsatDecember31

($millions) 2020 2019



Non-currentassets 688 3,705


Non-currentliabilities(3) 928 1,003(1) Includescashandcashequivalentsof$6million(2019:$38million).(2) Includestrade,otherpayablesandprovisionsof$2million(2019:$3million).(3) Includestrade,otherpayablesandprovisionsof$278million(2019:$223million).


VeresenMidstream


($millions) 2020 2019


Revenue 561 615

Expenses (177) (213)



Earnings 127 126


AsatDecember31

($millions) 2020 2019



Non-currentassets 4,658 4,501


Non-currentliabilities(3) 2,681 2,593(1) Includescashandcashequivalentsofnil(2019:$3million).(2) Includestrade,otherpayablesandprovisionsof$80million(2019:$106million).(3) Includestrade,otherpayablesandprovisionsof$46million(2019:$43million).

CKPC


($millions) 2020 2019

Earnings(Loss)andComprehensiveIncome(Loss)

Expenses (4) (4)

Impairment (589) —

Financecosts(1) (33) 4

Earnings(loss) (626) —

Earnings(loss)attributabletoPembina (314) (1)(1) Includesinterestincomeof$1million(2019:$1million).

AsatDecember31

($millions) 2020 2019



Non-currentassets — 283


Non-currentliabilities(3) 11 12(1) Includescashandcashequivalentsof$75million(2019:$118million).(2) Includestrade,otherpayablesandprovisionsof$99million(2019:$76million).(3) Includestrade,otherpayablesandprovisionsof$11million(2019:nil).


Other


($millions) 2020 2019


Revenue 51 52

Expenses (16) (16)



Earnings 14 16


AsatDecember31

($millions) 2020 2019



Non-currentassets 117 131


Non-currentliabilities(3) 64 84(1) Includescashandcashequivalentsof$1million(2019:$1million).(2) Includestrade,otherpayablesandprovisionsof$3million(2019:$4million).(3) Includestrade,otherpayablesandprovisionsof$1million(2019:$1million).


13.IMPAIRMENTS

ThefollowingtablesummarizesimpairmentsrecognizedfortheyearendedDecember31,2020:

($millions)Property,Plant&

Equipment(Note10)EquityAccounted

Investees(Note12) OtherTotalImpairment

Expense

JordanCove 344 — 5 349

InvestmentinRuby — 1,257 139 1,396

InvestmentinCKPC — 323 (2) 321

Other 13 11 — 24

Totalimpairments 357 1,591 142 2,090

Recognizedthroughimpairmentinshareofprofitfromequityaccountedinvestees 314

Recognizedasimpairmentexpense 1,776

Total 2,090

JordanCove

InDecember2020,asaresultofincreasedregulatoryandpoliticaluncertainty,Pembinarecognizedanimpairmentonthe

assetsassociatedwithJordanCove.Theimpairmentchargeof$349million($258millionnetoftax)includesallpreviously

capitalizedamountsrelatedtoJordanCove,exceptforlandwitharecoverablecarryingamountof$21millionwhich

approximatesitsfairvalue(Level3).

Ruby

InDecember2020,Pembinarecognizedanimpairmentforthefullamountofitsconvertible,cumulativepreferredinterestin

Ruby($1.3billion)anditsassociatedrelatedpartyadvance($139million).Thetotalimpairmentchargeof$1.4billion

($1.0billionnetoftax)wastheresultofanassessmenttriggeredbyupcomingcontractexpirationsinmid-2021withexisting

tariffrateswellinexcessofprevailinginterruptibletariffrates,alongwithdecliningRockiesbasinfundamentalsandreduced

futurevolumesresultingfromtheuncertaintywithJordanCove.TherecoverableamountofRubywasdeterminedusinga

valueinuseapproachbydiscountingexpectedcashflowsresultingfromPembina'sconvertible,cumulativepreferredshare

interest.Keyassumptionsthatinfluencedthecalculationoftherecoverableamountincludenofuturevolumesassociated

withJordanCove,incrementalfuturecontractedvolumesandtolls.Pembinaappliedadiscountrateof8percent(2019:8

percent)incalculatingtherecoverableamount,whichwasdeterminedusingcomparablepreferredshareyieldsadjustedfor

thespecificriskprofileoftheinvestment.

CKPC

OnDecember14,2020,Pembinaannouncedthatit,alongwithitsjointventurepartnerinCKPC,wouldbeindefinitely

suspendingexecutionoftheintegratedPDH/PPFacilityproject.Thesuspensionistheresultofthesignificantrisksarising

fromtheongoingCOVID-19pandemic,mostnotablywithrespecttocostsunderthelumpsumcontractforconstructionof

thePDHplant,whichremainsunderaforcemajeurecondition.Asaresultofthesuspension,Pembinarecognizedan

impairmentforthefullamountofitsinvestmentinCKPC,resultinginatotalimpairmentchargeof$323million($252million

netoftax)whichincludesPembina'sshareofCKPC'slossresultingfromanimpairmentchargerecognizedinthejointventure

of$314millionplusanincrementalimpairmentoftheremaininginvestmentvalue,basedonafairvaluelesscostsofdisposal

approachwhichdeterminedtherecoverableamountoftheinvestmenttobenil(Level3).


14.INCOMETAXES

Themovementsofthecomponentsofthedeferredtaxassetsanddeferredtaxliabilitiesareasfollows:

($millions)

BalanceatDecember31,

2019(RestatedNote4)

RecognizedinEarnings

(Loss)

RecognizedinOther

ComprehensiveIncome(Loss) Acquisition Equity Other

BalanceatDecember31,2020

Deferredincometaxassets

Derivativefinancialinstruments (13) 21 (4) — — — 4

Employeebenefits 9 (2) 4 — — — 11

Share-basedpayments 24 (10) — — — — 14

Provisions 79 4 — — — — 83

Benefitoflosscarryforwards 400 (125) — — — — 275

Otherdeductibletemporarydifferences 52 16 — — (2) — 66

Deferredincometaxliabilities

Property,plantandequipment 2,036 55 — — — — 2,091

Intangibleassets 263 (3) — — — — 260

Investmentsinequityaccountedinvestees 1,109 (417) — — — — 692

Taxablelimitedpartnershipincomedeferral 101 (103) — — — — (2)

Othertaxabletemporarydifferences (13) 32 — — — (4) 15

Totalnetdeferredtaxliabilities 2,945 (340) — — 2 (4) 2,603

($millions)

BalanceatDecember31,

2018(RestatedNote3)

RecognizedinEarnings

(Loss)

RecognizedinOther

ComprehensiveIncome(Loss) Acquisition Equity Other

BalanceatDecember31,2019

(RestatedNote4)

Deferredincometaxassets

Derivativefinancialinstruments (18) 5 — — — — (13)

Employeebenefits 9 (1) 1 — — — 9

Share-basedpayments 26 (2) — — — — 24

Provisions 46 16 — 17 — — 79

Benefitoflosscarryforwards 153 256 — 13 — (22) 400

Otherdeductibletemporarydifferences 67 (40) — 28 (3) — 52

Deferredincometaxliabilities

Property,plantandequipment 1,587 286 — 163 — 2,036

Intangibleassets 118 (14) — 159 — — 263

Investmentsinequityaccountedinvestees 1,263 (154) — — — — 1,109

Taxablelimitedpartnershipincomedeferral 122 (46) — 25 — — 101

Othertaxabletemporarydifferences 7 (13) — — (7) (13)

Totalnetdeferredtaxliabilities 2,814 (175) (1) 289 3 15 2,945


ReconciliationofEffectiveTaxRate


($millions,exceptasnoted) 2020 (RestatedNote3)

Earnings(loss)beforeincometax (416) 1,542

Canadianstatutorytaxrate(percent) 24.6 26.7

Incometaxatstatutoryrate (102) 412

Taxratechangesandforeignratedifferential (5) (349)

Changesinestimateandother (5) (35)

Permanentitems 12 7

Incometax(recovery)expense (100) 35

In2019,theenactmentofAlbertaBill3reducedcorporateincometaxratefrom12percentto8percentoverafour-year

periodwhichresultedinadeferredtaxrecoveryof$305million.Inthefourthquarterof2020,theAlbertagovernment

enactedBill35thatacceleratedtheAlbertacorporateincometaxratefrom10percentto8percenteffectiveJuly1,2020.

IncomeTaxExpense



Currenttaxexpense 240 210

Deferredtaxexpense

Originationandreversaloftemporarydifferences (485) 392

Taxratechangesondeferredtaxbalances 32 (345)

Decrease(increase)intaxlosscarryforward 113 (222)

Totaldeferredtax(recovery) (340) (175)

Totalincometax(recovery)expense (100) 35

DeferredTaxItemsRecoveredDirectlyinEquity


($millions) 2020 2019

Shareissuecosts (2) (3)

Othercomprehensiveincome(loss):

Changeinfairvalueofnetinvestmenthedges(Note26) (4) —

Remeasurementsofdefinedbenefitliability(Note24) 4 1

Deferredtaxitemsrecovereddirectlyinequity (2) (2)

Pembinahastemporarydifferencesassociatedwithitsinvestmentsinsubsidiaries.AtDecember31,2020,Pembinahasnot

recordedadeferredtaxassetorliabilityforthesetemporarydifferences(2019:nil)asPembinacontrolsthetimingofthe

reversalanditisnotprobablethatthetemporarydifferenceswillreverseintheforeseeablefuture.

AtDecember31,2020,PembinahadU.S.$758million(2019:U.S.$1.1billion)ofU.S.taxlossesthatdonotexpireand$43

million(2019:$67million)ofCanadiantaxlossesthatwillexpireafter2037.Pembinahasdeterminedthatitisprobablethat

futuretaxableprofitswillbesufficienttoutilizetheselosses.


15.TRADEPAYABLESANDOTHER

AsatDecember31 2019


Tradepayables 434 717

Otherpayables&accruedliabilities 346 288

Totaltradepayablesandother 780 1,005

16.LEASES

LesseeLeases

Pembinaentersintoarrangementstosecureaccesstoassetsnecessaryforoperatingthebusiness.Leased(right-of-use)

assetsincludeterminals,rail,buildings,landandotherassets.Totalcashoutflowsrelatedtoleaseswere$131millionforthe

yearendedDecember31,2020(2019:$83million).

Right-of-UseAssets

($millions) Terminals Rail Buildings Land&Other Total

BalanceatJanuary1,2019(RestatedNote4) — 221 127 79 427

Additions(RestatedNote3) — 54 1 19 74

Acquisition(Note7) 225 — 7 24 256

Amortization — (37) (17) (12) (66)

BalanceatDecember31,2019(RestatedNote4) 225 238 118 110 691

Additions — 24 22 — 46

Amortization (12) (41) (19) (14) (86)

BalanceatDecember31,2020 213 221 121 96 651

LessorLeases

Pembinahasenteredintocontractsfortheuseofitsassetsthathaveresultedinleasetreatmentforaccountingpurposes.

Assetsunderoperatingleasesincludepipelines,terminalsandstoragetanksandcaverns.SeeNote10forcarryingvalueof

property,plantandequipmentunderoperatingleases.Assetsunderfinanceleasesincludeofficesub-leasesandterminal

assets.

MaturityofLeaseReceivables

AsatDecember31 2020 2019(RestatedNote4)

($millions) OperatingLeases FinanceLeases OperatingLeases FinanceLeases

Lessthanoneyear 146 23 168 23

Onetotwoyears 142 23 150 24

Twotothreeyears 139 22 145 23

Threetofouryears 121 22 139 22

Fourtofiveyears 109 22 124 22

Morethanfiveyears 874 224 983 246

Totalundiscountedleasereceipts 1,531 336 1,709 360

Unearnedfinanceincomeonleasereceipts (199) (215)

Discountedunguaranteedresidualvalue 8 7

Financeleasereceivable 145 152

Lesscurrentportion(1) (7) (7)

Totalnon-current 138 145(1) IncludedintradereceivablesandotherontheConsolidatedStatementofFinancialPosition.


17.LOANSANDBORROWINGS

ThisnoteprovidesinformationaboutthecontractualtermsofPembina'sinterest-bearingloansandborrowings,whichare

measuredatamortizedcost.

CarryingValue,TermsandConditions,andDebtMaturitySchedule

($millions)Authorizedat

December31,2020Nominal

InterestRateYearof

Maturity December31,2020 December31,2019

Seniorunsecuredcreditfacilities(1)(3)(4) 4,138 1.61(2) Various(1) 1,530 2,097

SeniorunsecurednotesseriesA — 5.57 2020 — 74

SeniorunsecurednotesseriesC — 5.58 2020 — 199

Seniorunsecuredmedium-termnotesseries1 250 4.89 2021 250 250















Seniorunsecuredmedium-termnotesseries16 400 4.67 2050 397 —

Seniorunsecuredmedium-termnotesseries3A 50 5.05 2022 51 52

Seniorunsecuredmedium-termnotesseries5A 350 3.43 2021 350 353

Totalinterestbearingliabilities 10,876 10,152

Lesscurrentportion (600) (74)

Totalnon-current 10,276 10,078

CarryingValue

(1) Pembina'sunsecuredcreditfacilitiesincludea$2.5billionrevolvingfacilitythatmaturesinMay2024,a$500millionnon-revolvingtermloanthatmaturesinAugust2022,a$800millionrevolvingfacilitythatmaturesinApril2022,aU.S.$250millionnon-revolvingtermloanthatmaturesinMay2025anda$20millionoperatingfacilitythatmaturesinMay2021,whichistypicallyrenewedonanannualbasis.

(2) ThenominalinterestrateistheweightedaverageofalldrawncreditfacilitiesbasedonPembina'screditratingatDecember31,2020.Borrowingsunderthecreditfacilitiesbearinterestatprime,Bankers'Acceptance,orLIBORrates,plusapplicablemargins.

(3) IncludesU.S.$250millionvariableratedebtoutstandingatDecember31,2020(December31,2019:U.S.$454million).(4) TheU.S.dollardenominatednon-revolvingtermloanisdesignatedasahedgeoftheCompany’snetinvestmentinselectedforeignoperationswithaU.S.dollarfunctional

currency.RefertoNote27forforeignexchangeriskmanagement.

OnJanuary10,2020,Pembinaclosedanofferingof$1.0billionofseniorunsecuredmedium-termnotes.Theofferingwas

conductedinthreetranches,consistingof$250millionissuedthroughare-openingofPembina'sseniorunsecuredmedium-

termnotes,series10,havingafixedcouponof4.02percentperannum,payablesemi-annuallyandmaturingonMarch27,

2028;$500millionissuedthroughare-openingofPembina'sseniorunsecuredmedium-termnotes,series11,havingafixed

couponof4.75percentperannum,payablesemi-annuallyandmaturingonMarch26,2048;and$250millionissuedthrough

are-openingofPembina'sseniorunsecuredmedium-termnotes,series12,havingafixedcouponof3.62percentperannum,

payablesemi-annuallyandmaturingonApril3,2029.

OnApril6,2020,Pembinaenteredintoanunsecured$800millionrevolvingcreditfacilitywithcertainexistinglenders,which

providedadditionalliquidityandflexibilityinPembina'scapitalstructureinlightofcurrentmarketconditions.Theunsecured

revolvingcreditfacilitymaturesApril3,2022.Theothertermsandconditionsofthecreditfacility,includingfinancial

covenants,aresubstantiallysimilartoPembina'sunsecured$2.5billionrevolvingcreditfacility.


OnMay7,2020,PembinaenteredintoanunsecuredU.S.$250millionnon-revolvingtermloanwithaglobalbank,which

providedadditionalliquidityandflexibilityinPembina'scapitalstructureinlightofcurrentmarketconditions.Thetermloan

maturesMay7,2025.Theothertermsandconditionsofthecreditfacility,includingfinancialcovenants,aresubstantially

similartoPembina'sunsecured$2.5billionrevolvingcreditfacility.

OnMay28,2020,Pembinaclosedanofferingof$500millionofseniorunsecuredmedium-termnotes.Theofferingwas

conductedintwotranches,consistingoftheissuanceof$400millioninseniorunsecuredmedium-termnotes,series16,

havingafixedcouponof4.76percentperannum,payablesemi-annually,andmaturingonMay28,2050and$100million

issuedthroughare-openingofPembina'sseniorunsecuredmedium-termnotes,series7,havingafixedcouponof3.71

percentperannum,payablesemi-annuallyandmaturingonAugust11,2026.

OnJuly10,2020,Pembina's$200millionseniorunsecurednotes,seriesC,werefullyrepaidthroughanearlyredemption,of

whichnoticewasprovidedtoholdersonJune5,2020.Theseniorunsecurednotes,seriesC,wereoriginallysettomaturein

September2021.

Subsequenttoyear-end,onJanuary25,2021,Pembinaclosedanofferingof$600millionoffixed-to-fixedratesubordinated

notes,series1(the"SubordinatedNotes,Series1").TheSubordinatedNotes,Series1haveafixedcouponof4.80percentper

annum,payablesemi-annually,andmatureonJanuary25,2081.

Subsequenttoyear-end,onMarch25,2021,Pembinacancelledits$800millionrevolvingcreditfacility.Nobalancewas

outstandingonthecancellationdate.

Subsequenttoyear-end,onApril30,2021,Pembinaextendedthematuritydatesofitsrevolvingandoperatingcreditfacilities

toJune2026andMay2022,respectively.

FormoreinformationaboutPembina'sexposuretointerestrate,foreigncurrencyandliquidityrisk,seeNote27Financial

Instruments.

18.DECOMMISSIONINGPROVISION

ThedecommissioningprovisionreflectsthediscountedcashflowsexpectedtobeincurredtodecommissionPembina's

pipelinesystems,gasprocessingandfractionationplants,storageandterminallinghubs,includingestimatedenvironmental

reclamationandremediationcosts.Changesinthemeasurementofthedecommissioningprovisionareaddedto,ordeducted

from,thecostoftherelatedproperty,plantandequipmentorrightofuseasset.Whenare-measurementofthe

decommissioningprovisionrelatestoaretiredasset,theamountisrecordedinearnings(loss).

Theundiscountedcashflowsatthetimeofdecommissioningarecalculatedusinganestimatedtimingofeconomicoutflows

rangingfromoneto83years,withthemajorityestimatedat50years.Theestimatedeconomiclivesoftheunderlyingassets

formthebasisfordeterminingthetimingofeconomicoutflows.Pembinaappliedcredit-adjustedrisk-freeratesof3.3percent

to4.7percent(2019:3.3percentto4.7percent)andaninflationrateof1.8percent(2019:1.8percent).

($millions) 20202019

(RestatedNote4)

BalanceatJanuary1(2) 340 162

Unwindingofdiscountrate 15 9

Changeinrates — 90

Acquisition(Note7) — 74

Additions 11 8

Changeincostestimatesandother (16) (3)

Total 350 340

Lesscurrentportion(1) (2) (3)

BalanceatDecember31 348 337(1) IncludedintradepayablesandotherontheConsolidatedStatementofFinancialPosition.(2) January1,2019openingbalanceincludes$4millionrelatingtothecurrentportionoftheliabilitypreviouslyclassifiedastradepayablesandother.


19.SHARECAPITAL

Pembinaisauthorizedtoissueanunlimitednumberofcommonshares,withoutparvalue,254,850,850ClassApreferred

shares,issuableinseriesandanunlimitednumberofClassBpreferredshares.Theholdersofthecommonsharesareentitled

toreceivenoticeof,attendandvoteatanymeetingoftheshareholdersofPembina,receivedividendsdeclaredandsharein

theremainingpropertyofPembinaupondistributionoftheassetsofPembinaamongitsshareholdersforthepurposeof

winding-upitsaffairs.

CommonShareCapital

($millions,exceptasnoted)

NumberofCommonShares

(millions)Common

ShareCapital

BalanceatDecember31,2018 508 13,662

IssuedonAcquisition,netofissuecosts(Note7) 36 1,710

Share-basedpaymenttransactions 4 167


Share-basedpaymenttransactions 2 105


PreferredShareCapital

($millions,exceptasnoted)

NumberofPreferredShares

(millions)Preferred

ShareCapital


ClassA,Series23PreferredsharesissuedonAcquisition,netofissuecosts(Note7) 12 293ClassA,Series25PreferredsharesissuedonAcquisition,netofissuecosts(Note7) 10 243

PartVI.1tax — (3)


PartVI.1tax — (10)


OnMarch1,2019,noneofthesixmillionCumulativeRedeemableRateResetClassAPreferredSeries3sharesoutstanding

wereconvertedintoCumulativeRedeemableFloatingRateClassAPreferredSeries4shares.

OnMarch31,2019,noneofthesixmillionCumulativeRedeemableRateResetClassAPreferredSeries17sharesoutstanding


OnJune3,2019,noneofthe10millionCumulativeRedeemableRateResetClassAPreferredSeries5sharesoutstanding


OnDecember2,2019,noneofthe10millionCumulativeRedeemableRateResetClassAPreferredSeries7shares

outstandingwereconvertedintoCumulativeRedeemableFloatingRateClassAPreferredSeries8shares.

OnDecember16,2019,inconnectionwiththeKinderAcquisition,theoutstandingpreferredsharesofKinderMorganCanada

wereexchangedforSeries23and25ClassApreferredshareswithsimilartermsandconditionsasthesharespreviously

issuedbyKinderMorganCanada.DividendsontheSeries23and25ClassApreferredshareswillcontinuetobepaidonthe

15thofFebruary,May,AugustandNovemberineachyear,if,asandwhendeclaredbytheBoardofDirectors.

OnJune15,2020,noneoftheeightmillionCumulativeRedeemableRateResetClassAPreferredSeries19sharesoutstanding


OnNovember16,2020,noneoftheninemillionCumulativeRedeemableRateResetClassAPreferredSeries9shares

outstandingwereconvertedintoCumulativeRedeemableFloatingRateClassAPreferredSeries10shares.


Subsequenttoyearend,onJanuary25,2021inconjunctionwiththeofferingoftheSeries1SubordinatedNotes,Pembina

issued600,000Series2021-AClassAPreferredShares,toComputershareTrustCompanyofCanada,tobeheldintrustas

treasurysharestosatisfyPembina'sobligationsundertheindenturegoverningtheSeries1SubordinatedNotes.

Subsequenttoyearend,onMarch1,2021,Pembinaredeemedallofthe6.8millionissuedandoutstandingCumulative

RedeemableMinimumRateResetClassAPreferredShares,Series11foraredemptionpriceequalto$25.00perSeries11

ClassAPreferredShare.

Subsequenttoyearend,onJune1,2021,Pembinaredeemedallofthe10millionissuedandoutstandingCumulative

RedeemableMinimumRateResetClassAPreferredShares,Series13foraredemptionpriceequalto$25.00perSeries13

ClassAPreferredShare.

Dividends

ThefollowingdividendsweredeclaredbyPembina:


($millions) 2020 2019

Commonshares

$2.52percommonshare(2019:$2.36) 1,385 1,213

Preferredshares

$1.23perSeries1preferredshare(2019:$1.23) 12 12













151 126


OnJanuary6,2021,PembinaannouncedthatitsBoardofDirectorshaddeclaredadividendof$0.21percommonshareinthe

totalamountof$115million,payableonFebruary12,2021toshareholdersofrecordonJanuary25,2021.

OnFebruary3,2021,PembinaannouncedthatitsBoardofDirectorshaddeclaredadividendof$0.21percommonsharein

thetotalamountof$115million,payableonMarch15,2021toshareholdersofrecordonFebruary25,2021.

Pembina'sBoardofDirectorsalsodeclaredquarterlydividendsforPembina'spreferredsharesonJanuary6,2021asoutlined

inthefollowingtable:

Series RecordDate PayableDate PerShareAmountDividendAmount

($millions)

Series1 February1,2021 March1,2021 $0.306625 3







Series15 March15,2021 March31,2021 $0.279000 2




Series23 February1,2021 February16,2021 $0.328125 4

Series25 February1,2021 February16,2021 $0.325000 3

38

20.REVENUE

Revenuehasbeendisaggregatedintocategoriestoreflecthowthenature,timinganduncertaintyofrevenueandcashflows

areaffectedbyeconomicfactors.

a. RevenueDisaggregation

2020 2019


Pipelines Facilities

Marketing&New

Ventures Total Pipelines Facilities

Marketing&New

Ventures Total($millions)

Take-or-pay(1) 1,664 740 — 2,404 1,200 625 — 1,825

Fee-for-service(1) 295 117 — 412 387 117 — 504

Productsales(2)(3) — — 2,956 2,956 — 5 3,946 3,951

Revenuefromcontractswithcustomers 1,959 857 2,956 5,772 1,587 747 3,946 6,280

Operationalfinanceleaseincome 15 — — 15 — — — —

Fixedoperatingleaseincome 131 35 — 166 63 29 — 92

Totalexternalrevenue 2,105 892 2,956 5,953 1,650 776 3,946 6,372(1) Revenuerecognizedovertime.(2) Revenuerecognizedatapointintime.(3) 2020periodandcomparative2019periodhavebeenrestated.SeeNote3totheConsolidatedFinancialStatements.


b. ContractLiabilities

Significantchangesinthecontractliabilitiesbalancesduringtheperiodareasfollows:

2020 2019


($millions) Take-or-Pay

OtherContractLiabilities

TotalContractLiabilities Take-or-Pay

OtherContractLiabilities

TotalContractLiabilities

Openingbalance 8 223 231 9 159 168

Additions(netintheperiod) 3 117 120 4 35 39

Acquisition(Note7) — — — — 77 77

Revenuerecognizedfromcontractliabilities(1) (8) (51) (59) (5) (48) (53)

Closingbalance 3 289 292 8 223 231

Lesscurrentportion(2) (3) (59) (62) (8) (31) (39)

Endingbalance — 230 230 — 192 192(1) Recognitionofrevenuerelatedtoperformanceobligationssatisfiedinthecurrentperiodthatwereincludedintheopeningbalanceofcontractliabilities.(2) AsatDecember31,2020,thebalanceincludes$3millionofcashcollectedundertake-or-paycontractswhichwillberecognizedwithinoneyearasthecustomerchoosesto

ship,process,orotherwiseforegotheassociatedservice.

ContractliabilitiesdepictPembina'sobligationtoperformservicesinthefutureforcashandnon-cashconsiderationwhich

hasbeenreceivedfromcustomers.Contractliabilitiesincludeup-frontpaymentsornon-cashconsiderationreceivedfrom

customersforfuturetransportation,processingandstorageservices.Contractliabilitiesalsoincludeconsiderationreceived

fromcustomersfortake-or-paycommitmentswherethecustomerhasamake-uprighttoshiporprocessfuturevolumes

underafirmcontract.Theseamountsarenon-refundableshouldthecustomernotuseitsmake-uprights.

Pembinadoesnothaveanycontractassets.Inallinstanceswheregoodsorserviceshavebeentransferredtoacustomerin

advanceofthereceiptofcustomerconsideration,Pembina'srighttoconsiderationisunconditionalandhasthereforebeen

presentedasareceivable.


c. RevenueAllocatedtoRemainingPerformanceObligations

Pembinaexpectstorecognizerevenueinfutureperiodsthatincludescurrentunsatisfiedremainingperformanceobligations

totaling$8.5billion(2019:$9.3billion).Overthenextfiveyears,thisremainingperformanceobligationwillberecognized

annuallyrangingfrom$1.1billion(2019:$1.1billion)decliningto$969million(2019:$983million).Subsequently,upto2039

(2019:2039),Pembinawillrecognizefrom$870million(2019:$977million)to$22million(2019:$13million)peryear.

Inpreparingtheabovefigures,Pembinahastakenthepracticalexpedienttoexcludecontractsthatarebeingaccountedfor

usingthepracticalexpedienttorecognizerevenueinanamountequaltoPembina'srighttoinvoice,aswellasthepractical

expedienttoexcludecontractsthathaveoriginalexpecteddurationsofoneyearorless.

Variableconsiderationrelatingtoflowthroughcostsarenotincludedintheamountspresented.Theseflowthroughcostsdo

notimpactnetincomeorcashflow,andduetothelong-termnatureofthecontractsthereissignificantuncertaintyin

estimatingtheseamounts.Inaddition,Pembinaexcludescontractedrevenueamountsforassetsnotyetin-serviceunless

bothBoardofDirectorsapprovalandregulatoryapprovalfortheassethasbeenobtained.

21.NETFINANCECOSTS



Interestexpenseonfinancialliabilitiesmeasuredatamortizedcost:

Loansandborrowings 362 291

Leases 39 17

Unwindingofdiscountrate 15 8

Gaininfairvalueofnon-commodity-relatedderivativefinancialinstruments (5) (4)

Foreignexchangelosses(gains)andother 9 (23)

Netfinancecosts 420 289

Netinterestpaidof$429million(2019:$311million)includesinterestpaidduringconstructionandcapitalizedof$46million

(2019:$42million).


22.OPERATINGSEGMENTS

Pembinadeterminesitsreportablesegmentsbasedonthenatureofoperationsandincludesthreeoperatingsegments:

Pipelines,FacilitiesandMarketing&NewVentures.

ThePipelinessegmentincludesconventional,oilsandsandtransmissionpipelinesystems,crudeoilstorageandterminalling

businessandrelatedinfrastructureservingvariousmarketsandbasinsacrossNorthAmerica.

TheFacilitiessegmentincludesprocessingandfractionationfacilitiesandrelatedinfrastructurethatprovidePembina's

customerswithnaturalgasandNGLservicesthatarehighlyintegratedwithPembina'sotherbusinessesandabulkmarine

terminalinthePortofVancouver,Canada.

TheMarketing&NewVenturessegmentundertakesvalue-addedcommoditymarketingactivitiesincludingbuyingandselling

productsandoptimizingstorageopportunities,bycontractingcapacityonPembina'sandvariousthird-partypipelinesand

utilizingPembina'srailfleetandraillogisticscapabilities.Marketingactivitiesalsoincludeidentifyingcommercial

opportunitiestofurtherdevelopotherPembinaassets.Pembina'sMarketingbusinessalsoincludesresultsfromAuxSable's

NGLextractionfacilitynearChicago,IllinoisandothernaturalgasandNGLprocessingfacilities,logisticsanddistribution

assetsintheUnitedStatesandCanada.

Thefinancialresultsoftheoperatingsegmentsareincludedbelow.Performanceismeasuredbasedonresultsfromoperating

activities,netofdepreciationandamortization,asincludedintheinternalmanagementreportsthatarereviewedby

Pembina'sChiefExecutiveOfficer,ChiefFinancialOfficerandotherSeniorVicePresidents.Theseresultsareusedtomeasure

performanceasmanagementbelievesthatsuchinformationisthemostrelevantinevaluatingresultsofcertainsegments

relativetootherentitiesthatoperatewithintheseindustries.Inter-segmenttransactionsarerecordedatmarketvalueand

eliminatedundercorporateandinter-segmenteliminations.

FortheyearendedDecember31,2020(RestatedNote3)

Pipelines(1) FacilitiesMarketing&

NewVentures(2)

Corporate&Inter-segmentEliminations Total($millions)

Revenuefromexternalcustomers 2,105 892 2,956 — 5,953

Inter-segmentrevenue 146 339 — (485) —

Totalrevenue(3) 2,251 1,231 2,956 (485) 5,953

Operatingexpenses(4) 498 392 — (178) 712

Costofgoodssold,includingproductpurchases — 11 2,815 (317) 2,509

Depreciationandamortizationincludedinoperations 402 199 50 11 662

Costofsales 900 602 2,865 (484) 3,883

Realizedgainoncommodity-relatedderivativefinancialinstruments — — (54) — (54)

Unrealized(gain)lossoncommodity-relatedderivativefinancialinstruments — (4) 88 — 84

Shareofprofitfromequityaccountedinvestees-operations 227 55 — — 282

Adjustedgrossprofit 1,578 688 57 (1) 2,322

Impairmentinshareofprofitfromequityaccountedinvestees — — (314) — (314)

Grossprofit(loss) 1,578 688 (257) (1) 2,008

Depreciationincludedingeneralandadministrative — — — 38 38

Othergeneralandadministrative(4) 24 10 28 146 208

Other(income)expense (1) 2 4 (23) (18)

Impairmentexpense 1,396 10 370 — 1,776

Reportablesegmentresultsfromoperatingactivities 159 666 (659) (162) 4

Netfinancecosts(income) 31 24 (13) 378 420

Reportablesegmentearnings(loss)beforetax 128 642 (646) (540) (416)

Capitalexpenditures 587 370 38 34 1,029

Contributionstoequityaccountedinvestees — 69 155 — 224


FortheyearendedDecember31,2019(RestatedNote3)

Pipelines(1) FacilitiesMarketing&

NewVentures(2)

Corporate&Inter-segmentEliminations Total($millions)

Revenuefromexternalcustomers 1,650 776 3,946 — 6,372

Inter-segmentrevenue 137 345 — (482) —

Totalrevenue(3) 1,787 1,121 3,946 (482) 6,372

Operatingexpenses(4) 436 344 — (178) 602

Costofgoodssold,includingproductpurchases — 4 3,559 (311) 3,252

Depreciationandamortizationincludedinoperations 243 166 51 11 471

Costofsales 679 514 3,610 (478) 4,325

Realizedgainoncommodity-relatedderivativefinancialinstruments — — (33) — (33)

Shareofprofitfromequityaccountedinvestees 274 51 50 — 375

Unrealizedlossoncommodity-relatedderivativefinancialinstruments — — 13 — 13

Grossprofit(loss) 1,382 658 406 (4) 2,442

Depreciationincludedingeneralandadministrative — — — 36 36

Othergeneralandadministrative(4) 30 14 35 181 260

Otherexpense 3 — 3 9 15

Impairmentexpense 300 — — — 300

Reportablesegmentresultsfromoperatingactivities 1,049 644 368 (230) 1,831

Netfinancecosts(income) 6 21 (8) 270 289

Reportablesegmentearnings(loss)beforetax 1,043 623 376 (500) 1,542

Capitalexpenditures 892 569 157 27 1,645

Contributionstoequityaccountedinvestees 13 73 177 — 263(1) Pipelinestransportationrevenueincludes$228million(2019:$33million)associatedwithU.S.pipelinerevenue.(2) Marketing&NewVenturesincludesrevenueof$143million(2019:$182million)associatedwithU.S.midstreamsales.(3) During2020,noonecustomeraccountedfor10percentormoreoftotalrevenuesreportedthroughoutallsegments.During2019,onecustomeraccountedfor10percentor

moreoftotalrevenueswith$718millionreportedthroughoutallsegments.(4) Pembinaincurred$370million(2019:$339million)ofemployeecosts,ofwhich$244million(2019:$182million)wasrecordedinoperatingexpensesand$126million(2019:

$157million)ingeneralandadministrativeexpenses.Employeecostsincludesalaries,benefitsandshare-basedcompensation.

GeographicalInformation

Non-CurrentAssets



Canada 26,504 26,222

UnitedStates 3,601 5,543

Totalnon-currentassets(1) 30,105 31,765(1) Excludesdeferredincometaxassets.


23.EARNINGS(LOSS)PERCOMMONSHARE

BasicEarnings(Loss)PerCommonShare

ThecalculationofbasiclosspercommonshareatDecember31,2020wasbasedonthelossattributabletocommon

shareholdersof$476million(2019:$1.4billion(1)earnings)andaweightedaveragenumberofcommonsharesoutstandingof

550million(2019:512million).

DilutedEarnings(Loss)PercommonShare

ThecalculationofdilutedlosspercommonshareatDecember31,2020wasbasedonlossattributabletocommon

shareholdersof$476million(2019:$1.4billion(1)earnings),andweightedaveragenumberofcommonsharesoutstanding

afteradjustmentfortheeffectsofalldilutivepotentialcommonsharesof550million(2019:514million).

Earnings(Loss)AttributabletoCommonShareholders




Dividendsonpreferredshares (148) (123)

Cumulativedividendsonpreferredshares,notyetdeclared (12) (8)

Basicanddilutedearnings(loss)attributabletocommonshareholders (476) 1,376

WeightedAverageNumberofCommonShares

2019

(Inmillionsofshares,exceptasnoted) 2020 (RestatedNote3)

IssuedcommonsharesatJanuary1 548 508

EffectofsharesissuedonAcquisition — 1

Effectofsharesissuedonexerciseofoptions 2 3

BasicweightedaveragenumberofcommonsharesatDecember31 550 512

Dilutiveeffectofshareoptionsonissue(1) — 2

DilutedweightedaveragenumberofcommonsharesatDecember31 550 514

Basicearnings(loss)percommonshare(dollars) (0.86) 2.69

Dilutedearnings(loss)percommonshare(dollars) (0.86) 2.68(1) TheaveragemarketvalueofPembina'ssharesforpurposesofcalculatingthedilutiveeffectofshareoptionsfortheyearendedDecember31,2019wasbasedonquoted

marketpricesfortheperiodduringwhichtheoptionswereoutstanding.

FortheyearendedDecember31,2020,277thousand(2019:nil)stockoptionswereexcludedfromthecalculationofdiluted

earnings(loss)percommonshareastheimpactoftheseoptionsareanti-dilutive.


24.PENSIONPLAN

AsatDecember31

($millions) 2020 2019

Registereddefinedbenefitnetobligation 26 19

Supplementaldefinedbenefitnetobligation 18 16

Netemployeebenefitobligations 44 35

Pembinamaintainsdefinedcontributionplansandnon-contributorydefinedbenefitpensionplanscoveringitsemployees.

Pembinacontributesfiveto10percentofanemployee'searningstothedefinedcontributionplanuntiltheemployee'sage

plusyearsofserviceequals50,atwhichtimetheybecomeeligibleforthedefinedbenefitplans.Pembinarecognized$12

millioninexpenseforthedefinedcontributionplanduringtheyear(2019:$11million).Thedefinedbenefitplansincludea

fundedregisteredplanforalleligibleemployeesandanunfundedsupplementalretirementplanforthoseemployeesaffected

bytheCanadaRevenueAgencymaximumpensionlimits.Thedefinedbenefitplansareadministeredbyseparatepension

fundsthatarelegallyseparatedfromPembina.Benefitsundertheplansarebasedonthelengthofserviceandtheannual

averagebestthreeyearsofearningsduringthelast10yearsofserviceoftheemployee.Benefitspaidoutoftheplansarenot

indexed.Pembinameasuresitsaccruedbenefitobligationsandthefairvalueofplanassetsforaccountingpurposesasat

December31ofeachyear.ThemostrecentactuarialfundingvaluationwasatDecember31,2019.Thedefinedbenefitplans

exposePembinatoactuarialriskssuchaslongevityrisk,interestraterisk,andmarket(investment)risk.

EffectiveJanuary1,2021,Pembinarevisedtheeligibilityrequirementsforthedefinedbenefitplan.Employeeswithanage

plusyearsofserviceof40atJanuary1,2021willremaineligibleforthedefinedbenefitplan,whentheirageplusyearsof

servicereaches50.Allotheremployeeswillremaininthedefinedcontributionplan.

DefinedBenefitObligations

AsatDecember31($millions)

2020 2019

RegisteredPlans

SupplementalPlan

RegisteredPlan

SupplementalPlan

Presentvalueofunfundedobligations — 18 — 16

Presentvalueoffundedobligations 278 — 250 —

Totalpresentvalueofobligations 278 18 250 16

Fairvalueofplanassets 252 — 231 —

Recognizedliabilityfordefinedbenefitobligations (26) (18) (19) (16)

Pembinafundsthedefinedbenefitobligationplansinaccordancewithgovernmentregulationsbycontributingtotrustfunds

administeredbyanindependenttrustee.Thefundsareinvestedprimarilyinequitiesandbonds.Definedbenefitplan

contributionstotaled$23millionfortheyearendedDecember31,2020(2019:$20million).

Pembinahasdeterminedthat,inaccordancewiththetermsandconditionsofthedefinedbenefitplans,andinaccordance

withstatutoryrequirementsoftheplans,thepresentvalueofrefundsorreductionsinfuturecontributionsisnotlowerthan

thebalanceofthetotalfairvalueoftheplanassetslessthetotalpresentvalueofobligations.Assuch,nodecreaseinthe

definedbenefitassetisnecessaryatDecember31,2020(December31,2019:nil).

RegisteredDefinedBenefitPensionPlanAssetsComprise

AsatDecember31

(Percent) 2020 2019

Equitysecurities 63 62

Debt 37 38

100 100

120PembinaPipelineCorporationAnnualReport2020

MovementinthePresentValueoftheDefinedBenefitPensionObligation

2020 2019

($millions)Registered

PlansSupplemental

PlanRegistered

PlanSupplemental

Plan

DefinedbenefitsobligationsatJanuary1 250 16 212 12

Benefitspaidbytheplan (28) (2) (12) —

Currentservicecosts 18 1 15 1

Interestexpense 8 1 8 —

Actuariallossesinothercomprehensiveincome 30 2 27 3

DefinedbenefitobligationsatDecember31 278 18 250 16

MovementinthePresentValueofRegisteredDefinedBenefitPensionPlanAssets

($millions) 2020 2019

FairvalueofplanassetsatJanuary1 231 193

Contributionspaidintotheplan 23 20

Benefitspaidbytheplan (28) (12)

Returnonplanassets 18 22

Interestincome 8 8

FairvalueofregisteredplanassetsatDecember31 252 231

ExpenseRecognitioninEarnings(Loss)


($millions) 2020 2019

RegisteredPlan

Currentservicecosts 19 15

Interestonobligation 9 8

Interestonplanassets (8) (8)

20 15

Theexpenseisrecognizedinthefollowinglineitemsintheconsolidatedstatementofcomprehensiveincome:


($millions) 2020 2019

RegisteredPlan

Operatingexpenses 10 7

Generalandadministrativeexpense 10 8

20 15

ExpenserecognizedfortheSupplementalPlanwaslessthan$2millionforeachoftheyearsendedDecember31,2020and

2019.

ActuarialGainsandLossesRecognizedinOtherComprehensiveIncome(Loss)

2020 2019

($millions)Registered

PlansSupplemental

Plan TotalRegistered

PlanSupplemental

Plan Total

BalanceatJanuary1 (33) (2) (35) (28) (1) (29)

Remeasurements:

Financialassumptions (13) (1) (14) (21) (1) (22)

Experienceadjustments (10) (1) (11) — — —

Returnonplanassetsexcludinginterestincome 15 — 15 16 — 16

Recognizedlossduringtheperiodaftertax (8) (2) (10) (5) (1) (6)

BalanceatDecember31 (41) (4) (45) (33) (2) (35)

PembinaPipelineCorporationAnnualReport2020121

Principalactuarialassumptionsused:

AsatDecember31

(weightedaveragepercent) 2020 2019

Discountrate 2.6 3.1

Futurepensionearningincreases 4.0 4.0

Assumptionsregardingfuturemortalityarebasedonpublishedstatisticsandmortalitytables.Thecurrentlongevities

underlyingthevaluesoftheliabilitiesinthedefinedplansareasfollows:

AsatDecember31

(years) 2020 2019

Longevityatage65forcurrentpensioners

Males 21.9 21.8

Females 24.3 24.2

Longevityatage65forcurrentmemberaged45

Males 22.9 22.8

Females 25.2 25.1

Thecalculationofthedefinedbenefitobligationissensitivetothediscountrate,compensationincreases,retirementsand

terminationratesassetoutabove.Achangeintheestimateddiscountrateof2.6percentby100basispointsat

December31,2020isconsideredreasonablypossibleinthenextfinancialyear.Anincreaseby100basispointswouldresult

ina$40millionadditiontotheobligationwhereas,adecreasewouldleadtoa$51millionreductiontotheobligation.

Pembinaexpectstocontribute$23milliontothedefinedbenefitplansin2021.

25.SHARE-BASEDPAYMENTS

AtDecember31,2020,Pembinahasthefollowingshare-basedpaymentarrangements:

ShareOptionPlan(Equity-Settled)

PembinahasashareoptionplanunderwhichemployeesareeligibletoreceiveoptionstopurchasesharesinPembina.

Long-TermShareUnitAwardIncentivePlan(Cash-Settled)

Pembinahasalong-termshareunitawardincentiveplan.Undertheshare-basedcompensationplan,awardsofrestricted

("RSU")andperformance("PSU")shareunitsaremadetoofficersandnon-officers.Theplanresultsinparticipantsreceiving

cashcompensationbasedonthevalueoftheunderlyingnotionalsharesgrantedundertheplan.Paymentsarebasedona

tradingvalueofPembina'scommonsharesplusnotionaldividendsandperformanceofPembina.

Pembinaalsohasadeferredshareunit("DSU")plan.UndertheDSUplan,directorsarerequiredtotakeatleast50percentof

totaldirectorcompensationasDSUs,untilsuchtimethattheyhavemetcertainshareownershipguidelines.ADSUisa

notionalsharethathasthesamevalueasonePembinacommonshare.ItsvaluechangeswithPembina'sshareprice.DSUsdo

nothavevotingrightsbuttheyaccruedividendsasadditionalDSUunits,atthesamerateasdividendspaidonPembina's

commonshares.DSUsarepaidoutwhenadirectorretiresfromtheboardandareredeemedforcashusingtheweighted

averageoftradingpriceofcommonsharesontheTorontoStockExchange("TSX")forthelastfivetradingdaysbeforethe

redemptiondate,multipliedbythenumberofDSUsthedirectorholds.

TermsandConditionsofShareOptionPlanandShareUnitAwardIncentivePlan

ShareOptionPlan

Shareoptionsvestone-thirdonthefirstanniversaryofthegrantdate,one-thirdonthesecondanniversaryofthegrantdate

andone-thirdonthethirdanniversaryofthegrantdateandhaveacontractuallifeofsevenyears.


Long-TermShareUnitAwardIncentivePlan(1)

GrantdateRSUs,PSUsandDSUstoOfficers,Non-Officers(2)andDirectors(thousandsofunits,exceptasnoted) PSUs(3) RSUs(3) DSUs Total

January1,2019 475 460 36 971

January1,2020 469 487 31 987(1) DistributionUnitsaregrantedinadditiontoRSUandPSUgrantsbasedonnotionalaccrueddividendsfromRSUandPSUgrantedbutnotpaid.(2) Non-OfficersdefinedasseniorselectedpositionswithinPembina.(3) Contractuallifeof3years.

PSUsvestonthethirdanniversaryofthegrantdate.RSUsvestone-thirdonthefirstanniversaryofthegrantdate,one-third

onthesecondanniversaryofthegrantdateandone-thirdonthethirdanniversaryofthegrantdate.Actualunitsawardedare

basedonthetradingvalueofthesharesandperformanceofPembina.

DisclosureofShareOptionPlan

Thenumberandweightedaverageexercisepricesofshareoptionsasfollows:

(thousandsofoptions,exceptasnoted) NumberofOptions

WeightedAverageExercisePrice

(dollars)

OutstandingatDecember31,2018 17,928 $42.12

Granted 5,470 $48.27

Exercised (3,979) $37.95

Forfeited (655) $45.29

Expired (180) $48.98


Granted 7,316 $37.55

Exercised (2,188) $40.17

Forfeited (1,103) $44.86

Expired (833) $45.24


AsofDecember31,2020,thefollowingoptionsareoutstanding:

(thousandsofoptions,exceptasnoted)ExercisePrice(dollars)

NumberOutstandingatDecember31,2020 OptionsExercisable

WeightedAverageRemainingLife

$26.83–$36.32 4,451 681 6.0

$36.33–$43.06 4,349 3,813 3.3

$43.07–$45.29 4,362 1,138 5.0

$45.30–$48.08 3,402 2,039 4.9

$48.09–$52.01 5,212 2,800 3.9

Total 21,776 10,471 4.6

Optionsareexercisedregularlythroughouttheyear.Therefore,theweightedaveragesharepriceduringtheyearof$49.79

(2019:$48.87)isrepresentativeoftheweightedaveragesharepriceatthedateofexercise.


Expectedvolatilityisestimatedbyconsideringhistoricaveragesharepricevolatility.Theweightedaverageinputsusedinthe

measurementofthefairvaluesatgrantdateofshareoptionsarethefollowing:

ShareOptionsGranted


(dollars,exceptasnoted) 2020 2019

Weightedaverage

Fairvalueatgrantdate 3.82 4.12

Expectedvolatility(percent) 36.61 18.7

Expectedoptionlife(years) 3.67 3.67

Expectedannualdividendsperoption 2.52 2.36

Expectedforfeitures(percent) 6.9 6.6

Risk-freeinterestrate(basedongovernmentbonds)(percent) 0.5 1.6

DisclosureofLong-TermShareUnitAwardIncentivePlan

Thelong-termshareunitawardincentiveplanswerevaluedusingthevolumeweightedaveragepricefor20daysending

December31,2020of$32.53(2019:$47.52).Actualpaymentmaydifferfromamountvaluedbasedonmarketpriceand

companyperformance.

EmployeeExpenses


($millions) 2020 2019

Shareoptionplan,equitysettled 17 16

Long-termshareunitawardincentiveplan 11 50

Share-basedcompensationexpense 28 66

Totalcarryingamountofliabilitiesforcashsettledarrangements 60 95

Totalintrinsicvalueofliabilityforvestedbenefits 39 57

26.ACCUMULATEDOTHERCOMPREHENSIVEINCOME

($millions)

CurrencyTranslation

Reserve

CashFlowHedge

Reserve

PensionandotherPost-RetirementBenefitPlan

Adjustments(2) Total

BalanceatDecember31,2018 347 — (30) 317

Othercomprehensivelossbeforehedgingactivities (213) — (6) (219)

BalanceatDecember31,2019 134 — (36) 98

Othercomprehensivelossbeforehedgingactivities (117) — (10) (127)

Othercomprehensivegainresultingfromhedgingactivities(1) 32 — — 32

Taximpact (1) — — (1)

BalanceatDecember31,2020 48 — (46) 2(1) AmountsrelatetohedgesoftheCompany'snetinvestmentinforeignoperations(reportedinCurrencyTranslationReserve)andinterestratederivativesdesignatedascash

flowhedges(reportedinCashFlowHedgeReserve)(Note27).(2) PensionandotherPost-RetirementBenefitPlanAdjustmentswillnotbereclassifiedintoearnings.


27.FINANCIALINSTRUMENTS&RISKMANAGEMENT

RiskManagementOverview

Pembinahasexposuretocounterpartycreditrisk,liquidityriskandmarketrisk.Pembinarecognizesthateffective

managementoftheserisksisacriticalsuccessfactorinmanagingorganizationandshareholdervalue.

Riskmanagementstrategies,policiesandlimitsensurerisksandexposuresarealignedtoPembina'sbusinessstrategyandrisk

tolerance.Pembina'sBoardofDirectorsisresponsibleforprovidingriskmanagementoversightatPembinaandoverseeshow

managementmonitorscompliancewithPembina'sriskmanagementpoliciesandproceduresandreviewstheadequacyof

thisriskframeworkinrelationtotherisksfacedbyPembina.InternalauditpersonnelassisttheBoardofDirectorsinits

oversightrolebymonitoringandevaluatingtheeffectivenessoftheorganization'sriskmanagementsystem.

CounterpartyCreditRisk

CounterpartycreditriskrepresentsthefinanciallossPembinamayexperienceifacounterpartytoafinancialinstrumentor

commercialagreementfailedtomeetitscontractualobligationstoPembinainaccordancewiththetermsandconditionsof

thefinancialinstrumentsoragreementswithPembina.CounterpartycreditriskarisesprimarilyfromPembina'scashandcash

equivalents,tradeandotherreceivables,advancestorelatedpartiesandfromcounterpartiestoitsderivativefinancial

instruments.ThecarryingamountofPembina'scashandcashequivalents,tradeandotherreceivables,advancestorelated

parties,derivativefinancialinstrumentsandcertainfinancialguaranteesrepresentsthemaximumcounterpartycredit

exposure,withouttakingintoaccountsecurityheld.

Pembinamanagescounterpartycreditriskthroughestablishedcreditmanagementtechniques,includingconducting

comprehensivefinancialandotherassessmentsforallnewcounterpartiesandregularreviewsofexistingcounterpartiesto

establishandmonitoracounterparty'screditworthiness,settingexposurelimits,monitoringexposuresagainsttheselimits,

enteringintomasternettingarrangementsandobtainingfinancialassuranceswherewarranted.Pembinautilizesvarious

sourcesoffinancial,creditandbusinessinformationinassessingthecreditworthinessofacounterpartyincludingexternal

creditratings,whereavailable,andinothercases,detailedfinancialstatementanalysisinordertogenerateaninternalcredit

ratingbasedonquantitativeandqualitativefactors.TheestablishmentofcounterpartyexposurelimitsisgovernedbyaBoard

ofDirectorsdesignatedcounterpartyexposurelimitmatrixwhichrepresentsthemaximumdollaramountsofcounterparty

exposurebydebtratingthatcanbeapprovedforacounterparty.Pembinacontinuestocloselymonitorandreassessthe

creditworthinessofitscounterparties,whichhasresultedinPembinareducingormitigatingitsexposuretocertain

counterpartieswhereitwasdeemedwarrantedandpermittedundercontractualterms.

Financialassurancesfromcounterpartiesmayincludeguarantees,lettersofcreditandcash.AtDecember31,2020lettersof

credittotaling$130million(December31,2019:$90million)wereheldprimarilyinrespectofcustomertradereceivables.

PembinatypicallyhascollecteditstradereceivablesinfullandatDecember31,2020,94percentwerecurrent(2019:95

percent).Managementdefinescurrentasoutstandingaccountsreceivableunder30dayspastdue.Pembinahasagenerallien

andacontinuingandfirstprioritysecurityinterestin,andasecuredchargeon,allofashipper'spetroleumproductsinits

custody.

AtDecember31,theagingofpastduetradeandotherreceivableswasasfollows:

($millions) 2020 2019

31-60dayspastdue 3 1

Greaterthan61dayspastdue 8 7

11 8


Pembinausesalossallowancematrixtomeasurelifetimeexpectedcreditlossesatinitialrecognitionandthroughoutthelife

ofthereceivable.ThelossallowancematrixisdeterminedbasedonPembina'shistoricaldefaultratesovertheexpectedlife

oftradereceivables,adjustedforforward-lookingestimates.Managementbelievestheunimpairedamountsthatarepastdue

bygreaterthan30daysarefullycollectiblebasedonhistoricaldefaultratesofcustomersandmanagement'sassessmentof

counterpartycreditriskthroughestablishedcreditmanagementtechniquesasdiscussedabove.

Expectedcreditlossesonleasereceivablesaredeterminedusingaprobability-weightedestimateofcreditlosses,measured

asthepresentvalueofallexpectedcashshortfalls,discountedattheinterestratesimplicitintheleases,usingreasonableand

supportableinformationaboutpastevents,currentconditionsandforecastsoffutureeconomicconditions.Pembina

considerstheriskofdefaultrelatingtoleasereceivableslowbasedonPembina'sassessmentofindividualcounterpartycredit

riskthroughestablishedcreditmanagementtechniquesasdiscussedabove.

AdvancestorelatedpartiesatDecember31,2020areheldatamortizedcostandconsistoffundsadvancedbyPembinatoa

jointlycontrolledentity.Expectedcreditlossesaremeasuredusingaprobability-weightedestimateofcreditlosses,measured

asthepresentvalueofallexpectedcashshortfalls,discountedattheeffectiveinterestrateofthefinancialasset,using

reasonableandsupportableinformationaboutpastevents,currentconditionsandforecastsoffutureeconomicconditions.

AsaresultoftheassessmentleadingtotheimpairmentofPembina'spreferredinterestinRuby,Pembinafurtherimpairedits

remainingrelatedpartyadvanceof$139milliontoRuby.SeeNote13foradditionaldetails.

Pembinamonitorsandmanagesitsconcentrationofcounterpartycreditriskonanongoingbasis.Pembinabelievesthese

measuresminimizeitscounterpartycreditriskbutthereisnocertaintythattheywillprotectitagainstallmateriallosses.As

partofitsongoingoperations,Pembinamustbalanceitsmarketandcounterpartycreditriskswhenmakingbusiness

decisions.

LiquidityRisk

LiquidityriskistheriskPembinawillnotbeabletomeetitsfinancialobligationsastheycomedue.Thefollowingarethe

contractualmaturitiesoffinancialliabilities,includingestimatedinterestpayments.

OutstandingBalancesDuebyPeriod

December31,2020CarryingAmount

ExpectedCashFlows

LessThan1Year 1-3Years 3-5Years

MoreThan5Years($millions)

Tradepayablesandaccruedliabilities 780 780 780 — — —

Loansandborrowings 10,876 16,275 1,058 2,262 2,708 10,247

Dividendspayable 115 115 115 — — —

Derivativefinancialliabilities 69 69 69 — — —

Leaseliabilities 774 1,064 131 217 174 542

Pembinamanagesitsliquidityriskbyforecastingcashflowsovera12monthrollingtimeperiodtoidentifyfinancing

requirements.Thesefinancingrequirementsarethenaddressedthroughacombinationofcreditfacilitiesandthroughaccess

tocapitalmarkets,ifrequired.


MarketRisk

Pembina'sresultsaresubjecttomovementsincommodityprices,foreignexchangeandinterestrates.AformalRisk

ManagementProgramincludingpoliciesandprocedureshasbeendesignedtomitigatetheserisks.

a. CommodityPriceRisk

CertainofthetransportationcontractsortollingarrangementswithrespecttoPembina'spipelineassetsdonotincludetake-

or-paycommitmentsfromcrudeoilandgasproducersand,asaresult,Pembinaisexposedtothroughputriskwithrespectto

thoseassets.AdecreaseinvolumestransportedcandirectlyandadverselyaffectPembina’srevenuesandearnings.The

demandfor,andutilizationof,Pembina'spipelineassetsmaybeimpactedbyfactorssuchaschangingmarketfundamentals,

capacitybottlenecks,operationalincidents,regulatoryrestrictions,systemmaintenance,weatherandincreasedcompetition.

Marketfundamentals,suchascommoditypricesandpricedifferentials,naturalgasandgasolineconsumption,alternative

energysourcesandglobalsupplydisruptionsoutsideofPembina'scontrolcanimpactboththesupplyofanddemandforthe

commoditiestransportedonPembina'spipelines.

Pembina'sMarketingbusinessincludesactivitiesrelatedtoproductstorage,terminalling,andhubservices.Theseactivities

exposePembinatocertainrisksrelatingtofluctuationsincommoditypricesand,asaresult,Pembinamayexperience

volatilityinrevenueandimpairmentsrelatedtothebookvalueofstoredproductwithrespecttotheseactivities.Primarily,

Pembinaentersintocontractstopurchaseandsellcrudeoil,condensate,NGLandnaturalgasatfloatingmarketprices;asa

result,thepricesofproductsthataremarketedbyPembinaaresubjecttovolatilityasaresultoffactorssuchasseasonal

demandchanges,extremeweatherconditions,marketinventorylevels,generaleconomicconditions,changesincrudeoil

marketsandotherfactors.Pembinamanagesitsriskexposurebybalancingpurchasesandsalestosecurelessvolatile

margins.NotwithstandingPembina'smanagementofpriceandqualityrisk,marketingmarginsforcommoditiescanvaryand

havevariedsignificantlyfromperiodtoperiodinthepast.Thisvariabilitycouldhaveanadverseeffectontheresultsof

Pembina'sMarketingbusinessanditsoverallresultsofoperations.Toassistinreducingthisinherentvariabilityinits

Marketingbusiness,Pembinahasinvested,andwillcontinuetoinvest,inassetsthathaveafee-basedrevenuecomponent.

PembinaisalsoexposedtopotentialpricedeclinesanddecreasingfracspreadsbetweenthetimePembinapurchasesNGL

feedstockandsellsNGLproducts.FracspreadisthedifferencebetweenthesalepricesofNGLproductsandthecostofNGL

sourcedfromnaturalgasandacquiredatpricesrelatedtonaturalgasprices.Fracspreadscanchangesignificantlyfrom

periodtoperioddependingontherelationshipbetweenNGLandnaturalgasprices(the"fracspreadratio"),absolute

commoditypricesandchangesintheCanadiantoU.S.dollarexchangerate.Inadditiontothefracspreadratiochanges,there

isalsoadifferentialbetweenNGLproductpricesandcrudeoilpriceswhichcanchangemarginsrealizedformidstream

products.Theamountofprofitorlossmadeontheextractionportionofthebusinesswillgenerallyincreaseordecreasewith

fracspreads.ThisexposurecouldresultinvariabilityofcashflowgeneratedbytheMarketingbusiness,whichcouldaffect

PembinaandthecashdividendsthatPembinaisabletodistribute.

Pembinautilizesfinancialderivativeinstrumentsaspartofitsoverallriskmanagementstrategytoassistinmanagingthe

exposuretocommodityprice,interestrate,costofpowerandforeignexchangerisk.Asanexampleofcommodityprice

mitigation,Pembinaactivelyfixesaportionofitsexposuretofractionationmarginsthroughtheuseofderivativefinancial

instruments.Additionally,Pembina'sMarketingbusinessisalsoexposedtovariabilityinquality,timeandlocation

differentialsforvariousproducts,andfinancialinstrumentsmaybeusedtooffsetPembina'sexposurestothesedifferentials.

Pembinadoesnotusefinancialinstrumentsforspeculativepurposes.Commoditypricefluctuationsandvolatilitycanalso

impactproduceractivityandthroughputinPembina’sinfrastructure.


Thefollowingtableshowstheimpactonearnings(1)iftheunderlyingcommoditypriceriskofthederivativefinancial

instruments(increased)ordecreasedby15percent,withothervariablesheldconstant.

AsatDecember31,2020 15Percent 15Percent

($millions) PriceIncrease PriceDecrease

Crudeoil (30) 28

Naturalgas 9 (9)

NGL(2) (32) 32(1) Basedonaveragemarketprices.(2) Includespropane,butaneandcondensate.

b. ForeignExchangeRisk

CertainofPembina'scashflows,namelyaportionofitscommodity-relatedcashflows,certaincashflowsfromU.S.-based

infrastructureassetsanddistributionsfromU.S.-basedinvestmentsinequityaccountedinvestees,aresubjecttocurrency

risk,arisingfromthedenominationofspecificcashflowsinU.S.dollars.Additionally,aportionofPembina'scapital

expendituresandcontributionsorloanstoPembina'sU.S.-basedinvestmentsinequityaccountedinvestees,maybe

denominatedinU.S.dollars.Furthermore,thevalueoftheinvestmentinU.S.dollardenominatedsubsidiarieswillfluctuate

withchangesinexchangerateswhentranslatedintoPembina'sfunctionalcurrency.

Pembinamonitors,assessesandrespondstotheseforeigncurrencyrisksusinganactiveriskmanagementprogram,which

mayincludetheissuanceofU.S.dollardebt,andexchangeofforeigncurrencyfordomesticcurrencyatafixedrate.

Thefollowingtableshowstheimpactonearnings(1)iftheunderlyingforeignexchangeriskrateofthederivativefinancial

instruments(increased)ordecreasedby$0.10,withothervariablesheldconstant.

AsatDecember31,2020 $0.10 $0.10

($millions) RateIncrease RateDecrease

U.S.toCanadiandollars (26) 26(1) BasedontheU.S.toCanadiandollarexchangerate.

c. InterestRateRisk

InterestbearingfinancialliabilitiesincludePembina'sdebtandleaseliabilities.Pembinahasafloatinginterestratedebtinthe

formofitscreditfacilitiesandcertainlong-termdebt,whichsubjectsPembinatointerestraterisk.Pembinamonitorsand

assessesvariableinterestrateriskandrespondstothisriskbyissuinglong-termdebtwithfixedinterestratesorbyentering

intointerestrateswaps.

Pembina'sU.S.drawingsonitscreditfacilities,certainU.S.debt,andPembina'sinterestrateswapshavevariablerate

componentsthatreferencetheLondonInterbankOfferedRate("LIBOR").Thisrateisexpectedtobephasedoutfollowing

2021andwilllikelybereplacedbyasecuredovernightfinancingrate.LIBORwillceasetobepublishedattheendof2023.

Pembinawillcontinuetomonitordevelopmentsandthepotentialimpactonthebusiness.

Atthereportingdate,theinterestrateprofileofPembina'sinterest-bearingfinancialinstrumentswas:

AsatDecember31

($millions) 2020 2019

Carryingamountsoffinancialliability

Fixedrateinstruments(1) 10,120 8,874

Variablerateinstruments(2) 1,530 2,097

11,650 10,971(1) Includesleaseliabilities.(2) AtDecember31,2020,Pembinaheldpositionsinfinancialderivativecontractsdesignatedascashflowhedginginstruments,fixingtheinterestratesonU.S.$250millionof

variableratedebt(December31,2019:nil).


CashFlowSensitivityAnalysisforVariableRateInstruments

Thefollowingtableshowstheimpactonearningsifinterestratesatthereportingdatewouldhave(increased)decreased

earningsby100basispoints,withothervariablesheldconstant.

AsatDecember31,2020 100BasisPoint 100BasisPoint

($millions) Increase DecreaseVariablerateinstruments (13) 13

FairValues

Thefairvaluesoffinancialassetsandliabilities,togetherwiththecarryingamountsshownintheconsolidatedstatementsof

financialposition,areshowninthetablebelow.Certainnon-derivativefinancialinstrumentsmeasuredatamortizedcost

includingcashandcashequivalents,tradereceivablesandother,financeleasereceivables,advancestorelatedpartiesand

tradepayablesandotherhavebeenexcludedbecausetheyhavecarryingamountsthatapproximatetheirfairvaluedueto

thenatureoftheitemortheshorttimetomaturity.TheseinstrumentswouldbeclassifiedinLevel2ofthefairvalue

hierarchy.

2020 2019AsatDecember31 Carrying

Value

FairValue(1) CarryingValue

FairValue(1)

($millions) Level1 Level2 Level3 Level1 Level2 Level3

Financialassetscarriedatfairvalue

Derivativefinancialinstruments(3) 53 — 53 — 48 — 48 —

Financialliabilitiescarriedatfairvalue

Derivativefinancialinstruments(3) 69 — 69 — 9 — 9 —

Financialliabilitiescarriedatamortizedcost

Loansandborrowings(2) 10,876 — 11,902 — 10,152 — 10,729 —(1) ThebasisfordeterminingfairvalueisdisclosedinNote6.(2) Carryingvalueofcurrentandnon-currentbalances.(3) AtDecember31,2020allderivativefinancialinstrumentsarecarriedatfairvaluethroughearnings.

Pembina'sfinancialinstrumentscarriedatfairvaluearevaluedusingLevel2inputsthatincludequotedforwardpricesfor

commodities,timevalueandvolatilityfactors,whichcanbesubstantiallyobservedorcorroboratedinthemarketplace.

Instrumentsinthiscategoryincludenon-exchangetradedderivativessuchasover-the-counterphysicalforwardsandoptions,

includingthosethathavepricessimilartoquotedmarketprices.Pembinaobtainsquotedmarketpricesforitsinputsfrom

informationsourcesincludingbanks,BloombergTerminalsandNaturalGasExchange.

InterestRatesUsedforDeterminingFairValue

Theinterestratesusedtodiscountestimatedcashflows,whenapplicable,arebasedonthegovernmentyieldcurveatthe

reportingdateplusanadequatecreditspread,andwereasfollows:

AsatDecember31

(percent) 2020 2019

Derivatives 0.5-0.7 2.0-2.5

Loansandborrowings 0.5-3.9 2.3-4.0

Fairvalueofpowerderivativesarebasedonmarketratesreflectingforwardcurves.


Non-DerivativeInstrumentsDesignatedasNetInvestmentHedges

PembinahasdesignatedcertainU.S.dollardenominateddebtasahedgeoftheCompany'snetinvestmentinU.S.dollar

denominatedsubsidiariesandinvestmentsinequityaccountedinvestees.Thedesignateddebthasbeenassessedashaving

noineffectivenessastheU.S.dollardebthasanequalandoppositeexposuretoU.S.dollarfluctuations.Asaresult,allforeign

exchangegainsorlossesonthedebtarereporteddirectlyinothercomprehensive(loss)income.

ThefollowingbalancesofU.S.dollardebthadbeendesignatedashedges:

FortheYearsendedDecember31

($millions) 2020 2019

NotionalamountofU.S.debtdesignated(inU.S.dollars) 250 —

CarryingvalueofU.S.debtdesignated 317 —

Maturitydate 2025 NA

Derivativeinstruments

Pembinaentersintoderivativeinstrumentstohedgefuturecashflowsassociatedwithinterestrate,commodity,andforeign

exchangeexposures.Derivativesareconsideredeffectivehedgestotheextentthattheyoffsetthechangesvalueofthe

hedgeditemortransactionresultingfromaspecifiedriskfactor.Insomecases,eventhoughthederivativesareconsideredto

beeffectiveeconomichedges,theydonotmeetthespecificcriteriaforhedgeaccountingtreatmentandareclassifiedasheld

atfairvaluethroughprofitorloss("FVTPL").

Thefollowingtableisasummaryofthenetderivativefinancialinstruments,whichisconsistentwiththegrossbalances:

2020 2019

AsatDecember31($millions)

CurrentAsset

Non-CurrentAsset

CurrentLiability Total

CurrentAsset

Non-CurrentAsset

CurrentLiability

Non-CurrentLiability Total

Commodity,power,storageandrailfinancialinstruments 11 27 (68) (30) 34 5 (6) (3) 30

Interestrate — 1 (1) — — — — — —

Foreignexchange 14 — — 14 6 3 — — 9

Netderivativefinancialinstruments 25 28 (69) (16) 40 8 (6) (3) 39

NotionalandMaturitySummary

ThematurityandnotionalamountorquantityoutstandingrelatedPembina'sderivativeinstrumentsisasfollows:

($millions)Liquids(bpd)

NaturalGas(GJ/d)

Power(MWh)

ForeignExchange

InterestRate

AsatDecember31,2020

Purchases(1) 1,756 73,557 6 — —

Sales(1) 25,284 — — — —

MillionsofU.S.dollars — — — 260 250

Maturitydates 2021 2021 2021 2021 2025

AsatDecember31,2019

Purchases(1) 409 94,727 — — —

Sales(1) 24,839 — — — —

MillionsofU.S.dollars — — — 470 —

Maturitydates 2020-2021 2020-2021 NA 2020-2021 NA(1) Barrelsperday("bpd"),gigajoulesperday("GJ/d")andmegawatthours("MWh").


GainsandLossesonDerivativeInstruments

Realizedandunrealizedgains(losses)onderivativeinstrumentsareasfollows:


($millions) 2020 2019

DerivativeinstrumentsheldatFVTPL(1)

Realized(gain)loss

Commodity-related (54) (33)

Foreignexchange 2 3

Unrealizedloss(gain)

Commodity-related 84 13

Foreignexchange 5 4(1) Realizedandunrealized(gains)lossesoncommodityderivativeinstrumentsheldatFVTPLareincludedin(gain)lossoncommodity-relatedderivativefinancialinstrumentsin

theconsolidatedstatementsof(loss)earningsandcomprehensive(loss)income.Realizedandunrealized(gains)lossesonforeignexchangederivativeinstrumentsheldatFVTPLareincludedinnetfinancecostsintheconsolidatedstatementsof(loss)earningsandcomprehensive(loss)income.

28.CAPITALMANAGEMENT

Pembina'sobjectivewhenmanagingcapitalistoensureastablestreamofdividendstoshareholdersthatissustainableover

thelong-term.Pembinamanagesitscapitalstructurebasedonrequirementsarisingfromsignificantcapitaldevelopment

activities,theriskcharacteristicsofitsunderlyingassetbaseandchangesineconomicconditions.Pembinamanagesitscapital

structureandshort-termfinancingrequirementsusingnon-GAAPmeasures,includingtheratiosofdebttoadjustedEBITDA,

debttototalenterprisevalue,adjustedcashflowtodebtanddebttoequity.ThemetricsareusedtomeasurePembina's

financialleverageandmeasurethestrengthofPembina'sbalancesheet.Pembinaremainssatisfiedthattheleverage

currentlyemployedinitscapitalstructureissufficientandappropriategiventhecharacteristicsandoperationsofthe

underlyingassetbase.Pembina,uponapprovalfromitsBoardofDirectors,willbalanceitsoverallcapitalstructurethrough

newequityordebtissuances,asrequired.

Pembinamaintainsaconservativecapitalstructurethatallowsittofinanceitsday-to-daycashrequirementsthroughits

operations,withoutrequiringexternalsourcesofcapital.Pembinafundsitsoperatingcommitments,short-termcapital

spendingaswellasitsdividendstoshareholdersthroughthiscashflow,whilenewborrowingandequityissuancesare

primarilyreservedforthesupportofspecificsignificantdevelopmentactivities.ThecapitalstructureofPembinaconsistsof

shareholder'sequity,comprisedofcommonandpreferredequity,pluslong-termdebt.Long-termdebtiscomprisedofbank

creditfacilitiesandunsecurednotes.

Pembinaissubjecttocertainfinancialcovenantsunderitsnoteindenturesandcreditagreementsandisincompliancewith

allfinancialcovenantsasofDecember31,2020.

Note19ofthesefinancialstatementsshowsthechangeinsharecapitalfortheyearendedDecember31,2020.


29.GROUPENTITIES

SignificantSubsidiaries

AsatDecember31

(percentages) Jurisdiction OwnershipInterest

PembinaCochinLLC DelawareU.S. 100

PembinaEmpressNGLPartnership Alberta 100

PembinaGasServicesLimitedPartnership Alberta 100

PembinaHoldingCanadaL.P. Alberta 100

PembinaInfrastructureandLogisticsL.P. Alberta 100

PembinaMidstreamLimitedPartnership Alberta 100

PembinaOilSandsPipelineL.P. Alberta 100

PembinaPipeline Alberta 100

PKMCanadaNorth40LimitedPartnership Manitoba 100

30.RELATEDPARTIES

Pembinaentersintotransactionswithrelatedpartiesinthenormalcourseofbusinessandontermsequivalenttothosethat

prevailinarm'slengthtransactions,unlessotherwisenoted.Pembinacontractscapacityfromitsequityaccountedinvestee

Alliance,advancesfundstosupportoperationsandprovidesservices,onacostrecoverybasis,toinvestmentsinequity

accountedinvestees.Asummaryofthesignificantrelatedpartytransactionsareasfollows:

EquityAccountedInvestees

($millions) 2020 2019

FortheyearsendedDecember31:

Servicesprovided 136 82

Servicesreceived 14 2

Interestincome 14 10

AsatDecember31:

Advancestorelatedparties(1) 13 131

Tradereceivablesandother 19 17

Tradepayablesandaccruedliabilities 2 —(1) DuringtheyearendedDecember31,2020,PembinaadvancedU.S.$24million(2019:U.S.$31million)toRubyand$5million(2019:$17million),netofrepayments,toFort

Corp.InDecember31,2020,PembinarecognizedanimpairmentofU.S.$110milliononitsadvancestoRuby(Note13).DuringtheyearendedDecember31,2019,Pembinaconverted$57millioninadvancestoCKPCintoequitycontributions.

KeyManagementPersonnelandDirectorCompensation

KeymanagementconsistsofPembina'sdirectorsandcertainkeyofficers.

Compensation

Inadditiontoshort-termemployeebenefits,includingsalaries,directorfeesandshort-termincentives,Pembinaalsoprovides

keymanagementpersonnelwithshare-basedcompensation,contributestopostemploymentpensionplansandprovidescar

allowances,parkingandbusinessclubmemberships.

Keymanagementpersonnelcompensationcomprised:


($millions) 2020 2019

Short-termemployeebenefits 10 10

Share-basedcompensationandother 10 13

Totalcompensationofkeymanagement 20 23


Transactions

KeymanagementpersonnelanddirectorsofPembinacontrollessthanonepercentofthevotingcommonsharesofPembina

(consistentwiththeprioryear).CertaindirectorsandkeymanagementpersonnelalsoholdPembinapreferredshares.

Dividendpaymentsreceivedforthecommonandpreferredsharesheldarecommensuratewithothernon-relatedholdersof

thoseinstruments.

Certainofficersaresubjecttoemploymentagreementsintheeventofterminationwithoutjustcauseorchangeofcontrol.

Post-EmploymentBenefitPlans

Pembinahassignificantinfluenceoverthepensionplansforthebenefitoftheirrespectiveemployees.Nobalancepayableis

outstandingatDecember31,2020(December31,2019:nil).

($millions)TransactionValue

YearsEndedDecember31

Post-employmentbenefitplan Transaction 2020 2019

Definedbenefitplan Funding 23 20

31.COMMITMENTSANDCONTINGENCIES

Commitments

PembinahadthefollowingcontractualobligationsoutstandingatDecember31,2020:

ContractualObligations(1) PaymentsDuebyPeriod

($millions) Total Lessthan1Year 1–3Years 3–5Years After5Years

Leases(2) 1,064 131 217 174 542

Loansandborrowings(3) 16,275 1,058 2,262 2,708 10,247

Constructioncommitments(4) 1,208 523 149 43 493

Other 569 112 145 75 237

Totalcontractualobligations 19,116 1,824 2,773 3,000 11,519(1) Pembinaentersintoproductpurchaseagreementsandpowerpurchaseagreementstosecuresupplyforfutureoperations.PurchasepricesofbothNGLandpowerare

dependentoncurrentmarketprices.VolumesandpricesforNGLandpowercontractscannotbereasonablydetermined,andtherefore,anamounthasnotbeenincludedinthecontractualobligationsschedule.Productpurchaseagreementsrangefromoneto9yearsandinvolvethepurchaseofNGLproductsfromproducers.Assumingproductisavailable,Pembinahassecuredbetween35and175mbpdofNGLeachyearuptoandincluding2029.Powerpurchaseagreementsrangefromoneto24yearsandinvolvethepurchaseofpowerfromelectricalserviceproviders.Pembinahassecuredupto80megawattsperdayeachyearuptoandincluding2044.

(2) Includesterminals,rail,officespace,landandvehicleleases.(3) Excludingdeferredfinancingcosts.IncludinginterestpaymentsonPembina'sseniorunsecurednotes.(4) Excludingsignificantprojectsthatareawaitingregulatoryapproval,projectswhichPembinaisnotcommittedtoconstruct,andprojectsthatareexecutedbyequity

accountedinvestees.

CommitmentstoEquityAccountedInvestees

Pembinahascommitmentstoprovidecontributionstocertainequityaccountedinvesteesbasedonannualbudgetsapproved

bythejointventurepartners.

Contingencies

Pembina,includingitssubsidiariesanditsinvestmentsinequityaccountedinvestees,aresubjecttovariouslegaland

regulatoryandtaxproceedings,actionsandauditsarisinginthenormalcourseofbusiness.Werepresentourinterests

vigorouslyinallproceedingsinwhichweareinvolved.Legalandadministrativeproceedingsinvolvingpossiblelossesare

inherentlycomplex,andweapplysignificantjudgmentinestimatingprobableoutcomes.Ofmostsignificanceisaclaimfiled

againstAuxSablebyacounterpartytoanNGLsupplyagreement.AuxSablehasfiledStatementsofDefenserespondingto

theclaim.Whilethefinaloutcomeofsuchactionsandproceedingscannotbepredictedwithcertainty,atthistime

managementbelievesthattheresolutionsofsuchactionsandproceedingswillnothaveamaterialimpactonPembina's

financialpositionorresultsofoperations.


LettersofCredit

Pembinahasprovidedlettersofcredittovariousthirdpartiesinthenormalcourseofconductingbusiness.Thelettersof

creditincludefinancialguaranteestocounterpartiesforproductpurchasesandsales,transportationservices,utilities,

engineeringandconstructionservices.Thelettersofcredithavenothadandarenotexpectedtohaveamaterialimpacton

Pembina'sfinancialposition,earnings,liquidityorcapitalresources.

AtDecember31,2020,Pembinahad$91million(December31,2019:$103million)inlettersofcreditissuedtofacilitate

commercialtransactionswiththirdpartiesandtosupportregulatoryrequirements.

32.SUBSEQUENTEVENTS

OnJune1,2021,PembinaannouncedthatithadenteredintoanarrangementagreementwithInterPipelineLtd.("Inter

Pipeline"),pursuanttowhichPembinaproposedtoacquirealloftheissuedandoutstandingcommonsharesofInterPipeline

bywayofaplanofarrangementundertheBusinessCorporationsAct(Alberta)(the"InterPipelineArrangement").Pursuant

totheInterPipelineArrangement,holdersofInterPipelinecommonshares(otherthandissentingholdersofInterPipeline

commonshares)wouldhavereceived0.5ofacommonshareofPembinaforeachcommonshareofInterPipelinethatthey

owned.OnJuly25,2021,thearrangementagreementwasterminatedandPembinareceivedtheterminationfeeof

$350million.

OnJune4,2021,Pembinaacquireda49.9percentinterestinajointventurewiththeHaislaNationtodeveloptheCedarLNG

Project,aLNGfacilitylocatedonthecoastofBritishColumbiawithintheDouglasChannelonHaisla-ownedland.Pembina's

initialinvestmentof$129millionincluded$76millionofaccruedcontingentconsiderationpayableonachievementofcertain

conditions.Underthetermsoftheagreement,Pembinahascommitmentstomakeadditionalpaymentsonapositivefinal

investmentdecisionaswellascontributionstofunddevelopmentcostsandannualoperatingbudgets.


www.pembina.com

HEAD OFFICEPembina Pipeline Corporation

Suite 4000, 585 – 8th Avenue SW

Calgary, Alberta T2P 1G1

AUDITORSKPMG LLP

Chartered Accountants

Calgary, Alberta

TRUSTEE, REGISTRAR & TRANSFER AGENTComputershare Trust Company of Canada

Suite 600, 530 – 8th Avenue SW

Calgary, Alberta T2P 3S8

1.800.564.6253

STOCK EXCHANGEPembina Pipeline Corporation

Toronto Stock Exchange listing symbols for:COMMON SHARES PPL

PREFERRED SHARES PPL.PR.A, PPL.PR.C, PPL.PR.E, PPL.PR.G, PPL.PR.I, PPL.PR.K,

PPL.PR.M, PPL.PR.O, PPL.PR.Q, PPL.PR.S, PPL.PF.A, PPL.PF.C and PPL.PF.E

New York Stock Exchange listing symbol for:Common shares PBA

INVESTOR INQUIRIESPhone 403.231.3156

Fax 403.237.0254

Toll Free 1.855.880.7404

Email [email protected]

Website www.pembina.com

q4 2020 annual report restated

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