Pembina Pipeline Corporation (PPL) Earnings Call Transcript & Summary

Good afternoon. My name is Shantel, and I will be your conference operator today. At this time, I would like to welcome everyone to the Pembina Pipeline Corporation's Annual General Meeting of Shareholders. Thank you for joining us. Randy Findlay, Chairman, you may begin your meeting.

Thank you, operator. Good afternoon, ladies and gentlemen, and welcome to the Annual Meeting of Shareholders of Pembina Pipeline Corporation. My name is Randy Findlay, Chairman of the Board of Directors of Pembina, and I will preside over this meeting as Chairman. This year, to proactively address the unprecedented public health impacts of COVID-19 and to mitigate risk to the health and safety of our communities, shareholders, employees and other stakeholders, this meeting is being held as a virtual-only meeting. We have ensured that this virtual meeting offers shareholders the opportunity to participate, submit questions and vote at the meeting. As in past years, we expect that the vast majority of votes will be cast by proxy in advance of this meeting. If you previously voted in advance of the meeting, there is no need to vote online today, and your previously submitted vote will be counted. That said, registered shareholders and duly appointed proxy holders are able to vote online at the meeting by clicking on the voting icon at the top of the screen and selecting voting options on each ballot item. Given the virtual format of the meeting and in order for us to expeditiously undertake discussions on other -- on any matter proposed for a vote, we would encourage shareholders who have specific questions on an item of business to be discussed at today's meeting to submit their questions now, clearly identifying the applicable item of formal business. Such submissions will be addressed prior to voting on the applicable motion. Questions can be submitted by clicking on the question icon at the top of the screen and typing in a question. Following the formal portion of this meeting, we will have a presentation of the corporation's activities by our President and CEO, Mick Dilger. After which, we will have a question-and-answer session, at which time all participants will have the opportunity to ask questions unrelated to the formal business of the meeting. If you have any questions about Pembina and not specifically relating to an item of business to be discussed at today's meeting, please feel free to submit such questions at any time, and they will be addressed at the conclusion of the meeting. We will do our best to answer shareholder questions. But if for any reason, we are unable to do so during the meeting, we will try to engage with shareholders after the meeting. With me today are Mick Dilger, President and Chief Executive Officer and a Director of Pembina; and Brenda Rawcliffe, Manager, Associate General Counsel and Corporate Secretary of Pembina. Also present at the meeting are a number of representatives of Pembina's executive management team, employees and external advisers. I would also like to welcome the Directors of Pembina that are present today and in particular, the new nominee for election, Bob Gwin. Two long-serving colleagues will not be standing for election. After serving more than 20 years as Director of Pembina, Bob Michaleski will retire from the Board. Prior to his role as a Director, Bob served Pembina in various senior management and executive capacities since 1980, including serving as our CEO from January 2000 to December 2013. Fellow Director, Jeff Smith, is also retiring this year. Jeff has been a Director since April 2012. Most recently serving as Chair of the Governance, Nominating and Corporate Social Responsibility Committee. The Board and Pembina shareholders have benefited greatly from the experience, wisdom and counsel of these 2 gentlemen. On behalf of the Board, management and our shareholders, I thank Bob and Jeff for their dedication, and wish them all the best in the future. On a personal note, Bob and Jeff had been colleagues I can rely on to bring the highest degree of interrogatory to their counsel to me. I will miss both of them. The meeting will now come to order. I appoint Brenda Rawcliffe to act as Secretary of the meeting, and the representative of Computershare Trust Company, Kyle Gould, to act as a scrutineer. Will the Secretary please table the notice and proof of mailing of the Notice of the Meeting.

I have received an Affidavit from Computershare Trust Company of Canada indicating that the Notice of Meeting, information circular and form of proxy were mailed to shareholders of record as at March 19, 2020. In addition, I have an affidavit from Computershare Trust Company of Canada confirming the mailing of the 2020 audited financial statements to registered shareholders on March 9, 2020. I can also advise that the notice of this meeting and related materials were provided to the directors, officers and the auditors of the company.

Thank you. I direct that these affidavits, together with the copies of the documents mailed to the shareholders, be kept by the Secretary with the minutes of this meeting. The reading of the Notice of Meeting will be dispensed with. The corporation's bylaws provide that business may be transacted at a meeting if there is a quorum present.

I have been advised by Computershare that a quorum is present.

Accordingly, I declare that this meeting is regularly called and properly constituted for the transaction of business. The voting at today's meeting will be conducted by online ballot for all matters. If you are a registered shareholder or a duly appointed proxy holder that has already voted by proxy, there is no need for you to vote online since your vote will be recorded in accordance with your proxy instructions. The online polls will be open for all items of business to be voted on at the start of the meeting. This will allow you to vote on each item immediately or if you prefer, you may wait until the conclusion of discussion on each item prior to casting your vote. Once discussion has concluded on all items of business, we will pause for a minute to ensure all votes are entered. I will then declare voting closed on all matters of business. The results of the votes will be announced prior to the close of the meeting. I requested that certain shareholders or proxy holders move and second motions proposed at this meeting. This is not intended to limit discussion or to suggest that other shareholders are not welcome to move or second motions. Registered shareholders and proxy holders should feel free to initiate discussion on any motion. However, I would ask you to hold questions or comments not related to a formal motion to the general question period at the end of the meeting. If you have a question, please identify yourself and indicate whether you are a shareholder or a proxy holder. The first item of business is the presentation of the financial statements for the fiscal year ended December 31, 2019. These statements, including the auditor's report, have been mailed to all registered shareholders and to beneficial shareholders who requested these materials. If you have questions for KPMG, in relation to the financial statements, please submit them through the virtual platform, and we will address them with representatives of KPMG following the formal part of the meeting. The next item of business is the election of Directors to hold office until the next annual meeting or until their successors are duly elected or appointed. Information on this information can be found on Page 9 of Pembina's information circular for this meeting. The number of Directors of Pembina to be elected at this meeting has been fixed at 10. Pembina's information circular sets forth management's proposed 10 nominees. Each of the nominees remains qualified and has consented to her or his nomination as a Director today. Will the Secretary please read the names of the 10 individuals who have been nominated by management.

The management nominees are as follows: Randall J. Findlay, Anne-Marie N. Ainsworth, Michael H. Dilger, Robert G. Gwin, Maureen A. Howe, Gordon J. Kerr, David M. LeGresley; Leslie A. O'Donoghue, Bruce D. Rubin, and Henry W. Sykes.

Thank you. All of the Director nominees, other than Mr. Dilger, are independent, and all of the nominees, other than Mr. Gwin, currently sit on our Board. The nominees bring a diversity of skills and experience to our Board. Their biographies can be found on Pages 14 through 23 of the information circular. I would like to take this opportunity to say a few words about Mr. Gwin, the new nominee for election to the Board. Mr. Gwin was previously President of Anadarko Petroleum Corporation prior to its acquisition by Occidental Petroleum in late 2019. Prior thereto, he was Executive Vice President, Finance and Chief Financial Officer of Anadarko from 2009 to 2018. He also serves as the Chairman of the Board of Western Gas Partners LP from 2010 to 2018. If there are no further nominations, I declare the nominations closed. May I have a motion to elect the 10 nominees as Directors of Pembina Pipeline Corporation.

So moved.

I second the motion.

Is there any discussion?

Mr. Chairman, there are no questions from shareholders or registered proxy holders in relation to this matter.

If there is no discussion and as there are no further nominees, I have been advised that sufficient votes have been cast in advance of the meeting to elect the 10 nominees as Directors of Pembina. However, in accordance with our majority voting policy for Director elections, we will proceed with the voting on this matter. Only registered shareholders or their duly appointed proxy holders can vote by online ballot by selecting the applicable voting options on the voting panel displayed on their screens. [Voting]

The next item of business is the appointment of the auditors for Pembina. Information on this motion can be found on Pages 9 to 10 of Pembina's information circular for this meeting. May I have a motion that the firm of KPMG LLP of Calgary, Alberta be appointed auditors of Pembina until the next annual meeting or until a successor is appointed, and that their remuneration and the scope of the audit is to be fixed by Pembina's Board upon recommendation of its Audit Committee?

So moved.

I second the motion.

Is there any discussion of the motion?

Mr. Chairman, there are no questions from shareholders or registered proxy holders on this matter of business.

As no comments have been received on this motion, I will proceed to the next item of business. The next item of business at this meeting is the approval of the amendment and restatement of Pembina's existing bylaw #1, as more fully described on Pages 10 to 11 of Pembina's information circular for this meeting. The Directors approved the amended and restated bylaw #1 on February 27, 2020. The full text of the amended and restated bylaw #1 is included in the information circular at Appendix A. In order to be passed, the ordinary resolution must be approved by a majority of the votes cast by Pembina shareholders present or represented by proxy at this meeting. At this time, I would ask you -- I would ask to have a motion to conduct the vote of Pembina shareholders to confirm the amendment to Pembina's bylaw #1, which is set forth in Pembina's information circular for this meeting.

Mr. Chairman, I move that the resolution set forth on Page 11 of Pembina's information circular confirming the amendment to Pembina's bylaw #1 be approved and authorized as an ordinary resolution of Pembina shareholders.

I second the motion.

You have heard the motion. Is there any discussion?

Mr. Chairman, there are no questions from shareholders or registered proxy holders in relation to this matter of business.

As no comments have been received on this motion, I will proceed to the next item of business. The next item of business at this meeting is the approval of the adoption of bylaw #2, which provides a framework for nominating Directors for election to the Board as more fully described on Pages 11 to 12 of the information circular for this meeting. The Directors on the recommendation of the Governance, Nominating and Corporate Social Responsibility Committee approved bylaw #2 on February 27, 2020. The full text of bylaw #2 is included in the information circular at Appendix B. In order to be passed, the ordinary resolution must be approved by a majority of the votes cast by Pembina shareholders present or represented by proxy at this meeting. At this time, I would ask to have a motion to conduct the vote of Pembina shareholders to confirm the adoption of bylaw #2, which is set forth in Pembina's information circular for this meeting.

Mr. Chairman, I move that the resolution set forth on Page 12 of Pembina's information circular confirming the adoption of bylaw #2 be approved and authorized as an ordinary resolution of Pembina shareholders.

I second the motion.

You have heard the motion. Is there any discussion?

Mr. Chairman, there are no questions from shareholders or registered proxy holders in relation to this matter of business.

As no comments have been received on this motion, I will proceed to the next item of business. The next item of business at this meeting is the approval of Pembina's approach to executive compensation as more fully described on Page 12 of Pembina's information circular. In order to be passed, the nonbinding resolution must be approved by a majority of the votes cast by Pembina shareholders present or represented by proxy at this meeting. At this time, I would ask to have a motion to conduct the vote of Pembina shareholders to approve Pembina's approach to executive compensation as set forth in Pembina's information circular.

Mr. Chairman, I move that the resolution approving Pembina's approach to executive compensation, all as more particularly described in Pembina's information circular be approved and authorized by Pembina shareholders as a nonbinding resolution of Pembina shareholders.

I second the motion.

You have heard the motion. Is there any discussion?

Mr. Chairman, there are no questions from registered shareholders or proxy holders in relation to this matter of business.

As no comments have been received on this motion, I will proceed to the next item of business. Those are all of the matters to be voted on at today's meeting. The polls on all items of business will close in 1 minute time. For those of you who have not voted on all of the items of business, please do so now. We will take a short pause to allow for this voting. [Voting]

That concludes the voting at today's meeting. I have received the scrutineers' report on the ballots required for each of the items of business considered at the meeting, and I am pleased to announce that all of the items were passed with at least 90% approval. A report disclosing the number of votes cast in favor, against and withheld from voting in respect of each item of business at this meeting will be filed on SEDAR promptly following the meeting and a report on the election of each Director will be disclosed in a press release to be issued following the meeting. As there is no further business to be considered at this meeting, may I have a motion to terminate the meeting?

I move this meeting be terminated.

I second the motion.

I declare the formal portion of this meeting terminated. At this time, I would like to take the opportunity to introduce Cynthia Carroll, who we are pleased to announce, will be joining our Board following today's AGM. Ms. Carroll was selected by the Directors after the circular was mailed to shareholders and therefore, did not make the ballot for election at the meeting today. Ms. Carroll has spent most of her career leading global businesses in the industrial sector. Cynthia began her career as an exploration geologist at Amoco production company. Before joining Alcan Aluminums Corporation from 2000 -- 2013, Cynthia served as the Chief Executive Officer of Anglo American plc. At that time, Anglo American was one of the largest and most diversified mining companies in the world, employing approximately 160,000 people with operations on 6 continents and a market capitalization of approximately $40 billion. Anglo American ranked in the top 20 companies on the London Stock Exchange FTSE 100 Index. She serves on the Board of Directors of several public companies. We will now have a presentation of the corporation's activities by our President and CEO, Mick Dilger. After which, we would be pleased to answer any questions that you may have. If you wish to ask a question, you will have to please click on the question icon, type in and submit your question. You may submit your questions during next presentation. In an online format, we may receive questions of a similar theme, and your specific questions may be paraphrased in the interest of efficiency and addressing as many themes as possible. Before I introduce Mick Dilger, our President and CEO, I'd like to say that as CEO and Chair, we have worked closely together for a number of years. However, events of the last 2 months have intensified our discussions. I can say without hesitation that as shareholders of Pembina, we are indeed fortunate to have such a dedicated and talented CEO and team to guide us. Mick, over to you.

Hello, everyone. Thanks, Randy. Well chaired meeting as usual. Good wishes to all the listeners. I know it's certainly been unprecedented difficult time. This afternoon, we're going to spend about 30 minutes through this presentation. And then my colleague, Scott Arnold, is going to help facilitate some questions. And I think what's on people's mind is how are we able to stay safe and what is our ability to make money looking forward. And so that's really going to be what I'm going to be spending time on this afternoon. But before I get into that, I want to say some thank yous. I want to thank our Board, their guidance particularly in this acute situation has been tremendous. Their responsiveness has been unprecedented and has facilitated our decisive response to this crisis. A special thanks to Jeff Smith, who's retiring. Jeff, I'm going to miss your enthusiasm. Jeff comes into every meeting enthusiastic and creative and very supportive, and we're going to miss that. And Bob and I have worked together for 15 years. He was the previous CEO of Pembina and really defined who Pembina is in our value system and has been a huge security blanket for me over that whole time frame. And we're going to miss that a lot and don't be surprised if I call you, Bob, for advice and looking forward to a long friendship with both of you folks. Also, a great thanks to our employees. There's many heroes among them. It's been humbling for me to watch us adapt to this crisis, and just couldn't be more pleased with the ground we've taken over the last 8 weeks. Turning to the forward-looking information. Clearly, more judgment and more prediction in this year's report than ever before, and so just caution you that many of the statements we are going to make are forward-looking in nature. Also, throughout the deck, we have non-GAAP measures that we will be referencing. On page -- next, Page 3, as is customary, I'm going to first address what we've accomplished kind of year-over-year, year-end to year-end, and forgive me, and I'm aware that what we got done in 2019 doesn't seem like a month ago, it seems like years ago, given all that's happened. In some ways, it seems like the good old days and things were easier back then. But we did have just an absolutely terrific year in 2019, and that success has spilled into the first quarter of 2020. The highlight, of course, of the year was the $4.25 billion acquisition of Kinder Morgan and added very timely capability and resilience to our company in terms of highly contracted assets with investment-grade counterparties highlighted by the Cochin condensate pipeline system and the Edmonton Terminals. The acquisition provided additional diversification. And just an additional point there, I'm so pleased that we did the Veresen acquisition in 2017 and the Kinder acquisition. And a shout out to our Board who encouraged management to diversify from a position of strength, which we did. On a safety front, we had 9 million hours of worked hours, very, very high safety record and as impressive as that is, pleased to announce that record continues through the first quarter and even now in the middle of this COVID situation. Operationally, we moved a record 2.7 million barrels a day in our Pipelines Division and 900,000 barrels a day in our Facilities Division. So those were record volumes for both. We placed $500 million of assets into service safely and reliably, and we still have over $1 billion of projects that we are advancing for completion in 2020 and into early 2021. We had a record year, exceeding the high end of our guidance range for the second year in a row, $3.1 billion in 2019. And we did an update to our sustainability report and announced a stand on carbon reduction and on diversity and inclusion. So some significant ground taken there. Our dividend, we increased $0.01 a share, roughly 5% in 2019 and followed that up with an additional 5% in 2020. Next, I'm going to talk about how we came to be so well prepared for this pandemic, although in full disclosure, we didn't specifically prepare for a pandemic, but kind of a mosaic of different preparedness got us here. So we always have had a very well-developed a tried and true emergency response plan. So we immediately put that into place, albeit that response plan typically tended to be designed for -- to be regional in nature and not national in nature. And so we put that plan into place and immediately had to make the whole team redundant because of the ongoing and vastness of this outbreak. In 2013, we again, learned from adversity with the Calgary floods when we realized that our downtown core came near flooding, and well, we started a transition to laptop, computers and envisioned a situation where we might not be able to work from Downtown Calgary. In 2016, more adversity with the Fort McMurray wildfires made us convinced we had to be able to operate our district operations without a district office. And so put plans in place across the board to operate in that fashion. And then further to our Veresen acquisition in '17 and really having a proliferation of operating locations from Chicago to Portland to Houston, we started to develop virtual meeting technology. And again, very, very timely. So with all that preparedness together, we truly seamlessly transition to our current environment without issue. In terms of financial preparedness, again, learning from adversity back to the financial crisis. Really, understanding that capital may not always be available, and wouldn't it be great if we had a model that was self-funding so we could continue to build ongoing projects or envision new projects without reliance on capital markets. And so that was the catalyst for moving towards a self-sustaining funding model. In 2012, after we acquired Provident, which was commodity exposed, we had an unfortunate ratings downgrade and it highlighted the ability to have a high percentage fee-for-service business, but also to have a buffer embedded in our credit rating in case things went wrong, for example, what we just went through, and to develop relationships with rating agencies so they really understood our business, which, again, has served us very well. A real catalyst to have a strong balance sheet, have ample liquidity and long-tenured debt maturities. More recently, in 2015 and 2016, through the commodity price collapse, we did consciously, at the advice of our Board, seek diversification. And to many of you on the phone that might have looked like offense, but it was really defense. It was diversification of our customer base, our basins, our currency and the commodity. And we also started a commodity hedging program, which we formalized and looked even further our diversification efforts towards global markets, and I'll talk more about that. So through the entire piece, we have learned from adversity, and we have -- we continue to strive to reduce risk. On -- you have the Pembina Decisive slide to slide? Yes. So on Pembina decisive, as I look back here over the last 6 weeks, I'm really pleased with the way we play things. We were quick out of the gate on many, many fronts. And really, I have no regrets on what we've done. On Slide 8, we talk about some of the decisive actions we took. We were early adopters of restricting travel, canceling large group meetings, working from home. We initiated our emergency response plans. We were able to identify all of our infrastructure as critical, and we continue to operate safely, reliably. We have not turned down an Mcf a gas, a barrel of oil through our systems, and we've reliably moved customers' volumes to markets. We've talked to all of our customers. We consulted with them on our capital project delays, and so feel we've really done a great job with all of our stakeholders. Financially, again, we took decisive actions deferring approximately $1 billion of capital projects whilst maintaining about $1.3 billion of projects in-flight. And really, the way we stratified that was the projects in-flight that were nearing completion, we undertook to complete those to generate incremental EBITDA once they were in service. And the projects that were early days, for example, our Peace Phase VII project or our petrochemical joint venture, we safely deferred. What I mean by safely deferred as we are deferring those projects in a manner that we don't destroy capital and that when circumstances are right again, we can bring them back without having destroyed value. We also looked across our organization and streamlined our cost structure, taking approximately $50 million of administrative cost out and about $50 million of operating cost out of our business. Those savings, we think, are ongoing or perpetual. We initiated some asset sales. They were actually in-flight asset sales, communicated those, and we expect those to generate capital for us of between $200 million and $500 million, and we added over $1 billion of liquidity. So just a tremendous response, a resilient response and pleased to say that this morning, we were able to reiterate our guidance, albeit we'll be in the low end of that range. On Page 9, I'll talk a little bit more about the capital program. On the top part of your page is the -- are the projects that we're going to continue to put into service through 2020 and into 2021, which will all result in incremental EBITDA once placed in service. The lower part of your page shows the roughly $4.5 billion of projects that we safely deferred in consultation with our customers and to safeguard our employees. Some of these projects were deferred, first and foremost, for safety reasons. To not start, for example, a multibillion-dollar petrochemical project in the middle of a pandemic was primarily and initially driven by safety and then only as a secondary consideration for financial reasons. We plan to bring the deferred projects back into service when the time is right. Next, I'm going to talk about our Pembina strength, Pembina Strong. As the headline says, "Offense sells tickets, but defense wins championships." And as I also mentioned earlier, our diversification efforts in 2012 with Provident, in 2017 with Veresen, in 2019 with Kinder Morgan, those were mainly about diversifying our asset base. So we find ourselves diversified nicely across commodities, and I'll deal more with that on the subsequent slide. But we also, through that piece, developed what we call our financial guardrails. And those are the cornerstone of our promise to shareholders. And really what underlies even the guardrails is our focus on being a service provider to customers who are in great geology. So in times like this, that we are servicing the best plays in our franchise areas. We are pursuing and have long-term fee-based contracts, including cost-of-service or take-or-pay contracts. 80% of our exposure is with investment-grade or split-rated counterparties. We just had our ratings reaffirmed by S&P and DBRS, which I think is quite a statement, really, when you think about the state of the sector and the global economy. It just shows our resilience. We have about $2.5 billion in liquidity. I'll talk more about that later. And so we are feeling extremely comfortable with our dividend in 2020 and looking forward to 2021. And furthermore, our hedging program is serving us very well. On Slide 12, I'll just deal with the currency exposure on the right-hand side. And that, really, a lot of our USD-denominated revenue comes out of the Veresen acquisition, and as the Canadian dollar has dropped against the U.S. dollar has helped offset some of the headwinds. The main thing I want to talk about, though, is on the left side. When you really look at Pembina, and I've got a great slide I'm looking forward to presenting to you all later on. This 2020 commodity exposure slide really tells the story of where Pembina is now. The 30% natural gas through this downturn that's been really focused on commodity price erosion, natural gas, particularly in Canada, has held up well. And so many of our big customers, including our mid-caps, have a large natural gas focus, and that is serving them very well and in turn us. 30% NGLS. And yes, propane and butane prices are under pressure. We are seeing some hope for propane prices looking forward. But ethane demand has remained solid, and Pembina is the ethane backbone of Alberta and BC, and ethane demand has stayed strong. So that leaves 40% of our business exposed to crude oil and condensate. And recall that of that exposure, not on an EBITDA basis, but on a volumetric basis, about half of our barrels come from the oil sands, which are very high-quality counterparties and are under cost of service arrangements. And so if those volumes were to fluctuate, we'd be financially indifferent. The crude oil, the conventional crude oil and condensate barrels are where we do have some exposure. On the conventional crude, yes, we are seeing some erosion of conventional crudes. On the diluent, it is not certainly linear that erosion with what we see from the sector overall. I could draw your attention to the fact that about 250,000 barrels a day of diluent are imported into Alberta. And of that, more than half comes from Southern Lights' pipeline. And so as SAGD production is shut in and diluent demand is destroyed from that, the reduction in diluent is, our observations so far, coming from the import pipelines, most notably Southern Lights, whereas the diluent from WCSB, which comes down Peace Pipeline or Cochin Pipeline, we have not seen as much erosion from there and furthermore, have very strong contracts in place for that erosion to get more acute. So when you kind of go through the mosaic of Pembina and how -- who our counterparties are, how our business works, where we're exposed to commodities, where we're not, we find ourselves in a very good shape here. On Slide 13, I'll just briefly review the guardrails, which are as follows: to maintain at least 80% of our business from fee-for-service. We currently find ourselves in the 90% to 95% range. Some of that, of course, is because our marketing business is making less money. Our payout ratio remains very healthy due to the actions we're taking in the 70% to 75% of fee-based business or about 60% overall, meaning we're only needing 60% of our free cash flow after all costs to pay our dividend. Our counterparty credit is holding up very well. And our BBB rating, which was reaffirmed, you can see why because our overall FFO-to-debt is consistent with prior years. Our liquidity position, just one comment on this slide, we have about $2.5 billion of available liquidity. The slide I'm going to spend most time on is Slide 15 here, and it really is the thrust of the story I want to tell. As I said, I want to highlight Pembina's ability to make money and to continue to make money, notwithstanding the circumstance we find ourselves in. So I'm going to orient you to this slide. We've got from 2008 the way through to 2020 on this slide. And the blue bars are really our EBITDA over time. And if you put a best fit into that, it's nothing short of a beautiful thing. We've increased EBITDA steadily throughout this multiyear time frame. The diamonds are our dividends per share and a little more subtle on this scale, can't quite tell, but I can say that in 2008 was just about $1.50. And in 2020, about $2.50. So roughly a 5% growth through thick and thin. The gray bar is there just for your interest, it's the price of natural gas, and you can see that we have not been overly sensitive to natural gas. The red line is the price of oil. And the dotted line is the share price. The gray shaded areas are the crisis we've been through. So '08, '09 was a financial crisis. '15, '16 was the commodity price collapse. And '20 and let's hope not '21 is the COVID impact, which in our business is a commodity price collapse and really, by different words. But what's remarkable about this graph is really the negligible impact in '08 when we saw the price of oil drop dramatically, the negligible impact on Pembina's EBITDA. The 2015-2016 crisis, again, oil price cratered, we actually increased our EBITDA through that piece. And into 2020, where even at the low end of our new guidance, our EBITDA continues to increase. And so what I assert is that our ability to make money does not -- is not highly correlated to the price of oil, notwithstanding our share price seems to be. And that's truly a little bit of a mystery to me, particularly when you consider in 2017, we acquired Veresen and had that great diversification and then further shored up our business. In 2019, through the acquisition of Kinder Morgan. All through the piece, EBITDA going up. All through the piece, dividends going up. And as we sit here today, yield should be more valuable than ever with the very, very low underlying interest rates and our yield is very healthy and very well protected. And so I feel we are better prepared to recover as we sit here in 2020 than we were in the commodity price collapse or in the financial crisis. So when we think about Pembina Ready, what we mean there is ready to recover. I think this AGM brings to a conclusion the actions we've taken to prepare to stabilize our organization. And again, very proud of those efforts. And now we start to look forward and return to what will be a new normal. Because of what we've gone through, we've had to take a position on timing of recovery. We judge it to be somewhere between 12 and 24 months. We will probably lead the upstream sector out of that recovery slightly. But we also already see some early signs of recovery in refinery demand. We see the production cuts coming, and we think that's a front-runner to seeing supply and demand come back into balance. Looking forward, we do see new oil and natural gas pipelines being in various stages of approval or completion. And certainly, that's promising and had been historically a huge barrier to our industry in Western Canada. And when I sit back and I think about what does Pembina do primarily? And really, we sit between high-quality resources and the entry point to pipelines, including these new pipelines. So we will have a huge role to play when prices return and continuing that service. We are really the company between production and egress. When I think about it, we are a critical infrastructure owner that is -- can't be easily replicated, and we will continue to do our jobs, and we have 100 years of resource life and behind our assets. And so very confident about being able to continue to do what we've done in the past. I think about the projects, our readiness to bring them back into service. I think about our global strategy, which will continue to help diversify Western Canadian markets and diversify our customer concentration, perhaps, more into demand pull customers rather than supply push customers. So I think that remains on point. And really, our staff, our tremendous staff who we have retained our core competencies. Certainly, we've had to make adjustments for reduction of $1 billion of capital and to really grow into the combination of Kinder, Veresen and Pembina over the last number of years. But we are ready to respond. We retain the core competencies to do that. So in closing, we are prepared. We have been decisive. It served us well. We've defended our balance sheet. We've stuck to our guardrails, we're strong, and we're ready to recover. So that concludes the formal part of my presentation, and I will then open it up to questions. Thank you for your attention. There will be a slight delay for these questions to be posted, and Mr. Scott Arnold will read them out.

Thank you, Mick. And as I understand, Mr. Randy Findlay has rejoined the call and is available to respond to some of the questions that I will ask momentarily. There've been a number of questions from guests relating to Director and executive compensation, which we've attempted to summarize and would like to address here. The questions in respect to Director compensation relate to whether Board compensation for Pembina Directors, is it at an appropriate level, and in respect of why certain Directors of Pembina are paid in U.S. dollars. The questions around executive compensation also relate to whether the compensation levels are appropriate and whether any consideration has been given to reducing executive compensation in the current environment.

Randy, do you want to take the first part, and I'll take the second?

I'm happy to do that, Mick. Let me talk about executive compensation, first of all, and let you -- tell you that we take compensation very seriously. We consider looking at what is in the best interest of shareholders, employees and the health of the organization. We do this on an annual basis. We benchmark against the peer group. And our target is to end up at P50 or at the 50th percentile and -- for target compensation. Over the last 5 years, Pembina has had exceptional performance ranking in the top quartile for total return to shareholders. And in addition, we've experienced fairly significant growth, resulting in a change of our peer group. And mixing those 2 things together, leads us to increases in executive compensation. In an attempt to get to the P50 mark, I can tell you that some of the executives are not at that level. And the other thing that I would add to that is that approximately 50% of the executive's total compensation is at risk. So it's based on the company's performance, individual performance. And so there's a self-correcting, self-adjusting factor in there for given conditions, such as what we're experiencing now with lower oil prices, reduced commodity demand and things like that. So I believe not only are the compensation levels appropriate, I believe the mechanism is appropriate and it allows for adjustment of actual received compensation based on the performance of the company and of the industry. If we turn to Director compensation, we really use a similar process. We have a benchmark against the peer group, and we look for P50 as the target. I can tell you that when we looked at this in November of 2019, the Directors were all below the P50, but we declined to make any adjustments. We thought we were fairly -- we thought our compensation was fair, and that we didn't need to increase to the P50 at that time. Under normal times, we ask a lot of our Directors. Many of them engage in -- well, all of them engage in consultation with management between meetings, individually and/or as a group, and quite often, we ask Directors to participate with Pembina -- with Pembina's interaction and meetings with governments, external advisers. We ask them to open doors for us in terms of contacts with politicians, with other advisers and things like that. That's under normal circumstances. Now with COVID-19, the drop in oil prices, we're asking even more of our Directors. We're having more frequent meetings, more consultations, more get-togethers. And they are always there. They are always delivering their best when we have these meetings. And Mick, you might want -- do you want to respond to the part about if there's going to be any potential adjustment given the situation?

Yes. For sure, Randy. And I think that was a thorough answer. I'll just give a little bit of color. As Randy mentioned, executive comp -- a well-designed executive comp is self-correcting. And Pembina has had a terrific run over the last -- you pick the period, 3 years, 5 years, 10 years. And this is going to be a tougher year. The last 2 years, we've exceeded guidance. This year, we're working hard to remain in guidance, albeit, the low end. And in a year like this, I'll talk about my compensation, about 80% of my compensation is variable. And we will not make some of our targets this year. And so my current calculation is I will make about half of what I made last year. And so certainly, that's -- you can't create a case where the executive would be more aligned with the shareholders to do well. So I do believe the compensation plan works. When you have year-over-year over year of good performance, you could have doubts about whether it works. But in a year where we have the first less than ideal performance, compensation for me gets cut in half. I think one can conclude that the program as designed is effective.

Perhaps to round out that first question, Randy, could you comment on the issue of certain Directors being paid in U.S. dollars?

Yes. For sure. We pay U.S.-based Directors in U.S. dollars. We have to be competitive with their other options to sit on Boards. And unfortunately, that's the situation with the Canadian dollar running at 70%, 75% of the U.S. dollar, it's a significant reduction in what they would receive if they were sitting on a Board in the U.S. and to be competitive, we want to -- we need to do that. Also, we've engaged in a program of just diversifying, from a gender point of view, that we're diversifying from geographic and diversifying from experience, and to do that, many of the folks that we're looking at -- and as you can see, the 2 new Directors that we added were both from the U.S. and I think that fits with the company's strategy to look wider and have a greater perspective on what's happening, not only in Canada, but North America and then the world.

One of the other questions that has been submitted by a guest is whether certain Directors of Pembina sit on the Boards of too many companies, and whether or not they have sufficient time to meet their obligations to Pembina?

Randy, maybe let me take that one. It's really been punctuated here in the last 2 months for me and over a much longer period of time indeed. I have never been in a situation where I've reached out to a Director, and it happened a lot recently, that they didn't have anything but time for me. Never ever had I faced a situation where I couldn't reach a Director or they wouldn't give me all the time that I need. And so I can tell you firsthand that our Directors have ample time to contribute to Pembina.

Just let me add to that, Mick. We do a Board effectiveness survey every year, and in part of that survey has every Director to comment on every other Directors' capabilities, what they do well, what they could improve upon, giving us an opportunity. And then I'm the only -- myself and the individual Directors are the only ones to actually see what those comments are. And so then I have one-on-one meetings with each of the Directors. And so I have the opportunity to -- if the other Directors think that 1 Director or 2 Directors are not pulling their weight or not responding, there's that opportunity for other Directors to comment on that, and then I can sit down with the individual in question and have that conversation. I can tell you that in the 3 years we've been doing this, I haven't had to sit down with any Director and tell them that they're not pulling their weight or they need to pull up their socks or their participation is less than what it should be. So that's another good check on whether folks are too busy or not.

Another question from one of our guests. Is the dividend safe?

Yes. It's -- when we look at 2020, I think people can do the math that at the low end of our guidance at a 60% payout ratio, give or take, that we're extremely well cushioned. If you look forward to 2021, the committed capital drops to only $300 million to $400 million in 2021. If we were to further defer our Phase VII and VIII, IX and our petrochemical project, that's hopefully not what we need to do, and the market is recovering, and we can bring those back. But we have the option to continue to defer that, in which case, we will have even more substantial available cash flow to cover our dividend in 2021 and also consider the roughly $1.3 billion of capital that we're deploying in 2020 will be producing incremental cash flow in 2021. And so we feel very confident in 2020 and 2021. And by most accounts, what we're facing here right now will be in some phase of correction, bracketed by 12 to 24 months. So we're feeling very good about our dividend right now.

Next question is, is there an initiative to diversify the ethnicity of Directors and executives?

Randy, I'll talk about executives. Do you want to start talking about the Board first or do you want me to launch?

Yes. Yes. The question is around we look at diversity and is -- in the broadest sense of gender diversity, ethnic diversity, also geographic diversity, diversity of background and so forth on that. And so -- and then we've gone away from -- let's just think of a friend who might sit on the Board, we hire professional search firms to go out and scour the -- really scour the world. And this last search as we did, we had candidates from all over the world, and we had candidates that did meet what you would call an ethnicity diversity. But in the end, we end up picking who is the best candidate to sit on the Board and who is -- who brings the credentials that we need at that time.

And I'll just add, I mean we -- our diversity and inclusion stand more or less says that the makeup of our company at all levels should reflect the demographic of the population at large, adjusted for the percentage of different groups' availability to work. And so that is our goal, and we are taking steps every day towards achieving that goal. And I think that people will observe us taking ground in that regard in the years to come.

Mick and Randy, there are no further questions at this time.

Randy, do you want me to close?

Yes. Go ahead, Mick. You can close.

Yes. Well, I just want to say, I wish all the listeners, the best safety and happiness and really hope that things can get back to normal sooner rather than later. And thank you for your support. And have a good summer. Thank you very much for attending.

This concludes today's conference call. You may now disconnect.