CALGARY, Oct. 28 /CNW/ -- Pembina Pipeline Income Fund ("Pembina" or the "Fund"), (TSX: PIF.UN, PIF.DB.B), announced today its financial and operating results for the three and nine months ended September 30, 2009. A summary of results is noted below:

-   The Fund distributed $0.39 per Trust Unit during the third quarter of
2009 for total cash distributions of $60.2 million, a 19 percent
increase over the same period in 2008. Pembina expects, based on its
current projections, estimates and assumptions, to maintain this
level of cash distribution through 2013 by continuing to provide
Unitholders $0.13 per unit per month, or $1.56 per unit per year. The
Fund plans on converting to a corporation in late 2010 and expects to
distribute $1.56 per unit per year to shareholders as a dividend once
the new structure is in place (see "Forward-Looking Information,
Statements and Assumptions" below).
-   Pembina generated net earnings of $44.7 million during the third
quarter of 2009, compared to $48.1 million during the third quarter
of 2008. For the first nine months of 2009, Pembina's net earnings
were $109.2 million, compared to $122.8 million during the first nine
months of 2008. Excluding the after tax gain on sale of linefill of
$15.2 million included in the third quarter of 2008 and $30 million
included in the first nine months of 2008, net earnings have
increased 35.9 percent and 17.7 percent, respectively, during the
quarter and nine months ended September 30, 2009.
-   Net operating income during the third quarter was $91.5 million,
compared to $77 million during the third quarter of 2008. Year-to-
date, Pembina has generated net operating income of $248.7 million,
compared to $220.1 million during the first nine months of 2008.
-   Strong returns were generated by the Oil Sands & Heavy Oil
Infrastructure business unit, which realized increases in both third
quarter and year-to-date net operating income (compared to the same
periods in 2008) due primarily to contribution from the Horizon
Pipeline, which commenced operations in November 2008. The Cutbank
Complex gas gathering and processing facility, acquired in June,
introduced a new source of revenue for the Midstream & Marketing
business unit, while lower operating expenses helped maintain margins
on Pembina's Conventional Pipeline systems. Combined, these positive
factors largely offset the impact of reduced commodity prices and
associated lower pipeline throughputs during the quarter.
-   Pembina's major growth projects, the Nipisi and Mitsue Pipelines, are
proceeding on schedule and on budget. Detailed engineering is nearing
completion, stakeholder and Aboriginal consultation is ongoing and
Pembina has submitted all required regulatory applications. The
Nipisi and Mitsue Pipeline projects were initiated in response to
industry demand for reliable diluent supply to, and diluted heavy oil
take-away capacity from, the region north of Slave Lake, Alberta. The
combined capital cost estimate for both pipelines is approximately
$440 million and Pembina currently expects the pipelines to be placed
into service in mid-2011.
-   Subsequent to quarter end, the Fund entered into an agreement for the
issuance by way of private placement of $267 million in Senior
Unsecured Notes, Series D (the "Series D Notes") by its wholly-owned
subsidiary Pembina Pipeline Corporation. Subject to Pembina and the
purchasers of the Series D Notes satisfying all of the conditions to
closing, Pembina expects the Series D Notes will be issued in a
single tranche on November 18, 2009 with a 10-year bullet maturity
and a fixed interest rate of 5.91 percent.
Results from Operations
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HIGHLIGHTS(1)      3 Months  3 Months         9 Months  9 Months
(in millions of       Ended     Ended            Ended     Ended
dollars, except   Sept. 30, Sept. 30,    %   Sept. 30, Sept. 30,    %
where noted)          2009      2008  Change     2009      2008  Change
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Average throughput
- conventional
(mbbls/d)            389.3     430.5    (9.6)   397.9     440.9    (9.8)
Contracted capacity
- oil sands
(mbbls/d)            775.0     775.0       -    775.0     775.0       -
Total throughput
and contracted
volumes (mbbls/d)  1,164.3   1,205.5    (3.4) 1,172.9   1,215.9    (3.5)
Average Cutbank
Complex
throughput (mmcf/d)  200.5         -   100.0    200.2         -   100.0
Capital
expenditures          23.1      14.6    58.2    364.2     197.8    84.1
Revenue               211.9     201.3     5.3    555.4     525.5     5.7
Product purchases      80.8      84.2    (4.0)   187.2     196.9    (4.9)
Operating expenses     39.6      40.1    (1.2)   119.5     108.5    10.1
Net operating
income(2)             91.5      77.0    18.8    248.7     220.1    13.0
General &
administrative
expense               11.1       9.6    15.6     34.5      28.7    20.2
Interest expense
on long-term debt     13.0      11.5    13.0     34.8      28.0    24.3
Net earnings           44.7      48.1    (7.1)   109.2     122.8   (11.1)
Cash flow from
operations            62.2      50.4    23.4    152.6     156.4    (2.4)
EBITDA(2)              77.8      85.0    (8.5)   207.8     221.1    (6.0)
Cash distributions
to Unitholders        60.2      50.7    18.7    170.9     146.4    16.7
$ Per Trust Unit    $0.39     $0.38     2.6    $1.17     $1.10     6.4
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(1) This third quarter 2009 Interim Report to Unitholders reports
unaudited results of the Fund for the three and nine months ended
September 30, 2009 and comparative to unaudited results for the three
and nine months ended September 30, 2008.
(2) Refer to "Non-GAAP Measures" below.

Conventional Pipelines

Pembina's extensive network of pipelines in Alberta and British Columbia ("BC") provides safe, dependable and cost-effective transportation service to customers in Western Canada. These strategically located pipeline assets are expected to generate stable and predictable cash flows.

During the three months ended September 30, 2009, Pembina's Conventional Pipelines business transported an average of 389,282 bbls/d, compared to 430,493 bbls/d during the same three month period in 2008. The decline in aggregate throughput was primarily the result of year-over-year changes in drilling and production associated with changes in the Alberta royalty regime, softer commodity prices through much of 2009 and difficult access to credit for many smaller exploration and production companies. Pembina expects that as commodity prices and market fundamentals stabilize, drilling and production activity should improve thereby assisting the normalization of throughputs.

Pembina's Conventional Pipelines generated revenue of $62.2 million during the third quarter of 2009, compared to $67.7 million generated over the same period in 2008. Revenues were down primarily as a result of decreased aggregate throughput, discussed above. Year-to-date revenues were $192 million in 2009, compared to $197.7 million the year before. Average revenue totaled $1.61 per barrel during the third quarter and $1.64 per barrel during the first nine months of 2009, consistent with the first quarter of 2008, but up 10 cents per barrel from the first nine months of 2008.

Pembina's continued focus on operating cost discipline and steady operations helped reduce operating expenses for the Conventional Pipelines business during the third quarter of 2009. During the quarter, operating expenses were $24 million, compared to the third quarter of 2008 when operating expenses totaled $29.7 million. Year-to-date operating expenses of $81.6 million compare favourably to $82.2 million the year before.

Lower operating expenses helped maintain net operating income margins, partially offsetting the decrease in revenue. Conventional Pipelines contributed $38.2 million in net operating income during the third quarter of 2009, compared to $38 million for the same quarter of the prior year. Net operating income totaled $110.4 million for the first nine months of 2009 and $115.5 million for the comparable period in 2008.

Pembina continues to invest capital in its assets to help enhance safety and reliability while at the same time providing for the possibility of future growth.