Okay, folks. Good afternoon, ladies and gentlemen. Thank you for all coming today. Welcome to the annual general meeting for Pembina Pipeline. My name is Randy Findlay. I am the Chairman of the Board of Directors of Pembina. I will preside over this meeting today. With me on the podium today, Mick Dilger, our Chief Executive Officer and President, Chris Sherman, Vice President and General Counsel and Corporate Secretary. In the audience today are a number of representatives of Pembina's executive management team, employees, and external advisors. Would the executives in attendance today please stand? Thank you. Fine-looking bunch. At this time, I'd like to introduce you to other members of the Board of Directors in attendance today. Anne-Marie Ainsworth, if you'd just stand quickly. Doug Arnell, Gord Kerr, Maureen Howe, Gordon Kerr, David LeGresley, Bob Michaleski, Leslie O'Donoghue, Bruce Rubin, Jeff Smith.
Henry Sykes, the other member of the Board, is unable to be with us today. The meeting will now come to order. I appoint Chris Sherman to act as Secretary of the meeting. The representatives of Computershare Trust Company represent here today, Connor Doyle and Falon Omotako, to act as scrutineers. Will the Secretary please table the notice and proof of mailing of the notice of the meeting?
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 16, 2018. In addition, I have an affidavit from Computershare Trust Company of Canada confirming the mailing of the 2017 audited financial statements to shareholders on March 6, 2018. I can also advise that the notice of this meeting and related materials were provided to the Directors, Officers, and Auditors of the company.
Thank you, Chris. 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 the 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. We will start with the formal part of the meeting. Then after its termination, Mick will be making a short presentation on Pembina's activities. We'll answer questions at that time. I've 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 that you hold questions or comments not related to the formal part of this meeting to the question period at the end, which Mick will be handling. If you have a question, please identify yourself and whether or not you are a shareholder or a proxy holder. I will remind you of the three-minute rule that we will be enforcing, which is for individual questions for three minutes. The reason for this is to allow time for all shareholders to ask questions if they wish.
All registered shareholders who have not already submitted proxies and proxy holders were provided with forms or ballots for their use in connection with the votes to be conducted at this meeting when they registered with the scrutineers before entering the meeting. If you are a registered shareholder and have not completed a proxy or a proxy holder and have not yet received ballots, would you please raise your hand so that the scrutineers can provide you with the appropriate ballots? Is there anybody needing ballots today? I don't see any hands up looking for ballots. All right. That's good. We get to go to a shorter version. The first item of business is the presentation of the financial statements for the fiscal year ended December 31, 2017. These statements, including the auditor's report, have been mailed to all registered shareholders and to beneficial shareholders who requested these materials.
Extra copies are also available at this meeting. Kimberly Payne, Leontine Atkins, Richard Whiteley, and Kristy Carscallen of KPMG LLP, Keyera's auditors, are in attendance and are available to answer any questions following the formal part of this meeting. The next item of business is the election of directors of Keyera to hold office until the next annual meeting or until their successors are duly elected or appointed. Before I get to the election of the directors, I would like to mention one long-serving director, Lorne Gordon, who is not standing for election this year. Lorne served for more than 20 years as a director, including 17 years as chairman of the board from 1997 to 2014, and was the president and CEO of Keyera prior to that. Keyera has benefited greatly from Lorne's experience, his wisdom, his wise counsel, and throughout its history as a public company.
We wish him all the best in his retirement, Lorne, you will be missed. A number of the directors of Keyera to be elected this meeting have been fixed at 12. Pembina Pipeline's information circular sets forth management's proposed 12 director nominees. Each of the nominees remains qualified and has consented to his or her nomination as director here today. Would the secretary please read the names of the 12 persons who have been nominated by management?
The management nominees are as follows: Randall J. Findlay, Anne-Marie N. Ainsworth, Douglas J. Arnell, Michael H. Dilger, Maureen E. Howe, Gordon J. Kerr, David M.B. LeGresley, Robert B. Michaleski, Leslie A. O'Donoghue, Bruce D. Rubin, Jeffrey T. Smith, and Henry W. Sykes.
All of the director nominees, other than Mr. Dilger, are independent, and all of the directors currently sit on our board. Three of the nominated directors, Mr. Arnell, Ms. Howe, and Mr. Sykes, are former directors of Veresen and joined our board in October 2017 when the acquisition of Veresen closed. I'd like to say a few words about each of the nominees. As you will see, they bring a diversity of skills and experience to our board. First off, Ms. Ainsworth resides in the U.S. and serves on the board of several public companies. Prior to that, she was President and CEO of Oiltanking Partners. She had a long and distinguished career with Shell and Sunoco in management and executive positions. She joined our board in October 2014. Mr. Arnell has served on our board since October 2017.
He is the President and CEO of Helm Energy Advisors, which provides advisory services to the global energy business. Mr. Arnell has held various executive positions and has extensive experience in the LNG sector. He is also a Director of Methanex Corporation. Ms. Howe has served on our board since October 2017. She currently serves as Director of TimberWest Forest Corp., the Insurance Corporation of British Columbia, and the Canadian Securities Institute Research Foundation, and she is the Chairperson of the University of British Columbia's Phillips, Hager & North Centre for Financial Research. Previously, she was Managing Director at RBC Capital Markets. Mr. Kerr was President and CEO of Enerplus Corporation until 2013 and is past Chair of the Canadian Association of Petroleum Producers. He is currently a member of the Management Advisory Council for the Haskayne School of Business at the University of Calgary.
He was first appointed to the board in January 2015. Mr. LeGresley is a corporate director who serves on the boards of EQB Inc. and Woodland Biofuels Inc. He was a senior executive at National Bank Financial for 12 years and has extensive experience in the financial services industry. He has been on our board since 2010. Mr. Michaleski was Pembina CEO from January 2000 until December 2013. He also sits on the boards of several other public companies, and he's been on our board since 2000. Ms. O'Donoghue is the Executive Vice President, Chief Strategy, and Corporate Development Officer at Nutrien Ltd. She has served on our board since 2008. Mr. Rubin has served on our board since May 2017. He resides in the U.S. and is an independent businessman. He has over 38 years of experience in the energy refining and petrochemical sectors.
Mr. Rubin has held various executive positions with Sunoco Chemicals and Braskem America. Mr. Smith is an independent businessman and corporate director with experience in oil and gas operations, finance, mergers and acquisitions, and governance, human resources, and health and safety. He has served on our board since 2012. Mr. Sykes served on our board since October 2017. He currently serves as a director of several private companies and is a past chair of the Arts Commons in Calgary and the Arctic Institute of North America. Previously, he was the president and CEO and director of MGM Energy Corp, president of ConocoPhillips Canada, and an executive with Gulf Canada Resources. We will proceed with the election. Are there any further nominations? If there are no further nominations, I declare the nominations closed. Do we have a seconder to that? Somebody propose that?
Moved.
Thank you. The seconder?
I second the motion.
Thank you. Is there any discussion? Yes.
Hello, Randy. It's Marijke Knipfer. I'm a proxy holder for my company. For the minority shareholders who don't own all that many shares, I am going to say we are making strides, folks. According to page 52, I am very pleased to say, if my calculations are correct, that from last year going forward to this year, hold your seats. This is a biggie. We are getting our directors who are going to be costing us one-quarter of 1% less the coming year than they did this year. We're moving in the right direction. Except for Mr. Findlay, who's my favorite director, of course, he's getting the greatest increase of all. Even though the whole bunch of them are giving us one quarter of 1% less. Mr. Findlay is getting 3.4% more by the looks of it.
Other than that, I would like to find out why it is that we still need to have two directors that we are paying in U.S. dollars. We are a Canadian company. I understand their expertise is wonderful and good and all that wonderful, stupendous stuff. We're Canadian, and if our money isn't good enough for them, maybe we should find Canadians. That's number one. I also would like to find out why we still need to have directors such as Ms. Howe, who are on four other boards, which I find is splitting her efforts too thinly. I would also like to find out why we have Mr. Sykes, who, if you read the little fine print, was on a board that led its way into bankruptcy, as it says on page 20. Seems to be a theme.
I think you were on the same situation with Spyglass, weren't you, Randy? I'd like to get answers to that. I realize that our minority votes make no hell of a bean because you guys have got them all. The fact is, we have to toe the line and get you guys to toe the line as well.
Thank you.
I'm anticipating your answers.
I'm trying to go through all of the questions that you asked. Let's deal with U.S. directors. We find that as we expand our operations and look around the world, we need to have more geographic diversity. Yes, we compensate them in U.S. dollars because that's where they live and that's what they deal with. We think that's only fair. To be honest, to attract good directors, if their alternatives are to be paid in U.S. dollars by U.S. corporations, then we have to be competitive on that. Give me another one of your questions.
I asked why is it we are accepting a director, Mr. Sykes, who has led another company into the bankruptcy proceeding.
Oh, yes. Oftentimes, directors join companies and try to save them from bankruptcy, and sometimes it doesn't work. Sometimes they're there when the company goes bankrupt. You're required to disclose your association with the company for over a year previously. He may not have actually been on the board when the company went into bankruptcy, but because he was there a prior year, then that's disclosed. Another question about Ms. Howe sitting on various boards. She's a professional director. She has time to do that. We checked that with her. She brings a wide variety of experience. We believe that directors who sit on other boards bring that additional knowledge to our board and helps make better decisions.
Are the dollars that we are seeing in the circular for these two people that we're paying in U.S. dollars, are they the Canadian equivalent dollars in the circular, or are they the U.S. dollars that we're seeing?
I don't know. Scott, any ideas? Tracy?
I'm hard of hearing. I have two implants. You'll have to speak a little louder down there.
Sorry. They've been converted to Canadian.
Converted to Canadian. Okay. As I say, I don't find that acceptable because there are other boards that do have Americans on them, and I don't believe they get paid in American dollars. Hallelujah, we've got one quarter of 1% less that we're going to be paying you guys. Let's keep that trend going. Thank you.
Thank you. Is there any further discussion? If not, in accordance with our majority voting policy for director elections, the scrutineers will tabulate their votes received in favor of each director individually, but the scrutineers collect. We don't have any ballots, so we're not doing that. The next item of business is the appointment of the auditors for Pembina. May I have a motion that the firm of KPMG 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 their audit is to be fixed by Pembina's board upon recommendation of its audit committee?
Moved.
Thank you. Is there any discussion on the motion for the appointment of the auditors? None? All right. All in favor, signify by raising your right hand. Contrary, if any. The motion is carried. The next item of business at this meeting is the approval of Pembina's approach to executive compensation, as more fully disclosed in Pembina's information circular. In order to be passed, the non-binding resolution must be approved by a majority of the votes cast by Pembina shareholders present in person or represented by proxy at this meeting. At this time, I would ask to have a motion to conduct a vote of Pembina shareholders to approve Pembina's approach to each executive compensation as set forth in Pembina's 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 non-binding resolution of Pembina shareholders.
I second the motion.
Thank you. You have heard the motion. Is there any discussion?
Yes.
I'm back.
There you go.
Okay. Insofar as executive compensation, I take a look at page 59. I see that you're starting to show us things the way I look at things. It looks like Mr. Dilger is getting a 19% raise. What you're failing to show us is that from 2015 to 2017, that overall picture, he got a 51.69% increase. It's not just 19 over the last couple of years, 50% increase. How many people here get a 50% increase in two years? I bet you none of you do. I bet you none of you get paid CAD 5 million either. On top of which, I love the man. He's a nice man. He's a good-looking CEO. I only wish I was his wife and had her expense account.
That should be worth a couple million right there.
Like I said, I just wish I was his wife and had her expense account. However, I don't see why on top of paying him this huge amount of money, why out of his own pocket, he can't put for his own retirement aside, why we also have to put a pension aside. That to me is egregious. Totally egregious. Like I say, most of us don't have CAD 5 million in the bank, and this is what he's getting every year. There's got to be a reversal on this. I am sorry. I don't care if you're telling me everybody else is doing it. Just because every idiot is going to the railroad trestle and jumping off of it into the river does not mean we have to follow. Thank you.
That being said, since we're giving them all these increases, along with Mr. Burrows, who got a 57.3% increase over the last two years, which is even more egregious, even though here it says 25% for one year. In 2014, our stock price was CAD 43.03, and today it was CAD 43 and change. We're at the same place we were four years ago, and yet we're giving these people all these increases. Not acceptable. Thank you.
All right. I don't think there was a question there, was there? No, if there's a question, I'll answer it, but I think it was a statement, thank you. All right. Is there any other discussion on the compensation for executive management? No, there's not. We're just going to take a short minute here to converse with the corporate secretary.
While Mr. Findlay's busy there, I'd just like to make a comment that based on Pembina's outstanding results in 2017 and the first quarter of 2018, I think that the executive is worth every penny that they're making, because where else are you going to find that kind of growth in a company? You should just be thankful that we're lucky enough to have these people.
Thank you. Any other comments? No. All right. We don't have ballots, all the proxies have been in, and the motion to approve executive compensation has been approved by 94.6% of the votes cast. Just to go back, because we didn't ballot on the election of the directors, we looked to the proxy votes on that, and all of the directors were elected by a substantial votes for their continuing as directors or being elected as directors. Okay. As there's no further business to be considered at the meeting. One more thing? All right.
It's my understanding that only those who have actually got proxies are allowed to speak at the actual meeting. I don't believe there's that many people who actually have proxies because they give most of them to you people. I'd like to find out if this gentleman who came up to the mic, whether he has an actual proxy to speak or whether he's just a shareholder. I would motion that that man's comments be stricken from the formal meeting as he had no right to come up and speak. Thank you.
If you're familiar with the minutes, we don't record individual comments at the meeting anyways. Thank you for pointing that out. Okay. Is there any other further business?
If there's not, I would consider a motion to terminate this meeting.
I move this meeting be terminated.
Thank you. Is there a seconder?
I second the motion.
Thank you. All those in favor signify by raising your right hand. Carried. I declare the formal portion of this meeting terminated, and thank you all for attending. You can now look to the more exciting part. Mick will explain what's gone on in the last year and some of the things we're looking forward to. I've heard the story, it's a very good story, and I'm sure you'll all want to hear it. Thank you very much. We are smoking. I'm going to come down here if I can. Can everyone see me? You know what, while we have a break here, maybe the people who are standing at the back, there's lots of seats here. You want to come up? I think it'll be more comfortable.
Well, years ago when I joined Pembina, I guess that was 14 years ago, Bob and I used to go on field trips every year. I remember, Bob, you and I talking saying, "One of these years, we're going to have to go out to the field or have an AGM when there's bad news." 14 years later, I'm pleased to announce that we have had no bad news, and I've got the greatest job in the world. Our future is truly bright. I have to declare that some of the things I'll be saying are forward-looking in nature. They're things we believe will happen, but there are no guarantees. They're based on estimates and other predictive information. It's our hope, it's our belief, but it is not a promise. 27 highlights.
First of all, I want to thank all of our customers over the last number of years. I'm so pleased commodity prices are improving for at least the liquids-based customers. I know it's tough out there for the gas people but amazing resilience. We went through a bunch of bad years, we had no bankruptcies. You consider the price of commodities, what's happened, it's just a real accomplishment by our customer producers to get through that, and nice to see that they're making money again. We put about CAD 5 billion into service for those customers with another CAD 1.2 billion on the way. A great deal of service being provided. To our investors, thank you for your support. Every time we go to the market, we're way oversubscribed.
It's a great vote of confidence, we've met with all of our major shareholders in the last 90 days or so, they're all staying invested. I hope with the consecutive great quarters we're putting out that we hope that trend, we expect that trend will continue, thank you for supporting us. Last year, we did achieve the highest total return in our peer group, we were pleased to provide a dividend increase of about 12%. We are giving the shareholders nice raises as well. To our employees, let's start with our directors and Lorne. Lorne, thank you. Every time we're going to walk into the Lorne Gordon boardroom, which is our big boardroom, we'll think of you and everything that you've taught us. Lorne has been on Pembina's board and predecessor boards, he said last night, since 1975. Is that correct, Lorne?
Think about that. Where were you in 1975? He was already a board member. It's just absolutely fantastic. Yes, we'll miss you, Lorne, but we'll remember all the lessons that you've taught us when we're in the Lorne Gordon boardroom. To our board members, this is a terrific board. We are a team. It's a harmonious team, it's a collaborative team, we've really figured each other out. We know what the board needs, they know what we need. Our meetings, like our meetings over the last two days, are really a bunch of people trying to make circumstances better for all the stakeholders of Pembina. It's a talented team, it's a skilled team to help us with our glowing future, which includes some new industries that we're entering.
To my immediate officer group, what a great bunch of people we have there, I'll speak of each of them here in the next coming slides. Underneath our senior officers, we have the next wave of VPs that have just demonstrated they're up for it. We have tremendous bench strength, succession planning, as some of the senior officers get drawn across the world for new projects, rest assured there's people in behind that can take care of things as if we were still there. A special welcome to Veresen people, to Veresen board members. This is their first AGM when they're on board, I think it's been about a year since we announced the combination. It's been terrific. We are performing at or above expectations on the Veresen assets and collectively. They make us more valuable and vice versa.
They are adding value. They're teaching us the North American gas business. We're learning about LNG, we're already a very high-functioning team. There's no dysfunction. For those that were paying attention, we closed the transaction in October, by the end of the year, only three months later, we were fully integrated. Systems, people, moves were done, which is unprecedented. Real terrific story. We're having fun. Some of the stats here, I've got a stat on safety. We maintain our tremendous safety record even through all the change, we've been named a Top 100 Employer this year for the first year in many years as a Top 70 Employer. As Lorne said last night, if our employees take care of Pembina, then we will take care of our employees, that's the Pembina way. Communities, we've invested CAD 4 million.
We expect that investment to double over the next number of years. We're trying to target half a percent of EBITDA, which, based on the projections you'll see, should get that up to about CAD 10 million annually that we're reinvesting in communities. We're really very proud of that, including our multimillion-dollar United Way contribution. We're in business for all the stakeholders. That's our purpose, not just one. When companies fail to take care of one of the stakeholders, they have problems. We are paying attention to all the stakeholders. Some highlights, they are highlights. It's all good, contrasting 2017 to 2016, these are per-share numbers. You see sometimes companies put up, "Oh, we made this much more money," but how much did you make per share?
Ultimately, yes, share price may not go up linear, in line with cash flow per share or EBITDA per share, it eventually does. A share is worth its ability to pay dividends over the long run. When you keep raising the dividend, the share price will follow. Despite short-term headwinds, the share price always follows its ability to pay dividends. You can see our operating margin per share, adjusted EBITDA per share, earnings per share, adjusted cash flow per share, all up about 30% over last year. That's the long-term leading indicator of where our share price should go. We're not too distressed that our share price didn't go up year-over-year, it will. This is how shares are valued. Just a brief history of how our company evolved to blanket Western Canada and eventually North America. Start out with the geology.
The original cash registers for Pembina were Swan Hills, they were Drayton Valley. Later on, the oil sands, then shale happened. The Montney, the Duvernay, the Williston. The resource is astounding that we have underneath our asset base. We could literally double production if we had suitable egress out of Western Canada for our production. Even though we're thousands of miles away from consuming centers, we're still competitive. That's how good the geology is. We just need a couple of bright spots, an LNG approval, a pipeline to move forward in [Honest], and I think there'll be hope restored to the sector, and we will start to see the oil producers in the sector and the infrastructure companies in the sector will start to track commodity prices much better. These are enormous resources, hundreds of years of earning potential underneath. There's our pipeline system.
It's not a bad location. It's like having an apartment in downtown New York. It's location, location. Our assets are on top of some of the best geology in the world. Those pipelines in green are our conventional pipeline system. In yellow, our oil sands pipeline system. One or another of our commodities is always working. Sometimes it's oil. Used to be heavy oil. Sometimes it's gas, sometimes it's NGLs, but something's always working. What's good about our asset base is we have assets in each commodity type. There's our gas plants that we had from Pembina, the green plants. Our fractionator, Canada's largest fractionation complex. There's the Veresen assets we acquired. You can see the red line is Alliance Pipeline . Sits right on top of. Actually disappears under Peace. We share a right of way. Huge synergy.
The gas plants in the Montney right here. Oops. Sorry about that. Right here. We really didn't participate in processing in the Montney, and now we do. I think we have the best processing assets in the whole Montney. We're ideally situated with what we call the Pembina store to provide the services that producers need. Some producers want processing plants, some don't. Some want pipe, some want fractionation. We'll talk more about some of the new products coming to the Pembina store soon. We zoom out and, yes, now we're a North American company, about 15% of our cash flow coming from U.S. sources. Last but not least at all is our investment in Ruby, which brings us into a new basin, the Rockies basin around Opal Hub.
The dotted line here is our aspiration to build a pipeline to our proposed Jordan Cove site, which will bring Rockies and Western Canadian gas to the world. It's kind of frustrating. I heard AECO was well under CAD 1 today. I don't know if anybody could tell me what it is trading at today, but there's about a CAD 10 difference between AECO and prices in Tokyo. Pretty frustrating to be a producer in Western Canada when your product is worth 10 times as much somewhere else in the world, and you can't get it there. We're trying to play a role in closing that gap. I'm going to give you the same history by the customer services that we provide. Production, consumption, and here's how we filled the space in over time. Of course, we started out, our roots were a pipeline company.
What is now our conventional pipeline business unit is the original Pembina. Now it's still our largest business unit, but there's a lot of other commerce going on outside of conventional pipeline. When we looked at it, we said, "Man, we've got great pipeline assets, but how can we fill them up?" We started to market around our assets. We got into oil sands. We built terminals to aggregate more product to start to fill up our pipelines from an oil perspective. We added gas processing because when you take gas out of the ground, if you make it very cold, you get more liquids extracted. We said, "If we own these gas plants and we can chill the process more, we can get more liquids out, and then we can fill up spare capacity we have in our pipelines." We did that.
Now we're actually our largest owned customer. I think we have 100,000 barrels a day coming out of plants we own that is the customer of our pipeline business. That strategy worked out very well. In 2012, we said, "Where does all that NGL go once it's on our pipe?" Well, it gets fractionated. We first thought about entering fractionation on our own, we realized, man, this stuff's really hard, and you need a lot of storage, and it's complex and interconnectivity, and it's going to cost us a lot more to get into this than we thought, and it's a lot more complex, and it's going to take time we don't have. We combined with Provident Energy, and we added the storage. I'll show you a slide later on storage. We've got a lot of storage.
We have a lot of fractionation now. We have distribution, one of Canada's largest rail facilities, and I think thousands of rail cars. We filled in that natural gas liquids value chain, as it were, alongside the original Pembina crude value chain. The service we were missing was natural gas because product comes out of the ground, sometimes it's gas, sometimes it's NGL, sometimes it's crude, sometimes it's condensate, but we couldn't provide gas service. That's really what led us to combining with Veresen, was to offer natural gas services through Alliance Pipeline and the Channahon plant. Now we can offer all the services that producers require. There's nothing they can't buy in the Pembina store to get their hydrocarbons to market.
Our aspiration is to add even another step into our value chain to get that natural gas that isn't getting a fair price in Western Canada to the rest of the world. That's our aspiration with Jordan Cove, and we're optimistic we can get that done. We would like to turn propane into polypropylene. The value of propane as polypropylene is worth about seven times as much. We think our producer customers have a lot of vested interest and alignment with seeing that value-added service coming on. We are pursuing polypropylene in Western Canada. We are pursuing propane exports. We're currently constructing a plant or export terminal in Prince Rupert. We're doing all that we can to get Canadian hydrocarbons to the world where they're worth more.
We're doing everything we can, and so are our partners, infrastructure partners, whether it's TransCanada on Keystone XL or Enbridge on Line 3 or Kinder Morgan. We're all trying to do the same thing, and it's vitally important for our sector and our Canadian economy that we connect to global markets because it's costing the country billions and billions of CAD a year. It eventually will result in a lower standard of living and less competitive economy if we're unable to do that. That's really the journey from a customer service perspective. We will be able to go to a customer and take their gas and turn it into polypropylene someday, or take their gas and ship it to Tokyo or their propane and ship it to Korea. It's getting pretty exciting. Effective January 1, we unveiled our new structure.
The structure really two sides, operating side, services side of our company. We've broken our operating side into pipelines, not surprisingly, pipelines go with the pipelines. The facilities go with the facility. In our pipeline division, we have our conventional pipeline business, the legacy original Pembina business, the oil sands businesses, the pipelines that we started to acquire effective 2001, and most recently, what we call transmission pipelines. That's by and large the Veresen pipes, Alliance Ruby, Pacific Connector Gas Pipeline, that dotted line that I showed you going from Malin Hub to Jordan Cove, that will be in transmission business unit. But also some of the assets that Pembina had, Vantage and of course, another Veresen asset, AEGS. Transmission is launched. They are developing operating capability very rapidly.
Good thing, because we're taking over operatorship of AEGS, and we've taken over operatorship of the Vantage system, and they need to gear up for Pacific Connector Gas Pipeline once that becomes real. That's off and running. In our gathering and processing, it's the legacy Pembina processing businesses. It's Veresen Midstream, that's the joint venture business, and of course, our fractionation complex. Jarrod's leading that. Jason's leading the pipeline business, and Stu is leading our commodity business. We put all our commodity businesses together, and we're already seeing added value on railcar optimization and hedging and other things like that. That seems to be playing out very well. Hats off to all the people in marketing. They've undergone pretty much the most change over the last six months, but I see they're reemerging very powerfully and full of ideas.
Stu, of course, looks after Jordan Cove and petrochemical business. It's a lot of work. We don't see him out much anymore. He's always on an airplane. Steven's our Chief Financial Officer and carefully stewarded us through all the many changes over the last six months. It's been a tremendous success, and we have unparalleled access to capital and shareholder relations. Paul's looking after our corporate services team. We have phenomenal back office people, accounting, IT, procurement, just absolutely great groups. You see all the results, but you don't see all the hard work in behind getting approvals these days which falls under Harry. You never see our name in the press. Why is that? We're building thousands of km of pipes because we have very talented external affairs people. This is our new leadership team, and it's a real privilege to work with them.
Here's our growth of all our pipelines. Started out pre-1997 with the original Pembina system, 550,000 barrels a day. It was about half full back then. We went on a journey of growth, accretive growth. It started in oil sands, because when I started at Pembina in 2005, I was Vice President of Business Development, and I mainly worked on oil sands pipes. We grew the company quite rapidly just building out oil sands. The shale happened, NGL started to happen, condensate started to happen. We really started to grow the conventional business again, the Phase One, Two, Three assets. Most recently, we put Phase Three, which was our largest ever project into service middle of 2007, and that's been just a tremendous success and filling even faster than we anticipated. AEGS, Vantage 2014-2017.
We combined with Veresen and really got that gas leg to our stool, which is working out very well. We are looking at expanding Alliance right now. A phased growth on the gas side. As we look forward, we announced Phase Six today, and there will be a Phase 7 and 8. Don't know exactly when and how they are going to look, but there is just a lot of momentum in the basin again, with higher, particularly condensate prices. We're at about 3 million barrels. Remember where we started about half full, about 300,000. It's a tenfold increase since 1997. It's a pretty amazing story, a story that was unimaginable 10, 15 years ago for us. Unimaginable. Here we are. More to come. Processing, similar story. We were not in the processing business until 2009.
We did a modest acquisition of the Cut Bank Complex, an asset that was familiar to many of us and has grown. I think we're about a BCF a day at Cut Bank alone now. The expansions. We got Younger and Empress through the Provident acquisition, added a bunch of plants. Most of these were greenfield. We merged with Veresen, got a real big bump on our net share of the Veresen Midstream processing capacity. Of course, half of Aux Sable. We're at about 6 billion cubic feet a day, which makes us the largest processor. In less than 10 years, we've gone from not being in the business to the largest player in the business. That's really what we try to do is we'll test out a business. We tested out Cut Bank.
We like the business. We commit ourselves to it. Fractionation, same thing. 2012, we were not in the business. We acquired Provident. We went on a rapid growth spurt, some of which we foresaw. I always try to be honest. It takes skill, but it takes luck. What led us to Provident was skill. And filling up the pipeline with the processing strategy. That was scale, but the shales, that was luck. That supersized everything. That's the luck part, but it's good to have some of that, too. Now, with our recently announced Empress expansion, we're going to be over 300,000 barrels a day and clearly, again, the largest fractionation owner in Canada. Storage, almost 14 million barrels of storage. That's a lot of storage. It's one of the things that makes our business excellent because it's just a great shock absorber.
When you have storage, you can deal with outages and other problems. You can store product today if it's worth more tomorrow and sell it tomorrow and make money. Storage is a great asset for us, and we may be now the largest in Canada, I'm not sure, with the recent additions of the three new caverns in Bursaw. I'll have to check that stat. Diversification, that's the other thing. It's not just that our cash flow per share has gone up, it's gotten less risky. How do you make cash flow less risky? You diversify. Your broker tells you diversify your portfolio. That's what we've done. We've got EBITDA coming in, operating margin coming in from different businesses, pipeline, storage, marketing, and our revenues come from different hydrocarbons, about a third gas, third NGL, third crude condensate.
As I said, always one commodity's working, usually two, sometimes all three work, and that's when it gets really exciting. Nicely diversified across commodities. Currency, we've upped our U.S. exposure, about doubled it through Veresen. They have the Oxbow plant, they've got Ruby Pipe, they've got Alliance U.S., we are getting diversified into the U.S. and it opens up, it teaches us how the U.S. market works and in a very risk-measured way. We're learning about the U.S. and that probably will result in us growing on stateside. Then lastly, our counterparty credit. We have very high-quality customers and counterparties. We don't have to worry about getting paid. When you build a gas plant or a pipeline, it takes you 10 years for you to get your money back. You really do need high-quality credit counterparties, otherwise you never make your money back.
We pay a lot of attention to that. Really great diversification. When you put it all together, we made a bold assertion in 2015 that we could double our EBITDA, we were able to do that. We sit now, back then, about CAD 1 billion of EBITDA, our guidance is CAD 2.55 billion-CAD 2.75 billion , that is a double. That's awesome, but we also doubled it per share. Just apples to apples, our stock price to me is well undervalued considering the EBITDA per share that we are creating now. That's what we're most proud of here in terms of our financial results. Our financial guardrails. We started to communicate with our board and with our investors around what kind of company did we want and how would we evaluate new opportunities. We came up with this language around guardrails.
We have a lot of rope as management, provided we stay within these guardrails. Every time we talk about something new, Jordan Cove or petrochemicals, rest assured that those projects have to fit our guardrails. Our guardrails are not going to fit the projects. That, I think, given our shareholders or investors a lot of confidence that anything we do is going to fall within a framework that meets the objectives of Pembina's investors. Those guardrails are really pretty straightforward. At least 80% of the money we make is going to come from highly predictable fee-based businesses. Said a different way, 20% or less is going to be dependent on commodity prices. We've gone in 2015, these were aspirational guardrails when we set them. They weren't in the bag. We had to work towards these.
We were at 77% in 2015, and now we're at 87%. Well within that guardrail, it makes our cash flow very predictable and less risky. Our payout ratio. We wanted to make sure that our dividend could be paid solely from our fee-based income stream. Said a different way, we didn't want having to pay our dividend out of the commodity-exposed businesses. When Scott and I go to bed at night, we're not worried about paying the dividend because it's being paid from highly reliable income streams. Credit exposure. I talked about credit exposure. We have highly creditworthy counterparties and a very strong balance sheet. We're on the strong end of triple B, and that affords us the opportunity to borrow money very cost-effectively. As I said earlier, we have great access to capital.
These new projects that we're talking about, we have every confidence in the world that when we put them on the books, we can finance them. This is a different slice of our fee-based business. You contrast 2015. We had only about 44% of our cash flow came from really reliable, long-term sources. Now, about 71% is from 10-year contracts where we have high reliability on where that cash is coming from. Back in 2015, about 33% was fee-based, but it was short-term fee-based. Yeah, you knew how much you were going to get paid, you just didn't know how long you were going to get paid that amount. Now that's down to 16. We've really done a big conversion from fee-based business with not a lot of term to highly reliable term. The last two slices are commodity exposed.
We went about from 23% commodity exposed down to about 13%. Really, the way to think about that is we didn't really grow our commodity-exposed businesses. We grew all our other businesses. We diversified out of that. We still love our commodity businesses. Right now, they're just killing it, and we're making lots of money. It is a lot of fun, but we don't need to rely on that cash flow to pay the ever-growing dividend that we're putting out. Our funding plan, we're self-funding. With all these projects that we're talking about, we can pay for them out of cash flow and by borrowing money. We don't have the dividend reinvestment plan. We don't need to issue equity. What that means for our shareholders is they're not getting diluted anymore.
That's a great place to be, to be in a self-funding model. Even with some of the monster initiatives that we see out in the horizon, there's a decent chance we won't need to raise equity even to build world-scale assets. We're sitting in a very good position. What's next? We've got about CAD 20 billion still of unsecured growth. That's a tremendous prize, and it comes from our existing businesses, our processing, fractionation, pipelines, marketing, and from our new ventures. A different way to think about Pembina is with this new venture slice, if we're successful, we have two halves of our business. The original business makes more money when prices are high. The value-added parts actually make more money when commodity prices are low. For example, polypropylene. Polypropylene uses propane as a feedstock. It's the major cost.
When propane is low, maybe our marketing businesses make less money, but our polypropylene business is going to make a lot more money. The new ventures often can make more money in low commodity prices. We are becoming a unique company that can make money when prices are high or money when prices are low. That is the real strategic brainstorm, along with adding customer service and exposing our producers to ways to make money when commodities are low. Our shareholders get the same benefit. We are adding a new level altogether of diversification. Why does Pembina win so much business? Why are we successful? Why do our customers come and buy things in the Pembina store? Well, you will see by my analogies why we call it the store, and you will see this is what the grocery store does.
If you offer multiple services, multiple products, you might get a discount. We have processing, fractionation, pipelines, C2+ pipelines, C3+ crude oil, condensate. There is a huge variety. We are using up a lot of shelf space in the store, so you might just buy one of those things. If you increase your volume, we will give you a discount. If you subscribe for more services, we will give you a discount. A lot of our new contracts are structured so that if you use our whole value chain, if any part of the value chain has an outage, you do not pay for any of it. If you get your gathering from company A, your pipeline for company B, your fractionation from Company C, and your marketing for company D, you are paying for three out of those four services if one is down.
If you sign up with Pembina, you are only paying for the services when they all work. That is a big thing. We have what we call step-up rights. Let us say you are a producer and you are in a new field, a new reservoir. You do not really know how it is going to work out. You are pretty sure you are going to get 1,000 barrels a day, but you might get two. With Pembina, we can say, "Well, sign up for the 1,000, and we will give you a right to step up for the 2,000." We can bracket their outcomes. They do not have to sign up for 2,000 and find out later they only need one. We give them a lot of embedded flexibility. We give them rights to expand.
We have, as I said, that big shock absorber with storage so that if something goes down, if we have a downstream outage, they can keep producing and go to storage for a while. That is a huge benefit. With the new ventures, we can get LNG done and Prince Rupert and polypropylene. It is a whole new section to the store that people can shop in, and the feedback on those services is very positive for us. There is our employee stakeholders. We have gone from 430 employees in 2010. We had about 1,500 at the end of last year. By 2019, I think we will have about 2,000 employees, is my guess, on the way over here. We have grown dramatically, created I think a lot of great jobs, and we really do have something special going on, I think, at our company.
Others are noticing, we're getting some accolades. Our safety record, our promise to each other is we stay safe, we work very, very hard on safety. Our recordable injury rates are as low as anybody's, if not lower. Our driving record is tremendous. We talked a little bit about community involvement. We donated or invested CAD 4 million in communities, 4,000 hours of volunteer work, CAD 3.4 million in the United Way. We are partnering with Breakfast Club of Canada for breakfast programs in the areas that we operate in. We're really going to pick this up over the next year or two. We have full-time people working on how to invest our money and get the same kind of leverage and returns that we get in our operating businesses, in our community investments as well.
Investors, we've more than doubled the energy index returns over the last number of years. I do think the sector is poised for some tailwinds, get some egress announced. I think money and confidence will return to the basin. There's a lot of deep value, in my opinion, in the basin right now, we just have to unearth it. Our value proposition, visible growth within the guardrails. Yeah, we're doing some different things. You look back at our evolution when we were just a pipeline company, gathering, processing seemed scary. Now it just seems second nature. Maybe to some investors, LNG seems scary, but in three or four or five years, hopefully that'll look like second nature. We will grow. We'll grow within the guardrails. We have some company-changing opportunities in front of us that we think we can capitalize on.
It'll just create more and more opportunities. We are self-funded. Our growth can be funded through cash flow and through borrowing, we don't see a lot of dilution in the future. Talked about fee-for-service assets. We could support our dividend and grow our dividend out of the fee stream without reliance on commodity prices. Conservative balance sheet, triple B, strong triple B balance sheet, conservative payout ratio. Our purpose is for the benefit of all the stakeholders and not just one of the stakeholders. We're taking a very long-term view on Pembina's purpose. With that, thank you for your attention. I'd love to take any questions you might have.
My name's Emil Shribney. I'm a shareholder and a proxy holder.
Well done.
Thanks very-
My partner in crime.
Thanks very much, Mick, for a very comprehensive presentation. I'd like to know the percentage of business related to the diluent and condensate. The reason that I'm asking this question is that a number of oil companies now are engaged in shipping bitumen without diluent or experimenting with it, or they're about to use this pellet method. I don't know whether this is still in the experimental stage. However, should I be concerned that we need to have a plan B regarding the condensate? The other question I have that's unrelated, but how are we doing on the Jordan Cove approval?
I do believe the pellet method, it does look interesting, but I think it is experimental still. You saw last year the railways get really backed up. Farmers couldn't move their grain. It was a real issue. The railways are not going to be able to handle the kind of volumes that we're talking about. It's not really economic in the long term to ship crude by rail. Comparatively, it's about three times as expensive in most circumstances. I'm sure there are exceptions to that. We do forecast condensate demand growing, and in our basins, a lot of the growth is condensate. You're perceptive in realizing that. What many people don't know is we still import about half the condensate that we utilize in the oil sands. We import it from the U.S.
Long before we'd have to worry about where our incremental supply is coming from, the imports would be displaced. You saw, for example, how growth in gas volumes in the consuming areas, right, in the Marcellus, has pushed out Canadian gas. Local condensate growth will push out imports. We could double our Alberta condensate production before we'd have displaced all the imports. We see a real nice fairway for condensate growth for at least the next five years.
What are we supposed to do if we don't get any of these pipelines through? We're forced to ship by rail, are we not?
Yeah. There will be incremental shipments, but it will hurt our country if we can't grow egress. We're seeing curtailments now. It manifests itself in low gas prices and low WCS pricing. What happens when you have more production than egress, prices go down. It's costing, I think the last estimate I saw was about CAD 20 billion a year, the lack of egress. People think about billions, and they don't know what that means. What it means is we're not going to be able to pay for healthcare and proper education, and your kids are going to have to move away to work in some other province or land. It's a serious thing, and it's happening today. Your second question around Jordan Cove, we are working towards the approvals.
As you know, we submitted last September, and there's an active dialogue of Q&A with the FERC, but it's too early to say when we're going to hear from that. We have a lot of confidence. We've been really getting to know that project well, and we were always confident it would work, but now that I think the world has a consensus that we're not going to have enough LNG in the 2023 to 2025 timeframe, and prices are starting to reflect that, we have quite a bit of confidence that there'll be a home for Western Canadian and Rockies Gas at Jordan Cove.
Thank you very much.
You're welcome.
Hi, Mick. If I'm staring at you, it's because my hearing is really going, and I'm having to read lips. I'd like to find out, in regard to the problems that we're having with pipelines, I know that it's affecting the economy a lot. We send CAD 46 billion, that's with a B, from Alberta to Ottawa, yet our pretty boy, picture-seeking, whatever you want to call him, hasn't really done a lot to help us, and neither have the people to the west. In fact, I think they're even being the worst hindrance that we've got to getting the economy really rolling in Canada. I'm wondering, how is all of this affecting us with Pembina, and what are you able to do about it?
First, I think we should send you to those town halls. Maybe that would help. It's going to back us up eventually, right? We still have running room, as I said, in condensate because we have imports, and our NGL moves by rail car, and we're facilitating new homes for NGLs with our propane exports. I think the NGL picture's well within hand. We have an Alliance expansion announced, we think we can get gas out of the province. It's really the oil bottleneck. I don't know what more Kinder Morgan could've done. They spent 4 years consulting. They had the federal government on site. They had the then provincial government on site. It was fully and lawfully approved with all the right regulators. Most of the First Nations were on site. They couldn't have done anything else.
I just think it hurts the credibility and the competitiveness of our country that we can't get projects that are lawfully approved underway. If you were an investor in Europe or in the U.S. and you're looking at Canada saying, "Man, I wonder if they're going to follow their laws," how much confidence does that give you? The feds are saying the right things, and I think it's time for action there now. I do believe in the fullness of time, these oil pipes will progress. We just need to do whatever we personally can to make sure that happens.
Bill Manulik, a beneficial shareholder. I know there's a lot of uncertainty over the next 5 years, but I'm assuming, you can correct me if I'm wrong, that you have a 5-year base case plan. I was wondering under that plan, in the fifth year, what you see for profit, and if that's not a good item to look at from your point of view, maybe you could
Yeah
provide something useful for me.
I can only do that qualitatively. We can't give guidance that far out. It's a long way out, and if I did that, I think our General Counsel would come over and dive tackle me. We do see a lot of running room. That's why I took some time to talk about the competitiveness of the geology and how our assets are situated. We think the future is very bright, and I think it can get extremely bright if we can get these commodities to the world that need them. North American crude demand might stay pretty flat. Gas demand's going to go up, but worldwide crude and gas demand is going to keep on going because people around the world want the same standard of living that we have.
They want gas, they want oil, and we need to get it to those markets because that's where it's going to be worth a lot. When people ask me a question like this, I always say, if you look at a company's past, it's a pretty good indicator of how they will do in the future, and we've been able to grow our cash flow per share by 8%-10%. That means, in theory, your dividend should be able to go up 6%-8% in the forecast period. That means your share price, if it was a perfect world, your share price would go up 6%-8% in the forecast period. Don't know if that's going to happen. The world is a funny place. It depends on interest rates, politics, governments, policy, regulation.
There's so many moving parts, but we think we're very well-situated to keep doing what we have been doing.
I'd rather have a specific answer.
I know.
I want to thank you for this meeting and your presentation because it's much, much better than the one I was at this morning.
Thank you.
Thank you very much.
It didn't give us the double talk at the one I was at yesterday. Thanks, Mick.
You're welcome. We won't ask for names. Any other questions?
Mick, the future looks really bright. If I wasn't a shareholder I'm Derek Fenty, I'm a retiree, and I'm a shareholder. I'm not a proxy holder. Please don't strike what I'm saying from the minutes. I see programs on TV, they talk to wealth managers and fund managers, and somebody will ask about Pembina. It's an infrastructure company, and you get lumped in, and infrastructure companies, they're not being able to build things these days, and I don't know. Pembina's built a lot in the last four years, five years. Then what about bond rates go up and the 10-year bond rates? What about Pembina? All those interest dividend-paying companies, they're all going to go down. You look at your guardrails and you look at the results, I think should speak for themselves.
In very tough times in the last three years, Pembina has been able to have phenomenal results, record results year after year. Why is that message not getting out enough to improve the share price?
It's a great question. I think about it at least once a day. Maybe once an hour, actually. At times when there's news events and markets are not discerning, for example, with the problems with Trans Mountain, people lose confidence in a basin. When they lose confidence in a basin, say, you're a mutual fund manager in New York and you're looking and saying, "Man, those Canadians, they can't even follow their own laws," then Western Canadian Select drops, can't get gas out of Alberta, so prices are low. I don't have any confidence, so they sell. The things they sell are liquid, right? The shares you can sell are the ones that have liquidity, and they're generally the largest holdings. We're one of those companies that when there's tide selling, you just get sold.
After the tide is over, the companies that perform, I think they get picked up again. I would say, there's been some missteps of our peers, so we get lumped in with our peers. There's been some missteps by governments. We get lumped in with that. A lot of what comes out of Western Canada is heavy crude. It's WCS, and prices are discounted. That mutual fund manager in New York, he may not be discerning and say, "You know what? Pembina doesn't even transport virtually any WCS, right?" Our oil sands pipelines transport synthetic crude oil, which is worth as much as sweet oil. We transport NGLs. We don't even move WCS, really, but we get lumped in with that.
Then you just keep putting out the results and my boss told me, "Just keep putting out the results and people will notice." We're a Top 100 Employer . Communities phone us to thank us. They invite us into their communities. Customers phone us, and we don't have to have the checkered suits and run around trying to find business. We get return business. You just keep putting up the numbers and people will notice. Over time, a stock should be worth its ability to pay dividends. Last year, we increased 12%. Far this year, 6%, and our payout ratio is actually going down, not up. I think, in the fullness of time, that'll work itself out.
Thank you for the increase in dividends. I really appreciate that. As do most people here. Do you see any way to toss off the carcasses of all those other infrastructure companies and rise above? I don't know, talk to the fund managers face-to-face? I know you go to conferences.
No, we talk to all the major investors annually. I'm pleased to say, as far as I know, all of our major investors are still with us. They see the value. I think the analysts, I don't know what our consensus is. Maybe someone can tell me. I didn't look after today's call. It was around CAD 50 last time I called. A lot of people think that we have a pretty good company and we're going to keep doing what we're doing. Over time, it's been a pretty good story. I think our compounded return's 15% or 17% over 10 years. Not a lot of people are getting those kind of returns in their portfolio, and that's why I own so many shares.
Thank you.
All right. I bet we have some wine and beer and soft drinks outside. Why don't you all join us outside and we can have a celebration?