Good day, and welcome to the Pembina Pipeline Corporation 2022 Annual General Meeting. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Randall Findlay, Chair of the Board. Please go ahead, sir.
Good afternoon, and welcome to the 2022 Annual Meeting of Shareholders of Pembina Pipeline Corporation. My name is Randy Findlay, chair of the board of directors of Pembina Pipeline Corporation. In accordance with our bylaws, I will preside over this meeting as chairman. As Pembina continues to build strong relationships and partnerships with Indigenous communities, it is important to the board of directors and to me personally to start our meeting today with a land acknowledgment. Pembina acknowledges our traditional hosts and thanks them for their graciousness in welcoming us to carry out work on their traditional territories. Pembina plays a role in the economic reconciliation with Indigenous peoples and their respective communities where Pembina operates. We acknowledge the future generations and the collective responsibilities we have to these lands.
The spirit and intent of the United Nations Declaration on the Rights of Indigenous Peoples within the context of the Canadian Constitution and existing Canadian laws. The United Nations Declaration on the Rights of Indigenous Peoples as a framework for reconciliation, and that all Canadians, including private industry and government, must play a role in advancing the Truth and Reconciliation Commission of Canada's Calls to Action, and in particular, Call to Action 92, business and reconciliation. Indigenous peoples are the traditional stewards of the lands and waters where each of us work and choose to live. We further acknowledge that the Indigenous peoples have inhabited these lands and waters since time immemorial. Indigenous peoples' territory, culture, truths, traditions, teachings, and languages are sacred, and we are thankful to be here today as a guest.
We acknowledge the original inhabitants of this place who have hunted, fished, gathered, and taken care of these lands with respect to their sovereignty, their right to self-determination, and we honor their sacred spiritual connection with the land and water. This meeting is being held as a virtual-only meeting again this year to proactively address the ongoing impacts of the COVID-19 pandemic and to mitigate risks to the health and safety of our communities, shareholders, employees, and other stakeholders. We have ensured that this virtual meeting offers shareholders the opportunity to participate, submit questions, and vote at the meeting. Following the formal portion of this meeting, we'll have a presentation regarding the company's activities by our President and Chief Executive Officer, Scott Burrows.
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 any 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 all of the shareholder questions, but if for any reason we aren't able to do so during the meeting, we will do our best to engage with shareholders after the meeting.
With me today on the webcast are Scott Burrows, President and Chief Executive Officer, and a Director of Pembina, Henry Sykes, a Director of Pembina and the Chair of Pembina's Human Resources, Health and Compensation Committee, and Jason Metcalf, Senior Manager, Deputy General Counsel, and Corporate Secretary of Pembina. Joining us remotely are a number of representatives of Pembina's executive management team, employees, and external advisors. I would also like to welcome each of the other directors of Pembina who are joining us remotely today, and in particular, the new director nominee for election, Ana Dutra. You may recall that last year, I said I would retire in 2022. After careful consideration, the board has asked me to continue on as Chair for one more year to oversee and facilitate the company's leadership transition.
I am honored to have been asked to continue working with the board and management team that has such a deep and unwavering commitment to values and ethics, and a company with a long-standing reputation as a reliable and responsible energy service provider. The board continues to focus on succession planning and ensuring that the next chair has the right characteristics to lead the board as Pembina evolves in the coming years. Now, we will move to the formal parts of the business meeting. The meeting will now come to order. In accordance with our bylaws, I appoint Jason Metcalf to serve as secretary of the meeting.
In the unlikely event we experience any technical difficulty or disruption, and I'm unable to chair the meeting, Jason Metcalf will be appointed with the consent of the meeting in accordance with our bylaws to also chair the meeting in my absence so the meeting may continue as planned. I also appoint Kyle Gould, a representative of Pembina's registrar and transfer agent, Computershare Trust Company of Canada, to act as a scrutineer for the meeting. I will now ask Jason to address a few housekeeping matters related to the formal proceedings.
Thank you, Randy. If at any time during the meeting you experience technical difficulties, please refer to the technical support button on the broadcast section of your screen.
The platform we are using today allows our registered shareholders and duly appointed proxy holders the ability to vote online and ask questions during the formal part of the meeting. We would encourage shareholders and duly appointed proxy holders who have specific questions on an item of business to submit your questions as soon as possible by clicking on the message icon on your screen. This will allow us to address them at the most appropriate time in our meeting. If your question relates to a voting matter, we will answer your question when we reach that item. When submitting a question, please identify yourself and indicate whether you are a shareholder or a proxy holder. As previously mentioned, questions not related to a voting matter will be answered after our Chief Executive Officer's presentation, at which time all participants may ask questions during a question and answer session.
As we may receive multiple questions of a similar theme, your specific question may be paraphrased in the interest of efficiency and to address as many themes as possible. Any questions that we are unable to address during the meeting will be referred to our investor relations team for follow-up. To assist us in doing so, please indicate your contact information with your question. Let's move on to voting. If you are a registered shareholder or duly appointed proxy holder and have already voted in the manner indicated in the meeting materials that were sent to you do not need to vote again at this meeting, even if the voting item appears on your screen. Any votes you do cast at this meeting will revoke your prior vote. All items of business for shareholder approval will be conducted by ballot.
If you are a registered shareholder or a duly appointed proxy holder and have not yet voted, you may vote during the meeting by clicking on the voting icon at the top of the screen and selecting voting options on each ballot option. The polls will be opened for all items of business for shareholder approval 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. For each item of business, we will address any specific questions from registered shareholders and proxy holders that relate to that item. Once discussion is concluded on all items of business, we will pause for a moment to ensure all votes are entered. We 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. For meeting efficiency, we have asked certain registered shareholders or duly appointed proxy holders to move and second motions proposed at this meeting. This is not intended to limit discussion or suggest that other registered shareholders and duly appointed proxy holders are not able to move or second motions. Registered shareholders and proxy holders should feel free to initiate discussion on any motion at the appropriate time.
I have been advised by Computershare that the meeting materials were duly delivered to the shareholders and that a quorum is present. Accordingly, I declare that the meeting has been duly called and is properly constituted for the transaction of business. Computershare's Affidavit of Mailing and the Scrutineer's Report on attendance will be filed by the secretary with the minutes of this meeting. The reading of the notice of meeting will be dispensed with. I now declare the online polls open on each resolution. Each person entitled to vote should see voting choices displayed at the top of their screen. We will now commence with the formal business of the meeting. The first item of business is the presentation of the financial statements for the fiscal year ended December 31, 2021, and the auditor's report thereon.
These materials have been mailed to all registered shareholders and to beneficial shareholders who requested a copy of such materials. No action is required by shareholders on this item. The next item of business is the election of the directors. In accordance with our bylaws, the board of directors has fixed the number of directors to be elected today at 12. Pembina's information circular for the meeting sets forth management's proposed 12 director nominees. Each of the nominees is qualified and has consented to his or her nomination as director today and will serve for a term of one year, which expires at the 2023 annual meeting of shareholders or until their successors are duly elected or appointed.
As we did not receive any additional nominations, in accordance with our advance notice bylaw, I will ask the secretary to please read the names of those 12 individuals who have been named and described in the information circular to serve as directors of Pembina.
The management nominees are as follows. Randall Findlay, Anne-Marie Ainsworth, Scott Burrows, Cynthia Carroll, Ana Dutra, Robert G. Gwin, Maureen Howe, Gordon Kerr, David LeGresley, Leslie O'Donoghue, Bruce Rubin, and Henry Sykes.
All of the director nominees other than Mr. Burrows are independent, and all of the nominees other than Ms. Dutra currently sit on our board. The nominees bring a diverse set of skills and experience to our board, and further information with respect to each nominee is set forth in the information circular for the meeting. Their biographies can be found on pages 16 through 27 of the information circular. I would like to take this opportunity to say a few words about Ms. Dutra, the new nominee for election to the board. Ms. Dutra is an experienced corporate director and an executive with over 30 years of experience in profit and loss management, technology, business growth and board and executive level advisory.
She was previously the president and chief executive officer of The Executives' Club of Chicago from 2014 to 2018, and prior thereto was the proxy officer and chief executive officer of Korn Ferry from 2008 to 2013. Ms. Dutra is currently a non-executive director of a number of entities, including CME Group, First Internet Bancorp, Amesite Inc., and CarParts.com, Inc. May I have a motion to elect the 12 nominees as directors of Pembina Pipeline Corporation?
Mr. Chair, I move to nominate the 12 individuals named and described in the information circular to serve as directors of Pembina and to hold office until the next annual meeting of shareholders, or until their successors are duly elected or appointed.
I second the motion.
We will now open the floor to any questions on this item of business. Jason, can you please advise if we have received any questions on this item?
Mr. Chair, we have received some questions and comments in relation to this item of business. The first question, why has the annual director retainer increased 15% from 2021 to 2022? Our economy has not increased by 15%. No one in the workplace got a 15% increase. Unacceptable. This retainer should be put back to the 2021 level, which is already too much. The number of directors at 12 is far too many. This means they are either too inefficient or Pembina is only a part-time job since several directors have too many other commitments. If we had fewer directors that actually put in full-time, five days a week for full-time pay, we would not need so many. Ms.
Dutra appears to have four other directorships besides Pembina, yet is being paid full-time wages from Pembina. We do not need directors who only give one-fifth of a week to Pembina. If she wants to be a Pembina director, then she should only get one-fifth of the pay. Otherwise, she should not be on the slate and should be told to resign if elected. I believe there's more, if you could just bear with me for a moment, Mr. Chair. Mr. Chair, the question or comment continues. Ms. Carroll has been a director since May 2020 and has had more than enough time to buy plenty of shares during that period of time. The information circular says she has 0 shares, which means.
Perhaps she is too busy with the other three directorships that she does not think that Pembina is important. She should resign immediately since we don't need directors who have so many other directorships. Gwynne is also since May 2020 and has had more than enough time to buy plenty of shares during that period of time. The information circular says he has zero shares.
That concludes the questions, Jason. Or that question. I believe series of questions. Maybe the first part of it, which is director comp. Maybe Henry, I could turn that over to you as chairman of the Human Resources, Health and Compensation Committee.
Sure. Mr. Chair, unfortunately, we don't increase directors' fees every year by an amount of inflation or any other amount. What we do is compare our directors' compensation to other companies' directors' compensation using the peer groups that we've described here. Because we tend to do these in lumps rather than over time, the lumps look larger than they otherwise than they really are. If you looked at the total increase since on an annual basis, it would be substantially less than the 15%. I suggest it would be within a reasonable. It would bear a reasonable correlation to the market.
I'd also like to point out with respect to the question about the shareholdings of Bob Gwynne and Cynthia Carroll, that our guidelines provide that directors have five years to achieve their share ownership goal. If they don't by that period of time, then there are consequences. For the time being, they are well within the timeframe that they have. The other thing I would point out is in the past two years to a year and a half, directors have been under a blackout in terms of trading in shares for a significant period of time because of the transactions we've been involved in and financial results we've been issuing.
It would have been very difficult to acquire a substantial number of shares. Overall, they remain in compliance with the corporate guidelines.
Thank you, Henry. Jason, could you maybe go back to one of the second or third questions? We've discussed director comp. We've discussed shareholding of Gwin and Carroll.
I think there was a question by Ana Dutra and her and the time she would spend on this board given her other board memberships. Pembina has governance guidelines that require directors to sit on no more than four other company boards. She has until the end of this year to get into compliance with that. There seems to be a misconception in the question that a directorship should be a full-time job. Directors are required to be independent of the companies that they are directors of, with the exception of, for example, the CEO. It is not a full-time job.
I would suggest that she's well able to deal with the commitments of being a director of the four companies that she is a director of.
I believe that addresses the question, Mr. Sykes. Thank you.
Thank you, Jason. If there are no further discussion, I've been advised that sufficient votes have been cast in advance of the meeting to elect the 12 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 duly appointed proxy holders can vote by online ballot by selecting the applicable voting options displayed on their screens. The next item of business is the appointment of KPMG LLP as the auditors of Pembina. May I have a motion that the firm of KPMG LLP of Calgary, Alberta be appointed auditors of Pembina until the next annual meeting of shareholders, and that the remuneration be fixed by Pembina's board of directors upon recommendation of its audit committee.
Mr. Chair, I move that KPMG LLP be appointed as the auditors of Pembina till the next annual meeting of shareholders, and that their remuneration be fixed by the directors of Pembina.
I second the motion.
Thank you both. You have heard the motion, and it is now open for questions. Jason, can you please advise if we've received any questions on this item?
Mr. Chair, we have not received any questions in relation to this item 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 is the consideration of an ordinary resolution approving the continuation of Pembina's shareholders' rights plan, as more fully disclosed in Pembina's information circular. At this time, I would ask to have a motion to approve the resolution as set forth on page 13 of the information circular.
Mr. Chair, I move that the resolution approving the continuation of Pembina's shareholder rights plan, as set forth on page 13 of Pembina's information circular, be approved.
Second.
Thank you both. You've heard the motion. It is now open for questions. Jason, can you please advise if we have received any questions on this item?
Mr. Chair, we have not received any questions in relation to this item of business.
As no comments have been received on the motion, I will proceed to the next item of business. The next item of business at this meeting is consideration of a non-binding resolution accepting Pembina's approach to executive compensation, as disclosed in the information circular. The text of the resolution is set out on page 14 of the information circular for the meeting. This is an advisory vote, so the results will not be binding on Pembina's board of directors. The board will, however, consider the outcomes of the vote as part of its ongoing review of executive compensation. If a significant number of shareholders oppose the say on pay resolution, the board will consult with shareholders to understand their concerns and then review our approach to the executive compensation with their concerns in mind.
At this time, I would ask to have a motion to approve the resolution as set forth on page 14 of Pembina's information circular, accepting Pembina's approach to executive compensation.
Mr. Chair, I move that the resolution on page 14 of Pembina's information circular accepting Pembina's approach to executive compensation be approved as a non-binding resolution of Pembina shareholders.
I second the motion.
You have heard the motion and is now open for questions. Jason, have we received any questions on this motion?
Mr. Chair, we have received a question in relation to this item of business. The question relates to whether Mr. Burrows and his future compensation levels will be in line with his current compensation or increased in respect of his new role. A related question relates to an executive receiving a raise. However, on our read, this executive is no longer with Pembina, and the increase in compensation does not reflect a raise, so the question will not be addressed.
Okay. Thank you.
Mr. Sykes, would you like to address the question on compensation of our CEO?
We set our officers, including our CEO's compensation, by reference to a peer group. This year, we expanded the peer group. It had shrunk through mergers, acquisitions of other companies. We expanded the peer group to reflect a reasonable range of companies, with which we could compare our officers. We have not changed our compensation philosophy with respect to that peer group, which is to pay at about the median or about 50% of the where that peer group is. Currently, our officers, including our CEOs, some are slightly above, some are slightly below the median.
We will continue to monitor that on an annual basis to ensure that our officers are appropriately compensated with respect to the peer group, which reflects, in a sense, alternative opportunities that they might have to pursue if they were not fairly paid here. Our goal is, as I said, to pay fairly, and we use the independent peer group and an independent third-party consultant to ensure that we are not overpaying, nor are we underpaying.
Thank you, Henry. With there being no further questions, I will note that this was the final agenda item and the last matter to be voted on at today's meeting. Those of you who have not yet cast your votes, please do so now. I will pause for one minute before closing the polls. The polls are now closed, and this concludes the voting at today's meeting. I have received the scrutineer's report on the ballots required for each of the items of business. The results are as follows. In respect of the election of directors of Pembina, I am pleased to announce that the election of each of the director nominees has been approved by a majority of the votes cast. Accordingly, I declare the 12 directors nominated hereby elected as directors of Pembina.
With respect to the appointment of Pembina's auditor, I declare the motion regarding the appointment of KPMG LLP as the auditors of Pembina to be passed. The ordinary resolution approving the continuation of Pembina's shareholders rights plan has been approved by 94% of the votes cast. Accordingly, I declare the ordinary resolution be passed. Finally, the non-binding resolution accepting Pembina's approach to executive compensation has been approved by approximately 88% of the votes cast. Accordingly, I declare the non-binding resolution accepting Pembina's approach to executive compensation to be passed. A report disclosing the number of votes cast in favor, against, and withheld from voting in respect of each item of business voted upon at this meeting will be filed on SEDAR promptly following the meeting. 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 the meeting, may I please have a motion to terminate the meeting?
Mr. Chair, I move this meeting be terminated.
I second the motion.
I declare the formal portion of this meeting terminated. We will now have a presentation regarding Pembina's activities by our President and Chief Executive Officer, Scott Burrows, followed by a question-and-answer session, during which we will be pleased to answer any questions that you may have. As a reminder, if you wish to ask a question, please click on the question icon, type in, and submit your question. You may submit your questions during Scott's presentation. Before I turn the meeting over to Scott, on behalf of the board, I want to thank Pembina's former president and CEO, Mick Dilger, for his service and contribution to Pembina. During Mick's tenure, Pembina accelerated its impressive history of innovation and growth, becoming a truly differentiated, integrated leader in the midstream industry with a strong core business, well-positioned for the future.
We are all truly proud to have worked with Mick. On behalf of the board, I would also like to thank all of our shareholders for joining us today and for your ongoing support. The board is committed to working diligently on your behalf. Before Scott speaks, on behalf of your board of directors, I'd like to say that in his short tenure as CEO, Scott and his management team are doing an amazing job at maintaining and strengthening the value and ethics that Pembina stands for. Scott.
Thanks, Randy, and good afternoon, everyone. I'm very honored to be presenting at Pembina's AGM for the first time as president and CEO and grateful for the opportunity to lead such an amazing organization at this important point in its history. I would like to add my thanks to Mick Dilger for his leadership, dedication, and many contribution to Pembina's success, as well as the personal mentorship he provided to me personally over my career here.
In my 11 years at Pembina, I've been fortunate to be part of a team that has grown the Pembina store into roughly a CAD 40 billion-dollar entity, operating safely and reliably with many businesses in multiple jurisdictions and more. The officer group has evolved over the last year. I'm thrilled to have the opportunity to work with the dynamic and dedicated individuals shown here, as well as the broader team of our talented employees across North America. Pembina's future is full of exciting opportunities, and I'm confident that together with our many stakeholders, we will accomplish great things. Over the past year, as part of our commitment to equity, diversity, and inclusion or EDI, Pembina has made important progress. We are working to create a culture that encourage our employees to take time to understand each other's experiences and unique perspectives.
Through this, we build trust, connection, and empathy, and create a culture in which people feel safe to be their authentic selves at work. We have multiple initiatives that support this work. However, one of our most visible and impactful initiatives is our Conversations for Change series, which features our own employees sharing their stories on various EDI topics. I know for myself, I'm continuously moved by the bravery of our panelists. It is so powerful to hear firsthand from someone I work with about how they experience the world living with mental health issues, or as an Indigenous person, a person of color, a woman, a person who is LGBTQ2S+, a person with a disability, or someone trying to unpack societal gender norms.
In a very recent example, we partnered with the town of Whitecourt, Boys and Girls Club of Whitecourt, and Whitecourt Public Library to host Whitecourt's first Pride celebration in June. This is Pembina leading the way in creating an experience of inclusion and belonging alongside our community partners. I'm proud of the work Pembina is doing in this space, and we'll have more to say on EDI later in this presentation. Before we proceed, I would like to remind you that some of the comments made today are based on Pembina's current expectations, estimates, judgments, and projections. We also refer to non-GAAP measures in this presentation. More information about these statements and measures can be found in our annual and quarterly MD&A.
This past year has been one of organizational transition for Pembina, and while there have been significant changes at the executive leadership level, the core strategy that has been instrumental in Pembina's success and help generating industry leading returns remains intact. As we move forward into 2022 and beyond, the current management team remains committed to ensuring Pembina's long-term future and that of our stakeholders. We have committed ourselves to being in business for all stakeholders, not just one. When companies run into trouble, it is usually because they fail to take care of one of these groups. So we balance the interests of all of our stakeholders, employees, customers, communities, and investors. We have a long history of ensuring each group benefits from our business activities.
Pembina plans to do in the future is somehow tied to our purpose and one or more of these stakeholder groups. Our ESG focus supports all of our stakeholders as well, which makes it really easy to incorporate it into our strategy. Our customers are increasingly asking Pembina to support them in achieving their own ESG commitments, and we have the expertise and infrastructure to do that. Our communities expect us to minimize the impact of our operations and to share the economic benefits we bring. Our employees want a work environment that celebrates and values their diversity, where they are represented at all levels of the organization. Our investors want to know that we are embracing the transition to a lower carbon economy while still providing competitive returns.
Accordingly, Pembina advanced a number of important ESG initiatives in 2021, which I will speak to today. The execution of Pembina's strategy has created the asset map shown here. Today, no matter what comes out of the ground, gas, C2+, C3+, crude, condensate, we can provide services for it. We have about 3 million barrels per day of transportation and 6 BCF per day of gas processing. We have the largest fractionation complex in Canada and one of the largest in North America, plus a significant portfolio of above and below ground storage assets. We've built a tremendous marketing business around it. Gives us great market insights and allows us to offer the full spectrum of services to our customers.
What's really exciting is that we are starting to add icons on this map on the West Coast of Canada, as you can see with our Prince Rupert Terminal and our proposed Cedar LNG facility as we advance our global market access strategy and getting our customers the best price for their products. The global market access strategy remains an important part of Pembina's future aspirations. This slide tells a similar story, but from the perspective of how we have developed and continue to develop our customer service offerings across multiple hydrocarbon value chains, natural gas, NGL, and oil and condensate. It starts on the left with the production and ends on the right with consumption. For decades, we've been filling in the pieces in between those, and today we are ideally situated with what we call the Pembina store to provide all the services that customers need.
No matter what product they have or where they have it, the customer is one phone call away from a service for everything. As we step down the value chain, it's going to be towards higher and higher value markets. Our integrated service offering drive lasting value, and we will continue to enhance the Pembina store. Finally, to wrap up within the area of strategy, we remain committed to our financial guardrails, which were developed to provide a roadmap on how we would grow and diversify Pembina while maintaining a consistent approach to financial risk. They've been a valuable tool both in the execution of our strategy and in communicating our plans to you, our shareholders. I'll take a moment to quickly recap the guardrails. First, we want at least 80% of our adjusted EBITDA to come from fee-based sources as opposed to commodity exposed sources.
Second, we target less than 100% payout of fee-based distributable cash flow, meaning we are not reliant on the commodity exposed portion of our business to pay our dividend. Third, we target at least 75% of our credit exposure to be with investment-grade and secured counterparties. Fourth, we strive to maintain a strong BBB credit rating. Disciplined execution of our strategy and our commitment to prudent financial management has allowed Pembina to deliver value to shareholders throughout various commodity price environments and economic cycles. The blue bars shown here represent adjusted EBITDA per share, and as you can see, the trend has generally been increasing, particularly over the last seven years.
Our ability to make money and deliver per share value has continued even when oil prices, shown in red, and gas prices, shown by the dotted line, have moved up and down as we have faced a global pandemic and all that has entailed for the economy. As we have said in the past, while we grow bigger, we also want to grow better, and delivering more value per share over time is proof of our success. I will turn now to what Pembina has been able to deliver over the past year or so. Throughout another remarkable year, we once again navigated the uncertainty and ever-changing reality of the pandemic and its consequences on the global economy and energy prices while still moving the company boldly forward.
Financially, Pembina delivered record adjusted EBITDA of CAD 3.43 billion in 2021, which exceeded the top end of our annual guidance range and represented a 5% increase over 2020. Strong financial results reflected higher commodity prices across all products within Pembina's value chain, crude oil, natural gas, and natural gas liquids. As well, volumes on many of Pembina's systems improved throughout 2021, and higher commodity prices and volumes led to strong annual results in our marketing business. We placed over CAD 500 million of assets into service in 2021, including the Prince Rupert Terminal, Hythe developments, and the expansion of Vancouver Wharves Terminal. As well, during 2021, Pembina announced and ultimately terminated a proposed acquisition of Inter Pipeline.
The record continues to show that while acquisitions may be a tool to execute our strategy, we will remain disciplined, prioritizing shareholder returns and our financial guardrails. As consolation, we did enjoy the receipt of a CAD 350 million termination fee, which was used to pay down debt. Strong financial performance and the receipt of the termination fee allowed Pembina to exit 2021 in an even better financial position with a stronger balance sheet, improved liquidity, and having maintained or strengthened the company's financial guardrails. That momentum has continued into 2022. As we announced yesterday with the release of our quarterly results, 2022 is off to an excellent start.
A strong contribution from our marketing business, growing volumes on many key systems, and the benefit of new assets placed into service over the past year allowed us to deliver record quarterly adjusted EBITDA of CAD 1 billion, which is a first for the company. Physical volumes on Pembina's conventional pipeline systems, which serve as a proxy for Pembina's broader business, grew by nearly 5% in the first quarter of 2022 compared to the same period in 2021. That trend has continued into April with physical volumes reaching an all-time monthly high. With a strong first quarter and a positive outlook for the rest of the year, yesterday, we raised our 2022 adjusted EBITDA guidance to CAD 3.45 billion-CAD 3.6 billion.
Another recent highlight was our announcement of the creation of a new joint venture through which Pembina and KKR will combine their respective Western Canadian natural gas processing assets into a single new entity. The combined entity, which Pembina will operate and manage, will include Pembina's field-based natural gas processing assets, the Veresen Midstream business, and the business currently carried on by Energy Transfer Canada. Collectively, the value of these transactions is more than CAD 11 billion, excluding assets under construction, and we expect closing of the transaction to occur in the third quarter of 2022. As you can see on the map, the assets of the respective companies are very complementary. Altogether, the new company will serve customers through an industry-leading platform that includes 25 gas processing facilities, providing approximately 5 BCF per day of capacity.
Through the combination of our assets, we are creating a premier and highly competitive Western Canadian natural gas processing entity. With a meaningful platform that spans the Montney and Duvernay trends, our ability to provide a reliable, safe, and high-value service to our customers will create value for them as it will for Pembina and KKR. Notably, for our investors, the net benefits of the transactions and associated efficiencies are expected to drive mid- to high single-digit adjusted cash flow per share accretion. As such, we have announced our intention to raise the monthly common share dividend by three-quarters of a cent per share upon closing of the transaction. Yes, we promise to name it shortly. Finally, as we look back over our accomplishments over the past year, it is important to highlight the important progress we have made on ESG. Pembina has a long history of embracing ESG.
It is not new for us. We've been doing it long before it was called ESG. That said, Pembina is embracing the opportunity to adapt, respond, and contribute to a more sustainable future, and our strong commitment to ESG is being demonstrated by the ambitious new projects, partnerships, and targets we announced this past year. First, we are pleased to announce a bold target to reduce Pembina's greenhouse gas emissions intensity by 30% by 2030. The GHG reduction will help guide business decisions and improve overall emissions intensity performance while increasing Pembina's long-term value and ensuring Canadian energy is developed and delivered responsibly. To meet the target, Pembina will focus initially on operational opportunities, greater use of renewable and lower emission energy sources, and investments in a lower carbon economy.
Second, we further demonstrated Pembina's commitment to employee diversity, equal opportunity, and ensuring a safe and inclusive workplace with the announcement of employee equity, diversity, and inclusion targets. We set targets for the overall employee group as well as for the executive team. For women, we have set a target of 35% for the overall workforce by 2025 and 30% for the executive team by 2022, which we have already surpassed. As it relates to overall diversity, we have set a target of 45% by 2025 for the overall workforce and 40% by 2025 for the executive team. These targets support the work being done across the organization to increase the representation of women and other underrepresented groups at all levels of the organization.
In 2021, we also announced two significant and transformational partnerships that combine strong business opportunities with compelling ESG attributes. The first is a partnership with the Haisla Nation to develop the proposed Cedar LNG project, which would be the largest First Nations-owned infrastructure project in Canada and one of the cleanest environmental profiles in the world. The second is Chinook Pathways, a partnership with the Western Indigenous Pipeline Group to evaluate ownership of the Trans Mountain pipeline following the completion of the construction of the Trans Mountain expansion project. These partnerships do not happen overnight. They happen after years of relationship building with the communities that live and work near these projects. Both are exciting opportunities to redefine how indigenous communities and industry can work together to support indigenous economic reconciliation in Canada.
Pembina has never been one to shy away from a challenge, and our work over the past year across the ESG spectrum is no exception. I'm very proud of the strides we have taken and inspired by what is possible. I will turn now to our outlook for the future. Over the past year and a half, we've been sharing our sense of optimism about what is possible for Pembina and its stakeholders, due in large part to the fundamental drivers that seem to be pointing us in the right direction. Within the WCSB, we have seen volumes for crude oil, natural gas, and NGLs return to pre-pandemic levels. While there's daily and weekly volatility, commodity prices continue to show strength, reflecting a robust post-pandemic economic outlook and tight energy supply picture with oil, natural gas, and propane prices all exceeding pre-pandemic price levels.
We have seen some uptick in rig activity in the WCSB. Since June 2021, rig activity has exceeded the pre-pandemic levels we saw back in 2019. With strong industry fundamentals as the backdrop, our customers are well-positioned too. They are generating record amounts of free cash flow, and their balance sheets are in tremendous shape after paying down a significant amount of debt. Together, these factors support our view of increased producer activity and a return to more significant volume growth at some point soon. As we have talked about often, Northeast BC continues to show promise as a driver of growth in the WCSB. Over the past year or so, we have seen significant producer M&A, with large companies consolidating the space with the group overall now being capable of deploying capital more quickly and at a lower cost.
Longer-term liquids growth will be driven substantially by natural gas demand as the LNG industry on the West Coast of Canada begins to take off. Between LNG Canada and our Cedar LNG project, we could see more than 2 BCF a day of LNG being exported, and that could grow to greater than 4 BCF a day with the expansion of LNG Canada. Adding to this is the conversion from coal to gas in the generation of electricity in Alberta, as well as growing demand for exports of gas to the United States. What does this all mean for Pembina? Ultimately, more gas equals more gas processing in areas where Pembina has a presence.
Increased gas processing ultimately leads to more NGL volumes, which requires transportation, fractionation, storage, and rail, along with marketing service, which Pembina is well situated to service on our customer's behalf. We are signing new long-term agreements with leading producers in the area. We were excited yesterday to announce a 20-year midstream services agreement for the transportation and fractionation of liquids from ConocoPhillips Canada's Montney development in Northeast BC. Under the arrangement, and subject to certain exclusions, ConocoPhillips Canada has dedicated liquids production from the majority of its acreage within the liquids-rich Northeast BC region of the Montney resource play. ConocoPhillips Canada is a premier producer in the area, and we are thrilled with this agreement. This new agreement complements other agreements we recently signed with a second Montney producer and agreement with a third-area producer, which we expect to be signed in mid-2022.
Pembina sees the Northeast BC Montney as a strategically important area and a key driver of growth in the basin, and we are poised to benefit from new development. In an increasingly competitive environment, we continue to demonstrate that customers value the certainty and dependability of our infrastructure, our strong track record of safety and reliability, competitive fees, and integrated service offering. As a result of these long-term commitments and agreements, Pembina expects to have secured the transportation rights to a significant portion of forecasted future growth in the Northeast BC Montney, which collectively will support improved utilization of its existing assets as well as capital-efficient expansion projects into the future. Pembina currently has about CAD 1.5 billion of projects underway, primarily focused on the phased expansion of our Peace Pipeline system.
We were pleased yesterday to announce that we are reactivating our previously deferred Phase VIII expansion, which will enable more product segregation and provide upstream capacity in key segments on our pipeline to serve growing volumes. Based on the significant long-term commitments from leading producers as I discussed, we have clear visibility to the demand for incremental capacity in this region. As a result, we are confident in the decision to reactivate the Phase VIII expansion at this time. We are also excited that construction and line fill of the Phase VII expansion are complete and final commissioning is underway. As we announced yesterday, Phase VII is expected to be approximately CAD 150 million under budget and is expected to enter commercial service on June first. Phase VII was constructed to provide transportation for the growing condensate supply in the WCSB.
We continue to progress our Phase IX expansion, which similarly debottlenecks certain corridors and provides more product segregation. Collectively, these expansion projects will accommodate the growth we see coming and allow Pembina to continue to provide industry-leading transportation service to our producing customers in a highly capital-efficient manner. Finally, we are constructing a new cogeneration facility that will provide electricity and heat to the existing Empress NGL Extraction Facility, thereby reducing operating costs and greenhouse gas emissions at that site. Pembina also continues to develop additional greenfield and brownfield projects to accommodate the many demand drivers we see impacting the industry in Pembina's business. The CAD 4 billion worth of projects under development include expansions of our existing assets, like new gas processing facilities, new pipeline terminals, pipeline connections, cogeneration facilities, and additional NGL extraction at existing plants.
This also includes our value chain enhancing projects, such as the Cedar LNG project. We are confident in our ability to convert this attractive portfolio of highly economic potential projects into secured investments. As we evaluate and execute on the projects that fall into our more historical value chain, we are increasingly seeing development opportunities for projects that are related to energy transition. We have many low carbon energy projects we can do to reduce our emissions. As I mentioned, we are pursuing near-term opportunities in the LNG space. We've also put forth a vision around carbon capture and storage system, of which I will speak to on the next slide. Longer term, we see the future opportunities to move forward in such projects as ammonia and hydrogen.
Pembina is delighted to be partnering with TC Energy to jointly develop a world-scale carbon transportation and sequestration system known as the Alberta Carbon Grid. This project could grow over time to transport and sequester up to 20 million tons of CO2 per year and will allow Pembina to play a vital role in helping Alberta-based industries effectively manage emissions. Further, for Canada to achieve its national climate targets, carbon transportation and sequestration technology and infrastructure will need to play a vital role. We believe Pembina and TC are uniquely positioned. We will be reducing our project costs using our current rights of way and existing pipelines, which will also reduce the environmental impact of the project.
Recently, during the first quarter, we were very pleased when the government of Alberta announced the Alberta Carbon Grid had been successfully chosen to move to the next stage of the province's carbon capture, utilization and storage process in Alberta's industrial heartland. This stage includes exploring how to safely develop carbon storage hubs north and northeast of Edmonton. We look forward to progressing this important project over the next few years. I spoke earlier of the Pembina store and where it's going. We are always looking to enhance their service offerings. As we develop opportunities around the energy transition and low carbon solutions, here's an illustrative example of what the future Pembina store could look like. It includes the operational opportunities to reduce our emissions at our facilities and to capture our own carbon.
At the same time, it includes the potential for a whole new value chain around the capture, transportation, and sequestration of CO2 for our customers in multiple industries. As I said in the opening slides, we strive to deliver benefits for all four of our stakeholder groups, and that, of course, includes delivering value to our shareholders. Our ability to do that over the long term rests on the decisions we make around capital allocation. Our capital allocation priorities have always been focused first on a strong balance sheet. Our commitment in this regard has been demonstrated consistently and is unwavering. Second comes the security of our dividend. We recognize that our investors depend on the income they receive through the dividend. Thirdly, our track record shows that we can add strategic and financial value through investment of accretive growth capital.
Finally, we will allocate any remaining residual cash flow either to debt reduction in preparation for future capital investment or back to shareholders via incremental dividends or share repurchases as appropriate. Cash flow from operating activities is expected to exceed dividends in the capital investment program in 2022. Pembina expects to allocate a portion of the excess towards common share repurchases with the balance available for incremental capital investment, debt repayment, or additional distribution to shareholders. Including shares repurchased in December 2021, Pembina has now completed CAD 58 million towards its 2022 share repurchase target. Given the resilience of our business and the strong financial performance in 2021 and now into 2022, we stand in a strong financial position. Through our disciplined response during the pandemic and now through the recovery, Pembina is strengthening its financial profile by paying down debt.
Forecasted debt levels at the end of 2022 are expected to position the company favorably relative to its stated leverage targets necessary to preserve a strong BBB credit rating. Maintaining that rating is foundational to our strategy, and our recent delevering has made us more resilient and created flexibility around future capital allocation decisions. Pembina has paid more than CAD 11 billion in common share dividends since inception, and importantly for our shareholders, has never cut its dividend. Over the past 10 years, we have grown the dividend on average by almost 5% per year, and our dividend is safe. In 2021, our payout ratio, that is our dividends divided by our adjusted cash flow from operating activities, was just over 50%, highlighting the significant cushion between the amount of cash we are generating and the dividend we are paying.
We are pleased to announce our intention to raise the dividend by three quarters of a CAD cent per share following the closing of the Newco transaction, which we expect in the third quarter of this year. Pembina has a long history of returning capital to shareholders this way, and we look forward to continuing to grow the dividend over time to match the growth in Pembina's cash flow. In addition to a stable and growing dividend, shareholders do well when our share price does well. I'm happy to share with you this graph, which shows that since the time of the last meeting, Pembina has delivered a total shareholder return of 42%, outperforming the major comparable indices during that period. On a year-to-date basis, Pembina is up close to 30%, while the S&P 500 is down 14%.
In closing, this is an exciting time for Pembina, and I believe our value proposition remains compelling. We have a diversified business, integrated asset base, and a growing ability to reach higher value markets for our customers' products. The prospects for the broader industry, particularly here in the Western Canadian Sedimentary Basin, remain bright and Pembina is well-positioned to benefit. We are capitalizing on the many opportunities to build upon Pembina's base business while developing our multi-billion dollar portfolio of growth opportunities. We are a leading participant in the energy industry's evolution to a more sustainable future. With that, we'll wrap things up. We would once again like to thank all of our stakeholders for their support in joining us today. I would also like to thank my colleagues and to the board of directors for their continual and unwavering support.
At this time, we'd be pleased to answer any questions you may have.
No questions.
Scott, we've received no questions at this time.
Well, with that, I'd like to thank you for taking the time to dial in today. If you do have a question, you can go onto our website and get our investor relations contact information. We're always happy to take and receive and respond to your questions. Thanks, everybody, and have a great weekend.
This concludes today's call. Thank you for your participation. You may now disconnect.