Exhibit 99.2



Pembina Pipeline Corporation



MANAGEMENT'S DISCUSSION AND ANALYSIS



The following management's discussion and analysis ("MD&A")
of the financial and operating results of Pembina Pipeline Corporation ("Pembina" or the "Company") is dated
February 25, 2016 and is supplementary to, and should be read in conjunction with, Pembina's audited consolidated annual financial
statements for the years ended December 31, 2015 and 2014 ("Consolidated Financial Statements"). All dollar amounts contained
in this MD&A are expressed in Canadian dollars unless otherwise noted.



Management is responsible for preparing the MD&A. This MD&A
has been reviewed and recommended by the Audit Committee of Pembina's Board of Directors and approved by its Board of Directors.



This MD&A contains forward-looking statements (see "Forward-Looking
Statements & Information") and refers to financial measures that are not defined by Generally Accepted Accounting Principles
("GAAP"). For more information about the measures which are not defined by GAAP, see "Non-GAAP and Additional GAAP
Measures."



Readers should refer to page 48 for a list of abbreviations that
may be used in this MD&A.



About Pembina



Calgary-based Pembina Pipeline Corporation is a leading transportation
and midstream service provider that has been serving North America's energy industry for over 60 years. Pembina owns and operates
an integrated system of pipelines that transport various products derived from natural gas and hydrocarbon liquids produced in
western Canada and North Dakota. The Company also owns and operates gas gathering and processing facilities and an oil and natural
gas liquids infrastructure and logistics business. Pembina’s integrated assets and commercial operations along the entire
hydrocarbon value chain allow it to offer a full spectrum of midstream and marketing services to the energy sector.



Pembina is committed to working with its community and aboriginal
neighbours, while providing value for investors in a safe, environmentally responsible manner. This balanced approach to operating
ensures the trust Pembina builds among all of its stakeholders is sustainable over the long term.



Pembina’s common shares trade on the Toronto and New
York stock exchanges under PPL and PBA, respectively. For more information, visit www.pembina.com.



Pembina's goal is to provide highly competitive and reliable
returns to investors through monthly dividends on its common shares while enhancing the long-term value of its securities. To achieve
this, Pembina's strategy is to:



| | • | Preserve value by providing safe, responsible, cost-effective
and reliable services;
| | - | ------------------------------------------------------------------------------------



| | • | Diversify the Company's asset base along the hydrocarbon value chain by providing integrated service offerings which enhance
profitability;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------



| | • | Pursue projects or assets that are expected to generate increased cash flow per share and capture long-life, economic hydrocarbon
reserves; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------



| | • | Maintain a strong balance sheet through the application of prudent financial management to all business decisions.
| | - | ------------------------------------------------------------------------------------------------------------------



Pembina is structured into four businesses: Conventional Pipelines,
Oil Sands & Heavy Oil, Gas Services and Midstream, which are described in their respective sections of this MD&A.



1


Pembina Pipeline Corporation




Financial & Operating Overview



|                                                                                   |  | 3 Months Ended December 31 (unaudited) |       |   | 12 Months Ended December 31 | 
|---------------------------------------------------------------------------------- |  | -------------------------------------- | ----- | - | --------------------------- | 
|($ millions, except where noted)                                                   |  | 2015                                   |       |   | 2014                        | 
|Conventional Pipelines revenue volumes (mbpd)(1)(2)                                |  |                                        | 621   |   |                             | 
|Oil Sands & Heavy Oil contracted capacity (mbpd)(1)                                |  |                                        | 880   |   |                             | 
|Gas Services average revenue volumes (mboe/d)net to Pembina(2)(3)                  |  |                                        | 103   |   |                             | 
|Midstream NGL sales volumes (mbpd)(1)(4)                                           |  |                                        | 123   |   |                             | 
|Total volume (mbpd)(1)                                                             |  |                                        | 1,727 |   |                             | 
|Revenue                                                                            |  |                                        | 1,242 |   |                             | 
|Net revenue(5)                                                                     |  |                                        | 407   |   |                             | 
|Operating expenses                                                                 |  |                                        | 110   |   |                             | 
|Realized (gain) on commodity-related derivative financial instruments              |  |                                        | (7    | ) |                             | 
|Operating margin(5)                                                                |  |                                        | 304   |   |                             | 
|Depreciation and amortization included in operations                               |  |                                        | 73    |   |                             | 
|Unrealized (gain) loss on commodity-related derivative financial instruments       |  |                                        | (6    | ) |                             | 
|Gross profit                                                                       |  |                                        | 237   |   |                             | 
|General and administrative expenses                                                |  |                                        | 42    |   |                             | 
|Other expenses                                                                     |  |                                        | 10    |   |                             | 
|Net finance costs (income)                                                         |  |                                        | 22    |   |                             | 
|Share of loss of investment in equity accounted investees, net of tax              |  |                                        | 2     |   |                             | 
|Current tax (recovery) expense                                                     |  |                                        | (19   | ) |                             | 
|Deferred tax expense                                                               |  |                                        | 50    |   |                             | 
|Earnings                                                                           |  |                                        | 130   |   |                             | 
|Earnings per common share – basic (dollars)                                        |  |                                        | 0.32  |   |                             | 
|Earnings per common share – diluted (dollars)                                      |  |                                        | 0.32  |   |                             | 
|EBITDA(5)                                                                          |  |                                        | 260   |   |                             | 
|Cash flow from operating activities                                                |  |                                        | 285   |   |                             | 
|Cash flow from operating activities per common share – basic (dollars)(5)          |  |                                        | 0.79  |   |                             | 
|Adjusted cash flow from operating activities(5)                                    |  |                                        | 280   |   |                             | 
|Adjusted cash flow from operating activities per common share – basic (dollars)(5) |  |                                        | 0.77  |   |                             | 
|Common share dividends declared                                                    |  |                                        | 168   |   |                             | 
|Dividends per common share (dollars)                                               |  |                                        | 0.46  |   |                             | 
|Preferred share dividends declared                                                 |  |                                        | 13    |   |                             | 
|Capital expenditures                                                               |  |                                        | 448   |   |                             | 
|Total enterprise value ($ billions)(5)                                             |  |                                        | 15    |   |                             | 



| | (1) | mbpd is thousands of barrels per day.
| | --- | -------------------------------------

| | (2) | Revenue volumes are equal to contracted plus interruptible volumes.
| | --- | -------------------------------------------------------------------

| | (3) | Gas Services average revenue volumes converted to mboe/d from MMcf/d at 6:1 ratio.
| | --- | ----------------------------------------------------------------------------------

| | (4) | NGL is natural gas liquids.
| | --- | ---------------------------

| | (5) | Refer to "Non-GAAP and Additional GAAP Measures."
| | --- | -------------------------------------------------



Pembina delivered solid financial and operational results in
2015 with record throughput, EBITDA, operating margin, cash and adjusted cash flow per share, demonstrating the financial resilience
of Pembina’s fee-for-service business model. Revenue was $4.6 billion and $1.2 billion for the full year and fourth quarter
of 2015, compared to $6.1 billion and $1.3 billion in the same periods of 2014, largely a result of the reduced commodity prices
that also positively impacted the cost of product purchases. The Company’s Conventional Pipelines and Gas Services businesses
had an increase in revenue of 22 percent and 27 percent during 2015 compared to 2014. This strong performance resulted from higher
volumes and new assets being placed in service and was complemented with the steady results in the Oil Sands and Heavy Oil business.
For the full year, net revenue (revenue less cost of goods sold including product purchases) in 2015 was $1.5 billion, consistent
with 2014 and $407 million for the fourth quarter of 2015 as compared to $304 million for the same period in 2014. Net revenue
in the Midstream business declined by 22 percent as compared to 2014, largely due to lower commodity prices, and, to a lesser extent,
tighter price differentials across most commodities.



2


Pembina Pipeline Corporation




Operating expenses were $426 million for the full year in 2015,
compared to $401 million during the same period of 2014, with the increase primarily due to the addition of assets, offset by the
sale of the Company's non-core trucking subsidiary in its Midstream business recognized in the second quarter of 2014. For the
fourth quarter of 2015, operating expenses were $110 million compared to $117 million in the same period of 2014. The quarter-over-quarter
decrease in operating expenses was primarily related to timing of integrity spending in the Company's Conventional Pipelines business,
which was partially offset by the addition of new assets.



For the year ended December 31, 2015, operating margin was $1,118
million compared to $1,078 million in 2014 primarily due to increases in the Company’s Conventional Pipelines and Gas Services
businesses from new assets being placed in service and increased volumes, offset by decreases in the Midstream business. The Oil
Sands and Heavy Oil business maintained a reliable contribution to the operating margin with a two percent year-over-year increase.
During the fourth quarter of 2015, operating margin was $304 million compared to $195 million in the fourth quarter of 2014 primarily
due to increased contribution from the Company's Conventional Pipelines and Midstream businesses. Pembina's Midstream business
results in 2014 were impacted by an inventory impairment recognized in the fourth quarter and overall higher cost of product which
reduced net revenue.



Depreciation and amortization included in operations during 2015
was $249 million compared to $216 million for the full year of 2014. This increase was primarily due to the year-over-year growth
in Pembina's asset base primarily associated with the Company's pipeline expansions, the Vantage pipeline acquisition, in addition
to certain useful life adjustments partially offset by decreased amortization in the Midstream business associated with intangibles
that were fully depreciated in the prior year and the sale of a non-core trucking related subsidiary. In the fourth quarter of
2015, depreciation and amortization included in operations rose to $73 million compared to $62 million in the same period last
year primarily due to new assets in service.



Gross profit for 2015 was $866 million compared to $876 million
for 2014 due to increased operating margin offset by a greater increase in depreciation and amortization included in operations.
In the fourth quarter of 2015, gross profit was $237 million compared to $144 million in 2014. This quarter-over-quarter increase
was a result of increased operating margin partially offset by an increase in depreciation and amortization included in operations
and increased unrealized mark-to-market positions of commodity-related derivative financial instruments.



The Company’s general and administrative expenses (excluding
corporate depreciation and amortization) remained relatively consistent year over year. For the year ending December 31, 2015,
Pembina incurred general and administrative expenses (excluding corporate depreciation and amortization) of $143 million compared
to $146 million in 2014. Increased salary, benefit and rent expenses due to increased staff to support new in-service assets were
offset by decreased short and long-term incentives. General and administrative expenses (excluding corporate depreciation and amortization)
for the fourth quarter of 2015 increased to $36 million as compared to $25 million in the same period of 2014. These increases
were primarily due to fluctuations in the share price and the impact on long-term incentive expenses incurred in the quarter as
compared to the previous year. Every $1 change in share price is expected to change Pembina's annual share-based incentive expense
by approximately $1 million.



3


Pembina Pipeline Corporation




Pembina generated EBITDA of $955 million in 2015, a $35 million
increase over 2014 EBITDA of $920 million. The increase was largely due to higher operating margin as described above. EBITDA for
the fourth quarter of 2015 was $260 million, compared to $170 million for the same period in 2014. This increase was due to higher
operating margin partially offset by the quarter-over-quarter increase in general and administrative expenses and other expenses.
Other expenses in 2015 include a $13 million de-recognition of costs related to the propane export terminal project and an $8 million
loss on the sale of linefill.



Net finance costs totalled $71 million in 2015, a $59 million
decrease from $130 million recognized in 2014. This decrease is largely attributable to the change in fair value of the conversion
feature on the series E and F convertible debentures ("Conversion Feature"). The Conversion Feature was impacted by the
reduction in the principal outstanding, primarily as a result of the October 13, 2015 redemption of the series E convertible debentures,
as well as changes in the share price. In 2015, Pembina recognized a gain on revaluation of $40 million, compared to a loss on
revaluation of $41 million in 2014. Partially offsetting the decreased costs were interest expenses on loans and borrowings, which
increased from $90 million in 2014 to $103 million in 2015, as a result of an increased level of outstanding loans and borrowings
to fund growth capital. Net finance costs incurred during the fourth quarter of 2015 were $22 million compared to income of $9
million for the fourth quarter of 2014. This increase is largely attributable to the revaluation of the Conversion Feature identified
above.



Income tax expense for 2015 totalled $199 million, including
current tax of $41 million and deferred tax of $158 million, compared to income tax expense of $167 million in 2014, including
current tax of $103 million and deferred tax of $64 million. Current tax expense for 2015 was lower than the comparable period
in 2014 predominantly due to lower taxable income allocations from deferral partnerships in our corporate structure. The increase
in deferred tax expense in the current quarter is mainly attributable to an increase in the income tax rate and higher taxable
temporary differences between book and tax basis. Alberta's Finance Minister increased the general corporate tax rate from 10 percent
to 12 percent, effective July 1, 2015. Income tax expense was $31 million for the fourth quarter of 2015, including current tax
recovery of $19 million and deferred tax of $50 million, compared to $39 million, including current tax expense of $28 million
and deferred tax of $11 million in the same period of 2014. The decrease in current taxes is attributable to a decrease in taxable
income in the fourth quarter of 2015 as compared to the prior year for the same reasons as noted above. The increase in deferred
taxes was due to the increase in the income tax rate previously noted.



The Company's earnings increased six percent to $406 million
($1.02 per common share-basic) in 2015 compared to $383 million ($1.07 per common share-basic) in 2014. The increase was most significantly
impacted by the increased operating margin and lower net finance costs offset by increased deferred tax and depreciation and amortization
expenses in 2015. For the fourth quarter of 2015, the Company’s earnings increased $46 million to $130 million ($0.32 per
common share-basic) compared to $84 million ($0.22 per common share-basic) during the fourth quarter of 2014. This was driven by
higher operating margin slightly offset by higher net finance costs as well as increased general and administrative and depreciation
and amortization expenses recognized in the fourth quarter. The per common share amounts were impacted by the increase in the number
of common shares outstanding largely as a result of the dividend reinvestment plan, convertible debenture redemptions and conversions
and the November 19, 2015 common share issuance.



Cash flow from operating activities remained relatively consistent
year over year. Cash flow from operating activities was $801 million ($2.31 per common share-basic) for the year ended December
31, 2015 compared to $800 million ($2.45 per common share-basic) in 2014. Increased operating margin and a decreased change in
non-cash working capital was offset by increased taxes paid in 2015. Cash flow from operating activities increased $89 million
in the fourth quarter of 2015 as compared to the same period in 2014. Cash flow from operating activities was $285 million ($0.79
per common share-basic) during the fourth quarter of 2015 compared to $196 million ($0.58 per common share-basic) for the same
period in 2014 primarily due to increased operating margin and payments received and deferred.



4


Pembina Pipeline Corporation




Adjusted cash flow from operating activities increased $101 million
to $878 million ($2.53 per common share-basic) in 2015 as compared to $777 million ($2.38 per common share-basic) during 2014.
The increase was primarily due to increased operating margin and lower current tax and share-based compensation expenses offset
by increased preferred share dividends declared. Adjusted cash flow from operating activities increased in the fourth quarter of
2015 as compared to 2014. Adjusted cash flow from operating activities was $280 million ($0.77 per common share-basic) in 2015
as compared to $164 million ($0.49 per common share-basic) during the fourth quarter of 2014. The increase is largely due to higher
operating margin and lower current tax, offset by an increase in preferred share dividends declared.



Operating Results



|                       |  | 3 Months Ended December 31 (unaudited) |     |     | 12 Months Ended December 31 | 
|---------------------- |  | -------------------------------------- | --- | --- | --------------------------- | 
|                       |  | 2015                                   |     |     | 2014                        | 
|($ millions)           |  | Revenue                                |     |     | Operating Margin(1)         | 
|Conventional Pipelines |  |                                        | 163 |     |                             | 
|Oil Sands & Heavy Oil  |  |                                        | 56  |     |                             | 
|Gas Services           |  |                                        | 51  | (1) |                             | 
|Midstream              |  |                                        | 137 | (1) |                             | 
|Corporate              |  |                                        |     |     |                             | 
|Total                  |  |                                        | 407 |     |                             | 



(1)Net revenue (revenue less cost of goods sold
including product purchases). Refer to "Non-GAAP and Additional GAAP Measures."



Conventional Pipelines



|                                                                             |  | 3 Months Ended December 31 (unaudited) |     |   | 12 Months Ended December 31 | 
|---------------------------------------------------------------------------- |  | -------------------------------------- | --- | - | --------------------------- | 
|($ millions, except where noted)                                             |  | 2015                                   |     |   | 2014                        | 
|Average revenue volumes (mbpd)(1)                                            |  |                                        | 621 |   |                             | 
|Revenue                                                                      |  |                                        | 163 |   |                             | 
|Operating expenses                                                           |  |                                        | 52  |   |                             | 
|Realized loss on commodity-related derivative financial instruments          |  |                                        | 2   |   |                             | 
|Operating margin(2)                                                          |  |                                        | 109 |   |                             | 
|Depreciation and amortization included in operations                         |  |                                        | 26  |   |                             | 
|Unrealized (gain) loss on commodity-related derivative financial instruments |  |                                        | (1  | ) |                             | 
|Gross profit                                                                 |  |                                        | 84  |   |                             | 
|Capital expenditures                                                         |  |                                        | 227 |   |                             | 



| | (1) | Revenue volumes are equal to contracted plus interruptible volumes.
| | --- | -------------------------------------------------------------------

| | (2) | Refer to "Non-GAAP and Additional GAAP Measures."
| | --- | -------------------------------------------------



5


Pembina Pipeline Corporation




Business Overview



Pembina's Conventional Pipelines business comprises a well-maintained
and strategically located 9,100 km pipeline network that transports hydrocarbon products and extends across much of Alberta and
parts of B.C., Saskatchewan and North Dakota. The primary objectives of this business are to provide safe, responsible, reliable
and cost effective transportation services for customers, pursue opportunities for increased throughput, and maintain and/or grow
sustainable operating margin on invested capital by capturing incremental volumes, expanding its pipeline systems, managing revenue
and following a disciplined approach to its operating expenses.



Operational Performance



Conventional Pipelines' revenue volumes averaged 614 mbpd for
2015, up seven percent compared to 575 mbpd for 2014. During the fourth quarter of 2015, revenue volumes averaged 621 mbpd, relatively
consistent with the same period of 2014, when average revenue volumes were 612 mbpd.



The full-year and fourth-quarter incremental volumes were due
to several factors, including:



| | · | The completion of Pembina's Peace and Northern Phase II expansion (the
"Phase II Expansion") which includes (i) the crude oil and condensate or the low vapour pressure ("LVP") expansion
("Phase II LVP"), which was placed into service in April 2015 and achieved average monthly revenue volumes of 260 mbpd
in December, and (ii) the NGL or the high vapour pressure ("HVP") expansion ("Phase II HVP"), which was placed
into service in September 2015 and is now fully commissioned. These expansions allowed for the receipt of higher revenue volumes
at Pembina's existing connections and truck terminals;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | The addition of the Vantage pipeline, which began transporting volumes
during the latter part of the fourth quarter of 2014;
| | - | ----------------------------------------------------------------------------------------------------------------------------



| | · | Additional connections placed into service on Pembina’s Phase
I crude oil, condensate and NGL pipeline expansions (the "Phase I Expansions"), which was placed into service in 2013
and where additional volumes increased over time as new connections were placed into service during 2014; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | New storage facilities and portions of pipeline associated with the
Conventional Pipelines' other expansion programs and connections, including the additional capacity between Kakwa and Fox Creek
which Pembina commissioned throughout 2015, also contributed to increased mainline throughput.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



To date in 2016, Conventional Pipelines' revenue volumes have
been strong where the monthly average revenue volume were in excess of 650 mbpd in January.



Financial Performance



Conventional Pipelines' revenue increased 22 percent in 2015
to $628 million as compared to $513 million for 2014. During the fourth quarter of 2015, revenue was $163 million, an increase
of 12 percent over the $146 million of revenue generated in the same quarter of the previous year. The increases were primarily
the result of higher volumes associated with the Phase I and Phase II Expansions and new connections being placed into service,
as well as revenue associated with the Vantage pipeline acquired in late 2014. In addition, certain toll increases on the Company's
various systems were placed into effect in the first half of 2015, also contributed to higher revenue over the year.



Year-over-year operating expenses increased six percent. Operating
expenses were $224 million for 2015 compared to $211 million in 2014. Quarter-over-quarter operating expenses decreased 28 percent
to $52 million in the fourth quarter of 2015 compared to $72 million in the same period of the prior year. The increase in full-year
operating expenses were primarily the result of higher integrity spending to maintain safe operations on Pembina's gathering systems,
operating expenditures associated with the Phase I and Phase II Expansions, as well as the addition of the Vantage pipeline. The
lower operating expenses during the fourth quarter of 2015 are primarily the result of shifted timelines in integrity expenses
as compared to the same period in 2014 which experienced increased maintenance costs on the Peace and Western systems.



6


Pembina Pipeline Corporation




As a result of higher revenue, which was partially offset by
an increase in operating expenses, operating margin was $401 million for the full year of 2015 and $109 million for the fourth
quarter, 33 percent and 47 percent higher, respectively, than the $302 million and $74 million recorded for the commensurate periods
of 2014.



Depreciation and amortization included in operations for the
year ended December 31, 2015 was $88 million compared to $42 million for 2014. The increase was largely due to additional in-service
assets, as discussed above, including the Vantage pipeline assets acquired in the fourth quarter of 2014. During the fourth quarter
of 2015, depreciation and amortization included in operations was $26 million compared to $17 million during the same period of
the prior year. The increase for the fourth quarter of 2015 was due to the same factors noted above.



Gross profit was $314 million and $84 million for the year and
three months ended December 31, 2015, respectively, compared to $260 million and $55 million during the same periods of 2014. These
21 percent and 53 percent increases were due to higher operating margin which was partially offset by increased depreciation and
amortization included in operations, as discussed above.



Capital expenditures totalled $932 million and $227 million for
the full year and fourth quarter of 2015, respectively, compared to $628 million and $232 million for the same periods of 2014.
The majority of this spending relates to Pembina's pipeline expansion projects which are described below.



New Developments



Pembina has been successful in its commercial efforts to secure
the majority of its existing crude oil, NGL and condensate volumes under long-term, firm-service contracts. In aggregate, and including
contracted volumes on the Vantage pipeline, Pembina currently has secured 777 mbpd of firm service contracts of crude oil, condensate
and NGL across its Conventional Pipelines business once all expansions are placed into service.



Pembina commissioned its Phase II HVP expansion in September
2015. In conjunction with the Phase II LVP portion of the expansion, which was placed into service in April 2015, the entire Phase
II Expansion is now in service. In aggregate, the Phase II Expansion has increased the Peace and Northern systems' capacity by
108 mbpd and is underpinned by five to ten-year contracts with substantial take-or-pay commitments from 40 customers.



Pembina continues work on its Phase III pipeline
expansions ("Phase III Expansion"), which included bringing into service a 70 km, 16-inch pipeline segment from
Kakwa to Simonette in 2015. To date, the Company has completed 30percent of the overall Phase III Expansion program
and estimates the total capital cost to be $2.4 billion.



The Phase III Expansion also includes two pipelines between Fox
Creek and Namao, Alberta (one 16-inch diameter and one 24-inch diameter) which would provide an initial combined capacity of 420
mbpd. The Alberta Energy Regulator ("AER") hearing for the project concluded in the fourth quarter of 2015 and Pembina
expects to receive an AER written decision near the end of the first quarter of 2016. Subject to regulatory and environmental approvals,
the Company continues to anticipate an in-service date of mid-2017.



As part of the Company's plans to expand its gathering presence
in Alberta and B.C., Pembina completed its lateral in the Willesden Green area of Alberta during 2015 and is continuing work on
its pipeline lateral in the Karr area of Alberta (the "Karr Lateral") which will service production from the Montney
resource play and will access the Company's Phase III Expansion. All approvals have been received and construction has now commenced.
Generally due to unseasonably warm weather, the project is tracking above budget; however, the contract largely protects Pembina
from a cost risk perspective. Pembina continues to anticipate an in-service date of early 2016.



7


Pembina Pipeline Corporation




Pembina is continuing to progress its pipeline infrastructure
in northeast B.C. (the "NEBC Expansion"). The NEBC Expansion, which is underpinned by a long-term, cost-of-service agreement
with an anchor tenant, will transport condensate and NGL for various producers in the liquids-rich Montney resource play. To date,
engineering is 90 percent complete and applications for regulatory and environmental approvals have now been submitted. The NEBC
Expansion has an expected capital cost of $220 million and is anticipated to be in service in late 2017, subject to regulatory
and environmental approvals.



In early 2016, subsequent to year end, Pembina entered into agreements
for the construction of a new pipeline lateral in the Altares area of B.C. (the "Altares Lateral") which will transport
production from the Montney resource play and will connect into Pembina's NEBC Expansion for an expected capital cost of $70 million.
The Altares Lateral, underpinned by a long-term, cost-of-service agreement, is expected to have initial capacity of approximately
17 mbpd with an in-service date of mid-2017, subject to environmental and regulatory approval.



As announced in February 2015, Pembina continues to progress
its expansion of the Vantage pipeline system (the "Vantage Expansion") for an estimated capital cost of $85 million.
Supported by a long-term, fee-for-service agreement with a take-or-pay component, the Vantage Expansion will increase the mainline
capacity from 40 mbpd to 68 mbpd through the addition of mainline pump stations and the construction of a gathering lateral. All
regulatory and environmental approvals have now been received and construction of the gathering lateral is now complete with final
commissioning work underway. Construction of the pump stations has now begun, and to date, the project cost is expected to be under
budget. Pembina originally expected the Vantage Expansion to be completed in early 2016; however, due to a third-party plant delay,
the Company expects to place it into service in the third quarter of 2016, with the contract commencing on August 1, 2016.



Pembina's projects and existing pipeline networks continue to
have expansion capacity available to meet the needs of future developments currently under evaluation by its customers. Capacity
increases to meet the Company's customers' existing and future demands can often be achieved through simple upgrades, such as adding
new pump stations, which can be installed in less than 18 months. For example, adding pump stations to the Phase III Expansion
could increase capacity from 420 mbpd to 680 mbpd in the Fox Creek to Edmonton corridor for an aggregate capacity on the Peace
and Northern systems of 1,200 mbpd.



8


Pembina Pipeline Corporation




Oil Sands & Heavy Oil



|                                                     |  | 3 Months Ended December 31 |     |  | 12 Months Ended December 31 | 
|---------------------------------------------------- |  | -------------------------- | --- |  | --------------------------- | 
|($ millions, except where noted)                     |  | 2015                       |     |  | 2014                        | 
|Contracted capacity (mbpd)                           |  |                            | 880 |  |                             | 
|Revenue                                              |  |                            | 56  |  |                             | 
|Operating expenses                                   |  |                            | 20  |  |                             | 
|Operating margin(1)                                  |  |                            | 36  |  |                             | 
|Depreciation and amortization included in operations |  |                            | 4   |  |                             | 
|Gross profit                                         |  |                            | 32  |  |                             | 
|Capital expenditures                                 |  |                            | 16  |  |                             | 



| | (1) | Refer to "Non-GAAP and Additional GAAP Measures."
| | --- | -------------------------------------------------



Business Overview



Pembina plays an important role in supporting Alberta's oil sands
and heavy oil industry. Pembina is the sole transporter of synthetic crude oil for Syncrude Canada Ltd. (via the Syncrude Pipeline)
and Canadian Natural Resources Limited's Horizon Oil Sands operation (via the Horizon Pipeline) to delivery points near Edmonton,
Alberta. Pembina also owns and operates the Nipisi and Mitsue pipelines, which provide transportation for producers operating in
the Pelican Lake and Peace River heavy oil regions of Alberta, and the Cheecham Lateral, which transports synthetic crude to oil
sands producers operating southeast of Fort McMurray, Alberta. The Oil Sands & Heavy Oil business operates approximately 1,650
km of pipeline and has approximately 880 mbpd of contracted capacity, inclusive of the Horizon Expansion (see New Developments),
under long-term, extendible contracts, which provide for the flow-through of eligible operating expenses to customers. As a result,
operating margin from this business is primarily driven by the amount of capital invested and is predominantly not sensitive to
fluctuations in operating expenses or actual throughput.



Financial Performance



In 2015, Oil Sands & Heavy Oil revenue was $213 million,
an increase of four percent from 2014 revenue of $204 million, largely due to increased flow-through operating expenses. For the
fourth quarter of 2015, revenue was $56 million, compared to $52 million in the fourth quarter of last year.



Operating expenses were $74 million for the year ended December
31, 2015, an increase of nine percent compared to $68 million for 2014. Operating expenses were $20 million during the fourth quarter
of 2014 compared to $18 million for the same period of the prior year. Increased operating costs, which are eligible to be recovered
under Pembina’s contractual arrangements with its customers, were largely attributable to scheduled integrity work and other
repair and maintenance activities, partially offset by reduced power and labour costs.



Operating margin was $139 million and $36 million for the year
and three months ended December 31, 2015 compared to $136 million and $34 million, respectively, generated during the same periods
of 2014 for the reasons described above.



Depreciation and amortization included in operations during the
year and fourth quarter ended December 31, 2015 was $17 million and $4 million, consistent with the same periods of 2014.



Gross profit was $122 million and $32 million for the twelve
and three months ended December 31, 2015, respectively, compared to $119 million and $30 million during the same periods of 2014
as a result of the factors discussed above.



9


Pembina Pipeline Corporation




Full-year capital expenditures within the Oil Sands & Heavy
Oil business totalled $28 million in 2015 compared to $41 million for the same period in 2014. The spending in 2015 relates to
the Horizon Expansion (defined below), the Cheecham expansion and a new connection, as compared to the costs incurred in 2014 associated
with the Cornerstone pipeline project, the majority of which was recovered.



New Developments



In June 2015, Pembina announced that it will expand its existing
Horizon Pipeline System (the "Horizon Expansion"), underpinned by a fixed return, long-term agreement, for an estimated
capital cost of $125 million. The Horizon Expansion will increase the pipeline's capacity up to 250 mbpd, which will be achieved
by upgrading mainline pump stations and other facility modifications, as required. Engineering work is now complete, most regulatory
and environmental approvals have been received and civil construction is underway. The Horizon Expansion is expected to be in service
mid-2016.



Gas Services



|                                                      |  | 3 Months Ended December 31 (unaudited) |     |  | 12 Months Ended December 31 | 
|----------------------------------------------------- |  | -------------------------------------- | --- |  | --------------------------- | 
|($ millions, except where noted)                      |  | 2015                                   |     |  | 2014                        | 
|Average revenue volumes (MMcf/d) net to Pembina(1)(2) |  |                                        | 606 |  |                             | 
|Average revenue volumes (mboe/d)(3) net to Pembina(1) |  |                                        | 103 |  |                             | 
|Revenue                                               |  |                                        | 52  |  |                             | 
|Cost of goods sold, including product purchases       |  |                                        | 1   |  |                             | 
|Net revenue(4)                                        |  |                                        | 51  |  |                             | 
|Operating expenses                                    |  |                                        | 18  |  |                             | 
|Operating margin(4)                                   |  |                                        | 33  |  |                             | 
|Depreciation and amortization included in operations  |  |                                        | 9   |  |                             | 
|Gross profit                                          |  |                                        | 24  |  |                             | 
|Capital expenditures                                  |  |                                        | 33  |  |                             | 



| | (1) | Revenue volumes are equal to contracted plus interruptible volumes.
| | --- | -------------------------------------------------------------------

| | (2) | Volumes at the Musreau Gas Plant exclude deep cut processing as those volumes are counted when they are processed through the
shallow cut portion of the plant.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Average revenue volumes converted to mboe/d from MMcf/d at a 6:1 ratio.
| | --- | -----------------------------------------------------------------------

| | (4) | Refer to "Non-GAAP and Additional GAAP Measures."
| | --- | -------------------------------------------------



Business Overview



Pembina's operations include a growing natural gas gathering
and processing business, which is strategically positioned in active and emerging NGL-rich plays in the WCSB and is integrated
with Pembina's other businesses. Gas Services provides gas gathering, compression, and both shallow and deep cut processing services
for its customers, primarily on a fee-for-service basis under long-term contracts. The NGL extracted through this business' facilities
are transported by Pembina's Conventional Pipelines business on its Peace pipeline system with the capability for a portion of
the volumes to be further processed at Pembina's fractionation facilities. Operating assets within Gas Services include:



| | · | Pembina's Cutbank complex (the "Cutbank Complex") –
located near Grande Prairie, Alberta, this facility includes four shallow cut sweet gas processing plants (the Cutbank gas plant,
the Musreau gas plant ("Musreau I"), the Musreau II facility ("Musreau II") and the Kakwa gas plant) and one
deep cut gas processing plant (the Musreau deep cut facility). In total, the Cutbank Complex has 525 MMcf/d of processing capacity
(468 MMcf/d net to Pembina) and 205 MMcf/d of deep cut extraction capacity (net to Pembina). The Cutbank Complex also includes
approximately 350 km of gathering pipelines.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



10


Pembina Pipeline Corporation




| | · | Pembina's Saturn complex (the "Saturn Complex") – located
near Hinton, Alberta, includes two identical 200 MMcf/d deep cut gas processing plants (the "Saturn I" and "Saturn
II" facilities) for a total of 400 MMcf/d of deep cut extraction capacity, as well as approximately 25 km of gathering pipelines.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Pembina's Resthaven facility ("Resthaven") – located
near Grande Cache, Alberta, this facility includes 200 MMcf/d (134 MMcf/d net to Pembina) of integrated shallow and deep cut processing
capacity, as well as approximately 30 km of gathering pipelines.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Pembina's Saskatchewan Ethane Extraction Plant ("SEEP") –
located to service the southeast Saskatchewan Bakken region, this facility has a deep cut processing capacity that could reach
60 MMcf/d with ethane fractionation capabilities up to 4,500 bpd and 104 km of ethane delivery pipeline.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Operational Performance



Within Pembina's Gas Services business, on a full year basis,
average revenue volumes, net to Pembina, increased more than 27 percent to 656 MMcf/d compared to 515 MMcf/d in 2014. Higher volumes
for full year 2015 compared to full year 2014 were mainly due to the addition of Musreau II, which was placed into service in December
2014, and the Saturn II and SEEP facilities, which were placed into service in August 2015, as well as the addition of the Resthaven
facility, which was placed into service in October 2014. Partially offsetting the improved results was an unscheduled outage at
Resthaven in the fourth quarter of 2015, which was placed back into shallow cut operating service in February 2016 and is expected
to operate at full recovery by April. During the fourth quarter of 2015, volumes have increased by four percent compared to the
same period in the prior year. Higher volumes during the fourth quarter of 2015 compared to the same period last year were primarily
due to the same reasons as described above. Overall, Pembina continues to benefit from producer activity focused on liquids-rich
natural gas in the areas surrounding its assets, although increased throughput was partially offset by lower interruptible service
volumes on deep cut facilities due to lower NGL pricing during the twelve months ended December 31, 2015 compared to the same period
in the previous year.



Financial Performance



Gas Services generated revenue of $209 million in 2015 compared
to $165 million recognized in 2014. During the fourth quarter of 2015, $52 million in revenue was generated, up from $46 million
in the same period of the prior year. These 27 and 13 percent increases, respectively, primarily reflect the new facilities that
were placed into service in this business, partially offset by the unscheduled outage at Resthaven and lower interruptible volumes,
as discussed above.



Full-year operating expenses totalled $64 million, up from $58
million during the prior year. For the fourth quarter of 2015, Gas Services incurred operating expenses of $18 million compared
to $17 million during the fourth quarter of 2014. The full year and quarterly increases during 2015 were mainly due to additional
operating costs associated with the new facilities that were placed in service, partially offset by lower power costs and operational
efficiencies gained at the Cutbank Complex with the addition of Musreau II and, at the Saturn Complex, with the addition of Saturn
II.



Gas Services realized operating margin of $144 million in 2015
and $33 million in the fourth quarter of 2015 compared to $107 million and $29 million during the same periods of the previous
year. The increases over the fourth quarter and full year 2015 compared to the same periods in 2014 were primarily due to the addition
of the new facilities placed into service, as discussed above.



Depreciation and amortization included in operations for the
full year of 2015 totalled $33 million compared to $22 million in 2014, with the increase primarily attributable to the addition
of new assets as discussed above. For the fourth quarter of 2015, depreciation and amortization included in operations totalled
$9 million compared to $7 million in the same period of 2014, for the same reasons noted above.



11


Pembina Pipeline Corporation




On a full year basis, gross profit was $111 million in 2015 compared
to $85 million during 2014. For the three months ended December 31, 2015, gross profit was $24 million compared to $22 million
in the same period of 2014. These increases reflect higher operating margin, partially offset by slightly higher depreciation and
amortization included in operations during the 2015 period compared to the same period of 2014, primarily resulting from new assets
being placed into service.



For the year ended December 31, 2015, capital expenditures within
Gas Services totalled $242 million compared to $295 million during 2014. Capital spending in 2015 has been largely to finalize
construction at SEEP and Saturn II, as well as to advance construction at Musreau III and the Resthaven Expansion (defined below).
In 2014, capital spending was directed towards Resthaven, Musreau II and Saturn II.



New Developments



During the fourth quarter and full year 2015, Pembina continued
to advance its growth projects as well as place new assets into service within the Gas Services business.



As previously announced in November, Pembina will construct,
own and operate a new 100 MMcf/d shallow cut gas plant ("Duvernay I") in close proximity to the Company's Fox Creek Terminal
for an expected capital cost, including supporting infrastructure, of $125 million. Duvernay I, which is underpinned by a substantial
take-or-pay agreement with a large, diversified, investment-grade customer, will leverage the design of Pembina's Musreau II and
the Musreau III facility ("Musreau III"). Duvernay I will be the first large-scale gas processing plant designed specifically
for the Duvernay and creates a new growth platform for the Company. As part of this development, NGL production from Duvernay I
will be transported on Pembina's Peace Pipeline under a long-term, take-or-pay agreement as well as fractionated under another
agreement at the Company's Redwater site. Pembina has now received AER approval for the gas plant and is currently awaiting approval
for the associated pipeline in relation to this project. The Company anticipates bringing Duvernay I in service in the second half
of 2017, subject to the remaining environmental and regulatory approvals.



In late August, Pembina commissioned its Saturn II and SEEP facilities.
Saturn II was placed into service ahead of schedule and under budget and SEEP was placed into service on time and also under budget.
With the Saturn II and SEEP facilities in service, Pembina's Gas Services' capacity has increased 26 percent from 1.0 to 1.3 bcf/d.



Plant construction of Pembina's 100 MMcf/d expansion of Resthaven
(the "Resthaven Expansion") is ongoing. The overall project is approximately 80 percent complete and has an estimated
capital cost of $105 million. In September, Pembina placed the gathering pipeline associated with the Resthaven Expansion into
service. In advance of the Resthaven Expansion being placed into service, the newly commissioned pipeline is able to provide additional
gas volumes for the Company's existing Resthaven facility. Pembina expects the Resthaven Expansion, which is underpinned by a fee-for-service
agreement with a substantial take-or-pay component, to be in service in mid-2016.



The Company continues to advance its 100 MMcf/d shallow cut Musreau
III facility, which is being built adjacent to Pembina's existing Musreau I and Musreau II facilities. Regulatory and environmental
approvals have been received and the overall project is approximately 75 percent complete and is tracking under budget from the
original expected cost of $105 million. Pembina anticipates bringing Musreau III, which is underpinned by long-term, take-or-pay
agreements, on-stream in mid-2016.



12


Pembina Pipeline Corporation




Once the facilities under development described above are in
service, Pembina expects Gas Services' processing capacity to reach approximately 1.6 bcf/d, including deep cut capacity of 900
MMcf/d. The volumes from Pembina's existing assets and those under development will be processed largely on a contracted, fee-for-service
basis and results in condensate and NGL to be transported for additional toll revenue on Pembina's Conventional Pipelines.



Midstream



|                                                                             |  | 3 Months Ended December 31(1) (unaudited) |       |   | 12 Months Ended December 31(1) | 
|---------------------------------------------------------------------------- |  | ----------------------------------------- | ----- | - | ------------------------------ | 
|($ millions, except where noted)                                             |  | 2015                                      |       |   | 2014                           | 
|NGL sales volumes (mbpd)                                                     |  |                                           | 123   |   |                                | 
|Revenue                                                                      |  |                                           | 1,000 |   |                                | 
|Cost of goods sold, including product purchases                              |  |                                           | 863   |   |                                | 
|Net revenue(2)                                                               |  |                                           | 137   |   |                                | 
|Operating expenses                                                           |  |                                           | 23    |   |                                | 
|Realized gain on commodity-related derivative financial instruments          |  |                                           | (9    | ) |                                | 
|Operating margin(2)                                                          |  |                                           | 123   |   |                                | 
|Depreciation and amortization included in operations                         |  |                                           | 31    |   |                                | 
|Unrealized (gain) loss on commodity-related derivative financial instruments |  |                                           | (5    | ) |                                | 
|Gross profit                                                                 |  |                                           | 97    |   |                                | 
|Capital expenditures                                                         |  |                                           | 169   |   |                                | 



| | (1) | Share of loss of investment in equity accounted investees not included in these results.
| | --- | ----------------------------------------------------------------------------------------

| | (2) | Refer to "Non-GAAP and Additional GAAP Measures."
| | --- | -------------------------------------------------



Business Overview



Pembina offers customers a comprehensive suite of midstream products
and services through its Midstream business as follows:



| | · | Crude oil midstream assets include 17 truck terminals (three of which
are capable of emulsion treatment and water disposal) and terminalling at a downstream hub location at the Pembina Nexus Terminal
("PNT"), which features storage and terminal connectivity. PNT includes 21 inbound pipeline connections and 13 outbound
pipeline connections to approximately 1.2 mmbpd of crude oil and condensate supply connected to the terminal and 310 mbbls of surface
storage in and around the Edmonton and Fort Saskatchewan, Alberta areas.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | NGL midstream includes two NGL operating systems – Redwater West
and Empress East.
| | - | ----------------------------------------------------------------------------------



| | o | The Redwater West NGL system ("Redwater West") includes the 750 MMcf/d (322.5 MMcf/d net to Pembina) Younger extraction
and fractionation facility in B.C.; a 73 mbpd NGL fractionator and 7.3 mmbbls of finished product cavern storage at Redwater, Alberta;
and third-party fractionation capacity in Fort Saskatchewan, Alberta. Redwater West purchases NGL mix from various natural gas
and NGL producers and fractionates it into finished products for further distribution and sale. Also located at the Redwater site
is Pembina's rail-based terminal which services Pembina's proprietary and customer needs for importing and exporting NGL products.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | o | The Empress East NGL system ("Empress East") includes 2.4 bcf/d ofcapacity in the straddle plants at Empress,
Alberta; 20 mbpd of fractionation capacity and 1.1 mmbbls of cavern storage in Sarnia, Ontario; and 5.3 mmbbls of hydrocarbon storage
at Corunna, Ontario. Empress East extracts NGL mix from natural gas at the Empress straddle plants and purchases NGL mix from other
producers/suppliers. Ethane and condensate are generally fractionated out of the NGL mix at Empress and sold into Alberta markets.
The remaining NGL mix is transported by pipeline to Sarnia, Ontario for further fractionation, distribution and sale.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



13


Pembina Pipeline Corporation




The financial performance of Pembina's Midstream business can
be affected by seasonal demands for products and other market factors. In NGL midstream, propane inventory generally builds over
the second and third quarters of the year and is sold in the fourth quarter and the first quarter of the following year during
the winter heating season. Condensate, butane and ethane are generally sold rateably throughout the year. See "Risk Factors"
in this MD&A for more information.



Operational & Financial Performance



In the Midstream business, revenue was $3.7 billion and $1.0
billion in the year ended and fourth quarter of 2015, respectively, as compared to $5.3 billion and $1.1 billion in the same periods
of 2014 which was impacted by lower commodity prices which also positively impacted the cost of product purchases. In the Midstream
business, Pembina generated net revenue (revenue less costs of goods sold including product purchases) of $458 million and $137
million in the year ended and fourth quarter of 2015 compared to $587 million and $61 million in the same periods of 2014. The
22 percent decrease in net revenue for the year ended 2015 was primarily due to lower commodity prices (particularly the weaker
year-over-year propane and butane prices), tighter price differentials across all commodities in 2015 and the sale of the Company’s
non-core trucking-related subsidiary recognized in the second quarter of 2014, partially offset by revenue from new assets being
placed in service. Pembina's Midstream business results in 2014 were impacted by an inventory impairment recognized in the fourth
quarter and overall higher cost of product which reduced net revenue.



Operating expenses during the full year and fourth quarter of
2015 were $71 million and $23 million, respectively, compared to $69 million and $12 million in the comparable periods of 2014
representing a three and 92 percent increase over 2014. The full-year and fourth-quarter increases were largely due to new assets
being placed into service. Full year operating expenses were also partially offset by the Company's sale of its non-core trucking-related
subsidiary recognized in the second quarter of 2014.



Operating margin was $427 million during the full year and $123
million during the fourth quarter of 2015 compared to $528 million and $57 million in the respective periods of 2014. The full-year
decrease from 2014 was primarily due to lower net revenue due to lower commodity prices, as discussed above. The quarter-over-quarter
increase is primarily due to the same reasons that impacted quarter-over-quarter net revenue, as discussed above.



The Company's crude oil midstream operating margin for the year
ended December 31, 2015 totalled $170 million compared to $188 million during the prior year. Crude oil midstream operating margin
was $37 million in the fourth quarter of 2015, relatively consistent with the $36 million generated in the same period of 2014.
The decrease on a full year basis was largely due to the factors which impacted net revenue, particularly lower crude oil prices
and narrower differentials, as well as a crude-by-rail marketing contract expiry, which was partially offset by a realized gain
on commodity-related derivative financial instruments of $21 million.



For the year ended December 31, 2015, operating margin for NGL
midstream was $257 million compared to $340 million during 2014. Operating margin for Pembina's NGL midstream activities was $86
million for the fourth quarter of 2015 compared to $21 million for the fourth quarter of 2014. The full-year decrease was largely
a result of lower margins due to significantly weaker commodity prices, especially for propane and butane, where propane and butane
market prices declined in excess of 60 percent during the full year of 2015 compared to the same period in 2014. The increase in
operating margin during the fourth quarter of 2015 compared to the same period in 2014 was a result of an inventory write-down
recognized in the fourth quarter of 2014 and higher quarter-over-quarter sales margins, as discussed above.





14


Pembina Pipeline Corporation




Full year depreciation and amortization included in operations
for Pembina's Midstream business totalled $107 million, down from $135 million in 2014. Depreciation and amortization included
in operations during the fourth quarter of 2015 totalled $31 million compared to $34 million during the fourth quarter of 2014.
These decreases are primarily due to decreased amortization expenses associated with intangible assets which became fully depreciated
in the prior year.



For the full year and three months ended December 31, 2015, gross
profit in this business was $316 million and $97 million, respectively, compared to $407 million and $36 million during the same
periods in 2014. The year-to-date decrease was due to the same factors which impacted net revenue, operating expenses, operating
margin and depreciation and amortization included in operations, as noted above.



For the year ended December 31, 2015, capital expenditures within
the Midstream business totalled $566 million compared to $390 million during 2014. Capital spending in this business in 2015 was
primarily directed towards the development of Pembina's second and third fractionators ("RFS II" and "RFS III"),
as well as NGL storage caverns and associated infrastructure. Capital was also spent to progress above ground storage at the Edmonton
North Terminal ("ENT") and the preliminary work for the Company's proposed Canadian Diluent Hub ("CDH"). Capital
expenditures in 2014 were primarily related to development of RFS II at the Company's Redwater site, above ground storage at ENT
and completion of the Cynthia Full Service Terminal.



New Developments



In December 2015, Pembina completed the construction of RFS II,
its second 73 mbpd ethane-plus fractionator at the Company's Redwater site. RFS II is anticipated to be completed generally on
budget from the estimated $415 million capital cost and is currently being commissioned with an expectation of being on stream
by the end of March 2016 (one quarter later than originally expected).



Pembina is also advancing RFS III, its third fractionator at
Redwater for an estimated capital cost of $400 million, which will have propane-plus capacity of 55 mbpd. Regulatory and environmental
approval has been received and over 50 percent of all long-lead items have arrived onsite with construction of pilings and foundations
now complete. Pembina expects RFS III to be in service in the third quarter of 2017 and, once complete, Pembina's Redwater site
will be the largest fractionation facility in Canada with a total of 210 mbpd of fractionation capacity.



Pembina is progressing work to provide terminalling services
for the North West Redwater Partnership ("North West") with respect to North West's planned refinery for an expected
capital cost of $180 million. Underpinned by a long-term fixed return agreement and a long-term NGL mix purchase and sale agreement
related to RFS III, the terminalling services include truck and rail loading, storage, as well as handling and processing equipment
for a variety of products delivered from North West. Detailed engineering and procurement is 40 percent complete with substantially
all long-lead mechanical items ordered. Subject to regulatory and environmental approvals, the storage services are expected to
be in service in early 2017, with the remaining facilities to be phased in with final completion expected by late 2017.



Pembina continues to advance a detailed class three engineering
estimate associated with the proposed CDH. Subject to further regulatory and environmental approvals, Pembina anticipates phasing
in additional connections to various condensate delivery systems with a view to achieving full connectivity and service offerings
at CDH in mid-2017.





15


Pembina Pipeline Corporation




At ENT, Pembina has now completed construction of three above
ground storage tanks, which have a total working capacity of 550 mbbls, with the electrical work nearing completion and the mechanical
integration continuing to be progressed. The project is estimated to have a capital cost of $75 million and is tracking on budget
and on schedule to be in service in mid-2016.



At its NGL storage and terminalling facilities in Corunna, Ontario,
Pembina is progressing a number of initiatives including the installation of a new brine pond, upgrades to its rail rack and construction
of a new propane truck rack to meet increased demand for services. The propane racks were completed in December 2015, with remaining
construction underway for the brine pond and rail racks. The remainder of the project is expected to be in service in early 2016.



Pembina remains committed to providing market access solutions
for its customers by developing a North American west coast propane export terminal. Pembina is currently evaluating multiple potential
west coast sites; however, the Company has decided that it will no longer pursue the previously announced Portland, Oregon location.



Other Non-Operating Expenses



Pension Liability



Pembina maintains a defined contribution plan and non-contributory
defined benefit pension plans covering employees and retirees. The defined benefit plans include a funded registered plan for all
qualified employees and an unfunded supplemental retirement plan for those employees affected by the Canada Revenue Agency maximum
pension limits. At the end of 2015, the pension plans carried a net obligation of $22 million compared to a net obligation of $19
million at the end of 2014. At December 31, 2015, plan obligations amounted to $168 million (2014: $157 million) compared to plan
assets of $146 million (2014: $138 million). In 2015, the pension plans' expense was $11 million (2014: $8 million). Pembina's
contributions to the pension plans totaled $9 million in 2015 (2014: $10 million).



Financing Activity



On February 2, 2015, Pembina closed an offering of $600 million
of senior unsecured medium-term notes. The offering was conducted in two tranches: gross proceeds of $450 million in senior unsecured
medium-term notes, Series 5, having a fixed coupon of 3.54 percent per annum, paid semi-annually, and which mature on February
3, 2025 and gross proceeds of $150 million through the re-opening of Pembina's Series 3, 4.75 percent medium-term notes, which
mature April 30, 2043.



On April 10, 2015, Pembina closed a $225 million offering of
nine million cumulative redeemable rate reset class A preferred shares, Series 9 (the "Series 9 Preferred Shares") at
a price of $25.00 per share. The Series 9 Preferred Shares began trading on the Toronto Stock Exchange on April 10, 2015 under
the symbol PPL.PR.I.



On June 16, 2015, Pembina closed an offering of $600 million
of senior unsecured medium-term notes. The offering was conducted in two tranches: gross proceeds of $500 million in senior unsecured
medium-term notes, Series 6, having a fixed coupon of 4.24 percent per annum, paid semi-annually, and which mature on June 15,
2027 and gross proceeds of $100 million through the re-opening of Pembina's Series 3, 4.75 percent medium-term notes, which mature
April 30, 2043.



On November 19, 2015, Pembina closed a bought deal offering of
15.3 million common shares at a price of $30.00 per share for aggregate gross proceeds of $460 million.



16


Pembina Pipeline Corporation




Subsequent to year end, on January 15, 2016, Pembina closed a
$170 million offering of 6.8 million cumulative redeemable minimum rate reset class A preferred shares, Series 11 (the "Series
11 Preferred Shares") at a price of $25.00 per share. The Series 11 Preferred Shares began trading on the Toronto Stock Exchange
on January 15, 2016 under the symbol PPL.PR.K.



Liquidity & Capital Resources



|($ millions)                                           |  | December 31, 2015 |       |  | December 31, 2014 | 
|------------------------------------------------------ |  | ----------------- | ----- |  | ----------------- | 
|Working capital(1)                                     |  |                   | 37    |  |                   | 
|Variable rate debt(2)                                  |  |                   |       |  |                   | 
|Bank debt                                              |  |                   | 25    |  |                   | 
|Total variable rate debt outstanding (average of 2.3%) |  |                   | 25    |  |                   | 
|Fixed rate debt(2)                                     |  |                   |       |  |                   | 
|Senior unsecured notes                                 |  |                   | 467   |  |                   | 
|Senior unsecured medium-term notes                     |  |                   | 2,700 |  |                   | 
|Total fixed rate debt outstanding (average of 4.5%)    |  |                   | 3,167 |  |                   | 
|Convertible debentures(2)                              |  |                   | 149   |  |                   | 
|Finance lease liability                                |  |                   | 12    |  |                   | 
|Total debt and debentures outstanding                  |  |                   | 3,353 |  |                   | 
|Cash and unutilized debt facilities                    |  |                   | 2,031 |  |                   | 



| | (1) | As at December 31, 2015, working capital includes $5 million (December 31, 2014: $4 million) associated with the current portion
of loans and borrowings.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Face value.
| | --- | -----------



Pembina
anticipates cash flow from operating activities will be more than sufficient to meet its short-term operating obligations and fund
its targeted dividend level. Global economic conditions have had a downward effect on commodity pricing; however, Pembina's business
model is largely comprised of cash flow derived from fee-for-service arrangements, which continued to help mitigate the impact
of the market downturn. Pembina believes that its reliable cash flow, limited commodity exposure (with the exception of portions
of its Midstream business) and strong credit profile will enable it to preserve its financial strength into the foreseeable future,
particularly as the Company brings its over $5.3 billion suite of
long-term, primarily fee-for-service-based projects into service throughout the 2016 to late-2017 timeframe. In the short-term,
Pembina expects to source funds required for capital projects from cash and cash equivalents, its credit facility, the DRIP and
accessing the debt and equity capital markets, as required. Based on its successful access to financing in the debt and equity
markets over the past several years and recently, Pembina believes it should continue to have access to funds, despite the recent
weakened industry and commodity price environment. Refer to "Risk Factors – Additional Financing and Capital Resources"
for more information. Management remains satisfied that the leverage employed in Pembina's capital structure, of which a significant
portion is funding assets under construction which will not contribute to the results until they come into service, is sufficient
and appropriate given the characteristics and operations of the underlying asset base.



Management may make adjustments to Pembina's capital structure
as a result of changes in economic conditions or the risk characteristics of the underlying assets. To maintain or modify Pembina's
capital structure in the future, Pembina may renegotiate new debt terms, repay existing debt, seek new borrowing and/or issue additional
equity.



17


Pembina Pipeline Corporation




On April 16, 2015, Pembina increased the available funds under
its revolving unsecured credit facility to $2 billion and retained a $750 million accordion feature. Pembina's credit facilities
at December 31, 2015 consisted of an unsecured $2 billion (December 31, 2014: $1.5 billion) revolving credit facility which matures
in May, 2020 and an operating facility of $30 million (December 31, 2014: $30 million) due in May, 2016, which is expected to be
renewed on an annual basis. Borrowings on the revolving credit facility and the operating facility bear interest at prime lending
rates plus nil to 1.25 percent (December 31, 2014: nil to 1.25 percent) or Bankers' Acceptances rates plus 1.00 percent to 2.25
percent (December 31, 2014: 1.00 to 2.25 percent). Margins on the credit facilities are based on the credit rating of Pembina's
senior unsecured debt. There are no repayments due over the term of these facilities. As at December 31, 2015, Pembina had $2.0
billion (December 31, 2014: $1.1 billion) of cash and unutilized debt facilities. At December 31, 2015, Pembina had loans and borrowings
(excluding amortization, letters of credit and finance lease liabilities) of $3.2 billion (December 31, 2014: $2.5 billion). Pembina's
senior loans and borrowings to total consolidated capitalization at December 31, 2015 was 30 percent (December 31, 2014: 27 percent).
Pembina also had an additional $23 million (December 31, 2014: $38 million) in letters of credit issued in a separate credit facility.
Pembina is required to meet certain specific and customary affirmative and negative financial covenants under its senior unsecured
notes, medium-term notes and revolving credit and operating facilities including a requirement to maintain certain financial ratios.
Pembina is also subject to customary restrictions on its operations and activities under its notes and facilities, including restrictions
on the granting of security, incurring indebtedness and the sale of its assets. Pembina's financial covenants include the following:



|Debt Instrument                     | Financial Covenant                                            | Ratio                              
|----------------------------------- | ------------------------------------------------------------- | -----------------------------------
|Senior unsecured medium-term notes  | Funded Debt to Capitalization                                 | Maximum 70%                        
|Revolving unsecured credit facility | Debt to Capital
        EBITDA(1) to senior interest coverage | Maximum 65%
        Minimum 2.5:1.0

| | (1) | Refer to "Non-GAAP and Additional GAAP Measures."
| | --- | -------------------------------------------------



In addition to the table above, Pembina has additional covenants
on its unsecured debt. Pembina was in compliance with all covenants under its notes and facilities as at the year ended December
31, 2015 (December 31, 2014 – in compliance).



On October 13, 2015, Pembina redeemed the entire outstanding
principal amount of the Company's Series C 5.75 percent convertible unsecured subordinated debentures (the "Series C Debentures")
and the Series E 5.75 percent convertible unsecured subordinated debentures (the "Series E Debentures" and together with
the Series C Debentures the "Debentures") through the issuance of common shares.



Credit Ratings



The following information with respect to Pembina's credit ratings
is provided as it relates to Pembina's financing costs and liquidity. Specifically, credit ratings affect Pembina's ability to
obtain short-term and long-term financing and the cost of such financing. A reduction in the current ratings on Pembina's debt
by its rating agencies, particularly a downgrade below investment grade ratings, could adversely affect Pembina's cost of financing
and its access to sources of liquidity and capital. In addition, changes in credit ratings may affect Pembina's ability, and the
associated costs, to enter into normal course derivative or hedging transactions. Credit ratings are intended to provide investors
with an independent measure of credit quality of any issues of securities. The credit ratings assigned by the rating agencies are
not recommendations to purchase, hold or sell the securities nor do the ratings comment on market price or suitability for a particular
investor. Any rating may not remain in effect for a given period of time or may be revised or withdrawn entirely by a rating agency
in the future if, in its judgment, circumstances so warrant.



DBRS rates Pembina's senior unsecured notes and senior unsecured
medium-term notes 'BBB' and Series 1, Series 3, Series 5, Series 7, Series 9 and Series 11 Preferred Shares Pfd-3. S&P's long-term
corporate credit rating on Pembina is 'BBB' and its rating of the Class A preferred shares, Series 1, Series 3, Series 5, Series
7, Series 9 and Series 11 is P-3.



18


Pembina Pipeline Corporation




Capital Expenditures



|                          |  | 3 Months Ended December 31 (Unaudited) |     |  | 12 Months Ended December 31 | 
|------------------------- |  | -------------------------------------- | --- |  | --------------------------- | 
|($ millions)              |  | 2015                                   |     |  | 2014                        | 
|Development capital       |  |                                        |     |  |                             | 
|Conventional Pipelines    |  |                                        | 227 |  |                             | 
|Oil Sands & Heavy Oil     |  |                                        | 16  |  |                             | 
|Gas Services              |  |                                        | 33  |  |                             | 
|Midstream                 |  |                                        | 169 |  |                             | 
|Corporate/other projects  |  |                                        | 3   |  |                             | 
|Total development capital |  |                                        | 448 |  |                             | 



During the full year and fourth quarter of 2015, capital expenditures
were $1,811 million and $448 million, respectively, compared to $1,412 million and $483 million in the same periods of 2014.



The majority of the capital expenditures in the full year and
fourth quarter of 2015 were incurred in Pembina's Conventional Pipelines, Midstream, and Gas Services businesses. Conventional
Pipelines' capital expenditures were primarily incurred to complete the Phase II Expansion, as well as progress the Phase III Expansion.
Gas Services' capital was deployed to complete SEEP and the Saturn II facility, as well as progress the Musreau III facility and
the Resthaven Expansion. Midstream's capital expenditures were primarily directed towards RFS II and RFS III, cavern development,
above ground storage and related infrastructure at the Redwater facility.



Contractual Obligations at December 31, 2015



|($ millions)                        |  | Payments Due By Period |      
|----------------------------------- |  | ---------------------- | -----
|Contractual Obligations             |  | Total                  |      
|Operating and finance leases(1)     |  |                        | 925  
|Loans and borrowings(2)             |  |                        | 5,284
|Convertible debentures(2)           |  |                        | 178  
|Construction commitments(3)         |  |                        | 1,878
|Total contractual obligations(2)(4) |  |                        | 8,265



| | (1) | Includes office space, vehicles and over 3,500 rail car leases supporting future propane transportation in the Midstream business.
The Company has sublet office space up to 2027 and has contracted sub-lease payments for a potential of $105 million over the term.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Excluding deferred financing costs. Including interest payments on senior unsecured notes.
| | --- | ------------------------------------------------------------------------------------------

| | (3) | Excluding significant projects that are awaiting regulatory or land approval.
| | --- | -----------------------------------------------------------------------------

| | (4) | Pembina enters into product purchase agreements to secure future operations in the Midstream business. Product purchase agreements
range from one to 10 years and involve the purchase of NGL products from producers. Purchase price of NGL is dependent on the current
market prices. Volumes and prices for these contracts cannot be reasonably determined and therefore has not been included in the
contractual obligations schedule. Assuming product is available, Pembina has secured between 51 mbpd and 72 mpbd each year up to
and including 2025.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Pembina is, subject to certain conditions, contractually committed
to the construction and operation of the Phase III Expansion, the Resthaven Expansion, RFS II, RFS III, the NEBC Expansion, the
Horizon Expansion, the Vantage Expansion, the Musreau III facility, North West, Duvernay I, as well as certain pipeline connections
and laterals and select caverns at the Company's Redwater site. Additional commitments exist in relation to assets recently brought
into service and other corporate infrastructure. See "Forward-Looking Statements & Information" and "Liquidity
& Capital Resources."



19


Pembina Pipeline Corporation




Dividends



Common Share Dividends



Common share dividends are payable if, as, and when declared
by Pembina's Board of Directors. The amount and frequency of dividends declared and payable is at the discretion of the Board of
Directors, which considers earnings, cash flow, capital requirements, the financial condition of Pembina and other relevant factors.



On May 5, 2015, Pembina increased its monthly dividend on its
common shares by 5.2 percent from $0.145 per common share per month (or $1.74 annualized) to $0.1525 per common share per month
(or $1.83 annualized) effective as of the May 25, 2015 record date.



Preferred Share Dividends



The holders of Pembina's class A preferred shares are entitled
to receive fixed cumulative dividends payable quarterly on the 1st day of March, June, September and December, if, as and when
declared by the Board of Directors of Pembina, for the initial fixed rate period for each series of preferred share.



DRIP



Throughout 2015, eligible Pembina shareholders had the opportunity
to receive, by reinvesting the cash dividends declared payable by Pembina on their common shares, either (i) additional common
shares at a discounted subscription price equal to 95 percent of the Average Market Price (as defined in the DRIP), pursuant to
the "Dividend Reinvestment Component" of the DRIP, or (ii) a premium cash payment (the "Premium DividendTM")1
equal to 102 percent of the amount of reinvested dividends, pursuant to the "Premium DividendTM Component" of the
DRIP.



Participation in the DRIP for the year ended December 31, 2015
was 60 percent (December 31, 2014 – 57 percent) of common shares outstanding. Proceeds for the fourth quarter of 2015 totalled
$99 million and $373 million for the full year, compared to $83 million and $321 million for the respective periods in 2014.



On January 7, 2016 Pembina made amendments to the Company's Premium
DividendTM and DRIP to allow the Board of Directors to set the discount under the regular dividend reinvestment component
of the DRIP at a rate of up to 5 percent to the Average Market Price. Effective the same date, the Board of Directors set the current
discount rate at 3 percent to the Average Market Price and reduced the premium to the regular cash dividend paid to the Company's
shareholders who participate in the Premium DividendTM component from 102 percent to 101 percent.



Related Party Transactions



For the year ended December 31, 2015, Pembina had no transactions
with related parties as defined in IAS 24– Related Party Disclosures, except those pertaining to contributions to
Pembina's defined benefit pension plan and transactions with key management personnel in the ordinary course of their employment
or directorship agreements.










1TM denotes trademark of Canaccord Genuity
Corp.



20


Pembina Pipeline Corporation




Critical Accounting Estimates



The preparation of the Consolidated Financial Statements in conformity
with IFRS requires management to make judgments, estimates and assumptions that are based on the circumstances and estimates at
the date of the financial statements and affect the application of accounting policies and the reported amounts of assets, liabilities,
income and expenses. Actual results may differ from these estimates.



Judgments, estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any
future periods affected.



The following judgment and estimation uncertainties are those
management considers material to the Company's financial statements:



Judgments



| | (i) | Business combinations
| | --- | ---------------------



Business combinations are accounted for using the acquisition
method of accounting. The determination of fair value often requires management to make judgments about future possible events.
The assumptions with respect to determining the fair value of property, plant and equipment and intangible assets acquired generally
require the most judgment.



| | (ii) | Depreciation and amortization
| | ---- | -----------------------------



Depreciation and amortization of property, plant and equipment
and intangible assets are based on management's judgment of the most appropriate method to reflect the pattern of an asset's future
economic benefit expected to be consumed by the Company. Among other factors, these judgments are based on industry standards and
historical experience.



| | (iii) | Impairment
| | ----- | ----------



Assessment of impairment is based on management’s judgment
of whether there are internal and external factors that would indicate that an asset, or cash generating unit ("CGU")
is impaired. The determination of a CGU is also based on management's judgment and is an assessment of the smallest group of assets
that generate cash inflows independently of other assets. The asset composition of a CGU can directly impact the recoverability
of the assets included therein. In assessing the recoverability, each CGU's carrying value is compared to its recoverable amount,
defined as the greater of fair value less costs to sell and value in use.



Estimates



| | (i) | Business Combinations
| | --- | ---------------------



Estimates of future cash flows, forecast prices, interest rates
and discount rates are made in determining the fair value of assets acquired and liabilities assumed. Changes in any of the assumptions
or estimates used in determining the fair value of acquired assets and liabilities could impact the amounts assigned to assets,
liabilities, intangible assets and goodwill in the purchase price equation. Future earnings can be affected as a result of changes
in future depreciation and amortization, asset or goodwill impairment.



| | (ii) | Provisions and contingencies
| | ---- | ----------------------------



Provisions recognized are based on management's judgment about
assessing contingent assets and liabilities and timing, scope and amount of assets and liabilities. Management uses judgment in
determining the likelihood of realization of contingent assets and liabilities to determine the outcome of contingencies.



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Pembina Pipeline Corporation




Based on the long-term nature of the decommissioning provision,
the most significant uncertainties in estimating the provision are the discount rates used, the costs that will be incurred and
the timing of when these costs will occur.



| | (iii) | Deferred taxes
| | ----- | --------------



The calculation of the deferred tax asset or liability is based
on assumptions about the timing of many taxable events and the enacted or substantively enacted rates anticipated to be applicable
to income in the years in which temporary differences are expected to be realized or reversed.



| | (iv) | Depreciation and amortization
| | ---- | -----------------------------



Estimated useful lives of property, plant and equipment and intangible
assets are based on management's assumptions and estimates of the physical useful lives of the assets, the economic lives, which
may be associated with the reserve lives and commodity type of the production area, in addition to the estimated residual value.



| | (v) | Impairment tests
| | --- | ----------------



Impairment tests include management's best estimates of future
cash flows and discount rates.



Changes in Accounting Policies



New standards adopted in 2015



The following amendments to existing standards issued by the
International Accounting Standards Board ("IASB") were adopted as of January 1, 2015, without any material impact to
Pembina's Financial Statements: IAS 24 Related Party Disclosuresand IFRS8Operating Segments.



New standards and interpretations
not yet adopted



Certain new standards, interpretations, amendments and improvements
to existing standards were issued by the IASB or IFRIC and are effective for accounting periods beginning on or after January 1,
2016. These standards have not been applied in preparing these Financial Statements. Those which may be relevant to Pembina are
described below:



IFRS 9 Financial Instruments (2014) is effective January
1, 2018 and is available for early adoption. The new standard is a single financial instrument accounting standard addressing:
classification and measurement (Phase I), impairment (Phase II) and hedge accounting (Phase III). The Company is currently evaluating
the impact that the standard will have on its results of operations and financial position and is assessing when adoption will
occur.



IFRS 15 Revenue from Contracts with Customers is effective
for annual periods beginning on or after January 1, 2018. The new standard contains a single model that applies to contracts with
customers and two approaches to recognizing revenue; at a point in time or over time. The Company intends to adopt IFRS 15 for
the annual period beginning on January 1, 2018. The Company is currently evaluating the impact that the standard will have on its
results of operations and financial position.



IFRS 16 Leases is effective for annual periods beginning
on or after January 1, 2019. The new standard results in substantially all lessee leases being recorded on the statement of financial
position. The Company intends to adopt IFRS 16 for the annual period beginning on January 1, 2019. The Company is currently evaluating
the impact that the standard will have on its results of operations and financial position.



22


Pembina Pipeline Corporation




Controls and Procedures



Disclosure Controls and Procedures



Pembina maintains disclosure controls and procedures designed
to provide reasonable assurance that information required to be disclosed in Pembina's filings is reviewed, recognized and disclosed
accurately and in the appropriate time period.



An evaluation, as of December 31, 2015, of the effectiveness
of the design and operation of Pembina's disclosure controls and procedures, as defined in Rule 13a – 15(e) and 15d –
15(e) under the United States Securities Exchange Act of 1934, as amended (the "Exchange Act") and National Instrument
52-109 Certification of Disclosure in Issuer's Annual and Interim Filings ("NI 52-109"), was carried out by management,
including the Chief Executive Offer ("CEO") and the Chief Financial Officer ("CFO"). Based on that evaluation,
the CEO and CFO have concluded that the design and operation of Pembina's disclosure controls and procedures were effective as
at December 31, 2015 to ensure that material information relating to the Company is made known to the CEO and CFO by others, particularly
during the period during which the annual filings are being prepared.



It should be noted that while the CEO and CFO believe that Pembina's
disclosure controls and procedures provide a reasonable level of assurance that they are effective, they do not expect that Pembina's
disclosure controls and procedures will prevent all errors or fraud. A control system, no matter how well conceived or operated,
can provide only reasonable, not absolute, assurance that the objectives of the control system are met.



Internal Control over Financial Reporting



Pembina maintains internal control over financial reporting which
is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with IFRS.



Management is responsible for establishing and maintaining adequate
internal control over financial reporting, as defined in Rules 13a – 15(f) and 15d – 15(f) under the Exchange Act and
under NI 52-109.



Management, including the CEO and the CFO, has conducted an evaluation
of Pembina's internal control over financial reporting based on criteria established in Internal Control – Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).



Based on management's assessment as at December 31, 2015, the
CEO and CFO have concluded that Pembina's internal control over financial reporting is effective.



Further, there has been no change in the Company's internal control
over financial reporting that occurred during the year covered by this Annual Report that has materially affected, or are reasonably
likely to materially affect, Pembina's internal control over financial reporting.



The effectiveness of internal control over financial reporting
as of December 31, 2015 was audited by KPMG LLP, an independent registered public accounting firm, as stated in their Report of
Independent Registered Public Accounting Firm, which is included in this 2015 Annual Report to Shareholders.



Due to its inherent limitations, internal control over financial
reporting is not intended to provide absolute assurance that a misstatement of Pembina's financial statements would be prevented
or detected. Further, the evaluation of the effectiveness of internal control over financial reporting was made as of a specific
date, and continued effectiveness in future periods is subject to the risks that controls may become inadequate.



23


Pembina Pipeline Corporation




Risk Factors



Pembina's value proposition is based on balancing economic benefits
against risk. Where possible, Pembina will reduce risk. In addition to an objective of contractually eliminating its business risk
by contracting firm service commitments, Pembina has a formal Risk Management Program including policies, procedures and systems
designed to mitigate any residual risks. The risks that may affect the business and operation of Pembina and its operating subsidiaries
are described at a high level within this MD&A and more fully within Pembina's Annual Information Form ("AIF"), an
electronic copy of which is available at www.pembina.com or on Pembina's SEDAR profile at www.sedar.com and which
is filed under Form 40-F on Pembina's EDGAR profile at www.sec.gov. Further, additional discussion about counterparty risk,
market risk, liquidity risk and additional information on financial risk management can be found in Note 23 to the Consolidated
Financial Statements.



Shareholders and prospective investors should carefully consider
these risk factors before investing in Pembina's securities, as each of these risks may negatively affect the trading price of
Pembina's securities, the amount of dividends paid to shareholders and the ability of Pembina to fund its debt obligations, including
debt obligations under its outstanding convertible debentures and any other debt securities that Pembina may issue from time to
time.



Operational Risks



Operational risks include: pipeline leaks; the breakdown or failure
of equipment, pipelines and facilities, information systems or processes; the compromise of information and control systems; the
performance of equipment at levels below those originally intended (whether due to misuse, unexpected degradation or design, construction
or manufacturing defects); spills at truck terminals and hubs; spills associated with the loading and unloading of harmful substances
onto rail cars and trucks; failure to maintain adequate supplies of spare parts; operator error; labour disputes; disputes with
interconnected facilities and carriers; operational disruptions or apportionment on third-party systems or refineries which may
prevent the full utilization of Pembina's facilities and pipelines; and catastrophic events including but not limited to natural
disasters, fires, floods, explosions, train derailments, earthquakes, acts of terrorists and saboteurs, and other similar events,
many of which are beyond the control of Pembina. Pembina may also be exposed from time to time, to additional operational risks
not stated in the immediately preceding sentences. The occurrence or continuance of any of these events could increase the cost
of operating Pembina's assets or reduce revenue, thereby impacting earnings. Additionally, Pembina's facilities and pipelines are
reliant on electrical power for their operations. A failure or disruption within the local or regional electrical power supply
or distribution or transmission systems could significantly affect ongoing operations. In addition, a significant increase in the
cost of power or fuel could have a materially negative effect on the level of profit realized in cases where the relevant contracts
do not provide for recovery of such costs.



Commodity Price Risk



Pembina's Midstream business includes activities related to product
storage, terminalling, and hub services. These activities expose Pembina to certain risks including that Pembina may experience
volatility in revenue due to fluctuations in commodity prices. Primarily, Pembina enters into contracts to purchase and sell crude
oil and NGL at floating market prices. The prices of products that are marketed by Pembina are subject to volatility as a result
of such factors as seasonal demand changes, extreme weather conditions, general economic conditions, changes in commodity markets
and other factors. Pembina manages its risk exposure by balancing purchases and sales to lock-in margins. Notwithstanding Pembina's
management of price and quality risk, marketing margins for commodities can vary and have varied significantly from period to period.
This variability could have an adverse effect on the results of Pembina's commercial Midstream business and its overall results
of operations. To assist in effectively smoothing that variability inherent in this business, Midstream is investing in assets
that have a fee-based revenue component, and is looking to expand this area going forward.



24


Pembina Pipeline Corporation




The Midstream business is also exposed to possible price declines
between the time Pembina purchases NGL feedstock and sells NGL products, and to decreasing frac spreads. Frac spread is the difference
between the sale prices of NGL products and the cost of NGL sourced from natural gas and acquired at natural gas-related prices.
Frac spreads can change significantly from period to period depending on the relationship between crude oil and natural gas prices
(the "frac spread ratio"), absolute commodity prices, and changes in the Canadian to U.S. dollar foreign exchange rate.
There is also a differential between NGL product prices and crude oil prices which can change margins realized for midstream products
separate from frac spread ratio changes. The amount of profit or loss made on the extraction portion of the NGL midstream business
will generally increase or decrease with frac spreads. This exposure could result in variability of cash flow generated by the
NGL midstream business, which could affect Pembina and the cash dividends of Pembina.



Pembina responds to commodity price risk by using an active Risk
Management Program to fix revenues to pay for a minimum of 50 percent of the fixed committed term natural gas supply costs. Pembina’s
fixed committed natural gas supply can vary from year to year based on industry dynamics. Additionally Pembina's Midstream business
is also exposed to variability in quality, time and location differentials and the Company may also utilize financial derivative
instruments as part of its overall risk management strategy to assist in managing the exposure to commodity price risk as a result
of these activities. The Company does not trade financial instruments for speculative purposes.



Reserve Replacement, Throughput and Product Demand



Pembina's Conventional Pipeline tariff revenue is based upon
a variety of tolling arrangements, including fee-for-service contracts, cost-of-service agreements and market-based tolls. As a
result, certain pipeline tariff revenue is heavily dependent upon throughput levels of crude oil, NGL and condensate. Future throughput
on Pembina's crude oil and NGL pipelines and replacement of oil and gas reserves in the service areas will be dependent upon the
activities of producers operating in those areas as they relate to exploiting their existing reserve bases and exploring for and
developing additional reserves, and technological improvements leading to increased recovery rates. Without reserve additions,
or expansion of the service areas, throughput on such pipelines would decline over time as reserves are depleted. As oil and gas
reserves are depleted, production costs may increase relative to the value of the remaining reserves in place, causing producers
to shut-in production or seek out lower cost alternatives for transportation. If the level of tariffs collected by Pembina decreases
as a result, cash flow available for dividends to shareholders and to service obligations under Pembina's debt securities and other
debt obligations could be adversely affected.



Over the long term, Pembina's business will depend, in part,
on the level of demand for crude oil, condensate, NGL and natural gas in the markets served by the crude oil and NGL pipelines
and gas processing and gathering infrastructure in which the Company has an interest. Global economic events continue to have a
substantial downward effect on the prices of such products and Pembina cannot predict the impact of future economic conditions
on the energy and petrochemical industries or future demand for and prices of natural gas, crude oil, condensate and NGL. As lower
commodity prices reduce drilling activity, the supply growth that has been fuelling the growth in pipeline infrastructure could
slow down. These factors could negatively affect pipeline and processing capacity value as transportation and processing capacity
becomes more abundant. Future prices of these products are determined by supply and demand factors, including weather and general
economic conditions as well as economic, political and other conditions in other oil and natural gas regions, all of which are
beyond Pembina's control.



25


Pembina Pipeline Corporation




The volumes of natural gas processed through Pembina's gas processing
assets and of NGL and other products transported in its pipelines depend on production of natural gas in the areas serviced by
the gas processing business and associated pipelines. Without reserve additions, production will decline over time as reserves
are depleted and production costs may rise. Producers may shut-in production at lower product prices or higher production costs.
Producers in the areas serviced by the business may not be successful in exploring for and developing additional reserves or achieving
technological improvements to increase recovery rates, and the gas plants and the pipelines may not be able to maintain existing
volumes of throughput. Commodity prices may not remain at a level which encourages producers to explore for and develop additional
reserves or produce existing marginal reserves. Given the ongoing adverse global economic conditions, the prices of these products
continue to be depressed and the risks that producers will not seek reserves additions has heightened. Lower production volumes
will also increase the competition for natural gas supply at gas processing plants which could result in higher shrinkage premiums
being paid to natural gas producers.



The rate and timing of production from proven natural gas reserves
tied into the gas plants is at the discretion of the producers and is subject to regulatory constraints. The producers have no
obligation to produce natural gas from these lands. Pembina's gas processing assets are connected to various third-party trunk
line systems. Operational disruptions or apportionment on those third-party systems may prevent the full utilization of the business.



Over the long-term, Pembina's business will depend, in part,
on the level of demand for NGL and natural gas in the geographic areas in which deliveries are made by pipelines and the ability
and willingness of shippers having access or rights to utilize the pipelines to supply such demand. Pembina cannot predict the
impact of future economic conditions, fuel conservation measures, alternative fuel requirements, governmental regulation or technological
advances in fuel economy and energy generation devices, all of which could reduce the demand for natural gas and NGL.



Reputation



Reputational risk is the potential for market or company specific
events that could result in the deterioration of Pembina's reputation with key stakeholders. The potential for harming Pembina's
corporate reputation exists in every business decision and all risks can have an impact on reputation, which in turn can negatively
impact Pembina's business and its securities. Reputational risk cannot be managed in isolation from other forms of risk. Credit,
market, operational, insurance, liquidity, regulatory and legal risks, among others, must all be managed effectively to safeguard
Pembina's reputation. Pembina's reputation could also be impacted by the actions and activities of other companies operating in
the energy industry, particularly other energy infrastructure providers, over which it has no control. In particular, Pembina's
reputation could be impacted by negative publicity related to pipeline incidents, unpopular expansion plans or new projects, and
due to opposition from organizations opposed to energy, oil sands and pipeline development and particularly shipment of production
from oil sands regions. Negative impacts from a compromised reputation could include revenue loss, reduction in customer base,
delays in regulatory approvals on growth projects, and decreased value of Pembina's securities.



26


Pembina Pipeline Corporation




Environmental Costs and Liabilities



Pembina's operations, facilities and petroleum product shipments
are subject to extensive national, regional and local environmental, health and safety laws and regulations governing, among other
things, discharges to air, land and water, the handling and storage of petroleum products and hazardous materials, waste disposal,
the protection of employee health, safety and the environment, and the investigation and remediation of contamination. Pembina's
facilities could experience incidents, malfunctions or other unplanned events that result in spills or emissions in excess of permitted
levels and result in personal injury, fines, penalties or other sanctions and property damage. Pembina could also incur liability
in the future for environmental contamination associated with past and present activities and properties. The facilities and pipelines
must maintain a number of environmental and other permits from various governmental authorities in order to operate, and these
facilities are subject to inspection from time to time. Failure to maintain compliance with these requirements could result in
operational interruptions, fines or penalties, or the need to install potentially costly pollution control technology. Licenses
and permits must be renewed from time to time and there is no guarantee that the license will be renewed on the same or similar
conditions. There can be no assurance that we will be able to obtain all of the permits, licenses, registrations, approvals and
authorizations that may be required to conduct operations that it may wish to undertake. Further, if at any time regulatory authorities
deem any one of Pembina's pipelines or facilities unsafe or not in compliance with applicable laws, they may order it shut down.



While Pembina believes its current operations are in compliance
with all applicable significant environmental and safety regulations, there can be no assurance that substantial costs or liabilities
will not be incurred. Moreover, it is possible that other developments, such as increasingly strict environmental and safety laws,
regulations and enforcement policies thereunder, claims for damages to persons or property resulting from Pembina's operations,
and the discovery of pre-existing environmental liabilities in relation to any of the Company's existing or future properties or
operations, could result in significant costs and liabilities to Pembina. In addition, the costs of environmental liabilities in
relation to spill sites of which Pembina is currently aware could be greater than the Company currently anticipates, and any such
differences could be substantial. If Pembina is not able to recover the resulting costs or increased costs through insurance or
increased tariffs, cash flow available to pay dividends to shareholders and to service obligations under Pembina's debt securities
and other debt obligations could be adversely affected.



While Pembina maintains insurance in respect of damage caused
by seepage or pollution in an amount it considers prudent and in accordance with industry standards, certain provisions of such
insurance may limit the availability thereof in respect of certain occurrences unless they are discovered within fixed time periods,
which typically range from 72 hours to 30 days. Although the Company believes it has adequate leak detection systems in place to
monitor a significant spill of product, if Pembina is unaware of a problem or is unable to locate the problem within the relevant
time period, insurance coverage may not be available.



Abandonment Costs



Pembina is responsible for compliance with all applicable laws
and regulations regarding the abandonment of its pipeline systems and other assets at the end of their economic life, and these
abandonment costs may be substantial.



The proceeds of the disposition of certain assets, including,
in respect of certain pipeline systems, line fill, may be available to offset abandonment costs. While Pembina estimates future
abandonment costs, actual costs may differ. Pembina may, in the future, determine it prudent or be required by applicable laws
or regulations to establish and fund additional reclamation funds to provide for payment of future abandonment costs. Such reserves
could decrease cash flow available for dividends to shareholders and to service obligations under Pembina's debt securities and
other debt obligations.



27


Pembina Pipeline Corporation




Pembina has complied with the National Energy Board ("NEB")
requirements on its NEB-regulated pipelines for the creation of set-aside and collection mechanisms required under the applicable
NEB rules and regulations regarding the abandonment of its pipeline systems and assets. Pembina will continue to monitor any regulatory
changes. Pembina owned and/or operated rate-regulated pipelines account for 841 km of the total infrastructure in the Conventional
Pipelines business.



Completion and Timing of Expansion Projects



The successful completion of Pembina's growth and expansion projects
is dependent on a number of factors outside of Pembina's control, including the impact of general economic, business and market
conditions, availability of capital at attractive rates, receipt of regulatory approvals, reaching long-term commercial arrangements
with customers in respect of certain portions of the expansions, construction schedules and costs that may change depending on
supply, demand and/or inflation, labour, materials and equipment availability, contractor non-performance, weather conditions,
and cost of engineering services. There is no certainty, nor can Pembina provide any assurance, that necessary regulatory approvals
will be received on terms that maintain the expected return on investment associated with a specific projects, or at all, or that
satisfactory commercial arrangements with customers will be reached where needed on a timely basis or at all, or that third parties
will comply with contractual obligations in a timely manner. Factors such as special interest group opposition, Aboriginal, landowner
and other stakeholder consultation requirements, changes in shipper support over time, and changes to the legislative or regulatory
framework could all have an impact on contractual and regulatory milestones being accomplished. As a result, the cost estimates
and completion dates for Pembina's major projects can change during different stages of the project. Early stage projects face
additional challenges including securing leases, easements, rights-of-way, permits and/or licenses from landowners or governmental
authorities allowing access for such purposes, as well as Aboriginal consultation requirements. Accordingly, actual costs and timing
estimates may vary from initial estimates and these differences can be significant, and certain projects may not proceed as planned,
or at all. Further, there is a risk that maintenance will be required more often than currently planned or that significant maintenance
capital projects could arise that were not previously anticipated.



Under most of Pembina's construction and operation agreements,
the Company is obligated to construct the facilities regardless of delays and cost increases and Pembina bears the risk for any
cost overruns, and future agreements with customers entered into with respect to expansions may contain similar conditions. While
Pembina is not currently aware of any significant undisclosed cost overruns at the date hereof, any such cost overruns in the future
may adversely affect the economics of particular projects, as well as Pembina's business operations and financial results, and
could reduce Pembina's expected return on investment which, in turn, could reduce the level of cash available for dividends and
to service obligations under Pembina's debt securities and other debt obligations.



Operating and Capital Costs



Operating and capital costs of Pembina's business may vary considerably
from current and forecast values and rates and represent significant components of the cost of providing service. In general, as
equipment ages, costs associated with such equipment may increase over time. Dividends may be reduced if significant increases
in operating or capital costs are incurred and this may also impact the ability of Pembina to service obligations under its debt
securities and other debt obligations.



28


Pembina Pipeline Corporation




Although operating costs are to be recaptured through the tariffs
charged on natural gas volumes processed and oil and NGL transported, respectively, to the extent such charges escalate, producers
may seek lower cost alternatives or stop production of their natural gas and/or crude oil.



Additional Financing and Capital Resources



The timing and amount of Pembina's capital expenditures, and
the ability of the Company to repay or refinance existing debt as it becomes due, directly affects the amount of cash dividends
that Pembina pays. Future acquisitions, expansions of Pembina's assets, and other capital expenditures and the repayment or refinancing
of existing debt as it becomes due will be financed from sources such as cash generated from operations, the issuance of additional
shares or other securities (including debt securities) of Pembina, and borrowings. Dividends may be reduced, or even eliminated,
at times when significant capital or other expenditures are made. There can be no assurance that sufficient capital will be available
on terms acceptable to Pembina, or at all, to make additional investments, fund future expansions or make other required capital
expenditures. As a result of the ongoing weakness of the global economy, Pembina may have restricted access to capital and increased
borrowing costs. Although Pembina's business and asset base have not changed materially, the ability of Pembina to raise capital
is dependent upon, among other factors, the overall state of capital markets and investor demand for investments in the energy
industry and Pembina's securities in particular. To the extent that external sources of capital, including the issuance of additional
shares or other securities or the availability of additional credit facilities, become limited or unavailable on favourable terms
or at all due to credit market conditions or otherwise, the ability of Pembina to make the necessary capital investments to maintain
or expand its operations, to repay outstanding debt and to invest in assets, as the case may be, may be impaired. To the extent
Pembina is required to use cash flow to finance capital expenditures or acquisitions or to repay existing debt as it becomes due,
the level of dividends payable may be reduced.



Debt Service



At the end of 2015, Pembina had exposure to floating interest
rates on $25 million in debt, which was subsequently repaid in January 2016. Debt exposure is managed by using derivative financial
instruments.



Variations in interest rates and scheduled principal repayments,
if required, under the terms of Pembina's banking agreements, could result in significant changes in the amounts required to be
applied to debt service before payment of any dividends. Certain covenants in Pembina's agreements with the lenders may also limit
payments and dividends paid by Pembina.



Pembina and its subsidiaries are permitted to borrow funds to
finance the purchase of pipelines and other energy infrastructure assets, to fund capital expenditures and other financial obligations
or expenditures in respect of those assets and for working capital purposes. Amounts paid in respect of interest and principal
on debt incurred in respect of those assets reduce the amount of cash flow available for common share dividends. Variations in
interest rates and scheduled principal repayments for which Pembina may not be able to refinance at favourable rates, or at all,
could result in significant changes in the amount required to be applied to service debt, which could have detrimental effects
on the amount of cash available for common share dividends. Pembina, on a consolidated basis, is also required to meet certain
financial covenants under the credit facilities and is subject to customary restrictions on its operations and activities, including
restrictions on the granting of security, incurring indebtedness and the sale of its assets.



The lenders under Pembina's unsecured credit facilities have
also been provided with guarantees and subordination agreements. If Pembina becomes unable to pay its debt service charges or otherwise
commits an event of default such as bankruptcy, payments to all of the lenders will rank in priority to dividends and payments
to holders of convertible debentures.



29


Pembina Pipeline Corporation




Although Pembina believes the existing credit facilities are
sufficient for immediate requirements, there can be no assurance that the amount will be adequate for the future financial obligations
of Pembina or that additional funds will be able to be obtained on terms favourable to Pembina or at all.



Credit Ratings



Rating agencies regularly evaluate Pembina, basing their ratings
of its long-term and short-term debt on a number of factors. This includes Pembina's financial strength as well as factors not
entirely within its control, including conditions affecting the industry in which Pembina operates generally and the wider state
of the economy. There can be no assurance that one or more of Pembina's credit ratings will not be downgraded.



Pembina's borrowing costs and ability to raise funds are directly
impacted by its credit ratings. Credit ratings may be important to suppliers or counterparties when they seek to engage in certain
transactions. A credit rating downgrade could potentially impair Pembina's ability to enter into arrangements with suppliers or
counterparties, to engage in certain transactions, and could limit Pembina's access to private and public credit markets and increase
the costs of borrowing under its existing credit facilities. A downgrade could also limit Pembina's access to debt and preferred
share markets and increase its cost of borrowing.



The occurrence of a downgrade in Pembina's credit ratings could
adversely affect its ability to execute portions of its business strategy and could have a material adverse effect on its liquidity,
results of operations and capital position.



Changes in Legislation



There can be no assurance that income tax laws, regulatory and
environmental laws or policies and government incentive programs relating to the pipeline or oil and natural gas industry, will
not be changed in a manner which adversely affects Pembina or its Shareholders or other securityholders.



Foreign Exchange Risk



Pembina's commodity-related transactions, rail
car leases, Vantage pipeline tariff cash flows and some of its capital expenditure commitments may be subject to currency
risk, primarily arising from the denomination of specific earnings, cash flows and expenditure commitments in U.S. dollars.
Pembina partially mitigates this risk using an active Risk Management Program to exchange foreign currency for domestic
currency at a fixed rate.



Interest Rate Risk



Pembina has floating interest rate debt which subjects the Company
to interest rate risk. Pembina responds to this risk under the active Risk Management Program by entering into financial derivative
contracts to fix interest rates.



Cyber Security



Pembina's infrastructure, technologies and data are becoming
increasingly integrated, which creates a risk that failure of one system could lead to failure of another system. The risk of a
cyber-attack targeting the industry is also increasing. A breach in the security or failure of the Company’s information
technology could result in operational outages, delays, damage to assets or the environment, reputational harm, lost profits, lost
data and other adverse outcomes. The Company’s security strategy focuses on information technology security risk management
which includes continuous monitoring, threat detection and an incident response protocol.



30


Pembina Pipeline Corporation




Selected Quarterly Operating Information



|(mbpd unless stated otherwise)                                     |  | 2015 |       |  | 2014 | 
|------------------------------------------------------------------ |  | ---- | ----- |  | ---- | 
|                                                                   |  | Q4   |       |  | Q3   | 
|Average volume                                                     |  |      |       |  |      | 
|Conventional Pipelines revenue volumes(1)                          |  |      | 621   |  |      | 
|Oil Sands & Heavy Oil contracted capacity                          |  |      | 880   |  |      | 
|Gas Services average revenue volumes (mboe/d) net to Pembina(1)(2) |  |      | 103   |  |      | 
|Midstream NGL sales volumes                                        |  |      | 123   |  |      | 
|Total                                                              |  |      | 1,727 |  |      | 

| | (1) | Revenue volumes are equal to contracted plus interruptible volumes.
| | --- | -------------------------------------------------------------------

| | (2) | Gas Services average revenue volumes converted to mboe/d from MMcf/d at 6:1 ratio.
| | --- | ----------------------------------------------------------------------------------



31


Pembina Pipeline Corporation




Selected Quarterly Financial Information



|                                                                                   |  | 2015 |        |   | 2014 | 
|---------------------------------------------------------------------------------- |  | ---- | ------ | - | ---- | 
|($ millions, except where noted)                                                   |  | Q4   |        |   | Q3   | 
|Revenue                                                                            |  |      | 1,242  |   |      | 
|Operating expenses                                                                 |  |      | 110    |   |      | 
|Cost of goods sold, including product purchases                                    |  |      | 835    |   |      | 
|Realized (gain) loss on commodity-related derivative financial instruments         |  |      | (7     | ) |      | 
|Operating margin(1)                                                                |  |      | 304    |   |      | 
|Depreciation and amortization included in operations                               |  |      | 73     |   |      | 
|Unrealized (gain) loss on commodity-related derivative financial instruments       |  |      | (6     | ) |      | 
|Gross profit                                                                       |  |      | 237    |   |      | 
|EBITDA(1)                                                                          |  |      | 260    |   |      | 
|Cash flow from operating activities                                                |  |      | 285    |   |      | 
|Cash flow from operating activities per common share – basic (dollars)(1)          |  |      | 0.79   |   |      | 
|Adjusted cash flow from operating activities(1)                                    |  |      | 280    |   |      | 
|Adjusted cash flow from operating activities per common share – basic (dollars)(1) |  |      | 0.77   |   |      | 
|Earnings for the period                                                            |  |      | 130    |   |      | 
|Earnings per common share – basic (dollars)                                        |  |      | 0.32   |   |      | 
|Earnings per common share – diluted (dollars)                                      |  |      | 0.32   |   |      | 
|Common shares outstanding (millions):                                              |  |      |        |   |      | 
|Weighted average – basic                                                           |  |      | 363    |   |      | 
|Weighted average – diluted                                                         |  |      | 363    |   |      | 
|End of period                                                                      |  |      | 373    |   |      | 
|Common share dividends declared                                                    |  |      | 168    |   |      | 
|Common dividends declared per share (dollars)                                      |  |      | 0.4575 |   |      | 
|Preferred share dividends declared                                                 |  |      | 13     |   |      | 



| | (1) | Refer to "Non-GAAP and Additional GAAP Measures."
| | --- | -------------------------------------------------



During the periods in the prior table, Pembina's results were
impacted by the following factors and trends:



| | · | Increased oil production during 2014 and relatively stable production
in 2015 from customers operating in the Montney, Cardium and Deep Basin Cretaceous formations of west central Alberta, which resulted
in increased service offerings, new connections and capacity expansions in these areas;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Increased liquids-rich natural gas production in 2014 and relatively
stable production in 2015 from producers in the WCSB (Deep Basin, Montney and emerging Duvernay shale plays), which resulted in
increased gas gathering and processing at the Company's Gas Services assets, additional associated NGL and condensate volumes transported
on its pipelines and expansion of its fractionation capacity;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | New assets being placed into service and the acquisition of the Vantage
pipeline;
| | - | ---------------------------------------------------------------------------------



32


Pembina Pipeline Corporation




| | · | A strong propane market in North America throughout the first half
of 2014 and an overall significantly weaker commodity market (especially the weaker propane and butane market) during the latter
part of 2014 and in 2015;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Increased common shares outstanding and common share dividends due
to: the DRIP, debenture conversions, common share issuance, increasing the common share dividend rate, the acquisition of the Vantage
pipeline and SEEP; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Increased preferred share dividends due to additional preferred shares
issued.
| | - | ------------------------------------------------------------------------------



Selected Annual Financial Information



|($ millions, except where noted)                  | 2015   | 2014   | 2013 
|------------------------------------------------- | ------ | ------ | -----
|Revenue                                           | 4,635  | 6,069  | 5,006
|Earnings                                          | 406    | 383    | 351  
|Per common share – basic (dollars)                | 1.02   | 1.07   | 1.12 
|Per common share – diluted (dollars)              | 1.02   | 1.06   | 1.12 
|Total assets                                      | 12,936 | 11,262 | 9,142
|Long-term financial liabilities(1)                | 3,908  | 3,428  | 2,454
|Declared dividends per common share ($ per share) | 1.80   | 1.72   | 1.65 
|Preferred share dividends declared                | 48     | 31     | 5    



| | (1) | Includes loans and borrowings, convertible debentures, long-term derivative financial instruments, deferred revenue, provisions
and employee benefits, share-based payments and other.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Additional
Information



Additional information about Pembina filed with Canadian and
U.S. securities commissions, including quarterly and annual reports, AIFs (filed with the U.S. Securities and Exchange Commission
under Form 40-F), Management Information Circulars and financial statements can be found online at www.sedar.com, www.sec.gov and
through Pembina's website at www.pembina.com.



Non-GAAP and Additional GAAP Measures



Throughout this MD&A, Pembina has used the following terms
that are not defined by GAAP but are used by management to evaluate the performance of Pembina and its businesses. Since non-GAAP
and additional GAAP measures do not have a standardized meaning prescribed by GAAP and are therefore unlikely to be comparable
to similar measures presented by other companies, securities regulations require that non-GAAP and additional GAAP measures are
clearly defined, qualified and reconciled to their nearest GAAP measure. Except as otherwise indicated, these non-GAAP and additional
GAAP measures are calculated and disclosed on a consistent basis from period to period. Specific adjusting items may only be relevant
in certain periods.



The intent of non-GAAP and additional GAAP measures is to provide
additional useful information to investors and analysts though the measures do not have any standardized meaning under IFRS. The
measures should not, therefore, be considered in isolation or used in substitute for measures of performance prepared in accordance
with IFRS. Other issuers may calculate these non-GAAP and additional GAAP measures differently.



Investors should be cautioned that net revenue, EBITDA, adjusted
cash flow from operating activities, cash flow from operating activities per common share, adjusted cash flow from operating activities
per common share, operating margin and total enterprise value should not be construed as alternatives to earnings, cash flow from
operating activities or other measures of financial results determined in accordance with GAAP as indicators of Pembina's performance.



33


Pembina Pipeline Corporation




Net revenue



Net revenue is a non-GAAP financial measure which is defined
as total revenue less cost of goods sold including product purchases. Management believes that net revenue provides investors with
a single measure to indicate the margin on sales before non-product operating expenses that is comparable between periods. Management
utilizes net revenue to compare consecutive results, particularly in the Midstream business, to aggregate revenue generated by
each of the Company's businesses and to set comparable objectives.



|                                               | 3 Months Ended
        December 31
        (unaudited) | 12 Months Ended
        December 31
|---------------------------------------------- | ------------------------------------------------------ | -----------------------------------
|                                               |                                                        |                                    
|($ millions)                                   | 2015                                                   | 2014                               
|Revenue                                        | 1,242                                                  | 1,259                              
|Cost of goods sold,including product purchases | 835                                                    | 955                                
|Net revenue                                    | 407                                                    | 304                                



Earnings before interest, taxes, depreciation and amortization
("EBITDA")



EBITDA is a non-GAAP measure and is calculated as results from
operating activities plus share of profit (loss) from equity accounted investees (before tax, depreciation and amortization) plus
depreciation and amortization (included in operations and general and administrative expense) and unrealized gains or losses on
commodity-related derivative financial instruments. The exclusion of unrealized gains or losses on commodity-related derivative
financial instruments eliminates the non-cash impact.



Management believes that EBITDA provides useful information to
investors as it is an important indicator of an issuer's ability to generate liquidity through cash flow from operating activities.
EBITDA is also used by investors and analysts for assessing financial performance and for the purpose of valuing an issuer, including
calculating financial and leverage ratios. Management utilizes EBITDA to set objectives and as a key performance indicator of the
Company's success.



|                                                                                            | 3 Months Ended
        December 31
        (unaudited) | 12 Months Ended
        December 31
|------------------------------------------------------------------------------------------- | ------------------------------------------------------ | -----------------------------------
|($ millions, except per share amounts)                                                      | 2015                                                   | 2014                               
|Results from operating activities                                                           | 185                                                    | 114                                
|Share of profit from equity accounted investees (before tax, depreciation and amortization) | 2                                                      | 2                                  
|Depreciation and amortization                                                               | 79                                                     | 65                                 
|Unrealized (gain) loss on commodity-related derivative financial instruments                | (6)                                                    | (11)                               
|EBITDA                                                                                      | 260                                                    | 170                                
|EBITDA per common share – basic (dollars)                                                   | 0.72                                                   | 0.51                               



Adjusted cash flow from operating activities, cash flow from
operating activities per common share and adjusted cash flow from operating activities per common share



Adjusted cash flow from operating activities is a non-GAAP measure
which is defined as cash flow from operating activities plus the change in non-cash operating working capital, adjusting for current
tax and share-based payment expenses, and deducting preferred share dividends declared. Adjusted cash flow from operating activities
excludes preferred share dividends because they are not attributable to common shareholders. The calculation has been modified
to include current tax and share-based payment expense as it allows management to better assess the obligations discussed below.
Management believes that adjusted cash flow from operating activities provides comparable information to investors for assessing
financial performance during each reporting period. Management utilizes adjusted cash flow from operating activities to set objectives
and as a key performance indicator of the Company's ability to meet interest obligations, dividend payments and other commitments.
Per common share amounts are calculated by dividing cash flow from operating activities, or adjusted cash flow from operating activities,
as applicable, by the weighted average number of common shares outstanding.



34


Pembina Pipeline Corporation




|                                                                                | 3 Months Ended
        December 31
        (unaudited) | 12 Months Ended
        December 31
|------------------------------------------------------------------------------- | ------------------------------------------------------ | -----------------------------------
|($ millions, except per share amounts)                                          | 2015                                                   | 2014                               
|Cash flow from operating activities                                             | 285                                                    | 196                                
|Add (deduct):                                                                   |                                                        |                                    
|Change in non-cash operating working capital                                    | (16)                                                   | (14)                               
|Current tax recovery (expenses)                                                 | 19                                                     | (28)                               
|Taxes paid                                                                      | 7                                                      | 11                                 
|Accrued share-based payments                                                    | (2)                                                    | 9                                  
|Share-based payments                                                            |                                                        |                                    
|Preferred share dividends declared                                              | (13)                                                   | (10)                               
|Adjusted cash flow from operating activities                                    | 280                                                    | 164                                
|Cash flow from operating activities per common share – basic (dollars)          | 0.79                                                   | 0.58                               
|Adjusted cash flow from operating activities per common share – basic (dollars) | 0.77                                                   | 0.49                               



Operating margin



Operating margin is an additional GAAP measure which is defined
as gross profit before depreciation and amortization included in operations and unrealized gain/loss on commodity-related derivative
financial instruments. Management believes that operating margin provides useful information to investors for assessing the financial
performance of the Company's operations. Management utilizes operating margin in setting objectives and views it as a key performance
indicator of the Company's success.



Reconciliation of operating margin to gross profit:



|                                                                               | 3 Months Ended
        December 31
        (unaudited) | 12 Months Ended
        December 31
|------------------------------------------------------------------------------ | ------------------------------------------------------ | -----------------------------------
|($ millions)                                                                   | 2015                                                   | 2014                               
|Revenue                                                                        | 1,242                                                  | 1,259                              
|Cost of sales (excluding depreciation and amortization included in operations) |                                                        |                                    
|Operating expenses                                                             | 110                                                    | 117                                
|Cost of goods sold, including product purchases                                | 835                                                    | 955                                
|Realized
    (gain) loss on commodity-related derivative financial instruments | (7)                                                    | 8                                  
|Operating margin                                                               | 304                                                    | 195                                
|Depreciation and amortization included in operations                           | 73                                                     | 62                                 
|Unrealized (gain) loss on commodity-related derivative financial instruments   | (6)                                                    | (11)                               
|Gross profit                                                                   | 237                                                    | 144                                



35


Pembina Pipeline Corporation




Total enterprise value



Total enterprise value is a non-GAAP measure which is calculated
by aggregating the market value of common shares, preferred shares and convertible debentures at a specific date plus senior debt
less cash and cash equivalents. Management believes that total enterprise value provides useful information to investors to assess
the overall market value of the Company and as an input to calculate financial ratios. Management utilizes total enterprise value
to assess Pembina's growth.



|($ millions, except where noted)        |  | February 22, 2016 |        |      | December 31, 2015 |  |        | December 31, 2014 | 
|--------------------------------------- |  | ----------------- | ------ | ---- | ----------------- |  | ------ | ----------------- | 
|Shares outstanding (millions of shares) |  |                   | 376    |      |                   |  | 373    |                   | 
|Closing share price (dollars)           |  |                   | 33.46  |      |                   |  | 30.15  |                   | 
|Market value                            |  |                   |        |      |                   |  |        |                   | 
|Common shares                           |  |                   | 12,578 |      |                   |  | 11,258 |                   | 
|Series 1 Preferred Shares (PPL.PR.A)    |  |                   | 133    | (1)  |                   |  | 167    | (2)               | 
|Series 3 Preferred Shares (PPL.PR.C)    |  |                   | 85     | (4)  |                   |  | 109    | (5)               | 
|Series 5 Preferred Shares (PPL.PR.E)    |  |                   | 160    | (7)  |                   |  | 194    | (8)               | 
|Series 7 Preferred Shares (PPL.PR.G)    |  |                   | 151    | (10) |                   |  | 193    | (11)              | 
|Series 9 Preferred Shares (PPL.PR.I)    |  |                   | 168    | (13) |                   |  | 199    | (14)              | 
|Series 11 Preferred Shares (PPL.PR.K)   |  |                   | 163    | (15) |                   |  |        |                   | 
|5.75% convertible debentures (PPL.DB.C) |  |                   |        |      |                   |  |        |                   | 
|5.75% convertible debentures (PPL.DB.E) |  |                   |        |      |                   |  |        |                   | 
|5.75% convertible debentures (PPL.DB.F) |  |                   | 178    | (18) |                   |  | 166    | (19)              | 
|Market capitalization                   |  |                   | 13,616 |      |                   |  | 12,286 |                   | 
|Senior debt                             |  |                   | 3,167  |      |                   |  | 3,192  |                   | 
|Cash and cash equivalents               |  |                   | (41    | )    |                   |  | (26    | )                 | 
|Total enterprise value(21)              |  |                   | 16,742 |      |                   |  | 15,452 |                   | 



| | (1) | 10 million preferred shares outstanding at a market price of $13.30 at February 22, 2016.
| | --- | -----------------------------------------------------------------------------------------

| | (2) | 10 million preferred shares outstanding at a market price of $16.70 at December 31, 2015.
| | --- | -----------------------------------------------------------------------------------------

| | (3) | 10 million preferred shares outstanding at a market price of $24.40 at December 31, 2014.
| | --- | -----------------------------------------------------------------------------------------

| | (4) | 10 million preferred shares outstanding at a market price of $14.20 at February 22, 2016.
| | --- | -----------------------------------------------------------------------------------------

| | (5) | 10 million preferred shares outstanding at a market price of $18.10 at December 31, 2015.
| | --- | -----------------------------------------------------------------------------------------

| | (6) | 6 million preferred shares outstanding at a market price of $24.97 at December 31, 2014.
| | --- | ----------------------------------------------------------------------------------------

| | (7) | 10 million preferred shares outstanding at a market price of $16.01 at February 22, 2016.
| | --- | -----------------------------------------------------------------------------------------

| | (8) | 10 million preferred shares outstanding at a market price of $19.40 at December 31, 2015.
| | --- | -----------------------------------------------------------------------------------------

| | (9) | 10 million preferred shares outstanding at a market price of $25.70 at December 31, 2014.
| | --- | -----------------------------------------------------------------------------------------

| | (10) | 10 million preferred shares outstanding at a market price of $15.10 at February 22, 2016.
| | ---- | -----------------------------------------------------------------------------------------

| | (11) | 10 million preferred shares outstanding at a market price of $19.30 at December 31, 2015.
| | ---- | -----------------------------------------------------------------------------------------

| | (12) | 10 million preferred shares outstanding at a market price of $25.02 at December 31, 2014.
| | ---- | -----------------------------------------------------------------------------------------

| | (13) | 9 million preferred shares outstanding at a market price of $18.68 at February 22, 2016.
| | ---- | ----------------------------------------------------------------------------------------

| | (14) | 9 million preferred shares outstanding at a market price of $22.09 at December 31, 2015.
| | ---- | ----------------------------------------------------------------------------------------

| | (15) | 6.8 million preferred shares outstanding at a market price of $23.95 at February 22, 2016.
| | ---- | ------------------------------------------------------------------------------------------

| | (16) | $236 million principal amount outstanding at a market price of $147.00 at December 31, 2014 and with a conversion price of
$28.55.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------

| | (17) | $23 million principal amount outstanding at a market price of $160.00 at December 31, 2014 and with a conversion price of $24.94.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------

| | (18) | $149 million principal amount outstanding at a market price of $119.00 at February 22, 2016 and with a conversion price of
$29.53.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------

| | (19) | $149 million principal amount outstanding at a market price of $112.00 at December 31, 2015 and with a conversion price of
$29.53.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------

| | (20) | $150 million principal amount outstanding at a market price of $138.50 at December 31, 2014 and with a conversion price of
$29.53.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------

| | (21) | Refer to "Non-GAAP and Additional GAAP Measures."
| | ---- | -------------------------------------------------



36


Pembina Pipeline Corporation




The following is a list of abbreviation that may be used in this
MD&A:

Measurement bpdbarrels per day mbpdthousands of barrels per day mbblsthousands of barrels mmbblsmillions of barrels mboe/dthousands of barrels of oil equivalent per day MMcf/dmillions of cubic feet per day bcf/dbillions of cubic feet per day kmkilometre


Other B.C.British Columbia DRIPPremium DividendTM and Dividend Reinvestment Plan IFRSInternational Financial Reporting Standards NGLNatural gas liquids U.S.United States WCSBWestern Canadian Sedimentary Basin deep cutEthane-plus capacity extraction gas processing capabilities shallow cutSweet gas processing with propane and/or condensate-plus
extraction capabilities






37


Pembina Pipeline Corporation




Forward-Looking Statements & Information



In the interest of providing Pembina's securityholders and potential
investors with information regarding Pembina, including management's assessment of the Company's future plans and operations, certain
statements contained in this MD&A constitute forward-looking statements or information (collectively, "forward-looking
statements"). Forward-looking statements are typically identified by words such as "anticipate", "continue",
"estimate", "expect", "may", "will", "project", "should", "could",
"believe", "plan", "intend", "target", "view", "maintain", "schedule",
"objective", "strategy", "likely", "potential", "outlook", "goal",
"would", and similar expressions suggesting future events or future performance.

By their nature, such forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated
in such forward-looking statements. Pembina believes the expectations reflected in those forward-looking statements are reasonable
but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in
this MD&A should not be unduly relied upon. These statements speak only as of the date of the MD&A.

In particular, this MD&A contains forward-looking statements,
including certain financial outlook, pertaining to the following:

| | · | the future levels of cash dividends that Pembina intends to pay to
its shareholders, the dividend payment date and the tax treatment thereof;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------

| | · | planning, construction, capital expenditure estimates, schedules, regulatory
and environmental applications and anticipated approvals, expected capacity, incremental volumes, in-service dates, rights, activities,
benefits and operations with respect to new construction of, or expansions on existing, pipelines, gas services facilities, fractionation
facilities, terminalling, storage and hub facilities and other facilities or energy infrastructure, as well as the impact of the
Company's new projects on its future financial performance;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | pipeline, processing, fractionation and storage facility and system
operations and throughput levels;
| | - | -----------------------------------------------------------------------------------------------------

| | · | Pembina's strategy and the development and expected timing of new business
initiatives and growth opportunities and the impact thereof;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------

| | · | Pembina's estimated decommissioning obligations and deferred tax liability;
| | - | ---------------------------------------------------------------------------

| | · | increased throughput potential due to increased oil and gas industry
activity and new connections and other initiatives on Pembina's pipelines and at Pembina's facilities;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | expected future cash flows and the sufficiency thereof, financial strength,
sources of and access to funds at attractive rates, future contractual obligations, future financing options, future renewal of
credit facilities, availability of capital to fund growth plans, operating obligations and dividends and the use of proceeds from
financings;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | tolls and tariffs and processing, transportation, fractionation, storage
and services commitments and contracts;
| | - | ----------------------------------------------------------------------------------------------------------------

| | · | the adoption of new accounting standards;
| | - | -----------------------------------------

| | · | the impact of share price and discount rate on annual share-based incentive
expense; and
| | - | ----------------------------------------------------------------------------------------

| | · | the impact of the current commodity price environment on Pembina.
| | - | -----------------------------------------------------------------

Various factors or assumptions are typically applied by Pembina
in drawing conclusions or making the forecasts, projections, predictions or estimations set out in forward-looking statements and
financial outlook based on information currently available to Pembina. These factors and assumptions include, but are not limited
to:

| | · | oil and gas industry exploration and development activity levels and
the geographic region of such activity;
| | - | ------------------------------------------------------------------------------------------------------------

| | · | the success of Pembina's operations;
| | - | ------------------------------------

| | · | prevailing commodity prices, interest rates and exchange rates and
the ability of Pembina to maintain current credit ratings;
| | - | -----------------------------------------------------------------------------------------------------------------------------

| | · | the availability of capital to fund future capital requirements relating
to existing assets and projects;
| | - | ---------------------------------------------------------------------------------------------------------

| | · | expectations regarding participation in Pembina's DRIP;
| | - | -------------------------------------------------------

| | · | future operating costs including geotechnical and integrity costs;
| | - | ------------------------------------------------------------------

| | · | oil and gas industry compensation levels;
| | - | -----------------------------------------

| | · | in respect of current developments, expansions, planned capital expenditures,
completion dates and capacity expectations: that third parties will provide any necessary support; that any third-party projects
relating to Pembina's growth projects will be sanctioned and completed as expected; that any required commercial agreements can
be reached; that all required regulatory and environmental approvals can be obtained on the necessary terms in a timely manner;
that counterparties will comply with contracts in a timely manner; that there are no unforeseen events preventing the performance
of contracts or the completion of the relevant facilities; and that there are no unforeseen material costs relating to the facilities
which are not recoverable from customers;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | in respect of providing value to shareholders: prevailing commodity
prices, margins and exchange rates; that Pembina's future results of operations will be consistent with past performance and management
expectations in relation thereto; the continued availability of capital at attractive prices to fund future capital requirements
relating to existing assets and projects, including but not limited to future capital expenditures relating to expansion, upgrades
and maintenance shutdowns; the success of growth projects; future operating costs; that counterparties to material agreements will
continue to perform in a timely manner; that there are no unforeseen events preventing the performance of contracts; and that there
are no unforeseen material construction or other costs related to current growth projects or current operations;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | interest and tax rates;
| | - | -----------------------

| | · | prevailing regulatory, tax and environmental laws and regulations and
tax pool utilization; and
| | - | -----------------------------------------------------------------------------------------------

| | · | the amount of future liabilities relating to environmental incidents
and the availability of coverage under Pembina's insurance policies (including in respect of Pembina's business interruption insurance
policy).
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The actual results of Pembina could differ materially from those
anticipated in these forward-looking statements as a result of the material risk factors set forth below:

| | · | the regulatory environment and decisions and Aboriginal and landowner
consultation requirements;
| | - | ------------------------------------------------------------------------------------------------

| | · | the impact of competitive entities and pricing;
| | - | -----------------------------------------------

| | · | labour and material shortages;
| | - | ------------------------------

| | · | reliance on key relationships and agreements and the outcome of stakeholder
engagement;
| | - | ---------------------------------------------------------------------------------------

| | · | the strength and operations of the oil and natural gas production industry
and related commodity prices;
| | - | --------------------------------------------------------------------------------------------------------

| | · | non-performance or default by counterparties to agreements which Pembina
or one or more of its subsidiaries has entered into in respect of its business;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | actions by governmental or regulatory authorities including changes
in tax laws and treatment, changes in royalty rates or increased environmental regulation;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | fluctuations in operating results;
| | - | ----------------------------------

| | · | adverse general economic and market conditions in Canada, North America
and elsewhere, including changes, or prolonged weakness, as applicable, in interest rates, foreign currency exchange rates, commodity
prices, supply/demand trends and overall industry activity levels; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the other factors discussed under "Risk Factors" in Pembina's
AIF for the year ended December 31, 2015. Pembina's MD&A and AIF are available at www.pembina.com and in Canada under Pembina's
company profile on www.sedar.com and in the U.S. on the Company's profile at www.sec.gov.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

These factors should not be construed as exhaustive. Unless
required by law, Pembina does not undertake any obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise. Any forward-looking statements contained herein are expressly qualified
by this cautionary statement. The purpose of the financial outlook contained herein is to give the reader an indication of the
expected impact of current growth projects on Pembina's future financial performance. Readers should be aware that the financial
outlook contained herein may not be appropriate for other purposes.



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